INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT is made as of the 20th day of
December, 1995, by and between XXXXXXXX BRANDS INTERNATIONAL, INC., a New Jersey
corporation ("Seller") and XXXX XXXXXXX & CO., a Delaware corporation (the
"Company").
W I T N E S S E T H
WHEREAS, Seller and Smithfield Foods, Inc., a Delaware
corporation ("Purchaser"), have entered into a Stock Purchase Agreement dated as
of December 20, 1995 (the "Purchase Agreement"), pursuant to which Purchaser has
agreed to purchase from Seller all of the issued and outstanding shares of stock
of the Company (capitalized terms used but not defined herein shall have the
meanings set forth in the Purchase Agreement); and
WHEREAS, the Company continues to remain liable for all of its
Liabilities and has agreed to indemnify Seller against the possibility that any
Liability of the Company could be asserted against Seller.
NOW, THEREFORE, in consideration of the mutual promises
hereinafter set forth and other good and valuable consideration, the parties
hereby agree as follows:
1. Indemnification Obligations of the Company.
1.1. The Company will reimburse, indemnify and hold harmless
Seller, its officers, directors, employees, agents and successors or assigns
(each, a "Seller Indemnified Party") against and in respect of any and all
damages, losses, deficiencies, liabilities, costs and expenses incurred or
suffered by such party that relate to the failure of the Company to pay, perform
or discharge any of the Liabilities or the Environmental Liabilities of the
Company or any of its Subsidiaries arising prior to, at or after the Closing,
excluding Income and Property Taxes, but including, without limitation, existing
Liabilities of the Company guaranteed by Seller and Liabilities or Environmental
Liabilities arising from the condition of any Real Property or Disposed Real
Property, other than Disposed Real Property acquired by Seller from the Company.
1.2. As partial consideration for the indemnity herein, Seller
has agreed that Company may rely on the warranties and representations made by
Seller in the Purchase Agreement as if stated herein and Company shall be
entitled to be indemnified (the
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"Company Indemnified Party") therefore to the same extent and under the same
terms as Purchaser as set forth in the Purchase Agreement.
1.3. The Company shall indemnify and hold harmless the Seller
Indemnified Parties from and against (i) all Taxes with respect to all periods
beginning after the Closing Date, and (ii) all Taxes with respect to any period
beginning before the Closing Date and ending after the Closing Date, but only
with respect to Taxes attributable to the period after the Closing Date; (iii)
all Taxes attributable to and arising out of any transaction directed to occur
by the Purchaser after the Closing even if such transaction occurs on the
Closing Date; and (iv) any Taxes attributable to an election pursuant to Section
338(g) of the Code.
2. Third Party Claims - Indemnification
2.1 If a claim by a third party is made against an indemnified
party (i.e. a Seller Indemnified Party or the Company), the indemnified party
shall promptly notify the indemnifying party of such claim or demand, specifying
the nature of such claim or demand and the amount or the estimated amount
thereof to the extent then feasibly determinable (which estimate shall not be
conclusive of the final amount of such claim and demand) (the "Claim Notice").
The indemnifying party shall have ten (10) business days from the personal
delivery or mailing of the Claim Notice (the "Notice Period") to notify the
indemnified party, (A) whether or not it disputes its liability to the
indemnified party hereunder with respect to such claim or demand and (B)
notwithstanding any such dispute, whether or not it desires, at its sole cost
and expense, to defend the indemnified party against such claims or demand. If
the indemnifying party fails to undertake the defense of any claim or demand,
the indemnified party may undertake such matter at the expense of the
indemnifying party.
2.2 If such claim, demand, action or proceeding is a third
party claim, demand, action or proceeding, the indemnifying party will have the
right at its expense to assume the defense thereof using counsel reasonably
acceptable to the indemnified party. The indemnified party shall have the right
to participate, at its own expense, with respect to any such third party claim,
demand, action or proceeding in connection with any such third party claim,
demand, action or proceeding, the parties shall cooperate with each other and
provide each other with access to relevant books and records in their
possession. No such third party claim, demand, action or proceeding shall be
settled without the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld. It shall be deemed not unreasonable
if a party is unwilling to consent to a settlement if the settlement results in
additional liability to the indemnified
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party as a result of such settlement or if such party is required to be enjoined
or otherwise similarly restricted or bound under the terms of the settlement.
Except in instances where a settlement restricts or negatively impacts the
indemnified party or its business after such settlement or results in additional
liability to such party as a result of such settlement, if a firm written offer
is made to settle any such third party claim, demand, action or proceeding and
the indemnifying party proposes to accept such settlement, then: (i) the
indemnifying party shall be excused from, and the indemnified party shall be
solely responsible for, all further defense of such third party claim, demand,
action or proceeding; (ii) the maximum liability of the indemnifying party
relating to such third party claim, demand, action or proceeding shall be the
amount of the proposed settlement if the amount thereafter recovered from the
indemnified party on such third party claim, demand, action or proceeding is
greater than the amount of the proposed settlement; and (iii) the indemnified
party shall pay all attorneys' fees and legal costs and expenses incurred after
rejection of such settlement by the indemnified party.
2.3 In the event an indemnified party should have a claim
against the indemnifying party hereunder that does not involve a claim or demand
being asserted against or sought to be collected from it by a third party, the
indemnified party shall promptly send a Claim Notice with respect to such claim
to the indemnifying party. If the indemnifying party does not notify the
indemnified party within the Notice Period that it disputes such claim, the
amount of such claim shall be conclusively deemed a liability of the
indemnifying party hereunder.
3. Provisions Regarding Indemnity. The amounts for which a
party shall be liable under Paragraph 1 or 2 of this Agreement shall be net of
any tax benefit realized by the indemnified party as a result of the facts and
circumstances giving rise to the liability of the indemnifying party and shall
also be net of any insurance proceeds received by the indemnified party
(retroactively, if necessary) in connection with the facts giving rise to the
right of indemnification (net of any expenses (including legal fees) incurred by
the indemnified party in collecting such proceeds) and plus any taxes incurred
as a result of such indemnification or insurance recovery. The indemnified party
shall be obligated in connection with any Claim for indemnification under this
Agreement to use all commercially reasonable efforts to obtain any insurance
proceeds available to such indemnified party with regard to the applicable
Claim.
4. Payment. Upon the determination of the liability under Paragraph 2
hereof and after exhaustion of insurance coverage as required by Paragraph 3
hereof and receipt of any such insurance
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proceeds, the Indemnifying Party shall pay to the indemnified party within ten
(10) business days, the amount of any Claim for indemnification made hereunder.
Upon the payment in full of any Claim, the indemnifying party shall be
subrogated to the rights of the indemnified party against any Person (including
without limitation any insurer) with respect to the subject matter of such
Claim.
5. Notices. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given upon receipt only if (i) delivered
personally or by courier or (ii) sent by registered or certified mail, postage
prepaid, or (iii) sent by confirmed facsimile with the original to follow by
first class mail, postage prepaid, as follows:
If to the Company, to:
Xxxx Xxxxxxx & Co.
c/o Smithfield Foods, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx, III, President
Facsimile No: (000) 000-0000
With a required copy to:
Xxxxxxx & Xxxx, S.C.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxxx
or Xxxxxx X. Xxxxx
Facsimile No: (000) 000-0000
If to Seller, to:
Xxxxxxxx Brands International, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: General Counsel
Facsimile No: (000) 000-0000
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Xxxxxxx, Xxxxxxxx & Xxxxxxx
1800 Provident Tower
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxxx
Facsimile No: (000) 000-0000
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered, mailed or received by facsimile transmission.
6. Binding Effect. This Agreement shall be binding upon
the parties hereto and their respective heirs, successors, assigns
and legal representatives.
7. Exclusive Benefits. Nothing in this Agreement is intended
to confer any rights or remedies, whether express or implied, under or by reason
of this Agreement, on any persons other than the parties hereto and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement.
8. Applicable Law. This Agreement and the rights and
remedies of the parties hereto shall be governed by and construed
in accordance with the internal laws of Ohio.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day, month and year first above written.
SELLER:
XXXXXXXX BRANDS INTERNATIONAL, INC.
By: _______________________________
Xxxxxx X. Xxxxx, Vice President
THE COMPANY:
XXXX XXXXXXX & CO.
By: _______________________________
(Title)
