Exhibit 2.1
STOCK PURCHASE AGREEMENT
By and Among
UAP HOLDING CORP.,
CONAGRA FOODS, INC.
and
UNITED AGRI PRODUCTS, INC.
Dated as of October 29, 2003
Index of Exhibits
Exhibit 1.1(a) Permitted Encumbrances
Exhibit 1.1(b) Retained Assets
Exhibit 1.1(c) Retention Bonuses
Exhibit 3.3.1 Designation, Preferences, Rights, Powers, Terms and
Conditions of the Shares
Exhibit 4.1.4 Form of Buyer Transition Services Agreement
Exhibit 4.1.6 Form of Seller Transition Services Agreement
Exhibit 4.1.7 Terms of Letter of Credit
Exhibit 4.1.8 Apollo Letter
Exhibit 4.1.9 Preferred Letter
Exhibit 4.2.5 Form of Indemnification Agreement
Exhibit 4.2.7 Form of Fertilizer Supply Agreement
Exhibit 4.2.9 Form of International Supply Agreement
Exhibit 4.2.10 Form of Buyer Release
Exhibit 4.2.11 Form of Seller Release
Exhibit 5.1(b) Form of Auditor's Draft Preliminary Audit Report
Exhibit 8.7.1 Commitment Letters
Exhibit 9.1.1 Conduct of Business Exceptions
Exhibit 9.1.8 UAP Intellectual Property
Exhibit 9.2.2 Terms of Backup Funded Bridge
Exhibit 9.3.1 Exceptions to Termination of Affiliate Agreements
Exhibit 9.3.5 Guarantees
Exhibit 9.3.6 Form of Canadian Operations Assignment and Assumption
Agreement
Exhibit 9.4.3 Corporate Services
Exhibit 14.12(a) Knowledge - Executive Officers of Seller
Exhibit 14.12(b) Knowledge - Executive Officers of the Company
STOCK PURCHASE AGREEMENT, dated as of October 29, 2003, by and among UAP
Holding Corp., a Delaware corporation ("Buyer"), ConAgra Foods, Inc., a
Delaware corporation ("Seller"), and United Agri Products, Inc., a Delaware
corporation (the "Company").
RECITALS:
(a) Seller is the owner, directly or indirectly, of all of the issued and
outstanding capital stock of the Company, United Agri Products Canada,
Inc., a Canadian corporation ("UAP Canada"), and 2326396 Canada, Inc.,
a Canadian corporation ("Access"); and
(b) Seller desires to sell or cause to be sold all of the issued and
outstanding shares of capital stock of the Company (the "Company
Stock"), UAP Canada (the "Canada Stock") and Access (the "Access
Stock" and, together with the Company Stock and the Canada Stock, the
"Stock") to Buyer, and Buyer desires to purchase the Stock from Seller
or its Subsidiaries, for the consideration and upon the terms and
conditions contained in this Agreement.
AGREEMENT:
In consideration of the foregoing recitals and in further consideration of
the mutual covenants and agreements hereinafter contained, the parties hereto
agree, subject to the terms and conditions hereinafter set forth, as follows:
1. Definitions.
1.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following respective meanings:
"Acquired Companies" shall mean the Company, UAP Canada, Access and the
Company Subsidiaries, and "Acquired Company" shall mean any of them.
"Action" shall mean (i) any claim, action, litigation, suit, grievance,
arbitration, proceeding or prosecution, or (ii) any investigation of which
Seller has knowledge of, in either case by or before any Governmental Authority.
"Accrued 2003 Rebate Amount" means the total of all 2003 Rebates as
reflected in the Final Closing Balance Sheet, accrued in an amount equal to 100%
of actual and reasonable estimated 2003 Rebates earned as of Closing.
"Actual 2003 Rebate Amount" means the total amount of all 2003 Rebates
collected by the Acquired Companies from the Closing.
"Affiliate" shall mean, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
Controls, is Controlled by, or is under common Control with, such specified
Person.
"Agreement" shall mean this Agreement.
"Albemarle" shall mean Albemarle Agricultural Chemicals, LLC.
"Ancillary Agreements" shall mean, collectively, the Indemnification
Agreement, the Buyer Transition Services Agreement, the Fertilizer Supply
Agreement, the Buyer Release, the Seller Release, the International Supply
Agreement and the Seller Transition Services Agreement.
"Ancillary Canadian Assets" shall mean the assets owned or leased by UAP
Canada and Access relating to hauling, transportation and trucking services.
"Applicable Accounting Principles" shall mean GAAP as in effect on the date
hereof applied on a basis consistent with the principles, procedures and
methodologies, including, without limitation, auditing procedures, used in the
preparation of the Year-end Statements, provided that, the Liability for
Non-Income Taxes shall be fully accrued as of the Closing Date, and, in the case
of any Straddle Period, shall be accrued by closing the books of the Acquired
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Companies as of and including the Closing Date. In the case of any item of
Non-Income Tax in respect of the Straddle Period that cannot be specifically
allocated based on such closing of the books, such item of Non-Income Tax shall
be prorated and accrued based on the number of days during the portion of the
Straddle Period prior to and including the Closing Date.
"Bonus/Transition Services Amount" shall mean the sum of the Retention
Bonuses plus the Transition Services Fee, not to exceed, collectively, Fifteen
Million Dollars ($15,000,000).
"Business" shall mean the business conducted by the Acquired Companies as
of the date hereof, including the business of manufacturing, repackaging,
distributing and selling fertilizers (including the sale and distribution of
bulk fertilizer at wholesale), crop protection chemicals, seeds and other
agriculture production products as conducted by the Acquired Companies as of the
date hereof, throughout the United States and Canada and all businesses
incidental or related thereto as conducted by the Acquired Companies as of the
date hereof throughout the United States and Canada, and including the Canadian
Business, but excluding, however, the Retained Businesses.
"Canadian Business" shall mean the business conducted in Canada by ConAgra
Limited that shall be transferred to UAP Canada through the Canadian Operations
Assignment and Assumption Agreement, including the business of distributing and
selling fertilizers, crop protection chemicals, seeds and other agricultural
products as conducted in Canada by ConAgra Limited, and all businesses
incidental or related thereto as conducted by ConAgra Limited in Canada,
excluding, however, the Retained Businesses.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company Material Adverse Effect" shall mean any result, occurrence, fact,
change, circumstance or condition or event that has had or can be reasonably
expected to have, a material adverse effect on (a) the business, operations,
financial condition, results of operations or
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capitalization of the Business, taken as a whole, or (b) the ability of Seller
to consummate the transactions contemplated by this Agreement; provided however,
that the following shall not be taken into account in determining whether there
has been a "Company Material Adverse Effect":
(1) any such effects attributable to general conditions affecting the
United States and/or Canadian economy nationally or regionally
(including without limitation, prevailing interest rate and security
market levels);
(2) any such effects attributable to conditions (whether economic, legal,
regulatory, financial, political or otherwise) affecting the industry
or markets in which the Business operates in general which do not
effect the Business materially disproportionally relative to other
similarly situated participants in the industry or markets in which
the Business operates;
(3) any such effects attributable to climactic or weather conditions in
any markets in which the Acquired Companies operate or do business;
(4) any such effects relating to or resulting from, directly or
indirectly, the transactions contemplated by this Agreement or the
announcement or pendency thereof;
(5) fees and expenses, severance and other bonus, benefit or compensation
costs paid or to be paid by Buyer or Seller pursuant to this Agreement
in connection with the transactions contemplated in this Agreement;
(6) any action taken by, or an action of, Seller or the Acquired Companies
with the prior written consent of Buyer; and
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(7) any failure by the Business to meet any internal projections,
expectations or forecasts or published revenue or earnings predictions
for any period ending on or after the date of this Agreement
(collectively, the "Forecasts"), provided that if a Company Material
Adverse Effect is determined to have occurred but for this subpart
(7), and if such Company Material Adverse Effect then results in the
failure by the Business to meet any Forecasts, or if any Forecasts are
not met as a result of the factors causing the Company Material
Adverse Effect, then this subpart (7) shall not, in and of itself,
result in a determination that such Company Material Adverse Effect
has not occurred.
"Company Subsidiaries" shall mean the Subsidiaries of the Company, and
"Company Subsidiary" shall mean any of them. For all purposes of this Agreement,
neither Timberland nor Albemarle shall be deemed to be a Company Subsidiary.
"Confidentiality Agreement" shall mean the Confidentiality Agreement dated
June 6, 2003, between Apollo Management V, L.P. and Seller.
"Control" (including the terms "Controlling", "Controlled by" and "under
common Control with"), with respect to the relationship between or among two or
more Persons, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the affairs or management of a Person, whether
through the ownership of voting securities, by contract or otherwise, including,
without limitation, the ownership, directly or indirectly, of securities having
the power to elect a majority of the board of directors or similar body
governing the affairs of such Person.
"Deloitte" shall mean Deloitte & Touche L.L.P.
"DOJ" shall mean the United States Department of Justice.
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"Encumbrances" shall mean any mortgage, lien, pledge, hypothecation,
security interest, encumbrance, covenant, title defect, title retention
agreement, voting trust agreement or right-of-first refusal.
"Equity Securities" shall mean any capital stock or other equity interest
or any securities convertible into or exchangeable for capital stock or any
other rights, warrants or options to acquire any of the foregoing securities.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is or was a member of a group of which Seller is or was a
member and which is or was under common control or treated as a single employer
with Seller within the meaning of Section 414 (b), (c), (m) or (o) of the Code.
"Estimated Rebate Amount" shall mean the amount equal to the difference
between Estimated Net Book Value and the sum of the Closing Cash Payment plus
the Preferred Consideration, provided that in no event shall the Estimated
Rebate Amount be less than zero.
"FTC" shall mean the United States Federal Trade Commission.
"Fundamental Documents" shall mean the documents by which any Person (other
than an individual) establishes its legal existence or which govern its internal
affairs. For example, the "Fundamental Documents" of a corporation are its
certificate of incorporation and by-laws.
"GAAP" shall mean United States generally accepted accounting principles,
as in effect from time to time.
"Greenville Litigation" shall mean, collectively, the lawsuits currently
pending in the Circuit Court of Washington County, Mississippi, captioned Xxxxxx
Xxxxx Xxxxxx, et al. x. Xxxxxx Chemical Company, et al., at Case No. CI2002-373;
Xxxx Xxxxxxx, et al. x. Xxxxxx Chemical
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Company, et al., at Case No. CI2002-473; and Xxxx Xxxxxxx, et al. x. Xxxxxx
Chemical Company, et al., at Case No. CI2002-533, and any appeals in connection
therewith.
"Greenville Reserves" shall mean any reserves relating to the Greenville
Litigation or the remediation of Hazardous Materials at the Greenville Site, as
included in the Final Closing Balance Sheet.
"Governmental Authority" shall mean any federal, provincial, municipal,
state, local or foreign government, any governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Income Taxes" shall mean all federal, state, provincial, municipal, local,
foreign and other governmental Taxes imposed on or measured by gross or net
income and any franchise taxes that are economically equivalent to gross or net
income taxes; provided, that such term shall not mean any gross receipts,
transfer, sales, use, goods and services, excise, duties, fees or similar Taxes
or assessments.
"Indemnified Party" shall mean a party entitled to indemnification
hereunder. "Indemnifying Party" shall mean a party obligated to provide
indemnification hereunder.
"Law" shall mean any federal, state, provincial, municipal, local or
foreign statute, law, ordinance, regulation, rule, executive order, code,
governmental restriction or other requirement of law of any judicial or
administrative interpretation thereof existing at any time during the period
from and after the date hereof until the Closing Date which is effective as of
the date hereof.
"Xxxx 35" shall mean the 1983 Gates Learjet Corp 35A, serial number 508,
registration number N881CA, currently leased by Seller.
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"Liabilities" shall mean any and all debts, liabilities and obligations,
whether known or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated and whether due or to become
due, regardless of when asserted.
"Lowest Cost Response" means any compliance activity or any investigation,
cleanup, remediation, removal action or response activity that (1) complies with
all applicable Environmental Laws; (2) is acceptable to Governmental Authorities
to the extent approval is required; (3) is consistent with and would not violate
any currently existing agreement binding on any Acquired Company; (4) is
consistent with and does not unreasonably interfere with the operation of the
facility in a manner substantially similar to business and operations being
conducted at such facility at the time of Closing; and (5) can be achieved for
the lowest financial cost as compared with other potential response activities.
"Net Book Value" shall mean the consolidated stockholders equity of the
Acquired Companies as of the Effective Time as reflected on the Estimated
Closing Balance Sheet, Preliminary Closing Balance Sheet, Preliminary Audited
Closing Balance Sheet and Final Closing Balance Sheet, as applicable, as
adjusted as necessary to:
(1) eliminate the effect of recorded Income Tax assets and Liabilities
(current and deferred);
(2) provide that no accrual, reserve, provision or Liability be reflected
with respect to:
(a) the Bonus/Transition Services Amount;
(b) the costs and expenses related to the transactions contemplated
by this Agreement, including without limitation, Buyer's
reimbursed transaction expenses;
(c) the costs of the Funded Bridge;
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(d) the Retained Litigation;
(e) the Retained Businesses and the Retained Assets;
(f) any Liability arising from any Affiliate Agreement (other than
(i) accounts payable arising from pre-Closing sales of Products
(as defined in the Fertilizer Supply Agreement) by Seller or its
Affiliate (other than the Acquired Companies) to an Acquired
Company (it being understood that the closing balance sheets will
reflect the 60 day payment term for such accounts payable for
pre-Closing sales of Products), and (ii) any unpaid Liabilities
associated with the arrangements between the Acquired Companies
and Seller's Peavey business); and
(g) any Liabilities retained by, or the responsibility of, Seller or
its Affiliates (other than the Acquired Companies);
(3) provide that working capital shall reflect accrued Rebates equal to
100% of actual and reasonable estimated Rebates earned as of the
Closing Date;
(4) settle and treat as equity adjustments all intercompany investments
and accounts of the Acquired Companies other than Liabilities of the
Acquired Companies to Seller or its Affiliates (other than the
Acquired Companies) in respect of Products (as defined in the
Fertilizer Supply Agreement); and
(5) provide that no assets be reflected with respect to:
(a) the Retained Litigation;
(b) the Retained Businesses and the Retained Assets;
(c) any asset arising from any Affiliate Agreement (other than any
assets associated with the arrangements between the Acquired
Companies and the Seller's Peavey business);
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(d) cash retained by Seller; and
(e) prepaid insurance premiums to the extent the insurance policies
with respect thereto will not continue in place for occurrences
after the Effective Time.
"Non-Income Taxes" shall mean any Taxes other than Income Taxes.
"Permitted Encumbrances" shall mean the Encumbrances listed on Exhibit
1.1(a) hereto.
"Person" shall mean any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization, other entity
or Governmental Authority.
"Rebates" means all right, title and interest of the Acquired Companies in
and to the receipt or payment of any and all rebates, incentives, loyalty or
other bonuses, freight or other similar refunds, rebillings, performance or
award payments, marketing payments, warehousing and interest payments, program
payments, products furnished on a discounted or "no-charge" basis, and all other
such payments or forms of compensation, and the proceeds thereof, that are now
or may hereafter be payable by vendors to any of the Acquired Companies as a
result of product sales (whether wholesale, retail or otherwise), service or
other such performance criteria sold or performed prior to Closing.
"Retained Assets" shall mean the assets and rights described on Exhibit
1.1(b) hereto.
"Retained Businesses" shall mean (i) the bulk wholesale fertilizer
business, including the international fertilizer business and the import and
export of fertilizer products, as conducted by Seller or its Affiliates (other
than the Acquired Companies) wherever such business may be conducted, (ii) the
commodity grain business as conducted by Seller or its Affiliates, other than
the seed products business as conducted by the Acquired Companies prior to the
Closing Date in the United States or Canada, (iii) all businesses and operations
conducted outside of the United
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States and Canada, and (iv) the imagery technology business, each as conducted
by Seller, the Company, UAP Canada, Access and/or any Affiliates thereof on or
before the Closing Date.
"Retained Site" shall mean the facility and real property owned and
operated by Xxxx & Xxxxx, Inc., located at 000 Xxxx 0xx Xxxxxx, Xxxxxxx, XX.
"Retention Bonuses" shall mean all of the obligations set forth or
described on Exhibit 1.1(c) hereto, including, without limitation, obligations
with respect to transaction completion payments, the buy-out value of stock
options, the buy-out value of restricted stock, FY03 long term senior management
incentive awards and supplemental performance bonuses, each as set forth in the
agreements and schedules attached hereto as Exhibit 1.1(c), but excluding the
Salary Protection Obligations.
"Salary Protection Obligations" shall mean obligations with respect to the
payment of base salary and annual incentives as set forth or described in the
agreements and schedules attached hereto as Exhibit 1.1(c).
"Site" shall mean any of the real properties currently or previously owned,
leased or operated by: (i) any Acquired Company; (ii) any predecessors of any
Acquired Company; (iii) any entities previously owned by any Acquired Company;
or (iv) any Subsidiary of Seller (other than the Acquired Companies) to the
extent such real property relates to the Canadian Business, in each case,
including all soil, subsoil, sediment surface waters and groundwater thereat or
thereunder.
"Subsidiary" shall mean, with respect to any Person, another Person owned
directly or indirectly by such Person by reason of such Person owning or
Controlling an amount of the voting securities, other voting ownership or voting
partnership interests of another Person which is sufficient to elect at least a
majority of its Board of Directors or other governing body of
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another Person or, if there are no such voting interests, at least a majority of
the equity interests of another Person.
"Tax" or "Taxes" shall mean any (i) federal, state, provincial, municipal,
local or foreign tax, charge, levy, fees, duties or other like assessment,
including income, capital, gross receipts, windfall profits, value added, ad
valorem, profits, goods and services, stamp, transfer, gains, occupational,
severance, property, land transfer, payroll, sales, use, license, excise,
franchise, employment, withholding or similar taxes, workers compensation
levies, customs excise duties, social security and unemployment insurance
charges and retirement contributions imposed by any Governmental Authority,
together with applicable interest, penalties and additions to tax and (ii) any
liability for the foregoing amounts of another Person by agreement or as
consequence of being a member of a combined, consolidated, affiliated, unitary
or similar Tax group, including within the meaning of Treas. Reg. Section
1.1504-6, or similar provision of state, provincial, municipal, local or foreign
Law or by being a transferee.
"Tax Return" shall mean any report, return, statement, election,
designation or other information required, or permitted, by Law to be filed or
supplied to a Governmental Authority (or otherwise so filed or supplied) in
connection with any Taxes and all claims for refunds of Taxes.
"Transition Services Fee" shall have the meaning given such term in the
Buyer Transition Services Agreement.
"2003 Rebates" shall mean all Rebates in respect of crop year 2003, and any
prior crop year, as such crop year was determined by the applicable
manufacturer, earned as of the Closing Date.
"United States" shall mean the United States of America.
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1.2 Other Defined Terms. The following terms shall have the meanings
given to such terms in the Sections indicated below.
Term Section
---- ------------
Access.......................................................... Recital
Access Stock.................................................... Recital
Affiliate Agreement............................................. 7.16
ALAE............................................................ 9.4.2
Audit........................................................... 5.1(b)
Audit Fees...................................................... 5.1(b)
Apollo Agreement................................................ 4.1.8
Backup Funded Bridge............................................ 9.2.2
Bridge Commitment Letter........................................ 8.7.1
Bridge Lender................................................... 8.7.1
Business Confidential Information............................... 14.19.1
Buyer........................................................... Caption
Buyer 401(k) Plan............................................... 6.3
Buyer Disclosure Schedule....................................... 8
Buyer Release................................................... 4.2.10
Buyer Transition Services Agreement............................. 4.1.4
Buyer's 125 Plan................................................ 6.6
Buyout Date Restriction ........................................ 9.11
Canada Stock.................................................... Recital
Canadian Consideration.......................................... 3.5
Canadian Employee Plans ........................................ 7.28
Canadian Operations Assignment and Assumption Agreement......... 9.3.6
Claim Notice.................................................... 12.3
Closing......................................................... 4
Closing Cash Payment............................................ 3.3.2
Closing Date.................................................... 4
COBRA Coverage.................................................. 6.1(c)
Commitment Letters.............................................. 8.7.1
Company......................................................... Caption
Company Employees............................................... 6.1(a)
Company Litigation.............................................. 9.9.1
Company Material Contracts...................................... 7.15
Company Permits................................................. 7.14.1
Company Stock................................................... Recital
Competing Business.............................................. 9.1.5
Competing Operation............................................. 9.2.4
Corporate Services.............................................. 9.4.3
Covered Claim................................................... 9.4.2(a)
Covered Loss.................................................... 9.4.2(a)
Effective Time.................................................. 4
Employee Plan................................................... 7.18
Environmental Claims............................................ 7.19(h)(i)
Environmental Laws.............................................. 7.19(h)(ii)
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Term Section
---- ------------
Environmental Permits........................................... 7.19(a)
Equity Commitment Letter........................................ 8.7.2
Estimated Closing Balance Sheet................................. 3.2
Estimated Net Book Value........................................ 3.2
Fertilizer Supply Agreement..................................... 4.2.7
Final Closing Balance Sheet..................................... 5.1(d)
Final Net Book Value Calculation................................ 5.1(d)
Final Net Book Value............................................ 5.2
Financial Statements............................................ 7.9.1
Financiers...................................................... 14.8
Financing....................................................... 8.7.1
Greenville Environmental Matters ............................... 9.13.1
Greenville Site ................................................ 9.13.1
Guarantees...................................................... 9.3.5
Hazardous Materials............................................. 7.19(h)(iii)
Indemnification Agreement....................................... 4.2.5
Indemnity Basket................................................ 12.5.1
Indemnity Cap................................................... 12.5.2
Insurance Policies.............................................. 9.4.2(a)
Intellectual Property Rights.................................... 7.12.5
Interim Financials.............................................. 7.9.1
Interim Period Rebate Payment................................... 3.3.3
International Supply Agreement.................................. 4.2.9
IRD Condition................................................... 10.4
IRS............................................................. 7.18.4
Xxxx Purchase Option............................................ 9.11
Lenders......................................................... 8.7.1
LTD Recipient................................................... 6.1(d)
Monthly Reports................................................. 9.1.4
Notice Period................................................... 12.3
Option.......................................................... 9.11
OSHA Laws....................................................... 7.26
Owned Real Property............................................. 7.22
Pre-Existing Environmental Matters.............................. 12.1.5
Preferred Consideration......................................... 3.3.1
Preferred Percentage............................................ 12.5.8
Preliminary Audited Closing Balance Sheet....................... 5.1(b)
Preliminary Closing Balance Sheet............................... 5.1(a)
Preferred Agreement............................................. 4.1.9
Pro Forma Net Book Value........................................ 7.9.1
Prohibited Term................................................. 9.1.5
Proposed Final Allocation....................................... 13.3.2
Purchase Price.................................................. 3.1
RCRA............................................................ 7.19(h)(ii)
Records......................................................... 9.5
Reimbursement Accounts.......................................... 6.6
Release......................................................... 7.19(h)(iv)
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Term Section
---- ------------
Report.......................................................... 5.1(b)
Retained Business Confidential Information...................... 14.19.3
Retained Intellectual Property.................................. 9.4.1
Retained Litigation............................................. 9.9.2
Retained Records................................................ 9.5
Retention Agreement............................................. 10.4
Rights.......................................................... 9.3.4
Section 338(h)(10) Joint Election............................... 13.3.1
Seller.......................................................... Caption
Seller 401(k) Plans............................................. 6.3
Seller Deductible............................................... 9.4.2
Seller Disclosure Schedule...................................... 7
Seller LTD Plan................................................. 6.1(d)
Seller Parties.................................................. 14.16
Seller Pension Plans............................................ 6.2
Seller Release.................................................. 4.2.11
Seller Transition Services Agreement............................ 4.1.6
Seller's 125 Plan............................................... 6.6
Senior Bank Commitment Letter................................... 8.7.1
Senior Credit Lender............................................ 8.7.1
Shares.......................................................... 3.3.1
Stock........................................................... Recital
Straddle Period................................................. 13.3.4
Subsidiary Securities........................................... 7.8.2
Termination Date................................................ 11.1(b)
Third Party Insurer............................................. 9.4.2
Timberland...................................................... 7.27.1
Timberland Interest............................................. 7.27.3
Total Deductible................................................ 9.4.2
Transfer Taxes.................................................. 13.1
UAP Canada...................................................... Recital
UAP Deductible.................................................. 9.4.2
UAP Intellectual Property....................................... 9.1.8
UAP Plan........................................................ 7.28
ULAE............................................................ 9.4.2
Year-end Statements............................................. 7.9.1
2. Purchase and Sale of Stock. Subject to the terms and conditions set
forth in this Agreement, at Closing, Seller shall sell, transfer, assign, convey
and deliver, or shall cause to be sold, transferred, assigned, conveyed and
delivered, to Buyer, and Buyer shall purchase, accept and acquire from Seller or
its Subsidiaries, all of the outstanding shares of the Stock, free and
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clear of all Encumbrances. Notwithstanding anything to the contrary set forth in
this Agreement, upon the written request of Buyer delivered at least ten
business days prior to the Closing Date, Buyer will be entitled to organize a
newly incorporated Delaware subsidiary ("Newco") and assign to Newco its rights
to acquire the Company Stock. In such case, at the Closing, the transactions
contemplated by this Agreement will be consummated by Buyer acquiring the Access
Stock and the Canada Stock and having Newco merge (the "Merger") with and into
the Company. As a result of such Merger, all of the Company Stock will be
converted into the right to receive the consideration set forth in Section 3.3
(other than the Canadian Consideration). Nothing contained in this Section 2
will relieve Buyer of its obligations under this Agreement except to the extent
that Newco has satisfied such obligations. The parties will cooperate to prepare
and execute all such documents as are necessary to consummate the Merger, it
being understood that Buyer will pay for all incremental costs and expenses,
other than in respect of Taxes (other than Transfer Taxes which are addressed in
Section 13.1 below), incurred after the date hereof and on or prior to the
Closing Date in consummating the transactions pursuant to the Merger as compared
to consummating the transactions without the Merger.
3. Consideration.
3.1 Purchase Price. The purchase price payable by Buyer for the Stock
(the "Purchase Price") shall be an amount equal to Final Net Book Value.
The Purchase Price shall be paid by delivery by Buyer to Seller of (i) the
Shares, and (ii) cash in an amount equal to the difference between Final
Net Book Value and the Preferred Consideration (the "Cash Consideration"),
in accordance with Section 3.3 hereof.
3.2 Estimated Closing Balance Sheet. On or prior to the fourth (4th)
business day prior to the Closing Date, Seller shall prepare in
consultation with Buyer and deliver an estimated combined consolidated
balance sheet for the Business (the "Estimated
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Closing Balance Sheet"), together with an estimate of the calculation of
Net Book Value (the "Estimated Net Book Value"), which shall be prepared
pursuant to the provisions of Section 5.1(a) using the amounts reflected on
the Estimated Closing Balance Sheet, both of which shall be estimated as of
the Closing Date.
3.3 Payment of the Purchase Price. The Purchase Price shall be paid as
follows:
3.3.1 Preferred Consideration. An amount, not to exceed Seventy-Five
Million Dollars ($75,000,000), equal to fifty percent (50%) of
the sum of (i) the equity contributed to Buyer pursuant to the
Equity Commitment Letter, plus (ii) the equity issued by Buyer
pursuant to Section 6.1(b), provided that such amount shall not
exceed Six Million Dollars ($6,000,000) for purposes of this
calculation (collectively, the "Preferred Consideration"), shall
be paid by Buyer issuing and delivering to Seller at Closing
shares of Buyer's Series A redeemable preferred stock, $.001 par
value per share, having an initial liquidation preference equal
to the Preferred Consideration (the "Shares"). The designation,
preferences, rights, powers, terms and conditions of the Shares
shall be as set forth on Exhibit 3.3.1 hereto.
3.3.2 Closing Cash Payment. At Closing, Buyer shall pay to Seller, or
to ConAgra Limited and ConAgra Foods Refrigerated Foods Co., Inc.
as provided in Section 3.5, in cash an amount equal to Five
Hundred Seventy-Five Million Dollars ($575,000,000) less the sum
of (i) Bonus/Transition Services Amount, plus (ii) the Preferred
Consideration (the "Closing Cash Payment"). In the event the
Estimated Net Book Value is less than the sum of the Closing Cash
Payment plus the Preferred
17
Consideration, the Closing Cash Payment shall be reduced on a
dollar-for-dollar basis by the amount of such shortfall.
3.3.3 Rebate Collection Payment. During the period from the Closing
Date to the Settlement Date, Buyer and/or the Acquired Companies
shall, each Monday, pay to Seller 50% of all Rebates collected
during the immediately preceding week, all such payments not to
exceed the Estimated Rebate Amount (the aggregate amount so paid
to Seller under this Section 3.3.3 shall be referred to herein as
the "Interim Period Rebate Payment").
3.3.4 Settlement Date Cash Payment. The balance of the Cash
Consideration, if any, shall be paid on the Settlement Date in
accordance with Section 5.2 hereof.
3.4 Form of Payment. All cash payments required to be made pursuant to
this Agreement shall be made free and clear of all liens, claims and
encumbrances and shall be made by wire transfer of immediately available
funds to the accounts designated by the receiving party.
3.5 Canada Payment. The portion of the Purchase Price allocated to UAP
Canada shall be paid in cash and shall be paid to ConAgra Limited and the
portion of the Purchase Price allocated to Access pursuant to Section
13.3.2 hereof shall be paid in cash and shall be paid to ConAgra Foods
Refrigerated Foods Co., Inc. (collectively, the "Canadian Consideration").
3.6 Rebates.
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(a) Buyer will cause the Acquired Companies to use their
commercially reasonable efforts to collect all Rebates in
the ordinary course of business consistent with past
practice.
(b) If, as of April 30, 2004, the Actual 2003 Rebate Amount
exceeds the Accrued 2003 Rebate Amount, then Buyer shall pay
or cause to be paid to Seller an amount equal to 100% of
such excess. If, as of such date, the Accrued 2003 Rebate
Amount exceeds the Actual 2003 Rebate Amount, then Seller
shall pay to Buyer an amount equal to 100% of such excess.
(c) After April 30, 2004, Buyer shall promptly forward to Seller
the amount of all 2003 Rebates that may thereafter be
received by any of the Acquired Companies.
(d) All payments made pursuant to this Section 3.6 will be made
in immediately available funds.
(e) The Acquired Companies shall promptly forward to Seller any
Rebates received in respect to the operations of the
Retained Businesses. Seller shall promptly forward to the
Company any rebates received by Seller for which Seller has
no right to receipt hereunder.
(f) Buyer shall not allow any of the Acquired Companies to
amend, modify, or otherwise permit or agree to any change
from the terms or conditions of, or waive or defer its
rights under, or sell, transfer or assign (other than for
security purposes) any interest in, any Rebate or the
collection or payment thereof other than amendments,
modifications, supplements or other arrangements which are
not adverse to Seller.
19
(g) Buyer will, and will cause each of the Acquired Companies
to, upon reasonable prior notice and during regular business
hours, permit Seller or its agents and representatives full
access to the offices and properties, books and records and
employees of the Acquired Companies for the purpose of (i)
examining, copying and auditing the books, records and other
such documents relating to the Rebates and the collection
thereof, and (ii) to discuss matters relating to the Rebates
and the collection thereof with any of their respective
officers or employees having knowledge of such matters. From
the Closing Date until April 30, 2004, Seller shall have the
right to have a Seller representative attend meetings or
participate in other communications between vendors and
Buyer or the Company arranged to discuss any rebates to the
extent such meetings or communications that relate to any
matter that may materially adversely affect Seller's rights
and interests with or respect to the Rebates, and Buyer
shall give Seller reasonable advance notice of any such
meetings or communications. In addition, the Acquired
Companies shall, upon the reasonable request of Seller to
Buyer specifying the information relating to the Rebates
that Seller desires, instruct vendors to share with Seller
information and documentation relating to the Rebates and
the payment thereof; provided, however, that the Acquired
Companies shall be entitled to participate in any such
discussions between such vendors and Seller. Buyer shall be
afforded reasonable time to attempt to satisfy Seller's
information request directly.
20
(h) The Company shall submit to Seller, on a weekly basis, a
report which sets forth the amount of Rebates paid to date,
and the amount of all Rebates outstanding, on a per-vendor
basis. In addition, the Company shall forward to Seller all
reports from vendors which relate to the Rebates, as well as
any notices of default or nonperformance relating to any
contracts from which the Rebates arise.
4. Closing. Subject to the terms and conditions contained in this
Agreement, the closing of the transactions contemplated hereby (the "Closing")
will occur at the offices of O'Melveny & Xxxxx LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, on the second business day after the conditions set forth
in Section 10 (other than those conditions that by their nature are to be
fulfilled only at Closing, but subject to the fulfillment of all such conditions
at the time of Closing) have been satisfied, or at such other place or on such
other date as the parties hereto may mutually agree (the "Closing Date").
Closing shall be effective as of 11:59 p.m. central time on the business day
immediately preceding the Closing Date (the "Effective Time").
4.1 Buyer's Obligations at Closing. At the Closing, Buyer shall:
4.1.1 Closing Cash Payment. Deliver or cause to be delivered to Seller
the Closing Cash Payment in accordance with Section 3 hereof.
4.1.2 Shares. Deliver to Seller the stock certificate representing the
Shares.
4.1.3 Certificates. Deliver to Seller the certificates contemplated in
Section 10.3.
4.1.4 Buyer Transition Services Agreement. Execute and deliver to
Seller a transition services agreement in substantially the form
attached hereto as
21
Exhibit 4.1.4, together with such changes as may be agreed by the
parties (the "Buyer Transition Services Agreement").
4.1.5 Legal Opinion. Cause to be delivered to Seller the legal opinion
of O'Melveny & Xxxxx LLP in a form mutually agreeable.
4.1.6 Seller Transition Services Agreement. Execute and deliver to
Seller a transition services agreement in substantially the form
attached hereto as Exhibit 4.1.6, together with such changes as
may be agreed by the parties (the "Seller Transition Services
Agreement").
4.1.7 Equipment Lease Credit Support. Deliver to Seller an irrevocable
standby letter of credit from a financial institution reasonably
acceptable to Seller in a form reasonably acceptable to Seller
and containing the substantive provisions set forth on Exhibit
4.1.7 hereto.
4.1.8 Apollo Agreement. Cause Apollo Management V, L.P. to execute and
deliver to Seller the letter agreement in the form attached
hereto as Exhibit 4.1.8 (the "Apollo Letter").
4.1.9 Preferred Agreement. Execute and deliver to Seller the letter
agreement in the form attached hereto as Exhibit 4.1.9 (the
"Preferred Letter").
4.1.10 Other Documents. Deliver to Seller copies of all fully executed
documents required to be obtained at Closing in satisfaction of
the closing condition set forth in Section 10.3(b) of this
Agreement (that are not otherwise provided to be delivered to
Seller pursuant to this Section 4.1) and such other customary
documents, instruments or certificates as may be reasonably
requested by Seller and as shall be consistent with the terms of
this Agreement, in form and substance reasonably acceptable to
Seller.
22
4.2 Seller's Obligations at Closing. At the Closing, Seller shall:
4.2.1 Stock Certificates. Deliver or cause to be delivered to Buyer
stock certificates representing all of the Stock, copies of stock
registers or other documents reasonably acceptable to Buyer
evidencing ownership of the Stock in accordance with applicable
Law, which certificates or other documents, if applicable, shall
be either duly endorsed in blank or accompanied by stock powers
or other instruments of transfer duly executed and in proper form
for transfer to Buyer under applicable Law.
4.2.2 Legal Opinion. Cause to be delivered to Buyer the legal opinion
of XxXxxxx North Xxxxxx & Xxxxx, PC LLO in a form mutually
agreeable.
4.2.3 Certificates. Deliver to Buyer the certificates contemplated in
Section 10.2.
4.2.4 Resignations. Deliver to Buyer, to the extent requested by
Buyer, written resignations of the officers and directors of the
Acquired Companies, pursuant to which such individuals will
relinquish their respective titles. Such resignations will not
affect ongoing employment with the Acquired Companies.
4.2.5 Indemnification Agreement. Execute and deliver to Buyer, and
cause the Acquired Companies to execute and deliver to Seller
(with a copy to Buyer), the agreement, in substantially the form
attached hereto as Exhibit 4.2.5, together with such changes as
may be agreed by the parties, pursuant to which the Acquired
Companies agree to be bound, jointly and severally, by each of
the indemnification obligations of Buyer set forth in this
Agreement and the Acquired Companies agree to be bound by the
23
covenants set forth in Sections 9.2.1, 9.2.3, 9.2.4 and 9.2.5
(the "Indemnification Agreement").
4.2.6 Buyer Transition Services Agreement. Execute and deliver to the
Company, and cause the Acquired Companies to execute and deliver
to Seller (with a copy to Buyer), the Buyer Transition Services
Agreement.
4.2.7 Fertilizer Supply Agreement. Execute and deliver to the Company,
and cause the Company and UAP Canada to execute and deliver to
Seller (with a copy to Buyer), a fertilizer supply agreement in
substantially the form attached hereto as Exhibit 4.2.7, together
with such changes as may be agreed by the parties (the
"Fertilizer Supply Agreement").
4.2.8 Seller Transition Services Agreement. Execute and deliver to the
Company, and cause the Acquired Companies to execute and deliver
to Seller (with a copy to Buyer), the Seller Transition Services
Agreement.
4.2.9 International Supply Agreement. Execute and deliver to the
Company and cause the Company to execute and deliver to Seller
(with a copy to Buyer), an international supply agreement in
substantially the form attached hereto as Exhibit 4.2.9, together
with such changes as may be agreed by the parties (the
"International Supply Agreement").
4.2.10 Buyer Release. Cause each of the Acquired Companies to execute
and deliver to Seller, with a copy to Buyer, a release in
substantially the form attached hereto as Exhibit 4.2.10,
together with such changes as may be agreed by the parties (the
"Buyer Release").
4.2.11 Seller Release. Execute and deliver, and cause its Subsidiaries
that have had any business dealings with the Acquired Companies
to execute and
24
deliver, to Buyer a release substantially in the form attached
hereto as Exhibit 4.2.11, together with such changes as may be
agreed by the parties (the "Seller Release").
4.2.12 Other Documents. Deliver to Buyer copies of all fully executed
documents required to be obtained at Closing in satisfaction of
the closing condition set forth in Section 10.2(b) of this
Agreement (that are not otherwise provided to be delivered to
Buyer pursuant to this Section 4.2) and such other customary
documents, instruments or certificates as may be reasonably
requested by Buyer and as shall be consistent with the terms of
this Agreement, in form and substance reasonably acceptable to
Buyer.
4.2.13 Apollo Agreement. Execute and deliver to Apollo Management V,
L.P. the Apollo Letter.
4.2.14 Canadian Certificate. Deliver to Buyer a certificate issued
pursuant to section 116 of the Income Tax Act (Canada) in respect
of the sale of the Access Stock to Buyer, provided that:
(a) if a certificate issued by the Minister of National Revenue
pursuant to subsection 116(2) of such Act in respect of the
disposition of the Access Stock to Buyer, specifying a
certificate limit in an amount which is not less than the
portion of the Purchase Price allocable to the Access Stock,
is not delivered to Buyer at or before the Closing, Buyer
shall be entitled to withhold from the portion of the
Purchase Price payable to ConAgra Foods Refrigerated Foods
Co., Inc. at the Closing the amount that it may be required
to remit pursuant to subsection 116(5) of such Act in
connection with such purchase,
25
(b) if, prior to the 28th day after the end of the month in
which the Closing occurs (or such later time if the Canada
Customs and Revenue Agency confirms in writing that Buyer
may continue to hold the amount withheld pursuant to Section
(a) hereof), Seller delivers to Buyer:
(i) a certificate issued by the Minister of National
Revenue under Section 116(2) of such Act in respect of
the disposition of the Access Stock to Buyer, Buyer
shall promptly pay to Seller the lesser of (i) the
amount withheld pursuant to Section (a) hereof and (ii)
the amount withheld pursuant to Section (a) hereof less
the amount, if any, by which the portion of the
Purchase Price allocable to the Access Stock exceeds
the amount specified in such certificate as the
certificate limit, multiplied by the percentage
specified in subsection 116(5) of such Act, together
with any interest earned on the amount so withheld to
the date of such payment (less any applicable
withholding Tax), or
(ii) a certificate issued by the Minister of National
Revenue under Section 116(4) of such Act in respect of
the disposition of the Access Stock to Buyer, Buyer
shall promptly pay the amount withheld pursuant to
Section (a) hereof to Seller, together with any
interest earned thereon (less any applicable
withholding Tax), and
26
(c) if Buyer has withheld an amount pursuant to Section (a)
hereof and Seller does not deliver to the Buyer, prior to
the 28th day after the end of the month in which the Closing
occurs (or such later time if the Canada Customs and Revenue
Agency confirms in writing that Buyer may continue to hold
the amount withheld pursuant to Section (a) hereof),:
(i) a certificate issued by the Minister of National
Revenue under Section 116(2) of such Act in respect of
the disposition of the Access Stock to Buyer specifying
a certificate limit equal or greater than the portion
of the Purchase Price allocable to the Access Stock, or
(ii) a certificate issued by the Minister of National
Revenue under Section 116(4) of such Act in respect of
the disposition of the Access Stock to Buyer,
Buyer shall remit to the Receiver General of Canada the amount
required to be remitted pursuant to subsection 116(5) of such Act (and
the amount so remitted shall be credited to the Buyer as a payment to
ConAgra Foods Refrigerated Foods Co., Inc. on account of the Purchase
Price) and Buyer shall pay to ConAgra Foods Refrigerated Foods Co.,
Inc. any remaining portion of the amount withheld pursuant to Section
(a) hereof, together with interest earned on the amount withheld
pursuant to Section (a) hereof, prior to such remittance (less any
applicable withholding Tax).
4.2.15 Preferred Agreement. Execute and deliver to Buyer the Preferred
Letter.
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5. Post-Closing Settlement.
5.1 Closing Balance Sheet.
(a) As soon as reasonably practicable following the Closing
Date, but in no event more than sixty (60) days after
Closing, Seller shall prepare a combined, consolidated
balance sheet of the Acquired Companies as of the Effective
Time in accordance with the Applicable Accounting Principles
(the "Preliminary Closing Balance Sheet"). Within such sixty
(60) day period Seller shall submit the Preliminary Closing
Balance Sheet to Buyer, together with a preliminary
calculation of Net Book Value.
(b) Promptly following execution of this Agreement, Seller and
Buyer shall jointly engage Deloitte to (i) audit the
Preliminary Closing Balance Sheet in accordance with the
Applicable Accounting Principles (the "Audit"), and (ii)
upon completion of the Audit, deliver to Seller and Buyer
its draft preliminary audit report in the form attached
hereto as Exhibit 5.1(b) (the "Report") together with the
accompanying draft audited balance sheet of the Acquired
Companies (the "Preliminary Audited Closing Balance Sheet"),
and a calculation of Net Book Value. The parties hereto
shall use commercially reasonable efforts to cause Deloitte
to complete the Audit, the Report and the Preliminary
Audited Closing Balance Sheet within 45 days after
Deloitte's receipt of the Preliminary Closing Balance Sheet.
Buyer and Seller acknowledge and agree that Deloitte shall
not issue its final audit report until all objections to the
calculations set forth therein have been resolved in
accordance with Section 5.1(d) and such resolution is
incorporated into the Preliminary Audited Closing Balance
Sheet and
28
Deloitte's calculation of Net Book Value. Buyer and Seller
shall share equally all of the fees and expenses of Deloitte
(the "Audit Fees") in connection with the Audit and the
Report.
(c) After the Closing, Buyer shall provide, and shall cause the
Acquired Companies to provide, to Seller and Deloitte, and
Seller shall provide to Buyer and Deloitte, such assistance
and access during normal business hours to employees, books,
records, work papers, information and other supporting
documentation as is reasonably necessary to timely prepare
the Preliminary Closing Balance Sheet, calculate Net Book
Value, conduct the Audit and prepare, issue and deliver the
Report and the Preliminary Audited Closing Balance Sheet.
Buyer and Seller shall have the right to be present to
observe the taking of any physical inventory in connection
with Deloitte's preparation of the Preliminary Audited
Closing Balance Sheet and may review and examine the
policies, procedures, methodologies, books, records and work
papers used in their preparation. To assist in the
preparation of the closing balance sheets, Seller shall have
the right to maintain, without charge, a designated employee
or other representative at the Company's Greeley, Colorado
headquarters, and Buyer shall provide reasonable office
space and assistance to such designee, until delivery of the
Final Closing Balance Sheet. Seller, Buyer and the Acquired
Companies shall preserve, and shall direct Deloitte to
preserve, all information, books, records, work papers and
supporting documents and other materials used in such
preparation in accordance with Section 9.5 hereof.
29
(d) Unless, at any time on or prior to the thirtieth (30th)
calendar day after delivery of the Preliminary Audited
Closing Balance Sheet and calculation of Net Book Value,
either (i) Seller notifies Buyer in writing that Seller
objects to items or calculations contained in the
Preliminary Audited Closing Balance Sheet and/or the
calculation of Net Book Value, or (ii) Buyer notifies Seller
in writing that Buyer objects to items or calculations
contained in the Preliminary Audited Closing Balance Sheet
and/or the calculation of Net Book Value, in each case,
specifying in detail each objection and the basis for each
objection, the Preliminary Audited Closing Balance Sheet
shall be issued in final form by Deloitte and such
Preliminary Audited Closing Balance Sheet and calculation of
Net Book Value shall be final and binding upon the parties
absent fraud or manifest error. Neither Seller nor Buyer
shall have the right to dispute the principles, procedures
and methodologies used in the preparation of the Preliminary
Audited Closing Balance Sheet or the calculation of Net Book
Value so long as the principles, procedures and
methodologies used are the Applicable Accounting Principles.
If Buyer and Seller are unable to mutually resolve the
disputed items within thirty (30) calendar days after any
such notification has been given (or within such extended
time period as is mutually agreed to in writing by the
parties), the unresolved disputed items shall be referred
for a final determination to a mutually acceptable
independent accountant of national standing. Such
determination shall be final and binding upon the parties,
absent fraud or manifest error. Such accountant shall be
jointly retained by Buyer and Seller on a mutually
30
acceptable basis and Buyer and Seller shall share equally
the fees and expenses of such accountant. Promptly following
the date that Seller and Buyer reach agreement upon the
disputed items pursuant to this Section 5.1(d), or, if
applicable, the date of the final determination of such
accountant of the disputed items pursuant to this Section
5.1(d), the parties shall direct Deloitte to incorporate
such resolution into the Preliminary Audited Closing Balance
Sheet and shall direct Deloitte to issue its final audit
report and final revised calculation of Net Book Value. The
Preliminary Audited Closing Balance Sheet, as may be
adjusted pursuant to the terms hereof (the "Final Closing
Balance Sheet"), and Deloitte's final revised calculation of
Net Book Value, as appropriately modified to reflect any
changes (the "Final Net Book Value Calculation"), shall be
final, binding and conclusive for all purposes hereunder,
absent fraud or manifest error.
(e) Consistent Use of Applicable Accounting Principles. For the
avoidance of doubt, the Seller and Buyer acknowledge and
agree that the Estimated Closing Balance Sheet, the
Preliminary Audited Closing Balance Sheet, the Preliminary
Closing Balance Sheet and the Final Closing Balance Sheet
shall all be prepared in accordance with the policies,
procedures and methodologies set forth in the Applicable
Accounting Principles.
5.2 Settlement of Purchase Price. On the second business day following
the earlier to occur of (i) the expiration of thirty (30) calendar days
following delivery of the Preliminary Audited Closing Balance Sheet to
Buyer and Seller if neither Seller nor Buyer has objected to the
Preliminary Audited Closing Balance Sheet, or (ii) if either
31
Seller or Buyer shall have objected to the Preliminary Audited Closing
Balance Sheet, final determination of the disputed items pursuant to
Section 5.1(d) (such date referred to herein as the "Settlement Date"),
then (a) Buyer will pay to Seller in cash an amount equal to the excess, if
any, of the Final Net Book Value over the sum of (i) the Preferred
Consideration, (ii) the Closing Cash Payment, and (iii) the Interim Period
Rebate Payment, or (b) Seller will pay to Buyer an amount equal to the
excess, if any, of the sum of (i) the Preferred Consideration, (ii) the
Closing Cash Payment, and (iii) the Interim Period Rebate Payment over the
Final Net Book Value, in either case together with interest at the rate of
six percent (6%) per annum on such amount from the Closing Date to the date
of payment. As used herein, "Final Net Book Value" shall mean the Net Book
Value as reflected in the Final Net Book Value Calculation. The procedures
set forth in this Section 5 shall be the sole remedy for any disputes with
respect to matters set forth in the Preliminary Audited Closing Balance
Sheet (and the calculation of Net Book Value related thereto).
6. Employee Matters.
6.1 General.
(a) Continued Employment. As of the Effective Time, Buyer will
cause the Acquired Companies to provide continuation of
employment, with comparable base salary, to each individual
employed by any of the Acquired Companies (or otherwise in
connection with the Business, including any individuals
employed by any Subsidiary of Seller (other than the
Acquired Companies)) including those individuals primarily
employed by the Canadian Business on the Closing Date
(including employees absent from work due to short-term
disability, sick leave,
32
military leave or other permitted absences) other than those
employees employed primarily in connection with the Retained
Businesses (the "Company Employees"). Notwithstanding
anything herein to the contrary, Buyer shall cause the
Acquired Companies to (i) honor and be responsible for all
vacation benefits that the Company Employees are entitled to
as of the Closing, and (ii) pay to the Company Employees, on
or before April 30, 2004, all bonuses and incentive
payments, other than the Retention Bonuses (the payment of
which is addressed in Section 6.1(b) below), to the extent
such bonuses and incentive payments are accrued on the Final
Closing Balance Sheet. Subject to the terms of the Buyer
Transition Services Agreement, and other than as relates to
the Canadian Employee Plans, as of the Effective Time the
Company Employees employed in Canada shall cease to actively
participate in any Employee Plan sponsored or offered by
Seller, any Acquired Company or any of their Affiliates and
will accrue no further rights or benefits with respect to
periods after the Effective Time under any such Employee
Plan.
(b) Retention Bonuses. The Company shall be responsible for and
pay the Retention Bonuses, provided that the Company's
maximum aggregate Liability for Retention Bonuses shall be
$7,500,000. Seller shall be responsible for and pay any
Retention Bonuses to the extent exceeding $7,500,000. The
Company shall be responsible for and pay the Salary
Protection Obligations. Upon the written request of Buyer
given to Seller at least five (5) business days prior to the
Closing, and subject to receipt of unconditional (other than
a condition that Closing occur) consents and
33
releases from the persons entitled to receive the Retention
Bonuses and/or Salary Protection Obligations, Seller shall
terminate, effective as of the Effective Time, the Retention
Bonuses and Salary Protection Obligations so long as Seller
and its Affiliates have no Liability (except for any
Retention Bonuses to the extent exceeding $7,500,000), and
incur no additional costs, with respect to the Retention
Bonuses and Salary Protection Obligations or the termination
thereof, including without limitation any costs to procure
such consents or effect such termination. Buyer and the
Acquired Companies shall indemnify and hold Seller and its
Affiliates harmless from and against any Liability relating
to or arising from the Retention Bonuses or Salary
Protection Obligations regardless of whether all or any
portion of such Retention Bonuses or Salary Protection
Obligations are terminated, provided that the maximum amount
of Retention Bonuses for which Buyer and the Acquired
Companies will be responsible shall be $7,500,000.
(c) COBRA. Buyer and the Acquired Companies (other than Access
and UAP Canada) shall be responsible for providing the group
health plan continuation coverage pursuant to Section 4980B
of the Code and Sections 601-609 of ERISA ("COBRA Coverage")
for the Company Employees and their eligible dependents and
for former employees of the Company and their dependents who
are eligible for COBRA Coverage. Buyer shall indemnify and
hold Seller and Seller's Affiliates harmless from and
against any Liability Seller or Seller's Affiliates incur at
any time after Closing under the provisions of Section 4980B
of the Code or Sections
34
601-609 of ERISA with respect to any Company Employee, or a
dependent or spouse of any such employee, who had or has a
"qualifying event" (within the meaning of Section
4980(B)(f)(3) of the Code) before, on or after Closing.
(d) Long-term Disability. On and after the Closing, Seller shall
provide applicable benefits to any individual who
immediately before his active employment ceased was employed
by the Acquired Companies and who as of the Closing Date
either (i) is currently receiving long-term disability
benefits under a long-term disability plan of Seller or one
of its Affiliates (the "Seller LTD Plan"), (ii) has been
approved for receipt of long-term disability benefits under
the Seller LTD Plan, or (iii) is receiving a disability
pension under a Seller Pension Plan (collectively, an "LTD
Recipient"). An LTD Recipient shall be treated as a Company
Employee only if and when the LTD Recipient recovers from
his or her disabling condition and returns to active service
with the Acquired Companies.
(e) Vesting. Seller will cause the accrued benefit or account
balance of each Company Employee under the Seller 401(k)
Plans to become fully vested and nonforfeitable as of the
Closing Date. Seller will cause the Seller Pension Plans and
any supplemental retirement plans maintained by Seller or
its Affiliates to be amended so that Company Employees
receive credit for service with the Acquired Companies and
their Affiliates after the Closing (as though it were
service with Seller and its Affiliates) for vesting purposes
only under any such Seller Pension Plan. Buyer shall
reimburse Seller for all incremental out-of-pocket
administrative costs and
35
expenses paid or incurred by Seller in connection with
Seller's obligations described in the preceding sentence.
6.2 Seller Pension Plans. As of the Closing Date, the Company
Employees shall cease to actively participate in any pension plan offered
by Seller, any Acquired Company (other than the Canadian Employee Plans) or
any of their Affiliates, including but not limited to (a) the ConAgra
Pension Plan for Salaried Employees and (b) the ConAgra Pension Plan for
Hourly Rate Production Employees (the "Seller Pension Plans") and will
receive no further benefit accruals under such pension plans. At or prior
to the Effective Time, UAP Canada shall become the plan sponsor of the UAP
Plan and shall assume the obligations of the plan sponsor thereunder.
6.3 401(k) Plans. As of the Closing Date, the Company Employees shall
cease to actively participate in the ConAgra Retirement Income Savings Plan
and the ConAgra Retirement Income Savings Plan for Hourly Rate Production
Employees (the "Seller 401(k) Plans") and no contributions shall be made to
the Seller 401(k) Plans for the benefit of the Company Employees with
respect to periods after the Closing Date. As of the Closing Date, the
interests of the Company Employees in the Seller 401(k) Plans shall be one
hundred percent (100%) vested and shall be fully nonforfeitable. Except as
expressly set forth herein, no assets of any Employee Plan shall be
transferred to Buyer or any of its Affiliates or to any plan of Buyer or
any of its Affiliates. As soon as practical following the Closing, Buyer
shall cause the Acquired Companies (other than Access or UAP Canada) to
establish a plan designed to be qualified under Code Section 401(k) ("Buyer
401(k) Plan"). As soon as practical following receipt by Buyer and Seller
of favorable determination letters or Buyer's certification to Seller, and
Seller's certification to Buyer, in a manner reasonably acceptable to both
Seller and Buyer, that Buyer's
36
401(k) Plan and Seller's 401(k) Plans are qualified under the applicable
provisions of the Code, Seller shall cause the trustee of Seller's 401(k)
Plans to transfer, solely in the form of cash or notes representing
outstanding participant loans, assets representing the full account
balances of the Company Employees, and upon such transfer, Buyer and
Buyer's 401(k) Plan shall be responsible for proper administration of such
account balances and the related liability to the Company Employees. Buyer
shall use reasonable commercial efforts to qualify Buyer's 401(k) Plan
under the applicable provisions of the Code and obtain a favorable
determination letter.
6.4 Welfare Plans. The parties acknowledge that the Company Employees
participate in welfare benefit plans and programs of Seller or its
Subsidiaries, including medical and workers' compensation plans and
programs. As of the Closing Date, subject to the terms of the Buyer
Transition Services Agreement, the Company Employees shall cease to
participate in such welfare plans and programs. From and after the Closing,
Buyer shall cause the Acquired Companies to be responsible for, and shall
indemnify and hold Seller and its Affiliates harmless from and against, all
Liabilities, whether incurred before, on or after the Closing Date, with
respect to all such welfare benefit plans and programs attributable to
Company Employees, including, but not limited to, medical benefits and
workers' compensation benefits, except as otherwise provided in Section
6.1(d) hereof for disability benefits. The Final Closing Balance Sheet
shall reflect proper accruals in accordance with GAAP for such employee
benefits. From and after the Closing, Buyer shall cause the Acquired
Companies to be responsible, and shall indemnify and hold Seller and its
Affiliates harmless from and against, any Liability under the Worker
Adjustment and Retraining Notification Act (29 U.S.C. Sections 2101-2109)
or any similar foreign, federal, state or local laws or ordinances. Seller
agrees not
37
to terminate, amend or alter prior to, on or following Closing any
Third-Party Policy for an Employee Plan to the extent such insurance would
provide benefits to Company Employees with respect to pre-Closing
occurrences; provided, however, that Seller may make changes to such
Third-Party Policies to the extent that the resulting benefits provided to
Company Employees are not worse than those provided to other comparable
employees of Seller and its Affiliates.
6.5 Buyer Plans. Buyer shall cause periods of service with Seller,
Seller's Affiliates, and the Acquired Companies to count for purposes of
eligibility and vesting under any benefit plans provided to the Company
Employees after Closing (other than with respect to any option plan or
long-term incentive plan). Buyer shall cause the Acquired Companies to
waive pre-existing condition requirements, evidence of insurability
provisions, waiting period requirements or any similar provisions under any
employee benefit plan or compensation arrangements provided to any Company
Employees after the Closing Date to the extent that such requirements were
satisfied under corresponding plans of Seller prior to the Closing. After
Closing, Buyer shall cause the Acquired Companies to apply toward any
deductible requirements and out-of-pocket maximum limits under its employee
welfare benefit plans any amounts paid (or accrued) by each Company
Employee prior to Closing under welfare benefit plans during the
then-current plan year.
6.6 Flexible Spending Accounts. Seller maintains a plan qualified
under I.R.C. Section 125 ("Seller's 125 Plan") that includes flexible
spending accounts for medical care reimbursements and dependent care
reimbursements ("Reimbursement Accounts"). As soon as reasonably
practicable following the Closing Date, cash equal to the aggregate value
of the Reimbursement Accounts of the Company Employees shall be transferred
38
from Seller to a plan that Buyer causes to be established by the Company
that is intended to qualify under I.R.C. Section 125 ("Buyer's 125 Plan").
Upon receipt of such amount, Buyer's 125 Plan shall assume all obligations
and liabilities with respect to the Reimbursement Accounts for the Company
Employees. Buyer shall cause the Company to recognize the elections of the
Company Employees under Seller's 125 Plan for purposes of Buyer's 125 Plan
for the calendar year in which the Closing occurs.
6.7 Retained Employees. All individuals employed primarily by the
Retained Businesses shall be transferred out of the Acquired Companies
prior to Closing.
6.8 Cooperation. The parties shall cooperate with each other and
exchange any information, filings or notices as appropriate to implement
the provisions of this Section 6. Buyer shall assist in providing any
information, filings or notices (including the notice required by Section
204(h) of ERISA) as needed to cease the benefit accruals. Seller agrees
that should Buyer need to communicate with the representatives of any
Company Employees who are covered by a collective bargaining agreement
during the period from the signing of this Agreement until the Closing
Date, Buyer will advise Seller of the details of such communication and how
it may affect compliance with the terms of such agreement. Seller shall
cooperate with Buyer, as requested, to organize, facilitate and participate
in, and Buyer shall allow Seller to organize, facilitate and participate
in, any such communications, including attending meetings as requested and
reasonably required.
6.9 Indemnity. Buyer shall indemnify and hold Seller and Seller's
Affiliates harmless from and against any Liability resulting directly or
indirectly from any breach or nonfulfillment of any agreement or covenant
on the part of Buyer or the Acquired Companies under this Section 6. Seller
shall indemnify and hold Buyer and Buyer's
39
Affiliates harmless from and against any Liability resulting directly or
indirectly from any breach or nonfulfillment of any agreement or covenant
on the part of Seller under this Section 6.
6.10 No Third Party Beneficiaries. Nothing in this Agreement shall
create or establish, or be deemed to create or establish, any Company
Employee as a third party beneficiary of this Agreement or provide any
guarantee of employment from and after the Closing.
7. Representations and Warranties of Seller. Seller hereby represents and
warrants to Buyer as set forth below. Such representations and warranties are
made subject to those matters set forth in the Seller Disclosure Schedule dated
as of the date hereof and delivered as a separate document (the "Seller
Disclosure Schedule") in the manner provided for the introductory paragraph of
the Seller Disclosure Schedule.
7.1 Organization, Good Standing and Corporate Power. Each of Seller
and the Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company has the
corporate power to own, operate and lease its properties and to carry on
its business as now being conducted. The Company is qualified to conduct
its Business in all jurisdictions in which such qualification or
authorization is required, except for those jurisdictions in which failure
to be so qualified or authorized has not had a Company Material Adverse
Effect.
7.2 Certificate and By-Laws. Seller has previously made available to
Buyer true, complete and correct copies of the Fundamental Documents of the
Company as in effect as of the date of this Agreement. Such Certificate of
Incorporation and by-laws have not been further amended and are in full
force and effect. The Seller Disclosure
40
Schedule contains a complete and accurate list of all officers and
directors of the Company, UAP Canada, Access, each Company Subsidiary and
Timberland.
7.3 Corporate Authorization; Binding Effect. Each of Seller and the
Company has all requisite corporate power and authority to enter into this
Agreement and the Ancillary Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby and to perform
its respective obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Ancillary Agreements by each of Seller
and the Company have been duly and validly authorized by all necessary
corporate action on the part of Seller and the Company, respectively. This
Agreement and the Ancillary Agreements constitute the valid and binding
obligation of Seller and the Company, enforceable against Seller and the
Company in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity.
7.4 Effect of Agreement. The execution, delivery and performance of
this Agreement and the Ancillary Agreements to which it is a party by each
of Seller and the Company and the consummation by Seller and the Company of
the transactions contemplated hereby and thereby will not, with or without
the giving of notice or the lapse of time or both, assuming compliance with
the matters referred to in Section 7.5, (a) violate any Law to which Seller
or any Acquired Company is subject or to which any of their respective
assets or properties are bound; (b) violate any judgment, order, writ or
decree of any court applicable to Seller or any Acquired Company; (c)
conflict with or result in the violation of any provision of Seller's or
any Acquired Company's Fundamental Documents; or (d) result in any material
violation of, or material breach or
41
material default under (with or without notice or lapse of time), or give
rise to a right of termination, cancellation or acceleration of any
obligation or the loss of a material benefit under, any Company Material
Contract, or result in the creation of any Encumbrance upon the Stock or
any of the properties or assets of any of the Acquired Companies.
7.5 Government Authorization; Third-Party Consents. The execution,
delivery and performance by Seller of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby require no action by or in respect of or any consent, approval,
order or authorization of, registration, declaration or filing with, (i)
any Governmental Authority, or (ii) any other third party in respect of any
Company Material Contract or, to Seller's knowledge, otherwise, other than
(a) the filing of a pre-merger notification report under the HSR Act; (b)
compliance with any applicable non-United States Laws intended to prohibit,
restrict or regulate (x) foreign investment, including the Investment
Canada Act, or (y) mergers and acquisitions or actions having the purpose
or effect of monopolization or restraint of trade, including, without
limitation, the Competition Act (Canada); and (c) filings under the
Environmental Permits or immaterial Company Permits as may be necessary to
reflect the change of control of the Company, UAP Canada or Access
contemplated hereby.
7.6 No Options, Warrants, Rights. The Company does not have
outstanding any Equity Securities other than the Company Stock. UAP Canada
does not have outstanding any Equity Securities other than the Canada
Stock. Access does not have outstanding any Equity Securities other than
the Access Stock. Timberland does not have outstanding any Equity
Securities other than the membership interests owned by the Company and
Timberland Enterprises, Inc. None of the Company Subsidiaries has
outstanding any Equity Securities other than those held by the Company or
another
42
wholly-owned Subsidiary of the Company. Neither the Company, UAP Canada,
Access nor any Company Subsidiary has any outstanding commitments to issue
or sell any Equity Securities, and no securities or obligations evidencing
any such right are outstanding. To Seller's knowledge, Timberland has no
outstanding commitments to issue or sell any Equity Securities. There are
no outstanding obligations, written or otherwise, of Seller, the Company,
UAP Canada, Access, any of the Company Subsidiaries or, to Seller's
knowledge, Timberland to repurchase, redeem or otherwise acquire any Equity
Securities. There are no preemptive rights in respect of any Equity
Securities of the Company, UAP Canada, Access or any Company Subsidiary. No
Acquired Company owns any Equity Securities of any Person other than its
respective Subsidiaries. Neither Seller, the Company, Access nor UAP Canada
is a party to any agreements, arrangements or understandings with respect
to the voting, transfer or assignment of any Equity Security.
7.7 Capital Stock; Title to Shares.
7.7.1 The authorized capital stock of the Company consists of One
Thousand (1,000) shares of common stock, $1.00 par value, of
which One Thousand (1,000) shares are issued and outstanding. All
of the Company Stock is duly authorized, validly issued, fully
paid and nonassessable. No current or former stockholder or any
other Person is contending or has a valid basis for contesting
the ownership of the Company Stock or any distributions or
contributions relating thereto. Seller is the lawful and
equitable owner of all of such shares of common stock of the
Company, free and clear of all Encumbrances.
43
7.7.2 UAP Canada is authorized to issue an unlimited number of common
shares, of which one (1) share is issued and outstanding. ConAgra
Limited is the lawful and equitable owner of the share of issued
and outstanding common stock of UAP Canada, free and clear of all
Encumbrances.
7.7.3 Access is authorized to issue an unlimited number of common
shares of which one (1) share is issued and outstanding. ConAgra
Foods Refrigerated Foods Co., Inc. is the lawful and equitable
owner of the share of issued and outstanding common stock of
Access, free and clear of all Encumbrances.
7.8 Subsidiaries.
7.8.1 All Company Subsidiaries and their respective jurisdictions of
incorporation are identified on the Seller Disclosure Schedule.
Each Company Subsidiary is a corporation or other legal entity
duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and has the power to
own, operate and lease its properties and to carry on its
business as now being conducted. Each Company Subsidiary is
qualified to conduct its business in all jurisdictions in which
such qualification or authorization is required, except for those
jurisdictions in which failure to be so qualified or authorized
would not have a Company Material Adverse Effect.
7.8.2 All of the outstanding capital stock of, or other ownership
interests in, each Company Subsidiary (the "Subsidiary
Securities"), is owned by the Company, directly or indirectly,
free and clear of all Encumbrances, and
44
all of the outstanding shares of capital stock or other equity
interests of each Company Subsidiary are validly issued, fully
paid and nonassessable. No current or former stockholder or any
other Person is contending or has a valid basis for contesting
the ownership of any Equity Security of any Company Subsidiary or
any distributions or contributions relating thereto.
7.8.3 Seller has previously made available to Buyer true, complete and
correct copies of the Fundamental Documents of each Company
Subsidiary as in effect as of the date of this Agreement. Such
Fundamental Documents have not been further amended and are in
full force and effect.
7.9 Financial Statements; No Undisclosed Liabilities.
7.9.1 Seller has heretofore delivered to Buyer (i) audited pro forma
combined consolidated balance sheets of the Business as of
February 24, 2002, and February 23, 2003, and the related audited
combined consolidated statements of earnings and cash flows for
the years ended February 25, 2001, February 24, 2002, and
February 23, 2003 (the "Year-end Statements"), and (ii) an
unaudited pro forma combined consolidated balance sheet of the
Business as of September 21, 2003, and the related unaudited
combined consolidated statement of earnings for the seven (7)
month period then ended (the "Interim Financials"). The Year-end
Statements and the Interim Financials (together, the "Financial
Statements") present fairly, in all material respects, the
financial position and results of operation and cash flows of the
Business as of the dates and for the periods then ended, and have
been prepared in accordance with GAAP consistently applied in
accordance with past practices throughout
45
the periods covered thereby, except (y) as described in the
Seller Disclosure Schedule, and (z) in the case of the Interim
Financials, for normal year-end adjustments (none of which, other
than with respect to rebates, are material) and the omission of
footnote disclosures required by GAAP. Seller has heretofore
delivered to Buyer a pro forma calculation of Net Book Value
assuming the Closing Date was the date of the Interim Financials
based upon the Interim Financials (the "Pro Forma Net Book
Value"). The Pro Forma Net Book Value was calculated in good
faith using the amounts reflected on the balance sheet included
in the Interim Financials.
7.9.2 As of the date hereof, to Seller's knowledge, none of the
Acquired Companies have any Liabilities of a type required to be
reflected on a balance sheet prepared in accordance with GAAP
consistently applied except those (i) set forth or provided for
in the balance sheet included in the Interim Financials, (ii)
incurred since September 21, 2003, in the ordinary course of
business or in accordance with or pursuant to this Agreement, or
(iii) recorded as part of normal year end adjustments (none of
which, other than with respect to rebates, are material).
Notwithstanding the foregoing, no representation and warranty is
made pursuant to this Section 7.9.2 with respect to any matter
that is specifically addressed by another representation or
warranty contained in this Section 7 or any certificate or
instrument delivered pursuant to this Agreement.
7.9.3 Section 7.9.3 of the Seller Disclosure Schedule lists, as of
September 21, 2003, the location of all Company owned assets held
by a third party on a
46
consignment or similar arrangement other than locations where
less than $25,000 of assets are held.
7.10 Conduct of Business Since September 21, 2003. Since September 21,
2003 and except for the transactions contemplated herein:
7.10.1 As of the date hereof, there has not been a Company Material
Adverse Effect.
7.10.2 As of the date hereof, no event has occurred that would have
been prohibited by Section 9.1.1 if the terms of said Section had
been in effect as of and after September 21, 2003.
7.10.3 Except for indebtedness owed by an Acquired Company to Seller
or a subsidiary thereof, none of the Acquired Companies has
incurred, assumed or otherwise become responsible or liable for
any indebtedness (including capital lease obligations) for
borrowed funds or purchase money indebtedness, or assumed,
guaranteed, endorsed or otherwise become liable or responsible
(either directly, contingently or otherwise), for the obligations
of any other Person, except in respect of such assumption,
guarantees or endorsements for such amounts that are immaterial
and incurred in the ordinary course of Business.
7.11 Taxes and Tax Returns.
(a) With respect to the Acquired Companies (i) all Tax Returns
required to be filed by them have been timely and properly
filed, (ii) all Taxes due and payable as of the date of the
balance sheet included in the Interim Financials have been
paid or accrued on the Interim Financials in accordance with
GAAP consistently applied in accordance with past
47
practices (other than Income Taxes), (iii) all Taxes for
which a notice of assessment or collection has been received
as of the date of the balance sheet included in the Interim
Financials (other than amounts being contested in good faith
by appropriate proceedings and for which the liability
therefor has been accrued on the Interim Financials in
accordance with GAAP consistently applied in accordance with
past practices (other than Income Taxes), have been paid,
and (iv) the Liability for Non-Income Taxes for periods
ending on or before the Closing Date and for the portion of
the Straddle Period through the Effective Time will be
accrued on the Final Closing Balance Sheet in accordance
with the Applicable Accounting Principles. No Governmental
Authority has asserted any claim for Taxes, or to Seller's
knowledge, has threatened to assert any claim for Taxes. Any
open years for Income Tax Returns of the Acquired Companies
are as set forth in the Seller Disclosure Schedule. All
Taxes required by Law to be withheld or collected and
remitted (including without limitation, Income Tax, Canada
Pension Plan contributions, Unemployment Insurance and
Workmans' Compensation premiums and their respective
Canadian equivalents) by the Acquired Companies have been
withheld or collected and paid to the appropriate
Governmental Authorities (or are properly being held for
such payment). As of the date of the balance sheet included
in the Interim Financials, there are no liens for Taxes upon
the assets of the Acquired Companies (other than liens for
Taxes that are not yet due or that have been contested in
good faith by appropriate proceedings and for which an
appropriate reserve has been
48
accrued on the Interim Financials in accordance with GAAP
consistently applied in accordance with past practices).
(b) The Seller has previously delivered to the Buyer materially
true, correct and complete copies of (i) all Tax Returns
filed by or on behalf of any of the Acquired Companies for
all completed Tax years that remain open for audit or review
by the relevant Taxing authority and (ii) all material and
presently effective ruling requests, private letter rulings,
notices of proposed deficiencies, closing agreements,
settlement agreements, and any similar documents or
communication sent or received by, or relating to, any of
the Acquired Companies.
(c) None of the Acquired Companies has been notified that either
the Internal Revenue Service, the Canadian Customs and
Revenue Agency or any other Governmental Authority has
raised any adjustments or intends to raise such adjustments,
in connection with any Tax Return of the Acquired Companies;
there are no pending Tax audits and no waivers of statutes
of limitations have been given or requested with respect to
any Acquired Company;
(d) No Acquired Company (i) is or has made an election to be
treated as, a "consenting corporation" under Section 341(f)
of the Code and (ii) is not, and has not been, a "personal
holding company" within the meaning of Section 542 of the
Code or a United States real property holding corporation
within the meaning of Code (S) 897;
(e) The Company and the Company's Subsidiaries are each a member
of the consolidated tax group of which Seller is the parent
for Federal Income
49
Tax purposes, and have filed Income Tax returns as a member
of such tax group for all periods since 1990 or since each
such Company or Company Subsidiary was formed or acquired by
the Company or Seller.
(f) A change in control of the Acquired Companies constituting a
change in the ownership of a substantial portion of the
assets of Seller's affiliated group (within the meaning of
Treas. Reg. (S) 1.280G-1, Q&A-29(a)) shall not occur as a
result of Buyer's acquisition of the Company pursuant to
this Agreement.
(g) Neither the Company nor the Company Subsidiaries has engaged
in a "listed transaction" as described in Treasury
Regulation section 1.6011-4(b)(2);
(h) As a consequence of the transactions contemplated by this
Agreement, Buyer is not obligated to withhold any United
States Federal, state or local Income Taxes (or withholdings
in lieu of Income Taxes) or any Canadian Federal, provincial
or local Income Taxes (or withholdings in lieu of Income
Taxes) from any payments it makes to Seller except as
contemplated by Section 4.2.14.
(i) None of the Acquired Companies is a party to, is bound by,
or has any obligation under, any tax sharing agreement, tax
indemnification agreement or similar contract or
arrangement, excluding leases entered into in the ordinary
course of business and sales contracts, either individually
or in the aggregate, that do not have a material adverse
effect.
(j) Each of UAP Canada and Access is a registrant for the
purposes of the Excise Tax Act (Canada) having registration
number 875431603RT0001
50
and 886399849RC0001, respectively, and is not a financial
institution within the meaning of the Excise Tax Act
(Canada). The Company is not a registrant for the purposes
of the Excise Tax Act (Canada).
(k) ConAgra Limited is a resident of Canada within the meaning
of the Income Tax Act (Canada). ConAgra Foods Refrigerated
Foods Co., Inc. is a non-resident of Canada within the
meaning of the Income Tax Act (Canada). The Company Stock
does not constitute "taxable Canadian property" as defined
in the Income Tax Act (Canada).
(l) Notwithstanding anything to the contrary contained in this
Section 7.11, a representation and warranty set forth in
this Section 7.11 shall not be considered to be breached
unless as a consequence of such representation and warranty
being untrue, the Buyer or an Acquired Company suffers a
loss from such breach exceeding $50,000 exclusive of
interest, penalties, fees and costs accruing after the
Closing Date.
7.12 Intellectual Property.
7.12.1 True and complete copies of (i) the registration for each item
of Intellectual Property owned by any Acquired Company and
material to the operation of the Business, or owned by Seller or
Seller's Affiliates (other than the Acquired Companies) and used
primarily in the Business and material to the operation of the
Business, which is registered in the United States or Canada,
(ii) the application for each item of Intellectual Property owned
by any Acquired Company and material to the operation of the
Business, or owned by Seller or Seller's Affiliates (other than
the Acquired Companies) and used primarily in the Business and
material to
51
the operation of the Business, for which an application has been
filed in the United States or Canada, and (iii) each license or
other agreement under which the Intellectual Property of a
third-party is licensed to an Acquired Company, where the
licensed Intellectual Property is material to the operation of
the Business, other than normal and routine off-the-shelf
software license agreements, have been previously made available
to Buyer.
7.12.2 To the knowledge of Seller, the Acquired Companies own all
right, title and interest in and to, or possess adequate licenses
or other rights to use, all material Intellectual Property Rights
currently used to conduct the Business as now operated by them,
and have taken all steps reasonably necessary to validly
maintain, and have not taken any steps that could constitute
abandonment of, such Intellectual Property Rights, including
paying all necessary fees and filing all appropriate affidavits
and renewals with the appropriate administrative or governmental
office.
7.12.3 To the knowledge of Seller, the material Intellectual Property
Rights of the Acquired Companies currently used to conduct the
Business do not infringe upon or otherwise violate any
Intellectual Property Rights of others. There are no unresolved
pending or, to the knowledge of Seller, threatened Actions that
allege that an Acquired Company has infringed or misappropriated
the Intellectual Property Rights of any third party. To the
knowledge of Seller, no third party is infringing on or otherwise
violating the material Intellectual Property Rights of the
Acquired Companies currently used to conduct the Business. There
are no unresolved pending
52
or, to the knowledge of Seller, threatened Actions that challenge
or otherwise question the validity of any material Intellectual
Property Rights that an Acquired Company owns and/or currently
uses to conduct the Business.
7.12.4 None of the Acquired Companies is a party to any agreement,
contract, or judicial order that in any way limit or restrict any
material Intellectual Property Rights that an Acquired Company
owns and/or currently uses to conduct the Business, other than
normal and routine off-the-shelf software license agreements.
7.12.5 For purposes of this Agreement, "Intellectual Property Right"
means any trademark, service xxxx, logo, trade name, brand, trade
dress, domain name, mask work, copyright, patent, software
license, invention, trade secret, or know-how (including any
registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary intellectual
property right.
7.13 Actions and Proceedings.
7.13.1 As of the date hereof, there are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental
Authority against any of the Acquired Companies or against
Seller, or any Affiliate of Seller, that in the case of Seller or
any such Affiliate, relates to the Business, other than those
that have been satisfied. As of the date hereof, there are no
Actions pending or, to the knowledge of Seller, threatened
against Seller, the Acquired Companies, or any Affiliate of
Seller other than Actions that can be resolved without material
Liability to the Acquired
53
Companies and without materially adversely affecting the
Business. As of the date hereof, to the knowledge of Seller,
there are no Actions pending or threatened against any officer,
director or key employee of the Acquired Companies, or which
relate to the transactions contemplated by this Agreement or the
Ancillary Agreements. Seller has delivered to Buyer true, correct
and complete copies of all material complaints and answers, and
has given Buyer access to certain other documents, correspondence
and information requested by Buyer, relating to such matters
referred to in Section 7.13.1 of the Seller Disclosure Schedule.
7.13.2 Section 7.13.2 of the Seller Disclosure Schedule sets forth a
true, correct and complete list of each Action that within the
last five (5) years, (i) resulted in any criminal sanctions or
(ii) resulted in payments in excess of $250,000, in each case by
or against any Acquired Company, or any officer, director or key
employee thereof in their capacity as an officer, director or key
employee thereof (whether as a result of a judgment, civil fine,
settlement or otherwise).
7.14 Compliance with Laws.
7.14.1 As of the date hereof, to the knowledge of Seller, except for
any non-compliance or failure that has been corrected prior to
the date hereof and for any non-compliance or failure arising in
the ordinary course of business that can be corrected in the
ordinary course of business without material Liability to the
Acquired Companies and without materially adversely affecting the
Business, (i) each of the Acquired Companies holds, owns or
possesses, and is in compliance with the terms of, all
54
permits, licenses, exemptions, orders and approvals of all
Governmental Authorities (other than Environmental Permits, which
are exclusively provided for in Section 7.19) necessary for the
conduct of their respective businesses, including for the conduct
of the Business, and for the ownership, possession and operation
of their respective assets and properties (the "Company Permits")
and all Company Permits are in full force and effect and will
remain in full force and effect upon, and will not be adversely
affected by, the consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements, (ii) with respect to
the Company Permits, no violations have been recorded in respect
of any thereof and no Action is pending or threatened by any
Governmental Authority to revoke, modify or limit any thereof,
(iii) the Business is being conducted, and has been conducted at
all times since January 1, 2000, in compliance with all
applicable Laws, (iv) no investigation or review by any
Governmental Authority with respect to an Acquired Company is
pending or threatened, and (v) none of Seller or the Acquired
Companies or UAP Canada, as applicable, has conducted during the
36 month period prior to the date hereof any internal
investigation concerning any alleged violation of any Law
applicable to any of the Acquired Companies or the Business
(regardless of the outcome of such investigation) on the part of
Seller, the Acquired Companies or any officer, director,
employee, agent or representative thereof, other than any
investigations of matters that would not have a materially
adverse effect on the operation of the Business or that resulted
in no material Liability.
55
7.14.2 As of the date hereof, except for such matters applicable to
the industry in which the Business operates in general, no
Governmental Authority regulating the design, manufacture,
production, marketing, distribution, sale or advertising of any
products material to the Business that are currently sold,
distributed or used in connection with the Business has requested
of the Acquired Companies or UAP Canada, as applicable, that any
such product be removed from the market, or recalled, or that
substantial new product testing or modification be undertaken as
a condition to the continued manufacturing, production, selling
or distribution of any such product.
7.15 Material Contracts. The Seller Disclosure Schedule sets forth, as
of the date hereof, a listing of all of the following oral or written
agreements to which any of the Acquired Companies is a party to or bound by
(except as otherwise indicated below): (a) agreement, contract, indenture,
or other instrument relating to the borrowing of money or the guarantee of
any obligation for the borrowing of money by the Acquired Companies; (b)
employment agreement with an individual requiring payments of compensation
in excess of $100,000 per year; (c) consulting agreement with an individual
requiring payments of compensation in excess of $150,000 per year; (d) any
material distributor, purchase or supply agreement with a term greater than
one (1) year which is not terminable by an Acquired Company without
Liability on thirty (30) days (or less) notice; (e) manufacturing, toll
processing, packaging, repackaging, co-packaging or other similar contracts
requiring annual payments to or from any Acquired Company in excess of
$500,000; (f) consignment contract, or similar contract, pursuant to which
inventory with value greater than $250,000 is held by any Acquired Company
or a third party on behalf
56
of any Acquired Company; (g) commissioned sales representative agreement,
or similar contract that has required or is reasonably expected to require
annual payments greater than $250,000; (h) contracts, or a group of related
contracts, with any customer or supplier establishing or relating to any
rebate, promotion or other allowance that has required or is reasonably
expected to require annual payments greater than $500,000; (i) partnership
agreement, limited liability company agreement, joint venture or similar
contract or agreement; (j) contracts which are terminable by the other
party or parties thereto upon a change of control of the Company, UAP
Canada or Access, other than such contract the termination of which would
not, individually or in the aggregate, have a Company Material Adverse
Effect; (k) contracts or agreements that purport to limit the ability of an
Acquired Company to compete in any line of business or in any geographic
area; (l) collective bargaining or labor agreements; (m) list of locations
where any of the Acquired Companies lease real property or is a party to an
agreement relating to the use or occupancy of real property by the Acquired
Companies, excluding, however, any rail spurs or sidings; (n) any contract
with a remaining term greater than 12 months and that involves annual
aggregate consideration greater than $1,000,000; or (o) other material
contract, agreement or arrangement entered into other than in the ordinary
course of business. The contracts required to be so listed are referred to
herein as the "Company Material Contracts". Each Company Material Contract
is a valid and binding obligation of the Acquired Company that is a party
thereto or otherwise bound thereby, and, to Seller's knowledge, is in full
force and effect without further amendment. The Acquired Company that is
bound by each Company Material Contract, and, to the knowledge of Seller,
each other party thereto, is not (with or without lapse of time or the
giving of notice, or both) in material breach or default thereunder, except
for any breach or default
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arising in the ordinary course of business that has been cured or that will
be resolved in the ordinary course of business, will not result in any
material Liability to the Acquired Companies and will not materially
adversely affect the Business. To Seller's knowledge, no other party to any
such Company Material Contract has terminated or cancelled, or intends to
terminate or cancel, such Company Material Contract. A true, correct and
complete copy of each written Company Material Contract and a description
of each oral Company Material Contract has been made available to Buyer.
7.16 Related Party Transactions. The Seller Disclosure Schedule sets
forth a description of all services provided by Seller or any of its
Affiliates (other than the Acquired Companies) to any Acquired Company or
to the Business, as well as a description of services, sales or purchase
contract, agreement and/or relationships between any of the Acquired
Companies on the one hand, and Seller or any of Seller's other Affiliates
on the other (each such service, contract, agreement or relationship, an
"Affiliate Agreement"). Other than Liabilities set forth in the Interim
Financials or the Final Closing Balance Sheet or Liabilities of the type
and nature set forth in the Interim Financials that arose after the date of
the Interim Financials in the ordinary course of business and consistent
with past practice, and before the date hereof, none of the Acquired
Companies has any Liabilities to Seller or any of its Affiliates (other
than the Acquired Companies) and none of Seller or its Affiliates (other
than the Acquired Companies) has any Liabilities to any of the Acquired
Companies. None of the Acquired Companies, nor, to Seller's knowledge, any
directors, officers or employees thereof, have (i) used any company funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity, (ii) made any unlawful payment to foreign
or domestic government officials or employees or to foreign or domestic
political
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parties or campaigns from corporate funds or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other
unlawful payment.
7.17 Labor Relations.
7.17.1 As of the date hereof, there are no (i) labor strikes,
slowdowns, picketing or handbilling activity, representation or
certification campaigns or work stoppages with respect to Company
Employees pending, or to Seller's knowledge, threatened against
or affecting the Business, (ii) grievance or arbitration
proceedings, letter agreements or settlement agreements arising
out of collective bargaining agreements to which an Acquired
Company is a party, or (iii) unfair labor practice complaints
pending or, to Seller's knowledge, threatened against an Acquired
Company.
7.17.2 As of the date hereof, (i) no labor union, trade union, or
similar organization currently represents the employees of any
Acquired Company, and to the knowledge of Seller, no labor union,
trade union, or similar organization, or any Company Employees
have taken any action with respect to organizing the employees of
any Acquired Company; and (ii) there have not been any plant
closings, mass layoffs or other terminations of employees of the
Acquired Companies which would create any obligations upon or
liabilities for the Acquired Companies under the Worker
Adjustment and Retraining Notification Act or similar laws.
7.17.3 As of the date hereof, to the knowledge of Seller, the Acquired
Companies are in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of
employment and wages and hours, including all federal, state,
provincial and local equal
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employment opportunity, safety and health, fair labor standards,
workers' compensation, disability, immigration, and labor law,
except for any non-compliance that has been corrected prior to
the date hereof and for any non-compliance arising in the
ordinary course of business that can be resolved in the ordinary
course of business without material Liability to the Acquired
Companies and without materially adversely affecting the
Business.
7.17.4 As of the date hereof, there are, with respect to the Acquired
Companies, no pending administrative charges or complaints, for
which Seller has received notice thereof, with, or to Seller's
knowledge, investigations by, any federal, state or local
agencies responsible for regulating employment or labor practices
initiated or threatened against any of the Acquired Companies,
including any charge, complaint or investigation regarding
violations or alleged violations of any federal, state,
provincial or local wage and hour law or any foreign, federal,
state or local law with respect to discrimination on the basis of
race, color, creed, national origin, religion or any other basis
under such foreign, federal, state or local law, other than with
respect to matters that can be resolved without material
Liability to the Acquired Companies and without materially
adversely affecting the Business.
7.17.5 No Acquired Company is delinquent in payments to any Company
Employees (or to any third persons) for any wages, salaries,
commissions, bonuses or other compensation or benefits for any
services performed by them to date or amounts required to be
reimbursed to such employees.
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7.18 Employee Plans. For purposes of this Section 7.18 and Section 6,
the term "Employee Plan" means all material pension, retirement,
disability, medical, dental or other health insurance plans, life insurance
or other death benefit plans, profit sharing, deferred compensation, stock
option, bonus or other incentive plans, severance plans or other employee
benefit plans or arrangements, including, without limitation, any "pension
plan" as defined in Section 3(2) of ERISA, any "registered pension plan" as
defined in Subsection 248(1) of the Income Tax Act (Canada), each Canadian
Employee Plan and any "welfare plan", as defined in Section 3(1) of ERISA,
covering any of the Company Employees. "Employee Plan" shall not include
any government sponsored employee benefit arrangements. Schedule 7.18
contains a true, correct and complete list of all Employee Plans. Seller
has made available to Buyer, true, complete and correct copies of (i) each
Employee Plan of which an Acquired Company is the plan sponsor (or, in the
case of any unwritten material Employee Plans, descriptions thereof), and
with respect to each Canadian Employee Plan, all documents, establishing,
creating or amending each Canadian Employee Plan, (ii) the most recent
financial statements and accounting statements for each Canadian Employee
Plan, (iii) all annual information returns with respect to each Canadian
Employee Plan, (iv) copies of all material correspondence with the
applicable Governmental Authority with respect to each Canadian Employee
Plan for the last three (3) years, (v) all booklets, summaries, manuals and
written communications of a general nature distributed or made available to
any employees or former employees concerning any Canadian Employee Plan for
the last three (3) years, (vi) the most recent annual report on Form 5500
filed with the applicable Government Authority with respect to each
Employee Plan of which an Acquired Company is the plan sponsor (if any such
report was required by applicable Law), (vii)
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the most recent summary plan description for each Employee Plan for which
such a summary plan description is required by applicable Law, (viii) each
trust agreement, funding agreement or annuity contract in effect as of the
date hereof and relating to any Employee Plan of which an Acquired Company
is the plan sponsor and (ix) the most recent actuarial report for any
Employee Plan of which an Acquired Company is the plan sponsor that is a
single employer defined benefit pension plan. Except as reflected in the
Seller Disclosure Schedule or as would not have, individually or in the
aggregate, a Company Material Adverse Effect:
7.18.1 The Acquired Companies, each Employee Plan, and the
administrator and fiduciaries of each Employee Plan have complied
in all material respects with all applicable Laws governing each
Employee Plan and no lawsuits or complaints to, or by, any Person
are pending with respect to any Employee Plan or concerning the
assets held in the funding media for any Canadian Employee Plan.
No Acquired Company nor Company Subsidiary is the sponsor of any
Employee Plan (other than the Canadian Employee Plans). Except as
provided in this Agreement, and other than any Employee Plans
sponsored by an Acquired Company, after the Closing, neither
Buyer nor the Acquired Companies will have any Liability with
respect to any of the Employee Plans.
7.18.2 None of the Acquired Companies, an Employee Plan, or an
administrator or fiduciary of any Employee Plan has taken any
action, or failed to take any action, that could subject it or
him or her or any other Person to any liability for any excise
tax or for breach of fiduciary duty under ERISA with respect to
or in connection with any Employee Plan.
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7.18.3 None of the Acquired Companies, an Employee Plan, an
administrator or fiduciary of any Employee Plan, or any other
Person has any liability to any plan participant, beneficiary or
other Person under any provision of ERISA or any other applicable
Law by reason of any payment of benefits or other amounts or
failure to pay benefits or any other amounts, or by reason of any
credit or failure to give credit for any benefits or rights (such
as, but not limited to, vesting rights) with respect to benefits
under or in connection with any Employee Plan. None of the
Acquired Companies is in arrears with respect to any
contributions under any Employee Plan.
7.18.4 Each funded Employee Plan that is intended to be qualified
under Section 401 (a) of the Code, and the trust or trusts
maintained in connection with such Employee Plan has received a
favorable Internal Revenue Service ("IRS") determination letter
as to the qualification under the Code.
7.18.5 No Acquired Company is a participating employer in any
multiemployer plan (as defined under applicable Canadian pension
laws or in Section 3(37) of ERISA).
7.18.6 None of the Employee Plans has incurred an "accumulated funding
deficiency" as defined in Section 412 of the Code.
7.18.7 No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by the Acquired Companies with
respect to any ongoing, frozen or terminated "single employer
plan", within the meaning of Section 4001(a)(14) of ERISA.
7.18.8 All accrued obligations of the Acquired Companies for payments
by it to trust or other funds or to any governmental or
administrative agency, with
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respect to pension benefits, unemployment compensation benefits,
social security benefits or any other benefits for employees of
the Acquired Companies have been paid or adequate accruals
therefor have been made in the Financial Statements, and none of
the foregoing has been rendered not due by reason of any
extension, whether at the request of any of the Acquired
Companies or otherwise.
7.18.9 To Seller's knowledge, the Employee Plans are in material
compliance with the requirements of Sections 162(k) (to the
extent applicable prior to its amendment by the Technical and
Miscellaneous Revenue Act of 1988) and 4980B of the Code and
Section 601 of ERISA.
7.18.10 Each Company Employee (a) as of October 2, 2003 for Company
Employees based in the United States, and (b) as of August 29,
2003 for Company Employees based in Canada, is listed on Section
7.18.10(a) of the Seller Disclosure Schedule. Any individual who
is employed or engaged by an Acquired Company, but primarily
associated with any Retained Business is listed on Section
7.18.10 (b) of the Seller Disclosure Schedule.
7.18.11 The Acquired Companies are subject to no Liability solely
because the Acquired Companies or the Business were ERISA
Affiliates of Seller or any other ERISA Affiliate of Seller.
7.19 Environmental. As of the date hereof:
(a) To Seller's knowledge, the Acquired Companies possess all
environmental, health and safety permits, licenses and
governmental authorizations (collectively, "Environmental
Permits") required under
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Environmental Laws to conduct the Business. Section 7.19 of
the Seller Disclosure Schedule lists all material
Environmental Permits required to be obtained or filed by
any Acquired Company, or by the Seller on behalf of any
Acquired Company.
(b) To Seller's knowledge, the Acquired Companies are in
compliance with all applicable Environmental Permits and
Environmental Laws except for any non-compliance that has
been corrected prior to the date hereof and for any
non-compliance arising in the ordinary course of business
that can be corrected in the ordinary course of business
without material Liability to the Acquired Companies;
(c) To Seller's knowledge, none of the Acquired Companies has
received any written communication from any Person that
alleges that an Acquired Company is not in compliance with
all applicable Environmental Laws and Environmental Permits
except for any non-compliance that has been corrected prior
to the date hereof and for any non-compliance arising in the
ordinary course of business that can be corrected in the
ordinary course of business without material Liability to
the Acquired Companies.
(d) There are no Environmental Claims pending, or to Seller's
knowledge threatened, against an Acquired Company, in either
case arising out of (i) any Site; (ii) any current or former
operations of an Acquired Company or their respective
predecessors or Affiliates; (iii) third-party consignment
warehouses, public warehouses, third-party co-packaging
facilities, or tolling facilities utilized by any Acquired
Company or their respective predecessors or Affiliates; or
(iv) any off-Site location to which Hazardous
65
Materials or materials containing Hazardous Materials were
sent for handling, storage, treatment or disposal.
(e) To Seller's knowledge, (a) no Releases of Hazardous
Materials have occurred at, from, in, to, on, or under any
Site, and (b) no Hazardous Materials are present in, on,
about or migrating from any Site, which are reasonably
likely to give rise to an Environmental Claim that would
result in a material Liability to any Acquired Company.
(f) To Seller's knowledge, neither any Acquired Company, any
predecessor of any Acquired Company, nor any entity
previously owned by any Acquired Company, has transported or
arranged for treatment storage, handling, disposal, or
transportation of any Hazardous Material to any off-Site
location which is reasonably likely to result in an
Environmental Claim against any Acquired Company.
(g) To Seller's knowledge, there have been no third-party audits
of environmental conditions conducted by, on behalf of, or
which are in the possession of the Company with respect to
any Site which have not been made available or delivered to
Buyer prior to execution of this Agreement.
(h) (i) "Environmental Claims" means all civil and criminal,
administrative, regulatory or judicial actions, suits,
demand, demand letters, directives, claims, liens
investigations, requests for information, proceedings,
notices of noncompliance or violation, or other
communication (in each case in writing) by any Person,
including any citizens' group, alleging noncompliance,
violation or potential liability (including potential
responsibility or liability for costs of enforcement,
66
investigation, cleanup, governmental response, removal or
remediation, for natural resources damages, property damage,
personal injuries, fines, penalties or for contribution,
indemnification, cost recovery, compensation or injunctive
relief) arising out of, or related to (x) the presence,
Release or threatened Release of any Hazardous Materials, or
(y) circumstances forming the basis of any violation or
alleged violation of, or liability under, any Environmental
Law or Environmental Permit.
(ii) "Environmental Laws" mean all foreign, federal, state,
provincial, municipal and local, civil and criminal,
laws, rules, regulations, orders, decrees, common law,
judgments or binding agreements existing as of the date
hereof issued, promulgated or entered into by or with
any Governmental Authority, relating to pollution, the
environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or
protection of human health and the environment,
including laws and regulations relating to Releases or
threatened Releases of Hazardous Materials, or
otherwise relating to the generation, manufacture,
processing, labeling, distribution, use, treatment,
storage, transport, handling of or exposure to
Hazardous Materials, including but not limited to: the
Clean Air Act, 42 U.S.C.(S) 7401 et seq.; the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C.(S) 9601 et seq.; the
Federal Water Pollution Control Act, 33 U.S.C.(S) 1251
et seq.; the Hazardous Material Transportation Act 49
U.S.C.(S) 1801 et seq.; the Federal Insecticide,
Fungicide
67
and Rodenticide Act 7 U.S.C.(S) 136 et seq.; the Food
Quality Protection Act of 1996, 7 U.S.C.A.(S) 136 et
seq.; the Resource Conservation and Recovery Act of
1976 ("RCRA"), 42 U.S.C.(S) 6901 et seq.; the Toxic
Substances Control Act, 15 U.S.C.(S) 2601 et seq.; the
Oil Pollution Act of 1990, 33 U.S.C.(S) 2701 et seq.;
and the state analogues thereto; Pest Control Product
Act (Canada), Fertilizers Act (Canada), Seeds Act
(Canada), Pesticides Act (Ontario), Environmental
Protection Act (Ontario), Ontario Water Resources Act,
and in each case the regulations thereunder and the
provincial analogues of such Canadian and Ontario
legislation and regulations.
(iii) "Hazardous Materials" means (x) any petroleum or
petroleum products, fractions or wastes, radioactive
materials or wastes, friable asbestos and
polychlorinated biphenyls; and (y) any other chemical,
material, substance or waste the generation,
manufacture, processing, labeling, distribution,
possession, use, treatment, storage or Release of which
is prohibited, limited or regulated under any
applicable Environmental Law.
(iv) "Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal,
discharge, dispersal, leaching or migration into the
environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or
within any building, structure or facility.
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(i) There are no Encumbrances (other than Permitted
Encumbrances) arising under or pursuant to any Environmental
Law on any Site currently owned by an Acquired Company and
material to the operation of the Business, including those
which would give rise to the imposition of special
conditions under any Environmental Law with respect to the
ownership, occupancy, development, use or transferability of
any such Site.
(j) To Seller's knowledge, there are no (i) underground storage
tanks, active or abandoned, (ii) polychlorinated biphenyl
containing equipment owned by an Acquired Company, or (iii)
asbestos containing material, at any Site currently owned by
an Acquired Company and which requires any remediation which
will likely result in a material Liability to the Acquired
Companies.
This Section 7.19 contains the exclusive representations and
warranties of Seller with regard to Environmental Claims, Environmental Laws,
Environmental Permits and any other environmental matters in this Agreement. For
purposes of the representations and warranties in Section 7.19(b) and (c), the
term "material Liability" shall mean a liability that can be satisfied (i) at a
monetary cost to the Acquired Companies that is generally consistent with costs
and expenses historically incurred and paid by the Acquired Companies, and (ii)
with an effect on the Business generally consistent with the effect on the
Business in the past to satisfy similar liabilities.
7.20 Sufficiency of Assets. Except (i) for the matters and items set
forth on Exhibit 9.4.3, (ii) for the services to be provided pursuant to
the Buyer Transition Services Agreement, and (iii) for the assets, systems
and personnel utilized by Seller or its Affiliates (other than the Acquired
Companies) to provide the services pursuant to the
69
Buyer Transition Services Agreement, upon consummation of the transactions
contemplated by this Agreement, the Acquired Companies shall have the
personnel, assets, properties, Company Material Contracts and services
necessary and presently utilized to conduct the Business as presently
conducted by the Acquired Companies.
7.21 Absence of Liens. Except for assets disposed of in the ordinary
course of business, each of the Acquired Companies has valid title to or a
valid leasehold in, or a contractual or common law right to use each item
of tangible personal property used in the conduct of the Business free and
clear of any Encumbrances, other than Permitted Encumbrances.
7.22 Real Estate. The Seller Disclosure Schedule sets forth a list all
real property owned in fee by the Acquired Companies (the "Owned Real
Property"). With respect to each such parcel of Owned Real Property:
(a) an Acquired Company has good and marketable title to the
parcel of Owned Real Property, free and clear of any
Encumbrance, except for Permitted Encumbrances;
(i) as of the date hereof, to Seller's knowledge, there are
no pending or threatened condemnation, expropriation,
eminent domain or other similar proceedings, lawsuits
or administrative actions relating to the Owned Real
Property which materially and adversely affect the
current use or occupancy thereof;
(ii) there are no outstanding written or oral rights,
agreements, options or rights of first refusal to
purchase any parcel of Owned Real Property, or any
portion thereof or interest therein, which have been
granted to any other Person;
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(iii) to Seller's knowledge, there are no parties (other
than the Acquired Companies) in possession of or
holding any rights to take possession of any parcel or
portion of Owned Real Property; and
(iv) except for any matter which would not materially
adversely affect the current use of a parcel of Owned
Real Property, (a) the legal description for the parcel
contained in the deed thereof describes such parcel
fully and adequately, (b) to Seller's knowledge the
buildings and improvements are located within the
boundary lines of the described parcels of land, are
not in violation of applicable setback requirements,
zoning laws, and ordinances (and none of the properties
or buildings or improvements thereon are subject to
"permitted non-conforming use" or "permitted
non-conforming structure" classifications), and do not
encroach on any easement which may burden the land, (c)
to Seller's knowledge the land does not serve any
adjoining property for any purpose inconsistent with
the current use of the land, and (d) to Seller's
knowledge the property is not located within any flood
plain or subject to any similar type restriction for
which any permits or licenses necessary to the use
thereof have not been obtained.
7.23 Insurance. Section 7.23 of the Seller Disclosure Schedule
contains a true and complete list of all policies of liability, theft,
fidelity, business interruption, fire, product liability, product
contamination, workmens' compensation, employer's liability and other
material forms of insurance (excluding any Employee Plan) provided by third
parties and held by Seller, any Affiliate of Seller, or any Acquired
Company for the benefit of any
71
Acquired Company, which have been issued for various policy periods between
January 1, 1994 and the present, and under which Seller or an Acquired
Company may currently be entitled to benefits. Section 7.23 of the Seller
Disclosure Schedule specifies the insurer, the type of insurance, the
policy number, the policy limits, the applicable deductible, and any
material pending claims thereunder which relate to the Acquired Companies.
Such policies are in full force and effect, all premiums for such policies
have been paid, and the aggregate limits of liability of said policies, if
any, have not been impaired.
7.24 Brokers and Finders. Except for Gleacher & Co. (whose fees shall
be paid by Seller), neither Seller nor any Acquired Company has employed
any investment banker, broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with the
transactions contemplated by this Agreement.
7.25 Investment Purpose. Seller is receiving the Shares pursuant to
this Agreement for investment for its own account and not with a view to,
or for sale in connection with, the distribution thereof. Seller
acknowledges that the Shares are not registered under the United States
Securities Act of 1933, as amended, any applicable state securities laws or
any applicable foreign securities laws, and that the Shares may not be
transferred or sold except pursuant to the registration provisions of the
United States Securities Act of 1933, as amended, or applicable foreign
securities laws or pursuant to an applicable exemption therefrom and
pursuant to state securities laws as applicable.
7.26 OSHA Matters. As of the date hereof, there are no pending, or to
the knowledge of the Seller, threatened Actions, in writing, against any
Acquired Company under any Law designed to provide safe and healthful
working conditions and to reduce occupational safety and health hazards, or
any program, whether government or private,
72
designed to provide safe and healthful working conditions, including the
Occupational Health and Safety Act (OSHA) (collectively, "OSHA Laws") other
than Actions that can be resolved without material Liability to the
Acquired Companies. As of the date hereof, to Seller's knowledge, except
for any non-compliance that has been corrected prior to the date hereof and
for any non-compliance arising in the ordinary course of business that can
be corrected in the ordinary course of business without material Liability
to the Acquired Companies, none of the Acquired Companies is in violation
of any OSHA Laws. This Section 7.26 contains the exclusive representations
and warranties of Seller with regard to OSHA Laws, and any violation
thereof or other matter related thereto, in this Agreement.
7.27 UAP Timberland.
7.27.1 UAP Timberland, L.L.C. ("Timberland") is a limited liability
company duly organized, validly existing and in good standing
under the laws of the State of Delaware. Timberland has the
limited liability company power to own, operate and lease its
properties and to carry on its business as now being conducted.
Timberland is qualified to conduct its business in all
jurisdictions in which such qualification or authorization is
required, except for those jurisdictions in which failure to be
so qualified or authorized would not have a Company Material
Adverse Effect.
7.27.2 Seller has previously made available to Buyer true, complete
and correct copies of the Fundamental Documents of Timberland as
in effect as of the date of this Agreement.
7.27.3 The Company owns, free and clear of all Encumbrances, a fifty
percent (50%) membership interest in Timberland (the "Timberland
Interest").
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The Timberland Interest is duly authorized, validly issued, fully
paid and nonassessable. To Seller's knowledge, no current or
former stockholder or any other Person is contending or has a
valid basis for contesting the ownership of the Timberland
Interest, or any portion thereof, or any distributions or
contributions relating thereto.
7.28 Canadian Employee Plans. The term "Canadian Employee Plans"
means, collectively, (i) the Pension Plan for Employees of United Agri
Products, a division of ConAgra Limited (the "UAP Plan"); and (ii) the
United Agri Products Savings Plan (which, for greater certainty, includes a
deferred profit sharing plan and a group registered retirement savings
plan). Except as reflected in the Seller Disclosure Schedule:
7.28.1 Neither Seller nor any of its Affiliates have any formal plans
or commitments, legally binding or otherwise, to create any
material additional pension, benefit or compensation plans or to
modify or change any existing Canadian Employee Plan, other than
as contemplated in the Canadian Operations Assignment and
Assumption Agreement, such as would affect any Canadian Company
Employees or former Canadian employees of UAP Canada or Access.
7.28.2 Each of the Canadian Employee Plans has been registered (where
required), established, maintained, funded, invested and
administered in compliance in all material respects with its
terms, any applicable collective agreement and with applicable
Laws.
7.28.3 All required contributions and/or premiums to be made under the
Canadian Employee Plans have been fully paid to the date hereof
in a
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timely fashion in accordance with the terms of that Canadian
Employee Plan and all applicable Laws, and no material Taxes,
penalties or fees are owing or eligible under any Canadian
Employee Plan.
7.28.4 As of the date of the last actuarial valuation, no material
unfunded liability, solvency deficiency, unpaid special payment
or experience deficiency, whether due or not, exists with respect
to any Canadian Employee Plan.
7.28.5 Neither Seller nor any of its Affiliates have received or
applied for any payment of surplus (or any payment as a result of
the demutualization of the insurer of any Canadian Employee Plan)
out of or in respect of any Canadian Employee Plan.
7.28.6 With respect to each of the Canadian Employee Plans that is
funded fully or partially by an insurance policy, there will be
no material liability of Access or UAP Canada as of the Closing
Date under any such insurance policy or ancillary agreement with
respect to any such insurance policy in the nature of a
retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of
events occurring prior to the Closing Date.
7.28.7 Seller has made available to Buyer accurate and complete
information regarding the costs of providing the Canadian
Employee Plans to employees and former employees for the last
three (3) years. All costs of administering the Canadian Employee
Plans (including fees for trustees and/or other service
providers) which are due and payable prior to the
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Closing Date by Seller or its Affiliates have been paid or will
be paid prior to the Closing Date.
7.28.8 None of the Canadian Employee Plans provides for benefit
increases (or the acceleration of or an increase in funding) that
are contingent upon or will become effective upon the entering
into of this Agreement or the completion of the transactions
contemplated hereby.
7.28.9 There has been no material change in the value of any Canadian
Employee Plan since the last valuation such as would affect the
actuarial reports in respect of such Canadian Employee Plan or
Access or UAP Canada's financial statements, and the actuarial
assumptions used in such documents have not materially changed
since the last valuation.
7.28.10 Neither Seller nor any of its Affiliates have taken any action
or made any filing with any Governmental Authority under any
applicable Law to terminate the Canadian Employee Plans or any of
them.
7.28.11 To the knowledge of Seller, no event has occurred respecting
any registered Canadian Employee Plan which would entitle any
person to cause the wind-up or termination of such Canadian
Employee Plan, in whole or in part, or which could otherwise be
reasonably expected to adversely affect the tax status of such
Canadian Employee Plan.
7.28.12 None of Seller, UAP Canada, ConAgra Limited, Access or any
administrator or fiduciary of any Canadian Employee Plan or any
agent of any of the foregoing have been in breach of any
fiduciary obligation with respect to the administration of the
Canadian Employee Plans or have engaged in any transaction or
have acted or failed to act in a manner which
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would subject such person to any material liability for breach of
fiduciary duty under applicable Law.
8. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller as set forth below. Such representations and warranties are
made subject to those matters set forth in the Buyer Disclosure Schedule dated
as of the date hereof and delivered as a separate document (the "Buyer
Disclosure Schedule").
8.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware. Buyer has the corporate power and authority to carry on its
business as it is now being conducted.
8.2 Corporate Authorization; Binding Effect. Buyer has all requisite
corporate power and authority to enter into this Agreement and the
Ancillary Agreements and any and all instruments necessary or appropriate
in order to effectuate fully the terms and conditions of this Agreement or
the Ancillary Agreements and to consummate the transactions contemplated
hereby and thereby and to perform its respective obligations hereunder or
thereunder. The execution and delivery of this Agreement and the Ancillary
Agreements by Buyer have been duly authorized by its Board of Directors.
This Agreement and the Ancillary Agreements constitute the valid and
binding agreement of Buyer enforceable against Buyer in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles
of equity.
8.3 Government Authorization; Third Party Consents. The execution,
delivery and performance by Buyer of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby requires no
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consent, approval, order or authorization of, registration, declaration, or
filing with, any Governmental Authority or any other third party other than
(a) the filing of a pre-merger notification report under the HSR Act; and
(b) compliance with any applicable non-United States Laws intended to
prohibit, restrict or regulate (i) foreign investment, including the
Investment Canada Act, or (ii) mergers and acquisitions or actions having
the purpose or effect of monopolization or restraint of trade, including,
without limitation, the Competition Act (Canada).
8.4 Effect of Agreement. The execution, delivery and performance of
this Agreement and the Ancillary Agreements by Buyer and the consummation
by Buyer of the transactions contemplated hereby and thereby will not, with
or without the giving of notice or the lapse of time or both, (a) assuming
compliance with the matters referred to in Section 8.3, violate any Law to
which Buyer is subject or to which any of its assets or properties are
bound; (b) violate any judgment, order, writ or decree of any court
applicable to Buyer; or (c) conflict with or result in the violation of any
provision of Buyer's Fundamental Documents.
8.5 Limited Reliance. Buyer has had the opportunity to visit Seller
and meet with their representatives to discuss the Acquired Companies, and
all materials and information requested by Buyer have been provided to
Buyer to Buyer's satisfaction. To the actual knowledge of Buyer, there
exists no material inaccuracy in, or any material breach of, any
representation, warranty or covenant of Seller contained in this Agreement
that is sufficient to allow Buyer or any other Person to bring a claim for
indemnification against Seller pursuant to the terms of this Agreement.
8.6 Terms of Sale. Buyer acknowledges that EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE ACQUIRED
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COMPANIES ARE BEING SOLD TO BUYER ON AN "AS-IS, WHERE-IS" BASIS WITHOUT ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OTHER THAN THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT.
8.7 Financing.
8.7.1 Debt Financing. Buyer has provided to Seller a true, correct and
complete copy of (i) the executed commitment letter, dated
October 28, 2003, from General Electric Capital Corporation (the
"Senior Credit Lender") pursuant to which the Senior Credit
Lender has committed (subject to the conditions set forth
therein) to Buyer to provide debt financing (the "Senior Bank
Commitment Letter"), and (ii) the executed commitment letter,
dated October 28, 2003 (the "Bridge Commitment Letter", and
together with the Senior Bank Commitment Letter, the "Commitment
Letters"), from UBS Loan Finance LLC and UBS Securities LLC
(together, the "Bridge Lender", and together with the Senior
Credit Lender, the "Lenders") pursuant to which, the Bridge
Lender has committed (subject to conditions set forth therein) to
Buyer to provide debt financing (the "Funded Bridge"), such debt
financing arrangements referred to herein as the "Financing". A
copy of the Commitment Letters is attached hereto as Exhibit
8.7.1. The Commitment Letters have not been amended or rescinded,
are in full force and effect and constitute the only
understanding of the Lenders and Buyer with respect to the
Lenders' obligations to fund the Financing.
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8.7.2 Equity Contribution. Buyer has provided to Seller a true,
correct and complete copy of an equity commitment letter (the
"Equity Commitment Letter") pursuant to which it has up to $150
million, and no less than $120 million, of equity capital that is
available for, and, concurrent with the consummation of the
Financing, shall be contributed to, Buyer as equity. The
aggregate proceeds of the Financing, the Funded Bridge (if
provided by Seller and Buyer) and the Equity Contribution will be
in an amount sufficient to consummate the transactions
contemplated hereby, to pay related fees and expenses, and to
provide for currently anticipated working capital needs of the
Acquired Companies as of Closing.
8.8 Investment Purpose. Buyer is purchasing the Stock for investment
for its own account and not with a view to, or for sale in connection with,
the distribution thereof. Buyer acknowledges that the Stock is not
registered under the United States Securities Act of 1933, as amended, any
applicable state securities laws or any applicable foreign securities laws,
and that the Stock may not be transferred or sold except pursuant to the
registration provisions of the United States Securities Act of 1933, as
amended, or applicable foreign securities laws or pursuant to an applicable
exemption therefrom and pursuant to state securities laws as applicable.
8.9 Brokers and Finders. Buyer has not employed any investment banker,
broker or finder or incurred any liability for any brokerage fees,
commissions or finders fees in connection with the transactions
contemplated by this Agreement.
8.10 Canadian Business. Buyer acknowledges and agrees that the
representations, warranties and covenants of Seller contained in this
Agreement are made as if, and under the assumption that, the transactions
contemplated by the Canadian Operations
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Assignment and Assumption Agreement had been completed as of the date
hereof, and Buyer agrees that Seller shall not be considered in breach of
any representation, warranty or covenant in this Agreement solely because
the transactions contemplated by the Canadian Operations Assignment and
Assumption Agreement are not completed as of the date hereof.
9. Covenants.
9.1 Covenants of Seller.
9.1.1 Conduct of Business. During the period from the date hereof to
the Closing Date, unless Buyer shall otherwise agree in writing
or as expressly contemplated by this Agreement, Seller shall
cause the Acquired Companies to (i) conduct and operate the
Business in all material respects in the usual and ordinary
course consistent with past practice, (ii) use commercially
reasonable efforts to preserve intact its business organizations
and relationships with third parties, and (iii) use commercially
reasonable efforts to keep available the services of their
present officers and key employees. Without limiting the
generality of the foregoing, unless Buyer shall otherwise agree
in writing (which agreement will not be unreasonably withheld) or
as expressly contemplated by this Agreement, during the period
from the date hereof to the Closing Date, Seller shall not permit
any Acquired Company to, except as described on Exhibit 9.1.1:
(a) adopt or propose any change in its Fundamental Documents;
(b) authorize for issuance, issue, deliver, sell, pledge,
dispose of, encumber or grant any Encumbrance on, or
authorize or propose the issuance, delivery,
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sale, pledge, disposition of, or grant of any Encumbrance
on, any of its Equity Securities, or enter into any
agreement with respect to any of the foregoing;
(c) acquire or agree to acquire any business or any corporation,
partnership, association or other business operation,
organization or division thereof (whether by merger,
consolidation, reorganization, acquisition of Equity
Securities or assets or otherwise);
(d) subject to Section 9.4 hereof, sell, abandon or otherwise
dispose of, or pledge, mortgage or otherwise encumber any
material assets of any Acquired Company other than sales of
inventory in the ordinary course of business or dispositions
of assets in an aggregate amount or having a fair market
value (whichever is higher) not greater than $500,000 on
arm's length terms to third parties who are not Affiliates
of Seller or any Acquired Company;
(e) subject to Section 9.4 hereof, other than in the ordinary
course of business waive, release, grant or transfer any
rights of material value;
(f) make any change in any method of accounting or accounting
policy, practice or procedure (excluding Tax accounting),
except as required by applicable Law or to comply with GAAP,
as in effect on the date of such change (and shall promptly
notify Buyer in writing of any such required change), make
or change any material election related to either Non-Income
Taxes or Canadian Taxes;
(g) except in the ordinary course of business and in a manner
which Seller believes, in good faith, to be in the best
interests of the Acquired
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Companies, amend or supplement in any material respect,
terminate, renew or renegotiate any Company Material
Contract or enter into any new contract which would have
been deemed to be a Company Material Contract if it had been
in effect on the date hereof;
(h) terminate, amend in any respect or fail to renew, obtain or
preserve any Company Permits except in the ordinary course
of business;
(i) adopt or amend any Employee Plan or collective bargaining
agreement, or increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay
any benefit other than pursuant to an existing agreement
(copies of which have been made available to Buyer prior to
the date hereof) or increases of salaries, compensation or
benefits in the ordinary course of business consistent with
past practice;
(j) declare, issue or make any direct or indirect redemption,
purchase or other acquisition of any of its Equity
Securities or property, declare, issue, pay, set aside for
payment or make any distribution or dividend to its
shareholders in cash or in kind (except as expressly
contemplated by Section 9.4.3 or Section 9.4.4 of this
Agreement) or split, combine, dividend, distribute or
reclassify any shares of its capital stock or other Equity
Securities;
(k) make any capital expenditures or commitments with respect
thereto aggregating more than $500,000;
(l) dispose of or permit to lapse any rights to the use of any
material Intellectual Property Rights, or disclose any such
material Intellectual
83
Property Rights not a matter of public knowledge, except for
any such disclosure required by applicable Law or judicial
process;
(m) engage in any practice to delay payment of any accounts
payable or other Liabilities beyond their scheduled due
dates, or to accelerate payment of or pay any accounts
payable or other Liabilities prior to their scheduled due
dates, except in the ordinary course of business and
consistent with past practice, or offer or make any new
incentives available to customers, except in the ordinary
course of business; or
(n) agree or commit to do any of the actions prohibited by
paragraphs (a) through (m) of this Section 9.1.1.
9.1.2 Access to Information.
(a) Generally. During the period from the date hereof until the
Closing Date, Seller will, and will cause the Acquired
Companies and each of their respective employees, officers,
auditors and agents to, provide Buyer and Buyer's counsel,
financial advisors, accountants and other authorized
representatives (except to the extent not permitted under
applicable Law as advised by counsel) with reasonable access
during normal business hours to the Acquired Companies'
books and records and properties, plants and personnel.
(b) Debt Financings. Without limitation on the foregoing, during
the period from the date hereof until the Closing Date, with
respect to the transactions contemplated by the Commitment
Letters, Seller will, and will cause the Acquired Companies
and each of their respective employees and officers, and
will direct its auditors and agents, to use reasonable
84
commercial efforts to assist Buyer, at Buyer's cost, in
respect to matters reasonably within Seller's and the
Acquired Companies' control, in satisfying the conditions
precedent provided for in the Commitment Letters and the
definitive documentation with respect to the facilities and
agreements contemplated by the Commitment Letters, including
efforts relating to obtaining or perfecting liens, releasing
liens, providing access to properties and assets for third
party appraisals, furnishing officers' certificates,
obtaining consents (including landlord consents),
establishing new lock-boxes and implementing a new cash
management system. Until Closing, Seller will upon
reasonable advance notice, provide Buyer with reasonable
access during normal business hours to the personnel of the
Acquired Companies for the limited purpose of preparing to
market a post-Closing high-yield debt offering to refinance
the Funded Bridge; provided that in no event shall such
access interfere in any material respect with the provision
of the performance of the normal employment duties of such
personnel and provided further that Buyer shall reimburse
Seller for any out-of-pocket costs and expenses, including
without limitation, any direct or allocated costs and
expenses relating to air travel, Seller's airplanes,
Seller's pilots and the like, incurred by Seller in
connection with such access and the preparation to market
such offering, including fees of attorneys, accountants and
other advisors.
9.1.3 Cash Management. During the period from the date hereof to the
Closing Date, the Acquired Companies shall continue to
participate in Seller's cash management program and,
notwithstanding anything in this
85
Agreement to the contrary, all cash generated by the Acquired
Companies prior to the Effective Time (including all lock box
receipts) shall be retained by Seller.
9.1.4 Interim Financial Information. Within fifteen (15) days
following the end of each month beginning with the month ending
October 31, 2003, and ending prior to the Closing, Seller shall
deliver to Buyer a copy of the pro-forma summary balance sheet of
the Business and the related summary statement of earnings for
such month (collectively, the "Monthly Reports"). The Monthly
Reports shall be prepared on the same basis as the Interim
Financials in accordance with Section 7.9.
9.1.5 Noncompetition Agreement. In order to further induce Buyer to
enter into this Agreement and consummate the transactions
contemplated hereunder, Seller agrees that for a period of five
(5) years after the Closing Date (the "Prohibited Term"), neither
Seller nor any of its Affiliates shall, directly or indirectly,
either for itself or any other Person, carry on activities or
participate in the ownership or management or control of, or the
financing of, or allow its name or reputation to be used in or by
in respect to the activity prohibited by this Section 9.1.5 (in
each case whether as an officer, director, partner, member,
agent, consultant, franchisee, franchisor, creditor or otherwise)
any present or future business enterprise that (i) engages in the
manufacture in the United States or Canada of agricultural or
non-crop protection chemicals as currently conducted by the
Business, (ii) sells or distributes in the United States or
Canada agricultural or non-crop protection chemicals as currently
conducted by
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the Business, (iii) sells in the United States or Canada
fertilizer products at retail, or (iv) develops or sells in the
United States or Canada agricultural seeds for grain crops,
provided that such restriction shall not apply to, and Seller and
its Affiliates shall not be prohibited from engaging in, the
Retained Businesses and activities incidental or related thereto.
Without limiting the remedies available, the parties to this
Agreement agree that damages at law would be an insufficient
remedy in the event of a breach of this Section 9.1.5 and Section
9.1.6 and that if Seller fails to keep and perform every covenant
of this Section 9.1.5 and Section 9.1.6, Buyer shall be entitled
to injunctive relief or other equitable remedies in the event of
any such failure to keep or perform. Notwithstanding the above,
the terms of this Section 9.1.5 shall not apply to (a) passive
investments of two percent (2%) or less in publicly traded
companies, (b) any acquisition by Seller or any of its Affiliates
of another Person, or the business of another Person that has an
ancillary division, department, subsidiary or other Affiliate,
that engages in the foregoing business (the "Competing Business")
but which Person is not principally engaged therein; provided,
however, that (1) promptly after acquiring such Competing
Business, Seller or such Affiliate shall notify Buyer thereof and
(2) if greater than 12 months remain in the Prohibited Term,
Seller or such Affiliate shall use reasonable commercial efforts
to divest itself of such Competing Business as soon as reasonably
practicable.
9.1.6 No-Hire; Non-Solicitation. Seller agrees that for a period of
two (2) years after the Closing Date, neither Seller nor any of
its Affiliates that are
87
Controlled by Seller shall hire or, directly or indirectly,
induce or attempt to induce any employee of the Company and its
Subsidiaries who is employed in a management (including senior
management, regional management, divisional management or
management of any operating company) or sales position to leave
the employ of the Company or its Subsidiaries or in any way
interfere with the relationship between the Company or its
Subsidiaries and any such management level employee thereof;
provided, however, nothing herein shall restrict the above
referenced parties from (i) soliciting any such employee by
general employment advertising or third party employment agencies
(so long as such agencies are not directed by such parties to
target such employees), or (ii) hiring any employee (other than a
senior corporate management employee, unless the Company and
Seller otherwise agree) who responds to such permitted
solicitation or seeks employment on an unsolicited basis
9.1.7 Certain Agreements. Seller agrees that the covenants set forth
in Sections 9.1.5 and 9.1.6 are reasonable with respect to their
duration, geographical area and scope, and acknowledge that but
for Sections 9.1.5 and 9.1.6, Buyer would not have entered into
this Agreement. If, at the time of enforcement of any of the
provisions of Section 9.1.5 or 9.1.6, a court holds that the
restrictions stated therein are unreasonable under the
circumstances then existing, the parties hereto agree that the
maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated periods, scope
or area. If any of the provisions of Section 9.1.5 or 9.1.6 are
held to be unenforceable in any
88
jurisdiction, then, as to such jurisdiction, such provision shall
be ineffective to the extent of its unenforceability in such
jurisdiction, without affecting the remaining provisions of
Section 9.1.5 or 9.1.6, as the case may be, in such jurisdiction,
or affecting in any other jurisdiction the validity or
enforceability of such provision of Section 9.1.5 or 9.1.6, as
the case may be.
9.1.8 Intellectual Property of UAP. Subject to the rights provided to
Seller and its Affiliates under the Seller Transition Service
Agreement, Seller hereby acknowledges and agrees that the
Acquired Companies shall specifically and exclusively retain all
right, title and interest in and to the names set forth on
Exhibit 9.1.8 (and derivations thereof) and to any logos,
trademarks, service marks, trade names, domain names, copyrights
and trade dress related thereto (the "UAP Intellectual
Property"). Seller (for itself and its Subsidiaries (not
including any Acquired Company)) acknowledges that it does not
own, any right, title or interest in or to the UAP Intellectual
Property. Seller agrees that promptly after Closing it will cause
Seller and its Subsidiaries (not including any Acquired Company)
to discontinue the use of any advertising or other form of media
that uses or references any such UAP Intellectual Property.
Seller further agrees that as soon as practicable, but in no
event longer than six (6) months after the Closing Date, it shall
remove all signage used by Seller and its Subsidiaries (not
including any Acquired Company) which refers to any UAP
Intellectual Property, and take all such other action as may be
89
necessary to dissociate Seller with the operations of the
Business after Closing.
9.1.9 UAP Timberland. During the period from the date hereof to the
Closing Date, unless Buyer shall otherwise agree in writing,
Seller shall not agree to any change in the Fundamental Documents
of Timberland.
9.2 Covenants of Buyer.
9.2.1 Environmental Covenant Not to Xxx. Except for claims made by
Buyer or any other party entitled to indemnification pursuant to
Section 12 hereof, Buyer and the Company hereby forever waive,
release and covenant not to bring or aid, and shall indemnify and
hold Seller and any of Seller's Affiliates harmless from and
against, any investigation, inquiry, Action, demand, Liability,
claim, lawsuit or any other type of administrative or judicial
action, whether known, unknown, actual or contingent, accrued or
unaccrued, against Seller or its Affiliates which Buyer, the
Acquired Companies, or any of their respective predecessors or
successors, may now or hereafter hold, which arises from or
relates to the operation or violation of any Environmental Law or
regulation, whether now existing or later enacted, in respect to
the assets or operations of the Acquired Companies, the Business,
or any Site.
9.2.2 Financing. Buyer and its Affiliates will use their respective
commercially reasonable efforts to obtain financing for the
transactions contemplated pursuant to the terms of the Commitment
Letters. Buyer will promptly inform Seller of all material
developments relating to arranging the Financing. Buyer and its
Affiliates shall make no change in the terms of
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the Financing or the Commitment Letters that could be adverse to
or prejudice Seller or could otherwise adversely affect the
Closing, and shall make no change to the conditions to the
closing of the Financing or the transactions contemplated by the
Commitment Letters, in each case without Seller's prior written
consent. In the event the Bridge Lender does not, for any reason,
provide the Funded Bridge at Closing, Buyer and Seller shall
provide the Funded Bridge pursuant to the terms set forth in
Exhibit 9.2.2 (the "Backup Funded Bridge"), with Seller and Buyer
each providing fifty percent (50%) of the initial face amount of
the Backup Funded Bridge. As soon as practical following Closing,
Buyer shall cause the Company to market, and use commercially
reasonable efforts to issue, a high yield issue to refinance the
Backup Funded Bridge.
9.2.3 No-Hire; Non-Solicitation. Buyer and the Company agree that for
a period of two (2) years after the Closing Date, neither Buyer,
the Company, nor any of their respective Affiliates that are
Controlled by them shall hire or, directly or indirectly, induce
or attempt to induce any employee of Seller and its Subsidiaries
who is employed in a management (including senior management,
regional management, divisional management or management of any
operating company) or sales position to leave the employ of
Seller or its Subsidiaries or in any way interfere with the
relationship between Seller or its Subsidiaries and any such
management level employee thereof; provided, however, nothing
herein shall restrict the above referenced parties from (i)
soliciting any such employee by general employment advertising or
third party employment
91
agencies (so long as such agencies are not directed by such
parties to target such employees), or (ii) hiring any employee
(other than a senior corporate management employee, unless the
Company and Seller otherwise agree) who responds to such
permitted solicitation or seeks employment on an unsolicited
basis.
9.2.4 Noncompetition Agreement. In order to further induce Seller to
enter into this Agreement and consummate the transactions
contemplated hereunder, and subject to the terms of the
International Supply Agreement, Buyer and the Company each agree
that during the three (3) year period following the Closing Date
(the "Buyer Prohibited Term") neither Buyer, the Company nor the
Acquired Companies shall, directly or indirectly, either for
themselves or any other Person, carry on activities or
participate in the ownership or management or control of, or the
financing of, or allow their name or reputation to be used in or
by in respect to the activity prohibited by this Section 9.2.4
(in each case whether as an officer, director, partner, member,
agent, consultant, franchisee, franchisor, creditor or otherwise)
any present or future business enterprise that engages in (i) the
manufacture or formulation of agricultural or non-crop protection
chemicals, (ii) the sale or distribution of agricultural or
non-crop protection chemicals, (iii) the sale of fertilizer
products at retail, or (iv) the development or sale of
agricultural seeds for grain crops, in each case in any country
other than the United States and Canada where such activity is
currently conducted by Seller or its Affiliates. Without limiting
the remedies available, the parties to this Agreement agree that
damages at
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law would be an insufficient remedy in the event of a breach of
this Section 9.2.4 and Section 9.2.3 and that if any of Buyer,
the Company or the Acquired Companies fails to keep and perform
every covenant of this Section 9.2.4 and Section 9.2.3, Seller
shall be entitled to injunctive relief or other equitable
remedies in the event of any such failure to keep or perform.
Notwithstanding the above, the terms of this Section 9.2.4 shall
not apply to (a) passive investments of two percent (2%) or less
in publicly traded companies, (b) any acquisition by Buyer, the
Company, the Acquired Companies, or any of their Affiliates of
another Person, or the business of another Person that has an
ancillary division, department, subsidiary or other Affiliate,
that engages in the foregoing business (the "Competing
Operation") but which Person is not principally engaged therein;
provided, however, that (1) promptly after acquiring such
Competing Operation, Buyer, the Company, any Acquired Company, or
such Affiliate shall notify Seller thereof and (2) if greater
than 12 months remain in the Buyer Prohibited Term, Buyer, the
Company, any Acquired Company, or such Affiliate shall use
reasonable commercial efforts to divest itself of such Competing
Operation as soon as reasonably practicable.
9.2.5 Certain Agreements. Buyer and the Company agree that the
covenants set forth in Sections 9.2.3 and 9.2.4 are reasonable
with respect to their duration, geographical area and scope, and
acknowledge that but for Sections 9.2.3 and 9.2.4, Seller would
not have entered into this Agreement. If at the time of
enforcement of any of the provisions of
93
Sections 9.2.3 or 9.2.4, a court holds that the restrictions
stated therein are unreasonable under the circumstances then
existing, the parties hereto agree that the maximum period, scope
or geographical area reasonable under such circumstances shall be
substituted for the stated periods, scope or area. If any of the
provisions of Sections 9.2.3 or 9.2.4 are held to be
unenforceable in any jurisdiction, then, as to such jurisdiction,
such provision shall be ineffective to the extent of its
unenforceability in such jurisdiction, without affecting the
remaining provisions of Section 9.2.3 or 9.2.4, as the case may
be, in such jurisdiction, or affecting in any other jurisdiction
the validity or enforceability of such provision of Section 9.2.3
or 9.2.4, as the case may be.
9.3 Covenants Regarding Certain Inter-Company Matters.
9.3.1 Termination of Affiliate Agreements. Except as provided in
Exhibit 9.3.1, the Affiliate Agreements (and all assets and
Liabilities related thereto) are hereby terminated as of the
Closing Date. Between the date hereof and the Closing Date,
Seller and Buyer shall put in place documentation to evidence the
arrangements described on Exhibit 9.3.1 as they exist on the date
hereof, together with any changes in such arrangements as
mutually agreed to by Seller and Buyer.
9.3.2 Intentionally left blank.
9.3.3 Inter-Company Contracts. The parties acknowledge that various
contracts relating to the operations of the Company and its
Subsidiaries or the Business were originally entered into in the
name of Seller or an Affiliate of Seller other than the Company
or its Subsidiaries, including those
94
contracts set forth in Section 9.3.3 of the Seller Disclosure
Schedule. Such contracts, or portions thereof relating to the
Business, have been or will be assigned to the Company at or
immediately prior to Closing pursuant to an assignment and
assumption agreement in a form mutually agreeable to Buyer and
Seller and consistent with the terms of this Agreement. From and
after the Closing Date, the Company shall indemnify and hold
Seller and its Affiliates harmless from and against all
Liabilities relating to or in connection with the Business that
arise under any such contracts (or such portions thereof). Buyer
shall further provide (and cause the Acquired Companies to
further provide) any guarantees and other commercially reasonable
assurances required to obtain the release of Seller and its
Affiliates (other than Acquired Companies) from such Liabilities.
Buyer shall, and shall cause the Acquired Companies to, not renew
or otherwise extend, or permit the renewal or extension of, the
existing term of, or create any new or additional obligations
under, any such contracts to the extent Buyer has or gains
knowledge of such contracts, other than any such contract with
respect to which Seller and its Affiliates (other than the
Acquired Companies) would have no potential Liability.
9.3.4 Unassigned or Unassignable Contracts. If any third party's
(including any Governmental Authority's) consent or approval to
the assignment or other transfer to any Acquired Company of any
contract or agreement referred to in Section 9.3.3 has not been
obtained prior to the Closing, then as to the burdens,
obligations, rights or benefits under or pursuant to such
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contracts or agreements (collectively, the "Rights") not
assignable to an Acquired Company thereof because such consent or
approval has not been obtained:
(a) After the Closing, Seller shall, and shall cause its
Affiliates to, hold the Rights in trust for the applicable
Acquired Company thereof for the account, benefit and burden
thereof;
(b) After the Closing, Buyer shall, and shall cause the Acquired
Companies to, and Seller shall, and shall cause its
Affiliates to, take all such reasonable actions and do all
such things as shall be reasonably necessary or desirable in
order that (i) the value of the Rights shall be preserved
and shall inure to the benefit of the applicable Acquired
Company and such that all benefits under the Rights may be
received by the applicable Acquired Company, and (ii) the
applicable Acquired Company will perform the burdens and
obligations under such Rights; and
(c) After the Closing, Seller, Buyer and the Company shall
continue to use their respective commercially reasonable
efforts to obtain such consent or approval.
9.3.5 Guarantees. Buyer and the Company shall use commercially
reasonable efforts to cause Buyer to be substituted in all
respects for Seller and its Affiliates (other than the Acquired
Companies), and Seller and its Affiliates (other than the
Acquired Companies) fully released, effective as of the Closing
or as soon as possible thereafter, in respect of all obligations
of Seller and its Affiliates (other than the Acquired Companies)
under each of the guarantees, indemnities, bonding
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arrangements, letters of credit and letters of comfort given by
Seller or its Affiliates (other than the Acquired Companies) for
the benefit of the Business (the "Guarantees") of which Buyer is
aware, including, without limitation, those which are identified
on Exhibit 9.3.5 hereto. If any such release cannot be obtained,
(a) Buyer shall indemnify and hold Seller and Seller's Affiliates
(other than the Acquired Companies) harmless from and against any
Liability relating to any Guarantee not released, (b) Seller
agrees to maintain (and shall cause to be maintained) each
Guarantee not released for the remainder of its remaining term,
and (c) Buyer shall, and shall cause the Acquired Companies to,
not renew or otherwise extend the original term of any contract,
agreement, lease, or other document or instrument to which such
unreleased Guarantee relates.
9.3.6 Canadian Transfer. Prior to the Closing Seller shall cause the
Canadian Business to be transferred by ConAgra Limited to UAP
Canada pursuant to the assignment and assumption agreement in the
form of Exhibit 9.3.6 attached hereto (the "Canadian Operations
Assignment and Assumption Agreement") and, in connection with
such transfer, ConAgra Limited and UAP Canada shall make the
following elections within the time (unless an earlier time is
referred to below) and in the manner prescribed by applicable
Law, which elections are agreed to by Buyer:
(i) an election pursuant to subsection 85(1) of the Income Tax
Act (Canada) and any similar election under any applicable
provincial Law for the transfer of the assets of the
Canadian Business at such elected amounts as may be
determined by Seller in its sole
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discretion, which election shall be made within 180 days of
Closing;
(ii) an election pursuant to section 22 of the Income Tax Act
(Canada) and any similar election under any applicable
provincial Law with respect to the sale of the accounts
receivable; and
(iii) an election pursuant to section 167 of the Excise Tax Act
(Canada) and any similar election under any applicable
provincial Law.
Buyer, ConAgra Limited and UAP Canada waive compliance with the
provisions of all applicable legislation regarding bulk sales or
similar laws in Ontario or other relevant jurisdictions in
respect of the purchase and sale of the Canadian Business and
Seller shall indemnify and hold harmless UAP Canada from and
against all claims, demands, actions, damages and expenses
(including, legal fees and expenses) which are made against
and/or which UAP Canada suffers as a result of, or in respect of
or arising out of such non-compliance.
9.4 Excluded Assets; Insurance.
9.4.1 Retained Intellectual Property. Seller specifically and
exclusively retains all right, title and interest in and to the
name "ConAgra" (and derivations thereof) and to any logos,
trademarks, service marks, trade names, domain names, copyrights
and trade dress related thereto (the "Retained Intellectual
Property"). Buyer acknowledges that it will not acquire, and that
the Acquired Companies do not own, any right, title or interest
in or to the Retained Intellectual Property. Buyer agrees that
promptly after Closing it will cause the Acquired Companies to
discontinue the use of
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any advertising or other form of media that uses or references
any such Retained Intellectual Property. Buyer further agrees
that as soon as practicable, but in no event longer than six (6)
months after the Closing Date, it shall remove all signage which
refers to any Retained Intellectual Property, and take all such
other action as may be necessary to dissociate Seller with the
operations of the Business after Closing.
9.4.2 Insurance.
(a) For purposes of this Agreement, the following terms shall
have the following meanings:
"Insurance Policies" shall mean the insurance policies provided
by Third Party Insurers potentially benefiting the Acquired
Companies providing for true risk transfer, a list of which is
included on Section 9.4.2 of the Seller Disclosure Schedule
(Seller makes no representation or warranty that the list is
complete), excluding, however, any medical, health, and worker's
compensation policies.
"Covered Claim" shall mean any Acquired Company claim resulting
from any occurrence, event or condition existing or occurring
prior to the Effective Time that is entitled to coverage under an
Insurance Policy.
"Covered Loss" shall mean the amount to which the insured is
entitled to recover with respect to a Covered Claim under the
Insurance Policy prior to application of applicable deductibles.
"Total Deductible" shall mean the deductible or retention under
the applicable Insurance Policy to which any Covered Claim is
subject, such amounts listed in Section 9.4.2 of the Seller
Disclosure Schedule for the Insurance Policies so listed on such
Schedule.
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"UAP Deductible" shall mean the deductible or retention amount
applicable to Covered Claims for which the Acquired Companies
retain responsibility, such amounts listed in Section 9.4.2 of
the Seller Disclosure Schedule for the Insurance Policies so
listed on such Schedule; the parties hereto acknowledge and agree
that the UAP Deductible for any Insurance Policies not listed in
Section 9.4.2 of the Seller Disclosure Schedule shall be the
deductible or retention amount applicable to the Covered Claims
for which the Acquired Companies retained responsibility, which
amount may be different than the deductible or retention amounts
listed on Section 9.4.2 of the Seller Disclosure Schedule.
"Seller Deductible" shall mean the amount equal to the difference
between the applicable Total Deductible and the applicable UAP
Deductible.
"Third Party Insurer" shall mean the named insurer in an
Insurance Policy.
"ALAE" shall mean all reasonable and necessary expenses
specifically allocable to a specific Covered Claim, including,
without limitation, (a) all costs associated with the
investigation, negotiation, settlement or defense of such claim,
including, without limitation, fees paid to attorneys, experts
and investigators, fees for medical examinations, witness' travel
expense and court reporter fees, and (b) expenses incurred by
Seller to finance or fund any letter of credit or surety bond
required by insurers with respect to such specific Covered Claim.
"ULAE" shall mean expenses which cannot be allocated to a
specific Covered Claim (a) incurred by a third party claims
administrator for the processing, tracking, reporting or handling
of Covered Claims; or (b) incurred by Seller to finance or fund
any letter of credit or surety bond required by insurers with
respect to Covered Claims generally.
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(b) As of the Effective Time, the Acquired Companies' coverages
under the Insurance Policies will be discontinued with
respect to post-Closing occurrences and Buyer shall cause
the Acquired Companies to implement their own policies and
programs as of the Effective Time.
(c) From and after the Closing, with respect to any Covered
Claim, (x) the Acquired Companies and Buyer shall be
responsible for, and shall pay, Covered Losses up to the
amount of the UAP Deductible, (y) Seller shall be
responsible for, and shall pay, Covered Losses, if any,
relating to such Covered Claim to the extent that the amount
of such Covered Loss exceeds the applicable UAP Deductible,
provided that such amount shall in no event be greater than
the applicable Seller Deductible (the "Seller Payment"), and
(z) the Acquired Companies shall be entitled to the benefit
of any payments required to be made by the Third Party
Insurer pursuant to Insurance Policies in respect to such
Covered Claim. Notwithstanding the foregoing, Seller shall
not be responsible for the Seller Deductible (or any portion
thereof), and shall not pay the Seller Deductible (or any
portion thereof) with respect to, Environmental Claims.
(d) To the extent permitted under the applicable Insurance
Policy, Buyer and/or the Acquired Companies shall have
direct rights as named insured under the Insurance Policies
and shall give the applicable Third Party Insurer written
notice of any Covered Claim, with a copy of such notice to
be given by the Company to Seller. In the event Buyer and/or
the Acquired Companies do not have direct rights under and
are not permitted under the applicable Insurance Policy to
give such notice, Seller shall,
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upon the Company's written request, to the extent permitted
by the Insurance Policy or otherwise consented to by the
Third Party Insurer, assign to the Company the right to such
Covered Claim and the Company shall give the Third Party
Insurer written notice of such Covered Claim with a copy of
such notice to be given by the Company to Seller. If such
assignment is prohibited, Buyer and the Acquired Companies
shall give Seller and the applicable Third Party Insurer
written notice of the Covered Claim and, subject to the
other terms and conditions of this Section 9.4.2, Seller
shall (i) as soon as practical but in any event within
thirty (30) business days following receipt of such written
notice from Buyer or the Acquired Companies provide written
notice to the applicable Third Party Insurer to the extent
such notice is required and (ii) hold the burdens,
obligations, rights or benefits relating to such Covered
Claim not assignable to the Company in trust for the Company
for the account, benefit and burden thereof. Buyer and the
Acquired Companies shall give the Third Party Insurer and
Seller any information required by an Insurance Policy or
Third Party Insurer.
(e) If Buyer, Seller or their respective Affiliates receive any
recovery relating to a Covered Claim from a Person other
than a Third Party Insurer, such as by way of contribution,
other than any recovery which is required to be paid to any
other Person, then the proceeds of such recovery, after the
subtraction of the costs to obtain such recovery, shall be
paid as follows: (i) First, Seller shall be entitled to such
proceeds up to the extent of the Seller Payment; and (ii)
the Acquired Companies shall be entitled to any
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remaining proceeds of such recovery. Buyer and the Acquired
Companies shall cooperate with Seller and provide Seller
with access to information to enable Seller to perform its
obligations under this Section 9.4.2. Buyer and the Acquired
Companies shall comply with all policy obligations,
including notice obligations, with respect to claims under
an Insurance Policy.
(f) If an Action has been, or is, taken against any of the
Acquired Companies which would have been a Covered Claim but
for (i) Seller's nonpayment of premiums for such policy, or
(ii) Seller's breach, other than any breach resulting from
any action or omission of or by Buyer or an Acquired
Company, of Seller's obligations under such policy which
results in coverage denial or restriction, then Seller shall
indemnify and hold harmless Buyer up to the maximum amount
of Covered Loss such insurer would have paid if (i) Seller
had satisfied the premium payments, or (ii) Seller had not
breached its policy obligations, as applicable.
Notwithstanding the foregoing, the parties agree and
acknowledge that Seller shall have no Liability or
obligation for the failure of any Third Party Insurer to pay
any Covered Loss as a result of (i) the financial failure or
insolvency of such Third Party Insurer, (ii) any failure of
the Acquired Companies to provide information or to take
action required by the Third Party Insurer or Insurance
Policies with respect to a Covered Claim, or (iii) any
action taken by the Acquired Companies with respect to such
Covered Claim, including, without limitation, any failure to
provide required notices to a Third Party Insurer. Buyer and
the Acquired
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Companies shall not agree to any settlement of any Covered
Claim under any Insurance Policy without the prior written
consent of Seller if such settlement amount exceeds the
applicable UAP Deductible. Seller shall have the right but
not the obligation to participate at its own expense in
defense of litigation arising out of any Covered Claim.
Seller's right of participation shall include the right to
exercise joint control over defense of such Covered Claim.
(g) Acquired Companies and Buyer shall be responsible for
payment of all ALAE until the UAP Deductible has been paid
out on any Covered Claims, except those in which Seller has
exercised its right to participate in the defense. On those
Covered Claims in which Seller is participating in the
defense, ALAE shall be shared equally from and after the
date of Seller's initial participation until the UAP
Deductible and Seller Deductible, respectively, have been
paid out on any Covered Claims. Seller shall be responsible
for payment of additional ALAE on Covered Losses only after
the UAP Deductible has been paid out. Acquired Companies and
Buyer shall also be responsible for payment of all ULAE
attributable to Covered Claims.
9.4.3 Corporate Services. Buyer acknowledges that (i) certain
management information systems and services are supplied by
Seller or its Affiliates (other than the Acquired Companies) to
the Business, including without limitation, the systems and
services listed on Exhibit 9.4.3 hereto (the "Corporate
Services"), and (ii) Buyer will not acquire, and the Acquired
Companies do not own, any right, title or interest in or to the
Corporate
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Services, except for the limited rights pursuant to the terms of
the Transition Services Agreement.
9.4.4 Retained Assets. The Retained Assets shall be distributed by the
Acquired Companies to Seller or its designees at or before
Closing in accordance with the assignment and assumption
agreements and other appropriate documents in a form mutually
agreeable to Buyer and Seller and consistent with the terms of
this Agreement.
9.5 Record Retention. Except as set forth below and also subject to
Section 13 hereof, Buyer will cause all books and records (whether retained
in hard copy, electronic or any other media) of the Acquired Companies that
are in or come into the possession of the Acquired Companies (the
"Records") to be retained for seven (7) years after Closing. In addition,
except as set forth below and also subject to Section 13 hereof, to the
extent any books and records of the Business are retained by Seller
following Closing (the "Retained Records"), Seller shall retain the
Retained Records for seven (7) years after Closing. During such term, each
party shall allow the other party and its representatives access to inspect
and copy the Records and Retained Records, as appropriate, during normal
business hours to the extent reasonably required for a legitimate business
purpose. In the event a party intends to destroy any Records or Retained
Records in its control at the end of such seven (7) year term, such party
shall first notify the other party at which time the other party shall have
the right to remove the Records at their its own cost. The parties
acknowledge that, in the past, Seller and the Acquired Companies have
routinely disposed of certain books and records on a periodic basis and
have not retained such books and records for seven (7) years.
Notwithstanding the foregoing, Seller and the Acquired Companies may
continue such routine periodic record destruction in the
105
ordinary course of business and in compliance with applicable Law so long
as prior to such destruction, the party intending to destroy the records
notifies the other party of the nature of such destruction and permits the
other party to remove and retain such records at its expense.
Notwithstanding the foregoing, following Closing Buyer shall, and shall
cause the Acquired Companies to, retain records pursuant to policies
established by certain legal proceeding and investigations which have been
separately disclosed by Seller to Buyer.
9.6 Governmental Approvals.
9.6.1 Subject to the terms and conditions herein provided and
applicable legal requirements, each of the parties hereto agrees
to use its commercially reasonable efforts to take, or cause to
be taken, all action, and to do, or cause to be done, and to
assist and cooperate with the other parties hereto in doing, as
promptly as practicable, all things necessary, proper or
advisable under applicable Laws to ensure that the conditions set
forth in Section 10 are satisfied and to consummate and make
effective the transactions contemplated by this Agreement.
9.6.2 Each of the parties shall use its commercially reasonable
efforts to obtain as promptly as practicable all consents,
waivers, approvals, authorizations or permits of, or registration
or filing with or notification to, any Governmental Authority or
any other Person required in connection with, and waivers of any
violations, defaults or breaches that may be caused by, the
consummation of the transactions contemplated by this Agreement.
9.6.3 Each party hereto shall promptly inform the other of any
communication from the FTC, the DOJ, the Competition Bureau
(Canada), the Investment
106
Review Division of Industry Canada or any other Governmental
Authority regarding any of the transactions contemplated by this
Agreement. If any party hereto or any Affiliate thereof receives
a request for additional information or documentary material from
any such Governmental Authority with respect to the transactions
contemplated by this Agreement, then such party shall use
commercially reasonable efforts to cause to be made, as soon as
reasonably practicable and after consultation with the other
party, an appropriate response in compliance with such request.
9.6.4 Without limiting the generality of the foregoing, Buyer will,
and Seller will use reasonable commercial efforts to, obtain all
authorizations, approvals or waivers required under the XXX Xxx,
xxx Xxxxxxxxxxx Xxx (Xxxxxx) and the Investment Canada Act to
consummate the transactions contemplated hereby, including,
without limitation, making all filings with the Antitrust
Division of the DOJ, the FTC, the Competition Bureau (Canada) and
the Investment Review Division of Industry Canada required in
connection therewith (the initial filings to occur no later than
three (3) business days following the execution and delivery of
this Agreement) and responding as promptly as practicable to all
inquiries received from the DOJ, the FTC, the Competition Bureau
(Canada), the Investment Review Division of Industry Canada or
any Governmental Authority for additional information or
documentation. Buyer and Seller shall pay their own respective
legal fees associated with the above referenced filings. Buyer
shall pay all other fees associated with the above
107
referenced filings. Each of Buyer and Seller shall furnish to the
other such necessary information and reasonable assistance as the
other may request in connection with its preparation of any
filing or submission which is necessary under the XXX Xxx, xxx
Xxxxxxxxxxx Xxx (Xxxxxx), or the Investment Canada Act. Buyer and
Seller shall keep each other apprised of the status of any
communications with, and any inquiries or requests for additional
information from, the FTC, the DOJ, the Competition Bureau
(Canada), and the Investment Review Division of Industry Canada.
The parties acknowledge that the email letter to the Investment
Review Division of Industry Canada dated October 23, 2003 has
satisfied the obligation in this Section 9.6.4 to make the
initial filings referred to in this Section 9.6.4 with the
Investment Review Division of Industry Canada. The parties
further acknowledge that Buyer has initiated a process to obtain
confirmation from the Investment Review Division of Industry
Canada that the transactions contemplated by this Agreement are
not reviewable under the Investment Canada Act and that Buyer
shall not be in breach of any of its covenants or obligations
under this Agreement in pursuing this process until November 7,
2003. If Buyer has not received such confirmation from the
Investment Review Division of Industry Canada by November 7,
2003, Buyer shall, unless otherwise agreed by Seller, file an
application for review under the Investment Canada Act by
November 14, 2003, Seller's agreement not to be unreasonably
withheld.
9.7 Investigation and Agreement by the Parties; No Other
Representations or Warranties.
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(a) Buyer acknowledges and agrees that it has made its own inquiry and
investigation into, and, based thereon, has formed an independent judgment
concerning, the Business, and Buyer has requested such documents and
information from Seller as Buyer considers material in determining whether
to enter into this Agreement and to consummate the transactions
contemplated in this Agreement. Buyer acknowledges and agrees that it has
had an opportunity to ask all questions of and receive answers from Seller
with respect to any matter Buyer considers material in determining whether
to enter into this Agreement and to consummate the transactions
contemplated in this Agreement. In connection with Buyer's investigation of
the Business, Buyer and its representatives have received from Seller or
its representatives certain projections and other forecasts for the
Business and certain estimates, plans and budget information. Buyer
acknowledges and agrees that there are uncertainties inherent in attempting
to make such projections, forecasts, estimates, plans and budgets; that
Buyer is familiar with such uncertainties; that Buyer is taking full
responsibility for making its own evaluation of the adequacy and accuracy
of all estimates, projections, forecasts, plans and budgets so furnished to
it or its representatives; and that Buyer will not (and will cause all of
its respective Subsidiaries or other Affiliates or any other Persons acting
on its behalf to not) assert any claim or cause of action against any of
Seller's direct or indirect partners, directors, officers, employees,
agents, stockholders, Affiliates, consultants, counsel, accountants,
investment bankers or representatives with respect thereto, or hold any
such other Person liable with respect thereto, except in the case of fraud
or willful misconduct on the part of Seller or such other Person.
(b) Buyer agrees that, except for the representations and warranties
made by Seller that are expressly set forth in this Agreement, Seller has
not made and shall not be
109
deemed to have made to Buyer or to any of its representatives or Affiliates
any representation or warranty of any kind. Without limiting the generality
of the foregoing, Buyer agrees, except as set forth in this Agreement, that
neither Seller nor any of Seller's Affiliates makes or has made any
representation or warranty to Buyer or to any of Buyer's representatives or
Affiliates with respect to:
(i) any projections, forecasts, estimates, plans or budgets of
future revenues, expenses or expenditures, future results of
operations (or any component thereof), future cash flows (or
any component thereof) or future financial condition (or any
component thereof) of the Business, the Acquired Companies
or the future business, operations or affairs of the
Business or the Acquired Companies heretofore or hereafter
delivered to or made available to Buyer or its counsel,
accountants, advisors, lenders, representatives or
Affiliates; and
(ii) any other information, statement or documents heretofore or
hereafter delivered to or made available to Buyer or its
counsel, accountants, advisors, lenders, representatives or
Affiliates with respect to the Business or the Acquired
Companies, except to the extent covered by a representation
and warranty made by Seller and contained in this Agreement.
9.8 Notification. For purposes of Section 8.5 and this Section 9.8,
(a) the "actual knowledge of Buyer" means the actual knowledge (without any
duty to investigate) of Xxxx Xxxxxx, Xxxx Xxxxxx or Xxxx Xxxxxx, and (b)
Buyer will not be deemed to have actual knowledge merely as a result of any
investigation or inquiry regarding the Business, including any review by
Buyer or its lawyers, consultants, accountants or other advisors
110
or agents of documents or materials that contain facts from which it may be
inferred that Buyer had such actual knowledge. Prior to Closing, Buyer
shall promptly inform Seller in writing when it has actual knowledge of any
breach of the representations, warranties or covenants contained in this
Agreement that is sufficient to allow Buyer or any other Person to bring a
claim for indemnification against Seller pursuant to the terms of this
Agreement. If Buyer notifies Seller of any breach of this Agreement or
Seller has knowledge of any breach of this Agreement by it, then no such
notification or knowledge will be taken into account in determining whether
any Person is entitled to indemnification under this Agreement.
9.9 Litigation.
9.9.1 Acquired Company Litigation. Buyer acknowledges that various
Actions are now pending or may arise after the date hereof which
result from operations of the Business or the Acquired Companies
and which name, or may in the future name, Seller (and/or one or
more of Seller's Affiliates), either individually, together with
one or more of the Acquired Companies, or otherwise, as a party
thereto, including, without limitation, the Actions described in
the Seller Disclosure Schedule (the "Company Litigation");
provided, however, that for the purposes of this Agreement, the
term "Company Litigation" shall not include the Retained
Litigation. From and after the Closing, Buyer shall indemnify,
defend and hold Seller and Seller's Affiliates harmless from and
against all Liability relating to the Company Litigation
including, without limitation, all costs and expenses of
defending the Company Litigation, but excluding any Liability
arising out of the operation of any business other than the
Business by Seller or its
111
Affiliates (other than the Acquired Companies) and excluding any
Liability to the extent Buyer is entitled to indemnification
pursuant to Section 12.1 hereof. Buyer may settle or compromise
any such Company Litigation (i) with the written consent of
Seller, which consent shall not be unreasonably withheld or
delayed, or (ii) without such consent, so long as such settlement
or compromise includes (A) an unconditional release of Seller
and/or its Affiliates, as the case may be, from all Liability in
respect of such Company Litigation, (B) does not subject Seller
or its Affiliates to any injunctive relief or other equitable
remedy, and (C) does not include a statement or omission of
fault, culpability or failure to act by or on behalf of Seller or
its Affiliates. Seller and its Affiliates shall have the right,
but not the obligation, to participate at their own expense in
the defense of any Company Litigation and any such participation
shall not in any way diminish or lessen the obligations of Buyer
hereunder. Seller shall reasonably cooperate with Buyer, at
Buyer's cost and expense, in connection with the defense of any
Company Litigation and, in connection therewith, shall furnish on
a timely basis all such information, records, documents and
testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested by
Buyer, and provide, on a timely basis, access to and availability
of its employees for purposes of such litigation, including,
without limitation, for purposes of assisting in trial
preparation and the conduct of any trial.
9.9.2 Retained Litigation. Notwithstanding anything contained in this
Agreement to the contrary, the parties hereto agree that Seller,
at its cost
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and expense, shall retain, and shall have the sole right to
control, all claims and causes of action which have been asserted
or may be asserted in the future by or on behalf of the Acquired
Companies in the following captioned lawsuits and/or any other
lawsuits which may be filed in the future with respect to the
subject matter of such captioned lawsuits (hereinafter
collectively referred to as the "Retained Litigation"):
(a) In re Linerboard Antitrust Litigation, MDL Docket No. 1261 (E.D.
Pa),
(b) In re Vitamins Antitrust Litigation (MDL No. 1285) Misc. 99-0197
(D.D.C.), and
(c) Giral v. F-Xxxxxxx XxXxxxx, Civil Action No. 98 CA 7467 (D.C.
Sup. Ct.);
including any appeals thereof.
Seller shall be entitled to receive and retain the benefits of any judgment
awarded or settlement reached in connection with the Retained Litigation. Buyer
shall, and shall cause the Acquired Companies to, reasonably cooperate with
Seller, at Seller's cost and expense, in respect to the Retained Litigation and,
in connection therewith shall furnish, on a timely basis, all information,
records, documents and testimony and attend such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably requested by
Seller and provide, on a timely basis, access to, and availability of, Company
Employees for purposes of such litigation, including, without limitation, for
purposes of assisting in trial preparation and the conduct of any trial. Seller
may settle or compromise the Retained Litigation (i) with the written consent of
Buyer, which consent shall not be unreasonably withheld or delayed, or (ii)
without such consent, so long as such settlement or compromise includes (a) an
unconditional release of the Acquired Companies from all Liability in respect of
such Retained Litigation to the extent
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any of the Acquired Companies are named as a defendant in such Retained
Litigation or it would be reasonable to expect that any of the Acquired
Companies will be named as defendants in connection with such Retained
Litigation, (b) does not subject Buyer or its Affiliates (including the Acquired
Companies) to any injunctive relief or any equitable remedy and (c) does not
include a statement or admission of fault, culpability, or failure to act by or
in behalf of Buyer or its Affiliates (including the Acquired Companies).
9.10 Confidentiality Agreement. Buyer, on behalf of itself and its
Affiliates, and Seller hereby agree that the Confidentiality Agreement
shall, effective as of Closing, terminate and be of no further force or
effect.
9.11 Xxxx. The parties acknowledge that Seller currently leases the
Xxxx 35 and that such lease includes an option to purchase the Xxxx 35 (the
"Xxxx Purchase Option") which may be exercised on the quarterly anniversary
dates of such lease (the "Buyout Date Restriction"). Buyer shall have the
option to include the Xxxx 35 as an asset of the Company in accordance with
the terms of this Section 9.11 (the "Option"). The Option can be exercised
by Buyer at any time prior to the tenth (10th) business day prior to the
Closing Date by written notice to Seller and, once exercised, shall be
irrevocable. If the Option is exercised, Seller shall exercise the Xxxx
Purchase Option, cause the Xxxx 35 to be transferred to the Company, and
Net Book Value shall be increased by an amount equal to the Xxxx Purchase
Option price plus reasonable costs of acquiring the Xxxx 35, including
filing fees, registration costs, taxes, attorney fees and other direct
out-of-pocket costs. If the Option is exercised, Seller shall use
commercially reasonable efforts to obtain a waiver of the Buyout Date
Restriction from the lessor of the Xxxx 35. If such waiver is received in
sufficient time prior to Closing to allow the Company to obtain title to
the Xxxx 35 at Closing, then title to the Xxxx 35 shall be transferred to
the Company
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immediately prior to the Effective Time. If the waiver is not received in
sufficient time prior to Closing to allow the Company to obtain title to
the Xxxx 35 at Closing, then the Xxxx Purchase Option will be exercised on
the quarterly anniversary date of the lease first succeeding the Closing
Date, and Seller shall, as soon as practicable, cause title to the Xxxx 35
to be transferred to the Company.
9.12 Termination Expenses. Buyer, on behalf of itself and its
Affiliates, and Seller hereby agree that the letter agreement, dated July
28, 2003 between Apollo Management V, L.P. and Seller shall terminate and
be of no further force or effect if Closing shall not have occurred on or
before November 30, 2003.
9.13 Greenville Environmental Matters.
9.13.1 Subject to all of the provisions of this Section 9.13, Seller
shall reimburse Buyer or the Acquired Companies for two-thirds
(2/3) of the direct out-of-pocket Environmental Costs paid by
Buyer or any Acquired Company to remediate as required by
Environmental Laws the presence, Release, threatened Release, or
migration of any Hazardous Materials in violation of
Environmental Laws, at, from, in, to, on or under the real
property and facilities located at 000 Xxxxxx Xxxx and 0000 Xxx
Xxxxxx Xxxx in Greenville, Mississippi (the "Greenville Site")
solely to the extent such Environmental Costs directly relate to
facts, circumstances or conditions existing prior to the
Effective Time (the "Greenville Environmental Matters"). Seller
shall not be required to pay, or reimburse Buyer for, any
Environmental Costs paid to remedy any conditions or
circumstances resulting from occurrences after the Effective
Time. Seller's obligation to reimburse Environmental Costs of
Buyer and the Acquired Companies
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shall specifically exclude any such costs to the extent such
costs are caused, contributed to, increased or exacerbated by
activities, operations, circumstances or conditions arising or
occurring at the Greenville Site after the Effective Time. Seller
shall have no obligation to reimburse Buyer for any Environmental
Costs for the Greenville Environmental Matters in excess of the
Lowest Cost Response.
9.13.2 Subject to the terms of this Section 9.13, Buyer or the Company
shall have exclusive control over all Greenville Environmental
Matters, including exclusive control over the selection and
performance of any response or remedy necessary to resolve any
Environmental Claims relating to the Greenville Environmental
Matters. Seller shall have the right, but not the obligation, at
its own expense, to participate in any discussions,
correspondence, proposals, meetings, hearings and proceedings
with or involving Governmental Authorities, environmental
consultants or contractors which relate to any Greenville
Environmental Matter, and Buyer shall provide reasonable advance
notice of the same to Seller. Buyer shall provide to Seller, at
Buyer's expense, copies of any documents relating to the above,
including, without limitation, any response, remediation or
corrective action proposals, notices of violations, claims,
communications or other information. Buyer and the Acquired
Companies shall not propose any response, remediation or
corrective action plan to any Governmental Authorities or other
third parties, and shall not implement or consent to implement
any such plan or any other remediation, relating to Greenville
Environmental Matters unless and until
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approved in writing by Seller, which approval shall not be
unreasonably withheld or delayed.
9.13.3 Buyer shall obtain the written consent of Seller, which consent
will not be unreasonably withheld or delayed, prior to any Phase
I, Phase II or any other environmental studies, surveys, or
investigations, including testing and sampling (collectively
"Environmental Studies"), being conducted with respect to the
Greenville Site, unless such action is required by a Governmental
Authority, Buyer's financing sources or any purchaser of the
Greenville Site from Buyer or an Acquired Company, in which case
Buyer will give Seller prompt advance written notice of all such
Environmental Studies proposed to be conducted. Seller or its
representatives shall be provided the opportunity to review and
monitor, be present at, and participate in any such Environmental
Studies and Buyer shall provide to Seller, at Buyer's cost,
copies of all such Environmental Studies and all information
obtained in connection with such Environmental Studies. Buyer
agrees that neither it, its representatives nor any third party
will conduct any construction, demolition, excavation, remodeling
or other physical changes, involving ground disruption, to the
property at the Greenville Site, without Seller's prior written
consent, which consent will not unreasonably be withheld or
delayed, unless such action is reasonably required to repair or
maintain the structural integrity or operational condition of the
facility, in which case (i) Buyer will give Seller prompt advance
written notice of such action, (ii) Seller or its representatives
shall be provided the opportunity to review
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and monitor, be present at, and participate in any such
activities of the facility, and (iii) Buyer shall provide Seller
with copies of any information obtained in connection with such
actions which may relate to Seller's obligations under this
Section 9.13. Buyer agrees that it will use reasonable commercial
efforts to conduct any Environmental Studies, construction,
demolition, excavation, remodeling and management of the
Greenville Site in a manner that will mitigate and not exacerbate
any exposure for Environmental Costs for which Seller may be
obligated under the provisions of this Section 9.13, until
Seller's obligations hereunder terminate.
9.13.4 All direct out-of-pocket costs related to the Greenville
Litigation, including counsel fees, defense costs, settlement
payments and judgments, incurred by Seller, Buyer or any Acquired
Company (the "Greenville Expenses") shall be fully paid by the
Company. Subject to the provisions of this Section 9.13, Seller
will reimburse Buyer for two-thirds (2/3) of the Greenville
Expenses paid by Buyer to the extent in excess of the Greenville
Reserves.
9.13.5 Seller shall, at its option, have the exclusive right to direct
and control the Greenville Litigation including the selection of
attorneys, experts and consultants. Seller shall have the right
to transfer the control of the Greenville Litigation to Buyer at
any time. If control of the Greenville Litigation is transferred
to Buyer, Seller shall have the right to participate in such
defense at Seller's cost. Buyer and Seller agree that the party
controlling the defense of the Greenville Litigation will not
settle such
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matter, or any part thereof, without written notice to and the
prior written consent of the other party, which consent will not
be unreasonably withheld or delayed. Buyer shall provide Seller
and its representatives all access to information, documentation,
employees and former employees, with respect to the Greenville
Site, and shall provide all reasonable cooperation, necessary for
Seller to defend the Greenville Litigation. Buyer shall not
discard or destroy any documents, records, or information in any
form or format, relating to the Greenville Site and Greenville
Litigation until Seller's obligations hereunder terminate.
9.13.6 Seller shall not be obligated, and shall have no Liability,
under the provisions of this Section 9.13 for any claim relating
to Greenville Environmental Matters which is presented to Seller
by Buyer more than four (4) years after the Closing Date.
Notwithstanding the foregoing, it is specifically understood and
agreed that any claim for Environmental Costs for which
indemnification may be sought need not be incurred or paid by
Buyer within the foregoing period, but only that notice of a
specific claim for reimbursement required under the provisions of
Section 9.13.1 be asserted and presented to Seller within such
period. Any such claim shall set forth, with reasonable
specificity, the nature of the claim, the remediation required,
and the source of the remediation requirement, and shall include
a copy of the demand or notice received by Buyer to which such
claim relates.
9.13.7 Seller's aggregate Liability under this Section 9.13 shall in
no event exceed Ten Million Dollars ($10,000,000.00).
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9.13.8 Notwithstanding anything in this Agreement to the contrary, the
parties hereto acknowledge and agree that the provisions of this
Section 9.13 are solely for the benefit of Seller, Buyer and the
Acquired Companies, and are not intended, and shall not create,
any third party beneficiary rights in or to any other Person. The
provisions of this Section 9.13 shall not be assignable except
that Buyer may assign all or any of its rights under this Section
9.13 by way of security to any Financiers lending money or making
other banking facilities available to the Buyer; provided,
further, however, that no such assignment shall relieve Buyer of
its obligations hereunder.
10. Conditions Precedent to Obligations.
10.1 Conditions to Each Party's Obligations. The respective
obligations of each party to consummate the transactions contemplated
herein shall be subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) Governmental Approvals. All authorizations, consents,
orders, declarations or approvals of, or filings with, or
terminations or expirations of waiting periods imposed by,
any Governmental Authority, which are required for or in
connection with the execution and delivery of this Agreement
and the consummation by each party hereto, for which the
failure to obtain, make or occur would have the effect of
making any of the transactions contemplated hereby illegal
shall have been obtained, made or occurred.
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(b) HSR Act. The waiting period (and any extension thereof)
under the HSR Act and any other applicable antitrust Laws
(other than the Competition Act (Canada)) shall have expired
or been terminated.
(c) Competition Act (Canada). Either: (i) the waiting period
(and any extension thereof) under the Competition Act
(Canada) shall have expired or been terminated or waived,
and the Commissioner of Competition shall have advised that
the Commissioner does not at the current time intend to make
an application under Section 92 of the Competition Act
(Canada); or (ii) a certificate shall have been issued under
Section 102 of the Competition Act (Canada).
(d) Investment Canada Act. Buyer shall: (i) have received
correspondence from the Investment Review Division of
Industry Canada confirming that the transactions
contemplated by this Agreement are not subject to an
application for review; or (ii) have provided a letter to
the Investment Review Division of Industry Canada confirming
discussions with the Investment Review Division of Industry
Canada, that the transactions contemplated by this
Agreement, in the view of the Investment Review Division of
Industry Canada, are not subject to an application for
review; or (iii) have received, where an application for
review has been made by Buyer, written evidence from the
Minister of Industry Canada that the Minister is satisfied
or deemed to be satisfied that the transactions contemplated
by this Agreement are likely to be of net benefit to Canada.
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(e) No Injunction. No Governmental Authority having jurisdiction
over Seller or Buyer, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated,
enforced or entered any Law, decree, injunction or other
order (whether temporary, preliminary or permanent) which is
then in effect nor shall any Action be pending (if such
pending Action could reasonably be expected to be
successful) at what would otherwise be the Closing Date and
has the effect of making the transactions contemplated
herein illegal or otherwise prohibiting consummation of the
transactions contemplated herein.
10.2 Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions contemplated herein shall be subject to the
satisfaction on or prior to the Closing Date of the following additional
conditions, unless waived in writing by Buyer:
(a) Representations and Warranties. Each of the representations
and warranties of Seller set forth in this Agreement shall
be true and correct in all respects as of the date of this
Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date except for
such inaccuracies that would not have a Company Material
Adverse Effect (it being understood that for purposes of
this Section 10.2(a), the representations and warranties
shall be read as if there were not Company Material Adverse
Effect qualifications therein except for the Company
Material Adverse Effect qualifier referred to in this
Section 10.2(a)). Buyer shall have received an officer's
certificate signed on behalf of Seller to such effect.
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(b) Performance of Obligations of Seller. Seller shall have
performed in all material respects all obligations required
to be performed by it under this Agreement on or prior to
the Closing Date, and Buyer shall have received an officer's
certificate signed on behalf of Seller to such effect.
(c) Financing. The conditions to the Financing set forth in the
Senior Bank Commitment Letter shall have been satisfied.
(d) Deliveries. The deliveries by Seller referred to in Section
4 shall have been made.
10.3 Conditions to Obligation of Seller. The obligation of Seller to
consummate the transactions contemplated herein shall be subject to the
satisfaction on or prior to the Closing Date of the following additional
conditions, unless waived in writing by Seller:
(a) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be
true and correct in all respects as of the date of this
Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, except
for such inaccuracies that would not have a material adverse
effect on Buyer's ability to consummate the transactions
contemplated by this Agreement or the Ancillary Agreements.
Seller shall have received an officer's certificate signed
on behalf of Buyer to such effect.
(b) Performance of Obligations of Buyer. Buyer shall have
performed in all material respects all obligations required
to be performed by it under this Agreement on or prior to
the Closing Date, and Seller shall have received an
officer's certificate signed on behalf of Buyer to such
effect.
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(c) Deliveries. The deliveries by Buyer referred to in Section 4
shall have been made.
10.4 Conditions Relating to Ancillary Canadian Assets. In the event
that all other conditions to consummation of the transaction set forth
herein have been satisfied or waived on or prior to the Closing Date except
for the condition set forth in Section 10.1(d) (the "IRD Condition"), then
the parties agree that the Closing shall occur pursuant to the terms hereof
except that, prior to the Closing, the parties shall enter into a separate
agreement by which the ownership of and title to the Ancillary Canadian
Assets shall be retained by, or transferred to, Seller prior to the
Effective Time and operated for the benefit of the Acquired Companies, at
Buyer's sole risk, cost, expense, and liability (to the same extent as if
Buyer owned or leased the Ancillary Canadian Assets), until such time as
the IRD Condition has been satisfied or waived, at which time the Ancillary
Canadian Assets will be transferred to Buyer or an Acquired Company (the
"Retention Agreement"). The Retention Agreement shall further provide the
mechanism by which Buyer shall obtain the benefit of the Ancillary Canadian
Assets and shall pay or cause to be paid and/or reimburse or cause to be
reimbursed, Seller for all such risk, cost, expense and liability.
Retention of the Ancillary Canadian Assets pursuant to the Retention
Agreement shall not affect the remaining terms of this Agreement. The
parties agree that the failure to satisfy the IRD Condition shall in no way
hinder or prevent the Closing of the transaction as otherwise contemplated
hereunder. Upon satisfaction of the IRD Condition, Seller shall promptly
transfer title to and ownership of the Ancillary Canadian Assets to Buyer
under the terms hereof.
11. Termination.
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11.1 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Closing Date:
(a) by mutual written agreement of Seller and Buyer;
(b) by either Seller or Buyer, if Closing shall not have
occurred on or before December 31, 2003, as such date may be
extended by the 30-day cure period provided for in Sections
11.1(d) and (e) (the "Termination Date"); provided that the
party seeking to terminate this Agreement pursuant to this
Section 11.1(b) shall not have breached in any material
respect its obligations under this Agreement in any manner
that shall have proximately contributed to the failure to
consummate the transactions contemplated herein on or before
the Termination Date;
(c) by either Seller or Buyer, if any permanent injunction,
order, decree or ruling by any Governmental Authority of
competent jurisdiction preventing the consummation of the
transactions contemplated herein shall have become final and
nonappealable; provided, however, that the party seeking to
terminate this Agreement pursuant to this Section 11.1(c)
shall have used commercially reasonable efforts to remove
such injunction or overturn such action;
(d) by Buyer, if there has been a material breach of the
representations or warranties, covenants or agreements of
Seller set forth in this Agreement, which breach is not
curable or, if curable, is not cured within thirty (30) days
after written notice of such breach is given by Buyer to
Seller; provided, however, that this termination right under
this Section 11.1(d) shall not be available unless the
individual or aggregate impact of all
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inaccuracies of such representations and warranties (without
regard to any Company Material Adverse Effect qualifier(s)
contained in any and each such representation or warranty)
would cause any condition set forth in Section 10.1 or 10.2
to not be fulfilled (or rendered not reasonably capable of
being fulfilled);
(e) by Seller, if there has been a material breach of any of the
representations or warranties, covenants or agreements of
Buyer set forth in this Agreement, which breach is not
curable or, if curable, is not cured within thirty (30) days
after written notice of such breach is given by Seller to
Buyer.
11.2 Effect of Termination. In the event of termination of this
Agreement pursuant to this Section 11, the transactions contemplated hereby
shall be deemed abandoned and this Agreement shall forthwith become void,
except that the provisions of this Section 11.2, all of Section 14 and the
terms of the Confidentiality Agreement shall survive any termination of
this Agreement; provided, however, that nothing in this Agreement shall
relieve any party from liability for any breach of this Agreement.
12. General Indemnity.
12.1 Indemnification of Buyer by Seller. From and after the Closing,
Seller shall indemnify and hold Buyer and the Acquired Companies, and the
directors, officers, employees and Affiliates of Buyer, harmless from and
against any and all Losses that may be sustained, suffered or incurred by
any of them as a result of, or based upon or arising from or in respect of:
12.1.1 Any misrepresentation or breach of warranty on the part of
Seller or any of its Affiliates (other than the Acquired
Companies) under this
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Agreement, or from any misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished by
Seller or its Affiliates (other than the Acquired Companies) to
Buyer hereunder; provided that for purposes of this Section
12.1.1 all such representations and warranties shall be made
without regard to any Company Material Adverse Effect
qualifier(s) contained in any and each such representation and
warranty;
12.1.2 Any nonfulfillment of any covenant or agreement on the part of
Seller or any of its Affiliates (other than the Acquired
Companies) under this Agreement;
12.1.3 The Retained Assets, and operation of the Retained Businesses
prior to the Closing Date;
12.1.4 The matters referred to in the press releases of Seller dated
May 25, 2001 and June 22, 2001; provided that indemnifiable
Losses under this Section 12.1.4 shall be limited to any fines,
penalties or out-of-pocket settlement or judgment payments
imposed on the Company, or claims for director and officer
indemnification made against the Company under corporate Law, the
Company's currently existing Fundamental Documents or a currently
existing employment agreement by any director or officer of the
Company (in their capacity as a director or officer), to the
extent relating to such matters.
12.1.5 Any Environmental Costs in connection with (i) the presence,
Release, threatened Release, or migration of any Hazardous
Materials, at, from, in, to, on or under the Retained Site,
including but not limited to pollution,
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contamination, damage degradation, natural resource damages,
injury or damage to property related thereto; (ii) exposure or
injury (including death) of Persons to Hazardous Materials at or
emanating from the Retained Site; or (iii) any violation of any
Environmental Law or Environmental Permit at the Retained Site
(all of the above collectively defined as the "Pre-Existing
Environmental Matters"). For purposes of this Agreement,
"Environmental Costs" means any losses, obligations, damages,
fines, penalties, judgments, settlements, actions, claims, costs
and expenses (including without limitation, reasonable fees,
disbursements and expenses of experts, engineers and consultants,
and the costs of investigations or feasibility studies and
performance of remedial or removal actions and cleanup
activities) required under (or to enable compliance with) any
Environmental Law or Environmental Permit. Seller shall have
exclusive control over the cessation of operations and closing of
the Retained Site, including the selection and performance of any
response or remedy necessary to the cessation of operations and
closing. Buyer and the Company shall cooperate with Seller in all
matters relating to the cessation of operations and closing of
the Retained Site, including but not limited to compliance with
Ohio hazardous waste laws and Cessation of Regulated Operations
rules, as set forth in the Ohio Revised Code and Ohio
Administrative Code. Buyer and the Company shall provide Seller
and its representatives access to and cooperation of Buyer's and
the Company's employees and environmental consultants and access
to all documents, records or information, in any form or format,
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prepared by or on behalf of Buyer or the Company or in Buyer's or
the Company's possession, necessary to the cessation of
operations and closing of the Retained Site.
12.1.6 All other Actions, demands, assessments, adjustments, costs and
expenses incident to the foregoing, including, without
limitation, attorneys' fees and other out-of-pocket expenses.
For purposes of Section 12.1.1 the representations and warranties set forth
in Sections 7.9.2, 7.13.1, 7.14.1, 7.14.2, 7.15, 7.17, 7.19, 7.22(a), and 7.26
shall be read as if the words "as of the date hereof" did not appear therein and
the representations and warranties in such sections, although not required to be
made as of the Closing Date pursuant to Section 10.2(a), will be deemed to have
been made as of the date hereof and as of the Closing Date (with such
representations and warranties to be read for such purposes so that the term "as
of the date hereof" shall mean "as of the Closing Date").
12.2 Indemnification of Seller by Buyer. From and after the Closing,
Buyer and the Company shall indemnify and hold Seller, and its directors,
officers, employees and Affiliates, harmless from and against any and all
Losses that may be sustained, suffered or incurred by any of them as a
result of, or based upon or arising from or in respect of:
12.2.1 Any misrepresentation or breach of warranty on the part of
Buyer or its Affiliates under this Agreement, or from any
misrepresentation in or omission from any certificate or other
instrument furnished or to be furnished by Buyer or its
Affiliates to Seller hereunder; and
12.2.2 Any nonfulfillment of any covenant or agreement on the part of
Buyer or its Affiliates under this Agreement, including the other
indemnification obligations of Buyer set forth in this Agreement;
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12.2.3 The failure of Buyer or the Acquired Companies to pay, perform
or discharge any of the Liabilities of any Acquired Company
arising prior to, at or after the Closing, except to the extent
such Liability is subject to indemnification from Seller under
this Agreement or any of the Ancillary Agreements.
12.2.4 All other Actions, demands, assessments, adjustments, costs and
expenses incident to the foregoing or the Buyer Indemnities and
including, without limitation, attorneys' fees and other
out-of-pocket expenses.
12.3 Third Party Claims. Except as set forth in Section 13, all claims
for indemnification pursuant to this Agreement relating to third party
claims shall be asserted and resolved as set forth in this Section 12.3,
subject, however, to the terms, conditions and limitations otherwise set
forth in this Agreement. In the event that any written claim or demand for
which an Indemnifying Party would be liable is asserted against or sought
to be collected from any Indemnified Party by a third party, such
Indemnified Party shall promptly, but in no event more than 30 days
following such Indemnified Party's receipt of such claim or demand, notify
the Indemnifying Party in writing of such claim or demand and the amount or
the estimated amount thereof to the extent then feasible (which estimate
shall not be conclusive of the final amount of such claim and demand) (the
"Claim Notice"). The Indemnified Party shall not be foreclosed by any
failure to provide timely notice of the existence of a third party claim or
demand to the Indemnifying Party except to the extent that the Indemnifying
Party incurs any material out-of-pocket expense or otherwise has been
materially prejudiced as a result of such delay. With respect to any claim
or demand set forth in a Claim Notice, if the Indemnifying Party
acknowledges in a writing delivered to the Indemnified Party within
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60 days following receipt of a Claim Notice (the "Notice Period") that the
Indemnifying Party is obligated under the terms of their indemnification
obligations hereunder in connection with such claim or demand, then the
Indemnifying Party shall have the right to assume the defense of such claim
or demand in good faith and at its own expense and by its own counsel;
provided, however, that the Indemnifying Party shall not have the right to
assume the defense of any third party claim, notwithstanding the giving of
such written acknowledgement, if (i) the claim seeks only an injunction or
other equitable relief, (ii) the Indemnified Party shall have been advised
by counsel that there are one or more legal or equitable defenses available
to it which are different from or in addition to those available to the
Indemnifying Party and, in the reasonable opinion of the Indemnified Party,
counsel for the Indemnifying Party could not adequately represent the
interests of the Indemnified Party because such interests could be in
conflict with those of the Indemnifying Party, (iii) such action or
proceeding involves, or could have a material effect on, any material
matter beyond the scope of the indemnification obligation of the
Indemnifying Party or (iv) the Indemnifying Party shall not have assumed
the defense of the third party claim within the Notice Period. All costs
and expenses incurred by the Indemnifying Party in defending such claim or
demand shall be a liability of, and shall be paid by, the Indemnifying
Party. So long as the Indemnifying Party (a) has assumed the defense of
such third party action in accordance with this Section 12.3 and is
defending any such third party claim, or (b) has been precluded from
assuming the defense of such third party claim by any of clauses (ii) to
(iv) of this Section 12.3, the Indemnified Party shall not settle or
compromise such third party claim without the consent of the Indemnifying
Party. The Indemnified Party shall make available to the Indemnifying Party
all information reasonably available to such Indemnified Party relating to
such
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claim or demand. The Indemnified Party shall cooperate in all reasonable
respects with the Indemnifying Party and its counsel in defending any
claims or demands, including, without limitation, making available to the
Indemnifying Party all information reasonably available to the Indemnified
Party relating to such claim or demand, and shall not take any action which
is reasonably likely to be detrimental to such defense. In addition, the
Indemnified Party and the Indemnifying Party shall render to each other
such assistance as may reasonably be requested in order to ensure the
proper and adequate defense of any such claim or demand. The party in
charge of the defense shall keep the other party fully apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto. If any Indemnified Party desires to participate in, but
not control, any such defense or settlement it may do so at its sole cost
and expense. The Indemnifying Party shall not, without the prior written
consent of the Indemnified Party, settle, compromise or offer to settle or
compromise any such claim or demand (i) on a basis which would result in
the imposition of a consent order, injunction or decree which would
restrict the future activity or conduct of the Indemnified Party or any
Subsidiary or Affiliate thereof without the written consent of the
Indemnified Party and (ii) without obtaining a (a) release from all
Liability with respect to such claim or demand and (b) the dismissal with
prejudice of any litigation or other proceeding with respect to such claim
or demand, in each case, for the benefit of and in form and substance
reasonably satisfactory to the Indemnified Party. If the Indemnifying Party
elects not to defend the Indemnified Party against a claim or demand for
which the Indemnifying Party would be liable, whether by not giving the
Indemnified Party timely notice as provided above or otherwise, then the
amount of any such claim or demand, or, if the same be contested by the
Indemnified Party, then that portion thereof as to which such defense is
unsuccessful
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(and the reasonable costs and expenses pertaining to such defense) shall be
the liability of the Indemnifying Party hereunder. If the Indemnifying
Party elects not to defend any such third party claim, the Indemnified
Party shall have no obligation to do so, but may settle or compromise any
such third party claim at the risk and expense of the Indemnifying Party.
To the extent the Indemnifying Party shall control or participate in the
defense or settlement of any third party claim or demand, the Indemnified
Party will give to the Indemnifying Party and its counsel access to, during
normal business hours, the relevant business records and other documents,
and shall permit them to consult with the employees and counsel of the
Indemnified Party. The Indemnified Party shall use commercially reasonable
efforts in the defense of all such claims and demands.
12.4 Direct Claims. In any case in which an Indemnified Party seeks
indemnification pursuant to this Agreement which is not subject to Section
12.3 because no third party action is involved, the Indemnified Party shall
promptly notify the Indemnifying Party in writing of any Losses which such
Indemnified Party claims are subject to indemnification under the terms of
this Agreement. The Indemnified Party shall not be foreclosed by any
failure to provide timely notice except to the extent that the Indemnifying
Party has been prejudiced as a result of such delay.
12.5 Limitations.
12.5.1 Basket. Seller shall have no Liability for indemnification
obligations under this Agreement pursuant to Section 12.1.1 (or,
in each such case, Section 12.1.6 to the extent relating thereto)
except to the extent the aggregate Liability for such
indemnification obligations exceeds Ten Million Dollars
($10,000,000) (the "Indemnity Basket"), provided that Liability
for indemnification obligations for breaches of the
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representations and warranties contained in Sections 7.1, 7.2,
7.3, 7.6, 7.7, 7.8, 7.11, 7.24 and 7.25 shall not be subject to
the Indemnity Basket.
12.5.2 Cap. Seller's aggregate Liability for indemnification
obligations under this Agreement pursuant to Section 12.1.1 (or
Section 12.1.6 to the extent relating thereto) shall in no event
exceed One Hundred and Fifty Million Dollars ($150,000,000) (the
"Indemnity Cap"), provided that Liability for indemnification
obligations for breaches of the representations and warranties
contained in Sections 7.1, 7.2, 7.3, 7.6, 7.7, 7.8, 7.11, 7.24
and 7.25 shall not be subject to the Indemnity Cap.
12.5.3 Remedies. Except in the case of fraud or intentional
misrepresentation, the provisions of this Section 12 and Section
13 shall be the exclusive basis for the assertion of claims for
monetary damages against, or the imposition of Liability on,
Seller, Buyer or the Company or their respective Affiliates in
respect of the transactions contemplated herein, including,
without limitation, any breach or alleged breach of this
Agreement.
12.5.4 Mitigation. Seller, Buyer and the Company will use commercially
reasonable efforts to mitigate the losses, costs, expenses and
damages for which such party may become entitled to
indemnification hereunder, including without limitation, Section
13 hereof.
12.5.5 Net Recovery. The amount to which Buyer may become entitled
pursuant to Section 12 or Section 13 hereof shall be net of any
recovery (whether by way of payment, discount, credit, set off,
Tax benefit, counterclaim or otherwise) received by Buyer or any
Acquired Company from a third
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party (including any insurer or Governmental Authority) or any
Tax cost in respect of such claim. In computing the amount of any
such Tax cost or Tax benefit, the indemnified party shall be
deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the
receipt or accrual of any indemnity payment hereunder or the
deductibility of any indemnified Loss. The amount of any increase
or reduction hereunder shall be adjusted to reflect any final
determination with respect to the indemnified party's Liability
for Taxes and, if necessary, each of Seller or Buyer, as the case
may be, shall make payments to the other to reflect such
adjustment. To the extent that such recovery does not decrease
Seller's obligations because the recovery was not actually
received until after Seller made the applicable payment, such
recovery shall be promptly repaid by Buyer to Seller, less all
reasonable costs, charges and expenses incurred by Buyer in
obtaining such recovery from the third party.
12.5.6 Reserves. Seller's Liability for any breach of representation,
warranty or covenant, under Sections 12 or Section 13 hereof, or
otherwise shall be reduced to the extent of any reserve (taking
into account prior claims against such reserve, if any) reflected
in the Final Net Book Value with respect to the matter covered by
such representation, warranty or covenant, such indemnified
matter or otherwise.
12.5.7 Limitation of Damages. Seller shall be responsible under this
Agreement, including, without limitation, Section 13 hereof, only
for direct damages, and shall in no event be liable for
incidental, indirect, special,
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consequential, punitive or similar damages or losses except to
the extent that any Indemnified Party must pay any such damages
or losses to a third party.
12.5.8 Satisfaction of Indemnity Claims. Notwithstanding any of the
terms and conditions of this Agreement to the contrary, at
Seller's option, amounts payable by Seller with respect to any
indemnity claim brought under this Agreement, including Section
13 hereof, will be satisfied by either (i) the payment of cash,
or (ii) a combination of the payment of cash and the conveyance
of a portion of the Shares. If Seller elects subpart (ii), the
shares reconveyed shall be valued at such share's initial par
value; the value of shares conveyed with respect to any claim
shall not exceed an amount equal to the "Preferred Percentage"
multiplied by the amount of such claim. "Preferred Percentage"
shall equal the Preferred Consideration (as such consideration
may be increased in accordance with the terms of the Preferred
Letter) divided by the Purchase Price.
12.6 Adjustments to the Purchase Price. Any indemnity payment pursuant
to this Agreement (including payments under Section 12 or Section 13) shall
be treated as an adjustment to the Purchase Price.
12.7 Taxes. Except as expressly provided in this Section 12 or Xxxxxxx
00, xxxx of the provisions of Section 12 (other than Sections 12.5.4,
12.5.5, 12.5.6, 12.5.7, 12.5.8 and 12.6) shall apply to Sections 7.11 or 13
hereof or any other representation, warranty or covenant in respect of any
Tax matter of the Acquired Companies.
13. Tax Covenants and Special Tax Indemnity.
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13.1 Transfer Taxes. Seller shall be responsible for and pay all
Non-Income Taxes ("Transfer Taxes") imposed on or in connection with (i)
the transactions contemplated by the Canadian Operations Assignment and
Assumption Agreement and (ii) the transactions contemplated by Section
9.4.4, provided that Buyer shall be responsible for and pay all Transfer
Taxes imposed on or in connection with (i) the sale of the Stock, (ii) the
deemed or actual sale of the assets of the Acquired Companies, and (iii)
all other transactions contemplated in this Agreement, excluding the
transactions described in Sections 9.3.6, 9.4.3 and 9.4.4 hereof.
13.2 Tax Sharing Agreements. Any tax sharing or other allocation
agreement with respect to Taxes between any Acquired Company and Seller
(and each of its Subsidiaries) is hereby terminated as of the Closing Date
and shall have no further effect for any taxable period (whether the
current year, a past year or a future year). This Section 13 and Section
7.11 above shall control all of the parties' respective obligations for
Taxes affecting the Acquired Companies and supersedes any and all prior
agreements, contracts or understandings regarding the Acquired Companies'
Taxes between Seller and any of the Acquired Companies.
13.3 Section 338(h) Joint Election and Tax Returns.
13.3.1 Section 338(h)(10) Joint Election. Buyer and Seller each agree
that they shall make an election or join in making an election
under Section 338(h)(10) of the Code, to treat the sale of the
Stock and the stock of the Acquired Companies as a sale of all of
the assets of each Acquired Company (including a Section 338(g)
election by Buyer with respect to UAP Canada and Access)
(collectively, a "Section 338(h)(10) Joint Election") for United
States federal Income Tax purposes and an election
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under the statutes of such states and localities as permit an
equivalent election to treat the sale of the Stock and the stock
of the Acquired Companies as a sale of all of the Acquired
Companies' assets as provided by such states' and localities'
applicable laws for state and local Income Tax purposes. Buyer
and Seller agree to take all such reasonable action necessary to
give effect to the Section 338(h)(10) Joint Election for federal,
state and local Income Tax purposes to the greatest extent
permitted by Law, including the timely filing of IRS Form 8023 or
state or local equivalent; provided, however, the parties hereby
agree that no equivalent election will be made or filed with any
foreign government or agency for any foreign Tax purpose.
13.3.2 Purchase Price Allocation.
(a) Seller shall prepare an allocation of the Purchase Price
(and all other capitalized costs) among the Acquired
Companies' assets in accordance with Code Sections 338 and
1060 and Treasury regulations thereunder (and any similar
provision of state or local law, as appropriate), which
allocation shall be substantially consistent with Schedule
13.3.2, other than as required by changes in the assets of
the Acquired Companies that occur between the date hereof
and the Closing Date. Seller shall deliver such allocation
(the "Proposed Final Allocation") to Buyer within 65 days
after the delivery of the Preliminary Audited Closing
Balance Sheet to Buyer and Seller. If Buyer does not object
to the Proposed Final Allocation within 65 days of its
receipt, it shall become the Final Allocation. If Buyer
objects to the Proposed Final Allocation within the
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time provided in the prior sentence, Buyer and Seller shall
negotiate in good faith to resolve any disagreements
regarding the Proposed Final Allocation. If agreement cannot
be reached within 10 business days, then the Final
Allocation shall be determined by a big four accounting firm
acceptable to both parties. Seller, Buyer, the Acquired
Companies and their respective Affiliates shall report, act,
and file Tax Returns (including, but not limited to, IRS
Form 8883) in all respects and for all purposes consistent
with the Final Allocation. Neither Seller, Buyer, the
Acquired Companies nor their respective Affiliates shall
take any position (whether in audits, Tax returns, or
otherwise) which is inconsistent with the Final Allocation
unless required to do so by a final, non-appealable decision
of a court of competent jurisdiction.
(b) For the purposes of Sections 3.5 and 4.2.14, the portion of
the Purchase Price allocated to the Canada Stock and the
Access Stock, respectively, shall be agreed upon by Seller
and Buyer, acting reasonably, which allocation shall be
based upon the Net Book Value attributable to each of the
Canada Stock and Access Stock. For the purposes of Closing,
such allocations shall be based upon the Estimated Closing
Balance Sheet and thereafter shall be adjusted (if required)
based on the Final Closing Balance Sheet. If the final
allocation of the Purchase Price to the Access Stock exceeds
the amount allocated to the Access Stock at Closing, the
provisions of Section 4.2.14 shall apply (with such
modifications as are necessary) to any additional payment
for the Access Stock. Seller, Buyer and their respective
Affiliates shall report, act, and file Tax Returns for
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Canadian Tax purposes consistent with the final allocations
to the Canada Stock and the Access Stock. Neither Seller,
Buyer nor their respective Affiliates shall take any
position for Canadian Tax purposes (whether in audits, Tax
returns, or otherwise) which is inconsistent with such final
allocations unless required to do so by a final,
non-appealable decision of a court of competent
jurisdiction.
13.3.3 Tax Returns. Buyer shall cause the Acquired Companies to
consent to join, for all Tax periods of the Acquired Companies
ending on or before the Closing Date for which the Acquired
Companies are eligible to do so, in any consolidated or combined
federal, state or local Income Tax Returns with Seller or its
Subsidiaries. Seller shall cause to be prepared, subject to
approval of Buyer, which shall not be unreasonably withheld, and
timely filed (including any extensions) any and all such
consolidated or combined federal, state or local Income Tax
Returns as well as any separate federal, state, local or foreign
Income Tax Returns for the Acquired Companies for all Tax periods
of the Acquired Companies ending on or before the Closing Date;
provided, that Buyer's right of approval shall only extend to its
confirmation that Seller's reporting on such Income Tax
returns is not inconsistent in any material respect with the
provisions of Section 13.3.2 hereof and/or the making of the
Section 338(h)(10) Joint Election in accordance with Section
13.3.1 hereof. Buyer shall or shall cause to be prepared and
timely filed any and all other Tax Returns of the Acquired
Companies of any kind or type that are due or become due after
the Closing Date. Seller shall have the right to approve,
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which approval will not be unreasonably withheld, all Tax Returns
of the Acquired Companies, which are prepared by or at the
direction of Buyer, in respect of a Straddle Period (as such term
is defined hereinbelow). The parties agree to cooperate with each
other and each other's Affiliates in the preparation of the
portions of such returns pertaining to the Acquired Companies.
The parties shall provide each other with full access to
applicable and reasonably relevant records to enable the timely
preparation and filing of said returns. Seller shall pay on a
timely basis all Income Taxes shown as due on any returns for the
periods (or portion thereof) occurring or ending on or before the
Closing Date. The parties shall make available to each other
without charge, copies of the portions of such returns relating
to the Acquired Companies for taxable years ending before or
including the Closing Date.
13.3.4 Income Tax Return Allocations. Seller shall include the income
and deductions of the Acquired Companies (including any deferred
income triggered into income by Treas. Reg. Section 1.1502-13 and
Treas. Reg. Section 1.1502-19, or equivalent provisions of state
or local law) on Seller's consolidated or combined federal, state
or local Income Tax Returns for the Tax periods ending on or
before the Closing Date and shall pay all Income Taxes
attributable thereto. In any case where any Tax Return in respect
to any Acquired Company that covers a Tax period beginning before
and ending after the Closing Date (a "Straddle Period"), the
amount of Income Taxes allocable between Seller on one hand, and
Buyer and the Acquired Companies on the other hand, shall be
determined
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by closing the books of the Acquired Companies as of and
including the Closing Date. In the case of any item of income,
deduction, loss or credit that cannot be specifically allocated
based on such closing of the books, such item or Income Tax shall
be allocated to Seller based on the percentage of days in such
Straddle Period that occur on or before the Closing Date. In the
case of Income Taxes attributable to the Tax periods (or portion
thereof) occurring or ending on or before the Closing Date,
Seller shall be liable for and be allocated all such Taxes.
13.3.5 Wage Reporting. Buyer and Seller agree to utilize, or cause
their respective Affiliates to utilize, the alternate procedure
set forth in Revenue Procedure 96-60, 1996-2 C.B. 399, with
respect to wage reporting.
13.4 Allocation of Income Tax Benefits.
13.4.1 If any adjustments shall be made to any federal, state, local,
or foreign Income Tax returns relating to the Acquired Companies
or Seller for any Tax period or portion of any Tax period ending
on, before or occurring through the Closing Date, which result in
any Income Tax detriment to Seller or any Affiliate of Seller
with respect to such period and any Income Tax benefit to the
Acquired Companies, Buyer or any Affiliate of Buyer for any Tax
period ending after the Closing Date (to the extent such Income
Tax benefit is realized after the Closing Date), Seller shall be
entitled to the benefit of such Income Tax benefit to the extent
of the related Income Tax detriment (except to the extent accrued
as an asset on the Final Closing Balance Sheet), and Buyer shall
or shall cause the Acquired Companies to pay to Seller such
amount at such time or times as
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and to the extent that the Acquired Companies, Buyer or any
Affiliate of Buyer actually realizes such benefit through a
refund of Income Tax or reduction in the amount of Income Tax
which any of them would otherwise have had to pay if such
adjustment had not been made. In determining whether and when
such Income Tax benefit is received, all Income Tax attributes of
the Acquired Companies shall first be used to determine the
Acquired Companies' Income Tax Liability, and the effect of such
Tax benefit, if any, shall only be considered to apply after all
such other items.
13.4.2 If any adjustment shall be made to any federal, state, local,
or foreign Income Tax returns relating to the Acquired Companies
for any Tax period (or portion thereof) occurring or beginning
after the Closing Date which results in any Income Tax detriment
to Buyer, the Acquired Companies or any Affiliate of Buyer with
respect to such period and any Income Tax benefit realized by
Seller or any Affiliate of Seller for any Tax period (or portion
thereof) occurring or ending on or before the Closing Date, Buyer
shall be entitled to the benefit of such Income Tax benefits to
the extent of the related Income Tax detriment. Seller shall pay
to Buyer such amount at such time or times as and to the extent
that Seller or any Affiliate of Seller actually realizes such
benefit through a refund of Income Tax or reduction in the amount
of Income Taxes which Seller or any such Affiliate would
otherwise have had to pay if such adjustment had not been made.
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13.4.3 Each party hereto shall pay to the other party, within 5 days
of written demand therefor, but in no event more than 20 days
prior to the due date thereof, the amount of all Income Taxes
such party is obligated to pay or that it is allocated to it
under this Section 13. Notwithstanding anything contained in
Section 12 to the contrary, payments pursuant to this Section 13
shall not be limited by any indemnity baskets, caps or other
limitations whatsoever.
13.5 Income Tax Indemnity. If Closing occurs, from and after the
Closing Date, Seller shall timely pay to the applicable Governmental
Authority and be liable for, and agree to indemnify, defend and hold
harmless each of Buyer and the Acquired Companies from and against (i) all
Income Taxes imposed on the Seller and/or any of the Acquired Companies for
any Tax period (or, in the case of a Straddle Period, portion thereof)
ending on or before the Closing Date, (ii) all Taxes of Seller or any of
its Affiliates (whether current or prior) other than the Acquired Companies
for all periods, (iii) the breach of the representations in respect of
Non-Income Taxes only that are set forth in Section 7.11 and (iv) any
United States federal, state or local Income Taxes of the Seller or the
Acquired Companies as a direct consequence of making of a Section
338(h)(10) or 338(g) election contemplated by Section 13.3.1. In addition,
Seller shall indemnify and hold Buyer and UAP Canada harmless from and
against (without duplication) any Income Taxes imposed on UAP Canada or any
reduction in the Income Tax deductions that could otherwise have been
claimed by UAP Canada in the calculation of its income for Canadian Tax
purposes in respect of the receivables transferred to UAP Canada as part of
the transfer of the Canadian Business that may be
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sustained, suffered or incurred by either of them as a result of the
failure of Seller to file the election provided for by section 9.3.6(ii).
13.6 Refunds. Any refunds (net of any costs associated with receipt
thereof) of Income Taxes or Non-Income Taxes (to the extent such Non-Income
Taxes are reflected as a reserve in the Final Closing Balance Sheet or
previously paid by Seller or an Affiliate of Seller) that are received by
Buyer or any of the Acquired Companies, which are attributable to any Tax
period (or portion thereof) occurring or ending on or before the Closing
Date of any Acquired Company, shall be for the benefit of Seller. Buyer
shall or shall cause the Acquired Companies to pay to Seller or its
designee any such refunds within ten (10) days of receipt thereof.
13.7 Cooperation. After the Closing Date, Seller and Buyer shall make
available to the other, free of charge, cost or expense and as reasonably
requested, all information, records or documents reasonably relevant to Tax
liabilities or potential Tax liabilities of the Acquired Companies or
predecessor thereof for all periods prior to or including the Closing Date
(or any matter, transaction or event occurring on or before the Closing
Date that may affect such a Tax liability) and each such Person shall
preserve all such available information, records and documents until the
expiration of any applicable statute of limitations or extensions thereof.
Each such Person shall provide, free of charge, cost or expense, the
other(s) and the pertinent Tax Authority with all available information and
documentation reasonably necessary to comply with all Tax audit information
requests or inquiries made of any such periods relevant to such Tax
liabilities or potential Tax liabilities (or any matter, transaction or
event occurring on or before the Closing Date that reasonably may affect
such a Tax liability). Any information obtained
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pursuant to this Section 13.7 shall be held in strict confidence and shall
be used solely in connection with the reason for which it was requested.
13.8 Tax Audits. Buyer shall promptly notify Seller in writing upon
receipt by Buyer, any Affiliate of Buyer, or the Acquired Companies, and
Seller shall promptly notify Buyer in writing upon receipt by Seller or any
Affiliate of Seller, of notice of any pending or threatened federal, state,
local or foreign Tax audits, examinations or assessments of the Acquired
Companies (other than consolidated or combined Income Tax audits,
examinations or assessments of the Seller's Tax group for federal or state
Tax purposes), so long as any Tax period (or portion thereof) ending on or
before the Closing Date or a Straddle Period remains open. Seller shall
have the sole right to represent the Acquired Companies, and their
predecessors, in any Tax audit or administrative or court proceeding
relating to Income Taxes attributable to any Tax period occurring or ending
on or before the Closing Date (including a Straddle Period) of Seller or
the Acquired Companies, and to employ counsel of its choice at its expense,
provided that Seller may not settle any audit that it reasonably expects
could have a material adverse effect on Buyer or the Acquired Companies
without Buyer's prior written consent. Buyer shall have the sole right to
represent the Acquired Companies in any audit or administrative or court
proceeding relating to Non-Income Taxes of the Acquired Companies, and to
employ counsel of its choice at its expense, provided, that neither Buyer
nor any Acquired Company may settle any audit that it reasonably expects
could have a material adverse effect on Seller or its Affiliates without
Seller's prior written consent. For purposes of the immediately preceding
sentence only, the term "material adverse effect" shall include any
Liability for Non-Income Taxes that is subject to indemnification by Seller
pursuant to this Section 13 and Section 7.11.
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13.9 Buyer's Indemnity. If Closing occurs, Buyer shall timely pay or
shall cause the Acquired Companies to timely pay, indemnify and hold Seller
and Seller's Affiliates harmless from and against any Liability resulting
directly or indirectly from (i) any breach or nonfulfillment of any
agreements or covenant on the part of Buyer or the Acquired Companies under
this Section 13; (ii) all Income Taxes of Buyer and/or any of the Acquired
Companies for all Tax periods (and in the case of a Straddle Period, the
portion thereof) beginning after the Closing Date (except as specifically
provided for in Section 13.5); (iii) all Non-Income Taxes of Buyer and the
Acquired Companies for all Tax Periods other than a Liability for
Non-Income Taxes that is indemnified by Seller pursuant to Section 13.5
hereof; and (iv) all Income Taxes of Seller or the Acquired Companies
attributable to an extraordinary transaction (other than any deemed asset
sale for United States federal, state or local Income Tax purposes as
contemplated by Section 13.1.1 hereof, the distribution of the Retained
Assets or the transaction contemplated by Section 9.3.6 hereof) effected at
the request or direction of Buyer or any Acquired Company after the
Effective Time.
13.10 Survival. The obligations of the parties under this Section 13
shall survive the Closing until thirty (30) days after the expiration of
the applicable or underlying Tax statute of limitations (including any
extensions). The representations and warranties contained in Section 7.11
hereof in respect of Income Tax matters of Seller and the Acquired
Companies shall not survive Closing. The representations and warranties
contained in Section 7.11 hereof in respect of Non-Income Tax matters of
the Acquired Companies shall survive the Closing until thirty (30) days
after the expiration of the applicable or underlying Tax statute of
limitations (including any extensions).
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13.11 Sole Remedy for Taxes. Section 13 shall be a party's sole remedy
in respect of a breach of Sections 7.11, 4.2.14, the Tax-related covenants
of Section 9.3.6 or Section 13 hereof except as otherwise expressly
provided by Section 12 hereof. In no event shall any party hereto pay more
than once under different provisions of this Agreement for the same
Liability in respect of Taxes.
14. Miscellaneous. The following miscellaneous provisions shall apply to
this Agreement:
14.1 Notices. All notices or other communications required or
permitted to be given, pursuant to the terms of this Agreement, shall be in
writing and shall be deemed to be duly given when received if delivered in
person or by facsimile and confirmed by mail, or mailed by registered or
certified mail (return receipt requested) or overnight courier, express
mail, postage prepaid, as follows:
If to Seller:
ConAgra Foods, Inc.
Xxx XxxXxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Vice President/Controller
Facsimile: (000) 000-0000
With a Copy to:
XxXxxxx North Xxxxxx & Xxxxx, PC LLO
First National Tower
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
If to Buyer:
c/o Apollo Management, L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
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Attn: Xxxx Xxxxxx
Facsimile: (000) 000-0000
With a Copy to:
O'Melveny & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
or at such other address as the party to whom notice is to be given
furnishes in writing to the other party in the manner set forth above.
14.2 Amendments and Waivers. This Agreement may not be modified or
amended, except by instrument or instruments in writing, signed by the
party against whom enforcement of any such modification or amendment is
sought. Any party hereto may, by an instrument in writing, waive compliance
by another party with any term or provision of this Agreement on the part
of such other party to be performed or complied with. Except as set forth
herein, no action taken pursuant to this Agreement, including any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any
representation, warranty or agreement contained herein. The waiver by any
party hereto of a breach of any term or provision of this Agreement shall
not be construed as a waiver of any subsequent breach.
14.3 Fees and Expenses. Except as otherwise provided in this
Agreement, including Section 6.1 hereof, Buyer, Seller and the Company
shall each pay their own expenses, and those of their respective
Affiliates, in connection with the preparation and execution of this
Agreement and any expenses specifically payable by them pursuant to this
Agreement, provided however, that if the transactions contemplated by this
Agreement are consummated, then (i) the Company shall reimburse Buyer for
its expenses incurred in connection with the consummation of the
transactions contemplated
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herein including fees and expenses relating to the financing obtained
pursuant to the Senior Bank Commitment Letter, and (ii) Seller shall pay
the costs of the Funded Bridge if funded by the Bridge Lender, provided
that Seller shall not be required to pay more than $5,000,000 pursuant to
this subpart (ii), and Buyer shall cause the Company to pay the remainder
of such costs. Seller agrees that it will not cause the Company to pay
Seller's outside legal, accounting, broker and similar expenses incurred in
connection with the consummation of the transactions contemplated herein.
14.4 Survival. The representations and warranties of Seller made in or
pursuant to this Agreement, together with the corresponding indemnification
obligations of Seller set forth in Section 12.1.1, shall survive the
Closing but shall terminate eighteen (18) months after the Closing Date,
except that (i) the representations and warranties (and such corresponding
indemnification obligations) contained in Sections 7.1, 7.2, 7.3, 7.6, 7.7,
7.8, 7.24 and 7.25 shall survive indefinitely, (ii) the representations and
warranties (and such corresponding indemnification obligations) contained
in Section 7.18 shall survive until the fourth anniversary of the Closing
Date, and (iii) the representations and warranties (and such corresponding
indemnification obligations) contained in Section 7.19 shall terminate
forty-eight (48) months after the Closing Date. The survival of the
representations, warranties and indemnification obligations of Seller under
Sections 7.11 and 13 hereof is excluded from this Section 14.4 and is
governed exclusively by Section 13.10 hereof. For the avoidance of doubt,
all other indemnity obligations shall survive indefinitely, unless a
shorter period is expressly specified. Notwithstanding the foregoing, it is
specifically understood and agreed that the damages sustained for which
indemnification may be sought need not be incurred or paid by the
Indemnified Party within the foregoing periods, but only that the claim
with respect to which
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indemnification is sought be asserted and presented to the Indemnifying
Party within such periods. All covenants and agreements hereunder shall
survive the Closing and survive indefinitely until fully performed unless a
shorter survival period is specified.
14.5 Entire Agreement. This Agreement, the Ancillary Agreements, the
Seller Disclosure Schedule, the Buyer Disclosure Schedule and the
Confidentiality Agreement constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral and written, among the parties hereto
with respect to the subject matter hereof.
14.6 Applicable Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to contracts made and performed in
Delaware (without regard to conflicts of law doctrines).
14.7 Binding Effect; Benefits. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns; nothing in this Agreement, express or implied, is
intended to confer on any Person other than the parties hereto (and, with
respect to Sections 12.1 and 12.2, the parties entitled to indemnity
thereunder) or their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
14.8 Assignability. Neither this Agreement nor any of the parties'
rights hereunder shall be assignable by any party hereto without the prior
written consent of the other party hereto. Notwithstanding anything to the
contrary contained herein, it is hereby acknowledged and agreed that Buyer
may assign and/or charge all or any of its rights under this Agreement by
way of security to any bank(s) and/or holders of debt securities and/or
financial institution(s) and/or hedge counterparties and/or any other
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person (together, the "Financiers") lending money or making other banking
facilities available to the Company, Buyer and their respective Affiliates
or to any Financiers who provide funds on or in connection with any
subsequent refinancing of such funding or to any person from time to time
appointed by any Financier to act as security trustee on behalf of such
Financier; without limitation to the foregoing, any such person or
Financier may assign such rights on any enforcement of the security under
such finance arrangement; provided further, however, that no such
assignment shall relieve Buyer of its obligations hereunder.
14.9 Effect of Headings. The headings of the various sections and
subsections herein are inserted merely as a matter of convenience and for
reference and shall not be construed as in any manner defining, limiting,
or describing the scope or intent of the particular sections to which they
refer, or as affecting the meaning or construction of the language in the
body of such sections.
14.10 Exhibits; Disclosure Schedule. All exhibits and schedules
referred to in this Agreement are attached hereto and are incorporated
herein by reference as if fully set forth herein. The disclosure of any
matter in any section of the Seller Disclosure Schedule or the Buyer
Disclosure Schedule shall not be deemed to constitute an admission by any
party or to otherwise imply that any such matter is material or may have a
Company Material Adverse Effect for purposes of this Agreement.
14.11 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or other
provisions of this Agreement in any other jurisdiction.
152
14.12 Construction.
14.12.1 As used in this Agreement in respect to Seller, "knowledge,"
"knows" or "known" means, with respect to the matter in question,
the actual knowledge of the executive officers of Seller, as
listed on Exhibit 14.12(a) hereto, assuming such officers have
made reasonable inquiry with respect to such matter of the
executive officers of the Company listed on Exhibit 14.12(b)
hereto.
14.12.2 The language in all parts of this Agreement shall in all cases
be construed as a whole according to its fair meaning, strictly
neither for nor against any party hereto, and without implying a
presumption that the terms thereof shall be more strictly
construed against one party by reason of the rule of construction
that a document is to be construed more strictly against the
person who himself drafted same. It is hereby agreed that
representatives of both parties have participated in the
preparation hereof.
14.12.3 The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and Section, Exhibit and Schedule references are to
this Agreement unless otherwise specified.
14.12.4 The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
14.12.5 Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The meaning of general words
herein shall not be limited by
153
specific examples introduced by "such as" or "for example" or
other similar expressions unless otherwise specified.
14.12.6 References to a Person include its successors and permitted
assigns. References to a "party" or the "parties" shall refer,
respectively, to a party or the parties to this Agreement, unless
the context otherwise requires or this Agreement otherwise
specifies.
14.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be regarded as an original and all of
which shall constitute one and the same instrument.
14.14 Consent to Jurisdiction. The parties hereto hereby irrevocably
submit to the exclusive jurisdiction of any United States federal or
Delaware state court sitting in Wilmington, Delaware with respect to any
action or proceeding arising out of or relating to this Agreement and each
of the parties hereto hereby irrevocably agrees that all claims in respect
of such action or proceeding shall be heard and determined in any such
court and irrevocably waives any objection it may now or hereafter have as
to the venue of any such suit, action or proceeding brought in such court
or that such court is an inconvenient forum. The parties hereto shall cause
the Acquired Companies to be bound by this Section.
14.15 Waiver of Jury Trial. Each party hereto waives any right to a
trial by jury in any Action to enforce or defend any right under this
Agreement, any related agreement or any amendment, instrument, document or
agreement delivered, or which in the future may be delivered, in connection
with this Agreement or any related agreement and agrees that any action
shall be tried before a court and not before a jury.
154
14.16 Exclusivity. Prior to any termination of this Agreement, none of
Seller, the Company or any of their respective Affiliates (collectively,
the "Seller Parties") shall directly or indirectly encourage, solicit,
initiate or participate in discussions or negotiations with, or provide any
confidential information to, any person (other than Buyer and its
Affiliates) concerning any (w) merger with the Company, (x) sale, transfer
or other disposition of the Business or assets of the Company (other than
the Retained Assets or as otherwise described in Exhibit 9.1.1 hereto) or
any material part thereof (other than sales, transfers or dispositions
occurring in the ordinary course of business), (y) sale, transfer or other
disposition of any Stock or other Equity Securities of the Company or (z)
similar transaction involving the Company (whether structured as a merger,
recapitalization, stock sale, asset sale or other form of transaction).
Seller will promptly inform Buyer if any Seller Party receives, after the
date hereof, any proposal or inquiry in respect of any such transaction.
14.17 Further Assurances. Each of the parties hereto agrees that, from
and after the Closing, upon the reasonable request of any other party
hereto and without further consideration, such party will execute and
deliver to such other party such documents and further assurances and will
use reasonable commercial efforts to take such other actions (without cost
to such party) as such other party may reasonably request in order to carry
out the purpose and intention of this Agreement. Such actions shall include
the transfer or conveyance by Buyer, the Acquired Companies or their
respective Affiliates and successors of any assets or rights included in
the Retained Assets or Retained Businesses.
14.18 Currency Denomination. Unless specifically denoted otherwise
herein, all monetary amounts referred to, and any payments to be made
pursuant to, this Agreement are expressed in, and shall be in, dollars of
the United States of America.
155
14.19 Covenant Not to Disclose; Publicity.
14.19.1 Seller agrees that as the owner of the Business, it and its
Affiliates may possess certain data and knowledge of operations
of the Business which may be proprietary in nature and
confidential, including certain trade secrets (herein, "Business
Confidential Information"). Seller covenants and agrees that
neither it nor any of its Affiliates will, at any time after the
Closing Date, reveal, divulge or make known to any Person (other
than Buyer) or use for its own account or for the account of any
Person, any Business Confidential Information. Seller further
covenants and agrees that neither it nor any of its Affiliates
shall divulge any Business Confidential Information which it may
acquire during any transition period in which it assists or
consults with Buyer or its Affiliates to facilitate the transfer
and the continued success of the Business. Notwithstanding the
foregoing, it is understood that the foregoing provisions shall
apply only to Business Confidential Information which relates
exclusively to the Business and not to information which is
otherwise used in connection with Seller's other operations. In
addition, notwithstanding the foregoing, it shall not be a
violation of the covenant set forth in this Section 14.19.1 for
Seller to disclose information to the extent required to do so by
applicable Law, provided, that Seller shall provide Buyer with
prompt notice of any such requirement in order to allow Buyer to
seek an appropriate protective order and Seller shall confer in
good faith with the Buyer to the content of the disclosure, or if
any information disclosed by the Seller is in the public domain
(other than as a
156
result of conduct by Seller or its Affiliates which constitutes
the breach of a confidentiality obligation to Buyer).
14.19.2 Except as required by applicable Law, and except as may be
mutually agreed, none of Seller, Buyer nor the Company shall
disclose this Agreement or the terms and conditions contained in
this Agreement. The parties hereto agree that they will consult
with each other concerning any proposed press release or public
announcement pertaining to the transactions contemplated hereby
and shall use their commercially reasonable efforts to agree upon
the text of any such press release or public announcement.
Notwithstanding any provision contained herein, each party hereto
(and each of their respective employees, representatives or other
agents) may disclose to any and all Persons, without limitations
of any kind, the tax treatment and tax structure of the
transaction and all materials of any kind (including opinions and
other tax analyses) that are provided to the taxpayer relating to
such tax treatment and tax structure. In the event that Seller,
Buyer or the Company or any of their Affiliates or
representatives become legally compelled to disclose any such
information or documents referred to in this Section, 14.19.2
Seller, Buyer or the Company (as applicable) shall provide the
other parties with prompt written notice before such disclosure,
sufficient to enable the other either to seek a protective order,
at its expense, or other appropriate remedy preventing or
prohibiting such disclosure or to waive compliance with the
provisions of this Section 14.19.2 or both.
157
14.19.3 Buyer agrees that as the purchaser of the Business, it, the
Company and the Acquired Companies may possess certain data and
knowledge of operations of the Retained Businesses which may be
proprietary in nature and confidential, including certain trade
secrets, customer lists and product development materials
(herein, "Retained Business Confidential Information"). Buyer and
the Company each covenants and agrees that neither of them nor
any of their Affiliates will, at any time after the Closing Date,
reveal, divulge or make known to any Person (other than to
Seller) or use for their own account or for the account of any
Person, any Retained Business Confidential Information. Buyer and
the Company each further covenants and agrees that neither of
them nor any of their Affiliates shall divulge any Retained
Business Confidential Information which they may acquire during
any transition period in which it assists or consults with Seller
or its Affiliates to facilitate the transfer and the continued
success of the Retained Businesses. Notwithstanding the
foregoing, it is understood that the foregoing provisions shall
apply only to Retained Business Confidential Information which
relates exclusively to the Retained Businesses and not to
information which is otherwise used in connection with the
Business. In addition, notwithstanding the foregoing, it shall
not be a violation of the covenant set forth in this Section
14.9.3 for Buyer or the Company to disclose information to the
extent required to do so by applicable Law, provided, that Buyer
or the Company, as applicable, shall provide Seller with prompt
notice of any such requirement in order to allow Seller to seek
an appropriate protective order
158
and Buyer and the Company shall confer in good faith with Seller
to the content of the disclosure, or if any information disclosed
by Buyer or the Company is in the public domain (other than as a
result of conduct by Buyer, the Company or their Affiliates which
constitutes the breach of a confidentiality obligation to
Seller).
14.20 Information Access. After the Closing Date, Buyer shall, and
shall cause the Acquired Companies to, reasonably cooperate with Seller to
the extent reasonably required for Seller to comply with any subpoena or
request from a Governmental Authority, defend claims (whether in court,
administrative proceedings or arbitration tribunals), conduct inquiries or
investigations and satisfy other obligations, and, in connection therewith,
shall furnish on a timely basis information, Records and testimony (and
locate and assemble information and Records requested by Seller), attend
such conferences, proceedings, hearings, trials and appeals as may be
reasonably requested by Seller, and provide on a timely basis access to,
and availability of, Company Employees.
[signature page follows]
159
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
SELLER: BUYER:
ConAgra Foods, Inc., UAP Holding Corp.,
a Delaware corporation a Delaware corporation
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxx Xxxxxx
---------------------------------- --------------------------------
COMPANY:
United Agri Products, Inc.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
----------------------------------
EXHIBIT 1.1(a)
Permitted Encumbrances
(a) Any easement, lease, license, covenant, reservation, right of way
or similar restriction of record or not of record which does not
materially affect the current or future use or enjoyment of the
subject property as it is currently being used;
(b) Any zoning, building, fire, health, safety or similar restriction
by governmental agency or insurance carriers which does not
materially affect the use or enjoyment of the subject property as
it is currently being used;
(c)
(c) Any matter that is insured by a title insurance policy in favor
of Buyer or an Acquired Company or their respective Affiliates;
(d) Any matter that would be disclosed on a true, correct and
complete survey of the subject property which does not materially
affect the current or future use or enjoyment of the subject
property as it is currently being used;
(e) Any liens for Taxes not yet due and payable or being contested in
good faith by appropriate proceedings and for which reserves are
reflected in the calculation of Net Book Value;
(f) Any 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; and
(g) Any 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.
(h)
EXHIBIT 1.1(b)
Retained Assets
(a) The name "ConAgra" and any logos, trademarks, service marks,
trade names, domain names, copyrights and trade dress related
thereto.
(b) All assets and rights relating to or arising from the conduct of
the Retained Businesses, including, without limitation, (i) all
right, title and interest in and to the receipt or payment of any
and all rebates, incentives, loyalty or other bonuses, freight or
other similar refunds, rebillings, performance or award payments,
marketing payments, warehousing and interest payments, program
payments, products furnished on a discounted or "no-charge"
basis, and all other such payments or forms of compensation, and
the proceeds thereof, that are now or may hereafter be payable by
vendors as a result of product sales (whether wholesale, retail
or otherwise), service or other such performance criteria of the
Retained Businesses (other than any such rebates, incentives,
loyalty or other bonuses and the like which are part of the
calculations of profits, losses and margins under Section 4.3,
with respect to the mix plants, and Section 4.4, with respect to
the Imperial Joint Venture, of the Fertilizer Supply Agreement),
and (ii) the fertilizer facilities located in the following
cities;
1. St. Xxxxxx, MO
2. Hastings, NE
3. Shakopee, MN
4. Imperial, NE (reactor, tanks and related assets)
5. Xxxxx, IN
6. Kentland, IN
7. Pekin, IL
8. Xxxxxxx, IA
9. Irvington, IA
10. Franklin, MN
11. Red Rock, MN
12. Dubuque, IA
13. Xxxxxxxxx, KS
14. Corpus Christi, TX
15. Victoria, TX
16. Catoosa, OK
17. Moorhead, MN
(c) All cash, bank accounts, cash equivalents and other similar types
of investments, certificates of deposit, U.S. Treasury bills and
other marketable securities;
(d) All claims, causes of action, chooses in action, rights of
recovery and rights of set-off of any kind against any Person
arising out of or relating to the Retained Assets or Retained
Businesses whether now existing or hereafter arising;
(e) Any amounts receivable from Seller or any of Seller's Affiliates
(other than any Acquired Company);
(f) All Income Tax refunds, including any interest in respect
thereof, and Income Tax benefits and credits attributable to
periods prior to the Closing;
(g) All claims, causes of action, chooses in action, rights of
recovery and rights of set-off of any kind against any Person
arising out of or primarily relating to the Retained Litigation;
(h) All rights and interests in Fossil Creek Farm Joint Venture;
(i) All Equity Securities in PSI Produtos Agricolas Ltda.
(j) All rights and interests in the Retained Site;
(k) Any rights of the Acquired Companies with respect to the chemical
impregnation of sodium chlorate or sodium nitrate in poultry
feed;
(l) Any rights or interests of Seller, the Company, the Acquired
Companies or the Retained Businesses to the following names,
marks and/or brands in the European Union and United Kingdom:
1. FLF
2. Xxxxxx'x T-80
3. Torpedo
4. Torpedo II
5. Gladiator
6. Drill
7. Abacus
8. Sprayguard
9. Phase II
10. Xxxxxxx X-00
00. Xxxxxxx
12. Admix-P
13. Cropspray 11-E
14. SM-99
(m) Corn pad and underlying real estate and driveway to the East
thereof at UAP Great Lakes retail location in DeForest,
Wisconsin; and(n) In the event Seller or its Affiliates,
including the Acquired Companies, completes prior to the Closing
Date the divestiture of any of the assets or businesses listed on
Exhibit 9.1.1 hereto, other than items 1 (Dover, Ontario) and
00.x (Xxxxx, Xxxxx Xxxxxx), such assets or businesses so divested
shall be deemed to be a Retained Asset for purposes of this
Agreement.
EXHIBIT 9.4.3
Corporate Services
(a) HRIS system
(b) accounting system
(c) general ledger and financial reporting
(d) fixed asset system
(e) money management
(f) external financial reporting
(g) treasury and financing activity
(h) insurable risk programs
(i) safety and environmental programs
(j) tax filings, payment, refunds, protests, reporting
(k) freight and overnight services
(l) legal counsel
(m) communication systems
(n) inventory control systems
(o) internal and external auditing
(p) bank lines of credit
(q) risk management
(r) employee benefits programs
(s) trademark/trade name maintenance
(t) vehicle leasing arrangements
(u) real estate lease services
(v) travel services (w) EDI with vendors
(w) MIS services
EXHIBIT 14.12(a)
----------------
Knowledge-Executive Officers of Seller
--------------------------------------
1. Xxxxxx Xxxxxx, EVP Operations Control & Development
2. Xxxxxxx Xxxxx, VP Planning
3. Xxxx Xxxx, Director Planning/Development
EXHIBIT 14.12(b)
---------------
Knowledge -- Executive Officers of the Company
----------------------------------------------
1. Xxxxx Xxxxxxx
2. Xxxxx Xxxxxx
3. Xxxx Xxxxxxx
4. Xxxxxx Xxxxx
5. Xxxxxxx "Rad" Page
6. Xxxx Xxxxxxx
7. Xxxxx Xxxxxxx
8. Xxxx XxXxxxxx
9. H. Xxxxx Xxxxxxxx
10. Xxxx Xxxx
11. Xxxx Xxxxxxx
