STOCK PURCHASE AGREEMENT dated as of December 20, 2007 between YILDIZ HOLDING A.S. and CAMPBELL INVESTMENT COMPANY relating to the purchase and sale of the ACQUIRED COMPANIES
EXECUTION
COPY
dated
as
of
December
20, 2007
between
YILDIZ
HOLDING A.S. and
XXXXXXXX
INVESTMENT COMPANY
relating
to the purchase and sale
of
the
ACQUIRED
COMPANIES
(as
defined herein)
TABLE
OF CONTENTS
Page
|
ARTICLE
1
|
|
|
Definitions
|
|
|
Section
1.01. Definitions
|
1
|
|
Section
1.02. Other
Definitional and Interpretative Provisions
|
10
|
|
ARTICLE
2
|
|
|
Purchase
and
Sale
|
|
|
Section
2.01. Purchase
and
Sale
|
10
|
|
Section
2.02. Non-Trading
Payments
|
11
|
|
Section
2.03. Closing
|
11
|
|
Section
2.04. Estimate
Certificate
|
12
|
|
Section
2.05. Closing
Statement
|
12
|
|
Section
2.06. Adjustment
to the
Closing Payment
|
14
|
|
Section
2.07. Allocation
of the
Closing Payment
|
16
|
|
Section
2.08. Structuring
Considerations
|
17
|
|
ARTICLE
3
|
|
|
Representations
and Warranties of
Seller
|
|
|
Section
3.01. Corporate
Existence and
Power
|
17
|
|
Section
3.02. Corporate
Authorization
|
18
|
|
Section
3.03. Governmental
Authorization
|
18
|
|
Section
3.04. Noncontravention
|
18
|
|
Section
3.05. Capitalization
|
19
|
|
Section
3.06. Ownership
and Transfer of
Shares
|
19
|
|
Section
3.07. Subsidiary
|
19
|
|
Section
3.08. Financial
Statements
|
20
|
|
Section
3.09. Inventory;
Receivables;
Payables
|
21
|
|
Section
3.10. Absence
of Certain
Changes
|
21
|
|
Section
3.11. No Undisclosed
Material
Liabilities
|
24
|
|
Section
3.12. Material
Contracts
|
24
|
|
Section
3.13. Litigation
|
26
|
|
Section
3.14. Properties
|
26
|
|
Section
3.15. Sufficiency
of
Assets
|
26
|
|
Section
3.16. Licenses
and
Permits
|
27
|
|
Section
3.17. Environmental
Matters
|
27
|
|
Section
3.18. Compliance
with
Laws
|
27
|
i
Page
|
Section
3.19. Intellectual
Property
|
28
|
|
Section
3.20. Employee
Benefit
Plans
|
29
|
|
Section
3.21. Finders’
Fees
|
30
|
|
Section
3.22. Food
and Health
Safety
|
30
|
|
Section
3.23. Labor
and
Employment Matters
|
31
|
|
Section
3.24. Suppliers
|
31
|
|
ARTICLE
4
|
|
|
Representations
and Warranties of
Buyer
|
|
|
Section
4.01. Corporate
Existence and Power
|
32
|
|
Section
4.02. Corporate
Authorization
|
32
|
|
Section
4.03. Governmental
Authorization
|
32
|
|
Section
4.04. Noncontravention
|
33
|
|
Section
4.05. Financing
|
33
|
|
Section
4.06. Litigation;
Compliance with Laws
|
33
|
|
Section
4.07. Finders’
Fees
|
33
|
|
Section
4.08. Purchase
for
Investment
|
34
|
|
ARTICLE
5
|
|
|
Covenants
of
Seller
|
|
|
Section
5.01. Conduct
of the
Company
|
34
|
|
Section
5.02.
Access
to
Information
|
36
|
|
Section
5.03. Maintenance
of
Insurance Policies
|
37
|
|
Section
5.04. Non-Competition;
Non-Solicitation
|
38
|
|
Section
5.05. Transition
Services
|
40
|
|
Section
5.06. Third
Party
Consents
|
42
|
|
Section
5.07. Notification
Of
Certain Matters
|
42
|
|
Section
5.08. Resignation
Of
Directors
|
42
|
|
Section
5.09. Delivery
Of
Audited Financial Statements
|
43
|
|
Section
5.10. 2005
Audit
|
43
|
|
ARTICLE
6
|
|
|
Covenants
of
Buyer
|
|
|
Section
6.01. Confidentiality
|
43
|
|
Section
6.02. Access
to
Information Following Closing
|
43
|
|
Section
6.03. Insurance
|
44
|
|
Section
6.04. Inspections;
No
Other Representations
|
44
|
ii
Page
|
ARTICLE
7
|
|
|
Covenants
of Buyer and
Seller
|
|
|
Section
7.01. Reasonable
Best
Efforts; Further Assurances
|
44
|
|
Section
7.02. Certain
Filings
|
45
|
|
Section
7.03. Public
Announcements
|
46
|
|
Section
7.04. Inter-Company
Transactions
|
46
|
|
Section
7.05. Material
Consents
|
46
|
|
ARTICLE
8
|
|
|
Tax
Matters
|
|
|
Section
8.01. Tax
Representations
|
47
|
|
Section
8.02. Filing
of Returns
and Other Tax Covenants
|
48
|
|
Section
8.03. Transfer
Taxes
|
50
|
|
Section
8.04. Cooperation
on
Tax Matters
|
50
|
|
Section
8.05. Section
338(h)(10) Election
|
51
|
|
Section
8.06. Indemnification
Provisions
|
52
|
|
Section
8.07. Canadian
Withholding and Section 116 Certificate
|
55
|
|
ARTICLE
9
|
|
|
Employee
Matters
|
|
|
Section
9.01. Employees
|
57
|
|
Section
9.02. Employee
Benefits
|
57
|
|
ARTICLE
10
|
|
|
Conditions
to
Closing
|
|
|
Section
10.01. Conditions
to
Obligations of Buyer and Seller
|
59
|
|
Section
10.02. Conditions
to
Obligation of Buyer
|
60
|
|
Section
10.03. Conditions
to
Obligation of Seller
|
61
|
|
ARTICLE
11
|
|
|
Survival;
Indemnification
|
|
|
Section
11.01. Survival
|
61
|
|
Section
11.02. Indemnification
|
62
|
|
Section
11.03. Procedures
|
63
|
|
Section
11.04. Limitation
on
Damages
|
64
|
|
Section
11.05. Assignment
of
Claims
|
64
|
|
Section
11.06. Exclusivity
|
65
|
|
Section
11.07. Closing
Payment
Adjustment
|
65
|
iii
Page
|
ARTICLE
12
|
|
|
Termination
|
|
|
Section
12.01. Grounds
for
Termination
|
65
|
|
Section
12.02. Effect
of
Termination
|
66
|
|
ARTICLE
13
|
|
|
Miscellaneous
|
|
|
Section
13.01. Notices
|
66
|
|
Section
13.02. Amendments
and
Waivers
|
68
|
|
Section
13.03. Expenses
|
68
|
|
Section
13.04. Successors
and
Assigns
|
68
|
|
Section
13.05. Governing
Law
|
68
|
|
Section
13.06. Jurisdiction
|
68
|
|
Section
13.07. Counterparts;
Third Party Beneficiaries
|
69
|
|
Section
13.08. Entire
Agreement
|
69
|
|
Section
13.09. Severability
|
70
|
|
Section
13.10. Disclosure
Schedules
|
70
|
Exhibit
A
– Acquired Companies
Exhibit
B
– Closing Payment Adjustment
Exhibit
C
– Allocation Statement
iv
AGREEMENT
(this “Agreement”) dated as of December 20, 2007 between Yildiz
Holding A.S., a corporation organized under the laws of Turkey
(“Buyer”), and Xxxxxxxx Investment Company, a Delaware
corporation (“Seller”).
W I T N E S S E T H
:
WHEREAS,
Seller is the record and beneficial owner of the Shares (as defined below);
and
WHEREAS,
Seller desires to sell the Shares to Buyer, and Buyer desires to purchase
the
Shares from Seller, upon the terms and subject to the conditions hereinafter
set
forth.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
ARTICLE
1
Definitions
Section
1.01. Definitions. (a) As used herein, the
following terms have the following meanings:
“Acquired
Companies” means the companies listed on Exhibit A
hereto.
“Affiliate”
means, with respect to any Person, any Person directly or indirectly
controlling, controlled by, or under common control with such other
Person. For purposes of this definition, “control,”
when used with respect to any Person, means the power to
direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
“controlling” and “controlled” have meanings
correlative to the foregoing. Notwithstanding the foregoing, for
purposes of this Agreement, none of the Acquired Companies nor the Subsidiary
shall be considered an Affiliate of Seller.
“Audited
Financial Statements” means the audited combined consolidated balance
sheets and the related audited income statements and cash flow statements
of the
Acquired Companies and the Subsidiary as of and for each
of
the
2007 and 2006 fiscal years, prepared in accordance with GAAP, including an
unqualified auditors’ report from PricewaterhouseCoopers with respect
thereto.
“Balance
Sheet” means the unaudited consolidated balance sheet of the Acquired
Companies and the Subsidiary for the fiscal year ending on the Balance Sheet
Date as set forth on Section 3.08 of the Disclosure Schedule.
“Balance
Sheet Date” means July 29, 2007.
“Business
Day” means a day, other than Saturday, Sunday or other day on which
commercial banks in New York, New York or Camden, New Jersey or Istanbul,
Turkey
are authorized or required by applicable Law to close.
“Xxxxxxxx”
means Xxxxxxxx Soup Company, a New Jersey corporation.
“Cash”
means all cash and cash equivalents of the Acquired Companies and the Subsidiary
and shall be comprised of the line items set forth under the heading “Cash” on
Exhibit B and no others.
“CERCLA”
means the Comprehensive Environmental Response, Compensation and Liability
Act
of 1980, as amended, and any rules or regulations promulgated
thereunder.
“Closing
Date” means the date of the Closing.
“Code”
means the United States Internal Revenue Code of 1986, as amended.
“Competition
Laws of Turkey” means the Law on Protection of Competition No. 4054,
dated December 13, 1994, as amended by Law Amending the Law on Protection
of
Competition published in the Official Gazette, dated July 13, 1995 and No.
2875.
“Disclosure
Schedule” means the disclosure schedule delivered by Seller to Buyer
concurrently with the execution of this Agreement.
“Environmental
Laws” means any and all applicable Laws having as their principal
purpose the protection of the environment or natural resources or the regulation
of the effect of the environment on human health and safety, including, but
not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the
Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. § 2601 et seq.) and the Federal Insecticide,
2
Fungicide,
and Rodenticide Act (7 U.S.C. § 136 et seq.), and any comparable foreign, state
or local Laws.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and
the
rules and regulations promulgated thereunder.
“External
Debt” means, with respect to each Acquired Company and the Subsidiary,
the aggregate indebtedness for borrowed money owed by such Acquired Company
or
the Subsidiary as of the Closing Date to a Person other than Xxxxxxxx or
any of
its Affiliates and shall be comprised of the line items under the heading
“External Debt” set forth on Exhibit B and no others. For the
avoidance of doubt, neither Inter-Company Non-Trading Payables nor any of
the
line items taken into account in the calculation of Net Working Capital shall
be
taken into account when determining the amount of External Debt.
“Final
Closing Items” means Final Closing Cash, Final Closing Inter-Company
Non-Trading Receivables, Final Closing Net Working Capital, Final Closing
External Debt and Final Closing Inter-Company Non-Trading Payables.
“Final
Determination” means (i) any final determination of liability in
respect of a Tax that, under applicable law, is not subject to further appeal,
review or modification through proceedings or otherwise (including the
expiration of a statute of limitations or a period for the filing of claims
for
refunds, amended returns or appeals from adverse determinations), including
a
“determination” as defined in Section 1313(a) of the Code or execution of an
Internal Revenue Service Form 870AD or (ii) the payment of Tax by Buyer,
Seller
or any of their Affiliates, whichever is responsible for payment of such
Tax
under applicable law, with respect to any item disallowed or adjusted by
a
Taxing Authority, provided that such responsible party determines that
no action should be taken to recoup such payment and the other party
agrees.
“Food
Safety Laws” means all applicable Laws relating to the use,
manufacture, packaging, licensing, labeling, distribution, marketing,
advertising, or sale of any food product, including the U.S. Federal Food,
Drug
and Cosmetic Act, its implementing regulations and guidance documents, and
all
similar applicable Laws in each jurisdiction where the products of the Acquired
Companies and the Subsidiary are sold, including any Law prohibiting, or
requiring the disclosure of, specific ingredients (including allergens) and
all
Laws regarding good manufacturing practices and all applicable health and
safety
Laws regarding the cleanliness of food preparation areas.
“GAAP”
means generally accepted accounting principles in the United
States.
3
“Godiva
Canada” means Godiva Chocolatier of Canada LTD.
“Hazardous
Substances” means any pollutant, contaminant, waste or chemical or any
toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous
substance, waste or material, or any substance, waste or material having
any
constituent elements displaying any of the foregoing characteristics, including
petroleum, its derivatives, by-products and other hydrocarbons, and any
substance, waste or material regulated under any Environmental Law.
“HSR
Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as
amended.
“Intellectual
Property Right” means any trademarks, service marks, trade names,
Internet domain names, patents, copyrights, computer software, trade secrets
and
know-how (together with all goodwill associated therewith and including any
registrations or applications for registration of any of the
foregoing).
“Inter-Company
Non-Trading Payables” means, with respect to each Acquired Company as
of the Closing Date, any amounts, together with accrued interest, if any,
up to
the Closing Date, included in the line items under the heading “Inter-Company
Non-Trading Payables” set forth on Exhibit B and no
others. For the avoidance of doubt, none of the line items taken into
account in the calculation of Net Working Capital shall be taken into account
when determining the amount of Inter-Company Non-Trading Payables.
“Inter-Company
Non-Trading Receivables” means, with respect to each Acquired Company
as of the Closing Date, any amounts, together with accrued interest, if any,
up
to the Closing Date, included in the line items under the heading “Inter-Company
Non-Trading Receivables” set forth on Exhibit B and no
others. For the avoidance of doubt, none of the line items taken into
account in the calculation of Net Working Capital shall be taken into account
when determining the amount of Inter-Company Non-Trading
Receivables.
“International
Plan” means any material employment, severance or similar contract,
plan, arrangement or policy and each other material plan or material arrangement
(written or oral), including collective labor agreements, providing for
compensation, bonuses, profit-sharing, stock option or other stock related
rights or other forms of incentive or deferred compensation, vacation benefits,
insurance (including any self-insured arrangements), health or medical benefits,
employee assistance program, disability or sick leave benefits, workers’
compensation, supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension,
health,
medical or life insurance benefits), excluding any statutorily required plan,
which
4
is
maintained, administered or contributed to by any of the Acquired Companies
and
covers any employee or former employee of the Acquired Companies or their
dependents, where such individuals are located exclusively outside of the
United
States; provided, however, that a plan or program sponsored or operated
by a governmental authority (including the State Earnings Related Pension
Scheme
in the United Kingdom) shall not constitute an International Plan.
“knowledge
of Buyer”, “Buyer’s knowledge” or any other similar
knowledge qualification in this Agreement means to the actual knowledge of
Xxxxxx Xxxxx Kurama and Baris Oner.
“knowledge
of Seller”, “Seller’s knowledge” or any other similar
knowledge qualification in this Agreement means to the actual knowledge of
Xxx
Xxxxxxx, Xxxxxx Xxxxxxxxx (as to Section 3.12 only), Xx Xxxxxxxxx (as to
North
American matters only), Xxx Xxx (as to Japanese and Asia Pacific matters
only),
Xxxxxxx Xxxxx (as to European matters only), Xxx Xxxxxx (as to human resources
matters only), Xxxx Xxxxxxxx (as to supply chain matters only) and Xxxxx
Xxxx.
“Law”
means any law, statute, regulation, rule, permit, license, certificate,
judgment, order, award or other legally binding decision or requirement of
any
arbitrator, court, government or governmental agency or instrumentality
(domestic or foreign).
“Licensed
Intellectual Property Rights” means all Intellectual Property Rights
owned by a third party and licensed to any Acquired Company or the
Subsidiary.
“Lien”
means any mortgage, lien, pledge, charge, encumbrance, security interest
or
transfer restriction.
“Material
Adverse Effect” means a material adverse effect on the business,
assets, liabilities, condition (financial or otherwise) or results of operations
of the Acquired Companies and the Subsidiary, taken as a whole, except any
such
effect resulting from or arising in connection with (1) effects that can
be
shown to be proximately caused by the execution or announcement of this
Agreement or Seller’s compliance with the terms hereof, (2) changes or
conditions affecting either or both of the retail or confectionary industries
generally, (3) economic, market, financial, regulatory or political conditions
generally (including changes thereto), (4) the announcement, declaration,
commencement, occurrence, continuation or threat of any war or armed
hostilities, any act or acts of terrorism or any public health or other public
emergency or crisis, (5) seasonal fluctuations affecting the Acquired Companies
or the Subsidiary or either or both of the retail or confectionary industries
or
(6) changes in applicable Law or GAAP; provided that in each of clauses
(2) through
5
(5)
above,
to the extent not disproportionately affecting the Acquired Companies and
the
Subsidiary taken as a whole relative to other participants in either or both
of
the retail or confectionary industries generally.
“Net
Working Capital” means the operating net working capital of the
Acquired Companies and the Subsidiary and is comprised of each of the line
items
under the heading “Net Working Capital” set forth on Exhibit B and no
others.
“Owned
Intellectual Property Rights” means all Intellectual Property Rights
owned by an Acquired Company or the Subsidiary.
“Party
in Interest” means any person whose consent, approval, waiver or
authorization is required in connection with the transactions contemplated
by
this Agreement under the terms of a lease for an Identified Store.
“Permits”
means, with respect to a Person, all material governmental licenses, permits,
certificates, consents, approvals, or other material governmental authorizations
owned or held by, granted to, or held for the benefit of, such
Person.
“Permitted
Liens” means (1) Liens disclosed in the
Disclosure Schedule; (2) Liens disclosed on the Balance Sheet or notes thereto
or securing liabilities reflected on the Balance Sheet or notes thereto;
(3)
Liens for Taxes, assessments and similar charges that are not yet due and
payable or are being contested in good faith by appropriate proceedings,
provided an appropriate reserve has been established therefor in the Audited
Financial Statements in accordance with GAAP; (4) construction, mechanic’s,
materialman’s, carrier’s, repairer’s and other similar Liens arising or incurred
in the ordinary course of business that are not yet due and payable; (5)
Liens
that exist by operation of Law; or (6) other Liens that do not secure payment
of
indebtedness for borrowed money and would not reasonably be expected to have
a
Material Adverse Effect.
“Person”
means an individual, corporation, partnership, limited liability company,
association, trust or other entity or organization, including a government
or
political subdivision or an agency or instrumentality thereof.
“Post-Closing
Tax Period” means any Tax period beginning after the Closing Date; and,
with respect to a Tax period that begins on or before the Closing
Date and ends thereafter, the portion of such Tax period beginning after
the
Closing Date.
“Pre-Closing
Tax Period” means any Tax period ending on or before the Closing Date;
and, with respect to a Tax period that begins on or before the
6
Closing
Date and ends thereafter, the portion of such Tax period ending on the Closing
Date.
“Reference
Rate” means the rate per annum appearing on Dow Xxxxx page 3750
(formerly known as Telerate page 3750, or on any successor or substitute
page)
for deposits in U.S. dollars with a maturity of 3-months set at or about
11.00
a.m. London time (USD LIBOR BBA) on the Closing Date, plus 25 basis
points.
“Seller
Group” means, with respect to U.S. federal income Taxes, the affiliated
group of corporations (as defined in Section 1504(a) of the Code) of which
Seller is a member and, with respect to state, local or non-U.S. income or
franchise Taxes, the consolidated, combined or unitary group of which Seller
or
any of its Affiliates is a member.
“Shares”
means the outstanding shares of capital stock of, or other equity interests
in,
the Acquired Companies.
“Short
Form Stock Purchase Agreement” means the stock purchase agreement
referred to in Section 2.03(v) of the Disclosure Schedule that is to be entered
into with respect to Godiva France SA.
“Subsidiary”
means Godiva Brands, Inc., a Delaware corporation.
“Target
Net Working Capital” means $28,500,000.
“Tax”
means (i) any tax, social contribution, governmental fee or other like
assessment or charge of any kind whatsoever (including, but not limited to,
withholding on amounts paid to or by any Person), together with any interest,
penalty, addition to tax or additional amount imposed by any governmental
authority (domestic or foreign) responsible for the imposition of any such
tax
(a “Taxing Authority”) and (ii) any liability for the payment
of any amount of the type described in the immediately preceding clause (i)
as a
result of any Acquired Company being a member of an affiliated, consolidated
or
combined group with any other corporation at any time on or prior to the
Closing
Date.
“Tax
Asset” means any net operating loss, net capital loss, investment tax
credit, foreign tax credit, charitable deduction or any other credit or tax
attribute that could be carried forward or back to reduce Taxes (including,
without limitation, deductions and credits related to alternative minimum
Taxes)
and losses or deductions deferred by the Code or other applicable Law
(including, without limitation, pursuant to Section 163(e)(3) or Section
163(j)
of the Code).
“Transaction
Documents” means this Agreement and the Short Form Stock Purchase
Agreement, each as amended from time to time.
7
“Unaudited
Financial Statements” means the unaudited combined consolidated balance
sheets and the related unaudited income statements and cash flow statements
of
the Acquired Companies and the Subsidiary as of and for each of the 2007
and
2006 fiscal years included in item #6 of Section 3.08 of the Disclosure Schedule
(it being understood that the Unaudited Financial Statements are qualified
and
subject to Section 3.08 of the Disclosure Schedule).
“U.S.
Acquired Company” means Godiva Chocolatier, Inc.
|
Term
|
Section
|
|
Acquired
Company Securities
|
3.05
|
|
Aggregate
Deemed Sales Price
|
8.05(d)
|
|
Agreement
|
Preamble
|
|
Allocation
Statement
|
2.07
|
|
Balance
Sheet Reconciliation
|
3.08
|
|
Buyer
|
Preamble
|
|
Buyer
DC Plan
|
9.02(d)
|
|
Buyer
Non-Trading Payment
|
2.02
|
|
Buyer
Plans
|
9.02(b)
|
|
Buyer
RSP
|
9.02(e)
|
|
Canadian
Shares
|
8.07
|
|
Cash
Free/Debt Free Price
|
2.01
|
|
Claim
|
11.03(a)
|
|
Closing
|
2.03
|
|
Closing
Cash
|
2.05(a)
|
|
Closing
External Debt
|
2.05(a)
|
|
Closing
Inter-Company Non-Trading Payables
|
2.05(a)
|
|
Closing
Inter-Company Non-Trading Receivables
|
2.05(a)
|
|
Closing
Items
|
2.05(a)
|
|
Closing
Net Working Capital
|
2.05(a)
|
|
Closing
Payment
|
2.01
|
|
Closing
Statement
|
2.05(a)
|
|
COBRA
|
9.02(i)
|
|
Confidentiality
Agreement
|
6.01
|
|
Confidential
Information
|
5.04(c)
|
|
Damages
|
11.02(a)
|
|
De
Minimis Claim
|
11.02(a)
|
|
EBIT
Reconciliation
|
3.08
|
|
Employee
Plans
|
3.20(a)
|
|
Estimate
Certificate
|
2.04
|
|
Estimated
Closing Cash
|
2.04
|
8
|
Term
|
Section
|
|
Estimated
Closing External Debt
|
2.04
|
|
Estimated
Closing Inter-Company Non-Trading Payables
|
2.04
|
|
Estimated
Closing Inter-Company Non-Trading Receivables
|
2.04
|
|
Estimated
Closing Items
|
2.04
|
|
Estimated
Closing Net Working Capital
|
2.04
|
|
Final
Closing Cash
|
2.06(a)(i)
|
|
Final
Closing External Debt
|
2.06(a)(iv)
|
|
Final
Closing Inter-Company Non-Trading Payables
|
2.06(a)(v)
|
|
Final
Closing Inter-Company Non-Trading Receivables
|
2.06(a)(ii)
|
|
Final
Closing Net Working Capital
|
2.06(a)(iii)
|
|
ICC
|
13.06
|
|
ICC
Rules
|
13.06
|
|
Identified
Store
|
7.05
|
|
Indemnified
Party
|
11.03(a)
|
|
Indemnifying
Party
|
11.03(a)
|
|
ITA
|
8.07
|
|
Leases
|
3.14(a)
|
|
Major
Suppliers
|
3.24
|
|
Post-Closing
Straddle Period
|
8.06(b)
|
|
Potential
Contributor
|
11.05
|
|
Pre-Closing
Straddle Period
|
8.06(b)
|
|
Restricted
Businesses
|
5.04(a)
|
|
Returns
|
8.01
|
|
Section
338(h)(10) Allocation Statement
|
8.05(d)
|
|
Section
338(h)(10) Election
|
8.05(a)
|
|
Seller
|
Preamble
|
|
Seller
Non-Trading Payment
|
2.02
|
|
Seller
Plans
|
9.02(b)
|
|
Straddle
Period
|
8.06(b)
|
|
Structural
Changes
|
2.08
|
|
Subsidiary
Securities
|
3.07(b)
|
|
Tax
Benefit
|
8.06(e)
|
|
Tax
Claim
|
8.06(g)
|
|
Tax
Indemnified Party
|
8.06(g)
|
|
Tax
Indemnifying Party
|
8.06(g)
|
|
Termination
Date
|
12.01(b)
|
|
Third
Party Claim
|
11.03(b)
|
|
Transition
Services
|
5.05(a)
|
|
Transition
Services Agreement
|
5.05(a)
|
|
Transferred
Employees
|
9.01
|
|
UK
Defined Benefit Scheme
|
3.20(e)
|
|
Vacation
Policy
|
9.02(g)
|
9
|
Term
|
Section
|
|
WARN
|
9.02(h)
|
|
Warranty
Breach
|
11.02(a)
|
Section
1.02. Other Definitional and Interpretative
Provisions. The words “hereof”, “herein” and “hereunder” and
words of like import used in this Agreement shall refer to this Agreement
as a
whole and not to any particular provision of this Agreement. The
captions herein are included for convenience of reference only and shall
be
ignored in the construction or interpretation hereof. References to
Articles, Sections, Appendices, Exhibits and Schedules are to Articles,
Sections, Appendices, Exhibits and Schedules of this Agreement unless otherwise
specified. All Appendices, Exhibits and Schedules annexed hereto or
referred to herein are hereby incorporated in and made a part of this Agreement
as if set forth in full herein. Without limiting the generality of
the preceding sentence, all matters disclosed in the Disclosure Schedule
relevant to a Section of this Agreement shall be deemed to be incorporated
into
and made a part of such Section. Any capitalized terms used in any
Appendix, Exhibit or Schedule but not otherwise defined therein, shall have
the
meaning as defined in this Agreement. Any singular term in this
Agreement shall be deemed to include the plural, and any plural term the
singular. Whenever the words “include”, “includes” or “including” are
used in this Agreement, they shall be deemed to be followed by the words
“without limitation”, whether or not they are in fact followed by those words or
words of like import. “Writing”, “written” and comparable terms refer
to printing, typing and other means of reproducing words (including electronic
media) in a visible form. References to any agreement or contract are
to that agreement or contract as amended, modified or supplemented from time
to
time in accordance with the terms hereof and thereof. References to
any Person include the successors and permitted assigns of that
Person. References from or through any date mean, unless otherwise
specified, from and including or through and including,
respectively. References to “law”, “laws” or to a particular statute
or law shall be deemed also to include any and all Laws.
ARTICLE
2
Purchase
and Sale
10
Trading
Receivables, plus (iii) if Estimated Closing Net Working Capital exceeds
Target
Net Working Capital, the amount of such excess, less (iv) if Target Net Working
Capital exceeds Estimated Closing Net Working Capital, the amount of such
excess, less (v) the Estimated Closing External Debt, less (vi) the Estimated
Closing Inter-Company Non-Trading Payables. The Closing Payment shall
be made as provided in Section 2.03 and shall be subject to adjustment as
provided in Section 2.06.
Section
2.02. Non-Trading
Payments. In addition to the payment of the Closing Payment as
set forth in Section 2.01, immediately after the Closing, (i) Buyer agrees
to
cause the Acquired Companies to pay to Seller or its Affiliates (as Seller
shall
determine) the Estimated Closing Inter-Company Non-Trading Payables in the
applicable currency (the “Buyer Non-Trading Payment”) and (ii)
Seller agrees to pay (or cause to be paid) to the appropriate Acquired Companies
the Estimated Closing Inter-Company Non-Trading Receivables in the applicable
currency (the “Seller Non-Trading
Payment”).
(i) Buyer
shall deliver to Seller the Closing Payment in immediately available funds
by
wire transfer to one or more accounts of Seller designated by Seller, by
notice
to Buyer, which notice shall be delivered not later than two Business Days
prior
to the Closing Date (or if not so designated, then by one or more certified
or
official bank checks payable in immediately available funds to the order
of
Seller in such amount).
(ii) Other
than
with respect to Godiva Belgium NV and Godiva France SA, Seller shall deliver
to
Buyer certificates for the Shares duly endorsed or accompanied by stock powers
duly endorsed in blank, with any required transfer stamps affixed
thereto.
(iii) Seller
shall deliver to Buyer duly executed instruments of transfer and sold notes
(in
a form complying with the Stamp Duty Ordinance (Chapter 117 of the Laws of
Hong
Kong)) in respect of the shares in Godiva Chocolatier (Asia) Limited in favor
of
the Buyer.
11
(iv) Seller
and
Buyer shall record the sale by Seller to Buyer of the shares of Godiva Belgium
NV in the share register of Godiva Belgium NV or deliver a proxy to this
effect.
(v) With
respect to Godiva France SA, Buyer and Seller shall cause the items set forth
on
Section 2.03(v) of the Disclosure Schedule to occur.
(vi) Seller
and
Buyer shall each deliver such other documents, instruments and agreements
as are
required to be delivered by such party at the Closing pursuant to this
Agreement.
Section
2.04. Estimate
Certificate. Not less than five Business Days prior to the
Closing Date, Seller shall deliver to Buyer a certificate (the “Estimate
Certificate”) of a representative of Seller setting forth Seller’s good
faith estimate of the following items at the Closing: (i) Cash (the
“Estimated Closing Cash”), (ii) Inter-Company Non-Trading
Receivables (the “Estimated Closing Inter-Company Non-Trading
Receivables”), (iii) Net Working Capital (the “Estimated
Closing Net Working Capital”), (iv) External Debt (the
“Estimated Closing External
Debt”), and (v) Inter-Company
Non-Trading Payables (the “Estimated Closing Inter-Company Non-Trading
Payables”) (items (i) through (v), collectively, the “Estimated
Closing Items”). The determination of the Estimated Closing
Items shall be made by applying the principles, policies and practices used
in
connection with the preparation of the relevant portions of the Balance Sheet,
including the adjustments, notes and assumptions set forth in Section 3.08
of
the Disclosure Schedule. The amounts set forth on the Estimate
Certificate shall be conclusive for the purposes of calculating the Closing
Payment, the Buyer Non-Trading Payment and the Seller Non-Trading Payment
but
the actual Closing Cash, Closing Inter-Company Non-Trading Receivables, Closing
Net Working Capital, Closing External Debt and Closing Inter-Company Non-Trading
Payables and any resulting adjustment to the Closing Payment shall be determined
in accordance with the provisions of Section 2.05.
12
the
preparation of the relevant portions of the Balance Sheet, including the
adjustments, notes and assumptions set forth in Section 3.08 of the Disclosure
Schedule and shall be accompanied by appropriate information and documentation
in reasonable detail supporting Buyer’s calculations.
(b) If
Seller
disagrees with Buyer’s calculation of any of the Closing Items delivered
pursuant to Section 2.05(a), Seller may, within 30 days after delivery of
the
Closing Statement referred to in Section 2.05(a), deliver a notice to Buyer
disagreeing with such calculation and setting forth Seller’s calculation of such
amount. Any such notice of disagreement shall specify those items or
amounts as to which Seller disagrees.
(c) If
a
notice of disagreement shall be duly delivered pursuant to Section 2.05(b),
Buyer and Seller shall, during the 30 days following such delivery, use their
reasonable best efforts to reach agreement on the disputed items or amounts
of
the Closing Items. If, during such period, Buyer and Seller are
unable to reach such agreement, they shall promptly thereafter cause an
independent accountant of nationally recognized standing, reasonably
satisfactory to Buyer and Seller (who shall not have any material relationship
with Buyer or Seller), promptly to review this Agreement and the disputed
items
or amounts for the purpose of calculating the disputed Closing
Items. In making such calculation, such independent accountant shall
consider only those items or amounts in the Closing Items as to which Seller
has
disagreed and shall make its determination strictly in accordance with the
principles, policies and practices used in connection with the preparation
of
the Balance Sheet, including the adjustments, notes and assumptions set forth
in
Section 3.08 of the Disclosure Schedule. Such independent accountant
shall deliver to Buyer and Seller, as promptly as practicable, a report setting
forth such calculation, it being understood that the amount of the disputed
items or amounts calculated by the independent accountant shall not (i) in
the
case of Closing Cash, Closing Inter-Company Non-Trading Receivables and Closing
Net Working Capital, be more than the amount thereof shown in Seller’s
calculations delivered pursuant to Section 2.05(b) nor less than the amount
thereof shown in Buyer’s calculation delivered pursuant to Section 2.05(a) and
(ii) in the case of Closing External Debt and Closing Inter-Company Non-Trading
Payables, be more than the amount thereof shown in Buyer’s calculations
delivered pursuant to Section 2.05(a) nor less than the amount thereof shown
in
Seller’s calculations delivered pursuant to Section 2.05(b). Such
report shall be final and binding upon the parties hereto. The cost
of such review and report shall be borne by Buyer if the difference between
the
Final Closing Items and Buyer’s calculation of the Closing Items delivered
pursuant to Section 2.05(a) is greater than the difference between the Final
Closing Items and Seller’s calculation of the Closing Items delivered pursuant
to Section 2.05(b), by Seller if the first such difference is less than the
second such difference and otherwise equally by Buyer and Seller.
13
(d) Buyer
and
Seller agree that they will, and agree to cause their respective independent
accountants and each of the Acquired Companies and the Subsidiary to, cooperate
and assist in the preparation of the Closing Statement and the calculation
of
the Closing Items and in the conduct of the audits or reviews referred to
in
Section 2.05(c), including without limitation, the making available to the
extent necessary of books, records, work papers and personnel.
Section
2.06. Adjustment
to the Closing Payment. (a) If:
(i) Estimated
Closing Cash exceeds Final Closing Cash, Seller shall pay to Buyer, in the
manner and with interest as provided in Section 2.06(b), the amount of such
excess. If Final Closing Cash exceeds Estimated Closing Cash, Buyer
shall pay to Seller in the manner and with interest as provided in Section
2.06(b), the amount of such excess. “Final Closing
Cash” means Closing Cash as shown in Buyer’s calculation delivered
pursuant to Section 2.05(a), if no notice of disagreement with respect thereto
is duly delivered pursuant to Section 2.05(b), or if such a notice of
disagreement is delivered, as agreed by Buyer and Seller pursuant to Section
2.05(c) or in the absence of such agreement, as shown in the independent
accountant’s calculation delivered pursuant to Section 2.05(c);
provided that, in no event shall Final Closing Cash be more than
Seller’s calculation of Closing Cash delivered pursuant to Section 2.05(b) or
less than Buyer’s calculation of Closing Cash delivered pursuant to Section
2.05(a);
(ii) Estimated
Closing Inter-Company Non-Trading Receivables exceeds Final Closing
Inter-Company Non-Trading Receivables, Seller shall pay to Buyer, in the
manner
and with interest as provided in Section 2.06(b), the amount of such excess,
and
Buyer shall cause the applicable Acquired Companies to pay to Seller or its
Affiliates (as Seller shall determine) an offsetting amount, based, if
applicable, on the previously agreed interest rate (and if none, at the
Reference Rate) and in the applicable currency. If Final Closing
Inter-Company Non-Trading Receivables exceeds Estimated Closing Inter-Company
Non-Trading Receivables, Buyer shall pay to Seller in the manner and with
interest as provided in Section 2.06(b), the amount of such excess and Seller
or
its Affiliates (as Seller shall determine) shall pay to the applicable Acquired
Companies an offsetting amount, based, if applicable, on the previously agreed
interest rate (and if none, at the Reference Rate) and in the applicable
currency. “Final Closing Inter-Company Non-Trading
Receivables” means Closing Inter-Company Non-Trading Receivables as
shown in Buyer’s calculation delivered pursuant to Section 2.05(a), if no notice
of disagreement with respect thereto is duly delivered pursuant to Section
2.05(b), or if such a notice of disagreement is delivered, as
agreed
14
by
Buyer
and Seller pursuant to Section 2.05(c) or in the absence of such agreement,
as
shown in the independent accountant’s calculation delivered pursuant to Section
2.05(c); provided that, in no event shall Final Inter-Company
Non-Trading Receivables be more than Seller’s calculation of Closing
Inter-Company Non-Trading Receivables delivered pursuant to Section 2.05(b)
or
less than Buyer’s calculation of Closing Inter-Company Non-Trading Receivables
delivered pursuant to Section 2.05(a);
(iii) Estimated
Closing Net Working Capital exceeds Final Closing Net Working Capital, Seller
shall pay to Buyer, in the manner and with interest as provided in Section
2.06(b), the amount of such excess. If Final Closing Net Working
Capital exceeds Estimated Closing Net Working Capital, Buyer shall pay to
Seller
in the manner and with interest as provided in Section 2.06(b), the amount
of
such excess. “Final Closing Net Working Capital”
means Closing Net Working Capital as shown in Buyer’s calculation delivered
pursuant to Section 2.05(a), if no notice of disagreement with respect thereto
is duly delivered pursuant to Section 2.05(b), or if such a notice of
disagreement is delivered, as agreed by Buyer and Seller pursuant to Section
2.05(c) or in the absence of such agreement, as shown in the independent
accountant’s calculation delivered pursuant to Section 2.05(c);
provided that, in no event shall Final Closing Net Working Capital be
more than Seller’s calculation of Closing Net Working Capital delivered pursuant
to Section 2.05(b) or less than Buyer’s calculation of Closing Net Working
Capital delivered pursuant to Section 2.05(a);
(iv) Estimated
Closing External Debt exceeds Final Closing External Debt,
Buyer shall pay to Seller in the manner and with interest as provided in
Section
2.06(b), the amount of such excess. If Final Closing External Debt
exceeds Estimated Closing External Debt, Seller shall pay to Buyer in the
manner
and with interest as provided in Section 2.06(b), the amount of such
excess. “Final Closing External Debt” means Closing
External Debt as shown in Buyer’s calculation delivered pursuant to Section
2.05(a), if no notice of disagreement with respect thereto is duly delivered
pursuant to Section 2.05(b), or if such a notice of disagreement is delivered,
as agreed by Buyer and Seller pursuant to Section 2.05(c) or in the absence
of
such agreement, as shown in the independent accountant’s calculation delivered
pursuant to Section 2.05(c); provided that, in no event shall Final
Closing External Debt be less than Seller’s calculation of Closing External Debt
delivered pursuant to Section 2.05(b) or more than Buyer’s calculation of
Closing External Debt delivered pursuant to Section 2.05(a); and
15
(v) Estimated
Closing Inter-Company Non-Trading Payables exceeds Final Closing Inter-Company
Non-Trading Payables, Buyer shall pay to Seller in the manner and with interest
as provided in Section 2.06(b), the amount of such excess, and Seller or
its
Affiliates (as Seller shall determine) shall pay to the applicable Acquired
Companies an offsetting amount, based, if applicable, on the previously agreed
interest rate (and if none, at the Reference Rate) and in the applicable
currency. If Final Closing Inter-Company Non-Trading Payables exceeds
Estimated Closing Inter-Company Non-Trading Payables, Seller shall pay to
Buyer
in the manner and with interest as provided in Section 2.06(b), the amount
of
such excess, and Buyer shall cause the applicable Acquired Companies to pay
to
Seller or its Affiliates (as Seller shall determine) an offsetting amount,
based, if applicable, on the previously agreed interest rate (and if none,
at
the Reference Rate) and in the applicable currency. “Final
Closing Inter-Company Non-Trading Payables” means Closing Inter-Company
Non-Trading Payables as shown in Buyer’s calculation delivered pursuant to
Section 2.05(a), if no notice of disagreement with respect thereto is duly
delivered pursuant to Section 2.05(b), or if such a notice of disagreement
is
delivered, as agreed by Buyer and Seller pursuant to Section 2.05(c) or in
the
absence of such agreement, as shown in the independent accountant’s calculation
delivered pursuant to Section 2.05(c); provided that, in no event shall
Final Closing Inter-Company Non-Trading Payables be less than Seller’s
calculation of Closing Inter-Company Non-Trading Payables delivered pursuant
to
Section 2.05(b) or more than Buyer’s calculation of Closing Inter-Company
Non-Trading Payables delivered pursuant to Section 2.05(a).
(b) Any
payment made by Buyer or Seller (or its Affiliates) pursuant to Section
2.06(a) shall be treated as an adjustment to the Closing Payment and
shall be made in cash within five days after such calculation has been
determined by delivery by Buyer or Seller (or its Affiliates), as the case
may
be, in immediately available funds by wire transfer to an account of Seller
(in
the case of a payment by Buyer) or Buyer (in the case of a payment by Seller)
or
by causing such payment to be credited to such account of the receiving party
as
may be designated by such party. Any amount payable shall bear
interest from and including the Closing Date to but excluding the actual
date of
payment at the previously agreed interest rate or, if none, at the Reference
Rate. Such interest shall be payable at the same time as the payment
to which it relates and shall be calculated daily on the basis of a year
of 365
days and the actual number of days elapsed.
Section
2.07. Allocation
of the Closing Payment. Set forth on Exhibit C hereto is
a statement (the “Allocation Statement”) prepared by Seller and
Buyer to be used to allocate on a percentage basis the Closing Payment among
the
16
Acquired
Companies. Seller and Buyer shall use the same percentages on the
Allocation Statement to allocate among the Acquired Companies any payments
that
occur at or after the Closing that are adjustments to the Closing Payment
or are
made pursuant to Section 2.02. Buyer and Seller agree to (i) be bound
by the Allocation Statement (including any revisions thereto) and (ii) act
in
accordance with the Allocation Statement (including any revisions thereto)
in
the preparation, filing and audit of any Returns, unless required by applicable
Law to do otherwise.
Section
2.08. Structuring
Considerations. The parties agree that between the date of this
Agreement and the Closing Date, at the request of the other party, they will
consider and discuss in good faith alternative acquisition structures (including
without limitation the acquisition of certain Shares by merger or an acquisition
of Shares in a certain order or by Affiliates of Buyer and for there to be
an
additional Seller selling an Acquired Company in modified corporate form)
(“Structural Changes”) to the extent that such Structural
Changes may address the reasonable objectives of either party; provided
that either party may withhold its consent if it determines, in its sole
discretion acting in good faith, that such Structural Change (a) would impede
or
delay in any material way the ability of the parties to close the transactions
contemplated by this Agreement or (b) otherwise adversely affect the benefits
of
the transactions contemplated by this Agreement to such party. In the
event that Structural Changes are identified and agreed to prior to the Closing
Date, the parties shall reflect the Structural Changes (and any other
modifications to the Agreement agreed to in connection with such Structural
Changes) in an amendment to the Agreement that complies with the requirements
of
Section 13.02.
ARTICLE
3
Representations
and Warranties of Seller
Except
as
set forth in the Disclosure Schedule, Seller represents and warrants to Buyer
as
of the date of this Agreement and, unless otherwise indicated herein, as
of the
Closing Date that:
Section
3.01. Corporate
Existence and Power. Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction
of
incorporation. Each Acquired Company is duly organized, validly
existing and, to the extent relevant in a particular jurisdiction, in good
standing under the laws of its jurisdiction of organization and has all
corporate or other powers required to carry on its business as now
conducted. Each Acquired Company is duly qualified to do business and
is in good standing in each jurisdiction where such qualification is, to
the
extent relevant in a particular jurisdiction, necessary, except for those
jurisdictions where the failure to be so
17
qualified
would not, and would not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect.
Section
3.02. Corporate
Authorization. The execution, delivery and performance by each
of Seller and its Affiliates of the Transaction Documents to which each is
or
will be a party and the consummation of the transactions contemplated hereby
are
within the corporate powers and authority of each of Seller and its Affiliates
and have been duly authorized by all necessary corporate action on the part
of
Seller and such Affiliates. Each of the Transaction Documents to
which it is or will be a party constitutes, or will when executed constitute,
the legal, valid and binding obligation of each of Seller and such Affiliates
enforceable against each of Seller and such Affiliates in accordance with
its
respective terms, (1) except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to or affecting creditors’ rights generally,
including the effect of statutory and other laws concerning fraudulent
conveyances and preferential transfers and (2) subject to the limitations
imposed by general equitable principles (regardless of whether such
enforceability is considered in proceeding at law or in equity).
Section
3.03. Governmental
Authorization. The execution, delivery and performance by Seller
of each of the Transaction Documents to which it is or will be a party and
the
consummation of the transactions contemplated hereby and thereby require
no
action, consent or approval by or in respect of, filing with or notice to,
any
governmental body, agency or official other than: (1) compliance with any
applicable requirements of the HSR Act; and (2) any other such action or
filing
as to which the failure to make or obtain would not have, individually or
in the
aggregate, a Material Adverse Effect or materially impair the ability of
Seller
to consummate the transactions contemplated hereby or for Seller or its
Affiliates to perform their obligations under the Transaction
Documents.
Section
3.04. Noncontravention. The
execution, delivery and performance by each of Seller and its Affiliates
of any
of the Transaction Documents to which Seller or such Affiliates is or will
be a
party, and the consummation of the transactions contemplated hereby and thereby
do not and will not (1) violate or conflict with the organizational documents
of
each of Seller and such Affiliates , or any Acquired Company or the Subsidiary,
(2) assuming compliance with the matters referred to in Section 3.03, contravene
or conflict with or constitute a violation of any provision of any Law binding
upon or applicable to each of Seller and such Affiliates, or any Acquired
Company or the Subsidiary, (3) with or without the giving of notice or the
lapse
of time, or both, constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or obligation of each
of
Seller and such Affiliates, or any Acquired Company or the Subsidiary, or
to a
loss of any benefit to which each of
18
Seller
and
such Affiliates, or any Acquired Company or the Subsidiary is entitled, under
any provision of any agreement, contract or other instrument to which each
of
Seller and such Affiliates, or any Acquired Company or the Subsidiary, is
a
party or by which any of them or their respective properties or assets is
bound
or (4) result in the creation or imposition of any Lien (other than Permitted
Liens not affecting the Shares) upon or with respect to any Acquired Company,
the Subsidiary, any of their respective properties or assets or the Shares,
except, in the case of clauses (2), (3) and (4), for any such contravention,
conflict, violation, default, termination, cancellation, acceleration or
loss
that would not, and would not be reasonably expected to, have, individually
or
in the aggregate, a Material Adverse Effect or materially impair the ability
of
Seller to deliver the Shares at the Closing or for Seller or its Affiliates
to
perform their obligations hereunder.
Section
3.07. Subsidiary. (a)
The Subsidiary is the only subsidiary of any of the Acquired
Companies. The Subsidiary is a corporation duly
organized
19
under
the
laws of Delaware, validly existing and in good standing under the laws of
its
jurisdiction of organization and has all necessary power and authority to
carry
on its business as now conducted, except as would not have, individually
or in
the aggregate, a Material Adverse Effect. The Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing
in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where the failure to be so qualified would not, individually
or in
the aggregate, have a Material Adverse Effect.
(b) All
of the
outstanding capital stock or other equity securities of the Subsidiary is
owned
by Godiva Chocolatier, Inc., directly or indirectly, free and clear of any
Lien. All outstanding shares of capital stock and other equity
interests of the Subsidiary have been duly authorized and validly issued
and are
fully paid and non-assessable. There are no outstanding (1) shares of capital
stock or other securities of the Subsidiary convertible into or exchangeable
for
shares of capital stock or other securities of the Subsidiary or (2) options
or
other rights to acquire from any Acquired Company or the Subsidiary, or other
obligation of any Acquired Company or the Subsidiary to issue, any capital
stock, other securities or securities convertible into or exchangeable for
capital stock or other securities of the Subsidiary (the items in clauses
(1)
and (2) being referred to collectively as the “Subsidiary
Securities”). There are no outstanding obligations of any
Acquired Company or the Subsidiary or any other Person to repurchase, redeem
or
otherwise acquire the Subsidiary Securities. There are no agreements
or other instruments relating to the issuance, sale or transfer of the
Subsidiary Securities.
Section
3.08. Financial
Statements. Subject to Section 3.08 of the Disclosure Schedule,
the Unaudited Financial Statements (i) have been prepared from the books
and
records of Xxxxxxxx, Seller, the Acquired Companies and the Subsidiary, (ii)
have been prepared in accordance with GAAP consistently applied and (iii)
present fairly, in all material respects, the financial condition and the
results of operations of the Acquired Companies and the Subsidiary at their
respective dates and for the periods covered by such statements. The
Acquired Companies and the Subsidiary have not received any written advice
or
notification, and to the knowledge of Seller, any oral advice or notification,
from its independent certified public accountants that it has used any improper
accounting practice that would have the effect of not reflecting or incorrectly
reflecting in the Unaudited Financial Statements or the books and records,
any
properties, assets, liabilities, revenues or expenses. None of the
Acquired Companies and the Subsidiary has engaged in any transaction, maintained
any bank account, or used any of its funds, except for transactions, bank
accounts and funds that have been, and are, reflected in the normally maintained
books and records of the Acquired Companies and the Subsidiary. The
“EBIT Reconciliation” set forth in item #1 of Section 3.08(a) of the Disclosure
Schedule (the “EBIT Reconciliation”) sets forth the material
items required to reconcile
20
the
EBIT
calculations set forth on the Unaudited Financial Statements to EBIT set
forth
in the Information Memorandum regarding the Acquired Companies dated Fall
2007
and previously provided to Buyer. No single item included in the
“Others” line item of the EBIT Reconciliation exceeds $300,000. The
“Balance Sheet Reconciliation” set forth in item #2 of Section 3.08(a) of the
Disclosure Schedule (the “Balance Sheet Reconciliation”) sets
forth the material items required to reconcile the Balance Sheet to the balance
sheet set forth in the Information Memorandum regarding the Acquired Companies
dated Fall 2007 and previously provided to Buyer.
Section
3.09. Inventory;
Receivables; Payables. (a) Subject to any reserve
included in the Balance Sheet, at the Balance Sheet Date, all inventories
of the
Acquired Companies and the Subsidiary (including inventory ordered but not
yet
received) consisted of items of a quality usable or saleable in the normal
course of the business of the Acquired Companies consistent with past practices
and were in quantities sufficient for the normal operation of the businesses
of
the Acquired Companies in accordance with past practices. The values
at which inventories are shown on the Balance Sheet have been determined
in
accordance with the customary valuation policy of the Acquired Companies
consistent with past practice. Since the Balance Sheet Date, the
Acquired Companies have continued to replenish their inventory and to dispose
of
out-of-season and slow-moving inventory in a normal and customary manner
consistent with past practices prevailing in the business of the Acquired
Companies.
(b) The
receivables of the Acquired Companies and the Subsidiary which have arisen
in
connection with the business of the Acquired Companies and the Subsidiary
and
which, with respect to the Acquired Companies and the Subsidiary, are reflected
in the Unaudited Financial Statements, have arisen only from bona fide
transactions entered into and, to the knowledge of Seller, are, except to
the
extent of the reserves therefore, if any, set forth in the Unaudited Financial
Statements, collectible in the ordinary course of business consistent with
past
practice.
(c) All
accounts payable of the Acquired Companies and the Subsidiary have arisen
in the
ordinary course of business.
Section
3.10. Absence
of Certain Changes. Since the Balance Sheet Date, the business
of the Acquired Companies and the Subsidiary has been conducted in the ordinary
course consistent with past practices and there has not been:
(i) any
event,
occurrence or development which has had or would reasonably be expected to
have,
individually or in the aggregate, a Material Adverse Effect;
21
(ii) any
declaration, setting aside or payment of any dividend or other distribution
with
respect to any shares of capital stock or other voting or equity securities
of
any Acquired Company or by the Subsidiary to any Person other than the
Subsidiary or any Acquired Company, or any repurchase, redemption or other
acquisition by any Acquired Company or the Subsidiary of any outstanding
shares
of capital stock or other securities of any Acquired Company, the Subsidiary
or
any other entity;
(iii) any
amendment of any term of any outstanding security of any Acquired Company
or the
Subsidiary;
(iv) any
incurrence, assumption or guarantee by any Acquired Company or the Subsidiary
of
any indebtedness for borrowed money other than from Seller or its Affiliates
in
the ordinary course of business consistent with past practice;
(v) any
making
of any loan, advance or capital contribution to or investment in any Person
by
any Acquired Company or the Subsidiary other than loans, advances or capital
contributions to the Subsidiary or investments made in the Subsidiary in
the
ordinary course of business consistent with past practice and other than
travel,
relocation and similar advances to employees in the ordinary course of business
consistent with past practice;
(vi) any
material change in any method of accounting or accounting practice by any
Acquired Company or the Subsidiary (except for any such change required by
reason of a concurrent change in GAAP);
(vii) any
sale
(other than sales of inventory, whether through retail channels or sales
through
wholesalers, in the ordinary course of business), assignment or other
disposition (including by sublease) of any material asset or property of
any
Acquired Company or the Subsidiary or imposition of any Lien (other than
Permitted Liens) on any material asset or property of any Acquired Company
or
the Subsidiary;
(viii) any
(1)
employment, deferred compensation, severance, retirement or other similar
agreement entered into as of the date hereof with any director, officer,
employee, agent or representative of any Acquired Company or the Subsidiary
(or
any amendment to any such existing agreement), (2) grant of any severance
or
termination pay to any director, officer, employee, agent or representative
of
any Acquired Company or the Subsidiary as of the date hereof, or (3) change
in
compensation or other benefits payable (including under any severance pay,
termination pay, vacation pay, company awards, salary continuation
22
for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit plan, payment
or
arrangement) to any director, officer, employee, agent or representative
of any
Acquired Company or the Subsidiary (other than pursuant to existing individual
employment arrangements, award or service agreements, or collective bargaining
agreements, previously provided to Buyer prior to the date hereof or by
operation of Law) as of the date hereof, in each case other than in the ordinary
course of business consistent with past practice;
(ix) any
adoption of or change (other than a change required by Law) in any Employee
Plan
or International Plan maintained by any Acquired Company or the Subsidiary
or
any compensation or labor policy;
(x) any
damage, destruction or loss, whether or not covered by insurance, with respect
to the property and assets of the Acquired Companies and the Subsidiary having
a
replacement cost of more than $150,000 for any single loss or $750,000 for
all
such losses;
(xi) as
of the
date of this Agreement, any capital expenditures or capital additions or
betterments in excess of $1,500,000 individually or $20,000,000 in the
aggregate, or any commitments to do the same, by any Acquired Company or
the
Subsidiary;
(xii) grant
of
any license or sublicense of any Intellectual Property Right in which any
Acquired Company or the Subsidiary has any interest, except in the ordinary
course of business consistent with past practice;
(xiii) any
material change in any tax accounting or tax reporting principles, methods
or
policies, any election or rescission of any material election relating to
Taxes,
or any material settlement or compromise of any claim relating to Taxes all
with
respect to any Acquired Company or the Subsidiary;
(xiv) any
institution by any of the Acquired Companies and the Subsidiary or settlement
of
any legal proceeding involving any of the Acquired Companies and the Subsidiary
with respect to an amount in excess of $1,000,000; or
(xv) any
agreement, whether or not in writing, to do any of the foregoing by any Acquired
Company or the Subsidiary.
23
(a) liabilities
provided for in the Balance Sheet or disclosed in the notes
thereto;
(b) liabilities
incurred in the ordinary course of business since the Balance Sheet Date;
and
(c) other
undisclosed liabilities that would not, and would not reasonably be expected
to,
individually or in the aggregate, have a Material Adverse Effect.
(i) any
agreement, indenture or other instrument relating to the borrowing of money
(other than any such agreement with Seller or any of its Affiliates) or
incurrence, assumption or guarantee of any indebtedness or imposing of any
material Lien;
(ii) any
material agreement, license, contract or commitment pursuant to which any
trade
secret, confidential or other proprietary information, or any customer
information of any Acquired Company or the Subsidiary may be transferred,
disclosed to or used by any Person other than Xxxxxxxx and its
Affiliates;
(iii) any
agreement, contract or commitment for the purchase of materials, supplies,
goods, services or equipment providing for either (A) annual payments of
$500,000 or more or (B) aggregate payments of $1,000,000 or more, in each
case
(x) that cannot be terminated on less than one year’s notice without payment of
any material penalty and (y) excluding purchases of inventory in the ordinary
course of business;
(iv) any
agreement, contract or commitment, or group of related agreements, contracts
or
commitments, requiring a single capital expenditure by an Acquired Company
or
the Subsidiary of greater than $1,000,000;
(v) any
loan
or advance to, or investment in, any Person or any agreement, contract or
commitment relating to the making of any such loan, advance or investment,
other
than travel, relocation and similar advances to employees in the ordinary
course
of business;
24
(vi) any
material partnership, joint venture, strategic alliance or similar agreement
or
arrangement;
(vii) any
agreement, contract or arrangement for the sale of any of the assets of the
Acquired Companies or the Subsidiary other than in the ordinary course of
business consistent with past practice or for the grant to any Person of
any
preferential rights to purchase any assets of the Acquired Companies or the
Subsidiary other than in connection with commercial transactions entered
into in
the ordinary course of business;
(viii) any
written agreement or contract with Seller or any of its Affiliates that will
survive the Closing and is not with respect to goods, services or supplies
that
are covered by the Transition Services;
(ix) written
contracts or agreements with Major Suppliers;
(x) the
agreements and licenses that are required to be set forth on Section 3.19(a)(ii)
or Section 3.19(a)(iii) of the Disclosure Schedule; or
(xi) any
agreement, contract, written understanding or commitment limiting the freedom
of
any Acquired Company or the Subsidiary to engage in any line of business
or to
compete with any Person except for customary exclusives and restrictions
as may
be contained in leases or other occupancy contracts that relate to a certain
shopping center or a specified geographic radius surrounding a retail store
operated by an Acquired Company and not to the business generally.
Seller
has
furnished or made available to Buyer true and complete copies of all the
Material Contracts as in effect on the date of this Agreement (together with
all
amendments, modifications or supplements thereto) required to be disclosed
in
Section 3.12 of the Disclosure Schedule.
(b) Each
Material Contract required to be disclosed in Section 3.12 of the Disclosure
Schedule or entered into after the date hereof which would have been required
to
be disclosed in Section 3.12 of the Disclosure Schedule if it had been entered
into prior to the date of this Agreement is in full force and effect and
is
valid, binding and enforceable against the parties thereto in accordance
with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to the enforcement of creditors’ rights generally or by
principles governing the availability of equitable remedies. No
Acquired Company nor the Subsidiary or, to the knowledge of Seller, any other
party thereto, is in default or breach in any material respect under the
terms
of any Material Contract (including any Material Contract entered into after
the
date hereof that would have been required to be
25
disclosed
in Section 3.12 of the Disclosure Schedule if it had been entered into prior
to
the date of this Agreement) and, to the knowledge of Seller, no event has
occurred that with the lapse of time or the giving of notice or both would
constitute a breach or default in any material respect by any Acquired Company,
the Subsidiary or any other party thereunder. No party to any
Material Contract (including any Material Contract entered into after the
date
hereof that would have been required to be disclosed in Section 3.12 of the
Disclosure Schedule if it had been entered into prior to the date of this
Agreement) has exercised any termination rights with respect thereto, and
no
party has given written notice of termination or any significant dispute
with
respect to any Material Contract (including any Material Contract entered
into
after the date hereof that would have been required to be disclosed in Section
3.12 of the Disclosure Schedule if it had been entered into prior to the
date of
this Agreement).
Section
3.13. Litigation. There
is no claim, action, suit,
investigation or proceeding pending against, or to the knowledge of Seller,
threatened against, any Acquired Company or the Subsidiary or any of their
respective properties before any court or arbitrator or any governmental
body,
agency or official which would reasonably be expected to have, individually
or
in the aggregate, a Material Adverse Effect.
Section
3.14. Properties. (a)
Section 3.14 of the
Disclosure Schedule identifies by address any real property owned, leased
or
subleased by an Acquired Company or the Subsidiary as of the date of this
Agreement (the “Leases”). Seller has furnished or
made available to Buyer true and complete copies of each Lease.
(b) Except
as
would not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect: (i) each material Lease is in full force and effect
in
accordance with its terms; (ii) all material amounts due and payable as rent
due
under each such Lease have been paid in full (except that routine
reconciliations of typical lease charges such as taxes, common area maintenance
payments, insurance and the like may still be owed for prior periods if such
amounts have not been billed by landlords or are in the routine process of
payment on the date of this Agreement or are being disputed); and (iii) no
Acquired Company nor the Subsidiary, or to the knowledge of Seller, any other
party thereto, is in default or breach in any material respect under the
terms
of any such material Lease.
Section
3.15. Sufficiency
of Assets. As of the Closing Date, the assets of the Acquired
Companies and the Subsidiary, together with the services provided to the
Acquired Companies and the Subsidiary as contemplated by Section 5.05, will
be
sufficient, in all material respects, to conduct the business of the Acquired
Companies and the Subsidiary as conducted on the date of this
Agreement.
26
Section
3.16. Licenses
and Permits. The Acquired Companies and the Subsidiary have all
Permits necessary for the operation of the business of the Acquired Companies
and the Subsidiary as such business is being conducted as of the date of
this
Agreement, except for the absence of such Permits as would not have,
individually or in the aggregate, a Material Adverse Effect. None of
the Acquired Companies nor the Subsidiary is in default in any material respect
under any of such Permits.
(a) No
written
notice, request for information, order, complaint or penalty has been received
by Seller or any of its Affiliates, any Acquired Company or the Subsidiary
within the two years preceding the date of this Agreement or as to matters
that
have not been resolved, and there are no judicial, administrative or other
actions, suits, investigations or proceedings pending or, to the knowledge
of
Seller, threatened, which allege a violation of or liability under any
Environmental Law, in each case relating to any Acquired Company or the
Subsidiary or any property currently owned, leased or operated by any Acquired
Company or the Subsidiary and arising out of any Environmental Law;
(b) Each
Acquired Company and the Subsidiary, any property currently owned or operated
by
any Acquired Company or the Subsidiary and any property currently leased
by any
Acquired Company or the Subsidiary, have in full force and effect all Permits
necessary for their operations to comply with all applicable Environmental
Laws
and are, and at all times since January 1, 2006 have been, in compliance
with
the terms of such Permits and with all other applicable Environmental Laws;
and
(c) No
property now or previously owned, leased or operated by any Acquired Company
or
the Subsidiary or any property to which an Acquired Company or the Subsidiary
has, directly or indirectly, transported or arranged for the transportation
of
any Hazardous Substances is listed or, to Seller’s knowledge, proposed for
listing, on the National Priorities List promulgated pursuant to CERCLA,
on
CERCLIS (as defined in CERCLA) or on any similar federal, state or foreign
list
of sites requiring investigation or clean-up.
Section
3.18. Compliance
with Laws. Each Acquired Company and the Subsidiary is, and at
all times since January 1, 2006 has been, in compliance with all applicable
Laws, except for violations that have not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.
27
Section
3.19. Intellectual
Property. (a) Section 3.19(a) of the Disclosure Schedule
contains a true and complete list of (i) all material registrations
and applications for registration included in the Owned Intellectual Property
Rights as of the date of this Agreement, (ii) all material agreements (excluding
licenses for commercial off-the-shelf computer software that are generally
available on nondiscriminatory pricing terms) to which any Acquired Company
or
the Subsidiary is a party as of the date of this Agreement and pursuant to
which
any Acquired Company or the Subsidiary obtains the right to use any Licensed
Intellectual Property Rights; and (iii) all material agreements (excluding,
for
the avoidance of doubt, any incidental licenses granted in the ordinary course
of business) to which any Acquired Company or the Subsidiary is a party as
of
the date of this Agreement and pursuant to which any Acquired Company or
the
Subsidiary grants to any third party the right to use the GODIVA trademark
or
logo in connection with the sale of GODIVA branded products or
services.
(b) As
of the
Closing, to the knowledge of Seller, the Owned Intellectual Property Rights,
together with the Licensed Intellectual Property Rights and the services
provided to the Acquired Companies and the Subsidiary pursuant to the services
contemplated by Section 5.05, constitute all of the Intellectual Property
Rights
necessary to the conduct of the business of the Acquired Companies and the
Subsidiary, each as currently conducted. To the knowledge of Seller,
the rights contained within the Owned Intellectual Property Rights with respect
to the GODIVA trademark and logo are valid, subsisting and
enforceable. An Acquired Company or the Subsidiary owns all right,
title and interest contained within the Owned Intellectual Property Rights
with
respect to the GODIVA trademark and logo and, to the knowledge of Seller,
such
ownership is free and clear of any Lien (other than Permitted
Liens).
(c) To
the
knowledge of Seller, none of the Acquired Companies and the Subsidiary have
infringed or misappropriated any Intellectual Property Right of any third
party
in any material respect. There is no written claim or proceeding
pending against or, to the knowledge of Seller, threatened against any Acquired
Company or the Subsidiary alleging that any Acquired Company or the Subsidiary
has infringed or misappropriated any Intellectual Property Right of any third
party in any material respect. To the knowledge of Seller, there are
no proceedings pending or threatened against any Acquired Company or the
Subsidiary challenging the validity, enforceability, use or exclusive ownership
of the rights contained within the Owned Intellectual Property Rights with
respect to the GODIVA trademark and logo.
(d) To
the
knowledge of Seller, no person has infringed, is currently infringing or
misappropriated any Owned Intellectual Property Right in any material
respect.
28
(e) To
the
knowledge of Seller, there has not been any material failure of the information
technology systems of the Acquired Companies and the Subsidiary within the
last
year.
Section
3.20. Employee
Benefit Plans. (a) Section 3.20(a) of the Disclosure Schedule
contains a list of each material “employee benefit plan,” as defined in Section
3(3) of ERISA, each material employment, severance or similar contract, plan,
arrangement or policy and each other material plan or material arrangement
(written or oral) providing for compensation, bonuses, profit-sharing, stock
option or other stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance (including any self-insured
arrangements), health or medical benefits, employee assistance program,
disability or sick leave benefits, workers’ compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits), excluding any statutorily required plan (other than workers’
compensation), which covers any employee or former employee of the Acquired
Companies. Such plans are referred to collectively herein as the
“Employee Plans”; provided that any International Plan
(and any plan or program that would otherwise constitute an International
Plan,
but for the proviso in the definition of such term) shall not constitute
an
Employee Plan. Seller has made available to Buyer copies (or to the extent
no
such copy exists, an accurate description) of each Employee Plan and, if
applicable, related trust or funding agreements or insurance policies, and
all
material amendments to each Employee Plan, together with the most recent
annual
report (Form 5500 including, if applicable, Schedule B thereto) and Form
990, if
applicable, prepared in connection with any such plan or trust.
(b) Each
Employee Plan which is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service, and Seller is not aware of any reason why any such determination
letter
should be revoked. The Seller has made available to Buyer copies of
the most recent Internal Revenue Service determination letters with respect
to
each such Employee Plan. Each Employee Plan has been maintained in
material compliance with its terms and with the requirements prescribed by
any
and all statutes, orders, rules and regulations, including ERISA and the
Code,
which are applicable to such Employee Plan.
(c) To
the
knowledge of Seller, none of the Acquired Companies or the Subsidiary has
any
current or projected liability in respect of post-employment or post-retirement
health or medical or life insurance benefits for retired, former or current
employees of the Acquired Company or the Subsidiary, except as required to
avoid
excise tax under Section 4980B of the Code or to comply with non-U.S.
Laws.
29
(d) Section
3.20(d) of the Disclosure Schedule contains a list of each International
Plan. Copies or descriptions of each International Plan and any
amendments thereto have been made available to Buyer, and copies of, to the
extent applicable, any related trust or funding agreements or insurance
policies, amendments thereto, actuarial reports relating thereto and
prospectuses or summary plan descriptions relating thereto have been made
available to Buyer. Each International Plan has been maintained in
material compliance with its terms and with the requirements prescribed by
applicable law (including any special provisions relating to qualified plans
where such International Plan was intended to so qualify) and has been
maintained in good standing with the applicable regulatory
authorities.
(e) Except
with respect to the Campbell’s Group Pension Scheme (the “UK Defined
Benefit Scheme”), neither Godiva U.K. Limited nor its Affiliates
currently or at any time since April 27, 2004 have been connected with or
an
associate of (as those terms are used in the UK Pensions Xxx 0000 (“PA04”)) an
employer in relation to an occupational pension scheme (as defined in section
1
of the UK Xxxxxxx Xxxxxxx Xxx 0000 (“PSA 1993”)) established in the UK which is
not a money purchase scheme (as defined in section 181 of PSA
1993).
Section
3.21. Finders’
Fees. Except for Centerview Partners LLC, whose fees will be
paid by Seller or an Affiliate of Seller, there is no investment banker,
broker,
finder or other intermediary which has been retained by or is authorized
to act
on behalf of Seller or any of its Affiliates, the Acquired Companies or the
Subsidiary which might be entitled to any fee or commission in connection
with
the transactions contemplated by this Agreement.
Section
3.22. Food
and Health Safety. (a) The Acquired Companies and the Subsidiary
are and, since January 1, 2006, have been in compliance in all material respects
with all Food Safety Laws, and no claim has been filed against the Acquired
Companies or the Subsidiary alleging a violation of any such Food Safety
Laws
which would reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect. The Acquired Companies and the Subsidiary
have not, as of the date of shipment, released products that are “adulterated,”
“misbranded,” or otherwise unfit for human consumption under the applicable Food
Safety Laws.
(b) Since
January 1, 2006, there have been no recalls or withdrawals of products produced
or sold by the Acquired Companies or the Subsidiary or other similar federal,
state or private actions with respect to such products and, to the knowledge
of
Seller, no facts or circumstances exist that could reasonably be expected
to
result in such actions.
30
(c) To
the
knowledge of Seller, each of the material suppliers, co-packers, manufacturers
and distributors of any of the Acquired Companies and the Subsidiary are
in
compliance in all material respects with all Food Safety Laws as they relate
to
the products of the Acquired Companies or the Subsidiary. There is no
action, suit, claim, investigation or proceeding pending against or, to the
Knowledge of the Seller, threatened against the Acquired Companies regarding
the
existence of a defect in the manufacture, production, distribution or sale
of
any products made, sold or distributed on behalf of the Acquired Companies
or
the Subsidiary which would reasonably be expected to have, individually or
in
the aggregate, a Material Adverse Effect.
(d) To
the
extent required by a governmental authority, all labeling used on the products
of the Acquired Companies or the Subsidiary has been filed or registered
with
and/or approved by each governmental authority that require such filing,
registration and/or approval. To the extent any of the products of
the Acquired Company and the Subsidiary are labeled or otherwise marketed
as
being “Kosher,” “Parve,” “Hechsher,” “Organic,” “All Natural,” “Low Calorie,”
“Sugar Free,” or any similar claim, the Acquired Companies or the Subsidiary
possess appropriate certifications or scientifically reliable materials to
substantiate such claims.
Section
3.23. Labor
and Employment Matters. Except as set forth in Section 3.23 of
the Disclosure Schedule, (a) neither the Acquired Companies nor the Subsidiary
is, or within the past three (3) years has been, a party to any labor or
collective bargaining contract that pertains to employees of the Acquired
Companies or the Subsidiary; and (b) to the Seller’s knowledge and except as
would not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect, (i) there are no organizing activities or collective
bargaining arrangements that could affect the Acquired Companies or the
Subsidiary pending or under discussion with any labor organization or group
of
employees of the Acquired Companies or the Subsidiary; (ii) there are no
ongoing
or pending strikes, picketing, slowdowns, work stoppages, other job actions,
lockouts, arbitrations, grievances or other labor disputes involving any
of the
employees of the Acquired Companies or the Subsidiary; and (iii) there are
no
complaints, charges or claims against the Acquired Companies or the Subsidiary
pending with any public or governmental authority, arbitrator or court based
on,
arising out of, in connection with, or otherwise relating to the employment
or
termination of employment or failure to employ by the Acquired Companies
or the
Subsidiary, of any individual.
Section
3.24. Suppliers. Section
3.24 of the Disclosure Schedule lists, by percentage of total purchases by
or
for the Acquired Companies and the Subsidiary for the fiscal year ended as
of
the Balance Sheet Date, (i) the ten largest vendors, (ii) the five largest
suppliers, and (iii) the five largest co-
31
manufacturers
of the Acquired Companies and the Subsidiary (whether directly or through
any of
Xxxxxxxx and its Affiliates), individually and as a whole (each of the foregoing
in clauses (i), (ii) and (iii), a “Major
Supplier”). Since January 1, 2007, there has not been any
material adverse change in the business relationship, and there been no material
dispute, between the Acquired Companies and the Subsidiary (or any of Xxxxxxxx
and its Affiliates with respect to any of the Acquired Companies and the
Subsidiary) and any Major Supplier, and no Major Supplier has provided notice
of
its intention to cease or reduce its sales to any of the Acquired Companies
and
the Subsidiary.
Representations
and Warranties of Buyer
Buyer
represents and warrants to Seller, as of the date of this Agreement and,
unless
otherwise indicated herein, as of the Closing Date that:
Section
4.01. Corporate
Existence and Power. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and has all necessary corporate or other power and authority required to
carry
on its business as now conducted and to perform all of its obligations under
each Transaction Document to which it will be party.
Section
4.02. Corporate
Authorization. The execution, delivery and performance
by Buyer of the Transaction Documents to which it is or will be a party and
the
consummation of the transactions contemplated thereby are within the corporate
powers and authority of Buyer and have been duly authorized by all necessary
corporate action on the part of Buyer. Each of the Transaction
Documents to which it is or will be a party constitutes, or will when executed
constitute, the legal, valid and binding obligation of Buyer, as applicable,
enforceable against Buyer in accordance with its respective terms, (1) except
as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to or affecting
creditors’ rights generally, including the effect of statutory and other laws
concerning fraudulent conveyances and preferential transfers and (2) subject
to
the limitations imposed by general equitable principles (regardless of whether
such enforceability is considered in a proceeding at law or in
equity).
Section
4.03. Governmental
Authorization. The execution, delivery and performance
by Buyer of each of the Transaction Documents to which it is or will be a
party
and the consummation of the transactions contemplated hereby and thereby
require
no material action, consent or approval by or in respect of, material filing
with or material notice to, any governmental body, agency or official other
than: (1) compliance with any applicable requirements of the HSR
32
Act
and
the Competition Laws of Turkey; and (2) any other such action or filing as
to
which the failure to make or obtain would not materially impair the ability
of
Buyer to consummate the transactions contemplated by the Transaction
Documents.
Section
4.04. Noncontravention. The
execution, delivery and performance by Buyer of the Transaction Documents
to
which it is or will be a party and the consummation of the transactions
contemplated hereby and thereby do not and will not (1) violate or conflict
with
the certificate of incorporation or bylaws (or other organizational documents)
of Buyer, (2) assuming compliance with the matters referred to in Section
4.03,
contravene or conflict with or constitute a violation of any provision of
any
Law binding upon or applicable to Buyer or (3) with or without the giving
of
notice or the lapse of time, or both, constitute a default under or give
rise to
any right of termination, cancellation or acceleration of any material right
or
obligation of Buyer, or to a loss of any material benefit to which Buyer
is
entitled under any provision of any agreement, contract or other instrument
to
which Buyer is a party or by which Buyer or its properties or assets is bound,
except in the case of the foregoing clauses (2) and (3), for any such
contravention, conflict, violation, termination, cancellation, acceleration
or
loss that would not, individually or in the aggregate, materially impair
the
ability of Buyer to consummate the transactions contemplated by the Transaction
Documents.
Section
4.05. Financing. Buyer
has and will have prior to the Closing sufficient cash, available lines of
credit or other sources of immediately available funds necessary to enable
it to
(i) pay the Closing Payment at Closing and any other amounts payable by Buyer
hereunder and (ii) cause the Acquired Companies to pay any amounts payable
by
the Acquired Companies to the Seller or its Affiliates pursuant to this
Agreement.
Section
4.06. Litigation;
Compliance with Laws. There are no claims, actions,
suits, investigations or proceedings pending against, or to the knowledge
of
Buyer, threatened against or affecting, Buyer or any subsidiary of Buyer,
any of
their respective properties before any court or arbitrator or any governmental
body, agency or official which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contemplated by the
Transaction Documents. Except as would not, individually or in the
aggregate, materially impact the ability of Buyer to consummate the transactions
contemplated by the Transaction Documents, Buyer and its subsidiaries are
in
compliance in all material respects with all applicable Laws (including with
respect to entering into this Agreement and consummating the transactions
contemplated hereby).
Section
4.07. Finders’
Fees. Except for Citigroup Global Markets Inc. and
Standard Unlu, whose fees will be paid by Buyer, there is no
investment
33
banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of Buyer who might be entitled to any fee or commission
in
connection with the transactions contemplated by this Agreement.
Section
4.08. Purchase
for Investment. Buyer is purchasing the Shares for investment
for its own account and not with a view to, or for sale in connection with,
any
distribution (as such term is used in Section 2(11) of the Securities Act
of
1933) thereof. Buyer (either alone or together with its advisors) has
sufficient knowledge and experience in financial and business matters so
as to
be capable of evaluating the merits and risks of its investment in the Shares
and is capable of bearing the economic risks of such
investment. Buyer is an informed and sophisticated purchaser, and has
engaged expert advisors, experienced in the evaluation and purchase of
investments such as the Shares as contemplated hereunder. Buyer has
undertaken such investigation as it has deemed necessary to enable it to
make an
informed and intelligent decision with respect to the execution, delivery
and
performance of the Transaction Documents. Buyer acknowledges that, to
the extent necessary to make an informed and intelligent decision with respect
to the execution, delivery and performance of the Transaction Documents,
Seller
and its Affiliates have given Buyer access to key employees, documents and
facilities of the Acquired Companies and the Subsidiary and, to the extent
related to the Acquired Companies or the Subsidiary, Seller and its
Affiliates.
ARTICLE
5
Seller
agrees that:
Section
5.01. Conduct
of the Company. From the date of this Agreement until
the Closing Date, except as set forth in the Disclosure Schedule or as expressly
contemplated by any of the Transaction Documents, Seller shall cause each
Acquired Company and the Subsidiary to (1) conduct its business in the ordinary
course in a manner consistent with past practice and (2) use its reasonable
efforts to preserve intact its business organizations and relationships and
goodwill with third parties and to keep available the services of its present
employees. Without limiting the generality of the foregoing, from the
date of this Agreement until the Closing Date, except as required by Law,
as set
forth in the Disclosure Schedule or as expressly contemplated by the Transaction
Documents, Seller will not, without the prior consent of Buyer (not to be
unreasonably withheld), permit an Acquired Company or the Subsidiary
to:
(a) adopt
or
propose any change in its organizational documents;
34
(b)
merge or consolidate with any other Person or acquire a material amount of
assets from any other Person other than (1) pursuant to existing contracts,
agreements or commitments that are disclosed herein or in the Disclosure
Schedule and (2) the acquisition of inventory, materials or supplies in the
ordinary course of business;
(c)
sell, assign, license or otherwise dispose of (including by sublease) any
material assets or property except (1) pursuant to existing contracts or
commitments that are in the Disclosure Schedule or (2) for the sale of inventory
in the ordinary course of business;
(d)
make any loan, advance or capital contribution to or investment in any Person,
except for customary travel, relocation and similar advances in the ordinary
course of business consistent with past practice;
(e)
transfer, issue, sell, pledge, encumber or dispose of any shares of capital
stock or other securities of, or other ownership interests in, any of the
Acquired Companies or the Subsidiary, or grant options, warrants, calls or
other
rights to purchase or otherwise acquire shares of the capital stock or other
securities of, or other ownership interests in, any of the Acquired Companies
or
the Subsidiary;
(f)
effect any recapitalization, reclassification, stock split, combination or
like
change in the capitalization of any of the Acquired Companies or the Subsidiary,
or amend the terms of any outstanding securities of any of the Acquired
Companies or the Subsidiary;
(g)
(A) increase the salary or other compensation of any director, officer or
employee of any of the Acquired Companies or the Subsidiary, except for normal
increases in the ordinary course of business, (B) grant any unusual or
extraordinary bonus, benefit or other direct or indirect compensation to any
director, officer, employee or consultant, (C) increase the coverage or benefits
available under any (or create any new) severance pay, termination pay, vacation
pay, company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or
other
employee benefit plan or arrangement made to, for, or with any of the directors,
officers, employees, agents or representatives of any of the Acquired Companies
or the Subsidiary or otherwise modify or amend or terminate any such plan or
arrangement, except as required by an applicable labor agreement disclosed
in
the Disclosure Schedule or Law, or (D) enter into any employment, deferred
compensation, severance, special pay, consulting, non-competition or similar
agreement or arrangement with any directors or officers of any of the Acquired
Companies or the Subsidiary (or amend any such agreement to which any of the
Acquired Companies or the Subsidiary is a party), except as required by existing
35
individual
employment arrangements, award or service agreements disclosed in the Disclosure
Schedule or an applicable labor agreement disclosed in the Disclosure Schedule
or Law;
(h)
enter into any commitment for capital expenditures of $1,000,000 individually
or
$5,000,000 in the aggregate;
(i)
enter into or renew any agreement, contract or arrangement that would be
required, if existing on the date hereof, to be disclosed pursuant to Section
3.12(a)(vi), Section 3.12(a)(ix) or Section 3.12(a)(xi);
(j)
amend or modify in any material respect or terminate any (x) Material Contract
or (y) any lease for any store with sales of more than $1,500,000 in the
trailing twelve months prior to the date hereof, except for extensions or
renewals of leases in the ordinary course of business pursuant to the terms
of
any lease and consistent with past practice;
(k)
settle or compromise any material pending or threatened litigation or any claim
or claims that would (i) require any payment by any Acquired Company or the
Subsidiary after the Closing Date, (ii) transfer or encumber any material asset
or property of any Acquired Company or the Subsidiary, (iii) result in a
material loss of revenue or (iv) place a material restriction on the business
of
the Acquired Companies or the Subsidiary;
(l)
make any material change in any Tax accounting or Tax reporting principles,
methods or policies, elect or rescind any material election relating to Taxes,
settle or compromise any claim relating to Taxes in a material amount, all
with
respect to the Acquired Companies or the Subsidiary; or
(m)
enter into a binding agreement to do any of the foregoing.
In
addition, Seller will (i) pay all maintenance and similar fees and take all
other appropriate actions as necessary to prevent the abandonment, loss or
impairment of all Owned Intellectual Property Rights required to be set forth
on
Section 3.19(a)(i) of the Disclosure Schedule and (ii) transfer to the Acquired
Companies or the Subsidiary those domain names set forth on Section 5.01 of
the
Disclosure Schedule.
Section
5.02. Access
to
Information. (a) Access to Information Prior to
Closing. From the date of this Agreement until the Closing Date,
Seller will (1) give, and will cause each Acquired Company and the Subsidiary
to
give, Buyer and its counsel, financial advisors, auditors and other authorized
representatives, reasonable access to the books, records and properties of
each
Acquired Company and Subsidiary, (2) furnish, and will cause each Acquired
Company and the
36
Subsidiary
to furnish, to Buyer and its counsel, financial advisors, auditors and other
authorized representatives, such financial and operating data and other
information relating to the Acquired Companies and the Subsidiary as such
Persons may reasonably request and (3) instruct the employees, counsel and
financial advisors of Seller, the Acquired Companies and the Subsidiary to
cooperate with Buyer in its investigation of the Acquired Companies and the
Subsidiary and to provide such information and assistance as Buyer or its
representatives may reasonably request to assist with its financing for the
transactions contemplated hereby. Any investigation pursuant to this
Section 5.02 shall be conducted in such a manner as not to interfere
unreasonably with the conduct of the business of Seller or any of its
Affiliates, the Acquired Companies or the Subsidiary. Notwithstanding
the foregoing, Buyer shall not have access to personnel records relating to
individual performance or evaluation records, medical histories or other
information the disclosure of which in Seller’s good faith opinion could subject
Seller or any of its Affiliates, the Acquired Companies or the Subsidiary to
risk of liability.
(b) Access
to Information Following Closing. From and after the Closing
Date, Seller will afford promptly to Buyer and its counsel, auditors and other
authorized representatives reasonable access to its books of account, financial
and other records, employees and auditors to the extent they relate to the
Acquired Companies or the Subsidiary and to the extent necessary to permit
Buyer
to determine any matter relating to its rights and obligations in connection
with any audit, investigation, dispute or litigation or any other reasonable
business purpose relating to the Acquired Companies or the Subsidiary or Buyer’s
rights or obligations under any of the Transaction Documents; provided
that any such access by Buyer and its counsel, auditors and other authorized
representatives shall not unreasonably interfere with the conduct of the
business of Seller, the Acquired Companies or any other respective
Affiliates.
Section
5.03. Maintenance of Insurance
Policies. Prior to the Closing, Seller and its
Affiliates will use reasonable best efforts to maintain insurance policies
for
the Acquired Companies and the Subsidiary and their assets, properties and
employees in an amount and scope consistent with any such insurance policies
in
effect as of the date of this Agreement. The Acquired Companies and
the Subsidiary shall after the Closing continue to have coverage under any
such
insurance policies in effect at the Closing with respect to, but only with
respect to, occurrences prior to the Closing (except that, with respect to
claims made policies, the Acquired Companies and the Subsidiary shall have
coverage after the Closing only with respect to claims made prior to the
Closing), and it is understood that (i) the Acquired Companies and the
Subsidiary shall continue to be responsible for amounts (including deductibles)
not covered by such insurance policies and (ii) the provisions of this Section
5.03 shall not obligate Seller or any of its Affiliates to pay any money with
respect to any
37
insurance
policies (including, without limitation, with respect to insurance policies
in
effect on or prior to the Closing) after the Closing.
Section
5.04. Non-Competition;
Non-Solicitation. (a) For a period of two years
from the Closing Date, Seller shall not, and shall cause its Affiliates not
to,
(i) directly or indirectly, own any interest in, manage, control or operate
any
business involving the manufacture, production, distribution or sale of premium
chocolates other than the businesses of Pepperidge Farm and Arnott’s as operated
substantially in the manner that such businesses exist on the date hereof or
(ii) own any interest in, manage, control or operate any retail stores, whether
in corporate, proprietorship or partnership form or otherwise, focusing
principally on the sale of chocolate (the “Restricted
Businesses”); provided, however, that the restrictions
contained in this Section 5.04(a) shall not restrict or prohibit (i) the
acquisition (and subsequent ownership, management, control or operation) by
Seller or any of its Affiliates of a business, whether in corporate,
proprietorship or partnership form or otherwise, not principally engaged in
the
Restricted Business; provided that Seller and its Affiliates will use
commercially reasonable efforts to divest such Restricted Business as promptly
as reasonably practicable thereafter or (ii) the acquisition by Seller and
its
Affiliates, directly or indirectly, of less than 5% in the aggregate of the
outstanding capital stock of any company engaged in a Restricted
Business.
(b) For
a period of two years from the Closing Date, without the prior written consent
of Buyer, Seller shall not, and shall cause its directors, officers, and
employees not to, directly or indirectly, (i) cause, solicit, induce or
encourage any executive or management employees of any of the Acquired Companies
and the Subsidiary as of the Closing Date to leave such employment or hire,
employ or otherwise engage any such individual; provided, however, that
the foregoing provision will not prevent Seller from hiring any such individual
that seeks employment with Seller (x) in response to general advertisements
that
are not specifically targeted at executive employees of the Acquired Companies
and the Subsidiary, or (y) through third party employment agencies that do
not
specifically target executive or management employees of the Acquired Companies
and the Subsidiary, or (ii) cause, induce or encourage any actual or prospective
material supplier or licensor of any of the Acquired Companies and the
Subsidiary, or any other Person who has a material business relationship with
any of the Acquired Companies and the Subsidiary, to terminate or adversely
modify any such actual relationship or avoid or deny a prospective
relationship.
(c)
From and after the Closing Date, Seller shall not, and shall cause their
directors, officers, employees and Affiliates not to, directly or indirectly,
disclose, reveal, divulge or communicate to any Person other than authorized
officers, directors and employees of Buyer or use or otherwise exploit for
its
own benefit, other than as consistent with Section 5.04(a), or for the benefit
of anyone
38
other
than
Buyer, any Confidential Information (as defined below). Seller shall
not have any obligation to keep confidential (or cause its officers, directors
or Affiliates to keep confidential) any Confidential Information if and to
the
extent disclosure thereof is specifically required by applicable Law, the rules
of any national securities exchange or any Returns or other filings required
to
be made with any Taxing Authority; provided,
however, that in the event disclosure is required
by applicable
Law, Seller shall, to the extent reasonably possible, provide Buyer with prompt
notice of such requirement prior to making any disclosure so that Buyer may
seek
an appropriate protective order. For purposes of this Section
5.04(c), “Confidential Information” means any information with
respect to any of the Acquired Companies and the Subsidiary, including methods
of operation, customer lists, products, prices, fees, costs, technology,
inventions, trade secrets, know-how, software, marketing methods, plans,
personnel, suppliers, competitors, markets or other specialized information
or
proprietary matters. “Confidential Information” does
not include, and there shall be no obligation hereunder with respect to,
information that (i) is generally available to the public on the date of this
Agreement or (ii) becomes generally available to the public other than as a
result of a disclosure not otherwise permissible hereunder.
(d) The
covenants and undertakings contained in this Section 5.04 relate to matters
which are of a special, unique and extraordinary character and a violation
of
any of the terms of this Section 5.04 may cause irreparable injury to Buyer,
the
amount of which will be impossible to estimate or determine and which cannot
be
adequately compensated. Accordingly, the remedy at law for any breach
of this Section 5.04 may be inadequate. Therefore, Buyer will be
entitled to seek temporary and permanent injunction, restraining order or other
equitable relief from any court of competent jurisdiction in the event of any
breach of this Section 5.04 without the necessity of proving actual damage
or
posting any bond whatsoever. The rights and remedies provided by this
Section 5.04 are cumulative and in addition to any other rights and remedies
which Buyer may have hereunder or at law or in equity.
(e)
The parties hereto agree that if any provision contained in this Section 5.04
shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions of this Section 5.04, but this Section 5.04 shall be construed as
if
such invalid, illegal or unenforceable provision had never been contained
herein. It is the intention of the parties that if it is determined
that a specified time period, a specified business limitation or any other
relevant feature of this Section 5.04 is unreasonable, arbitrary, against public
policy, or to any extent invalid, such provision shall not be construed to
be
null, void and of no effect, but to the extent such provision would be valid
or
enforceable under applicable Law, a court of competent jurisdiction shall
construe and interpret or reform this Section to provide for a lesser period
of
time, business limitation or other relevant feature
39
which
is
determined by such court to be reasonable, not arbitrary, not against public
policy, and valid and enforceable under such applicable Law.
Section
5.05. Transition Services. (a) From
and after the Closing Date, Seller shall provide transition services to Buyer
in
some or all of the following areas as reasonably requested by Buyer: (1)
information technology, (2) human resources and benefits, (3) purchasing, (4)
finance and accounting and (5) real estate administration (each, a
“Transition Service” and collectively, the “Transition
Services”). The cost for all of the services to be provided
for each Transition Service will be billed by Seller to Buyer and will be as
follows:
(i) information
technology services shall cost $384,000 per month;
(ii)
human resources and benefits shall cost $100,000 per month for Xxxxxxxx
administrative costs plus an amount equal to the fees, claims and/or expenses
(net of contributions paid by the Transferred Employees) paid by Xxxxxxxx during
the previous month with respect to the human resources services provided to
employees of the Acquired Companies;
(iii)
purchasing services costs shall be $37,250 per month;
(iv)
finance and accounting costs shall be $10,500 per month; and
(v)
real estate administration costs shall be $5,750 per month.
(b)
The costs for Transition Services set forth in Section 5.05(a) are
for all Transition Services that Seller intends to provide. Buyer and
Seller may mutually agree that only a portion of the Transition Services shall
be provided to Buyer in which case Seller will reduce the costs associated
with
such Transition Service in proportion to the amount and type of Transition
Services that are not provided to Buyer.
(c)
Seller and Buyer covenant and agree to use reasonable best efforts
and to work together in good faith to finalize a definitive written agreement
relating to the provision of Transition Services (the “Transition
Services Agreement”) promptly after the date hereof. As part
of such discussions the parties will work in good faith to reach a mutually
agreeable arrangement with respect to reasonable out-of-pocket expenses incurred
with respect to the provision of Transition Services. The Transition
Services Agreement will reflect that:
40
(i)
the nature, quality, scope and standard of care with respect to Seller’s
delivery of Transition Services shall be substantially identical to the services
provided by Seller or its Affiliates to the Acquired Companies as of the date
hereof (subject to any company wide changes made by Seller or its Affiliates
with respect to services included in the Transition Services);
(ii)
the Transition Services will be provided at volumes or levels necessary for
the
Acquired Companies and the Subsidiary to conduct their business consistent
with
the 2008 fiscal year projections provided to Buyer;
(iii)
Seller and Buyer shall mutually agree on the period during which Buyer may
request the provision of each Transition Service duration of each Transition
Service; provided that no Transition Service shall be
required to be provided for a period of more than twelve (12) months from the
Closing Date;
(iv)
Seller shall have the right, in its sole discretion but subject to providing
Buyer with prior notice, to satisfy its obligation to provide or procure
Transition Services by causing one or more of its Affiliates or one or more
subcontractors to provide or procure such Transition Services; provided
that Seller shall remain liable for the performance of such Transition Services
by any of its Affiliates or subcontractors;
(v)
Seller shall not be obligated to provide or procure Transition Services where
the consent of a third Person is reasonably required for the provision of such
Transition Services; provided that Seller and Buyer shall use
reasonable best efforts to obtain, at no cost to Seller, such consents;
and
(vi)
the Transition Services shall be subject to customary terms and
limitations regarding liability, indemnification, damages and billing procedures
to be agreed by Seller and Buyer.
(d)
In addition to the Transition Services to be provided or procured by Seller
or
its Affiliates in accordance with this Section 5.05, if requested by Buyer,
and
to the extent that Seller and the Buyer may mutually agree, Seller or its
Affiliates shall provide additional services to the Buyer. The Seller
shall consider in good faith and not unreasonably deny any request made by
Buyer
pursuant to this Section 5.05(d). The scope of any such additional
services, as well as the term, costs, and other terms and conditions applicable
to such additional services, shall be as mutually agreed by Seller and
Buyer.
41
(e)
If Seller and Buyer are unable to reach a definitive written agreement with
respect to Transition Services, Seller will, at Buyer’s request and consistent
with the principles set forth in this Section 5.05, provide Transition Services
to Buyer on commercially reasonable and customary terms and at the costs set
forth in Section 5.05(a).
Section
5.06. Third Party Consents. Seller and Buyer
shall, and Seller shall cause the Acquired Companies and the Subsidiary to,
use,
their commercially reasonable efforts to obtain at the earliest practicable
date
all material consents, waivers and approvals from, and provide all notices
to,
all Persons that are not a governmental body in connection with the transactions
contemplated by this Agreement, including the consents, waivers, approvals
and
notices referred to in Section 3.04 hereof (except for such matters covered
by
Section 7.02 and Section 7.05). All such consents, waivers, approvals
and notices, other than those with respect to leases for Identified Stores
as
set forth in Section 7.05, shall be in writing and in form and substance
satisfactory to Buyer. Notwithstanding anything to the contrary in
this Agreement, (i) neither Buyer nor Seller nor any of their Affiliates (which
for purposes of this sentence shall include the Acquired Companies and the
Subsidiary) shall be required to pay any amounts in connection with obtaining
any consent, waiver or approval and (ii) other than as specifically set forth
in
this Agreement, no consent, including with respect to leases for Identified
Stores as set forth in Section 7.05, shall be required to consummate the Closing
of the transactions contemplated by this Agreement.
Section
5.07. Notification Of Certain Matters. Seller
shall give notice to Buyer and Buyer shall give notice to Seller, as promptly
as
reasonably practicable upon becoming aware of (a) any fact, change, condition,
circumstance, event, occurrence or non-occurrence that has caused or is
reasonably likely to cause any representation or warranty in this Agreement
made
by it to be untrue or inaccurate in any respect at any time after the date
hereof and prior to the Closing, (b) any material failure on its part to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder or (c) the institution of or the threat of institution
of any legal proceeding against any of Seller, the Acquired Companies or the
Subsidiary related to this Agreement or the transactions contemplated hereby;
provided that the delivery of any notice pursuant to this Section 5.07 shall
not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice, or the representations or warranties of, or the
conditions to the obligations of, the parties hereto.
Section
5.08. Resignation Of Directors. If requested in
writing by Seller, Seller shall cause each of the directors of the Acquired
Companies and the Subsidiary to submit a letter of resignation effective on
or
before the Closing Date.
42
Section
5.09. Delivery Of Audited Financial
Statements. Seller shall use its commercially reasonable efforts
to (i) deliver the Audited Financial Statements to Buyer as promptly as
practicable after the date hereof and (ii) subject to the execution of
appropriate release letters by Buyer, use commercially reasonable efforts to
provide access to the PricewaterhouseCoopers’ work papers for the Audited
Financial Statements.
Section
5.10. 2005 Audit. Seller shall, and shall cause
its Affiliates to, at Buyer’s cost, assist Buyer and its representatives,
including, without limitation, by providing such information as is reasonably
requested by Buyer, with the preparation of audited financial statements for
the
results of operations of the Acquired Companies and the Subsidiary for the
fiscal year ended in 2005.
ARTICLE
6
Covenants
of Buyer
Buyer
agrees that:
Section
6.01. Confidentiality. All
information provided or made
available to Buyer or any of its Representatives (as such term is defined in
the
Confidentiality Agreement) will be subject to the Confidentiality Agreement
dated September 25, 2007 between Buyer and Xxxxxxxx (the
“Confidentiality Agreement”), which agreement shall remain in
full force and effect until the Closing and shall thereupon terminate except
that the disclosure, but not the use (to the extent necessary to operate the
Acquired Companies and the Subsidiary in the ordinary course) of any Evaluation
Information (as defined in the Confidentiality Agreement) to the extent related
solely to Seller or its Affiliates shall continue to be governed by the terms
of
the Confidentiality Agreement; provided
that
Buyer and Seller may, after consultation with the other party,
disclose such information as may be necessary in connection with seeking
necessary consents and approvals as contemplated by this
Agreement.
Section
6.02. Access to Information Following
Closing. From and after the Closing Date, Buyer will afford, and
will cause each Acquired Company and the Subsidiary to afford, promptly to
Seller and its Affiliates and their counsel, auditors and other authorized
representatives reasonable access to their books of account, financial and
other
records, employees and auditors to the extent they relate to the Acquired
Companies or the Subsidiary and to the extent necessary to permit Seller and
its
Affiliates to determine any matter relating to their rights and obligations
in
connection with any audit, investigation, dispute or litigation (other than
any
dispute or litigation to which any of Buyer, the Acquired Companies and the
Subsidiary is party) or any other reasonable business purpose relating to any
Acquired Company or the Subsidiary or Seller’s or any of its Affiliate’s rights
or
43
obligations
under any of the Transaction Documents; provided that any such access
by Seller and its Affiliates and their counsel, auditors and other authorized
representatives shall not unreasonably interfere with the conduct of the
business of Buyer, its Affiliates, any Acquired Company or the
Subsidiary.
Section
6.03. Insurance. Buyer agrees that,
subject to Section 5.03, all insurance policies covering the Acquired Companies
or the Subsidiary maintained by or on behalf of Seller or its Affiliates shall
not provide coverage to the Acquired Companies or the Subsidiary following
the
Closing and that, after the Closing, Seller and its Affiliates shall have no
obligation of any kind to maintain any form of insurance covering the Acquired
Companies or the Subsidiary.
Section
6.04. Inspections; No Other
Representations. Buyer agrees to accept the Shares in the
condition they are in on the Closing Date based upon its own inspection,
examination and determination with respect thereto as to all matters, and
without reliance upon any express or implied representations or warranties
of
any nature, whether in writing, oral or otherwise, made by or on behalf of
or
imputed to Seller or any of its Affiliates, except as expressly set forth in
this Agreement. Without limiting the generality of the foregoing,
Buyer acknowledges that Seller and its Affiliates make no representation or
warranty with respect to any projections, estimates or budgets delivered to
or
made available to Buyer of future revenues, future results of operations (or
any
component thereof), future cash flows or future financial condition (or any
component thereof) of any Acquired Company and the Subsidiary or the future
business and operations of any Acquired Company and the Subsidiary or any other
information or documents made available to Buyer or its counsel, accountants
or
advisors with respect to any Acquired Company, the Subsidiary, Seller, any
of
Seller’s Affiliates or any of the foregoing business, assets, liabilities or
operations, except as expressly set forth in this Agreement.
ARTICLE
7
Covenants
of Buyer and Seller
Buyer
and
Seller agree that:
Section
7.01. Reasonable Best Efforts; Further
Assurances. Subject to the terms and conditions of this
Agreement, Buyer and Seller will use their reasonable best efforts to take,
or
cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable to consummate the transactions contemplated by any of
the
Transaction Documents. Seller and Buyer shall execute and deliver,
and Seller, prior to the Closing, and Buyer, after the Closing, shall cause
the
Acquired Companies and the Subsidiary to execute and deliver, such other
documents, certificates, agreements and other writings and to take such
44
other
actions as may be necessary or appropriate in order to consummate or implement
expeditiously the transactions contemplated by any of the Transaction
Documents.
Section
7.02. Certain Filings. (a) Seller and Buyer shall
cooperate with one another (1) in determining whether any action by or in
respect of, or filing with, any governmental body, agency, official or authority
is required, or any actions, consents, approvals or waivers are required to
be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by any of the Transaction
Documents and (2) subject to the terms and conditions of this Agreement, in
taking such actions or making any such filings, furnishing information required
in connection therewith and seeking to obtain on a timely basis any such
actions, consents, approvals or waivers. In furtherance and not in
limitation of the foregoing, each of Buyer and Seller shall (i) take all steps
reasonably necessary to prepare and make an appropriate filing with the Turkish
Competition Authority with respect to the transactions contemplated hereby
and
(ii) make an appropriate filing of a Notification and Report Form pursuant
to
the HSR Act with respect to the transactions contemplated hereby as promptly
as
practicable after the date of this Agreement (and in any event, with respect
to
both items (i) and (ii) of this Section 7.02(a), within 10 Business Days of
the
date of this Agreement) and to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to the
HSR
Act and to take all other actions necessary to cause the expiration or
termination of the applicable waiting periods under the HSR Act as soon as
practicable; provided, however, that Buyer shall in no event
be under any obligation to (1) divest, or hold separate (including by trust
or
otherwise), any material business, product line, or asset as a precondition
to
the approval by such governmental authority of the transactions contemplated
by
under the Transaction Documents, or (2) agree to any material limitation on
the
operation or conduct of the businesses of Buyer or its Affiliates.
(b)
If any objections are asserted with respect to the transactions contemplated
by
the Transaction Documents under any antitrust Law or if any action, suit or
other proceeding is instituted or threatened by any governmental authority
or
any private party challenging any of the transactions contemplated hereby as
violative of any antitrust Law, Buyer and Seller shall use their respective
reasonable best efforts promptly to resolve such objections; provided,
however, that Buyer shall in no event be under any obligation
to (1)
divest, or hold separate (including by trust or otherwise), any material
business, product line, or asset as a precondition to the approval by such
governmental authority of the transactions contemplated by under the Transaction
Documents, or (2) agree to any material limitation on the operation or conduct
of the businesses of Buyer or its Affiliates.
45
(c)
Buyer and Seller shall use their respective reasonable best efforts to
keep the other party informed in all material respects with respect to any
communication given or received in connection with any filing, submission,
investigation or proceeding relating to the transactions contemplated by the
Transaction Documents.
Section
7.03. Public Announcements. The parties
shall consult with each other before issuing any press release with respect
to
any Transaction Document or the transactions contemplated thereby and will
not
issue any such press release prior to such
consultation. Notwithstanding the foregoing, except as provided by
Section 6.01, no provision of this Agreement shall relieve Buyer or any of
its
Representatives (as such term is defined in the Confidentiality Agreement)
from
any of its obligations under the Confidentiality Agreement.
Section
7.04. Inter-Company Transactions. Seller
shall use its commercially reasonable efforts to settle and/or satisfy all
inter-company liabilities and obligations existing between Xxxxxxxx and its
Affiliates, on the one hand, and the Acquired Companies and the Subsidiary,
on
the other hand, prior to the Closing. All inter-company liabilities
and obligations existing between Xxxxxxxx and its Affiliates on the one hand,
and the Acquired Companies and the Subsidiary on the other, that are not paid
at
Closing shall remain outstanding after the Closing and be paid in the ordinary
course of business and consistent with past practice.
Section
7.05. Material Consents. From and after the date
of this Agreement, each of Seller and Buyer shall use their commercially
reasonable efforts to obtain consent in connection with the transactions
contemplated by this Agreement with respect to the leases for the stores set
forth on Section 7.05 of the Disclosure Schedule (each an “Identified
Store” and collectively, the “Identified Stores”);
provided that this sentence shall not require
any Person to agree to
any modification of any lease with respect to an Identified Store or to make
any
payments except for payments expressly provided for in this Section
7.05. If, at any time within 180 days of the Closing Date, a Party in
Interest terminates, recaptures, evicts or locks out an Acquired Company or
the
Subsidiary or takes any action that results in the inability of any Acquired
Company or the Subsidiary to operate an Identified Store on the terms set forth
in the applicable lease for such Identified Store (collectively, a “Loss
of Space”) under more than five (5) of leases for Identified Stores
prior to the expiration of the current term of the applicable lease for such
Identified Store, then, for each such Identified Store in excess of five (5)
Identified Stores for which consent is not obtained and a Loss of Space occurs,
Seller shall promptly pay to Buyer the amount specified on item #2 of Section
7.05 of the Disclosure Schedule; provided the Party in Interest has no
basis for terminating the applicable lease as a result of any action taken
by
Buyer or its Affiliates (including the Acquired Companies and the Subsidiary)
after the
46
Closing
Date. Seller or its Affiliates shall not, and shall cause the
Acquired Companies and the Subsidiary not to, agree or consent to any
modification of any lease of an Identified Store without the prior written
consent of Buyer. It is understood and agreed that with respect to
all leases for Identified Stores (i) under no circumstances will the inability
to renew or extend a lease for an Identified Store by the Acquired Companies
or
the Subsidiary at the end of the current term give rise to a payment obligation
by Seller under this Section 7.05 and (ii) that any consent received with
respect to a lease for an Identified Store shall be in writing and in form
and
substance reasonably satisfactory to Buyer.
ARTICLE
8
Tax
Matters
Section
8.01. Tax Representations. Seller represents and
warrants to Buyer as of the date of this Agreement and as of the Closing Date
that with respect to each Acquired Company and the Subsidiary, to the best
of
Seller’s knowledge (i) all Tax returns, statements, reports and forms
(collectively, the “Returns”) that are material and required to
be filed with any Taxing Authority on or before the Closing Date with respect
to
each Acquired Company and the Subsidiary have been, or will be, timely filed
(including any extensions) on or before the Closing Date; (ii) each of the
Acquired Companies and the Subsidiary has timely paid all Taxes shown as due
and
payable on the Returns that have been filed; (iii) the Returns that have been
filed are true, correct and complete in all material respects; (iv) the charges,
accruals and reserves for Taxes with respect to each of the Acquired Companies
and the Subsidiary reflected on their respective books are adequate to cover
material Tax liabilities accruing through the end of the last period for which
each of the Acquired Companies and the Subsidiary ordinarily record items on
their respective books; (v) there is no action, suit, proceeding, investigation,
audit or claim now pending or proposed in writing against or with respect to
any
Acquired Company or the Subsidiary in respect of any material Tax for which
adequate reserves do not appear on the Audited Financial Statements of the
Acquired Companies or the Subsidiary; (vi) each of the Acquired Companies and
the Subsidiary has complied in all material respects with all applicable Laws
relating to the withholding of Taxes and has duly and timely withheld and paid
over to the appropriate Taxing Authority all amounts required to be so withheld
and paid under all applicable Laws, and (vii) to the best of Seller's knowledge
(a) no chargeable gain would arise in respect of any asset of Godiva UK Limited
which is either reflected as such in Exhibit B if that asset were to be disposed
of for consideration equal to the value attributed thereto in Exhibit B or
acquired after the Balance Sheet Date if that asset were to be disposed of
for
consideration equal to the consideration given for its acquisition, in each
case
disregarding any statutory rights to claim any allowance or relief
47
other
than
amounts deductible under Section 38 of the Taxation of Chargeable Gains Xxx
0000, (b) Godiva UK Limited has not, without the prior consent of H.M. Treasury,
caused, permitted or entered into a transaction specified in Section 765 of
the
Income and Corporation Taxes Xxx 0000, (c) Godiva UK Limited has not entered
into or been a party to any schemes or arrangements designed partly or wholly
for the purposes of avoiding or deferring any liability to pay any Taxes, and
(d) Godiva UK Limited is and has at all times been resident in the United
Kingdom for Tax purposes and is not and has not been treated as resident or
as
having a branch or permanent establishment in any other jurisdiction for any
Taxation purpose (including under any double taxation treaty or
agreement).
Section
8.02. Filing of Returns and Other Tax Covenants. (a)
The parties
acknowledge
and agree that, for U.S.
federal income Tax purposes,
the taxable years of the U.S. Acquired Company and the Subsidiary will close
as
of the end of the Closing Date. Seller shall include
all items of income, gain,
loss, deduction and credit of the U.S. Acquired Company and the
Subsidiary attributable
to the short
period that ends on the Closing Date in, and shall
timely
file
or cause to be
timely
filed,
the U.S.
consolidated
federal income Returns
of the
Seller Group
and shall
be responsible for the
payment of any Taxes due with respect thereto. With respect to income
or franchise Taxes other than U.S. federal income Taxes, the parties agree
to
take all reasonable actions as may be required to close the taxable
period of the Acquired Companies and the Subsidiary as of the close of business
on the Closing Date, and, except as otherwise required by applicable Law, Seller
shall be responsible for filing any Return for any short taxable period that
ends on the Closing Date and shall pay any and
all Taxes due
with respect to such Returns. All
Returns
described in
this Section
8.02(a) shall be
prepared in a manner consistent with
prior
practice. Seller shall provide
Buyer
with copies of the portions
of such Returns
that relate to the U.S.
Acquired Company and the Subsidiary at least forty-five
(45) days prior
to the due date
(including
extensions) for
filing thereof for Buyer’s
review. If Buyer objects
to any
portion of such Returns, Seller and Buyer
shall attempt in good faith
to resolve any disagreements prior to the due date for filing. In the
event that Seller
and Buyer
are unable to resolve any
dispute with respect to such Return at least ten (10) days prior to the due
date
for filing, such dispute shall be resolved pursuant to Section 8.06(h),
which resolution shall be
binding on the parties.
(b)
Seller shall timely
file or cause to be timely filed all Returns of the Acquired Companies and
the
Subsidiary due on or before the Closing Date and shall pay all Taxes shown
as
due on such Returns. Seller shall timely file or cause to be timely
filed all Returns of the Acquired Companies and the Subsidiary due after the
Closing Date that include only taxable periods ending on or before the Closing
Date, and shall pay all Taxes shown as due on such
Returns. All Returns
described in this
Section
8.02(b) shall be
prepared in a manner consistent with
48
prior
practice. Seller shall provide
Buyer
with copies of such
Returns at
least forty-five
(45) days prior
to the due date
(including
extensions) for
filing thereof for Buyer’s
review. If Buyer objects
to any
portion of such Returns, Seller and Buyer
shall attempt in good faith
to resolve any disagreements prior to the due date for filing. In the
event that Seller
and Buyer
are unable to resolve any
dispute with respect to such Return at least ten (10) days prior to the due
date
for filing, such dispute shall be resolved pursuant to Section 8.06(h),
which resolution shall be
binding on the parties.
(c) Buyer
shall timely file
or cause to be
timely filed all
Returns (other than those Returns described in Section 8.02(a) or
(b)) required to be filed
by each Acquired Company and the Subsidiary after the
Closing Date and,
subject to the right to payment from Seller
under Section 8.06,
shall
pay
or cause to be paid all
Taxes shown as
due
thereon. With respect
to any Return
covering a taxable period that begins before but ends after the Closing Date,
such Return shall be prepared in a manner consistent with past practice
and shall be submitted by Buyer to Seller at least forty-five (45) days prior
to
the due date (including extensions) of such Return for Seller’s
review. If
Seller objects to any portion of such Returns, Seller and Buyer
shall attempt in good faith
to resolve any disagreements regarding such Returns prior to the due date for
filing. In the event that Seller and
Buyer are unable
to resolve any
dispute with respect to such Return at least ten (10) days
prior to the due date
for filing, such dispute shall be resolved pursuant to Section 8.06(h),
which resolution shall be
binding on the parties.
(d) Not
later than ten (10) days prior to the due date for the payment of Taxes on
any
Returns that Buyer has the responsibility to cause to be filed pursuant to
Section 8.02(c), Seller shall pay to Buyer the amount of Taxes owed by Seller
pursuant to the provisions of Section 8.06. No payment pursuant to
this Section 8.02(d) shall excuse Seller from its indemnification obligations
pursuant to Section 8.06 if the amount of Taxes pursuant to a Final
Determination for the Pre-Closing Tax Period covered by any such Return exceeds
the amount of Seller’s payment under this Section 8.02(d) with respect to the
Return. If a dispute arises with respect to a Return or the amount of
Taxes for which Seller is responsible and is not resolved at least ten (10)
days
prior to the due date of the Return, Seller shall pay to Buyer the amount that
Buyer deems to be due and owing (and the Return shall be filed in the manner
that Buyer deems correct); provided, however, that if the independent
accounting firm resolving the dispute pursuant to Section 8.06(h) determines
that the amount of Taxes that are the responsibility of Seller differs from
the
amount paid to Buyer, Seller shall pay to Buyer, or Buyer shall pay to Seller,
the amount necessary to reflect the independent accounting firm’s determination
plus interest at the Reference Rate. Buyer shall cause each Acquired
Company and the Subsidiary to file any
49
amended
Returns permitted by Law to reflect the final determination by the independent
accounting firm and pay the Taxes shown as due on any such Return.
(e)
Any and all existing Tax sharing agreements between any Acquired Company or
the
Subsidiary and any member of the Seller Group shall be terminated as of the
Closing Date. After such date neither any Acquired Company nor the
Subsidiary, on the one hand, and Seller or any Affiliate of Seller, on the
other
hand, shall have any further rights or liabilities thereunder.
Section
8.03. Transfer Taxes. All transfer, filing,
recording, documentary, sales, use, stamp, registration and other similar Taxes
and fees (including any penalties and interest) incurred in connection with
the
purchase and sale of the Acquired Companies pursuant to this Agreement
(including any real property transfer Tax and any similar Tax) shall be shared
equally by Buyer and Seller, each of whom shall indemnify and hold harmless
each
other from its share of such Taxes and shall cooperate in filing all necessary
Returns and other documentation with respect to all such Taxes and
fees. Each of Seller and Buyer will, and will cause its Affiliates
to, join in the execution of any Returns and other documentation as may required
by Law. In particular, with respect to the shares of Godiva France
SA, Buyer shall register the Short Form Stock Purchase Agreement with the French
Tax Administration no later than thirty (30) days after the Closing
Date. In addition, no later than ten (10) days from the date of
registration with the French Tax Administration, Buyer shall deliver to Seller
an original of the Short Form Stock Purchase Agreement duly registered as proof
of compliance with the registration formalities as required by French
law.
Section
8.04. Cooperation on Tax Matters. Buyer and
Seller agree to furnish or cause to be furnished to each other, upon request,
as
promptly as practicable, such information (including access to books and
records) and assistance relating to any Acquired Company or the Subsidiary
as is
reasonably necessary for the filing of any Return, for the preparation for
any
audit, and for the prosecution or defense of any claim, suit or proceeding
relating to any proposed adjustment. Buyer and Seller agree to retain
or cause to be retained all books and records pertinent to any Acquired Company
and the Subsidiary until the applicable period for assessment under applicable
Law (giving effect to any and all extensions or waivers) has expired, and to
abide by or cause the abidance with all record retention agreements entered
into
with any Taxing Authority. Each Acquired Company and the Subsidiary
agrees to give Seller reasonable notice prior to transferring, discarding or
destroying any such books and records relating to Tax matters and, if Seller
so
requests, the Acquired Company or the Subsidiary shall allow Seller to take
possession of such books and records. Buyer and Seller shall
cooperate with each other in the conduct of any audit or other proceedings
involving any Acquired Company or the Subsidiary for any Tax
50
purposes
and each shall execute and deliver such powers of attorney and other documents
as are necessary to carry out the intent of this subsection.
Section
8.05. Section 338(h)(10) Election. (a) Upon the request
of Buyer, Seller shall join with Buyer in making an election under Section
338(h)(10) of the Code and the Treasury Regulations and any corresponding or
similar elections under state or local tax law with respect to the U.S. Acquired
Company (and the Subsidiary if designated by Buyer) (collectively, the
“Section 338(h)(10) Election”). Any such request
shall be made by Buyer in writing no later than thirty (30) days from the
Closing Date.
(b)
Except as provided in Section 8.05(d), Buyer shall be responsible for the
preparation and filing of all forms and documents required to effectuate the
Section 338(h)(10) Election. Seller shall execute (or cause to be
executed) and deliver to Buyer a Form 8023 and such additional documents or
forms as are reasonably requested to complete properly the Section 338(h)(10)
Election at least ten (10) days prior to the date such Section 338(h)(10)
Election is to be filed.
(c)
Buyer and Seller shall file, and shall cause their Affiliates to file, all
Returns and statements, forms and schedules in connection therewith in a manner
consistent with the Section 338(h)(10) Election and shall take no position
contrary thereto unless required to do so by applicable Law.
(d)
Within thirty (30) days after notifying the Seller of its intent to make a
Section 338(h)(10) Election, Buyer shall deliver to Seller a statement (the
“Section 338(h)(10) Allocation Statement”) allocating the ADSP
(as such term is defined in Treasury Regulations Section 1.338-4) (the
“Aggregate Deemed Sales Price”) of the assets
of the U.S. Acquired Company (and, if applicable, the Subsidiary) in accordance
with the Treasury Regulations promulgated under Section
338(h)(10). Seller shall have the right to review the Section
338(h)(10) Allocation Statement. If within thirty (30) days after
receipt of the Section 338(h)(10) Allocation Statement Seller notifies Buyer
in
writing that the allocation of one or more items reflected in the Section
338(h)(10) Allocation Statement is not a reasonable allocation, Buyer and Seller
will negotiate in good faith to resolve such dispute. If no such
notice is received from Seller, Seller shall be deemed to have agreed to the
Section 338(h)(10) Allocation Statement. If a notice is received and
Buyer and Seller fail to resolve such dispute within thirty (30) days, such
resolution shall be resolved pursuant to Section 8.06(h), which resolution
shall
be binding on the parties. The Section 338(h)(10) Allocation
Statement shall be adjusted as required by Law pursuant to the above
procedures. Buyer and Seller agree to act in accordance with the
Section 338(h)(10) Allocation Statement in the preparation, filing and audit
of
any Return.
51
Section
8.06. Indemnification Provisions. (a) Seller hereby
indemnifies Buyer against and agrees to hold it harmless from (i) any Taxes
(other than transfer Taxes, which are specifically addressed in Section 8.03
hereof) of any Acquired Company or the Subsidiary relating to any and all
Pre-Closing Tax Periods; (ii) any Taxes resulting from, arising out of, based
on
or relating to the Section 338(h)(10) Election (for the avoidance of doubt,
Taxes for this purpose shall not include any reduction in any Tax Asset (or
increase in Taxes as a result of such reduction) of Buyer or any of its
Affiliates as a result of a redetermination of the Aggregate Deemed Sales Price
agreed to by Buyer and Seller or pursuant to a Final Determination); (iii)
any
Taxes resulting from, arising out of, based on or relating to, the transactions
contemplated by this Agreement as a result of Seller failing to pay any such
Taxes for which the Seller has primary liability; (iv) any Taxes of an Acquired
Company or of the Subsidiary resulting from a breach of the representations
in
Section 8.01 hereof; and (v) liabilities, costs and expenses (including, without
limitation, reasonable expenses of investigation and attorneys’ fees and
expenses), arising out of or incident to the imposition, assessment or assertion
of any Tax described in the foregoing clauses (i), (ii), (iii) and (iv),
including those incurred in the contest in good faith in appropriate proceedings
relating to the imposition, assessment or assertion of any such Tax, in each
case incurred or suffered by Buyer, any of its Affiliates or, effective upon
the
Closing, any Acquired Company or the Subsidiary; provided,
however, that Seller shall be obligated to make payments to Buyer
pursuant to this Section 8.06(a) only to the extent that the amount that would
otherwise be payable by Seller pursuant to this Section 8.06(a) in respect
of
any Acquired Company or Subsidiary (notwithstanding this proviso) exceeds the
aggregate amount of the provisions for Taxes reflected on Exhibit B as of
the Closing Date attributable to that Acquired Company or
Subsidiary.
(b)
For purposes of this Agreement, Taxes of any Acquired Company and the Subsidiary
that relate to any taxable period that includes but does not end on the Closing
Date (a “Straddle Period”) will be apportioned between the
period of the Straddle Period that begins before the Closing Date and ends
on
the Closing Date (the “Pre-Closing Straddle Period”) and the
period of the Straddle Period that extends from the day after the Closing Date
to the end of the Straddle Period (the “Post-Closing Straddle
Period”) in accordance with this Section 8.06(b). The
portion of such Tax attributable to the Pre-Closing Straddle Period shall (i)
in
the case of any Taxes other than sales or use taxes, value-added taxes,
employment taxes, withholding taxes, and any Tax based on, or measured by
income, receipts or profits earned during a Straddle Period, shall be deemed
equal to the amount that would be payable for the entire taxable period
multiplied by a fraction, the numerator of which is the number of days in the
Pre-Closing Straddle Period, and denominator of which is the number of days
in
the Straddle Period, and (ii) in the case of any sales or use taxes, value-added
taxes, employment taxes, withholding taxes, and any Tax based on or measured
by
income, receipts
52
or
profits
earned during a Straddle Period, be deemed equal to the amount that would be
payable if the Straddle Period ended on and included the Closing
Date. For purposes of this Section 8.06(b), any exemption, deduction,
credit or other item that is calculated on an annual basis will be allocated
to
the Pre-Closing Straddle Period on a pro rata basis by multiplying the total
amount of such items for the Straddle Period by a fraction, the numerator of
which is the number of calendar days in the Pre-Closing Straddle Period, and
the
denominator of which is the number of calendar days in the Straddle
Period. The portion of Tax attributable to a Post-Closing Straddle
Period shall be calculated in a corresponding manner.
(c)
Buyer covenants that it will not cause or permit any Acquired Company, the
Subsidiary or any Affiliate of Buyer, except for the making of the Section
338(h)(10) Election, (i) to take any action on the Closing Date other than
in the ordinary course of business, including but not limited to the
distribution of any dividend or the effectuation of any redemption, that could
give rise to any Tax liability or reduce any Tax Asset of the Seller Group
or
give rise to any loss of the Seller or the Seller Group under this
Agreement, (ii) to make any election or deemed election under Section
338(g) of the Code (other than any Section 338(g) election that is a result
of
the Section 338(h)(10) Election) or any comparable provision under applicable
Law with respect to any Acquired Company or the Subsidiary, or (iii) to
make or change any Tax election or amend any Return that results in any
increased Tax liability or reduction of any Tax Asset of Seller or the Seller
Group in respect of any Pre-Closing Tax Period. Buyer further
covenants that it will not cause or permit any Acquired Company, the Subsidiary
or any Affiliate of Buyer to take any action that (iv) would have the
effect with respect to the Seller or any of its Affiliates of reducing
accumulated earnings and profits as determined under Section 1248 of the Code
of
any Acquired Company that is a controlled foreign corporation for U.S. federal
income tax purposes or (v) is outside the ordinary course of business and
that could result in the recognition by Seller or any of its Affiliates of
income or greater amounts of income under Section 951 of the Code than they
would otherwise realize if a closing of the books had taken place on the Closing
Date. Notwithstanding Section 8.06(a), Buyer agrees that Seller is to
have no liability for any Tax resulting from any action referred to in clauses
(i) to (v) of this Section 8.06(c), and agrees to indemnify and hold harmless
Seller and its Affiliates against (x) any such Tax resulting from such actions,
(y) any Tax incurred or suffered by Seller or any of its Affiliates, arising
out
of a breach of any other covenant or agreement of Buyer contained in this
Article 8, and (z) any liabilities, costs, expenses (including, without
limitation, reasonable expenses of investigation and attorney’s fees and
expenses), losses, damages, assessments, settlements or judgments arising out
of
or incident to the imposition, assessment or assertion of any Tax described
in
clause (x) or (y) above, including those incurred in the contest in good faith
in appropriate proceedings relating to the
53
imposition,
assessment or assertion of any such Tax, in each case incurred or suffered
by
Seller or any of its Affiliates.
(d)
Buyer shall promptly pay or cause to be paid to Seller any refunds of Taxes
and
interest thereon received by Buyer, any Affiliate of Buyer, any Acquired
Company, or the Subsidiary attributable to Taxes paid by Seller, any Acquired
Company or the Subsidiary (or any predecessor or Affiliate of Seller) with
respect to any Pre-Closing Tax Period, but only to the extent that such refund
was not reflected in the Net Working Capital as of the Closing Date on
Exhibit B. If, in lieu of receiving any such refund, any
Acquired Company or the Subsidiary reduces a Tax liability with respect to
a
Post-Closing Tax Period or increases a Tax Asset that can be carried forward
to
a Post-Closing Tax Period, Buyer shall promptly pay or cause to be paid to
Seller the amount of such reduction in Tax liability or the amount of any
benefit resulting from such increase in Tax Assets, as the case may
be. The benefit resulting from an increase in a Tax Asset shall be
calculated on the same basis as applicable to Tax Benefits pursuant to Section
8.06(e).
(e)
If Seller’s indemnification obligation under this Section 8.06 arises in respect
of an adjustment which makes allowable to Buyer, any of its Affiliates or,
effective upon the Closing, any Acquired Company or the Subsidiary any
deduction, amortization, exclusion from income or other allowance which would
not, but for such adjustment, be allowable (a “Tax Benefit”),
then any payment by Seller to Buyer shall be an amount equal to (x) the amount
otherwise due but for this Section 8.06(e), minus (y) the present value of
the
Tax Benefit multiplied by the maximum federal, state, or foreign, as the case
may be, corporate Tax rate in effect at the time the relevant adjustment is
made
or, in the case of a credit, by 100 percent. The present value referred to
in
the preceding sentence shall be determined using a discount rate equal to the
mid-term applicable U.S. federal rate in effect at the time the relevant
adjustment is made and assuming that the Tax Benefit will be used at the
earliest date or dates allowable by applicable Law. For the avoidance
of doubt, any adjustment that is not amortizable, depreciable or deductible
shall not be considered a Tax Benefit and no Tax Benefit will be
deemed realized with respect to the U.S. Acquired Company or the Subsidiary
if a
338(h)(10) Election is made (pursuant to Section 8.05 of this Agreement) with
respect thereto.
(f)
Any payment by Buyer or Seller pursuant to this Article 8 shall be made not
later than thirty (30) days after receipt by Seller or Buyer of written notice
from the other. Such notice shall state the specific Tax that has
been paid by Buyer, Seller, or any of its respective Affiliates, the amount
thereof and the indemnity payment requested.
54
(g)
If any claim (including any audit) or demand with respect to Taxes is received
by either party for which the other party may reasonably be expected to be
liable pursuant to this Section 8.06 (a “Tax Claim”), the party
receiving such claim or demand (the “Tax Indemnified Party”)
shall promptly notify the other party (the “Tax Indemnifying
Party”) in writing of such Tax Claim; provided,
however, that the failure to give the Tax Indemnifying
Party notice as
provided herein shall not relieve the Tax Indemnifying Party of its obligations
under this Section 8.06 except to the extent that the Tax Indemnifying Party
is
actually and materially prejudiced thereby. The Tax Indemnifying
Party shall have the right, at its own expense, to defend any Tax Claim;
provided that the Tax Indemnified Party shall have the right to
participate in the audit or defense of such Tax Claim and to be consulted with
respect thereto, and the Tax Indemnifying Party shall not settle a Tax Claim
without the consent of the Tax Indemnified Party if such settlement would have
an adverse effect on the Tax Indemnified Party, which consent shall not be
unreasonably withheld, delayed or conditioned. Notwithstanding
anything herein to the contrary, Buyer shall have no right to defend (but may
participate in) any Tax Claim with respect to Seller Group’s consolidated U.S.
federal, state or local income Return. In the event that the Tax
Indemnifying Party fails to prosecute a Tax Claim, the Tax Indemnified Party
may, upon notice to and at the expense of the Tax Indemnifying Party, assume
the
defense of any such Tax Claim.
(h)
Any dispute as to any matter covered in this Article 8 shall be resolved by
an
independent accounting firm mutually acceptable to Seller and
Buyer. The fees and expenses of such accounting firm shall be borne
equally by Seller and Buyer. If any dispute with respect to a Return
is not resolved prior to the due date for filing such Return, such Return shall
be filed in the manner which the party responsible for preparing such Return
deems correct.
Section
8.07. Canadian Withholding and Section 116
Certificate. Seller shall deliver to Buyer a certificate issued
pursuant to section 116 of the Income Tax Act (Canada) (the
“ITA”) in respect of the sale of the
shares of Godiva Chocolatier of Canada LTD (the “Canadian
Shares”) to Buyer, provided that:
(a)
if a certificate issued by the Minister of National Revenue pursuant to
subsection 116(2) of the ITA in respect of the disposition of the Canadian
Shares to Buyer, specifying a certificate limit in an amount which is not less
than the portion of the Closing Payment allocable to the Canadian Shares, is
not
delivered to Buyer at or before the Closing, Buyer shall be entitled to withhold
from the Closing Payment payable to Seller at the Closing 25% of the portion
of
the Closing Payment allocable to the Canadian Shares,
(b)
if, prior to the 29th day after the end of the month in which the Closing occurs
(or such later time if the Canada Revenue Agency confirms in
55
writing
and in a form that is reasonably acceptable to Buyer that Buyer may continue
to
hold the amount withheld pursuant to Section 8.07(a) hereof), Seller delivers
to
Buyer:
(i)
a certificate issued by the Minister of National Revenue under subsection 116(2)
of the ITA in respect of the disposition of the Canadian Shares to Buyer, Buyer
shall promptly pay to Seller the lesser of (i) the amount withheld pursuant
to
Section 8.07(a) hereof and (ii) the amount withheld pursuant to Section 8.07(a)
hereof less 25% of the amount, if any, by which the portion of the Closing
Payment allocable to the Canadian Shares exceeds the amount specified in such
certificate as the certificate limit, 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 subsection 116(4)
of the ITA in respect of the disposition of the Canadian Shares to Buyer, Buyer
shall promptly pay the amount withheld pursuant to Section 8.07(a) hereof to
Seller, together with any interest earned thereon (less any applicable
withholding Tax), and
(c)
if Buyer has withheld an amount pursuant to Section 8.07(a) hereof and Seller
does not deliver to the Buyer, prior to the 29th day after the end of the month
in which the Closing occurs (or such later time if the Canada Revenue Agency
confirms in writing and in a form that is reasonably acceptable to Buyer that
Buyer may continue to hold the amount withheld pursuant to Section 8.07(a)
hereof):
(i)
a certificate issued by the Minister of National Revenue under subsection 116(2)
of the ITA in respect of the disposition of the Canadian Shares to Buyer
specifying a certificate limit equal to or greater than the portion of the
Closing Payment allocable to the Canadian Shares, or
(ii)
a certificate issued by the Minister of National Revenue under subsection 116(4)
of the ITA in respect of the disposition of the Canadian Shares to
Buyer,
Buyer
shall remit to the Receiver General of Canada the amount required to be remitted
pursuant to subsection 116(5) of the ITA (and the amount so remitted shall
be
credited to the Buyer as a payment to Seller on account of the Closing Payment)
and Buyer shall pay to Seller any remaining portion of the amount withheld
pursuant to Section 8.07(a) hereof, together with interest earned on the amount
withheld pursuant to Section 8.07(a) hereof, prior to such remittance (less
56
any
applicable withholding Tax). Seller agrees to indemnify Buyer for any
Tax for which Buyer is assessed as a consequence of failure to timely remit
amounts withheld under Section 8.07(a) due to reliance on the written
confirmation from the Canadian Revenue Agency (as referred to in Section 8.07(b)
and (c) of this Agreement). This Section 8.07 shall apply with such
modifications as are necessary to any adjustments to the Closing
Payment.
ARTICLE
9
Employee
Matters
Section
9.01. Employees. Buyer acknowledges that it shall continue
the employment of all of the employees of the Acquired Companies and the
Subsidiary (other than employees receiving long-term disability benefits) as
of
the Closing Date (collectively, the “Transferred
Employees”).
Section
9.02. Employee Benefits. (a) For a period of at least
12 months (or 18 months in the case of Transferred Employees located in Europe)
following the Closing Date, Buyer shall procure that each Transferred Employee
shall be employed on terms and conditions (whether contractual or otherwise)
and
provided with employee benefits that are comparable in the aggregate to those
provided to such Transferred Employees immediately prior to the Closing Date;
and shall provide each Transferred Employee with cash compensation that is
comparable to the cash compensation of such Transferred Employee immediately
prior to the Closing Date.
(b)
With respect to those Employee Plans and International Plans in which
Transferred Employees were, immediately prior to the Closing Date, entitled
to
participate that are not sponsored by an Acquired Company (the “Seller
Plans”), such Transferred Employees shall, effective as of the Closing
Date, cease to participate in and accrue benefits thereunder. Buyer
shall establish or designate or cause the relevant Acquired Company to establish
employee benefits plans for the benefit of Transferred Employees (the
“Buyer Plans”) that provide benefits that satisfy the
requirements of Section 9.02(a). Buyer shall give Transferred
Employees full credit for purposes of eligibility and vesting and benefit
accrual (other than benefit accrual under a defined benefit plan) under the
Buyer Plans as was recognized under the Seller Plans. As between the
Seller Plans and the Buyer Plans, the Seller Plans shall be responsible for
all
claims for benefits incurred by Transferred Employees under the Seller Plans
up
to the Closing Date, and Buyer Plans shall be responsible for all claims for
benefits incurred by Transferred Employees on and after the Closing
Date.
(c)
With respect to any Buyer Plans that are welfare benefit plans, Buyer shall
(i)
cause there to be waived any eligibility requirements or pre-
57
existing
condition limitations and (ii) give effect to, in determining any deductible
and
maximum out-of-pocket limitations, amounts paid by such Transferred Employees
with respect to similar plans maintained by Seller.
(d)
Within 120 days after the Closing Date, Buyer shall cover Transferred Employees
located in the United States under one or more defined contribution plans and
trusts intended to qualify under Section 401(a) and Section 501(a) of the Code
(collectively, the “Buyer DC Plan”). To the extent
relevant, Buyer shall permit such Transferred Employees to make a “direct
rollover” of their account balances (including loan account balances) under the
Seller’s defined contribution plans that are Employee Plans to the Buyer DC
Plan. Seller and Buyer shall reasonably cooperate in good faith to
effect such transfers or distributions as soon as practicable after the Closing
Date.
(e)
Effective as of the Closing Date, Buyer shall establish or designate or shall
cause Godiva Canada to establish a retirement savings plan for the benefit
of
Transferred Employees of Godiva Canada (the “Buyer
RSP”). The Buyer RSP shall provide benefits to Transferred
Employees of Godiva Canada that are comparable in the aggregate to the benefits
such Transferred Employees received under the Pension Plan for Employees of
Xxxxxxxx Company of Canada.
(f)
Buyer shall, for a period of at least 12 months (or 18 months in the case of
Transferred Employees located in Europe) following the Closing Date, maintain
a
severance pay practice, program or arrangement for the benefit of each
Transferred Employee that provides for the severance benefits set forth on
Section 9.02(f) of the Disclosure Schedule or, if better, the severance benefits
provided under Buyer’s severance pay practice, program or arrangement for the
benefit of its similarly situated employees.
(g)
With respect to any accrued but unused vacation time to which any Transferred
Employee is entitled pursuant to the vacation policy applicable to such
Transferred Employee immediately prior to the Closing Date (the
“Vacation Policy”), Buyer shall allow such Transferred Employee
to use such accrued vacation; provided, however, that if Buyer deems it
necessary to disallow such employee from taking such accrued vacation, Buyer
shall be liable for and pay in cash to each such Transferred Employee an amount
equal to such vacation time in accordance with the terms of the Vacation Policy;
provided, further, that Buyer shall be liable for and pay in cash an
amount equal to such accrued vacation time to any Transferred Employee whose
employment terminates for any reason other than cause prior to the close of
business on the last calendar day of the year during which the Closing Date
occurs, unless otherwise required by applicable Law.
(h)
On and for 90 days after the Closing Date, Buyer shall not, and shall cause
the
Acquired Companies and the Subsidiary not to, implement any
58
employment
terminations, layoffs or hours reductions or take any other action that could
reasonably be expected to result in the Seller, Xxxxxxxx or any of their
Affiliates having a liability under the Worker Adjustment and Retraining
Notification Act of 1988 (“WARN”) or a similar State or foreign
Law as the result of a “mass layoff” or a “plant closing” as such terms are
defined by WARN or as the result of a similar event under such State or foreign
Law.
(i)
Buyer shall be solely responsible for satisfying the obligations imposed under
Section 4980B of the Code and Sections 601-608 of ERISA (collectively,
“COBRA”) (or any similar obligation under any applicable Law)
with respect to all Transferred Employees.
(j)
For each Transferred Employee who is eligible to participate in a long-term
incentive plan or program maintained or sponsored by Seller or one of the
Acquired Companies, Buyer shall provide a comparable long-term incentive
compensation opportunity, or provide an offsetting cash payment to any
Transferred Employee whose eligibility is not so maintained. For
Transferred Employees whose eligibility to receive long-term incentive
compensation is maintained by Buyer pursuant to the preceding sentence,
“comparable” shall mean a target long-term incentive level of at least 85% of
Seller’s or any Acquired Company’s level as of the Closing Date for a period of
12 months (or 18 months in the case of Transferred Employees located in
Europe).
(k)
The provisions of this Article 9 shall apply to and in respect of the
Transferred Employees only for so long as the Transferred Employees continue
in
the employment of the Buyer, any Acquired Company, the Subsidiary, any Affiliate
or any person to whom the whole or any part of the Acquired Companies is
transferred.
(l)
The provisions of this Article 9 are solely for the benefit of the parties
to
this Agreement, and Buyer agrees that if Buyer is in breach of any of the
provisions of this Article 9, Seller may, at its discretion, and without
limitation, seek to procure compliance with such provisions by Buyer by applying
to the court for damages and/or specific performance; provided, however, that
no
employee or former employee of any of the Acquired Companies or the Subsidiary
shall be regarded for any purpose as a third-party beneficiary of the
Agreement.
ARTICLE
10
Conditions
to Closing
Section
10.01. Conditions to Obligations of Buyer and
Seller. The obligations of Buyer and Seller to
consummate the Closing are subject to the
59
satisfaction
(or, to the extent permitted by Law, waiver by the relevant party) of the
following conditions:
(a)
Any applicable waiting period under the HSR Act relating to the transactions
contemplated by this Agreement shall have expired or been
terminated.
(b)
The Turkish Competition Authority shall have granted clearance or approval
with
respect to the transactions contemplated by this Agreement.
(c)
No order, injunction or decree issued by any court or agency of competent
jurisdiction preventing the consummation of the Closing shall be in
effect. No Law shall have been enacted, entered, promulgated or
enforced that prohibits or makes illegal the consummation of the
Closing.
Section
10.02. Conditions to Obligation of
Buyer. The obligation of Buyer to consummate the
Closing is subject to the satisfaction (or, to the extent permitted by Law,
waiver by Buyer) of the following further conditions:
(a)
(1) Seller shall have performed or complied in all material respects with all
of
the agreements and covenants required by this Agreement to be performed or
complied with by them at or prior to the Closing Date, (2) the representations
and warranties of Seller contained in this Agreement and in any certificate
or
other writing delivered by Seller pursuant hereto, disregarding any
qualifications or exceptions contained in such representations or warranties
relating to materiality or Material Adverse Effect, shall be true and accurate
at and as of the Closing Date, as if made at and as of such time (other than
any
representations and warranties that address matters as of a specific date,
which
shall be true and accurate as of such date), except for any inaccuracies which,
individually or in the aggregate, would not, and would not reasonably be
expected to, constitute a Material Adverse Effect and (3) Buyer shall have
received a certificate signed by an executive officer of Seller to the foregoing
effect.
(b)
Seller shall have caused the following documents to be delivered to
Buyer:
(i)
such documents regarding the corporate organization, existence, authorization
and similar matters relating to each of the Acquired Companies or the Subsidiary
as Buyer may reasonably request; and
(ii)
a certification pursuant to Treasury Regulations Section 1.1445-2(b)(2) signed
by Seller to the effect that Seller is not a foreign person.
60
(c)
Seller shall have delivered to Buyer the Audited Financial Statements and,
except as set forth on Section 10.02(c) of the Disclosure Schedule, such Audited
Financial Statements shall not differ in any material and adverse respect from
the Unaudited Financial Statements for the corresponding period. Upon
receipt of the Audited Financial Statements, Buyer shall have 10 Business Days
to notify Seller in writing that it believes the condition to closing set forth
in this Section 10.02(c) has not been satisfied and if Buyer shall not so notify
Seller, the condition to closing set forth in this Section 10.02(c) shall be
deemed satisfied.
Section
10.03. Conditions to Obligation of
Seller. The obligation of Seller to consummate the
Closing is subject to the satisfaction (or, to the extent permitted by Law,
waiver by Seller) of the following further conditions:
(a)
(1) Buyer shall have performed or complied in all material respects with all
of
the agreements, covenants and conditions required by this
Agreement to be performed or complied with by it on or prior to the
Closing Date, (2) the representations and warranties of Buyer contained in
this
Agreement and in any certificate or other writing delivered by Buyer pursuant
hereto shall be true and accurate in all material respects at and as of the
Closing Date, as if made at and as of such time (other than any representations
and warranties that address matters as of a specific date, which shall be true
and accurate as of such date) and (3) Seller shall have received a certificate
signed by an executive officer of Buyer to the foregoing effect.
(b)
Buyer shall have caused (i) documents regarding the corporate organization,
existence, authorization and similar matters relating to Buyer as Seller may
reasonably request.
ARTICLE
11
Survival;
Indemnification
Section
11.01. Survival. The representations and
warranties of Seller and Buyer contained in this Agreement shall survive until
18 months after the Closing Date, except that: (i) the representations and
warranties contained in Section 3.01, Section 3.02, Section 3.05, Section 3.06,
Section 3.21, Section 4.01, Section 4.02, Section 4.07 and Section 4.08 shall
survive indefinitely or until the latest date permitted by Law and (ii) the
representations and warranties contained in Article 8 shall survive Closing
until 90 days after the expiration of the applicable statute of limitations
with
respect to the particular matter that is the subject matter
thereof. Except as otherwise provided in this Agreement, the
covenants and agreements of Buyer and Seller contained in this Agreement shall
survive Closing and shall continue in full force and effect indefinitely or
for
the shorter period
61
specified
in this Agreement. Any breach of representation, warranty, covenant
or agreement in respect of which indemnity may be sought under this Agreement
shall survive the time at which it would otherwise terminate pursuant to Section
11.01, if notice of the inaccuracy or breach thereof giving rise to such right
of indemnity shall have been given to the party against whom such indemnity
may
be sought prior to such time.
Section
11.02. Indemnification. (a) From and after
Closing, Seller hereby indemnifies Buyer and its Affiliates (including the
Acquired Companies and the Subsidiary) against and agrees to hold each of them
harmless from any and all damage, loss, liability and expense (including,
without limitation, reasonable expenses of investigation and reasonable
attorneys’ fees and expenses in connection with any action, suit or proceeding)
(“Damages”) actually incurred or suffered by Buyer or any of
its Affiliates arising out of or resulting from any inaccuracy or breach of
any
representation or warranty (determined, except with respect to Section 3.08,
Section 3.10, Section 3.11 and Section 3.23, without regard to any qualification
or exception contained therein relating to materiality or Material Adverse
Effect or any similar qualification or standard) (each such inaccuracy and
breach, a “Warranty Breach”) or breach of covenant or agreement
made or to be performed by Seller pursuant in this Agreement (except for
representations, covenants or agreements contained in Article 8 of this
Agreement as to which the provisions of Article 8 shall govern);
provided that with respect to indemnification by Seller for Warranty
Breaches pursuant to this Section 11.02 (other than Warranty Breaches with
respect to Section 3.01, Section 3.02, Section 3.06, Section 3.05 and Section
3.07(b)), (i) Seller shall not be liable with respect to a Warranty Breach
unless the amount of Damages resulting from such Warranty Breach exceeds $25,000
(“De Minimis Claim”), (ii) Seller shall not be liable unless
the aggregate amount of Damages with respect to all Warranty Breaches, other
than De Minimis Claims, exceeds $2,125,000 and then only to the extent of such
excess and (iii) Seller’s maximum liability shall not exceed $144,500,000;
provided further that any claim for indemnification pursuant to Section
8.06 shall not be subject to the limitations on indemnification set forth in
this Section 11.02.
(b)
From and after Closing, Buyer hereby indemnifies Seller and its Affiliates
against and agrees to hold each of them harmless from any and all Damages
actually incurred or suffered by Seller or any of its Affiliates arising out
of
or related in any way to any Warranty Breach or breach of a covenant, in each
case of Buyer contained in this Agreement.
(c)
Notwithstanding any of the provisions of this Article 11, Section 8.06 shall
provide the exclusive remedy for Buyer’s and its Affiliates’ (and, after the
Closing, the Acquired Companies’ and the Subsidiary’s) recovery of any
Tax
62
from
Seller and its Affiliates, and the procedures set forth in Section 8.06 shall
govern any claim for indemnification under such provision.
Section
11.03. Procedures. (a) Other than with respect
to an indemnification claim for Taxes (which shall be governed by Article 8),
the party seeking indemnification under Section 11.02 (the “Indemnified
Party”) agrees to give prompt notice to the party against whom
indemnity is sought (the “Indemnifying Party”) of the assertion
of any claim, or the commencement of any suit, action or proceeding
(“Claim”) in respect of which indemnity may be sought under
such Section and will provide the Indemnifying Party such information with
respect thereto that the Indemnifying Party may reasonably
request. The failure to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder, except to the
extent such failure shall have adversely prejudiced the Indemnifying
Party.
(b)
The Indemnifying Party shall be entitled to participate in the defense of any
Claim asserted by any third party (“Third Party Claim”) and,
subject to the limitations set forth in this Section 11.03, shall be entitled
to
control the defense of such Third Party Claim and appoint lead counsel for
such
defense, in each case at its expense.
(c)
If the Indemnifying Party shall assume the control of the defense of any Third
Party Claim in accordance with the provisions of this Section 11.03,
(1) the Indemnifying Party shall obtain the prior written consent of the
Indemnified Party (which shall not be unreasonably withheld, conditioned or
delayed) before entering into any settlement of such Third Party Claim, if
the
settlement does not release the Indemnified Party from all liabilities and
obligations with respect to such Third Party Claim or the settlement imposes
injunctive or other equitable relief against the Indemnified Party and (2)
the
Indemnified Party shall be entitled to participate in the defense of such Third
Party Claim and to employ separate counsel of its choice for such
purpose. The fees and expenses of such separate counsel shall be paid
by the Indemnified Party; provided, however, that such
Indemnified Party shall be entitled to participate in any such defense with
separate counsel at the expense of the Indemnifying Party if (i) so
requested by the Indemnifying Party to participate or (ii) in the
reasonable opinion of counsel to the Indemnified Party, a conflict or potential
conflict exists between the Indemnified Party and the Indemnifying Party that
would make such separate representation advisable.
(d)
Each party shall cooperate, and cause their respective Affiliates to cooperate,
in the defense or prosecution of any Third Party Claim and shall furnish or
cause to be furnished such records, information and testimony, and attend such
conferences, discovery proceedings, hearings, trials or appeals, as may be
reasonably requested in connection therewith.
63
(e)
Each Indemnified Party must mitigate to the extent required under applicable
Law
any loss for which such Indemnified Party seeks indemnification under this
Agreement. If such Indemnified Party mitigates its loss after the
Indemnifying Party has paid the Indemnified Party under any indemnification
provision of this Agreement in respect of that loss, the Indemnified Party
must
notify the Indemnifying Party and pay to the Indemnifying Party the extent
of
the value of the benefit to the Indemnified Party of that mitigation (less
the
Indemnified Party’s reasonable costs of mitigation) within two Business Days
after the benefit is received.
(f)
Each Indemnified Party shall use reasonable best efforts to collect any amounts
available under insurance coverage, or from any other Person alleged to be
responsible, for any Damages payable under Section 11.02.
Section
11.04. Limitation on Damages. (a) The amount
of any Damages payable under Section 11.02 by the Indemnifying Party shall
be
net of (1) any amounts actually recovered by the Indemnified Party under
applicable insurance policies (net of any deductibles) and (2) any Tax Benefit
(as defined in Section 8.06(e)) available to the Indemnified Party arising
from
the incurrence or payment of any such Damages; provided, that, in the
case of clause (1), the Indemnified Party shall assert and pursue its rights
under applicable insurance policies and if the Indemnified Party recovers
amounts under any applicable insurance policies after the Indemnifying Party
has
paid the Indemnified Party under any indemnification provision of this
Agreement, the Indemnified Party must notify the Indemnifying Party and pay
to
the Indemnifying Party the extent of such recovery.
(b)
The Indemnifying Party shall not be liable under Section 11.02 for any (1)
Damages relating to any matter to the extent that (A) there is included in
the
Closing Statement an identifiable liability or reserve (including liabilities
or
reserves that are not individual line items, but are identifiable components
of
a line item) relating to such matter (it being understood that the Indemnifying
Party shall be liable for the excess of the Damages over such identifiable
liability or reserve) or (B) the Indemnified Party had otherwise been
compensated for such matter pursuant to the Closing Payment adjustment mechanism
contemplated by Section 2.05 and Section 2.06 (it being understood that the
Indemnifying Party shall be liable only for the excess of the Damages over
such
Closing Payment adjustment compensation), (2) special, punitive, indirect or
consequential Damages (including diminution in value of the Shares) or (3)
Damages for lost profits.
Section
11.05. Assignment of Claims. If the
Indemnified Party receives any payment from an Indemnifying Party in respect
of
any Damages pursuant to Section 11.02 and the Indemnified Party could have
recovered all or a part of such
64
Damages
from a third party (other than from Buyer, Seller, the Acquired Companies,
the
Subsidiary, or any Affiliate of or any current or former employee or agent
of
any such Persons) (a “Potential Contributor”) based on the
underlying Claim asserted against the Indemnifying Party, the Indemnified Party
shall assign such of its rights to proceed against the Potential Contributor
as
are necessary to permit the Indemnifying Party to recover from the Potential
Contributor the amount of such payment.
Section
11.06. Exclusivity. Except as
specifically set forth in this Agreement and with respect to fraud and
intentional misrepresentation, Buyer waives any rights and claims Buyer and
its
Affiliates may have against Seller and its Affiliates, whether in law or in
equity, relating to the Acquired Companies or the Subsidiary or any of their
respective assets, business or operations, the Shares or the transactions
contemplated hereby, and Seller waives any such rights and claims Seller and
its
Affiliates may have against Buyer and its Affiliates, the Acquired Companies
or
the Subsidiary. The rights and claims waived hereby include claims
for contribution or other rights of recovery arising out of or relating to
any
Environmental Law, claims for breach of contract, breach of representation
or
warranty, negligent misrepresentation and all other claims for breach of
duty. After the Closing, Article 8 and Section 11.02 will provide the
exclusive remedy for any misrepresentation, breach of warranty, covenant or
other agreement (other than those contained in Section 2.06, Section 5.02 and
Section 6.02), or other claim arising out of this Agreement or the transactions
contemplated hereby. Notwithstanding the foregoing, it is understood
that nothing herein shall prohibit any party hereto from exercising its rights
to seek equitable relief with respect to a breach of covenant or agreement
under
any Transaction Document.
Section
11.07. Closing Payment Adjustment. Any amount
paid by Seller or Buyer under Article 8 or Article 11 will be treated as an
adjustment to the Closing Payment.
ARTICLE
12
Termination
Section
12.01. Grounds for Termination. This
Agreement may be terminated and the transactions contemplated herein may be
abandoned at any time prior to the Closing:
(a)
by mutual written agreement of Seller and Buyer;
(b)
by either Seller or Buyer if the Closing shall not have been consummated
by April 18, 2008 (the “Termination Date”); provided
that neither
65
of
the
parties may terminate this Agreement pursuant to this clause if the Closing
shall not have been consummated by the Termination Date by reason of the failure
of such party or any of its Affiliates to perform in all material respects
any
of its or their respective covenants or agreements contained in this
Agreement;
(c)
by either Buyer, on the one hand, or Seller, on the other hand, if a material
breach of any provision of this Agreement has been committed by the other party
or any of its Affiliates and such breach is not capable of being satisfied
or
cured by the Termination Date or if any representation or warranty of the other
party has become untrue such that the conditions set forth in Article 10 hereof
would not be satisfied and such breach is incapable of being cured;
or
(d)
by either Seller or Buyer if consummation of the Closing would violate any
nonappealable final order, decree or judgment of any court or governmental
body
having competent jurisdiction.
The
party
desiring to terminate this Agreement pursuant to Section 12.01(b)-(d) shall
give
notice of such termination to the other party.
Section
12.02. Effect of Termination. If this
Agreement is terminated as permitted by Section 12.01, such termination shall
be
without liability of any party (or any Affiliate, stockholder, director,
officer, employee, agent, consultant or representative of such party) to any
other party to this Agreement; provided that if such termination shall
result from the (1) failure of any party to this Agreement to perform a covenant
or agreement contained in this Agreement or (2) a knowing or willful breach
by
any party hereto of any representation or warranty contained herein made as
of
the date of this Agreement, such party shall be fully liable for any and all
Damages incurred or suffered by any other party as a result of such failure
or
breach. The provisions of Section 6.01 (it being understood that all
provisions of the Confidentiality Agreement will remain in full force and
effect), Section 12.02 and Article 13 shall survive any termination hereof
pursuant to Section 12.01.
ARTICLE
13
Section
13.01. Notices. All
notices, requests and other communications to any party hereunder shall be
in
writing (including facsimile transmission) and shall be given,
66
if
to
Buyer, to:
Yildiz
Holding A.S.
Ferah
Cad.
Cesme Sk. No:2/4
B.
Camlica/Uskudar 34692 Istanbul
Attention:
Baris Oner
Fax:
x00
000 00 00
with
a
copy (which shall not constitute notice) to:
Weil,
Gotshal & Xxxxxx LLP
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attention:
Xxxxx X. Xxxxxxxx
Fax:
(000)
000-0000
if
to
Seller, to:
Xxxxxxxx
Investment Company
c/o
Campbell Soup Company
Xxx
Xxxxxxxx Xxxxx
Xxxxxx,
Xxx Xxxxxx 00000-0000
Attention:
Corporate Secretary
Fax:
(000)
000-0000
with
a
copy (which shall not constitute notice) to:
Xxxxx
Xxxx
& Xxxxxxxx
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxxxx
Fax:
(000)
000-0000
or
to such
other address or telecopy number and with such other copies, as such party
may
hereafter specify for the purpose by notice to the other parties. All
such notices, requests and other communications shall be deemed received on
the
date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a Business Day in the place of
receipt. Otherwise, any such notice, request or communication shall
be deemed not to have been received until the next succeeding Business Day
in
the place of receipt. Each such notice, request or other
communication shall be effective (1) if given by telecopy, when such telecopy
is
transmitted to the telecopy number specified in this Section and
67
evidence
of receipt is received or (2) if given by any other means, upon delivery or
refusal of delivery at the address specified in this Section 13.01.
Section
13.02. Amendments and Waivers. (a) Any
provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed, in the case of an amendment,
by
each party to this Agreement, or in the case of a waiver, by the party against
whom the waiver is to be effective.
(b)
No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section
13.03. Expenses. Except as otherwise
provided herein, all costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or
expense.
Section
13.04. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. No party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement by operation of law or otherwise without the consent of each
other party hereto; provided, that Buyer may assign this Agreement and
any or all rights or obligations hereunder (including Buyer’s rights to purchase
the Shares and Buyer’s rights to seek indemnification hereunder) to any one or
more Affiliates of Buyer; provided, further, that no such assignment
shall release Buyer from any liability or obligation under this Agreement,
interfere with, delay or create any additional obligations with respect to
the
Closing or negatively impact, in any manner, the transactions contemplated
hereby or Xxxxxxxx or any of its Affiliates.
Section
13.05. Governing Law. This Agreement
shall be governed by and construed in accordance with the law of the State
of
New York, without regard to the conflicts of law rules of such
state.
Section
13.06. Jurisdiction. Except as
otherwise expressly provided
in this Agreement, any controversy, dispute or claim arising under or in
connection with this Agreement (including, without limitation, the existence,
validity, interpretation or breach hereof and any claim based on contract,
tort
or statute) shall be resolved by a binding arbitration, to be held in London,
England pursuant to the Rules of Arbitration (the “ICC Rules”)
of the International Chamber of
Commerce (the “ICC”)
in accordance with the
then-prevailing ICC Rules. The parties agree that the arbitrators
shall have the authority to make an award of
68
specific
performance, in addition to any other remedy to which such party is entitled
at
law or in equity. Each
of the parties hereby irrevocably consents to the jurisdiction of the ICC and
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue in London, England
is an
inconvenient forum. Each party shall bear its own expenses incurred
in connection with arbitration and the fees and expenses of the arbitrators
shall be shared equally by the parties involved in the dispute and advanced
by
them from time to time as required. The decision of the arbitrators
in any such proceeding will be final and binding and not subject to judicial
review and final judgment may be entered upon such an award in any court of
competent jurisdiction, but entry of such judgment will not be required to
make
such award effective. Any action against any party hereto ancillary
to arbitration pursuant to this Section 13.06 (as determined by the
arbitrators), including any action for provisional or conservatory measures
or
action to enforce an arbitration award or any judgment entered by any court
in
respect of any thereof may be brought in any court of competent jurisdiction
located within London, England, in the United States District Court for
the Southern District of New York or any New York State court sitting in New
York City, Borough of Manhattan or in any other court in any jurisdiction in
the
world, and the parties hereto
hereby irrevocably submit to the jurisdiction of such courts. The
parties hereby irrevocably waive, to the fullest extent permitted by applicable
law, any objection which they may now or hereafter have to the laying of venue
of any such action brought in such court or any defense of inconvenient forum
for the maintenance of such action. Each of the parties hereto agrees
that a judgment in any such action may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Process
in any such suit, action or proceeding may be served on any party anywhere
in
the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service
of process on such party as provided in Section 13.06 shall be deemed
effective service of process on such party.
Section
13.07. Counterparts; Third Party
Beneficiaries. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same
instrument. Each Transaction Document shall become effective when
each party thereto shall have received a counterpart thereof signed by the
other
party thereto. No Transaction Document is intended to confer upon any
Person other than the parties thereto any rights or remedies
hereunder.
Section
13.08. Entire Agreement. The Transaction
Documents, together with the Confidentiality Agreement, constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior agreements and understandings, both oral
and
written, between the parties with respect to the subject matter of this
Agreement. No representation, inducement,
69
promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by any party hereto.
Section
13.09. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction or other governmental authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such a determination, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.
[Remainder
of page intentionally left blank; next page is signature
page]
70
IN
WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed
by
their respective authorized officers as of the day and year first above
written.
|
YILDIZ
HOLDING A.S.
|
|||
| By: | /s/ Xxxxx Xxxxx | ||
| Name: |
Xxxxx
Xxxxx
|
||
| Title: |
Chairman
|
||
| By: |
/s/
Xxxxxx Xxxxx Kurama
|
||
| Name: |
Xxxxxx
Xxxxx Kurama
|
||
| Title: |
General
Manager
|
||
[Signature
page to the Stock Purchase Agreement]
|
XXXXXXXX
INVESTMENT COMPANY
|
|||
| By: |
/s/
Xxxxxx X. Xxxxxxxxx
|
||
| Name: |
Xxxxxx
X. Xxxxxxxxx
|
||
| Title: |
Senior
Vice President and
Chief
Financial Officer
|
||
