ASSET SALE AGREEMENT between KRAFT FOODS GLOBAL, INC. and DEL MONTE CORPORATION Dated as of March 15, 2006
Exhibit 2.1
EXECUTION COPY
between
KRAFT FOODS GLOBAL, INC.
and
DEL MONTE CORPORATION
Dated as of March 15, 2006
TABLE OF CONTENTS
Page | ||||||||
ARTICLE 1 | PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES | 1 | ||||||
1.1 | Certain Definitions | 1 | ||||||
1.2 | Purchase and Sale of Assets | 11 | ||||||
1.3 | Allocation of Final Purchase Price | 11 | ||||||
1.4 | Assets | 12 | ||||||
1.5 | Excluded Assets | 14 | ||||||
1.6 | Assumption of Liabilities | 15 | ||||||
1.7 | Excluded Liabilities | 17 | ||||||
1.8 | Limitation on Assignment of Contracts | 19 | ||||||
ARTICLE 2 | CLOSING | 19 | ||||||
2.1 | Closing | 19 | ||||||
2.2 | BUYER’s Conditions to Closing | 21 | ||||||
2.3 | SELLER’s Conditions to Closing | 21 | ||||||
2.4 | Inventory Adjustment | 22 | ||||||
ARTICLE 3 | REPRESENTATIONS AND WARRANTIES OF SELLER | 25 | ||||||
3.1 | SELLER’s Authority; No Conflicts | 25 | ||||||
3.2 | Title to Tangible Assets | 26 | ||||||
3.3 | Intellectual Property | 26 | ||||||
3.4 | Litigation; Proceedings | 28 | ||||||
3.5 | Contracts | 28 | ||||||
3.6 | Compliance with Applicable Laws | 30 | ||||||
3.7 | Brokers | 30 | ||||||
3.8 | Inventory | 30 | ||||||
3.9 | Financial Information; Property, Plant and Equipment; Spare Parts | 31 | ||||||
3.10 | Environmental Matters | 31 | ||||||
3.11 | Products | 32 | ||||||
3.12 | Labor Matters | 32 | ||||||
3.13 | Employee Benefits | 33 | ||||||
3.14 | Taxes | 34 | ||||||
3.15 | Customers; Suppliers | 34 | ||||||
3.16 | Condition and Sufficiency of Assets | 35 | ||||||
3.17 | Coupon Activities | 35 | ||||||
3.18 | Promotions | 35 |
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Page | ||||||||
3.19 | Absence of Certain Events | 35 | ||||||
3.20 | No Other Representations or Warranties | 36 | ||||||
ARTICLE 4 | REPRESENTATIONS AND WARRANTIES OF BUYER | 36 | ||||||
4.1 | BUYER'S Authority; No Conflicts | 36 | ||||||
4.2 | Actions and Proceedings | 37 | ||||||
4.3 | Availability of Funds | 37 | ||||||
4.4 | Brokers | 37 | ||||||
4.5 | Tax Matters | 38 | ||||||
ARTICLE 5 | COVENANTS OF SELLER | 38 | ||||||
5.1 | Access | 38 | ||||||
5.2 | Ordinary Conduct of the Business | 38 | ||||||
5.3 | Delivery | 40 | ||||||
5.4 | Accounts Receivable | 40 | ||||||
5.5 | Use of Trademarks, Trade Names and Designations | 40 | ||||||
5.6 | Confidential Information | 41 | ||||||
5.7 | Notices of Certain Events | 41 | ||||||
5.8 | Audited Business Financial Statements | 42 | ||||||
5.9 | Trade and Consumer Promotions | 42 | ||||||
5.10 | Schedules Update | 42 | ||||||
ARTICLE 6 | COVENANTS OF BUYER | 43 | ||||||
6.1 | Confidentiality | 43 | ||||||
6.2 | Accounts Receivable | 43 | ||||||
6.3 | Employee Benefits | 43 | ||||||
6.4 | Humane Treatment | 51 | ||||||
6.5 | AS 400 and Other Computer Equipment | 51 | ||||||
6.6 | Privacy Policy | 51 | ||||||
6.7 | Common Transferred IP | 51 | ||||||
6.8 | Purchase Orders | 51 | ||||||
ARTICLE 7 | MUTUAL COVENANTS OF THE PARTIES | 52 | ||||||
7.1 | Best Efforts | 52 | ||||||
7.2 | Cooperation | 53 | ||||||
7.3 | Publicity | 54 | ||||||
7.4 | Access to Information | 54 | ||||||
7.5 | Bulk Sales Waiver | 54 | ||||||
7.6 | Expenses | 54 | ||||||
7.7 | Tax Matters | 54 | ||||||
7.8 | Employee Non-Solicitation | 56 |
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Page | ||||||||
7.9 | Books and Records | 56 | ||||||
ARTICLE 8 | INDEMNIFICATION | 56 | ||||||
8.1 | Survival | 56 | ||||||
8.2 | Indemnification by SELLER | 57 | ||||||
8.3 | Indemnification by BUYER | 57 | ||||||
8.4 | Exclusive Remedy; Limitation of Liability | 58 | ||||||
8.5 | Losses Net of Insurance; Tax Benefits | 58 | ||||||
8.6 | Procedures Relating to Indemnification | 59 | ||||||
8.7 | Effect of Knowledge | 60 | ||||||
ARTICLE 9 | TERMINATION | 61 | ||||||
9.1 | Basis for Termination | 61 | ||||||
9.2 | Notice of Termination, Return of Documents, Continuing Confidentiality | |||||||
Obligation | 62 | |||||||
9.3 | Effect of Termination | 62 | ||||||
ARTICLE 10 | GENERAL PROVISIONS | 62 | ||||||
10.1 | Assignment | 62 | ||||||
10.2 | No Third-Party Beneficiaries | 63 | ||||||
10.3 | Amendments | 63 | ||||||
10.4 | Waiver of Compliance | 63 | ||||||
10.5 | Notices | 63 | ||||||
10.6 | Interpretation | 64 | ||||||
10.7 | Counterparts | 64 | ||||||
10.8 | Severability | 64 | ||||||
10.9 | Governing Law | 65 | ||||||
10.10 | Actions and Proceedings | 65 | ||||||
10.11 | Specific Performance | 65 | ||||||
10.12 | Entire Agreement | 66 |
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This ASSET SALE AGREEMENT (this “Agreement”), dated as of March 15, 2006, is by and between
Kraft Foods Global, Inc., a Delaware corporation (“SELLER”), and Del Monte Corporation, a Delaware
corporation (“BUYER”).
W I T N E S S E T H:
WHEREAS, BUYER desires to purchase the Assets (as defined below) and to assume the Assumed
Liabilities (as defined below) from SELLER, and SELLER desires to sell the Assets and transfer to
BUYER the Assumed Liabilities, upon the terms and subject to the conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and 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
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
1.1 CERTAIN DEFINITIONS. For all purposes of this Agreement except as expressly
provided or unless the context otherwise requires the following definitions shall apply:
“Adjustment Payment” shall have the meaning assigned thereto in Section 2.4(e).
“Agreement” shall have the meaning assigned thereto in the preamble.
“Animals” shall have the meaning assigned thereto in Section 6.4.
“Assets” shall have the meaning assigned thereto in Section 1.4.
“Assigned Contracts” shall have the meaning assigned thereto in Section 1.4(e).
“Assumed Liabilities” shall have the meaning assigned thereto in Section 1.6.
“Basket” shall have the meaning assigned thereto in Section 8.2.
“BCT Fund” shall have the meaning assigned thereto in Section 3.13(e).
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“BCT Welfare Fund” shall have the meaning assigned thereto in Section 3.13(e).
“Benefits Continuation Period” shall have the meaning assigned thereto in Section 6.3(b).
“Business” shall mean the manufacture, marketing, packaging and sale of the Products as
conducted by SELLER.
“Business Employees” shall have the meaning assigned thereto in Section 6.3(a).
“BUYER” shall have the meaning assigned thereto in the preamble.
“BUYER’s FSA” shall have the meaning assigned thereto in Section 6.3(g).
“BUYER’s Objection” shall have the meaning assigned thereto in Section 2.4(b).
“Cap” shall have the meaning assigned thereto in Section 8.2.
“Capital Stock” shall mean: (i) with respect to any Person that is a corporation, any and all
shares, interests, participations or other equivalents (however designated and whether or not
voting) of corporate stock, including each class or series of common stock and preferred stock of
such Person; and (ii) with respect to any Person that is not a corporation, any and all partnership
or other equity interests of such Person.
“Capitalized Lease Obligation” shall mean, as to any Person, the obligations of such Person
under a lease that are required to be classified and accounted for as capital lease obligations
under GAAP.
“Cause” shall have the meaning assigned thereto in Section 6.3(e).
“CBAs” shall have the meaning assigned thereto in Section 6.3(d).
“Closing” shall have the meaning assigned thereto in Section 2.1.
“Closing Date” shall have the meaning assigned thereto in Section 2.1.
“Closing Inventory Statement” shall have the meaning assigned thereto in Section 2.4(a).
“COBRA Coverage” shall have the meaning assigned thereto in Section 6.3(f).
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“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Collateral Agreements” shall have the meaning assigned thereto in Section 2.1(d).
“Common Transferred IP” shall have the meaning assigned thereto in Section 1.4(c)(iii).
“Confidential Information” shall have the meaning assigned thereto in Section 5.6.
“Confidentiality Agreement” shall have the meaning assigned thereto in Section 6.1.
“Contract” shall mean any contract or agreement (other than any Purchase Order) relating
exclusively to the Business or any Product.
“Controlling Party” shall have the meaning assigned thereto in Section 8.6(c).
“CPA Firm” shall have the meaning assigned thereto in Section 2.4(c).
“Currency Agreement” shall mean any foreign exchange contract, currency swap agreement or
other similar agreement or arrangement designed to protect any Person against fluctuations in
currency values.
“Domain Names” shall have the meaning assigned thereto in Section 1.4(c)(vi).
“Due Date” shall have the meaning assigned thereto in Section 7.7(d).
“Employees on Disability Leave” shall have the meaning assigned thereto in Section 6.3(a).
“End Date” shall have the meaning assigned thereto in Section 9.1(d).
“Environmental Law” shall mean any federal, state or local law, regulation, ordinance, rule,
license, permit, governmental authorization or common law, including any judicial or administrative
order, consent decree or judgment, and including requirements of the New York State Department of
Environmental Conservation, applicable to the Assets or the Business and relating to pollution,
protection of the environment, the effect of the
environment on employee health, environmental regulation or control or the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance.
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“Environmental Permits” shall have the meaning assigned thereto in Section 3.10(d).
“Equipment” shall have the meaning assigned thereto in Section 1.4(f).
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” shall mean, with respect to any entity, trade or business, any other entity,
trade or business that is, or was at the relevant time, a member of a group described in Section
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the
first entity, trade or business, or that is, or was at the relevant time, a member of the same
“controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
“Estimated Inventory Statement” shall have the meaning assigned thereto in Section 2.4(a).
“Excluded Assets” shall have the meaning assigned thereto in Section 1.5(j).
“Excluded Liabilities” shall have the meaning assigned thereto in Section 1.7.
“Excluded Taxes” shall mean any (i) Income Taxes of SELLER for any period, and (ii) any
non-Income Taxes of SELLER for any period (other than any non-Income Taxes relating to the
Business, the Assets or the Assumed Liabilities for any Post-Closing Period); provided,
however, that Excluded Taxes shall not include any Transfer Taxes other than Transfer Taxes
that shall be borne by the SELLER pursuant to Section 7.7(a). For purposes of this Agreement, in
the case of any Straddle Period, (i) Property Taxes for the Post-Closing Period shall be equal to
the amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the
numerator of which is the number of days during the Straddle Period that is in the Post-Closing
Period and the denominator of which is the number of days in the entire Straddle Period, and (ii)
Taxes (other than Property Taxes) for the Post-Closing Period shall be computed as if such taxable
period began as of the Closing Date.
“Expiration Date” shall have the meaning assigned thereto in Section 8.1.
“Facilities” shall mean each of the manufacturing and packaging facilities in Buffalo, New
York and the kennel facility in Sherburne, New York,
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each owned directly or indirectly by SELLER,
including all right, title and interest of SELLER in and to the underlying land, all buildings,
structures and improvements thereon and all fixtures and fittings attached thereto and contained
therein, together with all appurtenances thereto and all easements benefiting the same (all as more
particularly described in those certain title commitments numbers MTANY-018736 and MTANY-018734
issued by Madison Title Agency, LLC as agent for Chicago Title Insurance Company).
“FDA Act” shall mean the Food, Drug and Cosmetic Act, as amended, including by the Food
Additive Amendment of 1958.
“Final Allocation” shall have the meaning assigned thereto in Section 1.3.
“Final Closing Inventory Statement” shall have the meaning assigned thereto in Section 2.4(d).
“Final Purchase Price” shall have the meaning assigned thereto in Section 1.2.
“Financial Information” shall have the meaning assigned thereto in Section 3.9(a).
“Formulations” shall mean the past and current formulations for each Product.
“GAAP” shall mean generally accepted accounting principles in the United States of America.
“GST” shall have the meaning assigned thereto in Section 7.7(a).
“Hazardous Substance” shall mean any toxic or hazardous materials or substances, including
asbestos, buried contaminants, chemicals, flammable explosives, radioactive materials, petroleum
and petroleum products and other substances defined as, or included in the definition of,
“hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under any
Environmental Law.
“HSR Act” shall have the meaning assigned thereto in Section 2.2(f).
“HST” shall have the meaning assigned thereto in Section 7.7(a).
“Income Taxes” shall mean U.S. federal, state or local or foreign net income or capital gain
Taxes (but not any gross income Taxes and not any withholding Taxes or payroll, employment or
employee Taxes) together with any interest or penalties imposed with respect thereto.
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“Indebtedness” shall mean with respect to any Person, without duplication:
(i) all obligations of such Person for borrowed money;
(ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar
instruments;
(iii) all obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all obligations under any title retention agreement
(but excluding trade accounts payable and other accrued liabilities arising in the ordinary course
of business that are not overdue by 90 days or more or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted);
(iv) all obligations for the reimbursement of any obligor on any letter of credit, banker’s
acceptance or similar credit transaction;
(v) guarantees and other contingent obligations in respect of Indebtedness referred to in
clauses (i) through (iv) above and clause (vii) below;
(vi) all obligations of any other Person of the type referred to in clauses (i) through (v)
above and clause (vii) below that are secured by any Lien on any property or asset of such Person;
and
(vii) all obligations under Currency Agreements and Interest Swap Obligations of such Person.
“Initial Purchase Price” shall have the meaning assigned thereto in Section 1.2.
“Intellectual Property” shall have the meaning assigned thereto in Section 1.4(c)(vi).
“Interest Swap Obligations” shall mean the obligations of any Person pursuant to any
arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to
receive from time to time periodic payments calculated by applying either a floating or a fixed
rate of interest on a stated notional amount in exchange for periodic payments
made by such other Person calculated by applying a fixed or a floating rate of interest on the
same notional amount and shall include, without limitation, interest rate swaps, caps, floors,
collars and similar agreements.
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“Inventory” shall have the meaning assigned thereto in Section 1.4(a).
“IP Basket” shall have the meaning assigned thereto in Section 8.2.
“Liens” shall mean liens, security interests, options, rights of first refusal, claims,
easements, mortgages, charges, indentures, deeds of trust, rights of way, restrictions on the use
of real property, encroachments, licenses to third parties, leases to third parties, security
agreements or any other encumbrances and other restrictions or limitations on use of real or
personal property or irregularities in title thereto.
“Losses” shall have the meaning assigned thereto in Section 8.2.
“Marked Materials” shall have the meaning assigned thereto in Section 5.5(a).
“Material Adverse Effect” shall mean the effect of any circumstance, change, development,
condition or event that (a) is materially adverse to the business, financial condition, assets,
liabilities or results of operations of the Business; provided, however, that
“Material Adverse Effect” shall not include the effect of any circumstance, change, development,
condition or event (i) arising out of or affecting the industry in which the Business operates
generally (provided that the Business is not materially disproportionately affected as compared to
other participants in the same industry), (ii) arising out of or affecting the general economy or
financial markets (provided that the Business is not materially disproportionately affected as
compared to other participants in the same industry), (iii) arising out of the announcement of this
Agreement and the Collateral Agreements and the transactions contemplated hereby and thereby or
(iv) arising out of any action taken or not taken by SELLER or its affiliates at the written
direction, or to the extent required under the terms of this Agreement with the written consent, of
BUYER, or (b) has a material adverse effect on SELLER’s ability to consummate the transactions
contemplated by this Agreement.
“Multiemployer Plan” shall mean any “multiemployer plan” within the meaning of Section
4001(a)(3) of ERISA.
“New Plans” shall have the meaning assigned thereto in Section 6.3(c).
“Non-controlling Party” shall have the meaning assigned thereto in Section 8.6(c).
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“Nonrecoverable Transfer Taxes” shall have the meaning assigned thereto in Section
7.7(a).
“Old Plans” shall have the meaning assigned thereto in Section 6.3(c).
“Omnibus Patent Assignment” shall mean the agreement entered into between BUYER (or one of its
subsidiaries) and SELLER (or one of its subsidiaries), to be executed at Closing, substantially in
the form attached hereto as Exhibit A.
“Omnibus Trademark Assignment” shall mean the agreement entered into between BUYER (or one of
its subsidiaries) and SELLER (or one of its subsidiaries), to be executed at Closing, substantially
in the form attached hereto as Exhibit B.
“Patent License” shall mean the license entered into between BUYER (or one of its
subsidiaries) and SELLER (or one of its subsidiaries), to be executed at Closing, substantially in
the form attached hereto as Exhibit C.
“Patents” shall have the meaning assigned thereto in Section 1.4(c)(v).
“Permits” shall have the meaning assigned thereto in Section 3.6.
“Permitted Liens” shall have the meaning assigned thereto in Section 3.2.
“Person” shall mean any individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust, association, organization,
governmental authority or other entity of any kind or nature.
“Plans” shall have the meaning assigned thereto in Section 3.13(a).
“Post-Closing Period” shall mean any taxable period (or portion thereof) beginning after the
Closing Date.
“Processing Instructions” shall mean the past and current processing instructions for each
Product.
“Products” shall mean the products manufactured and sold listed or described on Schedule
1.1(a) hereto, and any other product sold under any of the Trademarks, and any successor to any
thereof, each a “Product.”
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“Property Taxes” shall mean real, personal and intangible property taxes.
“Proposed Allocation” shall have the meaning assigned thereto in Section 1.3.
“PST” shall have the meaning assigned thereto in Section 7.7(a).
“Purchase Orders” shall have the meaning assigned thereto in Section 1.4(b).
“Qualified Plans” shall have the meaning assigned thereto in Section 3.13(c).
“QST” shall have the meaning assigned thereto in Section 7.7(a).
“Recoverable Transfer Taxes” shall have the meaning assigned thereto in Section 7.7(a).
“Represented Employees” shall have the meaning assigned thereto in Section 6.3(a).
“Retiree Medical Credit Employee” shall mean any Transferred Employee who (i) is a Salaried
Employee, (ii) is between the ages of 50-53 (inclusive) on the Closing Date, and (iii) has at least
9 years of recognized service for purposes of SELLER’s retiree medical program as of the Closing
Date.
“Salaried Employees” shall have the meaning assigned thereto in Section 6.3(a).
“SELLER” shall have the meaning assigned thereto in the preamble.
“SELLER’s FSA” shall have the meaning assigned thereto in Section 6.3(g).
“SELLER’s Knowledge” shall mean (i) to the actual knowledge of Xxxx Xxxxxxxxx, Xxxx Xxxxxxxx,
Xxxx Xxxxxxxx, Xxxx Xxxx and Xxxx Xxxxxxx, and (ii) the knowledge that any one or more such
individuals would reasonably be expected to have in light of the functional responsibilities of
such individuals with respect to the Business.
“Severance Period” shall have the meaning assigned thereto in Section 6.3(e).
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“Specifications” shall mean all past and current raw materials, manufacturing, processing,
packaging, labeling, quality assurance and other specifications for each Product.
“Statements” shall have the meaning assigned thereto in Section 2.4(a).
“Straddle Period” shall mean any taxable period beginning on or prior to and ending after the
Closing Date.
“Supply Agreement” shall mean the Supply Agreement, of even date herewith, between BUYER and
SELLER.
“Tax Claim” shall have the meaning assigned thereto in Section 8.6(c).
“Tax Return” or “Return” shall mean any return, declaration, report, claim for refund,
information return or similar statement filed or required to be filed with respect to any Taxes,
including any schedule or attachment thereto, and including any amendment thereof.
“Taxes” shall mean any income, alternative or add-on minimum, gross receipts, sales, use,
transfer, gains, ad valorem, franchise, profits, license, withholding, payroll,
direct placement, employment, excise, severance, stamp, procurement, occupation, premium, property,
escheat, environmental or windfall profit tax, custom, duty or other tax, or other similar
governmental charge or assessment, together with any interest, additions or penalties with respect
thereto including any liability for any such amounts imposed on any other person, whether such
liability arises under law or contract.
“Third-Party Claim” shall have the meaning assigned thereto in Section 8.6(a).
“Trademarks” shall have the meaning assigned thereto in Section 1.4(c)(i).
“Transfer Date” shall have the meaning assigned thereto in Section 6.3(a).
“Transfer Taxes” shall have the meaning assigned thereto in Section 7.7(a).
“Transferred Employees” shall have the meaning assigned thereto in Section 6.3(a).
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“Transferred Information” shall have the meaning assigned thereto in Section 1.4(d).
“Transition Services Agreement” shall mean the Transition Services Agreement, of even date
herewith, between BUYER and SELLER.
“UPC Codes” shall have the meaning assigned thereto in Section 1.5(e).
“WARN Act” shall have the meaning assigned thereto in Section 6.3(k).
“Welfare Benefits” shall have the meaning assigned thereto in Section 6.3(e).
1.2 PURCHASE AND SALE OF ASSETS. Upon the terms, and subject to the conditions, of
this Agreement, on the Closing Date, SELLER will sell, convey, transfer and assign, or cause to be
sold, conveyed, transferred and assigned, to BUYER (or a subsidiary of BUYER specified by BUYER),
and BUYER will (or will cause one of its subsidiaries to) purchase, the Assets, in each case free
and clear of all Liens other than Permitted Liens, for an aggregate cash purchase price of five
hundred eighty million United States Dollars ($580,000,000) (the “Initial Purchase Price”), as
adjusted pursuant to the Inventory Adjustment set forth in Section 2.4 (the “Final Purchase
Price”), payable as set forth in Article 2.
1.3 ALLOCATION OF FINAL PURCHASE PRICE. As soon as reasonably practicable and in any
event within sixty (60) days after the Closing Date, BUYER shall provide to SELLER for SELLER’s
review and approval a proposed allocation of the Final Purchase Price, if it is available, and if
the Final Purchase Price is not available, the Initial Purchase Price, and the Assumed Liabilities
among the Assets in accordance with Section 1060 of the Code and the Treasury Regulations
thereunder (the “Proposed Allocation”). The parties acknowledge that BUYER’s ability to prepare
the Proposed Allocation within 60 days after Closing is dependent on the cooperation of SELLER as
required by Section 5.1. In the event SELLER’s cooperation is delayed, BUYER and SELLER shall
negotiate in good faith to agree upon a reasonable extension of time for BUYER to prepare the
Proposed Allocation. SELLER will review such Proposed Allocation and, to the extent SELLER
disagrees with the content of the Proposed Allocation, SELLER will inform BUYER of such
disagreement within thirty (30) days after receipt of such Proposed Allocation. SELLER and BUYER
will attempt in good faith to resolve any such disagreement. If SELLER and BUYER are unable to
reach an agreement on the Proposed Allocation within ninety (90) days of the Closing Date, any
disagreement shall be resolved by the CPA Firm
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pursuant to the procedures provided in Section
2.4(c). The Proposed Allocation, as prepared by BUYER if no timely SELLER’s objection has been
given or as adjusted pursuant to any agreement between the parties or as determined pursuant to the
decision of the CPA Firm, when final and binding on all parties, is herein referred to as the
“Final Allocation.” Neither BUYER nor SELLER, nor any of their respective affiliates, shall take
any position on any Tax Return or audit inconsistent with the Final Allocation unless required to
do so by applicable law. SELLER and BUYER shall each provide to the other for review a copy of its
report with respect to this transaction pursuant to Section 1060 of the Code at least ten (10)
business days prior to its submission to the Internal Revenue Service. Such reports shall be
consistent with the Final Allocation. The amount of the Adjustment Payment pursuant to Section
2.4(e), if any, shall be allocated solely to the Inventory.
1.4 ASSETS. The term “Assets” shall mean all right, title and interest of SELLER in
and to the following:
(a) all inventory of SELLER that is current, non-obsolete and useable or saleable in the
ordinary course through primary sales channels as of the Closing Date and that is related primarily
to the Business, including raw materials, supplies (excluding spare parts), packaging materials,
work-in-process and finished products, wherever located, and all prepayments and deposits with
respect to any thereof (the “Inventory”);
(b) all commitments and orders (subject to the terms and conditions of such commitments and
orders) for the purchase of Products from SELLER and its affiliates that have not been shipped
prior to the Closing Date (collectively, the “Purchase Orders”), as well as (to the extent
severable) the portion of any other purchase order of SELLER or its affiliates relating to any of
the Products that have not been shipped prior to the Closing Date, and all rights to payments,
prepayments or deposits therefor;
(c) (i) the registered trademarks and trademark applications listed on Schedule
1.4(c)(i), together with the goodwill associated therewith (the “Trademarks”);
(ii) all copyrights, Formulations, Specifications, Processing Instructions, trade secrets,
know-how, inventions, trade dress, trade names, common-law trademarks and service marks related
exclusively to the Business, together with the goodwill associated therewith;
(iii) all other copyrights, Formulations, Specifications, Processing Instructions, trade
secrets, know-how, inventions, trade dress, trade names, common-law trademarks and service marks,
together with the
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goodwill associated therewith (A) that relate primarily to the Business and (B)
with respect to which SELLER or its affiliates use such intellectual property rights in a manner
that is not significant, it being understood that such intellectual property shall only constitute
Assets if it meets each of the requirements set forth in clauses (A) and (B); provided,
however, that any such trade secrets, know-how or inventions that constitute Assets
pursuant to this Section 1.4(c)(iii) (“Common Transferred IP”) shall be subject to the license
described in Section 6.7;
(iv) the copyright registrations and pending copyright applications listed on Schedule
1.4(c)(iv);
(v) the patents, patent applications and invention disclosure documents listed on Schedule
1.4(c)(v) (the “Patents”); and
(vi) the Internet domain names listed on Schedule 1.4(c)(vi) (the “Domain Names”)
(items (i) through (vi) collectively, the “Intellectual Property”);
(d) all existing product literature, advertising materials and promotional materials and all
other books and records used or held for use primarily in the Business, whether in hard copy or
electronic format, including personnel records, manuals, technical information, computerized data,
employment compensation and benefit records, customer lists, quality records and reports, recipes,
research records, cost information, pricing and sales data, market surveys, marketing know-how and
data, mailing lists, purchase and sale records and correspondence, advertising records, business
plans, test results, drawings, diagrams, training manuals and literature (except SELLER’s corporate
records, Tax Returns and accounting records), except to the extent SELLER is required by applicable
law to retain the same (collectively, the “Transferred Information”);
(e) the Contracts, but only to the extent any required third party consents are obtained (the
“Assigned Contracts”);
(f) all machinery, spare parts, equipment and other property owned by SELLER or its
affiliates, including all telephone equipment, tools, furniture, office equipment, bakery equipment
and motor vehicles, in each case owned by SELLER or its affiliates and located at either Facility
or otherwise used or held for use primarily in the Business, including any software and associated
hardware that is used to operate factory equipment and is owned by SELLER or its affiliates
(collectively, the “Equipment”);
(g) any laptop, desktop (including monitors) or notebook computers located at either Facility
or otherwise used or held for use
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primarily in the Business, that are, in each case, owned by
SELLER or its affiliates, including all software embedded therein and electronic files stored
thereon which are primarily related to the Business, in each case to the extent owned by SELLER or
its affiliates;
(h) subject to BUYER’s covenant in Section 6.6, all user information and data associated with
or derived from those internet web sites associated with the Domain Names;
(i) the Facilities;
(j) all transferable Permits, in each case used or held for use primarily in the conduct of
the Business;
(k) all rights, causes of action, claims and credits to the extent related primarily to the
Business or any Asset or Assumed Liability, including all guarantees, warranties, indemnities and
similar rights in favor of SELLER, in each case arising after the Closing Date;
(l) all kitchen systems, and all quality and/or HAACP systems used in the Facilities and all
local security systems, in each case owned by SELLER or its affiliates;
(m) the dogs and cats located at the kennel facility in Sherburne, New York; and
(n) all goodwill of the Business.
1.5 EXCLUDED ASSETS. The Assets shall not include any assets other than the assets
specifically listed or described in Section 1.4, and, without limiting the generality of the
foregoing, shall expressly exclude (except to the extent described in Section 1.4):
(a) any manufacturing or distribution facilities or equipment other than the Facilities and
the Equipment;
(b) subject to the limited transitional license in Section 5.5, the “Kraft” trademarks, trade
names and trade designations;
(c) any accounts receivable relating to the Business incurred prior to the Closing Date;
(d) cash and cash equivalents of the Business existing prior to the Closing Date;
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(e) the UPC bar codes that relate to the Products (the “UPC Codes”);
(f) any (i) Income Tax refunds (or credits) of SELLER for any period and (ii) any non-Income
Tax refunds (or credits) of SELLER for any period (other than any non-Income Tax refunds (or
credits) relating to the Business, the Assets or the Assumed Liabilities for, or applicable to, any
Post-Closing Period), but not to include any refunds or credits of Transfer Taxes that are borne by
BUYER pursuant to Section 7.7(a);
(g) any Capital Stock;
(h) any laptop, desktop (including monitors) or notebook computers located at either Facility,
that are, in each case, leased by SELLER or any of its affiliates;
(i) all application systems and software, including all computer software, programs and source
disks, and related program documentation, tapes, manuals, forms, guides and other materials, and
all computer hardware and other systems hardware and networking and communications assets,
including servers, databases, backups and peripherals (including all software embedded therein and
electronic files stored thereon), in each case located at either Facility, except as otherwise
specified in Section 1.4; and
(j) any other assets that are not described in Section 1.4 (clauses (a) through (i)
collectively, the “Excluded Assets”).
1.6 ASSUMPTION OF LIABILITIES. BUYER shall assume on the Closing Date and thereafter
shall pay, perform and discharge when due all of the following liabilities, obligations and
commitments relating to, or arising from, the conduct of the Business or the use of Assets, of
whatever kind and nature, primary or secondary, direct or indirect, absolute or contingent, known
or unknown, whether or not accrued (collectively, the “Assumed Liabilities”):
(a) all obligations, liabilities and commitments arising out of the ownership or operation of
the Business after the Closing Date, except to the extent that any such obligations, liabilities or
commitments are retained by SELLER or otherwise are the responsibility of SELLER pursuant to this
Agreement;
(b) the accounts payable relating to the Business incurred after the Closing Date related to
goods or services purchased after the Closing Date;
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(c) all liabilities, obligations and commitments in respect of any and all Products
manufactured by BUYER or its affiliates after the Closing Date, including warranty obligations and
product, recall or withdrawal liabilities, irrespective of the legal theory asserted (it being
understood that any Product the date of manufacture of which cannot be determined pursuant to the
coding on such Product shall be deemed to have been manufactured after the Closing Date if such
Product was sold more than forty-five (45) days after the Closing Date);
(d) all liabilities, obligations and commitments of SELLER under Purchase Orders and that
portion of the other orders described in Section 1.4(b) with respect to Products that in either
case are outstanding as of the Closing Date, but only to the extent arising or relating to
performance after the Closing Date, and excluding any liability, obligation or commitments arising
out of or related to any default by SELLER or any of its affiliates with respect to any such
Purchase Order or other order;
(e) the Assigned Contracts, but only to the extent arising or relating to performance after
the Closing Date, and excluding any liability, obligation or commitment arising out of or related
to any default by SELLER or any of its affiliates with respect to any such Contract;
(f) all liabilities, obligations and commitments for manufacturer’s coupons relating to
Products (i) which coupons are issued, granted, delivered or otherwise made available prior to the
Closing Date and are received by the clearinghouse for reimbursement more than sixty (60) days
after the Closing Date and (ii) which coupons are issued, granted, delivered or otherwise made
available after the Closing Date;
(g) all liabilities, obligations and commitments for trade and consumer promotions relating to
the Products arising from trade promotion activities or events occurring after the Closing Date;
(h) all liabilities, obligations and commitments relating to Products returned or claimed as
spoiled more than forty-five (45) days after the Closing Date or that were manufactured and sold
after the Closing Date (it being understood that any Product the date of manufacture of which
cannot be determined pursuant to the coding on such Product shall be deemed to have been
manufactured after the Closing Date if such Product was sold more than forty-five (45) after the
Closing Date);
(i) all liabilities, obligations and commitments for customer deductions attributable to
invoices with respect to Products sold after the Closing Date, other than for those reasons
addressed by clauses (f) and (h) of this Section 1.6;
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(j) all claims, investigations, losses, liabilities, expenses and obligations relating to any
Environmental Law that arise out of the ownership or operation of the Business or the condition of
the Facilities and the Assets, including those relating to (i) compliance with any Environmental
Law, (ii) the investigation or remediation of any Hazardous Substances whether on-site or off-site,
or (iii) any alleged personal injury or property damage involving any Hazardous Substance;
(k) all liabilities, obligations and commitments for compensation and benefits to Transferred
Employees arising solely out of the employment of Transferred Employees by BUYER after the Closing
Date;
(l) all liabilities, obligations and commitments specifically assumed by BUYER pursuant to
Section 6.3;
(m) all liabilities, obligations and commitments with respect to Taxes relating to the
Business, the Assets and the Assumed Liabilities (other than Excluded Taxes); and
(n) all liabilities, obligations and commitments with respect to the dogs and cats located at
the kennel facility in Sherburne, New York.
BUYER’s obligations under this Section 1.6 shall not be subject to offset or reduction by reason of
any actual or alleged breach of any representation, warranty or covenant contained in this
Agreement or any document delivered in connection herewith or any right or alleged right to
indemnification hereunder. Except for the obligations specifically assumed by BUYER in this
Section 1.6, BUYER shall not be deemed to have assumed or agreed to be responsible for any
liabilities, obligations or commitments of SELLER or its affiliates of any kind or nature, whether
primary or secondary, direct or indirect, absolute or contingent, or known or unknown, and whether
or not accrued.
1.7 EXCLUDED LIABILITIES. Notwithstanding any provision of this Agreement to the
contrary, BUYER shall not assume, or in any way be liable for the payment, performance or discharge
of, any of, and SELLER shall pay, perform and discharge when due all, of the following liabilities,
obligations or commitments (collectively, the “Excluded Liabilities”):
(a) except to the extent assumed by BUYER and its affiliates pursuant to Section 1.6, all
obligations, liabilities and commitments arising out of the ownership or operation of the Business
prior to the Closing Date;
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(b) the accounts payable relating to the Business incurred before the Closing Date, or any
Indebtedness of SELLER or any of its affiliates;
(c) all liabilities, obligations and commitments in respect of any and all Products
manufactured by SELLER or its affiliates prior to the Closing Date, including warranty obligations
and product, recall or withdrawal liabilities, irrespective of the legal theory asserted (it being
understood that any Product the date of manufacture of which cannot be determined pursuant to the
coding on such Product or otherwise shall be deemed to have been manufactured after the Closing
Date if such Product was sold more than forty-five (45) days after the Closing Date);
(d) all liabilities, obligations and commitments for manufacturer’s coupons relating to
Products which coupons are issued, granted, delivered or otherwise made available prior to the
Closing Date and are received by the clearinghouse for reimbursement within sixty (60) days after
the Closing Date;
(e) all liabilities, obligations and commitments for trade and consumer promotions relating to
Products arising from trade promotion activities or events occurring prior to the Closing Date;
(f) all liabilities, obligations and commitments relating to Products returned or claimed as
spoiled within forty-five (45) days after the Closing Date;
(g) all liabilities, obligations and commitments for customer deductions attributable to
invoices with respect to Products sold prior to the Closing Date;
(h) except to the extent assumed by BUYER and its affiliates pursuant to Section 1.6 and
Section 6.3, all liabilities, obligations and commitments incurred prior to the Closing Date under
any employee benefit plans (as defined in Section 3(3) of ERISA) of SELLER and its affiliates and
any Multiemployer Plans covering Business Employees, and all other liabilities, obligations and
commitments in respect of Business Employees incurred prior to the Closing Date, including any
liabilities, obligations, or commitments arising under the “Project Xxx Core Team Members Retention
and Incentive Plan,” other than those specifically assumed by BUYER pursuant to Section 1.6 and
Section 6.3;
(i) all liabilities, obligations, and commitments arising under the “Project Xxx Core Team
Members Retention and Incentive Plan;”
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(j) all liabilities, obligations and commitments with respect to Excluded Taxes; and
(k) all other Liabilities not expressly assumed under this Agreement.
SELLER’s obligations under this Section 1.7 shall not be subject to offset or reduction by reason
of any actual or alleged breach of any representation, warranty or covenant contained in this
Agreement or any document delivered in connection herewith or any right or alleged right to
indemnification hereunder.
1.8 LIMITATION ON ASSIGNMENT OF CONTRACTS. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any Contract or any
right thereunder if an attempted assignment, without the consent of, or other action by, any third
party, would constitute a breach or other contravention thereof or in any way materially adversely
affect the rights of BUYER or SELLER or any of their respective affiliates thereunder. If any such
consent or other action is not obtained before the Closing (including for any Contract that would
be an Assigned Contract but for the absence of such consent), SELLER shall (in addition to its
obligations under Section 7.1(c)) use its commercially reasonable efforts to establish an
arrangement (including subleasing, sublicensing or subcontracting) reasonably acceptable to BUYER
under which BUYER would obtain the benefits and be responsible for the obligations thereunder in
accordance with this Agreement to the maximum extent permitted by applicable law; provided,
however, that if any such consent or other action is obtained after the Closing, SELLER
promptly shall, or shall cause one of its affiliates to, assign such Contract or right to BUYER (or
a subsidiary of BUYER specified by BUYER) for no additional consideration.
ARTICLE 2
CLOSING
CLOSING
2.1 CLOSING. The closing of the purchase and sale of the Assets and of the
transactions contemplated by this Agreement (the “Closing”) shall be held at the offices of
Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 9:00 a.m. New York Time
on the date which is the first fiscal month end for SELLER following satisfaction or waiver of the
conditions specified in Sections 2.2 and 2.3 hereto; provided, however, that if
such day is not a business day, the Closing shall occur on the first business day thereafter; provided,
further, however, that in any event “Closing Date” shall mean 12:01 a.m. New York
time on the day immediately following the day which is the first fiscal month end for SELLER
following
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satisfaction or waiver of the conditions specified in Sections 2.2 and 2.3 hereto.
(a) At the Closing, BUYER shall deliver to SELLER (i) by wire transfer to SELLER’s bank
account per the wire transfer instructions on Schedule 2.1(a) hereto immediately available
funds in an amount equal to the Initial Purchase Price (it being understood that BUYER shall
initiate such wire transfer as promptly as practicable on the date of the Closing after all other
conditions have been satisfied or waived); and (ii) instruments of assumption in form and substance
reasonably satisfactory to SELLER and its counsel evidencing and effecting the assumption by BUYER
of the Assumed Liabilities and such other documents as are specifically required by this Agreement
(it being understood that such instruments shall not require BUYER or any other person to make any
additional representations, warranties or covenants, express or implied, not contained in this
Agreement).
(b) At the Closing, SELLER shall deliver or cause to be delivered to BUYER (i) special
warranty deeds, with respect to the Facilities, subject only to Permitted Liens; and (ii) customary
owner’s or seller’s affidavits required for the purchase of title insurance in form reasonably
acceptable to SELLER (it being understood that such affidavits shall not require SELLER or any
other person to make any additional representations, warranties or covenants, express or implied,
not contained in, or otherwise increase the liability of SELLER beyond its liability pursuant to,
this Agreement).
(c) At the Closing, SELLER shall deliver or cause to be delivered to BUYER such appropriately
executed instruments of sale, assignment, transfer and conveyance in form and substance reasonably
satisfactory to BUYER and its counsel evidencing and effecting the sale and transfer to BUYER of
the Assets not being transferred pursuant to Section 2.1(b) (it being understood that such
instruments shall not require SELLER or any other person to make any additional representations,
warranties or covenants, express or implied, not contained in this Agreement).
(d) At the Closing, SELLER (or one of its subsidiaries) and BUYER (or one of its subsidiaries)
shall execute and deliver the Omnibus Patent Assignment, the Omnibus Trademark Assignment and the
Patent License (together with the Transition Services Agreement and the Supply Agreement, the
“Collateral Agreements”).
(e) At or before the Closing, SELLER shall furnish to BUYER a certificate of non-foreign
status signed by the appropriate party and
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sufficient in form and substance to relieve BUYER of all
withholding obligations under Section 1445 of the Code.
2.2 BUYER’S CONDITIONS TO CLOSING. The obligation of BUYER to purchase and pay for
the Assets and assume the Assumed Liabilities is subject to the satisfaction (or waiver by BUYER)
as of the Closing of the following conditions:
(a) The representations and warranties of SELLER made in Article 3 of this Agreement (other
than the representation set forth in Section 3.16(b) and Section 3.19(a)), disregarding all
qualifications and exceptions contained therein relating to materiality, Material Adverse Effect or
words of similar import, shall be true and correct at and as of the Closing Date as if made on such
date (except for representations and warranties made as of a specified date, which shall be true
and correct only as of such specified date), with only such exceptions as would not, individually
or in the aggregate, have a Material Adverse Effect.
(b) The representation of SELLER made in Section 3.16(b) and Section 3.19(a) shall be true and
correct in all respects on the Closing Date as if made on and as of such date.
(c) SELLER shall have performed or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or complied with by SELLER by the time of the
Closing.
(d) SELLER shall have delivered to BUYER a certificate of SELLER dated the Closing Date and
signed by an authorized officer of SELLER to the effect that each of the conditions specified above
in Sections 2.2(a) through (c) is satisfied in all respects.
(e) No injunction or order of any court or administrative agency of competent jurisdiction
shall be in effect as of the Closing that restrains or prohibits the purchase and sale of the
Assets or the exercise by BUYER of control over the Assets.
(f) The waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 (the
“HSR Act”) shall have expired or been terminated.
(g) SELLER (or one of its subsidiaries) shall have executed and delivered to BUYER (or one of
its subsidiaries) each of the Omnibus Patent Assignment, the Omnibus Trademark Assignment and the
Patent License.
2.3 SELLER’S CONDITIONS TO CLOSING.The obligation of SELLER to sell and deliver
or cause to be sold and delivered the Assets to
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BUYER and to perform its obligations hereunder is subject to the satisfaction (or waiver by SELLER) as of
the Closing of the following conditions:
(a) The representations and warranties of BUYER made in Article 4 of this Agreement,
disregarding all qualifications and exceptions contained therein relating to materiality, Material
Adverse Effect or words of similar import, shall be true and correct at and as of the Closing Date
as if made on such date (except for representations and warranties made as of a specified date,
which shall be true and correct only as of such specified date), with only such exceptions as would
not, individually or in the aggregate, have a material adverse effect on BUYER’s ability to
consummate the transactions contemplated by this Agreement.
(b) BUYER shall have performed or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or complied with by BUYER by the time of the
Closing.
(c) BUYER shall have delivered to SELLER a certificate of BUYER dated the Closing Date and
signed by an authorized officer of BUYER to the effect that each of the conditions specified above
in Sections 2.3(a) and (b) is satisfied in all respects.
(d) No injunction or order of any court or administrative agency of competent jurisdiction
shall be in effect as of the Closing that restrains or prohibits the purchase and sale of the
Assets.
(e) The waiting period under the HSR Act shall have expired or been terminated.
(f) BUYER (or one of its subsidiaries) shall have executed and delivered to SELLER (or one of
its subsidiaries) the Omnibus Patent Assignment, the Omnibus Trademark Assignment and the Patent
License.
(g) BUYER shall have delivered to SELLER properly executed resale exemption certificates for
Georgia, Pennsylvania, Ohio, Illinois, Texas, California, Hawaii, New York, Michigan and Brampton,
Ontario, in each case containing the requisite tax registration numbers for the Inventory being
transferred by SELLER pursuant to this Agreement.
2.4 INVENTORY ADJUSTMENT.
(a) Schedule 2.4(a) is a statement setting forth SELLER’s good faith estimate of the
type and value of the Inventory to be transferred to BUYER pursuant to Section 1.4 on the Closing
Date (the “Estimated Inventory Statement”). As soon as practicable, and in any event within sixty
(60) days following the Closing Date, SELLER shall prepare and deliver
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to BUYER a statement setting
forth the type and value of the Inventory, as of the Closing Date, that is current, non-obsolete
and saleable or useable in the ordinary course. Such statement shall be derived from a physical
taking of the Inventory as of the Closing Date. The value of Inventory shall be determined in a
manner as described on Schedule 2.4(a) in accordance with GAAP applied consistently with
the Financial Information as such relates to the valuation of Inventory (the “Closing Inventory
Statement” and together with the Estimated Inventory Statement, the “Statements”). BUYER shall
provide to SELLER and its accountants access to the books and records, any other information,
including working papers of its accountants, and to any employees of BUYER necessary for SELLER to
prepare the Closing Inventory Statement, to respond to BUYER’s Objection (as defined below) and to
prepare materials for presentation to the CPA Firm (as defined below) in connection with Section
2.4(c). BUYER and SELLER each shall cooperate with and assist the other party as may be reasonably
necessary to carry out the purposes of this Section 2.4.
(b) BUYER shall, within thirty (30) days after the delivery by SELLER of the Closing Inventory
Statement, complete its review thereof. SELLER shall give BUYER reasonable notice of, and BUYER
and its representatives shall have the opportunity to observe, the taking of inventory (which may
begin prior to the Closing Date) in connection with the calculation of the Closing Inventory
Statement, and BUYER and its representatives also shall have the opportunity to verify the status
of the Inventory as current, non-obsolete and saleable or usable in the ordinary course. For a
period of thirty (30) days after delivery of the Closing Inventory Statement, and thereafter as
reasonably necessary for BUYER to respond to SELLER’s comments on any BUYER’s Objection and to
prepare materials for presentation to the CPA Firm, SELLER shall as promptly as practicable make
available to BUYER all books, records, work papers, personnel (including their accountants and
employees) and other materials and sources used by SELLER in or otherwise reasonably related to the
preparation of the Closing Inventory Statement. The Closing Inventory Statement shall be
binding and conclusive upon, and deemed accepted by, BUYER unless BUYER shall have notified SELLER
in writing within thirty (30) days after delivery of the Closing Inventory Statement of any good
faith objection thereto (the “BUYER’s Objection”). The BUYER’s Objection shall set forth a
description of the basis of BUYER’s Objection and the adjustments to the value of Inventory
reflected on the Closing Inventory Statement which BUYER believes should be made. Any items not
disputed during the foregoing thirty (30) day period shall be deemed to have been accepted by
BUYER.
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(c) If SELLER and BUYER are unable to resolve all of their disputes with respect to the
Closing Inventory Statement within thirty (30) days following SELLER’s receipt of BUYER’s Objection
to such Closing Inventory Statement pursuant to Section 2.4(b), they shall refer their remaining
differences to an internationally recognized firm of independent public accountants as to which
SELLER and BUYER mutually agree (the “CPA Firm”) for decision, which decision shall be final and
binding on the parties. SELLER and BUYER shall direct the CPA Firm to issue a written report
setting forth its determination as quickly as practicable. Any expenses relating to the engagement
of the CPA Firm shall be borne proportionately by BUYER and SELLER based on the extent to which
BUYER’s and SELLER’s calculation of the Closing Inventory Statement differ from the CPA Firm’s
determination. SELLER and BUYER shall each bear the fees of their respective auditors incurred in
connection with the determination and review of the Statements.
(d) The Closing Inventory Statement shall become final and binding on the parties upon the
earliest of (i) if no BUYER’s Objection has been given, the expiration of the period within which
BUYER must make its objection pursuant to Section 2.4(b) hereof, (ii) agreement in writing by
SELLER and BUYER that the Closing Inventory Statement, together with any modifications thereto
agreed by SELLER and BUYER, shall be final and binding and (iii) the date on which the CPA Firm
shall issue its written determination with respect to any dispute relating to such Closing
Inventory Statement. The Closing Inventory Statement, as submitted by SELLER if no timely BUYER’s
Objection has been given or as adjusted pursuant to any agreement between the parties or as
determined pursuant to the decision of the CPA Firm, when final and binding on all parties, is
herein referred to as the “Final Closing Inventory Statement.”
(e) Within ten (10) business days following issuance of the Final Closing Inventory Statement,
the net adjustment payment payable pursuant to this Section 2.4(e) (the “Adjustment Payment”) and
interest thereon shall be paid by wire transfer of immediately available funds to a
bank account designated by SELLER or BUYER, as the case may be. The Adjustment Payment shall
be the difference, if any, between (x) the value of Inventory, as reflected on the Final Closing
Inventory Statement, minus (y) the value of Inventory, as reflected on the Estimated Inventory
Statement. The Adjustment Payment, if any, shall be payable by BUYER to SELLER, if positive, and
by SELLER to BUYER, if negative. The Adjustment Payment shall bear interest from the Closing Date
to the date of payment at the prime rate of JPMorgan Chase & Co. in effect on the Closing Date,
which interest shall be calculated on the basis of a 365-day year and the actual number of days
elapsed and such interest shall be paid on the same date and in the same manner as such Adjustment
Payment.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
REPRESENTATIONS AND WARRANTIES OF SELLER
SELLER hereby represents and warrants to BUYER as follows:
3.1 SELLER’S AUTHORITY; NO CONFLICTS.
(a) SELLER is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. SELLER has all requisite corporate power and authority to enter
into this Agreement and the Collateral Agreements and to consummate the transactions contemplated
hereby and thereby. All corporate acts and other proceedings required to be taken by SELLER to
authorize the execution, delivery and performance of this Agreement and the Collateral Agreements
and the consummation of the transactions contemplated hereby and thereby have been duly and
properly taken. This Agreement, the Transition Services Agreement and the Supply Agreement have
been, and the Omnibus Patent Assignment, the Omnibus Trademark Assignment and the Patent License at
the Closing will be, duly executed and delivered by SELLER (or one of its subsidiaries) and,
assuming the due execution hereof (and thereof) by BUYER (or one of its subsidiaries), this
Agreement, the Transition Services Agreement and the Supply Agreement constitute, and the Omnibus
Patent Assignment, the Omnibus Trademark Assignment and the Patent License will constitute, the
valid and binding obligation of SELLER (or one of its subsidiaries), enforceable against SELLER (or
one of its subsidiaries) in accordance with its terms, except as enforcement hereof and thereof may
be limited by applicable bankruptcy, insolvency or other similar laws affecting creditors’ rights
generally and by general equitable principles.
(b) No material third-party consents other than those set forth in Schedule 3.1(b) are
required with respect to SELLER’s execution and
delivery of this Agreement and the Collateral Agreements and the consummation of the
transactions contemplated hereby and thereby. Except as set forth in Schedule 3.1(b), the
execution, delivery and performance by SELLER of this Agreement, the Transition Services Agreement
and the Supply Agreement do not and will not, and the execution, delivery and performance by SELLER
(or one of its subsidiaries) of the Omnibus Patent Assignment, the Omnibus Trademark Assignment and
the Patent License will not, violate, breach, conflict with, constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination, cancellation,
payment or acceleration or to a loss of any benefit relating to the Business to which SELLER is
entitled under any Contract), or result in the creation of any Lien (other than Permitted Liens) on
any Assets, or require action by or filing with, or any permission, authorization, consent or
approval of any governmental authority under (i) any provision of SELLER’s
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certificate of
incorporation or by-laws, (ii) assuming compliance with the applicable requirements of the HSR Act
and any other regulatory approvals listed on Schedule 3.1(b), any statute, rule or
regulation applicable to SELLER or any of its properties or assets, or (iii) assuming the
third-party consents listed in Schedule 3.1(b) are obtained, any Contract, except, in the
case of clauses (ii) and (iii), for such violations, breaches, conflicts, defaults or right of
termination, cancellation, payment, acceleration or Lien or governmental filing or approval that
would not, individually or in the aggregate, have a Material Adverse Effect. For purposes of this
Section 3.1, the effects of Section 1.8 shall be ignored.
3.2 TITLE TO TANGIBLE ASSETS. SELLER has good and valid title to the Assets, free and
clear of all Liens of any nature whatsoever, except (a) mechanics’, carriers’, workmen’s,
repairmen’s or other like Liens arising or incurred in the ordinary course of business for sums not
yet delinquent for a period of more than 60 days and which are not, individually or in the
aggregate, material, (b) Liens for Taxes and other governmental charges that are not due and
payable or the validity of which are being contested in good faith by appropriate proceedings and
for which adequate reserves have been made in accordance with GAAP, (c) with respect to the
Facilities, any easements, rights-of-way, permits, zoning or other similar restrictions and other
similar charges or encumbrances in respect of the Facilities which do not materially detract from
the value of the Facilities, or impair the ownership, occupancy or use of the Facilities, or
interfere in any material respect with the ordinary conduct of the Business or the use of the
Facilities or any Asset, and (d) the matters disclosed in Schedule 3.2 hereof which do not
materially detract from the value of the Facilities, or impair the ownership, occupancy or use of
the Facilities, or interfere in any material respect with the ordinary conduct of the Business or
the use of the Facilities or any Asset (such matters described
in the foregoing clauses (a) through (d), (collectively, the “Permitted Liens”). This Section
3.2 shall not apply to Intellectual Property.
3.3 INTELLECTUAL PROPERTY. Except as set forth in Schedule 3.3:
(a) SELLER or one of its subsidiaries exclusively owns the Intellectual Property (other than
any common law rights in trademarks or trade names included in Intellectual Property);
(b) the United States and Canadian Intellectual Property is free and clear of all
restrictions, Liens (other than Permitted Liens), court orders, injunctions, decrees, writs or
other encumbrances, whether by written agreement or otherwise, excluding claims of invalidity on
the grounds of non-use that could be asserted against the Trademarks and that,
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if true, would not,
individually or in the aggregate, be material to the Business;
(c) To SELLER’s Knowledge, the Intellectual Property outside of the United States and Canada
is free and clear of all material restrictions, Liens (other than Permitted Liens), court orders,
injunctions, decrees, writs or other material encumbrances, whether by written agreement or
otherwise, excluding any claims of invalidity on the grounds of non-use that could be asserted
against the Trademarks registered in countries other than the United States and Canada;
(d) all of the United States and Canadian Intellectual Property (other than any common law
rights in trade marks or trade names included in Intellectual Property) is valid (excluding claims
of invalidity on the grounds of non-use that could be asserted against the Trademarks and that, if
true, would not, individually or in the aggregate, be material to the Business), subsisting and in
full force and effect, and no suits or proceedings (by any governmental agency or any other Person)
have been instituted, are pending or to SELLER’s Knowledge threatened, which challenge any rights
in respect of the Intellectual Property or the validity or enforceability thereof;
(e) except as would not, individually or in the aggregate, have a Material Adverse Effect, all
of the Intellectual Property outside of the United States and Canada is valid, subsisting and in
full force and effect, and no suits or proceedings (by any governmental agency or any other Person)
have been instituted, are pending or to SELLER’s Knowledge threatened, which challenge any rights
in respect of the Intellectual Property or the validity or enforceability thereof;
(f) SELLER has taken all reasonable action to maintain and protect the Intellectual Property
in all material respects;
(g) the Business has not infringed or violated, and is not currently infringing or violating,
the intellectual property rights of any Person, and SELLER has not received any written claim or
notice alleging any such infringement (including any invitation to license, or any written claim
that SELLER must license or refrain from using, the intellectual property rights of any third
party);
(h) SELLER has not granted any license or other right or interest in the Intellectual Property
to any Person;
(i) to SELLER’s Knowledge, no third party is misappropriating, infringing, diluting, or
violating any Intellectual Property;
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(j) other than (i) under an appropriate nondisclosure agreement or contractual provision
relating to confidentiality and non-disclosure or (ii) as would not, individually or in the
aggregate, have a Material Adverse Effect, there has been no disclosure to any third party of
confidential information or trade secrets of SELLER or any affiliate related to any Product or the
Business;
(k) to SELLER’s Knowledge, all Persons who have made material contributions to the development
of any Product have assigned to SELLER all their rights in and to such Product;
(l) neither SELLER nor any of its affiliates has any obligation to pay any third party
(including any SELLER employee) any royalties or other fees for the continued use of any
Intellectual Property, nor will SELLER or any affiliate have any obligation to pay such royalties
or other fees arising from the consummation of the transactions contemplated by this Agreement; and
(m) neither SELLER nor any of its affiliates is a party to any contract under which a third
party would receive or would be entitled to receive a license or any other right to any
Intellectual Property as a result of the consummation of the transactions contemplated by this
Agreement.
3.4 LITIGATION; PROCEEDINGS. Except as set forth in Schedule 3.4, there are
no material (a) outstanding judgments, orders, writs, injunctions or decrees of any court,
governmental agency or arbitration tribunal relating to the Business or any Product or Asset or (b)
actions, suits, claims (including employee grievances which have reached the final stage prior to
arbitration) or legal,
administrative or arbitration proceedings pending or, to SELLER’s Knowledge threatened, which
relate to the Business or any Product or Asset or which seek any material injunctive relief. There
are no investigations that are material to the Business pending or, to SELLER’s Knowledge
threatened, which relate to the Business or any Product or Asset.
3.5 CONTRACTS. SELLER has delivered or made available current and complete copies of
the documents constituting all Contracts as of the date of this Agreement (all of which Contracts
are listed on Schedule 3.5) and will promptly deliver or make available complete copies of
all documents that become Contracts after the date hereof, in each case together with all
amendments thereto. Except as would not, individually or in the aggregate, be material to the
Business, there are no oral Contracts or oral amendments to any written Contracts. The Schedules
referenced below set forth as of the date of this Agreement each Contract included in the Assets
involving:
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(a) Schedule 3.5(a): annual payments (alone or together with all related Contracts)
reasonably expected to be in excess of $250,000;
(b) Schedule 3.5(b): a term in excess of twelve (12) months or that otherwise cannot
be terminated by SELLER on not more than six (6) months notice (without payment of any penalty);
(c) Schedule 3.5(c): any lease or sublease or other occupancy agreements granting to
any third Person the right of use or occupancy for any portion of the Facilities and any
outstanding option or other contractual rights to purchase, lease or use, or rights of first
refusal to purchase the Facilities or any portions thereof or interests therein or to the right to
receive any portion of the income or profits from the sale, operation or development thereof;
(d) Schedule 3.5(d): any joint venture, partnership or similar arrangement;
(e) Schedule 3.5(e): any agreement that would limit in any material respect the
freedom of BUYER after the Closing Date to compete in any line of business or with any Person or in
any area or to engage in any activity or business in any area;
(f) Schedule 3.5(f): the future disposition or acquisition of any Assets or
properties individually or in the aggregate material to the Business, other than dispositions or
acquisitions in the ordinary course of business;
(g) Schedule 3.5(g): other than the Transition Services Agreement and the Supply
Agreement, any arrangement between SELLER or any of its affiliates and SELLER or any other
affiliate of SELLER that will not be terminated at or prior to the Closing; and
(h) Schedule 3.5(h): any lease for any laptop, desktop (including monitors) or
notebook computers, machinery, spare parts, equipment and other property, including all telephone
equipment, tools, furniture, office equipment, xxxxx equipment and motor vehicles, and including
any Contract relating to a Capitalized Lease Obligation.
Each Contract is a valid and binding obligation of SELLER and, to SELLER’s Knowledge, of each other
party thereto, and is in full force and effect. Except as set forth in Schedule 3.5(i),
SELLER and, to SELLER’s Knowledge, each other party to each Contract, has performed all material
obligations required to be performed by it to date thereunder and is not (with or without the lapse
of time or the giving of notice, or both) in breach or default in any
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material respect thereunder.
As of the date hereof, SELLER has not received any written notice of the intention of any party to
terminate any Contract or that any party considers SELLER to be in material breach or material
default thereunder or in potential breach in any material respect or default thereunder. Neither
SELLER, nor to SELLER’s Knowledge, any other party thereto is in breach of any obligation under any
Purchase Order, which breach would, individually or in the aggregate, be material to the Business.
Such Purchase Orders have been entered into in the ordinary course of business in all material
respects. SELLER has not received any written notice of the intention of any party to cancel any
Purchase Order, which cancellations would, individually or in the aggregate, be material to the
Business.
3.6 COMPLIANCE WITH APPLICABLE LAWS. Except as set forth on Schedule 3.6, the
Business is being conducted and the Facilities are being maintained, and during the last two years
the Business has been conducted and the Facilities have been maintained, in compliance in all
material respects with all applicable statutes, laws, ordinances, rules, orders and regulations of
any governmental authority or instrumentality that are material to the conduct of the Business.
SELLER has obtained or made all required material permits, approvals, orders, authorizations,
consents, licenses, certificates, franchises, exemption of, or filings and registrations with, any
governmental authority (collectively “Permits”) necessary for the operation of the Business as
currently conducted and the ownership of the Assets. All such Permits are listed on Schedule
3.6. No written, or to SELLER’s Knowledge, oral notice, charge, claim, action or assertion has
been received by SELLER or has been
filed, commenced or, to SELLER’s Knowledge, threatened against SELLER alleging any violation
of a Permit.
3.7 BROKERS. There is no broker or other person who would have any valid claim
against BUYER for a fee, commission or brokerage in connection with this Agreement or the
transactions contemplated hereby as a result of any agreement, understanding or action by SELLER.
SELLER shall be solely responsible for all fees and expenses of any broker, finder or other person
engaged by or on behalf of it or otherwise claiming through it in connection with the transactions
contemplated by this Agreement.
3.8 INVENTORY. At the Closing, except to the extent excluded from the Final Closing
Inventory Statement, the Inventory will (a) be current, non-obsolete and saleable in the ordinary
course and pursuant in all material respects to all applicable laws, including the FDA Act, and (b)
meet in all material respects applicable manufacturing specifications and be free of defects in all
material respects.
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3.9 FINANCIAL INFORMATION; PROPERTY, PLANT AND EQUIPMENT; SPARE PARTS.
(a) Schedule 3.9(a) sets forth the unaudited pro forma schedule of incremental
earnings before interest, taxes, depreciation and amortization for the Business for the 53-week
period ended December 31, 2005 (the “Financial Information”). Except for the elimination of
certain allocated costs and certain adjustments to marketing accruals to align accrual reversals
with the year the accrual was originally recorded, the Financial Information (i) has been prepared
in conformity with SELLER’s internal management accounting policies applied on a basis consistent
with prior years, (ii) has been prepared from SELLER’s books and records, (iii) has eliminated all
inter-company sales and profits, and (iv) presents fairly in all material respects the results of
operations of the Business as of the date indicated therein.
(b) Schedule 3.9(b) sets forth an unaudited statement of the net book value of
property, plant and equipment and spare parts, in each case relating to the Assets and Assumed
Liabilities being transferred to or assumed by BUYER, as of December 31, 2005, which statement (i)
has been prepared in conformity with SELLER’s internal management accounting policies applied on a
basis consistent with prior years, (ii) has been prepared from SELLER’s books and records, (iii)
has eliminated all inter-company sales and profits, and (iv) presents fairly in all material
respects the financial information indicated therein as of the date indicated therein.
(c) SELLER’s books and records with respect to the Business are subject to the controls and
procedures of SELLER, are maintained consistent with GAAP, and are correct in all material
respects.
3.10 ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the materials listed on Schedule 3.10, neither SELLER nor
any of its affiliates has (i) stored, released, handled or disposed of any Hazardous Substances on,
under, from or at any of the Facilities or any other properties, other than in a manner that would
not, individually or in the aggregate, have a Material Adverse Effect, (ii) any knowledge of the
presence of any Hazardous Substances on, under or at any of the Facilities or any other property
but arising from the Facilities, other than in a manner that would not, individually or in the
aggregate, have a Material Adverse Effect or (iii) received any written notice (A) of any violation
of any Environmental Laws, (B) of the institution or pendency of any suit, action, claim,
proceeding or investigation by any governmental entity or any third party in connection with any
such violation, (C) requiring the response to or remediation of Hazardous Substances at or arising
from
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any of the Facilities or any other properties or (D) demanding payment for response to or
remediation of Hazardous Substances at or arising from any of the Facilities or any other
properties, except for notices relating to any matter that would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) Except as disclosed in the materials listed on Schedule 3.10, the operations of
the Business and the use of the Assets are being maintained and during the last five years have
been maintained in compliance in all material respects with all Environmental Laws.
(c) SELLER has made available to BUYER complete and correct copies of all material studies,
reports, surveys, assessments, audits, correspondence, investigations, analysis, tests, and other
documents (whether in hard copy or electronic form) in SELLER’s possession regarding the presence
or alleged presence of Hazardous Substances at, on, or affecting the Business, or regarding
SELLER’s compliance with any Environmental Law.
(d) Except as disclosed in the materials listed on Schedule 3.10, SELLER has obtained
and owns or possesses all Permits required under Environmental Law necessary for the operation of
the Business as it is presently conducted and to use the Assets as currently used (collectively,
the “Environmental Permits”), and SELLER is in compliance in all material
respects with all such Environmental Permits. All such Environmental Permits are listed on
Schedule 3.10(d).
(e) Except as set forth in this Section 3.10, no representations or warranties are being made
with respect to Environmental Law matters.
3.11 PRODUCTS. Except as set forth on Schedule 3.11, since January 1, 2003 no
Products manufactured, sold or delivered by the Business have been adulterated, contaminated,
misbranded or mislabeled in any material respect within the meaning of the FDA Act, or any other
federal, state or local law, rule or regulation. During the three-year period prior to the date
hereof, there has been no recall or withdrawal by SELLER or any of its affiliates of any Product or
any other product of the Business or otherwise manufactured at the Buffalo Facility.
3.12 LABOR MATTERS.
(a) Except as set forth in Schedule 3.12(a), SELLER is not a party to or bound by any
collective bargaining agreement or other labor-related agreement with any labor union or labor
organization with respect to Business Employees. SELLER is in material compliance with the terms,
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conditions and obligations contained in any such agreement set forth on Schedule 6.3(d).
(b) No material work stoppage, slowdown, lockout, strike, or other material labor dispute
concerning Business Employees is pending or, to SELLER’s Knowledge, threatened.
(c) SELLER has made available to BUYER a complete and accurate list (giving job title, age,
credited service, hourly rate or annual base salary, employment status, and bonus or incentive
compensation potential) as of the date hereof of each Business Employee. SELLER shall update such
list prior to the Closing Date (including to add the names and accrued vacation of each Business
Employee) and shall deliver such updated list to BUYER.
3.13 EMPLOYEE BENEFITS.
(a) Schedule 3.13(a) lists each material plan, agreement, arrangement or policy
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, change in control benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension, health, medical or life
insurance benefits), or other employee benefits, in each case, which is either maintained,
administered, sponsored or contributed to by SELLER and its affiliates for the benefit of any
Business Employee (as defined in Section 6.3(a)), other than Multiemployer Plans (collectively, the
“Plans”).
(b) With respect to each Plan, SELLER has made available to BUYER the current summary plan
description and any material modifications thereto for each Plan in respect of which there exists a
summary plan description, and has made available to BUYER a copy of each Plan with respect to which
no summary plan description exists.
(c) Schedule 3.13(c) identifies each Plan that is intended to be a “qualified plan”
within the meaning of Section 401(a) of the Code (“Qualified Plans”). The Internal Revenue Service
has issued a favorable determination letter with respect to each Qualified Plan and the related
trust on or after January 1, 1997 that has not been revoked.
(d) Except as would not, individually or in the aggregate, have a Material Adverse Effect,
there does not now exist, nor do any
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circumstances exist that would result in, any liabilities
under (i) Title IV of ERISA, (ii) Section 302 of ERISA, or (iii) Sections 412 and 4971 of the Code,
in each case, that would reasonably be expected to be a liability of the Business following the
Closing (other than obligations assumed pursuant to Section 6.3(d)).
(e) The only Multiemployer Plans to which SELLER and its affiliates are obligated to
contribute on behalf of the Business Employees are the Bakery and Confectionery Union and Industry
International Pension Fund (the “BCT Fund”) and the Bakery and Confectionary Union and Industry
International Health Benefits Fund (the “BCT Welfare Fund”). The BCT Welfare Fund does not as of
the date hereof incorporate any mechanism or provision by which any withdrawal penalty, accelerated
contribution obligation, or other similar liability would reasonably be expected to be imposed on
BUYER upon a cessation of participation (assuming for this purpose that BUYER complies with all
terms of such fund, any applicable collective bargaining agreements, and applicable law).
3.14 TAXES. Except as would not, individually or in the aggregate, have a Material
Adverse Effect, (a) none of the Assets is “tax exempt use property” within the meaning of Section
168(h) of the Code; (b) none of the Assets is a lease made pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954; (c) no liens for
Taxes have been filed and no claims for Taxes have been asserted in writing with respect to
the Business, the Assets or the Assumed Liabilities; and (d) SELLER has paid all Taxes required to
be paid by it with respect to the Business, the Assets and the Assumed Liabilities. SELLER
warrants to BUYER that the seller of any Canadian Assets is duly registered for GST, QST, HST and
PST in Canada.
3.15 CUSTOMERS; SUPPLIERS.
(a) Schedule 3.15(a) lists the ten (10) largest (in terms of dollar amount) customers
of the Business as conducted by SELLER for the year ended on December 31, 2005. With respect to
the period following December 31, 2005, as of the date hereof, no such customer has materially
reduced its business with the Business or has provided written or, to SELLER’s Knowledge, oral
notice indicating that it will terminate or materially reduce its business with the Business.
(b) Schedule 3.15(b) lists the ten (10) largest (in terms of dollar amount) suppliers
of the Business as conducted by SELLER for the year ended on December 31, 2005.
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3.16 CONDITION AND SUFFICIENCY OF ASSETS.
(a) The Assets, whether owned or leased, are in good operating condition and repair (normal
wear and tear excepted) and are adequate for the purposes for which they are presently used. The
Facilities have adequate utility service for the operation of the Business as currently operated
and adequate access to public roads or valid easements over private streets or private property for
such ingress and egress from such property for the operation of the Business as currently operated.
No portion of the Facilities is subject to any material condemnation, notice, order or proceeding
by any public or quasi-public authority and, to SELLER’s Knowledge, no such material notice, order
or proceeding is threatened.
(b) The Assets, together with (i) the services specified in Annex A of the Transition Services
Agreement that SELLER will provide to BUYER pursuant to the Transition Services Agreement, (ii) the
Product that SELLER will provide to BUYER pursuant to (and as defined in) the Supply Agreement and
(iii) the patents to be licensed pursuant to the Patent License (in each case in the form of the
Agreement or Annex existing as of the date hereof), constitute all of the assets that are used in
or necessary to conduct, and are sufficient to permit BUYER to conduct, the Business in all
material respects in the manner in which it has heretofore been conducted, other
than (except to the extent provided pursuant to the Transition Services Agreement) corporate
treasury, regulatory, tax, legal, corporate-wide information services, public relations, human
resources and certain corporate-wide accounting, financial and administrative functions.
3.17 COUPON ACTIVITIES. Schedule 3.17 sets forth a list of all manufacturer’s
coupon activities or programs for the Business authorized and distributed by SELLER and in effect
as of the date hereof.
3.18 PROMOTIONS. Schedule 3.18 sets forth a description of each trade or
consumer promotion instituted on behalf of SELLER and that (a) relates to the Products, (b) will
continue beyond the date hereof and (c) potentially involves in the aggregate an amount in excess
of $100,000. Such descriptions include a summary of the pricing terms of the trade or consumer
promotion and the period for which it is in effect.
3.19 ABSENCE OF CERTAIN EVENTS. Since December 31, 2005, (a) no circumstance, change,
development, condition or event has arisen or occurred that has had, individually or in the
aggregate, a Material Adverse Effect, (b) SELLER has conducted the Business in all material
respects in the ordinary course, consistent with past practice, and (c) there has been no material
damage to any portion of the Facilities caused by fire or casualty that has not been fully
repaired.
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3.20 NO OTHER REPRESENTATIONS OR WARRANTIES. SELLER makes no representation or
warranty to BUYER, express or implied, with respect to the Business, the Assets or the Assumed
Liabilities, including any representation or warranty as to merchantability, fitness for a
particular purpose or future results, other than as expressly provided in this Article 3 or the
Collateral Agreements or in any certificate delivered pursuant hereto or thereto. Without limiting
the foregoing, SELLER does not make any representation or warranty to BUYER, express or implied,
with respect to (a) the information set forth in the confidential information memorandum
distributed by or on behalf of SELLER in connection with the transactions contemplated hereby, (b)
any management presentation or (c) any financial projection or forecast relating to the Business.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
REPRESENTATIONS AND WARRANTIES OF BUYER
BUYER hereby represents and warrants to SELLER as follows:
4.1 BUYER’S AUTHORITY; NO CONFLICTS.
(a) BUYER is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. BUYER has all requisite corporate power and authority to enter into
this Agreement and the Collateral Agreements and to consummate the transactions contemplated hereby
and thereby. All corporate acts and other proceedings required to be taken by BUYER to authorize
the execution, delivery and performance of this Agreement and the Collateral Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly and properly taken.
This Agreement, the Transition Services Agreement and the Supply Agreement have been, and the
Omnibus Patent Assignment, the Omnibus Trademark Assignment and the Patent License at the Closing
will be, duly executed and delivered by BUYER (or one of its subsidiaries) and, assuming the due
execution hereof (and thereof) by SELLER (or one of its subsidiaries), this Agreement, the
Transition Services Agreement and the Supply Agreement constitute, and the Omnibus Patent
Assignment, the Omnibus Trademark Assignment and the Patent License when executed will constitute,
the valid and binding obligation of BUYER (or one of its subsidiaries), enforceable against BUYER
(or one of its subsidiaries) in accordance with its terms, except as enforcement hereof and thereof
may be limited by applicable bankruptcy, insolvency or other similar laws affecting creditors’
rights generally and by general equitable principles.
(b) No material third-party consents are required with respect to BUYER’s execution and
delivery of this Agreement and the Collateral Agreements and, except as set forth in Schedule
4.1(b), the consummation
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of the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement, the Transition Services Agreement and the Supply
Agreement by BUYER do not and will not, and the execution, delivery and performance by BUYER of the
Omnibus Patent Assignment, the Omnibus Trademark Assignment and the Patent License will not,
violate, breach, conflict with, constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, payment or acceleration) under, or
result in the creation of any Lien on any asset of BUYER, or require action by or filing with, or
any other permission, authorization, consent or approval of any governmental authority under (i)
any provision of BUYER’s certificate of incorporation or
by-laws, (ii) assuming compliance with the applicable provisions of the HSR Act and any other
regulatory approvals, any statute, rule or regulation applicable to BUYER or any of its properties
or assets or (iii) except as set forth in Schedule 4.1(b), any contract of BUYER except, in
the case of clauses (ii) or (iii), for such violations, breaches, conflicts, defaults or right of
termination, cancellation, payment or acceleration or Lien or governmental filing or approval that
would not, individually or in the aggregate, have a material adverse effect on the ability of BUYER
to consummate the transactions contemplated by this Agreement.
4.2 ACTIONS AND PROCEEDINGS. There are no (a) outstanding judgments, orders, writs,
injunctions or decrees of any court, governmental agency or arbitration tribunal against BUYER that
would or could prevent, or otherwise materially adversely affect the ability of BUYER to
consummate, the transactions contemplated hereby; or (b) actions, suits, claims or legal,
administrative or arbitration proceedings or investigations pending or, to the best knowledge of
BUYER, threatened against BUYER, that would or could prevent, or otherwise materially adversely
affect the ability of BUYER to consummate, the transactions contemplated hereby.
4.3 AVAILABILITY OF FUNDS. BUYER has, and will at Closing have, cash available or
available borrowing facilities or commitments which, together with available cash, is and will be
at Closing sufficient to enable it to consummate the transactions contemplated by this Agreement.
True and complete copies of any facilities and commitments as of the date hereof have been provided
to SELLER.
4.4 BROKERS. There is no broker or other person who would have any valid claim
against SELLER for a fee, commission or brokerage in connection with this Agreement or the
transactions contemplated hereby as a result of any agreement, understanding or action by BUYER.
BUYER shall be solely responsible for all fees and expenses of any broker, finder or other
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person
engaged by or on behalf of it or otherwise claiming through it in connection with the transactions
contemplated by this Agreement.
4.5 TAX MATTERS. BUYER warrants to SELLER that the buyer of any Canadian Assets is,
as of the date hereof, duly registered for GST and PST in Canada and will, as of the Closing, be
registered for GST,QST, HST and PST in Canada.
ARTICLE 5
COVENANTS OF SELLER
COVENANTS OF SELLER
SELLER covenants and agrees as follows:
5.1 ACCESS. Prior to the Closing, subject to applicable law, SELLER will: (i) grant
to BUYER or cause to be granted to BUYER and its representatives, employees, counsel and
accountants (collectively who are subject to the same obligations of secrecy and non-use as BUYER)
reasonable access, during normal business hours and upon reasonable notice, to the personnel,
properties, books and records of SELLER relating primarily to the Business or otherwise material to
the Business, Assets or Products, including access to the Facilities; (ii) furnish to BUYER, its
accountants, counsel, consultants, engineers, advisors, agents and other representatives such
financial and operating data and other information relating to the Business (including for purposes
of determining the allocations described in Sections 1.3 and 7.7) as such Persons may reasonably
request; (iii) permit BUYER to make such inspections and to make copies of such books and records
as it may reasonably require; and (iv) consult with BUYER at BUYER’s reasonable request, regarding
the Business, the Assets and the Products; provided, that such access does not unreasonably
interfere with the normal operations of SELLER or the Business, and provided
further, that all requests for access shall be directed
to Xxxx Xxxx, Senior Director, Business Planning and Analysis, or such other person as SELLER
shall designate from time to time, so long as any such person is reasonably available.
5.2 ORDINARY CONDUCT OF THE BUSINESS. Except as permitted by the terms of this
Agreement, from the date hereof to the Closing, SELLER will cause the Business to be conducted in
all material respects in the ordinary course consistent with past practice and shall use its
commercially reasonable efforts to preserve intact in all material respects the Business and
relationships with third parties and employees of the Business and the goodwill of the Business.
Without limiting the generality of the foregoing, except as provided in this Agreement, SELLER
shall not, without the prior written consent of BUYER (not to be unreasonably withheld):
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(a) Sell, lease, license or otherwise dispose of or abandon any of the Assets, except for
sales of finished goods inventory in the ordinary course of business consistent with past practice.
(b) Mortgage, pledge or grant any security interest in any of the Assets or otherwise permit
or suffer to exist any Lien on any of the Assets other than Permitted Liens.
(c) Except (i) as may be required by applicable law or by a binding agreement existing on the
date hereof and disclosed on Schedule 3.12(a), (ii) for normal recurring salary increases
in the ordinary course of business consistent with past practice, or (iii) for any action taken
with respect to a Plan that applies uniformly to both Business Employees and similarly situated
other employees of SELLER and its affiliates, increase the compensation or benefits of any employee
of the Business (other than the payment of, or promise to pay, stay or similar bonuses that are the
sole responsibility of SELLER and as disclosed in writing to BUYER prior to the Closing) or
otherwise enter into or amend any Plans, including any employment, severance, consulting,
termination or other agreement with a Business Employee.
(d) Enter into, modify in any material respect, amend in any material respect or terminate any
material Contract or waive, release or assign any material rights thereunder, or otherwise enter
into any contract or transaction relating to the purchase of assets for use in the Business in
excess of $500,000 individually.
(e) Enter into any Contract containing any provision that (i) limits SELLER’s ability (or the
ability of any subsidiary of SELLER) to create,
incur, assume or suffer to exist any Liens on its property (other than (A) any customary
non-assignment provision of any contract or lease governing a leasehold or ownership interest of
SELLER or any subsidiary of SELLER and (B) any such provision in favor of any holder of a
Capitalized Lease Obligation solely to the extent such provision relates to the property subject to
such Capitalized Lease Obligation), (ii) requires the grant of a Lien to secure an obligation of
such Person if a Lien is granted to secure another obligation of such Person or (iii) limits the
ability of any subsidiary of SELLER to pay dividends, make loans or advances to SELLER and its
affiliates or transfer assets to SELLER and its affiliates.
(f) Enter into any agreement, contract, commitment or arrangement to do anything described
above that it is prohibited from doing.
Without limiting the foregoing, SELLER shall consult with BUYER regarding renewal, extension,
amendment or modification of any Contract set forth on
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Schedule 3.5(a) or 3.5(b),
the term of which would otherwise expire within six (6) months of the Closing Date and, at the
written request of BUYER, shall reasonably cooperate with BUYER and take commercially reasonable
steps to seek to extend or amend the Contracts listed on Schedule 5.2 so that such
contracts will continue for a term of at least six (6) months following the Closing Date on terms
substantially the same or no worse than the terms currently in effect, it being understood that
BUYER shall be solely responsible for any costs incurred in connection with SELLER taking any of
such commercially reasonable steps.
5.3 DELIVERY. At the Closing SELLER shall make available to BUYER all Formulations,
Specifications and Processing Instructions corresponding to each Product (except that, with respect
to past Formulations, Specifications and Processing Instructions, this delivery obligation shall
only apply to the extent such past Formulations, Specifications and Processing Instructions are
available).
5.4 ACCOUNTS RECEIVABLE. SELLER shall promptly forward or cause to be forwarded to
BUYER any and all proceeds from accounts receivable that are not Excluded Assets relating to the
Products and which proceeds are received by SELLER after the Closing Date and all associated
supporting documents covering cash receipts and customer deductions associated with sales activity
after the Closing Date.
5.5 USE OF TRADEMARKS, TRADE NAMES AND DESIGNATIONS.
(a) To the extent that “Kraft” trademarks, trade names or trade designations or any other
trademark, trade name, logo or designation belonging to SELLER following the Closing Date appear on
any Inventory, packaging, advertising materials and any other materials related to the Business
transferred to BUYER pursuant to Section 1.4 hereof or otherwise transferred to BUYER by SELLER
(the “Marked Materials”), BUYER (i) may make packaging materials constituting Marked Materials for
a period not to exceed twelve (12) months following the Closing Date, and (ii) may use and sell or
otherwise distribute such Marked Materials in the ordinary course of business consistent with past
practice for a period not to exceed twelve (12) months following the Closing Date without
materially altering or modifying such Marked Materials, or removing such trademarks, trade names or
designations, but shall not use such trademarks, trade names or designations in any other manner
without the prior written consent of SELLER. Notwithstanding the foregoing, SELLER shall not as a
result of this Section 5.5 be liable for any obligations, liabilities or commitments in respect of
any Marked Materials shipped or sold at any time after the Closing Date (and for the avoidance of
doubt this Section 5.5 shall not affect the liabilities
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assumed by BUYER or retained by SELLER
pursuant to Sections 1.6 and 1.7). In addition, the parties hereto agree to those matters set
forth in Schedule 5.5(a) regarding specified designations with respect to Product
packaging.
(b) Except as otherwise required by applicable law, in no event shall BUYER use the “Kraft”
trademark or any other trademark, trade name, logo or designation belonging to SELLER or any of its
affiliates following the Closing Date in connection with the advertising or publicizing of the
Products other than in accordance with Section 5.5(a). Notwithstanding the foregoing, BUYER may
use such a trademark, trade name, logo or designation belonging to SELLER or any of its affiliates
(1) that appears on a real property building for a period of two months following the Closing,
after which period such trademark, trade name, logo or designation belonging to SELLER may no
longer appear on BUYER’s real property building, or (2) in connection with any ongoing consumer
promotion as of the Closing Date, through the expiration of such promotion, or in in-process
advertisements, in the event that such trademark, trade name, logo or designation belonging to
SELLER cannot be revised without undue effort or substantial cost.
5.6 CONFIDENTIAL INFORMATION. Except as otherwise provided herein or in the
Collateral Agreements, after the Closing Date, SELLER shall keep secret and retain in
strictest confidence, and shall not use for the benefit of itself or others, all information
primarily relating to the Business, the Assets, the Assumed Liabilities or the Products that SELLER
did not make generally publicly available during the time period when SELLER conducted the Business
(the “Confidential Information”), including Formulations, Specifications, Processing Instructions,
“know-how,” trade secrets, customer lists, details of client or consultant contracts, pricing
policies, marketing plans or strategies, product development techniques or plans, business
acquisition plans, designs and design projects, inventions and research projects primarily relating
to the Business, the Products, the Assets or the Assumed Liabilities, and shall not disclose such
Confidential Information to anyone within SELLER without a need to know or otherwise outside of
BUYER except with BUYER’s express written consent. Without limiting the foregoing, SELLER shall
maintain the confidentiality of the Formulations in accordance with the policies and procedures
that were applicable to the Formulations prior to the sale of the Business.
5.7 NOTICES OF CERTAIN EVENTS. SELLER shall as promptly as reasonably practicable
notify BUYER of:
(a) Any material notice or other communication from any Person alleging that the consent of
such Person is or may be required in connection with the transactions contemplated by this
Agreement;
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(b) Any material notice or other communication from any governmental authority in connection
with the transactions contemplated by this Agreement;
(c) Any actions, suits, claims, investigations or proceedings commenced relating to the
Business or any Assets that, if pending on the date of this Agreement, would have been required to
have been disclosed pursuant to Section 3.4; or
(d) Subject to applicable law, between the date hereof and the Closing Date, SELLER shall
provide to BUYER monthly statements of revenue and expenses relating exclusively to the Business as
currently prepared on a monthly basis for SELLER.
5.8 AUDITED BUSINESS FINANCIAL STATEMENTS. SELLER will provide or cause to be
provided to BUYER following the Closing, such financial information as may be required by BUYER to
comply with its obligations under Regulation S-X of the Securities Act of 1933, as amended,
provided that BUYER shall reimburse SELLER for its out of pocket costs in providing such
information. Such information shall be prepared in accordance with GAAP, including all required
footnotes, and in compliance with the requirements for the form and substance of financial
statements (including the periods to be covered) set forth in Regulation S-X and be provided in a
timely manner and, in any event, no later than sixty (60) days from Closing. Without limiting the
generality of the foregoing, at BUYER’s expense, SELLER shall use its commercially reasonable best
efforts to cause its independent auditors to perform any audit required in connection with such
information and to deliver to BUYER their report thereon in a timely manner following the Closing,
together with any consents required to use or disclose such report. Following the Closing, to the
extent required by BUYER’s SEC reporting obligations, SELLER will provide to BUYER at such times as
BUYER may reasonably request and at BUYER’s sole cost and expense additional financial information
(such as unaudited interim financial statements of the Business prepared in accordance with GAAP
and Regulation S-X). SELLER consents to the use by BUYER of all such information provided solely
for such purposes. In addition, the parties hereto agree to those matters regarding the
preparation of the audited and unaudited financial statements set forth in Schedule 5.8.
5.9 TRADE AND CONSUMER PROMOTIONS. SELLER shall deliver to BUYER on the Closing Date
a written list of all trade and consumer promotions relating to the Products.
5.10 SCHEDULES UPDATE. In the event that between the date hereof and the Closing
Date, SELLER determines in its good faith judgment
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that items not included on Schedule
1.4(c)(i), Schedule 1.4(c)(iv), Schedule 1.4(c)(v), or Schedule
1.4(c)(vi) relate exclusively to the Business and would constitute Trademarks, Copyrights,
Patents or Domain Names, SELLER shall update the applicable Schedule to add any such items.
ARTICLE 6
COVENANTS OF BUYER
BUYER covenants and agrees as follows:
6.1 CONFIDENTIALITY. BUYER acknowledges that all information provided to it by SELLER
and its affiliates, agents and representatives is subject to the terms of a confidentiality
agreement between BUYER and SELLER (the “Confidentiality Agreement”), the terms of which are
incorporated herein by reference. Effective upon, and only upon, the Closing, information provided
to BUYER or its affiliates that relates primarily to the Business, the Assets and the Assumed
Liabilities shall become BUYER’s information; and BUYER acknowledges that any and all information
provided to it by SELLER concerning SELLER (other than information relating primarily to the
Business, the Assets and the Assumed Liabilities) shall remain subject to the terms and conditions
of the Confidentiality Agreement after the date of the Closing.
6.2 ACCOUNTS RECEIVABLE. BUYER shall promptly forward or cause to be forwarded to
SELLER any and all proceeds from accounts receivable that are Excluded Assets relating to the
Products which proceeds are received by BUYER after the Closing Date.
6.3 EMPLOYEE BENEFITS.
(a) Schedule 6.3(a) contains a list of each employee of SELLER and its affiliates who
is employed in the Business (such list to be updated prior to Closing). All such employees are
referred to herein as the “Business Employees.” All Business Employees who are union represented
employees covered by a collective bargaining agreement are referred to herein as the “Represented
Employees,” and all Business Employees who are not Represented Employees are referred to herein as
the “Salaried Employees.” BUYER shall, or shall cause one of its affiliates to, make offers
of employment to all Business Employees (including those absent due to vacation, holiday or
approved leave of absence, including military leave and leave under the Family and Medical Leave
Act) other than Employees on Disability Leave (as defined below). Business Employees who accept
such offer of employment, as of the effective date of their employment with BUYER or one of its
affiliates, shall be referred to as “Transferred Employees.” BUYER shall, or shall cause one of
its affiliates to, make offers
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of employment to each Business Employee who is, as of the Closing
Date, absent due to short-term or long-term disability (the “Employees on Disability Leave”) who is
able and willing to return to work within the first year following the Closing Date;
provided that a job is available at such time as determined in BUYER’s sole
discretion. Such offer shall be made following BUYER’s receipt of a medical authorization that
releases the Employee on Disability Leave to return to work within the first year following the
Closing Date. Each Employee on Disability Leave who accepts such offer and actually returns to
work not later than one year after the Closing Date shall be considered a Transferred Employee,
effective as of the date of such return (the date of such return shall be considered the “Transfer
Date” of each such employee, and the Closing Date shall be considered the Transfer Date for each
other Transferred Employee).
(b) Post-Closing Benefits Generally. As of the Transfer Date of any Transferred
Employee, such Transferred Employee shall cease active participation in the Plans. From the
Closing Date through December 31, 2007 (the “Benefits Continuation Period”), BUYER shall provide,
or shall cause one of its affiliates to provide, to each Transferred Employee who is employed by
BUYER and its affiliates (i) base salary and target cash incentives (subject to the terms of
BUYER’s incentive compensation program except with respect to grade level target incentive
percentage thresholds) no less favorable than those provided such employee immediately prior to the
Closing Date, and (ii) compensation and employee benefits that are no less favorable in the
aggregate than those provided by BUYER to its own similarly-situated employees; provided,
however, that the employee benefits provided to any Transferred Employees who are covered
by a collective bargaining agreement which is assumed by BUYER pursuant to Section 6.3(d) below
will be governed by the terms thereof; and provided, further, that nothing in this
Agreement shall require BUYER to continue, or cause any of its affiliates to continue, to employ
any Transferred Employee. During the Benefits Continuation Period, the share of premium and
similar costs borne by the Salaried Employees for medical and dental coverage under BUYER’s welfare
benefit plans shall not exceed the comparable costs applicable to such Salaried Employees under
SELLER’s welfare benefit plans, as the same may be modified from time to time; provided,
however, that within ten (10) business days of receipt of invoices containing proper
documentation (which
invoices shall be submitted no more frequently than monthly), SELLER shall reimburse BUYER for
65% of the excess of (i) the aggregate employee contribution and similar costs that would have been
borne by Salaried Employees under BUYER’s welfare benefit plans in the absence of this provision
during the time period at issue; over (ii) the actual aggregate employee contribution and similar
costs borne by such Salaried Employees during the time period at issue. In the event BUYER cannot,
through the
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exercise of its commercially reasonable efforts, implement the foregoing employee
contribution and similar cost structure for Salaried Employees, as soon as practicable after the
Closing Date, BUYER shall pay to each Salaried Employee an amount equal to the excess of (i) the
estimated aggregate employee contribution and similar costs that will be borne by such Salaried
Employee under BUYER’s welfare benefit plans during the Benefit Continuation Period; over (ii) the
estimated aggregate employee contribution and similar costs that would have been borne by such
Salaried Employee under SELLER’s welfare benefit plans during the Benefits Continuation Period if
such employee had continued to participate in such plans, and SELLER shall reimburse BUYER, within
ten (10) business days of receipt of an invoice (with appropriate documentation) for 65% of the
aggregate payments to Salaried Employees pursuant to this sentence. The total reimbursements
payable by SELLER to BUYER under this Section 6.3(b) shall not exceed $100,000.
(c) Service Credit. For all purposes under the employee benefit plans of BUYER and
its affiliates providing benefits to any Transferred Employee at any time after the Closing Date
(the “New Plans”), each Transferred Employee shall be credited with his or her years of service
with SELLER and its affiliates (and any predecessors) before the Closing Date, to the same extent
as such Transferred Employee was entitled, before the Closing Date, to credit for such service
under any comparable Plan in which such Transferred Employee participated immediately before the
Closing Date (such plans, collectively, the “Old Plans”), except for purposes of benefit accrual
under any final average pay defined benefit pension plan and (except with respect to Retiree
Medical Credit Employees) for eligibility to receive post-retirement welfare benefits under any of
the New Plans. In addition, and without limiting the generality of the foregoing: (i) each
Transferred Employee shall be immediately eligible to participate, without any waiting time, in any
and all New Plans to the extent coverage under such New Plan replaces coverage under an Old Plan;
provided, however, that BUYER shall not be obligated to amend or otherwise modify
the terms of any New Plans intended to be qualified under Section 401(a) of the Code to permit such
immediate eligibility and (ii) for purposes of each New Plan providing medical, dental,
pharmaceutical and/or vision benefits to any Transferred Employee, BUYER shall cause all
pre-existing condition exclusions and
actively-at-work requirements of such New Plan to be waived for such employee and his or her
covered dependents, to the extent such exclusions or requirements were waived under the
corresponding Old Plan, and BUYER shall cause any eligible expenses incurred by such employee and
his or her covered dependents during the portion of the plan year of the Old Plan ending on the
date such employee’s participation in the corresponding New Plan begins to be taken into account
under such New Plan for purposes of
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satisfying all deductible, coinsurance and maximum
out-of-pocket requirements applicable to such employee and his or her covered dependents for the
applicable plan year as if such amounts had been paid in accordance with such New Plan. No later
than as soon as reasonably practicable following the Closing Date, SELLER shall provide the
administrator of the relevant New Plans a complete and accurate listing of such expenses incurred
by the Business Employees from January 1, 2006 (or, if earlier, the first day of the applicable
plan year) through the date on which their participation in such New Plans commences (such listing
to be updated periodically to reflect any such expenses reported following the Closing Date).
(d) Labor Matters. BUYER will assume the collective bargaining agreements identified
on Schedule 6.3(d) (collectively, the “CBAs”) effective as of the Closing (including the
obligation to honor the terms and conditions thereof and any obligations thereunder requiring a
successor to recognize a particular labor union as authorized representative of an employee group
or for any other purpose). BUYER and its affiliates shall have sole responsibility for all
obligations and liabilities arising under the CBAs on and after the Closing Date, and shall
indemnify and hold harmless SELLER and its affiliates with respect to any such obligations and
liabilities. For the avoidance of doubt, BUYER’s assumption of obligations and liabilities under
this Section 6.3(d) shall not include any pension (excluding the liabilities assumed by BUYER
pursuant to the provisions of this paragraph intended to comply with Section 4204 of ERISA) or
retiree medical liabilities arising or accruing prior to the Closing Date. For so long as BUYER is
obligated to contribute to the BCT Fund pursuant to the applicable CBA, BUYER will be obligated to
contribute to the BCT Fund for substantially the same number of contribution base units for which
SELLER had an obligation to contribute thereto. Subject to the next sentence, BUYER will provide
to the BCT Fund for a period of five plan years commencing with the first plan year beginning after
the Closing Date, a bond issued by a corporate surety company that is an acceptable surety for
purposes of Section 412 of ERISA, or an amount held in escrow by a bank or similar financial
institution, satisfactory to the BCT Fund, which bond or escrow will be paid to the BCT Fund if
BUYER withdraws from the BCT Fund, or fails to make a contribution when due, at any time during the
first five
plan years beginning after the Closing Date, in an amount equal to the greater of (x) the
average annual contribution required to be made by SELLER to the BCT Fund with respect to the
operations under the applicable CBA for the three plan years prior to the plan year in which the
Closing Date occurs (which average annual contribution, assuming the Closing Date occurs during
2006, is $932,460.59), or (y) the annual contribution that SELLER was required to make to the BCT
Fund with respect to the
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operations under the applicable CBA for the last plan year prior to the
plan year in which the Closing Date occurs (which annual contribution, assuming the Closing Date
occurs during 2006, is $977,607.80). In lieu of providing the bond or escrow contemplated by the
preceding sentence, BUYER may obtain a waiver, exemption, or variance of the requirement under
ERISA that it provide such bond. If BUYER withdraws from the BCT Fund in a complete withdrawal, or
a partial withdrawal with respect to operations covered by the applicable CBA, during the first
five (5) plan years beginning after the Closing Date, BUYER will be primarily liable to the BCT
Fund, and SELLER will be secondarily liable to the BCT Fund for any withdrawal liability SELLER
would have had to the BCT Fund with respect to the operations covered by the applicable CBA (but
for Section 4204 of ERISA) if the liability of BUYER with respect to the BCT Fund is not paid.
(e) Severance. During the Benefits Continuation Period, if BUYER terminates the
employment of any Transferred Employee without Cause (as defined below) or subjects any Transferred
Employee to any indefinite lay-off, or if any Transferred Employee voluntarily terminates
employment either because BUYER and its affiliates have failed to honor the terms of employment
required by Section 6.3(b) with respect to such employee or because a condition of continued
employment is such employee’s agreement to relocate to a job site more than fifty (50) miles from
such employee’s job site immediately prior to the Closing Date, BUYER shall pay to such Transferred
Employee cash severance in an amount equal to the greatest of (w) the severance pay due under the
applicable severance plan of BUYER and its affiliates for similarly situated employees of BUYER and
its affiliates (giving service credit for service with BUYER and SELLER and their affiliates), (x)
the severance pay that would have been due under the severance plan of SELLER and its affiliates
(including a CBA) that was applicable to such Transferred Employee immediately prior to the Closing
Date with service with BUYER after the Closing Date credited for purposes of determining such
severance, (y) in the case of exempt Salaried Employees, six (6) months’ base salary, and (z) in
the case of non-exempt Salaried Employees, three (3) months’ base salary. In addition, BUYER shall
continue to provide to each Transferred Employee the type of benefits described in Section 3(1) of
ERISA (whether or not covered by ERISA) (“Welfare Benefits”) (on the same terms as are applicable
to similarly situated active
employees, and at no greater cost to such Transferred Employee than would be applicable were
such Transferred Employee still employed) during the Severance Period (as defined below),
provided that such Welfare Benefits shall cease to be provided in the event such
Transferred Employee becomes eligible for substantially comparable Welfare Benefits from a
subsequent employer. BUYER shall provide reasonable outplacement services to any Transferred
Employee entitled to severance benefits pursuant to this
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paragraph. Within ten (10) business days
of receipt of invoices containing proper documentation (which invoices shall be submitted no more
frequently than monthly), SELLER shall reimburse BUYER for 65% of the excess of (i) cash severance
amounts paid pursuant to the first sentence of this paragraph over (ii) the cash severance amounts
that would have been payable under the applicable severance plan of BUYER and its affiliates had
the applicable Transferred Employee incurred a termination of employment entitling such employee to
severance under such plan (assuming for this purpose that the employee had satisfied all
requirements (including execution of a release of claims) to receive the maximum severance level
for which such employee would have been eligible and that such severance was not offset by any
unemployment compensation, and taking into account service credit for service with BUYER and SELLER
and their affiliates). For purposes of this paragraph, “Cause” means the Transferred Employee’s
material and willful misconduct, willful refusal to perform his or her job responsibilities, or
conviction of a felony or non-felony crime involving fraud or dishonesty, and “Severance Period”
shall mean, with respect to any Transferred Employee, a number of weeks determined by dividing such
Transferred Employee’s cash severance benefit by such Transferred Employee’s weekly base rate of
pay.
(f) Welfare Benefits Generally. With respect to Transferred Employees, (i) SELLER and
its affiliates shall be solely responsible for (A) claims for Welfare Benefits and for workers’
compensation, in each case that are incurred by or with respect to any Transferred Employee before
his or her Transfer Date, and (B) claims relating to health continuation coverage required by
Section 4980B of the Code or Part 6 of Title I of ERISA (“COBRA Coverage”) attributable to
“qualifying events” with respect to any Transferred Employee and his or her beneficiaries and
dependents that occur before such Transferred Employee’s Transfer Date, and (ii) BUYER and its
affiliates shall be solely responsible for (A) claims for Welfare Benefits and for workers
compensation, in each case that are incurred by or with respect to any Transferred Employee on or
after his or her Transfer Date, and (B) claims relating to COBRA Coverage attributable to
“qualifying events” with respect to any Transferred Employee and his or her beneficiaries and
dependents that occur on or after such Transferred Employee’s Transfer Date. For purposes of the
foregoing, a medical/dental claim shall be
considered incurred when the services are rendered, the supplies are provided or medication is
prescribed, and not when the condition arose; provided that claims for hospital charges
relating to a hospital confinement that begins before the applicable Transfer Date but continues
thereafter shall be treated as incurred before such Transfer Date. All claims for other
(non-hospital) charges relating to a hospital confinement that begins before the applicable
Transfer Date shall be considered incurred when the services are
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rendered, the supplies are
provided or medication is prescribed. A disability or workers’ compensation claim shall be
considered incurred before the applicable Transfer Date if the injury or condition giving rise to
the claim occurs before such Transfer Date, but only if such claim is actually filed before the
first anniversary of such Transfer Date.
(g) Medical Flexible Spending Plans. As of the Closing Date, BUYER will establish
flexible spending accounts for medical and dependent care expenses under a new or existing plan
(“BUYER’s FSA”) for each Transferred Employee who, on or prior to the Closing Date, is a
participant in a flexible spending account for medical and dependent care expenses under an
Employee Benefit Plan (“SELLER’s FSA”) or who elects to participate in BUYER’s FSA. Subject to
BUYER being provided all information reasonably necessary to permit the administrator of BUYER’s
FSA to accommodate the inclusion of the Transferred Employees in BUYER’s FSA on the basis described
herein, BUYER will credit or debit, as applicable, effective as of the Closing Date, the applicable
account of each Transferred Employee under BUYER’s FSA with an amount equal to the balance of each
such Transferred Employee’s account under SELLER’s FSA as of immediately prior to the Closing Date.
As soon as practicable after the Closing Date, SELLER will pay to BUYER the net aggregate amount
of the account balances credited under BUYER’s FSA, if such amount is positive, and BUYER will pay
to SELLER the net aggregate amount of the account balances credited under BUYER’s FSA, if such
amount is negative. No later than as soon as reasonably practicable following the Closing Date,
SELLER shall provide to BUYER a complete and accurate listing of year-to-date contributions and
reimbursements under SELLER’s FSA for the calendar year in which the Closing Date occurs (such
listing to be updated periodically to reflect any such information reported following the Closing
Date).
(h) Vacation. From and after the Closing Date, BUYER shall assume and honor all
earned but unused vacation days of the Transferred Employees that accrued prior to the applicable
Transfer Date, and shall hold harmless SELLER and its affiliates in respect of any liabilities with
respect to such accrued vacation.
(i) Qualified Retirement Plans. SELLER will retain all liabilities and obligations
under Plans that are Qualified Plans in respect of benefits accrued thereunder by Business
Employees prior to the Closing Date. No Transferred Employee will accrue any benefit under such
plans in respect of service with BUYER after the Closing Date. No assets or liabilities of any
Plan that is a Qualified Plan will be transferred to a retirement plan maintained by BUYER. BUYER
shall cause a tax-qualified defined contribution plan established or maintained by BUYER or its
applicable
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affiliate to accept eligible rollover distributions (as defined in Section 402(c)(4) of
the Code) from Transferred Employees with respect to any account balances (including loans)
distributed on or as of the Closing Date by applicable Plans. The distributions and rollovers
described herein shall comply with applicable law and each party shall make all filings and take
any actions required of such party under applicable law in connection therewith.
(j) Cash Compensation Obligations. SELLER and its affiliates shall retain liability
for payment of base salary, wages and overtime pay for each Business Employee accruing prior to
such Business Employee’s Transfer Date, and BUYER and its affiliates shall assume responsibility
for payments of base salary, wages and overtime pay to each Transferred Employee accruing on or
after such Business Employee’s Transfer Date. SELLER shall make a prorated annual bonus payment to
each Business Employee who remains employed through the Closing Date, the amount of which shall
equal the product of the applicable Business Employee’s annual bonus amount (as described in the
next sentence) multiplied by a fraction, the numerator of which is the number of days in the
calendar year during which the Closing Date occurs that elapse prior to the Closing Date, and the
denominator of which is 365. SELLER may determine the annual bonus amount using any good faith
methodology (which need not be the same for each Business Employee), including by basing such
amount upon target bonus or upon actual performance. Such prorated bonuses shall be paid no later
than the date on which SELLER pays annual bonuses to similarly situated other employees of SELLER
and its affiliates.
(k) WARN Act. On the Closing Date, SELLER shall provide a list of any and all
employees at the Facilities who have experienced, or will experience, an employment loss as defined
by the Worker Adjustment and Retraining Notification Act or any similar law requiring notice to
employees in the event of a plant closing or layoff (the “WARN Act”) within 90 days prior to the
Closing Date. SELLER shall not, at any time within the 90 days before the Closing Date, without
complying fully with the notice requirements and other requirements of the WARN Act, effectuate at
the Facilities a plant closing or mass layoff. BUYER shall be responsible for providing WARN Act
notice of any plant closing or mass layoff at the
Facilities that takes place after the Closing Date. BUYER shall assume liability for, and
shall fully indemnify and hold harmless SELLER and its affiliates with respect to, any liabilities
incurred by SELLER and its affiliates either (i) pursuant to the WARN Act and any similar statute
in connection with any Business Employee, to the extent such liability arises from actions of BUYER
and its affiliates or (ii) as a result of a failure to extend an offer complying with the
requirements of this Section 6.3 to a Business Employee (including any such severance or WARN Act
liabilities).
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6.4 HUMANE TREATMENT. BUYER agrees that, following the Closing Date, it will treat
all cats and dogs used in the Business (the “Animals”) humanely and agrees that it will not injure
or destroy any Animals, other than euthanasia in the best medical interest of an Animal.
6.5 AS 400 AND OTHER COMPUTER EQUIPMENT. Following completion of the transition
services period with respect to the services described as “AS400 Server” and “Computer Equipment”
in Annex A of the Transition Services Agreement, BUYER shall provide SELLER reasonable access to
the Buffalo Facility to remove the AS 400 computer server and other computer equipment constituting
Excluded Assets.
6.6 PRIVACY POLICY. Following the Closing, BUYER agrees to abide by the policies set
forth in Exhibit F to this Agreement with respect to the user information and data referred
to in Section 1.4(h).
6.7 COMMON TRANSFERRED IP. To the extent that there is any Common Transferred IP,
BUYER, on behalf of itself and its affiliates, to the extent of its rights with respect to the
Common Transferred IP, hereby grants to SELLER a nonexclusive, perpetual, irrevocable,
royalty-free, worldwide license to use and exploit such Common Transferred IP in connection with
the operation of the business of SELLER and its affiliates. Such right and license shall include,
to the extent of BUYER’s rights with respect to the Common Transferred IP, (a) the right to
disclose such Common Transferred IP in furtherance of any business use in the business of SELLER
and its affiliates, subject to SELLER entering into customary confidentiality arrangements with any
third party recipients thereof, and (b) SELLER’s right to grant licenses and/or sublicenses with
respect to the Common Transferred IP in furtherance of any business use in the business of SELLER
and its affiliates.
6.8 PURCHASE ORDERS. As soon as reasonably practicable following the Closing (and in
no event later than five (5) business days following the Closing) SELLER shall deliver to BUYER
copies of all Purchase Orders (or the portion of any other purchase order of SELLER or its
affiliates relating to any of the Products) that are outstanding as of the Closing Date.
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ARTICLE 7
MUTUAL COVENANTS OF THE PARTIES
MUTUAL COVENANTS OF THE PARTIES
Each of SELLER and BUYER covenants and agrees as follows:
7.1 BEST EFFORTS.
(a) SELLER and BUYER shall each cooperate with the other and use (and shall cause their
respective subsidiaries to use) their respective reasonable best efforts to promptly (i) take or
cause to be taken all necessary actions, and do or cause to be done all things, necessary, proper
or advisable under this Agreement and applicable laws to vest in BUYER good title to the Assets and
otherwise to consummate and make effective the transactions contemplated by this Agreement as soon
as practicable, including preparing and filing promptly and fully all documentation to effect all
necessary filings, notices, petitions, statements, registrations, submissions of information,
applications and other documents, and (ii) obtain as soon as practicable all approvals, consents,
registrations, Permits, authorizations and other confirmations required to be obtained from any
third party necessary, proper or advisable to consummate the transactions contemplated by this
Agreement or otherwise necessary for the operation of the Business as currently conducted in all
material respects and the ownership of the Assets after the Closing. Subject to applicable laws
relating to the exchange of information, SELLER and BUYER shall have the right to review in
advance, and to the extent practicable, each will consult the other on any filing made with, or
written materials submitted to, any third party and/or any governmental authority in connection
with the transactions contemplated by this Agreement. SELLER and BUYER shall provide the other
party with the opportunity to participate in any meeting with any governmental entity in respect of
any filing, investigation or other inquiry in connection with the transactions contemplated hereby.
Prior to the Closing Date, BUYER shall not, and shall not permit any of its affiliates to, enter
into or agree to enter into any agreement for the acquisition of any business or Person which
acquisition would reasonably be expected to materially impair BUYER’s ability to consummate the
transactions contemplated hereby. Notwithstanding anything in this Agreement to the contrary, in
connection with any filing or submission required, action to be
taken or commitment to be made by SELLER or BUYER or their respective affiliates or otherwise
with respect to the Business or any Assets or Products to consummate the transactions contemplated
by this Agreement, SELLER shall not, without BUYER’s prior written consent, sell, license, divest,
dispose of or hold separate any businesses, products or assets of the Business, commit to any sale,
license, divestiture, disposal or holding separate of any businesses, products or assets of the
Business or otherwise take or commit
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to take, or consent to the taking of, any action that would limit BUYER’s or its affiliates’ freedom of
action with respect to, or their freedom to retain, any of their businesses, products or assets, including the Business and all
Products and Assets.
(b) Without limiting Section 7.1(a), SELLER and BUYER shall cooperate and use their reasonable
best efforts to:
(i) avoid the entry of, or to have vacated or terminated, any decree, order, or judgment that
would restrain, prevent or delay the Closing, on or before the End Date (as defined in Section
9.1(d)), including defending through litigation on the merits any claim asserted in any court by
any Person; and
(ii) to avoid or eliminate each and every impediment under the HSR Act that may be asserted by
any governmental authority with respect to the transactions contemplated hereby so as to enable the
Closing to occur as soon as reasonably possible (and in any event no later than the End Date);
provided, however, that notwithstanding anything in this Agreement to the contrary,
BUYER shall not be required to sell, license, divest, dispose of or hold separate, or otherwise
take or commit to take, or consent to the taking of, any action limiting BUYER’s freedom of action
with respect to, or BUYER’s or BUYER’s affiliates, freedom to retain, any assets, products or
businesses of BUYER or SELLER (or their respective affiliates or subsidiaries) including the
Business and any Products or Assets.
(c) Without limiting the generality of the foregoing, SELLER shall use its reasonable best
efforts to obtain prior to the Closing all third party consents required in order to transfer the
Assets to BUYER at the Closing and BUYER will cooperate in order to obtain such consents;
provided, however, that SELLER shall not be required to expend any material sums of
money or offer or grant any material accommodation (financial or otherwise) to any third party in
connection therewith; and provided, further, however, that subject to the
immediately preceding proviso SELLER shall continue after the Closing for a period of twelve (12)
months to use its reasonable best efforts to obtain as promptly as practicable any such consents
that are not obtained prior to the Closing.
7.2 COOPERATION. BUYER and SELLER shall reasonably cooperate with each other and
shall cause their officers, employees, agents and representatives to reasonably cooperate with each
other for a period of twelve (12) months after the Closing to ensure the orderly transition of the
Assets and the Assumed Liabilities to BUYER and to minimize the disruption to the respective
businesses of the parties hereto resulting from the transactions contemplated hereby. No party
shall be required by this
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Section 7.2 to take any action that would unreasonably interfere with the
conduct of its business.
7.3 PUBLICITY. SELLER and BUYER agree that, from the date hereof through the Closing
Date, no public release or announcement concerning the transactions contemplated hereby shall be
issued by a party without the prior consent of the other party (which consent shall not be
unreasonably withheld or delayed), except as such release or announcement may be required by law or
the rules or regulations of any United States or foreign securities exchange.
7.4 ACCESS TO INFORMATION. After the Closing, upon reasonable notice, BUYER and
SELLER shall furnish or cause to be furnished to each other and their representatives, employees,
counsel and accountants, during normal business hours, reasonable access to examine and make copies
of its books of account, financial and other records (including accountants’ work papers) and
information and assistance relating to the Business, Assets and Assumed Liabilities as are
reasonably necessary for financial reporting and accounting matters, including Tax Return
preparation, and any litigation, dispute or other reasonable business purpose; provided,
however, that such access and assistance do not unreasonably disrupt the normal operations
of BUYER or SELLER.
7.5 BULK SALES WAIVER. BUYER and SELLER hereby waive compliance with the terms and
conditions of any applicable bulk sales law or similar laws that may be applicable to the sale or
transfer of the Assets.
7.6 EXPENSES. All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby will be paid by the party incurring such costs and expenses,
whether or not the transactions contemplated hereby are consummated, except as otherwise expressly
provided herein.
7.7 TAX MATTERS.
(a) BUYER shall be liable for all sales, use, excise, value-added, business, goods and
services, transfer, deed, recording, documentary, registration, conveyancing or similar taxes,
duties or expenses that may be imposed as a result of the sale and transfer of the Assets
(including any stamp duty or other tax chargeable in respect of any instrument transferring
property and any Taxes (other than Income Taxes) payable in connection with the sale and transfer
of the Intellectual Property), together with any and all penalties, interest and additions to tax
with respect thereto, that are recoverable by BUYER or any of its affiliates under applicable law
governing the payment of transfer taxes including, but not
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limited to, Canada Federal goods and
services tax (“GST”), Harmonized Sales Tax (“HST”), Quebec Sales Tax (“QST”) and Canada Provincial
sales tax (“PST”) (“Recoverable Transfer Taxes”). All other sales, use, excise, value-added,
business, goods and services, transfer, deed, recording, documentary, registration, conveyancing or
similar taxes, duties or expenses that may be imposed as a result of the sale and transfer of the
Assets (including any stamp duty or other tax chargeable in respect of any instrument transferring
property and any Taxes (other than Income Taxes) payable in connection with the sale and transfer
of the Intellectual Property), together with any and all penalties, interest and additions to tax
with respect thereto (“Nonrecoverable Transfer Taxes,” and, together with Recoverable Transfer
Taxes, “Transfer Taxes”), shall be borne fifty percent (50%) by BUYER and fifty percent (50%) by
SELLER. SELLER and BUYER shall cooperate in timely making all filings, returns, reports and forms
as may be required to comply with the provisions of such Transfer Tax laws. In no event shall
Transfer Taxes include Income Taxes. The Initial Purchase Price and Final Purchase Price are
exclusive of any Recoverable Transfer Taxes and Nonrecoverable Transfer Taxes described above.
(b) BUYER shall provide to SELLER, BUYER’s or BUYER’s appropriate affiliates’ U.S. and Canada
Tax identification and Tax registration numbers (GST, QST, HST and PST) prior to the Closing Date.
(c) BUYER and SELLER shall, and shall cause their respective subsidiaries and affiliates to,
cooperate with respect to Tax matters, including timely providing each other with applicable resale
and exemption certifications and other similar Tax and fee documentation. Without limiting the
generality of the foregoing, BUYER and SELLER and their respective affiliates and subsidiaries
shall cooperate to prepare and timely file any New York State transfer tax returns that are a
requirement for an effective transfer of title to the Facilities from SELLER to BUYER. In the
event the value of the Facilities is estimated for purposes of such New York State
transfer tax returns and differs from the purchase price allocated to the Facilities in the
Final Allocation, the parties shall amend the transfer tax returns to reflect the results of the
Final Allocation and, if necessary, the parties will pay any additional transfer taxes arising from
such amended returns in accordance with this Agreement.
(d) In the case of any Tax Return with respect to a Straddle Period required to be filed by
BUYER after the Closing, SELLER shall pay BUYER the amount of any Excluded Tax that is or would
otherwise be payable with respect to such Tax Return at least five business days prior to the later
of the date such payment is or would otherwise be due (the “Due Date”); provided that BUYER
shall furnish SELLER with a copy of BUYER’S
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calculations with respect to such Excluded Taxes a
period of time prior to the relevant Due Date reasonably sufficient to enable SELLER to review and
approve such calculations.
7.8 EMPLOYEE NON-SOLICITATION. Neither SELLER nor any of its affiliates shall, for a
period of one (1) year following the Closing Date, seek to employ any Business Employee who accepts
BUYER’s offer of employment for so long as such individual is employed by BUYER or any affiliate of
BUYER; provided that SELLER and its affiliates shall not be prohibited from employing any
such person who contacts SELLER or its affiliates in response to any general solicitation or
advertising not directed at any such employee or group of employees.
7.9 BOOKS AND RECORDS. To the extent SELLER is required by applicable law to retain a
copy of the Transferred Information, SELLER shall be entitled to retain such copies as are so
required, subject to the requirements of Section 5.6 hereof and shall notify BUYER of the
categories of Transferred Information for which it has so retained copies.
ARTICLE 8
INDEMNIFICATION
INDEMNIFICATION
8.1 SURVIVAL. The representations and warranties of the parties hereto shall survive
the execution and delivery hereof and the delivery of all of the documents executed in connection
herewith and shall continue in full force and effect after the date hereof and after the Closing
Date for a period of 18 months after the Closing Date (the “Expiration Date”), provided,
however, that (a) the representations and warranties contained in Sections 3.1(a) (SELLER’s
Authority) and 4.1(a) (BUYER’s Authority) shall survive indefinitely; (b) the
representations and warranties contained in Section 3.2 (Title to Tangible Assets), Section
3.3 (Intellectual Property) and Section 3.10 (Environmental Matters) shall survive until the fifth
anniversary of the Closing Date; and (c) the representations and warranties contained in Section
3.13 (Employee Benefits) and Section 3.14 (Taxes) shall survive until ninety (90) days after the
expiration of the statute of limitations applicable to the matters covered thereby (giving effect
to any waiver, mitigation or extension thereof), if later, and provided, further,
that any covenants or agreements contained herein or made pursuant hereto that by their terms are
to be performed after the Closing Date shall survive until fully discharged. No action or
proceeding may be brought with respect to any of the representations and warranties unless written
notice thereof, setting forth in reasonable detail the claimed misrepresentation or breach of
warranty, shall have been delivered to the party alleged to have breached such representation or
warranty prior to the Expiration Date or such later expiration date as is described above.
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8.2 INDEMNIFICATION BY SELLER. SELLER shall indemnify BUYER, its affiliates and each
of their respective officers, directors, employees and agents and hold them harmless from and
against any loss, liability, claim, cost, damage or expense (including reasonable legal fees and
expenses) (collectively, “Losses”) suffered or incurred by any such indemnified party to the extent
arising from:
(a) any breach or inaccuracy of any representation or warranty of SELLER contained in this
Agreement (including in any certificate delivered pursuant to this Agreement on the Closing Date),
(b) any breach of any covenant or agreement of SELLER contained in this Agreement, and
(c) the Excluded Liabilities;
provided, however, that (x) SELLER shall not have any liability under clause (a)
above (other than with respect to breaches of Section 3.2 (Title to Tangible Assets), Section 3.3
(Intellectual Property), Section 3.7 (Brokers) and Section 3.16(b) (Sufficiency of Assets)) unless
the aggregate of all Losses relating thereto for which SELLER would, but for this proviso, be
liable exceeds on a cumulative basis, an amount equal to one percent (1%) of the Final Purchase
Price (the “Basket”), and then only to the extent that the aggregate of all such Losses relating
thereto exceeds the Basket, and (y) SELLER shall not have any liability under clause (a) above with
respect to any breach or inaccuracy of any representation or warranty of SELLER contained in
Section 3.3 (Intellectual Property) unless the aggregate of all
Losses relating thereto for which SELLER would, but for this proviso, be liable exceeds on a
cumulative basis, an amount equal to one half of one percent (0.5%) of the Final Purchase Price
(the “IP Basket”) and then only to the extent that the aggregate of all such Losses relating
thereto exceeds the IP Basket; and provided, further, however, that
SELLER’s aggregate liability under clause (a) above (other than with respect to breaches of Section
3.7 (Brokers)) shall in no event exceed fifteen percent (15%) of the Final Purchase Price (the
“Cap”). For the avoidance of doubt, (1) Losses with respect to matters not subject to the Basket
that are paid by SELLER to BUYER or its affiliates shall not count towards the Basket or the IP
Basket, (2) any Losses that count towards the IP Basket shall also count towards the Basket and (3)
any Losses that count towards the Basket shall also count towards the IP Basket.
8.3 INDEMNIFICATION BY BUYER. BUYER shall indemnify SELLER and its respective
officers, directors, employees and agents from and against and hold them harmless from any Loss
suffered or incurred by any such indemnified party to the extent arising from
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(a) any breach or inaccuracy of any representation or warranty of BUYER contained in this
Agreement (including in any certificate delivered pursuant to this Agreement on the Closing Date);
(b) any breach of any covenant or agreement of BUYER contained in this Agreement; and
(c) the Assumed Liabilities;
provided, however, that BUYER shall not have any liability under clause (a) above
(other than with respect to breaches of Section 4.4 (Brokers)) unless the aggregate of all Losses
relating thereto for which BUYER would, but for this proviso, be liable exceeds on a cumulative
basis an amount equal to the Basket, and then only to the extent that the aggregate of all such
Losses relating thereto exceeds the Basket; and provided, further, however,
that BUYER’s aggregate liability under clause (a) above (other than with respect to breaches of
Section 4.4 (Brokers)) shall in no event exceed the Cap.
8.4 EXCLUSIVE REMEDY; LIMITATION OF LIABILITY. BUYER and SELLER (a) each acknowledge
and agree that, from and after the Closing, their sole and exclusive remedy, with respect to any
and all claims relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions set forth in this Article 8, and (b) in furtherance of the foregoing,
hereby waive, from and after the Closing, to the fullest extent
permitted under applicable law, any and all rights, claims and causes of action, they may have
against each other relating to the subject matter of this Agreement arising under or based upon any
federal, state or local statute, law (including common law), ordinance, rule or regulation or
otherwise, except for, in the case of each of clause (a) and (b), (x) claims for specific
performance or injunctive or other equitable relief and (y) claims for fraud or intentional
misrepresentation. For the avoidance of doubt, this Section 8.4 shall not affect any remedies
provided in any Collateral Agreement. Notwithstanding anything to the contrary contained in this
Agreement, neither BUYER nor SELLER shall be liable under this Agreement for any special,
consequential, punitive or exemplary damages (including lost or anticipated revenues or profits
relating to the same) arising from any claim relating to this Agreement, whether such claim is
based on warranty, contract, tort (including negligence or strict liability) or otherwise.
8.5 LOSSES NET OF INSURANCE; TAX BENEFITS. The amount of any Losses for which
indemnification is provided under this Article 8 shall be net of (a) any amounts actually recovered
by the indemnified party under its insurance policies with respect to such Losses and (b) any tax
benefit actually realized by the indemnified party or its affiliates arising from the incurrence or
payment of any such Losses. Each party hereby waives, to the
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extent permitted under its applicable
insurance policies, any subrogation rights that its insurer may have with respect to any
indemnified Losses.
8.6 PROCEDURES RELATING TO INDEMNIFICATION.
(a) In order for an indemnified party to be entitled to any indemnification provided for under
this Article 8 in respect of, arising out of or involving a claim or demand made by any person,
firm, governmental authority or corporation against the indemnified party (a “Third-Party Claim”),
such indemnified party must notify the indemnifying party in writing, and in reasonable detail, of
the Third-Party Claim as promptly as reasonably possible after receipt by such indemnified party of
written notice of the Third-Party Claim; provided, however, that failure to give
such notification shall not affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually prejudiced as a result of such failure. The
indemnified party shall deliver to the indemnifying party, within five business days (or sooner, if
the nature of the asserted liability so requires) after the indemnified party’s receipt thereof,
copies of all written notices and documents (including court papers) received by the indemnified
party relating to the Third-Party Claim.
(b) If a Third-Party Claim is made against an indemnified party, the indemnifying party will
be entitled to participate in the defense thereof and, if it so chooses and acknowledges in writing
to the indemnified party its obligation to indemnify the indemnified party therefor, to assume the
defense thereof with counsel selected by the indemnifying party and reasonably satisfactory to the
indemnified party. Should the indemnifying party so elect to assume the defense of a Third-Party
Claim, the indemnifying party will not be liable to the indemnified party for legal expenses
subsequently incurred by the indemnified party in connection with the defense thereof, unless the
Third-Party Claim involves potential conflicts of interest or substantially different defenses for
the indemnified party and the indemnifying party. If the indemnifying party assumes such defense,
the indemnified party shall have the right to participate in the defense thereof and to employ
counsel, at its own expense (except to the extent provided in the immediately preceding sentence),
separate from the counsel employed by the indemnifying party, it being understood that the
indemnifying party shall control such defense. The indemnifying party shall be liable for the fees
and expenses of counsel employed by the indemnified party for any period during which the
indemnifying party has not assumed the defense thereof. All the parties hereto shall cooperate in
the defense or prosecution of any Third-Party Claim. Such cooperation shall include the retention
and (upon the indemnifying party’s request) the provision to the indemnifying party of records and
information that are reasonably relevant
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to such Third-Party Claim and reasonably available to the
indemnified party, to the extent permitted by applicable law, and making employees available on a
mutually convenient basis to provide additional information and explanation of any material
provided hereunder. If the indemnifying party shall have assumed the defense of a Third-Party
Claim, the indemnifying party shall not enter into any settlement of or otherwise compromise or
discharge such Third-Party Claim without the indemnified party’s prior written consent (which
consent shall not be unreasonably withheld or delayed), unless such settlement, compromise or
discharge irrevocably releases the indemnified party from all liabilities and obligations with
respect to such Third-Party Claim and does not impose any injunctive or other equitable relief
against the indemnified party. Whether or not the indemnifying party shall have assumed the
defense of a Third-Party Claim, the indemnified party shall not admit any liability with respect
to, or settle, compromise or discharge, such Third-Party Claim without the indemnifying party’s
prior written consent (which consent shall not be unreasonably withheld or delayed).
(c) Anything to the contrary in this Section 8.6 notwithstanding, if a Third-Party Claim
includes or could reasonably be expected to include both a claim for Taxes that are Excluded Taxes
and a claim for Taxes that are not Excluded Taxes, and such claim for Taxes that are Excluded Taxes
is not separable from such a claim for Taxes that are not Excluded Taxes, SELLER (if the claim for
Taxes that are Excluded Taxes exceeds or reasonably could be expected to exceed in amount the claim
for Taxes that are not Excluded Taxes) or otherwise the BUYER (SELLER or BUYER, as the case may be,
the “Controlling Party”), shall be entitled to control the defense of such Third-Party Claim (such
Third-Party Claim, a “Tax Claim”). In such case, the other party (SELLER or BUYER, as the case may
be, the “Non-Controlling Party”) shall be entitled to participate fully (at the Non-Controlling
Party’s sole expense) in the conduct of such Tax Claim and the Controlling Party shall not settle
such Tax Claim without the consent of such Non-Controlling Party (which consent shall not be
unreasonably withheld). The costs and expenses of conducting the defense of such Tax Claim shall
be reasonably apportioned based on the relative amounts of the Tax Claim that are Excluded Taxes
and the Tax Claim that are not Excluded Taxes.
8.7 EFFECT OF KNOWLEDGE. The representations and warranties set forth in this
Agreement or any Collateral Agreement or any certificate delivered pursuant to any thereof, shall
not be affected by any investigation, verification or examination by any party hereto or by any
representative of any such party.
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ARTICLE 9
TERMINATION
TERMINATION
9.1 BASIS FOR TERMINATION. Anything contained herein to the contrary notwithstanding,
this Agreement may be terminated and the transactions contemplated hereby abandoned at any time
prior to the Closing Date:
(a) by mutual written consent of SELLER and BUYER;
(b) by BUYER if (i) SELLER breaches or fails to perform any of its representations, warranties
or covenants contained in this Agreement and such breach or failure to perform would give rise to
the failure to satisfy any of the conditions set forth in Section 2.2(a), (b) or (c), and cannot be
or has not been cured within 60 days following delivery by BUYER to SELLER of written notice of
such breach, and shall not have been waived by BUYER or (ii) any other condition set forth in
Section 2.2 shall have become incapable of fulfillment and shall not have been waived by BUYER;
(c) by SELLER if (i) BUYER breaches or fails to perform any of its representations, warranties
or covenants contained in this Agreement and such breach or failure to perform would give rise to
the failure to satisfy any
of the conditions set forth in Section 2.3(a) or (b), and cannot be or has not been cured
within 60 days following delivery by SELLER to BUYER of written notice of such breach, and shall
not have been waived by SELLER or (ii) any other condition set forth in Section 2.3 shall have
become incapable of fulfillment and shall not have been waived by SELLER;
(d) by SELLER or BUYER if the Closing does not occur on or prior to December 31, 2006 (the
“End Date”); or
(e) by SELLER or BUYER, if (i) there shall be any law or regulation that makes consummation of
the transactions hereunder illegal or otherwise prohibited (other than those having only an
immaterial effect and that do not impose criminal liability or penalties) or (ii) any governmental
authority or instrumentality having competent jurisdiction shall have issued an order, decree or
ruling or taken any other action (which the terminating party shall have used its reasonable best
efforts (with respect to antitrust-related matters) or reasonable efforts (with respect to matters
that are not antitrust-related) to resist, resolve or lift) permanently restraining, enjoining or
otherwise prohibiting any material component of the transactions hereunder, and such order, decree,
ruling or other action shall have become final and non-appealable;
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provided, however, that the party seeking termination pursuant to clause (b), (c),
(d) or (e) is not in breach of any of its representations, warranties, covenants or agreements
contained in this Agreement, including the covenants and agreements set forth in Section 7.1(b) of
this Agreement.
9.2 NOTICE OF TERMINATION, RETURN OF DOCUMENTS, CONTINUING CONFIDENTIALITY OBLIGATION.
In the event of termination by SELLER or BUYER pursuant to this Article 9, written notice thereof
shall forthwith be given to the other party and the transactions contemplated by this Agreement
shall be terminated, without further action by any party. If the transactions contemplated by this
Agreement are terminated as provided herein:
(a) BUYER shall return to SELLER or destroy all documents and copies and other material
constituting CI under (and as defined in) the Confidentiality Agreement received from SELLER
relating to the transactions contemplated hereby, whether so obtained before or after the execution
hereof; and
(b) all CI received by BUYER with respect to the Business shall be treated in accordance with
the Confidentiality Agreement, which shall
remain in full force and effect notwithstanding the termination of this Agreement.
9.3 EFFECT OF TERMINATION. If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Article 9, this Agreement shall become void
and of no further force and effect, except for the provisions of (a) Sections 3.7 and 4.4 relating
to finders’ fees and bankers’ fees, (b) Sections 5.6 and 6.1 relating to the obligations of the
parties to keep confidential certain information and data obtained by them, (c) Section 7.3
relating to publicity, (d) Section 7.6 relating to expenses, and (e) this Section 9.3,
provided, however, that nothing in this Article 9 shall be deemed to release any
party from any liability for any breach by such party of the terms and provisions of this Agreement
or to impair the right of any party to compel specific performance by another party of its
obligations under this Agreement.
ARTICLE 10
GENERAL PROVISIONS
GENERAL PROVISIONS
10.1 ASSIGNMENT. Except as set forth below, this Agreement and the rights and
obligations hereunder shall not be assignable or transferable by BUYER or SELLER (including by
operation of law in connection with a merger, or sale of substantially all the assets, of BUYER or
SELLER) without the prior written consent of each of the other parties hereto. Without the
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consent of any party hereto BUYER may assign its rights hereunder to one or more majority-owned
subsidiaries of BUYER and may collaterally assign its rights under this Agreement to any lender or
financing source; provided, however, that no assignment shall limit or affect the
assignor’s obligations hereunder.
10.2 NO THIRD-PARTY BENEFICIARIES. Except for persons entitled to indemnification
under Article 8 hereof, this Agreement is for the sole benefit of the parties hereto, and nothing
herein express or implied shall give or be construed to give to any person or entity, other than
the parties hereto, any legal or equitable rights hereunder.
10.3 AMENDMENTS. No amendment to this Agreement shall be effective unless it shall be
in writing and signed by each party hereto.
10.4 WAIVER OF COMPLIANCE. Except as otherwise provided in this Agreement, any
failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may
be waived by the party entitled to the benefits thereof only by a written instrument signed by the
party, granting such waiver, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
10.5 NOTICES. All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or sent by telecopy, or sent, postage
prepaid, by registered, certified or express mail, or reputable overnight courier service and shall
be deemed given when delivered by hand or telecopied, three days after mailing (one business day in
the case of guaranteed overnight express mail or guaranteed overnight courier service), as follows:
(i) If to SELLER:
Kraft Foods Global, Inc.
c/o General Counsel
Kraft Foods Inc.
Xxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
c/o General Counsel
Kraft Foods Inc.
Xxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
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with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
(ii) if to BUYER:
Del Monte Corporation
Xxx Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
Xxx Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
with a copy to
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX
Attention: Xxxxxxx X’Xxxxx, Esq.
Fax: (000) 000-0000
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX
Attention: Xxxxxxx X’Xxxxx, Esq.
Fax: (000) 000-0000
10.6 INTERPRETATION. The headings contained in this Agreement, in any Exhibit or
Schedule hereto and in the table of contents to this Agreement, are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. This Agreement shall
be construed without regard to any presumption or rule requiring construction or interpretation
against the party drafting or causing any instrument to be drafted. The parties acknowledge and
agree that to the extent that there is a conflict between (a) any general provision of this
Agreement and (b) any provision specifically relating to Tax matters, the terms of the specific Tax
provision shall control. Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words, “without limitation.”
10.7 COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective when one or more
such counterparts have been signed by each of the parties and delivered to the other party.
10.8 SEVERABILITY. If any provision of this Agreement or the application of any such
provision to any person or circumstance shall be held
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invalid, illegal or unenforceable in any
respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision hereof, as long as the economic or legal substance of the Agreement
is not affected in any manner adverse to either party. Upon determination that any term or other
provision is invalid, illegal or incapable of being enforced, 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.
10.9 GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to agreements made and to be performed entirely
within such State, without regard to the conflicts of law principles of such State.
10.10 ACTIONS AND PROCEEDINGS. Each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any federal court located in the State of Delaware or the
Delaware Chancery Court in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such court and (c) agrees
that it will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court sitting in the State of
Delaware or the Delaware Chancery Court. Each of the parties hereto irrevocably consents to the
service of any summons and complaint and any other process in any other action relating to the
transactions contemplated by this Agreement, on behalf of itself or its property, by the personal
delivery of copies of such process to such party. Nothing in this Section 10.10 shall affect the
right of any party hereto to serve legal process in any other manner permitted by law. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.11 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would
occur if any provision of this Agreement or any Collateral Agreement were not performed in
accordance with the terms hereof and that the parties shall be entitled, without posting a bond or
similar indemnity, to an injunction or injunctions to prevent breaches of this Agreement or any
Collateral Agreement to enforce specifically the performance of the terms and provisions hereof or
thereof in any federal court located in the State of Delaware or any Delaware state court, in
addition to any other remedy to which they are entitled at law or in equity.
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10.12 ENTIRE AGREEMENT. This Agreement (including all Exhibits and Schedules annexed
hereto), the Collateral Agreements and the Confidentiality Agreement contain the entire agreement
and understanding between the parties hereto with respect to the subject matter hereof and, except
to the extent specifically set forth herein, supersede all prior agreements and understandings
relating to such subject matter.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date
first written above.
KRAFT FOODS GLOBAL, INC. | ||||||||
By: | /s/ Xxxxxxx X. Xxxx | |||||||
Name: | Xxxxxxx X. Xxxx | |||||||
Title: | Vice President, Global External Development | |||||||
DEL MONTE CORPORATION | ||||||||
By: | /s/ Xxxxxx X. Xxxxxxx | |||||||
Name: | Xxxxxx X. Xxxxxxx | |||||||
Title: | Senior Vice President and Treasurer |
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