EXECUTION COPY
ASSET PURCHASE AGREEMENT
BY AND AMONG
AGWAY ENERGY PRODUCTS, LLC,
AGWAY ENERGY SERVICES, INC.,
AGWAY ENERGY SERVICES PA, INC.,
AGWAY, INC. (solely for purposes of Sections 2.5(b), 7.13 and 7.19),
--------------- ---- -----
AND
SUBURBAN PROPANE, L.P.
Dated as of November 10, 2003
TABLE OF CONTENTS
Page
Article I DEFINITIONS...........................................................................1
1.1 Certain Definitions...................................................................1
1.2 Terms Defined Elsewhere in this Agreement.............................................9
1.3 Other Definitional and Interpretive Matters..........................................11
Article II PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES...............................12
2.1 Purchase and Sale of Assets..........................................................12
2.2 Excluded Assets......................................................................15
2.3 Assumption of Liabilities............................................................16
2.4 Excluded Liabilities.................................................................17
2.5 Further Conveyances and Assumptions; Consent of Third Parties........................18
2.6 Bulk Sales Laws......................................................................19
2.7 Purchase Price Allocation............................................................19
Article III CONSIDERATION........................................................................20
3.1 Consideration........................................................................20
3.2 Purchase Price Deposit...............................................................20
3.3 Payment of Purchase Price; Funding of Certain Escrows; Non-Competition Payments......21
3.4 Working Capital Adjustment...........................................................21
3.5 Accounts Receivable Credit Balance Adjustment........................................23
Article IV CLOSING AND TERMINATION..............................................................26
4.1 Closing Date.........................................................................26
4.2 Deliveries by Sellers................................................................26
4.3 Deliveries by Purchaser..............................................................27
4.4 Termination of Agreement.............................................................28
4.5 Procedure Upon Termination...........................................................29
4.6 Effect of Termination................................................................30
4.7 Expense Reimbursement and Break-Up Fee...............................................30
Article V REPRESENTATIONS AND WARRANTIES OF SELLERS............................................31
5.1 Organization and Good Standing.......................................................31
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TABLE OF CONTENTS
(continued)
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5.2 Authorization of Agreement...........................................................31
5.3 Conflicts; Consents of Third Parties.................................................32
5.4 Financial Statements.................................................................32
5.5 No Undisclosed Liabilities...........................................................33
5.6 Purchased Assets.....................................................................33
5.7 Absence of Certain Developments......................................................34
5.8 Taxes................................................................................34
5.9 Real Property........................................................................35
5.10 Tangible Personal Property...........................................................36
5.11 Intellectual Property................................................................36
5.12 Material Contracts...................................................................36
5.13 Employee Benefits....................................................................37
5.14 Labor................................................................................38
5.15 Litigation...........................................................................38
5.16 Compliance with Laws; Permits........................................................39
5.17 Environmental Matters................................................................39
5.18 Financial Advisors...................................................................40
5.19 Accounts Receivable..................................................................40
5.20 Inventory............................................................................40
5.21 Significant Suppliers................................................................40
5.22 Insurance............................................................................41
5.23 Absence of Certain Business Practices................................................41
5.24 No Other Representations or Warranties; Schedules....................................41
Article VI REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................................42
6.1 Organization and Good Standing.......................................................42
6.2 Authorization of Agreement...........................................................42
6.3 Conflicts; Consents of Third Parties.................................................43
6.4 Litigation...........................................................................43
6.5 Financial Advisors...................................................................43
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TABLE OF CONTENTS
(continued)
Page
6.6 Financial Capability.................................................................43
6.7 Condition of the Business............................................................44
Article VII COVENANTS............................................................................44
7.1 Access to Information................................................................44
7.2 Conduct of the Business Pending the Closing..........................................45
7.3 Consents.............................................................................47
7.4 Regulatory Approvals.................................................................47
7.5 Alternative Transaction..............................................................48
7.6 Further Assurances...................................................................49
7.7 Confidentiality......................................................................49
7.8 Preservation of Records..............................................................50
7.9 Publicity............................................................................50
7.10 Contacts with Suppliers and Customers................................................50
7.11 Bonds................................................................................50
7.12 Supplementation and Amendment of Schedules...........................................50
7.14 Agway Name...........................................................................51
7.16 Industrial Site Recovery Act.........................................................52
7.17 Tax Clearance Certificates; Reserve for Taxes........................................53
7.18 Formation of LLC.....................................................................53
7.19 Assumption, Assignment and Transfer by Agway.........................................53
7.20 Conveyance of Title..................................................................53
Article VIII EMPLOYEES AND EMPLOYEE BENEFITS......................................................54
8.1 Employment...........................................................................54
8.2 Employee Benefits....................................................................54
Article IX CONDITIONS TO CLOSING................................................................56
9.1 Conditions Precedent to Obligations of Purchaser.....................................56
9.2 Conditions Precedent to Obligations of Sellers.......................................57
9.3 Conditions Precedent to Obligations of Purchaser and Sellers.........................57
9.4 Frustration of Closing Conditions....................................................58
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TABLE OF CONTENTS
(continued)
Page
Article X INDEMNIFICATION......................................................................58
10.1 Survival of Representations and Warranties...........................................58
10.2 Indemnification by Sellers...........................................................58
10.3 Indemnification by Purchaser.........................................................59
10.4 Indemnification Procedures...........................................................60
10.5 Certain Limitations on Indemnification...............................................61
10.6 Calculation of Losses................................................................63
10.7 Characterization of Indemnity Payments...............................................63
10.8 No Consequential Damages.............................................................64
10.9 Exclusive Remedy.....................................................................64
10.10 Environmental Liabilities and the Environmental Indemnity Escrow Fund................64
Article XI MISCELLANEOUS........................................................................67
11.1 Payment of Sales, Use or Similar Taxes...............................................67
11.2 Insurance............................................................................68
11.3 Expenses.............................................................................68
11.4 Injunctive Relief....................................................................68
11.5 Submission to Jurisdiction; Consent to Service of Process............................69
11.6 Waiver of Right to Trial by Jury.....................................................69
11.7 Entire Agreement; Amendments and Waivers.............................................69
11.8 Governing Law........................................................................70
11.9 Notices..............................................................................70
11.10 Severability.........................................................................70
11.11 Binding Effect; Assignment...........................................................71
11.12 Non-Recourse.........................................................................71
11.13 Counterparts.........................................................................71
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TABLE OF CONTENTS
(continued)
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Schedules
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1.1(a) Knowledge of Sellers
1.1(b) Purchased Contracts
1.1(c) Excluded Contracts
1.1(d) Intellectual Property Licenses Granted to Third Parties
2.1(m) Automotive Parts
2.1(n) Bulk Plant Equipment
2.2(d) Excluded Intellectual Property
2.2(i) Surety Bonds
2.5(c) Receipt of Benefit of Contracts
3.4(b)(i) Agreed Principles
3.4(b)(ii) Average Working Capital
5.3(a) Conflicts
5.3(b) Consents
5.5 Undisclosed Liabilities
5.6 Exceptions to Good Title
5.7 Absence of Certain Developments
5.8 Taxes
5.9(a) Real Property
5.9(b) Highways
5.9(g) Casualties and Condemnations
5.10 Tangible Personal Property
5.11 Intellectual Property
5.12(a) Material Contracts Related to Former Real Property
5.12(b) Defaults
5.13(a) Employee Benefits
5.13(c) Qualified Plans
5.13(e) Continuing Benefits
5.13(f) Maintenance of Employee Benefit Plans
5.13(g) Increases and Acceleration of Employee Benefits
5.14(a) Labor and Collective Bargaining Agreement
5.14(b) Labor
5.14(c) Delinquent Payments to Transferred Employees
5.15 Litigation
5.16(a) Violation of Laws
5.16(b) Default of Permits
5.16(c) Notice of Violation of Laws
5.17 Environmental Matters
5.18 Financial Advisors
5.21 Significant Suppliers
5.22 Insurance
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TABLE OF CONTENTS
(continued)
Page
5.23 Absence of Certain Business Practices
6.3 No Conflicts
6.5 Purchaser's Financial Advisors
7.2 Exceptions to Conduct of Business
7.17 Tax Clearance Certificates
7.19 Agway, Inc. Purchased Contracts
8.1 Exceptions to Compensation
8.2(e)(i) Incentive and Severance Plans
8.2(e)(ii) Executives
9.1(d) Consent to Assignment of Material Contracts
9.3(e) Consents
Exhibits
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A Approval Order
B Bidding Procedures Order
C Purchase Price Deposit Escrow Agreement
D General Escrow Agreement
E Xxxx of Sale
F Assignment and Assumption Agreement
G Sellers' Non-Competition
H Transition Services Agreement
I Compensation Order
J Environmental Indemnity Escrow Agreement
K Power of Attorney
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of November 10, 2003 (this "Agreement"),
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by and among Agway Energy Products, LLC, a Delaware limited liability company
("Energy LLC"), Agway Energy Services, Inc., a Delaware corporation ("Energy
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Services, Inc."), and Agway Energy Services PA, Inc., a Delaware corporation
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("Services PA") (each a "Seller", collectively,"Sellers"), Suburban Propane,
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L.P., a Delaware limited partnership ("Purchaser") and Agway, Inc., a Delaware
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Corporation ("Agway"), solely for purposes of Sections 2.5(b), 7.13 and 7.19.
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W I T N E S S E T H:
WHEREAS, Agway, the parent of Sellers, commenced a case (the "Bankruptcy
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Case") under chapter 11 of title 11 of the United States Code, 11 U.S.C.
----
Sections 101 et seq. (the "Bankruptcy Code"), on October 1, 2002, by filing
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voluntary petitions with the United States Bankruptcy Court for the Northern
District of New York;
WHEREAS, Sellers presently conduct the Business;
WHEREAS, Sellers desire to sell, transfer and assign to Purchaser, and
Purchaser desires to acquire and assume from Sellers, all of the Purchased
Assets (as defined in Section 2.1) and Assumed Liabilities (as defined in
Section 2.3), all as more specifically provided herein;
WHEREAS, certain terms used in this Agreement are defined in Section
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1.1 and;
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NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINITIONS.
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For purposes of this Agreement, the following terms shall have the
meanings specified in this Section 1.1:
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"Affiliate" means, with respect to any Person, any other Person that,
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directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, and the term
"control" (including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.
1
"Agway" means Agway, Inc., a Delaware corporation and debtor-in-possession.
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"Approval Order" means the order of the Bankruptcy Court, in the form
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attached hereto as Exhibit A which, among other things, authorizes Agway to
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cause Sellers to enter into this Agreement and otherwise approves this Agreement
and all of the terms and conditions hereof and the transactions contemplated
hereunder.
"Bankruptcy Court" means the United States Bankruptcy Court for the
-----------------
Northern District of New York or any other court having jurisdiction over the
Bankruptcy Case from time to time.
"Bidding Procedures Hearing" means the hearing at which the Bankruptcy
----------------------------
Court considers the approval of the Bidding Procedures and entry of the Bidding
Procedures Order.
"Bidding Procedures Motion" means the motion or motions to be filed by
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Agway, in form and substance reasonably acceptable to Purchaser and Sellers,
seeking entry of the Bidding Procedure Order.
"Bidding Procedures Order" means the order of the Bankruptcy Court, in the
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form attached hereto as Exhibit B, that, among other things, (i) approves the
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payment of the Expense Reimbursement and Break-Up Fee on the terms and
conditions set forth in Section 4.7 hereof, and (ii) establishes a date by which
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bids for Alternative Transactions must be submitted by bidders and establishes
procedures for the auction process.
"Business" means the businesses of Sellers as currently or heretofore
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conducted.
"Business Day" means any day of the year on which national banking
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institutions in New York are open to the public for conducting business and are
not required or authorized to close.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Contract" means any contract, indenture, note, bond, lease or other
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written agreement.
"Credit Balance Escrow Deposit" means the sum of Ten Million Dollars
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($10,000,000).
"Credit Balance Escrow Fund" means the Credit Balance Escrow Deposit
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together with all interest or income actually earned thereon pursuant to the
Indemnity Escrow Agreement.
"Customer Installations" means each installation of equipment owned by
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Sellers on the premises of its customers, and shall include all tanks,
regulators, meters, fittings, tubings and any other related equipment.
2
"Documents" means all files, documents, instruments, papers, books,
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reports, records, tapes, microfilms, photographs, letters, budgets, forecasts,
ledgers, business records (to the extent requested by Purchaser), journals,
title policies, customer lists and files, regulatory filings, operating data and
plans, technical documentation (design specifications, functional requirements,
operating instructions, logic manuals, flow charts, etc.), user documentation
(installation guides, user manuals, training materials, release notes, working
papers, etc.), marketing documentation (sales brochures, flyers, pamphlets, web
pages, etc.), and other similar materials related primarily to the Business and
the Purchased Assets in each case whether or not in electronic form.
"Employee" means all individuals, as of the date hereof, who are employed
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by Sellers in connection with the Business, together with individuals who are
hired in respect of the Business after the date hereof and prior to the Closing.
"Environmental Law" means any foreign, federal, state or local statute,
------------------ regulation, ordinance, or rule of common law relating to the
protection of human health and safety or the environment including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act (42 X.X.X.xx. 9601 et seq.), the Hazardous Materials Transportation Act (49
-- ----
U.S.C. Xxx.xx. 1801 et seq.), the Resource Conservation and Recovery Act (42
-- ----
X.X.X.xx. 6901 et seq.), the Clean Water Act (33 U.S.C. ss. 1251 et seq.), the
-- ---- -- ----
Clean Air Act (42 X.X.X.xx. 7401 et seq.) the Toxic Substances Control Act (15
-- ----
X.X.X.xx. 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act
-- ----
(7 X.X.X.xx. 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C.
-- ----
ss. 651 et seq.), and the regulations promulgated pursuant thereto.
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"Environmental Indemnity Escrow Agreement" means the Environmental
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Indemnity Escrow Agreement to be dated as of the Closing Date by and among
Sellers, Purchaser and the Escrow Agent substantially in the form of Exhibit J
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hereto.
"Environmental Indemnity Escrow Deposit" means the sum of Fifteen Million
----------------------------------------
Dollars ($15,000,000).
"Environmental Indemnity Escrow Fund" means the Environmental Indemnity
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Escrow Deposit together with any and all interest or income actually earned
thereon pursuant to the Environmental Indemnity Escrow Agreement.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
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amended.
"Escrow Agent" means National City Bank in its capacity as Escrow Agent
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under each of the Purchase Price Deposit Escrow Agreement, the General Escrow
Agreement, and the Environmental Indemnity Escrow Agreement.
"Excluded Contracts" means the Contracts listed on Schedule 1.1(c).
------------------ ---------------
"FCC Licenses" means Sellers' licenses granted by the United States Federal
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Communications Commission with respect to radio dispatch equipment of Sellers.
3
"Former Real Property Liabilities" means all Liabilities of Sellers arising
--------------------------------
out or in connection with (i) the real property formerly owned by any Seller
located in Macungie, Pennsylvania and which is a subject of the Amended and
Restated Asset Purchase Agreement, by and between Buckeye Terminal, LLC and
Energy LLC, dated as of June 30, 2000, (ii) the real property formerly owned or
leased by any Seller located in Freedom, Pennsylvania and Pittston, Pennsylvania
and which is a subject of the Purchase Agreement, by and between Agway Petroleum
Corp. and Scranton-Altoona Terminals Corp., dated as of August 7, 1997 and (iii)
any Liabilities of any Seller under the agreements referred to in clauses (i)
and (ii) above for matters other than indemnification with respect to
environmental Liabilities.
"Furniture and Equipment" means all furniture, fixtures, furnishings,
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equipment, tools, machinery, vehicles, leasehold improvements, tanks, and other
tangible personal property owned or used by Sellers in the conduct of the
Business, wherever located and including all such artwork, desks, chairs,
tables, Hardware, copiers, telephone lines and numbers, telecopy machines and
other telecommunication equipment, cubicles and miscellaneous office furnishings
and supplies.
"GAAP" means generally accepted accounting principles in the United States
----
as of the date hereof.
"General Escrow Agreement" means the General Escrow Agreement to be dated
-------------------------
as of the Closing Date by and among Sellers, Purchaser and the Escrow Agent
substantially in the form of Exhibit D hereto.
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"General Indemnity Escrow Deposit" means the sum of Four Million Dollars
------------------------------------
($4,000,000).
"General Indemnity Escrow Fund" means the General Indemnity Escrow Deposit
------------------------------
together with all interest or income actually earned thereon pursuant to the
General Escrow Agreement.
"Governmental Body" or "Governmental Bodies" means any one or more
------------------ --------------------
governments or governmental or regulatory bodies thereof, or political
subdivisions thereof, whether foreign, federal, state, or local, or any one or
more agencies, instrumentalities or authorities thereof, or any one or more
courts or arbitrators (public or private).
"Hardware" means any and all computer and computer-related hardware,
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including, but not limited to, computers, file servers, facsimile servers,
scanners, color printers, laser printers and networks.
"Hazardous Material" means any substance, material or waste which is
-------------------
regulated by any Government Body including, without limitation, petroleum and
its by-products, asbestos, and any material or substance which is defined as a
"hazardous waste," "hazardous substance," "hazardous material," "restricted
hazardous waste," "industrial waste," "solid waste," "contaminant," "pollutant,"
4
"toxic waste" or "toxic substance" under any provision of Environmental Law.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
-------
as amended.
"Indebtedness" of any Person means, without duplication, (i) the principal
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of and premium (if any) in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (ii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable and other accrued current liabilities arising
in the Ordinary Course of Business); (iii) all obligations of such Person under
leases required to be capitalized in accordance with GAAP; (iv) all obligations
of such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction; (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons for the payment of
which such Person is responsible or liable, directly or indirectly, as obligor,
guarantor, surety or otherwise, including guarantees of such obligations; and
(vi) all obligations of the type referred to in clauses (i) through (v) of other
Persons secured by any Lien on any property or asset of such Person (whether or
not such obligation is assumed by such Person).
"Intellectual Property Licenses" means (i) any grant to a third Person of
--------------------------------
any right to use any of the Purchased Intellectual Property owned by any Seller,
and (ii) any grant to Sellers of a right to use a third Person's intellectual
property rights which is necessary for the use of any Purchased Intellectual
Property which is not owned by any Seller.
"Inventory" means (i) Sellers' inventory of appliances owned by Sellers and
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located at Sellers' Properties at the opening of business on the Closing Date;
(ii) Sellers' inventory of Products owned by Sellers at the opening of business
on the Closing Date, wherever located including, at one of Sellers' Properties
or on the premises of one of the active customers of Sellers or in transit; and
(iii) Sellers' inventory of tanks, parts and fittings owned by Sellers and
located at one of Sellers' Properties or in transit at the opening of business
on the Closing Date.
"IRS" means the Internal Revenue Service.
---
"ISRA" means the Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et. seq.,
----
and the regulations promulgated thereunder and any amendments and successors
thereto.
"Knowledge of Sellers" means the actual knowledge after reasonable due
--------------------
inquiry of those Persons with respect to Sellers as identified on Schedule
--------
1.1(a) hereto.
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"Law" means any federal, state, local or foreign law, statute, code,
---
ordinance, rule or regulation.
5
"Legal Proceeding" means any judicial, administrative or arbitral actions,
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suits or proceedings (public or private) by or before a Governmental Body.
"Liability" or "Liabilities" means any debt, liability or obligation
--------- -----------
(whether direct or indirect, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, or due or to become due), and including all costs
and expenses relating thereto.
"Lien" means any lien, encumbrance, pledge, mortgage, deed of trust,
----
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude or transfer restriction under any shareholder or similar
agreement.
"Material Adverse Effect" means (i) a material adverse effect on the
-------------------------
Business, assets, properties, results of operations or financial condition of
Sellers (taken as a whole), or (ii) a material adverse effect on the ability of
Sellers to consummate the transactions contemplated by this Agreement, other
than an effect resulting from an Excluded Matter. "Excluded Matter" means any
----------------
one or more of the following: (i) the effect of any change in the United States
or foreign economies or securities or financial markets in general, unless such
events materially and adversely affect the Business; (ii) the effect of any
change that generally affects any industry in which any Seller operates; (iii)
the effect of any change arising in connection with earthquakes, hostilities,
acts of war, sabotage or terrorism or military actions or any escalation or
material worsening of any such hostilities, acts of war, sabotage or terrorism
or military actions existing or underway as of the date hereof, unless such
events materially and adversely affect the Business; (iv) the effect of any
action taken by Purchaser or its Affiliates with respect to the transactions
contemplated hereby or with respect to Sellers, including their respective
employees; (v) the effect of any changes in applicable Laws or accounting rules;
or (vi) any effect resulting from the public announcement of this Agreement,
compliance with terms of this Agreement or the consummation of the transactions
contemplated by this Agreement.
"Order" means any order, injunction, judgment, decree, ruling, writ,
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assessment or arbitration award of a Governmental Body.
"Ordinary Course of Business" means the ordinary and usual course of normal
---------------------------
day-to-day operations of the Business through the date hereof consistent with
past practice.
"Permits" means any approvals, authorizations, consents, licenses, permits
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or certificates of a Governmental Body.
"Permitted Exceptions" means (i) all defects, exceptions, restrictions,
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easements, rights of way and encumbrances disclosed in policies of title
insurance which have been made available to Purchaser by Seller; (ii) statutory
liens for current Taxes, assessments or other governmental charges not yet due
and payable or the amount or validity of which is being contested in good faith
by appropriate proceedings provided an appropriate reserve is established
therefor; (iii) mechanics', carriers', workers', repairers' and similar Liens
6
arising or incurred in the Ordinary Course of Business; (iv) zoning, entitlement
and other land use and environmental regulations by any Governmental Body
provided that such regulations have not been violated; (v) title of a lessor
under a capital or operating lease; (vi) any licenses to intellectual property
of Sellers that have been granted by Sellers to third parties set forth in
Schedule 1.1(d); and (vii) such other imperfections in title, charges,
----------------
easements, restrictions and encumbrances which would not have a Material Adverse
Effect or impair Purchaser's ability to continue to utilize Sellers' Properties
in their present manner in any material respect.
"Person" means any individual, corporation, partnership, firm, joint
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venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
"Products" means any and all products developed, manufactured, marketed,
--------
leased or sold by Sellers.
"Purchase Price Deposit" means the sum of Ten Million Five Hundred Thousand
----------------------
Dollars ($10,500,000).
"Purchase Price Deposit Escrow Agreement" means the Purchase Price Deposit
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Escrow Agreement of even date herewith by and among Sellers, Purchaser and the
Escrow Agent in substantially the form of Exhibit C hereto.
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"Purchase Price Deposit Escrow Fund" means the Purchase Price Deposit
--------------------------------------
together with any and all interest or income actually earned thereon pursuant to
the Purchase Price Escrow Agreement.
"Purchased Contracts" means all Contracts related to the Business to which
--------------------
any of Sellers are parties or otherwise bound as set forth on Schedule 1.1(b),
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other than Excluded Contracts.
"Purchased Intellectual Property" means all intellectual property rights
---------------------------------
owned by Sellers, but excluding the Excluded Intellectual Property, that are
used by Sellers in connection with, arising from, or in respect of, the Business
as follows: (i) all patents and applications therefor, including continuations,
divisionals, continuations-in-part, or reissue patent applications and patents
issuing thereon (collectively, "Patents"), (ii) all trademarks, service marks,
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trade names, service names, brand names, trade dress rights, logos, Internet
domain name registrations and corporate names and general intangibles of a like
nature, including, all of Sellers' rights, title and interest to use the "AGWAY"
name as a trade name and service name solely in connection with the Business and
in accordance with and subject to Section 7.14, together with the goodwill
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associated with any of the foregoing, and all applications, registrations and
renewals thereof, (collectively, "Marks"), (iii) copyrights and registrations
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and applications therefor and works of authorship, and mask work rights, in each
case used primarily in connection with the Business, (collectively,
"Copyrights") and (iv) all Software and Technology of Sellers used in connection
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with the Business.
7
"Release" means any release, spill, emission, leaking, pumping, injection,
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deposit, disposal, discharge, dispersal, or leaching into the indoor or outdoor
environment, or into or out of any property.
"Remedial Action" means all actions required by any Environmental Laws to
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(i) clean up, remove, treat or in any other way address any Hazardous Material;
(ii) prevent the Release of any Hazardous Material so it does not endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment; (iii) perform pre-remedial studies and investigations or
post-remedial monitoring and care; or (iv) to correct a condition of
non-compliance with Environmental Laws.
"Sale Motion" means the motion or motions to be filed by Agway, in form and
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substance reasonably acceptable to Purchaser and Sellers, seeking entry of the
Approval Order.
"Software" means, except to the extent generally available for purchase
--------
from a third Person, any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, screens, user interfaces, report formats,
filmwork, development tools, templates, menus, buttons and icons, and (iv) all
documentation including user manuals and other training documentation related to
any of the foregoing.
"Tangible Property" means the Purchased Assets which are tangible property
------------------
and transferred to Purchaser pursuant to Sections 2.1(b), 2.1(e), 2.1(j), 2.1(l)
---------------------------------------
and 2.1(n).
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"Tax Authority" means any state or local government, or agency,
--------------
instrumentality or employee thereof, charged with the administration of any law
or regulation relating to Taxes.
"Tax Return" means all returns, declarations, reports, estimates,
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information returns and statements required to be filed in respect of any Taxes.
"Taxes" means (i) all federal, state, local or foreign taxes, charges, or
-----
other assessments, including, without limitation, all net income, gross
receipts, capital, sales, use, motor fuel, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes and (ii) all interest, penalties, fines, additions
to tax or additional amounts imposed by any Tax Authority in connection with any
item described in clause (i).
"Technology" means, collectively, all designs, formulae, algorithms,
----------
procedures, methods, techniques, ideas, know-how, research and development,
technical data, programs, subroutines, tools, materials, specifications,
processes, inventions (whether patentable or unpatentable and whether or not
reduced to practice), apparatus, creations, improvements, works of authorship
8
and other similar materials, and all recordings, graphs, drawings, reports,
analyses, and other writings, and other tangible embodiments of the foregoing,
in any form whether or not specifically listed herein, and all related
technology, that are used in, incorporated in, embodied in, displayed by or
relate to, or are used or useful in the design, development, reproduction,
maintenance or modification of, any of the Products.
"WARN" means the Worker Adjustment and Retraining Notification Act of 1988,
----
as amended.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of this
---------------------------------------------
Agreement, the following terms have meanings set forth in
the sections indicated:
Term Section
---- -------
Accounting Referee 2.7(b)(ii)
Actual Heating Degree Days 3.5(b)
Agreed Principles 3.4(a)
Allocation Objection Notice 2.7(b)(i)
Allocation Response Period 2.7(b)(i)
Allocation Schedule 2.7(b)
Alternative Transaction 7.5
Antitrust Laws 7.4(b)
Audited Year-End Financial Statements 5.4
Automotive Equipment 2.1(m)
Average Heating Day Degrees 3.5(b)
Average Net Working Capital 3.4(a)
Asset Basis 2.7(a)
Assumed Liabilities 2.3
Balance Sheet 5.4
Balance Sheet Date 5.4
Bankruptcy Case Recitals
Bankruptcy Code Recitals
Bonds 2.2(i)
Break-Up Fee 4.7(a)
Budget Price 3.5(b)
Burn Rate 3.5(b)
Cash Settlement of Credit Balances 3.5(a)
Closing 4.1
Closing Date 4.1
Closing Date Balance Sheet 3.4(a)
Closing Statement 3.4(a)
Closing Working Capital 3.4(a)
COBRA 5.13(e)
Confidentiality Agreement 7.7
Copyrights 1.1 (in Purchased Intellectual
Property definition)
9
Term Section
---- -------
Credit Balance Settlement Statement 3.5(a)
Deductible 10.5(b)(ii)
De Minimis 10.5(b)(i)
Employee Benefit Cap 8.2(e)
Employee Benefit Plans 5.13(a)
Energy LLC Recitals
Energy Services, Inc. Recitals
Environmental Liabilities 0
Equity 7.5
ERISA Affiliate 5.13(a)
Estimated Closing Working Capital 3.4(a)
Excluded Assets 2.2
Excluded Bonus Amounts 8.2(e)
Excluded Intellectual Property 2.2(d)
Excluded Liabilities 2.4
Expenses 10.3(a)(iii)
Expense Reimbursement 4.7(b)
Final Cash Settlement of Credit Balances 3.5(f)
Final Unaudited Interim Financial Statements 5.4
Final Working Capital 3.4(f)
Financial Statements 5.4
Heating Degree Day 3.5(b)
Heating Degree Day Deficit 3.5(b)
Initial Unaudited Interim Financial Statements 5.4
ISRA Closing Compliance 7.16(a)(ii)
Leased Real Property 5.9(a)
LNA 7.16(a)(i)
LLC I 7.18
LLC II 7.18
Losses 10.2(a)(i)
Marks 1.1 (in Purchased Intellectual
Property definition)
Material Contract 5.12
Minimum Guarantee 8.2(a)
Multiemployer Plans 5.13(a)
Multiple Employer Plans 5.13(a)
Net Working Capital 3.4(a)
NJDEP 7.16(a)
Number of Budget Program Customers at Closing 3.5(b)
Other AGWAY Marks 7.14(b)(v)
10
Term Section
---- -------
Owned Properties 5.9
Patents 1.1 (in Purchased Intellectual
Property definition)
Pension Plans 5.13(b)
Pre-Closing Breaches of Purchased Contracts 2.4(i)
Pre-Existing Hazardous Materials 10.10(a)
Property 10.10(a)
Purchased Assets 2.1
Purchase Price 3.1
Purchaser Recitals
Purchaser Documents 6.2
Purchaser Indemnified Parties 10.2(a)
Purchaser Plans 8.2(a)
Qualified Plans 5.13(c)
Real Property Lease 5.9
Remediation 10.10(a)
Remediation Agreement 7.16(a)(ii)
Revised Statements 2.7
Securities Act 7.1
Seller Group 7.5
Seller Indemnified Parties 10.3(a)
Sellers Recitals
Sellers Documents 5.2
Sellers' Non-Competition Agreement 4.2(g)
Sellers' Policies 10.10(e)(i)
Sellers' Property 5.9
Services PA Recitals
Significant Suppliers 5.21
Survival Period 10.1
State Tax Liabilities 7.17
Tax Clearance Certificates 7.17
Tax Escrow 10.5(b)(iii)
Termination Date 4.4(a)
Title IV Plans 5.13(a)
Transferred Employees 8.1(a)
Unaudited Year-End Financial Statements 5.4
Unresolved Claims 10.7
Warm Weather Adjustment 3.5(a)
1.3 Other Definitional and Interpretive Matters
-------------------------------------------
(a) Unless otherwise expressly provided, for purposes of this Agreement,
the following rules of interpretation shall apply:
11
Calculation of Time Period. When calculating the period of time before
----------------------------
which, within which or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in calculating
such period shall be excluded. If the last day of such period is a non-Business
Day, the period in question shall end on the next succeeding Business Day.
Dollars. Any reference in this Agreement to $ means U.S. dollars.
-------
Exhibits/Schedules. The Exhibits and Schedules to this Agreement are hereby
------------------
incorporated and made a part hereof and are an integral part of this Agreement.
All Exhibits and Schedules annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Any matter or item disclosed on one schedule shall be deemed to have
been disclosed on each other schedule to the extent that disclosure of such
matter or item is manifest or obvious from a reading of the schedules as a
whole. Any capitalized terms used in any Schedule or Exhibit but not otherwise
defined therein shall be defined as set forth in this Agreement.
Gender and Number. Any reference in this Agreement to gender shall include
-----------------
all genders, and words imparting the singular number only shall include the
plural and vice versa.
Headings. The provision of a Table of Contents, the division of this
--------
Agreement into Articles, Sections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement. All references in this
Agreement to any "Section" are to the corresponding Section of this Agreement
unless otherwise specified.
Herein. The words such as "herein," "hereinafter," "hereof," and
------ ------ ----------- ------
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
---------
in which such words appear unless the context otherwise requires.
Including. The word "including" or any variation thereof means "including,
--------- --------- ---------
without limitation" and shall not be construed to limit any general statement
-------------------
that it follows to the specific or similar items or matters immediately
following it.
(b) The parties hereto have participated jointly in the negotiation and
drafting of this Agreement and, in the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as jointly drafted
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provision of this
Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 PURCHASE AND SALE OF ASSETS. On the terms and subject to the conditions
---------------------------
set forth in this Agreement, at the Closing Purchaser shall purchase, acquire
12
and accept from Sellers, and Sellers shall sell, transfer, assign, convey and
deliver to Purchaser all of Sellers' right, title and interest in, to and under
the Purchased Assets free and clear of all Liens of Agway's creditors.
"Purchased Assets" shall mean the following assets of Sellers (but excluding the
----------------
Excluded Assets) as of the Closing:
(a) all accounts receivable of Sellers other than any accounts receivable
arising out of or in connection with any Excluded Contract;
(b) subject to Section 7.18, all Inventory used in connection with the
-------------
Business;
(c) all security deposits (including for rent, electricity, telephone and
utilities) and all prepaid charges and expenses of Sellers other than (i) any
customer security or other deposits and (ii) any security or other deposits,
prepaid charges or expenses paid in connection with or relating to any Excluded
Assets;
(d) all rights, titles and interest of Sellers in and to each Owned
Property and Real Property Lease, together, subject to Section 7.18, with all
------------
improvements, fixtures and other appurtenances thereto and rights in respect
thereof as well as all condemnation awards, or insurance proceeds received or
the right to receive insurance proceeds in connection with Owned Property or
Leased Real Property condemned or as to which a casualty loss has occurred on or
after the date hereof as and to the extent provided in Section 11.2;
------------
(e) subject to Section 7.18, the Furniture and Equipment (including each
------------
Seller's interest as lessee in any leases with respect to the foregoing);
(f) the Purchased Intellectual Property other than the Excluded
Intellectual Property;
(g) the Purchased Contracts and all rights under any oral agreements that
Seller has with those of its customers as to whom it has no written contracts,
together with all security and guarantees in favor of Seller relating thereto
other than customer security or other deposits;
(h) all Documents that are used in, held for use in or intended to be used
in, or that arise out of, the Business, including Documents relating to
Products, services, marketing, advertising, promotional materials, Purchased
Intellectual Property, personnel files for Transferred Employees and all files,
customer files, vendor lists, referral lists and documents (including credit
information), books, records, literature and correspondence, whether or not
physically located on any of the premises referred to in clause (d) above, but
excluding (i) personnel files for Employees of Sellers who are not Transferred
Employees, (ii) such files as may be required under applicable Law regarding
privacy, (iii) Documents which any Seller is not permitted to transfer pursuant
to any contractual confidentiality obligation owed to any third party, and (iv)
any Documents primarily related to or are required to realize the benefits of
any Excluded Assets;
13
(i) each of Sellers' Business as a going concern and all franchises and
Permits used by Sellers in the Business (to the extent assignable);
(j) subject to Section 7.18, all supplies owned by Sellers;
------------
(k) all rights of Sellers under non-disclosure or confidentiality,
non-compete, or non-solicitation agreements with employees and agents of Sellers
or with third parties to the extent relating to the Business or the Purchased
Assets (or any portion thereof);
(l) subject to Section 7.18, the Customer Installations;
------------
(m) the motor vehicles and replacement parts owned by Sellers as set forth
on Schedule 2.1(m) (collectively, the "Automotive Equipment");
-------------- --------------------
(n) subject to Section 7.18, the bulk plant equipment set forth on Schedule
------------ --------
2.1(n);
------
(o) all of Sellers' books and records pertaining to the customers and
Purchased Contracts on the Closing Date, except general ledgers, tax returns,
and related correspondence;
(p) all of Sellers' rights, title and interests to use the Agway trade name
and service name solely in connection with the Business and in accordance with
and subject to Section 7.14;
------------
(q) the right to xxxx and receive payment for Products shipped or delivered
by Sellers and services performed by Sellers but unbilled or unpaid as of the
Closing;
(r) the right to receive and retain correspondences related to the
Business;
(s) all rights of Sellers under or pursuant to all warranties,
representations and guarantees made by suppliers, manufacturers and contractors
to the extent relating to Products sold, or services provided, to Sellers or to
the extent affecting any Purchased Assets other than any warranties,
representations and guarantees pertaining to any Excluded Assets or Excluded
Liability;
(t) fax and telephone numbers of Sellers (including the call center);
(u) all of the membership interests in LLC I (and the assets of LLC I which
include all of the membership interests in LLC II);
(v) FCC Licenses;
14
(w) all goodwill and other intangible assets associated with the Business,
including customer and supplier lists and the goodwill associated with the
Purchased Intellectual Property; and
(x) the "xxxxxxxxxxx.xxx" domain name registration.
2.2 Excluded Assets. The Purchased Assets shall not include any of Sellers'
---------------
right, title or interest in or to the following Sellers' assets, properties,
interests and rights in or to any of the following (collectively, the "Excluded
--------
Assets"):
------
(a) all cash, cash equivalents, bank deposits or similar cash items of
Sellers;
(b) all (i) customer security or other deposits and (ii) security or other
deposits and prepaid charges or expenses of Sellers paid in connection with or
relating to any Excluded Assets;
(c) the Excluded Contracts, including any personal property subject to any
Excluded Contract and any accounts receivable arising out of or in connection
with any Excluded Contract;
(d) any intellectual property rights of Sellers set forth on Schedule
--------
2.2(d) (the "Excluded Intellectual Property");
------
(e) the "xxxxx.xxx" domain name registration and the right to use
"xxxxx.xxx" as a domain name or otherwise;
(f) any (i) confidential personnel and medical records pertaining to any
Employee; (ii) other books and records that Sellers are required by Law to
retain or that Sellers determine are necessary or advisable to retain,
including, without limitation, Tax Returns, financial statements, and corporate
or other entity filings; provided, however, that Purchaser shall have the right
-------- -------
to make copies of any portions of such retained books and records that relate to
the Business or any of the Purchased Assets; (iii) any information management
systems of Sellers, other than those used or held for use primarily in the
conduct of the Business; (iv) minute books, articles or certificates of
incorporation, by-laws, limited liability company certificates or articles of
formation, limited liability company operating agreements, all amendments
thereto, stock ledgers and stock certificates of Sellers; (v) documents relating
to proposals to acquire the Business by Persons other than Purchaser; (vi)
personnel files for Employees of Sellers who are not Transferred Employees;
(vii) such files as may be required under applicable Law regarding privacy;
(viii) Documents which any Seller is not permitted without prior written consent
to transfer pursuant to any contractual confidentiality obligation owed to any
third party; and (ix) any Documents primarily related to or are required to
realize the benefits of any Excluded Assets;
(g) any claim, right or interest of any Seller in or to any refund, rebate,
abatement or other recovery for Taxes, together with any interest due thereon or
15
penalty rebate arising therefrom, for any Tax period (or portion thereof) ending
on or before the Closing Date;
(h) all amounts owed by any Affiliate of Sellers other than accounts
receivable arising in the Ordinary Course of Business in connection with the
sale of Product;
(i) other than condemnation awards received or to which Sellers shall be
entitled in connection with the Owned Property or the Leased Real Property and
insurance proceeds received or the right to insurance proceeds in connection
with Owned Property or Leased Real Property condemned or as to which a casualty
has occurred on or after the date hereof as and to the extent provided in
Section 11.2 and any recovery under any insurance policies as and to the extent
------------
provided in Section 10.10, all insurance policies or rights to proceeds thereof
-------------
relating to the assets, properties, business or operations of any Seller; and
any surety bonds issued on behalf of or at the request of any Seller and any
surety bond for which any Seller or Agway has contractually committed to
indemnify the surety as set forth on Schedule 2.2(i) (collectively, the
---------------
"Bonds");
-----
(j) any rights, claims or causes of action of any Seller against third
parties relating to assets, properties, business or operations of any Seller
arising out of events occurring on or prior to the Closing Date other than
against third party vendors in connection with any warranty claim related to an
Assumed Liability and any recovery under any insurance policies and from third
parties for claims and causes of action to the extent provided in Section
-------
10.10(e); and
--------
(k) any weather insurance policy or derivative instrument or the right to
proceeds thereof relating to the mitigation of the effect of warm weather.
2.3 Assumption of Liabilities. On the terms and subject to the conditions
--------------------------
set forth in this Agreement, at the Closing Purchaser shall assume, effective as
of the Closing, and shall timely perform and discharge in accordance with their
respective terms, the following Liabilities of Sellers (collectively, the
"Assumed Liabilities"):
-------------------
(a) all Liabilities of Sellers under the Purchased Contracts to the extent
Purchased Contracts are assigned to Purchaser or Purchaser receives the benefit
thereof and is not an Excluded Liability;
(b) all Liabilities arising in connection with customer security or other
deposits (notwithstanding that such deposits constitute Excluded Assets);
(c) all Liabilities arising from the sale of Products in the Ordinary
Course of Business pursuant to product warranties, product returns and rebates;
(d) all Liabilities arising in connection with Sellers' accounts receivable
credit balances;
16
(e) accounts payable incurred in the Ordinary Course of Business existing
on the Closing Date (including, for the avoidance of doubt, (i) invoiced
accounts payable and (ii) accrued but uninvoiced accounts payable);
(f) 50% of all transfer taxes and all other Taxes applicable to the
transfer of the Purchased Assets pursuant to this Agreement in accordance with
Section 11.1(a);
---------------
(g) Liabilities with respect to the Employees, including Liabilities in
excess of the Employee Benefit Cap, but only as and to the extent provided in
Article VIII; and
------------
(h) all Liabilities relating to amounts required to be paid by Purchaser
hereunder.
2.4 Excluded Liabilities. Purchaser will not assume or be liable for any
---------------------
Excluded Liabilities. "Excluded Liabilities" shall mean the following
----------------------
Liabilities of Sellers or Agway arising out of, relating to or otherwise in
respect of the Business and all other Liabilities not specifically assumed by
Purchaser pursuant to Section 2.3 hereof:
-----------
(a) all Liabilities arising out of Excluded Contracts;
(b) except as otherwise provided in Section 2.3(f), all Liabilities for
---------------
Taxes (i) for all taxable periods in the case of any Sellers and any of their
respective Affiliates, and in the case of Taxes relating to the Excluded Assets,
(ii) for all taxable periods (or portions thereof as provided in Section
-------
11.1(b)) ending on or prior to (or, to the extent attributable to the portion of
-------
such period ending on the Closing Date, including) the Closing Date, in the case
of Taxes relating to the Purchased Assets and (iii) under any Tax allocation,
sharing or similar agreement (whether oral or written);
(c) all Liabilities relating to amounts required to be paid by Sellers
hereunder;
(d) any Liability of Sellers with respect to any Indebtedness for borrowed
money, indebtedness under any working capital facilities, and bank overdrafts;
(e) any Liability of Sellers arising out of any threatened or pending
litigation or other claim whether asserted or unasserted to the extent related
to events occurring on or prior to the Closing Date;
(f) any Liabilities of Sellers to any Affiliates or current or former
stockholders or members of Sellers to the extent related to events occurring or
existing on or prior to the Closing Date;
(g) all Liabilities with respect to the Employees and Employee Benefit
Plans, except as and to the extent provided in Article VIII;
------------
17
(h) any Liabilities arising out of any action or inaction by Sellers or any
fact or set of facts giving rise to any Liability to or claim by any third party
for personal injury or property damage that is asserted on or after the Closing
as a result of or arising out of the Business or Sellers' alleged negligent,
reckless or intentional acts or omissions prior to the Closing;
(i) any Liability or obligation relating to any breach or default under any
Purchased Contract occurring prior to the Closing ("Pre-Closing Breaches of
------------------------
Purchased Contracts");
-------------------
(j) any Liability or obligation relating to the violation of any Law that
arises out of or results from any act, omission or occurrence of Sellers prior
to Closing;
(k) the Former Real Property Liabilities; and
(l) any Liability or obligation of Sellers which results from any breach or
default by Seller under this Agreement.
2.5 Further Conveyances and Assumptions; Consent of Third Parties.
----------------------------------------------------------------------
(a) From time to time following the Closing, Sellers shall, or shall cause
its Affiliates to, make available to Purchaser such non-confidential data in
personnel records of Transferred Employees as is reasonably necessary for
Purchaser to transition such employees into Purchaser's records.
(b) From time to time following the Closing, Sellers, Agway and Purchaser
shall, and shall cause their respective Affiliates to, execute, acknowledge and
deliver all such further conveyances, notices, assumptions, releases and
acquaintances and such other instruments, and shall take such further actions,
as may be reasonably necessary or appropriate to assure fully to Purchaser and
its respective successors or assigns, all of the properties, rights, titles,
interests, estates, remedies, powers and privileges intended to be conveyed to
Purchaser under this Agreement and the Sellers Documents and to assure fully to
Sellers and its Affiliates and their successors and assigns, the assumption of
the liabilities and obligations intended to be assumed by Purchaser under this
Agreement and the Sellers Documents, and to otherwise make effective the
transactions contemplated hereby and thereby.
(c) Nothing in this Agreement nor the consummation of the transactions
contemplated hereby shall be construed as an attempt or agreement to assign any
Purchased Asset, including any Contract, Permit, certificate, approval,
authorization or other right, which by its terms or by Law is nonassignable
without the consent of a third party or a Governmental Body or is cancelable by
a third party in the event of an assignment ("Nonassignable Assets") unless and
--------------------
until such consent shall have been obtained. With respect to Material Contracts
or Permits that are material for the Business as a going concern after the
Closing Date, Sellers shall, and shall cause their Affiliates to, use their
commercially reasonable efforts to cooperate with Purchaser at its request for
up to 180 days following the Closing Date in endeavoring to obtain such consents
18
promptly; provided, however, that such efforts shall not require any Seller or
-------- -------
any of their Affiliates to incur any expenses or Liabilities or provide any
financial accommodation or to remain secondarily or contingently liable for any
Assumed Liability or to initiate any litigation or legal proceedings to obtain
any such consent. If any such consent is not obtained, or if any attempt at an
assignment thereof would be ineffective or would affect the rights of Sellers
thereunder so that Purchaser would not in fact receive all such rights, Sellers
shall cooperate, at no expense to Sellers, with Purchaser to provide Purchaser
with the economic benefits under such Purchased Asset, Contract, Permit,
certificate, approval, authorization or other right, including, without
limitation, the Purchased Contracts set forth on Schedule 2.5(c), provided that
--------------- --------
no Seller shall be obligated to continue as a going concern. Purchaser and
Sellers, at no additional expense to Purchaser, shall use their respective
commercially reasonable efforts to obtain, or cause to be obtained, any consent,
substitution, approval or amendment required to novate all Liabilities under any
and all Purchased Contracts or other Liabilities that constitute Assumed
Liabilities or to obtain in writing the unconditional release of Sellers and
their Affiliates so that, in any such case, Purchaser shall be solely
responsible for such Liabilities.
2.6 BULK SALES LAWS. Purchaser hereby waives compliance by Sellers with the
---------------
requirements and provisions of any "bulk-transfer" Laws of any jurisdiction that
may otherwise be applicable with respect to the sale of any or all of the
Purchased Assets to Purchaser.
2.7 PURCHASE PRICE ALLOCATION.
-------------------------
(a) Purchaser and Sellers agree that, for Purchaser's and Sellers'
respective federal, state and local income tax purposes, the Purchase Price and
the Assumed Liabilities (the "Asset Basis") shall be allocated among the
------------
Purchased Assets and Sellers' Non-Competition Agreement as set forth in
Allocation Schedule (as provided below) and in a manner consistent with Section
1060 of the Code and the regulations thereunder.
(b) Within a reasonable period of time following the Closing, but in no
event later than forty five (45) days following the Closing Date, Purchaser
shall prepare and deliver to Sellers a schedule (an "Allocation Schedule")
--------------------
allocating the Asset Basis among the Purchased Assets and the Sellers'
Non-Competition Agreement.
(i) Sellers shall have a period of ten (10) days after the delivery of
the Allocation Schedule (the "Allocation Response Period") to present in
----------------------------
writing to Purchaser notice of any objections Sellers may have to the
allocations set forth therein (an "Allocation Objections Notice"). Unless
-----------------------------
Sellers timely object, or as otherwise require by law, such Allocation
Schedule shall be binding on the parties without further adjustment.
(ii) If Sellers shall raise any objections within the Allocation
Response Period, Purchaser and Sellers shall negotiate in good faith and
use their commercially reasonable efforts to resolve such dispute. If the
19
parties fail to agree within five (5) days after the delivery of the
Allocation Objections Notice, then Purchaser shall submit the Allocation
Schedule, including modifications, if any, that Purchaser chooses to make
as a result of its negotiations with Sellers, to Deloitte & Touche or such
other independent accounting firm mutually agreed upon by Sellers and
Purchaser (the "Accounting Referee") for resolution by it. The disputed
------------------
items shall be submitted to the Accounting Referee within five (5) days
following such failure to agree. The determination of the Accounting
Referee shall be final and binding on the parties and shall not be subject
to appeal. The Accounting Referee shall render such decision and report to
Seller and Purchaser in writing, specifying the reasons for its decision in
reasonable detail, not later than thirty (30) days after the item has been
referred to it. The costs, fees and expenses of the Accounting Referee
shall be borne equally by Sellers (collectively) and Purchaser.
(iii) For all Tax purposes, Purchaser and Sellers agree to report the
transactions contemplated by this Agreement in a manner consistent with the
terms of this Agreement and the Allocation Schedule as finally determined,
and agree that, except as otherwise required by law, neither of them will
take any position inconsistent therewith in any Tax Return. In addition, to
the extent there are accounts receivable credit balances and deferred
revenue on the balance sheet of Sellers as at the Closing Date, Sellers
will recognize the value of such accounts as ordinary income on their Tax
Returns as appropriate or required by law.
ARTICLE III
CONSIDERATION
3.1 Consideration. The aggregate consideration for the Purchased Assets
-------------
shall be (a) an amount in cash equal to Two Hundred Six Million Dollars
($206,000,000) (the "Purchase Price"), subject to adjustment as provided in
---------------
Sections 3.4, 3.5, 11.1(b) and 11.2, and (b) the assumption of the Assumed
------------- --- ------ ----
Liabilities.
3.2 Purchase Price Deposit. Upon the execution of this Agreement, Purchaser
----------------------
shall immediately deposit with the Escrow Agent under the Purchase Price Deposit
Escrow Agreement the sum of Ten Million Five Hundred Thousand Dollars
($10,500,000) by wire transfer of immediately available funds. Upon the terms
and subject to the conditions of the Purchase Price Deposit Escrow Agreement,
the Purchase Price Deposit Escrowed Fund shall be distributed as follows:
(a) if the Closing shall occur, the Purchase Price Deposit Escrowed
Fund shall be applied towards the Purchase Price payable by Purchaser to Sellers
pursuant to Section 3.3 hereof;
-----------
(b) if this Agreement is terminated by Sellers pursuant to Section
-------
4.4(f), the Purchase Price Deposit Escrowed Fund shall be delivered to Sellers;
-----
or
20
(c) if this Agreement is terminated other than pursuant to Section
-------
4.4(f), the Purchase Price Deposit Escrow Fund shall be delivered to Purchaser.
------
3.3 Payment of Purchase Price; Funding of Certain Escrows;
----------------------------------------------------------------
Non-Competition Payments.
-------------------------
(a) On the Closing Date, Purchaser shall pay to Sellers, by wire transfer
of immediately available funds to an account designated in writing by Sellers
prior to the Closing, the Purchase Price, less (i) the amount of the Purchase
Price Deposit Escrowed Fund and (ii) Twenty-Nine Million Dollars ($29,000,000),
representing the sum of the amounts of the General Indemnity Escrow Deposit, the
Environmental Indemnity Escrow Deposit and the Credit Balance Escrow Deposit.
(b) On the Closing Date, Purchaser shall deliver to the Escrow Agent under
the General Escrow Agreement, by wire transfer of immediately available funds,
the amount of Four Million Dollars ($4,000,000), representing the sum of the
amounts of General Indemnity Escrow Deposit.
(c) On the Closing Date, Purchaser shall deliver to the Escrow Agent under
the Environmental Indemnity Escrow Agreement, by wire transfer of immediately
available funds, the amount of Fifteen Million Dollars ($15,000,000),
representing the sum of the amounts of the Environmental Indemnity Escrow
Deposit.
(d) On the Closing Date, Purchaser shall deliver to the Escrow Agent under
the General Escrow Agreement, by wire transfer of immediately available funds,
the amount of Ten Million Dollars ($10,000,000), representing the sum of the
amounts of the Credit Balance Escrow Deposit.
3.4 Working Capital Adjustment.
--------------------------
(a) At least 10 days prior to the Closing Date, Sellers shall deliver to
Purchaser an estimate of the Closing Working Capital (the "Estimated Closing
------------------
Working Capital"), which shall be reasonably acceptable to Purchaser.
---------------
(b) As promptly as practicable, but no later than forty-five (45) days
after the Closing Date, Purchaser shall cause to be prepared and delivered to
Sellers the Closing Statement (as defined below) and a certificate based on such
Closing Statement setting forth Purchaser's calculation of Closing Working
Capital. The closing statement (the "Closing Statement") shall fairly present in
-----------------
all material respects the consolidated Net Working Capital of the Business as of
the end of business on the Closing Date ("Closing Working Capital"). "Net
------------------------- ---
Working Capital" means (i) the sum of (A) trade and other accounts receivable
----------------
net of reserves, (B) Inventory, (C) Sellers' prepaid expenses and other current
assets (excluding Taxes related accounts, sales and use Tax, property Tax,
deferred income Tax and other Tax on Products and excluding any and all accounts
representing derivative assets established under the provisions of Statement of
Financial Accounting Standards No. 133 for derivative instruments and hedging
activities), and (D) notes and lease receivables, reduced by, without
duplication, (ii) the sum of (A) trade and other accounts payable of Sellers
21
(including any customer security or other deposits but excluding Taxes related
accounts, sales and use Tax, property Tax, deferred income Tax or other Tax on
Products but excluding any and all accounts representing derivative liabilities
established under the provisions of Statement of Financial Accounting Standards
No. 133 for derivative instruments and hedging activities), (B) accounts
receivable credit balances of Sellers and (C) without duplication, deferred
revenue of Sellers, in each case as determined in accordance with the accounting
principles set forth on Schedule 3.4(b)(i) (the "Agreed Principles"). The
------------------ ------------------
preparation of the Closing Statement shall be for the sole purpose of
determining the difference between the Net Working Capital on the Closing Date
and the Average Net Working Capital. For purposes hereof, "Average Net Working
-------------------
Capital" shall mean the arithmetic average of Net Working Capital as of the
-------
conclusion of each calendar month during the 12-month period ending on August
31, 2003 as set forth on Schedule 3.4(b)(ii).
-------------------
(c) If Sellers disagree with Purchaser's calculation of Closing Working
Capital delivered pursuant to Section 3.4(b), Sellers may, within fifteen (15)
--------------
days after delivery of the Closing Statement, deliver a notice to Purchaser
disagreeing with such calculation and setting forth Sellers' calculation of such
amount. Any such notice of disagreement shall specify those items or amounts as
to which Sellers disagree, and Sellers shall be deemed to have agreed with all
other items and amounts contained in the Closing Statement and the calculation
of Closing Working Capital delivered pursuant to Section 3.4(b).
--------------
(d) If a notice of disagreement shall be duly delivered pursuant to Section
-------
3.4(c), Purchaser and Sellers shall, during the ten (10) days following such
------
delivery, use their reasonable best efforts to reach agreement on the disputed
items or amounts in order to determine, as may be required, the amount of
Closing Working Capital, which amount shall not be less than the amount thereof
shown in Purchaser's calculation delivered pursuant to Section 3.4(b) nor more
--------------
than the amount thereof shown in Sellers' calculation delivered pursuant to
Section 3.4(c). If during such period, Purchaser and Sellers are unable to reach
--------------
such agreement, they shall promptly thereafter cause the Accounting Referee to
review this Agreement and the disputed items or amounts for the purpose of
calculating Closing Working Capital (it being understood that in making such
calculation, the Accounting Referee shall be functioning as an expert and not as
an arbitrator). In making such calculation, the Accounting Referee shall
consider only those items or amounts in the Closing Statement and Sellers'
calculation of Closing Working Capital as to which Sellers has disagreed. The
Accounting Referee shall deliver to Purchaser and Sellers, as promptly as
practicable (but in any case no later than thirty (30) days from the date of
engagement of the Accounting Referee), a report setting forth such calculation.
Such report shall be final and binding upon Purchaser and Sellers. The cost of
such review and report shall be borne equally by Purchaser and Sellers.
(e) Purchaser and Sellers shall, and shall cause their respective
representatives to, cooperate and assist in the preparation of the Closing
Statement and the calculation of Closing Working Capital and in the conduct of
the review referred to in this Section 3.4, including, without limitation, the
-----------
22
making available to the extent necessary of books, records, work papers and
personnel.
(f) If the Final Working Capital exceeds the Average Net Working Capital,
Purchaser shall pay to Sellers, in the manner and with interest as provided in
Section 3.4(g), the amount of such excess and, if the Final Working Capital is
---------------
less than the Average Net Working Capital, Sellers shall pay to Purchaser, as an
adjustment to the Purchase Price, in the manner and with interest as provided in
Section 3.4(g), the amount of such deficiency. "Final Working Capital" means
-------------- ----------------------
Closing Working Capital (i) as shown in Purchaser's calculation delivered
pursuant to Section 3.4(b) if no notice of disagreement with respect thereto is
-------------
duly delivered pursuant to Section 3.4(c); or (ii) if such a notice of
---------------
disagreement is delivered, (A) as agreed by Purchaser and Sellers pursuant to
Section 3.4(d) or (B) in the absence of such agreement, as shown in the
---------------
Accounting Referee's calculation delivered pursuant to Section 3.4(d).
--------------
(g) Any payment pursuant to Section 3.4(f) shall be made at a mutually
---------------
convenient time and place within three (3) Business Days after Final Working
Capital has been determined by wire transfer by Purchaser or Sellers, as the
case may be, of immediately available funds to the account of such other party
as may be designated in writing by such other party. The amount of any payment
to be made pursuant to this Section 3.4 shall bear interest from and including
-----------
the Closing Date to but excluding the date of payment at a rate per annum equal
to the rate of interest published from time to time by the Wall Street Journal
-------------------
as the "prime rate" at large U.S. money center banks during the period from the
Closing Date to the date of payment. Such interest shall be payable at the same
time as the payment to which it relates and shall be calculated daily on the
basis of a year of three hundred sixty five (365) days and the actual number of
days elapsed.
3.5 Accounts Receivable Credit Balance Adjustment.
---------------------------------------------
(a) In the event that there is a Heating Degree Day Deficit (as defined
below) that is greater than 2.0% of the Average Heating Degree Days (as defined
below) for the period from September 15, 2003 through March 31, 2004, Purchaser
shall be entitled to receive from the Credit Balance Escrow Fund the amount of
the Warm Weather Adjustment (but shall not be entitled to receive the amount, if
any, by which the Warm Weather Adjustment exceeds the amount of the Credit
Balance Escrow Fund). For purposes hereof:
"Warm Weather Adjustment" = (Heating Degree Day Deficit * Burn Rate * Budget
-------------------------
Price * Number of Budget Program Customers at Closing) * (number of days between
April 1, 2003 and the Closing Date / 365)
As soon as practicable after March 31, 2004, but no later than April 15, 2004,
Purchaser shall calculate the Warm Weather Adjustment, and deliver to Sellers
the Accounts Receivable Credit Balance Settlement Statement based thereon (the
"Credit Balances Settlement Statement") and a certificate based on such Credit
------------------------------------
23
Balance Settlement Statement setting forth Purchaser's calculation of any
disbursement of all or a portion of the Credit Balance Escrow Fund to Purchaser
(the "Cash Settlement of Credit Balances"). No payment shall be made out of the
----------------------------------
Credit Balance Escrow Fund to Purchaser unless there is a Heating Degree Day
Deficit of greater than 2.0% of the Average Heating Degree Days.
(b) For purposes of this Section 3.5 the following terms shall have the
-----------
following meanings:
(i) "Average Heating Degree Days" means 6,084.
---------------------------
(ii) "Actual Heating Degree Days" means the average of the cumulative
---------------------------
heating degree days recorded at each of Sellers' 89 separate Heating Degree
Day monitors across its marketing territory from September 15, 2003 through
March 31, 2004.
(iii) "Heating Degree Day Deficit" means Average Heating Degree Days
---------------------------
minus Actual Heating Degree Days, which in any event shall be no less than
zero.
(iv) "Burn Rate" means 0.120 gallons per Heating Degree Day.
---------
(v) "Budget Price" means $1.399 per gallon.
------------
(vi) "Number of Budget Program Customers at Closing" means the number
-----------------------------------------------
of customers at Closing as set forth on a certificate delivered by Sellers
to Purchaser at the Closing, which certificate shall be reasonably
acceptable to Purchaser.
(c) If Sellers disagree with Purchaser's calculation of Credit Balance
Settlement Statement delivered pursuant to Section 3.5(a), Sellers may, within
--------------
ten (10) Business Days after delivery of the Credit Balance Settlement
Statement, deliver a notice to Purchaser disagreeing with such calculation and
setting forth Sellers' calculation of such amount. Any such notice of
disagreement shall specify those items or amounts as to which Sellers disagree,
and Sellers shall be deemed to have agreed with all other items and amounts
contained in the Credit Balance Settlement Statement and the calculation of the
Credit Balance Settlement Statement delivered pursuant to Section 3.5(a).
--------------
Purchaser shall provide or make available to Sellers such information as they
may reasonably request to verify the information contained in the "Credit
Balance Settlement Statement" including, without limitation, providing Sellers
with information concerning the cumulative heating degree days recorded at each
of Sellers' 89 separate heating degree day monitors across its marketing
territory for each month subsequent to the Closing Date through March 31, 2004
within 15 days after the conclusion of each such month.
(d) If a notice of disagreement shall be duly delivered pursuant to Section
-------
3.5(c), Purchaser and Sellers shall, during the ten (10) days following such
------
delivery, use their reasonable best efforts to reach agreement on the disputed
24
items or amounts in order to determine, as may be required, the amount of the
Cash Settlement of Credit Balances, which amount shall not be more than the
amount thereof shown in Purchaser's calculation delivered pursuant to Section
-------
3.5(c) nor less than the amount thereof shown in Sellers' calculation delivered
------
pursuant to Section 3.5(c). If during such period, Purchaser and Sellers are
---------------
unable to reach such agreement, they shall promptly thereafter cause the
Accounting Referee to review this Agreement and the disputed items or amounts
for the purpose of calculating the Cash Settlement of Credit Balances (it being
understood that in making such calculation, the Accounting Referee shall be
functioning as an expert and not as an arbitrator). In making such calculation,
the Accounting Referee shall consider only those items or amounts in the Credit
Balance Settlement Statement and Sellers' calculation of Cash Settlement of
Credit Balances as to which Sellers have disagreed. The Accounting Referee shall
deliver to Purchaser and Sellers, as promptly as practicable (but in any case no
later than thirty (30) days from the date of engagement of the Accounting
Referee), a report setting forth such calculation. Such report shall be final
and binding upon Purchaser and Sellers. The cost of such review and report shall
be borne equally by Purchaser and Sellers.
(e) Purchaser and Sellers shall, and shall cause their respective
representatives to, cooperate and assist in the preparation of the Credit
Balance Settlement Statement and the calculation of the Cash Settlement of
Credit Balances and in the conduct of the review referred to in this Section
-------
3.5, including, without limitation, the making available to the extent necessary
---
of books, records, work papers and personnel.
(f) The amount of the Final Cash Settlement of Credit Balances (as defined
below), if any, shall be disbursed promptly from the Credit Balance Escrow Fund
by the Escrow Agent to Purchaser, and, if there is any remaining Credit Balance
Escrow Fund after any such disbursement to Purchaser, such remaining Credit
Balance Escrow Fund shall be promptly disbursed to Sellers. In no event shall
Seller be obligated to pay Purchaser more than the Credit Balance Escrow Fund,
which is an absolute cap on Sellers' Liability with respect to the Cash
Settlement of Credit Balances. "Final Cash Settlement of Credit Balances" means
----------------------------------------
the Cash Settlement of Credit Balances (i) as shown in Purchaser's calculation
delivered pursuant to Section 3.5(a) if no notice of disagreement with respect
--------------
thereto is duly delivered pursuant to Section 3.5(c); or (ii) if such a notice
--------------
of disagreement is delivered, (A) as agreed by Purchaser and Sellers pursuant to
Section 3.5(d) or (B) in the absence of such agreement, as shown in the
---------------
Accounting Referee's calculation delivered pursuant to Section 3.5(d); provided,
-------------- --------
however, that in no event shall the Final Cash Settlement of Credit Balances be
-------
more than Purchaser's calculation of the Cash Settlement of Credit Balances
delivered pursuant to Section 3.5(a) or less than Sellers' calculation of the
---------------
Cash Settlement of Credit Balances delivered pursuant to Section 3.5(c).
--------------
25
ARTICLE IV
CLOSING AND TERMINATION
4.1 CLOSING DATE. Subject to the satisfaction of the conditions set forth
------------
in Sections 9.1, 9.2 and 9.3 hereof (or the waiver thereof by the party entitled
------------ --- ---
to waive that condition), the closing of the purchase and sale of the Purchased
Assets and the assumption of the Assumed Liabilities provided for in Article II
----------
hereof (the "Closing") shall take place at the offices of Weil, Gotshal & Xxxxxx
-------
LLP located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx (or at such other place as
the parties may designate in writing) at 10:00 a.m. (New York City time) on a
date to be specified by the parties, which date shall be no later than the
second Business Day after satisfaction or waiver of the conditions set forth in
Article IX (other than conditions that by their nature are to be satisfied at
----------
the Closing, but subject to the satisfaction or waiver of such conditions),
unless another time or date, or both, are agreed to in writing by the parties
hereto. The date on which the Closing shall be held is referred to in this
Agreement as the "Closing Date."
-------------
4.2 Deliveries by Sellers. At the Closing, Sellers shall deliver to
-----------------------
Purchaser:
(a) a duly executed xxxx of sale substantially in the form of Exhibit
-------
E hereto;
-
(b) duly executed assignment and assumption agreement substantially in
the form of Exhibit F hereto and duly executed assignments of the U.S. trademark
---------
registrations and applications included in the Purchased Intellectual Property,
in a form suitable for recording in the U.S. trademark office, and general
assignments of all other Purchased Intellectual Property;
(c) the officer's certificate required to be delivered pursuant to
Sections 9.1(a) and 9.1(b);
--------------- ------
(d) a certified copy of the Approval Order;
(e) a duly executed counterpart signature page to the General Escrow
Agreement;
(f) a duly executed counterpart signature page to the Environmental
Indemnity Escrow Agreement;
(g) duly executed counterpart signature pages of Agway and Sellers to
the Non-Competition Agreement, substantially in the form attached hereto as
Exhibit G (the "Sellers' Non-Competition Agreement");
--------- ----------------------------------
(h) a duly executed counterpart signature page to the Transition
Services Agreement, substantially in the form attached hereto as Exhibit H,
---------
provided that Purchaser may delete any of the services listed on Schedule A to
-------- ----------
the Transition Services Agreement or Sellers may add certain additional
26
transition services reasonably acceptable to Purchaser at any time up to ten
(10) days prior to the Closing Date upon written notice to the other parties
hereto;
(i) a certified copy of the certificate of incorporation and/or
certificate of formation for each of Sellers, as applicable;
(j) a certificate of good standing for each of Sellers from the
jurisdiction of organization of each such Seller and Vermont, Massachusetts,
Pennsylvania, New Jersey and New York, each dated not later than thirty (30)
days prior to the Closing Date;
(k) a copy of the resolutions adopted by the board of directors or
managers/management committee of each Seller, as applicable, approving and
authorizing the closing of the transactions contemplated herein;
(l) the ISRA Closing Compliance in accordance with Section 7.16;
------------
(m) affidavits, stating, under penalties of perjury, each Seller's
United States taxpayer identification number and that such Seller is not a
foreign person pursuant to Section 1445(b)(2) of the Code; and
(n) all other instruments of conveyance and transfer, in form and
substance reasonably acceptable to Purchaser, as may be necessary to convey the
Purchased Assets to Purchaser, including, without limitation, all of Sellers'
limited or special warranty deeds, affidavits of title (which shall not expand
Sellers' Liability beyond that created hereunder), assignment and assumption
agreements, and motor vehicle certificates of title.
4.3 Deliveries by Purchaser. At the Closing, Purchaser shall deliver
-----------------------
to Sellers:
(a) a duly executed assignment and assumption agreement
substantially in the form attached hereto as Exhibit F hereto;
---------
(b) the amount payable to Sellers as provided in Section 3.3(a)
---------------
hereof;
(c) a duly executed counterpart signature page to the General
Escrow Agreement;
(d) a duly executed counterpart signature page to the
Environmental Indemnity Agreement;
(e) duly executed counterpart signature pages to the Sellers'
Non-Competition Agreement;
27
(f) a duly executed counterpart signature page to the Transition Services
Agreement, substantially in the form attached hereto as Exhibit H;
----------
(g) the officer's certificate required to be delivered pursuant to Sections
--------
9.2(a) and 9.2(b);
------ ------
(h) a certified copy of the certificate of partnership of Purchaser;
(i) a certificate of good standing for Purchaser from the jurisdiction of
its organization, dated not later than thirty (30) days prior to the Closing
Date;
(j) a copy of the resolutions adopted by the board of supervisors of
Purchaser approving and authorizing the closing of the transactions contemplated
herein; and
(k) such other documents, instruments and certificates as Sellers may
reasonably request.
4.4 TERMINATION OF AGREEMENT. This Agreement may be terminated prior to
------------------------
the Closing as follows:
(a) by Purchaser or Sellers, if the Closing shall not have occurred by the
close of business on or before the sixtieth (60th) day after the execution and
delivery of this Agreement (the "Termination Date"); provided, however, that, if
---------------- -------- -------
the Closing shall not have occurred due to the failure of the Bankruptcy Court
to enter the Approval Order and if all other conditions to the respective
obligations of the parties to close hereunder that are capable of being
fulfilled by the Termination Date shall have been so fulfilled or waived, then
no party may terminate this Agreement prior to thirty (30) days after the
Termination Date; provided, further, that if the Closing shall not have occurred
-------- -------
on or before the Termination Date due to a material breach of any
representations, warranties, covenants or agreements contained in this Agreement
by Purchaser or Sellers, then the breaching party may not terminate this
Agreement pursuant to this Section 4.4(a);
--------------
(b) by mutual written consent of Sellers and Purchaser;
(c) by Purchaser, if any of the conditions to the obligations of Purchaser
set forth in Sections 9.1 and 9.3 shall have become incapable of fulfillment
------------- ---
other than as a result of a breach by Purchaser of any covenant or agreement
contained in this Agreement, and such condition is not waived by Purchaser;
(d) by Sellers, if any condition to the obligations of Sellers set forth in
Sections 9.2 and 9.3 shall have become incapable of fulfillment other than as a
------------ ---
result of a breach by any Seller of any covenant or agreement contained in this
Agreement, and such condition is not waived by Sellers;
(e) by Purchaser, if there shall be a breach by any Seller of any
representation or warranty, or any covenant or agreement contained in this
28
Agreement which would result in a failure of a condition set forth in Section
-------
9.1 or 9.3 and which breach cannot be cured or has not been cured by the earlier
--- ---
of (i) 20 Business Days after the giving of written notice by Purchaser to
Sellers of such breach and (ii) the Termination Date;
(f) by Sellers, if there shall be a breach by Purchaser of any
representation or warranty, or any covenant or agreement contained in this
Agreement which would result in a failure of a condition set forth in Section
-------
9.2 or 9.3 and which breach cannot be cured or has not been cured by the earlier
--- ---
of (i) 20 Business Days after the giving of written notice by any Seller to
Purchaser of such breach and (ii) the Termination Date;
(g) by Sellers or Purchaser if there shall be in effect a final
nonappealable Order of a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby; it being agreed that the parties hereto shall
promptly appeal any adverse determination which is not nonappealable (and pursue
such appeal with reasonable diligence);
(h) by Purchaser or Sellers, if Sellers accept an Alternative Transaction
at the conclusion of the auction contemplated by the Bidding Procedures or the
Bankruptcy Court approves an Alternative Transaction, subject to the limitations
set forth in the Bidding Procedures Order and subject to Purchaser's right to
payment of the Expense Reimbursement and Break-Up Fee in accordance with the
provisions of Section 4.7;
-----------
(i) by Purchaser, if the Audited Year-End Financial Statements or Final
Unaudited Interim Financial Statements are not delivered to Purchaser at least
three (3) Business Days prior to the Bidding Procedures Hearing or differ in any
material and adverse respect, as determined in Purchaser's sole discretion, from
the Unaudited Year-End Financial Statements or Initial Unaudited Interim
Financial Statements, respectively; provided, however, Purchaser's termination
-------- -------
right under this Section 4.4(i) shall expire and be of no further force or
---------------
effect upon the earlier to occur of (i) 5:00 p.m. (Eastern time) on the third
Business Day after Purchaser's receipt of the Audited Year-End Financial
Statements and (ii) 9:00 a.m. (Eastern time) on the date of the Bidding
Procedures Hearing; or
(j) by Purchaser in accordance with Section 7.13.
------------
4.5 PROCEDURE UPON TERMINATION. In the event of termination and abandonment
--------------------------
by Purchaser or Sellers, or both, pursuant to Section 4.4 hereof, written notice
-----------
thereof shall forthwith be given to the other party or parties, and this
Agreement shall terminate, and the purchase of the Assets hereunder shall be
abandoned, without further action by Purchaser or Sellers. If this Agreement is
terminated as provided herein each party shall redeliver all documents, work
papers and other material of any other party relating to the transactions
29
contemplated hereby, whether so obtained before or after the execution hereof,
to the party furnishing the same.
4.6 EFFECT OF TERMINATION.
---------------------
(a) In the event that this Agreement is terminated in accordance with
Section 4.4, then each of the parties shall be relieved of their duties and
------------
obligations arising under this Agreement after the date of such termination and
such termination shall be without liability to Purchaser or Sellers; provided,
--------
however, that the obligations of the parties set forth in Section 4.7 and 11.3
------- ----------- ----
through 11.13 hereof shall survive any such termination and shall be enforceable
-----
hereunder.
(b) Nothing in this Section 4.6 shall relieve Purchaser or Sellers of any
-----------
liability for a breach of this Agreement prior to the date of termination. The
damages recoverable by the non-breaching party shall include all attorneys' fees
reasonably incurred by such party in connection with the transactions
contemplated hereby.
(c) The Confidentiality Agreement shall survive any termination of this
Agreement and nothing in this Section 4.6 shall relieve Purchaser or Sellers of
-----------
their obligations under the Confidentiality Agreement. If this Agreement is
terminated in accordance with Section 4.4, Purchaser agrees that the prohibition
-----------
in the Confidentiality Agreement restricting Purchaser's ability to solicit any
employee of any Seller to join the employ of Purchaser or any if its Affiliates
shall be extended to a period of two (2) years from the date of this Agreement.
4.7 Expense Reimbursement and Break-Up Fee.
--------------------------------------
(a) If this Agreement is terminated by Purchaser or Sellers pursuant to
Section 4.4(h) and, an Alternative Transaction is consummated, then on the next
--------------
Business Day following the consummation of the Alternative Transaction, Sellers
shall pay to Purchaser a break-up fee in an amount equal to $5,000,000 (the
"Break-Up Fee").
------------
(b) If (i) Purchaser terminates this Agreement pursuant to the provisions
of Section 4.4(e), or (ii) Sellers accept an Alternative Transaction at the
---------------
conclusion of the auction contemplated by the Bidding Procedures Order or the
Bankruptcy Court approves an Alternative Transaction, Sellers shall reimburse
Purchaser for the amount of its out-of-pocket costs and expenses in connection
with the preparation, negotiation, execution and delivery of this Agreement
(including, without limitation, those costs and expenses incurred in connection
with its due diligence activities relating thereto but not including any
financing fees or borrowing costs incurred by Purchaser) in amount up to (but
not in excess of) $3,675,000 (the "Expense Reimbursement") within five (5) days
----------------------
after Purchaser's demand therefor accompanied by reasonable and customary
documentation thereof.
(c) The Expense Reimbursement and the Break-up Fee shall be payable to Purchaser
in cash, by wire transfer of immediately available funds to an account
designated in writing by Purchaser. Upon payment of the Break-Up Fee and Expense
30
Reimbursement, in each case as required by this Agreement, Sellers shall be
deemed fully released and discharged from any liability or obligation arising
under or resulting from this Agreement (other than those provisions of this
Agreement that survive termination as set forth in Section 4.6). Sellers'
------------
obligations under this Section 4.7 to pay the Break-Up Fee and Expense
------------
Reimbursement shall survive termination of the Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, hereby represent and warrant to Purchaser
that:
5.1 Organization and Good Standing. Each of Sellers is a company duly
--------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now conducted. Each of Sellers is
duly qualified or authorized to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction in which it owns or leases
real property and each other jurisdiction in which the conduct of its business
or the ownership of its properties requires such qualification or authorization,
except where the failure to be so qualified, authorized or in good standing
would not have a Material Adverse Effect.
5.2 Authorization of Agreement. Each Seller has all requisite power,
----------------------------
authority and legal capacity to execute and deliver this Agreement and each
Seller has all requisite power, authority and legal capacity to execute and
deliver each other agreement, document, or instrument or certificate
contemplated by this Agreement or to be executed by Sellers in connection with
the consummation of the transactions contemplated by this Agreement (the
"Sellers Documents"), to perform their respective obligations hereunder and
------------------
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Sellers Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on the part of each Seller. This
Agreement has been, and each of the Sellers Documents will be at or prior to the
Closing, duly and validly executed and delivered by each Seller which is a party
thereto and (assuming the due authorization, execution and delivery by the other
parties hereto and thereto, the entry of the Approval Order, and, with respect
to Sellers' obligations under Section 4.7, the entry of the Bidding Procedures
-----------
Order) this Agreement constitutes, and each of the Sellers Documents when so
executed and delivered will constitute, legal, valid and binding obligations of
Sellers enforceable against Sellers in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
31
5.3 Conflicts; Consents of Third Parties.
------------------------------------
(a) Except as set forth on Schedule 5.3(a), none of the execution and
----------------
delivery by Sellers of this Agreement or by Sellers of the Sellers Documents,
the consummation of the transactions contemplated hereby or thereby, or
compliance by Sellers with any of the provisions hereof or thereof will conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or give
rise to any obligation of Sellers to make any payment under, or to the
increased, additional, accelerated or guaranteed rights or entitlements of any
Person under any provision of (i) the certificate of incorporation and bylaws,
certificate of formation and operating agreement or comparable organizational
documents of any Seller; (ii) any Contract or Permit to which any Sellers are a
party or by which any of the properties or assets of any Seller are bound; (iii)
any Order of any court, Governmental Body or arbitrator applicable to any Seller
or any of the properties or assets of any Seller as of the date hereof; or (iv)
any applicable Law, other than, in the case of clauses (ii), (iii) and (iv),
such conflicts, violations, defaults, terminations, cancellations or
accelerations that would not have a Material Adverse Effect.
(b) Except as set forth on Schedule 5.3(b), no consent, waiver, approval,
---------------
Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of any
Seller in connection with the execution and delivery of this Agreement or the
Sellers Documents, the compliance by any Seller with any of the provisions
hereof or thereof, the consummation of the transactions contemplated hereby or
the taking by any Seller of any other action contemplated hereby, except for (i)
compliance with the applicable requirements of the HSR Act, (ii) the entry of
the Approval Order, (iii) the entry of the Bidding Procedures Order with respect
to Sellers' obligations under Section 4.7, and (iv) for such other consents,
-----------
waivers, approvals, Orders, Permits, authorizations, declarations, filings and
notifications, the failure of which to be obtained or made would not have a
Material Adverse Effect.
5.4 Financial Statements. Sellers have delivered to Purchaser copies of (i)
--------------------
the unaudited combined statements of financial position of Sellers as at June
30, 2003 and June 30, 2002 and the related unaudited combined statements of
operations and changes in member's equity, combined statements of comprehensive
income and combined statements of cash flow of Sellers for the years ended June
30, 2003, June 30, 2002 and June 30, 2001 (the "Unaudited Year-End Financial
------------------------------
Statements") and (ii) the initial unaudited combined statements of financial
----------
position of Sellers as at September 30 , 2003 and the related unaudited combined
statements of operations and changes in member's equity, combined statements of
comprehensive income and combined statements of cash flow of Sellers for the
three-month period then ended (the "Initial Unaudited Interim Financial
--------------------------------------
Statements"). As contemplated by Section 4.4(i), Sellers intend to deliver to
---------- --------------
Purchaser on or before three (3) Business Days prior to the Bidding Procedures
Hearing, copies of (i) the audited combined statements of financial position of
Sellers as at June 30, 2003 and June 30, 2002 and the related audited combined
32
statements of operations and changes in member's equity, combined statements of
comprehensive income and combined statements of cash flow of Sellers for the
years ended June 30, 2003, June 30, 2002 and June 30, 2001 (the "Audited
-------
Year-End Financial Statements") and (ii) the final unaudited combined statements
-----------------------------
of financial position of Sellers as at September 30 , 2003 and the related
unaudited combined statements of operations and changes in member's equity,
combined statements of comprehensive income and combined statements of cash flow
of Sellers for the three-month period then ended (the "Final Unaudited Interim
------------------------
Financial Statements" and, together with the Unaudited Year-End Financial
---------------------
Statements, the Audited Year-End Financial Statements and the Initial Unaudited
Interim Financial Statements, referred to herein as the "Financial Statements").
--------------------
Each of the Financial Statements has been prepared in accordance with GAAP
consistently applied without modification of the accounting principles used in
the preparation thereof throughout the periods presented and presents fairly in
all material respects the consolidated financial position, results of operations
and cash flows of Sellers as at the dates and for the periods indicated therein,
subject to normal year-end adjustments and the absence of complete notes in the
case of the Unaudited Interim Financial Statements.
For the purposes hereof, the combined statements of financial position of
Sellers as at June 30, 2003 that constitute a part of the Unaudited Year-End
Financial Statements is referred to as the "Balance Sheet"; provided, however,
------------- -------- -------
that from and after Sellers' delivery of the Audited Year-End Financial
Statements to Purchaser as contemplated by Section 4.4(i), the combined
---------------
statements of financial position of Sellers as at June 30, 2003 that constitute
a part of the Audited Year-End Financial Statements shall thereafter constitute
the "Balance Sheet" for purposes hereof. June 30, 2003 is referred to as the
--------------
"Balance Sheet Date."
------------------
5.5 NO UNDISCLOSED LIABILITIES. Except as set forth on Schedule 5.5, none
--------------------------- ------------
of Sellers has any material Liabilities of any kind that would have been
required to be reflected in, reserved against or otherwise described in the
Balance Sheet or the notes thereto in accordance with GAAP other than (i)
Liabilities incurred in the Ordinary Course of Business since the Balance Sheet
Date that would not have a Material Adverse Effect, (ii) Liabilities incurred in
connection with the transactions contemplated hereby, and (iii) Excluded
Liabilities.
5.6 PURCHASED ASSETS. Except as set forth in Schedule 5.6, Sellers own and
---------------- ------------
have good title to each of the Purchased Assets other than as to Owned Property,
which is represented and warranted to under Section 5.9, which, as of the
-----------
Closing, will be free and clear of all Liens other than Permitted Exceptions.
The Purchased Assets constitute all of the assets necessary to operate the
Business consistent with past practice. All of the Automotive Equipment listed
on Schedule 2.1(m) is in good operating condition and is in all material
----------------
respects capable of being used without the present need for repairs or
replacement except in the Ordinary Course of Business. All material Furniture
and Equipment is in good working order reasonable and ordinary wear and tear
excepted.
33
5.7 ABSENCE OF CERTAIN DEVELOPMENTS. Except as expressly contemplated by
--------------------------------
this Agreement or as set forth on Schedule 5.7, since the Balance Sheet Date (i)
------------
Sellers have conducted the Business only in the Ordinary Course of Business and
(ii) there has not been any event, change, occurrence or circumstance that has
had a Material Adverse Effect.
5.8 TAXES. Except as set forth on Schedule 5.8:
----- ------------
(a) All federal, state and local income and franchise and all other
material Tax Returns required to be filed by or with respect to Sellers or the
Purchased Assets have been timely filed with the appropriate Tax Authorities in
all jurisdictions in which such Tax Returns are required to be filed (taking
into account any extension of time to file granted or to be obtained on behalf
of Sellers) and such Tax Returns are true, correct and complete in all material
respects; and (ii) all material Taxes due and payable by or with respect to
Sellers or the Purchased Assets, whether or not shown on such Tax Returns have
been timely paid in full.
(b) No Seller is a Foreign Person within the meaning of Section 1445 of the
Code.
(c) All material Taxes required to be withheld by Sellers have been
withheld and have been (or will be) duly and timely paid to the proper Tax
Authority.
(d) No written agreement or other document extending, or having the effect
of extending, the period of assessment or collection of any material Taxes of
any Seller is still in effect with any Tax Authority.
(e) No deficiencies with respect to material Taxes of any Seller have been
asserted in writing by any Tax Authority that have not been fully paid.
(f) There are no audits or investigations by any Tax Authority of any
Sellers in progress with respect to any material Tax and no written notice has
been received that a Tax Authority intends to commence any such audit or
investigation.
(g) No claim has been made in writing within the past 5 years by a Tax
Authority in a jurisdiction where any of Sellers does not file Tax Returns that
it is or may be subject in that jurisdiction to a material Tax.
(h) There are no Liens on any of the Purchased Assets that arose in
connection with any failure (or alleged failure) to pay any Tax, except for
Permitted Exceptions.
(i) None of Sellers is a party to any Tax allocation, indemnity or sharing
agreement or arrangement with respect to a material Tax that could apply to the
Purchased Assets after the Closing Date.
34
5.9 REAL PROPERTY.
-------------
(a) Schedule 5.9(a) sets forth a complete list of (i) all real property and
---------------
interests in real property owned in fee by Sellers (individually, an "Owned
-----
Property" and collectively, the "Owned Properties"), and (ii) all real property
-------- ----------------
and interests in real property leased (collectively, the "Leased Real Property")
--------------------
by Sellers (individually, a "Real Property Lease" and collectively, the "Real
----
Property Leases") and, together with the Owned Properties, being referred to
----------------
herein individually as a "Sellers' Property" and collectively as the "Sellers'
------------------ -------
Properties") as lessee or lessor. Sellers have good, valid and marketable fee
----------
title to all Owned Property, free and clear of all Liens of any nature
whatsoever except (A) Liens set forth on Schedule 5.9(a) and (B) Permitted
----------------
Exceptions. Sellers have an enforceable leasehold interest under each of the
Real Property Leases, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity). No Seller has received any written notice of any default or event that
with notice or lapse of time, or both, would constitute a default by any Seller
under any of the Real Property Leases.
(b) To the Knowledge of Sellers or except as set forth on Schedule 5.9(b),
----------------
there are no Federal, State or local plans to change the highway or road system
in the vicinity of the Owned Properties or to restrict or change access from any
such highway or road to the Owned Properties or of any pending or threatened
condemnation of the Owned Properties or any part thereof or of any plans for
improvements which might result in a special assessment against the Owned
Properties.
(c) Sellers have received no notices of violations of law or municipal
ordinances, Environmental Laws, or other orders or requirements issued by any
Governmental Body or department with respect to the Owned Properties or the
Leased Real Property.
(d) Sellers have not received any notice from the holder of any mortgage on
the Owned Properties or any insurance company insuring the Owned Properties
requiring repairs, alterations or maintenance to be done on the Owned
Properties. Any such notice received by Sellers prior to the Closing shall be
complied with by Sellers prior to the Closing.
(e) There are no actions, suits or proceedings pending or, to the Knowledge
or Sellers, threatened, against or affecting Sellers or the Owned Properties or
the Leased Real Property, at law or in equity, before any federal, state,
municipal or governmental department, commission, board, bureau, agency or
instrumentality which, if determined adversely to Sellers, would in any way
affect the Owned Properties, the Leased Real Property or the operation thereof.
(f) To the Knowledge of Sellers, without independent inquiry, the Owned
Properties and the Leased Real Property and the present use and condition
35
thereof do not violate any applicable deed restrictions or other covenants,
restrictions or agreements, site plan approvals, zoning or subdivision
regulations applicable to the Owned Properties or the Leased Real Property.
(g) There have been no material casualties or condemnations with respect to
Sellers' Properties within the past twelve months, except as set forth on
Schedule 5.9(g).
---------------
(h) No rent required to be paid by any Seller under each of the Leased Real
Property Leases is past due, except where any Seller has a bona fide dispute
with the lessor under such Real Property Lease.
5.10 TANGIBLE PERSONAL PROPERTY. Schedule 5.10 sets forth all leases of
---------------------------- -------------
personal property ("Personal Property Leases") involving annual payments in
--------------------------
excess of $5,000 relating to personal property used by any Seller in the
Business or to which any Sellers are a party or by which the properties or
assets of any Sellers are bound. Sellers have an enforceable leasehold interest
under each of the Personal Property Leases under which it is a lessee, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). To the Knowledge of
Sellers, no Seller has received any written notice of any default or event that
with notice or lapse of time or both would constitute a default by any Seller
under any of the Personal Property Leases.
5.11 INTELLECTUAL PROPERTY. Schedule 5.11 sets forth an accurate and
---------------------- --------------
complete list of all material Purchased Intellectual Property. Except as
disclosed in Schedule 5.11, Sellers own or possess licenses or other rights to
-------------
use all material Purchased Intellectual Property, except as would not have a
Material Adverse Effect. Except as set forth on Schedule 5.11, to the Knowledge
-------------
of Sellers, (i) the Purchased Intellectual Property are not the subject of any
challenge received by Sellers in writing, except as would not have a Material
Adverse Effect and (ii) none of Sellers has received any written notice of any
default or any event that with notice or lapse of time, or both, would
constitute a default under any Purchased Intellectual Property license to which
any Seller is a party or by which it is bound, nor, to the Knowledge of Sellers,
is there a basis for any such default. Notwithstanding any other provisions of
this Agreement, Sellers make no representations or warranties regarding the
current or future value of the Purchased Intellectual Property, which is
conveyed to and accepted by Purchaser pursuant to this Agreement "AS IS."
5.12 MATERIAL CONTRACTS.
------------------
(a) Schedule 1.1(b) includes all of the material Contracts of Sellers (not
---------------
including the Excluded Contracts) related to the Business or by which the
Purchased Assets may be bound or affected (collectively, the "Material
--------
Contracts"). Except as set forth on Schedule 5.12(a), none of the Material
--------- -----------------
Contracts relate to any formerly owned real property or formerly leased real
property of Sellers that is not an Owned Property or Leased Real Property.
36
(b) Except as set forth on Schedule 5.12(b), each of the Material Contracts
----------------
is in full force and effect and is the legal, valid and binding obligation of
Sellers, enforceable against them in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), except where the
failure to be so in full force and effect, legal, valid and binding or
enforceable would not have a Material Adverse Effect. Except as set forth on
Schedule 5.12(b), none of Sellers are in material default under any Material
-----------------
Contract that would result in termination of any such Material Contract or have
received any written notice of any default or event that with notice or lapse of
time or both would constitute a default by any Seller under any Material
Contract.
5.13 EMPLOYEE BENEFITS.
-----------------
(a) Schedule 5.13(a) lists: (i) all material "employee benefit plans", as
----------------
defined in Section 3(3) of ERISA, and all other material employee benefit
arrangements or payroll practices, including, without limitation, bonus plans,
consulting or other compensation agreements, incentive, equity or equity-based
compensation, or deferred compensation arrangements, stock purchase, severance
pay, sick leave, vacation pay, salary continuation, disability, hospitalization,
medical insurance, life insurance, scholarship programs maintained by Sellers or
to which Sellers contributed or are obligated to contribute thereunder for
current or former employees of Sellers (the "Employee Benefit Plans"), and (ii)
-----------------------
all "employee pension plans", as defined in Section 3(2) of ERISA, subject to
Title IV of ERISA or Section 412 of the Code, maintained by Sellers and any
trade or business (whether or not incorporated) which are or have ever been
under common control, or which are or have ever been treated as a single
employer, with Sellers under Section 414(b), (c), (m) or (o) of the Code ("ERISA
-----
Affiliate") or to which Sellers and any ERISA Affiliate contributed or has ever
---------
been obligated to contribute thereunder (the "Title IV Plans"). None of the
--------------
Title IV Plans is a multiemployer plan as defined in Section 3(37) of ERISA
("Multiemployer Plan"), or has been subject to Sections 4063 or 4064 of ERISA.
------------------
(b) True, correct and complete copies of the following documents, with
respect to each of the Employee Benefit Plans and Title IV Plans (as
applicable), have been made available to Purchaser (A) any plans and related
trust documents, and all amendments thereto, (B) the most recent Forms 5500 for
the past three (3) years and schedules thereto, (C) the most recent financial
statements and actuarial valuations for the past three (3) years, (D) the most
recent IRS determination letter, (E) the most recent summary plan descriptions
(including letters or other documents updating such descriptions) and (F)
written descriptions of all non-written agreements relating to the Employee
Benefit Plans and Title IV Plans (collectively, the "Pension Plans").
--------------
(c) Except as set forth on Schedule 5.13(c), each of the Employee Benefit
-----------------
Plans and Title IV Plans intended to qualify under Section 401 of the Code
("Qualified Plans") has been determined by the IRS to be so qualified, and, to
----------------
37
the Knowledge of Sellers, nothing has occurred with respect to the operation of
any such plan which could reasonably be expected to result in the revocation of
such favorable determination.
(d) All contributions and premiums required by law or by the terms of
any Employee Benefit Plan or Title IV Plan or any agreement relating thereto
have been timely made (taking into account any waivers granted with respect
thereto) to any funds or trusts established thereunder or in connection
therewith in all material respects.
(e) Except as set forth on Schedule 5.13(e), none of the Employee
-----------------
Benefit Plans which are "welfare benefit plans" within the meaning of Section
3(1) of ERISA provide for continuing benefits or coverage for any participant or
any beneficiary of a participant post-termination of employment except as may be
required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA").
-----
(f) Except as set forth on Schedule 5.13(f), each of the Employee
-----------------
Benefit Plans and Title IV Plans has been maintained, in all material respects,
in accordance with its terms and all provisions of applicable Law, including but
not limited to ERISA and the Code.
(g) Except as set forth on Schedule 5.13(g), neither the execution and
----------------
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment becoming due to any employee of any
Seller; (ii) increase any benefits otherwise payable under any Employee Benefit
Plan or Title IV Plan; or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
5.14 LABOR.
-----
(a) Except as set forth on Schedule 5.14(a), none of Sellers is a
-----------------
party to any labor or collective bargaining agreement.
(b) Except as set forth on Schedule 5.14(b) there are no (i) strikes,
----------------
work stoppages, slowdowns, lockouts or arbitrations or (ii) material grievances
or other labor disputes pending or, to the Knowledge of Sellers, threatened
against or involving any Seller, except as would not have a Material Adverse
Effect. There are no unfair labor practice charges, grievances or complaints
pending or, to the Knowledge of Sellers, threatened by or on behalf of any
employee or group of employees of Sellers, except as would not have a Material
Adverse Effect.
(c) Except as set forth on Schedule 5.14(c), Sellers are not
-----------------
delinquent in payments to any Transferred Employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed for
Sellers as of the date hereof or amounts required to be reimbursed to the
Transferred Employees.
5.15 LITIGATION. Except as set forth in Schedule 5.15, there are no Legal
---------- -------------
Proceedings pending or, to the Knowledge of Sellers, threatened against any
38
Seller before any Governmental Body, which, if adversely determined, would have
a Material Adverse Effect.
5.16 Compliance with Laws; Permits.
-----------------------------
(a) Except as set forth on Schedule 5.16 (a), Sellers are in
------------------
compliance with all Laws of any Governmental Body applicable to their respective
operations or assets or the Business, except where the failure to be in
compliance would not have a Material Adverse Effect and except with respect to
Environmental Laws, which are represented and warranted to in Section 5.17.
------------
Except as set forth on Schedule 5.16(a), none of Sellers has received any
-----------------
written notice of or been charged with the violation of any Laws, except where
such violation would not have a Material Adverse Effect.
(b) Sellers currently have all material Permits which are required
for the operation of the Business at each of Sellers' Properties as presently
conducted. Except as set forth on Schedule 5.16(b), none of Sellers is in
-----------------
default or violation (and no event has occurred which, with notice or the lapse
of time or both, would constitute a default or violation) of any term, condition
or provision of any Permit to which it is a party, except where such default or
violation would not have a Material Adverse Effect and except with respect to
Environmental Laws, which are represented and warranted to in Section 5.17.
------------
(c) Except as set forth on Schedule 5.16(c) and except with respect
----------------
to Environmental Laws, which are represented and warranted to in Section 5.17,
------------
Sellers, within the previous five (5) years, have not received, and to the
Knowledge of Sellers there is no basis for any Seller to receive a notice of any
violation or alleged violation of any applicable statutes, ordinances, orders,
rules, and regulations promulgated by any U.S. federal, state, municipal,
non-U.S. or other Governmental Body which apply to the conduct of its business.
5.17 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 5.17 hereto
--------------------- -------------
and except in each case as would not have a Material Adverse Effect:
(a) the operations of each Seller are in compliance with all
applicable Environmental Laws and all material Permits issued pursuant to
Environmental Laws or otherwise;
(b) each Seller has obtained all material Permits required under all
applicable Environmental Laws necessary to operate its business and shall
provide Purchaser with a list of all such Permits prior to Closing;
(c) none of Sellers is the subject of any outstanding written order
or Contract with any governmental authority or person respecting (i)
Environmental Laws, (ii) Remedial Action or (iii) any Release or threatened
Release of a Hazardous Material;
(d) none of Sellers has received any written communication alleging
either or both that any Seller may be in violation of any Environmental Laws, or
39
any Permit issued pursuant to Environmental Laws, or may have any liability
under any Environmental Laws;
(e) to the Knowledge of Sellers, there are no investigations of the
Business, or currently or previously owned, operated or leased property of any
Seller or of any property to which any Seller sent Hazardous Materials for
disposal pending or threatened which would reasonably be expected to result in
the imposition of any material liability pursuant to any Environmental Laws;
(f) there are no Hazardous Materials on, at, under or migrating from
any of Sellers' Properties except as in material compliance with Environmental
Laws; and
(g) the representations and warranties contained in this Section 5.17
------------
are the sole and exclusive representations and warranties of Sellers with
respect to environmental matters.
5.18 FINANCIAL ADVISORS. Except as set forth on Schedule 5.18, no Person
------------------ -------------
has acted, directly or indirectly, as a broker, finder or financial advisor for
any Seller in connection with the transactions contemplated by this Agreement
and no Person is entitled to any fee or commission or like payment from
Purchaser in respect thereof.
5.19 ACCOUNTS RECEIVABLE. All of Sellers' accounts receivable arising since
-------------------
the Balance Sheet Date arose from bona fide transactions in the Ordinary Course
of Business, and the goods and services involved have been sold, delivered and
performed to the account obligors, and no further filings (with Governmental
Bodies, insurers or others) are required to be made, no further goods are
required to be provided and no further services are required to be rendered in
order to complete the sales and fully render the services and to entitle Sellers
to collect the accounts receivable in full. Except as set forth on Schedule
--------
5.19, no accounts receivable have been assigned or pledged to any other Person,
----
firm or corporation, and, except only to the extent fully reserved against as
set forth in the Balance Sheet, no defense or set-off to any such account has
been asserted by the account obligor or exists.
5.20 INVENTORY. As of the Closing Date, the Inventory shall consist of
---------
items of a quality, condition and quantity consistent with normal seasonally
adjusted Inventory levels of Sellers and be usable and saleable in the ordinary
and usual course of business for the purposes for which intended. Each Seller's
Inventory is valued on its books of account in accordance with GAAP (on an
average cost basis) at the lower of cost or market, and the value of obsolete
materials, materials below standard quality and slow-moving materials have been
written down in accordance with GAAP, net of amounts due to/from exchange
partners.
5.21 SIGNIFICANT SUPPLIERS. Schedule 5.21 sets forth the 10 principal
--------------------- --------------
suppliers of each Seller during the fiscal year ended June 30, 2003
("Significant Suppliers"), together with the dollar amount of Products purchased
-----------------------
by such Seller from each such supplier during each such period. Except as
40
otherwise set forth in Schedule 5.21, Sellers maintain good relations with all
-------------
Significant Suppliers, as well as with governments, partners, financing sources
and other parties with whom Sellers have significant relations, and no such
party has canceled, terminated or, to the Knowledge of Sellers, made any threat
to any Seller to cancel or otherwise terminate its relationship with such Seller
or to materially decrease its services or supplies to such Sellers or its direct
or indirect purchase or usage of the Products or services of such Seller.
Schedule 1.1(b) includes all material written agreements, arrangements and
---------------
understandings between Sellers and the Significant Suppliers.
5.22 INSURANCE. Schedule 5.22 hereto is a complete and correct list of all
--------- -------------
insurance policies (including, without limitation, fire, liability, product
liability, workers' compensation and vehicular) presently in effect that relate
to Sellers or their respective properties, all of which have been in full force
and effect from and after the inception date(s) set forth on Schedule 5.22. Such
-------------
policies are sufficient for compliance by Sellers with all applicable material
Laws and all Material Contracts. Except as set forth on Schedule 5.22, none of
--------------
the insurance carriers, to the Knowledge of Sellers, has indicated to any of
Sellers an intention to cancel any such policy or to materially increase any
insurance premiums (including workers' compensation premiums). Except as set
forth on Schedule 5.22, during the prior two (2) years, all notices required to
-------------
have been given by Sellers to any insurance company have been timely and duly
given, and no insurance company has asserted that any claim by or against Seller
is not covered by the applicable policy relating to such claim.
5.23 ABSENCE OF CERTAIN BUSINESS PRACTICES. To the Knowledge of Seller or
-------------------------------------
except as set forth on Schedule 5.23, neither Sellers nor any other Affiliate of
-------------
Sellers has (a) received, directly or indirectly, any rebates, payments,
commissions, promotional allowances or any other economic benefits, regardless
of their nature or type, from any customer, supplier, employee or agent of any
customer or supplier; or (b) directly or indirectly given or agreed to give any
money, gift or similar benefit to any customer, supplier, employee or agent of
any customer or supplier, any official or employee of any government (domestic
or foreign), or any political party or candidate for office (domestic or
foreign), or other Person who was, is or may be in a position to help or hinder
the business of Sellers (or assist Sellers in connection with any actual or
proposed transaction), in each case which (i) may subject any such Sellers to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, may have had an adverse effect on the
assets, business, operations or prospects of any such Sellers, or (iii) if not
continued in the future, may adversely affect the assets, business, operations
or prospects of any such Sellers.
5.24 NO OTHER REPRESENTATIONS OR WARRANTIES; SCHEDULES. Except for the
-----------------------------------------------------
representations and warranties contained in this Article V (as modified by the
---------
Schedules hereto), neither Sellers nor any other Person makes any other express
or implied representation or warranty with respect to Sellers, the Business, the
Purchased Assets, the Assumed Liabilities or the transactions contemplated by
this Agreement, and Sellers disclaim any other representations or warranties,
whether made by Sellers, any Affiliate of Sellers or any of their respective
41
officers, directors, employees, agents or representatives. Except for the
representations and warranties contained in Article V hereof (as modified by the
---------
Schedules hereto), Sellers (i) expressly disclaim and negate any representation
or warranty, expressed or implied, at common law, by statute, or otherwise,
relating to the condition of the Purchased Assets (including any implied or
expressed warranty of merchantability or fitness for a particular purpose, or of
conformity to models or samples of materials) and (ii) hereby disclaim all
liability and responsibility for any representation, warranty, projection,
forecast, statement, or information made, communicated, or furnished (orally or
in writing) to Purchaser or its Affiliates or representatives (including any
opinion, information, projection, or advice that may have been or may be
provided to Purchaser by any director, officer, employee, agent, consultant, or
representative of Sellers or any of their Affiliates). Sellers makes no
representations or warranties to Purchaser regarding the probable success or
profitability of the Business. The disclosure of any matter or item in any
schedule hereto shall not be deemed to constitute an acknowledgment that any
such matter is required to be disclosed.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers that:
6.1 ORGANIZATION AND GOOD STANDING. Purchaser is a limited partnership duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now conducted.
6.2 AUTHORIZATION OF AGREEMENT. Purchaser has full power and authority to
--------------------------
execute and deliver this Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be executed by
Purchaser in connection with the consummation of the transactions contemplated
hereby and thereby (the "Purchaser Documents"), and to consummate the
---------------------
transactions contemplated hereby and thereby. The execution, delivery and
performance by Purchaser of this Agreement and each Purchaser Document have been
duly authorized by all necessary action on behalf of Purchaser. This Agreement
has been, and each Purchaser Document will be at or prior to the Closing, duly
executed and delivered by Purchaser and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each Purchaser Document when so executed and delivered will
constitute, legal, valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
42
6.3 CONFLICTS; CONSENTS OF THIRD PARTIES.
------------------------------------
(a) Except as set forth on Schedule 6.3, none of the execution and
------------
delivery by Purchaser of this Agreement and of Purchaser Documents, the
consummation of the transactions contemplated hereby or thereby, or the
compliance by Purchaser with any of the provisions hereof or thereof will (i)
conflict with, or result in a violation of, any provision of the certificate of
limited partnership or limited partnership agreement of Purchaser, (ii) conflict
with, violate, result in the breach of, or constitute a default under, or result
in the termination, cancellation or acceleration (whether after the filing of
notice or lapse of time or both) of any material right or obligation of
Purchaser under, any Contract or Permit to which Purchaser is a party or by
which Purchaser or its properties or assets are bound or (iii) violate any
statute, rule, regulation or Order of any Governmental Body applicable to
Purchaser or any of the properties or assets of Purchaser or (iv) any applicable
Law, except, in the case of clauses (ii), (iii) and (iv), for such violations,
breaches, defaults, terminations, cancellations or accelerations as would not
have a material adverse effect on the ability of Purchaser to perform its
obligations under this Agreement or to consummate the transactions contemplated
by this Agreement.
(b) No consent, waiver, approval, Order, Permit or authorization of,
or declaration or filing with, or notification to, any Person or Governmental
Body is required on the part of Purchaser in connection with the execution and
delivery of this Agreement or Purchaser Documents, the compliance by Purchaser
with any of the provisions hereof or thereof, the consummation of the
transactions contemplated hereby or the taking by Purchaser of any other action
contemplated hereby, or for Purchaser to conduct the Business, except for
compliance with the applicable requirements of the HSR Act.
6.4 LITIGATION. There are no Legal Proceedings pending or, to the
----------
knowledge of Purchaser, threatened against Purchaser, or to which Purchaser is
otherwise a party before any Governmental Body, which are reasonably likely to
prohibit or restrain the ability of Purchaser to enter into this Agreement, or
which, if adversely determined, would reasonably be expected to have a material
adverse effect on the ability of Purchaser to perform its obligations under this
Agreement or to consummate the transactions hereby. Purchaser is not subject to
any Order of any Governmental Body except to the extent the same would not
reasonably be expected to have a material adverse effect on the ability of
Purchaser to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby.
6.5 FINANCIAL ADVISORS. Except as set forth on Schedule 6.5, no Person has
------------------ ------------
acted, directly or indirectly, as a broker, finder or financial advisor for
Purchaser in connection with the transactions contemplated by this Agreement and
no person is entitled to any fee or commission or like payment in respect
thereof.
6.6 FINANCIAL CAPABILITY. Purchaser (i) at the Closing will have,
---------------------
sufficient funds available to pay the Purchase Price and any expenses incurred
by Purchaser in connection with the transactions contemplated by this Agreement,
43
(ii) at the Closing will have, the resources and capabilities (financial or
otherwise) to perform its obligations hereunder, and (iii) has not incurred any
obligation, commitment, restriction or Liability of any kind, which would impair
or adversely affect such resources and capabilities.
6.7 CONDITION OF THE BUSINESS. Notwithstanding anything contained in this
-------------------------
Agreement to the contrary, Purchaser acknowledges and agrees that Sellers are
not making any representations or warranties whatsoever, express or implied,
beyond those expressly given by Sellers in Article V hereof (as modified by the
---------
Schedules hereto), and Purchaser acknowledges and agrees that, except for the
representations and warranties contained therein, the Purchased Assets and the
Business are being transferred on a "where is" and, as to condition, "as is"
basis. Any claims Purchaser may have for breach of representation or warranty
shall be based solely on the representations and warranties of Sellers set forth
in Article V hereof (as modified by the Schedules hereto as supplemented or
---------
amended). Purchaser further represents that no Seller nor any of their
Affiliates nor any other Person has made any representation or warranty, express
or implied, as to the accuracy or completeness of any information regarding any
Seller, the Business or the transactions contemplated by this Agreement not
expressly set forth in this Agreement, and none of Sellers, any of their
Affiliates or any other Person will have or be subject to any Liability to
Purchaser or any other Person resulting from the distribution to Purchaser or
its representatives or Purchaser's use of, any such information, including any
confidential memoranda distributed on behalf of Sellers relating to the Business
or other publication or data room information provided to Purchaser or its
representatives, or any other document or information in any form provided to
Purchaser or its representatives in connection with the sale of the Business and
the transactions contemplated hereby.
ARTICLE VII
COVENANTS
7.1 ACCESS TO INFORMATION. Sellers agree that, prior to the Closing Date,
---------------------
Purchaser or its lenders shall be entitled, through its officers, employees and
representatives (including, without limitation, their respective legal advisors
and accountants), to make such investigation of the properties, businesses and
operations of the Business and such examination of the books and records of the
Business, the Purchased Assets and the Assumed Liabilities as they reasonably
request and to make extracts and copies of such books and records, and, prior to
and after the Closing Date, Sellers shall use commercially reasonable efforts to
furnish Purchaser and its representatives with such financial, business and
operating data of Sellers as may be required or reasonably requested by
Purchaser for inclusion in, or in connection with, any private placement
memoranda or filings with the U.S. Securities and Exchange Commission and
registration statement (including, without limitation, any prospectus
supplement) of Purchaser under the Securities Act of 1933, as amended (the
"Securities Act"), filed contemporaneously with the transactions contemplated
----------------
hereby or within sixty (60) days thereafter, including, without limitation,
using reasonable commercial efforts to furnish Purchaser, at Sellers' expense,
44
with financial statements of Sellers complying with Regulation S-X under the
Securities Act and using reasonable commercial efforts to cause Sellers'
certified public accountants to provide their opinion, consents for the
inclusion thereof in any such registration statement and comfort letters that
are customary for registration statements or private placement memoranda. Any
such investigation and examination shall be conducted during regular business
hours upon reasonable advance notice and under reasonable circumstances and
shall be subject to restrictions under applicable Law. Sellers shall cause the
officers, employees, consultants, agents, accountants, attorneys and other
representatives of Sellers to cooperate with Purchaser or its lenders and
Purchaser's or its lenders' representatives in connection with such
investigation and examination, and Purchaser or its lenders and their respective
representatives shall cooperate with Sellers and its representatives and shall
use their reasonable efforts to minimize any disruption to the Business.
Notwithstanding anything herein to the contrary, no such investigation or
examination shall be permitted to the extent that it would require any Seller to
disclose information subject to attorney-client privilege or conflict with any
confidentiality obligations to which any Sellers are bound. Sellers shall use
commercially reasonable efforts to provide to Purchaser a list of the FCC
Licenses as soon as practicable.
7.2 CONDUCT OF THE BUSINESS PENDING THE CLOSING.
--------------------------------------------
(a) Prior to the Closing, except (i) as set forth on Schedule 7.2,(ii)
as required by applicable Law, (iii) as otherwise contemplated by this Agreement
or (iv) with the prior written consent of Purchaser (which consent shall not be
unreasonably withheld or delayed), Sellers shall:
(i) conduct the Business only in the Ordinary Course of Business and
in compliance with applicable Law;
(ii) use their commercially reasonable efforts to (A) preserve the
present business operations, organization and goodwill of the Business, (B)
preserve the present relationships with customers and suppliers of the
Business, and (C) maintain its insurance policies with respect to the
Business and the Purchased Assets; and
(iii) act in accordance with the Bankruptcy Court's compensation order
attached hereto as Exhibit I.
---------
(b) Except (i) as set forth on Schedule 7.2, (ii) as required by
-------------
applicable Law, (iii) as otherwise contemplated by this Agreement or (iv) with
the prior written consent of Purchaser (which consent shall not be unreasonably
withheld or delayed with respect to subsections (i), (iv) and (xii) below),
Sellers shall not, solely as it relates to the Business:
(i) make or rescind any material election relating to Taxes, settle
or compromise any material claim, action, suit, litigation, proceeding,
45
arbitration, investigation, audit or controversy relating to Taxes, or
except as may be required by applicable Law or GAAP, make any material
change to any of their methods of accounting or methods of reporting income
or deductions for Tax or accounting practice or policy from those employed
in the preparation of its most recent Tax Returns;
(ii) subject any of the Purchased Assets to any Lien outside of the
Ordinary Course of Business, except for Permitted Exceptions;
(iii) acquire any material properties or assets that would be
Purchased Assets or sell, assign, license, transfer, convey, lease or
otherwise dispose of any of the Purchased Assets;
(iv) make any material change, whether written or oral, to any
Material Contract with any of the suppliers or customers/licensees of
Sellers;
(v) delay payment of any accrued expense, trade payable or other
liability of Sellers beyond its due date or the date when such liability
would have been paid in the Ordinary Course of Business other than in
respect of any cash expense, trade payable or liability being contested by
Sellers in good faith;
(vi) allow Sellers' Inventory to vary in any material respect from
the levels customarily maintained;
(vii) engage in any one or more material activities or transactions
outside the Ordinary Course of Business;
(viii) enter into or agree to enter into any merger or consolidation
with, any corporation or other entity;
(ix) cancel or compromise any debt or claim or waive or release any
material right of any Seller that constitutes a Purchased Asset except in
the Ordinary Course of Business;
(x) enter into any commitment for capital expenditures in excess of
$500,000 for all commitments in the aggregate;
(xi) enter into, modify or terminate any labor or collective
bargaining agreement to which Sellers or their Employees are a party, or,
through negotiation or otherwise, make any commitment or incur any
liability to any labor organization;
(xii) alter, amend or terminate any existing Real Property Lease or
enter into any lease or contract affecting any of Sellers' Properties;
46
(xiii) accelerate collection of any notes or accounts receivable of
Sellers in advance of their regular due dates or the dates when they would
have been collected in the Ordinary Course of Business;
(xiv) enter into any transaction or make any commitment which would
likely result in any of the representations, warranties or covenants of
Sellers contained in this Agreement not being true and correct after the
occurrence of such transaction or event; or
(xv) agree to do anything prohibited by this Section 7.2.
-----------
7.3 CONSENTS. Sellers shall use their commercially reasonable efforts, and
--------
Purchaser shall cooperate with Sellers, to obtain at the earliest practicable
date all consents and approvals required to consummate the transactions
contemplated by this Agreement, including, without limitation, the consents and
approvals referred to in Section 5.3(b) hereof; provided, however, that Sellers
-------------- -------- -------
shall not be obligated to pay any consideration therefor to any third party from
whom consent or approval is requested or to initiate any litigation or legal
proceedings to obtain any such consent or approval.
7.4 REGULATORY APPROVALS.
--------------------
(a) Purchaser and Sellers (if necessary) shall (a) make or cause to be
made all filings required of each of them or any of their respective
subsidiaries or Affiliates under the HSR Act or other Antitrust Laws with
respect to the transactions contemplated hereby as promptly as practicable and,
in any event, within five (5) days after the date the Bidding Procedures Order
are approved by the Bankruptcy Court in the case of all filings required under
the HSR Act and within four weeks in the case of all other filings required by
other Antitrust Laws, (b) comply at the earliest practicable date with any
request under the HSR Act or other Antitrust Laws for additional information,
documents, or other materials received by each of them or any of their
respective subsidiaries from the FTC, the Antitrust Division or any other
Governmental Body in respect of such filings or such transactions, and (c)
cooperate with each other in connection with any such filing and in connection
with resolving any investigation or other inquiry of any of the FTC, the
Antitrust Division or other Governmental Body under any Antitrust Laws with
respect to any such filing or any such transaction. Each such party shall use
reasonable best efforts to furnish to each other all information required for
any application or other filing to be made pursuant to any applicable law in
connection with the transactions contemplated by this Agreement. Each such party
shall promptly inform the other parties hereto of any oral communication with,
and provide copies of written communications with, any Governmental Body
regarding any such filings or any such transaction. No party hereto shall
independently participate in any formal meeting with any Governmental Body in
respect of any such filings, investigation, or other inquiry without giving the
other parties hereto prior notice of the meeting and, to the extent permitted by
such Governmental Body, the opportunity to attend and/or participate.
47
(b) Purchaser and Sellers shall use their best efforts to take such
action as may be required to cause the expiration of the notice periods under
the HSR Act or other Antitrust Laws with respect to such transactions as
promptly as possible after the execution of this Agreement. Each of Purchaser
and Sellers shall use their best efforts to resolve such objections, if any, as
may be asserted by any Governmental Body with respect to the transactions
contemplated by this Agreement under the HSR Act, the Xxxxxxx Act, as amended,
the Xxxxxxx Act, as amended, the Federal Trade Commission Act, as amended, and
any other United States federal or state or foreign statutes, rules,
regulations, orders, decrees, administrative or judicial doctrines or other laws
that are designed to prohibit, restrict or regulate actions having the purpose
or effect of monopolization or restraint of trade (collectively, the "Antitrust
---------
Laws"); provided that Purchaser as a condition to the resolution of any of such
----- --------
obligations shall not be obligated to dispose or otherwise divest itself of any
of its assets. In connection therewith, if any Legal Proceeding is instituted
(or threatened to be instituted) challenging any transaction contemplated by
this Agreement as in violation of any Antitrust Law, each of Purchaser and
Sellers shall cooperate and use its best efforts to contest and resist any such
Legal Proceeding, and to have vacated, lifted, reversed, or overturned any
decree, judgment, injunction or other order whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents, or restricts
consummation of the transactions contemplated by this Agreement, including by
pursuing all reasonable avenues of administrative and judicial appeal and all
available legislative action, unless, by mutual agreement, Purchaser and Sellers
decide that litigation is not in their respective best interests.
7.5 ALTERNATIVE TRANSACTION. From the date hereof (and any prior time)and
-----------------------
until the conclusion of the auction contemplated by the Bidding Procedures,
Sellers are permitted to cause their representatives and Affiliates (together
with Sellers, the "Seller Group") to initiate contact with, solicit or encourage
------------
submission of any inquiries, proposals or offers by, any Person (in addition to
Purchaser and its Affiliates, agents and representatives) in connection with any
sale or other disposition of equity securities of Sellers ("Equity") or all or
--------
substantially all of the assets of any or all of Sellers or engaging in a public
offering of the Equity or all or substantially all of the assets of any or all
of Sellers (or of another security derived from the Equity) of any or all of
Sellers (an "Alternative Transaction"), and nothing herein shall prohibit Seller
------------------------
Group from responding to requests for information regarding an Alternative
Transaction or otherwise facilitating the auction process contemplated by the
Bidding Procedures Order. Purchaser acknowledges and agrees that until the
earlier of (x) the entry by the Bankruptcy Court of the Approval Order and (y)
the termination of this Agreement in accordance with its terms, the Seller Group
shall be permitted to pursue Alternative Transactions, including, but not
limited to, supplying information relating to Sellers or the Equity to
prospective purchasers of the Equity or all or substantially all of the assets
of any or all of Sellers or prospective underwriters or purchasers of the Equity
or all or substantially all of the assets of any or all of Sellers in a public
offering. None of the Seller Group shall have any liability to Purchaser, either
under or relating to this Agreement or any applicable Law, by virtue of entering
into or seeking Bankruptcy Court approval of such a definitive agreement for an
48
Alternative Transaction pursuant to this Section 7.5; provided, that Purchaser
------------
is paid any Expense Reimbursement and Break-Up Fee that may be payable pursuant
to Section 4.7 at the time provided for therein.
-----------
7.6 FURTHER ASSURANCES. Each of Sellers and Purchaser shall use its
-------------------
commercially reasonable efforts to (i) take all actions necessary or appropriate
to consummate the transactions contemplated by this Agreement and (ii) cause the
fulfillment at the earliest practicable date of all of the conditions to their
respective obligations to consummate the transactions contemplated by this
Agreement.
7.7 CONFIDENTIALITY.
---------------
(a) Purchaser acknowledges that the information provided to it in
connection with this Agreement and the transactions contemplated hereby is
subject to the terms of the confidentiality agreement between Sellers'
representative, executed on May 9, 2003 on behalf of Sellers, and Purchaser,
executed by Purchaser on April 25, 2003 (the "Confidentiality Agreement"), the
--------------------------
terms of which are incorporated herein by reference, provided that Purchaser may
--------
include such financial information and other information Purchaser reasonably
determines is required to be disclosed by the rules and regulations of the U.S.
Securities and Exchange Commission in Purchaser's filings with the U.S.
Securities and Exchange Commission or in any private placement memoranda and to
its lenders, underwriters and rating agencies. Effective upon, and only upon,
the Closing Date, the Confidentiality Agreement shall terminate with respect to
information relating solely to the Business or otherwise included in the
Purchased Assets; provided, however, that Purchaser acknowledges that any and
-------- -------
all other Confidential Information provided to it by Sellers, their Affiliates
or their representatives concerning Sellers shall remain subject to the terms
and conditions of the Confidentiality Agreement after the Closing Date.
Notwithstanding the foregoing, the Confidentiality Agreement shall not apply to
information contained in this Agreement or the Exhibits and Schedules attached
hereto or as to matters which are part of the Bankruptcy Court record or
otherwise known to the general public.
(b) Notwithstanding anything to the contrary set forth herein or in
any other agreement to which the parties hereto are parties or by which they are
bound, the obligations of confidentiality contained herein and therein, as they
relate to the transactions described in this Agreement, shall not apply to the
Tax structure or Tax treatment of the transactions described in this Agreement,
and each party hereto (and any employee, representative, or agent of any party
hereto) may disclose to any and all persons, without limitation of any kind, the
Tax structure and Tax treatment of the transactions described in this Agreement
and all materials of any kind (including opinions or other tax analysis) that
are provided to such party relating to such Tax treatment and Tax structure;
provided, however, that such disclosure shall not include the name (or other
-------- -------
identifying information not relevant to the Tax structure or Tax treatment) of
any person and shall not include information for which nondisclosure is
reasonably necessary in order to comply with applicable securities laws.
49
7.8 PRESERVATION OF RECORDS. Sellers and Purchaser agree that each of them
-----------------------
shall preserve and keep the records (including work papers and electronic files
associated with Tax Returns regarding sale, use, excise and Product) held by it
or their Affiliates relating to the Business for a period of seven (7) years
from the Closing Date and shall make such records and personnel available to the
other as may be reasonably required by such party in connection with, among
other things, any insurance claims by, legal proceedings or tax audits against
or governmental investigations of Sellers or Purchaser or any of their
Affiliates or in order to enable Sellers or Purchaser to comply with their
respective obligations under this Agreement and each other agreement, document
or instrument contemplated hereby or thereby. In the event Sellers or Purchaser
wishes to destroy such records prior or after that time, such party shall first
give ninety (90) days prior written notice to the other and such other party
shall have the right at its option and expense, upon prior written notice given
to such party within that ninety (90) day period, to take possession of the
records within one hundred and eighty (180) days after the date of such notice.
7.9 PUBLICITY. Neither Sellers nor Purchaser shall issue any press release
---------
or public announcement concerning this Agreement or the transactions
contemplated hereby without obtaining the prior written approval of the other
party hereto, which approval will not be unreasonably withheld or delayed,
unless, in the sole judgment of Purchaser or Sellers, disclosure is otherwise
required by applicable Law or by the applicable rules of any stock exchange on
which Purchaser or Sellers lists securities, provided that the party intending
to make such release shall use its best efforts consistent with such applicable
Law to consult with the other party with respect to the text thereof.
7.10 CONTACTS WITH SUPPLIERS AND CUSTOMERS. Notwithstanding anything to the
-------------------------------------
contrary contained herein, prior to the Closing, (i) without the prior written
consent of Sellers, which may be withheld for any reason, Purchaser shall not
contact any customers of the Business, and (ii) Purchaser shall not contact any
suppliers to the Business without the prior written consent of Sellers, which
consent shall not be unreasonably withheld or delayed.
7.11 BONDS. Sellers and Agway shall continue to maintain the Bonds issued
-----
on behalf of or at the request of any Seller that are in effect on the Closing
Date until such time as Purchaser, using its reasonable best efforts, causes
Purchaser's surety to replace the Bonds. In the event that an obligee under any
of the Bonds makes a claim thereunder as a result of Purchaser's breach or
alleged breach of any of the Bonds' provisions, Purchaser shall promptly
indemnify and hold harmless any Seller or Agway from any such surety's demand
for indemnification under such surety indemnification agreement.
7.12 SUPPLEMENTATION AND AMENDMENT OF SCHEDULES. From time to time prior to
------------------------------------------
the Closing, Sellers shall have the right to, or will upon the reasonable
request of Purchaser, supplement or amend the Schedules with respect to any
matter hereafter arising or discovered after the delivery of the Schedules
pursuant to this Agreement that, if existing or known at, or occurring prior to,
the date of this Agreement, would have been required to be set forth or
described in such Schedules. No such supplement or amendment shall have any
50
effect on the satisfaction of the condition to closing set forth in Section
-------
9.1(a); provided, however, if the Closing shall occur, then Purchaser shall be
------ --------
deemed to have waived any right or claim pursuant to the terms of this Agreement
----------------
or otherwise, including pursuant to Article X hereof, with respect to any and
---------
all matters disclosed pursuant to any such supplement or amendment at or prior
to the Closing.
7.13 BIDDING PROCEDURES. Within five (5) days after the execution and
------------------
delivery of this Agreement, Agway shall file the Bidding Procedures Motion and
the Sale Motion with the Bankruptcy Court. If the Bidding Procedures Order and
the Approval Order, as entered, do not conform to Exhibits A and B hereto,
---------- -
respectively, Purchaser shall have one (1) Business Day after Purchaser's
receipt of notification of the entry of each such order to notify Sellers in
writing that Purchaser elects, in its sole discretion, to terminate this
Agreement.
7.14 AGWAY NAME.
----------
(a) Within thirty (30) days following the Closing, each Seller shall
file a certificate of amendment of such Seller's certificate of incorporation or
certificate of formation, as the case may be, with the Secretary of State of
Delaware, changing its corporate or limited liability company name, as the case
may be, to remove any reference to the name "Agway", or any similar name or
derivative thereof.
(b) Notwithstanding any other provisions of this Agreement, Purchaser
acknowledges and agrees that:
(i) Sellers are conveying exclusively to Purchaser all of their
rights, title and interests to use the "AGWAY" name as a trade name or
service name and any related Marks solely in connection with the Business,
such rights, title and interests being limited to the use of the "AGWAY"
name as part of a trade name or service name in connection with the
Business such that the trade name or service name must include an
additional term describing or indicating the Business or a part of the
Business in which the entity is involved (e.g., "AGWAY ENERGY," AGWAY
PROPANE," "AGWAY OIL");
(ii) Sellers shall not grant, and has not granted, the rights conveyed
to Purchaser pursuant to Section 7.14(b)(i) to any Person other than
-------------------
Purchaser;
(iii) Purchaser agrees not to use, directly or indirectly, the AGWAY
name outside of the Business and to use the AGWAY name within the Business
only as permitted pursuant to this Section 7.14;
------------
(iv) this Agreement does not grant Purchaser any right to use, and
Purchaser shall not use, the trade name or service name "AGWAY", or any
similar name or derivative thereof, by itself (without regard to whether a
type of entity designation is used with the AGWAY name) for a business or
entity formed and/or operated by or for Purchaser in connection with the
Business;
51
(v) Agway owns, and nothing in this Agreement transfers to or grants
to Purchaser any right, title or interest in or to, the AGWAY name, or any
similar name or derivative thereof, including any trademark and service
xxxx registrations for the AGWAY xxxx, in connection with any business,
products, and/or services outside of the Business (the "Other AGWAY
------------
Marks");
------
(vi) the Other AGWAY Marks are not part of the Purchased Intellectual
Property; and
(vii) Agway has licensed, and nothing contained in this Agreement
limits Agway's right to license, third parties to use the Other AGWAY
Marks.
(c) Purchaser acknowledges that Agway intends to transfer to third
parties some or all of the Other AGWAY Marks, including any trademark and
service xxxx registrations of the Other AGWAY Marks; and Purchaser hereby
releases Agway and Sellers from any and all liability in connection with any
transfer or transfers of the Other AGWAY Marks.
7.15 RETENTION OF FUNDS. From and after the Closing until (i) Sellers
------------------
shall have paid to Purchaser any amounts owed to Purchaser pursuant to Section
-------
3.4(f) or (ii) it shall have been determined pursuant to Section 3.4 that no
----- ------------
amounts are owed by Sellers to Purchaser thereunder, Sellers shall retain an
amount of funds equal to the greater of (A) $1,000,000 and (B) 125% of the
amount, if any, by which Average Net Working Capital exceeds Estimated Closing
Working Capital, and upon the written request of Purchaser, which may be made no
more often than every thirty (30) days, Sellers shall provide Purchaser with
reasonable evidence that such funds have been retained.
7.16 INDUSTRIAL SITE RECOVERY ACT.
----------------------------
(a) As a condition precedent to Purchaser's obligation to close,
Sellers shall have received from the New Jersey Department of Environmental
Protection ("NJDEP"), pursuant to ISRA, for all of Sellers' Properties located
------
in New Jersey:
(i) a letter from NJDEP indicating that ISRA does not apply to this
transaction for each such property ("LNA") or
-----
(ii) a remediation agreement to permit closing to occur prior to ISRA
compliance pursuant to N.J.S.A 13:1K-9 which shall be acceptable to
Purchaser and shall name Purchaser as the ordered party ("Remediation
------------
Agreement") for any of Sellers' Properties located in New Jersey for which
----------
an LNA is not available (the receipt of either documents referred to in
clauses (i) and (ii) shall herein be referred to as "ISRA Closing
-------------
Compliance") and Sellers shall have delivered a copy thereof to Purchaser.
-----------
(b) From and after Closing, Purchaser shall comply with Sellers' ISRA
obligations arising from the transactions contemplated herein. Purchaser shall
52
cooperate with Sellers and shall provide Sellers with access to the facilities
at reasonable times in order for Sellers to accomplish any actions required by
the State of New Jersey to the extent Purchaser is not complying with such
obligations.
7.17 TAX CLEARANCE CERTIFICATES; RESERVE FOR TAXES. Prior to the Closing,
-----------------------------------------------
Sellers shall file an application for a tax clearance certificate from each of
the Tax Authorities listed on Schedule 7.17 (collectively, the Tax Clearance
------------- -------------
Certificates") releasing Sellers from all Liability for all Taxes listed on
------------
Schedule 7.17 owed to such jurisdictions through the Closing Date (collectively,
-------------
the "State Tax Liabilities"), it being understood that it is neither a condition
-----------------------
to Closing or covenant of Sellers that any Tax Clearance Certificates be
received. Sellers shall reserve not of less than $900,000 of cash, which shall
be used solely for the purpose of paying State Tax Liabilities until the earlier
to occur of (i) receipt by Seller of such Tax Clearance Certificates and (ii) 15
months following the Closing Date. Sellers shall provide to Purchaser any Tax
Clearance Certificates it receives.
7.18 FORMATION OF LLC. Notwithstanding anything else contained herein, in
-----------------
order to facilitate the transfer at Closing to Purchaser of the Purchased Assets
that are Tangible Property, prior to the Closing, Sellers shall transfer all of
such Tangible Property to a newly formed single member limited liability company
("LLC I"), which shall in turn transfer all of the Tangible Property that are
-------
non-propane assets to a second limited liability company (LLC II"), which shall
-------
be wholly owned by LLC I (it being understood that membership interests in LLC I
and LLC II are Purchased Assets).
7.19 ASSUMPTION, ASSIGNMENT AND TRANSFER BY AGWAY. At Closing and pursuant
--------------------------------------------
to Section 365 of the Bankruptcy Code, and subject to Bankruptcy Court approval,
Agway shall assume and assign to Purchaser those Purchased Contracts to which
Agway is a party, which Purchased Contracts are listed on Schedule 7.19. At
---------------
Closing and pursuant to Section 363 of the Bankruptcy Code, and subject to
Bankruptcy Court approval, Agway shall sell, transfer, assign, convey and
deliver to Purchaser all of Agway's right, title and interest in and to those
Owned Properties that Agway owns.
7.20 CONVEYANCE OF TITLE. Notwithstanding anything else provided herein,
-------------------
title to any titled Purchased Asset shall be conveyed to Purchaser only upon the
certificate of title relating to any such titled Purchased Assets having been
executed by the relevant Seller and delivered to Purchaser, which may occur
after the Closing. To the extent such transfer of title occurs after the
Closing, Sellers shall deliver powers of attorney relating to the execution of
the certificates of title to each of the titled Purchased Assets in form and
substance reasonably acceptable to Purchaser and Sellers authorizing the
execution of such certificates of title on behalf of Sellers. Such powers of
attorney shall appoint an employee of Purchaser. In the event that any such
power attorneys lapse under applicable law, Sellers agree to promptly execute
replacement powers of attorney upon the request of Purchaser. Purchaser and
Sellers acknowledge that any such delay in the transfer of title is necessary to
facilitate the orderly transfer of title.
53
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFITS
8.1 EMPLOYMENT.
----------
(a) Transferred Employees. At least ten (10) days prior to the
----------------------
Closing, Purchaser shall deliver, in writing, an offer of employment to the
Chief Operating Officer, all field employees, including the general managers,
and any other Employee that Purchaser identifies prior to Closing as critical to
Purchaser's operation of the Business, with such employment to commence
immediately following the Closing, and Purchaser shall deliver to Sellers at
least ten (10) days prior to the Closing a list of those Employees to whom
Purchaser is offering employment. Except as set forth on Schedule 8.1, which may
------------
be amended up to ten (10) days prior to the Closing, each such offer of
employment shall be at the same salary or hourly wage rate and position in
effect immediately prior to the Closing. Such individuals who accept such offer
by the Closing Date are hereinafter referred to as the "Transferred Employees."
---------------------
(b) STANDARD PROCEDURE. Pursuant to the "Standard Procedure" provided
------------------ ------------------
in Section 5 of Revenue Procedure 96-60, 1996-2 C.B. 399, (i) Purchaser and
Sellers shall report on a predecessor/successor basis as set forth therein, (ii)
Sellers will not be relieved from filing a Form W-2 or Form 1099 with respect to
any Transferred Employees or independent contractor, as the case may be, and
(iii) Purchaser will undertake to file (or cause to be filed) a Form W-2 for
each such Transferred Employee with respect to the portion of the year during
which such Employees are employed by Purchaser that includes the Closing Date,
excluding the portion of such year that such Employee was employed by Sellers.
8.2 EMPLOYEE BENEFITS.
-----------------
(a) Purchaser shall provide employee benefits to the Transferred
Employees which are substantially similar to those provided by Purchaser to
similarly situated active employees of Purchaser including, without limitation,
with respect to severance, vacations and incentive compensation. For purposes of
eligibility, vesting and rate of vacation accrual or severance pay, if
applicable, but not benefit accrual for any other purpose, under the employee
benefit plans of Purchaser providing benefits to Transferred Employees (the
"Purchaser Plans"), Purchaser shall credit each Transferred Employee with his or
---------------
her years of service with Sellers and any predecessor entities, to the same
extent as such Transferred Employee was entitled immediately prior to the
Closing to credit for such service under any similar Employee Benefit Plan. For
the purpose of determining incentive compensation (not including any retention
compensation set forth as "Minimum Guarantee" on Schedule 8.2(e)(ii)) the
----------------
("Minimum Guarantee")), for any Transferred Employee under Purchaser's
----------------------
compensation plans, Purchaser shall take into account his or her performance
since July 1, 2003, the commencement of Sellers' current fiscal year. Purchaser
shall accept a trust to trust transfer of assets and liabilities from Sellers'
Savings Plan to Purchaser's Savings Plan of the account attributable to
54
Transferred Employees, at each Transferred Employee's option. Such trust to
trust transfer shall be made in cash and notes representing participant loans in
accordance with the requirements of Section 414(l) of the Code, as soon as
reasonably practicable after the Closing Date.
(b) Notwithstanding subsection (a) above, with respect to Purchaser's
group health plans, Purchaser shall as of the Closing Date either establish
group health plans for the Transferred Employees that are substantially similar
to those that such Employees participated in immediately prior to Closing, or
shall enroll the Transferred Employees in the Purchaser Plans which cover
similarly situated employees of Purchaser. Any group health plan of Purchaser
shall take into account employment with any Seller for purposes of determining
eligibility to participate. Transferred Employees shall participate without any
waiting periods, without evidence of insurability, and without application of
pre-existing physical or mental condition limitations except to the extent
applicable under such similar Employee Benefit Plans. Purchaser shall count
claims arising during the calendar year on or prior to the effective date of
coverage for purposes of satisfying deductibles, out-of-pocket maximums, and all
other similar limitations under the welfare plans of Purchaser. Sellers shall
provide Purchaser with schedules as of the Closing Date in such form as is
mutually convenient to the parties, and update such schedules immediately
thereafter, which reflect the deductibles satisfied, amounts credited toward
out-of-pocket maximums and any other similar limitations as of the Closing Date.
(c) Nothing contained in this Article VIII or elsewhere in this
-------------
Agreement shall be construed to prevent the termination of employment of any
individual Transferred Employee or any change in the employee benefits available
to any individual Transferred Employee provided such change applies to similarly
situated employees of Purchaser.
(d) Accrued Vacation. Except as required by applicable Law, Purchaser
----------------
shall be responsible for all Liabilities with respect to Transferred Employees
attributable to their accrued and unused vacation, sick days and personal days
earned with Sellers through the Closing Date.
(e) With respect to Employees that are not Transferred Employees,
Sellers shall be responsible for all Liabilities under applicable law or the
terms of Sellers' Employee Benefit Plans, including all Liabilities arising
under WARN or Sellers' employee pension benefit plans and Sellers' Liability to
provide continued group health coverage under Part 6, Subtitle A of Title I of
ERISA or Section 4980B of the Code, except as provided below. To the extent
Sellers' Liability to such Employees under any severance arrangement, or on
account of incentive compensation under the plans set forth on Schedule
--------
8.2(e)(i) or accrued and unused vacation, exceeds an aggregate amount of Five
-----
Million Dollars ($5,000,000) (the "Employee Benefit Cap"), Purchaser shall
---------------------
assume such Liability in excess of the Employee Benefit Cap; provided that
--------
Sellers shall be solely responsible for all Liabilities related to severance and
incentive compensation that represents a Minimum Guarantee (the "Excluded Bonus
--------------
Amounts") of Sellers' executives who are not Transferred Employees who are set
-------
55
forth on Schedule 8.2(e)(ii), and provided, further, any such Liabilities
-------------------- -------- -------
related to the Excluded Bonus Amounts shall not be applied to the Employee
Benefit Cap. Purchaser shall assume all Liabilities in respect of incentive
compensation of Transferred Employees under Sellers' plans accrued, earned and
unpaid for during Sellers' current fiscal year through the Closing Date (and, to
the extent so accrued and earned, Purchaser shall have no additional obligation
to provide incentive compensation under Section 8.2(a) hereof for such period);
--------------
provided, however, that Sellers shall pay the Minimum Guarantee directly to the
-------- -------
applicable Transferred Employees and Purchaser shall promptly reimburse Sellers
therefor but not with respect to any matching payments under Sellers' or Agway's
pension or other employee benefit plans.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. The obligation of
------------------------------------------------
Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by Purchaser in whole or
in part to the extent permitted by applicable Law):
(a) The representations and warranties of Sellers set forth in this
Agreement qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, at and as if
made on the Closing, except to the extent such representations and warranties
relate to an earlier date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of such
earlier date), and Purchaser shall have received a certificate signed by an
authorized officer of Sellers, dated the Closing Date, to the foregoing effect;
(b) Sellers shall have performed and complied in all material respects
with all obligations and agreements required in this Agreement to be performed
or complied with by it prior to the Closing Date, and Purchaser shall have
received a certificate signed by an authorized officer of Sellers, dated the
Closing Date, to the foregoing effect;
(c) there have been no facts or circumstances that give rise to a
Material Adverse Effect on the Business;
(d) any required consent to the assignment of the Contracts set forth
on Schedule 9.1(d) shall have been obtained or such Contracts shall have
----------------
been assumed and assigned to Purchaser in accordance with Section 7.19; and
------------
(e) Sellers shall have delivered, or caused to be delivered, to
Purchaser all items set forth in Section 4.2.
------------
56
9.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS. The obligations of
-----------------------------------------------
Sellers to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions (any or all of which may be waived by Sellers in whole or
in part to the extent permitted by applicable Law):
(a) The representations and warranties of Purchaser set forth in this
Agreement qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, at and as if
made on the Closing, except to the extent such representations and warranties
relate to an earlier date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of such
earlier date), and Sellers shall have received a certificate signed by an
authorized officer of Purchaser, dated the Closing Date, to the foregoing
effect;
(b) Purchaser shall have performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
performed or complied with by Purchaser on or prior to the Closing Date, and
Sellers shall have received a certificate signed by an authorized officer of
Purchaser, dated the Closing Date, to the foregoing effect;
(c) evidence of the wire transfer referred to in Section 3.3 hereof;
-----------
and
(d) Purchaser shall have delivered, or caused to be delivered, to
Sellers the items set forth in Section 4.3.
-----------
9.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND SELLERS. The
-----------------------------------------------------------------
respective obligations of Purchaser and Sellers to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, on or prior to
the Closing Date, of each of the following conditions (any or all of which may
be waived by Purchaser and Sellers in whole or in part to the extent permitted
by applicable Law):
(a) there shall not be in effect any Order by a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(b) the Bankruptcy Court shall have entered the Bidding Procedures
Order;
(c) the Bankruptcy Court shall have entered the Approval Order within
forty (40) days after the date that the Bankruptcy Court approves the Bidding
Procedures Order and any stay period applicable to the Approval Order shall have
expired or shall have been waived by the Bankruptcy Court;
(d) the waiting period applicable to the transactions contemplated by
this Agreement under the HSR Act shall have expired or early termination shall
have been granted; and
57
(e) the consents, waivers, approvals or other authorizations listed
on Schedule 9.3(e) shall have been obtained or otherwise satisfied.
--------------
9.4 FRUSTRATION OF CLOSING CONDITIONS. Neither Sellers nor Purchaser may
---------------------------------
rely on the failure of any condition set forth in Section 9.1, 9.2 or 9.3, as
------------------------
the case may be, if such failure was caused by such party's failure to comply
with any provision of this Agreement.
ARTICLE X
INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------------------
warranties of the parties contained in this Agreement shall survive the Closing
through and including the date that is fifteen (15) months after the Closing
Date (other than representations and warranties set forth in Sections 5.8 and
------------
5.17, each of which shall survive through and including the three (3) year
----
anniversary of the Closing Date) (as applicable, the "Survival Period");
-----------------
provided, however, that any obligations to indemnify and hold harmless shall not
-------- -------
terminate with respect to any Losses as to which the Person to be indemnified
shall have given notice to the indemnifying party in accordance with Section
-------
10.4(a) before the termination of the applicable Survival Period.
------
10.2 INDEMNIFICATION BY SELLERS.
--------------------------
(a) Subject to Sections 7.12, 10.1, 10.5 and 10.10 hereof, Sellers
------------- ---- ---- -----
hereby agree to indemnify and hold Purchaser and its directors, officers,
employees, Affiliates, agents, successors and permitted assigns (collectively,
the "Purchaser Indemnified Parties") harmless from and against:
-----------------------------
(i) any and all losses, liabilities, obligations, damages, costs and
expenses (individually, a "Loss" and, collectively, "Losses") based upon,
---- ------
attributable to or resulting from the breach of any representation or
warranty of any Seller set forth in Article V hereof, or any representation
---------
or warranty contained in any certificate delivered by or on behalf of any
Seller pursuant to this Agreement;
(ii) any and all Losses based upon, attributable to or resulting from
the breach of any covenant or other agreement on the part of any Seller
under this Agreement;
(iii) any and all Losses based upon or arising directly from any
Excluded Asset, any Excluded Liability (other than any Liabilities arising
from or in connection with the failure to qualify or re-qualify any
portable propane tanks of Sellers installed at a customer's location in
compliance with DOT Regulations), State Tax Liabilities or any Pre-Closing
Breaches of Purchased Contracts; and
58
(iv) any and all notices, actions, suits, proceedings, claims,
demands, assessments, judgments, costs, penalties and expenses, including
attorneys' and other professionals' fees and disbursements (collectively,
"Expenses") incident to the foregoing matters referred to clauses (i)
--------
through (iii);
provided, however, that Sellers' obligations to indemnify and hold
-------- -------
harmless with respect to the Losses referred to in clauses (ii) and (iii)
above shall terminate fifteen (15) months after the Closing Date except
with respect to any Losses as to which the Purchaser Indemnified Parties
shall have given notice to Sellers in accordance with Section 10.4(a)
----------------
before the expiration of such period and, provided, further, that neither
-------- -------
the immediately preceding provision nor Section 10.9 shall preclude Sellers
------------
from challenging any claim asserting that it is liable for an Excluded
Liability following the expiration of such period other than with respect
to any Environmental Liabilities, for which Purchasers' sole and exclusive
recourse against any Seller shall be pursuant to Section 10.10.
--------------
(b) Purchaser acknowledges and agrees that Sellers shall not have any
liability under any provision of this Agreement for any Loss to the extent that
such Loss relates to action taken by Purchaser or any other Person (other than
Sellers in breach of this Agreement) after the Closing Date. Purchaser shall
take and shall cause its Affiliates to take all reasonable steps to mitigate any
Loss upon becoming aware of any event which would reasonably be expected to, or
does, give rise thereto, including incurring costs only to the minimum extent
necessary to remedy the breach which gives rise to the Loss.
(c) The parties hereto acknowledge and agree that the General
Indemnity Escrow Fund and the Environmental Indemnity Escrow Fund have been
created for the purpose and as the sole and exclusive source of satisfying
Sellers' obligations to indemnify and hold harmless the Purchaser Indemnified
Parties in accordance with this Section 10.2(a)(i), Section 10.5 and Section
------------------- ------------ -------
10.10, respectively, except as otherwise expressly provided herein.
-----
10.3 INDEMNIFICATION BY PURCHASER.
----------------------------
(a) Subject to Sections 10.1 and 10.5, Purchaser hereby agrees to
-------------- ----
indemnify and hold Sellers and its directors, officers, employees, Affiliates,
agents, successors and permitted assigns (collectively, the "Seller Indemnified
------------------
Parties") harmless from and against:
-------
(i) any and all Losses based upon, attributable to or resulting from
the breach of any representation or warranty of Purchaser set forth in
Article VI hereof, or any representation or warranty contained in any
----------
certificate delivered by or on behalf of Purchaser pursuant to this
Agreement;
59
(ii) any and all Losses based upon, attributable to or resulting from
the breach of any covenant or other agreement on the part of Purchaser
under this Agreement;
(iii) any and all Losses based upon or arising directly out of any
Assumed Liability;
(iv) all Losses based upon or arising directly out of any Purchaser's
operation of the Business after the Closing Date; and
(v) any and all Expenses incident to the foregoing.
(b) Sellers shall take and cause its Affiliates to take all
reasonable steps to mitigate any Loss upon becoming aware of any event which
would reasonably be expected to, or does, give rise thereto, including incurring
costs only to the minimum extent necessary to remedy the breach which gives rise
to the Loss.
10.4 INDEMNIFICATION PROCEDURES.
--------------------------
(a) If any of the Persons to be indemnified under this Article X has
suffered or incurred any Loss (regardless of any limitations provided in Section
10.5 hereof), the indemnified party shall so notify the party from whom
indemnification is sought promptly in writing describing such Loss, the amount
or estimated amount thereof, if known or reasonably capable of estimation, and
the method of computation of such Loss, all with reasonable particularity and
containing a reference to the provisions of this Agreement or any other
agreement, instrument or certificate delivered pursuant hereto in respect of
which such Loss shall have occurred. If any action at Law or suit in equity is
instituted by or against a third party with respect to which the indemnified
party intends to claim any Loss under this Article X, the indemnified party
shall promptly notify the indemnifying party of such action or suit and tender
to the indemnifying party the defense of such action or suit. A failure by the
indemnified party to give notice and to tender the defense of the action or suit
in a timely manner pursuant to this Section 10.4 shall not limit the obligations
of the indemnifying party under this Article X, except (i) to the extent such
indemnifying party is prejudiced thereby, (ii) to the extent expenses are
incurred during the period in which notice was not provided and (iii) as
provided by Section 10.1.
(b) If any claim, demand or liability is asserted by any third party
against any Person entitled to indemnification hereunder, the indemnifying party
shall be entitled to assume control of the defense of any actions or proceedings
brought against the indemnified party in respect of matters embraced by the
indemnity and thereafter shall not be liable for the expenses of the indemnified
party. If the indemnifying party fails to assume the defense of any such matter
within thirty (30) days after request by the indemnified party to assume such
defense, the indemnified party may assume control of the defense of the claim.
In all cases, the party without the right to control the defense of the
indemnifiable claim may participate in the defense at its own expense.
60
Notwithstanding anything in this Section 10.4 to the contrary, neither the
-------------
indemnifying party nor the indemnified party shall, without the written consent
of the other party, settle or compromise any indemnifiable claim or permit a
default or consent to entry of any judgment unless the claimant and such party
provide to such other party an unqualified release from all liability in respect
of the indemnifiable claim. Notwithstanding the foregoing, if a settlement offer
solely for money damages is made by the applicable third party claimant, and the
indemnifying party notifies the indemnified party in writing of the indemnifying
party's willingness to accept the settlement offer and, subject to the
limitations of Sections 10.5, 10.6, and 10.7, pay the amount called for by such
------------- ---- ----
offer, and the indemnified party declines to accept such offer, the indemnified
party may continue to contest such indemnifiable claim, free of any
participation by the indemnifying party, and the amount of any ultimate
liability with respect to such indemnifiable claim that the indemnifying party
has an obligation to pay hereunder shall be limited to the lesser of (A) the
amount of the settlement offer that the indemnified party declined to accept
plus the Losses of the indemnified party relating to such indemnifiable claim
through the date of its rejection of the settlement offer or (B) the aggregate
Losses of the indemnified party with respect to such indemnifiable claim. If the
indemnifying party makes any payment on any indemnifiable claim, the
indemnifying party shall be subrogated, to the extent of such payment, to all
rights and remedies of the indemnified party to any insurance benefits or other
claims of the indemnified party with respect to such indemnifiable claim.
10.5 CERTAIN LIMITATIONS ON INDEMNIFICATION.
--------------------------------------
(a) Notwithstanding anything herein to the contrary, any Person making
an indemnification claim under Section 10.2(a)(i) or 10.3(a)(i) must give notice
------------------ ----------
to the indemnifying party of any such indemnification claim in writing in
reasonable detail prior to the expiration of the applicable Survival Period. Any
indemnification claim not made on or prior to that date will be irrevocably and
unconditionally released and waived.
(b) Notwithstanding anything herein to the contrary, an
indemnifying party shall not have any liability under Section 10.2(a)(i) or
-------------------
10.3(a)(i) (as applicable):
----------
(i) with respect to any individual claim (or group of related
claims of the same Person having, in each case, substantially similar
factual or legal basis) for the breach of a representation or
warranty, unless and until the Losses claimed exceed $15,000 (the
"De Minimis Amount");
-----------------
(ii) unless and until the amount of the Losses to the indemnified
parties finally determined to arise thereunder based upon, related to
or resulting from the breach of all representations and warranties
exceeds, in the aggregate $1,000,000 (the "Deductible"), disregarding
----------
any individual claim that does not exceed the De Minimis Amount, at
which time such Losses shall be recoverable from the first dollar of
Loss; and
61
(iii) with respect to any Losses of Purchaser that arise under or
are based upon, related to or resulting from the breach by any Seller
of any representation and warranty (including Section 5.8) set forth
------------
in this Agreement other than Section 5.17 and 10.10, Purchaser's
------------- -----
only recourse shall be shall be the General Indemnity Escrow Fund,
which shall serve as a cap on all such Losses (such that Sellers shall
have no liability to Purchaser in excess of the funds held in such
escrow) and shall remain in escrow until fifteen (15) months after the
Closing Date, with any remaining funds in excess of $500,000 (such
$500,000, the "Tax Escrow") being disbursed to Sellers on the date
------------
that is fifteen (15) months after the Closing Date; provided, however,
-------- -------
that if Purchaser has one or more claims pending in respect of (i) the
breach of any representation or warranty other than those contained in
Section 5.17 or (ii) any other Losses for which Sellers are required
------------
to indemnify Purchaser for pursuant to Section 10.2 on the date that
------------
is fifteen (15) months after the Closing Date, a portion of any
remaining General Indemnity Escrow Fund (not including the Tax Escrow)
equal to the reasonable amount of such claims (or, if the reasonable
amount of such claims exceeds the amount of the remaining General
Indemnity Escrow Fund, the remaining amount of such funds) shall be
retained by the Escrow Agent pending the resolution thereof. The Tax
Escrow shall remain in escrow until the third (3rd) anniversary of the
Closing Date to serve as the source of indemnification of Purchaser
with respect to any Losses that arise under or are based upon, related
to or resulting from the breach of any representation and warranty set
forth in Section 5.8, with any remaining General Indemnity Escrow
------------
Fund being disbursed to Sellers on the third (3rd)anniversary of the
Closing Date; provided, however, that if Purchaser has one or more
-------- -------
claims pending in respect of the breach of any representation or
warranty contained in Section 5.8 on the third (3rd) anniversary of
-----------
the Closing Date, a portion of any remaining Tax Escrow equal to the
reasonable amount of such claims (or, if the reasonable amount of such
claims exceeds the amount of the remaining Tax Escrow, the remaining
amount of such funds) shall be retained by the Escrow Agent pending
the resolution thereof. This Section 10.5(b)(iii) shall not in any way
-------------------
limit the amount or time period for which Purchaser shall be entitled
to be indemnified by Sellers under Section 10.2 with respect to State
------------
Tax Liabilities.
(c) No representation or warranty of Sellers contained herein
shall be deemed untrue or incorrect, and Sellers shall not be deemed to have
breached a representation or warranty, as a consequence of the existence of any
fact, circumstance or event of which (a) it is manifestly evident that such
fact, circumstance or event is disclosed in response to another representation
or warranty contained in this Agreement or (b) Purchaser is aware as of the
Closing Date.
(d) Purchaser shall not make any claim for indemnification under
this Article X in respect of any Losses that is taken into account in the
calculation of any adjustment to the Purchase Price pursuant to Section 3.4 and
-----------
in respect of any of Sellers' representation or warranty regarding Inventory to
the extent taken into account in the calculation of any adjustment to the
Purchase Price pursuant to Section 3.4.
-----------
62
10.6 CALCULATION OF LOSSES.
---------------------
(a) The amount of any Losses for which indemnification is
provided under this Article X shall be net of any amounts actually recovered or
---------
recoverable by the indemnified party under insurance policies or otherwise with
respect to such Losses (net of any Tax or expenses incurred in connection with
such recovery).
(b) If the amount of any Loss for which indemnification is
provided under this Article X gives rise to a currently realizable Tax benefit
---------
(as defined below) to the Indemnified Party making the claim, then the indemnity
claim shall be (i) increased to take account of any net Tax cost incurred by the
indemnified party arising from the receipt of indemnity payments hereunder
(grossed up for such increase) and (ii) reduced to take account of any net Tax
benefit realized by the indemnified party arising from the incurrence or payment
of any such Loss. To the extent such indemnity claim does not give rise to a
currently realizable Tax benefit, if the amount with respect to which any
indemnity claim is made gives rise to a subsequently realized Tax benefit to the
indemnified party that made the claim, such indemnified party shall refund to
the indemnifying party the amount of such Tax benefit (with and including any
gross-up payment made pursuant to this Section 10.6 with respect to such Tax
------------
benefit) when, as and if realized (it being understood that such indemnified
party shall use its reasonable efforts to realize such Tax benefit). For
purposes of this Section 10.6, a "Tax benefit" means an amount by which the Tax
------------ -----------
liability of the party (or group of corporations including the party) is
actually reduced (including by deduction, reduction of income by virtue of
increased tax basis or otherwise, entitlement to refund, credit or otherwise)
plus any related interest received from the relevant Tax Authority. In computing
the amount of any such Tax cost or Tax benefit, the indemnified party shall be
deemed to recognize all other items of income, gain, loss, deduction or credit
before recognizing any item arising from the receipt of any indemnity payment
hereunder or the incurrence or payment of any indemnified Loss. For purposes of
this Section 10.6, a Tax benefit is "currently realizable" to the extent that
------------- ---------------------
such Tax benefit can be realized in the current taxable period or year or in any
Tax Return with respect thereto (including through a carryback to a prior
taxable period) or in any taxable period or year prior to the date of the
indemnity claim. The amount of any increase, reduction or payment hereunder
shall be adjusted to reflect any final determination (which shall include the
execution of Form 870-AD or successor form) with respect to the indemnified
party's liability for Taxes, and payments between the parties to this Agreement
to reflect such adjustment shall be made if necessary. Any indemnity payment
under this Article X shall be treated as an adjustment to the value of the asset
---------
upon which the underlying claim was based, unless a final determination (which
shall include the execution of a Form 870-AD or successor form) with respect to
the indemnified party or any of its Affiliates causes any such payment not to be
treated as an adjustment to the value of the asset for United States federal
income tax purposes.
10.7 CHARACTERIZATION OF INDEMNITY PAYMENTS. Sellers and Purchaser agree
--------------------------------------
to treat any indemnity payment made pursuant to this Article X as an adjustment
---------
to the Purchase Price for federal, state, local and foreign income tax purposes.
63
10.8 NO CONSEQUENTIAL DAMAGES. Notwithstanding anything to the contrary
------------------------
elsewhere in this Agreement, no party (or any of its Affiliates) shall, in any
event, be liable to any other party (or any of its Affiliates) for any
consequential, incidental, special or punitive damages of such other party (or
any of its Affiliates), including loss of future revenue, income or profits,
diminution of value or loss of business reputation or opportunity relating to
the breach or alleged breach hereof.
10.9 EXCLUSIVE REMEDY. Subject to Section 11.4 hereof and except for
---------------- -------------
common law fraud in the inducement under which a common law court would abrogate
this Agreement and except as otherwise provided in Section 10.10, the sole and
-------------
exclusive remedy of Sellers and Purchaser for any breach or inaccuracy, or
alleged breach or inaccuracy, of any representation, warranty, covenant or
agreement made by Sellers or Purchaser shall be indemnification in accordance
with this Article X, which indemnification obligation shall be effective solely
----------
upon the Closing. Subject to the exceptions set forth in the immediately
preceding sentence, in furtherance of the foregoing, the parties hereby waive,
to the fullest extent permitted by applicable Law, any and all other rights,
claims and causes of action (including rights of contributions, if any) known or
unknown, foreseen or unforeseen, which exist or may arise in the future, that it
may have against Sellers or any of its Affiliates, or Purchaser or any of its
Affiliates, as the case may be, arising under or based upon any federal, state
or local Law (including any such Law relating to environmental matters or
arising under or based upon any securities Law, common Law or otherwise).
10.10 ENVIRONMENTAL LIABILITIES AND THE ENVIRONMENTAL INDEMNITY ESCROW FUND.
---------------------------------------------------------------------
(a) As used herein the following terms shall have the following
meanings:
"Property" shall mean any property currently or formerly owned, leased
--------
or used by any Seller.
"Remediation" shall mean all reasonably necessary actions to
-----------
investigate, monitor and/or cleanup, including, without limitation, the
preliminary assessment, site investigation, remedial investigation, remedial
selection and remedial action, in accordance with Environmental Laws.
"Pre-Existing Hazardous Materials" shall mean Hazardous Materials
-----------------------------------
Released prior to the Closing, including any migration or dispersal of such
Hazardous Materials.
(b) Purchaser shall be entitled to payment from the Environmental
Indemnity Escrow Fund pursuant to the Environmental Indemnity Escrow Agreement
for all Losses of Purchaser arising from: (i) the presence of Pre-Existing
Hazardous Materials on, at, under or migrating from the Property, including,
without limitation, all costs of Remediation of Hazardous Materials on, at,
under or migrating from any Property pursuant to Environmental Laws including
Remediation of Sellers' Properties to standards under Environmental Laws
applicable to non-residential use, whether such Remediation is voluntary or
64
involuntary; (ii) any violation of Environmental Laws that occurred prior to the
Closing Date by any Seller or for which any Seller has Liability; (iii)
compliance with Environmental Laws at any property to which any Seller sent
materials for disposal or for which Seller has Liability under Environmental
Laws arising from an occurrence prior to the Closing Date; and (iv) any and all
Losses based upon, attributed to, or resulting from a breach of Sections 5.17 or
-------------
7.16, (i) through (iv) collectively "Environmental Liabilities". In the event
---- --------------------------
that any of Sellers' Properties are subject to ISRA, Purchaser may fund any
financial assurance required by ISRA from the Environmental Indemnity Escrow
Fund as provided in the Environmental Indemnity Escrow Agreement.
(c) With respect to any Environmental Liabilities that arise
under or are based upon, related to or resulting from Section 10.10, other than
-------------
as set forth in Sections 10.10(d) and (e), Purchaser's exclusive recourse shall
---------------- ---
be the Environmental Indemnity Escrow Fund, which shall serve as an absolute cap
on all such Losses (such that Sellers shall have no liability to Purchaser in
excess of the funds held in such escrow) and, subject to the terms of the
Environmental Escrow Agreement, shall remain in escrow until the third (3rd)
anniversary of the Closing Date, with any remaining Environmental Indemnity
Escrow Fund being disbursed to Sellers on the third (3rd) anniversary of the
Closing Date; provided, however, that if Purchaser has one or more claims
-------- -------
pending in respect to Losses under Section 10.10 on the third (3rd) anniversary
-------------
of the Closing Date, a portion of any remaining Environmental Indemnity Escrow
Fund equal to the reasonable amount of such claims (or, if the reasonable amount
of such claims exceeds the amount of the remaining Environmental Indemnity
Escrow Fund, the remaining amount of such funds) shall be retained by the Escrow
Agent pending the resolution thereof. Notwithstanding anything contained in this
Agreement to the contrary, Purchaser's right to recovery from the Environmental
Indemnity Escrow Fund, including for breaches of the representations and
covenants, set forth at Sections 5.17 and 7.16, shall not be subject to Section
------------- ---- -------
7.12, Section 10.2(b) and Sections 10.4 through 10.7 of this Agreement.
---- -------------- ------------- ----
(d) In furtherance of the foregoing and subject to Section
10.10(b) and (e), Purchaser hereby waives, to the fullest extent permitted by
applicable Law, any and all other rights, claims and causes of action (including
rights of contributions, if any) known or unknown, foreseen or unforeseen, which
exist or may arise in the future, that it may have against Sellers or any of
their Affiliates, arising under or based upon any Environmental Laws; provided,
--------
however, that the foregoing shall not apply to those rights, claims and causes
-------
of action for Environmental Liabilities (i) for which Sellers have received
notice prior to the Closing Date that relate to any property other than any
Owned Property or Leased Real Property or (ii) to the extent coverage may be
available under Sellers' Policies pursuant to this Section 10.10, in which case
-------------
the provisions contained in Section 10.10(e)(vii) shall apply.
--------------------
(e) Sellers shall make available to Purchaser at premises of
Sellers copies and evidence of general liability insurance policies, excess
liability insurance policies and environmental liability policies ("Sellers'
---------
Policies") that are in Sellers' possession or control and that were in effect at
---------
65
at any time prior to the Closing Date. Purchaser may at Purchaser's expense make
and retain photocopies of Sellers' Policies.
(ii) To the extent Purchaser's Environmental Liabilities exceed, or
are estimated to exceed, in the aggregate, the amount of the Environmental
Indemnity Escrow Deposit, Purchaser shall have the right to file claims under
Sellers' Policies to recover Environmental Liabilities and shall have the right
to pursue any rights, claims and causes of action of any Seller against third
parties, other than the Sellers.
(iii) In the event that Purchaser's Environmental Liabilities exceed
or are estimated to exceed the amount of the Environmental Indemnity Escrow
Deposit, Purchaser shall provide Sellers with written notice thereof pursuant to
Section 11.9 hereof and Sellers shall cooperate with Purchaser, with respect to
recovery of Purchaser's Environmental Liabilities pursuant to Sellers' Policies
and any rights, claims and causes of action against any third party, which
cooperation shall include using Sellers' commercially reasonable efforts to
supply relevant documents and information and permitting Purchaser, at
Purchaser's discretion, to pursue at Purchaser's expense such insurance coverage
or rights, claims, or causes of action against third parties in the name of any
Seller. Within thirty (30) days of Sellers' receipt of Purchasers' notice
pursuant to this Section 10.10(e)(iii), Sellers shall provide Purchaser with
----------------------
written notice of Sellers' representative for the purpose of cooperation
pursuant to this Section 10.10(e). In the event that Sellers (i) do not provide
----------------
such notice within thirty (30) days of Sellers' receipt of Purchaser's notice
pursuant to this Section 10.10(e) or (ii) in the event Sellers fail to continue
-----------------
to diligently cooperate with Purchaser as provided herein after thirty (30) days
written notice and opportunity to cure, Purchaser shall be deemed to be granted
an irrevocable power of attorney to pursue such insurance and any rights, claims
and causes of action pursuant to the Power of Attorney, substantially in the
form attached hereto as Exhibit K, which shall be executed at the Closing but
---------
shall not be exercised by Purchaser unless and until the occurrence of (i) or
(ii) in this sentence.
(iv) In the event Purchaser is successful in obtaining coverage under
Sellers' Policies pursuant to this Section 10.10(e), and in the event
-----------------
Sellers are unable to recover, in part or in full, for other Seller liabilities
under Sellers' Policies as a result of payment of such insurance proceeds to
Purchaser, Purchaser agrees to indemnify and defend Sellers for the unrecovered
amount to the extent of such insurance proceeds received by Purchaser.
(v) Purchaser shall be solely responsible, and shall indemnify and
hold Sellers harmless, for its own costs and all costs incurred by Sellers or
Sellers' representative in complying with Purchaser's requests for information
in connection with Purchaser's filing of claims under Sellers' Policies or any
demands, claims, or causes of action asserted by Purchaser against any insurer
or any third party in the name of any Seller.
66
(vi) Nothing in this Agreement shall prohibit Sellers from filing claims
against Sellers' Policies or prosecuting and settling such claims without the
prior consent of Purchaser, provided that Sellers shall provide notice to
Purchaser of any such claims and settlement and provided that Sellers shall do
--------
nothing to impair Purchaser's rights under this Section 10.10(e), including,
-----------------
without limitation, by waiving or releasing such rights in any settlement
entered into by Sellers; provided, however, that to the extent Sellers' recovery
-------- -------
depletes coverage limits under Sellers' Policies, that depletion shall not be
deemed such a waiver or release of Purchaser's rights.
(vii) As a condition of payment to Purchasers of proceeds from Sellers'
Policies, Purchaser shall irrevocably waive, to the fullest extent permitted by
applicable Law, any and all rights, claims and causes of action (including
rights of contributions, if any) known or unknown, foreseen or unforeseen, which
exist or may arise in the future, that it may have against Sellers or any of
their Affiliates, arising under or based upon any federal, state or local Law,
including any Environmental Laws, relating to the same event or series of events
giving rise to the claim for which insurance proceeds are obtained. In the event
Purchasers are unsuccessful in obtaining proceeds from Sellers' Policies for a
claim, Purchaser shall irrevocably waive, to the fullest extent permitted by
applicable Law, subject to Section 10.10(d)(i) any and all rights, claims and
-------------------
causes of action (including rights of contributions, if any) known or unknown,
foreseen or unforeseen, which exist or may arise in the future, that it may have
against Sellers or any of their Affiliates, arising under or based upon any
federal, state or local Law, including any Environmental Laws, relating to the
same event or series of events giving rise to the claim.
(viii) Sellers make no representation or warranty regarding whether and to
what extent coverage under Sellers' Policies may exist or whether and to what
extent third-party claims may exist. Nothing in this Agreement shall make
Sellers liable to Purchaser for any provision of self insurance, copayment, or
deductible under any Sellers' Policies. Subject to Section 10.10(e)(vi), nothing
--------------------
in this Agreement shall make Sellers liable to Purchaser for any defenses to
coverage asserted by any insurer or any third party.
ARTICLE XI
MISCELLANEOUS
11.1 Payment of Sales, Use or Similar Taxes.
--------------------------------------
(a) Each of Purchaser on one hand and Sellers on the other hand shall be
responsible for (and shall indemnify and hold harmless the other and their
respective directors, officers, employees, Affiliates, agents, successors and
permitted assigns against) 50% of any sales Taxes applicable to the Purchased
Assets and for all other applicable sales, use, stamp, documentary, filing,
recording, transfer or similar fees or Taxes or governmental charges (including
67
real property transfer taxes, UCC-3 filing fees, FAA, ICC, DOT, real estate and
motor vehicle registration, title recording or filing fees and other amounts
payable in respect of transfer filings) in connection with the sale of the
Purchased Assets contemplated by this Agreement (other than Taxes measured by or
with respect to income (including capital gains) imposed on Sellers or its
Affiliates). Sellers shall file all necessary documents (including all Tax
Returns) with respect to all such amounts in a timely manner.
(b) For purposes of clause (b) of the definition of Excluded Liabilities,
in the case of a taxable period that includes the Closing Date, Taxes relating
to the Purchased Assets shall be allocated to the periods before and after the
Closing Date as follows: (i) in the case of Taxes such as property Taxes, such
Taxes shall be allocated to periods before and after the Closing Date on a per
diem basis and the Purchase Price adjusted accordingly and (ii) in the case of
Taxes based on net or gross income, or transactional taxes such as sales Taxes,
the portion of such Taxes allocable to the period before the Closing Date shall
be computed on the assumption that the taxable period ended on the Closing Date.
11.2 Insurance. If on or after the date hereof and on or prior to the
---------
Closing Date any of the Purchased Assets are damaged by fire or other casualty,
Purchaser shall be entitled to the receipt of any insurance proceeds received or
the right to receive insurance proceeds in connection therewith, and Purchaser
shall be entitled to any condemnation awards, or insurance proceeds received or
the right to receive insurance proceeds in connection with any Owned Property or
Leased Real Property condemned or to which a casualty has occurred on or after
the date hereof and on or prior to the Closing Date if the Closing occurs, and
Purchaser shall receive a credit against the cash portion of the Purchase Price
of an amount equal to the deductible or retention amount of the insurance policy
maintained by the applicable Seller covering such occurrence.
11.3 Expenses. Except as otherwise provided in this Agreement, each of
--------
Sellers and Purchaser shall bear its own expenses incurred in connection with
the negotiation and execution of this Agreement and each other agreement,
document and instrument contemplated by this Agreement and the consummation of
the transactions contemplated hereby and thereby. Purchaser shall bear the
filing fees associated with the HSR Act filings.
11.4 Injunctive Relief. Damages at law may be an inadequate remedy for the
-----------------
breach of any of the covenants, promises and agreements contained in this
Agreement, and, accordingly, any party hereto shall be entitled to injunctive
relief with respect to any such breach, including without limitation specific
performance of such covenants, promises or agreements or an order enjoining a
party from any threatened, or from the continuation of any actual, breach of the
covenants, promises or agreements contained in this Agreement. The rights set
forth in this Section 11.4 shall be in addition to any other rights which a
-------------
Party may have at law or in equity pursuant to this Agreement.
68
11.5 Submission to Jurisdiction; Consent to Service of Process.
---------------------------------------------------------
(a) Without limiting any party's right to appeal any order of the
Bankruptcy Court, (i) the Bankruptcy Court shall retain exclusive jurisdiction
to enforce the terms of this Agreement and to decide any claims or disputes
which may arise or result from, or be connected with, this Agreement, any breach
or default hereunder, or the transactions contemplated hereby, and (ii) any and
all proceedings related to the foregoing shall be filed and maintained only in
the Bankruptcy Court, and the parties hereby consent to and submit to the
jurisdiction and venue of the Bankruptcy Court and shall receive notices at such
locations as indicated in Section 11.9 hereof; provided, however, that if the
------------------- -------- -------
Bankruptcy Case has closed, the parties agree to unconditionally and irrevocably
submit to the exclusive jurisdiction of the Commercial Division, Civil Branch of
the Supreme Court of the State of New York sitting in New York County and any
appellate court from any thereof, for the resolution of any such claim or
dispute. The parties hereby irrevocably waive, to the fullest extent permitted
by applicable law, any objection which they may now or hereafter have to the
laying of venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby consents to process being served by
any party to this Agreement in any suit, action or proceeding by delivery of a
copy thereof in accordance with the provisions of Section 11.9.
------------
11.6 Waiver of Right to Trial by Jury. Each party to this Agreement waives
--------------------------------
any right to trial by jury in any action, matter or proceeding regarding this
Agreement or any provision hereof.
11.7 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement (including
-----------------------------------------
the schedules and exhibits hereto) and the Confidentiality Agreement represent
the entire understanding and agreement between the parties hereto with respect
to the subject matter hereof. This Agreement can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by the party against whom
enforcement of any such amendment, supplement, modification or waiver is sought.
No action taken pursuant to this Agreement shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be construed
as a further or continuing waiver of such breach or as a waiver of any other or
subsequent breach. No failure on the part of any party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy.
69
11.8 GOVERNING LAW. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of New York applicable to contracts made
and performed in such State.
11.9 NOTICES. All notices and other communications under this Agreement
-------
shall be in writing and shall be deemed given (i) when delivered personally by
hand (with written confirmation of receipt), (ii) when sent by facsimile (with
written confirmation of transmission) or (iii) one Business Day following the
day sent by overnight courier (with written confirmation of receipt), in each
case at the following addresses and facsimile numbers (or to such other address
or facsimile number as a party may have specified by notice given to the other
party pursuant to this provision):
c/o Agway, Inc.
XX Xxx 0000
Xxxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
If to Purchaser, to:
Suburban Propane, L.P.
000 Xxxxx 00 Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx, General Counsel
With a copy to:
Cole, Schotz, Meisel, Xxxxxx & Xxxxxxx, P.A.
Court Plaza North
00 Xxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
11.10 SEVERABILITY. If any term or other provision of this Agreement is
------------
invalid, illegal, or incapable of being enforced by any law or public policy,
all other terms or provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
70
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal, or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
11.11 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
--------------------------
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity not a party to this
Agreement except as provided below. No assignment of this Agreement or of any
rights or obligations hereunder may be made by either Sellers or Purchaser (by
operation of law or otherwise) without the prior written consent of the other
parties hereto and any attempted assignment without the required consents shall
be void; provided, however, Purchaser may assign this Agreement and any or all
-------- -------
rights or obligations hereunder (including, without limitation, Purchaser's
rights to purchase the Purchased Assets (in whole or in part) or Purchaser's
rights to seek indemnification hereunder) to any one or more Affiliates of
Purchaser, but Purchaser shall be jointly and severally liable with such
Affiliate or Affiliates in respect of the performance of Purchaser's obligations
hereunder. No assignment of any obligations hereunder shall relieve the parties
hereto of any such obligations. Upon any such permitted assignment, the
references in this Agreement to Purchaser shall also apply to any such assignee
unless the context otherwise requires.
11.12 NON-RECOURSE. No past, present or future director, officer, employee,
------------
incorporator, member, partner or stockholder of Sellers shall have any liability
for any obligations or liabilities of Sellers under this Agreement or the
Sellers Documents of or for any claim based on, in respect of, or by reason of,
the transactions contemplated hereby and thereby.
11.13 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
SUBURBAN PROPANE, L.P.
By: /s/ Xxxxxxx X. Xxxx, Xx.
---------------------------------------
Name: Xxxxxxx X. Xxxx, Xx.
Title: Senior Vice President -
Corporate Development
AGWAY ENERGY PRODUCTS, LLC
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
AGWAY ENERGY SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
72
AGWAY ENERGY SERVICES PA, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
AGWAY, INC., solely for purposes of
Sections 2.5(b), 7.13 and 7.19
--------------- ---- ----
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
73
ASSET PURCHASE AGREEMENT
BY AND AMONG
AGWAY ENERGY PRODUCTS, LLC,
AGWAY ENERGY SERVICES, INC.,
AGWAY ENERGY SERVICES PA, INC.,
AGWAY, INC. (solely for purposes of Sections 2.5(b), 7.13 and 7.19),
--------------- ---- -----
AND
SUBURBAN PROPANE, L.P.
Dated as of November 10, 2003
Displayed below is a summary of Exhibits and Disclosure Schedules that have not
been filed. We will furnish supplementally a copy of any omitted Exhibit and/or
Disclosure Schedule to the Commission upon request.
Page
Schedules
---------
1.1(a) Knowledge of Sellers
1.1(b) Purchased Contracts
1.1(c) Excluded Contracts
1.1(d) Intellectual Property Licenses Granted to Third Parties
2.1(m) Automotive Parts
2.1(n) Bulk Plant Equipment
2.2(d) Excluded Intellectual Property
2.2(i) Surety Bonds
2.5(c) Receipt of Benefit of Contracts
3.4(b)(i) Agreed Principles
3.4(b)(ii) Average Working Capital
5.3(a) Conflicts
5.3(b) Consents
5.5 Undisclosed Liabilities
5.6 Exceptions to Good Title
5.7 Absence of Certain Developments
5.8 Taxes
5.9(a) Real Property
5.9(b) Highways
5.9(g) Casualties and Condemnations
5.10 Tangible Personal Property
5.11 Intellectual Property
5.12(a) Material Contracts Related to Former Real Property
5.12(b) Defaults
5.13(a) Employee Benefits
5.13(c) Qualified Plans
5.13(e) Continuing Benefits
5.13(f) Maintenance of Employee Benefit Plans
5.13(g) Increases and Acceleration of Employee Benefits
5.14(a) Labor and Collective Bargaining Agreement
5.14(b) Labor
5.14(c) Delinquent Payments to Transferred Employees
5.15 Litigation
5.16(a) Violation of Laws
5.16(b) Default of Permits
5.16(c) Notice of Violation of Laws
5.17 Environmental Matters
5.18 Financial Advisors
5.21 Significant Suppliers
5.22 Insurance
74
Page
Schedules
---------
5.23 Absence of Certain Business Practices
6.3 No Conflicts
6.5 Purchaser's Financial Advisors
7.2 Exceptions to Conduct of Business
7.17 Tax Clearance Certificates
7.19 Agway, Inc. Purchased Contracts
8.1 Exceptions to Compensation
8.2(e)(i) Incentive and Severance Plans
8.2(e)(ii) Executives
9.1(d) Consent to Assignment of Material Contracts
9.3(e) Consents
Exhibits
--------
A Approval Order
B Bidding Procedures Order
C Purchase Price Deposit Escrow Agreement
D General Escrow Agreement
E Xxxx of Sale
F Assignment and Assumption Agreement
G Sellers' Non-Competition
H Transition Services Agreement
I Compensation Order
J Environmental Indemnity Escrow Agreement
K Power of Attorney
75
