EXECUTION COPY
ASSET PURCHASE AGREEMENT
among
EAGLE FAMILY FOODS, INC.,
EAGLE FAMILY FOODS HOLDINGS, INC.,
XXXX'X INC.
and
CADBURY BEVERAGES DELAWARE INC.
Dated as of August 13, 2001
TABLE OF CONTENTS
Page
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SECTION 1. SALE OF ASSETS AND ASSUMPTION OF LIABILITIES.....................1
1.1. Sale of Assets...................................................1
1.2. Assets...........................................................2
1.3. Excluded Assets..................................................3
1.4. Assumed Liabilities..............................................5
1.5. Excluded Liabilities.............................................6
SECTION 2. PURCHASE PRICE AND ADJUSTMENTS...................................7
2.1. Purchase Price...................................................7
2.2. Purchase Price Adjustments.......................................7
2.3. Proration of Real and Personal Property Taxes....................9
SECTION 3. REPRESENTATIONS AND WARRANTIES OF EAGLE AND HOLDINGS............10
3.1. Corporate Existence; Subsidiary.................................10
3.2. Corporate Authority; No Violation...............................11
3.3. Governmental Approvals; Consents................................11
3.4. Financial Statements; Undisclosed Liabilities; Commission
Filings.........................................................12
3.5. Absence of Changes..............................................13
3.6. Real Property...................................................14
3.7. Contracts.......................................................15
3.8. Litigation, Agencies............................................16
3.9. Intangible Property Rights......................................17
3.10. Insurance.......................................................18
3.11. Tax Matters.....................................................18
3.12. Employment and Benefits.........................................19
3.13. Compliance with Laws............................................20
3.14. Finders; Brokers................................................21
3.15. Environmental Matters...........................................21
3.16. Product Guaranty; Warranty; Inventory...........................23
3.17. Product Recalls.................................................24
3.18. Customers and Suppliers.........................................24
3.19. Title and Condition of the Assets...............................24
3.20. Consumer List...................................................25
3.21. Loading.........................................................25
SECTION 4. REPRESENTATIONS OF BUYER AND IP BUYER...........................25
4.1. Corporate Existence.............................................25
4.2. Corporate Authority.............................................26
4.3. Governmental Approvals; Consents................................26
4.4. Finders; Brokers................................................26
4.5. Financial Capacity..............................................26
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SECTION 5. AGREEMENTS OF BUYER, IP BUYER, EAGLE AND HOLDINGS...............27
5.1. Operation of the Business.......................................27
5.2. Investigation of Business.......................................28
5.3. Mutual Cooperation; No Inconsistent Action......................28
5.4. Public Disclosures..............................................29
5.5. Access to Records and Personnel.................................30
5.6. License Agreements..............................................30
5.7. Employee Relations and Benefits.................................31
5.8. Asset Reconciliation............................................33
5.9. "As Is" Condition...............................................33
5.10. Non-Solicitation of Eagle Employees.............................33
5.11. Prohibited Activities...........................................34
5.12. Consumer Claims and Complaints..................................34
5.13. Promotion/Pricing Allowance.....................................34
5.14. Administration of Accounts and Related Matters; Customer
Inquiries.......................................................35
5.15. Covenant Not to Compete; Non Solicitation; Confidentiality......35
5.16. Termination of Broker Agreements................................36
5.17. Packaging Materials and Supplies................................36
5.18. No Solicitation or Negotiations.................................37
5.19. Removal of Excluded Assets......................................37
5.20. Mixed Pallet Co-Promotions......................................37
5.21. Maintenance of Assets...........................................37
5.22. Acquisition of Rights of Confidentiality........................37
SECTION 6. CONDITIONS......................................................38
6.1. Conditions Precedent to Obligations of All Parties..............38
6.2. Conditions Precedent to Obligation of Eagle and Holdings........38
6.3. Conditions Precedent to Obligation of IP Buyer and Buyer........39
SECTION 7. CLOSING.........................................................41
7.1. Closing Date....................................................41
7.2. Buyer Deliveries................................................41
7.3. Eagle Deliveries................................................42
SECTION 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.....42
8.1. Survival of Representations, Warranties, Covenants and
Agreements......................................................42
8.2. Indemnification by Eagle and Holdings...........................42
8.3. Indemnification by Buyer and IP Buyer...........................44
8.4. Indemnification Calculations....................................45
SECTION 9. TERMINATION.....................................................46
9.1. Termination Events..............................................46
9.2. Effect of Termination...........................................47
SECTION 10. ALTERNATIVE DISPUTE RESOLUTION..................................47
SECTION 11. MISCELLANEOUS...................................................47
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11.1. Notices.........................................................47
11.2. Bulk Transfers..................................................48
11.3. Transaction Taxes...............................................48
11.4. Further Assurances; Asset Returns...............................48
11.5. Other Covenants.................................................49
11.6. Expenses........................................................49
11.7. Non-Assignability...............................................49
11.8. Amendment; Waiver...............................................50
11.9. Representations and Warranties; Schedules and Exhibits..........50
11.10. Third Parties...................................................51
11.11. Governing Law...................................................51
11.12. Consent to Jurisdiction.........................................51
11.13. Certain Definitions.............................................51
11.14. Entire Agreement................................................52
11.15. Section Headings; Table of Contents.............................52
11.16. Severability....................................................52
11.17. Counterparts....................................................52
11.18. Updating Eagle Disclosure Schedules.............................52
EXHIBITS
--------
EXHIBIT A - Xxxxxx License Agreement
EXHIBIT B - ReaLemon License Agreement
EXHIBIT C - Form of Assumption Agreement
EXHIBIT X - Xxxxxx, Xxxxx & Xxxxxxx LLP Opinion
EXHIBIT E - Form of Xxxx of Sale Agreement
EXHIBIT F - Xxxxxxx Xxxx & Xxxxxxxxx Opinion
EXHIBIT G - FIRPTA Certificate
EXHIBIT H - Form of Services Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of August 13, 2001 (hereinafter
"Agreement"), among EAGLE FAMILY FOODS, INC., a Delaware corporation ("Eagle"),
EAGLE FAMILY FOODS HOLDINGS, INC., a Delaware corporation ("Holdings"), CADBURY
BEVERAGES DELAWARE INC., a Delaware corporation ("IP Buyer") and XXXX'X INC., a
Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Eagle is engaged, in part, in the business of developing,
manufacturing, marketing, distributing and selling shelf-stable juice sold under
the ReaLemon/ReaLime and related brand names (which businesses are hereinafter
referred to as the "Business"); and
WHEREAS, Buyer and IP Buyer desire to purchase from Eagle and Eagle desires
to sell to Buyer and IP Buyer, on the terms and subject to the conditions of
this Agreement, substantially all of the assets and certain of the liabilities
of Eagle principally related to the Business (such purchase, the "Asset
Purchase");
NOW, THEREFORE, in consideration of the foregoing representations,
warranties, covenants and agreements herein contained, the parties hereto hereby
agree as follows:
SECTION 1.
SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1. Sale of Assets.
(a) Subject to the satisfaction or waiver of the conditions set forth in
this Agreement, at the Closing and as of the Closing Date, Eagle shall sell,
assign, transfer, convey and deliver to the appropriate party as designated in
Section 1.1(b) free and clear of any lien or other encumbrance other than
Permitted Liens (as defined below), and such party shall purchase or assume, as
the case may be, all of the assets, rights, properties, claims, contracts and
business of Eagle which are principally utilized in the Business, of every kind,
nature, character and description, tangible and intangible, real, personal or
mixed, wherever located (the "Assets"), other than the Excluded Assets described
in Section 1.3 hereof. As of the Closing, risk of loss as to the Assets shall
pass from Eagle to the appropriate party.
(b) Manner of Conveyance of Specific Assets. The Assets shall be
specifically conveyed to and purchased by Buyer and IP Buyer as follows:
(i) All Assets other than Intangible Property (as defined below) shall
be sold, assigned, transferred, conveyed and delivered to Buyer.
(ii) All of the Intangible Property shall be sold, assigned,
transferred, conveyed and delivered to IP Buyer.
1.2. Assets. The Assets to be purchased by Buyer and IP Buyer at the
Closing include, without limitation, all of Eagle's rights, title and interest
in and to the following:
(a) Real Property. All Real Property (as defined in Section 3.6(a)) set
forth on Schedule 3.6 hereto, including the Facility (as defined in Section
3.6(a)) thereon, and all easements, privileges, rights-of-way, riparian and
other water rights, lands underlying any adjacent streets or roads and
appurtenances pertaining to or accruing to the benefit of such property to which
Eagle has title, in each case subject to the exceptions described on Schedule
3.6 hereto.
(b) Machinery and Equipment. All machinery, vehicles, computers, furniture,
fixtures, equipment, supplies and other items of personal property owned by
Eagle, which are located at the Facility on the Closing Date or otherwise
principally used in or related to the Business or necessary to operate the
Facility; including, without limitation, the machinery, vehicles, computers,
furniture, fixtures, equipment, supplies and other items of personal property
described on Schedule 1.2(b) hereto (the "Machinery") and all warranties and
guarantees, if any, express or implied, existing for the benefit of Eagle in
connection with the Machinery, to the extent transferable.
(c) Intangible Property. The Assets set forth in this Section 1.2(c) shall
be collectively referred to as the "Intangible Property".
(i) Patent Rights. All of Eagle's right, title and interest in the
following, used principally in connection with the Business or necessary to
conduct the Business as presently conducted and/or set forth on Schedule
3.9(a) hereto: (A) unexpired domestic and foreign patents and patent
applications, as well as all reissues, divisionals, continuations and
continuations-in-part and any patents issuing thereon and all documents or
files pertaining thereto; and (B) license agreements and other agreements
which relate to inventions and discoveries and any patent applications and
patents thereon, as well as improvements therein; all solely in the
territories set forth on such Schedule 3.9(a);
(ii) Trademark Rights. All of Eagle's right, title and interest in the
following, used principally in connection with the Business or necessary to
conduct the Business as presently conducted and/or set forth on Schedule
3.9(b) hereto: (A) trademarks, trademark registrations, trademark
applications and trade names (including all documents or files pertaining
to and all translations, adoptions, derivations and combinations of any of
the foregoing); (B) licenses or other rights to use trademarks or trade
dress owned by others; and (C) any trade dress; and all goodwill associated
with any of the foregoing and symbolized thereby solely in the territories
set forth on Schedule 3.9(b);
(iii) Copyrights. All of Eagle's right, title and interest in the
following, used principally in connection with the Business or necessary to
conduct the Business as presently conducted and/or set forth on Schedule
3.9(c) hereto: (A) copyrights, copyright registrations and copyright
applications (including all physical embodiments of and all files and
documents pertaining to any of the foregoing) and (B) licenses or other
rights to use the copyrights of others; all solely in the territories set
forth on such Schedule 3.9(c);
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(iv) Technology. All of Eagle's right, title and interest in the
Technology (as defined in Section 3.9(a));
(v) Business Information. All business information, management systems
(to the extent transferable) and related books, files and records currently
used principally in connection with the Business or necessary to conduct
the Business as presently conducted, including but not limited to any
database, advertising, marketing and sales plans and programs, trade
secrets, business and strategic plans, customer lists, business methods,
techniques, formulas and recipes; all in any tangible medium of expression;
and
(vi) Internet Rights. All right, title and interest of Eagle in the
following, used principally in connection with the Business or necessary to
conduct the Business as presently conducted and/or set forth on Schedule
3.9(d) hereto: domain name registrations and reservations, if applicable.
(d) Contracts. Subject to Section 1.3, all Contracts (as defined in Section
3.7(a)) to which Eagle is a party or by which Eagle is bound as of the Closing
Date.
(e) Licenses and Permits. To the extent transferable, all Licenses and
Permits (as defined in Section 3.13) owned or used by Eagle and which relate
principally to the operation of the Business.
(f) Inventories. The finished products produced by or on behalf of the
Business and owned or shipped (to the extent owned) by Eagle on the Closing Date
and all work-in-process, raw materials, packaging materials and other materials
and supplies used in connection therewith, principally related to the Business
and owned by Eagle on the Closing Date, including (i) any of the foregoing
whether or not located at any location controlled by Eagle, in transit to the
Facility or in possession of third parties on behalf of Eagle and (ii) returns
of inventory following the Closing Date (collectively, the "Inventory").
(g) Books and Records. All books and records primarily related to the
Business in whatever form they exist, and a copy (electronic or paper) of all
other material books and records related to the Business.
(h) Memorabilia. All memorabilia of or related to the Business in the
control or possession of Eagle or any of its affiliates.
(i) Other Assets. All other assets, including all prepaid expenses,
principally utilized in the Business owned by Eagle included in (i) the
Financial Statements (as defined in Section 3.4), to the extent still in
existence on the Closing Date, and (ii) the Closing Statement (as defined in
Section 2.2(b)) including, in each case, the notes thereto but excluding the
Excluded Assets (as defined in Section 1.3 below).
1.3. Excluded Assets. It is expressly agreed that Eagle will retain and
neither Buyer nor IP Buyer will acquire the following assets (collectively, the
"Excluded Assets"):
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(a) Non-Acquired Assets. Any assets utilized by Eagle principally in
connection with businesses other than the Business.
(b) Cash and Cash Equivalents. Cash and cash equivalents, including,
without limitation, bank deposits, investments in so-called "money market"
funds, commercial paper funds, certificates of deposit, Treasury bills and
accrued interest thereon, other than any of the foregoing to the extent arising
out of operations of the Business on or after the Closing Date.
(c) Tax Refunds. Any refunds or credits (including interest thereon or
claims therefore) with respect to any Taxes (as defined in Section 3.11(a))
relating to the Assets for any period or portion thereof ending on or before the
Closing Date, other than any Taxes assumed by Buyer pursuant to Section 11.3.
(d) Insurance Contracts. Any contracts of insurance in respect of the
Business; and any reimbursement for, or other benefit associated with prepaid
insurance (except to the extent any of such prepaid insurance was charged to the
Business), and any rights associated with any prepaid insurance expense for
which Buyer will not receive the benefit after the Closing Date, including,
without limitation, any insurance proceeds with respect to events occurring
prior to the Closing Date, to the extent Eagle assumes or retains the cost of
any such event or indemnifies Buyer with respect to such event.
(e) Excluded Information Systems. Any information systems of the Business
identified in Schedule 1.3(e).
(f) Employee Benefit Assets. Except as expressly provided in Section 5.7
hereof, assets relating to the Benefit Plans (as defined in Section 3.12(b)).
(g) Transferred or Disposed Assets. Any assets transferred or otherwise
disposed of by Eagle in the ordinary course of the Business prior to the Closing
and not in violation of this Agreement, or with Buyer's prior written consent.
(h) Trademarks. (i) All corporate trademarks, servicemarks, trade names of
Eagle and its affiliates incorporating the words "Eagle Family Foods" or
otherwise set forth on Schedule 1.3(h) and/or any logos related thereto or used
in connection therewith not associated principally with the Business, or
containing any trademarks, service marks, trade names or logos associated
principally with the Business including; (ii) any translations, adaptations,
derivations or combinations of any of the items indicated in (i); and (iii) all
goodwill associated with any of the items indicated in (i) and (ii).
(i) Excluded Receivables. The accounts receivables and other receivables of
the Business, including without limitation, the receivables set forth on
Schedule 1.3(i), but excluding the accounts receivables and other receivables of
the Business arising on or after the Closing Date.
(j) UPC Number. Any manufacturer's identification number included in a
Universal Product Code number; provided, however, that Eagle shall consent to
Buyer (i) manufacturing finished goods inventory containing the manufacturer's
identification number used by Eagle until the first (1st) anniversary of the
Closing Date, (ii) selling any finished goods
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inventory existing as of the Closing Date or manufactured pursuant to clause (i)
prior to the first (1st) anniversary of the Closing Date, (iii) using any
packaging existing as of the Closing Date or manufactured pursuant to clause (i)
prior to the first (1st) anniversary of the Closing Date, and (iv) reselling any
returned inventory containing the manufacturer's identification number used by
Eagle prior to the first (1st) anniversary of the Closing Date.
(k) Promotional Contracts. Any contracts involving advertising or
promotional programs (excluding broker and distribution agreements) with a third
party or third party trade name or trademark, and all rights and obligations
under such promotional contracts, including, without limitation, those set forth
on Schedule 1.3(k).
(l) Other Agreements. The agreement with Broad Street Licensing Group LLC,
dated May 18, 2000, as well as any licenses resulting therefrom and all
payments, debts, obligations and liabilities arising under such agreements.
(m) Other Excluded Assets. Such other specific assets used in the Business
as are listed on Schedule 1.3(m).
1.4. Assumed Liabilities. On the Closing Date, Buyer shall assume and agree
to pay, perform and discharge when due, all of the following debts, liabilities
and obligations of Eagle (collectively, the "Assumed Liabilities"):
(a) all debts, obligations and liabilities in respect of the Business or
the Assets arising or incurred by Buyer or IP Buyer on and after the Closing
Date;
(b) all debts, obligations and liabilities which arise on account of
Buyer's operation of the Business, the use of the Assets, and/or sale of any
products manufactured and/or sold by Buyer on and after the Closing Date;
(c) all Taxes related to the Business attributable to periods or portions
thereof beginning on or after the Closing Date;
(d) all obligations and liabilities of Eagle under the Contracts (other
than the Contracts that are Excluded Assets) and Licenses and Permits requiring
performance on or after the Closing Date (other than as a result of default by
Eagle or its agents or affiliates occurring prior to the Closing Date);
(e) all obligations and liabilities assumed by Buyer pursuant to Section
5.7 hereof;
(f) all Environmental Liabilities of Eagle arising as a result of at
anytime being the owner, occupant of, or the operator of the activities
conducted at the Facility (provided that the foregoing shall in no way limit the
representations and warranties contained in Section 3.15 or Eagle's and
Holdings' obligations under Section 8.2(a)(i));
(g) all liabilities for (i) inventory returns received after the Closing
Date for products sold on or after the Closing Date and (ii) inventory
reclamation costs for products of the
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Business returned to reclamation centers on or after the Closing Date in excess
of Seventy-Five Thousand Dollars ($75,000);
(h) all liabilities for commissions and sales incentives payable to brokers
based on sales earned on or after the Closing Date notwithstanding the fact that
the agreements with such brokers have been terminated pursuant to Section 5.16;
and
(i) all liabilities or obligations to Olmarc Packaging Company for any
charges or obligations arising on or after the Closing Date for the storage,
maintenance, transportation or removal of equipment constituting Assets.
1.5. Excluded Liabilities. Except as expressly provided in Section 1.4,
Buyer and IP Buyer assume no liabilities or obligations relating to the
Business, the Assets or Eagle. All such liabilities and obligations, including,
without limitation, the following liabilities are, and shall remain, the
liabilities and obligations of Eagle (collectively, the "Excluded Liabilities"):
(a) all obligations and liabilities arising out of or relating to the
Excluded Assets;
(b) all debts, liabilities or obligations of Eagle that do not arise out of
or are not related to the Business;
(c) except as specifically set forth in Sections 1.4(g), 1.4(h), 1.4(i),
1.4(j) and 1.5(e), all trade and drafts payable of Eagle ("Trade Payables");
(d) except as provided in Section 2.2(e), all liabilities for (i) coupons
dropped on or before the Closing Date (regardless of when such coupon is or was
redeemed), and (ii) inventory returns received for products sold prior to the
Closing Date and (iii) inventory reclamation costs for products of the Business
returned to reclamation centers on or after the Closing Date to a maximum of
Seventy-Five Thousand Dollar ($75,000);
(e) all liabilities related to (i) income Taxes of Eagle, (ii) except as
provided in Section 11.3 hereof, Taxes attributed to the transfer of the Assets
or the assumption of the Assumed Liabilities pursuant to this Agreement, (iii)
all other Taxes related to the Business attributable to periods or portions
thereof ending on or prior to the Closing Date and (iv) Taxes of any other
person pursuant to an agreement or otherwise;
(f) all liabilities or obligations of Eagle and Holdings to their
stockholders;
(g) all liabilities for commissions and sales incentives payable to brokers
based on sales earned prior to the Closing Date;
(h) any indebtedness (whether current or long term) of Eagle or the
Business;
(i) any other obligations and liabilities for which Eagle has expressly
assumed responsibility pursuant to this Agreement, including without limitation,
the obligations and liabilities assumed by Eagle pursuant to Section 5.7; and
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(j) all obligations and liabilities of Eagle or Holdings set forth on
Schedule 1.5.
SECTION 2.
PURCHASE PRICE AND ADJUSTMENTS
2.1. Purchase Price.
(a) The aggregate purchase price for the Business shall be One Hundred
Twenty-Eight Million Four Hundred Twenty-Five Thousand United States Dollars
($128,425,000.00), as adjusted as provided in Section 2.2 (the "Purchase
Price"). The portion of the purchase price payable by each buyer (for the
particular Assets to be acquired by such buyer) shall be the amount set forth on
Schedule 2.1(a).
(b) The parties hereto agree to allocate the Purchase Price plus all
Assumed Liabilities required to be treated as purchase consideration for federal
income tax purposes in accordance with the rules under Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code") and the Treasury
Regulations promulgated thereunder. The allocation of the Purchase Price shall
be as set forth in Schedule 2.1(b). The parties hereto recognize that the
Purchase Price does not include the Assumed Liabilities required to be treated
as purchase consideration for federal income tax purposes or Buyer's and IP
Buyer's acquisition expenses and that Buyer and IP Buyer will allocate such
liabilities and expenses appropriately. The parties hereto agree to act in
accordance with the computations and allocations contained in Schedule 2.1(b)
(including Buyer's and IP Buyer's additional allocations and any modification
thereto reflecting any post-closing adjustments) in any relevant Tax returns or
filings, including any forms or reports required to be filed pursuant to Section
1060 of the Code, the Treasury Regulations promulgated thereunder or any
provisions of local, state and foreign law ("1060 Forms"), and to cooperate in
the preparation of any 1060 Forms and to file such 1060 Forms in the manner
required by applicable law.
(c) Payment of Purchase Price. Except as provided in Section 2.2, the
Purchase Price shall be payable in immediately available federal funds to such
bank accounts as shall be designated in writing by Eagle at least two (2)
business days prior to Closing.
2.2. Purchase Price Adjustments.
(a) Calculation of the Inventory Adjustment. On the terms set forth in
Section 2.2(d), the Purchase Price shall be adjusted by the difference between
the amount of the value of the Inventory as of the Closing Date (as adjusted
pursuant to the immediately following sentence, the "Closing Inventory"), valued
in accordance with GAAP consistently applied and in accordance with the
Accounting Practices, as finally determined, accepted, deemed accepted or agreed
pursuant to this Section 2.2 and the Forecasted Inventory (as defined in this
Section 2.2(a)). The "Closing Inventory" shall also include the cost value of
Inventory (valued in accordance with GAAP consistently applied and in accordance
with the Accounting Practices) returned to Buyer pursuant to Section 1.5(d)(ii)
not later than ninety (90) days after the Closing Date. Such Purchase Price
adjustment shall be paid as set forth in Section 2.2(d) below. The
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forecasted value of the Inventory as of the Closing Date is as set forth on
Schedule 2.2(a) (the "Forecasted Inventory").
(b) Post Closing Inventory Adjustment. Not later than ninety (90) days
after the Closing Date, Eagle will prepare and deliver to Buyer a certificate,
signed by the Chief Financial Officer of Eagle, setting forth the amount of the
Closing Inventory (the "Closing Statement"). Eagle will simultaneously provide
the Closing Statement to Xxxxxx Xxxxxxxx LLP, Champion Plaza, 000 Xxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000-0000 ("Xxxxxx Xxxxxxxx") which Xxxxxx
Xxxxxxxx shall have thirty (30) days to audit the Closing Statement and deliver
to Eagle and Buyer such audited Closing Statement ("Audited Closing Statement")
and a report (the "Report") reflecting any changes made to the Closing Statement
or any of the calculations or methodologies employed therein. Buyer shall be
solely responsible for all fees and expenses of Xxxxxx Xxxxxxxx. Buyer shall
cooperate fully and shall provide Eagle with all assistance and access to books
and records necessary for Eagle to prepare the Closing Statement. The Closing
Statement shall be prepared by Eagle based upon the same accounting policies and
practices employed by Eagle in the preparation of the Financial Statements.
Notwithstanding anything to the contrary contained herein, the Closing Inventory
shall not include (i) any finished goods inventory with an expiration date
during the six (6) month period commencing on the Closing Date or (ii) any
finished goods inventory, work in process, raw materials, packaging, packaging
materials or shipping containers in excess of amounts reasonably expected to be
sold or used in production during the six (6) month period commencing on the
Closing Date. Buyer and its representatives shall be entitled to full access to
the relevant records and working papers prepared by or for Eagle to aid in its
review of the calculation of the Closing Inventory set forth in the Closing
Statement.
(c) Closing Inventory Calculation.
(i) If Eagle believes that the Audited Closing Statement has not been
properly calculated in accordance with the calculation methodologies set
forth in this Section 2.2 or disputes any change referenced in the Audited
Closing Statement and the Report, it shall, within thirty (30) days after
receipt of the Audited Closing Statement and the Report, give written
notice (the "Objection") to Buyer, setting forth the basis of the Objection
in reasonable detail and to the extent practicable the adjustments to the
Audited Closing Statement and the Report that Eagle believes should be
made. Failure to so notify Buyer shall constitute acceptance and approval
of the Audited Closing Statement and Report. If Buyer agrees that any
change proposed by Eagle is appropriate, the change shall be made to the
Audited Closing Statement and the Report. If the proposed change is
disputed by Buyer, then Eagle and Buyer shall negotiate in good faith to
resolve such dispute as expeditiously as possible.
(ii) If, after a period of thirty (30) days following the date on
which Eagle gives Buyer the Objection, Buyer has not responded in writing
to the Objection or any proposed change still remains disputed, Buyer and
Eagle shall in good faith jointly select a major accounting firm (the
"Neutral Accounting Firm") to resolve any remaining disputes. The Neutral
Accounting Firm shall act as an arbitrator to determine, based solely on
presentations by Eagle and Buyer, and not by independent review, only those
issues still in dispute. The Neutral Accounting Firm's determination, based
upon the
8
calculation methodologies set forth in Section 2.2(c), shall be made within
thirty (30) days following the date on which the dispute is submitted,
shall be set forth in a written statement delivered to Eagle and Buyer, and
shall be final, binding and conclusive. The fees and any expenses of the
Neutral Accounting Firm shall be shared equally by Eagle and Buyer. In the
event a party does not comply with the procedure and time requirements
contained herein, the Neutral Accounting Firm shall render a decision based
solely on the evidence it has which was timely filed by either of the
parties.
(d) Payment of Inventory Adjustment. In the event the Closing Inventory is
less than ninety percent (90%) of the Forecasted Inventory, Eagle shall pay
Buyer dollar-for-dollar the difference between (i) ninety percent (90%) of the
Forecasted Inventory and (ii) the Closing Inventory. In the event the Closing
Inventory is greater than one hundred ten percent (110%) of the Forecasted
Inventory, Buyer shall pay Eagle dollar-for-dollar the difference between (i)
one hundred ten percent (110%) of the Closing Inventory and (ii) the Forecasted
Inventory. The Purchase Price shall not be adjusted pursuant to this Section
2.2(d) if the Closing Inventory is equal to or greater than ninety percent (90%)
of the Forecasted Inventory and equal to or less than one hundred ten percent
(110%) of the Forecasted Inventory. Any payments pursuant to this Section 2.2(d)
shall be considered adjustments to the Purchase Price for all purposes. Payment
of any adjustment to the Purchase Price pursuant to this Section 2.2(d) shall be
made by wire transfer to an account designated by Eagle or Buyer, as the case
may be, in United States Dollars, in immediately available federal funds within
three (3) business days after (i) the Closing Calculation has been determined,
accepted or deemed accepted by Buyer pursuant to Section 2.2(c)(i) or (ii) any
proposed change made by Buyer has been agreed upon by the parties or finally
determined by the Neutral Accounting Firm as described in Section 2.2(c)(ii)
together with interest from the Closing Date to the date of payment at the "base
rate" of Citibank, N.A. or any successor thereto in New York, New York on the
Closing Date, based on a 360-day year.
(e) Payment for Pre-Paid Expenses. Schedule 2.2(e) sets forth with adequate
detail all pre-paid expenses incurred by Eagle as of the date of this Agreement
for (i) coupons to be dropped on or after the Closing Date, and (ii) art and
design work, printing and production costs for point-of-sale materials, in each
case, to be used by Buyer in the conduct of the Business on or after the Closing
Date. Between the date of this Agreement and the Closing Date, Eagle shall
provide Buyer with notice of any additional pre-paid expenses incurred by Eagle
during such period for (i) coupons to be dropped on or after the Closing Date,
and (ii) art and design work, printing and production costs for point-of-sale
materials, in each case, to be used by Buyer in the conduct of the Business on
or after the Closing Date (which notice shall include the amounts of any such
pre-paid expenses). At the Closing, Eagle will provide Buyer with all reasonable
documentation and evidence showing that the pre-paid expenses described above
were actually incurred by Eagle. Within ten (10) days after the Closing, Buyer
shall pay to Eagle the amount of all pre-paid expenses described above and for
which Eagle has provided to Buyer the documentation and evidence described in
the immediately preceding sentence.
2.3. Proration of Real and Personal Property Taxes. The following
prorations shall be allocated on the Closing Date so that items relating to time
periods ending on or prior to the Closing Date shall be allocated to Eagle and
items relating to time periods beginning after the Closing Date shall be
allocated to Buyer:
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(a) real and personal property Taxes and assessments on or with respect to
the Assets for any taxable period commencing prior to the Closing Date and
ending after the Closing Date;
(b) payroll related taxes for Transferred Employees (including unemployment
and FICA taxes) for any taxable period commencing prior to the Closing Date and
ending after the Closing Date;
(c) the amount of rent, Taxes and charges for sewer, water, telephone,
electricity and other utilities relating to the Assets;
(d) amounts due under all maintenance, service and supply agreements
relating to the operation and maintenance of the Facility and expressly assumed
by Buyer hereunder; and
(e) all other items normally adjusted in connection with similar
transactions.
The amount of all such prorations shall be settled and paid on the Closing
Date, provided, however, that final payments with respect to prorations that are
not able to be calculated as of the Closing Date shall be calculated and paid as
soon as practicable thereafter, provided, further, that Eagle shall not be
responsible for any increased assessments on real or personal property resulting
from the transactions contemplated hereby. If any of the Tax rates for
payroll-related Taxes or real or personal property Taxes for the current taxable
period are not established by the Closing Date, the prorations shall be made on
the basis of the rate in effect for the preceding taxable period, and such
proration shall be adjusted upon presentation of written evidence by Buyer or
Eagle, as the case may be, that the actual taxes paid differ from the amount
assumed as of the Closing Date; provided, however, that any real property taxes
shall be allocated in accordance with Section 164(d) of the Code.
SECTION 3.
REPRESENTATIONS AND WARRANTIES OF EAGLE AND HOLDINGS
Eagle and Holdings each, jointly and severally, represents and warrants to
Buyer and IP Buyer that:
3.1. Corporate Existence; Subsidiary.
(a) Eagle is a corporation duly organized and validly existing and in good
standing under the laws of the State of Delaware and has the requisite power and
authority to own, lease or otherwise hold and operate the properties and assets
used in the Business being sold hereunder and to carry on the Business as the
same is now being conducted. Eagle is duly authorized, qualified or licensed to
do business as a foreign corporation and is in good standing in every
jurisdiction wherein, by reason of the nature of the Business or the character
of the Assets, the failure to be so qualified would individually or in the
aggregate have a material adverse effect on the results of operations, condition
(financial or otherwise), or business of the Business taken as a whole or on the
ability of Eagle to consummate the transactions contemplated hereby (a "Material
Adverse Effect").
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(b) No subsidiary or affiliate of Eagle is engaged in the Business or owns,
leases or otherwise holds and operates any of the properties or assets used in
the Business (including the Facility) being sold hereunder.
(c) Holdings is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Holdings owns all of the
issued and outstanding shares of capital stock of Eagle and holds all voting
rights thereunder.
3.2. Corporate Authority; No Violation. This Agreement and all agreements,
documents and instruments referred to herein and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by the
Boards of Directors of Eagle and Holdings and, where appropriate, have been duly
authorized by all requisite corporate, stockholder, or other action prior to the
execution and delivery of this Agreement and all other agreements, documents and
instruments, and Eagle and Holdings have full power and authority to execute and
deliver this Agreement and all agreements, documents and instruments referred to
herein and to perform their respective obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. This Agreement
and all agreements, documents and instruments referred to herein have been duly
executed and delivered by Eagle and Holdings, and constitute valid and legally
binding obligations of Eagle and Holdings, enforceable in accordance with their
terms except as enforceability may be (a) limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditor's rights, or (b)
subject to general principles of equity. Except as set forth in Schedule 3.2,
the execution, delivery and performance of this Agreement and all agreements,
documents and instruments referred to herein by Eagle and Holdings and the
consummation by Eagle and Holdings of the transactions contemplated hereby and
thereby will not violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of Eagle or Holdings, (x) result in the creation or
imposition of any adverse claim, restriction on, transfer of pledge, lien,
charge, mortgage, encumbrance, or security interest of any kind upon or give to
any person any interest or right (including any right of termination or
cancellation) in or with respect to any of the Assets or the Business, (y)
violate any law, order, writ, injunctions, decree, statute, rule or regulation
applicable to Eagle, Holdings or any of the Assets or the Business, cause the
suspension or revocation of any permit, license, consent or approval given with
respect to or held by Eagle related to the Assets or the Business or (z)
conflict with or result in any breach of or constitute (with or without due
notice or lapse of time or both) any default under or cause any acceleration of,
or any maturity of, any contract, indenture, mortgage, lease, note or other
agreement or instrument to which Eagle or Holdings is subject or is a party or
to which any Assets or the Business are subject, except in the case of clauses
(x), (y) or (z) for any such creation or imposition of any lien or security
interest, violation, conflict, breach or default which individually or in the
aggregate would not have a Material Adverse Effect.
3.3. Governmental Approvals; Consents. Neither Eagle nor Holdings is
subject to any order, judgment or decree which would prevent the consummation of
the transactions contemplated hereby. No claim, legal action, suit, arbitration,
governmental investigation, action, or other legal or administrative proceeding
is pending or, to the knowledge of Eagle or Holdings, threatened against Eagle
or Holdings which would be reasonably likely to enjoin or delay the transactions
contemplated hereby. Except as set forth in Schedule 3.3 hereto, no consent,
approval, order or authorization of, license or permit from, notice to or
registration, declaration or
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filing with, any governmental, judicial or regulatory authority or entity,
domestic or foreign, or of any third party, is or has been required on the part
of Eagle or Holdings in connection with the execution, delivery and performance
of this Agreement and all agreements, documents and instruments referred to
herein or the consummation of the transactions contemplated hereby or thereby
except for such consents, approvals, orders or authorizations of, licenses or
permits, filings or notices the failure of which to obtain or make would not
individually or in the aggregate have a Material Adverse Effect or which have
been obtained.
3.4. Financial Statements; Undisclosed Liabilities; Commission Filings.
(a) Schedule 3.4(a) contains a true, complete and accurate copy of the
unaudited balance sheet of the Business as of July 1, 2000 and the related
statements of income for the fiscal year ended on such date, including any notes
related thereto (the "Annual Financial Statements"). The Annual Financial
Statements are true and correct in all material respects and present fairly and
accurately the financial condition and the results of the operations of the
Business as of the dates and for the periods indicated. The Annual Financial
Statements have been prepared from and in accordance with the books and records
of Eagle and in conformity with U.S. generally accepted accounting principles
("GAAP") consistently applied and under Eagle's internal accounting practices
which are set forth in Schedule 3.4(a) (the "Accounting Practices"). Schedule
3.4(a) also contains a true, complete and accurate copy of the unaudited balance
sheet of the Business as of March 31, 2001 and the related statements of income
for the thirty-nine (39) week period ended on such date, including any notes
related thereto (the "Interim Financial Statements," and together with the
Annual Financial Statements, the "Financial Statements"). The Interim Financial
Statements are true and correct in all material respects and present fairly and
accurately the financial condition of the Business as of such date and the
results of operations and cash flows for the week period then ended subject to
those normal year-end audit adjustments which have not been made and as set
forth in Schedule 3.4(a). The Interim Financial Statements have been prepared in
accordance with the Accounting Practices. All Financial Statements are qualified
by the fact that the Business has not operated as a separate "stand-alone"
entity within Eagle; provided that the Financial Statements are prepared in
conformity with GAAP and the Accounting Practices. As a result, the Business
received certain allocated charges and credits as specifically identified and
quantified in the notes accompanying the Financial Statements. Such charges and
credits, while believed by Eagle to be reasonable, do not necessarily reflect
the amounts which would have resulted from arms-length transactions. In
addition, in order to present stand-alone Financial Statements for the Business,
a number of significant assumptions regarding the basis of presentation have
been made, all of which are believed by Eagle to be reasonable and are
specifically identified and quantified in the notes to the Financial Statements.
Eagle makes no representation with respect to any financial information for the
Business delivered to Buyer other than as contained in or pursuant to this
Agreement. Eagle makes no other representation or warranty with respect to such
financial information presented in the financial statements.
(b) Schedule 3.4(b) contains a true, complete and accurate copy of the
audited balance sheet of Eagle as of July 1, 2000 and the related statements of
income for the fiscal year ended on such date, reflecting the adjustments and
allocations necessary to derive the Annual Financial Statements (the "Bridge
Annual Financial Statements"). The Bridge Annual Financial Statements have been
prepared from and in accordance with the books and records of Eagle and
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in conformity in all material respects with GAAP consistently applied and under
the Accounting Practices. Schedule 3.4(b) also contains the unaudited balance
sheet of Eagle as of March 31, 2001 and the related statements of income for the
thirty-nine (39) week period ended on such date, reflecting the adjustments and
allocations necessary to derive the Interim Financial Statements (the "Bridge
Interim Financial Statements"). The Bridge Interim Financial Statements have
been prepared in accordance with the Accounting Practices. Except as set forth
in Schedule 3.4(b), there are no adjustments required to be made to the
Financial Statements relating to transactions between the Business, on the one
hand, and its affiliates, on the other, in order for the Financial Statements to
be in conformity in all material respects with GAAP consistently applied.
(c) Eagle does not have any outstanding claims, liabilities or indebtedness
(absolute, contingent or otherwise) relating to the Business except as set forth
in the Financial Statements other than liabilities and obligations incurred in
the ordinary course of business after the date of the Financial Statements and
which would not be reasonably expected, individually or in the aggregate, to
have a Material Adverse Effect.
(d) Since July 20, 1998, Eagle has filed all forms, reports, schedules,
statements and other documents with the Securities and Exchange Commission (the
"Commission") required to be filed by it pursuant to the U.S. Federal securities
laws and the rules and regulations promulgated thereunder, and all forms,
reports, schedules, statements and other documents filed with the Commission
have complied in all material respects with all applicable requirements of the
U.S. Federal securities laws and the Commission rules and regulations
promulgated thereunder (such forms, schedules, statements, reports and other
documents, together with any amendments, supplements and exhibits thereto, are
sometimes collectively referred to as the "Commission Filings"). Except to the
extent the information contained in any Commission Filing has been amended or
superseded by an after filed Commission Filing, the Commission Filings did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
3.5. Absence of Changes.
(a) Except as otherwise disclosed in Schedule 3.5 or in the Commission
Filings or as contemplated by this Agreement, since July 1, 2000, (i) the
Business has been conducted in all material respects in the ordinary course
consistent with past practice and (ii) there has not been, and no fact or
condition exists which would have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, other than seasonal
changes, changes relating to the economy in general or changes relating to the
industry in which the Business operates in general.
(b) Without limiting the generality of Section 3.5(a), since July 1, 2000,
with respect to the Business, except as otherwise disclosed in Schedule 3.5 or
as contemplated by this Agreement, Eagle has not:
(i) failed to pay any creditor any amount owed to such creditor when
due (after the expiration of applicable grace periods) arising from the
operation of the Business, other than in the ordinary course of business
consistent with past practice or
13
amounts being contested in good faith and for which adequate reserves have
been provided;
(ii) sold or otherwise transferred any of the assets of the Business
material to the Business or cancelled any debts or claims material to the
Business or waived any rights material to the Business, except, in each
case described in this clause in the ordinary course of business consistent
with past practice;
(iii) disposed of any material patents, trademarks or copyrights or
any patent, trademark, or copyright applications used principally in the
operations of the Business;
(iv) defaulted on any material obligation relating to the operations
of the Business;
(v) written down the value of any Inventory specifically relating to
the Business except in the ordinary course of business consistent with past
practice;
(vi) made any material change, or announced any material change, in
the terms, including, but not limited to, price, payment terms or
off-invoice allowances and discounts, of the sale of any product (or
component thereof) or services relating to the Business; or made any
change, or announcement of any change, in the form or manner of
distribution of any product (or component thereof) relating to the
Business;
(vii) experienced any shortage or difficulty in obtaining any raw
material required by the Business other than in the ordinary course of
business;
(viii) made any change in the accounting methods or practices of the
Business with respect to its condition, operations, business, properties,
assets or liabilities; or
(ix) entered into any agreement or made any commitment to do any of
the foregoing.
3.6. Real Property.
(a) Schedule 3.6 contains a list of all real property principally used by
Eagle in the Business (together with the Facility (as defined herein) the "Real
Property"), including all buildings, structures and other improvements situated
thereon (the "Facility"). Except as set forth in Schedule 3.6, (i) there are no
parties in possession of any portion of the Real Property as lessees, tenants at
sufferance or trespassers other than Eagle and (ii) to the knowledge of Eagle,
there is no pending special assessment affecting the Real Property or any part
thereof. Except as provided in Schedule 3.6, neither Eagle nor Holdings has
received actual notice from any governmental authority that the location,
construction, occupancy, operation or use of the buildings located on the Real
Property violates any restrictive covenant or deed restriction (or other
Permitted Liens) or any other governmental laws, orders, rules or regulations.
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(b) Except for corporate offices of Eagle and Holdings, the leases for
which are not included in the Assets, Eagle does not lease any real property in
connection with the Business.
(c) The real estate tax bills for the Real Property cover the whole of the
Real Property and do not cover or apply to any other property.
(d) No portion of any Real Property is located in an area designated as a
flood zone by any governmental authority.
(e) As of the date of this Agreement, neither Eagle nor Holdings has
received any written notice from any governmental entity having jurisdiction
over all or any portion of the Real Property regarding any adverse change in the
specific application to the Real Property of any applicable laws relating to a
change in the permitted use of all or any portion of the Real Property.
(f) To the knowledge of Eagle and Holdings, the Real Property, including,
without limitation, all building systems, structural components, roofs and
building equipment, are in good condition and repair (reasonable wear and tear
excepted), suitable for the purposes which they are currently being used and for
the operation of the Business.
(g) Neither Eagle nor Holdings has incurred or agreed to pay any amount or
perform any covenant in connection with the water tower adjacent to the Real
Property and there are no existing obligations with respect to such water tower
that could affect any future owner of the Real Property.
3.7. Contracts.
(a) Except as otherwise disclosed in Schedule 3.7(a), there are no
outstanding commitments, contracts, indentures and agreements, written or oral,
to which Eagle is a party to or by which Eagle is bound that relates principally
to the Business (hereinafter, each a "Contract") including, without limitation:
(i) employment, severance, termination, consulting or similar
contracts;
(ii) contracts containing covenants not to compete or other covenants
restricting the development, manufacture, marketing, distribution or sale
of any product or service of the Business;
(iii) contracts principally relating to the Business with any
subsidiary or affiliate of Eagle;
(iv) contracts relating to the Intellectual Property (including any
licenses or other agreements under which Eagle is licensee or licensor of
any such Intellectual Property, including the names ReaLemon and ReaLime)
or to trade secrets, confidential information or proprietary rights and
processes of Eagle or any other Person;
(v) contracts for marketing, advertising or promotions on behalf of
the Business;
15
(vi) contracts relating to indebtedness for money borrowed or the
mortgaging, pledging or otherwise placing a lien on any Asset (other than
Permitted Liens or liens on equipment in connection with equipment leases);
or
(vii) personal property leases, purchase orders for inventory, service
or maintenance agreements, broker agreements, sales representative
agreements and license agreements;
that (A) involve commitments by Eagle for terms of twelve (12) months or
longer and involve payment of more than $50,000; (B) involve payment of more
than $100,000; or (C) have been entered into with salesmen, commissioned agents,
or other sales representatives, or with bottlers, manufacturers, consultants,
management services, distributors, dealers or customers and involve payment of
more than $50,000 (other than purchase orders in the ordinary course of business
consistent with past practice), and in the case of (A) - (C), are not terminable
by their terms, without penalty, on thirty (30) days or less notice, except for
Contracts, the loss of which would not have a Material Adverse Effect. Contracts
disclosed in Schedule 3.7(a) are hereafter referred to as the "Disclosed
Contracts."
(b) Eagle has furnished or made available to Buyer a true and correct copy
of each Disclosed Contract. Each Contract which is to be assigned to Buyer
pursuant to this Agreement is valid and in full force and effect in accordance
with its terms. To Eagle's and Holdings' knowledge, the other parties thereto
are not (with or without the lapse of time or the giving of notice or both) in
material default or material breach under any Disclosed Contract and there are
no claims affecting the same of any kind pending or, to Eagle's or Holdings'
knowledge, threatened, as of which Eagle or Holdings has notice.
(c) Except as listed in Schedule 3.7(c), all Disclosed Contracts to be
assigned to Buyer and IP Buyer in accordance with this Agreement are assignable
without the requirement of consent from any other party thereto except for those
Disclosed Contracts the failure to be assignable would not have a Material
Adverse Effect.
3.8. Litigation, Agencies.
Except as set forth in Schedule 3.8 or as disclosed in the Commission
Filings or for worker's compensation claims, as of the date hereof, there are no
claims, actions, suits, proceedings (whether adjudicatory, rulemaking,
licensing, or otherwise) or investigations pending or, to the knowledge of Eagle
and Holdings, threatened in law or in equity, or before any Federal, state or
foreign commission, court, tribunal, board or governmental agency related to the
Business. Except as set forth in Schedule 3.8, Eagle is not in default under any
judgment, order, injunction or decree of any court or government agency relating
to the Business except for such defaults, judgments, orders, injunctions or
decrees which would not have a Material Adverse Effect.
3.9. Intangible Property Rights.
(a) Schedule 3.9(a) lists all domestic and foreign patents and patent
applications and all license agreements and other agreements which relate to
inventions, discoveries and Technology (as defined herein) and any patent
applications and patents thereon,
16
used principally in connection with the Business (the "Patent Rights"). To
Eagle's and Holdings' knowledge, except as set forth in Schedule 3.9(a) and
except as would not have a Material Adverse Effect, (i) Eagle owns, is licensed
or has the right to use the Patent Rights and the Technology (as defined below)
described in Schedule 3.9(a) free and clear of all liens, encumbrances, equities
and other restrictions (ii) there are no pending claims challenging the validity
or ownership of such Patent Rights or Technology or Eagle's right to own or use
such Patent Rights or Technology; (iii) the patents under such Patent Rights are
valid and subsisting and none of the claims of said patents infringes or is now
being infringed by others; (iv) there are no licenses or sublicense agreements
now in effect regarding Eagle's use of such Patent Rights or Technology; (v)
neither Eagle nor the Patent Rights infringes any U.S. or foreign patent or
trade secret owned by third parties in the current operation of the Business and
no claim is now pending or threatened by or against third parties to such
effect; and (vi) Eagle has taken reasonable security measures to protect the
security, confidentiality and value of the Technology. For purposes of this
Section 3.9(a), the term "Technology" shall mean the plans, designs, research
data, inventions (whether patentable or unpatentable and whether or not reduced
to practice) trade secrets and other proprietary know-how, recipes, formulae and
manufacturing production and processes, techniques, operating manuals, drawings,
technology, manuals, data, records, procedures, research and development
records, supplier lists, pricing and cost information, business and marketing
plans and proposals, and all licenses or other rights to use any technical
information, know-how and trademarks of others developed principally for the
Business or used principally in connection with the Business or necessary to
conduct the Business as presently conducted.
(b) Schedule 3.9(b) lists (i) all trademark registrations and trademark
applications and (ii) any and all licenses or other rights to use trademarks
owned by others including, without limitation, the Licensed Marks (as defined in
Section 5.6), in each case, used principally in connection with the Business or
necessary to conduct the Business as presently conducted (the "Trademark
Rights"). To Eagle's and Holdings' knowledge, except as set forth in Schedule
3.9(b) and except as would not have a Material Adverse Effect, (i) Eagle owns,
is licensed or has a valid and subsisting right to use the Trademark Rights;
(ii) all such registered Trademark Rights are valid and subsisting, free and
clear of any liens, charges or other encumbrances or rights of third parties
which would restrict Buyer's right to use such Trademark Rights; and (iii) no
claim by or against third parties with regard to the use of any of such
Trademark Rights and trade dress is pending or has been made or threatened and
none of such Trademark Rights infringes or is being infringed by others.
(c) Schedule 3.9(c) lists all copyright registrations and renewals thereof,
copyright applications and all material licenses or other rights to use the
copyrights of others, in each case used principally in connection with the
Business or necessary to conduct the Business as presently conducted (the
"Copyright Rights"). To Eagle's and Holdings' knowledge, except as disclosed in
Schedule 3.9(c) and except for those claims that would not have a Material
Adverse Effect, there are no pending or threatened claims by or against Eagle
with respect to any Copyright Rights or the use thereof and no valid basis
exists for any such claim by or against third parties.
(d) Schedule 3.9(d) lists all domain name registrations used, owned or
reserved by Eagle principally in connection with the Business or necessary to
conduct the Business as
17
presently conducted (the "Internet Rights"). To Eagle's and Holdings' knowledge,
except as disclosed in Schedule 3.9(d) and except as would not have a Material
Adverse Effect, (i) Eagle owns, is licensed or has the right to use and transfer
the Internet Rights; (ii) all such Internet Rights are valid and subsisting,
free and clear of any encumbrances or rights of third parties which would
restrict IP Buyer's right to use or transfer such Internet Rights; and (iii) no
claim by or against third parties with regard to the use of any of such Internet
Rights is pending or has been made or threatened, no valid basis exists for any
such claim by or against third parties and none of such Internet Rights is
infringing or being infringed by others.
(e) To Eagle's and Holdings' knowledge, except as set forth in Schedule
3.9(e) and except as would not have a Material Adverse Effect, (i) all right,
title and interest in and to the Licensed Marks are owned by Eagle, (ii) the
Licensed Marks are valid and subsisting, free and clear of any liens, charges or
other encumbrances, (iii) no claim by or against third parties with regard to
use of the Licensed Marks is pending or threatened and none of such Licensed
Marks infringes or is being infringed by others.
3.10. Insurance. Schedule 3.10 contains an accurate list and description of
all insurance policies maintained by or on behalf of Eagle for the Assets and
personnel related to the Business (the "Insurance Policies"). Such description
includes the insurance carrier, the type of coverage, the coverage amounts, the
deductibles of such policies and the expiration of the current premium periods
thereunder. The Insurance Policies are of the kinds, covering such risks and in
such amounts and with such deductibles and exclusions, as are consistent with
past business practice. Eagle has furnished Buyer with a true, complete and
accurate copy of the Insurance Policies. The Insurance Policies are in full
force and effect and will continue in full force and effect to the Closing Date
except for those failures to have insurance policies in force that would not
have a Material Adverse Effect. Eagle is not in material default under any
provisions of any Insurance Policy nor has Eagle or Holdings received notice of
cancellation of any Insurance Policy. No material claim is pending under any
Insurance Policy as to which Eagle or Holdings has been advised or been given
notice that coverage has been denied or disputed by the underwriter of such
policy.
3.11. Tax Matters.
(a) For purposes of this Agreement, "Taxes" shall mean any federal, state,
provincial, local, territorial and foreign income, profits, franchise, gross
receipts, payroll, sales, employment, use, property, real estate, excise, value
added, estimated, stamp, alternative or add- on minimum, environmental,
withholding and any other taxes, duties or assessments, together with all
interest, penalties and additions imposed with respect to such amounts.
(b) Eagle has withheld from salaries, wages and other compensation of and
any other payments made to employees, independent contractors or creditors all
material Taxes related to the Business and required to be so withheld, and has
either duly and timely paid such Taxes to the appropriate taxing authority or
(if not yet due and payable) set aside such Taxes in accounts for that purpose
for all periods for which the statutory period of limitations for the assessment
of Tax has not yet expired.
(c) There are no liens for Taxes (other than for Permitted Liens) on any
Asset.
18
(d) None of the Assets is "tax-exempt use property" within the meaning of
Section 168(h) of the Code.
(e) All material tax returns required to be filed with respect to the
Business ("Tax Returns") (including any combined, consolidated, unitary or
similar return) have been duly and timely filed, taking into account any
extensions of the filing deadlines which have been validly granted to Eagle and
each such Tax Return is complete and correct in all material respects that
pertain to the Business. All Taxes owed by Eagle with respect to the Business
(whether or not shown on any Tax Return) that, if unpaid, could result in a
lien, charge or other encumbrance (other than a Permitted Lien) on the Assets of
the Business, have been paid. Eagle has duly and timely filed all material sales
and use, real or personal property and employment (including, without
limitation, wages, bonuses and benefits) Tax Returns with respect to the
Business, taking into account any extensions of the filing deadlines which have
been validly granted to Eagle, and each such Tax Return is complete and correct
in all material respects. Eagle has paid all material sales and use, property
and employment (including, without limitation, wages, bonuses and benefits)
Taxes and assessments with respect to the Business that have become due with
respect to any period ended on or prior to the Closing Date.
(f) Except as disclosed in Schedule 3.11, no governmental or regulatory
authority is now asserting in writing, or to the knowledge of Eagle or Holdings,
threatening to assert against the Business or the Assets any deficiency or claim
for Taxes, and there is no reasonable basis for any such assertion of which
Eagle is or reasonably should be aware.
(g) To the knowledge of Eagle or Holdings, the Assets are not subject to
any direct or indirect liability for Taxes of any other Person.
3.12. Employment and Benefits.
(a) Labor Controversies. Except as described in Schedule 3.12(a) and except
for any matter that would not have a Material Adverse Effect, in respect of the
Business, (i) Eagle is in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, (ii) there is no unfair labor
practice complaint against Eagle pending before the National Labor Relations
Board, (iii) there is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against or affecting Eagle, (iv) within the past five (5)
years, Eagle has not experienced any strike, work stoppage or other labor
difficulty, and (v) Eagle is not a party to, or subject to, a collective
bargaining agreement, and no collective bargaining agreement relating to
employees of Eagle is currently being negotiated.
(b) Employee Benefit Plans.
(i) For purposes of this Agreement, "Benefit Plans" shall mean all
"employee benefit plans" (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
including, without limitation, "multiemployer plans" within the meaning of
Sections 3(37) and 4001(a)(3) of ERISA, retirement, savings, stock
purchase, stock option, severance, employment, change-in-control, fringe
benefit, collective bargaining, bonus, incentive, deferred compensation and
19
all other employee benefit plans, agreements, programs, policies or other
arrangements (whether or not subject to ERISA) as to which both (A) any
employee or former employee of the Business (collectively, the "Business
Employees") has any present or future right to benefits and (B) Eagle or
any of its subsidiaries has any present or future liability. Schedule
3.12(b)(i) sets forth a list of each material Benefit Plan.
(ii) With respect to each material Benefit Plan, Eagle has made
available to Buyer a copy or written description thereof.
(iii) Except as described in Schedule 3.12(b)(iii), each material
Benefit Plan has been established and administered in accordance with its
terms and in compliance with the applicable provisions of ERISA, the Code
and other applicable laws, except where a failure to do so would not have a
Material Adverse Effect. Except as provided in Section 5.7 with respect to
liabilities assumed by Buyer pursuant to this Agreement, there are no
circumstances pursuant to which Buyer could have any liability with respect
to any Benefit Plan, or any other plan maintained or contributed to by any
entity that is, or at any time was, a member of a controlled group (as
defined in Section 412(n)(6)(B) of the Code) that includes or included
Eagle, or any predecessor thereto.
(c) Employment Contracts. Except as described in Schedule 3.12(c), there
are no material employment contracts between Eagle, on the one hand, and
Business Employees, on the other hand, other than contracts representing the
standard terms and conditions of employment prevailing between Eagle and their
Business Employees.
(d) Employee Relations. Neither Eagle nor Holdings has any information that
would lead it to reasonably believe that any of the individuals listed on
Schedule 3.12(d) or more than ten percent (10%) of the Waterloo Employees will
refuse offers of employment from Buyer. No more than ten percent (10%) of the
Waterloo Employees have been terminated or resigned during the twelve (12) month
period prior to the date of this Agreement.
(e) Schedule 3.12(e) sets forth the names of all Waterloo Employees
currently receiving long-term and short-term disability benefits.
3.13. Compliance with Laws. Except as disclosed in Schedule 3.13 and except
for those failures to have, to be in full force and effect, to file, retain and
maintain and to comply that would not, individually or in the aggregate, have a
Material Adverse Effect (a) with respect to the Business, Eagle has all
licenses, permits or franchises issued by any United States or foreign, Federal,
state, provincial, municipal or local authority or regulatory body and other
governmental certificates, authorizations and approvals (collectively "Licenses
and Permits") required by every United States or foreign, federal, state,
provincial, municipal and local governmental or regulatory body for the
operation of the Business and the use of the Assets; (b) with respect to the
Business, all such Licenses and Permits are in full force and effect and, no
action, claim or proceeding is pending, nor to the knowledge of Eagle or
Holdings is threatened, to suspend, revoke, revise, limit, restrict or terminate
any of such Licenses and Permits or declare any such License and Permit invalid;
(c) with respect to the Business, Eagle has filed all necessary reports and
maintained and retained all necessary records pertaining to such Licenses and
Permits; and (d) with respect to the Business, Eagle has otherwise complied with
and is in compliance with all of
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the Federal, state, local and foreign statutes, laws, ordinances, regulations,
rules, requirements, Licenses and Permits, judgments, decrees and orders
applicable to its existence, financial condition, operations, properties or
Business, and neither Eagle nor Holdings has received any notice to the
contrary.
3.14. Finders; Brokers. With the exception of fees and expenses payable to
Credit Suisse First Boston Corporation, which shall be Eagle's sole
responsibility, neither Eagle nor Holdings is a party to any agreement with any
finder or broker, or in any way obligated to any finder or broker for any
commissions, fees or expenses in connection with the origin, negotiation,
execution or performance of this Agreement.
3.15. Environmental Matters. Except as disclosed in Schedule 3.15:
(a) In respect of the Business, Eagle is in compliance with all
Environmental Laws (as defined below) applicable to the nature, scope and extent
of the Business as presently or previously conducted by Eagle.
(b) In respect of the Business, Eagle holds, and is in compliance with, all
Licenses and Permits, required under Environmental Laws ("Environmental
Permits") applicable to the nature, scope and extent of the Business as
presently or previously conducted by Eagle. The Environmental Permits are set
forth in Schedule 3.15.
(c) There are no unresolved past, pending or threatened Environmental
Claims against Eagle in connection with the Assets or the Business, nor is Eagle
aware of any facts or circumstances which could reasonably be expected to form
the basis for any Environmental Claim against Eagle.
(d) No Releases of Hazardous Substances have occurred at, from, in, to, on,
or under any Site and no Hazardous Substances are present in, on, about or
migrating from any Site that could give rise to an Environmental Claim against
Eagle or Buyer.
(e) Neither Eagle in connection with the Business or the Assets, the
Business, any predecessors of Eagle in connection with the Business or the
Assets, nor any entity previously owned by Eagle in connection with the Business
or the Assets, has transported or arranged for the treatment, storage, handling,
disposal, recycling or transportation of any Hazardous Substances to any
off-Site location which would result in an Environmental Claim against Eagle,
any predecessors of Eagle or any entity previously owned by Eagle.
(f) No Site is a current or proposed Environmental Clean-up Site.
(g) There are no Liens arising under or pursuant to any Environmental Law
on any Site.
(h) There are no (i) underground storage tanks, active or abandoned, (ii)
polychlorinated biphenyl containing equipment, or (iii) asbestos containing
material at any Site.
(i) Eagle in connection with the Business or the Assets, has not, either
expressly or by operation of law, assumed or undertaken, or agreed to assume or
undertake,
21
responsibility for any liability or obligation of any other Person, arising
under or relating to Environmental Laws, including but not limited to, any
obligation for investigation, corrective or remedial action.
(j) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, on behalf of, or which are in the
possession of Eagle with respect to any Site which have not been made available
to Buyer prior to execution of this Agreement.
(k) There are no past, pending, current or threatened Environmental
Liabilities, except for such Environmental Liabilities that would not have a
Material Adverse Effect.
(l) As used herein:
"Environment" means all air, surface water, groundwater, or land, including
land surface or subsurface, including all fish, wildlife, biota and all other
natural resources.
"Environmental Claim" means any and all written administrative or judicial
actions, suits, orders, claims, liens, notices, notices of violations,
investigations, complaints, requests for information, proceedings, or other
communication, whether criminal or civil, (collectively, "Claims") pursuant to
or relating to any applicable Environmental Law by any person (including but not
limited to any governmental entity, private person and citizens' group) based
upon, alleging, asserting, or claiming any actual or potential (i) violation of
or liability under any Environmental Law, (ii) violation of any Environmental
Permit, or (iii) liability for investigatory costs, cleanup costs, removal
costs, remedial costs, response costs, natural resource damages, property
damage, personal injury, fines, or penalties arising out of, based on, resulting
from, or related to the presence, Release, or threatened Release into the
Environment, of any Hazardous Substances at any location, including but not
limited to any off-Site location to which Hazardous Substances or materials
containing Hazardous Substances were sent for handling, storage, recycling,
treatment, or disposal.
"Environmental Clean-up Site" means any location which is listed or
proposed for listing on the National Priorities List, the Comprehensive
Environmental Response, Compensation and Liability Information System, or on any
similar state list of sites requiring investigation or cleanup, or which is the
subject of any pending or threatened action, suit, proceeding, or investigation
related to or arising from any alleged violation of any Environmental Law.
"Environmental Laws" means any domestic, foreign, federal, state,
interstate or local statute, law or regulation which is in effect and is binding
upon Eagle as of the Closing Date or any order, injunction, judgment, decree,
common law or other enforceable requirement of any governmental entity, and
relating to the protection of the environment, human health or worker safety,
including any of the foregoing related to: (i) Remedial Actions; (ii) the
reporting, licensing, permitting, or investigating of the emission, discharge,
Release or threatened Release of Hazardous Substances into the air, surface
water, groundwater, natural resources or land; or (iii) the manufacture,
release, distribution, use, generation, treatment, storage, disposal, transport
or handling of Hazardous Substances.
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"Environmental Liability" means any liability or obligation arising under
Environmental Laws in connection with the Assets or the Business to the extent
arising from any condition existing or any act or omission of Eagle at or prior
to the Closing Date.
"Hazardous Substance" means (i) any substance or material regulated under
applicable Environmental Laws or (ii) gasoline, diesel fuel or other petroleum
hydrocarbons or polychlorinated biphenyls or asbestos.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing of a
Hazardous Substance into the Environment.
"Remedial Action" means any response action, removal action, remedial
action, corrective action, monitoring program, sampling program, investigation
or other cleanup activity pertaining to any Hazardous Substance.
"Site" means any real property at which the Business was currently or
formerly conducted, including but not limited to, all real properties currently
or previously owned, leased or operated by: (i) Eagle, in connection with the
Business or the Assets; (ii) any predecessors of Eagle, in connection with the
Business or the Assets; or (iii) any entities previously owned by Eagle, in
connection with the Business or the Assets, in each case, including all soil,
subsoil, surface waters and groundwater thereat.
3.16. Product Guaranty; Warranty; Inventory.
(a) To Eagle's and Holdings' knowledge, except as disclosed in Schedule
3.16(a) or that would not have a Material Adverse Effect, no shipment or other
delivery of products made or to be made by Eagle on or prior to the Closing Date
was or as of the Closing Date will be, and no food or food ingredients in the
Inventory on the Closing Date will be as of the Closing Date be (i) adulterated
or misbranded within the meaning of the Federal Food, Drug & Cosmetic Act, as
amended (the "FD&C Act"); (ii) an article which may not under the provisions of
Sections 404 or 505 of the FD&C Act be introduced into interstate commerce; or
(iii) adulterated or misbranded within the meaning of any pure food laws or
ordinances of any state, province or city to which such articles are shipped or
to be shipped.
(b) All finished goods Inventory to be sold to Buyer hereunder are products
which, under the provisions of such laws, can be shipped and/or sold in
interprovincial or foreign commerce, which conform in all respects to the
requirements of such laws and the regulations issued pursuant thereto except
where noncompliance of such laws and regulations would not have a Material
Adverse Effect. All of the Inventory to be sold to Buyer hereunder consists of
items of a quality and quantity usable or saleable in the ordinary course of
business and not at prices significantly lower than list prices. The value of
all items of Inventory in the Financial Statements included in Schedule 3.4(a)
and in the Closing Statement, as applicable, has been accounted for in such
Financial Statements in accordance with the Accounting Practices and Inventory
which is obsolete, of below standard quality as of the Closing Date or not
otherwise saleable prior to the expiration of its shelf life has been written
down to net realizable value as of
23
the Closing Date. The quantities of Inventory at the Closing will be sufficient
for currently anticipated order levels in the ordinary course of business
consistent with past practice.
(c) Except as set forth in Schedule 3.16(c), in the last twenty-four (24)
months, (i) neither Holdings nor Eagle knows or has any reason to know of any
claim based on any product liability or warranty in connection with the
Business; and (ii) neither Eagle nor Holdings has become aware of any claim
(actual or threatened) based on any product warranty in connection with the
Business.
3.17. Product Recalls. Except as disclosed in Schedule 3.17, there has not
been, since January 23, 1998, any product recall of any product manufactured,
shipped or sold by the Business.
3.18. Customers and Suppliers. Set forth in Schedule 3.18 is a list of the
eight largest customers of the Business and the eight largest suppliers to the
Business, in each case based on dollar volume during Eagle's fiscal year ended
June 30, 2001 together with the net sales for such customer in such period or
the total dollar value of supplies purchased from such supplier in such period,
as applicable. Except as set forth in Schedule 3.18, none of such customers or
suppliers has terminated, or to Eagle's or Holdings' knowledge, has provided
written notice of an intention to terminate its relationship with the Business.
3.19. Title and Condition of the Assets.
(a) Eagle has good and valid title (and fee title in the case of the Real
Property) to all of the Assets free and clear of all liens, charges and other
encumbrances, except (i) as set forth in Schedule 3.19(a), (ii) for liens for
Taxes and other governmental charges and assessments that are not yet
delinquent, (iii) for liens of carriers, warehousemen, and other like liens
arising in the ordinary course of business for sums not yet due and payable or
that are being contested in good faith, (iv) as disclosed in the Financial
Statements, (v) with respect to Real Property, (A) easements, licenses,
covenants, rights-of-way and other similar restrictions, (B) any conditions that
may shown by a current survey, title report or physical inspection and (C)
zoning, building and other similar restrictions, so long as none of (A), (B) or
(C), individually, or in the aggregate, grant any third party any option or
right to acquire or lease a portion thereof, or materially and adversely affect
the use or operation of the Real Property substantially as currently used, and
(vi) other liens, charges or other encumbrances which do not interfere in any
material respect with the operations of the Business (collectively, the
"Permitted Liens"). This Agreement and the instruments of transfer to be
executed and delivered pursuant hereto will effectively vest in the Buyer and IP
Buyer title to all of the Assets free and clear of all liens other than the
Permitted Liens.
(b) Except for the Excluded Assets, the services contemplated by the
Services Agreement (as defined in Section 6.3(j)) and except as specifically set
forth in Schedule 3.19(b), the Assets constitute the entire Business and all of
the assets (tangible and intangible), properties and rights necessary to conduct
the Business in all material respects as currently conducted. Except as set
forth on Schedule 3.19(b), all tangible Assets (including, but without
limitation the Machinery and the Inventory) are located at the Facility and
there are no shared facilities or
24
services of the Business which are used in connection with any other business or
operations of Eagle or any affiliate or subsidiary other than the Business.
(c) Except as set forth in Schedule 3.19(c), the items of tangible personal
property and the Real Property included in the Assets are in good working order
(subject to normal wear and tear, free from defects other than such minor
defects that do not interfere with the continued use thereof in the conduct of
normal operations) and are suitable for the purposes for which they are
currently being used and for the operation of the Business.
3.20. Consumer List. A list of summary information in the form customarily
maintained by Eagle for consumers who have contacted Eagle or its affiliates
within the two (2)-year period prior to the date of this list, which is, in all
material respects, complete and accurate as of May 2001, has been provided to
Buyer by Eagle.
3.21. Loading. Except as set forth in Schedule 3.21, since July 1, 2000,
Eagle has not sold any amount of product of the Business which is material to
the monthly sales of the Business as a whole (a) with payment terms longer than
terms customarily offered by Eagle for such product (which payment terms have
been disclosed to Buyer), (b) at a discount from the listed price materially
differing from any discounts customarily offered by Eagle for such product, or
(c) with shipment terms materially differing from the shipment terms customarily
offered by Eagle for such product.
SECTION 4.
REPRESENTATIONS OF BUYER AND IP BUYER
Buyer and IP Buyer each, jointly and severally, represents and warrants to
Eagle and Holdings that:
4.1. Corporate Existence. It is a corporation duly organized and validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite power and authority to own, lease and
operate the properties and assets used in the Business being purchased hereunder
and to carry on the Business as the same is now being conducted. It is duly
authorized, qualified or licensed to do business as a foreign corporation and in
good standing in every jurisdiction wherein, by reason of the nature of the
Business or the character of the Assets, the failure to be so qualified would
individually or in the aggregate have a material adverse effect on the ability
of Buyer to consummate the transactions contemplated hereby (a "Buyer Material
Adverse Effect").
4.2. Corporate Authority. This Agreement and all agreements, documents and
instruments referred to herein and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by its Board of
Directors and by all requisite corporate, shareholder, or other action prior to
the execution and delivery of this Agreement and all other agreements, documents
and instruments, and it has full power and authority to execute and deliver this
Agreement and all agreements, documents and instruments referred to herein and
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. This Agreement has been and all
agreements, documents and instruments referred to herein will be duly executed
and delivered by it, and will constitute valid and legally binding
25
obligations of it, enforceable in accordance with their terms except as
enforceability may be (a) limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditor's rights, or (b) subject to general
principles of equity. The execution, delivery and performance of this Agreement
and all agreements, documents and instruments referred to herein by it and the
consummation by it of the transactions contemplated hereby and thereby will not
violate or conflict with any provision of its Certificate of Incorporation or
By-Laws, (x) violate any law, order, writ, injunction, decree, statute, rule or
regulation applicable to it or (y) conflict with or result in any breach of or
constitute (with or without due notice or lapse of time or both) any material
default under or cause any acceleration of, or any maturity of, any contract,
indenture, mortgage, lease, note or other agreement or instrument to which such
party is subject or is a party, except in the case of clauses (x) or (y) for any
such violation, breach or default which individually or in the aggregate would
not have a Buyer Material Adverse Effect.
4.3. Governmental Approvals; Consents. It is not subject to any order,
judgment or decree which would prevent the consummation of the transactions
contemplated hereby. No claim, legal action, suit, arbitration, governmental
investigation, action, or other legal or administrative proceeding is pending
or, to its knowledge, threatened against it which would be reasonably likely to
enjoin or delay the transactions contemplated hereby. Except as set forth in
Schedule 4.3 hereto, no consent, approval, order or authorization of, license or
permit from, notice to or registration, declaration or filing with, any
governmental, judicial or regulatory authority or entity, domestic or foreign,
or of any third party, is or has been required on its part in connection with
the execution, delivery and performance of this Agreement and all agreements,
documents and instruments referred to herein, or the consummation of the
transactions contemplated hereby or thereby except for such consents, approvals,
orders or authorizations of, licenses or permits, filings or notices the failure
of which to obtain or make would not individually or in the aggregate have a
Buyer Material Adverse Effect.
4.4. Finders; Brokers. It is not a party to any agreement with any finder
or broker, or in any way obligated to any finder or broker for any commissions,
fees or expenses, in connection with the origin, negotiation, execution or
performance of this Agreement.
4.5. Financial Capacity. Buyer has in hand cash or cash readily available
to it without condition necessary to consummate the transactions contemplated by
this Agreement.
SECTION 5.
AGREEMENTS OF BUYER, IP BUYER, EAGLE AND HOLDINGS
5.1. Operation of the Business. Except as otherwise contemplated by this
Agreement or as disclosed in Schedule 5.1, Eagle covenants that until the
Closing it will use all reasonable efforts to continue (or cause to be
continued), in a manner consistent with the past practices of the Business, to
maintain and preserve intact the Business, the Assets and the goodwill
associated therewith, and to maintain (or cause to be maintained) the ordinary
and customary relationships of the Business with its suppliers, customers and
others having business relationships with it with a view toward preserving for
Buyer and IP Buyer to and after the Closing Date the Business, the Assets and
the goodwill associated therewith. Until the Closing Date, Eagle shall continue
to operate and conduct the Business in the ordinary course, and maintain its
books and records in
26
accordance with past practices and will not without the prior written approval
of Buyer or as otherwise contemplated by this Agreement or Schedule 5.1 take any
of the following actions:
(a) sell, transfer or otherwise dispose of or encumber any of its
properties or assets pertaining to the Business, other than (i) Inventory in the
ordinary course of business consistent with past practice or (ii) any property
or asset (other than machinery, vehicles, computers and equipment) which is not
material to the results of operations, financial condition or business of the
Business taken as a whole;
(b) cancel any debts or waive any claims or rights pertaining to the
Business, except in the ordinary course of business;
(c) grant any increase in the compensation of officers or employees
primarily engaged in the Business, except for increases (i) in the ordinary
course of business and consistent with past practice (which do not exceed three
percent (3%) of annual compensation) or (ii) as required by any Benefit Plan;
(d) make any capital expenditure or commitment or grant any trade discount
pertaining to the Business, other than (i) in the ordinary course of business
consistent with past practice or (ii) pursuant to existing commitments or
business plans previously delivered to Buyer;
(e) except with respect to endorsement of negotiable instruments in the
ordinary course of its Business consistent with past practice, incur, assume or
guarantee any indebtedness for borrowed money other than (i) purchase money
borrowings, (ii) indebtedness for borrowed money incurred in the ordinary course
of business consistent with past practice, (iii) refundings of existing
indebtedness and (iv) other indebtedness for borrowed money which is not
material to the results of operations, financial condition, or business of the
Business taken as a whole;
(f) enter into, amend, modify, terminate (partially or completely), grant
any waiver under or give any consent with respect to any material Contract or
any material License and Permit;
(g) violate, breach or default under in any material respect, or take or
fail to take any action that (with or without notice or lapse of time or both)
would constitute a material violation or breach of, or default under, any term
or provision of any Contract or any License and Permit;
(h) engage in any transaction with respect to the Business with any
officer, director or affiliate of Eagle or any stockholder of Holdings (except
for transactions which will be the exclusive liability of Eagle or Holdings
after the Closing);
(i) make any change in any method of accounting or accounting principle,
method or practice except for any such change required by reason of a concurrent
change in generally accepted accounting principles, or write down the value of
any Inventory except in the ordinary course of business consistent with past
practice;
27
(j) settle, release or forgive any claim or litigation or waive any right
thereto, in each case pertaining to the Business, except in the ordinary course
of business (except for settlements, releases or forgiveness which will be the
exclusive liability of Eagle or Holdings after the Closing);
(k) make any material change in any method of purchasing, selling,
marketing, management or other operations with respect to the Business; or
(l) agree, whether in writing or otherwise, to do any of the foregoing.
5.2. Investigation of Business. Buyer and IP Buyer may, prior to the
Closing Date, make or cause to be made such investigation of the business and
properties of the Business and of its financial and legal condition as Buyer and
IP Buyer deem necessary or advisable, including, without limitation the right to
conduct a reasonable environmental investigation of the Facility at their sole
cost and expense; provided that such investigations do not materially interfere
with the Business. Eagle will permit Buyer and IP Buyer and their respective
authorized agents or representatives, including their independent accountants,
to have full access to the properties, books and records of the Business at
reasonable hours to review information and documentation relative to the
properties, books, contracts, commitments and other records of the Business.
Buyer and IP Buyer and their respective representatives will hold in confidence
all confidential information obtained from Eagle, its officers, agents,
representatives or employees in accordance with the provisions of the letter
dated January 24, 2001 between Buyer and Eagle (the "Confidentiality Letter").
5.3. Mutual Cooperation; No Inconsistent Action.
(a) Subject to the terms and conditions hereof, the parties hereto agree,
at their own cost and expense, to use their commercially reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including all of the following (i)
obtain prior to Closing all licenses, certificates, permits, approvals,
authorizations, qualifications and orders of governmental authorities as are
necessary for the consummation of the transactions contemplated hereby,
including but not limited to such consents and approvals as may be required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"Xxxx-Xxxxx Act"), as set forth below and any similar foreign legislation; and
(ii) effect all necessary transfers, recordations, registrations and other
filings with respect to the Business, including, without limitation, the Patent
Rights, Technology, Trademark Rights, Copyrights and Internet Rights. The
parties hereto shall cooperate fully with each other to the extent reasonable in
connection with the foregoing; provided, however, that neither Buyer nor IP
Buyer shall be required to consent to the divestiture or other disposition of
any of its or its affiliates' assets and Buyer, IP Buyer and their respective
affiliates shall have no obligation to contest, administratively or in court,
any ruling, order or other action of any governmental, judicial or regulatory
authority respecting the transaction contemplated by this Agreement; provided,
further, however, that the parties hereto shall promptly respond to the Federal
Trade Commission ("FTC") or the United States Department of Justice ("DOJ")
Request for Additional Information.
28
(b) Each party hereto shall promptly and before any relevant legal deadline
make all filings which may be required by each of them in connection with the
consummation of the transactions contemplated hereby under the Xxxx-Xxxxx Act
and any similar foreign legislation. Each party shall furnish to the other such
necessary information and assistance as the other party may reasonably request
in connection with the preparation of any necessary filings or submissions by it
to any U. S. or foreign governmental agency, including, without limitation, any
filings necessary under the provisions of the Xxxx-Xxxxx Act. Each party shall
provide the other party the opportunity to make copies of all correspondence,
filings or communications (or memoranda setting forth the substance thereof)
between such party or its representatives, on the one hand, and the FTC, DOJ or
any similar foreign governmental agency or members of their respective staffs,
on the other hand, with respect to this Agreement or the transactions
contemplated hereby; provided, however, that each party shall have no obligation
to share with the other party internal Item 4(c) materials; and provided,
further that any competitively sensitive information of any party shall first be
reviewed by the parties' antitrust counsel and may be withheld from the other
party as appropriate.
(c) Each party hereto shall notify and keep the other advised as to (i) any
litigation or administrative proceeding pending and known to such party, or to
its knowledge threatened, which challenges the transactions contemplated hereby
and (ii) any event or circumstance which would constitute a breach of their
respective representations and warranties in this Agreement or that would cause
any of the conditions to the other party's obligation to proceed with the
Closing not to be satisfied, provided that (A) the failure of any party to
comply with clause (ii) shall not subject such party to any liability hereunder
except as and to the extent such party would be responsible for a breach of such
representations and warranties pursuant to Section 8 (including, without
limitation, the limitations on recovery and the time periods for bringing claims
thereunder) and (B) no notice given hereunder shall have any effect for the
purpose of determining satisfaction of the conditions to Closing set forth in
Section 6 or for the purpose of determining whether any party is entitled to
indemnification hereunder. Subject to the provisions of Section 10 hereof, each
party hereto shall not take any action inconsistent with their obligations under
this Agreement or which would materially hinder or delay the consummation of the
transactions contemplated by this Agreement.
5.4. Public Disclosures. Prior to the Closing Date, no party to this
Agreement will issue any press release or make any other public disclosures
concerning this transaction or the contents of this Agreement without the prior
written consent of the other parties. Notwithstanding the above, nothing in this
Section 5.4 will preclude any party from making any disclosures required by law,
or regulation or stock exchange listing requirement or necessary and proper in
conjunction with the filing of any tax return or other document required to be
filed with any federal, state or local governmental body, authority or agency;
provided, that the party required to make the release or disclosure shall allow
the other parties reasonable time to comment on such release or disclosure in
advance of such issuance; provided, further, that the party so required to make
such release or disclosure may reject such comments on a reasonable basis.
5.5. Access to Records and Personnel.
(a) The parties shall retain the books, records, documents, instruments,
accounts, correspondence, writings, evidences of title and other papers relating
to the Business
29
and the Assets in their possession (the "Books and Records") for the period of
time set forth in their respective records retention policies on the Closing
Date or for such longer period as may be required by law or any applicable court
order, but in no event for a period of less than six (6) years. In the event
that Eagle has elected to dispose of any Books and Records as provided in this
Section 5.5(a), Eagle shall give Buyer reasonable advance notice thereof and
Buyer shall have the right to require Eagle to deliver such Books and Records to
Buyer at Buyer's expense.
(b) The parties will allow each other reasonable access to such Books and
Records, and to personnel having knowledge of the whereabouts and/or contents of
such Books and Records, for legitimate business reasons, such as the preparation
of tax returns or the defense of litigation. Each party shall be entitled to
recover its out-of-pocket costs (including, without limitation, copying costs)
incurred in providing such records and/or personnel to the other party. The
requesting party will hold in confidence all confidential information identified
as such by, and obtained from, the disclosing party, any of its officers,
agents, representatives or employees, provided, however, that information which
(i) was in the public domain; or (ii) becomes known to the requesting party from
or through a third party not under an obligation of non-disclosure to the
disclosing party, shall not be deemed to be confidential information.
(c) Schedule 5.5 contains a list of services which Eagle will provide to
Buyer between the date hereof and the Closing Date.
5.6. License Agreements.
(a) On the Closing Date, Eagle shall assign and IP Buyer shall assume the
Trademark License Agreement attached hereto as Exhibit A, dated January 23,
1998, by and among BDH Two Inc., Xxxxxx, Inc. and Eagle (the "Xxxxxx License
Agreement"), pursuant to which IP Buyer shall obtain the right to use certain
Xxxxxx trademarks associated with the Business subject to the terms and
conditions set forth in the License Agreement, including the pre-existing
licenses described therein; provided that neither IP Buyer nor Buyer shall pay
or be obligated to pay any money or other consideration to BDH Two, Inc.,
Xxxxxx, Inc. or any other person in connection with such assignment.
(b) On the Closing Date, Eagle shall assign and IP Buyer shall assume the
Trademark License Agreement attached hereto as Exhibit B, dated January 23,
1998, by and among Eagle and Xxxxxx Foods Corporation (the "ReaLemon License
Agreement"), pursuant to which Eagle has granted the right to use the REALEMON,
REALIME, LEMONA, LEMON BURST, REALFIG and REALPRUNE trademarks (the "Licensed
Marks"), subject to the terms and conditions set forth in the ReaLemon License
Agreement, including the pre-existing licenses described therein.
5.7. Employee Relations and Benefits.
(a) Offers of Employment. As soon as practicable after the date hereof,
Eagle shall provide Buyer with a list of the name, position and base salary of
each current employee of Eagle primarily engaged in the Business and employed at
the Facility, whether or not actively employed (e.g., including employees on
vacation and leave of absence, including maternity, family, sick or short-term
disability leave), and Eagle shall update the list prior to the Closing
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Date to reflect new hires and employment terminations (the "Waterloo
Employees"). Buyer shall offer employment as of the Closing Date to all Waterloo
Employees excluding any Waterloo Employees currently receiving long-term
disability benefits on substantially the same terms of their employment with
Eagle, including, without limitation, participation in health, welfare, and
similar benefit plans on substantially similar terms as such Waterloo Employees
participated in such plans during their employment with Eagle. Eagle shall
provide Buyer reasonable access to the employees at its corporate headquarters
who are also engaged primarily or significantly in the Business (the "Corporate
Employees"), and, to the extent permitted by applicable law, such information
regarding such Corporate Employees as is contained in personnel records, for
purposes of permitting Buyer to determine which Corporate Employees to offer to
employ. Offers of employment to Corporate Employees shall be on substantially
the same terms of their employment with Eagle, including, without limitation,
participation in health, welfare, and similar benefit plans on substantially
similar terms as such Corporate Employees participated in such plans during
their employment with Eagle. Eagle and Holdings covenant and agree that they
will not take any action to discharge or dissuade any Waterloo Employee or
Corporate Employee from accepting any offer of employment from Buyer (including,
without limitation, making any offer to increase compensation or benefits to any
such persons). All such Waterloo Employees and Corporate Employees who accept
such offer of employment and thereafter commence work with Buyer are referred to
herein as "Transferred Employees."
(b) Transition Services. Subject to the terms of the Services Agreement,
during the six (6) month period following the Closing, if requested by Buyer,
Eagle shall administer the payroll of Buyer with respect to the Transferred
Employees, and extend coverage under insurance policies and administrative
service contracts it maintains under its group health and welfare plans to
Transferred Employees covered under Eagle's group plans, but only to the extent
such extension of coverage is permitted by the relevant carrier or provider.
(c) Benefit Plan Participation. Except as provided in Section 5.7(b) or
except as otherwise required by applicable law, Transferred Employees shall
cease active participation in (and accrual of additional benefits under) all
Benefit Plans as of the Closing Date.
(d) Employment Liabilities. Except as provided in Section 5.7(b), Eagle
shall retain, and Buyer shall have no responsibility for, any and all
liabilities that have arisen or may arise with respect to (i) any Benefit Plan,
(ii) any Employee or former employee who is not a Transferred Employee, and
(iii) subject to Section 5.7(f), any Transferred Employee to the extent
attributable to events or circumstances occurring or existing prior to the
Closing Date; provided that Eagle shall have no obligations or liabilities under
the Worker Adjustment and Retraining Notification Act or any similar state laws
with respect to terminations of employment of employees resulting from Buyer's
failure to offer employment to the Waterloo Employees as set forth in Section
5.7(a).
(e) Defined Contribution Plans.
(i) Vesting; Participation. As of the Closing Date, Eagle shall cause
all Transferred Employees to be fully vested in their account balances
under the Eagle 401(k) Retirement Plan (the "Savings Plan") and, as of such
date, the active participation by Transferred Employees in the Savings Plan
shall cease.
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(ii) Distribution of Plan Assets. Eagle shall cause the account
balances of Transferred Employees under the Savings Plan to be available
for distribution to the Transferred Employees. Buyer shall allow
Transferred Employees who have elected to take such distributions and who
are then employed by Buyer to transfer such account balances to a defined
contribution plan that is intended to meet the qualification requirements
of Code Section 401(a) that includes a cash or deferred arrangement under
Code Section 401(k) and that covers such Transferred Employees (the "Buyer
Savings Plan").
(iii) Cooperation. Eagle and Buyer shall provide each other with such
records and information as may be necessary or appropriate to carry out
their obligations under this Section 5.7(e), and shall cooperate in taking
such other actions as may reasonably be required to effect the distribution
and transfer of assets and liabilities as described in this Section 5.7(e).
(f) Welfare Plans. With respect to any "welfare benefit plan" (as defined
in Section 3(1) of ERISA) maintained by Buyer for the benefit of Transferred
Employees after the Closing Date, Buyer shall (i) cause there to be waived any
pre-existing condition limitations other than with respect to pre-existing
conditions of Transferred Employees which are not currently covered by Eagle's
welfare benefit plans and (ii) give effect, in determining any deductible and
maximum out-of-pocket limitations, to claims incurred and amounts paid by, and
amounts reimbursed to, such employees with respect to similar plans maintained
by Eagle immediately prior to Closing. Eagle shall retain all liabilities and be
responsible for (i) claims for workers compensation or for the type of benefits
described in Section 3(1) of ERISA (whether or not covered by ERISA) that are
incurred prior to the Closing Date by Transferred Employees, and (ii) claims
relating to "COBRA" coverage attributable to "qualifying events" occurring prior
to the Closing Date with respect to any Transferred Employees and their
beneficiaries and dependents. Buyer shall assume sole responsibility for, (i)
claims for workers compensation or for the type of benefits described in Section
3(1) of ERISA (whether or not covered by ERISA) that are incurred on or after
the Closing Date by Transferred Employees, and (ii) claims relating to COBRA
coverage attributable to "qualifying events" occurring on or after the Closing
Date with respect to Transferred Employees and their beneficiaries and
dependents. For purposes of the foregoing, a medical/dental claim shall be
considered incurred when the medical services are rendered or medical supplies
are provided, and not when the condition arose; provided, that claims relating
to a hospital confinement that commences on or prior to the Closing Date but
continues thereafter shall be created as incurred on or prior to the Closing
Date. A disability or workers compensation claim shall be considered incurred on
or prior to the Closing Date if the injury or condition giving rise to the claim
occurs on or prior to the Closing Date.
(g) Service Credit. With respect to the Transferred Employees, Buyer shall
recognize all service with Eagle and its predecessors, Xxxxxx Foods Corporation
and Xxxxxx Inc., for purposes of eligibility and vesting under all benefit plans
of Buyer maintained for the benefit of Transferred Employees to the extent that
prior service of similarly situated employees of Buyer is recognized for such
purposes, and for which there was a similar Benefit Plan of Eagle for which
service with Eagle was applicable for purposes of eligibility and vesting.
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(h) Certain Benefits. Eagle shall provide each Transferred Employee with
the following: (i) full vesting of any award or benefit under any Benefit Plan
where such vesting was otherwise conditioned upon the future performance of
services with Eagle, including under any Benefit Plan that is intended to be
tax-qualified under Section 401(a) of the Code and under any related
non-qualified plan; (ii) payment, as soon as practicable following the Closing
Date, of any annual bonus award owed such employee under Eagle's bonus program
for Eagle's fiscal year ended June 30, 2001; (iii) if the Closing occurs after
August 31, 2001, payment, as soon as practicable following the Closing Date of
an estimate of any annual bonus award that such employee would have earned under
Eagle's bonus program for the fiscal year in which the Closing Date occurs,
based on available data and prorated to reflect the portion of the year actually
worked for Eagle; and (iv) payment, as soon as practicable following the Closing
Date, of any accrued, but unused vacation days. No payment shall be owed by
Eagle pursuant to Section 5.7(h)(iii) if the Closing occurs on or prior to
August 31, 2001.
(i) No Rights Conferred on Employees. Nothing herein, expressed or implied,
shall confer upon any employee or former employee of Eagle or Buyer or any of
their affiliates (including, without limitation, the Transferred Employees), any
rights or remedies including, without limitation, any right to employment or
continued employment for any specified period) of any nature or kind whatsoever,
under or by reason of this Agreement.
5.8. Asset Reconciliation. Buyer shall be responsible for removing, at its
sole expense and risk, all inventory acquired by Buyer hereunder which is not
located at the Facility.
5.9. "As Is" Condition. Except as expressly set forth herein, Buyer agrees
that it shall accept all tangible Assets in an "As Is" "Where Is" condition at
the Closing Date. Except as expressly set forth herein, neither Eagle nor
Holdings makes any warranty with respect to the value, condition or use of the
assets, whether expressed or implied, including, without limitation, any implied
warranty of merchantability or fitness for a particular purpose.
5.10. Non-Solicitation of Eagle Employees.
(a) Until the Closing shall actually have occurred, Buyer acknowledges that
it remains subject to the Confidentiality Letter; provided, that Buyer and its
affiliates shall be entitled to make offers of employment to marketing and
management employees employed at Eagle's headquarters and any Waterloo
Employees. The foregoing provision will not prevent Buyer or any of its
affiliates from soliciting for employment or hiring any employee of Eagle or any
of its affiliates (i) who responds to a public advertisement placed by Buyer or
any of its affiliates, (ii) who has not been employed by Eagle during the
preceding six (6) months or (iii) who has been terminated by Eagle or its
affiliates.
(b) Eagle and Buyer agree that a monetary remedy for a breach of the
agreements set forth in Section 5.10(a) hereof will be inadequate and
impracticable and further agree that such a breach would cause irreparable harm,
and that the non-breaching party shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damages. In the event
of such a breach, the breaching party agrees that the non-breaching party shall
be entitled to such injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions as a court of competent
jurisdiction shall determine.
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(c) If any of the provisions of this Section 5.10 is invalid in part, it
shall be curtailed, as to time, location or scope, to the minimum extent
required for its validity under the laws of the United States and shall be
binding and enforceable with respect to Buyer as so curtailed.
5.11. Prohibited Activities. Until the Closing Date, Buyer shall not, and
shall not knowingly permit, instruct or encourage its employees or sales
representatives to, provide, furnish or formally announce any incentive to any
customer of the Business intended to reduce or defer such customer's purchases
of product from Eagle, whether by means of any agreement, arrangement,
understanding or promotion.
5.12. Consumer Claims and Complaints. The parties shall assure that their
respective consumer affairs departments cooperate and assist each other to
assure the expeditious handling of consumer claims and complaints.
5.13. Promotion/Pricing Allowance. In the event that customers of the
Business xxxx or make a deduction against Buyer's otherwise valid invoices, for
promotion or pricing allowances (such as slotting allowances, returns, retailer
or distributor ads, store display allowances and similar items) applicable to
the Business prior to Closing or to any of Eagle's businesses other than the
Business, Buyer will forward on a weekly basis by the following Tuesday such
xxxx or evidence of such deduction ("Eagle's Deductions") to Eagle for payment.
In the event customers of the Business xxxx Eagle or make a deduction against
Eagle's otherwise valid invoices for promotion or pricing allowances applicable
to the Business as conducted from and after the Closing, Eagle will forward on a
weekly basis by the following Wednesday such xxxx or evidence of such deduction
("Buyer's Deductions") to Buyer for payment. A representative of each of Eagle
and Buyer will coordinate the cash settlement process netting the Buyer's
Deductions against Eagle's Deductions and netting amounts owed to Buyer from
Eagle pursuant to the order management services provided under the Services
Agreement. Proper documentation will be required in each case. If Buyer's
Deductions are greater than Eagle's Deductions in any week, Buyer will transfer
cash to Eagle by Thursday of that week. If Eagle's Deductions are greater than
Buyer's Deductions in any week, Eagle will transfer cash to Buyer by Thursday of
that week. Any minor discrepancies found during that week's settlement will be
resolved by the following week's cash settlement. A ten percent (10%) annual
percentage interest rate will be applied to deductions for both parties,
commencing on the date the invalid deduction was taken against an otherwise
valid invoice and ending on the date that the cash settlement invoice is passed
to the appropriate party. At such time that the weekly net cash settlements are
consistently no longer material, Eagle and Buyer will agree by mutual consent to
waive the application of an interest rate.
5.14. Administration of Accounts and Related Matters; Customer Inquiries.
(a) All payments and reimbursements received by Eagle or any of its
affiliates after the Closing related to or arising out of the Assets or Assumed
Liabilities, or any Closing Inventory that is returned to Eagle or any affiliate
thereof, shall be held by such person in trust for the benefit of Buyer and,
immediately upon receipt by such person of any such payment, reimbursement or
Closing Inventory, such person shall pay over to Buyer the amount of such
payment or reimbursement or deliver to Buyer such Closing Inventory without
right of set off.
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(b) All payments and reimbursements received by Buyer or any of its
affiliates after the Closing related to or arising out of the Excluded Assets or
Excluded Liabilities shall be held by such person in trust for the benefit of
Eagle and, immediately upon receipt by such person of any such payment or
reimbursement, such person shall pay over to Eagle the amount of such payment or
reimbursement without right of set off.
(c) Eagle covenants and agrees that it will promptly forward to Buyer any
mail (physical, electronic or otherwise), facsimile or telephone inquiries of
actual or potential clients, customers, suppliers and vendors of or relating to
the Business, including, without limitation, customer orders.
5.15. Covenant Not to Compete; Non Solicitation; Confidentiality.
(a) Eagle and Holdings acknowledge that the agreements and covenants
contained in this Section 5.15 are essential to protect the value of the
Business being acquired by Buyer and IP Buyer. Therefore, Eagle and Holdings
agree that for the period commencing on the Closing Date and ending on the fifth
(5th) anniversary of the Closing Date (such period is hereinafter referred to as
the "Restricted Period"), neither Eagle nor Holdings shall participate or
engage, directly or indirectly, whether as an employee, agent, officer,
consultant, director, stockholder, partner, joint venturer, investor or
otherwise, in developing, manufacturing, marketing, distributing, and selling
lemon or lime juice or lemon or lime juice concentrate anywhere in the world.
(b) Eagle and Holdings acknowledge that the value to IP Buyer and Buyer of
the transactions contemplated by this Agreement would be substantially
diminished if Eagle or Holdings or any of their respective affiliates were to
solicit for employment any Waterloo Employee. Accordingly, Eagle and Holdings
shall not, either alone or in conjunction with any other person, or directly or
indirectly (including through any of its present or future affiliates), solicit
for employment any persons who within the prior twelve (12) months had been a
Waterloo Employee; provided, however, that the foregoing provision will not
prevent Eagle or Holdings from hiring any such person (i) who responds to a
public advertisement placed by Eagle or Holdings or any of its affiliates, (ii)
who has not been employed by Buyer or IP Buyer during the preceding six (6)
months or (iii) who has been terminated by IP Buyer or Buyer or any of its
affiliates.
(c) Eagle and Holdings will refrain from, either alone or in conjunction
with any other person, directly or indirectly (including through any of its
presents or future affiliates) disclosing (unless compelled by judicial or
administrative process) or using any confidential or secret information relating
to the Business or any client, customer or supplier of the Business.
(d) Eagle and Holdings further agree that during the Restricted Period,
each such party shall refrain from, whether alone or in conjunction with any
other person, or directly or indirectly (including through any of its present or
future affiliates) causing or attempting to cause any employee of the Business
to resign or sever a relationship with IP Buyer or Buyer or any affiliate of
Buyer.
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(e) Eagle and Buyer agree that a monetary remedy for a breach of the
agreements set forth in this Section 5.15 will be inadequate and impracticable
and further agree that such a breach would cause irreparable harm, and that the
non-breaching party shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damages. In the event of such a
breach, the breaching party agrees that the non-breaching party shall be
entitled to such injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions as a court of competent
jurisdiction shall determine.
(f) If any of the provisions of this Section 5.15 is invalid in part, it
shall be curtailed, as to time, location or scope, to the minimum extent
required for its validity under the laws of the United States and shall be
binding and enforceable with respect to Eagle and Holdings, as applicable, as so
curtailed; it being the intention of the parties that the provisions of this
Section 5.15 be enforced to the fullest extent permissible under the laws and
policies of each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such laws and policies of
any provision of this Section 5.15) shall not render unenforceable or impair the
remainder of the provision of this Section 5.15.
(g) The parties agree that One Thousand Dollars ($1,000.00) of the Purchase
Price will be allocated to the covenants contained in this Section 5.15.
5.16. Termination of Broker Agreements. On or prior to the Closing, Eagle
will send all notices (which shall have been reviewed by Buyer) required to
cause the termination of all of the broker agreements and understandings,
written or oral, entered into by it or its affiliates with respect to the
brokers for the Business, including, but not limited to, any broker agreements
set forth in Schedule 3.7 hereto it being understood and agreed that the timing
of the actual termination of such broker agreements will occur pursuant to the
terms of such broker agreements. For avoidance of doubt, the term "broker
agreement" as used in this Section 5.16 does not include distribution agreements
or arrangements or understandings with distributors for the Business.
5.17. Packaging Materials and Supplies. Eagle hereby consents to the use
and depletion by Buyer and/or any licensed bottlers after the Closing Date of
those on-hand packaging materials and inventories which bear the name and/or
corporate logo of Eagle and/or its affiliates. If Buyer and/or licensed bottlers
elect to use such on-hand packaging materials, Buyer shall use such on-hand
packaging materials on a first-use basis (in preference to any other packaging
materials) so as to exhaust such on-hand packaging materials as soon as possible
after the Closing Date.
5.18. No Solicitation or Negotiations. Unless and until this Agreement is
terminated in accordance with the provisions hereof, Eagle and Holdings will
not, and will cause each director, officer, employee, representative,
stockholder, agent, advisor, accountant and attorney of Eagle and Holdings, not
to enter into any letters of intent, arrangements, understandings, agreements,
or otherwise solicit or engage in any discussions or negotiations concerning, or
provide any confidential information or data to any person with respect to the
Business, or otherwise cooperate with, encourage or assist any discussions with
any person regarding any merger, consolidation, liquidation, dissolution,
acquisition, business combination, joint venture, in each case related to the
Business, or the sale of all or any significant assets of the Business, directly
or indirectly, and will immediately cease and cause to be terminated any
existing activities,
36
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing; provided, however, that the provisions of this Section
5.18 shall not prevent Eagle, Holdings or its affiliates from selling, disposing
or otherwise transferring all or any of its assets other than assets used
principally in connection with the Business whether by merger, consolidation,
liquidation, dissolution, business combination or otherwise.
5.19. Removal of Excluded Assets. Within ten (10) days of the Closing Date,
Eagle shall have removed all Excluded Assets, if any, from the Facility.
5.20. Mixed Pallet Co-Promotions. The parties hereto shall co-merchandise
the products of the Business with other products of Eagle as specified on
Schedule 5.20.
5.21. Maintenance of Assets. Within twelve (12) months of the Closing Date,
Eagle will not, without the consent of Buyer, (a) sell assets representing fifty
percent (50%) of the net sales of Eagle after the consummation of the
transactions contemplated hereby ("Significant Assets"), (b) distribute its
Significant Assets to its stockholders by way of dividend or otherwise, (c)
dissolve or liquidate or (d) enter into any written agreement to do any of the
foregoing, unless Eagle shall first deliver Ten Million Dollars ($10,000,000.00)
in cash (the "Escrow Funds") to a nationally-recognized bank, as escrow agent,
mutually selected by Buyer and Eagle, to be held and disbursed by such escrow
agent in accordance with the terms of an escrow agreement to be entered into by
the parties hereto and the escrow agent at the time of the creation of the
escrow. The Escrow Funds shall be available to Buyer and IP Buyer to satisfy any
claims pursuant to Section 8.2 hereof. Such escrow shall terminate on the twelve
(12) month anniversary of the Closing Date.
5.22. Acquisition of Rights of Confidentiality. At the Closing, Eagle and
its affiliates shall assign, grant and convey to Buyer all of their respective
rights under confidentiality agreements between them and persons other than
Buyer that were entered into in connection with or relating to a possible sale
of the Business or any part thereof (but only to the extent such agreement
relates to the Business) (collectively, the "Other Confidentiality Letters"),
including the right to enforce all terms of the Other Confidentiality Letters
but only to the extent the Other Confidentiality Letters relate to the Business
or any part thereof. At the Closing, Eagle shall deliver to Buyer copies of the
Other Confidentiality Letters.
SECTION 6.
CONDITIONS
6.1. Conditions Precedent to Obligations of All Parties. The respective
obligations of all parties to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing Date
of the following conditions:
(a) No Injunction, etc. At the Closing Date, there shall be no injunction,
restraining order or decree of any nature of any court or governmental agency or
body of competent jurisdiction that is in effect that restrains or prohibits the
consummation of the transactions contemplated by this Agreement or the transfer
to Buyer or IP Buyer by Eagle of the Business or any of the Assets, except for
the sale of Inventory in the ordinary course of business.
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(b) Regulatory Authorizations. All consents, approvals, authorizations and
orders of federal, state and foreign governmental and regulatory authorities as
are necessary in connection with the transfer of the Business and of the Assets
to Buyer or IP Buyer or which if not obtained would be reasonably likely to
subject Buyer, IP Buyer or Eagle, or any stockholder, officer, director or agent
of any such person to civil or criminal liability or could render such transfer
void or voidable (the "Required Consents") shall have been obtained, except for
Required Consents the failure to obtain which, individually or in the aggregate,
are not material to the operations of the Business taken as a whole and the
failure of which to obtain would not subject Buyer, IP Buyer, Eagle, or any
stockholder, officer, director, or agent of any such person to civil or criminal
liability; provided that for purposes of this clause (b) applicable waiting
periods specified under the Xxxx-Xxxxx Act or any similar foreign legislation
with respect to the transactions contemplated by this Agreement shall have
lapsed or been terminated.
6.2. Conditions Precedent to Obligation of Eagle and Holdings. The
obligation of Eagle and Holdings to consummate the transactions provided for in
this Agreement is subject to fulfillment of each of the following conditions:
(a) Accuracy of IP Buyer's and Buyer's Representations and Warranties;
Covenants of IP Buyer and Buyer. (i) The representations and warranties of IP
Buyer and Buyer contained in this Agreement that are qualified as to materiality
shall be true and correct and the representations and warranties of IP Buyer and
Buyer set forth in this Agreement and that are not so qualified shall be true
and correct in all material respects, in each case on the date of this Agreement
(except to the extent cured prior to the Closing Date) and on the Closing Date
as though made on the Closing Date, except to the extent such representations
and warranties speak as of an earlier date; (ii) IP Buyer and Buyer shall have
complied in all material respects with all covenants contained in this Agreement
to be performed by it prior to Closing; and (iii) Eagle and Holdings shall have
received a certificate signed by an officer of IP Buyer and Buyer to such
effect;
(b) License Agreements. IP Buyer shall have executed an assignment of each
of the Xxxxxx License Agreement and the ReaLemon License Agreement, in form and
substance reasonably satisfactory to Eagle;
(c) Assumption Agreement. Buyer and IP Buyer shall have executed an
undertaking (the "Assumption Agreement") substantially in the form of Exhibit C
pursuant to which Buyer and IP Buyer agree to assume all Assumed Liabilities;
(d) Exemption Certificates. Buyer and IP Buyer shall have executed and
delivered to Eagle all certificates required by all relevant taxing authorities
that are necessary to support any exemption from the imposition of any sales or
similar Tax on the transfer of the Assets;
(e) Tax Forms. Buyer and IP Buyer shall have executed and delivered to
Eagle and Holdings all transfer tax forms and returns required to be filed by
Buyer or IP Buyer, as the case may be, in connection with the transactions
contemplated hereby; and
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(f) Opinion of Counsel. Eagle and Holdings shall have received a favorable
opinion, dated the Closing Date, of Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel for
Buyer and IP Buyer, substantially in the form of Exhibit D hereof.
6.3. Conditions Precedent to Obligation of IP Buyer and Buyer. The
obligation of Buyer and IP Buyer to consummate the transactions provided for in
this Agreement is subject to fulfillment of each of the following conditions:
(a) Accuracy of Representations and Warranties of Eagle and Holdings;
Covenants of Eagle and Holdings. (i) The representations and warranties of Eagle
and Holdings contained in this Agreement (except as affected by the transactions
contemplated in this Agreement) that are qualified as to materiality shall be
true and correct and the representations and warranties of Eagle and Holdings
set forth in this Agreement and that are not so qualified shall be true and
correct in all material respects, in each case on the date of this Agreement
(except to the extent cured prior to the Closing Date) and on the Closing Date
as though made on the Closing Date, except to the extent such representations
and warranties speak as of an earlier date; (ii) Eagle and Holdings shall have
complied in all material respects with all covenants contained in this Agreement
to be performed by it prior to Closing; and (iii) IP Buyer and Buyer shall have
received a certificate signed by an officer of Eagle and Holdings to such
effect;
(b) License Agreements. Eagle shall have executed assignments of the Xxxxxx
License Agreement and the ReaLemon License Agreement, in form and substance
reasonably satisfactory to IP Buyer;
(c) Xxxx of Sale. Eagle shall have executed and delivered to IP Buyer and
Buyer a xxxx of sale, substantially in the form of Exhibit E hereof;
(d) Opinion of Counsel. IP Buyer and Buyer shall have received a favorable
opinion, dated the Closing Date, of Xxxxxxx Xxxx & Xxxxxxxxx, counsel for Eagle
and Holdings, substantially in the form of Exhibit F hereof;
(e) Litigation. There shall not be pending or threatened by any person any
suit, action or proceeding: (i) challenging or seeking to restrain or prohibit
the purchase of the Business or the Assets as contemplated by this Agreement or
any of the other transactions contemplated by this Agreement or seeking to
obtain from Buyer in connection with the purchase of the Business or the Assets
contemplated by this Agreement any damages that are material in relation to the
size of the transaction contemplated hereby or to IP Buyer or Buyer; (ii)
seeking to prohibit or limit the ownership or operation by IP Buyer or Buyer of
the Business or to compel IP Buyer or Buyer to dispose of or hold separate any
material portion of the business or assets of IP Buyer or Buyer as a result of
the purchase of the Business or the Assets contemplated by this Agreement or any
of the other transactions contemplated by this Agreement; (iii) seeking to
prohibit IP Buyer or Buyer from effectively controlling in any material respect
the Business; or (iv) before any Federal, state or foreign commission, court,
tribunal, board or governmental agency which, if determined or resolved
adversely or in accordance with the plaintiffs' demands would have a Material
Adverse Effect;
39
(f) No Material Adverse Change. During the period from the date hereof to
the Closing Date except as set forth in Schedule 3.5 or Schedule 5.1, there
shall not have been any material adverse change in the assets, properties,
business, results of operations or financial condition of the Business taken as
a whole, changes relating to the economy in general or changes relating to the
industry in which the Business operates in general;
(g) Deed. Eagle shall have executed and delivered to Buyer a bargain and
sale deed with covenants against grantor's acts to all of the Real Property
executed and acknowledged by Eagle in proper form for recording, with all
necessary revenue stamps attached, conveying to Buyer fee title to the Real
Property subject to the Permitted Liens;
(h) Tax Forms. Eagle shall have executed and delivered to IP Buyer and
Buyer all transfer tax forms and returns required to be filed by Eagle prior to
or on the Closing Date in connection with the transactions contemplated hereby;
(i) FIRPTA. Eagle shall have executed and delivered to Buyer an affidavit
pursuant to the Foreign Investment in Real Property Tax Act (in the form of
Exhibit G hereof);
(j) Services Agreement. Eagle shall have executed and delivered to Buyer a
services agreement (the "Services Agreement"), substantially in the form of
Exhibit H hereof pursuant to which Eagle will provide certain transition
services to Buyer in connection with the operation of the Business for a period
of up to six (6) months after Closing;
(k) Title Affidavits. Eagle shall have executed and delivered such
affidavits, indemnities and information as Buyer's nationally-recognized title
insurance company shall reasonably require in order to insure Buyer's title in
accordance with this Agreement;
(l) Real Property Records. With respect to Real Property and the Facility,
Eagle shall have delivered to Buyer to the extent in its possession or control
(i) copies of all available plans and specifications, (ii) duplicate originals
of all guarantees and warranties which Eagle received from its contractors,
suppliers or material men, and (iii) all records and files with respect to
operation and maintenance;
(m) Third Party Consents. The consents listed in Schedule 6.3(m) hereto
shall have been obtained in form and substance reasonably satisfactory to Buyer;
(n) Assignment of Intellectual Property. Eagle shall have executed
assignments of the Intellectual Property to IP Buyer in form and substance
reasonably satisfactory to IP Buyer;
(o) Delivery of Books and Records and Technology. Eagle shall have
delivered to Buyer and IP Buyer all of the Books and Records and the Technology;
and
(p) Products Formulae. Buyer and IP Buyer shall have received at the
Closing, all copies of the formula cards, secret processes, product manuals and
similar information with respect to the composition and manufacture of the
products of the Business;
40
(q) Tangible Property. Buyer shall have received at Closing all items of
tangible property included in the Assets; and
(r) Insurance Policy. An insurance policy with one of the insurance
carriers listed on Schedule 6.3(r) in form and substance reasonably satisfactory
to Buyer, listing Buyer and certain of Buyer's affiliates as the named insured
and Eagle as an additional insured to cover up to Five Million dollars
($5,000,000.00) of Environmental Liabilities of the Business for a period of
between five (5) years and ten (10) years (at Buyer's sole discretion) from the
Closing Date (the "Environmental Insurance") shall be obtained;
provided, that the items listed in subsections (l), (o), (p) and (q) hereto
shall be deemed to have been delivered pursuant to this Section 6.3 if such item
has been delivered to or is otherwise located at the Facility on the Closing
Date.
SECTION 7.
CLOSING
7.1. Closing Date. Unless this Agreement shall have been terminated and the
transactions herein shall have been abandoned pursuant to Section 9 hereof, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place at the offices of Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, XX at 10:00 a.m., New York City time, on September 17, 2001 (or as soon as
practicable thereafter as all of the conditions to the Closing set forth in
Section 6 hereof are satisfied or waived) by the party entitled to waive such
conditions, or such other date, time and place as shall be agreed upon by Eagle
and Buyer (the actual date and time being herein called the "Closing Date").
7.2. Buyer Deliveries. At the Closing, Buyer and IP Buyer, as applicable,
shall deliver to Eagle:
(a) the Purchase Price as provided in Sections 2.1 and 2.2 hereof;
(b) the documents described in Section 6.2 hereof; and
(c) such other documents and instruments as counsel for the parties hereto
mutually agree to be reasonably necessary to consummate the transactions
described herein.
7.3. Eagle Deliveries. At the Closing, Eagle shall deliver to IP Buyer and
Buyer, as applicable:
(a) the documents described in Section 6.3 hereof;
(b) limited or special warranty deeds to the Real Property;
(c) releases, pay off letters, mortgage releases and UCC-3 termination
statements from all parties holding liens, encumbrances, mortgages or other
security interests in any of the Assets other than Permitted Liens; and
41
(d) such other documents and instruments as counsel for the parties hereto
mutually agree to be reasonably necessary to consummate the transactions
described herein.
SECTION 8.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
8.1. Survival of Representations, Warranties, Covenants and Agreements.
Notwithstanding any right of any party (whether or not exercised) to investigate
the accuracy of the representations and warranties of the other party contained
in this Agreement, Eagle and Holdings, on the one hand, and IP Buyer and Buyer,
on the other hand, have the right to rely fully upon the representations,
warranties covenants and agreements of the other contained in this Agreement.
The representations, warranties, covenants and agreements of Eagle, Holdings, IP
Buyer and Buyer contained in this Agreement will survive the Closing (a)
indefinitely with respect to the representations and warranties contained in
Section 3.2, 3.14, 4.2 and 4.4, (b) until sixty (60) calendar days after the
expiration of all applicable statutes of limitations (including all periods of
extension, whether automatic or permissive) with respect to matters covered by
Section 3.11; and (insofar as they relate to ERISA or the Code) Section 3.12,
(c) until the fourth (4th) anniversary of the Closing Date with respect to
Section 3.15 and (d) until the fifteen (15) month anniversary of the Closing in
the case of all other representations and warranties or until the fifteen (15)
month anniversary of the expiration or final performance date thereof with
respect to all other covenants and agreements contained in this Agreement and if
no such expiration or final performance date is specified, indefinitely.
8.2. Indemnification by Eagle and Holdings.
(a) Eagle and Holdings shall, jointly and severally, defend, indemnify and
hold IP Buyer and Buyer and their respective officers, directors, employees,
agents and affiliates harmless from and against and in respect of any and all
actual losses, costs, (including environmental investigations and remediation
costs) liabilities, damages, judgments, fines, penalties, demands, settlements
and expenses, including reasonable attorneys' fees, incurred directly by such
persons (collectively, "Buyer Losses") which arise out of (i) any breach of any
of the representations and warranties of Eagle or Holdings contained in this
Agreement, (ii) any breach by Eagle or Holdings of any of its covenants (other
than the covenant set forth in clause (ii) of the first sentence of Section
5.3(c)) in this Agreement which survive the Closing, (iii) the ownership,
operation or use of any of the Excluded Assets, or (iv) Excluded Liabilities.
Buyer and IP Buyer shall give Eagle and Holdings prompt written notice of any
third party claim which may give rise to any indemnity obligation under this
Section 8.2 and Eagle and Holdings shall have the right to assume the defense of
any such claim through counsel of its own choosing, by so notifying Buyer and IP
Buyer within thirty (30) days of receipt of such written notice; provided,
however, that Eagle's and Holdings' counsel shall be reasonably satisfactory to
such IP Buyer and Buyer. Failure to give prompt notice shall not affect the
indemnification obligations hereunder in the absence of actual prejudice. If IP
Buyer or Buyer desires to participate in any such defense assumed by Eagle and
Holdings, they may do so at their sole cost and expense. If Eagle and Holdings
decline to assume any such defense, they shall jointly and severally be liable
for all reasonable costs and expenses of defending such claim incurred by Buyer
and IP Buyer, including reasonable fees and disbursements of counsel. Neither
party shall, without the prior written consent of the other party, which shall
not be unreasonably withheld, settle, compromise or offer
42
to settle or compromise any such claim or demand on a basis which would result
in the imposition of a consent order, injunction or decree which would restrict
the future activity or conduct of the other party or any subsidiary or affiliate
thereof or if such settlement or compromise does not include an unconditional
release of the other party for any liability arising out of such claim or demand
or any related claim or demand.
(b) The foregoing obligation to indemnify IP Buyer and Buyer and their
respective officers, directors, employees, agents and affiliates set forth in
Section 8.2(a) shall be subject to each of the following limitations:
(i) The indemnification obligation of Eagle and Holdings for any
breach of the representations and warranties of Eagle or Holdings contained
in this Agreement and any breach of the agreements and covenants to be
performed by Eagle or Holdings shall survive the periods set forth in
Section 8.1, and thereafter all such representations and warranties of
Eagle and Holdings under this Agreement shall be extinguished. No claim for
the recovery of such Buyer Losses may be asserted by IP Buyer, Buyer or
their respective officers, directors, employees, agents and affiliates
after such periods; provided, however, that claims first asserted in
writing with specificity within such period shall not thereafter be barred.
(ii) No reimbursement for Buyer Losses asserted against Eagle or
Holdings under Section 8.2(a)(i) above shall be required unless and until
the cumulative aggregate amount of such Buyer Losses equals or exceeds One
Million Two Hundred Fifty Thousand Dollars ($1,250,000.00) (the
"Threshold") and then only to the extent that the cumulative aggregate
amount of Buyer Losses, as finally determined, exceeds the Threshold.
(iii) Eagle's liability to IP Buyer, Buyer and their respective
officers, directors, employees, agents and affiliates under Section
8.2(a)(i) for Buyer Losses in excess of the Threshold shall not exceed
twenty-five percent (25%) of the Purchase Price.
(iv) For purposes of determining indemnification obligations
hereunder, all qualifications as to "materiality" or "Material Adverse
Effect" in any representation (other than Section 3.5(a)(ii)) or covenant
(other than Section 5.1) shall be disregarded (and such provision shall be
read without such qualifications) and the limitations set forth in this
Section 8.2 shall exclusively be applicable.
(c) The indemnities provided in this Section 8.2 shall survive the Closing.
Absent fraud, the indemnity provided in this Section 8.2 and injunctive relief
shall be the sole and exclusive remedy of the indemnified party against the
indemnifying party at law or equity for any matter covered by paragraphs (a) and
(b).
(d) In no event shall Eagle, Holdings or their affiliates be liable to IP
Buyer, Buyer or their respective officers, directors, employees, agents and
affiliates for special, indirect, incidental, consequential or punitive damages.
43
8.3. Indemnification by Buyer and IP Buyer.
(a) Buyer and IP Buyer shall defend, indemnify and hold Eagle, Holdings and
their respective officers, directors, employees, agents and affiliates harmless
from and against and in respect of any and all actual losses, costs,
liabilities, damages, judgments, fines, penalties, demands, settlements and
expenses, including reasonable attorney fees, incurred directly by such persons
(hereinafter "Sellers' Losses"; and together with Buyer Losses, "Losses")
arising out of (i) any breach of any of the representations and warranties of
Buyer or IP Buyer contained in this Agreement, (ii) any breach by Buyer or IP
Buyer of any of their covenants (other than the covenant set forth in clause
(ii) of the first sentence of Section 5.3(b)) in this Agreement which survives
the Closing, (iii) the ownership, operation or use of the Assets on or after the
Closing Date or (iv) all Assumed Liabilities. Eagle and Holdings shall give
Buyer and IP Buyer prompt written notice of any third party claim which may give
rise to any indemnity obligation under this Section 8.3 and Buyer and IP Buyer
shall have the right to assume the defense of any such claim through counsel of
its own choosing, by so notifying Eagle and Holdings within thirty (30) days of
receipt of such written notice; provided, however, that Buyer's or IP Buyers'
counsel shall be reasonably satisfactory to Eagle and Holdings. Failure to give
prompt notice shall not affect the indemnification obligations hereunder in the
absence of actual prejudice. If Eagle or Holdings desires to participate in any
such defense assumed by Buyer and IP Buyer, they may do so at their sole cost
and expense. If Buyer and IP Buyer decline to assume any such defense, they
shall be jointly and severally liable for all costs and expenses of defending
such claim incurred by Eagle and Holdings, including reasonable fees and
disbursements of counsel. Neither party shall, without the prior written consent
of the other party, which shall not be unreasonably withheld, settle, compromise
or offer to settle or compromise any such claim or demand on a basis which would
result in the imposition of a consent order, injunction or decree which would
restrict the future activity or conduct of the other party or any subsidiary or
affiliate thereof or if such settlement or compromise does not include an
unconditional release of the other party for any liability arising out of such
claim or demand.
(b) The foregoing obligation to indemnify Eagle, Holdings and their
respective officers, directors, employees, agents and affiliates set forth in
Section 8.3(a) shall be subject to each of the following limitations:
(i) The indemnification obligation of IP Buyer and Buyer for any
breach of the representations and warranties of Buyer and IP Buyer
contained in this Agreement and any breach of the agreements and covenants
of IP Buyer and Buyer to be performed shall survive for the periods set
forth in Section 8.1, and thereafter all such representations and
warranties of IP Buyer and Buyer under this Agreement shall be
extinguished. No claim for the recovery of such Sellers' Losses may be
asserted by Eagle, Holdings or their respective officers, directors,
employees, agents and affiliates, after such periods; provided, however,
that claims first asserted in writing with specificity within such period
shall not thereafter be barred.
(ii) No reimbursement for Sellers' Losses asserted against Buyer under
Section 8.3(a)(i) above shall be required unless and until the cumulative
aggregate amount of such Sellers' Losses equals or exceeds One Million Two
Hundred Fifty Thousand Dollars ($1,250,000.00) (the "Buyer Threshold") and
then only to the extent that the
44
cumulative aggregate amount of Sellers' Losses, as finally determined,
exceeds the Buyer Threshold.
(iii) Buyer's and IP Buyer's liability to Eagle, Holdings and their
respective officers, directors, employees, agents and affiliates under
Section 8.3(a)(i) for Sellers' Losses in excess of the Buyer Threshold
shall not exceed twenty-five percent (25%) of the Purchase Price.
(iv) For purposes of determining indemnification obligations
hereunder, all qualifications as to "materiality" or "Material Adverse
Effect" in any representation or covenant shall be disregarded (and such
provision shall be read without such qualifications) and the limitations
set forth in this Section 8.3 shall exclusively be applicable.
(c) The indemnities provided in this Section 8.3 shall survive the Closing.
Absent fraud, the indemnity provided in this Section 8.3 and injunctive relief
shall be the sole and exclusive remedy of the indemnified party against the
indemnifying party at law or equity for any matter covered by paragraphs (a) and
(b).
(d) In no event shall IP Buyer or Buyer be liable to Eagle, Holdings or
their respective officers, directors, employees, agents and affiliates for
special, indirect, incidental, consequential or punitive damages.
8.4. Indemnification Calculations.
(a) The amount of any Sellers' Losses or Buyer Losses for which
indemnification is provided under this Section 8 shall be computed net of any
insurance proceeds received by the indemnified party in connection with such
Losses and the indemnified party must first seek coverage to the maximum extent
under any insurance policy before the indemnifying party is obligated to provide
indemnification to the indemnified party under this Section 8. If the payment or
accrual by the indemnified party of the amount with respect to which any claim
is made under this Section 8 (an "Indemnity Claim") would give rise to a current
income tax deduction and thereby a currently realizable Tax Benefit (as defined
below) to the party making the claim, the indemnity payment shall be reduced by
the amount of the Tax Benefit available to the party making the claim. 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 party that made the claim,
such party shall refund to the indemnifying party the amount of such Tax Benefit
when, as and if realized. For the purposes of this Agreement, any subsequently
realized Tax Benefit shall be treated as though it were a reduction in the
amount of the initial Indemnity Claim, and the liabilities of the parties shall
be redetermined as though both occurred at or prior to the time of the indemnity
payment. For purposes of this Section 8.4, a "Tax Benefit" means an amount by
which the tax liability of the party (or group of corporations including the
party) is reduced as compared with the tax that would have been payable by such
party but for the payment or accrual of the amount with respect to which the
Indemnity Claim is made (including, without limitation, 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 taxing
authority. Where a party has other
45
losses, deductions, credits or items available to it, the Tax Benefit from any
losses, deductions, credits or items relating to the Indemnity Claim shall be
deemed to be realized proportionately with any other losses, deductions, credits
or items. For the purposes of this Section 8.4, a Tax Benefit is "currently
realizable" to the extent it can be reasonably anticipated that such Tax Benefit
will 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. In the
event that there should be a determination disallowing the Tax Benefit, the
indemnifying party shall be liable to refund to the indemnified party the amount
of any related reduction previously allowed or payments previously made to the
indemnifying party pursuant to this Section 8.4. The amount of the refunded
reduction or payment shall be deemed a payment under this Section 8.4 and thus
shall be paid subject to any applicable reductions under this Section 8.4.
(b) The parties agree that any indemnification payments made pursuant to
this Agreement shall be treated for tax purposes as an adjustment to the
Purchase Price, unless otherwise required by applicable law.
SECTION 9.
TERMINATION
9.1. Termination Events. Without prejudice to other remedies which may be
available to the parties by law or this Agreement, this Agreement may be
terminated and the transactions contemplated herein may be abandoned:
(a) by mutual consent of the parties hereto;
(b) by any party by notice to the other party if the Closing shall not have
been consummated on or before October 31, 2001, unless extended by written
agreement of the parties hereto, so long as the party terminating this Agreement
shall not be in default or breach hereunder; or
(c) at any time before the Closing, by Eagle or Holdings on the one hand,
and Buyer or IP Buyer, on the other hand, in the event (i) following written
notification of a material breach hereof by the non-terminating party if such
non-terminating party fails to cure such breach within fifteen (15) business
days following notification thereof by the terminating party or (ii) following
written notification, upon notification of the non-terminating party by the
terminating party that the satisfaction of any condition to the terminating
party's obligation under this Agreement becomes impossible or impracticable with
the use of commercially reasonable efforts if the failure of such conditions to
be satisfied is not caused by a breach hereof by the terminating party.
9.2. Effect of Termination. In the event of any termination of the
Agreement as provided in Section 9.1 above, this Agreement shall forthwith
become wholly void and of no further force and effect and there shall be no
liability on the part of any party hereto, except that (i) the obligations of
the parties hereto under Sections 5.2, 5.4, 5.10 and 11.6 of this Agreement
shall remain in full force and effect and (ii) termination shall not preclude
either party from suing the other party for breach of this Agreement.
46
SECTION 10.
ALTERNATIVE DISPUTE RESOLUTION
The parties shall attempt in good faith to resolve any dispute arising out
of or relating to this Agreement promptly by negotiations between executives who
have authority to settle the controversy. Any party may give the other
party(ies) written notice of any dispute not resolved in the normal course of
business. Within twenty (20) days after delivery of said notice, executives of
both parties shall meet at a mutually acceptable time and place, and thereafter
as often as they reasonably deem necessary, to exchange relevant information and
to attempt to resolve the dispute. If the matter has not been resolved within
sixty (60) days of the disputing party's original notice, or if the parties fail
to meet within twenty (20) days, either party may initiate legal proceedings to
resolve the controversy or claim. If a party's negotiator intends to be
accompanied at a meeting by an attorney, the other party's negotiator shall be
given at least three (3) business days' notice of such intention and may also be
accompanied by an attorney. All negotiations pursuant to this clause are
confidential and shall be treated as compromise and settlement negotiations for
purposes of the Federal Rules of Evidence and state rules of evidence. Nothing
in this Section 10 shall (a) supercede or modify in any respect any other
dispute resolution procedure specifically described herein, including, without
limitation, those described in Section 2.2, or (b) limit in any way the rights
of any party hereto to seek injunctive relief for any matter for which such
party specifically has the right to seek injunctive relief under this Agreement.
SECTION 11.
MISCELLANEOUS
11.1. Notices. All communications provided for hereunder shall be in
writing and shall be deemed to be given when delivered in person or by private
courier with receipt, when telefaxed and received, or three (3) days after being
deposited in the United States mail, first-class, registered or certified,
return receipt requested, with postage paid and,
If to IP Buyer or Buyer: Xxxx'x Inc.
0 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Att: Vice President and General Counsel
Fax: 000-000-0000
With a copy to: Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Xxxx X. Xxxx, Esq.
Fax: 000-000-0000
If to Eagle or Holdings: Eagle Family Foods, Inc.
Eagle Family Foods Holdings, Inc.
000 Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
47
Att: President and Chief Executive Officer
Fax: 000-000-0000
With a copy to: Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Att: Xxxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
or to such other address as any such party shall designate by written notice to
the other parties hereto.
11.2. Bulk Transfers. IP Buyer and Buyer waive compliance with the
provisions of all applicable laws relating to bulk transfers in connection with
the Asset Purchase. Eagle and Holdings shall jointly and severally indemnify IP
Buyer and Buyer and their respective officers, directors, employees, agents and
affiliates in respect of, and hold each of them harmless from and against, any
and all losses suffered, occurred or sustained by any of them or to which any of
them becomes subject, resulting from, arising out of or relating to the failure
of Eagle to comply with the provisions of all applicable laws relating to bulk
transfers in connection with the Asset Purchase.
11.3. Transaction Taxes. Buyer and Eagle shall each be responsible for the
payment of fifty percent (50%) of all sales and transfer taxes, if any, which
may be payable with respect to the consummation of the transactions contemplated
by this Agreement and to the extent any exemptions from such taxes are available
Buyer and Eagle shall cooperate to prepare any certificates or other documents
necessary to claim such exemptions.
11.4. Further Assurances; Asset Returns. Upon request from time to time,
Eagle shall execute and deliver all documents, take all rightful oaths, and do
all other acts that may be reasonably necessary or desirable, in the reasonable
opinion of counsel for Buyer, to perfect or record the title of IP Buyer or
Buyer, or any successor of IP Buyer or Buyer, to the Assets transferred or to be
transferred under this Agreement, or to aid in the prosecution, defense, or
other litigation of any rights arising from said transfer (provided that IP
Buyer or Buyer shall reimburse Eagle for all reasonable out of pocket costs and
expenses resulting from any such request). In the event that Buyer receives any
assets of Eagle that are not intended to be transferred pursuant to the terms of
this Agreement, whether or not related to the Business, Buyer agrees to promptly
return such assets to Eagle at Eagle's expense. Effective on the Closing Date,
Eagle hereby constitutes and appoints Buyer the true and lawful attorney of
Eagle, with full power of substitution, in the name of Eagle or Buyer, but on
behalf of and for the benefit of Buyer; (a) to demand and receive from time to
time any and all of the Assets and to make endorsements and give receipts and
releases for and in respect of the same and any part thereof; (b) to institute,
prosecute, compromise and settle any and all actions or proceedings that Buyer
may deem proper in order to collect, assert or enforce any claim, right or title
of any kind in or to the Assets; (c) to defend or compromise any or all legal or
administrative actions or proceedings in respect of any of the Assets; and (d)
to do all such acts and things in relation to the matters set forth in the
preceding clauses (a) through (c) as Buyer shall deem desirable. Eagle hereby
acknowledges that the appointment hereby made and the power hereby granted are
coupled with
48
an interest and are not and shall not be revocable by it in any manner or for
any reason. Eagle shall deliver to Buyer at its request an acknowledged power of
attorney to the foregoing effect executed by Eagle.
11.5. Other Covenants. To the extent that any consents needed to assign to
IP Buyer or Buyer any of the Assets have not been obtained on or prior to the
Closing Date this Agreement shall not constitute an assignment or attempted
assignment thereof if such assignment or attempted assignment would constitute a
breach thereof. Subject to the rights of IP Buyer and, Buyer to terminate this
Agreement, if any such consent shall not be obtained on or prior to the Closing
Date, then (a) the parties shall use their reasonable efforts in good faith to
obtain such consent as promptly as practicable thereafter and (b) if in the
reasonable judgment of IP Buyer or Buyer such consent may not be obtained, the
parties shall use reasonable efforts in good faith to cooperate, and to cause
each of their respective affiliates to cooperate, in any lawful arrangement
designed to provide for IP Buyer and Buyer the benefits under any such Assets.
11.6. Expenses. Subject to Section 11.3 and Section 2.2, the parties shall
each pay their respective expenses (such as legal, investment banker and
accounting fees) incurred in connection with the origination, negotiation,
execution and performance of this Agreement, except that Buyer shall be
responsible for the payment of any filing fee under the Xxxx-Xxxxx Act. Eagle
shall pay the premiums on the Environmental Insurance for the first four (4)
years of coverage thereunder and Buyer shall pay the premiums on the
Environmental Insurance for any subsequent years of coverage thereunder. Eagle
shall reimburse Buyer for the amount of any deductible paid by Buyer pursuant to
the Environmental Insurance during the first four (4) years of coverage.
Notwithstanding the foregoing, Buyer shall be solely responsible for paying any
portion of such premiums or deductibles relating to coverage for items disclosed
in Schedule 3.15.
11.7. Non-Assignability. This Agreement shall inure to the benefit of and
be binding on the parties hereto and their respective successors and permitted
assigns. This Agreement shall not be assigned by either party hereto without the
express prior written consent of the other party, and any attempted assignment,
without such consents, shall be null and void; provided, that Buyer and IP Buyer
may assign their respective rights and obligations hereunder to any of their
affiliates (whether now or hereafter existing); provided, further, that no such
assignment shall relieve Buyer or IP Buyer of any of their obligations
hereunder.
11.8. Amendment; Waiver. This Agreement may be amended, supplemented or
otherwise modified only by a written instrument executed by the parties hereto.
No waiver by either party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and executed by the party so waiving.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants, or
agreements contained herein, and in any documents delivered or to be delivered
pursuant to this Agreement and in connection with the Closing hereunder. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.
11.9. Representations and Warranties; Schedules and Exhibits.
49
(a) IP Buyer and Buyer acknowledge and agree that neither Eagle nor
Holdings, is making any representation or warranty whatsoever, express or
implied, including, without limitation, in respect of Holdings, Eagle, the
Business or the Assets, except those representations and warranties of Eagle and
Holdings explicitly set forth in this Agreement or in the schedules hereto
prepared by Eagle and Holdings. Each of Buyer, IP Buyer, Eagle and Holdings
agrees that except to the extent expressly covered by a representation or
warranty contained in this Agreement or in the Schedules hereto or except for
claims based on fraud, neither Eagle, Holdings nor any of the respective
officers, directors, stockholders, employees, affiliates, representatives or
agents of Eagle or Holdings shall have any liability or responsibility arising
out of, or relating to, any information (whether written or oral), documents or
materials furnished by Eagle or Holdings or any of their officers, directors,
stockholders, employees, affiliates or any of their respective representatives
or agents, including the Confidential Information Memoranda prepared by Credit
Suisse First Boston Corporation, and any information, documents or materials
made available to Buyer and IP Buyer in certain "data rooms", management
presentations or any other form in expectation of the transactions contemplated
by this Agreement.
(b) All exhibits and schedules hereto are hereby incorporated by reference
and made a part of this Agreement. All statements contained in schedules,
exhibits, certificates and other instruments attached hereto or delivered or
furnished on behalf of Eagle or Holdings, pursuant hereto or in connection with
the transactions contemplated hereby, shall be deemed representations and
warranties by Eagle or Holdings. Any fact or item which is clearly disclosed on
any Schedule or Exhibit to this Agreement or in the Financial Statements in such
a way as to make its relevance to a representation or representations made
elsewhere in this Agreement or to the information called for by another Schedule
or other Schedules (or Exhibit or other Exhibits) to this Agreement readily
apparent shall be deemed to be an exception to such representation or
representations or to be disclosed on such other Schedule or Schedules (or
Exhibit or Exhibits), as the case may be, notwithstanding the omission of a
reference or cross-reference thereto. Any fact or item disclosed on any Schedule
or Exhibit hereto shall not by reason only of such inclusion be deemed to be
material and shall not be employed as a point of reference in determining any
standard of materiality under this Agreement.
11.10. Third Parties. This Agreement does not create any rights, claims or
benefits inuring to any person that is not a party hereto nor create or
establish any third party beneficiary hereto other than those persons entitled
to indemnification under Section 8 and Section 11.2.
11.11. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
11.12. Consent to Jurisdiction. Each of the parties hereto, irrevocably
submits to the exclusive jurisdiction of the Supreme Court of the State of New
York, New York County, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby. Each of
the parties hereto, further agrees that service of any process, summons, notice
or document by U.S. registered mail to such party's respective address set forth
in Section 11.1 shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately preceding sentence. Each of
the parties hereto irrevocably and unconditionally
50
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in the
Supreme Court of the State of New York, New York County, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
11.13. Certain Definitions. For purposes of this Agreement, the term:
(i) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned person;
(ii) "person" means an individual, corporation, partnership,
association, trust, limited liability company, limited partnership, limited
liability partnership, partnership, incorporated organization, other entity
or group (as defined in Section 13(d)(3) of the Securities Exchange Act of
1934);
(iii) "subsidiary" or "subsidiaries" of IP Buyer, Buyer, Eagle or any
other person means any person of which Buyer, Eagle or such other person,
as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, fifty percent (50%) or more of
the stock or other equity interests the holder of which is generally
entitled to vote for the election of the board of directors or other
governing body of such person; and
(iv) "the knowledge of" a party hereto when modifying any
representation and warranty shall mean that such party has no knowledge
that such representation and warranty is not true and correct to the same
extent as provided in the applicable representation and warranty, and that:
(A) such party has made appropriate investigations and inquiries
of its officers and responsible employees; and
(B) nothing has come to its attention in the course of such
investigation and inquiries or otherwise which would cause such party,
in the exercise of due diligence, to believe that such representation
and warranty is not true and correct in all material respects.
Eagle and Holdings shall be deemed to have satisfied the requirements of
this Section 11.13 by making appropriate investigations and inquiries of the
current or former officers and employees of Eagle and Holdings listed in
Schedule 11.13, and no knowledge of any other current or former officer or
employee of Eagle or Holdings shall be imputed to the persons listed in Schedule
11.13 or to Eagle or Holdings.
11.14. Entire Agreement. This Agreement, and the Schedules and Exhibits
hereto set forth the entire understanding of the parties hereto and no
modifications or amendments to this Agreement shall be binding on the parties
unless in writing and signed by the party or parties to be bound by such
modification or amendment.
51
11.15. Section Headings; Table of Contents. The section headings contained
in this Agreement and the Table of Contents to this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
11.16. Severability. If any provision of this Agreement shall be declared
by any court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain in
full force and effect.
11.17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument. Delivery of an
executed counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart to this Agreement.
11.18. Updating Eagle Disclosure Schedules. Eagle and Holdings may update
or supplement any Schedule in Section 3 in writing delivered to Buyer at any
time on or prior to Closing to reflect matters which occur subsequent to the
date hereof and do not result from the breach of any of the covenants contained
in Section 5.1. Buyer in its sole discretion shall either (i) accept such
Schedules as modified and close the Asset Purchase and the transactions
contemplated by this Agreement, thereby waiving any claim Buyer may have that
such modification is a breach of the representations and warranties given in
Section 3 on the Closing Date, or (ii) terminate this Agreement in the event
such modification has, individually or in the aggregate, a Material Adverse
Effect.
52
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
EAGLE FAMILY FOODS, INC.
By: /s/ Xxxxxxxx X. Xxxx
------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Vice President and General
Counsel
EAGLE FAMILY FOODS HOLDINGS, INC.
By: /s/ Xxxxxxxx X. Xxxx
------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Vice President and General
Counsel
XXXX'X INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
CADBURY BEVERAGES DELAWARE, INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
53
INDEX OF DEFINED TERMS
PAGE
----
[COLUMN 1]
1060 Forms..........................................7
Accounting Practices...............................12
affiliate..........................................51
Agreement...........................................1
Annual Financial Statements........................12
Xxxxxx Xxxxxxxx.....................................8
Asset Purchase......................................1
Assets..............................................1
Assumed Liabilities.................................5
Assumption Agreement...............................39
Audited Closing Statement...........................8
Benefit Plans......................................20
Books and Records..................................30
Xxxxxx License Agreement...........................30
Bridge Annual Financial Statements.................13
Bridge Interim Financial Statements................13
Business Employees.................................20
Buyer...............................................1
Buyer Losses.......................................42
Buyer Material Adverse Effect......................25
Buyer Savings Plan.................................32
Buyer Threshold....................................45
Buyer's Deductions.................................34
Closing............................................41
Closing Date.......................................41
Closing Inventory...................................7
Closing Statement...................................8
Code................................................7
Commission.........................................13
Commission Filings.................................13
Confidentiality Letter.............................28
Contract...........................................15
Copyright Rights...................................18
Corporate Employees................................31
Disclosed Contracts................................16
DOJ................................................29
Eagle...............................................1
Eagle's Deductions.................................34
Environment........................................22
Environmental Claim................................22
Environmental Clean-up Site........................22
Environmental Insurance............................41
Environmental Laws.................................23
[COLUMN 2]
Environmental Liability............................23
Environmental Permits..............................21
ERISA..............................................20
Escrow Funds.......................................37
Excluded Assets.....................................3
Excluded Liabilities................................6
Facility...........................................14
FD&C Act...........................................23
Financial Statements...............................12
Forecasted Inventory................................8
FTC................................................29
GAAP...............................................12
Xxxx-Xxxxx Act.....................................28
Hazardous Substance................................23
Holdings............................................1
Indemnity Claim....................................45
Insurance Policies.................................18
Intangible Property.................................2
Interim Financial Statements.......................12
Internet Rights....................................18
Inventory...........................................3
IP Buyer............................................1
Licensed Marks.....................................30
Licenses and Permits...............................21
Losses.............................................44
Machinery...........................................2
Material Adverse Effect............................11
Neutral Accounting Firm.............................8
Objection...........................................8
Other Confidentiality Agreements...................37
Patent Rights......................................17
person.............................................51
Purchase Price......................................7
Real Property......................................14
ReaLemon License Agreement.........................30
Release............................................23
Remedial Action....................................23
Report..............................................8
Required Consents..................................38
Restricted Period..................................35
Savings Plan.......................................32
Sellers' Losses....................................44
Services Agreement.................................40
i
PAGE
----
[COLUMN 1]
Significant Assets.................................37
Site...............................................23
subsidiaries.......................................51
subsidiary.........................................51
Tax Benefit........................................46
Tax Returns........................................19
Taxes..............................................18
[COLUMN 2]
Technology.........................................17
Threshold..........................................43
Trade Payables......................................6
Trademark Rights...................................17
Transferred Employees..............................31
Waterloo Employees.................................31
ii
