Exhibit 2.4
AMENDED AND RESTATED ACQUISITION AGREEMENT
This Amended and Restated Acquisition Agreement (the "Agreement") is
dated as of the 4th day of November, 1997, and amended and restated as of the
9th day of March, 1998, among Xxxxxxx & Xxxxxx Products Co., a Delaware
corporation ("Seller"), Imperial Wallcoverings, Inc., a Delaware corporation
("Imperial"), and BDPI Holdings Corporation, a Delaware corporation
("Purchaser").
RECITALS:
A. Imperial, together with its wholly owned subsidiaries Imperial
Wallcoverings Limited, a company incorporated in England ("Imperial UK") and
Marketing Service, Inc., a Delaware corporation ("MSI") and Imperial
Wallcoverings (Canada) Inc. ("Imperial Canada"), Canadian corporation owned by
Imperial and Xxxxxxx & Xxxxxx Canada Inc., an Ontario corporation and indirect
wholly owned subsidiary of Seller ("C&A Canada") (Imperial UK and MSI being
referred to herein collectively as the "Subsidiaries" and, together with
Imperial and Imperial Canada, the "Company" and Imperial UK, MSI and Imperial
being referred to herein as the "Purchased Imperial Companies"), is presently
engaged in the business (the "Business") of the development, production,
manufacture, marketing, distribution and sale of paper and vinyl decorative
surface products and related products for residential, commercial and industrial
applications ("Products") and performing certain related services;
B. Seller is the record and beneficial owner of all of the issued and
outstanding shares of Common Stock, par value $0.01 per share, of Imperial (the
"Imperial Shares") and C&A Canada is the record and beneficial owner of
3,100,000 issued and outstanding shares of common stock, without par value, of
Imperial Canada, which shares, together with the 1,000,000 shares of common
stock of Imperial Canada owned of record and beneficially by Imperial, represent
all of the issued and outstanding shares of capital stock of Imperial Canada;
C. Seller intends to cause C&A Canada to own all of the issued and
outstanding shares of common stock of Imperial Canada and to cause Imperial
Canada to be liquidated (the "Imperial Canada Liquidation") prior to the
Closing, with the result that C&A Canada will have all right, title and interest
in and to the assets, and be subject to all of the obligations and liabilities,
of Imperial Canada;
D. Purchaser intends to effect the recapitalization (the "Xxxxxx
Recap") of Xxxxxx Decorative Products Holdings, Inc. ("BDPH") pursuant to, among
other transactions, the merger of
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Purchaser into BDPH (the "Merger"), whereupon all rights and obligations of
Purchaser hereunder will be, by virtue of the Merger, vested in BDPH (which will
be renamed "The Imperial Home Decor Group Inc." following the Merger);
E Seller desires to sell, assign and deliver ("Transfer") to Purchaser,
and Purchaser desires to purchase and accept from Seller, the Imperial Shares on
the terms and subject to the conditions set forth in this Agreement;
F. Seller desires to cause C&A Canada to Transfer to Purchaser or its
assignee (and, where applicable the term "Purchaser" will also refer to such
assignee), and Purchaser desires to purchase and accept from C&A Canada, the C&A
Imperial Canada Assets and to assume the C&A Imperial Canada Assumed Liabilities
(together, the "Imperial Canada Business Acquisition").
NOW, THEREFORE, the parties hereto agree as follows:
I. PURCHASE AND SALE OF SHARES
1.1. Purchase and Sale of Shares. On the terms and subject to the
conditions hereof, at the Closing, Seller will Transfer, or cause to be
Transferred, to Purchaser, and Purchaser will purchase and accept from Seller
and C&A Canada, the Imperial Shares and the C&A Imperial Canada Assets, free and
clear of all Liens, for the amount determined pursuant to Section 1.3 and in
consideration of the grant of the Option to be delivered at Closing pursuant to
Section 4.3.3 and the assumption of the C&A Imperial Canada Assumed Liabilities
(such amount, together with the Option and the C&A Imperial Canada Assumed
Liabilities, the "Purchase Price"). Notwithstanding any other provision hereof,
in no event will the total amount of the accounts payable and accrued
liabilities included in the C&A Imperial Canada Assumed Liabilities (other than
any liabilities under the Canadian Pension Plan) exceed $5.0 million. For
purposes of this Agreement, (a) the "C&A Imperial Canada Assets" means all
assets, properties and rights, of whatever kind and nature, real or personal,
tangible or intangible, contractual or legal, wherever located, as of the
Closing that would have been owned or held by Imperial Canada but for the
Imperial Canada Liquidation except for any right, title or interest in, to or
under that certain Credit Agreement dated as of July 12, 0000, xxxxxxx
Xxxxxxxx Xxxxxxxx Xxxx xx Xxxxxxxx, XXX Xxxxxx Inc. and Imperial Canada (the
"Imperial Canada Credit Agreement") and (b) "C&A Imperial Canada Assumed
Liabilities" means all obligations and liabilities, fixed or contingent,
primary or secondary, direct or indirect, absolute or contingent, known or
unknown, whether or not accrued, as of the Closing that would have been
obligations or liabilities of Imperial Canada but for the Imperial Canada
Liquidation,
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except for (i) any Indebtedness of C&A Canada and (ii) such of the foregoing as
are retained by Seller or any of its Post-Closing Affiliates hereunder or as to
which Seller has agreed to indemnify the Purchaser or the Purchased Imperial
Companies under any provision of Article VI and (iii) any obligation or
liability under the Imperial Canada Credit Agreement.
1.2. Closing Payment. (a) The cash portion of the Purchase Price will
be (i) $58 million, plus the amount of cash of Imperial UK as of immediately
prior to the Closing, less $500,000 (the "Base Amount"), (ii) plus the
Adjustment Amount, and (iii) minus the amount of any Indebtedness of any
Purchased Imperial Companies outstanding immediately prior to the Closing
(calculated after giving effect to any payments of any such Indebtedness prior
to the Closing and in accordance with this Agreement (provided, however, that
nothing in this Section 1.2 will be deemed to constitute an authorization of the
incurrence or maintenance of any such Indebtedness by the Company)). For
purposes of this Agreement (A) "Adjustment Amount" means, if Net Cash Flow is
negative, a positive amount equal to such negative Net Cash Flow and, if Net
Cash Flow is positive, a negative amount equal to such positive Net Cash Flow;
(B) "Indebtedness" means any liability or obligation (whether primary or
secondary as a guarantor or other surety other than arising out of the
endorsement of checks for collection in the ordinary course of business), for
borrowed money, for deferred purchase price of any asset (other than obligations
to pay for inventory purchased in the ordinary course of business), under a
capitalized lease and any other liability or obligation which should be shown as
indebtedness on a consolidated balance sheet for the Company prepared in
accordance with GAAP, whether or not evidenced by a note, bond or similar
instrument, and any prepayment penalties, accrued interest or other amounts due
on or in respect of any of the foregoing; and (C) the term "Net Cash Flow" means
an amount, for the period from and including November 2, 1997 through the
opening of business on the Closing Date, calculated in accordance with Schedule
1.2, giving effect to an additional deemed positive cash flow amount (regardless
of the actual amount thereof) of $6.0 million.
(b) Not less than two business days prior to the Closing Date, Seller
and Purchaser will jointly prepare estimates of the Adjustment Amount and
Indebtedness (such estimated Adjustment Amount minus such estimated Indebtedness
being the "Estimated Purchase Price Adjustment Amount"), determined in
accordance with Section 1.2(a) and based upon their respective review of monthly
financial information then available to Seller and Purchaser and their
respective inquiries of personnel responsible for the preparation of financial
information relating to the Company in the ordinary course thereof. If the
parties are unable so to
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agree on the Estimated Purchase Price Adjustment Amount, then the amount thereof
as estimated by Deloitte & Touche LLP, Purchaser's independent accountants
("D&T"), in good faith will be the Estimated Purchase Price Adjustment Amount
for all purposes of this Agreement and the amount to be paid by Purchaser at the
Closing will be the Base Amount, plus or minus, as the case may be, the
Estimated Purchase Price Adjustment Amount (such amount, the "Closing Payment").
(c) On the Closing Date, Purchaser will cause to be paid by wire
transfer of immediately available funds to such account as Seller has
theretofore designated an amount equal to the Closing Payment.
1.3. Purchase Price Adjustment. (a) In order finally to determine the
Purchase Price, the Closing Payment will be increased or decreased, as the case
may be, by the amount, if any, by which the Adjustment Amount and Indebtedness,
each as finally determined in accordance with this Section 1.3, differ (on a
combined basis) from the amounts thereof reflected in the Estimated Purchase
Price Adjustment Amount. For purposes of this Agreement, (x) the adjustment
referred to in the immediately preceding sentence will be finally calculated on
a net basis and (y) all determinations of the actual amounts thereof (the
"Actual Purchase Price Adjustment Amount") will be determined by reference to
the amounts thereof required to be shown, with respect to Indebtedness, on a
consolidated balance sheet as of the opening of business on the Closing Date
and, with respect to Net Cash Flow, on a consolidated statement of cash flows
for the period from and including November 2, 1997 through the opening of
business on the Closing Date (collectively, the "Closing Statement"), each on a
basis consistent with, and using the same accounting principles, policies,
practices and procedures used in preparing, the Financial Statements and in
accordance with Schedule 1.2 and Section 1.2(a).
(b) Within 60 calendar days after the Closing Date, Purchaser will in
good faith prepare and deliver, or cause to be prepared and delivered, to Seller
a Closing Statement setting forth Purchaser's determination of the Actual
Purchase Price Adjustment Amount. The parties and their respective authorized
representatives will be entitled to review, during normal business hours, the
books, records and work papers of the Company to prepare or review, as the case
may be, the Closing Statement and to determine the Actual Purchase Price
Adjustment Amount. Without limiting the generality or effect of any other
provision hereof, (i) the parties will provide the other parties and their
authorized representatives access, during normal business hours, to the
facilities, personnel and accounting and other records of the Company and the
parties, as the case may be, to the extent reasonably determined by such other
parties to be necessary to
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permit Purchaser to prepare or have prepared the Closing Statement and to
compute the Actual Purchase Price Adjustment Amounts as herein provided and to
permit Seller to review such Closing Statement and computation (including, if
requested by Seller, such access as may be necessary or appropriate to permit
Xxxxxx Xxxxxxxx L.L.P. ("AA") to perform an audit of Net Cash Flow); provided,
however, that the parties will conduct any such review in a manner that does not
unreasonably interfere with the conduct of any other party's business, and (ii)
Seller will take such actions as may be reasonably requested by Purchaser to
close, or to assist Purchaser in closing, as of the opening of business on the
Closing Date, or as of the Closing, as the case may be, the books and accounting
records of the Company and otherwise reasonably to cooperate with Purchaser and
its representatives in the preparation of the Closing Statement. Concurrently
with the delivery of the Closing Statement, Seller will use its reasonable
efforts to cause AA to provide Purchaser access to any of such firm's
workpapers, trial balances and similar materials prepared in connection with
such firm's audits or reviews of any of the Financial Statements (the
"Workpapers").
(c) If, within 45 calendar days after the date of Purchaser's delivery
of its computation of the Actual Purchase Price Adjustment Amount, Seller
determines in good faith that such computations are inaccurate, Seller will give
written notice to Purchaser within such 45 calendar day period (i) setting forth
Seller's computation of Actual Purchase Price Adjustment Amount and (ii)
specifying in reasonable detail Seller's basis for its disagreement with
Purchaser's computations. The failure by Seller so to express its disagreement
or provide such specification within such 45 calendar day period will constitute
Seller's acceptance of Purchaser's computation of the Actual Purchase Price
Adjustment Amounts. If Purchaser and Seller are unable to resolve any
disagreement between them within ten calendar days after the giving of notice of
such disagreement, the items in dispute will be referred for determination to
KPMG Peat Marwick LLP (the "Accountants") as promptly as practicable. The
Accountants will make a determination as to each of the items in dispute, which
determination will be (A) in writing, (B) furnished to each of the parties
hereto as promptly as practicable after the items in dispute have been referred
to the Accountants, (C) made in accordance with this Agreement, and (D)
conclusive and binding upon each of the parties hereto. In connection with their
determination of the disputed items, the Accountants will be entitled to rely on
the Workpapers and the Company's books and records, and the fees and expenses of
the Accountants will be shared equally by Purchaser and Seller (except as
provided below). Purchaser and Seller will use reasonable efforts to cause the
Accountants to render their decision as soon as practicable, including without
limitation by promptly complying with all reasonable requests by
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the Accountants for information, books, records and similar items. If the
determination of the Accountants represents an outcome more favorable to either
Purchaser or Seller than the midpoint of such parties' last written settlement
offers related to all items in dispute, in the aggregate, submitted to the other
party at least two calendar days before the referral of the matter to the
Accountants (each a "Last Offer"), then the party obtaining such favorable
result will be deemed the "Prevailing Party" and the other party will be deemed
the "Non-Prevailing Party". For purposes hereof, all of the fees and expenses of
the Accountants, will be borne by the Non-Prevailing Party. No party will
disclose to the Accountants, and the Accountants will not consider for any
purpose, any settlement offer (other than the Last Offer) made by any party.
(d) To the extent that the Actual Purchase Price Adjustment Amount,
determined as provided in this Section 1.3 is more or less than the Estimated
Purchase Price Adjustment Amount, Seller or Purchaser, as applicable, will,
within ten calendar days after the final determination of the Actual Purchase
Price Adjustment Amount, calculated on a net basis, pursuant to this Section
1.3, make or, in the case of Purchaser, cause to be made payment by wire
transfer of immediately available funds of the amount of such difference,
together with interest thereon from the Closing Date to the date of payment (at
a rate equal to The Chase Manhattan Bank's prime rate, as publicly announced and
in effect from time to time during such period, plus 2.0%, calculated on the
basis of the actual number of days elapsed over 365), to such account as has
been designated by Purchaser or Seller, as applicable.
1.4. Intercompany Obligations. Notwithstanding any other provision
hereof, except for the receivables and payables described in Schedule 1.4
("Post-Closing AR/AP"), any amount owed by Seller or any of its Affiliates other
than the Purchased Imperial Companies (collectively, "Post-Closing Affiliates"),
or owed by any of the Purchased Imperial Companies to Seller or any Post-Closing
Affiliate, in respect of liabilities, obligations or assets of the Purchased
Imperial Companies of a type that would be shown on a consolidated balance sheet
of any of the Purchased Imperial Companies as "Investments and Advances From
(To) Xxxxxxx & Xxxxxx Products Co." will be settled at or prior to the Closing
and will not be reflected in the Closing Statement. Effective immediately after
the Closing, all intercompany liabilities and obligations owing from Seller or
any Post-Closing Affiliate to any of the Purchased Imperial Companies or owing
from any of the Purchased Imperial Companies to Seller or any Post-Closing
Affiliate (except for any Post-Closing AR/AP) that is not settled as
contemplated by the immediately preceding sentence will be netted against each
other and the net balance thereof will be discharged and deemed forgiven without
further action or payment,
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will be deemed contributed to or deducted from capital of the appropriate
Purchased Imperial Company and all such amounts will be excluded from the
determination of Net Cash Flow or Indebtedness under Sections 1.2 and 1.3. As a
result, immediately following the Closing, there will be no further liability or
obligation in respect of any such matters between Seller or any Post-Closing
Affiliate, on the one hand, and the Purchased Imperial Companies, on the other
hand, except as expressly provided herein. Any holder of a note or other
evidence of indebtedness deemed settled pursuant to this Section 1.4 will
surrender such note or other evidence of indebtedness to the obligor thereon. In
addition, and without limiting the generality or effect of the foregoing,
effective as of immediately prior to the Closing, all contracts and other
obligations, other than the Transaction Documents and other than as set forth on
Schedule 1.4, between or among the Purchased Imperial Companies or any of the
Subsidiaries, on the one hand, and Seller or any Post-Closing Affiliate, on the
other hand, will be terminated without further action to the extent that they
would otherwise apply to any period or act occurring after the Closing.
Notwithstanding anything to the contrary in this Agreement, Purchaser will not
assume any liability or obligation (other than those listed on Schedule 1.4)
owed by Imperial Canada to Seller or any Post-Closing Affiliate of a type that
would be shown on a balance sheet of Imperial Canada and any such liability or
obligation will not be included in the C&A Imperial Canada Assumed Liabilities.
II. REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of Seller. Subject to Section 2.3,
Seller represents and warrants to Purchaser as follows:
2.1.1. The Imperial Shares. (a) Except as set forth on
Schedule 2.1.1, (i) Seller owns free and clear of any mortgages, liens, security
interests or other encumbrances (collectively, "Liens") the number of Imperial
Shares listed in Schedule 2.1.1, which Shares represent all of the issued and
outstanding shares of capital stock of Imperial, and (ii) C&A Canada owns the
shares of common stock of Imperial Canada listed in Schedule 2.1.1 as owned by
C&A Canada (the "C&A Canada-Owned Imperial Canada Shares"), which shares,
together with the shares of common stock of Imperial Canada listed in Schedule
2.1.1 as owned by Imperial (the "Imperial-Owned Imperial Canada Shares"),
represent all of the issued and outstanding shares of capital stock of Imperial
Canada.
(b) The Imperial Shares are duly authorized, validly issued and
outstanding, fully paid and nonassessable. The Imperial
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Shares have not been issued in violation of, and are not subject to, any
preemptive rights, and there are no outstanding convertible or exchangeable
securities, calls, options or similar Contracts relating to the Imperial Shares
or that may require the Company to issue to any person or entity any shares of
any of its capital stock. Except as listed or described on Schedule 2.1.1, there
are no voting trust or other Contracts restricting the voting, dividend rights
or disposition of the Imperial Shares.
(c) Except as set forth in Schedule 2.1.1, Seller owns the Imperial
Shares beneficially and of record free and clear of all Liens and at the Closing
will Transfer its entire right, title and interest in and to the Imperial Shares
to Purchaser.
(d) The Company does not own, beneficially or of record, any stock or
other ownership interests in, or control, any other entity other than the
Subsidiaries, all of the issued and outstanding share capital of which is owned
by Imperial free and clear of all Liens (except for the C&A Canada-Owned
Imperial Canada Shares and as set forth on Schedule 2.1.1); and, except as set
forth on Schedule 2.1.1, there are no outstanding convertible or exchangeable
securities or agreements giving any person or entity any right to acquire shares
of capital stock of either of the Subsidiaries and no voting trusts or other
Contracts restricting the voting, dividend rights or disposition of shares of
either of the Subsidiaries.
2.1.2. Authorization and Effect of Agreement. Seller has the
requisite corporate power to execute and deliver this Agreement and the other
agreements or instruments referred to herein other than the Recapitalization
Agreement, dated as of the date hereof, between Xxxxxx, Inc., BDPH and Purchaser
(the "Xxxxxx Agreement") (collectively, the "Transaction Documents") to which
Seller is a party and to perform the transactions contemplated hereby to be
performed by it. All necessary corporate action required to be taken under the
Delaware General Corporation Law for the due authorization of the execution and
delivery by Seller of the Transaction Documents to which Seller is a party and
the performance by Seller of the transactions contemplated thereby to be
performed by it has been duly taken by Seller. Each Transaction Document to
which Seller is a party has been, or will be, as the case may be, duly executed
and delivered by Seller, and, assuming the due execution and delivery of such
Transaction Document by Purchaser, constitutes, or will constitute, as the case
may be, valid and binding obligations of Seller enforceable in accordance with
its terms. Imperial and each of the Subsidiaries is a corporation duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation.
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2.1.3. No Restrictions. The execution and delivery of the
Transaction Documents by Seller, C&A Canada and Imperial to which they are
parties does not, and the performance by Seller, C&A Canada and Imperial of the
transactions contemplated thereby to be performed by them will not, conflict
with, or result in any violation of, or constitute a default (with or without
notice or lapse of time or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a benefit under,
(i) any provision of the Certificate of Incorporation or By-laws or comparable
governing documents of Seller, C&A Canada, Imperial or any of the Subsidiaries,
(ii) any material lease, agreement, or other contract or legally binding
contractual right or obligation (a "Contract") of the Company, (iii) any permit
or approval ("Permit") issued under any domestic, foreign or other statute, law,
ordinance, rule, regulation, judgment, order, injunction, decree or ruling or
common law obligation ("Law") of any domestic, foreign or other court,
government, governmental agency, authority, entity or instrumentality
("Governmental Entity"), or (iv) any Law (other than a Law requiring a Permit),
other than, as to clauses (ii), (iii) and (iv), any such conflicts, violations
or defaults as are listed or described on Schedule 2.1.3 or which, individually
or in the aggregate, could not reasonably be expected to result in a material
undisclosed liability of the Company. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to Seller or the
Company in connection with the execution and delivery by Seller and C&A Canada
of the Transaction Documents to which they are a party or the performance by
Seller and C&A Canada of the transactions contemplated thereby to be performed
by them, except (i) for the filing of a premerger notification report by an
Affiliate of Seller under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), if applicable in the circumstances, (ii) for
such of the foregoing as are listed or described on Schedule 2.1.3, and (iii)
for such consents, approvals, orders, authorizations of, or registrations,
declarations or filings with, any Governmental Entity, which, individually or in
the aggregate, if not obtained or made, could not reasonably be expected to
result in a material undisclosed liability of the Company.
2.1.4. Financial Statements. (a) Attached as Schedule
2.1.4(a) are the audited consolidated balance sheets of the Company as of
January 27, 1996 and December 28, 1996, the related audited consolidated
statements of stockholders' equity, operations and cash flows for the fiscal
years then ended, accompanied by the accountant's reports thereon, the unaudited
combined balance sheet of the Company as of September 26, 1997 (the "Balance
Sheet") and the unaudited combined statements of operations for the combined
first two fiscal quarters of 1996 and
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1997 (collectively, with the related notes, the "Financial Statements"). The
audited Financial Statements present fairly, in all material respects, the
consolidated financial position of the Company as of the dates thereof and the
consolidated results of its operations and cash flows for the periods specified
in conformity with United States generally accepted accounting principles,
consistently applied ("GAAP"), except as set forth in Schedule 2.1.4(a).
(b) Seller will deliver audited consolidated balance sheets of
the Company as of September 26, 1997 and the related audited consolidated
statements of stockholders' equity, operations and cash flows for the nine month
periods ended September 26, 1997 (collectively, with the related notes, the
"Offering Financial Statements") as promptly as practicable and in any event by
November 30, 1997. The Offering Financial Statements will present fairly, in all
material respects, the consolidated financial position of the Company as of the
dates thereof and the results of its operations and cash flows for the periods
specified in conformity with GAAP.
(c) The Company does not have, and as of immediately prior to
the Closing will not have, any liabilities or obligations, whether known or
unknown, absolute, accrued, contingent or otherwise, whether due or to
become due, including any uninsured liabilities, and whether arising by virtue
of a breach of or under any Law, any lawsuit or claim or otherwise, that would
be required by GAAP to be shown as a liability on a consolidated balance sheet
of the Company except (i) as and to the extent set forth in the Balance Sheet or
specifically disclosed in the notes thereto, (ii) liabilities incurred in the
ordinary course of business consistent with past practice and not prohibited by
this Agreement, which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, (iii) as set forth in Schedule
2.1.4(c), and (iv) other liabilities for which Seller is responsible pursuant to
this Agreement.
(d) Except as listed or described on Schedule 2.1.4(d), (i)
from September 26, 1997 to November 4, 1997, the Company has conducted the
Business only in the ordinary course, consistent with past practice, (ii) since
September 26, 1997 through November 4, 1997, the Company has not taken any
action which would have constituted a violation of Section 3.5 if Section 3.5
had applied since September 26, 1997, and (iii) during the period from September
26, 1997 to the Closing Date, there has not been any Material Adverse Effect,
including any damage, destruction, loss or abandonment (whether or not covered
by insurance) which, individually or in the aggregate, has or, to the Knowledge
of Seller, could reasonably be expected to have, a Material Adverse Effect,
other than, as applied to the accuracy
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of this representation in respect of the period between the date hereof and the
Closing Date, changes or effects after the date hereof that result from
general economic conditions or competitive circumstances in the markets in
which the Business is conducted.
(e) For purposes of this Agreement, the term "Material Adverse
Effect" means an event, circumstance or occurrence that has a material adverse
effect on the Business or the consolidated financial condition or results of
operations of the Company relative, in the case of financial condition or
results of operations, to the management projections for the Business set forth
in Schedule 2.1.4(e).
2.1.5. Brokers. No broker, investment banker, financial
advisor or other person (other than BancBoston Securities, Inc. and Xxxxxxxxxxx
Xxxxxxx & Co., Inc., the fees and expenses of which will be paid by Seller) is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement.
2.2. Representations and Warranties of Purchaser. Subject to Section
2.3, Purchaser represents and warrants to Seller as follows:
2.2.1. Authorization and Effect of Agreement. Purchaser has
the requisite corporate power to execute and deliver this Agreement and to
perform the transactions contemplated hereby to be performed by it. All
necessary corporate action required to be taken under the Delaware General
Corporation Law for the due authorization of the execution and delivery by
Purchaser of this Agreement and the performance by Purchaser of the transactions
contemplated hereby to be performed has been duly taken by Purchaser. This
Agreement has been duly executed and delivered by Purchaser and, assuming the
due execution and delivery of this Agreement by Seller constitutes a valid and
binding obligation of Purchaser, enforceable in accordance with its terms.
2.2.2. No Restrictions. The execution and delivery of this
Agreement by Purchaser does not, and the performance by Purchaser of the
transactions contemplated hereby to be performed by it will not, conflict with,
or result in any material violation of, or constitute a material default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit under, any provision of the charter or bylaws or comparable
governing documents of Purchaser, or any material Contract or Permit applicable
to Purchaser other than any such conflicts, violations or defaults which,
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individually or in the aggregate, could not reasonably be expected to result in
a material undisclosed liability of Purchaser. No material consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with respect to
Purchaser in connection with the execution and delivery of this Agreement by
Purchaser or the performance by Purchaser of the transactions contemplated
hereby to be performed by either of them, except (i) for such of the foregoing
as are listed or described on Schedule 2.2.2 and (ii) for such consents,
approvals, orders, authorizations of, or registrations, declarations or filings
with, any Governmental Entity, which, individually or in the aggregate if not
obtained or made, could not reasonably be expected to result in a material
undisclosed liability of Purchaser.
2.2.3. Financial Capacity. Purchaser has in hand a commitment
letter (the "Commitment Letter"), which is currently in effect and a true and
correct copy of which has been previously provided to Seller, from the
financial institutions indicated therein, as well as the equity commitment
letter of Blackstone Capital Partners III Merchant Banking Fund, L.P.
("Blackstone"), to provide the secured debt and equity financing contemplated by
Purchaser for the transactions described in this Agreement and has obtained a
highly confident letter, a true and correct copy of which has been previously
provided to Seller, with respect to the subordinated debt financing so
contemplated. Blackstone has undertaken to provide the equity capital
contemplated by the Commitment Letter, and a true and correct copy of such
undertaking has been previously provided to Seller.
2.2.4. Disclosure. As of the date hereof, to the Knowledge of
Purchaser, (a) Seller is not in breach of any of its representations and
warranties set forth in Section 2.1.4 and (b) Purchaser has furnished to
Seller's financial advisors all material information pertaining to the Company
and the Xxxxxx Recap that such financial advisors have requested prior to the
date hereof.
2.3. Certain Limitations on Representations and Warranties. (a) Each
of the parties is a sophisticated legal entity that was advised by experienced
counsel and, to the extent it deemed necessary, other advisors in connection
with this Agreement. Accordingly, each of the parties hereby acknowledges that
(i) there are no representations or warranties by or on behalf of any party
hereto or any of its respective Affiliates or representatives other than those
expressly set forth in this Agreement and (ii) the parties' respective rights,
obligations and remedies with respect to this Agreement and the events giving
rise thereto will be solely and exclusively as set forth in the Transaction
Documents.
12
(b) Any representation and warranty made in this Agreement by
Seller will be deemed for all purposes to be qualified by the disclosures made
in any Schedule specifically referred to in such representation or warranty and
by the information disclosed in any other Schedule if the relevance of such
information to such representation and warranty is reasonably apparent on its
face. References in this Article to matters "primarily" relating to the Business
are to matters which predominantly relate to the Business rather than
predominantly to one of either Seller's or any Post-Closing Affiliate's other
businesses or to the businesses or operations of Seller or any Post-Closing
Affiliate generally.
III. COVENANTS
3.1. Investigation by Purchaser. (a) Prior to the Closing, upon
reasonable notice from Purchaser to Seller given in accordance with this
Agreement, Seller will, and will cause the Company to, afford to the officers,
attorneys, accountants or other authorized representatives of Purchaser
reasonable access during normal business hours to the facilities and the books
and records of the Company so as to afford Purchaser a reasonable opportunity to
make, at its sole cost and expense, such review, examination and investigation
of the Company as Purchaser may reasonably desire to make, including without
limitation a so-called "Phase I" (i.e., documentary review and walk-through site
inspection) preliminary environmental evaluation; provided, however, that no
borings or other so-called "Phase II" environmental examinations will be
performed without Seller's prior written consent, which consent may be given or
withheld in Seller's sole discretion. Purchaser will be permitted to make
extracts from or to make copies of such books and records as may be reasonably
necessary. Prior to the Closing, Seller will furnish to Purchaser, or cause to
be furnished to Purchaser, such financial and operating data and other
information pertaining to the Company as Purchaser may reasonably request;
provided, however, that nothing in this Agreement will obligate Seller to take
actions that would unreasonably disrupt the normal course of business of itself,
any Post-Closing Affiliate or the Company, violate the terms of any applicable
Law or rules of any national stock exchange applicable to it or its Affiliates
or any Contract to which any of them is a party or to which any of them or any
of their assets are subject (to the extent described in reasonable detail in
response to any request for information specified above) or grant access to any
of their proprietary or confidential information not related to the Business.
(b) Subject to Section 3.2, whether or not the Closing occurs,
Purchaser will, and will cause its Affiliates other than Seller to, treat in
confidence all documents, materials and other information (including without
limitation information relating to
13
supply and sales agreements and relationships with third persons or entities)
disclosed by any other party that is not its Affiliate, whether before, during
or after the course of the negotiations leading to the execution of this
Agreement or thereafter, including without limitation in its investigation of
the other parties and in the preparation of agreements, schedules and other
documents relating to the consummation of the transactions contemplated hereby.
Prior to the Closing, and in the event that this Agreement is terminated,
neither Purchaser nor any of its Affiliates will, and if the Closing occurs,
Seller will not and will cause its Affiliates not to, disclose to any third
party any confidential information, except as required by Law or rules of any
national stock exchange or any Governmental Authority applicable to it or its
Affiliates or Purchaser determines is required to be disclosed in connection
with the financing described in Section 2.2.3, subject to Seller's right to
review and reasonably object to such disclosure. If this Agreement is
terminated, Purchaser and each of its Affiliates will return to Seller all
originals and copies of all non-public documents and materials of the type
provided for in this Section 3.1 which have been furnished or made available in
connection with this Agreement, and Purchaser will destroy all notes, analyses,
compilations, studies or other documents which contain or otherwise reflect such
information.
3.2. Press Releases. Prior to the Closing, no party will issue or
cause the publication of any press release or other public announcement with
respect to this Agreement or the transactions contemplated hereby without the
prior consent of the other parties, which consent will not be unreasonably
withheld or delayed; provided, however, that nothing herein will prohibit any
party from issuing or causing publication of any such press release or public
announcement to the extent that such party determines such action to be required
by Law or the rules of any national stock exchange applicable to it or its
Affiliates or prohibit Purchaser from making any disclosure it determines may be
reasonably necessary in furtherance of obtaining the financing contemplated by
Section 2.2.3, in which event the party making such determination will, if
practicable in the circumstances, use reasonable efforts to allow the other
parties reasonable time to comment on such release or announcement in advance of
its issuance.
3.3. Regulatory Filings. (a) Not later than two business days after
the date hereof, Purchaser will, and Seller will cause the ultimate parent
entity of Seller to, make such filings, if any, as may be required by the HSR
Act with respect to the consummation of the transactions contemplated by this
Agreement. Thereafter, Purchaser will, and Seller will cause the ultimate parent
entity of Seller to, file or cause to be filed as promptly as practicable with
the United States Federal Trade Commission
14
(the "FTC") and the United States Department of Justice (the "DOJ") supplemental
information, if any, which may be required or requested by the FTC or the DOJ
pursuant to the HSR Act. To the extent required by Law, Seller will make, or
cause any of its Affiliates to make, such filings and use its reasonable efforts
to obtain the governmental approvals and the other third party consents (if any)
referred to in Section 2.1.3, and Purchaser will each make such filings and use
its reasonable efforts to obtain the governmental approvals and the other third
party consents (if any) referred to in Section 2.2.2. All filings referred to in
this Section 3.3(a) will comply in all material respects with the requirements
of the respective Laws pursuant to which they are made.
(b) Without limiting the generality or effect of Section 3.3(a), each
of the parties will (i) use their respective reasonable efforts to comply as
expeditiously as possible with all lawful requests of Governmental Entities for
additional information and documents pursuant to the HSR Act, if applicable,
(ii) not (A) extend any waiting period under the HSR Act or (B) enter into any
agreement with any Governmental Entity not to consummate the transactions
contemplated by this Agreement, except with the prior consent of each of the
other parties hereto, and (iii) cooperate with each other and use reasonable
efforts to prevent the entry of, and to cause the lifting or removal of, any
temporary restraining order, preliminary injunction or other judicial or
administrative order which may be entered into in connection with the
transactions contemplated by this Agreement, including without limitation the
execution, delivery and performance by the appropriate entity of such
divestiture agreements or other actions, as the case may be, as may be necessary
to secure the expiration or termination of the applicable waiting periods under
the HSR Act or the removal, dissolution, stay or dismissal of any temporary
restraining order, preliminary injunction or other judicial or administrative
order which prevents the consummation of the transactions contemplated hereby or
requires as a condition thereto that all or any part of the Business be held
separate and, prior to or after the Closing, pursue the underlying litigation or
administrative proceeding diligently and in good faith.
3.4. Injunctions. Without limiting the generality or effect of any
provision of Section 3.3, Section 3.6 or Section 3.9 or Article IV, if any
Governmental Entity having jurisdiction over any party issues or otherwise
promulgates any injunction, decree or similar order prior to the Closing which
prohibits the consummation of the transactions contemplated hereby, the parties
will use their respective reasonable efforts to have such injunction dissolved
or otherwise eliminated as promptly as possible and, prior to or after the
Closing, to pursue the underlying litigation diligently and in good faith.
15
3.5. Operation of the Business. Except in connection with or as a
result of any matter listed or described on Schedule 3.5, as expressly
contemplated herein or as otherwise consented to by Purchaser or requested by
Purchaser or any of its Affiliates, from the date hereof to the Closing Date,
Seller will cause the Company to:
(a) Use reasonable efforts to keep the Business intact
(including without limitation relationships with customers, employees,
suppliers and others) and not take or permit to be taken or do or
suffer to be done anything other than in the ordinary course of
business of the Business as presently conducted, and use
reasonable efforts to maintain the goodwill associated with the
Business; without limiting the generality or effect of the foregoing,
(i) in all events Seller will take all actions so that, as of
immediately prior to the Closing, the total accounts payable and
accrued liabilities (other than any liabilities under the Canadian
Pension Plan) included in the C&A Imperial Canada Assumed Liabilities
total not more than $5.0 million and (ii) not effect any transaction
between Imperial Canada or C&A Canada, on the one hand, and any of the
Purchased Imperial Companies, on the other hand, except in the ordinary
course of business;
(b) Continue existing practices relating to maintenance of the
assets owned, leased or otherwise held by the Company for use in the
Business ("Assets") in good repair, ordinary wear and tear excepted,
and continue to make capital expenditures substantially in accordance
with budgets previously delivered to Purchaser (and Imperial hereby
agrees to continue to make capital expenditures only substantially in
accordance with budgets previously delivered to Purchaser unless each
other party otherwise consents);
(c) Not purchase, sell, lease or dispose of, or enter into any
Contract for the purchase, sale, lease or disposition of, or subject to
Lien, any of the Assets other than (i) Products or (ii) in the ordinary
course of business of the Business;
(d) Not adopt or make any amendment to any Employee Plan or
increase the general rates of compensation of Employees, except (i) as
required by Law or (ii) pursuant to any Contract in effect on the date
of this Agreement (Seller representing that, to the Knowledge of
Seller, no Contract providing for such adoption, amendment or increase
is in effect other than collective bargaining agreements the terms of
which have been previously disclosed to Purchaser);
16
(e) Not enter into, amend, modify or cancel any material
Contract except in the ordinary course of business consistent with past
practice;
(f) Not incur indebtedness for borrowed money, or assume,
guarantee, endorse or otherwise become responsible for the obligations
of any other person or entity, or make loans or advances to any person
or entity (other than advances to Employees in the ordinary course of
business consistent with past practice reflected on the Company's books
and records);
(g) Not enter into any joint venture, partnership or similar
arrangement;
(h) Not amend its Certificate of Incorporation or By-Laws;
(i) Not dispose of, permit to lapse or otherwise fail to
preserve any of its Intellectual Property or other similar rights,
dispose of or permit to lapse any material Permit, or dispose of or
disclose to any person or entity other than an authorized
representative of Purchaser, any trade secret (except for such of the
foregoing as may occur by operation of Law or the terms of any of the
foregoing);
(j) Not make any change in the accounting methods, principles
or practices of the Business, except as required by GAAP;
(k) Not sell or factor any account receivable of the Business
or otherwise participate in any accounts receivable facility other than
to accept payments made by account debtors to the Company at an
existing lock-box of the Company (which lock-box arrangement will be
terminated as promptly as practicable);
(l) With respect to the Pension Plan for Salaried Employees of
Imperial Wallcoverings (Canada), Inc.(the "Canadian Pension Plan"), (1)
not withdraw any assets from the Canadian Pension Plan other than to
pay benefits in accordance with its existing terms, (2) not make any
amendment to the Canadian Pension Plan and (3) other than as may be
required by Law, make any change to the actuarial assumptions used in
determining the actuarial present value of the liabilities of the
Canadian Pension Plan;
(m) Not fail to pay when due any amount owed to a third party,
including without limitation, any Taxes, in accordance with the
applicable payment terms;
17
(n) Not prepay any obligation of the Company other than (i) in
the ordinary course of business consistent with past practice or (ii)
Indebtedness; and
(o) Not enter into a Contract to do any of the foregoing
(other than as may be required by Section 3.5(a) or 3.5(b).
For purposes of this Agreement, "Intellectual Property" means all patents and
trademarks and all material trade names, service marks and registered
copyrights, and registrations and applications therefor, used or held for use in
the conduct of the Business.
3.6. Satisfaction of Conditions. Without limiting the generality or
effect of any provision of Section 3.3, 3.4 or 3.9 or Article IV, prior to the
Closing, each of the parties hereto will use its respective reasonable efforts
with due diligence and in good faith to satisfy promptly all conditions required
hereby to be satisfied by such party in order to expedite the consummation of
the transactions contemplated hereby.
3.7. Negotiations With Others. From the date hereof until the
termination of this Agreement in accordance with its terms or the Closing,
Seller and its Affiliates will not, and will cause its and their respective
officers, directors, investment bankers, attorneys, accountants and other agents
not to: (i) initiate, solicit (including by way of furnishing information) or
accept, any offer or proposal which constitutes, an Alternative Proposal or (ii)
in the event of an unsolicited Alternative Proposal, engage in substantive
discussions or negotiations, or enter into any Contract, with, or furnish
information to, any Person relating to any Alternative Proposal. All such
negotiations prior to the date hereof have been terminated. For purposes of this
Agreement, "Alternative Proposal" means any proposal or offer from any Person
relating to any acquisition or purchase of all or substantially all of the
assets or common stock of the Company or any merger, consolidation, business
combination or similar transaction involving the Company, other than the
transactions contemplated by this Agreement.
3.8. Certain Additional Covenants. Seller will use its reasonable
best efforts to cause the independent accountants that issued the reports
relating to the Offering Financial Statements to consent to Purchaser's use of
the Offering Financial Statements as may be required by applicable Law in the
disclosure documents relating to the financing contemplated by this Agreement or
any subsequent financing involving a public offering.
18
3.9. Efforts to Consummate. Subject to the terms and conditions
herein provided, Seller and Purchaser will use their reasonable efforts to take
or cause to be taken, all actions and to do, or cause to be done, all things
necessary to consummate and make effective the transactions contemplated by this
Agreement and to cooperate with the other in connection with the foregoing.
Seller will, at its sole expense, cause to be included in the assets and
properties of the Company prior to the Closing all assets, properties, permits,
authorizations, rights and related obligations which are being used or held for
use primarily or exclusively by the Company (whether or not such assets,
properties, permits, authorizations, rights and related obligations are
presently owned or held by the Company), all on terms and conditions, and
pursuant to documentation, reasonably acceptable to Purchaser.
3.10. Resignations. Prior to the Closing, upon Purchaser's specific
request, Seller will cause to resign or to be removed from office such officers
and directors of Imperial and each of the Subsidiaries whose full-time
employment is not in the Business.
3.11. Certain Conditions. Notwithstanding any other provision hereof,
in the event that the condition to the Closing set forth in Section 4.2.4 is not
satisfied, Purchaser will have no liability or obligation to Seller or any other
Person under any provision of, or actual or alleged breach of, this Article III
(other than Section 3.1(b) or 3.2), the parties hereby expressly acknowledging
and agreeing that Purchaser will have no liability or obligation hereunder if
the Xxxxxx Recap shall not have been consummated.
3.12. Certain Pre-Closing Transactions. Prior to the Closing, Seller
will cause Imperial to Transfer to C&A Canada the Imperial-Owned Imperial Canada
Shares for $1.00 and will cause the Imperial Canada Liquidation to be effected
with the result described in the recitals to this Agreement; such Transfer and
Imperial Canada Liquidation will be deemed not to constitute a breach of any
representation, warranty or covenant herein.
IV. THE CLOSING
4.1. Conditions Precedent to Obligations of Purchaser and Seller. The
obligations of Purchaser and Seller under this Agreement to consummate the
transactions contemplated hereby will be subject to the satisfaction, at or
prior to the Closing, of the conditions that 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 prohibits the Closing and
the waiting period (and any extension thereof) applicable to the Imperial Canada
Business Acquisition
19
and the purchase and sale of the Imperial Shares contemplated hereby under the
HSR Act shall have lapsed or been terminated. The foregoing conditions may be
waived (i) insofar as it is a condition to the obligations of Purchaser, by
Purchaser at its option and (ii) insofar as it is a condition to the obligations
of Seller, by Seller at its option.
4.2. Additional Conditions Precedent to Obligations of Purchaser. The
obligations of Purchaser under this Agreement to consummate the transactions
contemplated hereby will be subject to the satisfaction, at or prior to the
Closing, of all of the following conditions, any one or more of which may be
waived at the option of Purchaser:
4.2.1. No Material Breach. There shall have been no material breach by
Seller in the performance of any of the covenants herein to be performed by it
in whole or in part prior to the Closing.
4.2.2. Transfer Documents, Etc. Seller shall have delivered or caused
to be delivered to Purchaser the certificates representing the Imperial Shares,
and certificates representing all shares of capital stock of the Subsidiaries,
which certificates shall have been duly endorsed for transfer or accompanied by
duly executed stock powers, with (if applicable) any required tax stamps affixed
thereto and a Xxxx of Sale and other transfer documents for the C&A Imperial
Canada Assets, including without limitation, a deed of sale for the owned real
property included in the C&A Imperial Canada Assets, in a form reasonably
acceptable to Purchaser.
4.2.3. Other Documents. Seller shall have duly executed and delivered
to Purchaser a Management Services Agreement in substantially the form of
Schedule 4.2.3(a) (the "MSA") and a Noncompetition Agreement in substantially
the form of Schedule 4.2.3(b) (the "NCA"), and Seller shall have delivered to
Purchaser an opinion of Cravath, Swaine & Xxxxx, counsel to Seller,
substantially to the effect set forth in Schedule 4.2.3(c).
4.2.4. Xxxxxx Closing. The conditions to the obligations of Purchaser
to consummate the Xxxxxx Recap shall have been satisfied or duly waived in
accordance with the requirements thereof.
4.2.5. Material Adverse Change. Since September 26, 1997, there shall
not have occurred (a) a Material Adverse Effect or (b) any event which could
reasonably be expected to have a Material Adverse Effect.
20
4.2.6. No Litigation. There shall not be pending or threatened any
litigation seeking to enjoin this Agreement or the transactions contemplated
hereby or the Xxxxxx Recap or seeking substantial damages as a result thereof.
4.2.7. Certain Approvals. All filings and approvals specified in
Schedule 2.1.3 shall have been made or obtained and shall be in full force and
effect.
4.2.8. Release of Liens. Seller shall have delivered to Purchaser
evidence reasonably satisfactory to Purchaser of the release and termination of
all Liens in respect of Indebtedness and any guarantees of indebtedness of
Seller or any Post-Closing Affiliate.
4.2.9. Evidence of Imperial Canada Liquidation. Seller shall have
furnished to Purchaser evidence reasonably satisfactory to Purchaser that the
Imperial Canada Liquidation has been effected and that, as a result of the
Imperial Canada Liquidation, C&A Canada has all right, title and interest in and
to the assets of Imperial Canada.
4.3. Additional Conditions Precedent to Obligations of Seller. The
obligations of Seller under this Agreement to consummate the transactions
contemplated hereby will be subject to the satisfaction, at or prior to the
Closing, of all the following conditions, any one or more of which may be waived
at the option of Seller:
4.3.1. No Material Breach. There shall have been no material breach by
Purchaser in the performance of any of the covenants herein to be performed by
it in whole or in part prior to the Closing.
4.3.2. Closing Payment. Purchaser shall have delivered the Closing
Payment to Seller in the manner specified in Section 1.2.
4.3.3. Option. Purchaser shall have executed and delivered to Seller
an Option Agreement in substantially the form of Exhibit A (the "Option
Agreement") under which Seller will have the right (the "Option") to purchase
6.7% of the common stock of BDPH issuable in the Merger calculated as specified
in Footnote 1 of Exhibit A at an initial option exercise price (the "Initial
Exercise Price") calculated in accordance with Note 2 of Exhibit A and otherwise
on the terms set forth in Exhibit A. The Initial Exercise Price will be
proportionately increased to the extent that stockholders of Purchaser make any
additional contributions to the capital of BDPH to fund any adjustments required
by Section 1.3 and the comparable provisions of the Xxxxxx Agreement.
21
4.3.4. Other Documents. Purchaser shall have caused the Company to
have duly executed and delivered to Seller the MSA and the NCA, and Purchaser
shall have delivered to Seller an opinion of Xxxxx, Day, Xxxxxx & Xxxxx, counsel
to Purchaser, substantially to the effect set forth in Schedule 4.3.4.
4.4. The Closing. Subject to the fulfillment or waiver of the
conditions precedent specified in Sections 4.1, 4.2 and 4.3, the consummation of
the purchase and sale of the Shares contemplated hereby (the "Closing") will
take place on December 31, 1997 (or as soon as practicable thereafter as all of
the conditions to the Closing set forth in Section 4.3 are satisfied or waived)
(the actual date of the Closing, the "Closing Date"). The Closing will take
place at 10:00 A.M., Eastern Time, at the offices of Xxxxx, Day, Xxxxxx & Xxxxx,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other time or place or
on such date as shall be agreed upon the parties. At the Closing, the parties
will execute and deliver such transfer and assumption documentation as may be
customary to evidence the Transfer of the C&A Imperial Canada Assets and the
assumption of the C&A Imperial Canada Assumed Liabilities, as contemplated
herein.
4.5. Termination. Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated at any time prior to the
Closing:
(a) By the mutual written consent of Purchaser and Seller;
(b) By Purchaser or Seller if the Closing shall not have
occurred on or before May 31, 1998 (the "Drop Dead Date");
(c) By either Purchaser or Seller if there shall have been
entered a final, nonappealable order or injunction of any Governmental
Entity restraining or prohibiting the consummation of the transactions
contemplated hereby or any material part thereof;
(d) By Purchaser, in its sole discretion, on December 5, 1997
or, if later, the fifth day following Seller's delivery of the Offering
Financial Statements, but neither before nor after such date, if the
Offering Financial Statements reflect an adverse difference from the
financial information for the first three quarters of fiscal year 1997
previously provided to Purchaser by Imperial in any material respect as
determined by Purchaser, which determination will be conclusive for all
purposes; or
22
(e) By Purchaser, in its sole discretion, by notice given to
Seller prior to 5:00 p.m., New York time, on November 5, 1997.
In the event of the termination of this Agreement under this Section 4.5, each
party hereto will pay all of its own fees and expenses. There will be no further
liability hereunder on the part of any party hereto if this Agreement is so
terminated, except under Sections 3.1(b), 3.2 and 7.2 or by reason of a breach
of any covenant or representation or warranty contained in this Agreement,
including without limitation the covenants contained in Sections 3.3, 3.4 and
3.7.
V. SURVIVAL AND INDEMNIFICATION
5.1. Survival of Representations, Warranties and Covenants. (a) Each of
the representations and warranties contained in Article II and in the last
sentence of Section 6.1.3(a) will survive the Closing and remain in full force
and effect until the later of (i) the expiration of the applicable statute of
limitations and (ii) the fifth anniversary of the Closing Date, except that the
representations and warranties contained in clauses (ii) and (iii) of the first
sentence of Section 2.1.3 and Sections 2.1.4, 2.2.2 and 2.2.4 will not survive
the Closing. Any claim for indemnification with respect to such matters which is
not asserted by a notice given as herein provided specifically identifying the
particular breach underlying such claim (whether or not the Indemnifiable Loss
has been actually incurred as of the date of such notice) and the facts and
Indemnifiable Loss relating thereto (to the extent reasonably determinable as of
the date of such notice), within such specified periods of survival may not be
pursued and is hereby irrevocably waived.
(b) The covenants contained in Sections 3.1(b), 3.3(b), 3.4,
3.5(a)(i)-(ii), 3.5(l), 3.5(m), 3.5(n), 3.8 and 3.9 (second sentence only), in
this Article V and in Articles I, VI and VII (the "Post-Closing Covenants") will
survive the Closing and remain in effect indefinitely unless a specified period
is otherwise set forth in this Agreement (in which event such specified period
will control). All other covenants contained in this Agreement will terminate,
without further action, upon the occurrence of the Closing, with the result that
any claim for an alleged breach of any such covenant may not be pursued and is
hereby irrevocably waived.
5.2. Limitations on Liability. (a) For purposes of this Agreement, (i)
"Indemnity Payment" means any amount of Indemnifiable Losses required to be paid
pursuant to this Agreement, (ii) "Indemnitee" means any person or entity
entitled to indemnification under this Agreement, (iii) "Indemnifying
23
Party" means any person or entity required to provide indemnification under this
Agreement, (iv) "Indemnifiable Losses" means any and all claims, demands,
actions, suits or proceedings (by any person or entity, including without
limitation any Governmental Entity), settlements and compromises relating
thereto and reasonable attorneys' fees and expenses in connection therewith or
in enforcing the Indemnifying Party's obligations hereunder, losses,
liabilities, costs and expenses, reduced by the amount of insurance proceeds
actually received from any person or entity that is not an Affiliate of the
Indemnitee, and (v) "Third Party Claim" means any claim, demand, action, suit or
proceeding made or brought by any person or entity who or which is not a party
to this Agreement or an Affiliate of a party to this Agreement.
(b) After the Closing, as between Seller and any Post-Closing
Affiliate, on the one hand, and Purchaser, the Purchased Imperial Companies and
any Affiliate of either of them, on the other hand, the rights and obligations
set forth in this Article V will be the sole and exclusive remedies for breach
of this Agreement.
5.3. Indemnification. (a) Subject to Sections 5.1, 5.2 and 5.4, Seller
will indemnify, defend and hold harmless Purchaser and its Affiliates and their
respective directors, officers, partners, shareholders, employees, agents and
representatives (including, without limitation, any predecessor or successor to
any of the foregoing) (such persons and entities, "Purchaser Indemnitees") from
and against any and all Indemnifiable Losses relating to, resulting from or
arising out of:
(i) Any breach by Seller of any of the representations or
warranties of Seller contained in this Agreement;
(ii) Any breach by Seller of any Post-Closing Covenant of
Seller contained in this Agreement;
(iii) Any controlled group liability under (A) Title IV of
ERISA, (B) Section 302 of ERISA, (C) Sections 412 and 4971 of the
Internal Revenue Code of 1986, as amended (the "Code"), (D)
continuation coverage requirements of Sections 601, et seq. of ERISA
and Section 4980B of the Code, and (E) corresponding or similar
provisions of foreign Laws, other than such liabilities that arise
solely out of, or relate solely to, Employees or Former Employees;
(iv) All Indemnifiable Losses incurred by any Purchaser
Indemnitee by reason of any liability or obligation of Seller or any of
its Post-Closing Affiliates that does not solely arise out of the
Business or the Company; and
24
(v) The assertion against Purchaser or any of its Affiliates
of any liability or obligation of Imperial Canada or C&A Canada that is
not a C&A Imperial Canada Assumed Liability.
(b) Subject to Sections 5.1, 5.2 and 5.4, Purchaser will, and, if the
Closing occurs, Imperial, jointly and severally with Purchaser will, indemnify,
defend and hold harmless Seller and each Post-Closing Affiliate and their
respective directors, officers, partners, shareholders, employees, agents and
representatives (including, without limitation, any predecessor or successor to
any of the foregoing) (such persons and entities, "Seller Indemnitees") from and
against any and all Indemnifiable Losses relating to, resulting from or arising
out of:
(i) Any breach by Purchaser of any of the representations or
warranties of Purchaser contained in this Agreement;
(ii) Any breach by Purchaser of any Post-Closing Covenant of
Purchaser contained in this Agreement;
(iii) The Assumed Push-Down Liabilities;
(iv) All Indemnifiable Losses incurred by any Seller
Indemnitee by reason of any liability or obligation of the Company that
solely arises out of the Business or the operations of the Company,
provided, however, that this Section 5.3(b)(iv) will not apply to any
matter for which Purchaser is entitled to indemnification under Section
5.3(a); and
(v) The assertion against Seller or any of its Post-Closing
Affiliates of any C&A Imperial Canada Assumed Liability.
5.4. Defense of Claims. (a) If any Indemnitee receives notice of the
assertion or commencement of any Third Party Claim against such Indemnitee with
respect to which an Indemnifying Party is obligated to provide indemnification
under this Agreement, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than 30
calendar days after receipt of such written notice of such Third Party Claim.
Such notice by the Indemnitee will describe the Third Party Claim in reasonable
detail, will include copies of all material written evidence thereof and will
indicate the estimated amount, if reasonably practicable, of the Indemnifiable
Loss that has been or may be sustained by the Indemnitee. The Indemnifying
Party will have the right to participate in, or, by giving written notice to
the Indemnitee, to assume, the defense of any Third Party Claim at such
Indemnifying Party's own expense and by such
25
Indemnifying Party's own counsel (reasonably satisfactory to the Indemnitee),
and the Indemnitee will cooperate in good faith in such defense.
(b) If, within ten calendar days after giving notice of a Third Party
Claim to an Indemnifying Party pursuant to Section 5.4(a), an Indemnitee
receives written notice from the Indemnifying Party that the Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in the
last sentence of Section 5.4(a), the Indemnifying Party will not be liable for
any legal expenses subsequently incurred by the Indemnitee in connection with
the defense thereof; provided, however, that if the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party Claim
within ten calendar days after receiving written notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps or
if the Indemnifying Party has not undertaken fully to indemnify the Indemnitee
in respect of all Indemnifiable Losses relating to the matter, the Indemnitee
may assume its own defense, and the Indemnifying Party will be liable for all
reasonable costs or expenses paid or incurred in connection therewith. Without
the prior written consent of the Indemnitee, the Indemnifying Party will not
enter into any settlement of any Third Party Claim which would lead to liability
or create any financial or other obligation on the part of the Indemnitee for
which the Indemnitee is not entitled to indemnification hereunder, or which
provides for injunctive or other non-monetary relief applicable to the
Indemnitee or does not include an unconditional release of all Indemnified
Parties. If a firm offer is made to settle a Third Party Claim without leading
to liability or the creation of a financial or other obligation on the part of
the Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder and the Indemnifying Party desires to accept and agree to such offer,
the Indemnifying Party will give written notice to the Indemnitee to that
effect. If the Indemnitee fails to consent to such firm offer within ten
calendar days after its receipt of such notice, the Indemnitee may continue to
contest or defend such Third Party Claim and, in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will not exceed
the amount of such settlement offer.
(c) Any claim by an Indemnitee on account of an Indemnifiable Loss
which does not result from a Third Party Claim (a "Direct Claim") will be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than 30 calendar days after the Indemnitee
becomes aware of such Direct Claim. Such notice by the Indemnitee will describe
the Direct Claim in reasonable detail, will include copies of all material
written evidence thereof and will indicate the estimated amount, if reasonably
practicable, of the
26
Indemnifiable Loss that has been or may be sustained by the Indemnitee. The
Indemnifying Party will have a period of 30 calendar days within which to
respond in writing to such Direct Claim. If the Indemnifying Party does not so
respond within such 30 calendar day period, the Indemnifying Party will be
deemed to have rejected such claim, in which event the Indemnitee will be free
to pursue such remedies as may be available to the Indemnitee on the terms and
subject to the provisions of this Agreement.
(d) A failure to give timely notice or to include any specified
information in any notice as provided in Sections 5.4(a), 5.4(b) or 5.4(c) will
not affect the rights or obligations of any party hereunder except and only to
the extent that, as a result of such failure, any party which was entitled to
receive such notice was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise prejudiced as a result of such
failure.
(e) If the amount of any Indemnifiable Loss, at any time subsequent to
the making of an Indemnity Payment to the Indemnitee, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, or pursuant
to any claim, recovery, settlement, rebate or other payment by or against any
other person or entity, the amount of such reduction, less any costs, expenses,
premiums or taxes incurred in connection therewith, will promptly be repaid by
the Indemnitee to the Indemnifying Party. Upon making any Indemnity Payment the
Indemnifying Party will, to the extent of such Indemnity Payment, be subrogated
to all rights of the Indemnitee against any third person or entity that is not
an Affiliate of the Indemnitee in respect of the Indemnifiable Loss to which the
Indemnity Payment relates; provided, however, that (i) the Indemnifying Party
shall then be in compliance with its obligations under this Agreement in respect
of such Indemnifiable Loss and (ii) until the Indemnitee recovers full payment
of its Indemnifiable Loss, any and all claims of the Indemnifying Party against
any such third person or entity on account of said Indemnity Payment will be
subrogated and subordinated in right of payment to the Indemnitee's rights
against such third person or entity. Without limiting the generality or effect
of any other provision hereof, each such Indemnitee and Indemnifying Party will
duly execute upon request all instruments reasonably necessary to evidence and
perfect the above-described subrogation and subordination rights.
VI. OTHER POST-CLOSING COVENANTS
6.1. Personnel Matters.
6.1.1. Employees and Employee Benefit Plans. (a) Purchaser and
Imperial, jointly and severally, will indemnify Seller and
27
each of its Affiliates for any Indemnifiable Loss relating to, resulting from
or arising out of any change by Purchaser or any of its affiliates, including
the Company, in employee plan benefits or levels of compensation following the
Closing Date from those existing on the Closing Date or any liability or
obligation to any Employee in the event that Purchaser or any of its affiliates,
including the Company, terminates the employment of any person who is an
Employee as of the Closing Date. Subject to Section 6.1.4, effective as of the
Closing Date, Purchaser will, or will cause one of its Affiliates to, offer
employment to each person employed as of the Closing Date by C&A Canada that
would have been employed by Imperial Canada but for the Imperial Canada
Liquidation ("Imperial Canada Employees").
(b) Purchaser agrees that, under any employee benefit plan made
available or established after the Closing, Employees will receive credit for
their years of service with Seller, any Post-Closing Affiliate or the Company
prior to the Closing in determining eligibility and vesting thereunder, and in
determining the amount of benefits under any applicable sick leave, vacation or
severance plan. Purchaser will, or will cause one of its Affiliates to, cover
Employees and Former Employees as of the Closing under a group health plan and
waive any preexisting condition limitations applicable to Employees under any
group health plan made available to Employees to the extent that an Employee's
condition would not have operated as a preexisting condition limitation under
any applicable group health plan prior to the Closing, and Purchaser will, or
will cause one of its Affiliates to, take all action necessary to ensure that
Employees and Former Employees are given full credit for all co-payments and
deductibles incurred under any group health plan for the plan year that includes
the Closing Date.
(c) For purposes of this Agreement, the term "Employee Plan" means each
employee benefit plan as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and each other material
plan, program, agreement or arrangement, whether or not subject to ERISA, that
(i) provides benefits for Employees or Former Employees and (ii) is maintained
by Seller, any Post-Closing Affiliate or the Company or to which Seller, any
Post-Closing Affiliate or the Company contributes or is obligated to contribute,
or under which Seller, any Post-Closing Affiliate or the Company is liable in
respect of Employees or Former Employees. As used in this Agreement, (A) the
term "Employee" means each person (if any) listed or described as such on
Schedule 6.1.1 and each person who is an Imperial Canada Employee or is employed
by the Company as of the Closing(Seller hereby covenanting that no such person
will be so employed who also works for Seller or any Post-Closing Affiliate) and
(B) the term "Former Employee" means any person formerly so employed by the
Company in the conduct of the
28
Business but does not include person who became an employee of Seller (or any
entity that is or was an Affiliate of Seller) following the termination of their
employment with the Company. The terms "Employee" and "Former Employee" will
include, where an Employee Plan provides benefits for beneficiaries or
dependents, the beneficiaries and dependents of an Employee or Former Employee.
6.1.2. Assumption of Obligations. (a) Effective as of the Closing,
Purchaser will cause the Company to assume and be solely responsible for all
liabilities and obligations of any of Seller and each Post-Closing Affiliate
arising at any time and relating to the employment or termination of employment
of any Employee or Former Employee, except to the extent that any of such
liabilities or obligations are expressly retained by any Seller or any
Post-Closing Affiliate pursuant to this Section 6.1. Notwithstanding the
foregoing but subject to the provisions of Section 6.1.1, Seller will retain and
be solely responsible for all liabilities and obligations relating to or arising
out of the deemed termination of any Imperial Canada Employee arising solely by
virtue of the fact that the Imperial Canada Business Transaction is in the form
of a sale to Purchaser of assets rather than the capital stock of Imperial
Canada.
(b) Except as provided in Section 6.1.3, effective as of the Closing,
Purchaser will cause the Company to, assume and be solely responsible for all
liabilities and obligations of Seller or any Post-Closing Affiliate with respect
to Employees and Former Employees under any Employee Plan and Seller and each
Post-Closing Affiliate will be relieved of all liabilities and obligations with
respect to such Employee Plans. The liabilities and obligations assumed by
Purchaser and all of its Affiliates pursuant to this Section 6.1.2(b) include
without limitation (i) any liability or obligation relating to (x) short-term
and long-term disability benefits, (y) group medical benefits, and (z) retiree
health and life insurance benefits; including in each case any claims for
disability, medical, health and life insurance benefits incurred prior to the
Closing; and (ii) any liability or obligation to provide such Employees and
Former Employees and their qualified beneficiaries with continuation coverage
(within the meaning of Section 4980B(f)(2) of the Code) under each Employee Plan
that is a group health plan, and any liability or obligation relating to such
coverage, including without limitation any liability or obligation to provide
such Employees and Former Employees with the notice required under Section
4980B(f)(6) of the Code with respect to qualifying events that occur as a result
of the Transfer of the Assets. Notwithstanding the foregoing, neither Purchaser
nor any of its Affiliates will assume any liabilities or obligations with
respect to Seller's cafeteria plan arrangement arising out of any
29
failure of Seller to set forth the terms of such plan in a written plan
document.
(c) Purchaser and Seller will, and Seller will cause C&A Canada to,
take all steps (i) as are necessary (including obtaining all required
governmental or third party consents) to effect the assumption by Purchaser or
one of Purchaser's Affiliates of the Employee Benefit Plans (other than the
plans referred to in Section 6.1.3) maintained or sponsored by Imperial Canada
prior to the Imperial Canada Liquidation and the collective bargaining
agreements covering Employees employed by Imperial Canada prior to the Imperial
Canada Liquidation and (ii) as are reasonably calculated to ensure that
Purchaser or its Affiliate assuming such plans and collective bargaining
agreements do not incur any obligations or liabilities with respect to such
plans and agreements that are greater than, or in addition to, C&A Canada's
obligations or liabilities as successor to Imperial Canada's obligations or
liabilities under the terms of such plans and agreements as of the Closing Date.
6.1.3. Retirement Plans. (a) As of the Closing, Seller will cause
Employees to fully vest in their accrued benefits under the Xxxxxxx & Xxxxxx
Corporation Employees' Profit Sharing and Personal Savings Plan (the "Savings
Plan") and the Xxxxxxx & Xxxxxx Corporation Employees' Pension Account Plan (the
"Pension Plan" and, together with the Savings Plan, the "Retirement Plans").
Except as provided in Section 6.1.3(b), neither Purchaser nor any of its
Affiliates will assume any liabilities or obligations with respect to the
Retirement Plans, which will be retained by Seller. As soon as practicable after
the Closing, to the extent permitted by Law and the terms of the Pension Plan,
Seller will permit distributions to Employees of their accrued benefits under
the Pension Plan. Purchaser will, or will cause one of its Affiliates to, take
all action necessary to cause one or more qualified retirement plans maintained
by Purchaser or any one of its Affiliates to accept an eligible rollover
distribution (within the meaning of Section 402(f)(2) of the Code) of the
amounts distributed from the Pension Plan to each Employee who shall become an
employee of Purchaser's affiliated group and a rollover contribution (within
the meaning of Section 408(d)(3) of the Code) with respect to such amounts. To
the extent distributions from the Pension Plan are not permitted under Law,
Purchaser and Seller will take such mutually agreed upon action with respect
to Employees' benefits, whether that be a spin-off, trustee-to-trustee transfer
to a plan maintained by Purchaser or any of its Affiliates, or retention in the
Pension Plan for eventual distribution pursuant to the terms of such plan. All
distributions under the Pension Plan will satisfy all requirements for
funding as are required by Law giving effect to the transactions contemplated
by this Agreement. Seller represents and warrants that distributions to
Employees as
30
contemplated by this Section 6.1.3 are permitted by the terms of the Pension
Plan.
(b) As soon as reasonably practicable following the Closing, Seller
will cause the trustee of the Savings Plan to transfer the account balances of
Employees and Former Employees to the trustee of a qualified defined
contribution plan maintained by Purchaser or any one of its Affiliates
("Purchaser's Plan"). Such transferred account balances will be made in cash
except to the extent any portion of an account balance represents a participant
loan, in which case the participant's loan obligation will be transferred to the
trustee of Purchaser's Plan. The assets transferred from the Savings Plan to
Purchaser's Plan will be equal to the account balances of the transferring
Employees and Former Employees as of the valuation date immediately preceding
the date of transfer. No transfer of assets to Purchaser's Plan will occur until
Purchaser and Seller have received such assurances as are reasonable that the
applicable provisions of the Code have been satisfied. Purchaser will take such
action as may be necessary to cause Purchaser's Plan to provide each such
Employee and Former Employee after the transfer with an initial account balance
that is at least equal to the account balance transferred with respect to such
Employee and Former Employee from the Savings Plan, and to provide all benefits
protected by law, including optional forms of benefit.
(c) Purchaser and Seller will, and Seller will cause Imperial Canada
to, take all steps as are necessary or reasonably requested by Purchaser, to
transfer the sponsorship of the Canadian Pension Plan to Purchaser, or one of
Purchaser's Affiliates (including obtaining all required governmental and third
party consents). To the extent such a transfer is not permitted by the terms of
the Canadian Pension Plan or applicable Law, Seller and Purchaser will permit
distributions or make other arrangements in the same manner as contemplated with
respect to Pension Plan by the third and fourth sentences of Section 6.1.3(a),
subject to applicable law.
6.1.4. Employment and Plan Amendments or Terminations. Except as
provided in Section 6.1.1, no provision of this Section 6.1 will limit
Purchaser's or any of its Affiliates' right and authority to discontinue,
suspend or modify the employment of any Employee or benefits provided to any or
all Employees or Former Employees after the Closing; provided, however, that in
the event of any such discontinuance, suspension or modification Purchaser will,
or will cause one of its Affiliates to, remain liable for all Employee Plan and
other employee benefit liabilities or obligations assumed pursuant to this
Agreement and will indemnify, defend and hold harmless Seller, each Post-Closing
Affiliate and their respective directors, officers, partners,
31
employees, agents and representatives (including without limitation any
predecessor or successor to any of the foregoing) from and against any and all
Indemnifiable Losses they may suffer or incur as a result thereof. Neither
Seller nor any Post-Closing Affiliate will be liable for any liability or
obligation that may arise from the amendment or termination by Purchaser or any
of its Affiliates of any employee benefit plan assumed, established or continued
by Purchaser or any of its Affiliates under this Section 6.1.
6.1.5. Transitional Matters. Each of Seller and Purchaser will use its
respective reasonable efforts to cooperate to (a) transfer to Purchaser or any
of its Affiliates any insurance and administrative services contracts that
Purchaser wishes to continue with respect to any Employee Plan that Purchaser or
any of its Affiliates is assuming or continuing pursuant to this Agreement and
(b) cause any insurance carrier administering workers' compensation and other
employee benefit liabilities or obligations assumed by Purchaser or any of its
Affiliates to deal directly with Purchaser or such Affiliate.
6.1.6. Employee Information. Each of Seller and Purchaser will provide
the other, in a timely manner, any information with respect to any Employee's or
Former Employee's employment with and compensation from Seller, any Post-Closing
Affiliate or Purchaser or any of its Affiliates, as the case may be, or rights
or benefits under any employee benefit plan which the other party hereto may
reasonably request.
6.2. General Post-Closing Matters.
6.2.1. Post-Closing Notifications. Purchaser and Seller will, and each
will cause its respective Affiliates to, comply with any post-Closing
notification or other requirements, to the extent then applicable to such party,
of any antitrust, trade competition, investment, control or other Law of any
Governmental Entity having jurisdiction over the Business.
6.2.2. Access. (a) On the Closing Date, or as soon thereafter as
practicable, and in no event later than 30 calendar days after the Closing Date,
Seller will deliver or cause to be delivered to Purchaser all original
agreements, documents, books, records, including without limitation Employee
records and records relating to obligations of the Company to Employees under
Employee Plans retained or assumed by Purchaser or the Company hereunder, and
files primarily relating to the Business or the Company (collectively,
"Records") in the possession of Seller or any Post-Closing Affiliate to the
extent not in the possession of the Company or Purchaser, subject to the
following exceptions:
32
(i) Purchaser recognizes that certain Records may contain only
incidental information relating to the Company or may primarily relate
to Seller or any Post-Closing Affiliate, or the businesses of Seller or
any Post-Closing Affiliate other than the Business, and Seller and its
Post-Closing Affiliates may retain such Records and Seller may deliver
appropriately excised copies of such Records; and
(ii) Seller and each Post-Closing Affiliate may retain any Tax
Returns so long as true and complete copies of the portions thereof
relating to the Business are delivered to Purchaser at or before the
Closing or made available to Purchaser following the Closing.
After the Closing, each party will, and will cause its Affiliates to, retain all
Records (except those Records referred to in Section 6.2.2(a)(i) and (ii))
required to be retained pursuant to obligations imposed by any applicable Law.
Except as provided in the immediately preceding sentence, each party will, and
will cause its Affiliates to, retain all Records for a period of seven years
after the Closing Date. After the end of such seven-year period, before
disposing, or permitting its Affiliates to dispose, of any such Records, each
party will, and will cause its Affiliates to, give notice to such effect to the
other party and give the other party at its cost and expense an opportunity to
remove and retain all or any part of such Records as the other party may elect.
(b) After the Closing, upon reasonable notice, each party hereto will
give, or cause to be given, to the representatives, employees, counsel and
accountants of the other parties hereto access, during normal business hours, to
Records relating to periods prior to or including the Closing, and will permit
such persons to examine and copy such Records to the extent reasonably requested
by the other party in connection with tax and financial reporting matters
(including, without limitation, any Tax Return relating to state or local real
property transfer or gains taxes), audits, legal proceedings, governmental
investigations and other business purposes and to make inquiries relating
thereto of the relevant personnel; provided, however, that nothing herein will
obligate any party to take actions that would unreasonably disrupt the normal
course of its business, violate the terms of any contract to which it is a party
or to which it or any of its assets is subject or grant access to any of its
proprietary, confidential or classified information (except to the extent
required for purposes of defending or prosecuting any third party lawsuits or
administrative or other adjudicative proceedings ("Legal Proceedings")). Each
party will, and will cause its respective Affiliates controlled by it to,
provide or make available to the other and the other's respective Affiliates
access to employees of Purchaser and the Company for the purposes
33
of, and with the limitations described in, the preceding sentence (including
without limitation for the purpose of providing, and preparing to provide,
testimony in connection with third party Legal Proceedings).
6.2.3. Certain Tax Matters. (a) Seller will prepare and file or cause
to be prepared and filed all Income Tax Returns for the Purchased Imperial
Companies required to be filed with the appropriate foreign, United States,
state and local taxing authorities for any taxable period that ends on or before
the Closing Date (each a "Pre-Closing Tax Period"). Seller will prepare and, if
required to do so by applicable Law, deliver to Purchaser for signing and filing
any Income Tax Returns of the Purchased Imperial Companies with respect to any
Pre-Closing Tax Period (including any short period) that have not been filed
prior to the Closing Date. Seller will pay all Taxes required to be paid with
respect to such Tax Returns. Seller will prepare and file or cause to be
prepared and filed all Income Tax Returns for Imperial Canada and will pay all
Income Taxes required to be paid with respect to such Tax Returns.
(b) Except as otherwise provided in Section 6.2.3(a) or Section
6.2.3(c), Purchaser will prepare and file or cause to be prepared and filed all
Tax Returns for the Purchased Imperial Companies that are required to be filed
with the appropriate United States, state, local and foreign taxing authorities
for all periods as to which such Tax Returns are due after the Closing Date
(taking into account all extensions of due dates). Subject to Section 6.2.3(r)
and Section 6.2.3(v), Purchaser will pay or cause to be paid all Taxes required
to be paid with respect to such Tax Returns.
(c) With respect to any taxable period that would otherwise include but
not end on the Closing Date, to the extent permissible pursuant to applicable
Law, Seller will, and Purchaser will cause the Purchased Imperial Companies and
Imperial Canada to, insofar as possible, (i) take all steps as are or may be
reasonably necessary, including without limitation the filing of elections or
returns with applicable taxing authorities, to cause such period to end on the
Closing Date or (ii) if clause (i) is inapplicable, report (insofar as possible)
the operations of the Purchased Imperial Companies only for the portion of such
period ending on the Closing Date in a combined, consolidated or unitary Tax
Return filed by Seller or a Post-Closing Affiliate, and report the operations of
Imperial Canada only for the portion of such period ending at the close of
business on the Closing Date, notwithstanding that such taxable period does not
end on the Closing Date. If clause (ii) applies to a taxable period of the
Purchased Imperial Companies, the portion of such taxable period included in
such return filed by Seller will be treated as a Pre-Closing Tax Period
described in
34
Section 6.2.3(a) and Purchaser will not be responsible for filing such return
for such portion of such year pursuant to Section 6.2.3(b), provided that the
foregoing will not relieve Purchaser of its obligation under Section 6.2.3(b) to
file a Tax Return reporting the operations of the Purchased Imperial Companies
for the portion of such taxable period beginning after the Closing Date. If it
is not possible for a Tax Return to be filed for Non-Income Taxes that reports
the operations of Imperial Canada only for the period ending at the close of
business on the Closing Date, the parties shall cooperate in preparing a return
for the whole taxable period.
(d) Purchaser will prepare and deliver, or will cause to be prepared
and delivered, within 60 calendar days of receipt of Seller's request therefor,
to Seller, Seller's standard international, federal and state Income Tax Return
data gathering packages relating to the Purchased Imperial Companies, and
Seller's standard Tax Return data gathering packages relating to the Non-Income
Taxes of Imperial Canada (if appropriate pursuant to Section 6.2.3(c)). Such
packages will be prepared on a basis consistent with the prior year's Income Tax
or Non-Income Tax (if appropriate) Returns. In addition to providing such
packages to Seller, Purchaser will promptly provide or cause to be provided to
Seller such other information as Seller may reasonably request in order for the
operations of the Company to be properly reported in such Income Tax or
Non-Income Tax(if appropriate) Returns.
(e) Seller will indemnify, defend and hold harmless Purchaser and each
of its Affiliates from and against any and all liability for any taxable period
as a result of Treasury Regulation Section 1.1502-6 (or any comparable provision
of state, local or foreign law) for Income Taxes of any corporation, other than
the Purchased Imperial Companies which is or has been affiliated with Seller or
Xxxxxxx & Xxxxxx Corporation, a Delaware corporation ("C&A Corp.").
(f) Purchaser is eligible to and will make a timely and effective
election under Section 338(g) of the Code (and any comparable provision of state
or local law) with respect to the purchase of the Imperial Shares hereunder.
Both Seller and Purchaser are eligible to, and Purchaser will make and Seller
will cause C&A Corp. to make, a timely and effective election under Section
338(h)(10) of the Code (and any comparable provision of state or local law) with
respect to such purchase (the "Section 338(h)(10) Election").
(g) At the Closing, Purchaser will deliver to Seller a completed
Internal Revenue Service Form 8023A, and the required schedules thereto ("Form
8023A"), providing for the Section 338(h)(10) Election. Provided that the
information on such Form
35
8023A is, in the reasonable determination of Seller, correct and complete in all
material respects, Seller will, at the Closing, execute and deliver such Form
8023A to Purchaser. If any changes or supplements are required to the Form 8023A
as a result of any information that is first available after the Closing, Seller
and Purchaser will promptly agree upon and make such changes. Purchaser and
Seller (or C&A Corp.) will timely file the Form 8023A, and any required
supplements thereto, and will provide written evidence to the other that it has
done so.
(h) Purchaser and Seller agree that neither of them will take, or
permit their Affiliates to take, any action to modify or revoke the elections
contained in or the content of any Form 8023A without the express written
consent of the other party.
(i) Seller will pay and indemnify and hold Purchaser and Imperial
harmless from (i) any and all Taxes arising from the Section 338(h)(10) Election
and (ii) any Tax liability, cost or expense arising out of the failure to pay
such Tax. Seller will also pay any state or local Tax (and indemnify and hold
Purchaser and the Purchased Imperial Companies harmless against any Tax
liability, cost or expense arising out of any failure to pay such Tax)
attributable to any election under state or local law comparable to the election
available under Section 338(g) of the Code (or which results from the making of
an election under Section 338(g) of the Code) with respect to Purchaser's
acquisition of the Purchased Imperial Companies.
(j) Purchaser and Seller agree to report transactions under this
Agreement consistent with the Section 338(h)(10) Election and will take no
position contrary thereto unless required to do so pursuant to a final
determination by any Taxing authority or judicial proceeding.
(k) Seller will cause any tax sharing agreements between the Company
and Seller or any other Post-Closing Affiliate to be terminated, effective as of
the Closing Date, to the extent that any such agreement relates to the Company.
(l) Purchaser and Seller agree that for purposes of all Tax Returns and
other appropriate documents, (i) $10 million of the Purchase Price will be
allocated to the Imperial Canada Business Acquisition, (ii) the balance of the
Purchase Price and the liabilities of the Purchased Imperial Companies (plus
other relevant items) will be allocated to the assets of the Purchased Imperial
Companies (with the Option deemed for this purpose to be valued at $6 million)
in a manner consistent with the purchase price allocation to be determined by
the parties in accordance with Treasury Regulation Section 1.338(h)(10)-1, and
(iii) the sum of $10 million and the C&A Imperial Assumed Liabilities will be
allocated among the C&A Imperial Canada Assets as follows:
36
(A) Purchaser will propose such an allocation and (B) if Seller disagrees in
good faith, after consultation with its Canadian tax advisors, with Purchaser's
proposed allocation, Purchaser, Seller and their respective Canadian tax
advisors will negotiate to determine such an allocation based on the principle
that Purchaser's proposed allocation will be used to the maximum extent
permitted by Canadian tax law. Such allocation as finally determined will be
evidenced by a writing signed by Seller and Purchaser. The parties agree that,
if requested by Seller, the parties will make any election under Canadian tax
law necessary to permit C&A Canada or Imperial Canada to treat any loss on
accounts receivable as an ordinary loss unless Purchaser determines in its sole
discretion that such election could have a negative impact on Purchaser or any
of its Affiliates.
(m) On or before the Closing Date, Seller agrees to provide Purchaser
and the Company with all required clearance certificates or similar documents
that may be required by any state, local or other Taxing authority in order, to
the extent allowed, to relieve Purchaser of any obligation to withhold any
portion of the Purchase Price. If necessary to avoid sales or use Taxes, Seller
will, to the extent allowed, provide Purchaser with all appropriate state and
local resale certificates.
(n) Seller will furnish to Purchaser on or before the Closing Date a
certification of Seller's non-foreign status as set forth in Treasury Regulation
Section 1.1445-2(b).
(o) Seller, Purchaser and the Company will reasonably cooperate with
each other in connection with the preparation and filing of all Tax Returns or
any audit examinations for any period, including without limitation the timely
furnishing or making available of records, books of account and any other
information necessary for the preparation of the Tax Returns.
(p) (i) With respect to any Income Tax Return of the Purchased Imperial
Companies for a Pre-Closing Tax Period and any Income Tax Return of Imperial
Canada for any tax period, Seller and its duly appointed representatives will
have the sole right, at its or their expense, to supervise or otherwise
coordinate any examination process and to negotiate, resolve, settle or contest
any asserted Tax deficiencies or assert and prosecute any claims for refund;
notwithstanding the foregoing, without the express written consent of Purchaser
or Imperial, which consent will not be unreasonably withheld or delayed, Seller
will not file any amended Tax Return, settle any Tax claim or assessment, or
surrender any right to claim a refund of Tax, if such action could have the
effect of increasing the Tax liabilities of the Purchased Imperial Companies or
Purchaser.
37
(ii) With respect to any other Tax Return of C&A Imperial
Canada or the Purchased Imperial Companies, Purchaser, the Purchased Imperial
Companies and their duly appointed representatives will have the sole right, at
the expense of Purchaser or the Purchased Imperial Companies, to supervise or
otherwise coordinate any examination process and to negotiate, resolve, settle
or contest any asserted Tax deficiencies or assert and prosecute any claims for
refund; notwithstanding the foregoing, without the express written consent of
Seller, which consent will not be unreasonably withheld or delayed, neither
Purchaser nor the Purchased Imperial Companies will file any amended Tax Return,
settle any Tax claim or assessment, or surrender any right to claim a refund of
Tax, if such action could have the effect of increasing the Tax liabilities of
Seller or any Post-Closing Affiliate.
(iii) Each party hereto will notify the other within 30
calendar days (unless action is required sooner, then as soon as practicable) of
the assertion of any claim or the commencement of any suit, action, proceeding,
investigation or audit with respect to the operations of the Company that is the
subject of this Section 6.2.3(p), and will provide the other copies (subject to
deletion of nonrelevant information) of all correspondence relating to such
contest.
(q) (i) "Income Tax" or "Income Taxes" means all Taxes imposed on,
measured by or which require reference to, net or taxable income (including any
income, franchise, estimated, alternative, minimum, add-on minimum or other Tax
imposed on, measured by or which require reference to, net or taxable income),
together with interest and penalties thereon and estimated payments thereof,
(ii) "Taxes" means all federal, state, local, foreign and other taxes (including
without limitation income, profits, premium, estimated, excise, sales, use,
occupancy, gross receipts, franchise, ad valorem, severance, capital levy,
production, transfer, withholding, social security, employment, unemployment
compensation, payroll-related and property taxes, alternative minimum, estimated
stamp, value added, windfall profits, import duties and other governmental
charges and assessments), whether or not measured in whole or in part by net
income, and including deficiencies, interest, additions to tax or additional
amounts, interest and penalties with respect thereto (such term shall also
include any "Taxes" as to which the Company is liable as a successor or
transferee or pursuant to a contractual obligation), (iii) "Non-Income Taxes"
means all Taxes that are not Income Taxes, and (iv) "Tax Returns" means all
returns, reports or information returns or statements relating to Taxes as are
required to be filed with any United States, state, local and foreign taxing
authorities.
38
(r) Seller will defend, indemnify and hold harmless Purchaser and the
Purchased Imperial Companies and their respective directors, officers,
employees, agents and representatives (including, without limitation, any
predecessor or successor to any of the foregoing) from and against any breach of
a covenant contained in this Section 6.2.3 and against the following Taxes and,
except as otherwise provided in Section 6.2.3(s), against any loss, damage,
liability, or expense, including reasonable fees for attorneys and consultants,
incurred in contesting or otherwise in connection with any such Taxes and in
enforcing their rights under this Section 6.2.3: (i) all Income Taxes imposed on
the Purchased Imperial Companies with respect to taxable periods ending before
or on the Closing Date, (ii) all Income Taxes of Imperial Canada with respect to
any Tax period, (iii) with respect to taxable periods beginning before the
Closing Date and ending after the Closing Date, Income Taxes imposed on the
Purchased Imperial Companies that are allocable, pursuant to Section 6.2.3(s),
to the portion of such period ending on the Closing Date, (iv) all Non-Income
Taxes of Imperial Canada that arise or accrue after the close of business on the
Closing Date, and (v) all Canadian Non-Income Taxes arising out of or related to
the pre-Closing transfer pricing practices of Seller and its Affiliates.
(s) Purchaser will, and, if the Closing occurs, Imperial jointly and
severally with Purchaser will, indemnify, defend and hold harmless Seller, each
Post-Closing Affiliate and their respective directors, officers, partners,
employees, agents and representatives (including, without limitation, any
predecessor to any of the foregoing) from and against (i) all Income Taxes
imposed on the Purchased Imperial Companies with respect to taxable periods
beginning after the Closing Date and, with respect to taxable periods beginning
before the Closing Date and ending after the Closing Date, Income Taxes imposed
on the Purchased Imperial Companies that are allocable, pursuant to Section
6.2.3(t), to the portion of such period beginning after the Closing Date, (ii)
all Income Taxes relating to or arising out of the operation by Purchaser or any
of its Affiliates of the business of Imperial Canada after the Closing Date,
(iii) all Non-Income Taxes of the Purchased Imperial Companies with respect to
any Tax period and Non-Income Taxes of Imperial Canada that arise or accrue
through the close of business on the Closing Date, in each case other than sales
and transfer Taxes which are Seller's responsibility pursuant to Section
6.2.3(v) and Taxes which are Seller's responsibility pursuant to Section
6.2.3(r)(v), and (iv) any loss, damage, liability, or expense, including
reasonable fees for attorneys and consultants, incurred in contesting or
otherwise in connection with any such Taxes and in enforcing their rights under
this Section 6.2.3.
39
(t) In the case of Income Taxes of the Purchased Imperial Companies and
Non-Income Taxes of Imperial Canada that are payable with respect to a taxable
period that begins before the Closing Date and ends after the Closing Date, the
portion of any such Tax that is allocable to the portion of the period ending on
the Closing Date or, in the case of Non-Income Taxes of Imperial Canada, at the
close of business on the Closing Date, will be deemed equal to the amount that
would be payable if the taxable year ended immediately prior to the Closing
Date (including the taxable years of organizations in which the Company owns a
partnership interest or equity interest) (except that, solely for purposes of
determining the marginal tax rate applicable to income or receipts during such
period in a jurisdiction in which such tax rate depends upon the level of income
or receipts, annualized income or receipts may be taken into account if
appropriate for an equitable sharing of such Taxes). The portion of Tax
allocable to the portion of the period ending on the Closing Date shall be
computed on a per diem basis in the case of Taxes that are neither (x) Income
Taxes nor (y) imposed in connection with any sale or other transfer or
assignment of property, real or personal, tangible or intangible.
(u) Any Tax refund (or comparable benefit resulting from a reduction in
Tax liability) for a period ending on or before the Closing Date arising out of
the carryback of a loss or credit incurred by the Purchased Imperial Companies
in a taxable period (or allocable portion thereof) ending after the Closing Date
will be the property of Purchaser and, if received by Seller or any Post-Closing
Affiliate will be paid over promptly to Purchaser (including any interest
received from or credited thereon by the applicable taxing authority). Any other
Income Tax refund for a period ending on or before the Closing Date or for the
allocable portion of a period including the Closing Date will be the property of
Seller. Purchaser will pay or cause the Company to pay to Seller all refunds or
credits of Taxes (including any interest received from or credited thereon by
the applicable taxing authority) received by Purchaser or any of its Affiliates
after the Closing Date and attributable to Income Taxes paid by the Purchased
Imperial Companies or any other Post-Closing Affiliate with respect to a
Pre-Closing Tax Period or by Seller. Such payment will be made to Seller
promptly after receipt of any such refund from, or allowance of such credit by,
the relevant taxing authority. In all other events, any Tax refund will be the
property of the Purchased Imperial Companies and paid to the Purchased Imperial
Companies.
(v) Seller and Purchaser will each pay one-half of all sales and
transfer Taxes, if any, which may be payable with respect to the consummation of
the transactions contemplated by this Agreement, including any and all sales,
transfer, recording and other Taxes arising from the Imperial Canada Business
40
Acquisition being effected in the form of a purchase and sale of assets rather
than a stock acquisition, and to the extent any exemptions from such Taxes are
available Seller and Purchaser will cooperate to prepare any certificates or
other documents necessary to claim such exemptions.
6.2.4. Insurance. With respect to any loss, liability or damage
suffered by Purchased Imperial Companies after the Closing Date relating to,
resulting from or arising out of the conduct of the Business prior to the
Closing Date or included in the C&A Imperial Canada Assumed Liabilities, for
which Seller or any Post-Closing Affiliate would be entitled to assert, or cause
any other Person to assert, a claim for recovery under any policy of insurance
maintained by Seller or a Post-Closing Affiliate or for the benefit of Seller or
the Company, in respect of the Business, products, employees or the Company
("Insurance"), at the request of Purchaser, Seller will use its reasonable
efforts to assert, or to assist Purchaser or the Purchased Imperial Companies to
assert, one or more claims under such Insurance covering such loss, liability or
damage if Purchaser or any of the Purchased Imperial Companies is not itself
entitled to assert such claim, provided that all of Seller's and any
Post-Closing Affiliate's out-of-pocket costs and expenses incurred in connection
with the foregoing, including without limitation any liability, obligation or
expense referred to in the last sentence of this Section 6.2.4, are promptly
reimbursed by Purchaser. Seller will be deemed, solely for the purpose of
asserting claims for Insurance pursuant to the immediately preceding sentence,
to have assumed or retained liability for such loss, liability or damage to the
extent of the policy limits of the applicable policy of Insurance; provided,
however, that (a) Purchaser's obligations under Section 5.3(b) will not be
affected by the provisions of this Section 6.2.4 and (b) with respect to any
claim made at the request of Purchaser or the Purchased Imperial Companies by
Seller or any Seller Affiliate under any Insurance pursuant to this Section
6.2.4, Purchaser will indemnify, defend and hold harmless Seller and each
Post-Closing Affiliate and their respective directors, officers, partners,
employees, agents and representatives (including without limitation any
predecessor or successor of any of the foregoing) from and against any
Indemnifiable Loss relating to, resulting from or arising out of any deductible,
policy limit, obligation, indemnity, reinsurance due to the liquidation or
insolvency of the reinsurer, self-insurance retention, premium adjustments
resulting from claims made at the request of Purchaser or the Purchased Imperial
Companies under this Section 6.2.4 or other like arrangement by which any such
entity retains any liability or obligation under any such policy of Insurance or
otherwise.
6.2.5. Receivables. As of the Closing, Seller will terminate any
agreements to which Imperial or any of the
41
Subsidiaries is a party that is related to the accounts receivables facility
operated by a finance subsidiary of Seller for its affiliates and Seller will
indemnify, defend and hold harmless the Company or Purchaser for any
Indemnifiable Loss arising out of the Company's prior participation in this
facility or performance under such agreements, provided, however, that the
foregoing indemnity obligation will not apply to any loss on the sale of
receivables prior to the Closing Date or the collection (or failure to collect)
the receivables. Seller hereby agrees that all monies (regardless of any prior
discount or loss on sale) collected after the Closing by Seller or any
Post-Closing Affiliate with respect to receivables attributable to the Company
will be paid to the Company within three business days of Seller's or
Post-Closing Affiliate's receipt thereof.
6.2.6. Surety Obligations. (a) From and after the Closing, Purchaser
will, and will cause the Company to, use reasonable efforts to obtain and have
issued replacements for any guarantee, performance bond, letter of credit or
other agreement guaranteeing or securing liabilities and obligations (including
without limitation in respect of operating or other leases and the surety bonds
listed on Schedule 6.2.6) (collectively, "Surety Obligations") relating to the
Business or the Company under which Seller or any Post-Closing Affiliate has any
liability to a third party and to obtain any amendments, novations, releases,
waivers, consents or approvals necessary to release Seller and each Post-Closing
Affiliate to such Surety Obligations from all liability thereunder relating to
the Business or the Company, in each case as promptly as practicable. In the
event and for the period that Purchaser and the Company fail to obtain any such
replacement, amendment, novation, release, waiver, consent or approval, without
limiting the generality of Section 5.3(b), Purchaser will indemnify, defend, and
hold harmless Seller and each Post-Closing Affiliate and their respective
directors, officers, partners, employees, agents and representatives (including
without limitation the predecessors or successors of any of the foregoing) from
and against any Indemnifiable Loss relating to, resulting from or arising out of
any such failure by Purchaser or the Company.
(b) From and after the Closing, Seller will use reasonable
efforts to obtain and have issued replacements for any Surety Obligations
relating to any business other than the Business or any Post-Closing Affiliate
or under which the Company has any liability to a third party and to obtain any
amendments, novations, releases, waivers, consents or approvals necessary to
release the Company from all liability thereunder relating to any business other
than the Business or any Post-Closing Affiliate, in each case as promptly as
practicable. In the event and for the period that Seller fails to obtain any
such replacement, amendment, novation, release, waiver, consent or approval,
42
without limiting the generality of Section 5.3(a), Seller will indemnify,
defend, and hold harmless the Company and its respective Affiliates, directors,
officers, partners, employees, agents and representatives (including without
limitation the predecessors or successors of any of the foregoing) from and
against any Indemnifiable Loss relating to, resulting from or arising out of any
such failure by Seller.
6.2.7. Assumed Push-Down Liabilities. Without further action,
effective as of the Closing, the Company will assume the liabilities of Seller
listed on Schedule 6.2.7 (the "Assumed Push-Down Liabilities") but only to the
extent related exclusively to the Business.
6.2.8. 1994 Financial Statements. Seller will deliver as promptly as
practicable after Purchaser's written request, audited consolidated balance
sheets of the Company as of January 28, 1995 and the related audited
consolidated statements of stockholders' equity, operations and cash flows for
the fiscal year then ended, accompanied by the accountant's report thereon.
6.2.9. Certain Contracts. (a) Notwithstanding anything to the contrary
in this Agreement, to the extent that (i) any Contract that is a C&A Imperial
Canada Asset (an "Assumed Contract") is not capable of being assigned to
Purchaser in connection with the Closing without the consent or waiver of a
third Person (including without limitation a Governmental Entity) which has not
been obtained on or before the Closing Date, or (ii) any of the transactions
contemplated by this Agreement constituted or would constitute a breach of any
Assumed Contract, or a violation of any Law or Order or other governmental
edict, Seller will be deemed not to have Transferred, and will not be obligated
to Transfer, to Purchaser any direct or indirect right, title or interest in or
to any such Contract without first having obtained all necessary consents and
waivers. Seller will use reasonable efforts to obtain such consents and waivers
as may be necessary to cure such potential breach or violation; provided,
however, but without affecting Seller's obligations under Section 5.3, Seller
will not be obligated to pay any consideration therefor to the party from whom
the consent or waiver is requested. Purchaser agrees that neither Seller nor any
of its Affiliates will have any liability whatsoever arising out of or relating
to the failure to obtain any consents or waivers that may have been or may be
required in connection with the transactions contemplated by this Agreement or
because of a breach of, default under or termination of any Assumed Contract as
a result thereof.
(b) To the extent that the consents and waivers referred to in
the immediately preceding paragraph are not obtained, or until the breaches or
violations referred to in the
43
immediately preceding paragraph are resolved, Seller will use reasonable
efforts, (i) with reasonable costs of Purchaser and its Affiliates related
thereto to be promptly reimbursed by Seller, to provide to Purchaser, at its
request, the benefits of any such Contract and cooperate in any reasonable and
lawful arrangement designed to provide such benefits to Purchaser, without
incurring any financial obligation to Seller or any of its Affiliates, and (ii)
with reasonable costs of Seller and its Affiliates related thereto to be
promptly reimbursed by Purchaser, to enforce, at the request and for the account
of Purchaser, any rights of Seller arising from any such Contract against the
other party or parties to such Contract (including the right to elect to
terminate in accordance with the terms thereof upon the advice of Purchaser).
Notwithstanding any provision to the contrary contained herein, Purchaser will
perform or pay for the benefit of the other party or parties thereto the
obligations of Seller under or in connection with any such Contract and will
indemnify and hold Seller and its Affiliates harmless from any Indemnifiable
Losses relating to, resulting from or arising out of any failure by Purchaser so
to perform or pay. Purchaser will comply with all reasonable requests of Seller
for cooperation in connection with the performance of Seller's obligations under
this Section 6.2.9.
VII. MISCELLANEOUS PROVISIONS
7.1. Notices. All notices and other communications required or
permitted hereunder will be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been duly given when delivered in person or by
a nationally recognized overnight courier service or when dispatched during
normal business hours by electronic facsimile transfer (confirmed in writing by
mail simultaneously dispatched) to the appropriate party at the address
specified below:
(a) If to Purchaser, to:
BDPI Holdings Corporation
c/o The Blackstone Group
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxxxxx
Senior Managing Director
44
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
(b) If to Seller, to:
Xxxxxxx & Xxxxxx Products Co.
000 XxXxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Corporate Counsel
with a copy to:
Xxxxxxx & Xxxxxx Products Co.
0000 Xxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxx, Esq.
Executive Vice President - Law
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
7.2. Expenses. Except as otherwise expressly provided herein, (a)
Seller will pay or cause to be paid all expenses incurred by Seller incident to
this Agreement and in preparing to consummate and consummating the transactions
provided for herein and (b) Purchaser will pay any expenses incurred by it
incident to this Agreement and in preparing to consummate and consummating the
transactions provided for herein, including without limitation the fees and
expenses of any broker, finder, financial advisor or similar person engaged by
such party.
7.3. Successors and Assigns. (a) Subject to Section 7.3(b), this
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, but will not be
assignable or delegatable by any party without the prior written consent of the
other parties hereto. Notwithstanding the foregoing sentence, Purchaser may
assign any of its rights or obligations under this Agreement to any lender to
Purchaser or any subsidiary of Purchaser as security for obligations to such
lender in respect of the financing arrangements entered into in connection with
the
45
transactions contemplated hereby and any refinancings, extensions, refundings or
renewals thereof, or to any subsidiary of Purchaser or BDPH or any entity of
which Purchaser is a subsidiary, provided however, that no assignment hereunder
shall in any way affect Purchaser's or the Company's obligations or liabilities
under this Agreement.
(b) Nothing in this Agreement is intended to limit Purchaser's ability
to sell or to Transfer the Shares following the Closing Date provided that such
sale or Transfer will not result in a termination of any of Purchaser's
covenants, duties, responsibilities, obligations or liabilities hereunder,
including without limitation under Sections 3.1(b) and Articles V and VI, unless
the person or entity acquiring the Shares pursuant to such sale or Transfer
assumes all of such covenants, duties, responsibilities, obligations and
liabilities in a written instrument reasonably satisfactory to Seller.
7.4. Waiver. Either Purchaser or Seller by written notice to the
other may (a) extend the time for performance of any of the obligations or other
actions of the other under this Agreement, (b) waive any inaccuracies in the
representations or warranties of the other contained in this Agreement, (c)
waive compliance with any of the conditions or covenants of the other contained
in this Agreement, or (d) waive or modify performance of any of the obligations
of the other under this Agreement; provided, however, that neither Purchaser nor
Seller may, without the prior written consent of the other, make or grant such
extension of time, waiver of inaccuracies or compliance or waiver or
modification of performance with respect to its (or any of its Affiliates')
representations, warranties, conditions or covenants hereunder. Except as
provided in the immediately preceding sentence, no action taken pursuant to this
Agreement will be deemed to constitute a waiver of compliance with any
representations, warranties or covenants contained in this Agreement and will
not operate or be construed as a waiver of any subsequent breach, whether of a
similar or dissimilar nature.
7.5. Entire Agreement. This Agreement (including the Schedules
hereto) supersedes any other agreement, whether written or oral, that may have
been made or entered into by any party or any of their respective Affiliates (or
by any director, officer or representative thereof) prior to the date hereof
relating to the matters contemplated hereby. This Agreement (together with the
Schedules hereto) constitutes the entire agreement by and among the parties
hereto and there are no agreements or commitments by or among such parties or
their Affiliates except as expressly set forth herein.
7.6. Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written
46
agreements as may mutually be determined by Purchaser and Seller to be
necessary, desirable or expedient to further the purposes of this Agreement, or
to clarify the intention of the parties hereto.
7.7. Rights of the Parties. Except as provided in Article V or in
Sections 6.2.3 and 7.3, nothing expressed or implied in this Agreement is
intended or will be construed to confer upon or give any person or entity other
than the parties hereto and their respective Affiliates any rights or remedies
under or by reason of this Agreement or any transaction contemplated hereby.
7.8. Further Assurances. From time to time, whether at or after the
Closing as and when requested by either Purchaser or Seller, the other will
execute and deliver, or cause to be executed and delivered, all such documents
and instruments as may be reasonably necessary or otherwise reasonably requested
by Purchaser or Seller to consummate the transactions contemplated by this
Agreement or otherwise to carry out the intent and purpose of this Agreement and
to assure that the Company holds all of the assets, properties, permits,
authorizations, rights and related obligations used or held for use primarily or
exclusively in the Business, including without limitation the proper filing,
registration or recordation of such documents and instruments.
7.9. Applicable Law; Jurisdiction. This Agreement and the legal
relations among the parties hereto will be governed by and construed in
accordance with the substantive Laws of the State of New York, without giving
effect to the principles of conflict of laws thereof.
7.10. Titles and Headings. Titles and headings to Sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
7.11. Certain Interpretive Matters and Definitions. (a) Unless the
context otherwise requires, (i) all references to Sections or Schedules are to
Sections or Schedules of or to this Agreement, (ii) each term defined in this
Agreement has the meaning assigned to it, (iii) each accounting term not
otherwise defined in this Agreement has the meaning assigned to it in accordance
with GAAP, (iv) "or" is disjunctive but not necessarily exclusive, (v) words in
the singular include the plural and vice versa, (vi) the terms "subsidiary" and
"Affiliate" have the meanings given to those terms in Rule 12b-2 of Regulation
12B under the Securities Exchange Act of 1934, as amended, provided, however,
that, except with respect to Section 1.3, none of Purchaser, its parent or any
entity controlled by either of them will be deemed to be Affiliates of Seller
and none Seller, C&A Corp. or any entity controlled by either of them will be
deemed to be Affiliates of Purchaser, (vii)
47
all references to "$" or dollar amounts will be to lawful currency of the United
States of America, and (viii) "Knowledge of Seller" means solely to the actual
knowledge of the persons listed on Schedule 7.11(a), and (ix) "Knowledge of
Purchaser" means solely to the actual knowledge of the persons listed on
Schedule 7.11(b).
(b) No provision of this Agreement will be interpreted in favor of, or
against, any of the parties hereto by reason of the extent to which any such
party or its counsel participated in the drafting thereof or by reason of the
extent to which any such provision is inconsistent with any prior draft hereof
or thereof.
7.12. Bulk Transfer Laws. Purchaser hereby waives compliance by
Seller with the provisions of any so-called "bulk transfer" Law of any
jurisdiction in connection with the sale of the C&A Imperial Canada Assets to
Purchaser.
48
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
XXXXXXX & XXXXXX PRODUCTS CO.
By: /s/ J. Xxxxxxx Xxxxx
Name: J. Xxxxxxx Xxxxx
Title: Executive Vice President and Chief Financial
Officer
IMPERIAL WALLCOVERINGS, INC.
By: /s/ J. Xxxxxxx Xxxxx
Name: J. Xxxxxxx Xxxxx
Title: Executive Vice President and Chief Financial
Officer
BDPI HOLDINGS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxxxx
Title: Vice President
Schedules and Exhibits (Omitted)
--------------------------------
Exhibit A -Option Agreement
Schedule 1.2 -Net Cash Flow
Schedule 1.4 -Intercompany Obligations
Schedule 2.1.1 -Capitalization of Imperial and Imperial Canada
Schedule 2.1.3 -Conflicts; consents
Schedule 2.1.4 -Financial Statements
Schedule 2.1.4(c) -Undisclosed Liabilities
Schedule 2.1.4(d) -Conduct of the Business since September 26, 1997
Schedule 2.1.4(e) -Management Projections for the Business
Schedule 2.2.2 -Buyer Consents and Appraisals
Schedule 3.5 -Operation of the Business
Schedule 4.2.3(a) -Form of Management Services Agreement
Schedule 4.2.3(b) -Non-Competition Agreement
Schedule 4.2.3(c) -Opinion of Cravath, Swaine & Xxxxx
Schedule 4.3.4 -Opinion of Xxxxx, Day Xxxxxx & Xxxxx
Schedule 6.1.1 -Employees
Schedule 6.2.6 -Surety Obligations
Schedule 6.2.7 -Assumed Push - Down Liabilities
Schedule 7.11 -Knowledge of Seller
Schedule 7.11(b) -Knowledge of Purchaser
Xxxxxxx & Xxxxxx Corporation hereby undertakes to furnish supplementally
a copy of any omitted exhibit or schedule to the Commission upon request.
