Exhibit 2.9
INDEMNITY AGREEMENT
This Indemnification Agreement is entered into on this 25th day of
September, 1997, by and among Agri-Nutrition Group Limited, a Delaware
corporation ("Agri-Nutrition"), Mardel Laboratories, Inc., a Delaware
corporation ("Mardel") and the stockholders of Mardel listed on the signature
page hereof (the "Stockholders").
RECITALS
A. Agri-Nutrition, Mardel Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Agri-Nutrition ("Acquisition"), and
Mardel have entered into an Agreement and Plan of Merger dated September 25,
1997 (the "Merger Agreement") pursuant to which Mardel will merge with and into
Acquisition and the shares of Mardel Common Stock held by the Stockholders will
be canceled and extinguished and converted into the right to receive cash and
shares of Agri-Nutrition Common Stock pursuant to the terms of Section 1(e) of
the Merger Agreement.
B. Under the Merger Agreement, it is a condition precedent to
Agri-Nutrition's and Acquisition's obligations to consummate the Merger that the
Stockholders enter into this Agreement, and the Stockholders are willing to do
so in order to induce Agri-Nutrition and Acquisition to perform their
obligations under the Merger Agreement.
NOW, THEREFORE, in consideration of the premises hereinafter set forth
and intending to be legally bound thereby, the parties hereto agree as follows:
AGREEMENT
Section 1. INDEMNIFICATION BY THE STOCKHOLDERS
(a) Indemnification. From and after the Effective Date, as that term is
defined in the Merger Agreement, each of the Stockholders, jointly and
severally, agrees to indemnify and hold Agri-Nutrition, Acquisition, their
directors and officers, and the respective heirs, administrators, successors,
and assigns of each of the foregoing, harmless from any claims, damages, losses,
liabilities, judgments, fines, penalties, assessments, settlements, costs, or
expenses, including reasonable expenses of investigation, reasonable attorneys'
fees, and other reasonable legal costs and expenses incident to any of the
foregoing or to the enforcement of this Agreement (collectively herein referred
to as "Claims"), whether or not any suit is brought or, if brought, whether or
not such suit is successful, in whole or in part arising out of or relating to
any material misrepresentation or inaccuracy in any of the representations or
warranties made by Mardel in the Merger Agreement or the schedules thereto, or
in any agreement, instrument, certificate, or document delivered to
Agri-Nutrition or Acquisition by Mardel in connection with the Merger Agreement
or the transactions contemplated thereby; provided, however, that Xxxxxxx X.
Xxxx and Xxxxxxxx X. Xxxxx shall not have any liability under this Section 1(a)
with respect to any Claims other than Claims arising out
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of or relating to any material misrepresentation or inaccuracy in the
representations and warranties with respect to their ownership of Mardel
securities; provided, further, that a Stockholder shall not have liability for
any Claim in excess of such Stockholder's pro rata portion of such Claim, based
on the number of shares of common stock of Mardel owned immediately prior to the
Effective Time (as defined in the Merger Agreement) by such Stockholder in
proportion to the total number of shares of such common stock owned immediately
prior to the Effective Time by all Stockholders who would otherwise have
liability for such Claim under this Section 1(a), until the date which is 30
days after the date that Agri-Nutrition provided notice of such Claim to each of
the Stockholders who would otherwise have liablity for such Claim under this
Section 1(a).
(b) Limitation on Indemnification. Notwithstanding the provisions of
Section 1(a), the liability of the Stockholders pursuant to this Agreement shall
be limited as follows:
(i) with respect to Claims arising during the period from the
date of the Closing through the first anniversary of the date of the
Closing, to $600,000;
(ii) with respect to Claims arising during the period from the
date following the first anniversary of the date of the Closing through
the second anniversary of the date of the Closing, to $400,000; and
(iii) with respect to Claims arising during the period from
the date following the second anniversary of the date of the Closing
through the third anniversary of the date of the Closing, to $200,000.
In addition, the Stockholders shall incur no liability under this
Agreement except to the extent that Claims hereunder exceed an aggregate of
$15,000.
(c) Right of Offset of Agri-Nutrition. In addition to any rights or
remedies otherwise available to Agri-Nutrition at law or in equity,
Agri-Nutrition may enforce its rights pursuant to this Agreement by offsetting
the amounts of any Claims arising under this Agreement against payments of
Additional Merger Consideration. In the event that Agri-Nutrition exercises its
right of offset set forth in this Section 1(c) and any Stockholder disagrees
with Agri-Nutrition as to the validity or amount of the related Claim,
Agri-Nutrition promptly shall deposit that portion of the offset amount that is
in dispute in an interest-bearing escrow account. Following a final
determination of the validity and amount of such Claim, Agri-Nutrition promptly
shall cause any portion of the escrowed funds exceeding the amount required to
satisfy such Claim in full in accordance with such determination to be
distributed to the Stockholders, along with interest thereon. Agri-Nutrition
shall be responsible for payment of all fees and expenses relating to the
establishment and maintenance of the escrow account. All escrowed funds shall be
invested in investments considered "investment grade" by either of Standard &
Poor's Corporation or Xxxxx'x Investor Services, Inc.
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(d) Payment. At the option of the Stockholders, up to 51 percent of any
amount due Agri-Nutrition under this Agreement may be paid in Agri-Nutrition
Common Stock. For purposes of calculating the number of shares payable
hereunder, the value of Agri-Nutrition Common Stock shall be calculated based
upon the closing price of Agri-Nutrition Common Stock on the NASDAQ National
Market, or such other exchange or market upon which Agri-Nutrition Common Stock
may then be traded, on the date that Agri-Nutrition provides written notice to
the Stockholders of its intent to exercise its right to indemnification
hereunder.
Section 2. INDEMNIFICATION BY AGRI-NUTRITION
From and after the Effective Date, Agri-Nutrition agrees to indemnify
and hold each Stockholder, and each of the Stockholder's heirs, administrators,
successors, and assigns, harmless from any Claims, whether or not suit is
brought or, if brought, whether or not such suit is successful, in whole or in
part arising out of or relating to any material misrepresentation or inaccuracy
in any of the representations or warranties made by Agri-Nutrition in the Merger
Agreement or the schedules thereto, or in any agreement, instrument,
certificate, or document delivered to Mardel by Agri-Nutrition or Acquisition in
connection with the Merger Agreement or the transactions contemplated thereby.
Section 3. THIRD PARTY CLAIMS
The obligations and liabilities of a party from which indemnification
is sought (an "Indemnifying Party") to a party seeking indemnification (an
"Indemnified Party") under this Agreement with respect to claims resulting from
the assertion of liability by third parties shall be subject to the following
conditions:
(a) The Indemnified Party shall give prompt written notice to the
Indemnifying Party of the nature of the assertion of liability by a third party
and the amount thereof to the extent known; provided, however, that the failure
of the Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of such party's obligations under this Agreement.
(b) Except as provided in Section 3(c), if any action, suit, or
proceeding (a "Legal Action") is brought by a third party against an Indemnified
Party, the Indemnifying Party shall be entitled to defend such Legal Action at
its own cost and expense by counsel reasonably acceptable to the Indemnified
Party, and such defense shall include all appeals or reviews that counsel for
the Indemnifying Party shall deem appropriate; provided, however, that, prior to
defending such Legal Action the Indemnifying Party must acknowledge in writing
its obligation to indemnify the Indemnified Party and give prompt notice to the
Indemnified Party of its intention to assume such defense. Until the
Indemnifying Party shall have assumed the defense of any such Legal Action, all
legal or other expenses reasonably incurred by the Indemnified Party shall be
borne by the Indemnifying Party. If there exists or is reasonably likely to
exist a conflict of interest that would make it inappropriate in the reasonable
judgment of the Indemnified Party for the same counsel to represent both the
Indemnified Party and the Indemnifying Party, then
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the Indemnified Party shall be entitled to retain its own counsel, in each
jurisdiction for which the Indemnified Party determines counsel is required, at
the expense of the Indemnifying Party.
(c) Notwithstanding the Indemnifying Party's rights to assume the
defense of a Legal Action set forth in Section 3(b), the Indemnified Party may
at any time elect, by written notice to the Indemnifying Party, to assume the
defense of such Legal Action by counsel reasonably acceptable to the
Indemnifying Party; provided, however, that in such event, the Indemnified Party
shall bear all expenses thereafter incurred by it in defending such Legal
Action, but the Indemnifying Party shall bear the costs of any damage, loss,
liability, judgment, fine, penalty, assessment, or settlement arising out of
such Legal Action.
(d) In any Legal Action initiated by a third party and defended by the
Indemnifying Party (i) the Indemnified Party shall have the right to be
represented by advisory counsel and accountants, at its own expense, (ii) the
Indemnifying Party shall keep the Indemnified Party fully informed as to the
status of such Legal Action at all stages thereof, whether or not the
Indemnified Party is represented by its own counsel, (iii) the Indemnified Party
shall make available to the Indemnifying Party, and its attorneys and
accountants, all books and records of the Indemnified Party relating to such
Legal Action, (iv) the parties shall render to each other such assistance as may
be reasonably required in order to ensure the proper and adequate defense of
such Legal Action, and (v) the Indemnifying Party shall not make any settlement
of any claim without the written consent of the Indemnified Party, which shall
not be unreasonably withheld. Without limiting the generality of the foregoing,
it shall not be deemed unreasonable for the Indemnified Party to withhold
consent to a settlement involving injunctive or other equitable relief against
the Indemnified Party or its assets, employees, or business.
(e) In any Legal Action initiated by a third party and defended by the
Indemnified Party, (i) the Indemnifying Party shall have the right to be
represented by advisory counsel and accountants, at its own expense, (ii) the
Indemnified Party shall keep the Indemnifying Party fully informed as to the
status of such Legal Action at all stages thereof, whether or not the
Indemnifying Party is represented by its own counsel, (iii) the Indemnifying
Party shall make available to the Indemnified Party, and its attorneys and
accountants, all books and records of the Indemnifying Party relating to such
Legal Action, (iv) the parties shall render to each other such assistance as may
be reasonably required in order to ensure the proper and adequate defense of
such Legal Action, and (v) the Indemnified Party shall not make any settlement
of any claim without the written consent of the Indemnifying Party, which shall
not be unreasonably withheld. Without limiting the generality of the foregoing,
it shall not be deemed unreasonable for the Indemnifying Party to withhold
consent to a settlement involving injunctive or other equitable relief against
the Indemnifying Party or its assets, employees, or business.
Section 4. INCORPORATION BY REFERENCE
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The Merger Agreement is hereby incorporated into this Agreement by
reference thereto and all terms and conditions included therein shall have the
same force and effect upon all of the parties hereto as if set forth in their
entirety herein. Capitalized terms used herein that are not otherwise defined
shall have the meanings set forth in the Merger Agreement. Any notice or other
communication required or which may be given under this Agreement shall be given
in accordance with the terms of Section 10(c) of the Merger Agreement and the
initial addresses of the Stockholders for such purposes shall be the addresses
set forth on Schedule D to the Merger Agreement.
Section 5. TERM
This Agreement shall expire on the day following the third anniversary
of the date of the Closing.
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date first above written.
STOCKHOLDERS: MARDEL LABORATORIES, INC.
By:
Xxxxx X. Xxxxxxxxxx Xxx X. Xxxxxxxxxx
President
AGRI-NUTRITION GROUP LIMITED
Xxx X. Xxxxxxxxxx
By:
Xxxxxxx X. Xxxxxxxxxx Xxxxx X. Xxxxx
President
Xxxxxxx X. Xxxx
Xxxxxxxx X. Xxxxx
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