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EXHIBIT 10.1(b)
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SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
XXXXXXX CONTAINER CORPORATION
AND
STONE CONTAINER CORPORATION
DATED AS OF OCTOBER 28, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS........................................................1
1.1 Definitions..................................................1
1.2 Other Definitions............................................5
ARTICLE II
PURCHASE AND SALE OF SECURITIES....................................6
2.1 Securities Purchase..........................................6
2.2 Closing Transactions.........................................6
ARTICLE III
CONDITIONS TO CLOSING..............................................7
3.1 Conditions to Buyer's Obligations............................7
3.2 Conditions to Seller's Obligations...........................9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.............10
4.1 Title to Properties.........................................10
4.2 Contracts and Commitments...................................11
4.3 Proprietary Rights..........................................12
4.4 Environmental Matters.......................................13
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER..........................13
5.1 Organization and Corporate Power............................13
5.2 Authorization...............................................13
5.3 No Violation................................................14
5.4 Governmental Authorities and Consents.......................14
5.5 Securities..................................................14
5.6 Title to Assets of Company..................................14
5.7 Litigation..................................................14
5.8 Brokerage...................................................15
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER.............................15
6.1 Organization and Corporate Power..............................15
6.2 Authorization.................................................15
6.3 No Violation..................................................15
6.4 Governmental Authorities and Consents.........................15
6.5 Litigation....................................................16
6.6 Brokerage.....................................................16
ARTICLE VII
INDEMNIFICATION AND RELATED MATTERS.................................16
7.1 Survival......................................................16
7.2 Indemnification...............................................17
7.3 Pre-Joint Venture Liabilities.................................20
ARTICLE VIII
ADDITIONAL AGREEMENTS...............................................21
8.1 Tax Matters...................................................21
8.2 Press Releases and Announcements..............................21
8.3 Further Transfers.............................................21
8.4 Specific Performance..........................................21
8.5 Expenses......................................................22
8.6 Non-Competition, Non-Solicitation and Confidentiality.........22
8.7 Termination of Agreements.....................................23
8.8 Transition Assistance.........................................24
8.9 Sufficient Capitalization.....................................24
9.1 Amendment and Waiver..........................................24
9.2 Notices.......................................................24
9.3 Binding Agreement; Assignment.................................25
9.4 Severability..................................................25
9.5 Construction..................................................26
9.6 Captions......................................................26
9.7 Entire Agreement..............................................26
9.8 Counterparts..................................................26
9.9 Governing Law.................................................26
9.10 Parties in Interest...........................................26
9.11 Arbitration...................................................27
9.12 Delivery by Facsimile.........................................28
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SECURITIES PURCHASE AGREEMENT
THIS AGREEMENT is made as of October 28, 1999, by and between
Xxxxxxx Container Corporation, a Delaware corporation ("Buyer") and Stone
Container Corporation, a Delaware corporation ("Seller"). Seller and Buyer are
collectively referred to herein as the "Parties" and individually as a "Party."
WHEREAS, Seller owns beneficially and of record 65% of the
membership interests of S & G Packaging Company, L.L.C., a Delaware limited
liability company (the "Company") and Buyer owns beneficially and of record 35%
of the membership interests of the Company.
WHEREAS, Seller desires to sell, and Buyer desires to purchase,
all of Seller's membership interests in the Company (collectively, the
"Securities"), subject to the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities or otherwise.
"Buyer Pre-Joint Venture Liabilities" means any and all Losses of
the Company (including, without limitation, any and all liabilities of the
Company pursuant to CERCLA or any other Environmental and Safety Requirements)
which (i) relate to or arise out of occurrences prior to July 12, 1996 and (ii)
arise from, relate to or are attributable to the conduct of Buyer, its
predecessors or any of their affiliates.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"Credit Agreement" means the Credit Agreement, dated as of July
12, 1996, among the Company, Bankers Trust Company and certain lenders parties
thereto, as amended from time to time.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
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"Contract" shall mean any contract, license, sublicense,
franchise, permit, mortgage, purchase orders, indenture, loan agreement, lease,
sublease, agreement, obligation, instrument or other arrangement or any
commitment to enter into any of the foregoing (in each case, whether written or
oral) to which the Company is a party or by which any of its assets are bound.
"Disputed Amount" means the aggregate amount of consumption
credit to which the Company is entitled to under the Original Supply Agreement.
In the event that Buyer and Seller cannot agree on the Disputed Amount at or
prior to Closing, for purposes of this Agreement, the Disputed Amount shall be
deemed to be $50 per ton of such paper.
"Environmental and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law, in each case
concerning public health and safety, worker health and safety and pollution or
protection of the environment, including, without limitation, all those relating
to the presence, use, production, generation, handling, transport, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
Release, threatened Release, control or cleanup of any hazardous or otherwise
regulated materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, as the
foregoing are enacted and in effect prior to, on, or after the Closing Date.
"Indebtedness" means (i) any indebtedness for borrowed money or
issued in substitution for or exchange of indebtedness for borrowed money, (ii)
any indebtedness evidenced by any note, bond, debenture or other debt security,
(iii) any indebtedness for the deferred purchase price of property or services
with respect to which a Person is liable, contingently or otherwise, as obligor
or otherwise (other than trade payables and other current liabilities incurred
in the Ordinary Course of Business which are not more than six months past due),
(iv) any commitment by which a Person assures a creditor against loss
(including, without limitation, contingent reimbursement obligations with
respect to letters of credit), (v) any indebtedness guaranteed in any manner by
a Person (including, without limitation, guarantees in the form of an agreement
to repurchase or reimburse), (vi) any obligations under capitalized leases with
respect to which a Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or with respect to which obligations a Person assures a
creditor against loss, (vii) any indebtedness secured by a Lien on a Person's
assets, and (viii) any amounts owed to any Person under any noncompetition or
consulting arrangements.
"JV Agreement" means the Joint Venture Agreement between Buyer
and Seller, dated as of July 12, 1996.
"Knowledge" as used in the phrases "to the Knowledge of Seller",
"to Seller's Knowledge" or phrases of similar import means the information
provided to Seller from each of Xxxxxx Xxxxxxxxxx, Xxxxxx Xxxxxx, Xxxxxx
Xxxxxxxxx, Xxxxxx Xxxxxxx and Xxxx Xxxxxxx in their
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respective Certificates Regarding Representations and Warranties, the form of
such certificates being attached hereto as Appendix A.
"Liens" means any mortgage, pledge, security interest,
encumbrance, claim, Tax, lien or charge of any kind (including, without
limitation, any conditional sale or other title retention agreement or lease in
the nature thereof), any sale of receivables with recourse against the Company,
Sellers or any of their Affiliates, any filing or agreement to file a financing
statement as debtor under the Uniform Commercial Code or any similar statute.
"material" means any matter that, in the aggregate with all other
related matters, has resulted in or might result in costs, liabilities,
expenses, damages or prospects of or to, or claims by or against the Company
involving $50,000 or more.
"Material Adverse Effect" means an event, transaction, condition
or change which has had or could reasonably be expected to have a material
adverse effect on the business, assets, liabilities, operations, condition
(financial or otherwise), operating results, backlog, earnings, customer and
supplier relations, employee and sales representative relations, applicable
regulations, or business prospects of the Company.
"Ordinary Course of Business" means the conduct of business and
operations by the Company only in the ordinary course of business consistent
with past custom and practice of the Company (including, without limitation,
with respect to quantity and frequency, maintenance of working capital balances,
collection of accounts receivable, payment of employee compensation, payment of
accounts payable and cash management practices generally).
"Original Supply Agreement" means the Paper Supply Agreement,
dated as of July 12, 1996, among Stone, Buyer and the Company, as amended.
"Person" means an individual, a partnership, a limited liability
company a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Proprietary Rights" means all of the following items along with
all income, royalties, damages and payments due or payable prior to or at the
Closing or thereafter (including, without limitation, damages and payments for
past, present or future infringements or misappropriations thereof, the right to
xxx and recover for past infringements or misappropriations thereof and any and
all corresponding rights that, now or hereafter, may be secured throughout the
world): (i) patents, patent applications, patent disclosures and inventions
(whether or not patentable and whether or not reduced to practice) and any
reissue, continuation, continuation-in-part, division, revision, extension or
reexamination thereof; (ii) trademarks, service marks, trade dress, logos, trade
names and corporate names (and all translations, adaptions, derivations and
combinations of the foregoing), Internet addresses, websites, domain names,
together with all goodwill associated therewith; registered and unregistered
copyrights, copyrightable works and mask works; (iii) all registrations,
applications and renewals for any of the foregoing; (iv) trade secrets and
confidential
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information (including, without limitation, ideas, formulae, compositions,
know-how, manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans, proposals,
technical data, financial, business and marketing plans, and customer and
supplier lists and related information); (v) computer software and software
systems (including, without limitation, data, databases and related
documentation); (vi) other proprietary rights; (vii) licenses or other
agreements to or from third parties regarding the foregoing; and (viii) all
copies and tangible embodiments of the foregoing (in whatever form or medium).
"Release" shall have the meaning set forth in CERCLA.
"Seller Pre-Joint Venture Liabilities" means any and all Losses
of the Company (including, without limitation, any and all liabilities of the
Company pursuant to CERCLA or any other Environmental and Safety Requirements)
which (i) relate to or arise out of occurrences prior to July 12, 1996 and (ii)
arise from, relate to or are attributable to the conduct of the Seller, its
predecessors or any of their affiliates.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, limited liability
company, association or other business entity, a majority of the partnership or
other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that Person
or a combination thereof. For purposes hereof, a Person or Persons shall be
deemed to have a majority ownership interest in a partnership, limited liability
company, association or other business entity if such Person or Persons shall be
allocated a majority of partnership, association or other business entity gains
or losses or shall be or control the managing director or general partner of
such partnership, association or other business entity.
"Tax" or "Taxes" means any federal, state, local or foreign
income, gross receipts, franchise, alternative or add-on minimum, estimated,
sales, use, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental, customs,
duties, real property, personal property, capital stock, social security,
unemployment, disability, payroll, license, employee or other withholding, or
other tax, of any kind whatsoever, including any interest, penalties or
additions to tax or additional amounts in respect of the foregoing.
"Tax Returns" means returns, declarations, reports, claims for
refund, information returns or other documents (including any related or
supporting schedules, statements or information) filed or required to be filed
in connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
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"Transaction Documents" means this Agreement, Supply Agreement,
Patent, Trademark and Trade Secret Assignment, Master Lease Agreement and any
other agreement contemplated hereby to which the Company and/or Buyer are
parties.
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1.2 OTHER DEFINITIONS Each of the following defined terms has the
meaning given such term in the Section set forth opposite such defined term:
DEFINED TERM SECTION REFERENCE
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AAA Section 9.11
Ancillary Documents Section 8.7
Applicable Limitation Date Section 7.1(a)
Arbitrable Dispute Section 9.11
Arbitration Expenses Section 9.11(c)
Arbitrators Section 9.11(b)
Basket Section 7.2(c)
Buyer Preamble
Buyer Parties Section 7.2(a)
Cap Section7.2(c)
Certificates Regarding Representations
and Warranties Section 1.1
Closing Section 2.2(a)
Closing Date Section 2.2(a)
Closing Transactions Section 2.2(b)
Company Preamble
Company Warranties Section 7.1(a)
Confidential Information Section 8.7(c)
Costs and Fees Section 9.11(c)
Xxxxxxx Preamble
HSR Act Section 3.1(e)
Indemnified Party Section 7.2(d)
Indemnifying Party Section 7.2(d)
Leased Properties Section 4.1(b)
Loss Section 7.2(a)
Losses Section 7.2(a)
Master Lease Agreement Section 3.1(h)
Non-Compete Period Section 8.7(a)
Non-Solicitation Period Section 8.6(b)
No Hire Period Section 8.6(c)
Parties Preamble
Party Preamble
Patent, Trademark and Trade Secret Assignment Section 3.1(h)
Purchase Price Section 2.2(b)
Securities Preamble
Seller Preamble
Seller Parties Section 7.2(b)
Supply Agreement Section 3.1(g)
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ARTICLE II
PURCHASE AND SALE OF SECURITIES
2.1 SECURITIES PURCHASE Subject to the terms and conditions set
forth in this Agreement, on the Closing Date, (a) Buyer shall purchase from
Seller, and Seller shall sell and transfer to Buyer, all of the Securities owned
by Seller (which shall represent 65% of the membership interests in the Company
as of the Closing Date), free and clear of any Liens, restrictions on transfer
(other than any restrictions under the Securities Act of 1933, as amended, and
applicable state securities laws), options, warrants, rights, calls,
commitments, proxies or other contract rights and (b) in consideration of the
sale of the Securities and the covenants and agreements of the Sellers contained
in Section 8.6, Buyer shall deliver to Seller the consideration specified in
Section 2.2.
2.2 CLOSING TRANSACTIONS
(a) Closing. Subject to satisfaction or waiver of the
conditions contained in this Agreement, the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxxxx & Xxxxx, 000 X. Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx, commencing at
10:00 a.m. on October 28, 1999, or at such other place or on such other date as
may be mutually agreeable to Buyer and Sellers. The date and time of the Closing
are herein referred to as the "Closing Date."
(b) Closing Transactions. Subject to the conditions set forth
in this Agreement, the Parties shall consummate the following "Closing
Transactions" on the Closing Date:
(i) Seller shall deliver to Buyer the Securities
accompanied by duly executed instruments of transfer with all
requisite state and federal transfer stamps affixed thereto;
(ii) Buyer shall deliver to Seller, by wire transfer of
immediately available funds to an account or accounts designated
by Seller prior to Closing, an aggregate amount equal to Five
Hundred Thousand Dollars ($500,000.00) (the "Purchase Price");
(iii) Buyer shall pay in full all of the Company's
Indebtedness as of the Closing Date under the Credit Agreement;
(iv) Seller and Buyer shall deliver the certificates and
other documents and instruments required to be delivered at or
prior to the Closing pursuant to this Agreement; and
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(v) Seller shall deliver to Buyer all corporate books and
records of the Company in Seller's possession.
ARTICLE III
CONDITIONS TO CLOSING
3.1 CONDITIONS TO BUYER'S OBLIGATIONS The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
fulfillment of the following conditions as of the Closing Date to Buyer's
satisfaction in its sole discretion:
(a) The representations and warranties set forth in Article IV
and Article V hereof shall be true and correct in all material respects at and
as of the Closing Date;
(b) Seller shall have performed and complied in all material
respects with all of the covenants and agreements required to be performed by it
under this Agreement on or prior to the Closing, including, without limitation,
the simultaneous transfer of all of the Securities;
(c) Seller shall have delivered to Buyer and the Company a duly
executed instrument of release, pursuant to which Seller shall unconditionally
release the Company from its obligation to pay $4 million of its accounts
payable owed to Seller for paper purchased under the Original Supply Agreement,
it being understood that all other accounts payable of the Company to Seller in
excess of $4 million pursuant to the Original Supply Agreement shall remain in
full force and effect (less the Disputed Amount), but shall be payable in equal
monthly installments without interest over a 12 month period commencing on the
first business day of the first month following Closing. At or prior to the
Closing, Buyer and Seller shall use their reasonable best efforts to mutually
agree in good faith on the Disputed Amount, if any, to be credited to the
Company for paper purchased by the Company under the Original Supply Agreement.
In the event that Buyer and Seller cannot agree at or prior to the Closing on
the Disputed Amount, such amount shall be determined post-closing in accordance
with the procedures set forth in Section 9.11 hereof;
(d) All consents by third parties that are required for the
transfer of the Securities to Buyer, that are required for the consummation of
the transactions contemplated hereby or that are required in order to prevent a
breach of or a default under or a termination or modification of or any right of
acceleration of any obligations under any material Contract to which the Company
or Buyer is a party or by which any of its assets are bound, shall have been
obtained, all on terms satisfactory to Buyer, and a list of all such consents is
attached hereto as Schedule 3.1(d);
(e) All applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), shall have been obtained or terminated prior to the date hereof;
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(f) No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable judgment, decree, injunction, order or ruling would prevent the
performance of this Agreement or any of the transactions contemplated hereby,
declare unlawful the transactions contemplated by this Agreement, cause such
transactions to be rescinded or materially and adversely affect the right of
Buyer to own, operate or control the Company, and no judgment, decree,
injunction, order or ruling shall have been entered which has any of the
foregoing effects;
(g) Each of Seller and the Company shall have duly authorized,
executed and delivered to Buyer the Amended and Restated Paper Supply Agreement
(the "Supply Agreement") substantially in the form attached hereto as Exhibit I;
(h) Each of Seller and the Company shall have duly authorized,
executed and delivered to Buyer a copy of the Patent, Trademark and Trade Secret
Assignment (the "Patent, Trademark and Trade Secret Assignment") substantially
in the form attached hereto as Exhibit II;
(i) Each of Seller and the Company shall have duly authorized,
executed and delivered to Buyer the Master Lease Agreement (the "Master Lease
Agreement") substantially in the form attached hereto as Exhibit III;
(j) On or prior to the Closing Date, Seller shall have
delivered to Buyer all of the following:
(i) a certificate from Seller, in form and substance
satisfactory to Buyer, dated the Closing Date, stating that the
preconditions specified in Section 2.2(b) and Sections 3.1(a),
(b), (d) and (e) have been satisfied;
(ii) copies of all third party and governmental consents,
approvals, filings, releases, terminations, payoff letters, etc.
required in connection with the consummation of the transactions
contemplated herein, the list of which is set forth on Schedule
3.1(d);
(iii) copies of all documents and records relating to the
business of the Company that are in any Seller's possession;
(iv) such other documents or instruments as Buyer may
reasonably request to effect the transactions contemplated
hereby; and
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(k) All proceedings to be taken by Seller in connection with
the consummation of the Closing Transactions and the other transactions
contemplated hereby and all certificates, instruments and other documents
required to be delivered by Seller to effect the transactions contemplated
hereby reasonably requested by Buyer shall be reasonably satisfactory in form
and substance to Buyer.
Any condition specified in this Section 3.1 may be waived
by Buyer; provided that no such waiver shall be effective unless it is set forth
in a writing executed by Buyer or unless Buyer agrees in writing to consummate
the transactions contemplated by this Agreement without fulfillment of such
condition.
3.2 CONDITIONS TO SELLER'S OBLIGATIONS The obligation of Seller
to consummate the transactions contemplated by this Agreement is subject to the
fulfillment of the following conditions as of the Closing Date to Seller's
satisfaction in its sole discretion:
(a) The representations and warranties set forth in Article VI
shall be true and correct in all material respects at and as of the Closing
Date;
(b) Buyer shall have performed and complied in all material
respects with all of the covenants and agreements required to be performed by it
under this Agreement on or prior to the Closing;
(c) All applicable waiting periods under the HSR Act shall have
expired or been terminated;
(d) Buyer shall have duly authorized, executed and delivered to
Seller the Supply Agreement;
(e) On or prior to the Closing Date, Buyer shall have delivered
to the Seller a certificate from Buyer, in form and substance satisfactory to
Seller, dated the Closing Date, stating that the preconditions specified in
Section 2.2(b) and Sections 3.2(a), (b) and (c) have been satisfied;
(f) Buyer shall deliver to Seller the Purchase Price as set
forth in Section 2.2(b);
(g) No action, suit or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator wherein an unfavorable
judgment, decree, injunction, order or ruling would prevent the performance of
this Agreement or any of the transactions contemplated hereby, declare unlawful
the transactions contemplated by this Agreement or cause such transactions to be
rescinded, and no judgment, decree, injunction, order or ruling shall have been
entered which has any of the foregoing effects; and
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(h) All proceedings to be taken by Buyer in connection with the
consummation of the Closing Transactions and the other transactions contemplated
hereby and all certificates, instruments and other documents required to be
delivered by Buyer to effect the transactions contemplated hereby reasonably
requested by Seller shall be reasonably satisfactory in form and substance to
Seller.
Any condition specified in this Section 3.2 may be waived by the
Seller; provided that no such waiver shall be effective against Seller unless it
is set forth in a writing executed by Seller or unless Seller agrees in writing
to consummate the transactions contemplated by this Agreement without the
fulfillment of such condition.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
As a material inducement to Buyer to enter into this Agreement,
Seller to its Knowledge, hereby represents and warrants that:
4.1 TITLE TO PROPERTIES.
(a) The Company owns fee simple title to the interest in such
parcel of real property specified in Schedule 4.1(a), free and clear of all
Liens, except as specified in Schedule 4.1(a);
(b) The real property leases and subleases described on
Schedule 4.1(b) are valid, binding, enforceable and in full force and effect and
have not been modified (except to the extent disclosed in the documents
delivered to Buyer), and the Company holds a valid and existing leasehold
interest under such leases or subleases for the term set forth in Schedule
4.1(b). The leases and subleases described in Schedule 4.1(b) (the "Leased
Properties") constitute all of the leases and subleases under which the Company
holds leasehold or subleasehold interests in real property. As of the Closing,
(A) Sellers shall have obtained the consent of each landlord to the transactions
contemplated hereunder and under the other Transaction Documents or (B) the
lease or sublease does not prohibit the transactions contemplated hereunder and
under the other Transaction Documents.
(c) Except as set forth on Schedule 4.1(c), the Company owns
good and marketable title to, or a valid leasehold interest in, free and clear
of all Liens, all of the personal property and assets which are shown on the
applicable latest balance sheet or acquired thereafter or located on the Leased
Properties or used by the Company.
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4.2 CONTRACTS AND COMMITMENTS.
(a) Except as specifically contemplated by this Agreement and
except as set forth in Schedule 4.2, the Company is not a party to or bound by,
whether written or oral, any:
(i) collective bargaining agreement or Contract with any
labor union or any bonus, pension, profit sharing, retirement or
any other form of deferred compensation plan or any stock
purchase, stock option, hospitalization insurance or similar plan
or practice, whether formal or informal;
(ii) Contract for the employment of any officer, individual
employee or other person on a full-time or consulting basis or
any severance agreements involving annual compensation in excess
of $100,000;
(iii) agreement or indenture relating to the borrowing of
money or to mortgaging, pledging or otherwise placing a Lien on
any of its assets;
(iv) agreements with respect to the lending or investing of
funds;
(v) license or royalty agreements;
(vi) guaranty of any obligation, other than endorsements
made for collection;
(vii) lease or agreement under which it is lessee of, or
holds or operates, any personal property owned by any other party
calling for payments in excess of $10,000 annually or under which
it is lessor of or permits any third party to hold or operate any
property, real or personal, owned or controlled by it;
(viii) Contract or group of related Contracts with the same
party for the purchase or sale of supplies, products or other
personal property or for the furnishing or receipt of services
which either calls for performance over a period of more than one
year (except if such Contracts do not involve a sum in excess of
$10,000 annually) or involves a sum in excess of $10,000;
(ix) Contract or group of related Contracts with the same
party continuing over a period of more than six months from the
date or dates thereof, not terminable by it on 30 days or less
notice without penalties or involving more than $10,000;
(x) Contract which prohibits it from freely engaging in
business anywhere in the world;
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(xi) Contract relating to the distribution, marketing or
sales of its products;
(xii) agreements, Contracts or understandings pursuant to
which the Company subcontracts work to third parties; or
(xiii) other agreement material to it, whether or not
entered into in the Ordinary Course of Business.
(b) Except as disclosed in Schedule 4.2, no Contract or
commitment required to be disclosed on Schedule 4.2 has been breached or
canceled by the other party, and there is no basis to reasonably expect an
anticipated breach by any other party to any Contract set forth on Schedule 4.2.
4.3 PROPRIETARY RIGHTS.
(a) Schedule 4.3 sets forth a complete and correct list of: (i)
all patented or registered Proprietary Rights and all pending patent
applications or other applications for registration of Proprietary Rights owned,
filed or used by the Company; (ii) all trade names, and unregistered trademarks
used by the Company; (iii) all material unregistered copyrights and material
computer software owned or used by the Company; and (iv) all licenses or similar
agreements or arrangements to which the Company is a party, either as licensee
or licensor, or as a third party beneficiary, for Proprietary Rights, in each
case identifying the subject Proprietary Rights.
(b) Except as set forth in Schedule 4.3, (i) the Company owns
and possesses all right, title and interest in and to, or has a valid and
enforceable right to use all Proprietary Rights necessary for the operation of
the Company's business as currently conducted, and as currently proposed to be
conducted, free and clear of all Liens, licences or any other restrictions
(including but not limited to any injunction, judgment, order, decree, ruling or
agreement), (ii) no claim by any third party contesting the validity,
enforceability, use or ownership of any of the Proprietary Rights set forth on
Schedule 4.3 has been made, is currently outstanding or is threatened, and there
are no grounds for same, (iii) the Company's business as currently conducted and
as currently proposed to be conducted does not infringe, misappropriate or
otherwise conflict with any Proprietary Rights of any third party, Seller is not
aware of any facts that indicate a likelihood of any of the foregoing and Seller
has not received any notices regarding any of the foregoing, (iv) no third party
has infringed, misappropriated or otherwise conflicted with any of the
Proprietary Rights owned or used by the Company and Seller is not aware of any
facts that indicate a likelihood of any of the foregoing, and (v) immediately
subsequent to the Closing, the Proprietary Rights owned or used by the Company
will be owned by or available for use by the Company on terms and conditions
identical to those under which the Company owned or used such Proprietary Rights
prior to the Closing.
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4.4 ENVIRONMENTAL MATTERS.
(a) The Company has been and is currently in material
compliance with all Environmental and Safety Requirements, and the Company has
not received any oral or written notice or demand regarding any liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) or any
corrective, investigatory or remedial obligations arising under Environmental
and Safety Requirements which relate to the Company or any of its properties or
facilities.
(b) Without limiting the generality of the foregoing, the
Company has obtained and has been and is currently in compliance with, all
permits, licenses and other authorizations required pursuant to any
Environmental and Safety Requirements for the occupancy of its properties or
facilities or the operation of its business as currently conducted. A list of
all such permits, licenses and other authorizations which are material to the
Company is set forth on Schedule 4.4.
(c) The Company has not treated, stored, disposed of, arranged
for or permitted the disposal of, transported, handled or Released any substance
(including, without limitation, any hazardous substance) or owned, occupied or
operated any facility or property (and no such facility or property is
contaminated with any such substance), so as to give rise to material
liabilities of the Company pursuant to CERCLA or in material violation of any
other Environmental and Safety Requirements.
(d) Seller has furnished to Buyer all environmental audits,
reports and other material environmental documents relating to the Company which
are in its possession or under its reasonable control and which have not already
been disclosed or provided to the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement to Buyer to enter into this Agreement,
Seller represents and warrants to Buyer that:
5.1 ORGANIZATION AND CORPORATE POWER. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full corporate power and authority to enter into this
Agreement and the other agreements contemplated hereby to which Seller is a
party and perform its obligations hereunder and thereunder.
5.2 AUTHORIZATION. The execution, delivery and performance of
this Agreement and the other agreements contemplated hereby to which Seller is a
party have been duly and validly authorized by all requisite corporate action on
the part of Seller and no other corporate proceedings on its part are necessary
to authorize the execution, delivery or performance of this Agreement. This
Agreement constitutes, and each of the other agreements contemplated hereby to
which Seller is a
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party shall when executed constitute, a valid and binding obligation of Seller,
enforceable in accordance with their terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws from time to time affecting the enforcement of creditors'
rights generally.
5.3 NO VIOLATION. Seller is not subject to or obligated under its
certificate of incorporation, its by-laws, any applicable law, or rule or
regulation of any governmental authority, or any agreement or instrument, or any
license, franchise or permit, or subject to any order, writ, injunction or
decree, which would be breached or violated by its execution, delivery or
performance of this Agreement and the other agreements contemplated hereby to
which Seller is a party.
5.4 GOVERNMENTAL AUTHORITIES AND CONSENTS. Seller is not required
to submit any notice, report or other filing with any governmental authority in
connection with the execution or delivery by it of this Agreement and the other
agreements contemplated hereby to which Seller is a party or the consummation of
the transactions contemplated hereby or thereby. No consent, approval or
authorization of any governmental or regulatory authority or any other party or
person is required to be obtained by Seller in connection with its execution,
delivery and performance of this Agreement and the other agreements contemplated
hereby to which Seller is a party or the transactions contemplated hereby or
thereby, except such filings and notices which may be required under the HSR
Act.
5.5 SECURITIES. Seller is a member of the Company. Seller holds
of record and owns beneficially all of the Securities, and at the Closing such
Seller will transfer to the Seller good and marketable title to such Securities,
in each case free and clear of any Liens, restrictions on transfer (other than
any restrictions under the Securities Act of 1933, as amended, and applicable
state securities laws), options, warrants, rights, calls, commitments, proxies
or other contract rights. Seller is not a party to any option, warrant, right,
Contract, call, put or other agreement or commitment providing for the
disposition or acquisition of any membership interests, equity securities or
securities containing equity features of the Company (other than this
Agreement). Seller is not a party to any voting trust, proxy or other agreement
or understanding with respect to the voting of any membership interests of the
Company.
5.6 TITLE TO ASSETS OF COMPANY. Except for the real property of
Seller subject to the Master Lease, none of Seller or any of its Affiliates
(other than the Company) owns or holds title to any of the assets used by the
Company to conduct its business. At Closing, Seller shall deliver to Buyer
ownership and possession of all assets owned by the Company which are stored in
Seller's warehouse located in Bernice, Louisiana. Seller shall continue to
provide such warehousing under the same terms and conditions as currently in
effect.
5.7 LITIGATION. There are no actions, suits, proceedings or
orders pending or, to Sellers' knowledge, threatened against or affecting
Sellers at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would adversely affect Sellers'
performance under this
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Agreement and the other agreements contemplated hereby to which Sellers are a
party or the consummation of the transactions contemplated hereby or thereby.
5.8 BROKERAGE. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Seller.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to Sellers to enter into this Agreement,
Buyer hereby represents and warrants to Sellers that:
6.1 ORGANIZATION AND CORPORATE POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to enter into this Agreement
and the other agreements contemplated hereby to which Buyer is a party and
perform its obligations hereunder and thereunder.
6.2 AUTHORIZATION OF TRANSACTION. The execution, delivery and
performance of this Agreement and the other agreements contemplated hereby to
which Buyer is a party have been duly and validly authorized by all requisite
corporate action on the part of Buyer, and no other corporate proceedings on its
part are necessary to authorize the execution, delivery or performance of this
Agreement. This Agreement constitutes, and each of the other agreements
contemplated hereby to which Buyer is a party shall when executed constitute, a
valid and binding obligation of Buyer, enforceable in accordance with their
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws from time to time
affecting the enforcement of creditors' rights generally.
6.3 NO VIOLATION. Buyer is not subject to or obligated under its
certificate of incorporation, its by-laws, any applicable law, or rule or
regulation of any governmental authority, or any agreement or instrument, or any
license, franchise or permit, or subject to any order, writ, injunction or
decree, which would be breached or violated by its execution, delivery or
performance of this Agreement and the other agreements contemplated hereby to
which Buyer is a party.
6.4 GOVERNMENTAL AUTHORITIES AND CONSENTS. Buyer is not required
to submit any notice, report or other filing with any governmental authority in
connection with the execution or delivery by it of this Agreement and the other
agreements contemplated hereby to which Buyer is a party or the consummation of
the transactions contemplated hereby or thereby. No consent, approval or
authorization of any governmental or regulatory authority or any other party or
person is required to be obtained by Buyer in connection with its execution,
delivery and performance of this Agreement and the other agreements contemplated
hereby to which Buyer is a party or the
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transactions contemplated hereby or thereby, except such filings and notices as
may be required under the HSR Act.
6.5 LITIGATION. There are no actions, suits, proceedings or
orders pending or, to Buyer's knowledge, threatened against or affecting Buyer
at law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which would adversely affect Buyer's performance under this
Agreement and the other agreements contemplated hereby.
6.6 BROKERAGE. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Buyer.
ARTICLE VII
INDEMNIFICATION AND RELATED MATTERS
7.1 SURVIVAL.
(A) SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Any claim for indemnification under Article VII with respect to the
representations and warranties set forth in Sections 4.1 (other than Section
4.1(a)), 4.2 and 4.3 of Article IV (Representations and Warranties Concerning
the Company) (collectively, the "Company Warranties") must be brought prior to
the eighteen month anniversary of the Closing Date in accordance with Section
7.2(d) hereof. Any claim for indemnification under Article VII with respect to
representations and warranties set forth in Section 4.4 (the "Environmental
Warranties") must be brought prior to the twenty-four month anniversary of the
Closing Date in accordance with Section 7.2(d) hereof. Any claim for
indemnification under Article VII with respect to all representations and
warranties (other than the Company Warranties and the Environmental Warranties,
but including claims under Section 4.1(a) hereof), covenants and agreements set
forth in this Agreement, other Transaction Documents or in any writing or
certificate delivered in connection with this Agreement may be brought at any
time, and all such representations, warranties, covenants and agreements (other
than the Company Warranties and the Environmental Warranties) shall survive the
Closing Date without any time limitation.
(B) SPECIAL RULE FOR FRAUD. Notwithstanding anything in this
Section 7.1 to the contrary, in the event of any breach of a representation or
warranty by a Party that constitutes actual fraud, the representation or
warranty shall survive consummation of the transactions contemplated in this
Agreement and continue in full force and effect without any time limitation.
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(C) RISK ALLOCATION. The representations, warranties, covenants
and agreements made herein, together with the indemnification provisions herein,
are intended among other things to allocate the economic cost and the risks
inherent in the transactions contemplated hereby between the Parties and,
accordingly, a Party shall be entitled to the indemnification or other remedies
provided in this Agreement by reason of any breach of any such representation,
warranty, covenant or agreement by another Party notwithstanding whether any
employee, representative or agent of the Party seeking to enforce a remedy knew
or had reason to know of such breach.
7.2 INDEMNIFICATION.
(a) Sellers' Indemnification. Seller shall indemnify Buyer and
the Company and each of their respective officers, directors, employees, agents,
representatives, Affiliates, successors and permitted assigns (collectively, the
"Buyer Parties") and hold each of them harmless from and against and pay on
behalf of or reimburse such Buyer Parties in respect of any loss (including
diminution in value), liability, demand, claim, action, cause of action, cost,
damage, deficiency, Tax, penalty, fine or expense, whether or not arising out of
third party claims (including, without limitation, interest, penalties,
reasonable attorneys' fees and expenses, court costs and all amounts paid in
investigation, defense or settlement of any of the foregoing) (collectively,
"Losses" and individually, a "Loss") which any such Buyer Party may suffer,
sustain or become subject to, as a result of, in connection with, relating or
incidental to or by virtue of:
(i) breach by Seller of any representation, warranty or
covenant made by Seller contained in this Agreement, the other
Transaction Documents, any Exhibit or Schedule hereto or any
certificate delivered by the Seller to Buyer with respect hereto
or thereto in connection with the Closing; or
(ii) any claim for payment of fees and/or expenses as a
broker or finder in connection with the origin, negotiation or
execution of this Agreement or the other Transaction Documents or
the consummation of the transactions contemplated hereby based
upon any alleged agreement, arrangement or understanding between
the claimant and Seller or any of its agents or representatives.
(b) Buyer Indemnification. Buyer shall indemnify Seller and
each of its officers, directors, employees, agents, representatives, Affiliates,
successors and permitted assigns (collectively, the "Seller Parties") and hold
each of them harmless from and against and pay on behalf of or reimburse such
Seller Parties in respect of any Loss which such Seller Parties may suffer,
sustain or become subject to, as the result of, in connection with, relating to
or incidental to or by virtue of:
(i) the breach by Buyer of any representation, warranty or
covenant made by Buyer contained in this Agreement, any other
Transaction Document or any certificate delivered by Buyer to
Seller with respect thereto in connection with the Closing; or
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(ii) any claim for payment of fees and/or expenses as a
broker or finder in connection with the origin, negotiation or
execution of this Agreement or the other Transaction Documents or
the consummation of the transactions contemplated hereby based
upon any alleged agreement, arrangement or understanding between
the claimant and the Buyer or any of its agents or
representatives.
(c) Limitations on Indemnity.
(i) The Buyer Parties shall be entitled to indemnification
under this Article VII in respect of breaches of the Company
Warranties only to the extent that the aggregate amount of all
such Losses exceeds $50,000 (the "Basket"), in which case Seller
shall be liable only for such Losses, exceeding the initial
$50,000, and in no event shall the Buyer Parties be entitled to
indemnification in respect of such Losses in excess of $15
million (the "Cap"); provided that the foregoing limitations
(i.e., the Basket and the Cap) shall not apply with respect to
any Loss arising from or related to a breach of any
representation, warranty, covenant or agreement of Seller (other
than the Company Warranties and the Environmental Warranties);
(ii) Notwithstanding anything to the contrary contained
herein, for purposes of determining whether there has been a
breach and the amount of any Losses that are the subject matter
of a claim for indemnification hereunder, the Basket amounts
shall be the materiality standard for all purposes hereunder and,
therefore, each representation and warranty contained in this
Agreement shall be read without regard and without giving effect
to any materiality or Material Adverse Effect standard or
qualification contained in such representation or warranty (as if
such standard or qualification were deleted from such
representation and warranty).
(d) Procedure. If a Party seeks indemnification under this
Article VII, such party (the "Indemnified Party") shall give written
notice to the other party(ies) (the "Indemnifying Party") after
receiving written notice of any action, lawsuit, proceeding,
investigation or other claim against it (if by a third party) or
discovering the liability, obligation or facts giving rise to such
claim for indemnification, describing the claim, the amount thereof
(if known and quantifiable), and the basis thereof; provided that the
failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party of its or his obligations hereunder except to the
extent such failure shall have harmed the Indemnifying Party. In that
regard, if any action, lawsuit, proceeding, investigation or other
claim shall be brought or asserted by any third party which, if
adversely determined, would entitle the Indemnified Party to indemnity
pursuant to Article VII, the Indemnified Party shall promptly notify
the Indemnifying Party of the same in writing, specifying in detail
the basis of such claim and the facts pertaining thereto and the
Indemnifying Party shall defend such action, lawsuit, proceeding,
investigation or other claim giving rise to the Indemnified Party's
claim for indemnification at its own expense, and shall be entitled to
appoint lead counsel of such
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defense with a nationally recognized reputable counsel acceptable to
the Indemnified Party; provided that, as a condition precedent to the
Indemnifying Party's right to assume control of such defense, it must
first:
(i) enter into an agreement with the Indemnified Party (in
form and substance reasonably satisfactory to the Indemnified
Party) pursuant to which the Indemnifying Party agrees to be
fully responsible (with no reservation of rights) for all Losses
relating to such claims and that it will provide full
indemnification (whether or not otherwise required hereunder) to
the Indemnified Party for all Losses relating to such claim, and
(ii) unconditionally guarantee the payment and performance
of any liability or obligation which may arise with respect to
such claim or the facts giving rise to such claim for
indemnification (without regard to the Basket), and
(iii) furnish the Indemnified Party with reasonable
evidence that the Indemnifying Party is and will be able to
satisfy any such liability;
and provided further that the Indemnifying Party shall not have the right to
assume control of such defense and shall pay the fees and expenses of counsel
retained by the Indemnified Party, if the claim which the Indemnifying Party
seeks to assume control (i) seeks non-monetary relief, (ii) involves criminal or
quasi-criminal allegations, (iii) involves a claim to which the Indemnified
Party reasonably believes an adverse determination would be detrimental to or
injure the Indemnified Party's reputation or future business prospects, or (iv)
involves a claim which, upon petition by the Indemnified Party, the appropriate
court rules that the Indemnifying Party failed or is failing to vigorously
prosecute or defend.
If the Indemnifying Party is permitted to assume and control the
defense and elects to do so, the Indemnified Party shall have the right to
employ counsel separate from counsel employed by the Indemnifying Party in any
such action and to participate in the defense thereof, but the fees and expenses
of such counsel employed by the Indemnified Party shall be at the expense of the
Indemnified Party unless (i) the employment thereof has been specifically
authorized by the Indemnifying Party in writing, or (ii) the Indemnifying Party
has been advised by counsel that a reasonable likelihood exists of a conflict of
interest between the Indemnifying Party and the Indemnified Party.
If the Indemnifying Party shall control the defense of any such
claim, the Indemnifying Party shall obtain the prior written consent of the
Indemnified Party (which shall not be unreasonably withheld) before entering
into any settlement of a claim or ceasing to defend such claim, if pursuant to
or as a result of such settlement or cessation, injunction or other equitable
relief will be imposed against the Indemnified Party or if such settlement does
not expressly
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unconditionally release the Indemnified Party from all liabilities and
obligations with respect to such claim and all other claims arising out of the
same or similar facts and circumstances, with prejudice.
(e) Payments. The amount of indemnification to which an
Indemnified Party shall be entitled under this Section 7.2 shall be determined:
(i) by the written agreement between the Indemnified Party and the Indemnifying
Party; (ii) by a final judgment or decree of any court of competent
jurisdiction; or (iii) by any other means to which the Indemnified Party and the
Indemnifying Party shall agree. The judgment or decree of a court shall be
deemed final when the time for appeal, if any, shall have expired and no appeal
shall have been taken or when all appeals taken shall have been finally
determined. The Indemnified Party shall have the burden of proof in establishing
the amount of Losses suffered by it. The Indemnifying Party shall pay the
Indemnified Party in immediately available funds promptly after the amount of
indemnification is determined pursuant to this Section 7.2(e).
(f) Purchase Price Adjustments. Amounts paid to or on behalf of
Sellers or Buyer as indemnification shall be treated as adjustments to the
Purchase Price.
(g) Waiver, Release and Discharge. Except as set forth in
Section 3.1(c) herein, effective upon the Closing, Seller hereby irrevocably
waives, releases and discharges the Company from any and all liabilities and
obligations to Seller of any kind or nature whatsoever, whether in his capacity
as Seller hereunder, as a holder of membership interests, member, manager,
officer or director of the Company or otherwise (including, without limitation,
in respect of rights of contribution or indemnification), in each case whether
absolute or contingent, liquidated or unliquidated, known or unknown, and
whether arising hereunder or under any other agreement or understanding or
otherwise at law or equity, and each Seller shall not seek to recover any
amounts in connection therewith or thereunder from the Company.
7.3 PRE-JOINT VENTURE LIABILITIES.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, Seller shall retain and assume all Seller Pre-Joint Venture
Liabilities and indemnify the Buyer Parties and hold the Buyer Parties harmless
from and against and pay on behalf or reimburse the Buyer Parties in respect of
any Seller Pre-Joint Venture Liabilities such Buyer Party may suffer, sustain or
become subject to.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, Buyer shall retain and assume all Buyer Pre-Joint Venture Liabilities
and indemnify the Seller Parties and hold the Seller Parties harmless from and
against and pay on behalf or reimburse the Seller Parties in respect of any
Buyer Pre-Joint Venture Liabilities such Seller Party may suffer, sustain or
become subject to.
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ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1 TAX MATTERS.
(a) Transfer Taxes. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest thereon) incurred in connection with this Agreement shall be paid by
Seller when due, and Seller shall, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and if required by
applicable law, Buyer shall, and shall cause its Affiliates to, join in the
execution of any such Tax Returns and other documentation.
(b) Cooperation on Tax Matters. Buyer and Seller shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns of the Company and any audit,
litigation or other proceeding with respect to Taxes of the Company. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Seller, at the option of Buyer, shall cooperate
in the preparation and filing of an election under Section 754 of the Code, and
under any similar state or local tax law, with respect to the sale of membership
interests in the Company.
8.2 PRESS RELEASES AND ANNOUNCEMENTS. At, prior to and after the
Closing Date, no press releases related to this Agreement and the transactions
contemplated herein, or other announcements to the employees, customers or
suppliers of the Company shall be issued without the mutual approval of all
Parties, except for any public disclosure which is required by law or regulation
(in which case the disclosure shall be prepared jointly by Seller and Buyer).
8.3 FURTHER TRANSFERS. Seller shall execute and deliver such
further instruments of conveyance and transfer and take such additional action
as Buyer may reasonably request to effect, consummate, confirm or evidence the
transfer to Buyer of the Securities and any other transactions contemplated
hereby. In addition, to the extent any Proprietary Rights that are supposed to
be owned by the Company are owned by, or in the name of, Seller, at the request
of the Company, Seller shall take any and all actions necessary to transfer such
Proprietary Rights to the Company.
8.4 SPECIFIC PERFORMANCE. Seller acknowledges that the Company's
business is unique and recognizes and affirms that in the event of a breach of
this Agreement by such Seller, money damages may be inadequate and Buyer may
have no adequate remedy at law. Accordingly, Seller agrees that Buyer shall have
the right, in addition to any other rights and remedies existing in its favor,
to enforce its rights and Seller's obligations hereunder not only by an action
or actions for damages but also by an action or actions for specific
performance, injunctive and/or other equitable relief.
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8.5 EXPENSES. Except as otherwise provided herein, Seller and
Buyer shall pay all of their own fees, costs and expenses (including, without
limitation, fees, costs and expenses of legal counsel, investment bankers,
brokers or other representatives and consultants and appraisal fees, costs and
expenses) incurred in connection with the negotiation of this Agreement, the
performance of its obligations hereunder, and the consummation of the
transactions contemplated hereby. Seller shall pay one-half of the filing fee
associated with any filings under the HSR Act.
8.6 NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY.
(a) Non-Competition. In consideration of the mutual covenants
provided for herein to Seller at the Closing, during the period beginning on the
Closing Date and ending on the tenth anniversary of the Closing Date (the
"Non-Compete Period"), Seller shall not, and shall not allow any of its
respective Affiliates to engage (whether as an owner, operator, manager,
employee, officer, director, consultant, advisor, representative or otherwise),
directly or indirectly in any business that the Company conducts as of the
Closing Date or any business that otherwise competes with the Company as of the
Closing Date in any geographic area in which the Company conducts its business
as of the Closing Date; provided that ownership of less than 5% of the
outstanding stock of any publicly-traded corporation shall not be deemed to be
engaging solely by reason thereof in any of the Company's business. Seller
acknowledges that the business that the Company currently conducts consists of
the manufacture, distribution and sale of paper bags. Seller expressly
acknowledges and agrees that each and every restriction imposed by this Section
8.6 is reasonable with respect to subject matter, time period and geographical
area.
(b) Non-Solicitation. Notwithstanding anything in Section
8.3(b) of the JV Agreement to the contrary, Seller agrees that, during the
period beginning on the Closing Date and ending on the fifth anniversary of the
Closing Date (the "Non-Solicitation Period"), Seller shall not, and shall not
permit any of its Affiliates to, directly or indirectly,
(i) contact, approach or solicit for the purpose of
offering employment to or hiring (whether as an employee,
consultant, agent, independent contractor or otherwise) any
person employed by the Company at any time prior to the Closing
Date or during the Non-Solicitation Period, without the prior
written consent of Buyer; or
(ii) solicit or attempt to induce any customer or other
business relation of the Company into any business relationship,
except to the extent Seller has been engaged in business
(unrelated to the business of the Company) with such customer
prior to the Closing Date
(c) No Hiring. Notwithstanding anything in Section 8.3(b) of
the JV Agreement to the contrary, Seller agrees that during the period beginning
on the Closing Date and ending on the third anniversary of the Closing Date (the
"No Hire Period"), Seller shall not, and shall not permit any of its Affiliates
to, directly or indirectly, hire or employ any person employed by the Company
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at any time prior to the Closing Date or during the No Hire Period, without
prior written consent of Buyer; it being understood that Seller and its
Affiliates may actually hire persons employed by the Company after the No Hire
Period, provided that Seller and its Affiliates comply with the provisions set
forth in Section 8.6 (b) hereof.
(d) Confidentiality. Notwithstanding anything in Article VI of
the JV Agreement to the contrary, Seller shall treat and hold as confidential
any information concerning the business and affairs of the Company that is not
already generally available to the public (the "Confidential Information"),
refrain from using any of the Confidential Information except in connection with
this Agreement, and deliver promptly to Buyer, at the request and option of
Buyer, all tangible embodiments (and all copies) of the Confidential Information
which are in its possession or under its control. In the event that Seller is
requested or required (by oral question or request for information or documents
in any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, Seller shall notify
Buyer promptly of the request or requirement so that Buyer may seek an
appropriate protective order or waive compliance with the provisions of this
Section 8.6(d). If, in the absence of a protective order or the receipt of a
waiver hereunder, Seller is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt,
Seller may disclose the Confidential Information to the tribunal; provided that
Seller shall use its best efforts to obtain, at the request of Buyer, an order
or other assurance that confidential treatment shall be accorded to such portion
of the Confidential Information required to be disclosed as Buyer shall
designate.
(e) Remedy for Breach. Seller acknowledges and agrees that in
the event of a breach by Seller of any of the provisions of this Section 8.6,
monetary damages shall not constitute a sufficient remedy. Consequently, in the
event of any such breach, the Company, Buyer and/or their respective successors
or assigns may, in addition to other rights and remedies existing in their
favor, apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce or
prevent any violations of the provisions hereof, in each case without the
requirement of posting a bond or proving actual damages.
(f) Enforcement. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 8.6 is invalid
or unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
8.7 TERMINATION OF AGREEMENTS.. The Parties confirm that all of
the Ancillary Agreements (as such term is defined in the JV Agreement) shall be
terminated as of the date hereof, and that upon such termination the parties
thereto shall have no further obligation or liability with respect to the such
agreements, except with respect to the obligations related to the Disputed
Amount
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and those obligations set forth therein which by their express terms survive the
termination of such agreements.
8.8 TRANSITION ASSISTANCE. For a period of 180 days after the
Closing Date (which period may be extended at Buyer's sole discretion for up to
an additional 90 days upon 14 days prior written notice to Seller), Seller shall
provide Buyer (as Buyer may reasonably request) with access to, and use and
support of, all of Seller's computer programs and hardware (including, without
limitation, the MSA computer system, utilities, modules, libraries, databases,
compilations, applications and other electronically shared data used to track or
store the Company's accounts receivable, accounts payable, customer lists,
inventory and other Company records) which are currently used by the Company to
support the conduct of the Company's business. Such access and support shall be
provided to Buyer at Seller's actual cost. Buyer shall use its reasonable
efforts to cause the Company not to require such access and support to conduct
its business.
8.9 SUFFICIENT CAPITALIZATION. Seller shall (i) be able to pay
its debts as they become due and (ii) have adequate capital and/or own property
that has a fair saleable value greater than the amount required to pay its
Indebtedness (including a reasonable estimate of the amount of all contingent
liabilities hereunder, under the Transaction Documents or in connection with the
transactions contemplated hereby or thereby).
ARTICLE IX
MISCELLANEOUS
9.1 AMENDMENT AND WAIVER. This Agreement may be amended and any
provision of this Agreement may be waived, provided that any such amendment or
waiver shall be binding upon a Party only if such amendment or waiver is set
forth in a writing executed by such Party. No course of dealing between or among
any persons having any interest in this Agreement shall be deemed effective to
modify, amend or discharge any part of this Agreement or any rights or
obligations of any Party under or by reason of this Agreement.
9.2 NOTICES. All notices, demands and other communications given
or delivered under this Agreement shall be in writing and shall be deemed to
have been given when personally delivered, mailed by first class mail, return
receipt requested, or delivered by express courier service or telecopied (with
hard copy to follow). Notices, demands and communications to Seller shall,
unless another address is specified in writing, be sent to the respective
address or telecopy number indicated below:
Notices to Seller: with a copy to:
------------------ ---------------
Stone Container Corporation Sidley & Austin
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000 Xxxxx Xxxxxxxx Xxxxxx One First National Plaza
Chicago, IL 60601 Xxxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq. Attention: Xxxxxxxxx X. Xxxxxxxx, Esq.
Notices to Buyer: with a copy to:
----------------- ---------------
Xxxxxxx Container Corporation Xxxxxxxx & Xxxxx
000 Xxxx Xxxx Xxxx 000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000 Xxxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq. Attention: Xxxxxxx X. Xxxxxx, P.C.
Xxxxxxxx X. Xxxxxx, Esq.
9.3 BINDING AGREEMENT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the Parties
and their respective successors and permitted assigns; provided that neither
this Agreement nor any of the rights, interests or obligations hereunder may be
assigned by Seller or Buyer without the prior written consent of Buyer or Seller
respectively. Notwithstanding the foregoing, without the prior written consent
of Seller, Buyer may at any time, in its sole discretion, assign, in whole or in
part, (a) its rights and obligations pursuant to this Agreement to one or more
of its Affiliates; (b) its rights under this Agreement for collateral security
purposes to any lender providing financing to Buyer, the Company or any of their
Affiliates and any such lender may exercise all of the rights and remedies of
the Buyer hereunder; and (c) its rights under this Agreement, in whole or in
part, to any subsequent purchaser of the Company or any of its divisions or any
material portion of its assets (whether such sale is structured as a sale of
stock, sale of assets, merger, recapitalization or otherwise).
9.4 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
9.5 CONSTRUCTION. The language used in this Agreement shall be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any person. Nothing
in the schedules hereto shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the schedule identifies the
exception
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with reasonable particularity and describes the relevant facts in reasonable
detail. Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed adequate to
disclose an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
item itself). The Parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any Party has
breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first representation,
warranty, or covenant.
9.6 CAPTIONS. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement.
9.7 ENTIRE AGREEMENT. The schedules identified in this Agreement
are incorporated herein by reference. This Agreement and the documents referred
to herein contain the entire agreement between the Parties and supersede any
prior understandings, agreements or representations by or between the Parties,
written or oral, which may have related to the subject matter hereof in any way.
9.8 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.
9.9 GOVERNING LAW.. All questions concerning the construction,
validity and interpretation of this Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision (whether of the State
of Illinois or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Illinois.
9.10 PARTIES IN INTEREST. Nothing in this Agreement, express or
implied, is intended to confer on any person other than the Parties and their
respective successors and assigns any rights or remedies under or by virtue of
this Agreement.
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9.11 ARBITRATION.
Except for disputes, controversies, or claims arising under
Sections 2.2 or 8.6 hereto and for other claims seeking injunctive relief, and
except as expressly provided elsewhere in this Agreement or the other
Transaction Documents, any dispute, controversy, or claim arising under or
relating to the Transaction Documents or any breach of threatened breach thereof
("Arbitrable Dispute") shall be resolved by final and binding arbitration
administered by the American Arbitration Association ("AAA") under its
Commercial Arbitration Rules, subject to the following:
(a) Any Party may demand that any Arbitrable Dispute be
submitted to binding arbitration. The demand for arbitration shall be in
writing, shall be served on the other Party in the manner prescribed herein for
the giving of notices, and shall set forth a short statement of the factual
basis for the claim, specifying the matter or matters to be arbitrated.
(b) The arbitration shall be conducted by a panel of three
arbitrators, one selected by Buyer, one selected by Seller and the third to be
selected jointly by the arbitrators selected by Buyer and Seller (collectively,
the "Arbitrators") who shall conduct such evidentiary or other hearings as they
deem necessary or appropriate and thereafter shall make their determination as
soon as practicable. Any arbitration pursuant hereto shall be conducted by the
Arbitrators under the guidance of the Federal Rules of Civil Procedure and the
Federal Rules of Evidence, but the Arbitrators shall not be required to comply
strictly with such Rules in conducting any such arbitration. All such
arbitration proceedings shall take place in Chicago, Illinois.
(c) Except as provided herein:
(i) each Party shall bear its own "Costs and Fees," which are
defined as all reasonable pre-award expenses of the arbitration,
including travel expenses, out-of-pocket expenses (including, but not
limited to, copying and telephone) witness fees, and reasonable
attorney's fees and expenses;
(ii) the fees and expenses of the Arbitrators and all other
costs and expenses incurred in connection with the arbitration
("Arbitration Expenses") shall be borne equally by the Parties; and
(iii) notwithstanding the foregoing, the Arbitrators shall be
empowered to require any one or more of the Parties to bear all or any
portion of such Costs and Fees and/or the fees and expenses of the
Arbitrators in the event that the Arbitrators determine such Party has
acted unreasonably or in bad faith.
(d) The Arbitrators shall have the authority to award any
remedy or relief that a Court of the State of Illinois could order or grant,
including, without limitation, specific performance of any obligation created
under this Agreement and the other Transaction Documents, the awarding
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of punitive damages, the issuance of an injunction, or the imposition of
sanctions for abuse or frustration of the arbitration process. The Arbitrators
shall render their decision and award upon the concurrence of at least two (2)
of their number. Such decision and award shall be in writing and counterpart
copies thereof shall be delivered to each Party. The decision and award of the
Arbitrators shall be binding on all Parties. In rendering such decision and
award, the Arbitrators shall not add to, subtract from or otherwise modify the
provisions of this Agreement or the other Transaction Documents. Any Party to
the arbitration may seek to have judgment upon the award rendered by the
Arbitrators entered in any court having jurisdiction thereof.
(e) Each Party agrees that it will not file any suit, motion,
petition or otherwise commence any legal action or proceeding for any matter
which is required to be submitted to arbitration as contemplated herein except
in connection with the enforcement of an award rendered by the Arbitrators. Upon
the entry of an order dismissing or staying any action or proceeding filed
contrary to the preceding sentence, the Party which filed such action or
proceeding shall promptly pay to the other Party the reasonable attorney's fees,
costs and expenses incurred by such other Party prior to the entry of such
order.
9.12 DELIVERY BY FACSIMILE. This Agreement and any Transaction
Document, and any amendments hereto or thereto, to the extent signed and
delivered by means of a facsimile machine, shall be treated in all manner and
respects as an original Contract and shall be considered to have the same
binding legal effects as if it were the original signed version thereof
delivered in person. At the request of any party hereto or to any such Contract,
each other party hereto or thereto shall re-execute original forms thereof and
deliver them to all other parties. No party hereto or to any such Contract shall
raise the use of a facsimile machine to deliver a signature or the fact that any
signature or Contract was transmitted or communicated through the use of
facsimile machine as a defense to the formation of a Contract and each such
party forever waives any such defense.
* * * * *
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IN WITNESS WHEREOF, the Parties have executed this Agreement as
of the date first written above.
XXXXXXX CONTAINER CORPORATION
By: /s/ Xxxxxxx X. Park
--------------------------------------------
Its: Vice President and Corporate Controller
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STONE CONTAINER CORPORATION
By: /s/ Xxxxxx Ledrer
--------------------------------------------
Its: V.P., Secretary and General Council
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