Exhibit 2.1
STOCK PURCHASE AGREEMENT
between
INTERNATIONAL MULTIFOODS CORPORATION
(Seller)
and
GRUMA, S.A. DE C. V.
(Buyer)
______________________________
Dated as of August 6, 1999
______________________________
SALE OF DAMCA INTERNATIONAL CORPORATION
TABLE OF CONTENTS
Page No.
INDEX OF DEFINED TERMS vi
1. Purchase and Sale of the Shares 1
2. Closing; Purchase Price Adjustment 1
(a) Closing and Adjustment 1
(b) Determination of Closing Net Assets 2
3. Conditions to Closing 4
(a) Buyer's Obligation 4
(b) Seller's Obligation 6
4. Representations and Warranties of Seller 7
(a) Organization and Authority of Seller 8
(b) No Conflicts 8
(c) The Shares 8
(d) Organization and Standing of the Company and
the Subsidiaries 9
(e) Capital Stock of the Company and the Subsidiaries 9
(f) Equity Interests 9
(g) Financial Statements 10
(h) Taxes 10
(i) Title to Tangible Personal Property 12
(j) Title to Real Property 12
(k) Condition of Assets 13
(l) Intellectual Property 14
(m) Contracts 15
(n) Litigation; Decrees 17
(o) Insurance 17
(p) Employee Benefits 18
(q) Absence of Changes or Events 18
(r) Compliance with Laws 20
(s) Environmental Matters 21
(t) Employee and Labor Relations 21
(u) Accounts 21
(v) No Undisclosed Liabilities 21
(w) Inventory 22
(x) Accounts Receivable 22
(y) Corporate Name 22
(z) Customers 22
(aa) Year 2000 Plans 22
(bb) AGROMONACA, C.A., Xxxxx Xxxx and
the Monaca Subsidiary. 22
(cc) Books and Records 22
(dd) Utilities 23
(ee) Representations and Warranties in
Note Purchase Agreement 23
5. Covenants of Seller 23
(a) Access 23
(b) Ordinary Conduct 23
(c) Confidentiality 26
(d) Insurance 26
(e) Resignations 26
(f) Covenant Not to Compete 26
(g) Delivery of Records 28
(h) Owned Real Property. 29
6. Representations and Warranties of Buyer 29
(a) Organization and Authority of Buyer 29
(b) No Conflicts 30
(c) Securities Act of 1933 30
(d) Litigation; Decrees 30
(e) Representations and Warranties in
Note Purchase Agreement 30
7. Covenants of Buyer 30
(a) Confidentiality 30
(b) No Representations or Warranties 31
(c) Retention of Records 31
(d) Debt Releases 31
8. Mutual Covenants 31
(a) Consents 31
(b) Cooperation 32
(c) Trademarks 33
(d) Publicity 34
(e) Closing Conditions 35
(f) Antitrust Notification 35
(g) Intercompany Accounts 35
(h) Insurance 36
(i) Disclosure Supplements 37
(j) Disposition of Xxxxx Xxxx Business,
Monaca Subsidiary and Excluded Assets 37
(k) Reserve for Receivables 37
9. Employees and Employee Benefits 38
10. Further Assurances 38
11. Indemnification 38
(a) Tax Indemnification 38
(b) Other Indemnification by Seller 40
(c) Other Indemnification by Buyer 43
(d) Adjustments; Clean-Up Actions 44
(e) Termination of Indemnification 45
(f) Procedures Relating to Indemnification
for Third Party Claims 46
(g) Procedures Relating to Indemnification
of Tax Claims 47
(h) Procedure for Indemnification--Other Claims 47
(i) Form of Indemnification Payments 48
12. Tax Matters 48
13. Assignment 50
14. No Third-Party Beneficiaries 50
15. Termination 51
16. Survival of Representations 52
17. Expenses 52
18. Amendments 52
19. Notices 52
20. Interpretation 54
21. Counterparts 54
22. Entire Agreement 55
23. No Brokerage Fees 55
24. Severability 55
25. Governing Law; Jurisdiction 55
26. Equitable Remedies 56
27. Disclosure Schedule 56
EXHIBITS
Exhibit A Form of Note Purchase Agreement
Exhibit B Form of Opinion of Faegre & Xxxxxx LLP
Exhibit C Form of Opinion of Seller's General Counsel
Exhibit D Form of Opinion of Xxxxxxxx Xxxxx Xxxxxx Xxxxx Xxxxxx & Xxx
Exhibit E Material Consents, Approvals and Other Actions
Exhibit F Form of Opinion of Akin, Gump, Strauss, Xxxxx and Xxxx, LLP
Exhibit G Form of Opinion of Xxxxxxxx Xxxxxx Xxxxxxxx
Exhibit H Seller's Financial Statements
Exhibit I Licensed Marks and Form of Trademark License Agreement
Exhibit J Excluded Assets and Written-Off Assets
Subject to Reimbursement
INDEX OF DEFINED TERMS
(Not Part of the Agreement)
Term Section
Acquired Business 5(f)(ii)(A)
Adjusted Purchase Price 2(a)
Affiliate 20(c)
Agreement Introduction
Agro Business 11(b)(vi)
Allocations 12(g)
Arbitrator 2(b)(iii)
Audited Financial Statements 4(g)
BAT 11(a)
Business day 20(d)
Buyer Introduction
Buyer's Plans 9
Buyer Tax Act 11(a)
Closing 2(a)
Closing Date 2(a)
Closing Net Assets 2(b)(ii)
Closing Statement 2(b)(ii)
Code 4(h)(i)(C)
Company Recitals
Company Property 4(j)
Competing Business 5(f)(ii)(A)
Confidentiality Agreement 7(a)
Contracts 4(m)
Disclosure Schedule 4
DOJ 8(f)
Domestic 20(i)
Environmental Laws 11(b)(ix)
Excluded Assets 8(j)
Federal 20(i)
Fixed Adjustments 2(b)(i)
Foreign 20(i)
FTC 8(f)
GAAP 2(b)(v)
Hazardous Substance 4(s)
HSR Act 3(a)(iv)
Including 20(b)
Interim Statement 4(g)
Inversiones 3(a)(ix)
IPC 11(a)
Knowledge 20(h)
Leased Property 4(j)
License 8(c)(iii)
Licensed Marks 8(c)(iii)
Marks 8(c)(i)
Material Adverse Effect 4
Monaca Subsidiary 3(a)(vii)
Net Assets 2(b)(v)
Non-Competition Area 5(f)(i)
Note 1
Note Purchase Agreement 1
Owned Property 4(j)
Permitted Investment 5(f)(ii)
Permitted Liens 4(i)
Person 20(e)
Pre-Closing Tax Period 4(h)(i)(B)
Purchase Price 1
Restricted Business 5(f)(i)
Xxxxx Xxxx 3(a)(vii)
Section 338(h)(10) Election 12(g)
Seller Introduction
Seller's Plans 4(p)(i)
Shares Recitals
Straddle Period 11(a)
Subsidiaries 3(a)(ix)(B)
Tax 4(h)(i)(A)
Tax Claim 11(g)
Tax Notice 11(g)
Tax Return 4(h)(i)(D)
Third Party Claim 11(f)
Transaction Costs 12(g)
Written-Off Assets 8(k)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into
as of August 6, 1999, between INTERNATIONAL MULTIFOODS CORPORATION, a
Delaware corporation ("Seller"), and GRUMA, S.A. DE C.V., a Mexican
corporation ("Buyer").
WHEREAS, Buyer desires to purchase from Seller, and Seller desires
to sell to Buyer, all of the issued and outstanding shares of Common
Stock, par value $1.00 per share (the "Shares"), of DAMCA INTERNATIONAL
CORPORATION, a Delaware corporation and wholly owned subsidiary of
Seller (the "Company").
NOW, THEREFORE, the parties agree as follows:
1. Purchase and Sale of the Shares. On the terms and subject
to the conditions of this Agreement, at the Closing (as defined in
Section 2(a)) Seller shall sell to Buyer, and Buyer shall purchase from
Seller, the Shares in exchange for a promissory note of Buyer (the
"Note") in the form attached as Exhibit 1 to the Note Purchase
Agreement (the "Note Purchase Agreement") attached as Exhibit A hereto,
dated the Closing Date (as defined in Section 2(a)), in the principal
amount of $19,295,000 (the "Purchase Price"), bearing interest at the
rate of 71/2% per annum, payable on the dates and containing the other
terms set forth in Exhibit 1 to the Note Purchase Agreement, subject to
adjustment in the principal amount of the Note as provided in Section
2.
2. Closing; Purchase Price Adjustment.
(a) Closing and Adjustment. The closing (the "Closing")
of the purchase and sale of the Shares shall be held at the offices of
Faegre & Xxxxxx LLP, 2200 Norwest Center, 00 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx, at 9:00 a.m. Minneapolis time on August 16,
1999, or, if later, on the second business day after all of the
conditions to closing set forth in Sections 3(a) and (b) have been
satisfied or waived, or on such other date as the parties may mutually
agree. The date on which the Closing occurs is called the "Closing
Date" and the Closing shall be deemed to have become effective at 12:01
a.m. on the Closing Date. At the Closing, (i) Seller shall deliver to
Buyer stock certificates representing the Shares, duly endorsed by
Seller for transfer to Buyer or accompanied by stock powers duly
executed by Seller in proper form for transfer to Buyer; (ii) Buyer
shall deliver to Seller the Note in a principal amount (the "Adjusted
Purchase Price") equal to (A) the Purchase Price, plus or minus (B) the
amount, if any, by which Closing Net Assets (determined in accordance
with Section 2(b)) exceeds or is less than $22,295,000; (iii) Buyer
shall execute and deliver to Seller, and Seller shall execute and
deliver to Buyer, the Note Purchase Agreement in the form attached
hereto as Exhibit A; and (iv) Buyer and Seller shall deliver the other
items required to be delivered under Section 3.
(b) Determination of Closing Net Assets.
(i) A physical inventory of the Subsidiaries (as defined in
Section 3(a)(viii)) has been conducted by Seller consistent with past
practices (and in accordance with the written inventory policies of
Molinos Nacionales, C.A. (MONACA), a copy of which has been delivered
to Buyer) as of the close of business on June 30, 1999. Buyer has
observed the taking of such physical inventory and the reconciliation
thereof. The value of the inventory shown on the Closing Statement (as
defined in clause (ii) below) and included in the determination of
Closing Net Assets (as defined in clause (ii) below) shall be based on
such physical inventory, as updated through July 31, 1999 in accordance
with the perpetual inventory system or other inventory records of
Molinos Nacionales, C.A. (MONACA) and with a physical count as of July
31, 1999 by Molinos Nacionales, C.A. (MONACA) consistent with ordinary
month-end practices, and, subject to such updating, the quantities of
each item of inventory determined under such physical inventory taken
as of June 30, 1999, shall be final and binding for purposes of
determining the value of such inventory and not subject to any post-
Closing adjustment, except as may be necessary to correct computational
errors. For purposes of determining Closing Net Assets, the Interim
Statement (as defined in Section 4(g)) shall conclusively be deemed to
have been true and correct, and shall be final and binding, in all
respects as of June 30, 1999. The amount of accrued reserves for trade
receivables, the agreed upon accrual for special salaried and hourly
employee termination expenses and year 2000 expenses and the amount of
inventory for spare parts (the "Fixed Adjustments") that shall be
included in Closing Net Assets shall be fixed at the respective amounts
thereof set forth in the Interim Statement.
(ii) Before the Closing, Seller, in consultation with Buyer,
shall prepare a statement dated as of July 31, 1999 (the "Closing
Statement") setting forth Net Assets (as defined in clause (v) below)
as of July 31, 1999 ("Closing Net Assets"). If there is a dispute
between Seller and Buyer with respect to any matters regarding Closing
Net Assets not made final and binding under Section 2(b)(i), Seller and
Buyer shall use all reasonable efforts to resolve the dispute before
the scheduled Closing, which resolution shall be reflected in the
determination of Closing Net Assets and shall be final and binding and
not subject to any post-Closing adjustment, except as may be necessary
to correct computational errors. Closing Net Assets shall be
determined as of July 31, 1999, regardless of when the Closing occurs.
(iii) If there is a dispute between Seller and Buyer with
respect to matters regarding Closing Net Assets not made final and
binding under Section 2(b)(i), which Seller and Buyer mutually conclude
they will be unable to resolve before the scheduled Closing, then
promptly after reaching that conclusion each party, acting in good
faith and exercising reasonable business judgment, shall prepare a
written statement setting forth in reasonable detail the matters that
remain in dispute and the Closing Net Assets determined by that party,
and shall submit copies of those documents to the other party. If the
Closing Net Assets set forth in Seller's written statement exceed the
Closing Net Assets set forth in Buyer's written statement by $250,000
or less, then the scheduled Closing shall proceed based on Closing Net
Assets equal to one-half of the sum of (x) the Closing Net Assets set
forth in Seller's written statement, plus (y) the Closing Net Assets
set forth in Buyer's written statement, which shall be final and
binding and not subject to any post-Closing adjustment, except as may
be necessary to correct computational errors. If the Closing Net
Assets set forth in Seller's written statement exceed the Closing Net
Assets set forth in Buyer's written statement by more than $250,000,
then Seller and Buyer shall immediately submit copies of their written
statements to Xxxxxx Xxxxxxxx LLP, unless Xxxxxx Xxxxxxxx LLP does not
agree to resolve such dispute over the amount of Closing Net Assets
because of a conflict of interest or otherwise, in which case Seller
and Buyer shall promptly submit copies of their written statements to
such nationally recognized independent public accounting firm as may be
agreed upon by Seller and Buyer (Xxxxxx Xxxxxxxx LLP or such other
agreed upon firm being hereinafter referred to as the "Arbitrator").
The Arbitrator shall review all matters that remain in dispute (which
shall not include any matters made final and binding under Section
2(b)(i)) and endeavor to render written decisions resolving such
matters at or before the scheduled Closing, which decisions shall be
reflected in the determination of Closing Net Assets (provided that the
Closing Net Assets so determined may not be less than those set forth
in the Buyer's written statement nor more than those set forth in the
Seller's written statement) and shall be final and binding and not
subject to any post-Closing adjustment, except as may be necessary to
correct computational errors. If the Arbitrator informs Seller and
Buyer that it is unable before the scheduled Closing to render
decisions resolving all matters that remain in dispute, then the
Closing shall be delayed until the first business day after the date on
which all remaining disputes have been resolved.
(iv) The procedures for arbitration under this Section 2(b)
shall be determined by the Arbitrator, provided that all disputed
matters shall be resolved by the Arbitrator in accordance with the
principles and methodology set forth in this Section 2(b) and in the
Interim Statement. The fees and disbursements of the Arbitrator shall
be borne equally by the parties.
(v) As used in this Section 2(b), "Net Assets" means the book
value (net of appropriate reserves) of all assets, less the book value
of all liabilities, of Inversiones on a consolidated basis of a type
that would be shown on the face of a balance sheet prepared in
accordance with United States generally accepted accounting principles
("GAAP"), other than (A) assets and liabilities of a type expressly
excluded from, or included in, Net Assets on the Interim Statement or
by this Agreement and (B) Fixed Adjustments, regardless of the
requirements of GAAP; all as determined on a basis consistent with the
principles applied by Seller in calculating the $22,295,000 of Net
Assets in the preparation of the Interim Statement.
3. Conditions to Closing.
(a) Buyer's Obligation. The obligation of Buyer to
consummate the transactions contemplated by this Agreement, including
the execution and delivery of the Note to Seller, is subject to the
satisfaction (or waiver by Buyer) of each of the following conditions:
(i) The representations and warranties of Seller made
under this Agreement, considered individually or collectively (without
giving effect to any supplement to the Disclosure Schedule), shall be
true and correct as of the date hereof and (except as they may be
affected by transactions contemplated hereby or by activities after the
date of this Agreement in the ordinary course of business) immediately
before the Closing, as though made immediately before the Closing,
except where the failure to be so true and correct would not have a
Material Adverse Effect (as defined in Section 4); each of the
representations and warranties of Seller set forth in Sections 4(c) and
4(e) or in the form of Note Purchase Agreement attached as Exhibit A,
considered individually (without giving effect to any supplement to the
Disclosure Schedule), shall be true and correct in all respects as of
the date hereof and immediately before the Closing, as though made
immediately before the Closing. Seller shall have performed or
complied in all material respects with all obligations and covenants
required by this Agreement, the Note Purchase Agreement or the Note to
be performed or complied with by Seller by the Closing; and Seller
shall have delivered to Buyer a certificate executed by an authorized
officer of Seller dated the Closing Date confirming the foregoing.
(ii) Buyer shall have received an opinion of Faegre &
Xxxxxx LLP, special counsel to Seller, substantially in the form of
Exhibit B; an opinion of Xxxxx X. Xxxxxxx, General Counsel of Seller,
substantially in the form of Exhibit C; and an opinion of Xxxxxxxx
Xxxxx Xxxxxx Xxxxx Xxxxxx & Xxx, special Venezuelan counsel to Seller,
substantially in the form of Exhibit D; each of which opinions shall be
dated the Closing Date.
(iii) No action, lawsuit, proceeding, or investigation by
any government body shall be pending or, to the knowledge of Seller,
threatened in writing by the governmental body wherein a judgment or
order is reasonably likely to be issued that would prevent any of the
transactions contemplated hereby or cause such transactions to be
declared unlawful; no injunction or order of any court or
administrative agency of competent jurisdiction shall be in effect that
restrains or prohibits the consummation of the transactions
contemplated hereby; no law shall be in effect which shall make illegal
Buyer's acquisition of the Shares; and no war or similar civil
insurrection in Venezuela shall be continuing that would have a
material adverse effect upon the Subsidiaries' ability to operate their
businesses, taken as a whole, following the Closing.
(iv) All filings required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall
have been made, and any approvals required thereunder shall have been
obtained, or the waiting period required thereby shall have expired or
terminated.
(v) Since the date of this Agreement, no incident or
event (other than those expressly contemplated by this Agreement,
including Section 8) shall have occurred that, individually or in the
aggregate, has a Material Adverse Effect.
(vi) The consents, approvals, and other actions listed on
Exhibit E by third parties and governmental entities or authorities
that are required for the consummation of the transactions shall have
been obtained.
(vii) Seller shall have caused the Company to transfer
the shares of capital stock of Xxxxx Xxxx Multifoods, Inc., a Canadian
corporation ("Xxxxx Xxxx") and Multifoods Venezuela, C.A., a Venezuelan
corporation ("Monaca Subsidiary") to Seller and certain assets of
Molinos Nacionales, C.A. (MONACA) to an indirect subsidiary of Seller,
each in accordance with Section 8(j).
(viii) all intercompany loans and accounts between any of
the Company or the Subsidiaries, on the one hand, and Seller or any of
its other affiliates, including Xxxxx Xxxx, on the other hand, shall
have been paid in full and all other agreements and arrangements
between any of the Company or the Subsidiaries, on the one hand, and
Seller or any of its other affiliates, including Xxxxx Xxxx, on the
other hand, required by this Agreement to be terminated at or prior to
Closing shall have been terminated.
(ix) On the Closing Date, Seller shall have delivered to
Buyer the following:
(A) certified copies of resolutions duly adopted by
Seller's Board of Directors approving the execution, delivery, and
performance of this Agreement and the Note Purchase Agreement and the
consummation of the transactions contemplated hereby and thereby;
(B) copies of the certificate of incorporation of the
Company certified by Delaware Secretary of State as of a recent date
and copies of the charter documents of Inversiones Monaca, C.A.
("Inversiones"), Molinos Nacionales, C.A. (MONACA), and AGROMONACA,
C.A. (collectively, the "Subsidiaries");
(C) copies of the bylaws of the Company, certified by the
Secretary of the Company, and copies of the bylaws of the Subsidiaries;
(D) a good standing certificate, as of a recent date, for
the Company from the Delaware Secretary of State; and
(E) an assignment separate from certificate, in form and
substance reasonably satisfactory to counsel for Buyer, sufficient to
transfer to Buyer Seller's right, title, and interest in the Shares.
(x) All proceedings to be taken by Seller in connection
with the consummation of the Closing and the other transactions
contemplated hereby and all documents required to be delivered by
Seller in connection with the transactions contemplated hereby,
including the transfer of Seller's right, title, and interest in the
Shares to Buyer, will be reasonably satisfactory to Buyer.
(xi) Seller shall have executed and delivered to Buyer
the Note Purchase Agreement.
(b) Seller's Obligation. The obligation of Seller to
consummate the transactions contemplated by this Agreement, including
the transfer of Seller's right, title, and interest in the Shares to
Buyer, is subject to the satisfaction (or waiver by Seller) as of the
Closing of each of the following conditions:
(i) Each of the representations and warranties of Buyer
contained in this Agreement or contained in the form of Note Purchase
Agreement attached as Exhibit A, considered individually, shall be true
and correct in all material respects as of the date hereof and
immediately before the Closing, as though made immediately before the
Closing; Buyer shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement
or the Note Purchase Agreement to be performed or complied with by
Buyer by the Closing; and Buyer shall have delivered to Seller a
certificate executed by an authorized officer of Buyer dated the
Closing Date confirming the foregoing.
(ii) Seller shall have received an opinion of Akin, Gump,
Strauss, Xxxxx and Xxxx, L.L.P., substantially in the form of Exhibit
F; and an opinion of Xxxxxxxx Xxxxxx Xxxxxxxx, General Counsel of
Buyer, substantially in the form of Exhibit G; each of which opinions
shall be dated as of the Closing Date.
(iii) No action, lawsuit, proceeding, or investigation by
any government body shall be pending or, to the knowledge of Buyer,
threatened in writing by the governmental body wherein a judgment or
order is reasonably likely to be issued that would prevent any of the
transactions contemplated hereby or cause such transactions to be
declared unlawful; no injunction or order of any court or
administrative agency of competent jurisdiction shall be in effect that
restrains or prohibits the consummation of the transactions
contemplated hereby; and no law shall be in effect which shall make
illegal Seller's sale of the Shares to Buyer.
(iv) All filings required under the HSR Act shall have
been made, and any approvals required thereunder shall have been
obtained, or the waiting period required thereby shall have expired or
terminated.
(v) Seller and all of its affiliates other than the
Company and the Subsidiaries shall have been released from all, and
shall have no obligations or contingent obligations or be subject to
any recourse under any guarantees thereby of, or other financial
accommodations thereby with respect to, and none of the assets of
Seller or any such affiliates shall be subject to any security for any,
indebtedness or other obligations of the Company or one or more of the
Subsidiaries; and none of Seller nor any of its affiliates other than
the Company and the Subsidiaries shall have any reimbursement
obligations to issuers of letters of credit or other third-party credit
enhancements backing obligations of the Company or any of its
Subsidiaries.
(vi) all intercompany loans and accounts between any of
the Company or the Subsidiaries, on the one hand, and Seller or any of
its other affiliates, including Xxxxx Xxxx, on the other hand, shall
have been paid in full and all other agreements and arrangements
between any of the Company or the Subsidiaries, on the one hand, and
Seller or any of its other affiliates, including Xxxxx Xxxx, on the
other hand, required by this Agreement to be terminated at or prior to
Closing shall have been terminated.
(vii) Seller shall have received (A) certified copies of
resolutions adopted by Buyer's Board of Directors approving the
execution, delivery, and performance of this Agreement, the Note
Purchase Agreement and the Note and the consummation of the
transactions contemplated hereby and thereby and (B) copies of the
charter documents and bylaws of Buyer.
(viii) The fairness opinion referred to in Section 23
shall not have been withdrawn or modified in a material manner.
(ix) All proceedings to be taken by Buyer in connection
with the consummation of the Closing and the other transactions
contemplated hereby and all documents required to be delivered by Buyer
in connection with the transactions contemplated hereby will be
reasonably satisfactory to Seller.
(x) Buyer shall have executed and delivered to Seller the
Note Purchase Agreement and the Note.
4. Representations and Warranties of Seller. "Material
Adverse Effect" means any change or effect (other than those set forth
in the Disclosure Schedule, as defined below) that, individually or
when taken together with all such changes or effects, is reasonably
likely to have a material adverse effect on the business, operations,
results of operations, properties, or financial condition of the
Company and its subsidiaries (other than Xxxxx Xxxx, the Monaca
Subsidiary, or any subsidiaries of Xxxxx Xxxx) taken as a whole, or a
material adverse effect upon the ownership of the capital stock of the
Company or any Subsidiary, individually or taken as a whole (other than
incidents, occurrences, events, or conditions generally applicable to
the industry in which the Subsidiaries operate or changes in general
economic conditions) or materially impairs the ability of Seller to
consummate the transactions contemplated by this Agreement. No
representations or warranties are made as to Xxxxx Xxxx and its
subsidiaries, or as to the Monaca Subsidiary or as to the assets of
Molinos Nacionales, C.A. (MONACA) to be transferred to an indirect
subsidiary of Seller pursuant to Section 8(j). Except as otherwise set
forth in the disclosure schedule delivered by Seller to Buyer
concurrently with the execution of this Agreement (the "Disclosure
Schedule"), Seller represents and warrants to Buyer, as follows:
(a) Organization and Authority of Seller. Seller is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware. Seller has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. All corporate acts
and proceedings required to be taken to authorize the execution,
delivery, and performance by Seller of this Agreement and the
consummation by Seller of the transactions contemplated hereby have
been duly and properly taken. This Agreement has been duly executed
and delivered by Seller and, assuming due authorization, execution, and
delivery of this Agreement by Buyer, constitutes a valid and binding
obligation of Seller, enforceable against Seller in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, and other similar laws affecting creditors'
rights generally and by general principles of equity.
(b) No Conflicts. The execution, delivery, and
performance by Seller of this Agreement do not, and the consummation by
Seller of the transactions contemplated hereby will not, directly or
indirectly (with or without notice or lapse of time) (i) conflict with,
or result in any violation of, any provision of the charter or bylaws
or other organizational documents of any of Seller, the Company, or the
Subsidiaries, or (ii) conflict with, result in any violation of, or
constitute a default under, any instrument, contract, commitment,
agreement, or arrangement to which any of Seller, the Company, or the
Subsidiaries is a party or by which any of them or their property or
assets is bound, or any judgment, order, writ, injunction, or decree to
which any of Seller, the Company or the Subsidiaries has been
specifically identified as subject, or any statute, law, ordinance,
rule, or regulation applicable to any of them or their property or
assets (except where such conflict, violation, or default would not
have a Material Adverse Effect). No material consent, approval,
license, permit, order, or authorization of, or registration,
declaration, or filing with, any court, administrative agency or
commission, or other governmental authority or instrumentality,
domestic or foreign, is required to be obtained or made by any of
Seller, the Company, or the Subsidiaries in connection with the
execution, delivery, and performance by Seller of this Agreement or the
consummation by Seller of the transactions contemplated hereby other
than compliance with the HSR Act.
(c) The Shares. Seller is the owner of the Shares, free
and clear of all claims, pledges, liens, encumbrances, security
interests, options, charges, rights of third parties, and restrictions,
except for restrictions upon transfer of the Shares other than in
compliance with federal and state securities laws. The Shares are not
subject to any voting trust agreement or other contract, agreement,
arrangement, commitment, or understanding, other than this Agreement.
Seller has the sole right to vote or direct the voting of the Shares,
at its discretion, on any matter submitted to a vote of the Company's
shareholders. The delivery to Buyer at the Closing of the certificate
or certificates representing the Shares, duly endorsed in blank or in
favor of Buyer, will transfer to Buyer good title to such Shares, free
and clear of all claims, pledges, liens, encumbrances, security
interests, options, charges, rights of third parties and restrictions
against free transferability which are not created by Buyer or its
affiliates except for restrictions upon further transfer of the Shares
other than in compliance with federal and state securities laws.
(d) Organization and Standing of the Company and the
Subsidiaries. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
The Subsidiaries are corporations duly organized, validly existing, and
in good standing under the laws of the Country of Venezuela. Each of
the Company and the Subsidiaries has all requisite corporate power and
authority to enable it to own, lease, or otherwise hold its properties
and assets and to carry on its business as presently conducted. The
Company is duly qualified and in good standing to do business as a
foreign corporation in each jurisdiction in which the property owned,
leased, or operated by it or the nature of its business makes such
qualification necessary, except where the failure to be so qualified or
in good standing would not have a Material Adverse Effect.
(e) Capital Stock of the Company and the Subsidiaries.
The authorized capital stock of the Company consists of 10,000 shares
of Common Stock, par value $1.00 per share, of which 3,246 shares are
issued and outstanding. The authorized capital stock of Inversiones
consists of 44,302 shares of stock, par value 1,000 Bolivars per share,
of which 44,302 shares are issued and outstanding. The authorized
capital stock of Molinos Nacionales C.A. (MONACA) consists of 3,045,966
shares of stock, par value 1,000 Bolivars per share, of which 3,044,302
Class B shares are issued and outstanding and 1,664 Class A shares are
held in treasury. The authorized capital stock of AGROMONACA C.A.
consists of 5,000 shares of stock, par value 1,000 Bolivars per share,
of which 5,000 shares are issued and outstanding. All of the Shares
and all of the outstanding shares of capital stock of the Subsidiaries
were duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth above, there are no shares of
capital stock of any of the Company or the Subsidiaries outstanding.
Neither the Shares nor any shares of capital stock of the Subsidiaries
have been issued in violation of any preemptive or similar rights.
There are no outstanding subscriptions, calls, warrants, options,
agreements, convertible or exchangeable securities, or other
commitments under which any of Seller, the Company, or the Subsidiaries
is obligated to issue, sell, transfer, or otherwise dispose of, or
purchase, return, redeem, or otherwise acquire, any of the Shares or
any other shares of capital stock of the Company or the Subsidiaries,
other than this Agreement. The Company owns, directly or indirectly,
all of the outstanding shares of capital stock of the Subsidiaries,
free and clear of all claims, pledges, liens, encumbrances, security
interests, options, charges, rights of third parties, and restrictions,
except for restrictions upon transfer other than in compliance with
applicable securities laws. The Company or a Subsidiary has the sole
right to vote or direct the voting of all of the outstanding shares of
the capital stock of each of the Subsidiaries, at its discretion, on
any matter submitted to a vote of each such Subsidiary's shareholders.
(f) Equity Interests. Except for the Subsidiaries, Xxxxx
Xxxx and its subsidiaries and the Monaca Subsidiary (discussed in
Section 8(j)), the Company does not directly or indirectly own any
capital stock of, or other equity interests in, any corporation or
other entity.
(g) Financial Statements. Attached as Exhibit H are (i)
an audited Consolidated Balance Sheet of Inversiones as of February 28,
1999, and an audited Consolidated Statement of Operations and Cash
Flows of Inversiones for the fiscal year ended February 28, 1999,
together with the notes thereto and the report thereon of KPMG Xxxxxxx
Xxxxxxx Xxxxxxx (collectively, the "Audited Financial Statements"), and
(ii) an unaudited Consolidated Statement of Net Assets of Inversiones
as of June 30, 1999 (the "Interim Statement"). Except as expressly
disclosed therein, the Audited Financial Statements fairly present, in
all material respects, the consolidated assets, liabilities, and
financial condition of the Subsidiaries at their respective dates and
the consolidated results of operations of the Subsidiaries for the
respective periods covered thereby, all in conformity with GAAP applied
on a basis consistent with prior periods. Except as expressly
disclosed therein, the Interim Statement fairly presents, in all
material respects, the Net Assets of the Subsidiaries at the date
thereof, all in conformity with GAAP applied on a basis consistent with
the Audited Financial Statements, except as provided in clause (A) or
(B) of Section 2(b)(v) and except for the format of the Interim
Statement and the absence of notes thereto. The Company does not
directly, or indirectly except through the Subsidiaries, Xxxxx Xxxx and
its subsidiaries or the Monaca Subsidiary, own, lease or otherwise hold
any properties or assets or conduct or carry on any business or
operations, and the Company on a consolidating basis does not have any
direct actual liabilities or direct contingent liabilities.
(h) Taxes.
(i) For purposes of this Agreement, (A) "Tax" or "Taxes" means
all United States and Venezuelan federal, state, and local, and all
other foreign, taxes and assessments, including all income, import,
gift, business asset, luxury, wholesale sale, value added, stamp,
customs duties, payroll, social security, Instituto Nacional de
Cooperacion Educativa (INCE), municipal business license, municipal
real estate, municipal garbage collection and withholding Taxes imposed
pursuant to laws, decrees, rules, resolutions or regulations in effect
at any time prior to the Closing on businesses conducted by the Company
or its Subsidiaries and all interest, penalties, monetary corrections,
and additions imposed with respect to such amounts; (B) "Pre-Closing
Tax Period" means all Tax periods ending on or before the July 31, 1999
and the portion ending on or before July 31, 1999 of any Tax period
that includes (but does not begin on) that day and includes the final
Tax year of the Company and the Subsidiaries as members of Seller's
affiliated group, excluding, however, the Closing Date; (C) "Code"
means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder; and (D) "Tax Return" or "Tax Returns" means
returns, reports, information statements, and other documentation
(including any additional or supporting material) filed or maintained,
or required to be filed or maintained, in connection with the
calculation, determination, assessment, or collection of any Tax. For
purposes of this Agreement, Taxes also includes any obligations under
any agreements or arrangements with any person with respect to the
liability for, or sharing of, Taxes (including any liability for Taxes
imposed as a result of joint and several liability of the Company or
any Subsidiary or pursuant to Treas. Reg. Section 1.1502-6 or
comparable provisions of state, local or foreign law) and including any
liability for Taxes as a transferee or successor, by contract or
otherwise.
(ii) Each of the Company and the Subsidiaries, and any
affiliated group (within the meaning of Section 1504 of the Code) of
which any of the Company or the Subsidiaries is or has been a member,
has filed or caused to be filed in a timely manner (within any
applicable extension periods) all Tax Returns required to be filed,
except where the failure to file such Tax Returns would not have a
Material Adverse Effect. All Taxes shown to be due on such Tax Returns
have been paid in full, will be paid in full on or before July 31,
1999, or will be included in the final determination of Closing Net
Assets. True and complete copies of all federal and foreign income Tax
returns of the Company and the Subsidiaries (but not of Seller) for all
Tax periods for which the applicable statute of limitations has not run
as of the Closing Date have been made available to Buyer. No
adjustment relating to any such Tax Return has been threatened or
proposed in writing prior to the date of this Agreement by any Tax
authority that has not been settled in full.
(iii) Since March 1, 1995, the Company and each of its
Subsidiaries have complied in all material respects with the provisions
of the Code relating to the withholding and payment of Taxes,
including, without limitation, the withholding and reporting
requirements under Code sections 1441 through 1464, 3401 through 3406,
and 6041 through 6049 as well as similar provisions under any other
laws of any country or subdivision thereof; and have, within the time
and in the manner prescribed by law, withheld from employees' wages and
paid over to the proper governmental authorities all amounts required
to be so paid.
(iv) No statute of limitations for assertion of Tax claims by
a Tax authority has been extended with respect to any Tax period that
still remains open.
(v) Since March 1, 1995, no claim has been made in writing by
any Tax authority with respect to the Company or any of its
Subsidiaries in a jurisdiction where the Company or such Subsidiary
does not file reports and returns to the effect that the Company or
such Subsidiary, as the case may be, is or may be subject to taxation
by that jurisdiction.
(vi) Neither the Company nor any of its Subsidiaries has
agreed or is required to include in income or make any material
adjustment under either Section 481(a) or Section 482 of the Code (or
an analogous provision of state, local, or foreign law) by reason of a
change in accounting or otherwise. Neither the Company nor any of its
Subsidiaries has disposed of any material property in a transaction
being accounted for under the installment method pursuant to Section
453 of the Code.
(vii) Neither the Company nor any of its Subsidiaries is a
party to any agreement (other than this Agreement) to share Taxes with
respect to any Tax period (or portion thereof), but a United States
Federal Tax allocation ruling with respect to the Company and the
Subsidiaries is in effect.
(viii) There is no contract, agreement, plan or arrangement
covering any person that, individually or collectively, could give rise
to the payment of any amount that would not be deductible by the
Company or any Subsidiary thereof by reason of Section 280G of the
Code.
(ix) Neither the Company nor any of its Subsidiaries has at
any time distributed the stock of any corporation in a transaction
satisfying the requirements of Section 355 of the Code since April 16,
1997.
(x) Neither the Company nor any of its Subsidiaries is a party
to a joint venture, partnership, or other arrangement or contract that
could be treated as a partnership for federal income Tax purposes.
(i) Title to Tangible Personal Property. Each of the
Company and the Subsidiaries has good and valid title to all tangible
personal property that it owns, and (assuming good title in the lessor)
valid leasehold interests in all tangible personal property that it
leases, in each case free and clear of all liens, security interests,
and other encumbrances, except (i) mechanics', materialmen's,
carriers', workmen's, warehousemen's, repairmen's, landlord's, or other
similar liens securing obligations that are not delinquent; (ii) liens
for Taxes and other governmental charges that are not due and payable
or that may be paid without interest or penalty; (iii) liens, security
interests, and other encumbrances evidenced by any security agreement,
financing statement, purchase money agreement, conditional sales
contract, capital lease, operating lease, or license the nondisclosure
of which does not constitute a misrepresentation under Section 4(m);
(iv) imperfections of title and encumbrances that do not, individually
or in the aggregate, materially impair the ownership or value or the
continued use and operation in the current manner of the assets to
which they relate (the liens and other encumbrances under clauses (i)
through (iv) being "Permitted Liens"); and (v) liens, security
interests and other encumbrances against the lessors' interests in
property leased to the Company or any Subsidiary. Except for (1) those
assets acquired after June 30, 1999, (2) assets leased by the Company
or any Subsidiary from third parties pursuant to leases disclosed in
the Disclosure Schedule or the non-disclosure of which in the
Disclosure Schedule does not constitute a misrepresentation under
Section 4(m) of this Agreement and motor vehicles, all tangible
personal property and assets material to the present operations of the
Company and the Subsidiaries are reflected in the Interim Statement in
a manner and to the extent required by GAAP (except for the absence of
information that would be reflected in notes to financial statements).
Seller has provided to Buyer a list of all material equipment owned by
the Company or any Subsidiary as of July 31, 1999.
(j) Title to Real Property. The Disclosure Schedule sets
forth a complete list of all real property owned by any of the Company
or any of the Subsidiaries (each, an "Owned Property") and a complete
list of all real property leased by the Company or any of the
Subsidiaries as a tenant (each, a "Leased Property"). The Company or
one of the Subsidiaries continues to hold such title as it acquired to
each Owned Property, has not done anything to adversely affect such
title and, assuming good fee simple title in the landlord, has a valid
leasehold interest in all Leased Property (an Owned Property or Leased
Property being sometimes referred to as a "Company Property"), in each
case free and clear of all mortgages, deeds of trust, liens, security
interests, easements, restrictive covenants, rights-of-way, options to
purchase of third parties granted by the Company or any Subsidiary,
contracts of third parties with the Company or any Subsidiary
permitting third parties to buy in the future, undivided interests in
such Company Property granted by the Company or any Subsidiary,
reversions or contingent reversions of Company Property to third
parties and beneficial ownership of Company Property by third parties,
and other encumbrances, except (i) Permitted Liens; (ii) mortgages,
deeds of trust, liens, security interests, easements, restrictive
covenants, rights-of-way, encroachments, and other encumbrances on any
Company Property that are shown as of record; (iii) any conditions that
may be shown by a current, accurate survey or physical inspection of
any Company Property; (iv) mortgages, deeds of trust, liens, security
interests, easements, restrictive covenants, rights-of-way, and other
encumbrances or defects, whether or not of record, against the fee
title or other estate held by the landlord with respect to any Leased
Property; and (v) (A) platting, subdivision, zoning, building, and
other similar restrictions, (B) other easements, restrictive covenants,
rights-of-way, encroachments, and other similar encumbrances, whether
or not of record, and (C) reservations of coal, oil, gas, minerals, and
mineral interests, whether or not of record, none of which items set
forth in this clause (v) individually or in the aggregate materially
interferes with the continued use and operation of the Company Property
to which it relates substantially in the manner in which such Company
Property is currently used and operated. Neither the Company nor any
Subsidiary has sold any portion of any Company Property to any third
party. To Seller's knowledge, (x) since the date each Company Property
was acquired by the Company or any of the Subsidiaries, as applicable,
the Company and the Subsidiaries have enjoyed pacific, continuous,
open, notorious and undisturbed use and possession of the same, except
to the extent that the failure to have such use and possession would
not materially impair the ownership or value or the continued use and
operation of the Company Property in the current manner by the
Subsidiary owning such Company Property, and (y) no action, claim or
suit of any kind whatsoever has been settled, or is threatened to be
settled, by any third party, including governmental authorities,
against the Company or any of the Subsidiaries contesting title or
possession of any Company Property or any part thereof in a manner
which does, or is reasonably likely to, materially impair the ownership
or value or the continued use and operation of the Company Property in
the current manner by the Subsidiary owning such Company Property. To
the best of Seller's knowledge, there is no significant fact or
condition which would have an adverse effect on the ownership by the
Company or any Subsidiary of the Company Property that has not been
specifically disclosed in writing by the Company, the Subsidiaries or
Seller to Buyer.
(k) Condition of Assets. The assets and properties
utilized in the Subsidiaries, whether owned or leased, other than the
plants at which milling and related operations are presently idle, as
set forth in the Disclosure Schedule, and the assets and properties
therein, are physically in operating condition (reasonable wear and
tear and depreciation because of age excepted), except where the
failure to be in operating condition would not have a Material Adverse
Effect. Except as expressly provided in this Section 4(k) and in
Section 4(s), no further representation is made concerning the physical
condition of any of the Company Properties or any other assets of any
of the Company or the Subsidiaries, all of which are being accepted "AS
IS AND WHERE IS" as of the Closing (including all environmental aspects
thereof, except as otherwise provided in Section 4(s)). Without
limiting the preceding sentence, Seller makes no representation or
warranty in this Agreement or otherwise as to the "Year 2000"
compliance of any assets of the Company or the Subsidiaries.
(l) Intellectual Property. To Seller's knowledge, the
Disclosure Schedule sets forth a true and correct list of all material
patents and patent applications, and all material registrations or
applications for trademarks, trade names, service marks, commercial
slogans and copyrights that are held by or on behalf of the Company or
the Subsidiaries. To Seller's knowledge, except for those disclosed in
the Disclosure Schedule as being owned by Seller, all of which (other
than those containing the name Multifoods) will be licensed to one of
the Subsidiaries at Closing pursuant to Section 8(c)(iii), the Company
or one of the Subsidiaries owns (free and clear of all liens, security
interests, and other encumbrances, other than Permitted Liens) or has
the right to use, without payment to any other party (other than under
a license described in the Disclosure Schedule or the non-disclosure of
which would not constitute a misrepresentation under Section 4(m)), the
patents, trademarks, trade names, service marks, commercial slogans and
copyrights used by the Company and the Subsidiaries in the operation of
their business, except where the failure of the Company or the
Subsidiaries to own or have the right to use any such patent,
trademark, trade name, service xxxx, commercial slogan or copyright
would not have a Material Adverse Effect. Seller owns (free and clear
of all liens, security interests and other encumbrances, other than
Permitted Liens and, with respect to those trademarks, trade names and
commercial slogans to be licensed to a Subsidiary pursuant to Section
8(c)(iii), those which do not impair Seller's rights to license them to
one of the Subsidiaries at Closing), and has the right to license, to
the extent provided in Section 8(c)(iii), to a Subsidiary at Closing
the trademarks, trade names, service marks, commercial slogans and
copyrights disclosed in the Disclosure Schedule as being owned by
Seller. To Seller's knowledge, (i) no claims have been made in writing
since January 1, 1996 by any person challenging or questioning either
the right of any of the Company or the Subsidiaries to use, or the
validity of, any trademark, trade name, service xxxx, commercial slogan
or copyright set forth in the Disclosure Schedule (including those to
be licensed by Seller to a Subsidiary under Section 8(c)(iii), but only
with respect to their use in the Non-Competition Area described in
Section 5(f)) in any jurisdiction, domestic or foreign; (ii) since
January 1, 1996, no person has claimed in writing the right to use any
such trademark, trade name, service xxxx, commercial slogan or
copyright listed in the Disclosure Schedule (including those to be
licensed by Seller to a Subsidiary under Section 8(c)(iii), but only
with respect to their use in the Non-Competition Area described in
Section 5(f)), other than under a license described in the Disclosure
Schedule; and (iii) no claims of patent, trademark, trade name, service
xxxx, commercial slogan or copyright infringement have been made in
writing since January 1, 1996 by any person with respect to the right
of any of the Company or the Subsidiaries to continue to sell any
product or service without payment of a royalty or license fee (other
than payments that are currently subject to a license described in the
Disclosure Schedule). None of Seller, the Company, or the Subsidiaries
has received any written notice that any material trademark, trade
name, service xxxx, commercial slogan or copyright set forth in the
Disclosure Schedule (including those to be licensed or transferred by
Seller to a Subsidiary pursuant to Section 8(c)(iii)) has been declared
unenforceable or otherwise invalid by any court or governmental
authority.
To Seller's knowledge, the Company and the Subsidiaries have
such rights to use, possess or own intellectual property, whether
registered or unregistered, as are necessary to operate the businesses
of the Company and the Subsidiaries in the manner in which they are
currently being operated. The absence of registered licenses from
Seller to Molinos Nacionales, C.A. (MONACA) of the material
registrations of trademarks, tradenames, service marks and commercial
slogans disclosed in the Disclosure Schedule during the period that
they were registered in the name of Seller and used by the Subsidiaries
will not affect the use by the Subsidiaries or the enforceability of
such trademarks, tradenames, service marks or commercial slogans,
except where such limitations on use or enforceability would not have a
Material Adverse Effect. At the Closing or as soon thereafter as is
practicable, Seller will deliver to Buyer or one of the Subsidiaries
all documents, if any, relating to the unregistered intellectual
property rights of the Company and the Subsidiaries, including formulae
and trade secrets, in the possession of Seller to the extent not then
in the possession of the Company and the Subsidiaries.
(m) Contracts. The Disclosure Schedule describes, and
Seller has made available to Buyer true and complete copies of, each of
the following agreements, contracts, understandings, or arrangements in
effect as of the date of this Agreement to which any of the Company or
the Subsidiaries is bound:
(i) employment or severance agreement (other than those
that at the Closing will be terminable at will or upon not more than 60
days' notice by the Company or one or more of the Subsidiaries without
penalty or additional payments), provided that no representation is
made regarding any non-contractual obligations imposed by law in the
event of termination of an employee in Venezuela;
(ii) covenant not to compete that materially restricts
the operation of the Company and the Subsidiaries, individually or
taken as a whole, as presently conducted;
(iii) material agreement or contract with Seller or any
affiliate of Seller (other than the Company or the Subsidiaries) or any
current officer or director of any of the Company, the Subsidiaries,
Xxxxx Xxxx, the Monaca Subsidiary or of Seller or any other affiliate
of Seller (other than employment agreements the non-disclosure of which
does not constitute a misrepresentation under clause (i) above or
Seller's Plans (as defined in Section 4(p));
(iv) operating lease (as lessor or lessee) of any Company
Property or any other real or tangible personal property (except any
lease calling for payments of less than $25,000 per lease);
(v) license (as licensor or licensee) of any patents,
trademarks, trade names, service marks, copyrights, or other
intellectual property material to the Company and the Subsidiaries,
individually or taken as a whole (other than non-negotiated licenses of
commercially available computer software);
(vi) management, service, consulting, agency,
representation, construction, or other similar contract under which
there exists an aggregate future liability in excess of $25,000 per
contract (other than those that at the Closing will be terminable at
will or upon not more than 60 days' notice by the Company or one or
more of the Subsidiaries without penalty or additional payments);
(vii) material advertising agreement (other than those
that at the Closing will be terminable at will or upon not more than 60
days' notice by the Company or one or more of the Subsidiaries without
penalty or additional payments);
(viii) written agreement for the purchase or sale of raw
materials, supplies, or products that calls for performance over a
period of more than one year (other than those that at the Closing will
be terminable at will or upon not more than 60 days' notice by the
Company or one or more of the Subsidiaries without penalty or
additional payments);
(ix) other than with respect to intercompany loans or
advances to be paid in full at or before the Closing under Section
8(g), agreement or contract under which any money has been borrowed or
loaned or any note, bond, indenture, or other evidence of indebtedness
has been issued, directly or indirectly guaranteed or assumed (other
than endorsements for the purpose of collection in the ordinary course
of business);
(x) mortgage, deed of trust, guaranty by the Company or
any Subsidiary, pledge agreement, security agreement, purchase money
agreement, conditional sales contract, or capital lease (other than (A)
any purchase money agreement, conditional sales contract, or capital
lease evidencing liens only on tangible personal property incurred in
connection with the operations of the Company and its Subsidiaries
under which there exists an aggregate future liability not in excess of
$25,000 per contract or lease; and (B) protective filings of financing
statements under the Uniform Commercial Code or similar statute);
(xi) partnership or joint venture agreement;
(xii) material distribution agreement not terminable at
will or upon not more than 60 days' notice by the Company or one or
more of the Subsidiaries without penalty or additional payments; and
(xiii) other agreement, contract, understanding, or
arrangement not made in the ordinary course of business, except those
calling for payments of less than $25,000 per agreement, contract,
understanding or arrangement.
Each agreement, contract, understanding, and arrangement required to be
described in the Disclosure Schedule under this Section 4(m)
(collectively, the "Contracts") is valid, binding, and in full force
and effect, and enforceable by the Company or the Subsidiaries in
accordance with its terms, except (A) as such enforceability may be
limited by bankruptcy, insolvency, moratorium, and other similar laws
affecting creditors' rights generally and by general principles of
equity, or (B) such invalidity, lack of binding effect, or lack of
enforceability that would not have a Material Adverse Effect. None of
Seller, the Company, or the Subsidiaries is (with or without the lapse
of time or the giving of notice, or both) in breach of, or in default
under, any of the Contracts, except if such breach or default would not
have a Material Adverse Effect, and, to Seller's knowledge, no other
party to any of the Contracts is (with or without the lapse of time or
the giving of notice, or both) in breach of, or in default under, any
of the Contracts, except if such breach or default would not have a
Material Adverse Effect.
(n) Litigation; Decrees. As of the date of this
Agreement, no action, lawsuit, proceeding, or investigation is pending
(with respect to which any of Seller, the Company, or any of the
Subsidiaries has been notified) or, to Seller's knowledge, threatened
against any of the Company or one or more of the Subsidiaries, that, if
decided adversely to such person, would have a Material Adverse Effect.
As of the date of this Agreement, none of the Company or any of the
Subsidiaries is specifically identified as a party subject to any
material restrictions or limitations under any judgment or order of any
court, administrative agency or commission, or other governmental
authority or instrumentality, domestic or foreign. There are no
judgments, orders or decrees of any court, administrative agency or
commission, or other governmental authority or instrumentality,
domestic or foreign, to which Seller is subject which would prohibit or
enjoin, or otherwise adversely affect, the ability of Seller to
consummate the transactions contemplated hereby.
(o) Insurance. The insurance policies currently
maintained with respect to the Company and the Subsidiaries and their
respective assets, properties, and businesses (other than Seller's
Plans, as defined in Section 4(p)) are listed in the Disclosure
Schedule. Seller has made available to Buyer true and correct copies
of all such policies of insurance maintained by the Company or any
Subsidiary (but not those maintained by Seller).
(i) All such insurance policies to which the Company or
any of the Subsidiaries is a party or that provide coverage to the
Company or any Subsidiary:
(A) are valid and enforceable; and
(B) are sufficient for compliance with all legal requirements and
contracts to which the Company or any Subsidiary is a party or by which
any of them is bound except where failure to comply would not have a
Material Adverse Effect.
(ii) With respect to the policies disclosed in the
Disclosure Schedule, except as noted in Section 8(h)(i), none of
Seller, the Company nor any Subsidiary has received any notice of
cancellation or any other indication that any insurance policy is no
longer in full force or effect or will not be renewed or that the
issuer of any policy is not willing or able to perform its obligations
thereunder.
(iii) Seller, the Company or the Subsidiaries have paid
all premiums due, and have otherwise performed all of their respective
obligations, under each policy to which the Company or any Subsidiary
is a party or that provides coverage to the Company or any Subsidiary.
(p) Employee Benefits.
(i) The Disclosure Schedule identifies each employee pension,
retirement, profit sharing, stock bonus, stock option, stock purchase,
bonus, incentive, deferred compensation, hospitalization, medical,
dental, vision, vacation, insurance, sick pay, disability, severance,
or other plan, fund, program, policy, contract, or arrangement
providing employee benefits maintained or contributed to by any of
Seller, the Company, or the Subsidiaries in which any employees of any
of the Company or the Subsidiaries who will continue to be employees of
the Company or the Subsidiaries after the Closing are participating or
maintained or contributed to by the Company or the Subsidiaries under
which any current or former employees of any of the Company or the
Subsidiaries have accrued any benefits to which they remain entitled
(the "Seller's Plans"). Seller has provided Buyer with true and
correct copies or accurate summaries of all Seller's Plans.
(ii) Except as provided in Section 9 or to the extent accrued
in the Closing Statement, none of Buyer, the Company, or the
Subsidiaries will have after the Closing any liability of any kind
payable with respect to any Seller's Plan that is attributable to
benefits accrued before the Closing or the operation or administration
of the Seller's Plan before the Closing.
(q) Absence of Changes or Events. From June 30, 1999
through the date of this Agreement, the Company's business has been
conducted in the ordinary course substantially consistent with past
practices. Without limiting the generality of the immediately
preceding sentence, from June 30, 1999 through the date of this
Agreement, none of the Company or the Subsidiaries has:
(i) suffered any damage or destruction (not fully covered
by insurance, subject to reasonable deductions or retentions) or caused
or experienced any other event that has resulted in the discontinuance
of operations or otherwise has caused, or may be reasonably likely to
cause, a Material Adverse Effect or otherwise suffered any Material
Adverse Effect;
(ii) amended its charter or bylaws or other
organizational documents;
(iii) declared or paid or set aside for payment any
dividend or other distribution of any of its assets with respect to the
Shares or the capital stock of the Subsidiaries, other than
distributions of assets made by a Subsidiary to the Company or other
Subsidiary;
(iv) redeemed, purchased or otherwise acquired any shares
of its capital stock or sold, granted or otherwise disposed of,
directly or indirectly, any shares of its capital stock or other
securities or issued any capital stock or any option, warrant, or right
relating thereto or any security convertible into its capital stock or
agreed to change or amend any terms or conditions of any such capital
stock or securities, or granted any registration right with respect
thereto;
(v) adopted or amended any Seller's Plan maintained by
any of the Company or the Subsidiaries (rather than by Seller) except
to the extent required by applicable law or entered into any collective
bargaining agreement;
(vi) granted to any employee of any of the Company or the
Subsidiaries any increase in compensation or other material benefits,
except (A) as may be required under existing agreements or (B) in the
ordinary course of business consistent with past practices or increases
for which Seller or any affiliate of Seller (other than the Company or
the Subsidiaries) is solely obligated; or permitted any sums or other
corporate assets of any of the Company or the Subsidiaries to be paid
to or withdrawn from the Company or the Subsidiaries by the directors
or officers of the Company or the Subsidiaries, except for ordinary
compensation and fees, payments under established benefit plans, and
ordinary expense reimbursement and similar payments;
(vii) incurred, assumed, or guaranteed any indebtedness
for borrowed money other than intercompany indebtedness to be paid in
full at or before the Closing under Section 8(g) and other indebtedness
incurred in the ordinary course of business consistent with past
practices that is prepayable at any time without penalty;
(viii) granted any mortgage, pledge, lien, or encumbrance
on, or agreed to the imposition of any restriction or charge of any
kind with respect to, any of its assets, other than under purchase
money agreements, conditional sales contracts, capital leases,
operating leases, or licenses that are incurred in the ordinary course
of business based on past practices of the Company and the
Subsidiaries;
(ix) canceled any indebtedness owing to it, or waived any
claims or rights of material value (other than settlements of trade
accounts in the ordinary course of business that, either individually
or in the aggregate, would not have a Material Adverse Effect);
(x) except for intercompany indebtedness excepted under
clause (vii) of this Section 4(q), and except for other intercompany
transactions in the ordinary course of business (including the making
of guarantees by Seller of obligations of the Company or one or more
Subsidiaries), loaned or advanced any amount to, or sold, transferred,
or leased any of its material assets to, or entered into any material
agreement or arrangement with, Seller or any of its affiliates (other
than the Company or the Subsidiaries);
(xi) made any change in method of accounting or
accounting practice or policy other than those required by GAAP;
(xii) purchased or otherwise acquired any assets or made
any capital expenditures (other than (A) purchases of inventory in the
ordinary course of business consistent with past practices and (B)
capital expenditures that, together with all other capital expenditures
made by any of the Company or the Subsidiaries since July 1, 1999, do
not exceed $500,000 in the aggregate), provided that the Subsidiaries
have committed to make additional capital expenditures that do not
exceed $500,000 in the aggregate;
(xiii) sold, leased to others or otherwise disposed of
any of its assets that are material, individually or in the aggregate,
to the Company and the Subsidiaries, taken as a whole (other than sales
of inventory in the ordinary course of business consistent with past
practices) or that would have a material adverse effect upon the
ownership of the capital stock of the Company or any Subsidiary,
individually or taken as a whole;
(xiv) modified or amended any of the Contracts in any
respect materially adverse to the business, assets, financial
condition, or results of operations of the Company and the
Subsidiaries, taken as a whole or that would have a material adverse
effect upon the ownership of the capital stock of the Company or any
Subsidiary, individually or taken as a whole;
(xv) extended payment terms to customers other than in
the ordinary course of business or permitted any material change in its
credit practices;
(xvi) except as permitted under clause (vii) of this
Section 4(q), made any loans or advances to, guaranties for the benefit
of, or investments in, any person or entity (other than customary
travel and other expense advances, salary advances, and employee
relocation assistance in accordance with past practices);
(xvii) entered into any merger, consolidation or
corporate reorganization; or
(xviii) agreed, whether orally or in writing, to do any
of the foregoing.
(r) Compliance with Laws. Each of the Company and the
Subsidiaries is in compliance with all applicable statutes, laws,
ordinances, rules, orders, and regulations of any governmental
authority or instrumentality, domestic or foreign (including all
Environmental Laws as defined in Section 11(b)(ix)), except for
noncompliance that would not have a Material Adverse Effect. No
written notice (the reason for which has not been corrected) has been
served upon Seller, the Company, or any of the Subsidiaries since
January 1, 1996 by any governmental body of any material violation of
any statute, law, ordinance, order, rule, or regulation (including any
Environmental Law). The Company and the Subsidiaries have all
governmental franchises, licenses, permits, approvals, and other
authorizations (including permits required to comply with Environmental
Laws) necessary in order to enable them to own, operate, and use their
assets and conduct their business as it is currently being conducted,
except where the failure to obtain and maintain the same would not have
a Material Adverse Effect. All material governmental franchises,
licenses, permits, authorizations, and approvals possessed by any of
the Company or the Subsidiaries and used in the operation of their
business (including all material permits required to comply with
Environmental Laws) are listed in the Disclosure Schedule.
(s) Environmental Matters.
(i) To Seller's knowledge, (a) no real property owned or
operated by the Company or any Subsidiary contains any Hazardous
Substances that will be reasonably likely to be the subject of any
claim for liability by any governmental authority and result in
material liability to the Company or any Subsidiary if the real
property is operated as presently operated and the Hazardous
Substances, if not presently exposed, are not exposed; (b) no real
property formerly owned or operated by the Company or any Subsidiary
was contaminated with any Hazardous Substances that will be reasonably
likely to be the subject of any claim for liability by any governmental
authority and result in material liability to the Company or any
Subsidiary; (c) neither the Company nor any Subsidiary has made any
off-site disposal of any Hazardous Substance that is reasonably likely
to be the subject of any claim for liability by any governmental
authority and to result in material liability to the Company or any
Subsidiary; and (d) Seller has provided Buyer with copies of all
environmental reports, filings, regulatory correspondence and other
environmental data prepared or received by the Company or any
Subsidiary since January 1, 1996 concerning the Company, the
Subsidiaries and their compliance with, or liability under, any
Environmental Law which are in the possession of Seller, the Company or
any Subsidiary.
(ii) For purposes of this Agreement, the term "hazardous
substance" means any matter, waste or mixture containing any substance
defined as hazardous or toxic by any Environmental Law governing the
operations of the Company or the Subsidiaries at the Company Property
at which such matter, waste or mixture is located.
(t) Employee and Labor Relations. None of the Company or
the Subsidiaries is a party to, or is bound by, any collective
bargaining agreement or other contract with a labor union. No labor
strikes, lockouts, or material labor disputes or work stoppages are
pending or, to Seller's knowledge, have been threatened since January
1, 1996 against any of the Company or the Subsidiaries. To Seller's
knowledge, no union organizational campaign has occurred since January
1, 1996 with respect to the employees of the Company or the
Subsidiaries.
(u) Accounts. The Disclosure Schedule sets forth the
name of each bank or other financial institution in which any of the
Company or the Subsidiaries has an account, lock box, or safe deposit
box and the names of all persons authorized to draw thereon or have
access thereto.
(v) No Undisclosed Liabilities. Except as reflected,
reserved against, or otherwise disclosed in the Audited Financial
Statements or the Interim Statement, the Company and the Subsidiaries
had, as of the dates of the respective balance sheets included therein,
no liabilities or obligations that would be required as of those dates
to be reflected on a balance sheet (or required to be disclosed in the
notes thereto) prepared in accordance with GAAP in effect on those
dates (without regard to events, incidents, assertions, or state of
knowledge occurring after the dates of such balance sheets) that would
have a Material Adverse Effect.
(w) Inventory. All inventories reflected on the Audited
Financial Statements and the Interim Statement (including finished
goods, work in process, raw materials, and supplies) were as of their
respective dates, and all inventories existing as of July 31, 1999
will, as of July 31, 1999, be, properly valued on the Closing Statement
at the lower of cost or market value in accordance with prior
practices.
(x) Accounts Receivable. All accounts receivable of the
Company and the Subsidiaries that are reflected on the Audited
Financial Statements or on the Interim Statement represented, as of the
respective dates of such financial statements, valid obligations
arising from sales actually made or services actually performed in the
ordinary course of business, provided that nothing stated herein shall
constitute a guaranty of the collectibility of such receivables and no
representation is made as to Excluded Assets, as defined in Section
8(j), or Written-Off Assets, as defined in Section 8(k).
(y) Corporate Name. There are no actions, suits or
proceedings pending, or to the knowledge of Seller, threatened, against
or affecting the Company or any of the Subsidiaries that may result in
any impairment of the right of the Company or any such Subsidiary to
use its corporate name. To the knowledge of Seller, the use of the
corporate names of the Company and the Subsidiaries does not infringe
the rights of any third party.
(z) Customers. Set forth in the Disclosure Schedule is a
complete and accurate list of the top 10 customers in terms of sales of
the Company and the Subsidiaries during the fiscal year ended February
28, 1999.
(aa) Year 2000 Plans. Molinos Nacionales, C.A. (MONACA)
has adopted plans to investigate and correct "Year 2000" problems
associated with the operation of its businesses. The Company has
informed Buyer of such plans.
(bb) AGROMONACA, C.A., Xxxxx Xxxx and the Monaca
Subsidiary. AGROMONACA, C.A., does not own, lease or otherwise hold
any properties or assets and does not conduct or carry on any business
or operations. Neither Xxxxx Xxxx nor any subsidiary of Xxxxx Xxxx
holds any properties or assets related to the conduct of the business
of the Subsidiaries in the Non-Competition Area (as defined in Section
5(f)). The assets of the Monaca Subsidiary are of the nature set forth
in Section 4(bb) of the Disclosure Schedule.
(cc) Books and Records. All books of account, minute
books, stock record books, and other records of the Company and the
Subsidiaries have been made available to Buyer or its counsel. At or
promptly after the Closing, all of those books and records will be in
the possession of the Company and the Subsidiaries, respectively.
(dd) Utilities. All water, gas, electric, telephone and
other utility equipment required by law and now utilized by the Company
and the Subsidiaries on Company Property are installed and connected
pursuant to valid permits and are reasonably adequate for the present
use of the Company Property on which they are located, and all fees and
charges with respect thereto that are due and payable have been paid in
full, except where the failure to install any such utilities, obtain
such permits or make such payments does not individually or in the
aggregate materially interfere with the continued use and operation of
the Company Property to which they relate substantially in the manner
in which such Company Property is currently used and operated.
(ee) Representations and Warranties in Note Purchase
Agreement. All of the representations and warranties of Seller
contained in the form of Note Purchase Agreement attached as Exhibit A
are true and correct and are incorporated herein as if made in their
entirety herein.
5. Covenants of Seller. Seller covenants with Buyer as
follows:
(a) Access. Until the Closing, Seller will, and will
cause the Company and the Subsidiaries to, give Buyer and its officers,
employees, agents, and representatives reasonable access, during normal
business hours and upon reasonable notice, to the personnel,
properties, books, and records of the Company and the Subsidiaries;
provided, however, that (i) such access shall not unreasonably disrupt
the normal operations of any of Seller, the Company, or the
Subsidiaries; and (ii) Seller may excise from any books and records to
which Buyer and its officers, employees, agents, and representatives
have access all information that does not relate to the Company or the
Subsidiaries.
(b) Ordinary Conduct. Except as expressly contemplated
by this Agreement (including Section 8), from the date hereof to the
Closing, Seller will cause the business of the Company and the
Subsidiaries to be conducted in the ordinary course in substantially
the same manner as presently conducted and will cause the Company and
the Subsidiaries to maintain their corporate existence in good
standing, maintain proper business and accounting records, and make all
reasonable efforts consistent with past practices to preserve their
business organization and relationships with their respective material
customers and suppliers, key employees, and others with whom they have
a material business relationship, provided that Seller shall not be
required to cause the Company's or the Subsidiaries' assets to be in
"Year 2000" compliance. In addition, except as expressly contemplated
by this Agreement (including Section 8), Seller will not permit any of
the Company or the Subsidiaries to do any of the following without the
prior written consent of Buyer:
(i) amend its charter or bylaws or other organizational
documents;
(ii) declare or pay or set aside for payment any dividend
or other distribution of any of its assets with respect to the Shares
or the capital stock of the Subsidiaries, other than distributions of
assets made by a Subsidiary to the Company or another Subsidiary;
(iii) redeem, purchase or otherwise acquire or sell,
grant or otherwise dispose of, directly or indirectly, any shares of
its capital stock or other securities or issue any capital stock or any
option, warrant, or right relating thereto or any security convertible
into its capital stock or agree to change or amend any terms or
conditions of any such capital stock or securities;
(iv) adopt or amend any Seller's Plan maintained by the
Company or the Subsidiaries (rather than by Seller) or enter into any
collective bargaining agreement, except to the extent required by
applicable law;
(v) grant to any employee of the Company or the
Subsidiaries any increase in compensation or other material benefits,
except (A) as may be required under existing agreements, (B) in the
ordinary course of business consistent with past practices, (C)
increases for which Seller or any affiliate of Seller (other than the
Company or the Subsidiaries) shall be solely obligated, (D) the sale by
the Subsidiaries at less than market value or transfer by the
Subsidiaries without consideration to employees of the Subsidiaries of
(1) automobiles used by such employees and (2) memberships in clubs
used by such employees, and (E) stay bonuses, in the amounts, and to
the employees of the Subsidiaries, set forth in Section 5(b) of the
Disclosure Schedule for continuing as employees of the Subsidiaries
following the Closing; or permit any sums or other corporate assets of
any of the Company or the Subsidiaries to be paid to or withdrawn from
the Company or the Subsidiaries by the directors or officers of the
Company or the Subsidiaries, except for ordinary compensation and fees,
payments under established benefit plans, and ordinary expense
reimbursement and similar payments;
(vi) incur, assume, or guarantee any indebtedness for
borrowed money other than intercompany indebtedness to be paid in full
at or before the Closing under Section 8(g) and other indebtedness
incurred in the ordinary course of business consistent with past
practices that is prepayable at any time without penalty;
(vii) grant any mortgage, pledge, lien, or encumbrance
on, or agree to the imposition of any restriction or charge of any kind
with respect to, any of its assets, other than under purchase money
agreements, conditional sales contracts, capital leases, operating
leases, or licenses in the ordinary course of business consistent with
past practice;
(viii) cancel any indebtedness owing to it or waive any
claims or rights of material value (other than settlements of trade
accounts in the ordinary course of business that, either individually
or in the aggregate, would not have a Material Adverse Effect);
(ix) except for intercompany indebtedness permitted under
clause (vi) above or guarantees by Seller of obligations of the Company
or any Subsidiary, and except for other intercompany transactions in
the ordinary course of business, loan or advance any amount to, or
sell, transfer, or lease any of its material assets to, or enter into
any material agreement or arrangement with, Seller or any of its
affiliates (other than the Company or the Subsidiaries);
(x) make any change in a method of accounting or
accounting practice or policy other than those required by GAAP;
(xi) purchase or acquire any assets or make any capital
expenditures (other than (A) purchases of inventory in the ordinary
course of business consistent with past practices and (B) capital
expenditures that, together with all other capital expenditures made by
any of the Company or the Subsidiaries since July 1, 1999, do not
exceed $500,000 in the aggregate, provided that the Company and the
Subsidiaries may in addition commit for capital expenditures that are
not made as of the Closing in an amount not to exceed $500,000);
(xii) sell, lease to others or otherwise dispose of any
of its assets that are material, individually or in the aggregate, to
the Company and the Subsidiaries, taken as a whole (other than sales of
inventory in the ordinary course of business consistent with past
practices) or that would have a material adverse effect upon the
ownership of the capital stock of the Company or any Subsidiary,
individually or taken as a whole;
(xiii) enter into any Contract or any contract, agreement
or order for the purchase of any wheat, oats, corn or rice without the
express prior written consent of Xxxxxx Xxxxxxxxx or any other person
designated by Buyer, modify, amend, or terminate any of the Contracts
in any respect materially adverse to the business, assets, financial
condition, or results of operations of the Company and its
Subsidiaries, taken as a whole or that would have a material adverse
effect upon the ownership of the capital stock of the Company or any
Subsidiary, individually or taken as a whole, except terminations upon
expiration of a Contract's term;
(xiv) extend payment terms to customers other than in the
ordinary course of business or permit any material change in its credit
practices;
(xv) except as permitted under clause (vi) above, make
any loans or advances to, guaranties for the benefit of, or investments
in, any person or entity (other than customary travel and other expense
advances, salary advances, and employee relocation assistance in
accordance with past practices);
(xvi) enter into any merger, consolidation or corporate
reorganization;
(xvii) change any practice with respect to Taxes, change
or revoke any Tax election or settle or compromise any dispute
involving a Tax liability;
(xviii) initiate or enter into any negotiations or
solicitation or discuss or encourage (including by way of furnishing
non-public information) any offer or proposal regarding the sale or
transfer, direct or indirect, of any of the Shares or any share of the
capital stock of any of the Subsidiaries or permit its officers,
directors, agents or affiliates to do so; or
(xix) agree, whether orally or in writing, to do any of
the foregoing.
(c) Confidentiality. Seller will keep confidential and
cause its affiliates to keep confidential all nonpublic information
relating to the Company and the Subsidiaries that does not also relate
to any of the other businesses of Seller or any of its affiliates,
except for disclosures required by law, the rules of any securities
exchange to which it is subject, or administrative process (including
disclosures required in Tax Returns or in other governmental filings)
and disclosures in the defense of any Third Party Claim (as defined in
Section 11(f)) or the contest of any Tax Claim (as defined in Section
11(g)), provided that Seller shall provide Buyer with reasonable notice
of any required disclosure, to the extent practicable, and except for
information that becomes public other than as a result of a breach of
this Section 5(c) or is disclosed by Seller in the defense of any claim
by Buyer or any of its affiliates against Seller. Seller will, to the
extent practicable, excise from any books and records of Seller or any
of its affiliates that relate to both the Company and any other
businesses of Seller or any of its affiliates all information that
relates solely to the Company or the Subsidiaries before the disclosure
of such books and records to any third party.
(d) Insurance. Seller shall use reasonable efforts to
keep all insurance policies set forth in the Disclosure Schedule in
effect on the date hereof, or equivalent replacements therefor, in full
force and effect until the Closing.
(e) Resignations. At the Closing, Seller shall deliver
to Buyer duly signed resignations, effective immediately after the
Closing, of all directors and executive officers of the Company and the
Subsidiaries, except as otherwise provided in a notice from Buyer to
Seller at least two business days prior to Closing.
(f) Covenant Not to Compete.
(i) Seller hereby agrees that, except as provided below, for a
period commencing on the Closing Date and terminating on the fifth
anniversary of the Closing Date, it will not, except in the case of a
Permitted Investment, directly or indirectly engage in (or become a
partner, co-venturer, co-marketer, or shareholder in or otherwise
participate in the management or operation of any venture or enterprise
of any kind that engages in) the business of manufacturing, selling,
and/or distributing (A) wheat flour, corn flour, and corn flour for
production of corn tortillas and arepas, wheat flour tortillas, whole
grain rice, rice flour, corn cooking oil, oat cereals, or spices, for
use by retail consumers sold through retail grocery stores; and (B)
wheat flour or prepared bakery mixes to food processors and commercial
and retail bakeries (the "Restricted Business"), in each case in the
countries of Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador,
French Guiana, Guyana, Paraguay, Peru, Suriname, Uruguay, or Venezuela
(the "Non-Competition Area"); provided that Seller may own in the
aggregate, directly or indirectly, up to 10% of any outstanding class
of equity securities of any entity engaged in the Restricted Business
in the Non-Competition Area, the equity securities of which are
publicly traded on a domestic or foreign stock exchange or in a
domestic or foreign over-the-counter market, provided, however, that
said equity interest shall not include a right of Seller, directly or
indirectly, to appoint a member of the board of directors of the entity
engaged in the Restricted Business or permit the Seller to control said
entity engaged in the Restricted Business in a manner disproportionate
to its 10% or less interest in the equity securities of such entity.
None of the marketing, distribution, or sale by Seller, directly or
indirectly, of products of any nature manufactured by others shall be
deemed to constitute part of the Restricted Business for any purpose
hereof if such marketing, distribution or sale is pursuant to the
conduct by Seller, directly or indirectly, of its distribution
businesses at the request of customers of such businesses for which the
primary distribution business of Seller, directly or indirectly, occurs
outside of the Non-Competition Area. Seller acknowledges that the
restrictions and covenants contained in this Section 5(f) are a
material inducement to and consideration for Buyer in entering into
this Agreement and consummating the transactions contemplated hereby.
(ii) For purposes of this Section 5(f), a Permitted Investment
includes either of the following:
(A) an acquisition after the Closing of an entity or all
or any portion of its equity interests or of its businesses (the entity
or businesses so acquired called the "Acquired Business") if that
portion of the Acquired Business that is engaged in the Restricted
Business in the Non-Competition Area (the "Competing Business")
generated less than $15 million in revenues or accounted for less than
15% of the total revenues of the Acquired Business during the most
recently completed fiscal year of the Acquired Business preceding the
date of the acquisition; or
(B) an acquisition after the Closing of an Acquired
Business or all or any portion of its equity interests if (1) that
portion of the Acquired Business constituting the Competing Business
generated $15 million or more, but no more than $25 million, in
revenues and accounted for 15% or more, but less than 25%, of the total
revenues of the Acquired Business during the most recently completed
fiscal year of the Acquired Business preceding the date of the
acquisition; (2) Seller gives written notice to Buyer of the
acquisition and the identity of the Acquired Business (which shall
contain a description of the businesses conducted by the Acquired
Business, including the Competing Business) as promptly as practicable
after the acquisition; and (3) Seller endeavors in good faith to
dispose of, or cause the Acquired Business to dispose of, the Competing
Business on commercially reasonable terms within 18 months after the
acquisition.
(iii) Notwithstanding anything stated in Section 5(f)(i), if
(A) any Person shall acquire, directly or indirectly, a majority of the
common stock or voting power of the capital stock of Seller, or (B) any
Person shall be combined, pursuant to merger, consolidation or
otherwise, with Seller, directly or indirectly, in a business
combination in which the holders of the equity interests in the Person
immediately prior to the business combination and the holders of the
equity interests in the Seller immediately prior to the business
combination each hold, directly or indirectly, at least 20% of the
common stock or the voting power of the capital stock (or equivalent
ownership interests) of Seller or the combined entity immediately after
the business combination (each transaction referred to in either clause
(A) or clause (B) hereinafter referred to as an
"acquisition/combination transaction"), the reference to the "fifth
anniversary date" in Section 5(f)(i) shall be deemed for all purposes
thereof to be "the third anniversary date," such that Section 5(f)(i)
shall be of no effect after the third anniversary date of the Closing
Date. In addition, if Seller is combined with any other Person,
directly or indirectly, in an acquisition/combination transaction,
nothing stated in Section 5(f)(i) shall limit the Seller's right, after
the acquisition/combination transaction, to conduct any business of the
nature conducted by the combining Person immediately prior to
acquisition/combination transaction.
(iv) Notwithstanding anything stated in this Section 5(f),
Xxxxx Xxxx may continue its business of selling mixes and other
consumer products to Cadenalco S.A. and Comercializadora Sampo Ltda. in
Colombia, provided that such business shall not be expanded in volume
from its existing sales and shall be discontinued on or prior to
December 31, 1999.
(g) Delivery of Records. At the Closing or as soon
thereafter as practicable, but no later than 30 days after the Closing
Date, Seller will deliver to Buyer all corporate records of the Company
and the Subsidiaries, and all other original agreements, documents,
books, and records relating to the Company and the Subsidiaries in the
possession of Seller to the extent not then in the possession of the
Company or the Subsidiaries; provided, however, that (i) subject to
Buyer's rights of access under Section 12(b) and Seller's obligations
under Section 5(c), Seller may retain copies of all original Tax
Returns and work papers relating to Taxes of the Company and the
Subsidiaries, (ii) subject to Seller's obligations under Section 5(c),
Seller may keep and use a copy of all such accounting books and
records, and (iii) with respect to books and records relating to both
the Company and the Subsidiaries, on the one hand, and to any other
business or operation presently or formerly conducted by Seller or any
of its other affiliates (including Xxxxx Xxxx and its subsidiaries and
the Monaca Subsidiary), on the other hand, (A) subject to Seller's
obligations under Section 5(c), Seller may keep and use or otherwise
transfer to a third party a copy of such books and records, and (B)
excerpts from such books and records that do not relate to the Company
and its Subsidiaries may be excised from the books and records that are
delivered to Buyer.
(h) Owned Real Property. With respect to the four
parcels of Owned Property marked with an asterisk in Section 4(j) of
the Disclosure Schedule, the Certificates of Ownership and Encumbrances
indicate an area that differs from the area shown in Section 4(j) of
the Disclosure Schedule and in the records of the appropriate
government registrar. With respect to the Owned Property consisting of
a rice mill in Acarigua, as disclosed in Schedule 4(j) of the
Disclosure Schedule, ownership is registered in the records of the
appropriate government registrar in the name of an entity that was
merged with Molinos Nacionales, C.A. (MONACA). Seller agrees to use
its best efforts promptly (i) to obtain and deliver to Buyer revised
Certificates of Ownership and Encumbrances with respect to the four
Owned Properties that are asterisked in Section 4(j) of the Disclosure
Schedule that indicate the same area that is shown in Schedule 4(j) of
the Disclosure Schedule, and (ii) to have the Owned Property consisting
of a rice mill in Acarigua registered in the name of Molinos
Nacionales, C.A. (MONACA) and to obtain a Certificate of Ownership and
Encumbrances showing such registration. If Seller is unable to receive
such revised Certificates of Ownership and Encumbrances or to effect
such registration of the rice mill despite its best efforts, Seller,
notwithstanding anything stated in this Agreement, hereby agrees to
indemnify Buyer, the Company and the Subsidiaries against any loss,
liability, claim, damage or expense (including any material impairment
of the ownership or the continued use and operation of such Owned
Property in the current manner by the Subsidiary owning such Owned
Property) that results from the disparity between the area of the four
Owned Properties asterisked in Schedule 4(j) of the Disclosure
Schedule, as shown in Schedule 4(j) of the Disclosure Schedule, and the
area of such Owned Properties shown on the Certificates of Ownership
and Encumbrances delivered to Buyer prior to the date of this Agreement
or from the failure of the ownership of the rice mill in Acarigua to be
registered in the name of Molinos Nacionales, C.A. (MONACA), without
any thresholds, caps or time limitations on such indemnification. In
consideration of this covenant and indemnification, Seller shall not be
deemed to have breached Section 4(j) of this Agreement solely because
of the area of the four asterisked Owned Properties shown on Schedule
4(j) of the Disclosure Schedule or the failure of the rice mill in
Acarigua to be registered in the name of Molinos Nacionales, C.A.
(MONACA), notwithstanding anything stated in Section 4(j).
6. Representations and Warranties of Buyer. Buyer represents
and warrants to Seller as follows:
(a) Organization and Authority of Buyer. Buyer is a
corporation duly organized, validly existing, and in good standing
under the laws of the Country of Mexico. Buyer has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. All corporate acts
and proceedings required to be taken to authorize the execution,
delivery, and performance by Buyer of this Agreement and the
consummation by Buyer of the transactions contemplated hereby have been
duly and properly taken. This Agreement has been duly executed and
delivered by Buyer and, assuming due authorization, execution, and
delivery of this Agreement by Seller, constitutes a valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, and other similar laws affecting creditors'
rights generally and by general principles of equity.
(b) No Conflicts. The execution, delivery, and
performance by Buyer of this Agreement do not, and the consummation by
Buyer of the transactions contemplated hereby will not, directly or
indirectly (with or without notice or lapse of time) (i) conflict with,
or result in any violation of, any provision of the certificate of
incorporation or bylaws of Buyer, or (ii) conflict with, result in any
violation of, or constitute a default under, any instrument, contract,
commitment, agreement, or arrangement to which Buyer is a party or by
which Buyer or its property or assets is bound, or any judgment, order,
writ, injunction, or decree to which Buyer has been specifically
identified as subject, or any statute, law, ordinance, rule, or
regulation applicable to Buyer or its property or assets (except where
such conflict, violation, or default would not materially impair the
ability of Buyer to consummate the transactions contemplated hereby).
No material consent, approval, license, permit, order, or authorization
of, or registration, declaration, or filing with, any court,
administrative agency or commission, or other governmental authority or
instrumentality, domestic or foreign, is required to be obtained or
made by Buyer in connection with the execution, delivery, and
performance by Buyer of this Agreement or the consummation by Buyer of
the transactions contemplated hereby other than compliance with the HSR
Act.
(c) Securities Act of 1933. The Shares purchased by
Buyer under this Agreement are being acquired for Buyer's own account
and not with a view to, or for resale in connection with, any
distribution or public offering thereof, and Buyer will not offer to
sell or otherwise dispose of the Shares so acquired by it in violation
of any of the registration requirements of the Securities Act of 1933,
as amended, or applicable state securities laws.
(d) Litigation; Decrees. There are no judgments, orders,
or decrees of any court, administrative agency or commission, or other
governmental authority or instrumentality, domestic or foreign, to
which Buyer is subject that would prohibit or enjoin, or otherwise
adversely affect the ability of Buyer to consummate, the transactions
contemplated hereby. As of the date of this Agreement, no action,
lawsuit, proceeding, or investigation is pending (with respect to which
Buyer has been notified) or, to Buyer's knowledge, threatened against
Buyer that, if decided adversely to Buyer, individually or in the
aggregate, is reasonably likely to adversely affect the ability of
Buyer to consummate the transactions contemplated hereby.
(e) Representations and Warranties in Note Purchase
Agreement . All of the representations and warranties of Buyer
contained in the form of Note Purchase Agreement attached as Exhibit A
are true and correct and are incorporated herein as if made in their
entirety herein.
7. Covenants of Buyer. Buyer covenants with Seller as
follows:
(a) Confidentiality. Buyer acknowledges that the
information being provided to it by Seller is subject to the terms of a
confidentiality agreement between Buyer and Seller dated as of
September 16, 1998 (the "Confidentiality Agreement"), the terms of
which are incorporated herein by reference, and which shall remain in
full force and effect until the Closing. The Confidentiality Agreement
shall remain in effect after the Closing as to all confidential
information that does not relate solely to the Company or the
Subsidiaries. Buyer agrees that it will not use confidential
information provided to it in connection herewith to trade in Seller's
common stock.
(b) No Representations or Warranties. Buyer acknowledges
that none of Seller, the Company, the Subsidiaries, or any other person
has made any representation or warranty, expressed or implied, as to
the accuracy or completeness of any information regarding any of
Seller, the Company, or the Subsidiaries not expressly included in this
Agreement or in any certificate signed by Seller and delivered pursuant
hereto, and none of Seller, the Company, the Subsidiaries, or any other
person will be subject to any liability to Buyer or any other person
resulting from Buyer's use of any such information, except as expressly
provided in this Agreement.
(c) Retention of Records. Without limiting the
provisions of Sections 11 and 12, unless otherwise consented to in
writing by Seller (which shall not be unreasonably withheld), Buyer
shall at no time after the Closing permit the Company or the
Subsidiaries to destroy or otherwise dispose of any of its books and
records existing as of the Closing, which books and records are less
than seven years old at the time of such proposed destruction, without
first offering, by notice to Seller, to surrender to the Seller, such
books and records or any portion thereof, at least thirty days before
the proposed destruction or other disposition.
(d) Debt Releases. Buyer shall endeavor in good faith,
using commercially reasonable efforts, to either (i) cause Buyer to be
substituted for Seller and all of its affiliates other than the Company
and the Subsidiaries as of the Closing, without recourse to Seller or
any such affiliates, with respect to (A) all guarantees thereby of, (B)
other financial accommodations thereby of, and (C) security provided
thereby for, indebtedness or other obligations of the Company or one or
more of the Subsidiaries and for all reimbursement obligations of
Seller and all of its affiliates other than the Company or any of the
Subsidiaries to issuers of letters of credit or other third-party
credit enhancements backing obligations of the Company or any of the
Subsidiaries or (ii) to refinance and repay all such indebtedness and
other obligations of the Company and the Subsidiaries as of the
Closing. Buyer shall at Closing either pay directly to Seller or
contribute funds necessary for the Company or any of the Subsidiaries
to repay intercompany debt of the Company and Subsidiaries to Seller.
Nothing stated herein shall limit the Closing condition provided for in
Section 3(b)(v).
8. Mutual Covenants. Each of Seller and Buyer covenants as
follows:
(a) Consents. Buyer acknowledges that (i) certain
consents to the transactions contemplated by this Agreement may be
required from parties to instruments, contracts, commitments,
agreements, or arrangements of the Company that are described in the
Disclosure Schedule or the nondisclosure of which therein does not
constitute a misrepresentation under Section 4(b), which consents have
not been obtained, and (ii) certain new governmental licenses, permits
and authorizations may be required as a result of the change in control
of the Company and the Subsidiaries in order for the Company and the
Subsidiaries to conduct their business following the Closing in the
same manner as conducted before the Closing. Except as otherwise
expressly provided in this Section 8(a), Seller shall not have any
liability to any of Buyer, the Company, or the Subsidiaries arising out
of the failure to obtain any such consents or any such new governmental
licenses, permits, or authorizations that may be required. Seller
shall cooperate with Buyer in a reasonable manner in connection with
Buyer obtaining any such consents and any such new governmental
licenses, permits, or authorizations; provided, however, that such
cooperation shall not include any requirement of Seller or any of its
affiliates to expend money or offer or grant any accommodation
(financial or otherwise) to any third party. Nothing stated herein
shall limit the conditions set forth in Section 3(a) of this Agreement.
(b) Cooperation. Buyer and Seller shall cooperate with
each other and shall cause their respective, and their respective
affiliates', officers, employees, agents, and representatives to
cooperate with each other for a period of 30 days after the Closing to
ensure the orderly transition of the Company and the Subsidiaries from
Seller's to Buyer's ownership and to minimize any disruption to the
respective businesses of Seller, Buyer, the Company, and the
Subsidiaries that might result from the transactions contemplated
hereby. For a period of 30 days after the Closing, Seller shall make
available to the Subsidiaries Xxxxxxx Xxxxxxxxx'x services on-site at
the Subsidiaries at all reasonable times (provided that for any period
or periods of time during such 30-day period, not to exceed 15 days,
Xxxxxxx Xxxxxxxxx may be absent for the purpose of facilitating his
relocation in which event he shall be available by telephone and the
30-day period shall be extended by such period of absence), shall make
his services available to the Subsidiaries by telephone at all
reasonable times from the date the on-site obligation ceases to a date
90 days after the Closing and shall make the services of Xxxxxx Xxxxxxx
available to the Subsidiaries by telephone at all reasonable times for
90 days after the Closing, provided that such persons are employees of
Seller or an affiliate of Seller (other than the Company and the
Subsidiaries) at the time of the requested services. During the period
that Xxxxxxx Xxxxxxxxx is on site, he shall have reasonable access to a
reasonable on-site office, secretarial services, the use of a cell
phone, automobile and such other equipment and services from the
Subsidiaries as are reasonable to enable Xxxxxxx Xxxxxxxxx to perform
such services. Each party shall reimburse the other for reasonable
out-of-pocket costs and expenses (excluding compensation to or with
respect to employees thereof) incurred in assisting the other under
this Section 8(b). Neither party shall be required by this Section
8(b) to take any action that would unreasonably interfere with the
conduct of its or its affiliates' businesses.
Without limiting the provisions of Sections 11 and 12, after
the Closing, upon reasonable written notice, Buyer and Seller shall
furnish to each other and each other's officers, employees, agents, and
representatives access, during normal business hours, to such
information relating to the Company and the Subsidiaries and such other
assistance as is reasonably necessary for financial reporting,
accounting, and other reasonably appropriate purposes; provided,
however, that such access or assistance shall not unreasonably disrupt
the normal operations of any of Seller, Buyer, the Company, or the
Subsidiaries and shall be subject to the confidentiality obligations of
Section 5(c) and the Confidentiality Agreement.
(c) Trademarks.
(i) With respect to all packaging materials of the Company or
the Subsidiaries that are owned or on order at the time of Closing and
that bear the corporate name of Seller or any affiliate thereof other
than the Company or the Subsidiaries or any trade name, trademark,
service xxxx or logo of Seller or any such affiliate of Seller other
than those to be licensed to the Subsidiaries pursuant to Section
8(c)(iii) (such corporate names, trade names, trademarks, service
marks, and logos, exclusive of Xxxxx Xxxx or Tulip or any variant
thereof (which shall be subject to Section 8(c)(iii)), being
collectively called the "Marks"), Seller hereby grants to the
Subsidiaries, effective at Closing, the nontransferable right and
nonexclusive license to use for a reasonable time (not to exceed 6
months) after the Closing all of such packaging materials in the
ordinary course of business. Buyer agrees that, for so long as the
right and license granted under this Section 8(c) remain in effect, the
nature and quality of all products of the Subsidiaries sold under any
of the Marks shall substantially conform to Seller's practices,
standards, and specifications as in effect on the date of this
Agreement, and Seller shall have access at all reasonable times to the
facilities of the Subsidiaries to assure itself of compliance with the
requirements of this provision. If Seller reasonably determines that
the requirements of the foregoing provision have not been complied with
in all material respects and such noncompliance continues for five
business days after Buyer or a Subsidiary receives written notice of
non-compliance, Seller may immediately terminate the right and license
granted under this Section 8(c)(i) by giving written notice of such
termination to Buyer. Upon any such termination, Buyer agrees to cause
the Subsidiaries immediately to cease all use of the Marks.
(ii) Other than as permitted under clause (i) above, Buyer
shall not, without the prior written consent of Seller, use or permit
any of the Company or the Subsidiaries at any time after the Closing to
use in any manner any of the Marks. Without limiting the generality of
the foregoing, (A) Buyer shall cause each of the Company and the
Subsidiaries to take immediately after the Closing all corporate
actions as may be necessary or required to change its name to a name
that does not include the word "Multifoods" or any variant thereof or
any term confusingly similar thereto, and (B) Buyer shall cause the
Company and the Subsidiaries to relabel immediately after the Closing
all of their supplies (other than the packaging materials referred to
in clause (i) above) and other tangible assets bearing any of the
Marks.
(iii) Seller grants to the Subsidiaries a perpetual, exclusive
(except for the rights of Xxxxx Xxxx under Section 5(f)(iv)), royalty-
free, transferable license (the "License" or this "License") to use the
Xxxxx Xxxx and Tulip trademarks, trade names, and commercial slogans
referred to in Exhibit I in the Non-Competition Area to the extent that
such trademarks, trade names and commercial slogans afford Seller such
rights (collectively the "Licensed Marks") and Buyer accepts this
License subject to the following terms and conditions:
(A) Buyer acknowledges the ownership of the Licensed
Marks in Seller and agrees to assist, and to cause the Subsidiaries to
assist, Seller in recording this Agreement with appropriate government
authorities. Buyer agrees that it will not, and will not permit the
Company or the Subsidiaries to, attack the title of Seller to the
Licensed Marks or attack the validity of this License.
(B) Buyer agrees that without Seller's consent, which
shall not be unreasonably withheld, the nature and quality of: all
services rendered by the Subsidiaries in connection with the Licensed
Marks; all goods sold by the Subsidiaries under the Licensed Marks; and
all related advertising, promotional, and other related uses of the
Licensed Marks by the Subsidiaries shall conform to the standards in
place with respect to the Licensed Marks immediately before Closing
(with the exception of variations on size, volume presentation and
special designs and of new products developed by the Subsidiaries
following the Closing that are reasonably related to the businesses
presently operated by the Company or its Subsidiaries to the extent the
Licensed Marks by their terms may be used with respect to such new
products).
(C) Buyer shall comply, and cause the Subsidiaries to
comply, with all applicable laws and regulations and obtain all
appropriate government approvals pertaining to the sale, distribution
and advertising of goods and services covered by this License. Buyer
agrees to notify, or cause the Company or the Subsidiaries to notify,
Seller of any unauthorized use of the Licensed Marks by others promptly
as it comes to Buyer's, the Company's or a Subsidiary's attention.
Buyer and Seller shall, and Buyer shall cause the Subsidiaries to,
cooperate in enforcing any infringement or unfair competition
proceedings involving the use of Licensed Marks.
(D) Buyer shall not permit the Subsidiaries to transfer
or sublicense the Licensed Marks to a third party unless it delivers to
Seller a written agreement of the transferee to be bound by the terms
of the License granted hereby.
Seller agrees to execute and deliver at the Closing a trademark
license agreement in the form included with Exhibit I for registration
in Venezuela and trademark license agreements for recordation or
registration in Brazil and Colombia in substantially the form included
with Exhibit I with such changes thereto as may be necessary or
appropriate to provide for the use and recordation or registration of
the Licensed Marks under the laws of such jurisdictions.
(d) Publicity. No public release or announcement
concerning the transactions contemplated hereby shall be issued by
either party on or before the Closing Date without the prior consent of
the other party, except as such release or announcement may be required
by law or the rules or regulations of any applicable United States or
foreign securities exchange, in which case the party required to make
the release or announcement shall, if practicable under the
circumstances, allow the other party reasonable time to comment on such
release or announcement in advance of issuance.
(e) Closing Conditions. Subject to the terms and
conditions of this Agreement (including the limitations set forth in
Section 8(a)), each party will endeavor in good faith to satisfy all
conditions to Closing set forth in this Agreement that are within the
party's control.
(f) Antitrust Notification. Each of Seller and Buyer
shall file as soon as practicable with the United States Federal Trade
Commission (the "FTC") and the United States Department of Justice (the
"DOJ") the notification and report form required for the transactions
contemplated hereby and will promptly file or cause to be filed any
supplemental information requested under the HSR Act. The notification
and report form and all such supplemental information filed by Buyer or
Seller will be in substantial compliance with the requirements of the
HSR Act. All filing fees required to be paid by Buyer under the HSR
Act will be paid by Buyer. Each of Buyer and Seller shall furnish to
the other such necessary information and reasonable assistance as the
other may reasonably request in connection with its preparation of any
filing or submission necessary under the HSR Act. Seller and Buyer
shall keep each other apprised of the status of any communications
with, and inquiries or requests for additional information from, the
FTC or the DOJ, and shall use their best efforts to comply promptly
with any such inquiry or request. Each of Seller and Buyer will
endeavor in good faith to cause the expiration or early termination of
the waiting period required under the HSR Act as a condition to the
purchase and sale of the Shares.
(g) Intercompany Accounts. Buyer and Seller agree that
(i) all intercompany loans and accounts between any of the Company or
the Subsidiaries, on the one hand, and Seller or any of its other
affiliates, including Xxxxx Xxxx and the Monaca Subsidiary, on the
other hand (including all receivables of any of the Company or the
Subsidiaries for cash advanced directly or indirectly to Seller and all
payables of any of the Company or the Subsidiaries for direct or
indirect overdrafts on Seller's bank accounts outstanding at the
Closing), shall be paid in full at the Closing by the party obligated
to make the payment, by Seller on behalf of its affiliates other than
the Company and the Subsidiaries, or by Buyer on behalf of the Company
and the Subsidiaries, as the case may be, and (ii) such payments shall
have no effect on the amount of Closing Net Assets.
(h) Insurance.
(i) With respect to the existing fire/business-
interruption insurance provided by Royal Caribe insuring Molinos
Nacionales, C.A. (MONACA) and the marine transport insurance provided
by Xxxxx insuring Molinos Nacionales C.A. (MONACA), such policies shall
be cancelled at Closing and, as a result, shall not provide insurance
protection to Buyer, the Company or the Subsidiaries with respect to
occurrences on or after the Closing Date. With respect to the master
insurance policies set forth in the Disclosure Schedule that insure
both the Company and the Subsidiaries and Seller, Seller shall have no
obligation to continue, and may terminate, such policies in effect
following the Closing. Seller may, in its sole discretion, take any
action it desires to discontinue the coverage of the Company and the
Subsidiaries under the master policies of Seller that are presently in
effect.
(ii) To the extent that, and as long as, coverage at any
time remains after Closing under the master insurance policies referred
to in Section 8(h)(i) with respect to occurrences prior to the Closing
Date relating to the Company or the Subsidiaries, Seller shall, as long
as the insurance is in place, use commercially reasonable efforts,
subject to (1) the terms of the applicable insurance policies, (2)
Section 8(h)(iii) and (3) Seller's termination and discontinuance
rights provided in Section 8(h)(i), to assist the Company and the
Subsidiaries in seeking payment or reimbursement by or from the insurer
to the Company, the Subsidiaries or claimants against the Company or
the Subsidiaries under such insurance policies, provided that certain
of such policies are subject to deductibles which will continue in
effect.
(iii) If any legal action, arbitration, negotiation or
other proceeding is required for coverage to be asserted against any
insurer for the benefit of the Company and the Subsidiaries, Buyer,
unless Seller is required under Section 11(b) to indemnify the Company
and the Subsidiaries for losses being covered by such insurance, shall
make, or cause the Company or the Subsidiaries to make, such assertions
at the expense of Buyer, the Company or the Subsidiaries. If Buyer,
the Company and the Subsidiaries are not permitted to assert such
coverage, then Seller or one of its affiliates shall do so, and in such
event Buyer shall, and shall cause the Company and the Subsidiaries to,
hold harmless and indemnify Seller and its affiliates for any
reasonable out-of-pocket costs and expenses (but not compensation
payments to or with respect to their employees) that they may incur
because of such action.
(iv) If (A) any property of the Company or any of the
Subsidiaries is damaged or destroyed prior to the Closing Date or
condemned in whole or in part prior to the Closing Date, (B) all or a
part of the damaged or destroyed property is subject to insurance
coverage or the condemned property is subject to a condemnation award,
and (C) the decrease in the value of the property resulting from such
damage, destruction or condemnation is included in the determination of
Closing Net Assets in the Closing Statement, all insurance proceeds and
condemnation awards relating to such property, whenever paid, promptly
shall be remitted to Seller. Except as provided in the immediately
preceding sentence, if any event described in clause (A) shall occur,
the proceeds or awards therefrom of the nature described in clause (B)
shall be retained by the Company and the Subsidiaries.
(i) Disclosure Supplements. From time to time before the
Closing, Seller may supplement or amend the Disclosure Schedule with
respect to any matter arising that would make any representation or
warranty set forth in Section 4 inaccurate if updated immediately
before the Closing or to correct any information in the Disclosure
Schedule or in any representation or warranty of Seller. For purposes
of determining the fulfillment of the conditions set forth in Section
3(a)(i) as of the Closing, the Disclosure Schedule shall be deemed to
include only that information contained therein on the date of this
Agreement and shall be deemed to exclude any information contained in
any subsequent supplement or amendment thereto. However, for purposes
of determining the accuracy of the representations or warranties of
Seller contained in Section 4 or the liability of Seller with respect
thereto under Section 11(b)(i), the Disclosure Schedule shall be deemed
to include all information contained in any subsequent supplement or
amendment thereto.
(j) Disposition of Xxxxx Xxxx Business, Monaca Subsidiary
and Excluded Assets. Buyer and Seller acknowledge that, prior to the
Closing, Seller shall cause the Company to transfer to Seller or any of
its affiliates (for no consideration) all of the shares of capital
stock of Xxxxx Xxxx. Buyer and Seller further agree that to effectuate
such transfers, the Company may adopt a "Plan of Liquidation" under
Section 332 of the Code. The documents executed to effect the
foregoing transactions shall be reasonably satisfactory to Buyer.
Buyer and Seller further (i) acknowledge that, Molinos Nacionales, C.A.
(MONACA) has sold to Seller the Monaca Subsidiary for a cash amount
equal to the net equity (on the date of purchase by Seller of the stock
of the Monaca Subsidiary) of the Monaca Subsidiary, and (ii) agree
that, prior to the Closing, Seller shall cause Molinos Nacionales, C.A.
(MONACA) to sell to Inversiones 91060, an indirect subsidiary of
Seller, the net assets described in Exhibit J hereto as Excluded Assets
(the "Excluded Assets") for a nominal value determined by Seller.
Notwithstanding anything to the contrary in this Agreement, all
representations, warranties, covenants, and other references to "the
Company" shall be deemed to be made after giving effect to the
transactions contemplated by this Section 8(j).
(k) Reserve for Receivables. The reserve for receivables
included in the Interim Statement and to be included in the Closing
Statement reserves against specifically identified receivables (other
than Excluded Assets), identified as Written-Off Assets in Exhibit J
(the "Written-Off Assets"). Buyer agrees that Seller and its
affiliates (other than the Company and the Subsidiaries) shall have the
right to take, on behalf of the Company and the Subsidiaries, any
action reasonably appropriate to collect the Written-Off Assets.
Buyer, at Seller's request, shall cause the Company and the
Subsidiaries to execute and deliver to Seller or any affiliate of
Seller designated by Seller, or their representatives designated by
Seller, such Powers of Attorney and other documents reasonably
requested by Seller to facilitate Seller's collection efforts with
respect to the Excluded Assets and the Written-Off Assets. Buyer
shall, and shall cause the Company and the Subsidiaries to, cooperate
in such collection efforts to the extent reasonably requested by
Seller, which shall include providing Seller or its designated
affiliate, or their representatives designated by Seller, with records
and information reasonably relevant to such collection efforts and
making employees available on a mutually convenient basis to provide
additional information and explanation of the Written-Off Assets and
the Excluded Assets and the collection claims. If all or any portion
of any such Written-Off Assets or such Excluded Assets is collected at
any time by the Company or any of the Subsidiaries, the amount so
collected promptly shall be remitted to Seller.
9. Employees and Employee Benefits. For purposes of
eligibility, vesting and entitlement to vacation and severance
benefits, each person who is an employee of the Company or any
Subsidiary immediately prior to the Closing shall be given credit under
all of Buyer's employee benefit plans, if any, in which employees of
the Company or any of its Subsidiaries shall hereafter participate (the
"Buyer's Plans"), (including the vacation policy(ies) and severance
plans included within Buyer's Plans) for such employee's service with
any of Seller, the Company, the Subsidiaries or any other affiliate of
Seller prior to the Closing Date; and each employee and covered
dependent thereof shall be allowed to participate in each of Buyer's
Plans in which any employee of the Company or any of its Subsidiaries
shall participate without regard to preexisting conditions, waiting
periods, or other exclusions or limitations not imposed on such
individual by Seller's Plans immediately prior to the Closing Date.
Each such employee of the Company or any of the Subsidiaries who is an
existing employee thereof immediately prior to the Closing shall be
credited under the vacation policy(ies) included within Buyer's Plans
with all vacation, if any, accrued by such employee prior to the
Closing Date under the vacation policy(ies) included within Seller's
Plans and not used by such employee prior to the Closing Date.
10. Further Assurances. From time to time after the Closing,
as and when requested by any party, the other party shall execute and
deliver all such documents and instruments and shall take all such
further or other actions (subject to the limitation set forth in
Section 8(a)), as the party may reasonably deem necessary or desirable
to give full effect to this Agreement.
11. Indemnification.
(a) Tax Indemnification. Seller shall indemnify Buyer and
its affiliates (including, on or after the Closing Date, the Company
and the Subsidiaries) against (i) all liability for income Taxes of the
Company or the Subsidiaries for any Pre-Closing Tax Period; (ii) all
liability (as a result of Treasury Regulation Section 1.1502-6(a) or any
comparable provision of state, local or foreign law) for Taxes of
Seller or any other corporation (other than the Company or the
Subsidiaries), including Xxxxx Xxxx or the Monaca Subsidiary,
affiliated at any time before the Closing with the Company or the
Subsidiaries; (iii) all liability of Buyer or any of its affiliates for
United States federal income Taxes to the extent such liability results
from the Section 338(h)(10) Election required by Section 12(g)
(including income Taxes attributable to a deemed sale of assets under
Section 338(a) of the Code, but excluding income Taxes attributable to
operations conducted after July 31, 1999 (other than the Section
338(h)(10) Election occurring on the Closing Date)); (iv) all liability
of Buyer or any of its affiliates for income taxes imposed by any other
jurisdiction that recognizes an election comparable to the Section
338(h)(10) Election and allows Seller to exclude from income gain on
the sale of the Shares, to the extent such liability results from the
338(h)(10) Election or any comparable election under such
jurisdiction's Tax laws required by Section 12(g) (including income
Taxes attributable to a deemed sale of assets under Section 338(a) of
the Code or a comparable provision, but excluding income taxes
attributable to operations conducted after July 31, 1999 (other than
the Section 338(h)(10) Election or comparable elections occurring on
the Closing Date)); (v) all liability for breaches of the
representations and warranties set forth in Section 4(h) and for
breaches by Seller of the covenants, obligations and agreements set
forth in Section 12 of this Agreement; (vi) all liability of the
Company or the Subsidiaries for import Taxes incurred on or prior to
July 31, 1999 and business asset ("BAT") Taxes incurred for all Tax
periods ending on or prior to July 31, 1999; (vii) all Taxes, if any,
resulting from (A) the sale of the Agro Business (as defined in Section
11(b)(vi), (B) the transfer of assets from Molinos Nacionales, C.A.
(MONACA) to the Monaca Subsidiary and the sale of the stock of the
Monaca Subsidiary to Seller as contemplated by Section 8(j), (C) the
disposition of the stock of Xxxxx Xxxx to Seller as contemplated by
Section 8(j), and (D) the sale of the Excluded Assets to Inversiones
91060; and (viii) all liability for reasonable legal fees and expenses
attributable to any item in clause (i) through (vii) above. In
addition, to the extent provided in Section 11(b), Seller shall
indemnify Buyer and its affiliates (including, on or after the Closing
Date, the Company and the Subsidiaries) against all liability for sales
("IPC") Taxes and all other Taxes (other than income, import and BAT
Taxes) of the Company or the Subsidiaries for any Pre-Closing Tax
Period, which indemnification shall be deemed to have been made
pursuant to Section 11(b) and not pursuant to Section 11(a). Seller's
indemnification of Buyer for liabilities for Taxes, as set forth in
this Section 11, will not be modified or nullified in any way by the
knowledge of, or disclosure to, Buyer of such liability.
Notwithstanding the foregoing, Seller shall not indemnify Buyer or
Buyer's affiliates (including, on or after the Closing Date, the
Company and the Subsidiaries) against (x) any liability for Taxes of
any of the Company or the Subsidiaries for the Pre-Closing Tax Period
or otherwise incurred on or prior to July 31, 1999 to the extent such
liability has been included in the final determination of Closing Net
Assets, or (y) any liability for Taxes attributable to any action taken
on or after the Closing Date by Buyer, any of its affiliates, or any
transferee of Buyer or any of its affiliates, including the Company and
the Subsidiaries, other than any such action expressly required by
applicable law or by this Agreement (a "Buyer Tax Act"), or
attributable to a breach by Buyer of its obligations under this
Agreement.
Buyer shall, and shall cause the Company and the Subsidiaries to,
indemnify Seller and its affiliates against (i) all liability for Taxes
of the Company or the Subsidiaries for any Tax period ending after July
31, 1999 (other than Taxes of the Company or the Subsidiaries for which
indemnification by Seller has been expressly provided under the
foregoing paragraph of this Section 11(a)); (ii) all liability for
Taxes of any of the Company or the Subsidiaries for the Pre-Closing Tax
Period or otherwise incurred on or prior to July 31, 1999 to the extent
such liability has been included in the final determination of Closing
Net Assets; (iii) all liability for Taxes attributable to a Buyer Tax
Act or to a breach by Buyer of its obligations under this Agreement;
(iv) all liability for breaches by Buyer of the covenants, obligations
and agreements set forth in Section 12 of this Agreement; and (v) all
liability for reasonable legal fees and expenses attributable to any
item in clause (i), (ii), (iii) or (iv) above.
In the case of any Tax period that includes (but does not begin
on) July 31, 1999 (a "Straddle Period"), and in the case of the final
Tax year of the Company for United States federal income Tax purposes
as a member of Seller's affiliated group, the income Taxes of the
Company and the Subsidiaries for the Pre-Closing Tax Period (which are
subject to indemnification by Seller to the extent set forth in this
Section 11(a)) shall be computed using a closing-of-the-books method as
if such Tax period ended as of July 31, 1999, with all standard
deductions, exemptions, progressivity in rates, and other items
calculated with respect to the full Straddle Period apportioned to the
Pre-Closing Tax Period based upon the ratio of the number of days
during the Straddle Period that are in the Pre-Closing Tax Period to
the total number of days in the Straddle Period. Notwithstanding
anything stated in this Agreement, the total amount of the BAT Taxes of
Molinos Nacionales C.A. allocable to the Seller for the Straddle Period
commencing March 1, 1999 and ending February 29, 2000 shall be the sum
of (i) one-half of one percent (.5%) of the amount of the Agro Business
assets included in the BAT Tax base on February 28, 1999 and (ii) the
product of one percent (1%) of the average of (A) the BAT Tax base of
the assets of Molinos Nacionales C.A. (MONACA) (other than the Agro
Business assets referred to in clause (i)) on February 28, 1999 and (B)
the BAT Tax base of the assets of Molinos Nacionales C.A. (MONACA) at
the close of business on July 31, 1999, multiplied by the ratio of the
number of days in such Straddle Period that occur in the Pre-Closing
Tax Period.
Seller's indemnity obligation for income Taxes, import Taxes and
BAT Taxes for a Straddle Period shall initially be effected by its
payment to Buyer of the excess of (x) such Taxes for the Pre-Closing
Tax Period, over (y) the sum of (i) the amount of such Taxes paid by
Seller or any of its affiliates (other than the Company or the
Subsidiaries), including Xxxxx Xxxx, at any time, plus (ii) the amount
of such Taxes paid by any of the Company or the Subsidiaries on or
before July 31, 1999, plus (iii) the amount of such Taxes included in
the final determination of Closing Net Assets. Seller shall initially
pay such excess to Buyer within 30 days after the Tax Return with
respect to the liability for such Taxes is required to be filed (or, if
later, is actually filed). If (x) the sum of (i) the amount of such
Taxes paid by Seller or any of its affiliates (other than the Company
or the Subsidiaries), including Xxxxx Xxxx, at any time, plus (ii) the
amount of such Taxes paid by any of the Company or the Subsidiaries on
or before July 31, 1999, plus (iii) the amount of such Taxes included
in the final determination of Closing Net Assets, exceeds (y) the
amount of such Taxes for the Pre-Closing Tax Period, Buyer shall pay to
Seller the amount of such excess, within 30 days after the Tax Return
with respect to the liability for such Taxes is required to be filed.
The payments to be made under this paragraph by Seller or Buyer with
respect to any Straddle Period shall be appropriately adjusted to
reflect any final determination with respect to Taxes for such Straddle
Period.
(b) Other Indemnification by Seller. Seller shall
indemnify Buyer and its directors, officers, employees, subsidiaries
and other affiliates (including, on and after the Closing Date, the
Company and the Subsidiaries) against any loss, liability, claim,
damage, or expense (including reasonable legal fees and expenses,
except as otherwise provided in Section 11(f)) suffered or incurred by
any such indemnified party (other than those relating to income, import
and BAT Taxes (which are covered by Section 11(a)), those resulting
from a breach of any representation or warranty set forth in Section
4(h) or a breach of any covenant, obligation or agreement set forth in
Section 12 of this Agreement) as a result of:
(i) any breach of any representation or warranty of
Seller contained in this Agreement (other than those set forth in
Section 4(h) or 4(s) or any breach of Section 4(r) with respect to
compliance with Environmental Laws) or any certificate signed by Seller
and delivered pursuant thereto;
(ii) any breach of any covenant, obligation or agreement
of Seller contained in this Agreement (other than those set forth in
Section 12 of this Agreement);
(iii) any product recall or Third Party Claim (as defined
in Section 11(f)), including claims for product liability, with respect
to products manufactured, processed or sold by the Company or the
Subsidiaries before the Closing Date, other than those products sold by
the Company or the Subsidiaries on or after the Closing Date with
respect to which Buyer, the Company, or the Subsidiaries, (A) because
of negligence in the packaging, storage, or transportation of such
products on or after the Closing Date were primarily responsible for
such loss, liability, claim, damage, or expense related to such
products, or (B) in the exercise of reasonable diligence in the
ordinary course of business should have discovered the defect in such
products on or after the Closing Date and before the sale of such
products;
(iv) any material action, lawsuit, hearing, proceeding,
or investigation that, before the Closing Date, was pending against the
Company or the Subsidiaries before any court, including pending
litigation set forth in the Disclosure Schedule;
(v) any violation before the Closing Date by the Company
or the Subsidiaries of any foreign currency exchange laws, decrees,
rules, resolutions or regulations in effect at any time prior to the
Closing;
(vi) (A) the ownership by the Company of Xxxxx Xxxx or
its subsidiaries, (B) the ownership by Molinos Nacionales, C.A.
(MONACA) of the Monaca Subsidiary, (C) the ownership by Molinos
Nacionales, C.A. (MONACA) of the animal feed division of Molinos
Nationales, C.A. (MONACA) that was transferred to Alimentos Super-S
C.A., a newly-formed subsidiary of Molinos Nacionales, C.A. (MONACA),
which subsidiary was thereafter sold to Crescent River Corporation
A.V.V. in June 1999 (the "Agro Business"), (D) the ownership by Molinos
Nacionales, C.A. (MONACA) of the Excluded Assets, (E) the operations of
Xxxxx Xxxx or its subsidiaries or the Monaca Subsidiary, or (F) the
operation, prior to Closing, of the Agro Business;
(vii) any non-payment of IPC Taxes or any other Taxes
(other than income, import or BAT Taxes) of the Company or the
Subsidiaries for any Pre-Closing Tax Period, provided that no such
indemnification shall be provided by Seller pursuant to this Section
11(b)(vii) unless an appropriate governmental authority, without
solicitation or encouragement by Buyer or, after the Closing, the
Company or any Subsidiary, or any affiliate of any of the foregoing
persons, shall have asserted in writing prior to Closing or shall
assert in writing within the applicable statute of limitations with
respect to IPC Taxes or within 18 months after the Closing Date with
respect to all other Taxes (other than income, import or BAT Taxes) a
Third-Party Claim (as defined in Section 11(f)) which would give rise
to indemnification pursuant to this Section 11(b)(vii) and Seller shall
have promptly been given notice of such Third-Party Claim and a full
opportunity to discuss such Third-Party Claim on a timely basis with
such asserting governmental authority;
(viii) any Third-Party Claim (other than claims of a
nature covered by Section 11(b)(iv) or (b)(ix)) asserted before or
after Closing that arises solely and exclusively out of any event
occurring prior to Closing or any condition (other than the Company's
or any Subsidiary's financial condition) existing prior to Closing
resulting from the operations of, or ownership of property by, the
Company or any Subsidiary prior to Closing, provided, however that no
such indemnification shall be provided by Seller pursuant to this
Section 11(b)(viii) unless (x) a third party, without solicitation or
encouragement by Buyer or, after the Closing, the Company or any
Subsidiary, or any affiliate of any of the foregoing persons, shall
have commenced litigation in the form of a lawsuit against the Company
or any Subsidiary brought by the third party in a court of competent
jurisdiction within 18 months after the Closing based upon such Third
Party Claim, and (y) the Third Party Claim did not arise primarily as a
result of the enactment of laws, regulations or decrees on or after the
Closing Date;
(ix) (A) any breach of Section 4(s) of this Agreement,
(B) any event, condition or occurrence that would have constituted a
breach of Section 4(s) of this Agreement but for (1) the qualifiers
contained in Section 4(s) relating to knowledge, materiality or the
likelihood that claims will be asserted by a governmental authority or
(2) the disclosures made in the Disclosure Schedule, or (C) any
violation by the Company or any of the Subsidiaries of any federal,
state, local or foreign environmental laws, regulations, or decrees in
effect at or prior to Closing relating to air, water, noise, odor,
Hazardous Substances or the protection of health, safety or the
environment ("Environmental Laws") or breach of Section 4(r) relating
to non-compliance with Environmental Laws, provided, however, that no
such indemnification shall be provided by Seller pursuant to this
Section 11(b)(ix) unless (x) an appropriate governmental authority,
without solicitation or encouragement by Buyer or, after the Closing,
the Company or any Subsidiary, or any affiliate of any of the foregoing
persons, shall have asserted in writing prior to Closing or shall
assert in writing within 48 months after the Closing Date a Third-Party
Claim which would give rise to indemnification pursuant to this Section
11(b)(ix) and Seller shall have promptly been given notice of such
Third-Party Claim and a full opportunity to discuss such Third-Party
Claim on a timely basis with such asserting governmental authority, and
(y) the loss, liability, claim, damage, or expense did not arise
primarily as a result of the enactment of laws, regulations or decrees
on or after the Closing Date; or
(x) any Third Party Claim of Xxxxxxx Xxxxxxxxx, Xxxxxx
Xxxxxxx or Xxxxxxx Xxxx for employee compensation or benefits based
upon the duration of such employee's combined employment with Seller
and its affiliates, including the Subsidiaries, that would not have
arisen if they had not been employed by Seller or any of its
subsidiaries (other than the Company or the Subsidiaries) prior to
their employment by the Subsidiaries;
provided; however, that (A) Seller shall not have any liability or
indemnification obligation under Section 11(b)(i) arising from a breach
of any representation or warranty (except for breaches of Sections
4(a), 4(c), the first two sentences of Section 4(d) or 4(e)) or any
liability or indemnification obligation pursuant to Section 11(b)(vii),
(viii) or (ix) unless the aggregate of all losses, liabilities, claims,
damages, and expenses for which Seller would, but for this clause (A),
be liable exceeds on a cumulative basis an amount equal to 1% of the
Adjusted Purchase Price, and then only to the extent of any such
liabilities and indemnification obligations that, in the aggregate,
exceed 1/2% of the Adjusted Purchase Price, (B) Seller shall not have
any liability or indemnification obligation under Section 11(b)(i)
(except for breaches of Sections 4(a), 4(c), the first two sentences of
Section 4(d), or 4(e)) or any liability or indemnification obligation
pursuant to Section 11(b)(vii), (viii) or (ix) to the extent the
aggregate of all losses, liabilities, claims, damages, and expenses for
which Seller would, but for the provisions of this clause (B), be
liable exceeds on a cumulative basis an amount equal to 50% of the
Adjusted Purchase Price, and (C) Seller shall not have any liability
for any loss, liability, claim, damage, or expense to the extent such
loss, liability, claim, damage, or expense has been included in the
final determination of Closing Net Assets; and further provided that
the limitations set forth in clauses (A) and (B) above shall not apply
to any breach by Seller that is intentionally fraudulent.
Except as provided in Section 26 and Section 5(h), Buyer's sole
and exclusive remedy with respect to any and all claims relating to the
subject matter of this Agreement shall be under the indemnification
provisions set forth in this Section 11, provided that nothing stated
herein shall limit Seller's obligations under the Note Purchase
Agreement. In furtherance of the foregoing, Buyer hereby waives, to
the fullest extent permitted under applicable law, all rights, claims,
and causes of action any of Buyer, the Company, or the Subsidiaries may
have against Seller or under or based upon any federal, state, local or
foreign statute, law, ordinance, rule or regulation or arising under or
based upon common law or otherwise, except to the extent provided with
respect to Seller in Section 11(a) and this Section 11(b).
(c) Other Indemnification by Buyer. Buyer shall
indemnify Seller and its directors, officers, employees, subsidiaries
and other affiliates against any loss, liability, claim, damage, or
expense (including reasonable legal fees and expenses, except as
otherwise provided in Section 11(f)) suffered or incurred by any such
indemnified party (other than any relating to Taxes of the nature
covered by Section 11(a)) as a result of:
(i) any breach of any representation or warranty of Buyer
contained in this Agreement or any certificate signed by Buyer and
delivered pursuant hereto;
(ii) any breach of any covenant, obligation or agreement
of Buyer contained in this Agreement or the Confidentiality Agreement;
(iii) without limiting the generality of clause (iv) or
(v) below, any claims in respect of products sold by the Company or the
Subsidiaries after the Closing under any of the Marks or the Licensed
Marks, which are brought against Seller or any of its affiliates as a
result of any right and license to use the Marks or the Licensed Marks
granted by Seller under Section 8(c) (other than those for which
indemnification by Seller has been expressly provided under Section
11(a) or (b) and has not terminated under Section 11(e));
(iv) without limiting the generality of clause (v) below,
any claim, action, lawsuit, proceeding, or investigation relating
primarily to the Company or the Subsidiaries, whether arising before,
at, or after the Closing (other than those for which indemnification by
Seller has been expressly provided under Section 11(a) or (b) and has
not terminated under Section 11(e)); and
(v) any obligation or liability of the Company or the
Subsidiaries or, with respect to obligations or liabilities relating
primarily to the Company or the Subsidiaries, Seller, whether arising
before, at, or after the Closing (other than those for which
indemnification by Seller has been expressly provided under Section
11(a) or (b) and has not terminated under Section 11(e)), including (A)
any obligation or liability included in the final determination of
Closing Net Assets, and (B) any obligation or liability of Seller or
any affiliate of Seller, other than the Company or the Subsidiaries, to
pay or perform, or provide security for, any such obligation or
liability of any of the Company or the Subsidiaries, or to reimburse
any party for payments under a letter of credit or other credit
enhancement backing such obligation or liability of any of the Company
or the Subsidiaries (1) under any guaranty, obligation, or security
agreement to assure performance given or made by Seller or any such
affiliate, (2) any reimbursement agreement, or (3) that otherwise
arises as a matter of law or contract, provided that nothing stated
herein shall limit the Closing condition provided for in Section
3(b)(v).
Except as provided in Section 26, Seller's sole and exclusive
remedy with respect to any and all claims relating to the subject
matter of this Agreement shall be under the indemnification provisions
set forth in this Section 11, provided that nothing stated herein shall
limit Buyer's obligations under the Note Purchase Agreement. In
furtherance of the foregoing, Seller hereby waives, to the fullest
extent permitted under applicable law, all rights, claims, and causes
of action Seller may have against Buyer or under or based upon any
federal, state, local, or foreign statute, law, ordinance, rule, or
regulation or arising under or based upon common law or otherwise,
except to the extent provided with respect to Buyer in Section 11(a)
and this Section 11(c).
(d) Adjustments; Clean-Up Actions. The amount of any
loss, liability, claim, damage, or expense for which indemnification is
provided under this Section 11 shall be net of any amounts recovered
(regardless of time) or recoverable with diligent effort by the
indemnified party under insurance policies with respect to such loss,
liability, claim, damage, or expense, and shall be (i) increased to
take account of any net Tax cost incurred by the indemnified party
arising from the receipt of indemnity payments hereunder and (ii)
reduced to take account of any net Tax benefit realized by the
indemnified party arising from the incurrence or payment of any such
loss, liability, claim, damage, or expense. Any indemnity payment made
pursuant to this Section 11 will be treated as an adjustment to the
purchase price for the Shares for Tax purposes, unless a final
determination (which shall include the execution of a Form 870-AD or
successor form) with respect to the indemnified party causes any such
payment not to constitute an adjustment to the purchase price for the
Shares for United States federal income Tax purposes.
Notwithstanding anything to the contrary stated in this Section
11(d) or any other Section of this Agreement, (i) in the case of any
contamination or other condition at any Company Property or any
occurrence, the existence or occurrence of which constitutes a breach
of any representation or warranty in Section 4(r) or 4(s) or in the
case of any indemnification obligation pursuant to Section 11(b)(ix),
Seller's indemnification obligations will be limited to the payment of
fines and clean-up obligations imposed by an appropriate governmental
authority and will not include any obligations to improve any Company
Property to comply with any statutes, laws, ordinances, rules, orders
or regulations or any obligations to remove any facilities or
improvements from any Company Property or to discontinue operations at,
or transfer operations from, any Company Property, and (ii) if clean-up
action is required to correct a situation giving rise to any loss,
liability, claim, damage, or expense for which a party is entitled to
indemnification under this Section 11, then the indemnifying party
shall not be obligated with respect to the costs and expenses of such
clean-up action, (A) in the case of any contamination or other
condition at any Company Property or any occurrence, the existence or
occurrence of which constitutes a breach of any representation or
warranty in Section 4(r) or 4(s) or in the case of any indemnification
obligation pursuant to Section 11(b)(ix), to the extent such costs and
expenses exceed those that would have been incurred had Buyer, the
Company, or the Subsidiaries taken only such actions to clean-up such
contamination or other condition as are required under applicable law
in effect prior to the Closing Date, and (B) in all other cases, to the
extent such costs and expenses exceed those that would have been
incurred had the indemnified party taken only such actions to clean-up
such situation that a person of ordinary prudence under like
circumstances who was not entitled to indemnification for the costs and
expenses of such clean-up action would have reasonably taken.
Except as otherwise expressly provided in Section 11(b), 11(f) or
16, no delay by an indemnified party in asserting a right to
indemnification under this Section 11 shall constitute a waiver of a
right to indemnification pursuant to this Section 11.
(e) Termination of Indemnification. The obligation to
indemnify a party (x) under Section 11(a) or with respect to IPC Taxes
under Section 11(b), shall terminate upon the expiration of the
applicable statute of limitations with respect to the income, import,
BAT or IPC Tax liability in question (giving effect to any waiver,
mitigation, or extension thereof), (y) under Sections 11(b)(i) and
11(c)(i), shall terminate when the applicable representation or
warranty terminates under Section 16 (except in cases of intentional
fraud, for which the obligation to indemnify shall not terminate), and
(z) under the other clauses of Sections 11(b) and 11(c), except as
otherwise expressly provided in Section 11(b) or under clause (x)
hereof, shall not terminate; provided, however, that in no event shall
any obligation to indemnify terminate with respect to any item as to
which the person to be indemnified shall have, before the expiration of
the applicable period, previously made a claim by delivering a notice
under Section 11(f) or (g) to the party to be providing the
indemnification.
(f) Procedures Relating to Indemnification for Third
Party Claims. In order for a party to be entitled to any
indemnification under this Agreement (other than under Section 11(a))
involving a claim or demand made by any third party against the
indemnified party (a "Third Party Claim"), the indemnified party shall
notify the indemnifying party in writing of the Third Party Claim, and
deliver to the indemnifying party copies of all notices and documents
accompanying or constituting the Third Party Claim, within five
business days after obtaining notice thereof; provided, however, that
failure to give such notification shall not affect the indemnification
provided hereunder, except to the extent the indemnifying party shall
have been actually prejudiced as a result of such failure. Thereafter,
the indemnified party shall deliver to the indemnifying party, within
five business days after the indemnified party's receipt thereof,
copies of all notices and documents (including court papers) received
by the indemnified party relating to the Third Party Claim; provided,
however that failure to deliver such copies shall not affect the
indemnification provided hereunder except to the extent the
indemnifying party shall have been actually prejudiced as a result of
such failure.
If a Third Party Claim is made against an indemnified party, the
indemnifying party will be entitled to participate in the defense
thereof and, if it so chooses, to assume the defense thereof with
counsel selected by the indemnifying party and reasonably satisfactory
to the indemnified party. Should the indemnifying party so elect to
assume the defense of a Third Party Claim, which election must be made
within ten business days (in the case of a Third Party Claim with
respect to which a complaint has been filed) or 20 business days (in
the case of all other Third Party Claims) after the indemnifying party
receives notice of the Third Party Claim from the indemnified party,
the indemnifying party will not be liable to the indemnified party for
legal expenses incurred by the indemnified party in connection with the
defense thereof. If the indemnifying party assumes such defense, the
indemnified party may, but need not, participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel
employed by the indemnifying party, it being understood that the
indemnifying party shall control such defense. If the indemnifying
party has not assumed the defense of a Third Party Claim, the
indemnifying party shall be liable for the fees and expenses of counsel
employed by the indemnified party. If the indemnifying party chooses
to defend or prosecute any Third Party Claim, the indemnified party
shall cooperate in the defense or prosecution thereof with
reimbursement by the indemnifying party of reasonable out-of-pocket
expenses (but not compensation payments to or with respect to
employees) of the indemnified party incurred in connection therewith
and if the indemnifying party does not choose to defend or prosecute a
Third Party Claim, the indemnifying party shall cooperate in the
defense or prosecution thereof by the indemnified party. Such
cooperation shall include the retention and (upon the defending or
prosecuting party's request) the provision to the defending or
prosecuting party of records and information that are reasonably
relevant to the Third Party Claim, and making employees available on a
mutually convenient basis to provide additional information and
explanation of any material provided hereunder. If the indemnifying
party shall not have assumed the defense of a Third Party Claim, the
indemnifying party agrees to waive any and all claims such indemnifying
party may have against the indemnified party arising out of the conduct
of the defense thereof by the indemnified party, except for claims of
gross negligence or willful misconduct on the party of the indemnified
party related solely to the conduct of such defense. Whether or not
the indemnifying party shall have assumed the defense of a Third Party
Claim, the indemnified party shall not admit any liability with respect
to, or settle, compromise or discharge, the Third Party Claim without
the indemnifying party's prior written consent, which shall not be
unreasonably withheld. All Tax Claims shall be governed by Section
11(g). No reserves for Third Party Claims indemnified against by
Seller pursuant to Section 11(b) shall be included in Closing Net
Assets.
(g) Procedures Relating to Indemnification of Tax Claims.
If a claim is made by any Tax authority, which, if successful, might
result in an indemnity payment to Buyer or one of its affiliates under
Section 11(a), Buyer shall promptly notify Seller in writing of such
claim (a "Tax Claim"). If notice of a Tax Claim ("Tax Notice")
received by any of Buyer, the Company, or the Subsidiaries after the
Closing Date is not given to Seller within a sufficient period of time
to allow Seller to effectively contest such Tax Claim, Seller shall not
be liable to Buyer or any of its affiliates to the extent that Seller's
position is actually prejudiced as a result thereof.
Seller shall control all proceedings, including selection of
counsel, taken in connection with any Tax Claim (except to the extent
the Tax Claim relates to Taxes of the Company or the Subsidiaries for a
Tax period that includes (but does not end on) July 31, 1999) and,
without limiting the foregoing, may in its sole discretion pursue or
forego any and all administrative appeals, proceedings, hearings, and
conferences with any Tax authority with respect thereto and either pay
the Tax claimed and xxx for a refund where applicable law permits such
refund suits (subject to Buyer's obligations, if any, with respect to
such Taxes under Section 11(a) and Buyer's rights, if any, with respect
to such refund under Section 12(c)) or contest the Tax Claim in any
permissible manner. Seller and Buyer shall jointly control all
proceedings taken in connection with any Tax Claim to the extent it
relates to Taxes of any of the Company or the Subsidiaries for a Tax
period that includes (but does not end on) July 31, 1999. Each of
Buyer, the Company, the Subsidiaries, and their respective affiliates
shall cooperate with Seller in contesting any Tax Claim (with
reimbursement by Seller of reasonable out-of-pocket expenses (but not
compensation payments to or with respect to employees) of any such
person incurred in connection therewith, except to the extent the Tax
Claim relates to Taxes of any of the Company or the Subsidiaries for a
Tax period that includes (but does not end on) July 31, 1999), which
cooperation shall include the retention and (upon Seller's request) the
provision to Seller of records and information that are reasonably
relevant to the Tax Claim, and making employees available on a mutually
convenient basis to provide additional information or explanation of
any material provided hereunder or to testify at proceedings relating
to the Tax Claim.
In no case shall any of Buyer, the Company, or the Subsidiaries
admit any liability with respect to, or settle, compromise, or
discharge, any Tax Claim without Seller's prior written consent, which
shall not be unreasonably withheld. In no case shall Seller admit any
liability with respect to, or settle, compromise or discharge, any Tax
Claim relating to Taxes of any of the Company or the Subsidiaries for a
Tax period that includes (but does not end on) July 31, 1999 without
Buyer's prior written consent, which shall not be unreasonably
withheld.
(h) Procedure for Indemnification--Other Claims. A claim
for indemnification for any matter not involving a Third Party Claim or
a Tax Claim, other than indemnification for the breach of any
representation or warranty in 4(s) or under Section 4(r) relating to
non-compliance with Environmental Laws or under Section 11(b)(vii) or
(ix), none of which may be asserted by an indemnified party unless a
Third Party Claim has been made by an appropriate governmental
authority, may be asserted by notice to the party from whom
indemnification is sought.
(i) Form of Indemnification Payments. All
indemnification payments required to be made by either Seller or Buyer
pursuant to this Section 11 shall be made in cash.
12. Tax Matters.
(a) For any Tax period that includes (but does not end
on) July 31, 1999, Buyer shall timely prepare and file with the
appropriate authorities all Tax Returns required to be filed by or with
respect to the Company and the Subsidiaries, and will pay all Taxes
shown to be due or required to be paid on those Tax Returns, subject to
Seller's obligations, if any, with respect to such Taxes under Section
11(a). For any Tax period of the Company or the Subsidiaries that ends
on or before July 31, 1999 (including without limitation the final Tax
year of the Company for United States federal income Tax purposes as a
member of Seller's affiliated group), Seller shall timely prepare and
file with the appropriate authorities all Tax Returns required to be
filed by or with respect to the Company or the Subsidiaries regardless
of the due date of such Tax Returns, and will pay all Taxes shown to be
due or required to be paid on such Tax Returns, subject to Buyer's
obligations, if any, with respect to such Taxes under Section 11(a).
Buyer and Seller agree to cause all Tax Returns for any Tax period that
includes (but does not end on) July 31, 1999 to be filed on the basis
that the relevant Tax period ended at midnight on July 31, 1999 and on
a basis consistent with prior filings by Seller, unless the relevant
Tax authority will not accept a Tax Return filed on that basis.
(b) Each of Seller, Buyer, the Company, and the
Subsidiaries shall reasonably cooperate, and shall cause their
respective affiliates, officers, employees, agents, auditors, and other
representatives to reasonably cooperate, in preparing and filing all
Tax Returns relating to Taxes of the Company or the Subsidiaries,
including maintaining and making available to each other all records
necessary in connection with such Taxes and in resolving all disputes
and audits with respect to all Tax periods relating to such Taxes.
Each of Buyer and Seller recognizes that the other party and its
affiliates will need access from time to time after the Closing to
certain accounting and Tax records and information held by such party
and its affiliates to the extent such records and information pertain
to events occurring on or before the Closing Date. Therefore, each of
Buyer and Seller shall, and Buyer shall cause each of the Company and
the Subsidiaries to, (i) properly retain and maintain such records and
information in accordance with the past custom and practice of such
corporation until such time as the other party agrees that such
retention and maintenance is no longer necessary, which agreement shall
not be unreasonably withheld, and (ii) subject to Seller's obligations
under Section 5(c) and Buyer's obligations under the Confidentiality
Agreement, allow the other party, its affiliates and their agents and
representatives, at times and dates mutually acceptable to the parties,
to inspect, review and make copies of such records and information as
such other party may deem necessary or appropriate from time to time,
such activities to be conducted during normal business hours and at the
other party's expense.
(c) Any refunds or credits of Taxes of the Company or the
Subsidiaries for any Tax period ending on or before July 31, 1999 shall
be for the account of Seller. Any refunds or credits of Taxes of the
Company or the Subsidiaries for any Tax period beginning July 31, 1999
(except for refunds relating to Taxes resulting from the 338(h)(10)
Election, or comparable elections with respect to other jurisdictions,
required by Section 12(g)) shall be for the account of Buyer. Any
refunds or credits of Taxes of any of the Company or the Subsidiaries
for any Straddle Period shall be equitably apportioned between Seller
and Buyer (based on each party's respective indemnification obligations
with respect to such Taxes). Buyer shall, if Seller so requests and at
Seller's expense, cause the Company or the Subsidiaries to file for and
obtain any refunds or credits to which Seller is entitled under this
Section 12(c). Buyer shall permit Seller to control the prosecution of
any such refund claim (other than any such claim for refund of Taxes
for any Tax period that includes (but does not end on) July 31, 1999,
which shall be controlled jointly by Buyer and Seller) and, where
deemed appropriate by Seller, shall cause the applicable Company or
Subsidiaries to authorize by appropriate powers of attorney such
persons as Seller shall designate to represent the Company or the
Subsidiaries with respect to such refund claim. Buyer shall cause the
Company or the Subsidiaries to forward to Seller any refund to which
Seller is entitled under this Section 12(c) within ten days after such
refund is received (or reimburse Seller for any credit to which Seller
is entitled under this Section 12(c) within ten days after such credit
is allowed or applied against other Tax liability). Buyer agrees that
the Company may not, and Buyer shall not permit the Company to, carry
back any item of loss, deduction, or credit that arises in any Tax
period beginning after July 31, 1999 into any Tax period ending on or
before July 31, 1999.
(d) Seller shall be responsible for filing any amended
consolidated, combined, or unitary income Tax Returns for Tax years
ending on or before July 31, 1999 (and, subject to Buyer's obligations
under Section 11(a), to pay any amount of income Tax due that is shown
thereon) that are required as a result of examination adjustments made
by the Internal Revenue Service or by the applicable state, local, or
foreign Tax authorities for such Tax years as finally determined. For
those jurisdictions in which separate income Tax Returns are filed by
any of the Company or the Subsidiaries, any required amended income Tax
Returns resulting from such examination adjustments, as finally
determined, shall be prepared by Seller and furnished to the Company or
the Subsidiaries for approval (which shall not be unreasonably
withheld), signature and filing at least ten days before the due date
for filing such amended income Tax Returns.
(e) Notwithstanding anything to the contrary provided in
Section 11(a), all transfer, documentary, sales, use, gross receipts,
registration, document or stamp, and other such Taxes, if any, incurred
in connection with this Agreement and the transactions contemplated
hereby shall be paid one-half by Buyer and one-half by Seller, and
Buyer and Seller shall cooperate in timely filing all Tax Returns as
may be required to comply with the provisions of such Tax laws.
(f) Seller shall cause each of the Company and the
Subsidiaries to be released before the Closing from the provisions of
any Tax sharing, Tax allocation or Tax indemnity agreement to which any
of the Company or the Subsidiaries is a party or by which any of them
is bound.
(g) Buyer and Seller shall take all actions necessary to
effect a timely election under Section 338(h)(10) of the Code (a
"Section 338(h)(10) Election") (and any comparable elections under
state or local Tax law) with respect to the Company, including the
filing of Internal Revenue Service Form 8023. In connection with such
election Buyer and Seller shall jointly determine the amount of the
"adjusted grossed-up basis" of the Shares of the Company and the
"modified aggregate deemed selling price" of the assets of the Company
and the allocation of such amounts among the assets of the Company in
accordance with section 338(b)(5) of the Code and the Treasury
Regulations promulgated thereunder (the "Allocations"). The
calculations of the "adjusted grossed-up basis" and the Allocations
shall not include the respective investment banking, legal, accounting,
and other fees or costs incurred by each of Seller and Buyer as a
result of the transactions contemplated by this Agreement ("Transaction
Costs"). Seller shall calculate gain or loss, if any, resulting from
such election in a manner consistent with the Allocations and shall not
take any position inconsistent with the Allocations in any Tax Return
or otherwise; provided, however, that Seller shall be entitled to take
into account its Transaction Costs when calculating such gain or loss.
Buyer shall allocate the "adjusted grossed-up basis" of the Shares of
the Company among the assets of the Company in a manner consistent with
the Allocations and shall not take any position inconsistent with the
Allocations in any Tax Return or otherwise; provided, however, that
Buyer shall be entitled to add its Transaction Costs to the "adjusted
grossed-up basis" of the Shares of the Company for purposes of
allocating among the assets of the Company. Buyer and its affiliates
agree that in the two-year period following the Closing Date they will
take no action by way of merger, liquidation, sale of assets, or other
transaction involving the Company, the Subsidiaries, or the corporation
that acquires the Company that will result in an invalid Section
338(h)(10) Election.
(h) Buyer shall make an election under Section 338(g) of
the Code (and any comparable elections under state and local Tax law)
with respect to the Subsidiaries ("Section 338(g) Elections"). Buyer
shall provide Seller with copies of the Section 338(g) Elections.
(i) At the Closing, Seller shall deliver to Buyer,
pursuant to Section 1445(b)(2) of the Code and Treasury Regulation
Section 1.1445-2(b)(2), a duly executed certification of non-foreign
status. Such certification shall conform to the model certification
provided in Treasury Regulation Section 1.1445-2(b)(2)(iii)(B).
13. Assignment. This Agreement and the rights hereunder shall
not be assignable or transferable by Buyer or Seller without the prior
written consent of the other, provided that Buyer may assign and
transfer this Agreement and the rights hereunder to any wholly-owned
subsidiary of Buyer, without the consent of Seller, provided further
that no such assignment shall relieve Buyer from any, and Buyer shall
continue to be liable and responsible for the performance of all,
obligations under this Agreement, and Buyer shall remain as fully
liable hereunder as though no assignment or transfer had been made.
14. No Third-Party Beneficiaries. Except as expressly
provided in Section 11 and 12 with respect to directors, officers,
employees, subsidiaries and other affiliates of Buyer and Seller, this
Agreement is for the sole benefit of the parties and their successors
and permitted assigns, and nothing herein expressed or implied shall
give to any person, other than the parties and such successors and
assigns, any legal or equitable rights hereunder.
15. Termination.
(a) Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time before the Closing:
(i) by mutual written consent of Seller and Buyer;
(ii) by Seller if any of the conditions set forth in
Section 3(b) has not been satisfied as of the Closing Date or shall
have become incapable of fulfillment, and shall not have been waived in
writing by Seller;
(iii) by Buyer if any of the conditions set forth in
Section 3(a) has not been satisfied as of the Closing Date or shall
have become incapable of fulfillment, and shall not have been waived in
writing by Buyer; or
(iv) by either party hereto, if there are material
conditions to the Closing which have not been satisfied and the
Closing does not occur on or before October 31, 1999 or otherwise if
the Closing does not occur on or before December 31, 1999;
provided, however, that the failure to satisfy the conditions or
consummate the transactions contemplated by this Agreement on or before
October 31, 1999 or December 31, 1999, as the case may be, did not
result from the breach in any material respect by the party seeking
termination under clause (ii), (iii), or (iv) above of any of its
representations, warranties, covenants, or agreements.
(b) In the event of termination by Seller or Buyer under
this Section 15, written notice thereof shall immediately be given to
the other party and the transactions contemplated by this Agreement
shall be terminated, without further action by either party. If the
transactions contemplated by this Agreement are so terminated, then:
(i) Buyer shall return to Seller all documents and other
material received from or on behalf of any of Seller, the Company, the
Subsidiaries, or the Seller's other affiliates relating to the
transactions contemplated hereby, whether so obtained before or after
the execution hereof; and
(ii) all confidential information received by Buyer shall
be treated in accordance with the Confidentiality Agreement, which
shall remain in full force and effect in accordance with the terms
thereof notwithstanding the termination of this Agreement.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 15, all
further obligations under this Agreement will terminate, except for the
provisions of (i) Section 7(a) relating to the obligation of Buyer to
keep confidential certain information and data obtained by it from
Seller, (ii) Section 17 relating to certain expenses, (iii) Section
8(d) relating to publicity, (iv) Section 23 relating to finder's fees
and broker's fees, and (v) this Section 15. Nothing in this Section 15
shall be deemed to release either party from liability for any willful
and material breach by the party of the terms and provisions of this
Agreement, but, in the event of termination, all other liabilities
otherwise arising under this Agreement shall be released.
16. Survival of Representations. Except as provided in this
Section 16, the representations and warranties in this Agreement and in
any certificate delivered pursuant hereto shall survive the Closing
solely for purposes of Section 11 of this Agreement until the close of
business eighteen months following the Closing Date, whereupon such
representations and warranties shall terminate; provided, however, that
those representations and warranties for which a party shall have
delivered an indemnification notice under Section 11(f) or 11(h) before
the expiration of such eighteen-month period shall not terminate. The
representations and warranties in Section 4(s) of this Agreement and in
4(r) of this Agreement relating to compliance with Environmental Laws
and in any certificate delivered pursuant thereto shall survive the
Closing solely for purposes of Section 11 of this Agreement until the
close of business 48 months following the Closing Date, whereupon such
representations and warranties shall terminate, provided, however, that
those representations and warranties under Section 4(s) or under
Section 4(r) relating to compliance with Environmental Laws for which a
party shall have delivered an indemnification notice under Section
11(f) before the expiration of such 48-month period shall not
terminate. The representations and warranties set forth in this
Agreement or any certificate delivered pursuant hereto relating to
income, import, BAT or IPC Taxes shall survive for the applicable
statute of limitations, including extensions. The representations and
warranties in Sections 4(a), 4(c), the first two sentences of Section
4(d), and 4(e) and 6(a), 6(c), and 6(f) shall terminate upon expiration
of the applicable statute of limitations.
17. Expenses. Whether or not the transactions contemplated
hereby are consummated, and except as otherwise provided in this
Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs or expenses. Seller will pay, or reimburse
the Subsidiaries for, the costs and expenses associated with obtaining
all governmental licenses and permits necessary in order to enable the
Subsidiaries to own, operate and use their assets and conduct their
business as it is currently being conducted without resulting in a
Material Adverse Effect. Such payment or reimbursement shall be made
by Seller promptly upon receipt of invoices or other similar
documentation showing that such payments are owing or have been made by
the Subsidiaries. Notwithstanding anything herein stated, Seller shall
not be obligated to pay, or reimburse Buyer or the Subsidiaries for,
such costs and expenses to the extent they exceed those that would have
been incurred if the Subsidiaries had taken only such actions, and
obtained only such licenses and permits, that a person of ordinary
prudence under like circumstances who paid such costs and expenses
without reimbursement would have reasonably taken or obtained.
18. Amendments. No amendment to this Agreement shall be
effective unless it is in writing and signed by both parties.
19. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be
delivered by hand, or sent by facsimile, or sent, postage prepaid, by
United States registered, certified or express mail, or by reputable
overnight courier service, and shall be deemed given, if delivered by
hand, when so delivered, or if sent by facsimile, when received, or if
sent by mail, three business days after mailing (two business days in
the case of express mail), or if sent by overnight courier service, one
business day after delivery to such service, as follows:
(i) if to Buyer, to
Gruma, S.A. de X.X.
Xxxxxxx del Xxxxx Ote.
407 Co. del Xxxxx
San Xxxxx Xxxxx Xxxxxx, X.X.
66220 Mexico
Attention: President
Facsimile No.: 000-000-000-0000
with a copy to:
Xxxxxxxx Xxxxxx Xxxxxxxx, Corporate General Counsel
Gruma, S.A. de X.X.
Xxxxxxx del Xxxxx Ote.
407 Co. del Xxxxx
San Xxxxx Xxxxx Xxxxxx, X.X.
00000 Xxxxxx
Facsimile No.: 000-(000)-000-0000
with a copy to:
J. Xxxxxxx Xxxxxx, Xx.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.LP.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Facsimile No.: (000)-000-0000
(ii) if to Seller, to
International Multifoods Corporation
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Chairman, President
and Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxx, General Counsel
International Multifoods Corporation
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Any party may change the address to which notices and other
communications are to be delivered or sent by giving the other party
notice in the manner set forth above.
20. Interpretation. In this Agreement, the Disclosure
Schedule, and any exhibits attached hereto:
(a) words denoting the singular include the plural and
vice versa and words denoting any gender include all genders;
(b) "including" means "including without limitation";
(c) "affiliate" has the meaning set forth in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended;
(d) "business day" means any day other than a Saturday,
Sunday, or a day that is a statutory holiday under the laws of the
United States or the State of Minnesota;
(e) "person" or "Person" means an individual,
partnership, joint venture, corporation, limited liability company,
trust, unincorporated organization, government, or governmental
department or agency;
(f) the use of headings is for convenience of reference
only and shall not affect the meaning or interpretation of this
Agreement, the Disclosure Schedule, or any exhibits attached hereto;
(g) all monetary amounts are expressed in United States
dollars, unless expressly stated otherwise;
(h) "knowledge" as to a party means the actual knowledge
of any director or executive officer of the party; and
(i) "domestic" or "federal" means relating to the United
States of America, and "foreign" means relating to any jurisdiction
other than the United States of America or any subdivision thereof.
21. Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement.
22. Entire Agreement. This Agreement (including the
Disclosure Schedule and the exhibits attached hereto) and the
Confidentiality Agreement contain the entire agreement and
understanding between the parties hereto with respect to the subject
matter hereof and supersede all prior agreements and understandings
relating to that subject matter.
23. No Brokerage Fees. Each party represents that no brokers
or finders are entitled to any brokerage fee, finder's fee, or
commission in connection with this Agreement or the transactions
contemplated hereby. The parties acknowledge that Seller has retained
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated to render its
opinion as to the fairness to Seller, from a financial point of view,
of the transactions contemplated hereby, and that Seller shall be
responsible for payment of that fee.
24. Severability. If any provision of this Agreement is held
invalid, illegal, or unenforceable in any respect by a court of
competent jurisdiction, such invalidity, illegality, or
unenforceability shall not affect any other provision hereof.
25. Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Delaware, without regard to conflicts-of-law principles. Any dispute,
controversy or claim arising out of or relating to this Agreement or
the breach, termination or invalidity hereof shall be finally
determined by arbitration in accordance with the Commercial Arbitration
Rules of the International Chamber of Commerce and all parties shall
have the opportunity to call such witnesses and present such evidence
as such parties reasonably require. Said arbitration shall be carried
out by three arbitrators, unless Buyer and Seller agree that the nature
of the dispute only requires one arbitrator. Said arbitrators shall be
appointed one by each of Buyer and Seller and the third by the two
arbitrators so appointed. The appointment of the arbitrators shall
occur within thirty (30) days from the date on which a party hereto
delivers to the other a written notice requesting that the dispute be
submitted to arbitration, which written notice shall clearly state the
issue in dispute and any other relevant facts. Unless otherwise agreed
by Buyer and Seller, any such arbitration proceedings shall take place
at New York, New York. The language to be used in the arbitral
proceedings, and in which the arbitral award shall be rendered, shall
be English. The determinations of the arbitrators shall be final and
binding upon the parties and shall not, in the absence of manifest
error, be subject to judicial review. If the arbitrators shall not be
able to reach consensus, the decision of the third arbitrator selected
by the first two arbitrators shall be deemed for all purposes to be the
decision of the arbitrators. The fees and expenses of an arbitrator
selected by a party shall be borne by such party, and the fees and
expenses of the third arbitrator shall be borne equally by Buyer and
Seller unless otherwise allocated in the determination of the
arbitrators. Notwithstanding the foregoing, each of Seller and Buyer
retain the right to seek injunctive relief against the other party in
the state courts of Delaware or the United States District Court for
the District of Delaware to enjoin such party from breaching or
continuing to breach this Agreement, and such reservation of right
shall not be deemed in conflict or inconsistent with the parties'
agreement to arbitrate hereunder. Buyer further agrees that service of
any process, summons, notice or document by express delivery service to
Buyer at the address for notices to Buyer set forth in Section 19 shall
be effective service of process for any action, suit or proceeding in
Delaware with respect to any matters to which Buyer has submitted to
jurisdiction as set forth above in the immediately preceding sentence.
Buyer irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in (x) the state
courts of the State of Delaware, or (y) the United States District
Court for the District of Delaware, and hereby further irrevocably and
unconditionally waives any claim and agrees not to plead or claim in
any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
26. Equitable Remedies. The parties agree that money damages
or other remedy at law would not be a sufficient or adequate remedy for
any breach or violation of, or default under, this Agreement by them
and that in addition to all other remedies available to them, each of
them shall be entitled, to the fullest extent permitted by law, to an
injunction restraining such breach, violation, or default or threatened
breach, violation, or default and to any other equitable relief,
including specific performance, without bond or other security being
required.
27. Disclosure Schedule. The Disclosure Schedule has been
arranged in a manner that corresponds to the Sections of this
Agreement; provided that a disclosure made in any section of the
Disclosure Schedule that is sufficient to reasonably inform Buyer of
information required to be disclosed in another section of the
Disclosure Schedule to avoid a misrepresentation under a Section of
this Agreement shall be deemed, for all purposes of this Agreement, to
have been made under such other section of the Disclosure Schedule.
However, the mere listing in the Disclosure Schedule of a document or
other item shall not be deemed adequate to disclose an exception to a
representation or warranty made in this Agreement (unless the
representation or warranty has to do with the existence of the document
or other item itself or the mere listing of the document or item in the
Disclosure Schedule otherwise reasonably informs Buyer of an exception
to the representation or warranty). Matters reflected in the
Disclosure Schedule are not necessarily limited to matters required by
this Agreement to be reflected in the Disclosure Schedule. Such
additional matters are set forth for informational purposes and do not
necessarily include other matters of a similar nature.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
INTERNATIONAL MULTIFOODS CORPORATION
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
GRUMA, S.A. DE C.V.
By: /s/ Xxxx X. Xxxxxxx and
/s/ Xxxxxxxx Xxxxxx
Name: Xxxx X. Xxxxxxx and Xxxxxxxx Xxxxxx
Title: Attorneys in Fact
Exhibit A
Note Purchase Agreement
between
Gruma, S.A. de C.V.,
Issuer
and
International Multifoods Corporation,
Acquiror
Dated as of August 18, 1999
Note Purchase Agreement
This Note Purchase Agreement (this "Note Agreement") is made as of
the 18th day of August, 1999 between Gruma, S.A. de C.V., a Mexican
corporation ("Gruma"), and International Multifoods Corporation, a
Delaware corporation ("IMC").
Whereas, under a Stock Purchase Agreement (the "Purchase
Agreement") dated as of August 6, 1999 between IMC and Gruma, Gruma has
agreed to purchase from IMC all of the issued and outstanding capital
stock (the "Damca Shares") of Damca International Corporation, a
Delaware corporation and wholly owned subsidiary of IMC ("Damca");
Whereas, the Purchase Agreement contemplates that the Damca Shares
shall be sold in exchange for a Promissory Note of Gruma in the form
attached as Exhibit 1 hereto (the "Promissory Note" and, together with
any note or notes issued in exchange or substitution therefor, herein
collectively called the "Notes" and individually called a "Note"); and
Whereas, the Purchase Agreement contemplates that the Promissory
Note shall be issued pursuant to, and subject to the terms and
conditions of, this Note Agreement, which shall be one of the documents
executed by the parties in connection with the closing under the
Purchase Agreement.
Now, therefore, the parties agree as follows:
1. Issuance of Note. Gruma has previously authorized and
hereby issues and delivers to IMC the Promissory Note registered in the
name of IMC and duly executed on behalf of Gruma. The Promissory Note
is issued to IMC in exchange for the Damca Shares, which Gruma hereby
acknowledges have been transferred and assigned to Gruma simultaneously
with the execution and delivery of this Note Agreement. The Promissory
Note is issued pursuant to, and is subject to the terms and conditions
of, this Note Agreement.
2. Restriction on Transfer of Notes.
2.1 Restrictions. The Notes are transferable only pursuant to
(a) a public offering registered under the Securities Act of 1933, as
amended (the "Securities Act"); (b) Rule 144 (or any similar rule then
in effect) adopted under the Securities Act; or (c) subject to the
conditions specified in Section 2.2, any other legally available means
of transfer that does not require registration under the Securities
Act. Following the issuance of the Promissory Note to IMC, the Notes
may be transferred only to affiliates of IMC immediately after the
transfer, successors of IMC or Qualified Institutional Buyers, as
defined in Rule 144A of the Securities Act, without the consent of
Gruma. Except as expressly set forth in this Section 2.1, there shall
be no restrictions upon transfer of the Notes.
2.2 Legend. Each of the Notes shall be endorsed with the
following legend:
"This Note has not been registered under the Securities Act of 1933, as
amended, or applicable state securities laws and may not be transferred
without (1) an opinion of counsel reasonably satisfactory to the maker
of this Note that the transfer may be lawfully made without
registration under the Securities Act and applicable state securities
laws or (2) such registration."
2.3 Removal of Legend. The legend endorsed on a Note pursuant
to Section 2.2 shall be removed, and Gruma shall issue a Note without
such legend to the holder of such Note, (a) without an opinion of
counsel, at such time as Rule 144(k) (or any similar rule then in
effect) under the Securities Act is in effect with respect to
subsequent dispositions of such Note, (b) if such Note is being
disposed of pursuant to a registration under the Securities Act and any
applicable state securities laws or pursuant to Rule 144 or any similar
rule then in effect, or (c) if the holder provides Gruma with an
opinion of counsel reasonably satisfactory to Gruma to the effect that
a sale, transfer, assignment, offer, pledge, or other distribution of
such Note may be made without registration and that the legend is not
required to satisfy the applicable exemption from registration.
2.4 Register of Notes. Gruma or its duly appointed agent
shall maintain a separate register for the Notes in which it shall
register the issuance and transfer of the Notes. All transfers of a
Note shall be recorded on the register, and Gruma shall be entitled to
regard the registered holder of a Note as the actual owner of such Note
until Gruma is required to record a transfer of such Note on its
register. Gruma or its agent shall be required to record any such
transfer when it receives (a) the Note to be transferred duly and
properly assigned by the registered holder thereof or by its attorney
duly authorized in writing, and (b) if such Note bears the legend set
forth in Section 2.2, the opinion of counsel referred to in Section 2.2
or 2.3 (if required under Section 2.2 or 2.3) or evidence of compliance
with the registration provisions referred to in those Sections.
2.5 Replacement of Notes. Upon receipt of evidence reasonably
satisfactory to Gruma of the loss, theft, destruction, or mutilation of
any Note, and, in the case of any such loss, theft, or destruction,
upon delivery of a bond or (with respect to a holder of a Note whose
financial condition is sufficient, in the reasonable discretion of
Gruma) a written indemnity agreement of the holder of such Note
reasonably satisfactory to Gruma (it being agreed that IMC's agreement
to hold Gruma harmless for any expenses it may incur in connection with
reissuance of a lost, stolen, or destroyed Note shall be sufficient
indemnity hereunder, in which event a bond shall not be required), or,
in the case of any such mutilation, upon surrender and cancellation of
such Note, as the case may be, Gruma will issue a new Note, of like
tenor, in lieu of such lost, stolen, destroyed, or mutilated Note.
2.6 Exchange of Notes. Gruma shall, upon written request of
the holder of a Note and surrender of such Note for such purpose, issue
new Notes in exchange therefor in such denominations of at least
$1,000,000 as shall be specified by the holder of such Note, in an
aggregate principal amount equal to the then unpaid principal amount of
the Note surrendered and substantially in the form of such Note and
dated the date to which interest has been paid on such Note.
2.7 Voluntary Prepayment of the Notes. Gruma may, at its
option, prepay the Notes at any time, in whole or in part (but if in
part only in the amount of $100,000 or integral multiples thereof),
without prepayment premium or penalty, upon at least 15 days' prior
written notice to the holders of the Notes. In the event Gruma shall
give notice of any prepayment in accordance with the foregoing, such
notice shall specify the principal amount of the Notes to be prepaid
and the date of the proposed prepayment, and thereupon such principal
amount, together with accrued and unpaid interest thereon to the
prepayment date, shall become due and payable on the prepayment date.
In the event any prepayment shall be less than the entire unpaid
principal amount of the Notes, the amount of such prepayment shall be
applied on the last maturing required installment or installments of
principal of the Notes in inverse order of maturity.
2.8 Pro Rata Payments. All payments and prepayments of
principal of and interest on the Notes shall be made and applied pro
rata on all of the Notes outstanding in accordance with the respective
unpaid principal amounts thereof.
3. Representations and Warranties by Gruma. Gruma represents
and warrants to IMC, as of the time immediately prior to its
acquisition of the Damca Shares, as follows:
3.1 Organization, Standing, Etc. Gruma is a corporation duly
organized, validly existing, and in good standing under the laws of
Mexico. Gruma is duly qualified to do business and is in good standing
in each jurisdiction in which the character of the properties and
assets now owned or leased by it or the nature of the business
transacted by it requires it to be so qualified, except where the
failure to be so qualified, individually or in the aggregate, would not
have a material adverse effect upon the business or financial condition
of Gruma and its subsidiaries, taken as a whole, or upon the
transactions contemplated by this Note Agreement ("Material Adverse
Effect"). Gruma has the requisite corporate power and authority to
carry on its business as now conducted, to own and hold under lease its
properties, to issue the Promissory Note pursuant to this Note
Agreement, and to otherwise perform its obligations under this Note
Agreement and the Promissory Note. The copies of the charter documents
of Gruma delivered to IMC before the execution of this Note Agreement
are true and complete.
3.2 Corporate Acts and Proceedings. Each of this Note
Agreement and the Promissory Note has been duly authorized by all
necessary corporate action on behalf of Gruma and has been duly
executed and delivered by an authorized officer of Gruma. All
corporate actions necessary for the authorization, creation, issuance,
and delivery of the Promissory Note have been taken by Gruma. This
Note Agreement is a valid and binding agreement of Gruma enforceable
against Gruma in accordance with its terms, except as the
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization, or other similar laws affecting the enforcement of
creditors' rights generally, and except for judicial limitations on the
enforcement of the remedy of specific performance and other equitable
remedies. The Promissory Note is a valid and binding agreement of
Gruma enforceable against Gruma in accordance with its terms, except as
the enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally.
3.3 Litigation; Governmental Proceedings. There are no legal
actions, suits, arbitrations, or other legal, administrative, or
governmental proceedings or investigations pending or, to the knowledge
of Gruma, threatened against Gruma that seek to enjoin or otherwise
challenge the issuance of the Promissory Note or the consummation by
Gruma of this Note Agreement. Gruma is not in default with respect to
any judgment, order, or decree (other than non-material judgments,
orders, or decrees) of any court or any governmental agency or
instrumentality.
3.4 Compliance with Laws and Instruments. Neither the
execution nor delivery of, nor the performance of or compliance with,
this Note Agreement or the Promissory Note, nor the consummation of the
transactions contemplated hereby or thereby, will violate or conflict
with, or, with or without the giving of notice or passage of time, or
both, constitute a default under, result in a breach of the terms,
conditions, or provisions of, require a consent under, create a penalty
or permit the acceleration of any payment or performance obligation
under, or terminate or permit the termination of, or result in the
imposition of any lien or encumbrance upon any asset or property of
Gruma pursuant to, any applicable law or administrative regulation, or
judgment, order, or decree of any court or governmental body, or any
contract, agreement, or instrument to which Gruma is a party or by
which Gruma's properties or assets are bound or affected, and will not
violate the charter documents of Gruma.
3.5 The Promissory Note. Giving effect to the transactions
hereunder and under the Purchase Agreement, the Promissory Note is
validly issued and is free of all pledges, liens, encumbrances, and
restrictions, except restrictions on transfer set forth in Section 2.
Based in part upon the representations and warranties of IMC contained
in Section 4.5, (a) no consent, authorization, approval, permit, or
order of or filing with any governmental or regulatory authority is
required under current laws and regulations in connection with the
execution and delivery of this Note Agreement or the issuance of the
Promissory Note, and (b) the offer, issuance, sale, and delivery of the
Promissory Note will not, under current laws and regulations, require
compliance with the registration requirements of the Securities Act or
applicable state or foreign securities laws.
4. Representations and Warranties of IMC. IMC represents and
warrants to Gruma as follows:
4.1 Organization, Standing, Etc. IMC is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Delaware. IMC has the requisite corporate power and authority
to perform its obligations under this Note Agreement.
4.2 Corporate Acts and Proceedings. This Note Agreement has
been duly authorized by all necessary corporate action on behalf of IMC
and has been duly executed and delivered by an authorized officer of
IMC. This Note Agreement is a valid and binding agreement of IMC
enforceable against IMC in accordance with its terms, except as the
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization, or other similar laws affecting the enforcement of
creditors' rights generally, and except for judicial limitations on the
enforcement of the remedy of specific performance and other equitable
remedies.
4.3 Litigation; Governmental Proceedings. There are no legal
actions, suits, arbitrations, or other legal, administrative, or
governmental proceedings or investigations pending or, to the knowledge
of IMC, threatened against IMC that seek to enjoin or otherwise
challenge the consummation by IMC of this Note Agreement.
4.4 Compliance with Laws and Instruments. Neither the
execution nor delivery of, nor the performance of or compliance with,
this Note Agreement, nor the consummation of the transactions
contemplated hereby, will violate or conflict with, or, with or without
the giving of notice or passage of time, or both, constitute a default
under, result in a breach of the terms, conditions, or provisions of,
require a consent under, create a penalty or permit the acceleration of
any payment or performance obligation under, or terminate or permit the
termination of, or result in the imposition of any lien or encumbrance
upon any asset or property of IMC pursuant to, any applicable law or
administrative regulation, or judgment, order, or decree of any court
or governmental body, or any contract, agreement, or instrument to
which IMC is a party or by which IMC's properties or assets are bound
or affected, and will not violate the Certificate of Incorporation or
Bylaws of IMC.
4.5 Investment Intent; Accreditation. The Promissory Note is
being acquired for IMC's own account and not with the view to, or for
resale in connection with, any distribution or public offering thereof
within the meaning of the Securities Act. IMC understands that the
Promissory Note has not been registered under the Securities Act or any
applicable state laws by reason of its issuance in a transaction exempt
from the registration and prospectus delivery requirements of the
Securities Act and such laws. IMC qualifies as an "accredited
investor" within the meaning of Rule 501 under the Securities Act.
4.6 Tax Withholding. IMC acknowledges that the payment of
interest on the Notes may be subject to Mexican tax withholding, and
hereby authorizes Gruma to withhold from any interest payments on the
Notes any amounts required to satisfy its Mexican tax withholding
obligations in respect of such interest payments.
5. Covenants. Gruma covenants, for so long as any of the
Notes remain outstanding, as follows:
5.1 Corporate Existence. Gruma will maintain its corporate
existence in good standing and will comply, and will cause each of its
subsidiaries to comply, in all material respects with all applicable
laws and regulations of each applicable foreign or domestic national
government and of each political subdivision thereof and of any other
governmental authority.
5.2 Furnishing of Financial Statements and Information. Gruma
will deliver to each holder from time to time of at least 10% of the
aggregate principal amount of the Notes then outstanding (a
"Substantial Noteholder") the following:
(a) as soon as practicable, but within 90 days after the
end of each fiscal quarter, unaudited consolidated balance sheets of
Gruma and its subsidiaries as of the end of that quarter, together with
the related consolidated statements of operations and cash flow for
that quarter, all in reasonable detail, prepared in accordance with
generally accepted accounting principles in Mexico (but with such
reconciliation by footnote to United States generally accepted
accounting principles and the provisions of Regulation S-X promulgated
by the Securities and Exchange Commission as is required in respect of
foreign issuers under Regulation S-X), and certified by an authorized
financial or accounting officer of Gruma, subject to normal year-end
adjustments;
(b) as soon as practicable, but within 120 days after the
end of each fiscal year, a consolidated balance sheet of Gruma and its
subsidiaries as of the end of that fiscal year, together with the
related consolidated statements of operations, stockholders' equity,
and cash flows for that fiscal year, all in reasonable detail, prepared
in accordance with generally accepted accounting principles in Mexico
(but with such reconciliation by footnote to United States generally
accepted accounting principles and the provisions of Regulation S-X
promulgated by the Securities and Exchange Commission as is required in
respect of foreign issuers under Regulation S-X), and duly certified by
Gruma's independent public accountants, who shall have given Gruma an
audit opinion, unqualified as to the scope of the audit, regarding
those statements; and
(c) with reasonable promptness, all financial data filed
by Gruma with the Securities and Exchange Commission or submitted to
the holders of Gruma's American Depository Receipts and such other
financial data then existing relating to the business, affairs, and
financial condition of Gruma and its material subsidiaries as is
available to Gruma and as from time to time any Substantial Noteholder
may reasonably request.
5.3 Inspection. Upon the occurrence and during the
continuance of an Event of Default (as hereinafter defined), Gruma will
permit any Substantial Noteholder's officers or employees or any
outside representatives designated by any Substantial Noteholder and
reasonably satisfactory to Gruma, to visit and inspect at such
Substantial Noteholder's expense any of the properties of Gruma or its
subsidiaries, including their books and records (and to make
photocopies thereof or make extracts therefrom), and to discuss their
affairs, finances, and accounts with their officers, lawyers, and
accountants, except with respect to trade secrets and similar
confidential information, all to such reasonable extent and at such
reasonable times and intervals as any Substantial Noteholder may
request. Except as otherwise required by laws or regulations
applicable to such Substantial Noteholder, each of the Substantial
Noteholders severally agrees to maintain, and shall require its
representatives to maintain, all information obtained pursuant to
Sections 5.2 and 5.3 on a confidential basis and not to disclose any
such information to any competitor of Gruma or any of its subsidiaries.
5.4 Information for Potential Purchasers.
(a) Gruma agrees that, upon the request of any holder of
a Note or any prospective purchaser of a Note, Gruma shall promptly
provide (but in any case within 15 days of a request) to such holder or
potential purchaser the following information: (1) a brief statement
of the nature of the business of Gruma and its subsidiaries and the
products and services they offer; (2) Gruma's most recent consolidated
balance sheets and profit and loss and retained earnings statements and
similar financial statements for the two preceding fiscal years before
such request (which financial information shall be audited, to the
extent reasonably available); and (3) such other information about
Gruma, its subsidiaries and their business, financial condition, and
results of operations as the requesting person shall request that is
necessary in order to comply with Rule 144A promulgated under the
Securities Act.
(b) Gruma hereby represents and warrants to any such
requesting person that the information provided by Gruma pursuant to
this Section 5.4 will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were
made, not misleading.
6. Default.
6.1 Events of Default. Each of the following events shall be
an "Event of Default" for purposes of this Note Agreement and the
Notes:
(a) if Gruma or any of its material subsidiaries becomes
insolvent or bankrupt, or admits in writing its inability to pay its
debts as they mature, or makes an assignment for the benefit of
creditors, or ceases doing business as a going concern, or institutes
proceedings to be adjudicated a voluntary bankrupt, or consents to the
filing of a bankruptcy proceeding against it, or files or consents to
the filing of a petition or answer or consent seeking reorganization or
suspension of payments ("suspension de pagos"), or applies for or
consents to the appointment of a trustee, receiver, liquidator, sindico
or assignee in bankruptcy or insolvency for Gruma or any of its
material subsidiaries, or for the major part of the property of any
such person;
(b) if a bankruptcy proceeding shall be instituted
against Gruma or any of its material subsidiaries, or a decree or order
by a court having jurisdiction is entered approving as properly filed a
petition seeking reorganization or suspension of payments ("suspension
de pagos") of Gruma or any of its material subsidiaries, and such
proceeding, decree or order is not discharged, vacated, or stayed
within 90 days after it has been entered, or if a trustee, receiver,
liquidator, sindico or assignee in bankruptcy or insolvency is
appointed for Gruma or any of its material subsidiaries, or for the
major part of the property of any such person, and the order of the
appointment is not discharged, vacated, or stayed within 90 days after
the appointment;
(c) if any judgment, writ, or warrant of attachment or of
any similar process in an amount in excess of, individually or in the
aggregate, $20,000,000 shall be entered or filed against Gruma or any
of its subsidiaries or against any of the property or assets of any
such person and remains unpaid, unvacated, unbonded or unstayed for a
period of 90 days after Gruma or such subsidiary has knowledge of such
judgment, writ, warrant or process;
(d) if an order for relief shall be entered in any
bankruptcy proceeding in which Gruma or any of its material
subsidiaries is the debtor;
(e) if Gruma or any of its subsidiaries shall default in
any material respect in the due and punctual performance of any
covenant or agreement in any note, bond, indenture, loan agreement,
note agreement, mortgage, security agreement, or other instrument
evidencing or related to indebtedness for borrowed money in an amount
equal to or in excess of, individually or in the aggregate,
$20,000,000, and the default shall continue for more than the period of
notice or grace, if any, therein specified and shall not have been
waived;
(f) (1) if any representation or warranty made by Gruma
in this Note Agreement or in any document delivered pursuant hereto
shall prove to have been untrue or incorrect as of the date hereof; or
(2) if any report, certificate, financial statement, or financial
schedule prepared by Gruma or any officer of Gruma furnished or
delivered pursuant hereto shall prove to be untrue or incorrect as of
the date it was made, furnished, or delivered and such
misrepresentation, untruth or inaccuracy shall, individually or in the
aggregate, have a Material Adverse Effect or a material adverse effect
upon the validity or enforceability of this Note Agreement or any of
the Notes;
(g) if default shall be made in Gruma's obligation to pay
the principal of any of the Notes or any installment thereof, in the
amounts, at the time, and as otherwise required by such Note (whether
or not payment is permitted under any loan or other agreement to which
Gruma or any of its subsidiaries is a party), and such default shall
continue beyond 5:00 p.m., Dallas, Texas time on the first business day
after notice of non-payment of any such principal is given to Gruma by
the holder of such Note;
(h) if Gruma fails to pay any interest on any of the
Notes, in the amounts, at the time, and as otherwise required by such
Note (whether or not payment is permitted under any loan or other
agreement to which Gruma or any of its subsidiaries is a party) and
such default shall continue beyond 5:00 p.m., Dallas, Texas time on the
first business day after notice of non-payment of any such interest is
given to Gruma by the holder of such Note; or
(i) if default shall be made in the due and punctual
performance or observance of any other term contained in this Note
Agreement, and the default shall have continued for a period of 30 days
and shall, individually or in the aggregate, have a Material Adverse
Effect or a material adverse effect upon the validity or enforceability
of this Note Agreement or any of the Notes, or shall materially impair
the ability of any Substantial Noteholder to determine the financial
condition of Gruma.
6.2 Remedies Upon Events of Default.
(a) Upon the occurrence of an Event of Default specified
in paragraph (a), (b) or (d) of Section 6.1 above, the unpaid principal
of the Notes, together with all interest accrued and unpaid thereon,
shall be and become immediately due and payable.
(b) Upon the occurrence of any other Event of Default
(unless the Event of Default shall have been waived by the holders of
the Notes in the manner provided in Section 7 hereof), the holder or
holders of a majority of the aggregate principal of the Notes then
outstanding may, at its or their option, by notice in writing to Gruma,
declare the unpaid principal of all of the Notes, together with all
interest accrued and unpaid thereon, to be forthwith due and payable,
and the same shall thereupon become and be immediately due and payable.
6.3 Notice of Defaults. When, to its knowledge, any Event of
Default has occurred or exists, Gruma shall give written notice within
five business days of the Event of Default to each holder of a Note.
6.4 Suits for Enforcement. In case an Event of Default shall
have occurred and be continuing, unless the Events of Default shall
have been waived in the manner provided in Section 7, each holder of a
Note may proceed to protect and enforce its rights under this Section 6
by suit in equity or action at law. In the event of any such action,
each holder shall be entitled to receive all reasonable fees, costs,
and expenses incurred, including such reasonable fees and expenses of
its attorneys and accountants.
6.5 Remedies Cumulative. No right, power, or remedy conferred
upon any holder of a Note hereunder shall be exclusive, and each such
right, power, or remedy shall be cumulative and in addition to every
other right, power, or remedy to which any holder of a Note may be
entitled.
7. Waivers and Amendments. With the written consent of the
record holder or holders of a majority of the aggregate principal
amount of the Notes then outstanding, the obligations of Gruma to, and
the rights of, the holders of the Notes under this Note Agreement may
be waived (either generally or in a particular instance and either
retroactively or prospectively), and with the same consent Gruma may
enter into a supplemental agreement for the purpose of modifying in any
manner the obligations of Gruma to, or the rights of, the holders of
the Notes; provided, however, that no such waiver or supplemental
agreement shall (a) extend the maturity of any Note, or change the
principal of, or the rate or time of payment of any interest on, any
Note, or affect the time, amount or allocation of any payments or
prepayments of principal of any Note, or (b) reduce the aforesaid
percentage of the aggregate principal amount of the Notes, the holder
or holders of which are required to consent to any waiver or
supplemental agreement, without the consent of the record holders of
all of Notes then issued and outstanding. Written notice of any such
waiver or supplemental agreement shall be given to the record holders
of the Notes who have not previously consented thereto in writing.
Neither this Note Agreement nor any provision hereof may be changed,
waived, discharged, or terminated orally, but only by a statement in
writing signed by the party against which enforcement of the change,
waiver, discharge, or termination is sought, except to the extent
provided in this Section 7.
8. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be
delivered by hand, or sent by facsimile, or sent, postage prepaid, by
mail, or by reputable overnight courier service, and shall be deemed
given, if delivered by hand, when so delivered, or if sent by
facsimile, when received, or if sent by mail, three business days after
mailing (two business days in the case of express mail), or if sent by
overnight courier service, one business day after delivery to such
service, as follows:
(a) if to Gruma, to
Gruma, S.A. de X.X.
Xxxxxxx del Xxxxx Ote.
407 Co. del Xxxxx
San Xxxxx Xxxxx Xxxxxx, X.X.
66220 Mexico
Attention: Xxxxxx Rubiraltia
Facsimile No.: 000-000-000-0000
with a copy to:
Xxxxxxxx Xxxxxx Xxxxxxxx, Corporate General Counsel
Gruma, S.A. de X.X.
Xxxxxxx del Xxxxx Ote.
407 Co. del Xxxxx
San Xxxxx Xxxxx Xxxxxx, X.X.
00000 Xxxxxx
Facsimile No.: 000-000-000-0000
with a copy to:
J. Xxxxxxx Xxxxxx, Xx.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Facsimile No.: (000) 000-0000
(b) if to IMC, to
International Multifoods Corporation
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Chairman, President
and Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxx, General Counsel
International Multifoods Corporation
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Facsimile No.: (000) 000-0000
(c) if to any holder of a Note other than IMC, to the
address of such holder shown on the note register of Gruma.
Each of Gruma and any holder of a Note may change the address to which
notices and other communications are to be delivered or sent to it by
giving the holders of the Notes, in the case of Gruma, or Gruma, in the
case of any holder of a Note, notice of such change in the manner set
forth above.
9. Interpretation. In this Note Agreement and the Notes:
(a) words denoting the singular include the plural and
vice versa and words denoting any gender include all genders;
(b) "including" means "including without limitation";
(c) "business day" means any day other than a Saturday,
Sunday, or a day that is a statutory holiday under the laws of the
United States, Mexico, or the State of Delaware;
(d) "person" means an individual, partnership, joint
venture, corporation, limited liability company, trust, unincorporated
organization, government, or governmental department or agency;
(e) the use of headings is for convenience of reference
only and shall not affect the meaning or interpretation of this Note
Agreement;
(f) all monetary amounts are expressed in United States
dollars, unless expressly stated otherwise;
(g) "knowledge" as to a party means the actual knowledge
of any director or executive officer of the party;
(h) "domestic" or "federal" means relating to the United
States of America, and "foreign" means relating to any jurisdiction
other than the United States of America or any subdivision thereof;
(i) "affiliate" has the meaning set forth in Rule 12b-2
under the Securities Exchange Act of 1934, as amended;
(j) "subsidiary" of a party means any entity of which the
outstanding securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other
persons performing similar functions are directly or indirectly owned
by such party;
(k) "material subsidiary" means any subsidiary of Gruma
which accounted for, after intercompany eliminations, more than 10% of
the consolidated total assets of Gruma as of the end of, or more than
10% of the consolidated net income or the consolidated net sales of
Gruma for, the most recently completed fiscal year, in each case
determined in accordance with generally accepted accounting principles
in Mexico consistent with those applied in the preparation of the
financial statements referred to in Section 5.2(b); and
(l) all reports, certificates, financial statements,
schedules, notices and other documents or instruments required or
permitted to be delivered or given under this Note Agreement shall be
prepared and provided in English.
10. Counterparts. This Note Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement.
11. Entire Agreement. This Note Agreement (including the
exhibits attached hereto), the Promissory Note, the Purchase Agreement,
and the other agreements expressly contemplated by the Purchase
Agreement contain the entire agreement and understanding between the
parties with respect to the subject matter hereof and supersede all
prior agreements and understandings relating to that subject matter.
12. Severability. If any provision of this Note Agreement is
held invalid, illegal, or unenforceable in any respect by a court of
competent jurisdiction, such invalidity, illegality, or
unenforceability shall not affect any other provision hereof.
13. Governing Law; Consent to Jurisdiction; Judgment Currency.
(a) This Note Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
regard to conflicts-of-law principles.
(b) Gruma hereby irrevocably submits to the exclusive
jurisdiction of (1) the state courts of the State of Delaware, and (2)
the United States District Court for the District of Delaware, and any
appellate court thereof, for the purposes of any action, suit, or
proceeding arising out of this Note Agreement, the Notes or any
transaction contemplated hereby or thereby (and agrees not to commence
any such action, suit, or proceeding except in such courts). Gruma
hereby irrevocably appoints CT Corporation System (the "Process
Agent"), with an office on the date hereof at 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, X.X.X., as its agent to receive on behalf of Gruma
service of copies of the summons and complaint and any other process
which may be served in any such action, suit or proceeding in any such
court. Such service may be made by mailing or delivering a copy of the
process to Gruma, in care of the Process Agent at the address specified
above for the Process Agent, and Gruma hereby irrevocably authorizes
and directs the Process Agent to accept such service on its behalf.
Gruma further agrees that it shall at any time hereafter, at the
request of any holder of a Note, execute and deliver such powers of
attorney and other documents and take such further or other actions as
such holder may reasonably deem necessary or desirable to give full
effect to the foregoing appointment. Gruma irrevocably and
unconditionally waives any claim or objection to the laying of venue of
any action, suit, or proceeding arising out of this Note Agreement, the
Notes or the transactions contemplated hereby or thereby in (A) the
state courts of the State of Delaware, or (B) the United States
District Court for the District of Delaware, or any appellate court
thereof, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action,
suit, or proceeding brought in any such court has been brought in an
inconvenient forum. Final judgment in any such action, suit or
proceeding brought in any such court shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other
manner required by law.
(c) If, for the purposes of obtaining judgment against
Gruma with respect to its obligations under this Note Agreement or any
of the Notes in any court, it is necessary to convert a sum due under
this Note Agreement or any of the Notes in United States dollars into
another currency (the "Other Currency"), Gruma agrees, to the fullest
extent permitted by applicable law, that the rate of exchange used
shall be that at which, in accordance with normal banking procedures,
the holders of the Notes could purchase United States dollars with the
Other Currency on the business day preceding that on which final
judgment is given.
(d) The obligations of Gruma in respect of any sum due
under this Note Agreement or any of the Notes shall, notwithstanding
any judgment in any Other Currency, be discharged only to the extent
that, on the business day following receipt by any holder of a Note of
any sum adjudged to be so due in the Other Currency, such holder may in
accordance with normal banking procedures purchase United States
dollars with the Other Currency. If the amount of United States
dollars so purchased is less than the sum originally due to such holder
in United States dollars, Gruma hereby agrees, as a separate obligation
and notwithstanding any such judgment, to indemnify such holder against
such loss.
14. Equitable Remedies. The parties agree that money damages
or other remedy at law would not be a sufficient or adequate remedy for
any breach or violation of, or default under, this Note Agreement by
them and that, in addition to all other remedies available to them,
each of them shall be entitled, to the fullest extent permitted by law,
to an injunction restraining such breach, violation, or default or
threatened breach, violation, or default and to any other equitable
relief, including specific performance, without bond or other security
being required.
15. Benefits of Agreement. This Note Agreement shall be
binding on and inure to the benefit of Gruma and its successors, IMC
and its successors and assigns, and each holder of a Note.
In witness whereof, the parties have caused this Note Agreement to
be duly executed as of the date first written above.
GRUMA, S.A. de C.V.
By:
Name:
Title:
INTERNATIONAL MULTIFOODS
CORPORATION
By:
Name:
Title:
Exhibit 1
This Note has not been registered under the Securities Act of
1933, as amended, or applicable state securities laws and may not be
transferred without (1) an opinion of counsel reasonably satisfactory
to the maker of this Note that the transfer may be lawfully made
without registration under the Securities Act and applicable state
securities laws or (2) such registration.
PROMISSORY NOTE
R-1
U.S.$__________ August __, 1999
FOR VALUE RECEIVED, the undersigned, Gruma, S.A. de C.V., a Mexican
corporation ("Maker"), hereby promises to pay to International
Multifoods Corporation, a Delaware corporation ("IMC"), or registered
assigns, the principal sum of U.S.$_________ (the "Original Principal
Amount") in (i) one installment equal to 5% of the Original Principal
Amount on July 31, 2000, (ii) one installment equal to 7.5% of the
Original Principal Amount on July 31, 2001, (iii) one installment equal
to 35% of the Original Principal Amount on July 31, 2002, (iv) one
installment equal to 10% of the Original Principal Amount on July 31,
2003, and (v) a final installment equal to 42.5% of the Original
Principal Amount on July 31, 2004. Interest shall accrue on the unpaid
principal balance hereof from the date hereof at the rate of 7.5% per
annum (computed on the basis of a 360-day year, 30-day month) and,
subject to any required tax withholding, shall be payable quarterly on
the last day of January, April, July and October of each year,
commencing October 31, 1999 and continuing until payment in full of the
principal hereof.
Notwithstanding anything to the contrary stated above, interest on
this Note shall not exceed the maximum amount of nonusurious interest
that may be contracted for, taken, reserved, charged or received under
law and any interest in excess of that maximum amount shall be credited
on the principal of this Note or, if that has been paid, refunded.
This Note is issued pursuant to, and is subject to the terms and
conditions of, a Note Purchase Agreement between Maker and IMC dated as
of the date hereof (as amended from time to time, the "Note
Agreement"), which sets forth certain rights and obligations, including
confidentiality obligations, of the holder of this Note (a copy of
which is available without cost to the holder of this Note upon written
request to Maker at its principal executive office).
As provided in the Note Agreement, this Note is transferable only
on a register therefore maintained by Maker or its duly appointed
agent, upon receipt by Maker or such agent of (i) this Note duly and
properly assigned by the registered holder hereof or by its attorney
duly authorized in writing, and (ii) if this Note bears the legend set
forth in Section 2.2 of the Note Agreement, the opinion of counsel
referred to in Section 2.2 or 2.3 of the Note Agreement (if required
under Section 2.2 or 2.3) or evidence of compliance with the
registration provisions referred to in those Sections. Maker shall be
entitled to regard the registered holder of this Note as the actual
owner of this Note for the purpose of receiving payment and for all
other purposes until Maker is required to record a transfer of this
Note on its register.
In case an Event of Default under and as defined in the Note
Agreement shall occur, the principal of and accrued and unpaid interest
on this Note may be declared, or shall otherwise become, immediately
due and payable in the manner and with the effect provided in the Note
Agreement.
All payments hereunder shall be made in United States dollars by
wire transfer of immediately available federal funds to such account as
the holder of this Note shall specify from time to time by notice in
writing to Maker.
As provided in the Note Agreement, this Note is subject to
prepayment in whole or in part at the option of the Maker upon the
notice and subject to the terms and conditions provided in the Note
Agreement.
This Note shall be governed by the laws of the State of Delaware,
without giving effect to principles of conflicts of laws thereof.
Maker hereby waives presentment, protest, notice of non-payment,
dishonor and notice of dishonor, except to the extent expressly
required by the Note Agreement.
Maker agrees to pay all costs of collection, including reasonable
attorneys' fees and disbursements, in the event this Note is not paid
when due.
Whenever any payment to be made hereunder shall be stated to be
due on other than a business day (as defined in the Note Agreement),
such payment may be made on the next succeeding business day, and such
extension of time shall in such case be included in the computation of
payment of interest on this Note.
GRUMA, S.A. de C.V.
By:____________________________
Name:__________________________
Title:_________________________
