Exhibit 2.1
ASSET PURCHASE AGREEMENT
BETWEEN
BCP INGREDIENTS, INC.
(the "Buyer")
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and
CHINOOK GLOBAL LIMITED
(the "Seller")
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Dated as of March 16, 2007
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Definitions ........................................................ 1
1.2 Construction ....................................................... 1
ARTICLE II
SALE AND TRANSFER OF ASSETS; CLOSING
2.1 Assets to be Sold .................................................. 2
2.2 Excluded Assets .................................................... 3
2.3 Consideration ...................................................... 4
2.4 Liabilities ........................................................ 6
2.5 Allocation ......................................................... 6
2.6 Closing ............................................................ 6
2.7 Delivery of Purchased Inventory .................................... 6
2.8 Consents ........................................................... 7
2.9 Transfer Taxes and Other Expenses .................................. 7
2.10 Proration of Certain Items ......................................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES RELATING TO THE BUSINESS
3.1 Organization; Good Standing ........................................ 8
3.2 Authority; Enforceability .......................................... 9
3.3 Consent and Approvals; No Violation ................................ 9
3.4 Taxes and Tax Returns .............................................. 9
3.5 Litigation ......................................................... 9
3.6 Undisclosed Liabilities ............................................ 10
3.7 EBITDA ............................................................. 10
3.8 Permits ............................................................ 10
3.9 Compliance with Laws ............................................... 10
3.10 Contracts .......................................................... 11
3.11 Title to Personal Property ......................................... 11
3.12 Finished Goods Inventory ........................................... 11
3.13 Proprietary Rights ................................................. 11
3.14 Warranties ......................................................... 11
3.15 Brokers ............................................................ 12
3.16 Disclosure ......................................................... 12
3.17 No Other Representations or Warranties ............................. 12
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES RELATING TO BUYER
4.1 Organization; Good Standing; GST Registration ...................... 12
4.2 Authority; Enforceability .......................................... 12
4.3 Consents and Approvals; No Violation ............................... 12
4.4 Litigation ......................................................... 13
4.5 Brokers ............................................................ 13
4.6 No Other Representations or Warranties ............................. 13
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Consent Agreement .................................................. 13
5.2 Rebates ............................................................ 14
5.3 Accounts Receivable ................................................ 14
5.4 Transferred Employees .............................................. 15
5.5 Equipment .......................................................... 15
5.6 Bulk Sales Act of Ontario .......................................... 15
5.7 Access to Seller Records ........................................... 15
5.8 Morrisburg Facility Negotiation Right .............................. 16
5.9 Customer Contract Liability ........................................ 16
5.10 Certain Deliveries ................................................. 16
ARTICLE VI
INDEMNIFICATION
6.1 Survival ........................................................... 17
6.2 Seller's Agreement to Indemnify .................................... 17
6.3 Buyer's Agreement to Indemnify ..................................... 18
6.4 Limitations ........................................................ 18
6.5 Procedure for Indemnification - Third-Party Claims ................. 19
6.6 Indemnification Procedure - Direct Claims .......................... 20
6.7 Exclusive Remedy ................................................... 22
ARTICLE VII
GENERAL PROVISIONS
7.1 Expenses ........................................................... 23
7.2 Amendment and Modification ......................................... 23
7.3 Waiver of Compliance; Consents ..................................... 23
7.4 Notices ............................................................ 23
7.5 Publicity .......................................................... 24
7.6 Assignment; No Third-Party Rights .................................. 25
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7.7 Governing Law ...................................................... 25
7.8 Jurisdiction; Service of Process ................................... 25
7.9 Further Assurances; Records ........................................ 25
7.10 Severability ....................................................... 25
7.11 Counterparts ....................................................... 26
7.12 Entire Agreement ................................................... 26
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EXHIBITS
A Form of Escrow Agreement
B Form of Consent Agreement
C Form of Equipment Purchase Agreement
D Form of ▇▇▇▇ of Sale
E Form of Assignment and Assumption Agreement
F Form of Tolling Agreement
G Form of Non-Compete Agreement
H Form of Transition Services Agreement
SCHEDULES
2.1(b)(i) Assumed Contracts
2.2(a) Country List
2.3(c) Purchased Inventory Valuation
2.5 Purchase Price Allocation
2.10(a) Prorated Contracts
2.10(b) Prorated Commission Payments
3.12 Finished Goods Inventory Specifications
5.4 Transferred Employees
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of March 16, 2007, is between BCP
Ingredients, Inc., a Delaware corporation (the "Buyer"), and Chinook Global
Limited, an Ontario corporation (the "Seller").
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Background Statement
Seller is engaged in the business of producing and selling choline
chloride and specialty choline derivatives (the "Business") from its Sombra and
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ facilities (the "Facilities"). Seller desires to
sell, and Buyer desires to purchase, certain of the assets of Seller used in the
Business, for the consideration and on the terms set forth herein.
Statement of Agreement
The parties agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Definitions. Capitalized terms used in this Agreement have the
meanings given to them in Appendix 1 to this Agreement.
1.2 Construction.
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(a) The article and section headings contained in this Agreement are
solely for the purpose of reference and convenience, are not part of the
agreement of the parties and shall not in any way limit, modify or otherwise
affect the meaning or interpretation of this Agreement.
(b) References to "Sections" or "Articles" refer to corresponding Sections
or Articles of this Agreement unless otherwise specified.
(c) Unless the context requires otherwise, the words "include,"
"including" and variations thereof mean "including, without limitation"; the
words "hereof," "hereby," "herein," "hereunder" and similar terms refer to this
Agreement as a whole and not any particular Section or Article in which such
words appear.
(d) Unless the context requires otherwise, words in the singular include
the plural, words in the plural include the singular, and words importing any
gender shall be applicable to all genders. Any reference to any law, statute or
regulation shall be as in effect on the date hereof.
(e) If a term is defined as one part of speech (such as a noun), it shall
have a corresponding meaning when used as another part of speech (such as a
verb).
(f) Currency amounts referenced herein are in U.S. Dollars.
(g) References to a number of days refer to calendar days unless Business
Days are specified. Except as otherwise specified, whenever any action must be
taken on or by a day that is not a Business Day, then such action may be validly
taken on or by the next day that is a Business Day. References herein to "local
time" are to local time in Charlotte, North Carolina.
(h) All accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP.
(i) The parties acknowledge that they and their attorneys have reviewed
this Agreement and have had the opportunity to negotiate fully all of its
provisions, and that any rule of construction to the effect that any ambiguities
are to be resolved against the drafting party, or any similar rule operating
against the drafter of an agreement, shall not be applicable to the construction
or interpretation of this Agreement.
ARTICLE II
SALE AND TRANSFER OF ASSETS; CLOSING
2.1 Assets to be Sold. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing and effective as of the Effective Time,
Seller shall sell, convey, assign, transfer and deliver to Buyer, and Buyer
shall purchase and acquire from Seller, all of Seller's right, title and
interest in and to only the following assets of Seller used in the Business
(collectively, the "Purchased Assets"):
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(a) all Product Inventory held in connection with the operation of the
Business (including any such Product Inventory located at any transload shipment
site, consignment warehouse or any other offsite location or in transit in any
railcar, truck or other mode of transportation, but excluding the Product
Inventory described in Section 2.2(b)) (the "Purchased Inventory") (for clarity,
Product Inventory associated with invoices issued prior to Closing shall be
deemed to have been converted to Seller Accounts Receivable and Product
Inventory associated with invoices issued subsequent to Closing shall be deemed
to be Purchased Inventory); and
(b) the goodwill of the Business, comprised of all of the intangible
property associated with the Business and customarily described as goodwill,
including (but subject to Section 2.2):
(i) the Business Contracts set out in Schedule 2.1(b)(i)
(collectively, the "Assumed Contracts");
(ii) the following records of Seller: (x) customer records, customer
lists and other customer information related to the Business as it has
been conducted since January 1, 2006, including principal customer
contacts, addresses and telephone numbers and an electronic version of the
price book for the periods beginning February 1, 2007 and March 1, 2007,
however, to the extent that such records relate to Assumed Contracts with
terms beginning prior to January 1, 2006, Seller will provide each of the
above since the commencement of said Assumed Contract(s) and (y) for each
customer located in a country on Schedule 2.2 other than the United States
or Canada to whom the Seller has
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sold or shipped Business products since January 1, 2006, copies of the
transaction documents related to the most recent such sale or shipment, in
each case except to the extent that Seller has an obligation of
confidentiality with respect to such records pursuant to an agreement set
forth on Section 2.1(b)(ii) of the Disclosure Schedule (collectively, the
"Purchased Records"); provided that Seller may retain copies of the
Purchased Records; and
(iii) all of the operating procedures, formulas and other similar
Know-How and Trade Secrets used in connection with production of the
Business products.
2.2 Excluded Assets. Notwithstanding anything to the contrary contained in
Section 2.1 or elsewhere in this Agreement, the following assets of Seller
(collectively, the "Excluded Assets") are not included in the Purchased Assets:
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(a) any goodwill (including customer contracts, customer information and
transportation, logistics and other records) or other assets primarily
associated with the conduct of the Business in any country not set forth on
Schedule 2.2, it being agreed that the Buyer is not acquiring the Business as
conducted in any country not set forth on Schedule 2.2;
(b) a maximum of five containers of liquid drums (92 metric tons) of
liquid choline chloride in inventory, which shall be retained by the Seller to
satisfy supply obligations existing as of the Closing for one customer;
(c) all cash, cash equivalents and short-term investments;
(d) all accounts receivable of the Seller (the "Seller Accounts
Receivable");
(e) the capital stock or other equity interests of any of the subsidiaries
of Seller or any minority-owned affiliate of Seller;
(f) the Seller's right, title and interest in the Facilities including all
real property, improvements, personal property and equipment located at such
Facilities;
(g) rights, claims or causes of action of Seller against third parties
relating to the assets, properties, business or operations of Seller that arise
in connection with the discharge by Seller of the Retained Liabilities or that
relate to the Excluded Assets;
(h) all contracts of insurance and self-insurance arrangements of Seller,
and the rights thereunder;
(i) all customer and other records relating to the conduct of the Business
prior to December 31, 2005;
(j) all software and computer systems;
(k) all Proprietary Rights not described in Section 2.1(b)(iii);
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(l) any and all rights arising under the Business Contracts not set out in
Schedule 2.1(b)(i), including any and all Business Contracts relating to the
lease or purchase of office equipment, software, material handling equipment,
raw materials, specialty gases and management and production services (the
"Excluded Contracts"); and
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(m) all claims for refund of Taxes and other governmental charges of
whatever nature.
2.3 Consideration.
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(a) Purchase Price and Payment. The consideration for the Purchased Assets
will be (i) the sum of (A) Twenty-Nine Million dollars ($29,000,000) (the "Base
Purchase Price"), plus (B) the Estimated Purchased Inventory Amount (such sum,
the "Purchase Price"), and (ii) the assumption of the Assumed Liabilities. At
the Closing, the Buyer shall deliver to the Seller (x) a promissory note, in
form and substance mutually satisfactory to the parties, for an amount equal to
3.0% of the Base Purchase Price, and (y) an amount equal to the remainder of the
Purchase Price minus the Purchased Inventory Escrow Amount by wire transfer to
an account or accounts designated in writing by Seller.
(b) Inventory Escrow. At the Closing, Buyer shall pay, out of the Purchase
Price, an amount equal to fifteen percent of the Estimated Purchased Inventory
Amount (the "Purchased Inventory Escrow Amount") to be held in an escrow account
(the "Escrow Account") in accordance with an Escrow Agreement to be executed
prior to Closing in the form of Exhibit A (the "Escrow Agreement").
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(c) Valuation of Purchased Inventory. The Estimated Purchased Inventory
Amount is $1,840,444 and represents Seller's good faith estimate of the value of
the Purchased Inventory as of the close of business on the Business Day
preceding the Closing Date calculated in accordance with the per-unit valuation
set forth on Schedule 2.3(c). Inventory items known at the time of such count to
not be useable or saleable in the ordinary course of business or not included in
Purchased Inventory pursuant to Section 2.2(b) have not been included for
purposes of calculating the Estimated Purchased Inventory Amount.
(d) Post-Closing Adjustment for Purchased Inventory.
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(i) From the Closing until no later than noon on March 19, 2007,
Seller shall be permitted to continue to produce "specialty products" at
Seller's Sombra, Ontario Facility using existing raw materials Purchased
Inventory. Such production shall not be deemed a violation of the
Non-Compete Agreement. The specialty products produced pursuant to this
Section 2.3(d)(i) shall be deemed finished goods Purchased Inventory
hereunder, including for purposes of determining the Closing Purchased
Inventory Amount. Upon completion of the activities contemplated by this
Section 2.3(d)(i), Seller shall notify Buyer of the amount of additional
finished goods Purchased Inventory produced.
(ii) Within two Business Days of the Closing, Buyer and Seller shall
jointly conduct a count of the Purchased Inventory located at the Seller's
Morrisburg, Ontario Facility. Within 30 days following the Closing Date
Buyer shall provide to Seller a final statement of its determination of
the value of all of the Purchased Inventory (as
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determined in accordance with Sections 2.3(c) and 2.3(d)(i) and, for
Purchased Inventory located at the Seller's Morrisburg, Ontario Facility,
using the inventory count established pursuant to the preceding sentence)
as of the Effective Time and such amount shall be the Closing Purchased
Inventory Amount. Following delivery of such statement, Buyer shall make
available to Seller such information as Seller may reasonably request in
order to verify the accuracy of such statement. If within 30 days
following delivery of the statement of the Closing Purchased Inventory
Amount, Seller has not given Buyer written notice of its objection as to
such amount (which notice shall state the basis of Seller's objection),
then the Closing Purchased Inventory Amount calculated by Buyer shall be
binding and conclusive on the parties.
(iii) If Seller duly gives Buyer such notice of objection, and if
Buyer and Seller fail to resolve the issues outstanding with respect to
Buyer's statement of the Closing Purchased Inventory Amount within 20 days
of Buyer's receipt of Seller's objection notice, Buyer and Seller shall
submit the issues remaining in dispute to the Due Diligence Agent for
resolution applying the principles set forth in this Agreement. The Due
Diligence Agent shall not have any power to alter or modify the terms of
this Agreement and shall have the authority only to resolve the
outstanding issues with respect to the statement of the Closing Purchased
Inventory Amount as described in the preceding sentence. If issues are
submitted to the Due Diligence Agent for resolution, (i) Seller and Buyer
shall furnish or cause to be furnished to the Due Diligence Agent such
work papers and other documents and information relating to the disputed
issues as the Due Diligence Agent may request; (ii) the determination by
Due Diligence Agent, as set forth in a notice to be delivered to both
Seller and Buyer within 30 days of the submission to the Due Diligence
Agent of the issues remaining in dispute, shall be final, binding and
conclusive on the parties; and (iii) Seller and Buyer will each bear 50%
of the fees and costs of the Due Diligence Agent for such determination.
(iv) Within five days after the Closing Purchased Inventory Amount
is finally determined pursuant to this Section 2.3(d) (either by agreement
of the parties or by the Due Diligence Agent):
(A) if the Closing Purchased Inventory Amount exceeds the
Estimated Purchased Inventory Amount, then (x) Buyer shall pay such
excess to Seller by wire transfer of immediately available funds and
(y) Buyer and Seller shall jointly instruct the Escrow Agent to
release to Seller all funds then held in the Escrow Account;
(B) if the Estimated Purchased Inventory Amount exceeds the
Closing Purchased Inventory Amount by an amount that is less than or
equal to the amount of funds in the Escrow Account, then Buyer and
Seller shall jointly instruct the Escrow Agent to release to Buyer
such excess and to release all remaining funds then held in the
Escrow Account to Seller; and
(C) if the Estimated Purchased Inventory Amount exceeds the
Closing Purchased Inventory Amount by an amount that is greater than
the amount of funds in the Escrow Account, then (x) Buyer and Seller
shall jointly instruct the
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Escrow Agent to release all funds then held in the Escrow Account to
Buyer and (y) Seller shall pay the remainder of such excess to Buyer
by wire transfer of immediately available funds.
Unreasonable failure by either party to cooperate in instructing the
Escrow Agent, in the manner described in the Escrow Agreement, to release
funds as provided in this Section 2.3(d)(iv) shall be deemed a breach of
this Agreement.
(v) Any adjustment contemplated by this Section 2.3(d) shall be
deemed to be an adjustment to the Purchase Price.
2.4 Liabilities.
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(a) Assumed Liabilities. On the Closing Date, but effective as of the
Effective Time, Buyer shall assume and agree to discharge only the following
liabilities of Seller (the "Assumed Liabilities"):
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(i) all liabilities under the Assumed Contracts, including all
outstanding purchase orders, other than any liabilities of Seller (x) for
breaches of the Assumed Contracts occurring, or warranty claims arising,
prior to the Effective Time, and (y) to pay the Non-Contingent Rebates
required to be paid by the Seller pursuant to Section 5.2(a); and
(ii) all other liabilities specifically allocated to Buyer pursuant
to the terms of Article II, Article V, Article VI and Section 7.1.
(b) Retained Liabilities. Buyer shall not assume, and Seller shall remain
responsible for, the Retained Liabilities. "Retained Liabilities" shall mean
every liability of Seller resulting from the Business other than the Assumed
Liabilities.
2.5 Allocation. The Purchase Price (including as adjusted pursuant to
Section 2.3(d)(iv)) shall be allocated in accordance with Schedule 2.5. After
the Closing, the parties shall make consistent use of the allocation specified
in Schedule 2.5 for all Tax purposes and in all filings, declarations and
reports with the Canada Revenue Agency and the United States Internal Revenue
Service. In any Proceeding related to the determination of any Tax, none of
Buyer, Seller or their respective shareholders shall contend or represent that
such allocation is not a correct allocation.
2.6 Closing. The purchase and sale provided for in this Agreement (the
"Closing") will take place at the offices of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.,
in Charlotte, North Carolina, commencing at 10:00 a.m. (local time) on the date
hereof. The Closing shall be effective as of 11:59 p.m. (local time) on the
Closing Date (the "Effective Time").
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2.7 Delivery of Purchased Inventory.
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(a) Raw Materials. Seller shall, at Seller's expense, cause all Purchased
Inventory consisting of raw materials (except for raw materials Purchased
Inventory processed into finished specialty products pursuant to Section
2.3(d)(i)) to be delivered within a reasonable
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period of time following the Closing to Buyer's facility in St. ▇▇▇▇▇▇▇,
Louisiana, to Buyer's facility in Verona, Missouri or to the Facility in
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ for processing pursuant to the Tolling Agreement,
which facility shall be determined at the reasonable discretion of Seller.
Notwithstanding the foregoing, if Buyer requests that such raw materials be
delivered to a facility not selected by Seller, Seller shall reasonably
cooperate with Buyer to deliver such raw materials to such facility, provided
that Buyer shall bear all costs relating to such delivery in excess of the costs
Seller would have incurred had the raw materials been delivered to the facility
selected by Seller.
(b) Finished Goods. Buyer shall, at Buyer's expense, arrange for the
shipment to a facility of the Buyer, to customers or other third parties, or to
the Facility in ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ for processing pursuant to the
Tolling Agreement, of all Purchased Inventory consisting of finished goods
located at the Facility in ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ as of the Effective Time and
all finished good generated pursuant to Section 2.3(d)(i). The Buyer shall
ensure that all such shipments have occurred within 60 days following the
Closing. Purchased Inventory consisting of finished goods not located at either
Facility as of the Effective Time or generated pursuant to Section 2.3(d)(i)
(including any such goods located at transload facilities, in transit to
transload facilities, or held by customers on consignment) shall be deemed
delivered on a where-is basis as of the Effective Time or upon their production
pursuant to Section 2.3(d)(i), as applicable.
(c) Other Product Inventory. The parties anticipate that all Purchased
Inventory consisting of bags, pallets, stretch wrap and other supplies of the
Business will be utilized in the processing of finished goods pursuant to the
Tolling Agreement. Accordingly, at the Closing, the Seller shall deliver all
such Product Inventory to Buyer at the Facility in ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇.
Upon termination of, or satisfaction of all of Seller's obligations under, the
Tolling Agreement, Buyer shall, at Buyer's expense, promptly arrange for
shipment of any such Purchased Inventory that remains to third parties or to a
facility of the Buyer.
2.8 Consents. To the extent that there are certain Assumed Contracts that
are not assignable without the consent or approval of Persons other than Seller
("Consent Contracts"), and such consents or approvals are not obtained by the
Closing Date, Seller and Buyer shall cooperate for a period of one year from the
Closing Date to obtain such consent or approval, and, in the absence of such
consent or approval, shall cooperate with one another to give Buyer (or its
designated Affiliate) the practical benefits of such Consent Contract. Such
Consent Contract shall be deemed to be a Purchased Asset and an Assumed
Liability; provided that Buyer (or its designated Affiliate) is given the
practical benefits of such Consent Contract.
2.9 Transfer Taxes and Other Expenses.
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(a) Buyer shall pay any and all transfer and ad valorem (as opposed to
income) Taxes applicable to the sale of the Purchased Assets, including without
limitation any and all goods and services, sales or other Taxes as may be
required under the law of the applicable state or province, and specifically
including goods and services tax payable pursuant to the Excise Tax Act (Canada)
in respect of the supply of the Purchased Assets, which tax shall be payable in
the amount of 6.0% of the Purchase Price for payment by the Buyer to the
applicable Canadian taxing authorities, which Canadian goods and services tax
shall be payable by the Buyer to the Seller at the same time and in the same
manner that the closing payment is being made to the
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Seller pursuant to Section 2.3(a)(y). If Buyer does not deliver such amounts to
Seller at the Closing, any Damages that Seller may suffer in connection with
Canadian goods and services taxes on the sale of the Purchased Assets shall not
be subject to the limitations on indemnification set forth in Section 6.4.
(b) Buyer shall pay the costs for registering the transfer of any
Proprietary Rights included in the Purchased Assets.
(c) Buyer shall be responsible for any and all ad valorem (property) Taxes
on the Purchased Assets.
(d) Seller shall be responsible for and shall pay any and all sales Taxes
applicable to sales of goods or services by the Business prior to the Effective
Time. Buyer shall be responsible for and shall pay sales Taxes applicable to
sales of goods or services by the Business from and after the Effective Time.
2.10 Proration of Certain Items.
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(a) The parties shall prorate the lease or service payment obligations
under the applicable Assumed Contracts set forth in Schedule 2.10(a) through the
Effective Time, with Seller being responsible for the payment obligations
accruing through the Effective Time and receiving credit for any prepayments or
deposits and Buyer being responsible for the payment obligations accruing from
and after the Effective Time.
(b) The parties shall prorate the commission payment obligations to the
sales agents set forth in Schedule 2.10(b) through the Effective Time, with
Seller being responsible for the commission payment obligations for Seller
Accounts Receivable as in existence at the Effective Time and receiving credit
for any prepayments and Buyer being responsible for the payment obligations
arising from accounts receivable created after the Effective Time.
(c) To the extent payments to be prorated or credited pursuant to this
Section 2.10 are determined as of the Closing Date, an appropriate adjustment
shall be made to the closing payment due pursuant to Section 2.3(a). To the
extent payments to be prorated or credited pursuant to this Section 2.10 are not
determined as of the Closing Date, appropriate payments shall be made from the
Buyer to the Seller or from the Seller to the Buyer, as applicable, at such
times as such payment obligations are determined. Buyer and Seller agree to
cooperate and communicate with each other, to a commercially reasonable extent,
to determine the amount of any payments required pursuant to this Section
2.10(c).
ARTICLE III
REPRESENTATIONS AND WARRANTIES RELATING TO THE BUSINESS
Seller represents and warrants to Buyer that:
3.1 Organization; Good Standing. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Seller has the requisite corporate power and authority to own,
lease and use the properties and assets that it
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owns, leases and uses in connection with the Business and to conduct the
Business as presently conducted.
3.2 Authority; Enforceability. Seller has the requisite power and
authority to (i) execute and deliver this Agreement and each certificate,
document and agreement to be executed by Seller in connection herewith
(collectively, the "Seller Documents") and (ii) perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
Seller Documents and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by the Board of Directors and
shareholders of the Seller and no other proceedings on the part of Seller are
necessary to authorize this Agreement or any Seller Document or to consummate
the transactions contemplated hereby or thereby. This Agreement has been duly
and validly executed and delivered by Seller, and upon execution and delivery by
Seller of each Seller Document, such Seller Document shall constitute a legal,
valid and binding obligation of Seller, enforceable against it in accordance
with its terms.
3.3 Consent and Approvals; No Violation.
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(a) The Seller is not required to obtain any Governmental Authorization in
connection with (i) the execution or delivery by Seller of this Agreement or the
Seller Documents or (ii) the performance by Seller of its obligations under this
Agreement or the Seller Documents.
(b) Except as disclosed in Section 3.3(b) of the Disclosure Schedule,
neither the execution and delivery of this Agreement and the Seller Documents by
Seller nor the performance of Seller's obligations hereunder or thereunder will:
(i) violate any provision of the certificate and articles of
incorporation, certificates and articles of amendment or bylaws of Seller
or any resolution adopted by the board of directors or shareholders of
Seller;
(ii) breach any of the terms or provisions of, or give any Person a
right to declare a default under, or require the consent or waiver of any
Person under, any Material Contract;
(iii) conflict with or violate any Legal Requirement applicable to
the Business; or
(iv) conflict with or violate the terms of any Permit relating to
the Business.
3.4 Taxes and Tax Returns. There are no Liens with respect to Taxes
(except for Liens for Taxes not yet delinquent) upon any of the Purchased
Assets.
3.5 Litigation. Except as disclosed in Section 3.5 of the Disclosure
Schedule, there are no Proceedings by or against Seller with respect to the
Business or the Purchased Assets that are pending or have been commenced since
April 1, 2005, or, to Seller's Knowledge, that are threatened against Seller
with respect to the Business or the Purchased Assets, or that challenge,
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or that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, the transactions contemplated by this Agreement.
3.6 Undisclosed Liabilities. Except as disclosed in Section 3.6 of the
Disclosure Schedule, to Seller's Knowledge, the Seller has no material
obligation or liability in connection with the Purchased Assets or the Business
and to the Seller's Knowledge there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against Seller giving rise to any such material obligation or liability,
except liabilities and obligations that (i) are fully accrued or reserved
against in the Statement of EBITDA; (ii) were incurred since the date of the
Statement of EBITDA in the ordinary course of the Business and consistent with
past practices and are of the same type and category as shown on the Statement
of EBITDA; or (iii) are the Seller's obligations under the Business Contracts,
excluding liability for breaches thereof.
3.7 EBITDA. Seller has provided to the Due Diligence Agent a statement of
EBITDA for the Business for the twelve month period beginning on February 1,
2006 and ending on January 31, 2007 (the "Statement of EBITDA"). The Statement
of EBITDA presents fairly, in all material respects, the EBITDA of the Business
for the period referred to therein.
3.8 Permits.
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(a) To the Seller's Knowledge, the Seller holds, owns or otherwise has
available to it all Governmental Authorizations necessary or required for Seller
to lawfully conduct the Business as currently conducted, for Seller to own,
lease or use the Purchased Assets, and for Seller to fulfill its obligations
under the Assumed Contracts, except for any such Governmental Authorizations the
failure to hold, own or otherwise have available would not have a material
adverse effect on the Business (all such Governmental Authorizations, the
"Permits"). For clarity, Permits do not include Governmental Authorizations
solely relating to the operation of the Facilities or not otherwise pertaining
to the Purchased Assets.
(b) To Seller's Knowledge, each of the Permits is valid and in full force
and effect, and all applications required to have been filed for renewal of the
Permits have been duly filed on a timely basis with the appropriate Governmental
Authorities. Seller has not received, at any time since April 1, 2005, any
written notice from any Governmental Authority regarding any actual or proposed
revocation, withdrawal, suspension, cancellation or termination (other than by
expiration) of any Permit.
3.9 Compliance with Laws. Except as set forth on Section 3.9 of the
Disclosure Schedule:
(a) to Seller's Knowledge, Seller is in material compliance with all Legal
Requirements applicable to the Business, the Assumed Contracts and the ownership
of the Purchased Assets and is not liable for the payment of any compensation,
damages, taxes, fines, penalties or other amounts, however designated, for a
failure to fully comply with any such Legal Requirement; and
(b) Seller has not received, at any time since April 1, 2005, any written
notice from any Governmental Authority, with respect to the Business or the
Purchased Assets, alleging any
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material violation of, or failure to comply with, any Legal Requirement by
Seller with respect to the Business.
3.10 Contracts.
---------
(a) Set forth in Section 3.10 of the Disclosure Schedule is a list of all
of the Business Contracts, other than any Excluded Contract or any Business
Contract that (i) relates only to Excluded Assets or (ii) does not impose a
material obligation on Seller and does not provide a material benefit to Seller.
(b) Seller has heretofore made available to the Due Diligence Agent true
and complete copies of all written Business Contracts set forth on Section 3.10
of the Disclosure Schedule, in each case as amended to date and currently in
effect.
(c) Each of the Business Contracts set forth in Part A of Section 3.10 of
the Disclosure Schedule (the "Material Contracts") is in full force and effect,
constitutes a valid and binding obligation of Seller and, to Seller's Knowledge,
the other parties thereto, is legally enforceable against Seller and, to
Seller's Knowledge, the other parties thereto, in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting the rights of creditors
generally.
(d) Seller is not in breach or default in any material respect under any
Business Contract set forth on Section 3.10 of the Disclosure Schedule and, to
Seller's Knowledge, no other party to any such Business Contracts is in breach
or default in any material respect thereunder and to Seller's Knowledge there is
no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against Seller under any such
Business Contracts.
3.11 Title to Personal Property. Seller owns good and valid and legal and
beneficial title to the Purchased Assets free and clear of all Liens except for
Permitted Liens.
3.12 Finished Goods Inventory. The Finished Goods Inventory was produced
in the ordinary course and meets the specifications set forth in Schedule 3.12
and is otherwise in good and saleable condition in the ordinary course of
business and conforms to all applicable warranties.
3.13 Proprietary Rights. Seller, legally and beneficially, owns free and
clear of all Liens except for Permitted Liens or otherwise has the right to use
in the manner in which they are currently used all of the Proprietary Rights
that are included in the Purchased Assets and has no obligation to pay any
royalty to any Person relating to any such Proprietary Rights. To Seller's
Knowledge, Seller's use of such Proprietary Rights in the conduct of the
Business has not infringed upon any Proprietary Right of any other Person, and
no Person is infringing upon any such Proprietary Right of Seller in connection
with the conduct of the Business.
3.14 Warranties. To Seller's Knowledge, as of the date hereof, there are
no unresolved claims received by Seller with respect to a breach of any warranty
by Seller in connection with the sale of products by the Business.
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3.15 Brokers. No broker, finder or other Person is or shall be entitled to
any brokerage fees, commissions or finder's fees in connection with the
transactions contemplated hereby from Seller by reason of any action taken by
Seller.
3.16 Disclosure. No representation or warranty made by Seller in this
Agreement, the disclosure schedules or any agreement executed by the Seller and
delivered to the Buyer pursuant hereto contains any untrue statement of a
material fact or omits to state a material fact necessary to make such
representation or warranty not misleading.
3.17 No Other Representations or Warranties. EXCEPT AS EXPRESSLY SET FORTH
IN THIS ARTICLE III, SELLER DOES NOT MAKE, AND NO PARTY SHALL BE ENTITLED TO
RELY UPON, ANY REPRESENTATION OR WARRANTY AS TO ANY FACT OR MATTER ABOUT SELLER
OR THE BUSINESS INCLUDING, BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OF
FITNESS FOR A PARTICULAR PURPOSE OR WITH RESPECT TO ANY FINANCIAL STATEMENTS
DELIVERED BY SELLER TO BUYER AT CLOSING.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES RELATING TO BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization; Good Standing; GST Registration. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Buyer is properly registered under the Excise
Tax Act (Canada) for the purposes of the Canadian goods and services tax under
registration number 881 405 716 RT0001.
4.2 Authority; Enforceability. Buyer has the requisite power and authority
to (i) execute and deliver this Agreement and each certificate, document and
agreement to be executed by Buyer in connection herewith (collectively, the
"Buyer Documents") and (ii) perform its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Buyer Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by Buyer and no other proceedings on the part of Buyer
are necessary to authorize this Agreement or any of the Buyer Documents or to
consummate the transactions contemplated hereby or thereby. This Agreement has
been duly and validly executed and delivered by Buyer, and upon execution and
delivery by Buyer of each Buyer Document, such Buyer Document shall constitute,
a legal, valid and binding obligation of Buyer, enforceable against it in
accordance with its terms.
4.3 Consents and Approvals; No Violation.
------------------------------------
(a) No Governmental Authorization is required by Buyer in connection with
(i) the execution or delivery by Buyer of this Agreement or the Buyer Documents,
or (ii) the performance of Buyer's obligations under this Agreement or the Buyer
Documents.
(b) Neither the execution and delivery of this Agreement and the Buyer
Documents by Buyer nor the performance of Buyer's obligations hereunder or
thereunder will:
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(i) violate any provision of the certificate of incorporation or
bylaws of Buyer or any resolution adopted by the board of directors or
shareholders of Buyer;
(ii) breach any of the terms or provisions of, or give any Person a
right to declare a default under any Contract binding on Buyer; or
(iii) conflict with or violate any Legal Requirement applicable to
Buyer.
4.4 Litigation. There are no Proceedings by or against Buyer that are
pending or, to Buyer's knowledge, threatened against Buyer that could affect its
ability to consummate the transactions contemplated by this Agreement. Buyer is
not subject to any Order that could affect the enforceability of this Agreement
against Buyer or impair its ability to consummate the transactions contemplated
by this Agreement.
4.5 Brokers. No broker, finder or other Person is or shall be entitled to
any brokerage fees, commissions or finder's fees in connection with the
transactions contemplated hereby from Buyer by reason of any action taken by
Buyer.
4.6 No Other Representations or Warranties. EXCEPT AS EXPRESSLY SET FORTH
IN THIS ARTICLE IV, BUYER DOES NOT MAKE, AND NO PARTY SHALL BE ENTITLED TO RELY
UPON, ANY REPRESENTATION OR WARRANTY AS TO ANY FACT OR MATTER ABOUT BUYER,
INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OF FITNESS FOR A
PARTICULAR PURPOSE.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Consent Agreement. At the Closing, Buyer and Seller shall enter into
an agreement in substantially the form attached hereto as Exhibit B regarding
the real property on which the Facilities are located (the "Consent Agreement").
Seller covenants and agrees that as a condition to any sale or other disposition
of such real property occurring within 10 years of the Closing Date, Seller
shall require the purchaser, lessees, licensee or other occupants of the
Facilities (excluding any lender providing secured financing in an amount
greater than or equal to $1 million to Seller or any purchaser upon the exercise
of remedies by such lender involving the transfer of the Facilities) to agree to
be bound by the form of non-competition agreement attached to the Consent
Agreement. For clarity, a purchaser of any of the equipment or other removable
property contained in or located at the Facilities as of the Effective Time that
does not purchase the Facilities shall not be required to enter into any such
agreement; provided, however, that the Seller shall not sell all or
substantially all of such equipment to any such purchaser that, to Seller's
Knowledge, intends to use such equipment within North America to compete with
the Buyer in the Business. In addition, after such time as the equipment
necessary to conduct the Business has been sold or removed from a Facility and
the real property on which such Facility is situated in a manner consistent with
the preceding sentence, no purchaser of such Facility or real property shall be
required to agree to be bound by the form of non-competition agreement attached
to the Consent Agreement as a condition to the sale of such Facility or real
property. Within seven days of any transfer of the real property at which either
Facility is located, Seller
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shall provide Buyer (i) written notice of any transfer described in the
parenthetical above, or (ii) the non-compete executed as provided above, as
applicable.
5.2 Rebates.
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(a) Section 5.2(a) of the Disclosure Schedule sets forth all rebate
programs extended by Seller to customers with respect to sales of Business
products for which Seller has an obligation arising out of sales made prior to
Closing, regardless of any sales of Business products made by Buyer to such
customers after the Closing, which obligation can be determined as of the
Closing without additional information to be received from the applicable
customers after the Closing (the "Non-Contingent Rebates"). Within 30 days after
the Closing Date, or as they become due, Seller shall pay to customers all
payments due for Non-Contingent Rebates arising out of sales of Business
products by Seller prior to Closing. Buyer shall pay to customers, when due, all
payments due for Non-Contingent Rebates arising out of sales of Business
products by Buyer after the Closing.
(b) Section 5.2(b) of the Disclosure Schedule sets forth all rebate
programs extended by Seller to customers with respect to sales of Business
products for which Seller has an obligation arising out of sales made prior to
Closing (i) only if sales of Business products made by Buyer to such customers
after the Closing reach a certain level, (ii) that cannot be calculated as of
the Closing without considering sales made by Buyer after the Closing or (iii)
that cannot be calculated as of the Closing until Seller receives additional
information from the applicable customers after the Closing (the "Contingent
Rebates"). Buyer shall pay to customers, when due, all payments due for
Contingent Rebates.
5.3 Accounts Receivable.
-------------------
(a) Following Closing, the Buyer shall use commercially reasonable efforts
to assist the Seller in collecting the Seller Accounts Receivable, including (i)
by instructing customers to make payments on the Seller Accounts Receivable
directly to the Seller, (ii) by cooperating in the resolution of any disputes
with customers of the Business, and (iii) by providing the Seller copies of all
written communications (including e-mail and other electronic communications)
between the Buyer and any other Person with respect to the Seller Accounts
Receivable promptly upon receipt thereof and a written record of any oral
communications between the Buyer and any other Person with respect to the Seller
Accounts Receivable promptly after the occurrence thereof. The Buyer shall have
no authority to settle, discount, write-off or otherwise compromise any Seller
Accounts Receivable.
(b) In the event that the Buyer receives payment on any Seller Accounts
Receivable, the Buyer shall hold such payment in trust for the Seller and shall
immediately remit such payment to the Seller by wire transfer of immediately
available funds. For purposes of the foregoing, so long as any Seller Accounts
Receivable remain outstanding with a customer of the business, any and all
payments by such customer (whether to Seller or to Buyer) shall be deemed to
have been made toward such customer's Seller Accounts Receivable until such
customer's Seller Accounts Receivable are paid in full, unless such customer has
notified the Seller or the Buyer in writing that it is disputing the validity of
or its obligation to pay the Seller Account Receivable. In the event that the
Seller receives any additional payments by a customer in
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respect of accounts receivable of the Business after such time as the Seller has
received payment in full for such customer's Seller Accounts Receivable, the
Seller shall hold any such payment in trust for the Buyer and promptly remit any
such payment to the Buyer by wire transfer of immediately available funds.
5.4 Transferred Employees. On or prior to Closing, Buyer shall deliver an
offer of at-will employment to the individual listed on Schedule 5.4. If such
person accepts the offer, Buyer agrees to provide such person (the "Transferred
Employee") a salary and commissions substantially similar to the salary and
commissions currently provided to the Transferred Employee by Seller or an
Affiliate of Seller, as the case may be, and benefits reasonably comparable to
those currently provided by Buyer to its similarly situated employees. Each
Transferred Employee shall be engaged to perform duties on behalf of Buyer
similar to those performed in the position currently held by the Transferred
Employee. Buyer shall not require any of the Transferred Employees to relocate
in connection with such employment. With respect to each Transferred Employee
who accepts Buyer's offer of employment, Buyer shall be liable and responsible
for the payment of all compensation and benefits accruing with respect to the
Transferred Employee on or after the Closing Date. Seller shall be liable and
responsible for the payment of all compensation and benefits accruing with
respect to any Transferred Employee prior to the Closing Date.
5.5 Equipment. Seller shall permit Buyer to visit the Facilities during
normal business hours within two Business Days following the Closing. If, within
five Business Days following such visit, Buyer shall have provided written
notice to Seller that Buyer desires to purchase any of the manufacturing
equipment used in connection with the Business located at either Facility, then
Buyer and Seller shall execute an Equipment Purchase Agreement in the form
attached as Exhibit C (the "Equipment Purchase Agreement") and Seller shall sell
to Buyer such equipment for consideration of $1.00; provided, however, that
under no circumstances shall Seller be required to deliver to Buyer any such
equipment needed by Seller, in Seller's sole judgment, to fulfill any of its
obligations under the Tolling Agreement or the Transition Services Agreement
until such time as Seller has fulfilled all of its obligations under such
agreements or such agreements have been terminated.
5.6 Bulk Sales Act of Ontario. Buyer, in consideration of the
indemnification of Seller provided in Section 6.2(c) hereof, waives compliance
by Seller with and acknowledges that the transaction contemplated hereby shall
be completed without adherence to the provisions of the Bulk Sales Act, R.S.O.
1990, Chapter B.14.
5.7 Access to Seller Records. For a period of one year from the date
hereof, Seller shall maintain in physical and/or electronic form (i)
transportation and logistics records related to the Business as it has been
conducted since January 1, 2006 with respect to delivery of Business products to
customers and (ii) for each customer located in a country on Schedule 2.2 other
than the United States or Canada to whom the Seller has sold or shipped Business
products since January 1, 2006, the transaction documents related to any such
sales or shipments. During such one year period, upon two Business Days' advance
notice, Seller shall provide Buyer with reasonable access to such records and
documents. Following such one year period, upon notice to Buyer, Seller may move
or destroy any such records and documents.
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5.8 Morrisburg Facility Negotiation Right. For a period of three months
from the date hereof, Buyer shall have the right to notify Seller that Buyer is
interested in purchasing Seller's Morrisburg, Ontario Facility and, in the event
of such notification, Seller agrees that it will negotiate in good faith with
the Buyer during such three-month period with respect to such a sale; provided,
however, that at any ▇▇▇▇ ▇▇▇▇▇▇ may, in Seller's sole discretion, accept or
decline any offer or proposal made by Buyer with respect to the sale of such
Facility. During such three month period, Seller agrees that it will not offer
to sell such Facility without first notifying Buyer and allowing Buyer a
reasonable opportunity to exercise the right of negotiation described in the
preceding sentence.
5.9 Customer Contract Liability. Pursuant to a certain Assumed Contract,
Buyer shall be obligated following Closing to provide certain amounts of
Business products to a certain customer free of charge. Seller agrees to
continue to bear the economic burden of this obligation, in furtherance of which
Seller agrees that, promptly after the Closing, Seller shall contact such
customer and use commercially reasonable efforts to negotiate with such customer
to amend such contract to eliminate such obligation to provide free Business
products, which efforts shall include an offer by the Seller to satisfy the
obligation with a cash payment from the Seller to such customer in an amount
equal to the remaining amount of free Business products to which such customer
is entitled. In the event that Seller is unable to satisfy such obligation to
such customer within three months after Closing, in consideration of Buyer's
assumption of such obligation, Seller agrees to pay to an account or accounts
designated in writing by Buyer such amount as is necessary to make Buyer whole
for assuming the obligation to provide free Business products pursuant to the
Assumed Contract.
5.10 Certain Deliveries. In addition to any other documents to be
delivered under other provisions of this Agreement, at the Closing:
(a) Seller shall deliver to Buyer:
(i) a ▇▇▇▇ of sale for all of the tangible Purchased Assets in the
form of Exhibit D (the "▇▇▇▇ of Sale") executed by Seller;
------------
(ii) an assignment of all of the Purchased Assets that are
intangible personal property in the form of Exhibit E, which assignment
shall also contain Buyer's undertaking and assumption of the Assumed
Liabilities (the "Assignment and Assumption Agreement") executed by
Seller;
(iii) a Tolling Agreement, dated as of the Closing Date, with Buyer
or a designated Affiliate of Buyer in substantially the form of Exhibit F
(the "Tolling Agreement") executed by Seller;
-----------------
(iv) a Non-Compete Agreement, dated as of the Closing Date, with
Buyer or a designated Affiliate of Buyer in substantially the form of
Exhibit G (the "Non-Compete Agreement") executed by each of the Seller,
Chinook Services LLC, Chinook LLC, ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇;
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(v) a Transition Services Agreement, dated as of the Closing Date,
with Buyer or a designated Affiliate of Buyer in substantially the form of
Exhibit H (the "Transition Services Agreement") executed by Seller;
---------------------------------
(vi) the Consent Agreement executed by Seller;
(vii) the Escrow Agreement executed by Seller; and
(viii) a certificate pursuant to Section 6 of the Ontario Retail
Sales Tax Act.
(b) Buyer shall deliver to Seller:
(i) the Purchase Price (less the Purchased Inventory Escrow Amount
to be deposited by Buyer with the Escrow Agent at Closing) by wire
transfer to an account specified by Seller in a writing delivered to Buyer
prior to the Closing Date;
(ii) the Assignment and Assumption Agreement executed by Buyer;
(iii) the Tolling Agreement executed by Buyer;
(iv) the Non-Compete Agreements executed by Buyer;
(v) the Transition Services Agreement executed by Buyer;
(vi) the Consent Agreement executed by Buyer;
(vii) the Escrow Agreement executed by Buyer; and
(viii) the promissory note described in Section 2.3(a).
ARTICLE VI
INDEMNIFICATION
6.1 Survival. All representations, warranties, covenants and agreements
made by Seller and Buyer in this Agreement and the documents to be executed in
connection with this Agreement shall survive the Closing.
6.2 Seller's Agreement to Indemnify. Subject to the limitations set forth
in this Article VI, after the Closing, Seller shall indemnify and hold harmless
Buyer for any and all Damages resulting from:
(a) any breach of any representation or warranty of Seller contained in
this Agreement;
(b) any breach of any covenant or agreement of Seller contained in this
Agreement; or
(c) the Retained Liabilities.
17
6.3 Buyer's Agreement to Indemnify. Subject to the limitations set forth
in this Article VI, after the Closing Buyer shall indemnify and hold harmless
Seller for any and all Damages resulting from:
(a) any breach of any representation or warranty of Buyer contained in
this Agreement;
(b) any breach of any covenant or agreement of Buyer contained in this
Agreement;
(c) the Assumed Liabilities; or
(d) the Buyer's operation of the Business after the Effective Time.
6.4 Limitations. Notwithstanding anything set forth in Article VI to the
contrary:
(a) Neither Seller nor Buyer shall have any liability under Section 6.2(a)
or 6.3(a) for any breaches of its representations and warranties, unless and
until the total amount of the Damages under such subsection exceed $100,000,
provided that in the event the aggregate Damages exceeds $100,000, then Seller
or Buyer, as applicable, shall be liable for all such Damages in full from the
first dollar of loss.
(b) Seller shall have no liability under Section 6.2 to the extent the
total amount of the Damages under such Section exceeds 20% of the Purchase
Price. Buyer shall have no liability under Section 6.3 to the extent the total
amount of the Damages under such Section exceeds 20% of the Purchase Price. The
aforementioned limitation regarding liability shall not apply to Damages arising
out of fraud, willful misconduct or the Retained Liabilities.
(c) No indemnification shall be required by Seller under Section 6.2(a)
unless Seller shall have received notice of a claim specifying the factual basis
of that claim in reasonable detail to the extent then known by Buyer on or
before the date one year after the Closing Date; provided, however, that the
foregoing limitation shall not apply to breaches of the representations and
warranties set forth in Sections 3.1 (Organization; Good Standing), 3.2
(Authority; Enforceability), 3.11 (Title to Personal Property) and 3.15
(Brokers). No other indemnification shall be required by Seller under Section
6.2 (including as to breaches of the representations and warranties excluded
from the preceding limitation) unless Seller shall have received notice of a
claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Buyer on or before the date three years after the Closing
Date.
(d) No indemnification payment shall be required by Buyer under Section
6.3(a) unless Buyer shall have received notice of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by Seller on
or before the date one year after the Closing Date; provided, however, that the
foregoing limitation shall not apply to breaches of the representations and
warranties set forth in Sections 4.1 (Organization; Good standing), 4.2
(Authority; Enforceability) and 4.5 (Brokers). No other indemnification shall be
required by Buyer under Section 6.3 (including as to breaches of the
representations and warranties excluded from the preceding limitation) unless
Buyer shall have received notice of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by Seller on or before the
date three years after the Closing Date.
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(e) All Damages recoverable by an Indemnified Party shall be net of
insurance proceeds and any amounts such Indemnified Party recovers from third
parties. The amount of any Damages may be offset by any actual net Tax savings
realized by the Indemnified Party arising from the incurrence or payment of any
such Damages in the taxable year in which such Damages are incurred or in any
preceding taxable year as a result of the use of net operating loss carrybacks.
In such event, the Indemnified Party shall reimburse the Indemnifying Party the
actual amount of such tax savings realized. In computing the amount of any such
tax benefit, the Indemnified Party shall be deemed to recognize all other income
gain, loss, deduction, or credit before recognizing any item arising from the
incurrence or payment of any indemnified Damages. If the Indemnified Party does
not realize any net Tax savings in the taxable year in which such Damages are
incurred (or in any proceeding taxable year), but will realize a net Tax savings
in a subsequent year, the Damages shall be reduced by the present value of the
net Tax savings expected to be received, determined by discounting the expected
payment by the Prime Rate in effect on the date of the Indemnified Party's
incurrence of the Damages.
(f) Notwithstanding any other provision in this Agreement to the contrary,
neither Seller nor Buyer shall be required to indemnify, hold harmless or
otherwise compensate any Buyer Indemnified Party or Seller Indemnified Party,
respectively, for damage to reputation, lost business opportunities, lost
profits, mental or emotional distress, consequential, incidental, special,
exemplary, punitive or indirect damages, interference with business operations
or diminution in value. For all purposes of this Agreement, the term "Damages"
shall be deemed not to include any such non-reimbursable damages.
(g) Upon any payment of Damages to an Indemnified Party, the Indemnifying
Party shall be subrogated to all rights of the Indemnified Party with respect to
the Damages to which such indemnification relates; provided, however, that the
Indemnifying Party will only be subrogated to the extent of any amount paid by
it pursuant to this Agreement in connection with such Damages.
6.5 Procedure for Indemnification - Third-Party Claims.
--------------------------------------------------
(a) If any party shall claim indemnification hereunder arising from any
claim or demand of a third party, the party seeking indemnification (the
"Indemnified Party") shall notify the party from whom indemnification is sought
(the "Indemnifying Party") in writing of the basis for such claim or demand
setting forth the nature of the claim or demand in reasonable detail. The
failure of the Indemnified Party to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of any indemnification obligation hereunder
except to the extent that the defense of such claim or demand is prejudiced by
the failure to give such notice.
(b) If any Proceeding is brought by a third party against an Indemnified
Party and the Indemnified Party gives notice to the Indemnifying Party pursuant
to Section 6.5(a), the Indemnifying Party shall be entitled to participate in
such Proceeding and, to the extent that it wishes, to assume the defense of such
Proceeding, if (i) the Indemnifying Party provides written notice to the
Indemnified Party that the Indemnifying Party intends to undertake such defense,
(ii) the Indemnifying Party conducts the defense of the third-party claim
actively and diligently with counsel reasonably satisfactory to the Indemnified
Party, and (iii) the Indemnifying Party is a party to the Proceeding, the
Indemnifying Party has not determined in good faith that joint
19
representation would be inappropriate because of a conflict in interest. The
Indemnified Party shall, in its sole discretion, have the right to employ
separate counsel (who may be selected by the Indemnified Party in its sole
discretion) in any such action and to participate in the defense thereof, and
the fees and expenses of such counsel shall be paid by such Indemnified Party.
The Indemnified Party shall fully cooperate with the Indemnifying Party and its
counsel in the defense or compromise of such claim or demand. If the
Indemnifying Party assumes the defense of a Proceeding, no compromise or
settlement of such claims may be effected by the Indemnifying Party without the
Indemnified Party's consent unless (A) there is no finding or admission of any
violation of law or any violation of the rights of any Person by the Indemnified
Party and no material adverse effect on any other claims then pending against
the Indemnified Party and (B) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Party (subject to the deductible set forth
in Section 6.4(a)).
(c) If (i) notice is given to the Indemnifying Party of the commencement
of any third-party Proceeding and the Indemnifying Party does not, within 15
days after the Indemnified Party's notice is given, give notice to the
Indemnified Party of its election to assume the defense of such Proceeding, (ii)
any of the conditions set forth in clauses (i)-(iii) of Section 6.5(b) above
become unsatisfied, or (iii) it is reasonably likely that the Proceeding may
adversely and materially affect the Indemnified Party other than as a result of
monetary damages for which it would be entitled to indemnification from the
Indemnifying Party under this Agreement (subject to the deductible set forth in
Section 6.4(a)), the Indemnified Party shall (upon notice to the Indemnifying
Party) have the right to undertake the defense, compromise or settlement of such
claim; provided that the Indemnifying Party shall remain responsible for any
indemnifiable amounts arising from such third-party claim to the extent provided
in this Article VI. Notwithstanding the provisions of subsection (i) of the
preceding sentence, the Indemnifying Party, after additional investigation into
the Proceeding, may later elect to assume the defense of the Proceeding upon 20
days' notice to the Indemnified Party; provided that both (x) such notice is
provided no later than 180 days after the Indemnified Party's first written
notice to the Indemnifying Party of such Proceeding and (y) the Indemnifying
Party reimburses the Indemnified Party for all out-of-pocket costs expended by
such party in the defense through such date of assumption and, in such event,
the Indemnified Party shall retain its rights as set forth in subsection (ii)
and (iii) of the preceding sentence. The Indemnifying Party may at any time
elect to participate in such Proceedings, negotiations or defense at any time at
its own expense.
6.6 Indemnification Procedure - Direct Claims.
-----------------------------------------
(a) If an Indemnified Party shall claim indemnification hereunder for any
claim other than third-party claims, the Indemnified Party shall notify the
Indemnifying Party in writing of the basis for such claim setting forth the
nature and amount of the Damages resulting from such claim. The Indemnifying
Party shall give written notice of any disagreement with such claim within 30
days following receipt of the Indemnified Party's notice of the claim,
specifying in reasonable detail the nature and extent of such disagreement. If
the Indemnifying Party and the Indemnified Party are unable to resolve any
disagreement within 30 days following receipt by the Indemnified Party of the
notice referred to in the preceding sentence, then the parties hereto agree to
arbitrate any direct claim for Damages less than $1,000,000 (an "Arbitration
Dispute") pursuant to this Section 6.6(a). With respect to any direct claim for
Damages equal to or greater
20
than $1,000,000, arbitration shall not be mandatory hereunder and the parties
shall be free to seek resolution of such dispute in state or federal courts.
(b) With respect to any Arbitration Dispute, either party may commence
arbitration proceedings with the CPR Institute for Arbitration Dispute
Resolution ("CPR") office by filing a demand for arbitration in writing (a
"Demand") with the CPR and by simultaneously sending a copy of the Demand to the
other party. The arbitration proceedings shall be governed by and decided in
accordance with the CPR Rules for Non-Administered Arbitration (the "CPR Rules")
then in effect, unless the parties shall mutually agree otherwise in writing.
Any evidentiary rules not expressly provided by the CPR Rules shall be
determined in accordance with the Federal Rules of Evidence. The arbitration
shall be governed by the U.S. Arbitration Act, 9 U.S.C. ss. 1, et seq. and shall
be administered under the procedures set forth herein.
(c) The arbitration panel to be selected (the "Arbitrators") shall be a
balanced panel, consisting of (i) three independent and impartial arbitrators
selected pursuant to CPR Rule 6.4 in the event the total amount in the
Arbitration Dispute is $1 million or more; or (ii) one independent and impartial
arbitrator selected pursuant to CPR Rule 6.4 in the event the total amount in
the Arbitration Dispute is less than $1 million.
(d) The arbitration shall be conducted in Detroit, Michigan; provided that
the Arbitrator(s) may, for the convenience of the parties and without changing
the site of the arbitration proceeding, permit the taking of evidence outside of
Detroit, Michigan.
(e) The Arbitrator(s) shall permit and facilitate discovery pursuant to
CPR Rule 11, except that for claims involving $1 million or less no depositions
shall be permitted; and for claims involving more than $1 million, each party
shall be limited to two depositions. These limits on depositions shall not be
modified without the written consent of all parties to the arbitration. Within
30 days after selection of a panel, the party filing the demand for arbitration
shall provide copies of all business documents and other evidence in its
possession that support its demand. Within 30 days of receipt of such
information, the receiving party shall produce all business documents and
evidence that support its defense or response. Thereafter, each party shall have
the right to such other discovery procedures as the Arbitrator(s) may determine
to be reasonably necessary for a fair understanding of any legitimate issue
raised in the arbitration. A party's failure to timely disclose documents,
witnesses, expert reports, calculations and other evidence relating to the
Arbitration Dispute shall operate as a bar to the nondisclosing party's use of
such evidence, and, in the Arbitrator's(s') discretion, be a basis for
sanctions, including an award against the nondisclosing party.
(f) It is the intention of the parties hereto that the arbitration
proceeding be completed through the rendering of the award within six months of
the selection of the Arbitrator(s), and each party hereto shall so instruct the
Arbitrator(s) and take such other actions as may be reasonably required to give
effect to such intention. The arbitration hearing shall be no longer than five
consecutive Business Days to be equally divided between the parties. These
timing requirements cannot be modified unless mutually agreed by the parties in
writing. The award of the Arbitrator(s) may be monetary damages, an order
requiring performance of obligations under this Agreement or any other
appropriate award or remedy. Nor may the Arbitrator(s) make any ruling, finding
or award that does not conform to the terms and conditions of this Agreement.
21
Notwithstanding anything to the contrary, the Arbitrator(s) shall not be
authorized or empowered to award punitive, exemplary, consequential or special
damages, and the parties expressly waive any claim to such damages.
(g) The fees and expenses of the Arbitrator shall be shared equally by the
parties and advanced by them from time to time as required; provided, that at
the conclusion of the arbitration, the prevailing party shall be entitled to
recover all attorneys' fees, filing fees, costs, including the costs of the
arbitration previously advanced, expert fees and costs, and related expenses
from the non-prevailing party and such recovery shall be made part of any
judgment or arbitration award.
(h) The final award rendered by the Arbitrator(s) (after any CPR appeal
allowed herein) shall be final and binding upon the parties and judgment may be
entered by any competent court having jurisdiction thereof. In the event of an
arbitration award of Damages less than $500,000 (inclusive of costs, fees and
interest), such award shall not be subject to appeal. In the event the award
exceeds $500,000 (inclusive of any award of costs, fees and interest), an appeal
may be taken under the CPR Arbitration Appeal Procedure from any final award of
an arbitral panel arising out of or related to this Agreement. Such appeal must
conform to the requirements of the CPR Arbitration Appeal Procedure.
Notwithstanding anything to the contrary provided in this paragraph and without
prejudice to the above procedures, any of the parties may apply to any court of
competent jurisdiction for temporary injunctive judicial relief if such action
is necessary to avoid irreparable damage or to preserve the status quo until
such time as the arbitration panel is convened and available to hear such
party's request for temporary relief. The award rendered by the Arbitrator(s),
after any appeal taken pursuant to the foregoing, shall be final and not subject
to judicial review, and judgment thereon may be entered in any court of
competent jurisdiction. The award of the Arbitrator(s) shall be accompanied by a
written explanation of the basis for the award. Any amount owing by any Person
as a result of this Section 6.6 shall be paid within two Business Days after
final determination of such amount.
6.7 Exclusive Remedy. From and after the Closing, the right to
indemnification and other rights under this Article VI shall constitute Buyer's
and Seller's sole and exclusive remedies with respect to any and all claims
arising under or relating to this Agreement, any agreement or document executed
and delivered pursuant to this Agreement, or the transactions contemplated by
this Agreement, except for claims arising out of fraud, willful breach or
failure to satisfy or pay Retained Liabilities. In furtherance of the foregoing,
from and after the Closing, to the fullest extent permitted by law, each of
Buyer and Seller hereby waive, release the other party (and its Affiliates,
employees and agents) from, and covenant not to ▇▇▇ or institute legal
proceedings with respect to, and shall cause any of their Affiliates to waive,
release the other party (and its Affiliates, employees and agents) from, and
covenant not to ▇▇▇ or institute legal proceedings with respect to, any and all
rights, claims and causes of action that they may have against any other party
or its Affiliates in connection with such transactions, except those arising
under this Article VI. Notwithstanding the foregoing, Buyer and Seller
acknowledge that, in the event a party would be irreparably injured by a breach
of a covenant set forth in this Agreement and monetary remedies would be
inadequate to protect a party hereto or its subsidiaries against such breach,
without prejudice to any other rights and remedies otherwise available to the
parties, such party shall be entitled to seek applicable equitable relief from a
court of competent jurisdiction.
22
ARTICLE VII
GENERAL PROVISIONS
7.1 Expenses. Whether or not the transactions contemplated hereby are
consummated, except as otherwise provided herein, each party hereto shall pay
all costs and expenses incurred by such party in connection with this Agreement
and the transactions contemplated hereby, including in each case all fees and
expenses of such party's investment bankers, finders, brokers, agents,
representatives, consultants, counsel and accountants.
7.2 Amendment and Modification. This Agreement may be amended, modified or
supplemented only by an agreement in writing signed by the party against whom
such amendment, modification or supplement is sought to be enforced. Any such
writing must refer specifically to this Agreement.
7.3 Waiver of Compliance; Consents. The rights and remedies of the parties
are cumulative and not alternative and may be exercised concurrently or
separately. No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege shall preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless signed in writing by the other party;
(b) no waiver that may be given by a party shall be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
party shall be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement. Any consent required or
permitted by this Agreement is binding only if in writing.
7.4 Notices. All notices, consents, waivers and other communications
hereunder shall be in writing and shall be (i) delivered by hand, (ii) sent by
facsimile transmission, or (iii) sent by a nationally recognized overnight
delivery service, charges prepaid, to the address set forth below (or such other
address for a party as shall be specified by like notice):
(a) If to Seller, to:
Chinook Global Limited
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇.,
▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ CFO
Copies to:
▇▇▇▇ ▇. ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
23
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇.,
▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attn: J ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Buyer, to:
BCP Ingredients, Inc.
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
President
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
Copies to:
Balchem Corporation
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Each such notice or other communication shall be deemed to have been duly given
and to be effective (i) if delivered by hand, immediately upon delivery if
delivered on a Business Day during normal business hours and, if otherwise, on
the next Business Day; (ii) if sent by facsimile transmission, immediately upon
confirmation that such transmission has been successfully transmitted on a
Business Day before or during normal business hours and, if otherwise, on the
Business Day following such transmission; or (iii) if sent by a nationally
recognized overnight delivery service, on the day of delivery by such service
or, if not a Business Day, on the first Business Day after delivery. Notices and
other communications sent via facsimile must be followed within two Business
Days by notice delivered by hand, nationally recognized delivery services or by
U.S. mail.
7.5 Publicity. The parties shall jointly issue a public announcement of
the transactions contemplated hereby on the Closing Date or a mutually agreed
upon date thereafter. The form and substance of such announcements shall be
approved by the parties, but shall not
24
disclose the Purchase Price or any other specific terms of the Agreement. No
party hereto shall issue any public announcement or similar publicity of the
transactions contemplated by this Agreement without first obtaining the prior
written consent of the other party. Notwithstanding the foregoing, any party may
make any public announcement if such party reasonably determines in good faith,
on the advice of legal counsel, that such public disclosure is required by a
Legal Requirement or stock exchange rules, so long as such party exercises
commercial reasonable efforts to consult with the other party prior to making
such disclosure.
7.6 Assignment; No Third-Party Rights. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any party hereto without the prior written consent of the other
party. This Agreement and its provisions are for the sole benefit of the parties
to this Agreement and their successors and permitted assigns and shall not give
any other Person any legal or equitable right, remedy or claim.
7.7 Governing Law. The execution, interpretation and performance of this
Agreement shall be governed by the internal laws and judicial decisions of the
State of Delaware, without regard to principles of conflicts of laws.
7.8 Jurisdiction; Service of Process. If any party commences a lawsuit or
other proceeding relating to or arising from this Agreement, the parties hereto
agree that the U.S. District Court for the Eastern District of Michigan shall
have sole and exclusive jurisdiction over any such proceeding. If all such
courts lack federal subject matter jurisdiction, the parties agree that the
courts of the State of Michigan in the County of ▇▇▇▇▇ shall have sole and
exclusive jurisdiction. Any of these courts shall be proper venue for any such
lawsuit or judicial proceeding and the parties hereto waive any objection to
such venue. The parties hereto consent to and agree to submit to the
jurisdiction of any of the courts specified herein and agree to accept service
of process to vest personal jurisdiction over them in any of these courts.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
7.9 Further Assurances; Records. Each Party shall cooperate and take such
actions, and execute all such further instruments and documents, at or
subsequent to the Closing, as another party or other parties may reasonably
request in order to convey title to the Purchased Assets to Buyer and otherwise
to effect the terms and purposes of this Agreement. For a period of two years
following the Closing Date, each party shall provide the other party or parties
with access to all relevant documents and other information pertaining to the
Purchased Assets that are needed by such other party or parties for the purposes
of preparing Tax Returns or for any other reasonable purpose.
7.10 Severability. If any provision contained in this Agreement shall for
any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein, unless the
invalidity of any such provision substantially deprives either party of the
practical benefits intended to be conferred by this Agreement. Notwithstanding
the foregoing, any provision of
25
this Agreement held invalid, illegal or unenforceable only in part or degree
shall remain in full force and effect to the extent not held invalid or
unenforceable, and the determination that any provision of this Agreement is
invalid, illegal or unenforceable as applied to particular circumstances shall
not affect the application of such provision to circumstances other than those
as to which it is held invalid, illegal or unenforceable.
7.11 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed on signature pages exchanged by facsimile, in which event each party
shall promptly deliver to the others such number of original executed copies as
the others may reasonably request.
7.12 Entire Agreement. This Agreement, including the exhibits, schedules
and the Disclosure Schedule, constitutes the entire agreement and understanding
of the parties hereto in respect of the subject matter hereof. The exhibits,
schedules and the Disclosure Schedule hereto are an integral part of this
Agreement and are incorporated by reference herein. This Agreement supersedes
all prior agreements, understandings, promises, representations and statements
between the parties and their representatives with respect to the transactions
contemplated by this Agreement.
[The remainder of this page is left blank intentionally.]
26
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BCP INGREDIENTS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------
Name: ▇▇▇▇ ▇ ▇▇▇▇▇
Title: President
CHINOOK GLOBAL LIMITED
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: CFO
27
APPENDIX 1
"Affiliate" means with respect to any Person, each of the Persons that
directly or indirectly, through one or more intermediaries, owns or controls, is
controlled by or is under common control with, such Person. For the purpose of
this Agreement, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" means this agreement, as it may hereafter be amended in
accordance with its terms.
"Arbitration Dispute" has the meaning set forth in Section 6.6(a).
-------------------
"Arbitrators" has the meaning set forth in Section 6.6(c).
-----------
"Assignment and Assumption Agreement" has the meaning set forth in Section
5.10(a)(ii).
"Assumed Contracts" has the meaning set forth in Section 2.1(b)(i).
-----------------
"Assumed Liabilities" has the meaning set forth in Section 2.4(a).
-------------------
"Base Purchase Price" has the meaning set forth in Section 2.3(a).
-------------------
"▇▇▇▇ of Sale" has the meaning set forth in Section 5.10(a)(i).
------------
"Business" has the meaning set forth in the Background Statement.
--------
"Business Contract" means any Contract under which Seller has any rights,
obligations or liabilities relating primarily to the Business and any
outstanding purchase order for the purchase of products by customers of the
Business being transferred pursuant to this Agreement (whether or not such
purchase order constitutes a Contract).
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in Detroit, Michigan are generally closed for business.
"Buyer" has the meaning set forth in the introductory paragraph of this
Agreement.
"Buyer Documents" has the meaning set forth in Section 4.2.
---------------
"Closing" has the meaning set forth in Section 2.6.
-------
"Closing Date" means the date the Closing actually takes place.
------------
"Closing Purchased Inventory Amount" has the meaning set forth in Section
2.3(d).
"Consent Agreement" has the meaning set forth in Section 5.1.
-----------------
"Consent Contracts" has the meaning set forth in Section 2.8.
-----------------
"Contingent Rebates" has the meaning set forth in Section 5.2(b).
------------------
"Contract" means any oral or written, legally binding agreement, contract
or obligation.
"Copyright" means the legal right provided by the Copyright Act of 1976,
as amended, to the expression contained in any work of authorship fixed in any
tangible medium of expression together with any similar rights arising in any
other country as a result of statute or treaty, including without limitation
legal rights provided by the Copyright Act (Canada) as amended.
"CPR" has the meaning set forth in Section 6.6(b).
---
"CPR Rules" has the meaning set forth in Section 6.6(b).
---------
"Damages" means damages, loss, liability, claim, damage, cost or expense
(including reasonable attorneys' fees) whether or not involving a third-party
claim.
"Demand" has the meaning set forth in Section 6.6(b).
------
"Disclosure Schedule" means the Disclosure Schedule delivered to Buyer by
Seller concurrently with the execution of this Agreement.
"Due Diligence Agent" means Ernst & Young LLP, in its capacity as due
diligence agent for the Buyer in connection with the transactions contemplated
herein or in its capacity as independent accountant for purposes of Section
2.3(d)(iii).
"EBITDA" means earnings before interest, foreign exchange gains or losses,
unrealized gains or losses from derivative instruments, gain on redemption of
note payable, income taxes, depreciation and amortization expense and includes
adjustments for certain environmental and legal charges incurred not in the
normal course of business.
"Effective Time" has the meaning set forth in Section 2.6.
--------------
"Equipment Purchase Agreement" has the meaning set forth in Section 5.5.
----------------------------
"Escrow Account" has the meaning set forth in Section 2.3(b).
--------------
"Escrow Agent" means U.S. Bank National Association, in its capacity as
escrow agent for purposes of Section 2.3(a).
"Escrow Agreement" has the meaning set forth in Sections 2.3 and
5.10(b)(i).
"Estimated Purchased Inventory Amount" has the meaning set forth in
Section 2.3(c).
"Excluded Assets" has the meaning set forth in Section 2.2.
---------------
"Excluded Contracts" has the meaning set forth in Section 2.2(l).
------------------
"Facilities" has the meaning set forth in the Background Statement.
----------
2
"GAAP" means generally accepted accounting principles in the United
States, consistently applied.
"Governmental Authority" means any nation or government, any state,
province or other political subdivision thereof, and any municipal, local, city
or county government.
"Governmental Authorization" means any approval, consent, license, permit,
waiver or other authorization issued or granted by or under the authority of any
Governmental Authority.
"Indemnified Party" has the meaning set forth in Section 6.5(a).
-----------------
"Indemnifying Party" has the meaning set forth in Section 6.5(a).
------------------
"Know-How" means ideas, designs, concepts, compilations of information
methods, techniques, procedures and processes, whether or not patentable.
"Legal Requirement" means any binding statute, law, treaty, rule,
regulation, Order, decree or writ of any court or Governmental Authority.
"Liens" means any mortgages, claims, liens, security interests, pledges,
encumbrances, escrows or charges.
"▇▇▇▇" means any word, name, symbol or device used by a Person to identify
its goods or services, whether or not registered, and any right that may exist
to obtain a registration with respect thereto from any Governmental Authority
and any rights arising under any such application. As used in this Agreement,
the term ▇▇▇▇ includes trademarks and service marks.
"Material Contracts" has the meaning set forth in Section 3.10(c).
------------------
"Non-Compete Agreement" has the meaning set forth in Section 5.10(a)(iv).
---------------------
"Non-Contingent Rebates" has the meaning set forth in Section 5.2(a).
----------------------
"Order" means any binding award, decision, injunction, judgment, order,
ruling or verdict entered, issued, made or rendered by any court, administrative
agency, other Governmental Authority or by any arbitrator.
"Patent" means any patent granted by the U.S. Patent and Trademark Office
or by the comparable agency of any other country, and any renewal thereof, and
any rights arising under any patent application filed with the U.S. Patent and
Trademark Office or the comparable agency of any other country and any rights
that may exist to file any such application.
"Permits" has the meaning set forth in Section 3.8(a).
-------
"Permitted Liens" means (i) Liens for Taxes or assessments not yet
delinquent or that are being contested in good faith and by appropriate
proceedings; (ii) Liens imposed by law, such as Liens of carriers, warehousemen,
mechanics, materialmen and landlords, and other similar Liens incurred in the
ordinary course of business consistent with past practices for sums that are not
3
overdue; (iii) security interests granted in connection with the purchase or
leasing of office equipment, computers, vehicles and other items of tangible
personal property; (iv) as to any leased assets or properties, rights of the
lessors thereof; and (v) Liens to be discharged in connection with the Closing.
"Person" means any corporation, association, joint venture, partnership,
limited liability company, unlimited liability company, organization, business,
individual, trust, government or agency or political subdivision thereof or
other legal entity.
"Prime Rate" means the per annum rate of interest from time to time by
Bank of America, N.A. (or, if such bank discontinues its practice of announcing
its prime rate, such other institution approved by Buyer and Seller) as its
prime rate of interest, in effect from time to time.
"Proceeding" means any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal or administrative) commenced,
brought, conducted, or heard by or before any Governmental Authority or
arbitrator.
"Product Inventory" means all inventories of finished goods,
work-in-process, raw materials, and bag, pallets, stretch wrap and other
supplies of the Business.
"Proprietary Rights" means Copyrights, Marks, Trade Secrets, Patents
(including any rights arising out of the Patent applications) and Know-How.
"Purchased Assets" has the meaning set forth in Section 2.1.
----------------
"Purchased Inventory" has the meaning set forth in Section 2.1(a).
-------------------
"Purchased Inventory Escrow Amount" has the meaning set forth in Section
-----------------------------------
2.3(b).
"Purchased Records" has the meaning set forth in Section 2.1(b)(ii).
-----------------
"Purchase Price" has the meaning set forth in Section 2.3(a).
--------------
"Retained Liabilities" has the meaning set forth in Section 2.4(b).
--------------------
"Seller" has the meaning set forth in the introductory paragraph of this
Agreement.
"Seller Accounts Receivable" has the meaning set forth in Section 2.2(d).
--------------------------
"Seller Documents" has the meaning set forth in Section 3.2.
----------------
"Seller's Knowledge" shall mean the actual knowledge, after due inquiry,
of ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"Software" means all types of computer software programs including
operating systems, application programs, software tools, firmware and software
imbedded in equipment, including both object code and source code versions
thereof.
"Statement of EBITDA" has the meaning set forth in Section 3.7.
-------------------
4
"Taxes" means (i) all taxes, charges, fees, levies or other assessments
(whether federal, state, provincial, municipal, local or foreign), including
income, gross receipts, excise, property, sales, use, transfer, license,
payroll, franchise, ad valorem, withholding, Social Security, Canada Pension
Plan Employment Insurance, health and unemployment taxes and (ii) any interest,
penalties and additions related to the foregoing.
"Tax Return" means any report or return required to be supplied to a
taxing authority in connection with the Taxes.
"Tolling Agreement" has the meaning set forth in Section 5.10(a)(iii).
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"Trade Secrets" means business or technical information of any Person
including, but not limited to, customer lists and Know-How, that is not
generally known to other Persons who are not subject to an obligation of
nondisclosure and that derives actual or potential commercial value from not
being generally known to other Persons.
"Transferred Employee" has the meaning set forth in Section 5.4.
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"Transition Services Agreement" has the meaning set forth in Section
5.10(a)(v).
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