EXHIBIT 2.7
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of December 8, 1998, by and among Chr.
Xxxxxx, Inc., a Wisconsin corporation ("Buyer"), Ingredient Technology
Corporation, a Delaware corporation (the "Company"), and Crompton & Xxxxxxx
Corporation, a Massachusetts corporation ("Seller").
WHEREAS, pursuant to the terms and subject to the conditions of this
Agreement, Buyer wishes to acquire all of the capital stock of the Company;
WHEREAS, Seller, being the holder, directly or indirectly, of all of the
Shares of the Company, wishes to sell the Shares to Buyer;
WHEREAS, the purchase and sale of the Shares of the Company (the
"Acquisition") has been approved by the Board of Directors of Buyer as being
in the best interests of Buyer and its equityholders;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and
subject to the conditions and other terms herein set forth, the parties hereto
hereby agree as follows:
ARTICLE 1A
For all purposes of this Agreement, the following terms shall have the
respective meanings set forth in this Article 1.A (such definitions to be
equally applicable to both the singular and plural forms of the terms herein
defined):
"Acquisition Proposal" shall have the meaning set forth in Section 5.11.
"Act" shall have the meaning set forth in Section 3.10.
"Additional Indemnity Taxes" shall have the meaning set forth in Section
9.7(a)
"Affiliate" shall mean any individual, partnership, corporation, entity or
other person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with the Person
specified. The term "control" shall mean the power, directly or indirectly,
to: (i) vote 10% or more of the securities which have ordinary voting power
in the election of Directors (or individuals filling any analogous position)
of any Person; or (ii) direct or cause the direction of the management and
policies of any Person, whether by contract or otherwise.
"Affiliated Group" shall have the meaning set forth in Section 8.2(a).
"Aging Schedule" shall have the meaning set forth in Section 3.9.
"Agreement" shall mean this Stock Purchase Agreement among Seller, the Company
and Buyer as such may hereafter be amended.
"Annual Financial Statements" shall have the meaning set forth in Section 3.6.
"Applicable Law" or "Law" shall mean any domestic or foreign federal, state or
local statute, law, ordinance, rule, administrative interpretation,
regulation, order, writ, injunction, directive, judgment, decree, policy,
guideline or other requirement (including those of any self-regulatory
organization), each as amended through the date hereof, applicable to Seller,
the Company, Buyer or any of their respective Affiliates, properties, assets,
officers, directors, employees or agents, as the case may be.
"Authorizations" shall have the meeting set forth in Section 3.2.
"Book Value Adjustment" shall mean the amount (positive or negative) equal to
(x) the Net Book Value of the Company as of the close of business on the last
Business Day of the month last preceding the month in which the Closing Date
occurs minus (y) an amount equal to $52,052,000.
"Business Day" shall mean any day that the NYSE is normally open for trading
and that is not a Saturday, a Sunday or a day on which banks in the State of
New Jersey are generally closed for regular banking business.
"Buyer" has the meaning set forth on the first page hereof and includes any
direct or indirect successor or assign.
"Buyer Disclosure Schedule" shall have the meaning set forth in Section 4.A.
"Buyer Material Adverse Effect" shall mean, with respect to any matter or
matters (individually or in the aggregate) affecting Buyer or any of its
Affiliates, a material adverse effect on (x) the business, assets, financial
condition or results of operations of Buyer and its Subsidiaries taken as a
whole or (y) the ability of Buyer to complete the Closing, in each case, other
than any change, effect, event or occurrence relating to (i) the United States
economy in general, (ii) this Agreement or the transactions contemplated
hereby or the announcement thereof, (iii) changes in legal or regulatory
conditions that affect in general the businesses in which Buyer and its
Subsidiaries are engaged or (iv) the industry or industries in which Buyer and
its Subsidiaries operate in general, and not specifically relating to Buyer or
its Subsidiaries.
"Canadian Subsidiary" shall have the meaning set forth in Section 5.12.
"Closing" shall have the meaning set forth in Section 1.2.
"Closing Date" shall have the meaning set forth in Section 1.2.
"Closing Price Documents" shall have the meaning set forth in Section 2.2(a).
"Closing Inventory Count" shall have the meaning set forth in Section 2.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth on the first page hereof.
"Company Disclosure Schedule" shall have the meaning set forth in Section 3.A.
"Company Financial Statements" shall have the meaning set forth in Section
3.6.
"Company Material Adverse Effect" shall mean, with respect to any matter or
matters (individually or in the aggregate) affecting the Company or any of its
Affiliates, a material adverse effect (the parties hereby agreeing that
aggregate Losses incurred or reasonably likely to be incurred in excess of $5
million shall be deemed a material adverse effect for purposes of this
definition) on (x) the business, assets, financial condition or results of
operations of the Company and its Subsidiaries taken as a whole or (y) the
ability of Seller or the Company to complete the Closing, in each case, other
than any change, effect, event or occurrence relating to (i) the United States
economy in general, (ii) this Agreement or the transactions contemplated
hereby or the announcement thereof, (iii) changes in legal or regulatory
conditions that affect in general the businesses in which the Company and its
Subsidiaries are engaged or (iv) the industry or industries in which the
Company and its Subsidiaries operate in general, and not specifically relating
to the Company or its Subsidiaries.
"Company Subsidiary" shall mean, each corporation, limited liability company,
partnership, joint venture or other Person in which the Company, directly or
indirectly, owns any capital stock, equity interest or other ownership or
investment interest.
"Confidentiality Agreement" shall mean that certain letter agreement relating
to confidential information provided by Seller and the Company to Buyer and
its Affiliates.
"Contracts" has the meaning set forth in Section 3.14.
"Covered Lease" shall mean that certain lease relating to the Real Estate
located in Mohwah, New Jersey.
"Covered Litigation" shall mean any Proceeding pending against the Company
and/or any Company Subsidiary as of the date hereof, including, without
limitation, those Proceedings listed in Section 3.22(a) of the Company
Disclosure Schedule.
"Disagreement" shall have the meaning set forth in Section 2.2(b).
"Encumbrance" shall have the meaning set forth in Section 3.2.
"Environmental Authorizations" shall have the meaning set forth in Section
3.18(c).
"Environmental Laws" shall have the meaning set forth in Section 3.18(a).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules, regulations and class exemptions of the Department of
Labor thereunder.
"Estimated Purchase Consideration" shall mean a bona fide estimate of the
Purchase Consideration, which estimate shall be computed in accordance with
the definitions contained in this Article 1.A, provided that in computing the
Estimated Purchase Consideration, the Book Value Adjustment shall be
reasonably estimated by Seller and the Company, subject to the reasonable
approval of Buyer.
"French Subsidiary" shall have the meaning set forth in Section 5.12.
"GAAP" shall mean generally accepted accounting principles as used in the
United States of America as in effect at the time any applicable financial
statements were prepared or any act requiring the application of GAAP was
performed; provided, however, that with respect to the preparation of any
financial statement or other application of GAAP on or after December 31, 1997
(including for purposes of determining the Estimated Purchase Consideration
and Purchase Consideration hereunder) such principles shall be applied on a
basis consistent with the preparation of the Company's Annual Financial
Statements for the 1997 fiscal year referred to in Section 3.6 hereof.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including the SEC or any other government authority, agency,
department, board, commission or instrumentality of the United States, any
State of the United States or any political subdivision thereof, and any
court, tribunal or arbitrator(s) of competent jurisdiction, and any
governmental or non-governmental self-regulatory organization, agency or
authority.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" shall have the meaning set forth in Section 9.4(a).
"Indemnifying Party" shall have the meaning set forth in Section 9.4(a).
"Independent Accounting Firm" shall mean such reputable national accounting
firm mutually agreed to by Buyer and Seller (which agreement shall not be
unreasonably withheld by either party), other than any accounting firm that
has performed services for Buyer, Seller or the Company or any of their
Affiliates during the past five years.
"Intellectual Property" shall have the meaning set forth in Section 3.13(a).
"Interim Balance Sheet" shall have the meaning set forth in Section 3.6.
"Interim Statements" shall have the meaning set forth in Section 3.6.
"IRS" shall mean the Internal Revenue Service, and any successor thereto.
"Loss" shall mean any and all claims, losses, liabilities, costs, penalties,
fines and expenses (including reasonable expenses for attorneys, accountants,
consultants and experts), damages, obligations to third parties, expenditures,
proceedings, judgments, awards, settlements or demands that are imposed upon
or otherwise incurred, suffered or sustained by the relevant party. For
purposes of the indemnifications set forth in Sections 9.1(e) and 9.1(h)
hereof, Losses shall include, without limitation, fines and penalties imposed
as a result of violations of Environmental Laws, costs of obtaining permits
and approvals required by Environmental Laws, costs of preparing such permit
and approval applications, costs of preparing contingency, emergency response,
containment and other plans required by Environmental Laws, costs of
investigation, clean-up and/or remediation required by Environmental Laws, and
costs and expenses, including capital expenditures, required to comply with
Environmental Laws and any permits, approvals or plans required to be prepared
or approved under Environmental Laws.
"Material Contract" shall mean any Contract involving aggregate consideration
in excess of $100,000 payable by or to any party to such Contract and/or
performance over a period in excess of six months.
"Net Book Value" shall mean consolidated stockholders' equity of the Company
as determined in accordance with GAAP consistently applied, except to the
extent otherwise provided on Schedule I attached hereto.
"Notice of Disagreement" shall have the meaning set forth in Section 2.2(b).
"Notified Party" shall have the meaning set forth in Section 7.1.
"Notifying Party" shall have the meaning set forth in Section 7.1.
"NYSE" shall mean the New York Stock Exchange, Inc., and any successor
thereto.
"Order" shall have the meaning set forth in Section 3.18(b).
"Person" shall mean any individual, corporation, company, partnership (limited
or general), joint venture, association, trust, limited liability company,
Governmental Authority or other organization or entity.
"Plan" has the meaning set forth in Section 3.17(a).
"Post-Closing Tax Period" shall have the meaning set forth in Section 8.2(b).
"Pre-Closing Tax Period" has the meaning set forth in Section 8.2(a).
"Premium Increase" shall have the meaning set forth in Section 9.7(b).
"Prime Rate" shall mean the prime rate (currently the base rate on corporate
loans posted by at least 75% of the 30 largest U.S. banks) as reported from
time to time in The Wall Street Journal (or if not then reported therein, such
other reputable comparable source).
"Proceeding" shall have the meaning set forth in Section 3.15(d).
"Purchase Consideration" shall mean an amount in cash equal to (x)
$103,000,000, plus (y) the Book Value Adjustment.
"Real Estate" shall have the meaning set forth in Section 3.12(a), except that
for purposes of Sections 3.18, 9.1(e) and 9.1(h), "Real Estate" shall also
include each parcel of real property that was previously, but is no longer,
owned or used by the Company and/or any Company Subsidiary or in which the
Company or any Company Subsidiary previously had, but no longer has, a
leasehold or other interest.
"Records" shall mean all records and original documents (and copies thereof)
in the possession of the Company or its Affiliates as of the Closing Date (a)
which pertain to or are utilized by the Company to administer, reflect,
monitor, evidence or record information respecting the business or conduct of
the Company, or (b) necessary or appropriate to comply with any Applicable
Law, and shall include in the case of (a) and (b) above all such records
maintained on electronic or magnetic media, or in the electronic data base
system of the Company.
"Related Party" shall have the meaning set forth in Section 3.29
"Release" shall have the meaning set forth in Section 3.18(d).
"Regulatory Documents" shall mean, with respect to a Person, all
forms, reports, registration statements, schedules and other
documents filed, or required to be filed, with any Governmental
Authority by such Person pursuant to Applicable Law.
"Right" shall mean any option, warrant, convertible or exchangeable security,
right, subscription, call, legally binding commitment, unsatisfied preemptive
right or other agreement or right of any kind to purchase or otherwise acquire
from the specified Person any capital stock thereof, whether issued and
outstanding, authorized but unissued or treasury shares.
"SEC" shall mean the Securities and Exchange Commission, and any successor
thereto.
"Securities" shall mean any security as defined in the Securities
Act.
"Seller" has the meaning set forth on the first page hereof and includes any
direct or indirect successor or assign.
"Shares" shall have the meaning set forth in Section 3.4.
"Subsidiary" of a Person shall mean any Person 50% or more of the voting stock
(or of any other form of general partnership or other voting or controlling
equity interest in the case of a Person that is not a corporation) of which is
beneficially owned by the Person directly or indirectly through one or more
other Persons.
"Supplemental Closing" shall have the meaning set forth in Section 2.2(d).
"Supplemental Closing Date" shall have the meaning set forth in Section
2.2(d).
"Tax Benefit" shall mean a Tax deduction, Tax credit or other Tax benefit.
"Tax Return" shall mean any return, report, information statement, schedule or
other document (including any related or supporting information and including
any Form 1099 or other document or report required to be provided by the
Company to third parties) with respect to Taxes, including any document
required to be retained or provided to any Governmental Authority pursuant to
31 U.S.C. Sections 5311-5328 and regulations promulgated thereunder, relating
to the Company or any consolidated group of which any such entity was a member
at the applicable time, and any amended Tax Returns.
"Tax" or "Taxes" shall have the meaning set forth in Section 3.15(a).
"Tax Liens" shall have the meaning set forth in Section 3.8.
"Third Party Claim" shall have the meaning set forth in Section 9.4(a).
"Title or Authority Warranty" shall have the meaning set forth in Section
9.3(d).
"Treasury Regulations" shall mean regulations promulgated under the Code.
"Wire Transfer" shall mean a payment in immediately available funds by wire
transfer in lawful money of the United States of America to such account or to
a number of accounts as shall have been designated to the paying party in
writing by the party to receive payment.
ARTICLE I
THE ACQUISITION
1.1. General. Upon the terms and subject to the conditions hereof, Seller
agrees to sell, transfer, assign, convey and deliver to Buyer (or at Buyer's
election, an Affiliate of Buyer), and Buyer (or at Buyer's election, an
Affiliate of Buyer) agrees to purchase, redeem and accept from Seller, the
Shares for the Purchase Consideration.
1.2. Closing. The consummation of the Acquisition as contemplated by this
Agreement (the "Closing") shall take place at the offices of Wachtell, Lipton,
Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m.,
local time, on the later of January 15, 1999 or the fifth Business Day after
all of the conditions set forth in Article VI hereof (other than conditions
which relate to actions to be taken at the Closing) have been satisfied or
waived, or at such other date, time and place as Buyer and Seller shall agree
(the date on which the Closing takes place being referred to herein as the
"Closing Date").
1.3. Instruments of Transfer; Payment of Purchase Consideration.
(a) Not less than two Business Days prior to the Closing Date, Seller
shall deliver to Buyer Wire Transfer instructions designating the account(s)
to which the Estimated Purchase Consideration shall be paid by Buyer at the
Closing.
(b) At the Closing, Seller shall deliver, or shall cause to be delivered,
to Buyer the following:
(1) one or more certificates representing all of the Shares duly executed
in blank or accompanied by stock powers duly executed in blank, in proper form
for transfer, with all appropriate stock transfer tax stamps affixed;
(2) a certificate of the Secretary of State of the State of Delaware as to
the good standing of the Company dated as of a date not earlier than 10 days
prior to the Closing Date, together with a copy of the Certificate of
Incorporation, as amended, of the Company certified by the Secretary of State
of the State of Delaware;
(3) the documents required to be delivered pursuant to Section 6.2;
(4) resignations of the officers and directors of the Company and the
Company Subsidiaries and each person who is a trustee, custodian or authorized
signatory under any Plan which covers employees of the Company and/or the
Company Subsidiaries exclusively, effective as of the Closing Date, except as
Buyer shall direct in writing to the contrary;
(5) resignations of the signatories of the bank and other depository
accounts and safe deposit boxes of the Company and the Company Subsidiaries;
(6) a general release in the form of Exhibit 1.3(b)(6);
(7) possession of all Records and all pass books, keys, articles,
passwords or codes required for access to the Company, the Company
Subsidiaries, their business, properties and assets and/or the Real Estate,
and the combinations for all safes, vaults and other places of safe keeping or
storage of the Company and the Company Subsidiaries, in each case, in the
possession of Seller or any of its Affiliates as of the Closing Date;
(8) one or more Supply Agreements, executed by Seller, in the form(s)
negotiated pursuant to Section 5.14 and with the terms set forth in Exhibit
5.14 hereto; and
(9) A supplement to the Company Disclosure Schedule updating same as of
the Closing Date.
(c) At the Closing, Buyer shall deliver, or shall cause to be delivered,
to Seller the following:
(1) an amount cash equal to the Estimated Purchase Consideration by Wire
Transfer to the designated account(s); and
(2) the documents required to be delivered pursuant to Section 6.3.
ARTICLE II
POST-CLOSING ADJUSTMENT
2.1. Closing Inventory. As soon as practicable after the Closing Date
and, in any event, within 30 days thereafter, Buyer and Seller shall take a
physical count of the inventory of the Company and its Subsidiaries to
determine the inventory of the Company and its Subsidiaries as of the close of
business on the last Business Day of the month last preceding the month in
which the Closing Date occurs (the "Closing Inventory Count"). As soon as
practicable after the date hereof, Buyer and Seller shall agree on the
procedures to be used in taking the Closing Inventory Count. The parties
anticipate that Buyer and Seller may begin taking the Closing Inventory Count
before the Closing. Except as the parties may otherwise agree, the Closing
Inventory Count shall be made jointly by representatives of each party unless
the Buyer declines to send a representative to any location, in which event
the count at such location shall be made by Seller and the Seller's count
shall be final and binding on the Buyer. The Company's inventory, as
reflected in the Closing Price Documents, shall be based on the Closing
Inventory Count.
2.2. Supplemental Closing.
(a) As soon as reasonably practicable following the Closing Date, and in
no event more than thirty Business Days thereafter, Buyer and the Company
shall prepare and deliver to Seller schedules calculating the amount of the
Book Value Adjustment and setting forth such calculations (including
calculation of the Net Book Value) in reasonable detail (collectively, the
"Closing Price Documents"). The parties shall consult with one another and
cooperate in the preparation and review of the Closing Price Documents in
accordance with this Section 2.2, including, without limitation, providing
access to such working papers and information relating to the preparation
thereof as reasonably requested by the other party.
(b) Within twenty Business Days after delivery of the Closing Price
Documents to Seller, Seller may dispute all or any portion of the Closing
Price Documents by giving written notice (a "Notice of Disagreement") to Buyer
setting forth in reasonable detail the basis for any such dispute (any such
dispute being hereinafter called a "Disagreement"). The parties shall
promptly commence good faith negotiations with a view to resolving all such
Disagreements. If Seller does not give such a Notice of a Disagreement within
the twenty-Business-Day period set forth in this paragraph (b), Seller shall
be deemed to have accepted such Closing Price Documents in the form delivered
to Seller by Buyer.
(c) If Seller shall deliver a Notice of Disagreement and Buyer shall not
dispute all or any portion of such Notice of Disagreement by giving written
notice to Seller setting forth in reasonable detail the basis for such dispute
within twenty Business Days following the delivery of such Notice of
Disagreement, Buyer shall be deemed to have irrevocably accepted the Closing
Price Documents as modified in the manner described in the Notice of
Disagreement. If Buyer disputes all or any portion of the Notice of
Disagreement within the twenty-Business-Day period described in the previous
sentence, and within twenty Business Days following the delivery to Seller of
the notice of such dispute Seller and Buyer do not resolve the Disagreement
(as evidenced by a written agreement among the Buyer, the Company and Seller),
such Disagreement shall thereafter be referred by either Buyer or Seller to an
Independent Accounting Firm for a resolution of such Disagreement in
accordance with the terms of this Agreement. The determinations of such firm
with respect to any Disagreement shall be rendered within twenty Business Days
after referral of the Disagreement to such firm or as soon thereafter as
reasonably possible, shall be final and binding upon the parties, the amount
so determined shall be used to complete the final Closing Price Documents and
the parties agree that the procedures set forth in this Section 2.2 shall be
the sole and exclusive remedy with respect to the determination of the Book
Value Adjustment. Buyer and Seller shall use their reasonable best efforts to
cause the Independent Accounting Firm to render its determination within the
twenty-Business-Day period described in the previous sentence, and each shall
cooperate with such firm and provide such firm with access to the books,
records, personnel and representatives of it and such other information as
such firm may require in order to render its determination. All of the fees
and expenses of any Independent Accounting Firm retained pursuant to this
paragraph (c) shall be shared equally by Buyer and Seller. Seller and Buyer
shall execute such engagement letters and other agreements in connection with
the engagement of the Independent Accounting Firm as such firm may reasonably
request.
(d) Promptly after the Closing Price Documents have been finally
determined in accordance with paragraphs (a), (b) and (c) of this Section 2.2
(including by means of a deemed acceptance of such documents by Seller or by
Buyer as provided in paragraphs (b) and (c), respectively), but in no event
later than five Business Days following such final determination (the
"Supplemental Closing Date"), the parties hereto shall hold a supplemental
closing (the "Supplemental Closing"), either by telephone or in person at a
mutually convenient location. If the Purchase Consideration is greater than
the Estimated Purchase Consideration, Buyer shall deliver, or shall cause to
be delivered, to Seller on the Supplemental Closing Date an amount in cash
equal to the difference in the manner (by check or Wire Transfer) set forth in
written payment instructions delivered by Seller to Buyer at least one
Business Day prior to the Supplemental Closing Date. If the Purchase
Consideration is less than the Estimated Purchase Consideration, Seller shall
deliver to Buyer on the Supplemental Closing Date an amount in cash equal to
the difference in the manner (by check or Wire Transfer) set forth in written
payment instructions delivered by Buyer to Seller at least one Business Day
prior to the Supplemental Closing Date. In any case, the amount payable at
the Supplemental Closing shall be accompanied by interest thereon calculated
at the Prime Rate for the period from the Closing Date up to but not including
the Supplemental Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY
3.A. Disclosure Schedule. On or prior to the date hereof, Seller and the
Company have delivered to Buyer a schedule (the "Company Disclosure Schedule")
setting forth, among other things, items the disclosure of which is necessary
or appropriate either in response to an express disclosure requirement
contained in a provision hereof or as an exception to one or more
representations or warranties contained in this Article III or to one or more
of the covenants contained in Article V or in Article X. The mere inclusion
of an item in the Company Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by Seller or the
Company that such item represents a material exception or fact, event or
circumstance or that such item is reasonably likely to result in a Company
Material Adverse Effect. The Company Disclosure Schedule is arranged in
sections and paragraphs corresponding to the sections and paragraphs contained
herein. A fact or matter disclosed in the Company Disclosure Schedule with
respect to one section or paragraph shall be deemed to be disclosed with
respect to each other section and paragraph of this Agreement where such
disclosure is appropriate if, but only if, the relevance of the disclosure to
such other section or paragraph is readily apparent. Notwithstanding the
foregoing, a fact or matter shall be deemed to be disclosed as an exception to
the representations and warranties in Section 3.4 only if it is disclosed in
Section 3.4 of the Company Disclosure Schedule. Seller shall be permitted to
supplement in writing the Company Disclosure Schedule from time to time
following the date hereof by delivery of such supplements to Buyer in the
manner provided under Section 11.5, provided that such supplements shall not
be considered in determining the satisfaction of the conditions set forth in
Sections 6.2(a), 6.2(b) and 6.2(c) hereof. Subject to the provisions of
Section 9.3(d) hereof, the representations and warranties set forth in this
Article III and the covenants set forth in Article V shall survive the Closing
notwithstanding any investigation made by or information furnished to Buyer in
connection herewith.
3.B. Representations and Warranties of Seller and the Company. Subject to
the foregoing and except as set forth in the Company Disclosure Schedule, each
of Seller and the Company hereby represents and warrants to Buyer as of the
date of this Agreement as follows:
3.1. Authority of Seller. Seller has full corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby by Seller have been duly
and validly authorized by all necessary corporate action on the part of
Seller. This Agreement has been, and each other agreement and document to be
executed and delivered pursuant hereto by Seller will be, duly and validly
executed and delivered by Seller, and this Agreement constitutes (assuming due
authorization, execution and delivery by Buyer), and, when executed and
delivered, such ancillary documents will constitute (assuming due
authorization, execution and delivery by the other parties thereto), the
legal, valid and binding obligations of Seller enforceable against Seller in
accordance with their respective terms, except as the enforceability thereof
may be subject to or limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws relating to or affecting the rights of creditors
generally and general principles of equity, regardless of whether applied in
proceedings at law or in equity.
3.2. No Violation. Neither the execution, delivery and performance
hereof, nor the consummation of the transactions contemplated hereby, nor
compliance with any of the provisions hereof, by Seller, will: (i) conflict
with, breach or violate, or result in a conflict with, or breach or violation
of, or a default under, or give rise to any right of termination, cancellation
or acceleration with respect to (A) Seller's, the Company's and/or any Company
Subsidiary's Certificate of Incorporation or By-Laws; (B) any approval,
consent, license, franchise, permit, order, waiver, certificate, registration
or authorization of any kind whatsoever (collectively, "Authorizations"),
agreement, instrument, other document or obligation to which Seller, the
Company and/or any Company Subsidiary is a party or by which Seller, the
Company, any Company Subsidiary, the Shares and/or any of Seller's, the
Company's and/or any Company Subsidiaries' properties or assets are bound; (C)
any Law applicable to Seller, the Company, any Company Subsidiary, the Shares
and/or any of Seller's, the Company's and/or any Company Subsidiary's
properties or assets; or (ii) result in the creation or imposition of any
lien, security interest, claim, charge, condition, equitable interest, pledge,
option, right of first refusal or encumbrance of any kind whatsoever,
including any restriction on use, voting, transfer or other disposition,
receipt of income or exercise of any other attribute of ownership
(collectively, "Encumbrances") upon the Shares or any of the properties or
assets of the Company and/or any Company Subsidiary. Except for the approvals
set forth in Section 3.2 of the Company Disclosure Schedule, no Authorization
or other action of, or registration, declaration, recording or filing with,
any Governmental Authority or other Person is required in connection with the
execution and delivery of this Agreement and/or any other agreement or
document to be executed and delivered pursuant hereto by Seller and/or the
consummation by Seller of the transactions contemplated hereby and/or thereby.
3.3. Organization and Standing of the Company. The Company is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Delaware. The Company has the full power and authority
to own or lease its properties and assets and to carry on all business
activities now conducted by it. The Company is duly qualified and in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or holding of its properties or assets makes such
qualification necessary. Section 3.3 of the Company Disclosure Schedule lists
each jurisdiction in which the Company is qualified to do business as a
foreign corporation as of the date hereof. The Company's Certificate of
Incorporation and By-Laws (true, correct and complete copies of which have
been made available to Buyer) are in full force and effect without amendment
or modification. The stock transfer and minute books of the Company (true,
correct and complete copies of which have been made available for inspection
by Buyer and its representatives) are correct and complete. Since December
31, 1993, except as set forth in Section 3.3 of the Company Disclosure
Schedule, the Company has not merged or consolidated with any other person or
acquired any business or line of business, whether by means of a stock or
asset purchase, merger, consolidation or otherwise.
3.4. Capitalization. The entire authorized capital stock of the Company
consists of 1000 shares of Common Stock, $1.00 par value, of which 10 shares
(the "Shares") are duly authorized and validly issued and outstanding. The
Shares constitute all of the issued and outstanding shares of capital stock of
the Company of whatever class, series or designation. All of the Shares are
fully paid and nonassessable. None of the Shares have been issued in
violation of, or are subject to, any preemptive or subscription rights. All
of the Shares have been issued in full compliance with all applicable federal
and state securities laws or in accordance with exemptions therefrom. There
are no outstanding warrants, options, subscriptions, convertible or
exchangeable securities or other agreements, instruments, documents or
commitments pursuant to which the Company is or may become obligated to issue,
sell, purchase, retire or redeem any shares of capital stock or other
securities of the Company. The Seller owns, directly or indirectly through
one or more Subsidiaries, the Shares and will transfer them, or cause them to
be transferred, to the Buyer at Closing free and clear of all Encumbrances.
3.5. Company Subsidiaries. Section 3.5 of the Company Disclosure Schedule
lists each Company Subsidiary (other than the Canadian Subsidiary and the
French Subsidiary). Each of the Company Subsidiaries is duly organized and
validly existing and in good standing under the Laws of the jurisdiction of
its organization. Each of the Company Subsidiaries has the full power and
authority to own or lease its properties and assets and to carry on all
business activities now conducted by it. Each of the Company Subsidiaries is
duly qualified and in good standing in each jurisdiction in which the nature
of its business or the ownership, leasing or holding of its properties or
assets makes such qualification necessary. In the case of each of the Company
Subsidiaries (other than the Canadian Subsidiary and the French Subsidiary),
Section 3.5 of the Company Disclosure Schedule lists each jurisdiction in
which such Company Subsidiary (other than the Canadian Subsidiary and the
French Subsidiary) is qualified to do business as a foreign corporation as of
the date hereof. The Certificate of Incorporation and By-Laws (true, correct
and complete copies of which have been made available to Buyer) of each
Company Subsidiary are in full force and effect without amendment or
modification. The stock transfer and minute books of each Company Subsidiary
(true, correct and complete copies of which have been made available for
inspection by Buyer and its representatives) are correct and complete. Since
December 31, 1993, except as set forth in Section 3.5 of the Company
Disclosure Schedule, none of the Company Subsidiaries has merged or
consolidated with any other person or acquired any business or line of
business, whether by means of a stock or asset purchase, merger, consolidation
or otherwise. In the case of each Company Subsidiary (other than the Canadian
Subsidiary and the French Subsidiary), Section 3.5 of the Company Disclosure
Schedule sets forth a true, correct and complete summary of the capitalization
of such Company Subsidiary. The outstanding capital stock, equity interest or
other ownership or investment interests of each Company Subsidiary are fully
paid and nonassessible, have not been issued in violation of, and are not
subject to, any preemptive or subscription rights, and have been issued in
full compliance with all applicable federal and state securities laws or in
accordance with exemptions therefrom. There are no outstanding warrants,
options, subscriptions, convertible or exchangeable securities or other
agreements, instruments, documents or commitments pursuant to which any
Company Subsidiary is or may become obligated to issue, sell, purchase, retire
or redeem any capital stock, equity interest or other ownership or investment
interest except as set forth in Section 3.5 of the Company Disclosure
Schedule.
3.6. Financial Statements. Section 3.6 of the Company Disclosure Schedule
sets forth the following consolidated financial statements of the Company (the
"Company Financial Statements"): (i) consolidated balance sheets of the
Company as of fiscal year end 1994, 1995, 1996 and 1997 and statements of
results of operations for the years then ended (the "Annual Financial
Statements"); and (ii) unaudited consolidated balance sheets of the Company as
of October 25, 1997 and October 24, 1998 (such October 24, 1998 consolidated
balance sheet being referred to herein as the "Interim Balance Sheet") and
statements of results of operations for the ten (10) months then ended (such
statements of results of operations for the ten (10) months ended October 24,
1998 being referred to herein as the "Interim Statements"). The Company
Financial Statements are true and correct in all material respects, have been
prepared in accordance with the books and records of the Company and the
Company Subsidiaries, fairly present the financial condition and results of
operations of the Company and the Company Subsidiaries as of the dates and for
the periods indicated, and, subject to customary year-end adjustments and the
absence of footnotes, have been prepared in accordance with GAAP applied on a
basis consistent throughout the periods reflected therein.
3.7. Use of Assets. The Company and the Company Subsidiaries own, have
valid leasehold interests in, or hold under valid licenses or right of use to,
all of the property and assets, personal and real, tangible or intangible,
used by the Company and/or the Company Subsidiaries in connection with the
conduct of their business as presently conducted. The properties and assets
of the Company and the Company Subsidiaries are sufficient for the operation
of their current business in the ordinary course and are suitable for the
respective purposes for which they are currently being used. Except for
inventory in transit to or from customers or suppliers, inventory maintained
in third party warehouses or other facilities, and vehicles in the possession
of employees, all of the tangible personal property owned or leased by the
Company and the Company Subsidiaries is currently in their possession.
3.8. Ownership of Assets. The Company and the Company Subsidiaries have
good title to all of their owned properties and assets, including the assets
reflected on the Interim Balance Sheet and assets acquired after the periods
reflected in the Interim Balance Sheet (except for assets sold in the ordinary
course of business consistent with past practice). None of such property is
subject to any Encumbrances, except for: (i) Encumbrances listed in Section
3.8 of the Disclosure Statement; (ii) statutory liens for real and personal
property Taxes not yet delinquent or due and payable ("Tax Liens"); and (iii)
Encumbrances which do not detract from the value or interfere with the use or
marketability of the property affected thereby (it being understood that any
Encumbrance securing any obligation to pay monies shall be deemed to affect
marketability) (collectively, the Encumbrances excepted pursuant to clauses
(i), (ii) and (iii) above being referred to herein as "Permitted
Encumbrances").
3.9. Accounts Receivable. All accounts, notes and claims receivable of
the Company and the Company Subsidiaries, as reflected on the Interim Balance
Sheet, represent, and all accounts, notes and claims receivable of the Company
and the Company Subsidiaries as reflected in the Closing Price Documents will
represent, valid claims against the obligors thereof which arose in the
ordinary course of business. A correct and complete aging schedule of the
trade account receivables of the Company and the Company Subsidiaries dated as
of the date of the Interim Balance Sheet has been made available to the Buyer
(the "Aging Schedule").
3.10. Inventory. The inventory maintained by the Company and the Company
Subsidiaries complies in all material respects with the Federal Food, Drug and
Cosmetics Act (the "Act") and acts amending or supplementing the Act and the
pure food and drug laws of all states in the United States and the laws of all
countries into which products of the Company and the Company Subsidiaries
would normally be shipped by the Company or the Company Subsidiaries, in each
case, to the extent applicable. No inventory maintained by the Company or any
Company Subsidiary is: (i) adulterated or misbranded within the meaning of the
Act or such laws; (ii) prohibited from introduction into interstate commerce
under the provisions of Section 404 or 505 of the Act; or (iii) contains a
misbranded hazardous substance or banned hazardous substance. Section 3.10 of
the Company Disclosure Schedule lists each warehouse or other facility where
the Company or any Company Subsidiary maintains inventory. The current
inventories of the Company and the Company Subsidiaries are useable and, in
the case of finished goods inventories, salable in the ordinary course of
business and stored in compliance with applicable Law, in each case other than
as reserved against on the Interim Balance Sheet.
3.11. Equipment. Section 3.11 of the Company Disclosure Schedule lists
each item of machinery, equipment, material furniture, material fixtures,
vehicles and/or other material tangible personal property owned by the Company
or any Company Subsidiary, including items held under capitalized leases.
Section 3.11 of the Company Disclosure Schedule also lists each lease under
which the Company or any Company Subsidiaries has rights in tangible personal
property. All machinery and equipment (including office equipment) owned or
leased by the Company and/or the Company Subsidiaries: (i) has been maintained
in accordance with reasonably sound maintenance practices; and (ii) is in good
operating condition and repair, ordinary wear and tear excepted, and, in the
case of such property leased by the Company and/or any Company Subsidiary, is
in the condition required for such property by the terms of the lease
applicable thereto during the term of the lease and upon the expiration
thereof.
3.12. Real Property.
(a) Section 3.12(a) of the Company Disclosure Schedule lists each parcel
of real property currently owned or used by the Company and/or any Company
Subsidiary or in which the Company and/or any Company Subsidiary currently has
a leasehold or other similar interest (collectively, the "Real Estate"), and
sets forth, as to each such parcel, whether it is owned or leased. The
Company and the Company Subsidiaries do not have any interest in or use of any
other real property other than as set forth in Section 3.12(a) of the Company
Disclosure Schedule, including, for example, any interest of the Company or
any Company Subsidiary under an easement or wharf use agreement.
(b) The Real Estate and the use thereof by the Company and the Company
Subsidiaries are in compliance with all applicable Laws affecting the use and
occupancy of the Real Estate and are in compliance with the provisions of all
covenants and restrictions affecting the use and occupancy of the industrial
parks, subdivisions, or other planned use developments, if any, in which the
Real Estate is located.
(c) Except for the leases under which the Company or any Company
Subsidiary is a tenant with respect to any Real Estate, none of the Real
Estate is subject to any lease, option to purchase, right of first refusal or
other agreement or restriction granting any rights in the Real Estate to any
other person, other than Permitted Encumbrances.
(d) There are no: (i) actual or, to Seller's knowledge, proposed special
assessments, or any commenced or, to Seller's knowledge, planned improvements,
which may result in an assessment or otherwise affect the Real Estate; (ii)
pending or, to Seller's knowledge, threatened condemnation proceedings
involving the Real Estate; (iii) pending or, to Seller's knowledge, threatened
litigation or administrative actions involving the Real Estate; (iv) repairs,
alterations or corrections of any existing condition with respect to the Real
Estate required under applicable Law; (v) pending or, to Seller's knowledge,
threatened changes in any zoning Laws which may affect the Real Estate; or
(vi) other pending or, to Seller's knowledge, threatened matters which may
adversely affect the Real Estate or the interest of the Company and/or the
Company Subsidiaries therein or use thereof.
(e) With respect to each parcel of the Real Estate: (i) the buildings and
improvements on such parcel are located within the boundary lines of such
parcel, are not in violation of applicable setback requirements or Laws, and
do not encroach on any easements which may affect such parcel; (ii) such
parcel does not serve any adjoining property for any purpose inconsistent with
the use of such parcel by the Company and/or the Company Subsidiaries; (iii)
such parcel is not located within any flood plain or any area containing
wetlands and is not subject to any similar type of restriction for which all
applicable Authorizations necessary for the use thereof have not been
obtained; and (iv) such parcel is suitable for the purposes for which it is
currently being used.
(f) The buildings, fixtures and other improvements located on the Real
Estate have received all necessary Authorizations from all Governmental
Authorities, have been maintained in accordance with reasonably sound
maintenance practices, and are in good condition, working order and repair,
ordinary wear and tear excepted. None of the buildings, fixtures or other
improvements located on the Real Estate is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost. The buildings, fixtures and other improvements located on the
Real Estate are suitable for the purposes for which they are currently being
used and are adequate for the continued conduct of the business of the Company
and the Company Subsidiaries as currently conducted.
3.13. Intellectual Property.
(a) As used herein, "Intellectual Property" means: (i) patents, patent
applications, unpatented inventions and discoveries; (ii) registered and
unregistered business names, trade names, trade dress, domain names,
trademarks and service marks; (iii) copyrights on both published works and
unpublished works; and (iv) product formulations, know-how, trade secrets,
confidential information, customer lists, software, technical information,
data, process technology, plans, drawings, and blueprints.
(b) Section 3.13(b) of the Company Disclosure Schedule lists: (i) all
patents and patent applications owned by the Company and/or the Company
Subsidiaries and the jurisdictions by which each such patent has been issued
or in which each such application has been filed (including registration or
application numbers); (ii) all trade names, trademarks, domain names and
service marks owned and used by the Company and/or the Company Subsidiaries
and all registrations owned and registration applications filed by the Company
and/or the Company Subsidiaries for trade names, trademarks and service marks
and the jurisdictions by which each such registration has been issued or under
which each such application has been filed (including registration and
application numbers); (iii) all registrations owned and registration
applications filed by the Company and/or the Company Subsidiaries for
copyrights owned and/or used by the Company and/or the Company Subsidiaries
and the jurisdictions by which each such registration has been issued or in
which each such application has been filed (including registration and
application numbers). The Intellectual Property owned by the Company and/or
the Company Subsidiaries, including the Intellectual Property listed in
Section 3.13(b) of the Company Disclosure Schedule, is referred to herein as
the "Company's Intellectual Property."
(c) Section 3.13(c) of the Company Disclosure Schedule lists all licenses,
agreements or other arrangements under which any Person is licensed or
otherwise authorized to use any of the Company's Intellectual Property.
(d) Section 3.13(d) of the Company Disclosure Schedule lists all licenses,
agreements or other arrangements under which the Company or any Company
Subsidiary is licensed or otherwise authorized to use any Intellectual
Property owned by any Person other than the Company and/or any Company
Subsidiary. The Intellectual Property which the Company and/or any Company
Subsidiary has the authority to use under such licenses, agreements or other
arrangements is referred to herein as the "Third Party Intellectual Property."
(e) Except for the rights existing under the licenses, agreements and
other arrangements listed in Section 3.13(c) of the Company Disclosure
Schedule, the Company and/or the Company Subsidiaries have the exclusive right
to the use of all of the Company's Intellectual Property. To Seller's
knowledge, all patents and all registered trademarks, service marks and
copyrights included in the Company's Intellectual Property are valid and
subsistent, and no patents or registered trademarks, service marks or
copyrights included in the Company's Intellectual Property have been, in whole
or in part, abandoned, dedicated, disclaimed or allowed to lapse for
nonpayment of fees or taxes or for any other reason. The present activities
of the Company and the Company Subsidiaries and their use of Intellectual
Property do not infringe on or violate any intellectual property rights of any
other Person and, to the Seller's knowledge, no Person is infringing or
violating any of the Company's Intellectual Property or the rights of the
Company and/or the Company Subsidiaries in any Third Party Intellectual
Property.
(f) Except as set forth in Section 3.13(f) of the Company Disclosure
Schedule, all current employees of the Company and the Company Subsidiaries
have: (i) executed written agreements not to misuse or disclose confidential
information of the Company and the Company Subsidiaries; and (ii) executed
written agreements that assign to the Company all Intellectual Property
developed by such employees while employed by the Company and/or the Company
Subsidiaries. To Seller's knowledge, no present employee of the Company
and/or any Company Subsidiary has entered into any agreement (other than with
the Company or any of its Subsidiaries) that restricts or limits in any way
the scope or type of work in which such employee may be engaged or requires
such employee to transfer, assign or disclose to any Person any Intellectual
Property which he develops or with which he becomes familiar during his
employment by the Company and/or any Company Subsidiary.
(g) The Company has adopted and implemented a commercially reasonable plan
to investigate and correct any "year 2000 problems" associated with the
operation of the Company's business.
3.14. Contracts and Commitments. Section 3.14 of the Company Disclosure
Schedule identifies the following leases, contracts, agreements and other
arrangements (collectively, "Contracts"), written or unwritten, to which the
Company and/or any Company Subsidiary is a party, by which the Company and/or
any Company Subsidiary is bound and/or under which the Company and/or any
Company Subsidiary has any rights and/or obligations which are continuing or
require future performance:
(a) Material Contracts relating to the purchase of products from the
Company and/or any Company Subsidiary, including open purchase orders and any
requirements or other agreements pursuant to which the Company and/or any
Company Subsidiary is obligated to supply products to any person or any person
is obligated or has the right to purchase products from the Company and/or any
Company Subsidiary;
(b) Material Contracts relating to the purchase of raw materials,
packaging or other inventories and/or any other Material Contracts for the
purchase of tangible personal property or services, including open purchase
orders and any requirements or other agreements, pursuant to which any person
is obligated to supply products or services to the Company and/or any Company
Subsidiary and/or the Company and/or any Company Subsidiary has the right to
purchase any such products or services;
(c) Material Contracts providing for any promotional allowance, volume
discount, incentive payment, rebate, advertising allowance or other similar
payment, refund or accommodation to any customer of the Company and/or any
Company Subsidiary;
(d) Material Contracts providing for any promotional allowance, volume
discount, incentive payment, rebate, advertising allowance or other similar
payment, refund or accommodation to the Company and/or any Company Subsidiary;
(e) Indentures, mortgages, notes, loans or credit agreements or Contracts
relating to the borrowing of money or to the direct or indirect guarantee or
assumption of obligations of others;
(f) Contracts with stockholders, directors, officers or employees,
including Contracts involving employees that contain any severance or
termination pay liabilities or obligations or any bonus, or deferred
compensation agreements with employees, but excluding Plans.
(g) Contracts with any sales representative, dealer, distributor,
wholesaler, manufacturer's representative, sales agent or other sales
contract;
(h) Contracts under which the Company and/or any Company Subsidiary serves
as a sales representative, dealer, distributor, wholesaler, manufacturer's
representative, or sales agent for any other person;
(i) Material manufacturing or tolling agreements or other Material
Contracts pursuant to which any person provides processing, finishing,
packaging or other goods or services to the Company and/or any Company
Subsidiary;
(j) Contracts pursuant to which any person provides warehouse or storage
facilities for the Company and/or any Company Subsidiary;
(k) Contracts restraining, limiting or prohibiting disclosure of
information or competition limiting or benefiting the Company and/or any
Company Subsidiary; and
(l) Material Contracts not otherwise disclosed above.
Seller has made available to Buyer a correct and complete copy of each
written Contract identified in Sections 3.11, 3.12, 3.13 and 3.14 of the
Company Disclosure Schedule. Except as disclosed in Section 3.14 of the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary is
required under the terms of any of such Contracts to give notice to or obtain
consent from any party thereto to consummate the transactions contemplated
hereby. Except as disclosed in Section 3.14 of the Company Disclosure
Schedule, all oral contracts are terminable by the Company or the Company
Subsidiary party thereto upon notice to the other party thereto without
premium, penalty or other liability or obligation of the Company or any
Company Subsidiary after such termination. With respect to each Contract
identified in Sections 3.11, 3.12, 3.13 and 3.14 of the Company Disclosure
Schedule, except as disclosed in such sections: (i) such Contract is legal,
valid and binding, and is enforceable (except as the enforceability thereof
may be subject to or limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws relating to or affecting the rights of creditors
generally and general principles of equity, regardless of whether applied in
proceedings at law or in equity) and in full force and effect; (ii) neither
the Company nor any Company Subsidiary is in breach of default thereunder and
no event has occurred which with notice or lapse of time would constitute a
breach or default by the Company or any Company Subsidiary or permit any third
party to terminate, modify or accelerate such Contract; (iii) neither the
Company nor any Company Subsidiary has repudiated any provision of such
Contract; (iv) to the Seller's knowledge, no third party is in breach or
default, and no event has occurred which with notice or lapse of time, would
constitute a breach or default by a third party or permit the Company or any
Company Subsidiary to terminate, modify or accelerate such Contract; (v)
neither the Company nor any Company Subsidiary has any present expectation or
intention of not fully performing any obligation on its part to be performed
pursuant to such Contract; (vi) the Seller does not have any knowledge of any
breach or anticipated breach by any other party to such Contract; and (vii)
neither the Company nor any Company Subsidiary is obligated to sell any
property or services at prices lower than, or to purchase any property or
services at prices higher than, prevailing market prices.
3.15. Taxes.
(a) For the purposes hereof "Tax" or "Taxes" means all federal, state,
county, local, foreign and other taxes, assessments or charges, including
income, estimated income, business, occupation, franchise, property (real and
personal), sales, employment, gross receipts, use, transfer, ad valorem,
profits, license, capital, payroll, employee or other withholding,
unemployment, excise, goods and services, severance, stamp, and including
interest, penalties and additions which are or may be payable in connection
therewith.
(b) All material returns, reports, forms and other documents and all
amendments relating to Taxes (collectively, "Tax Returns") required to be
filed by the Company and/or any Company Subsidiary prior to the date hereof
have been timely and properly filed (taking into account any extension of time
within which to file) and properly reflect the Tax liability of the Company
and/or such Company Subsidiary. All such Tax Returns are correct and complete
in all material respects.
(c) All Taxes shown as due on such Tax Returns will have been timely paid
in full prior to the Closing, except as set forth in Section 3.15(c) of the
Company Disclosure Schedule as to any such Taxes which are being contested in
good faith in appropriate proceedings and for which the Company has made
adequate provision in the Company Financial Statements.
(d) Except as set forth in Section 3.15(d) of the Company Disclosure
Schedule, there is no action, suit, proceeding, audit, investigation,
assessment, adjustment, or claim (collectively, "Proceedings") now pending or,
to the Seller's knowledge, proposed in writing against or with respect to the
Company and/or any Company Subsidiary in respect of any Tax. Except as set
forth in Section 3.15(d) of the Company Disclosure Schedule, there are no
outstanding waivers or other agreements extending any statutory periods of
limitation for the assessment of Taxes of the Company and/or any Company
Subsidiary. Except as set forth in Section 3.15(d) of the Company Disclosure
Schedule, all Tax Returns of the Company and the Company Subsidiaries with
respect to federal income Taxes and all state income Taxes through the year
ended December 31, 1993 have been examined and the examination concluded or
are Tax Returns with respect to which the applicable periods for assessment,
giving effect to waivers and extensions, have expired.
(e) Buyer is not required to withhold Tax on the purchase of the Shares
under Section 1445 of the Code.
(f) No payments by the Company and/or any Company Subsidiary resulting
from the consummation of the Acquisition or required as a result of such
consummation pursuant to any Contract entered into by the Company on or before
the Closing Date will result in a nondeductible expense pursuant to Section
280G of the Code.
(g) Except as set forth in Section 3.15(g) of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary has agreed or is
required to make any adjustment under Section 481(a) of the Code by reason of
a change in method of accounting or otherwise.
(h) Neither the Company nor any Company Subsidiary is a "consenting
corporation" under Section 341(f) of the Code.
(i) There are no tax sharing agreements to which the Company and/or any
Company Subsidiary is a party that will survive the Closing.
3.16. Labor Practices and Matters.
(a) The Company and the Company Subsidiaries are in compliance with the
Federal Fair Labor Standards Act and all Laws relating to employment
discrimination, employee welfare and labor standards which are applicable to
the Company and/or any Company Subsidiary, including without limitation: (i)
any provisions thereof relating to the employment of any person not a citizen
of the United States; and (ii) any provisions thereof relating to wages,
bonuses, collective bargaining, equal pay and the payment of Social Security
and similar payroll taxes. There is no basis for any claim by any past or
present employee of the Company and/or any Company Subsidiary that such
employee was wrongfully discharged or subject to any employment discrimination
by the Company and/or any Company Subsidiary arising out of or relating to
such employee's race, sex, color, religion, handicap or any other protected
characteristic under applicable Law. There are no Proceedings involving the
Company and/or any Company Subsidiary relating to labor or employment matters,
and there is no pending investigation by any governmental agency or, to the
knowledge of Seller, threatened claim by any such agency or other person
relating to labor or employment matters involving the Company and/or any
Company Subsidiary.
(b) Except as set forth in Section 3.16(b) of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary is a party to any
agreement or contract with any union, labor organization, employee group, or
other entity or individual which affects the employment of employees with the
Company and/or any Company Subsidiary, including, without limitation, any
collective bargaining agreements or labor contracts.
(c) To the knowledge of the Seller, none of the employees of the Company
or any Company Subsidiary is in the process of being organized into labor
unions or associations. Since December 31, 1993, neither the Company nor any
Company Subsidiary has been subject to a strike or other work stoppage and, to
the knowledge of Seller, there are no strikes or work stoppages contemplated
or threatened against the Company or any Company Subsidiary.
(d) Section 3.16(d) of the Company Disclosure Schedule lists each of the
states where the Company and/or any Company Subsidiary has or maintains any
unemployment or worker's compensation accounts. Since December 31, 1993,
neither the Company nor any Company Subsidiary has had any adverse change in
its contribution or its experience rating for unemployment or worker's
compensation purposes in any state. No unemployment or worker's account of
the Company or any Company Subsidiary has a negative balance.
(e) The Company and each Company Subsidiary is in full compliance with the
Occupational Safety and Health Act of 1970, as amended, ("OSHA") and all other
Laws regulating or otherwise affecting health and safety of the workplace.
3.17. Employee Benefits.
(a) Section 3.17(a) of the Company Disclosure Schedule lists all profit
sharing, pension or retirement, medical, health, or life insurance plans,
programs, arrangements or agreements, and each other employee benefit plan,
program, arrangement or agreement whatsoever maintained, contributed to, or
required to be contributed to, for the benefit of any current or former
employee or terminated employee of the Company and/or any Company Subsidiary
(including retirees), whether formal or informal (a "Plan" or the "Plans").
Neither the Company nor any Company Subsidiary has any formal plan or
commitment, whether legally binding or not, to create any additional Plan or
modify or change any existing Plan that would affect any current or former
employee of the Company or such Company Subsidiary.
(b) Seller has heretofore made available to Buyer a true, correct and
complete copy of each Plan (including all amendments thereto).
(c) All amounts which the Company and/or any Company Subsidiary is
required to pay under the terms of each Plan with respect to the most recent
plan year thereof ended prior to the date of this Agreement have been timely
paid in full, and all such amounts payable with respect to the portion of the
current plan year ending on the Closing Date will be paid on or before the
Closing Date or will be fully reflected as a liability in the Closing Price
Documents.
(d) With respect to each Plan which is an employee pension benefit plan
(as defined in Section 3(2) of ERISA)): (i) to the extent such Plan is
intended to qualify under Section 401(a) of the Code, such Plan is so
qualified and the Company and/or a Company Subsidiary has received a current
favorable determination letter to such effect from the IRS or is properly
relying on the qualification of a standardized prototype plan which the
Company and/or a Company Subsidiary has duly adopted; (ii) the provisions of
such Plan are, and its operation has been and is, in material compliance with
ERISA and the Code; (iii) the Company and the Company Subsidiaries are in
material compliance with ERISA and the Code, including ERISA's fiduciary and
prohibited transaction rules, participation and vesting provisions, reporting
and disclosure provisions and funding requirements; (iv) there is no funding
deficiency, and no Reportable Event (as defined in Section 4043 of ERISA and
regulations issued thereunder) has occurred, nor has such Plan applied for or
received a waiver of the minimum funding standards imposed by ERISA and the
Code; (v) no facts, including any Reportable Event, exist which might
constitute grounds for the termination of such plan by the Pension Benefit
Guaranty Corporation or the appointment by the appropriate United States
District Court of a trustee to administer such plan; and (vi) none of the
Company, any Company Subsidiary, any Plan, any trust created thereunder, or
any trustee or administrator thereof has engaged in a transaction in
connection with the Company, any Company Subsidiary or any trustee or
administrator of any Plan or any such trust, or any party dealing with any
Plan or any such trust, which could be subject to a material civil penalty
assessed pursuant to Section 502(i) or 502(l) of ERISA. With respect to each
Plan which is an employee welfare benefit plan (as defined in Section 3(1) of
ERISA): (i) the provisions of such Plan are, and its operation has been and
is, in material compliance with ERISA and the Code and the Comprehensive
Omnibus Budget Reconciliation Act of 1985, as amended; and (ii) the Company
and the Company Subsidiaries are in material compliance with ERISA and the
Code, including ERISA's fiduciary and prohibited transaction rules and
reporting and disclosure requirements. No Plan which is an employee pension
or welfare benefit plan is currently under audit or review by the Department
of Labor, the IRS or any other federal or state Governmental Authority, and to
Seller's knowledge no such action is contemplated or under consideration.
(e) Neither the Company nor any Company Subsidiary is a party to any
multi-employer plan (as defined in Section 3(37) of ERISA), nor has the
Company or any Company Subsidiary incurred any withdrawal liability in
connection with any such plan.
(f) No Plan provides for health or other welfare benefits to retirees, nor
has the Company or any Company Subsidiary promised or incurred any liability
in connection with any such benefit.
(g) No actions or claims (except those routinely submitted in the ordinary
course of plan administration) are currently pending, or, to the Seller's
knowledge, currently threatened, against any Plan.
3.18. Compliance With Environmental Laws.
(a) For purposes hereof, "Environmental Laws" mean the Solid Waste
Disposal Act, the Clean Air Act, the Clean Water Act, the Water Quality Act of
1987, the Federal Insecticide, Fungicide and Rodenticide Act, the Marine
Protection, Research and Sanctuary's Act, the Pollution Prevention Act of
1990, the National Environmental Policy Act, the Noise Control Act, the Safe
Drinking Water Act, the Emergency Planning and Community Right to Know Act,
the Resource Conservation and Recovery Act of 1976 ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Toxic Substance Control Act of 1976 and all other Laws regulating or otherwise
affecting the environment and/or the disposal of waste or other materials, as
the same may have been amended. For purposes hereof, "Operating Period"
means: (i) with respect to the Company, the period since May 31, 1988; (ii)
with respect to each Company Subsidiary, the period since May 31, 1988 or, if
later, the date on which the Company acquired such Company Subsidiary; (iii)
with respect to each parcel of Real Estate, the period since May 31, 1988 or,
if later, the earlier of the date on which the Company or a Company Subsidiary
acquired or first occupied such parcel (except that in the case of each parcel
of Real Estate, if any, which was occupied and/or owned by the Seller and/or
any Affiliate of the Seller before it was owned or occupied by the Company or
a Company Subsidiary, the "Operating Period" shall mean the period from the
earlier of the date on which the Seller or such Affiliate acquired or first
occupied such parcel). With respect to each parcel of real property which was
previously, but is no longer, owned or used by the Company and/or any Company
Subsidiary or in which the Company and/or any Company Subsidiary had, but no
longer has, a leasehold or other interest, the "Operating Period" for such
parcel shall terminate when the Company and/or any Company Subsidiary last
owned, used and/or had any leasehold or other interest in such parcel.
(b) The Company, each Company Subsidiary and each parcel of the Real
Estate at all times during the relevant Operating Period has been, and, to the
Seller's knowledge, at all times prior to the relevant Operating Period has
been, in full compliance with all Environmental Laws. None of Seller, the
Company and/or any Company Subsidiary is subject to, nor to Seller's knowledge
is there any basis for Seller, the Company and/or any Company Subsidiary to be
subject to, any judgment, decree, order or citation (collectively, an "Order")
based on any violation of Environmental Law with respect to the operations of
the Company, the Company Subsidiaries and/or the Real Estate or, in the case
of the Company and the Company Subsidiaries, otherwise. None of Seller, the
Company and/or any Company Subsidiary has been threatened with or received a
written notice, directive, violation, report or charge asserting any violation
of, and no action has been taken against Seller, the Company and/or the
Company Subsidiaries, or to Seller's knowledge against any other owner or user
of the Real Estate under, any Environmental Law with respect to the operations
of the Company, the Company Subsidiaries and/or the Real Estate or, in the
case of the Company and the Company Subsidiaries, otherwise. None of the
assets of the Company and/or the Company Subsidiaries are required to be
upgraded, modified or replaced to be in compliance with Environmental Laws.
(c) Section 3.23 of the Company Disclosure Schedule lists all
Authorizations held by the Company and/or the Company Subsidiaries and/or held
by Seller with respect to the current operations of the Company and/or the
Company Subsidiaries required under Environmental Laws ("Environmental
Authorizations"), true, correct and complete copies of which have been made
available for inspection by Buyer and its representatives. The Company and
the Company Subsidiaries have timely obtained all Environmental
Authorizations, all of which are in full force and effect, and the Company and
the Company Subsidiaries have paid all fees and other charges therefor and are
in compliance with all terms and conditions thereof.
(d) None of the Company, any Company Subsidiary, or any third person has,
during the relevant Operating Period for such parcel or, to Seller's
knowledge, at any time prior to the relevant Operating Period for such parcel,
stored, used, generated, treated, recycled, disposed of or Released (as
defined below), any substance in a manner on any parcel of Real Estate which
may form the basis for any present or future claim against Buyer, the Company
and/or any Company Subsidiary based upon Environmental Laws, or which may
subject Buyer, the Company and/or any Company Subsidiary to claims for
damages. No parcel of the Real Estate has, during the relevant Operating
Period for such parcel or, to Seller's knowledge, at any time prior to the
relevant Operating Period for such parcel, been used as a landfill, dump site
or for any other use which involved the disposal of solid waste on such parcel
or which may subject Buyer, the Company and/or any Company Subsidiary to any
claim for cleanup or damages under Environmental Laws. Except for the storage
and use of hazardous chemicals in the ordinary course of business and in
compliance with all Environmental Laws, no hazardous or toxic substances or
wastes, as defined under Environmental Laws, have, during the relevant
Operating Period for such parcel or, to Seller's knowledge, at any time prior
to the Operating Period for such parcel, been located at, on or under any
parcel of the Real Estate, or been stored, used, generated, treated, recycled
or disposed of on or Released from any parcel of the Real Estate. No parcel
has, during the relevant Operating Period or, to Seller's knowledge, prior to
the relevant Operating Period, been contaminated by hazardous or toxic
substances or wastes, as defined under Environmental Laws, originating from
off-site sources. For purposes hereof, "Release" means to discharge, spill,
emit, leak, leach, deposit or otherwise release any substance to the outdoor
or indoor environment or into or out of any property, including by the
movement of any substance through or in air, soil, surface water, ground water
or property.
(e) During the relevant Operating Period, (i) no asbestos, urea
formaldehyde or polychlorinated biphenals were Released in, on or under any of
the Real Estate, and (ii) no above ground or underground storage tanks were
located at, on or under any of the Real Estate. To Seller's knowledge no
asbestos, urea formaldehyde, polychlorinated biphenals or aboveground or
underground storage tanks are currently located at, on or under any of the
Real Estate currently owned or used by the Company and/or any Company
Subsidiary or in which the Company and/or any Company Subsidiary currently has
a leasehold or other similar interest.
(f) Each of the Company and the Company Subsidiaries has, at all times
during the relevant Operating Period and, to the Seller's knowledge, at all
times prior thereto, utilized only properly licensed haulers and transporters
to dispose of any pollutant, contaminant or hazardous or toxic substance,
material or waste and all such disposal has been in full compliance with all
Environmental Laws applicable at the time of such disposal and there have been
no violations of Environmental Laws in connection with any such disposal.
Neither the Company nor any Company Subsidiary has been named or listed as a
potentially responsible party in any matter arising under Environmental Laws,
nor has Seller been so named in connection with the operations of the Company,
the Company Subsidiaries and/or the Real Estate. To the Seller's knowledge,
there is no existing condition that may form the basis of any present or
future claim, demand or action seeking investigation, cleanup, removal,
notification or other remedial or responsive action with respect to any
facility, site, location or body of water, surface or subsurface, for which
Buyer, the Company and/or any Company Subsidiary would be liable or
responsible, whether as a result of the disposal of any pollutant, contaminant
or hazardous or toxic substance, material or waste at such facility, site,
location or body of water or otherwise.
(g) True, correct and complete copies of all environmental claims,
reports, studies, compliance actions, correspondence with environmental
regulators or the like, of or in the possession of Seller, the Company and/or
any Company Subsidiary with respect to the Company, any such Company
Subsidiary and/or the Real Estate have been made available to Buyer.
3.19. Products. No claim for product liability has been asserted against
the Company and/or any Company Subsidiary since December 31, 1993, and, to
Seller's knowledge, no event has occurred which might give rise to the
assertion of any such claim. There is no deficiency or inadequacy in the
manufacture, design or formulation of any of the products of the Company and
the Company Subsidiaries that may hereafter give rise to any such failure or
result in any such claim. All products sold by the Company and the Company
Subsidiaries have been manufactured in compliance with all applicable
manufacturing and quality control procedures.
3.20. Product Warranties. All products and services manufactured and/or
sold by the Company and the Company Subsidiaries (and the delivery thereof)
have been in conformity with all applicable contractual commitments and all
express or implied warranties. No warranty claims exist for the repair or
replacement thereof or other damages in connection with such services, sales
or deliveries, except for any such claims incurred in the ordinary course of
business consistent in amount and character with past experience of the
Company and the Company Subsidiaries. All product labeling of the Company and
the Company Subsidiaries is in conformity with all Applicable Laws. Copies of
the standard terms and conditions of sale, delivery or lease of the Company
and the Company Subsidiaries (including all warranty provisions) have been
made available to Buyer. Since December 31, 1993, neither the Company nor any
Company Subsidiary has voluntarily or involuntarily recalled or withdrawn any
product from commerce due to health and/or safety concerns.
3.21. Insurance. Section 3.21 of the Company Disclosure Schedule
summarizes the insurance coverages maintained with respect to the operations
and assets of the Company and the Company Subsidiaries. Section 3.21 of the
Company Disclosure Schedule also summarizes each claim (including any claim
for worker's compensation) made by the Company and/or any Company Subsidiary
under, or which has been made against the Company and/or any Company
Subsidiary and has been paid or defended in accordance with, the terms of, any
insurance policy maintained by the Company and/or any Company Subsidiary since
December 31, 1993.
3.22. Litigation.
(a) There is no Proceeding, or to Seller's knowledge, any investigation or
inquiry, before any Governmental Authority or any private tribunal now
pending, or, to Seller's knowledge, threatened, against, relating to or
affecting: (i) Seller, the Company and/or any Company Subsidiary which would
adversely affect Seller's ability to consummate the transactions contemplated
hereby; or (ii) the Company and/or any Company Subsidiary, or any director,
officer or other employee thereof in his capacity as such, or the assets or
properties of the Company and/or any Company Subsidiary. To Seller's
knowledge, no basis exists for any such Proceeding, investigation or inquiry.
(b) None of the Company, any Company Subsidiary, and/or, to Seller's
knowledge, any officer, director or employee thereof, currently is or has been
permanently or temporarily enjoined or prohibited by any Order from engaging
in or continuing any conduct or practice in connection with the business of
the Company and/or any Company Subsidiary.
(c) There is no existing Order enjoining or prohibiting the Company or any
Company Subsidiary from taking, or requiring the Company and/or any Company
Subsidiary to take, any action of any kind or to which the Company and/or any
Company Subsidiary is subject or is bound.
(d) Neither the Company nor any Company Subsidiary is in default under any
Order.
3.23. Licenses and Permits. Section 3.23 of the Company Disclosure
Schedule lists all Authorizations held by the Company and/or the Company
Subsidiaries, and, in the case of nongovernmental Authorizations (such as, for
example, Kosher designations), the person, agency or authority granting such
approvals. Seller has made true, correct and complete copies of such
Authorizations available for inspection by Buyer and its representatives. The
Company and the Company Subsidiaries have all Authorizations and have made all
registrations, declarations, recordings and filings with, all Governmental
Authorities which are required for the conduct of their business or the
ownership and use of their properties and assets as currently conducted or
used. The Company and the Company Subsidiaries have timely obtained all such
Authorizations, all of which are in full force and effect, and the Company and
the Company Subsidiaries have paid all fees and other charges therefor and
have complied with and are in compliance with all terms and conditions
thereof.
3.24. Compliance with Laws. The Company, the Company Subsidiaries, the
conduct and operation of their business, and the condition of their properties
and assets are in compliance with all applicable Laws. No written notice has
been issued nor any investigation or review is pending or, to Seller's
knowledge, threatened by any Governmental Authority: (i) with respect to any
alleged violation or default under any applicable Law by the Company and/or
any Company Subsidiary; or (ii) with respect to any alleged failure by the
Company and/or any Company Subsidiary to have all Authorizations required in
connection with the conduct of the business of the Company and the Company
Subsidiaries and/or the ownership and/or use of their properties or assets or
with respect to any possible revocation, cancellation, termination, suspension
or adverse modification of any such Authorization.
3.25. Customers and Suppliers. Section 3.25 of the Company Disclosure
Schedule lists, with respect to 1997 and the ten-month period ended October
24, 1998, each of the Company's Major Customers and Major Suppliers (as
defined below) and the approximate dollar volume of sales made to and
purchases made from such persons. For purposes of this Section 3.25, "Major
Customer" shall mean any customer of the Company whose total purchases from
the Company and the Company Subsidiaries represented Two Percent (2%) or more
of the Company's total consolidated sales during 1997 and/or the ten-month
period ended October 24, 1998; and "Major Supplier" shall mean any supplier of
the Company whose total sales to the Company and the Company Subsidiaries
represented Two Percent (2%) or more of the Company's total consolidated cash
expenses during 1997 and/or the ten-month period ended October 24, 1998. To
Seller's knowledge, no Major Customer or Major Supplier has communicated to
Seller, the Company, and/or any Company Subsidiary that such customer or
supplier intends to cease doing business or to materially reduce its business
with the Company and/or its Company Subsidiaries or to terminate any agreement
with the Company and/or its Company Subsidiaries.
3.26. Accounts: Safe Deposit Boxes. Section 3.26 of the Company
Disclosure Schedule lists the bank and savings accounts, certificates of
deposit and safe deposit boxes of the Company and/or the Company Subsidiaries
and those persons authorized to sign thereon. True, correct copies of all
corporate borrowing, depository and transfer resolutions and those persons
entitled to act thereunder have been made available to Buyer.
3.27. Brokers; Agents. Seller has not dealt with any banker, agent,
finder, broker or other representative in any manner which could result in the
Company, any Company Subsidiary and/or Buyer being liable for any fee or
commission in the nature of an investment banking, finder's or originator's
fee in connection with the subject matter of this Agreement.
3.28. Absences of Certain Changes or Events. Since December 31, 1997, the
Company and the Company Subsidiaries have not: (i) taken any action which
would have constituted a violation under Section 5.1 if Seller had then been
bound by Section 5.1; or (ii) failed to take any action which would have been
required by Section 5.1 if Seller had been bound by Section 5.1. Since
December 31, 1997, there has not been any Company Material Adverse Effect.
3.29. Related Party Transactions. Since December 31, 1993, no Related
Party (as defined below) has had any interest in any transaction, lease,
Contract or other arrangement with the Company and/or any Company Subsidiary.
Without limitation to the foregoing, since December 31, 1993, no Related Party
has had: (i) any interest in any Person which has purchased, sold or furnished
to the Company and/or any Company Subsidiary any goods or services; (ii) a
beneficial interest in any lease, Contract, commitment or understanding to
which the Company or any Company Subsidiary is a party or by which it is bound
or affected; (iii) any claim against the Company and/or any Company Subsidiary
or any assets of the Company and/or any Company Subsidiary; or (iv) any
interest in any assets used by the Company and/or any Company Subsidiary. For
purposes hereof, each of the following shall be deemed to be a "Related
Party:" (i) Seller; (ii) each Affiliate of the Seller; (iii) each individual
who is or was at any time since December 31, 1993, an officer or director of
any of the foregoing; (iii) any family member of any of the individuals
referred to in clause (ii); and (iv) any Person in which any of the
individuals referred in clause (ii) or (iii) hold, directly or otherwise, a
voting, proprietary or equity interest in excess of two (2%).
3.30. Certain Payments. Since December 31, 1993, neither the Company nor
any Company Subsidiary nor any director or officer, agent or employee thereof
nor any other Person associated with or acting for or on behalf thereof, has
directly or indirectly: (i) made any contribution, gift, bribe, rebate,
payoff, influence payment, kickback, or other payment to any person, private
or public, regardless or form, whether in money, property or services (A) to
obtain favorable treatment in securing business for or in respect of the
Company and/or any Company Subsidiary, (B) to pay for favorable treatment for
business secured for or in respect of the Company and/or any Company
Subsidiary, (C) to obtain special concessions or for special concessions
already obtained for or in respect of the Company and/or any Company
Subsidiary, or (D) in violation of any Law; or (ii) established or maintained
any fund or asset that was required to be, but has not been, recorded in the
consolidated books and records of the Company.
3.31. Undisclosed Liabilities. The Company and its Company Subsidiaries
are not subject to any obligation, liability, debt or commitment, whether
absolute, contingent, accrued or otherwise, whether due or to become due,
except for: (i) liabilities reflected on the Interim Balance Sheet; (ii)
liabilities incurred in the ordinary course of business since the date of the
Interim Balance Sheet; (iii) liabilities not required to be disclosed on the
Interim Balance Sheet in accordance with GAAP, but otherwise disclosed herein
to the extent required by the terms hereof; (iv) liabilities listed in Section
3.31 of the Company Disclosure Schedule; and (v) liabilities arising
hereunder.
3.32. No Material Omissions. No representation or warranty by Seller
contained in this Agreement or in any writing to be furnished pursuant hereto
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact required to make the representations or
warranties herein or therein contained, in light of the circumstances under
which they are made, not misleading.
3.33. Filing Documents. None of the information regarding the Seller or
any of its Affiliates supplied or to be supplied by Seller for inclusion in
any documents to be filed with any Governmental Authority in connection with
the transactions contemplated hereby will, at the respective times such
documents are filed with any Governmental Authority, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.A. Disclosure Schedule. On or prior to the date hereof, Buyer has
delivered to Seller a schedule (the "Buyer Disclosure Schedule") setting
forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained
in a provision hereof or as an exception to one or more representations or
warranties contained in this Article IV or to one or more of the covenants
contained in Article V. The mere inclusion of an item in the Buyer Disclosure
Schedule as an exception to a representation or warranty shall not be deemed
an admission by Buyer that such item represents a material exception or fact,
event or circumstance or that such item is reasonably likely to result in a
Buyer Material Adverse Effect. The Buyer Schedule is arranged in sections and
paragraphs corresponding to the sections and paragraphs herein. A fact or
matter disclosed in the Buyer Disclosure Schedule with respect to one section
or paragraph shall be deemed to be disclosed with respect to each other
section and paragraph of this Agreement where such disclosure is appropriate
if, but only if, the relevance of the disclosure to such other section or
paragraph is readily apparent. Buyer shall be permitted to supplement in
writing the Buyer Disclosure Schedule from time to time following the date
hereof by delivery of such supplements to Seller in the manner provided under
Section 11.5, provided that such supplements shall not be considered in
determining the satisfaction of the conditions set forth in Sections 6.3(a)
and 6.3(b) hereof. Subject to the provisions of Section 9.3(d) hereof, the
representations and warranties set forth in this Article IV and the covenants
set forth in Article V shall survive the Closing notwithstanding any
investigation made by or information furnished to Seller in connection
herewith.
4.B. Representations and Warranties of Buyer . Subject to the foregoing
and except as set forth in the Buyer Disclosure Schedule, Buyer hereby
represents and warrants to each of Seller and the Company as of the date of
this Agreement as follows:
4.1. Organization and Authority of Buyer. Buyer is a corporation, duly
organized, validly existing and in good standing under the laws of the State
of Wisconsin. Buyer has the power and authority to carry on its business as
it is now being conducted and to own, lease and operate all of its properties
and assets. Buyer has full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by Buyer have been duly and validly
authorized by all necessary corporate action on the part of Buyer. This
Agreement has been, and each other agreement and document to be executed and
delivered pursuant hereto by Buyer will be, duly and validly executed and
delivered by Buyer, and this Agreement constitutes (assuming due
authorization, execution and delivery by Seller and the Company), and, when
executed and delivered, such ancillary documents will constitute(assuming due
authorization, execution and delivery by the other parties thereto), the
legal, valid and binding obligations of Buyer enforceable against Buyer in
accordance with their respective terms, except as the enforceability thereof
may be subject to or limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws relating to or affecting the rights of creditors
generally and general principles of equity, regardless of whether applied in
proceedings at law or in equity.
4.2. No Violation. Neither the execution, delivery and performance
hereof, nor the consummation of the transactions contemplated hereby, nor
compliance with any of the provisions hereof, by Buyer, will conflict with,
breach or violate, or result in a conflict with, or breach or violation of, or
a default under, or give rise to any right of termination, cancellation or
acceleration with respect to: (i) Buyer's Articles of Incorporation or By-
Laws; (ii) any Authorization, agreement, instrument, other document or
obligation to which Buyer is a party or by which Buyer and/or any of Buyer's
properties or assets are bound; or (iii) any Law applicable to Buyer and/or
any of Buyer's properties or assets. Except for the approval referred to in
Section 4.2 of the Buyer Disclosure Schedule, no Authorization or other action
of, or registration, declaration, recording or filing with, any Governmental
Authority or other Person is required in connection with the execution and
delivery of this Agreement and/or any other agreement or document to be
executed and delivered pursuant hereto by Buyer and/or the consummation by
Buyer of the transactions contemplated hereby and/or thereby.
4.3. Brokers; Agents. Buyer has not dealt with any banker, agent, finder,
broker or other representative in any manner which could result in Seller
being liable for any fee or commission in the nature of an investment
banker's, finder's or originator's fee in connection with the subject matter
of this Agreement.
4.4. Filing Documents. None of the information regarding the Buyer or any
of its Affiliates supplied or to be supplied by Buyer for inclusion in any
documents to be filed with any Governmental Authority in connection with the
transactions contemplated hereby will, at the respective times such documents
are filed with any Governmental Authority, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.5. Cash Consideration. Buyer will have sufficient cash on hand to pay
the Purchase Consideration as of the Closing.
4.6. Securities Act. The Shares are being acquired by Buyer for
investment only and not with a view to any public distribution thereof. Buyer
acknowledges that the Shares will not be registered by Seller pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities laws, and Buyer will not offer to sell or otherwise dispose of the
Shares in violation of any of the registration requirements of the Securities
Act.
ARTICLE V
PRE-CLOSING COVENANTS
5.1. Conduct of Business by the Company. During the period from the date
of this Agreement and continuing through the Closing Date, except as expressly
contemplated or permitted by this Agreement or with the prior written consent
of Buyer, the Company shall (a) carry on its business in the ordinary course
consistent with past practice; (b) use all reasonable efforts to preserve its
present business organization and relationships; (c) use all reasonable
efforts to keep available the present services of its employees; (d) use all
reasonable efforts to preserve and maintain its assets and properties
consistent with past practice; and (e) use all reasonable efforts to preserve
its rights, franchises, goodwill and relations with its customers and others
with whom it conducts business. Without limiting the generality of the
foregoing, except as expressly contemplated by this Agreement or required by
Applicable Law or consented to in writing by Buyer, the Company shall not, and
shall cause each of its Subsidiaries not to, directly or indirectly:
(i) amend or agree to amend its Articles/Certificate of
Incorporation or By-Laws (or comparable instruments), or merge with or into or
consolidate with, or agree to merge with or into or consolidate with, any
other Person, subdivide or in any way reclassify any shares of its capital
stock or its equity interests, or change or agree to change in any manner the
rights of its outstanding capital stock or its equity interests;
(ii) issue, sell or purchase, or issue any Right to purchase or otherwise
acquire, or enter into any contracts, agreements or arrangements to issue,
sell or purchase, any shares of its capital stock or its equity interests;
(iii) incur any indebtedness for borrowed money or guarantee the
indebtedness of any other Person;
(iv) make, or agree to make, any change in its accounting or record
keeping methods or practices for Tax or accounting purposes or make, or agree
to make, any change in depreciation or amortization policies or rates adopted
by it for Tax or accounting purposes;
(v) make any loan or advance to any of its Affiliates, partners, officers,
directors, employees, consultants, agents or other representatives (other than
travel advances made in the ordinary course of business), or make any other
loan or advance, in each case otherwise than in the ordinary course of
business but in no event individually or in the aggregate in excess of $5,000;
(vi) sell, offer to sell, abandon or make any other disposition of any of
its assets, except in the ordinary course of business consistent with past
practice; grant or suffer, or agree to grant or suffer, any Encumbrance on any
of its material assets;
(vii) except in the ordinary course of business consistent with past
practice, incur or assume, or agree to incur or assume, any liability or
obligation (whether or not currently due and payable) relating to its business
or any of its assets in excess of $100,000, individually or in the aggregate;
(viii) settle any claim, action or proceeding involving any liability for
material money damages or any material restrictions upon any of its
operations;
(ix) create, renew, amend, terminate or cancel, or take any action that
might result in the creation, renewal, amendment, termination, breach or
cancellation of, any Contract other than in the ordinary course of business
consistent with past practice;
(x) enter into, or agree to enter into, any contract, agreement or
arrangement with any of its Affiliates other than those entered into in the
ordinary course of business consistent with past practice;
(xi) declare dividends or declare or make any other distributions of any
kind payable to Seller and/or its Affiliates in the aggregate greater than
cash and other liquid assets on hand on the date hereof plus or minus the
consolidated net income or net loss of the Company from the date hereof
through the close of business on the last Business Day of the month last
preceding the month in which the Closing Date occurs, or make any direct or
indirect redemption, retirement, purchase or other acquisition of any shares
of its capital stock, its equity interests or Rights;
(xii) acquire or agree to acquire in any manner, including by way of
merger, consolidation or purchase of an equity interest or assets, any
business or any corporation, partnership, association or other business
organization or division thereof;
(xiii) enter into, amend, modify or renew any written employment,
consulting, severance or similar agreements or arrangements with any
directors, officers or employees of the Company, or grant any salary or wage
increase or increase benefits under any Plan, except (i) normal individual
increases in compensation to employees in the ordinary course of business
consistent with past practice, (ii) in accordance with agreements or
arrangements existing as of the date hereof, and (iii) grants of awards or
bonuses to newly hired officers and employees consistent with past practice;
or
(xiv) Make or authorize any change in its prices or credit policies
except in the ordinary course of business consistent with past practice;
(xv) Enter into or amend any Material Contract;
(xvi) Fail to pay any debts or obligations as the same become due and
payable, except for debts or obligations being contested by the Company or any
Subsidiary in good faith and by appropriate proceedings;
(xvii) After the close of business on the last Business Day of the month
last preceding the month in which the Closing Date occurs, declare or pay any
dividend or make any other distribution of any kind on its capital stock or
enter into, or agree to enter into, any contract, agreement, arrangement or
other transaction with any Affiliate of Seller, except on a basis consistent
with arms-length pricing; or
(xviii) authorize or agree (by contract or otherwise) to do any of the
foregoing.
5.2. Insurance. The Company will use all reasonable efforts to maintain
in effect until the Closing Date all material casualty and liability policies
maintained by the Company on the date hereof or will procure comparable
replacement policies (to the extent commercially reasonable) and maintain such
policies in effect until the Closing Date.
5.3. Maintenance of Records. Through the Closing Date, the Company will
maintain the Records in the same manner and with the same care that the
Records have been maintained prior to the execution of this Agreement.
5.4. Further Assurances. Each party to this Agreement shall execute such
documents and other papers and perform such further acts as may be reasonably
required to carry out the provisions hereof and the transactions contemplated
hereby.
5.5. Efforts of Parties to Close. During the period from the date of this
Agreement through the Closing Date, each party hereto shall use its reasonable
best efforts to fulfill or obtain the fulfillment of the conditions precedent
to the consummation of the transactions contemplated hereby, including the
execution and delivery of any documents, certificates, instruments or other
papers that are reasonably required for the consummation of the transactions
contemplated hereby. During the period from the date of this Agreement and
continuing through the Closing, except as required by Applicable Law or with
the prior written consent of the other parties to this Agreement, no party to
this Agreement shall knowingly take any action which, or knowingly fail to
take any action the failure of which to be taken, would, or could reasonably
be expected to, (a) result in any conditions to the Closing set forth in
Article VI not being satisfied; (b) result in a material violation of any
provision of this Agreement; or (c) adversely affect or materially delay the
receipt of any of the requisite regulatory approvals necessary to consummate
the transactions contemplated hereby.
5.6. Confidentiality and Announcements.
(a) The parties agree to be bound by and comply with the provisions set
forth in the Confidentiality Agreement, the provisions of which are hereby
incorporated herein by reference.
(b) Subject to Section 5.8(a) and (b), the parties to this Agreement shall
consult with each other as to the form, substance and timing of any press
release or other public disclosure related to this Agreement or the
transactions contemplated hereby and no such press release or other public
disclosure shall be made without the consent of the other parties, which
consent shall not be unreasonably withheld or delayed; provided, however, that
the parties may make such disclosure as is required by Applicable Law, based
on advice of counsel, after making reasonable efforts under the circumstances
to consult with each other prior to such disclosure.
5.7. Access; Certain Communications. Between the date of this Agreement
and the Closing Date, subject to any Applicable Laws relating to the exchange
of information and confidentiality, the Company shall afford to Buyer and its
authorized agents and representatives complete access, upon reasonable notice
and during normal business hours, to all Contracts, documents and information
of or relating to the assets, liabilities, business, operations, personnel and
other aspects of the business of the Company. The Company shall cause its
personnel, attorneys and accountants to provide assistance to Buyer in Buyer's
investigations of matters relating to the transactions contemplated hereby,
including allowing Buyer and its authorized agents and representatives access
to the facilities of the Company; provided , however, that Buyer's
investigations shall be conducted in a manner which does not unreasonably
interfere with the Company's normal operations, customers, and employee
relations.
5.8. Regulatory Matters; Third Party Consents.
(a) The parties to this Agreement shall cooperate with each other and
use their reasonable best efforts promptly to prepare and file (on a
confidential basis if requested by any of the other parties and permitted
under Applicable Law) all necessary documentation, to effect (on a
confidential basis if requested by any of the other parties and permitted
under Applicable Law) all applications, notices, petitions and filings, and to
obtain as promptly as practicable all permits, consents, approvals, waivers
and authorizations of all third parties and Governmental Authorities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement, including but not limited to, any filings to be made under the HSR
Act which filings shall be made within 30 days of the date of this Agreement,
and requests for required consents under the Contracts. Buyer agrees to take
all reasonable steps necessary to satisfy any conditions or requirements
imposed by any Governmental Authority in connection with the consummation of
the transactions contemplated by this Agreement, other than those conditions
or requirements which, individually or in the aggregate, are likely to have an
adverse effect on the Company, Buyer and/or their Affiliates. If any required
consent of or waiver by any third party (excluding any Governmental Authority)
is not obtained prior to the Closing, or if the assignment of any Contract
would be ineffective or would adversely affect any material rights or benefits
thereunder so that Buyer would not in fact receive all such rights and
benefits, the parties hereto, each without cost, expense or liability to the
other, shall cooperate in good faith to seek, if possible, an alternative
arrangement to achieve the economic results intended. The parties to this
Agreement will have the right to review in advance, and will consult with the
other on, in each case subject to Applicable Laws relating to the exchange of
information and confidentiality, all the information relating to Buyer, Seller
or the Company, as the case may be, which appear in any filing made with, or
written materials submitted to, any third party or any Governmental Authority
in connection with the transactions contemplated by this Agreement (except for
any confidential portions thereof). The parties to this Agreement agree that
they will consult with each other with respect to the obtaining of all
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the others apprised of
the status of matters relating to completion of the transactions contemplated
herein. The party responsible for a filing as set forth above shall, if
requested to do so by any other party, promptly deliver to the other parties
hereto evidence of the filing of all applications, filings, registrations and
notifications relating thereto (except for any confidential portions thereof),
and any supplement, amendment or item of additional information in connection
therewith (except for any confidential portions thereof). The party
responsible for a filing shall also promptly deliver to the other parties
hereto a copy of each material notice, order, opinion and other item of
correspondence received by such filing party from any Governmental Authority
in respect of any such application (except for any confidential portions
thereof). In exercising the foregoing rights and obligations, each of the
parties hereto shall act reasonably and as promptly as practicable.
(b) Each party to this Agreement shall, upon request, furnish each other
with all information concerning themselves, directors, officers, partners and
stockholders and such other matters as may be reasonably necessary or
advisable in connection with any statement, filing, notice or application made
by or on behalf of Buyer, Seller or the Company to any Governmental Authority
in connection with the transactions contemplated by this Agreement.
(c) The parties to this Agreement shall promptly advise each other upon
receiving any communication from any Governmental Authority whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any requisite regulatory approval will not be obtained or that
the receipt of any such approval will be materially delayed or that the
transactions contemplated hereby will become subject to additional conditions
imposed by a Governmental Authority.
5.9. Notification of Certain Matters. Each party to this Agreement shall
give prompt notice to the other parties, to the extent known by such party, of
(i) the occurrence, or failure to occur, of any event or existence of any
condition that has caused or could reasonably be expected to cause any of the
conditions contained in Sections 6.2(a), 6.2(b) or 6.3(a) of this Agreement
not to be satisfied prior to the Closing, and (ii) any failure on its part to
comply with or satisfy, in any material respect, any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement.
5.10. Expenses. Buyer, the Company and Seller shall each bear their
respective direct and indirect expenses incurred in connection with the
negotiation and preparation of this Agreement and the consummation of the
transactions contemplated hereby. The Company shall pay all pre-closing costs
and expenses for which the Company is responsible under this Section 5.10
prior to the Closing. Notwithstanding the foregoing, Seller and Buyer shall
each pay one-half of (i) the fees required in connection with any filings to
be made under the HSR Act and (ii) any amounts payable at any time on or after
the date hereof under those certain change of control contracts set forth in
Section 5.10 of the Company Disclosure Schedule (provided that the parties
hereby agree to use all reasonable efforts and to cooperate to restructure or
terminate such agreements), and, upon request of the other party, the
requested party shall promptly reimburse the requesting party for its share of
such fees and amounts.
5.11. Third Party Proposals. None of Seller, the Company or any of their
respective Affiliates, officers, directors, representatives or agents, shall
directly or indirectly solicit or encourage inquiries or proposals, or enter
into any definitive agreement, with respect to, or initiate or participate in
any negotiations or discussions with any Person concerning, any acquisition or
purchase of all or a substantial portion of the assets of, or of any equity
interest in, any of the Company or its Subsidiaries or any merger or business
combination with any of the Company or its Subsidiaries, in each case other
than as contemplated by this Agreement (each, an "Acquisition Proposal"), or
furnish any information to any such Person. Seller and any of its Affiliates
and agents shall notify Buyer immediately if any Acquisition Proposal
(including the terms thereof) is received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated with, any of Seller or any of its Affiliates, officers, directors,
representatives or agents. Seller shall, and shall cause its Affiliates,
officers, directors, employees, representatives and advisors to, immediately
cease or cause to be terminated any existing activities, including discussions
or negotiations with any parties, conducted prior to the date hereof with
respect to any Acquisition Proposal and shall seek to have all materials
distributed to Persons in connection therewith by Seller or any of its
Affiliates or advisors returned to Seller promptly or destroyed. None of
Seller or any of its Affiliates, officers, directors, representatives or
agents, shall amend, modify, waive or terminate, or otherwise release any
Person from, any standstill, confidentiality or similar agreement or
arrangement currently in effect with respect to the Company. Seller shall
cause its officers, directors, agents, advisors and Affiliates to comply with
the provisions of this Section 5.11.
5.12. Foreign Subsidiaries. Prior to the Closing, Seller shall cause the
Company to distribute or otherwise transfer to Seller or one or more of its
Affiliates (other than the Company or a Company Subsidiary) all of the
Company's, and any of the Company Subsidiaries', ownership interests in: (i)
0000-0000 Xxxxxx Inc., a Quebec corporation (the "Canadian Subsidiary"), or
such corporation's assets, including any capital stock thereof held by the
Company or any Company Subsidiary; and (ii) Xxxxx-Standard France SARL, a
French limited liability company (the "French Subsidiary"), or such company's
assets, including any capital stock thereof held by the Company or any Company
Subsidiary.
5.13. Interim Financial Statements and Aging Schedules. Without
limitation to Seller's obligations under Section 5.7 , Seller shall cause the
Company to furnish to Buyer, promptly upon completion thereof, the
consolidated financial statements of the Company (including a consolidated
balance sheet and a statement of results of operations) for each month after
October, 1998, which financial statements shall be prepared in accordance with
GAAP, applied on a consistent basis. Seller further shall cause the Company
to furnish to Buyer current Aging Schedules as soon as reasonably practicable
following Buyer's written request therefor, provided that such requests shall
not be made more than once per month.
5.14 Supply Agreements. As soon as reasonably practicable following the
date hereof, Buyer and Seller shall negotiate in good faith the definitive
terms of one or more supply agreements (the "Supply Agreements") containing
the terms set forth on Exhibit 5.14 hereto (which the parties agree are all of
the material terms) and such other terms and conditions as are reasonably
mutually agreeable to such parties and are otherwise customary for agreements
of such type entered into on an arms-length basis.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE ACQUISITION
6.1. Mutual Conditions. The obligations of each party to this Agreement
to effect the Acquisition shall be subject to the following conditions, any of
which may be waived in writing by each of the Company and Seller, on the one
hand, and Buyer, on the other hand:
(a) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated by this Agreement shall be in
effect. No proceeding by any Governmental Authority or other Person shall be
pending or threatened which questions the validity or legality of, or which
seeks to restrain or prohibit, the transactions contemplated hereby or which
could reasonably be expected to result in the imposition of material damages
or penalties upon any party hereto if such transactions are consummated. No
statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental Authority which
prohibits, restricts or makes illegal consummation of the transactions
contemplated hereby;
(b) All consents, waivers, authorizations and approvals required from all
Governmental Authorities to consummate the transactions contemplated hereby,
without the imposition of conditions or requirements shall have been obtained
and shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired or terminated; and
(c) In respect of the notifications of the parties hereto pursuant to the
HSR Act, the applicable waiting period and any extensions thereof shall have
expired or terminated.
6.2. Conditions to Buyer's Obligations. The obligations of Buyer to
effect the Acquisition shall be subject to the following conditions, any of
which may be waived in writing by Buyer:
(a) Each of the representations and warranties of each of Seller and the
Company set forth in this Agreement shall be true and correct in all respects,
subject to the standard set forth below, as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though newly made on and as of the
Closing Date. For purposes of this Section 6.2(a), no representation or
warranty of Seller or the Company contained in Article III hereof shall be
deemed untrue or incorrect as a consequence of the existence of any fact,
event or circumstance unless such fact, circumstance or event is not set forth
in the Company Disclosure Schedule (without giving effect to any supplement
thereto) and individually or taken together with all other facts, events or
circumstances inconsistent with any representation or warranty contained in
Article III hereof has had or is reasonably likely to result in a Company
Material Adverse Effect.
(b) Each of the representations and warranties of each of Seller and the
Company set forth in Section 3.4, shall be true and correct in all respects as
of the date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as though
newly made on and as of the Closing Date.
(c) The Company and Seller shall have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by them on or
prior to the Closing Date.
(d) Messrs. Wachtell, Lipton, Xxxxx & Xxxx, counsel to Seller, shall
have delivered to Buyer an opinion dated the Closing Date in the form of
Exhibit 6.2(d).
(e) Seller, the Company and the Company Subsidiaries shall have obtained
and have provided to Buyer such Authorizations as are required by Law or under
agreements with third parties in order to consummate the transactions
contemplated hereby and to continue the business of the Company and the
Subsidiaries after the Closing, including those required from third parties as
set forth in Section 3.14 of the Company Disclosure Schedule and those
required to avoid the acceleration of any indebtedness or the termination or
cancellation of Contracts or Authorizations affecting the Company, the Company
Subsidiaries and/or their business and properties, whether from lenders,
equipment lessors, landlords, manufacturers, suppliers, customers and other
Persons, in each case, other than those Authorizations the failure to obtain
of which would not reasonably be expected to have a Company Material Adverse
Effect.
(f) At least ten (10) days prior to the Closing, Seller shall have
delivered to Buyer a binding commitment to issue an ALTA owner's policy of
title insurance on each parcel of the Real Estate identified in Section
3.12(a) of the Company Disclosure Schedule as being owned by the Company or a
Subsidiary in the amount set forth in Section 3.12(a) of the Company
Disclosure Schedule naming the Company or such Subsidiary, as the case may be,
as proposed insured. Each such commitment shall be written by a title
insurance company reasonably acceptable to Buyer and licensed in the state in
which such parcel is located, shall show title to such Real Estate and any
easements, use or other agreements benefiting or appurtenant to any of the
Real Estate to be vested in the Company or such Subsidiary, as the case may
be, free and clear of all Encumbrances except Permitted Encumbrances, and
shall commit such insurance company to issue an ALTA owner's policy of title
insurance, insuring the Company's or Subsidiary's interest in such Real Estate
as fee simple owner. Each such commitment shall contain such special
endorsements as Buyer may reasonably require, including: (i) extended
coverage insuring over the standard preprinted exceptions including a gap
coverage endorsement insuring title to such Real Estate through the Closing
Date; (ii) nonimputation; (iii) access; and (iv) zoning.
(g) At least ten (10) days prior to the Closing, Seller shall have
delivered to Buyer a survey of each parcel of the Real Estate identified in
Section 3.12(a) of the Company Disclosure Schedule as being owned by the
Company or a Subsidiary which shall have been prepared by a surveyor licensed
in the state in which such parcel is located. Each such survey shall be in
such form and shall contain a surveyor's certificate in such form as will
cause the title insurance company which issues the commitment referred to in
Section 6.2(f) to delete all survey exceptions from the policy of title
insurance covering the parcel in question and shall: (i) set forth the legal
description of such parcel, which shall be the same description as set forth
in the title insurance commitment for such parcel referred to in Section
6.2(f); (ii) indicate the boundary lines by course and dimension of such
parcel; (iii) indicate the location of all easements, rights of way, public
utilities, water courses, drains, sewers and roads crossing such parcel and
the locations and names of all streets abutting or adjacent to such parcel;
and (iv) clearly designate the location of all improvements and all other
material matters of survey affecting such parcel.
(h) Between the date hereof and Closing there shall have been no damage to
or loss or destruction of any real or tangible personal property of the
Company or any Company Subsidiary which, individually or in the aggregate,
would require the expenditure of more than $5,000,000 to remedy, repair or
replace.
(i) Seller shall have delivered to Buyer a certificate, dated as of the
Closing Date, signed on behalf of Seller by its Chief Financial Officer
confirming the satisfaction of the conditions contained in paragraphs (a),
(b), (c) and (e) of this Section 6.2.
6.3. Conditions to Seller's and the Company's Obligations. The obligation
of the Company and Seller to effect the Acquisition shall be subject to the
following conditions, any of which may be waived in writing by the Company and
Seller:
(a) Each of the representations and warranties of Buyer set forth in
this Agreement shall be true and correct in all respects, subject to the
standard set forth below, as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though newly made on and as of the Closing Date. For
purposes of this Section 6.3(a), no representation or warranty of Buyer
contained in Article IV hereof shall be deemed untrue or incorrect as a
consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event is not set forth in the Buyer Disclosure Schedule
(without giving effect to any supplement thereto) and individually or taken
together with all other facts, events or circumstances inconsistent with any
representation or warranty contained in Article IV hereof has had or is
reasonably likely to result in a Buyer Material Adverse Effect;
(b) The Buyer shall have performed and complied in all material respects
with all agreements, covenants, obligations and conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
(c) Xxxxxxx & Xxxx, S.C., counsel to Buyer, shall have delivered to
Seller an opinion dated the Closing Date in the form of Exhibit 6.3(c).
(d) Buyer shall have delivered to Buyer a certificate, dated as of the
Closing Date, signed on behalf of Buyer by its President confirming the
satisfaction of the conditions contained in paragraphs (a) and (b) of this
Section 6.3.
ARTICLE VII
TERMINATION
7.1. Termination.
(a) This Agreement may be terminated prior to the Closing as follows:
(i) by written consent of Seller, the Company and Buyer;
(ii) by any of Buyer, on the one hand, or Seller or the Company, on the
other hand, (the "Notifying Party") if Seller or the Company, on the one hand,
or Buyer, on the other hand, as the case may be (the "Notified Party"), shall
have failed to perform and comply in all material respects with its or their
agreements and covenants hereunder and such failure to perform or comply shall
not have been remedied within 30 days after receipt by the Notified Party of
notice in writing from the Notifying Party, specifying the nature of such
failure and requesting that such failure be remedied; provided that the
Notifying Party may not terminate this Agreement pursuant to this subsection
(ii) for an additional 30 days if the Notified Party continues in good faith
to use its reasonable best efforts to perform or comply with such agreements
and covenants, other than in respect of approvals of any Governmental
Authority, in which case the Notifying Party may not terminate this Agreement
under this subsection (ii) as long as the Notified Party continues in good
faith to use its reasonable best efforts to perform or comply in respect of
the approvals of any Governmental Authority as required hereunder;
(iii) by any of Buyer, Seller or the Company if there shall be any Law or
regulation that makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited or if consummation of the transactions
contemplated hereby would violate any nonappealable final order, decree or
judgment of any court or Governmental Authority having competent jurisdiction;
(iv) by Buyer if any condition to Buyer's obligations hereunder becomes
incapable of fulfillment or is not satisfied or waived as of the Closing
through no fault of such party and is not waived by such party;
(v) by Seller or the Company if any condition to Seller's or the Company's
obligations hereunder becomes incapable of fulfillment or is not satisfied or
waived as of the Closing through no fault of such parties and is not waived by
such parties; or
(vi) without any further action on March 31, 1999, if the Closing has not
occurred on or before March 31, 1999, unless the failure of the Closing to
occur by such date shall be due to the failure of a party to perform or
observe the covenants and agreements of such party set forth herein, in which
case this Agreement shall terminate pursuant to this Section 7.1(vi) only upon
delivery of written notice of such termination by a party that has not so
failed to perform or observe its covenants and agreements to each other party
hereto in accordance with the provisions of Section 7.1(b).
Notwithstanding Section 7.1(a)(iii) - (v) hereof, a party who is or whose
Affiliate is in material breach of any of its obligations or representations
and warranties hereunder shall not have the right to terminate this Agreement
pursuant to Section 7.1(a)(iii) - (v).
(b) The termination of this Agreement shall be effectuated by the delivery
by the party terminating this Agreement to each other party of a written
notice of such termination, except for a termination pursuant to Section
7.1(vi) which shall be effective as of the date set forth therein subject to
the terms of such Section 7.1(vi). If this Agreement so terminates, it shall
become null and void and have no further force or effect, except as provided
in Section 7.2.
7.2. Survival After Termination . If this Agreement is terminated in
accordance with Section 7.1 hereof and the transactions contemplated hereby
are not consummated, this Agreement shall become void and of no further force
and effect, without any liability on the part of any party hereto, except for
the provisions of Section 5.6, this Section 7.2, the first sentence of Section
5.10 and clause (i) of the second sentence of Section 5.10. Notwithstanding
the foregoing, nothing in this Section 7.2 shall relieve any party to this
Agreement of liability for a willful breach of any provision of this Agreement
or any agreement made as of the date hereof or subsequent thereto pursuant to
this Agreement.
ARTICLE VIII
TAX MATTERS
8.1. Tax Matters. Except as otherwise required by Applicable Law,
Buyer will not cause or permit the Company, Buyer or any Affiliate of Buyer
(i) to take any action on the Closing Date, other than in the ordinary course
of business or except as agreed in writing between the parties (including, but
not limited to, the distribution of any dividend or the effectuation of any
redemption), that could give rise to any Tax liability or loss under this
Agreement by Seller, or (ii) to amend any Tax Return or file a claim for
refund for any Pre-Closing Tax Period that results in any net increased Tax
Liability to or any net reduced Tax Benefit of, Seller, the Company or any
Affiliate of the Company. Seller shall include the Company and the
Subsidiaries through the Closing Date in its United States federal income tax
return and in those state and local tax returns that are filed on a
consolidated or combined basis in accordance with Applicable Law and past
practice of Seller, the Company and the Company Subsidiaries.
8.2 Liability for Taxes.
(a) Seller shall be liable for, and shall hold Buyer, the Company and the
Company Subsidiaries harmless from and against, any or all Taxes due or
payable by the Company and/or the Company Subsidiaries, or by Buyer with
respect to the Company and/or the Company Subsidiaries, for any taxable period
ending on or before the Closing Date and the portion ending on the Closing
Date of any taxable period that includes (but does not end on) the Closing
Date ("Pre-Closing Tax Period"), and any Taxes arising after the Pre-Closing
Tax Period relating to adjustments under Section 481(a) of the Code
attributable to changes initiated during the Pre-Closing Tax Period ("Section
481 Taxes"), including: (i) any liability of the Company and/or the Company
Subsidiaries by reason of their being severally liable (pursuant to Treasury
Regulations Section 1.1502-6, any analogous state, local or foreign provision,
or otherwise), in whole or in part, for any tax of any affiliated group (as
defined in Section 1504(a) of the Code or any analogous state, local or
foreign provisions) with respect to which the Company and/or the Company
Subsidiaries may be or have been an includible corporation (as defined in
Sections 1504(b) and (c) of the Code or such analogous state, local or foreign
provisions) (an "Affiliated Group"); (ii) any liability that arises because
the Company and/or the Company Subsidiaries ceases on the Closing Date to be a
member of an Affiliated Group filing consolidated or combined returns; (iii)
any liability that results from any transaction with respect to the Canadian
Subsidiary and/or French Subsidiary described in Section 5.12; and (iv) any
and all sales, transfer, stamp, excise or similar Taxes applicable to the sale
to Buyer of the Shares, and the transactions contemplated hereby; provided,
however, that Seller shall not be liable for any Taxes due or payable by
Buyer, the Company and/or the Subsidiaries: (i) resulting or arising from any
action taken by or on behalf of Buyer, Buyer's Affiliates, the Company and/or
the Company Subsidiaries on or after the Closing Date out of the ordinary
course of business not contemplated by this Agreement; or (ii) for which a
liability, which is identified as being for such Taxes, to the extent that
such liability is accrued on the Closing Price Documents.
(b) Except for Section 481 Taxes, Buyer shall be liable for, and shall
hold Seller harmless from and against, any and all Taxes due or payable with
respect to: (i) the business activities, transactions and assets of the
Company and/or the Company Subsidiaries for any taxable tax period beginning
after the Closing Date and the portion beginning the day after the Closing
Date of any tax period that includes (but does not end on) the Closing Date
("Post-Closing Tax Period"); and (ii) any action taken by or on behalf of
Buyer, Buyer's Affiliates, the Company and/or the Company Subsidiaries out of
the ordinary course of business on or after the Closing Date not contemplated
by this Agreement.
(c) Any Taxes (other than real and personal property Taxes and any other
Taxes not measured or measurable, in whole or in part, by net or gross income
or receipts), with respect to the business, activities and assets of the
Company and the Company Subsidiaries that relate to a tax period beginning
before the Closing Date and ending after the Closing Date shall be apportioned
between Seller and Buyer, as determined from the books and records of the
Company consistent with the Code, regulations thereunder and other applicable
Law, based on the actual operations of the Company and the Company
Subsidiaries during the portion of such period ending on the Closing Date and
the portion of such period beginning on the day after the Closing Date, and
based on accounting methods, elections and conventions that do not have the
effect of distorting income or expenses, and each such portion of such period
shall be deemed to be a tax period subject to the provisions of Sections
8.2(a) and 8.2(b). Buyer shall, with the approval of Seller (which shall not
be unreasonably withheld), cause the Company and the Company Subsidiaries to
file any required separate (nonconsolidated or noncombined) state, local and
foreign Tax Returns for any such tax period, and Buyer shall pay, or cause to
be paid, all state, local or foreign Taxes (including interest and penalties
relating thereto) shown as due on any such returns with respect to the Company
and/or the Company Subsidiaries. In the event that Buyer and Seller are
unable to agree on any Tax Returns described in the immediately preceding
sentence, the dispute shall be referred to a nationally recognized independent
accounting firm mutually agreed upon by Buyer and Seller for resolution, and
the determination of such accounting firm shall be binding upon Buyer and
Seller, with the fees and expenses of such accounting firm borne equally by
Buyer and Seller. Seller shall pay Buyer its share of any such Taxes (except
to the extent accrued on the Closing Price Documents) pursuant to the filing
of any such Tax Returns under the provisions of this Section 8.2(c) within
five (5) business days after receipt of notice of such filing by Buyer, which
notice shall set forth in reasonable detail the calculations regarding
Seller's share of such Taxes.
(d) Any refunds or credits of Taxes that arise in, or are otherwise
attributable to, a Pre-Closing Tax Period (other than a refund or credit
arising from a carryback or a refund or credit reflected as an asset in the
Closing Price Documents) of the Company and/or any Company Subsidiary net of
any costs of collection shall be for the account of Seller. Any refunds or
credits of Taxes that arise in, or are otherwise attributable to, a Post-
Closing Tax Period of Buyer, the Company and/or any Company Subsidiary,
including any refunds or credits that arise from the carryback of any
deduction, loss or credit from a Post-Closing Tax Period to a Pre-Closing Tax
Period or a refund or credit reflected as an asset in the Closing Price
Documents, shall be for the account of Buyer. Buyer shall cause the Company
and the Company Subsidiaries to use their best efforts to seek and promptly to
forward to, or to reimburse, Seller for any refunds or credits due to Seller
after receipt thereof, and Seller shall use its best efforts to seek and
promptly to forward to, or reimburse, Buyer for any refunds or credits due
Buyer after receipt thereof.
8.3. Procedures.
(a) Seller shall have the right to exercise, at its own expense, control
at any time over the handling, disposition and/or settlement of any issue
raised in any official inquiry, examination or proceeding regarding any Tax
Return with respect to which Seller may be liable for Taxes pursuant to this
Article VIII (other than any Tax Return for a period beginning before the
Closing Date and ending after the Closing Date), including the right to settle
or otherwise terminate any contest with respect thereto; provided, however,
that (i) to the extent that such settlement or defense could reasonably be
expected to adversely affect Buyer for any Tax period or, the Company and/or
any Company Subsidiary for a Post-Closing Tax Period, Seller shall permit
Buyer to participate, at its own expense, in such settlement or defense
through counsel chosen by Buyer and Seller shall not enter into a settlement
(at the administrative level or during the course of judicial proceedings)
without prior consultation with Buyer; and (ii) Buyer shall cooperate with
Seller, as Seller may reasonably request, in any such inquiry, examination or
proceeding.
(b) Buyer shall have the right to exercise, at its own expense, control
at any time over the handling, disposition and/or settlement of any issue
raised in any official inquiry, examination or proceeding regarding any Tax
Return other than as described in Section 8.3(a)) (including the right to
settle or otherwise terminate any contest with respect thereto); provided,
however, that: (i) to the extent that such settlement or defense could
reasonably be expected to adversely affect Seller for any Tax period or, the
Company and/or any Company Subsidiary for any Pre-Closing Tax Period, Buyer
shall permit Seller to participate, at its own expense, in such settlement or
defense through counsel chosen by Seller and Buyer shall not enter into a
settlement (at the administrative level or during the course of judicial
proceedings) without prior consultation with Seller; (ii) Seller shall
cooperate with Buyer, as Buyer may reasonably request, in any such inquiry,
examination or proceeding; and (iii) in the case of any Tax Return for a
period beginning before the Closing Date and ending after the Closing Date,
Buyer shall settle any issue only with the consent of Seller, which consent
will not be unreasonably withheld or delayed.
(c) If, with respect to any official inquiry, examination or proceeding
with respect to Taxes for which indemnity may be sought pursuant to this
Article VIII, Seller, in the case of a Tax Return described in Section 8.3(a),
or Buyer, in the case of any other relevant Tax Return, elects not to exercise
control over the handling, disposition and/or settlement of the issues raised
in such inquiry, examination or proceeding, Buyer or Seller, as the case may
be, shall so notify Seller or Buyer, respectively, and the party so notified
shall be entitled, but shall not be obligated, to exercise control over the
handling, disposition and/or settlement, subject, in the case of Seller, to
the provisions of Section 8.3(a) and, in the case of Buyer, to the provisions
of Section 8.3(b).
(d) Buyer shall promptly notify Seller in writing upon receipt by Buyer,
the Company, any Company Subsidiary or any member of any group of which Buyer,
the Company and/or any Company Subsidiary may be a member, of notice of any
pending or threatened official inquiry, examination or proceeding that may
affect the Tax liability for the Company and/or any Company Subsidiary for any
Pre-Closing Tax Period. Seller shall promptly notify Buyer in writing upon
receipt by Seller of notice of any pending or threatened official inquiry,
examination or proceeding relating to the Company and/or any Company
Subsidiary for any tax period.
8.4. Survival. Anything in Section 9.3(d) to the contrary
notwithstanding, the provisions of this Article VIII relating to Taxes shall
survive the Closing until one year following the latest of (i) the date upon
which liability to which any such claim may relate is barred by all applicable
statutes of limitations (after taking into account any extensions); (ii) the
date upon which any claim for refund or credit related to any such claim is
barred by all applicable statutes of limitations (after taking into account
any extensions); and (iii) with respect to any claim for which indemnity is
being sought at the expiration of the periods described in clauses (i) and
(ii) above, the date of a final determination in such proceeding with respect
to such claim.
8.5. Exclusive Provisions Relating to Taxes. The provisions of this
Article VIII set forth the exclusive and entire agreement of the parties
relating to sharing liabilities for Taxes, division of refunds of Taxes,
control of proceedings relating to Taxes, and filing of Tax Returns, and the
provisions of Section 9.4 shall not apply to such matters except to the extent
expressly and plainly applicable.
8.6. Continuing Cooperation. Subsequent to the Closing, the parties
hereto shall provide each other, and Buyer shall cause the Company and the
Company Subsidiaries to provide Seller, with such cooperation and information
relating to the Company and the Company Subsidiaries as either reasonably may
request in: (i) filing any Tax Return, amended return or claim for refund;
(ii) determining any liability for Taxes or a right to refund of Taxes; or
(iii) conducting or defending any audit or other proceeding in respect of
Taxes. Such cooperation and information shall include providing copies of all
relevant Tax Returns (or applicable portions thereof), together with
accompanying schedules and related work papers, documents relating to rules or
other determinations by taxing Governmental Authorities and records concerning
the ownership and tax basis of the property which any party, the Company, the
Company Subsidiaries or any of their Affiliates may possess. Buyer shall
make, and shall cause the Company and the Company Subsidiaries to make, and
Seller shall make, its and their employees, accountants and other advisors
available on a mutually convenient basis to provide explanations of any
documents or information required to be provided hereunder. The parties shall
retain, and Buyer shall cause the Company and the Company Subsidiaries to
retain, all returns, schedules and work papers, and all material records and
other documents relating thereto, until the expiration of the statute of
limitation (and, to the extent notified by any party, any extensions thereof)
of the taxable years to which such returns and other documents relate and,
unless such returns and other documents are offered and delivered to Seller or
Buyer, as applicable, until the final determination of any tax in respect of
such years. In addition, the parties shall comply, and Buyer shall cause the
Company and the Company Subsidiaries to comply, with all applicable
governmental record retention agreements entered into with any taxing
authority with respect to the Company and/or the Company Subsidiaries. Seller
will cooperate with Buyer upon request in obtaining the Internal Revenue
Service to exercise its authority to limit the liability of the Company and
the Company Subsidiaries under Treasury Regulation Section 1.1502-6 for Taxes
of Seller's Affiliated Group. Any information obtained under this Article
VIII shall be kept confidential, except as may be otherwise necessary in
connection with the filing of any Tax Returns or claims for refund or in
conducting any audit or other proceeding in respect of Taxes. Notwithstanding
the foregoing, neither Seller nor Buyer shall be required unreasonably to
prepare any document, or determine any information not then in its possession,
in response to a request under this Section 8.6.
ARTICLE IX
INDEMNIFICATION
9.1. Indemnification by Seller. From and after Closing, Seller shall
indemnify and hold Buyer, the Company, the Company Subsidiaries and/or their
respective shareholders, directors, officers, employees, agents, successors
and/or assigns harmless from and against any and all Losses in excess of the
amount, if any, reserved or deducted for a particular matter in the Closing
Price Documents (including any costs of environmental remedies or cleanup)
suffered or incurred by any of them which result from or arise out of:
(a) Any inaccuracy in or breach of any of the representations or
warranties of the Company or the Seller made in this Agreement;
(b) Any breach or nonperformance of any of the covenants or other
agreements made by Seller or, only with respect to obligations thereunder
required to be performed prior to or as of the Closing, the Company in or
pursuant to this Agreement;
(c) Except for claims for Taxes (which shall be governed by Article VIII
hereof) and claims relating to any violation of Environmental Laws (which
shall be governed by Sections 9.1(a), 9.1(e) and 9.1(h)) or covered by the
representations and warranties set forth in Section 3.18 (which shall be
governed by Sections 9.1(a), 9.1(e) and 9.1(h)), any claim by any Governmental
Authority or any other Person based upon, alleging or arising out of any act,
omission or occurrence by or relating to the Company and/or the Company
Subsidiaries as of or before the Closing, including, without limitation, any
such Loss relating to or arising out of any claim for nonperformance or breach
of Contract or warranty, worker's compensation or unemployment compensation,
any product liability or personal injury or property damage, any violation of
wage hour Laws and/or employee welfare and safety Laws, any violation of
employment discrimination Laws, any claim under any Plan relating to events on
or before the Closing Date, and/or any claim for infringement relating to the
Company's and/or any Subsidiary's use of any Intellectual Property prior to
the Closing Date;
(d) Any Taxes to the extent provided in Article VIII;
(e) (i) Any violation by the Company or any Company Subsidiary of any
Environmental Law either (A) occurring during the Operating Period for the
Company or such Company Subsidiary or (B) occurring prior to the Operating
Period for the Company or such Company Subsidiary and known by Seller as of
the Closing; or (ii) any condition existing or Release occurring on or under
any parcel of the Real Estate in violation of any Environmental Law in effect
on or before the Closing Date and either (A) resulting from any action or
inaction occurring or any condition created during the Operating Period for
such parcel, or (B) resulting from any action or inaction occurring or any
condition created prior to the Operating Period for such parcel and known by
the Seller as of the Closing, in each case under clauses (i) and (ii) of this
Section 9.1(e), other than any Losses arising out of, attributable to, or
resulting from matters, facts or circumstances disclosed in Section 3.18 of
the Company Disclosure Schedule;
(f) The operations and/or disposition of the Canadian Subsidiary and/or
French Subsidiary prior to, at or after the Closing;
(g) The Covered Litigation (provided that Seller shall be permitted to
defend the Covered Litigation and shall have authority to resolve the Covered
Litigation, subject to the provisions set forth in Section 9.4 hereof); and
(h) (i) Any violation by the Company or any Company Subsidiary of any
Environmental Law either (A) occurring during the Operating Period for the
Company or such Company Subsidiary or (B) occurring prior to the Operating
Period for the Company or such Company Subsidiary and known by Seller as of
the Closing; or (ii) any condition existing or Release occurring on or under
any parcel of the Real Estate in violation of any Environmental Law in effect
on or before the Closing Date and either (A) resulting from any action or
inaction occurring or any condition created during the Operating Period for
such parcel, or (B) resulting from any action or inaction occurring or any
condition created prior to the Operating Period for such parcel and known by
the Seller as of the Closing, in each case under clauses (i) and (ii) of this
Section 9.1(h), only to the extent such Losses arise out of, are attributable
to, or result from matters, facts or circumstances disclosed in Section 3.18
of the Company Disclosure Schedule (including in the ERM Reports (as defined
in the Company Disclosure Schedule)), and then only for one half of any such
Losses.
9.2. Indemnification by Buyer. From and after Closing, Buyer shall
indemnify and hold Seller and/or its shareholders, directors, officers,
employees, agents, successors and/or assigns harmless from and against any and
all Losses suffered or incurred by any of them which result from or arise out
of:
(a) Any inaccuracy in or breach of any of the representations or
warranties of Buyer made in this Agreement;
(b) Any breach or nonperformance of any of the covenants or other
agreements made by Buyer or, only with respect to obligations required to be
performed thereunder after the Closing, the Company in or pursuant to this
Agreement; and
(c) The Covered Lease, provided the Buyer shall not be required to
indemnify any Person or make any payment with respect to any liability,
obligation, penalty or damages arising under the Covered Lease in connection
with any breaches or defaults thereunder occurring prior to the Closing.
9.3. Limitation on Liability. Anything in this Agreement to the
contrary notwithstanding:
(a) No party shall be required to indemnify any Person or make any
payment with respect to any Loss arising under Sections 9.1(a), 9.1(b),
9.1(c), 9.1(e), 9.2(a) and/or 9.2(b) if the inaccuracy or breach in question,
the breach or nonperformance in question, the claim in question or the
violation, condition or Release, in question, as the case may be, was
disclosed in any written supplement to the Company Disclosure Schedule or the
Buyer Disclosure Schedule, as the case may be, delivered to the other
party(ies) prior to Closing and such inaccuracy, breach, nonperformance,
claim, violation, condition or Release, together with all other inaccuracies,
breaches, nonperformances, claims, violations, conditions and/or Releases
would have caused any of the conditions set forth in Sections 6.2(a), 6.2(b)
or 6.2(c), in the case of indemnification or payment by Seller, or Sections
6.3(a) or 6.3(b), in the case of indemnification or payment by Buyer, not to
be satisfied as of Closing (without giving effect to any waiver thereof or any
supplement to the Company or Buyer Disclosure Schedules).
(b) (i) Seller shall not be required to indemnify any Person or make any
payment with respect to any Losses arising under Sections 9.1(a), 9.1(c)
(other than Losses to the extent arising under Section 9.1(c) with respect to
any claim arising under any Plan (which Losses shall not be subject to this
Section 9.3(b))) or 9.1(e), and Buyer shall not be required to indemnify or
make any payment with respect to any Losses arising under Section 9.2(a),
unless and until the aggregate amount of such Losses for which such party
would otherwise be liable under such Sections exceeds $1,250,000 (the "Basket
Amount"), but if and when the aggregate amount of Losses for which such party
would otherwise be liable under such Sections exceeds, in the aggregate, the
Basket Amount, then such party shall be liable for all such Losses but only to
the extent in excess of the Basket Amount, subject to the limitations set
forth in Section 9.3(c), below;
(c) (i) Seller shall not be required to indemnify any Person or make any
payments with respect to any Losses arising under Sections 9.1(a) or 9.1(c),
and Buyer shall not be required to indemnify or make any payment with respect
to any Losses arising under Section 9.2(a), in each case to the extent the
aggregate of the amounts for which such party is obligated to indemnify any
Persons or make payments under this Article IX exceeds $30,000,000; and (ii)
Seller shall not be required to indemnify any Person or make any payments with
respect to any Losses arising under Section 9.1(h) to the extent the aggregate
of the amounts for which Seller is obligated to indemnify any Persons or make
payments under such Section 9.1(h) exceeds $1,125,000.
(d) No Indemnified Party (as defined below) shall be entitled to any
indemnification or any payment pursuant to this Article IX unless the
Indemnified Party shall provide the Indemnifying Party (as defined below) with
notice of its claim for indemnification as provided in Section 9.4: (i)
within two (2) years after the Closing Date in the case of any claim for
indemnification under Sections 9.1(a) (other than in the case of any claim for
indemnification under Sections 9.1(a) with respect to any inaccuracy and/or
breach of any representation or warranty made in Sections 3.1 or 3.4), 9.1(b)
(in the case of any breach or nonperformance of any of the covenants or other
agreements covered thereby to the extent required to be performed prior to or
as of the Closing), 9.2(a) (other than in the case of any claim for
indemnification under Sections 9.2(a) with respect to any inaccuracy and/or
breach of any representation or warranty made in Section 4.1) or 9.2(b) (in
the case of any breach or nonperformance of any of the covenants or other
agreements covered thereby to the extent required to be performed prior to or
as of the Closing); (ii) within three (3) years after the Closing Date in the
case of any claim for indemnification under Sections 9.1(c); and (iii) within
the period of the applicable statute of limitations in all other cases.
9.4. Procedure.
(a) Notice of Third Party Claims. Any party entitle to and seeking
indemnification under this Article IX (an "Indemnified Party") for any Loss or
potential Loss arising from a claim asserted by a third party against the
Indemnified Party (a "Third Party Claim") shall give written notice to the
party obligated to provide indemnification under this Article IX (the
"Indemnifying Party") specifying in detail the source of the Loss or potential
Loss under Section 9.1 or 9.2, as the case may be. Written notice to the
Indemnifying Party of the existence of a Third Party Claim shall be given by
the Indemnified Party promptly after notice of the potential claim; provided,
however, that the Indemnified Party shall not be foreclosed from seeking
indemnification pursuant to this Article IX by any failure to provide such
prompt notice of the existence of a Third Party Claim to the Indemnifying
Party except and only to the extent that the Indemnifying Party actually
incurs an incremental out-of-pocket expense or otherwise has been materially
damaged or prejudiced as a result of such delay.
(b) Defense. Except as otherwise provided herein, the Indemnifying Party
may elect to compromise or defend, at such Indemnifying Party's own expense
and by such Indemnifying Party's own counsel (which counsel shall be
reasonably satisfactory to the Indemnified Party), any Third Party Claim. If
the Indemnifying Party elects to compromise or defend such Third Party Claim,
it shall, within 30 days after receiving notice of the Third Party Claim (10
days if the Indemnifying Party in good faith states in such notice that prompt
action is required), notify the Indemnified Party of its intent to do so, and
the Indemnified Party shall cooperate, at the expense of the Indemnifying
Party, in the compromise of, or defense against, such Third Party Claim. If
the Indemnifying Party elects not to compromise or defend against the Third
Party Claim, or fails to notify the Indemnified Party of its election to do so
as herein provided, or otherwise abandons the defense of such Third Party
Claim, (i) the Indemnified Party may pay (without prejudice of any of its
rights as against the Indemnifying Party), compromise or defend such Third
Party Claim (until such defense is assumed by the Indemnifying Party) and (ii)
the costs and expenses of the Indemnified Party incurred in connection
therewith shall be indemnifiable by the Indemnifying Party pursuant to the
terms of this Agreement. Notwithstanding anything to the contrary contained
herein, in connection with any Third Party Claim in which the Indemnified
Party shall reasonably conclude, based upon advice of its outside legal
counsel, that (x) there is a conflict of interest between the Indemnifying
Party and the Indemnified Party in the conduct of the defense of such Third
Party Claim or (y) there are specific defenses available to the Indemnified
Party which are different from or additional to those available to the
Indemnifying Party and which could be materially adverse to the Indemnifying
Party, then the Indemnified Party shall have the right to assume and direct
the defense of such Third Party Claim. In such an event, the Indemnifying
Party shall pay the reasonable fees and disbursements of counsel of the
Indemnifying Party and one counsel to all the Indemnified Parties.
Notwithstanding the foregoing, neither the Indemnifying Party nor the
Indemnified Party may settle or compromise any claim (however, if the sole
settlement relief payable to a third party in respect of such Third Party
Claim is monetary damages that are paid in full by the Indemnifying Party and
if the settlement results in the full and unconditional release of all claims
against the Indemnified Party by the person asserting such claim, the
Indemnifying Party may settle such claim without the consent of the
Indemnified Party) over the objection of the other. In any event, except as
otherwise provided herein, the Indemnified Party and the Indemnifying Party
may each participate, at its own expense, in the defense of such Third Party
Claim in which case each party shall cooperate in providing information to and
consulting with the other about the claim. If the Indemnifying Party chooses
to defend any claim, the Indemnified Party shall make available to the
Indemnifying Party any personnel or any books, records or other documents
within its control that are reasonably necessary or appropriate for such
defense, subject to the receipt of appropriate confidentiality agreements.
(c) Settlement. If a settlement offer solely for money damages is made by
a third party claimant and provides for a full and unconditional release of
all claims against the Indemnified Party by the claimant, and the Indemnifying
Party notifies the Indemnified Party in writing of the Indemnifying Party's
willingness to accept the settlement offer and pay the amount called for by
such offer, and the Indemnified Party reasonably declines to accept such
offer, the Indemnified Party may continue to contest such claim, free of any
participation by the Indemnifying Party, and the amount of any ultimate
liability with respect to such claim that the Indemnifying Party has an
obligation to pay hereunder shall be limited to the lesser of (A) the amount
of the settlement offer that the Indemnified Party declined to accept plus the
costs and expenses of the Indemnified Party prior to the date the
Indemnifying Party notifies the Indemnified Party of the Indemnifying Party's
willingness to settle or compromise such Third Party Claim and (B) the
aggregate Losses of the Indemnified Party with respect to such claim.
(d) Miscellaneous. The procedures set forth in Section 9.4(a)-(c) above
shall apply solely with respect to Third Party Claims and shall not be deemed
to apply to, or otherwise affect or limit, an Indemnified Party's rights under
this Agreement with respect to any claim other than a Third Party Claim.
(e) Notice of Non-Third Party Claims. Any Indemnified Party seeking
indemnification for any Loss or potential Loss arising from a claim asserted
by any party to this Agreement against the Indemnifying Party (a "Non-Third
Party Claim") shall give written notice to the Indemnifying Party specifying
in detail the source of the Loss or potential Loss under Section 9.1 or 9.2,
as the case may be. Written notice to the Indemnifying Party of the existence
of a Non-Third Party Claim shall be given by the Indemnified Party promptly
after the Indemnified Party becomes aware of the potential claim; provided,
however, that the Indemnified Party shall not be foreclosed from seeking
indemnification pursuant to this Article IX by any failure to provide such
prompt notice of the existence of a Non-Third Party Claim to the Indemnifying
Party except and only to the extent that the Indemnifying Party actually
incurs an incremental out-of-pocket expense or otherwise has been materially
damaged or prejudiced as a result of such.
9.5. Survival of Indemnity. Any matter as to which a claim has been
asserted by formal notice pursuant to Sections 9.4(a) or 9.4(e) and within the
time limitation applicable by reason of Section 9.3(d) that is pending or
unresolved at the end of any applicable limitation period under this Article
IX or Applicable Law shall continue to be covered by this Article IX
notwithstanding any applicable statute of limitations (which the parties
hereby waive) or the expiration dates set forth in Section 9.3(d) until such
matter is finally terminated or otherwise resolved by the parties under this
Agreement or by a court of competent jurisdiction and any amounts payable
hereunder are finally determined and paid.
9.6. Subrogation. Any Indemnifying Party shall be subrogated to any right
of action which the Indemnified Party may have against any other Person with
respect to any matter giving rise to a claim for indemnification hereunder.
9.7. Adjustments to Indemnification Obligations.
(a) All computations of indemnity payments due under this Article IX
shall reflect the actual present cash cost of the obligation with respect to
which the indemnity payment relates. If any Indemnified Party receives a Tax
Benefit by virtue of having paid or accrued an amount for which an indemnity
payment is provided, the amount of such Tax Benefit will be refunded to the
Indemnifying Party making such indemnity payment when, as and if such
Indemnified Party realizes a cash Tax savings from such Tax Benefit. If for
any reason an Indemnified Party has any Tax imposed on it on account of its
receipt of an indemnity payment including payments pursuant to this sentence
("Additional Indemnity Taxes"), such indemnity payment shall be "grossed-up"
for the Additional Indemnity Taxes so that the net payments received by the
Indemnified Party will be equal to the amount of the indemnity payment such
Indemnified Party would have received had no such Additional Indemnity Taxes
been imposed.
(b) The amount which any Indemnifying Party is or may be required to pay
any Indemnified Party pursuant to this Article IX shall be reduced (including
without limitation, retroactively) by any insurance proceeds or other amounts
actually recovered by or on behalf of such Indemnified Party in reduction of
the related Losses, less any increase in insurance premiums incurred by the
Indemnified Party as a result of such Loss (a "Premium Increase"). If an
Indemnified Party shall have received the payment required by this Agreement
from an Indemnifying Party in respect of a Loss and shall subsequently
actually receive insurance proceeds or other amounts in respect of such Loss,
then such Indemnified Party shall pay to such Indemnifying Party a sum equal
to the amount of such insurance proceeds or other amounts actually received
(net of any expenses in obtaining the same), less any Premium Increase.
(c) No Indemnified Party shall be entitled to indemnification under this
Agreement for consequential or punitive damages with respect to Any Non-Thirty
Party Claim.
9.8. Exclusive Remedy. Except as provided in Section 11.10, the right to
indemnification, if any, with respect to breaches of representations,
warranties and covenants pursuant to this Article IX shall constitute the sole
and exclusive remedy with respect thereto, shall preclude any other monetary
award (whether at law or in equity) and shall preclude assertion by any party
hereto of any right to any such monetary award from the Indemnifying Party.
Nothing in this Article IX shall limit the remedies available to an
Indemnified Party to enforce its right to indemnification.
9.9. Duty to Mitigate. Each party shall use its reasonable best efforts
to mitigate any and all Losses suffered, incurred or sustained by such party
arising out of, attributable to or resulting from any inaccuracy in or breach
of any of the representations, warranties or covenants of the other party
hereto.
9.10. Payment. If any Indemnitee shall incur any Loss for which it is
entitled to indemnification hereunder, the Indemnifying Party shall make the
indemnification payment required under this Article X within ten (10) days
after receipt by the Indemnifying Party of written notice from the Indemnitee
stating the amount of the Loss and of the indemnification payment requested.
Any indemnification payment required under this Section 9.10 which is not made
when due shall bear interest at a floating rate equal to the Prime Rate as in
effect from time to time from the date due until paid.
ARTICLE X
CONDUCT SUBSEQUENT TO CLOSING
10.1. Further Assurances. From and after the Closing, upon the
reasonable request of any other party from time to time, each party shall
execute, acknowledge and deliver to the other parties such further instruments
and take such other actions as such other party may reasonably request in
order: (i) to carry out the intent and purposes of this Agreement and/or more
effectively reflect the consummation of the transactions contemplated hereby;
and (ii) to confirm and perfect in the Company and the Company Subsidiaries
title to any and all of their assets and properties. Without limitation of
the foregoing, from and after the Closing, upon the reasonable request of
Buyer, but without cost to Buyer, the Company and/or any Company Subsidiary,
Seller shall cause any patents, registered trademarks, registered copyrights,
Contracts and/or other rights, properties and/or assets primarily used by or
related to the Company and/or any Company Subsidiaries (other than the
Canadian Subsidiary and the French Subsidiary) and set forth, or required to
be set forth, in the Company Disclosure Schedule, but titled in and/or held in
the name of the Seller and/or its other Affiliates, to be assigned,
transferred and conveyed to the Company and/or any Company Subsidiaries as
requested by Buyer.
10.2. Noncompetition and Nondisclosure Covenant.
(a) Other than as contemplated by the Supply Agreements, Seller shall
not (i) at any time during the five (5) year period commencing on the Closing
Date (the "Noncompetition Period") engage, either directly or indirectly,
except as a holder of no more than 5% of the stock of a publicly held company
provided Seller does not actively participate in the business of such company,
in the business of developing, manufacturing, distributing or selling (A)
reaction and compounded flavor ingredients for the food processing , bakery,
beverage and pharmaceutical industries, (B) natural colors for producers of
food or pharmaceuticals, (C) specialty sweeteners, including edible molasses,
molasses blends, malt extracts, and syrups for the bakery, confectionery and
food processing industries, or (D) seasonings and seasoning blends for the
food processing industry (collectively, the "Restricted Business") or (ii) at
any time during the Noncompetition Period, induce or attempt to induce any
present employee of the Company and/or the Company Subsidiaries to leave the
employ of the Company and/or the Company Subsidiaries (other than pursuant to
general advertisements or solicitation for employment not specifically target
at such employees) or (iii) at any time during the Noncompetition Period,
contact, solicit or entice any supplier, customer, distributor or
representative of the Company and/or any Company Subsidiary as of the date
hereof for the purpose of causing any such customer, supplier, distributor or
representative not to conduct the Restricted Business with the Company and/or
any Company Subsidiary. Notwithstanding the foregoing, during the
Noncompetition Period, Seller or any of its Affiliates may acquire or be
acquired by, or merge or effect any other business combination with, any
entity, whether in the form of a merger, stock purchase, purchase and
assumption or otherwise, the principal business of which is not the Restricted
Business. For purposes of this Section 10.2(a), an entity's "principal
business" shall be deemed to be the Restricted Business if the portion of such
entity's (including for this purpose any Affiliates of such entity, if such
entity was part of an affiliated group of entities acquired at the same time)
consolidated gross revenues attributable to the Restricted Business in the
full calendar quarter last preceding the closing of such acquisition exceeded
twenty-five (25%) of such entity's (and all such Affiliates') consolidated
gross revenues during such quarter.
(b) In the event that Seller or any of its Affiliates acquires or is
acquired by, or merges or effects any other business combination with, any
entity, whether in the form of a merger, stock purchase, purchase and
assumption or otherwise, in any case in compliance with the terms of Section
10.2(a) above, Seller or its Affiliates (or any such entity or its Affiliates,
if applicable) shall be entitled to consummate such transaction and continue
to operate any lines of business in which such entity or its Subsidiaries were
engaged at the time of such transaction (including without limitation any
Restricted Business), provided that any such entity and its Subsidiaries
shall, during the Noncompetition Period, conduct the Restricted Business
otherwise permitted under this Section 10.2(b) and neither Seller nor any of
its other Affiliates (Seller and its Affiliates being defined for purposes of
this Section 10.2(b) as of the time immediately prior to the consummation of
the relevant transaction under Section 10.2(a)) shall conduct such Restricted
Business.
(c) Seller shall not, and Seller shall ensure that its Affiliates do
not, at any time during the Noncompetition Period, use or disclose any
Confidential Information, and Seller shall protect and safeguard all
Confidential Information with the same care that it uses in protecting its own
proprietary information. For purposes hereof, "Confidential Information"
shall mean all information relating to the business of the Company and the
Company Subsidiaries as of or before the Closing that is not publicly known,
including, without limitation: (i) information regarding their products; (ii)
information concerning products under development by or being tested by the
Company and the Company Subsidiaries; (iii) the Company's Intellectual
Property relating to manufacturing processes and formulations; (iv) pricing
and customer information; (v) information concerning the marketing programs
and strategies of the Company and the Company Subsidiaries; (vi) personnel
information; and (vii) other information that is not publicly known and that
confers a competitive advantage on the Company and the Company Subsidiaries or
that would confer a competitive advantage on the competitors of the Company
and the Company Subsidiaries if it were disclosed to such competitors. The
foregoing notwithstanding, this Section 10.2(c) shall not apply to any
information that: (i) becomes or has become publicly known without any
violation by Seller and/or its Affiliates of its obligations hereunder; or
(ii) Seller and/or its Affiliates, in the written opinion of Seller's counsel,
are required to disclose by Law, whether by subpoena or otherwise, provided
that Seller and/or its Affiliates provide Buyer with a reasonable opportunity
to take appropriate measures to avoid such legal requirement or to protect
such Confidential Information despite such disclosure and disclose only so
much of the Confidential Information as Seller and/or its Affiliates are
required to disclose by Law. Seller shall be liable to Buyer, the Company and
the Company Subsidiaries for any violation of this Section 10.2(c) by Seller's
Affiliates.
(d) Seller acknowledges and agrees that a breach of the provisions of
this Section 10.2 will cause irreparable injury to Buyer, the Company and the
Company Subsidiaries, and that Buyer, the Company and the Company Subsidiaries
shall be entitled to an injunction enjoining and restraining Seller from doing
or continuing to do any such act or creating any other violations or
threatened violations of any such provision.
(e) Seller agrees that the terms and conditions of this Section 10.2 are
reasonable and necessary for the protection of Buyer, the Company, the Company
Subsidiaries and their trade secret, confidential and proprietary information
and for the prevention of damage or loss thereto as a result of action taken
by Seller.
10.3. Access to Records. After the Closing, Seller shall provide to
Buyer, the Company, the Company Subsidiaries and their respective
representatives, and Buyer shall cause the Company and the Company
Subsidiaries to provide to Seller and its representatives, the opportunity,
upon reasonable request, to examine and make copies of any documents and
Records relating to the Company and the Company Subsidiaries in their or their
Affiliates' custody, and to consult with their officers, employees, directors,
accountants and other representatives for bona fide business purposes,
including, without limitation, the preparation of Tax Returns and financial
statements and/or any audit with respect thereto. For a period of five (5)
years after the Closing, Seller shall not dispose of any, and Buyer shall
cause the Company and the Company Subsidiaries not to dispose of any, Records
relating to the business of the Company and the Company Subsidiaries as
conducted prior to the Closing Date unless Seller has first given to Buyer or
Buyer has first given to Seller, as the case may be, at least thirty (30) days
prior written notice of its intention to do so and afforded Buyer or Seller,
as the case may be, the opportunity to take possession of such Records prior
to their disposition.
10.4. Benefit Plan Rollovers. After the Closing Date, if Buyer so elects,
Seller shall cooperate with Buyer in affecting either a plan to plan transfer
or rollover of account balances of employees of the Company and the Company
Subsidiaries in any benefit plans maintained by Seller or its Affiliates to
any similar plans which Buyer may maintain or establish into which such
transfer may be made under applicable Law and in accordance with the terms of
the benefit plans maintained by Seller or its Affiliates. Such transfer or
rollover shall be accomplished only to the extent requested by Buyer with
respect to any employee of the Company and/or the Company Subsidiaries who is
eligible to participate in Buyer's plans and who consents to or elects to make
any such transfer or rollover.
10.5. Transition Services. At Buyer's request, but without cost to Buyer,
Company and/or any Company Subsidiary, for a period of up to 90 days after the
Closing, Seller shall provide invoicing, account receivable management (but
not credit services) and cash management services to the Company and the
Company Subsidiaries on the same basis and in the same manner as currently
provided by Seller to the Company and the Company Subsidiaries.
10.7 Cooperation. Seller shall reasonably cooperate with Buyer, the
Company and the Company Subsidiaries to effect the transition from Seller and
its other Affiliates to Buyer and its Affiliates following the Closing of the
provision of corporate and administrative services currently provided by
Seller and its other Affiliates to the Company and the Company Subsidiaries.
10.8. Employee Benefits. For a period of two years following the Closing
Date, Buyer shall cause the Company and the Company Subsidiaries to provide to
the employees of the Company and the Company Subsidiaries compensation,
employee benefits, fringe benefits and other benefits which, in the aggregate,
are generally as favorable as those provided by Buyer to its other North
American employees generally. For purposes of benefits provided by Buyer on a
corporatewide basis to employees, including employees of the Company and the
Company Subsidiaries, Buyer shall give such employees service credit for
periods of employment with the Company and the Company Subsidiaries.
ARTICLE XI
MISCELLANEOUS
11.1. Amendments; Waiver. This Agreement may not be amended, altered or
modified except by written instrument executed by all the parties hereto. Any
agreement on the part of any party to waive (i) any inaccuracies in the
representations and warranties contained herein by any other party or in any
document, certificate or writing delivered pursuant hereto by any other party,
or (ii) compliance with any of the agreements, covenants or conditions
contained herein, shall be valid only if set forth in an instrument in writing
signed on behalf of such party. No such waiver shall constitute a waiver of,
or estoppel with respect to, any subsequent or other inaccuracy, breach or
failure to strictly comply with the provisions of this Agreement.
11.2. Entire Agreement. This Agreement (including the Company Disclosure
Schedule, the Buyer Disclosure Schedule, any other schedules, certificates,
lists and documents referred to herein, and any documents executed by the
parties simultaneously herewith or pursuant thereto) constitutes the entire
agreement of the parties hereto, except as provided herein, and supersedes all
prior agreements and understandings, written and oral, among the parties with
respect to the subject matter hereof.
11.3. Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." The phrases "the date of this Agreement," "the date
hereof" and terms of similar import, unless the context otherwise requires,
shall be deemed to refer to the date set forth in the first paragraph of this
Agreement. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision. The use of the neuter pronoun "it"
shall also refer as appropriate to the masculine and/or feminine gender, and
vice versa. The use of the singular herein shall, where appropriate, be
deemed to include the plural and vice versa. As used herein, any
representation or warranty made "to Seller's knowledge" means that the Seller
does not know such representation or warranty is untrue, and the Seller shall
be deemed to "know" facts, circumstances or information if any officer,
director or management personnel of Seller, the Company and/or any Company
Subsidiary has actual knowledge of such facts, circumstances or information.
11.4. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
11.5. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if (a) delivered in person, (b) transmitted
by facsimile (with written confirmation), (c) mailed by certified or
registered mail (return receipt requested) or (d) delivered by an express
courier (with written confirmation) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Seller or the Company: Crompton & Xxxxxxx Corporation
Xxx Xxxxxxx Xxxxx - Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
With a copy to: Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to Buyer: Chr. Xxxxxx, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
11.6. Governing Law. The parties hereto agree that all terms and
conditions of this Agreement and the documents delivered in connection
herewith shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without giving effect to any choice of law
or conflict provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
11.7. Arbitration. Any controversy or claim arising under this Agreement
or the breach thereof (excluding any dispute with respect to the Closing Price
Documents which shall be resolved as provided in Section 2.2 and excluding any
dispute arising under Section 10.2) shall be submitted to and settled by
arbitration in New York, New York under the American Arbitration Association
("AAA") Commercial Arbitration Rules with expedited procedures as then in
effect, as modified by this Agreement. There shall be one arbitrator selected
by the parties within ten days of the arbitration demand or, if not, by the
AAA from its Large, Complex Case Panel who shall be an attorney with at least
15 years commercial law experience. Any issue about whether any claim is
covered by this arbitration clause shall be determined by the arbitrator. The
arbitrator shall apply substantive law and may award injunctive relief or any
other remedy available for a judge, but shall not have the power to award
punitive damages. The arbitrator shall so conduct the arbitration that a
final result, determination, finding, judgment and/or award (the "Final
Determination") is made or rendered as soon as practicable. The Final
Determination shall be final and binding on the parties and there shall be no
appeal from, or reexamination of, the Final Determination, except for fraud,
perjury, evident impartiality or misconduct by the arbitrator prejudicing the
rights of any party or to correct manifest clerical errors. The arbitrator
selected pursuant to this Section 11.7 will determine the allocation of the
costs and expenses of arbitration based upon the percentage which the portion
of the contested amount not awarded to each party bears to the amount actually
contested by such party. For example, if Buyer submits a claim for $1,000,
and the Seller contests only $500 of the amount claimed by Buyer, and if the
arbitrator ultimately resolves the dispute by awarding Buyer $300 of the $500
contested, then the costs and expenses of the arbitration shall be allocated
60% (i.e., $300 divided by $500) to Seller and 40% (i.e., $200 divided by
$500) to Buyer. If any party shall fail to pay the amount of any damages
assessed against it within ten (10) days of the delivery to such party of the
Final Determination, the unpaid amount shall bear interest from the date of
such delivery until paid at a floating rate equal to the Prime Rate plus 3%
per annum, but not exceeding the maximum rate permitted by Law in such cases,
and such party shall promptly reimburse the other party for any and all costs
or expenses of any nature or kind whatsoever (including, but not limited to,
all reasonable attorneys' fees) incurred in seeking to collect such damages or
to enforce any Final Determination.
11.8. Benefit; Assignment. This Agreement shall be binding upon and
inure to the benefit of Buyer, Seller and their respective successors and
permitted assigns. Neither Buyer nor Seller may assign its rights nor
delegate its obligations hereunder without the written consent of the other
parties hereto, except that Buyer may assign its rights and delegate its
obligations hereunder to any direct or indirect, wholly owned subsidiary of
Chr. Xxxxxx A/S, and, from and after the Closing, Buyer may assign its rights
under Articles IX and X, hereof, to any financial institution in connection
with the extension of credit to Buyer and/or its corporate affiliates by such
financial institution, but, in the event of any such assignment, Buyer shall
not be released from any of its obligations hereunder. Except as expressly
provided otherwise in Articles IX, this Agreement shall not be deemed to
confer any rights or remedies upon any person other than the parties hereto
and their respective successors and permitted assigns. Nothing in this
Agreement shall confer any rights of employment upon any Person.
11.9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same agreement, it being
understood that all of the parties need not sign the same counterpart.
11.10. Specific Performance. The parties hereto acknowledge that, in view
of the uniqueness of the Company's business and the transactions contemplated
by this Agreement, each party would not have an adequate remedy at law for
money damages in the event that the covenants to be performed under this
Agreement have not been performed in accordance with their terms, and
therefore agree that (notwithstanding any right to indemnification hereunder)
the other parties shall be entitled to specific enforcement of the terms of
such covenants and any other equitable remedy to which such parties may be
entitled.
11.11. Effect of Investigation. Except to the extent provided in this
Agreement, no investigation by the parties hereto made before or after the
date of this Agreement or the provisions of any documents (other than the
Company Disclosure Schedule and the Buyer Disclosure Schedule, and any
permitted supplements thereto to the extent provided in this Agreement),
whether available pursuant to this Agreement or otherwise, shall affect the
interpretation of the representations and warranties of the parties which are
contained herein.
11.12. WAIVER OF JURY TRIAL. WITHOUT LIMITATION TO SECTION 11.7, EACH OF
THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
CROMPTON & XXXXXXX CORPORATION
By: /s/Xxxxxxx X. Xxxxxxx
Name:
Title:
INGREDIENT TECHNOLOGY CORPORATION
By: /s/Xxxxxxx X. Xxxxxxx
Name:
Title:
CHR. XXXXXX, INC.
By: /s/Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: President
Schedule I
Adjustments to GAAP
For Purposes of Calculating Net Book Value
To the extent not otherwise required by GAAP, Net Book Value shall be computed
by making the following adjustments to the consolidated balance sheet of the
Company as of the close of business on the last Business Day of the month last
preceding the month in which the Closing Date occurs:
(I) any inter-company accounts between the Company and/or its
Subsidiaries, on the one hand, and Seller and/or its Affiliates (other than
the Company or any of its Subsidiaries), on the other hand, shall be excluded;
(II) unpaid costs and premiums, if any, due with respect to the surveys
and title insurance policies to be provided by Seller as provided in Sections
6.2(g) and (h) of the Agreement shall be accrued as liabilities;
(III) there shall be included as current assets or current liabilities, as
the case may be, amounts prepaid or appropriately accrued for periodic items
through the close of business on the last Business Day of the month last
preceding the month in which the Closing Date occurs, including, for example,
maintenance and service agreements, personal property leases, vacation and
sick pay and electric, gas, telephone and other utility charges;
(IV) there shall be included as current liabilities amounts appropriately
accrued for customer deposits or prepayments (if any) through the close of
business on the last Business Day of the month last preceding the month in
which the Closing Date occurs;
(V) no effect shall be given to the sale of the Shares to the Buyer or any
other transactions contemplated hereby (other than the disposition of the
Canadian and French Subsidiary as provided herein); and
(VI) the adjustments reflected in the consolidated balance sheet of the
Company as of October 24, 1998 (including the footnotes thereto) attached
hereto shall be applied in the same amounts (without further adjustment
thereto; except that the adjustments in columns three, four and nine (from the
left) shall be appropriately and consistently adjusted to reflect actual
balances) in the preparation of the consolidated balance sheet of the Company
as of the close of business on the last Business Day of the month last
preceding the month in which the Closing Date occurs.
