EXHIBIT 4.21
SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT (this "Second
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Amendment"), is entered into as of February 25, 2002, by and among Industrial
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Container Services, LLC, a Delaware limited liability company ( "Buyer") on the
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one hand, and IFCO Systems N.V., a Netherlands limited liability company
("IFCO"), IFCO Systems North America, Inc., a Delaware corporation ("ISNA"),
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IFCO Industrial Container Systems Holding Company, a Delaware corporation
("IICSH"), IFCO ICS - Chicago, Inc., an Illinois corporation ("IFCO Chicago"),
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IFCO ICS - Miami, Inc., a Delaware corporation ("IFCO Miami"), IFCO ICS - North
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Carolina, Inc., a Delaware corporation ("IFCO North Carolina"), IFCO ICS -
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Minnesota Inc., a Minnesota corporation ("IFCO Minnesota"), Container Resources
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Corporation, a Minnesota corporation ("Container"), IFCO ICS - Washington, Inc.,
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a Delaware corporation ("IFCO Washington"), IFCO ICS - California, Inc., a
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Delaware corporation ("IFCO California"), IFCO ICS - Florida, Inc., a Florida
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corporation ("IFCO Florida"), Environmental Recyclers of Colorado, Inc., a
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Colorado corporation ("Recyclers"), IFCO ICS - Illinois, Inc., an Illinois
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corporation ("IFCO Illinois"), PalEx Kansas, Inc., a Delaware corporation
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("PalEx Kansas"), IFCO ICS - Georgia, Inc., a Florida corporation ("IFCO
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Georgia"), IFCO ICS - Michigan, Inc., a Michigan corporation ("IFCO Michigan"),
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IFCO ICS - South Carolina, Inc., a Delaware corporation ("IFCO South Carolina")
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and IFCO ICS - L.L.C., a Colorado limited liability company ("IFCO L.L.C."), on
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the other hand. Capitalized terms used in this Agreement without definition
shall have the respective meanings given to them in the Asset Purchase Agreement
(defined below).
WHEREAS, the parties to this Second Amendment entered into that certain
Asset Purchase Agreement, dated as of November 21, 2001, as amended on January
30, 2002 (the "Asset Purchase Agreement"); and
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WHEREAS, the parties to the Asset Purchase Agreement entered into that
certain First Amendment to the Asset Purchase Agreement dated as of January 30,
2002, to extend the "drop dead date" (the "First Amendment"); and
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WHEREAS, the parties hereto desire to amend the Asset Purchase
Agreement in accordance with Section 11.3 thereof by entering into this Second
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Amendment as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
1. The Preamble. The Preamble to the Asset Purchase Agreement is hereby
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amended to read in its entirety as follows:
"THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of
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November 21, 2001, by and among Industrial Container Services, LLC, a Delaware
limited liability company ("Buyer") on the one hand, and IFCO Systems N.V., a
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Netherlands limited liability company ("IFCO"), IFCO Systems North America,
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Inc., a Delaware corporation
("ISNA"), IFCO Industrial Container Systems Holding Company, a Delaware
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corporation ("IICSH"), IFCO ICS - Chicago, Inc., an Illinois corporation ("IFCO
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Chicago"), IFCO ICS - Miami, Inc., a Delaware corporation ("IFCO Miami"), IFCO
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ICS - North Carolina, Inc., a Delaware corporation ("IFCO North Carolina"), IFCO
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ICS - Minnesota Inc., a Minnesota corporation ("IFCO Minnesota"), Container
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Resources Corporation, a Minnesota corporation ("Container"), IFCO ICS -
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Washington, Inc., a Delaware corporation ("IFCO Washington"), IFCO ICS -
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California, Inc., a Delaware corporation ("IFCO California"), IFCO ICS -
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Florida, Inc., a Florida corporation ("IFCO Florida"), Environmental Recyclers
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of Colorado, Inc., a Colorado corporation ("Recyclers"), IFCO ICS - Illinois,
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Inc., an Illinois corporation ("IFCO Illinois"), PalEx Kansas, Inc., a Delaware
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corporation ("PalEx Kansas"), IFCO ICS - Georgia, Inc., a Florida corporation
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("IFCO Georgia"), IFCO ICS - Michigan, Inc., a Michigan corporation ("IFCO
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Michigan"), IFCO ICS - South Carolina, a Delaware corporation ("IFCO South
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Carolina") and IFCO ICS - L.L.C., a Colorado limited liability company ("IFCO
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L.L.C."), on the other hand. IFCO and ISNA are sometimes jointly referred to
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herein as "Parents" and IICSH, IFCO Chicago, IFCO Miami, IFCO North Carolina,
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IFCO Minnesota, Container, IFCO Washington, IFCO California, IFCO Florida,
Recyclers, IFCO Illinois, PalEx Kansas, IFCO Georgia, IFCO Michigan, IFCO South
Carolina and IFCO L.L.C. are sometimes collectively referred to herein as
"Sellers."
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2. Section 1.1(a). Section 1.1(a) of the Asset Purchase Agreement is
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hereby amended to read in its entirety as follows:
"(a) Upon the terms and subject to the conditions contained in
this Agreement, and based on the representations, warranties, covenants and
agreements set forth herein, at the Closing (defined below) each Seller shall
(and each Parent shall cause each Seller to) sell, convey, transfer, assign and
deliver to Buyer, free and clear of Liens (defined below) other than Permitted
Liens (defined below) and Retained Liabilities (defined below), and Buyer shall
purchase from each Seller, substantially all of the assets, properties and
rights of each Seller, whether or not reflected in the Seller Financial
Statements (defined below), held by each Seller on the Closing Date (defined
below), and used in, related to or constituting the Business (the "Acquired
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Assets"). The Acquired Assets include, but are not limited to, the assets,
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properties and rights identified on Exhibit A, to this Agreement.
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Notwithstanding the foregoing, the Acquired Assets shall not include (i) those
assets identified as "Retained Assets" (herein so called) on Exhibit B to this
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Agreement or on an addendum to Exhibit B hereto executed by the parties hereto
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on or prior to the Closing Date; (ii) the Zellwood Assets (defined below) until
the Zellwood Closing (defined below) occurs, at which time the Zellwood Assets
actually acquired by Buyer or its Affiliates in accordance with Section 2.5
(Zellwood) at the Zellwood Closing shall be deemed Acquired Assets under this
Agreement; or (iii) the Chicago Assets (defined below) until the Chicago Closing
(defined below) occurs, at which time the Chicago Assets actually acquired by
Buyer or its Affiliates in accordance with Section 2.6 (Chicago) at the Chicago
Closing shall be deemed Acquired Assets under this Agreement. Buyer may, in its
sole discretion, notify Parents and Sellers prior to the Closing that Buyer
wishes to assign to one or more of its Affiliates (defined below) Buyer's right
to purchase some or all of the Acquired Assets from the respective Sellers. If
Buyer gives such notice, then each Affiliate of Buyer identified in such notice
shall be deemed to be a "Buyer" hereunder, to the extent applicable;
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provided, however, that it is contemplated only the Buyer listed in the preamble
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shall be making the Cash Payment (defined below) and delivering the Promissory
Notes (defined below)."
3. Section 1.1(c). There shall be added to the Asset Purchase Agreement
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a new Section 1.1(c), which shall read in its entirety as follows:
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"(c) Upon the terms and subject to the conditions contained in this
Agreement, and based on the representations, warranties, covenants and
agreements set forth herein, at the Chicago Closing, IFCO Chicago shall sell,
convey, transfer, assign and deliver to Buyer, free and clear of Liens other
than Permitted Liens and Retained Liabilities, and Buyer shall purchase from
IFCO Chicago, the Chicago Assets. For purposes of this Agreement, the term
"Chicago Assets" shall mean all of IFCO Chicago's title or interests in owned or
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leased real property (including, without limitation, improvements on such
property but excluding the leased real property pursuant to the Interim Parking
Agreement dated December 22, 2000 by and between the State of Illinois Medical
District Commission and Acme Barrel Company), equipment, machinery, tools, spare
parts, supplies, inventory (including, without limitation, spare parts
inventory) and work-in-progress, all right, title and interest of IFCO Chicago
in, to and under the Chicago Listed Permits (defined below), in each case to the
extent such assets are located and used in the operation of the Business of IFCO
Chicago conducted at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, comprised of owned
real property located at 1255, 1300, 1310, 1313, 1315, 1317, 1335 and ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
1301 and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, and 2301, 2311 and ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (collectively, the "Chicago Facility");
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provided, however, Buyer or its Affiliate may, in its sole discretion, notify
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Parents and Sellers prior to the Chicago Closing that Buyer or its Affiliate
wishes to assign to a third-party designee Buyer's or its Affiliate's right to
purchase some or all of the Chicago Assets from IFCO Chicago; provided, further,
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the leased real property located at ▇▇▇ ▇. ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ that is leased pursuant to the Industrial Building Lease by and between
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chicago Title and Trust, Trust No. 53856 c/o
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as lessor and Acme Barrel Company , Inc., dated as of November
27, 1996, shall be excluded from the Chicago Assets, shall instead be considered
Acquired Assets and shall be acquired at Closing."
4. Section 1.2. Section 1.2 of the Asset Purchase Agreement is hereby
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amended to read in its entirety as follows:
"1.2. Consideration for Purchase and Sale. The consideration for the
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purchase and sale of the Acquired Assets shall be the following:
(a) Closing Payment. At the Closing, as consideration for the
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purchase and sale of the Acquired Assets, Buyer shall pay to Sellers an
aggregate amount equal to $41,250,000 (the "Cash Payment") by wire transfer on
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the Closing Date of immediately available funds to the account or accounts
designated by Sellers to Buyer prior to the Closing.
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(b) Escrow.
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(i) Zellwood Escrow. At the Closing, Buyer shall deposit
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in escrow with Bank One Texas, NA, or such other third party escrow agent as may
be mutually acceptable to Buyer and IFCO Florida, as escrow agent (the "Escrow
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Agent"), subject to the terms of a mutually acceptable escrow agreement (the
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"Escrow Agreement"), an aggregate amount equal to $3,500,000, as follows: (i)
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cash in the amount of $2,000,000 (the "Zellwood Cash Fund") and (ii) $1,500,000
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in the form of a promissory note (the "Zellwood Purchase Price Note" and,
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together with the Zellwood Cash Fund, the "Zellwood Escrow Fund"). The Escrow
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Agreement shall provide for the distribution of the Zellwood Escrow Fund in
accordance with the terms of Section 2.5 (Zellwood) of this Agreement.
(ii) Chicago Escrow. At the Closing, Buyer shall deposit
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in escrow with the Escrow Agent, subject to the terms of the Escrow Agreement,
an aggregate amount equal to $2,000,000 in the form of the promissory note
(sometimes referred to herein as the "Chicago Purchase Price Note" or the
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"Chicago Escrow Fund" and, together with the Zellwood Purchase Price Note,
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jointly referred to as the "Promissory Notes"). The Escrow Agreement shall
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provide for the distribution of the Chicago Escrow Fund in accordance with the
terms of Section 2.6 (Chicago) of this Agreement.
(iii) Escrow Fees. Buyer and Parents shall each bear
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one-half of the fees and expenses of the escrow agreement in accordance with the
terms of the Escrow Agreement.
(c) Buyer's Assumption of Liabilities. At the Closing, Sellers
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shall assign and Buyer shall assume only the Liabilities (defined below)
specifically set forth on Exhibit C to this Agreement (collectively, the
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"Assumed Liabilities"). Notwithstanding the foregoing, the Assumed Liabilities
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shall not include the Zellwood Assumed Liabilities (defined below) except with
respect to the Zellwood Assumed Liabilities actually assumed by Buyer or its
Affiliates in accordance with Section 2.5 (Zellwood) at the Zellwood Closing,
and (ii) the Assumed Liabilities shall not include the Chicago Assumed
Liabilities (defined below) except with respect to the Chicago Assumed
Liabilities actually assumed by Buyer or its Affiliates in accordance with
Section 2.6 (Chicago) at the Chicago Closing.
As used herein, "Liability" shall mean, with respect to any person or
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entity, any liability or obligation of such person or entity of any kind,
character or description, whether known or unknown, absolute or contingent,
accrued or unaccrued, disputed or undisputed, liquidated or unliquidated,
secured or unsecured, joint or several, due or to become due, vested or
unvested, executory, determined, determinable or otherwise, and whether or not
the same is required to be accrued on the financial statements of such person or
entity.
(d) Buyer's Assumption of Contracts. At the Closing, Sellers
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shall assign and Buyer shall assume all contracts, intellectual property and
software licenses, real property leases, personal property leases, warranties,
commitments, agreements, arrangements and sales orders related to the Business
pursuant to which Sellers enjoy any right or benefit
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including the right to receive income in respect thereof (collectively, the
"Assumed Contracts"). Notwithstanding the foregoing, (i) the Assumed Contracts
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shall not include the Zellwood Assumed Contracts (defined below) except with
respect to the Zellwood Assumed Contracts actually assumed by Buyer or its
Affiliates in accordance with Section 2.5 (Zellwood) at the Zellwood Closing,
and (ii) the Assumed Contracts shall not include the Chicago Assumed Contracts
(defined below) except with respect to the Chicago Assumed Contracts actually
assumed by Buyer or its Affiliates in accordance with Section 2.6 (Chicago) at
the Chicago Closing.
(e) Buyer's Assumption of Permits. At the Closing, except as
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otherwise provided below, Sellers shall assign and Buyer shall assume all
governmental licenses, permits, approvals, identification numbers,
authorizations, exemptions, classifications, registrations, notifications and
certificates, and all consents or agreements with governmental authorities
(collectively, "Permits") which are in effect or are pending and which will need
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to be obtained by Buyer or assumed by Buyer to conduct the Business in the
manner and to the extent that it has been conducted and is currently being
conducted (the "Listed Permits"). Such Listed Permits are set forth on the
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Disclosure Schedule to Section 6.5(h) (Legal Requirements). Notwithstanding the
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foregoing, (i) the Listed Permits shall not include the Zellwood Listed Permits
(defined below) except with respect to the Zellwood Listed Permits actually
assumed by Buyer or its Affiliates in accordance with Section 2.5 (Zellwood) at
the Zellwood Closing, and (ii) the Listed Permits shall not include the Chicago
Listed Permits (defined below) except with respect to the Chicago Listed Permits
actually assumed by Buyer or its Affiliates in accordance with Section 2.6
(Chicago) at the Chicago Closing. At or prior to Closing, Sellers shall transfer
to Buyer all Listed Permits for which transfer no governmental approval is
necessary and to the extent requested by Buyer, shall initiate transfer of all
Listed Permits for which governmental approval is necessary. At Closing or as
soon as practicable thereafter, Sellers shall use commercially reasonable
efforts to transfer to Buyer all Listed Permits for which transfer governmental
approval to transfer is necessary. In the event the sale, transfer, assignment,
or conveyance of any of the Listed Permits is unlawful or is not permissible
under any agreement, or federal, state, or local law, rule, or regulation, then
the terms "sale, transfer or assignment," for the purposes of this Agreement
with respect to any such Listed Permits, shall be deemed to mean and require
each Seller's relinquishment of all of its right, title and interest in, to and
under such Listed Permits as of the Closing Date to the fullest extent necessary
or appropriate to enable Buyer to acquire such Listed Permits subject to the
satisfaction of Section 3.2(d) (Permits)."
(f) Post-Closing Earnout Payment. Subject to Section 10.8 (Right
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of Set-Off), on or before the later of (i) May 31, 2003 and (ii) in the event of
a dispute between Buyer and the Parents and Sellers regarding the determination
of the Earnout Amount for the Earnout Period (defined below), the date on which
such dispute is resolved in accordance with paragraph (h) of this Section (the
"Earnout Payment Date"), as additional consideration for the purchase and sale
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of the Acquired Assets, Buyer will pay to Sellers the Earnout Amount in cash.
"Earnout Amount" shall mean an aggregate amount, which shall not
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exceed $11,000,000, equal to the product of (y) three, multiplied by (z) the
Regional EBITDA (defined below) for the twelve (12) month period ending on
December 29, 2002 (the "Earnout Period"); provided,
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however, that the Earnout Amount shall be reduced by (A) any Damages (defined
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below) as provided in Section 10.8 (Right of Set-Off); (B) the amount of any
City Mandated Improvements (defined below) funded by Buyer; and (C) the amount
of any Premature Moving Costs (defined below).
"Premature Moving Costs" shall mean all costs and expenses incurred by
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Buyer or its Affiliate to relocate the operations conducted at the Chicago
Facility to the extent such costs and expenses (i) are incurred because the
operations of the Business at the Chicago Facility are ceased as a result of
actions, including without limitation a cease and desist order or a material
restriction on production (other than pursuant to the terms of the Order:
Limited And Conditional Approval to Continue Operation, dated February 14, 2002,
of the Commissioner of the Department of the Environment of the City of Chicago
(the "Chicago Order")) by a governmental authority prior to the Government
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Relocation Date (as defined below) (including without limitation because any
City Mandated Improvement is not made) and would not reasonably have been
incurred if such operations had been permitted to continue until the Government
Relocation Date and (ii) are not otherwise deducted from Regional EBITDA.
"Government Relocation Date" shall mean the later to occur of (x) May
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31, 2003 and (y) any later date through which the Chicago Facility is allowed to
operate by the City of Chicago, and any other governmental authority with
jurisdiction over the Chicago Facility, but not later than the eighteen (18)
month anniversary of the Closing Date.
"Regional EBITDA" shall mean the Central Region's earnings before (a)
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interest and non-operating income or expense, (b) income taxes, (c) depreciation
and (d) amortization of goodwill and intangibles, all as determined in
accordance with GAAP (defined below) as consistently applied for the Central
Region (defined below), but excluding the earnings and expenses attributable,
directly or indirectly, to any acquisitions made by Buyer during the Earnout
Period.
"Central Region" shall mean the facilities currently operated by
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IFCO Chicago and IFCO Illinois in Chicago, Illinois, by IFCO Michigan in Grand
Rapids, Michigan and by IFCO Minnesota in Minneapolis, Minnesota.
(g) Potential Adjustments to Regional EBITDA. Regional EBITDA
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shall be subject to the following adjustments, as applicable:
(i) Recurring Closure Effects. The parties hereto agree
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that if:
(A) (x) the Chicago Facility is required by the City
of Chicago, or other governmental authority with
jurisdiction over the Chicago Facility, to cease
operations or relocate before the Government
Relocation Date or the operations of the Chicago
Facility are subjected to a material restriction
(other than pursuant to the terms of the Chicago
Order)
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prior to the Government Relocation Date that are
imposed by a governmental authority with
jurisdiction over such Chicago Facility;
(y) neither Buyer nor its Affiliates have taken
any affirmative action that has caused the
Chicago Facility to fail to comply with any
agreement, judgment, decree or administrative
order entered into prior to the date of this
Agreement with the City of Chicago, or any other
governmental authority with jurisdiction over the
Chicago Facility, and pursuant to which the
Chicago Facility was scheduled to operate at
least until May 31, 2003; and
(z) the shut down of operations or relocation
could not be avoided by City Mandated
Improvements that would be funded by Sellers; or
(B) IFCO Chicago determines unilaterally to
discontinue the operations of the Chicago
Facility prior to the Government Relocation Date
after giving thirty (30) days prior written
notice to Buyer;
and, in either such case, Buyer in good faith determines
the loss of customers and/or increase in operating expenses
directly arising as a result of such cessation of
operation, material restriction or premature relocation
likely will negatively impact Regional EBITDA during
periods after the Earnout Period in an amount in excess of
$75,000 per year, then the Regional EBITDA shall be subject
to adjustment to account for such loss of customers and/or
increase in operating expenses.
(ii) Reallocation Effects. During the Earnout Period,
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Buyer and its Affiliates shall have full authority
and discretion to operate their businesses in the
manner determined by Buyer and its Affiliates in
their sole discretion to be prudent or appropriate,
subject to Buyer's obligations regarding
adjustment of Regional EBITDA as set forth in the
last sentence of this Section 1.2(g)(ii) and in
Section 1.2(g)(iii). Without limiting the foregoing,
Buyer and its Affiliates may (a) re-allocate
business, customers and operations among the existing
facilities included in the Central Region, including
without limitation by discontinuing operations at any
of such facilities or (b) re-allocate
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business, customers and operations from facilities in
the Central Region to new facilities or to existing
facilities that are not part of the Central Region.
The parties acknowledge that if Buyer and its
Affiliates re-allocate business, customers or
operations as described in item (b) of this paragraph
for any reason other than a cessation of operations
at the Chicago Facility under the circumstances
described in Section 1.2(g)(i)(A) or (B), then the
parties will endeavor in good faith to determine what
the Regional EBITDA for the Earnout Period would have
been if such re-allocation had not occurred, by
including in the Regional EBITDA calculation the
earnings and expenses that would have been
experienced at the facilities included in the Central
Region as of the date hereof but for the
re-allocation of such business, customers and
operations to new facilities or to facilities that
are not part of the Central Region.
(ii) New Business Allocation. Buyer acknowledges and
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agrees that Regional EBITDA should include the
earnings and expenses during the Earnout Period of
business from new customers who become customers of
the Business during the Earnout Period, to the extent
(x) a reasonably prudent operator of the Business
would have allocated such business to the facilities
included in the Central Region if such new business
had been part of the Business prior to the Closing
and if the operations of the Central Region were not
subject to the earnout contemplated by this Section
1.2 and (y) such new business of any such customer
would have increased Regional EBITDA by at least
$75,000 during the Earnout Period ("New Business");
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provided, however, that to the extent Buyer or its
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Affiliates elect to allocate New Business to
facilities that are not included in the Central
Region, Buyer shall disclose such allocation to IFCO
Chicago and shall either (a) identify in reasonable
detail the business reason for such allocation (which
cannot include the effect such New Business would
have had on Regional EBITDA) or (b) endeavor in good
faith to determine what the Regional EBITDA for the
Earnout Period would have been if such New Business
had been allocated to the facilities included in the
Central Region.
( h) Earnout Procedures .
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(A) As soon as practicable after December 29, 2002, and in
any event not later than February 28, 2003, IFCO Chicago shall, and IICSH and
the Parents shall cause IFCO Chicago to, deliver to Buyer a written notice (the
"Chicago EBITDA Notice") setting forth in reasonable detail IFCO Chicago's
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calculation of the Chicago Facility EBITDA (defined below), together with work
papers and records that support such calculation. IFCO Chicago shall, and IICSH
and the Parents shall cause IFCO Chicago to, endeavor in good faith to cooperate
with Buyer, its Affiliates and their auditors to permit Buyer to audit IFCO
Chicago's calculation of the Chicago Facility EBITDA.
"Chicago Facility EBITDA" shall mean the earnings of the
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Business operation conducted at the Chicago Facility during the period from
December 31, 2001 to the earlier of (x) December 29, 2002 or (y) the date of the
Chicago Closing, before (a) interest and non-operating income or expense
(including, without limitation, expenses directly or indirectly attributable to
(i) relocating the Chicago Facility, (ii) demolition, cleanup or construction in
connection with the sale of the property on which the Chicago Facility is
located, Premature Moving Costs, and City Mandated Improvements, and (iii)
requirements imposed in connection with any agreement entered into with the City
of Chicago or any other governmental authority as a condition to permitting the
Chicago Facility to continue operations until the Government Relocation Date,
provided such expenses shall cease to be incurred following the relocation of
the Chicago Facility), (b) income taxes, (c) depreciation and (d) amortization
of goodwill and intangibles, all as determined in accordance with GAAP (defined
below) as consistently applied for the Business operation conducted at the
Chicago Facility, all determined in accordance with GAAP and the prior practices
of IFCO Chicago, IICSH and Parents.
(B) Within ten (10) days after the completion of Buyer's
audit of the Business for the twelve (12) month period ending on December 29,
2002 (which audit shall be completed no later than March 31, 2003), provided
that IFCO Chicago shall have complied with its requirements set forth in Section
1.2(h)(A), Buyer shall prepare and deliver to the Parent/Seller Representative
(defined below) a statement (the "Earnout Computation Statement") setting forth
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in reasonable detail the calculation and amount of the Earnout Amount and
specifically showing the calculation of Regional EBITDA and the Chicago Facility
EBITDA included therein). Buyer shall cooperate with Parent/Seller
Representative, its Affiliates and their auditors, in all commercially
reasonable respects, to permit Parent/Seller Representative to audit Buyer's
Earnout Computation Statement.
(C) If, within thirty (30) business days after delivery of
the Earnout Computation Statement, Buyer has not received a written notice
signed by the Parent/Seller Representative (x) disputing the Earnout Computation
Statement, (y) indicating in reasonable detail the basis of such dispute and (z)
setting forth on behalf of the Parents and Sellers their proposed alternative
Earnout Computation Statement (a "Dispute Notice"), then Buyer's Earnout
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Computation Statement shall be conclusive and binding on the Parents and
Sellers. The Dispute Notice may include an objection to, and a proposed
alternate calculation of, the adjustments described in Section 1.2(g), including
a challenge regarding an adjustment of Regional EBITDA based on Buyer's and its
Affiliates' allocation of New Business. Regional EBITDA shall be adjusted to the
extent Sellers and Parents demonstrate that an allocation of
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New Business to facilities not included in the Central Region was made by Buyer
or its Affiliates with the intention of reducing Regional EBITDA.
(D) If the Parent/Seller Representative delivers such
Dispute Notice within such thirty (30) business day period, Buyer and the
Parent/Seller Representative each shall endeavor in good faith to settle such
dispute within twenty (20) business days after the giving of such notice.
(E) If any such dispute remains unresolved after such twenty
(20) business day period, either Buyer or the Parent/Seller Representative may
elect, by delivering written notice of such election (an "Earnout Arbitration
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Notice") to the other party (which shall be the Parent/Seller Representative if
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Buyer is delivering such notice), to submit the matter to arbitration by the
Chicago, Illinois, office of Ernst & Young LLP or, if Ernst & Young LLP refuses
to act as the arbitrator, then to an independent accounting firm (as applicable,
the "Accounting Firm") having a national reputation, which firm must not have
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any substantial audit or consulting relationship with either Buyer or any Parent
or Seller. The party delivering the Earnout Arbitration Notice shall attach to
such notice any revision such party wishes to make to such party's original
Earnout Computation Statement. If the other party wishes to alter such other
party's original Earnout Computation Notice, such other party shall deliver such
other party's new Earnout Computation Statement to the Accounting Firm and to
the party that delivered the Earnout Arbitration Notice not later than the fifth
business day after such other party's receipt of the Earnout Arbitration Notice.
(F) The Accounting Firm shall have discretion to select an
Earnout Amount that is not greater than the highest amount and not less than the
lowest amount proposed by the parties in their respective original Earnout
Computation Statements (or amended Earnout Computation Statement(s), if
applicable).
(G) If the Accounting Firm selects the Earnout Amount of one
of the parties as proposed in their respective original Earnout Computation
Statements (or amended Earnout Computation Statement(s), if applicable), then
the party whose Earnout Computation Statement was not selected by the Accounting
---
Firm shall bear the costs of the Accounting Firm. If the Accounting Firm
determines that the Earnout Amount shall be an amount that is less than the
highest amount and more than the lowest amount proposed by the parties in their
respective original Earnout Computation Statements (or amended Earnout
Computation Statement(s), if applicable), then the parties shall bear the costs
of the Accounting Firm in the same proportion as the difference between the
selected Earnout Amount and each party's proposed amount bears to the total
difference between the parties' respective proposed amounts.
(H) The parties hereto shall cooperate in good faith with
the Accounting Firm's determination of the adjustment to the Earnout Amount
pursuant hereto and shall promptly provide the Accounting Firm with prompt and
complete access to all books, records and customer contacts reasonably relevant
to the determination of such adjustment to the Earnout Amount. The Accounting
Firm shall have twenty-five (25) business days from the date of its receipt of
the Earnout Arbitration Notice to determine the correct adjustment to the
Earnout
10
Amount and each respective party's portion of liability for the fees of the
Accounting Firm, and its decision with respect thereto shall be final and
binding on the parties.
(I) After the Closing and through the calendar quarter
ending September 29, 2002, Buyer shall deliver to the Parent/Seller
Representative quarterly financial statements no later than thirty (30) days
following the end of each calendar quarter. Such financial statements shall be
prepared in accordance with GAAP and shall include a preliminary calculation of
Regional EBITDA, excluding the results of operations of the Chicago Facility,
for the quarter being reported and year-to-date. After the Closing and through
the calendar quarter ending September 29, 2002, Buyer also shall provide to the
Parent/Seller Representative reasonable access to all information of Buyer
regarding allocations of New Business and reallocations of business, customers
and operations as described in Section 1.2(g)(ii).
5. Section 1.4. Section 1.4 of the Asset Purchase Agreement is hereby
----------- -----------
amended to read in its entirety as follows:
"1.4 Allocation of Closing Payment. (a) The Cash Payment (including the
-----------------------------
assumption by Buyer of the Assumed Liabilities), (b) as of the Chicago Closing,
the Chicago Purchase Price and the Buyer's assumption of the Chicago Assumed
Liabilities, and (c) if applicable, the Zellwood Purchase Price and Buyer's
assumption of the Zellwood Assumed Liabilities, shall be allocated among the
Acquired Assets for tax purposes in accordance with Exhibit D to this Agreement,
---------
such exhibit to be prepared by Buyer and approved by Parents and Sellers prior
to the Closing. Parents, Sellers and Buyer will follow and use such allocation
in all income, sales registration and other tax returns, filings or other
related reports made by them to any governmental agencies."
6. Prorations; Real Estate Closing Costs. Buyer and Seller shall defer
-------------------------------------
apportionment of the items set forth in Section 1.5 (Prorations) and Section 1.6
(Real Estate Closing Costs) until after Closing. Within ninety (90) days after
Closing (or as soon thereafter as is practicable), Buyer and Seller shall
apportion such items and ISNA (on behalf of the Sellers) or Buyer, as the case
may be, shall pay the other, in immediately available funds, the net amount due
the other under Section 1.5 (Prorations) and Section 1.6 (Real Estate Closing
Costs) to the extent not otherwise paid at the Closing. Section 1.5 (Prorations)
and Section 1.6 (Real Estate Closing Costs) shall survive the Closing.
7. Section 2.1(c). There shall be added to the Asset Purchase Agreement
--------------
a new Section 2.1(c), which shall read in its entirety as follows:
--------------
"The Chicago Closing shall occur pursuant to the provisions of
Section 2.6 (Chicago)."
-----------
8. Section 2.2. The first sentence of Section 2.2 of the Asset
----------- -----------
Purchase Agreement is hereby amended to read in its entirety as follows:
11
"At the Closing, each Parent and Seller (as indicated) shall deliver
or cause to be delivered, to Buyer the following items, except to the extent
related to the Zellwood Assets and the Chicago Assets:"
9. Section 2.2(o). There shall be added to the Asset Purchase Agreement a
--------------
new Section 2.2(o), which shall read in its entirety as follows:
--------------
"(o) Letter of Credit. Parents and Sellers shall deliver to Buyer a
----------------
copy of the Letter of Credit required under Section 9.19(a) of this Agreement,
in form and substance reasonably satisfactory to Buyer."
10. Section 2.3(b). Section 2.3(b) of the Asset Purchase Agreement is
-------------- --------------
hereby amended to read in its entirety as follows:
"(b) Chicago Escrow Fund. Buyer shall deliver to the Escrow Agent, as
-------------------
described in Section 1.2(b)(ii), the Chicago Purchase Price Note in the form
attached hereto as Exhibit J."
---------
11. Section 2.3(c). Section 2.3(c) of the Asset Purchase Agreement is
-------------- --------------
hereby amended to read in its entirety as follows:
"(c) Zellwood Escrow Fund. Buyer shall deliver to the Escrow Agent,
--------------------
as described in Section 1.2(b)(i), the Zellwood Escrow Fund, including the
Zellwood Cash Fund and the Zellwood Purchase Price Note in the form attached
hereto as Exhibit K."
---------
12. Section 2.5(c)(i). Section 2.5(c)(i) of the Asset Purchase Agreement
----------------- -----------------
is hereby amended to read in its entirety as follows.
"(i) From the Closing Date until the Zellwood Closing, IFCO Florida
shall (A) use commercially reasonable efforts to maintain the Zellwood Assets in
their condition as of the Closing, (B) endeavor in good faith to maintain the
business and customer relationships relating to the operations of the Zellwood
Assets, (C) not, without the prior written consent of Buyer or its designated
Affiliate, incur any indebtedness for borrowed money that would be a Zellwood
Assumed Liability or that would encumber any of the Zellwood Assets, or enter
into any contract or commitment that would be Zellwood Assumed Contract that
cannot be terminated without cost on not more than thirty (30) days' notice, (D)
not, without the prior consent of Buyer or its designated Affiliate, incur any
other liability that would be a Zellwood Assumed Liability, (E) take all actions
required to maintain the Zellwood Listed Permits, (F) not take any affirmative
action to cause the representations and warranties set forth in Article 6
(Representations and Warranties of Parents and Sellers) to be untrue or
incorrect as of the Zellwood Closing with respect to the transactions to be
consummated at the Zellwood Closing, (G) not fail to take any commercially
reasonable action necessary to cause the representations and warranties set
forth in Article 6 (Representations and Warranties of Parents and Sellers) to be
true and correct as of the Zellwood Closing with respect to the transactions to
be consummated at the Zellwood Closing, (H) perform all applicable covenants set
forth in Article 8
12
(Covenants of Parents and Sellers), as such covenants relate to the transactions
to be consummated at the Zellwood Closing, the Zellwood Assets, the Zellwood
Facility and employees of the Zellwood Facility, (I) not sell any of the
Zellwood Assets to another party without the prior written consent of Buyer or
its designated Affiliate, and (J) not incur costs in excess of $10,000 per month
in the aggregate to repair or replace damaged, destroyed or obsolete assets used
in the operation of the Zellwood Facility, or make any capital expenditure
outside the ordinary course of business, without the prior consent of Buyer or
its designated Affiliate. IICSH and the Parents shall not take any affirmative
action to cause IFCO Florida to violate any of the foregoing. In addition, from
the Closing Date until the Zellwood Closing, IFCO Florida shall not, and IICSH
and the Parents shall not take any action to cause IFCO Florida to, terminate
any Active Employees (defined below) employed at the Zellwood Facility, without
the prior written consent of Buyer. Effective immediately before the Zellwood
Closing, IFCO Florida will terminate all such employees."
13. Section 2.5(c)(iii). Section 2.5(c)(iii) of the Asset Purchase
------------------ -------------------
Agreement is hereby amended to read in its entirety as follows:
"(iii) Prior to the Zellwood Closing, (A) Buyer shall, or shall cause
its designated Affiliate to, reimburse IFCO Florida promptly after Buyer's
receipt of invoices, for the direct costs and expenses of operating the Zellwood
Facility (including, without limitation, the cost of repairing or replacing
damaged, destroyed or obsolete assets used in the operation of such facility in
the ordinary course of business, but excluding allocations of Parents' selling,
general and administrative expenses or other expenses of Parents), to the extent
such costs and expenses are not paid to IFCO Florida under clause (B) of this
paragraph, and (B) IFCO Florida shall sell products and services only to Buyer
or its Affiliates, but only as required by Buyer or its Affiliates, at a price
equal to IFCO Florida's cost of producing such products, plus 1% of such cost.
IFCO Florida shall, and IICSH and Parents shall cause IFCO Florida to provide,
Buyer, and its designated Affiliate, reasonable access to IFCO Florida's books
and records to confirm the amount of any invoice for amounts claimed by IFCO
Florida under this provision.
14. Section 2.5(d)(ii). The second sentence of Section 2.5(d)(ii) of the
------------------ ------------------
Asset Purchase Agreement is amended to replace the reference to "Section
1.2(b)(ii) with "Section 1.2(c)."
15. Section 2.5(f). Section 2.5(f) of the Asset Purchase Agreement is
--------------
hereby amended to read in its entirety as follows:
"(f) Distribution of Zellwood Escrow Fund.
------------------------------------
(i) As soon as practicable after the Closing, the parties will,
by mutual written consent, jointly direct the Escrow Agent to disburse to the
EPA and the FDEP a portion of the Zellwood Cash Fund (the "Government Payment
------------------
Amount"), in an amount mutually satisfactory to the parties and sufficient to
------
cover payment requirements by the EPA and the FDEP for the PPAs (currently
anticipated by the parties to be approximately $350,000). If Buyer or its
Affiliate receive the PPAs prior to the Zellwood Closing, (a) Buyer shall direct
the Escrow Agent to disburse to IFCO Florida an amount equal to 50% of the
excess of the Zellwood Cash Fund
13
minus the Government Payment Amount and (b) the other 50% of the excess of the
Zellwood Cash Fund minus the Government Payment Amount, plus any interest or
dividends paid with respect thereto shall be held by the Escrow Agent in
accordance with the terms of the Escrow Agreement, and subject to distribution
to the Buyer pursuant to Section 9.19 (Insurance Costs) and to cover any amounts
to which Buyer or its Affiliates may be entitled under Article 10
(Indemnification). The term of the Escrow Agreement with respect to the portion
of the Zellwood Cash Fund deposited with the Escrow Agent pursuant to item (b)
of this Section 2.5(f)(i) shall extend until the later of (A) the fifth
anniversary of the Closing Date and (B) the settlement of all claims against
such amount in accordance with the terms of this Agreement.
(ii) If the Zellwood Closing occurs following the receipt of
executed PPAs from the EPA, DOJ and FDEP, then the Zellwood Purchase Price Note
shall be distributed to Sellers at the Zellwood Closing.
(iii) If the Zellwood Closing occurs as a result of Buyer's
determination to waive the condition of receiving the PPAs and purchase all the
Zellwood Assets, as set forth in subsection (e)(ii)(A) above, then the Zellwood
Cash Fund and the Zellwood Purchase Price Note shall be distributed to Sellers
at the Zellwood Closing.
(iv) If the Zellwood Closing occurs as a result of Buyer's
determination to acquire the Zellwood Assets, other than the Real Property
(including, without limitation, the improvements thereon) comprising the
Zellwood Facility, after the first anniversary of the Closing Date, as set forth
in subsection (e)(ii)(B) above, then the Zellwood Cash Fund and the Zellwood
Purchase Price Note (adjusted as described below) shall be distributed at the
Zellwood Closing, as follows:
(A) If the Zellwood Closing Date is after the first
anniversary of the Closing Date, then Buyer or its designated Affiliate shall
receive a distribution from the Zellwood Escrow Fund equal to the lesser of (1)
the amount of the Zellwood Moving Expenses (defined below) and (2) $1,000,000.
If the Zellwood Moving Expenses are less than $500,000, then such distribution
shall be in the form of cash from the Zellwood Cash Fund. If the Zellwood Moving
Expenses are greater than $500,000, then the first $500,000 of such distribution
shall be in the form of cash from the Zellwood Cash Fund, and the balance of
such distribution shall be represented by a principal reduction of the Zellwood
Purchase Price Note. The balance of the Zellwood Cash Fund and the Zellwood
Purchase Price Note shall be distributed to Sellers.
(B) If the Zellwood Closing Date is later than 30 months
after the Closing Date, and Buyer's determination to proceed with the Zellwood
Closing is in connection with or contemplation of a sale or refinancing of its
business, then clause (A) above shall not apply and Buyer or its designated
Affiliate shall receive a distribution from the Zellwood Escrow Fund equal to
the lesser of (1) the amount of the Zellwood Moving Expenses and (2) $3,500,000.
If the Zellwood Moving Expenses are less than $1,000,000, then such distribution
shall be in the form of cash from the Zellwood Cash Fund. If the Zellwood Moving
Expenses are greater than $1,000,000, then such distribution shall be in the
form of cash from the Zellwood Cash Fund, and the balance of such distribution
shall be represented by a principal
14
reduction of the Zellwood Purchase Price Note. The balance of the Zellwood Cash
Fund and the Zellwood Purchase Price Note, if any, shall be distributed to
Sellers.
(v) If the Zellwood Closing occurs as a result of IFCO
Florida's determination to sell the Zellwood Assets, other than the Real
Property (including, without limitation, the improvements thereon) comprising
the Zellwood Facility, after the first anniversary of the Closing Date, as set
forth in subsection (e)(iii) above, then the Zellwood Cash Fund and the Zellwood
Purchase Price Note (adjusted as described below) shall be distributed at the
Zellwood Closing, as follows:
(A) If the Zellwood Closing Date is after the first
anniversary of the Closing Date, then Buyer or its designated Affiliate shall
receive a distribution from the Zellwood Escrow Fund equal to the lesser of (1)
the amount of the Zellwood Moving Expenses (defined below) and (2) $5,000,000.
If the Zellwood Moving Expenses are less than $2,000,000, then such distribution
shall be in the form of cash from the Zellwood Cash Fund. If the Zellwood Moving
Expenses are greater than $2,000,000, then the first $2,000,000 of such
distribution shall be in the form of cash from the Zellwood Cash Fund, and the
balance of such distribution shall be represented by a principal reduction of
the Zellwood Purchase Price Note, to the extent thereof, and thereafter by a
principal reduction of the Chicago Purchase Price Note. The balance of the
Zellwood Cash Fund and the Zellwood Purchase Price Note, if any, shall be
distributed to Sellers.
(B) If the Zellwood Closing Date is later than 30 months
after the Closing Date, and IFCO Florida's determination to proceed with the
Zellwood Closing is in connection with or contemplation of a sale or refinancing
of either Parent's business, then clause (A) above shall not apply and Buyer or
its designated Affiliate shall receive a distribution from the Zellwood Escrow
Fund equal to the lesser of (1) the amount of the Zellwood Moving Expenses and
(2) $2,000,000. If the Zellwood Moving Expenses are less than $2,000,000, then
such distribution shall be in the form of cash from the Zellwood Cash Fund. If
the Zellwood Moving Expenses are greater than $2,000,000, then the first
$2,000,000 of such distribution shall be in the form of cash from the Zellwood
Cash Fund, and the balance of such distribution shall be represented by a
principal reduction of the Zellwood Purchase Price Note. The balance of the
Zellwood Cash Fund and the Zellwood Purchase Price Note, if any, shall be
distributed to Sellers."
16. Section 2.6. There shall be added to the Asset Purchase Agreement a
-----------
new Section 2.6, which shall read in its entirety as follows:
---------------
"2.6. Chicago.
-------
(a) Relocation of Chicago Facility. Buyer agrees to use
------------------------------
commercially reasonable efforts to make arrangements for the relocation of the
operations of the Business conducted by IFCO Chicago at the Chicago Facility to
a new location as soon as practicable after the Closing and, in any event, shall
relocate such operations prior to the Government Relocation Date. Buyer shall be
responsible for any Liabilities that arise solely out of the process of
15
relocating the Chicago Facility, including without limitation the Chicago Moving
Expenses, but Buyer shall not assume any costs, damages, liabilities, expenses,
penalties or fines resulting from Environmental Claims or any failure to comply
with applicable local ordinances, zoning or land use laws or regulations, in any
case to the extent arising out of conditions or circumstances in existence at
the Chicago Facility prior to the Chicago Closing, regardless of when notice for
any such costs, damages, liabilities, expenses, penalties or fines is given.
(b) Chicago Owner/Operator. Notwithstanding anything to the
----------------------
contrary contained in this Agreement, prior to the transfer of title to the real
property that constitutes part of the Chicago Assets to Buyer or its Affiliate
or designee at the Chicago Closing, (i) IFCO Chicago shall for as long as IFCO
Chicago holds title to and operates the Chicago Facility, not take any
affirmative action to cause Buyer to be deemed the owner and operator of the
Chicago Facility for purposes of Environmental Laws, and (ii) except for its
obligation to pay for products acquired from or services rendered by IFCO
Chicago pursuant hereto, Buyer shall not be obligated to take any action that
causes it to be deemed (A) an owner or operator of the Chicago Facility under
any applicable Environmental Laws or (B) otherwise liable for any Environmental
Claim, including without limitation those arising under CERCLA or similar state
laws, rules or regulations or the violation of any Environmental Laws, in each
case, with respect to the period prior to the Chicago Closing. IICSH and the
Parents shall not take any affirmative action to cause IFCO Chicago to violate
any of the foregoing.
(c) Covenants Pending Chicago Closing.
---------------------------------
(i) From the Closing Date until the Chicago Closing, IFCO
Chicago shall, (A) use commercially reasonable efforts to maintain the Chicago
Assets in their condition as of the Closing, (B) endeavor in good faith to
maintain the business and customer relationships relating to the operations of
the Chicago Assets, including by taking all actions necessary to permit the
Chicago Facility to continue in operation until the Government Relocation Date,
unless upon thirty (30) days prior written notice to Buyer, IFCO Chicago
determines in its sole discretion to continue such operation, (C) not, without
the prior written consent of Buyer or its designated Affiliate, incur any
indebtedness for borrowed money that would be a Chicago Assumed Liability or
that would encumber any of the Chicago Assets, or enter into any contract or
commitment that would be a Chicago Assumed Contract that cannot be terminated
without cost on not more than thirty (30) days' notice, (D) not, without the
prior consent of Buyer or its designated Affiliate, incur any other liability
that would be a Chicago Assumed Liability, (E) take all actions required to
maintain the Chicago Listed Permits, unless upon thirty (30) days prior written
notice to Buyer, IFCO Chicago determines to cease operating the Chicago
Facility, (F) not take any affirmative action to cause the representations and
warranties set forth in Article 6 (Representations and Warranties of Parents and
Sellers) to be untrue or incorrect as of the Chicago Closing with respect to the
transactions to be consummated at the Chicago Closing, (G) not fail to take any
commercially reasonable action necessary to cause the representations and
warranties set forth in Article 6 (Representations and Warranties of Parents and
Sellers) to be true and correct as of the Chicago Closing with respect to the
transactions to be consummated at the Chicago Closing, (H) perform all
applicable covenants set forth in Article 8 (Covenants of Parents and Sellers),
as such covenants relate to the transactions
16
to be consummated at the Chicago Closing, the Chicago Assets, the Chicago
Facility and employees of the Chicago Facility, (I) not sell any of the Chicago
Assets to another party without the prior written consent of Buyer or its
designated Affiliate, and (J) not incur costs in excess of $10,000 per month in
the aggregate to repair or replace damaged, destroyed or obsolete assets used in
the operation of the Chicago Facility, or make any capital expenditure outside
the ordinary course of business, without the prior consent of Buyer or its
designated Affiliate. In addition, from the Closing Date until the Chicago
Closing, IFCO Chicago shall not, and the Parents shall not take any action to
cause IFCO Chicago to, terminate any Active Employees employed at the Chicago
Facility, without the prior written consent of Buyer. Effective immediately
before the Chicago Closing, IFCO Chicago will terminate all such employees.
IISCH and the Parents shall not take any affirmative action to cause IFCO
Chicago to violate any of the foregoing. Notwithstanding the foregoing or
anything to the contrary contained herein, nothing herein shall be construed as
imposing any obligation on IFCO Chicago, Parents or any of their Affiliates to
continue operating the Chicago Facility or to maintain the Business or any
assets of the Chicago Facility either (i) in the event IFCO Chicago determines
in its sole discretion to cease operations at the Chicago Facility prior to
Buyer's relocation of the operations of such facility on or before the
Government Relocation Date, upon thirty (30) days prior written notice to Buyer
or (ii) after the Government Relocation Date.
(ii) In addition to the other conditions set forth in this
Agreement, Buyer's obligation to purchase, or cause an Affiliate to purchase,
the Chicago Assets pursuant to the terms of this Agreement at the Chicago
Closing is conditioned upon (A) there having been no material loss or
destruction between the Closing Date and the Chicago Closing Date of the Chicago
Assets that can reasonably be relocated to a new facility and utilized in the
operation of the Business, (B) there being no material increase in the Chicago
Assumed Liabilities between the Closing Date and the Chicago Closing Date other
than increases in the ordinary course of business consistent with past
practices, (C) IFCO Chicago conveying good and marketable title to the Chicago
Assets to Buyer or its Affiliate or designee, free and clear of all Liens other
than Permitted Liens, Liens, if any, created by Buyer or its Affiliate, Liens
that arise due to Buyer's failure to pay to IFCO Chicago amounts that Buyer owes
to IFCO Chicago pursuant to the terms hereof and Liens of any governmental
entity that arise out of on-site environmental conditions on the real property
included in the Chicago Assets and (D) IFCO Chicago using commercially
reasonable efforts to conduct the environmental remediation, including any
necessary investigation, pursuant to Section 2.6(c)(iii), to the extent
-------------------
requested by Buyer.
(iii) Promptly after the Closing Date, IFCO Chicago shall
conduct the environmental remediation of the real property included in the
Chicago Assets, including without limitation by removing and disposing of any
contaminated topsoil located on the site of the real property included in the
Chicago Assets at an appropriate and authorized waste management facility. Such
environmental remediation shall be performed to the least stringent extent
required by applicable Environmental Laws in effect at the time of such
environmental remediation or, if greater, to the extent Buyer determines that
such greater environmental remediation is reasonably necessary to permit the
real property that constitutes part of the Chicago Assets to be saleable to a
third party identified by Buyer. IICSH and the Parents shall
17
not take any affirmative action to cause IFCO Chicago to violate any of the
foregoing The environmental contractor IFCO Chicago selects (the "Environmental
-------------
Contractor") shall be acceptable to Buyer, and Buyer and its assignee shall be
----------
named as a third party beneficiary to the contract between IFCO Chicago and the
Environmental Contractor and shall be entitled to rely upon the work performed
by, and any reports or other documents prepared by, the Environmental
Contractor. If requested by Buyer, before beginning any further environmental
investigation or any environmental remediation, IFCO Chicago shall provide draft
plans to Buyer or its assignee for their review and comment. Notwithstanding the
foregoing or anything to the contrary contained herein, neither IFCO Chicago nor
any of its Affiliates shall have any obligation to Buyer or any assignee of
Buyer to conduct any environmental remediation of any real property included in
the Chicago Assets, except to the extent Buyer is obligated to reimburse IFCO
Chicago for any Chicago Moving Expenses. .
(iv) After the Closing Date and prior to the Chicago
Closing, IFCO Chicago shall cooperate with Buyer and any potential purchaser
identified by Buyer who is interested in purchasing the real property on which
the Chicago Facility is located. Such cooperation shall include without
limitation permitting such potential purchaser to visit and examine the property
and making available to such potential purchaser all information in IFCO
Chicago's possession regarding the property. Notwithstanding anything to the
contrary herein, IFCO Chicago shall not have any obligation to permit any
prospective purchaser to conduct any Phase II on the Chicago Assets unless it is
provided an indemnification from such prospective purchaser to protect IFCO
Chicago against liabilities solely and directly arising from the negligent
performance of that Phase II investigation.
(v) After the Closing Date and prior to the Chicago
Closing, IFCO Chicago shall, and IICSH and the Parents shall cause IFCO Chicago
to, cooperate with Buyer to effect the relocation of the Chicago Facility,
including without limitation by contracting with engineers, moving contractors,
building contractors, demolition contractors and other parties, all as
reasonably requested by Buyer, and by permitting such parties to enter the
Chicago Facility from time to time. Notwithstanding anything to the contrary
contained herein, IFCO Chicago shall not have any obligation to enter into any
such contract except to the extent Buyer acknowledges in writing that the
liabilities and obligations under such contract are included in Chicago Moving
Expenses.
(vi) Prior to the Chicago Closing, (A) Buyer shall, or shall
cause its designated Affiliate to, reimburse IFCO Chicago within ten (10)
business days after Buyer's receipt of invoices for the direct costs and
expenses (subject to paragraph (c)(vii) below) of operating the Chicago Facility
(excluding allocations of Parents' selling, general and administrative expenses
or other expenses of Parents), to the extent such costs and expenses are not
paid to IFCO Chicago under clause (B) of this paragraph, and (B) IFCO Chicago
shall sell products and services only to Buyer or its Affiliates, but only as
required by Buyer or its Affiliates, at a price equal to IFCO Chicago's cost of
producing such products, plus 1% of such cost. IFCO Chicago's cost of producing
such products shall not include any item excluded from IFCO Chicago's
calculation of Chicago Facility EBITDA. IFCO Chicago shall, and IICSH and
Parents shall cause IFCO Chicago to provide, Buyer and its designated Affiliate
reasonable
18
access to IFCO Chicago's books and records to confirm the amount of any invoice
for amounts claimed by IFCO Chicago under this provision.
(vii) Prior to the Chicago Closing, Buyer shall, or shall
cause its designated Affiliate to, reimburse IFCO Chicago promptly for IFCO
Chicago's actual capital expenditures at the Chicago Facility, but only to the
extent such capital expenditures are for maintenance and repairs in the ordinary
course of business consistent with past practices and specifically excluding any
capital expenditures required in any agreement with the City of Chicago or any
regulatory authority to permit the continued operation of the Chicago Facility
until the Government Relocation Date. IFCO Chicago shall promptly notify Buyer
if the City of Chicago or any other governmental authority having authority over
the Chicago Facility requires that any capital improvement, other expenditure or
change in manner of operation be made at the Chicago Facility to permit the
continued operation of the Business at such location (any such capital
improvement, expenditure or change in operation, a "City Mandated Improvement").
-------------------------
Buyer shall have the right in its sole discretion to require IFCO Chicago to
make such City Mandated Improvement at Buyer's cost and expense; provided,
--------
however, that notwithstanding anything to the contrary contained herein, nothing
-------
contained in this Agreement shall require or be construed to require Sellers or
Parent to make any City Mandated Improvement at Sellers' or Parent's cost and
expense. If Buyer elects not to fund any City Mandated Improvement, then IFCO
Chicago may elect, in lieu of making such City Mandated Improvement, to
discontinue the operation of the Chicago Facility, or, if possible, to
discontinue the portion of the operations conducted at the Chicago Facility that
could not be continued without the City Mandated Improvement
(d) Consideration for Chicago Purchase and Sale. The
-------------------------------------------
consideration for the purchase and sale of the Chicago Assets shall be the
following:
(i) At the Chicago Closing, subject to subsection (f)
below and the terms of the Escrow Agreement, as consideration for the purchase
and sale of the Chicago Assets, Buyer or its designated Affiliate shall pay to
the appropriate Sellers an amount equal to $2,000,000 (the "Chicago Purchase
----------------
Price"), payable by directing the Escrow Agent to deliver the Chicago Purchase
-----
Price Note to IFCO Chicago. At the Chicago Closing, Buyer may, in its sole
discretion, elect by written notice to Seller to defer receipt of title to the
real property on which the Chicago Facility is located until a future date, but
not later than the eighteenth month anniversary of the Closing Date. In the
event Buyer makes such an election, the Chicago Purchase Price Note shall be
released from Escrow and delivered to IFCO Chicago on the date on which Buyer or
its designee elects to take title to the real property on which the Chicago
Facility is located, which date shall not be later than the eighteenth month
anniversary of the Closing Date.
(ii) At the Chicago Closing, IFCO Chicago shall assign and
Buyer or its designated Affiliate shall assume only the Chicago Assumed
Liabilities. For purposes of this Agreement, the term "Chicago Assumed
---------------
Liabilities" shall mean any Liability of IFCO Chicago that would be an Assumed
-----------
Liability under the terms of this Agreement but for this Section 2.6, Section
1.2(c), and the other provisions of this Agreement referring to IFCO Chicago
19
or the Chicago Facility. Notwithstanding the foregoing or anything to the
contrary contained herein, subject to Buyer's obligation to promptly reimburse
Seller for Chicago Moving Expenses, neither Buyer nor any of its Affiliates has
assumed, assumes or intends to assume, and neither the term "Assumed Liability"
nor the term "Chicago Assumed Liability" shall be deemed or construed to mean
that Buyer or any of its Affiliates has assumed, assumes or agrees to assume,
any Retained Liability, including, without limitation, any liability or
obligation arising as a result of Environmental Claims, including without
limitation those arising under CERCLA or its state analogs or violations of
Environmental Laws at the Chicago Facility with respect to the period prior to
the Chicago Closing.
(iii) At the Chicago Closing, the appropriate Seller shall
assign and Buyer or its designated Affiliate shall assume all Chicago Assumed
Contracts. For purposes of this Agreement, the term "Chicago Assumed Contracts"
-------------------------
means all IFCO Chicago's contracts, intellectual property and software licenses,
real property leases (unless excluded in accordance with the terms of this
Section 2.6), personal property leases, warranties, commitments, agreements,
arrangements and sales orders related to the Business of IFCO Chicago at the
Chicago Facility pursuant to which IFCO Chicago enjoys any right or benefit
including the right to receive income in respect thereof, excluding waste
disposal contracts.
(iv) At the Chicago Closing, except as otherwise provided
below, the appropriate Seller shall assign and Buyer or its designated Affiliate
shall assume all Chicago Listed Permits that Buyer elects to assume if any. For
purposes of this Agreement, the term "Chicago Listed Permits" means all such
------------------------
governmental licenses, permits, approvals, identification numbers,
authorizations, exemptions, classifications, registrations, notifications and
certificate, and all consents or agreements with governmental authorities that
are in effect or are pending with respect to the relocation of the Business of
IFCO Chicago to a new facility. Such term shall not include any governmental
licenses, permits, approvals, identification numbers, authorizations,
exemptions, classifications, registrations, notifications, certificates or
consents or agreements with governmental authorities to the extent applicable to
the operation of the Business at the Chicago Facility. Notwithstanding anything
to the contrary contained herein, neither IFCO Chicago nor any of its Affiliates
shall have any liability or obligation with respect to obtaining or applying for
any governmental licenses, permits, approvals, identification numbers,
authorizations, exemptions, classifications, registrations, notifications,
certificates or consents or agreements with governmental authorities with
respect to any facility to which Buyer relocates the Business of IFCO Chicago.
At or prior to the Chicago Closing, Sellers shall transfer to Buyer all Chicago
Listed Permits for which transfer no governmental approval is necessary. At the
Chicago Closing or as soon as practicable thereafter, the appropriate Seller
shall use commercially reasonable efforts to transfer to Buyer all Chicago
Listed Permits for which transfer governmental approval to transfer is necessary
and shall initiate, to the extent requested by Buyer, transfer of all Chicago
Listed Permits for which governmental approval is necessary. In the event the
sale, transfer, assignment, or conveyance of any of the Chicago Listed Permits
is unlawful or is not permissible under any agreement, or federal, state, or
local law, rule, or regulation, then the terms "sale, transfer or assignment,"
for the purposes of this Agreement with respect to any such Chicago Listed
Permits, shall be deemed to mean and require the appropriate Seller's
relinquishment of all of its right, title and interest in, to and under such
20
Chicago Listed Permits as of the Chicago Closing Date to the fullest extent
necessary or appropriate to enable Buyer to acquire such Chicago Listed Permits.
(v) At the Chicago Closing, Buyer and each Seller and Parent
shall perform such acts, execute and deliver such closing documents, and
prorate, incur and share expenses with respect to the sale and acquisition of
the assets of the Chicago Facility contemplated hereby to the same extent that
it would have been required to do so pursuant to the terms of this Agreement if
the transactions included in the Chicago Closing were included in the Closing.
Without limiting the foregoing, subject to Section 1.6, at the Chicago Closing
Sellers shall deliver an owner's title insurance policy with respect to the Real
Property relating to the Chicago Facility in the customary form, insuring Buyer
and issued as of the date of the Chicago Closing by a title insurance company
reasonably satisfactory to Buyer, in an amount reasonably satisfactory to Buyers
and Sellers.
(e) Chicago Closing. The consummation of Buyer's acquisition of the
---------------
Chicago Assets provided for herein (the "Chicago Closing") shall take place at
---------------
the ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ at 10:00 A.M., local time, on
the third business day after the earlier of the date on which:
(i) subject to the satisfaction or waiver of the condition and
the rights and obligations set forth in the other sections of this Agreement,
IFCO Chicago ceases operation of the Chicago Facility and completes the
environmental remediation of the real property included in the Chicago Assets
pursuant to the requirements of Section 2.6(c)(iii) above, which discontinuation
and remediation shall occur as promptly as practicable after Buyer, an Affiliate
of Buyer or the assignee of Buyer's or its Affiliate's right to purchase the
Chicago Assets or any part thereof, notifies IFCO Chicago, Parents and the
Escrow Agent in writing of its election to acquire title to the Chicago Assets
or any part thereof on a date identified by such purchaser after IFCO Chicago
discontinues such operation and completes such remediation;
(ii) subject to the satisfaction or waiver of the condition and
the rights and obligations set forth in the other sections of this Agreement,
Buyer, an Affiliate of Buyer or Buyer's designee notifies IFCO Chicago, Parents
and the Escrow Agent in writing of its election to acquire title to real
property included in the Chicago Assets prior to the remediation of such real
property, in which case Buyer, its Affiliate or Buyer's designee, as applicable
shall undertake in writing to (x) complete the environmental remediation of such
real property (as described in Section 2.6(c)(iii)) at such acquiror's expense
or (y) to release IFCO Chicago from any obligation to environmentally remediate
such real property; or
(iii) subject to the satisfaction or waiver of the conditions
set forth in items (C) and (D) of Section 2.6(c)(ii), IFCO Chicago or either
Parent notifies Buyer or its assignee (assuming notice of assignment has been
provided to IFCO Chicago and Parents) of its determination to transfer title to
the Chicago Assets to Buyer, its Affiliate or assignee, as the case may be;
provided IFCO Chicago and Parents shall not be entitled to provide such notice
--------
until after the Government Relocation Date; provided further that Buyer may, in
-------- -------
its sole discretion, elect by written notice to IFCO Chicago and Parents to
defer receipt of title to the real
21
property on which the Chicago Facility is located until a future date, which
date shall not be later than the later of the eighteen (18) month anniversary of
the Closing Date or the date on which any Liens not permitted under Section
2.6(c)(ii) are removed from such real property;
provided, however, that in any case, Buyer, its Affiliate or assignee, as the
-------- -------
case may be, shall not be deemed to have acquired title to Chicago Assets
comprised of personal property until such Chicago Assets are removed from the
premises of the Chicago Facility.
The applicable time and date of the Chicago Closing are
referred to herein as the "Chicago Closing Date."
--------------------
(f) Distribution of Chicago Escrow Fund. The Chicago Escrow
-----------------------------------
Fund shall be distributed to Sellers at the Chicago Closing in accordance with
the terms of the Escrow Agreement.
(g) Chicago Moving Expenses. For purposes of this Agreement,
-----------------------
the term "Chicago Moving Expenses" means all costs and expenses that are
-----------------------
reasonable in nature and amount, or are incurred at Buyer's request or with its
consent, and that are paid or incurred by Buyer or its Affiliate to (i) shut
down the Chicago Facility and move the Chicago Assets to a new facility and
install the Chicago Assets at such new facility such that they are in working
order and operational, (ii) replace assets that would otherwise be Chicago
Assets, but that cannot be moved, or that Buyer elects not to move, (iii) scrap
any assets that are not moved from the Chicago Facility, and (iv) (A) acquire a
new facility in the same market area as the Chicago Facility from which to
operate the Business conducted by IFCO Chicago or (B) increase the capacity at a
business acquired by Buyer or an Affiliate of Buyer in the same market area as
the Chicago Facility operates so that the acquired business is able to absorb
the Business conducted by the Chicago Facility on a competitive and commercially
comparable basis. The term "Chicago Moving Expenses" also shall include: the
-----------------------
out-of-pocket expenses paid or incurred by IFCO Chicago to (A) conduct the
environmental remediation described in Section 2.6(c)(iii), including any
necessary investigation, of the real property included in the Chicago Assets to
the least stringent extent required by applicable Environmental Laws in effect
at the time of such environmental remediation or, if greater, to the extent
Buyer determines that such greater environmental remediation is reasonably
necessary to permit such real property to be saleable to a third party
identified by Buyer, at Buyer's option; provided, however, IFCO Chicago shall
-------- -------
not incur any such out-of-pocket expenses without the prior consent of Buyer;
provided, further, Buyer shall not be obligated to reimburse IFCO Chicago for
-------- -------
any out-of-pocket expenses incurred by IFCO Chicago for any environmental
remediation required with respect to, or performed on or for, offsite property
that is not part of, or for conditions that are not located on, the real
property included in the Chicago Assets, and (B) demolish or renovate the
structure at the Chicago Facility as reasonably requested by Buyer or its
Affiliate; provided, however, that IFCO Chicago shall not pay or incur an
-------- -------
expense or cost for any item or activity to demolish or renovate the structure
at the Chicago Facility that exceeds $10,000 or a series of such items and
activities that exceed $15,000 in the aggregate without the prior consent of
Buyer or its Affiliate. Subject to the foregoing, Buyer shall reimburse IFCO
Chicago and its Affiliates for Chicago Moving
22
Expenses not later than ten (10) business days from the date IFCO Chicago
delivers Buyer copies for such invoices.
(h) Assignment. Prior to the Chicago Closing, Buyer or an
----------
Affiliate of Buyer may assign to any third party transferee, purchaser or
assignee any or all of its rights under this Section 2.6 (Chicago)."
17. Section 6.8(a). Section 6.8(a) of the Asset Purchase Agreement
-------------- --------------
is hereby amended to read in its entirety as follows:
"(a) ISNA is acquiring the Promissory Notes for its own
account and not with a view to its distribution within the meaning of Section
2(11) of the Securities Act of 1933, as amended."
18. Section 8.16. Section 8.16 of the Asset Purchase Agreement is
------------ ------------
hereby amended to read in its entirety as follows:
"8.16. Remediation at Chicago Sites. Prior to the Chicago
----------------------------
Closing, with respect to the Real Property located at ▇▇▇▇ ▇. ▇▇/▇▇/ ▇▇▇▇▇▇ and
2301 and ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ in Chicago, Illinois, if Buyer requests them to do
so, Sellers shall (and Parents shall cause Sellers to) file a claim under the
relevant insurance policies that they hold (so long as the relevant insurance
policies are still in place and such claims are in accordance with such
policies) for remediation of such sites and shall use commercially reasonable
efforts to prosecute such claim; provided, however, Sellers shall not be
-------- -------
required to incur out-of-pocket expenses for the prosecution of such claim."
19. Section 9.6(a). Section 9.6(a) of the Asset Purchase Agreement
-------------- --------------
is amended to replace the reference to "January 31, 2002" with "January 31,
2003."
20. Section 9.7(a). This first sentence of Section 9.7(a) of the
-------------- --------------
Asset Purchase Agreement is hereby amended to read in its entirety as follows:
"For the purpose of this Agreement, the term "Active Employees"
shall mean all employees employed on the Closing Date, the Zellwood Closing Date
and the Chicago Closing Date, respectively, by Sellers for the Business who
are:"
21. Sections 9.7(b)(i) and (ii). Sections 9.7(b)(i) and (ii) of the
--------------------------- ---------------------------
Asset Purchase Agreement are hereby amended to read in their entirety as
follows:
"(i) Buyer is not obligated to hire any Active Employee,
except as required under the Collective Bargaining Agreements, but may interview
all Active Employees. Buyer will provide Seller with a list of Active Employees
to whom Buyer has not made an offer of employment on the Closing Date, the
Zellwood Closing Date or the Chicago Closing Date, as the case may be; provided,
--------
however, the number of Active Employees whom Buyer elects not to hire shall not
-------
exceed thirty (30). As used herein, "Hired Active Employees" means the Active
----------------------
23
Employees to whom Buyer has made an offer of employment that has been accepted
to be effective on the Closing Date, the Zellwood Closing Date or the Chicago
Closing Date, as the case may be. Subject to Legal Requirements, Buyer will have
reasonable access to the properties and personnel records (including performance
appraisals, disciplinary actions, grievances and medical records) of each Seller
for the purpose of preparing for and conducting employment interviews with all
Active Employees and will conduct the interviews as expeditiously as possible
prior to the Closing Date. Access will be provided by Sellers upon reasonable
prior notice during normal business hours. Effective immediately before the
Closing, the Zellwood Closing and the Chicago Closing, each Seller will
terminate the employment of all of its respective Hired Active Employees
affected thereby.
(ii) Neither any Seller nor any Parent nor any of their
Affiliates shall solicit the continued employment of any Active Employee (unless
and until Buyer has informed such Seller in writing that the particular Active
Employee will not receive any employment offer from Buyer) or the employment of
any Hired Active Employee after the Closing, the Zellwood Closing or the Chicago
Closing, as the case may be. Buyer shall inform Sellers promptly of the
identities of those Active Employees to whom it will not make employment offers,
and each Seller shall assist Buyer in complying with the WARN Act as to those
Active Employees."
22. Section 9.7(c). Section 9.7(c) of the Asset Purchase Agreement
-------------- --------------
is hereby amended to read in its entirety as follows:
"(i) Each Seller shall be responsible for (A) the payment of
all wages and other remuneration due to Active Employees with respect to their
services as employees of such Seller through the close of business on the
Closing Date, the Zellwood Closing Date or the Chicago Closing Date, as the case
may be, including pro rata bonus payments and all vacation pay earned prior to
the Closing Date, the Zellwood Closing Date or the Chicago Closing Date, as the
case may be; (B) the payment of any termination or severance payments and the
provision of health plan continuation coverage in accordance with the
requirements of COBRA and Sections 601 through 608 of ERISA; and (C) any and all
payments to employees required under the WARN Act.
(ii) Each Seller shall be liable for any claims made or
incurred by Active Employees and their beneficiaries through the Closing Date,
the Zellwood Closing Date or the Chicago Closing Date, as the case may be, under
the Benefit Plans. For purposes of the immediately preceding sentence, a charge
will be deemed incurred, in the case of hospital, medical or dental benefits,
when the services that are the subject of the charge are performed and, in the
case of other benefits (such as disability or life insurance), when an event has
occurred or when a condition has been diagnosed that entitles the employee to
the benefit."
23. Section 9.7(d). Section 9.7(d) of the Asset Purchase Agreement
-------------- --------------
is hereby amended to read in its entirety as follows:
"(d) Sellers' Retirement and Savings Plans.
-------------------------------------
24
(i) Except as provided in Sections 9.7(d)(ii), (iii) and (iv)
and with respect to Benefit Plans contributed to pursuant to the Collective
Bargaining Agreements, all Hired Active Employees who are participants in
Sellers' retirement plans shall retain their accrued benefits under Sellers'
retirement plans as of the Closing Date, the Zellwood Closing Date or the
Chicago Closing Date, as the case may be, and each Seller (or such Seller's
retirement plans) shall retain sole liability for the payment of such benefits
as and when such Hired Active Employees become eligible therefore under such
plans.
(ii) In accordance with Buyer's obligation under Section
2.6(c)(ii) (Chicago) to reimburse Sellers for the Chicago Facility operating
expenses for the period between the Closing and the Chicago Closing, Buyer
shall, within ten (10) business days of notice of payment, reimburse Sellers for
the contributions Sellers are required to make to the Local 705 International
Brotherhood of Teamsters Pension Fund (the "Local 705 Fund") for such period. As
--------------
of the Chicago Closing Date, Sellers will no longer be required to contribute to
the Local 705 Fund because of Sellers' complete withdrawal from the Local 705
Fund on the Chicago Closing Date. It is agreed that, in order to relieve Sellers
of any withdrawal liability Sellers would otherwise incur upon Sellers'
withdrawal from the Local 705 Fund, beginning on the Chicago Closing Date, Buyer
shall be obligated to contribute to the Local 705 Fund for substantially the
same number of contribution base units for which Sellers had an obligation to
contribute as of the Chicago Closing. In addition, after the Chicago Closing,
Buyer shall provide to the Local 705 Fund for a period of five (5) plan years
commencing with the first plan year beginning after the Chicago Closing, a bond
(the "Bond") issued by a corporate surety company that is an acceptable surety
----
under Section 412 of ERISA in an amount equal to the greater of (A) Sellers'
average annual contribution to the Local 705 Fund for the three (3) plan years
immediately preceding the plan year in which the Chicago Closing Date occurs or
(B) Sellers' annual contribution to the Local 705 Fund for the plan year
immediately preceding the plan year in which the Chicago Closing Date occurs,
which bond shall be paid to the Local 705 Fund if Buyer withdraws from the Local
705 Fund, or fails to make a contribution to the Local 705 Fund when due, at any
time during the first five (5) plan years beginning after the Chicago Closing.
Buyer shall purchase the Bond in the form of a five-year bond, if possible, and
shall notify Sellers of the premium amount for such five-year bond which amount
Sellers shall pay to the Buyer by the January 1st next following the Chicago
Closing. If Buyer is not able to purchase the Bond as a five-year bond, then
Buyer shall purchase the Bond as a one-year bond for each of the next five (5)
plan years which premium shall be paid by Sellers to Buyer by the January 1st
next following the Chicago Closing and by January 1st of each of the next four
(4) plan years thereafter. If Sellers fail to pay Buyer for the bond premium on
the one-year bond in any such plan year, Buyer shall set off the amount of the
premium from the amount due under its Promissory Notes. Buyer's obligation to
provide the Bond described in this Section 9.7(d)(ii) and Sellers' obligation to
pay Buyer for the amount of such Bond shall be excused if the Local 705 Fund
grants the parties a waiver. Sellers shall be responsible for attempting to
obtain said waiver on the parties' behalf. Buyer shall cooperate with Sellers in
attempting to secure such a waiver, and any expenses incurred by Buyer in such
attempt shall be paid by Sellers.
(iii) If Buyer withdraws from the Local 705 Fund in a complete
or partial withdrawal during the first five (5) plan years beginning after the
Chicago Closing and
25
incurs withdrawal liability as a result of such withdrawal, Buyer shall have the
right to set off from the amount due on its Promissory Notes an amount equal to
the lesser of (A) the amount of Sellers' withdrawal liability determined on the
Chicago Closing Date without regard to the provisions of this Section 9.7(d) and
Section 4204 of ERISA less the amount of the Bond, if any, or (B) the amount of
Buyer's withdrawal liability less the amount of the Bond, if any. In addition,
if Buyer becomes liable to the issuer of the Bond for amounts other than
premiums, Buyer shall have the right to set off from the amount due on the
Promissory Notes the amount of any such liability.
(iv) If Buyer withdraws in a complete or partial withdrawal
from the Local 705 Fund during the first five (5) plan years beginning after the
Chicago Closing, Sellers shall be secondarily liable for any withdrawal
liability it would have had to the Local 705 Fund (but for the provisions of
this Section 9.7(d) and Section 4204 of ERISA) if the withdrawal liability of
Buyer to the Local 705 Fund is not paid; provided, however, Sellers' secondary
-------- -------
liability obligation shall not apply if it is not required under the applicable
regulations issued by the PBGC."
24. Section 9.7(f). Section 9.7(f) of the Asset Purchase Agreement
-------------- --------------
is hereby amended to read in its entirety as follows:
"(f) Collective Bargaining Matters. Buyer shall assume all of
-----------------------------
the Collective Bargaining Agreements of Sellers under this Agreement or by
contract at the Closing, the Zellwood Closing or the Chicago Closing, as the
case may be. Any bargaining obligations of Buyer with any union with respect to
bargaining unit employees subsequent to the Closing, the Zellwood Closing or the
Chicago Closing, as the case may be, whether such obligations arise before or
after the Closing, the Zellwood Closing or the Chicago Closing, as the case may
be, shall be the sole responsibility of Buyer."
25. Section 9.7(g)(vi). Section 9.7(g)(vi) of the Asset Purchase
------------------ ------------------
Agreement is hereby amended to read in its entirety as follows:
"(vi) Seller and each ERISA Affiliate that, prior to the
Closing Date, the Zellwood Closing Date or the Chicago Closing Date, as the case
may be, sponsored a group health plan (as defined in Section 5000b of the Code,
Section 607 of ERISA, or both) which provides welfare benefits to any current or
former employee of Seller will continue to maintain such group health plan after
Closing, the Zellwood Closing and the Chicago Closing, respectively, and will
not, in connection with the sale (as such phrase is described in Section
54.4980B-9, Q&A-8 of the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as those regulations may be amended
from time to time (including corresponding provisions of succeeding
regulations), whether or not such regulations apply to this Agreement) of the
property, assets, and rights of the Business as described in this Agreement,
cease to provide coverage under such group health plan to its employees."
26. Section 9.10. Section 9.10 of the Asset Purchase Agreement is
------------ ------------
hereby amended to read in its entirety as follows:
26
"9.10 Payment of All Taxes Resulting from Sale of Assets by
-----------------------------------------------------
Sellers. Sellers shall (and Parents shall cause Sellers to) pay in a timely
-------
manner all Taxes resulting from or payable in connection with the sale of the
Acquired Assets pursuant to this Agreement, regardless of the person or entity
on whom such Taxes are imposed by Legal Requirements. Buyer shall promptly, but
no less than forty (40) days after receipt of an invoice from the Parent/Seller
Representative detailing the calculation and basis for the amounts paid,
reimburse Sellers for one-half of such Taxes."
27. Section 9.13. Section 9.13 of the Asset Purchase Agreement is
------------ ------------
hereby amended to read in its entirety as follows:
"9.13. Sellers' Access to Hired Active Employees. After the
-----------------------------------------
Closing Date, the Zellwood Closing Date and the Chicago Closing Date,
respectively, Buyer will, without cost or expense to Sellers, provide Sellers
reasonable access to the Hired Active Employees and such of Buyer's records that
are necessary for Sellers' preparation of Sellers' financial statements through
the Closing Date, the Zellwood Closing Date and the Chicago Closing Date,
respectively, including, but not limited to, the preparation of information for
Parents' and Sellers' quarterly filings and Parents' and Sellers' 2001 and 2002
tax returns."
28. Section 9.15. Section 9.15 of the Asset Purchase Agreement is
------------ ------------
hereby amended to read in its entirety as follows:
"9.15. Tax Matters Cooperation.
-----------------------
(a) Buyer and Sellers will cooperate in all reasonable
respects with each other in the preparation of all tax returns which include any
portion of the year 2001 or the tax years in which the Closing, the Zellwood
Closing or the Chicago Closing occurs. In addition, Buyer and Sellers will
provide each other with access to such of its books and records as may be
reasonably requested by the other in connection with federal, state and local
tax matters relating to periods which include any portion of the year 2001 or
the tax years in which the Closing, the Zellwood Closing or the Chicago Closing
occurs.
(b) Buyer and Sellers shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with any
audit, litigation, or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such matter.
Buyer and Sellers agree (i) to retain until the expiration of the applicable
statute of limitations all books and records which are relevant to the
determination o the Tax liabilities pertinent to the Acquired Assets relating to
any Tax period prior to the Closing Date, the Zellwood Closing Date or the
Chicago Closing Date, as the case may be, and to abide by all record retention
agreements entered into with any Tax authority, and (ii) to give the other party
reasonable written notice prior to destroying or discarding any such books and
records and if the other party so requests, Buyer or Sellers, as the case may
be, shall allow the other party to take possession of such books and records."
27
29. Section 9.19. There shall be added to the Asset Purchase
------------
Agreement a new Section 9.19, which shall read in its entirety as follows:
------------
"9.19. Insurance Costs.
---------------
(a) The term "Incremental Insurance Amount" shall, as
----------------------------
to each Insurance Claim Year (defined below), mean the sum of (i) an amount
equal to the difference between the Insurance Claims Costs (defined below) for
such year minus $2,154,000 (such difference being expressed as a positive number
or a negative number, as applicable) plus (ii) the sum of (A) crime insurance,
directors and officers insurance, employment practices insurance, general
liability insurance and umbrella insurance premium expense up to a maximum of
$160,000 per Insurance Claim Year, plus (B) third party administrative fees to
maintain Buyer's medical insurance plan for the Business up to a maximum of
$300,000 per Insurance Claim Year. Notwithstanding anything to the contrary
contained herein, the maximum Incremental Insurance Amount with respect to each
respective Insurance Claim Year shall be $1,100,000 and the minimum Incremental
Insurance Amount shall be $0.
(b) The term "Insurance Claims Costs" means the
----------------------
product of (1) the sum of (A) actual medical insurance claims expense up to a
maximum of $100,000 per claim, incurred by Buyer with respect to the Business,
employees of the Business (including for purposes of this calculation employees
of IFCO Florida and IFCO Chicago) during a specific Insurance Claim Year, (B)
actual workers' compensation claims expense up to a maximum of $250,000 per
claim, incurred by Buyer with respect to the Business, employees of the Business
(including for purposes of this calculation employees of IFCO Florida and IFCO
Chicago) during a specific Insurance Claim Year and (C) prescription drug
benefits expense incurred by Buyer with respect to the Business, employees of
the Business (including for purposes of this calculation employees of IFCO
Florida and IFCO Chicago) during a specific Insurance Claim Year, multiplied by
(2) for a specific Insurance Claim Year, the quotient of (x) the number of
employees of the Business at Closing that are not enrolled in a Union medical
plan, divided by (y) the monthly weighted average of employees of the Business
for such Insurance Claim Year that are not enrolled in a Union medical plan;
provided, however, that for purpose of this calculation the claims, premium
-------- -------
expenses, fees and benefit costs described in clauses (A) through (C) above
shall be adjusted each year to 2001 dollars, which adjustment shall be made by
multiplying the amount described in each of clauses (A) and (B) by the Combined
Adjustment Index (defined below) and by multiplying the amount described in
clause (C) by the Prescription Adjustment Index (defined below).
"Combined Adjustment Index" shall mean the following, as applicable:
-------------------------
(i) If the ▇▇▇▇▇▇ Index (defined below) is not published or publicly
available for the applicable year, then the percentage increase
or decrease in the annual Medical Care Services Index included in
the Bureau of Labor Statistics Consumer Price Index - Urban Wage
Earners and Clerical Workers (U.S. City Average) for such year,
as compared to the 2001 baseline of 278.5; or
28
(ii) For so long as the ▇▇▇▇▇▇ Index is published or publicly
available for the applicable year, then the average of (a) the
percentage increase or decrease described in item (i) of this
definition and (b) the percentage increase or decrease in the
▇▇▇▇▇▇ Health Value Initiative Annual Health Care Costs Per
Employee - National Averages, as published by ▇▇▇▇▇▇
Associates LLC for such year, as compared to the 2001 baseline
value of $4,778 (such percentage increase or decrease, the
"▇▇▇▇▇▇ Index").
------------
"Prescription Adjustment Index" shall mean the following, as
-----------------------------
applicable:
(i) If the ▇▇▇▇▇▇ Index is not published or publicly available for
the applicable year, then the percentage increase or decrease
in the annual Medical Care Index included in the annual Bureau
of Labor Statistics Consumer Price Index - Urban Wage Earners
and Clerical Workers (U.S. City Average) for such year, as
compared to the 2001 baseline value of 271.8; or
(ii) For so long as the ▇▇▇▇▇▇ Index is published or publicly
available for the applicable year, then the average of (a) the
percentage increase or decrease described in item (i) of this
definition and (b) the ▇▇▇▇▇▇ Index.
(c) The term "Average Incremental Insurance
-----------------------------
Amount" shall mean an aggregate amount equal to the product of (x) 2.275
------
multiplied by (y) the quotient of the sum of the Incremental Insurance Amount
for each of the Insurance Claim Years divided by five.
(d) At the Closing, Parents and Sellers shall
cause Bank One Texas, NA ("Bank One") to post a $3,750,000 irrevocable letter of
--------
credit in favor of Buyer (the "Letter of Credit"), the form of which is attached
----------------
hereto as Exhibit 1.
(i) If the Letter of Credit terminates in
accordance with its terms and Parents fail to deliver a Replacement LC
(defined below) at least thirty (30) days prior to the termination of
the Letter of Credit, then Buyer shall be entitled to draw the full
amount of the Letter of Credit and deposit such amount in an escrow
with Bank One pursuant to the form of Escrow Agreement attached hereto
as Exhibit 2.
"Replacement LC" means a new letter of credit
--------------
from a national or international banking institution with a credit
standing substantially similar to Bank One's, which new letter of
credit shall have terms substantially the same as the Letter of Credit,
subject to the following modifications: (A) the Replacement LC shall
have a term that extends from the date of issuance of the Replacement
LC through the earlier to occur of (x) the four-year anniversary of the
Closing Date and (y) if applicable, the expiration of Parents'
then-existing credit facility with the issuer of the Replacement LC,
(B) during each year of the Replacement LC's term through the
three-year anniversary of the Closing Date, the maximum annual draw
under the Replacement LC shall not be greater than $1,000,000, and (C)
after the three-year anniversary of the Closing Date and until the
Replacement LC's expiration thereafter, the maximum annual draw
thereunder shall not be greater than $750,000; provided, however, that
-------- -------
the Replacement LC shall provide that
29
if it terminates in accordance with clause (A) above and Parents fail
to replace the Replacement LC at least thirty (30) days prior to its
termination under clause (A) above with a new letter of credit from a
national or international banking institution with a credit standing
substantially similar to Bank One's, which new letter of credit shall
have terms substantially the same as the Replacement LC, then Buyer
shall be entitled to draw the full amount of the Replacement LC and
deposit such amount in an escrow with Bank One (or other suitable
escrow agent) pursuant to the form of Escrow Agreement attached hereto
as Exhibit 2.
(ii) The stated amount of the Replacement LC
shall decrease by $1,000,000 with respect to each year of the
Replacement LC's term through the three-year anniversary of the Closing
Date and by $750,000 with respect to each year of such Replacement LC's
term after the three-year anniversary of the Closing Date. Such
decreases shall automatically take effect with respect to each year
upon the final determination of the Incremental Insurance Amount for
the immediately-preceding Insurance Claim Year that Buyer is entitled
to draw under the Replacement LC with respect to such year in
accordance with the provisions of this Section 9.19 and the payment of
any related draw under the Replacement LC.
(iii) If the Letter of Credit or the Replacement
LC is drawn because Parents fail to deliver the Replacement LC or a
replacement thereof, as applicable, at least thirty (30) days prior to
the termination of such outstanding Letter of Credit or Replacement LC,
as applicable, and if such drawn funds are placed into an escrow
pursuant to the form of Escrow Agreement attached hereto as Exhibit 2,
Parents may nonetheless cause the early termination of such escrow by
providing Buyer a Replacement LC in accordance with the terms hereof.
(e) Within 10 days after the completion of Buyer's
audit of the Business for the years ending December 31, 2002, 2003, 2004, 2005
and 2006 (each such year being herein referred to as an "Insurance Claim Year"),
--------------------
and in any event not later than March 31 of each respective succeeding year,
Buyer shall (i) calculate the Incremental Insurance Amount, and after the year
ending December 31, 2006 shall calculate the Average Incremental Insurance
Amount and (ii) deliver to the Parent/ Seller Representative a written notice
setting forth the Incremental Insurance Amount, and after the year ending
December 31, 2006 the Average Incremental Insurance Amount, and, in reasonable
detail, Buyer's basis and calculation thereof (the "Incremental Insurance
Statement"). Buyer shall cooperate with Parent/Seller Representative, its
Affiliates and their auditors, in all commercially reasonable respects, to
permit Parent/Seller Representative to audit Buyer's Incremental Insurance
---------------------
Statement.
---------
(f) If, within thirty (30) business days after
delivery of the Incremental Insurance Statement, Buyer has not received a
written notice signed by the Parent/Seller Representative (x) disputing the
Incremental Insurance Statement, (i) indicating in reasonable detail the basis
of such dispute and (ii) setting forth on behalf of the Parents and Sellers
their proposed alternative Incremental Insurance Statement (a "Insurance Dispute
-----------------
Notice"), then Buyer's Incremental Insurance Statement shall be conclusive and
------
binding on the Parents and Sellers.
30
(g) If the Parent/Seller Representative delivers an
Insurance Dispute Notice within such thirty (30) business day period, Buyer and
the Parent/Seller Representative each shall endeavor in good faith to settle
such dispute within twenty (20) business days after the giving of such notice.
(h) If any such dispute remains unresolved after such
twenty (20) business day period, either Buyer or the Parent/Seller
Representative may elect, by delivering written notice of such election (an
"Insurance Arbitration Notice") to the other party (which shall be the
----------------------------
Parent/Seller Representative if Buyer is delivering such notice), to submit the
matter to arbitration by the Dallas, Texas, office of the Accounting Firm. The
party delivering the Insurance Arbitration Notice shall attach to such notice
any revision such party wishes to make to such party's original Incremental
Insurance Statement. If the other party wishes to alter such other party's
original Incremental Insurance Statement, such other party shall deliver such
other party's new Incremental Insurance Statement to the Accounting Firm and to
the party that delivered the Insurance Arbitration Notice not later than the
fifth business day after such other party's receipt of the Insurance Arbitration
Notice.
(i) The Accounting Firm shall have discretion to
select an Incremental Insurance Amount that is not greater than the highest
amount and not less than the lowest amount proposed by the parties in their
respective original Incremental Insurance Statements (or amended Incremental
Insurance Statement(s), if applicable).
(j) If the Accounting Firm selects the Incremental
Insurance Amount of one of the parties as proposed in their respective original
Incremental Insurance Statements (or amended Incremental Insurance Statement(s),
if applicable), then the party whose Incremental Insurance Statement was not
---
selected by the Accounting Firm shall bear the costs of the Accounting Firm. If
the Accounting Firm determines that the Incremental Insurance Amount shall be an
amount that is less than the highest amount and more than the lowest amount
proposed by the parties in their respective original Incremental Insurance
Statements (or amended Incremental Insurance Statement(s), if applicable), then
the parties shall bear the costs of the Accounting Firm in the same proportion
as the selected Incremental Insurance Amount bears to the parties' respective
proposed amounts.
(k) The parties hereto shall cooperate in good faith
with the Accounting Firm's determination of the adjustment to the Incremental
Insurance Amount pursuant hereto and shall promptly provide the Accounting Firm
with prompt and complete access to all books, records and customer contacts
reasonably relevant to the determination of such adjustment to the Incremental
Insurance Amount. The Accounting Firm shall have twenty five (25) business days
from the date of its receipt of the Insurance Arbitration Notice to determine
the correct adjustment to the Incremental Insurance Amount and each respective
party's portion of liability for the fees of the Accounting Firm, and its
decision with respect thereto shall be final and binding on the parties.
(l) If there is an Incremental Insurance Amount, as
determined in accordance with the foregoing procedures, with respect to any
Insurance Claim Year, then Parents and Sellers shall be jointly and severally
liable to pay such Incremental Insurance
31
Amount to Buyer. The payment of such Incremental Insurance Amount shall be
funded in the following order of priority:
(i) first, (A) with respect to each of the Insurance
Claim Years ending December 31, 2002, 2003 and 2004, Buyer shall draw
against the Letter of Credit (or if applicable, withdraw from the LC
Escrow) in an amount equal to the lesser of (1) the Incremental
Insurance Amount and (2) $1,000,000; (B) with respect to the Insurance
Claim Year ending December 31, 2005, Buyer shall draw against the
Letter of Credit (or if applicable, withdraw from the LC Escrow) in an
amount equal to the lesser of (1) the Incremental Insurance Amount and
(2) $750,000; and (C) with respect to the Insurance Claim Year ending
December 31, 2006, the Letter of Credit would have terminated and Buyer
shall not be entitled to draw any Incremental Insurance Amount from the
Letter of Credit;
(ii) second, the excess of (A) the Incremental
Insurance Amount with respect to a Insurance Claim Year over (B) the
amount of such Incremental Insurance Amount drawn from the Letter of
Credit (or if applicable, the LC Escrow) with respect to such year
(such difference being referred to herein as the ("Excess Insurance
Amount") shall be set off against the accrued but unpaid interest under
the Promissory Notes (on a pro rata basis based on the respective
principal amounts thereof);
(iii) third, any remaining unpaid Excess Insurance
Amount shall be distributed from the portion of the Zellwood Cash Fund
(if any) deposited with the Escrow Agent pursuant to Section
2.5(f)(i)(b);
(iv) fourth, any remaining unpaid Excess Insurance
Amount shall be set off against the outstanding principal amount of the
Promissory Notes (on a pro rata basis based on the respective principal
amounts thereof); and
(v) last, any remaining unpaid Excess Insurance Amount
shall be paid in cash by Sellers and Parents.
(m) If there is an Average Incremental Insurance Amount, as
determined in accordance with the foregoing procedures, then Parents and Sellers
shall be jointly and severally liable to pay such Average Incremental Insurance
Amount to Buyer. The payment of such Average Incremental Insurance Amount shall
be funded in the following order of priority:
(i) first, the full amount of the Average Incremental
Insurance Amount shall be set off against any accrued but unpaid
interest under the Promissory Notes (on a pro rata basis based on the
respective principal amounts thereof);
(ii) second, any remaining unpaid Average Incremental
Insurance Amount shall be distributed from the portion of the Zellwood
Cash Fund (if any) deposited with the Escrow Agent pursuant to Section
2.5(f)(i)(b);
(iii) third, any remaining unpaid Average Incremental
Insurance 32
32
Amount shall be set off against the outstanding principal amount of the
Promissory Notes (on a pro rata basis based on the respective principal
amounts thereof); and
(iv) last, any remaining unpaid Average Incremental
Insurance Amount shall be paid in cash by Sellers and Parents.
(n) If there is an Average Incremental Insurance Amount, as
determined in accordance with the foregoing procedures, then Buyer shall set off
such Average Incremental Insurance Amount (i) first, against any accrued but
unpaid interest under the Promissory Notes (on a pro rata basis based on the
respective principal amounts thereof), (ii) second, against the Remaining
Zellwood Cash, and (iii) third, against the outstanding principal amount of the
Promissory Notes (on a pro rata basis based on the respective principal amounts
thereof). If the accrued but unpaid interest on the Promissory Notes, the
Remaining Zellwood Cash and the outstanding principal amount of the Promissory
Notes are insufficient to cover the Average Incremental Insurance Amount, then
Sellers and Parents shall be jointly and severally obligated to pay Buyer, in
cash, the excess of the amount of the Average Incremental Insurance Amount over
the amount set off against the accrued but unpaid interest under the Promissory
Notes, the Remaining Zellwood Cash and the principal amount of the Promissory
Notes (such excess being herein referred to as the "Excess Average Amount").
---------------------
(o) Prior to the Chicago Closing and the Zellwood Closing,
IFCO Chicago and IFCO Florida shall, and IICSH and the Parents shall cause IFCO
Chicago and IFCO Florida to, respectively provide accurate information on their
Insurance Claims Costs with respect to each Insurance Claim Year and shall
reasonably cooperate with Buyer, its Affiliates and their auditors to permit
Buyer to audit IFCO Chicago's and IFCO Florida's calculations of such Insurance
Claims Costs.
30. There shall be added to the Asset Purchase Agreement a new Section
-------
9.20, which shall read in its entirety as follows:
----
"9.20 Removal of Subordination Prohibition. If Buyer is prohibited
------------------------------------
from paying the remaining principal and accrued interest (if any) then due under
the Promissory Notes at the Maturity (as defined in such Promissory Notes) of
the Promissory Notes because of the Subordination Agreement by and among Buyer,
Union Bank of California, N.A., Prudential Capital Partners, L.P., Prudential
Capital Partners Management Fund, L.P., and certain other parties, dated as of
the Closing Date (the "Subordination Agreement"), then on or prior to such
-----------------------
Maturity, Buyer shall remove such payment prohibition by obtaining a waiver
under such Subordination Agreement to permit such payments under the Promissory
Notes or by refinancing or retiring the indebtedness described in such
Subordination Agreement to which payment of principal and interest under the
Promissory Notes then is subordinated. Buyer acknowledges (i) that because the
Subordination Agreement would require the payee under the Promissory Notes to
pay any monetary recovery for Breach of the covenant set forth in this Section
-------
9.20 to other parties under the Subordination Agreement, remedies at law for
----
Buyer's failure to comply with its covenant in this Section 9.20 would be
------------
inadequate and (ii) that the payee under the Promissory Notes shall therefore be
entitled to obtain injunctive relief upon the Maturity date of the Promissory
Notes, including the remedy of specific performance to cause Buyer to comply
with
33
such covenant, so that the payee under the Promissory Notes then can immediately
enforce its rights under the Promissory Notes."
31. Section 10.3. Section 10.3 of the Asset Purchase Agreement is
------------ ------------
hereby amended by deleting the word "or" at the end of subsection (d) thereof,
deleting the period (.) at the end of subsection (e) thereof and replacing it
with ",; or", and inserting a new subsection (f) that reads in its entirety as
follows:
"(f) any liabilities or obligations that accrue, or otherwise
relate to the period after the Closing, under the Unassignable Contracts that
Buyer has required Sellers to maintain at Closing pursuant to Section 2.4(a)."
--------------
32. Section 10.8. Section 10.8 of the Asset Purchase Agreement is
------------ ------------
hereby amended to read in its entirety as follows:
"10.8 Right of Set-Off. Buyer shall set off any amount to which
----------------
it may be entitled under this Article 10 (Indemnification) (a) first, against
any amounts otherwise payable under Section 1.2(f) (Post-Closing Earnout
Payment), (b) second, against the portion of the Zellwood Cash Fund deposited
with the Escrow Agent pursuant to Section 2.5(f), if any, together with interest
--------------
or dividends thereon (in the form of a withdrawal rather than a setoff), (c)
third, against any accrued but unpaid interest under the Promissory Notes (on a
pro rata basis based on the respective principal amounts thereof), and (d)
fourth, against the outstanding principal amount of the Promissory Notes (pro
rata based on the respective principal amounts thereof), in each case upon
written agreement between Buyer and Parent/Seller Representative as to the
amount or upon the written decision of an arbitrator(s) (if the parties agree to
binding arbitration on the matters) or a final judgment of a court of competent
jurisdiction (if there is no agreement to arbitrate) determining such amount.
The exercise of such right of set-off or withdrawal by Buyer will not constitute
an event of default under this Agreement or the Promissory Notes or any
instrument securing the Promissory Notes. During the pendency of any arbitration
or court proceeding relating to any such set off, Buyer shall pay the interest
and principal payments under the Promissory Notes as such payments become due
and shall pay the Earnout Amount when due to a mutually acceptable escrow agent
or the escrow agent named by the court or arbitrator, as applicable, pending
resolution of the claim for set-off. Fees and expenses (including reasonable
attorneys' fees) shall be equitably allocated among the parties in the
discretion of the court or arbitrator, as applicable."
33. Section 11.5. The notification information with regard to Parents
------------
and Sellers and Buyer in Section 11.5 of the Asset Purchase Agreement is hereby
------------
amended to read in its entirety as follows:
34
"If to Parents or Sellers: IFCO Systems, N.V.
▇/▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President of IFCO Systems North
America, Inc.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to Buyer: Industrial Container Services, LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇"
34. Exhibits. Exhibit A, Exhibit B, Exhibit C, Exhibit J and Exhibit K
-------- --------- --------- --------- --------- ---------
of the Asset Purchase Agreement are hereby amended and replaced in their
entirety with Exhibit A, Exhibit B, Exhibit C, Exhibit J and Exhibit K attached
--------- --------- --------- --------- ---------
hereto, respectively.
35. Acquired Assets Note. References to the term "Acquired Assets
--------------------
Note" in the Asset Purchase Agreement are hereby replaced with the term "Chicago
Purchase Price Note."
36. Asset Purchase Agreement. All other forms and provisions of the
------------------------
Asset Purchase Agreement not expressly modified by this Second Amendment shall
remain in full force and effect and are hereby expressly ratified and confirmed.
37. No Waiver. In furtherance of Section 11.3 of the Asset Purchase
--------- ------------
Agreement, but subject to the last two sentences of Paragraph 35 below, nothing
in this Second Amendment is, and nothing herein shall be deemed to be, a waiver
of any provision of the Asset Purchase Agreement or of any right of any party
under the Asset Purchase Agreement, including without limitation any right or
obligation of any party in respect of any Breach that may have existed on, prior
to or after the date of this Second Amendment.
38. Representations and Warranties. No change made in the First
------------------------------
Amendment or in this Second Amendment affects, or shall be deemed to affect, any
representation or warranty of any party as made in the Asset Purchase Agreement
as of the date on which it was executed and delivered by the parties thereto.
Notwithstanding the foregoing or anything to the contrary contained herein, the
Disclosure Schedules to the Asset Purchase Agreement are hereby amended and
supplemented as set forth on Schedule A hereto, which amendment and
----------
supplementation shall be effective as of the date on which the Asset Purchase
Agreement was executed and delivered by the parties thereto. At the Closing, all
representations and warranties shall be true and correct as required by the
Asset Purchase Agreement and as modified by this Second Amendment.
*****
35
IN WITNESS WHEREOF, the undersigned parties have executed this Second
Amendment on the date first written above.
INDUSTRIAL CONTAINER SERVICES, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
------------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------
Title: VP/Treasurer
---------------------------------------------
IFCO SYSTEMS N.V.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------------
Printed Name: ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Title: CEO
---------------------------------------------
IFCO SYSTEMS NORTH AMERICA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: President
---------------------------------------------
IFCO INDUSTRIAL CONTAINER SYSTEMS HOLDING COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇
------------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
--------------------------------------
Title: President
---------------------------------------------
IFCO ICS - CHICAGO, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
------------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
--------------------------------------
Title: President
---------------------------------------------
Signature Page
IFCO ICS - MIAMI, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
---------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
-----------------------------------
Title: President
------------------------------------------
IFCO ICS - NORTH CAROLINA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
---------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
-----------------------------------
Title: President
------------------------------------------
IFCO ICS - MINNESOTA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
---------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
-----------------------------------
Title: President
------------------------------------------
CONTAINER RESOURCES CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇
---------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
-----------------------------------
Title: President
------------------------------------------
IFCO ICS - WASHINGTON, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
---------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
-----------------------------------
Title: President
------------------------------------------
Signature Page
IFCO ICS - CALIFORNIA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
-----------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
-------------------------------
Title: President
--------------------------------------
IFCO ICS - FLORIDA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
-----------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
-------------------------------
Title: President
--------------------------------------
ENVIRONMENTAL RECYCLERS OF COLORADO, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
-----------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
-------------------------------
Title: President
--------------------------------------
IFCO ICS - ILLINOIS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
-----------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
-------------------------------
Title: President
--------------------------------------
PALEX KANSAS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
-----------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
-------------------------------
Title: President
--------------------------------------
IFCO ICS - GEORGIA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
-----------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
-------------------------------
Title: President
--------------------------------------
Signature Page
IFCO ICS - MICHIGAN, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
----------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
------------------------
Title: President
-------------------------------
IFCO ICS - SOUTH CAROLINA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
----------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
------------------------
Title: President
-------------------------------
IFCO ICS - L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
----------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
------------------------
Title: President
-------------------------------
Signature Page
EXHIBIT 1
FORM OF LETTER OF CREDIT
EXHIBIT 2
FORM OF ESCROW AGREEMENT
EXHIBIT A
Acquired Assets
The Acquired Assets include, without limitation, the following items:
1. the Inventory, except any Inventory included in the Zellwood Assets and
the Chicago Assets;
2. all furniture, furnishings, fixtures, equipment (including
office equipment), machinery, appliances, parts, computer hardware,
automobiles and trucks and all other tangible personal property of
every description and kind and all replacement parts therefore (other
than Inventory) located at the Real Property, except for the Zellwood
Assets and the Chicago Assets, including without limitation any of the
foregoing that has been fully depreciated (collectively, the
"Equipment");
3. all Real Property (including real estate owned), except for
the Real Property included in the Zellwood Assets and the Chicago
Assets, including the structures and improvements located herein and
all fixtures and fixed assets attached thereto or located therein,
including machinery and equipment situated thereon or forming a part
thereof, together with all appurtenances, easements, rights-of-way and
other rights or interests related thereto;
4. all leasehold interests and leasehold improvements created by all
leases of personal property under which a Seller is a lessee or lessor;
5. all leasehold interests and leasehold improvements in the Leased
Premises, except for those included in the Zellwood Assets, the Chicago
Assets and the ▇▇▇▇▇▇ Lease;
6. all Accounts Receivable, instruments and chattel paper;
7. all deposits and rights with respect thereto;
8. all keys to any Real Property and Leased Premises being acquired;
9. all of Sellers' rights under all contracts, claims and rights
(and benefits arising therefrom) with or against all persons
whomsoever, including, without limitation, all rights against suppliers
under warranties covering any of the Inventory or Equipment and all
permits, to the extent they are legally transferable by Sellers;
10. all of Sellers' rights under all sales orders and sales contracts,
service orders and service contracts, purchase orders and purchase
contracts, quotations and bids;
11. the Intellectual Property;
A-1
12. the Assumed Contracts;
13. all customer lists, customer records and similar information to the
extent used in or comprising the Business;
14. all books and records, including without limitation, blueprints,
drawings and other technical papers, payroll, employee benefit,
accounts receivable and payable, inventory, maintenance, and asset
history records, ledgers, and books of original entry, all insurance
records and OSHA and EPA files;
15. all rights in connection with prepaid expenses with respect to the
Acquired Assets;
16. all sales and other data, policies and procedures, files and records,
manuals, invoices, customer lists, client lists, broker lists,
accounting records, business records, operating data and other data,
sales and promotional materials, catalogues and advertising literature;
17. all letters of credit issued to Sellers;
18. all computer software and programs of Sellers, including all
documentation, machine readable codes, printed listings of codes,
source codes with respect to such software and programs and licenses
and leases of software;
19. the Listed Permits;
20. all telephone numbers of Sellers;
21. all amounts recovered by any Seller for indemnity claims against
persons who are not parties to this Agreement for any event or
circumstance for which Buyer could seek indemnification pursuant to
Section 10.2 (Indemnification and Payment of Damages by Parents and
Sellers).
22. all plans and surveys, plats, specifications, engineer's drawings and
architectural renderings and similar items related to the Acquired
Assets, including, without limitation, those relating to utilities,
easements and roads;
23. the Domain Names;
24. the Zellwood Assets actually acquired by Buyer or its Affiliates in
accordance with Section 2.5 (Zellwood) at the Zellwood Closing;
25. the Chicago Assets acquired by Buyer, its Affiliates or assignees in
accordance with Section 2.6 (Chicago) at the Chicago Closing;
A-2
26. all rights ISNA has pursuant to the Settlement and Release Agreement,
dated as of February 28, 2001, by and among ISNA, Consolidated Drum
Reconditioning Co, Inc., CDRCo HC, LLC, CDRCo SW, LLC, CDRCo NW, LLC,
▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; and
27. except as set forth in the list of Retained Assets, to the extent
transferable, all other hardware, software, office furniture and
equipment relating to the Business, as well as all other or additional
privileges, rights, interests, properties and assets of any Seller of
every kind and description and wherever located that are used, or
intended for use, in the Business as it has been and as it is presently
being conducted.
A-3
EXHIBIT B
Retained Assets
The Retained Assets shall consist of the following:
1. each Seller's corporate charter, minute book and stock record
books, and seal;
2. software, to the extent it cannot be separated from licenses
held by Parents;
3. Permits that are not transferable to Buyer;
4. all cash on hand and in banks, cash equivalents (exclusive of
letters of credit issued by customers of Sellers), investments
and cash in transit to Sellers' bank accounts;
5. all leasehold interests and leasehold improvements in the
▇▇▇▇▇▇ Lease;
6. any right any Seller has, had or may have to recover against
persons who are not parties to this Agreement for any event or
circumstance for which Buyer could seek indemnification
pursuant to Section 10.2 (Indemnification and Payment of
Damages by the Parents and Sellers), including but not limited
to rights of Sellers under insurance policies, rights of
indemnification, rights of contribution, joint and several
liability, strict liability, contributory negligence or other
rights ("Recovery Rights"). Recovery Rights include but are
---------------
not limited to rights to recover under insurance policies or
other contracts or from other parties for environmental
damages at the Real Property or Leased Premises, products
liabilities, failures of title, business interruptions or
warranty claims;
7. the Zellwood Assets until the Zellwood Closing, and thereafter
any Zellwood Assets not acquired by Buyer or its Affiliates at
the Zellwood Closing in accordance with Section 2.5
(Zellwood);
8. the Chicago Assets until the Chicago Closing; and
9. shares of stock in Coca-Cola held in the name of ▇▇▇▇▇▇ Drum &
Barrel Co. Inc., which are not reflected in the Seller
Financial Statements.
B-1
EXHIBIT C
Assumed Liabilities
The Assumed Liabilities shall consist of the following:
1. all accounts payable relating to the Business or the Acquired Assets,
which have accrued in the ordinary course of business as presently
conducted, including, without limitation, the amounts reflected in
Seller Financial Statements and including any that are no more than
forty (40) days older than the invoice date, but excluding accounts
payable relating to the Retained Assets or Retained Liabilities;
2. any Liabilities under the Assumed Contracts (other than Liabilities
that arise out of such Seller's Breach of the Assumed Contracts prior
to the Closing Date);
3. any Liabilities accruing and arising after the Closing Date under all
of the Leased Premises except for the ▇▇▇▇▇▇ Lease, but excluding such
Liabilities that arise in respect of Liens thereon in existence at or
prior to the Closing, other than Permitted Liens;
4. any Liabilities under the Listed Permits (other than Liabilities that
arise out of such Seller's Breach of the Listed Permits prior to the
Closing Date);
5. any Liabilities arising from events or circumstances relating to the
operation of the Business that first occur after the Closing Date;
6. any Liabilities under Sellers' Collective Bargaining Agreements arising
from events or circumstances relating to the operation of the Business
after the Closing Date;
7. any Liabilities, including withdrawal liabilities, incurred by Buyer
with respect to the Multiemployer Plans after the Closing Date (except
as set forth in Section 9.7(d) (Sellers' Retirement and Savings Plans);
8. the Zellwood Assumed Liabilities after the Zellwood Closing; and
9. the Chicago Assumed Liabilities after the Chicago Closing.
C-1
EXHIBIT J
Form of Chicago Purchase Price Note
J-1
EXHIBIT K
Form of Zellwood Purchase Price Note
K-1