1
------------------------
AMENDED AND RESTATED
U.S. PARTNERSHIP AGREEMENT AMONG
HERCULES CREDIT, INC.
HERCULES FLAVOR, INC.
AND
FRIES & FRIES, INC.
------------------------
DATED AS OF FEBRUARY 4, 1997
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ARTICLE I. CERTAIN DEFINITIONS . . . . . . . . . . . . 3
DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . 4
1.1 "1995 FINANCIAL STATEMENTS". . . . . . . . . . 4
1.2 "ADJUSTED AGGREGATE VALUE" . . . . . . . . . . 4
1.3 "ADJUSTMENT TIME". . . . . . . . . . . . . . . 4
1.4 "AFFILIATES" . . . . . . . . . . . . . . . . . 4
1.5 "AGREED VALUE" . . . . . . . . . . . . . . . . 5
1.6 "CAPITAL ACCOUNT". . . . . . . . . . . . . . . 5
1.7 "CAPITAL CONTRIBUTION" . . . . . . . . . . . . 7
1.8 "C.E.O." . . . . . . . . . . . . . . . . . . . 8
1.9 "CITRUS SPECIALTIES" . . . . . . . . . . . . . 8
1.10 "CLAIM" or "CLAIMS". . . . . . . . . . . . . . 8
1.11 "COMPANIES". . . . . . . . . . . . . . . . . . 8
1.12 "CURRENT ASSETS" . . . . . . . . . . . . . . . 9
1.13 "CURRENT LIABILITIES". . . . . . . . . . . . . 9
1.14 "ESSENTIAL OIL". . . . . . . . . . . . . . . . 9
1.15 "ESTIMATED ADJUSTED AGGREGATE VALUE" . . . . . 9
1.16 "ESTIMATED TASTEMAKER U.S. VALUE". . . . . . . 9
1.17 "ESTIMATED TASTEMAKER B.V. VALUE". . . . . . . 10
1.18 "FINANCIAL ASSETS" . . . . . . . . . . . . . . 10
1.19 "FLAVOR" . . . . . . . . . . . . . . . . . . . 10
1.20 "FLAVOR AROMA CHEMICAL". . . . . . . . . . . . 10
1.21 "FLAVOR RELATED" . . . . . . . . . . . . . . . 11
1.22 "FRIES WITHDRAWAL" . . . . . . . . . . . . . . 11
1.23 "FRIES WITHDRAWAL DATE". . . . . . . . . . . . 11
1.24 "FRIES WITHDRAWAL DOCUMENTS" . . . . . . . . . 11
1.25 "GAAP" . . . . . . . . . . . . . . . . . . . . 11
1.26 "GOVERNMENTAL AUTHORITY" . . . . . . . . . . . 11
1.27 "HERCULES" . . . . . . . . . . . . . . . . . . 11
1.28 "HERCULES CONTRIBUTION". . . . . . . . . . . . 11
1.29 "HERCULES INDEMNITEES" . . . . . . . . . . . . 12
1.30 "INTERNAL REVENUE CODE". . . . . . . . . . . . 12
1.31 "INVESTMENT ASSET VALUE" . . . . . . . . . . . 12
1.32 "INVESTMENT ASSETS". . . . . . . . . . . . . . 12
1.33 "INVESTMENT GAIN". . . . . . . . . . . . . . . 12
1.34 "INVESTMENT LOSS". . . . . . . . . . . . . . . 13
1.35 "LONG-TERM LIABILITIES". . . . . . . . . . . . 13
1.36 "LONG-TERM LIABILITIES ADJUSTMENT" . . . . . . 13
1.37 "LONG-TERM LIABILITIES BASELINE" . . . . . . . 14
1.38 "MALLINCKRODT" . . . . . . . . . . . . . . . . 14
1.39 "NET WORKING CAPITAL". . . . . . . . . . . . . 14
1.40 "NOTICE" . . . . . . . . . . . . . . . . . . . 14
1.41 "OFFICERS" . . . . . . . . . . . . . . . . . . 14
1.42 "OLD PARTNERSHIP AGREEMENT". . . . . . . . . . 14
1.43 "PARTNERS' REPRESENTATIVES". . . . . . . . . . 15
1.44 "PARTNERSHIP INTEREST" . . . . . . . . . . . . 15
1.45 "SALE OF FRIES". . . . . . . . . . . . . . . . 15
1.46 "SUBSIDIARIES" . . . . . . . . . . . . . . . . 15
1.47 "TASTEMAKER BUSINESS". . . . . . . . . . . . . 16
1.48 "TASTEMAKER B.V. CURRENT ASSETS" . . . . . . . 16
1.49 "TASTEMAKER B.V. CURRENT LIABILITIES". . . . . 16
1.50 "TASTEMAKER B.V. LONG-TERM LIABILITIES". . . . 16
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1.51 "TASTEMAKER B.V. LONG-TERM LIABILITIES
ADJUSTMENT". . . . . . . . . . . . . . . . . . 17
1.52 "TASTEMAKER B.V. LONG-TERM LIABILITIES
BASELINE". . . . . . . . . . . . . . . . . . . 17
1.53 "TASTEMAKER B.V. WORKING CAPITAL". . . . . . . 17
1.54 "TASTEMAKER B.V. WORKING CAPITAL ADJUSTMENT" . 18
1.55 "TASTEMAKER B.V. WORKING CAPITAL BASELINE" . . 18
1.56 "TASTEMAKER B.V. VALUE". . . . . . . . . . . . 18
1.57 "TASTEMAKER GROUP" . . . . . . . . . . . . . . 19
1.58 "TASTEMAKER U.S.". . . . . . . . . . . . . . . 19
1.59 "TASTEMAKER U.S. COMBINED AND CONSOLIDATED
VALUE". . . . . . . . . . . . . . . . . . . . 19
1.60 "TASTEMAKER DEBT". . . . . . . . . . . . . . . 19
1.61 "TASTEMAKER U.S. LIABILITIES". . . . . . . . . 20
1.62 "TASTEMAKER U.S. OPERATING ASSETS" . . . . . . 20
1.63 "TASTEMAKER U.S. VALUE". . . . . . . . . . . . 21
1.64 "TAX". . . . . . . . . . . . . . . . . . . . . 21
1.65 "TREASURY REGULATION". . . . . . . . . . . . . 21
1.66 "U.S." . . . . . . . . . . . . . . . . . . . . 21
1.67 "WITHDRAWAL CLOSING" . . . . . . . . . . . . . 22
1.68 "WORKING CAPITAL ADJUSTMENT" . . . . . . . . . 22
1.69 "WORKING CAPITAL BASELINE" . . . . . . . . . . 22
ARTICLE II. FORMATION OF TASTEMAKER U.S. . . . . . . . . . 24
2.1 Formation. . . . . . . . . . . . . . . . . . . 24
2.2 Name.. . . . . . . . . . . . . . . . . . . . . 24
2.3 Principal Office and Place of Business.. . . . 24
2.4 Term.. . . . . . . . . . . . . . . . . . . . . 24
2.5 PARTNERSHIP INTEREST.. . . . . . . . . . . . . 24
ARTICLE III. PURPOSES OF TASTEMAKER U.S. . . . . . . . . . 26
3.1 TASTEMAKER U.S.. . . . . . . . . . . . . . . . 26
ARTICLE IV. CAPITAL CONTRIBUTIONS, PARTNERSHIP FINANCE AND
DETERMINATION OF CAPITAL ACCOUNT ADJUSTMENT. . 27
4.1 CAPITAL CONTRIBUTIONS. . . . . . . . . . . . . 27
4.2 Capital Expenditures . . . . . . . . . . . . . 27
4.3 Future Borrowings. . . . . . . . . . . . . . . 27
4.4 CAPITAL ACCOUNTS . . . . . . . . . . . . . . . 27
4.5 ADJUSTED AGGREGATE VALUE . . . . . . . . . . . 27
4.6 TASTEMAKER B.V. VALUE. . . . . . . . . . . . . 31
4.7 Partnership Services . . . . . . . . . . . . . 32
ARTICLE V. CERTAIN TAX MATTERS. DISTRIBUTION OF PROFITS AND
LOSSES, TAX ALLOCATIONS AND TERMINATION. . . . 33
5.1 Distribution of Profits and Losses . . . . . . 33
5.2 Section 704(c) Tax Allocations . . . . . . . . 33
5.3 Section 754 Adjustments. . . . . . . . . . . . 35
5.4 Tax Matters Partner. . . . . . . . . . . . . . 35
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ARTICLE VI. The PARTNERS' REPRESENTATIVES. . . . . . . . . 36
6.1 Part Of TASTEMAKER GROUP . . . . . . . . . . . 36
6.2 Governance . . . . . . . . . . . . . . . . . . 36
6.3 Alternate Representatives. . . . . . . . . . . 39
6.4 Principal Functions and Responsibilities of
the PARTNERS' REPRESENTATIVES. . . . . . . . . 39
6.5 Binding Signatories of the PARTIES . . . . . . 44
6.6 Action by Members Without a Meeting. . . . . . 50
6.7 Regular Meetings . . . . . . . . . . . . . . . 50
6.8 Special Meetings . . . . . . . . . . . . . . . 51
6.9 Waiver of Notice of Meetings . . . . . . . . . 51
6.10 Participation in Meetings by Conference
Telephone Permitted. . . . . . . . . . . . . . 52
6.11 Interested Members . . . . . . . . . . . . . . 52
6.12 Indemnification. . . . . . . . . . . . . . . . 54
6.13 Advance of Expenses. . . . . . . . . . . . . . 55
6.14 Insurance. . . . . . . . . . . . . . . . . . . 55
6.15 The CHAIR and the VICE-CHAIR . . . . . . . . . 55
ARTICLE VII. PARTNERSHIP MANAGEMENT GROUP. . . . . . . . . 58
7.1 THE OFFICERS . . . . . . . . . . . . . . . . . 58
7.2 Delegations of Authorities . . . . . . . . . . 59
7.3 TASTEMAKER U.S. Staff. . . . . . . . . . . . . 60
7.4 Forecasts, Budgets, and Plans. . . . . . . . . 60
7.5 Effect of Approval . . . . . . . . . . . . . . 61
ARTICLE VIII. TRANSFER OF PARTNERSHIP INTEREST; FRIES
WITHDRAWAL; SALE OF FRIES . . . . . . . . . 62
8.1 Transfer of PARTNERSHIP INTEREST . . . . . . . 62
8.2 Withdrawal from TASTEMAKER U.S. . . . . . . . 63
8.3 Right to Withdraw. . . . . . . . . . . . . . . 63
8.4 Notice of FRIES WITHDRAWAL . . . . . . . . . . 64
8.5 Date of FRIES WITHDRAWAL . . . . . . . . . . . 64
8.6 Redemption and Assumption of FRIES" Interest . 65
8.7 Deliveries by FRIES at the WITHDRAWAL CLOSING. 69
8.8 Deliveries by TASTEMAKER U.S. at the WITHDRAWAL
CLOSING. . . . . . . . . . . . . . . . . . . . 71
8.9 Deliveries by HFI and HCI at the WITHDRAWAL
CLOSING. . . . . . . . . . . . . . . . . . . . 73
8.10 Satisfaction of Delivery Requirements. . . . . 73
8.11 Approvals. . . . . . . . . . . . . . . . . . . 74
8.12 Further Assurances . . . . . . . . . . . . . . 74
8.13 SALE OF FRIES. . . . . . . . . . . . . . . . . 75
8.14 Representations And Covenants. . . . . . . . . 75
8.15 Assignment of Withdrawal Right . . . . . . . . 76
ARTICLE IX. TERMINATION AND DISSOLUTION. . . . . . . . . . 77
9.1 Termination. . . . . . . . . . . . . . . . . . 77
9.2 Final Audit. . . . . . . . . . . . . . . . . . 77
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ARTICLE X. SECRECY. . . . . . . . . . . . . . . . . . . . 79
10.1 Confidential Information . . . . . . . . . . . 79
10.2 Confidentiality. . . . . . . . . . . . . . . . 79
ARTICLE XI. INDEMNIFICATION. . . . . . . . . . . . . . . . 82
11.1 Indemnification. . . . . . . . . . . . . . . . 82
ARTICLE XII. MISCELLANEOUS . . . . . . . . . . . . . . . . 83
12.1 Authorization. . . . . . . . . . . . . . . . . 83
12.2 Notices. . . . . . . . . . . . . . . . . . . . 83
12.3 Successors and Assigns . . . . . . . . . . . . 83
12.4 Discharge; Amendments; Etc.. . . . . . . . . . 84
12.5 Governing Law. . . . . . . . . . . . . . . . . 85
12.6 Resolution of Disputes . . . . . . . . . . . . 85
12.7 Severability . . . . . . . . . . . . . . . . . 85
12.8 Counterparts . . . . . . . . . . . . . . . . . 86
12.9 Entire Agreement . . . . . . . . . . . . . . . 87
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Table of Appendices
A LIST BRIEFLY IDENTIFYING THE CONTENTS OF ALL OMITTED APPENDICES TO
THE AMENDED AND RESTATED U.S. PARTNERSHIP AGREEMENT DATED AS OF FEBRUARY 4,
1997 AMONG HERCULES FLAVOR, INC., HERCULES CREDIT, INC. AND FRIES AND FRIES,
INC. IS A S FOLLOWS:
APPENDIX A - List of Companies
APPENDIX B - Applicable Tax Principles
APPENDIX C - Form of Hercules Guaranty and Non-compete
HERCULES INCORPORATED WILL FURNISH SUPPLEMENTALLY A COPY OF ANY OMITTED
APPENDIX TO THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST.
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AMENDED AND RESTATED U.S.
PARTNERSHIP AGREEMENT
THIS AMENDED AND RESTATED U.S. PARTNERSHIP AGREEMENT (the "AGREEMENT"),
made this 4th day of February, 1997, is among HERCULES CREDIT, INC., a
corporation organized under the laws of the State of Delaware, U.S.A., and
having its offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(herein "HCI"), HERCULES FLAVOR, INC., a corporation organized under the laws of
the State of Delaware, U.S.A., and having its offices at ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (herein "HFI"), and FRIES & FRIES INC., a corporation
organized under the laws of the State of Delaware and having offices at ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (herein "FRIES"). HCI, HFI and
FRIES are sometimes referred to herein individually as a "PARTNER" and
collectively as the "PARTNERS".
WITNESSETH:
WHEREAS, HCI is a corporation organized under the laws of the State of
Delaware, U.S.A., having offices at Hercules Plaza, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and HCI is a wholly-owned SUBSIDIARY of
HERCULES.
WHEREAS, HFI is a corporation organized under the laws of the State of
Delaware, U.S.A., having offices at Hercules Plaza, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and HFI is a wholly-owned SUBSIDIARY of
HERCULES;
WHEREAS, FRIES, is a corporation organized under the laws of the State
of Delaware, U.S.A., having offices at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, and FRIES is a wholly-owned SUBSIDIARY of MALLINCKRODT;
WHEREAS, HFI and FRIES entered into that certain Partnership Agreement,
dated as of February 1, 1992, as amended by amendments dated May 15, 1992, and
January 1, 1994 ( as amended and currently in effect, the "OLD PARTNERSHIP
AGREEMENT") whereby a U.S. general partnership was formed under the Delaware
Uniform Partnership Law, 6 Del. C. Section 1501 et. seq., and such U.S. general
partnership is referred to herein as "TASTEMAKER U.S."
WHEREAS, TASTEMAKER U.S. was formed pursuant to the OLD PARTNERSHIP
AGREEMENT and has remained in effect since such formation.
WHEREAS, HFI has contributed to HCI twenty percent (20%) of HFI"s
ownership interest in TASTEMAKER U.S., in exchange for stock of HCI and
therefore, HCI now holds a ten percent (10%) undivided ownership interest in
TASTEMAKER U.S. with the remaining undivided ownership interest in TASTEMAKER
U.S. being held fifty percent (50%) by FRIES and forty percent (40%) by HFI.
WHEREAS, HCI, HFI and FRIES desire to amend and restate the OLD
PARTNERSHIP AGREEMENT in its entirety.
NOW, THEREFORE the PARTNERS agree that the OLD PARTNERSHIP AGREEMENT
shall be, and hereby is, amended and restated in its entirety as follows:
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I. ARTICLE I. CERTAIN DEFINITIONS
The terms set forth in this Article when used in this AGREEMENT shall
have, unless the context otherwise requires, the meaning ascribed to such terms
in this Article. In the construction and interpretation of this AGREEMENT, the
rules of construction set forth at the end of this Article shall be applicable
and followed.
1. DEFINITIONS AND INTERPRETATION
1.1 "1995 FINANCIAL STATEMENTS" shall mean the December 31, 1995
audited combined consolidated financial statements of TASTEMAKER U.S. and
TASTEMAKER B.V.
1.2 "ADJUSTED AGGREGATE VALUE" shall mean an amount equal to the
TASTEMAKER U.S. COMBINED AND CONSOLIDATED VALUE, less $10,425,000 and (A) either
(i) increased by the WORKING CAPITAL ADJUSTMENT, if the NET WORKING CAPITAL as
of the ADJUSTMENT TIME exceeds the WORKING CAPITAL BASELINE or (ii) decreased by
the WORKING CAPITAL ADJUSTMENT, if the WORKING CAPITAL BASELINE exceeds the NET
WORKING CAPITAL as of the ADJUSTMENT TIME, and (B) either (i) decreased by the
LONG-TERM LIABILITIES ADJUSTMENT if the LONG-TERM LIABILITIES as of the
ADJUSTMENT TIME exceed the LONG-TERM LIABILITIES BASELINE, or (ii) increased by
the LONG-TERM LIABILITIES ADJUSTMENT if the LONG-TERM LIABILITIES BASELINE
exceeds the LONG-TERM LIABILITIES as of the ADJUSTMENT TIME.
1.3 "ADJUSTMENT TIME" shall mean the close of business on the business
day immediately preceding the date NOTICE is given by FRIES pursuant to Section
8.4.
1.4 "AFFILIATES" of a specified person shall mean individually and
collectively any and all entities (whether corporation, firm, partnership, joint
venture or other business organization wherever incorporated or organized)
controlling, controlled by or under common control with such specified person.
1.5 "AGREED VALUE" shall mean, with respect to any asset, the value of
such asset as determined by the PARTNERS' REPRESENTATIVES or as otherwise
determined as provided herein.
1.6 "CAPITAL ACCOUNT" shall mean with respect to any PARTNER the
CAPITAL ACCOUNT maintained for such PARTNER in accordance with the following
provisions:
A. To each PARTNER"S CAPITAL ACCOUNT there shall be credited such
PARTNER"S CAPITAL CONTRIBUTIONS, such PARTNER"S distributive share of profits
and the amount of any TASTEMAKER U.S. liabilities that are assumed by such
PARTNER or that are secured by any TASTEMAKER U.S. property distributed to such
PARTNER.
B. To each PARTNER"S CAPITAL ACCOUNT there shall be debited the
amount of cash and AGREED VALUE of any TASTEMAKER U.S. property distributed to
such PARTNER pursuant to any provision of this AGREEMENT, such PARTNER"S
distributive share of losses and the amount of any labilities of such PARTNER
that are assumed by TASTEMAKER U.S. or that are secured by any property
contributed by such PARTNER to TASTEMAKER U.S.
C. In the event any PARTNERSHIP INTEREST (as such term is defined
in Section 1.44 hereof) is transferred in
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accordance with the terms of this AGREEMENT, the transferee shall succeed to the
CAPITAL ACCOUNT of the transferor to the extent it relates to the transferred
interest, except as adjusted upon an election under Section 754 of the INTERNAL
REVENUE CODE. The AGREED VALUE of all TASTEMAKER U.S. assets, other than the
INVESTMENT ASSETS, shall be adjusted in accordance with Section 704 of the
INTERNAL REVENUE CODE to equal their respective gross fair market values, as
determined by the PARTNERS' REPRESENTATIVES, and the value of the INVESTMENT
ASSETS shall be adjusted in accordance with Section 704 of the INTERNAL REVENUE
CODE as described in Paragraph E of this Section 1.6 upon (1) the acquisition of
an additional interest in TASTEMAKER U.S. by any new or existing partner in
exchange for more than a de minimis CAPITAL CONTRIBUTION (as defined in Section
1.7), or (2) the redemption of an interest of an existing PARTNER, or (3) upon
the distribution by TASTEMAKER U.S. to a PARTNER of more than a de minimis
amount of TASTEMAKER U.S. property other than money, unless all PARTNERS receive
simultaneous distributions of undivided interests in the distributed property in
proportion to their interests in TASTEMAKER U.S. Any such adjustment made on or
before August 31, 1997 shall be based upon the TASTEMAKER U.S. VALUE, and the
PARTNERS hereby agree that the aggregate balances of all CAPITAL ACCOUNTS shall,
immediately following such adjustment and notwithstanding any other provision of
this AGREEMENT, equal the TASTEMAKER U.S. VALUE; provided, however, that the
PARTNERS shall initially base such adjustment upon the ESTIMATED TASTEMAKER U.S.
VALUE until the TASTEMAKER U.S. VALUE is finally determined pursuant to Section
4.4 hereof.
D. In the event the AGREED VALUES of TASTEMAKER U.S. assets are
adjusted pursuant to Paragraph C. of this Section 1.6, the CAPITAL ACCOUNTS of
the PARTNERS shall be adjusted simultaneously to reflect the aggregate net
adjustment as if TASTEMAKER U.S. recognized gain or loss equal to the amount of
such aggregate net adjustment.
E. For purposes of any adjustment of the value of the INVESTMENT ASSETS
pursuant to Paragraph C. of this Section 1.6, in determining the CAPITAL
ACCOUNTS of each PARTNER, the value ascribed to the INVESTMENT ASSETS shall be
equal to the INVESTMENT ASSET VALUE.
F. Subject to the last sentence of Paragraph C of this Section 1.6, (i)
the foregoing provisions and the other provisions of this AGREEMENT relating to
the maintenance of CAPITAL ACCOUNTS are intended to comply with Treasury
Regulation Section 1.704-1(b) and shall be interpreted and applied in a manner
consistent with such Regulations, (ii) in the event that the PARTNERS shall
determine that it is prudent to modify the manner in which the CAPITAL ACCOUNTS,
or any debits or credits thereto, are computed in order to comply with such
Regulations, the PARTNERS' REPRESENTATIVES may make such modification; provided
that such modification is not likely to have a material effect on the amount
distributable to any PARTNER pursuant to Section 9.1 hereof upon the dissolution
of TASTEMAKER U.S., (iii)
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the PARTNERS' REPRESENTATIVES shall adjust the amounts debited or credited to
CAPITAL ACCOUNTS with respect to (a) any property contributed to TASTEMAKER U.S.
or distributed to the PARTNERS and (b) any liabilities that are secured by such
contributed or distributed property, or that are assumed by TASTEMAKER U.S. or
the PARTNERS, in the event the PARTNERS' REPRESENTATIVES shall determine such
adjustments are necessary or appropriate pursuant to Treasury Regulations
Section 1.704-1(b) (2) (iv), and (iv) the PARTNERS' REPRESENTATIVES also shall
make any appropriate modifications in the event unanticipated events might
otherwise cause this AGREEMENT not to comply with Treasury Regulation Section
1.704-1(b).
1.7 "CAPITAL CONTRIBUTION" shall mean the total amount of money and the
initial AGREED VALUE of any property (other than money) contributed or agreed to
be contributed, as the content requires, to TASTEMAKER U.S. by each PARTNER or
its AFFILIATES and SUBSIDIARIES pursuant to the terms of this AGREEMENT or
pursuant to the terms of the OLD PARTNERSHIP AGREEMENT. Any reference to the
Capital Contribution of a PARTNER shall include the Capital Contribution made by
a predecessor holder of the PARTNERSHIP INTEREST of such PARTNER. The capital
contribution of HCI was made by HFI as the predecessor holder of the PARTNERSHIP
INTEREST in TASTEMAKER U.S. now held by HCI.
1.8 "C.E.O." shall have the meaning ascribed to such term in Section 6.2 A
hereof.
1.9 "CITRUS SPECIALTIES" shall mean citrus derived products, including
natural citrus aromas, essential oils, cold-pressed oils, folded oils and
natural flavor fractions, but excluding non-flavoring materials derived from the
albedo portion of the peel or the edible portion of the fruit.
1.10 "CLAIM" or "CLAIMS" shall mean any claim, cost, expense, loss,
liability, fine, penalty, interest, payment, expense and/or damage (including
reasonable attorneys' and accountants' fees and expenses) resulting from or
arising out of any fact, event or circumstance with respect to which a party to
this AGREEMENT is obligated to provide indemnification pursuant to Article XI
hereof, including, without limitation, income tax liabilities of PARTNERS
incurred as a result of a termination of TASTEMAKER U.S. under Section 708 of
the INTERNAL REVENUE CODE as provided in Section 8.1.C hereof.
1.11 "COMPANIES" shall mean the collective reference to TASTEMAKER U.S.
and TASTEMAKER B.V. and all entities set forth on APPENDIX A hereto.
1.12 "CURRENT ASSETS" shall mean, as of any time, all items, excluding
deferred taxes and the current portion, if any, of INVESTMENT ASSETS, which
would be classified as a current asset under the heading "CURRENT ASSETS" on a
combined consolidated balance sheet of TASTEMAKER U.S. and TASTEMAKER B.V.
determined and prepared in accordance with GAAP applied on a basis consistent
with the practices and methodologies used in preparing the 1995 FINANCIAL
STATEMENTS.
1.13 "CURRENT LIABILITIES" shall mean, as of any time, all items,
excluding deferred taxes, the TASTEMAKER DEBT and any TAX that is a liability or
obligation of TASTEMAKER U.S., which would be classified as a current liability
under the heading "CURRENT
11
LIABILITIES" on a combined consolidated balance sheet of TASTEMAKER U.S. and
TASTEMAKER B.V. determined and prepared in accordance with GAAP applied on a
basis consistent with the practices and methodologies used in preparing the 1995
FINANCIAL STATEMENTS; provided, that when determining whether any TAX is
included as CURRENT LIABILITIES for purposes of calculating the ADJUSTED
AGGREGATE VALUE, the principles of Treasury Regulations Section 1.1502.76(b)
applied in the manner set forth in Appendix B hereto shall govern.
1.14 "ESSENTIAL OIL" shall mean a volatile oil originating from plants
and used as a raw material in the manufacture of flavor or which is sold as a
flavor.
1.15 "ESTIMATED ADJUSTED AGGREGATE VALUE" shall mean the estimate of
the ADJUSTED AGGREGATE VALUE delivered to the PARTNERS pursuant to Section 4.5
hereof.
1.16 "ESTIMATED TASTEMAKER U.S. VALUE" means an amount equal to the
ESTIMATED ADJUSTED AGGREGATE VALUE, less ninety-nine percent (99%) of the
ESTIMATED TASTEMAKER B.V. VALUE, less the INVESTMENT LOSS (if any) and plus the
INVESTMENT GAIN (if any).
1.17 "ESTIMATED TASTEMAKER B.V. VALUE" shall mean the estimate of the
TASTEMAKER B.V. VALUE delivered to the PARTNERS pursuant to Section 4.6 hereof.
1.18 "FINANCIAL ASSETS" shall mean collectively the INVESTMENT ASSETS
and cash in an amount equal to the excess, if any, of the sum of HFI's and HCI's
CAPITAL ACCOUNT balances (as adjusted under Section 1.6.C. as a result of the
FRIES WITHDRAWAL) over the INVESTMENT ASSET VALUE.
1.19 "FLAVOR" shall mean an ingredient or compound whose primary
function is to provide flavor or taste, but it is recognized that such products
may also provide other functional properties to products, including a processed
food, beverage, tobacco, or pharmaceutical product, including (1) basic
materials, such as extracts, but excluding inorganic salts and mineral salts;
and (2) ESSENTIAL OILS or FLAVOR AROMA CHEMICALS when sold to provide flavor or
taste, but it is recognized that such products may also provide other functional
properties to products.
1.20 "FLAVOR AROMA CHEMICAL" shall mean an aroma chemical sold
primarily as a flavor or as a raw material or component of a flavor,
particularly in a sale which may require meeting specific technical requirements
of the purchaser; and such aroma chemical includes natural ethyl butyrate,
citarus terpene fraction, natural C-6 acetate, natural acetic acid, natrualal
butyric acid, fusal oil, isoamyl isovalerate, isovaleraldehyde, ethyl acetate,
benzaldehyde, and acetaldehyde.
1.21 "FLAVOR RELATED" shall mean a product which is or contains a
flavor and which is sold primarily for a function which includes flavors or
taste, but it is recognized that such product may also provide other functional
properties to products, including fruit preparations and food service items.
1.22 "FRIES WITHDRAWAL" shall have the meaning ascribed to such term in
Section 8.3 hereof.
1.23 "FRIES WITHDRAWAL DATE" shall have the meaning ascribed to such
term in Section 8.5 hereof.
1.24 "FRIES WITHDRAWAL DOCUMENTS" shall mean individually
12
and collectively the agreements, documents and instruments entered into or
executed, delivered and performed to confirm, evidence or effectuate a FRIES
WITHDRAWAL, including those agreements, documents and instruments delivered
pursuant to Sections 8.7, 8.8 and 8.9 hereof.
1.25 "GAAP" shall mean generally accepted accounting principles as in
effect in the United States of America at the time of the preparation of the
financial statements with respect to which such term is used.
1.26 "GOVERNMENTAL AUTHORITY" shall mean any domestic (federal, state,
or local) or foreign government or governmental agency, department, commission,
authority, court, tribunal, or adjudicative body.
1.27 "HERCULES" shall mean Hercules Incorporated, a corporation
organized under the laws of the State of Delaware and having its principal
office at Hercules Plaza, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
1.28 "HERCULES CONTRIBUTION" shall mean an amount equal to the positive
difference (if any) between (i) the INVESTMENT ASSET VALUE on the FRIES
WITHDRAWAL DATE, and (ii) the sum of HFI's and HCI's CAPITAL ACCOUNT balances
(as adjusted under Section 1.6.C. as a result of the FRIES WITHDRAWAL);
provided, however, that if the amount set forth in clause (ii) above equals or
exceeds the INVESTMENT ASSET VALUE on the FRIES WITHDRAWAL DATE, the HERCULES
CONTRIBUTION shall be zero.
1.29 "HERCULES INDEMNITEES" shall mean individually and collectively
HCI, HFI, and their respective directors, officers, employees, servants, agents
and representatives.
1.30 "INTERNAL REVENUE CODE" shall mean the U.S. Internal Revenue Code
of 1986 as amended.
1.31 "INVESTMENT ASSET VALUE" shall mean, as of any measurement date,
the present value of the future cash flows owed to the holder of the INVESTMENT
ASSETS using a discount rate (compounded in accordance with the interest payment
dates of the INVESTMENT ASSETS) equal to nine (9) basis points plus the yield to
maturity on U.S. Treasury Notes having an original duration as close to the
original duration of the INVESTMENT ASSETS as possible and a maturity as close
to the maturity of the INVESTMENT ASSETS as possible. Such INVESTMENT ASSET
VALUE shall be determined as of the ADJUSTMENT TIME based upon yields of U.S.
Treasury Notes.
1.32 "INVESTMENT ASSETS" shall mean Five Hundred Million Dollars
($500,000,000.00) aggregate principal amount Newflana fixed rate notes issued
pursuant to an offering memorandum dated January 30, 1997.
1.33 "INVESTMENT GAIN" shall mean the amount by which the INVESTMENT
ASSET VALUE as of the ADJUSTMENT TIME exceeds the aggregate face amount of all
INVESTMENT ASSETS; provided, however, that the INVESTMENT GAIN shall be zero if
the aggregate face amount of all INVESTMENT ASSETS equals or exceeds the
INVESTMENT ASSET VALUE as of the ADJUSTMENT TIME.
1.34 "INVESTMENT LOSS" shall mean the amount by which the aggregate
face amount of all INVESTMENT ASSETS exceeds the INVESTMENT ASSET VALUE as of
the ADJUSTMENT TIME: provided, however, that the INVESTMENT LOSS shall be zero
if the INVESTMENT
13
ASSET VALUE as of the ADJUSTMENT TIME equals or exceeds the aggregate face
amount of all INVESTMENT ASSETS.
1.35 "LONG-TERM LIABILITIES" shall mean, at any time, the liabilities
of the Companies (other than CURRENT LIABILITIES, the long-term component of
pension liabilities, deferred taxes, the TASTEMAKER DEBT and any TAX that is a
liability or obligation of TASTEMAKER U.S.) which would be classified as a
liability under the heading "TOTAL LIABILITIES" on a combined consolidated
balance sheet of TASTEMAKER U.S. and TASTEMAKER B.V. determined and prepared in
accordance with GAAP applied on a basis consistent with the practices and
methodologies used in preparing the 1995 FINANCIAL STATEMENTS.
1.36 "LONG-TERM LIABILITIES ADJUSTMENT" shall mean, at any time, an
amount equal to either (i) if the LONG-TERM LIABILITIES at such time exceed the
LONG-TERM LIABILITIES BASELINE, the amount by which the LONG-TERM LIABILITIES at
such time exceed the LONG-TERM LIABILITIES BASELINE or (ii) if the LONG-TERM
LIABILITIES BASELINE exceeds the LONG-TERM LIABILITIES at such time, the amount
by which the LONG-TERM LIABILITIES BASELINE exceeds the LONG-TERM LIABILITIES at
such time; provided, however, that if the LONG-TERM LIABILITIES at such time
equal the LONG-TERM LIABILITIES BASELINE, the LONG-TERM LIABILITIES ADJUSTMENT
shall be zero.
1.37 "LONG-TERM LIABILITIES BASELINE" shall mean the total liabilities
of the Companies (other than CURRENT LIABILITIES, the long-term component of
pension liabilities, deferred taxes, the TASTEMAKER DEBT and any TAX that is a
liability or obligation of TASTEMAKER U.S.) which were classified as a liability
under the heading "TOTAL LIABILITIES" on the June 28, 1996 unaudited combined
consolidated balance sheet of TASTEMAKER U.S. and TASTEMAKER B.V. and their
respective subsidiaries, which was an amount equal to Thirty Eight Million Four
Hundred Fifty Thousand Twenty-Four Dollars ($38,450,024.00) less any TAX on such
balance sheet that is a liability or obligation of TASTEMAKER U.S.
1.38 "MALLINCKRODT" shall mean Mallinckrodt Inc., a corporation
organized under the laws of the State of New York and having offices at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇.
1.39 "NET WORKING CAPITAL" shall mean, at any time, an amount equal to
the difference between (i) the amount of CURRENT ASSETS at such time, and (ii)
the amount of CURRENT LIABILITIES at such time.
1.40 "NOTICE" shall mean the notice of FRIES WITHDRAWAL given by FRIES
pursuant to Section 8.4 hereof.
1.41 "OFFICERS" shall have the meaning ascribed to such term in Section
7. hereof.
1.42 "OLD PARTNERSHIP AGREEMENT" shall have the meaning ascribed to
such terms in the fourth WHEREAS clause first written above.
1.43 "PARTNERS' REPRESENTATIVES" shall mean the persons appointed to
manage the business and affairs of TASTEMAKER U.S. pursuant to Article VI
hereof.
1.44 "PARTNERSHIP INTEREST" shall mean each PARTNER"S ownership
interest in TASTEMAKER U.S. at any particular time, including the right of such
PARTNER to any and all benefits to
14
which such PARTNER may be entitled hereunder together with such PARTNER"S
obligation to comply with each provision hereof.
1.45 "SALE OF FRIES" shall mean and occur forthwith upon MALLINCKRODT
ceasing to indirectly or directly own and control FRIES regardless of the
reason, nature or manner of such cessation. Without limiting the generality or
scope of the foregoing, such cessation shall occur when MALLINCKRODT indirectly
or directly (i) transfers (whether by sale, disposition or otherwise) all or
part of its interest in FRIES to a person or entity not controlled by, or under
common control with, MALLINCKRODT; (ii) owns, controls or holds less than one
hundred percent (100%) of the ownership interest of FRIES; or (iii) does not
own, control, hold or exercise the power to direct the management and policies
of FRIES (whether through the ownership of voting securities, by contract or
otherwise) and/or the power to appoint or have elected the governing body (e.g.,
board of directors) of FRIES.
1.46 "SUBSIDIARIES" of a specified person shall mean individually and
collectively, as the case may be, those entities (whether corporation, firm,
partnership, joint venture or other business organization, wherever incorporated
or organized) of which such person shall own directly or indirectly more than
fifty percent (50%) of the ownership interest, or voting capital stock, or
equivalent capital interest.
1.47 "TASTEMAKER BUSINESS" shall have the meaning ascribed to such term
in Section 1.57 hereof.
1.48 "TASTEMAKER B.V. CURRENT ASSETS" shall mean, as of any time, all
items, excluding deferred taxes, which would be classified as a current asset
under the heading "CURRENT ASSETS" on a consolidated balance sheet of TASTEMAKER
B.V. determined and prepared in accordance with the customary accounting
practices, procedures and policies of TASTEMAKER B.V. used in connection with
its regularly prepared internal financial statements.
1.49 "TASTEMAKER B.V. CURRENT LIABILITIES" shall mean, as of any time,
all items, excluding deferred taxes, which would be classified as a current
liability under the heading "CURRENT LIABILITIES" on a consolidated balance
sheet of TASTEMAKER B.V. determined and prepared in accordance with the
customary accounting practices, procedures and policies of TASTEMAKER B.V. used
in connection with its regularly prepared internal financial statements.
1.50 "TASTEMAKER B.V. LONG-TERM LIABILITIES" shall mean, at any time,
the liabilities of TASTEMAKER B.V. (other than the TASTEMAKER B.V. CURRENT
LIABILITIES, the long-term component of pension liabilities and deferred taxes)
which would be classified as a liability under the heading "TOTAL LIABILITIES"
on a consolidated balance sheet of TASTEMAKER B.V. determined and prepared in
accordance with the customary accounting practices, procedures and policies of
TASTEMAKER B.V. used in connection with its regularly prepared internal
financial statements.
1.51 "TASTEMAKER B.V. LONG-TERM LIABILITIES ADJUSTMENT" shall mean, at
any time, an amount equal to either (i) if the TASTEMAKER B.V. LONG-TERM
LIABILITIES at such time exceed the TASTEMAKER B.V. LONG-TERM LIABILITIES
BASELINE, the amount by which the TASTEMAKER B.V. LONG-TERM LIABILITIES at such
time
15
exceeds the TASTEMAKER B.V. LONG-TERM LIABILITIES BASELINE or (ii) if the
TASTEMAKER B.V. LONG-TERM LIABILITIES BASELINE exceeds the TASTEMAKER B.V.
LONG-TERM LIABILITIES at such time, the amount by which the TASTEMAKER B.V.
LONG-TERM LIABILITIES BASELINE exceeds the TASTEMAKER B.V. LONG-TERM LIABILITIES
at such time; provided, however, that if the TASTEMAKER B.V. LONG-TERM
LIABILITIES at such time equal the TASTEMAKER B.V. LONG-TERM LIABILITIES
BASELINE, the TASTEMAKER B.V. LONG-TERM LIABILITIES ADJUSTMENT shall be zero.
1.52 "TASTEMAKER B.V. LONG-TERM LIABILITIES BASELINE" shall mean the
total liabilities of TASTEMAKER B.V. (other than the TASTEMAKER B.V. CURRENT
LIABILITIES, the long term component of pension liabilities and deferred taxes)
which were be classified as a liability under the heading "TOTAL LIABILITIES" on
the June 28, 1996 unaudited consolidated balance sheet of TASTEMAKER B.V., which
was an amount equal to Five Million Eight Hundred Sixty Thousand
($5,860,000.00).
1.53 "TASTEMAKER B.V. WORKING CAPITAL" shall mean, at any time, an
amount equal to the difference between (i) the amount of TASTEMAKER B.V. CURRENT
ASSETS at such time, and (ii) the amount of TASTEMAKER B.V. CURRENT LIABILITIES
at such time.
1.54 "TASTEMAKER B.V. WORKING CAPITAL ADJUSTMENT" shall mean, at any
time, an amount equal to either (i) if the TASTEMAKER B.V. WORKING CAPITAL at
such time exceeds the TASTEMAKER B.V. WORKING CAPITAL BASELINE, the amount by
which the TASTEMAKER B.V. WORKING CAPITAL at such time exceeds the TASTEMAKER
B.V. WORKING CAPITAL BASELINE, or (ii) if the TASTEMAKER B.V. WORKING CAPITAL
BASELINE exceeds the TASTEMAKER B.V. WORKING CAPITAL at such time, the amount by
which the TASTEMAKER B.V. WORKING CAPITAL BASELINE exceeds the TASTEMAKER B.V.
WORKING CAPITAL at such time; provided, however, that if the TASTEMAKER B.V.
WORKING CAPITAL at such time equals the TASTEMAKER B.V. WORKING CAPITAL BASELINE
the TASTEMAKER B.V. WORKING CAPITAL ADJUSTMENT shall be zero.
1.55 "TASTEMAKER B.V. WORKING CAPITAL BASELINE" shall mean the
TASTEMAKER B.V. WORKING CAPITAL on the June 28, 1996 unaudited consolidated
balance sheet of TASTEMAKER B.V., which was an amount equal to Nine Million Two
Hundred Twenty-One Thousand One Hundred Ninety-Two Dollars ($9,221,192.00).
1.56 "TASTEMAKER B.V. VALUE" shall mean an amount equal to $150,000,000
and (A) either (i) increased by the TASTEMAKER B.V. WORKING CAPITAL ADJUSTMENT,
if the TASTEMAKER B.V. WORKING CAPITAL as of the ADJUSTMENT TIME exceeds the
TASTEMAKER B.V. WORKING CAPITAL BASELINE or (ii) decreased by the TASTEMAKER
B.V. WORKING CAPITAL ADJUSTMENT, if the TASTEMAKER B.V. WORKING CAPITAL BASELINE
exceeds the TASTEMAKER B.V. WORKING CAPITAL as of the ADJUSTMENT TIME, and (B)
either (i) decreased by the TASTEMAKER B.V. LONG-TERM LIABILITIES ADJUSTMENT if
the TASTEMAKER B.V. LONG-TERM LIABILITIES as of the ADJUSTMENT TIME exceed the
TASTEMAKER B.V. LONG-TERM LIABILITIES BASELINE, or (ii) increased by the
TASTEMAKER B.V. LONG-TERM LIABILITIES ADJUSTMENT if the TASTEMAKER B.V.
LONG-TERM LIABILITIES BASELINE exceeds the TASTEMAKER B.V. LONG-TERM LIABILITIES
as of the ADJUSTMENT TIME.
1.57 "TASTEMAKER GROUP" shall mean a worldwide group of
16
entities controlled by TASTEMAKER U.S. through ownership or by agreement of the
PARTNERS and engaged in the research, development, manufacture, marketing and
sale of and activities related to ingredients and compounds used primarily to
provide flavor or taste in food and beverage products, including such activities
as related to the FLAVOR, FLAVOR AROMA CHEMICAL, FLAVOR RELATED, CITRUS
SPECIALTIES and ESSENTIAL OIL businesses. Such research, development,
manufacture, marketing, sale and related activities are collectively referred to
herein as the "TASTEMAKER BUSINESS". The TASTEMAKER GROUP includes TASTEMAKER
U.S.
1.58 "TASTEMAKER U.S." shall mean the partnership formed pursuant to
the OLD PARTNERSHIP AGREEMENT and continued pursuant to this AGREEMENT.
1.59 "TASTEMAKER U.S. COMBINED AND CONSOLIDATED VALUE" shall mean an
amount equal to One Billion One Hundred Ninety Million Dollars
($1,190,000,000.00).
1.60 "TASTEMAKER DEBT" shall mean the amount of principal and accrued
but unpaid interest, fees and other costs outstanding under that certain
$600,000,000 Credit Agreement dated January 24, 1997.
1.61 "TASTEMAKER U.S. LIABILITIES" shall mean all liabilities and
obligations of TASTEMAKER U.S. relating to or arising from the TASTEMAKER U.S.
OPERATING ASSETS or otherwise relating to or arising from the TASTEMAKER
BUSINESS of whatsoever nature, whether absolute, determined, determinable,
contingent or otherwise; provided, however, that TASTEMAKER U.S. LIABILITIES
shall not include any liability or obligations of TASTEMAKER U.S. for and in
respect of any TAX that is a liability or obligation of TASTEMAKER U.S. or any
contingent liability or obligation relating to or arising from the FINANCIAL
ASSETS.
1.62 "TASTEMAKER U.S. OPERATING ASSETS" shall mean all assets,
properties and business of TASTEMAKER U.S. of every kind and nature, wherever
located, including all assets and properties used in and all of the ownership
interest of TASTEMAKER U.S. in companies engaged in the FLAVOR, FLAVOR AROMA
CHEMICAL, FLAVOR RELATED, CITRUS SPECIALTIES, and ESSENTIAL OIL businesses, and,
except as may be included in the FINANCIAL ASSETS, all consideration received by
TASTEMAKER U.S. in connection with the divestiture of any such ownership
interest after the date hereof, and including, without limitation, all right,
title and interest of TASTEMAKER U.S. in, to and under (i) the Tastemaker name;
(ii) all rights under all contracts, agreements, leases, licenses, commitments,
sales and purchase orders and other instruments; (iii) all accounts, notes and
other receivables; (iv) all prepaid expenses, including but not limited to ad
valorem taxes, leases and rentals; (v) all of TASTEMAKER U.S.'s cash and cash
equivalents on land and in banks, except as may be included in the FINANCIAL
ASSETS; (vi) all of TASTEMAKER U.S.'s rights, claims, credits, causes of action
or rights of set-off against third parties relating to the TASTEMAKER U.S.
OPERATING ASSETS, including, without limitation, unliquidated rights under
manufacturers' and vendors' warranties; (vii) all intangible property and every
application for the same, in each case owned
17
or licensed by TASTEMAKER U.S.; (viii) all transferable licenses, permits or
other governmental authorizations affecting or relating in any way to the
TASTEMAKER BUSINESS; (ix) all goodwill associated with the TASTEMAKER BUSINESS
or the TASTEMAKER U.S. OPERATING ASSETS; and (x) all rights, title and interest
in any trust agreement, insurance contract, fund or other vehicle funding
employee benefits, any employment agreement or any collective bargaining
agreement, but excluding the FINANCIAL ASSETS.
1.63 "TASTEMAKER U.S. VALUE" means an amount equal to the ADJUSTED
AGGREGATE VALUE, less ninety-nine percent (99%) of the TASTEMAKER B.V. VALUE,
less the INVESTMENT LOSS (if any) and plus the INVESTMENT GAIN (if any).
1.64 "TAX" means any federal, state, local or foreign income, profits,
gross receipts, property, sales, use, license, excise, franchise, employment,
payroll, withholding, alternative or add-on minimum, ad valorem, transfer,
stamp, capital stock or excise tax, or any other tax, custom, duty, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest, penalty or addition to tax imposed by any Governmental Authority.
1.65 "TREASURY REGULATION" shall mean the United States Income Tax
Regulations including Temporary Regulations, promulgated under the INTERNAL
REVENUE CODE.
1.66 "U.S." shall mean the United States of America.
1.67 "WITHDRAWAL CLOSING" shall have the meaning ascribed to such term
in Section 8.5 hereof.
1.68 "WORKING CAPITAL ADJUSTMENT" shall mean, at any time, an amount
equal to either (i) if the NET WORKING CAPITAL at such time exceeds the WORKING
CAPITAL BASELINE, the amount by which the NET WORKING CAPITAL at such time
exceeds the WORKING CAPITAL BASELINE, or (ii) if the WORKING CAPITAL BASELINE
exceeds the NET WORKING CAPITAL at such time, the amount by which the WORKING
CAPITAL BASELINE exceeds the NET WORKING CAPITAL at such time; provided,
however, that if the NET WORKING CAPITAL at such time equals the WORKING CAPITAL
BASELINE the WORKING CAPITAL ADJUSTMENT shall be zero.
1.69 "WORKING CAPITAL BASELINE" shall mean the NET WORKING CAPITAL of
the Companies on the June 28, 1996 unaudited combined consolidated balance sheet
of TASTEMAKER U.S. and TASTEMAKER B.V., which was an amount equal to
Seventy-Seven Million Seven Hundred Six Thousand Nine Hundred Thirteen Dollars
($77,706,913.00) less any TAX on such balance sheet that is a liability or
obligation of TASTEMAKER U.S.
Construction of Certain Words and Phrases
1.70 The index, captions and headings of this AGREEMENT are for
convenience only and shall not define, limit or affect the scope, intent,
construction or interpretation of this AGREEMENT, or any provision hereof.
1.71 The words "herein", "hereof", "hereunder", "hereby", "hereto",
"herewith", and words of similar import shall refer to this AGREEMENT as a whole
and not to any particular Article, Section , paragraph, subsection and other
subdivision.
18
1.72 The words "include", "includes", "including" and all forms and
derivations thereof shall mean including without limitation.
1.73 Words of the singular number shall include correlative words of
the plural number and vice versa. Words of one gender (e.g., masculine) shall
include other genders (e.g., feminine and neuter).
1.74 In the interpretation and construction of this AGREEMENT no
provision shall be construed against the drafting PARTY because of its drafting
of this AGREEMENT or any part hereof.
19
2 ARTICLE II. FORMATION OF TASTEMAKER U.S.
2.1 Formation. Pursuant to the OLD PARTNERSHIP AGREEMENT, TASTEMAKER
U.S. was formed as a general partnership under the Uniform Partnership Law, 6
Del. C. Section 1501 et. seq. This AGREEMENT completely amends, restates and
supersedes the OLD PARTNERSHIP AGREEMENT. Simultaneous with the execution of
this AGREEMENT, HCI is formally admitted to TASTEMAKER U.S. as a general
partner. Each PARTNER shall use its best efforts to do all acts and things
necessary to perfect and to continue the maintenance of TASTEMAKER U.S. as a
general partnership under Delaware law.
2.2 Name. The name of the general partnership referred to in Section
2.1 hereof and covered by this AGREEMENT shall be "TASTEMAKER" and may be later
changed to such other name(s) as may be agreed in writing from time to time by
the PARTNERS.
2.3 Principal Office and Place of Business. The principal offices and
place of business of TASTEMAKER U.S. shall be at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇, and/or other such location(s) as may be agreed in writing from
time to time by the PARTNERS.
2.4 Term. TASTEMAKER U.S. shall continue in effect until December 31,
2031, unless terminated pursuant to the Delaware Uniform Partnership Law, 6 Del.
C. Section 1501 et. seq. or Article IX hereof.
2.5 PARTNERSHIP INTEREST. Unless otherwise agreed to in writing by the
PARTNERS or unless sold or transferred in accordance with this AGREEMENT, the
ownership of TASTEMAKER U.S. shall be as follows: a fifty percent (50%)
undivided PARTNERSHIP INTEREST shall be owned and held by FRIES, a forty percent
(40%) undivided PARTNERSHIP INTEREST shall be owned and held by HFI, and ten
percent (10%) undivided PARTNERSHIP INTEREST shall be owned and held by HCI.
20
3 ARTICLE III. PURPOSES OF TASTEMAKER U.S.
3.1 TASTEMAKER U.S. TASTEMAKER U.S. shall engage in the TASTEMAKER
BUSINESS and other businesses and activities as are from time to time mutually
agreed upon by the PARTNERS.
21
4 ARTICLE IV. CAPITAL CONTRIBUTIONS, PARTNERSHIP FINANCE AND DETERMINATION OF
CAPITAL ACCOUNT ADJUSTMENT
4.1 CAPITAL CONTRIBUTIONS. The PARTNERS have made or have caused to be
made, and shall make or cause to be made, CAPITAL CONTRIBUTIONS or transfers to
TASTEMAKER U.S. required by any existing or future written agreement signed by
all of the PARTNERS. Except as otherwise provided in Section 8.9 hereof, no
PARTNER shall be obligated to make any CAPITAL CONTRIBUTION or transfer to
TASTEMAKER U.S., except as required by any existing or future written agreement
signed by all of the PARTNERS.
4.2 Capital Expenditures. The financing of capital expenditures shall be
undertaken as directed by the PARTNERS' REPRESENTATIVES.
4.3 Future Borrowings. The PARTNERSHIP may, as directed by the PARTNERS'
REPRESENTATIVES, borrow funds and create liens against the property of
TASTEMAKER U.S., including borrowings and liens related to or in connection with
the TASTEMAKER DEBT.
4.4 CAPITAL ACCOUNTS. TASTEMAKER U.S. shall maintain an individual CAPITAL
ACCOUNT for each PARTNER. In the event on or before August 31, 1997 it is
necessary to adjust the CAPITAL ACCOUNT of the PARTNERS pursuant to Section
1.6.C. hereof, the ADJUSTED AGGREGATE VALUE and the TASTEMAKER B.V. VALUE shall
be determined in accordance with Sections 4.5 and 4.6, respectively, below.
4.5 ADJUSTED AGGREGATE VALUE. The PARTNERS shall cause TASTEMAKER U.S. to
prepare and deliver to each of the PARTNERS TASTEMAKER U.S.' good-faith
estimates of the amounts of CURRENT ASSETS, CURRENT LIABILITIES and LONG-TERM
LIABILITIES as of the ADJUSTMENT TIME, together with a calculation of the
ESTIMATED ADJUSTED AGGREGATE VALUE as of the ADJUSTMENT TIME. Any adjustment to
the PARTNER'S CAPITAL ACCOUNT shall initially be based upon the ESTIMATED
TASTEMAKER U.S. VALUE determined using such ESTIMATED ADJUSTED AGGREGATE VALUE.
Promptly thereafter the other PARTNERS, as of the ADJUSTMENT TIME, including all
parties who were PARTNERS, shall cause TASTEMAKER U.S. to engage Coopers &
▇▇▇▇▇▇▇ L.L.P. (the "ACCOUNTANTS") to conduct an audit of the CURRENT ASSETS,
the CURRENT LIABILITIES and the LONG-TERM LIABILITIES as of the ADJUSTMENT TIME,
and such PARTNERS shall use their best efforts to cause the ACCOUNTANTS to
complete such audit and deliver to each of such PARTNERS and any former PARTNER
as of the ADJUSTMENT TIME within sixty (60) days the ACCOUNTANTS' determination
of CURRENT ASSETS, CURRENT LIABILITIES and LONG-TERM LIABILITIES as of the
ADJUSTMENT TIME, and the WORKING CAPITAL ADJUSTMENT and LONG-TERM LIABILITIES
ADJUSTMENT as of the ADJUSTMENT TIME, (collectively, the "ACCOUNTANTS' NET
DETERMINATION"), together with the certification of the
22
ACCOUNTANTS that the balances of CURRENT ASSETS, CURRENT LIABILITIES and
LONG-TERM LIABILITIES were determined in accordance with the terms of this
AGREEMENT (the "ACCOUNTANTS' REPORT"). The fees and expenses of the ACCOUNTANTS
in preparing the ACCOUNTANTS' REPORT shall be paid one-half by FRIES and one-
half by HFI AND HCI. The PARTNERS shall have a period of sixty (60) days
following receipt of the ACCOUNTANTS' REPORT to review the books and records of
the COMPANIES for purposes of determining whether they agree with the
ACCOUNTANTS' REPORT and the determination of the WORKING CAPITAL ADJUSTMENT, the
LONG-TERM LIABILITIES ADJUSTMENT, CURRENT ASSETS, CURRENT LIABILITIES and
LONG-TERM LIABILITIES set forth therein. If any PARTNER disagrees with either
the WORKING CAPITAL ADJUSTMENT or the LONG-TERM LIABILITIES ADJUSTMENT
determined based upon the ACCOUNTANTS' REPORT, such PARTNER (whether one or more
than one, each a "DISPUTING PARTY") shall, at or before the end of such sixty
(60) day period, give to all other PARTNERS a written notice which shall set
forth a detailed explanation of such DISPUTING PARTY'S disagreement with the
determination of the WORKING CAPITAL ADJUSTMENT or the LONG-TERM LIABILITIES
ADJUSTMENT set forth in the ACCOUNTANT'S REPORTS (or the amounts of CURRENT
ASSETS, CURRENT LIABILITIES or LONG-TERM LIABILITIES used in the determination
thereof), as well as an amount for each disputed item and a proposal based on
such amounts for an amount that the DISPUTING PARTY believes to be more accurate
than the ACCOUNTANTS' NET DETERMINATION. If both of HFI and HCI dispute the
ACCOUNTANTS' REPORT, HFI and HCI may (but shall not be obligated to) submit a
joint notice of dispute. If no PARTNER gives such notice within said sixty (60)
day period, the WORKING CAPITAL ADJUSTMENT and the LONG-TERM LIABILITIES
ADJUSTMENT determined by the ACCOUNTANTS and set forth in the ACCOUNTANTS'
REPORT shall be deemed correct and conclusive for purposes of determining the
ADJUSTED AGGREGATE VALUE. If any PARTNER timely disputes the ACCOUNTANTS'
determination of either the WORKING CAPITAL ADJUSTMENT or the LONG-TERM
LIABILITIES ADJUSTMENT (or the amounts of CURRENT ASSETS, CURRENT LIABILITIES or
LONG-TERM LIABILITIES used in the determination thereof), the PARTNERS shall
negotiate in good faith in an attempt to agree upon a resolution of such dispute
for a period of thirty (30) days from the end of such sixty (60) day review
period. If, notwithstanding the good faith efforts of the PARTNERS, the PARTNERS
are unable to reach agreement, the items in the ACCOUNTANTS' REPORT that are in
dispute (and only the disputed items) will be referred for final binding
resolution to the United States national office of KPMG Peat Marwick LLP or, if
KPMG Peat Marwick LLP is unwilling or unable, due to conflicts, to serve in such
capacity, one of the six (6) largest United States certified public accounting
firms which shall be mutually agreed upon by the PARTNERS hereto (or such other
internationally recognized accounting firm as is agreed upon by the PARTNERS)
and which shall exclude those firms that provide or have provided accounting
services to any of the PARTNERS (the "ADJUSTMENT ARBITRATOR"). The items in
dispute shall be determined by the ADJUSTMENT ARBITRATOR in accordance with the
terms and provisions of this AGREEMENT, and the PARTNERS agree to use their best
23
efforts to cause the ADJUSTMENT ARBITRATOR to render its decision within sixty
(60) days after the dispute has been referred to the ADJUSTMENT ARBITRATOR for
resolution. The determination of the ADJUSTMENT ARBITRATOR shall be final and
binding, and all PARTNERS shall be bound thereby and judgment upon such
resolution may be entered in any court having requisite jurisdiction. The
responsibility to pay the total fees and expenses (for the entire arbitration
process described above as computed after the completion or termination of the
arbitration) of the ADJUSTMENT ARBITRATOR shall be included as part of the award
of the ADJUSTMENT ARBITRATOR, the PARTNERS hereby instructing the ADJUSTMENT
ARBITRATOR to assess such fees and expenses to the PARTNER or PARTNERS whose
position in such dispute was least supported by the determination of the
ADJUSTMENT ARBITRATOR.
4.6 TASTEMAKER B.V. VALUE. The PARTNERS shall cause TASTEMAKER B.V. to
prepare and deliver to each of the PARTNERS the TASTEMAKER B.V.'S good-faith
estimate of the TASTEMAKER B.V. CURRENT ASSETS, TASTEMAKER B.V. CURRENT
LIABILITIES and TASTEMAKER B.V. LONG-TERM LIABILITIES as of the ADJUSTMENT TIME,
together with a calculation of the ESTIMATED TASTEMAKER B.V. VALUE based upon
such estimates. Any adjustment to a PARTNER'S CAPITAL ACCOUNT shall initially be
based upon the ESTIMATED TASTEMAKER U.S. VALUE determined using such ESTIMATED
TASTEMAKER B.V. VALUE. Within thirty (30) days thereafter, the PARTNERS shall
cause TASTEMAKER B.V. to prepare and deliver to the PARTNERS the balance sheet
of TASTEMAKER B.V. as of the ADJUSTMENT TIME, together with a calculation of the
TASTEMAKER B.V. WORKING CAPITAL ADJUSTMENT and the TASTEMAKER B.V. LONG-TERM
LIABILITIES ADJUSTMENT, and the resulting TASTEMAKER B.V. VALUE. The PARTNERS
shall have a period of thirty (30) days following receipt of such information to
review the books and records of TASTEMAKER B.V. for purposes of determining
whether they agree with the determination of the TASTEMAKER B.V. WORKING CAPITAL
ADJUSTMENT and the TASTEMAKER B.V. LONG-TERM LIABILITIES ADJUSTMENT, and the
TASTEMAKER B.V. VALUE calculated based thereon. If any of the PARTNERS disagrees
with the TASTEMAKER B.V. WORKING CAPITAL ADJUSTMENT or the TASTEMAKER B.V.
LONG-TERM LIABILITIES ADJUSTMENT, such PARTNER shall, at or before the end of
such thirty (30) day review period, give to all other PARTNERS written notice
which shall set forth a detailed explanation of such PARTNER'S disagreement with
the determination of the TASTEMAKER B.V. WORKING CAPITAL ADJUSTMENT or the
TASTEMAKER B.V. LONG-TERM LIABILITIES ADJUSTMENT. If a PARTNER timely disputes
the determination of either the TASTEMAKER B.V. WORKING CAPITAL ADJUSTMENT or
the TASTEMAKER B.V. LONG-TERM LIABILITIES ADJUSTMENT, the PARTNERS shall
negotiate in good faith in an attempt to agree upon a resolution of such dispute
for a period of thirty (30) days from the end of such thirty (30) day review
period. If notwithstanding the good faith efforts of the PARTNERS, the PARTNERS
are unable to reach agreement, such dispute shall be resolved in accordance with
Section 6.5.B of this AGREEMENT.
4.7 Partnership Services. TASTEMAKER U.S. may obtain
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services, not otherwise provided, under separate agreements with (1) any PARTNER
or its respective AFFILIATES or SUBSIDIARIES; provided, however, that each such
agreement shall be subject to the prior approval of the other PARTNERS; or (2)
with third persons. All service agreements previously entered into with (1) any
PARTNER or one of its AFFILIATES or SUBSIDIARIES (and approved by the other
PARTNERS) or (2) a third person and in effect on the date hereof shall continue
in effect in accordance with its terms.
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5 ARTICLE V. CERTAIN TAX MATTERS. DISTRIBUTION OF PROFITS AND LOSSES, TAX
ALLOCATIONS AND TERMINATION
5.1 Distribution of Profits and Losses. Except as provided in Sections 5.2
and 5.3 hereof, each PARTNER shall share, in proportion to its PARTNERSHIP
INTEREST, TASTEMAKER U.S." profits, taxable income and losses, capital gains and
capital losses, cash flow, foreign tax credit, and any other business tax
credits. The foreign SUBSIDIARIES of TASTEMAKER U.S., except in Mexico, have
adopted and adhered to written dividend/distribution policies determined by the
PARTNERS' REPRESENTATIVES and shall continue to adhere to such policies.
Distributions from TASTEMAKER U.S. or the retention and use of funds in
TASTEMAKER U.S. shall be determined by the PARTNERS' REPRESENTATIVES.
5.2 Section 704(c) Tax Allocations.
A. In accordance with Section 704(c) of the INTERNAL REVENUE CODE,
except to the extent otherwise required by Treasury Regulations promulgated
thereunder, gain or loss from the sale of any property contributed to the
capital of TASTEMAKER U.S. shall, solely for tax purposes, be allocated first to
the PARTNER contributing that property so as to take account of any remaining
variation between the adjusted basis of such property to TASTEMAKER U.S. for
federal income tax purposes and its AGREED VALUE; and depreciation deductions
attributable to contributed property shall, solely for tax purposes, be
allocated so as to take account of any variation between the adjusted basis of
such property to TASTEMAKER U.S. for federal income purposes and its initial
AGREED VALUE by allocating such depreciation deductions first to the PARTNER not
contributing such property in an amount equal to the depreciation that would be
allowable to that PARTNER were the adjusted basis of such property equal to its
initial AGREED VALUE, and thereafter to the contributing PARTNER. Allocations of
AGREED VALUE among subclasses of assets (primarily vintage accounts of fixed
assets) shall be based upon the methodology agreed upon by the PARTNERS at the
formation of TASTEMAKER U.S.
B. Except as provided under Section 5.3 hereof, in the event the
AGREED VALUE of any PARTNERSHIP property is adjusted pursuant to Section 1.3 C.
hereof, subsequent allocations of gain, loss, and depreciation with respect to
such asset shall take account of any variation between the adjusted basis of
such asset for federal income tax purposes and its AGREED VALUE in the same
manner as under Section 5.2 A hereof.
C. Any elections (including an election to adjust the basis of
TASTEMAKER U.S. property in the manner provided under Sections 734(b) and 743(b)
of the INTERNAL REVENUE CODE) or other decisions relating to such allocations
shall be made by the PARTNERS' REPRESENTATIVES in any manner that reasonably
reflects the purpose and intention of this AGREEMENT. Allocations pursuant to
Sections 5.2 hereof are solely for purposes of federal, state and local taxes
and shall not affect, or in any
26
way be taken into account in computing, any PARTNER"S CAPITAL ACCOUNT or
share of profits, losses, other items, or distributions pursuant to any
provision of this AGREEMENT.
5.3 Section 754 Adjustments. To the extent an adjustment to the tax basis
of any asset pursuant to Sections 734(b) or 743(b) of the INTERNAL REVENUE CODE
is required pursuant to Treasury Regulation Section 1.704-1(b) (2) (iv) (m) to
be taken into account in determining CAPITAL ACCOUNTS, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis), and such
gain or loss shall be specifically allocated to the PARTNERS in a manner
consistent with Treasury Regulations.
5.4 Tax Matters Partner. Subject to the provisions hereof, FRIES is
designated as the Tax Matters Partner (as defined in Section 6231 of the
INTERNAL REVENUE CODE) and is authorized and required to represent TASTEMAKER
U.S. (at TASTEMAKER U.S." expense) in connection with all examinations of
TASTEMAKER U.S." affairs by tax authorities, including resulting administrative
and judicial proceedings, and to expend TASTEMAKER U.S. funds for professional
services and costs associated therewith. Each of HCI and HFI agrees to cooperate
with FRIES and to do or refrain from doing any or all things reasonably required
by FRIES to conduct such proceedings. To the extent practicable, FRIES shall
provide HCI and HFI with copies of the relevant documents and communications
related to such Tax Matters. Upon the earliest to occur of a FRIES WITHDRAWAL or
a SALE OF FRIES, then forthwith FRIES shall cease being and serving as the Tax
Matters Partner and HFI shall forthwith become and at all times thereafter serve
as the Tax Matters Partner.
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6 ARTICLE VI. The PARTNERS' REPRESENTATIVES
6.1 Part Of TASTEMAKER GROUP. The PARTNERS desire that TASTEMAKER U.S.
continue to be conducted as part of the TASTEMAKER GROUP. In order to promote
the efficiency, profitability and effectiveness of TASTEMAKER U.S. and in
recognition of the integrated relationship of the members of the TASTEMAKER
GROUP, the PARTNERS agree that their interests in TASTEMAKER U.S. shall continue
to be managed and administered by the PARTNERS' REPRESENTATIVES, including
providing input, guidance and whatever else may be required in connection with
and in furtherance of the conduct of TASTEMAKER U.S.
6.2 Governance.
A. Governance Prior To A FRIES WITHDRAWAL Or SALE OF FRIES: Prior to
the FRIES WITHDRAWAL DATE and until the date that is two (2) days after a SALE
OF FRIES, this Section 6.2 A shall govern and Sections 6.2 B and 6.2 C shall be
of no force or effect. The business and affairs of TASTEMAKER U.S. shall be
managed by and be under the general charge, control and direction of four (4)
PARTNERS' REPRESENTATIVES. Two (2) PARTNERS' REPRESENTATIVES shall be appointed
jointly by HCI and HFI acting jointly, and two (2) PARTNERS' REPRESENTATIVES
shall be appointed by FRIES. Each of the PARTNERS' REPRESENTATIVES as of the
date hereof shall continue to serve in such capacity until he retires, dies,
resigns, is removed or otherwise ceases to be a PARTNERS' REPRESENTATIVE. Each
PARTNERS' REPRESENTATIVE that was appointed by HFI prior to the date hereof
shall be treated as having been appointed by HFI and HCI acting jointly. The
Chief Executive Officer of TASTEMAKER U.S. (the "CEO") shall be invited to all
meetings of the PARTNERS' REPRESENTATIVES; however, such officer shall be an
ex-officio, non-voting attendee. Any PARTNERS' REPRESENTATIVE may place items on
the agenda for consideration by the PARTNERS' REPRESENTATIVES. A quorum at all
meetings of the PARTNERS' REPRESENTATIVES shall consist of at least one
PARTNERS' REPRESENTATIVE appointed jointly by HCI and HFI and at least one
PARTNERS' REPRESENTATIVE appointed by FRIES. The unanimous vote of PARTNERS'
REPRESENTATIVES shall be necessary for the passage of any resolution or for any
other action by the PARTNERS' REPRESENTATIVES (except adjournment of a meeting
where less than a quorum is present). A vacancy in the PARTNERS'
REPRESENTATIVES, whether caused by retirement, death, resignation, removal or
other reason, shall be filled within sixty (60) days after the creation of such
vacancy and shall be filled by appointment by the PARTNER or PARTNERS, as the
case may be, that appointed the departed PARTNERS' REPRESENTATIVE to the
position which has become vacant.
B. Governance After SALE OF FRIES. Prior to the FRIES WITHDRAWAL
DATE and from and after the date that is two (2) days after a SALE OF FRIES,
this Section 6.2 B. shall become effective and operative for all purposes and
Section 6.2 A. and
28
Section 6.2 C. shall be of no force and effect. The business and affairs of
TASTEMAKER U.S. shall be managed by and be under the general charge, control and
direction of the four (4) PARTNERS' REPRESENTATIVES. Three (3) PARTNERS'
REPRESENTATIVES shall be appointed jointly by HCI and HFI, and one (1) PARTNERS'
REPRESENTATIVE shall be appointed by FRIES. The CEO shall be invited to all
meetings of the PARTNERS' REPRESENTATIVES; however, such officer shall be an
ex-officio, non-voting attendee. Any PARTNERS' REPRESENTATIVE (with the prior
approval of the CHAIR) may place items on the agenda for consideration by the
PARTNERS' REPRESENTATIVES. A quorum at all meetings of the PARTNERS'
REPRESENTATIVES shall consist of three PARTNERS' REPRESENTATIVES. The
affirmative vote of three PARTNERS' REPRESENTATIVES shall be necessary for the
passage of any resolution or for any other action by the PARTNERS'
REPRESENTATIVES (except adjournment of a meeting where less than a quorum is
present). A vacancy in the PARTNERS' REPRESENTATIVES, whether caused by
retirement, death, resignation, removal or other reason, shall be filled within
sixty (60) days after the creation of such vacancy and shall be filled by the
PARTNER or PARTNERS, as the case may be, that appointed the departed PARTNERS'
REPRESENTATIVE to the position which has become vacant.
C. Governance After FRIES WITHDRAWAL DATE. Upon and after the FRIES
WITHDRAWAL DATE, this Section 6.2 C. shall become effective and operative for
all purposes, and Sections 6.2 A. and 6.2 B. shall be of no force and effect.
The business and affairs of TASTEMAKER U.S. shall be managed by and be under the
general charge, control and direction of four (4) PARTNERS' REPRESENTATIVES.
Three (3) PARTNERS' REPRESENTATIVES shall be appointed by HFI, and one (1)
PARTNERS' REPRESENTATIVE shall be appointed by HCI. The CEO shall be invited to
all meetings of the PARTNERS' REPRESENTATIVES; however, such officer shall be an
ex-officio, non-voting attendee. Any PARTNERS' REPRESENTATIVE (with the prior
approval of the CHAIR) may place items on the agenda for consideration by the
PARTNERS' REPRESENTATIVES. A quorum at all meetings of the PARTNERS'
REPRESENTATIVES shall consist of three PARTNERS' REPRESENTATIVES. The
affirmative vote of three PARTNERS' REPRESENTATIVES shall be necessary for the
passage of any resolution or for any other action by the PARTNERS'
REPRESENTATIVES (except adjournment of a meeting where less than a quorum is
present). A vacancy in the PARTNERS' REPRESENTATIVES, whether caused by
retirement, death, resignation, removal or other reason, shall be filled within
sixty (60) days after the creation of such vacancy and shall be filled by
appointment by the PARTNER that appointed the departed PARTNERS' REPRESENTATIVE
to the position which has become vacant.
6.3 Alternate Representatives. HCI and HFI (acting individually or
jointly) or FRIES, whichever may be the case pursuant to Section 6.2 hereof, may
designate one or more persons to serve as alternates for each of their
respective representatives on the PARTNERS' REPRESENTATIVES. The alternate
PARTNERS' REPRESENTATIVE may act only in the absence of the
29
member for whom he is serving as an alternate. The alternate member shall be
entitled to attend meetings of the PARTNERS' REPRESENTATIVES, to vote and to
exercise all the powers and rights of the absent member. Except as the PARTNERS'
REPRESENTATIVES may determine otherwise from time to time, in the absence of the
CEO, any OFFICER designated by the CEO for this purpose may attend, as the
alternate for the CEO, meetings of the PARTNERS' REPRESENTATIVES.
6.4 Principal Functions and Responsibilities of the PARTNERS'
REPRESENTATIVES. The principal functions and responsibilities of the PARTNERS'
REPRESENTATIVES on an on-going basis shall include the establishment, review,
approval, amendment, adoption, termination, etc. of each and all aspects of the
business, operation and activities of TASTEMAKER U.S. as the PARTNERS'
REPRESENTATIVES may desire from time to time including:
A. Major goals and policies of TASTEMAKER U.S., after full
consideration of pertinent comments and recommendations of the officers and
staff of TASTEMAKER U.S., including policies on investment, business ethics,
finance and accounting, antitrust, health, safety and environment, government
contracting and dealings, and such other policies as desired by the PARTNERS.
B. The long-range and strategic plans of TASTEMAKER U.S.
C. The business plan(s) of TASTEMAKER U.S., including financial
forecasts, operating budgets and capital budgets.
D. The performance of TASTEMAKER U.S. and each major division or
subsidiary thereof.
E. Any significant change in basic structure or direction of the
business of PARTNERSHIP or any major division or subsidiary thereof, such as (1)
getting into a new line of business and (2) getting out of an old line of
business.
F. Any significant matters, such as (1) dispositions, merger,
liquidation, capitalization or decapitalization of any major division or
subsidiary entity (whether corporation, partnership or other business
organization form) of TASTEMAKER U.S.; (2) formation or acquisition of any
entity or any equity interest, regardless of the form, manner, character or
other aspect of such acquisition or entity, the contents of its charter and
by-laws of such entity, and the election of its initial directors and their
successors; (3) acquisition or divestiture of any business or real property,
regardless of the form, manner, character or other aspect of such acquisition or
divesture; and (4) granting or obtaining technology licenses, or for
consideration to be paid, or received in a dollar amount or dollar equivalent in
excess of U.S. $500,000 over the life of the license but not more than
$1,000,000.
G. Any human resource policy or plan, such as employee compensation
policy, basic employee benefit plans, incentive plans, pension, profit sharing,
stock purchase, stock option, management incentive compensation, performance
shares,
30
etc.
H. The disposition or acquisition of any asset with a fair market
value or book value, whichever is higher, in excess of U.S. $500,000 but not
more than $1,000,000. If a group of assets is disposed of or acquired as a
result of the TASTEMAKER U.S. decision, the said dollar limit (or equivalent
thereof in local currency) shall include all such assets. However, the foregoing
is not intended to require or imply individual PARTNERS' REPRESENTATIVES
approval of employee transfers and relocations and similar matters done in the
ordinary course of business and pursuant to normal policies, procedures and
practices of TASTEMAKER U.S.
I. Agreements, understandings and arrangements which are (1) not in
the ordinary course of business (including take or pay contracts), or (2) over
three (3) years in duration, or (3) involve annual payments of more than U.S.
$500,000 or aggregate payments of more than U.S. $500,000 over the life of such
agreement, understanding or arrangement.
J. Distributions, return of capital, or other comparable payments to
a PARTNER and/or its AFFILIATES or SUBSIDIARIES.
K. With respect to TASTEMAKER U.S. financial condition:
(1) A (i) total annual maximum dollar limit for short-term
indebtedness for borrowed money (i.e., maturity of one year or less), regardless
of the form, manner, character or other aspect of such indebtedness (whether
acquired through financial institutions, commercial paper, credit lines or
otherwise); and (ii) preapproved list of banks and financial institutions.
(2) A (i) total annual maximum dollar limit for long-term
indebtedness for borrowed money (i.e., maturity of greater than one year),
regardless of the form, manner, character or other aspect of such indebtedness
and provided, however, that notwithstanding such limit, any one or more related
items of long-term indebtedness of more than U.S. $5,000,000 must be
specifically approved by the PARTNERS' REPRESENTATIVES prior to any commitment
or obligation for such indebtedness being created; and (ii) preapproved list of
banks and financial institutions.
(3) The issuance of any new equity or equity equivalent,
regardless of the form, or manner of such item or issuance;
(4) Any increase of U.S. $500,000 or more in any budget, and
any one or more related operating or capital expenditures of U.S. $500,000 or
more which is not in the operating or capital expenditures budget;
(5) The selection of the outside auditors for TASTEMAKER U.S.
and review the performance of such auditors.
L. Any agreement, understanding or arrangement and/or the terms and
conditions for providing services between TASTEMAKER U.S. and one or more
PARTNERS or their respective SUBSIDIARIES and AFFILIATES where such agreement,
understanding or arrangement is either then outside the ordinary course of
business, or involves annual payments of more than U.S. $500,000, or involves
aggregate payments over its life of more than U.S. $500,000, or has a term
greater than 36 months.
31
M. Any amendments to the charter, by-laws or other formation or
governing instrument of TASTEMAKER U.S. or its SUBSIDIARIES.
N. Any initiation or settlement of any litigation or similar
proceeding (including arbitration, administrative, equitable and other)
involving claims or settlements by or against TASTEMAKER U.S. or its
SUBSIDIARIES and exceeding or reasonably expected to exceed U.S. $500,000 but
not more than U.S. $1,000,000.
O. Recommend to the PARTNERS amendments or changes to this
AGREEMENT.
P. Appoint, compensate, terminate and review performance of the
OFFICERS.
Q. TASTEMAKER U.S. entering, making, executing, delivering,
amending, performing and/or terminating agreements, papers, documents,
undertakings, arrangements and transactions covering or relating to secrecy
obligations, use restrictions, or similar restrictions or obligations arising
out of or incidental to the ordinary and usual course of business of TASTEMAKER
U.S., provided that:
(1) in the case of secrecy obligations or use restrictions imposed
on others with respect to information that TASTEMAKER U.S.
deems proprietary or confidential, such agreements, papers,
documents, undertakings, arrangements and transactions may
require the receiving party to hold such information in
confidence and/or limit its use thereof for any period
determined by the CEO or his designee(s) as being the period
during which the information has value to TASTEMAKER U.S.; and
(2) in the case of secrecy obligations or use of restrictions
imposed on TASTEMAKER U.S. with respect to third-party
information that TASTEMAKER U.S. deems proprietary or
confidential, such agreements, papers, documents,
undertakings, arrangements and transactions shall not require
TASTEMAKER U.S. to hold such information in confidence and/or
limit its use thereof for any period in excess of ten (10)
years; provided, however, that as to the purchase, lease or
licensing of computer software, commitments to maintain
information in confidence or to restrict the use thereof may
be for any period of time that the CEO or his designee(s)
deems reasonable under the circumstances.
6.5 Binding Signatories of the PARTIES.
A. Except as provided otherwise in this AGREEMENT and except as such
powers and authorities may be limited or restricted from time to time in a
NOTICE from the Chief Executive Officer of a PARTNER to the Chief Executive
Officer of the other
32
PARTNERS, HCI and HFI (acting individually or jointly) and FRIES, whichever may
be the case pursuant to Section 6.2 hereof, each hereby grants to its respective
PARTNERS' REPRESENTATIVES and such PARTNERS' REPRESENTATIVES shall have and
exercise (1) full power and authority to act on behalf of such granting
PARTNER(S) in all matters related to TASTEMAKER U.S.; and (2) without limiting
the generality of the foregoing (1), such ancillary power as may be necessary or
convenient to exercise any powers or authorities described in the foregoing (1)
or otherwise granted to the PARTNERS' REPRESENTATIVES by the PARTNERS. The
powers of the PARTNERS' REPRESENTATIVES shall include the authority to do and
perform, or cause to be done and performed, all such acts, deeds and things and
to make, execute and deliver, or cause to be made, executed and delivered, all
such agreements, undertakings, documents, instruments and certificates in the
name and on behalf of TASTEMAKER U.S. and/or the PARTNERS in their respective
capacity as general partners as the PARTNERS' REPRESENTATIVES may deem necessary
or appropriate to effectuate or carry out fully the purpose or intent of any
powers and authorities extended to the PARTNERS' REPRESENTATIVES hereunder. At
all times while this AGREEMENT is in effect, any and all actions duly
authorized, approved or taken by the PARTNERS' REPRESENTATIVES pursuant to this
AGREEMENT shall be deemed to be the actions of the PARTNERS in their respective
capacity as general partners. All powers and authorities of the PARTNERS'
REPRESENTATIVES are additive and cumulative. The exercise, delegation or failure
to exercise any power or authority shall not affect the right or ability of the
PARTNERS' REPRESENTATIVES to exercise, delegate or fail to exercise the same or
any other power or authority in a similar, dissimilar or other instance.
B. Deadlock and Resolution Thereof.
(i) Deadlock Definition . A deadlock shall be deemed to have
occurred among the PARTNERS' REPRESENTATIVES only during the period prior to the
FRIES WITHDRAWAL DATE and until the date that is two (2) days after a SALE OF
FRIES and only if a PARTNERS' REPRESENTATIVE declares a deadlock after either
(1) at two (2) successive duly called meetings (whether regular or special) of
the PARTNERS' REPRESENTATIVES, with at least thirty (30) days between such
meetings, the PARTNERS' REPRESENTATIVES have rejected or failed to pass a
proposal for action by a vote in which the PARTNERS' REPRESENTATIVES of either
of (i) FRIES or (ii) HCI and HFI voted for and the other PARTNERS'
REPRESENTATIVES voted against such proposal; or (2) for two (2) successive duly
called meetings of the PARTNERS' REPRESENTATIVES with at least thirty (30) days
between such meetings all of the PARTNERS' REPRESENTATIVES (or alternates) of
one PARTNER fail to attend such meetings.
(ii) Deadlock Resolution.
(a) Resolution Panel. Prior to the FRIES WITHDRAWAL DATE and until
the date that is two (2) days after a SALE OF FRIES, this Section 6.5 B (ii)
shall be effective and operative for all purposes and Section 6.5 B (iii) shall
be of no force and effect. In the event of a dispute hereunder, including
33
any deadlock of the PARTNERS' REPRESENTATIVES, any PARTNER may give a NOTICE to
the other PARTNERS requesting that the RESOLUTION PANEL (as defined below) try
in good faith to negotiate a resolution of (but without any obligation to
resolve) such dispute. Upon the receipt of such NOTICE by the other PARTNERS,
the RESOLUTION PANEL shall promptly commence and diligently pursue such good
faith negotiations for a period of not longer than sixty (60) days (unless the
RESOLUTION PANEL agrees to a longer period).
1. The RESOLUTION PANEL shall consist of two members, of
which one member shall be the Chief Executive Officer or Chief Operating Officer
of HERCULES, and the other member shall be the Chief Executive Officer or Chief
Operating Officer of MALLINCKRODT (the "RESOLUTION PANEL"). The RESOLUTION PANEL
may only act by the affirmative vote of both its members.
2. Not later than fifteen (15) days after the said
NOTICE, each PARTNER shall submit to the other PARTNERS a written statement of
three to five single sided, single spaced, 8 1/2 by 11 pages, setting forth its
description of the dispute and of the respective positions of the PARTNERS on
such dispute; and its recommended resolution and the reasons why it feels its
recommended resolution is fair and equitable in light of the letter and spirit
of this AGREEMENT and the interests of the PARTNERS in the long term conduct of
TASTEMAKER U.S. The submission and exchange of such written statements of the
PARTNERS shall be simultaneous.
3. If the dispute continues unresolved for a period of
fifteen (15) days (or such longer period as the RESOLUTION PANEL may otherwise
agree upon) after the simultaneous exchange of such written statements, then the
RESOLUTION PANEL shall promptly convene a hearing in Wilmington, Delaware, if
FRIES sent the said NOTICE and in St. Louis, Missouri, if either HCI or HFI sent
the said NOTICE; and at such hearing, each of FRIES and of HCI and HFI acting
jointly shall have at least two (2) hours to present its or their case.
4. If the RESOLUTION PANEL renders an agreed resolution
on the matter in dispute, then all PARTNERS shall be bound thereby, and if the
RESOLUTION PANEL does not agree on a resolution, then the matter shall be
submitted forthwith to binding arbitration under Section 6.5 B (ii) (b).
(b) Binding Arbitration.
1. All disputes arising under or in connection with this
AGREEMENT, including any deadlock of the PARTNERS' REPRESENTATIVES, shall first
be subject to submission to the RESOLUTION PANEL pursuant to Section 6.5 B (ii)
(a) and if the RESOLUTION PANEL does not agree on a resolution, then forthwith
SUCH DISPUTE SHALL BE FINALLY SETTLED BY ARBITRATION IN ACCORDANCE WITH THE THEN
EXISTING COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION,
AND JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION THEREOF, subject to (I) through (VIII) below.
(I) Upon the request of any PARTNER, the Arbitration
shall be conducted under the expedited rules of the American Arbitration
Association for commercial arbitrations.
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(II) The Arbitrators shall be three independent
arbitrators, with one appointed by each of HFI and FRIES, and the two appointees
selecting the third arbitrator in accordance with the said Rules. If either HFI
or FRIES fails to select an arbitrator within ten (10) days after notice of such
failure from the other or the American Arbitration Association, then the
American Arbitration Association shall appoint such arbitrator, meeting the same
qualification as that for the third arbitrator. The third arbitrator shall be
someone who is then holding or within the immediately preceding three (3) years
has held the position of Chief Executive Officer or Chief Financial Officer in a
Fortune 500 company. If the two appointees are unable to agree on the third
arbitrator, then the American Arbitration Association shall select the same
using the foregoing qualification.
(III) The arbitration hearing shall be held in New York,
New York, at such date, time and place as established by the Arbitrators.
(IV) The Arbitrators shall have power to rule on their
own competency and on the validity of this AGREEMENT to make reference to
arbitration.
(V) Not later than forty-five (45) days after the
conclusion of the arbitration hearing, but prior to the rendering of any
arbitral award, each of FRIES and HCI and HFI acting jointly shall submit to the
Arbitrators a written statement of its (i) understanding of and view of the
PARTNERS' respective position on the disputes, and (ii) recommendation as to a
fair and equitable resolution of the dispute and the reasons why it believes
such resolution is fair and equitable. In reaching a decision on any dispute
hereunder, the Arbitrators MUST fashion their arbitral award from the said
recommendations submitted by the PARTNERS by accepting the recommendation of
either the FRIES or HCI and HFI acting jointly in whole or by accepting some
part of each recommendation.
(VI) Each PARTNER shall take or cause to be taken all
reasonable action to facilitate the conduct of the arbitration and the rendering
of the arbitral award at the earliest possible date.
(VII) The Arbitrators must give a written opinion
setting forth the basis of their decision.
(VIII) The cost of the Arbitration shall be borne and
paid by the PARTNERS in proportion to their respective PARTNERSHIP INTERESTS.
(iii) Dispute Resolution After FRIES WITHDRAWAL DATE or SALE
OF FRIES. From and after the earlier of the FRIES WITHDRAWAL DATE or the date
that is two (2) days after a SALE OF FRIES, the provisions of this Section 6.5 B
(iii) shall become effective and operative for all purposes and Section 6.5 B
(ii) shall be of no force and effect. Any and all disputes hereunder shall be
submitted to and conclusively and exclusively resolved by the chief executive
officer of HERCULES, and the decision of the chief executive officer of HERCULES
shall be final and binding on all of the PARTNERS.
C. Emergency Action. Notwithstanding anything to
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the contrary in the powers and authorities granted by the PARTNERS to the CEO
and the OFFICERS, in the event of an emergency involving the employees or
facilities of TASTEMAKER U.S., the CEO or his designee OFFICERS with appropriate
functional responsibility for the matter(s) in question may take, acting
individually or jointly, all reasonable actions necessary to properly deal with
such emergency. Immediately following the occurrence of any such emergency, the
CEO or the OFFICERS so acting shall notify the PARTNERS' REPRESENTATIVES to
detail the actions taken and the results thereof and to obtain further authority
or ratification as may be reasonably required.
6.6 Action by Members Without a Meeting. Any action required or permitted
to be taken at any meeting of the PARTNERS' REPRESENTATIVES may be taken without
a meeting if the PARTNERS' REPRESENTATIVES necessary to take such action at a
meeting of the PARTNERS' REPRESENTATIVES consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the PARTNERS'
REPRESENTATIVES.
6.7 Regular Meetings. Regular meetings of the PARTNERS' REPRESENTATIVES
shall be held not less than eight (8) times each year and at such dates, times
and places as the PARTNERS' REPRESENTATIVES may determine from time to time. A
NOTICE of the business to be considered at a meeting shall be given by the CHAIR
(or, in his absence, the VICE-CHAIR) to the PARTNERS' REPRESENTATIVES at least
seven (7) business days prior to the date of such meeting.
6.8 Special Meetings. Special meetings of the PARTNERS' REPRESENTATIVES
may be held at any time or place whenever called by the CHAIR (or, in his
absence, the VICE-CHAIR) of the PARTNERS' REPRESENTATIVES or any PARTNERS'
REPRESENTATIVE. A NOTICE thereof shall be given by such CHAIR or VICE-CHAIR to
the PARTNERS' REPRESENTATIVES at least seven (7) business days prior to the date
of such special meeting. The NOTICE of the special meeting shall set forth the
matters to be considered, and at such special meeting, only those matters can be
considered; unless all of the PARTNERS' REPRESENTATIVES agree otherwise.
6.9 Waiver of Notice of Meetings. Whenever notice is required to be given
by law or under any provisions of this Article, a written waiver thereof, signed
by the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. The matters to be considered, and the purpose of
regular and special meetings of the PARTNERS' REPRESENTATIVES shall be indicated
in any written waiver of notice to the extent such items must be specified in
the notice.
6.10 Participation in Meetings by Conference Telephone
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Permitted. The PARTNERS' REPRESENTATIVES may participate in a meeting of the
PARTNERS' REPRESENTATIVES by means of conference telephone or similar
communications equipment so long as all persons participating in the meeting can
hear each other; and participation in a meeting pursuant to this Section shall
constitute presence in person at such meeting.
6.11 Interested Members.
A. The PARTNERS understand that each PARTNERS' REPRESENTATIVE is
appointed by and is a representative of the PARTNER(s) appointing such member
and may be an officer or director of such appointing PARTNER(s) or its
AFFILIATES or SUBSIDIARIES. In serving as the PARTNERS' REPRESENTATIVES, such
PARTNERS' REPRESENTATIVE may consider and represent the interests of such
appointing PARTNER(s) and its AFFILIATES and SUBSIDIARIES, and no PARTNER or
PARTNERS' REPRESENTATIVE shall have individual or personal liability to the
other PARTNER(s) or TASTEMAKER U.S. because such member considers or represents
such interests.
B. No contract or transaction between TASTEMAKER U.S. and one or
more PARTNERS' REPRESENTATIVES or members of TASTEMAKER U.S." management, or
between the foregoing and any corporation, partnership, association or other
organization in which one or more of such members serve in a similar capacity or
have a financial interest, or between TASTEMAKER U.S. and any one or more of the
PARTNERS, or any corporation, partnership, association or other organization in
which such appointing PARTNER or its AFFILIATES or SUBSIDIARIES has a financial
interest shall be void or voidable because of the positions or financial
interests of any such PARTNERS' REPRESENTATIVE, or because of any such PARTNERS'
REPRESENTATIVE is present at or participates in the meeting of the PARTNERS'
REPRESENTATIVES, or because any such representative"s vote is counted for such
purpose. Common or interested representatives may be counted in determining the
presence of a quorum at a meeting of the PARTNERS' REPRESENTATIVES which
authorizes any contract or any transaction.
C. HCI, HFI and FRIES each shall be solely liable for the actions of
the PARTNERS' REPRESENTATIVES appointed by such PARTNER. No PARTNER shall bring
an action against any of the PARTNERS' REPRESENTATIVES for actions taken as a
member or related to his position as a member, except for actions based on a
knowing criminal act.
D. In each and all instances where a matter comes before the
PARTNERS' REPRESENTATIVES and a representative realizes or reasonably should
realize that interests of TASTEMAKER U.S. are in conflict with the interest of
the PARTNER(s) appointing such representative or of such PARTNER"s AFFILIATES
and SUBSIDIARIES, then prior to acting on such matter, such representative shall
inform each of the PARTNERS' REPRESENTATIVES of the existence (but not the
details) of such conflict and indicate that in acting upon such matter, such
representative will seek to protect, ▇▇▇▇▇▇ or further the interest of such
PARTNER, AFFILIATES or SUBSIDIARIES. Upon such disclosure, the PARTNERS'
REPRESENTATIVES of the other PARTNER(s)
37
shall have the right to have such matter tabled until the next meeting of the
PARTNERS' REPRESENTATIVES, and the PARTNER making such disclosure shall vote in
favor of such tabling of the matter. A PARTNERS' REPRESENTATIVE shall have no
personal liability for a failure to make such disclosure, except for a knowing
criminal act; however, the PARTNER appointing such representative shall be fully
responsible and liable for such failure. No claims brought for breach of this
Section shall be subject to indemnification by TASTEMAKER U.S. in any respect
whether by insurance or otherwise.
6.12 Indemnification.
A. TASTEMAKER U.S. shall, and is hereby obligated to, indemnify each
PARTNERS' REPRESENTATIVE and each of the OFFICERS (such PARTNERS'
REPRESENTATIVES and officers being individually and collectively, as the case
may be, the "Indemnitees") to the full extent then permitted by governing law
against expenses (including attorneys" fees), judgments, fines, and amounts paid
in settlement, in each and every situation where TASTEMAKER U.S. is obligated or
permitted to make such indemnification under such law; provided, however, that
under all circumstance such indemnification shall not apply to any situation
involving or arising from a failure to make a disclosure under or actions in
breach of Section 6.11 hereof.
B. The indemnification in the foregoing Paragraph A. shall inure to
the benefit of the Indemnitees whether or not the claim asserted is based on
matters which antedate the date of this AGREEMENT. Such right shall continue as
to persons who have ceased to be such a member or officer and shall inure to the
benefit of the heirs and personal representatives of such person. Such
indemnification shall be primary to and called upon prior to any other
indemnification which the Indemnitees may have or be entitled.
6.13 Advance of Expenses. Expenses incurred in defending any proceeding
(other than a proceeding involving or arising from a failure to make a
disclosure under or actions in breach of Section 6.11 hereof) shall be advanced
by TASTEMAKER U.S. before the final disposition of the proceeding on receipt of
an undertaking by or on behalf of the affected Indemnitees to repay the amount
of the advance if it shall ultimately be determined that the Indemnitees are not
entitled to be indemnified as authorized in Section 6.12 hereof.
6.14 Insurance. Initially, TASTEMAKER U.S. shall procure, purchase and
maintain insurance (e.g. directors and officers liability) on behalf of the
Indemnitees against any liability that may be asserted against or incurred by
the Indemnitees in their respective capacity as such a member or officer or of
the governing body of another enterprise, if serving at the request of
TASTEMAKER U.S., whether or not TASTEMAKER U.S. would have the power to
indemnify the Indemnitees against that liability under the provisions of Section
6.12 hereof. Such insurance shall be primary to and called upon prior to any
other insurance which the Indemnitees may have or be entitled.
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6.15 The CHAIR and the VICE-CHAIR.
A. Prior To FRIES WITHDRAWAL DATE And SALE OF FRIES.
Prior to the FRIES WITHDRAWAL DATE and the date that is two (2) days after a
SALE OF FRIES, this Section 6.15 A. shall be operative and effective for all
purposes and Section 6.15 B. shall be of no force and effect. As of the date
hereof, the chairperson of the PARTNERS' REPRESENTATIVES (herein the "CHAIR") is
▇▇▇▇ ▇. ▇▇▇▇▇▇▇; who was appointed from among the PARTNERS' REPRESENTATIVES
appointed by FRIES, and the vice-chairperson of the PARTNERS' REPRESENTATIVES
(herein the "VICE-CHAIR") is R. ▇▇▇▇▇ ▇▇▇▇▇▇▇; who was appointed from among the
PARTNERS' REPRESENTATIVES appointed by HFI. Upon the expiration of such current
terms, the CHAIR shall be appointed from among PARTNERS' REPRESENTATIVES
appointed by HCI and HFI acting jointly, and the VICE-CHAIR shall be appointed
from among PARTNERS' REPRESENTATIVES appointed by FRIES and the term of such
CHAIR and VICE-CHAIR each shall be four (4) years. Thereafter, this alternating
pattern shall continue whereby the CHAIR and the VICE-CHAIR shall be appointed
by the PARTNERS in an alternating fashion for four-year terms wherein either
FRIES or HCI and HFI acting jointly ("A") selects the CHAIR and the other ("B")
selects the VICE-CHAIR, and then for the next term, "A" selects the VICE-CHAIR
and "B" selects the CHAIR. Notwithstanding anything to the contrary, the same
PARTNER may not appoint the CHAIR in any two consecutive terms.
B. After A SALE Of FRIES Or FRIES WITHDRAWAL DATE. From and after
the earlier of the FRIES WITHDRAWAL DATE or the date that is two (2) days after
a SALE OF FRIES, this Section 6.15 B. shall become effective and operative for
all purposes and Section 6.15 A. shall be of no force and effect. The
chairperson of the PARTNERS' REPRESENTATIVES (herein the "CHAIR") and the
vice-chairperson of the PARTNERS' REPRESENTATIVES (hereinafter the "VICE-CHAIR")
shall be appointed from among the PARTNERS' REPRESENTATIVES appointed by HCI
and/or HFI. The term of the initial CHAIR and VICE-CHAIR each shall be four (4)
years. After such initial four-year term, the respective term(s) of the CHAIR
and the VICE-CHAIR shall be as determined by the PARTNERS' REPRESENTATIVES from
time to time. If at the time this Section 6.15 B. becomes operative and
effective, the incumbent CHAIR and/or VICE-CHAIR is a PARTNERS' REPRESENTATIVE
appointed by FRIES then such incumbent(s) shall immediately resign or be
expelled and shall be replaced in such office(s) by PARTNERS' REPRESENTATIVE(S)
appointed by HCI and/or HFI.
C. The CHAIR shall have such duties, responsibilities, powers and
authorities as may, from time to time, be assigned to him by the PARTNERS'
REPRESENTATIVES. All powers and authorities granted to the CHAIR are cumulative
and may be delegated to other member(s) of the PARTNERS' REPRESENTATIVES as the
CHAIR deems appropriate, and even if delegated, the CHAIR may still exercise
such powers and
39
authorities.
D. The VICE-CHAIR shall have such duties, responsibilities, powers
and authorities as may, from time to time, be assigned to him by the PARTNERS'
REPRESENTATIVES, as may be delegated or assigned to him by the CHAIR, or as may
be provided by law. Except as the PARTNERS' REPRESENTATIVES or the CHAIR may
from time to time determine otherwise, the VICE-CHAIR, in the absence of the
CHAIR, shall exercise the authorities and powers and carry out the duties and
responsibilities of the CHAIR until the return of the CHAIR.
6.16 Governing Documents. TASTEMAKER U.S. shall adopt such documents,
resolutions, etc. that are consistent with the provisions of this AGREEMENT.
Except to the extent prohibited by law, in the event of a conflict between such
documents and this AGREEMENT, this AGREEMENT shall control.
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7 ARTICLE VII. PARTNERSHIP MANAGEMENT GROUP
7.1 THE OFFICERS.
A. The PARTNERS' REPRESENTATIVES, from time to time, shall appoint
and/or terminate the OFFICERS of TASTEMAKER U.S. (individually and collectively
herein the "OFFICERS") and determine the duties and powers of the OFFICERS in
accordance with this Article. The OFFICERS as of the date hereof shall continue
to serve in their present capacities. The OFFICERS (including the OFFICERS as of
the date hereof) shall serve at the pleasure of the PARTNERS' REPRESENTATIVES
and shall be the senior management of TASTEMAKER U.S. The OFFICERS consist of
the following positions: (1) President, who shall be the Chief Executive Officer
(the "CEO"); (2) Vice President, Finance and Control, who shall be the Chief
Financial Officer (the "CFO")" (3) Vice President, International; and (4) Vice
President, U.S. and Canada; and (5) Vice President, Secretary and General
Counsel.
B. The CEO and the CFO. The CEO and CFO as of the date hereof were
appointed pursuant to the terms of the OLD PARTNERSHIP AGREEMENT and they shall
continue to serve as CEO and CFO respectively until they retire, resign or are
removed from such offices. Any successor or future CEO or CFO shall be appointed
from time to time, at such times and from such persons as the PARTNERS'
REPRESENTATIVES may desire or determine.
C. The CEO has been and shall be given by the PARTNERS'
REPRESENTATIVES such authority as the PARTNERS' REPRESENTATIVES deem adequate
for the CEO to manage the day-to-day affairs of TASTEMAKER U.S. in the ordinary
course of business. Except as the PARTNERS' REPRESENTATIVES may determine
otherwise, the powers and authorities of the CEO shall be cumulative and may be
delegated by the CEO as he reasonably deems appropriate, and even if delegated,
the CEO may still exercise such delegated powers and authorities. It is expected
that the CEO will delegate appropriate and adequate powers and authorities to
the other OFFICERS to enable them to properly carry out their duties and
responsibilities. At all times, the powers and authorities of the CEO and other
OFFICERS shall be subject and subordinate to this AGREEMENT and the duties,
powers and authorities of the PARTNERS' REPRESENTATIVES. The CEO shall report to
the PARTNERS' REPRESENTATIVES and, except as the PARTNERS' REPRESENTATIVES may
determine otherwise from time to time, the other OFFICERS shall report to the
CEO. In the periods between the meetings of the PARTNERS' REPRESENTATIVES, the
CEO shall report to and interface jointly with the CHAIR and the VICE-CHAIR.
7.2 Delegations of Authorities. The PARTNERS' REPRESENTATIVES have adopted
and shall adopt from time to time delegation(s) of authorities to be granted by
the PARTNERS' REPRESENTATIVES to the CEO and have approved and shall approve the
delegations of authority to be granted by the CEO to the other OFFICERS. The
delegation of authorities approved as of the
41
date hereof shall continue in force until otherwise modified pursuant to the
terms of this Section 7.2. Changes in the authorities of the CEO may be made
from time to time by the PARTNERS' REPRESENTATIVES. Changes in the authorities
of the other OFFICERS may be made from time to time by the PARTNERS'
REPRESENTATIVES or by the CEO after prior consultation with the CHAIR and the
VICE-CHAIR. In the event of a conflict between the directions, instructions,
powers, authorities, etc. given or granted by the PARTNERS' REPRESENTATIVES and
the CEO, those of the PARTNERS' REPRESENTATIVES shall control. The PARTNERS
REPRESENTATIVES shall cause the preparation and adoption of such corporate or
PARTNERSHIP resolutions, and taking of such other action as the PARTNERS'
REPRESENTATIVES deem necessary, appropriate or convenient to implement the
respective delegations of authorities as are granted from time to time to the
CEO and/or the other OFFICERS.
7.3 TASTEMAKER U.S. Staff. The CEO shall appoint or, through delegation to
other OFFICERS, cause to be appointed an operating staff sufficient for the
conduct of the day-to-day affairs of TASTEMAKER U.S. and, from time to time,
shall delegate or cause or approve the delegation to such staff of such powers
and authorities as the CEO reasonably deems appropriate and adequate to enable
such staff to properly carry out their respective duties and responsibilities;
provided, however, that in no event may the CEO grant or delegate or permit the
granting or delegation of more or different powers or authorities than those
granted or delegated to the CEO by the PARTNERS' REPRESENTATIVES.
7.4 Forecasts, Budgets, and Plans. The CEO shall be responsible for the
preparation of forecasts and annual budgets, business plans and strategic plans
(e.g., long-range plans) as the PARTNERS' REPRESENTATIVES may determine from
time to time and shall submit such budgets and plans to the PARTNERS'
REPRESENTATIVES for its approval. The form, level of detail, timing of
submission and other details of such forecasts, budgets, plans and submission
shall be as determined from time to time by the PARTNERS' REPRESENTATIVES.
7.5 Effect of Approval. Except as otherwise agreed or directed by the
PARTNERS' REPRESENTATIVES, when the annual business plan(s) and annual capital
budget(s) have been approved by the PARTNERS' REPRESENTATIVES, each and all the
individual or line items therein shall still be subject to the delegations of
authority from the PARTNERS' REPRESENTATIVES to the CEO.
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8 ARTICLE VIII. TRANSFER OF PARTNERSHIP INTEREST; FRIES
WITHDRAWAL; SALE OF FRIES
8.1 Transfer of PARTNERSHIP INTEREST.
A. Subject to Paragraphs B and C of this Section and except in accordance
with this AGREEMENT or with the prior written consent of the other PARTNERS in
no event shall a PARTNER directly or indirectly undertake to, attempt or in fact
(1) sell, assign, transfer or otherwise dispose of all or any part of its
PARTNERSHIP INTEREST or (2) terminate or dissolve TASTEMAKER U.S.
B. Subject to Paragraph C of this Section and notwithstanding Paragraph A
of this Section , a PARTNER may transfer all or part of its PARTNERSHIP INTEREST
to a person which owns one hundred percent of such PARTNER or which is owned one
hundred percent by such PARTNER, at any time without the consent of the other
PARTNERS provided that (i) such PARTNER shall give written notice of such
transfer to the other PARTNERS prior to or within a reasonable period (but not
more than thirty days) after the effective date of such transfer, and (ii) in
case of a transfer of partial interest, then effective as of the date of such
transfer, such PARTNER and its transferee shall be deemed to and must act
jointly on all matters of governance of TASTEMAKER U.S. including matters
referred to in or covered by Article VI hereof.
C. Notwithstanding anything to the contrary including Paragraphs A and B
of this Section , a PARTNER may not directly or indirectly sell, assign,
transfer or otherwise dispose of all or, within any twelve month period, any
part in excess of ten percent (10%) of its PARTNERSHIP INTEREST unless such
sale, assignment, transfer or disposition will not cause TASTEMAKER U.S. to
terminate as a partnership for U.S. income tax purposes pursuant to applicable
income tax laws including Section 708 of the INTERNAL REVENUE CODE, and the
transferor PARTNER shall furnish to TASTEMAKER U.S. an opinion of competent tax
counsel (which counsel and opinion shall be satisfactory to TASTEMAKER U.S.) to
such effect. A withdrawal of FRIES or of any AFFILIATE of FRIES in accordance
with the provisions of Section 8.3 through 8.15 shall not constitute a sale,
assignment, transfer or disposition of the PARTNERSHIP INTEREST of FRIES for
purposes of this Paragraph C. If a PARTNER purports to make or makes a sale,
assignment, transfer or disposal in violation of this Paragraph C and such
action of such PARTNER causes a termination under the said income tax laws, such
PARTNER shall defend, protect, indemnify and save harmless the other PARTNERS
for any and all CLAIMS suffered by such other PARTNERS as a result of or
relating to such termination including all income tax liabilities incurred by
such other PARTNERS as a result of such termination.
8.2 Withdrawal from TASTEMAKER U.S. Except for the withdrawal of FRIES in
accordance with the provisions of Sections 8.3 through 8.11 or with the prior
written consent of the other PARTNERS, in no event shall any PARTNER directly or
indirectly undertake to, attempt or in fact withdraw from
43
TASTEMAKER U.S.
8.3 Right to Withdraw. At any time prior to the earlier of (i) August 31,
1997, or (ii) the date that is thirty (30) days after the date of a SALE OF
FRIES, FRIES and any AFFILIATE of FRIES to which FRIES assigned its PARTNERSHIP
INTEREST in accordance with Sections 8.1 and 8.15 hereof, shall have and may
exercise a right to withdraw from TASTEMAKER U.S. and have its entire
PARTNERSHIP INTEREST redeemed as provided in Section 8.6 below; provided that
such withdrawal and redemption are collective actions and one may not be taken
without the other; such withdrawal and redemption are referred to herein as a
"FRIES WITHDRAWAL."
8.4 Notice of FRIES WITHDRAWAL. The FRIES WITHDRAWAL right granted under
Section 8.3 may be exercised only upon the giving by FRIES of a NOTICE thereof
to the other PARTNERS. Such NOTICE must be received by such other PARTNERS on or
before the earlier of (i) August 31, 1997 or (ii) the date that is thirty (30)
days after the date of a SALE OF FRIES. Such NOTICE shall be delivered in
accordance with Section 12.2 hereof. Any NOTICE of FRIES WITHDRAWAL not properly
or timely given may nevertheless be accepted at the sole and absolute discretion
of the intended recipient PARTNERS.
8.5 Date of FRIES WITHDRAWAL. A FRIES WITHDRAWAL shall be effectuated at a
closing on the date NOTICE is given by FRIES pursuant to Section 8.4 above;
provided that NOTICE is given within two (2) days of a SALE of FRIES, and in all
other events as soon as practicable after the giving of such NOTICE (such
closing is referred to herein as the "WITHDRAWAL CLOSING"). Such closing date is
referred to herein as the "FRIES WITHDRAWAL DATE." The FRIES WITHDRAWAL shall be
effective on the FRIES WITHDRAWAL DATE subject to and upon completion of the
WITHDRAWAL CLOSING.
8.6 Redemption and Assumption of FRIES" Interest. If FRIES properly and
timely exercises its right to withdraw from TASTEMAKER U.S., then at the
WITHDRAWAL CLOSING and contemporaneous with and as part of such FRIES
WITHDRAWAL, (i) TASTEMAKER U.S. shall transfer, assign and convey or cause to be
transferred, assigned and conveyed to FRIES all title, rights and interest of
TASTEMAKER U.S. of, in, under and to the TASTEMAKER U.S. OPERATING ASSETS and
the full benefit of any funds set aside in trust or otherwise in connection with
any employee benefit plan (including, but not limited to, pension plans), all as
existing on the FRIES WITHDRAWAL DATE; (ii) FRIES shall transfer, assign and
convey to TASTEMAKER U.S. all title, right and interests of FRIES of, in and to
FRIES" entire PARTNERSHIP INTEREST; and (iii) FRIES shall assume all TASTEMAKER
U.S. LIABILITIES existing on the FRIES WITHDRAWAL DATE. TASTEMAKER U.S. and
FRIES shall cooperate to effect the orderly transfer from TASTEMAKER U.S. to
FRIES of (i) all employees, (ii) all collective bargaining agreements,
employment agreements and employee benefit plans or arrangements (collectively,
the
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"Employee Benefit Plans") and (iii) any assets held in trust, segregated, set
aside or otherwise available to pay or satisfy benefits under such Employee
Benefit Plans. Anything in this PARTNERSHIP AGREEMENT to the contrary
notwithstanding, this Section shall not constitute an agreement to transfer,
assign or convey any TASTEMAKER U.S. OPERATING ASSET or any claim or right or
any benefit arising thereunder or resulting therefrom, if an attempted transfer,
assignment or conveyance thereof, without the consent of a third party thereto,
would constitute a breach or other contravention thereof or in any way adversely
affect the rights of FRIES or TASTEMAKER U.S. thereunder. FRIES and TASTEMAKER
U.S. will use their best efforts (but without any payment of money by FRIES or
TASTEMAKER U.S.) to obtain the consent of the other parties to any such
TASTEMAKER U.S. OPERATING ASSET or any claim or right or any benefit arising
thereunder for the transfer, assignment and conveyance thereof to FRIES as FRIES
may request. If such consent is not obtained, or if an attempted transfer,
assignment or conveyance thereof would be ineffective or would adversely affect
the rights of TASTEMAKER U.S. thereunder so that FRIES would not in fact receive
all such rights, TASTEMAKER U.S. and FRIES will cooperate in a mutually
agreeable arrangement under which FRIES would obtain the benefits and assume the
obligations thereunder in accordance with this Section 8.6, including
sub-contracting, sub-licensing, or sub-leasing to FRIES, or under which
TASTEMAKER U.S. would enforce for the benefit of FRIES, with FRIES assuming
TASTEMAKER U.S.'s obligations, any and all rights of FRIES against a third party
thereto. TASTEMAKER U.S. will promptly pay to FRIES when received all monies
received by TASTEMAKER U.S. under any TASTEMAKER U.S. OPERATING ASSET or any
claim or right or any benefit arising thereunder.
Except as provided otherwise in this Agreement or in any agreement
among the PARTNERS or any of their AFFILIATES, any expenses, fees and other
costs associated with the transferral, assignment and conveyance to FRIES of all
title, rights and interest of TASTEMAKER U.S. of, in and under the TASTEMAKER
U.S. OPERATING ASSETS and the assumption by FRIES of all TASTEMAKER LIABILITIES
pursuant to this Section 8.6 shall be borne at fifty percent (50%) by FRIES and
at fifty percent (50%) by HCI and HFI.
In connection with the FRIES WITHDRAWAL, TASTEMAKER U.S. shall
represent and warrant to FRIES (and to an AFFILIATE of FRIES, as the case may
be) as follows:
TASTEMAKER U.S. has all requisite power and authority to enter into
the FRIES WITHDRAWAL DOCUMENTS and to consummate the transactions
contemplated thereby. The execution, delivery and performance of the
FRIES WITHDRAWAL DOCUMENTS and the consummation by TASTEMAKER U.S.
of the transactions contemplated thereby have been duly authorized
by all necessary partnership action on the part of FRIES and, as
required, HFI and HCI. The FRIES WITHDRAWAL DOCUMENTS have been duly
executed and delivered by TASTEMAKER U.S. and (assuming the due
authorization, execution and delivery thereof by the other parties
thereto) constitute the valid and binding obligations
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of TASTEMAKER U.S., enforceable against TASTEMAKER U.S. in
accordance with their respective terms.
The transfer by TASTEMAKER U.S. to FRIES and any one or more of the FRIES
AFFILIATES of the TASTEMAKER U.S. OPERATING ASSETS and TASTEMAKER U.S.
LIABILITIES shall be without representation or warranty by TASTEMAKER U.S. of
any kind or nature, all of which are hereby expressly disclaimed, and shall be
subject to all liens, encumbrances and claims of whatever nature then existing
or thereafter arising, but without prejudice to any representation or warranty
made by the PARTNERS and their AFFILIATES with regard hereto. In connection with
the FRIES WITHDRAWAL, FRIES and any one or more AFFILIATE of FRIES, as the case
may be, shall represent and warrant to TASTEMAKER U.S. as follows (it being
agreed that any such representation or warranty as to FRIES shall be deemed true
and correct if any inaccuracy is due to any acts or omissions by the PARTNERS
and their respective AFFILIATES, including, prior to the SALE OF FRIES, without
limitation, FRIES, and any events or occurrences prior to the SALE OF FRIES):
A. Organization, Standing and Power. FRIES and each AFFILIATE of
FRIES is a corporation duly organized and validly existing under the laws of the
State of Delaware and has the requisite power and authority to carry on its
business as now being conducted.
▇. ▇▇▇▇▇ Interest in TASTEMAKER U.S. Immediately prior to the
consummation of the FRIES WITHDRAWAL, FRIES, together with any one or more
AFFILIATES of FRIES, owns a fifty percent (50%) undivided partnership interest
in TASTEMAKER U.S. (the "FRIES TASTEMAKER PARTNERSHIP INTEREST"), free and clear
of all security interests, liens, claims, pledges, voting rights, charges and
encumbrances of any nature whatsoever except for those provided by applicable
partnership law in the State of Delaware. There are no options, warrants, calls,
rights or agreements to which FRIES or any one or more AFFILIATES of FRIES is a
party obligating FRIES or any one or more AFFILIATES of FRIES to issue, deliver
or sell, or cause to be issued, delivered or sold, any partnership interests in
TASTEMAKER U.S. or obligating FRIES or any one or more AFFILIATES of FRIES to
grant, extend or enter into any such option, warrant or agreement.
C. Authority. FRIES, together with any one or more AFFILIATES of
FRIES, has all requisite power and authority to enter into the FRIES WITHDRAWAL
DOCUMENTS and to consummate the transactions contemplated thereby. The
execution, delivery and performance of this AGREEMENT and the FRIES WITHDRAWAL
DOCUMENTS and the consummation by FRIES or any one or more AFFILIATES of FRIES
of the transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of FRIES, together with any such
AFFILIATES, and, as required, the owner(s) of FRIES. The FRIES WITHDRAWAL
DOCUMENTS have been duly executed and delivered by FRIES or any one or more
AFFILIATES of FRIES and (assuming the due authorization,
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execution and delivery thereof by the other parties thereto) constitute the
valid and binding obligations of FRIES or any one or more AFFILIATES of FRIES,
enforceable against FRIES or any one or more AFFILIATES of FRIES in accordance
with their respective terms.
8.7 Deliveries by FRIES at the WITHDRAWAL CLOSING. At the WITHDRAWAL
CLOSING, FRIES shall deliver (or cause to be delivered) to TASTEMAKER U.S. the
following, in form and substance reasonably satisfactory to TASTEMAKER U.S.:
A. A duly executed instrument in form and substance consistent
with Section 8.6 and sufficient to transfer to TASTEMAKER U.S.
FRIES," together with any one or more AFFILIATES of FRIES;
entire PARTNERSHIP INTEREST free and clear of all encumbrances
of every kind and nature except for those provided by
applicable partnership law in the State of Delaware, provided
for or pursuant to this AGREEMENT or provided specifically in
a written agreement signed by all the PARTNERS.
B. A duly executed instrument in form and substance sufficient
for and to effectuate the assumption by FRIES of the
TASTEMAKER U.S. LIABILITIES.
C. Evidence that (i) TASTEMAKER U.S. and all of the HERCULES
INDEMNITEES have been fully and finally released from all
CLAIMS with respect to borrowed monies, including those
related to the TASTEMAKER DEBT and those related to the monies
borrowed or otherwise obtained and used to acquire INVESTMENT
ASSETS; and (ii) the FINANCIAL ASSETS have been fully and
finally released from all liens and encumbrances securing any
TASTEMAKER U.S. LIABILITIES.
D. Duly executed instrument(s) pursuant to which FRIES agrees,
subject to any rights of set-off of FRIES or any one AFFILIATE
of FRIES against TASTEMAKER U.S. and its AFFILIATES, to
protect, defend, indemnify and hold harmless TASTEMAKER U.S.
and all of the HERCULES INDEMNITEES against all CLAIMS related
to each of (i) the ownership, use, operation, possession, or
sale of the TASTEMAKER U.S. OPERATING ASSETS or (ii) the
TASTEMAKER U.S. LIABILITIES, in each case regardless of when
such CLAIMS arose prior to the WITHDRAWAL CLOSING.
E. Evidence that all consents, approvals and notices required in
connection with the FRIES WITHDRAWAL by any applicable
corporate or governing body (including the Board of Directors
and shareholders of FRIES) or GOVERNMENTAL AUTHORITY have been
obtained and are in full force and effect, where
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the failure to obtain such consent or approval or give such
notice would result in or could be reasonably expected to
result in a material adverse effect upon the ability of FRIES
or of any one or more AFFILIATE of FRIES to execute, deliver
or perform its part of this AGREEMENT and the transactions
contemplated herein or hereby.
F. A certificate signed by a duly authorized officer of FRIES or
of any one or more AFFILIATE OF FRIES, as the case may be,
certifying that the representations and warranties of FRIES
and of any AFFILIATE of FRIES made in connection with the
FRIES WITHDRAWAL are true and correct in all material respects
and that FRIES and any AFFILIATE of FRIES, as the case may be,
has performed in all material respects all obligations and
agreements and complied in all material respects with all
conditions to be performed or complied with by it.
G. A cash payment to TASTEMAKER U.S. in the amount necessary to
ensure that the cash included in the FINANCIAL ASSETS equals
the excess of the sum of HFI's and HCI's capital account (as
adjusted under Section 1.6.C. hereof as a result of the FRIES
WITHDRAWAL) balances over the Investment Asset Value.
8.8 Deliveries by TASTEMAKER U.S. at the WITHDRAWAL CLOSING. At the
WITHDRAWAL CLOSING, TASTEMAKER U.S. shall deliver to FRIES the following, in
form and substance reasonably satisfactory to FRIES:
A. Such deeds, bills of sale, endorsements, assignments and other
instruments of sale, assignment, conveyance and transfer as
shall be in form and substance consistent with Section 8.6 and
sufficient to convey, transfer and assign to FRIES all of
TASTEMAKER U.S. title, rights and interest of, in, under and
to the TASTEMAKER U.S. OPERATING ASSETS.
B. Such items (keys, passwords, etc.) as shall be in form and
substance sufficient to convey, transfer and assign to FRIES
physical possession or the right to obtain (e.g., warehouse
receipts) physical possession of the TASTEMAKER U.S. OPERATING
ASSETS.
C. Evidence that all consents, approvals and notices required in
connection with the FRIES WITHDRAWAL by any applicable
corporate or governing body (including the respective Boards
of Directors and shareholders of HERCULES, HCI and HFI), where
the failure to obtain such consent or approval or give such
notice would
48
result in or could be reasonably expected to result in a
material adverse effect upon the ability of TASTEMAKER U.S.,
HFI or HCI to execute, deliver or perform its part of this
AGREEMENT and the transactions contemplated herein or hereby.
D. Duly executed instrument(s) in the form of Appendix C hereto
pursuant to which (i) HERCULES guaranties to FRIES the full
and timely performance by HCI and HFI of all terms,
conditions, liabilities and obligations applicable to or to be
performed by HCI and/or HFI, as the case may be, under this
AGREEMENT and the FRIES WITHDRAWAL DOCUMENTS, and (ii)
HERCULES agrees to refrain from competing with the TASTEMAKER
BUSINESS for a period of three (3) years following the FRIES
WITHDRAWAL DATE.
E. Duly executed instruments in form and substance satisfactory
to FRIES pursuant to which TASTEMAKER U.S. and its AFFILIATES
fully and finally release FRIES from any liability or
obligation with respect to this PARTNERSHIP AGREEMENT other
than with regard to such liabilities which are related to the
TASTEMAKER U.S. OPERATING ASSETS or the TASTEMAKER U.S.
LIABILITIES.
8.9 Deliveries by HFI and HCI at the WITHDRAWAL CLOSING. At the WITHDRAWAL
CLOSING, HFI and HCI shall, and hereby jointly and severally agree to,
contribute to the capital of TASTEMAKER U.S. an amount of cash (which cash shall
be included in the TASTEMAKER U.S. OPERATING ASSETS transferred to FRIES but
shall not be taken into account in determining the AGREED VALUE of the
TASTEMAKER U.S. OPERATING ASSETS) equal to the HERCULES CONTRIBUTION.
8.10 Satisfaction of Delivery Requirements. At the date of receipt of
timely NOTICE of FRIES WITHDRAWAL, each of FRIES and TASTEMAKER U.S. shall use
its best efforts (individually or jointly, as the case may be) to cause all
delivery requirements called for under or pursuant to Section 8.7 and 8.8 hereof
to be satisfied and fulfilled, to the extent the satisfaction or fulfillment
thereof is within its reasonable control. If any event should occur, either
within or without the reasonable control of FRIES or TASTEMAKER U.S., which
would prevent fulfillment of such delivery requirements, both parties shall use
their respective best efforts to cure or remove the effect of the event as
expeditiously as possible; provided, however, that (without limitation), the
foregoing shall not be construed as requiring FRIES or TASTEMAKER U.S. to
institute litigation or expend any sums in the defense or settlement of
litigation in order to cure or remove the effect of any such event.
8.11 Approvals. Promptly following the receipt by the other PARTNERS of
timely NOTICE of the FRIES WITHDRAWAL, each of
49
FRIES and TASTEMAKER U.S. shall take, prepare, make and/or file, or cause to be
taken, prepared, made and/or filed, with such appropriate GOVERNMENTAL AUTHORITY
and other third party, all actions, filings and requests for approvals,
consents, permits, authorizations or waivers that are required from such
GOVERNMENTAL AUTHORITY or third party for the effectuation of the FRIES
WITHDRAWAL and shall diligently and expeditiously prosecute, and shall cooperate
fully with each other in the prosecution of, such actions, filings and requests
and all proceedings necessary to secure such approvals, consents, permits,
authorizations and waivers.
8.12 Further Assurances. After the WITHDRAWAL CLOSING, each of FRIES and
TASTEMAKER U.S. shall, from time to time upon any request by the other, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
all such further assignments, documents, instruments, transfers, conveyances,
discharges, releases, assurances and consents, and shall take or cause to be
taken such further actions, as such other may reasonably request to effect the
FRIES WITHDRAWAL and the transactions (including the redemption and assumption
referred to in Section 8.6 hereof) contemplated in connection therewith. Each of
the PARTNERS agrees to cooperate with any acquiror of FRIES with regard to the
change of the name of FRIES at the WITHDRAWAL CLOSING to a name which includes
the word "Tastemaker"; and at the WITHDRAWAL CLOSING, each of HFI and HCI agrees
to cause the name of TASTEMAKER U.S. to be changed from "Tastemaker" to
"Hercules Financial Partnership." Each PARTNER agrees to pay, and indemnify and
hold harmless the other PARTNERS from and against, the fee and expenses of any
broker, investment banker or other person that is entitled to any broker"s,
finder"s or other similar fee or commission based on agreements or arrangements
made by such PARTNER in connection with the execution and delivery of, or the
consummation of the transactions contemplated by the FRIES WITHDRAWAL DOCUMENTS.
8.13 SALE OF FRIES. In the event that prior to the FRIES WITHDRAWAL DATE a
SALE OF FRIES occurs, then two (2) days after such SALE OF FRIES the provisions
of Section 6.2 A., 6.5 B. (ii) and 6.15 A. hereof shall cease to be effective
and operative and shall be replaced for all purposes by Sections 6.2 B., 6.5 B.
(iii), and 6.15 B., respectively. From and after the FRIES WITHDRAWAL DATE the
provisions of Sections 6.2 C., 6.5 B. (iii) and 6.15 B. shall be effective and
operative and Sections 6.2 A., 6.2 B., 6.5 B. (ii) and 6.15 A. shall be of no
force and effect.
8.14 Representations And Covenants. FRIES shall not have any rights or
obligations under this AGREEMENT after the WITHDRAWAL CLOSING. The PARTNERS
acknowledge and agree that the representations, warranties and agreements
contained in Section 8.6, the covenants contained in Section 8.12, the terms and
provisions of Sections 4.5 and 4.6 and the corresponding Definitions shall be
incorporated into the FRIES WITHDRAWAL DOCUMENTS, and that the FRIES WITHDRAWAL
DOCUMENTS shall provide for such payments to or by TASTEMAKER U.S., FRIES, HFI
and HCI as
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may be necessary to take into consideration any change in a PARTNER'S CAPITAL
ACCOUNT resulting from any difference between the ESTIMATED TASTEMAKER U.S.
VALUE and the TASTEMAKER U.S. VALUE as finally determined. The FRIES WITHDRAWAL
DOCUMENTS shall also include provisions for negotiated resolutions of disputes.
8.15 Assignment of Withdrawal Right. FRIES shall have the right to assign
a portion of its rights under Sections 8.3 through 8.14, including the right to
receive specified assets, to any one or more AFFILIATES of FRIES, subject to
Section 8.1. In the event of such an assignment, the withdrawal rights set forth
in Section 8.3 through 8.14 are exercisable only in their entirety by FRIES and
all such assignees.
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9 ARTICLE IX. TERMINATION AND DISSOLUTION
9.1 Termination. Except as otherwise provided or permitted in this
AGREEMENT or the Delaware Uniform Partnership Law, TASTEMAKER U.S. shall remain
in full force and effect until December 31, 2031, and if the term of this
AGREEMENT is extended by the PARTNERS, then TASTEMAKER U.S. shall continue for
the period of such extension. Upon termination and dissolution of TASTEMAKER
U.S., TASTEMAKER U.S. shall be wound up in accordance with this AGREEMENT and
governing law and as rapidly as business circumstances will permit. Except as
required otherwise by governing law, the assets shall be liquidated or
distributed to the PARTNERS in kind, and the proceeds from any sale or sales
shall be distributed in the following order of priority:
A. to pay or provide for all amounts owing by TASTEMAKER U.S. to
creditors other than PARTNERS and for expenses of winding up TASTEMAKER U.S.,
including establishing an adequate reserve for taxes, other than income taxes,
and all contingent liabilities of any kind or character;
B. to pay or provide for all amounts owing by TASTEMAKER U.S. to the
PARTNERS other than for capital and profit; and
C. to pay or distribute any remaining assets to the PARTNERS in
accordance with their respective CAPITAL ACCOUNTS.
9.2 Final Audit. The PARTNERS shall, if at such time they determine such
action shall be advisable and proper, employ a firm of certified public
accountants to make a complete and final audit of the books, records and
accounts of TASTEMAKER U.S. as herein provided, and all final adjustments
between the PARTNERS shall be made on the basis of such certified audit. In the
event the PARTNERS disagree about a choice of certified public accountants, the
audit shall be performed by the outside auditors of TASTEMAKER U.S. and shall be
accepted by the PARTNERS.
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10 ARTICLE X. SECRECY
10.1 Confidential Information. For purposes hereof, "Confidential
Information" means the information of any PARTNER or of TASTEMAKER U.S. that
might reasonably be considered confidential, secret, sensitive, proprietary, or
private, including but not limited to, the following:
A. data, know-how, formulae, processes, designs, sketches,
photographs, plans, drawings, specifications, samples, reports, lists, financial
information, studies, findings, inventions and ideas, or proprietary information
relating to any PARTNER or TASTEMAKER U.S., or the methods of techniques used by
any PARTNER or TASTEMAKER U.S.;
B. data, documents or proprietary information employed in connection
with the marketing and implementation of each PARTNER"s products, including cost
information, business policies and procedures, revenues and markets, distributor
and customer lists, and similar items of information; and
C. any other data or information obtained by any PARTNER or
TASTEMAKER U.S. during the term of this AGREEMENT which is not generally known
to, and not readily ascertainable by proper means by third persons who could
obtain economic value from its use or disclosure.
10.2 Confidentiality.
A. Receipt of CONFIDENTIAL INFORMATION by a PARTNER from a PARTNER:
The receiving PARTNER shall treat as confidential all CONFIDENTIAL INFORMATION
of any other PARTNER, or of the SUBSIDIARIES or AFFILIATES of such other
PARTNER, that comes to the receiving PARTNER"s knowledge through its
participation in TASTEMAKER U.S. The receiving PARTNER shall take such steps to
prevent disclosure of such CONFIDENTIAL INFORMATION to any third person as it
would take in protecting its own proprietary or confidential information and
shall not use any portion of such CONFIDENTIAL INFORMATION for any purpose not
authorized herein.
B. Receipt of CONFIDENTIAL INFORMATION by a PARTNER from TASTEMAKER
U.S.: The receiving PARTNER shall treat as confidential all CONFIDENTIAL
INFORMATION of TASTEMAKER U.S. that comes to the receiving PARTNER"s knowledge
through its participation in TASTEMAKER U.S. The receiving PARTNER shall take
such steps to prevent disclosure of such CONFIDENTIAL INFORMATION to any third
person as such PARTNER would take in protecting its own proprietary or
confidential information; provided, however, such PARTNER may use such
CONFIDENTIAL INFORMATION for such PARTNER"S internal purposes not involving a
technology transfer. The receiving PARTNER shall endeavor, to the extent of
reasonable efforts, to prevent the unauthorized disclosure of such CONFIDENTIAL
INFORMATION by its SUBSIDIARIES and AFFILIATES.
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C. Receipt of CONFIDENTIAL INFORMATION by TASTEMAKER U.S. from a
PARTNER: TASTEMAKER U.S. shall treat as confidential all CONFIDENTIAL
INFORMATION of a PARTNER, or of the SUBSIDIARIES or AFFILIATES of such PARTNER,
that comes to TASTEMAKER U.S." knowledge. TASTEMAKER U.S. shall take all
reasonable steps to prevent disclosure of such CONFIDENTIAL INFORMATION to any
third person and shall not use any portion of such CONFIDENTIAL INFORMATION for
any purpose not authorized herein. TASTEMAKER U.S. shall take all reasonable
steps to prevent the unauthorized disclosure of such CONFIDENTIAL INFORMATION by
its SUBSIDIARIES and AFFILIATES, including the requirement that all such
entities execute obligations of confidence relating thereto consistent with this
Section , and to limit the access to such CONFIDENTIAL INFORMATION to those
SUBSIDIARIES and AFFILIATES on a need-to-know basis. To the extent that
TASTEMAKER U.S. or its SUBSIDIARIES or AFFILIATES receiving CONFIDENTIAL
INFORMATION has its respective employees execute secrecy and non-disclosure
agreements to protect its own confidential or proprietary information, such
agreements shall be intended and made to also protect such CONFIDENTIAL
INFORMATION.
D. Release of Obligations. No person receiving CONFIDENTIAL
INFORMATION shall be under any obligation with respect to any CONFIDENTIAL
INFORMATION:
(1) which is, at the time of disclosure, available to the general
public;
(2) which becomes at a later date available to the general public
through no fault of such receiving person and then only after said later date;
(3) which such receiving person can demonstrate was in its
possession before receipt from the disclosure;
(4) which is disclosed to such receiving person without restriction
on disclosure by a third party who has the lawful right to disclose such
information; or
(5) after fifteen (15) years from the date of disclosure.
E. SUBJECT TO THE ABOVE PARAGRAPH D OF THIS SECTION, THE CONFIDENTIALITY
AND NON-DISCLOSURE OBLIGATIONS OF THIS ARTICLE SHALL SURVIVE THE TERMINATION OF
THIS AGREEMENT.
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11 ARTICLE XI. INDEMNIFICATION
11.1 Indemnification. Each PARTNER agrees to defend, protect, indemnify
and save harmless the other PARTNERS, in proportion to the relative PARTNERSHIP
INTEREST of each in TASTEMAKER U.S., prior to the FRIES WITHDRAWAL DATE from and
against any and all judgments, liabilities, damages and losses, including
attorney"s fees, imposed upon such other PARTNER in any way arising out of or
relating to TASTEMAKER U.S., including but not limited to losses arising
pursuant to (i) any product liability; (ii) any failure to comply with any
federal, state and local law; (iii) any claim of patent, trademark or copyright
infringement brought against TASTEMAKER U.S.; (iv) any breach of contract by
TASTEMAKER U.S.; and (v) any transactions contemplated by this AGREEMENT or
undertaken by TASTEMAKER U.S. prior to the FRIES WITHDRAWAL DATE; provided, that
no PARTNER shall be required to indemnify and save harmless the other PARTNERS
from any claims, liabilities and losses resulting from the gross negligence or
willful misconduct of the other, or arising out of claims against the other as a
result of the other PARTNERS failing to perform its obligations under this
AGREEMENT or under any agreement relating to TASTEMAKER U.S; and provided
further that this Section 11.1 and the obligations of the PARTNERS in this
Section 11.1 shall terminate and be of no further force and effect from and
after the FRIES WITHDRAWAL DATE; and provided further that HCI and HFI shall not
be required to defend, protect, indemnify or save harmless the other PARTNERS
from any CLAIMS arising out of or otherwise related to the TASTEMAKER DEBT.
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12 ARTICLE XII. MISCELLANEOUS
12.1 Authorization. Each PARTNER hereby represents and warrants to the
others that it has obtained all necessary corporate approvals or comparable
authorities necessary to the execution, delivery or performance of its part of
this AGREEMENT and that its signatory hereto is duly authorized to execute and
deliver this AGREEMENT on behalf of such PARTNER, and the signing of this
AGREEMENT by such signatory is and shall be the act of such PARTNER.
12.2 Notices. Each election, exercise of a right or remedy (e.g., right to
terminate this AGREEMENT), communication, request, notice, waiver, approval and
consent requested or given hereunder or in connection herewith or referred to
herein (the foregoing items are individually and collectively referred to herein
as a "NOTICE") shall be in writing. Each NOTICE to be given or communicated to a
PARTNER shall be delivered by courier, hand, mail (postage prepaid) or by telex,
telegraph, or cable or facsimile promptly confirmed by letter to the address
indicated below the intended receiving PARTNER"S signature hereto or to such
other address for notices as may be designated by such intended receiving
PARTNER from time to time in a NOTICE to the other PARTNER. Each NOTICE shall be
only for the specific instance and matters covered thereby and shall not affect
any future or other instance or matter, whether of a similar or dissimilar
nature or involving the same or any other provision of this AGREEMENT.
12.3 Successors and Assigns. THIS AGREEMENT shall be binding upon and
shall inure to the benefit of the PARTNERS and their respective successors and
assigns; provided, however, neither PARTNER may, directly or indirectly, assign
or transfer all or any part of this AGREEMENT or any right, obligation or
interest herein in whole or in part without the prior consent of the other
PARTNER in each instance, except as expressly provided in Article 8. Regardless
of any such consent which may be granted, no assignment or transfer shall be
binding and valid until and unless the assignee or transferee shall have assumed
in writing all of the duties and obligations of the assignor or transferor
PARTNER hereunder and, furthermore, the assignor or transferor PARTNER shall
remain primarily liable hereunder. Any attempted assignment or transfer in
violation of this Section shall be null and void.
12.4 Discharge; Amendments; Etc. (1) THIS AGREEMENT may not be released,
discharged, abandoned, changed, amended, or modified in any manner in any
instance, except by a written document signed by the PARTNER sought to be
charged thereby. (2) The failure of any PARTNER to enforce at any time any one
or more of the provisions of this AGREEMENT shall in no way be construed to be a
waiver of such provision(s), nor in any way to affect the validity of this
AGREEMENT or any part thereof, or the right of any PARTNER thereafter to enforce
each and every provision
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hereof. (3) No waiver of any provision hereof (whether in whole or in part) in
any instance shall be held to be a waiver of any other similar or dissimilar
provisions, part or instance. (4) Each and all of the rights and remedies of a
PARTNER provided hereunder shall be in addition to all rights and remedies
(including the right to seek damages) which such PARTNER may have. Such rights
and remedies shall be cumulative, and the use of any right or remedy at any
time, or from time to time, shall not preclude or affect the use of any future
or other similar or dissimilar right or remedy. (5) In no event, shall any
PARTNER be liable for consequential, special or similar damages hereunder or in
connection herewith.
12.5 Governing Law. THIS AGREEMENT shall be governed by the law of the
State of Delaware without giving effect to any principle of law which would
result in the application of the law of some other jurisdiction.
12.6 Resolution of Disputes. All disputes arising under or in connection
with this AGREEMENT, including deadlocks of the PARTNERS' REPRESENTATIVES, shall
be resolved under and in accordance with Section 6.5 B. of this AGREEMENT.
12.7 Severability. Any provision of this AGREEMENT which is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without affecting, impairing, or invalidating
the remaining provisions hereof or the enforceability thereof. To the extent
legally permissible, the PARTNERS shall negotiate in good faith such amendment
of this AGREEMENT as may be necessary to fairly and equitably achieve in a
legally permissible manner the substance of the provision which was so
prohibited or unenforceable; provided, however, that if such prohibition or
unenforceability causes the frustration or failure of an essential purpose of
this AGREEMENT, then either PARTNER may terminate this AGREEMENT upon giving a
NOTICE to the other PARTNER; and further provided, however, that such right to
terminate is conditioned upon and subject to (1) the frustration or failure of
an essential purpose being so material as to reasonably warrant termination of
this AGREEMENT and the resultant dissolution of TASTEMAKER U.S. or disposal of a
PARTNERSHIP INTEREST as being a fair, equitable remedy under the then
circumstances; and (2) if there is a dispute as to such amendment, frustration,
failure of an essential purpose and/or as to whether termination of this
AGREEMENT is warranted, then such dispute shall be resolved in accordance with
Section 6.5 B. of this AGREEMENT, and pending such resolution, neither PARTNER
shall take directly or indirectly any action seeking or purporting to (i)
terminate or in fact terminating this AGREEMENT, or (ii) prevent or materially
hinder or in fact preventing or materially hindering the conduct of TASTEMAKER
U.S. in the ordinary course of business.
12.8 Counterparts. THIS AGREEMENT may be executed in one or more
counterparts, each of which shall be deemed to be an
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original and all of which shall constitute one and the same instrument.
12.9 Entire Agreement. This AGREEMENT embodies the entire agreement among
the PARTNERS with respect to the subject matter hereof and as of the date hereof
and supersedes all prior discussions, writings or practice with respect thereto.
58
IN WITNESS WHEREOF, each PARTNER, with the intention of being legally
bound, has duly executed this AGREEMENT by affixing its signature below as of
the date first written above.
HERCULES CREDIT, INC. HERCULES FLAVOR, INC.
By: ______________________ By: _____________________
Name Name
Printed: ______________________ Printed: _____________________
Title: ______________________ Title: _____________________
ADDRESS FOR NOTICES ADDRESS FOR NOTICES
Hercules Credit, Inc. Hercules Flavor, Inc.
_________________________ ___________________________
_________________________ ___________________________
Attention: _____________ Attention: _______________
Telephone: _____________ Telephone: _______________
Fax: _____________ Fax: _______________
With a copy to the following: With a copy to the following:
_________________________ ___________________________
_________________________ ___________________________
_________________________ ___________________________
Attention: _____________ Attention: _______________
Telephone: _____________ Telephone: _______________
Fax: _____________ Fax: _______________
FRIES & FRIES, INC.
By: ____________________
Name
Printed: ____________________
Title: ____________________
ADDRESS FOR NOTICES
Fries & Fries, Inc.
________________________
________________________
Attention: _____________
Telephone: _____________
Fax: _____________
With a copy to the following:
________________________
________________________
________________________
Attention: _____________
Telephone: _____________
Fax: _____________