Execution Copy
Exhibit 10(g)
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STOCK PURCHASE AGREEMENT
between
IMPERIAL SUGAR COMPANY
as SELLER
and
HORMEL FOODS CORPORATION
as BUYER
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Dated as of December 30, 2002
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Execution Copy
TABLE OF CONTENTS
ARTICLE I SALE OF STOCK..................................................................... 1
Section 1.1 Purchase and Sale......................................................... 1
Section 1.2 Time and Place of Closing................................................. 2
Section 1.3 Deliveries by Seller...................................................... 2
Section 1.4 Deliveries by Buyer....................................................... 3
Section 1.5 Excluded Intellectual Property............................................ 3
Section 1.6 Books and Records......................................................... 3
Section 1.7 No Ongoing or Transition Services......................................... 3
Section 1.8 Intercompany Accounts..................................................... 4
Section 1.9 Certain Distributions; Purchase Price Adjustments......................... 4
Section 1.10 Indiana Plant Disposition................................................. 6
Section 1.11 Specialty Foods of Canada Disposition..................................... 6
Section 1.12 ▇▇▇▇▇ Crystals Foodservice Disposition.................................... 6
Section 1.13 Disposition of ▇▇▇▇▇ Holdings Shares...................................... 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER......................................... 7
Section 2.1 Organization; Etc......................................................... 7
Section 2.2 Authority Relative to this Agreement...................................... 7
Section 2.3 Capitalization............................................................ 8
Section 2.4 Ownership of Shares....................................................... 9
Section 2.5 Consents and Approvals; No Violations..................................... 9
Section 2.6 Financial Statements...................................................... 10
Section 2.7 Absence of Undisclosed Liabilities........................................ 10
Section 2.8 Absence of Certain Changes................................................ 11
Section 2.9 Litigation................................................................ 13
Section 2.10 Compliance with Law....................................................... 13
Section 2.11 Employee Benefit Plans.................................................... 14
Section 2.12 Labor and Employment Matters.............................................. 15
Section 2.13 Taxes..................................................................... 17
Section 2.14 Title, Ownership and Related Matters...................................... 18
Section 2.15 Certain Contracts and Arrangements........................................ 19
Section 2.16 Intellectual Property..................................................... 20
Section 2.17 Environmental............................................................. 21
Section 2.18 Insurance................................................................. 23
Section 2.19 Products.................................................................. 24
Section 2.20 Inventory................................................................. 25
Section 2.21 Customers and Suppliers................................................... 25
Section 2.22 Accounts Receivable....................................................... 25
Section 2.23 Books and Records......................................................... 26
Section 2.24 Affiliate Transactions.................................................... 26
Section 2.25 Brokers; Finders and Fees................................................. 26
Section 2.26 Availability of Documents................................................. 26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER......................................... 27
Section 3.1 Organization; Etc......................................................... 27
Section 3.2 Authority Relative to this Agreement...................................... 27
Section 3.3 Consents and Approvals; No Violations..................................... 27
Section 3.4 Acquisition of Shares for Investment...................................... 28
Section 3.5 Availability of Funds..................................................... 28
Section 3.6 Litigation................................................................ 28
Section 3.7 Investigation by Buyer; Seller's Liability................................ 28
Section 3.8 Brokers; Finders and Fees................................................. 29
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ARTICLE IV COVENANTS OF THE PARTIES............................................................ 29
Section 4.1 Conduct of Business.......................................................... 29
Section 4.2 Access to Information; Confidentiality....................................... 31
Section 4.3 Consents; Cooperation........................................................ 32
Section 4.4 Commercially Reasonable Efforts.............................................. 34
Section 4.5 Public Announcements......................................................... 34
Section 4.6 Tax Matters.................................................................. 34
Section 4.7 Buyer's Knowledge of Breach.................................................. 40
Section 4.8 Employees; Employee Benefits................................................. 40
Section 4.9 Noncompete................................................................... 43
Section 4.10 Ancillary Agreements......................................................... 44
Section 4.11 Real Property Matters........................................................ 45
Section 4.12 Post-Closing Access.......................................................... 45
Section 4.13 Litigation Support and Idaho Fresh-Pak Litigation............................ 45
Section 4.14 Disposed Businesses.......................................................... 46
Section 4.15 Environmental Matters........................................................ 46
ARTICLE V CONDITIONS TO CONSUMMATION OF THE STOCK PURCHASE..................................... 47
Section 5.1 Conditions to Each Party's Obligations to Consummate the Stock Purchase...... 47
Section 5.2 Further Conditions to Seller's Obligations................................... 47
Section 5.3 Further Conditions to Buyer's Obligations.................................... 48
Section 5.4 Materiality of Conditions.................................................... 49
ARTICLE VI TERMINATION AND ABANDONMENT......................................................... 50
Section 6.1 Termination.................................................................. 50
Section 6.2 Procedure for and Effect of Termination...................................... 50
ARTICLE VII SURVIVAL AND INDEMNIFICATION....................................................... 51
Section 7.1 Survival Periods............................................................. 51
Section 7.2 Seller's Agreement to Indemnify.............................................. 52
Section 7.3 Buyer's Agreement to Indemnify............................................... 54
Section 7.4 Third-Party Indemnification.................................................. 55
Section 7.5 No Setoff.................................................................... 56
Section 7.6 No Duplication............................................................... 56
Section 7.7 Qualifications for Materiality............................................... 57
Section 7.8 Sole Remedy.................................................................. 57
Section 7.9 No Special Damages........................................................... 57
Section 7.10 Escrow Account............................................................... 58
ARTICLE VIII MISCELLANEOUS PROVISIONS.......................................................... 58
Section 8.1 Amendment and Modification................................................... 58
Section 8.2 Entire Agreement; Assignment................................................. 58
Section 8.3 Severability................................................................. 59
Section 8.4 Notices...................................................................... 59
Section 8.5 Governing Law................................................................ 60
Section 8.6 Dispute Resolution........................................................... 60
Section 8.7 Descriptive Headings......................................................... 62
Section 8.8 Counterparts................................................................. 62
Section 8.9 Fees and Expenses............................................................ 62
Section 8.10 Interpretation............................................................... 62
Section 8.11 Third-Party Beneficiaries.................................................... 62
Section 8.12 No Waivers................................................................... 63
Section 8.13 Specific Performance......................................................... 63
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Exhibits
Exhibit A Excluded Sugar Products
Exhibit B Assignment Agreement
Exhibit C License Agreement
Exhibit D Transition Services Agreement
Exhibit E Working Capital Schedule
Exhibit F Closing Condition Consents
Exhibit G Seller Lender Approvals
Exhibit H Designated Imperial Employees
Exhibit I Supplier Agreement
Exhibit J Co-Pack Agreement
Exhibit K Escrow Agreement
Exhibit L Title Policies
Exhibit M Title Imperfections
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of December 30, 2002 (this
"Agreement"), by and between Imperial Sugar Company, a Texas corporation
("Seller"), and Hormel Foods Corporation, a Delaware corporation ("Buyer").
Seller and Buyer are hereinafter collectively referred to as the "parties" and
each individually as a "party."
WHEREAS, Seller owns all the outstanding shares of capital stock of
Diamond Crystal Holdings, Inc., a Michigan corporation ("Holdings"), and
Savannah Foods & Industries, Inc., a Delaware corporation and wholly owned
subsidiary of Seller ("Savannah"), owns all the outstanding shares of capital
stock of Diamond Crystal Brands, Inc., a Delaware corporation ("Brands");
WHEREAS, Holdings and Brands together with their respective direct
and indirect subsidiaries identified on Schedule 2.3 of the Seller Disclosure
Letter (as defined below) (Holdings and Brands, collectively with such
subsidiaries, the "Companies," and, individually, each a "Company") conduct the
branded and private label dry packed food products businesses of Seller and
Savannah for the retail and foodservice industries, which businesses include the
development, production, marketing, distribution and sale of the products listed
in Section 2.19 of the Seller Disclosure Letter (all such businesses
collectively referred to as "DCB" or the "DCB Business"); provided, however,
that the DCB Business shall exclude (1) the business of the Companies, Seller,
Savannah and their respective affiliates relating to the marketing, distribution
and sale of the sugar products set forth on Exhibit A hereto (such business, the
"Excluded Sugar Business") and (2) any businesses formerly conducted by the
Companies but sold, transferred or otherwise discontinued prior to the date of
this Agreement; and
WHEREAS, Seller and Savannah desire to sell and Buyer desires to
purchase DCB in a single and indivisible transaction by means of a sale and
purchase of (1) all 1,000 of the issued and outstanding shares of common stock
of Holdings ("Holdings Shares") and (2) all 1,000 of the issued and outstanding
shares of common stock of Brands ("Brands Shares", and, together with Holdings
Shares, "Shares").
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained in this
Agreement, and intending to be legally bound, the parties agree as follows:
ARTICLE I
SALE OF STOCK
Section 1.1 Purchase and Sale. On the terms and subject to the
conditions of this Agreement, at the Closing (as defined below):
(a) Seller will sell, convey, assign, transfer and deliver to
Buyer, and Buyer will purchase, acquire and accept from Seller, the Holdings
Shares free and clear of all Liens (as defined below) except for those created
by Buyer or arising out of ownership of the Shares by Buyer;
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(b) Seller will cause Savannah to sell, convey, assign, transfer
and deliver to Buyer, and Buyer will purchase, acquire and accept from Savannah,
the Brands Shares free and clear of all Liens except for those created by Buyer
or arising out of ownership of the Shares by Buyer;
(c) Buyer will pay to Seller, for the account of Seller and
Savannah, in consideration for the Shares, an aggregate amount of $115,000,000,
subject to adjustment as provided in Section 1.9 (the "Purchase Price"), of
which $10,200,000 shall be deducted and deposited in escrow (the "Escrow
Amount") in accordance with Section 1.1(d), by wire transfer of immediately
available funds to an account or accounts designated by Seller prior to the
Closing; and
(d) Buyer will deposit the Escrow Amount with U.S. Bank, National
Association (the "Escrow Agent") to be held in escrow by the Escrow Agent in
accordance with the terms of the Escrow Agreement. Of the Escrow Amount,
$1,000,000 shall be the "Adjustment Escrow Amount" and $9,200,000 shall be the
"Indemnification Escrow Amount".
The transactions contemplated by this Section 1.1 are sometimes
referred to as the "Stock Purchase."
Section 1.2 Time and Place of Closing. The closing of the
transactions contemplated by this Agreement (the "Closing") will take place at
the offices of ▇▇▇▇▇ ▇▇▇▇▇ L.L.P., One Shell Plaza, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, at and effective as of 9:00 a.m. (local time) on the
date hereof subject to the satisfaction or waiver of all of the conditions to
each party's obligations under this Agreement. The date on which the Closing
occurs and the transactions contemplated by this Agreement become effective is
referred to as the "Closing Date."
Section 1.3 Deliveries by Seller. Subject to the terms and
conditions of this Agreement, at the Closing, Seller will deliver the following
to Buyer:
(a) Certificates representing the Shares, accompanied by stock
powers duly endorsed in blank or accompanied by duly executed instruments of
transfer;
(b) A certificate of an appropriate officer of Seller, dated the
Closing Date, stating that the conditions set forth in Section 5.3(a), (b) and
(e) have been satisfied;
(c) Duly executed copies of all Closing Condition Consents (as
defined below);
(d) The resignations of all members of the Boards of Directors and
all officers of the Companies who are employees of Seller; and
(e) All other documents, instruments and writings required to be
delivered by Seller at or (to the extent not previously delivered) prior to the
Closing Date under this Agreement.
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Section 1.4 Deliveries by Buyer. Subject to the terms and
conditions of this Agreement, at the Closing, Buyer will deliver the following
to Seller or the Escrow Agent, as applicable:
(a) To Seller, the Purchase Price less the Escrow Amount, in
immediately available funds, as set forth in Section 1.1 of this Agreement;
(b) To the Escrow Agent, the Escrow Amount, in immediately
available funds, as set forth in Section 1.1 of this Agreement;
(c) To Seller, a certificate of an appropriate officer of Buyer,
dated the Closing Date and stating that the conditions set forth in Section
5.2(a) and (b) have been satisfied; and
(d) All other documents, instruments and writings required to be
delivered by Buyer at or (to the extent not previously delivered) prior to the
Closing Date under this Agreement.
Section 1.5 Excluded Intellectual Property. Except as set forth (i)
in the Assignment Agreement among ▇▇▇▇▇ Holdings, Inc., a Delaware corporation
("▇▇▇▇▇"), Buyer, Seller and Hormel Foods, LLC, a Minnesota limited liability
company ("Hormel Foods, LLC"), in substantially the form attached as Exhibit B
to this Agreement (the "Assignment Agreement") and (ii) the License Agreement
among ▇▇▇▇▇, Buyer, Seller and Hormel Foods, LLC, in substantially the form
attached as Exhibit C to this Agreement (the "License Agreement"), it is
expressly agreed that Buyer is not purchasing, acquiring or otherwise obtaining
any right, title or interest in any names, patents, copyrights, trade names,
trademarks, identifying logos, service marks, trade secrets or other
intellectual property of Seller or any of Seller's affiliates (other than the
Companies) (collectively, the "Excluded Intellectual Property").
Section 1.6 Books and Records. Seller agrees to deliver to Buyer at
or as soon as practicable after the Closing all books and records of the
Companies and of Seller, Savannah and ▇▇▇▇▇ to the extent primarily related to
the DCB Business (including correspondence, memoranda, books of account,
personnel and payroll records and the like), except for the original books and
records of the Companies relating to Taxes (as defined below), including Tax
Returns (as defined below), copies of which shall be made available to Buyer
upon request. Subject to Section 4.2 hereof, Seller may keep copies of any books
and records delivered to Buyer.
Section 1.7 No Ongoing or Transition Services. Except as otherwise
agreed to in writing by Seller and Buyer or as provided in the Transition
Services Agreement in substantially the form attached as Exhibit D to this
Agreement (the "Transition Services Agreement"), at the Closing, all data
processing, accounting, insurance, banking, personnel, legal, communications and
other products and services provided to the Companies by Seller, Savannah or any
of their affiliates, including any agreements or understandings (written or
oral) with respect thereto, will terminate.
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Section 1.8 Intercompany Accounts. On or prior to the Closing Date,
all intercompany accounts between any of the Companies, on the one hand, and
Seller, Savannah and their affiliates (other than the Companies), on the other
hand, shall be canceled. Subject to Section 1.9 of this Agreement, no adjustment
shall be made to the Purchase Price as a result of any such cancellation.
Section 1.9 Certain Distributions; Purchase Price Adjustments.
(a) The parties agree that Seller and Savannah shall have the
right, at or prior to the Closing and subject to the terms of Section
4.1(c)(viii) hereof, to cause any Company to distribute cash and accounts
receivables to Seller, Savannah or their affiliates, by one or more dividends,
repurchases of existing stock and/or other distributions. Notwithstanding the
immediately preceding sentence, Seller, at or prior to the Closing and subject
to the terms of Section 4.1(c)(viii) hereof, shall cause the Companies to
transfer all accounts receivable, inventory and other current assets and all
current liabilities to the extent related to the Excluded Sugar Business (in
each case in the manner set forth in Exhibit E to this Agreement to the extent
practicable) to Seller, Savannah or their affiliates, by one or more dividends,
repurchases of existing stock and/or other distributions. Seller shall indemnify
and hold harmless Buyer from, against and in respect of any liabilities or
obligations, whether known or unknown, contingent or otherwise, without regard
for any indemnity limitation set forth in Article VII hereof, associated with
the ownership or operation of the Excluded Sugar Business and the sale or
transfer effected under this Section 1.9(a), including without limitation any
liability or obligation in respect of Taxes.
(b) Exhibit E to this Agreement sets forth the components of
combined, consolidated Working Capital (as defined below) as of June 30, 2002.
(c) Within 30 calendar days following the Closing:
(i) Seller shall prepare, or cause to be prepared, and deliver
to Buyer a combined consolidated schedule of components of Working Capital
as of the Closing Date in a manner consistent with Exhibit E (the "Closing
Date Working Capital Schedule") and a statement (the "Closing Statement")
reflecting the calculation of any adjustment to the Purchase Price under
Section 1.9(c), accompanied by a certificate of the chief financial officer
or principal accounting officer of Seller to the effect that such statement
has, to his or her knowledge, been prepared in accordance with the terms of
this Agreement. In connection with the preparation of the Closing Date
Working Capital Schedule, on or no later than three business days after the
Closing Date, Seller shall conduct a physical inventory for purposes of
determining the amount of inventory of the DCB Business on the Closing Date
to be included in such Closing Date Working Capital Schedule. Seller shall
permit Buyer and its representatives to observe the conduct of such
inventory and Buyer shall permit Seller access to its property as necessary
to conduct such inventory.
(ii) The Closing Date Working Capital Schedule shall reflect
Working Capital consistent with financial reporting policies and procedures
used by the DCB Business prior to the Closing, which policies and
procedures are set forth in Exhibit E to
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this Agreement. As used in this Agreement, "Working Capital" means the
amount of current assets of the DCB Business (excluding current assets
relating to the Excluded Sugar Business transferred in accordance with
Section 1.9(a), employee loans, income taxes and intercompany accounts)
minus the amount of the components of current liabilities of the DCB
Business (excluding all current liabilities relating to the Excluded Sugar
Business to be transferred in accordance with Section 1.9(a), income taxes
and intercompany accounts), each as of the Closing Date determined in
accordance with generally accepted accounting principles in the United
States ("GAAP") and calculated in a manner consistent with Exhibit E.
(iii) Buyer shall have a period of 30 calendar days after delivery of
the Closing Date Working Capital Schedule and the Closing Statement to
review (and cause Buyer's auditors to review) such documents and make any
objections it may have in writing to Seller. Seller will make the work
papers and back-up materials used in preparing the Closing Date Working
Capital Schedule and the Closing Statement available to Buyer and Buyer's
auditors at reasonable times and upon reasonable notice during such 30-day
period in order to facilitate the resolution by the parties of any
objections to the Closing Date Working Capital Schedule and the Closing
Statement. If written objections are delivered to Seller by Buyer within
such 30-day period, then Buyer and Seller shall attempt to resolve the
matter or matters in dispute. If no written objections are made by Buyer
within such 30-day period, then the Closing Date Working Capital Schedule
and the Closing Statement shall be final and binding on the parties. If
disputes with respect to the Closing Date Working Capital Schedule or the
Closing Statement cannot be resolved by Buyer and Seller within 30 calendar
days after timely delivery of any objections thereto, then, at the request
of Buyer or Seller, the specific matters in dispute shall be submitted to
KPMG LLP (the "Auditors") or such other independent accounting firm as may
be approved by Seller and Buyer, which firm shall render its opinion as to
such specific matters. If no such referral is made within 45 days after the
delivery of the objections, then the Closing Date Working Capital Schedule
and the Closing Statement shall be final and binding on the parties. Based
on such opinion, such independent accounting firm will then send to Seller
and Buyer its determination of the specified matters in dispute, which
determination shall be final and binding on the parties hereto. The fees
and expenses of the Auditors shall be borne one-half by Seller and one-half
by Buyer.
(iv) If the Working Capital reflected on the Closing Date Working
Capital Schedule as finally determined under Section 1.9(c) is less than
$9,366,000, then within five days following the final determination
thereof, Buyer shall be entitled to receive from the Escrow Agent out of
the Adjustment Escrow Amount the amount of such deficiency, together with
interest thereon at 7% per annum from (and including) the Closing Date to
(but excluding) the date of such payment. In the event that (i) the amount
of such deficiency, together with interest thereon, is not fully funded by
the Adjustment Escrow Amount, Seller shall pay the balance thereof to Buyer
by wire transfer in immediately available funds to the account or accounts
designated by Buyer or (ii) the amount of such deficiency is fully funded
by the Adjustment Escrow Amount, the Escrow Agent shall pay to Seller an
amount equal to (x) the Adjustment Escrow Amount less (y) the amount paid
to Buyer. If the Working Capital reflected on the Closing Date
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Balance Sheet is greater than $9,366,000, then within five days following
the final determination thereof, (i) Buyer will pay to Seller by wire
transfer in immediately available funds to the account or accounts
designated by Seller the amount of such excess, plus interest thereon and
on the Adjustment Escrow Amount at 7% per annum from (and including) the
Closing Date to (but excluding) the date of such payment and (ii) the
Escrow Agent shall make payment to Seller by wire transfer in immediately
available funds of the full amount of the Adjustment Escrow Amount.
Section 1.10 Indiana Plant Disposition. The parties agree that
prior to the Closing, Seller will cause the transfer of the Indiana Plant from
the DCB Business by sale or transfer of all shares of Menu Magic Foods, Inc.
("Menu Magic") such that (i) the Indiana Plant will not be part of the assets
and liabilities of the Companies immediately prior to the Closing and (ii)
neither Holdings nor Brands, directly or indirectly, will own shares of Menu
Magic immediately prior to the Closing. For purposes of this Agreement, "Indiana
Plant" means the blending plant located in Indianapolis, Indiana and currently
owned by Menu Magic, and all related Industrial Development Bond debt and all
other liabilities or obligations in respect of such plant. Seller shall
indemnify and hold harmless Buyer from, against and in respect of any
liabilities or obligations, whether known or unknown, contingent or otherwise,
without regard for any indemnity limitation set forth in Article VII hereof,
associated with the ownership or operation of Menu Magic and the Indiana Plant
and any sale or transfer effected under this Section 1.10, including without
limitation any liability or obligation in respect of Taxes or arising under any
Environmental Law.
Section 1.11 Specialty Foods of Canada Disposition. The parties
agree that prior to the Closing, Seller will cause the disposal of Specialty
Foods (as defined below) from the DCB Business by sale, transfer of all shares,
liquidation or other disposition of Specialty Foods such that (i) the assets and
liabilities of Specialty Foods, if any, will not be part of the assets and
liabilities of the Companies immediately prior to the Closing and (ii) neither
Holdings nor Brands, directly or indirectly, will own shares of Specialty Foods
immediately prior to the Closing. For purposes of this Agreement, "Specialty
Foods" means Diamond Crystal Specialty Foods of Canada Limited, a Canadian
corporation, and all debt and other liabilities or obligations of such corporate
entity. Seller shall indemnify and hold harmless Buyer from, against and in
respect of any liabilities or obligations, whether known or unknown, contingent
or otherwise, without regard for any indemnity limitation set forth in Article
VII hereof, associated with the ownership or operation of Specialty Foods and
any sale, transfer or liquidation effected under this Section 1.11, including
without limitation any liability or obligation in respect of Taxes or arising
under any Environmental Law.
Section 1.12 ▇▇▇▇▇ Crystals Foodservice Disposition. The parties
agree that prior to the Closing, Seller will cause the disposal of ▇▇▇▇▇
Crystals Foodservice (as defined below) from the DCB Business by sale, transfer
of all shares, liquidation or other disposition of ▇▇▇▇▇ Crystals Foodservice
such that (i) the assets and liabilities of ▇▇▇▇▇ Crystals Foodservice, if any,
will not be part of the assets and liabilities of the Companies immediately
prior to the Closing and (ii) neither Holdings nor Brands, directly or
indirectly, will own shares of ▇▇▇▇▇ Crystals Foodservice immediately prior to
the Closing. For purposes of this Agreement, "▇▇▇▇▇ Crystals Foodservice" means
▇▇▇▇▇ Crystals Foodservice, Inc., a Delaware corporation, and all debt and other
liabilities or obligations of such corporate entity. Seller shall indemnify and
hold
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harmless Buyer from, against and in respect of any liabilities or obligations,
whether known or unknown, contingent or otherwise, without regard for any
indemnity limitation set forth in Article VII hereof, associated with the
ownership or operation of ▇▇▇▇▇ Crystals Foodservice and any sale, transfer or
liquidation effected under this Section 1.12, including without limitation any
liability or obligation in respect of Taxes or arising under any Environmental
Law.
Section 1.13 Disposition of ▇▇▇▇▇ Holdings Shares. The parties agree
that prior to the Closing, Seller will cause the shares of common stock of ▇▇▇▇▇
held by Diamond Crystal Specialty Foods, Inc. to be transferred to Seller or an
affiliate of Seller such that Diamond Crystal Specialty Foods, Inc. will not own
shares of common stock of ▇▇▇▇▇ immediately prior to the Closing. Seller shall
indemnify and hold harmless Buyer from, against and in respect of any
liabilities or obligations, whether known or unknown, contingent or otherwise,
without regard for any indemnity limitation set forth in Article VII hereof,
associated with the ownership of such shares and the transfer effected under
this Section 1.13, including without limitation any liability or obligation in
respect of Taxes or arising under any Environmental Law.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in a letter to be delivered by Seller to Buyer
concurrently with this Agreement (the "Seller Disclosure Letter"), Seller
represents and warrants to Buyer as follows.
Section 2.1 Organization; Etc. Seller, Savannah, ▇▇▇▇▇ and each
Company (a) is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, (b) has all requisite corporate or
partnership, as applicable, power and authority to own, lease and operate all of
its properties and assets and to carry on its business as it is now being
conducted and (c) is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership, operation or
leasing of its properties makes such qualification necessary, except where the
failure to be so organized, existing and in good standing, to have such power
and authority or to be so qualified would not, individually or in the aggregate,
have a Seller Material Adverse Effect (as defined below). As used in this
Agreement, the term "Seller Material Adverse Effect" means a material adverse
change in, or effect on, the business, financial condition, results of
operations or customer, supplier or employee relationships of the DCB Business
or the ability of Seller to consummate the transactions contemplated hereby;
provided, however, that (a) any adverse change or effect attributable to the
announcement, pendency or consummation of the transactions contemplated by this
Agreement (including any cancellations of or delays in customer orders, any
reduction in sales, any disruption in supplier, distributor, partner or similar
relationships or any loss of employees) and (b) the effects of changes that are
generally applicable to the industries in which DCB operates or to the United
States economy generally, shall be excluded from such determination.
Section 2.2 Authority Relative to this Agreement.
(a) Seller has all requisite corporate power and authority to execute
and deliver this Agreement and each Ancillary Agreement to which it is a party.
Seller has and
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Savannah has, or as of the Closing will have, all requisite corporate power and
authority to consummate the transactions contemplated by this Agreement and each
Ancillary Agreement to which it is a party. The execution and delivery of this
Agreement, and each Ancillary Agreement to which Seller is a party, and the
consummation of the transactions contemplated by this Agreement and each such
Ancillary Agreement have been duly and validly authorized by all requisite
corporate action on the part of Seller and have been, or as of Closing will have
been, duly and validly authorized by all requisite corporate action on the part
of Savannah. This Agreement has been and each Ancillary Agreement to which
Seller is a party will, as of Closing, have been duly and validly executed and
delivered by Seller, and assuming this Agreement and each such Ancillary
Agreement has been duly authorized, executed and delivered by Buyer and the
other parties thereto, constitutes or will constitute, as applicable, a valid
and binding agreement of Seller, enforceable against Seller in accordance with
its terms, except that (a) such enforcement may be subject to any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other laws, now
or hereafter in effect, relating to or limiting creditors' rights generally and
(b) enforcement of this Agreement and the Ancillary Agreements, including, among
other things, the remedy of specific performance and injunctive and other forms
of equitable relief, may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(b) ▇▇▇▇▇ has, or as of the Closing will have, all requisite
corporate power and authority to execute and deliver the Assignment Agreement
and the License Agreement and all requisite corporate power and authority to
consummate the transactions contemplated thereby. The execution and delivery of
each of the Assignment Agreement and the License Agreement and the consummation
of the transactions contemplated by each of the Assignment Agreement and the
License Agreement have been, or as of the Closing will have been, duly and
validly authorized by all requisite corporate action on the part of ▇▇▇▇▇. Each
of the Assignment Agreement and the License Agreement will, as of Closing, have
been duly and validly executed and delivered by ▇▇▇▇▇, and, assuming the
Assignment Agreement and the License Agreement have been duly authorized,
executed and delivered by Buyer, will constitute a valid and binding agreement
of ▇▇▇▇▇, enforceable against ▇▇▇▇▇ in accordance with its terms, except that
(a) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now or hereafter
in effect, relating to or limiting creditors' rights generally and (b)
enforcement of the Assignment Agreement and the License Agreement, including,
among other things, the remedy of specific performance and injunctive and other
forms of equitable relief, may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 2.3 Capitalization. Section 2.3 of the Seller Disclosure
Letter sets forth (a) the authorized capital stock of each Company, (b) the
number of issued and outstanding shares of capital stock of each Company and (c)
the names and addresses of each record holder of the issued and outstanding
shares of capital stock of each Company, the number of shares held by each such
holder and the share certificate numbers, any repurchase or redemption rights
for such shares in favor of the Company and any limitations on the ability of
the holder of such capital stock to vote or dispose of such shares. The Holdings
Shares represent all the outstanding capital stock of Holdings, and the Brands
Shares represent all the outstanding capital stock of Brands. All outstanding
shares of capital stock of each Company are duly authorized, validly issued,
fully paid and nonassessable. Except for the Shares and as set forth in Section
2.3 of the
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Seller Disclosure Letter, there are not, and at the Closing there will not be,
any capital stock or other equity interests in any Company issued or outstanding
or any subscriptions, options, warrants, calls, rights (including preemptive
rights), convertible securities or other agreements or commitments of any
character obligating Seller or Savannah to cause any Company, or obligating any
Company, to issue, exchange, transfer, sell, repurchase, redeem or otherwise
acquire any of their capital stock or other equity interests, or any agreements,
arrangements or understandings obligating Seller, Savannah or any Company to
grant, extend, accelerate the vesting of or enter into any such subscription,
option, warrant, call, right or agreement granting any person any rights in any
Company similar to capital stock or other equity interests. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to any of the Companies. Except for the Companies, no Company owns
any interest in any corporation, general or limited partnership, limited
liability company, joint venture, estate, trust or other association. The DCB
Business, excluding the Excluded Sugar Business, is conducted exclusively
through the Companies, and, for the avoidance of doubt, none of the DCB Business
is conducted by or through Menu Magic, Specialty Foods or ▇▇▇▇▇ Crystals
Foodservice.
Section 2.4 Ownership of Shares.
(a) Except as set forth in Section 2.4 of the Seller Disclosure
Letter, all the Holdings Shares are owned of record and beneficially by Seller
and all the Brands Shares are owned of record by Savannah and beneficially by
Seller and Savannah free and clear of all liens, pledges, charges, claims,
security interests or other encumbrances, whether consensual, statutory or
otherwise (collectively, "Liens"). The Holdings Shares and the Brands Shares are
all duly authorized, validly issued, fully paid and non-assessable, free of
preemptive rights or any other third party rights and in certificated form, and
have been offered, sold and issued by Holdings and Brands, respectively, in
compliance with all applicable securities and corporate Laws, agreements or
contracts applicable to Holdings or Brands and Holdings' and Brands'
certificates of incorporation and by-laws and in compliance with any preemptive
rights, rights of first refusal or other rights. The consummation of the Stock
Purchase will convey to Buyer good and valid title to the Shares, of record and
beneficially, free and clear of all Liens, except for those created by Buyer or
arising out of ownership of the Shares by Buyer.
(b) Except as set forth in Section 2.4 of the Seller Disclosure
Letter, all the outstanding shares of capital stock of the Companies (other than
Holdings and Brands) are owned, of record and beneficially, directly or
indirectly, by Holdings or Brands free and clear of all Liens.
Section 2.5 Consents and Approvals; No Violations. Except for
applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of
1976, as amended (the "HSR Act"), or as set forth in Section 2.5 of the Seller
Disclosure Letter, neither the execution and delivery of this Agreement or any
Ancillary Agreement by Seller and of the Assignment Agreement and the License
Agreement by ▇▇▇▇▇, nor the consummation by Seller and Savannah of the
transactions contemplated by this Agreement and the Ancillary Agreements to
which Seller is a party and the consummation by ▇▇▇▇▇ of the transactions
contemplated by the Assignment Agreement and the License Agreement will (a)
conflict with or result in any breach of any provision of the certificate of
incorporation or by-laws of Seller, Savannah, ▇▇▇▇▇ or any of the Companies, (b)
result in a material violation or material breach of, or constitute (with or
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without due notice or lapse of time or both) a material default (or give rise to
any material right of termination, cancellation, acceleration or the loss of a
material benefit) under, or require any consent under or result in the creation
of any Lien under, any material note, bond, mortgage, deed of trust, indenture,
lease, license, commitment, contract, agreement or other material instrument,
obligation or arrangement to which Seller, Savannah, ▇▇▇▇▇ or any of the
Companies is a party or by which any of them or any of their respective
properties or assets are bound or affected, (c) violate or conflict with any
judgment, order, writ, injunction, decree, law, statute, rule, regulation or
ordinance (collectively, "Laws" and, individually, a "Law") applicable to
Seller, Savannah, ▇▇▇▇▇ or any of the Companies or any of their respective
properties or assets, or (d) require any notice to, filing with, or the
obtaining of any permit, authorization, consent or approval of or any action by,
any governmental or regulatory authority, domestic or foreign, except in the
case of clauses (b), (c) and (d) of this Section 2.5 for any such violations,
breaches, defaults, rights of termination, cancellation or acceleration or
requirements which, individually or in the aggregate, would not adversely affect
the ability of Seller, Savannah or ▇▇▇▇▇ to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements, or which become
applicable as a result of the business or activities in which Buyer is or
proposes to be engaged or as a result of any acts or omissions by, or the status
of or any facts pertaining to, Buyer.
Section 2.6 Financial Statements. Section 2.6 of the Seller
Disclosure Letter contains (a) the audited combined consolidated balance sheets
of DCB as of September 30, 2002, 2001 and 2000 and the audited combined
consolidated statements of operations, changes in shareholder's equity and
statements of cash flows of DCB for the years then ended (the "Audited Financial
Statements") and (b) the schedule of pro forma operating results for the DCB
Business for each of the years ended September 30, 2002, 2001 and 2000 together
with an agreed-upon procedures report of Seller's independent accountants
(collectively, the "Pro Forma Financial Statements" and, together with the
Audited Financial Statements, the "Financial Statements"). Except as disclosed
therein, such Financial Statements are based upon the books and records of the
Companies, the balance sheets included in the Audited Financial Statements
fairly present, in all material respects, the financial position of DCB as of
the dates thereof, and the statements of operations included in the Audited
Financial Statements fairly present, in all material respects, the results of
operations of DCB, for the periods indicated, in accordance with GAAP
consistently applied throughout the periods indicated (except, in the case of
unaudited statements, for the absence of notes thereto and subject to normal
year-end adjustments, which are not material in the aggregate). The pro forma
operating results included in the Pro Forma Financial Statements fairly present,
in all material respects, the results of operations of the DCB Business for the
periods indicated.
Section 2.7 Absence of Undisclosed Liabilities. Except (i) as
reflected or expressly reserved against in the latest balance sheet included in
the Financial Statements, (ii) for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice since the date of
such balance sheet, none of which is an uninsured liability or obligation for
breach of contract, breach of warranty, tort, infringement, litigation or
violation of governmental order, governmental authorization or any Law, (iii) as
otherwise disclosed herein or in Section 2.7(a) of the Seller Disclosure Letter
or (iv) for executory obligations existing as of the date of such balance sheet
that arose in the ordinary course of business consistent with past practice
under contracts and agreements and that, in accordance with GAAP, were not
required
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to be reflected on the such balance sheet, but only to the extent any of such
obligations relate to contracts and agreements that are disclosed in Section
2.15 of the Seller Disclosure Letter (or to contracts or agreements that are not
otherwise required to be disclosed in the Seller Disclosure Letter by the terms
of Section 2.15), no Company has any liabilities or obligations (whether direct,
indirect, accrued or contingent) in excess of $500,000, individually or in the
aggregate.
Section 2.8 Absence of Certain Changes. Except as set forth in
Section 2.8 of the Seller Disclosure Letter or as otherwise contemplated by
Sections 1.9(a), 1.10, 1.11, 1.12 and 1.13 of this Agreement, from September 30,
2002 to the date of this Agreement, there has not been a Seller Material Adverse
Effect and:
(a) none of the Companies has sold, leased, transferred or assigned
any of its assets, tangible or intangible, other than in the ordinary course of
business and consistent with past practice;
(b) none of the Companies has entered into any agreement or contract
(or series of related agreements or contracts) either involving more than
$100,000 or outside the ordinary course of business (other than sales and
purchase orders entered into in the ordinary course of business consistent with
past practice);
(c) none of the Companies has accelerated, suspended, terminated,
modified or canceled any agreement or contract (or series of related agreements
or contracts) involving more than $100,000 to which any of the Companies is a
party or by which any of them is bound except in the ordinary course of
business;
(d) other than (i) liens for taxes not yet due and payable, (ii)
statutory liens of lessors, liens of carriers, warehousemen, mechanics and
materialmen incurred in the ordinary course of business for sums not yet due or
(iii) liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of statutory obligations
("Permitted Liens"), no Lien has been imposed on any assets of any of the
Companies;
(e) none of the Companies has made any capital expenditure (or series
of related capital expenditures) either involving more than $500,000 or outside
the ordinary course of business;
(f) none of the Companies has made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any other person or
entity (or series of related capital investments, loans and acquisitions) either
involving more than $500,000 or outside the ordinary course of business or
acquired (by merger, exchange, consolidation, acquisition of stock or assets or
otherwise) any person or entity;
(g) none of the Companies has issued any note, bond or other debt
security or created, incurred, assumed or guaranteed any indebtedness for
borrowed money (including advances on existing credit facilities) or capitalized
lease obligation;
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(h) none of the Companies has delayed, postponed or accelerated the
payment of accounts payable or other liabilities or the receipt of any accounts
receivable, in each case outside the ordinary course of business;
(i) none of the Companies has canceled, compromised, waived or
released any material right or claim (or series of related rights or claims);
(j) except as provided in Section 2.16 of the Seller Disclosure
Letter, none of the Companies or ▇▇▇▇▇ has granted any license or sublicense of
any rights under or with respect to any DCB Intellectual Property;
(k) there has been no change made or authorized in the articles or
certificates of incorporation or organization or by-laws of any of the
Companies;
(l) none of the Companies has issued, sold or otherwise disposed of
any of its capital stock or equity interests, or granted any options, warrants
or other rights to purchase or obtain (including upon conversion, exchange or
exercise) any of its capital stock;
(m) none of the Companies has experienced any material damage,
destruction or loss (whether or not covered by insurance) to its property;
(n) none of the Companies has made any loan to, or entered into any
other transaction with, any of its directors, officers or employees outside the
ordinary course of business;
(o) none of the Companies has entered into any employment or
collective bargaining agreement, written or oral, or modified the terms of any
such existing agreement;
(p) none of the Companies has granted any increase in the base
compensation or made any other change in employment terms of any of its
directors, officers or employees outside the ordinary course of business;
(q) none of the Companies has adopted, amended, modified or
terminated any bonus, profit-sharing, incentive, severance or other plan,
contract or commitment for the benefit of any of its directors, officers or
employees (or taken any such action with respect to any other plan);
(r) none of the Companies has made or pledged to make any charitable
contribution outside the ordinary course of business;
(s) none of the Companies has discharged or satisfied any Lien or
paid any liability, in each case with a value in excess of $100,000 individually
or $100,000 in the aggregate, other than current liabilities paid in the
ordinary course of business;
(t) none of Seller, Savannah or the Companies has disclosed, to any
person or entity other than Buyer and authorized representatives of Buyer, any
proprietary confidential information related to the DCB Business, other than
pursuant to a confidentiality agreement prohibiting the use or further
disclosure of such information, which agreement (except for
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confidentiality agreements entered into in connection with the proposed sale of
the DCB Business) is listed on Section 2.15 of the Seller Disclosure Letter and
is in full force and effect on the date of this Agreement;
(u) Seller has not made any change in accounting principles or
practices from those utilized in the preparation of the Financial Statements;
and
(v) none of the Companies, or Seller or Savannah on behalf of the
Companies, has committed to take any of the actions described in this Section
2.8.
Section 2.9 Litigation. Except as set forth in Section 2.9 of the
Seller Disclosure Letter, there is no action, suit, proceeding, arbitration, or
governmental investigation, hearing or proceeding pending or, to the knowledge
of Seller, threatened against Seller, Savannah, ▇▇▇▇▇ or any Company by or
before any court or governmental or regulatory entity or authority, that (a)
involves amounts greater than $100,000, (b) would adversely affect the ability
of Seller, Savannah or ▇▇▇▇▇ to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements, (c) would adversely affect the ability
of Buyer to operate the DCB Business following the Closing in substantially the
same manner as operated by Seller, Savannah and the Companies prior to the
Closing or (d) involves or relates to any trade practices of the DCB Business,
including any pricing, promotion, rebate, discount, commission, allocation,
merchandising practice or territorial restriction.
Section 2.10 Compliance with Law.
(a) The DCB Business has been conducted in compliance in all material
respects with all applicable Laws (excluding Environmental Laws, which are the
subject of Section 2.17 of this Agreement), including but not limited to,
federal, state, local and foreign statutes, laws, ordinances, rules, orders,
regulations and other requirements pertaining to product labeling and food and
consumer products safety. Seller, Savannah, ▇▇▇▇▇ and the Companies have not,
during the three years prior to the date hereof received any written
communication from any governmental entity or authority that alleges that the
DCB Business or any of the Companies is, in any manner, not in compliance with
applicable Laws (excluding Environmental Laws). None of Seller, Savannah, ▇▇▇▇▇
or any of the Companies is relying on any exemption from or deferral of any Law
(excluding Environmental Laws), governmental order or governmental approval,
consent, license, permit, waiver, certificate, registration or other
authorization issued, granted, given, made available or otherwise required by
any governmental entity or authority or pursuant to Law (excluding Environmental
Laws) that would not be available to the Companies after the Closing.
(b) Seller, Savannah, ▇▇▇▇▇ and each of the Companies has, in full
force and effect, all material approvals, licenses, permits, authorizations and
certificates, from federal, state, local and foreign authorities (including,
without limitation, federal and state agencies regulating food safety) necessary
to conduct the DCB Business and own and operate the assets of the DCB Business
("Governmental Authorizations"). Section 2.10(b) of the Seller Disclosure Letter
sets forth a correct and complete list of such Governmental Authorizations and
for each such Governmental Authorization, indicates whether it will not continue
to be held by the
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Companies after the Closing. The Companies have conducted DCB in material
compliance with the terms and conditions of such Governmental Authorizations.
Section 2.11 Employee Benefit Plans.
(a) Section 2.11(a) of the Seller Disclosure Letter sets forth (i)
all employee benefit plans (as defined in Section 3(3) of Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and (ii) all material benefit
programs or practices providing for bonuses, incentive compensation, vacation
pay, insurance, restricted stock, stock options, employee discounts or passes,
company cars, tuition reimbursement or any other prerequisite or benefit
(including, without limitation, any fringe benefit under Section 132 of the
Code) to present or former employees, officers or independent contractors of any
of the Companies, that is not an employee benefit plan within the meaning of
ERISA ss. 3(3), in each case, maintained or contributed to by any of the
Companies and applicable to employees of any of the Companies (collectively, the
"Company Plans"). As used in this Section 2.11, Company Plans shall include
every such arrangement: (i) which any Company, or Seller or Savannah in
connection with the DCB Business, has committed to implement, establish, adopt
or contribute to in the future, and (ii) which is in the process of termination
(but such term does not include any such arrangement that has been terminated
and completely wound up prior to the date of this Agreement such that the
Companies have no present or potential financial liability with respect to such
arrangement).
(b) With respect to the Company Plans, Seller has made available to
Buyer true and accurate copies of (i) all plan documents, (ii) for any Company
Plan intended to be qualified under Section 401(a) of the Internal Revenue Code
of 1986 (the "Code"), the most recent favorable determination letter issued with
respect to the Company Plan, if any, and the most recent annual report (Form
5500 Series) filed with the Internal Revenue Service ("IRS") and, (iii) for the
Retirement Income Plan for Certain Bargaining Unit Employees of Savannah Foods &
Industries, Inc. (the "CBU Plan"), a copy of the most recent actuarial report.
(c) All Company Plans and their related trusts have been and are
maintained both in form and in operation in material compliance with applicable
requirements of ERISA, the Code, and all other federal and state statutes and
regulations relating to employee benefit plans. No Company has any commitment or
obligation to establish or adopt any new or additional Company Plans or to
increase the benefits under any existing Company Plan. No Company is the plan
administrator of any of the Company Plans. All Company Plans are, for reporting
and disclosure purposes, calendar year plan ends.
(d) No employee pension plan (within the meaning of section 3(2) of
ERISA) maintained by any of the Companies or any entity that is required to be
treated as a single employer together with the Companies under Section 414 of
the Code ("ERISA Affiliates") which is subject to Section 412 of the Code has
had any "accumulated funding deficiency" (as such term is defined in Section 412
of the Code), whether or not waived, as of the last day of the most recent plan
year, and no unsatisfied liability to the Pension Benefit Guaranty Corporation
("PBGC") has been incurred with respect to any such plan by any Company.
(e) Each Company Plan intended to be "qualified" within the meaning
of Section 401(a) of the Code has been determined to be so qualified by the
appropriate District
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Director of the IRS. No such Company Plan has lost its qualified status and, to
the knowledge of Seller, there are no facts which would adversely affect the
qualified status of any Company Plan.
(f) No withdrawal liability has been incurred by or asserted against
any Company, or any of their ERISA Affiliates, with respect to any
"multiemployer plan" (within the meaning of Section 3(37) of ERISA), other than
a liability that has been fully satisfied.
(g) With respect to any arrangement of the type described in Section
2.11(a) above that would have been a Company Plan but for the fact that it is
not an arrangement maintained or contributed to by any of the Companies and is
not applicable to employees of any of the Companies but with respect to which
the Companies are or may be financially liable either as a result of a direct
sponsor's affiliation to the Companies (whether or not such affiliation exists
at the date of this Agreement and notwithstanding that the arrangement is not
maintained by any of the Companies for the benefit of its employees or former
employees), or under any common law successor doctrine, express successor
liability provisions of law, provisions of a collective bargaining agreement,
labor or employment law or agreement with a predecessor employer, the
representations made in (c) through (f) above are true.
Section 2.12 Labor and Employment Matters. Except as set forth in
Section 2.12 of the Seller Disclosure Letter:
(a) There are no (i) collective bargaining agreements or other labor
agreements relating to any Company or covering any employee to which any Company
is a party or by which it is bound; (ii) unfair labor practice complaints
against any Company, pending (or to the knowledge of Seller threatened) before
the National Labor Relations Board or any state or local agency with respect to
the operation of any Company; (iii) pending or threatened labor strikes or other
material labor troubles affecting any Company; or (iv) material labor grievances
pending against any Company.
(b) To the knowledge of Seller, there are no organizing activities
involving any non-union employees of any Company currently in progress.
(c) The employment relationship between each of the Companies and
each employee of the Companies is at-will.
(d) Each Company has at all times been in compliance, in all material
respects, with all applicable Laws relating to employment and employment
practices, including, but not limited to, those relating to the calculation and
payment of wages, equal employment opportunity (including, but not limited to,
Laws prohibiting discrimination and/or harassment on the basis of race, national
origin, religion, gender, disability, age, workers' compensation, or any other
protected classification), affirmative action, and other hiring practices,
occupational safety and health, immigration, workers' compensation,
unemployment, the payment of social security and other taxes, and unfair labor
practices under the National Labor Relations Act.
(e) There are no workers' compensation claims pending against any
Company, and to the knowledge of Seller, no facts exist that would give rise to
such a claim.
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(f) No employee of any Company is subject to any secrecy,
confidentiality, or noncompetition agreement or any other agreement or
restriction of any kind that would impede in any material respect the ability of
such employee to carry out fully all activities of such employee in furtherance
of any Company's business.
(g) As of the date of this Agreement, no current employee of any
Company is on a short or long-term disability leave or leave of absence.
(h) To the knowledge of Seller, there are no complaints,
controversies, lawsuits, or other proceedings pending against any Company
brought on behalf of any applicant for employment, any employee, or any former
employee, or classes of the foregoing, alleging breach of any express or implied
contract of employment, or violation of any Law governing employment or the
termination thereof, or any other discriminatory, wrongful, or tortious conduct
in connection with the employment relationship or termination thereof.
(i) To the knowledge of Seller, there are no pending or threatened
investigations, audits, complaints, or proceedings against any Company by or
before any governmental entity, respecting or involving any applicant for
employment, any employee, or any former employee, or any class of the foregoing,
including, but not limited to: (i) the Equal Employment Opportunity Commission
or any other corresponding state or local agency relating to any claim or charge
concerning discrimination, (ii) the United States Department of Labor or any
other corresponding state or local agency relating to any claim or charge
concerning hours or wages, (iii) the Occupational Safety and Health
Administration or any other corresponding state or local agency relating to any
claim or charge concerning the safety and health of employees or any former
employees, and (iv) the Office of Federal Contract Compliance or any
corresponding state agency.
(j) No Company is delinquent in payments to any employee or any
former employee for any wages, salaries, commissions, bonuses, or other direct
compensation for any services performed for it to the date hereof or amounts
required to be reimbursed to such employees or former employees.
(k) Each employee of a Company hired after November 8, 1986, has
completed and the Company has retained an Immigration and Naturalization Service
form I-9 in accordance with the applicable rules and regulations. No Company has
as an employee: (i) a non-immigrant employee whose status would terminate or
otherwise be affected by the business transaction consummated under this
Agreement or (ii) an alien who is authorized to work in the United States in
non-immigrant status.
(l) All handbooks and material written policies and procedures
relating to employment by any Company including, but not limited to,
compensation, benefits, equal employment opportunity, and safety are listed and
described on Section 2.12 of the Seller Disclosure Letter and true and correct
copies of all such documents have been provided to Buyer.
(m) A complete and accurate list of all employees of each Company as
of the date of this Agreement are listed and described on Section 2.12 of the
Seller Disclosure Letter.
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(n) Except as set forth in Section 2.12(n) of the Seller Disclosure
Letter, since the enactment of the Worker Adjustment and Retraining Notification
("WARN") Act of 1988, no Company has affected a "plant closing" (as defined in
the WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment of a facility of such Company, or
a "mass lay off" (as defined in the WARN Act) affecting any site of employment
or one or more facilities or operating units within any site of employment of a
facility of such Company; nor has any Company been affected by any transaction
or engaged in lay offs or employment terminations sufficient to trigger the
application of any similar state or local law, ordinance, or regulation. With
respect to each plant closing identified on Section 2.12(n) of the Seller
Disclosure Letter, all notices required to be provided under the WARN Act to any
employees affected by such plant closing and to any other persons or entities
were provided to such employees, persons or entities in compliance with the
notice requirements of the WARN Act such that no Company has any liability or
obligation arising under or in connection with the WARN Act.
Section 2.13 Taxes.
(a) Except as set forth in Section 2.13 of the Seller Disclosure
Letter, with respect to each Company, (i) all returns and forms with respect to
Taxes (as defined in Section 4.6(m) of this Agreement) (collectively, "Tax
Returns") required to be filed on or before the Closing Date have been or will
be timely filed in accordance with any applicable Laws, (ii) all Taxes shown to
have become due under such Tax Returns, all of which were correct and complete
in all respects, and all Taxes not shown on such Tax Returns which may become
due up to and including the Closing Date, have been or will be paid or have been
or will be reserved for on the balance sheets included in the Financial
Statements, in accordance with GAAP and consistent with past practices, and
(iii) all Laws have been complied with relating to the withholding of Taxes and
the payment thereof (including without limitation, withholding of Taxes under
Sections 1441 and 1442 of the Code) and timely and properly withheld from
individual employee wages and paid over to the proper governmental or regulatory
entity or authority all amounts required to be so withheld and paid over under
applicable Law.
(b) Except as set forth in Section 2.13 of the Seller Disclosure
Letter, with respect to each Company, (i) there is no action, suit, proceeding,
audit, written claim, asserted deficiency or assessment pending or proposed with
respect to Taxes or with respect to any Tax Return that has not been resolved
and paid in full, nor has there been any notice to any Company by any
governmental or regulatory entity or authority regarding any such Tax, audit or
other proceeding, or, to the knowledge of Seller or any Company, is any such Tax
audit or other proceeding threatened with regard to any Taxes or Tax Returns,
(ii) there are no waivers or extensions of any applicable statute of limitations
for the assessment or collection of Taxes with respect to any Tax Return which
remain in effect, nor is any request for such waiver or consent pending, (iii)
there are no material liens for Taxes upon the assets of any Company, except for
Liens for Taxes not yet due and payable or Liens for Taxes being contested in
good faith through appropriate proceedings and (iv) there have been no requests
for any extension of time within which to file any Tax Returns, which Tax
Returns has not since been filed.
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(c) With respect to each Company, no claim has ever been made by a
governmental or regulatory entity or authority in a jurisdiction where the
Company files no Tax Return that the Company is or may be subject to taxation.
(d) Section 2.13(d) of the Seller Disclosure Letter lists all
federal, state, local and foreign income Tax Returns filed with respect to each
Company for taxable periods ended on or after September 30, 1999, indicates
those Tax Returns that have been audited and indicates those Tax Returns that
currently are the subject of audit.
(e) With respect to each Company, no payment has been made, there is
no obligation to make any payment, nor is the Company a party to any agreement
or contract that would result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code
and the consummation of the transactions contemplated by this Agreement will not
be a factor causing payments to be made by the Company or any Tax Affiliate that
are not deductible (in whole or in part) as a result of the application of
Section 280G of the Code.
(f) No Company is required to include in income any adjustment under
Section 481(a) of the Code by reason of a voluntary change in accounting method
initiated by the Company or any Tax Affiliate as a result of the Tax Reform Act
of 1986 and neither the Company nor any Tax Affiliate has knowledge that the IRS
has proposed any such adjustment or change in accounting method.
(g) With respect to each Company, all transactions that could give
rise to an understatement of federal income tax (within the meaning of Section
6661 of the Code as it applied prior to repeal) or an underpayment of tax
(within the meaning of Section 6662 of the Code) were reported by the Company in
a manner for which there is substantial authority or were adequately disclosed
on the Returns required in accordance with Sections 6661(b)(2)(B) and
6662(d)(2)(B) of the Code.
(h) No Company has been a United States real property holding
corporation within the meaning in Section 897(c)(2) of the Code during the
applicable period specified in Section 987(c)(1)(A)(ii) of the Code.
(i) No Company has filed any consent under Section 341(f) of the Code
concerning collapsible corporations.
(j) No Company constitutes either a "distributing corporation" or a
"controlled corporation" (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of shares qualifying for tax-free treatment under
Section 355 of the Code (i) in the two years prior to the date of this Agreement
or (ii) in a distribution that could otherwise constitute part of a "plan" or
"series of related transactions" (within the meaning of Section 355(e) of the
Code) in conjunction with the purchase of the Shares.
Section 2.14 Title, Ownership and Related Matters.
(a) The real properties (collectively, the "Real Property") owned by
the Companies and listed in Section 2.14 of the Seller Disclosure Letter
constitute all of the real
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property owned, leased, used or occupied by Seller, Savannah or any Company in
connection with the DCB Business.
(b) None of Seller, Savannah or any Company has received any notice
of any zoning violation, or the existence of any condemnation proceeding with
respect to any of the Real Property. Other than matters that are the subject of
public record, Seller has no knowledge of: (i) improvements made or contemplated
to be made by any governmental entity or authority, the costs of which are to be
assessed as special Taxes or charges against any of the Real Property or (ii)
any present assessments or any agreements or contracts providing for future
assessments against any of the Real Property.
(c) The Companies have good and marketable title to, or a valid
leasehold interest in, the buildings, machinery, equipment and other tangible
assets and properties used or leased by them, wherever located, or shown in the
latest balance sheet included in the Financial Statements or acquired after the
date thereof and material to the conduct of the DCB Business as a whole as
presently conducted, free and clear of all Liens, except (i) as described in
Section 2.14 of the Seller Disclosure Letter, (ii) for Permitted Liens, (iii)
for properties and assets disposed of in the ordinary course of business since
the date of the latest balance sheet included in the Financial Statements and
(iv) for Liens that do not and would not materially interfere with the use of
such assets in connection with the DCB Business as presently conducted, none of
which is a Lien for borrowed money. For purposes of the preceding sentence, the
Companies shall be considered to have "good and marketable" title to the Real
Property if title to such Real Property is marketable for the use of the
affected Real Property in the DCB Business as conducted immediately prior to
Closing. None of Seller, Savannah or any Company possesses or is a party to, and
to the knowledge of Seller there does not exist any, agreement with any railroad
affecting any of the Real Property.
(d) All of the buildings, machinery, equipment and other tangible
assets and properties material to the conduct of the DCB Business are in good
condition and repair, ordinary wear and tear excepted, and are usable in the
ordinary course of business of the DCB Business as presently conducted.
(e) Except for (i) the transfer of assets contemplated by Sections
1.10, 1,11, 1.12 and 1.13, (ii) the sale of King and of real properties located
in Moore, Oklahoma and Wilmington, Massachusetts described in Section 4.14 and
(iii) the sale, prior to the date hereof, of Seller's nutritional products
business to Buyer, since November 2, 1998 none of the Companies has sold,
transferred or conveyed any business, whether through a sale of assets or the
sale of equity or other ownership interests, or any real property.
Section 2.15 Certain Contracts and Arrangements. Except for sales and
purchase orders entered into in the ordinary course of business consistent with
past practice, Section 2.15 of the Seller Disclosure Letter lists, as of the
date of this Agreement, the following agreements, contracts, commitments or
undertakings, whether oral or written, to which Seller, Savannah or ▇▇▇▇▇ is a
party relating to the operation of the DCB Business or to which any Company is a
party: (a) employment agreement or other contract for the employment of employee
or other person on a full-time or consulting basis or relating to severance pay
for any such person; (b) indenture, mortgage, note, installment obligation,
agreement or other instrument
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relating to the borrowing of money by a Company (other than intercompany
accounts which shall be governed by Section 1.8 of this Agreement) or to
mortgaging, pledging or otherwise placing a Lien on any of the assets of the DCB
Business, or the guaranty by a Company of any obligation for the borrowing of
money; (c) lease or agreement under which it is lessee of, or holds or operates
any real or personal property owned by any other party with an annual lease
payment in excess of $100,000; (d) lease or agreement under which it is lessor
of, or permits any third party to hold or operate, any property, real or
personal; (e) contract or group of related contracts with the same party in
excess of $100,000 for the purchase of products or services, including contracts
with third parties for the research, development, manufacture or packaging of
the products of the DCB Business or for the supply of raw materials,
ingredients, packaging materials or other supplies; (f) contract or group of
related contracts with the same party in excess of $100,000 for the sale of
products or services, including contracts with customers (except for sales and
purchase orders entered into in the ordinary course of business consistent with
past practice); (g) contract or group of related contracts with the same party
(other than any contract or group of related contracts for the purchase or sale
of products or services) in excess of $100,000 continuing over a period of more
than six months from the date or dates thereof, not terminable by it on 30 days
or less notice without penalty; (h) contract which prohibits Seller, Savannah or
▇▇▇▇▇ from freely engaging in the DCB Business anywhere in the world or any of
the Companies from freely engaging in any business anywhere in the world; (i)
contract for the distribution, marketing, advertising or promotion of any
products, including any distributor, sales, consulting, advertising, marketing,
promotional or merchandising contracts; (j) franchise agreement; (k) except as
set forth in Error! Reference source not found. of the Seller Disclosure Letter,
license agreement or agreement providing for the payment or receipt of royalties
or other compensation by the Seller, Savannah, ▇▇▇▇▇ or any of the Companies in
connection with the DCB Intellectual Property; (l) agreement for the sale of any
material assets; (m) confidentiality or nondisclosure agreement or contract
other than relating to the sale or transfer of the DCB Business or any portion
thereof and (n) other contract, agreement, commitment or undertaking, which
individually involves the receipt or payment after the date of this Agreement of
more than $100,000 on an annual basis. Except as set forth in Section 2.15 of
the Seller Disclosure Letter, all contracts, agreements, commitments and
undertakings of the Companies are valid, binding and obligations of the Company
or Companies party thereto, enforceable in accordance with their terms and, to
the knowledge of Seller, no Company or any other party thereto is in default of
any material term under any of such contract, agreement, commitment or
undertaking. There are no renegotiations of, attempts to renegotiate or
outstanding rights to renegotiate any material terms of any material contract,
agreement, commitment or undertaking of the Companies and no person or entity
has made written demand for such renegotiation. Prior to the date of this
Agreement, Seller has made available to Buyer a true and correct copy of each
contract, agreement, commitment or undertaking required to be disclosed in
Section 2.15 of the Seller Disclosure Letter, together with all amendments,
waivers or other changes thereto.
Section 2.16 Intellectual Property.
(a) Section 2.16 of the Seller Disclosure Letter lists all rights in
patents, patent applications, trademarks, service marks, trade names, corporate
names, logos, registered copyrights, domain names or other registered
intellectual property rights owned by, licensed (except for shrink-wrap software
licenses) to or otherwise controlled by any Company or used in, developed for
use in or necessary to the conduct of the DCB Business as now conducted or for
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the development or production of products that are currently in development,
except to the extent any such intellectual property rights are assigned or
licensed to Buyer under the Assignment Agreement or the License Agreement (such
intellectual property rights so assigned or licensed to Buyer, the "▇▇▇▇▇
Assigned/Licensed Intellectual Property"). The Companies own and possess all
right, title and interest, or hold a valid license, in and to the rights set
forth in Section 2.16 of the Seller Disclosure Letter and all designs, plans,
specifications, formulas, technical information, trade secrets, know-how and
other confidential proprietary information owned by, licensed to or otherwise
controlled by any of the Companies or used in, developed for use in or necessary
to the conduct of the DCB Business as now conducted, except for the ▇▇▇▇▇
Assigned/Licensed Intellectual Property (such intellectual property rights set
forth in Section 2.16 of the Seller Disclosure Letter, such designs, plans,
specifications, formulas, technical information, trade secrets, know how,
unregistered copyrightable materials and other confidential proprietary
information and the ▇▇▇▇▇ Assigned/Licensed Intellectual Property Rights, are
referred to as the "DCB Intellectual Property"). ▇▇▇▇▇ owns and possesses all
right, title and interest in and to the ▇▇▇▇▇ Assigned/Licensed Intellectual
Property. The DCB Intellectual Property constitutes all of the intellectual
property necessary for the conduct of the DCB Business as now conducted. Section
2.16 of the Seller Disclosure Letter lists all DCB Intellectual Property that
has been licensed to third parties and all DCB Intellectual Property that are
licensed from third parties.
(b) None of Seller, Savannah, ▇▇▇▇▇ or the Companies has received
any notice of, nor to the knowledge of Seller are there any facts which indicate
a likelihood of, any infringement or misappropriation by, or conflict from, any
third party with respect to the DCB Intellectual Property. No claim by any third
party contesting the validity of any DCB Intellectual Property has been made, is
currently outstanding or, to the knowledge of Seller, is threatened. None of
Seller, Savannah, ▇▇▇▇▇ or the Companies has received any notice of any
infringement, misappropriation or violation by Seller, Savannah, ▇▇▇▇▇ or any
Company of any intellectual property rights of any third parties in connection
with the conduct of the DCB Business, and, to the knowledge of Seller, none of
Seller, Savannah, ▇▇▇▇▇ or the Companies has infringed, misappropriated or
otherwise violated any such intellectual property rights in connection with the
conduct of the DCB Business. To Seller's knowledge, none of the DCB Intellectual
Property is invalid or unenforceable.
Section 2.17 Environmental.
(a) The Companies are currently, and have been operated by the
Companies, in compliance, in all material respects, with all Environmental Laws,
which compliance includes, without limitation, obtaining and complying with all
permits, licenses, authorizations and approvals ("Environmental Authorizations")
necessary to conduct the DCB Business, a complete and correct list of which is
set forth in Section 2.10(b) of the Seller Disclosure Letter. To Seller's
knowledge, there has been no past Remedial Action or non-compliance with
Environmental Law at any Property which would result in any Company incurring
any liability under Environmental Law. The Companies have filed all reports and
notifications required to be filed under applicable Environmental Law.
(b) There is no outstanding, or to the Seller's knowledge
threatened, notice of violation, order, demand, allegation, citation, directive,
summons, complaint, fine, penalty or
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claim arising under any Environmental Law against any of the Companies. No
Company has received written notice of any claim or proceeding (including but
not limited to any third-party claim, contribution action, administrative
proceeding or information request) relating to any Environmental Law or alleging
that such Company or the DCB Business or the Property is in violation of, or has
potential liability under, any Environmental Law.
(c) The Companies are not subject to any material (individually or
in the aggregate) outstanding, or to the Seller's knowledge threatened, written
orders or material contracts or claims with any governmental entity or other
person respecting (A) Environmental Laws, (B) Remedial Action or (C) any Release
or threatened Release of a Hazardous Materials.
(d) The Companies have not received any written communication
alleging, with respect to any such party, the violation of or liability under
any Environmental Law and the Companies have not entered into or been subject to
any consent decree, compliance order or other administrative order with respect
to any Environmental Laws.
(e) There are no underground storage tanks currently owned or
operated or located on any Property. All above ground tanks at any Property are
in compliance with Environmental Laws. There is no asbestos, asbestos containing
material or PCBs located on, in or upon any Property. Without limitation of the
foregoing, with respect to the blending property of the DCB Business located in
Mitchellville, Iowa, all underground storage tanks at such facility have been
removed and any such tanks so removed were installed prior to January 1, 1987.
(f) None of the Companies, Seller or Savannah maintains any
reserves for any liability under Environmental Law, and, to Seller's knowledge,
no Company has any liability under Environmental Law for any predecessor
companies or properties owned or operated by any predecessor companies. There
are no past or present events, conditions, circumstances, activities, practices,
incidents or actions of any of the Companies or to the knowledge of Seller, any
predecessor companies, either collectively, individually or severally, which
could reasonably be expected to have a Seller Material Adverse Effect.
(g) No Company, and to Seller's knowledge no other person or entity
for whose conduct a Company is or may be held responsible, has generated,
manufactured, refined, transported, treated, stored, handled, disposed,
transferred, produced or processed any Hazardous Materials, or any solid wastes
at any property, except in compliance, in all material respects, with all
applicable Environmental Laws. No Property is listed on the National Priorities
List or any other list, schedule, log, inventory or record, maintained by any
governmental agency with respect to sites from which there has been a Release or
threatened Release of Hazardous Materials. or any contamination. No part of the
Property was, to Seller's knowledge, ever used, nor is it now being used, (i) as
a landfill, dump, or other disposal, storage, transfer or handling area of
Hazardous Materials or (ii) for the dispensing of gasoline or other petroleum
fuels. Seller has no knowledge of the Release or threatened Release of any
Hazardous Materials at or in the vicinity of any Property.
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For purposes of this Agreement:
(A) "Environmental Law" means any currently applicable Law
regulating or prohibiting Releases into any part of the natural
environment, or pertaining to the protection of natural resources, the
environment and public and employee health and safety including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA") (42 U.S.C. Section 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.),
the Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act
(33 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. Section 7401 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Section 136 et seq.) and the Occupational
Safety and Health Act (29 U.S.C. Section 651 et seq.) ("OSHA") and the
regulations promulgated pursuant thereto, and any such applicable state
or local statutes, and the regulations promulgated pursuant thereto, as
such Laws have been and may be amended or supplemented through the date
of this Agreement;
(B) "Hazardous Materials" shall mean any pollutant, toxic
substance, hazardous waste, hazardous material, hazardous substance or
petroleum product as defined or regulated under any Environmental Law;
(C) "Property" means any real property owned, leased or operated by
the Companies;
(D) "Release" means any release, spill, effluent, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the environment, or into or out of any
property owned, operated or leased by the applicable party; and
(E) "Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by a governmental entity
or required under any Environmental Law, or voluntarily undertaken to (I)
clean up, remove, treat, or in any other way ameliorate or address any
Hazardous Materials or other substance in the indoor or outdoor
environment; (II) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Materials so it does not endanger or
threaten to endanger the public health or welfare of the indoor or
outdoor environment; (III) perform pre-remedial studies and
investigations or post-remedial monitoring and care pertaining or
relating to a Release; or (IV) bring the applicable party into compliance
with any Environmental Law.
Section 2.18 Insurance.
(a) Section 2.18(a) of the Seller Disclosure Letter sets forth a
list and brief description of all policies of insurance maintained, owned or
held by Seller, Savannah, the Companies or any of their affiliates on the date
of this Agreement with respect to the DCB Business or any of the Companies.
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(b) Seller, Savannah or the Companies has at all times maintained
insurance relating to the DCB Business and covering property, fire, casualty,
liability, workers' compensation and all other forms of insurance customarily
obtained by businesses in the same industry. Such insurance (i) is in full force
and effect, (ii) is sufficient for compliance with all requirements of
applicable Law and of any agreement or contract to which any of the Companies is
subject and (iii) is valid and enforceable.
(c) Seller shall keep or cause such insurance or comparable
insurance to be kept in full force and effect through the Closing Date. Seller
has complied in all material respects with each of such insurance policies and
has not failed to give any notice or present any claim thereunder in a due and
timely manner.
Section 2.19 Products.
(a) Section 2.19(a) of the Seller Disclosure Letter sets forth a
true and complete list of all products of the DCB Business, including all
products (i) currently being sold, manufactured or distributed ("Current
Products") or (ii) developed, manufactured, sold or distributed since January 1,
2000 that are not currently being sold, manufactured or distributed ("Past
Products" and together with Current Products, "Products") and all products
currently under research and development.
(b) Each Company has prepared, manufactured, had manufactured for
it and sold all Products (including Products in process and in inventory on the
Closing Date) in full compliance with the United States Food, Drug and Cosmetic
Act, as amended (the "Food and Drug Act"), and all rules and regulations
promulgated thereunder and all applicable federal, state and municipal laws and
regulations governing the purity of food sold for human consumption (the "Food
Laws"). All of the Current Products satisfy, and all of the Past Products
satisfied, all federal and state nutritional labeling requirements, including
all regulations under the Food Laws and all other such laws and regulations. All
ingredients used in the Current Products conform, and all of the ingredients
used in the Past Products conformed, to the requirements of the Food Laws and
all other such laws and regulations. All of the (i) Current Products in process
or in inventory on the Closing Date are not and (ii) Products manufactured or
packaged by or for any of the Companies at the time of delivery thereof to the
customers of the DCB Business were not, "adulterated" or "misbranded" within the
meaning of the Food Laws and regulations, nor did any such Products constitute
an article prohibited from introduction into interstate commerce under the Food
Laws at the time of such delivery.
(c) To the knowledge of Seller, all the ingredients in each of the
Current Products generally are available and Seller has no knowledge of any
imminent or threatened shortage of supply.
(d) None of Seller, Savannah or any of the Companies has, whether
voluntarily or as a result of any action by any governmental or regulatory
authority or trade or consumer group, recalled or withdrawn a Product for any
reason, including any manufacturing or labeling defect, impurity or
adulteration, or issued any press release or public statements containing any
statement advising its trade customers or consumers of the Products to treat
such products in any manner other than in the ordinary course.
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(e) Except for any warranty implied by law or any warranty included
in any agreement, contract, commitment or undertaking listed in Section 2.15 of
the Seller Disclosure Letter, none of Seller, Savannah or any of the Companies
has given any guaranty or warranty or made any representation in respect of
Products or services supplied or agreed to be supplied by any of the Companies,
or has accepted any liability or obligation in respect of any such Products or
services which would apply after any such Products or services have been
supplied.
Section 2.20 Inventory. Subject to any reserve for inventory on the
face of the latest balance sheet included in the Financial Statements, the
inventory of raw materials, work in process, supplies and finished goods of each
of the Companies consists of items of a quality and quantity usable and, with
respect to finished goods only, salable, in each case, in the ordinary course of
business. Each of the Companies has on hand or has ordered and expects timely
delivery of such quantities of raw materials and supplies and has on hand such
quantities of work in process and finished goods as are reasonably required to
fill current orders on hand in a timely manner and to maintain the manufacture
and shipment of products at its normal level of operations.
Section 2.21 Customers and Suppliers.
(a) Section 2.21(a) of the Seller Disclosure Letter lists the 10
largest customers and the 10 largest suppliers of the Companies relating to the
DCB Business for each of the twelve-month periods ended September 30, 2001 and
September 30, 2002 and sets forth opposite the name of each such customer or
supplier the approximate percentage of net sales or purchases by the Companies
attributable to such customer or supplier for each such period. No customer or
supplier listed on Section 2.21(a) of the Seller Disclosure Letter has
communicated in writing or, to the knowledge of Seller, otherwise indicated that
it will stop or decrease the rate of business done with any of the Companies
except for changes in the ordinary course of business of the Companies.
(b) Section 2.21(b) of the Seller Disclosure Letter sets forth a
true and complete list, for each of the ten largest customer groups (as defined
below), of each discount, allowance, ▇▇▇▇-back price concession, volume
incentive, rebate, deal or other customer or consumer trade promotion program,
whether formal or informal, in each case to the extent identifiable and
available, utilized by any of the Companies during each of the twelve-month
periods ended September 30, 2001 and September 30, 2002, and for each such item
provides the amount of the total sales of the DCB Business attributable to such
item during each such period. For purposes of this Section 2.21, "customer
group" means (i) chain accounts (such customers who make purchases on an
aggregated basis through headquarters accounts) and (ii) national distributors.
Section 2.22 Accounts Receivable. Solely with respect to accounts
receivable of the DCB Business that are not transferred to Seller, Savannah or
their affiliates in accordance with Section 1.9(a) of this Agreement, all such
accounts receivable of each of Seller, Savannah and the Companies with respect
to the DCB Business are reflected properly on their books and records, are
valid, have arisen from bona fide transactions in the ordinary course of
business and are subject to no setoff or counterclaim. Except as disclosed in
the accounts receivable aging report attached to Section 2.22 of the Seller
Disclosure Letter, none of such accounts receivable
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is outstanding sixty days beyond the date of the aging report. The accounts
receivable reserves on the face of the September 30, 2002 balance sheet included
in the Financial Statements have been established based on the past practices of
the DCB Business and, in light of the collections experience of the DCB
Business, are, to Seller's knowledge, adequate to cover accounts receivable in
existence as of the date of such balance sheet that are not collectible in
accordance with their terms.
Section 2.23 Books and Records. The books of account of the Companies
are complete and correct in all material respects and have been maintained in
accordance with sound business practices, including the maintenance of an
adequate system of internal controls. The minute books of the Companies contain
accurate records of all meetings held and actions taken by the holders of stock
or other equity interests, the boards of directors and committees of the boards
of directors or other governing body of each of the Companies, and no meeting of
any such holders, boards of directors or other governing body or committees has
been held for which minutes are not contained in such minute books. The stock or
equity records of the Companies, all of which have been made available to Buyer,
are accurate and complete. At the Closing, all such books and records will be in
the possession of Seller or Savannah.
Section 2.24 Affiliate Transactions. No Insider (as defined below)
has any agreement, contract or arrangement with Seller, Savannah or any of the
Companies (other than employment not represented by a written Contract and
terminable at will) or any interest in any assets (whether real, personal or
mixed, tangible or intangible) used in or pertaining to the business of Seller
or Savannah related to the DCB Business or any of the Companies (other than
ownership of capital stock of Seller). To Seller's knowledge, no Insider has any
material direct or indirect interest in any competitor, supplier or customer of
any of the Companies or in any person or entity from whom or to whom any of the
Companies leases any property, or in any other person or entity with whom any of
the Companies otherwise transacts business of any nature. Section 2.24 of the
Seller Disclosure Letter lists all transactions between any of the Companies and
each Insider for the last three years (other than transactions arising in the
ordinary course of business in connection with routine employment matters (such
as routine payroll and benefit plan administration transactions)). For purposes
of this Agreement, "Insider" means (i) a shareholder, officer, director or
employee of Seller, Savannah or any of the Companies, (ii) any member of the
immediate family of any shareholder, officer, director or employee of Seller,
Savannah or any of the Companies or (iii) any entity in which any of the persons
described in clause (i) or (ii) owns any beneficial interest (other than less
than one percent of the stock of any publicly held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market).
Section 2.25 Brokers; Finders and Fees. Except for Banc of America
Securities LLC, whose fees will be paid by Seller, none of Seller, Savannah or
any Company has employed any investment banker, broker or finder or incurred or
will incur any liability for any investment banking fees, brokerage fees,
commissions or finders' fees in connection with this Agreement or the
transactions contemplated by this Agreement.
Section 2.26 Availability of Documents. Seller has made available to
Buyer correct and complete copies of the items referred to in the Seller
Disclosure Letter or in this
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Agreement (and in the case of any items not in written form, a correct and
complete written description thereof).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
Section 3.1 Organization; Etc. Buyer (a) is a corporation duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its organization, (b) has all requisite corporate power and
authority and all authorizations, licenses, permits and certifications to own,
lease and operate all of its properties and assets and to carry on its business
as now being conducted, and (c) is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership, operation or leasing of its properties makes such qualification
necessary, except where the failure to be so organized, existing and in good
standing, to have such power or authority or to be so qualified would not,
individually or in the aggregate, have a Buyer Material Adverse Effect (as
defined below). As used in this Agreement, the term "Buyer Material Adverse
Effect" shall mean an event, change or circumstance which would adversely affect
the ability of Buyer to consummate the transactions contemplated by this
Agreement.
Section 3.2 Authority Relative to this Agreement. Buyer has all
requisite corporate power and authority to execute and deliver this Agreement
and each Ancillary Agreement and to consummate the transactions contemplated by
this Agreement and the Ancillary Agreements. The execution and delivery of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements have been duly and
validly authorized by all requisite corporate action on the part of Buyer. This
Agreement has been and each Ancillary Agreement will, as of Closing, have been
duly and validly executed and delivered by Buyer, and assuming this Agreement
and each such Ancillary Agreement has been duly authorized, executed and
delivered by Seller or Savannah and the other parties thereto, constitutes or
will constitute, as applicable, a valid and binding agreement of Buyer,
enforceable against Buyer in accordance with its terms, except that (a) such
enforcement may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other laws, now or hereafter in effect,
relating to or limiting creditors' rights generally and (b) enforcement of this
Agreement and the Ancillary Agreements, including, among other things, the
remedy of specific performance and injunctive and other forms of equitable
relief, may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
Section 3.3 Consents and Approvals; No Violations. Except for
applicable requirements of the HSR Act, neither the execution and delivery of
this Agreement or any Ancillary Agreement by Buyer nor the consummation by Buyer
of the transactions contemplated by this Agreement and the Ancillary Agreements
will (a) conflict with or result in any breach of any provision of the
certificate of incorporation or by-laws of Buyer, (b) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, acceleration or
the loss of a benefit) under, or
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require any consent under or result in the creation of any Lien under any note,
bond, mortgage, deed of trust, indenture, lease, license, commitment, contract,
agreement or other instrument, obligation or arrangement to which Buyer is a
party or by which Buyer or its properties or assets may be bound or affected,
(c) violate or conflict with any Laws applicable to Buyer or any of its
properties or assets, or (d) require any notice to, filing with, or the
obtaining of any permit, authorization, consent or approval of or any action by,
any governmental or regulatory authority, domestic or foreign, except in the
case of clauses (b), (c) and (d) of this Section 3.3 for any such violations,
breaches, defaults, rights of termination, cancellation or acceleration or
requirements which, individually or in the aggregate, would not have a Buyer
Material Adverse Effect, or which become applicable as a result of the business
or activities in which Seller is or proposes to be engaged or as a result of any
acts or omissions by, or the status of any facts pertaining to, Seller.
Section 3.4 Acquisition of Shares for Investment. Buyer is acquiring
the Shares for investment and not with a view toward, or for sale in connection
with, any distribution thereof, nor with any present intention of distributing
or selling such Shares. Buyer agrees that the Shares may not be sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed of
without registration under the Securities Act of 1933, as amended, and any
applicable state securities laws, except under an exemption from such
registration under such Act and such laws.
Section 3.5 Availability of Funds. Buyer currently has sufficient
immediately available funds in cash or cash equivalents and will at the Closing
have sufficient immediately available funds, in cash, to pay the Purchase Price
and to pay any other amounts payable under this Agreement and to effect the
transactions contemplated by this Agreement, all without any third-party consent
or approval required.
Section 3.6 Litigation. There is no claim, action, suit, proceeding
or, to the knowledge of Buyer, governmental investigation pending or, to the
knowledge of Buyer, threatened against Buyer by or before any court or
governmental or regulatory authority which, individually or in the aggregate,
would have a Buyer Material Adverse Effect.
Section 3.7 Investigation by Buyer; Seller's Liability. Buyer has
conducted its own independent review and analysis of the business, operations,
assets, liabilities, results of operations, financial condition, software,
technology and prospects of the DCB Business and acknowledges that Buyer has
been provided access to the personnel, properties, premises and records of the
DCB Business for such purpose. In entering into this Agreement, Buyer has relied
solely upon its own investigation and analysis, and Buyer: (a) acknowledges that
none of Seller, Savannah, the Companies or any of their respective directors,
officers, shareholders, employees, affiliates, controlling persons, agents,
advisors or representatives makes or has made any representation or warranty,
either express or implied, as to the accuracy or completeness of any of the
information provided or made available to Buyer or its directors, officers,
employees, affiliates, controlling persons, agents or representatives; and (b)
agrees, to the fullest extent permitted by law, that none of Seller, Savannah,
the Companies or any of their respective directors, officers, employees,
shareholders, affiliates, controlling persons, agents, advisors or
representatives shall have any liability or responsibility whatsoever to Buyer
or its directors, officers, employees, affiliates, controlling persons, agents
or representatives on any basis
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(including, without limitation, in contract or tort, under federal or state
securities laws or otherwise) resulting from the distribution to Buyer, or
Buyer's use of, any information included in the Confidential Information
Memorandum dated July 2002 and any information, document, or material provided
or made available, or statements made, to Buyer (including its directors,
officers, employees, affiliates, controlling persons, advisors, agents or
representatives) in any "data rooms," management presentations or supplemental
due diligence information provided to Buyer (including its directors, officers,
employees, affiliates, controlling persons, advisors, agents or representatives)
in connection with discussions or access to management of the DCB Business or in
any other form in expectation of the transactions contemplated by this
Agreement, except that the foregoing limitations shall not apply to the extent
Seller makes the specific representations and warranties set forth in Article II
of this Agreement, but always subject to the limitations and restrictions
contained in this Agreement.
Section 3.8 Brokers; Finders and Fees. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇
Barney, whose fees will be paid by Buyer, neither Buyer nor any of its
affiliates has employed any investment banker, broker or finder or incurred any
liability for any investment banking, financial advisory or brokerage fees,
commissions or finders' fees in connection with this Agreement or the
transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.1 Conduct of Business. During the period from the date of
this Agreement to and including the Closing Date, except as otherwise
contemplated by this Agreement or the transactions contemplated by this
Agreement or consented to by Buyer in writing, Seller shall cause each Company:
(a) to conduct its business and operations in the ordinary course
consistent with past practice and in accordance with all applicable Laws;
(b) use commercially reasonable efforts to preserve its business
organization and goodwill, keep available the services of its officers,
employees and consultants and maintain satisfactory relationships with vendors,
customers and others having business relationships with it and
(c) not to:
(i) sell, lease, license or dispose of any interest in any of
its material properties or assets;
(ii) make any loans, advances (other than advances to Seller,
Savannah or other Companies in the ordinary course of business and
consistent with past practice and only so long as any such advance is
taken into account in the calculation of Working Capital in accordance
with Section 1.9) or capital contributions to, or investments in, any
other person (other than other Companies);
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(iii) terminate or amend any contract required to be disclosed
in Section 2.15 of the Seller Disclosure Letter other than in the
ordinary course of business consistent with past practice;
(iv) enter into any contract or agreement that would have been
required to be disclosed in Section 2.15 of the Seller Disclosure
Letter if such contract or agreement had been in effect on the date of
this Agreement other than customer contracts, product purchase
agreements or renewals of existing agreements or otherwise in the
ordinary course of business consistent with past practice;
(v) enter into any employment agreement with any employee or
increase in any manner the compensation of any of the officers,
directors, consultants or other employees of the Company, except for
such increases as are granted in the ordinary course of business in
accordance with its customary practices (which shall include normal
periodic performance reviews and related compensation and benefit
increases);
(vi) adopt, grant, extend or increase the rate or terms of any
bonus, insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with any such officers or employees of the
Company, except increases required by any applicable Law;
(vii) make any change in any of its present accounting methods
and practices, except as required by changes in GAAP;
(viii) incur any indebtedness for borrowed money, issue any debt
securities or assume, guarantee or endorse the obligations of any other
persons other than endorsements for collection in the ordinary course
of business;
(ix) take any action that would render, or which reasonably
may be expected to render, any representation or warranty made by
Seller in this Agreement untrue at the Closing, including any actions
referred to in Section 2.8;
(x) cancel or terminate its current insurance policies or
allow any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse replacement policies
providing coverage equal to or greater than the coverage under the
canceled, terminated or lapsed policies for substantially similar
premiums are in full force and effect; or
(xi) with respect to Taxes, except as set forth in Section
4.1(c)(xi) of the Seller Disclosure Letter: (A) make or rescind any
express or deemed election or take any other discretionary position
without the consent of Buyer (which consent will not be unreasonably
withheld or delayed), (B) amend any return, (C) settle or compromise
any Litigation, or (D) change any of its methods of reporting income or
deductions for federal or state income Tax purposes from those employed
in the preparation of the last filed federal or state income Tax
returns.
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Section 4.2 Access to Information; Confidentiality.
(a) From the date of this Agreement to the Closing, Seller will cause
the Companies to (i) give Buyer and its authorized representatives reasonable
access to all books, business and financial records, personnel, technology,
processes, business plans, budgets and projections, offices and other facilities
and properties of the Companies and their accountants, (ii) permit Buyer to make
such copies and inspections thereof as Buyer may reasonably request, and (iii)
cause the Companies' officers, as applicable, to furnish Buyer with such
financial and operating data and other information with respect to the business
and properties of the Companies as Buyer may from time to time reasonably
request; provided, however, that any such access shall be conducted at Buyer's
risk and expense, at a reasonable time, under the supervision of Seller,
Savannah or the Companies' personnel and in such a manner as to maintain the
confidentiality of this Agreement and the transactions contemplated by this
Agreement and not to interfere unreasonably with the operation of the businesses
of Seller, Savannah or the Companies. Buyer will not contact any suppliers,
customers and prospective customers of the Companies in regard to the DCB
Business without Seller's prior written consent, which consent shall not be
unreasonably withheld and which consent shall be granted no later than five
business days prior to the Closing. When such consent is granted, Seller will
cause each of the Companies, and their officers and employees, to cooperate
fully (including providing introductions where necessary) with Buyer to enable
Buyer to contact third parties, including suppliers, customers and prospective
customers of the Companies. Notwithstanding anything in this Section 4.2 to the
contrary, Seller shall not be required to provide, or to cause any of the
Companies to provide, any information under this Section 4.2(a) that is subject
to attorney-client privilege or subject to a confidentiality agreement with a
third party (such information, "Privileged Information"); provided, however,
that with respect to any information that Seller claims is Privileged
Information (i) Seller agrees to provide to Buyer a brief description of the
subject matter of the Privileged Information and (ii) Seller and Buyer agree to
cooperate with each other and to enter into arrangements reasonably acceptable
to each party to provide as much detail concerning the Privileged Information as
possible while still protecting the privileged and confidential nature of such
Privileged Information (a "Privilege Arrangement"); provided further, that Buyer
shall not be required to consummate the transactions contemplated by this
Agreement in the event Buyer reasonably determines either: (x) that any
Privileged Information being withheld from Buyer is material to an understanding
of the business, prospects, financial condition or results of operations of the
DCB Business or (y) that any Privilege Arrangement with respect to such
Privileged Information is not sufficient to allow Buyer to evaluate the impact
of the Privileged Information on the business, prospects, financial condition or
results of operations of the DCB Business (collectively, the "Privilege Closing
Conditions").
(b) All such information and access provided or granted pursuant to
Section 4.2(a) shall be subject to the terms and conditions of the letter
agreement (the "Confidentiality Agreement"), between Buyer and Seller, dated
October 29, 2002. The Confidentiality Agreement will terminate effective as of
the Closing.
(c) Seller will, and will cause its affiliates to, keep confidential
and protect, and will not divulge, allow access to or use in any way, (i) the
DCB Intellectual Property (except to the extent subject to and in accordance
with the License Agreement), (ii) any and all
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information of Seller, Savannah or the Companies concerning the DCB Business and
(iii) any and all notes, analyses, compilations, studies, summaries and other
material containing or based, in whole or in part, on any information of Seller,
Savannah or the Companies included in the foregoing ("Confidential
Information"). Seller acknowledges that such Confidential Information
constitutes a unique and valuable asset, and that any disclosure or other use of
such Confidential Information in breach of this Section 4.2 would be wrongful
and would cause irreparable harm to Buyer. The foregoing obligations of
confidentiality will not apply to any Confidential Information (i) that is now
or subsequently becomes generally publicly known, other than as a direct or
indirect result of the breach of this Agreement by Seller or any of its
affiliates or (ii) that Seller or any of its affiliates receives from a third
party without obligation of confidentiality or (iii) that Seller or any of its
affiliates independently develops after the Closing.
(d) Seller agrees that the provisions and restrictions contained in
Section 4.2(c) hereof are necessary to protect the legitimate continuing
interests of Buyer in acquiring the DCB Business and entering into this
Agreement, that agreements contained in Section 4.2(c) have been specifically
bargained for, that any violation or breach of such provisions and restrictions
will result in irreparable injury to Buyer for which a remedy at law would be
inadequate and that, in addition to any relief at law which may be available to
Buyer for such violation or breach and regardless of any other provision
contained in this Agreement, Buyer will be entitled to injunctive and other
equitable relief restraining such violation or breach (without any requirement
that Buyer provide any bond or other security).
(e) In the event that Seller is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand or similar process) to
disclose any Confidential Information, Seller shall notify Buyer promptly of the
request or requirement so that Buyer may seek an appropriate protective order or
waive compliance with the provisions of Section 4.2(c). If, in the absence of a
protective order or the receipt of a waiver hereunder, Seller is, on the advice
of counsel, compelled to disclose any Confidential Information to any tribunal
or else stand liable for contempt, Seller may disclose the Confidential
Information to the tribunal; provided, however, that Seller will use its best
efforts to obtain, at the request of Buyer, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Buyer designates.
(f) Effective upon the Closing, Seller shall assign to Buyer all of
Seller's right, title and interest in and to any confidentiality agreements to
which Seller or any agent of Seller may be a party relating to the
confidentiality of information of the DCB Business, or, if a confidentiality
agreement applies also to confidential information retained by Seller or any
affiliate, the Seller shall assign its rights, title and interest to the extent
the confidentiality agreement relates to confidential information that is not
retained.
Section 4.3 Consents; Cooperation.
(a) Each of Seller and Buyer shall cooperate, and use its
commercially reasonable efforts, to make all filings and obtain all licenses,
permits, consents, approvals, authorizations, qualifications and orders of
governmental authorities and other third parties necessary to consummate the
transactions contemplated by this Agreement; provided, however,
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that, notwithstanding the foregoing, (i) the actions of Seller and Buyer with
respect to filings, approvals and other matters pursuant to the HSR Act and any
local, state, federal (other than the HSR Act) or foreign antitrust statute,
antitrust law, antitrust regulation or antitrust rule applicable to Seller,
Savannah, the Companies or Buyer ("Other Antitrust Regulations") shall be
governed by subsections (b), (c), (d) and (e) of this Section 4.3, (ii) Seller
will obtain, or will cause Savannah and each the Companies to obtain, all
licenses, permits, consents, approvals, authorizations, qualifications and
orders required for the consummation of the transactions contemplated by this
Agreement listed on Exhibit F (the "Closing Condition Consents") and (iii)
Seller will use its best efforts to obtain all consents and approvals required
from its lenders in connection with the transactions contemplated by this
Agreement, all of which consents and approvals are listed on Exhibit G (the
"Seller Lender Approvals"), other than the consents and approvals of General
Electric Capital Corporation and of ▇▇▇▇▇▇ Trust and Savings Bank and other
associated lenders under Seller's credit facilities, which consents and
approvals have been obtained as of the date hereof.
(b) Seller and Buyer shall file with (i) the United States Federal
Trade Commission (the "FTC") and the United States Department of Justice (the
"DOJ"), the notification and report form required for the transactions
contemplated by this Agreement and any supplemental information requested in
connection with such notification and report form pursuant to the HSR Act and
(ii) any other applicable governmental or regulatory entity, all filings,
reports, information and documentation required for the consummation of the
transactions contemplated by this Agreement pursuant to the Other Antitrust
Regulations. Each of Seller and Buyer shall furnish to each other's counsel such
necessary information and reasonable assistance as the other party may request
in connection with its preparation of any filing or submission that is necessary
under the HSR Act and Other Antitrust Regulations. Each of Seller and Buyer
shall consult with each other as to the appropriate time of making such filings
and submissions and shall use commercially reasonable efforts to make such
filings and submissions at the agreed upon time.
(c) Each of Seller and Buyer shall keep each other apprised of the
status of any communications with, and any inquiries or requests for additional
information from, the FTC and the DOJ and other governmental or regulatory
entities and shall comply promptly with any such inquiry or request.
(d) Buyer and Seller shall, and Seller shall cause Savannah and the
Companies to, use commercially reasonable efforts to obtain an early termination
of the applicable waiting period under the HSR Act and Other Antitrust
Regulations; provided, that Buyer will not be required to dispose of, hold
separately or make any change in, any portion of its business or assets (or the
business or assets of the Companies) or incur any other material burden.
(e) With respect to any agreements for which any required consent or
approval is not obtained prior to the Closing (other than a Closing Condition
Consent which Seller shall obtain or cause to be obtained prior to Closing),
Seller and Buyer will each use its commercially reasonable efforts to obtain any
such consent or approval after the Closing Date until such consent or approval
has been obtained and Seller will provide Buyer or any Company with the same
benefits arising under such agreements, including performance by either Seller
or
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Savannah as agent, if legally and commercially feasible, provided that Buyer
will provide or cause the Companies to provide Seller with such access to the
premises, books and records and personnel as is necessary to enable Seller to
perform its obligations under such agreements and Buyer and the Companies shall
pay or satisfy the corresponding liabilities for the enjoyment of such benefits
to the extent Buyer or any Company would have been responsible therefor if such
consent or approval had been obtained.
(f) With respect to any agreements that relate primarily to the DCB
Business to which Seller or any of its affiliates is a party and to which any of
the Companies is not a party, prior to or at the Closing (or if requested by
Buyer, after the Closing), Seller shall, and shall cause each such affiliate to,
cause each such agreement to be assigned to Brands or such other of the
Companies designated by Buyer.
(g) With respect to the software licenses and other rights to use
software noted in Section 2.16(a)(3) of the Seller Disclosure Letter, after the
Closing Seller shall use its best efforts to, and shall cause each affiliate of
Seller to use its best efforts to, at Seller's expense, obtain an assignment to
Brands or such other of the Companies designated by Buyer of, or the right of
Brands or such other of the Companies designated by Buyer to use, each such
license and right. Until such assignment has been completed, Seller will provide
Buyer or any Company with the benefits of such software licenses and other
software rights, and Buyer and the Companies shall pay or satisfy the
corresponding liabilities for the enjoyment of such benefits to the extent Buyer
or any Company would have been responsible therefor if such assignment had
occurred. Buyer will provide such assistance as Seller may reasonably request in
connection with obtaining the assignment of or the right to use any such
software licenses or other rights to use software.
Section 4.4 Commercially Reasonable Efforts. Each of Seller and Buyer
shall cooperate, and use commercially reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable Laws to consummate the transactions contemplated
by this Agreement.
Section 4.5 Public Announcements. Prior to the Closing, except as
otherwise agreed to by the parties, the parties shall not issue any report,
statement or press release or otherwise make any public statements with respect
to this Agreement and the transactions contemplated by this Agreement, except as
in the reasonable judgment of the party may be required by Law or in connection
with its obligations as a publicly held, exchange-listed or Nasdaq-quoted
company, in which case the parties will use commercially reasonable efforts to
reach mutual agreement as to the language of any such report, statement or press
release. Upon the Closing, Seller and Buyer will consult with each other with
respect to the issuance of a joint report, statement or press release with
respect to this Agreement and the transactions contemplated by this Agreement.
Section 4.6 Tax Matters.
(a) Tax Treatment. Seller and Buyer hereby agree that an election
under Section 338 of the Code (or any similar provision of the law of any
country or taxing jurisdiction) will not be made with respect to the sale of the
Shares under this Agreement.
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(b) Indemnification.
(i) Seller's Indemnification of Buyer. Seller shall indemnify
Buyer from, against and in respect of any Taxes (as defined in Section
4.6(m) of this Agreement) imposed on any Company with respect to any
taxable period, or portion thereof, ending on or before the Closing Date.
Seller shall indemnify Buyer from, against and in respect of any Taxes (as
defined in Section 4.6(m) of this Agreement) which may be imposed on the
Companies because of the matters listed at Section 2.13(a) of the Seller
Disclosure Letter. Seller shall indemnify Buyer for any liability of any of
the Companies for Taxes of any person other than any of the Companies, (A)
under Treasury Regulations Section 1.1502-6 (or any similar provision of
state, local or foreign law) and (B) as a result of an express or implied
obligation to indemnify any other person, provided, however, in each case
such Taxes are attributable to a taxable period ending on or before the
Closing Date.
(ii) Buyer's Indemnification of Seller. Buyer shall indemnify
Seller from, against and in respect of any liability of Seller or its
subsidiaries for (A) any Taxes imposed on any Company with respect to any
taxable period, or portion thereof, beginning on or after the Closing Date
and (B) any Transfer Taxes for which Buyer is liable under Section 4.6(g)
of this Agreement.
(c) Computation of Tax Liabilities.
(i) Proration of Taxes and Earnings and Profits. To the extent
permitted by law or administrative practice, the taxable years of the
Companies shall end on and include the Closing Date. Whenever it is
necessary to determine the liability for Taxes, or the earnings and
profits, of any Company for a portion of a taxable year or period that
begins before and ends after the Closing Date, the determination of the
Taxes or the earnings and profits for the portion of the year or period
ending on, and the portion of the year or period beginning after, the
Closing Date shall be determined by assuming that the taxable year or
period ended on and included the Closing Date, except that exemptions,
allowances or deductions that are calculated on an annual basis shall be
prorated on the basis of the number of days in the annual period elapsed
through the Closing Date as compared to the number of days in the annual
period elapsing after the Closing Date.
(ii) Standalone Basis. Whenever it is necessary to determine the
liability of any Company for Taxes, such liability shall be computed as if
the Company was not a member of Seller's consolidated, affiliated, combined
or unitary group for Tax purposes.
(d) Tax Sharing Agreements. All tax sharing agreements or similar
agreements to which any of the Companies is a party will terminate on or prior
to the Closing Date, and none of the Companies will have any liabilities under,
or otherwise be bound by, such agreements after the Closing Date.
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(e) Tax Returns.
(i) Seller shall prepare, or cause to be prepared, and file or
cause to be filed when due Tax Returns with respect to the Companies for
any taxable period, or portion thereof, ending on or before the Closing
Date which are required or permitted by law or administrative practice to
be filed with respect to a taxable period, or portion thereof, ending on or
before the Closing Date, and will provide Buyer with a copy of such
applicable final draft federal income and state income Tax Returns
(excluding payroll taxes) and necessary supporting schedules with respect
to each Company at least five days before filing such Tax Returns. If (x)
Buyer objects to a position taken on any such draft Tax Return, (y) Buyer
notifies Seller of such objection within three days of receiving such draft
Tax Return from Seller, and (z) Buyer and Seller cannot reach agreement on
how to report such disputed position on such Tax Return, then the position
that is to be taken on the final Tax Return shall be resolved in accordance
with Section 4.6(i). If a resolution cannot be made pursuant to Section
4.6(i) prior to the due date of such Tax Return, Seller shall seek an
extension to file such Tax Return. If an extension is not available, Seller
shall file such Tax Return reporting the disputed issue consistent with
Seller's position and Seller shall agree to file an amended return if the
resolution process of Section 4.6(i) determines that a position different
from that taken on the filed Tax Return should have been taken.
(ii) Buyer shall prepare, or cause to be prepared, and file or
cause to be filed when due all other Tax Returns with respect to the
Companies required to be filed with respect to a taxable period, or portion
thereof, ending after the Closing Date.
(iii) If either Buyer or Seller may be liable for any material
portion of the Tax payable in connection with any Tax Return to be filed by
the other, the party responsible under this Agreement for filing such
return (the "Preparer") shall prepare and deliver to the other party (the
"Payor") a copy of such return and any schedules, work papers and other
documentation then available that are relevant to the preparation of the
portion of such return for which the Payor is or may be liable under this
Agreement not later than 20 days before the Due Date (as defined in Section
4.6(a) of this Agreement). The Preparer shall not file such return until
the earlier of either the receipt of written notice from the Payor
indicating the Payor's consent thereto, or the Due Date.
The Payor shall have the option of providing to the Preparer, at any
time at least 15 days prior to the Due Date, written instructions as to how
the Payor wants any, or all, of the items for which it may be liable
reflected on such Tax Return. The Preparer shall, in preparing such return,
cause the items for which the Payor is liable under this Agreement to be
reflected in accordance with the Payor's instructions (unless, in the
opinion of a partner of a nationally recognized law firm retained by the
Preparer, complying with the Payor's instructions would likely subject the
Preparer to any criminal penalty or to civil penalties under sections 6662
through 6664 of the Code or similar provisions of applicable state, local
or foreign laws) and, in the absence of having received such instructions,
in accordance with past practice.
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If the Preparer fails to satisfy its obligations under this Section
4.6(d), the Payor shall have no obligation to indemnify the Preparer for
any Taxes which are reflected on any such return or any related Loss, and
shall retain any and all remedies it may otherwise have which arise out of
such failure.
(f) Contest Provisions.
(i) Notification of Contests. Each of Buyer, on the one hand,
and Seller, on the other hand (the "Recipient"), shall notify the chief tax
officer of Seller or Buyer, as the case may be, in writing within 15 days
of receipt by the Recipient of written notice of any pending or threatened
audits, adjustments or assessments (a "Tax Audit") which are likely to
affect the liability for Taxes of such other party. If the Recipient fails
to give such prompt notice to the other party, it shall not be entitled to
indemnification for any Taxes arising in connection with such Tax Audit if
such failure to give notice adversely affects the other party's right to
participate in the Tax Audit.
(ii) Which Party Controls.
(A) Seller's Items. If such Tax Audit relates to any taxable period,
or portion thereof, ending on or before the Closing Date or for any Taxes
for which Seller are liable in full under this Agreement, Seller shall, at
its expense, control the defense and settlement of such Tax Audit.
(B) Termination of Defense and Settlement. Notwithstanding any other
provision to the contrary, Buyer in its sole and absolute discretion, may
notify Seller at any time that any such defense and settlement of such Tax
Audit, relating to Taxes for which Seller is required to indemnify the
Buyer pursuant to Section 4.6(b)(i), must be immediately terminated in
which case any obligation with respect to Seller to make indemnification
payments to the Buyer with respect to such Tax Audit shall thereupon
terminate.
(C) Buyer's Items. If such Tax Audit relates to any taxable period,
or portion thereof, beginning on or after the Closing Date or for any Taxes
for which Buyer is liable in full under this Agreement, Buyer shall, at its
expense, control the defense and settlement of such Tax Audit.
(D) Combined and Mixed Items. If such Tax Audit relates to Taxes for
which both Seller and Buyer are liable under this Agreement, to the extent
practicable such Tax Items (as defined in Section 4.6(a) of this Agreement)
will be distinguished and each party will control the defense and
settlement of those Taxes for which it is so liable.
If such Tax Audit relates to a taxable period, or portion thereof,
beginning before and ending after the Closing Date and any Tax Item cannot
be identified as being a liability of only one party or cannot be separated
from a Tax Item for which the other party is liable, the party which has
the greater potential liability for those Tax Items that cannot be so
attributed or separated (or both) shall control the defense and settlement
of the Tax Audit, provided that such party defends the items as reported on
the relevant Tax Return.
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(E) Participation Rights. Any party whose liability for Taxes may
be affected by a Tax Audit shall be entitled to participate at its expense
in such defense and to employ counsel of its choice at its expense.
(g) Transfer Taxes. All excise, sales, use, transfer (including
real property transfer or gains), stamp, documentary, filing, recordation and
other similar taxes, together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or penalties,
resulting directly from the sale and transfer by Seller to Buyer of the Shares
(the "Transfer Taxes"), shall be borne fully by Buyer. Notwithstanding Section
4.6(d) of this Agreement, which shall not apply to Tax Returns relating to
Transfer Taxes, any Tax Returns that must be filed in connection with Transfer
Taxes shall be prepared and filed when due by the party primarily or customarily
responsible under the applicable local law for filing such Tax Returns, and such
party will use its commercially reasonable efforts to provide such Tax Returns
to the other party at least 10 days prior to the Due Date for such Tax Returns.
(h) Buyer's Claiming, Receiving or Using of Refunds and
Overpayments. If, after the Closing, Buyer or any Company (A) receives any
refund or (B) utilizes the benefit of any overpayment of Taxes which, in each
case (A) and (B), (x) relates to Taxes paid by Seller, Savannah or any Company
with respect to a taxable period, or portion thereof, ending on or before the
Closing Date, or (y) is the subject of indemnification by Seller under this
Agreement, Buyer shall promptly transfer, or cause to be transferred, to Seller
the entire amount of the refund or overpayment (including interest) resolved or
utilized by Buyer or any Company. Buyer agrees to notify Seller within 15 days
following the discovery of a right to claim any such refund or overpayment and
the receipt of any such refund or utilization of any such overpayment. Buyer
agrees to claim any such refund or to utilize any such overpayment as soon as
possible and to furnish to Seller all information, records and assistance
necessary to verify the amount of the refund or overpayment.
(i) Resolution of All Tax-Related Disputes. In the event that
Seller and Buyer cannot agree on the calculation of any amount relating to Taxes
or the interpretation or application of any provision of this Agreement relating
to Taxes, such dispute shall be resolved by a partner at a nationally recognized
law firm mutually acceptable to Seller and Buyer, whose decision shall be final
and binding upon all persons involved and whose expenses shall be shared equally
by Seller and Buyer.
(j) Post-Closing Actions Which Affect A Party's Liability for
Taxes.
(i) Buyer shall not permit any Company to take any action on
or after the Closing Date which could materially increase Seller or
Savannah's liability for Taxes (including any liability of Seller to
indemnify Buyer for Taxes under this Agreement).
(ii) Except as set forth in Section 4.6(j)(ii) of the Seller
Disclosure Letter, Seller shall not take any action on or after the
Closing Date which could materially increase the Buyer's liability for
Taxes without the written approval of the Buyer (including any
liability of Buyer to indemnify Seller for Taxes under this Agreement).
Such action includes any settlement agreement entered into with respect
to a Tax Audit under Section 4.6(f)(ii)(A) if any portion of such
settlement agreement
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entered into by Seller materially affects the treatment of any tax item
with respect to tax years beginning on or after the Closing Date.
(iii) Except to the extent required by law, neither Buyer, any
Company nor any affiliate of any of them shall, without the prior
written consent of Seller, amend any Tax Return (with respect to any
Tax Item of any Company) filed by, or with respect to, any Company or
any of their subsidiaries for any taxable period, or portion thereof,
beginning before the Closing Date.
(k) Assistance and Cooperation. The parties agree that, after the
Closing Date:
(i) Each party shall assist (and cause their respective
affiliates to assist) the other party in preparing any Tax Returns
which such other party is responsible for preparing and filing;
(ii) The parties shall cooperate fully in preparing for any
Tax Audits, or disputes with taxing authorities, relating to any Tax
Returns or Taxes of any Company, including providing access to relevant
books and records relating to Taxes at issue;
(iii) The parties shall make available to each other and to any
taxing authority as reasonably requested all relevant books and records
relating to Taxes;
(iv) Each party shall promptly furnish the other party with
copies of all relevant correspondence received from any taxing
authority in connection with any Tax Audit or information request
relating to Taxes for which such other party may have an
indemnification obligation under this Agreement; and
(v) Except as otherwise provided in this Agreement, the party
requesting assistance or cooperation shall bear the other party's
out-of-pocket expenses in complying with such request to the extent
that those expenses are attributable to fees and other costs of
unaffiliated third-party service providers.
(l) This Section 4.6 alone shall govern the procedure for all Tax
indemnification claims, notwithstanding any provision of Article VII.
(m) For purposes of this Agreement, "Tax" or "Taxes" shall mean
taxes (other than those taxes described in Section 4.6(g) of this Agreement) of
any kind, levies or other like assessments, customs, duties, imposts, charges or
fees, including, without limitation, income taxes, gross receipts, ad valorem,
value added, excise, real or property, asset, sales, use, license, payroll,
transaction, capital, net worth, withholding, estimated, social security,
utility, workers' compensation, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer and gains taxes or
other governmental taxes imposed or payable to the United States, or any state,
county, local or foreign government or subdivision or agency thereof, together
with any interest, penalties or additions with respect thereto and any interest
in respect of such additions or penalties; "Due Date" shall mean, with respect
to any Tax Return, the date such return is due to be filed (taking into account
any valid extensions); and "Tax Item" shall
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mean, with respect to Taxes, any item of income, gain, deduction, loss or credit
or other tax attribute.
Section 4.7 Buyer's Knowledge of Breach. If, after signing but prior
to the Closing, any of the officers of Buyer listed below shall have actual
knowledge of a breach of a representation and warranty of Seller that
constitutes a Seller Material Adverse Effect, Buyer shall promptly notify Seller
of its knowledge, in reasonable detail, including the amount which Buyer
believes, based on the facts actually known by it and to the extent that such
amount may reasonably be determined, would be payable by Seller under the
indemnification provisions of this Agreement without reference to any
indemnification limitations set forth in Section 7.3 of this Agreement.
Notwithstanding the foregoing, any notice provided under this Section 4.7 shall
not limit or restrict (i) any right Buyer may have hereunder not to consummate
the transactions contemplated hereby arising from such breach of representation
or warranty or (ii) any right Buyer may have hereunder in respect of the
obligation of Seller to indemnify Buyer Indemnitees for such breach of
representation or warranty. For purposes of this Section 4.7, the officers of
Buyer shall be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇.
Section 4.8 Employees; Employee Benefits.
(a) With the exception of the CBU Plan, the DSLT Supplemental
Executive Retirement Plan and the DSLT Top Management Plan (collectively, the
"Continued Plans"), the Companies shall cease to be (and Buyer shall not become)
a sponsor and cease to be a contributing employer under all benefit plans
maintained in whole or in part by Seller, Savannah or any Company prior to
Closing. To the extent necessary, if one or more of the Companies is the sole
sponsor of any such Company Plans, Seller shall cause such Company Plans to be
terminated by the Companies effective not later than the Closing Date (or, if
the plan is a defined benefit plan, one day before the Closing Date). If one or
more of the Companies is a sponsor but is not the sole sponsor of any such
Company Plans, Seller shall cause such action as may be necessary to be taken to
completely sever the Companies' sponsorship of such Company Plans, effective not
later than the Closing Date (or, if the plan is a defined benefit plan, one day
before the Closing Date). If the plan is a plan subject to Section 204(h) of
ERISA, Seller shall take all further actions that may be required to cease
permanently the accrual of any further benefits under the plan including,
without limitation, the issuance of any notices in advance of such cessation.
With the exception of the Continued Plans, from and after the Closing, neither
Buyer nor any Company shall adopt, continue, contribute to or in any other
manner accept or continue responsibility for the administration or funding of
any benefit plan that was maintained prior to Closing by Company for the benefit
of employees. There shall be no spin-off of either liabilities or assets from
any Company Plan prior to Closing to any plan covering employees on and after
Closing. On and after the Closing, until at least the first anniversary of the
Closing, Buyer shall cause the Companies to provide the employees of the
Companies with salary and benefit plans, programs and arrangements no less
favorable in the aggregate than those currently provided by the applicable
Company.
(b) If, within the first year after Closing, any employee of a
Company becomes a participant in any employee benefit plan of Buyer or any of
its affiliates, such employee shall be given credit under such plan for the last
continuous period of service with such Company or any predecessor employer (to
the extent such credit was given by the
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Company or such predecessor) prior to and after the Closing ("Service Credit")
for purposes of determining eligibility to participate and vesting in benefits
but for no other purpose (including, without limiting the generality of the
foregoing, the accrual of benefits). Employees of the Company shall also receive
Service Credit for purposes of determining benefits under any vacation policy or
severance plan or arrangement maintained for the benefit of employees of the
Company.
(c) In the event that any person who is an employee of any Company
immediately prior to the Closing (an "Affected Employee") is discharged by Buyer
or any Company after the Closing, then Buyer shall be responsible for (i)
severance costs for such Affected Employee, in an amount equal to not less than
one week of pay for every year of Service Credit of the Affected Employee as of
the date of termination if such employee would be entitled to severance under
the plans and programs generally applicable to similarly situated employees of
Buyer in connection with such discharge, if such termination occurs on or before
the first anniversary of the Closing, or (ii) if such termination of employment
occurs after the first anniversary of the Closing, severance costs if and to the
extent that any severance plan established for the benefit of employees of the
Companies after the Closing Date provides any benefits to such Affected
Employee. Buyer shall be responsible and assume all liability for all notices or
payments due to any Affected Employees, and all notices, payments, fines or
assessments due to any governmental authority, under any applicable Law with
respect to the employment, discharge or layoff of employees by any Company after
the Closing, including but not limited to, the WARN Act and any rules or
regulations as have been issued in connection with the foregoing.
(d) Buyer agrees that, effective as of 12:01 a.m. on the day
following the Closing Date, each Affected Employee shall be immediately eligible
to participate, without any waiting time, in a group health plan (as defined in
Section 5000(b)(1) of the Code) which credits such Affected Employee towards the
deductibles, coinsurance and maximum out-of-pocket provisions imposed under such
group health plan, for the calendar year during which the Closing Date occurs,
with any applicable expenses already incurred during the portion of the year
preceding the Closing Date under the applicable group health plans of Seller;
provided, however, such obligation of Buyer is contingent on Seller furnishing
sufficient information in sufficiently usable form to enable Buyer to reasonably
administer its plan.
(e) Buyer agrees to provide group health plan continuation coverage
which meets the requirements of Section 4980B of the Code to each Affected
Employee, each former employee of the Companies and each of their respective
beneficiaries and dependents (A) who, immediately prior to the Closing, is
receiving group health plan continuation coverage under Section 4980B of the
Code under a group health plan of Seller, or (B) who otherwise constitutes an
"M&A Qualified Beneficiary" of the Companies with respect to the transactions
described in this Agreement within the meaning of Treasury Regulation Section
55.4980B-9.
(f) With respect to former employees of the Companies (determined as
of Closing), Seller shall be responsible and assume all liability for
obligations relating to post-retirement welfare plans covering the employees or
former employees of the Companies, all of which obligations are summarized in
Section 4.8(f) of the Seller Disclosure Letter.
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(g) Prior to, but effective as of and contingent upon, the Closing,
Seller shall transfer, and Brands shall assume, sponsorship of the CBU Plan.
Between the date of this Agreement and the Closing, Seller agrees to administer
the CBU Plan, or to cause Brands to administer the CBU Plan, in all material
respects in accordance with the provisions of ERISA and the Code. Seller shall
be responsible for filing all annual reports or similar governmental reports
that may be due with respect to any plan year that ends prior to or coincident
with Closing. To the extent reasonably requested by Buyer, Seller will cooperate
fully with Buyer in filing all annual reports and other similar governmental
reports that may be due with respect to the plan year ending after Closing. At
or prior to Closing, Seller shall deliver to Buyer the pertinent records
relating to the CBU Plan, including records relating to participants who were
not former employees of the Companies.
(h) Seller and Buyer shall cooperate and take all steps reasonably
necessary or appropriate so that, as soon as practicable following the Closing
Date, the Affected Employees who are participants in the Imperial Sugar Company
401(k) Savings Plan are permitted to take a distribution or to rollover their
benefits under that plan to one or more defined contribution plans sponsored by
Buyer or its affiliates (collectively, the "Transferee Savings Plan"). From and
after any such rollover, Buyer and the Transferee Savings Plan shall be solely
responsible for all liabilities with respect to the transferred benefits of the
Affected Employees.
(i) Buyer acknowledges that, at the Closing, the participation by the
Companies in all employee benefit plans other than the Continued Plans shall
terminate, and Buyer shall be solely responsible for providing or causing the
Companies to provide any successor or alternate plans.
(j) Buyer shall cause the Companies to honor the collective
bargaining agreement identified on Section 2.12 of the Seller Disclosure Letter.
(k) After the Closing Date, Buyer shall be responsible for, and shall
indemnify and hold harmless, (i) Seller, (ii) Savannah, (iii) the individuals
who were, prior to the Closing Date, officers, directors, employees, affiliates
and agents of either Seller or Savannah, and (iv) individuals who were, prior to
the Closing Date, the fiduciaries (including plan administrators) of the
Continued Plans, from and against, any and all claims, losses, damages, costs
and expenses (including, without limitation, attorneys' fees and expenses) and
other liabilities and obligations relating to or arising out of (x) all
salaries, commissions, post-Closing bonuses and vacation entitlements accrued on
the Closing Date Working Capital Statement but unpaid as of the Closing to any
Affected Employee, and (y) any claims of, or damages or penalties sought by, any
Affected Employee or any governmental entity on behalf of or concerning any
Affected Employee, with respect to any act or failure to act by Buyer to the
extent arising after the Closing Date from the employment, discharge, layoff or
termination after Closing of any Affected Employee who, after the Closing Date
either becomes an employee of Buyer or continues as an employee of any Company.
(l) On or before the Closing, Seller shall have caused the employment
of employees of Imperial set forth in Exhibit H (the "Designated Employees") to
be transferred to Holdings.
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(m) Seller acknowledges that Buyer intends to offer ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
employment with the DCB Business commencing immediately following the Closing,
and Seller agrees that Buyer may make such offer of employment. Seller agrees
that it shall be responsible for, and shall indemnify Buyer and the Companies
and hold each of them harmless for, any costs, liabilities or obligations
associated with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇' employment with Seller prior to the Closing
Date, including any costs, liabilities and obligations related to any employment
arrangement between Seller and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, including costs, liabilities and
obligations arising under that certain employment agreement, dated October 1,
2000, between Seller and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
Section 4.9 Noncompete.
(a) Except as otherwise agreed to in writing by Seller and Buyer, for
a period of the greater of (i) five years and (ii) the duration of the Supply
Agreement, commencing on the Closing Date, Seller agrees that neither Seller nor
any of its affiliates, directly or indirectly, will sell or cause the sale of
any DCB Non-Sugar Product or any product that is substantially similar to any
DCB Non-Sugar Product in the United States of America ("Seller DCB Non-Sugar
Restricted Business"). For purposes of this Agreement, "DCB Non-Sugar Product"
means any of the Products that do not contain sugar as an ingredient.
(b) Except for the Excluded Sugar Business or as otherwise agreed to
in writing by Seller and Buyer, for a period of five years commencing on the
Closing Date, Seller agrees that neither Seller nor any of its affiliates,
directly or indirectly, will sell or cause the sale of any DCB Sugar Product or
any product that is substantially similar to any DCB Sugar Product in the United
States of America ("Seller DCB Sugar Restricted Business" and together with
Seller DCB Non-Sugar Restricted Business "Seller Restricted Business"). For
purposes of this Agreement "DCB Sugar Product" means any of the Products that
contain sugar as an ingredient.
(c) The restrictions set forth in Sections 4.9(a) and (b) shall not
prohibit the ownership by Seller of up to one percent of the issued and
outstanding capital stock of a publicly held entity carrying on a Seller
Restricted Business, so long as Seller does not participate in the control or
take an active part in the management or direction thereof and does not in any
way render services thereto.
(d) Except as provided in the Co-Pack Agreement or as otherwise
agreed to in writing by Seller and Buyer, for a period of five years commencing
on the Closing Date, Buyer agrees that neither Buyer nor any of its affiliates,
directly or indirectly, will sell or cause the sale of any sugar products that
are part of the Excluded Sugar Business or that are substantially similar to
such products in the United States of America other than DCB Sugar Products and
products developed by Buyer or its affiliates that are substantially similar to
DCB Sugar Products ("Buyer Restricted Business").
(e) The restrictions set forth in Section 4.9(d) shall not prohibit
the ownership by Buyer of up to one percent of the issued and outstanding
capital stock of a publicly held entity carrying on a Buyer Restricted Business,
so long as Buyer does not participate in the control or
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take an active part in the management or direction thereof and does not in any
way render services thereto.
(f) The parties intend that each of the covenants contained in this
Section 4.9 shall be construed as a series of separate covenants, one for each
state of the United States and each county of each state of the United States.
Except for geographic coverage, each such separate covenant shall be deemed
identical in terms to the covenant contained in the preceding subsections of
this Section 4.9. If, in any judicial proceeding, a court shall refuse to
enforce any of the separate covenants (or any part thereof) deemed included in
those subsections, then such unenforceable covenant (or such part) shall be
deemed eliminated from this Agreement for the purpose of those proceedings to
the extent necessary to permit the remaining separate covenants (or portions
thereof) to be enforced. In the event that the provisions of this Section 4.9
should ever be deemed to exceed the time or geographic limitations, or the scope
of this covenant, permitted by applicable law, then such provisions shall be
reformed to the maximum time or geographic limitations, as the case may be,
permitted by applicable laws. The unenforceability of any covenant in this
Section 4.9 shall not preclude the enforcement of any other of said covenants or
provisions or of any other obligation of Seller or Buyer hereunder, and the
existence of any claim or cause of action of Seller or Buyer against the other
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Seller or Buyer of any of said covenants
(g) It is understood and agreed that damages will be an inadequate
remedy in the event of a breach or intended or threatened breach by Seller,
Buyer or any of their respective affiliates of any of the covenants of Seller or
Buyer, as applicable, in this Section 4.9, and that any such breach will cause
Seller or Buyer, as applicable, irreparable injury and damage. Accordingly,
Seller and Buyer each agree that the other shall be entitled, without waiving
any additional rights or remedies otherwise available to Seller or Buyer, as
applicable, to injunctive and other such equitable relief in the event of a
breach or intended or threatened breach of any of said covenants by Seller,
Buyer or any of their respective affiliates.
Section 4.10 Ancillary Agreements.
(a) Seller agrees to execute and deliver to Buyer the Transition
Services Agreement, the Supplier Agreement in substantially the form attached as
Exhibit I to this Agreement (the "Supplier Agreement") and the Co-Pack Agreement
in substantially the form attached as Exhibit J to this Agreement (the "Co-Pack
Agreement") at or prior to the Closing. Seller also agrees to cause ▇▇▇▇▇ to
execute and deliver to Buyer the Assignment Agreement and License Agreement at
or prior to the Closing.
(b) Buyer agrees to execute and deliver to Seller the Transition
Services Agreement, Supplier Agreement and the Co-Pack Agreement at or prior to
Closing. Buyer agrees to execute and deliver to ▇▇▇▇▇ the Assignment Agreement
and License Agreement at or prior to the Closing.
(c) Seller and Buyer agree to execute and deliver to each other and
the Escrow Agent the Escrow Agreement in substantially the form attached as
Exhibit K to this Agreement (the "Escrow Agreement" and, together with the
Assignment Agreement, the
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Transition Services Agreement, the License Agreement, the Supplier Agreement and
the Co-Pack Agreement, the "Ancillary Agreements") at or prior to the Closing.
Section 4.11 Real Property Matters. Seller has caused ▇▇▇▇▇▇▇ Title
(the "Title Company") to deliver a title insurance commitment (each, a "Title
Commitment" and, collectively, the "Title Commitments") and ▇▇▇▇ & Clark's
National Surveyor's Network to deliver a survey as to each Real Property site.
The Title Commitments have been marked by hand to show the changes that Buyer
requires to be made by the Title Company at or before Closing (the Title
Commitments, as so changed and as attached hereto as Exhibit L, the "Title
Policies"). Seller shall, at its expense, cause the Title Company to deliver the
Title Policies to Buyer within five (5) business days after the Closing (but to
be dated as of the Closing), and acknowledges and agrees that there remain
certain imperfections in the titles and/or to the Real Property as identified on
attached Exhibit M ("Title Imperfections"). Seller agrees to reimburse,
indemnify and hold harmless Buyer for, from and against (i) all expenses
reasonably incurred by Buyer and the Companies in attempting to cure the Title
Imperfections after the Closing (including bringing any quiet title or similar
actions, so long as any such action is commenced within six months after the
Closing and is thereafter diligently pursued), provided, however, that Buyer
shall consult with Seller with respect to all such actions taken, and (ii) all
claims made against Buyer or the Companies as a result of the assertion by any
other person or entity of rights under or relating to any of the Title
Imperfections, and all expenses reasonably incurred by Buyer or the Companies,
including reasonable attorney and consulting fees, in defending against any such
claims. If, notwithstanding Buyer's reasonable efforts to cure any Title
Imperfection, Buyer has been unable to cure such Title Imperfection as of the
date that is six months after the Closing, Seller shall pay to Buyer that amount
which compensates Buyer for the diminution in value of the affected Real
Property caused by the impact of the Title Imperfection on (A) marketability of
title to the affected Real Property for the use of the affected Real Property in
the DCB Business as conducted immediately prior to Closing and/or (B) the
usefulness of the affected Real Property for the use of the affected Property in
the DCB Business as conducted immediately prior to Closing.
Section 4.12 Post-Closing Access. After the Closing Date, each of
Seller and Buyer will afford, and will cause their affiliates to afford, to the
other party, its accountants and counsel, during normal business hours and upon
reasonable request, reasonable access to the books and records pertaining to
each of the Companies.
Section 4.13 Litigation Support and Idaho Fresh-Pak Litigation.
(a) In the event that and for so long as Seller, Savannah, Buyer or
any of the Companies is actively contesting or defending against any third party
litigation or arbitration in connection with any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction existing or occurring on or prior to the
Closing Date involving any of the Companies (the "Requesting Party"), Seller or
Buyer, as applicable, will cooperate and will cause its affiliates to cooperate
in the contest or defense, make available its personnel and provide such
testimony and access to its books and records as may be necessary in connection
with the contest or defense, all at the sole cost and expense of the Requesting
Party (unless and to the extent the Requesting Party is entitled to
indemnification therefor under Article VII).
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(b) Notwithstanding any representation or warranty of Seller contained
in this Agreement or any information or materials provided to Buyer or it
representatives or disclosed in the Seller Disclosure Letter, Seller shall
retain all responsibility for contesting or defending, at its expense, against
all proceedings related to (i) the claim of Idaho Fresh-Pak Inc. (d/b/a Idahoan
Foods) identified in Section 2.9 of the Seller Disclosure Letter (the "Fresh-Pak
Litigation") and (ii) the claim of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ identified in Sections 2.9
and 2.12(h) of the Seller Disclosure Letter (the "▇▇▇▇▇ Claim"), and shall
indemnify and hold harmless Buyer from, against and in respect of any liability,
demand, claim, action or cause of action, assessment, loss, damage, cost and
expense (including, without limitation, reasonable attorneys' fees and
expenses), including any damages or costs in settlement, without regard for any
indemnity limitation set forth in Article VII hereof, that arise out of or
relate to the Fresh-Pak Litigation and the ▇▇▇▇▇ Claim. For purposes of this
Section 4.13(b), the provisions of Section 7.4 shall apply; provided that Seller
shall be deemed to have received notice of the Fresh-Pak Litigation and the
▇▇▇▇▇ Claim as a Claim thereunder and assumed the defense thereof.
Section 4.14 Disposed Businesses. Notwithstanding any representation or
warranty of Seller contained in this Agreement or any information or materials
provided to Buyer or it representatives or disclosed in the Seller Disclosure
Letter, Seller shall indemnify and hold harmless Buyer from, against and in
respect of any liability or obligation (including in respect of Taxes or under
any Environmental Law), whether known or unknown, contingent or otherwise,
demand, claim, action or cause of action, assessment, loss, damage, cost and
expense (including, without limitation, reasonable attorneys' fees and
expenses), including any damages or costs in settlement, without regard for any
indemnity limitation set forth in Article VII hereof, that arises out of or
relates to the (i) the ownership and operation by Seller or its affiliates of
King Packaging Co., Inc. (and the assets and properties thereof) and the sale by
Brands of King Packaging Co., Inc. ("King") to Tyco International (US) Inc.
("Tyco") and Sunbelt Manufacturing, Inc. ("Sunbelt") (including any liability or
obligation, including obligation to indemnify, arising under that certain Stock
Purchase Agreement, dated December 7, 2001 (the "King Purchase Agreement"), by
and among Brands, King, Tyco and Sunbelt; provided, however, that Seller shall
have no obligation to indemnify Buyer with respect to (x) the obligations of
Brands set forth in Section 7.6 of the King Purchase Agreement, (y) compliance
by Hormel Foods, LLC after the Closing Date with the Trademark License
Agreement, dated December 7, 2001, between ▇▇▇▇▇ and ▇▇▇▇ (which Supply
Agreement is to be assigned to Hormel Foods, LLC in accordance with Section
5.3(k) hereof) or (z) compliance by Brands after the Closing Date with the
Supply Agreement, dated December 7, 2001, between Brands and King), (ii) the
ownership and operation of that certain real property located at ▇▇▇ ▇.▇. ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and the sale thereof to ▇▇▇▇▇▇▇ Foods, Inc. and (iii)
the ownership and operation of that certain real property located at ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ and the sale thereof to Backleaf
Corporation. Subject to Seller's compliance with the foregoing, Buyer agrees
that Seller shall be entitled to the benefits of that certain Escrow Agreement,
dated December 10, 2001, by and among Brands, Seller, Tyco, Sunbelt and The Bank
of New York, including any release of funds thereunder that may be due or
received by the Companies after the Closing.
Section 4.15 Environmental Matters. Notwithstanding any representation
or warranty of Seller contained in this Agreement, or any information or
materials provided to Buyer or its representatives or disclosed in the Seller
Disclosure Letter, Seller, at its cost and
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expense, shall use its best efforts to obtain a "No Further Action Required"
letter from the Georgia Department of Natural Resources, as recommended in the
Phase II report, dated December 26, 2002, related to the property of the DCB
Business located in Savannah, Georgia prepared for Seller, and, in the event
that there is any underground storage tank present on such property as of the
Closing Date, Seller shall indemnify and hold harmless Buyer, from, against and
in respect of any liability, obligation, whether known or unknown, contingent or
otherwise, demand, claim, action or cause of action, assessment, loss, damage,
cost and expense (including without limitation, reasonable attorneys' fees,
consultant fees and expenses) including any costs for Remedial Action, and
without regard for any indemnity limits set forth in Article VII hereof, that
arise out of or relate to, any investigation, removal and closure of any such
underground storage tank.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE STOCK PURCHASE
Section 5.1 Conditions to Each Party's Obligations to Consummate the
Stock Purchase. The respective obligations of each party to consummate the
transactions contemplated by this Agreement are subject to the satisfaction at
or prior to the Closing Date of the following conditions:
(a) No statute, rule, regulation, executive order, decree or injunction
shall have been enacted, entered, promulgated or enforced by any court or
governmental entity which prohibits the consummation of the transactions
contemplated by this Agreement;
(b) There shall not be any suit, action, investigation, inquiry or
other proceeding instituted, pending or threatened by any governmental or other
regulatory or administrative agency or commission or which seeks to enjoin or
otherwise prevent consummation of the transactions contemplated by this
Agreement;
(c) Any waiting period applicable to the transactions contemplated by
this Agreement under applicable U.S. antitrust or trade regulation laws and
regulations, including, without limitation, under the HSR Act or any Other
Antitrust Regulations, shall have expired or been terminated; and
(d) Buyer, Seller and the Escrow Agent shall each have executed and
delivered to each other the Escrow Agreement.
Section 5.2 Further Conditions to Seller's Obligations. The obligation
of Seller to consummate the transactions contemplated by this Agreement is
further subject to satisfaction or waiver (but no such waiver shall waive any
rights or remedy otherwise available to Seller) of the following conditions:
(a) The representations and warranties of Buyer contained in Article
III of this Agreement shall be true and correct in all material respects as of
the date of this Agreement and at and as of the Closing Date as though such
representations and warranties were made at and as of such date, except for
representations and warranties which are as of a different date or period which
shall be true and correct in all material respects as of such other date or
period;
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(b) Buyer shall have performed and complied in all material respects
with all agreements and obligations required by this Agreement to be performed
or complied with by it on or prior to the Closing;
(c) Seller shall have received all Seller Lender Approvals;
(d) Buyer shall have executed and delivered to Seller (i) the
Transition Services Agreement, (ii) the Supplier Agreement, (iii) the Co-Pack
Agreement and (iv) the Escrow Agreement; and
(e) Buyer shall have executed and delivered to ▇▇▇▇▇ (i) the Assignment
Agreement and (ii) the License Agreement.
Section 5.3 Further Conditions to Buyer's Obligations. The obligation
of Buyer to consummate the transactions contemplated by this Agreement are
further subject to the satisfaction or waiver at or prior to the Closing Date
(but no such waiver shall waive any rights or remedy otherwise available to
Buyer) of the following conditions:
(a) The representations and warranties of Seller contained in Article
II of this Agreement shall be true and correct in all material respects as of
the date of this Agreement and at and as of the Closing Date as though such
representations and warranties were made at and as of such date (without taking
into account any disclosures by Seller of discoveries, events or occurrences
arising on or after the date hereof), except for representations and warranties
which are as of a different date or period which shall be true and correct in
all material respects as of such other date or period;
(b) Seller shall have performed and complied in all material respects
with all agreements and obligations required by this Agreement to be performed
or complied with by it on or prior to the Closing;
(c) All Closing Condition Consents and Seller Lender Approvals shall
have been obtained, and none of such Closing Condition Consents or Seller Lender
Approvals shall contain any conditions or restrictions that restrict or limit
the business or activities of Buyer or any Company or have a material adverse
effect on, or would be reasonably likely to have a material adverse effect on,
Buyer or any of the Companies;
(d) There shall not be any suit, action, investigation, inquiry or
other proceeding instituted, pending or threatened by any governmental or other
regulatory or administrative agency or commission (i) seeking to prohibit direct
or indirect ownership, combination or operation by Buyer of any portion of the
business or assets of the Companies, or to compel Buyer or any of its affiliates
or any of the Companies to dispose of, or to hold separately, or to make any
change in any portion of the business or assets of Buyer or any of its
affiliates or of the Companies, as a result of the transactions contemplated by
this Agreement, or incur any material burden or (ii) seeking to require direct
or indirect transfer or sale by Buyer of, or to impose material limitations on
the ability of Buyer to exercise full rights of ownership of, any of the Shares;
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(e) After the date of this Agreement, no Seller Material Adverse Effect
shall have occurred;
(f) Buyer shall have received the Title Policies in accordance with
Section 4.11;
(g) Seller shall have executed and delivered to Buyer (i) the
Transition Services Agreement, (ii) the Supplier Agreement, (iii) the Co-Pack
Agreement and (iv) the Escrow Agreement;
(h) ▇▇▇▇▇ shall have executive and delivered to Buyer (i) the
Assignment Agreement and (ii) the License Agreement;
(i) Seller shall have delivered to Buyer evidence of the release,
cancellation and satisfaction in full of (A) all Liens on the shares of capital
stock of the Companies, including liens on the Holdings Shares and the Brands
Shares, (B) all Liens, other than Permitted Liens, on the assets of any of the
Companies, including without limitation, evidence of the release of all such
Liens in favor of General Electric Capital Corporation and of ▇▇▇▇▇▇ Trust and
Savings Bank and (C) all guaranties or similar obligations provided or granted
by any of the Companies in respect of any obligations owed by Imperial or any of
its affiliates, including any guaranties provided by any of the Companies to
General Electric Capital Corporation and ▇▇▇▇▇▇ Trust and Savings Bank;
(j) Seller shall have delivered to Buyer evidence of its completion of
actions to be taken by Seller on or before the Closing Date in accordance
Section 4.8(a) of this Agreement;
(k) Seller shall have caused that certain Trademark License Agreement,
dated December 7, 2001, between ▇▇▇▇▇ and King to be assigned to Hormel Foods,
LLC and such other agreements designated by Seller pursuant to Section 4.3(f) to
be assigned on or before Closing to Brands or such other of the Companies
designated by Buyer;
(l) The employment of each of the Designated Employees shall have been
transferred to Holdings; and
(m) All Privilege Closing Conditions, if any, shall have been
satisfied.
Section 5.4 Materiality of Conditions. Notwithstanding anything
contained in this Agreement, no condition to consummation of the Stock Purchase
contained in this Article V that involves performance of agreements by Seller or
the accuracy of representations and warranties made by Seller as of the date of
this Agreement, as of the Closing Date or as of any other date or period shall
be deemed not fulfilled, and Buyer shall not be entitled to fail to consummate
the transactions contemplated by this Agreement or terminate this Agreement on
such basis, if the respects in which such agreements have not been performed or
the representations and warranties are untrue, would not, individually or in the
aggregate, have or reasonably be expected to have a Seller Material Adverse
Effect.
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ARTICLE VI
TERMINATION AND ABANDONMENT
Section 6.1 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing Date:
(a) by mutual written consent of Seller and Buyer;
(b) by Seller or Buyer at any time after January 25, 2003 if the
Closing shall not have occurred by such date; provided that a party will not be
entitled to terminate this Agreement pursuant to this Section 6.1(b) if such
party's failure to comply fully with its obligations under this Agreement has
prevented the Closing from occurring;
(c) by Buyer, if
(i) Seller has breached any representation, warranty or agreement
contained in this Agreement in any material respect;
(ii) any of the conditions set forth in Section 5.3 have become
impossible to satisfy; or
(iii) after the date of this Agreement, there has occurred any
Seller Material Adverse Effect;
(d) by Seller, if
(i) Buyer has breached any representation, warranty or agreement
contained in this Agreement in any material respect; or
(ii) any of the conditions set forth in Section 5.2 have become
impossible to satisfy;
(e) by Seller or Buyer if a United States federal or state court of
competent jurisdiction or United States federal or state governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
non-appealable.
Section 6.2 Procedure for and Effect of Termination. In the event of
termination of this Agreement and abandonment of the transactions contemplated
by this Agreement by the parties under Section 6.1 of this Agreement, written
notice thereof shall be given by a party so terminating to the other party and
this Agreement shall forthwith terminate and shall become null and void and of
no further effect, and the transactions contemplated by this Agreement shall be
abandoned without further action by Seller or Buyer. If this Agreement is
terminated under Section 6.1 of this Agreement:
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(a) each party shall redeliver all documents, work papers and other
materials of the other parties relating to the transactions contemplated by this
Agreement, whether obtained before or after the execution of this Agreement, to
the party furnishing the same, and all confidential information received by any
party hereto with respect to the other party shall be treated in accordance with
the Confidentiality Agreement and Section 4.2(b) of this Agreement;
(b) all filings, applications and other submissions made pursuant
hereto shall, be withdrawn from the agency or other person to which made; and
(c) there shall be no liability or obligation under this Agreement on
the part of Seller or Buyer or any of their respective directors, officers,
employees, affiliates, controlling persons, agents or representatives, except
that Seller or Buyer, as the case may be, may have liability to the other party
if the basis of termination is a willful breach by Seller or Buyer, as the case
may be, of one or more of the provisions of this Agreement, and except that the
obligations provided for in Section 4.5, Section 6.2, Section 8.6 and Section
8.9 of this Agreement shall survive any such termination.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
Section 7.1 Survival Periods. Subject to the immediately following
sentence, all representations and warranties of the parties contained in this
Agreement shall survive the Closing until the date that is twenty-four months
from the Closing Date (the "Survival Period") except that the representations
and warranties of Seller contained in Section 2.11 [Employee Benefit Plans],
Section 2.13 [Taxes] and Section 2.17 [Environmental] shall survive the Closing
until expiration of the applicable statute of limitations but, except as
provided in Section 6.2(c) of this Agreement, shall not survive any termination
of this Agreement. Notwithstanding the immediately preceding sentence, the
representations and warranties in Section 2.2 [Authority Relative to this
Agreement] and Section 2.4 [Ownership of Shares] of this Agreement shall survive
the Closing indefinitely. Except with respect to the representations and
warranties contained in Section 2.2 [Authority Relative to this Agreement],
Section 2.4 [Ownership of Shares], Section 2.11 [Employee Benefit Plans],
Section 2.13 [Taxes] and Section 2.17 [Environmental] of this Agreement, the
parties intend to shorten the statute of limitations and agree that no claims or
causes of action may be brought against Seller or Buyer based upon, directly or
indirectly, any of the representations and warranties contained in Articles II
and III of this Agreement after the Survival Period (except for the
representations and warranties in Section 2.2 [Authority Relative to this
Agreement], Section 2.4 [Ownership of Shares], Section 2.11 [Employee Benefit
Plans], Section 2.13 [Taxes] and Section 2.17 [Environmental] of this Agreement)
or, except as provided in Section 6.2(c) of this Agreement, any termination of
this Agreement. This Section 7.1 shall not limit any covenant or agreement of
the parties which contemplates performance after the Closing, including, without
limitation, the covenants and agreements set forth in Sections 1.10, 1.11, 1.12,
1.13, 4.2, 4.3(e), 4.6, 4.8, 4.9, 4.11, 4.12, 4.13, 4.14 and 4.15 of this
Agreement.
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Section 7.2 Seller's Agreement to Indemnify.
(a) Subject to the terms and conditions set forth in this Agreement,
from and after the Closing, Seller shall, and shall cause all of its
subsidiaries to (except to the extent the ownership of any such subsidiary is
sold or transferred after the date hereof) indemnify and hold harmless Buyer and
its directors, officers, employees, affiliates, controlling persons, agents and
representatives and their successors and assigns (collectively, the "Buyer
Indemnitees") from and against all liability, demands, claims, actions or causes
of action, assessments, losses, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) (collectively, "Buyer
Damages") asserted against or incurred by any Buyer Indemnitee as a result of or
arising out of (i) a breach of any representation or warranty contained in
Article II of this Agreement or in the Seller Disclosure Letter or any closing
certificate delivered by or on behalf of Seller pursuant to this Agreement, (ii)
any product sold or manufactured by the Companies prior to the Closing Date
(including products manufactured by or for the account of any of Seller,
Savannah or the Companies prior to the Closing, regardless of their inclusion in
inventory of a Company as of the Closing and their eventual sale by a Company or
by Buyer or their affiliates after the Closing except to the extent that, after
the Closing, a Company, Buyer or any of their affiliates, or any representative
or agent of a Company, Buyer or its affiliates, or any person unaffiliated with
Seller or Savannah or the Companies (excluding suppliers or contract
manufacturers of Seller, Savannah or the Companies or other persons affiliated
with the production, storage, transportation and handling of such products prior
to Closing to the extent they produced, stored, transported or handled such
products) was negligent in the storage, handling or distribution of such
products, in which case the indemnification obligation of Seller hereunder shall
be reduced to the extent that such negligence contributed to the Buyer Damages)
and (iii) any breach of any of the covenants and agreements of any Seller
contained in this Agreement, including without limitation any agreement of
Seller to indemnify Buyer with respect to specific matters contained elsewhere
in this Agreement. Buyer Indemnitees shall be entitled to recover any Buyer
Damages for which Seller is obligated to indemnify under this Section 7.2, (i)
first, from the Escrow Agent, an amount equal to any Buyer Damages any such
Buyer Indemnitee may suffer hereunder pursuant to Section 7.9 hereof and (ii)
second, if and to the extent that the Indemnification Escrow Amount is not
sufficient to cover such Buyer Damages, from Seller.
(b) Seller's obligation to indemnify the Buyer Indemnitees for Buyer
Damages under Section 7.2(a) of this Agreement is subject to the following
limitations:
(i) No indemnification shall be made by Seller under
Section 7.2(a)(i) unless the aggregate amount of Buyer Damages exceeds
$750,000 (the "Basket Amount") and, in such event, indemnification shall be
made by Seller only to the extent Buyer Damages exceed $500,000 (the
"Deductible Amount");
(ii) In no event shall Seller's aggregate obligation to indemnify
the Buyer Indemnitees under Section 7.2(a)(i) exceed 50% of the Purchase
Price (the "Cap Amount"), except in the event that such obligation to
indemnify arises from the fraudulent act or omission of Seller;
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(iii) The amount of any Buyer Damages shall be reduced by (A) any
amount actually received by a Buyer Indemnitee with respect to such Buyer
Damages under any insurance coverage or from any other party alleged to be
responsible for such Buyer Damages (provided, however, that the amount of any
such reduction for insurance proceeds shall be offset by the present value of
any increase in insurance premiums attributable to any claim for insurance
related to such Buyer Damages) and (B) the amount of any Tax benefit actually
realized by the Buyer Indemnitee attributable to such Buyer Damages (provided
however, that the amount of any such reduction for Tax benefit shall be offset
by any increased tax liability of the Buyer Indemnitee as a result of inclusion
in income of any part of payments made in respect of such Buyer Damages, and
that for purposes of determining the amount of any Tax benefit or detriment
pursuant to this Section 7.2(b)(iii), the marginal combined federal and state
income tax rate of the Buyer Indemnitee shall be deemed to be forty percent
(40%)). The Buyer Indemnitees shall use commercially reasonable efforts to
collect any amounts available under such insurance coverage and from such other
party alleged to have responsibility. If a Buyer Indemnitee receives an amount
under insurance coverage or from such other party with respect to Buyer Damages
at any time subsequent to any indemnification provided by Seller under this
Section 7.2, then such Buyer Indemnitee shall promptly reimburse Seller for
amounts paid by Seller to the Buyer Indemnitee in connection with providing such
indemnification up to such amount received by the Buyer Indemnitee;
(iv) Buyer agrees that Buyer shall use commercially reasonable
efforts to pursue any claim pursuant to this Section 7.2(b) that is potentially
payable under the Title Policy issued pursuant to Section 4.11 of this Agreement
against such Title Policy before a claim is made against Seller pursuant to this
Article VII. Buyer Damages shall be reduced by the amount of any such proceeds
received under such title insurance policy; and
(v) Seller shall be obligated to indemnify the Buyer Indemnitees.
under Section 7.2(a)(i) only for those claims giving rise to Buyer Damages as to
which the Buyer Indemnitees have given Seller written notice of prior to the end
of the Survival Period (to the extent the Survival Period is applicable to such
claim). Any written notice delivered by a Buyer Indemnitee to Seller with
respect to Buyer Damages shall set forth with as much specificity as is
reasonably practicable the basis of the claim for Buyer Damages and, to the
extent reasonably practicable, a reasonable estimate of the amount of such
claim. Subject to the procedures with respect to Claims under Section 7.4
hereof, if such written notice (or an amended notice) states the amount of Buyer
Damages claimed and Seller notifies the Buyer Indemnitee that Seller does not
dispute the claim described in such notice or fails to notify the Buyer
Indemnitee within 20 business days after delivery of such notice by the Buyer
Indemnitee whether Seller disputes the claim described in such notice, Buyer
Damages in the amount specified in such notice will be admitted by Seller, and
Seller will pay the amount of such Buyer Damages to the Buyer Indemnitee. If
Seller has timely disputed its liability with respect to such claim, Buyer and
Seller will proceed in good faith to negotiate a resolution of such dispute in
accordance with Section 8.6 hereof. If a written notice does not state the
amount of Buyer Damages claimed, such omission will not preclude the Buyer
Indemnitee from
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recovering from Seller the amount of Buyer Damages with respect to the
claim described in such notice if any such amount is promptly provided once
determined.
(c) Subject to a Buyer Indemnitee's right to recover for Buyer Damages
from the Indemnification Escrow Amount in accordance with Section 7.9, Seller
will pay the amount of any Buyer Damages to the Buyer Indemnitee within 10
business days following the determination of Seller's liability for and the
amount of Seller Damages (whether such determination is made pursuant to the
procedures set forth in this Article VII, by agreement between Buyer and Seller,
by arbitration award or by final adjudication in accordance with the terms of
this Agreement).
Section 7.3 Buyer's Agreement to Indemnify.
(a) Subject to the terms and conditions set forth in this Agreement,
from and after the Closing, Buyer shall indemnify and hold harmless Seller and
its directors, officers, employees, affiliates, controlling persons, agents and
representatives and their successors and assigns (collectively, the "Seller
Indemnitees") from and against all liability, demands, claims, actions or causes
of action, assessments, losses, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) (collectively, "Seller
Damages") asserted against or incurred by any Seller Indemnitee as a result of
or arising out of (i) a breach of any representation or warranty contained in
Article III of this Agreement or any closing certificate delivered by or on
behalf of Buyer pursuant to this Agreement and (ii) any breach of any of the
covenants and agreements of Buyer contained in this Agreement.
(b) Buyer's obligation to indemnify the Seller Indemnitees under
Section 7.3(a) of this Agreement is subject to the following limitations:
(i) No indemnification shall be made by Buyer under
Section 7.3(a)(i) unless the aggregate amount of Seller Damages exceeds the
Basket Amount and, in such event, indemnification shall be made by Buyer
only to the extent that the aggregate amount of Seller Damages exceeds the
Deductible Amount;
(ii) In no event shall Buyer's aggregate obligation to indemnify
the Seller Indemnitees under Section 7.3(a)(i) exceed the Cap Amount,
except in the event that such obligation to indemnify arises from the
fraudulent act or omission of Buyer;
(iii) The amount of any Seller Damages shall be reduced by (A)
any amount actually received by a Seller Indemnitee with respect to such
Seller Damages under any insurance coverage or from any other party alleged
to be responsible for such Seller Damages (provided, however, that the
amount of any such reduction for insurance proceeds shall be offset by the
present value of any increase in insurance premiums attributable to any
claim for insurance related to such Seller Damages) and (B) the amount of
any Tax benefit actually realized by the Seller Indemnitee attributable to
such Seller Damages (provided however, that the amount of any such
reduction for Tax benefit shall be offset by any increased tax liability of
the Seller Indemnitee as a result of inclusion in income of any part of
payments made in respect of such Seller Damages, and that for purposes of
determining the amount of any Tax benefit or detriment pursuant to
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this Section 7.3(b)(iii), the marginal combined federal and state income
tax rate of the Seller Indemnitee shall be deemed to be forty percent
(40%)). The Seller Indemnitees shall use commercially reasonable efforts to
collect any amounts available under such insurance coverage and from such
other party alleged to have responsibility. If a Seller Indemnitee receives
any amount under insurance coverage or from such other party with respect
to Seller Damages at any time subsequent to any indemnification provided by
Buyer under this Section 7.3, then such Seller Indemnitee shall promptly
reimburse Buyer for amounts paid by Buyer to the Seller Indemnitee in
connection with providing such indemnification up to such amount received
by the Seller Indemnitee; and
(iv) Buyer shall be obligated to indemnify the Seller
Indemnitees under Section 7.3(a)(i) only for those claims giving rise to
Seller Damages as to which the Seller Indemnitees have given Buyer written
notice of prior to the end of the Survival Period. Any written notice
delivered by a Seller Indemnitee to Buyer with respect to Seller Damages
shall set forth with as much specificity as is reasonably practicable the
basis of the claim for Seller Damages and, to the extent reasonably
practicable, a reasonable estimate of the amount of such claim. Subject to
the procedures with respect to Claims under Section 7.4 hereof, if such
written notice (or an amended notice) states the amount of Seller Damages
claimed and Buyer notifies the Seller Indemnitee that Buyer does not
dispute the claim described in such notice or fails to notify the Seller
Indemnitee within 20 business days after delivery of such notice by the
Seller Indemnitee whether Buyer disputes the claim described in such
notice, Seller Damages in the amount specified in such notice will be
admitted by Buyer, and Buyer will pay the amount of such Seller Damages to
the Seller Indemnitee. If Buyer has timely disputed its liability with
respect to such claim, Seller and Buyer will proceed in good faith to
negotiate a resolution of such dispute in accordance with Section 8.6
hereof. If a written notice does not state the amount of Seller Damages
claimed, such omission will not preclude the Seller Indemnitee from
recovering from Buyer the amount of Seller Damages with respect to the
claim described in such notice if any such amount is promptly provided once
determined.
(c) Buyer will pay the amount of any Seller Damages to the Seller
Indemnitee within 10 business days following the determination of Buyer's
liability for and the amount of Seller Damages (whether such determination is
made pursuant to the procedures set forth in this Article VII, by agreement
between Buyer and Seller, by arbitration award or by final adjudication in
accordance with the terms of this Agreement).
Section 7.4 Third-Party Indemnification. The obligations of Seller to
indemnify the Buyer Indemnitees under Section 7.2 of this Agreement with respect
to Buyer Damages and the obligations of Buyer to indemnify the Seller
Indemnitees under Section 7.3 of this Agreement with respect to Seller Damages,
in either case resulting from the assertion of liability by third parties (each,
as the case may be, a "Claim"), will be subject to the following terms and
conditions:
(a) Any party against whom any Claim is asserted will give the
indemnifying party written notice of any such Claim promptly after learning of
such Claim, and the indemnifying party may, at its option, undertake the defense
of such Claim by representatives of
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its own choosing. Failure to give prompt notice of a Claim under this Agreement
shall not affect the indemnifying party obligations under this Article VII,
except to the extent the indemnifying party is materially prejudiced by such
failure to give prompt notice. If the indemnifying party, within 30 days after
notice of any such Claim, or such shorter period as is reasonably required,
fails to assume the defense of such Claim, the Buyer Indemnitee or the Seller
Indemnitee, as the case may be, against whom such Claim has been made will (upon
further notice to the indemnifying party) have the right to undertake the
defense, compromise or settlement of such Claim on behalf of and for the account
and risk, and at the expense, of the indemnifying party, subject to the right of
the indemnifying party to assume the defense of such Claim at any time prior to
settlement, compromise or final determination of such Claim. If the indemnifying
party assumes such defense, the Buyer Indemnitee or the Seller Indemnitee, as
the case may be, shall have the right to participate in the defense thereof and
to employ counsel, at its own expense (which expense shall not constitute a
Buyer Damage or Seller Damage, as applicable, unless the Buyer Indemnitee or the
Seller Indemnitee, as the case may be, reasonably determines that the
indemnifying party is not adequately representing or, because of a conflict of
interest, may not adequately represent, any interests of the Buyer Indemnitee or
the Seller Indemnitee, as the case may be, and only to the extent that such
expenses are reasonable), separate from the counsel employed by the Buyer
Indemnitee or the Seller Indemnitee, it being understood, however, that the
indemnifying party shall control such defense. The indemnifying party shall be
liable for the fees and expenses of counsel employed by the Buyer Indemnitee or
the Seller Indemnitee, as the case may be, for any period during which the
indemnifying party has not assumed the defense thereof.
(b) Anything in this Section 7.4 to the contrary notwithstanding, the
indemnifying party shall not enter into any settlement or compromise of any
action, suit or proceeding or consent to the entry of any judgment (i) which
does not include as an unconditional term of the delivery by the claimant or
plaintiff to the Seller Indemnitee or the Buyer Indemnitee, as the case may be,
of a written release from all liability in respect of such action, suit or
proceeding or (ii) for other than monetary damages to be borne by the
indemnifying party, without the prior written consent of the Seller Indemnitee
or the Buyer Indemnitee, as the case may be, which consent shall not be
unreasonably withheld.
(c) The indemnifying party and the Seller Indemnitee or Buyer
Indemnitee, as applicable, shall provide each other such cooperation as may be
reasonably requested and at the expense of the indemnifying party in all aspects
of any investigation, defense, pretrial activities, trial, compromise,
settlement or discharge of any claim in respect of which indemnity is sought
under this Article VII, including, but not limited to, by providing the other
party with reasonable access to employees and officers (including as witnesses)
and other information.
Section 7.5 No Setoff. Neither Buyer nor Seller shall have any right
to setoff any Buyer Damages or Seller Damages, respectively, against any
payments to be made by either of them under this Agreement.
Section 7.6 No Duplication. Any liability for indemnification under
this Agreement shall be determined without duplication of recovery by reason of
the state of facts (i) giving rise to such liability constituting a breach of
more than one representation, warranty,
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covenant or agreement or (ii) taken into account in determining any adjustment
to the Purchase Price under Section 1.9(c).
Section 7.7 Qualifications for Materiality. Notwithstanding any
provision in this Agreement to the contrary, the indemnification obligations of
Seller and of Buyer under this Article VII in connection with a breach of any
representation, warranty, covenant or other agreement contained in this
Agreement, and the amount of Losses to be indemnified, shall be determined
without regard to any qualifications, provisions or exceptions for "material",
"materiality," "in all material respects" (or correlative meanings) or "Seller
Material Adverse Effect" or "Buyer Material Adverse Effect" set forth in such
representation, warranty, covenant or other agreement, and each of such
representations, warranties, covenants or other agreements shall be deemed to
have been made or given for the purposes of this Article VII as though there
were no such qualification, provision or exception. The parties acknowledge that
the failure to disclose a matter in the Seller Disclosure Letter due to the
materiality thresholds set forth in any such representation, warranty, covenant
or other agreement shall not, per se, give rise to Buyer Damages or Seller
Damages, as the case may be.
Section 7.8 Sole Remedy.
(a) After the Closing, the parties agree that the sole and exclusive
remedy of any party to this Agreement or their respective affiliates with
respect to this Agreement, the events giving rise to this Agreement and the
transactions provided for in this Agreement and the Ancillary Agreements, shall
be limited to the indemnification provisions set forth in Section 1.9, 1.10,
1.11, 1.12, 1.13, 4.6, 4.8(k), 4.11, 4.13(b), 4.14 and 4.15 and this Article VII
and, in furtherance of the foregoing, each of the parties, on behalf of itself
and its affiliates, waives and releases the other parties to this Agreement (and
such other parties' affiliates) from, to the fullest extent permitted under any
applicable Law, any and all rights, claims and causes of action it or its
affiliates may have against the other party to this Agreement except as provided
by this Agreement. Notwithstanding the foregoing, nothing in this Agreement will
prevent any party from bringing an action based upon allegations of fraud by the
other party in connection with this Agreement. In the event such action is
brought, the prevailing party's attorneys' fees and costs will be paid by the
nonprevailing party.
(b) The parties intend that, even though indemnification and other
obligations appear in various sections and articles of this Agreement, the
indemnification procedures and, to the extent applicable, the limitations
contained in this Article VII shall apply to all indemnity and other obligations
of the parties under this Agreement, except as provided in Section 4.6 and
except to the extent expressly excluded in this Article VII.
Section 7.9 No Special Damages. IN NO EVENT SHALL ANY PARTY BE LIABLE
UNDER THIS ARTICLE VII OR OTHERWISE IN RESPECT OF THIS AGREEMENT FOR EXEMPLARY,
SPECIAL, PUNITIVE, INDIRECT, REMOTE, SPECULATIVE OR CONSEQUENTIAL DAMAGES EXCEPT
TO THE EXTENT ANY SUCH PARTY SUFFERS SUCH DAMAGES TO AN UNAFFILIATED THIRD PARTY
IN CONNECTION WITH A THIRD PARTY CLAIM, IN WHICH EVENT SUCH DAMAGES SHALL BE
RECOVERABLE.
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Section 7.10 Escrow Account.
(a) The Adjustment Escrow Amount shall be held by the Escrow Agent
from the Closing Date until the final resolution of any adjustment to the
Purchase Price is determined under Section 1.9 hereof and shall be released by
the Escrow Agent in accordance with Section 1.9 hereof and the terms of the
Escrow Agreement.
(b) The Indemnification Escrow Amount shall be held by the Escrow
Agent from the Closing Date until twenty-four months after the Closing Date (the
"Escrow Period") and shall be released by the Escrow Agent in accordance with
this Section 7.10 and the terms of the Escrow Agreement. During the Escrow
Period, if any Buyer Indemnitee suffers any Buyer Damages subject to
indemnification pursuant to this Article VII, it shall be entitled to receive,
upon final determination of the amount of Buyer Damages and its entitlement to
indemnification in accordance with the terms of this Agreement, from the Escrow
Agent out of the Indemnification Escrow Amount an amount equal to the amount of
such Buyer Damages.
(c) At the end of the Escrow Period, the Escrow Agent, shall promptly
deliver to Seller cash (the "Returned Cash") in amount equal to the then current
balance of Indemnification Escrow Amount (subject to the prior reduction of the
Indemnification Escrow Amount in satisfaction of any Buyer Damage for which any
Buyer Indemnitee was entitled to indemnification pursuant to this Article VII)
less the aggregate value (based on a reasonable good faith estimate of the
liability) of all claims for indemnification under this Article VII, if any, for
which notice has been timely filed by a Buyer Indemnitee pursuant to this
Article VII ("Pending Claims"). At the time that the Escrow Agent delivers the
Returned Cash to Seller, the Escrow Agent shall deliver a notice to Seller and
Buyer setting forth the amount of Returned Cash, the aggregate value of all
Pending Claims, and the amount of the Indemnification Escrow Amount, including
Investment Income (as defined in the Escrow Agreement) thereon, that will remain
in escrow under the Escrow Agreement pending resolution of any such Pending
Claims (the "Retained Cash").
(d) Within ten business days after the date on which a claim for
indemnification of Buyer Damages against Retained Cash has been completely and
finally resolved in accordance with this Agreement, the Escrow Agent shall
deliver to Seller the Retained Cash, including Investment Income thereon, less
an amount of cash equal to the aggregate amount released by the Escrow Agent to
the applicable Buyer Indemnitee pursuant to this Article VII in connection with
the final resolution of its claims against the Retained Cash.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Amendment and Modification. This Agreement may be amended,
modified or supplemented at any time by the parties to this Agreement, under an
instrument in writing signed by all parties.
Section 8.2 Entire Agreement; Assignment. This Agreement (including
the Seller Disclosure Letter) and the Confidentiality Agreement (a) constitute
the entire agreement
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between the parties concerning the subject matter of this Agreement and
supersede other prior agreements and understandings, both written and oral,
between the parties concerning the subject matter of this Agreement and (b)
shall not be assigned, by operation of law or otherwise, by a party, without the
prior written consent of the other parties.
Section 8.3 Severability. The invalidity or unenforceability of any
term or provision of this Agreement in any situation or jurisdiction shall not
affect the validity or enforceability of the other terms or provisions of this
Agreement or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction and the remaining terms and
provisions shall remain in full force and effect, unless doing so would result
in an interpretation of this Agreement which is manifestly unjust.
Section 8.4 Notices. Unless otherwise provided in this Agreement, all
notices and other communications under this Agreement shall be in writing and
may be given by any of the following methods: (a) personal delivery; (b)
facsimile transmission; (c) registered or certified mail, postage prepaid,
return receipt requested; or (d) overnight delivery service. Such notices and
communications shall be sent to the appropriate party at its address or
facsimile number given below or at such other address or facsimile number for
such party as shall be specified by notice given under this Agreement (and shall
be deemed given upon receipt by such party or upon actual delivery to the
appropriate address, or, in case of a facsimile transmission, upon transmission
by the sender and issuance by the transmitting machine of a confirmation slip
that the number of pages constituting the notice have been transmitted without
error; in the case of notices sent by facsimile transmission, the sender shall
contemporaneously mail a copy of the notice to the addressee at the address
provided for above; provided, however, that such mailing shall in no way alter
the time at which the facsimile notice is deemed received):
(a) if to Seller, to
Imperial Sugar Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice
President & General Counsel
with a copy to
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
One Shell Plaza
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr.
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(b) if to Buyer, to
Hormel Foods Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Section 8.5 Governing Law. This Agreement shall be governed by,
enforced under and construed in accordance with the laws of the State of
Delaware, without giving effect to any choice or conflict of law provision or
rule thereof.
Section 8.6 Dispute Resolution.
(a) Negotiation; Mediation.
(i) In the event of any dispute or disagreement between Seller
and Buyer as to the interpretation of any provision of this Agreement (or the
performance of obligations under this Agreement), the matter, on written request
of either party, shall be referred to representatives of the parties for
decision, each party being represented by a senior executive officer who has no
direct operational responsibility for the matters contemplated by this Agreement
(the "Representatives"). The Representatives shall promptly meet in a good faith
effort to resolve the dispute. If the Representatives do not agree upon a
decision within 30 calendar days after reference of the matter to them, each of
Buyer and Seller shall be free to exercise the remedies available to it under
Section 8.6(b).
(ii) The Representatives may, if they desire, agree to undertake
mediation and may, if they choose, do so in accordance with the commercial
mediation rules of the American Arbitration Association ("AAA"), either as
written or as modified by mutual agreement. A written agreement to undertake
mediation may be made at any time. If arbitration proceeds have been instituted,
they shall be stayed until the mediation process is terminated.
(b) Arbitration.
(i) Any controversy, dispute or claim arising out of or relating
in any way to this Agreement or the other agreements contemplated by this
Agreement or the transactions arising hereunder or thereunder that cannot be
resolved by negotiation or
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mediation pursuant to Section 8.6(a) shall be settled exclusively by
final and binding arbitration in the City of St. Louis, Missouri. Such
arbitration will apply the laws of the State of Delaware and the
commercial arbitration rules of AAA to resolve the dispute.
(ii) Such arbitration shall be conducted by one independent
and impartial arbitrator to be selected by mutual agreement of the
parties, if possible. If the parties fail to reach agreement regarding
appointment of an arbitrator within thirty days following receipt by
one party of the other party's notice of arbitration, the arbitrator
shall be selected from a list or lists of proposed arbitrators
submitted by AAA. Unless the parties agree otherwise, the arbitrator
shall be a licensed attorney with at least ten years of experience in
the practice of law. The selection process shall be that which is set
forth in the AAA commercial arbitration rules then prevailing, except
that (A) the number of preemptory strikes shall not be limited and
(B), if the parties fail to select an arbitrator from one or more
lists, AAA shall not have the power to make an appointment but shall
continue to submit additional lists until an arbitrator has been
selected. Initially, however, promptly following its receipt of a
request to submit a list of proposed arbitrators, AAA shall convene
the parties in person or by telephone and attempt to facilitate their
selection of an arbitrator by agreement. If the arbitrator should die,
withdraw or otherwise become incapable of serving, a replacement shall
be selected and appointed in a like manner.
(iii) The arbitrator shall render an opinion setting forth
findings of fact and conclusions of law with the reasons therefor
stated. A transcript of the evidence adduced at the hearing shall be
made and shall, upon request, be made available to either party. The
fees and expenses of the arbitrator shall be shared equally by the
parties and advanced by them from time to time as required; provided
that at the conclusion of the arbitration, the arbitrator may award
costs and expenses to the prevailing party in the arbitration
(including the costs of the arbitration previously advanced and the
fees and expenses of attorneys, accountants and other experts). No
pre-arbitration discovery shall be permitted, except that the
arbitrator shall have the power in his or her sole discretion, on
application by either party, to order pre-arbitration examination of
the witnesses and documents that the other party intends to introduce
in its case-in-chief at the arbitration hearing. The arbitrator shall
render his or her award within 90 days of the conclusion of the
arbitration hearing. The arbitrator shall not be empowered to award to
either party any punitive damages in connection with any dispute
between them arising out of or relating in any way to this Agreement
or the other agreements contemplated hereby or the transactions
arising hereunder or thereunder, and each party hereby irrevocably
waives any right to recover such damages. The arbitration hearings and
award shall be maintained in confidence.
(iv) Notwithstanding anything to the contrary provided in
this Section 8.6(b) and without prejudice to the above procedures,
either party may apply to any court of competent jurisdiction for
temporary injunctive or other provisional judicial relief or to
specifically enforce the terms of this Agreement if such action is
necessary to avoid irreparable damage or to preserve the status quo
until such time as the arbitrator is selected and available to hear
such party's request for temporary relief. The award
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rendered by the arbitrator shall be final and not subject to judicial
review and judgment thereon may be entered in any court of competent
jurisdiction.
(c) Inapplicable to Section 1.9. Notwithstanding anything to the
contrary contained in this Agreement, this Section 8.6 shall not apply to the
provisions of Sections 1.9(b) and (c) of this Agreement.
Section 8.7 Descriptive Headings. The descriptive headings used in
this Agreement are inserted for convenience of reference only and shall in no
way be construed to define, limit, describe, explain, modify, amplify, or add to
the interpretation, construction or meaning of any provision of, or scope or
intent of, this Agreement nor in any way affect this Agreement.
Section 8.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but any of which
together shall constitute one and the same instrument.
Section 8.9 Fees and Expenses. Whether or not this Agreement and the
transactions contemplated by this Agreement are consummated, and except as
otherwise expressly set forth in this Agreement, all costs and expenses
(including legal and financial advisory fees and expenses) incurred in
connection with, or in anticipation of, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses (and, in the case of Seller and Savannah, the expenses incurred by the
Companies). Each of Seller, on the one hand, and the Buyer, on the other hand,
shall indemnify and hold harmless the other party from and against any and all
claims or liabilities for financial advisory and finders' fees incurred by
reason of any action taken by such party or otherwise arising out of the
transactions contemplated by this Agreement by any person claiming to have been
engaged by such party. Seller agrees that none of the Companies has borne or
will bear any of Seller's or Savannah expenses in connection with the
transactions contemplated by this Agreement.
Section 8.10 Interpretation. The phrase "to the knowledge of Seller"
or any similar phrase shall mean such facts and other information which as of
the date of this Agreement are known to any director or officer of Seller,
Savannah or the Companies and any of the following individuals ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ Lehnies, ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ or any
knowledge that would have been acquired by any such person upon appropriate
inquiry and investigation. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
Section 8.11 Third-Party Beneficiaries. Savannah is an intended
third-party beneficiary of this Agreement. This Agreement is solely for the
benefit of Seller, Savannah and their respective successors and permitted
assigns, with respect to the obligations of Buyer under this Agreement, and for
the benefit of Buyer, and its successors and permitted assigns, with respect to
the obligations of Seller, under this Agreement, and this Agreement shall not be
deemed to confer upon or give to any other third party any remedy, claim of
liability or reimbursement, cause of action or other right.
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Section 8.12 No Waivers. Except as otherwise expressly provided in
this Agreement, no failure to exercise, delay in exercising, or single or
partial exercise of any right, power or remedy by any party, and no course of
dealing between the parties, shall constitute a waiver of any such right, power
or remedy. No waiver by a party of any default, misrepresentation, or breach of
warranty or covenant under this Agreement, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant under this Agreement or affect in any way any
rights arising by virtue of any prior or subsequent such occurrence. No waiver
shall be valid unless in writing and signed by the party against whom such
waiver is sought to be enforced.
Section 8.13 Specific Performance. The parties to this Agreement
agree that if any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, irreparable
damage would occur, no adequate remedy at law would exist and damages would be
difficult to determine, and that the parties shall be entitled to specific
performance of the terms of this Agreement and immediate injunctive relief,
without the necessity of proving the inadequacy of money damages as a remedy, in
addition to any other remedy at law or in equity.
[Remainder of page left blank intentionally. Signature page follows.]
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IN WITNESS WHEREOF, each of the undersigned has caused this
Stock Purchase Agreement to be duly signed as of the date first above written.
SELLER:
IMPERIAL SUGAR COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
HORMEL FOODS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President, External
Affairs and General Counsel
Execution Copy
EXHIBIT A
EXCLUDED SUGAR PRODUCTS
ALL CHANNELS OF DISTRIBUTION
100 lb bags
50 lb bags
40 lb box (powdered, ▇▇▇▇▇)
25 lb bags
5 lb bags
4 lb bags
Totes
GROCERY/RETAIL AND INDUSTRIAL CHANNELS OF DISTRIBUTION
Canisters
2 lb boxes
1 lb bags
1 lb boxes
