\n Section 8.1 Indemnification; Remedies……………………. 41
\n Section 8.2 Notice of Claim; Defense…………………….. 44
\n Section 8.3 Resolution of All Tax-Related Disputes………… 45
\n Section 8.4 Tax Effect of Indemnification Payments………… 45
\n Section 8.5 No Duplication; Sole Remedy Procedures………… 46
\n Section 8.6 No Right of Off-set\/Set-off………………….. 46<\/p>\n ARTICLE IX<\/p>\n
DEFINITIONS AND INTERPRETATION<\/p>\n
Section 9.1 Definitions………………………………… 46
\n Section 9.2 Interpretation……………………………… 54<\/p>\n
ARTICLE X<\/p>\n
MISCELLANEOUS<\/p>\n
Section 10.1 Fees and Expenses…………………………… 54
\n Section 10.2 Amendment and Modification…………………… 55
\n Section 10.3 Notices……………………………………. 55
\n Section 10.4 Counterparts……………………………….. 55
\n Section 10.5 Entire Agreement; No Third Party Beneficiaries…. 56
\n Section 10.6 Severability……………………………….. 56
\n Section 10.7 Governing Law………………………………. 56
\n Section 10.8 Dispute Resolution………………………….. 56
\n Section 10.9 Venue……………………………………… 56
\n Section 10.10 Time of Essence…………………………….. 57
\n Section 10.11 Extension; Waiver…………………………… 57
\n Section 10.12 Election of Remedies………………………… 57
\n Section 10.13 Assignment…………………………………. 57
\n Section 10.14 Waiver of Jury Trial………………………… 57
\n Section 10.15 Specific Performance………………………… 57
\n Section 10.16 Guarantee………………………………….. 57
\n<\/c><\/s><\/table>\n
EXHIBITS:
\n Trademark Assignment
\n Patent Assignment
\n Net Book Value Calculation<\/p>\n
STOCK PURCHASE AGREEMENT<\/p>\n
Stock Purchase Agreement, dated as of January 10, 2000, by and among
\nGroupe Danone, a societe anonyme organized under the laws of the Republic of
\nFrance, as Guarantor, Danone International Brands, Inc., a Delaware corporation,
\nMcKesson HBOC, Inc., a Delaware corporation and the holder of all the capital
\nstock of McKesson Water Products Company. Certain capitalized terms used in
\nthis Agreement have the meanings assigned to them in Article IX or elsewhere in
\nthe Agreement.<\/p>\n
WHEREAS, Seller owns all of the issued and outstanding Shares of
\nMcKesson Water Products Company, a California corporation; and<\/p>\n
WHEREAS, each of the Boards of Directors of Purchaser and Seller has
\napproved, and the Board of Directors of Seller deems it advisable and in the
\nbest interests of its shareholders to consummate, the acquisition of the Company
\nby Purchaser, which acquisition is to be effected by the purchase of all the
\noutstanding capital stock of the Company by Purchaser upon the terms and subject
\nto the conditions set forth herein;<\/p>\n
NOW, THEREFORE, in consideration of the foregoing and the mutual
\nrepresentations, warranties, covenants and agreements set forth herein,
\nintending to be legally bound hereby, the parties hereto agree as follows:<\/p>\n
ARTICLE I<\/p>\n
PURCHASE AND SALE OF SHARES<\/p>\n
Section 1.1 Sale and Transfer of Shares. Subject to the terms and
\n —————————
\nconditions of this Agreement, at the Closing, Seller shall sell, convey, assign,
\ntransfer and deliver to Purchaser all the issued and outstanding Shares, free
\nand clear of all Encumbrances, except for any Encumbrance relating to the resale
\nof the Shares by the Purchaser arising under the Securities Act or any
\napplicable state securities laws and Purchaser shall purchase, acquire and
\naccept the Shares from Seller.<\/p>\n
Section 1.2 The Purchase Price. Subject to the terms and conditions
\n ——————
\nof this Agreement, in consideration of the aforesaid sale, conveyance,
\nassignment, transfer and delivery to Purchaser of the Shares, Purchaser shall
\npay to Seller an amount of cash equal to $1,105,000,000.<\/p>\n
Section 1.3 Purchase Price Adjustment.
\n ————————- <\/p>\n
(a) As promptly as practicable, but no later than 90
\ncalendar days after the Closing Date, Seller shall prepare and deliver to
\nPurchaser a closing balance sheet as of the Closing Date (the “Closing Balance
\n —————
\nSheet”) prepared in accordance with GAAP on a basis consistent with the
\n—–
\nFinancial Statements and a statement of the Net Book Value of the Company as of
\nthe Closing Date derived therefrom (the “Closing Statement”), accompanied by a
\n —————–
\nreport <\/p>\n
2<\/p>\n
prepared by Deloitte & Touche, LLP which states that the Closing Balance Sheet
\npresents fairly the financial position of the Company in accordance with GAAP
\n(provided that the materiality level for such Closing Statement shall be the
\n ——–
\nlevel appropriate for businesses of the same size, scope and nature as the
\nCompany) and with adjustments similar to normal year-end adjustments, and that
\nthe Closing Balance Sheet fairly presents the financial position of the Company
\nas at the Closing Date. Seller and its accountants shall be provided with
\nreasonable access to the books and records of the Company reasonably related to
\nthe Seller’s preparation of the Closing Balance Sheet and the Closing Statement,
\nand the Purchaser shall ensure that personnel of the Company are available and
\ncooperative with the audit process and the signing of appropriate management
\nrepresentation letters.<\/p>\n
(b) In the event that $213,702,000 exceeds the Net Book Value of
\nthe Company set forth on the Closing Statement, Seller shall make a payment to
\nPurchaser equal to the amount of such excess. In the event that the Net Book
\nValue of the Company set forth on the Closing Statement exceeds $213,702,000,
\nPurchaser shall make a payment to Seller equal to the amount of such excess. For
\nillustrative purposes, attached hereto as Exhibit 1.3(b) is a worksheet showing
\nthe derivation of the dollar amount set forth in this Section 1.3(b).<\/p>\n
(c) Any payment required to be made by any party in accordance
\nwith clause (b) above shall be made within five Business Days of the date on
\nwhich the Closing Statement becomes final and binding on the parties in
\naccordance with this Section 1.3 and shall be made with interest thereon,
\ncalculated at the Interest Rate from the Closing Date to the date of payment.<\/p>\n
(d) Purchaser may dispute any amounts reflected on the Closing
\nStatement but solely on the basis that (i) the Closing Statement was not
\nprepared in accordance with GAAP, (ii) the Closing Statement was not prepared on
\na basis consistent with the Financial Statements, or (iii) the mathematical
\ncomputations or clerical entries embodied in the Closing Statement are
\ninaccurate; provided, however, that Purchaser shall notify Seller in writing of
\n ——– ——-
\neach disputed item (such notice being a “Notice of Dispute”), specifying the
\n —————–
\namount thereof in dispute and setting forth in reasonable detail each disputed
\nitem and amount and the basis for such dispute, within 30 calendar days after
\nPurchaser’s receipt of the Closing Statement. Practices, policies, estimates and
\nother matters used in the preparation of the Closing Statement that are
\npermitted under GAAP shall not be subject to dispute by Purchaser except on the
\ngrounds that the Closing Statement was not prepared on a basis consistent with
\nthe Financial Statements. Purchaser and its accountants shall be provided with
\nreasonable access to the books, records and non-proprietary work papers of the
\nSeller and its accountants reasonably related to the Purchaser’s review of the
\nClosing Statement, provided that the Purchaser executes customary waiver and
\n ——–
\nindemnification letters for the Seller’s accountants. In the event of such a
\ndispute, Seller and Purchaser shall attempt to reconcile their differences and
\nany resolution by them as to any disputed amounts shall be final and binding on
\nthe parties hereto. If Purchaser and Seller are unable to reach a resolution
\nwith such effect within 30 calendar days of the delivery of the Notice of
\nDispute, Purchaser and Seller shall submit the items remaining in dispute for
\nresolution to an independent accounting firm of national reputation mutually
\nappointed by Purchaser and Seller (the “Independent Accounting Firm”), which
\n —————————
\nshall, within 30 calendar days after submission, determine and report to the
\nparties upon such remaining disputed items and such <\/p>\n
3<\/p>\n
report shall be final and binding on the parties hereto. The fees and
\ndisbursements of the Independent Accounting Firm shall be allocated between
\nPurchaser and Seller, in the same proportion that the aggregate amount of such
\nremaining disputed items so submitted to the Independent Accounting Firm that is
\nunsuccessfully disputed by each (as finally determined by the Independent
\nAccounting Firm) bears to the total amount of such remaining disputed items so
\nsubmitted. If Purchaser does not deliver a Notice of Dispute to Seller within 30
\ncalendar days of the date of delivery to Purchaser of the Closing Statement, the
\nClosing Statement delivered to Purchaser shall be final and binding on the
\nparties hereto upon the expiration of such 30 calendar day period.<\/p>\n
(e) Each party shall make each payment due to the other party
\nhereunder as soon as practicable on the day when due in U.S. Dollars by wire
\ntransfer in immediately available funds. All computations of interest shall be
\nmade by the party entitled to receive payment on the basis of a year of 360
\ndays, in each case for the actual number of days (including the first day but
\nexcluding the last day) occurring in the period for which such interest is
\npayable. Whenever any payment hereunder shall be stated to be due on a day other
\nthan a Business Day, such payment shall be made on the next succeeding Business
\nDay, and such extension of time shall in such case be included in the
\ncomputation of payment of interest.<\/p>\n
ARTICLE II<\/p>\n
THE CLOSING<\/p>\n
Section 2.1 The Closing. The sale and transfer of the Shares by
\n ———–
\nSeller to Purchaser shall take place at the offices of Shearman & Sterling at
\n10:00 a.m., New York City time, two Business Days following the satisfaction
\nand\/or waiver of all conditions to close set forth in Article VI, unless another
\ndate or place is agreed in writing by each of the parties hereto.<\/p>\n
Section 2.2 Deliveries by Seller. At the Closing, Seller shall
\n ——————–
\ndeliver to Purchaser:<\/p>\n
(a) one or more certificates representing all the issued and
\noutstanding Shares, each such certificate to be duly and validly endorsed in
\nfavor of Purchaser or accompanied by a separate stock power duly and validly
\nexecuted by Seller and otherwise sufficient to vest in Purchaser good title to
\nsuch Shares;<\/p>\n
(b) resignations of each director of the Company and each
\nCompany Subsidiary;<\/p>\n
(c) a certification of non-foreign status for Seller in the form
\nand manner which complies with the requirements of Section 1445 of the Code and
\nthe regulations promulgated thereunder; and<\/p>\n
(d) all other previously undelivered documents required to be
\ndelivered by Seller to Purchaser at or prior to the Closing in connection with
\nthe Transactions.<\/p>\n
4<\/p>\n
Section 2.3 Deliveries by Purchaser. At the Closing, Purchaser
\n ———————–
\nshall:<\/p>\n
(a) transfer the amount set forth in Section 1.2 to an account
\ndesignated by Seller prior to the Closing by wire transfer in immediately
\navailable funds; and<\/p>\n
(b) deliver to Seller all other previously undelivered documents
\nrequired to be delivered by Purchaser to Seller at or prior to Closing in
\nconnection with the Transactions.<\/p>\n
ARTICLE III<\/p>\n
REPRESENTATIONS AND WARRANTIES OF SELLER<\/p>\n
Except as set forth in the Disclosure Schedule prepared and signed by
\nSeller and delivered to Purchaser simultaneously with the execution hereof or as
\nexpressly reflected in the Financial Statements, Seller represents and warrants
\nto Purchaser that all of the statements contained in this Article III are true
\nas of the date of this Agreement (or, if made as of a specified date, as of such
\ndate). For purposes of the representations and warranties of Seller contained
\nherein, disclosure in any section of the Disclosure Schedule of any facts or
\ncircumstances shall be deemed to be disclosure of such facts or circumstances
\nwith respect to all representations or warranties by Seller calling for
\ndisclosure of such information, whether or not such disclosure is specifically
\nassociated with or purports to respond to one or more or all of such
\nrepresentations or warranties if it is reasonably apparent on the face of the
\nDisclosure Schedule that such disclosure is applicable.<\/p>\n
Section 3.1 Organization. Seller is a corporation duly organized,
\n ————
\nvalidly existing and in good standing under the laws of Delaware. Seller has all
\nrequisite corporate or other power and authority and all necessary governmental
\napprovals to own, lease and operate its properties and to carry on its business
\nas now being conducted, except where the failure to be so organized, existing
\nand in good standing or to have such power, authority, and governmental
\napprovals would not have, individually or in the aggregate, a material adverse
\neffect on Seller’s ability to consummate the Transactions.<\/p>\n
Section 3.2 Authorization; Validity of Agreement. Seller has the
\n ————————————
\nrequisite corporate power and authority to execute and deliver this Agreement
\nand the other Transaction Documents to which it is or will be a party and to
\nconsummate the Transactions and the other transactions contemplated thereby.
\nThe execution, delivery and performance by Seller of this Agreement and the
\nother Transaction Documents to which it is or will be a party, and the
\nconsummation of the Transactions and the other transactions contemplated thereby
\nhave been or will be duly authorized by the Board of Directors of Seller, and no
\nother corporate action on the part of Seller is or will be necessary to
\nauthorize the execution, delivery and performance by Seller of this Agreement
\nand the other Transaction Documents to which it is or will be a party or the
\nconsummation of the Transactions and the other transactions contemplated
\nthereby. No vote of, or consent by, the holders of any class or series of stock
\nissued by Seller is or will be <\/p>\n
5<\/p>\n
necessary to authorize the execution and delivery by Seller of this Agreement
\nand the other Transaction Documents to which it is or will be a party or the
\nconsummation by it of the Transactions and the other transactions contemplated
\nthereby.<\/p>\n
Section 3.3 Execution; Validity of Agreement. This Agreement and the
\n ——————————–
\nother Transaction Documents to which it is a party have been or will be duly
\nexecuted and delivered by Seller, and, assuming due and valid authorization,
\nexecution and delivery hereof and thereof by Purchaser, are or will be valid and
\nbinding obligations of Seller, enforceable against Seller in accordance with its
\nterms except (a) as limited by applicable bankruptcy, insolvency,
\nreorganization, moratorium, fraudulent conveyance and other similar laws of
\ngeneral application affecting enforcement of creditors’ rights generally and (b)
\nthe availability of the remedy of specific performance or injunctive or other
\nforms of equitable relief may be subject to equitable defenses and would be
\nsubject to the discretion of the court before which any proceeding therefor may
\nbe brought.<\/p>\n
Section 3.4 Consents and Approvals; No Violations. Except for the
\n ————————————-
\nfilings, permits, authorizations, consents and approvals as may be required
\nunder, and other applicable requirements of the HSR Act, none of the execution,
\ndelivery or performance of this Agreement or the other Transaction Documents to
\nwhich it is or will be a party by Seller, the consummation by Seller of the
\nTransactions or the other transactions contemplated thereby or compliance by
\nSeller with any of the provisions hereof or thereof will (a) conflict with or
\nresult in any breach of any provision of the certificate of incorporation or by-
\nlaws of Seller, the Company or any Company Subsidiary, (b) require any filing
\nwith, or permit, authorization, consent or approval of, any Governmental Entity,
\n(c) result in a violation or breach of, or constitute (with or without due
\nnotice or lapse of time or both) a default (or give rise to any right of
\ntermination, cancellation or acceleration) under, or result in the creation of
\nany Encumbrance on any of the Shares or on any assets or properties of the
\nSeller or the Company or the Company Subsidiaries pursuant to, any of the terms,
\nconditions or provisions of any note, bond, mortgage, indenture, lease, license,
\npermit, franchise, contract, agreement or other instrument or obligation to
\nwhich Seller or any of its Subsidiaries is a party or by which any of them or
\nany of their respective properties or assets may be bound, or (d) violate any
\norder, writ, injunction, decree, statute, rule or regulation applicable to
\nSeller, any of its Subsidiaries or any of their properties or assets, excluding
\nfrom the foregoing clauses (b), (c) and (d) such violations, breaches or
\ndefaults which (A) would not, individually or in the aggregate, have a Company
\nMaterial Adverse Effect (without giving effect to the second proviso of the
\ndefinition thereof) or a material adverse effect on Seller’s ability to
\nconsummate the Transactions or the transactions contemplated by the other
\nTransaction Documents or (B) would become applicable solely as a result of the
\nbusiness or activities in which Purchaser is or proposes to be engaged or solely
\nas a result of any acts or omissions pertaining specifically to Purchaser.<\/p>\n
6<\/p>\n
Section 3.5 Ownership and Possession of Shares. Seller is the sole
\n ———————————-
\nrecord and beneficial owner of all the issued and outstanding Shares. The
\ncertificates representing the Shares are now and at all times during the term
\nhereof shall be held by Seller or by a nominee or custodian for the sole and
\nexclusive benefit of Seller, free and clear of all Encumbrances whatsoever,
\nexcept for any Encumbrances created by this Agreement and Encumbrances relating
\nto the resale of the Shares by Purchaser arising under the Securities Act or any
\napplicable state securities laws.<\/p>\n
Section 3.6 Good Title Conveyed. The stock certificates, stock
\n ——————-
\npowers, endorsements, assignments and other instruments to be executed and
\ndelivered by Seller to Purchaser at the Closing will be valid and binding
\nobligations of Seller, enforceable in accordance with their respective terms,
\nand will effectively vest in Purchaser good title to all the Shares, free and
\nclear of all Encumbrances, except restrictions relating to the resale of the
\nShares by Purchaser imposed by the Securities Act and any applicable state
\nsecurities laws.<\/p>\n
Section 3.7 Company Action. No vote of, or consent by, the holders
\n ————–
\nof any class or series of capital stock issued by the Company or any Company
\nSubsidiary is or will be necessary to authorize the execution and delivery by
\nSeller of this Agreement and the other Transaction Documents or the consummation
\nby it of the Transactions and the transactions contemplated by the other
\nTransaction Documents.<\/p>\n
Section 3.8 Capitalization. The authorized capital stock of the
\n ————–
\nCompany consists of 10,000 Shares. As of the date hereof, (a) 10,000 Shares are
\nissued and outstanding, (b) no Shares are owned by any Person other than Seller,
\nand (c) no Shares are issued and held in the treasury of the Company. All the
\noutstanding Shares and shares of capital stock of the Company Subsidiaries are
\nduly authorized, validly issued, fully paid and nonassessable. Except as set
\nforth above, as of the date hereof, (d) there are no shares of capital stock of
\nthe Company authorized, issued or outstanding; and (e) there are no existing
\noptions, warrants, calls, pre-emptive rights, subscriptions, registration or
\nother rights, agreements, arrangements or commitments of any character, relating
\nto the issued or unissued capital stock of the Company or any Company
\nSubsidiary, obligating the Company or any Company Subsidiary to issue, transfer
\nor sell or cause to be issued, transferred or sold any shares of capital stock
\nof the Company or any Company Subsidiary.<\/p>\n
Section 3.9 Organization; Qualification of Company. The Company (a)
\n ————————————–
\nis a corporation duly organized, validly existing and in good standing under the
\nlaws of the state of California; (b) has full corporate power and authority to
\ncarry on its business as it is now being conducted and to own the properties and
\nassets it now owns; and (c) is duly qualified or licensed to do business as a
\nforeign corporation in good standing in every jurisdiction in which such
\nqualification is required or, if the Company fails to be qualified in any such
\njurisdiction, such failure would not individually or in the aggregate have a
\nCompany Material Adverse Effect (without giving effect to the second proviso of
\nthe definition thereof). Seller has heretofore delivered to Purchaser complete
\nand correct copies of the certificate of incorporation and by-laws of the
\nCompany as presently in effect.<\/p>\n
7<\/p>\n
Section 3.10 Subsidiaries.
\n ———— <\/p>\n
(a) The Disclosure Schedule sets forth the name, jurisdiction of
\nincorporation and authorized capital of each Company Subsidiary and the
\njurisdictions in which each Company Subsidiary is qualified to do business. All
\nthe outstanding capital stock of each Company Subsidiary is owned directly or
\nindirectly by the Company, free and clear of all Encumbrances and all material
\nclaims or charges of any kind, and is validly issued, fully paid and
\nnonassessable. Each Company Subsidiary (i) is a corporation duly organized,
\nvalidly existing and in good standing under the laws of its state of
\nincorporation; (ii) has full corporate power and authority to carry on its
\nbusiness as it is now being conducted and to own the properties and assets it
\nnow owns; and (iii) is duly qualified or licensed to do business as a foreign
\ncorporation in good standing in every jurisdiction in which such qualification
\nis required or, if a Company Subsidiary fails to be qualified in any such
\njurisdiction, such failure would not individually or in the aggregate have a
\nCompany Material Adverse Effect (without giving effect to the second proviso in
\nthe definition thereof).<\/p>\n
(b) Other than the Company Subsidiaries, there are no other
\ncorporations, partnerships, joint ventures, associations or other entities in
\nwhich the Company or any Company Subsidiary owns, of record or beneficially, any
\ndirect or indirect equity or other interest or any right (contingent or
\notherwise) to acquire the same. Other than the Company Subsidiaries, neither the
\nCompany nor any Company Subsidiary is a member of (and no part of the business
\nof the Company or any Company Subsidiary is conducted through) any partnership.
\nThe Company is not a party to any joint venture agreement.<\/p>\n
Section 3.11 Financial Statements.
\n ——————– <\/p>\n
(a) True and complete copies of the Financial Statements are
\nincluded in the Disclosure Schedule. The Financial Statements have been prepared
\nfrom, are in accordance with and accurately reflect, the books and records of
\nthe Company and the Company Subsidiaries (which are complete and accurate in all
\nmaterial respects), comply in all material respects with applicable accounting
\nrequirements, have been prepared in accordance with GAAP applied on a consistent
\nbasis during the periods involved (except as may be stated in the notes thereto)
\nand fairly present the consolidated financial position and the consolidated
\nresults of operations and cash flows of the Company and the Company Subsidiaries
\nas of the times and for the periods referred to therein.<\/p>\n
(b) The average Net Working Capital per month of the Company for
\nthe twelve month period ended September 30, 1999 is $5,000,000. The Company has
\nmanaged the Net Working Capital for such period in the ordinary course of
\nbusiness consistent with past practice.<\/p>\n
Section 3.12 No Undisclosed Liabilities. Except for liabilities
\n ————————–
\nand obligations incurred in the ordinary course of business, between the Balance
\nSheet Date and the date hereof, neither the Company nor any Company Subsidiary
\nhas incurred any liabilities or obligations that are reasonably expected to have
\na Company Material Adverse Effect.<\/p>\n
8<\/p>\n
Section 3.13 Prepayment of Company Debt. No Indebtedness of the
\n ————————–
\nCompany or any Company Subsidiary contains any material restriction upon (a)
\nthe prepayment of any material amount of Indebtedness of the Company or any
\nCompany Subsidiary, (b) the incurrence of a material amount of Indebtedness by
\nthe Company or any Company Subsidiary or (c) the ability of the Company or any
\nCompany Subsidiary to grant any material lien on the properties or assets of the
\nCompany or any Company Subsidiary. The Disclosure Schedule sets forth the amount
\nof principal and unpaid interest outstanding under each instrument evidencing
\nIndebtedness of the Company and any Company Subsidiaries, if any, that will
\naccelerate or become due or result in a right on the part of the holder of such
\nIndebtedness (with or without due notice or lapse of time) to require
\nprepayment, redemption or repurchase as a result of the execution of this
\nAgreement or the consummation of any of the Transactions.<\/p>\n
Section 3.14 Absence of Certain Changes. Except as expressly
\n ————————–
\nrequired by this Agreement, since the Balance Sheet Date, (i) no event that
\nresulted in or is reasonably likely to result in a Company Material Adverse
\nEffect has occurred and (ii) the Company has not taken action that, if taken
\nafter the date hereof, would constitute a violation of Sections 5.1(a) through
\n5.1(j), (m), (n) or (r) hereof.<\/p>\n
Section 3.15 Title to Properties; Encumbrances. Except for property
\n ———————————
\nsold since the Balance Sheet Date in the ordinary course of business, each of
\nthe Company and each Company Subsidiary has good and marketable title to all the
\nproperties and assets (including, without limitation, real property, water
\nrights, inventory, equipment, facilities and intangible assets) reflected
\non the Balance Sheet, free and clear of all material Encumbrances not disclosed
\non the Balance Sheet. All such properties and assets constitute the properties
\nand assets necessary to conduct the business of the Company and the Company
\nSubsidiaries as currently conducted, other than the Intellectual Property
\nAssignments and property and assets used to provide ordinary course corporate
\nservices to the Company and the Company Subsidiaries.<\/p>\n
Section 3.16 Real Property. The Disclosure Schedule sets forth a
\n ————-
\ncomplete list and the location of all owned Real Property (the “Owned Real
\n ———-
\nProperty”). True and complete copies of all documents evidencing all
\n——–
\nEncumbrances upon the Owned Real Property have heretofore been furnished to
\nPurchaser. To the Knowledge of Seller, there are no condemnation proceedings or
\neminent domain proceedings pending or threatened in writing against the Real
\nProperty.<\/p>\n
Section 3.17 Leases. Set forth in Section 3.16 of the Disclosure
\n ——
\nSchedule is a true and correct list of all real property leased by the Company
\nand the Company Subsidiaries. A true and complete copy of each Lease has
\nheretofore been delivered to Purchaser. Each Lease is valid, binding and
\nenforceable in accordance with its terms and is in full force and effect. There
\nis no existing material default by the Company or any Company Subsidiary, or, to
\nthe Knowledge of the Seller, by any other party thereto, under any of the Leases
\nnor any event which, with notice or lapse of time or both, would constitute such
\na material default.<\/p>\n
9<\/p>\n
Section 3.18 Contracts and Commitments
\n ————————-<\/p>\n
(a) Section 3.18 of the Disclosure Schedule sets forth, as of the
\ndate hereof, a true, complete and correct list of every contract, agreement,
\nloan, lease, license, guarantee, understanding or commitment that (i) provides
\nfor future payments by the Company or any Company Subsidiary, or to the Company
\nor any Company Subsidiary, of more than $500,000 per annum and has an unexpired
\nterm exceeding one year and may not be canceled upon 60 days’ notice without any
\nliability, penalty or premium (excluding purchase orders, invoices and leasing
\ntransactions entered into or incurred in the ordinary course of business); (ii)
\nwas entered into by the Company or a Company Subsidiary with an Affiliate, a
\nstockholder, officer, director or significant employee of the Company, a Company
\nSubsidiary or Seller; (iii) is a collective bargaining or similar agreement;
\n(iv) involves an agreement with any bank, finance company or other organization
\nfor Indebtedness of the Company or any Company Subsidiary; (v) restricts the
\nCompany or any Company Subsidiary from engaging in any business or activity
\nanywhere in the world, other than restrictions which are immaterial to the
\nconduct of the Business; or (vi) is an employment agreement, consulting
\nagreement, severance or termination agreement or similar arrangement. Section
\n3.18 of the Disclosure Schedule (which shall be delivered no later than four
\ndays from the date hereof) sets forth, as of the date hereof, a true, complete
\nand correct list of all wells, springs and other water sources used by the
\nCompany or any Company Subsidiary in its business.<\/p>\n
(b) As of the date hereof, (i) there is not and, to the
\nKnowledge of Seller, there has not been claimed or alleged by any Person with
\nrespect to any contract listed or which should be listed in Section 3.18 of the
\nDisclosure Schedule any existing default or event that, with notice or lapse of
\ntime or both, would constitute a default or event of default on the part of the
\nCompany or any Company Subsidiary or, to the Knowledge of Seller, on the part of
\nany other party thereto, except such defaults, events of default and other
\nevents that would not result in a Company Material Adverse Effect and (ii) no
\nconsent, approval, authorization or waiver from, or notice to, any Governmental
\nEntity or other Person is required in order to maintain in full force and effect
\nany of the contracts listed or which should be listed in Section 3.18 of the
\nDisclosure Schedule, other than (A) such consents and waivers that have been
\nobtained and are unconditional and in full force and effect and such notices
\nthat have been duly given and (B) such consents, approvals, authorizations,
\nwaivers or notices, the failure of which to have or give would not have a
\nCompany Material Adverse Effect. Neither the Company nor any Company Subsidiary
\nis in default with respect to any contract listed or which should be listed in
\nSection 3.18 of the Disclosure Schedule, except as would not reasonably be
\nexpected to result in a Company Material Adverse Effect.<\/p>\n
Section 3.19 Customers and Suppliers. Since the Balance Sheet Date,
\n ———————–
\nthere has not been any material adverse change in the business relationship of
\nthe Company or any Company Subsidiary with any of the 10 largest customers of
\nthe Company (on the basis of consolidated Company sales) during the period from
\nthe Balance Sheet Date to the date hereof, or any of the 10 largest suppliers of
\nthe Company or any Company Subsidiary (on the basis of consolidated Company
\npurchases of goods or services) during the same period.<\/p>\n
10<\/p>\n
Section 3.20 Insurance. The Disclosure Schedule sets forth a true
\n ———
\nand complete list and description of all insurance policies in effect as of the
\ndate hereof, providing coverage with respect to the business or assets of the
\nCompany or the Company Subsidiaries. Each of such policies has been issued to
\nSeller or a Subsidiary thereof. Each of such policies is valid and binding and
\nin full force and effect in all material respects, all premiums due thereunder
\nhave been paid when due (except for any failures to pay any such premiums that,
\nindividually or in the aggregate, are not likely to result in a Company Material
\nAdverse Effect), and none of the Seller, the Company or any Company Subsidiary
\nhas received any notice of cancellation or termination in respect of any such
\npolicy.<\/p>\n
Section 3.21 Casualties. Since the Balance Sheet Date, neither the
\n ———-
\nCompany nor any Company Subsidiary has been affected as a result of flood, fire
\nor explosion which constitutes a Company Material Adverse Effect, whether or not
\nsuch damages or losses are covered by insurance.<\/p>\n
Section 3.22 Litigation. There is no action, suit, inquiry,
\n ———-
\nproceeding or investigation by or before any court or Governmental Entity
\npending or, to the Knowledge of Seller, threatened against or involving the
\nCompany or any Company Subsidiary that is reasonably expected to have a Company
\nMaterial Adverse Effect or that would reasonably be expected to materially
\nimpede the ability of Seller or the Company to complete the Closing.<\/p>\n
Section 3.23 Environmental Matters. Except as would not reasonably
\n ———————
\nbe expected to have a Company Material Adverse Effect and, other than with
\nrespect to clause (c), to the Constructive Knowledge of Seller, (a) the Company
\nand each Company Subsidiary are in compliance with all applicable Environmental
\nLaws and Environmental Permits, and all past non-compliance with Environmental
\nLaws or Environmental Permits has been resolved without any pending, on-going or
\nfuture obligation, cost or liability, (b) neither the Company nor any Company
\nSubsidiary has received any written notice, claim or other written communication
\nwith respect to the business of, or any property currently or formerly owned or
\nleased by, the Company or any Company Subsidiary from any Governmental Entity or
\nthird party alleging that the Company or any Company Subsidiary is not in
\ncompliance with or liable under any Environmental Law, (c) there has been no
\n“release”, as that term is defined in the Comprehensive Environmental Response,
\nCompensation, and Liability Act, 42 U.S.C. (S) 9601 et seq. (“CERCLA”), of any
\n — —-
\nHazardous Material in excess of any applicable reportable quantity or in any
\nquantity, concentration or manner that is reasonably expected to require
\ninvestigation, remediation, removal, monitoring or any other action pursuant to
\nEnvironmental Law, in each case at, to or from any of the Real Property or,
\nduring the period of the Company’s or any Company Subsidiary’s ownership, lease,
\nuse or occupancy thereof, any real property formerly owned, leased, used or
\noccupied by the Company or any Company Subsidiary, (d) there are no underground
\nor aboveground storage tanks or any surface impoundments, septic tanks, pits,
\nsumps or lagoons in which Hazardous Materials are being treated, stored or
\ndisposed on any of the Real Property, (e) neither the Company nor any Company
\nSubsidiary is conducting any investigation, remediation, removal, monitoring or
\nother action relating to any release or threatened release of any Hazardous
\nMaterial at the Real Property or at any other site, location or operation,
\neither voluntarily or pursuant to the order of any Governmental Entity or the
\nrequirements of any Environmental Law or Environmental Permit, (f) there is no
\nasbestos or <\/p>\n
11<\/p>\n
asbestos-containing material requiring abatement, remediation or other legally
\nrequired action by the Company on any of the Real Property, (g) none of the Real
\nProperty is listed or proposed for listing on the National Priorities List or
\nthe Comprehensive Environmental Response, Compensation and Liability Information
\nSystem under CERCLA, (h) the Company and each Company Subsidiary can maintain
\npresent production levels in compliance with Environmental Laws applicable as of
\nthe date hereof without an increase in capital or operating expenditures and
\nwithout modifying any Environmental Permits or obtaining any additional
\nEnvironmental Permits, and (i) Seller has made available to Purchaser copies of
\nany environmental assessment or audit reports in Seller’s possession relating to
\nthe Company’s or any Company Subsidiary’s operations or the Real Property, or
\nany property formerly owned, leased, used or occupied by the Company or any
\nCompany Subsidiary.<\/p>\n
Section 3.24 Compliance with Laws.
\n ——————– <\/p>\n
(a) The Company and the Company Subsidiaries have complied in a timely
\nmanner and in all respects with all laws, rules and regulations, ordinances,
\njudgments, decrees, orders, writs and injunctions of all United States federal,
\nstate, local, foreign governments and agencies thereof that apply to the
\nbusiness, properties or assets of the Company or any Company Subsidiary, except
\nfor violations that would not reasonably be expected to result in a Company
\nMaterial Adverse Effect.<\/p>\n
(b) The Company and each of the Company Subsidiaries holds all
\ngovernmental qualifications, registrations, filings, privileges, franchises,
\nlicenses, permits, approvals or authorizations material to the operation of the
\nrespective business and the ownership and use of the respective assets and
\nproperties of the Company and such Company Subsidiaries, as a whole
\n(collectively, “Material Licenses”). All Material Licenses, to the Knowledge of
\n —————–
\nSeller, are in full force and effect and the respective Company or Company
\nSubsidiary is in material compliance with each such Material License. All
\nMaterial Licenses will be available for use by the respective Company or Company
\nSubsidiary immediately after the Closing. As of the date hereof, no written
\nnotices have been received by the Company or any of the Company Subsidiaries
\nalleging the failure to hold any material qualification, registration, filing,
\nprivilege, franchise, license, permit, approval or other authorization.<\/p>\n
Section 3.25 Employee Benefit Plans.
\n ———————- <\/p>\n
(a) The Disclosure Schedule contains a true and complete list of all
\nPlans. The Company has heretofore made available to Purchaser a true and
\ncomplete copy of each written Plan and any amendments thereto and each agreement
\ncreating or modifying any related trust or other funding vehicle. Except as
\ndisclosed on Section 3.25(a) of the Disclosure Schedule, there are no other
\nemployee benefit plans, programs, arrangements or agreements, whether formal or
\ninformal, whether in writing or not, to which the Company is a party, with
\nrespect to which the Company has any obligation or which are maintained,
\ncontributed to or sponsored by the Company or Seller for the benefit of any
\ncurrent or former employee, officer or director of the Company. The Company has
\nno express or implied commitment (i) to create, incur liability with respect to
\nor cause to exist any other employee benefit plan, program or arrangement, (ii)
\nto enter into any contract or agreement to provide compensation or benefits to<\/p>\n
12<\/p>\n
any individual or (iii) to modify, change or terminate any Plan, other than with
\nrespect to a modification, change or termination required by ERISA or the Code.<\/p>\n
(b) The Company has not incurred any liability under, arising out of
\nor by operation of Title IV or Section 302 of ERISA (other than liability for
\npremiums to the PBGC arising in the ordinary course), including, without
\nlimitation, any liability in connection with (i) the termination or
\nreorganization of any employee benefit plan subject to Title IV of ERISA or (ii)
\nthe withdrawal from any “multi-employer pension plan” as defined in Section
\n3(37) or 4001(a)(3) of ERISA or “multiple-employer pension plan” as described in
\nSection 4063 or 4064 of ERISA, and no fact or event exists which could give rise
\nto any such liability.<\/p>\n
(c) The PBGC has not instituted proceedings to terminate any Title IV
\nPlan and no condition exists that presents a material risk that such proceedings
\nwill be instituted.<\/p>\n
(d) No Title IV Plan is a “multi-employer pension plan,” as defined in
\nSection 3(37) of ERISA, nor is any Title IV Plan a “multiple-employer or pension
\nplan” described in Sections 4063(a) and 4064 of ERISA.<\/p>\n
(e) To the best Knowledge of Seller, each Plan has been operated and
\nadministered in all material respects in accordance with its terms and
\napplicable law, including ERISA and the Code. Seller has performed all
\nmaterial obligations required to be performed by it under, is not in any
\nmaterial respect in default under or in violation of, and has no Knowledge of
\nany material default or violation by any party to, any Plan. No action, claim
\nor proceeding is pending or, to the Knowledge of the Seller, threatened with
\nrespect to any Plan (other than claims for benefits in the ordinary course) and
\nno fact or event exists that could give rise to any such action, claim or
\nproceeding.<\/p>\n
(f) Each Plan intended to be “qualified” within the meaning of Section
\n401(a) or 401(k) of the Code is so qualified and each trust established in
\nconnection with any Plan which is intended to be exempt from federal income
\ntaxation under Section 501(a) of the Code is so exempt.<\/p>\n
(g) None of the Plans provides for the payment of separation,
\nseverance, termination or similar-type benefits to any person or obligates
\nSeller to pay separation, severance, termination or similar-type benefits solely
\nor partially as a result of any transaction contemplated by this Agreement or as
\na result of a “change in ownership or effective control”, within the meaning of
\nsuch term under Section 280G of the Code. None of the Plans provides for or
\npromises retiree medical, disability or life insurance benefits to any current
\nor former employee, officer or director of the Company.<\/p>\n
Section 3.26 Tax Matters.
\n ———– <\/p>\n
(a) The Company and each Company Subsidiary has timely filed (or there
\nhave been filed on their behalf) with appropriate taxing authorities all Tax
\nReturns required to be filed by them on or prior to the date hereof, and such
\nTax Returns are complete and correct in all material respects.<\/p>\n
13<\/p>\n
(b) There are no liens for Taxes upon any property or assets of the
\nCompany or any Company Subsidiary, except for liens for Taxes not yet due.<\/p>\n
(c) No federal, state, local or foreign audits, examinations,
\ninvestigations or other administrative proceedings (such audits, examinations,
\ninvestigations and other administrative proceedings referred to collectively as
\n“Audits”) or court proceedings are presently pending with regard to any Taxes or
\n ——
\nTax Returns filed by or on behalf of the Company or any Company Subsidiary.<\/p>\n
(d) There are no outstanding requests, agreements, consents or waivers
\nto extend the statutory period of limitations applicable to the assessment of
\nany Taxes or deficiencies against the Company or any Company Subsidiary.<\/p>\n
(e) Neither the Company nor any of the Company Subsidiaries is a party
\nto any tax sharing, tax indemnity or other agreement or arrangement with any
\nPerson.<\/p>\n
(f) All Taxes owed by the Company and any Company Subsidiary have been
\ntimely paid and all Taxes which the Company or any Company Subsidiary are
\nrequired by law to withhold or to collect for payment have been duly withheld
\nand collected.<\/p>\n
(g) Neither the Company nor any Company Subsidiary has filed a consent
\nunder Section 341(f) of the Code or any comparable provision of state statutes.<\/p>\n
(h) As a result of a change in accounting method for a Tax period
\nbeginning on or before the Closing Date, none of the Company or any Company
\nSubsidiary will be required to include any adjustment under Section 481(c) of
\nthe Code (or any corresponding provision of state or local Tax law) in taxable
\nincome for any Tax period beginning on or after the Closing Date.<\/p>\n
Section 3.27 Intellectual Property.
\n ——————— <\/p>\n
(a) Section 3.27 of the Disclosure Schedule (which shall be delivered
\nno later than four (4) days from the date hereof) sets forth a true and complete
\nlist of all Patents, registered Trademarks, registered Copyrights and Licenses
\nincluded in the Company Intellectual Property.<\/p>\n
(b) To the Knowledge of Seller, there are no oppositions,
\ncancellations, invalidity proceedings, interferences or re-examination
\nproceedings presently pending with respect to the Company Intellectual Property
\nthat are reasonably likely to have a Company Material Adverse Effect.<\/p>\n
(c) To the Knowledge of Seller, the conduct of the business of the
\nCompany and the Company Subsidiaries, and the use of the Company Intellectual
\nProperty in connection therewith, does not conflict with or infringe any
\nIntellectual Property rights of any Person, and neither the Company nor any
\nCompany Subsidiary has received any notice from any <\/p>\n
14<\/p>\n
other Person pertaining to or challenging the right of the Company or any
\nCompany Subsidiary to use any of the Company Intellectual Property.<\/p>\n
(d) The Company and the Company Subsidiaries are the exclusive owners
\nof the entire and unencumbered right, title and interest in and to the Company
\nIntellectual Property, except for Intellectual Property licensed to the Company
\nand the Intellectual Property assigned to the Company pursuant to the Trademark
\nAssignment and Patent Assignment, the forms of which are attached hereto as
\nExhibits 3.27(a) and 3.27(b), respectively (the “Intellectual Property
\n ———————
\nAssignments”). Seller is the exclusive owner of the Intellectual Property
\n———–
\nassigned pursuant to the Intellectual Property Assignments. The Company and the
\nCompany Subsidiaries are entitled to use the Company Intellectual Property in
\nthe ordinary course of the business of the Company and the Company Subsidiaries
\nas presently conducted or as currently proposed to be conducted.<\/p>\n
(e) The Company Intellectual Property and, to the Knowledge of Seller,
\nany Intellectual Property licensed to the Company or any Company Subsidiary
\nunder the Licenses included in the Company Intellectual Property, is subsisting,
\nvalid and enforceable, and has not been adjudged invalid or unenforceable in
\nwhole or part.<\/p>\n
(f) To the Knowledge of Seller, no person is engaging in any activity
\nthat infringes the Company Intellectual Property. Except as set forth in Section
\n3.27(f) of the Disclosure Schedule, neither the Company nor any Company
\nSubsidiary has granted any license or other right to any third party with
\nrespect to the Company Intellectual Property.<\/p>\n
(g) The Company and the Company Subsidiaries have taken reasonable
\nsteps in accordance with normal industry practice to maintain the
\nconfidentiality of the Trade Secrets relating to the water purification process.
\nTo the Knowledge of Seller, there has been no misappropriation of any material
\nTrade Secrets relating to the water purification process by any person.<\/p>\n
(h) The Company and all Company Subsidiaries have (1) undertaken an
\nassessment of those Company Systems that could be or could have been adversely
\naffected by a failure to be Year 2000 Compliant, (2) developed a plan and time
\nline for rendering such Systems Year 2000 Compliant, and (3) to date,
\nimplemented such plan in accordance with such timetable in all material
\nrespects. Except as would not have a Company Material Adverse Effect, all
\nCompany Systems are Year 2000 Compliant. For purposes hereof, “Company Systems”
\n —————
\nshall mean all computer, hardware, software, systems, and equipment (including
\nembedded microcontrollers in non-computer equipment) embedded within or required
\nto operate the current products of the Company or any Company Subsidiary, and\/or
\nmaterial to or necessary for the Company, or any Company Subsidiary, to carry on
\nits business as currently conducted. For purposes hereof, “Year 2000 Compliant”
\n ——————-
\nmeans that the Company Systems provide uninterrupted millennium functionality in
\nthat the Company Systems did and will record, store, process and present
\ncalendar dates falling on or after January 1, 2000, in the same manner and with
\nthe same functionality as the Company Systems record, store, process, and
\npresent calendar dates falling on or before December 31, 1999.<\/p>\n
15<\/p>\n
Section 3.28 Labor Matters.
\n ————- <\/p>\n
(a) There is no labor strike, dispute, slowdown, stoppage or lockout
\nactually pending, or to the Knowledge of Seller, threatened against the Company
\nor any Company Subsidiary.<\/p>\n
(b) Neither the Company nor any Company Subsidiary is a party to or
\nbound by any collective bargaining agreement with any labor organization
\napplicable to employees of the Company or any Company Subsidiary.<\/p>\n
(c) the Company has not breached or otherwise failed to comply with
\nthe provisions of any collective bargaining or union contract and there are no
\ngrievances pending or, to the Knowledge of Seller, threatened against the
\nCompany under any such agreement or contract that are reasonably likely to have
\na Company Material Adverse Effect.<\/p>\n
(d) No labor union has been certified by the National Labor Relations
\nBoard as bargaining agent for any of the employees of the Company or any Company
\nSubsidiary.<\/p>\n
(e) Neither the Company nor any Company Subsidiary has experienced any
\nmaterial work stoppage or other material labor difficulty during the two-year
\nperiod ending on the date hereof.<\/p>\n
(f) There is no unfair labor practice charge or complaint against the
\nCompany or any Company Subsidiary pending or threatened before the National
\nLabor Relations Board or any other Governmental Entity or any current union
\norganization drive involving employees of the Company that could reasonably be
\nexpected to have a Company Material Adverse Effect.<\/p>\n
(g) Since the enactment of the WARN Act, neither the Company nor any
\nCompany Subsidiary has effectuated a “plant closing” (as defined in the WARN
\nAct) affecting any site of employment or one or more facilities or operating
\nunits within any site of employment or facility of the Company or any Company
\nSubsidiary, and there has not occurred a “mass layoff” (as defined in the WARN
\nAct) affecting any site of employment or facility of the Company or any Company
\nSubsidiary.<\/p>\n
Section 3.29 Bank Accounts. The Disclosure Schedule sets forth (a) the
\n ————-
\nnames and locations of all banks, trust companies, savings and loan associations
\nand other financial institutions at which the Company or any Company Subsidiary
\nmaintains safe deposit boxes, checking accounts or other accounts of any nature
\nthe available balance of which customarily exceeds $5,000 and (b) the names of
\nall Persons authorized to draw thereon, make withdrawals therefrom or have
\naccess thereto.<\/p>\n
Section 3.30 Brokers or Finders. No agent, broker, investment banker,
\n ——————
\nfinancial advisor or other firm or Person is or will be entitled to any brokers’
\nor finder’s fee or any other commission or similar fee in connection with any of
\nthe Transactions except for Lehman <\/p>\n
16<\/p>\n
Brothers Inc. whose fees and expenses will be paid by Seller in accordance with
\nSeller’s agreement with such firm.<\/p>\n
Section 3.31 Affiliated Transactions. Except as set forth on Schedule 3.31,
\n ———————–
\nno material contracts or agreements (including, without limitation, agreements
\nor contracts for the provision of any services or the sale of any goods) are in
\neffect as of the date hereof between the Company or any Company Subsidiary, on
\nthe one hand, and the Seller or its Affiliates or executive officers on the
\nother hand other than with respect to ordinary course residential deliveries of
\nwater.<\/p>\n
Section 3.32 Accounts Receivable. All accounts receivable and notes due and
\n ——————-
\nuncollected reflected on the Balance Sheet, and all accounts receivable and
\nnotes due and uncollected arising subsequent to the Balance Sheet Date (i) have
\narisen in the ordinary course of business of the Company and the Company
\nSubsidiaries; and (ii) represent valid obligations due the Company and the
\nCompany Subsidiaries enforceable in accordance with their terms.<\/p>\n
Section 3.33 Inventories. The Company’s and the Company Subsidiaries’
\n ———–
\ninventory of supplies, raw materials, work in process and finished goods
\nconsists only of items of quality commercially usable in the ordinary course of
\nbusiness, except for any items of obsolete material or material below standard
\nquality, all of which have been written down to realizable market value, or for
\nwhich adequate reserves have been provided in accordance with GAAP, and the
\ncurrent amount of such inventory is reasonable in the present circumstances of
\nthe business of the Company and the Company Subsidiaries.<\/p>\n
Section 3.34 Payables. All accounts payable of the Company or any Company
\n ——–
\nSubsidiary have arisen, and as of the Closing Date will have arisen, from bona
\n —-
\nfide transactions in the ordinary course of business consistent with past
\n—-
\npractice.<\/p>\n
Section 3.35 Product Liability. No facts or circumstances exist that
\n —————–
\nreasonably would be expected to be the basis for any claims or remedial expenses
\n(including, without limitation, claims for product liability, defects, breaches,
\nproduct warranties or personal injury claims) in connection with the production,
\npackaging, sale, distribution or use of any of the products produced in the
\nbusiness of the Company or any Company Subsidiary prior to or on the Closing
\nDate that are reasonably likely to result in a Company Material Adverse Effect.<\/p>\n
Section 3.36 Dividends. Since the Balance Sheet Date, the Company has not
\n ———
\npaid any dividends or made any other distribution (whether in cash, securities
\nor other property) to the Seller outside of the ordinary course of business.<\/p>\n
Section 3.37 No Other Representations. Except for the representations and
\n ————————
\nwarranties contained in this Article III, any other Transaction Documents, and
\nthe certificate required to be delivered pursuant to Section 6.2(b), neither
\nSeller nor any other person or entity acting on behalf of Seller, makes any
\nrepresentation or warranty, express or implied.<\/p>\n
17<\/p>\n
ARTICLE IV<\/p>\n
REPRESENTATIONS AND WARRANTIES OF PURCHASER<\/p>\n
Purchaser represents and warrants to Seller that:<\/p>\n
Section 4.1 Organization. Purchaser is a corporation duly organized, validly
\n ————
\nexisting and in good standing under the laws of the State of Delaware.
\nPurchaser has all requisite corporate or other power and authority and all
\nnecessary governmental approvals to own, lease and operate its properties and to
\ncarry on its business as now being conducted, except where the failure to be so
\norganized, existing and in good standing or to have such power, authority, and
\ngovernmental approvals would not have, individually or in the aggregate, a
\nmaterial adverse effect on Purchaser’s ability to consummate the Transactions.<\/p>\n
Section 4.2 Authorization; Validity of Agreement. Purchaser has full
\n ————————————
\ncorporate power and authority to execute and deliver this Agreement and the
\nother Transaction Documents to which it is or will be a party and to consummate
\nthe Transactions and the other transactions contemplated thereby. The
\nexecution, delivery and performance by Purchaser of this Agreement and the other
\nTransaction Documents to which it is or will be a party and the consummation of
\nthe Transactions have been or will be duly authorized by the Board of Directors
\nof Purchaser, and no other corporate action on the part of Purchaser is or will
\nbe necessary to authorize the execution and delivery by Purchaser of this
\nAgreement and the other Transaction Documents to which it is or will be a party
\nor the consummation of the Transactions and the other transactions contemplated
\nthereby. No vote of, or consent by, the holders of any class or series of stock
\nissued by Purchaser is necessary to authorize the execution and delivery by
\nPurchaser of this Agreement and the other Transaction Documents to which it is
\nor will be a party or the consummation by it of the Transactions and the other
\ntransactions contemplated thereby. This Agreement and the other Transaction
\nDocuments to which it is or will be a party have been or will be duly executed
\nand delivered by Purchaser, and, assuming due and valid authorization, execution
\nand delivery hereof by Seller, are or will be valid and binding obligations of
\nPurchaser, enforceable against Purchaser in accordance with their terms except
\n(a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
\nfraudulent conveyance and other similar laws of general application affecting
\nenforcement of creditors’ rights generally and (b) the availability of the
\nremedy of specific performance or injunctive or other forms of equitable relief
\nmay be subject to equitable defenses and would be subject to the discretion of
\nthe court before which any proceeding therefor may be brought.<\/p>\n
Section 4.3 Consents and Approvals; No Violations. Except for the filings,
\n ————————————-
\npermits, authorizations, consents and approvals as may be required under, and
\nother applicable requirements of, the HSR Act, none of the execution, delivery
\nor performance of this Agreement or the other Transaction Documents to which it
\nis or will be a party by Purchaser, the consummation by Purchaser of the
\nTransactions or the other transactions contemplated hereby or compliance by
\nPurchaser with any of the provisions hereof will (a) conflict with or result in
\nany breach of any provision of the certificate of incorporation or by-laws of
\nPurchaser, (b) require any filing with, or permit, authorization, consent or
\napproval of, any Governmental Entity, (c) result in a violation or breach of, or
\nconstitute (with or without due notice or lapse of time or <\/p>\n
18<\/p>\n
both) a default (or give rise to any right of termination, cancellation or
\nacceleration) under, any of the terms, conditions or provisions of any note,
\nbond, mortgage, indenture, lease, license, permit, franchise, contract,
\nagreement or other instrument or obligation to which Purchaser or any of its
\nSubsidiaries is a party or by which any of them or any of their respective
\nproperties or assets may be bound, or (d) violate any order, writ, injunction,
\ndecree, statute, rule or regulation applicable to Purchaser, any of its
\nSubsidiaries or any of their properties or assets, excluding from the foregoing
\nclauses (b), (c) and (d), such violations, breaches or defaults which (A) would
\nnot, individually or in the aggregate, have a material adverse effect on
\nPurchaser’s ability to consummate the Transactions or (B) would become
\napplicable solely as a result of the business or activities in which the Seller
\nis or proposes to be engaged or solely as a result of any acts or omissions
\npertaining specifically to Seller.<\/p>\n
Section 4.4 Acquisition of Shares for Investment; Ability to Evaluate and
\n ————————————————————-
\nBear Risk. (a) Purchaser is acquiring the Shares for investment and not with a
\n———
\nview toward, or for sale in connection with, any distribution thereof, nor with
\nany present intention of distributing or selling the Shares. Purchaser agrees
\nthat the Shares may not be sold, transferred, offered for sale, pledged,
\nhypothecated or otherwise disposed of without registration under the Securities
\nAct and any applicable state securities laws, except pursuant to any exemption
\nfrom such registration under such Act and such laws.<\/p>\n
(b) Purchaser is able to bear the economic risk of holding the Shares for
\nan indefinite period, and has knowledge and experience in financial and business
\nmatters such that it is capable of evaluating the risks of the investment in the
\nShares.<\/p>\n
Section 4.5 Availability of Funds. Purchaser currently has access to
\n ———————
\nsufficient immediately available funds in cash or cash equivalents and will at
\nthe Closing have sufficient immediately available funds, in cash, to pay the
\nPurchase Price and to pay any other amounts payable pursuant to this Agreement
\nand to effect the Transactions.<\/p>\n
Section 4.6 Litigation. There is no claim, action, suit, proceeding or, to
\n ———-
\nthe knowledge of Purchaser, governmental investigation pending or, to the
\nknowledge of Purchaser, threatened against Purchaser or any of its Subsidiaries
\nby or before any court or Governmental Entity that, individually or in the
\naggregate, would reasonably be expected to materially impede the ability of
\nPurchaser to complete the Closing.<\/p>\n
Section 4.7 Investigation by Purchaser; Seller’s Liability. Purchaser has
\n ———————————————-
\nconducted its own independent investigation, review and analysis of the
\nbusiness, operations, assets, liabilities, results of operations, financial
\ncondition, software, technology and prospects of the Company and the Company
\nSubsidiaries to the extent permitted by the Seller and the Seller’s
\nrepresentatives, which investigation, review and analysis was done by Purchaser
\nand its Affiliates and, to the extent Purchaser deemed appropriate, by
\nPurchaser’s representatives. Purchaser acknowledges that it and its
\nrepresentatives have been provided adequate access to the personnel and access
\nto certain records of the Company and the Company Subsidiary for such purpose.
\nIn entering into this Agreement, Purchaser acknowledges that it has relied
\nsolely upon the aforementioned investigation, review and analysis and not on any
\nfactual representations or opinions of Seller or Seller’s representatives
\n(except the representations and warranties of Seller <\/p>\n
19<\/p>\n
set forth in Article III of this Agreement, the other Transaction Documents and
\nthe certificate delivered pursuant to Section 6.2(b)), and Purchaser:<\/p>\n
(a) acknowledges that none of Seller, the Company, the Company
\n Subsidiaries or any of their respective directors, officers, shareholders,
\n employees, Affiliates, controlling persons, agents, advisors or
\n representatives makes or has made any oral or written representation or
\n warranty, either express or implied, as to the accuracy or completeness of
\n any of the information (including in the descriptive memorandum relating
\n to the Company provided to the Purchaser, in materials furnished in the
\n Company’s data room, in presentations by the Company’s management or
\n otherwise) provided or made available to the Purchaser or its directors,
\n officers, employees, Affiliates, controlling persons, agents or
\n representatives; and<\/p>\n
(b) agrees, to the fullest extent permitted by law, that none of
\n Seller, the Company, the Company Subsidiaries or any of their respective
\n directors, officers, employees, shareholders, Affiliates, controlling
\n persons, agents, advisors or representatives shall have any liability or
\n responsibility whatsoever to Purchaser or its directors, officers,
\n employees, Affiliates, controlling persons, agents or representatives on
\n any basis (including in contract or tort, under federal or state securities
\n laws or otherwise) based upon any information provided or made available,
\n or statements made (including in the descriptive memorandum relating to the
\n Company provided to the Purchaser, in materials furnished in the Company’s
\n data room, presentations by the Company’s management or otherwise), to
\n Purchaser or its directors, officers, employees, Affiliates, controlling
\n persons, advisors, agents or representatives (or any omissions therefrom),
\n including in respect of the specific representations and warranties of
\n Seller set forth in this Agreement, except that the foregoing limitations
\n shall not apply to Seller insofar as Seller makes the specific
\n representations and warranties set forth in Article III of this Agreement;
\n the other Transaction Documents and the certificate delivered pursuant to
\n Section 6.2(b) but always subject to the limitations and restrictions
\n contained in Article VIII.<\/p>\n
Section 4.8 Brokers or Finders. Neither Purchaser nor any of its
\n ——————
\nSubsidiaries or its Affiliates has entered into any agreement or arrangement
\nentitling any agent, broker, investment banker, financial advisor or other firm
\nor Person to any broker’s or finder’s fee or any other commission or similar fee
\nin connection with any of the Transactions, except those whose fees and expenses
\nwill be paid by Purchaser in accordance with Purchaser’s agreement with such
\nPersons.<\/p>\n
ARTICLE V<\/p>\n
COVENANTS<\/p>\n
Section 5.1 Interim Operations of the Company. Except as expressly
\n ———————————
\nprovided in this Agreement and except as set forth in the Disclosure Schedule
\nand except as may be consented to in writing by Purchaser (such consent not to
\nbe unreasonably withheld or delayed) <\/p>\n
20<\/p>\n
between the date of this Agreement and the Closing Date, Seller will cause the
\nCompany and the Company Subsidiaries to (i) conduct their business only in the
\nordinary course and on a basis consistent with past practice, (ii) use
\ncommercially reasonable efforts to preserve intact their business organization
\nand assets, (iii) use commercially reasonable efforts to keep available to
\nthemselves and to Purchaser the services of their present officers and key
\nemployees, (iv) not shorten or lengthen the customary payment cycles for any of
\nits payables or receivables and (v) use commercially reasonable efforts to
\npreserve their current relationships with their respective customers, suppliers,
\ndistributors and other Persons with which they have significant business
\nrelationships. Without limiting the generality of the foregoing, Seller shall
\nassure that, after the date hereof and prior to the Closing Date, without the
\nprior written consent of Purchaser:<\/p>\n
(a) neither the Company nor any Company Subsidiary shall: (i) amend its
\ncertificate of incorporation or by-laws or similar organizational documents,
\n(ii) issue, sell, transfer, pledge, dispose of or encumber any shares of any
\nclass or series of its capital stock, or securities convertible into or
\nexchangeable for, or options, warrants, calls, commitments or rights of any kind
\nto acquire, any shares of any class or series of its capital stock, (iii) except
\nas set forth in Section 5.9, declare, set aside or pay any dividend or other
\ndistribution payable in cash, stock or property with respect to any shares of
\nany class or series of its capital stock, (iv) split, combine or reclassify any
\nshares of any class or series of its stock, or (v) redeem, purchase or otherwise
\nacquire directly or indirectly any shares of any class or series of its capital
\nstock, or any instrument or security which consists of or includes a right to
\nacquire such shares;<\/p>\n
(b) neither the Company nor any of the Company Subsidiaries shall: (i)
\nincur or assume any (x) long-term debt or (y) Indebtedness in an individual
\namount not to exceed $100,000 and an aggregate amount not to exceed $500,000,
\n(ii) discharge, settle, release or otherwise modify the terms of any
\nIndebtedness or other liability, other than modifications of short-term debt in
\nthe ordinary and usual course of business and consistent with past practice, or
\n(iii) assume or guarantee the obligations, on a contingent basis or otherwise,
\nof any other Person, except in the ordinary course of business;<\/p>\n
(c) neither the Company nor any Company Subsidiary shall (A) grant any
\nincrease, or announce any increase, in the wages, salaries, compensation,
\nbonuses, incentives, pension or other benefits payable by the Company or any
\nCompany Subsidiary to any of its employees other than normal recurring increases
\nin the ordinary course of business or pursuant to plans, programs or agreements
\nexisting on the date hereof, including, without limitation, any increase or
\nchange pursuant to any Plan or (B) establish or increase or promise to increase
\nany benefits under any Plan, in either case except as required by law or any
\nagreement or involving ordinary increases consistent with the past practices of
\nthe Company or such Company Subsidiary;<\/p>\n
(d) neither the Company nor any Company Subsidiary shall voluntarily permit
\nany insurance policy naming it as a beneficiary or a loss payable payee to be
\ncancelled or terminated prior to the Closing Date;<\/p>\n
21<\/p>\n
(e) neither the Company nor any of the Company Subsidiaries shall adopt a
\nplan of complete or partial liquidation, dissolution, merger, consolidation,
\nrestructuring, recapitalization or other reorganization of the Company or any
\nCompany Subsidiary;<\/p>\n
(f) neither the Company nor any Company Subsidiary shall change in any
\nmaterial respect any of the accounting methods or practices used by it unless
\nrequired by GAAP;<\/p>\n
(g) neither the Company nor any of the Company Subsidiaries shall take, or
\nagree to or commit to take, any action that would result in any of the
\nconditions to the Closing set forth in Article VI not being satisfied, or would
\nmake any representation or warranty of Seller contained herein inaccurate in any
\nmaterial respect at, or as of any time prior to, the Closing Date, or that would
\nmaterially impair the ability of Purchaser or Seller to consummate the Closing
\nin accordance with the terms hereof or materially delay such consummation;<\/p>\n
(h) neither the Company nor any Company Subsidiary shall voluntarily permit
\nor take any action or omit to take any action which results in any of the assets
\nor properties (whether tangible or intangible) of the Company or any Company
\nSubsidiary to be subjected to any Encumbrance other than Permitted Encumbrances;<\/p>\n
(i) neither the Company nor any Company Subsidiary shall, except in the
\nordinary course of business consistent with past practice, discharge or
\notherwise obtain the release of any material Encumbrance;<\/p>\n
(j) neither the Company nor any Company Subsidiary shall merge with, enter
\ninto a consolidation with or acquire an interest of 5% or more in any Person or
\nacquire a substantial portion of the assets or business of any Person or any
\ndivision or line of business thereof, or otherwise acquire any material assets
\nother than in the ordinary course of business consistent with past practice;<\/p>\n
(k) neither the Company nor any Company Subsidiary shall make any capital
\nexpenditure or commitment for any capital expenditure in excess of $5,000,000 in
\nthe aggregate per month;<\/p>\n
(l) neither the Company nor any Company Subsidiary shall sell, transfer,
\nlease, sublease, license or otherwise dispose of any properties or assets, real,
\npersonal or mixed (including, without limitation, leasehold interests and
\nintangible assets), other than the sale of immaterial assets or inventories in
\nthe ordinary course of business consistent with past practice;<\/p>\n
(m) neither the Company nor any Company Subsidiary shall enter into any
\nagreement, arrangement or transaction with any of its directors, officers, or
\nshareholders (or with any relative, beneficiary, spouse or Affiliate of such
\nPerson) (other than to hire new employees in the ordinary course of business);<\/p>\n
22<\/p>\n
(n) neither the Company nor any Company Subsidiary shall write down or
\nwrite up (or fail to write down or write up in accordance with GAAP consistent
\nwith past practice) the value of any inventories or receivables or revalued any
\nassets of the Company or any Company Subsidiary other than in the ordinary
\ncourse of business consistent with past practice and in accordance with GAAP;<\/p>\n
(o) neither the Company nor any Company Subsidiary shall amend,
\nterminate, cancel or compromise any material claims of the Company or any
\nCompany Subsidiary or waive any other rights of substantial value to the Company
\nor any Company Subsidiary other than in the ordinary course of business and
\nconsistent with past practice;<\/p>\n
(p) neither the Company nor any Company Subsidiary shall allow any
\nmaterial governmental permit that was issued or relates to the Company or any
\nCompany Subsidiary or otherwise relates to any property or asset of the Company
\nor any Company Subsidiary to lapse or terminate or fail to renew any such
\ngovernmental permit or any insurance policy that is scheduled to terminate or
\nexpire within 45 calendar days of the Closing Date;<\/p>\n
(q) neither the Company nor any Company Subsidiary shall amend, modify
\nor consent to the termination of any contract listed or which should be listed
\nin Section 3.18 of the Disclosure Schedule or the Company’s or any Company
\nSubsidiary’s rights thereunder other than in the ordinary course of business and
\nconsistent with past practice;<\/p>\n
(r) neither the Company nor any Company Subsidiary shall terminate,
\ndiscontinue, close or dispose of any plant, facility or other business
\noperation;<\/p>\n
(s) neither the Company nor any Company Subsidiary shall make any
\nmaterial charitable contribution;<\/p>\n
(t) neither the Company nor any of the Company Subsidiaries shall
\nenter into any agreement, contract, commitment or arrangement to do any of the
\nforegoing; and<\/p>\n
(u) neither the Company nor any of the Company Subsidiaries shall
\nmake, change or revoke any material Tax election or Tax accounting method, or
\nshall settle or compromise any material Tax deficiency.<\/p>\n
Notwithstanding anything to the contrary contained herein, nothing shall
\nprohibit Seller from sweeping cash from the accounts of the Company in
\naccordance with Seller’s cash management program in the ordinary course of
\nbusiness and consistent with past practice.<\/p>\n
Section 5.2 Access; Confidentiality.
\n ———————– <\/p>\n
(a) Seller shall cause the Company prior to the Closing to (i) give
\nPurchaser and its authorized representatives reasonable access to all books,
\nrecords, personnel, offices and other facilities and properties of the Company,
\n(ii) permit Purchaser to make such copies and inspections thereof as Purchaser
\nmay reasonably request and (iii) cause the officers of the Company to furnish
\nPurchaser with such financial and operating data and other information with
\nrespect to the business and properties of the Company as Purchaser may from time
\nto time <\/p>\n
23<\/p>\n
reasonably request; provided, however, that any such access shall be conducted
\n ——– ——-
\nat Purchaser’s expense, at a reasonable time, under the supervision of Seller’s
\nor the Company’s personnel and in such a manner as not to interfere with the
\nnormal operation of the business of Seller or the Company. Notwithstanding
\nanything contained in this or any other agreement between Purchaser and Seller
\nexecuted prior to the date hereof, none of the Company, any Company Subsidiary,
\nSeller or any Affiliate of Seller shall have any obligation to make available to
\nPurchaser or its representatives, or provide Purchaser or its representatives
\nwith, any consolidated, combined or unitary Tax Return filed by Seller or any of
\nits Affiliates or predecessors (other than any such tax returns and materials,
\nincluding pro forma tax returns and schedules, solely relating to the Company or
\nany Company Subsidiary), or any related material, and nothing herein shall
\nrequire Seller to disclose any information to Purchaser if such disclosure would
\nin Seller’s sole and absolute discretion (i) jeopardize any attorney-client or
\nother legal privilege, or (ii) contravene any applicable laws or fiduciary duty.<\/p>\n
(b) The provisions of the Confidentiality Agreement shall remain
\nbinding and in full force and effect until the Closing, at which time such
\nConfidentiality Agreement and the obligations of Purchaser thereunder and under
\nthis Section 5.2 shall terminate. The information delivered to Purchaser or its
\nauthorized representatives pursuant hereto, including the information contained
\nin the Disclosure Schedule, shall be deemed to be Evaluation Material (as
\ndefined and subject to the exceptions contained in the Confidentiality
\nAgreement) until the Closing. Seller shall keep all information in its
\npossession relating to the Company or any Company Subsidiary confidential on the
\nterms and conditions of the Confidentiality Agreement which shall apply to the
\nSeller as if such terms and conditions were applicable to the Seller rather than
\nthe Purchaser, and as if fully set forth herein, except as necessary or
\nadvisable for Seller to perform its obligations under this Agreement.<\/p>\n
Section 5.3 Efforts and Actions to Cause Closing to Occur.
\n ——————————————— <\/p>\n
(a) Prior to the Closing, upon the terms and subject to the conditions
\nof this Agreement, Purchaser and Seller shall use their respective commercially
\nreasonable efforts to take, or cause to be taken, all actions, and to do, or
\ncause to be done and cooperate with each other in order to do, all things
\nnecessary, proper or advisable (subject to any applicable laws) to consummate
\nthe Closing and the other Transactions as promptly as practicable, including the
\npreparation and filing of all forms, registrations and notices required to be
\nfiled to consummate the Closing and the other Transactions and the taking of
\nsuch actions as are necessary to obtain any requisite approvals, authorizations,
\nconsents, orders, licenses, permits, qualifications, exemptions or waivers by
\nany third party or Governmental Entity. In addition, no party hereto shall and
\nSeller shall cause the Company not to take any action after the date hereof that
\ncould reasonably be expected to materially delay the obtaining of, or result in
\nnot obtaining, any permission, approval or consent from any Governmental Entity
\nor other Person required to be obtained prior to Closing. Nothing contained in
\nthis Agreement shall require Seller, the Company or Purchaser to pay any
\nconsideration to any other Person from whom any such approvals, authorizations,
\nconsents, orders, licenses, permits, qualifications, exemptions or waiver is
\nrequested.<\/p>\n
24<\/p>\n
(b) Prior to the Closing, each party shall promptly consult with the
\nother party hereto with respect to, provide any necessary information with
\nrespect to, and provide the other parties (or their respective counsel) with
\ncopies of, all filings made by such party with any Governmental Entity or any
\nother information supplied by such party to a Governmental Entity in connection
\nwith this Agreement and the Transactions. Each party hereto shall promptly
\ninform the other of any communication received by such party from any
\nGovernmental Entity regarding any of the Transactions. If any party hereto or
\nAffiliate thereof receives a request for information or documentary material
\nfrom any such Governmental Entity with respect to any of the Transactions, then
\nsuch party shall endeavor in good faith to make, or cause to be made, as soon as
\nreasonably practicable and after consultation with the other parties, an
\nappropriate response in compliance with such request.<\/p>\n
(c) In addition to and without limiting the agreements of the parties
\ncontained above, Purchaser and Seller shall (i) take promptly all actions
\nnecessary to make the filings required of them or any of their Affiliates under
\nthe HSR Act, (ii) comply at the earliest practicable date with any request for
\nadditional information or documentary material received by the Company,
\nPurchaser, Seller or any of their Affiliates from the FTC or the DOJ pursuant to
\nthe HSR Act or from any state Attorney General or other Governmental Entity in
\nconnection with antitrust matters, (iii) cooperate with each other in connection
\nwith any filing under the HSR Act and in connection with resolving any
\ninvestigation or other inquiry concerning the Transactions commenced by the FTC,
\nDOJ, any state Attorney General or any other Governmental Entity, (iv) use their
\nbest efforts to resolve such objections, if any, as may be asserted with respect
\nto the Transactions under any antitrust law and (v) advise the other parties
\npromptly of any material communication received by such party from the FTC, DOJ,
\nany state Attorney General or any other Governmental Entity regarding any of the
\nTransactions, and of any understandings, undertakings or agreements (oral or
\nwritten) such party proposes to make or enter into with the FTC, DOJ, any state
\nAttorney General or any other Governmental Entity in connection with the
\nTransactions. Concurrently with the filing of notifications under the HSR Act
\nor as soon thereafter as practicable, Seller and Purchaser shall each request
\nearly termination of the HSR Act waiting period. With regard to Purchaser,
\n“best efforts” for purposes of Section 5.3(c)(iv) shall include, without
\nlimitation, at the request of Seller, proffering Purchaser’s willingness to
\naccept an order providing for the divestiture by Purchaser of such properties,
\nassets, operations, or businesses of Purchaser or Seller as are necessary to
\npermit Purchaser to consummate the transactions contemplated by this Agreement,
\nincluding, without limitation, an offer to hold separate such properties,
\nassets, operations or businesses pending any such divestiture, and Purchaser’s
\nwillingness to accept such other conditions, restrictions, limitations, or
\nagreements affecting Purchaser’s full rights or ownership of the Shares as may
\nbe necessary to resolve such objections, if any, as may be asserted by the FTC,
\nDOJ, any state Attorney General or any other Governmental Entity with respect to
\nthe Transactions under any antitrust law.<\/p>\n
25
\n Section 5.4 Tax Matters.
\n ———– <\/p>\n
(a) Section 338 Election.
\n ——————– <\/p>\n
(i) Seller and Purchaser shall jointly make and file an election
\nunder Section 338(h)(10) of the Code (and under any comparable provisions of
\nstate or local law) (the “Elections”) for the Company and each Company
\n ———
\nSubsidiary (other than Compania General de Aguas S.A. de C.V. and, as soon as
\npracticable after the Closing, Seller and Purchaser shall mutually prepare a
\nForm 8023 (or applicable successor form), with all attachments. Purchaser and
\nSeller shall cooperate with each other to take all actions necessary and
\nappropriate (including filing such additional forms, returns, elections,
\nschedules and other documents as may be required) to effect and preserve timely
\nElections in accordance with the provisions of Section 338(h)(10) of the Code
\nand the Treasury Regulations thereunder (and any comparable provisions of state
\nor local tax law) or any successor provisions.<\/p>\n
(ii) In connection with such Elections, Purchaser shall cause the
\nCompany to prepare not later than 60 days following the Closing, and solely for
\npurposes of this Section 5.4(a)(ii), a balance sheet for the Company and each
\nCompany Subsidiary as of the Closing Date for which a Section 338(h)(10)
\nElection will be made setting forth the assets and liabilities of the Company
\nand each such Company Subsidiary, which balance sheets shall form the basis for
\nthe determinations required to be made by the Seller and the Purchaser pursuant
\nto the immediately succeeding sentence. Not later than 120 days after the
\nClosing, Seller and Purchaser shall act together in good faith to (1) determine
\nand agree upon the “Aggregate Deemed Sale Price” in accordance with the Treasury
\nRegulations under Section 338 of the Code promulgated thereunder and (2)
\ndetermine and agree upon the proper allocations of the “Aggregate Accrued Sale
\nPrice” among the assets of the Company and each Company Subsidiary (in
\naccordance with Section 338(b)(5) of the Code and the Treasury Regulations
\npromulgated thereunder). Seller and Purchaser shall (x) be bound by such
\ndetermination and such allocations for purposes of determining any Taxes, (y)
\nprepare and file their Tax Returns on a basis consistent with such determination
\nof the “Aggregate Deemed Sale Price” and such allocations and (z) take no
\nposition inconsistent with such determination and allocations on any applicable
\nTax Return, in any proceeding before any Taxing Authority. If Seller and
\nPurchaser fail to reach agreement with respect to the “Aggregate Accrued Sale
\nPrice” and\/or such allocations, or if Seller shall disagree with any item
\ncontained in the balance sheet prepared for purposes of this Section 5.4(a)(ii),
\nthen Seller and Purchaser shall, not later than 10 business days after either
\nSeller or Purchaser shall have terminated, in writing, discussions with respect
\nto such items, submit all such disputed items for resolution pursuant to Section
\n8.3. In the event that any of such allocations is disputed by any Taxing
\nAuthority, the party receiving notice of the dispute shall promptly notify the
\nother party hereto of the dispute.<\/p>\n
26<\/p>\n
(b) Tax Returns. Except as provided in Section 5.4(d),
\n ———– <\/p>\n
(i) Seller shall file or cause to be filed when due all
\n income and franchise Tax Returns that are required to be filed by or with
\n respect to the Company or any Company Subsidiary for taxable years or
\n periods ending on or before the Closing Date, and Seller shall remit (or
\n cause to be remitted) subject to Section 5.4(c)(ii) and Section 8.1(b) any
\n Taxes due in respect of such Tax Returns.<\/p>\n
(ii) Purchaser shall cause the Company to file or cause to
\n be filed all Tax Returns that are due after the Closing Date that are
\n required to be filed by or with respect to the Company or any Company
\n Subsidiary for taxable years or periods ending on or before the Closing
\n Date other than income and franchise Tax Returns. Any Tax Returns which the
\n Purchaser is required to cause the Company to file or cause to be filed
\n pursuant to this Section 5.4(b)(ii) shall be completed in a manner
\n consistent with past practice and shall be submitted (with copies of any
\n relevant schedules, work papers and other documentation then available) to
\n Seller for Seller’s approval not less than 30 days prior to the Due Date
\n for the filing of such Tax Return, which approval may not be unreasonably
\n withheld. Purchaser shall remit (or cause to be remitted) any Taxes due in
\n respect of such Tax Returns to the extent that such Taxes are specifically
\n identified and reflected as a current liability for unpaid Taxes on the
\n Balance Sheet.<\/p>\n
(iii) Purchaser shall file or cause to be filed when due all
\n Tax Returns that are required to be filed by or with respect to the Company
\n for taxable years or periods ending after the Closing Date, and Purchaser
\n shall remit (or cause to be remitted) any Taxes due in respect of such Tax
\n Returns.<\/p>\n
(iv) Any Tax Return required to be filed by Purchaser
\n relating to any Straddle Period shall be completed in a manner consistent
\n with the Company’s past practice and submitted (with copies of any relevant
\n schedules, work papers and other documentation then available) to Seller
\n for Seller’s approval not less than 30 days prior to the Due Date for the
\n filing of such Tax Return, which approval shall not be unreasonably
\n withheld.<\/p>\n
(v) Upon the written request of Purchaser setting forth in
\n detail the computation of the amount owed, Seller shall pay to Purchaser,
\n no later than 2 days prior to the Due Date for the applicable Tax Return,
\n the Taxes for which Seller is liable pursuant to Section 8.1(b)(ii) but
\n which are payable with any Tax Return to be filed by Purchaser with respect
\n to any Straddle Period.<\/p>\n
(vi) Within 120 days after the Closing Date or sooner if
\n reasonably required by Seller to timely file any Tax Return required to be
\n filed or caused to be filed by it pursuant to the terms of this Agreement,
\n Purchaser shall cause the Company to prepare and provide to Seller a
\n package of Tax information materials, including schedules and work papers,
\n required by Seller to enable Seller to prepare and file all Tax Returns
\n required to be prepared and filed by it pursuant to Section 5.4(b)(i) or to
\n review all Tax Returns proposed to be filed by or on behalf of the Company
\n or any <\/p>\n
27<\/p>\n
Company Subsidiary pursuant to Section 5.4(b)(ii). Such package shall be
\n consistent with those prepared by the Company and provided to Seller in the
\n past. Seller shall reimburse Purchaser and the Company for reasonable costs
\n incurred in preparing such packages. Purchaser shall prepare such package
\n in good faith in a manner consistent with the Company’s past practice.<\/p>\n
(vii) Seller may amend any Tax Return filed or required to be
\n filed for any taxable years or periods ending on or before the Closing Date
\n provided that it would not result in a Tax detriment to the Purchaser, the
\n Company or any Company Subsidiary.<\/p>\n
(c) Computation of Tax Liabilities.
\n —————————— <\/p>\n
(i) To the extent permitted or required by law or
\n administrative practice, (A) the taxable year of the Company which includes
\n the Closing Date shall be treated as closing on (and including) the Closing
\n Date and, notwithstanding the foregoing, (B) all transactions not in the
\n ordinary course of business occurring after the Closing shall be reported
\n on Purchaser’s consolidated United States federal income Tax Return to the
\n extent permitted by Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) and
\n shall be similarly reported on other Tax Returns of Purchaser or its
\n Affiliates to the extent permitted by law. For purposes of Sections
\n 5.4(b)(i) and (b)(ii) and Sections 8.1(b)(ii) and 8.1(c)(i), where it is
\n necessary to apportion between Seller and Purchaser the Tax liability of an
\n entity for a Straddle Period (which is not treated under the immediately
\n preceding sentence as closing on the Closing Date), such liability shall be
\n apportioned between the period deemed to end at the close of the Closing
\n Date, subject to Sections 8.1(b)(i) and 8.1(d)(i)(B), and the period deemed
\n to begin at the beginning of the day following the Closing Date on the
\n basis of an interim closing of the books, except that Taxes (such as real
\n property Taxes) imposed on a periodic basis shall be allocated on a daily
\n basis.<\/p>\n
(ii) In determining Seller’s liability for Taxes pursuant to
\n this Agreement, Seller shall be credited with the amount of any estimated
\n Taxes paid by or on behalf of the Company prior to the Closing Date. To the
\n extent that Seller’s liability for Taxes for a taxable year or period is
\n less than the amount of estimated Taxes previously paid by or on behalf of
\n the Company with respect to all or a portion of such taxable year or
\n period, Purchaser shall pay Seller the difference within two days after
\n filing the Tax Return relating to such Taxes.<\/p>\n
(d) Transfer Taxes. All Transfer Taxes resulting directly from the
\n ————–
\n Transactions shall be borne 50% by Purchaser and 50% by the Seller. Seller
\n shall cooperate with Purchaser and, subject to the other terms of this
\n Agreement, take any action reasonably requested by Purchaser which does not
\n cause Seller to incur any cost or material inconvenience in order to
\n minimize Transfer Taxes. Notwithstanding the provisions of Section 5.4(b),
\n which shall not apply to Tax Returns relating to Transfer Taxes, any Tax
\n Returns that must be filed in connection with Transfer Taxes shall be
\n prepared and filed when due by the party primarily or customarily
\n responsible under the <\/p>\n
28<\/p>\n
applicable local law for filing such Tax Returns, and such party will use
\n its reasonable efforts to provide such Tax Returns to the other party at
\n least 10 days prior to the Due Date for such Tax Returns.<\/p>\n
(e) Refunds.
\n ——- <\/p>\n
(i) Any Tax refund (including any interest in respect thereof)
\n received by Purchaser or the Company and any amounts credited against Tax
\n to which Purchaser or the Company becomes entitled, in either case other
\n than by way of any carryback from a taxable period, or portion thereof
\n beginning on or after the Closing Date or with respect to Taxes for which
\n Seller would have no indemnification obligation pursuant to Section 8.1 or
\n with respect to refunds or credits reflected on the Balance Sheet, that
\n relate to any taxable period, or portion thereof, ending on or before the
\n Closing Date shall be for the account of Seller, and Purchaser shall pay
\n over to Seller any such refund or the amount of any such credit in the case
\n of a refund, within five days after receipt or entitlement thereto, and in
\n the case of a credit, within five days after utilization thereof. Purchaser
\n shall pay Seller interest at the rate prescribed under section 6621(a)(1)
\n of the Code, compounded daily, on any amount not paid when due under this
\n Section 5.4(e). For purposes of this Section 5.4(e), where it is necessary
\n to apportion a refund or credit between Purchaser and Seller for a Straddle
\n Period, such refund or credit shall be apportioned between the period
\n deemed to end at the close of the Closing Date and the period deemed to
\n begin at the beginning of the day following the Closing Date on the basis
\n of an interim closing of the Company’s books, except that refunds or
\n credits of Taxes (e.g., real property Taxes) imposed on a periodic basis
\n shall be allocated on a daily basis.<\/p>\n
(ii) Purchaser shall cooperate, and cause the Company to
\n cooperate, in obtaining any Tax refund that Seller reasonably believes
\n should be available, including through filing appropriate forms with the
\n applicable Taxing Authorities.<\/p>\n
(f) Certain Post-Closing Settlement Payments. If the examination of
\n —————————————-
\n any federal, state, local or other Tax Return of Seller for any taxable
\n period ending on or before the Closing Date shall result (by settlement or
\n otherwise) in any adjustment which permits Purchaser or the Company to
\n increase deductions, losses or tax credits or decrease the income, gains or
\n recapture of tax credits which would otherwise (but for such adjustments)
\n have been reported or taken into account (including by way of any increase
\n in basis) by Purchaser or the Company for one or more periods ending after
\n the Closing Date, Seller shall notify Purchaser and provide it with
\n adequate information so that Purchaser can reflect on its or the Company’s
\n Tax Returns such increases in deductions, losses or tax credits or
\n decreases in income, gains or recapture of tax credits. Purchaser shall pay
\n to Seller, within 30 days of the receipt of such information, the lesser of
\n the amount of any resulting tax benefits to Purchaser or the Company and
\n the amount of any Tax liability to Seller which would not have arisen but
\n for the adjustment giving rise to the tax benefit.<\/p>\n
29<\/p>\n
(g) Post-Closing Actions which Affect Seller’s Liability for Taxes.
\n ————————————————————– <\/p>\n
(i) Purchaser shall not permit the Company to take any action
\n (not including the Elections) which could reasonably be expected to
\n increase Seller’s liability for Taxes (including any liability of Seller to
\n indemnify Purchaser for Taxes pursuant to this Agreement).<\/p>\n
(ii) None of Purchaser or any Affiliate of Purchaser shall (or
\n shall cause or permit the Company to) amend, refile or otherwise modify any
\n Tax Return relating in whole or in part to the Company with respect to any
\n taxable year or period ending on or before the Closing Date without the
\n prior written consent of Seller, which consent may not be unreasonably
\n withheld.<\/p>\n
(iii) Purchaser and any Affiliate of Purchaser may (and may cause
\n or permit the Company to) carryback for Federal, state, local or foreign
\n tax purposes to any taxable period, or portion thereof, of the Company or
\n Seller or any affiliate of Seller ending before, or which includes, the
\n Closing Date any operating losses, net operating losses, capital losses,
\n tax credits or similar items arising in, resulting from, or generated in
\n connection with a taxable year of Purchaser or any Affiliate of Purchaser,
\n or portion thereof, ending on or after the Closing Date. Any Tax refund
\n (including interest in respect thereof received by Seller or any Affiliate
\n thereof and any amounts credited against Tax to which the Seller or any
\n Affiliate thereof) becomes entitled, in either case by reason of such
\n carryback, shall be for the account of Purchaser, and Seller shall pay over
\n to Purchaser any such refund or the amount of any such credit in the case
\n of a refund, within 5 days of receipt or entitlement thereto, and in the
\n case of a credit, within 5 days after the utilization thereof. Seller shall
\n pay interest at the rate prescribed under Section 6621(a)(1) of the Code,
\n compounded daily on any amount not paid when due under this Section
\n 5.5(g)(iii).<\/p>\n
(h) Termination of Existing Tax Sharing Agreements. Any and all
\n ———————————————-
\n existing Tax sharing agreements or arrangements, written or oral, between
\n Seller and any Affiliates thereof and the Company or its Subsidiaries,
\n shall terminate as of the Closing.<\/p>\n
(i) Assistance and Cooperation. After the Closing Date, each of
\n ————————–
\n Seller and Purchaser shall (and shall cause their respective Affiliates
\n to):<\/p>\n
(i) timely sign and deliver such certificates or forms as
\n may be necessary or appropriate to establish an exemption from (or
\n otherwise reduce), or file Tax Returns or other reports with respect to,
\n Transfer Taxes;<\/p>\n
(ii) assist the other party in preparing any Tax Returns
\n which such other party is responsible for preparing and filing in
\n accordance with Section 5.4(b);<\/p>\n
(iii) cooperate fully in preparing for any audits of, or
\n disputes with Taxing Authorities regarding, any Tax Returns of the Company;
\n and<\/p>\n
30<\/p>\n
(iv) timely provide any written or other consent required by
\n the other party to enable it to sign any Tax Return, waiver, consent or
\n other document relating to any Tax Return required to be filed by it
\n pursuant to Section 5.4 or any defense of any claim conducted by it
\n pursuant to Section 8.2.<\/p>\n
Section 5.5 Publicity. The initial press release with respect to the
\n ———
\nexecution of this Agreement of each of Purchaser and Seller shall be subject to
\nthe approval of such other party. Thereafter, until the Closing, or the date
\nthe Transactions are terminated or abandoned pursuant to Article VII, neither
\nSeller, the Company, Purchaser nor any of their respective Affiliates shall
\nissue or cause the publication of any press release or other public announcement
\nwith respect to this Agreement or the Transactions without prior consent of the
\nother party, except as may be required by law or by any listing agreement with a
\nnational securities exchange or trading market, in which case any such required
\npress release or public announcement shall be subject to the extent practicable
\nto prior review by such other party.<\/p>\n
Section 5.6 Employees; Employee Benefits.
\n —————————- <\/p>\n
(a) On and after the Closing, until the first anniversary of the
\nClosing, Purchaser shall cause the Company to provide the Retained Employees
\nwith salaries, incentive opportunities and benefit plans, programs and
\narrangements (other than stay bonus and retention arrangements, retiree health
\nand retiree life insurance) which are substantially no less favorable in the
\naggregate than those currently provided as of the date hereof by the Seller, the
\nCompany and the Company Subsidiaries.<\/p>\n
(b) With respect to each employee benefit plan, practice or
\npolicy of Purchaser or any of its Affiliates, each Retained Employee shall be
\ngiven credit under such plan for all service prior to the Closing Date with the
\nCompany or any predecessor employer (to the extent such credit was given by the
\nSeller, the Company or any predecessor employer under a comparable Plan), for
\npurposes of determining eligibility and vesting (but not benefit accrual);
\nprovided, however, such service shall not be credited to the extent it would
\n——– ——-
\nresult in a duplication of benefits. Such service shall apply for purposes of
\nsatisfying any waiting periods, evidence of insurability requirements, or the
\napplication of any preexisting condition limitations. Subject to the terms of
\nthe plans of Purchaser, such Retained Employees shall be given credit for
\namounts paid under a corresponding employee benefit plan during the same period
\nfor purposes of applying deductibles, copayments and out-of-pocket maximums as
\nthough such amounts had been paid in accordance with the terms and conditions of
\nthe comparable employee benefit plan of the Purchaser.<\/p>\n
(c) Purchaser shall be responsible and assume all liability for
\nall notices or payments due to any Retained Employees, and all notices,
\npayments, fines or assessments due to any Governmental Entity, pursuant to any
\napplicable foreign, federal, state or local law, common law, statute, rule or
\nregulation with respect to the employment, discharge or layoff of employees by
\nthe Company after the Closing, including the WARN Act, Section 4980B of the
\nInternal Revenue Code and any rules or regulations as have been issued in
\nconnection with the foregoing.<\/p>\n
31<\/p>\n
(d) From and after the Closing, Purchaser shall be responsible for, and
\nshall indemnify and hold harmless the Seller and its Affiliates and their
\nofficers, directors, employees, Affiliates and agents and the fiduciaries
\n(including plan administrators) of the Plans from and against, any and all
\nclaims, losses, damages, costs and expenses (including attorneys’ fees and
\nexpenses) and other liabilities and obligations relating to or arising out of
\n(i) all salaries, wages, commissions, bonuses, employee incentive or other
\ncompensation, severance, holiday, vacation, welfare or retirement benefits
\n(other than retirement benefits provided by the Seller’s Retirement Plan,
\nSupplemental Retirement Plan, retiree health and retiree life insurance Plans,
\n1984 Executive Benefit Retirement Plan, 1988 Executive Survivor Benefits Plan
\nand 1988 Management Survivor Benefits Plan) earned on or after the Closing by
\nany Retained Employee or reserved on the Closing Statement, (ii) the liabilities
\nexpressly assumed by Purchaser under this Section 5.6 or any failure by
\nPurchaser to comply with the provisions of this Section 5.6, (iii) any
\ncontinuing contributions or other obligations of the Company with respect to the
\nPlans listed on the Disclosure Schedule as Plans subject to collective
\nbargaining agreements, (iv) any claims of, or damages or penalties sought by,
\nany Retained Employee, or any Governmental Entity on behalf of or concerning any
\nRetained Employee, with respect to any act or failure to act by Purchaser after
\nthe Closing to the extent arising from the employment, discharge, layoff or
\ntermination of any Retained Employee after the Closing and (v) the EEOC
\nInvestigation identified in the Disclosure Schedule.<\/p>\n
(e) Seller shall be responsible for, and shall indemnify and hold harmless
\nPurchaser and its Affiliates and their officers, directors, employees,
\nAffiliates, agents and the fiduciaries (including plan administrators) of the
\nPlans from and against any and all claims, losses, damages, costs, expenses
\n(including attorney’s fees and expenses) and other liabilities and obligations
\noccurring or incurred prior to the Closing and relating to or arising out of (i)
\nall salaries, wages, commissions, bonuses, employee incentive or other
\ncompensation, severance, holiday, vacation, welfare or retirement benefits
\n(including, without limitation, benefits provided under the Seller’s Retirement
\nPlan, Supplemental Retirement Plan, retiree health and retiree life insurance
\nPlans, 1984 Executive Benefit Retirement Plan, 1988 Executive Survivor Benefits
\nPlan and 1988 Management Survivor Benefits Plan) earned on or prior to the
\nClosing by any Retained Employee other than those reserved on the balance sheet
\nof the Company and its consolidated Subsidiaries as of the Closing Date, (ii)
\nall liabilities not expressly assumed by the Purchaser under this Section 5.6 or
\nany failure by Seller to comply with the provisions of this Section 5.6, (iii)
\nthose qualified Plans sponsored or maintained by the Company that are listed on
\nthe Disclosure Schedule and identified as frozen Plans, (iv) the completion of
\nthe termination of those Plans listed on the Disclosure Schedule and identified
\nas Plans in the process of being terminated, (v) any contributions or other
\nobligations of the Company incurred prior to the Closing with respect to the
\nPlans listed on the Disclosure Schedule as Plans subject to collective
\nbargaining agreements, and (vi) any claims or damages or penalties sought by any
\nRetained Employee, or any Governmental Entity on behalf of or concerning any
\nRetained Employee, with respect to any act or failure to act by Seller or the
\nCompany prior to the Closing to the extent arising from the employment,
\ndischarge, layoff or termination of any Retained Employee (other than the EEOC
\nInvestigation identified in the Disclosure Schedule).<\/p>\n
32<\/p>\n
(f) As of the Closing, any vested portion of an option to purchase shares
\nof Seller Common Stock issued pursuant to the 1994 Stock Option and Restricted
\nStock Plan or the 1999 Stock Option and Restricted Stock Plan shall remain
\nexercisable until the earlier of three years following the date of the Closing
\nor the Terminal Date (as defined in each of such Plans) of such option.<\/p>\n
(g) Effective as of the Closing, the Company, Seller and Purchaser shall
\ntake all action necessary and appropriate to cause the liabilities of Seller’s
\nDeferred Compensation Administration Plan II and the Option Gain Deferral Plan
\n(collectively, the “Deferred Compensation Plans”) attributable to Retained
\n —————————
\nEmployees to be transferred to a comparable deferred compensation plan sponsored
\nby the Purchaser or the Company (the “Purchaser DC Plans”) in which such
\n ——————
\nemployees are eligible to participate; provided, however, that such liabilities
\n ——– ——-
\nshall only be transferred to the extent of the amount of the reserve on the
\nClosing Statement. Following such transfer, Purchaser, the Company and the
\nPurchaser DC Plans (or any successor thereto) shall be solely responsible for
\nall liabilities under the Deferred Compensation Plans relating to such Retained
\nEmployees.<\/p>\n
(h) Seller shall take all action as may be necessary and appropriate (i) to
\ncause each Retained Employee who is a participant in Seller’s Profit-Sharing
\nInvestment Plan, as amended (the “PSIP”), (x) to be treated as a terminated
\n —-
\nemployee with respect to the PSIP effective as of the date of Closing with
\nrespect to eligibility to make contributions and to receive loans, in-service
\nwithdrawals, allocations of employer contributions and forfeitures and (y) to
\nbecome fully vested in all benefits accrued under the PSIP through the date of
\nClosing; (ii) to cause the PSIP to make available to such Retained Employees as
\nsoon as practicable following the Closing Date a distribution that qualifies
\nunder Code Section 401(k)(10) and thus allows each Retained Employee to roll
\nover such distribution into an individual retirement account or a qualified plan
\nof the Company or Purchaser (if such plan permits such roll over); and (iii) if
\nrequested by a Retained Employee, to transfer all outstanding loan balances
\nunder the PSIP to a qualified Plan of the Company.<\/p>\n
(i) The liabilities of Seller’s Retirement Plan attributable to Retained
\nEmployees shall remain in Seller’s Retirement Plan and Seller shall provide for
\nthe payment as they become due and in accordance with the terms of such Plan
\nupon the Retained Employee’s termination of employment from Seller. Effective
\nas of the Closing, such Retained Employees shall not be entitled to any
\nadditional credit for service or age under Seller’s Retirement Plan; provided,
\nhowever, that the Retained Employees will be credited with any service with
\nPurchaser and its Affiliates following the Closing for purposes of determining
\nthe Retained Employees’ eligibility for an early retirement benefit under the
\nSeller’s Retirement Plan.<\/p>\n
(j) Purchaser and the Company shall provide to Seller such information
\nnecessary for Seller to provide those benefits to Retained Employees described
\nin this Section 5.6, including, but not limited to, confirmation of a Retained
\nEmployee’s termination of employment from the Company or Purchaser. Seller
\nshall take all steps reasonable to provide to Purchaser and, if necessary, the
\nRetained Employees, such information necessary for Purchaser to provide those
\nbenefits to Retained Employees described in this Section 5.6, <\/p>\n
33<\/p>\n
including, without limitation, confirmation of a Retained Employee’s termination
\nof employment from Seller and its affiliates and subsidiaries.<\/p>\n
(k) Except where this Agreement provides otherwise, Seller shall pay (or
\nprovide for the payment, as applicable) as of the date of Closing directly to
\neach eligible Retained Employee (i) a pro-rata award under Seller’s Management
\nIncentive Plan, in accordance with the terms of the Plan and consistent with
\npast practice; (ii) a lump sum payment equal to the vested benefits credited to
\nthe Account (as defined in Seller’s Supplemental PSIP) of each eligible Retained
\nEmployee who is a participant in Seller’s Supplemental PSIP; and (iii) the
\npresent value of the benefit payable to each Retained Employee who is a
\nparticipant in the Seller’s Supplemental Retirement Plan in either a lump sum
\npayment or in accordance with the Retained Employee’s election, as appropriate
\nunder the terms of such Plan, and otherwise in accordance with the terms of each
\nsuch Plan.<\/p>\n
(l) The Purchaser shall assume all responsibility for providing benefits
\nrequired under Part 6 of Title I of ERISA (“COBRA Benefits”) in respect of
\n ————–
\nqualifying events occurring on or after the Closing for Retained Employees and
\ntheir qualified beneficiaries. Seller shall retain liability for all COBRA
\nBenefits in respect of qualifying events occurring prior to Closing for Retained
\nEmployees and their qualified beneficiaries.<\/p>\n
(m) Seller shall retain the liabilities pursuant to Seller’s retiree heath
\nand retiree life insurance Plans attributable to Retained Employees and shall
\nprovide coverage in accordance with the terms and conditions of such Plans upon
\nthe eligible Retained Employee’s termination of employment from the Company or
\nPurchaser. For purposes of determining a Retained Employee’s eligibility for
\nsuch benefits as a retiree of Seller, employment with Seller shall be deemed to
\nterminate as of the Closing, and no period of time after the Closing shall be
\ntaken into consideration in determining eligibility.<\/p>\n
(n) Purchaser shall provide short-term disability coverage for all
\nRetained Employees eligible to receive short-term disability benefits as of the
\nClosing on substantially the same terms and conditions as in effect immediately
\nprior to the Closing, so that such Retained Employees receive short-term
\ndisability benefits for a total of six months.<\/p>\n
(o) Seller shall provide a long-term disability benefit pursuant to the
\nterms and conditions of Seller’s Long-Term Disability Plan to (i) all Retained
\nEmployees who are on long-term disability as of the Closing and (ii) those
\nRetained Employees who are on short-term disability leave as of the Closing and
\nwho become eligible to receive a long-term disability benefit upon the
\nexpiration of such short-term disability leave following the Closing.<\/p>\n
(p) Effective as of the Closing, Purchaser shall be responsible for all
\nworkers’ compensation claims filed by Retained Employees based on events
\noccurring on and after the Closing. Seller shall retain liability for all
\nworkers’ compensation claims filed by Retained Employees and cases based on
\nevents occurring prior to the Closing.<\/p>\n
(q) In accordance with the terms of employment agreements entered into
\nbetween the Purchaser and certain Retained Employees, Seller shall, upon the
\nrequest of any <\/p>\n
34<\/p>\n
Retained Employee, pay to the Purchaser any payments due to such Retained
\nEmployee under the Company’s Divestiture Incentive Plan.<\/p>\n
(r) The Company, Seller and Purchaser shall cooperate and take all
\nsuch action as may be necessary to carry out the terms of this Section 5.6.<\/p>\n
Section 5.7 Indemnification. Following the Closing, Purchaser shall cause
\n —————
\nthe Company not to make any changes to its certificate of incorporation or by-
\nlaws that would adversely affect the rights of persons who are currently or were
\nofficers or directors of the Company, other than any directors who are not
\nofficers of the Company, to claim indemnification from such entity under the
\nterms of such certificate of incorporation or by-laws as in effect on the date
\nhereof for acts taken prior to the Closing.<\/p>\n
Section 5.8 Transition Services. The Seller shall provide to the Company
\n ——————-
\nand the Company Subsidiaries administrative and other transition services
\nreasonably requested by Purchaser for a period of up to six months after the
\nClosing. The Seller, the Company and the Company Subsidiaries shall negotiate
\nin good faith and enter into a transition services agreement (the “Transition
\n ———-
\nServices Agreement”) prior to Closing setting forth the terms and conditions of
\n——————
\nsuch services, including, without limitation, that the Company and the Company
\nSubsidiaries shall pay for such services at cost, and with other terms and
\nconditions that are customary for these types of services.<\/p>\n
Section 5.9 Intercompany Arrangements. As of the Closing Date, all
\n ————————-
\nintercompany accounts between the Company or any Company Subsidiary, on the one
\nhand, and Seller and its Affiliates (excluding the Company), on the other hand,
\nshall be canceled without any payment of funds and neither the Company nor any
\nCompany Subsidiary shall have any further liability therefor. In addition,
\nexcept as otherwise expressly contemplated by this Agreement, all agreements and
\ncommitments, whether written, oral or otherwise, which are solely between the
\nCompany or any Company Subsidiary, on the one hand, and Seller and its
\nAffiliates (excluding the Company), on the other hand, shall be terminated and
\nof no further effect, simultaneously with the Closing, without any further
\naction or liability on the part of the parties thereto.<\/p>\n
Section 5.10 Treatment of Seller Guaranties. Purchaser shall use its
\n ——————————
\ncommercially reasonable efforts, at Purchaser’s expense, to have released and
\ncancelled at the Closing each Seller Guaranty; provided, however, that to the
\n ——– ——-
\nextent that any Seller Guaranty cannot be so released and cancelled, Purchaser
\nshall use its commercially reasonable efforts, at Purchaser’s expense, to cause
\nitself to be substituted for Seller and each of Seller’s Affiliates directly
\naffected thereby in respect of such Seller Guaranty (or if not possible, added
\nas the primary obligor with respect thereto). If Purchaser is not able to
\neither release and cancel such Seller Guaranty or cause itself to be so
\nsubstituted in all respects in respect of such Seller Guaranty, then Purchaser
\nshall, at its election (a) obtain and deliver to Seller at the Closing letters
\nof credit in favor of Seller, on terms and conditions, and from financial
\ninstitutions, which in each case are reasonably satisfactory to Seller, with
\nrespect to all the obligations covered by each Seller Guaranty or (b) otherwise
\nindemnify, defend and hold harmless Seller and each such Affiliate of Seller
\nwith respect to all liabilities or expenses that might arise or be incurred by<\/p>\n
35<\/p>\n
Seller or such Affiliate of Seller with respect to any such Seller Guaranty.
\nSeller will, and shall cause its Affiliates to, cooperate and use commercially
\nreasonable efforts to assist Purchaser in performing its obligations under this
\nSection 5.10.<\/p>\n
Section 5.11 Update of Disclosure Schedule. Seller may, from time to
\n —————————–
\ntime, prior to or on the Closing Date, by notice in accordance with this
\nAgreement supplement or amend the Disclosure Schedule, including one or more
\nsupplements or amendments to correct any matter that would otherwise constitute
\na breach of any representation, warranty or covenant contained herein. If,
\npursuant to and in accordance with Section 7.1(f), such a supplement or
\namendment of any section of the Disclosure Schedule materially and adversely
\naffects the benefits to be obtained by Purchaser under this Agreement, then
\nPurchaser shall have the right to terminate this Agreement, but such termination
\nshall be Purchaser’s sole remedy relating to matters set forth in amendments or
\nsupplements to any section of the Disclosure Schedule. Notwithstanding any
\nother provision hereof to the contrary, the Disclosure Schedule and the
\nrepresentations and warranties made by the Seller shall be deemed for all
\npurposes to include and reflect such supplements and amendments as of the date
\nhereof and at all times thereafter, including the Closing Date.<\/p>\n
Section 5.12 Maintenance of Books and Records. Each of the parties hereto
\n ——————————–
\nshall preserve, until at least the eighth anniversary of the Closing Date, all
\npre-Closing Date records possessed or to be possessed by such party relating to
\nthe Company. After the Closing Date and up until at least the eighth
\nanniversary of the Closing Date, upon any reasonable request from a party hereto
\nor its representatives, the party holding such records shall (a) provide to the
\nrequesting party or its representatives reasonable access to such records during
\nnormal business hours and (b) permit the requesting party or its representatives
\nto make copies of such records, in each case at no cost to the requesting party
\nor its representatives (other than for reasonable out-of-pocket expenses);<\/p>\n
provided, however, that nothing herein shall require either party to disclose
\n——– ——-
\nany information to the other if such disclosure would jeopardize any attorney-
\nclient or other legal privilege or contravene any applicable law. Such records
\nmay be sought under this Section for any reasonable purpose, including to the
\nextent reasonably required in connection with the audit, accounting, tax,
\nlitigation, federal securities disclosure or other similar needs of the party
\nseeking such records. Notwithstanding the foregoing, at any time after the
\nfifth anniversary of the date of this Agreement, any and all such records may be
\ndestroyed by a party if such destroying party sends to the other parties hereto
\nwritten notice of its intent to destroy such records, specifying in reasonable
\ndetail the contents of the records to be destroyed; such records may then be
\ndestroyed after the 60th day following such notice unless the other party hereto
\nnotifies the destroying party that such other party desires to obtain possession
\nof such records, in which event the destroying party shall transfer the records
\nto such requesting party and such requesting party shall pay all reasonable
\nexpenses of the destroying party in connection therewith.<\/p>\n
Section 5.13 Seller’s Trademarks and Logos. (a) Notwithstanding anything
\n —————————–
\nto the contrary contained in this Agreement, it is expressly agreed that (1)
\nPurchaser is not purchasing, acquiring or otherwise obtaining, and the Company
\nwill not be entitled to retain following the Closing Date, any right, title or
\ninterest in any Trademarks employing Seller’s name or any part or variation of
\nsuch name or anything confusingly similar thereto and (2) neither the Company
\nnor Purchaser or its Affiliates shall make any use of such Trademarks from and
\nafter the Closing.<\/p>\n
36<\/p>\n
(b) As of the Closing, Seller grants to Purchaser, the Company and the
\nCompany Subsidiaries a non-exclusive, royalty free, fully paid license to use
\nand authorize others to use the Trademarks employing Seller’s name and any part
\nor variation thereof used in the business of the Company or any Company
\nSubsidiary for a term that will end up to 30 days after Closing for any
\nletterhead stationary and any equipment bearing such a Trademark, and for all
\nother inventory and marketing material bearing such a Trademark, until such time
\nas all such inventory and marketing material shall have been used, sold or
\ndistributed. Seller shall also permit Purchaser, the Company and the Company
\nSubsidiaries to make use of all trade dress as presently used by Seller, the
\nCompany or the Company Subsidiaries and related to the Trademarks on the same
\nterms and conditions as are applicable to the Trademarks. It is the intention
\nof Purchaser to transition to a new corporate name and Trademarks for itself as
\nsoon as reasonably practicable.<\/p>\n
Section 5.14 License Agreement. At the Closing, Seller and the Company
\n —————–
\nshall enter into a license agreement (the “License Agreement”). Pursuant to such
\nLicense Agreement, the Company shall license to Seller use of its “PC-1”
\nsoftware, but solely for use by Seller and its Subsidiaries in the healthcare
\nbusiness. Such license shall be non-exclusive, royalty-free and fully paid. In
\naddition, McKesson shall not be permitted to sublicense or assign any rights to
\n“PC-1” it may have. Also, such License Agreement shall contain a provision
\nallowing the Company to terminate upon a change of control of the Seller by
\nwhich a competitor of the Guarantor or any of its Affiliates gains control of
\nSeller.<\/p>\n
Section 5.15 Intellectual Property Assignments. At or prior to the
\n ———————————
\nClosing, Seller shall enter into the Intellectual Property Assignments with the
\nCompany.<\/p>\n
Section 5.16 Unclaimed Property Audit. Purchaser agrees to reasonably
\n ————————
\ncooperate and agrees to cause the Company to reasonably cooperate with Seller
\nand any of its employees, directors, representatives and other agents in
\nSeller’s preparation for and response to any unclaimed property audit by any
\nstate including, but not limited to, promptly providing copies of all reasonably
\nrequested documents and making Company employees available to respond to
\nreasonable inquiries of Seller in connection with any such audit. The
\nobligations of the Purchaser under this Section 5.16 shall survive until the
\nexpiration of the applicable state statutes of limitation.<\/p>\n
Section 5.17 Non-Competition.
\n ————— <\/p>\n
(b) For a period of five (5) years after the Closing (the “Restricted
\n ———-
\nPeriod”), Seller shall not, and shall cause its Subsidiaries not to, engage,
\n——
\ndirectly or indirectly, in any business anywhere in the world that manufactures,
\nproduces or supplies products or services of the kind manufactured, produced or
\nsupplied by the Business, the Company or any Company Subsidiary as of the
\nClosing Date or, without the prior written consent of Purchaser, directly or
\nindirectly, own an interest in, manage, operate, join, control, or participate
\nin as an officer, employee, partner, stockholder, consultant or otherwise, any
\nPerson that competes with Purchaser, the Business, the Company or any Company
\nSubsidiary in manufacturing, producing or supplying products or services of the
\nkind manufactured, produced or supplied by the<\/p>\n
37<\/p>\n
Business, the Company or any Company Subsidiary as of the Closing; provided,
\n ——–
\nhowever, that, for the purposes of this Section 5.17, ownership of securities
\n——-
\nhaving no more than five percent of the outstanding voting power of any
\ncompetitor which are listed on any national securities exchange or traded
\nactively in the national over-the-counter market shall not be deemed to be in
\nviolation of this Section 5.17 so long as the Person owning such securities has
\nno other connection or relationship with such competitor; provided further that
\n ——– ——-
\nthis Section 5.17 shall not prevent Seller’s use of the Intellectual Property
\nlicensed to it pursuant to the License Agreement.<\/p>\n
(b) Seller agrees that, without Purchaser’s prior written consent,
\nSeller will not, during the Restricted Period, employ any person who is or was
\nemployed by the Company or any Company Subsidiary as one of the top 12 senior
\nmanagement executives during the Restricted Period.<\/p>\n
(c) The Restricted Period shall be extended by the length of any
\nperiod during which Seller is in breach of the terms of this Section 5.17.<\/p>\n
(d) Seller acknowledges that a breach of its covenants contained in
\nSection 5.17 may cause irreparable damage to Purchaser, the exact amount of
\nwhich will be difficult to ascertain, and that the remedies at law for any such
\nbreach will be inadequate. Accordingly Seller agrees that if it breaches any of
\nthe covenants contained in Section 5.17 in addition to any other remedy which
\nmay be available at law or in equity, Purchaser shall be entitled to specific
\nperformance and injunctive relief.<\/p>\n
(e) The parties further acknowledge that the time, scope, geographic
\narea and other provisions of Section 5.17 have been specifically negotiated by
\nsophisticated commercial parties and agree that all such provisions are
\nreasonable under the circumstances of the transactions contemplated by this
\nAgreement. In the event that the agreements in Section 5.17 shall be determined
\nby any court of competent jurisdiction to be unenforceable by reason of their
\nextending for too great a period of time or over too great a geographical area
\nor by reason of their being too extensive in any other respect, they shall be
\ninterpreted to extend only over the maximum period of time for which they may be
\nenforceable and\/or over the maximum geographical area as to which they may be
\nenforceable and\/or to the maximum extent in all other respects as to which they
\nmay be enforceable, all as determined by such court in such action.<\/p>\n
Section 5.18 Further Action. Each of the parties hereto shall use all
\n ————–
\nreasonable efforts to take, or cause to be taken, all appropriate action, do or
\ncause to be done all things necessary, proper or advisable under applicable law,
\nand execute and deliver such documents and other papers, as may be required to
\ncarry out the provisions of this Agreement and consummate and make effective the
\ntransactions contemplated by this Agreement.<\/p>\n
Section 5.19 Environmental Compliance. With respect to any Real Property
\n ————————
\nlocated in the State of New Jersey, the Company will comply with any obligations
\nit may have pursuant to the execution of this Agreement or the consummation of
\nthe transactions contemplated herein to conduct any investigation, remediation,
\nremoval, monitoring or other action with respect to Hazardous Materials, or
\nprovide any notice to or obtain consent of <\/p>\n
38<\/p>\n
Governmental Entities or third parties, pursuant to any applicable Environmental
\nLaw or Environmental Permit.<\/p>\n
Section 5.20 Seller Consent. Seller hereby consents to the consummation
\n —————
\nof the transaction pursuant to any change of control provisions contained in any
\nagreement between Seller and the Company.<\/p>\n
Section 5.21 PWC Claim Assignment. Effective as of the Closing, the
\n ———————
\nCompany will assign to Seller, and Seller will assume from the Company all
\nclaims, and causes of action that the Company may have against PWC arising out
\nof or related to PWC’s development of PC-1.<\/p>\n
ARTICLE VI<\/p>\n
CONDITIONS<\/p>\n
Section 6.1 Conditions to Each Party’s Obligation to Effect the Closing.
\n ———————————————————–
\nThe respective obligation of each party to effect the Closing shall be subject
\nto the satisfaction on or prior to the Closing Date of each of the following
\nconditions:<\/p>\n
(a) Statutes; Court Orders. No statute, rule or regulation shall
\n ———————-
\nhave been enacted or promulgated by any Governmental Entity which prohibits the
\nconsummation of the Closing; and there shall be no order or injunction of a
\ncourt of competent jurisdiction in effect precluding consummation of the
\nClosing; provided, however, that the parties shall use their commercially
\n ——– ——-
\nreasonable efforts to have any such order or injunction vacated or lifted; and<\/p>\n
(b) HSR Approval. The applicable waiting period under the HSR Act
\n ————
\nshall have expired or been terminated.<\/p>\n
Section 6.2 Conditions to Obligations of Purchaser to Effect the Closing.
\n ————————————————————
\nThe obligations of Purchaser to effect the Closing shall be subject to the
\nsatisfaction on or prior to the Closing Date of each of the following
\nconditions:<\/p>\n
(a) Government Action. There shall not be pending any suit,
\n —————–
\naction or proceeding by any Governmental Entity<\/p>\n
(i) seeking to restrain or prohibit the consummation of the
\n Closing or the performance of any of the other Transactions, or seeking to
\n obtain from Seller or Purchaser any damages that are material in relation
\n to the Company or the Company Subsidiaries, or<\/p>\n
(ii) seeking to impose material limitations on the ability of
\n Purchaser effectively to exercise full rights of ownership of the Shares,
\n including the right to vote the Shares, or<\/p>\n
39<\/p>\n
(iii) which is reasonably expected to have a Company
\n Material Adverse Effect.<\/p>\n
(b) Representations and Warranties. All of the representations
\n ——————————
\nand warranties of Seller set forth in this Agreement that are qualified as to
\nmateriality shall be true and correct in all respects and any such
\nrepresentations and warranties that are not so qualified shall be true and
\ncorrect in all material respects, in each case as of the date of this Agreement
\nand as of the Closing Date (or if made as of a specified date, only as of such
\ndate) and Purchaser shall have received a certificate to such effect from the
\nSeller signed by a duly authorized officer thereof.<\/p>\n
(c) Seller Breach. Seller shall not have failed to perform in
\n ————-
\nany material respect any obligation or to comply in any material respect with
\nany covenant of Seller to be performed or complied with by it under this
\nAgreement, and the Purchaser shall have received a certificate to such effect
\nfrom the Seller signed by a duly authorized officer thereof.<\/p>\n
(d) Termination. This Agreement shall not have been terminated
\n ———–
\nin accordance with its terms.<\/p>\n
(e) Resolutions of Seller. Purchaser shall have received a true
\n ———————
\nand complete copy, certified by the Secretary or an Assistant Secretary of
\nSeller, of the resolutions duly and validly adopted by the Board of Directors of
\nSeller evidencing its authorization of the execution and delivery of this
\nAgreement and the Transaction Documents and the consummation of the transactions
\ncontemplated hereby and thereby.<\/p>\n
(f) Incumbency Certificate of Seller. Purchaser shall have
\n ——————————–
\nreceived a certificate of the Secretary or an Assistant Secretary of Seller
\ncertifying the names and signatures of the officers of Seller authorized to sign
\nthis Agreement and the other documents to be delivered hereunder.<\/p>\n
(g) Good Standing. Purchaser shall have received good standing
\n ————-
\ncertificates for the Company from the secretary of state of the jurisdiction in
\nwhich each such entity is incorporated or organized, in each case dated as of a
\ndate not earlier than five Business Days prior to the Closing Date and
\naccompanied by bring-down telegrams dated the Closing Date.<\/p>\n
(h) Intellectual Property Assignments. Seller shall have
\n ———————————
\ndelivered to Purchaser executed copies of (i) the Intellectual Property
\nAssignments and (ii) the License Agreement.<\/p>\n
Section 6.3 Conditions to Obligations of Seller to Effect the Closing.
\n ———————————————————
\nThe obligations of Seller to effect the Closing shall be subject to the
\nsatisfaction on or prior to the Closing Date of each of the following
\nconditions:<\/p>\n
(a) Government Action. There shall not be pending any suit,
\n —————–
\naction or proceeding by a Governmental Entity seeking to restrain or prohibit
\nthe consummation of the <\/p>\n
40<\/p>\n
Closing or the performance of any of the other Transactions, or seeking to
\nobtain from Seller any damages that are material in relation to the Company or
\nthe Company Subsidiaries.<\/p>\n
(b) Representations and Warranties. All of the representations and
\n ——————————
\nwarranties of Purchaser set forth in this Agreement that are qualified as to
\nmateriality shall be true and correct in all respects and any such
\nrepresentations and warranties that are not so qualified shall be true and
\ncorrect in all material respects, in each case as of the date of this Agreement
\nand as of the Closing Date (or if made as of a specified date, only as of such
\ndate) and Seller shall have received a certificate to such effect from the
\nPurchaser, signed by a duly authorized officer thereof.<\/p>\n
(c) Purchaser Breach. The Purchaser shall not have failed to perform
\n —————-
\nin any material respect any obligation or to comply in any material respect with
\nany covenant of the Purchaser to be performed or complied with by it under this
\nAgreement and Seller shall have received a certificate to such effect from the
\nPurchaser, signed by a duly authorized officer thereof.<\/p>\n
(d) Termination. This Agreement shall not have been terminated in
\n ———–
\naccordance with its terms.<\/p>\n
(e) Resolutions of Purchaser. Seller shall have received a true and
\n ————————
\ncomplete copy, certified by the Secretary or Assistant Secretary of Purchaser,
\nof the resolutions duly and validly adopted by the Board of Directors of
\nPurchaser evidencing its authorization of the execution and delivery of this
\nAgreement and the Transaction Documents and the consummation of the transactions
\ncontemplated hereby and thereby.<\/p>\n
(f) Incumbency Certificate of Purchaser. Seller shall have received a
\n ———————————–
\ncertificate of the Secretary or Assistant Secretary of Purchaser certifying the
\nnames and signatures of the officers of Purchaser authorized to sign this
\nAgreement and the other documents to be delivered hereunder.<\/p>\n
ARTICLE VII<\/p>\n
TERMINATION<\/p>\n
Section 7.1 Termination. The Transactions may be terminated or abandoned
\n ———–
\nat any time prior to the Closing Date:<\/p>\n
(a) By the mutual written consent of Purchaser and Seller;<\/p>\n
(b) By Purchaser or Seller if any Governmental Entity shall have
\nissued an order, decree or ruling or taken any other action (which order,
\ndecree, ruling or other action the parties hereto shall use their commercially
\nreasonable efforts to lift) which permanently restrains, enjoins or otherwise
\nprohibits the acquisition by Purchaser of the Shares and such order, decree,
\nruling or other action shall have become final and non-appealable;<\/p>\n
41<\/p>\n
(c) By either party if the Closing shall not have occurred on or prior
\nto April 30, 2000, and such party is not in willful breach of this Agreement at
\nthe time such party terminates this Agreement; provided, however, that such date
\n ——– ——-
\nshall be extended to September 30, 2000 in the event that Seller and Purchaser
\nreceive “second request” letters from the FTC and\/or DOJ pursuant to the HSR
\nAct;<\/p>\n
(d) By Seller if Purchaser shall have breached in any material respect
\nany of its representations, warranties, covenants or other agreements contained
\nin this Agreement which would give rise to the failure of a condition set forth
\nin Article VI, which breach cannot be or has not been cured within 30 days after
\nthe giving of written notice by Seller to Purchaser specifying such breach;<\/p>\n
(e) By Purchaser if Seller shall have breached any representation,
\nwarranty, covenant or other agreement contained in this Agreement which would
\ngive rise to the failure of a condition set forth in Article VI, which breach
\ncannot be or has not been cured within 30 days as to the giving of written
\nnotice by Purchaser to Seller specifying such breach; or<\/p>\n
(f) By Purchaser if (a) a supplement or amendment of any section of
\nthe Disclosure Schedule made by Seller pursuant to Section 5.11 materially and
\nadversely affects the benefits to be obtained by Purchaser under this Agreement
\nand (b) any breach of a representation, warranty, covenant or other agreement
\nreferred to in such supplement or amendment cannot be or has not been cured
\nwithin 30 days after supplement or amendment is made by Seller.<\/p>\n
Section 7.2 Effect of Termination. In the event of the termination or
\n ———————
\nabandonment of the Transactions by any party hereto pursuant to the terms of
\nthis Agreement, written notice thereof shall forthwith be given to the other
\nparty or parties specifying the provision hereof pursuant to which such
\ntermination or abandonment of the Transactions is made, and there shall be no
\nliability or obligation thereafter on the part of Purchaser or Seller except for
\nfraud or for willful breach of this Agreement prior to such termination or
\nabandonment of the Transactions and except pursuant to Section 5.2(b) or 10.1.
\nNo party shall have any liability to the other in connection with the
\ntermination of this Agreement insofar as such termination is effected pursuant
\nto Section 7.1(f) except pursuant to Section 5.2(b) or 10.1.<\/p>\n
ARTICLE VIII<\/p>\n
INDEMNIFICATION<\/p>\n
Section 8.1 Indemnification; Remedies.
\n ————————- <\/p>\n
(a) Seller shall indemnify, defend and hold harmless the Purchaser and
\nthe Purchaser Indemnified Persons from and against and in respect of all
\nPurchaser Losses.<\/p>\n
42<\/p>\n
(b) Seller shall indemnify and hold Purchaser harmless from and
\nagainst the following (net of the amount of any tax benefits received by
\nPurchaser or the Company as a result of the payment or accrual of any of the
\nfollowing taking into account any additional Tax incurred by Seller as a result
\nof any indemnification payment pursuant to this Section 8.1):<\/p>\n
(i) any liability for Taxes imposed on the Company or any
\n Company Subsidiary or for which the Company or any Company Subsidiary may
\n be liable, as a result of having been a member of an “affiliated group”
\n (within the meaning of Section 1504(a) of the Code) pursuant to Treasury
\n Regulation Section 1.1502-6(a) or comparable provisions of foreign, state
\n or local law (other than the affiliated group of Purchaser);<\/p>\n
(ii) any liability for Taxes imposed on the Company or any
\n Company Subsidiary, or for which the Company or any Company Subsidiary may
\n otherwise be liable, for any taxable year or period that ends on or before
\n the Closing Date and, with respect to any Straddle Period, the portion of
\n such Straddle Period deemed to end on and include the Closing Date;<\/p>\n
(iii) any liability for Taxes that would not have been imposed but
\n for the elections under Section 338(h)(10) or any comparable provisions of
\n state or local Tax law;<\/p>\n
(iv) any and all losses, liabilities, damages, judgments,
\n settlements and expenses that arise out of breach of any representations or
\n warranties contained in Section 3.26; and<\/p>\n
(v) all reasonable attorneys’ fees and expenses and reasonable
\n accountants’ fees and expenses incurred in the investigation or defense of
\n or in connection with the same.<\/p>\n
provided, however, that Seller shall not be liable for and shall not indemnify
\n——– ——-
\nPurchaser (or its Subsidiaries and Affiliates) for Excluded Taxes.<\/p>\n
(c) Purchaser shall indemnify and hold Seller and Seller’s
\nSubsidiaries and Affiliates harmless from and against (net of the amount of any
\ntax benefits received by Seller as a result of the payment or accrual of any of
\nthe following taking into account any additional Tax incurred by Purchaser as a
\nresult of any indemnification payment pursuant to this Section 8.1):<\/p>\n
(i) Taxes imposed on the Company for any taxable year or period
\n that begins after the Closing Date and, with respect to any Straddle
\n Period, the portion of such Straddle Period beginning after the Closing
\n Date; and<\/p>\n
(ii) Excluded Taxes.<\/p>\n
43<\/p>\n
(d) Seller’s indemnification obligations under Sections 8.1(a) and
\n8.1(b) shall be subject to each of the following limitations:<\/p>\n
(i) Seller’s indemnification obligations relating to (A) Purchaser
\n Losses shall survive only until June 30, 2001 (other than with respect to
\n representations and warranties made in (x) Section 3.23, which shall
\n survive until the fifth anniversary of the Closing Date and (y) Sections
\n 3.2, 3.3, 3.5 and 3.6, which shall survive indefinitely) and (B) any Tax
\n Claims shall survive until the expiration of the applicable tax statute of
\n limitations plus 120 days. No claim for the recovery of any Purchaser
\n Losses or Tax Claims may be asserted by any Purchaser Indemnified Person
\n after the expiration of the applicable indemnification period; provided,
\n ——–
\n however, that claims first asserted in writing by any Purchaser Indemnified
\n ——-
\n Person with reasonable specificity prior to the expiration of the
\n applicable indemnification period shall not thereafter be barred by the
\n expiration of the applicable indemnification period. The parties intend by
\n the foregoing to shorten the statute of limitations and agree that no
\n claims or causes of action may be brought against Seller based upon,
\n directly or indirectly, any of the representations or warranties contained
\n in Article III after the applicable survival period or, except as provided
\n in Section 7.2, any termination of this Agreement. This Section 8.1 shall
\n not limit any covenant or agreement of the parties that contemplates
\n performance after the Closing.<\/p>\n
44<\/p>\n
(ii) No reimbursement for Purchaser Losses asserted under
\nSection 8.1(a) shall be required unless the aggregate amount of Purchaser Losses
\nexceeds the Threshold, and, in such event, indemnification shall be made by
\nSeller only to the extent Purchaser Losses exceed the Threshold. Purchaser shall
\nnot have the right to indemnification for any individual Purchaser Loss which is
\nequal to or less than (x) with respect to any such indemnification right of
\nPurchaser arising under Section 3.12, $7,000,000, and (y) with respect to any
\nother such indemnification right, $150,000. With respect to individual Purchaser
\nLosses which are equal to or less than the amount set forth in the foregoing
\nclause (y) which do not give rise to an indemnification right under Section
\n3.12, such Purchasers Losses shall not be counted for purposes of determining
\nwhether the aggregate amount of Purchaser Losses exceeds the Threshold. The
\nlimitations of this Section 8.1(d)(ii) shall not apply to Tax Claims.<\/p>\n
(iii) Each Purchaser Loss shall be reduced by (1) the amount of
\nany insurance proceeds paid to Purchaser or any Purchaser Indemnified Person
\nwith respect to such loss, (2) any indemnity, contribution or other similar
\npayment paid to Purchaser or any Purchaser Indemnified Person by any third party
\nwith respect to such loss and (3) an amount equal to any reduction of income
\nTaxes attributable to such loss.<\/p>\n
(iv) In no event shall Seller’s aggregate liability to
\nPurchaser under this Agreement for breaches of representations or warranties,
\ncovenants or agreements, whether pursuant to this Article VIII or otherwise,
\nexceed the Cap Amount.<\/p>\n
Section 8.2 Notice of Claim; Defense.
\n ———————— <\/p>\n
(a) Each Purchaser Indemnified Person shall give Seller prompt notice
\nof any third-party claim (other than claims arising out of any pending or
\nthreatened audit, notice of deficiency, proposed adjustment, assessment,
\nexamination or other administrative or court proceeding, suit, dispute or other
\nclaim which could affect the liability for Taxes of Seller) that may give rise
\nto any indemnification obligation under this Article VIII, together with the
\nestimated amount of such claim, if reasonably ascertainable, (provided that
\nfailure to deliver such notice shall not release Seller from any of its
\nobligations hereunder except to the extent Seller is materially prejudiced by
\nsuch failure), together with a description of the facts and circumstances on
\nwhich such claim is based. Seller shall have the right to assume the defense (at
\nSeller’s expense) of any such claim through counsel of Seller’s own choosing by
\nso notifying such Purchaser Indemnified Person within 30 days of the receipt by
\nSeller of such notice from such Purchaser Indemnified Person; provided,
\n ——–
\nhowever, that any such counsel shall be reasonably satisfactory to such
\n——-
\nPurchaser Indemnified Person. Seller shall be liable for the fees and expenses
\nof counsel employed by such Purchaser Indemnified Person for any period during
\nwhich Seller has not assumed the defense of any such third-party claim (other
\nthan during any period in which Purchaser will have failed to give notice of the
\nthird-party claim as provided above). If Seller assumes such defense through
\ncounsel of its own choosing, such Purchaser Indemnified Person shall have the
\nright to participate in the defense thereof and to employ counsel, at its own
\nexpense, separate from the counsel employed by Seller, it being understood that
\nSeller shall control such defense. If Seller chooses to defend or prosecute a
\nthird-party claim, Purchaser shall cooperate in the defense or prosecution
\nthereof, which cooperation shall include, to the extent reasonably requested by
\nSeller, the retention and the provision to Seller of <\/p>\n
45<\/p>\n
records and information reasonably relevant to such third-party claim, and
\nmaking employees of the Company reasonably available on a mutually convenient
\nbasis to provide additional information and explanation of any materials
\nprovided hereunder. If Seller chooses to defend or prosecute any third-party
\nclaim, Purchaser shall agree to any settlement, compromise or discharge of such
\nthird-party claim that Seller may recommend and that by its terms, discharges,
\nPurchaser from the full amount of liability in connection with such third party
\nclaim, so long as the only remedy provided in such settlement compromise or
\ndischarge is payment of monetary damages for which the Purchaser is indemnified
\nby the Seller. None of Purchaser, any of its Affiliates or the Company may
\nsettle or otherwise dispose of any claim for which Seller may have a liability
\nunder this Agreement without the prior written consent of Seller, which consent
\nwill not be unreasonably withheld or delayed. Seller shall not be liable under
\nthis Section 8.2(a) for any settlement, compromise or discharge effected without
\nits consent in respect of any claim for which indemnity may be sought hereunder.
\nNo indemnified party shall take any action the purpose of which is to prejudice
\nthe defense of any claim subject to indemnification hereunder or to induce a
\nthird party to assert a claim subject to indemnification hereunder.<\/p>\n
(b) (i) Each party hereto shall notify the chief tax officer of the
\n other party in writing within 15 days following receipt by such party of
\n written notice of any pending or threatened audits, notice of deficiency,
\n proposed adjustment, assessment, examination or other administrative or
\n court proceeding, suit, dispute or other claim which could affect the
\n liability for Taxes of such other party. If the party required to give such
\n notice fails to give such notice to the other party promptly, it shall not
\n be entitled to indemnification for any Taxes arising in connection with
\n such Tax Claim if and to the extent that such failure to give notice
\n materially and adversely affects the other party’s right to participate in
\n or defend the Tax Claim.<\/p>\n
(ii) Seller shall have the sole right to represent the Company’s
\n interests in any Tax Claim relating to taxable periods ending on or before
\n the Closing Date and to employ counsel of its choice at its expense. In the
\n case of a Straddle Period, Seller shall be entitled to participate at its
\n expense in any Tax Claim relating in any part to Taxes attributable to the
\n portion of such Straddle Period deemed to end on or before the Closing Date
\n and, with the written consent of Purchaser, at Seller’s sole expense, may
\n assume the control of such Tax Claim. None of Purchaser, any of its
\n Affiliates or the Company may settle or otherwise dispose of any Tax Claim
\n for which Seller may have a liability under this Agreement without the
\n prior written consent of Seller, which consent may not be unreasonably
\n withheld.<\/p>\n
Section 8.3 Resolution of All Tax-Related Disputes. If Seller and
\n ————————————–
\nPurchaser cannot agree on the calculation of any amount relating to Taxes or the
\ninterpretation or application of any provision of this Agreement relating to
\nTaxes, such dispute shall be resolved by a nationally recognized accounting firm
\nmutually acceptable to each of Seller and Purchaser, whose decision shall be
\nfinal and binding upon all persons involved and whose expenses shall be shared
\nequally by Seller and Purchaser.<\/p>\n
Section 8.4 Tax Effect of Indemnification Payments. To the fullest extent
\n ————————————–
\npermitted by applicable law, all indemnity payments made by Seller to Purchaser
\nIndemnified <\/p>\n
46
\nPerson, or by Purchaser Indemnified Persons to Seller, pursuant to this
\nAgreement shall be treated for all Tax purposes as adjustments to the
\nconsideration paid with respect to the Shares.<\/p>\n
Section 8.5 No Duplication; Sole Remedy Procedures.
\n ————————————– <\/p>\n
(a) Any liability for indemnification hereunder shall be determined
\nwithout duplication of recovery by reason of the state of facts giving rise to
\nsuch liability constituting a breach of more than one representation, warranty,
\ncovenant or agreement.<\/p>\n
(b) Purchaser’s rights to indemnification as provided for in
\nSection 8.1 for a breach of Seller’s representations or warranties contained in
\nthis Agreement shall constitute Purchaser’s sole remedy for such a breach, and
\nSeller shall have no other liability or damages to Purchaser resulting from the
\nbreach.<\/p>\n
(c) The indemnification and other provisions of this Article VIII
\nshall govern the procedure for all indemnification matters under this Agreement,
\nexcept to the extent otherwise expressly provided herein.<\/p>\n
Section 8.6 No Right of Off-set\/Set-off. Neither Purchaser nor Seller
\n —————————
\nshall have any right to off-set or set-off any payment due pursuant to Section
\n1.2 of this Agreement against any other payment to be made pursuant to this
\nAgreement or otherwise (including against indemnification payments).<\/p>\n
ARTICLE IX<\/p>\n
DEFINITIONS AND INTERPRETATION<\/p>\n
Section 9.1 Definitions. For all purposes of this Agreement, except as
\n ———–
\notherwise expressly provided or unless the context clearly requires otherwise:<\/p>\n
“Affiliate” shall have the meaning set forth in Rule 12b-2 of the Exchange
\nAct.<\/p>\n
“Agreement” or “this Agreement” shall mean this Stock Purchase Agreement,
\ntogether with the Exhibits hereto and the Disclosure Schedule.<\/p>\n
“Balance Sheet” shall mean the most recent balance sheet of the Company and
\nits consolidated Subsidiaries included in the Financial Statements.<\/p>\n
“Balance Sheet Date” shall mean the date of the Balance Sheet.<\/p>\n
“Business” shall mean the packaged water business (including, without
\nlimitation, home-office delivery and retail) and the filtration systems for
\nwater business.<\/p>\n
47<\/p>\n
“Business Day” shall mean a day other than Saturday, Sunday or any day on
\nwhich the principal commercial banks located in the State of California are
\nauthorized or obligated to close under the laws of such state.<\/p>\n
“Cap Amount” shall mean (1) with respect to any claim made on or prior to
\nthe first anniversary of the Closing Date, $150,000,000, (2) with respect to any
\nclaim made after the first anniversary of the Closing Date, but on or prior to
\nthe third anniversary of the Closing Date, $130,000,000, (3) with respect to any
\nclaim made after the third anniversary of the Closing Date, but on or prior to
\nthe fourth anniversary of the Closing Date, $115,000,000, and (4) with respect
\nto any claim made after the fourth anniversary of the Closing Date,
\n$100,000,000.<\/p>\n
“Closing” shall mean the closing referred to in Section 2.1.<\/p>\n
“Closing Date” shall mean the date on which the Closing occurs.<\/p>\n
“Code” shall mean the Internal Revenue Code of 1986, as amended.<\/p>\n
“Company” shall mean McKesson Water Products Company, a California
\ncorporation.<\/p>\n
“Company Intellectual Property” shall mean all Trademarks, Patents,
\nCopyrights, Trade Secrets and Licenses that are currently used in the business
\nof the Company or any Company Subsidiary or that are necessary to conduct the
\nbusiness of the Company or the Company Subsidiaries as presently conducted or as
\ncurrently proposed to be conducted.<\/p>\n
“Company Material Adverse Effect” shall mean any material adverse effect on
\nthe business, financial condition or operations of the Company and all of the
\nCompany Subsidiaries, taken as a whole; provided, however, that the effects of
\n ——– ——-
\nchanges that are generally applicable to (a) the industries and markets in which
\nthe Company operates on the date hereof, or (b) the United States economy shall
\nbe excluded from the determination of Company Material Adverse Effect or (c) the
\nUnited States securities markets; and provided further that any adverse effect
\n ——– ——-
\non the Company or any Company Subsidiary resulting from the execution of this
\nAgreement, any public announcement relating to this Agreement or the
\nTransactions or consummation of the Transactions shall also be excluded from the
\ndetermination of Company Material Adverse Effect.<\/p>\n
“Company Subsidiary” shall mean each Person which is a Subsidiary of the
\nCompany.<\/p>\n
“Computer Software” shall mean computer software programs, databases,
\nsource code and all documentation related thereto.<\/p>\n
“Confidentiality Agreement” shall mean a letter agreement between Lehman
\nBros. Inc., and Purchaser relating to confidentiality executed in connection
\nwith the transactions contemplated hereby.<\/p>\n
48<\/p>\n
“Constructive Knowledge of Seller” shall mean the knowledge of the
\nofficers, directors and employees of Seller and the knowledge the officers,
\ndirectors and employees of Seller should have had after due inquiry and diligent
\ninvestigation.<\/p>\n
“Copyrights” shall mean U.S. and foreign registered and unregistered
\ncopyrights (including those in Computer Software and databases), rights of
\npublicity and all registrations and applications to register the same.<\/p>\n
“Disclosure Schedule” shall mean the disclosure schedule of even date
\nherewith prepared and signed by the Company and Seller and delivered to
\nPurchaser simultaneously with the execution hereof, as amended or supplemented
\nby Seller pursuant to the terms of Section 5.11 hereof.<\/p>\n
“DOJ” shall mean the Antitrust Division of the United States Department of
\nJustice.<\/p>\n
“Due Date” shall mean, with respect to any Tax Return, the date such return
\nis due to be filed (taking into account any valid extensions).<\/p>\n
“Encumbrances” shall mean any and all liens, charges, security interests,
\noptions, claims, mortgages, pledges, proxies, voting trusts or agreements,
\nobligations, understandings or arrangements or other restrictions on title or
\ntransfer of any nature whatsoever.<\/p>\n
“Environmental Law” shall mean all federal, state, local or foreign laws,
\nordinances, regulations, rules, codes, or final, nonappealable orders, writs,
\njudgments, injunctions or decrees governing pollution or the protection of the
\nenvironment, human health or safety as they relate to the environment or
\nHazardous Materials or natural resources.<\/p>\n
“Environmental Permit” means any permit, approval, identification number,
\nlicense or other authorization required under or issued pursuant to any
\nEnvironmental Law.<\/p>\n
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
\namended.<\/p>\n
“ERISA Affiliate” shall mean any trade or business, whether or not
\nincorporated, that together with the Company would be deemed a “single employer”
\nwithin the meaning of Section 4001(b) of ERISA.<\/p>\n
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.<\/p>\n
“Excluded Taxes” shall mean (a) any Taxes (other than income and franchise
\nTaxes) specifically identified and reflected as a current liability for unpaid
\ntaxes on the Balance Sheet (“Reserved Taxes”), provided, however, that the
\namount of such Reserved Taxes shall be reduced to the extent of payments by the
\nCompany and its Subsidiaries made after the Balance Sheet Date and before the
\nClosing with respect to such Reserved Taxes, (b) any Taxes resulting from
\ntransactions or actions taken by the Company on the Closing Date after the
\nClosing, (c) any <\/p>\n
49<\/p>\n
Taxes that result from an actual or deemed election under Section 338 of the
\nCode or comparable provisions of state or local tax law or any similar
\nprovisions of state law or the law of any other taxing jurisdiction with respect
\nto the Company or any Company Subsidiary in connection with any of the
\ntransactions contemplated by this Agreement (other than the Elections, as
\ncontemplated by Section 5.4(a) hereof), (d) any Transfer Taxes for which
\nPurchaser is liable pursuant to Section 5.4(d) and (e) any Taxes incurred solely
\nas a result of the Purchaser failing to cause the Company and each Company
\nSubsidiary to timely file or have filed on its behalf any Tax Return which the
\nPurchaser is required to cause the Company to file or cause to be filed pursuant
\nto the terms of this Agreement.<\/p>\n
“Financial Statements” shall mean (a) the unaudited consolidated
\nbalance sheets of the Company and the Company’s consolidated Subsidiaries as at
\nMarch 31 in each of the fiscal years 1997 through 1999 together with unaudited
\nconsolidated statements of income, shareholders’ equity and cash flows for each
\nof the years then ended, and (b) a consolidated balance sheet of the Company and
\nthe Company’s consolidated Subsidiaries as at September 30, 1999 and unaudited
\nconsolidated statements of income, shareholders’ equity and cash flows for the
\nnine-month period then ended.<\/p>\n
“FTC” shall mean the United States Federal Trade Commission.<\/p>\n
“GAAP” shall mean United States generally accepted accounting
\nprinciples.<\/p>\n
“Governmental Entity” shall mean a court, arbitral tribunal,
\nadministrative agency or commission or other governmental or other regulatory
\nauthority or agency.<\/p>\n
“Guarantor” shall mean Groupe Danone, a societe anonyme organized
\nunder the laws of the laws of the Republic of France.<\/p>\n
“Hazardous Material” means (a) any petroleum, petroleum products,
\nby-products or breakdown products, radioactive materials, asbestos-containing
\nmaterials or polychlorinated biphenyls or (b) any chemical, material or
\nsubstance regulated as toxic or hazardous or as a pollutant, contaminant or
\nhazardous or toxic waste under any Environmental Law.<\/p>\n
“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act
\nof 1976, as amended.<\/p>\n
“Indebtedness” shall mean (a) all indebtedness for borrowed money or
\nfor the deferred purchase price of property or services (other than current
\ntrade liabilities incurred in the ordinary course of business and payable in
\naccordance with customary practices), (b) any other indebtedness that is
\nevidenced by a note, bond, debenture or similar instrument, (c) all obligations
\nunder financing leases or similar arrangements, (d) all obligations in respect
\nof acceptances and letters of credit issued or created or similar arrangements,
\n(e) all liabilities secured by any lien on any property or similar arrangements
\nand (f) all guarantee obligations, contingent or otherwise, or similar
\narrangements.<\/p>\n
50<\/p>\n
“Insurance Policy” shall mean any insurance policy maintained by
\nSeller or any of its Affiliates, other than any State Workers’ Compensation
\nPolicy or any insurance policy the premiums of which are paid directly by the
\nCompany or any Company Subsidiary.<\/p>\n
“Intellectual Property Assignments” shall have the meaning set forth
\nin Section 3.27.<\/p>\n
“Intellectual Property” shall mean all of the following: (i)
\nTrademarks, (ii) Patents, (iii) Copyrights, (iv) Trade Secrets and (v)
\ninventions, whether or not patentable, whether or not reduced to practice, and
\nwhether or not yet made the subject of a pending patent application or
\napplications.<\/p>\n
“Interest Rate” shall mean the rate of interest announced publicly by
\nCitibank, N.A., in New York, New York, as its base rate.<\/p>\n
“Knowledge of Seller” shall mean the actual (and not constructive or
\nimputed) knowledge of Charles Norris, David Mahoney, Gary Lamont, Gordon
\nVanderhelm, Cynthia Pygin and Mike Riley.<\/p>\n
“Lease” shall mean each lease pursuant to which the Company or any
\nCompany Subsidiary leases any real or personal property (excluding leases
\nrelating solely to personal property calling for rental or similar periodic
\npayments not exceeding $100,000 per annum or $500,000 over the remaining term of
\nthe lease).<\/p>\n
“Licenses” shall mean all licenses and agreements pursuant to which
\nthe Company or any Company Subsidiary has acquired rights in or to any
\nTrademarks, Patents, Copyrights or Trade Secrets, or licenses and agreements
\npursuant to which the Company or any Company Subsidiary has licensed or
\ntransferred the right to use any of the foregoing.<\/p>\n
“Net Book Value” shall mean, with respect to a specific date, an
\namount equal to the excess of the total consolidated assets of the Company and
\nthe Company Subsidiaries on such date over the total consolidated liabilities of
\nthe Company and the Company Subsidiaries on such date.<\/p>\n
“Net Working Capital” shall mean with respect to any month, the sum of
\n(x)(1)customer accounts receivable less allowances for doubtful accounts, (2)
\nnotes and other receivables, (3) inventories and (4) prepaid expenses, less (y)
\ncurrent payables and accruals, in each case determined in accordance with GAAP
\nas of the last day of such month.<\/p>\n
“Patents” shall mean issued U.S. and foreign patents and pending
\npatent applications, patent disclosures, and any and all divisions,
\ncontinuations, continuations-in-part, reissues, reexaminations, and extensions
\nthereof, any counterparts claiming priority therefrom, utility models, patents
\nof importation\/confirmation, certificates of invention and similar statutory
\nrights, whether provided by statute or international treaties or conventions.<\/p>\n
“PBGC” shall mean the Pension Benefit Guaranty Corporation.<\/p>\n
51<\/p>\n
“Permitted Encumbrances” means (i) Encumbrances for inchoate
\nmechanics’ and materialmen’s liens for construction in progress and workmen’s,
\nrepairmen’s, warehousemen’s and carriers’ liens arising in the ordinary course
\nof business of the Company, or any Company Subsidiary, (ii) Encumbrances for
\nTaxes not yet payable and for Taxes being contested in good faith, (iii)
\nEncumbrances arising out of, under or in connection with this Agreement and (iv)
\nEncumbrances and imperfections of title the existence of which would not
\nmaterially affect the use of the property subject thereto.<\/p>\n
“Person” shall mean a natural person, partnership, corporation,
\nlimited liability company, business trust, joint stock company, trust,
\nunincorporated association, joint venture, Governmental Entity or other entity
\nor organization.<\/p>\n
“Plan” shall mean each deferred compensation and each incentive
\ncompensation, stock purchase, stock option and other equity compensation plan,
\nprogram, agreement or arrangement; each severance or termination pay, medical,
\nsurgical, hospitalization, life insurance and other “welfare” plan, fund or
\nprogram (within the meaning of Section 3(1) of ERISA); each profit-sharing,
\nstock bonus or other “pension” plan, fund or program (within the meaning of
\nSection 3(2) of ERISA); each employment, termination or severance agreement; and
\neach other employee benefit plan, fund, program, agreement or arrangement, in
\neach case, that is sponsored, maintained or contributed to or required to be
\ncontributed to by the Company or by any ERISA Affiliate, or to which the Company
\nor an ERISA Affiliate is party, whether written or oral, for the benefit of any
\ndirector, employee or former employee of the Company or any Company Subsidiary.<\/p>\n
“Purchase Price” shall mean the amount set forth in Section 1.2 as
\nsuch amount may be adjusted pursuant to Section 1.3 after the Closing.<\/p>\n
“Purchaser” shall mean Danone International Brands, Inc., a Delaware
\ncorporation.<\/p>\n
“Purchaser Indemnified Persons” shall mean Purchaser and each of its
\nAffiliates, their successors and assigns, and the officers, directors, employees
\nand agents of Purchaser and each of its Affiliates and their successors and
\nassigns.<\/p>\n
“Purchaser Losses” shall mean any and all actual losses, liabilities,
\ndamages, judgments, settlements and expenses (including interest and penalties
\nrecovered by a third party with respect thereto and reasonable attorneys’ fees
\nand expenses and reasonable accountants’ fees and expenses incurred in the
\ninvestigation or defense of any of the same or in asserting, preserving or
\nenforcing any of the rights of any Purchaser Indemnified Person arising under
\nthis Agreement) incurred by the Company or any of the Purchaser Indemnified
\nPersons that arise out of (a) any breach by Seller of any of Seller’s
\nrepresentations and warranties contained in or made by or pursuant to this
\nAgreement (which shall be determined without giving effect to any materiality
\nqualifier contained therein, including, without limitation, “Company Material
\nAdverse Effect”), (b) any breach by Seller of any covenants contained in this
\nAgreement or (c) any alleged or actual improper accounting practices by Seller
\nor any of its Subsidiaries (other <\/p>\n
52<\/p>\n
than the Company or any of the Company subsidiaries) any related restatements of
\nSeller’s earnings, any related reduction in the price of Seller’s publicly-
\ntraded securities or any related litigation, including without limitation the
\nKeystone litigation and the class actions against Seller related thereto;
\nprovided, however, that the term “Purchaser Losses” shall not include the
\n——— ——-
\nmatters referred to in Section 8.1(b).<\/p>\n
“Real Property” shall mean all real property that is owned or used by
\nthe Company or any Company Subsidiary or that is reflected as an asset of the
\nCompany or any Company Subsidiary on the Balance Sheet.<\/p>\n
“Retained Employee” shall mean each person who was an active or
\ninactive employee (including but not limited to any such employee who is on any
\nleave of absence, whether paid or unpaid, including, but not limited to, Short-
\nor-Long Term Disability Leave or Workers’ Compensation leave) of the Company or
\nany Company Subsidiary immediately prior to the Closing Date.<\/p>\n
“Securities Act” shall mean the Securities Act of 1933, as amended.<\/p>\n
“SEC” shall mean the United States Securities and Exchange Commission.<\/p>\n
“Seller” shall mean McKesson HBOC, Inc., a Delaware corporation.<\/p>\n
“Seller Guaranty” shall mean the guaranty of the industrial revenue
\nbonds issued by an agency of Waller County, Texas in the principal amount of
\n$6,000,000.<\/p>\n
“Shares” shall mean shares of common stock, par value $10.00, issued
\nby the Company.<\/p>\n
“Straddle Period” shall mean a taxable year or period beginning on or
\nbefore, and ending on or after, the Closing Date.<\/p>\n
“Subsidiary” shall mean, with respect to any Person, any corporation
\nor other organization, whether incorporated or unincorporated, of which (a) at
\nleast a majority of the securities or other interests having by their terms
\nordinary voting power to elect a majority of the Board of Directors or others
\nperforming similar functions with respect to such corporation or other
\norganization is directly or indirectly owned or controlled by such Person or by
\nany one or more of its Subsidiaries, or by such Person and one or more of its
\nSubsidiaries or (b) such Person or any other Subsidiary of such Person is a
\ngeneral partner (excluding any such partnership where such Person or any
\nSubsidiary of such party does not have a majority of the voting interest in such
\npartnership).<\/p>\n
“Tax” or “Taxes” shall mean all taxes, charges, fees, duties, levies,
\npenalties or other assessments imposed by any federal, state, local or foreign
\ngovernmental authority, including income, gross receipts, excise, property,
\nsales, gain, use, license, custom duty, unemployment, capital stock, transfer,
\nfranchise, payroll, withholding, social security, minimum estimated, profit,
\ngift, severance, value added, disability, premium, recapture, credit,
\noccupation, <\/p>\n
53<\/p>\n
service, leasing, employment, stamp and other taxes, and shall include interest,
\npenalties or additions attributable thereto or attributable to any failure to
\ncomply with any requirement regarding Tax Returns.<\/p>\n
“Tax Claim” shall mean a claim for indemnification or defense with
\nrespect to losses, liabilities, judgments, settlements and expenses relating to
\nTaxes arising out of Article VIII, including reasonable attorneys’ fees and
\nexpenses and reasonable accountants’ fees and expenses incurred in the
\ninvestigation or defense of any of the same or in asserting, preserving or
\nenforcing any of the rights of Purchaser or the Seller, as the case may be,
\narising out of Article VIII.<\/p>\n
“Taxing Authority” shall mean any federal, state, local or foreign
\nGovernmental Entity responsible for the imposition of any Taxes.<\/p>\n
“Tax Return” shall mean any return, declaration, report, claim for
\nrefund, or information return or statement relating to Taxes, including any such
\ndocument prepared on a consolidated, combined or unitary basis and also
\nincluding any schedule or attachment thereto, and including any amendment
\nthereof.<\/p>\n
“Threshold” shall mean an amount equal to $5,000,000.<\/p>\n
“Title IV Plan” shall mean a Plan that is subject to Section 302 or
\nTitle IV of ERISA or Section 412 of the Code.<\/p>\n
“Trademarks” shall mean U.S. and foreign registered and unregistered
\ntrademarks, trade dress, service marks, logos, trade names, corporate names and
\nall registrations and applications to register the same.<\/p>\n
“Trade Secrets” shall mean information, including but not limited to,
\na formula, pattern, compilation, program, device, method, technique, or process,
\nthat (i) derives actual or potential independent economic value from not being
\ngenerally known to, and not being readily ascertainable by proper means by,
\nother persons who can obtain economic value from its disclosure or use, and (ii)
\nis the subject of efforts that are reasonable under the circumstances to
\nmaintain its secrecy.<\/p>\n
“Transaction Documents” shall mean, collectively, this Agreement, the
\nIntellectual Property Assignments and the Transition Services Agreement and the
\nLicense Agreement.<\/p>\n
“Transactions” shall mean all the transactions provided for or
\ncontemplated by this Agreement.<\/p>\n
“Transfer Taxes” shall mean all sales (including bulk sales), use,
\ntransfer, recording, ad valorem, privilege, documentary, gains, gross receipts,
\nregistration, conveyance, excise, license, stamp, duties or similar Taxes and
\nfees.<\/p>\n
54<\/p>\n
“WARN Act” shall mean the Worker Adjustment and Retraining Notification
\nAct.<\/p>\n
Section 9.2 Interpretation.
\n ————– <\/p>\n
(a) The headings contained in this Agreement are for reference
\npurposes only and shall not affect in any way the meaning or interpretation of
\nthis Agreement.<\/p>\n
(b) Whenever the words “include,” “includes” or “including” are
\nused in this Agreement they shall be deemed to be followed by the words “without
\nlimitation.”<\/p>\n
(c) The words “hereof,” “herein” and “herewith” and words of
\nsimilar import shall, unless otherwise stated, be construed to refer to this
\nAgreement as a whole and not to any particular provision of this Agreement, and
\narticle, section, paragraph, exhibit and schedule references are to the
\narticles, sections, paragraphs, exhibits and schedules of this Agreement unless
\notherwise specified.<\/p>\n
(d) The meaning assigned to each term defined herein shall be
\nequally applicable to both the singular and the plural forms of such term, and
\nwords denoting any gender shall include all genders. Where a word or phrase is
\ndefined herein, each of its other grammatical forms shall have a corresponding
\nmeaning.<\/p>\n
(e) A reference to any party to this Agreement or any other
\nagreement or document shall include such party’s successors and permitted
\nassigns.<\/p>\n
(f) A reference to any legislation or to any provision of any
\nlegislation shall include any amendment to, and any modification or re-enactment
\nthereof, any legislative provision substituted therefor and all regulations and
\nstatutory instruments issued thereunder or pursuant thereto.<\/p>\n
(g) The parties have participated jointly in the negotiation and
\ndrafting of this Agreement. In the event an ambiguity or question of intent or
\ninterpretation arises, this Agreement shall be construed as if drafted jointly
\nby the parties and no presumption or burden of proof shall arise favoring or
\ndisfavoring any party by virtue of the authorship of any provisions of this
\nAgreement.<\/p>\n
ARTICLE X<\/p>\n
MISCELLANEOUS<\/p>\n
Section 10.1 Fees and Expenses. All costs and expenses incurred in
\n —————–
\nconnection with this Agreement and the consummation of the Transactions shall be
\npaid by the party incurring such expenses, except as specifically provided to
\nthe contrary in this Agreement.<\/p>\n
55<\/p>\n
Section 10.2 Amendment and Modification. This Agreement may be amended,
\n ————————–
\nmodified and supplemented in any and all respects, but only by a written
\ninstrument signed by all of the parties hereto expressly stating that such
\ninstrument is intended to amend, modify or supplement this Agreement.<\/p>\n
Section 10.3 Notices. All notices and other communications hereunder
\n ——-
\nshall be in writing and shall be deemed given if mailed, delivered personally,
\ntelecopied (which is confirmed) or sent by an overnight courier service, such as
\nFederal Express, to the parties at the following addresses (or at such other
\naddress for a party as shall be specified by like notice):<\/p>\n
if to Purchaser or Guarantor, to:<\/p>\n
Groupe Danone
\n 7, rue de Teheran
\n 75008 Paris
\n France
\n Attention: Emmanuel Faber
\n Telecopy: 011-33-1-44-35-20-97<\/p>\n
with a copy to:<\/p>\n
Shearman & Sterling
\n 599 Lexington Avenue
\n New York, NY 10022
\n Attention: Spencer D. Klein, Esq.
\n Telecopy: 212-848-7179<\/p>\n
if to Seller, to:<\/p>\n
McKesson HBOC, Inc.
\n One Post Street
\n San Francisco, CA 94104
\n Attention: Ivan D. Meyerson, Esq.
\n Telecopy: (415) 983-8826<\/p>\n
with a copy to:<\/p>\n
Skadden, Arps, Slate, Meagher & Flom LLP
\n Four Embarcadero Center, Suite 3800
\n San Francisco, CA 94111
\n Attention: Kenton J. King, Esq.
\n Telecopy: (415) 984-2698<\/p>\n
Section 10.4 Counterparts. This Agreement may be executed in two or
\n ————
\nmore counterparts, all of which shall be considered one and the same agreement
\nand shall become <\/p>\n
56<\/p>\n
effective when one or more counterparts have been signed by each of the parties
\nand delivered to the other parties.<\/p>\n
Section 10.5 Entire Agreement; No Third Party Beneficiaries. This
\n ———————————————-
\nAgreement, the Transaction Documents and the Confidentiality Agreement (a)
\nconstitute the entire agreement and supersede all prior agreements and
\nunderstandings, both written and oral, among the parties with respect to the
\nsubject matter hereof and thereof and (b) are not intended to confer upon any
\nPerson, other than the parties hereto and thereto and the third parties
\nspecified in Section 8.1, any rights or remedies hereunder.<\/p>\n
Section 10.6 Severability. Any term or provision of this Agreement
\n ————
\nthat is held by a court of competent jurisdiction or other authority to be
\ninvalid, void or unenforceable in any situation in any jurisdiction shall not
\naffect the validity or enforceability of the remaining terms and provisions
\nhereof or the validity or enforceability of the offending term or provision in
\nany other situation or in any other jurisdiction. If the final judgment of a
\ncourt of competent jurisdiction or other authority declares that any term or
\nprovision hereof is invalid, void or unenforceable, the parties agree that the
\ncourt making such determination shall have the power to reduce the scope,
\nduration, area or applicability of the term or provision, to delete specific
\nwords or phrases, or to replace any invalid, void or unenforceable term or
\nprovision with a term or provision that is valid and enforceable and that comes
\nclosest to expressing the intention of the invalid or unenforceable term or
\nprovision.<\/p>\n
Section 10.7 Governing Law. This Agreement shall be governed by and
\n ————-
\nconstrued in accordance with the laws of the State of New York, excluding (to
\nthe extent permissible by law) any rule of law that would cause the application
\nof the laws of a jurisdiction other than the State of New York.<\/p>\n
Section 10.8 Dispute Resolution. In the event of a dispute arising
\n ——————
\nout of or in connection with this Agreement, the matter shall be submitted to
\none of the Co-Chief Executive Officers of Seller and the Chief Executive Officer
\nof the Purchaser who shall meet in person in a neutral setting at least two (2)
\ntimes to attempt in good faith to resolve such matter, and no later than 30 days
\nafter a request for such meeting is made. In the event that they have been
\nunable to resolve such matter within thirty (30) days after their first meeting,
\neither party may seek the legal remedies entitled to them hereunder in
\naccordance with Article VIII of this Agreement.<\/p>\n
Section 10.9 Venue. Each of the parties hereto, including the
\n —–
\nGuarantor, (a) consents to submit itself to the personal jurisdiction of any
\nfederal court located in New York City in the State of New York or any New York
\nstate court located in New York City in the event any dispute that the parties
\nfail to resolve pursuant to Section 10.8 hereof arises out of this Agreement or
\nany of the Transactions, (b) agrees that it shall not attempt to deny or defeat
\nsuch personal jurisdiction by motion or other request for leave from any such
\ncourt, and (c) agrees that it shall not bring any action relating to this
\nAgreement or any of the Transactions in any court other than such federal or
\nstate courts. Guarantor hereby irrevocably designates, appoints and empowers
\nC.T. Corporation System, as its true and lawful agent and attorney-in-fact, in
\nits name, place and stead to receive and accept on its behalf service of process
\nin any action, suit or <\/p>\n
57<\/p>\n
proceeding with respect to any matters as to which it has submitted to
\njurisdiction as set forth in this Section 10.9.<\/p>\n
Section 10.10 Time of Essence. Each of the parties hereto hereby
\n —————
\nagrees that, with regard to all dates and time periods set forth or referred to
\nin this Agreement, time is of the essence.<\/p>\n
Section 10.11 Extension; Waiver. At any time prior to the Closing
\n —————–
\nDate, either party hereto may (a) extend the time for the performance of any of
\nthe obligations or other acts of the other party, (b) waive any inaccuracies in
\nthe representations and warranties of the other party contained in this
\nAgreement or in any document delivered pursuant to this Agreement or (c) waive
\ncompliance by the other parties with any of the agreements or conditions
\ncontained in this Agreement. Any agreement on the part of a party to any such
\nextension or waiver shall be valid only if set forth in an instrument in writing
\nsigned by or on behalf of such party. The failure of any party to this
\nAgreement to assert any of its rights under this Agreement or otherwise shall
\nnot constitute a waiver of those rights.<\/p>\n
Section 10.12 Election of Remedies. Neither the exercise of nor the
\n ——————–
\nfailure to exercise a right of set-off or to give notice of a claim under this
\nAgreement will constitute an election of remedies or limit Purchaser or any of
\nthe Purchaser Indemnified Persons in any manner in the enforcement of any other
\nremedies that may be available to any of them, whether at law or in equity.<\/p>\n
Section 10.13 Assignment. Neither this Agreement nor any of the
\n ———-
\nrights, interests or obligations hereunder shall be assigned by any of the
\nparties hereto (whether by operation of law or otherwise) without the prior
\nwritten consent of the other parties, except that Purchaser may assign, in its
\nsole discretion, any or all of its rights and interests hereunder to any direct
\nor indirect wholly owned Subsidiary of Purchaser. Subject to the preceding
\nsentence, this Agreement shall be binding upon, inure to the benefit of and be
\nenforceable by the parties and their respective successors and assigns.<\/p>\n
Section 10.14 Waiver of Jury Trial. Seller and Purchaser hereby
\n ——————–
\nirrevocably waive all right to trial by jury in any action, proceeding or
\ncounterclaim (whether based in contract, tort or otherwise) arising out of or
\nrelating to this Agreement or the actions of Seller or Purchaser in the
\nnegotiation, administration, performance and enforcement thereof.<\/p>\n
Section 10.15 Specific Performance. The parties hereto agree that
\n ——————–
\nirreparable damage would occur in the event any provision of this Agreement was
\nnot performed in accordance with the terms hereof and that the parties shall be
\nentitled to specific performance of the terms hereof, in addition to any other
\nremedy at law or equity.<\/p>\n
Section 10.16 Guarantee. Guarantor hereby guarantees the performance
\n ———
\nby the Purchaser (or any of its assignees pursuant to Section 10.13) of all the
\nPurchaser’s obligations hereunder. In connection with such guarantee, Guarantor
\nhereby represents and warrants to Seller (i) that it is a corporation duly
\nincorporated, validly existing and in good standing under the laws of the
\nRepublic of France and has all necessary corporate power and authority to enter<\/p>\n
58<\/p>\n
into this Agreement, and to carry out its obligations hereunder, and (ii) that
\nthe execution and delivery of this Agreement by Guarantor and the performance of
\nits obligations hereunder have been duly authorized by all requisite corporate
\naction on the part of Guarantor and (assuming due authorization, execution and
\ndelivery by Seller and Purchaser) constitutes a legal, valid and binding
\nobligation of Guarantor enforceable against Guarantor in accordance with its
\nterms.<\/p>\n
59<\/p>\n
IN WITNESS WHEREOF, Purchaser, Seller and Guarantor have executed this
\nAgreement or caused this Agreement to be executed by their respective officers
\nthereunto duly authorized as of the date first written above.<\/p>\n
DANONE INTERNATIONAL BRANDS INC.<\/p>\n
By \/s\/ Emmanuel Faber
\n —————————————
\n Name: Emmanuel Faber
\n Title:<\/p>\n
GROUPE DANONE<\/p>\n
By \/s\/ Emmanuel Faber
\n —————————————
\n Name: Emmanuel Faber
\n Title: Executive Vice-President and Chief
\n Financial Officer<\/p>\n
McKESSON HBOC, INC.<\/p>\n
By \/s\/ David L. Mahoney
\n —————————————
\n Name: David L. Mahoney
\n Title: Co-President and Co-Chief Executive
\n Officer<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8164],"corporate_contracts_industries":[],"corporate_contracts_types":[9622,9627],"class_list":["post-43694","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-mckesson-corp","corporate_contracts_types-planning","corporate_contracts_types-planning__purchase"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43694","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43694"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43694"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43694"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43694"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}