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EXHIBIT 2.1
DISTRIBUTION AGREEMENT
BETWEEN
FLOWERS INDUSTRIES, INC.
AND
FLOWERS FOODS, INC.
DATED AS OF OCTOBER 26, 2000
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS
Section 1.01. Definitions.............................................. 1
ARTICLE 2 CONTRIBUTIONS AND ASSUMPTION OF LIABILITIES
Section 2.01. Contribution of Contributed Subsidiaries................. 12
Section 2.02. Transfers of Certain Assets to Spinco Group.............. 12
Section 2.03. Assumption of Certain Liabilities........................ 13
Agreement Relating to Consents Necessary to Transfer
Section 2.04. Assets................................................... 13
ARTICLE 3 THE DISTRIBUTION
Section 3.01. Cooperation Prior to the Distribution.................... 13
Tulip Board Action; Conditions Precedent to the
Section 3.02. Distribution............................................. 14
Section 3.03. The Distribution......................................... 14
Section 3.04. Stock Dividend........................................... 15
Section 3.05. Fractional Shares........................................ 15
Section 3.06. Representations of Spinco; Release....................... 15
ARTICLE 4 INDEMNIFICATION AND OTHER MATTERS
Section 4.01. Spinco Indemnification of Tulip.......................... 15
Section 4.02. Tulip Indemnification of Spinco Group.................... 16
Insurance and Third Party Obligations; Limitation on
Section 4.03. Liability................................................ 16
Section 4.04. Notice and Payment of Claims............................. 17
Section 4.05. Notice and Defense of Third-Party Claims................. 17
Section 4.06. Adjustment in Indemnity Payment for Tax Consequences..... 19
Section 4.07. Non-Exclusivity of Remedies.............................. 20
ARTICLE 5 EMPLOYEE MATTERS
Section 5.01. Employee Matters Generally............................... 20
ARTICLE 6 ACCESS TO INFORMATION
Section 6.01. Provision of Corporate Records........................... 20
Section 6.02. Access to Information.................................... 20
Section 6.03. Litigation Cooperation................................... 20
Section 6.04. Reimbursement............................................ 21
Section 6.05. Retention of Records..................................... 21
Section 6.06. Confidentiality.......................................... 22
Section 6.07. Right of Inquiry......................................... 22
ARTICLE 7 CERTAIN OTHER AGREEMENTS
Section 7.01. Intercompany Accounts; Services; Guaranties.............. 23
Section 7.02. Trademarks; Trade Names.................................. 24
Section 7.03. Further Assurances and Consents.......................... 24
Section 7.04. Non-Solicitation......................................... 24
Section 7.05. Third Party Beneficiaries................................ 25
Section 7.06. Intellectual Property Rights and Licenses................ 25
Section 7.07. Insurance................................................ 25
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ARTICLE 8 TAXES
Section 8.01. Liability for Taxes...................................... 27
Section 8.02. Tax Returns.............................................. 27
Section 8.03. Distribution............................................. 28
Section 8.04. Tax Refunds and Benefits................................. 29
Section 8.05. Tax Sharing Arrangements................................. 30
Section 8.06. Contest Provisions....................................... 30
Section 8.07. Cooperation on Tax Matters; Other Tax Matters............ 32
ARTICLE 9 MISCELLANEOUS
Section 9.01. Notices.................................................. 32
Section 9.02. Amendments; No Waivers................................... 33
Section 9.03. Expenses................................................. 34
Section 9.04. Successors and Assigns................................... 34
Section 9.05. Governing Law............................................ 34
Section 9.06. Counterparts; Effectiveness.............................. 34
Section 9.07. Entire Agreement......................................... 34
Section 9.08. Certain Transfer Taxes................................... 35
Section 9.09. Jurisdiction............................................. 35
Section 9.10. Pre-Litigation Dispute Resolution........................ 35
Section 9.11. Severability............................................. 35
Section 9.12. Survival................................................. 35
Section 9.13. Captions................................................. 35
Section 9.14. Specific Performance..................................... 35
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Schedule A -- Spinco Assets -- Contracts
Schedule B -- Spinco Assets -- Other Assets, Properties and Business
Schedule C -- Spinco Group Liabilities
Schedule D -- Spinco Intellectual Property Rights
Schedule E -- Spinco Litigation
Schedule F -- Assumed Debt
Schedule G -- Company Debt
Schedule H -- Restated Spinco Charter
Schedule 2.01 -- Contribution of Contributed Subsidiaries
Schedule 7.01 -- Existing Arrangements
Schedule 7.07 -- Group Policies
Exhibit A -- Employee Benefits Agreement
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DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT dated as of October 26, 2000 (this "AGREEMENT")
between Flowers Industries, Inc., a Georgia corporation ("TULIP"), and Flowers
Foods, Inc., a Georgia corporation ("SPINCO").
W I T N E S S E T H:
WHEREAS, Spinco is presently a wholly-owned subsidiary of Tulip;
WHEREAS, the Board of Directors of Tulip has determined that it is in the
best interests of Tulip, its shareholders and Spinco that all outstanding shares
of Spinco Common Stock (as defined below) be distributed pro rata to Tulip's
shareholders (provided that all conditions precedent to the Distribution have
been satisfied) and that, pursuant to an Agreement and Plan of Restructuring and
Merger dated as of October 26, 2000 ("MERGER AGREEMENT") among Tulip, Kellogg
Company, a Delaware corporation ("PARENT"), and Kansas Merger Subsidiary, Inc.,
a Delaware corporation and a wholly-owned subsidiary of Parent ("MERGER
SUBSIDIARY"), immediately after the Distribution Merger Subsidiary be merged
with and into Tulip, as a result of which Tulip will become a wholly-owned
subsidiary of Parent (the "MERGER");
WHEREAS, for United States federal income Tax (as defined below) purposes,
it is intended that the holders of Tulip Common Stock be treated as having
received cash consideration from Parent and the Spinco Common Stock in
redemption and disposition of the outstanding Tulip Common Stock (as defined
below);
WHEREAS, Tulip is concurrently herewith entering into, or proposes to enter
into prior to the Distribution Date (as defined below), the Ancillary Agreements
(as defined below); and
WHEREAS, the parties hereto desire to set forth herein the principal
corporate transactions to be effected in connection with the Distribution and
certain other matters relating to the relationship and the respective rights and
obligations of the parties following the Distribution.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions. The following terms, as used herein, have the
following meanings:
"Action" means any claim, suit, action, arbitration, inquiry,
investigation or other proceeding of any nature (whether criminal, civil,
legislative, administrative, regulatory, prosecutorial or otherwise) by or
before any arbitrator or Governmental Entity or similar Person or body.
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the Exchange Act (as defined herein) as of the date hereof.
"Agreement" has the meaning set forth in the recitals.
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"Ancillary agreements" means the Employee Benefits Agreement and any
additional agreement entered into between Tulip and Spinco, which shall not
be entered into without the prior written consent of Parent (which shall
not be unreasonably withheld to the extent any such agreement does not
adversely affect Tulip or any of its Affiliates, including Parent, or the
financial strength or creditworthiness of Spinco, in each case, following
the Distribution Time).
"Assumed Debt" means all debt and similar obligations of Tulip
immediately prior to the Distribution, all of which shall be assumed by
Spinco pursuant to this Agreement (except for the Company Debt which shall
remain an obligation of Tulip following the Distribution) including as set
forth on Schedule F.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized or
required by law to close.
"Commission" means the Securities and Exchange Commission.
"Company Debt" means the debt of Tulip as set forth on Schedule G,
including without limitation any other debt or similar obligations of Tulip
immediately prior to the Distribution to the extent such debt is not
expressly assumed by Spinco in accordance with the terms of such debt or
similar obligations or otherwise refinanced, repaid or satisfied by Spinco,
including, without limitation, if applicable, Tulip's 7.15% Debentures due
2028 and the Loan Facility Agreement by and among Tulip, Suntrust Bank,
Atlanta and each of the participants party thereto, dated as of November 5,
1999, and all other agreements referenced in Section 4.04(1) of the Company
Disclosure Schedule (as defined in the Merger Agreement).
"Confidential Information" has the meaning set forth in Section 6.06.
"Confidentiality Agreement" means the Confidentiality Agreement dated
as of July 24, 2000 between Parent and Tulip.
"Contracts" means any agreement, lease, license, contract, treaty,
note, mortgage, indenture, franchise, permit, concession, arrangement or
other obligation.
"Contributed Subsidiaries" means (i) Flowers Bakeries Brands, Inc., a
Georgia corporation, Mrs. Smith's Bakeries, Inc., a Georgia corporation,
and Flowers Investments, Inc., a Georgia corporation, (ii) any subsidiaries
formed for the purpose of effecting the Restructuring, and (iii) the
respective direct and indirect Subsidiaries of the Persons referred to in
clauses (i) and (ii).
"Contribution" has the meaning set forth in Section 2.01.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "Controlling" and "Controlled" have meanings
correlative to the foregoing.
"Controlling Party" has the meaning set forth in Section 8.06(b).
"Current Period" means, in the case of a Straddle Period, that portion
of the Straddle Period that ends, with respect to Tulip, on and includes
the Distribution Date.
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"Damages" means, with respect to any Person, any and all damages
(including punitive and consequential damages), losses, Liabilities and
expenses incurred or suffered by such Person (including all expenses of
investigation, all attorneys' and expert witnesses' fees and all other
out-of-pocket expenses incurred in connection with any Action or threatened
Action).
"Discontinued Business" means any assets, business or operations of
Tulip, Spinco, their respective Subsidiaries or the Contributed
Subsidiaries that are or have been discontinued, sold or otherwise divested
prior to or on the Distribution Date.
"Distribution" means the distribution by Tulip, pursuant to the terms
and subject to the conditions hereof, of all of the outstanding shares of
Spinco Common Stock to the Tulip Shareholders of record as of the Record
Date.
"Distribution Agent" means First Union National Bank, or such other
nationally recognized banking institution as mutually agreed upon by Parent
and Spinco.
"Distribution Date" means the Business Day on which the Distribution
is effected.
"Distribution Documents" means this Agreement and the Ancillary
Agreements and any other agreements or documents entered into, with
Parent's prior written consent (which shall not be unreasonably withheld to
the extent such other agreements or documents do not adversely affect Tulip
or any of its Affiliates, including Parent, or the financial strength or
creditworthiness of Spinco, in each case, following the Distribution Time)
to effect the transactions contemplated hereby or by the Ancillary
Agreements (but excluding the Confidentiality Agreement and the Merger
Agreement).
"Distribution Time" means the time immediately before the Merger
Effective Time (as defined below).
"Draft Return" has the meaning set forth in Section 8.02(b).
"ELF" means Keebler Foods Company, a Delaware corporation.
"ELF Intellectual Property Rights" means all Intellectual Property
Rights (i) owned by ELF or (ii) owned by a third party and licensed or
sublicensed to ELF.
"ELF Merger" means the merger provided for in the Agreement and Plan
of Merger, dated as of October 26, 2000, among ELF, Flowers Industries,
Inc. and FK Acquisition Corp. (the "ELF Merger Agreement").
"ELF Merger Date" means the date as of which the Effective Time (as
defined in the ELF Merger Agreement) of the ELF Merger occurs.
"Employee Benefits Agreement" means the Employee Benefits Agreement in
the form attached as Exhibit A hereto to be entered into before the
Distribution Date between Tulip and Spinco, with only those amendments or
modifications made with Parent's prior written consent (which shall not be
unreasonably withheld to the extent such amendments or modifications do not
adversely affect Tulip or any of its Affiliates, including Parent, or the
financial strength or creditworthiness of Spinco in each case following the
Distribution Time).
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"Environmental Laws" means all Laws or any agreements with any
Governmental Entity or other third party relating to human health, safety
or the environment, including laws and agreements relating to emissions,
discharges, Releases or threatened Releases of Hazardous Substances, or
otherwise relating to the manufacture, generation, processing,
distribution, use, sale, treatment, receipt, storage, disposal, transport
or handling of Hazardous Substances, including the Comprehensive
Environmental Response, Compensation and Liability Act and the Resource
Conservation and Recovery Act, and the Occupational Safety and Health Act.
"Exchange Act" means the Securities Exchange Act of 1934, and the
rules and regulations promulgated thereunder.
"Finally Determined" means, with respect to any Action, threatened
Action or other matter, that the outcome or resolution of that Action,
threatened Action or other matter either (i) has been decided through
binding arbitration or by a Governmental Entity of competent jurisdiction
by judgment, order, award, or other ruling or (ii) has been settled or
voluntarily dismissed by the parties pursuant to the dispute resolution
procedure set forth in Section 9.10 or otherwise and, in the case of each
of clauses (i) and (ii), the claimants' rights to maintain that Action,
threatened Action or other matter have been finally adjudicated, waived,
discharged or extinguished, and that judgment, order, ruling, award,
settlement or dismissal (whether mandatory or voluntary, but if voluntary
that dismissal must be final, binding and with prejudice as to all claims
specifically pleaded in that Action, threatened Action or other matter) is
subject to no further appeal, vacatur proceeding or discretionary review.
"Finally Settled" has the meaning set forth in Section 8.04(c).
"Governmental Entity" means any federal, state, local or foreign
government or any court, tribunal, administrative agency or commission or
other governmental or other regulatory authority or agency, domestic,
foreign or supranational.
"Group" means, as the context requires, the Spinco Group (as defined
below) or Tulip.
"Group Policies" means all Policies, current or past, which prior to
the Distribution Time are or at any time were maintained by or on behalf of
or for the benefit or protection of Tulip or any Affiliate (or any of their
predecessors) and/or one or more of the current or past directors,
officers, employees or agents of any of the foregoing including, without
limitation, the Policies identified on Schedule 7.07 hereto.
"Hazardous Substance" means (i) chemicals, pollutants, contaminants,
hazardous wastes, toxic substances, and oil and petroleum products, (ii)
any substance that is or contains friable asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum or petroleum-derived
substances or wastes, radon gas or related materials, (iii) any substance
that requires removal or remediation under any Environmental Law, or is
defined, listed or identified as a "hazardous waste" or "hazardous
substance" thereunder, or (iv) any substance that is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous.
"Indemnified Party" has the meaning set forth in Section 4.04.
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"Indemnifying Party" has the meaning set forth in Section 4.04.
"Information Statement" means the information statement to be sent to
each Tulip Shareholder of record as of the Record Date in connection with
the Distribution.
"Insurance Proceeds" shall mean those monies (i) received by an
insured from an insurance carrier or (ii) paid by an insurance carrier on
behalf of an insured, in either case net of any applicable premium
adjustment, retrospectively-rated premium, deductible, retention, or cost
of reserve paid or held by or for the benefit of such insured.
"Insured Claims" shall mean those Liabilities that, individually or in
the aggregate, are covered within the terms and conditions of any of the
Group Policies, whether or not subject to premium adjustments, deductibles,
retentions, co-insurance, cost of reserve paid or held by or for the
benefit of the applicable insured(s), uncollectability or
retrospectively-rated premiums, but only to the extent that such
Liabilities (i) are within applicable Group Policy limits, including
aggregates and (ii) are actually paid.
"Intellectual Property Rights" means (i) inventions, whether or not
patentable, reduced to practice or made the subject of one or more pending
patent applications, (ii) national and multinational statutory invention
registrations, patents and patent applications (including all reissues,
divisions, continuations, continuations-in-part, extensions and
reexaminations thereof) registered or applied for in the United States and
all other nations throughout the world, and all improvements to the
inventions disclosed in each such registration, patent or patent
application, (iii) trademarks, service marks, trade dress, logos, domain
names, trade names and corporate names (whether or not registered) in the
United States and all other nations throughout the world, including all
variations, derivations, combinations, registrations and applications for
registration of the foregoing and all goodwill associated therewith, (iv)
copyrights (whether or not registered) and registrations and applications
for registration thereof in the United States and all other nations
throughout the world, including all derivative works, moral rights,
renewals, extensions, reversions or restorations associated with such
copyrights, now or hereafter provided by law, regardless of the medium of
fixation or means of expression, (v) computer software (including source
code, object code, firmware, operating systems and specifications), (vi)
trade secrets and, whether or not confidential, business information
(including pricing and cost information, business and marketing plans and
customer and supplier lists) and know-how (including manufacturing and
production processes and techniques and research and development
information), (vii) industrial designs (whether or not registered), (viii)
databases and data collections, (ix) copies and tangible embodiments of any
of the foregoing, in whatever form or medium, (x) all rights to obtain and
rights to apply for patents, and to register trademarks and copyrights,
(xi) all rights in all of the foregoing provided by treaties, conventions
and common law and (xii) all rights to sue or recover and retain damages
and costs and attorneys' fees for past, present and future infringement or
misappropriation of any of the foregoing.
"IRS" means the Internal Revenue Service.
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"Law" means any applicable federal, state, local or foreign law,
statute, common law, ordinance, directive, rule, regulation, judgment,
order, injunction, decree, arbitration award, agency requirement, license
or permit of any Governmental Entity.
"Liability" or "Liabilities" means any and all claims, debts,
liabilities, assessments, costs (including, with respect to matters under
Environmental Laws, removal costs, remediation costs, closure costs and
expenses of investigation and ongoing monitoring), deficiencies, charges,
demands, fines, penalties, damages, losses, Taxes, disgorgements and
obligations, of any kind, character or description (whether absolute,
contingent, matured, not matured, liquidated, unliquidated, accrued, known,
unknown, direct, indirect, derivative or otherwise) whenever arising,
including, but not limited to, all costs, interest and expenses relating
thereto (including, but not limited to, all expenses of investigation, all
attorneys' and expert witnesses' fees and all other out-of-pocket expenses
in connection with any Action or threatened Action) and expressly including
those relating to an Indemnified Party's own negligence or other
misconduct.
"Merger" has the meaning set forth in the recitals.
"Merger Agreement" has the meaning set forth in the recitals.
"Merger Effective Time" shall have the meaning assigned to the term
Effective Time in the Merger Agreement.
"Merger Subsidiary" has the meaning set forth in the recitals.
"Noncontrolling Party" has the meaning set forth in Section 8.06(b).
"NYSE" has the meaning set forth in Section 3.01(d).
"Offset Amount" has the meaning set forth in Section 8.04(c).
"Offset Date" has the meaning set forth in Section 8.04(c).
"Parent" has the meaning set forth in the recitals.
"Parent-Directed Transactions" means any transactions that occur at
the direction of Parent on the Distribution Date after the consummation of
the Merger (other than any transaction contemplated by this Agreement, any
restructuring undertaken in anticipation thereof and any transactions which
occur in the ordinary course of business). For the absence of doubt,
neither the Distribution, the Restructuring, the Merger, the ELF Merger or
any transaction undertaken in anticipation thereof shall be considered a
Parent-Directed Transaction.
"Person" means any individual, corporation (including not-for-profit
corporations), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, Governmental
Entity or other entity of any kind or nature.
"Policies" means insurance policies and insurance contracts of any
kind, including, without limitation, primary, excess and umbrella policies,
directors and officers', errors and omissions, commercial general liability
policies, life and benefits policies and contracts, fiduciary liability,
automobile, aircraft, property and casualty, workers' compensation and
employee dishonesty insurance policies, bonds and ELF-insurance together
with the rights, benefits and privileges thereunder.
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"Proxy Statement" means the proxy statement of Tulip to be filed with
the Commission pursuant to the Exchange Act in connection with the Merger.
"Record Date" means the date determined by Tulip's Board of Directors
(or by a committee of that board or any other Person acting under authority
duly delegated to that committee or Person by Tulip's Board of Directors or
a committee of that Board) as the record date for determining the Tulip
Shareholders of record entitled to receive the Distribution.
"Registration Statement" means the registration statement on Form 10,
Form S-1, or Form S-4 to be filed by Spinco with the Commission to effect
the registration of Spinco Common Stock (as defined below) pursuant to the
Exchange Act or the Securities Act in connection with the Distribution, as
such registration statement may be amended or supplemented from time to
time.
"Releases" means any releasing, disposing, discharging, injecting,
spilling, leaking, pumping, dumping, emitting, escaping, emptying,
migrating, transporting, placing, including into or upon, any land, soil,
surface water, ground water or air, or otherwise entering into the
environment, that is not authorized by a Governmental Entity.
"Representatives" has the meaning set forth in Section 6.06.
"Request" has the meaning set forth in Section 6.03.
"Restated Spinco Charter" means the restated articles of incorporation
of Spinco, which shall be in the form attached hereto as Schedule H, with
such changes as the Board of Directors of Spinco reasonably determines,
subject to the prior written approval of Parent (such approval not to be
unreasonably withheld).
"Restructuring" means the contributions pursuant to Section 2.01
hereof, the settlement of intercompany accounts prior to or as of the
Distribution Time, the Distribution and the other transactions contemplated
by this Agreement and the Ancillary Agreements (other than the Merger).
"Securities Act" means the Securities Act of 1933, and the rules and
regulations promulgated thereunder.
"Services" has the meaning set forth in Section 7.01(c).
"Spinco" has the meaning set forth in the recitals.
"Spinco Affiliated Group" has the meaning set forth in Section
8.01(a).
"Spinco Assets" means all assets, leases, properties and businesses,
of every kind and description, wherever located, real, personal or mixed,
tangible or intangible, owned, held or used by Tulip or any member of the
Spinco Group, excluding the Tulip Assets. Without limitation and for the
avoidance of doubt, the following items are, and shall be, "Spinco Assets"
(and are not, and shall not be, Tulip Assets):
(a) all right, title and interest in the real property situated at
1919 Flowers Circle, Thomasville, Georgia 31757, together with all
buildings, fixtures, and improvements erected thereon;
(b) all rights of the Spinco Group (but excluding any and all
rights of Tulip) under the Distribution Documents;
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(c) to the extent relating to the business, assets or employees of
any member of the Spinco Group, all rights of Tulip under the
Confidentiality Agreement and the confidentiality agreements entered
into by Tulip with potential purchasers of Tulip or certain of Tulip's
businesses prior to the date hereof;
(d) all cash and cash equivalents, including all bank account
balances and petty cash, of Tulip (provided, however, that the cash
positions of Tulip cannot be increased or decreased in a manner that
violates the Merger Agreement);
(e) all Spinco Intellectual Property Rights;
(f) all the rights to the contracts listed on Schedule A hereto to
the extent such contracts have not been entered into by or for the
benefit of ELF;
(g) the other assets, properties and businesses listed on Schedule
B hereto;
(h) all goodwill associated with the Spinco Group, Tulip or the
Spinco Assets prior to the Distribution Time (excluding goodwill
associated with the Tulip Assets), together with the right to represent
to third parties that the Spinco Group is the successor to all
businesses and operations of the Spinco Group and Tulip (other than
ELF).
"Spinco Business" means the businesses and operations of Spinco, its
Subsidiaries and the Contributed Subsidiaries, as conducted on the date
hereof, but taking into account the Restructuring.
"Spinco Common Stock" means the common stock, par value $.01 per
share, of Spinco.
"Spinco Environmental Liabilities" means any and all Liabilities of or
relating to (i) Tulip (including any Discontinued Business) or any member
of the Spinco Group or (ii) the Spinco Business or the Spinco Assets,
which, in either case, arise under or relate to Environmental Laws.
"Spinco Group" means Spinco, its direct and indirect Subsidiaries and
the Contributed Subsidiaries (including all successors to each of those
Persons).
"Spinco Group Liabilities" means, except as otherwise specifically
provided in the Merger Agreement or any Distribution Document, all
Liabilities (including Liabilities arising out of any litigation), whether
arising before, at or after the Distribution Time, of or relating to Tulip
or any member of the Spinco Group whether arising from the conduct of, in
connection with or relating to the Spinco Assets or the Spinco Business or
the ownership or use thereof or the Discontinued Business or otherwise; in
each case excluding the Tulip Liabilities. Without limiting the generality
of the foregoing, "Spinco Group Liabilities" shall include the following
Liabilities (a) whether arising before, at or after the Distribution Time:
(i) any Liabilities arising out of, in connection with or related to the
Spinco Assets, the Spinco Business or the Discontinued Business, (ii) the
Spinco Environmental Liabilities, (iii) the Assumed Debt, (iv) the Spinco
Litigation, (v) the Liabilities set forth on Schedule C hereto, (vi) the
contracts set forth on Schedule A, (vii) all other Liabilities of the
Spinco Group under any Distribution Document, (viii) except to the extent
otherwise expressly provided in this Agreement or the Merger Agreement, all
Liabilities of the Spinco Group or Tulip arising out of, or in connection
with or related to the
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Distribution and any of the other transactions contemplated by this
Agreement or any of the Ancillary Agreements, including any advisory fees
for the Merger and the Distribution to the extent such fees exceed $16
million, (ix) (1) any Taxes imposed upon or relating to Spinco, the Spinco
Assets, the Spinco Business, the Discontinued Business or the Contributed
Subsidiaries and (2) any Taxes for which Spinco is liable pursuant to
Article 8 hereof, or (x) any and all Liabilities (A) arising out of, in
connection with or relating to any of the Benefit Arrangements and Employee
Plans (as defined in the Tulip Merger Agreement), or (B) otherwise arising
out of, in connection with or relating to the employment of any individual
by Tulip, Spinco or any of their respective Affiliates (whether relating to
periods before, including or after the Distribution Time), including
without limitation Liabilities for compensation and benefits, other than
employment of Elf Employees (as defined in the Elf Merger Agreement) by ELF
and its Subsidiaries after the Distribution Time, and (b) to the extent
arising prior to or at the Distribution Date, any Liabilities for any
accounts payable of Tulip or the Spinco Group, unless expressly a Tulip
Liability. Nothing in this Agreement shall be interpreted to mean that the
obligations of Surviving Corporation (as defined in the Merger Agreement)
under Section 7.02 of the Merger Agreement constitute Spinco Group
Liabilities.
"Spinco Indemnitee" has the meaning set forth in Section 4.02(a).
"Spinco Intellectual Property Rights" means all Intellectual Property
Rights (i) owned by a member of the Spinco Group or Tulip or (ii) owned by
a third party and licensed or sublicensed to a member of the Spinco Group
or Tulip, including without limitation:
(i) all Tulip Name Rights, other than ELF Intellectual Property
Rights; and
(ii) the Intellectual Property Rights listed on Schedule D hereto,
it being expressly understood that no Intellectual Property Rights owned
by, licensed to, sublicensed to, used by or related to ELF or any of its
Subsidiaries constitute Spinco Intellectual Property Rights.
"Spinco Litigation" means (i) any litigation in which Tulip or one or
more of its officers, directors or employees is named a defendant (x)
relating to, involving or arising out of the Spinco Assets, the Spinco
Business or Tulip, including any Discontinued Business, (y) alleging
violations of federal or state securities laws by Tulip or (z) alleging
breaches of fiduciary duties of the Tulip directors under state law (in the
case of clauses (y) and (z), including the cases set forth on Schedule E);
and (ii) any litigation in which Tulip (or one or more of its officers,
directors or employees) is named a defendant on or after the date hereof
alleging violations of federal or state securities laws or breaches of
fiduciary duties of the Tulip directors at or prior to the Merger Effective
Time under state law, in each case described in this clause (ii) (x)
relating to or arising out of the Merger or the Restructuring or (y)
arising out of matters occurring before the Merger Effective Time.
"Straddle Period" means any taxable year or period beginning on or
before and ending after, with respect to Tulip, the Distribution Date.
"Straddle Period Tax Proceeding" has the meaning set forth in Section
8.06(b).
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"Subsidiary" means, with respect to any Person, any entity of which at
least a majority of the securities or other ownership interests having by
their terms ordinary voting power to elect a majority of the board of
directors or other Persons performing similar functions are at the time
directly or indirectly owned or controlled by such Person or by one or more
of its respective Subsidiaries or by such Person and any one or more of its
respective Subsidiaries.
"Tax" or "Taxes" means (i) any and all taxes, charges, fees, levies or
other assessments, including income, gross receipts, excise, real or
personal property, sales, withholding, social security, retirement,
unemployment, occupation, use, goods and services, service use, license,
value added, capital, net worth, payroll, profits, withholding, franchise,
transfer and recording taxes, fees and charges, and any other taxes,
assessment or similar charges imposed by the IRS or any taxing authority
(whether domestic or foreign including any state, county, local or foreign
government or any subdivision or taxing agency thereof (including a United
States possession)) (a "Taxing Authority"), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall
include any interest whether paid or received, fines, penalties or
additional amounts attributable to, or imposed upon, or with respect to,
any such taxes, charges, fees, levies or other assessments, (ii) any
liability for the payment of any amount of the type described in clause (i)
as a result of being or having been a member of an affiliated,
consolidated, combined or unitary group, or a party to any agreement or
arrangement, as a result of which liability to a Taxing Authority is
determined or taken into account with reference to the liability of any
other Person (including, e.g., liability under Treasury Regulation 1.1502-6
or similar liability under any other Law), and (iii) any liability with
respect to the payment of any amount of the type described in (i) or (ii)
as a result of any existing express or implied obligation (including, but
not limited to, an indemnification obligation).
"Tax Amount" has the meaning set forth in the Merger Agreement.
"Tax Proceeding" has the meaning set forth in Section 8.06(a).
"Tax Reporting Standard" has the meaning set forth in Section 8.02(b).
"Tax Return" shall mean any report, return, document, declaration or
other information or filing required to be supplied to any Taxing Authority
or jurisdiction (foreign or domestic) with respect to Taxes, including
information returns, any documents with respect to or accompanying payments
of estimated Taxes, or with respect to or accompanying requests for the
extension of time in which to file any such report, return, document,
declaration or other information.
"Taxing Authority" has the meaning set forth in the definition of
"Tax".
"Third-Party Claim" has the meaning set forth in Section 4.05.
"Transfer" has the meaning set forth in Section 2.02.
"Tulip" has the meaning set forth in the recitals.
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"Tulip Assets" means all assets as reflected in the unaudited pro
forma consolidated balance sheet as of July 15, 2000 of Tulip set forth in
Section 4.08 of the Company Disclosure Schedule accompanying the Merger
Agreement and the after-tax proceeds of the special dividend contemplated
by Section 6.06 of the ELF Merger Agreement to be received by Tulip.
Without limitation and for the avoidance of doubt, the following items are,
and shall be, "Tulip Assets" (and are not, and shall not be, Spinco
Assets):
(a) all rights of Tulip (but excluding any and all rights of the
Spinco Group) under the Merger Agreement, the Confidentiality Agreement
and the Distribution Documents; and
(b) all capital stock of ELF owned by Tulip and any rights related
to its ownership interest in ELF.
"Tulip Common Stock" means the common stock, par value $0.625 per
share, of Tulip.
"Tulip Indemnitee" has the meaning set forth in Section 4.01(a).
"Tulip Liabilities" means only the following Liabilities, whether
arising before, at or after the Distribution Time: (i) the Company Debt but
not any claim, action or litigation arising from the decision to pursue the
transactions contemplated by this Agreement, the Merger Agreement, the
Ancillary Agreements or the treatment in the transactions contemplated
hereby of any third party debt and (ii) any advisory fees relating to the
Merger and/or Distribution not to exceed $16 million, it being agreed that
notwithstanding the structuring of the transaction as a merger between
Tulip and Merger Subsidiary, it is the intention of the parties to place
Parent and, after the Merger, Tulip, in the same position, with respect to
assumption of or responsibility for Liabilities, as would occur if, instead
of consummating the Merger, Parent were only to purchase the capital stock
Tulip owns in ELF directly from Tulip (subject to clauses (i) and (ii)
above of this definition). For the avoidance of doubt, "Tulip Liabilities"
shall exclude among other matters (i) any and all Liabilities to the extent
specifically retained or assumed by the Spinco Group under this Agreement
or otherwise, (ii) any Taxes imposed upon or relating to Spinco, the Spinco
Assets, the Spinco Business, the Discontinued Business or the Contributed
Subsidiaries and (iii) any Taxes for which Spinco is liable pursuant to
Article 8 hereof.
"Tulip Name Rights" means all right, title and interest in and use of
the "Tulip" name and any derivative thereof including, without limitation,
all trademarks, service marks, trade dress, logos, domain names, trade
names and corporate names (whether or not registered) in the United States
and all other nations throughout the world, including all variations,
derivations, combinations, registrations and applications for registration
of the foregoing and all goodwill associated therewith.
"Tulip Shareholders" means the holders of the Tulip Common Stock.
Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated
thereunder.
Any reference to "including" or "include" means "including, without
limitation" or "include, without limitation," respectively.
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ARTICLE 2
CONTRIBUTIONS AND ASSUMPTION OF LIABILITIES
Section 2.01. Contribution of Contributed Subsidiaries. Upon the terms
and subject to the conditions set forth in the Merger Agreement and the
Distribution Documents, effective prior to the Distribution Time, Tulip shall
contribute to Spinco all of the outstanding shares of capital stock of, or other
ownership interests in, each of the Subsidiaries in clause (i) and clause (ii)
of the definition of Contributed Subsidiaries in the manner described in
Schedule 2.01, subject to receipt of any necessary consents or approvals of
third parties or of Governmental Entities and subject to Section 7.03.
Section 2.02. Transfers of Certain Assets to Spinco Group. Upon the terms
and subject to the conditions set forth in the Merger Agreement or any
Distribution Document, except as otherwise expressly set forth therein,
effective prior to or as of the Distribution Time, subject to receipt of any
necessary consents or approvals of third parties or of Governmental Entities,
Tulip shall assign, contribute, convey, transfer and deliver ("Transfer") to
Spinco or to one or more of Spinco's wholly-owned Subsidiaries all of the right,
title and interest of Tulip in and to all Spinco Assets that are not owned, held
or used by a Contributed Subsidiary, if any, as the same shall exist on the
Distribution Date immediately prior to the Distribution Time.
Section 2.03. Assumption of Certain Liabilities. Upon the terms and
subject to the conditions set forth in the Merger Agreement or any Distribution
Document, effective as of the Distribution Time (or of the time of Transfer, if
earlier, of the assets to which such Liabilities are attributable), Spinco
hereby unconditionally (i) assumes all Spinco Group Liabilities to the extent
not then an existing obligation of the Spinco Group and (ii) undertakes to pay,
satisfy and discharge when due in accordance with their terms all Spinco Group
Liabilities.
Section 2.04. Agreement Relating to Consents Necessary to Transfer Assets.
Notwithstanding anything in this Agreement to the contrary, this Agreement shall
not constitute an agreement to transfer or assign any asset or any claim or
right or any benefit arising thereunder or resulting therefrom if an attempted
assignment thereof, without the necessary consent of a third party, would
constitute a breach or other contravention thereof or in any way adversely
affect the rights of Spinco, or any member of the Spinco Group, or Tulip
thereunder. Spinco and Tulip shall cooperate with each other, keep each other
informed and will, subject to Section 7.03, use their reasonable best efforts to
obtain the consent of any third party or any Governmental Entity, if any,
required in connection with the transfer or assignment pursuant to Sections
2.02, 2.03 or 2.04 of any such asset or any claim or right or any benefit
arising thereunder. Until such required consent is obtained, or if such consent
cannot be obtained or an attempted assignment thereof would be ineffective or
would adversely affect the rights of the transferor thereunder so that the
intended transferee would not in fact receive substantially all such rights,
Spinco and Tulip will use reasonable efforts to cooperate in a mutually
agreeable arrangement under which the intended transferee would obtain (at the
transferee's expense and at no cost to the transferor) the benefits and assume
the obligations thereunder in accordance with this Agreement, including (but not
limited to) sub-contracting, sub-licensing or sub-leasing to such transferee, or
under which the transferor would enforce for the benefit of the transferee and
(except as otherwise provided herein or in any Ancillary Agreement) at the
transferee's expense any and all rights of the transferor against, with the
transferee assuming the transferor's obligations to, each third party thereto.
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ARTICLE 3
THE DISTRIBUTION
Section 3.01. Cooperation Prior to the Distribution.
(a) As promptly as practicable after the date of this Agreement,
Parent, Tulip and Spinco shall prepare, and Spinco shall file with the
Commission, the Registration Statement, which shall include or incorporate
by reference the Information Statement. Parent, Tulip and Spinco shall use
their reasonable best efforts to cause the Registration Statement to become
effective under the Exchange Act or Securities Act as soon as practicable.
After the Registration Statement has become effective, Tulip shall mail the
Information Statement as promptly as practicable to the Tulip Shareholders
of record as of the Record Date.
(b) Parent, Tulip and Spinco shall cooperate in preparing, filing with
the Commission and causing to become effective any registration statements
or amendments or supplements thereto that are appropriate to reflect the
establishment of or amendments to any employee benefit and other plans
contemplated by the Ancillary Agreements.
(c) Tulip and Spinco shall take all such action as may be necessary or
appropriate under the securities or blue sky laws of states or other
political subdivisions of the United States in connection with the
transactions contemplated hereby or by the Ancillary Agreements.
(d) Spinco shall prepare, file and pursue an application to permit the
listing of the Spinco Common Stock on the New York Stock Exchange ("NYSE").
Section 3.02. Tulip Board Action; Conditions Precedent to the
Distribution. Tulip's Board of Directors shall establish (or delegate authority
to establish) the Record Date and the Distribution Date and any appropriate
procedures in connection with the Distribution. In no event shall the
Distribution occur unless the following conditions shall have been satisfied or,
to the extent permitted, waived:
(a) the Registration Statement shall have become effective with the
Commission under the Exchange Act or Securities Act and shall have been
mailed to all Tulip shareholders of record on the Record Date;
(b) the Spinco Common Stock to be delivered in the Distribution shall
have been approved for listing on the NYSE, subject to official notice of
issuance;
(c) the Restated Spinco Charter shall be in effect;
(d) the contributions referred to in Section 2.01, the transfers
referred to in Section 2.02, and the assumptions of Liabilities referred to
in Section 2.03 of this Agreement shall have been effected;
(e) the Employee Benefits Agreement shall have been duly executed and
delivered by the parties thereto; and
(f) each condition to the Merger set forth in Sections 9.01, 9.02 and
9.03 of the Merger Agreement shall have been satisfied or waived.
Section 3.03. The Distribution. Subject to the terms and conditions set
forth in this Agreement, (i) immediately prior to the Distribution Time, Tulip
shall deliver to the
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Distribution Agent, for the benefit of the Tulip Shareholders of record on the
Record Date, a stock certificate or certificates, endorsed by Tulip in blank,
representing all of the then-outstanding shares of Spinco Common Stock owned by
Tulip, (ii) the Distribution shall be effective as of the Distribution Time and
(iii) Tulip shall instruct the Distribution Agent to distribute, on or as soon
as practicable after the Distribution Date, to each Tulip Shareholder of record
as of the Record Date one share of Spinco Common Stock (together with the
associated preferred share purchase rights), for that certain number of shares
(as determined by the Tulip Board of Directors) of Tulip Common Stock so held.
Spinco agrees to provide all certificates for shares of Spinco Common Stock that
Tulip shall require (after giving effect to Sections 3.04 and 3.05) in order to
effect the Distribution. The Merger and Distribution shall be effected such that
the Merger Consideration (as defined in the Merger Agreement) and the shares of
Spinco Common Stock to be distributed in the Distribution are payable and
distributable, as applicable, only to the same Tulip Shareholders, it being
understood that the Distribution shall be effective immediately before the
Merger Effective Time.
Section 3.04. Stock Dividend. On or before the Distribution Date, Spinco
shall issue to Tulip as a stock dividend the number of shares of Spinco Common
Stock (together with the associated preferred share purchase rights) that are
required to effect the Distribution, as certified by the Distribution Agent. In
connection with the Distribution, Tulip shall deliver to Spinco for cancellation
all of the share certificates currently held by it representing Spinco Common
Stock.
Section 3.05. Fractional Shares. No certificates representing fractional
shares of Spinco Common Stock will be distributed in the Distribution. The
Distribution Agent will be directed to determine the number of whole shares and
fractional shares of Spinco Common Stock allocable to each Tulip Shareholder of
record as of the Record Date. Upon the determination by the Distribution Agent
of such number of fractional shares, as soon as practicable after the
Distribution Date, the Distribution Agent, acting on behalf of the holders
thereof, shall sell such fractional shares for cash on the open market in each
case at the then prevailing market prices and shall disburse to each holder
entitled thereto, in lieu of any fractional share, without interest, that
holder's ratable share of the proceeds of that sale, after making appropriate
deductions of the amount required, if any, to be withheld for United States
federal income Tax purposes.
Section 3.06. Representations of Spinco; Release. Spinco represents and
warrants to Tulip that at and following the Distribution Time Tulip has no
Liabilities other than the Tulip Liabilities. Tulip is hereby unconditionally
released, from and after the Distribution Time, from all Spinco Group
Liabilities.
ARTICLE 4
INDEMNIFICATION AND OTHER MATTERS
Section 4.01. Spinco Indemnification of Tulip.
(a) Subject to Section 4.03, from and after the Distribution Date,
Spinco shall indemnify, defend and hold harmless each of Tulip, its
Affiliates (including, for the avoidance of doubt, Parent) and their
respective officers, directors, employees, successors and assigns (each, a
"Tulip Indemnitee") from and against any and all Damages incurred or
suffered by any Tulip Indemnitee arising out of, in connection with or
relating to (i) any and all Spinco Group Liabilities, and (ii) the breach
by
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any member of the Spinco Group of any obligation under any Distribution
Document (subject to any limitation set forth therein), including Damages
reasonably incurred, arising out of the enforcement of this Section 4.01.
(b) Subject to Section 4.03, from and after the Distribution Date,
Spinco shall indemnify, defend and hold harmless each Tulip Indemnitee and
each Person, if any, who controls any Tulip Indemnitee within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all Damages caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof or the Information Statement (in each
case as amended or supplemented if Spinco shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except to the extent that those Damages are caused by any such
untrue statement or omission or alleged untrue statement or omission based
upon information that is furnished to Spinco by Parent or any of its
Affiliates (other than Tulip) in writing specifically for use therein.
Section 4.02. Tulip Indemnification of Spinco Group.
(a) Subject to Section 4.03, from and after the Distribution Date,
Tulip shall indemnify, defend and hold harmless each member of the Spinco
Group, their Affiliates and their respective officers, directors,
employees, successors and assigns (each, a "Spinco Indemnitee") from and
against any and all Damages incurred or suffered by any Spinco Indemnitee
arising out of, in connection with or relating to (i) any and all Tulip
Liabilities and (ii) the breach by Tulip after the Distribution Date of any
obligation of Tulip under any Distribution Document (subject to any
limitation set forth therein), including Damages reasonably incurred,
arising out of the enforcement of this Section 4.02.
(b) Subject to Section 4.03, from and after the Distribution Date,
Tulip shall indemnify, defend and hold harmless each Spinco Indemnitee and
each Person, if any, who controls any Spinco Indemnitee within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all Damages caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof or the Information Statement (in each
case as amended or supplemented if Spinco shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that those
Damages are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information that is furnished by
Parent in writing to Spinco or Tulip or any of their Affiliates
specifically for use therein.
Section 4.03. Insurance and Third Party Obligations; Limitation on
Liability. If an Indemnified Party shall receive any amount of Insurance
Proceeds or any other amount from a third party in compensation for a specific
Liability giving rise to indemnification hereunder (i) at any time subsequent to
the actual receipt of a payment in full of indemnification of such Liability
hereunder, then such Indemnified Party shall reimburse the Indemnifying Party
for any such indemnification payment made up to the amount of
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such Insurance Proceeds or other amounts actually received or (ii) at any time
prior to the receipt of any indemnification payment in respect of such Liability
hereunder, then the indemnification to be paid under Section 4.01 or 4.02 shall
be paid net of the amount of any such Insurance Proceeds or other amounts
actually received. Notwithstanding this Section 4.03, (x) in no event shall any
Indemnified Party be required (i) to take any action, or forebear from
exercising any right, under the Merger Agreement or any Distribution Document or
(ii) to take any action with respect to, make any demand under or claim any
coverage in connection with, any Policy, and (y) nothing herein shall permit any
Indemnifying Party to delay or refrain from making any payment to any
Indemnified Party because of the availability or alleged availability of any
Policy or Insurance Proceeds.
Section 4.04. Notice and Payment of Claims. If any Tulip Indemnitee or
Spinco Indemnitee (the "Indemnified Party") determines that it is or may be
entitled to indemnification by any party (the "Indemnifying Party") under this
Article 4 (other than in connection with any Action subject to Section 4.05),
the Indemnified Party shall deliver to the Indemnifying Party a written notice
specifying, to the extent reasonably practicable, the basis for its claim for
indemnification and the amount for which the Indemnified Party reasonably
believes it is entitled to be indemnified. Within 30 calendar days after receipt
of such notice, the Indemnifying Party shall pay the Indemnified Party such
amount in cash or other immediately available funds unless the Indemnifying
Party objects in writing to the claim for indemnification or the amount thereof.
In the event of such an objection or failure to pay by the Indemnifying Party,
the amount, if any, that is Finally Determined to be required to be paid by the
Indemnifying Party in respect of such indemnity claim shall be paid by the
Indemnifying Party to the Indemnified Party in cash within 15 calendar days
after such indemnity claim has been so Finally Determined, with interest thereon
at the prime rate of SunTrust Bank, Atlanta in effect from time to time for the
period commencing on the 30th day following receipt of the initial notice of the
claim from the Indemnified Party until the date of actual payment (inclusive).
Section 4.05. Notice and Defense of Third-Party Claims.
(a) Promptly (and in any event within 10 Business Days) following the
earlier of (i) receipt of notice, whether by service of process or
otherwise, of the commencement by a third party of any Action against or
otherwise involving any Indemnified Party or (ii) receipt of information
from a third party alleging the existence of a claim against an Indemnified
Party, in either case, with respect to which indemnification may be sought
pursuant to this Agreement (a "Third-Party Claim"), the Indemnified Party
shall give the Indemnifying Party written notice thereof. The failure of
the Indemnified Party to give notice as provided in this Section 4.05 shall
not relieve the Indemnifying Party of its obligations under this Agreement,
except to the extent that the Indemnifying Party is actually and materially
prejudiced by such failure to give notice.
(b) Within 30 calendar days after receipt of notice from the
Indemnified Party pursuant to Section 4.05(a), the Indemnifying Party may
(by giving written notice thereof to the Indemnified Party) elect at its
option to, and shall at the request of the Indemnified Party, assume the
defense of such Third-Party Claim at the Indemnifying Party's sole cost and
expense unless the Indemnifying Party objects in writing to such
indemnification claim (in which case the Indemnified Party may not require
the Indemnifying Party to assume the defense and the Indemnifying Party
shall only assume the defense with the consent of the Indemnified Party).
During such 30-calendar day period, unless and until the Indemnifying Party
assumes the defense of a
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Third-Party Claim or objects in writing, the Indemnified Party shall take
such action as it deems appropriate, acting in good faith, in connection
with the Third-Party Claim; provided, however, that the Indemnified Party
shall not settle or compromise, or make any offer to settle or compromise,
the Third-Party Claim without the prior written consent of the Indemnifying
Party (which shall not be unreasonably withheld).
(c) If the Indemnifying Party assumes the defense of a Third-Party
Claim, (w) it shall keep the Indemnified Party timely informed of all
significant developments in connection therewith, (x) the defense shall be
conducted by counsel retained by the Indemnifying Party, provided that the
Indemnified Party shall have the right to participate in such proceedings
and to be represented by counsel of its own choosing at the Indemnified
Party's sole cost and expense, unless a conflict of interest is reasonably
likely to exist if the Indemnifying Party's counsel represents the
interests of the Indemnified Party in which case the Indemnified Party's
counsel's fees shall be at the Indemnifying Party's sole cost and expense;
and (y) the Indemnifying Party may settle or compromise the Third-Party
Claim without the prior written consent of the Indemnified Party so long as
such settlement or compromise includes an unconditional release of the
Indemnified Party from all claims that are or could be the subject of such
Third-Party Claim, provided that the Indemnifying Party may not agree to
any such settlement or compromise pursuant to which there is any finding or
admission of any violation of Law or pursuant to which any remedy or relief
(including but not limited to the imposition of a consent order, injunction
or decree which would restrict the future activity or conduct of the
Indemnified Party or any Subsidiary or Affiliate thereof), other than
monetary damages for which the Indemnifying Party shall be fully
responsible hereunder, shall be applied to or against the Indemnified
Party, without the prior written consent of the Indemnified Party (which
shall not be unreasonably withheld).
(d) If the Indemnifying Party has not objected in writing to such
indemnification claim, and, if at the end of the 30-calendar day period
referred to in Section 4.05(b) the Indemnifying Party has not assumed the
defense of such claim, or, if earlier, beginning at such time as the
Indemnifying Party has declined in writing to assume the defense of a
Third-Party Claim, (x) the Indemnified Party will take such steps as it
deems appropriate to defend that Third-Party Claim and the defense shall be
conducted by counsel retained by the Indemnified Party, provided that the
Indemnifying Party shall have the right to participate in such proceedings
and to be represented by counsel of its own choosing at the Indemnifying
Party's sole cost and expense; and (y) the Indemnifying Party shall
reimburse the Indemnified Party on a current basis (and in any event within
30-calendar days after the submission of invoices and bills by an
Indemnified Party) for its expenses of investigation, attorneys' and expert
witnesses' fees and other out-of-pocket expenses incurred in defending
against such Third-Party Claim and the Indemnifying Party shall be bound by
the result obtained with respect thereto by the Indemnified Party; provided
further, that the Indemnified Party shall not settle or compromise, or make
any offer to settle or compromise, the Third-Party Claim unless such
settlement or compromise includes an unconditional release of the
Indemnifying Party from all claims that are or could be the subject of such
Third-Party Claim, provided that the Indemnified Party may not agree to any
such settlement or compromise pursuant to which there is any finding or
admission of any violation of Law or pursuant to which any remedy or relief
(including but not limited to the imposition of a consent order, injunction
or decree
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which would restrict the future activity or conduct of the Indemnifying
Party or any Subsidiary or Affiliate thereof), other than monetary damages
for which the Indemnifying Party shall be fully responsible hereunder,
shall be applied to or against the Indemnifying Party without the prior
written consent of the Indemnifying Party (which shall not be unreasonably
withheld).
(e) The Indemnifying Party shall pay to (or at the direction of) the
Indemnified Party in cash the amount, if any, for which the Indemnified
Party is entitled to be indemnified hereunder within 15 calendar days after
such Third Party Claim has been Finally Determined, in the case of an
indemnity claim as to which the Indemnifying Party has acknowledged
liability or, in the case of any indemnity claim as to which the
Indemnifying Party has not acknowledged liability, within 15 calendar days
after such Indemnifying Party's liability, if any, hereunder has been
Finally Determined.
(f) Notwithstanding any other provision of this Agreement, Tulip
acknowledges and agrees that Spinco shall (solely at its own cost and
expense) assume and continue the defense of all the Spinco Litigation and
that, as long as such settlement or compromise includes an unconditional
release of all Tulip Indemnitees, Spinco shall be permitted to settle or
compromise such Actions without the consent of Tulip or any of its
Affiliates (including, after the Merger Effective Time, Parent) provided
that Spinco may not agree to any such settlement or compromise pursuant to
which there is any finding or admission of any violation of Law or pursuant
to which any remedy or relief (including but not limited to the imposition
of a consent order, injunction or decree which would restrict the future
activity or conduct of the Tulip Indemnitees), other than monetary damages
for which Spinco shall be responsible hereunder, shall be applied to or
against such Tulip Indemnitee, and which shall not jeopardize Spinco's
ability to pay, perform or indemnify against other Spinco Group Liabilities
without the prior written consent of such Tulip Indemnitee (which shall not
be unreasonably withheld); provided, further, that Spinco shall use its
reasonable best efforts to defend any Tulip Indemnitee and to cause any
Tulip Indemnitee to be dismissed with prejudice as a party to any pending
or future Spinco Litigation and, to the extent any Tulip Indemnitee
believes, in its reasonable judgment, that Spinco has failed to diligently
pursue such defense or dismissal, the Tulip Indemnitee shall be entitled
(at its own cost and expense) to independently move for or otherwise pursue
such defense or dismissal and to take such related actions as it may deem
necessary or appropriate in connection therewith. Spinco shall keep Tulip
timely informed of all significant developments with respect to the Spinco
Litigation to which any Tulip Indemnitee is a party and Tulip may, at any
time, at its option and expense, participate in the defense of all the
Spinco Litigation with representatives of its own choosing.
(g) Subject to Article 6, each party shall cooperate, and cause their
respective Representatives to cooperate, in the defense or prosecution of
any Third-Party Claim and shall furnish or cause to be furnished such
records, information and testimony, and attend such conferences, discovery
proceedings, hearings, trials or appeals, as may be reasonably requested in
connection therewith.
(h) Notwithstanding anything to the contrary in this Section 4.05, the
above provisions of this Section 4.05 shall not apply to Tax Proceedings,
which matters shall instead be governed by Section 8.06.
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Section 4.06. Adjustment in Indemnity Payment for Tax
Consequences. Notwithstanding any other provision, any indemnity payment
hereunder shall be increased or decreased at the time such indemnity payment is
made (and at any relevant later date) by such amount as is necessary to make the
Indemnified Party whole, but not greater than whole, for any Tax consequences to
such party or its Affiliates (including, with respect to Tulip, Parent after the
Merger Effective Time) arising in connection with such indemnity payment.
Section 4.07. Non-Exclusivity of Remedies. The remedies provided for in
this Article 4 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any Indemnified Party at law or in equity.
ARTICLE 5
EMPLOYEE MATTERS
Section 5.01. Employee Matters Generally. With respect to employee
matters and employee benefits arrangements, the parties hereto agree as set
forth herein and in the Employee Benefits Agreement. The parties hereto agree to
execute and deliver the Employee Benefits Agreement prior to the Distribution
Date.
ARTICLE 6
ACCESS TO INFORMATION
Section 6.01. Provision of Corporate Records. Except as otherwise
specifically set forth in this Agreement or any Ancillary Agreement, immediately
prior to or as soon as practicable following the Distribution Date, each Group
shall provide to the other Group all documents, Contracts, books, records and
data (including but not limited to minute books, stock registers, stock
certificates and documents of title) in its possession relating primarily to the
other Group or its business, assets and affairs (after giving effect to the
transactions contemplated hereby); provided that if any such documents,
Contracts, books, records or data relate to both Groups or the business and
operations of both Groups, each such Group shall provide to the other Group true
and complete copies of such documents, Contracts, books, records or data. Data
stored in electronic form shall be provided in the format in which it existed at
the Distribution Date, except as otherwise specifically set forth in this
Agreement or any Ancillary Agreement.
Section 6.02. Access to Information. From and after the Distribution
Date, each Group shall, for a reasonable period of time, afford promptly to the
other Group and its accountants, counsel and other designated representatives
reasonable access during normal business hours to all documents, Contracts,
books, records, computer data and other data in such Group's possession relating
to such other Group or the business and affairs of such other Group (after
giving effect to the transactions contemplated hereby) (other than data and
information subject to in the case of access provisions in any joint defense
arrangements between a member or members of one Group and a member or members of
the other Group, the terms of the relevant joint defense agreement), insofar as
such access is reasonably required by such other Group, including, without
limitation, for audit, accounting, litigation, regulatory compliance and
disclosure and reporting purposes.
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Section 6.03. Litigation Cooperation. From and after the Distribution
Date:
(a) Each Group shall use all reasonable best efforts to make available
to the other Group and its accountants, counsel, and other designated
representatives, upon written request, its current and former directors,
officers, employees and representatives as witnesses, and shall otherwise
cooperate with the other Group, to the extent reasonably required in
connection with any Action or threatened Action arising out of either
Group's business and operations in which the requesting party may from time
to time be involved.
(b) Each Group shall promptly notify the other Group hereto, upon its
receipt or the receipt by any of its members, of a request or requirement
(by oral questions, interrogatories, requests for information or documents,
subpoenas, civil investigative demands or other similar processes) which
relates to the business and operations of the other party (a "Request")
reasonably regarded as calling for the inspection or production of any
documents or other information in its possession, custody or control, as
received from any Person that is a party in any Action, or, in the event
the Person delivering the Request is not a party to such Action, as
received from such Person. In addition to complying with the applicable
provisions of Section 6.06, each Group shall assert and maintain, or cause
its members to assert and maintain, any applicable claim to privilege,
immunity, confidentiality or protection in order to protect such documents
and other information from disclosure, and shall seek to condition any
disclosure which may be required on such protective terms as may be
appropriate. No Group may waive, undermine or fail to take any action
necessary to preserve an applicable privilege without the prior written
consent of the affected party hereto (or any affected Group member or
Affiliates of any such party) except, in the opinion of such party's
counsel, as required by law.
(c) Tulip hereby waives any conflict which might preclude counsel
currently representing Tulip, Spinco or any of their respective Affiliates
from representing Spinco and/or any of its Affiliates following the
Distribution Date in connection with the Spinco Litigation existing at the
Merger Effective Time.
(d) Tulip and Spinco shall enter into such joint defense agreements,
in customary form, as Tulip and Spinco shall determine are advisable.
Section 6.04. Reimbursement. Except to the extent that any member of one
Group is obligated to indemnify any member of the other Group under Article 4,
each Group providing information or witnesses to the other Group, or otherwise
incurring any expense in connection with cooperating, under Sections 6.01, 6.02
or 6.03, shall be entitled to receive from the recipient thereof, upon the
presentation of invoices therefor, payment for all out-of-pocket costs and
expenses that may reasonably be incurred in providing such information,
witnesses or cooperation.
Section 6.05. Retention of Records. From and after the Distribution Date,
except as otherwise required by law or agreed to in writing, each party shall,
and shall cause the members of its respective Group to, retain all information
relating to the other Group's business and operations in accordance with the
then general practice of such party with respect to information relating to its
own business and operations. Notwithstanding the foregoing, any party may
destroy or otherwise dispose of any such information at any time, provided that,
prior to such destruction or disposal, (i) such party shall provide not less
than 90 or more than 120 calendar days' prior written notice to the other party,
specifying
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the information proposed to be destroyed or disposed of and the scheduled date
for such destruction or disposal, and (ii) if the recipient of such notice shall
request in writing prior to the scheduled date for such destruction or disposal
that any of the information proposed to be destroyed or disposed of be delivered
to such requesting party, the party proposing the destruction or disposal shall
promptly arrange for the delivery of such of the information as was requested at
the expense of the requesting party.
Section 6.06. Confidentiality. From and after the Distribution Date, each
party shall hold and shall cause its Affiliates and their respective directors,
officers, employees, counsel, accountants, agents, consultants, advisors and
other authorized representatives ("Representatives") to hold in strict
confidence all documents and other information (other than any such documents
and other information relating solely to the business or affairs of such party)
concerning the other party and/or its Affiliates ("Confidential Information")
unless such party is compelled to disclose such documents and/or other
information by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law or the rules of any applicable stock
exchange. Confidential Information shall not include such documents and/or other
information which can be shown to have been (A) in the public domain through no
fault of such party, (B) lawfully acquired after the Distribution Date on a
non-confidential basis from other sources or (C) acquired or developed
independently by such party without violating this Section 6.06 or the
Confidentiality Agreement. Notwithstanding the foregoing, such party may
disclose such Confidential Information to its Representatives so long as such
Persons are informed by such party of the confidential nature of such
Confidential Information and are directed by such party to treat such documents
and/or other information confidentially. In the event that such party or any of
its Representatives is requested or required (by oral questions,
interrogatories, requests for information or documents, subpoenas, civil
investigative demands or other similar processes) to disclose any of the
Confidential Information, such party will promptly notify the other party so
that the other party may seek a protective order or other remedy or waive such
party's compliance with this Section 6.06. Such party shall exercise reasonable
efforts to preserve the confidentiality of the Confidential Information,
including, but not limited to, by cooperating with the other party to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded the Confidential Information. If, in the absence of a
protective order or other remedy or the absence of receipt of a waiver of the
other party, such party or any of its Representatives is nonetheless legally
compelled to disclose any of the Confidential Information, such party or such
Representative may disclose only that portion of the Confidential Information
which is legally required to be disclosed. Such party agrees to be responsible
for any breach of this Section 6.06 by it and/or its Representatives.
Section 6.07. Right of Inquiry.
(a) In the event of a material adverse change after the Distribution
Date in the financial condition of Spinco, which change creates a
substantial risk that Spinco will not be able to satisfy or otherwise
settle, when due, its indemnification obligations to the Tulip Indemnitees
under this Agreement and the Ancillary Agreements. Parent shall have the
right, at its own expense, subject to entering into an agreement with
Spinco to preserve confidentiality and any applicable privilege for the
benefit of Spinco, upon consultation with Spinco, to have limited access on
reasonable prior notice to Spinco's senior management in order to monitor
the status of pending and anticipated litigation and governmental
investigations or proceedings for which Parent would reasonably be expected
to have contingent liability. Such right of inquiry shall
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terminate at such time as there is no longer a substantial risk that Spinco
will not be able to satisfy its indemnification obligations under this
Agreement and the Ancillary Agreements.
(b) In addition to the provisions of paragraph (a) above, Parent shall
have the right on an annual basis and subject to reasonable prior notice to
meet with the General Counsel of Spinco (or such corporate officer or
employee who performs the responsibilities and duties of a general counsel)
and receive an oral report, in a forum in which Parent may ask questions
regarding the status of pending and threatened litigation and governmental
investigations or proceedings for which Parent may reasonably be expected
to have contingent liability. For the avoidance of doubt, no such right
shall require Spinco to (i) provide confidential information, or (ii)
jeopardize the benefit of any applicable privilege. In addition, Parent
shall have the further right to request one additional meeting per year in
connection with the public disclosure by Spinco during such year of a
material adverse development in any pending or threatened litigation or
governmental investigation or proceeding for which Parent may reasonably be
expected to have contingent liability. Such meeting will be on the same
terms as set forth in this Section 6.07(b).
ARTICLE 7
CERTAIN OTHER AGREEMENTS
Section 7.01. Intercompany Accounts; Services; Guaranties.
(a) Except as otherwise specifically set forth herein or in any of the
Ancillary Agreements or in the Merger Agreement, (i) all intercompany loan
balances in existence as of the Distribution Time between Tulip and any
member of the Spinco Group will be settled or paid in cash or other
immediately available funds prior to or as of the Distribution Time and
(ii) all intercompany accounts receivable and accounts payable between
Tulip and any member of the Spinco Group in existence at the Distribution
Time shall be paid in full, in cash or other immediately available funds,
by the party or parties owing such obligations prior to Distribution Time.
(b) Except as otherwise contemplated hereby or as set forth on
Schedule 7.01 or in any Ancillary Agreements or in the Merger Agreement,
all prior agreements and arrangements, including those relating to goods,
rights or services provided or licensed, between any member of the Spinco
Group and Tulip shall be terminated effective as of the Distribution Time,
if not previously terminated. No such agreements or arrangements shall be
in effect after the Distribution Time unless embodied in this Agreement,
the Ancillary Agreements or set forth on Schedule 7.01.
(c) In addition to any services contemplated to be provided following
the Distribution Date pursuant to any Ancillary Agreement, each party, upon
written request of the other party, shall make available to the other
party, during normal business hours and in a manner that will not
unreasonably interfere with such party's business, its financial, tax,
accounting, legal, employee benefits and similar staff and services
(collectively "Services") whenever and to the extent that they may be
reasonably required in connection with the preparation of tax returns,
audits, claims, litigation or administration of employee benefit plans, and
otherwise to assist in effecting an orderly transition following the
Distribution Date.
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(d) Spinco shall use its reasonable best efforts to cause itself or
one or more of its Affiliates to be substituted in all respects for Tulip
or any of its Affiliates, effective as of the Distribution Date, in respect
of all obligations of Tulip or any of its Affiliates under any guaranties,
letters of credit or letters of comfort obtained by Tulip or any such
Affiliates for the benefit of the Spinco Group, any of its Affiliates or
the Spinco Business (the "Guaranties"). If Spinco is unable to effect such
a substitution with respect to any such Guaranty after using its reasonable
best efforts to do so, Spinco shall obtain letters of credit, on terms and
from financial institutions reasonably satisfactory to Parent, with respect
to the obligations covered by each of the Guaranties for which Spinco does
not effect such substitution. Subsequent to the Distribution Date, with
respect to any uncancelled Guaranty for which no substitution is effected
or letter of credit is provided, Spinco shall, pursuant to Section 4.01,
indemnify each Tulip Indemnitee against any Liability under any such
Guaranty.
Section 7.02. Trademarks; Trade Names.
(a) From and after the Distribution Date, Tulip will not, and will not
permit any of its Affiliates to, use any of the Spinco Intellectual
Property Rights.
(b) As promptly as practicable following the Distribution Time, and as
contemplated by the Merger Agreement, Tulip will file with the applicable
Governmental Entity amendments to its articles of incorporation or
otherwise take all action necessary to delete from their name the word
"Tulip" or any marks and names derived therefrom and shall do or cause to
be done all other acts, including the payment of any fees required in
connection therewith, to cause such amendments or other actions to become
effective.
(c) Tulip acknowledges that from and after the Distribution Date, the
Tulip Name Rights will remain an asset of the Spinco Group and shall
include any goodwill associated with the use of the "Tulip" name, and any
derivative thereof.
Section 7.03. Further Assurances and Consents. In addition to the actions
specifically provided for elsewhere in this Agreement, each of the parties
hereto shall use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things, reasonably necessary,
proper or advisable under applicable laws, regulations and agreements or
otherwise to consummate and make effective the transactions contemplated by this
Agreement, including, using its reasonable best efforts to obtain any consents
and approvals and to make any filings and applications necessary or desirable in
order to consummate the transactions contemplated by this Agreement; provided
that no party hereto shall be obligated to take any action or omit to take any
action if the taking of or the omission to take such action would be
unreasonably burdensome to the party, its Group or its Group's business. The
parties agree to enter into and execute such additional Distribution Documents
as may be reasonably necessary, proper or advisable to effect the transactions
contemplated by this Agreement or the Ancillary Agreements, provided, however
that such additional Distribution Documents shall not diminish any of the rights
granted or increase any of the Liabilities assumed under this Agreement or the
Ancillary Agreements, or otherwise adversely affect Tulip or any of its
Affiliates following the Distribution Time, and shall not be entered into
without the prior written consent of Parent, which shall not be unreasonably
withheld.
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Section 7.04. Non-Solicitation.
(a) Except as otherwise permitted by any Ancillary Agreement, for a
period of two years from the Merger Effective Time, neither Group nor any
of its Affiliates shall, directly or indirectly, solicit any employee of
the other Group. Notwithstanding the foregoing, the restriction set forth
in the immediately preceding sentence shall not apply to (i) Person who
contacts such Group or any of its Affiliates in response to general
advertisements or searches or other broad-based hiring methods or (ii)
individuals who choose to leave for Good Reason the employment of, or are
terminated by, a Group without the other Group having taken any action
otherwise prohibited by this Section 7.04(a). "GOOD REASON" for the
purposes of this Section 7.04(a) shall mean reduction in compensation, a
relocation of more than 25 miles from the employee's current place of
employment or a diminution of the employee's duties and responsibilities.
(b) If any provision contained in this Section 7.04 shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Section, but this Section shall be construed as if such
invalid, illegal or unenforceable provision had never been contained
herein. It is the intention of the parties that if any of the restrictions
or covenants contained herein is held to cover a geographic area or to be
for a length of time which is not permitted by applicable law, or in any
way construed to be too broad or to any extent invalid, such provision
shall not be construed to be null, void and of no effect, but to the extent
such provision would be valid or enforceable under applicable law, a court
of competent jurisdiction shall construe and interpret or reform this
Section to provide for a covenant having the maximum enforceable geographic
area, time period and other provisions (not greater than those contained
herein) as shall be valid and enforceable under such applicable law. In
addition to and not in limitation of the parties' obligations under Section
9.14, each of the parties hereto acknowledges that the other party would be
irreparably harmed by any breach of this Section and that there would be no
adequate remedy at law or in damages to compensate such party for any such
breach. Each of the parties hereto agrees that the other party shall be
entitled to injunctive relief requiring specific performance by such party
of this Section, and consents to the entry thereof.
Section 7.05. Third Party Beneficiaries. Parent shall be a third party
beneficiary of this Agreement. Except as contemplated in the preceding sentence,
nothing contained in this Agreement is intended to confer upon any Person or
entity other than the parties hereto and their respective successors and
permitted assigns and Parent, any benefit, right or remedies under or by reason
of this Agreement, except that the provisions of Article 4 shall inure to the
benefit of the Spinco Indemnitees and the Tulip Indemnitees.
Section 7.06. Intellectual Property Rights and Licenses. Except as
otherwise specifically set forth in this Agreement or in any Ancillary
Agreements, neither Group shall have any right or license in or to any
technology, software, Intellectual Property Right or other proprietary right
owned, licensed or held for use by the other Group.
Section 7.07. Insurance.
(a) The Spinco Assets shall include any and all rights of an insured
party under each of the Group Policies, subject to the terms of such Group
Policies and any limitations or obligations of Spinco contemplated by this
Section 7.07, specifically
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including rights of indemnity and the right to be defended by or at the
expense of the insurer, with respect to all Actions and Liabilities
incurred or claimed to have been incurred prior to the Distribution Date by
any party in or in connection with the conduct of any of the Spinco Group
or Tulip or their respective businesses and operations, and which Actions
and Liabilities may arise out of an insured or insurable occurrence under
one or more of such Group Policies. With respect to all of the applicable
Group Policies, Spinco shall use its reasonable best efforts, at its
option, either (x) to cause Tulip and its Affiliates to be named or
maintained as additional insured parties thereunder to the extent of, or
(y) to obtain (at Spinco's expense at no cost to Tulip or any of its
Affiliates) a run-off or tail coverage policy with respect to, in each
case, their respective insurable interests in respect of Tulip Liabilities
incurred or claimed to have been incurred prior to the Distribution Date
and insured thereunder, and the Tulip Assets shall include such rights, to
the extent they relate to Tulip Liabilities, of an additional insured party
under each such Group Policy or under such run-off or tail policy, as
applicable, subject to the terms of such policy which shall include a term
of no less than six years.
(b) Spinco shall administer all Group Policies. In the event Tulip
Liabilities are covered under the Group Policies for periods prior to the
Distribution Date, or under any Group Policy covering claims made after the
Distribution Date with respect to an action, error, omission or occurrence
prior to the Distribution Date, then from and after the Distribution Date,
upon request from Tulip, Spinco shall claim coverage for Insured Claims
under such Group Policy as and to the extent that such insurance is
available (subject to Section 7.07(c)) up to the full extent of the
applicable limits of liability of such Group Policy.
(c) Spinco shall use its reasonable best efforts to cause Insurance
Proceeds received with respect to claims, costs and expenses under the
Group Policies (i) relating to Tulip Liabilities, to be paid directly to
Tulip and (ii) relating to the Spinco Group Liabilities to be paid directly
to Spinco (or the applicable member of the Spinco Group). In the event
Spinco has been unable to cause Insurance Proceeds to be paid directly to
Tulip in accordance with the preceding sentence, or to cause Tulip and its
Affiliates to be named or maintained as additional insureds or to obtain
run-off or tail policies in accordance with the last sentence of Section
7.07(a), Spinco shall inform Tulip of the reasons therefor and Tulip shall
be entitled, at Spinco's cost and expense, to take such actions as may be
necessary to (A) achieve such payment or (B) achieve such additional
insured status or (C) obtain such run-off or tail policy, so long as the
actions referenced in (B) and (C) are not materially adverse to Spinco.
Payment of the allocable portions of indemnity costs out of Insurance
Proceeds resulting from such Group Policies will be made by Spinco to the
appropriate party upon receipt from the insurance carrier (to the extent
not paid directly to Tulip pursuant to the first sentence of this Section
7.07(c)). In the event that the aggregate limits on any Group Policies are
exceeded by the aggregate of outstanding Insured Claims by the parties
hereto, the parties shall agree on an equitable allocation of Insurance
Proceeds based upon their respective bona fide claims. Each party agrees to
use reasonable best efforts to maximize available coverage under those
Group Policies applicable to such party, and to take all reasonable steps
to recover from all other responsible parties in respect of an Insured
Claim to the extent coverage limits under a Group Policy have been exceeded
or would be exceeded as a result of such Insured Claim. Notwithstanding any
other provision of this Agreement, Spinco shall not be required to renew,
extend or expand the coverage available under any of the Group
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Policies provided, that prior to any termination (or failure to reinstate)
such Group Policies with respect to coverage of any Tulip Liabilities
insured thereunder, Spinco shall afford Tulip the opportunity of taking
such commercially reasonable steps as may be necessary to maintain such
coverage in place.
(d) Spinco shall maintain insurance policies issued in favor of Spinco
or its Subsidiaries that are customary and appropriate for a company in its
industry for a period of not less than six years from and after the
Distribution Time.
ARTICLE 8
TAXES
Section 8.01. Liability for Taxes.
(a) Spinco shall be liable for and Spinco shall indemnify Tulip and
its Affiliates for, all Taxes (A) imposed on or with respect to Tulip (or
any consolidated, combined or unitary group of which Tulip was a member
prior to the Distribution (each a "Spinco Affiliated Group")) (i) for any
taxable year or period that ends, with respect to Tulip, on or before the
Distribution Date; (ii) for the Current Period; (iii) resulting solely from
Tulip's inclusion in any Spinco Affiliated Group pursuant to Treasury
Regulation Section 1.1502-6 (or comparable provision of state, local or
foreign law); or (iv) resulting from any adjustment pursuant to Section
481(a) of the Code (or comparable provision of state, local or foreign law)
by reason of a change in the method of accounting or other change with
respect to any taxable year or period that ends with respect to Tulip on or
before the Distribution Date or with respect to the Current Period or (B)
resulting from a breach of the representation set forth in Section 8.07(b);
provided, however, that Spinco shall not be liable and shall not indemnify
Tulip for any Taxes imposed on Tulip as a result of any Parent-Directed
Transaction. Notwithstanding any other provision, Spinco shall be liable
for any Tax imposed on Tulip, any Spinco Affiliated Group, any member of
the Spinco Group or any Tulip Affiliate as a result of the Merger or the
ELF Merger. Any reference in this Section 8.01(a) to Tulip shall include a
reference to any Tulip predecessor entity or any entity as to which Tulip
is the successor.
(b) Tulip shall be liable for, and Tulip shall indemnify Spinco and
its Affiliates for, all Taxes (other than any Taxes relating to Spinco, the
Spinco Assets, the Spinco Business, the Discontinued Business or the
Contributed Subsidiaries or otherwise the responsibility of Spinco under
Section 4.01, 8.01(a) or 8.03) imposed on or with respect to Tulip (i) for
any taxable year or period that begins, with respect to Tulip, after the
Distribution Date and (ii) with respect to the Straddle Period, for the
portion of such Straddle Period beginning, with respect to Tulip after the
Distribution Date.
(c) For purposes of Sections 8.01(a) and 8.01(b), whenever it is
necessary to determine the liability for Taxes of Tulip for the Current
Period or for the portion of the Straddle Period beginning on the day
following the Distribution Date, such Taxes shall be determined on the
basis of a closing of the books of Tulip at the close of the Distribution
Date except that any such Tax imposed annually based on the ownership of
assets on a particular date shall be determined by prorating such Taxes, on
a daily basis, to the period to and including the Distribution Date and the
period thereafter; provided, however,that (i) Taxes imposed on Tulip as a
result of any Parent-Directed
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Transactions shall be allocated to the taxable year or period that is
deemed to begin at the beginning of the day following the Distribution
Date, and (ii) Taxes imposed on Tulip that relate to Spinco, the Spinco
Assets, the Spinco Business, the Discontinued Business or the Contributed
Subsidiaries shall be allocated to the Current Period.
Section 8.02. Tax Returns.
(a) Spinco shall cause to be prepared and timely filed all Tax Returns
that are required to be filed by or with respect to Tulip for taxable years
or periods ending on or before the Distribution Date for which the Tax
Return is due on or before the Distribution Date and shall timely pay in
full any Taxes due in respect of such Tax Returns. All such Tax Returns
shall be prepared and filed in accordance with the Tax Reporting Standard.
(b) Spinco shall cause to be prepared all Tax Returns that are
required to be filed by or with respect to Tulip (i) for the Current Period
and (ii) for any taxable years or periods ending, with respect to Tulip, on
or before the Distribution Date for which the Tax Return is due after the
Distribution Date. At least 45 days before the due date of any such Tax
Return, Spinco agrees to provide Tulip a draft copy (the "Draft Return") of
such Tax Return. Each such Tax Return shall not report any item in a manner
that is inconsistent with the manner in which any corresponding item has
been previously reported in any such Tax Return already filed, unless such
inconsistent treatment is (w) required by law or due to a change in
circumstances, or (x) is permitted by law, either Tulip or Spinco elects to
make such change in treatment and such change would not be prejudicial to
Spinco or Tulip (the "Tax Reporting Standard"). In the case of Tax Returns
described in clause (i) or (ii) of this Section 8.02(b), (y) unless (A)
Tulip believes that the proposed Tax Return does not comply with the Tax
Reporting Standard or (B) Tulip disagrees with the manner in which the
matters set forth in Section 8.03(a), (b), (c), (d) or (e) or the matters
set forth in the definition of "Tax Amount" (as defined in the Merger
Agreement) (or items affecting any Tax resulting from such matters) are
treated on such Draft Return on the basis that such matters or items are
calculated inconsistently with the definition of the Tax Amount, the Tax
Return shall be filed as set forth in the Draft Return and (z) to the
extent necessary for such Tax Return to be duly filed, Tulip shall cause an
officer or other authorized person to execute such Tax Returns and Tulip
agrees to cause such Tax Returns to be filed. In the event that Tulip
believes that the proposed Tax Return does not comply with the Tax
Reporting Standard or Tulip disagrees with such Draft Return as set forth
in clause (B) above, the parties shall endeavor to resolve their
disagreement over this matter, and failing that a neutral accountant
mutually acceptable to Tulip and Spinco shall resolve the disagreement
(consistent with the definition of Tax Amount, including the Reasonably
Expected By The Accountants standard set forth therein) prior to the date
the Tax Return is due. Tulip shall cause an officer or other authorized
person to execute such Tax Return reflecting the resolution by the neutral
accountants and Tulip agrees to cause such Tax Return to be filed. Spinco
shall determine (subject to any audit adjustment and subject to the consent
of Tulip (which consent shall not be unreasonably withheld)) the allocation
and apportionment of any unused net operating losses and credits of Tulip
or the Spinco Affiliated Group and Spinco and Tulip shall report
consistently with such determination.
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(c) Tulip shall prepare and timely file or shall cause to be prepared
and timely filed all Tax Returns that are required to be filed by it for
taxable years or periods beginning, with respect to Tulip, after the
Distribution Date and shall timely pay in full any Taxes due in respect of
such Tax Returns.
(d) Spinco shall pay Tulip, no later than two Business Days prior to
the date such Taxes are due to the applicable Taxing Authority, the amount
of any Taxes that (i) Tulip or any Tulip Affiliate is required to pay to
the applicable Taxing Authority and (ii) are either Taxes for which Spinco
is liable pursuant to Section 8.01(a) or 8.03 or are Spinco Group
Liabilities. Spinco shall pay, or cause to be paid, directly to the
applicable Taxing Authority any other Taxes that are Spinco Group
Liabilities.
Section 8.03. Distribution. Notwithstanding any other provision, Spinco
shall be liable for any Taxes that are imposed on Tulip, any Spinco Affiliated
Group, any member of the Spinco Group, any Tulip Affiliate or any other Person
as a result (in whole or in part) of (a) the Distribution, (b) the
Restructuring, (c) any transaction undertaken in anticipation of the
Distribution or the Restructuring, (d) any reduction in Tulip's basis in Spinco
by reason of an indemnity payment or otherwise, or (e) any election made in
connection with any of the above (it being understood that, to the extent
required to avoid double-counting, the dollar amount of the reduction in the
Merger Consideration (as defined in the Merger Agreement) by reason of paragraph
(a) (6) of Schedule I to the Merger Agreement shall reduce such indemnification
obligation (except to the extent that Spinco receives a refund, credit or other
recovery of, or relating to, such amount)).
Section 8.04. Tax Refunds and Benefits.
(a) Spinco shall be entitled to any refund of any Taxes of Tulip,
which Taxes are for taxable years or periods (or portions thereof) ending,
with respect to Tulip, on or before the Distribution Date, including any
interest paid by the applicable Governmental Entity thereon (net of any Tax
on such interest), received by Tulip, Parent, or any of their respective
Affiliates, and any amounts credited against Taxes of Tulip, which Taxes
are for taxable years or periods (or portions thereof) ending, with respect
to Tulip, on or before the Distribution Date, to which Tulip, Parent, or
any of their respective Affiliates becomes entitled. Spinco shall have the
right to determine whether any claim for refund of such Taxes to which
Spinco is entitled shall be made on behalf of Spinco by Tulip, Parent or
any of their respective Affiliates. If Spinco elects to make a claim for
refund of such Taxes to which Spinco is entitled, Tulip and Parent shall
cooperate fully in connection therewith. Without the prior written consent
of Spinco, neither Tulip, Parent nor any of their respective Affiliates
shall (i) make any election or (ii) file any amended Tax Return or propose
or agree to any adjustment of any item with the IRS or any other taxing
authority with respect to any taxable year or period of Tulip ending, with
respect to Tulip, on or before the Distribution Date that would have the
effect of increasing the Taxes of Tulip for any taxable year or period
ending, with respect to Tulip, on or before the Distribution Date.
Notwithstanding any other provision: Spinco shall not (and Tulip shall) be
entitled to any refunds (and interest thereon) or credits (A) that result
from a carryback of any Tax item (other than a Tax item relating to the
Spinco Assets, the Spinco Business or the Discontinued Business), (B) of or
against Taxes resulting from a Parent-Directed Transaction or (C) of or
against Taxes (to the extent such refunds and credits do not exceed the Tax
Amount) imposed as a result of any of the matters set forth in Section
8.03(a), (b), (c), (d) or (e), in the case of this clause (C), prior to the
date on which all relevant Tax years have been Finally Settled.
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(b) Tulip shall be entitled to any refund of any Taxes of Tulip, which
Taxes are for taxable years or periods (or portions thereof) beginning,
with respect to Tulip, after the Distribution Date, including any interest
paid thereon, received by Tulip, Parent, or any of their respective
Affiliates or any member of the Spinco Group, and any amounts credited
against Taxes of Tulip, which Taxes are for taxable years or periods (or
portions thereof) beginning, with respect to Tulip, after the Distribution
Date, to which Tulip, Parent, or any of their respective Affiliates or any
member of the Spinco Group becomes entitled. Tulip shall have the right to
determine whether any claim for refund of Taxes of Tulip for taxable years
or periods (or portions thereof) beginning, with respect to Tulip, after
the Distribution Date (and any other claim for refund of Taxes to which
Tulip is entitled) shall be made.
(c) Spinco and Tulip agree to determine (subject to any audit
adjustment) the unused net operating losses of Tulip (or any consolidated,
combined or unitary group of which Tulip was a member prior to the Closing
Date) as of the close of the Distribution Date in a manner consistent with
the closing of the books methodology described in Section 8.01(c) and
applicable Tax law; provided, however, that any deductions or losses
allowed under the Code that would not have arisen but for any obligations
listed in paragraph (a) (1), (2), (4), (5) or (7) of Schedule I to the
Merger Agreement for which Spinco or the shareholders of Tulip, immediately
prior to the Distribution, are directly or indirectly responsible shall be
allocated (subject to any audit adjustment) to the Current Period. Spinco
and Tulip agree that, to the extent that under applicable Tax rules, such
unused net operating loss is apportioned to Tulip, Spinco shall be
entitled, from and after the Offset Date, to offset its indemnity
obligations hereunder by an aggregate amount equal to the Offset Amount.
The "Offset Amount" shall mean the dollar amount of any tax benefit (that
is a reduction in taxes payable or is a refund, but not any deemed or
actual interest on any amount) that Tulip (or any consolidated, combined or
unitary group of which Tulip is a member after the Distribution Date)
actually derives after the Distribution Date (taking into account all facts
and circumstances as of the Offset Date) in cash from (but not in excess of
the amount of any such tax benefit that Spinco and its Subsidiaries would
have derived on or prior to the Offset Date if the net operating loss had
been apportioned to Spinco), and would not have derived but for, the
utilization of such losses. The "Offset Date" shall mean the latest of (i)
the date on which the taxable year of Tulip in which such utilization
occurs is Finally Settled, (ii) the date on which the taxable year of Tulip
ending on the Distribution Date is Finally Settled and (iii) the date on
which Spinco or its Subsidiaries would have derived such tax benefit if the
net operating loss had been apportioned to Spinco. "Finally Settled" shall
mean, with respect to a taxable year or period, finally and conclusively
settled with the Internal Revenue Service or, if such year or period is not
audited by the Internal Revenue Service, the date on which all applicable
statutes of limitations with respect to such year or period have expired.
For purposes of determining utilization and the benefit derived from
utilization, such net operating losses shall be the last item to be taken
into account for any taxable year or period. In the event that facts or
circumstances arise or come to light after the Offset Date which would
reduce the Offset Amount (treating references in the definition of Offset
Amount to such later date), then the Offset Amount shall be reduced to such
revised amount, and Spinco shall immediately remit to Tulip in cash the
amount by which the reduction in the Offset Amount has reduced any
indemnification obligation of Spinco hereunder.
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Section 8.05. Tax Sharing Arrangements. Any Tax allocation or sharing
agreement or arrangement, whether or not written, that may have been entered
into by Spinco, Tulip or any of their respective Affiliates shall be terminated
as to Tulip and its Affiliates as of the Distribution Date, and no payments
which are owed by or to Tulip or any of its Affiliates pursuant thereto shall be
made thereunder.
Section 8.06. Contest Provisions.
(a) Spinco shall have the sole right to represent Tulip's interests in
any Tax audit or administrative or court proceeding (a "Tax Proceeding") of
Tulip (or any consolidated, combined or unitary group of which Tulip is the
common parent) for taxable periods ending, with respect to Tulip, on or
before the Distribution Date, and to employ counsel of its choice at its
expense; provided, however, that (i) Spinco shall provide Tulip with a
timely and reasonably detailed account of each stage of such Tax Proceeding
and a copy of all documents relating to such Tax Proceeding, (ii) Spinco
shall consult with Tulip before taking any significant action in connection
with such Tax Proceeding, (iii) Spinco shall consult with Tulip and offer
Tulip an opportunity to comment before submitting any written materials
prepared or furnished in connection with such Tax Proceeding, (iv) Spinco
shall defend such Tax Proceeding diligently and in good faith as if it were
the only party in interest in connection with such Tax Proceeding and (v)
Spinco shall not settle, compromise or abandon any such Tax Proceeding
without obtaining the prior written consent, which consent shall not be
unreasonably withheld, of Tulip if such settlement, compromise or
abandonment could reasonably be expected to adversely affect Tulip.
(b) In the case of a Tax Proceeding for a Straddle Period of Tulip (a
"Straddle Period Tax Proceeding") (i) Spinco shall control such proceeding
if the claims for which Spinco is responsible exceed the claims for which
Tulip is responsible, and Tulip shall control such Tax Proceeding if the
claims for which Tulip is responsible exceed the claims for which Spinco is
responsible (Spinco or Tulip respectively, the "Controlling Party," and
Tulip or Spinco, respectively, the "Noncontrolling Party"), (ii) the
Controlling Party shall provide the Noncontrolling Party with a timely and
reasonably detailed account of each stage of such Straddle Period Tax
Proceeding and a copy of all documents (or portions thereof) relating to
such Straddle Period Tax Proceeding, (iii) the Controlling Party shall
consult with the Noncontrolling Party before taking any significant action
in connection with such Straddle Period Tax Proceeding and shall consult
with the Noncontrolling Party and offer the Noncontrolling Party an
opportunity to comment before submitting any written materials prepared or
furnished in connection with such Straddle Period Tax Proceeding, (iv) the
Controlling Party shall defend such Straddle Period Tax Proceeding
diligently and in good faith as if the taxpayer whose Tax Return is at
issue were the only party in interest in connection with such Straddle
Period Tax Proceeding, (v) the Noncontrolling Party shall have the right to
participate in any conference with any Tax authority regarding any Tax for
which the Noncontrolling Party may be required to indemnify the Controlling
Party or any Affiliate of the Controlling Party or may otherwise be liable,
and (vi) the Controlling Party shall not settle, compromise or abandon any
such Straddle Period Tax Proceeding without obtaining the prior written
consent, which consent shall not be unreasonably withheld, of the
Noncontrolling Party. In the event that the Noncontrolling Party reasonably
withholds consent pursuant to clause (vi) above, the Noncontrolling Party
shall be entitled to assume the defense of the Straddle Period Tax
Proceeding; provided that the Controlling
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Party's liability in connection with the Straddle Period Tax Proceeding
shall be limited to the amount such liability would have been under the
proposed settlement.
(c) Tulip shall have the sole right to control (including as to
settlement) any other Tax Proceeding of Tulip.
(d) Except to the extent set forth in Section 8.06(a), (b) or (c),
Spinco shall have the sole right to control (including as to settlement)
any Tax Proceeding of Spinco or any of the Contributed Subsidiaries.
(e) Tulip (or its Affiliate) shall have the sole right to control
(including as to settlement) any Tax Proceeding of ELF or any of its
Subsidiaries.
(f) Notwithstanding any other provision of this Agreement, Tulip and
its Affiliates shall be entitled to (i) control (including as to
settlement), and Spinco and its Affiliates shall not be entitled to
participate in, any Tax Proceeding with respect to any consolidated,
combined or unitary Tax Return that includes ELF, Parent or any of their
respective Subsidiaries for any taxable period, or Tulip for any taxable
period (or portion thereof) beginning, with respect to Tulip, after the
Distribution Date and (ii) file in such manner as it chooses in its sole
discretion any Tax Return described in clause (i) above (and neither Spinco
nor any of its Affiliates shall be entitled to any copy of or information
from any Tax Return described in clause (i) above (other than information
relating solely to ELF, its Subsidiaries or Tulip)).
(g) Notwithstanding any other provision of this Agreement, Spinco and
its Affiliates shall be entitled to (i) control (including as to
settlement), and Tulip and its Affiliates shall not be entitled to
participate in, any Tax Proceeding with respect to any consolidated,
combined or unitary Tax Return that includes Spinco for any taxable period
(or portion thereof) beginning, with respect to Spinco, after the
Distribution Date, and (ii) file in such manner as it chooses in its sole
discretion any Tax Return described in clause (i) above (and neither Tulip
nor any of its Affiliates shall be entitled to any copy of or information
from any Tax Return described in clause (i) above).
Section 8.07. Cooperation on Tax Matters; Other Tax Matters.
(a) Each of Tulip, Spinco or any of their respective Affiliates shall
provide the others with such assistance as may reasonably be requested by
each of them in connection with the preparation of any Tax Return, any
audit or other examination by any taxing authority, or any judicial or
administrative proceedings relating to liability for Taxes, and each shall
provide the others with any records or information which may be relevant to
such Tax Return, audit or examination, proceedings or determination.
(b) Spinco hereby represents and warrants to Tulip and its Affiliates
that there is no agreement or transaction pursuant to which ELF or any of
its Subsidiaries will pay or will become obligated to pay Taxes of Tulip or
any Person owned directly or indirectly by Tulip at any time (other than
Taxes imposed directly (and not by reason of any such agreement or
transaction) by the applicable Governmental Entity on ELF or any Person
owned directly or indirectly by ELF at any time). Such representation shall
survive until the end of the applicable statute of limitations (or such
later time as all claims in respect thereof are resolved).
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(c) In the event that the Distribution occurs on a different date from
the date of the ELF Merger, references above in this Article 8 (or any
definition used in this Article 8 for purposes of this Article 8) to
"Distribution Date" shall instead refer to the ELF Merger Date.
ARTICLE 9
MISCELLANEOUS
Section 9.01. Notices. All notices and other communications to any party
hereunder shall be in writing (including telecopy or similar writing) and shall
be deemed given when received addressed as follows:
If to Tulip to:
Keebler Holding Corp.
c/o Kellogg Company
One Kellogg Square
Battle Creek, Michigan 49016
Telecopy: (616) 961-6598
Attention: Janet L. Kelly
With copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy: (212) 403-2000
Attention: Daniel A. Neff
If to Spinco, to:
Flowers Foods, Inc.
1919 Flowers Circle
Thomasville, Georgia 31757
Telecopy: (912) 225-5433
Attention: G. Anthony Campbell
With a copy to:
Jones, Day, Reavis & Pogue
3500 SunTrust Plaza
303 Peachtree Street, N.E.
Atlanta, Georgia 30308-3242
Telecopy: (404) 581-8330
Attention: Robert W. Smith
Lizanne Thomas
Any party may, by written notice so delivered to the other parties, change
the address to which delivery of any notice shall thereafter be made.
Section 9.02. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of
an amendment, by
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Tulip and Spinco, or in the case of a waiver, by the party against whom the
waiver that is materially adverse is to be effective. In addition, unless
the Merger Agreement shall have been terminated in accordance with its
terms, any such amendment or waiver shall be subject to the prior written
consent of Parent.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 9.03. Expenses. All costs and expenses incurred by Tulip or
Spinco in connection with the preparation, execution and delivery of the
Ancillary Agreements and the consummation of the Merger, the Distribution and
the other transactions contemplated hereby and therein (including the fees
(other than up to $16 million in advisory fees) and expenses of all counsel,
accountants and financial and other advisors of both Groups in connection
therewith, and all expenses in connection with preparation, filing and printing
of the Registration Statement) shall be paid by Spinco; provided that Parent and
its Affiliates shall pay their own expenses, if any, incurred in connection with
the Distribution, and Spinco shall pay all other expenses of Tulip or Spinco or
any of their respective Subsidiaries, in connection with the Transaction
Agreements (as defined in the Merger Agreement), in each case except as
specifically provided otherwise herein, in the Merger Agreement or any Ancillary
Agreement.
Section 9.04. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of Parent and the other party
hereto. If any party or any of its successors or assigns (i) shall consolidate
with or merge into any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) shall transfer all
or substantially all of its properties and assets to any Person, then, and in
each such case, proper provisions shall be made so that the successors and
assigns of such party shall assume all of the obligations of such party under
the Distribution Documents.
Section 9.05. Governing Law. Subject to the provisions of the Georgia
Business Corporation Code applicable to the Distribution, this Agreement shall
be construed in accordance with and governed by the law of the State of
Delaware, without regard to the conflict of laws rules thereof.
Section 9.06. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other party hereto.
Section 9.07. Entire Agreement. This Agreement, the Merger Agreement, the
Confidentiality Agreement, the Ancillary Agreements and the other Distribution
Documents constitute the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersede all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter hereof and thereof. No representation, inducement,
promise, understanding, condition or warranty not
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set forth herein or in the Confidentiality Agreement, the Merger Agreement, the
Ancillary Agreements or the other Distribution Documents has been made or relied
upon by any party hereto. To the extent that the provisions of this Agreement
are inconsistent with the provisions of any Ancillary Agreement, the provisions
of such Ancillary Agreement shall prevail.
Section 9.08. Certain Transfer Taxes. Except as otherwise provided in the
Ancillary Agreements, all transfer, documentary, sales, use, stamp and
registration taxes and fees (including any penalties and interest) incurred in
connection with any of the transactions described in Article 2 or 3 of this
Agreement shall be borne and paid by Spinco. Subject to the following sentence,
the party that is required by applicable law to file any return or make any
payment with respect to any of those Taxes shall do so, and the other party
shall cooperate with respect to that filing or payment as necessary. To the
extent that Tulip is required to pay such Taxes to the applicable Governmental
Entity, Spinco shall pay Tulip the amount of such Taxes in accordance with this
Section 9.08, no later than two Business Days prior to the date such Taxes are
due.
Section 9.09. Jurisdiction. Except as otherwise expressly provided in
this Agreement, any Action seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby may be brought in any federal court located in the State of
Delaware or any Delaware State court, and each of the parties hereby consents to
the jurisdiction of such court (and of the appropriate appellate courts
therefrom) in any such Action and irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such Action in any such court or that any such Action
brought in any such court has been brought in an inconvenient forum. Process in
any such Action may be served on any party anywhere in the world, whether within
or without the jurisdiction of any such court. Without limiting the foregoing,
each party agrees that service of process on such party as provided in Section
9.01 shall be deemed effective service of process on such party.
Section 9.10. Pre-Litigation Dispute Resolution. Prior to the bringing of
any Action against the other, senior officers of Tulip and Spinco shall confer,
consult and in good faith attempt for a period of 30 calendar days to resolve
any dispute between such parties relating to this Agreement or any of the
Ancillary Agreements without resort to legal remedies.
Section 9.11. Severability. If any one or more of the provisions
contained in this Agreement should be declared invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained in this Agreement shall not in any way be affected or
impaired thereby so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such a declaration, the parties shall modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner so
that the transactions contemplated hereby are consummated as originally
contemplated to the fullest extent possible.
Section 9.12. Survival. All covenants and agreements of the parties
contained in this Agreement shall survive the Distribution Date indefinitely,
unless a specific survival or other applicable period is expressly set forth
therein.
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Section 9.13. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
Section 9.14. Specific Performance. Each party to this Agreement
acknowledges and agrees that damages for a breach or threatened breach of any of
the provisions of this Agreement would be inadequate and irreparable harm would
occur. In recognition of this fact, each party agrees that, if there is a breach
or threatened breach, in addition to any damages, the other non-breaching party
to this Agreement, without posting any bond, shall be entitled to seek and
obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction, attachment, or any other
equitable remedy which may then be available to obligate the breaching party (i)
to perform its obligations under this Agreement or (ii) if the breaching party
is unable, for whatever reason, to perform those obligations, to take any other
actions as are necessary, advisable or appropriate to give the other party to
this Agreement the economic effect which comes as close as possible to the
performance of those obligations (including, but not limited to, transferring,
or granting liens on the assets of the breaching party to secure the performance
by the breaching party of those obligations).
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IN WITNESS WHEREOF the parties hereto have caused this Distribution
Agreement to be duly executed by their respective authorized officers as of the
date first above written.
FLOWERS INDUSTRIES, INC.
By: /s/ G. Anthony Campbell
-----------------------------------
Name:
Title:
FLOWERS FOODS, INC.
By: /s/ G. Anthony Campbell
-----------------------------------
Name:
Title:
36
