SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): March 31, 1997
MALLINCKRODT INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 1-483 36-1263901
-------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
7733 Forsyth Boulevard, St. Louis, MO 63105-1820 (314) 854-5200
- ----------------------------------------------------------------
(Address and telephone number, including area code, of principal
executive offices)
INFORMATION TO BE INCLUDED IN THE REPORT
Items 1, 3, 4, 5, 6, 7(a), 8 and 9 are not applicable and are
omitted from this report.
Item 2. Acquisition or Disposition of Assets.
-------------------------------------
On March 31, 1997, Mallinckrodt Inc. (the "Company")
contributed all of the capital stock of its wholly-owned
subsidiary, Fries & Fries, Inc., a Delaware corporation ("F&F"),
to Givaudan-Roure (United States), Inc., a Delaware corporation
("GRUSI"), in exchange for 88,941.349 shares of non-voting 5.5%
Redeemable Preferred Stock, $1,000 stated value per share, of
GRUSI (the "Preferred Stock") as part of a transaction which the
parties intend will qualify as a tax-free contribution under
Section 351 of the Internal Revenue Code of 1986, as amended (the
"Contribution Transaction"). Prior to March 31, 1997, the only
material assets of F&F were its 50% general partner interest in
Tastemaker, a Delaware general partnership ("Tastemaker U.S."),
and its 49.5% ownership interest in Tastemaker B.V., a
Netherlands limited liability entity ("Tastemaker B.V.").
Together, Tastemaker U.S. and Tastemaker B.V. (collectively,
"Tastemaker") were globally engaged, both directly and indirectly
through their respective subsidiaries, in the development,
manufacture and sale of ingredients and compounds used primarily
to provide flavor or taste in food and beverage products. At the
time of the Contribution Transaction, F&F had debt in the
principal amount of $510 million (the "F&F Debt") and Tastemaker
U.S. had debt in the principal amount of $500 million (the
"Tastemaker Debt"). Both the F&F Debt and the Tastemaker Debt
were guaranteed by the Company. The Company has been released
from all liabilities and obligations with respect to both the F&F
Debt and the Tastemaker Debt.
Roche Holdings, Inc., a Delaware corporation ("Roche"),
owns 100% of the issued and outstanding voting stock of GRUSI.
Prior to the consummation of the Contribution Transaction, Roche
contributed 100% of the capital stock of Givaudan-Roure
Corporation, a New Jersey corporation ("GRC"), to GRUSI. GRC is
also engaged in the development, manufacture and sale of
ingredients and compounds used primarily to provide flavor or
taste in food and beverage products.
The Preferred Stock received by the Company is non-voting
and bears cumulative dividends at the rate of 5.5% per annum,
payable quarterly. Dividends which have accrued but are not
declared and paid on any quarterly dividend payment date bear
interest at the rate of 5.5% per annum from the applicable
dividend payment date until paid. The Preferred Stock has a
liquidation preference equal to its stated value plus accrued but
unpaid dividends and interest. The Preferred Stock ranks senior
to all other capital stock of GRUSI with respect to dividend
payments, liquidation preference and redemption. The Preferred
Stock is redeemable at a redemption price equal to its stated
value plus accrued but unpaid dividends and interest (a) at the
option of the holder on or after October 1, 1998 or upon the
occurrence of certain specified events, (b) at the option of the
issuer on or after April 1, 1999 or upon the refusal of the
holder to consent to certain specified events, and (c)
mandatorily on the tenth anniversary of the date of issuance.
The obligation of the issuer to pay the redemption price for the
Preferred Stock is supported by a Keepwell Agreement executed by
Roche and, until March 31, 1999, by a stand-by letter of credit.
The value of the stock received by the Company in
connection with the Contribution Transaction was determined
through arms-length negotiation based upon the value of F&F on
the date of closing. The number of shares of Preferred Stock was
determined assuming the value of the Preferred Stock equaled its
stated value of $1,000 per share.
Except as described in this report there does not exist any
material relationship between Roche, GRUSI and/or GRC, on the one
hand, and the Company or any of its affiliates, any director or
officer of the Company, or any associate of any such director or
officer, on the other hand.
Item 7. Financial Statements and Exhibits.
----------------------------------
(b) Pro Forma Financial Information.
The Mallinckrodt Inc. Form 10-Q for
the quarterly period ended December
31, 1996 had the operating results
of Fries & Fries, Inc. accounted
for as a discontinued operation
and, accordingly, prior year
results were restated. The Company
will realize a significant gain as
a result of the transactions
involving Fries & Fries, Inc.
described under Item 2, net of
associated costs. The gain will be
reported in Form 10-Q for the
quarterly period ended March 31,
1997, which will be filed by May
15, 1997.
(c) Exhibits.
Number Description
------ -----------
2.1 Agreement dated February 4, 1997
among Mallinckrodt Inc., Hercules
Incorporated, Roche Holdings, Inc.
and Givaudan-Roure (International)
SA
2.2 First Amendment to Agreement dated
March 28, 1997 among Mallinckrodt
Inc., Hercules Incorporated, Roche
Holdings, Inc. and Givaudan-Roure
(International) SA
2.3 Contribution Agreement dated
February 4, 1997 among Mallinckrodt
Inc., Roche Holdings, Inc. and
Givaudan-Roure (United States),
Inc.
SIGNATURES
----------
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.
Date: April 14, 1997 MALLINCKRODT INC.
By______________________________
Name Roger A. Keller
Title Vice President, Secretary
and General Counsel
EXHIBIT 2.1
AGREEMENT
AMONG
HERCULES INCORPORATED,
MALLINCKRODT INC.,
ROCHE HOLDINGS, INC.
AND
GIVAUDAN-ROURE (INTERNATIONAL) SA
DATED AS OF FEBRUARY 4, 1997
<PAGE>
TABLE OF CONTENTS
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Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. DEFINITIONS AND INTERPRETATION. . . . . . . . . . . . . . 4
1.1 Capitalized Terms. . . . . . . . . . . . . . . . . 4
1.1.1 1934 Act . . . . . . . . . . . . . . . . . 5
1.1.2 1995 Financial Statements. . . . . . . . . 5
1.1.3 Accountants. . . . . . . . . . . . . . . . 5
1.1.4 Accountants' Net Determination . . . . . . 5
1.1.5 Accountants' Report. . . . . . . . . . . . 5
1.1.6 Adjusted Aggregate Value . . . . . . . . . 5
1.1.7 Adjustment Time. . . . . . . . . . . . . . 6
1.1.8 Affiliate. . . . . . . . . . . . . . . . . 6
1.1.9 Agreement. . . . . . . . . . . . . . . . . 6
1.1.10 Adjustment Arbitrator. . . . . . . . . . . 6
1.1.11 Benefit Arrangement. . . . . . . . . . . . 6
1.1.12 Business . . . . . . . . . . . . . . . . . 6
1.1.13 Business Personnel . . . . . . . . . . . . 6
1.1.14 Closing. . . . . . . . . . . . . . . . . . 6
1.1.15 Closing Date . . . . . . . . . . . . . . . 6
1.1.16 Closing Deadline . . . . . . . . . . . . . 6
1.1.17 Code . . . . . . . . . . . . . . . . . . . 7
1.1.18 Companies. . . . . . . . . . . . . . . . . 7
1.1.19 Company Tax Return . . . . . . . . . . . . 7
1.1.20 Contribution Agreement . . . . . . . . . . 7
1.1.21 Cost of Arbitration. . . . . . . . . . . . 7
1.1.22 Current Assets . . . . . . . . . . . . . . 7
1.1.23 Current Liabilities. . . . . . . . . . . . 7
1.1.24 D&F Transaction Agreements . . . . . . . . 8
1.1.25 Damages. . . . . . . . . . . . . . . . . . 8
1.1.26 Designated Buyers. . . . . . . . . . . . . 8
1.1.27 Designated Transaction Agreements. . . . . 9
1.1.28 Disclosure Schedule. . . . . . . . . . . . 9
1.1.29 Disputing Party. . . . . . . . . . . . . . 9
1.1.30 Disputing Party's Proposal . . . . . . . . 9
1.1.31 Environment. . . . . . . . . . . . . . . . 9
1.1.32 Environmental Breach . . . . . . . . . . . 9
1.1.33 Environmental Indemnification Threshold. . 9
1.1.34 Environmental Requirements . . . . . . . . 9
1.1.35 ERISA Affiliate. . . . . . . . . . . . . . 10
1.1.36 Estimated Adjusted Aggregate Value . . . . 10
1.1.37 Estimated Long-Term Liabilities
Adjustment . . . . . . . . . . . . . . . . 11
1.1.38 Estimated Tastemaker B.V. Value. . . . . . 11
1.1.39 Estimated Working Capital Adjustment . . . 11
1.1.40 F&F. . . . . . . . . . . . . . . . . . . . 11
1.1.41 F&F Transaction Agreement. . . . . . . . . 11
1.1.42 FCPA . . . . . . . . . . . . . . . . . . . 11
1.1.43 Final Net Determination. . . . . . . . . . 12
1.1.44 Financial Statements . . . . . . . . . . . 12
1.1.45 Fries Withdrawal . . . . . . . . . . . . . 12
1.1.46 Fries Withdrawal Closing . . . . . . . . . 12
1.1.47 Fries Withdrawal Documents . . . . . . . . 12
1.1.48 GAAP . . . . . . . . . . . . . . . . . . . 12
1.1.49 Governmental Authority . . . . . . . . . . 12
1.1.50 HCI. . . . . . . . . . . . . . . . . . . . 12
1.1.51 HFI. . . . . . . . . . . . . . . . . . . . 12
1.1.52 HNBV . . . . . . . . . . . . . . . . . . . 12
1.1.53 Hazardous Substances . . . . . . . . . . . 13
1.1.54 Hercules Transaction Agreement . . . . . . 14
1.1.55 Indemnification Threshold. . . . . . . . . 14
1.1.56 Indemnified Party. . . . . . . . . . . . . 14
1.1.57 Indemnifying Party . . . . . . . . . . . . 14
1.1.58 Intellectual Property. . . . . . . . . . . 14
1.1.59 Interim Financial Statements . . . . . . . 14
1.1.60 International Plan . . . . . . . . . . . . 14
1.1.61 Licenses . . . . . . . . . . . . . . . . . 14
1.1.62 Long-Term Liabilities. . . . . . . . . . . 14
1.1.63 Long-Term Liabilities Adjustment . . . . . 15
1.1.64 Long-Term Liabilities Baseline . . . . . . 15
1.1.65 Multiemployer Plan . . . . . . . . . . . . 16
1.1.66 Net Working Capital. . . . . . . . . . . . 16
1.1.67 Newco. . . . . . . . . . . . . . . . . . . 16
1.1.68 Newco Preferred Stock. . . . . . . . . . . 16
1.1.69 Owners . . . . . . . . . . . . . . . . . . 16
1.1.70 Owners' Knowledge. . . . . . . . . . . . . 16
1.1.71 Owners' Maximum Liability. . . . . . . . . 16
1.1.72 Partners' Representatives. . . . . . . . . 17
1.1.73 Partnership Agreement. . . . . . . . . . . 17
1.1.74 PBGC . . . . . . . . . . . . . . . . . . . 17
. . . . . . . . . . . . . . . . . . . . . . . . . 17
1.1.75 PBO. . . . . . . . . . . . . . . . . . . . 17
1.1.76 PBO. . . . . . . . . . . . . . . . . . . . 17
1.1.77 Pinnacle . . . . . . . . . . . . . . . . . 17
1.1.78 Plan . . . . . . . . . . . . . . . . . . . 17
1.1.79 Pre-Closing Tax Period . . . . . . . . . . 17
1.1.80 Short Period . . . . . . . . . . . . . . . 17
1.1.81 Specified Officers . . . . . . . . . . . . 17
1.1.82 SPHN . . . . . . . . . . . . . . . . . . . 18
1.1.83 Tastemaker B.V. Current Assets . . . . . . 18
1.1.84 Tastemaker B.V. Current Liabilities. . . . 19
1.1.85 Tastemaker B.V. Long-Term Liabilities. . . 19
1.1.86 Tastemaker B.V. Long-Term Liabilities
Adjustment . . . . . . . . . . . . . . . . 19
1.1.87 Tastemaker B.V. Long-Term Liabilities
Baseline . . . . . . . . . . . . . . . . . 20
1.1.88 Tastemaker B.V. Subsidiary . . . . . . . . 20
1.1.89 Tastemaker B.V. Working Capital. . . . . . 20
1.1.90 Tastemaker B.V. Working Capital
Adjustment . . . . . . . . . . . . . . . . 21
1.1.91 Tastemaker B.V. Working Capital
Baseline . . . . . . . . . . . . . . . . . 21
1.1.92 Tastemaker B.V. Value. . . . . . . . . . . 21
1.1.93 Tastemaker Combined and Consolidated
Value. . . . . . . . . . . . . . . . . . . 22
1.1.94 Tastemaker Debt. . . . . . . . . . . . . . 22
1.1.95 Tastemaker Subsidiaries. . . . . . . . . . 22
1.1.96 Tax. . . . . . . . . . . . . . . . . . . . 22
1.1.97 Tax Annex. . . . . . . . . . . . . . . . . 23
1.1.98 Tax Loss . . . . . . . . . . . . . . . . . 23
1.1.99 TFI. . . . . . . . . . . . . . . . . . . . 23
1.1.100 Transaction Documents. . . . . . . . . . . 23
1.1.101 Transition Team Protocol . . . . . . . . . 23
1.1.102 VUT. . . . . . . . . . . . . . . . . . . . 23
1.1.103 Working Capital Adjustment . . . . . . . . 23
1.1.104 Working Capital Baseline . . . . . . . . . 24
1.2 Accounting Terms . . . . . . . . . . . . . . . . . 24
1.3 Construction . . . . . . . . . . . . . . . . . . . 24
1.4 Captions and Headings. . . . . . . . . . . . . . . 24
1.5 No Party Deemed Drafter. . . . . . . . . . . . . . 24
1.6 Reformation. . . . . . . . . . . . . . . . . . . . 25
1.7 Currency . . . . . . . . . . . . . . . . . . . . . 25
1.8 Materiality. . . . . . . . . . . . . . . . . . . . 25
2. THE DESIGNATED TRANSACTIONS, F&F TRANSACTION, HERCULES
TRANSACTION AND MALLINCKRODT TRANSACTION. . . . . . . . . 26
2.1 Designated Transactions. . . . . . . . . . . . . . 26
2.2 F&F Transaction. . . . . . . . . . . . . . . . . . 27
2.3 Hercules Transaction . . . . . . . . . . . . . . . 28
2.4 Mallinckrodt Transaction . . . . . . . . . . . . . 28
2.5 Consideration. . . . . . . . . . . . . . . . . . . 29
2.6 Determination of Adjusted Aggregate Value and
Tastemaker B.V. Value. . . . . . . . . . . . . . . 29
2.6.1 Adjusted Aggregate Value . . . . . . . . . 29
2.6.2 Tastemaker B.V. Value. . . . . . . . . . . 34
2.7 Closing Aggregate Value Adjustment . . . . . . . . 36
2.8 Closing. . . . . . . . . . . . . . . . . . . . . . 38
3. REPRESENTATIONS AND WARRANTIES OF THE OWNERS. . . . . . . 39
3.1 Organization, Standing and Power; Authority of
Tastemaker for the Designated Transaction
Agreements . . . . . . . . . . . . . . . . . . . . 39
3.2 Ownership of Tastemaker B.V., Tastemaker
Subsidiaries and Tastemaker B.V. Subsidiary and
Pinnacle . . . . . . . . . . . . . . . . . . . . . 40
3.3 Consents and Approvals; No Violation . . . . . . . 43
3.4 Financial Statements . . . . . . . . . . . . . . . 46
3.5 Liabilities. . . . . . . . . . . . . . . . . . . . 46
3.6 Books and Records. . . . . . . . . . . . . . . . . 47
3.7 Accounts Receivable. . . . . . . . . . . . . . . . 47
3.8 Inventory. . . . . . . . . . . . . . . . . . . . . 47
3.9 Absence of Certain Changes or Events . . . . . . . 48
3.10 No Existing Violation, Default, Etc. . . . . . . . 51
3.11 Licenses and Permits . . . . . . . . . . . . . . . 53
3.12 Environmental Matters. . . . . . . . . . . . . . . 53
3.13 Tax Matters. . . . . . . . . . . . . . . . . . . . 57
3.14 Orders, Litigation, Etc. . . . . . . . . . . . . . 58
3.15 Labor Matters. . . . . . . . . . . . . . . . . . . 59
3.16 Contracts. . . . . . . . . . . . . . . . . . . . . 60
3.17 Employee Benefits. . . . . . . . . . . . . . . . . 62
3.18 Intellectual Property. . . . . . . . . . . . . . . 69
3.19 Properties . . . . . . . . . . . . . . . . . . . . 72
3.20 Insurance Coverage . . . . . . . . . . . . . . . . 74
3.21 Company Brokers. . . . . . . . . . . . . . . . . . 75
3.22 Withdrawal Consents and Approvals; No Violation. . 75
4. REPRESENTATIONS AND WARRANTIES OF THE INTERESTED
PERSONS . . . . . . . . . . . . . . . . . . . . . . . . . 79
4.1 Organization, Standing and Power . . . . . . . . . 79
4.2 Authority. . . . . . . . . . . . . . . . . . . . . 79
4.3 Consents and Approvals; No Violation . . . . . . . 80
4.4 Brokers. . . . . . . . . . . . . . . . . . . . . . 82
4.5 Withdrawal Consents and Approvals; No Violation. . 82
5. COVENANTS OF THE OWNERS . . . . . . . . . . . . . . . . . 85
5.1 Access to Properties and Records . . . . . . . . . 85
5.2 Operations . . . . . . . . . . . . . . . . . . . . 85
5.3 Financial Statements . . . . . . . . . . . . . . . 86
5.4 Fees . . . . . . . . . . . . . . . . . . . . . . . 87
5.5 Non-Solicitation of Employees. . . . . . . . . . . 87
5.6 Confidentiality. . . . . . . . . . . . . . . . . . 88
5.7 Accounts; Safe Deposit Boxes; Powers of
Attorney; Officers and Directors . . . . . . . . . 88
5.8 Access . . . . . . . . . . . . . . . . . . . . . . 89
5.9 Resignations . . . . . . . . . . . . . . . . . . . 89
5.10 Tastemaker B.V. Partnership Election . . . . . . . 89
5.11 Third Party Infringement . . . . . . . . . . . . . 90
5.12 Third Party Defaults . . . . . . . . . . . . . . . 90
5.13 Resignations . . . . . . . . . . . . . . . . . . . 90
5.14 Severance and Stay Incentives. . . . . . . . . . . 90
5.15 Tax Waiver Notification. . . . . . . . . . . . . . 91
6. COVENANTS OF THE INTERESTED PERSONS . . . . . . . . . . . 91
6.1 Compliance with Transition Team Protocol . . . . . 91
6.2 Fees . . . . . . . . . . . . . . . . . . . . . . . 91
6.3 Record Retention and Access. . . . . . . . . . . . 92
6.4 Confidentiality. . . . . . . . . . . . . . . . . . 92
6.5 Responsibility for D&F Transaction Agreements. . . 93
6.6 Laidlaw Landfill Site. . . . . . . . . . . . . . . 94
6.7 Designated Transaction Approvals . . . . . . . . . 94
7.1 Satisfaction of Conditions . . . . . . . . . . . . 94
7.2 Governmental Consents. . . . . . . . . . . . . . . 95
7.3 Public Announcements . . . . . . . . . . . . . . . 96
7.4 Further Assurances . . . . . . . . . . . . . . . . 97
7.5 Tax Annex. . . . . . . . . . . . . . . . . . . . . 97
7.6 Tastemaker B.V. Pension. . . . . . . . . . . . . . 97
7.7 Tastemaker Debt. . . . . . . . . . . . . . . . . . 97
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS:
INDEMNITY FOR DAMAGES . . . . . . . . . . . . . . . . . . 99
8.1 Survival . . . . . . . . . . . . . . . . . . . . . 99
8.2 Indemnity by the Interested Persons. . . . . . . .100
8.3 Indemnity by the Owners. . . . . . . . . . . . . .101
8.4 Indemnity by Hercules. . . . . . . . . . . . . . .103
8.5 Indemnity by Mallinckrodt. . . . . . . . . . . . .103
8.6 Limitations on the Owners' Indemnification
Obligations. . . . . . . . . . . . . . . . . . . .104
8.7 Limitations of Remedies. . . . . . . . . . . . . .108
8.8 Indemnification Procedures . . . . . . . . . . . .109
8.8.1 Notice of Claims . . . . . . . . . . . . .109
8.8.2 Failure to Respond to Notice . . . . . . .110
8.8.3 Notice of Dispute. . . . . . . . . . . . .111
8.8.4 Third Party Claims . . . . . . . . . . . .112
8.8.4.1 Participation by Indemnified
Party . . . . . . . . . . . . . . . .113
8.8.4.2 Full Release . . . . . . . . . .113
8.8.4.3 Refusal to Settle. . . . . . . .114
8.8.5 Claims Made in Written Notice. . . . . . .115
8.8.6 Control in Cases of Environmental
Breach . . . . . . . . . . . . . . . . . .115
8.9 Tax Annex is Controlling . . . . . . . . . . . . .116
8.10 Registration Indemnity . . . . . . . . . . . . . .117
8.11 Mitigation of Damages. . . . . . . . . . . . . . .118
8.12 Reliance Upon Agreement. . . . . . . . . . . . . .118
9. RESOLUTION OF DISPUTES. . . . . . . . . . . . . . . . . .119
9.1 Conclusive and Exclusive . . . . . . . . . . . . .119
9.2 Resolution Panel . . . . . . . . . . . . . . . . .121
9.3 Position Statements. . . . . . . . . . . . . . . .122
9.4 Negotiations . . . . . . . . . . . . . . . . . . .123
9.5 Resolution Panel Decision. . . . . . . . . . . . .123
9.6 Forum and Waivers. . . . . . . . . . . . . . . . .123
10. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . .124
10.1 Conditions to Obligations of the Interested
Persons. . . . . . . . . . . . . . . . . . . . . .124
10.1.1 Accuracy of Representations and
Warranties . . . . . . . . . . . . . . . .124
10.1.2 Performance of Agreements. . . . . . . . .125
10.1.3 Officers' Certificate. . . . . . . . . . .125
10.1.4 Applicable Law; Governmental Approvals;
Filings. . . . . . . . . . . . . . . . . .125
10.1.5 Litigation; Governmental Action. . . . . .126
10.1.6 Material Change. . . . . . . . . . . . . .126
10.1.7 Transaction Agreement Conditions . . . . .126
10.1.8 Works Council Act. . . . . . . . . . . . .127
10.1.9 Designated Transactions Closing. . . . . .127
10.1.10 Specified Third Party Consents . . . . . .127
10.1.11 Withdrawal Approvals; Litigation . . . . .127
10.2 Conditions to Obligations of the Owners. . . . . .128
10.2.1 Accuracy of Representations and
Warranties . . . . . . . . . . . . . . . .128
10.2.2 Performance of Agreements. . . . . . . . .129
10.2.3 Officer's Certificate. . . . . . . . . . .129
10.2.4 Applicable Law; Governmental Approvals;
Filings. . . . . . . . . . . . . . . . . .129
10.2.5 Litigation; Governmental Action. . . . . .130
10.2.6 Transaction Agreement Conditions . . . . .130
10.2.7 Designated Transaction Closing . . . . . .131
10.2.8 Withdrawal Approval; Litigation. . . . . .131
10.3 Extension of the Closing Date. . . . . . . . . . .132
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . .133
11.1 Termination and Cancellation . . . . . . . . . . .133
11.2 Effect of Termination. . . . . . . . . . . . . . .135
11.3 Notices. . . . . . . . . . . . . . . . . . . . . .135
11.3.1 Hercules Notice Address. . . . . . . . . .136
11.3.2 Mallinckrodt Notice Address. . . . . . . .136
11.3.3 Roche Notice Address . . . . . . . . . . .137
11.3.4 GRI Notice Address . . . . . . . . . . . .137
11.4 Assignment . . . . . . . . . . . . . . . . . . . .138
11.5 Waiver . . . . . . . . . . . . . . . . . . . . . .138
11.6 Amendments . . . . . . . . . . . . . . . . . . . .139
11.7 Limitations on Rights of Third Parties . . . . . .139
11.8 Counterparts . . . . . . . . . . . . . . . . . . .139
11.9 Governing Law. . . . . . . . . . . . . . . . . . .139
11.10 Entire Agreement . . . . . . . . . . . . . . . . .139
<PAGE>
Table of Appendices
-------------------
APPENDIX A - Tastemaker Subsidiaries and Tastemaker B.V.
Subsidiary
APPENDIX B - Form of Designated Transaction Agreements
APPENDIX C - Disclosure Schedule
APPENDIX D - Tax Annex
APPENDIX E - Transition Team Protocol
APPENDIX F - Foreign Approvals
APPENDIX G - Withdrawal Approvals
APPENDIX H - Confidentiality Letter
APPENDIX I - Purchase Price for Assets under Designated
Transaction Agreements
APPENDIX J - Required Consents
APPENDIX K - Governmental Approvals
APPENDIX L - Plans and Plan Assets
THE TABLE OF APPENDICES SET FORTH ABOVE BRIEFLY IDENTIFIES
THE CONTENTS OF ALL APPENDICES TO THE AGREEMENT DATED AS OF
FEBRUARY 4, 1997 AMONG MALLINCKRODT INC., HERCULES INCORPORATED,
ROCHE HOLDINGS, INC. AND GIVAUDAN-ROURE (INTERNATIONAL) SA (THE
"AGREEMENT"). WITH THE EXCEPTION OF APPENDIX D WHICH IS INCLUDED
WITH THIS FILING, ALL OF THE APPENDICES LISTED IN THE TABLE OF
APPENDICES ARE OMITTED, AND MALLINCKRODT INC. AGREES TO FURNISH
SUPPLEMENTALLY A COPY OF ANY OMITTED APPENDIX TO THE SECURITIES
AND EXCHANGE COMMISSION UPON REQUEST.
AGREEMENT
---------
This Agreement (the "AGREEMENT"), dated as of February 4,
1997, is made and entered into by and among HERCULES
INCORPORATED, a Delaware corporation ("HERCULES"), MALLINCKRODT
INC., a New York corporation ("MALLINCKRODT"), GIVAUDAN-ROURE
(INTERNATIONAL) SA, a Swiss corporation ("GRI"), and ROCHE
HOLDINGS, INC., a Delaware corporation ("ROCHE" and, together
with GRI, the "INTERESTED PERSONS" and each individually an
"INTERESTED PERSON").
RECITALS
--------
A. Tastemaker, a general partnership organized and
existing under the laws of the State of Delaware ("TASTEMAKER"),
and Tastemaker B.V., a limited liability entity organized and
existing under the laws of The Netherlands ("TASTEMAKER B.V."),
together are engaged globally, both directly and indirectly
through their respective subsidiaries, in the development,
manufacture and sale of ingredients and compounds used primarily
to provide flavor or taste in food and beverage products (the
"BUSINESS").
B. Tastemaker is owned forty percent (40%) by Hercules
Flavor, Inc., a Delaware corporation and wholly owned subsidiary
of Hercules ("HFI"), ten percent (10%) by Hercules Credit, Inc.,
a Delaware corporation and wholly owned subsidiary of Hercules
("HCI"), and fifty percent (50%) by Fries & Fries, Inc., a
Delaware corporation and wholly owned subsidiary of Mallinckrodt
("F&F").
C. Tastemaker B.V. is owned one percent (1%) by
Tastemaker, forty-nine and one-half percent (49.5%) by F&F and
forty-nine and one-half percent (49.5%) by Hercules Nederland
B.V., a limited liability entity organized and existing under the
laws of The Netherlands and wholly owned subsidiary of Hercules
("HNBV").
D. Tastemaker Finance, Inc. ("TFI"), a Delaware
corporation, and each other Tastemaker Subsidiary listed on
APPENDIX A are, except as otherwise set forth in such Appendix,
wholly owned, directly or indirectly, by Tastemaker. Each
Tastemaker B.V. Subsidiary listed on APPENDIX A is, except as
otherwise set forth in such Appendix, wholly owned by Tastemaker
B.V.
E. Roche or one of its subsidiaries intends to organize
Givaudan-Roure (United States) Inc., a Delaware wholly owned
subsidiary ("NEWCO"), which will be, prior to the consummation of
the transactions contemplated by the Contribution Agreement (as
hereinafter defined), capitalized with 100% of the issued and
outstanding common stock of Givaudan-Roure Corporation, Inc., a
New Jersey corporation and a wholly owned subsidiary of Roche.
F. GRI or certain Affiliates of Roche and GRI, as the case
may be, (GRI, together with such Affiliates, the "DESIGNATED
BUYERS") and Tastemaker intend to enter into a series of Purchase
and Sale Agreements in substantially the form of APPENDIX B
attached hereto (the "DESIGNATED TRANSACTION AGREEMENTS"),
subject and pursuant to which and prior to the consummation of
the transactions contemplated by the F&F Transaction Agreement
(as hereinafter defined), the Hercules Transaction Agreement (as
hereinafter defined) and the Contribution Agreement (as
hereinafter defined), Tastemaker shall transfer to the Designated
Buyers, and the Designated Buyers shall acquire (i) certain of
Tastemaker's foreign subsidiaries (specified in APPENDIX I
attached hereto), in exchange for the aggregate payment by the
Designated Buyers of cash in the amount specified, along with the
method to be used to calculate the individual payments making up
such aggregate payment, and (ii) TFI and Tastemaker's one percent
(1%) interest in Tastemaker B.V. for the amounts specified next
to their respective names, all as set forth in APPENDIX I
attached hereto.
G. Concurrently with the execution of this Agreement and
the Hercules Transaction Agreement (as hereinafter defined), F&F
and GRI have entered into a Purchase and Sale Agreement dated as
of the date hereof (the "F&F TRANSACTION AGREEMENT"), subject and
pursuant to which and subsequent to the consummation of the
transactions contemplated by the Designated Transaction
Agreements, F&F has agreed to transfer to GRI, and GRI has agreed
to acquire, F&F's forty-nine and one-half percent (49.5%)
interest in Tastemaker B.V. in exchange for the payment by GRI to
F&F of cash in the amount specified in the F&F Transaction
Agreement.
H. Concurrently with the execution of this Agreement and
the F&F Transaction Agreement, the Interested Persons, Hercules
and HNBV have entered into a PURCHASE AND SALE AGREEMENT dated as
of the date hereof (the "HERCULES TRANSACTION AGREEMENT"),
subject and pursuant to which and subject and pursuant to the
terms and conditions of this Agreement, subsequent to the
consummation of the transactions contemplated by the Designated
Transaction Agreements, Hercules and HNBV have agreed that HNBV
shall transfer to GRI, and Roche and GRI have agreed that GRI
shall acquire, HNBV's interest in Tastemaker B.V. through the
acquisition by GRI of HNBV's forty-nine and one-half percent
(49.5%) interest in Tastemaker B.V. for cash in the amount
specified in the Hercules Transaction Agreement.
I. Subsequent to the consummation of the transactions
contemplated by the Designated Transaction Agreements, the F&F
Transaction Agreement and the Hercules Transaction Agreement,
Mallinckrodt desires to contribute to Newco Mallinckrodt's
interest in F&F in a share contribution which Mallinckrodt and
Roche intend will qualify as a tax-free contribution under
Section 351 of the Code (as hereinafter defined), subject and
pursuant to the terms and conditions of this Agreement and the
Contribution Agreement dated as of the date hereof among
Mallinckrodt, Newco and the Interested Persons (the "CONTRIBUTION
AGREEMENT") which shall be entered into concurrently herewith.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements, provisions and covenants contained herein, the
parties hereto agree as follows:
1. DEFINITIONS AND INTERPRETATION
------------------------------
1.1 Capitalized Terms. The following capitalized terms,
-----------------
when used in this Agreement and not otherwise defined, shall have
the following indicated meanings:
1.1.1 1934 Act shall mean the United States
--------
Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
1.1.2 1995 Financial Statements shall mean the
-------------------------
December 31, 1995 audited combined consolidated financial
statements of Tastemaker and Tastemaker B.V.
1.1.3 Accountants shall have the meaning ascribed
-----------
to such term in Section 2.6.1 of this Agreement.
1.1.4 Accountants' Net Determination shall have the
------------------------------
meaning ascribed to such term in Section 2.6.1 hereof.
1.1.5 Accountants' Report shall have the meaning
-------------------
ascribed to such term in Section 2.6.1 of this Agreement.
1.1.6 Adjusted Aggregate Value shall mean an amount
------------------------
equal to the Tastemaker Combined and Consolidated Value,
less the PBO Adjustment, and (A) either (i) increased by the
Working Capital Adjustment, if the Net Working Capital as of
the Adjustment Time exceeds the Working Capital Baseline or
(ii) decreased by the Working Capital Adjustment, if the
Working Capital Baseline exceeds the Net Working Capital as
of the Adjustment Time, and (B) either (i) decreased by the
Long-Term Liabilities Adjustment if the Long-Term
Liabilities as of the Adjustment Time exceed the Long-Term
Liabilities Baseline, or (ii) increased by the Long-Term
Liabilities Adjustment if the Long-Term Liabilities Baseline
exceeds the Long-Term Liabilities as of the Adjustment Time.
1.1.7 Adjustment Time shall mean the close of
---------------
business on the business day immediately preceding the
Closing Date.
1.1.8 Affiliate shall mean, with respect to any
---------
entity, an entity controlling, controlled by or under common
control with such entity, with control being defined as the
power to direct the management of an entity through direct
or indirect ownership.
1.1.9 Agreement shall mean this Agreement, the
--------
Disclosure Schedule and all schedules, annexes, exhibits and
appendices hereto.
1.1.10 Adjustment Arbitrator shall have the meaning
---------------------
ascribed to such term in Section 2.6.1 of this Agreement.
1.1.11 Benefit Arrangement shall have the meaning
-------------------
ascribed to such term in Section 3.17 of this Agreement.
1.1.12 Business shall have the meaning ascribed to
--------
such term in Recital A above.
1.1.13 Business Personnel shall have the meaning
------------------
ascribed to such term in Section 3.15 of this Agreement.
1.1.14 Closing shall have the meaning ascribed to
-------
such term in Section 2.8 hereof.
1.1.15 Closing Date shall mean the date upon which
------------
the transactions contemplated by the Transaction Documents
and the D&F Transaction Agreements are consummated.
1.1.16 Closing Deadline shall mean July 31, 1997;
----------------
PROVIDED, HOWEVER that if the condition set forth in Section
10.1.4 or Section 10.2.4 is not satisfied or, to the extent
permitted by law, waived in writing on or before July 31,
1997, the Closing Deadline shall be August 31, 1997.
1.1.17 Code shall mean the Internal Revenue Code of
----
1986, as amended.
1.1.18 Companies shall mean the collective reference
---------
to Tastemaker, Tastemaker B.V., the Tastemaker Subsidiaries
and the Tastemaker B.V. Subsidiary, and "COMPANY" shall mean
any one of the Companies.
1.1.19 Company Tax Return shall have the meaning
------------------
ascribed to such term in the Tax Annex.
1.1.20 Contribution Agreement shall have the meaning
----------------------
ascribed to such term in Recital I above.
1.1.21 Cost of Arbitration shall have the meaning
-------------------
ascribed to such term in Section 2.6.1 hereof.
1.1.22 Current Assets shall mean, as of any time,
--------------
all items, excluding deferred taxes and the current portion,
if any, of the Investment Assets (as defined in the
Partnership Agreement), which would be classified as a
current asset under the heading "CURRENT ASSETS" on a
combined consolidated balance sheet of Tastemaker and
Tastemaker B.V. determined and prepared in accordance with
GAAP applied on a basis consistent with the practices and
methodologies used in preparing the December 31, 1995
audited combined consolidated balance sheet of Tastemaker
and Tastemaker B.V.
1.1.23 Current Liabilities shall mean, as of any
-------------------
time, all items, excluding deferred taxes, the Tastemaker
Debt and any Tax that is the liability or obligation of
Tastemaker, which would be classified as a current liability
under the heading "CURRENT LIABILITIES" on a combined
consolidated balance sheet of Tastemaker and Tastemaker B.V.
determined and prepared in accordance with GAAP applied on a
basis consistent with the practices and methodologies used
in preparing the December 31, 1995 audited combined
consolidated balance sheet of Tastemaker and Tastemaker
B.V.; provided, that when determining whether any Tax is
included as a Current Liability for purposes of calculating
the Adjusted Aggregate Value, the principles of Treasury
Regulations Section 1.1502-76(b), applied in the manner set
forth in the Tax Annex, shall govern.
1.1.24 D&F Transaction Agreements shall mean the
--------------------------
collective reference to the F&F Transaction Agreement and
the Designated Transaction Agreements.
1.1.25 Damages shall mean any claim, cost, loss,
-------
liability, fine, penalty, interest, payment, expense and/or
damage (including reasonable attorneys' and accountants'
fees and expenses) resulting from or arising out of any
fact, event or circumstance with respect to which a party to
this Agreement is obligated to provide indemnification
pursuant to Article 8 hereof.
1.1.26 Designated Buyers shall have the meaning
-----------------
ascribed to such term in Recital F of this Agreement.
1.1.27 Designated Transaction Agreements shall have
---------------------------------
the meaning ascribed to such term in Recital F of this
Agreement.
1.1.28 Disclosure Schedule shall mean the Disclosure
-------------------
Schedule dated as of the date hereof, a copy of which
Disclosure Schedule is attached hereto as APPENDIX C.
1.1.29 Disputing Party shall have the meaning
---------------
ascribed to each term in Section 2.6 of this Agreement.
1.1.30 Disputing Party's Proposal shall have the
--------------------------
meaning ascribed to such term in Section 2.6 of this
Agreement.
1.1.31 Environment shall mean the ocean, natural
-----------
resources (including flora and fauna), soil, surface water,
ground water, any present or potential drinking water
supply, land surface, subsurface strata or the ambient air.
1.1.32 Environmental Breach shall have the meaning
--------------------
ascribed to such term in Section 8.6(b) of this Agreement.
1.1.33 Environmental Indemnification Threshold shall
---------------------------------------
have the meaning ascribed to such term in Section 8.6(b) of
this Agreement.
1.1.34 Environmental Requirements shall mean all
--------------------------
federal, state, local and foreign laws, rules, regulations,
orders, decrees, judgments, permits and licenses in effect
on the Closing Date, relating primarily to health, safety or
the Environment or the generation, handling, disposal,
transportation, release or threatened release of Hazardous
Substances, including those set forth in or promulgated
pursuant to the Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et seq., as amended ("FWPCA"), the Safe
Drinking Water Act, 42 U.S.C. Section 300f et seq., as
amended ("SDWA"), the Clean Air Act, 42 U.S.C. Section 7401
et seq., as amended ("CAA"), the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., as amended
("RCRA"), the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., as amended ("TSCA"), the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq., as
amended ("OSHA"), the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601, as
amended ("CERCLA"), the Emergency Planning and Community
Right-To-Know Act, 42 U.S.C. Section 11001 ("EPCRA"),
and the substantive equivalent of the foregoing in any
state, local or foreign jurisdiction.
1.1.35 ERISA Affiliate shall have the meaning
---------------
ascribed to such term in Section 3.17 of this Agreement.
1.1.36 Estimated Adjusted Aggregate Value shall mean
----------------------------------
an amount equal to the Tastemaker Combined and Consolidated
Value, less the PBO Adjustment, and (A) either (i) increased
by the Estimated Working Capital Adjustment, if the Net
Working Capital as of the Adjustment Time as estimated by
the Owners exceeds the Working Capital Baseline, or
(ii) decreased by the Estimated Working Capital Adjustment,
if the Working Capital Baseline exceeds the Net Working
Capital as of the Adjustment Time as estimated by the
Owners, and (B) either (i) decreased by the Estimated Long-
Term Liabilities Adjustment if the Long-Term Liabilities as
of the Adjustment Time as estimated by the Owners exceed the
Long-Term Liabilities Baseline, or (ii) increased by the
Estimated Long-Term Liabilities Adjustment if the Long-Term
Liabilities Baseline exceeds the Long-Term Liabilities as of
the Adjustment Time as estimated by the Owners.
1.1.37 Estimated Long-Term Liabilities Adjustment
------------------------------------------
shall mean the Long-Term Liabilities Adjustment determined
based upon the Owners' estimate of the balance of Long-Term
Liabilities as of the Adjustment Time and delivered to each
of the Interested Persons by the Owners pursuant to Section
2.6 below.
1.1.38 Estimated Tastemaker B.V. Value shall mean
-------------------------------
the Owners' estimate of the Tastemaker B.V. Value delivered
to the Interested Persons pursuant to Section 2.6.2 hereof.
1.1.39 Estimated Working Capital Adjustment shall
------------------------------------
mean the Working Capital Adjustment determined based upon
the Owners' estimate of the balances of Current Assets and
Current Liabilities as of the Adjustment Time and delivered
to each of the Interested Persons by the Owners pursuant to
Section 2.6 below.
1.1.40 F&F shall have the meaning ascribed to such
---
term in Recital B above.
1.1.41 F&F Transaction Agreement shall have the
-------------------------
meaning ascribed to such term in Recital G above.
1.1.42 FCPA shall have the meaning ascribed to such
----
term in Section 3.10 of this Agreement.
1.1.43 Final Net Determination shall have the
-----------------------
meaning ascribed to such term in Section 2.6.1 hereof.
1.1.44 Financial Statements shall have the meaning
--------------------
ascribed to such term in Section 3.5 of this Agreement.
1.1.45 Fries Withdrawal shall have the meaning
----------------
ascribed to the term "FRIES WITHDRAWAL" in the Partnership
Agreement.
1.1.46 Fries Withdrawal Closing shall have the
------------------------
meaning ascribed to the term "WITHDRAWAL CLOSING" in the
Partnership Agreement.
1.1.47 Fries Withdrawal Documents shall have the
--------------------------
meaning ascribed to the term "FRIES WITHDRAWAL DOCUMENTS" in
the Partnership Agreement.
1.1.48 GAAP shall mean generally accepted accounting
----
principles as in effect in the United States of America at
the time of the preparation of the financial statements with
respect to which such term is used.
1.1.49 Governmental Authority shall mean any
----------------------
domestic (federal, state or local) or foreign government or
governmental agency, department, commission, authority,
court, tribunal or adjudicative body.
1.1.50 HCI shall have the meaning ascribed to such
---
term in Recital B above.
1.1.51 HFI shall have the meaning ascribed to such
---
term in Recital B above.
1.1.52 HNBV shall have the meaning ascribed to such
----
term in Recital C above.
1.1.53 Hazardous Substances shall mean any materials
--------------------
defined as pollutants, contaminants, or hazardous or toxic
materials, substances or waste in any way by, and only to
the extent regulated by, any Environmental Requirements as
of the Closing Date, including without limitation: (i) any
"HAZARDOUS SUBSTANCE" or "POLLUTANT OR CONTAMINANT," as
defined in Sections 101(14), (33) of CERCLA or the
regulations designated pursuant to Section 102 of CERCLA, 42
U.S.C. Section 9602 and found at 40 C.F.R. Part 302, and as
regulated by CERCLA, and any element, compound, mixture,
solution, or substance designated pursuant to Section 102 of
CERCLA and as regulated by CERCLA, (ii) any substance
designated pursuant to Section 311(b)(2)(A) of FWPCA and as
regulated by FWPCA, (iii) any hazardous waste having the
characteristics identified under or listed pursuant to
Section 3001 of RCRA, 42 U.S.C. Sections 6901, 6921, (iv)
any substance containing petroleum, as defined in Section
9001(8) of RCRA, 42 U.S.C. Section 6991(8) or 40 C.F.R. Part
280, its derivatives, byproducts and hydrocarbons and as
regulated by RCRA, (v) any toxic pollutant listed under
Section 307(a) of the FWPCA, 33 U.S.C. Section 1317(a) and
as regulated by FWPCA, (vi) any hazardous air pollutant
listed under Section 112 of the Clean Air Act, 42 U.S.C.
Sections 7401, 7412, as amended and as regulated by the
Clean Air Act, (vii) any imminently hazardous chemical
substance or mixture with respect to which action has been
taken pursuant to Section 7 of TCSA, 15 U.S.C. Sections
2601, 2606, as amended and as regulated by TSCA, or (viii)
any other hazardous or toxic materials, contaminants,
substances or wastes regulated by applicable Environmental
Requirements.
1.1.54 Hercules Transaction Agreement shall have the
------------------------------
meaning ascribed to such term in Recital H above.
1.1.55 Indemnification Threshold shall mean an
-------------------------
amount equal to one percent (1%) of the Tastemaker Combined
and Consolidated Value.
1.1.56 Indemnified Party shall have the meaning
-----------------
ascribed to such term in Section 8.8 of this Agreement.
1.1.57 Indemnifying Party shall have the meaning
------------------
ascribed to such term in Section 8.8 of this Agreement.
1.1.58 Intellectual Property shall have the meaning
---------------------
ascribed to such term in Section 3.18 of this Agreement.
1.1.59 Interim Financial Statements shall have the
----------------------------
meaning ascribed to such term in Section 3.4 of this
Agreement.
1.1.60 International Plan shall have the meaning
------------------
ascribed to such term in Section 3.17 of this Agreement.
1.1.61 Licenses shall have the meaning ascribed to
--------
such term in Section 3.11 of this Agreement.
1.1.62 Long-Term Liabilities shall mean, at any
---------------------
time, the liabilities of the Companies (other than Current
Liabilities, the long-term component of pension liabilities,
deferred taxes, the Tastemaker Debt and any Tax that is a
liability or obligation of Tastemaker) which would be
classified as a liability under the heading "TOTAL
LIABILITIES" on a combined consolidated balance sheet of
Tastemaker and Tastemaker B.V. determined and prepared in
accordance with GAAP applied on a basis consistent with the
practices and methodologies used in preparing the December
31, 1995 audited combined consolidated balance sheet of
Tastemaker and Tastemaker B.V.
1.1.63 Long-Term Liabilities Adjustment shall mean,
--------------------------------
at any time, an amount equal to either (i) if the Long-Term
Liabilities at such time exceed the Long-Term Liabilities
Baseline, the amount by which the Long-Term Liabilities at
such time exceed the Long-Term Liabilities Baseline or (ii)
if the Long-Term Liabilities Baseline exceeds the Long-Term
Liabilities at such time, the amount by which the Long-Term
Liabilities Baseline exceeds the Long-Term Liabilities at
such time; provided, however, that if the Long-Term
Liabilities at such time equal the Long-Term Liabilities
Baseline, the Long-Term Liabilities Adjustment shall be
zero.
1.1.64 Long-Term Liabilities Baseline shall mean the
------------------------------
total liabilities of the Companies (other than Current
Liabilities, the long-term component of pension liabilities,
deferred taxes, the Tastemaker Debt and any Tax that is the
liability or obligation of Tastemaker) which were classified
as a liability under the heading "TOTAL LIABILITIES" on the
June 28, 1996 unaudited combined consolidated balance sheet
of Tastemaker and Tastemaker B.V. and their respective
subsidiaries, which was an amount equal to Thirty Eight
Million Four Hundred Fifty Thousand Twenty-Four Dollars
($38,450,024.00) less any Tax on such balance sheet that is
the liability or obligation of Tastemaker.
1.1.65 Multiemployer Plan shall have the meaning
------------------
ascribed to such term in Section 3.17 of this Agreement.
1.1.66 Net Working Capital shall mean, at any time,
-------------------
an amount equal to the difference between (i) the amount of
Current Assets at such time, and (ii) the amount of Current
Liabilities at such time.
1.1.67 Newco shall have the meaning ascribed to such
-----
term in Recital E above.
1.1.68 Newco Preferred Stock shall mean the
---------------------
preferred shares, $1,000 stated value per share, of Newco
with the rights, powers, preferences and other terms as set
forth in APPENDIX A of the Contribution Agreement.
1.1.69 Owners shall mean the collective reference to
------
Hercules and Mallinckrodt, and "OWNER" shall mean either of
Hercules or Mallinckrodt, as the context requires.
1.1.70 Owners' Knowledge shall mean the actual
-----------------
knowledge of the Specified Officers, and all facts which a
particular Specified Officer reasonably should have known in
light of such Specified Officer's actual responsibilities
and duties at the Companies.
1.1.71 Owners' Maximum Liability shall mean an
-------------------------
amount equal to twenty percent (20%) of the Tastemaker
Combined and Consolidated Value.
1.1.72 Partners' Representatives shall mean R.K.
-------------------------
Elliot, R.J.A. Fraser, M.G. Nichols and T.D. Meier.
1.1.73 Partnership Agreement shall mean the Amended
---------------------
and Restated U.S. Partnership Agreement dated February 4,
1997 among F&F, HFI and HCI and relating to Tastemaker.
1.1.74 PBGC shall have the meaning ascribed to such
----
term in Section 3.17 of this Agreement.
1.1.75 PBO Adjustment shall have the meaning
--------------
ascribed to such term in Section 2.7 of this Agreement.
1.1.76 PBO Plan shall have the meaning ascribed to
--------
such term in Section 2.7 of this Agreement.
1.1.77 Pinnacle shall have the meaning ascribed to
--------
such term in Section 3.1 of this Agreement.
1.1.78 Plan shall have the meaning ascribed to such
----
term in Section 3.17 of this Agreement.
1.1.79 Pre-Closing Tax Period shall have the meaning
----------------------
ascribed to such term in the Tax Annex.
1.1.80 Short Period shall have the meaning ascribed
------------
to such term in the Tax Annex.
1.1.81 Specified Officers shall mean Michael E.
------------------
Davis (President and Chief Executive Officer), Leslie L.
Blau (Vice President and General Manager, Asia Pacific),
Anthony J. Dennis, Ph.D. (Vice President, Research and
Development), Karen W. Duros (Vice President, General
Counsel and Secretary), John P. Murta (Vice President and
Chief Financial Officer), Tadanao Naganuma (General Manager,
Japan), Robert C. Pellegrino (Vice President and General
Manager, Americas), Edward A. Steiger (Vice President, Human
Resources), R. Stephen Sumption (Vice President and General
Manager, Consolidated Flavor Systems), Michael A. Taylor
(Vice President and General Manager, Citrus Specialties),
Pieter van de Watering (Vice President and General Manager,
Europe), R.K. Elliot (Tastemaker Partners' Representative),
R.J.A. Fraser (Tastemaker Partners' Representative), M.G.
Nichols (Tastemaker Partners' Representative), T.D. Meier
(Tastemaker Partners' Representative), Angel Heras Elvira
(Managing Director, Tastemaker S.A.), Steven G. Haussler
(Treasurer, Tastemaker Canada, Inc., Tastemaker, Inc. and
Cocoa Trading and Transport Company, and Assistant
Treasurer, Tastemaker Trading Sales Corporation), Mauricio
Graber (General Manager, Tastemaker S.A. de C.V.), John R.
Sheahan (Director, Tastemaker Holdings Limited and
Tastemaker Limited (U.K.)), Phillip F. Dressel (President
and Chairman of the Board, Tastemaker, Inc. and Cocoa
Trading and Transport Company), Jeffrey M. Kemp (Assistant
Treasurer, Tastemaker Trading Sales Corporation), Daniel R.
Larsen (Assistant Treasurer, Tastemaker Trading Sales
Corporation), and Lewis L. Croft (Director, Tastemaker Pty.
Ltd. and Tastemaker Limited (New Zealand)).
1.1.82 SPHN shall have the meaning ascribed to such
----
term in Section 7.6 hereof.
1.1.83 Tastemaker B.V. Current Assets shall mean, as
------------------------------
of any time, all items, excluding deferred taxes, which
would be classified as a current asset under the heading
"CURRENT ASSETS" on a consolidated balance sheet of
Tastemaker B.V. determined and prepared in accordance with
the customary accounting practices, procedures and policies
of Tastemaker B.V. used in connection with its regularly
prepared internal financial statements.
1.1.84 Tastemaker B.V. Current Liabilities shall
-----------------------------------
mean, as of any time, all items, excluding deferred taxes,
which would be classified as a current liability under the
heading "CURRENT LIABILITIES" on a consolidated balance
sheet of Tastemaker B.V. determined and prepared in
accordance with the customary accounting practices,
procedures and policies of Tastemaker B.V. used in
connection with its regularly prepared internal financial
statements.
1.1.85 Tastemaker B.V. Long-Term Liabilities shall
-------------------------------------
mean, at any time, the liabilities of Tastemaker B.V. (other
than the Tastemaker B.V. Current Liabilities, the long-term
component of pension liabilities and deferred taxes) which
would be classified as a liability under the heading "TOTAL
LIABILITIES" on a consolidated balance sheet of Tastemaker
B.V. determined and prepared in accordance with the
customary accounting practices, procedures and policies of
Tastemaker B.V. used in connection with its regularly
prepared internal financial statements.
1.1.86 Tastemaker B.V. Long-Term Liabilities
-------------------------------------
Adjustment shall mean, at any time, an amount equal to
either (i) if the Tastemaker B.V. Long-Term Liabilities at
such time exceed the Tastemaker B.V. Long-Term Liabilities
Baseline, the amount by which the Tastemaker B.V. Long-Term
Liabilities at such time exceeds the Tastemaker B.V. Long-
Term Liabilities Baseline or (ii) if the Tastemaker B.V.
Long-Term Liabilities Baseline exceeds the Tastemaker B.V.
Long-Term Liabilities at such time, the amount by which the
Tastemaker B.V. Long-Term Liabilities Baseline exceeds the
Tastemaker B.V. Long-Term Liabilities at such time;
provided, however, that if the Tastemaker B.V. Long-Term
Liabilities at such time equal the Tastemaker B.V. Long-Term
Liabilities Baseline, the Tastemaker B.V. Long-Term
Liabilities Adjustment shall be zero.
1.1.87 Tastemaker B.V. Long-Term Liabilities
-------------------------------------
Baseline shall mean the total liabilities of Tastemaker B.V.
--------
(other than the Tastemaker B.V. Current Liabilities, the
long term component of pension liabilities and deferred
taxes) which were be classified as a liability under the
heading "TOTAL LIABILITIES" on the June 28, 1996 unaudited
consolidated balance sheet of Tastemaker B.V., which was an
amount equal to Five Million Eight Hundred Sixty Thousand
Dollars ($5,860,000.00).
1.1.88 Tastemaker B.V. Subsidiary shall mean
--------------------------
Tastemaker S.A., a limited liability company organized and
existing under the laws of Spain.
1.1.89 Tastemaker B.V. Working Capital shall mean,
-------------------------------
at any time, an amount equal to the difference between (i)
the amount of Tastemaker B.V. Current Assets at such time,
and (ii) the amount of Tastemaker B.V. Current Liabilities
at such time.
1.1.90 Tastemaker B.V. Working Capital Adjustment
------------------------------------------
shall mean, at any time, an amount equal to either (i) if
the Tastemaker B.V. Working Capital at such time exceeds the
Tastemaker B.V. Working Capital Baseline, the amount by
which the Tastemaker B.V. Working Capital at such time
exceeds the Tastemaker B.V. Working Capital Baseline, or
(ii) if the Tastemaker B.V. Working Capital Baseline exceeds
the Tastemaker B.V. Working Capital at such time, the amount
by which the Tastemaker B.V. Working Capital Baseline
exceeds the Tastemaker B.V. Working Capital at such time;
provided, however, that if the Tastemaker B.V. Working
Capital at such time equals the Tastemaker B.V. Working
Capital Baseline the Tastemaker B.V. Working Capital
Adjustment shall be zero.
1.1.91 Tastemaker B.V. Working Capital Baseline
----------------------------------------
shall mean the Tastemaker B.V. Working Capital on the June
28, 1996 unaudited consolidated balance sheet of Tastemaker
B.V., which was an amount equal to Nine Million Two Hundred
Twenty-One Thousand One Hundred Ninety-Two Dollars
($9,221,192.00).
1.1.92 Tastemaker B.V. Value shall mean an amount
---------------------
equal to $150,000,000 and (A) either (i) increased by the
Tastemaker B.V. Working Capital Adjustment, if the
Tastemaker B.V. Working Capital as of the Adjustment Time
exceeds the Tastemaker B.V. Working Capital Baseline or (ii)
decreased by the Tastemaker B.V. Working Capital Adjustment,
if the Tastemaker B.V. Working Capital Baseline exceeds the
Tastemaker B.V. Working Capital as of the Adjustment Time,
and (B) either (i) decreased by the Tastemaker B.V. Long-
Term Liabilities Adjustment if the Tastemaker B.V. Long-Term
Liabilities as of the Adjustment Time exceed the Tastemaker
B.V. Long-Term Liabilities Baseline, or (ii) increased by
the Tastemaker B.V. Long-Term Liabilities Adjustment if the
Tastemaker B.V. Long-Term Liabilities Baseline exceeds the
Tastemaker B.V. Long-Term Liabilities as of the Adjustment
Time.
1.1.93 Tastemaker Combined and Consolidated Value
------------------------------------------
shall mean an amount equal to One Billion One Hundred Ninety
Million Dollars ($1,190,000,000.00).
1.1.94 Tastemaker Debt shall mean the amount of
---------------
principal and accrued but unpaid interest, fees and other
costs outstanding under the $600,000,000 Credit Agreement
dated January 24, 1997.
1.1.95 Tastemaker Subsidiaries shall mean the
-----------------------
collective reference to those entities set forth on APPENDIX
A hereto, other than Tastemaker B.V. and the Tastemaker B.V.
Subsidiary, and "TASTEMAKER SUBSIDIARY" shall mean any one
of the Tastemaker Subsidiaries.
1.1.96 Tax shall have the meaning ascribed to such
---
term in the Tax Annex.
1.1.97 Tax Annex shall mean and refer to those
---------
covenants, procedures, controls and other provisions set
forth on APPENDIX D attached hereto.
1.1.98 Tax Loss shall have the meaning ascribed to
--------
such term in the Tax Annex.
1.1.99 TFI shall have the meaning ascribed to such
---
term in Recital D of this Agreement.
1.1.100 Transaction Documents shall mean the
---------------------
collective reference to this Agreement, the Hercules
Transaction Agreement and the Contribution Agreement.
1.1.101 Transition Team Protocol shall mean and refer
------------------------
to those provisions set forth in APPENDIX E attached hereto,
as referred to in Sections 5.1, 5.3, 5.8 and 6.1 below.
1.1.102 VUT shall have the meaning ascribed to such
---
term in Section 2.7 of this Agreement.
1.1.103 Working Capital Adjustment shall mean, at any
--------------------------
time, an amount equal to either (i) if the Net Working
Capital at such time exceeds the Working Capital Baseline,
the amount by which the Net Working Capital at such time
exceeds the Working Capital Baseline, or (ii) if the Working
Capital Baseline exceeds the Net Working Capital at such
time, the amount by which the Working Capital Baseline
exceeds the Net Working Capital at such time; provided,
however, that if the Net Working Capital at such time equals
the Working Capital Baseline the Working Capital Adjustment
shall be zero.
1.1.104 Working Capital Baseline shall mean the Net
------------------------
Working Capital of the Companies on the June 28, 1996
unaudited combined consolidated balance sheet of Tastemaker
and Tastemaker B.V., which was an amount equal to Seventy-
Seven Million Seven Hundred Six Thousand Nine Hundred
Thirteen Dollars ($77,706,913.00) less any Tax on such
balance sheet that is a liability or obligation of
Tastemaker.
1.2 Accounting Terms. Accounting terms used in this
----------------
Agreement and not otherwise defined shall have the meanings
ascribed thereto under GAAP.
1.3 Construction. Unless the context clearly indicates to
------------
the contrary, words singular or plural in number shall be deemed
to include the other and pronouns having a neuter, masculine or
feminine gender shall be deemed to include and refer to any and
all genders. Whenever the terms "herein," "hereunder," or words
of like import are used in this Agreement, the intended reference
is to the entire Agreement and not to the clause, sentence,
section or subsection in which such word appears.
1.4 Captions and Headings. The captions and headings in
---------------------
this Agreement are inserted for convenience of reference only and
shall not be considered a part of, or affect the construction or
interpretation of, any provision of this Agreement.
1.5 No Party Deemed Drafter. This Agreement represents the
-----------------------
culmination of extensive and arms length negotiations among the
parties. No party shall be deemed the drafter of this Agreement,
and this Agreement shall not be construed for or against any
party by reason of a particular party being deemed the drafter.
1.6 Reformation. Should any term or condition of this
-----------
Agreement be determined by a court of competent jurisdiction to
be unenforceable for any reason, including, without limitation,
violation of statute or public policy, such provision shall, if
possible, be reformed by the parties hereto or, if the parties
cannot agree, by the appropriate court of competent jurisdiction
to comply with applicable legal requirements in a manner that is
as close in its intent and effect to the original provision as
possible or, if such reformation cannot be accomplished, shall be
stricken without affecting the validity of any other term or
condition of this Agreement.
1.7 Currency. All references in this Agreement to "DOLLARS"
--------
or "$" shall be deemed to mean and refer to United States
dollars.
1.8 Materiality. Whenever the terms "material" or
-----------
"material adverse effect" are used in Articles 3 and 5 and
Section 10.1 of this Agreement, such terms shall be interpreted
and construed as meaning "material" to the business, assets,
condition (financial or otherwise) or results of operations of
the Companies, taken as a whole, or referencing a "material
adverse effect" on the business, assets, condition (financial or
otherwise) or results of operations of the Companies, taken as a
whole; provided, however, that any such effect caused by or
resulting from (i) any change in generally accepted accounting
principles, (ii) the announcement or pendency of the transactions
contemplated by the Transaction Documents or the D&F Transaction
Agreements, (iii) fluctuations in the relative values of domestic
and/or foreign currencies, or (iv) any change in economic
conditions generally shall not be considered when determining
whether a material adverse effect has occurred. Whenever the
terms "material" or "material adverse effect" are used in
Articles 4 and 6 and Section 10.2 of this Agreement, such terms
shall be interpreted and construed as meaning "material" to the
business, assets, condition (financial or otherwise) or as a
result of operations of the Interested Persons and their
consolidated subsidiaries, taken as a whole, or referencing a
"material adverse effect" on the business, assets, condition
(financial or otherwise) or as a result of operations of the
Interested Persons and their consolidated subsidiaries, taken as
a whole; provided, however, that any such effect caused by or
resulting from (i) any change in generally accepted accounting
principles, (ii) the announcement or pendency of the transactions
contemplated by the Transaction Documents or the D&F Transaction
Agreements, (iii) fluctuations in the relative values of domestic
and/or foreign currencies, or (iv) any change in economic
conditions generally shall not be considered when determining
whether a material adverse effect has occurred.
2. THE DESIGNATED TRANSACTIONS, F&F TRANSACTION, HERCULES
------------------------------------------------------
TRANSACTION AND MALLINCKRODT TRANSACTION
----------------------------------------
2.1 Designated Transactions. Subject and pursuant to the
-----------------------
terms and conditions of the Designated Transaction Agreements,
Tastemaker shall transfer to the Designated Buyers the assets
specified in the Designated Transaction Agreements in exchange
for the consideration payable to Tastemaker, as provided in
APPENDIX I hereto. Tastemaker shall be solely responsible for
all covenants, representations, warranties, liabilities and
obligations of Tastemaker under the Designated Transaction
Agreements, and neither Mallinckrodt nor Hercules shall have any
responsibilities, liabilities or obligations under the Designated
Transaction Agreements. Each of Roche, GRI, Hercules and
Mallinckrodt acknowledges and agrees that in entering into, and
consummating the transactions contemplated by, and after the
consummation of the transactions contemplated by, the Designated
Transaction Agreements, the Interested Persons, on behalf of
themselves and the Designated Buyers, and the Owners, on behalf
of themselves and F&F and Tastemaker, are relying upon, and are
entitled to rely upon, the representations, warranties and
covenants of Roche, GRI, Hercules and Mallinckrodt set forth in
this Agreement.
2.2 F&F Transaction. Subject and pursuant to the terms and
---------------
conditions of the F&F Transaction Agreement, F&F shall transfer
to GRI, and GRI shall acquire, F&F's forty-nine and one-half
percent (49.5%) interest in Tastemaker B.V. in exchange for the
consideration payable to F&F by GRI as provided in the F&F
Transaction Agreement. Except as expressly provided in Section
5.5 of the Contribution Agreement, F&F shall be solely
responsible for all covenants, representations, warranties,
liabilities and obligations of F&F under the F&F Transaction
Agreement, and neither Mallinckrodt nor Hercules shall have any
responsibilities, liabilities or obligations under the F&F
Transaction Agreement. Each of Roche, GRI, Hercules and
Mallinckrodt acknowledges and agrees that in entering into, and
consummating the transactions contemplated by, and after the
consummation of the transactions contemplated by, the F&F
Transaction Agreement, GRI and Mallinckrodt, on behalf of itself
and F&F, are relying upon, and are entitled to rely upon, the
representations, warranties and covenants of Roche, GRI, Hercules
and Mallinckrodt set forth in this Agreement.
2.3 Hercules Transaction. Subject and pursuant to the
--------------------
terms and conditions of this Agreement and the Hercules
Transaction Agreement, Hercules shall cause HNBV to transfer to
GRI, and GRI shall acquire, HNBV's forty-nine and one-half
percent (49.5%) interest in Tastemaker B.V. in exchange for the
consideration payable to HNBV by GRI as provided in the Hercules
Transaction Agreement. Concurrently with the execution of this
Agreement, Hercules, GRI and Roche shall execute and deliver, and
Hercules shall cause HNBV to execute and deliver, the Hercules
Transaction Agreement. Hercules and HNBV shall be solely
responsible for all covenants, representations, warranties,
liabilities and obligations of Hercules and HNBV under the
Hercules Transaction Agreement, and Mallinckrodt shall have no
responsibilities, liabilities or obligations under the Hercules
Transaction Agreement.
2.4 Mallinckrodt Transaction. Subject and pursuant to the
------------------------
terms and conditions of this Agreement and the Contribution
Agreement, Mallinckrodt shall contribute to Newco one hundred
percent (100%) of the issued and outstanding capital stock of F&F
and shall receive Newco Preferred Stock and (if applicable) cash
as provided in the Contribution Agreement. Concurrently with the
execution of this Agreement, Mallinckrodt and the Interested
Persons shall execute and deliver, and the Interested Persons
shall cause Newco to execute and deliver, the Contribution
Agreement. Mallinckrodt shall be solely responsible for all
covenants, representations, warranties, liabilities and
obligations of Mallinckrodt under the Contribution Agreement, and
Hercules shall have no responsibilities, liabilities or
obligations under the Contribution Agreement.
2.5 Consideration. On the Closing Date, the Interested
-------------
Persons shall make, and shall cause the Designated Buyers and
Newco to make, payments and deliveries to Tastemaker, Tastemaker
B.V., F&F, HNBV and Mallinckrodt, in accordance with the
Designated Transaction Agreements, the F&F Transaction Agreement,
the Hercules Transaction Agreement and the Contribution
Agreement.
2.6 Determination of Adjusted Aggregate Value and
---------------------------------------------
Tastemaker B.V. Value. The Adjusted Aggregate Value and the
- ---------------------
Tastemaker B.V. Value shall be determined in accordance with
Sections 2.6.1 and 2.6.2 below.
2.6.1 Adjusted Aggregate Value. Five (5) business
------------------------
days prior to the Closing Date, the Owners shall cause to be
prepared and delivered to each of the Interested Persons the
Owners' good-faith estimate of the amounts of Current Assets,
Current Liabilities and Long-Term Liabilities as of the
Adjustment Time, together with the Owners' calculation of the
Estimated Working Capital Adjustment and the Estimated Long-Term
Liabilities Adjustment as of the Adjustment Time based upon such
estimates, which shall be used for purposes of determining the
Estimated Adjusted Aggregate Value as of the Adjustment Time.
Promptly after the Closing Date, the Interested Persons shall
engage Coopers & Lybrand L.L.P. (the "ACCOUNTANTS") to conduct an
audit of the Current Assets, the Current Liabilities and the
Long-Term Liabilities as of the Adjustment Time, and the
Interested Persons shall use their best efforts to cause the
Accountants to complete such audit and deliver to each of the
Interested Persons and the Owners within sixty (60) days after
the Closing Date the Accountants' determination of Current
Assets, Current Liabilities and Long-Term Liabilities as of the
Adjustment Time, and the Working Capital Adjustment and Long-Term
Liabilities Adjustment as of the Adjustment Time collectively
(the "ACCOUNTANTS' NET DETERMINATION"), together with the
certification of the Accountants that the balances of Current
Assets, Current Liabilities and Long-Term Liabilities were
determined in accordance with the terms of this Agreement (the
"ACCOUNTANTS' REPORT"). The fees and expenses of the Accountants
in preparing the Accountants' Report shall be paid one-half by
the Owners and one-half by the Interested Persons. The
Interested Persons and the Owners shall have a period of sixty
(60) days following receipt of the Accountants' Report to review
the books and records of the Companies for purposes of
determining whether they agree with the Accountants' Report and
the determination of the Working Capital Adjustment, the Long-
Term Liabilities Adjustment, Current Assets, Current Liabilities
and Long-Term Liabilities set forth therein, and the Interested
Persons shall give the Owners and their respective
representatives access to the books and records of the Companies
for such purpose. If any party disagrees with either the Working
Capital Adjustment or the Long-Term Liabilities Adjustment
determined based upon the Accountants' Report, such party
(whether one or more than one, each a "DISPUTING PARTY") shall,
at or before the end of such sixty (60) day period, give to all
other parties a written notice which shall set forth a detailed
explanation of such Disputing Party's disagreement with the
determination of the Working Capital Adjustment or the Long-Term
Liabilities Adjustment set forth in the Accountants' Reports (or
the amounts of Current Assets, Current Liabilities or Long-Term
Liabilities used in the determination thereof), as well as an
amount for each disputed item and a proposal based on such
amounts for an amount that the Disputing Party believes to be
more accurate than the Accountants' Net Determination (a
"DISPUTING PARTY'S PROPOSAL"). If both of the Owners or both of
the Interested Persons dispute the Accountants' Report, the
Owners or the Interested Persons, as the case may be, may (but
shall not be obligated to) submit a joint notice of dispute. If
no party gives such notice within said sixty (60) day period, the
Working Capital Adjustment and the Long-Term Liabilities
Adjustment determined by the Accountants and set forth in the
Accountants' Report shall be deemed correct and conclusive for
purposes of determining the Adjusted Aggregate Value. If any
party timely disputes the Accountants' determination of either
the Working Capital Adjustment or the Long-Term Liabilities
Adjustment (or the amounts of Current Assets, Current Liabilities
or Long-Term Liabilities used in the determination thereof), the
parties shall negotiate in good faith in an attempt to agree upon
a resolution of such dispute for a period of thirty (30) days
from the end of such sixty (60) day review period. If,
notwithstanding the good faith efforts of the parties, the
parties are unable to reach agreement upon the Working Capital
Adjustment and the Long-Term Liabilities Adjustment, the items in
the Accountants' Report that are in dispute (and only the
disputed items) will be referred for final binding resolution to
the United States national office of KPMG Peat Marwick LLP or, if
KPMG Peat Markwick LLP is unwilling or unable, due to conflicts,
to serve in such capacity, one of the six (6) largest United
States certified public accounting firms which shall be mutually
agreed upon by the parties hereto (or such other internationally
recognized accounting firm as is agreed upon by the parties) and
which shall exclude those firms that provide or have provided
accounting services to any of the parties (the "ADJUSTMENT
ARBITRATOR"). The items in dispute shall be determined by the
Adjustment Arbitrator in accordance with the terms and provisions
of this Agreement, and the parties agree to use their best
efforts to cause the Adjustment Arbitrator to render its decision
within sixty (60) days after the dispute has been referred to the
Adjustment Arbitrator for resolution. The determination of the
Adjustment Arbitrator shall be final and binding for purposes of
determining the amount of Current Assets, Current Liabilities and
Long-Term Liabilities as of the Adjustment Time, and the
resulting Working Capital Adjustment and Long-Term Liabilities
Adjustment as of the Closing Date (collectively, the "FINAL NET
DETERMINATION"), and all parties shall be bound thereby and
judgment upon such resolution may be entered in any court having
requisite jurisdiction. The responsibility to pay the total fees
and expenses of the Adjustment Arbitrator for the entire
arbitration process described above as computed after the
completion or termination of the arbitration (the "COST OF
ARBITRATION") shall be allocated as follows:
(i) To compute each party's allocation of the Cost
of Arbitration, each party's variance from the Final
Net Determination (each a "DETERMINATION VARIANCE")
shall be equal to the Final Net Determination minus (x)
for each Disputing Party, the Accountants' Net
Determination, adjusted by the net sum of the
adjustments set forth in such Disputing Party's
Proposal, and (y) for each party that is not a
Disputing Party, the Accountants' Net Determination.
(ii) Each party shall be allocated responsibility to
pay the part of the Cost of Arbitration equal to the Cost of
Arbitration multiplied by the absolute value of such party's
Determination Variance divided by the sum of the absolute
values of the Determination Variances of all parties.
(iii) With respect to any fees and expenses of the
Adjustment Arbitrator required to be paid prior to the
determination of the Final Net Determination, the Owners and
the Interested Persons shall bear the payments of such fees
and expenses equally; provided that after the Cost of
Arbitration has been finally determined, the parties hereto
shall make such payments to each other as may be necessary
to give effect to the allocation of the Cost of Arbitration
determined as set forth in clause (ii).
The parties intend and agree that the procedures set forth in
this Section 2.6.1 shall be the sole and exclusive procedures for
resolving all disputes concerning the Working Capital Adjustment
and the Long-Term Liabilities Adjustment as of the Closing Date.
Within ten (10) days after the date upon which the Working
Capital Adjustment and the Long-Term Liabilities Adjustment are
finally determined (whether by agreement of the parties, dispute
resolution or as a result of the failure to timely provide a
notice required by this Section), the consideration paid or
delivered pursuant to the Contribution Agreement on the Closing
Date shall be adjusted as provided in the Contribution Agreement.
2.6.2 Tastemaker B.V. Value. Five (5) business
---------------------
days prior to the Closing Date, the Owners shall cause to be
prepared and delivered to each of the Interested Persons the
Owners' good faith estimate of the Tastemaker B.V. Current
Assets, Tastemaker B.V. Current Liabilities and Tastemaker B.V.
Long-Term Liabilities as of the Adjustment Time, together with
the Owners' calculation of the Estimated Tastemaker B.V. Value
based upon such estimates, which shall be used for purposes of
determining the Estimated Tastemaker B.V. Value on the Closing
Date. Within thirty (30) days after the Closing Date, the
Interested Persons shall prepare and deliver to the Owners the
balance sheet of Tastemaker B.V. as of the Adjustment Time,
together with the Interested Persons' calculation of the
Tastemaker B.V. Working Capital Adjustment and the Tastemaker
B.V. Long-Term Liabilities Adjustment, and the resulting
Tastemaker B.V. Value. The Owners shall have a period of thirty
(30) days following receipt of such information to review the
books and records of Tastemaker B.V. for purposes of determining
whether they agree with the Interested Persons determination of
the Tastemaker B.V. Working Capital Adjustment and the Tastemaker
B.V. Long-Term Liabilities Adjustment, and the Tastemaker B.V.
Value calculated based thereon. If either of the Owners
disagrees with the Tastemaker B.V. Working Capital Adjustment or
the Tastemaker B.V. Long-Term Liabilities Adjustment as
determined by the Interested Persons, such Owner shall, at or
before the end of such thirty (30) day review period, give to the
Interested Persons written notice which shall set forth a
detailed explanation of such Owner's disagreement with the
Interested Persons determination of the Tastemaker B.V. Working
Capital Adjustment or the Tastemaker B.V. Long-Term Liabilities
Adjustment. If either of the Owners timely disputes the
Interested Persons determination of either the Tastemaker B.V.
Working Capital Adjustment or the Tastemaker B.V. Long-Term
Liabilities Adjustment, the parties shall negotiate in good faith
in an attempt to agree upon a resolution of such dispute for a
period of thirty (30) days from the end of such thirty (30) day
review period. If notwithstanding the good faith efforts of the
parties, the parties are unable to reach agreement upon the
Tastemaker B.V. Working Capital Adjustment and the Tastemaker
B.V. Long-Term Liabilities Adjustment, such dispute shall be
resolved in accordance with Article 9 of this Agreement.
2.7 Closing Aggregate Value Adjustment. (a) The Estimated
----------------------------------
Adjusted Aggregate Value and the Adjusted Aggregate Value have
been reduced by $10,425,000 (the "PBO ADJUSTMENT").
(b) If the Fries Withdrawal Closing occurs within two days
after the Closing Date, on the date of the Fries Withdrawal
Closing, Owners shall cause the Companies to transfer (whether by
operation of law or otherwise), to the Interested Persons or an
Affiliate of the Interested Persons, and at such time the
Interested Persons or an Affiliate of the Interested Persons
shall accept (whether by operation of law or otherwise),
sponsorship of each plan, contract, agreement or statutory
program providing for the payment of benefits, within the meaning
of Statement No. 87 of the Financial Accounting Standards Board
(each a "PBO PLAN" and collectively the "PBO PLANS") and shall
assume all obligations of the Companies to provide benefits under
such PBO Plans. In consideration of, and at the same time as
such transfer and assumption, Owners shall cause the Companies to
transfer (whether by operation of law or otherwise), to the
Interested Persons or an Affiliate of the Interested Persons any
and all assets (including without limitation all right, title and
interest in any trust agreement, insurance contract or other
instrument) held in connection with, set aside for or
specifically dedicated to each PBO Plan ("PLAN ASSETS") (i) the
value of which as of December 31, 1996 in the case of each such
PBO Plan listed on APPENDIX L (other than the plan covered by or
under the heading "Holland (including VUT)" listed on APPENDIX L
(the "DUTCH PLAN")) was at least equal to the value of the assets
listed in respect of each such PBO Plan on APPENDIX L (other than
the Dutch Plan) and (ii) with respect to the Dutch Plan, (A) the
value of which shall be, as of the date of transfer to a
successor plan established by Tastemaker B.V., at least equal to
23 million Dutch Guilders, (B) increased by the earnings
attributable to the investment of such assets and by any
contributions by Tastemaker B.V. and its employees to the Dutch
Plan in either case during the period from December 31, 1996 to
the date of transfer and (C) reduced by the losses attributable
to the investment of such assets and by any benefit payments made
to or in respect of any employee of any of the Companies covered
by the Dutch Plan as of December 31, 1996 who retired or
otherwise terminated service after December 31, 1996 and prior to
the date of transfer. Interested Persons accept the reduction in
the Estimated Adjusted Aggregate Value and the Adjusted Aggregate
Value above and the transfer of the Plan Assets to the Interested
Persons or an Affiliate of the Interested Persons as provided in
this subsection (b), in full settlement of all claims the
Interested Persons or their Affiliates may have against the
Owners in respect of funding and asset values of any of the PBO
Plans, and the Interested Persons shall indemnify and hold
harmless the Owners and their respective officers, employees,
agents, directors, subsidiaries, affiliates and representatives
from and against any and all claims relating to the funding
status of, or payment obligations under, each PBO Plan; provided
such reductions and such transfer shall in no way release the
Owners from their obligations under Section 3.17; and provided
further, that the Interested Persons expressly do not assume any
liability or obligation of the Owners under or in connection with
any PBO Plan other than the obligations of a PBO Plan sponsor.
2.8 Closing. Subject to the terms and conditions of the
-------
D&F Transaction Agreements and the Transaction Documents, the
closing of the transactions contemplated by the D&F Transaction
Agreements and the Transaction Documents (the "CLOSING") shall
occur on March 31, 1997. The Closing shall be held at the
offices of Taft, Stettinius & Hollister, 425 Walnut Street,
Cincinnati, Ohio. The closing of the transactions contemplated
by the Designated Transaction Agreements shall commence at 10:00
a.m. Eastern Standard Time on the Closing Date. The closing of
the transactions contemplated by the F&F Transaction Agreement
and the Hercules Transaction Agreement shall commence immediately
following the completion of the closing of the transactions
contemplated by the Designated Transaction Agreements. The
closing of the transactions contemplated by the Contribution
Agreement shall commence immediately following the completion of
the closing of the transactions contemplated by the Designated
Transaction Agreements, the F&F Transaction Agreement and the
Hercules Transaction Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE OWNERS
--------------------------------------------
The Owners represent and warrant to the Interested Persons
as of the date hereof and, except with respect to any
representations and warranties which expressly provide that they
are given as of a particular date, as of the Closing Date, as
follows:
3.1 Organization, Standing and Power; Authority of
-----------------------------------------------
Tastemaker for the Designated Transaction Agreements. Tastemaker
- ----------------------------------------------------
is a general partnership duly formed and validly existing under
the laws of the State of Delaware and has the requisite power and
authority to carry on its business as conducted on the date
hereof. Tastemaker B.V. is a limited liability entity duly
organized and validly existing under the laws of The Netherlands
and has the requisite power and authority to carry on its
business as conducted on the date hereof. Except as set forth in
SCHEDULE 3.1 of the Disclosure Schedule, each of the Tastemaker
Subsidiaries is duly organized and validly existing under the
laws of the jurisdiction in which it is organized as set forth on
APPENDIX A hereto and has the requisite power and authority to
carry on its business as conducted on the date hereof. The
Tastemaker B.V. Subsidiary is duly organized and validly existing
under the laws of Spain and has the requisite power and authority
to carry on its business as conducted on the date hereof.
Pinnacle Flavours & Chemicals Private Limited is a private
company limited by shares, duly organized and validly existing
under the laws of India ("PINNACLE"). Except as set forth in
SCHEDULE 3.1 of the Disclosure Schedule, each of the Companies is
duly qualified to transact business, and is in good standing, in
each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so
qualified would not reasonably be expected to have a material
adverse effect on the Companies. Tastemaker has all requisite
power and authority to enter into each of the Designated
Transaction Agreements and to consummate the transactions
contemplated thereby. The execution and delivery of each of the
Designated Transaction Agreements prior to the Closing Date by
Tastemaker and the consummation by Tastemaker on the Closing Date
of the transactions contemplated thereby will have been duly
authorized by all necessary action on the part of Tastemaker.
The Designated Transaction Agreements will have been duly
executed and delivered by Tastemaker prior to the Closing Date
and (assuming the due authorization, execution and delivery
thereof by the other parties thereto) will then constitute the
valid and binding obligations of Tastemaker, enforceable against
Tastemaker in accordance with their respective terms.
3.2 Ownership of Tastemaker B.V., Tastemaker Subsidiaries
-----------------------------------------------------
and Tastemaker B.V. Subsidiary and Pinnacle. Tastemaker B.V. is
- -------------------------------------------
owned one percent (1%) by Tastemaker. Tastemaker B.V. is the
sole owner of the Tastemaker B.V. Subsidiary and holds a twenty-
four percent (24%) minority shareholding in Pinnacle. Pinnacle
is an investment accounted for under the equity method on the
combined consolidated financial statements of Tastemaker and
Tastemaker B.V., and Tastemaker B.V. does not control or direct
the day-to-day operations of Pinnacle. A true and complete list
of all subsidiaries of any of the Companies, including the
ownership of each of the Tastemaker Subsidiaries and the
Tastemaker B.V. Subsidiary, accurately described, is on APPENDIX
A hereto. There are no options, warrants, calls, rights or
agreements (other than the Designated Transaction Agreements and
the Partnership Agreement): (i) to which Tastemaker is a party
obligating Tastemaker to issue, deliver, sell, repurchase, redeem
or otherwise acquire, cause to be issued, delivered, sold,
repurchased, redeemed, or otherwise acquired, any partnership
interests in Tastemaker or obligating Tastemaker to grant, extend
or enter into any such option, warrant, call, right or agreement;
(ii) except as set forth in SCHEDULE 3.2 of the Disclosure
Schedule, to which Tastemaker or any of the Tastemaker
Subsidiaries is a party obligating Tastemaker or any of the
Tastemaker Subsidiaries to issue, deliver, sell, repurchase,
redeem or otherwise acquire or cause to be issued, delivered,
sold, repurchased, redeemed, or otherwise acquired, additional
shares of capital stock of or ownership interests in any of the
Tastemaker Subsidiaries or obligating Tastemaker or any of the
Tastemaker Subsidiaries to grant, extend or enter into any such
option, warrant, call, right or agreement; (iii) to which
Tastemaker or Tastemaker B.V. is a party obligating Tastemaker or
Tastemaker B.V. to issue, deliver, sell, repurchase, redeem or
otherwise acquire or cause to be issued, delivered, sold,
repurchased, redeemed, or otherwise acquired any additional
ownership interest in Tastemaker B.V. or obligating Tastemaker or
Tastemaker B.V. to enter into any such option, warrant, call,
right or agreement; or (iv) to which Tastemaker B.V. or the
Tastemaker B.V. Subsidiary is a party obligating Tastemaker B.V.
or the Tastemaker B.V. Subsidiary or Pinnacle to issue, deliver,
sell, repurchase, redeem or otherwise acquire or cause to be
issued, delivered, sold, repurchased, redeemed, or otherwise
acquired additional ownership interests in the Tastemaker B.V.
Subsidiary or Pinnacle, or obligating Tastemaker B.V. or the
Tastemaker B.V. Subsidiary or Pinnacle to grant, extend or enter
into any such option, warrant, call, right or agreement. Except
as set forth in SCHEDULE 3.2 of the Disclosure Schedule, and
except pursuant to the transactions contemplated by the
Designated Transaction Agreements and the Partnership Agreement,
the interest of Tastemaker in each Tastemaker Subsidiary as set
forth in APPENDIX A hereto is owned by Tastemaker free and clear
of all security interests, liens, claims, pledges, voting rights,
charges and encumbrances of any nature whatsoever. Except as set
forth in SCHEDULE 3.2 of the Disclosure Schedule, and except
pursuant to the transactions contemplated by the Designated
Transaction Agreements, the interest of Tastemaker in Tastemaker
B.V. as set forth in APPENDIX A hereto is owned by Tastemaker
free and clear of all security interests, liens, claims, pledges,
voting rights, charges and other encumbrances of any nature
whatsoever. Except pursuant to the transactions contemplated by
the Designated Transaction Agreements and except as set forth in
SCHEDULE 3.2 of the Disclosure Schedule, the interest of each
Tastemaker Subsidiary in each other Tastemaker Subsidiary as set
forth in APPENDIX A hereto is owned by such Tastemaker Subsidiary
free and clear of all security interests, liens, claims, pledges,
voting rights, charges and other encumbrances of any nature
whatsoever. Except pursuant to the transactions contemplated by
the Designated Transaction Agreements and except as set forth in
SCHEDULE 3.2 of the Disclosure Schedule, the interest of
Tastemaker B.V. in the Tastemaker B.V. Subsidiary as set forth in
APPENDIX A hereto and the twenty-four percent (24%) interest of
Tastemaker B.V. in Pinnacle is owned by Tastemaker B.V. free and
clear of all security interests, liens, claims, pledges, voting
rights, charges and other encumbrances of any nature whatsoever.
3.3 Consents and Approvals; No Violation. Except as set
------------------------------------
forth in SCHEDULE 3.3 of the Disclosure Schedule, the execution
and delivery of the Transaction Documents and the D&F Transaction
Agreements do not, and the consummation of the transactions
contemplated thereby and compliance with the provisions thereof
will not, result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or
to the loss of a material right or benefit under, or result in
the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of any of the
Companies under: (i) any provision of the charter or
organizational documents of any of the Companies, (ii) any loan
or credit agreement, note, bond, mortgage, indenture, lease,
agreement, instrument, permit, concession, franchise or license
by which any of the Companies is bound or any License or (iii)
any judgment, order, decree, statute, law, ordinance, rule or
regulation by which any of the Companies is bound or to which any
of their respective properties or assets is subject, other than,
in the case of clauses (ii) and (iii), any such violations,
defaults, rights, liens, security interests, charges or
encumbrances that would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the
Companies, and would not impair the ability of the Owners or any
of their respective Affiliates to perform their obligations under
any of the Transaction Documents or the D&F Transaction
Agreements, prevent the consummation by the Owners or any of
their respective subsidiaries of any of the transactions
contemplated by any of the Transaction Documents or the D&F
Transaction Agreements or, other than by reason of any act or
omission of the Interested Persons or their respective
subsidiaries, materially and adversely affect the rights and
benefits of the Interested Persons or any of their respective
Affiliates under the Transaction Documents and the D&F
Transaction Agreements. No filing, declaration or registration
with, or consent, approval, order or authorization of, any
Governmental Authority is required by, or with respect to, any of
the Companies in connection with the execution and delivery by
the Owners, or any of their respective subsidiaries, as the case
may be, of the Transaction Documents and the D&F Transaction
Agreements or the consummation by the Owners, or any of their
respective subsidiaries, as the case may be, of the transactions
contemplated by the Transaction Documents and the D&F Transaction
Agreements, except: (a) in connection, or in compliance, with
the provisions of the Hart-Scott-Rodino Antitrust Improvement Act
of 1976, as amended, (b) for such filings, declarations,
registrations, consents, approvals, orders and authorizations as
are required from Governmental Authorities in the countries
disclosed in APPENDIX F hereto, and such other filings,
declarations, registrations, consents, approval, orders and
authorizations as may be required under the laws of any other
foreign country in which any of the Companies is organized,
conducts any business or owns any property or assets, and (c) for
such other filings, declarations, registrations, consents,
approvals, orders and authorizations, the failure of which to
obtain or make would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on
the Companies and would not impair the ability of the Owners or
any of their respective Affiliates to perform their obligations
under any of the Transaction Documents and the D&F Transaction
Agreements, prevent the consummation by the Owners or any of
their respective subsidiaries of any of the transactions
contemplated by any of the Transaction Documents and the D&F
Transaction Agreements or, other than by reason of any act or
omission of the Interested Persons or their respective
subsidiaries, materially and adversely affect the rights and
benefits of the Interested Persons under the Transaction
Documents and the D&F Transaction Agreements.
3.4 Financial Statements. The December 31, 1995 audited
--------------------
combined consolidated financial statements of Tastemaker and
Tastemaker B.V. (the "1995 FINANCIAL STATEMENTS") have been
prepared in accordance with GAAP and fairly present the combined
consolidated financial position of Tastemaker and Tastemaker B.V.
as at December 31, 1995 and the combined consolidated results of
their operations and their combined consolidated cash flows for
the year ended December 31, 1995. The June 28, 1996 unaudited
combined consolidated balance sheet, income statement and cash
flow statement of the Companies previously delivered to each of
the Interested Persons (the "INTERIM FINANCIAL STATEMENTS")
fairly present the combined consolidated financial position of
Tastemaker and Tastemaker B.V. as of June 28, 1996 (subject to
reasonable year-end adjustments, adjustments to conform to GAAP
and the absence of footnotes) and have been prepared in
accordance with the customary accounting practices, procedures
and policies of the Companies used in connection with regularly
prepared internal financial statements, which practices,
procedures and policies are not necessarily consistent in all
respects with GAAP or the practices, procedures and policies used
in preparing the 1995 Financial Statements. Except as set forth
in SCHEDULE 3.4 of the Disclosure Schedule, since the date of the
Interim Financial Statements, there has been no material adverse
change in the financial condition or operations of the Companies,
taken as a whole.
3.5 Liabilities. Except as reflected or reserved against
-----------
in the 1995 Financial Statements or the Interim Financial
Statements (collectively, the "FINANCIAL STATEMENTS"), or
disclosed in the footnotes thereto, or disclosed in SCHEDULE 3.5
of the Disclosure Schedule, none of the Companies had any
liabilities at the respective dates of such Financial Statements,
absolute, determined, determinable, contingent or otherwise, that
would reasonably be expected to have a material adverse effect on
the Companies.
3.6 Books and Records. The books and records of the
-----------------
Companies are complete and accurate in all material respects in
accordance with applicable policies of the Companies.
3.7 Accounts Receivable. All accounts receivable of the
-------------------
Companies reflected on the agings of accounts receivable included
in SCHEDULE 3.7 of the Disclosure Schedule and all accounts
receivable of the Companies recorded on the books of the
Companies since the date of such agings arose out of bonafide
transactions in the ordinary course of business of the Companies.
All accounts receivable of the Companies included in Current
Assets as of the Adjustment Time will have arisen out of bonafide
transactions in the ordinary course of business of the Companies
and will then be free and clear of all liens securing
indebtedness of any person or entity other than the Companies.
3.8 Inventory. The inventory of the Companies as reflected
---------
in the Interim Financial Statements was stated therein at the
lower of average cost or market, in the aggregate, and consisted
of items substantially all of which are, except as provided in
any inventory reserve, of a quality and quantity useable and
saleable in the ordinary course of business of the Companies.
Except pursuant to the transactions contemplated by the
Partnership Agreement and the Designated Transaction Agreements,
all inventory of the Companies is owned free and clear of all
liens securing indebtedness of any person or entity other than
the Companies. Since the date of the Interim Financial
Statements, the Companies have maintained their inventories in
the ordinary course of business.
3.9 Absence of Certain Changes or Events. Since
------------------------------------
December 31, 1995, except as reflected in the Interim Financial
Statements or disclosed in SCHEDULE 3.9 of the Disclosure
Schedule: (i) except for any liabilities incurred in the
ordinary course of business that would be reflected on a balance
sheet of the Companies prepared in accordance with GAAP,
consistently applied, none of the Companies has incurred any
liability or obligation (indirect, direct, absolute, determined,
determinable, contingent or otherwise), that has had or would
reasonably be expected to result in a material adverse effect on
the Companies; (ii) none of the Companies has entered into any
material oral or written agreement or other transaction, that is
not in the ordinary course of business and that has had or would
reasonably be expected to result in a material adverse effect on
the Companies; (iii) none of the Companies has sustained any
damage, destruction or other loss or interference with its
business, assets or properties from fire, flood, windstorm,
accident or other calamity (whether or not covered by insurance)
that has had or that would reasonably be expected to have a
material adverse effect on the Companies; and (iv) none of the
Companies has had an event, occurrence, development or state of
circumstances or facts (including, without limitation, the sale
of PFW Aroma Chemicals, previously a subsidiary of Hercules, to
Yule Catto & Co. plc) which has had or would reasonably be
expected to have a material adverse effect on the Companies. As
of the date hereof, none of the Specified Officers has notified
any of the Partners' Representatives that he or she intends to
resign within one (1) year after the Closing of the transactions
contemplated by the Transaction Documents. Since December 31,
1995, except as reflected in the Interim Financial Statements or
disclosed in SCHEDULE 3.9 of the Disclosure Schedule, there has,
with respect to the Companies, been no: (i) incurrence,
assumption or guarantee by the Companies of any material
indebtedness for borrowed money other than in the ordinary course
of business and in amounts and on terms consistent with past
practices; (ii) creation or other incurrence of any lien on any
material asset of any of the Companies other than in the ordinary
course of business consistent with past practices;
(iii) transaction or commitment made, or any contract or
agreement entered into, whether oral or written, by the Companies
relating to their assets or business (including the acquisition
or disposition of any assets) or any relinquishment by the
Companies of any contract or other right, in either case, in
excess of $100,000, other than transactions and commitments for
the purchase and sale of inventory, transactions and commitments
in the ordinary course of business and transactions and
commitments pursuant to the Transaction Documents and the D&F
Transaction Agreements; (iv) change in any method of accounting
or accounting practice by the Companies; (v) (A)(I) collective
bargaining agreement entered into with any representative of
employees or (II) expiration of any collective bargaining
agreement without its renewal and/or a new collective bargaining
agreement having been entered into and executed with a
representative of employees, or (B) as of the date hereof, (I)
written employment agreement providing for annual salary in
excess of $100,000 (or a material amendment of any existing such
agreement), (II) severance or change in control agreement
providing compensation or benefits in excess of $100,000 (or
material amendment of any such existing agreement), or (III)
enhanced retirement or deferred compensation arrangement entered
into, in the case of subclauses (I), (II), and (III) to this
clause (B), with any officer or employee or independent
contractor of any of the Companies whose annual salary exceeds
$100,000; (vi) (A) grant of any stay bonus to any employee of any
Company which bonus individually exceeds $50,000 (or amendment of
any existing such bonus), (B) implementation of any severance
plan, program or policy under which, if any employee covered by
such plan, program or policy were terminated, such employee would
be entitled in the aggregate to more than $100,000 of benefits;
or (C) as of the date hereof, adoption of or change to any stay
incentive or severance program covering a group of not less than
twelve (12) employees of the Companies; (vii) material change in
compensation payable to any employee of any of the Companies
whose annual salary is in excess of $100,000 pursuant to any
retirement plan, program or policy, other than in the ordinary
course of business consistent with past practice; (viii) as of
the date hereof, labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the
Companies, which employees were not subject to a collective
bargaining agreement on December 31, 1995, or any lockouts,
strikes, slowdowns, work stoppages or, as of the date hereof, to
the Owners' Knowledge, threats thereof by or with respect to such
employees; (ix) repurchase, redemption or other acquisition by
any of the Companies of any outstanding shares of capital stock
or other securities of, or other ownership interests in, the
Companies; or (x) amendment of any material term of any
outstanding security of any Company.
3.10 No Existing Violation, Default, Etc. Except as set
------------------------------------
forth in SCHEDULE 3.10 of the Disclosure Schedule, none of the
Companies is in violation of: (i) its charter or other
organizational documents, (ii) any applicable law, ordinance or
administrative or governmental rule or regulation (including any
such law, ordinance or administrative or governmental rule or
regulation applicable to the production processes or sale by the
Companies of their respective products) or (iii) any order,
decree or judgment of any Governmental Authority having
jurisdiction over any of the Companies, except for any violations
that would not reasonably be expected to have or to cause a
material adverse effect on the Companies. SCHEDULE 3.10 of the
Disclosure Schedule includes the policies of the Companies
regarding the Foreign Corrupt Practices Act of 1988, as amended
(the "FCPA"), including a description of the means by which
information regarding such policies is disseminated to employees
of the Companies. To the Owners' Knowledge, none of the
Companies nor any officer, director, employee or agent of any of
the Companies acting on behalf of the Companies has made,
directly or indirectly, any payment or promise to pay, or gift or
promise to give, or authorized such a promise or gift, of any
money or anything of value, directly or indirectly, to (i) any
foreign official (as such term is defined in the FCPA) for the
purpose of influencing any official act or decision of such
official or inducing him to use his influence to affect any act
or decision of a Governmental Authority or (ii) any foreign
political party or official thereof or candidate for foreign
political office for the purpose of influencing any official act
or decision of such party, official or candidate or inducing such
party, official or candidate to use its influence to affect any
act or decision of a foreign government or agency or subdivision
thereof, in the case of both (i) and (ii) in order to assist any
of the Companies to obtain or retain business or direct business
to any of the Companies, under circumstances which would subject
any of the Companies or their respective Affiliates, officers or
directors to liability under the FCPA. Except as set forth in
SCHEDULE 3.10 of the Disclosure Schedule, no event of default or
event that, but for the giving of notice or lapse of time, or
both, would constitute an event of default exists or, upon the
consummation of the transactions contemplated by the Transaction
Documents and the D&F Transaction Agreements, will exist on the
part of any of the Companies under any loan or credit agreement,
note, bond, mortgage, indenture or guarantee of indebtedness for
borrowed money or any other material lease, agreement or
instrument to which any of the Companies is a party or by which
any of the Companies or any of their respective properties,
assets or business is bound, except for any such default or event
of default which would not reasonably be expected to have a
material adverse effect on the Companies.
3.11 Licenses and Permits. Except as disclosed in SCHEDULE
--------------------
3.11 of the Disclosure Schedule, none of the Companies is in
violation of or default under any permit, license, franchise or
authorization from any Governmental Authority which is necessary
in connection with the ownership, lease or operation of its
properties or the conduct of its business as owned or leased and
conducted on the date hereof (collectively, the "LICENSES"),
except to the extent that such violation or default has not had
and would not reasonably be expected to have a material adverse
effect on the Companies. SCHEDULE 3.11 of the Disclosure
Schedule contains a true and complete list of all material
Licenses as of the date hereof, together with the name of the
Governmental Authority issuing each such License; all such
material Licenses are valid and in full force and effect; and to
the Owners' Knowledge, no such material License will be revoked,
terminated prior to its normal expiration date or not renewed.
3.12 Environmental Matters. (a) Except as set forth in
---------------------
SCHEDULE 3.12 of the Disclosure Schedule, (i) there is no
liability of any of the Companies under any Environmental
Requirement in existence on the Closing Date, whether absolute,
determined, determinable, contingent or otherwise, and (ii) the
properties, assets and operations of the Companies are in
compliance with all applicable Environmental Requirements,
except, in either case, for any such liability or non-compliance
that would not reasonably be expected to have a material adverse
effect on the Companies. Since February 1, 1992, no spill,
release, threatened release or discharge of Hazardous Substances
into the Environment which is required by applicable
Environmental Requirements to be reported has occurred at any of
the Companies' facilities or, to the Owners' Knowledge, on any
real property adjacent thereto, and since February 1, 1992, there
has been no corrective action, remediation or clean up required
of the Companies by applicable Environmental Requirements as a
consequence of any such spill, release, threatened release or
discharge. All corrective action, remediation or other clean up
activities undertaken by the Companies have been performed, or
are being performed, in accordance in all material respects with
all applicable Environmental Requirements. Each of the Companies
has discharged in all material respects any and all record
keeping and reporting requirements applicable to it pursuant to
all applicable Environmental Requirements and all such reports
and records are complete and correct in all material respects and
have been retained by the Companies for the length of time
required by any applicable Environmental Requirements setting
forth document retention requirements. Except as set forth in
SCHEDULE 3.12 of the Disclosure Schedule, none of the operating
sites of the Companies or, to the Owners' Knowledge, any property
adjacent thereto, or, to the Owners' Knowledge, any sites used
for the disposal of wastes generated by the Companies have been
designated as a "SUPERFUND SITE" or are otherwise the subject of
an order of removal or remedial action for which the Companies
have liability pursuant to the provisions of applicable
Environmental Requirements and there are no conditions or
circumstances affecting the operating sites for the Companies or
any property adjacent thereto which, to the Owners' Knowledge,
might reasonably cause them to be designated as a "SUPERFUND
SITE" or render them subject to any such order of removal or
remedial action for which the Companies will have liability
pursuant to the provisions of applicable Environmental
Requirements. Except as set forth in SCHEDULE 3.12 of the
Disclosure Schedule, no unresolved notice, notification, demand,
request for information, citation, summons or order has been
issued, no pending complaint has been filed, no unpaid penalty
has been assessed and no investigation, action, claim, suit,
proceeding or review is pending, or to the Owners' Knowledge,
threatened by any Governmental Authority with respect to the
Companies and relating to or arising out of any Environmental
Requirements that would reasonably be expected to have a material
adverse effect on the Companies, and to the Owners' Knowledge
there is no basis for sending any such notice or asserting any
such claim. Except as set forth in SCHEDULE 3.12 of the
Disclosure Schedule, no polychlorinated biphenyls, radioactive
material, lead, lead paint, asbestos-containing material,
incinerator, sump, surface impoundment, lagoon, landfill, septic,
wastewater treatment or other disposal system or underground
storage tank (active or inactive) is present at any property
owned, leased or operated by the Companies in violation of
applicable Environmental Requirements, which violation,
individually or in the aggregate, would reasonably be expected to
have a material adverse effect on the Companies. All permits
required by applicable Environmental Requirements and necessary
for the operation of the Companies' businesses or the use of the
Companies' assets have been obtained or have been applied for
within the period of time permitted by law, and in either case
are identified in SCHEDULE 3.12 of the Disclosure Schedule, and
if already obtained are in effect on the date hereof in
accordance with their terms except for those which, if not
obtained or not in effect, would not have a material adverse
effect on the Companies. Except as set forth in SCHEDULE 3.12 of
the Disclosure Schedule, the Companies are in material compliance
with the terms of such permits, no action or investigation has
been taken, commenced or, to the Owners' Knowledge, threatened by
any Governmental Authority or any other persons to revoke or
modify such permits or applications or to enforce the terms of or
take action for violation of such permits, and, to the Owners'
Knowledge, there is no reasonable basis for any such action or
investigation. No Specified Officer possesses any evidence which
would lead a reasonable person to believe that any permits
applied for will not be granted or that permits or permit
renewals which have been applied for but have not yet been
granted or renewed will, when issued or as a condition of
issuance, require material capital expenditures or materially
interrupt the operations of the Companies in order to bring any
subject facility or apparatus into material compliance with
applicable Environmental Requirements. None of the Companies use
the portion of the Laidlaw Landfill site in St. Louis, Missouri
which is believed to be included on the National Priorities List
for the treatment, storage or disposal of any waste or material.
(b) The Companies do not own, lease or operate and have not
within the past four (4) years owned, leased or operated any real
property in New Jersey or Connecticut.
3.13 Tax Matters. Except as set forth in SCHEDULE 3.13 of
-----------
the Disclosure Schedule, with respect to Taxes and Company Tax
Returns: (i) all Company Tax Returns required to be filed on or
prior to the date hereof have been filed when due in accordance
with all applicable laws; (ii) as of the time of filing, or, if
subsequently amended as of the date of such amendment, and to the
Owners' Knowledge, such Company Tax Returns correctly reflected
in all material respects the facts regarding the income,
business, assets, operations, activities and status of the
Companies and any other information required to be shown therein;
(iii) all Taxes shown to be due on such Company Tax Returns have
been timely paid, withheld or remitted to the appropriate
Governmental Authority or extensions for payment have been duly
obtained; (iv) as of the date hereof, none of the Companies (and
no member of any affiliated, consolidated, combined or unitary
group of which a Company is or has been a member) has waived or
granted any extension of any statute of limitations in respect of
any Company Tax Returns or Taxes; (v) as of the date hereof,
there is no audit, dispute, claim, action, proceeding or
investigation pending or, to the Owners' Knowledge, threatened
against or with respect to any Company with respect to any Tax,
which audit, dispute, claim, action, proceeding or investigation,
if determined adversely, would reasonably be expected, in
combination with any such audits, disputes, claims, actions,
proceedings or investigations, to have a material adverse effect
on the Companies; (vi) as of the date hereof, none of the
Companies is delinquent in the payment of any Tax, requested any
extension of time within which to file any Company Tax Return and
has not yet filed such Return, and all deficiencies asserted or
assessments made as a result of any audit by a Governmental
Authority of a Company Tax Return have been paid in full; and
(vii) there are no requests for rulings or determinations in
respect of any Tax pending between any Governmental Authority and
any Company.
3.14 Orders, Litigation, Etc. Except as listed on SCHEDULE
------------------------
3.14 of the Disclosure Schedule, there are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental
Authority against any of the Companies or any of their
properties, assets or businesses that would reasonably be
expected to have a material adverse effect on the Companies.
Except as listed on SCHEDULE 3.14 of the Disclosure Schedule,
there are no private or governmental actions, suits or claims or
legal, administrative or arbitration proceedings or
investigations pending against or, to the Owners' Knowledge,
threatened against or affecting, any of the Companies or any of
their properties, assets or businesses that would reasonably be
expected to have a material adverse effect on the Companies.
There are no actions, suits or claims or legal, administrative or
arbitration proceedings or investigations pending against or, to
the Owners' Knowledge, threatened against or affecting, any of
the Companies or any of their properties, assets or businesses
relating to the transactions contemplated by the Transaction
Documents, the D&F Transaction Agreements or the Fries Withdrawal
Documents.
3.15 Labor Matters. Except as set forth in SCHEDULE 3.15 of
-------------
the Disclosure Schedule, none of the Companies has any labor
contracts, collective bargaining agreements or material
consulting agreements with any persons employed by or otherwise
performing services primarily for any of the Companies
(collectively, the "BUSINESS PERSONNEL") or any representative of
any Business Personnel. Except as listed on SCHEDULE 3.15 of the
Disclosure Schedule, since February 1, 1992, none of the
Companies has engaged in any unfair labor practice with respect
to Business Personnel that is material to the Companies, and
there is no unfair labor practice complaint pending against any
of the Companies with respect to Business Personnel that is
material to the Companies. There is no labor strike, dispute,
slowdown or stoppage pending against or, to the Owners'
Knowledge, threatened against or affecting, any of the Companies
that would reasonably be expected to have a material adverse
effect on the Companies, and none of the Companies has
experienced any work stoppage or other material labor difficulty
involving its employees during the last four (4) years that has
had or would reasonably be expected to have a material adverse
effect on the Companies. Except as listed on SCHEDULE 3.15 of
the Disclosure Schedule, the Companies have been since February
1, 1992, and currently are in material compliance with the
requirements of all applicable labor and employment laws, rules
and regulations. Except as disclosed on SCHEDULE 3.15 of the
Disclosure Schedule, none of the Companies is engaged in
negotiations or discussions with any labor or trade union or
works council regarding amendment of any collective bargaining
agreement or changes to any retirement, welfare or severance
plan.
3.16 Contracts. SCHEDULE 3.16 of the Disclosure Schedule
---------
contains a list as of the date hereof of all contracts (other
than purchase orders and sales orders with customers and
suppliers of the Companies) to which any of the Companies is a
party or by which any of the Companies or its respective
properties is bound which (i) provides for the payment or receipt
by the Companies of $100,000 or more in any given 12-month
period, (ii) prohibits the Companies from engaging in their
respective normal businesses in any geographic location or (iii)
prohibits the Companies from competing with any person or entity.
The contracts listed on SCHEDULE 3.16 of the Disclosure Schedule
also include: (i) as of the date hereof, any lease (whether of
real or personal property) providing for payment or receipt by
any of the Companies of $100,000 or more in any given 12-month
period; (ii) as of the date hereof, any agreement for the
purchase of equipment or other capital assets that provides for
payments by any of the Companies of $100,000 or more in any given
12-month period; (iii) as of the date hereof, any agreement
providing for the sale by any of the Companies of equipment or
other capital assets that provides for annual payments to any of
the Companies of $100,000 or more in any given 12-month period;
(iv) any partnership, joint venture or other similar agreement or
arrangement to which any of the Companies is a party, other than
joint product development arrangements with customers; (v) as of
the date hereof, any agreement other than the Transaction
Documents and the D&F Transaction Agreements relating to the
acquisition or disposition of any business by any of the
Companies (whether by merger, sale of stock, sale of assets or
otherwise); (vi) as of the date hereof, any agreement relating to
indebtedness for borrowed money or the deferred purchase price of
property to which any of the Companies is a party (in either
case, whether incurred, assumed, guaranteed or secured by any
asset), except any such agreement with an aggregate outstanding
principal amount not exceeding $100,000; and (vii) any agreement
or transaction between any of the Companies and any of the
Owners, F&F, HNBV, HFI, HCI or any of their respective Affiliates
(other than the other Companies) involving a matter in excess of
$100,000 or which cannot be terminated by the Interested Persons
as of or after the Closing with thirty (30) days or less prior
notice without termination payment or penalty. To the Owners'
Knowledge, except as otherwise provided in SCHEDULE 3.16 of the
Disclosure Schedule and subject to normal expiration or
termination as provided in such contracts, each contract
disclosed in SCHEDULE 3.16 of the Disclosure Schedule is a valid
and binding agreement of the respective Company, and is in full
force and effect, except as any of the foregoing may be limited
by the bankruptcy or insolvency of any other party thereto or the
application by a court of appropriate jurisdiction of any
equitable principles. Except as provided in SCHEDULE 3.16 of the
Disclosure Schedule, none of the Companies is in default or
breach in any material respect under the terms of any contract
described on such SCHEDULE 3.16. True and complete copies of all
contracts listed on SCHEDULE 3.16 of the Disclosure Schedule have
been made available to each of the Interested Persons, except as
set forth in SCHEDULE 3.16 of the Disclosure Schedule.
3.17 Employee Benefits. SCHEDULE 3.17 of the Disclosure
-----------------
Schedule contains listings of each Plan (as hereinafter defined).
True and complete copies of all of such Plans (and if applicable
related trust agreements) together with the most recent annual
reports (Form 5500 including, if applicable, Schedule B thereto)
and the most recent actuarial valuation report prepared in
connection with any Plan, have been made available to the
Interested Persons. No Plan is maintained in connection with any
trust described in Section 501(c)(9) of the Code. Each Plan
complies in all material respects with the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), the Code and
all other applicable laws and administrative or governmental
rules and regulations. No "REPORTABLE EVENT" (within the meaning
of Section 4043 of ERISA) has occurred with respect to any Plan
(other than with respect to the transactions contemplated by the
Transaction Documents, the D&F Transaction Agreements, the Fries
Withdrawal and the Fries Withdrawal Documents). As of the date
of this Agreement, no Company is a contributing sponsor described
in 4043(b)(1) of ERISA. No condition exists which would subject
any of the Companies or any of their ERISA Affiliates (as
hereinafter defined) to any fine under Section 4071 of ERISA;
none of the Companies, nor any of their ERISA Affiliates, has
withdrawn from any Plan or Multiemployer Plan (as hereinafter
defined) or has taken, or is currently considering taking, any
action to do so; and no action has been taken, or is currently
being considered, by any of the Companies or any of their ERISA
Affiliates to terminate any Plan subject to Title IV of ERISA.
None of the Companies nor any ERISA Affiliate of any of them has
engaged in, or is a successor or parent corporation to an entity
that has engaged in, a transaction described in Sections 4069 or
4212(c) of ERISA. No condition exists that (i) could constitute
grounds for termination by the PBGC of any employee benefit plan
that is subject to Title IV of ERISA that is established,
maintained or contributed to by any of the Companies or any of
their ERISA Affiliates or (ii) presents a material risk of
complete or partial withdrawal from any Multiemployer Plan (as
hereinafter defined), which could result in any of the Companies
or any of the Interested Persons or any ERISA Affiliate of any of
them incurring a withdrawal liability within the meaning of
Section 4201 of ERISA. The assets of the Companies are not now,
nor will they solely because of the mere passage of time be,
subject to any lien imposed under Code Section 412(n) by reason
of a failure of any of the Owners or the Companies or any ERISA
Affiliate of any of them to make timely installments or other
payments required under Code Section 412. No Plan, nor any trust
created thereunder, has incurred any "ACCUMULATED FUNDING
DEFICIENCY" (as defined in Section 412 of the Code or Section 302
of ERISA), whether or not waived. There are no actions, suits or
claims pending or, to the Owners' Knowledge, threatened (other
than routine claims for benefits) with respect to any Plan which
would reasonably be expected to have a material adverse effect on
the Companies. None of the Companies nor any of their ERISA
Affiliates has incurred or, to the Owners' Knowledge, would
reasonably be expected to incur any liability material to the
Companies under or pursuant to Title IV of ERISA or Section 4971
of the Code. No prohibited transactions described in Section 406
of ERISA or Section 4975 of the Code have occurred which would
reasonably be expected to result in liability material to the
Companies. All Plans that are intended to be qualified under
Section 401(a) of the Code have received a favorable
determination letter as to such qualification from the Internal
Revenue Service, and to the Owners' Knowledge, no event has
occurred, either by reason of any action or failure to act, which
would cause the loss of any such qualification. To the Owners'
Knowledge, there is no reason why any Plan is not so qualified in
operation. None of the Companies is a party, contributes or
within the past six years has contributed, to a multiemployer
plan, as defined in Sections 3(37) and 4001(a)(2) of ERISA. None
of the Companies contributes to, or has within the past six years
contributed to a single-employer plan within the meaning of
Section 4001(a)(15) which has two or more contributing sponsors,
as defined in Section 4001(a)(13), at least two of whom are not
under common control, within the meaning of ERISA. The Companies
have complied in all material respects with the health care
continuation requirements of Part 6 of Title I of ERISA to the
extent applicable. Except as disclosed on SCHEDULE 3.17 of the
Disclosure Schedule, the execution and delivery of the
Transaction Documents and the D&F Transaction Agreements do not,
and the consummation of the transactions contemplated thereby and
compliance with the provisions thereof will not, result in an
increase in the amount of compensation or benefits or accelerate
the vesting or timing of payment of any compensation or benefits
payable by any of the Companies to any Plan, Benefit Arrangement
(as defined below), International Plan (as defined below) or to
any employee of any of the Companies. SCHEDULE 3.17 of the
Disclosure Schedule contains listings of each Benefit Arrangement
(as hereinafter defined) existing as of the date hereof. True
and complete copies or descriptions of each Benefit Arrangement
(and, if applicable, related trust agreements) and all amendments
thereto have been made available to the Interested Persons. Each
Benefit Arrangement has been maintained in substantial compliance
with its terms and with the requirements prescribed by any and
all applicable statutes, orders, rules and regulations and has
been maintained in good standing with applicable regulatory
authorities. All contributions and payments accrued under each
Plan and Benefit Arrangement, determined in accordance with prior
funding and accrual practices, as adjusted to include
proportional accruals for the period ending on the Closing Date,
will be discharged and paid on or prior to the Closing Date to
the extent then due or, to the extent required by GAAP, reflected
as a Current Liability as determined in the calculations related
to the Adjusted Aggregate Value. As used in this Agreement: (i)
"PLAN" means an "EMPLOYEE BENEFIT PLAN," as defined in Section
3(3) of ERISA, (other than a Multiemployer Plan) which (i) is
subject to any provision of ERISA, (ii) is established,
administered, maintained or contributed to by any of the
Companies or any of their Affiliates and (iii) covers any
employee or former employee of any Company in respect of service
with any Companies or to which any of the Companies or any of
their ERISA Affiliates otherwise may have any liability; (ii)
"MULTIEMPLOYER PLAN" means a "MULTIEMPLOYER PLAN" (as defined in
Section 4001(a)(3) of ERISA) to which any of the Companies or any
of their ERISA Affiliates is or has been obligated to contribute
or otherwise may have any liability; and (iii) with respect to
any person, "ERISA AFFILATEe" means any trade or business
(whether or not incorporated) which is under common control or
would be considered a single employer with such person pursuant
to Section 414(b), (c), (m) or (o) of the Code and the
regulations promulgated thereunder or pursuant to Section 4001(b)
of ERISA and the regulations promulgated thereunder. "BENEFIT
ARRANGEMENT" means any employment, severance, change in control
or similar contract or arrangement or any plan, policy, fund,
program or contract or arrangement providing for bonus, profit-
sharing, stock option, or other stock related rights or other
forms of incentive or deferred compensation, vacation benefits,
workers' compensation or severance benefits that (A) is not a
Plan, (B) is entered into, maintained, administered or
contributed to, as the case may be, by any of the Owners, the
Companies or the Affiliates of any of them and (C) covers in
respect of service with any Company any current or former U.S.
employee or U.S. independent contractor of any of the Companies
who is or was employed in the United States. "INTERNATIONAL
PLAN" means (I) any written employment agreement providing for
annual salary in excess of $100,000 or any severance or similar
contract or arrangement providing for compensation (including
retirement benefits) in excess of $100,000 that (A) is not a Plan
or a Benefit Arrangement and (B) is entered into between any of
the Companies and any current or former employee, agent or
independent contractor of any of the Companies who is employed by
any of the Companies in the Netherlands, the United Kingdom,
Mexico, Japan, Australia, Canada, or Singapore or who while
employed by any of the Companies was employed in the Netherlands,
the United Kingdom, Mexico, Japan, Australia, Canada, or
Singapore or (II) any written plan, policy, fund, program,
arrangement, or contract of or with any of the Companies or any
of their Affiliates in respect of service with any of the
Companies covering a group of employees (at least 12 in number)
who are employed by any of the Companies in the Netherlands, the
United Kingdom, Mexico, Japan, Australia, Canada, or Singapore or
who while employed by any of the Companies were employed in the
Netherlands, the United Kingdom, Mexico, Japan, Australia, Canada
or Singapore; providing for (A) retirement benefits (including
pension, health, medical or life insurance), but excluding any
retirement scheme fund, plan or program (x) sponsored by any
government or (y) providing benefits statutorily mandated under
the laws of the applicable jurisdiction either at the minimum
level statutorily mandated or pursuant to a statute which does
not specify a minimum benefit, or (B) bonus (including post
employment bonus), profit sharing, stock option, or other stock
related rights or other forms of incentive or deferred
compensation, vacation benefits, life insurance (including any
self insured arrangements), health or medical benefits,
disability benefits, supplemental unemployment benefits or
severance benefits (cumulatively "BENEFITS"), other than any
plan, policy, fund, program, arrangement or contract providing
for BENEFITS statutorily mandated by the laws of the applicable
jurisdiction either at the minimum level statutorily mandated or
pursuant to a statute which does not specify a minimum benefit
that (A) is not a Plan or a Benefit Arrangement and (B) is
entered into, maintained, administered, or contributed to by any
of the Sellers, the Companies or the Affiliates of any of them.
"PBGC" means the Pension Benefit Guaranty Corporation. SCHEDULE
3.17 of the Disclosure Schedule lists each International Plan.
True and complete copies of each International Plan and all
amendments thereto have been made available to the Interested
Persons. Each International Plan has been maintained and
operated in substantial compliance with its terms and with the
requirements prescribed by any and all applicable statutes,
orders, rules and regulations and has been maintained in good
standing with all applicable regulatory authorities. With
respect to each International Plan all necessary or appropriate
approvals, qualifications or certifications have been obtained
and no event has occurred or condition exists which would cause
the loss of such approval, qualification or certifications. All
contributions and payments accrued under each International Plan,
determined in accordance with prior funding and accrual
practices, as adjusted to include proportional accruals for the
period ending on or prior to the Closing Date will be discharged
and paid on or prior to the Closing Date to the extent then due
or, to the extent required by GAAP, reflected as a Current
Liability as determined in the calculation related to the
Adjusted Aggregate Value.
3.18 Intellectual Property.
---------------------
(a) The filed patents, the patent and trademark
applications, and the registered trademarks, servicemarks and
copyrights of each of the Companies as of the date hereof (the
"REGISTERED ITEMS") are listed in SCHEDULE 3.18 of the Disclosure
Schedule with an indication as to each, as applicable, of: (i)
the type of such right (i.e., patent, trademark, etc.); (ii) the
owner of such right; and (iii) the jurisdictions by or in which
such right has been issued or registered or in which an
application for such issuance or registration has been filed,
including the respective registration or application numbers.
(b) For purposes of this Section 3.18, the proprietary
intellectual property of each of the Companies (other than the
Registered Items) necessary for the conduct of their respective
businesses as conducted on the date hereof shall be referred to
as the "ANCILLARY ITEMS." The Registered Items and the Ancillary
Items are collectively referred to as the "INTELLECTUAL
PROPERTY."
(c) Except as set forth in SCHEDULE 3.18 of the
Disclosure Schedule, the Companies own or have the right to use
all Registered Items, and to the Owners' Knowledge, the Companies
own or have a right to use the Ancillary Items.
(d) Except as set forth in SCHEDULE 3.18 of the
Disclosure Schedule, each Registered Item owned by the Companies
is free and clear of all security interests, liens, claims,
pledges, charges or encumbrances of any nature whatsoever, except
for any such security interests, liens, claims, pledges, charges
or encumbrances which would not reasonably be expected to have a
material adverse effect on the Companies.
(e) SCHEDULE 3.18 of the Disclosure Schedule contains
a list as of the date hereof of each license and sub-license
agreement (with any of the Companies as licensor or licensee)
covering any Intellectual Property which involves the payment or
receipt by the Companies of in excess of $100,000 of license fees
or royalties per year. Such list specifies the identity of all
parties to the listed license and sublicense agreements and a
general description of the subject matter thereof. All of such
license agreements are in full force and effect, and there exists
no material default by any of the Companies under such license
agreements.
(f) Except as set forth in SCHEDULE 3.18 of the
Disclosure Schedule, no use by any of the Companies of any of the
Registered Items in connection with the Business as conducted on
the date hereof infringes upon, or otherwise violates, the rights
of any person (other than the Interested Persons or their
Affiliates) with respect thereto where such infringement or
violation could reasonably be expected to result in a restriction
upon or a termination of the Companies' right to use such
Registered Item. Except as set forth in SCHEDULE 3.18 of the
Disclosure Schedule, as of the date hereof, to the Owners'
Knowledge the Companies have not received notice that use by any
of the Companies of any of the Ancillary Items in connection with
the Business as conducted on the date hereof infringes upon, or
otherwise violates, the rights of any person (other than the
Interested Persons or their Affiliates) with respect thereto
where such infringement or violation could reasonably be expected
to result in a restriction upon or a termination of the
Companies' rights to use such Ancillary Items.
(g) Except as set forth in SCHEDULE 3.18 of the
Disclosure Schedule and except as may be provided in any license
agreement listed on SCHEDULE 3.18, none of the Intellectual
Property that is owned by any of the Companies is subject to any
outstanding judgment, injunction, order, decree or agreement
restricting the use thereof by any of the Companies or
restricting the licensing thereof by the Companies to any person.
(h) Except as set forth in SCHEDULE 3.18 of the
Disclosure Schedule, (i) the Companies have, to the Owners'
Knowledge, the exclusive right to use the Tastemaker name in
connection with the Business in any jurisdiction in which the
Companies do business on the date hereof, and (ii) as of the date
hereof, the Companies have not, to the Owners' Knowledge,
received any notice of conflict with respect to the rights of
others regarding the use of the name Tastemaker in connection
with the Business.
(i) Except as set forth in SCHEDULE 3.18 of the
Disclosure Schedule, no person, firm or corporation or other
business association is, to the Owners' Knowledge, presently
authorized by the Owners or the Companies to use the Tastemaker
name. The Owners have heretofore made available to each of the
Interested Persons copies of any documents listed in SCHEDULE
3.18 of the Disclosure Schedule.
3.19 Properties. (a) The Companies own or have the right
----------
to use all real and tangible personal property necessary for the
conduct of their businesses. Such property, excluding assets not
used in the operations of the Companies, is in good operating
condition and repair, subject to ordinary wear and tear, and
there exist no material restrictions on the right or ability of
the Companies to use such property in the conduct of their
respective businesses as conducted on the date hereof. Except as
set forth on SCHEDULE 3.19 to the Disclosure Schedule, all such
property as is owned by the Companies is free and clear of all
security interests, liens, claims, pledges, charges and other
encumbrances of any nature whatsoever, securing indebtedness of
any person or entity other than the Companies, except for any
such security interests, liens, claims, pledges, charges or
encumbrances which would not reasonably be expected to have a
material adverse effect on the Companies.
(b) SCHEDULE 3.19 of the Disclosure Schedule contains a
true and complete list of each lease of personal property to
which any of the Companies is a party as of the date hereof,
which provides for the payment or receipt by the Company of any
amount in excess of $100,000 per year. All such personal
property leases are in full force and effect, and there exists no
material default by any of the Companies under any such personal
property leases. True and complete copies of all such personal
property leases have been made available to each of the
Interested Persons.
(c) All real property owned by any of the Companies as of
the date hereof is described in SCHEDULE 3.19 of the Disclosure
Schedule, and none of such real property is subject to any
mortgage which secures debt of any person or entity other than
the Companies. A true and complete list of all leases of real
property by any of the Companies upon which offices staffed with
personnel of the Companies are located or manufacturing
operations of the Companies are conducted as of the date hereof
is contained in SCHEDULE 3.19 of the Disclosure Schedule, all
such real property leases are in full force and effect, and there
exists no material default by any of the Companies under any such
real property leases. True and complete copies of all such real
property leases have been made available to each of the
Interested Persons. All such real property is suitable in all
material respects for the conduct of the businesses of the
Companies as conducted on the date hereof. To the Owners'
Knowledge, none of the structures on any such owned real property
substantially encroaches upon real property of another person,
and no structure of any other person substantially encroaches
upon any of such owned real property.
3.20 Insurance Coverage. SCHEDULE 3.20 of the Disclosure
------------------
Schedule contains a true and complete description as of the date
hereof of the Companies' insurance programs covering the assets,
properties, operations and activities of the Companies. Except
as disclosed on SCHEDULE 3.20 to the Disclosure Schedule, there
is no material claim by the Companies pending under any policies
of insurance as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or in respect of
which such underwriters have reserved their rights. All premiums
payable under all policies of insurance maintained by the
Companies have been paid timely and the Companies have otherwise
complied in all material respects with the terms and conditions
of all such policies. To the Owners' Knowledge, there is no
threatened termination of, or material alteration of coverage
under, any policies of insurance maintained by the Companies.
3.21 Company Brokers. None of the Companies is a party to
---------------
any agreement providing for the payment of any broker's, finder's
or other similar fee or commission in connection with the
execution and delivery of, or the consummation of the
transactions contemplated by, any of the Transaction Documents or
the D&F Transaction Agreements, the Fries Withdrawal or the Fries
Withdrawal Documents.
3.22 Withdrawal Consents and Approvals; No Violation.
-----------------------------------------------
Assuming the completion of the closing of the transactions
contemplated by the D&F Transaction Agreements and the
Transaction Documents and other than by reason of any acts or
omissions by the Interested Persons and their respective
Affiliates (including, after the Closing, without limitation,
F&F) and any events or occurrences after the Closing not related
to any acts or omissions by the Owners and their respective
Affiliates (including, prior to the Closing, without limitation,
F&F), except as set forth in SCHEDULE 3.22 of the Disclosure
Schedule, the exercise on the Closing Date by F&F of the Fries
Withdrawal immediately after completion of the Closing will not,
and the consummation of the Fries Withdrawal Closing immediately
after completion of the Closing and compliance with the
provisions of the Partnership Agreement and the Fries Withdrawal
Documents in connection therewith will not, result in any
violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of
a material right or benefit under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of
the properties or assets of Tastemaker under: (i) the
Partnership Agreement, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease, agreement, instrument, permit,
concession, franchise or license by which Tastemaker is bound or
License or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation by which Tastemaker is bound or to
which any of its properties or assets is subject, other than, in
the case of clauses (ii) and (iii), any such violations,
defaults, rights, liens, security interests, charges or
encumbrances (A) that are attributable to the Interested Persons
or their Affiliates, or (B) that would not, individually or in
the aggregate, reasonably be expected to have a material adverse
effect on Tastemaker, and would not impair the ability of
Tastemaker to perform its obligations under the Partnership
Agreement or the Fries Withdrawal Documents, prevent the
consummation by Tastemaker of the Fries Withdrawal Closing or,
other than by reason of any act or omission of the Interested
Persons or F&F or their respective subsidiaries, materially and
adversely affect the rights and benefits of F&F under the
Partnership Agreement or the Fries Withdrawal Documents.
Assuming the completion of the closing of the transactions
contemplated by the D&F Transaction Agreements and the
Transaction Documents and other than by reason of any acts or
omissions by the Interested Persons and their respective
Affiliates (including, after the Closing, without limitation,
F&F) and any events or occurrences after the Closing not related
to any acts or omissions by the Owners and their respective
Affiliates (including, prior to the Closing, without limitation,
F&F), no filing, declaration or registration with, or consent,
approval, order or authorization of, any Governmental Authority
is required by, or with respect to, Tastemaker in connection with
the exercise on the Closing Date by F&F of the Fries Withdrawal
immediately after the completion of the Closing or the
consummation of the Fries Withdrawal Closing immediately after
the Closing, except: (a) in connection, or in compliance, with
the provisions of the Hart-Scott-Rodino Antitrust Improvement Act
of 1976, as amended, (b) for such filings, declarations,
registrations, consents, approvals, orders and authorizations in
the Countries disclosed in APPENDIX G hereto, and such filings,
declarations, registrations, covenants, approvals, orders and
authorizations that may be required under the laws of any other
foreign country in which Tastemaker or any then existing
subsidiary of Tastemaker is organized, conducts any business or
owns any property or assets, and (c) for such other filings,
declarations, registrations, consents, approvals, orders and
authorizations (1) that are attributable to the Interested
Persons or their Affiliates, or the ownership of F&F by the
Interested Persons or their Affiliates, or (2) the failure of
which to obtain or make would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on
Tastemaker and would not impair the ability of Tastemaker to
perform its obligations under the Partnership Agreement or the
Fries Withdrawal Documents, prevent the consummation by
Tastemaker of the Fries Withdrawal Closing or, other than by
reason of any act or omission of the Interested Persons or F&F or
their respective subsidiaries, materially and adversely affect
the rights and benefits of F&F under the Partnership Agreement or
the Fries Withdrawal Documents. Assuming the completion of the
closing of the transactions contemplated by the D&F Transaction
Agreements and the Transaction Documents and other than by reason
of any acts or omissions by the Owners and their respective
Affiliates, including, prior to the Closing, without limitation,
F&F, and any event or occurrence prior to the Closing not related
to any acts or omissions by the Interested Persons and their
respective Affiliates, except as disclosed on SCHEDULE 3.17 of
the Disclosure Schedule, the exercise on the Closing Date of the
Fries Withdrawal immediately following the completion of the
Closing will not, and the consummation of the Fries Withdrawal
and the transactions contemplated by the Fries Withdrawal
Documents on the Closing Date immediately following the Closing
will not, result in an increase in the amount of compensation or
benefits or accelerate the vesting or timing of payment of any
compensation or benefits payable by any of the Companies to any
Plan, Benefit Arrangement (as defined below), International Plan
(as defined below) or to any employee of any of the Companies,
other than any such increase, acceleration, vesting or changes in
timing as are attributable to the Interested Persons or their
Affiliates.
4. REPRESENTATIONS AND WARRANTIES OF THE INTERESTED PERSONS.
--------------------------------------------------------
The Interested Persons represent and warrant to each of the
Owners as of the date hereof and as of the Closing Date as
follows:
4.1 Organization, Standing and Power. GRI is a corporation
--------------------------------
duly organized and validly existing and in good standing under
the laws of Switzerland and has the requisite power and authority
to carry on its businesses as conducted on the date hereof.
Roche is a corporation duly organized and validly existing and in
good standing under the laws of Delaware and has the requisite
power and authority to carry on its businesses as conducted on
the date hereof.
4.2 Authority. The Interested Persons have all requisite
---------
power and authority to enter into each of the Transaction
Documents and the D&F Transaction Agreements and to consummate
the transactions contemplated thereby. The execution and
delivery of each of the Transaction Documents and the D&F
Transaction Agreements by Roche and/or GRI, as the case may be,
and the consummation by the Interested Persons of the
transactions contemplated thereby have been duly authorized by
all necessary action on the part of Roche and/or GRI, as the case
may be. Each of the Transaction Documents and the D&F
Transaction Agreements has been duly executed and delivered by
Roche and/or GRI, as the case may be, and (assuming the due
authorization, execution and delivery thereof by each other party
thereto other than the Designated Buyers) constitutes the valid
and binding obligation of Roche and/or GRI, as the case may be,
enforceable against Roche and/or GRI, as the case may be in
accordance with its respective terms. Each of the Designated
Buyers has all requisite power and authority to enter into each
of the Designated Transaction Agreements and to consummate the
transactions contemplated thereby. The execution and delivery of
each of the Designated Transaction Agreements prior to the
Closing Date by each of the Designated Buyers that is a party
thereto and the consummation by each of the Designated Buyers on
the Closing Date of the transactions contemplated thereby will
have been duly authorized by all necessary action on the part of
each of the Designated Buyers. The Designated Transaction
Agreements will have been duly executed and delivered by each of
the Designated Buyers that is a party thereto prior to the
Closing Date and (assuming the due authorization, execution and
delivery thereof by Tastemaker) will then constitute the valid
and binding obligations of each of the Designated Buyers that is
a party thereto, enforceable against each of the Designated
Buyers in accordance with their respective terms.
4.3 Consents and Approvals; No Violation. The execution
------------------------------------
and delivery of the Transaction Documents and the D&F Transaction
Agreements do not, and the consummation of the transactions
contemplated thereby and compliance with the provisions thereof
will not, result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or
to the loss of a material right or benefit under: (i) any
provision of the charter or organizational documents of either of
the Interested Persons; (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease, agreement, instrument, permit,
concession, franchise or license by which either of the
Interested Persons is bound; or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation by which
either of the Interested Persons is bound or to which any of its
properties or assets is subject, other than, in the case of
clauses (ii) and (iii), any such violations, defaults or rights
that, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on the Interested
Persons, and would not impair the ability of either of the
Interested Persons to perform its obligations under any of the
Transaction Documents or the D&F Transaction Agreements, prevent
the consummation by either of the Interested Persons of any of
the transactions contemplated by any of the Transaction Documents
or the D&F Transaction Agreements or, other than by reason of any
act or omission of the Owners or their respective Affiliates,
materially and adversely affect the rights and benefits of the
Owners under the Transaction Documents and the D&F Transaction
Agreements. No filing, declaration or registration with, or
consent, approval, order or authorization of, any Governmental
Authority is required by, or with respect to, either of the
Interested Persons in connection with the execution and delivery
by either of the Interested Persons of the Transaction Documents
or the consummation by either of the Interested Persons of the
transactions contemplated by the Transaction Documents, except:
(a) in connection, or in compliance, with the provisions of the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended;
(b) the filing of the certificate of designation of Newco
Preferred Stock with the Secretary of State of the State of
Delaware; and (c) for such filings, declarations, registrations,
consents, approvals, orders and authorizations as are disclosed
on APPENDIX F to this Agreement that may be required under the
laws of any foreign country in which any of the Companies is
organized, conducts any business or owns any property or assets.
4.4 Brokers. No broker, investment banker or other person
-------
other than J.P. Morgan & Co., Incorporated, the fees and expenses
of which will be paid by the Interested Persons, is entitled to
any broker's, finder's or other similar fee or commission in
connection with the execution and delivery of, or the
consummation of the transactions contemplated by, any of the
Transaction Documents and the D&F Transaction Agreements based on
agreements or arrangements made by the Interested Persons or the
Designated Buyers.
4.5 Withdrawal Consents and Approvals; No Violation.
-----------------------------------------------
Assuming the completion of the closing of the transactions
contemplated by the D&F Transaction Agreements and the
Transaction Documents and other than by reason of any acts or
omissions by the Owners and their respective Affiliates
(including prior to the Closing, without limitation, F&F), and
any events or occurrences prior to the Closing not related to any
acts or omissions by the Interested Persons and their respective
Affiliates, the exercise by F&F on the Closing Date of the Fries
Withdrawal immediately after completion of the Closing will not,
and the consummation of the Fries Withdrawal Closing immediately
after the Closing and compliance with the provisions of the
Partnership Agreement and the Fries Withdrawal Documents in
connection therewith will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material right
or benefit under: (i) any provision of the charter or
organizational documents of either of the Interested Persons or
F&F; (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease, agreement, instrument, permit, concession,
franchise or license by which either of the Interested Persons or
F&F is bound; or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation by which either of the Interested
Persons or F&F is bound or to which any of their respective
properties or assets is subject, other than, in the case of
clauses (ii) and (iii), any such violations, defaults or rights
that, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on the Interested
Persons or F&F, and would not impair the ability of F&F to
perform its obligations under the Partnership Agreement or the
Fries Withdrawal Documents, prevent the consummation by F&F of
the Fries Withdrawal Closing or, other than by reason of any act
or omission of the Owners or Tastemaker, materially and adversely
affect the rights and benefits of Tastemaker under the
Partnership Agreement and the Fries Withdrawal Documents.
Assuming the completion of the closing of the transactions
contemplated by the D&F Transaction Agreements and the
Transaction Documents and other than by reason of any acts or
omissions by the Owners and their respective Affiliates,
(including, prior to the Closing, without limitation, F&F) and
any events or occurrences prior to the Closing not related to any
acts or omissions by the Interested Persons and their respective
Affiliates, no filing, declaration or registration with, or
consent, approval, order or authorization of, any Governmental
Authority is required by, or with respect to, either of the
Interested Persons or F&F in connection with the exercise on the
Closing Date by F&F of the Fries Withdrawal immediately after the
completion of the Closing or the consummation by F&F of the Fries
Withdrawal Closing immediately after the completion of the
Closing, except: (a) in connection, or in compliance, with the
provisions of the Hart-Scott-Rodino Antitrust Improvement Act of
1976, as amended; and (b) for such filings, declarations,
registrations, consents, approvals, orders and authorizations as
are disclosed on APPENDIX G to this Agreement that may be
required under the laws of any foreign country in which
Tastemaker or any of its Subsidiaries is organized, conducts any
business or owns any property or assets, and (c) for such other
filings, declarations, registrations, covenants, approvals,
orders and authorizations the failure of which to obtain or make
would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on F&F and would not impair
the ability of F&F to perform its obligations under the
Partnership Agreement or the Fries Withdrawal Documents, prevent
the consummation by F&F of the Fries Withdrawal Closing or, other
than by reason of any act or omission of Tastemaker, materially
or adversely affect the rights and benefits of Tastemaker under
the Partnership Agreement or the Fries Withdrawal Documents.
5. COVENANTS OF THE OWNERS.
-----------------------
5.1 Access to Properties and Records. After the full
--------------------------------
execution and delivery hereof until the Closing Date, the Owners
shall cause the Companies to give the officers, employees,
attorneys, accountants, contractors and other agents and
representatives of the Interested Persons reasonable access to
the Companies' offices, properties and records in accordance with
the Transition Team Protocol.
5.2 Operations. Except as may otherwise be contemplated
----------
by the Transaction Documents and the D&F Transaction Agreements,
from the date hereof to the Closing, the Owners shall cause the
Companies to: (i) conduct their respective operations in
compliance with applicable laws and only in the ordinary course,
provided, that the Owners shall be permitted to cause the
Companies to declare and pay dividends and make other
distributions from the date hereof until (but in no event after)
the Adjustment Time; (ii) use reasonable best efforts to maintain
their respective properties and facilities in their present
condition, reasonable use and ordinary wear and tear excepted;
(iii) use reasonable best efforts to maintain their respective
relationships with customers, suppliers and key employees; (iv)
use reasonable best efforts to obtain any material consents of
non-governmental third parties required in connection with the
consummation of the transactions contemplated by the Transaction
Documents, the D&F Transaction Agreements and, if requested by
the Interested Persons, the Fries Withdrawal Documents; and (v)
continue to maintain insurance with coverages, deductibles and
limits which are the same in all respects material to the
Companies as exist on the date hereof. Without limiting the
generality of the foregoing, from the date hereof until the
Closing Date, the Owners will not permit the adoption of any
change to the Partnership Agreement and will not permit any of
the Companies to: (a) adopt or propose any change in its
certificate of incorporation or bylaws or other similar
constituent documents; (b) merge or consolidate with any other
person; or (c) acquire a business of any other person; (d) sell,
lease, license or otherwise dispose of any material assets or
property; or (e) agree or commit to do any of the foregoing;
except in the case of (d) and (e), (A) pursuant to existing
contracts or commitments, and (B) in the ordinary course of
business.
5.3 Financial Statements. On or before the Closing Date,
--------------------
the Owners shall deliver or cause to be delivered to each of the
Interested Persons an unaudited combined consolidated balance
sheet, income statement and cash flow statement of the Companies
as at, and for the interim period ending on, the last day of the
most recent accounting month of the Companies prior to the
Closing Date for which such statements are available. The
statements to be delivered pursuant to this Section shall be
prepared in accordance with the customary accounting practices,
procedures and policies of the Companies used in connection with
regularly prepared internal financial statements, which
practices, procedures and policies will not necessarily be
consistent in all respects with GAAP or the practices, procedures
and policies used in preparing the 1995 Financial Statements.
The Interested Persons shall have access to certain other
information customarily prepared by the Companies concerning the
financial condition and results of operations of the Companies in
accordance with the Transition Team Protocol.
5.4 Fees. Except as otherwise agreed by the parties in
----
writing, each of Hercules and Mallinckrodt shall pay all legal,
accounting, financial advisory, brokerage and finder fees and
commissions, filing fees and other similar fees and expenses
incurred by or imposed upon it in connection with the negotiation
and preparation of the Transaction Documents, the D&F Transaction
Agreements and the Fries Withdrawal Documents and the
consummation of the transactions contemplated by the Transaction
Documents, the D&F Transaction Agreements, the Fries Withdrawal
and the Fries Withdrawal Documents, and the Interested Persons
shall have no liability of any kind therefor.
5.5 Non-Solicitation of Employees. Each of the Owners
-----------------------------
agrees that for a period of three full years from the Closing
Date, neither it nor any of its Affiliates shall solicit the
employment of, or the performance of services by, any current
employee of any of the Companies whose employment is not
terminated by the Interested Persons or their respective
Affiliates subsequent to the Closing Date; provided, however,
that general solicitations not targeted to employees of the
Companies on the Closing Date shall not be deemed to violate this
Section 5.5.
5.6 Confidentiality. After Closing, the Owners and their
---------------
Affiliates will hold, and will use reasonable efforts to cause
their respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential
documents and information concerning the Companies and the
Business, except to the extent that such information was: (a)
previously known on a nonconfidential basis by the Owners; (b) in
the public domain through no fault of the Owners; (c) later
lawfully acquired by the Owners from any source other than one
related to the Owners' prior ownership of the Companies, which
source was not bound by any confidentiality obligation; or (d)
disclosed for purposes of litigation prosecution or defense, Tax
return preparation or payment, reporting historical financial
results and other proper business purposes. Notwithstanding
anything in this Section 5.6 to the contrary, the obligation of
the Owners and their Affiliates to hold any such information in
confidence shall be satisfied if they exercise the same care with
respect to such information as they would take to preserve the
confidentiality of their own similar information.
5.7 Accounts; Safe Deposit Boxes; Powers of Attorney;
-------------------------------------------------
Officers and Directors. The Owners shall provide prior to
- ----------------------
Closing; (i) a true and correct list of all bank and savings
accounts and safe deposit boxes of the Companies and those
persons authorized to sign thereon; (ii) a true and correct list
of all powers of attorney granted by the Companies for purposes
of authorizing persons not employees of the Companies to withdraw
money from bank accounts of the Companies or to pledge the credit
of the Companies; and (iii) a true and correct list of all
officers and directors of each of the Companies.
5.8 Access. Owners agree to make available to, and to
------
cause the Companies to make available to, the Interested Persons
during the period beginning on the date hereof, and ending on the
Closing Date, certain Business Personnel identified by Interested
Person for purposes of discussing with them their role in the
future success of, and the terms of their future employment with,
the combined organization of the Interested Persons, in
accordance with the Transition Team Protocol.
5.9 Resignations. The Owners will deliver to each of the
------------
Interested Persons the resignations of all officers and directors
of the Companies who will be officers, directors or employees of
either of the Owners or any of their respective Affiliates after
the Closing Date from their positions with the Companies on or
prior to the Closing Date. The Owners will indemnify the
Interested Persons for any severance or other employee benefit
payments triggered by such resignations.
5.10 Tastemaker B.V. Partnership Election. Prior to the
------------------------------------
Closing Date, Hercules and Mallinckrodt shall cause Tastemaker
B.V. to make an election complying with the requirements of
Treasury Regulations Section 301.7701-3(c) to be classified,
effective as of a date prior to the Closing Date, as a
partnership for United States federal income Tax purposes.
5.11 Third Party Infringement. Between the date hereof and
------------------------
the Closing Date, the Owners will promptly notify the Interested
Persons of (i) any infringement by any third party upon the
rights of the Companies in or to Intellectual Property of which
the Specified Officers become aware and (ii) any notice the
Specified Officers receive from any third party that the
Companies are or may be infringing upon the intellectual property
rights of any third party.
5.12 Third Party Defaults. Between the date hereof and the
--------------------
Closing Date, the Owners will promptly notify the Interested
Persons of any material default by any other person or entity,
under any agreements of the Companies which are required by this
Agreement to be listed on the Disclosure Schedule.
5.13 Resignations. Between the date hereof and the Closing
------------
Date, the Owners shall notify the Interested Persons in the event
any of the Specified Officers notifies any of the Partners'
Representatives that he or she intends to resign within one (1)
year after the Closing of the transactions contemplated by the
Transaction Documents.
5.14 Severance and Stay Incentives. From the date hereof
-----------------------------
until the Closing Date, the Owners shall give the Interested
Persons written notice of (i) the execution by the Companies of
any employment agreement with any single employee providing for
an annual salary of $100,000 or more or providing for any
severance pay or stay incentive of $50,000 or more for any one
employee, or (ii) the adoption of any stay incentive or severance
program covering a group of not less than twelve (12) employees
of the Companies.
5.15 Tax Waiver Notification. Between the date hereof and
-----------------------
the Closing Date, the Owners shall notify the Interested Persons
in the event (i) the Companies (or any member of any affiliated,
consolidated, combined or unitary group of which a Company is a
member) waives or grants any extension of any statute of
limitations in respect of any Company Tax Returns or Taxes or
(ii) any Company requests any extension of time in which to file
any Company Tax Return.
6. COVENANTS OF THE INTERESTED PERSONS.
-----------------------------------
6.1 Compliance with Transition Team Protocol. From the
----------------------------------------
date hereof until the Closing, the Interested Persons shall, and
shall cause their officers, employees, attorneys, accountants,
contractors and other agents and representatives to, comply with
the Transition Team Protocol.
6.2 Fees. Except as otherwise agreed by the parties in
----
writing, the Interested Persons shall pay all legal, accounting,
financial advisory, brokerage and finder's fees and commissions,
filing fees and other similar fees and expenses incurred by or
imposed upon the Interested Persons in connection with the
negotiation and preparation of the Transaction Documents, the D&F
Transaction Agreements and the Fries Withdrawal Documents and the
consummation of the transactions contemplated by the Transaction
Documents, the D&F Transaction Agreements, the Fries Withdrawal
and the Fries Withdrawal Documents, and the Owners shall have no
liability of any kind therefor.
6.3 Record Retention and Access. For a period of ten (10)
---------------------------
years following the Closing Date, the Interested Persons shall
grant each of the Owners and their respective representatives,
upon receipt of reasonable prior notice from the Owners, access
to, and shall make available to each of the Owners and their
respective representatives, all properties, facilities, documents
and correspondence of the Companies existing on the Closing Date,
during regular business hours and upon reasonable prior notice,
for purposes of preparing tax returns and securities filings,
prosecution and defense of litigation and all other proper
business purposes; provided that, in connection with such access
the Owners will at all times comply with the Interested Persons'
normal visitor safety and security procedures and requirements.
If within such ten (10) year period destruction of any records,
files, documents or correspondence of the Companies is desired
(other than records, files, documents or correspondence which
would not normally be retained in the records of the Companies'
record retention policies existing on the date hereof), the
Interested Persons shall not destroy or permit the destruction of
such items without giving thirty (30) days prior written notice
to the Owners, upon which notice the Owners shall have the right
to take possession of such records, files, documents and
correspondence.
6.4 Confidentiality. Until such time (if any) as the
---------------
transactions contemplated by the Transaction Documents have been
consummated, the Interested Persons shall continue to comply
with, and shall be bound by the terms and conditions of, that
certain confidentiality letter dated September 26, 1996, executed
and delivered by Roche, which confidentiality letter is attached
hereto as APPENDIX H and shall be for the benefit of, and
enforceable by, without limitation, each of the Owners.
6.5 Responsibility for D&F Transaction Agreements. The
---------------------------------------------
Interested Persons shall cause their respective subsidiaries and
Affiliates to fully and timely fulfill and perform, and the
Interested Persons hereby unconditionally guarantees the full and
timely performance and fulfillment by their subsidiaries and
Affiliates of, all of their respective obligations under the D&F
Transaction Agreements required to be performed or fulfilled by
GRI prior to the completion of the closing of the transactions
contemplated by the D&F Transaction Agreements; provided,
however, that upon completion of the closing of the transactions
contemplated by the prior Transaction Agreements (i) the
Interested Persons shall be fully and finally released of all
liabilities, responsibilities and obligations with respect to all
representations, warranties, covenants, agreements and other
obligations of their subsidiaries and Affiliates under the D&F
Transaction Agreements, and (ii) no claim may be asserted or
maintained against the Interested Persons with respect to any
representation, warranty, covenant, agreement or other obligation
under the D&F Transaction Agreements and all such claims shall
be, and hereby are, forever released, waived and barred.
6.6 Laidlaw Landfill Site. The Interested Persons agree
---------------------
that none of the Companies will use the portion of the Laidlaw
Landfill site in St. Louis, Missouri which is believed to be
included on the National Priorities List on or after the Closing
Date for the storage, treatment or disposal of any waste or
material.
6.7 Designated Transaction Approvals. To the extent the
--------------------------------
identity of a Designated Buyer or information regarding a
Designated Buyer is required for taking, preparing, making and/or
filing, or causing to be taken, prepared, made and/or filed, with
each appropriate Governmental Authority, any actions, filings and
requests for approvals, consents, permits, authorizations or
waivers that are required from such Governmental Authority for
the consummation of the transactions contemplated by such
Designated Transaction Agreement, GRI shall be responsible for
the same.
7. MUTUAL COVENANTS OF THE OWNERS AND THE INTERESTED PERSONS
---------------------------------------------------------
7.1 Satisfaction of Conditions. From and after the date
--------------------------
hereof, each of Hercules, Mallinckrodt, Roche and GRI shall use
their best efforts (individually or jointly, as the case may be)
to cause all conditions precedent set forth in Sections 10.1 and
10.2 of this Agreement (as appropriate to each of them) to be
satisfied and fulfilled at the earliest practicable date, to the
extent the satisfaction or fulfillment thereof is its
responsibility hereunder or within its reasonable control. If
any event should occur, either within or without the control of
any party hereto, which would prevent fulfillment of the
conditions precedent to the obligations of any party to
consummate the transactions contemplated by any of the
Transaction Documents, all parties shall use their respective
best efforts to cure or remove the effect of the event as
expeditiously as possible; provided, however, that (without
limitation) nothing set forth in this Section 7.1 shall be
construed as requiring any party to institute litigation or
expend any sums in the defense or settlement of litigation in
order to cure or remove the effect of any such event.
7.2 Governmental Consents. Promptly following the full
---------------------
execution of this Agreement, each of Hercules, Mallinckrodt,
Roche and GRI shall take, prepare, make and/or file, or cause to
be taken, prepared, made and/or filed, with each appropriate
Governmental Authority, all actions, filings and requests for
approvals, consents, permits, authorizations or waivers that are
required from such Governmental Authority for the consummation of
the transactions contemplated by each of the Transaction
Documents, the D&F Transaction Agreements and, if requested by
the Interested Persons, the Fries Withdrawal and the Fries
Withdrawal Documents and shall diligently and expeditiously
prosecute, and shall cooperate fully with each other in the
prosecution of, such actions, filings and requests and all
proceedings necessary to secure such approvals, consents,
permits, authorizations and waivers. The parties acknowledge and
agree that the actions, filings and requests required to be made
pursuant to this Section include, without limitation, compliance
with the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended, and those set forth on APPENDIX F and, if requested by
the Interested Persons, those set forth on APPENDIX G.
Notwithstanding anything in this Section 7.2 to the contrary,
none of Mallinckrodt, Hercules, Roche or GRI, nor any of their
respective Affiliates, shall be required to agree to any consent
decree, order or settlement in connection with an investigation
by, filing with or approval, consent permit, authorization or
waiver of any Governmental Authority.
7.3 Public Announcements. None of Hercules, Mallinckrodt,
--------------------
Roche or GRI shall make any public announcement at any time
concerning the Transaction Documents, the D&F Transaction
Agreements or the Fries Withdrawal Documents, or the transactions
contemplated by the Transaction Documents, the D&F Transaction
Agreements, or the Fries Withdrawal Documents, without the prior
approval of all parties to this Agreement. In the event any
party to this Agreement determines, after seeking and obtaining
the advice of competent counsel, that a public announcement
concerning the Transaction Documents, the D&F Transaction
Agreements or the Fries Withdrawal Documents, or the transactions
contemplated by the Transaction Documents, the D&F Transaction
Agreements or the Fries Withdrawal Documents, is required by law,
the party required to make such announcement shall give all other
parties hereto such notice of, and opportunity to review, the
proposed form and substance of the required announcement as is
practicable under the circumstances, but such review shall in no
event prevent the party required to make such announcement from
making an announcement in such form and substance as it shall
reasonably determine is required.
7.4 Further Assurances. After the Closing Date, each of
------------------
Hercules, Mallinckrodt, Roche and GRI shall, from time to time
upon any other party's request, execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, all such
further assignments, documents, data, employment records,
instruments, transfers, conveyances, discharges, releases,
assurances and consents, and shall take or cause to be taken such
further actions, as such other party may reasonably request to
further evidence or carry out the transactions contemplated by,
and the purposes of, the Transaction Documents, the Fries
Withdrawal and the Fries Withdrawal Documents.
7.5 Tax Annex. After the Closing Date, each of Hercules,
---------
Mallinckrodt, Roche and GRI shall comply with the terms and
conditions of the Tax Annex.
7.6 Tastemaker B.V. Pension. The parties agree to
-----------------------
cooperate with each other in connection with the segregation and
transfer of assets allocable to employees of Tastemaker B.V. from
Stichting Pensioenfonds Hercules Nederland ("SPHN") to a
successor plan established by Tastemaker B.V.
7.7 Tastemaker Debt. In the event that the Interested
---------------
Persons give written notice to the Owners on or before February
7, 1997 of their intent to cause F&F to exercise of the Fries
Withdrawal, from the date of such notice until March 1, 1997,
each of Hercules, Mallinckrodt, Roche and GRI shall use their
reasonable best efforts to enable the benefits and obligations of
Tastemaker, as borrower, under the Tastemaker Debt to be assigned
to and assumed by, or otherwise transferred to F&F upon such
terms and conditions as are satisfactory to all parties hereto
and consistent with the requirements of the Contribution
Agreement and the Partnership Agreement with respect thereto. To
such end and to the extent required, Roche shall unconditionally
guaranty the obligations of F&F with respect to the Tastemaker
Debt upon its transfer to F&F and, if required by the lender of
the Tastemaker Debt, Roche shall procure an unconditional
guaranty of such obligations from its ultimate parent, Roche
Holdings Ltd. If, notwithstanding the reasonable best efforts of
the parties, the proposed terms for the assignment, assumption,
and transfer of the Tastemaker Debt to F&F are not agreed with
the lenders of the Tastemaker Debt or are not reasonably
satisfactory to the parties hereto by March 1, 1997, each of
Hercules, Mallinckrodt, Roche and GRI shall use their reasonable
best efforts to obtain replacement financing of the Tastemaker
Debt upon terms mutually satisfactory to the parties, which shall
permit the assignment, assumption and transfer thereof to F&F and
which will satisfy the terms and conditions set forth in Section
10.2.6 of the Contribution Agreement and Section 8.7.C of the
Partnership Agreement, and the Closing Date shall be changed to a
date not later than the Closing Deadline and mutually agreeable
to the parties, which date shall allow a reasonable time
(assuming full cooperation by all parties) to obtain said
replacement financing. The Owners shall pay all costs and fees
under the lenders of the Tastemaker Debt (or any replacement
thereof) associated with the transfer of such obligations to F&F
and, if an unconditional guaranty of Roche Holdings Ltd. is
required by the lenders of the Tastemaker Debt and provided by
Roche Holding Ltd., the Owners shall reimburse Roche Holding Ltd.
for up to $750,000 of any stamp taxes imposed by a Governmental
Authority with respect to such unconditional guaranty of Roche
Holdings Ltd., if and to the extent such stamp tax is required to
be paid by Roche Holdings Ltd. The parties agree that they will
not unreasonably withhold any consent or agreement required of
the parties in this Section 7.7.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS:
------------------------------------------------------
INDEMNITY FOR DAMAGES
---------------------
8.1 Survival. All representations and warranties of the
--------
parties made in this Agreement, and all covenants and agreements
of the parties made in this Agreement and required to be
performed on or before the Closing Date, shall survive until 5:00
p.m. Eastern Standard Time on the second annual anniversary of
the Closing Date, notwithstanding any investigation heretofore
made or omitted by the parties, and shall expire and be of no
further force and effect after such time; provided that (i) the
representations and warranties contained in Sections 3.1, 3.2,
4.1 and 4.2 shall survive indefinitely, (ii) the representations
and warranties in Section 3.12 shall survive until the fifth
anniversary of the Closing Date, (iii) the covenants, agreements,
representations and warranties in the Tax Annex and Sections 3.13
and 3.17 shall survive until expiration of the statute of
limitations applicable to the matters covered thereby, if any
(giving effect to any waiver, mitigation or extension thereof)
or, if none is applicable, the second annual anniversary of the
Closing Date, and (iv) the representations and warranties in
Sections 3.22 and 4.5 shall survive for two days after the
Closing Date unless the Fries Withdrawal Closing occurs within
two days after the Closing Date in which case such
representations and warranties shall survive until the second
annual anniversary of the Closing Date. No party will have any
liability to any other party arising out of a breach of any
representation or warranty contained in this Agreement or of any
covenant or agreement made in this Agreement and required to be
performed on or before the Closing Date, unless the party
claiming that such breach occurred gives to all other parties
hereto written notice and a detailed explanation of the alleged
breach on or before 5:00 p.m. Eastern Standard Time on the last
day of the applicable survival period; provided, however, that if
notice of a claim is timely given, the claim specified in such
notice, and the specific representation, warranty, covenant or
agreement upon which any such claim is based, shall survive until
such claim has been finally resolved and provided further that
for the purpose of this Section, notice of a claim shall be
deemed given by the Interested Persons on the Closing Date with
respect to those items disclosed under the heading "SPECIFIED
ENVIRONMENTAL MATTERS" on SCHEDULE 3.12 of the Disclosure
Schedule.
8.2 Indemnity by the Interested Persons. Subject to the
-----------------------------------
provisions of Section 8.1 above, and further subject to any
rights of set off of Roche and GRI or any Affiliate of Roche and
GRI against either of the Owners or their respective Affiliates,
each of Roche and GRI shall indemnify and hold harmless each of
Hercules and Mallinckrodt, and each of their respective officers,
directors, agents, employees, subsidiaries, affiliates and
representatives in respect of any Damages suffered or incurred as
a result of or arising out of the breach by Roche, GRI or Newco
of any representation, warranty, covenant or agreement set forth
in any of the Transaction Documents. From and after the Fries
Withdrawal Closing (if it occurs), each of Roche and GRI shall
indemnify and hold harmless each of Hercules and Mallinckrodt,
and each of their respective officers, directors, agents,
employees, subsidiaries, affiliates and representatives, in
respect of any Damages suffered or incurred as a result of or
arising out of the breach by F&F after the Closing of any
representation, warranty, covenant or agreement set forth in the
Partnership Agreement or any of the Fries Withdrawal Documents.
8.3 Indemnity by the Owners. Subject to the provisions of
-----------------------
Section 8.1 above, and further subject to any rights of set off
of Hercules or Mallinckrodt or any Affiliate of Hercules or
Mallinckrodt against either of the Interested Persons or their
respective Affiliates, each of the Owners shall indemnify and
hold harmless the Interested Persons, their officers, directors,
agents, employees, subsidiaries, affiliates and representatives
in respect of any Damages suffered or incurred as a result of or
arising out of the breach by the Owners of any representation,
warranty, covenant or agreement set forth in this Agreement;
provided, however, that for purposes of determining whether a
breach by the Owners of a representation set forth in Article 3
(other than the representation and warranty in the first clause
(iv) of Section 3.9, as to which this proviso shall not be
applicable) is indemnifiable pursuant to this Section 8.3, the
accuracy of such representations shall be determined without
giving effect to the qualifications to such representations
concerning "material" (including as such term qualifies specific
items or effects) and "OWNERS' KNOWLEDGE," and, with respect to
Section 3.12 only, without giving effect to the disclosures set
forth under the heading "SPECIFIED ENVIRONMENTAL MATTERS" in
SCHEDULE 3.12 of the Disclosure Schedule and without giving
effect to the disclosures set forth in item three under the
heading "OTHER CLAIMS" on SCHEDULE 3.14, provided further, any
claim for indemnification for breach of a representation and
warranty contained in Section 3.1 through 3.11 and 3.14 through
3.22 shall not be indemnifiable, pursuant to Section 8.3, or
counted toward the Indemnification Threshold, unless the actual
and determined Damages suffered or incurred as a result of or
arising out of such breach exceed $500,000, and any claim for
indemnification for a breach of the representation and warranty
contained in Section 3.12 shall not be indemnifiable, pursuant to
Section 8.3, or counted toward the Environmental Indemnification
Threshold, unless the actual and determined Damages suffered or
incurred as a result of or arising out of such breach exceed
$100,000, it being agreed in both cases that (i) all claims
arising out of a set of operative facts or arising out of or in
connection with an event or series of events joined by a common
nexus of operative facts may be aggregated for such purposes, and
(ii) the Owners shall have no liability to the Interested
Persons, their officers, directors, agents, employees,
subsidiaries, affiliates and representatives for any claim for
breach of a representation and warranty arising out of a set of
operative facts or arising out of or in connection with an event
or series of events joined by a common nexus of operative facts
if the actual and determined Damages suffered or incurred as a
result of or arising out of such breach are less than or equal to
$500,000 for an Article 3 (other than Sections 3.12 and 3.13)
breach and $100,000 for a Section 3.12 breach.
8.4 Indemnity by Hercules. Subject to the provisions of
---------------------
Section 8.1 above, and further subject to any rights of set off
of Hercules or any Affiliate of Hercules against either of the
Interested Persons or their respective Affiliates, Hercules shall
indemnify and hold harmless Roche and/or GRI, as applicable,
their officers, directors, agents, employees, subsidiaries,
affiliates and representatives in respect of any Damages suffered
or incurred as a result of or arising out of the breach by
Hercules or HNBV of any representation, warranty, covenant or
agreement set forth in the Hercules Transaction Agreement.
8.5 Indemnity by Mallinckrodt. Subject to the provisions
-------------------------
of Section 8.1, and further subject to any rights of set off of
Mallinckrodt or any Affiliate of Mallinckrodt against either of
the Interested Persons or any of their respective Affiliates,
Mallinckrodt shall indemnify and hold harmless Roche and/or GRI,
as applicable, their officers, directors, agents, employees,
subsidiaries, affiliates and representatives in respect of any
Damages suffered or incurred as a result of or arising out of the
breach by Mallinckrodt of any representation, warranty, covenant
or agreement set forth in the Contribution Agreement.
8.6 Limitations on the Owners' Indemnification Obligations.
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(a) Notwithstanding anything in this Article 8 to the contrary,
neither Hercules nor Mallinckrodt shall have any liability or
obligation to indemnify the Interested Persons pursuant to
Section 8.3 hereof (except as otherwise provided in Sections
8.6(b) and 8.10 and in the Tax Annex) with respect to a breach of
a representation or warranty, unless and until the aggregate
liability of the Owners for all indemnifiable Damages of the
Interested Persons, their officers, directors, agents, employees,
subsidiaries, affiliates and representatives, other than those
indemnifiable Damages pursuant to Sections 8.6(b) and 8.10 hereof
and the Tax Annex hereto, exceeds the Indemnification Threshold,
and then the Owners shall only be liable for indemnifiable
Damages of the Interested Persons (other than those indemnifiable
Damages pursuant to Sections 8.6(b) and 8.10 hereof and the Tax
Annex hereto, which shall be paid as provided therein), their
officers, directors, agents, employees, subsidiaries, affiliates
and representatives in excess of the Indemnification Threshold.
(b) Notwithstanding anything in this Article 8 to the
contrary, neither Hercules nor Mallinckrodt shall have any
liability or obligation to indemnify the Interested Persons
pursuant to Section 8.3 hereof with respect to a breach by the
Owners of any representation or warranty set forth in Section
3.12 (an "ENVIRONMENTAL BREACH") unless and until the aggregate
liability of the Owners for all indemnifiable Damages of the
Interested Persons, their officers, directors, agents, employees,
subsidiaries, affiliates and representatives arising as a result
of or out of such Environmental Breaches exceeds five million
dollars ($5,000,000) (the "ENVIRONMENTAL INDEMNIFICATION
THRESHOLD"), and then the Owners shall be liable for
indemnifiable Damages (without regard to the Indemnification
Threshold provision of Section 8.6(a) hereof) of the Interested
Persons, their officers, directors, agents, employees,
subsidiaries, affiliates and representatives arising as a result
of or out of any Environmental Breach to the extent in excess of
the Environmental Indemnification Threshold; provided, however,
that indemnifiable Damages arising as a result of or out of any
Environmental Breach, to the extent they are for investigatory,
clean up or remedial activities, shall be limited, except as set
forth below, to those costs and expenses that are required by a
Governmental Authority possessing jurisdiction over the matter,
based upon the most cost-effective alternative allowable by such
Governmental Authority and utilizing the most cost-effective
technology available, and provided, further, if the Interested
Persons undertake any investigatory, clean up, remedial or
excavation activities at the facility other than as required (i)
under the Participation Agreement with BSB Gelderland dated
February 10, 1994 or (ii) by a Governmental Authority possessing
jurisdiction over the matter and based upon the most cost-
effective alternative allowable by such Governmental Authority
and utilizing the most cost-effective technology available, with
respect to the soil and ground water contamination at Barneveld,
The Netherlands, which is disclosed under the heading "SPECIFIED
ENVIRONMENTAL MATTERS" on SCHEDULE 3.12 of the Disclosure
Schedule, all Damages with respect to such soil and ground water
contamination shall be limited to an aggregate amount of two
million five hundred thousand dollars ($2,500,000); and provided
further, that for purposes of determining whether an
Environmental Breach has occurred, the accuracy of the
representations set forth in Section 3.12 shall be determined
without giving effect to the disclosures set forth under the
heading "SPECIFIED ENVIRONMENTAL MATTERS" in SCHEDULE 3.12 of the
Disclosure Schedule.
(c) Further, and notwithstanding anything in this Article 8
to the contrary, the aggregate liability of the Owners to the
Interested Persons under Section 8.3 with respect to a breach of
a representation or warranty shall in no event exceed the Owners'
Maximum Liability; provided that (i) the liability of the Owners
under the Tax Annex hereto shall not be subject to Owners'
Maximum Liability, but shall in no event exceed the limitations
set forth in the Tax Annex; and (ii) the liability of the Owners
under the Tax Annex hereto shall not count towards the
determination of whether the Owners' liability pursuant to
Section 8.3 has exceeded the Owners' Maximum Liability. In
addition to the limitations on the liability of the Owners set
forth in this Article 8, each of Hercules, Mallinckrodt, Roche
and GRI agrees that (x) the liability of Hercules and
Mallinckrodt under Section 8.3 of this Agreement and the Tax
Annex hereto shall not be affected by whether the applicable
breach is caused by or attributable to one or the other (or
neither) of them, and (y) the Interested Persons and their
respective officers, directors, agents, employees, subsidiaries,
affiliates and representatives shall not seek to recover from
either of Hercules or Mallinckrodt, and neither Hercules nor
Mallinckrodt shall in any event be liable for, more than fifty
percent (50%) of the Damages recoverable by the Interested
Persons and their officers, directors, agents, employees,
subsidiaries, affiliates and representatives from the Owners
pursuant to Section 8.3 above; it being the intention of the
parties that Hercules and Mallinckrodt equally bear the burden of
the indemnification obligations set forth in Section 8.3 and that
neither Owner shall be liable or responsible for any failure,
inability or unavailability of the other Owner with respect to
the obligations of the Owners in Section 8.3 above.
Notwithstanding anything herein to the contrary (i) Hercules
shall in no event have any liability or responsibility for any
representation, warranty, covenant or agreement set forth in
either of the Contribution Agreement or the F&F Transaction
Agreement; (ii) Mallinckrodt shall in no event have any liability
or responsibility for any representation, warranty, covenant or
agreement set forth in either of the Hercules Transaction
Agreement or, except as expressly provided in Section 5.5 of the
Contribution Agreement, the F&F Transaction Agreement; (iii) none
of the Indemnification Threshold, the Owners' Maximum Liability
or the $500,000 and $100,000 limitations set forth in Section 8.3
shall be applicable to limit the liability of Hercules or
Mallinckrodt to any of the Interested Persons under Sections 8.4
and 8.5, respectively, above; and (iv) in no event shall Damages
recoverable pursuant to this Article 8 or pursuant to the Tax
Annex be duplicative.
(d) Notwithstanding anything contained herein to the
contrary, the parties hereto intend and agree that the
limitations on Damages recoverable from the Owners set forth in
this Section 8.6 or Section 8.3 above shall not be applicable to
the breach of a covenant or agreement (as opposed to a
representation or warranty) by the Owners; provided, however,
that for purposes of such limitations on Damages, any covenant or
agreement relating to the truth or veracity of the
representations and warranties of the Owners shall be treated in
the same manner as a representation or warranty and the breach of
any such covenant or agreement shall be subject to the
limitations set forth in this Section 8.6 and in the last proviso
of Section 8.3 above.
8.7 Limitations of Remedies. The indemnification remedy
-----------------------
set forth in this Section 8 and the Tax Annex and any injunctive
or other equitable relief to which any party may be entitled from
a court of appropriate jurisdiction shall be the sole remedies to
which any party hereto is entitled for any breach or non-
compliance with the provisions of the Transaction Documents, or
any agreement, instrument or document delivered in connection
therewith. Any recovery of Damages pursuant to the
indemnification remedy set forth in this Section 8 (other than
with respect to an Environmental Breach pursuant to Section 8.10
hereof or the Tax Annex), shall be limited to a recovery of
compensatory damages and shall not include any punitive or
consequential damages or other non-compensatory damages; provided
that any such punitive or consequential damages or other non-
compensatory damages shall be recoverable if such damages are
suffered or incurred as a result of or arising out of an
Environmental Breach or to the extent awarded by a court or other
adjudicative body of appropriate jurisdiction and authority at an
outcome of any third party claim for which indemnification is
otherwise available hereunder.
8.8 Indemnification Procedures. The parties agree that the
--------------------------
procedures for asserting claims for indemnification and recovery
of Damages pursuant to this Section 8 shall be as follows:
8.8.1 Notice of Claims. In the event that a party
(the "INDEMNIFIED PARTY") shall reasonably believe that it has a
claim for Damages (whether or not arising out of a third party
claim) against any other party or parties hereto pursuant to this
Section 8 ("INDEMNIFICATION CLAIM"), it shall give prompt notice
in accordance herewith to the responsible party or parties (the
"INDEMNIFYING PARTY") of the nature and extent of such
Indemnification Claim and the Damages incurred by it; provided
that any failure to give such notice shall not affect the
Indemnified Party's right to indemnification hereunder except to
the extent the Indemnifying Party is prejudiced thereby. If the
Damages are liquidated in amount, the notice shall so state, and
such amount shall be deemed the amount of such Indemnification
Claim of the Indemnified Party against the Indemnifying Party
(subject to the right of the Indemnified Party to submit claims
for additional indemnifiable Damages incurred after the date of
any such notice). If the amount is not liquidated, the notice
shall so state and, in such event, such Indemnification Claim
shall be deemed asserted against the Indemnifying Party, but no
payment or satisfaction shall be made on account thereof until
the amount of such Indemnification Claim is liquidated. Such
notice shall also describe the consequences of a failure to
respond to such notice within the time periods set forth in, and
pursuant to, Section 8.8.2 below.
8.8.2 Failure to Respond to Notice. If the
Indemnifying Party shall not, within twenty (20) days after the
giving of such notice by the Indemnified Party, notify the
Indemnified Party in accordance herewith that the Indemnifying
Party disputes the right of the Indemnified Party to indemnity in
respect of such Indemnification Claim, then such Indemnification
Claim shall be paid or satisfied as follows: (i) if said
Indemnification Claim is liquidated then, subject to the
limitations set forth in Sections 8.3 and 8.6 above, the full
amount of Damages associated with such Indemnification Claim
shall be paid to the Indemnified Party by the Indemnifying Party
at the end of such twenty (20) day period, or (ii) if the amount
of such Indemnification Claim is unliquidated at the time notice
is originally given to the Indemnifying Party, the Indemnified
Party shall give a second notice to the Indemnifying Party when
the liquidated amount of such Indemnification Claim is known and,
unless the Indemnifying Party shall object in writing to such
amount (as opposed to the Indemnification Claim itself, as to
which the right to dispute has expired) within twenty (20) days
after the giving of said second notice, then, subject to the
limitations set forth in Sections 8.3 and 8.6, the payment of
such Indemnification Claim shall be made by the Indemnifying
Party to the Indemnified Party at the end of such twenty (20) day
period. Any portion of the amount of Damages asserted by an
Indemnified Party in connection with an Indemnification Claim
shall, if not objected to by the Indemnifying Party in accordance
with the procedures established herein, be considered to be
subject to satisfaction by payment without further objection.
If, on its own initiative and in accordance with the provisions
of this Section and any other provisions herein as applicable,
the Indemnifying Party shall not have made payments to the
Indemnified Party of any Indemnification Claim when said payment
is due, the Indemnified Party shall have the right to enforce in
any court of appropriate jurisdiction its right, subject to
Section 9.6 hereof, to collect from the Indemnifying Party the
amount of such Indemnification Claim.
8.8.3 Notice of Dispute. If an Indemnifying Party
shall notify the Indemnified Party that it disputes any
Indemnification Claim or the amount of Damages in respect thereof
(which notice shall only be given if the Indemnifying Party has a
good faith belief that the Indemnified Party is not entitled to
indemnity or the full amount of indemnity as claimed) then the
parties hereto shall endeavor to settle and compromise such
Indemnification Claim, and if unable to agree on any settlement
or compromise, such Indemnification Claim shall be settled in
accordance with the dispute resolution provisions of Section 9,
and any liability and the amount of the Damages established
pursuant to Section 9 shall be promptly paid and satisfied.
8.8.4 Third Party Claims. An Indemnified Party will
promptly give notice to the Indemnifying Party of any claim of a
third party which may reasonably be expected to result in an
Indemnification Claim by the Indemnified Party. Subject to
Section 8.8.6, an Indemnifying Party shall have the right to
direct the defense, compromise or settlement of such third party
claim with counsel selected by it, provided the Indemnifying
Party gives written notice to the Indemnified Party of its
election to do so within twenty (20) days after receipt of notice
in accordance with the preceding sentence, subject to the right
of the Indemnifying Party to tender the defense, compromise or
settlement of any such claim back to the Indemnified Party if, on
the basis of subsequently discovered information it becomes clear
that such claim is not subject to indemnification hereunder. If
the Indemnifying Party fails to so notify the Indemnified Party
of its election to defend any such third party claim, the
Indemnified Party will (upon further notice to the Indemnifying
Party) have the right to undertake the defense, compromise or
settlement of such third party claim, subject to the right of the
Indemnifying Party to assume the defense of any such claim at any
time prior to settlement, compromise or final determination
thereof, if and only if such assumption would not materially
prejudice the defense of such third party claim or the rights of
the Indemnified Party. It is understood that any party
undertaking the defense, compromise, or settlement of an
indemnifiable claim hereunder shall pursue diligently such claim
in good faith with a view toward achieving the most favorable
possible resolution of such claim.
8.8.4.1 Participation by Indemnified
Party. In the event an Indemnifying Party has assumed the
defense of any such third party claim, the Indemnified Party
shall nonetheless have the right to select its own counsel and
participate in the defense of such third party claim at and for
its own expense and account. Counsel for the Indemnified Party
in such circumstances shall consult and cooperate at all times
with counsel for the Indemnifying Party in defending against any
such third party claim.
8.8.4.2 Full Release. An Indemnifying Party
shall not under any circumstances, without the prior written
consent of the Indemnified Party, settle or compromise any third
party claim or consent to the entry of any judgment which (i)
provides for any form of relief against the Indemnified Party
other than monetary relief that will be paid in full by the
Indemnifying Party, or (ii) does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the
Indemnified Party a release from all liability in respect of such
third party claim, in form and substance reasonably satisfactory
to the Indemnified Party.
8.8.4.3 Refusal to Settle. Notwithstanding
anything to the contrary contained herein, if a third party claim
is made which the third party has unequivocally offered in
writing to settle on a basis that satisfies the requirements of
Section 8.8.4.2 above (an "UNEQUIVOCAL OFFER") but an Indemnified
Party elects not to settle on the basis of such Unequivocal
Offer, then either (a) if the defense, compromise or settlement
of such claim has been previously assumed by the Indemnifying
Party, at the option of the Indemnifying Party the Indemnifying
Party may pay to the Indemnified Party an amount equal to the
amount required to be paid in such Unequivocal Offer (plus any
related reasonable costs and expenses theretofore incurred by the
Indemnified Party with respect to such claim) and, upon such
payment, the Indemnifying Party shall be released from and held
harmless by the Indemnified Party with respect to all Damages
suffered or incurred as a result of arising out of said third
party claim and the Indemnified Party shall assume the defense,
compromise or settlement of such claim, or (b) if the defense,
compromise or settlement of such claim has not been assumed by
the Indemnifying Party, the Indemnifying Party shall not be
liable hereunder, with respect to any Indemnification Claim
arising from such third party claim, for more than the amount set
forth in any such Unequivocal Offer (or, if more than one
Unequivocal Offer has been made with respect to such third-party
claim, the Unequivocal Offer that required the lowest payment)
plus any related reasonable costs and expenses incurred by the
Indemnified Party as of the date of such Unequivocal Offer unless
either (i) the Unequivocal Offer was delivered to and rejected by
the Indemnifying Party, or (ii) the Unequivocal Offer was
delivered to the Indemnifying Party and the Indemnifying Party
did not, within ten (10) days after receipt of such Unequivocal
Offer, notify the Indemnified Party in writing that such
Indemnifying Party would pay the amount requested in the
Unequivocal Offer.
8.8.5 Claims Made in Written Notice. All claims
for indemnification hereunder shall be made in a written notice
setting forth, with particularity, the nature of the claim for
which indemnification is sought. All parties agree that no claim
for indemnification shall be made hereunder unless the party
requesting indemnification shall have a good faith belief that it
is entitled to indemnification hereunder.
8.8.6 Control in Cases of Environmental Breach.
With respect to any claim for indemnification made pursuant to
Section 8.3 as a result of a breach of Section 3.12 which does or
would reasonably be expected to involve any investigative, clean
up or other remedial activities on property then owned or leased
by the Interested Persons or their Affiliates ("REMEDIAL WORK"),
the Indemnified Party shall have the option to direct the
defense, compromise or settlement of such claim until the
Environmental Indemnification Threshold has been met, and
thereafter the Indemnifying Party shall have the option to direct
the defense, compromise or settlement of any such claim (such
party, as applicable, shall be the "CONTROLLING PARTY"). Both
parties agree to cooperate in good faith in resolving any such
claim. In addition, the Controlling Party agrees to (a) use
consultants and contractors which are reasonably satisfactory to
the other party, (b) ensure that any Remedial Work is conducted
in a safe, lawful and workmanlike manner in compliance with all
Environmental Requirements, (c) provide the other party with
reasonable advance notice of and an opportunity to comment upon
any filings to be made with any Governmental Authority or other
third parties and (d) provide the other party with reasonable
advance notice of and an opportunity to review and comment upon
plans for and written reports of, and to observe any, Remedial
Work. To the extent the Indemnifying Party is the Controlling
Party, the Controlling Party agrees that it will use reasonable
efforts to avoid interference with the normal business operations
of the Companies and the Interested Persons agree to provide
necessary access during normal business hours to the property of
the Companies. Where the Indemnifying Party is the Controlling
Party and has received a bid for necessary Remedial Work from a
qualified consultant or contractor, the Interested Persons shall
have the option to direct or undertake the Remedial Work
themselves in which case the indemnifiable Damages shall be
limited to the amount of the bid, notwithstanding anything in
Sections 8.3 and 8.6 to the contrary.
8.9 Tax Annex is Controlling. Notwithstanding any
-----------------------
provision in this Agreement to the contrary, to the extent that
any provision in this Article 8 is inconsistent with the Tax
Annex, the Tax Annex shall be controlling.
8.10 Registration Indemnity. Each of the Owners shall
----------------------
indemnify and hold harmless the Interested Persons in connection
with all costs and expenses, including, without limitation,
application, registration and filing fees, in excess of
$3,000,000 incurred by the Interested Persons in connection with
the registration with or GRAS ("GENERALLY RECOGNIZED AS SAFE")
clearance or approval by the United States Food and Drug
Administration (FDA), the Flavor Expert Panel (FEXPAN) or any
other similar non-governmental authority or Governmental
Authority of any chemical substance, component or ingredient
("SUBSTANCE") used as of the date hereof, or as of the Closing
Date in the manufacturing or production of products by any of the
Companies to the extent not registered with or GRAS-cleared by
any such non-governmental authority or Governmental Authority as
of the date hereof, or as of the Closing Date; provided that the
indemnity provided in this Section 8.10 shall only apply to one
registration, clearance or approval per Substance (in each case
as specified by the Owners) and shall expire on the sixth annual
anniversary of the Closing Date, after which date Owners shall
have no further liability or obligations under this Section 8.10,
and provided, further, that after the Closing the Interested
Persons use their best efforts to achieve all such registrations
in a cost-effective manner and at the earliest practical date,
and provided further that the Owners shall in no event be liable
for the costs of registering the substances, components or
ingredients described on SCHEDULE 8.10 of the Disclosure
Schedule, nor shall such costs be considered in determining
whether the $3,000,000 referenced above has been exceeded.
Notwithstanding any other provision hereof, it is understood by
the parties that no threshold, deductible or limitation on
indemnification hereunder (including, without limitation, the
Owners' Maximum Liability limitation or the $500,000 and $100,000
limitations on the size of indemnifiable claims set forth in
Section 8.3 above) shall relate to the provisions of this Section
8.10, and indemnification under this Section 8.10 shall not be
counted toward the Indemnification Threshold or the Environmental
Indemnification Threshold.
8.11 Mitigation of Damages. Notwithstanding anything to the
---------------------
contrary contained herein, the Indemnified Party shall be obliged
to mitigate the amount of Damages otherwise recoverable
hereunder, except that such duty of mitigation shall not apply
with respect to any Damages recoverable as a consequence of any
breach of Section 3.12 hereof.
8.12 Reliance Upon Agreement. In the event the Fries
-----------------------
Withdrawal is exercised and the Fries Withdrawal Closing occurs
within two days after the Closing Date (i) each of Roche, GRI,
Hercules and Mallinckrodt acknowledges and agrees that in
exercising the Fries Withdrawal and consummating the Fries
Withdrawal Closing, and after the consummation of the Fries
Withdrawal Documents, each of Roche, GRI, Hercules and
Mallinckrodt, on behalf of themselves and their respective
Affiliates, is relying upon, and is entitled to rely upon, the
representations, warranties and covenants of Roche, GRI, Hercules
and Mallinckrodt set forth in this Agreement, and (ii) each of
Hercules and Roche agrees, on behalf of themselves and their
respective Affiliates that are partners of Tastemaker, that the
"ESTIMATED ADJUSTED AGGREGATE VALUE," the "ADJUSTED AGGREGATE
VALUE," the "ESTIMATED TASTEMAKER B.V. VALUE," and the
"TASTEMAKER B.V. VALUE" (as such quoted terms are used and
defined in the Partnership Agreement) shall equal, and shall be
determined in the same manner as, the Estimated Adjusted
Aggregate Value, the Adjusted Aggregate Value, the Estimated
Tastemaker B.V. Value and the Tastemaker B.V. Value,
respectively, determined in accordance with Section 2.6 of this
Agreement.
9. RESOLUTION OF DISPUTES
----------------------
9.1 Conclusive and Exclusive. Except as expressly provided
------------------------
(i) in the Tax Annex and (ii) in Section 2.6.1 with respect to
the procedures for resolving disputes regarding the Working
Capital Adjustment and the Long-Term Liabilities Adjustment, each
and all disputes under the Transaction Documents shall be
conclusively and exclusively resolved in accordance with the
terms and conditions set forth in this Section 9.
Notwithstanding the foregoing, the parties recognize and
acknowledge that (i) in the event that all conditions precedent
to the transactions contemplated by the Transaction Documents,
the D&F Transaction Agreements and, if applicable, the Fries
Withdrawal Documents have been satisfied or waived and the
consummation of any of the transactions contemplated by such
agreements and documents (other than the initial transactions
contemplated by the Designated Transaction Agreements) does not
follow as soon as practicable after such initial transaction,
then specific performance of any such transactions shall be a
remedy that the Interested Persons may seek and the parties agree
that the Interested Persons shall be entitled to such remedy; and
(ii) in the event of a potential, anticipatory or actual breach
of certain provisions of the Transaction Documents and the D&F
Transaction Agreements (dealing with confidentiality, public
announcements, non-competition and the like) it may be necessary
or appropriate for a non-breaching party to seek injunctive
relief, if and to the extent legally available, in order to avoid
harm or further harm to such non-breaching party, and the parties
hereby agree that any such non-breaching party shall be entitled
to seek and obtain injunctive relief (but only injunctive relief)
in any court of competent jurisdiction (subject to Section 9.6
below) without first complying with this Article 9; provided,
however, that (i) if granted, such injunctive relief shall apply
only to prevent a breach or further breach of the specific
Sections of the Transaction Documents and the D&F Transaction
Agreements for which such relief is appropriate and shall remain
in effect only so long as the court deems necessary or
appropriate to permit resolution of the underlying disputes in
accordance with this Article 9, and (ii) no other relief or claim
may be obtained or sought from the court granting any such
injunctive relief unless and until the parties have fully
complied with the dispute resolution provisions of Sections 9.2
through 9.5 of this Article 9. Neither the seeking of injunctive
relief nor the granting thereof is intended to, or shall, result
in the application of a substantive or procedural law other than
the applicable governing law pursuant to Section 11.9 hereof.
9.2 Resolution Panel. Subject to Section 9.1, any dispute
----------------
under the Transaction Documents shall first be submitted to a
panel made up of officers from the parties to the dispute (the
"RESOLUTION PANEL"). If the dispute involves both of the
Interested Persons and both of the Owners, the Resolution Panel
shall consist of four members, of which two members shall be the
Chief Executive Officers, or other duly authorized executive
managers not theretofore involved in the dispute, of Roche and
GRI or their Affiliates, and the other two members shall be the
Chief Executive Officers or Chief Operating Officers, or another
duly authorized executive manager not theretofore involved in the
dispute, of Hercules and Mallinckrodt and their Affiliates. If
the dispute involves only one of the Interested Persons and/or
only one of the Owners, the Resolution Panel shall consist of
four members, which shall include the Chief Executive Officers or
Chief Operating Officers or other duly authorized executive
managers not theretofore involved in the dispute of all parties
to the dispute and (i) if only one Interested Person is involved
in the dispute, another authorized executive manager of such
Interested Person, and (ii) if only one Owner is involved in the
dispute, another authorized executive manager of such Owner;
provided, however, that the parties not involved in the dispute
shall be given notice of, and access to information relevant to,
the dispute.
9.3 Position Statements. Subject to Section 9.1 in the
-------------------
event of a dispute under the Transaction Documents (except as
otherwise provided in any Transaction Document), any party may
give a notice to the other parties (including any party not
involved in the dispute) requesting that the Resolution Panel try
in good faith to negotiate a resolution of (but without any
obligation to resolve) such dispute. Not later than fifteen (15)
days after said notice, each party involved in the dispute shall
submit to all other parties (including any party not involved in
the dispute) a written statement (provided that if both of the
Owners are involved in such dispute, the Owners shall be
entitled, but not obligated, to submit a joint written statement,
and if both of the Interested Persons are involved in such
dispute, the Interested Persons shall be entitled, but not
obligated, to submit a joint written statement) setting forth
such party's description of the dispute and of the respective
positions of the parties on such dispute, and such party's
recommended resolution and the reasons why such party feels its
recommended resolution is fair and equitable in light of the
terms and spirit of the Transaction Documents. The submission
and exchange of such written statements of the parties shall be
simultaneous. Such statements represent part of a good-faith
effort to resolve a dispute and as such, no statement may be
introduced as evidence or used as an admission against interest
in any judicial resolution of such dispute.
9.4 Negotiations. If the dispute continues unresolved for
------------
a period of fifteen (15) days (or such longer period as the
Resolution Panel may otherwise agree upon) after the simultaneous
exchange of such written statements, then the Resolution Panel
shall promptly commence and thereafter pursue for a period of not
less than thirty (30) days good-faith negotiations to resolve
such dispute (the "RESOLUTION NEGOTIATIONS") but without any
obligation to resolve it. A party not involved in the dispute
shall be entitled to observe, but not participate in, the
Resolution Negotiations.
9.5 Resolution Panel Decision. If, within thirty (30)
-------------------------
days (or such longer period as the Resolution Panel may
unanimously agree) after the commencement of Resolution
Negotiations, (i) the Resolution Panel renders an agreed
resolution on the matter in dispute, then all parties shall be
bound thereby and judgment upon such resolution may be entered in
any court having requisite jurisdiction; or (ii) the Resolution
Panel does not render an agreed resolution, then the parties
involved in such dispute shall be free to pursue their legal
rights and remedies in such manner as they may determine,
subject, however, to the provisions of Section 9.6 below.
9.6 Forum and Waivers. EACH OF ROCHE, GRI, MALLINCKRODT
-----------------
AND HERCULES AGREES THAT, EXCEPT TO THE EXTENT OTHERWISE PROVIDED
IN THE TAX ANNEX, ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR
ARISING OUT OF ANY ONE OR MORE OF THE TRANSACTION DOCUMENTS, OR
THE VALIDITY OR PERFORMANCE OF ANY OF THE TRANSACTION DOCUMENTS,
SHALL BE INITIATED AND PROSECUTED AS TO ALL PARTIES TO THE
DISPUTE AND THEIR SUCCESSORS AND ASSIGNS AT NEW YORK, NEW YORK,
WHICH SHALL BE THE EXCLUSIVE FORUM FOR ALL SUCH ACTIONS, SUITS OR
PROCEEDINGS. EACH OF ROCHE, GRI, MALLINCKRODT AND HERCULES
CONSENTS TO AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER ITS
PERSON BY ANY STATE OR FEDERAL COURT SITUATED AT NEW YORK, NEW
YORK HAVING JURISDICTION OVER THE SUBJECT MATTER, WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL DIRECTED TO THE
PARTIES AT THEIR RESPECTIVE ADDRESSES SET FORTH IN SECTION 11.3
OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE STATE OF NEW YORK.
EACH OF ROCHE, GRI, MALLINCKRODT AND HERCULES WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO
VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. EACH OF ROCHE, GRI, MALLINCKRODT AND
HERCULES HEREBY RECIPROCALLY AND IRREVOCABLY WAIVES TRIAL BY JURY
IN CONNECTION WITH ANY DISPUTE RELATING TO THE TRANSACTION
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION
DOCUMENTS.
10. CONDITIONS PRECEDENT
--------------------
10.1 Conditions to Obligations of the Interested Persons.
---------------------------------------------------
The obligations of the Interested Persons to consummate the
transactions contemplated by the Transaction Documents are
subject to the satisfaction or waiver by the Interested Persons
in writing of each of the following conditions precedent:
10.1.1 Accuracy of Representations and Warranties.
------------------------------------------
The representations and warranties of the Owners made in this
Agreement shall be true and correct in all material respects on
the Closing Date.
10.1.2 Performance of Agreements. Each of the
-------------------------
Owners shall have performed in all material respects all
obligations and agreements and complied in all material respects
with all covenants and conditions contained in this Agreement to
be performed and complied with by it on or prior to the Closing
Date.
10.1.3 Officers' Certificate. Each of the
---------------------
Interested Persons shall have received from each Owner a
certificate dated the Closing Date signed by a duly authorized
officer of each of the Owners delivering such certificate and
certifying to each of the Interested Persons that the
representations and warranties of the Owners made herein are true
and correct in all material respects on the Closing Date as if
made at and as of such date and that the Owner rendering such
certificate has performed in all material respects all
obligations and agreements and complied in all material respects
with all covenants and conditions contained in this Agreement to
be performed and complied with by it at or prior to the Closing
Date.
10.1.4 Applicable Law; Governmental Approvals;
---------------------------------------
Filings. No provision of any applicable law or regulation and no
- -------
judgment, injunction, order or decree shall prohibit the
consummation of the Closing. The licenses, permits, consents and
approvals of Governmental Authorities required by law and listed
in APPENDIX K hereto shall have been obtained in form and
substance reasonably satisfactory to each of the Interested
Persons and shall not have been revoked, and any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvement
Act of 1976, as amended, relating to the transactions
contemplated hereby shall have expired or been terminated.
10.1.5 Litigation; Governmental Action. There shall
-------------------------------
not be pending or in force on the Closing Date any injunction,
order or decree, or any complaint of any Governmental Authority
praying for an order or decree, restraining or enjoining the
consummation of the transactions contemplated by any one or more
of the Transaction Documents, and no Governmental Authority shall
have instituted, or notified the Interested Persons of its
intention to institute, any suit, investigation or proceeding
seeking to nullify, render ineffective or attack on any
substantive grounds the legality of any one or more of the
Transaction Documents.
10.1.6 Material Change. Between the date hereof and
---------------
the Closing Date, there shall not have occurred any event which
individually or in aggregate has had or would reasonably be
expected to have a material adverse effect on the Companies.
10.1.7 Transaction Agreement Conditions. Each of
--------------------------------
the Transaction Documents and the F&F Transaction Agreement shall
have been executed by each party thereto, and all of the
conditions precedent to the obligations of the Interested Persons
set forth in the Transaction Documents and the F&F Transaction
Agreement shall have been satisfied or waived by the Interested
Persons in writing.
10.1.8 Works Council Act. The requirements for
-----------------
compliance under the Dutch Code of Conduct for Mergers and the
Dutch Works Council Act shall have been satisfied and no appeal
to the Enterprise Division of the Amsterdam Court of Appeal shall
have been made by the Works Council; provided that all
information provided to the Owners by the Interested Persons in
connection with such requirements was to the knowledge of such
Interested Persons' true at the time made; and provided further
that the Interested Persons contacts with the Works Council in
connection with such requirements have been forthright and in
good faith.
10.1.9 Designated Transactions Closing. The closing
-------------------------------
of the transactions contemplated by each of the Designated
Transaction Agreements shall have occurred and been completed.
10.1.10 Specified Third Party Consents. The consents
------------------------------
described, and under the items listed, on APPENDIX J shall have
been obtained.
10.1.11 Withdrawal Approvals; Litigation. No
--------------------------------
provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of
the Fries Withdrawal Closing. The licenses, permits, consents
and approvals of Governmental Authorities required by law for the
consummation of the Fries Withdrawal Closing and listed in
APPENDIX K hereto shall have been obtained in form and substance
reasonably satisfactory to each of the Interested Persons and
shall not have been revoked, and any applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended, relating to the Fries Withdrawal shall have expired or
been terminated. There shall not be pending or in force on the
Fries Withdrawal Closing any injunction, order or decree, or any
complaint of any Governmental Authority praying for an order or
decree, restraining or enjoining the consummation of the
transactions contemplated by any or more of the Fries Withdrawal
or the Fries Withdrawal Documents, and no Governmental Authority
shall have instituted, or notified the Interested Persons of its
intention to institute, any suit, investigation or proceeding
seeking to nullify, render ineffective or attack on any
substantive grounds the legality of any one or more of the
Partnership Agreement or the Fries Withdrawal Documents. All
acts, consents, documents and other matters, other than the
giving of notice of exercise of the Fries Withdrawal and the
execution and delivery of the Fries Withdrawal Documents,
required by the Partnership Agreement to be taken or obtained in
connection with the Fries Withdrawal and the Fries Withdrawal
Closing shall have been taken or obtained.
10.2 Conditions to Obligations of the Owners. The
---------------------------------------
obligations of each of Hercules and Mallinckrodt to consummate
the transactions contemplated by the Transaction Documents are
subject to the satisfaction or waiver by each Hercules and
Mallinckrodt in writing of each of the following conditions
precedent:
10.2.1 Accuracy of Representations and Warranties.
------------------------------------------
The representations and warranties of the Interested Persons made
in this Agreement shall be true and correct in all material
respects on the Closing Date.
10.2.2 Performance of Agreements. The Interested
-------------------------
Persons shall have performed in all material respects all
obligations and agreements and complied in all material respects
with all covenants and conditions contained in this Agreement to
be performed and complied with by it on or prior to the Closing
Date.
10.2.3. Officer's Certificate. Each of the Owners
---------------------
shall have received from each Interested Person a certificate
dated the Closing Date signed by a duly authorized officer of
each of the Interested Persons delivering such certification and
certifying that the representations and warranties of the
Interested Persons made herein are true and correct in all
material respects on the Closing Date as if made at and as of
such date and that the Interested Person sending such certificate
has performed in all material respects all obligations and
agreements and complied in all material respects with all
covenants and conditions contained in this Agreement to be
performed or complied with by it at or prior to the Closing Date.
10.2.4 Applicable Law; Governmental Approvals;
---------------------------------------
Filings. No provision of any applicable law or regulation and no
- -------
judgment, injunction, order or decree shall prohibit the
consummation of the Closing. The licenses, permits, consents and
approvals of Governmental Authorities required by law for the
consummation of the transactions contemplated by each of the
Transaction Documents and listed in APPENDIX K hereto shall have
been obtained in form and substance reasonably satisfactory to
the Owners and shall not have been revoked, and any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvement
Act of 1976, as amended, relating to the transactions
contemplated hereby shall have expired or been terminated.
10.2.5 Litigation; Governmental Action. There shall
-------------------------------
not be pending or in force on the Closing Date any injunction,
order or decree, or any complaint of any Governmental Authority
praying for an order or decree, restraining or enjoining the
consummation of the transactions contemplated by any one or more
of the Transaction Documents, and no Governmental Authority shall
have instituted, or notified either of Hercules or Mallinckrodt
of its intention to institute, any suit, investigation or
proceeding seeking to nullify, render ineffective or attack on
any substantive grounds the legality of any one or more of the
Transaction Documents and all of the conditions precedent to the
obligations of F&F set forth in the F&F Transaction Agreement
shall have been satisfied or waived in writing by F&F.
10.2.6 Transaction Agreement Conditions. Each of
--------------------------------
the Transaction Documents and the F&F Transaction Agreement shall
have been executed by each party thereto, and all of the
conditions precedent to the obligations of Hercules and HNBV set
forth in the Hercules Transaction Agreement shall have been
satisfied or waived in writing by Hercules and HNBV and all of
the conditions precedent to the obligations of Mallinckrodt set
forth in the Contribution Agreement and the F&F Transaction
Agreement shall have been satisfied or waived in writing by
Mallinckrodt.
10.2.7 Designated Transaction Closing. The closing
------------------------------
of the transactions contemplated by each of the Designated
Transaction Agreements shall have occurred and been completed.
10.2.8 Withdrawal Approval; Litigation. No
-------------------------------
provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of
the Fries Withdrawal Closing. The licenses, permits, consents
and approvals of Governmental Authorities required by law for the
consummation of the Fries Withdrawal Closing and listed in
APPENDIX K hereto shall have been obtained in form and substance
reasonably satisfactory to the Owners and shall not have been
revoked, and any applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvement Act of 1976, as amended, relating to
the Fries Withdrawal shall have expired or been terminated.
There shall not be pending or in force on the Fries Withdrawal
Closing any injunction, order or decree, or any complaint of any
Governmental Authority praying for an order or decree,
restraining or enjoining the consummation of the transactions
contemplated by any one or more of the Fries Withdrawal or the
Fries Withdrawal Documents, and no Governmental Authority shall
have instituted, or notified either of Hercules or Mallinckrodt
of its intention to institute, any suit, investigation or
proceeding seeking to nullify, render ineffective or attack on
any substantive grounds the legality of any one or more of the
Partnership Agreement or the Fries Withdrawal Documents. All
acts, consents, documents and other matters, other than the
giving of notice of exercise of the Fries Withdrawal and the
execution and delivery of the Fries Withdrawal Documents,
required by the Partnership Agreement to be taken or obtained in
connection with the Fries Withdrawal and the Fries Withdrawal
Closing shall have been taken or obtained.
10.3 Extension of the Closing Date. In the event a
-----------------------------
condition precedent set forth in Section 10.1 or 10.2 of this
Agreement is not satisfied or waived in writing by the
beneficiary thereof on or before the date established by the
parties as the Closing Date for reasons beyond the reasonable
control of the party responsible for satisfying such condition,
and such condition, in the reasonable opinion of the party who is
responsible for satisfying such condition, is capable of being
satisfied prior to the Closing Deadline, the Closing Date shall
be extended, but not beyond the Closing Deadline, to a date
determined in good faith by the party or parties responsible for
satisfying such condition. The party responsible for satisfying
such condition shall use its reasonable best efforts in such case
to cause such condition precedent to be satisfied, and all
parties shall use their respective reasonable best efforts to
obtain an extension of time from any Governmental Authority whose
approval or consent to the consummation of the transactions
contemplated by any of the Transaction Documents is required and
will expire prior to the extended Closing Date.
11. MISCELLANEOUS
-------------
11.1 Termination and Cancellation. This Agreement may be
----------------------------
terminated and the transactions contemplated herein may be
abandoned at any time prior to Closing:
11.1.1 By the mutual written consent of the parties
hereto;
11.1.2 By any party hereto if neither the
terminating party nor an Affiliate of the terminating party is
then in material breach of its obligations under any of the
Transaction Documents or the D&F Transaction Agreements and if
the Closing Date has not occurred on before the Closing Deadline;
11.1.3 By any of Hercules, Mallinckrodt, Roche or
GRI if any of the D&F Transaction Agreements, the Hercules
Transaction Agreement or the Contribution Agreement is terminated
in accordance with the terms thereof prior to consummation of the
transactions contemplated thereby;
11.1.4 By the Interested Persons if any of the
conditions precedent set forth in Section 10.1 have not been
satisfied on or before the date established by the parties as the
Closing Date (as the same may be extended pursuant to Section
10.3);
11.1.5 By either of Hercules or Mallinckrodt if any
of the conditions precedent set forth in Section 10.2 have not
been satisfied on or before the date established by the parties
as the Closing Date (as the same may be extended pursuant to
Section 10.3);
11.1.6 By any party hereto not then in material
breach of its obligations hereunder if another party hereto
(other than an Affiliate of the terminating party) has materially
breached any covenant herein, such breach is within the
reasonable control of the breaching party and either (i) such
breach is not capable of being cured or corrected, or (ii) the
breaching party has not cured or corrected such breach within ten
(10) days after receipt of notice of such breach;
11.1.7 By any party hereto if there shall be any law
or regulation adopted subsequent to the date hereof that makes
consummation of the transactions contemplated hereby illegal or
otherwise prohibited or if consummation of the transactions
contemplated hereby would violate any nonappealable final order,
decree or judgment of any court or governmental body having
competent jurisdiction; or
11.1.8 By any of the Owners or the Interested
Persons, if following substantial compliance with any request for
additional information or documentary material pursuant to
Section 7A(e)(2) of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, any such party or its affiliates shall have received
any communication from the Department of Justice or Federal Trade
Commission (each an "HSR AUTHORITY") (which communication shall
be confirmed to the other parties by the HSR Authority) that
causes such party to reasonably believe that any HSR Authority
has authorized the institution of litigation challenging the
transactions contemplated by any of the Transaction Documents,
the D&F Transaction Agreements and the Partnership Agreement
under the U.S. antitrust laws, which litigation will include a
motion seeking an order or injunction prohibiting the
consummation of any of the transactions contemplated by the
Transaction Documents, the D&F Transaction Agreements and the
Partnership Agreement.
11.2 Effect of Termination. Upon any termination of this
---------------------
Agreement, each party hereto shall bear all expenses incurred by
it in connection with the negotiation, preparation, execution and
performance of this Agreement. No such termination shall relieve
any party hereto of any liability for a breach of or default
under this Agreement, which liability, including all expenses of
each party hereto incurred in connection with the negotiation,
preparation, execution and performance of this Agreement, shall
continue notwithstanding such termination. The provisions of
Section 6.4 hereof shall survive any termination of this
Agreement.
11.3 Notices. All notices, requests, consents, approvals,
-------
waivers and other communications hereunder shall be in writing
and shall be deemed given or delivered on the earlier of: (i)
the date actually received if properly addressed and delivered to
the addresses for notices specified herein, regardless of how
sent; or (ii) five (5) business days after being mailed by United
States certified or registered mail, return receipt requested,
with postage prepaid, in each case addressed in accordance with
the following:
11.3.1 Hercules Notice Address: Notices and other
communications to Hercules shall be sent to the following
addresses:
Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894-0001
Attention: George MacKenzie,
Senior Vice President and CEO
Telephone No.: 302-594-5175
Facsimile No.: 302-594-7032
with a required copy to:
Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894-0001
Attention: Israel J. Floyd
Assistant General Counsel and
Corporate Secretary
Telephone No.: 302-594-5128
Facsimile No.: 302-594-7252
or to such other addresses as Hercules may from time to time
designate in a notice pursuant to this Section 11.3.
11.3.2 Mallinckrodt Notice Address. Notices and
other communications to Mallinckrodt shall be sent to the
following addresses:
Mallinckrodt Inc.
675 McDonnell Boulevard
St. Louis, Missouri 63134
Attention: Mack G. Nichols
President and Chief Operating
Officer
Telephone No.: 314-854-5320
Facsimile No.: 314-854-5323
with a required copy to:
Mallinckrodt Inc.
675 McDonnell Boulevard
St. Louis, Missouri 63134
Attention: Roger A. Keller
Vice President and General
Counsel
Telephone No.: 314-854-5240
Facsimile No.: 314-854-5366
or to such other addresses as Mallinckrodt may from time to time
designate in a notice pursuant to this Section 11.3.
11.3.3 Roche Notice Address. Notices and other
communications to Roche shall be sent to the following addresses:
Roche Holdings, Inc.
15 East North Street
Dover, Delaware 19901
Attention: Treasurer
Telephone No.: 302-425-4701
Facsimile No.: 302-425-4713
with a required copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Phillip R. Mills
Telephone No.: 212-450-4618
Facsimile No.: 212-450-5500
or to such other addresses as Roche may from time to time
designate in a notice pursuant to this Section 11.3.
11.3.4 GRI Notice Address. Notices or other
communications to GRI shall be sent to the following addresses:
Givaudan-Roure (International) SA
5, Chemin de la Parfumerie
CH-1214 Vernier, Geneva
Attention: Othmar Vock
Telephone No.: 011-41-22-780-9440
Facsimile No.: 011-41-22-780-9152
with a required copy to:
Davis, Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Phillip R. Mills
Telephone No.: 212-450-4618
Facsimile No.: 212-450-5500
or to such other addresses as GRI may from time to time designate
in a notice pursuant to this Section 11.3.
11.4 Assignment. None of Hercules, Mallinckrodt, Roche or
----------
GRI shall assign this Agreement, or any rights hereunder, by
operation of law or otherwise, without the prior written consent
of all other parties hereto; provided that, without the prior
written consent of Mallinckrodt and Hercules, either Roche or GRI
may assign its respective rights under this Agreement, in whole
or from time to time in part, to one or more of its Affiliates,
however, no such assignment shall relieve Roche or GRI from
responsibility or liability hereunder.
11.5 Waiver. No waiver of any provision hereof shall be
------
effective unless such waiver is set forth in a writing signed by
the party to be charged thereby and all other parties are
provided notice thereof, and then such written waiver shall be
effective only in the instance and for the purpose specified
therein. No failure or delay on the part of any party in
exercising any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.
11.6 Amendments. This Agreement may be amended or modified
----------
in whole or in part only by a duly authorized written agreement
that refers to this Agreement and is signed by all of the parties
hereto.
11.7 Limitations on Rights of Third Parties. Nothing
--------------------------------------
expressed or implied in this Agreement is intended or shall be
construed to confer upon or give any person or entity other than
Hercules, Mallinckrodt and the Interested Persons any rights
under this Agreement.
11.8 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
11.9 Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the laws of the State
of New York of the United States of America, without giving
effect to its conflict of law principles.
11.10 Entire Agreement. The Transaction Documents
----------------
constitute and contain the entire agreements among Hercules,
Mallinckrodt and the Interested Persons and their respective
subsidiaries with respect to the subject matter hereof and
thereof and supersede all other agreements, written or oral, made
prior to the date hereof, or contemporaneously herewith and
relating to the transactions contemplated by such Transaction
Documents. No representation, warranty, covenant or agreement
relating to the transactions contemplated by the Transaction
Documents shall be binding upon any party hereto unless expressly
set forth in such Transaction Documents, and then only to the
extent so provided in such agreements.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
HERCULES INCORPORATED
By_________________________________
Name_______________________________
Title______________________________
MALLINCKRODT INC.
By_________________________________
Name_______________________________
Title______________________________
GIVAUDAN-ROURE (INTERNATIONAL) SA
By_________________________________
Name_______________________________
Title______________________________
ROCHE HOLDINGS, INC.
By_________________________________
Name_______________________________
Title______________________________
APPENDIX D - TAX ANNEX
TAXES
1. TAX DEFINITIONS
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1.1. Capitalized Terms. The following capitalized terms
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used in this Appendix D and in the Partnership Agreement, any
Transaction Document or any D&F Transaction Agreement, unless
otherwise defined, shall have the following meanings:
1.1.1. "ACCOUNTING REFEREE" shall have the meaning
ascribed to such term in Section 2.2 of this Appendix D.
1.1.2. "ADJUSTED BASELINE" shall mean the present
value, as of the Fries Withdrawal Date, of the net Tax benefit or
detriment to the Interested Persons and their Affiliates which is
attributable to the difference between (i) the basis of F&F or
any F&F Affiliate, as determined for United States federal income
Tax purposes, in the Inventory and the Wasting Assets acquired as
part of a Fries Withdrawal immediately following such Withdrawal,
assuming the Fries Withdrawal is treated as the liquidation of a
partner's interest in a partnership under sections 731, 732, and
751 of the Code, computed pursuant to Section 2.2 of this
Appendix D and in accordance with the assumptions set forth in
Section 2.1 of this Appendix D, and (ii) Tastemaker's basis in
the Inventory and Wasting Assets immediately prior to such Fries
Withdrawal.
1.1.3. "ADJUSTMENT FRACTION" shall have the meaning
ascribed to such term in Section 5.2(a) of this Appendix D.
1.1.4. "AMORTIZABLE INTANGIBLE" shall have the meaning
ascribed to such term in Section 2.1(vi) of this Appendix D.
1.1.5. "AUDITED PARTY" shall have the meaning ascribed
to such term in Section 4.8(c) of this Appendix D.
1.1.6. "BUILDING" shall mean any "nonresidential real
property" (as such term is defined in Section 168(e)(2)(B) of the
Code).
1.1.7. "COMPANY TAX RETURN" shall mean any Tax Return
required to be filed (i) by or on behalf of a Company and (ii)
with respect to a Pre-Closing Tax Period or Short Period.
1.1.8. "CONTESTANT" has the meaning set forth in
Section 4.8(a) of this Appendix D.
1.1.9. "ELECTION DEADLINE" has the meaning set forth
in Section 4.8(b)(1) of this Appendix D.
1.1.10 "EQUIPMENT" shall mean any "3-year property,"
"5-year property," "7-year property," "10-year property,"
"15-year property," or "20-year property" (as such terms are
defined in Section 168(e) of the Code).
1.1.11. "F&F AFFILIATE" shall mean any Affiliate of
F&F to whom F&F transfers a portion of its partnership interest
in Tastemaker and to whom real estate assets are transferred as
part of a Fries Withdrawal.
1.1.12. "F&F GROUP" shall have the meaning ascribed to
such term in Section 4.1(a) of this Appendix D.
1.1.13. "F&F INTANGIBLES" shall mean, collectively,
each Intangible (other than "Previously Amortizable F&F
Intangibles") contributed by F&F to the capital of Tastemaker.
1.1.14. "F&F TAX RETURN" shall mean any Tax Return
required to be filed (i) by or on behalf of F&F and (ii) with
respect to a Pre-Closing Tax Period or Short Period.
1.1.15. "FINAL DETERMINATION" shall mean (i) any final
determination of liability in respect of a Tax (or any final
determination in respect of a decrease in or adjustment to any
loss, deduction, credit or other Tax asset) that, under
applicable law, is not subject to further appeal, review or
modification through proceedings or otherwise (including the
expiration of a statute of limitations or a period for the filing
of claims for refunds, amended returns or appeals from adverse
determinations), (ii) the payment of Tax by an Interested Person,
an Owner or any Affiliate of an Interested Person or Owner,
whichever is responsible for payment of such Tax under applicable
law, with respect to any item disallowed or adjusted by a
Governmental Authority, or the entry into a legally binding
settlement or compromise agreement in respect of a decrease in or
adjustment to any loss, deduction, credit or other Tax asset,
provided that such responsible party determines in good faith
that no action should be taken to recoup such payment of Tax or
to further contest such decrease in or adjustment to a Tax asset,
and (iii) the final determination made by the Private Mediator
pursuant to such Section 4.8(b) of this Appendix D with respect
to a Tax Claim; provided, in the case of any final determination
described in clause (i) or any payment of Tax described in clause
(ii), that if any Owner makes a timely Private Contest Election
pursuant to Section 4.8(b) of this Appendix D, such determination
or payment shall not be a Final Determination.
1.1.16. "FRIES WITHDRAWAL" shall have the meaning
ascribed to such term in Section 8.3 of the Partnership
Agreement.
1.1.17. "FRIES WITHDRAWAL DATE" shall have the meaning
ascribed to such term in Section 8.5 of the Partnership
Agreement.
1.1.18. "HERCULES INTANGIBLES" shall mean,
collectively, each Intangible contributed by Hercules to the
capital of Tastemaker.
1.1.19. "HERCULES TAX" shall mean any Restructuring
Tax resulting from the transactions undertaken pursuant to the
Hercules Transaction Agreement.
1.1.20. "INITIAL BASELINE" shall mean $95,000,000.
1.1.21. "INTANGIBLE" shall mean any "Section 197
intangible" (as such term is defined in Sections 197(d) and (e)
of the Code), and any other intangible asset which is subject to
amortization for United States federal income tax purposes
pursuant to a provision of the Code other than Section 197.
1.1.22. "INVENTORY" shall mean any item which is
properly includible in inventory pursuant to Section 471 of the
Code and applicable Treasury Regulations.
1.1.23. "KEEPWELL AGREEMENT" shall have the meaning
ascribed to such term in Section 6.3 of the Contribution
Agreement.
1.1.24. "LETTER OF CREDIT" shall have the meaning
ascribed to such term in Section 10.2.7 of the Contribution
Agreement.
1.1.25. "MALLINCKRODT TAX" shall mean any Taxes of F&F
and any Restructuring Tax resulting from the transactions
undertaken pursuant to the F&F Transaction Agreement or the
Contribution Agreement.
1.1.26. "OTHER OPEN YEARS" shall have the meaning
ascribed to such term in Section 5.2(c) of this Appendix D.
1.1.27. "OWNERS' BASELINE CALCULATIONS" shall have the
meaning ascribed to such term in Section 2.2 of this Appendix D.
1.1.28. "PARTNERSHIP INTANGIBLES" shall mean,
collectively, the F&F Intangibles, the Hercules Intangibles, the
Previously Amortizable F&F Intangibles, and the Tastemaker
Intangibles.
1.1.29. "PARTNERSHIP RETURN" shall have the meaning
ascribed to such term in Section 4.1(c) of this Appendix D.
1.1.30. "POST-CLOSING TAX PERIOD" shall have the
meaning ascribed to such term in Section 4.3 of this Appendix D.
1.1.31. "POST-DETERMINATION RECOMPUTED BASELINE" shall
mean, with respect a Redetermination Event as a result of which
the Owners or Interested Persons are obligated to make a payment
pursuant to Section 5.2 of this Appendix D, the Recomputed
Baseline as computed immediately following such Redetermination
Event.
1.1.32. "PRE-CLOSING TAX PERIOD" shall have the
meaning ascribed to such term in Section 4.1(a) of this Appendix
D.
1.1.33. "PRE-DETERMINATION RECOMPUTED BASELINE" shall
mean, with respect a Redetermination Event as a result of which
the Owners or Interested Persons are obligated to make a payment
pursuant to Section 5.2 of this Appendix D, the Recomputed
Baseline as computed immediately prior to such Redetermination
Event, not taking into account all payments which (A) are treated
for Tax purposes as adjustments to the consideration paid or
delivered pursuant to the D&F Transaction Agreements or
Transaction Documents or to assets received by F&F or any F&F
Affiliate or contributed to Tastemaker in connection with a Fries
Withdrawal pursuant to Section 7 of this Appendix D, (B) do not
constitute Redetermination Events and (C) have not previously
been taken into account in determining any Post-Determination
Recomputed Baseline for purposes of Section 5.2(a) of this
Appendix D upon the occurrence of any Redetermination Event.
1.1.34. "PREVIOUSLY AMORTIZABLE F&F INTANGIBLES" shall
mean, collectively, each Intangible contributed by F&F to the
capital of Tastemaker which, immediately prior to such
contribution, was subject to amortization for United States
federal income tax purposes.
1.1.35. "PRIVATE APPEAL" shall have the meaning
ascribed to such term in Section 4.8(b)(2) of this Appendix D.
1.1.36. "PRIVATE CONTEST ELECTION" shall have the
meaning ascribed to such term in Section 4.8(b)(1) of this
Appendix D.
1.1.37. "PRIVATE MEDIATOR" shall mean the individual
appointed pursuant to Section 4.8(b)(2) of this Appendix D, which
individual is an attorney and is either (i) a former United
States Tax Court judge or (ii) in private practice and a
nationally recognized expert in the field of United States
federal income taxation.
1.1.38. "PRIVATE TRIAL" shall have the meaning
ascribed to such term in Section 4.8(b)(2) of this Appendix D.
1.1.39. "RECOMPUTED BASELINE" shall mean, at any time,
the Adjusted Baseline, recomputed by making such modifications to
the assumptions, methodology and information to which Section 2.1
of this Appendix D refers (other than the items specified in
clauses (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix),
(x), clause (C) of (xvii), (xviii), (xix), (xx), and (xxi) of
such Section 2.1) as are necessary in order fully to take into
account all events occurring prior to such time; provided, that
in making such recomputation, no modifications shall be made with
respect to the assumptions, methodology and information to which
such Section 2.1 refers when computing the net tax benefit or
detriment to the Interested Persons and their Affiliates that is
attributable to taxable periods of F&F, Roche or any Roche
Affiliate (other than taxable periods which are the subject of
the Tax Claim, if any, resulting in the Redetermination Event)
for which, as of such time, the statute of limitations (giving
effect to any waiver, mitigation or extension thereof) has
expired; and provided further, that no change in law which occurs
between the times of determination of the Adjusted Baseline and
the Recomputed Baseline shall be taken into account.
1.1.40. "REDETERMINATION EVENT" shall mean (i) any
Final Determination or (ii) any payment of any amount (other than
the payment of an amount pursuant to Section 5.2 of this Appendix
D) by the Owners or the Interested Persons which is treated by
the parties for Tax purposes as an adjustment to aggregate
consideration paid or delivered pursuant to the D&F Transaction
Agreements and the Transaction Documents or the total value of
the assets received by F&F or any F&F Affiliate or contributed to
Tastemaker in connection with a Fries Withdrawal pursuant to
Section 7 of this Appendix D and which exceeds $1 million, in
each case so long as the Final Determination described in clause
(i) or the payment described in clause (ii) results in a
Post-Determination Recomputed Baseline which differs from the
corresponding Pre-Determination Recomputed Baseline.
1.1.41. "RESTRUCTURING TAX" shall mean any Tax
resulting from the transactions undertaken pursuant to the
Transaction Documents, the D&F Transaction Agreements or the
Partnership Agreement (including, without limitation, a Fries
Withdrawal).
1.1.42. "ROCHE AFFILIATE" shall mean any Affiliate of
Roche.
1.1.43. "SECTION 351 LOSS" shall have the meaning
ascribed to such term in Section 5.3 of this Appendix D.
1.1.44. "SHORT PERIOD" shall mean the portion of any
Straddle Period ending at the end of the Closing Date.
1.1.45. "STEP-UP ADJUSTMENT" shall mean the amount, if
any, by which the Initial Baseline exceeds the Adjusted Baseline.
1.1.46. "STEP-UP GAIN" shall have the meaning ascribed
to such term in Section 5.2(b) of this Appendix D.
1.1.47. "STEP-UP LOSS" shall have the meaning ascribed
to such term in Section 5.2(a) of this Appendix D.
1.1.48. "STEP-UP TAX" shall mean any liability for Tax
(or any refund claim), a Final Determination in respect of which
will result in the Owners or Interested Persons being required to
indemnify the Interested Persons, the Owners or the Interested
Persons' and Owners' respective Affiliates, as the case may be,
pursuant to Section 5.2 of this Appendix D.
1.1.49. "STRADDLE PERIOD" shall have the meaning
ascribed to such term in Section 4.1(a) of this Appendix D.
1.1.50. "SUBSEQUENT LOSS" shall have the meaning
ascribed to such term in Section 4.2(d) of this Appendix D.
1.1.51. "TASTEMAKER INTANGIBLES" shall mean,
collectively, each Intangible of Tastemaker other than the F&F
Intangibles, the Hercules Intangibles, and the Previously
Amortizable F&F Intangibles.
1.1.52. "TASTEMAKER REFINANCED DEBT" shall have the
meaning ascribed to such term in Section 4.9(a) of this Appendix
D.
1.1.53. "TAX" means (i) any federal, state, local or
foreign income, profits, gross receipts, property, sales, use,
license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, transfer, stamp,
capital stock or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty or addition to
tax imposed by any Governmental Authority, (ii) liability of F&F
or a Company for the payment of any amounts of the type described
in Clause (i) above as a result of being a member of an
affiliated, consolidated, combined or unitary group, or being a
party to any agreement or arrangement whereby liability of F&F or
such Company, as the case may be, for payments of such amounts
was determined or taken into account with reference to the
liability of any other person for any Pre-Closing Tax Period or
Straddle Period, and (iii) liability of F&F or a Company for the
payment of any amounts as a result of being party to any Tax
sharing, allocation, compensation or like agreement or
arrangement binding, as the case may be, F&F or such Company or
with respect to the payment of any amounts of the type described
in Clauses (i) or (ii) above as a result of any express or
implied obligation to indemnify any other entity or individual.
1.1.54. "TAX CLAIM" has the meaning set forth in
Section 4.8(a) of this Appendix D.
1.1.55. "TAX INDEMNIFICATION PERIOD" means (i) with
respect to any Tax described in Clause (i) of the definition of
"Tax," any Pre-Closing Tax Period or Short Period of F&F or a
Company, (ii) with respect to any Tax described in Clause (ii) of
the definition of "Tax," any Pre-Closing Tax Period or Short
Period of F&F or a Company and the taxable period of any member
of a group described in such Clause (ii) which includes (but does
not end on) the Closing Date, (iii) with respect to any Tax
described in Clause (iii) of the definition of "Tax", the
survival period of the obligation under the applicable contract
or arrangement.
1.1.56. "TAX LOSS" shall have the meaning ascribed to
such term in Section 5.1(a) of this Appendix D.
1.1.57. "TAX RETURN" shall mean any return, report or
similar statement (including any attached schedules) required to
be filed with any Governmental Authority and relating to Taxes,
including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Taxes.
1.1.58. "TRANSFER TAX" shall have the meaning ascribed
to such term in Section 4.7 of this Appendix D.
1.1.59. "WASTING ASSET" shall mean any Equipment,
Partnership Intangible or Building.
1.2. Capitalized Terms Not Defined in Appendix D.
Capitalized terms used in this Appendix D and not otherwise
defined in this Appendix D shall have the meanings ascribed to
such terms in this Agreement.
2. ADJUSTED BASELINE
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Section 2.1. Assumptions Used in Determination of Adjusted
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Baseline. The Adjusted Baseline shall be determined in
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accordance with the following assumptions, methodology and
information:
(i) A discount rate of 6 percent, compounded
quarterly, shall be used;
(ii) The effective tax rate for the Interested Persons
shall be 38 percent;
(iii) In respect of Inventory of Tastemaker
transferred to F&F or an Affiliate of F&F
upon a Fries Withdrawal, such Inventory shall
be taken into account to reduce gross income
during the taxable period in which such Fries
Withdrawal occurs;
(iv) The "applicable recovery period" (as such term is
used in Section 168 of the Code) for any Buildings
transferred to F&F or any F&F Affiliate as part of
a Fries Withdrawal shall be 39 years;
(v) The "applicable recovery period" (as such term is
used in Section 168 of the Code) for any Equipment
transferred to F&F as part of a Fries Withdrawal
shall be (u) with respect to such Equipment as is
"3-year property" (as such term is used in Section
168 of the Code), 3 years; (v) with respect to
such Equipment as is "5-year property" (as such
term is used in Section 168 of the Code), 5 years;
(w) with respect to such Equipment as is "7-year
property" (as such term is used in Section 168 of
the Code), 7 years; (x) with respect to such
Equipment as is "10-year property" (as such term
is used in Section 168 of the Code), 10 years; (y)
with respect to such Equipment as is "15-year
property" (as such term is used in Section 168 of
the Code), 15 years; and (z) with respect to such
Equipment as is "20-year property" (as such term
is used in Section 168 of the Code), 20 years;
(vi) The amortization period for any Partnership
Intangibles which are (A) transferred to F&F as
part of a Fries Withdrawal and (B) amortizable by
F&F pursuant to Section 197(a) of the Code (such
Intangibles, "Amortizable Intangibles"), shall be
15 years;
(vii) Each Wasting Asset transferred to F&F or any
F&F Affiliate as part of a Fries Withdrawal
shall be treated as being held by F&F or such
F&F Affiliate, as the case may be, for the
entire amortization period or applicable
recovery period, if any, for such Wasting
Asset;
(viii) Amortization deductions attributable to any
Amortizable Intangible shall be determined by
using the straight line method;
(ix) Depreciation deductions for any Equipment or
Building shall be determined by using the
"applicable depreciation method" for such property
specified in Section 168 of the Code and by
assuming that (x) no election is made under
Section 168(b)(5) of the Code and (y) F&F or any
F&F Affiliate, as the case may be, is a calendar
year taxpayer with no assets other than those
acquired as part of the Fries Withdrawal;
(x) The amount claimed as a depreciation or
amortization deduction in any taxable period with
respect to a Wasting Asset transferred to F&F or
any F&F Affiliate as part of a Fries Withdrawal
shall be determined: (A) in the case of Buildings
or Equipment, by applying the "applicable
convention" (as such term is used in Section
168(d) of the Code and construed by the Internal
Revenue Service in currently applicable
administrative guidance, including Revenue
Procedure 89-15) for such property; (B) in the
case of any Amortizable Intangibles, beginning
with the month in which such Fries Withdrawal
occurs; and (C) in the case of other Partnership
Intangibles amortizable under Sections of the Code
other than Section 197(a), as appropriate under
applicable law;
(xi) For United States federal income Tax purposes,
none of the difference between (A) the aggregate
basis to F&F, determined immediately after a Fries
Withdrawal, of the F&F Intangibles transferred to
F&F as part of such Withdrawal, and (B) the
aggregate basis to Tastemaker, determined
immediately prior to a Fries Withdrawal, of such
Intangibles, shall be attributable to Amortizable
Intangibles;
(xii) For United States federal income Tax
purposes, 50 percent (50%) of the difference
between (A) the aggregate basis to F&F,
determined immediately after a Fries
Withdrawal, of the Hercules Intangibles
transferred to F&F as part of such
Withdrawal, and (B) the aggregate basis to
Tastemaker, determined immediately prior to a
Fries Withdrawal, of such Intangibles, shall
be attributable to Amortizable Intangibles;
(xiii) For United States federal income Tax
purposes, 50 percent (50%) of the difference
between (A) the aggregate basis to F&F,
determined immediately after a Fries
Withdrawal, of the Tastemaker Intangibles
transferred to F&F as part of such
Withdrawal, and (B) the aggregate basis to
Tastemaker, determined immediately prior to a
Fries Withdrawal, of such Intangibles, shall
be attributable to Amortizable Intangibles;
(xiv) For United States federal income Tax
purposes, 100 percent (100%) of the
difference between (A) the aggregate basis to
F&F, determined immediately after a Fries
Withdrawal, of the Previously Amortizable F&F
Intangibles transferred to F&F as part of
such Withdrawal, and (B) the aggregate basis
to Tastemaker, determined immediately prior
to a Fries Withdrawal, of such Intangibles,
shall be attributable to Amortizable
Intangibles;
(xv) For United States federal income Tax purposes, the
basis to F&F or any F&F Affiliate (as the case may
be) of its interest in Tastemaker, and the bases
to Tastemaker of any Wasting Assets or other
property transferred by Tastemaker to F&F or such
F&F Affiliate as part of a Fries Withdrawal,
determined as of the time immediately prior to
such Fries Withdrawal, shall be computed (A) using
all such Tax Returns, work papers, business
records and other materials as are possessed by
or, in the exercise of due diligence, can be
obtained by the parties and (B) in accordance with
all applicable provisions of the Code and Treasury
Regulations implementing such provisions;
(xvi) For United States federal income Tax
purposes, the basis to F&F or any F&F
Affiliate, as the case may be, determined as
of the time immediately after a Fries
Withdrawal, of any property transferred to
F&F or such F&F Affiliate as part of such
Withdrawal shall be (A) computed, in the case
of Inventory, in accordance with Section
732(c)(1) of the Code and the Treasury
Regulations implementing such provision, (B)
computed, in the case of any other property,
in accordance with Sections 751, 732(b) and
732(c)(2) of the Code and the Treasury
Regulations implementing such provisions,
provided, however, that full effect shall be
given to any agreement reached by the
Interested Persons and Owners as to the value
of any partnership unrealized receivables, as
set forth in Treasury Regulation Section
1.751-1(c)(3), and that any property of
Tastemaker described in Section 1231 of the
Code shall be treated as excluded in its
entirety from the definition of inventory
pursuant to Section 751(d)(2)(B) of the Code,
and (C) depreciated or amortized as rapidly
as possible, in accordance with applicable
law, to the extent such recovery period and
method is not otherwise provided for in this
Section 2.1;
(xvii) Each of the transactions contemplated by the
Designated Transaction Agreements shall be
deemed to have occurred without regard to
whether such transaction actually occurs,
unless the failure of such transaction to
occur was attributable to a failure of an
Owner or a Company to perform its obligations
under the relevant Agreement;
(xviii) The Adjusted Baseline shall be computed in a
manner which takes into account the payment
required by Section 2.3 of this Appendix D;
(xix) The Adjusted Baseline shall be determined
without regard to any change in law between
the date hereof and the date on which the
Adjusted Baseline is determined;
(xx) Tax benefits and burdens are realized by the
Interested Persons and their Affiliates on a
quarterly basis; and
(xxi) The Interested Persons shall be deemed to
have complied with the covenants set forth in
Section 4.9, regardless of whether the
Interested Persons in fact comply with such
covenants.
Section 2.2. Procedure for Determination of Adjusted
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Baseline. Within 15 days following the date on which the
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Adjusted Aggregate Value is finally determined pursuant to
Section 2.6 of the Agreement, the Owners shall cause to be
prepared and delivered to the Interested Persons a good faith
calculation of the Adjusted Baseline and the Step-Up Adjustment
(the "Owners' Baseline Calculations"). The Owners' Baseline
Calculations shall be based only on such assumptions of fact or
law as to which there is a reasonable basis. The Owners shall
promptly provide to the Interested Persons all relevant portions
of all Tax returns, work papers, procedures, and other materials
relevant to the Owners' Baseline Calculations as the Interested
Persons may reasonably request. Unless the Interested Persons
timely object as specified in this Section 2.2, the Owners'
Baseline Calculations shall be binding on the parties for
purposes of Sections 2.3 and 2.4 of this Appendix D. The
Interested Persons may object to the Owners' Baseline
Calculations only upon making a good-faith determination that
such Calculations are based on one or more (i) computational
errors, (ii) materially inaccurate factual assumptions, or (iii)
legal conclusions that do not provide a reasonable basis for the
tax treatment of any item included in such Calculations,
provided, however, that the Interested Persons may,
notwithstanding the existence of such reasonable basis, disclose
the treatment of such item on any Tax Return if the Interested
Persons provide Owners with notice of the intent to make such
disclosure at least thirty days prior to the filing of such Tax
Return and consult with Owners and/or Owners' counsel in good
faith regarding the necessity for such disclosure, and provided
further, however, that no such disclosure will be made if the
Interested Persons have received an opinion of nationally
recognized tax counsel that it is more likely than not that the
treatment of such item will be respected for federal income tax
purposes. If the Interested Persons object to all or any part of
the Owners' Baseline Calculations, they shall within thirty days
after receiving such Calculations notify the Owners in writing
that they so object. If a notice of objection is duly delivered,
the Interested Persons and the Owners shall negotiate in good
faith and use their best efforts to reach agreement as to the
computational, legal or factual question forming the basis for
the Interested Persons' objection. If the Interested Persons and
the Owners are unable to reach such agreement within twenty days
after due delivery of such notice, the parties' dispute shall be
referred for resolution to the same Adjustment Arbitrator as is
selected by the parties pursuant to Section 2.6.1 of the
Agreement or, if no Adjustment Arbitrator is selected by the
parties pursuant to such Section 2.6.1, to a certified public
accounting firm selected by the parties by applying the
principles of such provision (the "Accounting Referee"). The
Accounting Referee shall determine any item which is disputed by
the parties (and only such items) in a manner consistent with the
terms of Section 2.1 of this Appendix D and shall apply such
procedures as such Accounting Referee may require in resolving
the parties' dispute. The parties agree to use their best
efforts to cause the Accounting Referee to resolve their dispute
within 60 days after referral of the dispute to such Accounting
Referee. The costs, fees and expenses of the Accounting Referee,
to the extent incurred with respect to the parties' dispute over
the calculation of the Adjusted Baseline and the Step-Up
Adjustment, shall be borne by the Interested Persons, if such
Referee resolves the parties' dispute in favor of the Owners, and
by the Owners, if such Referee resolves the parties' dispute in
favor of the Interested Persons. Upon the resolution pursuant to
the procedures set forth in this Section 2.2 of all disputed
items relating to the calculation of the Adjusted Baseline and
the Step-Up Adjustment, the calculation of the Adjusted Baseline
and the Step-Up Adjustment pursuant to such resolution shall be
binding on the Interested Persons and the Owners for purposes of
Sections 2.3 and 2.4 of this Appendix D.
Section 2.3. Payment of Step-Up Adjustment. Within 10 days
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after the calculation of the Adjusted Baseline and the Step-Up
Adjustment becomes binding on the parties pursuant to Section 2.2
of this Appendix D, the Owners shall pay to the Interested
Persons, by wire transfer of immediately available funds, an
amount equal to the sum of (i) the Step-Up Adjustment and (ii)
interest on the Step-Up Adjustment from and including the Closing
Date to but excluding the date of payment at a rate per annum
equal to the rate of interest announced by Morgan Guaranty Trust
Company of New York from time to time as its Base Rate in New
York City in effect from time to time during the period from the
Fries Withdrawal Date to the date of payment. Such interest
shall be payable at the same time as the payment to which it
relates and shall be calculated daily on the basis of a year of
365 days and the total number of days elapsed.
Section 2.4. Adjusted Baseline Reflected on Tax Returns.
------------------------------------------
All Tax Returns filed by or on behalf of the Owners, the
Interested Persons or any of the Owners' or Interested Persons'
Affiliates (including Tastemaker) shall be consistent with the
calculation of the Adjusted Baseline (including all assumptions,
methodology and information on which such Adjusted Baseline is
based, other than the items specified in clauses (ii), (iii),
(vii), clauses (x) and (y) of (ix), (xvii), and (xxi) of Section
2.1 of this Appendix D) which becomes binding pursuant to Section
2.2 of this Appendix D; provided, that the Owners, the Interested
Persons and the Owners' and Interested Persons' Affiliates each
shall file or cause to be filed on its behalf Tax Returns which
take into account any changes in law, any event described in
clauses (i) and (ii) of the definition of "Final Determination"
binding on the party filing such Returns, any payment by the
Interested Persons or Owners treated for Tax purposes as an
adjustment to the consideration paid or delivered pursuant to the
D&F Transaction Agreements or the Transaction Documents or assets
received by F&F or any F&F Affiliate or contributed to Tastemaker
in connection with a Fries Withdrawal. If any Tax Return filed
by a party prior to the time at which the calculation of the
Adjusted Baseline becomes binding is inconsistent with such
calculation of the Adjusted Baseline, then such party shall, to
the extent permissible or required under applicable law, file an
amended Tax Return which is consistent with such calculation of
the Adjusted Baseline.
3. REPRESENTATIONS
---------------
Hercules and Mallinckrodt, jointly and severally, represent
and warrant to the Interested Persons as of the date hereof and
as of the Closing Date:
3.1. Valid Section 338 Elections. The acquisition by
---------------------------
Tastemaker Finance Inc. of the stock of each of Tastemaker Inc.
(formerly called Consolidated Flavor Corporation) and Cocoa
Trading and Transport Company constituted, in the case of each
entity the stock of which was acquired, a "qualified stock
purchase" within the meaning of Section 338(d)(3) of the Code.
In the case of each acquisition described in the preceding
sentence, a valid election was made under Section 338(h)(10) of
the Code.
4. COVENANTS
---------
4.1. Responsibility for Periods Beginning Before Closing
---------------------------------------------------
Date. (a) With respect to jurisdictions in which F&F (i) is
- ----
required to file a consolidated, combined or unitary Tax Return
with Mallinckrodt or any consolidated, combined or unitary group
of which F&F is a member ("F&F Group") or (ii) is eligible to
file a Tax Return with Mallinckrodt or any member of the F&F
Group and has filed such a Return in the most recent taxable
period for which a Return was due, Mallinckrodt shall include, or
cause to be included, F&F in such Tax Returns for all taxable
periods ending at or before the end of the Closing Date ("Pre-
Closing Tax Periods") and all taxable periods beginning prior to
and ending after the Closing Date ("Straddle Periods"). Items of
income of F&F included in such Returns shall be determined in
accordance with principles of Treasury Regulation Section
1.1502-76(b) applied to the portion of such period ending at the
end of the Closing Date and the portion of such period beginning
on the day following the Closing Date, including the application
of Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) to treat
transactions occurring after the consummation of the transactions
contemplated by the Contribution Agreement, including the
transfer of any interest in Tastemaker by F&F to any F&F
Affiliate and a Fries Withdrawal pursuant to or in respect of the
Partnership Agreement, as occurring on the day following the
Closing Date. F&F's share of Tastemaker income for Straddle
Periods shall each be allocated to the periods before and after
the consummation of the transactions contemplated by the
Contribution Agreement, as required by Treasury Regulation
Section 1.1502-76(b)(2)(v), by applying the interim closing of
the books method and the principles of Treasury Regulation
Section 1.1502-76(b), including the application of Treasury
Regulation Section 1.1502-76(b)(1)(ii)(B) to treat transactions
occurring after the consummation of the transactions contemplated
by the Contribution Agreement, including the transfer of any
interest in Tastemaker by F&F to any F&F Affiliate and a Fries
Withdrawal pursuant to or in respect of the Partnership
Agreement, as occurring on the day following the Closing Date.
Mallinckrodt shall timely prepare and file, or cause to be timely
prepared and filed, all such Tax Returns described in the first
sentence of this paragraph 4.1(a) with respect to Pre-Closing Tax
Periods and Straddle Periods referred to in this Section 4.1(a),
subject to Roche's review and approval (which approval shall not
be unreasonably withheld) of the portions of such Returns which
relate to F&F. All Tax Returns prepared pursuant to this Section
4.1(a) shall be prepared or completed in a manner consistent with
prior practice of Mallinckrodt or F&F, as applicable, concerning
the income, properties or operations of F&F (including elections
and accounting methods and conventions), except as otherwise
required by law. Mallinckrodt shall timely pay, or cause to be
timely paid, when due all Taxes relating to the Returns that it
is required to prepare and file pursuant to this Section 4.1(a).
(b) With respect to jurisdictions (i) in which F&F is
required to file a Tax Return and (ii) with respect to which
Section 4.1(a) does not apply, Mallinckrodt shall timely prepare
and file, or cause to be timely prepared and filed all such Tax
Returns of F&F for all Pre-Closing Tax Periods and Roche shall
timely prepare and file or cause to be timely prepared and filed
all such Tax Returns for all Straddle Periods, subject to
Mallinckrodt's review and approval (which approval shall not be
unreasonably withheld). Items of income of F&F included in such
Tax Returns shall be determined in accordance with principles of
Treasury Regulation Section 1.1502-76(b) applied to treat
transactions occurring after the consummation of the transactions
contemplated by the Contribution Agreement, including the
transfer of any interest in Tastemaker by F&F to any F&F
Affiliate and a Fries Withdrawal pursuant to or in respect of the
Partnership Agreement, as occurring on the day following the
Closing Date. F&F shall timely pay, when due, all Taxes relating
to the Tax Returns prepared and filed pursuant to this Section
4.1(b). Mallinckrodt shall reimburse F&F for any Taxes payable
pursuant to this Section 4.1(b) for any Pre-Closing Tax Period or
any Straddle Period to the extent applicable to the period ending
at the end of the Closing Date determined under principles of
Treasury Regulation Section 1.1502-76(b) on or before the later
of (i) with respect to Taxes due under any Tax Returns prepared
by Roche, fifteen days after such Tax Returns have been sent to
Mallinckrodt for approval, or (ii) within fifteen days prior to
the date on which the related tax liability is due. All Tax
Returns prepared pursuant to this Section 4.1(b) shall be
prepared or completed in a manner consistent with prior practice
of F&F concerning the income, properties or operations of F&F
(including elections, accounting methods and conventions), except
as otherwise required by law.
(c) With respect to jurisdictions in which Tastemaker (i)
is required to file a partnership information Tax Return
("Partnership Return") or (ii) is eligible to file a Partnership
Return and has filed such a Return in the most recent taxable
period for which a Partnership Return was due, Hercules shall
timely prepare and file, or cause to be timely prepared and filed
all such Partnership Returns for all Pre-Closing Tax Periods and
Straddle Periods, subject to the Roche's review and approval
(which approval shall not be unreasonably withheld) of all
Partnership Returns for Straddle Periods. Partners' distributive
shares of Tastemaker items of income, gain, loss, deduction or
credit shall be determined in accordance with Treasury Regulation
Section 1.706-1(c)(2)(ii) by applying the interim closing of the
books method. All Partnership Returns prepared pursuant to this
Section 4.1(c) shall be prepared or completed in a manner
consistent with prior practice of Tastemaker concerning the
income, properties or operations of Tastemaker (including
elections, accounting methods and conventions), except as
otherwise required by law.
(d) With respect to jurisdictions (i) in which Tastemaker
is required to file a Tax Return and (ii) with respect to which
Section 4.1(c) does not apply, Hercules shall timely prepare and
file, or cause to be timely prepared and filed all such Tax
Returns for all Pre-Closing Tax Periods and Straddle Periods,
subject to the Roche's review and approval (which approval shall
not be unreasonably withheld) of all Tax Returns for Straddle
Periods. All Returns prepared pursuant to this Section 4.1(d)
shall be prepared or completed in a manner consistent with prior
practice of Tastemaker concerning the income, properties or
operations of Tastemaker (including elections, accounting methods
and conventions), except as otherwise required by law.
Tastemaker shall pay all Taxes relating to Tax Returns required
to be prepared and filed pursuant to this Section 4.1(d). Any
Taxes of Tastemaker payable pursuant to such Tax Returns shall be
estimated and apportioned for purposes of determining the Working
Capital Adjustment, between the Owners, on the one hand, and the
Interested Persons on the other hand, in accordance with the
principles of Treasury Regulation Section 1.1502-76(b) applied as
of the Adjustment Time.
(e) With respect to jurisdictions in which any one or more
of the Tastemaker Subsidiaries are required to file a Tax Return,
the Owners shall timely prepare and file, or cause to be timely
prepared and filed, all such Tax Returns for all Pre-Closing Tax
Periods and the Interested Persons shall timely file prepare and
file, or cause to be timely filed, all such Tax Returns for all
Straddle Periods, subject to the Owners' review and approval
(which approval shall not be unreasonably withheld). All Tax
Returns prepared pursuant to this Section 4.1(e) shall be
prepared or completed in a manner consistent with prior practices
of the Tastemaker Subsidiaries concerning the income, properties
or operations of the Tastemaker Subsidiaries (including
elections, accounting methods and conventions), except as
otherwise required by law. The Tastemaker Subsidiaries shall pay
all Taxes relating to Tax Returns required to be prepared and
filed pursuant to this Section 4.1(e). Any Taxes of Tastemaker
Subsidiaries payable pursuant to such Tax Returns shall be
estimated and apportioned for purposes of determining the Working
Capital Adjustment, between the Owners, on the one hand, and the
Interested Persons on the other hand, in accordance with the
principles of Treasury Regulation Section 1.1502-76(b) applied to
a portion of such period ending as of the Adjustment time.
(f) With respect to jurisdictions in which Tastemaker B.V.
or any Tastemaker B.V. Subsidiary is required to file a Tax
Return, the Owners shall timely prepare and file, or cause to be
timely prepared and filed, all such Tax Returns for all Pre-
Closing Tax Periods and GRI shall timely prepare and file, or
cause to be timely prepared and filed, all such Tax Returns for
all Straddle Periods, subject to Owners' review and approval
(which approval shall not be unreasonably withheld). All Tax
Returns prepared pursuant to this Section 4.1(f) shall be
prepared or completed in a manner consistent with prior practices
of Tastemaker B.V. and the Tastemaker B.V. Subsidiaries
concerning the income, properties or operations of Tastemaker
B.V. and the Tastemaker B.V. Subsidiaries (including elections,
accounting methods and conventions), except as otherwise required
by law. Tastemaker B.V. and the Tastemaker B.V. Subsidiaries
shall pay all Taxes relating to Tax Returns required to be
prepared and filed pursuant to this Section 4.1(f). Any Taxes of
Tastemaker B.V. and the Tastemaker B.V. Subsidiaries payable
pursuant to such Tax Returns shall be estimated and apportioned
for purposes of determining the Working Capital Adjustment,
between the Owners, on the one hand, and GRI on the other hand,
in accordance with the principle of Treasury Regulation Section
1.1502-76(b) applied to the portion of such period ending as of
the Adjustment Time.
(g) No reference in this Section 4.1 to the principles of
Treasury Regulation Section 1.1502-76(b) contemplates the
application of such Regulation using the ratable allocation
method described in Treasury Regulation Section 1.1502-76
(b)(2)(ii).
4.2. Refunds and Carrybacks. (a) Except as provided in
----------------------
Section 4.2(d), the Owners shall be entitled to any refunds of
Taxes paid by or on behalf of the Companies (including refunds
paid by means of a credit against other or future Tax
liabilities) arising or accruing with respect to, or relating to,
items in Pre-Closing Tax Periods or that portion of any Straddle
Period ending at the Adjustment Time, to the extent in excess of
the amount shown, if any, as a Current Asset on the Accountants'
Net Determination or a Final Net Determination, as the case may
be. Except as provided in Section 4.2(d), Mallinckrodt shall be
entitled to any refunds of Taxes paid by or on behalf of F&F
(including refunds paid by means of a credit against other or
future Tax liabilities) arising or accruing with respect to, or
relating to, items in Pre-Closing Tax Periods or that portion of
any Straddle Period ending at the Adjustment Time.
(b) The Interested Persons shall be entitled to all other
refunds of Taxes paid by or on behalf of F&F and the Companies
(including refunds paid by means of a credit against other or
future Tax liabilities).
(c) The Interested Persons shall cause F&F and the
Companies to forward to Owners or to reimburse Owners for any
refunds due the Owners (pursuant to the terms of this Section
4.2) within fifteen days after receipt thereof, and the Owners
shall forward to the Interested Persons or reimburse the
Interested Persons for any refunds due the Interested Persons
(pursuant to the terms of this Section 4.2) within fifteen days
after receipt thereof. In the case of a refund received in the
form of a credit against other or future Tax liabilities,
reimbursement in respect of such refund shall be due in each case
on the due date for payment of the Taxes against which such
refund has been credited.
(d) The Owners agree that if F&F or any of the Companies
carries back any item of loss, deduction or credit that arises in
any Post-Closing Tax Period (a "Subsequent Loss") into any
taxable period beginning before the Closing Date, then the
Interested Persons shall be entitled to receive from the Owners a
payment in an amount equal to any Tax benefit or refund of Taxes
received by the Owners as a result thereof within fifteen days
after the receipt of such benefit or such refund.
(e) References to the Companies in subsections (b), (c) and
(d) of this Section 4.2 shall not include Tastemaker.
4.3. Responsibility for Taxable Periods Commencing After
---------------------------------------------------
the Closing Date. Subject to the provisions of Section 5 of this
- ----------------
Appendix D, for taxable periods commencing after the Closing Date
(each a "Post-Closing Tax Period"), the Interested Persons shall
(i) be liable solely for all Taxes of F&F and the Companies
(other than Tastemaker) attributable thereto and (ii) pay or
cause to be paid the Taxes described in clause (i) together with
any related costs. The Interested Persons shall prepare and file
or cause to be prepared and filed, all Tax Returns of F&F and the
Companies (other than Tastemaker) for Post-Closing Tax Periods.
4.4. Cooperation. After the Closing Date, each of the
-----------
Interested Persons and the Owners shall make available to the
other, as reasonably requested, and to any Governmental
Authority, all information, records and documents relating to Tax
liabilities or potential Tax liabilities relating to F&F and the
Companies and shall preserve all such information, records and
documents until the expiration of any applicable statute of
limitations or extension thereof, or such longer period as is
required by the Agreement.
4.5. Tax Sharing. Any and all existing Tax sharing,
-----------
allocation, compensation or like agreements or arrangements that
include F&F or any Company shall terminate with respect to F&F or
such Company, as the case may be, as of the date hereof without
liability to F&F or such Company.
4.6. No Real Property Holding Corporation; Partnership
-------------------------------------------------
Election. Within 30 days prior to the Closing, the Owners shall
- --------
deliver to the Interested Persons a certification for each
Company and signed by such Company to the effect that the Company
is not nor has it been within 5 years of the date hereof a
"United States real property holding corporation" as defined in
Section 897 of the Code. Prior to the Closing, the Owners shall
deliver to the Interested Persons a copy of the Form 8832 filed
by Tastemaker B.V. pursuant to Treasury Regulation 301.7701-3(c)
and Section 5.10 of the Agreement.
4.7. Transfer Taxes. The Interested Persons and Owners,
--------------
respectively, shall each bear 50% of the cost of all documentary,
stamp, transfer, sales, excise or other similar Taxes or
recording fees, including without limitation any real property
transfer and real property gains Taxes ("Transfer Taxes") payable
in respect of the transactions contemplated in the Transaction
Documents, the D&F Transaction Agreements and the Partnership
Agreement (including, without limitation, the Fries Withdrawal).
4.8 Contest Rights With Respect to Indemnified Taxes.
------------------------------------------------
(a) In the event any of the Interested Persons or any of their
Affiliates (each a "Contestant") receives any written notice of
any potential claim or proposed adjustment that could result in a
Step-Up Tax or a Tax in respect of which either or both of the
Owners, as the case may be, would be required to indemnify the
Interested Persons or their Affiliates, as the case may be,
pursuant to Section 5.1 of this Appendix D (a "Tax Claim") and
such Tax Claim arises in connection with an audit of a Tax Return
over which such Contestant has control by law or by agreement,
then this Section 4.8 shall apply unless such Contestant offers
to cede control of the audit of such Tax Claim to the Owners. In
the event a Tax Claim is subject to this Section 4.8(a), the
Contestant shall (i) promptly notify each Owner from whom an
indemnity payment would be required (each such Owner being
referred to herein both individually and collectively as an
"Indemnitor") of such Tax Claim and provide Indemnitor with
relevant information thereto (including a copy of any written
notices and information document requests received), provided
that the failure to give such notice shall not diminish the
Indemnitor's obligation hereunder except to the extent that such
failure results in a material and adverse effect on the
Indemnitor, (ii) forbear payment of the Tax claimed for at least
30 days after giving such notice (provided such forbearance is
permitted by law), and (iii) advise Indemnitor of all action
taken or proposed to be taken by the relevant Governmental
Authority. In addition, to the extent such Tax Claim relates to
an item or items which reasonably could be considered to
constitute "partnership items" within the meaning of Section 6231
(a)(3) of the Internal Revenue Code and the Treasury Regulation
thereunder, the parties shall use their best efforts to cause the
Internal Revenue Service to remove such items from Contestant's
audit (including forbearing from entering into an extension
agreement under Section 6229(b) of the Code) and to instead treat
such items as partnership items and determine the tax treatment
thereof pursuant to an audit of Tastemaker, in which case such
items shall no longer be subject to this Section 4.8(a). The
decision regarding whether or not such Tax Claim shall be
contested is solely that of the Contestant. If such Tax Claim is
contested, the Contestant shall in good faith and using its best
efforts contest the claim or proposed adjustment, shall keep the
Indemnitor fully informed at all administrative and judicial
stages of any contest, shall consult in good faith with
Indemnitor and Indemnitor's counsel regarding the contest of such
Tax Claim or proposed adjustment, and shall provide Indemnitor
and Indemnitor's counsel, at the Indemnitor's expense, with the
portions of drafts of all written petitions, briefs, and similar
submissions relating to Tax Claims indemnified by the Indemnitor
hereunder. Such proceedings, insofar as they relate to Tax
Claims, shall be controlled jointly by the Contestant and
Indemnitor. Contestant shall use its best efforts to permit
Indemnitor to be present and represented by Indemnitor's counsel
at any meetings or proceedings. Decisions regarding the contest
of such Tax Claim with respect to tactics to be pursued in
contesting such Tax Claim or substantive legal matters relating
to such Tax Claim shall be made jointly by Contestant and
Indemnitor. Notwithstanding any of the foregoing, a decision not
to contest such Tax Claim, a decision to refrain from seeking to
cause an item relating to such Tax Claim from being treated as a
partnership item, a decision regarding the terms of any
settlement of such Tax Claim with the Internal Revenue Service or
other relevant Governmental Authority, a decision regarding
whether to prosecute such Tax Claim in the United States Tax
Court, the United States Court of Federal Claims, a United States
District Court, or other available trial court or similar
judicial forum, or a decision not to appeal an adverse judicial
determination of a lower court, shall be made solely and
exclusively by the Contestant.
(b) (1) In the event that Indemnitor disagrees with any
decision made by Contestant pursuant to the last sentence of
Section 4.8(a) above, Indemnitor's sole recourse is to elect the
private contest resolution procedures outlined in this Section
4.8(b); provided, however, that any refusal or failure of
Contestant to seek to cause an item giving rise to a Tax Claim to
be treated as a partnership item shall not be the subject of a
proceeding pursuant to this Section 4.8(b). If Indemnitor
desires to proceed under this Section 4.8(b), it shall provide
Contestant with written notice of such election (a "Private
Contest Election") on or before the last date payment pursuant to
Section 5.1 or 5.2 of this Appendix D may be made in compliance
with Section 5.5 of this Appendix D (the "Election Deadline").
The making of a Private Contest Election shall cause the period
during which payment may be made in compliance with Section 5.5
of this Appendix D to be tolled until ten (10) days after the
date a final determination with respect to the amount of the Tax
Claim is made by the Private Mediator pursuant to Section
4.8(b)(2) of this Appendix D.
(2) Within 30 days of Contestant's receipt of such
Private Contest Election, each of Contestant and Indemnitor shall
submit to the other the names of 3 individuals qualified to
serve, and whom they would consent to being appointed, as the
Private Mediator, and which individuals have informed the
submitting party that they would be willing to serve as such
Private Mediator. Within 30 days of the end of the period during
which the parties may submit names of potential Private Mediators
to each other, the Contestant and Indemnitor shall jointly agree
as to the appointment of one of the proposed Private Mediators.
The Contestant and Indemnitor shall submit the Tax Claim to the
Private Mediator in a proceeding that (i) with respect to a Tax
Claim which does not arise out of a final judgment entered by the
United States Tax Court, the United States Court of Federal
Claims, a United States District Court or other available trial
court or similar judicial forum will be governed by the Rules of
the United States Tax Court (a "Private Trial") and (ii) with
respect to a Tax Claim which does arise out of a final judgment
entered by the United States Tax Court, the United States Court
of Federal Claims, a United States District Court or other
available trial court or similar judicial forum, an appeal of
such judgment to the United States Court of Appeals for the Sixth
Circuit (a "Private Appeal"). The Contestant shall present the
case of the relevant Governmental Authority in support of the Tax
Claim and Indemnitor shall present the case of the taxpayer in
opposition to the Tax Claim. A Private Trial before the Private
Mediator will be conducted in a manner consistent with a trial de
novo in the United States Tax Court; provided, however, that
notwithstanding any provision of the Rules of such Court to the
contrary, (A) the parties shall engage in discovery only to the
extent that each party may make discovery requests of the other
party or its Affiliates to the extent such requests relate to
documents in the possession of such other party and which
documents are relevant to the Tax Claim and (B) the decision of
the Private Mediator shall not be appealable. Subject to the
powers granted the Private Mediator in this Section 4.8(b)), the
Contestant and the Indemnitor shall, with respect to a Private
Trial conducted pursuant to this Section 4.8(b)), have the
ability to present the testimony of witnesses, introduce
documentary evidence, and otherwise fully develop a record in
such proceeding. The Private Mediator (i) with respect to a
Private Trial conducted pursuant to this Section 4.8(b)), shall
have all powers exercisable by a judge of the United States Tax
Court including, without limitation, the power to set the
calendar for the proceeding, to set briefing schedules, to rule
on motions, and to encourage and cause the parties to reach a
settlement with respect to the Tax Claim and (ii) with respect to
a Private Appeal conducted pursuant to this Section 4.8(b)),
shall have all powers exercisable by a judge of the United
States, Court of Appeals for the Sixth Circuit; provided,
however, that the Private Mediator must have made a final
determination as to the amount of the Tax Claim or the Contestant
and Indemnitor must enter into a settlement regarding the amount
of such Tax Claim no later than twelve months from the date the
Private Mediator is appointed; and provided, further, that in
rendering a final determination, the Private Mediator shall state
in reasonable detail the factual and legal bases for his or her
determination in a written opinion and shall endeavor to make
clear the effect of the determination on the Recomputed Baseline,
determined immediately prior to such determination. The
determination of the Private Mediator shall be final in all
respects and the indemnity payment required to be made by
Indemnitor pursuant to Section 5.1 or 5.2 of this Appendix D
shall be computed with reference to such final determination.
(3) The Contestant and Indemnitor shall bear their own
costs incurred in connection with a proceeding conducted pursuant
to this Section 4.8(b). The costs incurred in connection with
the conduct of the proceeding, including the cost of the Private
Mediator, shall be borne, respectively, fifty percent (50%) by
the Contestant or Contestants and fifty percent (50%) by the
Indemnitor or Indemnitors.
(c) In the event any potential claim or proposed adjustment
that relates to a Restructuring Tax, or that could result in a
Step-Up Tax, arises in or is made a part of an audit of
Tastemaker or the Owners or any of their Affiliates (each an
"Audited Party"), the Audited Party shall (i) promptly notify the
Interested Persons of such claim or adjustment and provide the
Interested Persons with relevant information thereto (including a
copy of any relevant written notices and information or document
requests received), (ii) advise the Interested Persons of the
status of such audit insofar as is relevant to the Interested
Persons' interests (including, to the extent relevant, providing
copies to the Interested Persons of all correspondence, providing
the Interests Persons with reasonable advance notice of meetings
or significant telephone conferences with the relevant
Governmental Authority, and consulting with the Interested
Persons regarding strategy decisions with respect to such audit).
The Audited Party and the Interested Persons shall jointly make
all decisions as to the substantive legal arguments to be set
forth in the portion of any written petition, brief and similar
submission relating to the claim or adjustment which is the
subject of this Section 4.8(c), and the Audited Party shall
provide to the Interested Persons for their review the portion of
any draft of such petition, brief and other submission relating
to such claim or adjustment. The Interested Persons shall have
right to consent to any settlement by the Audited Party with the
relevant Governmental Authority insofar as such settlement
relates to a Step-Up Tax, which consent shall not be unreasonably
withheld. Tastemaker and the Interested Persons will each use
their reasonable best efforts to coordinate their efforts with
respect to any simultaneous audit of Tastemaker, an Owner or any
of its Affiliates or an Interested Person or any of its
Affiliates, to the extent such audits involve identical or
related issues.
4.9. Covenants of the Interested Persons (a) The
-----------------------------------
Interested Persons covenant that any principal payments on or
refinancing of the Tastemaker Debt within one year of the Fries
Withdrawal Date shall be done solely with the proceeds of a
liability of the then obligor on the Tastemaker Debt, the
proceeds of which are allocable under the rules of Treasury
Regulation Section 1.163-8T to payments discharging the
Tastemaker Debt (the "Tastemaker Refinanced Debt," which term
shall also include any liability of the then obligor on the
Tastemaker Refinanced Debt, the proceeds of which are allocable
under the rules of Treasury Regulation Section 1.163-8T to
payments discharging such Tastemaker Refinanced Debt). The
Tastemaker Debt and any Tastemaker Refinanced Debt shall have an
aggregate term of, and will remain outstanding for, in the
aggregate, at least four months after the Fries Withdrawal Date.
(b) The Interested Persons covenant that none of F&F or any
F&F Affiliate shall be liquidated or dissolved or otherwise
suffer a termination of its corporate existence and none of F&F
or any F&F Affiliate shall be a party to any reorganization
(other than a reorganization in which F&F or such F&F Affiliate,
as the case may be, is the surviving corporation) within two
years of the Fries Withdrawal Date.
(c) The Interested Persons covenant that none of the assets
purchased from Tastemaker by the Interested Persons or any
Affiliate of the Interested Persons shall be transferred to F&F
or any F&F Affiliate within two years of the Fries Withdrawal
Date.
(d) The Interested Persons covenant that (i) except for
assets transferred in the ordinary course of business,
substantially all of the assets of Tastemaker immediately prior
to the Fries Withdrawal which are received by F&F as part of the
Fries Withdrawal shall remain in F&F for at least two years
subsequent to the Fries Withdrawal Date and (ii) except for
assets transferred in the ordinary course of business, none of
the assets distributed by Tastemaker to F&F or any F&F Affiliate
as part of the Fries Withdrawal shall be transferred by F&F or
such F&F Affiliate, as the case may be, within two years of the
Fries Withdrawal Date to any Affiliate of the Interested Persons
that received assets from Tastemaker by purchase pursuant to the
Designated Transaction Agreements.
(e) The Interested Persons covenant that F&F shall transfer
a portion of its partnership interest in Tastemaker to one or
more F&F Affiliates, each such F&F Affiliate shall receive
distributions of one or more significant parcels of real property
constituting substantially all of the real property held by
Tastemaker immediately prior to the Fries Withdrawal, and that
any lease of each such parcel of real property to F&F shall be
pursuant to a lease agreement that constitutes a "true" lease for
United States federal income tax purposes.
(f) The Interested Persons and Owners each covenant that,
subject to requirements of law, financial reporting requirements,
and the provisions of Sections 2.4 and 4.8 of this Appendix D,
with respect to all transactions executed in connection with or
as contemplated by the Wrap Agreement, the F&F Transaction
Agreement, the Hercules Transaction Agreement, the Contribution
Agreement, and the Partnership Agreement (including, but not
limited to, the Fries Withdrawal), such Interested Persons and
Owners (i) will not take any action inconsistent with the
separate legal status of all entities participating in such
transactions and the legal ownership of assets as reflected in
such agreements and (ii) will report the Transactions for Tax
purposes in a manner consistent with the form of such
transactions.
4.10. Taxing Jurisdictions. At or prior to the Closing,
--------------------
the Owners shall provide the Interested Persons with a list of
all jurisdictions, whether foreign or domestic, to which any Tax
is payable by F&F or any Company.
5. INDEMNITY
---------
5.1. Tax Indemnity by the Owners. (a) Notwithstanding
---------------------------
anything in the D&F Transaction Agreements, Transaction Documents
or Partnership Agreement to the contrary, Mallinckrodt, with
respect to Mallinckrodt Taxes (other than any Tax constituting a
Section 351 Loss), Hercules, with respect to Hercules Taxes, and
Mallinckrodt and Hercules, jointly and severally, with respect to
all Taxes (including Restructuring Taxes) other than Mallinckrodt
Taxes, Hercules Taxes, and any Tax constituting a Section 351
Loss, shall indemnify and hold harmless the Interested Persons
and their Affiliates against (i) any Tax of F&F or a Company
related to the Tax Indemnification Period, (ii) any Restructuring
Tax regardless of the taxable period to which it relates, and
(iii) any liabilities, costs, expenses (including, without
limitation, reasonable expenses of investigation and attorneys'
fees and expenses), losses, damages, assessments, settlements or
judgments arising out of or incident to the imposition,
assessment or assertion of any Tax described in (i) or (ii),
including those incurred in the contest in good faith in
appropriate proceedings relating to the imposition, assessment or
assertion of any such Tax, and any liability as transferee (the
sum of (i), (ii) and (iii) being referred to herein as a "Tax
Loss").
(b) For purposes of this Section 5.1, in the case of any
Tax that is payable for a Straddle Period, the portion of such
Tax related to the corresponding Short Period shall be determined
under the principles of Treasury Regulation Section 1.1502-76(b),
applying such Regulation in the manner set forth in Section 4.1
of this Appendix D.
5.2 Indemnity by Owners and Interested Persons Relating to
------------------------------------------------------
Basis Step-Up. (a) If after the Fries Withdrawal Date there
- -------------
shall be a Redetermination Event, then the Owners shall pay F&F,
Roche or Roche's Affiliates, as directed by Roche, an amount
(such amount, a "Step-Up Loss") equal to eighty-five percent
(85%) of the sum of the following five items:
(i) the excess, if any, of (A) the lower of (x) the
Initial Baseline and (y) the Pre-Determination
Recomputed Baseline, over (B) the Post-
Determination Recomputed Baseline;
(ii) the amount, if any, of interest and penalties
actually assessed in connection with such
Redetermination Event, multiplied by a fraction
(such fraction, the "Adjustment Fraction"), (A)
the numerator of which is the amount described in
clause (i) and (B) the denominator of which is the
excess of (x) the PreDetermination Recomputed
Baseline over (y) the Post-Determination
Recomputed Baseline;
(iii) the product of:
(A) interest (calculated by using the applicable
United States federal income Tax underpayment
rates in effect from time to time) on such
additional Tax, if any, of F&F, Roche or a
Roche Affiliate, as is, was, will be or would
become due in respect of the net reduction in
depreciation or amortization deductions
relating to Other Open Years which occurs
solely as a result of such Redetermination
Event; and
(B) the Adjustment Fraction;
(iv) interest (calculated by using a rate of 6 percent,
compounded quarterly and running from the Fries
Withdrawal Date through and including the date of
payment pursuant to this Section 5.2(a)) on the
portion of the amount described in clause (i)
which is attributable to the net reduction in
depreciation or amortization deductions relating
to taxable periods of F&F, Roche or a Roche
Affiliate subsequent to the last Other Open Year
for, as the case may be, F&F, Roche or such Roche
Affiliate; and
(v) interest (calculated by using a rate of 6 percent,
compounded quarterly) on each portion of the
amount described in clause (i) which is
attributable to a net reduction in depreciation or
amortization deductions relating to an Other Open
Year or a taxable period of F&F, Roche or a Roche
Affiliate which is the subject of the Tax Claim
resulting in such Redetermination Event; provided,
in the case of each portion of the amount
specified in clause (i) that is attributable to a
particular quarter of such Other Open Year or
taxable period of F&F, Roche or a Roche Affiliate,
that interest on such portion of such amount shall
run from the Fries Withdrawal Date through the end
of such quarter.
(b) If after the Fries Withdrawal Date there shall be a
Redetermination Event, then the Interested Persons shall pay the
Owners or the Owners' Affiliates, as directed by the Owners, an
amount (such amount, a "Step-Up Gain") equal to eighty-five
percent (85%) of the sum of the following four items:
(i) the excess, if any, of (A) the lower of (x) the
Initial Baseline and (y) the Post-Determination
Recomputed Baseline, over (B) the Pre-
Determination Recomputed Baseline;
(ii) the product of:
(A) interest (calculated by using the applicable
United States federal income Tax overpayment
rates in effect from time to time) on such
refunds of Tax, if any, to which F&F, Roche
or a Roche Affiliate, is, will be or would be
entitled by reason of the net increase in
depreciation or amortization deductions
relating to Other Open Years which occurs as
solely a result of the Redetermination Event;
and
(B) a fraction, (x) the numerator of which is the
amount described in clause (i) of this
Section 5.2(b) and (y) the denominator of
which is the excess of (I) the Post-
Determination Recomputed Baseline over (II)
the Pre-Determination Recomputed Baseline;
(iii) interest (calculated by using a rate of 6 percent,
compounded quarterly and running from the Fries
Withdrawal Date through and including the date of
payment pursuant to this Section 5.2(b,)) on the
portion of the amount described in clause (i) of
this Section 5.2(b,) which is attributable to an
increase in depreciation or amortization
deductions relating to taxable periods of F&F,
Roche or a Roche Affiliate subsequent to the last
Other Open Year for, as the case may be, F&F,
Roche or such Roche Affiliate; and
(iv) interest (calculated by using a rate of 6 percent,
compounded quarterly) on each portion of the amount
described in clause (i) which is attributable to a net
increase in depreciation or amortization deductions
relating to an Other Open Year or a taxable period of
F&F, Roche or a Roche Affiliate which is the subject of
the Tax Claim resulting in such Redetermination Event;
provided, in the case of each portion of the amount
specified in clause (i) that is attributable to a
particular quarter of such Other Open Year or taxable
period of F&F, Roche or a Roche Affiliate, that
interest on such portion of such amount shall run from
the Fries Withdrawal Date through the end of such
quarter.
(c) For purposes of this Appendix C, "Other Open Years"
shall mean, in the case of a Redetermination Event subject to
Section 5.2(a) or 5.2(b), all taxable periods of F&F, Roche or a
Roche Affiliate (other than taxable periods which are the subject
of the Tax Claim which resulted in such Redetermination Event),
in respect of which, as of the date of such Redetermination
Event, (x) a Tax Return was filed by or due from F&F, Roche or
such Affiliate of Roche (as the case may be) and (y) the statute
of limitations (giving effect to any waiver, mitigation or
extension thereof) has not expired.
5.3. Reciprocal Indemnity by Roche and Mallinckrodt. If
----------------------------------------------
there shall be a Final Determination that, solely as a result of
any breach by Roche or Mallinckrodt, as the case may be, of its
covenant in Section 7.3 of the Contribution Agreement, the
contribution by Roche of the G-R Stock, or by Mallinckrodt of the
capital stock of F&F, to Newco pursuant to the terms of the
Contribution Agreement fails to qualify as a tax-free
contribution under Section 351 or, in the case of Roche, Section
368(a)(1)(B) of the Code, then Roche or Mallinckrodt, as the case
may be, shall indemnify the other party or its Affiliates against
(i) the amount of any Tax of such other party or its Affiliates
resulting from such failure, and (ii) any liabilities, costs,
expenses (including, without limitation, reasonable expenses of
investigation and attorneys' fees and expenses), losses, damages,
assessments, settlements or judgments arising out of or incident
to the imposition, assessment or assertion of any Tax described
in (i), including those incurred in the contest in good faith in
appropriate proceedings relating to the imposition, assessment or
assertion of any such Tax (the sum of (i) and (ii) being referred
to herein as a "Section 351 Loss"); provided, that Roche shall
not be obligated to indemnify Mallinckrodt or its affiliates if
such failure results from (A) the terms of the Newco Preferred
Stock, the Keepwell Agreement or the Letter of Credit, (B) any
action taken by Roche, or which Roche causes to be taken by
Newco, pursuant to or as required by the terms of the Newco
Preferred Stock (including Roche's exercise of any right
thereunder), the Keepwell Agreement or the Letter of Credit, or
(C) Mallinckrodt's exercise of any right under the Newco
Preferred Stock, the Keepwell Agreement or the Letter of Credit.
5.4. Amount of Recovery for Damages and Losses Relating to
-----------------------------------------------------
Taxes. (a) Subject to Section 5.4(b) of this Appendix D, but
- -----
otherwise notwithstanding anything in the Partnership Agreement
or any of the Transaction Documents or D&F Transaction Agreements
to the contrary, with respect to any Tax Loss, Step-Up Loss,
Step-Up Gain, or Section 351 Loss against which an Interested
Person or its Affiliate or an Owner or its Affiliate is entitled
to be indemnified pursuant to this Section 5, such party shall be
indemnified against the full amount of such Tax Loss, Step-Up
Loss, Step-Up Gain or Section 351 Loss, as the case may be,
regardless of the amount of such Tax Loss, Step-Up Loss, Step-Up
Gain, or Section 351 Loss or the total amount of all Tax Losses,
Step-Up Losses, Step-Up Gains, or Section 351 Losses (or any
categories thereof) incurred as of any date.
(b) Notwithstanding anything in the Partnership Agreement
or any of the Transaction Documents or D&F Transaction Agreements
to the contrary:
(i) with respect to any Tax Loss, the aggregate
recovery to which the Interested Persons and their
Affiliates are entitled under Section 5.1 of this
Appendix D, Section 8 of the Agreement, Section 8 of the F&F
Transaction Agreement, Section 8 of the Hercules Transaction
Agreement, Article 11 of the Partnership Agreement and
Section 8 of the Contribution Agreement shall be reduced to
the extent that such Tax Loss has been taken into account in
determining the Adjusted Aggregate Value; and
(ii) with respect to any Tax Loss, Step-Up Loss, Step-
Up Gain, or Section 351 Loss, the Owners and their
Affiliates or the Interested Persons and their Affiliates,
as the case may be, shall be entitled to an aggregate
recovery under this Section 5, Section 8 of the Agreement,
Section 8 of the F&F Transaction Agreement, Section 8 of the
Hercules Transaction Agreement, Article 11 of the
Partnership Agreement and Section 8 of the Contribution
Agreement no greater than the amount of such Loss or such
Gain, as the case may be.
(c) Each party shall bear its own costs incurred in
connection with a Tax Claim relating to a Step-Up Tax (and, in
the case of a Redetermination Event which is a determination by a
Private Mediator, any costs incurred in connection with the Tax
Claim with respect to which the Private Mediator made its
determination); provided, that any cost of a proceeding before a
Private Mediator shall be borne by the parties as provided in
Section 4.8(b)(3) of this Appendix D.
5.5. Indemnification Procedure. (a) Any payment pursuant
-------------------------
to Section 5.1 or 5.2 of this Appendix D shall be made not later
than 30 days after receipt by, as the case may be, the Interested
Persons, Owner or Owners obligated to make payment pursuant to
such Section 5.1 or 5.2 of written notice from each Interested
Person or Owner which is, or an Affiliate of which is, entitled
to such payment pursuant to such Section 5.1 or 5.2. Such notice
shall state (i) in the case of any Tax Loss, that such Loss has
been paid by an Interested Person or its Affiliates and the
amount thereof, and (ii) in the case of any Redetermination Event
(other than a final determination described in clause (iii) of
the definition of "Final Determination") or any event which would
be described in clause (i) or (ii) of the definition of "Final
Determination" if a timely Private Contest Election were not
filed pursuant to Section 4.8(b)(1), that such Redetermination
Event or other event, as the case may be, has occurred and the
amount of the indemnity payment requested.
(b) Any payment pursuant to Section 5.3 of this Appendix D
shall be made not later than 30 days after receipt by Roche or
Mallinckrodt, as the case may be, of written notice from the
other party stating that a Section 351 Loss has been paid by such
other party or its affiliates and the amount thereof. Roche
agrees to give prompt notice to Mallinckrodt of any Section 351
Loss and the assertion of any claim, or the commencement of any
suit, action or proceeding in respect of which indemnity may be
sought hereunder which Roche deems to be within the ambit of
Section 5.3 (specifying with reasonable particularity the basis
therefor) and will give Mallinckrodt such information with
respect thereto as Mallinckrodt may reasonably request.
Mallinckrodt agrees to provide prompt notice to Roche of any
Section 351 Loss and the assertion of any claim, or the
commencement of any suit, action or proceeding in respect of
which indemnity may be sought hereunder which Mallinckrodt deems
to be within the ambit of Section 5.3 (specifying with reasonable
particularity the basis therefor) and will give Roche such
information with respect thereto as Roche may reasonably request.
6. SURVIVAL
--------
Notwithstanding anything in the Partnership Agreement or any
of the Transaction Documents or D&F Transaction Agreements to the
contrary, the representations, warranties, covenants and
agreements contained in the Partnership Agreement, Transaction
Documents and D&F Transaction Agreements, to the extent that such
representations, warranties, covenants and agreements relate to
Taxes (including, without limitation, Section 3.13 of the
Agreement, Section 7.3 of the Contribution Agreement, and all
provisions of this Appendix D), shall survive for the full period
of all applicable statutes of limitations (giving effect to any
waiver, mitigation or extension thereof).
7. ITEMS TREATED AS AGGREGATE VALUE ADJUSTMENTS
--------------------------------------------
7.1 Indemnity and Other Payments Treated as Aggregate Value
-------------------------------------------------------
Adjustments. For Tax purposes, the Owners and the Interested
- -----------
Persons shall treat, and shall cause their respective affiliates
to treat, any amount paid by the Owners or the Interested Persons
under Sections 2.3, 4.1, 4.2(d) or 5 of this Appendix D, Section
8 of the Agreement, Section 8 of the F&F Transaction Agreement,
Section 8 of the Hercules Transaction Agreement, Article 11 of
the Partnership Agreement or Section 8 of the Contribution
Agreement as an adjustment to the amount of consideration paid or
delivered pursuant to the D&F Transaction Agreements or the
Transaction Documents or assets received by F&F or any F&F
Affiliate or contributed to Tastemaker in connection with a Fries
Withdrawal, as appropriate, unless a Final Determination causes
any such amount not to be so treated. In the event of such a
Final Determination, the Interested Persons or Owners, as the
case may be, shall pay an amount that reflects the hypothetical
Tax consequences of the receipt or accrual of such amount paid
under Sections 2.3, 4.1, 4.2(d) and 5 of this Appendix D, Section
8 of the Agreement, Section 8 of the F&F Transaction Agreement,
Section 8 of the Hercules Transaction Agreement, Article 11 of
the Partnership Agreement and Section 8 of the Contribution
Agreement listed in the preceding sentence, using the maximum
statutory rate (or rates, in the case of an item that affects
more than one Tax) applicable to the recipient of the payment for
the relevant year, and reflecting, for example, the effect of
deductions available for interest paid with respect to such
amount or for state and local income Taxes.
7.2 Interest on Items Treated as Aggregate Value
--------------------------------------------
Adjustments. Any payment required to be made by the Interested
- -----------
Persons or Owners under Sections 4.1, 4.2(d) or 5 of this
Appendix D that is not made when due shall bear interest at a
rate per annum equal to the rate of interest announced by Morgan
Guaranty Trust Company of New York from time to time as its Base
Rate in New York City in effect from time to time during the
period from the Fries Withdrawal Date to the date of payment.
Such interest shall be payable at the same time as the payment to
which it relates and shall be calculated daily on the basis of a
year of 365 days and the total number of days elapsed.
EXHIBIT 2.2
FIRST AMENDMENT TO WRAP AGREEMENT
---------------------------------
This FIRST AMENDMENT TO WRAP AGREEMENT (the "AMENDMENT"),
dated as of March 28, 1997, is made and entered into by and among
HERCULES INCORPORATED, a Delaware corporation ("HERCULES"),
MALLINCKRODT INC., a New York corporation ("MALLINCKRODT"),
GIVAUDAN-ROURE (INTERNATIONAL) SA, a Swiss corporation ("GRI"),
and ROCHE HOLDINGS, INC., a Delaware corporation ("ROCHE" and,
together with GRI, the "INTERESTED PERSONS" and each individually
an "INTERESTED PERSON").
RECITALS
--------
A. The Owners and the Interested Persons are parties to
that certain Agreement dated as of February 4, 1997 (the
"AGREEMENT"), subject and pursuant to which the parties and their
respective Affiliates intend to consummate various transactions
more particularly described in the Agreement.
B. The parties desire to amend the Agreement to more
accurately reflect the mutual intentions of the parties with
respect to certain defined terms and to make certain other
changes, all as more particularly set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements, provisions and covenants contained herein, the
parties hereto agree as follows:
1. DEFINITIONS
-----------
Capitalized terms, when used in this Amendment and not
otherwise defined, shall have meanings ascribed thereto in the
Agreement. In addition, the definitions of "Agreement," "Current
Assets," "Current Liabilities," "Long-Term Liabilities," "Long-
Term Liabilities Baseline," "Partners' Representatives," and
"Working Capital Baseline" set forth in Sections 1.1.9, 1.1.22,
1.1.23, 1.1.62, 1.1.64, 1.1.72 and 1.1.104, respectively, shall
be, and hereby are, deleted and the following Sections 1.1.9,
1.1.22, 1.1.23, 1.1.62, 1.1.64, 1.1.72 and 1.1.104, respectively,
shall be, and hereby are, inserted in their place:
1.1.9 Agreement shall mean this Agreement, as
---------
amended by that certain First Amendment to Wrap Agreement
dated March 28, 1997, the Disclosure Schedule and all
schedules, annexes, exhibits and appendices hereto.
1.1.22 Current Assets shall mean, as of any time,
--------------
all items, excluding deferred taxes, the current portion, if
any, of the Investment Assets (as defined in the Partnership
Agreement), any accrued but unpaid interest receivable on
the Investment Assets and the unamortized portion of any
capitalized costs or expenses of obtaining the Tastemaker
Debt or the Investment Assets, which would be classified as
a current asset under the heading "CURRENT ASSETS" on a
combined consolidated balance sheet of Tastemaker and
Tastemaker B.V. determined and prepared in accordance with
GAAP applied on a basis consistent with the practices and
methodologies used in preparing the December 31, 1995
audited combined consolidated balance sheet of Tastemaker
and Tastemaker B.V.
1.1.23 Current Liabilities shall mean, as of any
-------------------
time, the sum of (A) the amount of accrued but unpaid
interest, fees and other costs (but excluding principal)
required to be paid to the Tastemaker Debt lender on the
Closing Date in order to pay in full and discharge all of
the Tastemaker Debt other than the principal thereof, and
(B) all items, excluding deferred taxes, the Tastemaker Debt
and any Tax that is the liability or obligation of
Tastemaker, which would be classified as a current liability
under the heading "CURRENT LIABILITIES" on a combined
consolidated balance sheet of Tastemaker and Tastemaker B.V.
determined and prepared in accordance with GAAP applied on a
basis consistent with the practices and methodologies used
in preparing the December 31, 1995 audited combined
consolidated balance sheet of Tastemaker and Tastemaker
B.V.; provided, that when determining whether any Tax is
included as a Current Liability for purposes of calculating
the Adjusted Aggregate Value, the principles of Treasury
Regulations Section 1.1502-76(b), applied in the manner set
forth in the Tax Annex, shall govern.
1.1.62 Long-Term Liabilities shall mean, at any
---------------------
time, the sum of (A) the amount of accrued but unpaid
interest, fees and other costs (but excluding principal)
required to be paid to the Tastemaker Debt lender on the
Closing Date in order to pay in full and discharge all of
the Tastemaker Debt other than the principal thereof, and
(B) the liabilities of the Companies (other than Current
Liabilities, the long-term component of pension liabilities,
deferred taxes, the Tastemaker Debt and any Tax that is a
liability or obligation of Tastemaker) which would be
classified as a liability under the heading "TOTAL
LIABILITIES" on a combined consolidated balance sheet of
Tastemaker and Tastemaker B.V. determined and prepared in
accordance with GAAP applied on a basis consistent with the
practices and methodologies used in preparing the December
31, 1995 audited combined consolidated balance sheet of
Tastemaker and Tastemaker B.V.
1.1.64 Long-Term Liabilities Baseline shall mean the
------------------------------
total liabilities of the Companies (other than Current
Liabilities, the long-term component of pension liabilities,
deferred taxes, the Tastemaker Debt and any Tax that is the
liability or obligation of Tastemaker) which were classified
as a liability under the heading "TOTAL LIABILITIES" on the
June 28, 1996 unaudited combined consolidated balance sheet
of Tastemaker and Tastemaker B.V. and their respective
subsidiaries, which was an amount equal to Thirty Eight
Million Four Hundred Fifty Thousand Twenty-Four Dollars
($38,450,024.00) plus any Tax on such balance sheet that is
a long-term liability of Tastemaker.
1.1.72 Partners' Representatives shall mean Israel
-------------------------
Floyd, George MacKenzie, M.G. Nichols and T.D. Meier.
1.1.104 Working Capital Baseline shall mean the Net
------------------------
Working Capital of the Companies on the June 28, 1996
unaudited combined consolidated balance sheet of Tastemaker
and Tastemaker B.V., which was an amount equal to Seventy-
Seven Million Seven Hundred Six Thousand Nine Hundred
Thirteen Dollars ($77,706,913.00), plus any Tax on such
balance sheet that is a current liability of Tastemaker.
2. EFFECT OF AMENDMENT
-------------------
Except as expressly set forth herein, the Agreement is
unchanged and in full force and effect, and the parties hereby
ratify and confirm the Agreement as amended hereby. The parties
further agree that all references to the Agreement in the
Transaction Documents, the D&F Transaction Agreements, the Fries
Withdrawal Documents (as defined in the Partnership Agreement)
and any other certificates, documents, instruments or agreements
entered into pursuant thereto or delivered in connection
therewith shall be deemed to mean and refer to the Agreement, as
amended by this Amendment.
3. CONSENT OF OTHERS
-----------------
By signing in the spaces provided below, each of Givaudan-
Roure (United States), Inc., Tastemaker, Hercules Flavor, Inc.,
Hercules Credit, Inc. and Fries & Fries, Inc. consent to this
Amendment and to the effect hereof on the Contribution Agreement
and the Fries Withdrawal Documents (as defined in the Partnership
Agreement). IN WITNESS WHEREOF, the parties have caused this
Amendment to be executed as of the date and year first written
above.
GIVAUDAN-ROURE (INTERNATIONAL) HERCULES INCORPORATED
SA
By_______________________ By_______________________
Name_____________________ Name_____________________
Title____________________ Title____________________
ROCHE HOLDINGS, INC. MALLINCKRODT INC.
By_______________________ By_______________________
Name_____________________ Name_____________________
Title____________________ Title____________________
CONSENTED BY:
GIVAUDAN-ROURE (INTERNATIONAL) TASTEMAKER
SA
By_______________________ By_______________________
Name_____________________ Name_____________________
Title____________________ Title____________________
HERCULES FLAVOR, INC. FRIES & FRIES, INC.
By_______________________ By_______________________
Name_____________________ Name_____________________
Title____________________ Title____________________
HERCULES CREDIT, INC.
By_______________________
Name_____________________
Title____________________
EXHIBIT 2.3
CONTRIBUTION AGREEMENT
AMONG
MALLINCKRODT INC.
ROCHE HOLDINGS, INC.
AND
GIVAUDAN-ROURE (UNITED STATES) INC.
DATED AS OF FEBRUARY 4, 1997
<PAGE>
Table of Contents
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Page
----
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. DEFINITIONS AND INTERPRETATION. . . . . . . . . . . . . . 4
1.1 Capitalized Terms. . . . . . . . . . . . . . . . . . 4
1.1.1 Certificate of Designation . . . . . . . . 4
1.1.2 Competitive Business . . . . . . . . . . . 4
1.1.3 Consolidated Subsidiaries. . . . . . . . . 4
1.1.4 Contribution Agreement . . . . . . . . . . 4
1.1.5 Downward Adjustment. . . . . . . . . . . . 4
1.1.6 Estimated Mallinckrodt Consideration . . . 5
1.1.7 Exchange Act . . . . . . . . . . . . . . . 5
1.1.8 F&F Debt . . . . . . . . . . . . . . . . . 5
1.1.9 F&F Debt Payoff Amount . . . . . . . . . . 5
1.1.10 F&F Stock. . . . . . . . . . . . . . . . . 5
1.1.11 F&F Tastemaker B.V. Interest . . . . . . . 5
1.1.12 F&F Tastemaker Partnership Interest. . . . 5
1.1.13 Final Mallinckrodt Consideration . . . . . 5
1.1.14 G-R Stock. . . . . . . . . . . . . . . . . 6
1.1.15 GRC Financial Statements . . . . . . . . . 6
1.1.16 Investment Assets. . . . . . . . . . . . . 6
1.1.17 Investment Asset Adjustment. . . . . . . . 6
1.1.18 Investment Asset Value . . . . . . . . . . 6
1.1.19 Keepwell Agreement . . . . . . . . . . . . 6
1.1.20 Letter of Credit . . . . . . . . . . . . . 6
1.1.21 Newco Preferred Stock. . . . . . . . . . . 6
1.1.22 Newco Stock. . . . . . . . . . . . . . . . 6
1.1.23 Noncompetition Period. . . . . . . . . . . 6
1.1.24 Roche Financial Statements . . . . . . . . 7
1.1.25 Securities Act . . . . . . . . . . . . . . 7
1.1.26 Tax. . . . . . . . . . . . . . . . . . . . 7
1.1.27 Tax Return . . . . . . . . . . . . . . . . 7
1.1.28 Term Sheet . . . . . . . . . . . . . . . . 8
1.1.29 Transferee . . . . . . . . . . . . . . . . 8
1.1.30 Upward Adjustment. . . . . . . . . . . . . 8
1.1.31 Voting Agreement . . . . . . . . . . . . . 8
1.1.32 Wrap Agreement . . . . . . . . . . . . . . 8
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . 8
1.3 Construction . . . . . . . . . . . . . . . . . . . . 8
1.4 Captions and Headings. . . . . . . . . . . . . . . . 8
1.5 No Party Deemed Drafter. . . . . . . . . . . . . . . 9
1.6 Reformation. . . . . . . . . . . . . . . . . . . . . 9
1.7 Currency . . . . . . . . . . . . . . . . . . . . . . 9
1.8 Materiality. . . . . . . . . . . . . . . . . . . . . 9
2. CONTRIBUTION TRANSACTION. . . . . . . . . . . . . . . . . 11
2.1 Contribution of F&F Stock. . . . . . . . . . . . . . 11
2.2 Consideration. . . . . . . . . . . . . . . . . . . . 11
2.3 Contributions. . . . . . . . . . . . . . . . . . . . 13
2.4 Closing. . . . . . . . . . . . . . . . . . . . . . . 13
2.5 Certificates for Newco Preferred Stock; Transfer
Restrictions . . . . . . . . . . . . . . . . . . . . 13
3. REPRESENTATIONS AND WARRANTIES OF MALLINCKRODT. . . . . . 15
3.1 Organization, Standing and Power . . . . . . . . . . 15
3.2 F&F Capital Structure. . . . . . . . . . . . . . . . 16
3.3 F&F Interest in Tastemaker and Tastemaker B.V. . . . 16
3.4 Authority. . . . . . . . . . . . . . . . . . . . . . 17
3.5 Consents and Approvals; No Violation . . . . . . . . 18
3.6 Actions, Etc.. . . . . . . . . . . . . . . . . . . . 20
3.7 F&F Business, Assets and Liabilities . . . . . . . . 20
3.8 Transactions with Affiliates.. . . . . . . . . . . . 21
3.9 Agreements with Hercules . . . . . . . . . . . . . . 22
3.10 No Existing Violation, Default, Etc. . . . . . . . . 22
3.11 Orders, Litigation, Etc. . . . . . . . . . . . . . . 23
3.12 Brokers. . . . . . . . . . . . . . . . . . . . . . . 23
3.13 Contracts. . . . . . . . . . . . . . . . . . . . . . 23
3.14 No Distribution. . . . . . . . . . . . . . . . . . . 24
3.15 No Intention to Dispose of Newco Preferred Stock . . 24
3.16 Tax Matters. . . . . . . . . . . . . . . . . . . . . 24
4. REPRESENTATIONS AND WARRANTIES OF ROCHE AND NEWCO . . . . 25
4.1 Organization, Standing and Power of GRC and Newco. . 25
4.2 Standing of GRC and Newco. . . . . . . . . . . . . . 26
4.3 Capital Structure. . . . . . . . . . . . . . . . . . 26
4.4 Newco Preferred Stock. . . . . . . . . . . . . . . . 27
4.5 Rights to Acquire Equity of GRC and Newco. . . . . . 27
4.6 Authority to Enter Into Contribution Agreement . . . 28
4.7 Authority to Enter Into Keepwell Agreement . . . . . 28
4.8 Consents and Approvals; No Violation . . . . . . . . 28
4.9 Financial Statements . . . . . . . . . . . . . . . . 30
4.10 Orders, Actions, Etc . . . . . . . . . . . . . . . . 30
4.11 Financial Capabilities . . . . . . . . . . . . . . . 31
4.12 No Intention to Dispose of Newco Common Stock. . . . 31
5. COVENANTS OF MALLINCKRODT . . . . . . . . . . . . . . . . 31
5.1 Noncompetition . . . . . . . . . . . . . . . . . . . 31
5.2 Documents to be delivered by Mallinckrodt at
Closing. . . . . . . . . . . . . . . . . . . . . . . 33
5.3 Confidentiality. . . . . . . . . . . . . . . . . . . 34
5.4 Distributions. . . . . . . . . . . . . . . . . . . . 35
5.5 Responsibility for F&F Transaction . . . . . . . . . 35
5.6 Operations . . . . . . . . . . . . . . . . . . . . . 36
6. COVENANTS OF ROCHE. . . . . . . . . . . . . . . . . . . . 36
6.1 Deliveries . . . . . . . . . . . . . . . . . . . . . 36
6.2 Certificate of Designation . . . . . . . . . . . . . 37
6.3 Keepwell Agreement . . . . . . . . . . . . . . . . . 37
6.4 Contribution of G-R Stock. . . . . . . . . . . . . . 37
6.5 Documents to be Delivered by Newco and Roche at
Closing. . . . . . . . . . . . . . . . . . . . . . . 37
7. MUTUAL COVENANTS OF MALLINCKRODT, NEWCO AND ROCHE
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1 Satisfaction of Conditions . . . . . . . . . . . . . 38
7.2 Further Assurances . . . . . . . . . . . . . . . . . 39
7.3 Preservation of Tax Free Status of Contribution. . . 39
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS; INDEMNITY FOR DAMAGES . . . . . . . . . . 40
8.1 Survival . . . . . . . . . . . . . . . . . . . . . . 40
8.2 Limitations of Remedies. . . . . . . . . . . . . . . 41
8.3 Indemnification Procedures . . . . . . . . . . . . . 42
8.4 Claims Made in Written Notice. . . . . . . . . . . . 42
9. RESOLUTION OF DISPUTES. . . . . . . . . . . . . . . . . . 42
9.1 Conclusive and Exclusive . . . . . . . . . . . . . . 42
9.2 Forum and Waivers. . . . . . . . . . . . . . . . . . 42
10. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . 43
10.1 Conditions to Obligations of Newco and Roche . . . . 43
10.1.1 Accuracy of Representations and
Warranties. . . . . . . . . . . . . . . . . . . 43
10.1.2 Performance of Agreements. . . . . . . . . 43
10.1.3 Officer's Certificate. . . . . . . . . . . 43
10.1.4 Wrap Agreement Conditions. . . . . . . . . 44
10.1.5 Legal Opinion. . . . . . . . . . . . . . . 44
10.2 Conditions to Obligations of Mallinckrodt. . . . . . 44
10.2.1 Accuracy of Representations and
Warranties. . . . . . . . . . . . . . . . . . . 44
10.2.2 Performance of Agreements. . . . . . . . . 44
10.2.3 Officer's Certificates . . . . . . . . . . 45
10.2.4 Wrap Agreement Conditions. . . . . . . . . 45
10.2.5 Legal Opinions . . . . . . . . . . . . . . 45
10.2.6 Release of Guaranties. . . . . . . . . . . 45
10.2.7 Letter of Credit . . . . . . . . . . . . . 45
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 46
11.1 Termination and Cancellation . . . . . . . . . . . . 46
11.2 Effect of Termination. . . . . . . . . . . . . . . . 47
11.3 Notices. . . . . . . . . . . . . . . . . . . . . . . 47
11.3.1 Mallinckrodt Notice Address. . . . . . . . 48
11.3.2 Newco and Roche Notice Address . . . . . . 48
11.4 Assignment . . . . . . . . . . . . . . . . . . . . . 49
11.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . 49
11.6 Amendments . . . . . . . . . . . . . . . . . . . . . 49
11.7 Limitations on Rights of Third Parties . . . . . . . 50
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . 50
11.9 Governing Law. . . . . . . . . . . . . . . . . . . . 50
11.10 Entire Agreement. . . . . . . . . . . . . . . . 50
<PAGE>
Table of Appendices
-------------------
APPENDIX A -- Term Sheet for 5.5% Preferred Stock
APPENDIX B -- Form of Keepwell Agreement
APPENDIX C -- Mallinckrodt Legal Opinion
APPENDIX D -- Roche Legal Opinion
APPENDIX E -- Letter of Credit Commitment Letter
THE TABLE OF APPENDICES SET FORTH ABOVE BRIEFLY IDENTIFIES
THE CONTENTS OF ALL OMITTED APPENDICES TO THE CONTRIBUTION
AGREEMENT DATED AS OF FEBRUARY 4, 1997 AMONG MALLINCKRODT INC.,
ROCHE HOLDINGS, INC. AND GIVAUDAN-ROURE (UNITED STATES) INC. (THE
"AGREEMENT"). A LIST BRIEFLY IDENTIFYING THE CONTENTS OF ALL
OMITTED SCHEDULES TO THE AGREEMENT IS AS FOLLOWS:
SCHEDULE 3.5 - CONTRACTS THAT REQUIRE CONSENT TO
TRANSACTION
SCHEDULE 3.7 - OTHER ASSETS AND LIABILITIES OF F&F
SCHEDULE 3.8 - TRANSACTIONS BETWEEN MALLINCKRODT OR F&F
AND ANY OF THE COMPANIES
SCHEDULE 3.9 - AGREEMENTS WITH HERCULES OR ITS
AFFILIATES
SCHEDULE 3.13 - AGREEMENTS TO WHICH F&F IS A PARTY
SCHEDULE 3.16 - TAX DISCLOSURES
MALLINCKRODT INC. WILL FURNISH SUPPLEMENTALLY A COPY OF ANY
OMITTED APPENDIX OR SCHEDULE TO THE SECURITIES AND EXCHANGE
COMMISSION UPON REQUEST.
<PAGE>
CONTRIBUTION AGREEMENT
----------------------
This Contribution Agreement (the "CONTRIBUTION AGREEMENT")
dated as of February 4, 1997, is made and entered into by and
among MALLINCKRODT INC., a New York corporation ("MALLINCKRODT"),
ROCHE HOLDINGS, INC., a Delaware corporation ("ROCHE"), and
GIVAUDAN-ROURE (UNITED STATES) INC., a Delaware corporation and a
wholly owned subsidiary of Roche ("NEWCO").
RECITALS
--------
A. Tastemaker, a general partnership organized and
existing under the laws of the State of Delaware ("TASTEMAKER"),
and Tastemaker B.V., a limited liability entity organized and
existing under the laws of The Netherlands ("TASTEMAKER B.V."),
together are engaged globally, both directly and indirectly
through their respective subsidiaries, in the development,
manufacture and sale of ingredients and compounds used primarily
to provide flavor or taste in food and beverage products (the
"BUSINESS").
B. Tastemaker is owned forty percent (40%) by Hercules
Flavor, Inc., a Delaware corporation ("HFI") and wholly owned
subsidiary of Hercules Incorporated, a Delaware corporation
("HERCULES"), ten percent (10%) by Hercules Credit, Inc., a
Delaware corporation ("HCI") and wholly owned subsidiary of
Hercules, and fifty percent (50%) by Fries & Fries, Inc., a
Delaware corporation ("F&F") and wholly owned subsidiary of
Mallinckrodt.
C. Tastemaker B.V. is owned one percent (1%) by
Tastemaker, forty-nine and one-half percent (49.5%) by F&F and
forty-nine and one-half percent (49.5%) by Hercules Nederland
B.V., a limited liability entity organized and existing under the
laws of The Netherlands ("HNBV") and wholly owned subsidiary of
Hercules.
D. Givaudan-Roure (International) SA, a Swiss corporation
("GRI," and together with "ROCHE," the "INTERESTED PERSONS"), or
certain Affiliates of Roche and GRI, as the case may be, ("GRI",
together with such Affiliates, the "DESIGNATED BUYERS") and
Tastemaker intend to enter into a series of Purchase and Sale
Agreements (the "DESIGNATED TRANSACTION AGREEMENTS"), subject and
pursuant to which and prior to the consummation of the
transactions contemplated by this Contribution Agreement, the F&F
Transaction Agreement (as hereinafter defined) and the Hercules
Transaction Agreement (as hereinafter defined), Tastemaker shall
transfer to the Designated Buyers, and the Designated Buyers
shall acquire, all of Tastemaker's foreign subsidiaries,
Tastemaker Finance, Inc., a Delaware corporation ("TFI"), and
Tastemaker's one percent (1%) interest in Tastemaker B.V. in
exchange for payment by the Designated Buyers of cash in the
amounts specified in the Wrap Agreement (as hereinafter defined).
E. Each of Hercules, Mallinckrodt and the Interested
Persons are parties to that certain Agreement of even date
herewith, which sets forth certain representations, warranties,
covenants and agreements relating to, among other issues, the
transfer by Hercules and HNBV to GRI of HNBV's interest in
Tastemaker B.V. and the contribution by Mallinckrodt to Newco of
Mallinckrodt's interest in F&F (the "WRAP AGREEMENT").
F. The transfer by Hercules and HNBV to GRI of HNBV's
interest in Tastemaker B.V. is covered by the Wrap Agreement and
that certain Purchase and Sale Agreement entered into among
Hercules, HNBV, Roche and GRI concurrently herewith (the
"HERCULES TRANSACTION AGREEMENT"), and neither Mallinckrodt nor
F&F shall have any liabilities, responsibilities or obligations
with respect to any representation, warranty, covenant or
agreement set forth in the Hercules Transaction Agreement.
G. The transfer by F&F to GRI of F&F's interest in
Tastemaker B.V. is covered by that certain Purchase and Sale
Agreement of even date herewith entered into between F&F and GRI
(the "F&F TRANSACTION AGREEMENT"), and (i) neither Hercules nor
HNBV shall have any liabilities, responsibilities or obligations
with respect to any representation, warranty, covenant or
agreement set forth in the F&F Transaction Agreement, and (ii)
except as expressly provided in Section 5.5 of this Contribution
Agreement, Mallinckrodt shall have no liabilities,
responsibilities or obligations with respect to any
representation, warranty, covenant or agreement set forth in the
F&F Transaction Agreement.
H. On or prior to Closing, Roche desires to transfer to
Newco, and Newco desires to acquire, all of the stock (the "G-R
STOCK") of Givaudan-Roure Corporation, Inc., a Delaware
corporation ("GRC") and a wholly owned subsidiary of Roche, in
exchange for shares of common stock of Newco, representing (in
conjunction with the common stock of Newco previously issued to
Roche) one hundred percent (100%) of the issued and outstanding
common stock of Newco in a transaction which Mallinckrodt and
Roche intend will qualify as a tax-free contribution under
Section 351 of the Code.
I. Mallinckrodt desires to contribute to Newco, and Newco
desires to acquire, one hundred percent (100%) of the issued and
outstanding capital stock of F&F in exchange for shares of
preferred stock of Newco in a transaction which Mallinckrodt and
Roche intend will qualify as a tax free contribution under
Section 351 of the Code, subject and pursuant to the terms and
conditions of this Contribution Agreement and the Wrap Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements, provisions and covenants contained herein, the
parties hereto agree as follows:
1. DEFINITIONS AND INTERPRETATION
------------------------------
1.1 Capitalized Terms. Capitalized terms used in this
-----------------
Contribution Agreement and not otherwise defined shall have the
meanings ascribed to such terms in the Wrap Agreement. In
addition, the following capitalized terms, when used in this
Contribution Agreement and not otherwise defined, shall have the
following indicated meanings:
1.1.1 Certificate of Designation shall have the
--------------------------
meaning ascribed to such term in Section 6.2 of this Contribution
Agreement.
1.1.2 Competitive Business shall have the meaning
--------------------
ascribed to such term in Section 5.1 of this Contribution
Agreement.
1.1.3 Consolidated Subsidiaries shall mean those
-------------------------
persons and entities, the assets, liabilities or results of
operations of which are included, or required by GAAP to be
included, in the consolidated financial statements of Roche or
GRC, as the case may be.
1.1.4 Contribution Agreement shall mean this
----------------------
agreement and all schedules, annexes, exhibits and appendices
hereto, other than the Keepwell Agreement attached hereto as
APPENDIX B.
1.1.5 Downward Adjustment shall have the meaning
-------------------
ascribed to such term in Section 2.2 hereof.
1.1.6 Estimated Mallinckrodt Consideration shall
------------------------------------
mean an amount equal to (A) the sum of (i) 50% of the Estimated
Adjusted Aggregate Value on the Closing Date, and (ii) 50% of the
Investment Asset Adjustment, less (B) the F&F Debt Payoff Amount.
1.1.7 Exchange Act shall mean the United States
------------
Securities and Exchange Act of 1934, as amended, and all rules
and regulations promulgated thereunder.
1.1.8 F&F Debt shall mean the indebtedness of F&F
--------
under that certain $600,000,000 Credit Agreement dated May 22,
1996 among F&F, as Borrower, Mallinckrodt, as Guarantor, Morgan
Guaranty Trust Company of New York, as Administrative Agent,
Citibank, N.A., as Documentation Agent, and the various banks
from time to time a party thereto.
1.1.9 F&F Debt Payoff Amount shall mean the amount
----------------------
of principal, accrued but unpaid interest, fees and other costs
and premium or penalty (if any) required to be paid in order to
pay in full and discharge the F&F Debt on the Closing Date.
1.1.10 F&F Stock shall have the meaning ascribed to
---------
such term in Section 3.2 of this Contribution Agreement.
1.1.11 F&F Tastemaker B.V. Interest shall have the
----------------------------
meaning ascribed to such term in Section 3.3 of this Contribution
Agreement.
1.1.12 F&F Tastemaker Partnership Interest shall
-----------------------------------
have the meaning ascribed to such term in Section 3.3 of this
Contribution Agreement.
1.1.13 Final Mallinckrodt Consideration shall mean
--------------------------------
an amount equal to (A) the sum of (i) 50% of the Adjusted
Aggregate Value, and (ii) 50% of the Investment Asset Adjustment,
less (B) the F&F Debt Payoff Amount.
1.1.14 G-R Stock shall have the meaning ascribed to
---------
such term in Recital H of this Contribution Agreement.
1.1.15 GRC Financial Statements shall mean the
------------------------
audited consolidated financial statements of GRC as of, and for
the year ended, December 31, 1995.
1.1.16 Investment Assets shall have the meaning
-----------------
ascribed to the term "INVESTMENT ASSETS" in the Partnership
Agreement.
1.1.17 Investment Asset Adjustment shall mean the
---------------------------
positive or negative difference between (i) the aggregate
Investment Asset Value of all Investment Assets as of the
Adjustment Time, and (ii) the aggregate face amount of all
Investment Assets.
1.1.18 Investment Asset Value shall have the meaning
----------------------
ascribed to the term "INVESTMENT ASSET VALUE" in the Partnership
Agreement.
1.1.19 Keepwell Agreement shall mean the Keepwell
------------------
Agreement attached hereto as APPENDIX B.
1.1.20 Letter of Credit shall have the meaning
----------------
ascribed to such term in Section 10.2.7 of this Contribution
Agreement.
1.1.21 Newco Preferred Stock shall have the meaning
---------------------
ascribed to such term in Section 4.4 of this Contribution
Agreement.
1.1.22 Newco Stock shall have the meaning ascribed
-----------
to such term in Section 4.3 of this Contribution Agreement.
1.1.23 Noncompetition Period shall have the meaning
---------------------
ascribed to such term in Section 5.1 of this Contribution
Agreement.
1.1.24 Roche Financial Statements shall mean the
--------------------------
consolidated audited financial statements of Roche as of, and for
the year ended, December 31, 1995.
1.1.25 Securities Act shall have the meaning
--------------
ascribed to such term in Section 2.5 of this Contribution
Agreement.
1.1.26 Tax shall mean (i) any federal, state, local
---
or foreign income, profits, gross receipts, property, sales, use,
license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, transfer, stamp,
capital stock or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty or addition to
tax imposed by any Governmental Authority, (ii) liability of F&F
for the payment of any amounts of the type described in clause
(i) above as a result of being a member of an affiliated,
consolidated, combined or unitary group, or being a party to any
agreement or arrangement whereby liability of F&F for payments of
such amounts was determined or taken into account with reference
to the liability of any other person for any Pre-Closing Tax
Period (as defined in the Tax Annex) or Straddle Period (as
defined in the Tax Annex), and (iii) liability of F&F for the
payment of any amounts as a result of being party to any Tax
sharing, allocation, compensation or like agreement or
arrangement binding F&F or with respect to the payment of any
amounts of the type described in clauses (i) or (ii) above as a
result of any express or implied obligation to indemnify, any
other entity or individual.
1.1.27 Tax Return shall mean any return, report or
----------
similar statement (including any attached schedules) required to
be filed with any Governmental Authority and relating to Taxes,
including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Taxes.
1.1.28 Term Sheet shall mean the Term Sheet for 5.5%
----------
Preferred Stock attached to this Contribution Agreement as
APPENDIX A.
1.1.29 Transferee shall have the meaning ascribed to
----------
such term in Section 2.5 of this Contribution Agreement.
1.1.30 Upward Adjustment shall have the meaning
-----------------
ascribed to such term in Section 2.2 hereof.
1.1.31 Voting Agreement shall mean that certain
----------------
power of attorney dated August 31, 1994 given to Tastemaker by
HNBV and F&F, pursuant to which Tastemaker is given the power to
represent, and vote the interests of, HNBV and F&F in the general
meetings of shareholders of Tastemaker B.V.
1.1.32 Wrap Agreement shall have the meaning
--------------
ascribed to such term in Recital E of this Contribution
Agreement.
1.2 Accounting Terms. Accounting terms used in this
----------------
Contribution Agreement and not otherwise defined shall have the
meanings ascribed thereto under GAAP.
1.3 Construction. Unless the context clearly indicates to
------------
the contrary, words singular or plural in number shall be deemed
to include the other and pronouns having a neuter, masculine or
feminine gender shall be deemed to include and refer to any and
all genders. Whenever the terms "herein," "hereunder," or words
of like import are used in this Contribution Agreement, the
intended reference is to the entire Contribution Agreement and
not to the clause, sentence or section in which such word
appears.
1.4 Captions and Headings. The captions and headings in
---------------------
this Contribution Agreement are inserted for convenience of
reference only and shall not be considered a part of, or affect
the construction or interpretation of, any provision of this
Contribution Agreement.
1.5 No Party Deemed Drafter. This Contribution Agreement
-----------------------
represents the culmination of extensive and arms length
negotiations between the parties. No party shall be deemed the
drafter of this Contribution Agreement, and this Contribution
Agreement shall not be construed for or against either party by
reason of a particular party being deemed the drafter.
1.6 Reformation. Should any term or condition of this
-----------
Contribution Agreement be determined by a court of competent
jurisdiction to be unenforceable for any reason, including,
without limitation, violation of statute or public policy, such
provision shall, if possible, be reformed by the parties hereto
or, if the parties cannot agree, by the appropriate court of
competent jurisdiction to comply with applicable legal
requirements in a manner that is as close in its intent and
effect to the original provision as possible or, if such
reformation cannot be accomplished, shall be stricken without
affecting the validity of any other term or condition of this
Contribution Agreement.
1.7 Currency. All references in this Contribution Agreement
--------
to "dollars" or "$" shall be deemed to mean and refer to United
States dollars.
1.8 Materiality. Whenever the terms "material" or
-----------
"material adverse effect" are used in Section 3 and Section 10.1
of this Contribution Agreement in reference to F&F or
Mallinckrodt, such terms shall be interpreted and construed as
meaning "material" to the business, assets, condition (financial
or otherwise) or results of operations of F&F, taken as a whole,
or of Mallinckrodt, taken as a whole, as the case may be, or
referencing a "material adverse effect" on the business, assets,
condition (financial or otherwise) or results of operations of
F&F, taken as a whole, or of Mallinckrodt, taken as a whole, as
the case may be; provided, however, that any such effect caused
-------- -------
by or resulting from (i) any change in generally accepted
accounting principles, (ii) the pendency or announcement of the
transactions contemplated by the Transaction Documents or the D&F
Transaction Agreements, (iii) fluctuations in the relative value
of domestic and/or foreign currencies, or (iv) any change in
economic conditions generally shall not be considered when
determining whether a material adverse effect has occurred.
Whenever the terms "material" or "material adverse effect" are
used in Section 4 and Section 10.2 of this Contribution
Agreement, such terms shall be interpreted and construed as
meaning "material" to the business, assets, condition (financial
or otherwise) or results of operations of Roche and its
Consolidated Subsidiaries, taken as a whole, of Newco, taken as a
whole, or of GRC, taken as a whole, as the case may be, or
referencing a "material adverse effect" on the business, assets,
condition (financial or otherwise) or results of operations of
Roche and its Consolidated Subsidiaries, taken as a whole, of
Newco, taken as a whole, or of GRC, taken as a whole, as the case
may be; provided, however, that any such effect caused by or
-------- -------
resulting from (i) any change in generally accepted accounting
principles, (ii) the pendency or announcement of the transactions
contemplated by the Transaction Documents or the D&F Transaction
Agreements, (iii) fluctuations in the relative value of domestic
and/or foreign currencies, or (iv) any change in economic
conditions generally shall not be considered when determining
whether a material adverse effect has occurred.
2. CONTRIBUTION TRANSACTION
------------------------
2.1 Contribution of F&F Stock. Subject and pursuant to the
-------------------------
terms and conditions of this Contribution Agreement and the Wrap
Agreement, Mallinckrodt shall contribute to Newco on the Closing
Date one hundred percent (100%) of the issued and outstanding
capital stock of F&F in exchange for the number of shares of
Newco Preferred Stock required to be issued and delivered to
Mallinckrodt by Newco, as provided in Section 2.2 below.
Mallinckrodt shall be solely responsible for all covenants,
representations, warranties, liabilities and obligations of
Mallinckrodt under this Contribution Agreement, and neither
Hercules nor HNBV shall have any responsibilities, liabilities or
obligations under this Contribution Agreement.
2.2 Consideration. Mallinckrodt shall obtain and deliver
-------------
to each of Roche and Newco five (5) business days in advance of
the Closing Date, written confirmation from F&F's lenders as to
the F&F Debt Payoff Amount. On the Closing Date, subject to the
last sentence of this Section 2.2, Newco shall issue and deliver
to Mallinckrodt shares of Newco Preferred Stock having an
aggregate stated value equal to the Estimated Mallinckrodt
Consideration. The Adjusted Aggregate Value shall be determined
in accordance with Section 2.6.1 of the Wrap Agreement. Within
ten (10) days after the date upon which the Working Capital
Adjustment and the Long-Term Liabilities Adjustment are finally
determined pursuant to Section 2.6.1 of the Wrap Agreement
(whether by agreement of the parties, dispute resolution or as a
result of the failure to timely provide a required notice), then
either (i) if the Working Capital Adjustment and the Long-Term
Liabilities Adjustment as finally determined result in a Final
Mallinckrodt Consideration that is higher than the Estimated
Mallinckrodt Consideration determined and paid on the Closing
Date (the amount by which the Final Mallinckrodt Consideration
exceeds such Estimated Mallinckrodt Consideration being
hereinafter referred to as the "UPWARD ADJUSTMENT"), Newco shall
deliver, and Roche shall cause Newco to deliver to Mallinckrodt
certificates representing shares of Newco Preferred Stock having
a stated value equal to the Upward Adjustment and cash in an
amount equal to any dividends which would have been paid on such
shares since the Closing Date, as well as interest on such unpaid
dividends, or (ii) if the Working Capital Adjustment and the
Long-Term Liabilities Adjustment as finally determined result in
a Final Mallinckrodt Consideration that is lower than the
Estimated Mallinckrodt Consideration determined and paid on the
Closing Date (the amount by which such Estimated Mallinckrodt
Consideration price exceeds the Final Mallinckrodt Consideration
being hereinafter referred to as the "DOWNWARD ADJUSTMENT"),
Mallinckrodt shall return to Newco certificates representing
shares of Newco Preferred Stock received on the Closing Date
having a stated value equal to the Downward Adjustment and shall
pay to Newco cash in an amount equal to the dividends paid on
such shares since the Closing Date, as well as interest on such
paid dividends. Interest shall be paid from and including the
Closing Date or, in the case of interest on declared but unpaid
dividends, from the date such dividend was payable to but
excluding the date of payment at a rate per annum equal to the
rate of interest announced by Morgan Guaranty Trust Company of
New York from time to time as its Base Rate in New York City in
effect from time to time during the period from the Closing Date
to the date of payment. Such interest shall be payable at the
same time as the payment to which it relates and shall be
calculated daily on the basis of a year of 365 days and the
actual number of days elapsed. Notwithstanding the foregoing, if
at any time the aggregate stated value of the Newco Preferred
Stock required to be delivered to Mallinckrodt pursuant to this
Section 2.2 exceeds $200,000,000, at the option of Newco, Newco
shall not be obligated to deliver to Mallinckrodt Newco Preferred
Stock having an aggregate stated value in excess of $200,000,000
and Newco shall pay to Mallinckrodt in cash the amount in excess
of $200,000,000 otherwise required to be delivered to
Mallinckrodt in Newco Preferred Stock.
2.3 Contributions. At or prior to the contribution by
-------------
Mallinckrodt of the stock of F&F to Newco in exchange for Newco
Preferred Stock as provided in Section 2.1 above, Roche shall
contribute to Newco all of its right, title and interest in the
G-R Stock, in exchange for shares of common stock of Newco,
representing (in conjunction with the common stock of Newco
previously issued to Roche) one hundred percent (100%) of the
issued and outstanding common stock of Newco.
2.4 Closing. The closing of the transactions contemplated
-------
by this Contribution Agreement shall occur at the time and place,
and on the Closing Date established by the parties under and
pursuant to the Wrap Agreement.
2.5 Certificates for Newco Preferred Stock; Transfer
------------------------------------------------
Restrictions. (a) Each certificate for Newco Preferred Stock
- ------------
issued to Mallinckrodt as part of the Tastemaker Combined and
Consolidated Value shall bear the following legend:
"The securities represented hereby have
not been registered under the Securities Act
of 1933, as amended, and may not be sold,
transferred or otherwise disposed of except
in accordance with the terms thereof and
unless registered with the Securities and
Exchange Commission of the United States and
the securities regulatory authorities of
certain states or unless an exception from
such registration is available. In addition,
transfer or other disposition of the
Securities represented hereby is restricted
as provided in the Contribution Agreement
dated as of February 4, 1997 among
Mallinckrodt Inc., Roche Holdings, Inc.,
Givaudan-Roure (International) SA, and the
Issuer.
(b) The Newco Preferred Stock has not been and will
not be registered under the Securities Act of 1933, as amended
(the "SECURITIES ACT"). The Newco Preferred Stock may not be
offered or sold to, or for the account or benefit of, any person
other than in a transaction exempt from the registration
requirements of the Securities Act and in compliance with all
applicable securities laws.
(c) No Newco Preferred Stock may be sold, disposed of
or otherwise transferred to any person (a "TRANSFEREE"), without
the prior written approval of Roche (which approval shall not be
unreasonably withheld) and unless Roche: (i) shall have received
not less than twenty (20) days prior to any such transfer: (1) an
opinion of counsel reasonably satisfactory to Roche stating that
such transfer does not require the registration of such Newco
Preferred Stock with the Securities and Exchange Commission of
the United States or any other securities regulatory authority;
and (2) an agreement in writing, reasonably satisfactory to
Roche, executed by the Transferee in which such Transferee agrees
to be bound by the provisions of this Section 2.5; and (ii) are
reasonably satisfied that any such transfer will not result in
any reporting requirement under the 1934 Act.
(d) Any attempt by any person to transfer any of the
Newco Preferred Stock other than in accordance with the
provisions of this Section 2.5 shall be deemed to be null and
void and shall not be given effect on the books and records of
Newco.
(e) Notwithstanding anything in this Section 2.5 to
the contrary, Newco hereby agrees to the assignment by
Mallinckrodt to the Morgan Guaranty Trust Company of New York of
the Newco Preferred Stock and Mallinckrodt's rights with respect
thereto, all as more particularly described in APPENDIX E
3. REPRESENTATIONS AND WARRANTIES OF MALLINCKRODT
----------------------------------------------
Mallinckrodt represents and warrants to Newco and Roche as
of the date hereof and as of the Closing Date as follows:
3.1 Organization, Standing and Power. Mallinckrodt is a
--------------------------------
corporation duly organized and validly existing under the laws of
the State of New York and has the requisite power and authority
to carry on its business as conducted on the date hereof. F&F is
a corporation duly organized and validly existing under the laws
of the State of Delaware and has the requisite power and
authority to carry on its business as conducted on the date
hereof. F&F is duly qualified as a foreign corporation and in
good standing in each jurisdiction where the nature of its
properties or the conduct of its business makes such
qualification necessary, except where the failure to so qualify
would not reasonably be expected to have a material adverse
effect on F&F.
3.2 F&F Capital Structure. The authorized capital of F&F
---------------------
consists of 10,000 common shares, $1.00 par value per share, (the
"F&F STOCK"), of which 100 shares are issued and outstanding, and
none of which shares are held in the treasury of F&F. All of the
issued and outstanding shares of F&F Stock were duly and validly
authorized and issued, are fully paid and nonassessable, and are
free of preemptive rights. Mallinckrodt owns all of the issued
and outstanding shares of F&F Stock, free and clear of all
security interests, liens, claims, pledges, voting rights,
charges and encumbrances of any nature whatsoever. There are no
options, warrants, calls, rights or agreements to which
Mallinckrodt (or its Affiliates) or F&F is a party obligating
Mallinckrodt (or its Affiliates) or F&F to issue, deliver, sell,
repurchase, redeem or otherwise acquire or cause to be issued,
delivered, sold, repurchased, redeemed or otherwise acquired
additional shares of capital stock of F&F, or obligating
Mallinckrodt (or its Affiliates) or F&F to grant, extend or enter
into any such option, warrant, call, right or agreement.
3.3 F&F Interest in Tastemaker and Tastemaker B.V. F&F
---------------------------------------------
owns a fifty percent (50%) partnership interest in Tastemaker
(the "F&F TASTEMAKER PARTNERSHIP INTEREST"), free and clear of
all security interests, liens, claims, pledges, voting rights,
charges and encumbrances of any nature whatsoever. Except as
provided in the Partnership Agreement, there are no options,
warrants, calls, rights or agreements to which F&F is a party
obligating F&F to issue, deliver, sell, repurchase, redeem or
otherwise acquire or cause to be issued, delivered, sold,
repurchased, redeemed or otherwise acquired any partnership
interests in Tastemaker or obligating F&F to grant, extend or
enter into any such option, call, right, warrant or agreement.
Prior to the consummation of the transactions contemplated by the
F&F Transaction Agreement, F&F owns a forty-nine and one-half
percent (49.5%) interest in Tastemaker B.V. (the "F&F TASTEMAKER
B.V. INTEREST"), free and clear of all security interests, liens,
claims, pledges, voting rights, charges and encumbrances of any
nature whatsoever except for the F&F Transaction Agreement and
the Voting Agreement. The F&F Tastemaker B.V. Interest has been
duly authorized and validly issued and is fully paid. Subject
and pursuant to the terms of the F&F Transaction Agreement, F&F
will transfer and deliver to GRI at the Closing valid title to
the F&F Tastemaker B.V. Interest, free and clear of all security
interests, liens, claims, pledges, voting rights, charges and
encumbrances of any nature, except for the Voting Agreement.
Except pursuant to the F&F Transaction Agreement, there are no
options, warrants, calls, rights or agreements to which F&F is a
party obligating F&F to issue, deliver or sell, or cause to be
issued, delivered or sold, or repurchased, redeemed or otherwise
acquired, any ownership interest in Tastemaker B.V. or obligating
F&F to grant, extend or enter into any such option, warrant,
call, right or agreement. A true and complete copy of the Voting
Agreement has been made available to the Interested Persons.
3.4 Authority. Mallinckrodt has all requisite power and
---------
authority to enter into this Contribution Agreement and the Wrap
Agreement and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Contribution
Agreement and the Wrap Agreement and the consummation by
Mallinckrodt of the transactions contemplated hereby and thereby
have been duly authorized by all necessary action on the part of
Mallinckrodt. This Contribution Agreement and the Wrap Agreement
have been duly executed and delivered by Mallinckrodt and
(assuming the due authorization, execution and delivery of this
Contribution Agreement by Roche and Newco and the due
authorization, execution and delivery of the Wrap Agreement by
the Interested Persons and Hercules) constitute the valid and
binding obligations of Mallinckrodt, enforceable against
Mallinckrodt in accordance with their respective terms. F&F has
all requisite power and authority to enter into the F&F
Transaction Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the F&F
Transaction Agreement by F&F and the consummation by F&F of the
transactions contemplated thereby have been duly authorized by
all necessary action on the part of F&F. The F&F Transaction
Agreement has been duly executed and delivered by F&F and
(assuming the due authorization, execution and delivery by GRI)
constitutes a valid and binding obligation of F&F, enforceable
against F&F in accordance with its terms.
3.5 Consents and Approvals; No Violation. Except as
------------------------------------
described on SCHEDULE 3.5 to this Contribution Agreement, the
execution and delivery by Mallinckrodt of this Contribution
Agreement and the Wrap Agreement, and the execution and delivery
by F&F of the F&F Transaction Agreement do not, and the
consummation of the transactions contemplated hereby and thereby
and compliance with the provisions hereof and thereof will not,
result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or,
except as provided in the Partnership Agreement, to the loss of a
material right or benefit under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the
properties or assets of F&F under: (i) any provision of the
Certificate of Incorporation or By-Laws of Mallinckrodt or F&F,
(ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease, agreement, instrument, permit, concession,
franchise or license by which Mallinckrodt or F&F is bound, or
(iii) any judgment, order, decree, statute, law, ordinance, rule
or regulation by which Mallinckrodt or F&F is bound or to which
any of their respective properties or assets is subject, other
than, in the case of clauses (ii) and (iii), any such violations,
defaults, rights, liens, security interests, charges or
encumbrances that would not reasonably be expected to have a
material adverse effect on F&F and would not impair the ability
of Mallinckrodt to perform its obligations under this
Contribution Agreement and the Wrap Agreement, or the ability of
F&F to perform its obligations under the F&F Transaction
Agreement, prevent the consummation of any of the transactions
contemplated hereby or thereby or, other than by reason of any
act or omission of Roche, GRI or Newco, materially and adversely
affect the rights and benefits of Roche or Newco hereunder, of
the Interested Persons under the Wrap Agreement, or of GRI under
the F&F Transaction Agreement. No filing, declaration or
registration with, or authorization, consent, order or approval
of, any Governmental Authority is required by, or with respect
to, Mallinckrodt or F&F in connection with the execution and
delivery by Mallinckrodt of the Wrap Agreement or this
Contribution Agreement, or the execution and delivery by F&F of
the F&F Transaction Agreement, or the consummation by
Mallinckrodt of the transactions contemplated by the Wrap
Agreement and this Contribution Agreement, or the execution and
delivery by F&F of the F&F Transaction Agreement, except: (a) in
connection, or in compliance, with the provisions of the Hart-
Scott-Rodino Antitrust Improvement Act of 1976, as amended, (b)
for such filings, declarations, registrations, consents,
approvals, orders and authorizations of the countries disclosed
in APPENDIX F to the Wrap Agreement, and such filings,
declarations, registrations, consents, approvals, orders and
authorizations that may be required under the laws of any other
foreign country in which any of the Companies is organized,
conducts any business or owns any property or assets; and (c) for
such other filings, declarations, registrations, consents,
approvals, orders and authorizations the failure of which to
obtain or make would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on
Mallinckrodt or F&F and would not impair the ability of
Mallinckrodt or F&F to perform their obligations hereunder or
thereunder, prevent the consummation by Mallinckrodt or F&F, of
any of the transactions contemplated hereby or thereby or, other
than by reason of any acts or omissions of Roche, GRI or Newco,
materially and adversely affect the rights and benefits of Roche
hereunder, of the Interested Persons under the Wrap Agreement, or
of GRI under the F&F Transaction Agreement.
3.6 Actions, Etc. There are no actions, suits or claims or
-------------
legal, administrative or arbitration proceedings or
investigations pending against or, to the knowledge of
Mallinckrodt, threatened against or affecting Mallinckrodt or any
of its properties, assets or businesses, relating to the
transactions contemplated by this Contribution Agreement, the
Wrap Agreement or the F&F Transaction Agreement that would impair
the ability of Mallinckrodt or F&F to perform their obligations
hereunder or thereunder.
3.7 F&F Business, Assets and Liabilities. F&F's business
------------------------------------
consists solely of regular and ongoing management input regarding
the operation and management of the Companies and the provision
of administrative services in support of the Companies and the
Business. F&F has no employees, consultants, independent
contractors, assets (including shares or other investments) or
liabilities of any kind, whether accrued, contingent, absolute,
determined or otherwise, or, attributable to F&F as a result of
F&F being an Affiliate of Mallinckrodt or any other person prior
to Closing, including without limitation, liabilities relating to
ERISA and environmental matters, except for (i) the ownership of
the F&F Tastemaker Partnership Interest and the rights and
obligations of F&F with respect thereto, (ii) the ownership of
the F&F Tastemaker B.V. Interest and the rights and obligations
of F&F with respect thereto, (iii) the rights and obligations of
F&F under the F&F Transaction Agreement, (iv) those assets and
liabilities described on SCHEDULE 3.7 to this Contribution
Agreement, and (v) those liabilities and obligations of F&F
arising under that certain $600,000,000 Credit Agreement dated
May 22, 1996 among F&F, as Borrower, Mallinckrodt, as Guarantor,
Morgan Guaranty Trust Company of New York, as Administrative
Agent, Citibank, N.A., as Documentation Agent, and the various
banks from time to time a party thereto (the "CREDIT AGREEMENT").
A true and complete copy of the Credit Agreement has been made
available to the Interested Persons. The Credit Agreement is in
full force and effect, and there exists no material default by
F&F or, to Mallinckrodt's knowledge, any other person or entity
under the Credit Agreement.
3.8 Transactions with Affiliates. Except as described on
----------------------------
SCHEDULE 3.8 to this Contribution Agreement, there are no
material transactions between Mallinckrodt, any of its Affiliates
(other than F&F), or F&F and any of the Companies other than any
such transactions which have been entered into on an arms length
basis in the ordinary course of the Companies' business. True
and complete copies of all agreements described on SCHEDULE 3.8
have been made available to the Interested Persons. All of the
agreements described on SCHEDULE 3.8 are in full force and
effect, and there exists no material default by Mallinckrodt or
F&F or, to Mallinckrodt's knowledge, any other person or entity
under such agreements.
3.9 Agreements with Hercules. Except as described on
------------------------
SCHEDULE 3.9 to this Contribution Agreement, none of
Mallinckrodt, any of its Affiliates (other than F&F), or F&F is a
party to any agreement with Hercules, HNBV, HFI or HCI that is
material to any of the Companies. True and complete copies of
all agreements described on SCHEDULE 3.9 have been made available
to the Interested Persons. All agreements described on SCHEDULE
3.9 are in full force and effect, and there exists no material
default by Mallinckrodt or F&F or, to Mallinckrodt's knowledge,
Hercules, HNBV, HFI or HCI under such agreements.
3.10 No Existing Violation, Default, Etc. F&F is not in
------------------------------------
violation of (i) its charter or other organizational documents,
(ii) any applicable law, ordinance or administrative or
governmental rule or regulation or (iii) any order, decree or
judgment of any Governmental Authority having jurisdiction over
it, except for any violation that would not reasonably be
expected to have or to cause a material adverse effect on it. No
event of default or event that, but for the giving of notice or
lapse of time, or both, would constitute an event of default
exists or, upon consummation of the transactions contemplated by
this Contribution Agreement, will exist under any loan or credit
agreement, note, bond, mortgage, indenture or guarantee of
indebtedness for borrowed money or any other material agreement
or instrument to which F&F is a party or by which F&F or its
properties, assets or business is bound, except for any such
default or event of default which would not reasonably be
expected to have a material adverse effect on F&F.
3.11 Orders, Litigation, Etc. There are no outstanding
------------------------
orders, judgments, injunctions, awards or decrees of any
Governmental Authority against F&F or any of its properties,
assets or businesses that would reasonably be expected to have a
material adverse effect on F&F. There are no actions, suits or
claims or legal, administrative or arbitration proceedings or
investigations pending against or, to Mallinckrodt's knowledge,
threatened against or affecting F&F or any of its properties,
assets or businesses that would reasonably be expected to have a
material adverse effect on F&F.
3.12 Brokers. No broker, investment banker or other person,
-------
other than Goldman, Sachs & Co., the fees and expenses of which
will be paid by Mallinckrodt, is entitled to any broker's,
finder's or other similar fee or commission in connection with
the execution and delivery of, or the consummation of the
transactions contemplated by, this Contribution Agreement, the
Wrap Agreement or the F&F Transaction Agreement based on
agreements or arrangements made by Mallinckrodt or F&F.
3.13 Contracts. SCHEDULE 3.13 attached hereto contains a
---------
list of all agreements, commitments, arrangements or plans to
which F&F is a party or by which F&F or its properties is bound.
Each agreement, commitment, arrangement or plan required to be
disclosed pursuant to this Section 3.13 is a valid and binding
agreement of F&F, and is in full force and effect, and neither
F&F nor, to Mallinckrodt's knowledge, after due inquiry, any
other party thereto is in default or breach under the terms of
any such agreement, commitment, arrangement or plan. True and
complete copies of all such documents have been delivered to
Newco and Roche by Mallinckrodt.
3.14 No Distribution. Except as described in Section 2.5
---------------
hereof, the transfer of the Newco Preferred Stock by Newco
hereunder, and the receipt of the Newco Preferred Stock by
Mallinckrodt, is solely for Mallinckrodt's own account and not
for Mallinckrodt as nominee or agent for any other person and is
not made with a view by Mallinckrodt to, or for offer or sale in
connection with, any distribution thereof (within the meaning of
the Securities Act) that would be in violation of the securities
laws of the United States of America or any state thereof or
Section 2.5 hereof.
3.15 No Intention to Dispose of Newco Preferred Stock.
------------------------------------------------
Mallinckrodt has no present plan or intention to sell, exchange,
transfer by gift or otherwise dispose of the Newco Preferred
Stock to be received by Mallinckrodt upon its contribution of the
capital stock of F&F to Newco pursuant to this Contribution
Agreement, except as described in Section 2.5 hereof.
3.16 Tax Matters. Except as set forth in SCHEDULE 3.16
-----------
attached hereto, with respect to Taxes and Tax Returns: (i) all
Tax Returns required to be filed by F&F on or prior to the date
hereof have been filed when due in accordance with all applicable
laws; (ii) as of the time of filing, or, if subsequently amended
as of the date of such amendment, and to the knowledge of
Mallinckrodt, such Tax Returns correctly reflected in all
material respects the facts regarding the income, business,
assets, operations, activities and status of F&F and any other
information required to be shown therein; (iii) all Taxes shown
to be due on such Tax Returns have been timely paid, withheld or
remitted to the appropriate Governmental Authority or extensions
for payment have been duly obtained; (iv) as of the date hereof,
neither F&F nor any member of any affiliated, consolidated,
combined or unitary group of which F&F is or has been a member
has waived or granted any extension of any statute of limitations
in respect of any such Tax Returns or Taxes; (v) as of the date
hereof, there is no audit, dispute, claim, action, proceeding or
investigation pending or, to the knowledge of Mallinckrodt
threatened against or with respect to F&F with respect to any
Tax, which audit, dispute, claim, action, proceeding or
investigation, if determined adversely, would reasonably be
expected in combination with any such audits, disputes, claims,
actions, proceedings or investigations, to have a material
adverse effect on F&F; (vi) as of the date hereof, F&F is not
delinquent in the payment of any Tax, requested any extension of
time within which to file any Tax Return and has not yet filed
such Return, and all deficiencies asserted or assessments made as
a result of any audit by a Governmental Authority of a Tax Return
of F&F have been paid in full; and (vii) as of the date hereof,
there are no requests for rulings or determinations in respect of
any Tax pending between any Governmental Authority and F&F.
4. REPRESENTATIONS AND WARRANTIES OF ROCHE AND NEWCO
-------------------------------------------------
Newco and Roche jointly and severally represent and warrant
to Mallinckrodt as of the date hereof and as of the Closing Date,
as follows:
4.1 Organization, Standing and Power of GRC and Newco.
-------------------------------------------------
Each of GRC and Newco is a corporation duly organized and validly
existing in good standing under the laws of Delaware and has the
requisite power and authority to carry on its businesses as
conducted on the date hereof. Newco has previously delivered to
Mallinckrodt true and complete copies of its Certificate of
Incorporation and Bylaws, both of which documents are in full
force and effect and have not been amended, modified, or
rescinded.
4.2 Standing of GRC and Newco. Each of GRC and Newco is
-------------------------
duly qualified to transact business, and is in good standing, in
each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so
qualified would not reasonably be expected to have a material
adverse effect on Newco or GRC.
4.3 Capital Structure. The authorized capital of Newco
-----------------
consists of 100 common shares, $1.00 par value per share, and, as
of the Closing Date, that certain amount of shares of 5.5%
preferred shares, with a stated value of $1,000 per share, which
will be issued by Newco in connection with the consummation of
the transactions contemplated under this Contribution Agreement
(collectively, the "NEWCO STOCK"). At all times prior to the
Closing of this Contribution Agreement, no preferred shares are
issued and outstanding, and no shares of capital stock are held
in the treasury of Newco. All of the issued and outstanding
shares of Newco Stock were duly and validly authorized and
issued, are fully paid and nonassessable, and are free of
preemptive rights. Roche owns all of the issued and outstanding
shares of Newco Stock, free and clear of all security interests,
liens, claims, pledges, voting rights, charges and encumbrances
of any nature whatsoever. The authorized capital of GRC consist
of 1,500 common shares, $1.00 par value per share, of which 1,500
shares are issued and outstanding, and none of which shares are
held in the treasury of GRC. All of the issued and outstanding
shares G-R Stock were duly and validly authorized and issued, are
fully paid and nonassessable, and are free of preemptive rights.
Roche owns all of the issued and outstanding shares of G-R Stock,
free and clear of all security interests, liens, claims, pledges,
voting rights, charges and other encumbrances of any nature
whatsoever. On the Closing Date, Newco will own all of the
issued and outstanding shares of G-R Stock, free and clear of all
security interests, liens, claims, pledges, voting rights,
charges and other encumbrances of any nature whatsoever.
4.4 Newco Preferred Stock. The preferred stock of Newco
---------------------
required to be issued to Mallinckrodt pursuant to Section 2.2
(the "NEWCO PREFERRED STOCK") shall, when so issued, be duly
authorized, validly issued and outstanding and fully paid and
nonassessable and shall not be subject to any liens,
restrictions, voting trusts or other claims or encumbrances of
any nature. The terms of the Newco Preferred Stock shall be as
set forth in the Term Sheet attached as APPENDIX A hereto, and
upon and after the filing of the Certificate of Designation with
the Secretary of State of the State of Delaware, the rights and
preferences of the Newco Preferred Stock set forth in such
Certificate of Designation shall be legal, valid and enforceable
by any holder of Newco Preferred Stock.
4.5 Rights to Acquire Equity of GRC and Newco. Except
-----------------------------------------
pursuant to this Contribution Agreement or the Certificate of
Designation, there are no options, warrants, calls, rights or
agreements to which Roche, GRC or Newco is a party obligating
Roche, GRC or Newco to issue, deliver, sell, repurchase, redeem,
or otherwise acquire or cause to be issued, delivered, sold,
repurchased or otherwise acquired additional shares of capital
stock of GRC or Newco, or obligating Roche, GRC or Newco to
grant, extend or enter into any such option, warrant, call, right
or agreement.
4.6 Authority to Enter Into Contribution Agreement. Each
----------------------------------------------
of Roche and Newco has all requisite power and authority to enter
into this Contribution Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Contribution Agreement by each of Roche and Newco and the
consummation by Roche and Newco of the transactions contemplated
hereby have been duly authorized by all necessary action on the
part of Newco. This Contribution Agreement has been duly
executed and delivered by each of Roche and Newco and (assuming
the due authorization, execution and delivery thereof by
Mallinckrodt) constitutes a valid and binding obligation of each
of Roche and Newco, enforceable against each of Roche and Newco
in accordance with its terms.
4.7 Authority to Enter Into Keepwell Agreement. Roche has
------------------------------------------
all requisite power and authority to enter into the Keepwell
Agreement and to consummate the transactions contemplated
thereby. The execution and delivery of the Keepwell Agreement by
Roche and the consummation by Roche of the transactions
contemplated thereby have been duly authorized by all necessary
corporate action on the part of Roche. The Keepwell Agreement
shall, when duly executed and delivered by Roche (and assuming
the due authorization, execution and delivery thereof by
Mallinckrodt), constitute a valid and binding obligation of
Roche, enforceable against Roche in accordance with its terms.
4.8 Consents and Approvals; No Violation. The execution
------------------------------------
and delivery by Roche of the Keepwell Agreement and this
Contribution Agreement, and the execution and delivery by Newco
of this Contribution Agreement will not, and the consummation of
the transactions contemplated hereby and thereby and compliance
with the provisions hereof and thereof will not, result in any
violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of
a material benefit under, (i) any provision of the charter or
organizational documents of any of Roche, Newco or GRC, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease,
agreement, instrument, permit, concession, franchise or license
by which any of Roche, Newco or GRC is bound or (iii) any
judgment, order, decree, statute, law, ordinance, rule or
regulation by which any of Roche, Newco or GRC is bound or to
which any of their respective properties or assets is subject,
other than, in the case of clauses (ii) and (iii), any such
violations, defaults, rights, liens, security interests, charges
or encumbrances that would not reasonably be expected to have a
material adverse effect on Roche, GRC or Newco, and would not
impair the ability of Roche to perform its obligations under the
Keepwell Agreement and this Contribution Agreement or the ability
of Newco to perform its obligations under this Contribution
Agreement, prevent the consummation by Roche, GRC or Newco of the
transactions contemplated by the Keepwell Agreement or this
Contribution Agreement or, other than by reason of any act or
omission of Mallinckrodt, materially and adversely affect the
rights and benefits of Mallinckrodt under the Keepwell Agreement
and this Contribution Agreement. No filing or registration with,
or authorization, consent or approval of, any Governmental
Authority is required by or with respect to Roche in connection
with the execution and delivery by Roche of the Keepwell
Agreement or the consummation by Roche of the transactions
contemplated by the Keepwell Agreement.
4.9 Financial Statements. The Roche Financial Statements
--------------------
fairly present the consolidated financial condition of Roche and
its Consolidated Subsidiaries as at the respective dates of the
Roche Financial Statements and the consolidated income and cash
flows of Roche and its Consolidated Subsidiaries for the periods
ending on the respective dates of the Roche Financial Statements.
The GRC Financial Statements fairly present the consolidated
financial condition of GRC and its Consolidated Subsidiaries as
of the respective dates of the GRC Financial Statements and the
consolidated income and cash flows of GRC and its Consolidated
Subsidiaries for the periods ending on the respective dates of
the GRC Financial Statements. Each of the Roche Financial
Statements and the GRC Financial Statements were prepared in
accordance with GAAP applied on a consistent basis (except as
otherwise indicated in such financial statements or the notes
thereto), subject, in the case of unaudited interim financial
statements, to normal recurring year-end adjustments. Since the
date of the most recent of the Roche Financial Statements, there
has been no material adverse change in Roche. Since the date of
the most recent GRC Financial Statements, there has been no
material adverse change in GRC. Newco is a newly formed
corporation and Newco has never conducted any business. Except
for Newco's right and obligations under this Contribution
Agreement, Newco does not have any assets or liabilities.
4.10 Orders, Actions, Etc. There are no outstanding orders,
---------------------
judgments, injunctions, awards or decrees of any Governmental
Authority against either of GRC or Newco or any of their
properties, assets or businesses that would reasonably be
expected to have a material adverse effect on either of GRC or
Newco. There are no actions, suits or claims or legal,
administrative or arbitration proceedings or investigations
pending against or, to Newco's or Roche's knowledge, threatened
against or affecting, either of GRC or Newco or any of their
properties, assets or businesses that would reasonably be
expected to have a material adverse effect on either of GRC or
Newco. There are no actions, suits or claims or legal,
administrative or arbitration proceedings or investigations
pending against or, to Newco's or Roche's knowledge, threatened
against or affecting, any of Newco, GRC or Roche or any of their
properties, assets or businesses relating to the transactions
contemplated by this Contribution Agreement.
4.11 Financial Capabilities. Roche and Newco have, and on
----------------------
the Closing Date will have, readily available credit, or access
thereto, in an amount sufficient to enable Roche to satisfy the
condition set forth in Section 10.2.6 of this Contribution
Agreement on or before the Closing Date.
4.12 No Intention to Dispose of Newco Common Stock. Roche
---------------------------------------------
has no present plan or intention to sell, exchange, transfer by
gift or otherwise dispose of the common stock of Newco to be
received by Roche upon its contribution of the G-R Stock to Newco
pursuant to this Contribution Agreement.
5. COVENANTS OF MALLINCKRODT
-------------------------
5.1 Noncompetition. During the period commencing on the
--------------
Closing Date and continuing until the third annual anniversary of
the Closing Date (the "NONCOMPETITION PERIOD"), Mallinckrodt
shall not, directly or indirectly, own, manage, operate or
control any business anywhere in the world which develops,
manufactures and sells ingredients and compounds used primarily
to provide flavor or taste in food and beverage products in
competition with the Business conducted by the Companies on the
date hereof (a "COMPETITIVE BUSINESS"); provided, however, that
the foregoing covenant shall not prohibit, or be interpreted as
prohibiting, Mallinckrodt from (i) continuing in any line of
business conducted by Mallinckrodt or any division or affiliate
of Mallinckrodt (other than the Companies and F&F) on the date
hereof, regardless of whether any such business is a Competitive
Business; (ii) conducting research and development for, or
manufacturing and selling raw materials to, a Competitive
Business; (iii) developing, manufacturing or selling ingredients
and compounds used in food and beverage products primarily for
purposes other than to provide flavor or taste; (iv) entering
into any relationship with a person or entity not owned, managed,
operated or controlled by Mallinckrodt for purposes unrelated to
the business of developing, manufacturing or selling ingredients
and compounds used primarily to provide flavor or taste in food
and beverage products, regardless of whether such person or
entity conducts a Competitive Business; (v) making equity
investments in publicly owned companies which conduct a
Competitive Business, provided such investments do not confer
upon Mallinckrodt more than 10% of the equity of such company;
(vi) retaining or acquiring additional equity in Newco; or (vii)
acquiring control of any person or entity which conducts a
Competitive Business if Mallinckrodt commences, within six (6)
months of such acquisition, transfer to a person or entity which
is not an Affiliate of Mallinckrodt of that portion of the
business of such person or entity as constitutes a Competitive
Business upon terms and conditions and at a price determined by
Mallinckrodt in its sole discretion, and thereafter diligently
pursues such transfer.
5.2 Documents to be delivered by Mallinckrodt at Closing.
----------------------------------------------------
On the Closing Date, and in addition to any other documents
required to be delivered pursuant to this Contribution Agreement
or the Wrap Agreement, Mallinckrodt shall deliver (or cause to be
delivered) to Roche the following, in form and substance
reasonably satisfactory to Roche:
(A) certificates representing all of the F&F Stock
registered on the books of F&F in the name of Newco;
(B) stock books, stock ledgers, minute books and corporate
seals of F&F;
(C) certificates of good standing for F&F from the
Secretary of State of the State of Delaware dated
within twenty (20) days of the Closing Date, together
with a bringdown telegram from the Secretary of State
of the State of Delaware dated the Closing Date,
relating to such certification of good standing;
(D) a copy of the Certificate of Incorporation of F&F
certified by the Secretary of State of the State of
Delaware to be a true and complete copy thereof, which
certification by said Secretary of State shall be dated
within twenty (20) days of the Closing Date;
(E) a copy of F&F's Certificate of Incorporation and
current Bylaws certified as of and at the Closing Date
by the Secretary of F&F to be true and complete copies
of such documents and further certified as of and at
the Closing Date to be in full force and effect without
amendment;
(F) receipts for the Newco Preferred Stock delivered on the
Closing Date by Newco pursuant to Section 2.2 hereof;
and
(G) duly executed assignments of all Intellectual Property
owned by the Companies, including, without limitation,
all Intellectual Property listed in Schedule 3.18 of
the Disclosure Schedule to the Wrap Agreement, and
registered in the name of Mallinckrodt or an Affiliate
of Mallinckrodt and which has not been previously
formally assigned to or registered in the name of any
of the Companies.
5.3 Confidentiality. After Closing, Mallinckrodt and its
---------------
Affiliates will hold, and will use their best efforts to cause
their respective officers, directors and employees to hold, in
confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
confidential documents and information concerning the Companies
and the Business, except to the extent that such information was:
(a) previously known on a nonconfidential basis by Mallinckrodt;
(b) in the public domain through no fault of Mallinckrodt;
(c) later lawfully acquired by Mallinckrodt from any source other
than one related to Mallinckrodt's prior ownership of the
Companies, which source was not bound by any confidentiality
obligation; or (d) disclosed for purposes of litigation
prosecution or defense, Tax return preparation or payment,
reporting historical financial results and other proper business
purposes. Notwithstanding anything in this Section 5.3 to the
contrary, the obligation of Mallinckrodt and its Affiliates to
hold any such information in confidence shall be satisfied if
they exercise the same care with respect to such information as
they would take to preserve the confidentiality of their own
similar information.
5.4 Distributions. Mallinckrodt shall not permit F&F to
-------------
distribute to Mallinckrodt, any Affiliate of Mallinckrodt or any
other entity prior to the Closing any proceeds of the sale of the
F&F Tastemaker B.V. Interest received by F&F pursuant to the F&F
Transaction Agreement.
5.5 Responsibility for F&F Transaction. Mallinckrodt shall
----------------------------------
cause F&F to fully and timely fulfill and perform, and
Mallinckrodt hereby unconditionally guarantees the full and
timely performance and fulfillment by F&F of, all of F&F's
obligations under the F&F Transaction Agreement required to be
performed or fulfilled by F&F prior to the completion of the
closing of the transactions contemplated by the F&F Transaction
Agreement; provided, however, that upon and after completion of
the closing of the transactions contemplated by the F&F
Transaction Agreement (i) Mallinckrodt shall be fully and finally
released of all liabilities, responsibilities and obligations
with respect to all representations, warranties, covenants,
agreements and other obligations of F&F under the F&F Transaction
Agreement, and (ii) no claim may be asserted or maintained
against Mallinckrodt with respect to any representation,
warranty, covenant, agreement or other obligation under the F&F
Transaction Agreement and all such claims shall be, and hereby
are, forever released, waived and barred. Notwithstanding
anything in this Contribution Agreement and in the F&F
Transaction Agreement to the contrary, the parties to this
Contribution Agreement acknowledge and agree that pursuant to the
Wrap Agreement, each of Roche, GRI, Hercules and Mallinckrodt
have acknowledged and agreed that in entering into, and
consummating the transactions contemplated by, and after the
consummation of the transactions contemplated by, the F&F
Transaction Agreement, GRI and Mallinckrodt, on behalf of itself
and F&F, are relying upon, and are entitled to rely upon, the
representations, warranties and covenants of Roche, GRI, Hercules
and Mallinckrodt set forth in the Wrap Agreement. Each of Roche,
Newco and Mallinckrodt further acknowledges and agrees that in
entering into, and consummating the transactions contemplated by,
and after the consummation of the transactions contemplated by,
the F&F Transaction Agreement, GRI and Mallinckrodt, on behalf of
itself and F&F, are relying upon, and are entitled to rely upon,
the representations, warranties and covenants of Roche, Newco and
Mallinckrodt set forth in this Contribution Agreement.
5.6 Operations. From the date hereof to the Closing Date,
----------
Mallinckrodt shall cause F&F to: (i) conduct its operations in
compliance with applicable laws and only in the ordinary course
consistent with past practices; (ii) use best efforts to maintain
its properties, assets and facilities in their present condition,
reasonable use and ordinary wear and tear excepted; and (iii)
continue to maintain insurance with coverages, deductibles and
limits as exist on the date of this Contribution Agreement.
6. COVENANTS OF ROCHE
------------------
6.1 Deliveries. On or before the Closing Date, Roche shall
----------
deliver or cause to be delivered to Mallinckrodt unaudited
consolidated balance sheets and income statements of Roche and
its Consolidated Subsidiaries as at and for the interim period
ending on the last day of the most recent accounting month of
Roche prior to the Closing Date for which such statements are
available. The foregoing statements to be delivered by Roche to
Mallinckrodt shall be prepared in accordance with the customary
accounting practices, procedures and policies of Roche used in
connection with regularly prepared, internal financial
statements.
6.2 Certificate of Designation. On or prior to the
--------------------------
Closing, Newco shall file with the Secretary of State of the
State of Delaware a Certificate of Designation with respect to
the Newco Preferred Stock, which Certificate of Designation (the
"CERTIFICATE OF DESIGNATION") shall be consistent with the Term
Sheet and otherwise acceptable in form and substance to
Mallinckrodt and the issuer of the Letter of Credit.
6.3 Keepwell Agreement. On the Closing Date, Roche shall
------------------
duly execute and deliver to Mallinckrodt a Keepwell Agreement.
6.4 Contribution of G-R Stock. On or prior to the
-------------------------
contribution by Mallinckrodt of the stock of F&F to Newco in
exchange for Newco Preferred Stock as provided in Section 2.1
above, Roche shall cause appropriate share transfer instruments
relating to the G-R Stock to be delivered to Newco in exchange
for shares of common stock of Newco, representing (in conjunction
with the common stock of Newco previously issued to Roche) one
hundred percent (100%) of the issued and outstanding common stock
of Newco.
6.5 Documents to be Delivered by Newco and Roche at
-----------------------------------------------
Closing. On the Closing Date, in addition to any other documents
- -------
required to be delivered pursuant to this Contribution Agreement
or the Wrap Agreement, Newco and Roche shall deliver (or cause to
be delivered) to Mallinckrodt the following, in form and
substance reasonably satisfactory to Mallinckrodt:
(A) certificates representing the number of shares of Newco
Preferred Stock to be delivered on the Closing Date
duly registered in Mallinckrodt's name;
(B) a certificate of good standing for each of Roche and
Newco from the Secretary of State of the State of
Delaware dated within twenty (20) days of the Closing
Date, together with a bringdown telegram from the
Secretary of State of the State of Delaware dated the
Closing Date, relating to such good standing
certificates;
(C) a copy of the Certificate of Incorporation, including
the Certificate of Designation, of Newco certified by
the Secretary of State of the State of Delaware to be a
true and complete copy thereof, which certification by
said Secretary of State shall be dated within twenty
(20) days of the Closing Date;
(D) a copy of Newco's Certificate of Incorporation,
including the Certificate of Designation and current
Bylaws certified by the Secretary of Newco to be true
and complete copies of such documents and further
certified to be in full force and effect without
amendment;
(E) evidence of the transfer to Newco of all of the G-R
Stock; and
(F) receipts for the F&F Stock and the other items
delivered pursuant to Section 5.2 hereof.
7. MUTUAL COVENANTS OF MALLINCKRODT, NEWCO AND ROCHE
-------------------------------------------------
7.1 Satisfaction of Conditions. From and after the date
--------------------------
hereof, each of Mallinckrodt, Newco and Roche shall use their
best efforts (individually or jointly, as the case may be) to
cause all conditions precedent set forth in Sections 10.1 and
10.2 of this Contribution Agreement (as appropriate to each of
them) to be satisfied and fulfilled at the earliest practicable
date, to the extent the satisfaction or fulfillment thereof is
its responsibility hereunder or within its reasonable control.
If any event should occur, either within or without the control
of any party hereto, which would prevent fulfillment of the
conditions precedent to the obligations of any party to
consummate the transactions contemplated by this Contribution
Agreement, each of the parties shall use its best efforts to cure
or remove the effect of the event as expeditiously as possible;
provided, however, that (without limitation) nothing set forth in
- -------- -------
this Section 7.1 shall be construed as requiring any party to
institute litigation or expend any sums in the defense or
settlement of litigation in order to cure or remove the effect of
any such event.
7.2 Further Assurances. After the Closing Date, each of
------------------
Mallinckrodt, Newco and Roche shall, from time to time upon any
other party's request, execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, all such further
assignments, documents, instruments, transfers, conveyances,
discharges, releases, assurances and consents, and shall take or
cause to be taken such further actions, as such other party may
reasonably request to further evidence or carry out the
transactions contemplated by, and the purposes of, this
Contribution Agreement.
7.3 Preservation of Tax Free Status of Contribution.
-----------------------------------------------
Following the Closing, none of Roche, Newco or Mallinckrodt shall
take any actions, or fail to take any action, that causes
Mallinckrodt's contribution of the capital stock of F&F to Newco,
or Roche's contribution of the G-R Stock to Newco, not to qualify
as tax free (except to the extent of the receipt pursuant to this
Contribution Agreement of "other property or money" within the
meaning of Section 351(b) of the Code) under Section 351 of the
Code.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
-------------------------------------------
COVENANTS; INDEMNITY FOR DAMAGES
--------------------------------
8.1 Survival. All representations and warranties of the
--------
parties made in this Contribution Agreement, and all covenants
and agreements of the parties made in this Contribution Agreement
and required to be performed on or before the Closing Date, shall
survive until 5:00 p.m. Eastern Standard Time on the second
annual anniversary of the Closing Date, notwithstanding any
investigation heretofore made or omitted by the parties, and
shall expire and be of no further force and effect after such
time; provided, however, that the representations and warranties
in Sections 3.1, 3.2, 3.3, 3.4, 4.1, 4.2, 4.3, 4.4, 4.5, 4.6 and
4.7 shall survive indefinitely and the representations and
warranties contained in Section 3.16 shall survive until the
expiration of the statute of limitations applicable to the
matters covered thereby (giving effect to any waiver, mitigation
or extension thereof by Mallinckrodt) or, if none is applicable,
the second annual anniversary of the Closing Date, and the
representations and warranties contained in Sections 3.15 and
4.12 and the covenants contained in Section 7.3 shall survive
until the expiration of the statute of limitations (giving effect
to any waiver, mitigation or extension thereof) applicable to the
United States federal income tax period of, in the case of
Sections 4.12 and 7.3 (insofar as either Section contains a
covenant of Roche), Mallinckrodt and, in the case of Sections
3.15 and 7.3 (insofar as either Section contains a covenant of
Mallinckrodt), Roche, in which the consummation of this
Contribution Agreement occurs. No party will have any liability
to any other party arising out of a breach of any representation
or warranty contained in this Contribution Agreement or of any
covenant or agreement made in this Contribution Agreement and
required to be performed on or before the Closing Date, unless
the party claiming that such breach occurred gives to the other
party hereto written notice and a detailed explanation of the
alleged breach at or before 5:00 p.m. Eastern Standard Time on
the last day of the applicable survival period; provided,
however, that if notice of a claim is timely given, the claim
specified in such notice, and the specific representation,
warranty, covenant or agreement upon which any such claim is
based, shall survive until such claim has been finally resolved.
8.2 Limitations of Remedies. The indemnification remedy
-----------------------
set forth in Article 8 of the Wrap Agreement and in the Tax Annex
and any injunctive or other equitable relief to which any party
may be entitled from a court of appropriate jurisdiction shall be
the sole remedies to which any party hereto is entitled for any
breach or non-compliance with the provisions of this Contribution
Agreement, or any agreement, instrument or document delivered in
connection herewith. Any recovery of Damages pursuant to the
indemnification remedy set forth in this Section 8 and Article 8
of the Wrap Agreement, shall be limited to a recovery of
compensatory damages and shall not include any special, punitive,
exemplary, incidental or consequential damages or damages of any
similar type; provided that any such non-compensatory damages
shall be recoverable if and to the extent awarded by a court or
other adjudicate body of appropriate jurisdiction and authority
at an outcome of any third party claim for which indemnification
is otherwise available hereunder.
8.3 Indemnification Procedures. The parties agree that the
--------------------------
procedures for asserting claims for indemnification and recovery
of Damages shall be as set forth in Article 8 of the Wrap
Agreement.
8.4 Claims Made in Written Notice. All claims for
-----------------------------
indemnification hereunder shall be made in a written notice
setting forth, with particularity, the nature of the claim for
which indemnification is sought. All parties agree that no claim
for indemnification shall be made hereunder unless the party
requesting indemnification shall have a good faith belief that it
is entitled to indemnification hereunder.
9. RESOLUTION OF DISPUTES
----------------------
9.1 Conclusive and Exclusive. Each and all disputes under
------------------------
this Contribution Agreement shall be conclusively and exclusively
resolved in accordance with the terms and conditions set forth in
Section 9 of the Wrap Agreement.
9.2 Forum and Waivers. EACH OF NEWCO, ROCHE AND
-----------------
MALLINCKRODT AGREES THAT, EXCEPT TO THE EXTENT OTHERWISE PROVIDED
IN THE TAX ANNEX TO THE WRAP AGREEMENT, ANY ACTION, SUIT OR
PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS CONTRIBUTION
AGREEMENT, ITS VALIDITY OR PERFORMANCE, SHALL BE INITIATED AND
PROSECUTED AS TO ALL PARTIES AND THEIR SUCCESSORS AND ASSIGNS AT
NEW YORK, NEW YORK, WHICH SHALL BE THE EXCLUSIVE FORUM FOR ALL
SUCH ACTIONS, SUITS OR PROCEEDINGS. EACH OF NEWCO, ROCHE AND
MALLINCKRODT CONSENTS TO AND SUBMITS TO THE EXERCISE OF
JURISDICTION OVER ITS PERSON BY ANY STATE OR FEDERAL COURT
SITUATED AT NEW YORK, NEW YORK HAVING JURISDICTION OVER THE
SUBJECT MATTER, WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
CERTIFIED MAIL DIRECTED TO THE PARTIES AT THEIR RESPECTIVE
ADDRESSES SET FORTH IN SECTION 11.3 OR AS OTHERWISE PROVIDED
UNDER THE LAWS OF THE STATE OF NEW YORK. EACH OF NEWCO, ROCHE
AND MALLINCKRODT WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED
HEREUNDER, AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. EACH OF
NEWCO, ROCHE AND MALLINCKRODT HEREBY RECIPROCALLY AND IRREVOCABLY
WAIVES TRIAL BY JURY IN CONNECTION WITH ANY DISPUTE RELATING TO
THIS CONTRIBUTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
10. CONDITIONS PRECEDENT
--------------------
10.1 Conditions to Obligations of Newco and Roche. The
--------------------------------------------
obligations of each of Newco and Roche to consummate the
transactions contemplated by this Contribution Agreement are
subject to the satisfaction or waiver by Newco and Roche in
writing of each of the following conditions precedent:
10.1.1 Accuracy of Representations and Warranties.
------------------------------------------
The representations and warranties of Mallinckrodt made herein
shall be true and correct in all material respects on the Closing
Date.
10.1.2 Performance of Agreements. Mallinckrodt
-------------------------
shall have performed in all material respects all obligations and
agreements and complied in all material respects with all
covenants and conditions contained in this Contribution Agreement
to be performed and complied with by it on or prior to the
Closing Date.
10.1.3 Officer's Certificate. Newco and Roche shall
---------------------
have received from Mallinckrodt a certificate dated the Closing
Date signed by a duly authorized officer of Mallinckrodt
certifying to each of Newco and Roche that the representations
and warranties of Mallinckrodt made herein are true and correct
in all material respects on the Closing Date as if made at and as
of such date and that Mallinckrodt has performed in all material
respects all obligations and agreements and complied in all
material respects with all covenants and conditions contained in
this Contribution Agreement to be performed and complied with by
it at or prior to the Closing Date.
10.1.4 Wrap Agreement Conditions. All of the
-------------------------
conditions precedent to the obligations of the Interested Persons
set forth in the Wrap Agreement shall have been satisfied or
waived in writing by the Interested Persons.
10.1.5 Legal Opinions. Each of Newco and Roche
--------------
shall have received the legal opinion, dated as of the Closing
Date, of Mallinckrodt's Vice President and General Counsel with
respect to those matters set forth in APPENDIX C to this
Contribution Agreement.
10.2 Conditions to Obligations of Mallinckrodt. The
-----------------------------------------
obligations of Mallinckrodt to consummate the transactions
contemplated by this Contribution Agreement are subject to the
satisfaction or waiver by Mallinckrodt in writing of each of the
following conditions precedent:
10.2.1 Accuracy of Representations and Warranties.
------------------------------------------
The representations and warranties of Newco and Roche made herein
shall be true and correct in all material respects on the Closing
Date.
10.2.2 Performance of Agreements. Each of Newco and
-------------------------
Roche shall have performed in all material respects all
obligations and agreements and complied in all material respects
with all covenants and conditions contained in this Contribution
Agreement to be performed and complied with by it on or prior to
the Closing Date.
10.2.3 Officer's Certificates. Mallinckrodt shall
----------------------
have received from each of Newco and Roche a certificate dated
the Closing Date signed by a duly authorized officer of each of
Newco and Roche certifying that the representations and
warranties of Newco and Roche made herein are true and correct in
all material respects on the Closing Date as if made at and as of
such date and that Newco and Roche have performed in all material
respects all obligations and agreements and complied in all
material respects with all covenants and conditions contained in
this Contribution Agreement to be performed or complied with by
them at or prior to the Closing Date.
10.2.4 Wrap Agreement Conditions. All of the
-------------------------
conditions precedent to the obligations of Hercules and
Mallinckrodt set forth in the Wrap Agreement shall have been
satisfied or waived in writing by each of Hercules and
Mallinckrodt.
10.2.5 Legal Opinions. Mallinckrodt shall have
--------------
received the legal opinion, dated as of the Closing Date, of the
General Counsel and Vice President of Hoffmann-LaRoche Inc. with
respect to those matters set forth in APPENDIX D to this
Contribution Agreement.
10.2.6 Release of Guaranties. Mallinckrodt shall
---------------------
have been fully and finally released from all liabilities,
obligations and responsibilities with respect to any and all
indebtedness of F&F and the Companies, including, without
limitation, Mallinckrodt's liabilities, obligations and
responsibilities with respect to the F&F Debt and Mallinckrodt's
guarantee thereof and with respect to the Tastemaker Debt and
Mallinckrodt's guarantee thereof.
10.2.7 Letter of Credit. Mallinckrodt shall have
----------------
received an irrevocable stand-by letter issued by Morgan Guaranty
Trust Company in an amount not less than the stated value of the
Newco Stock issued to Mallinckrodt at Closing consistent with the
Commitment Letter attached as APPENDIX E to this Contribution
Agreement (the "LETTER OF CREDIT").
11. MISCELLANEOUS
-------------
11.1 Termination and Cancellation. This Contribution
----------------------------
Agreement may be terminated and the transactions contemplated
herein may be abandoned at any time prior to Closing:
11.1.1 By the mutual written consent of the parties
hereto;
11.1.2 By any party hereto if neither the
terminating party nor an Affiliate of the terminating party is
then in material breach of its obligations under any of the
Transaction Documents or the D&F Transaction Agreements if the
Closing Date has not occurred on or before the Closing Deadline;
11.1.3 By either of Mallinckrodt or Roche if any of
the Wrap Agreement, the Hercules Transaction Agreement or the D&F
Transaction Agreements is terminated in accordance with the terms
thereof prior to consummation of the transactions contemplated
thereby;
11.1.4 By Roche if any of the conditions precedent
set forth in Section 10.1 have not been satisfied on or before
the date established as the Closing Date (as the same may be
extended pursuant to Section 10.3 of the Wrap Agreement);
11.1.5 By Mallinckrodt if any of the conditions
precedent set forth in Section 10.2 have not been satisfied on or
before the date established as the Closing Date (as the same may
be extended pursuant to Section 10.3 of the Wrap Agreement); or
11.1.6 By any party hereto if neither the
terminating party nor an Affiliate of the terminating party is
then in material breach of its obligations hereunder if another
party hereto has materially breached any covenant herein, such
breach is within the reasonable control of the breaching party
and either (i) such breach is not capable of being cured or
corrected or (ii) the breaching party has not cured or corrected
such breach within ten (10) days after receipt of notice of such
breach.
11.1.7 By any party hereto if there shall be any law
or regulation adopted subsequent to the date hereof that makes
consummation of the transactions contemplated hereby illegal or
otherwise prohibited or if consummation of the transactions
contemplated hereby would violate any nonappealable final order,
decree or judgment of any court or governmental body having
competent jurisdiction.
11.2 Effect of Termination. Upon any termination of this
---------------------
Contribution Agreement, each party hereto shall bear all expenses
incurred by it in connection with the negotiation, preparation,
execution and performance of this Contribution Agreement. No
such termination shall relieve any party hereto of any liability
for a breach of or default under this Contribution Agreement,
which liability including all expenses of each party hereto
incurred in connection with the negotiation, preparation,
execution and performance of this Contribution Agreement, shall
continue notwithstanding such termination. The provisions of
Section 5.3 hereof shall survive any termination of this
Contribution Agreement.
11.3 Notices. All notices, requests, consents, approvals,
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waivers and other communications hereunder shall be in writing
and shall be deemed given or delivered on the earlier of (i) the
date actually received if properly addressed and delivered to the
addresses for notices set forth herein, regardless of how sent,
or (ii) five (5) business days after being mailed by United
States certified or registered mail, return receipt requested,
with postage prepaid, in each case addressed in accordance with
the following:
11.3.1 Mallinckrodt Notice Address. Notices and
---------------------------
other communications to Mallinckrodt shall be sent to the
following addresses:
Mallinckrodt Inc.
675 McDonnell Boulevard
St. Louis, Missouri 63134
Attention: Mack G. Nichols, President and
Chief Operating Officer
Telephone No.: (314) 854-5320
Facsimile No.: (314) 854-5323
with a required copy to:
Mallinckrodt Inc.
675 McDonnell Boulevard
St. Louis, Missouri 63134
Attention: Roger A. Keller, Vice President and General
Counsel
Telephone No.: (314) 854-5240
Facsimile No.: (314) 854-5366
or to such other addresses as Mallinckrodt may from time to time
designate in a notice pursuant to this Section 11.3.
11.3.2 Newco and Roche Notice Address. Notices and
------------------------------
other communications to Newco and/or Roche shall be sent to the
following addresses:
Roche Holdings, Inc.
15 East North Street
Dover, Delaware 19901
Attention: Treasurer
Telephone No.: (302) 425-4701
Facsimile No.: (302) 425-4713
with a required copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Phillip R. Mills
Telephone No.: (212) 450-4618
Facsimile No.: (212) 450-5500
or to such other addresses as Newco may from time to time
designate in a notice pursuant to Section 11.3.
11.4 Assignment. None of Mallinckrodt, Newco or Roche shall
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assign this Contribution Agreement, or any rights hereunder, by
operation of law or otherwise, without the prior written consent
of the other parties hereto.
11.5 Waiver. No waiver of any provision hereof shall be
------
effective unless such waiver is set forth in a writing signed by
the party to be charged thereby, and then such written waiver
shall be effective only in the instance and for the purpose
specified therein. No failure or delay on the part of any party
in exercising any right, power or privilege under this
Contribution Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
11.6 Amendments. This Contribution Agreement may be amended
----------
or modified in whole or in part only by a duly authorized written
agreement that refers to this Contribution Agreement and is
signed by all of the parties hereto.
11.7 Limitations on Rights of Third Parties. Nothing
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express or implied in this Contribution Agreement is intended or
shall be construed to confer upon or give any person or entity
other than Mallinckrodt, Newco and Roche any rights under this
Contribution Agreement; provided, however, that GRI shall be
deemed a third-party beneficiary of this Agreement with respect
to the representations and warranties of Mallinckrodt set forth
in ARTICLE 3 hereof. Any claim brought by GRI against
Mallinckrodt with respect to such representations and warranties
shall be subject to any defense which Mallinckrodt would have if
it were Roche, rather than GRI, bringing such claim.
11.8 Counterparts. This Contribution Agreement may be
------------
executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
11.9 Governing Law. This Contribution Agreement shall be
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governed by and construed and enforced in accordance with the
laws of the State of New York of the United States of America,
without giving effect to its conflict of law principles.
11.10 Entire Agreement. This Contribution Agreement and
----------------
the Wrap Agreement constitute and contain the entire agreements
between Mallinckrodt, Newco and the Interested Persons with
respect to the subject matter hereof and thereof and supersede
all other agreements, written or oral, made prior to the date
hereof or contemporaneously herewith and relating to the
transactions contemplated by the Transaction Documents. No
representation, warranty, covenant or agreement relating to the
transactions contemplated by this Contribution Agreement and the
Wrap Agreement shall be binding upon any party hereto unless
expressly set forth in this Contribution Agreement or the Wrap
Agreement, and then only to the extent so provided in such
agreements.
IN WITNESS WHEREOF, the parties have executed this
Contribution Agreement as of the day and year first above
written.
MALLINCKRODT INC.
By: ______________________
Name: ______________________
Title: ______________________
ROCHE HOLDINGS, INC.
By: ______________________
Name: ______________________
Title: ______________________
GIVAUDAN-ROURE (UNITED STATES) INC.
By: ______________________
Name: ______________________
Title: ______________________
