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