SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) April 24, 1995
THE QUAKER OATS COMPANY
(Exact name of Registrant as specified in its charter)
New Jersey 1-12 36-1655315
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
Quaker Tower, P.O. Box 049001, Chicago, Illinois 60604-9001
(Address of principal executive offices)
312-222-7111
(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets
On April 24, 1995, The Quaker Oats Company, a New Jersey corporation and the
Registrant herein (the "Company"), completed the sale to Dalgety PLC
("Dalgety"), a company incorporated in England and Wales, of certain assets,
liabilities and obligations of its European Pet Foods Business for $700 million
in cash, subject to certain post-closing adjustments. The acquisition was made
pursuant to the Agreement for the Sale and Purchase of the European Pet Foods
Business of The Quaker Oats Company ("Agreement") dated February 3, 1995, among
the Company and Dalgety. The purchase price was determined by arms'-length
negotiation between the Company and Dalgety. The Company is the parent
corporation of those corporate entities identified as Asset Vendors and as
Share Vendors in the Agreement. The Company agreed to the sale to Dalgety by
the Asset Vendors of the asset businesses as going concerns and to the sale to
Dalgety by the Share Vendors of the shares. The assets sold and liabilities
assumed included, among other things, accounts receivable, inventory, prepaid
assets, other non-current assets, fixed assets and manufacturing facilities
throughout Europe, books and records, intellectual and intangible property,
accounts payable, and other current and non-current liabilities. Major brands
sold included Felix for cat food and Fido for dog food.
Item 7. Financial Statements and Exhibits
(b) Unaudited pro forma combined financial information with respect to the
disposition of the European Pet Foods Business is attached as an exhibit to
this Form 8-K.
(c) Exhibits (listed by numbers corresponding to the provisions of Item 601 of
Regulation S-K)
(2)(a) Agreement for the Sale and Purchase of the European Pet Foods
Business of The Quaker Oats Company dated February 3, 1995, among the
Company and Dalgety.
(2)(b) Addendum dated April 24, 1995 to the Agreement for the Sale and
Purchase of the European Pet Foods Business of The Quaker Oats Company
dated February 3, 1995, among the Company and Dalgety.
(99) Unaudited pro forma combined financial information of the Company
with respect to the disposition of the European Pet Foods Business.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE QUAKER OATS COMPANY
By Thomas L. Gettings
Thomas L. Gettings
Vice President and
Corporate Controller
Date: May 5, 1995
3
EXHIBIT INDEX
Electronic (E) or
Exhibit Incorporated by
Number Exhibit Description Reference (IBRF)
(2)(a) Agreement for the Sale and E
Purchase of the European Pet
Foods Business of The Quaker
Oats Company dated February 3,
1995, among the Company
and Dalgety.
(2)(b) Addendum dated April 24, 1995 E
to the Agreement for the
Sale and Purchase of the European
Pet Foods Business of The Quaker
Oats Company dated February 3,
1995, among the Company
and Dalgety.
(99) Unaudited pro forma combined E
financial information of the
Company with respect to the
disposition of the European Pet
Foods Business.
4
Exhibit (2)(a)
Dated February 3, 1995
(1) THE QUAKER OATS COMPANY
- - and -
(2) DALGETY PLC
__________________________
Agreement for the sale
and purchase of the
European Pet Foods Business
of The Quaker Oats Company
__________________________
ASHURST MORRIS CRISP
Broadwalk House
5 Appold Street
London EC2A 2HA
Tel: 0171-638-1111
Fax: 0171-972-7990
CONTENTS
CLAUSES PAGES
1. INTERPRETATION 1
2. SALE AND PURCHASE 11
3. CONDITIONS 11
4. CONSIDERATION 12
5. PERIOD PENDING COMPLETION 13
6. COMPLETION 13
7. RESTRICTIONS 18
8. LIABILITIES AND EXCLUDED LIABILITIES 20
9. DEBTORS 20
10. CONTRACTS 20
11. COMPLETION ACCOUNTS 21
12. EMPLOYEES 24
13. WARRANTIES 26
14. PURCHASER'S UNDERTAKINGS AND WARRANTIES 32
15. PENSIONS 33
16. VALUE ADDED TAX 33
17. ANNOUNCEMENTS 34
18. COSTS 34
19. ASSIGNMENT 35
20. EFFECT OF COMPLETION 35
21. ACTION AFTER COMPLETION 35
22. PROVISION OF BUSINESS INFORMATION 36
23. CONFIDENTIALITY 36
24. ENTIRE AGREEMENT 37
25. WAIVER, AMENDMENT 37
26. FURTHER ASSURANCES AND ACCESS 37
27. NOTICES 38
28. COUNTERPARTS 38
29. GOVERNING LAW AND SUBMISSION TO JURISDICTION 38
30. INVALIDITY 39
SCHEDULE 1
Particulars relating to the Companies 40
SCHEDULE 2
Particulars relating to the Subsidiaries 42
SCHEDULE 3
Warranties 45
SCHEDULE 4
Deed of Tax Indemnity 62
SCHEDULE 5
The Properties 76
SCHEDULE 6
Pensions 85
SCHEDULE 7
Transfer Details 86
SCHEDULE 8
Apportionment of Consideration 87
SCHEDULE 9
Employees of the Vendor's Group for the 88
purposes of Clause 1.10
SCHEDULE 10
The Restricted Territory 89
SCHEDULE 11
Matters requiring Purchaser's consent 90
THIS AGREEMENT is made the 3rd day of February 1995 BETWEEN:
(1) THE QUAKER OATS COMPANY, a corporation organised and existing under the
laws of the State of New Jersey, USA, of Quaker Tower, 321 North Clark Street,
Chicago, Illinois, USA ("Quaker"); and
(2) DALGETY PLC, (a company incorporated in England and Wales with registered
number 19739) whose registered office is at 100 George Street, London W1H 5RH,
England (the "Purchaser").
WHEREAS:
(A) Quaker is the parent corporation (direct or indirect) of those corporate
entities whose names are set out in column 1 of Part I of Schedule 7 (together
with Quaker, the "Share Vendors") and in column 1 of Part II of Schedule 7
(together, the "Asset Vendors") (the Asset Vendors and the Share Vendors being
collectively the "Vendors"). The Share Vendors are the owners of the entire
issued share capitals of the Companies.
(B) The Asset Vendors, the Companies and the Subsidiaries together carry on
the entire business in Europe of Quaker of the manufacture and sale of cat and
dog food and related products (including cat litter) (the "Business").
(C) Quaker has agreed to sell, or procure the sale of, and the Purchaser has
agreed to purchase, or procure the purchase of, the Business on the terms and
subject to the conditions set out in this Agreement, such sale and purchase to
be effected by way of:
(1) a sale of the Asset Businesses as going concerns by the Asset Vendors; and
(2) a sale of the Shares by the Share Vendors.
IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 The following provisions shall have effect for the interpretation of this
Agreement.
1.2 The following words and expressions shall, unless the context otherwise
requires, have the following meanings:
"Accounts Date" 30th June 1994;
"Adjusted Current Invested Capital" - an amount equal to the aggregate value of
debtors, stock and prepaid expenses, other receivables (to the extent not
otherwise included in the value of debtors), sums due from employees,
miscellaneous investments and non-current receivables, in each case of the
Business as at the Completion Date, less the aggregate value of creditors and
accruals for bonuses and profit sharing and other accrued liabilities, in each
case of the Business as at the Completion Date, as determined or agreed in
accordance with Clause 11;
"Adjusted Current Invested capital Statement" - the state of Adjusted Current
Invested Capital to be prepared in accordance with Clause 11.3:
"Agreed Form" - in relation to a document, in the form agreed between the
parties on or prior to the date hereof and for the purposes of identification
signed on their behalf;
"Asset Businesses" - the businesses forming part of the Business which are
carried on by the Asset Vendors in Europe comprising, inter alia, the Assets
and the following functions:
Finance, Management information Services, Human Resources, Commercial
Logistics, Offices and Administrative Services and Sales,
carried on by the Asset Vendors insofar as those functions relate directly to
the Business or (other than in relation to Quaker Italy) relate to both the
business and any other business(es) of the Asset Vendors and which are carried
out by the persons set out in the list in the Agreed form headed "Assumed
employees";
"Assets" - the Goodwill, Books and Records, benefit and burden of the
Contracts, Debtors, Intellectual Property, Fixed Plant, Loose Plant,
Properties, benefit and burden of the Shared Contracts and Stock, together with
the benefit of all insurance policies of the Asset Vendors prior to Completion
insofar as they relate to other Assets (but save to the extent that such
benefits relate to Assets which have been replaced or losses which have been
made good prior to Completion), all other assets and rights primarily used in
or for the purposes of the Asset Businesses and the benefit of any claims
primarily relating to the Asset Businesses, other than the Excluded Assets, but
excluding any such items disposed of in the ordinary course of business prior
to Completion;
"associated company" - has the meaning set out in section 416 et seq. T.A.;
"Assumed Employees: - those employees primarily engaged in the Asset Businesses
including (save in the case of Quaker Italy) those employees engaged in shared
functions as at Completion together with any other person to whom the
Regulations apply in connection with the sale of the Asset Businesses
hereunder, the names of such employees at 30th November 1994 being set out in
the list in the Agreed Form;
"Books and Records" - all books and records of the Asset Vendors relating
exclusively to the Asset Businesses, together with copies of such other books
and records as are used to run the Asset Businesses, including without
limitation employee records relating to the Assumed Employees, all documents
and other material (including all forms of computer or machine readable
material) containing or relating to information used to run the Asset
Businesses (whether or not confidential and in whatever form held) including
all formulae, designs, specifications, drawings, data, manuals and instructions
and all customer lists, marketing information, correspondence and files;
"business day" - any day on which banks in London and in New York are generally
open for business;
"CAA" - the Capital Allowances Act 1990;
"Companies" - the companies details of which are set out in Schedule 1 which
expression shall, for the purposes of Schedule 3, include the Subsidiaries;
"Completion" - the completion of the sale and purchase of the Shares and the
Asset Businesses in accordance with Clause 6;
"Completion Date" - the date on which Completion occurs;
"Conditions" - the conditions set out in Clause 3.1 of this Agreement;
"Consideration" - the consideration for the Shares and the Asset Businesses as
specified in Clause 4;
"Contracts" - all contracts, agreements and arrangements (together with
collective labour agreements insofar as they relate to the Assumed Employees
(which are wholly or partly unperformed at the completion Date exclusively
relating to the Asset Businesses and to which any Asset Vendor is a party or
the benefit and burden of which is held in trust for or has been assigned to
any such person, including (without limitation) those identified in the list in
the Agreed Form headed "Contracts and Shared Contracts";
"Covenants" - the convenants and undertakings given by the Vendor's Group
pursuant to Clause 7;
"Creditors" - those amounts owed by the Asset Vendors in connection with the
Asset Business as at the Completion Date in respect of trade bills payable and
trade creditors;
"Debtors" - those amounts owed to the Asset Vendors in connection with the
Asset Businesses as at the Completion Date in respect of trade debtors and
trade bills receivable;
"Deed of Tax Indemnity" - a deed of tax indemnity in the form set out in
Schedule 4;
"Disclosure Letter" - a letter of today's date together with the attachments
thereto addressed by Quaker to the Purchaser disclosing exceptions to the
Warranties;
"distribution" - a distribution as defined by Sections 209 to 211 (inclusive)
T.A. and Section 418 T.A.;
"Encumbrance" - any mortgage, charge (whether fixed or floating), pledge, lien,
security interest or other third party right or interest (legal or equitable)
over or in respect of the relevant asset, security or right;
"Environmental Warranties" - the Warranties set out in Part J of Schedule 3;
"Excluded Assets" - all assets or rights and the benefit of any claims of the
Asset Vendors consisting of or comprised in the following:
(a) cash in hand and at bank;
(b) all tax refunds, tax prepayments and insurance prepayments, all other
claims and rights to recovery not primarily relating to the Asset Businesses,
all claims and rights to recovery in respect of litigation prior to Completion,
and the benefit of all insurance policies of the Asset Businesses save insofar
as they relate to Assets;
(c) any interest whatsoever in the "Quaker", "OTA" or "Chiari and Forti" trade
names or trademarks, Quaker's corporate device or any other design element or
logo primarily associated with any such trade names or trademarks;
(d) the freehold property at Via Monte Rosa 21, Milan;
(e) all insurance policies and all rights and benefits thereunder relating to
periods after Completion;
(f) all statutory books and statutory records of the Asset Vendors other than
the Books and Records; and
(g) all assets of the Asset Vendors relating primarily to businesses of the
Asset Vendors other than the Asset Businesses;
"Excluded Liabilities" - the following liabilities of the Asset Vendors of the
Business at the Completion Date:
(a) all liabilities of the Asset Vendors to Tax;
(b) any intercompany debt or other liability or obligation between any Asset
Vendor and any other member of the Vendor's Group other than in the ordinary
course of trading;
(c) all amounts owed to any third party by way of overdraft or other
borrowings;
(d) all product liability claims relating to products manufactured by the
Asset Vendors prior to the Completion Date, but only to the extent that such
claims do not arise from the storage or handling of such products after
Completion; and
(e) all liabilities of Asset Vendors which do not relate primarily to the
asset Businesses;
"Financial Statements" - the packs of financial statements in the Agreed Form
in relation to the business as at the Accounts Date;
"Fixed Plant" - the fixed plant, machinery, equipment and tooling used or
intended for use primarily in the Asset Businesses attached or fixed to the
Properties;
"Goodwill" - the goodwill relating primarily to the Asset Business (but for the
avoidance of doubt excluding the goodwill attaching to any Excluded Assets)
together with the exclusive right for the Members of the Purchaser's Group to
represent themselves as carrying on the Asset Businesses in succession to the
Asset Vendors;
"holding company" - has the meaning set out in Section 736 Companies Act 1985;
"Intellectual Property" - the registered intellectual property (and
applications for registration of intellectual property) in the list in the
Agreed Form headed Intellectual Property together with:
(a) all inventions of the Asset Vendors used in the Asset Businesses whether
or not capable of protection by patent or registration;
(b) all know-how of the Asset Vendors used in the Asset Businesses;
(c) all copyright, moral rights, design rights, unregistered trade marks, and
all other intellectual property rights of the asset Vendors used in the Asset
Businesses; and
(d) all registered trade marks (and applications for registration of the
share) of the Vendors which are identical or confusingly similar to any
registered trade marks in the list headed Intellectual Property referred to
above, irrespective of the product or territory within the Restricted Territory
for which such mark is registered or applied for,
and all rights of the Asset Vendors against third parties in respect of any of
the foregoing but excluding (a) any rights in the "Quaker", "OTA" and "Chiari &
Forti" names and Quaker, OTA and/or Chiari & Forti logos and (b) Licenced
Intellectual Property;
"Intellectual Property Assignments" - the assignments of Intellectual Property
in the Agreed Form;
"IPRs" - patents, trade secrets, trade marks, names or signs, designs (whether
registered or unregistered and applications for any such right), copyright,
know-how, marketing information and other intellectual property and related
rights having similar effect but in each case only in the Restricted Territory;
"Liabilities" - all liabilities of the Asset Vendors relating primarily to the
Asset Businesses as at Completion including the Creditors but excluding the
Excluded Liabilities;
"Licensed Intellectual Property" - all IPRs (excluding trade marks) relating to
the patents, copyright in software, know how, trade secrets and other
confidential information used in the manufacture and/or distribution of
products of the Asset Businesses or of the businesses of the Companies as at
Completion or in the 6 month period prior to Completion but which are or may be
also used or have been used in the six month period prior to Completion in any
other business of the Vendor's Group as at Completion;
"Loose Plant" - the moveable plant, machinery, equipment, tooling, computers,
furniture, fittings, spare parts, maintenance equipment, computer and
communication equipment and vehicles primarily used or intended for use in the
Asset Businesses but excluding any such items disposed of by the Asset Vendors
in the ordinary course of business prior to Completion;
"Market Financial Statements" - the strong brand reporting statements and the
pet food division management reporting statements in the Agreed Form in
relation to the Business as at the Accounts Date;
"Properties" - the properties described in Schedule 5 or any part or parts
thereof and Property shall mean any one of them;
"Purchaser's Accountant" - Price Waterhouse;
"Purchaser's Group" - those subsidiary undertakings of the Purchaser whose
names are set out in column 2 of Schedule 7 and "Member of the Purchaser's
Group" shall be construed accordingly;
"Purchaser's Solicitors" - Slaughter and May, 35 Basinghall Street, London EC2V
5DB;
"Quaker Italy" - Quaker Chiari & Forti S.p.A.
"Regulations" - all regulations issued by relevant Member States giving effect
to European Commission Directive 77/187/EEC of 14th February 1977;
"Restricted Business" - the business of the manufacture and sale of cat and dog
food products and cat litter;
"Restricted Products" - cat and dog food products and cat litter;
"Restricted Territory" - within each of the countries, territories and areas
shown in Schedule 10;
"Retained Businesses" - the businesses of the Retained Group immediately
following Completion;
"Retained Group" - together Quaker Oats Limited, Quaker Oats B.V., Quaker Italy
and Quaker Oats Beteiligungsgesellschaft mbH together with those entities to
which the non-pet foods businesses of Quaker France S.A., OTA A/S and Svenska
OTA A/S are transferred prior to Completion in accordance with Clause 26.3;
"Shares" - the issued shares in the capital of each of the Companies specified
in Schedule 1;
"Shared Contracts" - those contracts, agreements and arrangements which are
wholly or partly unperformed at the Completion Date which relate in part to the
Asset Businesses and in part to other businesses of the Vendor's Group
including (without limitation) those set out in the list in the Agreed Form
headed "Contracts and Shared Contracts" but excluding such contracts,
agreements and arrangements of Quaker Italy;
"Standard Allocation Rationale" - the methodology used by the Business in each
relevant jurisdiction in allocating values of each of the line items included
in the Financial Statements (other than Stock) to those of the Business and the
Retained Businesses;
"Stock" - the stock in trade, ingredients, raw materials, packaging materials,
promotional materials, work in progress and finished goods acquired or produced
exclusively in the course of the Asset Businesses at the Properties or
elsewhere as at Completion;
"Stock Units" - the stock units in the Purchaser to be issued pursuant to the
Underwriting Agreement;
"Subsidiary" - has the meaning set out in Section 736 Companies Act 1985;
"Subsidiary" - a subsidiary or subsidiary undertaking of any Company;
"subsidiary undertaking" - has the meaning set out in Section 258 Companies Act
1985 as amended by Companies Act 1989;
"Tax" - any tax, and any duty, impost, levy or charge in the nature of tax,
(including without limitation social security contributions) whether domestic
or foreign, and any fine, penalty or interest connected therewith;
"Tax Authority" - any relevant authority of any relevant country for the
purposes of Tax;
"T.A." - the Income and Corporation Taxes Act 1988;
"Transitional Services Agreements" - the agreements to be entered into at
Completion pursuant to, and incorporating the terms set out in, the Framework
Agreement (being the framework agreement between the parties hereto of even
date in the Agreed Form) in relation to certain services to be provided
thereunder;
"Underwriting Agreement" - the underwriting agreement in the Agreed Form;
"Value Added Tax" or "VAT" - any Tax charged under the V.A.T.A. or its
equivalent in a foreign jurisdiction;
"V.A.T.A." - the Value Added Tax Act 1994;
"Vendor's Accountants" - Arthur Andersen & Company;
"Vendor's Group" - Quaker and its subsidiaries, subsidiary undertakings and
associated companies from time to time but excluding the Companies and the
Subsidiaries;
"Vendor's Scheme" - as defined in Schedule 6;
"Vendors" Scheme" - as defined in Schedule 6;
"Vendors" Solicitors" - Ashurst Morris Crisp of Broadwalk House, 5 Appold
Street, London EC2A 2HA;
"Warranties" - the warranties set out in Schedule 3; and
"Wider Purchaser's Group" - the Purchaser and its subsidiaries, subsidiary
undertakings and associated companies from time to time.
1.3 References to "F.A." followed by a stated year mean the Finance Act of the
year.
1.4 Words, expressions and abbreviations defined in the Deed of Tax Indemnity
shall have the share meanings in this Agreement and Clause 1.2 of the Deed of
Tax Indemnity shall apply to this Agreement.
1.5 References to the parties hereto include the respective successors in
title to substantially the whole of their respective undertakings.
1.6 References to persons shall include bodies corporate and unincorporated,
associations, partnerships and individuals.
1.7 References to statutes or statutory provisions include references to any
orders or regulations made thereunder and references to any statute, provision,
order or regulation include references to that statute, provision, order or
regulation as amended, modified, re-enacted or replaced from time to time
before the date hereof (subject as otherwise expressly provided herein) and to
any previous statute, statutory provision, order or regulation amended,
modified, re-enacted or replaced by such statute, provision, order or
regulation before the date hereof.
1.8 Headings to clauses, sub-clauses and paragraphs and descriptive notes in
brackets relating to provisions of taxation statutes are for information only
and shall not form part of the operative provisions of this Agreement and shall
be ignored in construing the share.
1.9 References to Recitals, Clauses or Schedules are to recitals to, clauses
of schedules to this Agreement. The Recitals and Schedules form part of the
operative provisions of this Agreement and references to this Agreement shall,
unless the context otherwise requires, include references to the Recitals and
the Schedules.
1.10 Where any Warranty refers to the awareness of Quaker (or similar
qualification) Quaker shall be deemed to have only such awareness as it would
have at the date hereof after making reasonable enquiries into the subject
matter of that Warranty with each of the persons whose names are set out in
Schedule 9.
1.11 Share as otherwise specified, all references to dates and times shall be
deemed to be references to London times and dates. All payments to be made
pursuant to this Agreement shall be made in US$, save in respect of payments
pursuant to Schedule 6 which shall be made in the currency of the country in
question.
1.12 References to any English legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court, official, or any
legal concept or thing shall in respect of any jurisdiction other than England
be deemed to include what most nearly approximates in that jurisdiction to the
English legal term.
1.13 General words shall not be given a restrictive meaning by reason of the
fact that they are followed by particular examples intended to be embraced by
the general words.
2. SALE AND PURCHASE
2.1 Upon the terms and subject to the conditions of this Agreement and set out
in Schedule 7:
(a) Quaker shall sell or procure the sale of, as beneficial owner, and the
Purchaser shall purchase or procure the purchase of, all of the Shares, in each
case free from any Encumbrances and together with all accrued benefits and
rights attaching thereto Completion; and
(b) Quaker shall procure the sale of, as beneficial owner (save where Assets
are subject to retention of title provisions), and the Purchaser shall procure
the purchase of, the Asset Businesses and the Assets.
2.2 For the avoidance of doubt, nothing in this Agreement shall have the
effect of transferring any trade name or other intellectual property right
whatsoever in or including the words or the names "Quaker", "OTA" and "Chiari &
Forti" in any of their variations.
2.3 The Purchaser agrees to accept, assume and take over, or procure the
acceptance, assumption and taking over of the Liabilities with effect from
Completion.
2.4 Risk in, title to and possession and use of the Assets shall pass to the
relevant Member of the Purchaser's Group upon and with effect from Completion.
Quaker undertakes to maintain in place until completion all existing insurance
policies, or policies providing compatible levels of cover, relating to the
business, including those relating to the Asset Businesses and the assets of
the Companies and the Subsidiaries.
3. CONDITIONS
3.1. Completion of the purchase of the Business is conditional upon the
fulfillment of each of the Conditions as follows:
(a) the Purchaser having received by 30th November 1995 confirmation (actual
or deemed) from the European Commission pursuant to Articles 6, 8 or 10 of
Council Regulation 4064/89 of the European Communities that the acquisition of
the business (including any ancillary restrictions within the meaning of
Commission Notice 14/8/90) fulfills, without a requirement for material
modification or amendment thereto, the conditions of Article 2(2) of such
Regulation (and for these purposes, "material" shall mean of an extent such
that the party (or either of them) being required to accept the effect of such
modification or amendment can reasonably demonstrate that it would have a
material impact on the business or on the acquisition or sale of the Business
or on the existing businesses of the Vendor's Group or the Wider Purchaser's
Group);
(b) the passing at a duly convened and held general meeting of the Purchaser
of a resolution in the Agreed Form, inter alia, to approve the arrangements in
this Agreement, to increase the Purchaser's authorised share capital and grant
the directors of the Purchaser authority to allot shares, and to approve the
despatch of the provisional allotment letters in respect of the Stock Units;
(c) the Council of the International Stock Exchange of the United Kingdom and
the Republic of Ireland Limited (the "London Stock Exchange") agreeing to admit
the Stock Units to the Official List (subject only to allotment and listing)
and such admission becoming effective in accordance with paragraph 7.1 of the
Listing Rules thereof; and
(d) the Underwriting Agreement having become unconditional in all respects and
not having been terminated in accordance with its terms.
3.2 If the Conditions have not been fulfilled on or before 30th November 1995
the respective obligations of the parties hereunder shall cease and, except in
relation to any breach of any provision of this Agreement prior thereto,
neither party shall have any claim against the other party.
3.3 The Purchaser and Quaker shall use their respective reasonable endeavours
to procure, insofar as each is able, that the Conditions are satisfied as soon
as practicable after the date of this Agreement. Each of the Purchaser and
Quaker agrees to supply promptly to the other (subject to an appropriate
undertaking as to confidentiality) all such information as the other may
reasonably request for the purposes of satisfying the Conditions.
4. CONSIDERATION
4.1 The Consideration shall be the aggregate of:
(a) US$700,000,000; plus or minus (as the case may be)
(b) the amount by which the Adjusted Current Invested Capital exceeds or falls
short of US $53,200,000, provided that no adjustment shall be made unless such
excess or shortfall amounts to US $3 million or more,
which sum shall be apportioned among the Shares, the Assets and the Covenants
as set out in Schedule 8.
4.2 Of the Consideration, US$700,000,000 (subject to Clause 6.6) shall be paid
on Completion in accordance with the provisions of paragraph (a) of Clause 6.5,
and the balance (if any) shall be satisfied in accordance with Clause 11.3.
4.3 The Consideration shall be paid by the Purchaser to Quaker and the receipt
of Quaker therefor shall constitute a good discharge to the Purchaser.
5. PERIOD PENDING COMPLETION
5.1 Quaker convenants with the Purchaser to procure that the Business is
conducted in the ordinary course, as theretofore conducted, between the date
hereof and Completion.
5.2 In particular, but without limitation to the generality of Clause 5.1, the
matters listed in Schedule 11 shall require the prior consent in writing of the
Purchaser. Quaker further undertakes with the Purchaser, insofar as the share
is within its power, to use all reasonable endeavours to procure that, save for
changes arising in the ordinary course of business, the Warranties continue to
be correct at all times up to and including Completion and, as regards that
part of the Business carried on by Quaker Oats B.V., the Dutch Completion.
5.3 For the avoidance of doubt, Quaker shall have no liability in the event
that any of the Warranties shall become incorrect at any time up to and
including Completion, save to the extent that Quaker fails to comply with its
undertaking in Clause 5.2 or as specifically provided in Clause 13.1.
5.4 Quaker will procure that, with effect from a date no later than
Completion, the Business of Quaker Latz GmbH and Orata GmbH shall be merged
into Quaker Beteiligungsgesellschaft mbh. The Purchaser acknowledges that the
provisions of this Clause 5 shall not apply to such merger.
6. COMPLETION
6.1 Completion shall take place not later than 10:00 a.m. on the later of 24th
April 1995 and the twenty-first business day following the date when the last
of the Conditions shall have been fulfilled or waived, at the offices of
Quaker's lawyers in each relevant jurisdiction or at such other places as the
parties may agree. All matters effected at Completion shall be deemed to take
place simultaneously and no delivery of any document shall be deemed to have
taken place until all transactions and deliveries of documents shall have been
effected.
6.2 On Completion, Quaker shall deliver to or procure the delivery to or make
available to the Purchaser:
(a) (i) transfers in common form relating to all the Deferred Shares in
Quaker Limited duly executed in favour of the Purchaser, or as it may direct,
together with the share certificates relating to such Deferred Shares; and
(ii) share warrants relating to all the Ordinary Shares in Quaker Limited;
(b) ordres de mouvements in respect of the Shares in Quaker France S.A. duly
executed in favour of the Purchaser, or as it may direct;
(c) share certificates relating to the Shares of OTA A/S duly endorsed by
Grocery International Holdings Inc;
(d) the Books and Records, the books and records, lists of customers and
suppliers, books of account, financial and other records in whatsoever medium
stored of each of the Companies and the Subsidiaries;
(e) the Loose Plant and all other Assets hereby agreed to be sold title to
which can be transferred by delivery;
(f) effective written resignations in the Agreed Forms executed as their
respective deeds of such of the directors and the secretaries (where relevant)
of the Companies and the Subsidiaries as the Purchaser may notify to Quaker not
less than 10 business days prior to Completion from their offices as director
or secretary of the Companies or the Subsidiaries;
(g) the written resignations of the auditors of the Companies and of each of
the Subsidiaries together, where relevant, with a letter from the auditors of
the relevant Company or Subsidiary containing a statement in accordance with
s.394 of the Companies Act 1985 or the local equivalent (if appropriate);
(h) the Intellectual Property Assignments duly executed in favour of the
relevant Members of the Purchaser's Group;
(i) the Common Seals (where applicable), Certificates of Incorporation and
Statutory Books, Share Certificate Books, cheque books and all copies of
constitutional documents of the Companies and the Subsidiaries;
(j) the Transitional Services Agreements duly executed by the relevant Members
of the Vendor's Group;
(k) the Deed of Tax Indemnity duly executed by Quaker;
(l) all title deeds and other relevant documents relating to the Properties
necessary to prove the title of the relevant Asset Vendor, company or
Subsidiary;
(m) duly executed transfers (where appropriate) of each share in the
Subsidiaries not registered in the name of the Companies or the Subsidiaries in
favour of the Purchaser, or as it may direct;
(n) share certificates (duly endorsed where appropriate) relating in all of
the issued shares of each of the Subsidiaries; and
(o) a certified copy of the minutes of a meeting of the Board of Directors of
Quaker authorising the execution of this Agreement and approving all matters in
connection with the execution of this Agreement.
6.3 At Completion (and prior to the taking effect of the resignations of the
directors referred to in Clause 6.2(f)) Quaker shall procure the passing of
Board or Shareholder Resolutions of the companies and each of the Subsidiaries:
(a) sanctioning for registration (subject where necessary to due stamping) the
transfers in respect of the Shares and any shares to which Clause 6.2 (m)
refers;
(b) appointing such persons as the Purchaser may nominate to be the directors
and secretary (where applicable) of the Companies and the Subsidiaries;
(c) revoking all mandates to bankers and giving authority in favour of the
directors appointed under paragraph (b) above or such other persons as the
Purchaser may nominate to operate the bank accounts thereof;
(d) resolving that the registered office of each of the Companies and that of
each of the Subsidiaries be changed to such address as the Purchaser may notify
to Quaker not less than 10 days prior to Completion; and
(e) changing the accounting reference date of each of the Companies and that
of each of the Subsidiaries to 30th June.
6.4 The parties shall procure that, at or as soon as practicable following
Completion, the names of those Companies and Subsidiaries which include
"Quaker" in their names are changed to such names (not including the name
"Quaker" or "OTA") as the Purchaser may reasonable notify to Quaker not less
than 10 days prior to Completion.
6.5 Upon compliance by Quaker with the provisions of Clauses 6.2 and 6.3 the
Purchaser shall:
(a) (subject to Clauses 6.6 and 6.7) satisfy that part of the Consideration
due on Completion by (I) the transfer by Completion of the sum of
US$700,000,000 to an account at such branch in London of such bank in New York
as Quaker and the Purchaser shall agree not less than 5 business days prior to
completion, (ii) the instruction by the Purchaser to such bank to transfer the
sum of US$700,000,000 to such account at that branch as Quaker shall have
notified to the Purchaser not less than 5 business days prior to Completion and
(iii) Quaker receiving confirmation from such bank that such sum is held to the
account of Quaker in immediately available funds;
(b) deliver to Quaker duly executed counterparts of the Intellectual Property
Assignments, the Transitional Services Agreements and the Deed of Tax
Indemnity; and
(c) deliver to Quaker a certified copy of the minutes of a meeting of the
Board of Directors of the Purchaser authorising the execution of this Agreement
and approving all matters in connection with the execution of this Agreement.
6.6 The parties agree to use all reasonable endeavours to procure that the
consultation and notification processes referred to in Clause 12.6(a) are
completed as soon as practicable and in any event within six months of
Completion. If such processes have not been completed by the due date for
Completion, the parties agree that:
(a) Dutch Completion shall be delayed and excluded from Completion on such
date (but without prejudice to Completion of the sale and purchase of the
remainder of the Business, and the provisions of Clause 6 shall apply
accordingly);
(b) on such due date for Completion, the Purchaser shall pay, or procure the
payment of, a sum equal to the Dutch Consideration into the Escrow Account; and
(c) Dutch Completion shall take place not later than the earlier of:
(i) 10:00 a.m. London time on the fifth business day following the date on
which the processes referred to in Clause 12.6(a) shall have been completed
(which shall be the date on which the relevant Works Council or other
representative body shall have advised positively with respect to the
transaction hereby contemplated or has forfeited or waived its right to appeal
with respect to the decision of the parties to proceed, as the case may be);
and
(ii) six months from the Completion Date (or the next following business day
if such day is not a business day),
and the relevant provisions of Clause 6 shall apply accordingly.
6.7 the parties shall instruct the bank (the "Bank") at which the Escrow
Account is held to arrange payment on Dutch Completion of the Dutch
Consideration to Quaker and payment of interest accrued thereon to the
Purchaser and, upon delivery of the Assets in the Netherlands of Quaker Oats
B.V., Quaker is hereby irrevocably authorised by the Purchaser to instruct the
Bank accordingly on its behalf. For the purposes of this Clause 6.7, the
following terms shall have the following meanings:
"Dutch Completion" - completion of the sale and purchase of that part of the
Business carried on in the Netherlands by Quaker Oats B.V.;
"Dutch Consideration" - US$124,000,000 (being equal to the initial
Consideration payable in respect of that part of the business which is carried
on in the Netherlands by Quaker Oats B.V.); and
"Escrow Account" - an interest bearing account with the bank specified under
Clause 6.5 (a) in the joint names of the parties.
6.8 At Completion:
(a) Quaker Italy (and Quaker shall so procure) and such person as the
Purchaser shall procure shall enter into a notarial deed or deeds conveying
ownership of the Assets and Liabilities of Quaker Italy and assigning the
leasehold office space at Via Monte Rosa 21, Milan, to the Purchaser or as it
direct;
(b) the parties shall deliver a Deed of Title being the notarial true copy of
the deed of transfer of the Properties in the Netherlands, duly executed by
Quaker Oats B.V. and such person as the Purchaser may procure, on which the
land register ("Kadastu") has marked its registration of such transfer; and
(c) the parties shall enter into such other deeds and documents as may be
reasonably necessary and reasonably practicable at Completion to vest in the
Purchaser's Group the full legal and beneficial interest to the Assets (save as
otherwise contemplated by this Agreement).
6.9.1 Quaker shall procure that, at completion, all intercompany debts or
other liabilities and obligations between any of the Companies or Subsidiaries
and any other member of the Vendor's Group, other than those arising in the
ordinary course of trading, shall be discharged.
6.9.2 Prior to Completion, Quaker shall be entitled to procure that any
amounts owing to any Member of the Vendor's Group by the Companies and the
Subsidiaries shall be repaid. To the extent that, at Completion, the Companies
and the Subsidiaries shall have an aggregate cash balance in excess of the
aggregate of their bank debt and accrued tax liability in respect of profits of
the period since 30 June 1994 at that date, the Purchaser shall, immediately
following Completion, pay to Quaker an amount equal to such excess. To the
extent that such aggregate cash balance is less than the aggregate of such bank
debt and such accrued tax liability at that date, Quaker shall, immediately
following Completion, pay to the Purchaser an amount equal to such deficit.
6.9.3 A liability for tax shall be regarded as accruing prior to Completion
for the purposes of Clause 6.9.2 above to the extent that such liability would
have been shown as tax payable (and not for the avoidance of doubt deferred
tax) in statutory accounts drawn up at the Completion Date for the period from
the Accounts Date to Completion.
6.10 At Completion the Vendor shall grant or shall procure that any relevant
members of the Vendor's Group shall grant to the Purchaser's Group a royalty
free perpetual irrevocable exclusive licence (with the right to assign or
sublicence) to use in respect of the Business in the Restricted Territory the
Licenced Intellectual Property. If reasonably requested by the Purchaser,
Quaker shall, or shall procure, at the Purchaser's cost, that the relevant
Member of the Vendor's Group shall execute all such documents as the Purchaser
may reasonable require give effect to this licence in any parts of the
restricted Territory.
6.11 Pending the registration of the Purchaser as registered proprietor of the
trade marks included in the Intellectual Property, the Vendors will and/or will
procure that any member of the Vendor's Group which is registered as proprietor
of the said trade marks or is the applicant for registration of such trademarks
will:
(i) forward to the Purchaser or Purchaser's agents all correspondence whether
from the Trade Marks Registries in any part of the relevant territory or
otherwise relating to the relevant trade marks;
(ii) lend or continue to lend (as necessary) their respective names to any
existing or future oppositions or proceedings for infringement which the
Purchaser may require to be brought against any person wrongfully using the
said trade marks, subject to the Purchaser indemnifying and keeping harmless
the Vendors or any member of the Vendor's Group in respect of any costs or
other liability which any of them may incur or which may arise out of or in
relation to future proceedings and any costs or other liability which may arise
out of or in relation to existing proceedings after Completion where the
Purchaser has asked for such continued assistance; and
(iii) promptly notify the Purchaser of any litigation, proceedings,
investigation or fact of which the Vendors become aware that could adversely
affect the trade marks included in the Intellectual Property.
6.12 At Completion, the Purchaser shall grant to such Member of the Vendor's
Group as Quaker may specify a royalty free, perpetual, irrevocable, exclusive
licence (with the right to assign or sub-licence) to use the patent owned by
Quaker France S.A. under application numbers 0088573 and 0088574, both filed on
28th February 1983, in any business of the Vendor's Group other than the
Business anywhere in the restricted Territory. If reasonable requested by
Quaker, the Purchaser shall execute at Quaker's cost all such documents as
Quaker may reasonably require to give effect to this Clause 6.12.
6.13 As soon as practicable after Completion, Quaker shall effect or procure
the cancellation or withdrawal of all trademarks and trade mark applications
including the words "Ken-L" which are registered or applied for in the name of
a member of the Vendor's Group in the Restricted Territory.
6.14 Forthwith following the date of this Agreement, the Purchaser shall notify
the French Treasury, pursuant to Article 11 of French Decree No. 89-938 of 29th
December 1989 as modified by French Decree No. 90-58 of 15th January 1990, of
the proposed sale of Quaker France S.A. Each party shall procure that prior to
Completion the Purchaser receives an acknowledgment from the French Treasury
(Direction du Tresor) that such acquisition is considered to be an European
Union direct investment in France or that all appropriate notice periods are
satisfied.
7. RESTRICTIONS
7.1 Subject to Clauses 7.3 and 7.5, Quaker hereby undertakes to procure that
(except as otherwise agreed in writing with the Purchaser) no member of the
Vendor's Group will either solely or jointly with or on behalf of any other
person:
(a) for a period of four years from the Completion Date carry on or be engaged
or concerned or interested directly or indirectly within the Restricted
Territory in any Restricted Business;
(b) for a period of four years from the Completion Date directly or indirectly
solicit or accept (either on its own account or as the agent of any other
person) the custom within the Restricted Territory of any person in respect of
the sale of Restricted Products such person having been a customer of the
Business in respect of such goods or services during the twelve month period
prior to the Completion Date;
(c) during the period of two years (in the case of Commercial Directors,
Marketing Managers, Sales Managers currently reporting to Commercial Directors,
R&D Directors, Senior R&D Project Leaders and Vice-Presidents of such functions
and the President of the Business) or one year (in the case of all other
employees) from the Completion Date Solicit or endeavour to entice any person
who was employed by any Company or Subsidiary at the completion Date or any
Assumed Employee to leave the service or employment of any member of the Wider
Purchaser's Group;
(d) without limitation to the provisions of this clause, in relation to any
restricted business, for a period of four years from the Completion Date, use
or assign or licence to any third party the use of any trade or business name,
trade mark or service mark or sign used by or in the Business at any time
during the two years before Completion or any name, mark or sign intended or
likely to be confused with it, including (without limitation) the use of name
"Quaker", "OTA" or "Chiari & Forti", in each case within the Restricted
Territory;
(e) it is acknowledged by the parties that the Vendor's Group will, after
Completion, hold certain trademark registrations or applications in the
Restricted Territory for restricted Products and that such trademarks are
derived from Quaker's pet food business in the United States which are not to
be transferred pursuant to this Agreement. Quaker undertakes that it will not
and will procure that no member of the Vendor's Group will sell any trademarks
or applications in respect of Restricted Products to any third party save as
part of a disposal of its United States pet food business;
(f) for a period of 4 years from the Completion Date register or procure
registration of any trade marks including the work "Kennel" or any words
confusingly similar thereto in the Restricted Territory; or
(g) Knowingly assist any other person to do any of the foregoing things.
7.2 Quaker further undertakes to and with the Purchaser to procure that
(except with the prior written consent of the Purchaser) no member of the
Vendor's Group shall after the date hereof, save as required by law or the
rules of any governmental or regulatory organisation or save as may be
reasonably required in connection with the ongoing businesses of the Vendor's
Group, use or reveal to any person any of the trade secrets, secret or
confidential operations, processes or dealings or any other confidential
information relating primarily to the Business including (without limitation)
sales targets and statistics, market share statistics, surveys and reports and
pricing information relating to sales and purchases until such time as the
share falls into the public domain otherwise than by reason of a breach of this
undertaking after the date hereof.
7.3 Nothing in this Clause 7 shall in any way prevent Quaker or any member of
the Vendor's Group from:
(a) holding or being interested in up to but not exceeding 10 per cent. of the
issued share or loan capital of any company (or any amount of such issued share
or loan capital carrying in aggregate not more than 10 per cent. of the votes
which could be cast at a general meeting of such company); or
(b) acquiring or being or becoming concerned or interested in the share
capital of any company or group of companies or in any business (or canvassing
or soliciting orders for the sale of any Restricted Products in respect of the
business of the share) if a part of the business of such company or group of
companies or such business which is not a material part of the business of such
company or group or business is a Restricted Business or if Quaker or the
member of Vendor's Group undertakes to sell within a reasonable period such
part of such company or group of companies or business; or
(c) employing any Assumed Employee or any employee of any of the Companies or
the Subsidiaries who responds to advertisements placed by or on behalf of any
member of the Vendor's Group where such advertisements have been placed
generally and have not been specifically aimed at any such employee.
7.4 For the purposes of paragraph (b) of Clause 7.3, a part of the business of
any company or any group of companies or business shall be deemed to be
material if the turnover of such part for the most recent financial year for
which audited accounts have been published exceeds either (a) $50 million
(calculated on the basis of exchange rates prevailing at the date of such
accounts) or (b) 10 per cent. of the turnover for such financial year of the
business or group of businesses of the company or group of companies or
business in which such part is comprised.
7.5 For the avoidance of doubt, it is acknowledged by the parties hereto that
nothing in this Agreement shall in any way prevent Quaker or any other member
of the Vendor's Group from carrying on a pet food and related products
business, or using any IPRs not exclusively used in connection with the Asset
Businesses, in the United States or anywhere else outside the Restricted
Territory.
7.6 Each Covenant and/or undertaking contained in this Clause 7 shall be
construed as a separate covenant and/or undertaking and if one or more of the
covenants and/or undertakings contained in this Clause 7 is held to be against
the public interest or unlawful or in any way an unreasonable restraint of
trade the remaining convenants and/or undertakings shall continue to bind the
Vendor's Group.
7.7 No provision of this Agreement, by virtue of which this Agreement is
subject to registration (if such be the case) under the Restrictive Trade
Practices Act 1976, shall take effect until the day after particulars of this
Agreement have been furnished to the Director General of Fair Trading pursuant
to Section 24 of that Act. For this purpose the expression "this Agreement"
includes any agreement or arrangement of which this Agreement forms part and
which is registrable or by virtue of which this Agreement is registrable.
8. LIABILITIES AND EXCLUDED LIABILITIES
8.1 The Purchaser's Group shall, and the Purchaser undertakes to the Vendors
to procure that the relevant Member of the Purchaser's Group shall:
(a) assume liability for the Liabilities; and
(b) pay, satisfy and discharge, in accordance with their terms, all debts,
liabilities and obligations incurred by the Purchaser's Group in connection
with the Asset businesses and the ownership of the Assets after Completion,
and with effect from Completion indemnify the vendors in respect thereof and
against any and all obligations, debts, costs, claims, demands and expenses
arising therefrom, or in respect of each grant given by a public authority to
any Asset Vendor any and all obligations, debts, costs, claims, demands and
expenses resulting from any act or omission of any Member of the Wider
Purchaser's Group otherwise than in the ordinary course of business after
Completion.
8.2 The vendors shall (subject to the provisions of the Transitional Services
Agreements insofar as the procedures for payment, satisfaction and discharge
are concerned) pay, satisfy and discharge the Excluded Liabilities in
accordance with their terms and indemnify the Purchaser in respect thereof and
against any and all obligations, debts, costs, claims, demands and expenses
arising therefrom.
9. DEBTORS
9.1 At any time after Completion, as and when required by the Purchaser,
Quaker shall deliver to the Purchaser or as it may direct the assignments of
such Debtors as the Purchaser may request. Quaker shall be entitled to deliver
from time to time in its discretion and with the consent of the Purchaser (such
consent not to be unreasonably withheld) assignments of such Debtors to the
Purchaser or as it may direct as Quaker may require.
9.2 Notwithstanding clause 9.1, Quaker undertakes to hold on trust for the
benefit of the Purchaser any Debtors received by it and pay the share to the
Purchaser as soon as is reasonably practicable after the receipt thereof.
10. CONTRACTS
10.1 If any of the Contracts or the Shared Contracts cannot be transferred to
the relevant Members of the Purchaser's Group at Completion without the consent
of a third party, Quaker shall procure that the relevant Asset Vendor and the
Purchaser shall procure that the relevant Member of the Purchaser's Group shall
use its respective reasonable endeavours to obtain such consent.
10.2 In any case where the consent referred to in Clause 10.1 is refused or
otherwise not obtained and until it is obtained or where any of the Contracts
or the Shared Contracts are incapable of transfer by assignment or by other
means to the Purchaser's Group:
(a) Quaker shall procure that the relevant Asset Vendor shall hold the
Contracts and the Shared Contracts and any monies, goods or other benefits
received thereunder as agent of and trustee for the relevant Member of the
Purchaser's Group and shall as soon as reasonably practicable following receipt
of the share account for and pay or deliver to such Member such monies, goods
and other benefits;
(b) the Purchaser shall procure that the relevant Member of the Purchaser's
Group shall perform the Contracts and Shared Contracts in accordance with their
terms and conditions as sub-contractor to the relevant Asset Vendor provided
that sub-contracting is permissible under the terms of the Contract or Shared
Contract in question and, where sub-contracting is not permissible, the
Purchaser shall procure that the relevant Member of the Purchaser's Group shall
perform the Contracts and the Shared Contracts in accordance with their terms
and conditions as agent for the relevant Asset Vendor and, in each case, the
Purchaser shall indemnify and keep indemnified the relevant Asset Vendor
against all reasonable costs, claims and damages in respect thereof. If such
Contract or Shared Contract does not permit sub-contracting or agency the
parties will make such other arrangements between themselves as may be
permissible to implement as far as possible the effective transfer of the
benefit and burden of the Contract or Shared Contract to the relevant Member of
the Purchaser's Group; and
(c) Quaker shall procure that the Asset Vendors shall give all reasonable
assistance to the Purchaser's Group at the cost of the Purchaser's Group to
enable it to enforce the rights of the Asset Vendors under the Contracts and
the Shared Contracts and shall at all times act with regard to the Contracts
and the Shared Contracts in accordance with the Purchaser's reasonable
instructions from time to time and, in each case, the Purchaser shall indemnify
and keep indemnified the relevant Asset Vendor against all reasonable costs,
claims and damages in respect thereof.
11. COMPLETION ACCOUNTS
11.1 The parties shall procure that, following Completion, statements of
accounts of the Companies, the Subsidiaries and the Retained Group shall be
prepared as follows:
(a) in accordance with Clause 11.3 for the purposes of determining the
adjustment (if any) to be made to the Consideration pursuant to Clause 4.1 (the
"Adjusted Current Invested Capital Statement"); and
(b) in accordance with Clause 11.4 for the purposes of:
(i) ascertaining whether the assets and liabilities of the Business and the
Retained businesses at Completion are, respectively, Assets or Excluded Assets
or Liabilities or Excluded Liabilities; and
(ii) to the extent that any asset or liability relates in part to the business
and in part to the Retained Businesses and is not severable, agreeing upon an
allocation of such asset or liability between the Business and the Retained
Businesses and accordingly agreeing whether such asset is an asset of the
Business or the Retained Businesses or such liability is a liability of the
Business or the Retained Businesses (the "Completion Statement").
11.2 For the purposes of preparing the Adjusted Current Invested Capital
Statement and the Completion Statement:
(a) the parties shall procure that, as soon as practicable following
completion, the books of account of the Companies, the Subsidiaries and the
Retained Group shall be closed with effect from the Completion Date in
accordance with usual month-end procedures heretofore conducted by such
companies; and
(b) as near as practicable to Completion, Quaker shall procure that a physical
stock-take of the stock of the Business and the Retained Business is made.
11.3.1 As soon as practicable after Completion and in any event not later
than 30 days after the Completion Date, the Purchaser shall (save in relation
to the Business of Quaker Italy):
(a) prepare or procure the preparation of the Adjusted Current Invested
Capital Statement. The Adjusted Current Invested Capital Statement shall be
prepared in accordance with US GAAP and on a basis consistent with that used in
the preparation of the Financial Statements, using Standard Allocation
Rationale, save that Stock shall be valued on the basis of the physical stock-
take at cumulative quarterly average actual cost consistent with practice as at
30 June 1994; and
(b) shall deliver copies of the Adjusted Current Invested Capital Statement to
Quaker and the Vendor's Accountants.
11.3.2 Without prejudice to the generality of Clause 11.3.1:
(a) the Purchaser shall procure that representatives of Quaker and the
Vendor's Accountants are entitled to access to such financial and other
information, including access to staff, as they may reasonably require to
examine the accounts and working papers relating to the preparation of the
Adjusted Current Invested Capital Statement; and
(b) Quaker shall procure that representatives of the Purchaser and the
Purchaser's Accountants are entitled to be present at the stock take referred
to in Clause 11.2(b).
11.3.3 Within the 30 days following the delivery of the Adjusted Current
Invested Capital Statement to Quaker in accordance with Clause 11.3.1, Quaker
shall deliver a notice to the Purchaser either confirming its acceptance of the
share or stipulating points of dispute (with reasons attached) (and failure to
deliver such notice in accordance with this Clause 11.3.3 shall be deemed
conclusive evidence of acceptance by Quaker of the statements delivered by the
Purchaser).
11.3.4 If Quaker should notify the Purchaser in accordance with Clause
11.3.3 that there are points of dispute, then, in default of agreement with
regard to such points within 30 days of the Purchaser's receipt of the notice
by Quaker in accordance with Clause 11.3.3, each point remaining in dispute
shall be referred for determination by an independent firm of chartered
accountants agreed upon by the Purchaser and Quaker or, in the absence of
agreement within 45 days after the Purchaser's receipt of the notice by Quaker
in accordance with Clause 11.3.3, by such other firm of chartered accountants
as is nominated at the request of the Purchaser or Quaker by the President for
the time being of the Institute of Chartered Accountants in England and Wales
(or his duly appointed deputy).
11.3.5 In making any determination, any such firm of chartered accountants
shall act as experts and not as arbitrators and their decision shall, in the
absence of manifest error, be final and binding on the parties. The costs of
any referral to a firm of chartered accountants under Clause 11.3.4 shall be
borne by Quaker and the Purchaser in such proportions as such firm may
determine or, in the absence of such determination, in equal shares.
11.3.6 In the event that the Adjusted Current Invested Capital (agreed or
determined, as the case may be, as provided above) exceeds US$ 56,200,000 the
Purchaser shall pay to Quaker a sum in cash equal to the excess of the Invested
Capital over US$53,200,000, to be paid within seven days of the agreement or
determination of the Adjusted Current Invested Capital as provided in this
Clause 11.3.
11.3.7 In the event that the Adjusted Current Invested Capital (agreed or
determined, as the case may be, as provided above) falls short of US$
50,200,000 Quaker shall pay to the Purchaser a sum in cash equal to the
shortfall of the Adjusted Current Invested Capital below US$53,200,000, to be
paid within seven days of the agreement or determination of the Adjusted
Current Invested Capital as provided in this Clause 11.3.
11.3.8 Any payment which may be made pursuant to Clauses 11.3.6 or 11.3.7
shall be made together with interest on such payment, accruing on a daily basis
at a rate of 9% per annum from (and including) the Completion Date to (but
excluding) the date of payment.
11.3.9 All values for the purposes of Clause 11.3 which are in a currency
other than US$ shall be converted into US$ at the relevant rate prevailing at
the close of business on the Completion Date.
11.4.1 For the purposes of preparing the Completion Statement, the Purchaser
shall, as soon as practicable after Completion and in any event not later than
45 days after the Completion Date (in consultation with Quaker and the Vendor's
Accountants to whom the Purchaser shall make available such financial and other
information, including access to staff, as they may reasonably require to
enable such consultations to take place), prepare or procure the preparation of
a statement classifying the assets and liabilities referred to in Clause
11.1(b) above as, respectively, assets of the Business or the Retained
Businesses or liabilities of the Business or the Retained Businesses (save in
relation to the Business and the Retained Businesses of Quaker Italy) and
the Purchaser shall deliver copies of the same to Quaker.
11.4.2 The provisions of Clauses 11.3.2(b), 11.3.3, 11.3.4 and 11.3.5 shall
apply mutatis mutandis as if references therein to the Adjusted Current
Invested Capital Statement were replaced by references to the Completion
Statement.
11.4.3 The parties shall meet as soon as practicable following the date of
this Agreement to agree appropriate procedures for equitably completing the
process contemplated by this Clause 11.4 recognising both the Purchaser's
desire to obtain comfort on the level of working capital in the business and
Quaker's desire to ensure that it has an accurate opening balance sheet in
relation to the Retained Business.
11.5 In relation to the Business and the Retained Businesses of Quaker Italy,
Quaker shall prepare or procure the preparation of the Adjusted Current
Invested Capital Statement and the Completion Statement, and the provisions of
Clauses 11.3.1 to 11.3.4 and Clause 11.4 shall apply mutatis mutandis as if
references to "the Purchaser" and "the Purchaser's Accountant" were replaced by
references to "Quaker" and "the Vendor's Accountants" and vice versa.
12. EMPLOYEES
12.1 Each of the relevant Asset Vendors shall use its reasonable endeavours to
retain the services of the Assumed Employees to the intent that their contracts
of employment shall continue in force until Completion and then be transferred
to the Purchaser's Group under the Regulations (where relevant) and shall
comply with all its obligations under the said contracts of employment, under
statute and under any agreement with any trade union in relation to the Asset
Businesses.
12.2 Quaker shall procure that the Asset Vendors shall discharge, and hereby
undertakes to indemnify the Purchaser's Group against, all liabilities,
obligations, costs, claims and demands arising from or in aspect of:
(a) the employment or the termination of the employment of any person engaged
at any time prior to Completion in the Business who is not an Assumed Employee
or an employee of any of the companies or Subsidiaries; and
(b) any of the Assumed Employees (whether for unpaid remuneration, wrongful
dismissal, unfair dismissal, loss of office or otherwise) arising from any acts
or omissions of the Asset Vendors prior to Completion, save for any matters set
out or referred to in the Disclosure Letter, save in either case where such
liability, cost, obligation, claim or demand arose as a result of an act or
omission made at the Purchaser's request.
12.3 the Purchaser's Group shall employ the Assumed Employees with effect
from Completion and shall discharge (and the Purchaser hereby undertakes to
indemnify the Asset Vendors against) all liabilities, obligations, costs,
claims and demands arising from or in respect of any of the Assumed Employees
(whether for unpaid remuneration, wrongful dismissal, unfair dismissal,
redundancy, loss of office or any claims arising out of any change in their
terms of employment or pension entitlements or otherwise) arising on or after
Completion.
12.4 If the contract of employment of any person who is not an Assumed Employee
is found or alleged to have effect after completion as if originally made with
a member of the Purchaser's Group as a consequence of the sale and purchase of
the Asset Businesses under this Agreement, Quaker shall procure that the Asset
Vendors:
(a) in consultation with the Purchaser, will, within seven days of being so
requested by the Purchaser, make to that person an offer to writing to employ
him under a new contract of employment to take effect upon the termination
referred to below; and
(b) the offer to be made will be such that none of the terms and conditions of
the new contract will differ materially from the corresponding provision of
that person's contract of employment immediately before Completion.
Upon that offer being made (or at any time after the expiry of the seven days
if the offer is not made as requested), the Purchaser shall procure that the
relevant Member of the Purchaser's Group shall terminate the employment of the
person concerned and Quaker shall procure that the Asset Vendors shall
indemnify the Purchaser against all costs, liabilities, charges and expenses
arising out of or in connection with the employment of such person after
Completion until such termination and against such termination.
12.5 Without prejudice to Clause 12.3 if the contract of employment of an
Assumed Employee is found or alleged not to have effect after Completion as if
originally made with a Member of the Purchaser's Group as a consequence of the
sale and purchase of the Asset Businesses under this Agreement (otherwise than
pursuant to Regulations 5(4A) of the United Kingdom Transfer of Undertakings
(Protection of employment Regulations 1981 or equivalent) the Purchaser agrees
that it will, and will procure that any relevant Member of the Purchaser's
Group will:
(a) in consultation with Quaker or the relevant Asset Vendor within 7 days of
being so requested by Quaker, make to that person an offer in writing to employ
him under a new contract of employment to take effect upon the termination
referred to below; and
(b) the offer to be made will be such that none of the terms and conditions of
the new contract will differ materially from the corresponding provision of
that person's contract of employment immediately before Completion.
Upon that offer being made (or at any time after the expiry of the seven days
if the offer is not made as requested) Quaker shall procure that the relevant
Asset Vendor shall terminate the employment of the person concerned and the
Purchaser shall pay Quaker such amount as would indemnify Quaker or the
relevant Asset Vendor against all costs, liabilities, charges and expenses
arising out of or in connection with the employment of that individual after
Completion until such termination and such termination.
12.6 Quaker and the Purchaser shall procure (insofar as each is able) that:
(a) in respect of the sale of that part of the Business in the Netherlands
carried on by Quaker Oats B.V., all applicable requirements regarding (i)
consultation with the relevant Works Council and (ii) notification of the
relevant trade union representatives, as set forth in (i) the Works Council Act
("Wet op de Ondernemingsraden") and (ii) the SER Merger Code ("Ser Fusie
Gedragsregels" 1975, as amended) respectively, together with requirements under
any applicable collective labour agreement, will be duly compiled with;
(b) in relation to any other jurisdiction in which Assumed Employees are
employed, appropriate consultation procedures with employees and employee
representatives are carried out; and
(c) in relation to any employees of the Companies and the Subsidiaries, the
parties shall conduct reasonable consultation procedures with employees and
employee representatives in relation to the sale and purchase of such Companies
and Subsidiaries.
12.7 The Purchaser undertakes that, in the event of the contract of employment
of any Assumed Employee or any employee of the companies or the Subsidiaries
being terminated by reason of redundancy in the 15 months following the
Completion Date, such termination shall be on terms which are no less
favourable than the terms offered under the Vendors" redundancy policy in force
at the date hereof, as disclosed in the Disclosure Letter.
13. WARRANTIES
13.1 Quaker warrants to the Purchaser in the terms of the Warranties at the
date hereof (and in respect only of the Warranties set out in Part F of
Schedule 3 insofar as they relate to trade-marks of the Business on the
Completion Date) so that the remedies of the Purchaser in respect of any breach
of any of the Warranties shall continue to subsist notwithstanding Completion
and acknowledges that none of the Companies nor the Subsidiaries nor any of
their employees, agents or officers has given any such warranties,
representations, consents, undertakings, indemnities or other statements.
13.2 Quaker acknowledges that the Purchaser has entered into this Agreement in
reliance upon each of the Warranties. Save in the case of any fraudulent
misrepresentation, the Purchaser agrees that the Purchaser will have no remedy
against Quaker, and Quaker shall not have any liability of whatsoever nature to
the Purchaser, in respect of any statement of fact or opinion whatsoever,
including any untrue or misleading statement, warranty or representation,
express or implied, made to the Purchaser or its agents, officers or employees
upon which the Purchaser relied or may have relied in entering into this
agreement and that the Purchaser's sole remedy (save in the case of any
fraudulent misrepresentation) is for breach of contract in respect of the
warranties, undertakings, covenants or indemnities expressly set out in this
Agreement and the Deed of Tax Indemnity subject to the limitations contained in
this Agreement and the Deed of Tax Indemnity.
13.3 Each of the Warranties shall be construed as a separate warranty and (save
as expressly provided to the contrary) shall not be limited by the terms of any
of the other Warranties.
13.4 Quaker shall be under no liability in respect of any claim under the
Warranties and any such claim shall be wholly barred and unenforceable unless
written notice of such claim setting out such reasonable details of the
relevant claim as are then available (including the grounds on which such claim
is based and the amount claimed to be payable in respect thereof) shall have
been served upon Quaker by the Purchaser:
(a) in the case of a claim under the Warranties (other than the Environmental
Warranties and the Warranties relating to Tax), by not later than 5 p.m. on
30th September 1996 or, if completion is effected after 30th June 1995, 30th
September 1997;
(b) in the case of a claim under the Warranties relating to Tax, by not later
than 5 p.m. on the expiry of the tax limitation period in the relevant
jurisdiction; and
(c) in the case of a claim under the Environmental Warranties, by not later
than 5 p.m. on the third anniversary of the Completion Date,
and in each case, either:
(A) the amount payable in aspect of the relevant claim has been agreed by
Quaker within twelve months of the date of such written notice; or
(B) legal proceedings have been instituted in respect of such claim by the due
service of process on Quaker within twelve months of the later of:
(i) the date of such written notice; and
(ii) in the event that Quaker shall make a request pursuant to paragraph (a)
of Clause 13.10.2 in respect thereof, the date on which judgment is given by a
court of competent jurisdiction or the date settlement is reached (with the
consent of Quaker) in respect of such proceedings or the date on which Quaker
and the Purchaser agree that proceedings or other action against any third
party shall be abandoned.
13.5 Quaker shall be under no liability in respect of any claim under the
Warranties:
(a) where the liability of Quaker in respect of that claim would (but for this
paragraph) have been less than US$150,000; and
(b) unless and until the liability in respect of that claim (not being a claim
for which liability is excluded under paragraph (a) above) when aggregated with
the liability of Quaker in respect of all other such claims shall exceed
US$5,000,000, in which event the Purchaser shall be entitled to claim the whole
amount.
13.6 the aggregate liability of Quaker in respect of all such claims under the
Warranties and the Deed of Tax Indemnity shall not in any circumstances exceed
US$500,000,000.
13.7 Quaker shall be under no liability in respect of any claim under the
Warranties and any such claim shall be wholly barred and uneforceable to the
extent that the facts or circumstances giving rise thereto are fairly disclosed
in the Disclosure Letter or otherwise dealt with or stated to be exceptions
under the terms of this Agreement.
13.8 No liability shall attach to Quaker in respect of any claim under the
Warranties to the extent that:
(a) the claim or the events giving rise to the claim would not have arisen but
for an act, omission or transaction of any member of the Wider Purchaser's
Group otherwise than in the ordinary course of the business of the Business as
at present carried on or pursuant to an existing obligation of the Business;
(b) the claim is based upon a liability which is contingent only, unless and
until such contingent liability becomes an actual liability or until the share
is finally adjudicated provided that the period of twelve months referred to in
Clauses 13.4(A) and (B) shall not commence until such liability has ceased to
be contingent;
(c) provision or reserve in respect of the matter giving rise to the claim
shall have been made in the Adjusted Current Investment Capital Statement;
(d) the claim occurs wholly or partly out of or the amount thereof is
increased as a result of:
(i) any change in the accounting principles or practices of the Wider
Purchaser's Group introduced or having effect after the date of this Agreement;
or
(ii) any increase in the rates of Tax made after the Completion Date and
having retrospective effect; or
(iii) any change in law or regulation or in its interpretation or
administration by a court of competent jurisdiction, or the change of published
practice of any competent Tax Authority in any such case with retrospective
effect;
(e) the loss or damage giving rise to the claim is recoverable by the Wider
Purchaser's Group under any policy of insurance or would have been so
recoverable but for any change in the terms of insurance since the date of this
Agreement; or
(f) the claim relates to a claim or liability for Tax and would not have
arisen but for any winding-up or cessation after Completion of any business or
trade carried on by the Wider Purchaser's Group.
13.9 In assessing any liabilities, damages or other amounts recoverable by the
Purchaser as a result of any claim under the Warranties there shall be taken
into account any benefit accruing to the Wider Purchaser's Group including,
without prejudice to the generality of the foregoing, any amount of any relief
from Tax obtained or obtainable by the Wider Purchaser's Group and any amount
by which any Tax for which the Wider Purchaser's Group is liable to be assessed
or accountable is reduced or extinguished, arising directly or indirectly in
consequence of the matter which gives to rise such claim.
13.10.1 This Clause 13.10 shall apply in circumstances where:
(a) any claim is made against the Wider Purchaser's Group which may give rise
to a claim by the Purchaser under the Warranties; or
(b) the Wider Purchaser's Group is or may be entitled to make recovery from
some other person of any sum in respect of any facts or circumstances by
reference to which the Purchaser has or may have a claim under the Warranties;
or
(c) Quaker shall have paid to the Purchaser an amount in respect of a claim
under the Warranties and subsequent to the making of such payment the Wider
Purchaser's Group becomes or shall become entitled to recover from some other
person a sum which is referable to that payment.
13.10.2 The Purchaser shall, and shall procure that the Wider Purchaser's
Group shall:
(a) subject to the Wider Purchaser's Group being indemnified to the reasonable
satisfaction of the Purchaser by Quaker against all reasonable costs and
expenses which may properly be incurred by reason of such action, promptly and
diligently take all such action as Quaker may reasonably request (including the
institution of proceedings and the instruction of professional advisers
approved by Quaker (such approval not to be unreasonably withheld or delayed)
to act on behalf of the Wider Purchaser's Group) to avoid, dispute, resist,
compromise, defend or appeal against any such claim against the Wider
Purchaser's Group as is referred to in paragraph (a) of Clause 13.10.1 or to
make such recovery by the Wider Purchaser's Group as is referred to in
paragraph (b) or (c) of clause 13.10.1, as the case may be, in accordance with
the instructions of Quaker to the intent that such action shall be delegated
entirely to Quaker; and
(b) not settle or compromise any liability or claim to which any such action
is referable without the prior written consent of Quaker which consent shall
not be unreasonably withheld or delayed; and
(c) in the circumstances mentioned in paragraph (c) of Clause 13.10.1,
promptly repay to Quaker an amount equal to the amount so recovered (save to
the extent that the sum paid by Quaker pursuant to Clause 13.10.1 (c) has been
reduced by the prospects of such recovery) (less reasonable costs of recovery,
if any) or, if lower, the amount paid by Quaker to the Purchaser,
provided that nothing in this Clause 13.10 shall oblige the relevant Member of
the Wider Purchaser's Group to do anything which would itself reasonably have a
material adverse effect on that Member.
13.10.3 In the event of circumstances arising which could give rise to a
claim under either the Warranties or the Deed of Tax Indemnity the provisions
of Clause 7 of the Deed of Tax Indemnity shall prevail over the provisions of
Clause 13.11 of this Agreement.
13.11 The Purchaser shall:
(a) promptly, and in any event within the period of 30 days following the
Wider Purchaser's Group becoming aware of such matter, inform Quaker in writing
of any fact, matter, event or circumstance which comes to its notice or to the
notice of the Wider Purchaser's Group whereby it appears that Quaker is or may
be liable to make any payment in respect of any claim under the Warranties or
whereby it appears the Wider Purchaser's Group shall become or may become
entitled to recover from some other person a sum which is referable to a
payment already made by Quaker in respect of such a claim;
(b) procure that, if such matter is remediable, Quaker shall be given an
opportunity to remedy to the reasonable satisfaction of the Purchaser such
matter or event within the period of 30 days following the date of service of
such notice;
(c) thereafter, at Quaker's expense, take such steps as Quaker may reasonably
request and keep Quaker fully informed of all developments in relation thereto;
and
(d) provide, at Quaker's expense, all such information and documentation (no
matter how it is recorded or stored) as Quaker shall reasonably request in
connection therewith and also in connection with any proceedings instituted by
or against the Wider Purchaser's Group under Clause 13.10.
13.12 To the extent that the facts or circumstances giving rise to a claim
under the Deed of Tax Indemnity also give rise to a claim under the Warranties
claims under the Deed of Tax indemnity shall be made in priority to claims
under the Warranties.
13.13. No payment in respect of any claim for Tax under the Warranties shall
become payable:
(a) in the case of a claim for Tax involving an actual payment of Tax or the
loss or set off of a relief against Tax, prior to the date on which a payment
of Tax becomes finally due and payable under or in consequence of the claim for
Tax in question; or
(b) in the case of a claim for Tax involving the loss of or reduction of a
right to repayment of Tax, prior to the day on which any repayment or increased
repayment of Tax which, but for such claim for Tax would have been available,
would have been due.
13.14 The Warranties shall remain in full force and effect after Completion
but, save in the event of a fraudulent misrepresentation by the Vendors
inducing the Purchaser's Group to enter into this Agreement, the Purchaser
shall have no right to rescind or terminate this Agreement after Completion
(whether for breach of any of the Warranties or under the provisions of the
Misrepesentation Act 1967 or for any other reason whatsoever) and the
Purchaser's sole remedy (save as aforesaid) in respect of a claim under the
Warranties shall be against Quaker in damages subject to the limitations
contained in this Agreement.
13.15 In the event that Quaker at any time after the date hereof shall wish to
take out insurance against any of Quaker's liabilities hereunder or under the
Deed of Tax Indemnity, the Purchaser shall, at Quaker's expense, provide such
information as the prospective insurer may reasonably require before effecting
such insurance.
13.16 The Purchaser warrants that it has no knowledge (being, for this purpose,
the knowledge of Messrs Harris, Martyn, Baxendale, Waterlow, Gandy, Robson and
Clotheir) of any circumstance which gives rise to a claim under the Warranties
or the Deed of Tax Indemnity.
13.17 The Purchaser shall take or procure the taking of all such steps and
action as the Purchaser may reasonably consider necessary or (subject to being
indemnified against all reasonable costs and expenses which may properly be
incurred) as Quaker may require in order to mitigate any claim under the
Warranties and shall act in accordance with such request.
13.18 Quaker undertakes:
13.18.1 to disclose in writing to the Purchaser anything which constitutes a
material breach of any of the Warranties as soon as practicable after it comes
to its notice at any time prior to Completion; and
13.18.2 that if any claim is made against it in connection with the sale of
the Shares or the Assets to the Purchaser's Group it will not make any claim
against any Company or Subsidiary or any Assumed Employee or any employee of
any Company or Subsidiary on whom it may have relied before agreeing to any
terms of this Agreement or any other document referred to in it or authorising
any statement in the Disclosure Letter.
13.19 Any payment made pursuant to the Warranties or the Deed of Tax Indemnity
by Quaker shall be deemed to be an adjustment to the purchase price.
13.20 The exclusions and limitations on Quaker's liability in Clauses 13.4 to
13.6 shall not apply in the case of any fraudulent misrepresentation made by
Quaker or its agent(s) or otherwise insofar as the action is based upon the
fraud of Quaker or its agent(s) (and for these purposes "fraud" includes the
deliberate concealment from the Purchaser (to be construed by reference to
s32(2) of the Limitation Act 1980) of any fact relevant to the Purchaser's
right of action against Quaker) save insofar as they satisfy the requirement of
reasonableness as stated in the Unfair Contract Terms Act 1977 or, in the case
of Clause 13.4, would satisfy the requirement of reasonableness were references
to periods of time to be construed as running from the discovery by the
Purchaser of the fraud or concealment (as the case may be), in which event such
references shall be so construed. References above to the Purchaser include
references to any permitted assignee of the Purchaser.
14. PURCHASER'S UNDERTAKINGS AND WARRANTIES
14.1 The Purchaser shall procure that as soon as reasonably practicable
following, and in any event within six months of, Completion there is deleted
(whether by over-marking or otherwise) from all printed material of whatsoever
nature used by the Business all references to the names "Quaker", "OTA" or
"Chiari & Forti" or any colourable imitation thereof or any logo primarily
associated with such names.
14.2 If any Stocks or other materials are supplied including promotion
material to any member of the Wider Purchaser's Group under this Agreement
bearing any name or mark of the vendor's Group or any other person, such member
is authorised by Quaker to sell or otherwise dispose of those Stocks or to use
that material until the earlier of (i) the expiration of six months following
Completion and (ii) the date on which those Stocks or materials are exhausted.
14.3 The Purchaser undertakes to Quaker (for itself and as trustee for each
member of the Vendor's Group) to indemnify and hold each member of the Vendor's
Group harmless against all losses, damages, costs, actions, proceedings,
claims, demands and expenses arising from the use by any member of the Wider
Purchaser's Group after completion of such names or logos or marks as are
referred to in Clause 14.1.
14.4 The Purchaser undertakes to Quaker to procure that the relevant members
of the Wider Purchaser's Group shall (at the cost of Quaker) provide the
Vendors such assistance as is reasonably necessary for the Vendors to prepare
any quarterly or annual financial statements for any period commencing prior to
Completion.
14.5 The Purchaser warrants to Quaker in the following terms:
14.5.1 the Purchaser is duly organised subsisting in its country of
organisation and has full corporate power to enter into this Agreement and to
perform the obligations incurred by it and has taken all necessary corporate
action to authorise the entry into and performance of its obligations under
this Agreement;
14.5.2 this Agreement constitutes and the other documents executed by the
Purchaser which are to be delivered at Completion will, when executed,
constitute binding obligations of the Purchaser in accordance with their
respective terms; and
14.5.3 the execution and delivery of this Agreement, and the performance by
the Purchaser of its obligations under it, will not (save as contemplated by
Clause 3):
(a) result in a breach of any provision of its constitutional documents which
breach would materially affect the performance by the Purchaser of its
obligations under this Agreement; or
(b) result in a breach of any order, judgment or decree of any court,
governmental agency or regulatory body to which it is a party or by which it is
bound; or
(c) require the consent of its shareholders.
15. PENSIONS
The provisions of Schedule 6 shall have effect in relation to the pension
schemes of the Companies and the Subsidiaries and the pension schemes of the
Asset Vendors relating to the Assumed Employees.
16. VALUE ADDED TAX
16.1 In this Agreement save as otherwise provided the amount of any payment or
the value of any supply (including the value of any supply referred to in
calculation of any sum due under this Agreement) is expressed exclusive of
Value Added Tax and where any such payment or taxable supply is made or deemed
to be made pursuant to this Agreement the amount of any Value Added Tax
properly chargeable thereon shall be paid forthwith upon the issue of a proper
tax invoice therefor in addition to the payment or where no payment is
otherwise due under this Agreement by the person to whom the said invoice is
addressed or to whom it refers as the payer. Provided that the Purchaser shall
not be obliged to pay such additional amount earlier than two business days
before the relevant Vendor is obliged to account to the relevant Tax Authority.
16.2 Without prejudice to the provisions of the preceding sub-clause the
parties to this Agreement shall use all reasonable and proper endeavours to
ensure that any available relief from a charge of Value Added Tax including in
particular any relief in respect of the transfer of the assets of a business or
part of a business (whether or not as a going concern) is applied in respect of
any supply of goods or services made pursuant to this Agreement.
16.3 The Vendor (with the consent of or in co-operation with the Purchaser
where required) shall make a request for any records or documents maintained by
the Vendor or any other person on behalf of the Vendor in respect of the
Business which would otherwise be required to be transferred into the keeping
of the Purchaser to be retained by the Vendor or any other person on behalf of
the Vendor to be and the Vendor hereby undertakes to preserve or procure the
perseverance of such records for such period as may be required by law and to
permit the relevant tax authority and the Purchaser or its authorised agent
reasonable access to them at the request of the Purchaser or procure that the
Purchaser or its authorised agent is afforded such access.
16.4 Where payment is required to be made under this Agreement to reimburse or
indemnify the payee for any cost or expense that payment shall be for an amount
to include any Value Added Tax borne on such cost or expense which the payee is
unable to recover as a credit or repayment of input tax.
16.5 The Purchaser and the Vendor hereby agree that they will use reasonable
endeavours to mitigate any adverse cash flow consequences arising for either
party in consequence of any election to charge German VAT being made, by any
Vendor (including the making of any set-off between tax payable and tax
recoverable).
17. ANNOUNCEMENTS
Neither the making of this Agreement nor its terms shall be disclosed by any
party without the prior consent of the other party (such consent not to be
unreasonably withheld or delayed) unless disclosure is required by law or by
any regulatory authority including without limitation any taxation authority
and any recognised stock exchange and disclosure shall then only be made:
(a) so far as practicable after prior consultation with the other parties as
to the terms of such disclosure; and
(b) only to the person or persons and in the manner required by law or such
regulatory authority or as otherwise agreed between the parties.
18. COST
18.1 Save as expressly otherwise provided in this Agreement each of the
parties shall bear its own legal, accountancy and other costs, charges and
expenses connected with the negotiation, preparation and implementation of this
Agreement and any other agreement incidental to or referred to in this
Agreement.
18.2 All excise, registration, stamp, transfer and similar taxes, levies,
charges and fees in connection with this Agreement and the transactions
contemplated by it shall be borne and paid by the Purchaser. Where any such
taxes, charges or fees are payable at Completion, or to enable the notarisation
of documents at Completion, the parties shall procure the appropriate
valuations are prepared and, if necessary, the Purchaser shall pay such taxes,
fees or charges immediately prior to Completion. If requested by the
Purchaser, Quaker shall (subject to its being indemnified against all costs,
expenses, liabilities, losses, damages or penalties in connection therewith)
give such reasonable assistance as the Purchaser may request to minimise such
items. Notarial fees shall be borne equally by the parties.
19. ASSIGNMENT
19.1 Save as otherwise expressly provided in this Agreement, this Agreement
and all rights and benefits hereunder are personal to the parties and may not
be assigned at law or in equity without the prior written consent of the other
party.
19.2 The rights or benefits of the Purchaser under this Agreement, including
without limitation the Warranties and the covenants in Clause 13, may be
assigned (together with any cause of action arising in connection with any of
them), in whole or in part, to any Member of the Wilder Purchaser's Group in
which the relevant Assets or Shares shall be vested.
19.3 The rights or benefits of Quaker under this Agreement may be assigned, in
whole or in part, to any Member of the Vendor's Group.
20. EFFECT OF COMPLETION
The terms of this Agreement shall insofar as not performed at Completion and
subject as specifically otherwise provided in this Agreement continue in force
after and notwithstanding Completion.
21. ACTION AFTER COMPLETION
21.1 On or as soon as possible after Completion, Quaker shall assist or join
with the Purchaser in sending out a notice in such form as may be agreed to all
of the Business" suppliers and customers and other business contacts in respect
of the Business informing them of the transfer of the Business.
21.2 All notices, correspondence, information, orders or inquiries relating to
the Business which are received by any member of the Vendor's Group on or after
Completion shall as soon as reasonably practicable be passed to the Purchaser.
21.3 All moneys or other items belonging to the Purchaser which are received
by any member of the Vendor's Group on or after Completion in connection with
the Business or any of the Assets shall as soon as reasonably practicable be
paid or passed to the Purchaser.
21.4 Quaker shall (at its own expense) procure that the names of each member
of the Vendor's Group in the Restricted Territory the name of which includes
the words "Felix", "Bonzo", "Fido" or "Latz" will be changed within 28 days
after Completion so as not to include those words, and that each such member
will from time to time after Completion upon the request of the Purchaser give
any consent or confirmation (to the extent it is within its power) necessary
for the adoption by the Purchaser or any person connected with it of any name
incorporating those words.
21.5 The parties shall consult with a view to a joint communication to
customers and suppliers and other business contacts of the Business, to be
issued after the date hereof.
22. PROVISION OF BUSINESS INFORMATION
Quaker shall procure that, for a period of seven years from the Completion
Date, any member of the Purchaser's Group, their auditor, agents or
representatives shall have such reasonable access to the relevant accounting
and other records of the Asset Vendors upon reasonable notice and in normal
working hours at the Purchaser's expense, and shall have the right to take
copies of the share, as such member of the Purchaser's Group shall reasonably
require.
23. CONFIDENTIALITY
23.1 Subject to Clause 23.2, each party shall (and Quaker shall procure that
the Vendor's Group shall, and the Purchaser shall procure that the Wilder
Purchaser's Group shall) treat as strictly confidential all information
received or obtained as a result of entering into or performing this Agreement
which relates to:
(a) the provisions of this Agreement;
(b) the negotiations relating to this Agreement; or
(c) the affairs of the Vendor's Group or the Wilder Purchaser's Group as the
case may be.
23.2 Either party may disclose information which would otherwise be
confidential if and to the extent:
(a) required by the law of any relevant jurisdiction;
(b) required by existing contractual obligations;
(c) required by any securities exchange or regulatory or governmental body to
which either party is subject or submits, wherever situated, including (without
limitation) the London Stock Exchange and the New York Stock Exchange, whether
or not the requirements for information has the force of law;
(d) required to vest the full benefit of this Agreement in either party;
(e) the information has come into the public domain through no fault of that
party;
(f) the other party has given prior written approval to the disclosure, such
approval not to be unreasonably withheld or delayed; or
(g) reasonably necessary to be disclosed to a proposing purchaser of other
businesses of the Vendors in the context of such purchase.
PROVIDED THAT (i) any such information disclosed pursuant to paragraphs (a)-(c)
or (g) shall be disclosed only after consultation (if practicable) with the
other party (but, in the case of (g), not as to the identity of the recipient
of such information) and (ii) any information may be disclosed to the
professional advisers, auditors and bankers of each party.
23.3 The restrictions contained in this Clause shall continue to apply after
the Completion of the sale and purchase of the Shares and Assets under this
Agreement without limit in time.
24. ENTIRE AGREEMENT
This Agreement (together with any documents referred to herein) constitutes the
entire agreement between the parties in connection with the subject matter of
this Agreement.
25. WAIVER AMENDMENT
25.1 No waiver of any term, provision or condition of this Agreement shall be
effective unless such waiver is evidenced in writing and signed by the waiving
party.
25.2 No omission or delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or of any other right, power or privilege.
The rights and remedies herein provided are cumulative with an not exclusive of
any rights or remedies provided by law.
25.3 No variation to this Agreement shall be effective unless made in writing
and signed by each of the parties.
26. FURTHER ASSURANCES AND ACCESS
26.1 At any time after Completion Quaker shall procure that the Vendors shall
execute all such documents and do such acts and things as the Purchaser may
reasonably require for the purpose of vesting in the Purchaser's Group the full
legal and beneficial title to the Assets and the Shares and giving to the
Purchaser's Group the full benefit of this Agreement.
26.2 The Purchaser shall procure that, for a period of seven years from the
Completion Date, any member of the Vendor's Group, their auditors, agents or
representatives shall have such reasonable access to the relevant accounting
and other records of the Business relating to the period prior to Completion
upon reasonable notice and in normal working hours at the Vendor's expense, and
shall have the right to take copies of the share, as such member of the
Vendor's Group shall reasonably require.
26.3 Quaker will procure that, and the Purchaser acknowledges Quaker will
procure that, prior to Completion, certain Companies or Subsidiaries will have
entered into agreements ("Transfer Agreements") with certain other members of
the Vendor's Group (particulars of which have been disclosed in writing to the
Purchaser) for the sale by such Companies of such of their businesses, and the
assets and liabilities of such businesses, as do not relate primarily to the
Business ("Transferred Assets"). If the relevant Companies have not at
Completion successfully transferred out all Transferred Assets, the Purchaser
shall procure that the relevant Companies shall at any time after Completion,
at Quaker's expense, execute all such documents and do such acts and things as
Quaker may reasonably require for the purpose of vesting in the relevant
members of the Vendor's Group the full legal and beneficial title to the
Transferred Assets and giving to the relevant members of the Vendor's Group the
full benefit of such agreements.
26.4 Each of the parties shall indemnify the other in respect of every
liability, loss, damage, cost, charge, fine, penalty and expense (including,
without limitation, legal costs and expenses) arising out of any breach (in the
case of Quaker) by such purchasers or (in the case of the Purchaser) by such
Company or Subsidiary of such Transfer Agreements.
26.5 To the extent that the terms of this Agreement conflicts with the terms
of the Transfer Agreements. The terms of this Agreement shall prevail.
27. NOTICES
Save as specifically otherwise provided in this Agreement, any notice, demand
or other communications to be served under this Agreement may be served upon
any party only by posting by registered post or delivering the share or sending
the share by fax to the relevant party to be served at its address above or fax
number given below or at such other address or number as it may from time to
time notify in writing to the other parties:
Quaker The Quaker Oats Company
fax number: 010 1 312-222-8315
marked for the attention of
Vice President, General Corporate Counsel
The Purchaser Dalgety PLC
fax number: 0171 493 0892
marked for the attention of
The Company Secretary
28. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by the parties
on separate counterparts, each of which when so executed and delivered shall be
an original, but all the counterparts shall together constitute one and the
share instrument.
29. GOVERNING LAW AND SUBMISSION TO JURISDICTION
29.1 This Agreement and all matters in connection with this Agreement shall be
governed by and construed in accordance with English law.
29.2 The parties hereby irrevocably submit to the non-exclusive jurisdiction
of the High Court of Justice in London for the purpose of hearing and
determining any dispute arising out of this Agreement and for the purpose of
enforcement of any judgment against their respective assets.
29.3 Quaker agrees that service of any writ, notice or other document for the
purpose of any proceedings in such court shall be duly served upon it if
delivered or sent by registered post to Quaker Oats Limited at its registered
address from time to time or at such other address within the United Kingdom as
it may from time to time notify in writing to the Purchaser (marked for the
attention of the Company Secretary).
30. INVALIDITY
If at any time any one or more of the provisions hereof is or becomes invalid,
illegal or unenforceable in any respect under any law, the validity, legality
and enforceability of the remaining provisions hereof shall not be in any way
affected or impaired thereby.
AS WITNESS the hands of the parties or their duly authorised representatives
the day and year first above written.
Exhibit (2)(b)
DATED 24 APRIL 1995
(1) THE QUAKER OATS COMPANY
- - and -
(2) DALGETY PLC
___________________________________
ADDENDUM
to the Agreement dated 3rd February 1995
for the sale and purchase of the European
Pet Foods Business of The Quaker Oats Company
____________________________________
ASHURST MORRIS CRISP
Broadwalk House
5 Appold Street
London EC2A 2HA
Tel: 0171-638-1111
Fax: 0171-972-7990
CONTENTS
CLAUSE PAGE
1. INTERPRETATION 1
2. AMENDMENT 4
3. TIMING OF CASH EQUALISATION PAYMENTS 5
4. PREPARATION OF THE ADJUSTED CURRENT INVESTED CAPITAL
STATEMENT AND COMPLETION STATEMENT 5
5. TRANSFER/RETENTION OF NON-PET FOODS BUSINESS 5
6. NON-PET FOODS EMPLOYEES 7
7. VALUE ADDED TAX 10
8. AGENCY ARRANGEMENT IN RELATION TO QUAKER OATS LIMITED 10
9. SPAIN 10
10. LIABILITIES 10
11. PARTNERSHIP GBR 11
12. ITALIAN WORKING CAPITAL AND AGENTS 11
13. FRANCE COLLECTE S.A. 12
14. THE NETHERLANDS/BELGIUM 12
15. APPORTIONMENTS OF CONSIDERATION 13
16. CASH MECHANISM 13
17. FURTHER ASSURANCES 13
18. TRANSITIONAL SERVICES AGREEMENT IN GERMANY 13
THIS ADDENDUM is made the 24th day of April 1995
BETWEEN:
(1) THE QUAKER OATS COMPANY, a corporation organised and existing under the
laws of the State of New Jersey, USA, of Quaker Tower, 321 North Clark Street,
Chicago, Illinois, USA ("Quaker"); and
(2) DALGETY PLC, a company incorporated in England and Wales with registered
number 19739, whose registered office is at 100 George Street,London W1H 5RH,
England ("Dalgety").
WHEREAS:
(A) By virtue of an agreement dated 3rd February 1995 (the "Sale Agreement")
Quaker agreed to sell and Dalgety agreed to purchase the Business (as defined
in the Sale Agreement).
(B) The parties to the Sale Agreement wish to amend the terms of the Sale
Agreement as set out herein.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 The words and expression used in this Addendum shall, unless the contrary
is stated, have the meanings ascribed to them in the Sale Agreement.
1.2 In addition, the following words and expressions shall have the following
meanings:
"Non-Pet Foods Employees" - those employees primarily engaged in the non-Pet
Foods Business at Completion (including those employees whose names are set out
in the list in the Agreed Form) together, if agreed, with any replacements
therefor and any further employees who are primarily engaged in the non-Pet
Foods Business as at Further Completion;
"Non-Pet Foods Books and Records" - all books and records of the Sale Companies
relating exclusively to the non-Pet Foods Business, together with copies of
such other books and records as are used to run the non-Pet Foods Business,
including without limitation employee records relating to the Non-Pet Foods
Employees, all documents and other material (including all forms of computer or
machine readable material) containing or relating to information used to run the
non-Pet Foods Business (whether or not confidential and in whatever form held)
including all formulae, designs, specifications, drawings, data, manuals and
instructions and all customer lists, marketing information, correspondence and
files;
"Calculation Date" - has the meaning given to it in Clause 3.1 hereof;
"Non-Pet Foods Contracts" - those contracts, agreements and arrangements which
are wholly or partly unperformed at the Completion Date relating to the non-Pet
Foods Business and which are set out in the list in the Agreed Form;
"Co-Packing Agreement" - the co-packing agreement dated 21st December 1989 and
made between OTA A/S and Nakskov Mill Foods A/S;
"Non-Pet Foods Creditors" - those amounts owed by the Sale Companies in
connection with the non-Pet Foods Business as at the Completion Date in respect
of trade bills payable and trade creditors;
"Distribution Agreement" - in relation to each Sale Company or Asset Vendor,
the distribution agreement in the Agreed Form;
"Non-Pet Food Liabilities" - all liabilities of the Sale Companies relating to
the non-Pet Foods Business;
"Further Completion" - completion of the sale and purchase of the Further non-
Pet Foods Assets in accordance with sub-Clause 5.3(b) hereof;
"Further non-Pet Foods Assets" - the Non-Pet Foods Books and Records, the Non-
Pet Foods Loose Assets and such of the Non-Pet Foods Contracts as are wholly or
partly unperformed at the date of Further Completion;
"Non-Pet Foods Goodwill" - the goodwill relating directly and exclusively to
the non-Pet Foods Business together with the exclusive right for the relevant
purchaser to represent itself as carrying on the non-Pet Foods Business in
succession to the Sale Companies;
"Indemnified Liabilities" - the Non-Pet Food Liabilities, if any, as at
Completion other than:
(a) any liabilities of the Sale Companies to Tax;
(b) any intercompany debt or other liability or obligation between the Sale
Companies and any other member of the Vendor's Group;
(c) any amounts owed to any third party by way of overdraft or other
borrowings;
(d) any liabilities of the Sale Companies primarily relating to the Business;
(e) the Non-Pet Foods Creditors;
(f) the burden of the Non-Pet Foods Contracts;
(g) any liabilities incurred or arising on or after Completion;
(h) any liabilities in relation to employees;
(i) any liabilities which have been taken into account for the purposes of sub-
Clause 5.2(b) of this Addendum;
"Initial non-Pet Foods Assets" - together:
(a) the Co-Packing Agreement;
(b) the Non-Pet Foods Intellectual Property; and
(c) the Non-Pet Foods Goodwill;
"Non-Pet Foods Intellectual Property" - the registered intellectual property
(and applications for registration of intellectual property) in the list in the
Agreed Form headed Non-Pet Food Intellectual Property together with:
(a) any interest whatsoever in the "Quaker" trade name or trademark, Quaker's
corporate device or any other design element or logo primarily associated with
any such trade names or trade marks;
(b) all goodwill in the names "Quaker" and "OTA", in trademarks incorporating
"Quaker" and "OTA", in any of the other Non-Pet Foods Intellectual Property or
in associated designs or trademarks;
(c) all know-how of the Sale Companies used primarily in the non-Pet Foods
Business;
(d) all copyright, moral rights, design rights, unregistered trade marks, and
all other intellectual property rights of the Sale Companies primarily used in
the non-Pet Foods Business, associated designs and all rights in any of them,
and all rights of the Sale Companies against third parties in respect of any of
the foregoing;
"Non-Pet Foods Loose Assets" - the computers, furniture, vehicles, other office
equipment and related non-fixed assets of the Sale Companies primarily used or
intended for use in the non-Pet Foods Business but excluding any such items
disposed of by the Sale Companies in the ordinary course of business prior to
Further Completion;
"non-Pet Foods Business" - the business of the respective Sale Companies
carried on at the date hereof other than the Business;
"Retained Employees" - all employees of the Sale Companies other than the Non-
Pet Foods Employees;
"Sale Companies" - Quaker France S.A., OTA A/S and Svenska OTA AB.
1.3 All sums payable pursuant to Clauses 5.2 and 12.1 of this Agreement shall
be paid in US$ at the relevant exchange rate prevailing on the Completion Date.
2. AMENDMENT
Quaker and Dalgety hereby agree that the Sale Agreement shall be amended as set
out in this Addendum but shall otherwise remain in full force and effect.
3. TIMING OF CASH EQUALISATION PAYMENTS
3.1 Any payments to be made pursuant to Clause 6.9.2 of the Sale Agreement
shall be made at the time that any payment is made pursuant to Clause 11.3.6
or 11.3.7 of the Sale Agreement (or, if no such payment is made, at the time
that any payment would have been made) ("Calculation Date") and Clauses 11.3.8
and 11.3.9 of the Sale Agreement shall apply mutatis mutandis as if references
to Clause 6.9.2 were substituted therein for references to Clause 11.3, 11.3.6
and 11.3.7; Clause 6.9.2 of the Sale Agreement shall be read accordingly.
3.2 References in Clause 6.9.2 of the Sale Agreement to "cash" shall be deemed
also to include references to "marketable securities" and "cash equivalents".
4. PREPARATION OF THE ADJUSTED CURRENT INVESTED CAPITAL STATEMENT AND
COMPLETION AND COMPLETION STATEMENT
4.1 The Adjusted Current Invested Capital Statement shall be prepared on the
same bases as the Completion Statement, and Clause 11.3.1(a) of the Sale
Agreement shall be read as if the second sentence thereof were deleted.
4.2 For the purposes of Clauses 11.3.1 and 11.4 of the Sale Agreement, the
Completion Statement and the Adjusted Current Invested Capital Statement shall
be prepared in accordance with US GAAP, and on a basis consistent with that
used in the preparation of the Financial Statements. Allocations between the
Business and the Non-pet Foods Business shall be made using allocation on the
bases set out in the document in the Agreed Form headed "Methodology for
Balance Sheet Splits".
4.3 The reference to "30 days" in Clause 11.3.1 of the Sale Agreement shall be
replaced by a reference to "45 days".
5. TRANSFER/RETENTION OF NON-PET FOODS BUSINESS
5.1 Transfer Agreements
The Transfer Agreements contemplated by Clause 26.3 of the Sale Agreement shall
not be entered into and instead the provisions of this Addendum shall have
effect. Clause 26.3 of the Sale Agreement shall be read accordingly.
5.2 Consideration for the Sale Companies
In consideration for Quaker not procuring the entering into of the Transfer
Agreements, Dalgety shall pay to Grocery International Holdings, Inc. (or, if
such value is negative, Grocery International Holdings, Inc. shall pay to
Dalgety) at the time provided for payments pursuant to Clause 6.9.2 of the Sale
Agreement the aggregate of:
(a) the value of the current non-pet foods stock-in-trade of the Sale
Companies as the Completion Date, valued at the Net Invoice Selling Price as
defined in the respective Distribution Agreements; and
(b) an amount equal to the aggregate value of debtors and pre-paid expenses,
other receivables (to the extent not otherwise included in the value of
debtors), sums due from employees, miscellaneous investments and non-current
receivables, as at the Completion Date, in each case of the Sale Companies and
which relate primarily to the non-Pet Foods Business less the aggregate value
of creditors and accruals for bonuses and profit sharing and other accrued
liabilities, in each case of the non-Pet Foods Business as at the Completion
Date, in each case to be determined or agreed on the same basis mutatis
mutandis as the value of the Adjusted Current Invested Capital.
For the avoidance of doubt, no value shall be attributed to the Non-Pet Foods
Loose Assets and nothing is this Clause 5 shall have any impact on the Adjusted
Current Invested Capital.
5.3 Purchase of non-Pet Foods Business
Upon the terms of this Addendum:
(a) at, and with effect from, Completion the Sale Companies shall sell and
Quaker shall purchase or procure the purchase of the Initial non-Pet Foods
Assets, in each case free from any Encumbrances and together with all accrued
benefits and rights attaching thereto; and
(b) at, and with effect from, termination of the relevant Distribution
Agreement, the Sale Companies shall sell and Quaker shall purchase, or procure
the purchase of, the non-Pet Foods Business and the Further non-Pet Foods
Assets, in each case free from any Encumbrances and together with all accrued
benefits and rights attaching thereto.
5.4 Consideration
(a) The consideration for the sale and purchase referred to in sub-Clause
5.3(a) shall be as follows:
Quaker France S.A.: FFrl, 756,000, which sum shall be apportioned as follows:
(i) Non-Pet Foods Intellectual Property: FFr585,000, which sum shall be
apportioned as to FFr490,000 amongst the Cruesli and associated trademarks and
as to FFr95,000 amongst the remaining Non-Pet Foods Intellectual Property; and
(ii) Non-Pet Foods Goodwill: FFr1,171,000;
5.5 Contracts
Quaker warrants to Dalgety that the Non-Pet Foods Contracts have been entered
into in the ordinary course of business.
(a) OTA A/S: Dkr6,165,000, which sum shall be apportioned as follows:
(i) Non-Pet Foods Intellectual Property: Dkr4,520,000, which sum shall be
apportioned as to Dkr 867,000 amongst the Cruesli and associated trademarks and
as to Dkr 3,653,000 amongst the remaining Non-Pet Foods Intellectual Property;
and
(ii) Non-Pet Foods Goodwill: Dkr1,645,000
(iii) the Co-Packing Agreement: Dkr1; and
Svenska OTA A/B : Dkr 886,000.
(b) The consideration for the sale and purchase of the non-Pet Foods Business
and the Further non-Pet Foods Assets shall be Lira1.
(c) The consideration for the purchases referred to in this Clause 5.4 shall be
paid in cash by Quaker to the relevant Sale Company on completion of the
relevant purchase.
(d) Any Taxation arising by reason of the purchases referred to in Clause 5.3
shall be dealt with in accordance with the Tax Indemnity and for such purposes
shall be deemed to be a Relevant Event occurring on or before the Completion
Date and any such liabilities shall be disregarded for the purposes of Clause
13.6 of the Sale Agreement.
6. NON-PET FOODS EMPLOYEES
6.1 Dalgety shall procure that each of the Sale Companies shall use its
reasonable endeavours to retain the services of the Non-Pet Foods Employees to
the intent that their contracts of employment shall continue in force until
Further Completion and then be transferred to Quaker, or such purchasers of the
non-Pet Foods Business as Quaker shall nominate, under the Regulations (where
relevant) and shall comply with all its obligations under the said contracts of
employment, under statute and under any agreement with any trade union in
relation to the non-Pet Foods Businesses.
6.2 Quaker shall, in respect of the period between Completion and up to but not
including Further Completion, pay or procure to be paid to the Sale Companies
an amount equal to all sums incurred by the Sale Companies in respect of
remuneration, employer's national insurance or social security costs, pension
contributions, other benefits and any other similar cost of employment of the
Non-Pet Foods Employees but, for the avoidance of doubt, not including any
amounts payable in respect of termination or claims for unfair dismissal,
wrongful dismissal or loss of office. Dalgety shall procure that appropriate
VAT invoices are issued to Quaker and Quaker shall make such payments within 15
days of receipt of such invoice or, if later, the date on which the relevant
Sale Company becomes obliged to make the relevant payment.
6.3 For the period commencing at Completion and until Further Completion:
6.3.1 Dalgety shall, at Quaker's expense use reasonable endeavours to procure
that the Non-Pet Food Employees shall perform functions, tasks and duties which
are the same as the functions, tasks and duties as they were performing prior
to Completion subject to Dalgety, at the request of Quaker, using its
reasonable endeavours to vary such duties in accordance with its normal
procedures.
6.3.2 Dalgety shall instruct the Non-Pet Food Employees of the services they
are required to perform under this Clause 6.3 in accordance with Quaker's
proper instructions from time to time provided that Quaker shall bear any cost
thereby incurred.
6.3.3 Dalgety shall furnish Quaker with a copy of any notice of termination
of any contract of employment of any Non-Pet Food Employee as soon as
reasonably practicable after any such notice is given or received, as the case
may be.
6.3.4 Quaker shall carry out and assist Dalgety in such procedures and
appraisals as Dalgety may reasonably require in accordance with the procedures
and appraisals used by Dalgety in relation to the Non-Pet Food Employees.
6.4 Subject to Clause 6.7, Dalgety shall procure that the Sale Companies shall
discharge, and hereby undertakes to indemnify Quaker and the Vendor's Group
against, all liabilities, obligations, costs, claims and demands arising from
or in respect of any of the Non-Pet Food Employees for payments under any
termination indemnity, wrongful dismissal, unfair dismissal or loss of office
arising from any acts or omissions of the Sale Companies prior to Further
Completion unless such acts or omissions are performed at the request of
Quaker, in which event Quaker shall indemnify Dalgety accordingly.
6.5 Quaker shall employ or procure that the Non-Pet Foods Employees are
employed with effect from Further Completion and shall discharge (and Quaker
hereby undertakes to indemnify Dalgety against) all liabilities, obligations,
costs, claims and demands arising from or in respect of any of the Non-Pet
Foods Employees (whether for unpaid remuneration, wrongful dismissal, unfair
dismissal, redundancy, loss of office or any claim arising out of any change in
these terms of employment or pension entitlements or otherwise) arising on or
after Further Completion.
6.6 If the contract of employment of any Retained Employee is found or alleged
to have effect after Further Completion as if originally made with Quaker or
any member of the Vendor's Group as a consequence of the transfer of the non-
Pet Foods Business under this Addendum, Dalgety agrees to procure that the
relevant Sale Company:
(a) in consultation with Quaker, will, within seven days of being so requested
by Quaker, make to that person an offer in writing to employ him under a new
contract of employment to take effect upon the termination referred to below;
and
(b) the offer to be make will be such that none of the terms and conditions of
the new contract will differ materially from the corresponding provisions of
that person's contract of employment immediately before Further Completion.
Upon that offer being made (or at any time after the expiry of the seven days
if the offer is not made as requested) Quaker shall procure that the employment
of the person concerned is terminated and Dalgety shall procure that the
relevant Sale Company shall indemnify Quaker and the Vendor's Group against the
employment of such person after Further Completion until such termination and
against such termination.
6.7 If the contract of employment of a Non-Pet Food Employee is found or is
alleged not to have effect after Further Completion as if originally made with
the purchasers of the non-Pet Foods Business as a consequence of the transfer
of the Non-Pet Foods Business under this Addendum (other than by virtue of the
relevant Non-Pet Food Employee objecting in accordance with the Regulations, to
the transfer of his contract of employment to the purchaser of the non-Pet
Foods Business) Quaker agrees that it will, and will procure that any relevant
Member of the Vendor's Group, will:
(a) in consultation with Dalgety or the relevant Sale Company within seven
days of being so requested by Dalgety, make to that person an offer in writing
to employ him under a new contract of employment to take effect from the
termination referred to below; and
(b) the offer to be made will be such that none of the terms and conditions
for the new contract will differ materially from the corresponding provision in
that person's contract of employment immediately before Further Completion.
Upon that offer being made (or at any time after the expiry of the seven days
if the offer is not made as requested) the relevant Sale Company shall
terminate the employment of the person concerned and Quaker shall pay the
relevant Sale Company such amount as would indemnify the relevant Sale Company
against all cost, liabilities, charges and expenses arising out of or in
connection with the employment of that individual after Further Completion
until such termination and against such termination.
6.8 Prior to Further Completion, Quaker and Dalgety shall procure (insofar as
each is able) that in relation to any jurisdiction in which Non-Pet Food
Employees are employed appropriate consultation procedures with employees and
employee representatives are carried out and for these purposes, Quaker and
Dalgety shall each provide the other with such information in writing relating
to the Non-Pet Food Employees any collective or any other information each may
reasonably require, upon written request.
6.9 The list in the Agreed Form initialed by or on behalf of the parties on 3rd
February 1995 headed "Assumed Employees" which sets out the names of the
assumed employees of the Business shall be amended by the deletion of the
following names: Joseph Sevage, Scott Cupp, Tracy Betzig, Timothy Handley,
Eileen Frazier and George Sewell.
7. VALUE ADDED TAX
The provisions of Clause 16 of the Sale Agreement shall have effect in relation
to the sales and purchases and other payments contemplated hereby, to the
extend applicable.
8. AGENCY ARRANGEMENT IN RELATION TO QUAKER OATS LIMITED
8.1 The Transitional Services Agreement dated 27th January 1995 and made
between Quaker Oats Limited and Quaker Limited (formerly Wellcase Limited)
shall terminate with effect from Completion.
8.2 Until such time as the parties shall agree, they will procure that:
(a) Quaker Oats Limited shall act for itself in relation to all of its
customers and suppliers and as undisclosed agent for Quaker Limited in relation
to the customers and suppliers of Quaker Limited;
(b) Quaker Limited shall provide all the services necessary in order to:
(i) issue invoices and collect all Debtors in the name of Quaker Oats Limited,
on behalf of Quaker Oats Limited and Quaker Limited as may be required; and
(ii) pay all Creditors in the name of Quaker Oats Limited on behalf of Quaker
Oats Limited and Quaker Limited as may be required.
9. SPAIN
Quaker Iberia S.A. shall be deemed to be an Asset Vendor and the Sale Agreement
shall apply accordingly save that the transfer of the Asset Business of Quaker
Iberia S.A. shall not be effected at Completion but shall be effected as soon
as practicable thereafter.
10. LIABILITIES
10.1 Quaker shall, with effect from 12.01 a.m. on the Completion Date,
indemnify the Sale Companies in respect of the Indemnified Liabilities and
against any and all obligations, debts, costs, claims, demands and expenses
arising therefrom.
10.2 Without prejudice to Clause 10.1, Dalgety shall use its reasonable
endeavours to procure that the Sale Companies shall pay, satisfy and discharge
the Non-Pet Food Liabilities accordance with their terms.
10.3 For the purposes of the Sale Agreement and for the avoidance of doubt,
it is agreed that the loan agreements entered into by Quaker Italy (i) pursuant
to the "Legge Sabatini" and (ii) in connection with grants received from the
Ministry of Industry shall not fall within the definition of Excluded
Liabilities and instead shall be deemed to be Liabilities.
11. PARTNERSHIP GBR
11.1 The parties hereby agree that, in substitution for the purchase by the
Purchaser's Group of the two properties owned by Partnership GbR at Euskitchen,
details of which are set out in Schedule 5 Part G, paragraphs 1 and 2 to the
Sale Agreement, Dalgety shall procure the purchase of, and Quaker shall procure
the sale of, Partnership Gbr to such partners as Dalgety shall nominate.
Dalgety shall also procure that a Member of the Wider Purchaser's Group shall
purchase the indebtedness of approximately DM17,500,000 together with the
outstanding interest thereon of approximately DM4,500,000 due to the Vendors'
Group from Partnership GbR at or after Completion. The Sale Agreement shall be
amended accordingly.
11.2 In consideration of Dalgety agreeing to purchase of Partnership GbR,
Quaker hereby agrees to indemnify the Purchaser's Group against any liability
of Partnership Gbr other than:
(a) any liabilities of the Business;
(b) the indebtedness referred to in Clause 11.1; and
(c) any liabilities associated with or arising out of or in any way connected
with the Properties owned by Partnership GbR.
11.3 For the avoidance of doubt nothing in this Clause 11 shall affect the
Warranties and the Warranties set out in Part A of Schedule 3 to the Sale
Agreement shall be applied to Partnership Gbr as if it were a Company (but
modified to the extent necessary having regard to its legal status as a GbR).
12. ITALIAN WORKING CAPITAL AND AGENTS
12.1 Quaker Italy shall retain all of those assets and liabilities of Quaker
Italy which are not severable from assets and liabilities of the Retained
Businesses and which would otherwise be the subject of the Adjusted Current
Invested Capital Statement and, in consideration therefor, the purchase price
payable for Quaker Italy shall be reduced by an amount equal to the net value
thereof each such item being valued on the same basis, mutatis mutandis, as the
Adjusted Current Invested Capital Statement prepared in accordance with Clause
4 hereof which sum shall be re-paid on the Calculation Date. Interest shall
not accrue or be payable on the value of the assets and liabilities referred to
in this Clause 12.1.
12.2 Notwithstanding Clause 12.1, the Adjusted Current Investment Capital
Statement shall be deemed to include an amount equal to the amount to be re-
paid pursuant to clause 12.2 for the purposes of calculating whether or not any
sums are payable pursuant to Clauses 11.3.6 or 11.3.7 of the Sale Agreement.
12.3 The thirty-seven sales agency contracts entered into by Quaker Italy
shall not be transferred at Completion in accordance with Clause 10 of the Sale
Agreement, but shall be retained by Quaker Italy pending termination of the
Distribution Agreement to be entered into by Quaker Italy. Upon such
termination, such contracts shall be assigned to Spillers Foods Italia s.p.a.
and Clause 10 of the Sale Agreement shall have effect in relation thereto.
12.4 Dalgety hereby undertakes to Quaker (for itself and for each member of
the Vendor's Group) to indemnify each Member of the Vendor's Group against all
additional liabilities, obligations, costs, claims and demands (if any)
incurred by reason of the changes contemplated by Clause 12.1 above.
13. FRANCE COLLECTE S.A.
13.1 France Collecte S.A. shall not be transferred to Quaker France S.A.
prior to Completion but instead shall be sold at Completion by Quaker Oats
Beteiligungsgesellschaft mbH and purchased by Dalgety France S.A.
13.2 Accordingly the Sale Agreement shall be amended as follows:
(a) France Collecte S.A. shall be deemed to be a Company and not a Subsidiary
and the definition of "Shares" shall be amended accordingly;
(b) on Completion, Quaker shall deliver or procure the delivery to or make
available to Dalgety ordres de mouvements in respect of the Shares in France
Collecte S.A. duly executed in favour of Dalgety France S.A.;
(c) the consideration attributed to France Collecte S.A. shall be $454,000 and
accordingly the apportionment set out in Schedule 8 shall be varied by an
increase in the apportionment to the Asset Business of Quaker Oats
Beteiligungsgesellschaft mbH and a decrease in the apportionment to Quaker
France S.A. by such an amount.
14. THE NETHERLANDS/BELGIUM
14.1 The sale and purchase of the Asset Business of Quaker Oats B.V. shall
be effected by way of a contribution of such Asset Business to a new company
established in Holland ("Dutch Newco") and an immediate subsequent sale of the
entire issued share capital of Dutch Newco to Dalgety UK Limited.
14.2 The Sale Agreement shall be amended as follows:
(a) Clause 6, other than Clause 6.9, shall be deemed to be varied accordingly
as if Dutch Newco were a Company;
(b) for the purposes of Clauses 8, 10, 12 and 14, Dutch Newco shall be deemed
to be a Member of the Purchaser's Group; and
(c) the remaining provisions shall be read accordingly.
14.3 The rights and liabilities of the Vendor's Group shall not be affected
by the changes contemplated by this Clause 14 and Dalgety undertakes to Quaker
to indemnify the Vendor's Group against all obligations, liabilities, costs,
claims, demands and expenses attributable to the changes contemplated by Clause
14.1 including, for the avoidance of doubt, any costs and expenses of effecting
such sale which exceed the costs which would otherwise have been incurred by
Quaker.
14.4 Quaker acknowledges that the Asset Business of Quaker Oats Europe Inc
will be acquired by a Belgian subsidiary of Dalgety.
15. APPORTIONMENTS OF CONSIDERATION
15.1 The Consideration attributed to Quaker Oats B.V. shall be apportioned
as follows:
(a) to the shares in Dutch Newco: $122,122,000; and
(b) amongst the headquarters Assets in Belgium: $1,878,000.
15.2 Following the calculation of the Adjusted Current Invested Capital, the
apportionments set out in Schedule 8 shall be varied by the amount of the
difference between (i) the Adjusted Current Invested Capital of the relevant
Asset Business or Company and (ii) the level of the adjusted current invested
capital of such entity as shown in the schedule in the Agreed Form headed "Pet
Food Divestiture - ACIC by Country".
16. CASH MECHANISM
The parties agree that, in conjunction with the transitional arrangements
following Completion to be undertaken by the Vendor's Group and the Wider
Purchaser's Group, they will procure that the procedures set out in the
document in the Agreed Form headed "Treasury Document" shall be adhered to.
17. FURTHER ASSURANCES
At any time after Completion or Further Completion as the case may be the Sale
Companies shall execute all such documents and do all such acts and things as
Quaker may reasonably require for the purpose of vesting in the Vendor's Group
the full legal and beneficial title to the Initial non-Pet Foods Assets, the
non-Pet Foods Business and the Further non-Pet Foods Assets and giving to
Quaker and the Vendor's Group the full benefit of this Agreement.
18. TRANSITIONAL SERVICES AGREEMENT IN GERMANY
18.1 For the purposes of Clause 18.2:
(a) the "German Agreement" is the transitional services agreement entered into
on the date hereof between Quaker Beverages GmbH and Spillers Deutschland GmbH;
and
(b) the DM:US$ exchange rate on the Completion Date shall be deemed to be
US$1:DM1.367.
18.2 In the event that the DM:US$ exchange rate shall vary by 5% or more
from the exchange rate at the Completion Date or on any Relevant Date (as
defined below) then the parties shall procure that their respective
subsidiaries shall agree that the charges provided under the German Agreement
shall be amended, with effect from the date of such variation (the "Relevant
Date") to such an amount (payable in DM) as is equal to the DM equivalent on
the Relevant Date of US$172,000.
AS WITNESS the hands of the parties or their duly authorised representatives
the day and year first above written.
SIGNED by
for an on behalf of
THE QUAKER OATS COMPANY
in the presence of:
SIGNED by
for and on behalf of
DALGETY PLC
in the presence of:
Exhibit (99) to Form 8-K
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information
with respect to the disposition of the European pet foods business should be
read in conjunction with historical financial statements contained in
the Company's Annual Report on Form 10-K; the Quarterly Report on Form
10-Q as of December 31, 1994; the Current Report on Form 8-K filed on
December 19, 1994, and Amendment No. 1 thereto filed on February 17, 1995,
which includes unaudited pro forma financial information of the Company
and Snapple Beverage Corp. ("Snapple"); and the Current Report on Form 8-K
filed on March 29, 1995, which includes unaudited pro forma financial
information of the Company with respect to the disposition of the North
American pet foods business. The following pro forma information is presented
for illustrative purposes only and is not necessarily indicative of the
operating results or financial position that would have occurred had the
disposition of the European pet foods business been consummated in accordance
with the assumptions set forth below, nor is it necessarily indicative of
future operating results or financial position.
Basis of Presentation
The unaudited pro forma combined balance sheet presents the consolidated
financial position assuming that the dispositions of the North American
and the European pet foods businesses occurred on December 31, 1994. The
unaudited pro forma combined income statements for the year ended
June 30, 1994 and for the six months ended December 31, 1994 present the
consolidated results of operations assuming that the acquisition of Snapple
and the dispositions of the pet foods businesses occurred as of July 1, 1993.
The Snapple acquisition was completed on December 6, 1994, and the North
American pet foods business disposition was completed on March 14, 1995.
Two-for-one Stock Split-up
Per share information and average number of common shares outstanding
have been restated to reflect the November 1994 two-for-one stock
split-up.
Pro Forma Adjustments
The amounts included in the European Pet Foods Business column on the
following balance sheet reflect the assets and liabilities assumed,
including accounts receivable, inventory, prepaid assets, other non-current
assets, fixed assets, accounts payable, and other current and non-current
liabilities. The additional amounts in this column reflect other
items that are affected by the sale of the European pet food business,
specifically writing-off intangibles and adjusting the cumulative translation
adjustment accounts. Deferred taxes have been reclassified to current
liabilities. The amounts included in the European Pet Foods Business
column on the income statements reflect the direct activity of the
business, including net sales and direct cost of sales, advertising and
merchandising expenses, and other general direct expenses of the business.
Pretax income has been tax effected at the Company's effective tax rates
for those periods.
The separate pro forma adjustments column on the balance sheet reflects the
after-tax proceeds from the sale, $700 million less estimated income taxes of
$237.6 million, as a reduction in short-term debt. This column also reflects
the estimated after-tax gain on the sale of the European pet foods business.
The separate pro forma adjustments column on the income statements reflects
the reduction in interest expense, as a result of the after-tax proceeds on
the sale reducing short-term debt. Interest expense has been calculated using
the short-term rates on the borrowings obtained for the Snapple acquisition.
If the interest rate were one-eighth of one percent different, pro forma
interest expense for the European pet foods business disposition would change
by approximately $500,000 and $250,000 for the year ended June 30, 1994 and the
six months ended December 31, 1994, respectively.
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1994
The North Pro European Pro ProForma
Quaker American Forma ProForma Pet Foods Forma Combined
Oats Pet Foods Adjust- Combined Business Adjust-
Company Business ments ments
Dollars in Millions
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 103.0 $ $ 103.0 $ $103.0
Trade accounts receivable - net 546.0 546.0 (121.6) 424.4
Inventories:
Finished goods 332.7 (19.9) 312.8 (41.4) 271.4
Grains and raw materials 111.4 ( 3.1) 108.3 ( 9.1) 99.2
Packaging materials and supplies 37.3 (2.0) 35.3 ( 6.3) 29.0
Total inventories 481.4 (25.0) 456.4 (56.8) 399.6
Other current assets 226.5 (12.3) 214.2 (11.9) 202.3
Total Current Assets 1,356.9 (37.3) 1,319.6 (190.3) 1,129.3
Other Receivables and Investments 121.8 121.8 (6.7) 115.1
Property, plant and equipment 2,282.6 (180.8) 2,101.8 (295.8) 1,806.0
Less accumulated depreciation 949.5 (72.0) 877.5 (152.0) 725.5
Property - Net 1,333.1 (108.8) 1,224.3 (143.8) 1,080.5
Intangible Assets -
Net of Amortization 561.9 (95.3) 466.6 (1.2) 465.4
Unallocated purchase costs 1,687.4 1,687.4 1,687.4
Total Assets $5,061.1 $(241.4) $4,819.7 $(342.0) $4,477.7
<FN>
See accompanying notes to unaudited pro forma combined financial information.
<CAPTION>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1994
North Pro European
The Quaker American Froma ProForma Pet Foods ProForma ProForma
Oats Pet Foods Adjust- Combined Business Adjust- Combined
Company Business ments ments
Dollars in Millions
<S> <C> <C> <C> <C> <C> <C> <C>
Liabilities and Shareholders'
Equity
Current Liabilities:
Short-term debt $1,886.6 $ $(525.0) $1,361.6 $ $(462.4) $ 899.2
Current portion of
long-term debt 45.1 45.1 45.1
Trade accounts payable 334.4 334.4 (108.9) 225.5
Other current liabilities 707.7 (16.6) 691.1 (27.4) 663.7
Total Current Liabilities 2,973.8 (16.6) (525.0) 2,432.2 (136.3) (462.4) 1,833.5
Long-term Debt 1,025.9 1,025.9 1,025.9
Other Liabilities 516.1 (15.5) 500.6 (18.8) 481.8
Deferred Income Taxes 75.6 (13.2) 62.4 (14.5) 47.9
Preferred Stock 100.0 100.0 100.0
Deferred Compensation (78.1) (78.1) (78.1)
Treasury Preferred Stock (4.9) (4.9) (4.9)
Common Shareholders' Equity:
Common stock 840.0 840.0 840.0
Reinvested Earnings 867.6 328.9 1,196.5 290.5 1,487.0
Cumulative translation adjustment (90.0) (90.0) (0.5) (90.5)
Deferred compensation (133.1) (133.1) (133.1)
Treasury common stock (1,031.8) ____ _____ (1,031.8) (1,031.8)
Total Common Shareholders' Equity 452.7 328.9 781.6 (0.5) 290.5 1,071.6
Total Liabilities and
Shareholders' Equity $5,061.1 $(45.3) $(196.1) $4,819.7 $(170.1) $(171.9) $4,477.7
<FN>
See accompanying notes to unaudited pro forma combined financial information.
<CAPTION>
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED JUNE 30, 1994
The Pro Pro
Quaker Snapple Forma Forma North Pro Pro
Oats Beverage Adjust- Combined American Forma Pro European Forma Pro
Company Corp. ments with Pet Foods Adjust- Forma Pet Foods Adjust- Forma
Snapple Business ments Combined Business ments Combined
Dollars in Millions (Except Per Share Data)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $5,955.0 $697.6 $6,652.6 $(570.5) $6,082.1 $(777.9) $5,304.2
Cost of goods sold 2,926.2 402.9 _____ 3,329.1 (293.0) ____ 3,036.1 (421.3) 2,614.8
Gross profit 3,028.8 294.7 3,323.5 (277.5) 3,046.0 (356.6) 2,689.4
Selling, general and
administrative expenses 2,425.6 168.5 40.0 2,634.1 (199.5) 2,434.6 (324.9) 2,109.7
Restructuring charges and
divestiture gains 108.6 108.6 (15.1) 93.5 93.5
Interest expense - net 89.7 2.6 107.0 199.3 (33.1) 166.2 (29.2) 137.0
Foreign exchange loss - net 26.2 _____ _____ 26.2 _____ ____ 26.2 26.2
Income before income taxes 378.7 123.6 (147.0) 355.3 (62.9) 33.1 325.5 (31.7) 29.2 323.0
Provision for income taxes 147.2 42.8 (42.8) 147.2 (24.1) 13.2 136.3 (12.3) 11.7 135.7
Net income 231.5 80.8 (104.2) 208.1 (38.8) 19.9 189.2 (19.4) 17.5 187.3
Preferred dividends-net of tax 4.0 _____ _____ 4.0 _____ ____ 4.0 4.0
Net income available for common $227.5 $ 80.8 $(104.2) $204.1 $(38.8) $19.9 $185.2 $(19.4) $17.5 $183.3
Per Common Share:
Net Income $ 1.68 $ 1.51 $ 1.37 $ 1.36
Average number of common
share outstanding
(in thousands) 135,236 135,236 135,236 135,236
<FN>
See accompanying notes to unaudited pro forma combined financial information.
<CAPTION>
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
FOR THE SIX MONTHS ENDED DECEMBER 31, 1994
Pro
The Pro Forma North Pro Pro
Quaker Snapple Forma Combined American Forma Pro European Forma Pro
Oats Beverage Adjust- with Pet Foods Adjust- Forma Pet Foods Adjust- Forma
Company Corp. ments Snapple Business ments Combined Business ments Combined
Dollars in Millions (Except Per Share Data)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $3,144.3 $271.6 $3,415.9 $(276.5) $3,139.4 $(422.8) $2,716.6
Cost of goods sold 1,616.4 164.9 1,781.3 (139.4) ____ 1,641.9 (229.3) 1,412.6
Gross profit 1,527.9 106.7 1,634.6 (137.1) 1,497.5 (193.5) 1,304.0
Selling, general and
administrative expenses 1,322.5 102.6 17.5 1,442.6 (100.7) 1,341.9 (175.3) 1,166.6
Interest expense - net 39.5 2.6 46.4 88.5 (16.5) 72.0 (14.6) 57.4
Foreign exchange loss - net 0.9 _____ 0.9 _____ ____ 0.9 0.9
Income before income taxes and
cumulative effect of
accounting change 165.0 1.5 (63.9) 102.6 (36.4) 16.5 82.7 (18.2) 14.6 79.1
Provision for income taxes 69.2 0.7 (24.4) 45.5 (15.2) 6.0 36.3 ( 7.6) 5.9 34.6
Income before cumulative effect
of accounting change 95.8 0.8 (39.5) 57.1 (21.2) 10.5 46.4 (10.6) 8.7 44.5
Preferred dividends -
net of tax 2.0 2.0 2.0 2.0
Net income available for
common before cumulative
effect of accounting change $93.8 $0.8 $(39.5) $55.1 $(21.2) $10.5 $44.4 $(10.6) $ 8.7 $42.5
Per Common Share:
Income before cumulative
effect of accounting change $ 0.70 $0.41 $0.33 $0.32
Average number of common
shares outstanding
(in thousands) 133,567 133,567 133,567 133,567
<FN>
See accompanying notes to unaudited pro forma combined financial information.
</TABLE>
