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ASSET PURCHASE AGREEMENT
among
THE CLOROX COMPANY,
a Delaware corporation,
A&M PRODUCTS MANUFACTURING COMPANY,
a Delaware corporation,
THE CLOROX PET PRODUCTS COMPANY,
a Texas corporation,
THE CLOROX SALES COMPANY,
a Delaware corporation,
THE CLOROX COMPANY OF CANADA, LTD.,
a Canadian corporation,
-and-
OIL-DRI CORPORATION OF AMERICA,
a Delaware corporation
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Dated as of November 19, 2002
2
1. Sale of Assets..................................................2
1.1 Sale of Assets; Assumption of Liabilities..............2
1.2 Closing................................................3
1.3 Purchase Price.........................................5
1.4 [Reserved.]............................................5
1.5 Assignment of Contract Rights and Transferable
Governmental Authorizations............................5
1.6 Restricted Use of Jonny Cat Trademark
and Similar Marks......................................5
2. REPRESENTATIONS AND WARRANTIES OF SELLERS.......................6
2.1 Organization and Power.................................6
2.2 Assets.................................................7
2.3 Authorization; No Conflict.............................7
2.4 Financial Statements...................................7
2.5 No Material Adverse Effect.............................8
2.6 Absence of Certain Developments........................8
2.7 Real Property and Related Matters......................9
2.8 Leasehold Interests...................................11
2.9 Unpatented Mining Claims, Surface Rights
and Water Rights......................................11
2.10 Personal Property and Title to Assets, Etc............12
2.11 Inventories...........................................13
2.12 Tax Matters...........................................13
2.13 Contracts and Commitments.............................14
2.14 Trademarks............................................16
2.15 Litigation; Proceedings; Kickback.....................16
2.16 Brokerage.............................................16
2.17 Governmental Consents, Etc............................16
2.18 Employees.............................................16
2.19 Employee Benefit Plans................................17
2.20 Insurance.............................................17
2.21 [Reserved.]...........................................17
2.22 Compliance with Laws; Permits; Certain Operations.....17
2.23 Environmental Matters.................................18
2.24 No Default............................................18
2.25 Customer Relations....................................19
2.26 Warranties and Product Liability......................19
2.27 Disclosure Schedules..................................19
3. Representations and Warranties of Buyer........................19
3.1 Due Organization......................................19
3.2 Authority; Binding Nature Of Agreement................20
3.3 Brokers...............................................20
3.4 No Conflict...........................................20
3.5 Litigation; Proceedings...............................20
3.6 Available Funds.......................................20
3.7 Authorization.........................................20
3.8 Governmental Consents, Etc............................20
4. Covenants......................................................21
4.1 Best Efforts..........................................21
4.2 Confidentiality.......................................21
4.3 Employees.............................................21
4.4 Due Diligence Investigation...........................24
4.5 Affirmative Covenants of Sellers......................24
4.6 Negative Covenants....................................25
4.7 Title Commitments.....................................25
4.8 Customer Information..................................26
4.9 Reclamation Bonds.....................................26
5. Conditions Precedent to Buyer's Obligation to Close............26
5.1 Accuracy Of Representations...........................26
5.2 Performance Of Obligations............................27
5.3 Required Filings And Consents.........................27
5.4 No Material Adverse Effect............................27
5.5 Third Party Consents..................................27
5.6 Acceptance Of Certain Financial Assurances............27
5.7 No Legal Proceedings..................................27
5.8 Delivery of Schedules.................................28
5.9 Due Diligence.........................................28
5.10 Surveys...............................................28
5.11 Title V Permit........................................28
5.12 Reserves..............................................28
5.13 Financial Information.................................28
6. Conditions Precedent to Sellers' Obligations to Close..........28
6.1 Accuracy Of Representations...........................29
6.2 Buyer's Performance...................................29
6.3 Release Of Certain Financial Assurances...............29
6.4 Required Filings And Consents.........................29
6.5 No Legal Proceedings..................................29
7. Termination....................................................29
7.1 Termination Events....................................29
7.2 Termination Procedures................................30
7.3 Effect Of Termination.................................30
8. Indemnification, Etc...........................................30
8.1 Survival Of Representations, Warranties
And Covenants.........................................30
8.2 Indemnification By Sellers............................31
8.3 Indemnification By Buyer..............................32
8.4 Method of Asserting Claims............................33
8.5 General...............................................35
9. DISCLAIMER.....................................................35
10. CONFIDENTIAL NATURE OF INFORMATION............................36
10.1 Confidentiality Agreement.............................36
11. Certain Post-Closing Covenants................................36
11.1 Further Actions.......................................36
11.2 Publicity.............................................36
11.3 Receipts After Closing................................36
11.4 Payment of Transfer Taxes and Tax Filings and Certain
Post-Closing Agreements...............................37
11.5 Telephone Numbers.....................................37
11.6 Transfer of 401(k) Assets.............................37
11.7 Jonny Cat Club........................................38
12. Miscellaneous Provisions......................................38
12.1 Further Assurances....................................38
12.2 Notices...............................................38
12.3 Headings..............................................39
12.4 Counterparts..........................................39
12.5 Governing Law; Venue..................................39
12.6 Successors And Assigns; Parties In Interest...........40
12.7 Amendments; Waiver....................................40
12.8 Severability..........................................40
12.9 Entire Agreement......................................40
12.10 Attorneys' Fees.......................................41
12.11 Knowledge Convention..................................41
12.12 Expenses..............................................41
12.13 No Strict Construction................................41
12.14 Specific Performance..................................41
12.15 Schedules and Exhibits................................41
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of November 19, 2002, by
and among The Clorox Company, a Delaware corporation ("CLOROX"), A&M Products
Manufacturing Company, a Delaware corporation ("A&M"), The Clorox Pet Products
Company, a Texas corporation ("CPP"), The Clorox Sales Company, a Delaware
corporation ("CSC"), and The Clorox Company of Canada, Ltd., a Canadian
corporation ("CCC" and, together with Clorox, A&M, CPP and CSC, "SELLERS"), and
Oil-Dri Corporation of America, a Delaware corporation ("Buyer").
RECITALS
A....Clorox, through its direct or indirect subsidiaries, A&M, CPP, CSC
and CCC manufactures, markets, sells and distributes traditional coarse clay cat
litter and cat litter box liners under the "Jonny Cat" trademarks.
B....A&M operates a processing and packaging facility in Taft, California
(the "TAFT PLANT"), which produces, among other products, "Jonny Cat"
traditional coarse clay cat litter, scoopable cat litter, agricultural chemical
based products, and industrial absorbents.
C....A&M operates a clay surface mine near the Taft Plant (the "TAFT
MINE"), which supplies clay ore to the Taft Plant (the Taft Plant and the Taft
Mine are sometimes collectively referred to herein as the "TAFT Facility"). The
Taft Mine is located on an approximately 640-acre parcel of real property owned
by A&M, which is adjacent to an approximately 700-acre parcel of real property,
as to which A&M holds certain United States Bureau of Land Management ("BLM")
unpatented mining claims.
D....Upon the terms and subject to the conditions of this Agreement, (1)
Buyer wishes to purchase, and Sellers wish to sell, certain assets relating to
the Jonny Cat product line and the Taft Facility, including, without limitation,
the Jonny Cat trademarks and inventory, Taft Facility equipment and related real
property and the Mining Claims, (2) Buyer wishes to assume certain related
obligations and liabilities and (3) Buyer wishes to employ certain of the Taft
Facility Employees at the Taft Facility after the closing of the sale of assets
hereunder.
E....Pursuant to that certain Memorandum of Agreement #1465, dated as of
April 18, 2001 (the "JONNY CAT COPACK AGREEMENT"), between A&M and Buyer, Buyer
manufactures and packages Jonny Cat traditional coarse clay cat litter for A&M.
F....Pursuant to that certain Memorandum of Agreement #1450, dated as of
March 12, 2001 (the "FRESH STEP COARSE CLAY COPACK AGREEMENT"), between A&M and
Buyer, Buyer manufactures and packages traditional coarse clay cat litter for
A&M, for sale under the "Fresh Step" trademark.
G....Upon the closing of the sale of the assets hereunder, A&M and Buyer
wish to (1) terminate the Jonny Cat Copack Agreement, (2) amend the Fresh Step
Coarse Clay Copack Agreement, (3) enter into a purchase order with respect to
cat litter box liners and (4) enter into a transitional services agreement with
respect to certain services to be provided to Buyer by Sellers after closing.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
1. SALE OF ASSETS.
1.1 SALE OF ASSETS; ASSUMPTION OF LIABILITIES.
(a) On the terms and subject to the conditions set forth in this Agreement,
Buyer shall purchase from the applicable Seller, and the applicable
Seller shall sell, assign, transfer, convey and deliver to Buyer, at
the Closing, all right, title and interest of such Seller in and to the
Assets, but not including the Excluded Assets. For purposes of this
Agreement, "ASSETS" shall mean (i) all assets related to the "Jonny
Cat" brand cat litter and business, (ii) the Taft Facility, and
(iii) all other assets and business lines of Sellers that generate
revenue out of the Taft Facility including, without limitation, the
Intangible Assets (other than Governmental Authorizations that are not
Transferable Governmental Authorizations), the Inventory, the
Equipment, the Advertising Materials, the Books and Records, the Mining
Claims, the Governmental Authorizations related to the Assets, which
are identified on SCHEDULE 1.1(A), but only to the extent that such
Governmental Authorizations are assignable or transferable to Buyer
(the "TRANSFERABLE GOVERNMENTAL AUTHORIZATIONS"), the Mineral Reserves
and the Real Property, but shall exclude the Excluded Assets. Unless
otherwise defined in the Recitals above or elsewhere in this Agreement,
the capitalized terms used herein shall have the meanings set forth in
EXHIBIT A.
(b) ASSUMPTION OF LIABILITIES. Subject to the conditions specified in this
Agreement, on the Closing Date, Buyer shall assume and agree to pay,
defend, discharge and perform as and when due all the Assumed Liabilities.
(c) RETAINED LIABILITIES AND EXCLUDED ASSETS. Notwithstanding anything to
the contrary contained in this Agreement, (i) Buyer shall not assume or
be liable for any liabilities or obligations of Sellers other than the
Assumed Liabilities (and Sellers agree to retain, remain liable for and
to fully and timely discharge such liabilities and to hold Buyer
harmless from such liabilities as provided in SECTION 8.2),
(ii) Sellers shall not be required to sell or cause to be sold, nor
shall Buyer acquire any interest in or to, or be required to buy, the
property or rights of Clorox or any Clorox Subsidiary identified on
SCHEDULE 1.1(C) (the "EXCLUDED ASSETS") and (iii) no title, right or
license of any kind is granted to Buyer pursuant to this Agreement with
respect to any Proprietary Information of Clorox or any Clorox
Subsidiary, either directly or indirectly, by implication, estoppel or
otherwise, except the Proprietary Information included in the Assets.
Buyer acknowledges and agrees, for purposes of this Agreement, that any
and all manufacturing know-how, processes and formula transferred or
caused to be transferred by Sellers to Buyer hereunder may continue to
be used by Clorox and all Clorox Subsidiaries at their respective
plants and production facilities or otherwise, provided such use is not
in contravention of any of the terms of this Agreement.
1.2 CLOSING.
(a) The closing of the transfer of the Assets to Buyer (the "CLOSING")
shall take place in accordance with a process of document exchange and
escrow mutually agreed upon by the parties and on a date mutually
agreeable to the parties, not later than December 10, 2002. For
purposes of this Agreement, "SCHEDULED CLOSING TIME" shall mean the
time and date as of which the Closing is required to take place
pursuant to this SECTION 1.2(A); and "CLOSING DATE" shall mean the time
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and date as of which the Closing actually takes place.
(b) At the Closing:
(i) Each Seller shall execute and deliver to Buyer (w) a Bill of Sale with
respect to the Assets being transferred by it, each in form and
substance mutually acceptable to the parties (the "BILLS OF
Sale"), (x) an Assignment of Trademarks and Goodwill with respect
to the Jonny Cat Trademarks being transferred by it, each in form
and substance mutually acceptable to the parties (the "TRADEMARK
ASSIGNMENTS"), (y) an assignment and assumption agreement in form
and substance mutually acceptable to the parties transferring,
among other things, the Assumed Contracts (the "ASSUMPTION
AGREEMENT"), and (z) such other documents and instruments of
transfer, in form and substance reasonably satisfactory to Buyer
and its counsel, as are required to transfer title to the Assets
(other than the Real Property, the Mining Claims and the Mineral
Reserves) to Buyer free and clear of all Encumbrances (other than
Permitted Encumbrances); provided, however, that all vehicle
titles not transferred to Buyer by Sellers at the Closing shall
be delivered to Buyer by Sellers promptly following the Closing;
(ii) A&M shall execute and deliver to Buyer a quit claim deed in
recordable form, conveying A&M's interest in the Real Property (the
"REAL PROPERTY DEED"), subject to the Permitted Encumbrances and the
Permitted Exceptions;
(iii) A&M shall execute and deliver to Buyer a quit claim deed in
recordable form, with all transfer taxes affixed or paid (to be split
as agreed herein), conveying A&M's interest in the Mining Claims (the
"MINING CLAIMS DEED") including, without limitation, all minerals and
mineral rights related thereto, subject to the Permitted Encumbrances
and the Permitted Exceptions;
(iv) Sellers shall execute and deliver to Buyer real estate conveyance
documents and certificates, assignments, non-disturbance and
attornment agreements, environmental and other disclosure documents,
affidavits and other documents and instruments as are reasonably
requested by Buyer and necessary to effectuate the transfer of the
Assets;
(v) Sellers shall deliver to Buyer any and all certificates and other
original documents evidencing any Transferable Governmental
Authorizations and any and all original copies of the written Assumed
Contracts, together with any and all required consents to assignment
of the Transferable Governmental Authorizations and the Contract
Rights that are required to be obtained prior to the Closing;
(vi) Buyer shall pay to Sellers the Purchase Price required under Section
1.3, by wire transfer of immediately available funds to such account
as Clorox shall designate;
(vii) Sellers, on the one hand, and Buyer, on the other hand, shall execute
and deliver to each other certificates (the "CLOSING Certificates")
certifying that (A) each of the representations and warranties made
by such party in this Agreement was accurate in all respects as of
the date of this Agreement, (B) except as expressly set forth in such
Closing Certificate, each of the representations and warranties made
by such party in this Agreement is accurate in all respects as of the
Closing Date as if made on the Closing Date, except to the extent
that such representations and warranties are made as of a specified
date, in which case such representations and warranties shall be true
in all respects as of the specified date, and except for any new
Disclosure Schedule or any supplements or amendments to such
Disclosure Schedules to the extent Buyer has not exercised its
termination rights pursuant to SECTION 7.1(B) as a result of any
matters disclosed thereon, (C) each of the covenants and obligations
that such party is required to have complied with or performed
pursuant to this Agreement at or prior to the Closing has been duly
complied with and performed in all material respects, and (D) except
as expressly set forth in the Closing Certificate, each of the
conditions set forth in SECTION 5 (with respect to the certificate of
Sellers) and SECTION 6 (with respect to the certificate of Buyer) has
been satisfied in all material respects;
(viii) A&M, CPP, CSC and CCC each shall deliver to Buyer a certified copy of
the resolutions duly adopted by its Board of Directors authorizing
the execution, delivery and performance of this Agreement and each of
the other Transactional Agreements to which it is a party, and the
consummation of the transactions contemplated by this Agreement and
the Transactional Agreements to which it is a party;
(ix) Buyer shall deliver to Sellers certified copies of the resolutions
duly adopted by Buyer's Board of Directors authorizing the execution,
delivery and performance of this Agreement and each of the other
Transactional Agreements to which it is a party, and the consummation
of the transactions contemplated by this Agreement and the
Transactional Agreements;
(x) Buyer and A&M shall enter into a termination agreement with respect
to the Jonny Cat Copack Agreement, in form and substance mutually
acceptable to the parties (the "JONNY CAT COPACK TERMINATION
AGREEMENT");
(xi) Buyer and A&M shall enter into an amendment to the Fresh Step Coarse
Clay Copack Agreement, in form and substance mutually acceptable to
the parties (the "FRESH STEP COARSE CLAY AMENDMENT");
(xii) Buyer shall assume the obligations of Sellers under the Assumed
Liabilities by delivering to Sellers the Assumption Agreement
executed by Buyer;
(xiii) Buyer and Sellers shall enter into a transitional services agreement,
in form and substance mutually acceptable to the parties (the
"TRANSITIONAL SERVICES AGREEMENT");
(xiv) Sellers shall deliver such other documents or instruments reasonably
requested by Buyer and which Buyer deems necessary in its reasonable
discretion to effectuate the transfer of the Assets; and
(xv) Buyer and A&M shall enter into a purchase order with respect to the
supply of cat litter box liners, in form and substance mutually
acceptable to the parties (the "LINER PURCHASE ORDER").
1.3 PURCHASE PRICE. As consideration for the sale of the Assets to Buyer,
at the Closing:
(a) Buyer shall pay to Sellers, in cash, $6,000,000 (the "PURCHASE PRICE");
and
(b) Buyer shall assume the Assumed Liabilities.
1.4 [RESERVED.]
1.5 ASSIGNMENT OF CONTRACT RIGHTS AND TRANSFERABLE GOVERNMENTAL AUTHORIZATIONS.
To the extent the transfer of any Contract Right or Transferable Governmental
Authorization to be transferred to Buyer pursuant to this Agreement shall
require the consent of any other Person, the parties agree that, until such
consent is obtained, this Agreement shall not constitute a contract to assign
the same if an attempted assignment without obtaining such consent would
constitute a breach or violation thereof or event of default thereunder, would
give rise to any right of acceleration or termination, or would violate any Law.
If any such consent is not obtained prior to Closing, for a period of six (6)
months after the Closing Sellers shall cooperate with Buyer at its request in
using Best Efforts to obtain such consent. Notwithstanding anything to the
contrary herein, (a) to the extent any Governmental Authorization is not
transferable, this Agreement shall not constitute a contract to transfer the
same and, for up to sixty (60) days after Closing, Sellers shall use their Best
Efforts to provide to Buyer such information as Buyer may reasonably request to
obtain a replacement Governmental Authorization, and (b) Sellers do not give any
representation or warranty with respect to the transferability of any
Governmental Authorization or the availability of any replacement Governmental
Authorization.
1.6 RESTRICTED USE OF JONNY CAT TRADEMARK AND SIMILAR MARKS.
(a) For a period of five (5) years after the Closing, (i) Buyer shall not
use, or permit the use of, any Jonny Cat Trademark, nor any trademark,
service mark, logo or other mark that is confusingly similar to any
Jonny Cat Trademark, as a brand name for any Scoopable Cat Litter or
any Silica Gel Cat Litter that may be sold or distributed anywhere in
the United States of America or Canada outside of the Taft Distribution
Area; and (ii) Buyer shall not use, or permit the use of, any Jonny
Cat Trademark, nor any trademark, service mark, logo or other mark that
is confusingly similar to any Jonny Cat Trademark, as a brand name for
any Silica Gel Cat Litter or any blended scoopable cat litter with any
silica gel crystal content that may be sold or distributed in the Taft
Distribution Area. Except as expressly provided in this SECTION
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1.6(a), no manufacturing, marketing, processing, distribution, sales or
other activity of Buyer (including, without limitation, any slotting
activities of Buyer) shall be restricted in any way whatsoever. Buyer
acknowledges and agrees that the Jonny Cat Trademarks being purchased
by it hereunder do not include any rights Clorox or any Clorox
Subsidiary may have in or to Trademarks outside of the United States
and Canada and that Clorox and the Clorox Subsidiaries retain any and
all such rights, as further provided in SECTION 1.1(C).
(b) Buyer acknowledges and agrees that its covenants in this SECTION 1.6
are a material inducement to Sellers' agreement to transfer the Jonny
Cat Trademarks to Buyer, that such covenants relate to matters which
are of a special, unique and extraordinary character that give each
such covenant a special, unique and extraordinary value, and that a
breach of any such covenants will result in irreparable harm and
damages to Sellers which cannot be adequately compensated by a monetary
award. In the event of any anticipated or actual breach of Buyer's
agreement set forth in this SECTION 1.6, each Seller shall be entitled
to seek a temporary restraining order and to seek temporary and
permanent injunctive relief and such other form of equitable or
injunctive relief as may be used by any court of competent jurisdiction
to prevent or terminate such anticipated or actual breach, as well as
any and all other applicable remedies at law and in equity available to
it. If a court of competent jurisdiction should declare the covenants
of Buyer in this SECTION 1.6 unenforceable, in whole or in part, due to
any unreasonable restriction of duration and/or geographical area, then
the parties hereto hereby acknowledge and agree that such a court of
law or equity shall have the express authority of the parties to this
Agreement to reform said covenants to a reasonable restriction and/or
to grant each Seller any and all other relief, at law or in equity,
reasonably necessary to protect the interests of such Seller. Buyer
expressly covenants and acknowledges that Buyer considers the
provisions of this SECTION 1.6 to be reasonable.
2. REPRESENTATIONS AND WARRANTIES OF SELLERS. As an inducement to Buyer to
enter into this Agreement, Sellers, jointly and severally, hereby represent
and warrant to Buyer as of the date hereof that the statements contained in this
SECTION 2 are true, correct and complete.
2.1 ORGANIZATION AND POWER. Each of Clorox, CSC and A&M is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, CPP is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas and CCC is a corporation duly
organized, validly existing and in good standing under the laws of Canada. Each
Seller is qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which the ownership of the Assets or the
conduct of business requires such Seller to be so qualified. Sellers have all
requisite corporate power and authority and all corporate licenses, permits and
other authorizations necessary to own and operate their respective properties
and to carry on their respective businesses as now conducted.
2.2 ASSETS. Except for the Excluded Assets, the Assets are (a) all of the assets
owned, leased or used by Sellers or any subsidiary or affiliate thereof
currently employed in or necessary to conduct the Jonny Cat Business as
currently conducted, (b) all of the assets on or related to the Taft Facility
and all business lines that generate revenue at the Taft Facility using any such
asset, and (c) except as otherwise specifically provided herein with respect to
the Jonny Cat Trademarks, owned exclusively or leased by one or more Sellers.
2.3 AUTHORIZATION; NO CONFLICT. Each Seller has duly and validly authorized the
execution, delivery and performance of this Agreement and all other
Transactional Agreements to which it is a party, and the transactions
contemplated hereby and thereby by all requisite corporate action. This
Agreement has been duly executed and delivered by Sellers, and this Agreement
constitutes, and the other Transactional Agreements upon execution and delivery
by the Sellers that are parties thereto shall each constitute, a valid and
binding obligation of each Seller that is a party thereto, enforceable in
accordance with their respective terms. The execution, delivery and performance
of this Agreement and the other Transactional Agreements by Sellers, and the
consummation of the transactions contemplated hereby and thereby, do not and
shall not (a) conflict with or result in any breach of any of the provisions of,
(b) constitute a default under, result in a violation of, or cause the
acceleration of any obligation under, (c) result in the creation of any
Encumbrance upon any of the Assets under, or (d) require any authorization,
consent, approval, exemption or other action by or notice to any court or
Governmental Body under, any Law, the provisions of Sellers' respective
certificates of incorporation or by-laws or any material indenture, mortgage,
lease, loan agreement or other agreement or instrument to which Sellers are
bound or to which any of the Assets are subject, except, in each case, for any
of the foregoing individually or in the aggregate, which would not reasonably be
expected to have a Material Adverse Effect or materially hinder or impair the
consummation of the transactions contemplated hereby.
2.4 FINANCIAL STATEMENTS. (a) Sellers have furnished, or promptly after the date
hereof shall furnish, Buyer with copies of (i) an unaudited statement of
operations for the United States Jonny Cat cat litter business for the fiscal
year ended June 30, 2002, an unaudited statement of operations for the United
States Jonny Cat cat litter business for the three (3) months ended September
30, 2002, an unaudited statement of operations for the agricultural and
industrial absorbent business for the fiscal year ended June 30, 2002 and an
unaudited statement of operations for the agricultural and industrial absorbent
business as of September 30, 2002 (collectively, the "P&L Statement"), and (ii)
an unaudited statement of inventory of the Business as of June 30, 2002 and
September 30, 2002, and an unaudited statement of fixed assets of the United
States Business at June 30, 2002 (collectively, the "Statement of Inventory and
Assets"). (b) The financial information provided to Buyers and referred to in
SECTION 2.4(A) (i) is based upon the information contained in Sellers' books and
records (which are accurate and complete in all material respects) and certain
allocations made by Sellers' management in its reasonable judgment and as
specifically described in the P&L Statement and the Statement of Inventory and
Assets, as applicable, and (ii) is accurate in all material respects as of the
times and with respect to the periods referred to therein. The P&L Statement and
the Statement of Inventory and Assets are attached hereto as SCHEDULE2.4.
2.5 NO MATERIAL ADVERSE EFFECT. Except as set forth in SCHEDULE 2.5, since June
30, 2002, there has been no change in the business, operations, properties,
assets, condition (financial or otherwise), customer relations or supplier
relations, taken as a whole, of Sellers related to the Assets or the Business
which could reasonably be expected to have a Material Adverse Effect.
2.6 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth in SCHEDULE 2.6, with
respect to the Assets, since September 30, 2002, Sellers have not:
(a) made any material changes in sales pricing practices or terms in respect
of the operation of the Assets, become subject to any material liabilities
or supply agreements with respect to the Assets obligating Sellers to
deliver in excess of 1,000 tons of product to any customer, or 5,000 tons
of product in the aggregate in any year, or entered into any sales or
supply agreements for a term in excess of six (6) months;
(b) subjected to any Encumbrance, any portion of the Assets, other than in the
ordinary course of business consistent with past practice and except
Permitted Exceptions and Permitted Encumbrances;
(c) sold, assigned or transferred any of the Assets, except in the ordinary
course of business consistent with past practice, or canceled without fair
consideration any material debts or claims owing to or held by it, except
in the ordinary course of business consistent with past practice;
(d) sold, assigned, transferred, abandoned or permitted to lapse any United
States or Canadian Intellectual Property, or disclosed any material
proprietary confidential information to any Person other than Buyer, in
either case except in the ordinary course of business or as part of the
sale of the Jonny Cat Business;
(e) with respect to employees at the Taft Facility, made or granted any bonus
or any wage or salary increase (except for a wage/salary increase of three
percent (3%) effective January 1, 2003) to any employee or group of
employees or made or granted any increase in any employee benefit plan or
arrangement (except in accordance with past custom and practice), or
amended or terminated any existing employee benefit plan or arrangement or
adopted any new employee benefit plan or arrangement;
(f) made any unpaid capital improvement or commitments with respect to the
Assets that aggregate in excess of $50,000;
(g) entered into any other material transaction related to the Assets;
(h) suffered any material damage, destruction or casualty loss to any Asset
with a replacement cost of $10,000 or more or at the Taft Facility,
whether or not covered by insurance;
(i) failed promptly to pay and discharge current liabilities related to the
Assets in accordance with past practice, except where disputed in good
faith;
(j) made any change in any method of accounting or accounting practice or
policy used with respect to the Assets other than such changes required by
GAAP; or
(k) agreed, whether in writing or otherwise, to take any of the actions set
forth in this SECTION 2.6.
2.7 REAL PROPERTY AND RELATED MATTERS.
(a) SCHEDULE 2.7(A) attached hereto sets forth a legal description of the
land comprising the Real Property. Except as set forth on
SCHEDULE 2.7(A), the Real Property, including, without limitation, all
mineral rights appertaining thereto, is free and clear of any
Encumbrance, other than Permitted Exceptions and Permitted
Encumbrances. With respect to the Real Property, to the knowledge of
Sellers, there are no encroachments or projections of improvements
located on any other property onto any part of the Real Property nor do
any improvements located on any part of such Real Property encroach or
project upon other properties other than Permitted Exceptions.
(b) Except as described in SCHEDULE 2.7(B), there are no pending or, to the
knowledge of Sellers, threatened actions, suits or proceedings,
including condemnation or similar proceedings, against any Seller or
relating to the Real Property or any material portion thereof, or
relating to or arising out of the interest of Sellers in the Real
Property or any material portion thereof, in any court or before or by
any federal, state, county or municipal department, commission, board,
bureau, agency, or other Governmental Body which, if decided contrary
to Sellers' interests, would have an adverse effect on the value or use
of the Real Property as currently used or reserved for use. Except as
described in SCHEDULE 2.7(B), no special assessment is pending or has
been proposed against any portion of the Real Property. Except as
described in SCHEDULE 2.7(B), no Person is or has been in adverse
possession of the Real Property or any part thereof for any period of
time.
(c) To the knowledge of Sellers, no portion of the Real Property is in
violation of, or used or occupied in a manner in violation of, any
building or fire code, zoning ordinance, certificate of occupancy,
insurance regulation or any other federal, state, county or municipal
law, ordinance, order, or regulation or statute applicable thereto. To
the knowledge of Sellers, all of the Real Property used by Sellers or
reserved for use by Sellers conforms with the uses permitted by the
applicable zoning ordinances (without benefit of the prior
nonconforming use doctrine) or pursuant to an existing permanent
variance, permit or exception to such ordinance which variance, permit
or exception will inure to the benefit of Buyer as owner of the Real
Property.
(d) The improvements situated on the Real Property which are necessary to
operate the Assets as currently conducted by Sellers are, in all material
respects, structurally sound and in good condition, order and repair,
taking into account their current use, age, ordinary wear and tear and
normal maintenance.
(e) To the knowledge of Sellers, there are no unrecorded licenses, leases, use
agreements or understandings (in each case, whether oral or written)
(collectively, "UNRECORDED LICENSES") relating to the use or occupancy of
the Real Property by others. There are no Unrecorded Licenses that would
reasonably be expected to have a Material Adverse Effect.
(f) Except as set forth in SCHEDULE 2.7(F), A&M has unrestricted legally
enforceable access to and from the Real Property and the non-owned
parcels of real estate underlying the Mining Claims to any railroad
rights of way, public highways, roads or streets sufficient to permit
the conduct of the operation of the Taft Facility and the Business as
currently operated, and, to the knowledge of Sellers, there is no
currently existing fact or condition which would result in the
interference with or termination of such access.
(g) Except as set forth on SCHEDULE 2.7(G), (i) Sellers have no knowledge
that the Real Property has ever been used as a cemetery or Native
American burial ground; (ii) to Sellers' knowledge, there are no
endangered or threatened species of animal or plant which at any time
during the past five (5) years have lived on any of the Real Property;
(iii) to Sellers' knowledge, no portion of the Real Property is a
"wetland," as that term is used under any federal law, rule or
regulation or any state or local law, rule or regulation applicable in
the state and locality in which the Real Property is situated; and
(iv) to the knowledge of Sellers, no portion of the Real Property has
ever been designated as archaeologically significant based on findings
of Native American artifacts or otherwise.
(h) All public utilities required for the present activities of the operation
of the Taft Facility connect into the Real Property or are available to
the Real Property at the boundaries thereof.
(i) No Person has any option to purchase, or right of first offer or first
refusal with respect to, any portion of the Real Property, or is party
to any agreement which, under any circumstances, could become such an
option or right of first offer or first refusal, except as set forth on
SCHEDULE 2.7(I). Sellers hold no options to purchase or acquire any
interest in real property, or rights of first offer or first refusal
with respect to any interest in real property (including any interest
which, upon acquisition, would be a Leasehold Interest (as defined in
SECTION 2.8 below)), which options or rights of first offer or first
refusal relate to real property that could be used as clay mining
property and is within twenty-five (25) miles of any point on the
exterior boundaries of any of the Real Property.
(j) Sellers do not own or hold any interest whatsoever in real property that
is used in any way in the conduct of the Business situated within
twenty-five (25) miles of any point on the exterior boundaries of any of
the Unpatented Mining Claims referred to in SECTION 2.9 or any of the Real
Property except for the Real Property and the Mining Claims.
2.8 LEASEHOLD INTERESTS. Sellers are not parties to any leases, subleases,
rental or other occupancy agreements relating to any real property and any
rights to use or occupy real property, or rights or interests therein, which (a)
are held by Sellers as lessee or sublessee (in each case, whether recorded or
unrecorded), (b) are used or held for use in or relating to the Business, or (c)
relate to real property that is within twenty-five (25) miles of any point on
the exterior boundaries of any of the Real Property.
2.9 UNPATENTED MINING CLAIMS, SURFACE RIGHTS AND WATER RIGHTS.
(a) The Unpatented Mining Claims identified on SCHEDULE 2.9(A) contain the
information specified below for each such Unpatented Mining Claim and are,
to the knowledge of Sellers, all of the Unpatented Mining Claims owned by
Sellers in the vicinity of the Taft Facility.
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Name of Claim Date of County Recording BLM Serial No.
Location Data
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Date Book Page
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(b) With respect to the Unpatented Mining Claims, subject only to the
paramount title of the United States, to the knowledge of Sellers:
(i) the Unpatented Mining Claims were laid out and monumented
consistent with industry practices on federal lands which were open to
entry under the Mining Law of 1872 at the time of location;
(ii) location notices and certificates were properly recorded and filed
with appropriate governmental authorities; (iii) affidavits of
assessment work, notices of intent to hold, or verified reports were
timely and duly recorded and filed with appropriate agencies for each
of the Unpatented Mining Claims for each year for all assessment years
during which the performance of assessment work was required by law and
for which such affidavit, notice or report was required to be filed;
(iv) payments of rental fees or maintenance fees in lieu of assessment
work were timely paid for each assessment year when such payments were
required by Law and affidavits thereof were timely filed with and
recorded in the local offices of the appropriate Governmental Body
insofar as required or allowed by applicable Law; (v) the work and
expenditures described in said affidavits, notices and reports were in
fact made and performed in a good faith effort to satisfy assessment
work requirements; (vi) the Unpatented Mining Claims are free and clear
of liens, production royalties, advance royalties, rents, bonuses or
bonus payments or finder's fees in favor of any Person; (vii) Sellers
have no knowledge of conflicting claims or activities or possession by
third parties in anticipation of such claims, except as set forth in
SCHEDULE 2.9(B); and (viii) Sellers have located each such Unpatented
Mining Claim under the Mining Law of 1872.
(c) Where Sellers' ownership of the Unpatented Mining Claims does not give
Sellers surface rights of ingress and egress and use of the surface of
such mining claims for mining and related purposes, Sellers have valid
and enforceable agreements with the owners of such surface rights
permitting Sellers access to such claims for mining and related
purposes, all of which agreements are set forth in SCHEDULE 2.9(C).
Sellers are not in default with respect to any obligations thereunder
and, to Sellers' knowledge, there has not occurred any event which,
with notice or lapse of time or both, would constitute such default.
The agreements set forth in SCHEDULE 2.9(C) are fully assignable and by
their terms do not require compensation to the surface owner, except as
provided in SCHEDULE 2.9(C).
(d) With respect to any Real Property and any Mining Claims constituting
part of the Assets, all water rights of Sellers appurtenant to such
Real Property and Mining Claims are set forth in SCHEDULE 2.9(D), and
such water rights, if any, have been granted pursuant to the
agreements, applications to appropriate water, certificates of
appropriation and applications to change water rights set forth in
SCHEDULE 2.9(D). Sellers are not in default with respect to any
obligations under such agreements and, to the best knowledge of
Sellers, there has not occurred any event which, with notice or lapse
of time or both, would constitute such a default. The agreements set
forth in SCHEDULE 2.9(D), if any, are fully assignable to Buyer and by
their terms do not require compensation to any party thereto.
(e) For purposes of this SECTION 2.9, "knowledge" shall mean actual knowledge
of Michael Weaver or written notice to him of the matter in question.
2.10 PERSONAL PROPERTY AND TITLE TO ASSETS, ETC.
(a) SCHEDULE 2.10(A) sets forth a true and complete list and brief description
from Sellers' business records, as of June 30, 2002, of all Equipment;
provided, however, such list may exclude Equipment that has an individual
value of less than $2,500.
(b) Except as set forth in SCHEDULE 2.10(B), all of the Assets (other than
----------------
the Mineral Reserves, the Real Property and the Mining Claims) that are
owned by any Seller including, but not limited to, such Assets
described in any Disclosure Schedule, are free and clear of any
Encumbrances other than Permitted Encumbrances and Permitted
Exceptions. Except as set forth in SCHEDULE 2.10(B), all tangible
----------------
Assets including, but not limited to, Books and Records, Equipment and
core samples are, or on the Closing Date will be, located at the Real
Property or shall be separately delivered to Buyer except for
(i) Assets that, as of the Closing Date, have been sold or otherwise
disposed of in the ordinary course of business and (ii) a split of each
core sample, which shall be retained by Sellers.
(c) The Equipment is in good operating condition, order and repair, taking
into account ordinary wear and tear.
2.11 INVENTORIES. All finished product Inventory, net of reserves for obsolete
and excess Inventory, included in the Assets are in salable condition and are
located at the Taft Facility or in the warehouses or Clorox distribution centers
in the United States or Canada specified in SCHEDULE 2.11, or are in transit to
any such location. The amount and value of Inventory being sold hereunder is at
a level in amount and fair market value at least equal to one million two
hundred thousand dollars ($1,200,000), with a three percent (3%) allowance for
unsalable or slow-moving Inventory. All work-in-process Inventory, net of
reserves for obsolete and excess Inventory, included in the Assets is capable of
being processed or made into salable condition in the ordinary course of
business and is located at the Taft Facility. All packaging materials, purchased
raw materials and fuels Inventory, net of reserves for obsolete and excess
Inventory, owned by Sellers were purchased for use at the Taft Facility and all
such packaging materials, purchased raw materials and fuels, net of reserves for
obsolete and excess Inventory, are in usable condition.
2.12 TAX MATTERS.
(a) All monies required to be withheld from Taft Facility employees for
income taxes, social security and unemployment insurance taxes or
collected from customers or suppliers in connection with the Jonny
Cat Business as sales, use or other Taxes have been withheld or
collected and paid, when due, to the appropriate governmental
authority, or if such payment is not yet due, an adequate reserve has
been established.
(b) With respect to the Taft Facility and the Business, except as set
forth on SCHEDULE 2.12:
(i) Each of the Sellers have filed or will file or cause to be
filed, within the applicable period prescribed by law, all Tax
Returns required by such law to be filed by such Sellers for all
taxable periods ending on or prior to the Closing Date. All Tax
Returns are or shall be accurate and complete in all respects,
have been prepared in compliance with all applicable laws and
regulations and reflect all Taxes due for such periods. Each of
the Sellers have paid, within the time and in the manner
prescribed by law, all Taxes due or payable prior to the Closing
Date, whether or not reflected on such Tax Returns and, with
respect to all Tax Returns that the applicable Sellers have not
yet filed, shall pay, within the time and in the manner
prescribed by law, all Taxes due for such periods. No Tax Returns
have been audited by any Governmental Body. None of the Sellers
are currently the beneficiary of any extension of time within
which to file any Tax Return;
(ii) No claim or assertion has been made against any of the Sellers by any
Governmental Body in any jurisdiction in which a Tax Return has not
been filed by a Seller that such Seller is or may be subject to
taxation of any sort in such jurisdiction or otherwise is required to
file a Tax Return in such jurisdiction. None of the Sellers have
waived any statute of limitations in respect of Taxes or agreed to
any extension of time with respect to a Tax assessment or deficiency;
(iii) Sellers do not have any reasonable expectation that any Governmental
Body will assess any Tax liability for any period for which Tax
Returns have, or should have, been filed. No Tax audits or
administrative or judicial Tax proceedings are pending or, to the
knowledge of Sellers, are being conducted by any Governmental Body
with respect to Sellers. Sellers have not received from any
Governmental Body (including authorities in jurisdictions where
Sellers have not filed Tax Returns) any (i) notice (written or
otherwise) indicating an intent to open an audit or other review,
(ii) request for information related to Tax matters, or (iii) notice
of deficiency or proposed adjustment for any amount of Tax proposed,
asserted, or assessed by any Governmental Body against Sellers or the
Assets; and
(iv) Each Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other
Third Party.
2.13 CONTRACTS AND COMMITMENTS. Except as set forth in SCHEDULE 2.13:
(a) Sellers are not a party to any contract, commitment or arrangement of the
type described below which would be binding on Buyer with respect to any
employees of the Taft Facility after the Closing Date, or would otherwise
be applicable to or binding upon Buyer for any reason at any time after
the Closing Date:
(i) bonus, pension, profit sharing, retirement or deferred compensation plan
or stock purchase, stock option, hospitalization insurance or similar plan
or practice, whether formal or informal, or severance agreements or
arrangements;
(ii) contract with any labor union or contract for the employment of any
officer, individual employee or other Person on a full-time, part-time or
consulting basis;
(iii) agreement or indenture relating to the borrowing of money or to
mortgaging, pledging or otherwise placing a lien on any of the Assets;
(iv) guarantee of any obligation for borrowed money or otherwise, other than
endorsements made for collection in the ordinary course of business;
(v) agreement or commitment with respect to the lending or investing of funds
to or in other persons or entities;
(vi) license or royalty agreement;
(vii) lease or agreement under which it is lessee of or holds or operates any
personal property owned by any other party for which the aggregate annual
rental payments to any one Person and its affiliates exceeds $10,000
(except to the extent any of the foregoing constitutes a Contract Right to
be assumed by Buyer hereunder);
(viii)lease or agreement under which it is lessor of or permits any third party
to hold or operate any property, real or personal, owned or controlled by
it for which the aggregate annual rental exceeds $10,000 (except to the
extent any of the foregoing constitutes a Contract Right to be assumed by
Buyer hereunder);
(ix) contract or group of related contracts with the same party for the
purchase or sale of products or services under which the undelivered
balance of such products and services has a selling price in excess of
$10,000 (except to the extent any of the foregoing constitutes a Contract
Right to be assumed by Buyer hereunder);
(x) other contract or group of related contracts with the same party
continuing over a period of more than six (6) months from the date or
dates thereof, not terminable by it on thirty (30) days' or less notice
without penalties or involving more than $10,000 (except to the extent any
of the foregoing constitutes a Contract Right to be assumed by Buyer
hereunder);
(xi) contract which prohibits it from freely engaging in business anywhere in
the world;
(xii) contract relating to the distribution or brokerage of its products;
(xiii)supply agreements or obligations undertaken by Sellers since June 30,
2002, not otherwise described in this SECTION 2.13 (except to the extent
any of the foregoing constitutes a Contract Right to be assumed by Buyer
hereunder); or
(xiv) contract with any officer, director, partner, shareholder or other insider
of Sellers.
(b) Except as specifically disclosed in SCHEDULE 2.13, since June 30, 2002,
(i) to the knowledge of Sellers, no contract or commitment material and
relating primarily to the Business, the Taft Facility or the Assets has
been breached or canceled by the other party, (ii) Sellers have
performed all material obligations required to be performed by them
through the date of this Agreement in connection with the Business, the
Taft Facility and the Assets and are not in receipt of any written
claim of default under any lease, contract, commitment or other
agreement to which any Seller is a party having an aggregate value over
the life thereof in excess of $10,000; and (iii) no event has occurred
which, with the passage of time or the giving of notice or both, would
result in a breach or default under any material lease, contract,
instrument or other agreement to which any Seller is a party and which
is related to the Assets.
(c) SCHEDULE 2.13 contains a list of all Contract Rights and Assumed
Contracts, and Seller has supplied Buyer with a true and correct copy of
all written Assumed Contracts which are referred to on Schedule 2.13,
together with all amendments, waivers or other changes thereto.
2.14 TRADEMARKS. Set forth on SCHEDULE 2.14(A) is a true and complete list of
all the Jonny Cat Trademarks that are used by Sellers in the conduct of the
Business. One or more Sellers owns and possesses all right, title and interest
in and to the Jonny Cat Trademarks. Sellers have not received any written
notices of infringement, misappropriation, invalidity or conflict from any Third
Party with respect to the Jonny Cat Trademarks, excluding assertions of rights
which have not been presented in the form of a specific claim or demand and are
not reasonably likely to have a Material Adverse Effect. Sellers have not
received any written notice that the Jonny Cat Trademarks have been infringed by
any third parties in any respect that is reasonably likely to have a Material
Adverse Effect. Except for licenses granted in connection with the sale of
products in the ordinary course of business (all of which are set forth in
SCHEDULE 2.14(B)), the Jonny Cat Trademarks are not subject to any license or
any contractual restriction on use, nor, to the knowledge of Sellers, are they
subject to any limitation pursuant to any order, decision, injunction, judgment,
award or decree of any Governmental Body, which in any such case is reasonably
likely to have a Material Adverse Effect.
2.15 LITIGATION; PROCEEDINGS; KICKBACK. Except as set forth in Schedule 2.15,
there are no actions, suits, proceedings, orders or investigations pending or,
to Sellers' knowledge, threatened against Sellers related to the Assets, at law
or in equity, or before or by any Governmental Body, which are reasonably likely
to have a Material Adverse Effect. No officer, director, employee, or agent of
Sellers at the Taft Facility has been or is authorized by any director or by any
executive officer of any Seller to make or receive, and to Sellers' knowledge,
no such Person has made or received, any bribe, kickback or other illegal
payment at any time with respect to the Assets.
2.16 BROKERAGE. No Seller has agreed or become obligated to pay, or has taken
any action that might result in any Person claiming to be entitled to receive,
any brokerage commissions, finders fees or similar compensation in connection
with the transactions contemplated by this Agreement.
2.17 GOVERNMENTAL CONSENTS, ETC. No Governmental Authorization is required in
connection with the execution, delivery or performance of this Agreement by
Sellers or the Closing by Sellers of any of the transactions contemplated
hereby, except as set forth ON SCHEDULE 2.17 and except for such Governmental
Authorizations the absence of which, individually or in the aggregate, would not
have a material adverse effect on Buyer's ability to mine and operate any of the
Assets.
2.18 EMPLOYEES.
(a) (i) No Seller is or at anytime during A&M's ownership of the Taft Facility
has been, a party to any collective bargaining agreement relating to the
Taft Facility and any Taft Facility Employees (a "COLLECTIVE BARGAINING
AGREEMENT"), (ii) Sellers have heretofore delivered to Buyer a true and
complete list, as of the date set forth therein, of the names, positions,
date of hire, and current salaries or wage rates of all Taft Facility
Employees, separately identifying those treated as exempt from the over-
time requirements of the Fair Labor Standards Act, and (iii) no Taft
Facility Employees are covered by a Collective Bargaining Agreement.
(b) To the knowledge of Sellers, no group of eight (8) or more of Taft
Facility Employees has any plans to terminate employment with any
Seller. Sellers have complied with all applicable laws relating to the
employment of labor at the Taft Facility, including provisions thereof
relating to wages, hours, equal opportunity, collective bargaining and
the payment of social security and other taxes, except for any
compliance failures, individually or in the aggregate, that would not
reasonably be expected to have a Material Adverse Effect. To the
knowledge of Sellers, Sellers have no labor relations problems at the
Taft Facility that would reasonably be expected to have a Material
Adverse Effect, and to the knowledge of Sellers, there have been no
union organization efforts by the Taft Facility Employees.
2.19 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.19 contains a list of all current
employee benefit plans, within the meaning of Section 3(3) of ERISA, and all
bonus, vacation, sick pay, paid time off, severance stock option, stock purchase
and other employee benefit plans and arrangements, whether formal or informal,
available to any current or former Taft Facility Employee (collectively, the
"BENEFIT PLANS"). No Benefit Plan is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
2.20 INSURANCE. SCHEDULE 2.20 lists and briefly describes each insurance policy
maintained by Sellers (and the insured values thereof) with respect to the Taft
Facility. All of such insurance policies are in full force and effect.
2.21 [RESERVED.]
2.22 COMPLIANCE WITH LAWS; PERMITS; CERTAIN OPERATIONS.
(a) Sellers are in compliance with all applicable Laws which affect the
Assets or the operation of the Taft Facility, except for failures to
comply which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. In particular, but without
limiting the generality of the foregoing, Sellers are not in violation
of, nor have Sellers received a written notice or charge asserting any
violation of, the Immigration Reform and Control Act of 1986, the Mine
Safety and Health Act of 1977, as amended, any Environmental Laws, or
any other state or federal acts (including rules and regulations
thereunder) regulating or otherwise affecting the employment of aliens
or reclamation, in each case with respect to the Assets, except for any
violations which, alone or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. Sellers have also complied
and are in substantial compliance with all legally required reclamation
plans relating to the Taft Mine or any reclamation activities
undertaken by Sellers with respect to the Taft Mine, and true and
correct copies of all such reclamation plans are set forth on
SCHEDULE 2.22.
(b) Sellers hold all Governmental Authorizations required for the
ownership, mining and operation of the Taft Facility as currently
conducted and as conducted consistent with Sellers' ordinary course of
business. To the extent assignments or transfers are permitted
thereunder, such Governmental Authorizations are being sold or
transferred to Buyer as part of the Assets. To the extent any of such
Governmental Authorizations cannot be transferred to Buyer prior to
Closing, Sellers have no reason to believe that Buyer will not be able
to effectuate the transfer thereof to Buyer or receive an equivalent
Governmental Authorizations in each case without incurring cost
therefor other than ordinary and customary federal, state, local and
municipal transfer and filing fees.
2.23 ENVIRONMENTAL MATTERS.
(a) Except as set forth on SCHEDULE 2.23, the Real Property is in compliance
with all applicable Environmental Laws, except where the failure to comply
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(b) Except as set forth on SCHEDULE 2.23, Sellers have obtained, and
maintained in full force and effect, and complied with all
environmental permits, licenses, certificates of compliance, approvals
and other Governmental Authorizations necessary to own or operate the
Assets under the Environmental Laws applicable to the Real Property and
the Equipment (collectively, the "ENVIRONMENTAL PERMITS"), except
(i) for any Environmental Permit, the absence of which could not
reasonably be expected to have a Material Adverse Effect, and
(ii) where the failure to comply with any Environmental Permit cannot
reasonably be expected to have a Material Adverse Effect.
(c) Sellers have disclosed and delivered to Buyer copies of all environmental
reports and investigations related to the Real Property that, to the
knowledge of Sellers, are in Sellers' possession.
(d) Except as set forth in SCHEDULE 2.23, none of the Real Property is or has
been listed on the United States Environmental Protection Agency National
Priorities List of Hazardous Waste Sites, or any other list, schedule,
law, inventory or record of hazardous or solid waste sites maintained by
any federal, state, foreign or local agency.
(e) Except as set forth in SCHEDULE 2.23, to the knowledge of Sellers, none of
the Real Property contains any Hazardous Materials, wastes or other
regulated substances under Environmental Laws, which constitutes a
violation of or gives rise to liability under any Environmental Law.
(f) Except as set forth on SCHEDULE 2.23, there are no underground storage
tanks, whether or not regulated under Environmental Laws, contained on the
Real Property or at the Taft Facility.
2.24 NO DEFAULT. Except as set forth on SCHEDULE 2.24, Sellers are not in
default or breach of any Assumed Contracts, which default or breach could
reasonably be expected to have a Material Adverse Effect, and there exists no
state of facts which after notice or lapse of time or both would constitute such
a default or breach, and, to the knowledge of Sellers, all such contracts,
agreements, indentures or other instruments which are Contract Rights hereunder
are in good standing and in full force and effect, enforceable in accordance
with their respective terms.
2.25 CUSTOMER RELATIONS.
(a) Sellers are not aware of any facts or information indicating that any
customer identified on SCHEDULE 2.25(A) has indicated overtly an intention
to materially alter or materially decrease the amount of any such business
(b) Except as set forth on SCHEDULE 2.25(B), Sellers do not have any present
intention of ceasing to supply or otherwise altering the amount of
business done with any customer.
2.26 WARRANTIES AND PRODUCT LIABILITY. There are no actions, suits, inquiries,
proceedings or, to the knowledge of Sellers, investigations by or before any
Governmental Body pending or threatened against or involving the Assets relating
to any product alleged to have been defective or improperly designed or
manufactured or stating a claim under any warranty, guarantee or indemnification
made by Sellers that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
2.27 DISCLOSURE SCHEDULES. Sellers shall deliver the Disclosure Schedules to
Buyer concurrently with the execution of this Agreement. To the extent required
by SECTION 4.5(G) below, Sellers will deliver additional Disclosure Schedules
and/or supplement or amend the Disclosure Schedules delivered pursuant hereto.
No additional Disclosure Schedule or additional supplement or amendment to the
Disclosure Schedules shall affect Buyer's obligation to consummate the
transactions contemplated hereunder unless Buyer exercises its right to
terminate this Agreement pursuant to SECTION 7.1(B) hereof. To the extent
reasonably apparent from its context, disclosure by Sellers on any one
Disclosure Schedule, or supplement or amendment thereto, delivered pursuant to
this Agreement at or prior to the Closing shall be disclosure as to all
applicable Disclosure Schedules. With respect to any Sections in this Section 2
which do not contain reference to any Disclosure Schedule, should Sellers
deliver a Disclosure Schedule after the execution of this Agreement pursuant to
SECTION 4.5(G), which specifically refers to any such Section, such Section,
and, to the extent provided herein, all other provisions of this Section 2,
shall be deemed qualified in all respects by the contents of such new Disclosure
Schedule, and the phrase "Except as disclosed in any Disclosure Schedule
referring to this Section" shall be deemed added to each applicable
representation and warranty therein.
3. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants, to
and for the benefit of Sellers, as of the date of Buyer's execution of this
Agreement:
3.1 DUE ORGANIZATION. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Buyer is qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions in which the ownership of its assets or the conduct of its
business requires Buyer to be so qualified. Buyer has all requisite corporate
power and authority and all corporate licenses, permits and authorizations
necessary to own and operate its properties and to carry on its businesses as
now conducted.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT. Buyer has the right, power and
authority to enter into and to perform its obligations under this Agreement and
the Transactional Agreements to which it will be a party; and the execution,
delivery and performance by Buyer of this Agreement and the Transactional
Agreements to which it will be a party have been duly authorized by all
necessary corporate action on the part of Buyer. Upon the execution and delivery
of this Agreement and each of the other Transactional Agreements to which Buyer
is a party, this Agreement and each such other Transactional Agreement will
constitute the legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms.
3.3 BROKERS. Buyer has not become obligated to pay, nor has Buyer taken any
action that might result in any Person claiming to be entitled to receive, any
brokerage commission, finder's fee or similar commission or fee in connection
with the sale of any of the Assets to Buyer.
3.4 NO CONFLICT. The execution, delivery and performance of this Agreement and
the other Transactional Agreements by Buyer, and the consummation of the
transactions contemplated hereby and thereby, do not and shall not (a) conflict
with or result in any breach of any of the provisions of, (b) constitute a
default under, result in a violation of, or cause the acceleration of any
obligation under, or (c) require any authorization, consent, approval, exemption
or other action by or notice to any court or Governmental Body under, the
provisions of Buyer's certificate of incorporation or by-laws, any material
indenture, mortgage, lease, loan agreement or other agreement or instrument to
which Buyer is bound, or any Law, except, in each case, for any of the
foregoing, individually or in the aggregate, which would not reasonably be
expected to materially hinder or impair the consummation of the transactions
contemplated hereby.
3.5 LITIGATION; PROCEEDINGS. There is no action, suit, proceeding, order or
investigation pending against Buyer, at law or in equity, or before or by any
Governmental Body, that challenges, or that is likely to have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
transactions contemplated hereby, and, to the knowledge of Buyer, no Person has
threatened to commence any such action, suit or proceeding.
3.6 AVAILABLE FUNDS. Buyer has sufficient cash, or firm commitments from
responsible lending institutions, available lines of credit or other sources of
available funds to enable it to pay the Purchase Price at the Closing.
3.7 AUTHORIZATION. Buyer has duly authorized the execution, delivery and
performance of this Agreement and all other Transactional Agreements to which it
will be a party, and the transactions contemplated hereby and thereby, by all
requisite corporate action.
3.8 GOVERNMENTAL CONSENTS, ETC. No Governmental Authorization is required in
connection with the execution, delivery or performance of this Agreement by
Buyer or the Closing by Buyer of any of the transactions contemplated hereby.
4. COVENANTS
4.1 BEST EFFORTS. During the Pre-Closing Period, Sellers and Buyer shall use
their respective Best Efforts to cause the conditions set forth in SECTIONS 5
and 6, respectively, to be satisfied on a timely basis.
4.2 CONFIDENTIALITY. During the Pre-Closing Period, neither of the parties
hereto shall issue or disseminate any press release or other publicity or
otherwise make any disclosure of any nature (to any supplier, customer,
landlord, creditor or employee of any party hereto not involved in the due
diligence and negotiation of this Agreement or to any other Person) regarding
the sale of the Assets to Buyer or the existence or terms of this Agreement or
any other Transactional Agreement, except to the extent that such party is
required by law to make any such disclosure or as agreed by the parties.
4.3 EMPLOYEES.
(a) Effective on the Closing Date, Buyer will make offers of employment to
all of the Taft Facility Employees identified in SCHEDULE 4.3(A) who
have passed a drug test administered by Buyer. The offers extended to
those employees who are on a leave of absence as of the Closing Date
also shall be contingent upon the employee returning to work in his or
her former position within six (6) months after the Closing Date, and
Sellers shall continue the employment and benefits of such employees
for no less than six (6) months after the Closing Date or until the
employee commences work with Buyer, if earlier. Taft Facility
Employees who accept employment with and perform services for Buyer are
referred to herein as "TRANSFERRING EMPLOYEES," and all other Taft
Facility Employees are referred to herein as "OTHER TAFT EMPLOYEES."
Effective as of the applicable Hire Date and until at least ninety (90)
days following the Hire Date, Buyer shall provide each Transferring
Employee with (i) pay equal to such Transferring Employee's salary or
hourly wage rate, as applicable, as in effect as of the date of this
Agreement, and (ii) employment at the Taft Facility that is
substantially equivalent, in terms of responsibilities and duties, to
the Transferring Employee's current employment; provided, however, that
if Buyer terminates the employment of a Transferring Employee other
than for cause during the 90-day period following the Transferring
Employee's Hire Date, Buyer shall offer severance benefits to such
employee no less generous than those provided under the applicable
severance policy of Clorox in effect as of the date of this Agreement.
The term "HIRE DATE" as used herein refers to the date a Transferring
Employee begins employment with Buyer and shall be the same as the
Closing Date except for those employees who are on a leave of absence
on such date. Subject to Buyer's agreements with Sellers in this
Section 4.3, (1) Buyer shall have the absolute right to establish all
terms and conditions of employment, including wages, benefits and
benefit plans, for any Transferring Employees and (2) Buyer is not
bound to assume, implement or continue any wages, terms and conditions
of employment, benefits or benefit plans which currently exist or which
are proposed to become effective in the future for Sellers' employees.
Sellers agree not to discourage any Taft Facility Employees from
accepting employment with Buyer.
(b) Except as otherwise provided in this Section 4.3, Buyer shall assume
all employment-related obligations accruing on or after the applicable
Hire Date with respect to the Transferring Employees, and Sellers shall
retain all employment-related obligations with respect to Other Taft
Employees whenever incurred or accruing. With respect to each
Transferring Employee, Sellers shall retain all employment-related
obligations incurred, accruing or attributable to claims incurred or
events occurring before the applicable Hire Date.
(c) For purposes of this SECTION 4.3 and unless otherwise expressly provided
herein:
(A) "EMPLOYMENT-RELATED OBLIGATIONS" to be assumed by Buyer with
respect to Transferring Employees shall include compensation
for services performed for Buyer after the Hire Date (and
related employment and withholding taxes), any Buyer-sponsored
employee welfare or pension benefit plan (as defined under ERISA
Sections 3(l) and 3(2), respectively) covering the Transferring
Employees with respect to claims incurred on or after the Hire
Date, and benefits accrued under any other unfunded employee
benefit plan or arrangement of Buyer covering the Transferring
Employees on or after the Hire Date.
(B) "EMPLOYMENT-RELATED OBLIGATIONS" to be assumed by Buyer shall not
include compensation (and related employment and withholding
taxes) for services performed for Sellers before or after the
Closing Date, any benefits accrued or claims incurred under any
employee welfare or pension plan sponsored by Sellers (as
defined under ERISA Sections 3(1) and 3(2), respectively)
covering the Taft Facility Employees prior to or after the
Closing Date, or any benefits accrued or claims incurred under
any other employee benefit plan or arrangement of Sellers
covering the Taft Facility Employees prior to or after the
Closing Date including, but not limited to, accrued vacation pay.
(d) Sellers shall be responsible for the health care coverage of any Other
Taft Employees as may be required by COBRA or otherwise under Sellers'
health benefits plans. After the Closing, Sellers shall ensure that
the option of continuing health care coverage under the Sellers' health
benefits plans is extended to the Transferring Employees to the extent
required by COBRA. Buyer shall be responsible for providing health
care continuation coverage as required by COBRA to any Transferring
Employees whose employment is terminated by Buyer after the Closing.
(e) In reliance on Buyer's agreement to offer to hire as of the Closing
Date all of the Taft Facility Employees identified on SCHEDULE 4.3(A),
and Sellers' agreement to continue the employment of those Taft
Facility Employees on a leave of absence as of that date, neither
Sellers nor any affiliates of Sellers have given the prior notification
specified in the WARN Act. Buyer shall comply with the WARN Act, to
the extent applicable, when terminating the employment of any
Transferring Employees during the first six (6) months following the
Closing Date.
(f) Transferring Employees shall be eligible to participate in Buyer's
welfare benefit plans, as defined in Section 3(1) of ERISA ("BUYER
WELFARE PLANS"), in accordance with the terms of such plans, effective
as of the Transferring Employee's Hire Date. Notwithstanding the
foregoing, Transferring Employees shall not be eligible to participate
in Buyer's medical and dental benefits plans until the first day of the
month following the Transferring Employee's Hire Date, and Sellers
shall continue the medical and dental benefits coverage, if any, of
each Transferring Employee through the last day of the calendar month
in which each such employee's employment with Sellers' terminates.
Buyer shall not be required to provide benefit coverage to any Taft
Facility Employee or his or her dependents to the extent that such
person has not become an employee of, and performed services for, Buyer.
(g) It is intended by the parties that the responsibilities, liabilities, and
covenants assumed or agreed to by Buyer pursuant to this Section 4.3 shall
also bind any Buyer Designee and any Affiliate of Buyer to which all or
any portion of the Assets are transferred, and Buyer agrees to cause any
such Buyer Designee or Affiliate to observe the provisions and covenants
of this SECTION 4.3.
(h) Except as otherwise provided in this SECTION 4.3, where this Section 4.3
requires a party to take any action or perform any task, the party
obligated to take such action or perform such task shall be responsible
for all fees, costs and other expenses incurred for, and related to, such
actions or tasks.
(i) Buyer's qualified retirement plans shall recognize Past Service for
purposes of determining eligibility to participate and vesting only,
but not for purposes of benefit accrual. Buyer's other non-retirement
benefit plans and policies, including, without limitation, severance
and welfare plans, shall recognize Past Service for purposes of
determining eligibility to participate, vesting and for any schedule of
benefits based on service (other than vacation accrual); provided,
however, that Past Service shall not be recognized to the extent such
recognition would result in duplication of benefits. Sellers shall be
responsible for making cash payments to Transferring Employees for
earned but unused vacation and accrued vacation determined as of the
Closing Date; provided, however, that Transferring Employees who
affirmatively elect in writing shall instead receive credit under
Buyer's vacation policy for unused vacation earned with Sellers in 2001
and 2002, with any unused vacation earned in 2000 and prior years paid
to such electing employees by Sellers. Sellers shall pay to Buyer no
later than 60 days after the Closing Date the dollar amount of vacation
pay credited by Buyer to electing employees plus the employer share of
payroll taxes estimated to become payable on such amount. "Past
Service" shall mean all service with Clorox or any Clorox Subsidiary,
including service with predecessor employers that was recognized by
Clorox or any Clorox Subsidiary.
(j) Sellers shall cause the accrued benefits of each Transferring Employee
under Sellers' qualified retirement plans as of the Closing Date to
become fully vested, and shall treat all Transferring Employees as
having been employed by Sellers on June 30, 2003, for purposes of
entitlement to any benefit accruals or to share in any matching, profit
sharing, or other employer contributions. In no event would Buyer,
during the ninety (90) day period following the Closing, terminate
without cause more than twenty-five (25) Transferring Employees.
4.4 DUE DILIGENCE INVESTIGATION. Buyer has commenced and will continue to
perform a pre-acquisition due diligence investigation and review of the books,
records and facilities related to the Assets and will complete such
pre-acquisition due diligence investigation not later than December 10, 2002.
Sellers agree to provide access to information for purposes of such
pre-acquisition due diligence investigation in accordance with Section 4.5(f)
hereof. Buyer shall have the right to terminate this Agreement as set forth in
SECTION 7.1(B) based upon such due diligence investigation. Notwithstanding
anything to the contrary contained herein, the conduct by Buyer of its due
diligence investigation shall not affect or mitigate (a) any covenants,
representations or warranties of Sellers contained herein or in the other
Transactional Agreements or (ii) Buyer's rights to indemnity under this
Agreement.
4.5 AFFIRMATIVE COVENANTS OF SELLERS. Prior to the Closing, Sellers shall:
(a) conduct the Business in the usual and ordinary course of business in
accordance with past custom and practice;
(b) keep in full force and effect their corporate existence;
(c) use Best Efforts to retain the Taft Facility Employees and preserve their
present business relationships in accordance with ordinary course of
business;
(d) maintain the tangible Assets in customary repair, order and condition and
maintain insurance related to the Assets comparable to that in effect on
the date of this Agreement;
(e) maintain their Books and Records in accordance with past custom and
practice;
(f) in connection with SECTION 4.4, permit Buyer and its Representatives
and potential lenders and their representatives, for a period from the
date hereof until the Closing, to have access to the Sellers' books and
records, invoices, contracts, leases, key personnel, independent
accountants, property, facilities, equipment and other things
reasonably related to the Assets, to conduct due diligence of the
Assets, including, but not limited to, making a detailed review of
prior operating results and the financial condition of Sellers and the
Assets, reviewing the condition of the Assets and conducting
environmental, health and safety audits of all real property and
facilities to be leased or purchased pursuant hereto; and Sellers will
fully cooperate and assist in such investigation; provided, that Buyer
shall use its Best Efforts not to materially disrupt the Assets, the
Business or the operations of the Taft Facility; and, provided further
and notwithstanding anything contained herein to the contrary, that the
exercise by Buyer of any such rights of access and due diligence shall
not affect or mitigate (i) any covenants, representations and
warranties of Sellers or (ii) Buyer's rights to indemnity under this
Agreement; and
(g) promptly inform Buyer in writing of any material variances from the
representations and warranties contained in SECTION 2 hereof or any
breach of any covenant or agreement contained in this SECTION 4, in
each case including, without limitation, the Disclosure Schedules
related thereto and promptly deliver to Buyer a Disclosure Schedule or
supplement or amendment to an existing Disclosure Schedule, as
appropriate, as any Seller may at any time or from time to time prior
to the Closing determine is necessary to correct any material
inaccuracy in the representation and warranty contained in SECTION 2
hereof or to correct any such material inaccuracy that would exist if
said representation and warranty were to be restated as of the Closing.
4.6 NEGATIVE COVENANTS. Prior to the Closing, without the prior written consent
of Buyer, Sellers shall not:
(a) take any action that would require disclosure under SECTION 4.5(F) of this
Agreement;
(b) directly or indirectly (including through any agent, broker, finder or
other third party), offer the Assets for sale, transfer, assignment or
other disposition (whether pursuant to merger, stock sale, asset sale
or otherwise) to any Person (other than pursuant hereto, the sale of
Inventory in the ordinary course of business to Third Parties or sales
of obsolete Equipment in the ordinary course of business consistent
with past practice), initiate or continue discussions with any Third
Party with respect to the sale of the Assets, or take any action
inconsistent with the foregoing including, without limitation, entering
into discussions or negotiations (or continuing such discussions or
negotiations) concerning any acquisition by any Third Party of the
Business, the Assets or the Taft Facility;
(c) make any change in their certificates of incorporation or bylaws that
would interfere with or prevent the consummation of the transactions
contemplated herein;
(d) enter into (i) any liabilities relating to the operation of the Assets or
(ii) supply obligations binding Sellers or Buyer to supply any Johnny Cat
Product for more than six (6) months;
(e) make any significant organizational or personnel changes relating to the
Assets other than with respect to Michael Weaver and other than as may be
necessary to replace employees who terminate employment prior to the
Closing;
(f) pay any bonus or grant any salary or wage increase with respect to the
Taft Facility Employees out of the ordinary course of business or
materially inconsistent with past business practices; or
(g) make any material changes out of the ordinary course of business in sales
prices, practices or terms in respect of the Assets.
4.7 TITLE COMMITMENTS. Sellers have delivered the Preliminary Title Report to
Buyer. Buyers shall use the Preliminary Title Report to obtain commitments for
title insurance issued by the Title Company ("TITLE COMMITMENTS") committing to
insure Buyer's title in the Real Property including, without limitation,
minerals and mineral rights, in an amount equal to the fair market value
thereof, which Title Commitments shall be for ALTA Form Owner's Policies
containing extended coverage, survey, zoning 3.1 (with parking), contiguity (if
applicable), property index number, location, access and leasehold (with respect
to the Leasehold Interests) endorsements and shall deliver pro-forma title
insurance policies prior to the Closing Date. Within five (5) Business Days of
the date that Buyer has received all of the Title Commitments (including copies
of all of the documents referenced on Schedule B thereto) and Surveys, Buyer
shall deliver to Sellers, in writing, such objections as Buyer may have to
anything reflected, contained, determined or set forth therein which would
reasonably be expected to have a Material Adverse Effect. Any such title or
survey matters as to a particular portion of Real Property to which Buyer does
not object within such time period, together with any other Permitted
Exceptions, shall be deemed to be Permitted Exceptions hereunder as to such
portion of Real Property. If exceptions to the title to the Real Property are
contained in the Title Commitments or any Schedule to this Agreement, or if
exceptions appear from the Surveys, and if in either case Buyer delivers written
objections thereto in accordance with this SECTION 4.7, then Sellers shall have
a period of five (5) Business Days within which to (i) cure, remove or insure
over such exceptions to the reasonable satisfaction of Buyer or (ii) provide
Buyer with notice that it is unable to cure, remove or insure over such
exceptions. Sellers shall in good faith use Best Efforts to eliminate or cure
all title or survey defects, without the expenditure of funds, to which Buyer
objects in accordance with this SECTION 4.7. If Sellers are unable to cure,
remove or insure over the exceptions within such five (5) Business Day period or
if Sellers provide written notice to such effect to Buyer, then by written
notice to Sellers within five (5) Business Days after the earlier of the
expiration of such five (5) Business Day period or Buyer's receipt of Sellers'
notice to such effect, Buyer shall have the right, as Buyer's sole remedy
hereunder, to (A) waive its objections and accept title subject to the
exceptions without set-off or reduction in the Purchase Price, or (B) terminate
this Agreement. Notwithstanding anything to the contrary herein, the inclusion
of the matters set forth in the Preliminary Title Report in the description of
the Real Property shall not prohibit Buyer from raising objections to such
matters as provided herein.
4.8 CUSTOMER INFORMATION. At least twenty (20) days prior to the Closing Date,
Sellers shall provide Buyer with a complete and accurate list of all "ship to"
information for each customer of Sellers related to the Assets and the Business
specifically identifying each such customer's "ship to" location or locations.
4.9 RECLAMATION BONDS. Buyer shall, timely after the date hereof, offer
replacement financial assurances for reclamation to the lead agency under
California SMRA reasonable in amount and meeting the requirements of California
SMRA.
5. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's obligation to
purchase the Assets and to take the other actions required to be taken by Buyer
at the Closing is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Buyer, in whole
or in part, in writing):
5.1 ACCURACY OF REPRESENTATIONS. All of the representations and warranties made
by Sellers in this Agreement (considered collectively), and each of said
representations and warranties (considered individually), shall (a) have been
accurate in all respects as of the date of this Agreement, but only if the
collective inaccuracies of the representations and warranties, or any individual
inaccuracy of any representations or warranty, would not reasonably be expected
to have a Material Adverse Effect, without giving effect to any materiality
qualifier contained in such representation or warranty, and (b) be accurate in
all material respects as of the Scheduled Closing Time as if made at the
Scheduled Closing Time, after giving effect to all Disclosure Schedules and
supplements and amendments thereto, but only if the collective inaccuracies of
the representations and warranties, or any individual inaccuracy of any
representations or warranty, would not reasonably be expected to have a Material
Adverse Effect, without giving effect to any materiality qualifier contained in
such representation or warranty.
5.2 PERFORMANCE OF OBLIGATIONS.
(a) Each of the documents required of Sellers referred to in SECTION 1.2(B)
shall have been executed by Sellers and delivered to Buyer.
(b) Each of the covenants and obligations that Sellers are required to comply
with or to perform at or prior to the Closing shall have been duly
complied with and performed by Sellers in all material respects.
5.3 REQUIRED FILINGS AND CONSENTS. All filings, authorizations and approvals, if
any, of any Governmental Body that are required for the consummation of the
transactions contemplated hereby (other than such Governmental Authorizations,
the absence of which, individually or in the aggregate, would not have a
Material Adverse Effect on Buyer's ability to use the Assets or operate the
Business after the Closing) shall have been duly made and obtained on terms and
conditions reasonably satisfactory to Buyer.
5.4 NO MATERIAL ADVERSE EFFECT. Since September 30, 2002, there shall have
been no Material Adverse Effect.
5.5 THIRD PARTY CONSENTS. All consents by Third Parties that are required for
the transfer of any Contract Rights, Governmental Authorizations (to the extent
transferable on or prior to the Closing) or any portion of the Assets to Buyer
as contemplated hereby or that are required to prevent a breach of, or a default
under or a termination or modification of, any Contract Right to which any
Seller is a party or to which any of the Assets is subject, and releases of all
Encumbrances on the Assets (except as specifically permitted hereby), shall have
been obtained on terms and conditions reasonably satisfactory to Buyer, except
where the failure to obtain any such consent would not reasonably be expected to
have a Material Adverse Effect.
5.6 ACCEPTANCE OF CERTAIN FINANCIAL ASSURANCES. The lead agency under California
SMRA shall have accepted replacement financial assurances for reclamation
provided to said lead agency by Buyer.
5.7 NO LEGAL PROCEEDINGS. No action or proceeding before any court or
Governmental Body shall be pending or threatened which, in the judgment of
Buyer, made in good faith and upon the advice of counsel, makes it inadvisable
or undesirable to consummate the transactions contemplated hereby by reason of
the probability that the action or proceeding shall result in a judgment, decree
or order which would prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions contemplated
by this Agreement or cause such transactions to be rescinded; provided, however,
that the foregoing shall not apply to the Jonny Cat Copack Agreement or the
Fresh Step Coarse Clay Copack Amendment.
5.8 DELIVERY OF SCHEDULES. Sellers shall have delivered to Buyer the Disclosure
Schedules as required by SECTION 2.27 above and Buyer shall not have exercised
any of its termination rights set forth in SECTION 7.1(B) below.
5.9 DUE DILIGENCE. Buyer shall have completed its due diligence investigation of
Sellers as described in SECTION 4.4 above and Buyer shall not have exercised any
of its termination rights set forth in SECTION 7.1(B) below.
5.10 SURVEYS. Buyer shall have obtained surveys of the Real Property prior to
the Closing, certified by licensed surveyors to Buyer and the Title Company as
conforming to current ALTA/ACSM Minimum Standard Detail Requirements (including
the following optional Table A items: 1, 2, 3, 4, 6, 7(a), 7(c), 8, 9, 10,
11(b), 14, 15 and 16) and disclosing the location of all improvements,
easements, party walls, sidewalks, roadways, utility lines and access to public
streets and roads (the "SURVEYS"), which Surveys shall (a) disclose the location
of the improvements thereon to be within the lot lines, the location of the
buildings to be within all building and setback lines, no encroachments of
buildings or other improvements from adjoining properties or other survey
defects and (b) not contain any conditions or exceptions to title that could
reasonably be expected to have a Material Adverse Effect.
5.11 TITLE V PERMIT. Buyer shall not have obtained during its due diligence
investigation reasonable tangible oral or written evidence from a regulatory
official of a Governmental Body that Buyer will not be able to obtain a Title V
air quality permit from the appropriate federal and state regulatory authorities
with respect to the Taft Facility and the Business as currently operated by
Sellers, or taking into account Buyer's anticipated capital expenditures at the
Taft Facility.
5.12 RESERVES. Buyer shall have determined to its satisfaction that the Real
Property, the Mineral Reserves and the Mining Claims shall contain fifteen (15)
years worth of reserves of clay at the current rate of use in quality
substantially similar to the clay being mined and processed by Sellers at the
Taft Facility prior to the Closing.
5.13 FINANCIAL INFORMATION. Buyer shall have received the P&L Statement and the
Statement of Inventory and Assets from Sellers and shall not have notified
Sellers of any objections to the information contained therein within three (3)
Business Days from Buyer's receipt thereof. Buyer shall have received (a)
written information from Sellers as to whether, with respect to the Business in
Canada, the sales LESS intercompany transfer costs LESS costs of delivery
commissions, advertising and sales promotion of such business exceed zero, and
(b) a written statement of the net sales of the United States cat litter box
liner business, and in either case Buyer shall not have reasonably determined
that such information could reasonably be expected to have a Material Adverse
Effect.
6. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS TO CLOSE. Sellers' obligations
to sell the Assets and to take the other actions required to be taken by Sellers
at the Closing, are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Sellers, in
whole or in part, in writing):
6.1 ACCURACY OF REPRESENTATIONS. Each of the representations and warranties made
by Buyer in this Agreement shall have been accurate in all material respects as
of the date of this Agreement and shall be accurate in all material respects as
of the Scheduled Closing Time as if made at the Scheduled Closing Time.
6.2 BUYER'S PERFORMANCE.
(a) Buyer shall have made the payments contemplated by SECTION 1.3 and each of
the documents required of Buyer referred to in SECTION 1.2(B) shall have
been executed and delivered by Buyer to Sellers.
(b) Each of the other covenants and obligations that Buyer is required to
comply with or to perform pursuant to this Agreement at or prior to the
Closing shall have been complied with and performed in all material
respects.
6.3 RELEASE OF CERTAIN FINANCIAL ASSURANCES. Any and all financial assurances
for reclamation required from Clorox or any Clorox Subsidiary under California
SMRA shall have been released by the lead agency under California SMRA, and
replacement financial assurances for reclamation that meet the requirements of
California SMRA shall have been provided to said lead agency by Buyer.
6.4 REQUIRED FILINGS AND CONSENTS. All filings, authorizations and approvals, if
any, of any Governmental Body that are required for the consummation of the
transactions contemplated hereby (to the extent not waived by Buyer) shall have
been duly made and obtained on terms and conditions reasonably satisfactory to
Sellers.
6.5 NO LEGAL PROCEEDINGS. No action or proceeding before any court or
Governmental Body shall be pending or threatened which, in the judgment of
Sellers, made in good faith and upon the advice of counsel, makes it inadvisable
or undesirable to consummate the transactions contemplated hereby by reason of
the probability that the action or proceeding shall result in a judgment, decree
or order which would prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions contemplated
by this Agreement or cause such transactions to be rescinded.
7. TERMINATION.
7.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by Buyer if there is a Breach of any covenant or obligation of Sellers and
such Breach shall not have been cured by the Closing after the delivery of
notice thereof to Sellers;
(b) by Buyer, in the event that either (i) Buyer's pre-acquisition due
diligence investigation and review of the Assets (as described in Section
4.4 of this Agreement), or (ii) any new Disclosure Schedule or supplement
or amendment to a Disclosure Schedule provided by any Seller after the
execution hereof, discloses matters which would (A) cause the condition
set forth in clause (a) of SECTION 5.1 not to be satisfied, or (B) after
including such newly disclosed matters in a new Disclosure Schedule or
amendment or supplement to an existing Disclosure Schedule, as applicable,
cause the condition set forth in clause (b) of SECTION 5.1 not to be
satisfied;
(c) by Buyer at or prior to the Scheduled Closing Time if any condition set
forth in SECTION 5 has not been satisfied by the Scheduled Closing Time;
(d) by Buyer if the Closing has not taken place on or before December 10, 2002
(other than as a result of any failure on the part of Buyer to comply with
or perform its covenants and obligations under this Agreement);
(e) by Sellers if there is a Breach of any covenant or obligation of Buyer and
such Breach shall not have been cured within ten (10) calendar days after
the delivery of notice thereof to Buyer;
(f) by Sellers if the Closing has not taken place on or before December 10,
2002 (other than as a result of any failure on the part of Sellers to
comply with or perform any covenant or obligation set forth in this
Agreement); or
(g) by the mutual written consent of Buyer and Sellers.
7.2 TERMINATION PROCEDURES. If Buyer wishes to terminate this Agreement pursuant
to SECTION 7.1, Buyer shall deliver to Sellers a written notice stating that
Buyer is terminating this Agreement and setting forth a brief description of the
basis on which Buyer is terminating this Agreement. If Sellers wish to terminate
this Agreement pursuant to SECTION 7.1, Sellers shall deliver to Buyer a written
notice stating that Sellers are terminating this Agreement and setting forth a
brief description of the basis on which such parties are terminating this
Agreement. In the event of any termination under SECTION 7.1(B), Buyer shall
give Sellers written notice of termination promptly after Buyer's discovery of
the fact or matter giving rise to Buyer's exercise of its termination rights.
7.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to SECTION
7.1, all further obligations of the parties under this Agreement to consummate
the transactions contemplated hereby shall terminate and no party shall have any
further liability or obligation to any other party or to any Representative of
such other party, but termination of this Agreement under SECTION 7.1(C),
7.1(D), 7.1(E) or 7.1(F) shall be without prejudice to any rights or remedies
the non-terminating party may have arising out of fraud, intentional breach or
intentional misrepresentation. The parties shall, upon termination of this
Agreement, remain bound by and continue to be subject to the provisions set
forth in SECTION 4.2 and SECTION 11.2 and in the Confidentiality Agreement.
8. INDEMNIFICATION, ETC.
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of each of the parties to this Agreement contained herein or in
any Transactional Agreement (other than the Jonny Cat Copack Termination
Agreement, the Fresh Step Coarse Clay Amendment and the Liner Purchase Order),
as modified by any new Disclosure Schedule or supplement or amendment to an
existing Disclosure Schedule delivered pursuant to SECTION 2.27, shall survive
the Closing and the sale of the Assets to Buyer until July 31, 2004, except for
breaches of representations and warranties for which a written Claim Notice (as
defined below) or with respect to which a Third Party Claim Notice (as defined
below), as the case may be, has been received by the alleged breaching party by
such date; PROVIDED HOWEVER that the representations and warranties set forth in
clause (c) of SECTION 2.2, SECTION 2.12, SECTION 2.19 and SECTION 2.23 shall
survive the Closing Date until the expiration of the applicable statute of
limitations. Neither Sellers nor Buyer shall have any liability whatsoever to
the other with respect to any such representations or warranties after the
survival period for such representations or warranties expires, except for
breaches of representations and warranties for which a written Claim Notice or
with respect to which a Third Party Claim Notice, as the case may be, has been
received by the alleged breaching party prior to the expiration of such survival
period and except for claims based on fraud. Notwithstanding anything to the
contrary in this Agreement, no investigation by Buyer shall affect the
representations and warranties of Sellers set forth in this Agreement or the
Disclosure Schedules, or contained in any other Transactional Agreement. The
covenants and other agreements of the parties in this Agreement shall survive
the Closing until fully performed. For purposes of this Agreement, a "CLAIM
NOTICE" relating to a particular representation or warranty shall be deemed to
have been given if any Indemnitee, acting in good faith, delivers to the alleged
breaching party a written notice stating that such Indemnitee believes that
there is or has been a possible Breach of such representation or warranty and
containing (a) a brief description of the circumstances supporting such
Indemnitee's belief that there is or has been such a possible Breach, and
containing, if applicable, any information required under SECTION 8.4(A) with
respect to any Third Party Claim relating to such possible Breach of which the
Indemnitee has notice or knowledge, and (b) a non-binding, preliminary estimate
of the aggregate dollar amount of the actual and potential Damages that have
arisen and may arise as a direct or indirect result of such possible Breach.
8.2 INDEMNIFICATION BY SELLERS.
(a) Sellers agree, jointly and severally, to hold harmless and indemnify
the Buyer Indemnitees from and against, and shall compensate and
reimburse the Buyer Indemnitees for, any Damages that are suffered or
incurred by the Buyer Indemnitees or to which the Buyer Indemnitees may
otherwise become subject at any time (regardless of whether or not such
Damages relate to any Third Party claim) and that arise directly or
indirectly from (i) any Breach of any of the representations or
warranties made by Sellers in this Agreement, the other Transactional
Agreements (other than the Jonny Cat Copack Termination Agreement, the
Fresh Step Coarse Clay Amendment and the Liner Purchase Order), the
Disclosure Schedules, as modified by any new Disclosure Schedules and
supplements and amendments to any Disclosure Schedules delivered
pursuant to SECTION 2.27, or in the Closing Certificate of Sellers,
(ii) any Breach of any covenant or agreement of Sellers contained in
this Agreement or any other Transactional Agreement (other than the
Jonny Cat Copack Termination Agreement, the Fresh Step Coarse Clay
Amendment and the Liner Purchase Order) to the extent not waived by
Buyer, (iii) any liabilities of Sellers other than the Assumed
Liabilities, including, without limitation, any liabilities for any
Release of Hazardous Materials on, upon or from the Real Property or in
connection with the Assets or the operation of the Business on or prior
to the Closing Date, and any liability of Sellers under Environmental
Laws arising from or related to the operation of the Business prior to
the Closing; (iv) any Third Party Claims or threatened claims against
Buyer arising out of the actions or inactions of Sellers prior to the
Closing Date with respect to the Assets or the operation of the
Business prior to the Closing Date; or (v) the failure of any Benefit
Plans to comply with their respective governing documents and
applicable Laws.
(b) Notwithstanding anything in this SECTION 8 to the contrary, (i) Sellers
shall not be required to make any indemnification payment pursuant to
SECTION 8.2(A) until such time as the total amount of all Damages
(including the Damages arising from such Breach and all other Damages
arising from any other Breaches of any representations or warranties)
that have been directly or indirectly suffered or incurred by any one
or more of the Buyer Indemnitees, or to which any one or more of the
Buyer Indemnitees has or have otherwise become subject, exceeds
$120,000, and then only for any such Damages in excess of that amount,
(ii) except as provided in clause (iii) of this SECTION 8.2(B), the
indemnification obligations of Sellers under SECTION 8.2(A)(I) shall
not exceed $3,000,000 in the aggregate and (iii) the indemnification
obligations of Sellers hereunder for any misrepresentation in
SECTION 2.2(C) related to Sellers' ownership of the Assets (other than
the Jonny Cat Trademarks) shall not be subject to any limit on the
amount of Damages.
8.3 INDEMNIFICATION BY BUYER.
(a) Buyer shall hold harmless and indemnify the Seller Indemnitees from and
against, and shall compensate and reimburse the Seller Indemnitees for,
any Damages that are suffered or incurred by the Seller Indemnitees or
to which the Seller Indemnitees may otherwise become subject at any
time (regardless of whether or not such Damages relate to any Third
Party Claim) and that arise directly or indirectly from (i) any Breach
of any of the representations or warranties made by Buyer in this
Agreement or in the Closing Certificate of Buyer, (ii) any Breach of
any covenant or agreement of Buyer contained in this Agreement or any
other Transactional Agreement (other than the Jonny Cat Copack
Termination Agreement and the Fresh Step Coarse Clay Amendment) to the
extent not waived by Sellers, (iii) any claims for severance with
respect to Transferring Employees arising out of Buyer's termination of
any Transferring Employee after the Closing Date, or (iv) any Third
Party Claims or threatened claims against Sellers arising out of the
actions or inactions of Buyer or any Buyer Designee after the Closing
Date with respect to the Assets or the operation of the Business after
the Closing Date.
(b) Notwithstanding anything in this SECTION 8 to the contrary, (i) Buyer
shall not be required to make any indemnification payment pursuant to
SECTION 8.3(A) until such time as the total amount of all Damages
(including the Damages arising from such Breach and all other Damages
arising from any other Breaches of any representations or warranties)
that have been suffered or incurred by any one or more of the Seller
Indemnitees, or to which any one or more of the Seller Indemnitees has
or have otherwise become subject, exceeds $120,000, and then only for
any such Damages in excess of that amount, and (ii) the indemnification
obligations of Buyer under SECTION 8.3(A)(I) shall not exceed
$3,000,000 in the aggregate.
8.4 METHOD OF ASSERTING CLAIMS. As used herein, "INDEMNIFYING PARTY" shall refer
to the party or parties hereto obligated to indemnify any Indemnitees under this
SECTION 8.
(a) Promptly after any Indemnitee has received notice of or has knowledge
of any claim by a Third Party or the commencement of any action, suit
or proceeding by a Third Party (collectively, a "THIRD PARTY CLAIM"),
the Indemnitee shall, if a claim with respect thereto may be made by
the Indemnitee against any Indemnifying Party pursuant to this
Section 8, give each Indemnifying Party written notice of such Third
Party Claim. Such notice shall state the nature and basis of such Third
Party Claim and, if ascertainable, the amount thereof, and shall
include copies of all pleadings and other pertinent documents. In each
such case the Indemnitee agrees to give such notice to all the
Indemnifying Parties promptly in accordance with SECTION 12.2 hereof;
provided, however, that the failure of the Indemnitee to give such
notice shall not excuse any Indemnifying Party's obligation to
indemnify except to the extent the Indemnifying Party has suffered
damage or prejudice by reason of the Indemnitee's failure to give or
delay in giving such notice. The Indemnifying Party or Parties shall
have the right, but not the obligation, exercisable by written notice
(the "ELECTION NOTICE") given to the Indemnitee within ten
(10) Business Days after receipt of such notice from the Indemnitee of
such Third Party Claim, to assume the defense and control the
settlement of such Third Party Claim, provided that all Indemnifying
Parties have acknowledged and agreed in writing that the Indemnifying
Parties have an obligation hereunder to provide indemnification to the
Indemnitee in respect of the Third Party Claim. If the Indemnifying
Party does not give the Election Notice, the Indemnitee shall have the
right to defend, contest, settle, or compromise such action or suit in
the exercise of its exclusive discretion and shall be entitled to
indemnification therefor to the extent provided in SECTION 8.2 or
SECTION 8.3, as applicable; provided, however, that the Indemnitee
shall not compromise or settle any such Third Party Claim without the
prior written consent of the Indemnifying Party or Indemnifying
Parties, as applicable, which consent shall not be unreasonably
withheld. If the Indemnifying Party gives the Election Notice, the
Indemnifying Party shall have the right to settle, compromise,
undertake, conduct and control, through counsel of its own choosing and
at its sole expense, the conduct and defense of such action, suit or
proceeding, and the Indemnitee shall reasonably cooperate with the
Indemnifying Party in connection therewith (at the expense of the
Indemnifying Party or Indemnifying Parties); provided, however, that
(i) the Indemnifying Party shall not thereby consent to the imposition
of any injunction against the Indemnitee without the written consent of
the Indemnitee; (ii) the Indemnifying Party shall permit the Indemnitee
to participate in (but not control) such conduct or settlement through
counsel chosen by the Indemnitee, but the fees and expenses of such
counsel and the fees, expenses and costs otherwise incurred by the
Indemnitee in connection with such participation shall be borne by the
Indemnitee except as provided in clause (iii) below; and (iii) upon a
final settlement or determination of such action, suit or proceeding,
the Indemnifying Party shall promptly reimburse the Indemnitee for the
full amount of any Damages resulting from such action, suit or
proceeding and all reasonable expenses related to such Damages incurred
by the Indemnitee, except fees and expenses of counsel for the
Indemnitee incurred after the assumption of the defense and control of
such action, suit or proceeding by the Indemnifying Party or
Indemnifying Parties. So long as the Indemnifying Party is, or the
Indemnifying Parties are, contesting any such action or suit in good
faith, the Indemnitee shall not pay or settle any such action or suit.
Notwithstanding the foregoing, the Indemnitee shall have the right to
pay or settle any such action or suit, provided that in such event the
Indemnitee shall waive any right to indemnity therefor by the
Indemnifying Party or the Indemnifying Parties and no amount in respect
thereof shall be claimed as Damages under this SECTION 8. At any time
after notice of any Third Party Claim, the Indemnifying Party or the
Indemnifying Parties may request the Indemnitee to agree in writing to
the payment or compromise of the Third Party Claim, whereupon such
action shall be taken unless the Indemnitee determines that the contest
should be continued, and so notifies the Indemnifying Party in writing
within fifteen (15) days of such request from the Indemnifying Party or
the Indemnifying Parties. In the event that the Indemnitee gives such
notice, the Indemnifying Party or the Indemnifying Parties shall be
liable pursuant to this SECTION 8.4(A) with respect to such Third Party
Claim only to the extent of the lesser of (A) the amount which the
other party or parties to the contested Third Party Claim had agreed to
accept in complete payment or compromise as of the time the
Indemnifying Party or the Indemnifying Parties made its or their
request therefor to the Indemnitee plus the amount of any fine,
penalty, tax, fee (including any reasonable legal fee, expert fee,
accounting fee or advisory fee), charge, cost (including any cost of
investigation) or expense of any nature incurred by the Indemnitee to
such date with respect to such Third Party Claim, or (B) such amount
for which the Indemnifying Party or the Indemnifying Parties may be
liable with respect to such Third Party Claim by reason of the
provisions of this SECTION 8.4(A).
(b) If an Indemnitee shall have any claim pursuant to this SECTION 8,
including, but not limited to, a claim for Damages as the result of the
Indemnifying Party's failure to acknowledge its obligation to
indemnify, the Indemnitee shall deliver to the Indemnifying Party or
the Indemnifying Parties a Claim Notice (in the case of any claim for
any misrepresentation or breach of any warranty pursuant to this
SECTION 8) or a notice outlining with reasonable particularity the
nature and amount of the claim for breach of any covenant or any other
claim pursuant to SECTION 8.2 (a "COVENANT BREACH NOTICE"). The
Indemnitee and Indemnifying Party or the Indemnifying Parties shall
thereafter attempt in good faith for a period of not less than thirty
(30) days to agree upon whether the Indemnitee is entitled to be
indemnified and held harmless under this SECTION 8 with respect to
Damages as a result of the claims under the Claim Notice or the
Covenant Breach Notice, as applicable, and the extent to which it is
entitled to be indemnified and held harmless hereunder for such
Damages. If the parties cannot so agree within said period, the
Indemnitee may thereafter commence litigation in a court of competent
jurisdiction in the venue designated in SECTION 12.5 for a
determination of its claim. Upon resolution of any claim pursuant to
this SECTION 8, whether by agreement between the parties or the
rendering of a final judgment in any litigation, the Indemnifying Party
or the Indemnifying Parties shall, within ten (10) days of such
resolution, pay over and deliver to the Indemnitee funds in the amount
of any claim as resolved, and any reasonably documented fees, including
reasonable attorneys' fees, incurred by the Indemnitee with respect to
any such litigation.
8.5 GENERAL.
(a) The indemnification provided in this SECTION 8 shall be the sole and
exclusive remedy after the Closing Date for damages available to the
parties to this Agreement for breach of any of the terms, conditions,
representations or warranties contained herein or in any Transactional
Agreement (other than the Jonny Cat Copack Termination Agreement, the
Fresh Step Coarse Clay Amendment and the Liner Purchase Order) or any
right, claim or action arising from the transactions contemplated by
this Agreement or the other Transactional Agreements (other than the
Jonny Cat Copack Termination Agreement, the Fresh Step Coarse Clay
Amendment and the Liner Purchase Order); provided, however, this
exclusive remedy for damages does not preclude a party from bringing an
action for (i) specific performance or other equitable remedy to
require a party to perform its obligations under this Agreement or any
Transactional Agreement, or (ii) based on fraud or intentional
misrepresentation.
(b) Notwithstanding anything contained in this Agreement to the contrary,
no party hereto shall be liable to any other party hereto or any
Indemnitee for Damages suffered or incurred by such party or Indemnitee
that are indirect, special, punitive, exemplary or consequential loss
or damage (including any loss of revenue or profit) (collectively,
"SPECIAL DAMAGES"); provided, however, the foregoing shall not be
construed to preclude recovery by an Indemnitee in respect of Damages
directly or indirectly incurred from (i) any Third Party Claims,
including, without limitation, Third Party Claims in which Special
Damages are awarded to the plaintiffs, or (ii) any claim based on
fraud, intentional breach or intentional misrepresentation. All
parties hereto shall use Best Efforts to mitigate their Damages.
(c) The rights to indemnification under this SECTION 8 shall not be subject to
set-off for any claim by the Indemnifying Party against any Indemnitee,
whether or not arising from the same event giving rise to such
Indemnitee's claim for indemnification.
9. DISCLAIMER. EXCEPT FOR THE RESPECTIVE REPRESENTATIONS AND WARRANTIES OF
SELLERS SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE DISCLOSURE SCHEDULES AND
THE OTHER TRANSACTIONAL AGREEMENTS (OTHER THAN THE JONNY CAT COPACK TERMINATION
AGREEMENT, THE FRESH STEP COARSE CLAY AMENDMENT AND THE LINER PURCHASE ORDER),
NEITHER CLOROX NOR ANY CLOROX SUBSIDIARY OR REPRESENTATIVE OF CLOROX OR ANY
CLOROX SUBSIDIARY MAKES ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH
RESPECT TO THE ASSETS OR ANY PART THEREOF, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
OR QUALITY, OR AS TO THE CONDITION OR WORKMANSHIP OF ANY OF THE ASSETS, OR THE
ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, AND ALL SUCH
REPRESENTATIONS AND WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED, IT BEING
UNDERSTOOD THAT, EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT, THE ASSETS
ARE TO BE CONVEYED HEREUNDER "AS IS" AND "WHERE IS" AS OF THE CLOSING AND IN
THEIR CONDITION AS OF THE CLOSING.
10. CONFIDENTIAL NATURE OF INFORMATION
10.1 CONFIDENTIALITY AGREEMENT. Buyer agrees that the Confidentiality Agreement
shall apply to (a) all documents, materials and other information that it shall
have obtained regarding Clorox or any Clorox Subsidiary during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), any
investigations made in connection therewith and the preparation of this
Agreement and related documents and (b) all analyses, reports, compilations,
evaluations and other materials prepared by Buyer or its counsel, accountants or
financial advisors that contain or otherwise reflect or are based upon, in whole
or in part, any of the provided information; provided, however, that the
Confidentiality Agreement shall terminate as of the Closing with respect to the
parties' obligations thereunder and shall be of no further force and effect
thereafter with respect to information of any Seller the ownership of which is
transferred to Buyer.
11. CERTAIN POST-CLOSING COVENANTS.
11.1 FURTHER ACTIONS. From and after the Closing Date, Sellers shall cooperate
with Buyer, and shall execute and deliver such documents and take such other
actions as Buyer may reasonably request, for the purpose of evidencing the sale
of the Assets to Buyer. Sellers shall use their Best Efforts to make Michael
Weaver, the current Taft Plant manager, available to provide up to sixteen (16)
hours of consulting to Buyer during normal business hours for thirty (30) days
after Closing, to assist Buyer in the transition of ownership of the Assets from
Sellers to Buyer, provided Mr. Weaver continues to be employed by Clorox or a
Clorox Subsidiary during that period.
11.2 PUBLICITY. Without limiting anything contained in SECTION 4.2, the parties
agree to cooperate with each other with respect to the issuance of press
releases or other publicity concerning any of the transactions contemplated
herein.
11.3 RECEIPTS AFTER CLOSING. The parties acknowledge that, after the Closing,
Clorox or any Clorox Subsidiary may receive funds, proceeds, contributions,
refunds, rebates, payments or receipts that are attributable to the Assets.
Sellers shall remit or cause to be remitted any such receipts to Buyer promptly
upon receipt, unless they relate to any accounts receivable of Clorox or any
Clorox Subsidiary or otherwise relate to services provided, products sold or
rights granted prior to the Closing. Buyer shall remit to Sellers promptly upon
Buyer's receipt, any funds, proceeds, contributions, rebates, payments or
receipts that are attributable to accounts receivable of Clorox or any Clorox
Subsidiary or otherwise relate to services provided, products sold or rights
granted by Clorox or any Clorox Subsidiary prior to the Closing. The parties
acknowledge that, after the Closing, Clorox or any Clorox Subsidiary may receive
invoices, bills, statements and other claims for the costs attributable to the
operation of the Taft Facility or the Jonny Cat Business after the Closing Date.
Any of the foregoing received by Clorox or any Clorox Subsidiary will be
promptly forwarded to Buyer, and Buyer agrees to pay on a timely basis all such
invoices, bills, statements and other forwarded claims.
11.4 PAYMENT OF TRANSFER TAXES AND TAX FILINGS AND CERTAIN POST-CLOSING
AGREEMENTS.
(a) Buyer, on the one hand, and Sellers, on the other hand, shall pay fifty
percent (50%) of all of the transfer Taxes imposed upon, or assessed
upon or with respect to, the transfer of the Assets to Buyer and any
transfer Taxes to effect any recording or filing with respect thereto
(collectively, the "TRANSFER TAXES") and all title and recording
costs. Sellers shall timely prepare and file any returns or other
filings related to such Transfer Taxes, including any claim for
exemption or exclusion from the application or imposition of any
Transfer Taxes. The parties shall pay such Transfer Taxes when due and
shall promptly following any filings related thereto furnish a copy of
such return or other filing and a copy of a receipt showing payment of
any such Transfer Taxes to the other parties.
(b) Each party agrees to furnish or cause to be furnished to the others,
upon request, as promptly as practicable, such information and
assistance at the requesting party's cost relating to the Assets as is
reasonably necessary for the filing of all Tax returns, including any
claim for exemption or exclusion from the application or imposition of
any Taxes or making of any election related to Taxes, the preparation
for any audit by any taxing authority and the prosecution or defense of
any claim, suit or proceeding relating to any Tax return.
(c) The parties acknowledge that the Purchase Price and other consideration
will be allocated among the Assets in accordance with an allocation
statement to be mutually agreed to by the parties on or prior to the
Closing (the "ASSET ALLOCATION STATEMENT"). All values contained in
the Asset Allocation Statement shall be consistently reported by Buyer,
Sellers and their respective Affiliates for all Tax purposes. Buyer
and Sellers agree that they shall each prepare and file IRS Form 8594,
as required by Section 1060 of the Code and the Treasury Regulations,
in a manner consistent with the Asset Allocation Statement.
(d) Sellers shall deliver to Buyer at or prior to the Closing an affidavit
under penalties of perjury stating for each Seller: (i) its name, address,
and taxpayer identification number and (ii) that it is not a "foreign
person" within the meaning of Section 1445 of the Code.
11.5 TELEPHONE NUMBERS. Sellers agree that, on and after the Closing Date, they
will cooperate with Buyer to transfer right, title and interest in and to the
telephone numbers at the Taft Facility to Buyer. Buyer agrees to pay all costs
and expenses associated with such transfer.
11.6 TRANSFER OF 401(K) ASSETS. As soon as reasonably practical following the
Closing Date, Sellers shall cause the trustees of Sellers' 401(k) profit sharing
plan ("SELLERS' 401(K) PLAN") to transfer to Buyer's 401(k) profit sharing plan
the Total 401(k) Plan Transfer Amount. The "TOTAL 401(K) PLAN TRANSFER AMOUNT"
shall be an amount equal to the account balances of all Transferring Employees
determined as of the valuation date immediately preceding the date of transfer,
including any amounts accrued as of that date but not yet contributed to
Sellers' 401(k) Plan or not yet allocated to the account of a Transferred
Employee.
11.7 JONNY CAT CLUB. Sellers shall prior to or after the Closing, take efforts
mutually agreed upon by the parties to transfer the rights, title, and interest,
if any, of Sellers in and to the trademarks related to the "Jonny Cat Club"
identified in SCHEDULE 2.14(A).
12. MISCELLANEOUS PROVISIONS.
12.1 FURTHER ASSURANCES. Each party hereto shall execute and deliver, and/or
cause to be executed and delivered, to the other parties hereto such instruments
and other documents, and shall take such other actions, as such other party may
reasonably request (prior to, at or after the Closing), for the purpose of
carrying out or evidencing the sale of the Assets to Buyer and Buyer's
assumption of the Assumed Liabilities.
12.2 NOTICES. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Sellers:
The Clorox Company
1221 Broadway
Oakland, CA 94612
Attn.: General Counsel
Facsimile: (510) 271-1696
The Clorox Pet Products Company
1221 Broadway
Oakland, CA 94612
Attn.: General Manager
Facsimile: (510) 271-7452
if to Buyer:
Oil-Dri Corporation of America
410 North Michigan Avenue
Chicago, IL 60611
Attention: Vice President and Chief Financial Officer
Facsimile: (312) 321-1271
with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Suite 2400
Chicago, IL 60601
Attention: Michael A. Nemeroff, Esq.
Facsimile: (312) 609-5005
12.3 HEADINGS. The headings contained in this Agreement are for convenience of
reference only, shall not be deemed to be a part of this Agreement and shall not
be referred to in connection with the construction or interpretation of this
Agreement.
12.4 COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall constitute an original and all of which, when taken together,
shall constitute one agreement.
12.5 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with, and governed in all
respects by, the internal laws of the State of Illinois (without giving
effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to this Agreement or
the enforcement of any provision of this Agreement may be brought or
otherwise commenced in any state or federal court located in Cook County,
Illinois. Each party to this Agreement and each Indemnitee:
(i) expressly and irrevocably consents and submits to the jurisdiction of each
state and federal court located in Cook County, Illinois (and each
appellate court located in the State of Illinois), in connection with any
such legal proceeding;
(ii) agrees that each state and federal court located in Cook County, Illinois,
shall be deemed to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense or otherwise), in any
such legal proceeding commenced in any state or federal court located in
Cook County, Illinois, any claim that such party is not subject personally
to the jurisdiction of such court, that such legal proceeding has been
brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Agreement or the subject matter of this Agreement
may not be enforced in or by such court.
(c) Nothing in this Section shall be deemed to limit or otherwise affect the
right of any party or Indemnitee to commence any legal proceeding against
any party hereto in any forum or jurisdiction.
12.6 SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. No party may assign its rights or delegate
its duties and obligations under this Agreement without the prior written
consent of the other parties, which may be withheld in the sole and absolute
discretion of such party; provided, however, Buyer shall have the right at any
time prior to the Closing to assign this Agreement (and all of its rights,
remedies, duties and obligations hereunder), without the consent of Sellers, to
an Affiliate of Buyer that is under Buyer's Control ("BUYER DESIGNEE"). Any
permitted assignment by a party of its rights under this Agreement shall not
relieve such party of its covenants and obligations hereunder. Any reference to
Buyer in this Agreement shall, to the extent applicable, also be deemed a
reference to the Buyer Designee, except where in the context of this Agreement
such use would not be appropriate. Except for the provisions of SECTION 8 hereof
and Buyer's acknowledgment and agreement regarding manufacturing, know-how,
processes and formula in SECTION 1.1, none of the provisions of this Agreement
is intended to provide any rights or remedies to any Person other than the
parties to this Agreement and their respective successors and permitted assigns
(if any). Without limiting the generality of the foregoing, no employee or
creditor of Clorox or any Clorox Subsidiary shall have any rights under this
Agreement or under any of the other Transactional Agreements.
12.7 AMENDMENTS; WAIVER. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed by all of
the parties hereto. No failure on the part of any party to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
party in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. No party shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
12.8 SEVERABILITY. In the event that any provision of this Agreement, or the
application of any such provision to any party or set of circumstances, shall be
determined to be invalid, unlawful, void or unenforceable to any extent, the
remainder of this Agreement, and the application of such provision to Persons or
circumstances other than those as to which it is determined to be invalid,
unlawful, void or unenforceable, shall not be impaired or otherwise affected and
shall continue to be valid and enforceable to the fullest extent permitted by
law.
12.9 ENTIRE AGREEMENT. This Agreement, the other Transactional Agreements and
the Exhibits and Disclosure Schedules hereto set forth the entire agreement
among the parties relating to the subject matter hereof and thereof, and there
are no agreements, understandings, representations or warranties among or
between any of the parties relating to the subject matter hereof and thereof
other than those set forth herein or in the other Transactional Agreements.
12.10 ATTORNEYS' FEES. If any lawsuit or injunctive or other equitable
proceeding is filed or commenced relating to or arising from a breach, default
or violation of this Agreement, the prevailing party shall be entitled to
recover from the other party such attorneys' fees, costs and expenses as the
court may award (including without limitation, the allocated costs for services
of in-house counsel), in addition to such other costs and expenses of suit or
proceeding as may be allowed by law.
12.11 KNOWLEDGE CONVENTION. References in this Agreement to the knowledge of any
party hereto shall mean the actual knowledge of the applicable party's executive
officers responsible for the subject of the applicable representation, after
reasonable investigation of the subject matter thereof, which executive officers
shall include, without limitation, with respect to Sellers (i) Richard Conti,
(ii) Robert Call and (iii) Michael Young. For purposes of this Agreement,
Michael Weaver, the Taft Facility plant manager, shall be deemed an executive
officer of A&M.
12.12 EXPENSES. Except as provided in SECTION 11.4 or any other Section of this
Agreement, or as otherwise provided in any other Transactional Agreement,
Sellers and Buyer shall bear their respective expenses, costs and fees in
connection with the transactions contemplated by the Transactional Agreements,
including, without limitation, the preparation, execution and delivery of the
Transactional Agreements and compliance with the Transactional Agreements,
whether or not the contemplated transactions shall be consummated.
12.13 NO STRICT CONSTRUCTION. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Person.
12.14 SPECIFIC PERFORMANCE. Sellers acknowledge that the Assets are unique and
recognize and affirm that in the event of a breach of this Agreement by Sellers,
money damages would be inadequate and Buyer would have no adequate remedy at
law. Accordingly, Sellers agree that Buyer shall have the right, in addition to
any other rights and remedies existing in its favor, to enforce its rights and
Sellers' obligations hereunder not only by an action or actions for damages but
also by an action or actions for specific performance, injunction and/or other
equitable relief, without posting any bond or security.
12.15 SCHEDULES AND EXHIBITS. The Disclosure Schedules and Exhibits attached to
this Agreement shall be construed with and as an integral part of this Agreement
to the same extent as if the same had been set forth VERBATIM herein.
[SIGNATURE PAGE FOLLOWS]
The parties to this Agreement have caused this Agreement to be executed
and delivered as of the date first written above.
BUYER SELLERS
OIL-DRI CORPORATION OF AMERICA, a THE CLOROX COMPANY, a Delaware
Delaware corporation corporation
By: By:
----------------------------- -----------------------------
Name: Name:
--------------------------- ---------------------------
Title: Title:
-------------------------- --------------------------
A&M PRODUCTS MANUFACTURING
COMPANY, a Delaware corporation
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
THE CLOROX PET PRODUCTS COMPANY,
a Texas corporation
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
THE CLOROX SALES COMPANY, a
Delaware corporation
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
THE CLOROX COMPANY OF CANADA, a
Canadian corporation
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
A-11
CHICAGO/#987237.9
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this EXHIBIT A):
ADVERTISING MATERIALS. "Advertising Materials" shall mean all advertising
and promotional materials that relate exclusively to the manufacture, sale or
distribution of Jonny Cat Product.
AFFILIATE. "Affiliate" shall mean any Person that Controls, is Controlled
by, or is under common Control with such Person.
AGREEMENT. "Agreement" shall mean the Asset Purchase Agreement to which
this EXHIBIT A is attached, as it may be amended from time to time.
A&M. "A&M" shall have the meaning set forth in the Recitals to the
Agreement.
ASSET ALLOCATION STATEMENT. "Asset Allocation Statement" shall have the
meaning set forth in SECTION 11.4(C) of the Agreement.
ASSETS. "Assets" shall have the meaning set forth in SECTION 1.1(A) of the
Agreement.
ASSUMED CONTRACTS. "Assumed Contracts" shall mean (a) the Contracts
identified in SCHEDULE 2.13 all purchase orders existing as of the Closing and
relating to goods ordered by Sellers for use exclusively at the Taft Facility in
connection with the Business, and (c) all obligations of continued performance
under executory sales orders for Jonny Cat Product existing as of the Closing.
ASSUMED EMPLOYEE LIABILITIES. "Assumed Employee Liabilities" shall mean
the obligations of Sellers with respect to the Taft Facility Employees, but only
to the extent Buyer has agreed to assume or be responsible for such obligations
as provided in SECTION 4.3 of the Agreement.
ASSUMED LIABILITIES. "Assumed Liabilities" shall mean the following
liabilities and obligations of Sellers: (a) the Assumed Employee Liabilities,
(b) the obligations of Sellers arising subsequent to the Closing under the
Assumed Contracts (excluding any obligation for any breach thereof occurring
prior to the Closing Date), but only to the extent the rights and benefits of
Sellers under such Contract Rights have been validly assigned to Buyer under
this Agreement or Buyer has otherwise received the benefits thereof in
accordance with SECTION 1.5 hereof, and (c) all responsibility for, and
liabilities with respect to, reclamation required in connection with mining
activities conducted in or around the Real Property or the real property
underlying the Mining Claims prior to and after the Closing, including, without
limitation, such responsibility under California SMRA and under any reclamation
plans adopted or accepted pursuant thereto, and the portion of annual property
tax liability associated with Buyer's period of ownership of the Real Property,
all as further provided in the Assumption Agreement; PROVIDED, HOWEVER, that
such assumption by Buyer shall not relieve Sellers of any liabilities or
obligations (i) for any violations of law existing prior to the Closing Date
with respect to reclamation and/or (ii) with respect to remediation or
correction of any reclamation previously completed by Sellers to the extent
required by state, local or municipal authorities, and Sellers shall indemnify
Buyer from and against any such liabilities or obligations in accordance with
SECTION 8 of the Agreement.
ASSUMPTION AGREEMENT. "Assumption Agreement" shall have the meaning set
forth in SECTION 1.2(B)(I) of the Agreement.
BENEFIT PLANS. "Benefit Plans" shall have the meaning set forth in
SECTION 2.19 of the Agreement.
BEST EFFORTS. "Best Efforts" shall mean the commercially reasonable
efforts that a prudent Person desiring to achieve a particular result would use
in order to achieve such result as expeditiously as possible.
BILLS OF SALE. "Bills of Sale" shall have the meaning set forth in SECTION
1.2(B)(I) of the Agreement.
BLM. "BLM" shall have the meaning set forth in the Recitals to the
Agreement.
BOOKS AND RECORDS. "Books and Records" shall mean all records and files
used exclusively in the conduct of the Business, including, but not limited to,
such records relating to customers and suppliers, personnel files, employee
manuals and payroll records, payment records, mining and drilling records,
topographic maps, aerial photographs, geological maps, engineering drawings,
blueprints, price lists, written processes, written formulae, engineering,
technical and shop drawings, and customer lists and photocopies of such records
and files as are required by applicable Law to be retained by any Seller or that
any Seller determines are necessary or advisable to retain.
BREACH. There shall be deemed to be a "Breach" of a representation,
warranty, covenant, obligation or other provision if there is or has been any
inaccuracy in or breach of, or any failure to comply with or perform, such
representation, warranty, covenant, obligation or other provision.
BUSINESS. "Business" shall mean, collectively, the Jonny Cat Business, the
business of manufacturing and packaging Jonny Cat Product at the Taft Facility
and the business of manufacturing and selling agricultural chemical based
products and industrial absorbents at the Taft Facility.
BUSINESS DAY. "Business Day" shall mean any day other than a Saturday,
Sunday or other day that banks are not authorized to be open for business in the
State of Illinois.
BUYER. "Buyer" shall have the meaning set forth in the Recitals to the
Agreement.
BUYER DESIGNEE. "Buyer Designee" shall have the meaning set forth in
SECTION 12.6 of the Agreement.
BUYER INDEMNITEES. "Buyer Indemnitees" shall mean the following Persons:
(a) Buyer; (b) Buyer's current and future Affiliates; (c) the respective
Representatives of the Persons referred to in clauses "(a)" and "(b)" above; and
(d) the respective successors and assigns of the Persons referred to in clauses
"(a)", "(b)" and "(c)" above.
BUYER WELFARE PLANS. "Buyer Welfare Plans" shall have the meaning set
forth in SECTION 4.3(F) of the Agreement.
CALIFORNIA SMRA. "California SMRA" shall mean the California Surface
Mining and Reclamation Act of 1975.
CCC. "CCC" shall have the meaning set forth in the Recitals to the
Agreement.
CERCLA. "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 906 et seq.
CLAIM NOTICE. "Claim Notice" shall have the meaning set forth in SECTION
8.1 of the Agreement.
CLOROX. "Clorox" shall have the meaning set forth in the Recitals to the
Agreement.
CLOROX SUBSIDIARY. "Clorox Subsidiary" shall mean any direct or indirect
subsidiary of Clorox, including, but not limited to, A&M, CPP, CSC and CCC.
CLOSING. "Closing" shall have the meaning set forth in SECTION 1.2(A) of
the Agreement.
CLOSING CERTIFICATES. "Closing Certificates" shall have the meaning set
forth in SECTION 1.2(B)(VII) of the Agreement.
CLOSING DATE. "Closing Date" shall have the meaning set forth in
SECTION 1.2(A) of the Agreement.
COBRA. "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation
Act of 1985.
CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
COLLECTIVE BARGAINING AGREEMENT. "Collective Bargaining Agreement" shall
have the meaning set forth in SECTION 2.18(A)(I) of the Agreement.
CONFIDENTIALITY AGREEMENT. "Confidentiality Agreement" means that certain
letter agreement, dated May 29, 2002, between Buyer and Clorox, relating to
Clorox's agreement to provide Buyer with access to certain "Evaluation
Material," as defined therein, and Buyer's agreements with respect to the
confidentiality of such material.
CONTRACT. "Contract" shall mean any written, oral, implied or other
agreement, contract, understanding, arrangement, instrument, note, guaranty,
indemnity, representation, warranty, deed, assignment, power of attorney,
certificate, purchase order, work order, insurance policy, benefit plan,
commitment, covenant, assurance or undertaking of any nature.
CONTRACT RIGHTS. "Contract Rights" shall mean all rights of Sellers under
the Assumed Contracts, but excluding any accounts receivable, claims, refunds,
causes of action, choses in action, rights of recovery and rights of set-off of
any kind or nature arising before, or by reason of events occurring prior to,
the Closing.
CONTROL. "Control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such entity, whether through ownership of voting securities or other interests,
by contract or otherwise.
COVENANT BREACH NOTICE. "Covenant Breach Notice" shall have the meaning
set forth in SECTION 8.4(B) of the Agreement.
CPP. "CPP" shall have the meaning set forth in the Recitals to the
Agreement.
CSC. "CSC" shall have the meaning set forth in the Recitals to the
Agreement.
DAMAGES. "Damages" shall mean any loss, damage, injury, liability, claim,
demand, settlement, judgment, award, fine, penalty, tax, fee (including any
reasonable legal fee, expert fee, accounting fee or advisory fee), charge, cost
(including any cost of investigation) or expense of any nature.
DISCLOSURE SCHEDULES. "Disclosure Schedules" shall mean the schedules
delivered to Buyer by Sellers upon execution of the Agreement, together with any
amendments and supplements thereto delivered on or prior to the Closing Date, a
copy of which is or shall be attached to the Agreement and is hereby
incorporated in the Agreement by this reference.
ELECTION NOTICE. "Election Notice" shall have the meaning set forth in
SECTION 8.4(A) of the Agreement.
EMPLOYMENT RELATED-OBLIGATION. "Employment-Related Obligation" shall have
the meaning set forth in SECTION 4.3(C)(A),(B) of the Agreement.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, deed of trust, security interest or other encumbrance.
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
ENVIRONMENTAL LAWS. "Environmental Laws" means (A) the Occupational Health
and Safety Act of 1970, as amended; (B) the Mine Safety and Health Act of 1977,
as amended; and (C) any and all federal, state and local statutes, laws,
regulations, ordinances, orders, policies, or decrees and the like, whether now
existing or subsequently enacted or amended, relating to public health or
safety, worker health or safety, pollution or protection of human health or the
environment, including natural resources, including but not limited to the Clean
Air Act, 42 U.S.C. ss. 7401 ET SEQ., the Federal Water Pollution Control Act, 33
U.S.C. ss. 1251 ET SEQ., RCRA, the Toxic Substances Control Act, 15 U.S.C. ss.
2601 ET SEQ., CERCLA, the Federal Food, Drug and Cosmetics Act, 21 U.S.C. ss.301
et seq. and any similar or implementing state or local law, which governs: (1)
the existence, clean-up, removal and/or remedy of contamination or threat of
contamination on or about real property; (2) the emission or discharge of
Hazardous Materials or contaminants into the environment; (3) the control of
Hazardous Materials or contaminants; or (4) the use, generation, or transport,
treatment, storage, disposal, removal, recycling, handling, or recovery of
Hazardous Materials.
ENVIRONMENTAL PERMITS. "Environmental Permits" shall have the meaning set
forth in SECTION 2.23(B) of the Agreement.
EQUIPMENT. "Equipment" shall mean all computers, equipment, machinery,
prototypes, tools, supplies, motor vehicles, heavy machinery, furniture and
other similar items of Sellers, including all related spare parts, dies, molds,
supplies and accessories, but only to the extent any of the foregoing is located
at the Taft Facility as of the date hereof or is delivered to the Taft Facility
after the date hereof and is primarily related to or used or held for use at the
Taft Facility in the production of Jonny Cat Product.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
FAIR LABOR STANDARDS ACT. "Fair Labor Standards Act" shall mean the Fair
Labor Standards Act of 1938, as amended, found at 29 United States Code Sections
201 ET SEQ..
FRESH STEP COARSE CLAY AMENDMENT. "Fresh Step Coarse Clay Amendment" shall
have the meaning set forth in SECTION 1.2(B)(XI) of the Agreement.
FRESH STEP COARSE CLAY COPACK AGREEMENT. "Fresh Step Coarse Clay Copack
Agreement" shall have the meaning set forth in the Recitals to the Agreement.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any
permit, license, certificate, concession, approval, consent, ratification,
permission, clearance, confirmation, endorsement, waiver, certification,
designation, rating, registration, qualification or authorization issued,
granted, given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any applicable law, rule or regulation of any
Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any federal, state,
local, foreign, provincial or other governmental body or agency, department,
commission, board, bureau, agency (regulatory or otherwise), council, court,
magistrate, panel or instrumentality.
HAZARDOUS MATERIAL. "Hazardous Material" shall include, without
limitation, the following: (a) any petroleum, waste oil, crude oil, diesel fuel
or other petroleum products, asbestos, asbestos-form or similar fibrous
materials, urea formaldehyde or polychlorinated biphenyl, dioxin, erionite,
"valley fever" or carcinogen; (b) any waste, gas or other substance or material
that is explosive or radioactive; (c) any "hazardous substance," "pollutant,"
"contaminant," "hazardous waste," "regulated substance," "hazardous chemical" or
"toxic chemical" as designated, listed or defined (whether expressly or by
reference) in any statute, regulation or other legal requirement (including
RCRA, CERCLA and any other so-called "superfund" or "superlien" law and the
respective regulations promulgated thereunder); (d) any other substance or
material (regardless of physical form) or form of energy that is subject to any
law which regulates or establishes standards of conduct in connection with, or
which otherwise relates to, the protection of human health, plant life, animal
life, natural resources, property or the enjoyment of life or property from the
presence in the environment of any solid, liquid, gas, odor, noise or form of
energy; and (e) any compound, mixture, solution, product or other substance or
material that contains any substance or material referred to in clause "(a)",
"(b)", "(c)" or "(d)" above.
HIRE DATE. "Hire Date" shall have the meaning set forth in SECTION 4.3(A)
of the Agreement.
INDEMNIFYING PARTY. "Indemnifying Party" shall have the meaning set
forth in SECTION 8.4 of the Agreement.
INDEMNITEE. "Indemnitee" shall mean any Buyer Indemnitee or Sellers
Indemnitee.
INTANGIBLE ASSETS. "Intangible Assets" shall mean the Jonny Cat
Trademarks, the Contract Rights, the Transferable Governmental Authorizations,
all manufacturing know-how at the Taft Facility, to the extent that it relates
solely to the Business, together with all associated goodwill and all rights to
use all of the foregoing forever and all other rights in, to and under the
foregoing, and all Prepaid Expenses.
INVENTORY. "Inventory" shall mean all inventories of Jonny Cat Product
owned by any Seller, wherever located, and all raw and packaging materials,
supplies and work-in-progress located at the Taft Facility or in transit to the
Taft Facility and related to the production of Jonny Cat Product, including,
without limitation, pallets, dyes, additives and deodorizers. "Inventory" shall
not include any raw and packaging materials, supplies and work-in-progress
related to the production of Scoopable Cat Litter or Silica Gel Cat Litter.
IRS. "IRS" shall mean Internal Revenue Service.
JONNY CAT BUSINESS. "Jonny Cat Business" shall mean the business of
selling cat litter and cat litter box liners conducted by Clorox or any Clorox
Subsidiary under the Jonny Cat Trademarks.
JONNY CAT COPACK AGREEMENT. "Jonny Cat Copack Agreement" shall have the
meaning set forth in the Recitals to the Agreement.
JONNY CAT COPACK TERMINATION AGREEMENT. "Jonny Cat Copack Termination
Agreement" shall have the meaning set forth in SECTION 1.2(B)(X) of the
Agreement.
JONNY CAT LINERS. "Jonny Cat Liners" shall mean all cat litter box
liners packaged under the Jonny Cat Trademarks.
JONNY CAT PRODUCT. "Jonny Cat Product" shall mean cat litter packaged
under any Jonny Cat Trademark and Jonny Cat Liners.
JONNY CAT TRADEMARKS. "Jonny Cat Trademarks" shall mean the trademarks,
trademark registrations and trademark applications listed on SCHEDULE 2.14 to
the Agreement and all goodwill related exclusively to the manufacture, sale or
distribution of cat litter and cat litter box liners under the Jonny Cat
Trademarks.
LAW. "Law" shall mean any national, federal, state, provincial or local
law, statute, ordinance, rule, regulation, code, order, judgment, injunction or
decree of any country.
LINER PURCHASE ORDER. "Liner Purchase Order" shall have the meaning set
forth in SECTION 1.2(B)(XV) of the Agreement.
MATERIAL ADVERSE EFFECT. "Material Adverse Effect" shall mean any
condition or event that could reasonably be expected to have a material and
adverse effect upon the financial condition or results of operations of the
Business, taken as a whole, or the value of the Assets, taken as a whole, other
than any condition or event (i) relating to the economy in general, (ii)
relating to the industries in which the Business operates in general, or (iii)
arising out of or resulting from actions of Buyer or a Buyer Designee in
connection with the Agreement.
MINERAL RESERVES. "Mineral Reserves" shall mean all mineral reserves and
deposits to which Buyer is entitled as owner of the Real Property and the Mining
Claims.
MINING CLAIMS. "Mining Claims" shall mean all BLM and other governmental
and third party claims and leases identified on EXHIBIT C attached hereto and
made a part hereof, whether or not located and held by Sellers under the Mining
Law of 1872, as amended, 30 U.S.C. ss.21 et seq. (the "MINING LAW OF 1872"),
which relate to the Assets (collectively, the "UNPATENTED MINING CLAIMS") and
all claims, refunds, causes of action, choses in action, rights of recovery and
rights of set-off of every kind and nature arising as of or by reason of events
occurring subsequent to Closing.
MINING CLAIMS DEED. "Mining Claims Deed" shall have the meaning set forth
in SECTION 1.2(B)(III) of the Agreement.
OTHER TAFT EMPLOYEES. "Other Taft Employees" shall have the meaning set
forth in SECTION 4.3(A) of the Agreement.
PERMITTED ENCUMBRANCES. "Permitted Encumbrances" shall mean inchoate
mechanic's and materialmen's liens for construction in progress and workmen's,
repairmen's, warehousemen's, carrier's and other similar statutory liens arising
in the ordinary course of business in respect of obligations that are not yet
due, provided that no Permitted Encumbrance shall constitute an Assumed
Liability.
PERMITTED EXCEPTIONS. "Permitted Exceptions" shall mean the following:
a. Liens for taxes, assessments and other charges of governmental or
quasi-governmental authorities which are not yet delinquent or which are being
contested by appropriate proceedings;
b. Zoning, building, access, environmental, and other similar
restrictions imposed by laws, ordinances, rules, requirements, resolutions,
policy statements and regulations of governmental and quasi-governmental
authorities claiming jurisdiction over the Real Property provided that no such
restriction shall materially restrict the use of any of the Assets in mining,
processing or packaging of clay and products made from clay;
c. All matters actually disclosed to Buyer prior to Closing by an
inspection of the Real Property, including, but not limited to, an environmental
investigation and assessment of the Real Property; and
d. Such state of facts as disclosed by the Surveys of the Real
Property, provided such facts do not serve as the basis for Buyer's election to
terminate the Agreement pursuant to SECTION 7 of the Agreement.
e. Any other matters approved, accepted or waived by Buyer in
writing.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
P&L STATEMENT. "P&L Statement" shall have the meaning set forth in SECTION
2.4 of the Agreement.
PRE-CLOSING PERIOD. "Pre-Closing Period" shall mean the period commencing
on the date hereof and ending on the Closing Date.
PRELIMINARY TITLE REPORT. "Preliminary Title Report" shall mean that
certain preliminary report regarding the Real Property issued by the Title
Company, dated as of October 7, 2002, set forth as EXHIBIT D attached hereto and
made a part hereof, together with copies of the exceptions to title described in
such report.
PREPAID EXPENSES. "Prepaid Expenses" shall mean all prepaid expenses
relating specifically and solely to the Assets, other than insurance deposits
and any Retained Tax Recovery.
PROPRIETARY INFORMATION. "Proprietary Information" means all information
(whether or not protectable by patent, copyright, mask works or trade secret
rights) not generally known to the public (except for patents), including, but
not limited to, works of authorship, inventions, discoveries, patentable subject
matter, patents, patent applications, industrial models, industrial designs,
trade secrets, trade secret rights, software, works, copyrightable subject
matters, copyright rights and registrations, mask works, know-how and show-how,
trademarks, trade names, service marks, emblems, logos, insignia and related
marks and registrations, specifications, technical manuals and data, libraries,
blueprints, drawings, proprietary processes, product information and development
work-in-process.
PURCHASE PRICE. "Purchase Price" shall have the meaning set forth in
SECTION 1.3(A) of the Agreement.
RCRA. "RCRA" shall mean the Resource Conservation and Recovery Act, 42
U.S.C. ss. 6901 et seq.
REAL PROPERTY. "Real Property" shall mean, collectively, (a) the land
located at 950 N. Petroleum Club Road, Taft, California, on which the Taft Plant
is located, and more particularly described in EXHIBIT E attached hereto and
made a part hereof, and the land located at on Midoil Road, on which the Taft
Mine is located, and more particularly described in EXHIBIT F attached hereto
and made a part hereof, (b) together with all easements, licenses, rights and
appurtenances relating to the foregoing, if any, and (c) all of A&M's right,
title and interest in and to all buildings, structures, fixtures, and
improvements on such land.
REAL PROPERTY DEED. "Real Property Deed" shall have the meaning set forth
in SECTION 1.2(B)(II) of the Agreement.
RELEASE. "Release" shall mean the spilling, leaking, disposing,
discharging, migrating, emitting, depositing, ejecting, leaching, escaping or
any other release or threatened release, however defined, whether intentional or
unintentional, of any Hazardous Material.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
RETAINED TAX RECOVERY. "Retained Tax Recovery" means any claim, right or
interest of Clorox or any Clorox Subsidiary in or to any refund, rebate,
abatement or other recovery for Taxes, together with any interest due thereon or
penalty rebate arising therefrom, the basis of which arises or accrues in any
period prior to the Closing.
SCHEDULE. All references to a "Schedule" herein shall mean a Schedule
included in the Disclosure Schedules, as amended or supplemented on or prior to
the Closing Date.
SCHEDULED CLOSING TIME. "Scheduled Closing Time" shall have the meaning
set forth in SECTION 1.2(A) of the Agreement.
SCOOPABLE CAT LITTER. "Scoopable Cat Litter" shall mean clay-based cat
litter which is marketed as scoopable or clumping cat litter and has as a
significant characteristic the formation of removable clumps, excluding Silica
Gel Cat Litter.
SELLER INDEMNITEES. "Seller Indemnitees" shall mean the following Persons:
(a) Sellers; (b) current and future Affiliates of Sellers; (c) the respective
Representatives of the Persons referred to in clauses "(a)" and "(b)" above; and
(d) the respective successors and assigns of the Persons referred to in clauses
"(a)", "(b)" and "(c)" above.
SELLERS. "Sellers" shall have the meaning set forth in the Recitals to the
Agreement.
SELLERS' 401(K) PLAN. "Sellers' 401(k) Plan" shall have the meaning set
forth in SECTION 11.6 of the Agreement.
SILICA GEL CAT LITTER. "Silica Gel Cat Litter" shall mean scoopable or
coarse cat litter consisting primarily of silica gel crystals, as well as
blended scoopable or coarse cat litter with silica gel crystal content in excess
of ten percent (10%).
SPECIAL DAMAGES. "Special Damages" shall have the meaning set forth in
SECTION 8.5(B) of the Agreement.
STATEMENT OF INVENTORY AND ASSETS. "Statement of Inventory and Assets"
shall have the meaning set forth in SECTION 2.4 of the Agreement.
SURVEYS. "Surveys" shall have the meaning set forth in SECTION 4.7(B) of
the Agreement.
TAFT DISTRIBUTION AREA. "Taft Distribution Area" shall mean the regions in
the United States of America and Canada, identified in SCHEDULE 1.6, which
SCHEDULE 1.6 shall be prepared and mutually agreed to by the parties on or prior
to the Closing Date.
TAFT FACILITY. "Taft Facility" shall have the meaning set forth in the
Recitals to the Agreement.
TAFT FACILITY EMPLOYEE. "Taft Facility Employee" shall mean an employee of
any Sellers, other than Michael Weaver, the Taft Facility plant manager, whose
primary job responsibilities are (or were, in the case of an employee on leave)
performed at the Taft Mine and/or the Taft Plant.
TAFT MINE. "Taft Mine" shall have the meaning set forth in the Recitals to
the Agreement.
TAFT PLANT. "Taft Plant" shall have the meaning set forth in the
Recitals to the Agreement.
TAXES. "Taxes" shall mean any federal, state, local, foreign, provincial
(or instrumentality thereof) taxes (including, without limitation, gross income,
gross receipts, windfall profits, occupation, unemployment, disability,
severance, real and personal property, production, excise, employment,
withholding, social security (or similar), alternative or add-on minimum, ad
valorem, value added, transfer, stamp, environmental, or any other duty, tax,
custom, governmental fee, or other like assessment of any kind whatsoever) and
other governmental charges (including, without limitation, interest, additions
to tax and penalties).
TAX RETURN. "Tax Return" means any return, declaration, claim for refund,
report or statement (whether informational or otherwise) related to Taxes,
including, without limitation, any schedule or attachment thereto and any
amendment thereof.
THIRD PARTY. "Third Party" shall mean any Person not a party to this
Agreement and not an Affiliate of any party to the Agreement.
THIRD PARTY CLAIM. "Third Party Claim" shall have the meaning set forth in
SECTION 8.4(A) of the Agreement.
TITLE COMMITMENTS. "Title Commitments" shall have the meaning set forth in
SECTION 4.7(A) of the Agreement.
TITLE COMPANY. "Title Company" shall mean Chicago Title Insurance
Company.
TOTAL 401(K) PLAN TRANSFER AMOUNT. "Total 401(k) Plan Transfer Amount"
shall have the meaning set forth in SECTION 11.6 of the Agreement.
TRADEMARK ASSIGNMENT. "Trademark Assignment" shall have the meaning
set forth in SECTION 1.2(B)(I) of the Agreement.
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TRADEMARKS. "Trademarks" shall mean registered and unregistered
trademarks, service marks and trade names, and other names, marks and slogans,
and all registration applications for any of the foregoing.
TRANSACTIONAL AGREEMENTS. "Transactional Agreements" shall mean: (a) the
Agreement, (b) the Bills of Sale, (c) the Trademark Assignments, (d) the Real
Property Deed, (e) the Mining Claim Deed, (f) the Assumption Agreement, (g) the
Closing Certificates, (h) the Jonny Cat Copack Termination Agreement, (i) the
Fresh Step Coarse Clay Amendment, (j) the Liner Purchase Order and (k) the
Transitional Services Agreement.
TRANSFERABLE GOVERNMENTAL AUTHORIZATIONS. "Transferable Governmental
Authorizations" shall have the meaning set forth in SECTION 1.1(A) of this
Agreement.
TRANSFERRING EMPLOYEES. "Transferring Employees" shall have the
meaning set forth in SECTION 4.3(A) of the Agreement.
TRANSFER TAXES. "Transfer Taxes" shall have the meaning set forth in
Section 11.4(a) of the Agreement.
TRANSITIONAL SERVICES AGREEMENT. "Transitional Services Agreement"
shall have the meaning set forth in SECTION 1.2(B)(XIII) of the Agreement.
UNRECORDED LICENSES. "Unrecorded Licenses" shall have the meaning set
forth in SECTION 2.7(E) of the Agreement.
WARN ACT. "WARN Act" shall mean, collectively, the Worker Adjustment and
Retraining Notification Act (Pub. L. 100-379, 102 Stat. 890 (1988)) and Chapter
4 (commencing with Section 1400) of Part 4 of Division 2 of the California Labor
Code.