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Exhibit A
CONTRIBUTION AGREEMENT
AMONG
THE PROCTER & GAMBLE COMPANY,
THE PROCTER & GAMBLE MANUFACTURING COMPANY
THE PROCTER & GAMBLE OHIO BRANDS COMPANY
AND
THE J.M. SMUCKER COMPANY
DATED AS OF OCTOBER 9, 2001
EXECUTION COPY
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CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT (this "AGREEMENT"), dated as of October 9, 2001,
by and among The Procter & Gamble Company, an Ohio corporation ("P&G"), The
Procter & Gamble Manufacturing Company (together with P&G, the "CONTRIBUTORS"),
The Procter & Gamble Ohio Brands Company, an Ohio corporation and a wholly owned
subsidiary of P&G ("NEWCO") and The J.M. Smucker Company, an Ohio corporation
("JMS"), each, a "Party" or together, "Parties." All capitalized terms used
herein shall have the meaning set forth in Article I.
WHEREAS, the board of directors of P&G has determined that it would
be in the best interests of P&G and its shareholders to separate the Jif/Crisco
Business from P&G;
WHEREAS, P&G has caused Newco, which currently conducts no business
operations and has no assets or liabilities other than in connection with its
formation, to be incorporated as its wholly owned subsidiary in order to effect
such separation;
WHEREAS, the board of directors of each of the Contributors and Newco
has determined that it would be appropriate and desirable for the Contributors
to contribute and transfer to Newco, and for Newco to receive and assume,
substantially all of the assets, properties, rights and interests of P&G and its
Affiliates and certain of the liabilities associated with the Jif/Crisco
Business on the terms set forth in this Agreement;
WHEREAS, P&G and Newco intend that the contribution and assumption of
assets and liabilities will qualify as a tax-free reorganization under Section
368 (a)(1)(D) of the Internal Revenue Code, as amended (the "CODE");
WHEREAS, Immediately following the contribution and assumption of
assets and liabilities pursuant to this Agreement, P&G, pursuant to an Agreement
and Plan of Merger ("MERGER AGREEMENT") by and among P&G, Newco and JMS, will
distribute to the shareholders of P&G all of the outstanding shares of Newco
(the "SPIN OFF");
WHEREAS, immediately following the Spin Off, Newco will merge (the
"MERGER") with and into JMS, upon the terms and subject to the conditions set
forth in the Merger Agreement and in accordance with the General Corporation Law
of the Ohio Revised Code;
WHEREAS, for federal income tax purposes, it is intended that (i) the
Spin Off shall be tax-free to P&G and to the shareholders of P&G pursuant to
Section 355 of the Code, and (ii) the Merger shall qualify as a tax-free
reorganization within the meaning of Section 368 of the Code; and
WHEREAS, the parties intend this Agreement, including the exhibits and
schedules hereto, to set forth the arrangements between them regarding the
separation of the Jif/Crisco Business from the Contributors and the contribution
of the Jif/Crisco Business to Newco.
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NOW THEREFORE, in consideration of the foregoing premises and of the
mutual covenants and agreements herein contained, the parties hereto, intending
to be legally bound hereby, agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
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As used in this Agreement, the following terms shall have the following
meanings:
1.01 "Action" shall mean any dispute, controversy, claim, action,
litigation, suit, cause of action, arbitration, mediation, or any proceeding by
or before any mediator or Governmental Entity, or any investigation, subpoena,
or demand preliminary to any of the foregoing.
1.02 "Affiliate" shall mean, with respect to a Person, another Person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person.
1.03 "Agreement" shall have the meaning set forth in the preamble.
1.04 "Ancillary Agreements" shall mean collectively (a) the Patent
Assignment Agreement; (b) the Patent License Agreement; (c) the Patent
Assignment and License Agreement; (d) the Trademark Assignment; (e) the
individual trademark, domain name and patent assignment documents, by country,
pursuant to Section 4.05; (f) the Manufacturing Plant Separation Agreement; (g)
the Transitional Services Agreement; (h) the Tax Sharing Agreement; (i) the
Shareholders Agreement (j) the Merger Agreement; and (k) all other documents
required to be delivered on the Closing Date by any party pursuant to this
Agreement.
1.05 "Assumed Liabilities" shall mean the following, and only the
following liabilities and obligations, and no other liabilities or obligations
whatsoever, whether known or unknown, accrued or contingent, direct or indirect,
arising from the operation of the Jif/Crisco Business prior to or following the
Closing Date:
(a) subject to the provisions of this Section 1.05, all liabilities
arising out of or related to the operation of the Jif/Crisco Business or
ownership of the Jif/Crisco Assets after the Closing;
(b) all liabilities for product liability and product warranty for
products of the Jif/Crisco Business manufactured by or for Newco or its
successors after the Closing;
(c) the following Environmental Costs and Liabilities:
(i) all Environmental Costs and Liabilities for Environmental
Matters disclosed pursuant to Section 3.03 of this Agreement;
(ii) the first $1,000,000 of Environmental Costs and
Liabilities not disclosed pursuant to Section 3.03 of this Agreement;
(iii) twenty percent (20%) of Environmental Costs and
Liabilities to the extent such Environmental Costs and Liabilities
exceed $1,000,000 but are less than $32,250,000 and
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one hundred percent (100%) of such Environmental Costs and Liabilities
in excess of $32,250,000; and
(iv) all Environmental Costs and Liabilities for all
Environmental Matters arising due to actions occurring after the
Closing Date;
(d) all liabilities for Taxes arising out of or related to the
operation of the Jif/Crisco Business after the Closing, ownership of the
Jif/Crisco Assets after the Closing, and the assumption of Assumed Liabilities;
(e) all liabilities and obligations of Newco as set forth in the
Ancillary Agreements;
(f) all liabilities of the Contributors arising after the Closing
pursuant to any Contract;
(g) all liabilities after the Closing for administration and redemption
of coupons of the Jif/Crisco Business, except as set forth in Section 4.12;
(h) all liabilities for returns of products of the Jif/Crisco Business
shipped prior to the Closing, but returned after the Closing, as set forth in
Section 4.13;
(i) all obligations and liabilities related to Newco Employees (as
defined in the Merger Agreement) arising due to facts and circumstances
occurring after the Closing;
(j) all out-of-pocket costs incurred by Contributors arising out of the
continued performance of the Portion Pac Agreement (as hereinafter defined) for
up to 6 consecutive months after the Closing Date, which costs shall not be
deemed to include consequential damages; and
(k) all liabilities and obligations of the Jif/Crisco Business set
forth on the Audited Statements, less payments thereon and discharges thereof
prior to the Closing Date.
1.06 "Authorization" means any Material legally-required consent,
authorization, approval, order license, certificate or permit of or from, or
declaration or filing with any Governmental Entity, including, without
limitation, any legally-required filing with any Governmental Entity and the
subsequent expiration of any legally-required waiting period under any antitrust
or competition laws.
1.07 [RESERVED]
1.08 "Books and Records" shall mean all of the Contributors' books,
records and other documents, and any copyrights related thereto, (including,
without limitation, customer and supplier lists and files; distribution lists;
mailing lists; sales materials; operating, production and other manuals; plans;
files; specifications; process drawings; computer programs data and information;
manufacturing and quality control records and procedures; research and
development files; and advertising and promotional materials) exclusively used
in the Jif/Crisco Business, and existing at the Closing Date. Notwithstanding
the foregoing, "Books and Records" shall not include information that the
Contributors received from consumers via the internet or other on-line methods
that, if given to Newco, would violate any privacy laws, regulations, rules,
opinions, other statements or positions of a Governmental Entity or the
requirements any self-regulatory body (including, without limitation, any
self-regulatory privacy body) in any country in the Geography.
1.09 "Business Day" shall mean any day on which commercial banks in New
York, New York are open for business providing substantially all services
offered by such banks.
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1.10 "Claim" shall have the meaning set forth in Section 5.03(a).
1.11 "Closing" means the closing of the transactions contemplated by
this Agreement in accordance with the terms and conditions as set forth in the
Merger Agreement and this Agreement.
1.12 "Closing Date" means the date on which the Closing occurs, as
provided in the Merger Agreement.
1.13 "Code" shall have the meaning set forth in the Recitals.
1.14 "Contracts" shall mean those purchase orders, contracts,
agreements and other obligations (except Intercompany Contracts) exclusively
used in the Jif/Crisco Business. The Contracts in effect as of the date of
execution of this Agreement, other than those made in the ordinary course of
business that involve payments of less than $100,000 per year, are set forth in
Schedule 1.14, which Schedule 1.14 shall be updated by Contributors at the
Closing to reflect the Contracts at that time. Notwithstanding the foregoing,
the agreement between P&G and Portion Pac Inc., dated October 26, 2000 ("Portion
Pac Agreement"), shall not be deemed a Contract.
1.15 "Contribution" shall have the meaning set forth in Section 2.01.
1.16 "Contributors" 1.16 shall have the meaning set forth in the
preamble.
1.17 "Culinary Sol Business" shall mean the culinary education and
retail business for specialized cooking products conducted by the Contributors
at the Rookwood Commons store in Norwood, Ohio prior to the Closing Date.
1.18 "Domain Names" shall mean those domain names related to the
Jif/Crisco Business as listed on Schedule 1.18, and the look and feel of the
corresponding Internet sites as currently owned by the Contributors as used in
the operation of the Jif/Crisco Business and as currently existing.
1.19 "Employees" shall have the meaning set forth in Section 1.01 of
the Merger Agreement.
1.20 "Encumbrances" means all liens, security interests, pledges,
mortgages, deeds of trusts, charges, options, or other encumbrances.
1.21 "Environmental Laws" means all federal, state, provincial and
local laws, by-laws, rules regulations, orders and permit requirements
applicable to the Real Property or to owners or operators thereof or thereon or
to the operations or activities conducted thereon, relating to the protection of
the environment or to human health or safety, and including without limitation,
those environmental laws relating to the generation, manufacture, storage,
management, transportation, treatment or disposal of Hazardous Substances,
employee and product safety, and the emission or release of Hazardous
Substances, nuisance, into the air, surface water, ground water, land surface,
subsurface strata or any building or structure.
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1.22 "Environmental Matter" means any matter arising out of, relating
to, or resulting from, pollution, protection of the environment or human health
or safety, health or safety of employees, sanitation, nuisance, emissions,
discharges, releases or threatened releases of Hazardous Substances or otherwise
arising out of, resulting from, or relating to, the generation, manufacture,
storage, management, transportation, treatment or disposal of Hazardous
Substances or to the application of Environmental Laws.
1.23 "Environmental Costs and Liabilities" shall mean any and all
losses, liabilities, obligations, damages, fines, penalties, judgments, actions,
claims, costs and expenses (including, without limitation, fees, disbursements
and expenses of legal counsel, experts, engineers and consultants and the costs
of investigation and feasibility studies and remedial action) arising from or
under any Environmental Law or order or Contract with any Governmental Entity or
other Person or any Environmental Matter with respect to Hazardous Substances.
Notwithstanding the foregoing, Environmental Costs and Liabilities shall not
include those Environmental Costs and Liabilities, if any, arising from
Environmental Matters, in connection with any waste disposal sites located off
the Real Property to which any Hazardous Substances have been transported by
Contributors or Contributors' agents or contractors prior to the Closing Date,
regardless of whether such waste disposal sites are disclosed in any schedule to
this Agreement.
1.24 "Equipment" shall mean only those assets as set forth in Schedule
1.24, "where is", and "as is" except as provided in Section 3.02.
1.25 "Excluded Assets" shall mean any and all assets not expressly
listed as Jif/Crisco Assets, whether or not used in the Jif/Crisco Business,
including, without limitation, the following assets:
(a) subject to Section 1.33(k) of this Agreement, cash and
equivalents (or similar types of investments), prepaid expenses and accounts
receivable related to the Jif/Crisco Assets that exist on the Closing Date;
(b) insurance policies of the Contributors and their Affiliates
pertaining to the Jif/Crisco Assets and all rights of the Contributors and their
Affiliates of every nature and description under or arising out of such
insurance policies;
(c) all rights which the Contributors retain under the Ancillary
Agreements;
(d) claims for refunds of Taxes paid by the Contributors and/or
their Affiliates arising prior to the Closing Date and relating to periods prior
to Closing;
(e) any Intercompany Contract;
(f) the Proprietary Information Technology; and
(g) without limitation, the assets listed in Schedule 1.25(g).
1.26 "Excluded Liabilities" shall mean all liabilities and obligations
of the Contributors, whether known or unknown, accrued or contingent, direct or
indirect, whether or
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not of, associated with or arising from the Jif/Crisco Business or the operation
thereof or any of the Jif/Crisco Assets, that are not Assumed Liabilities.
1.27 "Geography" shall mean the United States of America and Canada.
1.28 "Governmental Entity" shall mean any arbitrator, court, judicial,
legislative, administrative or regulatory agency, commission, department, board
or bureau or body or other governmental authority or instrumentality or any
Person or entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, whether foreign,
federal, state, provincial, local or other.
1.29 "Hazardous Substance" means any contaminant, pollutant, waste or
other substance that could cause harm or degradation to the environment or
adversely affect human health or safety, or is regulated by, or may form the
basis for liability under Environmental Laws or that is present in the
environment in such quantity or state that it contravenes any Environmental Laws
or that its remediation is required by any Environmental Laws.
1.30 "IAAA" shall have the meaning set forth in Section 5.03(d).
1.31 "Intercompany Contracts" shall mean all purchase orders,
contracts, agreements and other obligations between or among any of the
Contributors and any of the Contributors and any of their Affiliates.
1.32 "Inventory" shall mean, wherever situated, all maintenance
supplies, spare parts, raw materials, finished products, goods in-process, and
packaging supplies which are exclusively used in connection with the Jif/Crisco
Business or of the character included as inventory on the balance sheet
delivered as part of the Audited Statements pursuant to Section 3.15, and
including without limitation all such items located on the Real Property, all as
are owned by the Contributors at the Closing Date.
1.33 "Jif/Crisco Assets" shall mean only the following assets,
properties, rights and interests, wherever situated:
(a) the Books and Records;
(b) the claims, interests rights and benefits of the Contributors
arising after the Closing Date pursuant to the Contracts;
(c) the Equipment;
(d) the Trademarks;
(e) goodwill exclusively related to the Jif/Crisco Business, but
not otherwise specifically identified herein;
(f) the Real Property;
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(g) the Inventory;
(h) the Permits;
(i) the Domain Names;
(j) the Technology;
(k) to the extent that Cash Amount (as defined in the Merger
Agreement) is to be paid to holders of JMS Common Stock (as defined in the
Merger Agreement) pursuant to Section 3.01(d) of the Merger Agreement,
additional working capital in a form reasonably acceptable to JMS in an
aggregate amount sufficient for payment in respect of the Cash Amount; and
(l) all assets exclusively related to the Jif/Crisco Business of
the nature set forth on the Audited Statements, other than those assets
exclusively related to the Culinary Sol Business.
Notwithstanding the above, the Jif/Crisco Assets do not include any of
the Excluded Assets.
1.34 "Jif/Crisco Business" shall mean the direct and indirect business
of P&G and its affiliates relating to the manufacturing, packaging, distributing
and marketing of (i) shortening and oil products for human consumption and (ii)
peanut butter and peanut butter-based spread products for human consumption, in
each case by or on behalf of the Contributors under one or more Trademarks.
1.35 "JMS" shall have the meaning set forth in the Recitals.
1.36 "Knowledge of" means, whether or not capitalized, in the case of
an entity, the actual knowledge after due inquiry of the officers of such entity
as of the date of the representation, warranty or statement.
1.37 "Manufacturing Plant Separation Agreement" shall mean the
agreement in the form attached hereto as Exhibit 1.37 between Newco and the
Contributors, to be executed as of the Closing Date,.
1.38 "Material" and its variations mean, with respect to an event,
circumstance or condition, that such event, circumstance or condition,
individually or in the aggregate, has a material adverse effect upon the assets,
financial condition or earnings of the Jif/Crisco Business.
1.39 "Merger" shall have the meaning set forth in the Recitals.
1.40 "Merger Agreement" shall have the meaning set forth in the
Recitals.
1.41 "Newco" shall have the meaning set forth in the preamble.
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1.42 "Newco Assertion" shall have the meaning set forth in Section
5.01(b).
1.43 "Patent Assignment Agreement" shall mean the general assignment of
the patents to Newco from P&G as set forth in Schedule 1.43, to be executed as
of the Closing Date, which is in substantially the form attached hereto as
Exhibit 1.43.
1.44 "Patent License Agreement" shall mean that agreement in
substantially the form attached hereto as Exhibit 1.44, with respect to a
license of patents from P&G to Newco to be executed as of Closing Date. Such
licensed patents are set forth in Schedule 1.44.
1.45 "Patents" shall mean those patents, registrations, and
applications therefore set forth in Schedules 1.43 and 1.46.
1.46 "Patent Assignment and License Agreement" shall mean that
agreement with respect to the Culinary Sol Business in substantially the form
attached hereto as Exhibit 1.46, between P&G and Newco to be executed as of the
Closing Date. Such Assigned and Licensed patents are set forth in Schedule 1.46.
1.47 "Person" shall mean (as the context requires) an individual, a
corporation, a partnership, an association, a trust, a limited liability
company, or other entity or organization, including a Governmental Entity.
1.48 "Permits" mean all licenses, permits, approvals, variances,
waivers or consents, to the extent transferable without consent, issued by any
Governmental Entity exclusively related to the Jif/Crisco Business.
1.49 "P&G" shall have the meaning set forth in the preamble.
1.50 "P&G Assertion" shall have the meaning set forth in Section
5.02(b).
1.51 "Proprietary Information Technology" shall mean the list of
software and computer programs and information technology to be part of the
Excluded Assets, as identified in Schedule 1.51.
1.52 "Real Property" shall mean all right, title and interest in or to
the improved and unimproved land listed or described in Schedule 1.52, and all
buildings, structures, erections, improvements, appurtenances, and fixtures
situated on or forming part of such land.
1.53 "Shareholders Agreement" shall mean the agreement dated as of
October 9, 2001 among P&G and certain shareholders of JMS and is attached as
Exhibit B to the Merger Agreement.
1.54 "Spin Off" shall have the meaning set forth in the Recitals.
1.55 "Tax Sharing Agreement" shall mean the Tax Sharing Agreement
between the Contributors and Newco which will be in the form attached hereto as
Exhibit 1.55.
1.56 "Taxes or Tax" means all U.S. and non-U.S., federal, state,
provincial, local and
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other taxes, fees, levies, duties and other assessments or charges of whatever
kind (including without limitation, income, sales, use, excise, stamp, transfer,
property, value added, recording, registration, intangible, documentary, goods
and services, real estate, sales, payroll, gains, gross receipts, withholding
and franchise taxes) together with any interest, penalties, or additions payable
in connection with such taxes, fees, levies, duties or other assessments or
charges.
1.57 "Technology" shall mean the Patents plus any of the Contributors
non-patented formulations, trade secrets, process knowledge, and technological
and manufacturing know-how, in each case, exclusively used in the Jif/Crisco
Business as of the Closing Date.
1.58 "Trademarks" shall mean those trademarks, registrations and
applications therefore set forth in Schedule 1.58 and the goodwill associated
therewith.
1.59 "Trademark Assignment Agreement" shall mean the general assignment
of the Trademarks to Newco from P&G to be executed as of the Closing Date, which
will be substantially in the form attached hereto as Exhibit 1.59. Individual
Trademark assignment documents, by country, will be prepared and filed as
provided in Section 4.05 of this Agreement.
1.60 "Transitional Services Agreement" shall mean the agreement, in the
form attached hereto as Exhibit 1.60, between Newco and the Contributors, to be
executed as of the Closing Date, dealing with the short-term and long-term
provisions of certain services of the Contributors to Newco.
Other definitions are found in the following sections:
"Audited Statements" Section 3.15
"Balance Sheet Date" Section 3.15
"ERISA" Section 3.14
"ERISA Affiliate" Section 3.14
"Intellectual Property" Section 3.10
ARTICLE II
TRANSFER AND CONTRIBUTION OF JIF/CRISCO ASSETS; ASSUMPTION OF
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CERTAIN LIABILITIES
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2.01 CONTRIBUTION AND ASSUMPTION OF LIABILITIES. In accordance with the
terms and upon the conditions of this Agreement, on the Closing Date, but prior
to the closing of the Merger, the Contributors will convey, assign, transfer and
deliver (the "CONTRIBUTION") to Newco, and Newco will acquire and accept, all of
the Contributors' right, title and interest in and to the Jif/Crisco Assets, and
Newco will assume the Assumed Liabilities.
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2.02 DELIVERY OF CLOSING DOCUMENTS.
(a) On the Closing Date, but prior to the closing of the Merger, the
Contributors shall deliver to Newco, the following:
(i) an instrument of assignment in a form reasonably acceptable to
the Contributors, Newco and JMS for the Jif/Crisco Assets that will not be
transferred pursuant to specific documents described elsewhere in this Section
2.02;
(ii) such other documents as are, in the reasonable opinion of
counsel for the Contributors, Newco and JMS, necessary or desirable to transfer
the Assumed Liabilities and the Jif/Crisco Assets to Newco; and
(iii) transfer deeds of land for the Real Property in a form
reasonably acceptable to the Contributors, Newco and JMS.
(b) On the Closing Date, but prior to the closing of the Merger, the
Contributors and Newco concurrently will duly execute and deliver to each other
the Ancillary Agreements.
(c) On the Closing Date, but prior to the closing of the Merger, Newco
shall deliver to the Contributors any documents as are in the reasonable opinion
of counsel for the Contributors necessary or desirable for Newco to assume the
Assumed Liabilities and to acquire the Jif/Crisco Assets.
2.03 INTERDEPENDENCE. The transfers and deliveries described in this
Article II are mutually interdependent and are to be regarded as occurring
simultaneously on the Closing Date and prior to the closing of the Merger.
Unless agreed to in writing by the Contributors and Newco, no such transfer or
delivery will become effective until all other transfers and deliveries provided
for in this Article II have also become effective.
2.04. CONTRACTS. Notwithstanding the provisions of Section 2.01, no
Contract shall be deemed to be assigned to Newco as of the Closing unless it is
freely assignable or consent for assignment has been obtained prior to the
Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS
The Contributors hereby represent and warrant to Newco:
3.01 AUTHORITY. The Contributors have full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate proceedings on the part of the
Contributors that are necessary to approve and authorize the execution and
delivery of this Agreement and the consummation of the transactions
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contemplated hereby have occurred, and this Agreement is a valid and binding
obligation of the Contributors, enforceable against the Contributors in
accordance with its terms and the other Ancillary Agreements will be valid and
binding obligations of the Contributors enforceable against the Contributors in
accordance with their terms upon execution and delivery to Newco, in each case,
subject to (a) applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors rights and remedies generally and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief.
3.02 EQUIPMENT AND REAL PROPERTY. The Equipment is in good working
condition, except where not Material. Notwithstanding the foregoing, the
Equipment and Real Property is contributed by the Contributors and accepted by
Newco on a "where is", "as is" basis. Newco has had the opportunity to inspect
the Equipment and the Real Property and expressly agrees on the above. The
Contributors disclaim any and all express or implied warranties, including
without limitation the warranties of merchantability or fitness for any purpose,
with respect to the Equipment and/or the Real Property. The Equipment is
sufficient to manufacture the types of products of the Jif/Crisco Business as
such products are currently being manufactured by the Contributors in such
quantities and on such specifications as currently manufactured by the
Contributors.
3.03 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Schedule 3.03(a), to the Knowledge of P&G,
at the Closing, the Contributors possess all licenses, permits and other
approvals within the Geography of Governmental Entities necessary to enable them
to carry on the Jif/Crisco Business as it is currently conducted;
(b) Except as set forth in Schedule 3.03(b), to the Knowledge of P&G,
no spills, discharges or other releases of Hazardous Substances have occurred
in, on or beneath the Real Property;
(c) Except as set forth in Schedule 3.03(c), to the Knowledge of P&G,
there are no underground storage tanks at the Real Property;
(d) Except as set forth in Schedule 3.03(d), to the Knowledge of P&G,
there are no friable asbestos-containing materials, PCB's or PCB-containing
equipment at the Real Property;
(e) Newco acknowledges that the Contributors have made the Jif/Crisco
Assets available to Newco for inspection and have shared with Newco that certain
Phase I Environmental Site Assessment of the Real Property prepared by Arcadis
G&M for The Procter & Gamble Company and The Procter & Gamble Manufacturing
Company dated June 21, 2001 and June 29, 2001, respectively (collectively "Phase
I Studies"). Except as may be, and only to the extent, expressly set forth in
this Agreement, the Contributors make no representations, warranties, covenants
or declarations whatsoever as to the nature, quality, quantity, condition,
development potential or fitness for purpose of any of the Jif/Crisco Assets,
including but not limited to the presence or absence of any Environmental
Matter, or otherwise;
(f) Except as set forth in Schedule 3.03(f), to the Knowledge of P&G,
the Real Property is not listed or proposed for listing on the National
Priorities List pursuant to CERCLA, on the CERCLIS, or on any other similar
state list of sites requiring investigation or cleanup; and
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(g) Except as set forth in Schedule 3.03(g), for the past 3 years,
there have been no, and to Contributors' Knowledge threatened, (i) claims,
complaints, notices or requests for information concerning the Jif/Crisco
Business with respect to any alleged violation of Environmental Laws, or (ii)
complaints, notices or requests for information concerning the Jif/Crisco
Business regarding potential liability under any Environmental Laws.
(h) For purposes of Section 1.05(c)(i) and this Section 3.03 and the
disclosures contained herein, any reference to the Phase I Studies shall be
deemed to be adequate disclosure only if a matter contained in such Phase I
Studies provides reasonably specific notice of an Environmental Matter.
3.04 FINDER'S FEES AND COMMISSIONS. None of the Contributors has any
liability or obligation to pay any fees or commissions to any broker, finder or
other agent with respect to the transactions contemplated by this Agreement for
which Newco or JMS could become liable or obligated.
3.05 AUTHORIZATIONS. No Authorization is needed by the Contributors for
the execution, delivery, or performance of this Agreement and the consummation
of the transactions contemplated hereby in the Geography, except as set forth in
Schedule 3.05.
3.06 INTELLECTUAL PROPERTY. Except as set forth in Schedule 3.06 or
where not Material, to the Knowledge of P&G, the Contributors' use of the
Trademarks and Patents in the Jif/Crisco Business as currently conducted by the
Contributors, does not infringe any trademark, trade name, service mark or
patent, as the case may be, of any third party within the Geography. The
Patents, Trademarks, Domain Names and the patents to be licensed on Schedule
1.44 (collectively the "Intellectual Property") are all the patents, trademarks
and domain names used in the Jif/Crisco Business at the Closing Date without
giving effect to "Trademarks" in the definition of Jif/Crisco Business.- Except
as set forth in Schedule 3.06 or where not Material, during the past 2 years no
third party has made, or to the Knowledge of Contributors threatened, any claim
or demand or instituted any Action and Contributors have not received any
written notice that (i) challenges the rights of the Contributors in respect of
any of the Patents, Domain Names or Trademarks, (ii) asserts that the operation
of the Jif/Crisco Business is or was infringing, misappropriating or otherwise
violating the intellectual property rights of any third party, or (iii) asserts
that the Contributors are required to pay any royalty, license fee, charge or
other amount with regard to any intellectual property rights of a third party.
None of the Patents, Domain Names or Trademarks is subject to any outstanding
order, ruling, decree, judgment or stipulation by or with any Governmental
Entity, except where not Material.
3.07 LITIGATION AND CLAIMS. There is no Action pending or, to the
Knowledge of P&G, threatened against or involving the Contributors arising out
of the Contributors' operation of the Jif/Crisco Business with stated claims
exceeding One Thousand ($1000) United States Dollars or which questions or
challenges the validity of this Agreement or any action to be taken pursuant
hereto, except as set forth in Schedule 3.07 or where such litigation will not
have a material adverse effect on the ability of the Contributors to consummate
the transactions contemplated hereby or on Newco's ability to operate the
Jif/Crisco Business following the Closing.
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3.08 ORGANIZATION AND GOOD STANDING. The Contributors are corporations
duly organized, validly existing, and in good standing under the laws of their
respective countries or states of incorporation and are duly authorized to do
business therein, with full corporate power to own their properties and conduct
the Jif/Crisco Business as presently conducted by them, except where not
Material or will not have a material adverse effect on the ability of the
Contributors to consummate the transactions contemplated hereby or on Newco's
ability to operate the Jif/Crisco Business following the Closing.
3.09 TITLE TO PROPERTIES; ENCUMBRANCES. The Contributors have good,
valid and marketable title to, or, in the case of leased properties and assets,
valid leasehold interests in, all Jif/Crisco Assets, except where not Material,
in each case as such property is currently being used, subject to no
Encumbrances, except for (a) Encumbrances reflected in the Jif/Crisco balance
sheet delivered as part of the Audited Statements pursuant to Section 3.15 of
this Agreement; (b) Encumbrances consisting of zoning or planning restrictions,
easements, permits and other restrictions or limitations on the use of real
property or irregularities in title thereto which do not materially detract from
the value of, or impair the use of, the property that will be contributed to
Newco; (c) Encumbrances for current taxes, assessments or governmental charges
or levies on property not yet due or which are being contested in good faith and
for which appropriate reserves have been created; (d) Encumbrances of record;
(e) Encumbrances set forth on Schedule 3.09; and (f) Encumbrances that are not
Material. Each of P&G and its Subsidiaries is in compliance with the terms of
all leases of tangible properties that will be contributed to Newco to which it
is a party and under which it is in occupancy, and all such leases are in full
force and effect, in each case except where not Material.
3.10 VIOLATIONS/BREACHES. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby do not violate any
law, rule or regulation or order, judgment, or decree within the Geography
binding on the Contributors and will not result in a breach of any term of the
certificate of incorporation, code of regulation or by-laws of the Contributors
or of any contract, agreement or other instrument to which any of the
Contributors is a party, except where not Material or will not have a material
adverse effect on the ability of the Contributors to consummate the transactions
contemplated hereby or on Newco's ability to operate the Jif/Crisco Business
following the Closing.
3.11 COMPLIANCE WITH APPLICABLE LAWS. Except as set forth in Schedule
3.11 or where not Material, the Jif/Crisco Business is being conducted in
compliance with all statutes, laws, ordinances, rules, orders and regulations
applicable within the Geography.
3.12 CONTRACTS. Except as set forth in Schedule 3.12(a), to the
Knowledge of P&G, each Contract is in full force and effect and is enforceable
by the Contributors in accordance with its terms, except where not Material.
Except as set forth in Schedule 3.12(b), or where not Material, each of the
Contributors has performed all obligations required to be performed by it to
date under the Contracts and is not (with or without the lapse of time or the
giving of notice, or both) in breach or default thereunder. No Intercompany
Contract is material to the operation of the Jif/Crisco Business as presently
conducted.
3.13 REGULATORY MATTERS.
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(a) Except as set forth in Schedule 3.13(a), to the Knowledge of P&G,
there are no facts:
(i) which would furnish a substantial basis for the recall,
withdrawal or suspension of any products of the Jif/Crisco Business by the
United States Food and Drug Administration ("FDA") or any other competent US
governmental regulatory agency;
(ii) which, in the Geography, would otherwise reasonably be
expected to cause the Jif/Crisco Business to withdraw, recall or suspend any
products of the Jif/Crisco Business from the market or to change the marketing
classification of any products of the Jif/Crisco Business or to terminate or
suspend testing of any products of the Jif/Crisco Business;
(b) Schedule 3.13(b) contains an accurate and complete list, as of the
date hereof, of:
(i) all products which have been recalled by the Jif/Crisco
Business (whether voluntarily or otherwise) at any time during the past two (2)
years; and
(ii) all proceedings (whether completed or pending) at any time
during the past two (2) years seeking the recall, suspension or seizure of any
products of the Jif/Crisco Business.
3.14 EMPLOYMENT MATTERS.
(a) No Labor Commitments. Except as otherwise disclosed on Schedule
3.14(a) as of the date hereof, in the Geography, the Jif/Crisco Business (i) is
not obligated by or subject to any collective bargaining agreement, selection of
a collective bargaining representative for employees, order of the National
Labor Relations Board or other labor board of administration, or any unfair
labor practice decision and (ii) has not received notice of its being a party to
any labor dispute or unfair practice proceeding with respect to claims of, or
obligation to, the Employees.
(b) Immigration Matters. To the Knowledge of P&G, in the Geography, the
Jif/Crisco Business is in material compliance with all immigration laws,
statutes and regulations, including the Immigration Reform and Control Act of
1986; and is in possession of adequate documentation to demonstrate a pattern of
compliance relating to immigration matters.
(c) Compliance of Plans with ERISA and Code. As used in this Section
3.14(c), the terms "Employee Pension Benefit Plan", "Employee Welfare Benefit
Plan", shall have the respective meanings assigned to such terms in Section 3 of
the Employee Retirement Income Security Act of 1974 ("ERISA"). Except where not
Material, to the Knowledge of P&G, all ERISA plans, as defined in Section
3.14(c), are in material compliance with the provisions of ERISA, the applicable
provisions of the Code and all other applicable laws, regulations and
pronouncements. With respect to all Employee Pension Benefit Plans intended to
qualify under Section 401(a) of the Code, the Contributors have, prior to the
date hereof, received a favorable determination letter. To the extent that such
Plans have been amended since the date of receipt of the latest determination
letter, none of the Contributors are aware of any information that would
indicate that such amendments have adversely affected the status of such ERISA
plan. The Contributors have complied with all plan qualification requirements of
401(a) of the Code, as amended by the Tax Reform Act of 1986, so as to maintain
the qualified status of each Employee Pension Benefit Plan for Federal income
tax purposes. Except as set forth in Schedule 3.14(c) or where not Material, to
the Knowledge of P&G, as of the date hereof:
(i) all Employee Pension Benefit Plans that are subject to the
Minimum Funding Standards of Section 412 of the Code and Section 302 of ERISA
have met those
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standards, and no Employee Pension Benefit Plan of the Contributors and any
other entity which is under common control with the Contributors or is treated
as a single employer under Sections 414(b), (c), (m), or (o) of the Code ("ERISA
Affiliates") has incurred any accumulated funding deficiency (as defined in
Section 4971(c) of the Code);
(ii) the Contributors and ERISA Affiliates have made all payments
due from them to date under or with respect to each Plan, and all amounts
properly accrued to date as liabilities of the Contributors and ERISA Affiliates
under or with respect to each Plan have been recorded on the books of the
Contributors or ERISA Affiliates to the extent required by generally accepted
accounting principles;
(iii) each employee benefit plan sponsored or maintained, or
contributed to, by the Contributors or ERISA Affiliates with respect to the
Jif/Crisco Business employees has complied with the reporting and disclosure
requirements of Title I of ERISA;
(iv) no facts have occurred which have resulted or would result in
a prohibited transaction within the meaning of Section 406 of Title I of ERISA
(and not exempt under Section 408 of ERISA) or in the imposition of any material
excise tax pursuant to Section 4975 of the Code with respect to any Plan;
(v) to the Knowledge of P&G and ERISA Affiliates, there have been
no breaches of fiduciary duty or violations of Part 4 of Subtitle B, Title I of
ERISA by the administrators, trustees or other fiduciaries of any Plan with
respect to such ERISA plan;
(vi) each of the Contributors and ERISA Affiliates has performed
all material obligations required to be performed by them under, and is not in
default under, or in violation of, any material provision of any ERISA plan;
(vii) to the Knowledge of each P&G and ERISA Affiliates, there are
no actions, suits or claims pending (other than routine claims for benefits) or
threatened against any ERISA plan;
(viii) the Contributors and ERISA Affiliates never participated in,
and are not obligated to contribute to any employee pension benefit plan which
is a multi-employer plan; and
(ix) the Contributors and any ERISA Affiliate have complied with
the notice and continuation requirements of COBRA health care continuation
coverage under 4980B of the Code (or any predecessor provision) and the
regulations thereunder. For purposes of this Section 4.14, materiality shall
refer to a liability or 1088, taxes, penalties, interest and related legal fees,
with such determination being made on the basis of the aggregate of affected
participants of a benefit plan and not with respect to any single participant;
(d) Overtime, Back Wages, Vacation, Minimum Wages and Workers'
Compensation. To the Knowledge of P&G, except as set forth in Schedule 3.14(e)
or where otherwise not Material, in the Geography, no present or former Employee
has any valid and enforceable claim (whether under any foreign or domestic law)
under any employment agreement, or otherwise on account of or for (i) overtime
pay, other than overtime pay for the current payroll period, (ii) wages or
salary for any period other than the current payroll period, (iii) vacation or
time off (or pay in lieu thereof), other than that earned in respect of the
previous twelve months, (iv) any violation of any statute, ordinance or
regulation relating to minimum wages or maximum hours of work, or (v) workers'
compensation.
(e) Discrimination, Occupational Safety and Other Statutes and
Regulations. To the
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Knowledge of P&G, except as set forth in Schedule 3.14(f), in the Geography,
there is no valid and enforceable claim, against the Jif/Crisco Business arising
out of any breach or violation by the Contributors of any federal, state of
foreign statute, ordinance or regulation relating to discrimination in
employment or employment practices or child labor or occupational safety and
health standards including without limitation, The Occupational Safety and
Health Act, The Fair Labor Standards Act, Title VII of the Civil Rights Act of
1964, Executive Order 11246, the Age Discrimination in Employment Act of 1967,
the Americans with Disabilities Act of 1990, which claim, action or proceeding
is or would be Material.
3.15 FINANCIAL STATEMENTS; ABSENCE OF CHANGES.
(a) Attached as Schedule 3.15(a) are true and correct copies of the
audited special purpose statements of inventory and property, plant and
equipment - net as of June 30, 2001 (the "Balance Sheet Date") and June 30,
2000, together with the audited statements of revenues, direct cost of products
sold, direct marketing expenses and direct administrative and other expenses of
the Jif/Crisco Business and the Culinary Sol Business for the years ended June
30, 2001, 2000 and 1999 and the related supplemental schedules of direct cost of
products sold accompanied by the reports thereon of Deloitte and Touche LLP (the
"Audited Statements"). The Audited Statements were derived from the books and
records of the Contributors and were prepared in accordance with generally
accepted accounting principles of the United States, as in effect from time to
time, applied on a consistent basis, and present fairly in all material respects
the statements of inventory and property, plant and equipment - net and the
related statements of revenues, direct cost of products sold, direct marketing
expense and direct administrative and other expenses of the Jif/Crisco Business
and the Culinary Sol Business as at the dates and for the periods represented
therein;
(b) Except as set forth on Schedule 3.15(b) or as required or expressly
permitted by this Agreement, since June 30, 2001, the Contributors have operated
the Jif/Crisco Business in the ordinary course of business and there has not
occurred any event, occurrence or conditions which has had an adverse effect,
except where not Material.
3.16 ACTIVITIES OF NEWCO. Newco has not conducted any activities other
than in connection with the organization of Newco, the negotiation and execution
of this Agreement and the consummation of the transactions contemplated hereby.
After the Contribution, Newco will hold the Jif/Crisco Assets and will be liable
for the Assumed Liabilities and will not hold any other assets or be obligated
for any other liabilities.
3.17 INVENTORY. The inventories of finished products of the Jif/Crisco
Business on hand as of the Closing Date are of a good and merchantable quality
and are usable and salable in the ordinary course of business.
ARTICLE IV
COVENANTS
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4.01 BULK TRANSFER LAWS. Newco waives compliance by the Contributors
with any laws relating to bulk transfers and bulk sales applicable to the
transactions contemplated by this Agreement.
4.02 COOPERATION IN LITIGATION. For a period of three (3) years after
the Closing Date, the Contributors and Newco will, in the defense of any
third-party Action relating to the Jif/Crisco Business, make available during
normal business hours, but without unreasonably disrupting their respective
businesses, all personnel and records of the Jif/Crisco Business reasonably
necessary to permit the effective defense or investigation of such Action. If
information other than that pertaining to the Jif/Crisco Business is contained
in such records, the Contributors and Newco will either agree that such
information may be omitted or redacted by the producing party, or will enter
into appropriate secrecy commitments to protect such information.
4.03 COOPERATION OF THIRD PARTIES. Where the cooperation of third
parties such as insurers or trustees would be necessary in order for a party to
completely fulfill its obligations under this Agreement and the Ancillary
Agreements, such party will use all reasonable efforts to cause such third
parties to provide such cooperation.
4.04 EXPENSES. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, the Contributors and Newco will bear their own costs and expenses,
except that all Taxes in connection with the transactions contemplated by this
Agreement (except Taxes on the income of the Contributors or Newco) will be
borne by Contributors. To the extent a withholding Tax or other fee is deducted
with respect to a payment between Newco and the Contributors, or with any third
parties, the amount of Tax or other fee so withheld will be for the account of
the Contributors. Newco will provide copies to the Contributors of all receipts
from any Governmental Entity evidencing payment of such Taxes and other fees and
will assist the Contributors in claiming relief from double taxation.
4.05 INTELLECTUAL PROPERTY ASSIGNMENT/RECORDATION/MAINTENANCE.
(a) Newco will be responsible for, and will pay all expenses
(whether incurred before or after the Closing Date) involved in notarization,
authentication, legalization and/or consularization of the signatures of the
Contributors' representatives on the Trademark Assignment Agreement, the Patent
Assignment Agreement and the Trademark and Domain Name documents, by country,
and recording such assignment documents with the appropriate Governmental
Entities. Assignment documents, by country, will be provided by the
Contributors, at Newco's expense, for approval by Newco. The Contributors will
be responsible for, and will pay all expenses (whether incurred before or after
the Closing Date) involved in notarization, authentication, legalization and/or
consularization of the signatures of the Contributors' representatives on all
assignment documents.
(b) The Contributors will pay all expenses related to the
maintenance of Patents for six (6) months from and after the Closing Date, and
Newco will reimburse the Contributors for such expenses. After this six-month
period, Newco will be solely responsible
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for maintenance of the Patents. Newco will be responsible for, and will pay all
expenses related to the maintenance of Trademarks and Domain Names from and
after the Closing Date. If the Contributors receive any bills or invoices for
expenses related to the maintenance of Trademarks and Domain Names, from and
after the Closing Date, or maintenance of Patents, after six months from and
after the Closing Date, then the Contributors will forward to Newco such bills
or invoices for payment by Newco.
(c) The Contributors will pay all bills and invoices for Trademark
and Patent expenses which are received after the Closing Date but which relate
to work performed for the benefit of the Contributors before the Closing Date or
to maintain the Trademarks, Domain Names and Patents prior to the Closing Date.
The phrase "WORK PERFORMED FOR THE BENEFIT OF THE CONTRIBUTORS" will not include
any work, whether performed before or after the Closing Date, related to the
transfer of the Trademarks, Domain Names and Patents, and the Contracts and
certain purchase orders, contracts, agreements and other obligations, other than
that specifically assumed by the Contributors pursuant hereto.
4.06 FURTHER ASSURANCES; BOOKS AND RECORDS. From time to time after the
Closing Date, the Contributors and Newco will, and will cause their respective
Affiliates to, promptly execute and deliver, without consideration, such
documents as any of them may reasonably request, including, without limitation,
assignment and assumption agreements with respect to the Contracts, deeds, bills
of sale, consents and other instruments in addition to those specified in this
Agreement, in such form as may be appropriate, or take any additional actions,
if reasonably necessary or advisable in connection with the consummation of the
transactions contemplated by this Agreement to more effectively transfer, convey
and assign to Newco, and to put Newco in actual possession and control of, the
Jif/Crisco Assets, including without limitation obtaining any necessary third
party consents or approvals. In addition, Contributors shall promptly provide
Newco with copies of books and records to the extent that they are related to
the Jif/Crisco Business and to the extent they already exist, upon Newco's
reasonable request.
4.07 USE OF P&G'S NAME OR REPUTATION; PACKAGING MATERIALS; ADVERTISING.
Except as specifically set forth herein, including to the extent that any items
constitutes a Jif/Crisco Asset, Newco will not operate the Jif/Crisco Business
utilizing, based on or taking advantage of the name, reputation or corporate
goodwill of the Contributors. Newco will cease use of packaging, advertising,
sales and promotional materials bearing any of the Contributors' corporate
names, product identification numbers or consumer information telephone numbers
beginning six (6) months after the Closing Date, or such shorter period if
limited by the requirements of any law, rule or regulation or if new product
labeling and/or packaging is printed within such six (6) month time period.
Newco will maintain quality standards for products of the Jif/Crisco Business at
least equal to those maintained by the Contributors at the time of the Closing
Date for so long as Newco continues to use any packaging, advertising, sales or
promotional materials bearing the corporate names, product identification
numbers or consumer information telephone numbers of the Contributors.
4.08 ASSIGNMENT, ASSUMPTION AND CONSENT. The Contributors will use
reasonable efforts to obtain the consent of any third-party to any Contract,
which consent is required for the assignment of any such Contract. For no
consideration, the Contributors will, convey, assign,
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transfer and deliver to Newco, and Newco will acquire, accept and assume such
Contract, after obtaining such required consent, if obtained, and at or after
the Closing Date. If such consent cannot be obtained, Contributors shall use
commercially reasonable efforts to provide Newco the benefits of such Contracts
at Newco's expense. Contributors' only liability for any Contract that is not
assigned to Newco or JMS shall be limited to Contributors' obligations pursuant
to this Section 4.08.
4.09 REMOVAL OF ASSETS. Except for those Books and Records and other
documents described in the Transitional Services Agreement and/or the
Manufacturing Plant Separation Agreement, all tangible Jif/Crisco Assets not
located on the Real Property will be removed and shipped by the Contributors to
Newco within a time frame reasonably agreed by the parties after the Closing
Date from the Contributors' premises, at Newco's expense and in a manner so as
to not unreasonably interfere with the Contributors' operations and to not cause
damage to such premises; provided, however, the Contributors will be entitled to
retain originals or copies, made at Newco's expense, of Books and Records
related to Trademarks and Patents to the extent necessary for the Contributors
to perform the obligations set forth in Section 4.05. The Contributors will ship
to Newco all Books and Records and other documents described in the Transitional
Services Agreement or the Plant Separation Agreement within fourteen (14) days
after the expiration of the Transitional Services Agreement or the Plant
Separation Agreement, respectively, upon the same terms (described in the
preceding sentence) as other Jif/Crisco Assets.
4.10 PREPAID MATTERS. Newco will reimburse the Contributors for any
Jif/Crisco Asset which is received or service which is performed for the benefit
of Newco after the Closing Date pursuant to any Contract or purchase order,
contract, agreement or other obligation transferred to Newco pursuant to Section
4.08 which was paid by the Contributors previous to the Closing Date. Newco will
pay any reimbursement to be made as per this Section 4.10 by wire transfer to an
account specified by the Contributors within 5 (five) business days following
Newco's receipt of such Jif/Crisco Asset or performance of service at its actual
cost.
4.11 TRANSFERRING EMPLOYEES. Immediately prior to the Closing Date, any
person who is a Newco Employee (as defined in the Merger Agreement) shall cease
to be an employee of the Contributors and shall automatically become an employee
of Newco.
4.12 COUPONS. The Contributors will remain liable for redemption of and
administrative costs relating to all coupons set forth in Schedule 4.15 and
distributed before, but redeemed at P&G's coupon redemption center no later than
sixty (60) days after, the Closing Date.
4.13 PRODUCT RETURNS. Newco will assume responsibility for all returns
of products of the Jif/Crisco Business shipped prior to, but returned after, the
Closing Date, as well as all products of the Jif/Crisco Business shipped after
the Closing Date. No party hereto will
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undertake any action to encourage returns of products of the Jif/Crisco Business
other than in the ordinary course of business.
4.14 PORTION PAC AGREEMENT. P&G shall provide notice to Portion Pac
Inc. terminating the Portion Pac Agreement, which notice shall be in the form
and given in the manner required by the Portion Pac Agreement, not later than 3
Business Days after all of the conditions set forth in Section 7.03 of the
Merger Agreement have been fulfilled.
ARTICLE V
INDEMNIFICATION AND ARBITRATION
5.01 INDEMNIFICATION BY THE CONTRIBUTORS.
(a) Subject to the terms and conditions of this Agreement, P&G,
on behalf of itself and the other Contributors, jointly and severally, will
defend, indemnify and hold Newco harmless from and against all claims, losses,
liabilities, damages, costs and expenses (including without limitation
reasonable fees and expenses of attorneys incurred in investigation or defense
of any third-party Action, but excluding fees, costs and expenses of attorneys,
accountants, consultants and other experts and witnesses incurred in the
investigation or prosecution of any non-third-party Action) arising out of or
related to an Excluded Liability or breach of a representation or warranty
(except for any representation or warranty to the extent such representation or
warranty relates to Environmental Matters, including without limitation the
representations and warranties set forth in Section 3.03) or covenant of the
Contributors in this Agreement.
(b) Promptly after receipt by Newco of notice of any third-party
Action in respect of which indemnity may be sought against P&G hereunder (for
purposes of this Section 5.01, a "NEWCO ASSERTION"), Newco will notify P&G in
writing of the Newco Assertion, but the failure to so notify P&G will not
relieve P&G of any liability it may have to Newco, except to the extent P&G
demonstrates that it has suffered actual prejudice thereby. P&G will be entitled
to participate in and, to the extent P&G elects by written notice to Newco
within thirty (30) days after receipt by P&G of notice of such Newco Assertion,
to assume the defense of such Newco Assertion (unless Newco is also a party to
such Action and Newco determines in good faith that joint representation would
be inappropriate), at P&G's own expense, with counsel chosen by it which will be
reasonably satisfactory to Newco. With respect to any such Newco Assertion,
Newco will promptly provide P&G with: (i) notice and copies of any documents
served upon Newco; and (ii) all reasonable cooperation which P&G deems necessary
to defend such Newco Assertion, including, without limitation, providing P&G and
its outside attorneys access to any potentially-relevant documents, information,
or individuals within the control of Newco, other than any privileged documents.
If business information of Newco other than that pertaining to the Jif/Crisco
Business is contained in such documents or information, P&G and Newco will enter
into appropriate secrecy commitments to protect such documents or information.
Notwithstanding that P&G may have elected by written notice to assume the
defense of any Newco Assertion, Newco will have the right to participate in the
investigation and
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defense thereof, with separate counsel chosen by Newco, but in such event the
fees and expenses of Newco (above those which would otherwise have been
incurred) and such separate counsel will be paid by Newco.
(c) Notwithstanding anything in this Section 5.01 to the contrary:
(i) P&G will have no obligation with respect to any Newco Assertion if, in
connection therewith, Newco, without the written consent of P&G, which consent
shall not be unreasonably withheld or delayed, settles or compromises any Action
or consents to the entry of any judgment; and (ii) P&G will not, without the
written consent of Newco with respect to any Newco Assertion: (A) settle or
compromise any Action or consent to the entry of any judgment which does not
include as an unconditional term thereof the delivery by the claimant or
plaintiff to Newco of a duly executed written release of Newco from all
liability in respect of such Action, which release will be reasonably
satisfactory in form and substance to counsel for Newco; or (B) settle or
compromise any Action in any manner that, in the reasonable judgment of Newco or
its counsel, will materially adversely affect Newco other than as a result of
money damages or other money payments.
(d) Upon the payment of any settlement or judgment pursuant to
this Section 5.01 with respect to any Newco Assertion, P&G will be subrogated to
all rights and remedies of Newco against any third party in respect of such
Newco Assertion to the extent of the amount so paid by P&G.
(e) The indemnity provided for by this Section 5.01 will be
Newco's exclusive source of recovery against P&G with respect to matters covered
hereby.
5.02 INDEMNIFICATION BY NEWCO.
(a) Subject to the terms and conditions of this Agreement, Newco
will defend, indemnify and hold P&G harmless from and against all claims,
losses, liabilities, damages, costs and expenses (including without limitation
reasonable fees and expenses of attorneys incurred in investigation or defense
of any third-party Action, but excluding fees, costs and expenses of attorneys,
accountants, consultants and other experts and witnesses incurred in the
investigation or prosecution of any non-third-party Action) arising out of or
related to an Assumed Liability or breach of a representation, warranty or
covenant of Newco in this Agreement.
(b) Promptly after receipt by P&G of notice of any Action in
respect of which indemnity may be sought against Newco hereunder (for purposes
of this Section 5.02, a "P&G ASSERTION"), P&G will notify Newco in writing of
any P&G Assertion, but the failure to so notify Newco will not relieve Newco of
any liability it may have to P&G, except to the extent Newco demonstrates that
it has suffered actual prejudice thereby. Newco will be entitled to participate
in and, to the extent Newco elects by written notice to P&G within thirty (30)
days after receipt by Newco of notice of such P&G Assertion, to assume the
defense of such P&G Assertion, at its own expense, with counsel chosen by it
which will be reasonably satisfactory to P&G. With respect to any such P&G
Assertion (unless Contributors are also parties to such Action and
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Contributors determine in good faith that joint representation would be
inappropriate), P&G will promptly provide Newco with: (i) notice and copies of
any documents served upon P&G; and (ii) all reasonable cooperation which Newco
deems necessary to defend such P&G Assertion, including without limitation
providing Newco and its outside attorneys access to any potentially-relevant
documents, information, or individuals within the control of P&G, other than any
privileged documents. If business information of P&G other than that pertaining
to the Jif/Crisco Business is contained in such documents or information, P&G
and Newco will enter into appropriate secrecy commitments to protect such
documents or information. Notwithstanding that Newco may have elected by written
notice to assume the defense of any P&G Assertion, P&G will have the right to
participate in the investigation and defense thereof, with separate counsel
chosen by P&G, but in such event the fees and expenses of P&G (above those which
would otherwise have been incurred) and such separate counsel will be paid by
P&G.
(c) Notwithstanding anything in this Section 5.02 to the contrary:
(i) Newco will have no obligation with respect to any P&G Assertion if, in
connection therewith, P&G, without the written consent of Newco, , which consent
shall not be unreasonably withheld or delayed, settles or compromises any Action
or consent to the entry of any judgment; and (ii) Newco will not, without the
written consent of P&G with respect to any P&G Assertion: (A) settle or
compromise any Action or consent to the entry of any judgment which does not
include as an unconditional term thereof the delivery by the claimant or
plaintiff to P&G of a duly executed written release of P&G from all liability in
respect of such Action, which release will be reasonably satisfactory in form
and substance to counsel for P&G; or (B) settle or compromise any Action in any
manner that, in the reasonable judgment of P&G or its counsel, will materially
adversely affect P&G other than as a result of money damages or other money
payments.
(d) Upon the payment of any settlement or judgment pursuant to
this Section 5.02 with respect to any P&G Assertion, Newco will be subrogated to
all rights and remedies of P&G against any third party in respect of such P&G
Assertion to the extent of the amount so paid by Newco.
(e) The indemnity provided for by this Section 5.02 will be P&G's
exclusive source of recovery against Newco with respect to matters covered
hereby.
5.03 DISPUTE RESOLUTION.
(a) Any Action asserted by P&G against Newco or by Newco against
P&G (a "CLAIM") arising out of or related to this Agreement or any Ancillary
Agreement, including without limitation any Claim for indemnification pursuant
to Article V hereof or any issue as to whether or not a Claim is arbitrable,
will be resolved pursuant to the procedures described in this Section 5.03.
(b) Should any Claim arise, P&G and Newco will first attempt to
resolve such Claim by entering into good faith negotiations by or among their
appropriate employees or officers. Such negotiations will commence as soon as
practicable after P&G and Newco have each received notice of such Claim, but no
later than ten (10) days after such receipt, and will terminate thirty (30)
calendar days after such commencement. During negotiations, P&G and
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Newco will not have the right to any discovery, unless agreed by each of P&G and
Newco.
(c) Any Claim which has not been resolved pursuant to Section
5.03(b) of this Agreement will be referred to good faith negotiations by or
among one or more Vice Presidents of P&G and Newco. Such negotiations will
commence as soon as practicable after termination of the negotiations described
in Section 5.03(b), but not later than ten (10) business days thereafter, and
will terminate thirty (30) calendar days after such commencement. During the
negotiations, P&G and Newco will not have the right to any discovery, unless
otherwise agreed by P&G and Newco.
(d) Any Claim which has not been resolved pursuant to Section
5.03(c) of this Agreement will be determined by arbitration. The arbitration
will be conducted by one arbitrator, who will be appointed pursuant to the
International Arbitration Rules of the American Arbitration Association
("IAAA"). The arbitration will be held in Columbus, Ohio and will be conducted
in accordance with the rules of the IAAA, except that the rules set forth in
this Section 5.03(d) will govern such arbitration to the extent they conflict
with the rules of the IAAA. P&G and Newco will use commercially reasonable
efforts to cause the arbitration to be conducted in an expeditious manner. P&G
and Newco will use commercially reasonable efforts to cause the arbitration to
be completed within sixty (60) days after selection of the arbitrator. In the
arbitration, Ohio law will govern, except to the extent that those laws conflict
with the IAAA and the provisions of this Section 5.03(d). There will be no
discovery, except as the arbitrator will permit following a determination by the
arbitrator that the Person seeking such discovery has a substantial,
demonstrable need. All other procedural matters will be within the discretion of
the arbitrator. In the event a Person fails to comply with the procedures in any
arbitration in a manner deemed material by the arbitrator, the arbitrator will
fix a reasonable period of time for compliance and, if the Person does not
comply within said period, a remedy deemed just by the arbitrator, including an
award of default, may be imposed. The determination of the arbitrator will be
final and binding on P&G and Newco. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
5.04 Damage Limitations.
(a) Notwithstanding anything to the contrary in the Ancillary
Agreements, none of the Contributors nor Newco will be permitted to recover any
consequential, indirect, or punitive damages arising out of or related to this
Agreement, regardless of the form of the Claim or Action, including without
limitation Claims or Actions for indemnification, tort, breach of contract,
warranty, representation or covenant.
(b) The Contributors' aggregate liability arising out of or
related to breaches of representations and warranties pursuant to Section
5.01(a), regardless of the form of the Claim or Action, including, without
limitation, Claims or Actions for indemnification, tort, breach of contract,
warranty or representation, is limited to the amount by which all such
liabilities exceed Twenty Million United States Dollars ($20,000,000), and in no
event will the Contributors' aggregate liability exceed a total of One Hundred
Twenty Million United States Dollars ($120,000,000). Notwithstanding the
foregoing, Newco shall only bring a Claim or Action pursuant to this Section
5.04 for breaches of representations and warranties if such Claim or
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Action exceeds the amount of One Hundred Thousand United States Dollars
($100,000).
(c) Newco's aggregate liability arising out of or related to
breaches of representations and warranties set forth in this Agreement,
regardless of the form of the Claim or Action, including without limitation
Claims or Actions for indemnification, tort, breach of contract, warranty or
representation, is limited to the amount by which all such liabilities exceed
Twenty Million United States Dollars ($20,000,000), and in no event will Newco's
aggregate liability exceed a total of One Hundred Twenty Million United States
Dollars ($120,000,000). Notwithstanding the foregoing, the Contributors shall
only bring a Claim or Action pursuant to this Section 5.04 for breaches of
representations and warranties if such Claim or Action exceeds the amount of One
Hundred Thousand United States Dollars ($100,000).
(d) In the event any Claim or Action hereunder results in a Tax
benefit or is an insured loss to the indemnified Person, the indemnifying Person
will be entitled to a credit against any liability thereunder in the amount by
which any Taxes of the indemnified Person will be reduced by reason of any
deduction or adjustment allowed the indemnified Person for any payment,
settlement or satisfaction of such claim, as well as in the amount of and to the
extent of any insurance proceeds to which the indemnified Person is entitled.
For the purposes hereof, it will be presumed that the maximum possible Tax
benefit is derived in the shortest time period possible.
ARTICLE VI
MISCELLANEOUS
6.01 AMENDMENT. This Agreement and the Ancillary Agreements may not be
amended or modified in any respect except by a written agreement signed by the
parties hereto or thereto.
6.02 WAIVER OF COMPLIANCE. Except as otherwise provided in this
Agreement and the Ancillary Agreements, the failure by any Person to comply with
any obligation, covenant, agreement or condition under such agreements may be
waived by the Person entitled to the benefit thereof only by a written
instrument signed by the Person granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, covenant, agreement or
condition will not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. The failure of any Person to enforce at any time
any of the provisions of such agreements will in no way be construed to be a
waiver of any such provision, nor in any way to affect the validity of such
agreements or any part thereof or the right of any Person thereafter to enforce
each and every such provision. No waiver of any breach of such provisions will
be held to be waiver of any other or subsequent breach.
6.03 SURVIVAL. Each of the covenants and agreements contained in this
Agreement shall survive the Closing Date and continue in full force and effect
in accordance with its terms, but is subject to all applicable statutes of
limitation, statutes of repose and other similar defenses provided in law or
equity. Each and every representation and warranty of the Contributors contained
in this Agreement, the individual trademark and patent assignment documents, by
country or any certificates or documents required to be delivered at Closing by
any Party
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pursuant to Section 2.02 of this Agreement, including, without limitation, the
instrument of assignment, officer's certificates and receipts, if any, will
survive any investigation and will not be extinguished by the Closing, but will
survive for a period of eighteen (18) months following the Closing Date, except
that the representations and warranties made in Sections 3.01, 3.05, 3.08 and
3.10 survive without time limitations, and the representations and warranties in
Sections 3.03 and 3.09 each survive for 5 years from the Closing Date. No Party
may initiate any Claim nor will any Party be responsible for any Action arising
out of or related to a breach of a representation or warranty, regardless of the
form of the Claim or Action, including, without limitation, indemnification,
tort, breach of contract, warranty or representation, unless such Claim or
Action is initiated prior to the expiration of the relevant representation or
warranty.
6.04 NOTICES. All notices required or permitted pursuant to this
Agreement will be in writing and will be deemed to be properly given when
actually received by the Person entitled to receive the notice at the address
stated below, or at such other address as a party may provide by notice to the
other:
THE CONTRIBUTORS
The Procter & Gamble Company
One Procter & Gamble Plaza
Cincinnati, OH 45201
Attention: Director - Acquisitions and Divestures
WITH A COPY TO:
The Procter & Gamble Company
One Procter & Gamble Plaza
Cincinnati, OH 45202
Attention: Secretary
NEWCO
[To come]
If to JMS:
The J.M. Smucker Company
Strawberry Lane
Orrville, Ohio 44667
With a copy to:
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The J.M. Smucker Company
Strawberry Lane
Orrville, Ohio 44667
Attention: General Counsel
6.05 EXHIBITS AND SCHEDULES; INCORPORATION BY REFERENCE. The exhibits
and schedules attached to this Agreement, each when executed and/or delivered,
are incorporated by reference into and made a part of this Agreement.
6.06 SUCCESSORS AND ASSIGNS. This Agreement and the Ancillary
Agreements will be binding upon and will inure to the benefit of the signatories
hereto and their respective successors and permitted assigns. The Contributors
and Newco may not assign this Agreement, the Ancillary Agreements, or any of
their rights or liabilities hereunder or thereunder, without the prior written
consent of the other parties hereto or thereto, provided that the Contributors
and Newco may so assign, in whole or in part, to one or more of their
Affiliates. Any such assignment will not relieve the party making the assignment
from any liability under such agreements. The parties hereof acknowledge and
agree that JMS shall succeed to the rights, obligations and liabilities of
Newco, including, without limitation, those set forth in Articles III and V,
upon consummation of the Merger.
6.07 THIRD PARTY BENEFICIARIES. Notwithstanding anything contained in
this Agreement to the contrary, nothing in this Agreement, expressed or implied,
is intended to confer on any Person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
6.08 ENTIRE AGREEMENT. This Agreement, the Merger Agreement and the
Ancillary Agreements constitute the entire agreement between the parties hereto
with respect to the subject matter thereof and will supersede all previous
negotiations, commitments, and writings with respect to such subject matter.
6.09 SEVERABILITY. The illegality or partial illegality of any or all
of this Agreement, the Ancillary Agreements, or any provision hereof or thereof,
will not affect the validity of the remainder of the such agreements, or any
provision thereof, and the illegality or partial illegality of any such
agreements will not affect the validity of any such agreement in any
jurisdiction in which such determination of illegality or partial illegality has
not been made, except in either case to the extent such illegality or partial
illegality causes such agreements to no longer contain all of the material
provisions reasonably expected by the parties to be contained therein.
6.10 CAPTIONS. The captions appearing in this Agreement and the
Ancillary Agreements are inserted only as a matter of convenience and as a
reference and in no way define, limit or describe the scope or intent of such
agreements or any of the provisions thereof.
6.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all of which
will constitute one agreement.
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6.12 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the state of Ohio, whether common law or
statutory, without reference to the choice of law provisions thereof.
6.13 SPECIFIC PERFORMANCE. The parties hereby acknowledge and agree
that the failure of any party to perform its agreements and covenants hereunder
will cause irreparable injury to the other parties for which damages, even if
available, will not be an adequate remedy. Accordingly, each party hereby
consents to the issuance of injunctive relief by any court of competent
jurisdiction to compel performance of such party's obligations and to the
granting by any court of the remedy of specific performance of its obligations
hereunder.
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IN WITNESS WHEREOF, each of the signatories hereto has caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
THE PROCTER & GAMBLE COMPANY
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE PROCTER & GAMBLE
MANUFACTURING COMPANY
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE PROCTER & GAMBLE OHIO BRANDS COMPANY
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE J.M. SMUCKER COMPANY
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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