Execution Copy
ASSET PURCHASE AGREEMENT
BY AND AMONG
AGWAY ENERGY PRODUCTS, LLC,
AGWAY ENERGY SERVICES, INC.,
AGWAY ENERGY SERVICES PA, INC.,
AGWAY, INC. (solely for purposes of Sections 2.5(b), 7.13 and 7.19),
AND
SUBURBAN PROPANE, L.P.
Dated as of November 10, 2003
TABLE OF CONTENTS
Page
Article I DEFINITIONS.................................................1
1.1 Certain Definitions.........................................1
1.2 Terms Defined Elsewhere in this Agreement...................9
1.3 Other Definitional and Interpretive Matters................11
Article II PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES.....12
2.1 Purchase and Sale of Assets................................12
2.2 Excluded Assets............................................15
2.3 Assumption of Liabilities..................................16
2.4 Excluded Liabilities.......................................17
2.5 Further Conveyances and Assumptions; Consent of
Third Parties............................................18
2.6 Bulk Sales Laws............................................19
2.7 Purchase Price Allocation..................................19
Article III CONSIDERATION..............................................20
3.1 Consideration..............................................20
3.2 Purchase Price Deposit.....................................20
3.3 Payment of Purchase Price; Funding of Certain Escrows;
Non-Competition Payments.................................21
3.4 Working Capital Adjustment.................................21
3.5 Accounts Receivable Credit Balance Adjustment..............23
Article IV CLOSING AND TERMINATION....................................26
4.1 Closing Date...............................................26
4.2 Deliveries by Sellers......................................26
4.3 Deliveries by Purchaser....................................27
4.4 Termination of Agreement...................................28
4.5 Procedure Upon Termination.................................29
4.6 Effect of Termination......................................30
4.7 Expense Reimbursement and Break-Up Fee.....................30
Article V REPRESENTATIONS AND WARRANTIES OF SELLERS..................31
5.1 Organization and Good Standing.............................31
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TABLE OF CONTENTS
(continued)
Page
5.2 Authorization of Agreement.................................31
5.3 Conflicts; Consents of Third Parties.......................32
5.4 Financial Statements.......................................32
5.5 No Undisclosed Liabilities.................................33
5.6 Purchased Assets...........................................33
5.7 Absence of Certain Developments............................34
5.8 Taxes......................................................34
5.9 Real Property..............................................35
5.10 Tangible Personal Property.................................36
5.11 Intellectual Property......................................36
5.12 Material Contracts.........................................36
5.13 Employee Benefits..........................................37
5.14 Labor......................................................38
5.15 Litigation.................................................38
5.16 Compliance with Laws; Permits..............................39
5.17 Environmental Matters......................................39
5.18 Financial Advisors.........................................40
5.19 Accounts Receivable........................................40
5.20 Inventory..................................................40
5.21 Significant Suppliers......................................40
5.22 Insurance..................................................41
5.23 Absence of Certain Business Practices......................41
5.24 No Other Representations or Warranties; Schedules..........41
Article VI REPRESENTATIONS AND WARRANTIES OF PURCHASER................42
6.1 Organization and Good Standing.............................42
6.2 Authorization of Agreement.................................42
6.3 Conflicts; Consents of Third Parties.......................43
6.4 Litigation.................................................43
6.5 Financial Advisors.........................................43
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TABLE OF CONTENTS
(continued)
Page
6.6 Financial Capability.......................................43
6.7 Condition of the Business..................................44
Article VII COVENANTS..................................................44
7.1 Access to Information......................................44
7.2 Conduct of the Business Pending the Closing................45
7.3 Consents...................................................47
7.4 Regulatory Approvals.......................................47
7.5 Alternative Transaction....................................48
7.6 Further Assurances.........................................49
7.7 Confidentiality............................................49
7.8 Preservation of Records....................................50
7.9 Publicity..................................................50
7.10 Contacts with Suppliers and Customers......................50
7.11 Bonds......................................................50
7.12 Supplementation and Amendment of Schedules.................50
7.14 Agway Name.................................................51
7.16 Industrial Site Recovery Act...............................52
7.17 Tax Clearance Certificates; Reserve for Taxes..............53
7.18 Formation of LLC...........................................53
7.19 Assumption, Assignment and Transfer by Agway...............53
7.20 Conveyance of Title........................................53
Article VIII EMPLOYEES AND EMPLOYEE BENEFITS............................54
8.1 Employment.................................................54
8.2 Employee Benefits..........................................54
Article IX CONDITIONS TO CLOSING......................................56
9.1 Conditions Precedent to Obligations of Purchaser...........56
9.2 Conditions Precedent to Obligations of Sellers.............57
9.3 Conditions Precedent to Obligations of Purchaser and
Sellers..................................................57
9.4 Frustration of Closing Conditions..........................58
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TABLE OF CONTENTS
(continued)
Page
Article X INDEMNIFICATION............................................58
10.1 Survival of Representations and Warranties.................58
10.2 Indemnification by Sellers.................................58
10.3 Indemnification by Purchaser...............................59
10.4 Indemnification Procedures.................................60
10.5 Certain Limitations on Indemnification.....................61
10.6 Calculation of Losses......................................63
10.7 Characterization of Indemnity Payments.....................63
10.8 No Consequential Damages...................................64
10.9 Exclusive Remedy...........................................64
10.10 Environmental Liabilities and the Environmental Indemnity
Escrow Fund..............................................64
Article XI MISCELLANEOUS..............................................67
11.1 Payment of Sales, Use or Similar Taxes.....................67
11.2 Insurance..................................................68
11.3 Expenses...................................................68
11.4 Injunctive Relief..........................................68
11.5 Submission to Jurisdiction; Consent to Service of Process..69
11.6 Waiver of Right to Trial by Jury...........................69
11.7 Entire Agreement; Amendments and Waivers...................69
11.8 Governing Law..............................................70
11.9 Notices....................................................70
11.10 Severability...............................................70
11.11 Binding Effect; Assignment.................................71
11.12 Non-Recourse...............................................71
11.13 Counterparts...............................................71
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TABLE OF CONTENTS
(continued)
Schedules
1.1(a) Knowledge of Sellers
1.1(b) Purchased Contracts
1.1(c) Excluded Contracts
1.1(d) Intellectual Property Licenses Granted to Third Parties
2.1(m) Automotive Parts
2.1(n) Bulk Plant Equipment
2.2(d) Excluded Intellectual Property
2.2(i) Surety Bonds
2.5(c) Receipt of Benefit of Contracts
3.4(b)(i) Agreed Principles
3.4(b)(ii) Average Working Capital
5.3(a) Conflicts
5.3(b) Consents
5.5 Undisclosed Liabilities
5.6 Exceptions to Good Title
5.7 Absence of Certain Developments
5.8 Taxes
5.9(a) Real Property
5.9(b) Highways
5.9(g) Casualties and Condemnations
5.10 Tangible Personal Property
5.11 Intellectual Property
5.12(a) Material Contracts Related to Former Real Property
5.12(b) Defaults
5.13(a) Employee Benefits
5.13(c) Qualified Plans
5.13(e) Continuing Benefits
5.13(f) Maintenance of Employee Benefit Plans
5.13(g) Increases and Acceleration of Employee Benefits
5.14(a) Labor and Collective Bargaining Agreement
5.14(b) Labor
5.14(c) Delinquent Payments to Transferred Employees
5.15 Litigation
5.16(a) Violation of Laws
5.16(b) Default of Permits
5.16(c) Notice of Violation of Laws
5.17 Environmental Matters
5.18 Financial Advisors
5.21 Significant Suppliers
5.22 Insurance
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TABLE OF CONTENTS
(continued)
5.23 Absence of Certain Business Practices
6.3 No Conflicts
6.5 Purchaser's Financial Advisors
7.2 Exceptions to Conduct of Business
7.17 Tax Clearance Certificates
7.19 Agway, Inc. Purchased Contracts
8.1 Exceptions to Compensation
8.2(e)(i) Incentive and Severance Plans
8.2(e)(ii) Executives
9.1(d) Consent to Assignment of Material Contracts
9.3(e) Consents
Exhibits
A Approval Order
B Bidding Procedures Order
C Purchase Price Deposit Escrow Agreement
D General Escrow Agreement
E Bill of Sale
F Assignment and Assumption Agreement
G Sellers' Non-Competition
H Transition Services Agreement
I Compensation Order
J Environmental Indemnity Escrow Agreement
K Power of Attorney
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of November 10, 2003 (this "Agreement"),
by and among Agway Energy Products, LLC, a Delaware limited liability company
("Energy LLC"), Agway Energy Services, Inc., a Delaware corporation ("Energy
Services, Inc."), and Agway Energy Services PA, Inc., a Delaware corporation
("Services PA") (each a "Seller", collectively, "Sellers"), Suburban Propane,
L.P., a Delaware limited partnership ("Purchaser") and Agway, Inc., a Delaware
Corporation ("Agway"), solely for purposes of Sections 2.5(b), 7.13 and 7.19.
W I T N E S S E T H:
WHEREAS, Agway, the parent of Sellers, commenced a case (the "Bankruptcy
Case") under chapter 11 of title 11 of the United States Code, 11 U.S.C.
Sections 101 et seq. (the "Bankruptcy Code"), on October 1, 2002, by filing
voluntary petitions with the United States Bankruptcy Court for the Northern
District of New York;
WHEREAS, Sellers presently conduct the Business;
WHEREAS, Sellers desire to sell, transfer and assign to Purchaser, and
Purchaser desires to acquire and assume from Sellers, all of the Purchased
Assets (as defined in Section 2.1) and Assumed Liabilities (as defined in
Section 2.3), all as more specifically provided herein;
WHEREAS, certain terms used in this Agreement are defined in Section 1.1
and;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions.
For purposes of this Agreement, the following terms shall have the meanings
specified in this Section 1.1:
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, and the term
"control" (including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.
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"Agway" means Agway, Inc., a Delaware corporation and debtor-in-possession.
"Approval Order" means the order of the Bankruptcy Court, in the form
attached hereto as Exhibit A which, among other things, authorizes Agway to
cause Sellers to enter into this Agreement and otherwise approves this Agreement
and all of the terms and conditions hereof and the transactions contemplated
hereunder.
"Bankruptcy Court" means the United States Bankruptcy Court for the
Northern District of New York or any other court having jurisdiction over the
Bankruptcy Case from time to time.
"Bidding Procedures Hearing" means the hearing at which the Bankruptcy
Court considers the approval of the Bidding Procedures and entry of the Bidding
Procedures Order.
"Bidding Procedures Motion" means the motion or motions to be filed by
Agway, in form and substance reasonably acceptable to Purchaser and Sellers,
seeking entry of the Bidding Procedure Order.
"Bidding Procedures Order" means the order of the Bankruptcy Court, in the
form attached hereto as Exhibit B, that, among other things, (i) approves the
payment of the Expense Reimbursement and Break-Up Fee on the terms and
conditions set forth in Section 4.7 hereof, and (ii) establishes a date by which
bids for Alternative Transactions must be submitted by bidders and establishes
procedures for the auction process.
"Business" means the businesses of Sellers as currently or heretofore
conducted.
"Business Day" means any day of the year on which national banking
institutions in New York are open to the public for conducting business and are
not required or authorized to close.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any contract, indenture, note, bond, lease or other
written agreement.
"Credit Balance Escrow Deposit" means the sum of Ten Million Dollars
($10,000,000).
"Credit Balance Escrow Fund" means the Credit Balance Escrow Deposit
together with all interest or income actually earned thereon pursuant to the
Indemnity Escrow Agreement.
"Customer Installations" means each installation of equipment owned by
Sellers on the premises of its customers, and shall include all tanks,
regulators, meters, fittings, tubings and any other related equipment.
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"Documents" means all files, documents, instruments, papers, books,
reports, records, tapes, microfilms, photographs, letters, budgets, forecasts,
ledgers, business records (to the extent requested by Purchaser), journals,
title policies, customer lists and files, regulatory filings, operating data and
plans, technical documentation (design specifications, functional requirements,
operating instructions, logic manuals, flow charts, etc.), user documentation
(installation guides, user manuals, training materials, release notes, working
papers, etc.), marketing documentation (sales brochures, flyers, pamphlets, web
pages, etc.), and other similar materials related primarily to the Business and
the Purchased Assets in each case whether or not in electronic form.
"Employee" means all individuals, as of the date hereof, who are employed
by Sellers in connection with the Business, together with individuals who are
hired in respect of the Business after the date hereof and prior to the Closing.
"Environmental Law" means any foreign, federal, state or local statute,
regulation, ordinance, or rule of common law relating to the protection of human
health and safety or the environment including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C.ss. 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
App.ss. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.ss.
6901 et seq.), the Clean Water Act (33 U.S.C.ss. 1251 et seq.), the Clean Air
Act (42 U.S.C.ss. 7401 et seq.) the Toxic Substances Control Act (15 U.S.C.ss.
2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C.ss. 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C.
ss. 651 et seq.), and the regulations promulgated pursuant thereto.
"Environmental Indemnity Escrow Agreement" means the Environmental
Indemnity Escrow Agreement to be dated as of the Closing Date by and among
Sellers, Purchaser and the Escrow Agent substantially in the form of Exhibit J
hereto.
"Environmental Indemnity Escrow Deposit" means the sum of Fifteen Million
Dollars ($15,000,000).
"Environmental Indemnity Escrow Fund" means the Environmental Indemnity
Escrow Deposit together with any and all interest or income actually earned
thereon pursuant to the Environmental Indemnity Escrow Agreement.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means National City Bank in its capacity as Escrow Agent
under each of the Purchase Price Deposit Escrow Agreement, the General Escrow
Agreement, and the Environmental Indemnity Escrow Agreement.
"Excluded Contracts" means the Contracts listed on Schedule 1.1(c).
"FCC Licenses" means Sellers' licenses granted by the United States Federal
Communications Commission with respect to radio dispatch equipment of Sellers.
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"Former Real Property Liabilities" means all Liabilities of Sellers arising
out or in connection with (i) the real property formerly owned by any Seller
located in Macungie, Pennsylvania and which is a subject of the Amended and
Restated Asset Purchase Agreement, by and between Buckeye Terminal, LLC and
Energy LLC, dated as of June 30, 2000, (ii) the real property formerly owned or
leased by any Seller located in Freedom, Pennsylvania and Pittston, Pennsylvania
and which is a subject of the Purchase Agreement, by and between Agway Petroleum
Corp. and Scranton-Altoona Terminals Corp., dated as of August 7, 1997 and (iii)
any Liabilities of any Seller under the agreements referred to in clauses (i)
and (ii) above for matters other than indemnification with respect to
environmental Liabilities.
"Furniture and Equipment" means all furniture, fixtures, furnishings,
equipment, tools, machinery, vehicles, leasehold improvements, tanks, and other
tangible personal property owned or used by Sellers in the conduct of the
Business, wherever located and including all such artwork, desks, chairs,
tables, Hardware, copiers, telephone lines and numbers, telecopy machines and
other telecommunication equipment, cubicles and miscellaneous office furnishings
and supplies.
"GAAP" means generally accepted accounting principles in the United States
as of the date hereof.
"General Escrow Agreement" means the General Escrow Agreement to be dated
as of the Closing Date by and among Sellers, Purchaser and the Escrow Agent
substantially in the form of Exhibit D hereto.
"General Indemnity Escrow Deposit" means the sum of Four Million Dollars
($4,000,000).
"General Indemnity Escrow Fund" means the General Indemnity Escrow Deposit
together with all interest or income actually earned thereon pursuant to the
General Escrow Agreement.
"Governmental Body" or "Governmental Bodies" means any one or more
governments or governmental or regulatory bodies thereof, or political
subdivisions thereof, whether foreign, federal, state, or local, or any one or
more agencies, instrumentalities or authorities thereof, or any one or more
courts or arbitrators (public or private).
"Hardware" means any and all computer and computer-related hardware,
including, but not limited to, computers, file servers, facsimile servers,
scanners, color printers, laser printers and networks.
"Hazardous Material" means any substance, material or waste which is
regulated by any Government Body including, without limitation, petroleum and
its by-products, asbestos, and any material or substance which is defined as a
"hazardous waste," "hazardous substance," "hazardous material," "restricted
hazardous waste," "industrial
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waste," "solid waste," "contaminant," "pollutant," "toxic waste" or "toxic
substance" under any provision of Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Indebtedness" of any Person means, without duplication, (i) the principal
of and premium (if any) in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (ii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable and other accrued current liabilities arising
in the Ordinary Course of Business); (iii) all obligations of such Person under
leases required to be capitalized in accordance with GAAP; (iv) all obligations
of such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction; (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons for the payment of
which such Person is responsible or liable, directly or indirectly, as obligor,
guarantor, surety or otherwise, including guarantees of such obligations; and
(vi) all obligations of the type referred to in clauses (i) through (v) of other
Persons secured by any Lien on any property or asset of such Person (whether or
not such obligation is assumed by such Person).
"Intellectual Property Licenses" means (i) any grant to a third Person of
any right to use any of the Purchased Intellectual Property owned by any Seller,
and (ii) any grant to Sellers of a right to use a third Person's intellectual
property rights which is necessary for the use of any Purchased Intellectual
Property which is not owned by any Seller.
"Inventory" means (i) Sellers' inventory of appliances owned by Sellers and
located at Sellers' Properties at the opening of business on the Closing Date;
(ii) Sellers' inventory of Products owned by Sellers at the opening of business
on the Closing Date, wherever located including, at one of Sellers' Properties
or on the premises of one of the active customers of Sellers or in transit; and
(iii) Sellers' inventory of tanks, parts and fittings owned by Sellers and
located at one of Sellers' Properties or in transit at the opening of business
on the Closing Date.
"IRS" means the Internal Revenue Service.
"ISRA" means the Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et. seq.,
and the regulations promulgated thereunder and any amendments and successors
thereto.
"Knowledge of Sellers" means the actual knowledge after reasonable due
inquiry of those Persons with respect to Sellers as identified on Schedule
1.1(a) hereto.
"Law" means any federal, state, local or foreign law, statute, code,
ordinance, rule or regulation.
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"Legal Proceeding" means any judicial, administrative or arbitral actions,
suits or proceedings (public or private) by or before a Governmental Body.
"Liability" or "Liabilities" means any debt, liability or obligation
(whether direct or indirect, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, or due or to become due), and including all costs
and expenses relating thereto.
"Lien" means any lien, encumbrance, pledge, mortgage, deed of trust,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude or transfer restriction under any shareholder or similar
agreement.
"Material Adverse Effect" means (i) a material adverse effect on the
Business, assets, properties, results of operations or financial condition of
Sellers (taken as a whole), or (ii) a material adverse effect on the ability of
Sellers to consummate the transactions contemplated by this Agreement, other
than an effect resulting from an Excluded Matter. "Excluded Matter" means any
one or more of the following: (i) the effect of any change in the United States
or foreign economies or securities or financial markets in general, unless such
events materially and adversely affect the Business; (ii) the effect of any
change that generally affects any industry in which any Seller operates; (iii)
the effect of any change arising in connection with earthquakes, hostilities,
acts of war, sabotage or terrorism or military actions or any escalation or
material worsening of any such hostilities, acts of war, sabotage or terrorism
or military actions existing or underway as of the date hereof, unless such
events materially and adversely affect the Business; (iv) the effect of any
action taken by Purchaser or its Affiliates with respect to the transactions
contemplated hereby or with respect to Sellers, including their respective
employees; (v) the effect of any changes in applicable Laws or accounting rules;
or (vi) any effect resulting from the public announcement of this Agreement,
compliance with terms of this Agreement or the consummation of the transactions
contemplated by this Agreement.
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award of a Governmental Body.
"Ordinary Course of Business" means the ordinary and usual course of normal
day-to-day operations of the Business through the date hereof consistent with
past practice.
"Permits" means any approvals, authorizations, consents, licenses, permits
or certificates of a Governmental Body.
"Permitted Exceptions" means (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance which have been made available to Purchaser by Seller; (ii) statutory
liens for current Taxes, assessments or other governmental charges not yet due
and payable or the amount or validity of which is being contested in good faith
by appropriate proceedings provided an appropriate reserve is established
therefor; (iii) mechanics', carriers', workers', repairers' and similar
6
Liens arising or incurred in the Ordinary Course of Business; (iv) zoning,
entitlement and other land use and environmental regulations by any Governmental
Body provided that such regulations have not been violated; (v) title of a
lessor under a capital or operating lease; (vi) any licenses to intellectual
property of Sellers that have been granted by Sellers to third parties set forth
in Schedule 1.1(d); and (vii) such other imperfections in title, charges,
easements, restrictions and encumbrances which would not have a Material Adverse
Effect or impair Purchaser's ability to continue to utilize Sellers' Properties
in their present manner in any material respect.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
"Products" means any and all products developed, manufactured, marketed,
leased or sold by Sellers.
"Purchase Price Deposit" means the sum of Ten Million Five Hundred Thousand
Dollars ($10,500,000).
"Purchase Price Deposit Escrow Agreement" means the Purchase Price Deposit
Escrow Agreement of even date herewith by and among Sellers, Purchaser and the
Escrow Agent in substantially the form of Exhibit C hereto.
"Purchase Price Deposit Escrow Fund" means the Purchase Price Deposit
together with any and all interest or income actually earned thereon pursuant to
the Purchase Price Escrow Agreement.
"Purchased Contracts" means all Contracts related to the Business to which
any of Sellers are parties or otherwise bound as set forth on Schedule 1.1(b),
other than Excluded Contracts.
"Purchased Intellectual Property" means all intellectual property rights
owned by Sellers, but excluding the Excluded Intellectual Property, that are
used by Sellers in connection with, arising from, or in respect of, the Business
as follows: (i) all patents and applications therefor, including continuations,
divisionals, continuations-in-part, or reissue patent applications and patents
issuing thereon (collectively, "Patents"), (ii) all trademarks, service marks,
trade names, service names, brand names, trade dress rights, logos, Internet
domain name registrations and corporate names and general intangibles of a like
nature, including, all of Sellers' rights, title and interest to use the "AGWAY"
name as a trade name and service name solely in connection with the Business and
in accordance with and subject to Section 7.14, together with the goodwill
associated with any of the foregoing, and all applications, registrations and
renewals thereof, (collectively, "Marks"), (iii) copyrights and registrations
and applications therefor and works of authorship, and mask work rights, in each
case used primarily in connection with the Business, (collectively,
"Copyrights") and (iv) all Software and Technology of Sellers used in connection
with the Business.
7
"Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, or leaching into the indoor or outdoor
environment, or into or out of any property.
"Remedial Action" means all actions required by any Environmental Laws to
(i) clean up, remove, treat or in any other way address any Hazardous Material;
(ii) prevent the Release of any Hazardous Material so it does not endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment; (iii) perform pre-remedial studies and investigations or
post-remedial monitoring and care; or (iv) to correct a condition of
non-compliance with Environmental Laws.
"Sale Motion" means the motion or motions to be filed by Agway, in form and
substance reasonably acceptable to Purchaser and Sellers, seeking entry of the
Approval Order.
"Software" means, except to the extent generally available for purchase
from a third Person, any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, screens, user interfaces, report formats,
filmwork, development tools, templates, menus, buttons and icons, and (iv) all
documentation including user manuals and other training documentation related to
any of the foregoing.
"Tangible Property" means the Purchased Assets which are tangible property
and transferred to Purchaser pursuant to Sections 2.1(b), 2.1(e), 2.1(j), 2.1(l)
and 2.1(n).
"Tax Authority" means any state or local government, or agency,
instrumentality or employee thereof, charged with the administration of any law
or regulation relating to Taxes.
"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
"Taxes" means (i) all federal, state, local or foreign taxes, charges, or
other assessments, including, without limitation, all net income, gross
receipts, capital, sales, use, motor fuel, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes and (ii) all interest, penalties, fines, additions
to tax or additional amounts imposed by any Tax Authority in connection with any
item described in clause (i).
"Technology" means, collectively, all designs, formulae, algorithms,
procedures, methods, techniques, ideas, know-how, research and development,
technical data, programs, subroutines, tools, materials, specifications,
processes, inventions (whether patentable or unpatentable and whether or not
reduced to practice), apparatus, creations,
8
improvements, works of authorship and other similar materials, and all
recordings, graphs, drawings, reports, analyses, and other writings, and other
tangible embodiments of the foregoing, in any form whether or not specifically
listed herein, and all related technology, that are used in, incorporated in,
embodied in, displayed by or relate to, or are used or useful in the design,
development, reproduction, maintenance or modification of, any of the Products.
"WARN" means the Worker Adjustment and Retraining Notification Act of 1988,
as amended.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of this
Agreement, the following terms have meanings set forth in the sections
indicated:
Term Section
---- -------
Accounting Referee 2.7(b)(ii)
Actual Heating Degree Days 3.5(b)
Agreed Principles 3.4(a)
Allocation Objection Notice 2.7(b)(i)
Allocation Response Period 2.7(b)(i)
Allocation Schedule 2.7(b)
Alternative Transaction 7.5
Antitrust Laws 7.4(b)
Audited Year-End Financial Statements 5.4
Automotive Equipment 2.1(m)
Average Heating Day Degrees 3.5(b)
Average Net Working Capital 3.4(a)
Asset Basis 2.7(a)
Assumed Liabilities 2.3
Balance Sheet 5.4
Balance Sheet Date 5.4
Bankruptcy Case Recitals
Bankruptcy Code Recitals
Bonds 2.2(i)
Break-Up Fee 4.7(a)
Budget Price 3.5(b)
Burn Rate 3.5(b)
Cash Settlement of Credit Balances 3.5(a)
Closing 4.1
Closing Date 4.1
Closing Date Balance Sheet 3.4(a)
Closing Statement 3.4(a)
Closing Working Capital 3.4(a)
COBRA 5.13(e)
Confidentiality Agreement 7.7
Copyrights 1.1 (in Purchased
Intellectual Property
9
Term Section
---- -------
definition)
Credit Balance Settlement Statement 3.5(a)
Deductible 10.5(b)(ii)
De Minimis 10.5(b)(i)
Employee Benefit Cap 8.2(e)
Employee Benefit Plans 5.13(a)
Energy LLC Recitals
Energy Services, Inc. Recitals
Environmental Liabilities 0
Equity 7.5
ERISA Affiliate 5.13(a)
Estimated Closing Working Capital 3.4(a)
Excluded Assets 2.2
Excluded Bonus Amounts 8.2(e)
Excluded Intellectual Property 2.2(d)
Excluded Liabilities 2.4
Expenses 10.3(a)(iii)
Expense Reimbursement 4.7(b)
Final Cash Settlement of Credit Balances 3.5(f)
Final Unaudited Interim Financial Statements 5.4
Final Working Capital 3.4(f)
Financial Statements 5.4
Heating Degree Day 3.5(b)
Heating Degree Day Deficit 3.5(b)
Initial Unaudited Interim Financial Statements 5.4
ISRA Closing Compliance 7.16(a)(ii)
Leased Real Property 5.9(a)
LNA 7.16(a)(i)
LLC I 7.18
LLC II 7.18
Losses 10.2(a)(i)
Marks 1.1 (in Purchased
Intellectual Property
definition)
Material Contract 5.12
Minimum Guarantee 8.2(a)
Multiemployer Plans 5.13(a)
Multiple Employer Plans 5.13(a)
Net Working Capital 3.4(a)
NJDEP 7.16(a)
Number of Budget Program Customers at Closing 3.5(b)
Other AGWAY Marks 7.14(b)(v)
10
Term Section
---- -------
Owned Properties 5.9
Patents 1.1 (in Purchased
Intellectual Property
definition)
Pension Plans 5.13(b)
Pre-Closing Breaches of Purchased Contracts 2.4(i)
Pre-Existing Hazardous Materials 10.10(a)
Property 10.10(a)
Purchased Assets 2.1
Purchase Price 3.1
Purchaser Recitals
Purchaser Documents 6.2
Purchaser Indemnified Parties 10.2(a)
Purchaser Plans 8.2(a)
Qualified Plans 5.13(c)
Real Property Lease 5.9
Remediation 10.10(a)
Remediation Agreement 7.16(a)(ii)
Revised Statements 2.7
Securities Act 7.1
Seller Group 7.5
Seller Indemnified Parties 10.3(a)
Sellers Recitals
Sellers Documents 5.2
Sellers' Non-Competition Agreement 4.2(g)
Sellers' Policies 10.10(e)(i)
Sellers' Property 5.9
Services PA Recitals
Significant Suppliers 5.21
Survival Period 10.1
State Tax Liabilities 7.17
Tax Clearance Certificates 7.17
Tax Escrow 10.5(b)(iii)
Termination Date 4.4(a)
Title IV Plans 5.13(a)
Transferred Employees 8.1(a)
Unaudited Year-End Financial Statements 5.4
Unresolved Claims 10.7
Warm Weather Adjustment 3.5(a)
1.3 Other Definitional and Interpretive Matters
(a) Unless otherwise expressly provided, for purposes of this Agreement,
the following rules of interpretation shall apply:
11
Calculation of Time Period. When calculating the period of time before
which, within which or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in calculating
such period shall be excluded. If the last day of such period is a non-Business
Day, the period in question shall end on the next succeeding Business Day.
Dollars. Any reference in this Agreement to $ means U.S. dollars.
Exhibits/Schedules. The Exhibits and Schedules to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
All Exhibits and Schedules annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Any matter or item disclosed on one schedule shall be deemed to have
been disclosed on each other schedule to the extent that disclosure of such
matter or item is manifest or obvious from a reading of the schedules as a
whole. Any capitalized terms used in any Schedule or Exhibit but not otherwise
defined therein shall be defined as set forth in this Agreement.
Gender and Number. Any reference in this Agreement to gender shall include
all genders, and words imparting the singular number only shall include the
plural and vice versa.
Headings. The provision of a Table of Contents, the division of this
Agreement into Articles, Sections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement. All references in this
Agreement to any "Section" are to the corresponding Section of this Agreement
unless otherwise specified.
Herein. The words such as "herein," "hereinafter," "hereof," and
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires.
Including. The word "including" or any variation thereof means "including,
without limitation" and shall not be construed to limit any general statement
that it follows to the specific or similar items or matters immediately
following it.
(b) The parties hereto have participated jointly in the negotiation and
drafting of this Agreement and, in the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as jointly drafted
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provision of this
Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets. On the terms and subject to the conditions
set forth in this Agreement, at the Closing Purchaser shall purchase, acquire
and accept
12
from Sellers, and Sellers shall sell, transfer, assign, convey and deliver to
Purchaser all of Sellers' right, title and interest in, to and under the
Purchased Assets free and clear of all Liens of Agway's creditors. "Purchased
Assets" shall mean the following assets of Sellers (but excluding the Excluded
Assets) as of the Closing:
(a) all accounts receivable of Sellers other than any accounts receivable
arising out of or in connection with any Excluded Contract;
(b) subject to Section 7.18, all Inventory used in connection with the
Business;
(c) all security deposits (including for rent, electricity, telephone and
utilities) and all prepaid charges and expenses of Sellers other than (i) any
customer security or other deposits and (ii) any security or other deposits,
prepaid charges or expenses paid in connection with or relating to any Excluded
Assets;
(d) all rights, titles and interest of Sellers in and to each Owned
Property and Real Property Lease, together, subject to Section 7.18, with all
improvements, fixtures and other appurtenances thereto and rights in respect
thereof as well as all condemnation awards, or insurance proceeds received or
the right to receive insurance proceeds in connection with Owned Property or
Leased Real Property condemned or as to which a casualty loss has occurred on or
after the date hereof as and to the extent provided in Section 11.2;
(e) subject to Section 7.18, the Furniture and Equipment (including each
Seller's interest as lessee in any leases with respect to the foregoing);
(f) the Purchased Intellectual Property other than the Excluded
Intellectual Property;
(g) the Purchased Contracts and all rights under any oral agreements that
Seller has with those of its customers as to whom it has no written contracts,
together with all security and guarantees in favor of Seller relating thereto
other than customer security or other deposits;
(h) all Documents that are used in, held for use in or intended to be used
in, or that arise out of, the Business, including Documents relating to
Products, services, marketing, advertising, promotional materials, Purchased
Intellectual Property, personnel files for Transferred Employees and all files,
customer files, vendor lists, referral lists and documents (including credit
information), books, records, literature and correspondence, whether or not
physically located on any of the premises referred to in clause (d) above, but
excluding (i) personnel files for Employees of Sellers who are not Transferred
Employees, (ii) such files as may be required under applicable Law regarding
privacy, (iii) Documents which any Seller is not permitted to transfer pursuant
to any contractual confidentiality obligation owed to any third party, and (iv)
any Documents primarily related to or are required to realize the benefits of
any Excluded Assets;
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(i) each of Sellers' Business as a going concern and all franchises and
Permits used by Sellers in the Business (to the extent assignable);
(j) subject to Section 7.18, all supplies owned by Sellers;
(k) all rights of Sellers under non-disclosure or confidentiality,
non-compete, or non-solicitation agreements with employees and agents of Sellers
or with third parties to the extent relating to the Business or the Purchased
Assets (or any portion thereof);
(l) subject to Section 7.18, the Customer Installations;
(m) the motor vehicles and replacement parts owned by Sellers as set forth
on Schedule 2.1(m) (collectively, the "Automotive Equipment");
(n) subject to Section 7.18, the bulk plant equipment set forth on Schedule
2.1(n);
(o) all of Sellers' books and records pertaining to the customers and
Purchased Contracts on the Closing Date, except general ledgers, tax returns,
and related correspondence;
(p) all of Sellers' rights, title and interests to use the Agway trade name
and service name solely in connection with the Business and in accordance with
and subject to Section 7.14;
(q) the right to bill and receive payment for Products shipped or delivered
by Sellers and services performed by Sellers but unbilled or unpaid as of the
Closing;
(r) the right to receive and retain correspondences related to the
Business;
(s) all rights of Sellers under or pursuant to all warranties,
representations and guarantees made by suppliers, manufacturers and contractors
to the extent relating to Products sold, or services provided, to Sellers or to
the extent affecting any Purchased Assets other than any warranties,
representations and guarantees pertaining to any Excluded Assets or Excluded
Liability;
(t) fax and telephone numbers of Sellers (including the call center);
(u) all of the membership interests in LLC I (and the assets of LLC I which
include all of the membership interests in LLC II);
(v) FCC Licenses;
14
(w) all goodwill and other intangible assets associated with the Business,
including customer and supplier lists and the goodwill associated with the
Purchased Intellectual Property; and
(x) the "agwayenergy.com" domain name registration.
2.2 Excluded Assets. The Purchased Assets shall not include any of Sellers'
right, title or interest in or to the following Sellers' assets, properties,
interests and rights in or to any of the following (collectively, the "Excluded
Assets"):
(a) all cash, cash equivalents, bank deposits or similar cash items of
Sellers;
(b) all (i) customer security or other deposits and (ii) security or other
deposits and prepaid charges or expenses of Sellers paid in connection with or
relating to any Excluded Assets;
(c) the Excluded Contracts, including any personal property subject to any
Excluded Contract and any accounts receivable arising out of or in connection
with any Excluded Contract;
(d) any intellectual property rights of Sellers set forth on Schedule
2.2(d) (the "Excluded Intellectual Property");
(e) the "agway.com" domain name registration and the right to use
"agway.com" as a domain name or otherwise;
(f) any (i) confidential personnel and medical records pertaining to any
Employee; (ii) other books and records that Sellers are required by Law to
retain or that Sellers determine are necessary or advisable to retain,
including, without limitation, Tax Returns, financial statements, and corporate
or other entity filings; provided, however, that Purchaser shall have the right
to make copies of any portions of such retained books and records that relate to
the Business or any of the Purchased Assets; (iii) any information management
systems of Sellers, other than those used or held for use primarily in the
conduct of the Business; (iv) minute books, articles or certificates of
incorporation, by-laws, limited liability company certificates or articles of
formation, limited liability company operating agreements, all amendments
thereto, stock ledgers and stock certificates of Sellers; (v) documents relating
to proposals to acquire the Business by Persons other than Purchaser; (vi)
personnel files for Employees of Sellers who are not Transferred Employees;
(vii) such files as may be required under applicable Law regarding privacy;
(viii) Documents which any Seller is not permitted without prior written consent
to transfer pursuant to any contractual confidentiality obligation owed to any
third party; and (ix) any Documents primarily related to or are required to
realize the benefits of any Excluded Assets;
(g) any claim, right or interest of any Seller in or to any refund, rebate,
abatement or other recovery for Taxes, together with any interest due thereon or
penalty
15
rebate arising therefrom, for any Tax period (or portion thereof) ending on or
before the Closing Date;
(h) all amounts owed by any Affiliate of Sellers other than accounts
receivable arising in the Ordinary Course of Business in connection with the
sale of Product;
(i) other than condemnation awards received or to which Sellers shall be
entitled in connection with the Owned Property or the Leased Real Property and
insurance proceeds received or the right to insurance proceeds in connection
with Owned Property or Leased Real Property condemned or as to which a casualty
has occurred on or after the date hereof as and to the extent provided in
Section 11.2 and any recovery under any insurance policies as and to the extent
provided in Section 10.10, all insurance policies or rights to proceeds thereof
relating to the assets, properties, business or operations of any Seller; and
any surety bonds issued on behalf of or at the request of any Seller and any
surety bond for which any Seller or Agway has contractually committed to
indemnify the surety as set forth on Schedule 2.2(i) (collectively, the
"Bonds");
(j) any rights, claims or causes of action of any Seller against third
parties relating to assets, properties, business or operations of any Seller
arising out of events occurring on or prior to the Closing Date other than
against third party vendors in connection with any warranty claim related to an
Assumed Liability and any recovery under any insurance policies and from third
parties for claims and causes of action to the extent provided in Section
10.10(e); and
(k) any weather insurance policy or derivative instrument or the right to
proceeds thereof relating to the mitigation of the effect of warm weather.
2.3 Assumption of Liabilities. On the terms and subject to the conditions
set forth in this Agreement, at the Closing Purchaser shall assume, effective as
of the Closing, and shall timely perform and discharge in accordance with their
respective terms, the following Liabilities of Sellers (collectively, the
"Assumed Liabilities"):
(a) all Liabilities of Sellers under the Purchased Contracts to the extent
Purchased Contracts are assigned to Purchaser or Purchaser receives the benefit
thereof and is not an Excluded Liability;
(b) all Liabilities arising in connection with customer security or other
deposits (notwithstanding that such deposits constitute Excluded Assets);
(c) all Liabilities arising from the sale of Products in the Ordinary
Course of Business pursuant to product warranties, product returns and rebates;
(d) all Liabilities arising in connection with Sellers' accounts receivable
credit balances;
16
(e) accounts payable incurred in the Ordinary Course of Business existing
on the Closing Date (including, for the avoidance of doubt, (i) invoiced
accounts payable and (ii) accrued but uninvoiced accounts payable);
(f) 50% of all transfer taxes and all other Taxes applicable to the
transfer of the Purchased Assets pursuant to this Agreement in accordance with
Section 11.1(a);
(g) Liabilities with respect to the Employees, including Liabilities in
excess of the Employee Benefit Cap, but only as and to the extent provided in
Article VIII; and
(h) all Liabilities relating to amounts required to be paid by Purchaser
hereunder.
2.4 Excluded Liabilities. Purchaser will not assume or be liable for any
Excluded Liabilities. "Excluded Liabilities" shall mean the following
Liabilities of Sellers or Agway arising out of, relating to or otherwise in
respect of the Business and all other Liabilities not specifically assumed by
Purchaser pursuant to Section 2.3 hereof:
(a) all Liabilities arising out of Excluded Contracts;
(b) except as otherwise provided in Section 2.3(f), all Liabilities for
Taxes (i) for all taxable periods in the case of any Sellers and any of their
respective Affiliates, and in the case of Taxes relating to the Excluded Assets,
(ii) for all taxable periods (or portions thereof as provided in Section
11.1(b)) ending on or prior to (or, to the extent attributable to the portion of
such period ending on the Closing Date, including) the Closing Date, in the case
of Taxes relating to the Purchased Assets and (iii) under any Tax allocation,
sharing or similar agreement (whether oral or written);
(c) all Liabilities relating to amounts required to be paid by Sellers
hereunder;
(d) any Liability of Sellers with respect to any Indebtedness for borrowed
money, indebtedness under any working capital facilities, and bank overdrafts;
(e) any Liability of Sellers arising out of any threatened or pending
litigation or other claim whether asserted or unasserted to the extent related
to events occurring on or prior to the Closing Date;
(f) any Liabilities of Sellers to any Affiliates or current or former
stockholders or members of Sellers to the extent related to events occurring or
existing on or prior to the Closing Date;
(g) all Liabilities with respect to the Employees and Employee Benefit
Plans, except as and to the extent provided in Article VIII;
17
(h) any Liabilities arising out of any action or inaction by Sellers or any
fact or set of facts giving rise to any Liability to or claim by any third party
for personal injury or property damage that is asserted on or after the Closing
as a result of or arising out of the Business or Sellers' alleged negligent,
reckless or intentional acts or omissions prior to the Closing;
(i) any Liability or obligation relating to any breach or default under any
Purchased Contract occurring prior to the Closing ("Pre-Closing Breaches of
Purchased Contracts");
(j) any Liability or obligation relating to the violation of any Law that
arises out of or results from any act, omission or occurrence of Sellers prior
to Closing;
(k) the Former Real Property Liabilities; and
(l) any Liability or obligation of Sellers which results from any breach or
default by Seller under this Agreement.
2.5 Further Conveyances and Assumptions; Consent of Third Parties.
(a) From time to time following the Closing, Sellers shall, or shall cause
its Affiliates to, make available to Purchaser such non-confidential data in
personnel records of Transferred Employees as is reasonably necessary for
Purchaser to transition such employees into Purchaser's records.
(b) From time to time following the Closing, Sellers, Agway and Purchaser
shall, and shall cause their respective Affiliates to, execute, acknowledge and
deliver all such further conveyances, notices, assumptions, releases and
acquaintances and such other instruments, and shall take such further actions,
as may be reasonably necessary or appropriate to assure fully to Purchaser and
its respective successors or assigns, all of the properties, rights, titles,
interests, estates, remedies, powers and privileges intended to be conveyed to
Purchaser under this Agreement and the Sellers Documents and to assure fully to
Sellers and its Affiliates and their successors and assigns, the assumption of
the liabilities and obligations intended to be assumed by Purchaser under this
Agreement and the Sellers Documents, and to otherwise make effective the
transactions contemplated hereby and thereby.
(c) Nothing in this Agreement nor the consummation of the transactions
contemplated hereby shall be construed as an attempt or agreement to assign any
Purchased Asset, including any Contract, Permit, certificate, approval,
authorization or other right, which by its terms or by Law is nonassignable
without the consent of a third party or a Governmental Body or is cancelable by
a third party in the event of an assignment ("Nonassignable Assets") unless and
until such consent shall have been obtained. With respect to Material Contracts
or Permits that are material for the Business as a going concern after the
Closing Date, Sellers shall, and shall cause their Affiliates to, use their
commercially reasonable efforts to cooperate with Purchaser at its request for
up to 180 days following the Closing Date in endeavoring to obtain such consents
promptly;
18
provided, however, that such efforts shall not require any Seller or any of
their Affiliates to incur any expenses or Liabilities or provide any financial
accommodation or to remain secondarily or contingently liable for any Assumed
Liability or to initiate any litigation or legal proceedings to obtain any such
consent. If any such consent is not obtained, or if any attempt at an assignment
thereof would be ineffective or would affect the rights of Sellers thereunder so
that Purchaser would not in fact receive all such rights, Sellers shall
cooperate, at no expense to Sellers, with Purchaser to provide Purchaser with
the economic benefits under such Purchased Asset, Contract, Permit, certificate,
approval, authorization or other right. including, without limitation, the
Purchased Contracts set forth on Schedule 2.5(c), provided that no Seller shall
be obligated to continue as a going concern. Purchaser and Sellers, at no
additional expense to Purchaser, shall use their respective commercially
reasonable efforts to obtain, or cause to be obtained, any consent,
substitution, approval or amendment required to novate all Liabilities under any
and all Purchased Contracts or other Liabilities that constitute Assumed
Liabilities or to obtain in writing the unconditional release of Sellers and
their Affiliates so that, in any such case, Purchaser shall be solely
responsible for such Liabilities.
2.6 Bulk Sales Laws. Purchaser hereby waives compliance by Sellers with the
requirements and provisions of any "bulk-transfer" Laws of any jurisdiction that
may otherwise be applicable with respect to the sale of any or all of the
Purchased Assets to Purchaser.
2.7 Purchase Price Allocation.
(a) Purchaser and Sellers agree that, for Purchaser's and Sellers'
respective federal, state and local income tax purposes, the Purchase Price and
the Assumed Liabilities (the "Asset Basis") shall be allocated among the
Purchased Assets and Sellers' Non-Competition Agreement as set forth in
Allocation Schedule (as provided below) and in a manner consistent with Section
1060 of the Code and the regulations thereunder.
(b) Within a reasonable period of time following the Closing, but in no
event later than forty five (45) days following the Closing Date, Purchaser
shall prepare and deliver to Sellers a schedule (an "Allocation Schedule")
allocating the Asset Basis among the Purchased Assets and the Sellers'
Non-Competition Agreement.
(i) Sellers shall have a period of ten (10) days after the delivery of
the Allocation Schedule (the "Allocation Response Period") to present in
writing to Purchaser notice of any objections Sellers may have to the
allocations set forth therein (an "Allocation Objections Notice"). Unless
Sellers timely object, or as otherwise require by law, such Allocation
Schedule shall be binding on the parties without further adjustment.
(ii) If Sellers shall raise any objections within the Allocation
Response Period, Purchaser and Sellers shall negotiate in good faith and
use their commercially reasonable efforts to resolve such dispute. If the
parties fail to
19
agree within five (5) days after the delivery of the Allocation Objections
Notice, then Purchaser shall submit the Allocation Schedule, including
modifications, if any, that Purchaser chooses to make as a result of its
negotiations with Sellers, to Deloitte & Touche or such other independent
accounting firm mutually agreed upon by Sellers and Purchaser (the
"Accounting Referee") for resolution by it. The disputed items shall be
submitted to the Accounting Referee within five (5) days following such
failure to agree. The determination of the Accounting Referee shall be
final and binding on the parties and shall not be subject to appeal. The
Accounting Referee shall render such decision and report to Seller and
Purchaser in writing, specifying the reasons for its decision in reasonable
detail, not later than thirty (30) days after the item has been referred to
it. The costs, fees and expenses of the Accounting Referee shall be borne
equally by Sellers (collectively) and Purchaser.
(iii) For all Tax purposes, Purchaser and Sellers agree to report the
transactions contemplated by this Agreement in a manner consistent with the
terms of this Agreement and the Allocation Schedule as finally determined,
and agree that, except as otherwise required by law, neither of them will
take any position inconsistent therewith in any Tax Return. In addition, to
the extent there are accounts receivable credit balances and deferred
revenue on the balance sheet of Sellers as at the Closing Date, Sellers
will recognize the value of such accounts as ordinary income on their Tax
Returns as appropriate or required by law.
ARTICLE III
CONSIDERATION
3.1 Consideration. The aggregate consideration for the Purchased Assets
shall be (a) an amount in cash equal to Two Hundred Six Million Dollars
($206,000,000) (the "Purchase Price"), subject to adjustment as provided in
Sections 3.4, 3.5, 11.1(b) and 11.2, and (b) the assumption of the Assumed
Liabilities.
3.2 Purchase Price Deposit. Upon the execution of this Agreement, Purchaser
shall immediately deposit with the Escrow Agent under the Purchase Price Deposit
Escrow Agreement the sum of Ten Million Five Hundred Thousand Dollars
($10,500,000) by wire transfer of immediately available funds. Upon the terms
and subject to the conditions of the Purchase Price Deposit Escrow Agreement,
the Purchase Price Deposit Escrowed Fund shall be distributed as follows:
(a) if the Closing shall occur, the Purchase Price Deposit Escrowed Fund
shall be applied towards the Purchase Price payable by Purchaser to Sellers
pursuant to Section 3.3 hereof;
(b) if this Agreement is terminated by Sellers pursuant to Section 4.4(f),
the Purchase Price Deposit Escrowed Fund shall be delivered to Sellers; or
20
(c) if this Agreement is terminated other than pursuant to Section 4.4(f),
the Purchase Price Deposit Escrow Fund shall be delivered to Purchaser.
3.3 Payment of Purchase Price; Funding of Certain Escrows; Non-Competition
Payments.
(a) On the Closing Date, Purchaser shall pay to Sellers, by wire transfer
of immediately available funds to an account designated in writing by Sellers
prior to the Closing, the Purchase Price, less (i) the amount of the Purchase
Price Deposit Escrowed Fund and (ii) Twenty-Nine Million Dollars ($29,000,000),
representing the sum of the amounts of the General Indemnity Escrow Deposit, the
Environmental Indemnity Escrow Deposit and the Credit Balance Escrow Deposit.
(b) On the Closing Date, Purchaser shall deliver to the Escrow Agent under
the General Escrow Agreement, by wire transfer of immediately available funds,
the amount of Four Million Dollars ($4,000,000), representing the sum of the
amounts of General Indemnity Escrow Deposit.
(c) On the Closing Date, Purchaser shall deliver to the Escrow Agent under
the Environmental Indemnity Escrow Agreement, by wire transfer of immediately
available funds, the amount of Fifteen Million Dollars ($15,000,000),
representing the sum of the amounts of the Environmental Indemnity Escrow
Deposit.
(d) On the Closing Date, Purchaser shall deliver to the Escrow Agent under
the General Escrow Agreement, by wire transfer of immediately available funds,
the amount of Ten Million Dollars ($10,000,000), representing the sum of the
amounts of the Credit Balance Escrow Deposit.
3.4 Working Capital Adjustment.
(a) At least 10 days prior to the Closing Date, Sellers shall deliver to
Purchaser an estimate of the Closing Working Capital (the "Estimated Closing
Working Capital"), which shall be reasonably acceptable to Purchaser.
(b) As promptly as practicable, but no later than forty-five (45) days
after the Closing Date, Purchaser shall cause to be prepared and delivered to
Sellers the Closing Statement (as defined below) and a certificate based on such
Closing Statement setting forth Purchaser's calculation of Closing Working
Capital. The closing statement (the "Closing Statement") shall fairly present in
all material respects the consolidated Net Working Capital of the Business as of
the end of business on the Closing Date ("Closing Working Capital"). "Net
Working Capital" means (i) the sum of (A) trade and
21
other accounts receivable net of reserves, (B) Inventory, (C) Sellers' prepaid
expenses and other current assets (excluding Taxes related accounts, sales and
use Tax, property Tax, deferred income Tax and other Tax on Products and
excluding any and all accounts representing derivative assets established under
the provisions of Statement of Financial Accounting Standards No. 133 for
derivative instruments and hedging activities), and (D) notes and lease
receivables, reduced by, without duplication, (ii) the sum of (A) trade and
other accounts payable of Sellers (including any customer security or other
deposits but excluding Taxes related accounts, sales and use Tax, property Tax,
deferred income Tax or other Tax on Products but excluding any and all accounts
representing derivative liabilities established under the provisions of
Statement of Financial Accounting Standards No. 133 for derivative instruments
and hedging activities), (B) accounts receivable credit balances of Sellers and
(C) without duplication, deferred revenue of Sellers, in each case as determined
in accordance with the accounting principles set forth on Schedule 3.4(b)(i)
(the "Agreed Principles"). The preparation of the Closing Statement shall be for
the sole purpose of determining the difference between the Net Working Capital
on the Closing Date and the Average Net Working Capital. For purposes hereof,
"Average Net Working Capital" shall mean the arithmetic average of Net Working
Capital as of the conclusion of each calendar month during the 12-month period
ending on August 31, 2003 as set forth on Schedule 3.4(b)(ii).
(c) If Sellers disagree with Purchaser's calculation of Closing Working
Capital delivered pursuant to Section 3.4(b), Sellers may, within fifteen (15)
days after delivery of the Closing Statement, deliver a notice to Purchaser
disagreeing with such calculation and setting forth Sellers' calculation of such
amount. Any such notice of disagreement shall specify those items or amounts as
to which Sellers disagree, and Sellers shall be deemed to have agreed with all
other items and amounts contained in the Closing Statement and the calculation
of Closing Working Capital delivered pursuant to Section 3.4(b).
(d) If a notice of disagreement shall be duly delivered pursuant to Section
3.4(c), Purchaser and Sellers shall, during the ten (10) days following such
delivery, use their reasonable best efforts to reach agreement on the disputed
items or amounts in order to determine, as may be required, the amount of
Closing Working Capital, which amount shall not be less than the amount thereof
shown in Purchaser's calculation delivered pursuant to Section 3.4(b) nor more
than the amount thereof shown in Sellers' calculation delivered pursuant to
Section 3.4(c). If during such period, Purchaser and Sellers are unable to reach
such agreement, they shall promptly thereafter cause the Accounting Referee to
review this Agreement and the disputed items or amounts for the purpose of
calculating Closing Working Capital (it being understood that in making such
calculation, the Accounting Referee shall be functioning as an expert and not as
an arbitrator). In making such calculation, the Accounting Referee shall
consider only those items or amounts in the Closing Statement and Sellers'
calculation of Closing Working Capital as to which Sellers has disagreed. The
Accounting Referee shall deliver to Purchaser and Sellers, as promptly as
practicable (but in any case no later than thirty (30) days from the date of
engagement of the Accounting Referee), a report setting forth such calculation.
Such report shall be final and binding upon Purchaser and Sellers. The cost of
such review and report shall be borne equally by Purchaser and Sellers.
(e) Purchaser and Sellers shall, and shall cause their respective
representatives to, cooperate and assist in the preparation of the Closing
Statement and the calculation of Closing Working Capital and in the conduct of
the review referred to in
22
this Section 3.4, including, without limitation, the making available to the
extent necessary of books, records, work papers and personnel.
(f) If the Final Working Capital exceeds the Average Net Working Capital,
Purchaser shall pay to Sellers, in the manner and with interest as provided in
Section 3.4(g), the amount of such excess and, if the Final Working Capital is
less than the Average Net Working Capital, Sellers shall pay to Purchaser, as an
adjustment to the Purchase Price, in the manner and with interest as provided in
Section 3.4(g), the amount of such deficiency. "Final Working Capital" means
Closing Working Capital (i) as shown in Purchaser's calculation delivered
pursuant to Section 3.4(b) if no notice of disagreement with respect thereto is
duly delivered pursuant to Section 3.4(c); or (ii) if such a notice of
disagreement is delivered, (A) as agreed by Purchaser and Sellers pursuant to
Section 3.4(d) or (B) in the absence of such agreement, as shown in the
Accounting Referee's calculation delivered pursuant to Section 3.4(d).
(g) Any payment pursuant to Section 3.4(f) shall be made at a mutually
convenient time and place within three (3) Business Days after Final Working
Capital has been determined by wire transfer by Purchaser or Sellers, as the
case may be, of immediately available funds to the account of such other party
as may be designated in writing by such other party. The amount of any payment
to be made pursuant to this Section 3.4 shall bear interest from and including
the Closing Date to but excluding the date of payment at a rate per annum equal
to the rate of interest published from time to time by the Wall Street Journal
as the "prime rate" at large U.S. money center banks during the period from the
Closing Date to the date of payment. Such interest shall be payable at the same
time as the payment to which it relates and shall be calculated daily on the
basis of a year of three hundred sixty five (365) days and the actual number of
days elapsed.
3.5 Accounts Receivable Credit Balance Adjustment.
(a) In the event that there is a Heating Degree Day Deficit (as defined
below) that is greater than 2.0% of the Average Heating Degree Days (as defined
below) for the period from September 15, 2003 through March 31, 2004, Purchaser
shall be entitled to receive from the Credit Balance Escrow Fund the amount of
the Warm Weather Adjustment (but shall not be entitled to receive the amount, if
any, by which the Warm Weather Adjustment exceeds the amount of the Credit
Balance Escrow Fund). For purposes hereof:
"Warm Weather Adjustment" = (Heating Degree Day Deficit * Burn Rate *
Budget Price * Number of Budget Program Customers at Closing) * (number of days
between April 1, 2003 and the Closing Date / 365)
As soon as practicable after March 31, 2004, but no later than April 15,
2004, Purchaser shall calculate the Warm Weather Adjustment, and deliver to
Sellers the Accounts Receivable Credit Balance Settlement Statement based
thereon (the "Credit Balances Settlement Statement") and a certificate based on
such Credit Balance Settlement
23
Statement setting forth Purchaser's calculation of any disbursement of all or a
portion of the Credit Balance Escrow Fund to Purchaser (the "Cash Settlement of
Credit Balances"). No payment shall be made out of the Credit Balance Escrow
Fund to Purchaser unless there is a Heating Degree Day Deficit of greater than
2.0% of the Average Heating Degree Days.
(b) For purposes of this Section 3.5 the following terms shall have the
following meanings:
(i) "Average Heating Degree Days" means 6,084.
(ii) "Actual Heating Degree Days" means the average of the cumulative
heating degree days recorded at each of Sellers' 89 separate Heating Degree
Day monitors across its marketing territory from September 15, 2003 through
March 31, 2004.
(iii) "Heating Degree Day Deficit" means Average Heating Degree Days
minus Actual Heating Degree Days, which in any event shall be no less than
zero.
(iv) "Burn Rate" means 0.120 gallons per Heating Degree Day.
(v) "Budget Price" means $1.399 per gallon.
(vi) "Number of Budget Program Customers at Closing" means the number
of customers at Closing as set forth on a certificate delivered by Sellers
to Purchaser at the Closing, which certificate shall be reasonably
acceptable to Purchaser.
(c) If Sellers disagree with Purchaser's calculation of Credit Balance
Settlement Statement delivered pursuant to Section 3.5(a), Sellers may, within
ten (10) Business Days after delivery of the Credit Balance Settlement
Statement, deliver a notice to Purchaser disagreeing with such calculation and
setting forth Sellers' calculation of such amount. Any such notice of
disagreement shall specify those items or amounts as to which Sellers disagree,
and Sellers shall be deemed to have agreed with all other items and amounts
contained in the Credit Balance Settlement Statement and the calculation of the
Credit Balance Settlement Statement delivered pursuant to Section 3.5(a).
Purchaser shall provide or make available to Sellers such information as they
may reasonably request to verify the information contained in the "Credit
Balance Settlement Statement" including, without limitation, providing Sellers
with information concerning the cumulative heating degree days recorded at each
of Sellers' 89 separate heating degree day monitors across its marketing
territory for each month subsequent to the Closing Date through March 31, 2004
within 15 days after the conclusion of each such month.
(d) If a notice of disagreement shall be duly delivered pursuant to Section
3.5(c), Purchaser and Sellers shall, during the ten (10) days following such
delivery, use their reasonable best efforts to reach agreement on the disputed
items or
24
amounts in order to determine, as may be required, the amount of the Cash
Settlement of Credit Balances, which amount shall not be more than the amount
thereof shown in Purchaser's calculation delivered pursuant to Section 3.5(c)
nor less than the amount thereof shown in Sellers' calculation delivered
pursuant to Section 3.5(c). If during such period, Purchaser and Sellers are
unable to reach such agreement, they shall promptly thereafter cause the
Accounting Referee to review this Agreement and the disputed items or amounts
for the purpose of calculating the Cash Settlement of Credit Balances (it being
understood that in making such calculation, the Accounting Referee shall be
functioning as an expert and not as an arbitrator). In making such calculation,
the Accounting Referee shall consider only those items or amounts in the Credit
Balance Settlement Statement and Sellers' calculation of Cash Settlement of
Credit Balances as to which Sellers have disagreed. The Accounting Referee shall
deliver to Purchaser and Sellers, as promptly as practicable (but in any case no
later than thirty (30) days from the date of engagement of the Accounting
Referee), a report setting forth such calculation. Such report shall be final
and binding upon Purchaser and Sellers. The cost of such review and report shall
be borne equally by Purchaser and Sellers.
(e) Purchaser and Sellers shall, and shall cause their respective
representatives to, cooperate and assist in the preparation of the Credit
Balance Settlement Statement and the calculation of the Cash Settlement of
Credit Balances and in the conduct of the review referred to in this Section
3.5, including, without limitation, the making available to the extent necessary
of books, records, work papers and personnel.
(f) The amount of the Final Cash Settlement of Credit Balances (as defined
below), if any, shall be disbursed promptly from the Credit Balance Escrow Fund
by the Escrow Agent to Purchaser, and, if there is any remaining Credit Balance
Escrow Fund after any such disbursement to Purchaser, such remaining Credit
Balance Escrow Fund shall be promptly disbursed to Sellers. In no event shall
Seller be obligated to pay Purchaser more than the Credit Balance Escrow Fund,
which is an absolute cap on Sellers' Liability with respect to the Cash
Settlement of Credit Balances. "Final Cash Settlement of Credit Balances" means
the Cash Settlement of Credit Balances (i) as shown in Purchaser's calculation
delivered pursuant to Section 3.5(a) if no notice of disagreement with respect
thereto is duly delivered pursuant to Section 3.5(c); or (ii) if such a notice
of disagreement is delivered, (A) as agreed by Purchaser and Sellers pursuant to
Section 3.5(d) or (B) in the absence of such agreement, as shown in the
Accounting Referee's calculation delivered pursuant to Section 3.5(d); provided,
however, that in no event shall the Final Cash Settlement of Credit Balances be
more than Purchaser's calculation of the Cash Settlement of Credit Balances
delivered pursuant to Section 3.5(a) or less than Sellers' calculation of the
Cash Settlement of Credit Balances delivered pursuant to Section 3.5(c).
25
ARTICLE IV
CLOSING AND TERMINATION
4.1 Closing Date. Subject to the satisfaction of the conditions set forth
in Sections 9.1, 9.2 and 9.3 hereof (or the waiver thereof by the party entitled
to waive that condition), the closing of the purchase and sale of the Purchased
Assets and the assumption of the Assumed Liabilities provided for in Article II
hereof (the "Closing") shall take place at the offices of Weil, Gotshal & Manges
LLP located at 767 Fifth Avenue, New York, New York (or at such other place as
the parties may designate in writing) at 10:00 a.m. (New York City time) on a
date to be specified by the parties, which date shall be no later than the
second Business Day after satisfaction or waiver of the conditions set forth in
Article IX (other than conditions that by their nature are to be satisfied at
the Closing, but subject to the satisfaction or waiver of such conditions),
unless another time or date, or both, are agreed to in writing by the parties
hereto. The date on which the Closing shall be held is referred to in this
Agreement as the "Closing Date."
4.2 Deliveries by Sellers. At the Closing, Sellers shall deliver to
Purchaser:
(a) a duly executed bill of sale substantially in the form of Exhibit E
hereto;
(b) duly executed assignment and assumption agreement substantially in the
form of Exhibit F hereto and duly executed assignments of the U.S. trademark
registrations and applications included in the Purchased Intellectual Property,
in a form suitable for recording in the U.S. trademark office, and general
assignments of all other Purchased Intellectual Property;
(c) the officer's certificate required to be delivered pursuant to Sections
9.1(a) and 9.1(b);
(d) a certified copy of the Approval Order;
(e) a duly executed counterpart signature page to the General Escrow
Agreement;
(f) a duly executed counterpart signature page to the Environmental
Indemnity Escrow Agreement;
(g) duly executed counterpart signature pages of Agway and Sellers to the
Non-Competition Agreement, substantially in the form attached hereto as Exhibit
G (the "Sellers' Non-Competition Agreement");
(h) a duly executed counterpart signature page to the Transition Services
Agreement, substantially in the form attached hereto as Exhibit H, provided that
Purchaser may delete any of the services listed on Schedule A to the Transition
Services
26
Agreement or Sellers may add certain additional transition services reasonably
acceptable to Purchaser at any time up to ten (10) days prior to the Closing
Date upon written notice to the other parties hereto;
(i) a certified copy of the certificate of incorporation and/or certificate
of formation for each of Sellers, as applicable;
(j) a certificate of good standing for each of Sellers from the
jurisdiction of organization of each such Seller and Vermont, Massachusetts,
Pennsylvania, New Jersey and New York, each dated not later than thirty (30)
days prior to the Closing Date;
(k) a copy of the resolutions adopted by the board of directors or
managers/management committee of each Seller, as applicable, approving and
authorizing the closing of the transactions contemplated herein;
(l) the ISRA Closing Compliance in accordance with Section 7.16;
(m) affidavits, stating, under penalties of perjury, each Seller's United
States taxpayer identification number and that such Seller is not a foreign
person pursuant to Section 1445(b)(2) of the Code; and
(n) all other instruments of conveyance and transfer, in form and substance
reasonably acceptable to Purchaser, as may be necessary to convey the Purchased
Assets to Purchaser, including, without limitation, all of Sellers' limited or
special warranty deeds, affidavits of title (which shall not expand Sellers'
Liability beyond that created hereunder), assignment and assumption agreements,
and motor vehicle certificates of title.
4.3 Deliveries by Purchaser. At the Closing, Purchaser shall deliver to
Sellers:
(a) a duly executed assignment and assumption agreement substantially in
the form attached hereto as Exhibit F hereto;
(b) the amount payable to Sellers as provided in Section 3.3(a) hereof;
(c) a duly executed counterpart signature page to the General Escrow
Agreement;
(d) a duly executed counterpart signature page to the Environmental
Indemnity Agreement;
(e) duly executed counterpart signature pages to the Sellers'
Non-Competition Agreement;
27
(f) a duly executed counterpart signature page to the Transition Services
Agreement, substantially in the form attached hereto as Exhibit H;
(g) the officer's certificate required to be delivered pursuant to Sections
9.2(a) and 9.2(b);
(h) a certified copy of the certificate of partnership of Purchaser;
(i) a certificate of good standing for Purchaser from the jurisdiction of
its organization, dated not later than thirty (30) days prior to the Closing
Date;
(j) a copy of the resolutions adopted by the board of supervisors of
Purchaser approving and authorizing the closing of the transactions contemplated
herein; and
(k) such other documents, instruments and certificates as Sellers may
reasonably request.
4.4 Termination of Agreement. This Agreement may be terminated prior to the
Closing as follows:
(a) by Purchaser or Sellers, if the Closing shall not have occurred by the
close of business on or before the sixtieth (60th) day after the execution and
delivery of this Agreement (the "Termination Date"); provided, however, that, if
the Closing shall not have occurred due to the failure of the Bankruptcy Court
to enter the Approval Order and if all other conditions to the respective
obligations of the parties to close hereunder that are capable of being
fulfilled by the Termination Date shall have been so fulfilled or waived, then
no party may terminate this Agreement prior to thirty (30) days after the
Termination Date; provided, further, that if the Closing shall not have occurred
on or before the Termination Date due to a material breach of any
representations, warranties, covenants or agreements contained in this Agreement
by Purchaser or Sellers, then the breaching party may not terminate this
Agreement pursuant to this Section 4.4(a);
(b) by mutual written consent of Sellers and Purchaser;
(c) by Purchaser, if any of the conditions to the obligations of Purchaser
set forth in Sections 9.1 and 9.3 shall have become incapable of fulfillment
other than as a result of a breach by Purchaser of any covenant or agreement
contained in this Agreement, and such condition is not waived by Purchaser;
(d) by Sellers, if any condition to the obligations of Sellers set forth in
Sections 9.2 and 9.3 shall have become incapable of fulfillment other than as a
result of a breach by any Seller of any covenant or agreement contained in this
Agreement, and such condition is not waived by Sellers;
(e) by Purchaser, if there shall be a breach by any Seller of any
representation or warranty, or any covenant or agreement contained in this
Agreement
28
which would result in a failure of a condition set forth in Section 9.1 or 9.3
and which breach cannot be cured or has not been cured by the earlier of (i) 20
Business Days after the giving of written notice by Purchaser to Sellers of such
breach and (ii) the Termination Date;
(f) by Sellers, if there shall be a breach by Purchaser of any
representation or warranty, or any covenant or agreement contained in this
Agreement which would result in a failure of a condition set forth in Section
9.2 or 9.3 and which breach cannot be cured or has not been cured by the earlier
of (i) 20 Business Days after the giving of written notice by any Seller to
Purchaser of such breach and (ii) the Termination Date;
(g) by Sellers or Purchaser if there shall be in effect a final
nonappealable Order of a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby; it being agreed that the parties hereto shall
promptly appeal any adverse determination which is not nonappealable (and pursue
such appeal with reasonable diligence);
(h) by Purchaser or Sellers, if Sellers accept an Alternative Transaction
at the conclusion of the auction contemplated by the Bidding Procedures or the
Bankruptcy Court approves an Alternative Transaction, subject to the limitations
set forth in the Bidding Procedures Order and subject to Purchaser's right to
payment of the Expense Reimbursement and Break-Up Fee in accordance with the
provisions of Section 4.7;
(i) by Purchaser, if the Audited Year-End Financial Statements or Final
Unaudited Interim Financial Statements are not delivered to Purchaser at least
three (3) Business Days prior to the Bidding Procedures Hearing or differ in any
material and adverse respect, as determined in Purchaser's sole discretion, from
the Unaudited Year-End Financial Statements or Initial Unaudited Interim
Financial Statements, respectively; provided, however, Purchaser's termination
right under this Section 4.4(i) shall expire and be of no further force or
effect upon the earlier to occur of (i) 5:00 p.m. (Eastern time) on the third
Business Day after Purchaser's receipt of the Audited Year-End Financial
Statements and (ii) 9:00 a.m. (Eastern time) on the date of the Bidding
Procedures Hearing; or
(j) by Purchaser in accordance with Section 7.13.
4.5 Procedure Upon Termination. In the event of termination and abandonment
by Purchaser or Sellers, or both, pursuant to Section 4.4 hereof, written notice
thereof shall forthwith be given to the other party or parties, and this
Agreement shall terminate, and the purchase of the Assets hereunder shall be
abandoned, without further action by Purchaser or Sellers. If this Agreement is
terminated as provided herein each party shall redeliver all documents, work
papers and other material of any other
29
party relating to the transactions contemplated hereby, whether so obtained
before or after the execution hereof, to the party furnishing the same.
4.6 Effect of Termination.
(a) In the event that this Agreement is terminated in accordance with
Section 4.4, then each of the parties shall be relieved of their duties and
obligations arising under this Agreement after the date of such termination and
such termination shall be without liability to Purchaser or Sellers; provided,
however, that the obligations of the parties set forth in Section 4.7 and 11.3
through 11.13 hereof shall survive any such termination and shall be enforceable
hereunder.
(b) Nothing in this Section 4.6 shall relieve Purchaser or Sellers of any
liability for a breach of this Agreement prior to the date of termination. The
damages recoverable by the non-breaching party shall include all attorneys' fees
reasonably incurred by such party in connection with the transactions
contemplated hereby.
(c) The Confidentiality Agreement shall survive any termination of this
Agreement and nothing in this Section 4.6 shall relieve Purchaser or Sellers of
their obligations under the Confidentiality Agreement. If this Agreement is
terminated in accordance with Section 4.4, Purchaser agrees that the prohibition
in the Confidentiality Agreement restricting Purchaser's ability to solicit any
employee of any Seller to join the employ of Purchaser or any if its Affiliates
shall be extended to a period of two (2) years from the date of this Agreement.
4.7 Expense Reimbursement and Break-Up Fee.
(a) If this Agreement is terminated by Purchaser or Sellers pursuant to
Section 4.4(h) and, an Alternative Transaction is consummated, then on the next
Business Day following the consummation of the Alternative Transaction, Sellers
shall pay to Purchaser a break-up fee in an amount equal to $5,000,000 (the
"Break-Up Fee").
(b) If (i) Purchaser terminates this Agreement pursuant to the provisions
of Section 4.4(e), or (ii) Sellers accept an Alternative Transaction at the
conclusion of the auction contemplated by the Bidding Procedures Order or the
Bankruptcy Court approves an Alternative Transaction, Sellers shall reimburse
Purchaser for the amount of its out-of-pocket costs and expenses in connection
with the preparation, negotiation, execution and delivery of this Agreement
(including, without limitation, those costs and expenses incurred in connection
with its due diligence activities relating thereto but not including any
financing fees or borrowing costs incurred by Purchaser) in amount up to (but
not in excess of) $3,675,000 (the "Expense Reimbursement") within five (5) days
after Purchaser's demand therefor accompanied by reasonable and customary
documentation thereof.
(c) The Expense Reimbursement and the Break-up Fee shall be payable to
Purchaser in cash, by wire transfer of immediately available funds to an account
designated in writing by Purchaser. Upon payment of the Break-Up Fee and
30
Expense Reimbursement, in each case as required by this Agreement, Sellers shall
be deemed fully released and discharged from any liability or obligation arising
under or resulting from this Agreement (other than those provisions of this
Agreement that survive termination as set forth in Section 4.6). Sellers'
obligations under this Section 4.7 to pay the Break-Up Fee and Expense
Reimbursement shall survive termination of the Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, hereby represent and warrant to Purchaser
that:
5.1 Organization and Good Standing. Each of Sellers is a company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now conducted. Each of Sellers is
duly qualified or authorized to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction in which it owns or leases
real property and each other jurisdiction in which the conduct of its business
or the ownership of its properties requires such qualification or authorization,
except where the failure to be so qualified, authorized or in good standing
would not have a Material Adverse Effect.
5.2 Authorization of Agreement. Each Seller has all requisite power,
authority and legal capacity to execute and deliver this Agreement and each
Seller has all requisite power, authority and legal capacity to execute and
deliver each other agreement, document, or instrument or certificate
contemplated by this Agreement or to be executed by Sellers in connection with
the consummation of the transactions contemplated by this Agreement (the
"Sellers Documents"), to perform their respective obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Sellers Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on the part of each Seller. This
Agreement has been, and each of the Sellers Documents will be at or prior to the
Closing, duly and validly executed and delivered by each Seller which is a party
thereto and (assuming the due authorization, execution and delivery by the other
parties hereto and thereto, the entry of the Approval Order, and, with respect
to Sellers' obligations under Section 4.7, the entry of the Bidding Procedures
Order) this Agreement constitutes, and each of the Sellers Documents when so
executed and delivered will constitute, legal, valid and binding obligations of
Sellers enforceable against Sellers in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
31
5.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 5.3(a), none of the execution and
delivery by Sellers of this Agreement or by Sellers of the Sellers Documents,
the consummation of the transactions contemplated hereby or thereby, or
compliance by Sellers with any of the provisions hereof or thereof will conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or give
rise to any obligation of Sellers to make any payment under, or to the
increased, additional, accelerated or guaranteed rights or entitlements of any
Person under any provision of (i) the certificate of incorporation and bylaws,
certificate of formation and operating agreement or comparable organizational
documents of any Seller; (ii) any Contract or Permit to which any Sellers are a
party or by which any of the properties or assets of any Seller are bound; (iii)
any Order of any court, Governmental Body or arbitrator applicable to any Seller
or any of the properties or assets of any Seller as of the date hereof; or (iv)
any applicable Law, other than, in the case of clauses (ii), (iii) and (iv),
such conflicts, violations, defaults, terminations, cancellations or
accelerations that would not have a Material Adverse Effect.
(b) Except as set forth on Schedule 5.3(b), no consent, waiver, approval,
Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of any
Seller in connection with the execution and delivery of this Agreement or the
Sellers Documents, the compliance by any Seller with any of the provisions
hereof or thereof, the consummation of the transactions contemplated hereby or
the taking by any Seller of any other action contemplated hereby, except for (i)
compliance with the applicable requirements of the HSR Act, (ii) the entry of
the Approval Order, (iii) the entry of the Bidding Procedures Order with respect
to Sellers' obligations under Section 4.7, and (iv) for such other consents,
waivers, approvals, Orders, Permits, authorizations, declarations, filings and
notifications, the failure of which to be obtained or made would not have a
Material Adverse Effect.
5.4 Financial Statements. Sellers have delivered to Purchaser copies of (i)
the unaudited combined statements of financial position of Sellers as at June
30, 2003 and June 30, 2002 and the related unaudited combined statements of
operations and changes in member's equity, combined statements of comprehensive
income and combined statements of cash flow of Sellers for the years ended June
30, 2003, June 30, 2002 and June 30, 2001 (the "Unaudited Year-End Financial
Statements") and (ii) the initial unaudited combined statements of financial
position of Sellers as at September 30 , 2003 and the related unaudited combined
statements of operations and changes in member's equity, combined statements of
comprehensive income and combined statements of cash flow of Sellers for the
three-month period then ended (the "Initial Unaudited Interim Financial
Statements"). As contemplated by Section 4.4(i), Sellers intend to deliver to
Purchaser on or before three (3) Business Days prior to the Bidding Procedures
Hearing, copies of (i) the audited combined statements of financial position of
Sellers as at June 30, 2003 and June 30, 2002 and the related audited combined
statements of
32
operations and changes in member's equity, combined statements of comprehensive
income and combined statements of cash flow of Sellers for the years ended June
30, 2003, June 30, 2002 and June 30, 2001 (the "Audited Year-End Financial
Statements") and (ii) the final unaudited combined statements of financial
position of Sellers as at September 30 , 2003 and the related unaudited combined
statements of operations and changes in member's equity, combined statements of
comprehensive income and combined statements of cash flow of Sellers for the
three-month period then ended (the "Final Unaudited Interim Financial
Statements" and, together with the Unaudited Year-End Financial Statements, the
Audited Year-End Financial Statements and the Initial Unaudited Interim
Financial Statements, referred to herein as the "Financial Statements"). Each of
the Financial Statements has been prepared in accordance with GAAP consistently
applied without modification of the accounting principles used in the
preparation thereof throughout the periods presented and presents fairly in all
material respects the consolidated financial position, results of operations and
cash flows of Sellers as at the dates and for the periods indicated therein,
subject to normal year-end adjustments and the absence of complete notes in the
case of the Unaudited Interim Financial Statements.
For the purposes hereof, the combined statements of financial position of
Sellers as at June 30, 2003 that constitute a part of the Unaudited Year-End
Financial Statements is referred to as the "Balance Sheet"; provided, however,
that from and after Sellers' delivery of the Audited Year-End Financial
Statements to Purchaser as contemplated by Section 4.4(i), the combined
statements of financial position of Sellers as at June 30, 2003 that constitute
a part of the Audited Year-End Financial Statements shall thereafter constitute
the "Balance Sheet" for purposes hereof. June 30, 2003 is referred to as the
"Balance Sheet Date."
5.5 No Undisclosed Liabilities. Except as set forth on Schedule 5.5, none
of Sellers has any material Liabilities of any kind that would have been
required to be reflected in, reserved against or otherwise described in the
Balance Sheet or the notes thereto in accordance with GAAP other than (i)
Liabilities incurred in the Ordinary Course of Business since the Balance Sheet
Date that would not have a Material Adverse Effect, (ii) Liabilities incurred in
connection with the transactions contemplated hereby, and (iii) Excluded
Liabilities.
5.6 Purchased Assets. Except as set forth in Schedule 5.6, Sellers own and
have good title to each of the Purchased Assets other than as to Owned Property,
which is represented and warranted to under Section 5.9, which, as of the
Closing, will be free and clear of all Liens other than Permitted Exceptions.
The Purchased Assets constitute all of the assets necessary to operate the
Business consistent with past practice. All of the Automotive Equipment listed
on Schedule 2.1(m) is in good operating condition and is in all material
respects capable of being used without the present need for repairs or
replacement except in the Ordinary Course of Business. All material Furniture
and Equipment is in good working order reasonable and ordinary wear and tear
excepted.
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5.7 Absence of Certain Developments. Except as expressly contemplated by
this Agreement or as set forth on Schedule 5.7, since the Balance Sheet Date (i)
Sellers have conducted the Business only in the Ordinary Course of Business and
(ii) there has not been any event, change, occurrence or circumstance that has
had a Material Adverse Effect.
5.8 Taxes. Except as set forth on Schedule 5.8:
(a) All federal, state and local income and franchise and all other
material Tax Returns required to be filed by or with respect to Sellers or the
Purchased Assets have been timely filed with the appropriate Tax Authorities in
all jurisdictions in which such Tax Returns are required to be filed (taking
into account any extension of time to file granted or to be obtained on behalf
of Sellers) and such Tax Returns are true, correct and complete in all material
respects; and (ii) all material Taxes due and payable by or with respect to
Sellers or the Purchased Assets, whether or not shown on such Tax Returns have
been timely paid in full.
(b) No Seller is a Foreign Person within the meaning of Section 1445 of the
Code.
(c) All material Taxes required to be withheld by Sellers have been
withheld and have been (or will be) duly and timely paid to the proper Tax
Authority.
(d) No written agreement or other document extending, or having the effect
of extending, the period of assessment or collection of any material Taxes of
any Seller is still in effect with any Tax Authority.
(e) No deficiencies with respect to material Taxes of any Seller have been
asserted in writing by any Tax Authority that have not been fully paid.
(f) There are no audits or investigations by any Tax Authority of any
Sellers in progress with respect to any material Tax and no written notice has
been received that a Tax Authority intends to commence any such audit or
investigation.
(g) No claim has been made in writing within the past 5 years by a Tax
Authority in a jurisdiction where any of Sellers does not file Tax Returns that
it is or may be subject in that jurisdiction to a material Tax.
(h) There are no Liens on any of the Purchased Assets that arose in
connection with any failure (or alleged failure) to pay any Tax, except for
Permitted Exceptions.
(i) None of Sellers is a party to any Tax allocation, indemnity or sharing
agreement or arrangement with respect to a material Tax that could apply to the
Purchased Assets after the Closing Date.
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5.9 Real Property.
(a) Schedule 5.9(a) sets forth a complete list of (i) all real property and
interests in real property owned in fee by Sellers (individually, an "Owned
Property" and collectively, the "Owned Properties"), and (ii) all real property
and interests in real property leased (collectively, the "Leased Real Property")
by Sellers (individually, a "Real Property Lease" and collectively, the "Real
Property Leases") and, together with the Owned Properties, being referred to
herein individually as a "Sellers' Property" and collectively as the "Sellers'
Properties") as lessee or lessor. Sellers have good, valid and marketable fee
title to all Owned Property, free and clear of all Liens of any nature
whatsoever except (A) Liens set forth on Schedule 5.9(a) and (B) Permitted
Exceptions. Sellers have an enforceable leasehold interest under each of the
Real Property Leases, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity). No Seller has received any written notice of any default or event that
with notice or lapse of time, or both, would constitute a default by any Seller
under any of the Real Property Leases.
(b) To the Knowledge of Sellers or except as set forth on Schedule 5.9(b),
there are no Federal, State or local plans to change the highway or road system
in the vicinity of the Owned Properties or to restrict or change access from any
such highway or road to the Owned Properties or of any pending or threatened
condemnation of the Owned Properties or any part thereof or of any plans for
improvements which might result in a special assessment against the Owned
Properties.
(c) Sellers have received no notices of violations of law or municipal
ordinances, Environmental Laws, or other orders or requirements issued by any
Governmental Body or department with respect to the Owned Properties or the
Leased Real Property.
(d) Sellers have not received any notice from the holder of any mortgage on
the Owned Properties or any insurance company insuring the Owned Properties
requiring repairs, alterations or maintenance to be done on the Owned
Properties. Any such notice received by Sellers prior to the Closing shall be
complied with by Sellers prior to the Closing.
(e) There are no actions, suits or proceedings pending or, to the Knowledge
or Sellers, threatened, against or affecting Sellers or the Owned Properties or
the Leased Real Property, at law or in equity, before any federal, state,
municipal or governmental department, commission, board, bureau, agency or
instrumentality which, if determined adversely to Sellers, would in any way
affect the Owned Properties, the Leased Real Property or the operation thereof.
(f) To the Knowledge of Sellers, without independent inquiry, the Owned
Properties and the Leased Real Property and the present use and condition
thereof
35
do not violate any applicable deed restrictions or other covenants, restrictions
or agreements, site plan approvals, zoning or subdivision regulations applicable
to the Owned Properties or the Leased Real Property.
(g) There have been no material casualties or condemnations with respect to
Sellers' Properties within the past twelve months, except as set forth on
Schedule 5.9(g).
(h) No rent required to be paid by any Seller under each of the Leased Real
Property Leases is past due, except where any Seller has a bona fide dispute
with the lessor under such Real Property Lease.
5.10 Tangible Personal Property. Schedule 5.10 sets forth all leases of
personal property ("Personal Property Leases") involving annual payments in
excess of $5,000 relating to personal property used by any Seller in the
Business or to which any Sellers are a party or by which the properties or
assets of any Sellers are bound. Sellers have an enforceable leasehold interest
under each of the Personal Property Leases under which it is a lessee, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). To the Knowledge of
Sellers, no Seller has received any written notice of any default or event that
with notice or lapse of time or both would constitute a default by any Seller
under any of the Personal Property Leases.
5.11 Intellectual Property. Schedule 5.11 sets forth an accurate and
complete list of all material Purchased Intellectual Property. Except as
disclosed in Schedule 5.11, Sellers own or possess licenses or other rights to
use all material Purchased Intellectual Property, except as would not have a
Material Adverse Effect. Except as set forth on Schedule 5.11, to the Knowledge
of Sellers, (i) the Purchased Intellectual Property are not the subject of any
challenge received by Sellers in writing, except as would not have a Material
Adverse Effect and (ii) none of Sellers has received any written notice of any
default or any event that with notice or lapse of time, or both, would
constitute a default under any Purchased Intellectual Property license to which
any Seller is a party or by which it is bound, nor, to the Knowledge of Sellers,
is there a basis for any such default. Notwithstanding any other provisions of
this Agreement, Sellers make no representations or warranties regarding the
current or future value of the Purchased Intellectual Property, which is
conveyed to and accepted by Purchaser pursuant to this Agreement "AS IS."
5.12 Material Contracts.
(a) Schedule 1.1(b) includes all of the material Contracts of Sellers (not
including the Excluded Contracts) related to the Business or by which the
Purchased Assets may be bound or affected (collectively, the "Material
Contracts"). Except as set forth on Schedule 5.12(a), none of the Material
Contracts relate to any formerly owned real property or formerly leased real
property of Sellers that is not an Owned Property or Leased Real Property.
36
(b) Except as set forth on Schedule 5.12(b), each of the Material Contracts
is in full force and effect and is the legal, valid and binding obligation of
Sellers, enforceable against them in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), except where the
failure to be so in full force and effect, legal, valid and binding or
enforceable would not have a Material Adverse Effect. Except as set forth on
Schedule 5.12(b), none of Sellers are in material default under any Material
Contract that would result in termination of any such Material Contract or have
received any written notice of any default or event that with notice or lapse of
time or both would constitute a default by any Seller under any Material
Contract.
5.13 Employee Benefits.
(a) Schedule 5.13(a) lists: (i) all material "employee benefit plans", as
defined in Section 3(3) of ERISA, and all other material employee benefit
arrangements or payroll practices, including, without limitation, bonus plans,
consulting or other compensation agreements, incentive, equity or equity-based
compensation, or deferred compensation arrangements, stock purchase, severance
pay, sick leave, vacation pay, salary continuation, disability, hospitalization,
medical insurance, life insurance, scholarship programs maintained by Sellers or
to which Sellers contributed or are obligated to contribute thereunder for
current or former employees of Sellers (the "Employee Benefit Plans"), and (ii)
all "employee pension plans", as defined in Section 3(2) of ERISA, subject to
Title IV of ERISA or Section 412 of the Code, maintained by Sellers and any
trade or business (whether or not incorporated) which are or have ever been
under common control, or which are or have ever been treated as a single
employer, with Sellers under Section 414(b), (c), (m) or (o) of the Code ("ERISA
Affiliate") or to which Sellers and any ERISA Affiliate contributed or has ever
been obligated to contribute thereunder (the "Title IV Plans"). None of the
Title IV Plans is a multiemployer plan as defined in Section 3(37) of ERISA
("Multiemployer Plan"), or has been subject to Sections 4063 or 4064 of ERISA.
(b) True, correct and complete copies of the following documents, with
respect to each of the Employee Benefit Plans and Title IV Plans (as
applicable), have been made available to Purchaser (A) any plans and related
trust documents, and all amendments thereto, (B) the most recent Forms 5500 for
the past three (3) years and schedules thereto, (C) the most recent financial
statements and actuarial valuations for the past three (3) years, (D) the most
recent IRS determination letter, (E) the most recent summary plan descriptions
(including letters or other documents updating such descriptions) and (F)
written descriptions of all non-written agreements relating to the Employee
Benefit Plans and Title IV Plans (collectively, the "Pension Plans").
(c) Except as set forth on Schedule 5.13(c), each of the Employee Benefit
Plans and Title IV Plans intended to qualify under Section 401 of the Code
("Qualified Plans") has been determined by the IRS to be so qualified, and, to
the
37
Knowledge of Sellers, nothing has occurred with respect to the operation of any
such plan which could reasonably be expected to result in the revocation of such
favorable determination.
(d) All contributions and premiums required by law or by the terms of any
Employee Benefit Plan or Title IV Plan or any agreement relating thereto have
been timely made (taking into account any waivers granted with respect thereto)
to any funds or trusts established thereunder or in connection therewith in all
material respects.
(e) Except as set forth on Schedule 5.13(e), none of the Employee Benefit
Plans which are "welfare benefit plans" within the meaning of Section 3(1) of
ERISA provide for continuing benefits or coverage for any participant or any
beneficiary of a participant post-termination of employment except as may be
required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA").
(f) Except as set forth on Schedule 5.13(f), each of the Employee Benefit
Plans and Title IV Plans has been maintained, in all material respects, in
accordance with its terms and all provisions of applicable Law, including but
not limited to ERISA and the Code.
(g) Except as set forth on Schedule 5.13(g), neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment becoming due to any employee of any
Seller; (ii) increase any benefits otherwise payable under any Employee Benefit
Plan or Title IV Plan; or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
5.14 Labor.
(a) Except as set forth on Schedule 5.14(a), none of Sellers is a party to
any labor or collective bargaining agreement.
(b) Except as set forth on Schedule 5.14(b) there are no (i) strikes, work
stoppages, slowdowns, lockouts or arbitrations or (ii) material grievances or
other labor disputes pending or, to the Knowledge of Sellers, threatened against
or involving any Seller, except as would not have a Material Adverse Effect.
There are no unfair labor practice charges, grievances or complaints pending or,
to the Knowledge of Sellers, threatened by or on behalf of any employee or group
of employees of Sellers, except as would not have a Material Adverse Effect.
(c) Except as set forth on Schedule 5.14(c), Sellers are not delinquent in
payments to any Transferred Employees for any wages, salaries, commissions,
bonuses or other direct compensation for any services performed for Sellers as
of the date hereof or amounts required to be reimbursed to the Transferred
Employees.
5.15 Litigation. Except as set forth in Schedule 5.15, there are no Legal
Proceedings pending or, to the Knowledge of Sellers, threatened against any
Seller before
38
any Governmental Body, which, if adversely determined, would have a Material
Adverse Effect.
5.16 Compliance with Laws; Permits.
(a) Except as set forth on Schedule 5.16(a), Sellers are in compliance with
all Laws of any Governmental Body applicable to their respective operations or
assets or the Business, except where the failure to be in compliance would not
have a Material Adverse Effect and except with respect to Environmental Laws,
which are represented and warranted to in Section 5.17. Except as set forth on
Schedule 5.16(a), none of Sellers has received any written notice of or been
charged with the violation of any Laws, except where such violation would not
have a Material Adverse Effect.
(b) Sellers currently have all material Permits which are required for the
operation of the Business at each of Sellers' Properties as presently conducted.
Except as set forth on Schedule 5.16(b), none of Sellers is in default or
violation (and no event has occurred which, with notice or the lapse of time or
both, would constitute a default or violation) of any term, condition or
provision of any Permit to which it is a party, except where such default or
violation would not have a Material Adverse Effect and except with respect to
Environmental Laws, which are represented and warranted to in Section 5.17.
(c) Except as set forth on Schedule 5.16(c) and except with respect to
Environmental Laws, which are represented and warranted to in Section 5.17,
Sellers, within the previous five (5) years, have not received, and to the
Knowledge of Sellers there is no basis for any Seller to receive a notice of any
violation or alleged violation of any applicable statutes, ordinances, orders,
rules, and regulations promulgated by any U.S. federal, state, municipal,
non-U.S. or other Governmental Body which apply to the conduct of its business.
5.17 Environmental Matters. Except as set forth on Schedule 5.17 hereto and
except in each case as would not have a Material Adverse Effect:
(a) the operations of each Seller are in compliance with all applicable
Environmental Laws and all material Permits issued pursuant to Environmental
Laws or otherwise;
(b) each Seller has obtained all material Permits required under all
applicable Environmental Laws necessary to operate its business and shall
provide Purchaser with a list of all such Permits prior to Closing;
(c) none of Sellers is the subject of any outstanding written order or
Contract with any governmental authority or person respecting (i) Environmental
Laws, (ii) Remedial Action or (iii) any Release or threatened Release of a
Hazardous Material;
(d) none of Sellers has received any written communication alleging either
or both that any Seller may be in violation of any Environmental Laws, or any
39
Permit issued pursuant to Environmental Laws, or may have any liability under
any Environmental Laws;
(e) to the Knowledge of Sellers, there are no investigations of the
Business, or currently or previously owned, operated or leased property of any
Seller or of any property to which any Seller sent Hazardous Materials for
disposal pending or threatened which would reasonably be expected to result in
the imposition of any material liability pursuant to any Environmental Laws;
(f) there are no Hazardous Materials on, at, under or migrating from any of
Sellers' Properties except as in material compliance with Environmental Laws;
and
(g) the representations and warranties contained in this Section 5.17 are
the sole and exclusive representations and warranties of Sellers with respect to
environmental matters.
5.18 Financial Advisors. Except as set forth on Schedule 5.18, no Person
has acted, directly or indirectly, as a broker, finder or financial advisor for
any Seller in connection with the transactions contemplated by this Agreement
and no Person is entitled to any fee or commission or like payment from
Purchaser in respect thereof.
5.19 Accounts Receivable. All of Sellers' accounts receivable arising since
the Balance Sheet Date arose from bona fide transactions in the Ordinary Course
of Business, and the goods and services involved have been sold, delivered and
performed to the account obligors, and no further filings (with Governmental
Bodies, insurers or others) are required to be made, no further goods are
required to be provided and no further services are required to be rendered in
order to complete the sales and fully render the services and to entitle Sellers
to collect the accounts receivable in full. Except as set forth on Schedule
5.19, no accounts receivable have been assigned or pledged to any other Person,
firm or corporation, and, except only to the extent fully reserved against as
set forth in the Balance Sheet, no defense or set-off to any such account has
been asserted by the account obligor or exists.
5.20 Inventory. As of the Closing Date, the Inventory shall consist of
items of a quality, condition and quantity consistent with normal seasonally
adjusted Inventory levels of Sellers and be usable and saleable in the ordinary
and usual course of business for the purposes for which intended. Each Seller's
Inventory is valued on its books of account in accordance with GAAP (on an
average cost basis) at the lower of cost or market, and the value of obsolete
materials, materials below standard quality and slow-moving materials have been
written down in accordance with GAAP, net of amounts due to/from exchange
partners.
5.21 Significant Suppliers. Schedule 5.21 sets forth the 10 principal
suppliers of each Seller during the fiscal year ended June 30, 2003
("Significant Suppliers"), together with the dollar amount of Products purchased
by such Seller from each such
40
supplier during each such period. Except as otherwise set forth in Schedule
5.21, Sellers maintain good relations with all Significant Suppliers, as well as
with governments, partners, financing sources and other parties with whom
Sellers have significant relations, and no such party has canceled, terminated
or, to the Knowledge of Sellers, made any threat to any Seller to cancel or
otherwise terminate its relationship with such Seller or to materially decrease
its services or supplies to such Sellers or its direct or indirect purchase or
usage of the Products or services of such Seller. Schedule 1.1(b) includes all
material written agreements, arrangements and understandings between Sellers and
the Significant Suppliers.
5.22 Insurance. Schedule 5.22 hereto is a complete and correct list of all
insurance policies (including, without limitation, fire, liability, product
liability, workers' compensation and vehicular) presently in effect that relate
to Sellers or their respective properties, all of which have been in full force
and effect from and after the inception date(s) set forth on Schedule 5.22. Such
policies are sufficient for compliance by Sellers with all applicable material
Laws and all Material Contracts. Except as set forth on Schedule 5.22, none of
the insurance carriers, to the Knowledge of Sellers, has indicated to any of
Sellers an intention to cancel any such policy or to materially increase any
insurance premiums (including workers' compensation premiums). Except as set
forth on Schedule 5.22, during the prior two (2) years, all notices required to
have been given by Sellers to any insurance company have been timely and duly
given, and no insurance company has asserted that any claim by or against Seller
is not covered by the applicable policy relating to such claim.
5.23 Absence of Certain Business Practices. To the Knowledge of Seller or
except as set forth on Schedule 5.23, neither Sellers nor any other Affiliate of
Sellers has (a) received, directly or indirectly, any rebates, payments,
commissions, promotional allowances or any other economic benefits, regardless
of their nature or type, from any customer, supplier, employee or agent of any
customer or supplier; or (b) directly or indirectly given or agreed to give any
money, gift or similar benefit to any customer, supplier, employee or agent of
any customer or supplier, any official or employee of any government (domestic
or foreign), or any political party or candidate for office (domestic or
foreign), or other Person who was, is or may be in a position to help or hinder
the business of Sellers (or assist Sellers in connection with any actual or
proposed transaction), in each case which (i) may subject any such Sellers to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, may have had an adverse effect on the
assets, business, operations or prospects of any such Sellers, or (iii) if not
continued in the future, may adversely affect the assets, business, operations
or prospects of any such Sellers.
5.24 No Other Representations or Warranties; Schedules. Except for the
representations and warranties contained in this Article V (as modified by the
Schedules hereto), neither Sellers nor any other Person makes any other express
or implied representation or warranty with respect to Sellers, the Business, the
Purchased Assets, the Assumed Liabilities or the transactions contemplated by
this Agreement, and Sellers disclaim any other representations or warranties,
whether made by Sellers, any Affiliate
41
of Sellers or any of their respective officers, directors, employees, agents or
representatives. Except for the representations and warranties contained in
Article V hereof (as modified by the Schedules hereto), Sellers (i) expressly
disclaim and negate any representation or warranty, expressed or implied, at
common law, by statute, or otherwise, relating to the condition of the Purchased
Assets (including any implied or expressed warranty of merchantability or
fitness for a particular purpose, or of conformity to models or samples of
materials) and (ii) hereby disclaim all liability and responsibility for any
representation, warranty, projection, forecast, statement, or information made,
communicated, or furnished (orally or in writing) to Purchaser or its Affiliates
or representatives (including any opinion, information, projection, or advice
that may have been or may be provided to Purchaser by any director, officer,
employee, agent, consultant, or representative of Sellers or any of their
Affiliates). Sellers makes no representations or warranties to Purchaser
regarding the probable success or profitability of the Business. The disclosure
of any matter or item in any schedule hereto shall not be deemed to constitute
an acknowledgment that any such matter is required to be disclosed.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers that:
6.1 Organization and Good Standing. Purchaser is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now conducted.
6.2 Authorization of Agreement. Purchaser has full power and authority to
execute and deliver this Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be executed by
Purchaser in connection with the consummation of the transactions contemplated
hereby and thereby (the "Purchaser Documents"), and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Purchaser of this Agreement and each Purchaser Document have been
duly authorized by all necessary action on behalf of Purchaser. This Agreement
has been, and each Purchaser Document will be at or prior to the Closing, duly
executed and delivered by Purchaser and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each Purchaser Document when so executed and delivered will
constitute, legal, valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
42
6.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 6.3, none of the execution and delivery
by Purchaser of this Agreement and of Purchaser Documents, the consummation of
the transactions contemplated hereby or thereby, or the compliance by Purchaser
with any of the provisions hereof or thereof will (i) conflict with, or result
in a violation of, any provision of the certificate of limited partnership or
limited partnership agreement of Purchaser, (ii) conflict with, violate, result
in the breach of, or constitute a default under, or result in the termination,
cancellation or acceleration (whether after the filing of notice or lapse of
time or both) of any material right or obligation of Purchaser under, any
Contract or Permit to which Purchaser is a party or by which Purchaser or its
properties or assets are bound or (iii) violate any statute, rule, regulation or
Order of any Governmental Body applicable to Purchaser or any of the properties
or assets of Purchaser or (iv) any applicable Law, except, in the case of
clauses (ii), (iii) and (iv), for such violations, breaches, defaults,
terminations, cancellations or accelerations as would not have a material
adverse effect on the ability of Purchaser to perform its obligations under this
Agreement or to consummate the transactions contemplated by this Agreement.
(b) No consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of Purchaser in connection with the execution and
delivery of this Agreement or Purchaser Documents, the compliance by Purchaser
with any of the provisions hereof or thereof, the consummation of the
transactions contemplated hereby or the taking by Purchaser of any other action
contemplated hereby, or for Purchaser to conduct the Business, except for
compliance with the applicable requirements of the HSR Act.
6.4 Litigation. There are no Legal Proceedings pending or, to the knowledge
of Purchaser, threatened against Purchaser, or to which Purchaser is otherwise a
party before any Governmental Body, which are reasonably likely to prohibit or
restrain the ability of Purchaser to enter into this Agreement, or which, if
adversely determined, would reasonably be expected to have a material adverse
effect on the ability of Purchaser to perform its obligations under this
Agreement or to consummate the transactions hereby. Purchaser is not subject to
any Order of any Governmental Body except to the extent the same would not
reasonably be expected to have a material adverse effect on the ability of
Purchaser to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby.
6.5 Financial Advisors. Except as set forth on Schedule 6.5, no Person has
acted, directly or indirectly, as a broker, finder or financial advisor for
Purchaser in connection with the transactions contemplated by this Agreement and
no person is entitled to any fee or commission or like payment in respect
thereof.
6.6 Financial Capability. Purchaser (i) at the Closing will have,
sufficient funds available to pay the Purchase Price and any expenses incurred
by Purchaser in
43
connection with the transactions contemplated by this Agreement, (ii) at the
Closing will have, the resources and capabilities (financial or otherwise) to
perform its obligations hereunder, and (iii) has not incurred any obligation,
commitment, restriction or Liability of any kind, which would impair or
adversely affect such resources and capabilities.
6.7 Condition of the Business. Notwithstanding anything contained in this
Agreement to the contrary, Purchaser acknowledges and agrees that Sellers are
not making any representations or warranties whatsoever, express or implied,
beyond those expressly given by Sellers in Article V hereof (as modified by the
Schedules hereto), and Purchaser acknowledges and agrees that, except for the
representations and warranties contained therein, the Purchased Assets and the
Business are being transferred on a "where is" and, as to condition, "as is"
basis. Any claims Purchaser may have for breach of representation or warranty
shall be based solely on the representations and warranties of Sellers set forth
in Article V hereof (as modified by the Schedules hereto as supplemented or
amended). Purchaser further represents that no Seller nor any of their
Affiliates nor any other Person has made any representation or warranty, express
or implied, as to the accuracy or completeness of any information regarding any
Seller, the Business or the transactions contemplated by this Agreement not
expressly set forth in this Agreement, and none of Sellers, any of their
Affiliates or any other Person will have or be subject to any Liability to
Purchaser or any other Person resulting from the distribution to Purchaser or
its representatives or Purchaser's use of, any such information, including any
confidential memoranda distributed on behalf of Sellers relating to the Business
or other publication or data room information provided to Purchaser or its
representatives, or any other document or information in any form provided to
Purchaser or its representatives in connection with the sale of the Business and
the transactions contemplated hereby.
ARTICLE VII
COVENANTS
7.1 Access to Information. Sellers agree that, prior to the Closing Date,
Purchaser or its lenders shall be entitled, through its officers, employees and
representatives (including, without limitation, their respective legal advisors
and accountants), to make such investigation of the properties, businesses and
operations of the Business and such examination of the books and records of the
Business, the Purchased Assets and the Assumed Liabilities as they reasonably
request and to make extracts and copies of such books and records, and, prior to
and after the Closing Date, Sellers shall use commercially reasonable efforts to
furnish Purchaser and its representatives with such financial, business and
operating data of Sellers as may be required or reasonably requested by
Purchaser for inclusion in, or in connection with, any private placement
memoranda or filings with the U.S. Securities and Exchange Commission and
registration statement (including, without limitation, any prospectus
supplement) of Purchaser under the Securities Act of 1933, as amended (the
"Securities Act"), filed contemporaneously with the transactions contemplated
hereby or within sixty (60) days thereafter, including, without limitation,
using reasonable commercial efforts to
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furnish Purchaser, at Sellers' expense, with financial statements of Sellers
complying with Regulation S-X under the Securities Act and using reasonable
commercial efforts to cause Sellers' certified public accountants to provide
their opinion, consents for the inclusion thereof in any such registration
statement and comfort letters that are customary for registration statements or
private placement memoranda. Any such investigation and examination shall be
conducted during regular business hours upon reasonable advance notice and under
reasonable circumstances and shall be subject to restrictions under applicable
Law. Sellers shall cause the officers, employees, consultants, agents,
accountants, attorneys and other representatives of Sellers to cooperate with
Purchaser or its lenders and Purchaser's or its lenders' representatives in
connection with such investigation and examination, and Purchaser or its lenders
and their respective representatives shall cooperate with Sellers and its
representatives and shall use their reasonable efforts to minimize any
disruption to the Business. Notwithstanding anything herein to the contrary, no
such investigation or examination shall be permitted to the extent that it would
require any Seller to disclose information subject to attorney-client privilege
or conflict with any confidentiality obligations to which any Sellers are bound.
Sellers shall use commercially reasonable efforts to provide to Purchaser a list
of the FCC Licenses as soon as practicable.
7.2 Conduct of the Business Pending the Closing.
(a) Prior to the Closing, except (i) as set forth on Schedule 7.2, (ii) as
required by applicable Law, (iii) as otherwise contemplated by this Agreement or
(iv) with the prior written consent of Purchaser (which consent shall not be
unreasonably withheld or delayed), Sellers shall:
(i) conduct the Business only in the Ordinary Course of Business and
in compliance with applicable Law;
(ii) use their commercially reasonable efforts to (A) preserve the
present business operations, organization and goodwill of the Business, (B)
preserve the present relationships with customers and suppliers of the
Business, and (C) maintain its insurance policies with respect to the
Business and the Purchased Assets; and
(iii) act in accordance with the Bankruptcy Court's compensation order
attached hereto as Exhibit I.
(b) Except (i) as set forth on Schedule 7.2, (ii) as required by applicable
Law, (iii) as otherwise contemplated by this Agreement or (iv) with the prior
written consent of Purchaser (which consent shall not be unreasonably withheld
or delayed with respect to subsections (i), (iv) and (xii) below), Sellers shall
not, solely as it relates to the Business:
(i) make or rescind any material election relating to Taxes, settle or
compromise any material claim, action, suit, litigation, proceeding,
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arbitration, investigation, audit or controversy relating to Taxes, or
except as may be required by applicable Law or GAAP, make any material
change to any of their methods of accounting or methods of reporting income
or deductions for Tax or accounting practice or policy from those employed
in the preparation of its most recent Tax Returns;
(ii) subject any of the Purchased Assets to any Lien outside of the
Ordinary Course of Business, except for Permitted Exceptions;
(iii) acquire any material properties or assets that would be
Purchased Assets or sell, assign, license, transfer, convey, lease or
otherwise dispose of any of the Purchased Assets;
(iv) make any material change, whether written or oral, to any
Material Contract with any of the suppliers or customers/licensees of
Sellers;
(v) delay payment of any accrued expense, trade payable or other
liability of Sellers beyond its due date or the date when such liability
would have been paid in the Ordinary Course of Business other than in
respect of any cash expense, trade payable or liability being contested by
Sellers in good faith;
(vi) allow Sellers' Inventory to vary in any material respect from the
levels customarily maintained;
(vii) engage in any one or more material activities or transactions
outside the Ordinary Course of Business;
(viii) enter into or agree to enter into any merger or consolidation
with, any corporation or other entity;
(ix) cancel or compromise any debt or claim or waive or release any
material right of any Seller that constitutes a Purchased Asset except in
the Ordinary Course of Business;
(x) enter into any commitment for capital expenditures in excess of
$500,000 for all commitments in the aggregate;
(xi) enter into, modify or terminate any labor or collective
bargaining agreement to which Sellers or their Employees are a party, or,
through negotiation or otherwise, make any commitment or incur any
liability to any labor organization;
(xii) alter, amend or terminate any existing Real Property Lease or
enter into any lease or contract affecting any of Sellers' Properties;
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(xiii) accelerate collection of any notes or accounts receivable of
Sellers in advance of their regular due dates or the dates when they would
have been collected in the Ordinary Course of Business;
(xiv) enter into any transaction or make any commitment which would
likely result in any of the representations, warranties or covenants of
Sellers contained in this Agreement not being true and correct after the
occurrence of such transaction or event; or
(xv) agree to do anything prohibited by this Section 7.2.
7.3 Consents. Sellers shall use their commercially reasonable efforts, and
Purchaser shall cooperate with Sellers, to obtain at the earliest practicable
date all consents and approvals required to consummate the transactions
contemplated by this Agreement, including, without limitation, the consents and
approvals referred to in Section 5.3(b) hereof; provided, however, that Sellers
shall not be obligated to pay any consideration therefor to any third party from
whom consent or approval is requested or to initiate any litigation or legal
proceedings to obtain any such consent or approval.
7.4 Regulatory Approvals.
(a) Purchaser and Sellers (if necessary) shall (a) make or cause to be made
all filings required of each of them or any of their respective subsidiaries or
Affiliates under the HSR Act or other Antitrust Laws with respect to the
transactions contemplated hereby as promptly as practicable and, in any event,
within five (5) days after the date the Bidding Procedures Order are approved by
the Bankruptcy Court in the case of all filings required under the HSR Act and
within four weeks in the case of all other filings required by other Antitrust
Laws, (b) comply at the earliest practicable date with any request under the HSR
Act or other Antitrust Laws for additional information, documents, or other
materials received by each of them or any of their respective subsidiaries from
the FTC, the Antitrust Division or any other Governmental Body in respect of
such filings or such transactions, and (c) cooperate with each other in
connection with any such filing and in connection with resolving any
investigation or other inquiry of any of the FTC, the Antitrust Division or
other Governmental Body under any Antitrust Laws with respect to any such filing
or any such transaction. Each such party shall use reasonable best efforts to
furnish to each other all information required for any application or other
filing to be made pursuant to any applicable law in connection with the
transactions contemplated by this Agreement. Each such party shall promptly
inform the other parties hereto of any oral communication with, and provide
copies of written communications with, any Governmental Body regarding any such
filings or any such transaction. No party hereto shall independently participate
in any formal meeting with any Governmental Body in respect of any such filings,
investigation, or other inquiry without giving the other parties hereto prior
notice of the meeting and, to the extent permitted by such Governmental Body,
the opportunity to attend and/or participate.
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(b) Purchaser and Sellers shall use their best efforts to take such action
as may be required to cause the expiration of the notice periods under the HSR
Act or other Antitrust Laws with respect to such transactions as promptly as
possible after the execution of this Agreement. Each of Purchaser and Sellers
shall use their best efforts to resolve such objections, if any, as may be
asserted by any Governmental Body with respect to the transactions contemplated
by this Agreement under the HSR Act, the Sherman Act, as amended, the Clayton
Act, as amended, the Federal Trade Commission Act, as amended, and any other
United States federal or state or foreign statutes, rules, regulations, orders,
decrees, administrative or judicial doctrines or other laws that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, the "Antitrust Laws");
provided that Purchaser as a condition to the resolution of any of such
obligations shall not be obligated to dispose or otherwise divest itself of any
of its assets. In connection therewith, if any Legal Proceeding is instituted
(or threatened to be instituted) challenging any transaction contemplated by
this Agreement as in violation of any Antitrust Law, each of Purchaser and
Sellers shall cooperate and use its best efforts to contest and resist any such
Legal Proceeding, and to have vacated, lifted, reversed, or overturned any
decree, judgment, injunction or other order whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents, or restricts
consummation of the transactions contemplated by this Agreement, including by
pursuing all reasonable avenues of administrative and judicial appeal and all
available legislative action, unless, by mutual agreement, Purchaser and Sellers
decide that litigation is not in their respective best interests.
7.5 Alternative Transaction. From the date hereof (and any prior time) and
until the conclusion of the auction contemplated by the Bidding Procedures,
Sellers are permitted to cause their representatives and Affiliates (together
with Sellers, the "Seller Group") to initiate contact with, solicit or encourage
submission of any inquiries, proposals or offers by, any Person (in addition to
Purchaser and its Affiliates, agents and representatives) in connection with any
sale or other disposition of equity securities of Sellers ("Equity") or all or
substantially all of the assets of any or all of Sellers or engaging in a public
offering of the Equity or all or substantially all of the assets of any or all
of Sellers (or of another security derived from the Equity) of any or all of
Sellers (an "Alternative Transaction"), and nothing herein shall prohibit Seller
Group from responding to requests for information regarding an Alternative
Transaction or otherwise facilitating the auction process contemplated by the
Bidding Procedures Order. Purchaser acknowledges and agrees that until the
earlier of (x) the entry by the Bankruptcy Court of the Approval Order and (y)
the termination of this Agreement in accordance with its terms, the Seller Group
shall be permitted to pursue Alternative Transactions, including, but not
limited to, supplying information relating to Sellers or the Equity to
prospective purchasers of the Equity or all or substantially all of the assets
of any or all of Sellers or prospective underwriters or purchasers of the Equity
or all or substantially all of the assets of any or all of Sellers in a public
offering. None of the Seller Group shall have any liability to Purchaser, either
under or relating to this Agreement or any applicable Law, by virtue of entering
into or seeking Bankruptcy Court approval of such a definitive agreement for an
Alternative Transaction pursuant to this
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Section 7.5; provided, that Purchaser is paid any Expense Reimbursement and
Break-Up Fee that may be payable pursuant to Section 4.7 at the time provided
for therein.
7.6 Further Assurances. Each of Sellers and Purchaser shall use its
commercially reasonable efforts to (i) take all actions necessary or appropriate
to consummate the transactions contemplated by this Agreement and (ii) cause the
fulfillment at the earliest practicable date of all of the conditions to their
respective obligations to consummate the transactions contemplated by this
Agreement.
7.7 Confidentiality.
(a) Purchaser acknowledges that the information provided to it in
connection with this Agreement and the transactions contemplated hereby is
subject to the terms of the confidentiality agreement between Sellers'
representative, executed on May 9, 2003 on behalf of Sellers, and Purchaser,
executed by Purchaser on April 25, 2003 (the "Confidentiality Agreement"), the
terms of which are incorporated herein by reference, provided that Purchaser may
include such financial information and other information Purchaser reasonably
determines is required to be disclosed by the rules and regulations of the U.S.
Securities and Exchange Commission in Purchaser's filings with the U.S.
Securities and Exchange Commission or in any private placement memoranda and to
its lenders, underwriters and rating agencies. Effective upon, and only upon,
the Closing Date, the Confidentiality Agreement shall terminate with respect to
information relating solely to the Business or otherwise included in the
Purchased Assets; provided, however, that Purchaser acknowledges that any and
all other Confidential Information provided to it by Sellers, their Affiliates
or their representatives concerning Sellers shall remain subject to the terms
and conditions of the Confidentiality Agreement after the Closing Date.
Notwithstanding the foregoing, the Confidentiality Agreement shall not apply to
information contained in this Agreement or the Exhibits and Schedules attached
hereto or as to matters which are part of the Bankruptcy Court record or
otherwise known to the general public.
(b) Notwithstanding anything to the contrary set forth herein or in any
other agreement to which the parties hereto are parties or by which they are
bound, the obligations of confidentiality contained herein and therein, as they
relate to the transactions described in this Agreement, shall not apply to the
Tax structure or Tax treatment of the transactions described in this Agreement,
and each party hereto (and any employee, representative, or agent of any party
hereto) may disclose to any and all persons, without limitation of any kind, the
Tax structure and Tax treatment of the transactions described in this Agreement
and all materials of any kind (including opinions or other tax analysis) that
are provided to such party relating to such Tax treatment and Tax structure;
provided, however, that such disclosure shall not include the name (or other
identifying information not relevant to the Tax structure or Tax treatment) of
any person and shall not include information for which nondisclosure is
reasonably necessary in order to comply with applicable securities laws.
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7.8 Preservation of Records. Sellers and Purchaser agree that each of them
shall preserve and keep the records (including work papers and electronic files
associated with Tax Returns regarding sale, use, excise and Product) held by it
or their Affiliates relating to the Business for a period of seven (7) years
from the Closing Date and shall make such records and personnel available to the
other as may be reasonably required by such party in connection with, among
other things, any insurance claims by, legal proceedings or tax audits against
or governmental investigations of Sellers or Purchaser or any of their
Affiliates or in order to enable Sellers or Purchaser to comply with their
respective obligations under this Agreement and each other agreement, document
or instrument contemplated hereby or thereby. In the event Sellers or Purchaser
wishes to destroy such records prior or after that time, such party shall first
give ninety (90) days prior written notice to the other and such other party
shall have the right at its option and expense, upon prior written notice given
to such party within that ninety (90) day period, to take possession of the
records within one hundred and eighty (180) days after the date of such notice.
7.9 Publicity. Neither Sellers nor Purchaser shall issue any press release
or public announcement concerning this Agreement or the transactions
contemplated hereby without obtaining the prior written approval of the other
party hereto, which approval will not be unreasonably withheld or delayed,
unless, in the sole judgment of Purchaser or Sellers, disclosure is otherwise
required by applicable Law or by the applicable rules of any stock exchange on
which Purchaser or Sellers lists securities, provided that the party intending
to make such release shall use its best efforts consistent with such applicable
Law to consult with the other party with respect to the text thereof.
7.10 Contacts with Suppliers and Customers. Notwithstanding anything to the
contrary contained herein, prior to the Closing, (i) without the prior written
consent of Sellers, which may be withheld for any reason, Purchaser shall not
contact any customers of the Business, and (ii) Purchaser shall not contact any
suppliers to the Business without the prior written consent of Sellers, which
consent shall not be unreasonably withheld or delayed.
7.11 Bonds. Sellers and Agway shall continue to maintain the Bonds issued
on behalf of or at the request of any Seller that are in effect on the Closing
Date until such time as Purchaser, using its reasonable best efforts, causes
Purchaser's surety to replace the Bonds. In the event that an obligee under any
of the Bonds makes a claim thereunder as a result of Purchaser's breach or
alleged breach of any of the Bonds' provisions, Purchaser shall promptly
indemnify and hold harmless any Seller or Agway from any such surety's demand
for indemnification under such surety indemnification agreement.
7.12 Supplementation and Amendment of Schedules. From time to time prior to
the Closing, Sellers shall have the right to, or will upon the reasonable
request of Purchaser, supplement or amend the Schedules with respect to any
matter hereafter arising or discovered after the delivery of the Schedules
pursuant to this Agreement that, if existing or known at, or occurring prior to,
the date of this Agreement, would have been required to be set forth or
described in such Schedules. No such supplement or
50
amendment shall have any effect on the satisfaction of the condition to closing
set forth in Section 9.1(a); provided, however, if the Closing shall occur, then
Purchaser shall be deemed to have waived any right or claim pursuant to the
terms of this Agreement or otherwise, including pursuant to Article X hereof,
with respect to any and all matters disclosed pursuant to any such supplement or
amendment at or prior to the Closing.
7.13 Bidding Procedures. Within five (5) days after the execution and
delivery of this Agreement, Agway shall file the Bidding Procedures Motion and
the Sale Motion with the Bankruptcy Court. If the Bidding Procedures Order and
the Approval Order, as entered, do not conform to Exhibits A and B hereto,
respectively, Purchaser shall have one (1) Business Day after Purchaser's
receipt of notification of the entry of each such order to notify Sellers in
writing that Purchaser elects, in its sole discretion, to terminate this
Agreement.
7.14 Agway Name.
(a) Within thirty (30) days following the Closing, each Seller shall file a
certificate of amendment of such Seller's certificate of incorporation or
certificate of formation, as the case may be, with the Secretary of State of
Delaware, changing its corporate or limited liability company name, as the case
may be, to remove any reference to the name "Agway", or any similar name or
derivative thereof.
(b) Notwithstanding any other provisions of this Agreement, Purchaser
acknowledges and agrees that:
(i) Sellers are conveying exclusively to Purchaser all of their
rights, title and interests to use the "AGWAY" name as a trade name or
service name and any related Marks solely in connection with the Business,
such rights, title and interests being limited to the use of the "AGWAY"
name as part of a trade name or service name in connection with the
Business such that the trade name or service name must include an
additional term describing or indicating the Business or a part of the
Business in which the entity is involved (e.g., "AGWAY ENERGY," AGWAY
PROPANE," "AGWAY OIL");
(ii) Sellers shall not grant, and has not granted, the rights conveyed
to Purchaser pursuant to Section 7.14(b)(i) to any Person other than
Purchaser;
(iii) Purchaser agrees not to use, directly or indirectly, the AGWAY
name outside of the Business and to use the AGWAY name within the Business
only as permitted pursuant to this Section 7.14;
(iv) this Agreement does not grant Purchaser any right to use, and
Purchaser shall not use, the trade name or service name "AGWAY", or any
similar name or derivative thereof, by itself (without regard to whether a
type of entity designation is used with the AGWAY name) for a business or
entity formed and/or operated by or for Purchaser in connection with the
Business;
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(v) Agway owns, and nothing in this Agreement transfers to or grants
to Purchaser any right, title or interest in or to, the AGWAY name, or any
similar name or derivative thereof, including any trademark and service
mark registrations for the AGWAY mark, in connection with any business,
products, and/or services outside of the Business (the "Other AGWAY
Marks");
(vi) the Other AGWAY Marks are not part of the Purchased Intellectual
Property; and
(vii) Agway has licensed, and nothing contained in this Agreement
limits Agway's right to license, third parties to use the Other AGWAY
Marks.
(c) Purchaser acknowledges that Agway intends to transfer to third parties
some or all of the Other AGWAY Marks, including any trademark and service mark
registrations of the Other AGWAY Marks; and Purchaser hereby releases Agway and
Sellers from any and all liability in connection with any transfer or transfers
of the Other AGWAY Marks.
7.15 Retention of Funds. From and after the Closing until (i) Sellers shall
have paid to Purchaser any amounts owed to Purchaser pursuant to Section 3.4(f)
or (ii) it shall have been determined pursuant to Section 3.4 that no amounts
are owed by Sellers to Purchaser thereunder, Sellers shall retain an amount of
funds equal to the greater of (A) $1,000,000 and (B) 125% of the amount, if any,
by which Average Net Working Capital exceeds Estimated Closing Working Capital,
and upon the written request of Purchaser, which may be made no more often than
every thirty (30) days, Sellers shall provide Purchaser with reasonable evidence
that such funds have been retained.
7.16 Industrial Site Recovery Act.
(a) As a condition precedent to Purchaser's obligation to close, Sellers
shall have received from the New Jersey Department of Environmental Protection
("NJDEP"), pursuant to ISRA, for all of Sellers' Properties located in New
Jersey:
(i) a letter from NJDEP indicating that ISRA does not apply to this
transaction for each such property ("LNA") or
(ii) a remediation agreement to permit closing to occur prior to ISRA
compliance pursuant to N.J.S.A 13:1K-9 which shall be acceptable to
Purchaser and shall name Purchaser as the ordered party ("Remediation
Agreement") for any of Sellers' Properties located in New Jersey for which
an LNA is not available (the receipt of either documents referred to in
clauses (i) and (ii) shall herein be referred to as "ISRA Closing
Compliance") and Sellers shall have delivered a copy thereof to Purchaser.
(b) From and after Closing, Purchaser shall comply with Sellers' ISRA
obligations arising from the transactions contemplated herein. Purchaser shall
cooperate
52
with Sellers and shall provide Sellers with access to the facilities at
reasonable times in order for Sellers to accomplish any actions required by the
State of New Jersey to the extent Purchaser is not complying with such
obligations.
7.17 Tax Clearance Certificates; Reserve for Taxes. Prior to the Closing,
Sellers shall file an application for a tax clearance certificate from each of
the Tax Authorities listed on Schedule 7.17 (collectively, the Tax Clearance
Certificates") releasing Sellers from all Liability for all Taxes listed on
Schedule 7.17 owed to such jurisdictions through the Closing Date (collectively,
the "State Tax Liabilities"), it being understood that it is neither a condition
to Closing or covenant of Sellers that any Tax Clearance Certificates be
received. Sellers shall reserve not of less than $900,000 of cash, which shall
be used solely for the purpose of paying State Tax Liabilities until the earlier
to occur of (i) receipt by Seller of such Tax Clearance Certificates and (ii) 15
months following the Closing Date. Sellers shall provide to Purchaser any Tax
Clearance Certificates it receives.
7.18 Formation of LLC. Notwithstanding anything else contained herein, in
order to facilitate the transfer at Closing to Purchaser of the Purchased Assets
that are Tangible Property, prior to the Closing, Sellers shall transfer all of
such Tangible Property to a newly formed single member limited liability company
("LLC I"), which shall in turn transfer all of the Tangible Property that are
non-propane assets to a second limited liability company (LLC II"), which shall
be wholly owned by LLC I (it being understood that membership interests in LLC I
and LLC II are Purchased Assets).
7.19 Assumption, Assignment and Transfer by Agway. At Closing and pursuant
to Section 365 of the Bankruptcy Code, and subject to Bankruptcy Court approval,
Agway shall assume and assign to Purchaser those Purchased Contracts to which
Agway is a party, which Purchased Contracts are listed on Schedule 7.19. At
Closing and pursuant to Section 363 of the Bankruptcy Code, and subject to
Bankruptcy Court approval, Agway shall sell, transfer, assign, convey and
deliver to Purchaser all of Agway's right, title and interest in and to those
Owned Properties that Agway owns.
7.20 Conveyance of Title. Notwithstanding anything else provided herein,
title to any titled Purchased Asset shall be conveyed to Purchaser only upon the
certificate of title relating to any such titled Purchased Assets having been
executed by the relevant Seller and delivered to Purchaser, which may occur
after the Closing. To the extent such transfer of title occurs after the
Closing, Sellers shall deliver powers of attorney relating to the execution of
the certificates of title to each of the titled Purchased Assets in form and
substance reasonably acceptable to Purchaser and Sellers authorizing the
execution of such certificates of title on behalf of Sellers. Such powers of
attorney shall appoint an employee of Purchaser. In the event that any such
power attorneys lapse under applicable law, Sellers agree to promptly execute
replacement powers of attorney upon the request of Purchaser. Purchaser and
Sellers acknowledge that any such delay in the transfer of title is necessary to
facilitate the orderly transfer of title.
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ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFITS
8.1 Employment.
(a) Transferred Employees. At least ten (10) days prior to the Closing,
Purchaser shall deliver, in writing, an offer of employment to the Chief
Operating Officer, all field employees, including the general managers, and any
other Employee that Purchaser identifies prior to Closing as critical to
Purchaser's operation of the Business, with such employment to commence
immediately following the Closing, and Purchaser shall deliver to Sellers at
least ten (10) days prior to the Closing a list of those Employees to whom
Purchaser is offering employment. Except as set forth on Schedule 8.1, which may
be amended up to ten (10) days prior to the Closing, each such offer of
employment shall be at the same salary or hourly wage rate and position in
effect immediately prior to the Closing. Such individuals who accept such offer
by the Closing Date are hereinafter referred to as the "Transferred Employees."
(b) Standard Procedure. Pursuant to the "Standard Procedure" provided in
Section 5 of Revenue Procedure 96-60, 1996-2 C.B. 399, (i) Purchaser and Sellers
shall report on a predecessor/successor basis as set forth therein, (ii) Sellers
will not be relieved from filing a Form W-2 or Form 1099 with respect to any
Transferred Employees or independent contractor, as the case may be, and (iii)
Purchaser will undertake to file (or cause to be filed) a Form W-2 for each such
Transferred Employee with respect to the portion of the year during which such
Employees are employed by Purchaser that includes the Closing Date, excluding
the portion of such year that such Employee was employed by Sellers.
8.2 Employee Benefits.
(a) Purchaser shall provide employee benefits to the Transferred Employees
which are substantially similar to those provided by Purchaser to similarly
situated active employees of Purchaser including, without limitation, with
respect to severance, vacations and incentive compensation. For purposes of
eligibility, vesting and rate of vacation accrual or severance pay, if
applicable, but not benefit accrual for any other purpose, under the employee
benefit plans of Purchaser providing benefits to Transferred Employees (the
"Purchaser Plans"), Purchaser shall credit each Transferred Employee with his or
her years of service with Sellers and any predecessor entities, to the same
extent as such Transferred Employee was entitled immediately prior to the
Closing to credit for such service under any similar Employee Benefit Plan. For
the purpose of determining incentive compensation (not including any retention
compensation set forth as "Minimum Guarantee" on Schedule 8.2(e)(ii)) the
("Minimum Guarantee")), for any Transferred Employee under Purchaser's
compensation plans, Purchaser shall take into account his or her performance
since July 1, 2003, the commencement of Sellers' current fiscal year. Purchaser
shall accept a trust to trust transfer of assets and liabilities from Sellers'
Savings Plan to Purchaser's Savings Plan of the account attributable to
54
Transferred Employees, at each Transferred Employee's option. Such trust to
trust transfer shall be made in cash and notes representing participant loans in
accordance with the requirements of Section 414(l) of the Code, as soon as
reasonably practicable after the Closing Date.
(b) Notwithstanding subsection (a) above, with respect to Purchaser's group
health plans, Purchaser shall as of the Closing Date either establish group
health plans for the Transferred Employees that are substantially similar to
those that such Employees participated in immediately prior to Closing, or shall
enroll the Transferred Employees in the Purchaser Plans which cover similarly
situated employees of Purchaser. Any group health plan of Purchaser shall take
into account employment with any Seller for purposes of determining eligibility
to participate. Transferred Employees shall participate without any waiting
periods, without evidence of insurability, and without application of
pre-existing physical or mental condition limitations except to the extent
applicable under such similar Employee Benefit Plans. Purchaser shall count
claims arising during the calendar year on or prior to the effective date of
coverage for purposes of satisfying deductibles, out-of-pocket maximums, and all
other similar limitations under the welfare plans of Purchaser. Sellers shall
provide Purchaser with schedules as of the Closing Date in such form as is
mutually convenient to the parties, and update such schedules immediately
thereafter, which reflect the deductibles satisfied, amounts credited toward
out-of-pocket maximums and any other similar limitations as of the Closing Date.
(c) Nothing contained in this Article VIII or elsewhere in this Agreement
shall be construed to prevent the termination of employment of any individual
Transferred Employee or any change in the employee benefits available to any
individual Transferred Employee provided such change applies to similarly
situated employees of Purchaser.
(d) Accrued Vacation. Except as required by applicable Law, Purchaser shall
be responsible for all Liabilities with respect to Transferred Employees
attributable to their accrued and unused vacation, sick days and personal days
earned with Sellers through the Closing Date.
(e) With respect to Employees that are not Transferred Employees, Sellers
shall be responsible for all Liabilities under applicable law or the terms of
Sellers' Employee Benefit Plans, including all Liabilities arising under WARN or
Sellers' employee pension benefit plans and Sellers' Liability to provide
continued group health coverage under Part 6, Subtitle A of Title I of ERISA or
Section 4980B of the Code, except as provided below. To the extent Sellers'
Liability to such Employees under any severance arrangement, or on account of
incentive compensation under the plans set forth on Schedule 8.2(e)(i) or
accrued and unused vacation, exceeds an aggregate amount of Five Million Dollars
($5,000,000) (the "Employee Benefit Cap"), Purchaser shall assume such Liability
in excess of the Employee Benefit Cap; provided that Sellers shall be solely
responsible for all Liabilities related to severance and incentive compensation
that represents a Minimum Guarantee (the "Excluded Bonus Amounts") of Sellers'
executives
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who are not Transferred Employees who are set forth on Schedule 8.2(e)(ii), and
provided, further, any such Liabilities related to the Excluded Bonus Amounts
shall not be applied to the Employee Benefit Cap. Purchaser shall assume all
Liabilities in respect of incentive compensation of Transferred Employees under
Sellers' plans accrued, earned and unpaid for during Sellers' current fiscal
year through the Closing Date (and, to the extent so accrued and earned,
Purchaser shall have no additional obligation to provide incentive compensation
under Section 8.2(a) hereof for such period); provided, however, that Sellers
shall pay the Minimum Guarantee directly to the applicable Transferred Employees
and Purchaser shall promptly reimburse Sellers therefor but not with respect to
any matching payments under Sellers' or Agway's pension or other employee
benefit plans.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions Precedent to Obligations of Purchaser. The obligation of
Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by Purchaser in whole or
in part to the extent permitted by applicable Law):
(a) The representations and warranties of Sellers set forth in this
Agreement qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, at and as if
made on the Closing, except to the extent such representations and warranties
relate to an earlier date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of such
earlier date), and Purchaser shall have received a certificate signed by an
authorized officer of Sellers, dated the Closing Date, to the foregoing effect;
(b) Sellers shall have performed and complied in all material respects with
all obligations and agreements required in this Agreement to be performed or
complied with by it prior to the Closing Date, and Purchaser shall have received
a certificate signed by an authorized officer of Sellers, dated the Closing
Date, to the foregoing effect;
(c) there have been no facts or circumstances that give rise to a Material
Adverse Effect on the Business;
(d) any required consent to the assignment of the Contracts set forth on
Schedule 9.1(d) shall have been obtained or such Contracts shall have been
assumed and assigned to Purchaser in accordance with Section 7.19; and
(e) Sellers shall have delivered, or caused to be delivered, to Purchaser
all items set forth in Section 4.2.
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9.2 Conditions Precedent to Obligations of Sellers. The obligations of
Sellers to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions (any or all of which may be waived by Sellers in whole or
in part to the extent permitted by applicable Law):
(a) The representations and warranties of Purchaser set forth in this
Agreement qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, at and as if
made on the Closing, except to the extent such representations and warranties
relate to an earlier date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of such
earlier date), and Sellers shall have received a certificate signed by an
authorized officer of Purchaser, dated the Closing Date, to the foregoing
effect;
(b) Purchaser shall have performed and complied in all material respects
with all obligations and agreements required by this Agreement to be performed
or complied with by Purchaser on or prior to the Closing Date, and Sellers shall
have received a certificate signed by an authorized officer of Purchaser, dated
the Closing Date, to the foregoing effect;
(c) evidence of the wire transfer referred to in Section 3.3 hereof; and
(d) Purchaser shall have delivered, or caused to be delivered, to Sellers
the items set forth in Section 4.3.
9.3 Conditions Precedent to Obligations of Purchaser and Sellers. The
respective obligations of Purchaser and Sellers to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, on or prior to
the Closing Date, of each of the following conditions (any or all of which may
be waived by Purchaser and Sellers in whole or in part to the extent permitted
by applicable Law):
(a) there shall not be in effect any Order by a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(b) the Bankruptcy Court shall have entered the Bidding Procedures Order;
(c) the Bankruptcy Court shall have entered the Approval Order within forty
(40) days after the date that the Bankruptcy Court approves the Bidding
Procedures Order and any stay period applicable to the Approval Order shall have
expired or shall have been waived by the Bankruptcy Court;
(d) the waiting period applicable to the transactions contemplated by this
Agreement under the HSR Act shall have expired or early termination shall have
been granted; and
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(e) the consents, waivers, approvals or other authorizations listed on
Schedule 9.3(e) shall have been obtained or otherwise satisfied.
9.4 Frustration of Closing Conditions. Neither Sellers nor Purchaser may
rely on the failure of any condition set forth in Section 9.1, 9.2 or 9.3, as
the case may be, if such failure was caused by such party's failure to comply
with any provision of this Agreement.
ARTICLE X
INDEMNIFICATION
10.1 Survival of Representations and Warranties. The representations and
warranties of the parties contained in this Agreement shall survive the Closing
through and including the date that is fifteen (15) months after the Closing
Date (other than representations and warranties set forth in Sections 5.8 and
5.17, each of which shall survive through and including the three (3) year
anniversary of the Closing Date) (as applicable, the "Survival Period");
provided, however, that any obligations to indemnify and hold harmless shall not
terminate with respect to any Losses as to which the Person to be indemnified
shall have given notice to the indemnifying party in accordance with Section
10.4(a) before the termination of the applicable Survival Period.
10.2 Indemnification by Sellers.
(a) Subject to Sections 7.12, 10.1, 10.5 and 10.10 hereof, Sellers hereby
agree to indemnify and hold Purchaser and its directors, officers, employees,
Affiliates, agents, successors and permitted assigns (collectively, the
"Purchaser Indemnified Parties") harmless from and against:
(i) any and all losses, liabilities, obligations, damages, costs and
expenses (individually, a "Loss" and, collectively, "Losses") based upon,
attributable to or resulting from the breach of any representation or
warranty of any Seller set forth in Article V hereof, or any representation
or warranty contained in any certificate delivered by or on behalf of any
Seller pursuant to this Agreement;
(ii) any and all Losses based upon, attributable to or resulting from
the breach of any covenant or other agreement on the part of any Seller
under this Agreement;
(iii) any and all Losses based upon or arising directly from any
Excluded Asset, any Excluded Liability (other than any Liabilities arising
from or in connection with the failure to qualify or re-qualify any
portable propane tanks of Sellers installed at a customer's location in
compliance with DOT Regulations), State Tax Liabilities or any Pre-Closing
Breaches of Purchased Contracts; and
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(iv) any and all notices, actions, suits, proceedings, claims,
demands, assessments, judgments, costs, penalties and expenses, including
attorneys' and other professionals' fees and disbursements (collectively,
"Expenses") incident to the foregoing matters referred to clauses (i)
through (iii);
provided, however, that Sellers' obligations to indemnify and hold harmless
with respect to the Losses referred to in clauses (ii) and (iii) above
shall terminate fifteen (15) months after the Closing Date except with
respect to any Losses as to which the Purchaser Indemnified Parties shall
have given notice to Sellers in accordance with Section 10.4(a) before the
expiration of such period and, provided, further, that neither the
immediately preceding provision nor Section 10.9 shall preclude Sellers
from challenging any claim asserting that it is liable for an Excluded
Liability following the expiration of such period other than with respect
to any Environmental Liabilities, for which Purchasers' sole and exclusive
recourse against any Seller shall be pursuant to Section 10.10.
(b) Purchaser acknowledges and agrees that Sellers shall not have any
liability under any provision of this Agreement for any Loss to the extent that
such Loss relates to action taken by Purchaser or any other Person (other than
Sellers in breach of this Agreement) after the Closing Date. Purchaser shall
take and shall cause its Affiliates to take all reasonable steps to mitigate any
Loss upon becoming aware of any event which would reasonably be expected to, or
does, give rise thereto, including incurring costs only to the minimum extent
necessary to remedy the breach which gives rise to the Loss.
(c) The parties hereto acknowledge and agree that the General Indemnity
Escrow Fund and the Environmental Indemnity Escrow Fund have been created for
the purpose and as the sole and exclusive source of satisfying Sellers'
obligations to indemnify and hold harmless the Purchaser Indemnified Parties in
accordance with this Section 10.2(a)(i), Section 10.5 and Section 10.10,
respectively, except as otherwise expressly provided herein.
10.3 Indemnification by Purchaser.
(a) Subject to Sections 10.1 and 10.5, Purchaser hereby agrees to indemnify
and hold Sellers and its directors, officers, employees, Affiliates, agents,
successors and permitted assigns (collectively, the "Seller Indemnified
Parties") harmless from and against:
(i) any and all Losses based upon, attributable to or resulting from
the breach of any representation or warranty of Purchaser set forth in
Article VI hereof, or any representation or warranty contained in any
certificate delivered by or on behalf of Purchaser pursuant to this
Agreement;
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(ii) any and all Losses based upon, attributable to or resulting from
the breach of any covenant or other agreement on the part of Purchaser
under this Agreement;
(iii) any and all Losses based upon or arising directly out of any
Assumed Liability;
(iv) all Losses based upon or arising directly out of any Purchaser's
operation of the Business after the Closing Date; and
(v) any and all Expenses incident to the foregoing.
(b) Sellers shall take and cause its Affiliates to take all reasonable
steps to mitigate any Loss upon becoming aware of any event which would
reasonably be expected to, or does, give rise thereto, including incurring costs
only to the minimum extent necessary to remedy the breach which gives rise to
the Loss.
10.4 Indemnification Procedures.
(a) If any of the Persons to be indemnified under this Article X has
suffered or incurred any Loss (regardless of any limitations provided in Section
10.5 hereof), the indemnified party shall so notify the party from whom
indemnification is sought promptly in writing describing such Loss, the amount
or estimated amount thereof, if known or reasonably capable of estimation, and
the method of computation of such Loss, all with reasonable particularity and
containing a reference to the provisions of this Agreement or any other
agreement, instrument or certificate delivered pursuant hereto in respect of
which such Loss shall have occurred. If any action at Law or suit in equity is
instituted by or against a third party with respect to which the indemnified
party intends to claim any Loss under this Article X, the indemnified party
shall promptly notify the indemnifying party of such action or suit and tender
to the indemnifying party the defense of such action or suit. A failure by the
indemnified party to give notice and to tender the defense of the action or suit
in a timely manner pursuant to this Section 10.4 shall not limit the obligations
of the indemnifying party under this Article X, except (i) to the extent such
indemnifying party is prejudiced thereby, (ii) to the extent expenses are
incurred during the period in which notice was not provided and (iii) as
provided by Section 10.1.
(b) If any claim, demand or liability is asserted by any third party
against any Person entitled to indemnification hereunder, the indemnifying party
shall be entitled to assume control of the defense of any actions or proceedings
brought against the indemnified party in respect of matters embraced by the
indemnity and thereafter shall not be liable for the expenses of the indemnified
party. If the indemnifying party fails to assume the defense of any such matter
within thirty (30) days after request by the indemnified party to assume such
defense, the indemnified party may assume control of the defense of the claim.
In all cases, the party without the right to control the defense of the
indemnifiable claim may participate in the defense at its own expense.
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Notwithstanding anything in this Section 10.4 to the contrary, neither the
indemnifying party nor the indemnified party shall, without the written consent
of the other party, settle or compromise any indemnifiable claim or permit a
default or consent to entry of any judgment unless the claimant and such party
provide to such other party an unqualified release from all liability in respect
of the indemnifiable claim. Notwithstanding the foregoing, if a settlement offer
solely for money damages is made by the applicable third party claimant, and the
indemnifying party notifies the indemnified party in writing of the indemnifying
party's willingness to accept the settlement offer and, subject to the
limitations of Sections 10.5, 10.6, and 10.7, pay the amount called for by such
offer, and the indemnified party declines to accept such offer, the indemnified
party may continue to contest such indemnifiable claim, free of any
participation by the indemnifying party, and the amount of any ultimate
liability with respect to such indemnifiable claim that the indemnifying party
has an obligation to pay hereunder shall be limited to the lesser of (A) the
amount of the settlement offer that the indemnified party declined to accept
plus the Losses of the indemnified party relating to such indemnifiable claim
through the date of its rejection of the settlement offer or (B) the aggregate
Losses of the indemnified party with respect to such indemnifiable claim. If the
indemnifying party makes any payment on any indemnifiable claim, the
indemnifying party shall be subrogated, to the extent of such payment, to all
rights and remedies of the indemnified party to any insurance benefits or other
claims of the indemnified party with respect to such indemnifiable claim.
10.5 Certain Limitations on Indemnification.
(a) Notwithstanding anything herein to the contrary, any Person making an
indemnification claim under Section 10.2(a)(i) or 10.3(a)(i) must give notice to
the indemnifying party of any such indemnification claim in writing in
reasonable detail prior to the expiration of the applicable Survival Period. Any
indemnification claim not made on or prior to that date will be irrevocably and
unconditionally released and waived.
(b) Notwithstanding anything herein to the contrary, an indemnifying party
shall not have any liability under Section 10.2(a)(i) or 10.3(a)(i) (as
applicable):
(i) with respect to any individual claim (or group of related claims
of the same Person having, in each case, substantially similar factual or
legal basis) for the breach of a representation or warranty, unless and
until the Losses claimed exceed $15,000 (the "De Minimis Amount");
(ii) unless and until the amount of the Losses to the indemnified
parties finally determined to arise thereunder based upon, related to or
resulting from the breach of all representations and warranties exceeds, in
the aggregate $1,000,000 (the "Deductible"), disregarding any individual
claim that does not exceed the De Minimis Amount, at which time such Losses
shall be recoverable from the first dollar of Loss; and
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(iii) with respect to any Losses of Purchaser that arise under or are
based upon, related to or resulting from the breach by any Seller of any
representation and warranty (including Section 5.8) set forth in this
Agreement other than Section 5.17 and 10.10, Purchaser's only recourse
shall be shall be the General Indemnity Escrow Fund, which shall serve as a
cap on all such Losses (such that Sellers shall have no liability to
Purchaser in excess of the funds held in such escrow) and shall remain in
escrow until fifteen (15) months after the Closing Date, with any remaining
funds in excess of $500,000 (such $500,000, the "Tax Escrow") being
disbursed to Sellers on the date that is fifteen (15) months after the
Closing Date; provided, however, that if Purchaser has one or more claims
pending in respect of (i) the breach of any representation or warranty
other than those contained in Section 5.17 or (ii) any other Losses for
which Sellers are required to indemnify Purchaser for pursuant to Section
10.2 on the date that is fifteen (15) months after the Closing Date, a
portion of any remaining General Indemnity Escrow Fund (not including the
Tax Escrow) equal to the reasonable amount of such claims (or, if the
reasonable amount of such claims exceeds the amount of the remaining
General Indemnity Escrow Fund, the remaining amount of such funds) shall be
retained by the Escrow Agent pending the resolution thereof. The Tax Escrow
shall remain in escrow until the third (3rd) anniversary of the Closing
Date to serve as the source of indemnification of Purchaser with respect to
any Losses that arise under or are based upon, related to or resulting from
the breach of any representation and warranty set forth in Section 5.8,
with any remaining General Indemnity Escrow Fund being disbursed to Sellers
on the third (3rd) anniversary of the Closing Date; provided, however, that
if Purchaser has one or more claims pending in respect of the breach of any
representation or warranty contained in Section 5.8 on the third (3rd)
anniversary of the Closing Date, a portion of any remaining Tax Escrow
equal to the reasonable amount of such claims (or, if the reasonable amount
of such claims exceeds the amount of the remaining Tax Escrow, the
remaining amount of such funds) shall be retained by the Escrow Agent
pending the resolution thereof. This Section 10.5(b)(iii) shall not in any
way limit the amount or time period for which Purchaser shall be entitled
to be indemnified by Sellers under Section 10.2 with respect to State Tax
Liabilities.
(c) No representation or warranty of Sellers contained herein shall be
deemed untrue or incorrect, and Sellers shall not be deemed to have breached a
representation or warranty, as a consequence of the existence of any fact,
circumstance or event of which (a) it is manifestly evident that such fact,
circumstance or event is disclosed in response to another representation or
warranty contained in this Agreement or (b) Purchaser is aware as of the Closing
Date.
(d) Purchaser shall not make any claim for indemnification under this
Article X in respect of any Losses that is taken into account in the calculation
of any adjustment to the Purchase Price pursuant to Section 3.4 and in respect
of any of Sellers' representation or warranty regarding Inventory to the extent
taken into account in the calculation of any adjustment to the Purchase Price
pursuant to Section 3.4.
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10.6 Calculation of Losses.
(a) The amount of any Losses for which indemnification is provided under
this Article X shall be net of any amounts actually recovered or recoverable by
the indemnified party under insurance policies or otherwise with respect to such
Losses (net of any Tax or expenses incurred in connection with such recovery).
(b) If the amount of any Loss for which indemnification is provided under
this Article X gives rise to a currently realizable Tax benefit (as defined
below) to the Indemnified Party making the claim, then the indemnity claim shall
be (i) increased to take account of any net Tax cost incurred by the indemnified
party arising from the receipt of indemnity payments hereunder (grossed up for
such increase) and (ii) reduced to take account of any net Tax benefit realized
by the indemnified party arising from the incurrence or payment of any such
Loss. To the extent such indemnity claim does not give rise to a currently
realizable Tax benefit, if the amount with respect to which any indemnity claim
is made gives rise to a subsequently realized Tax benefit to the indemnified
party that made the claim, such indemnified party shall refund to the
indemnifying party the amount of such Tax benefit (with and including any
gross-up payment made pursuant to this Section 10.6 with respect to such Tax
benefit) when, as and if realized (it being understood that such indemnified
party shall use its reasonable efforts to realize such Tax benefit). For
purposes of this Section 10.6, a "Tax benefit" means an amount by which the Tax
liability of the party (or group of corporations including the party) is
actually reduced (including by deduction, reduction of income by virtue of
increased tax basis or otherwise, entitlement to refund, credit or otherwise)
plus any related interest received from the relevant Tax Authority. In computing
the amount of any such Tax cost or Tax benefit, the indemnified party shall be
deemed to recognize all other items of income, gain, loss, deduction or credit
before recognizing any item arising from the receipt of any indemnity payment
hereunder or the incurrence or payment of any indemnified Loss. For purposes of
this Section 10.6, a Tax benefit is "currently realizable" to the extent that
such Tax benefit can be realized in the current taxable period or year or in any
Tax Return with respect thereto (including through a carryback to a prior
taxable period) or in any taxable period or year prior to the date of the
indemnity claim. The amount of any increase, reduction or payment hereunder
shall be adjusted to reflect any final determination (which shall include the
execution of Form 870-AD or successor form) with respect to the indemnified
party's liability for Taxes, and payments between the parties to this Agreement
to reflect such adjustment shall be made if necessary. Any indemnity payment
under this Article X shall be treated as an adjustment to the value of the asset
upon which the underlying claim was based, unless a final determination (which
shall include the execution of a Form 870-AD or successor form) with respect to
the indemnified party or any of its Affiliates causes any such payment not to be
treated as an adjustment to the value of the asset for United States federal
income tax purposes.
10.7 Characterization of Indemnity Payments. Sellers and Purchaser agree to
treat any indemnity payment made pursuant to this Article X as an adjustment to
the Purchase Price for federal, state, local and foreign income tax purposes.
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10.8 No Consequential Damages. Notwithstanding anything to the contrary
elsewhere in this Agreement, no party (or any of its Affiliates) shall, in any
event, be liable to any other party (or any of its Affiliates) for any
consequential, incidental, special or punitive damages of such other party (or
any of its Affiliates), including loss of future revenue, income or profits,
diminution of value or loss of business reputation or opportunity relating to
the breach or alleged breach hereof.
10.9 Exclusive Remedy. Subject to Section 11.4 hereof and except for common
law fraud in the inducement under which a common law court would abrogate this
Agreement and except as otherwise provided in Section 10.10, the sole and
exclusive remedy of Sellers and Purchaser for any breach or inaccuracy, or
alleged breach or inaccuracy, of any representation, warranty, covenant or
agreement made by Sellers or Purchaser shall be indemnification in accordance
with this Article X, which indemnification obligation shall be effective solely
upon the Closing. Subject to the exceptions set forth in the immediately
preceding sentence, in furtherance of the foregoing, the parties hereby waive,
to the fullest extent permitted by applicable Law, any and all other rights,
claims and causes of action (including rights of contributions, if any) known or
unknown, foreseen or unforeseen, which exist or may arise in the future, that it
may have against Sellers or any of its Affiliates, or Purchaser or any of its
Affiliates, as the case may be, arising under or based upon any federal, state
or local Law (including any such Law relating to environmental matters or
arising under or based upon any securities Law, common Law or otherwise).
10.10 Environmental Liabilities and the Environmental Indemnity Escrow
Fund.
(a) As used herein the following terms shall have the following meanings:
"Property" shall mean any property currently or formerly owned, leased or
used by any Seller.
"Remediation" shall mean all reasonably necessary actions to investigate,
monitor and/or cleanup, including, without limitation, the preliminary
assessment, site investigation, remedial investigation, remedial selection and
remedial action, in accordance with Environmental Laws.
"Pre-Existing Hazardous Materials" shall mean Hazardous Materials Released
prior to the Closing, including any migration or dispersal of such Hazardous
Materials.
(b) Purchaser shall be entitled to payment from the Environmental Indemnity
Escrow Fund pursuant to the Environmental Indemnity Escrow Agreement for all
Losses of Purchaser arising from: (i) the presence of Pre-Existing Hazardous
Materials on, at, under or migrating from the Property, including, without
limitation, all costs of Remediation of Hazardous Materials on, at, under or
migrating from any Property pursuant to Environmental Laws including Remediation
of Sellers' Properties to standards under Environmental Laws applicable to
non-residential use, whether such
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Remediation is voluntary or involuntary; (ii) any violation of Environmental
Laws that occurred prior to the Closing Date by any Seller or for which any
Seller has Liability; (iii) compliance with Environmental Laws at any property
to which any Seller sent materials for disposal or for which Seller has
Liability under Environmental Laws arising from an occurrence prior to the
Closing Date; and (iv) any and all Losses based upon, attributed to, or
resulting from a breach of Sections 5.17 or 7.16, (i) through (iv) collectively
"Environmental Liabilities". In the event that any of Sellers' Properties are
subject to ISRA, Purchaser may fund any financial assurance required by ISRA
from the Environmental Indemnity Escrow Fund as provided in the Environmental
Indemnity Escrow Agreement.
(c) With respect to any Environmental Liabilities that arise under or are
based upon, related to or resulting from Section 10.10, other than as set forth
in Sections 10.10(d) and (e), Purchaser's exclusive recourse shall be the
Environmental Indemnity Escrow Fund, which shall serve as an absolute cap on all
such Losses (such that Sellers shall have no liability to Purchaser in excess of
the funds held in such escrow) and, subject to the terms of the Environmental
Escrow Agreement, shall remain in escrow until the third (3rd) anniversary of
the Closing Date, with any remaining Environmental Indemnity Escrow Fund being
disbursed to Sellers on the third (3rd) anniversary of the Closing Date;
provided, however, that if Purchaser has one or more claims pending in respect
to Losses under Section 10.10 on the third (3rd) anniversary of the Closing
Date, a portion of any remaining Environmental Indemnity Escrow Fund equal to
the reasonable amount of such claims (or, if the reasonable amount of such
claims exceeds the amount of the remaining Environmental Indemnity Escrow Fund,
the remaining amount of such funds) shall be retained by the Escrow Agent
pending the resolution thereof. Notwithstanding anything contained in this
Agreement to the contrary, Purchaser's right to recovery from the Environmental
Indemnity Escrow Fund, including for breaches of the representations and
covenants, set forth at Sections 5.17 and 7.16, shall not be subject to Section
7.12, Section 10.2(b) and Sections 10.4 through 10.7 of this Agreement.
(d) In furtherance of the foregoing and subject to Section 10.10(b) and
(e), Purchaser hereby waives, to the fullest extent permitted by applicable Law,
any and all other rights, claims and causes of action (including rights of
contributions, if any) known or unknown, foreseen or unforeseen, which exist or
may arise in the future, that it may have against Sellers or any of their
Affiliates, arising under or based upon any Environmental Laws; provided,
however, that the foregoing shall not apply to those rights, claims and causes
of action for Environmental Liabilities (i) for which Sellers have received
notice prior to the Closing Date that relate to any property other than any
Owned Property or Leased Real Property or (ii) to the extent coverage may be
available under Sellers' Policies pursuant to this Section 10.10, in which case
the provisions contained in Section 10.10(e)(vii) shall apply.
(e) Sellers shall make available to Purchaser at premises of Sellers copies
and evidence of general liability insurance policies, excess liability insurance
policies and environmental liability policies ("Sellers' Policies") that are in
Sellers'
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possession or control and that were in effect at any time prior to the Closing
Date. Purchaser may at Purchaser's expense make and retain photocopies of
Sellers' Policies.
(ii) To the extent Purchaser's Environmental Liabilities exceed, or
are estimated to exceed, in the aggregate, the amount of the Environmental
Indemnity Escrow Deposit, Purchaser shall have the right to file claims
under Sellers' Policies to recover Environmental Liabilities and shall have
the right to pursue any rights, claims and causes of action of any Seller
against third parties, other than the Sellers.
(iii) In the event that Purchaser's Environmental Liabilities exceed
or are estimated to exceed the amount of the Environmental Indemnity Escrow
Deposit, Purchaser shall provide Sellers with written notice thereof
pursuant to Section 11.9 hereof and Sellers shall cooperate with Purchaser,
with respect to recovery of Purchaser's Environmental Liabilities pursuant
to Sellers' Policies and any rights, claims and causes of action against
any third party, which cooperation shall include using Sellers'
commercially reasonable efforts to supply relevant documents and
information and permitting Purchaser, at Purchaser's discretion, to pursue
at Purchaser's expense such insurance coverage or rights, claims, or causes
of action against third parties in the name of any Seller. Within thirty
(30) days of Sellers' receipt of Purchasers' notice pursuant to this
Section 10.10(e)(iii), Sellers shall provide Purchaser with written notice
of Sellers' representative for the purpose of cooperation pursuant to this
Section 10.10(e). In the event that Sellers (i) do not provide such notice
within thirty (30) days of Sellers' receipt of Purchaser's notice pursuant
to this Section 10.10(e) or (ii) in the event Sellers fail to continue to
diligently cooperate with Purchaser as provided herein after thirty (30)
days written notice and opportunity to cure, Purchaser shall be deemed to
be granted an irrevocable power of attorney to pursue such insurance and
any rights, claims and causes of action pursuant to the Power of Attorney,
substantially in the form attached hereto as Exhibit K, which shall be
executed at the Closing but shall not be exercised by Purchaser unless and
until the occurrence of (i) or (ii) in this sentence.
(iv) In the event Purchaser is successful in obtaining coverage under
Sellers' Policies pursuant to this Section 10.10(e), and in the event
Sellers are unable to recover, in part or in full, for other Seller
liabilities under Sellers' Policies as a result of payment of such
insurance proceeds to Purchaser, Purchaser agrees to indemnify and defend
Sellers for the unrecovered amount to the extent of such insurance proceeds
received by Purchaser.
(v) Purchaser shall be solely responsible, and shall indemnify and
hold Sellers harmless, for its own costs and all costs incurred by Sellers
or Sellers' representative in complying with Purchaser's requests for
information in connection with Purchaser's filing of claims under Sellers'
Policies or any demands, claims, or causes of action asserted by Purchaser
against any insurer or any third party in the name of any Seller.
66
(vi) Nothing in this Agreement shall prohibit Sellers from filing
claims against Sellers' Policies or prosecuting and settling such claims
without the prior consent of Purchaser, provided that Sellers shall provide
notice to Purchaser of any such claims and settlement and provided that
Sellers shall do nothing to impair Purchaser's rights under this Section
10.10(e), including, without limitation, by waiving or releasing such
rights in any settlement entered into by Sellers; provided, however, that
to the extent Sellers' recovery depletes coverage limits under Sellers'
Policies, that depletion shall not be deemed such a waiver or release of
Purchaser's rights.
(vii) As a condition of payment to Purchasers of proceeds from
Sellers' Policies, Purchaser shall irrevocably waive, to the fullest extent
permitted by applicable Law, any and all rights, claims and causes of
action (including rights of contributions, if any) known or unknown,
foreseen or unforeseen, which exist or may arise in the future, that it may
have against Sellers or any of their Affiliates, arising under or based
upon any federal, state or local Law, including any Environmental Laws,
relating to the same event or series of events giving rise to the claim for
which insurance proceeds are obtained. In the event Purchasers are
unsuccessful in obtaining proceeds from Sellers' Policies for a claim,
Purchaser shall irrevocably waive, to the fullest extent permitted by
applicable Law, subject to Section 10.10(d)(i) any and all rights, claims
and causes of action (including rights of contributions, if any) known or
unknown, foreseen or unforeseen, which exist or may arise in the future,
that it may have against Sellers or any of their Affiliates, arising under
or based upon any federal, state or local Law, including any Environmental
Laws, relating to the same event or series of events giving rise to the
claim.
(viii) Sellers make no representation or warranty regarding whether
and to what extent coverage under Sellers' Policies may exist or whether
and to what extent third-party claims may exist. Nothing in this Agreement
shall make Sellers liable to Purchaser for any provision of self insurance,
copayment, or deductible under any Sellers' Policies. Subject to Section
10.10(e)(vi), nothing in this Agreement shall make Sellers liable to
Purchaser for any defenses to coverage asserted by any insurer or any third
party.
ARTICLE XI
MISCELLANEOUS
11.1 Payment of Sales, Use or Similar Taxes.
(a) Each of Purchaser on one hand and Sellers on the other hand shall be
responsible for (and shall indemnify and hold harmless the other and their
respective directors, officers, employees, Affiliates, agents, successors and
permitted assigns against) 50% of any sales Taxes applicable to the Purchased
Assets and for all other applicable sales, use, stamp, documentary, filing,
recording, transfer or similar fees or
67
Taxes or governmental charges (including real property transfer taxes, UCC-3
filing fees, FAA, ICC, DOT, real estate and motor vehicle registration, title
recording or filing fees and other amounts payable in respect of transfer
filings) in connection with the sale of the Purchased Assets contemplated by
this Agreement (other than Taxes measured by or with respect to income
(including capital gains) imposed on Sellers or its Affiliates). Sellers shall
file all necessary documents (including all Tax Returns) with respect to all
such amounts in a timely manner.
(b) For purposes of clause (b) of the definition of Excluded Liabilities,
in the case of a taxable period that includes the Closing Date, Taxes relating
to the Purchased Assets shall be allocated to the periods before and after the
Closing Date as follows: (i) in the case of Taxes such as property Taxes, such
Taxes shall be allocated to periods before and after the Closing Date on a per
diem basis and the Purchase Price adjusted accordingly and (ii) in the case of
Taxes based on net or gross income, or transactional taxes such as sales Taxes,
the portion of such Taxes allocable to the period before the Closing Date shall
be computed on the assumption that the taxable period ended on the Closing Date.
11.2 Insurance. If on or after the date hereof and on or prior to the
Closing Date any of the Purchased Assets are damaged by fire or other casualty,
Purchaser shall be entitled to the receipt of any insurance proceeds received or
the right to receive insurance proceeds in connection therewith, and Purchaser
shall be entitled to any condemnation awards, or insurance proceeds received or
the right to receive insurance proceeds in connection with any Owned Property or
Leased Real Property condemned or to which a casualty has occurred on or after
the date hereof and on or prior to the Closing Date if the Closing occurs, and
Purchaser shall receive a credit against the cash portion of the Purchase Price
of an amount equal to the deductible or retention amount of the insurance policy
maintained by the applicable Seller covering such occurrence.
11.3 Expenses. Except as otherwise provided in this Agreement, each of
Sellers and Purchaser shall bear its own expenses incurred in connection with
the negotiation and execution of this Agreement and each other agreement,
document and instrument contemplated by this Agreement and the consummation of
the transactions contemplated hereby and thereby. Purchaser shall bear the
filing fees associated with the HSR Act filings.
11.4 Injunctive Relief. Damages at law may be an inadequate remedy for the
breach of any of the covenants, promises and agreements contained in this
Agreement, and, accordingly, any party hereto shall be entitled to injunctive
relief with respect to any such breach, including without limitation specific
performance of such covenants, promises or agreements or an order enjoining a
party from any threatened, or from the continuation of any actual, breach of the
covenants, promises or agreements contained in this Agreement. The rights set
forth in this Section 11.4 shall be in addition to any other rights which a
Party may have at law or in equity pursuant to this Agreement.
68
11.5 Submission to Jurisdiction; Consent to Service of Process.
(a) Without limiting any party's right to appeal any order of the
Bankruptcy Court, (i) the Bankruptcy Court shall retain exclusive jurisdiction
to enforce the terms of this Agreement and to decide any claims or disputes
which may arise or result from, or be connected with, this Agreement, any breach
or default hereunder, or the transactions contemplated hereby, and (ii) any and
all proceedings related to the foregoing shall be filed and maintained only in
the Bankruptcy Court, and the parties hereby consent to and submit to the
jurisdiction and venue of the Bankruptcy Court and shall receive notices at such
locations as indicated in Section 11.9 hereof; provided, however, that if the
Bankruptcy Case has closed, the parties agree to unconditionally and irrevocably
submit to the exclusive jurisdiction of the Commercial Division, Civil Branch of
the Supreme Court of the State of New York sitting in New York County and any
appellate court from any thereof, for the resolution of any such claim or
dispute. The parties hereby irrevocably waive, to the fullest extent permitted
by applicable law, any objection which they may now or hereafter have to the
laying of venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby consents to process being served by
any party to this Agreement in any suit, action or proceeding by delivery of a
copy thereof in accordance with the provisions of Section 11.9.
11.6 Waiver of Right to Trial by Jury. Each party to this Agreement waives
any right to trial by jury in any action, matter or proceeding regarding this
Agreement or any provision hereof.
11.7 Entire Agreement; Amendments and Waivers. This Agreement (including
the schedules and exhibits hereto) and the Confidentiality Agreement represent
the entire understanding and agreement between the parties hereto with respect
to the subject matter hereof. This Agreement can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by the party against whom
enforcement of any such amendment, supplement, modification or waiver is sought.
No action taken pursuant to this Agreement shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be construed
as a further or continuing waiver of such breach or as a waiver of any other or
subsequent breach. No failure on the part of any party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy.
69
11.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and performed in such State.
11.9 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given (i) when delivered personally by
hand (with written confirmation of receipt), (ii) when sent by facsimile (with
written confirmation of transmission) or (iii) one Business Day following the
day sent by overnight courier (with written confirmation of receipt), in each
case at the following addresses and facsimile numbers (or to such other address
or facsimile number as a party may have specified by notice given to the other
party pursuant to this provision):
c/o Agway, Inc.
PO Box 4933
Syracuse, New York 13221
Facsimile: (315) 449-6435
Attention: Karen Ohliger
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Facsimile: (212) 310-8007
Attention: David E. Zeltner, Esq.
If to Purchaser, to:
Suburban Propane, L.P.
240 Route 10 West
Whippany, New Jersey 07981
Facsimile: (973) 503-9184
Attention: Janice Meola, General Counsel
With a copy to:
Cole, Schotz, Meisel, Forman & Leonard, P.A.
Court Plaza North
25 Main Street
Hackensack, New Jersey 07601
Facsimile: (201) 678-6262
Attention: Michael D. Sirota, Esq.
11.10 Severability. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any law or public policy,
all other terms or provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in
70
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal, or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.
11.11 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity not a party to this
Agreement except as provided below. No assignment of this Agreement or of any
rights or obligations hereunder may be made by either Sellers or Purchaser (by
operation of law or otherwise) without the prior written consent of the other
parties hereto and any attempted assignment without the required consents shall
be void; provided, however, Purchaser may assign this Agreement and any or all
rights or obligations hereunder (including, without limitation, Purchaser's
rights to purchase the Purchased Assets (in whole or in part) or Purchaser's
rights to seek indemnification hereunder) to any one or more Affiliates of
Purchaser, but Purchaser shall be jointly and severally liable with such
Affiliate or Affiliates in respect of the performance of Purchaser's obligations
hereunder. No assignment of any obligations hereunder shall relieve the parties
hereto of any such obligations. Upon any such permitted assignment, the
references in this Agreement to Purchaser shall also apply to any such assignee
unless the context otherwise requires.
11.12 Non-Recourse. No past, present or future director, officer, employee,
incorporator, member, partner or stockholder of Sellers shall have any liability
for any obligations or liabilities of Sellers under this Agreement or the
Sellers Documents of or for any claim based on, in respect of, or by reason of,
the transactions contemplated hereby and thereby.
11.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[Remainder of this page intentionally left blank]
71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
SUBURBAN PROPANE, L.P.
By:
-------------------------------------
Name: Michael J. Dunn, Jr.
Title: Senior Vice President -
Corporate Development
AGWAY ENERGY PRODUCTS, LLC
By:
-------------------------------------
Name: Michael R. Hopsicker
Title: President and Chief Executive Officer
AGWAY ENERGY SERVICES, INC.
By:
-------------------------------------
Name: Michael R. Hopsicker
Title: President and Chief Executive Officer
72
AGWAY ENERGY SERVICES PA, INC.
By:
-------------------------------------
Name: Michael R. Hopsicker
Title: President and Chief Executive Officer
AGWAY, INC., solely for purposes of Sections 2.5(b),
7.13 and 7.19
By:
-------------------------------------
Name: Michael R. Hopsicker
Title: Chief Executive Officer
73
Exhibit A
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF NEW YORK
- -------------------------------------------
In re: : (Hon. Stephen D. Gerling)
:
: Chapter 11
:
AGWAY, INC., : Case No. 02-65872-6-SDG
:
Debtor-in-Possession. :
:
- -------------------------------------------
ORDER PURSUANT TO 11 U.S.C. ss.ss. 105, 363, 365 and 1146(c):
(i) APPROVING ASSET PURCHASE AGREEMENT; (ii) AUTHORIZING
THE DEBTOR TO (A) CAUSE AGWAY PRODUCTS, LLC, AGWAY ENERGY
SERVICES, INC., AND AGWAY SERVICES PA, INC. TO SELL
SUBSTANTIALLY ALL OF THEIR ASSETS, (B) TO ASSUME AND ASSIGN CERTAIN
EXECUTORY CONTRACTS AND UNEXPIRED LEASES,
AND (C) TO SELL CERTAIN PROPERTY TO SUBURBAN
PROPANE, L.P. OR ITS DESIGNEE (OR TO THE SUCCESSFUL
BIDDER) AND (iii) GRANTING OTHER RELATED RELIEF
Upon the motion (the "Motion") of Agway, Inc., ("Agway" or the "Debtor")
filed with this Court on November __, 2003, pursuant to 11 U.S.C. ss.ss. 105,
363(b), (f), (m) and (n), 365 and 1146(c) for an Order authorizing the Debtor to
cause Agway Products, LLC, Agway Energy Services, Inc., and Agway Services PA,
Inc. (collectively, the "Sellers") to sell substantially all of their assets,
(b) assume and assign certain executory contracts and unexpired leases, and (c)
sell certain real property (collectively, the "Purchased Assets") to Suburban
Propane, L.P. or its designee ("Suburban") (or to the successful bidder), and
granting other related relief; and it appearing that an Auction was held
pursuant to this Court's order dated November __, 2003 (the "Procedures Order")
and ________ having presented the highest and best bid for the Purchased Assets
as more particularly identified in Schedule 2.1 of the Asset Purchase Agreement
by and among Agway, the Sellers and _________ dated as of November __, 2003 (the
"Agreement"), a
true copy of which is attached hereto as Exhibit "A"; and upon
the record of the sale hearing (the "Sale Hearing"); and it appearing that the
relief sought by the Debtor is necessary and in the best interests of the
Debtor, its creditors and estate and other parties in interest; and due
deliberation having been had; and sufficient cause appearing therefor;
THE COURT HEREBY FINDS AND DETERMINES that:(1)
A. On October 1, 2002 (the "Commencement Date"), the Debtor and five
of its subsidiaries (collectively, the "Debtors") commenced voluntary cases
under chapter 11 of Title 11, United States Code (the "Bankruptcy Code").
B. Since the Commencement Date, the Debtors have continued in
possession and management of their businesses and properties as
debtors-in-possession pursuant to Sections 1107(a) and 1108 of the
Bankruptcy Code.
C. No trustee or examiner has been appointed in this case.
D. The Debtor owns all of the equity interests in the Sellers.
E. The Court has jurisdiction over the Motion pursuant to 28 U.S.C.
ss.ss. 157 and 1334. This matter is a core proceeding pursuant to 28 U.S.C.
ss. 157(b)(2)(A), (N) and (O). Venue of this case and the Motion in this
District is proper under 28 U.S.C. ss.ss. 1408 and 1409.
F. The statutory predicates for the relief sought in the Motion are
Sections 105(a), 363(b), (f), (m) and (n), 365(a), (c) and (f), and 1146(c)
of the Bankruptcy Code, and Fed. R. Bankr. P. 2002, 6004 and 9014.
- ----------
1 Findings of fact shall be construed as conclusions of law and conclusions
of law shall be construed as findings of fact when appropriate. See Fed. R.
Bankr. P. 7052.
2
G. All capitalized terms in this Order shall have the same definition
as in the Agreement unless expressly stated otherwise.
H. As evidenced by the certificate of service previously filed with
the Court, and based on the representations of counsel at the Sale Hearing:
(i) proper, timely, adequate and sufficient notice of the Motion and the
Sale Hearing has been provided in accordance with the Procedures Order;
(ii) such notice was good, sufficient and appropriate under the particular
circumstances; and (iii) no other or further notice of the Motion, the Sale
Hearing or the entry of this Order is or shall be required.
I. A reasonable opportunity to object or be heard regarding the relief
requested in the Motion has been afforded to all interested persons and
entities.
J. As evidenced by the record at the Sale Hearing, the Debtor and the
Sellers have marketed the Purchased Assets and conducted the sale process
in compliance with the Procedures Order, the Auction (as defined in the
Procedures Order) was duly noticed and conducted in a noncollusive, fair,
and good faith manner, and a reasonable opportunity was provided to any
interested party to make a higher or better offer for the Purchased Assets.
K. _________'s offer is memorialized in the Agreement, which provides
for the sale and transfer of the Purchased Assets to _________. Such offer
is the highest and best offer received for the assumption, assignment and
sale of the Purchased Assets.
L. The purchase price to be paid by __________ is fair and constitutes
reasonably equivalent value and reasonable market value for the Purchased
Assets.
M. ___________ is a purchaser in good faith with respect to the
Purchased Assets as that term is used in Section 363(m) of the Bankruptcy
Code. The Agreement
3
was negotiated, proposed and entered into by the parties in good faith,
from arm's length bargaining positions and without collusion and,
therefore, __________ is entitled to the protections of Section 363(m) of
the Bankruptcy Code with respect to the Purchased Assets. Neither the
Debtor nor ___________ has engaged in any conduct that would cause or
permit the Agreement to be voided under Section 363(n) of the Bankruptcy
Code.
N. The Debtor has articulated compelling circumstances and sound
business reasons for causing the Sellers to consummate the Agreement and to
sell the Purchased Assets as set forth in the Motion outside of a plan of
reorganization, and it is a reasonable exercise of the Debtor's business
judgment to cause the Sellers to consummate the transactions contemplated
by the Agreement.
O. The Debtor has full corporate power and authority to cause the
Sellers to execute the Agreement and all other documents contemplated
thereby, and to sell the Purchased Assets to ____________.
P. The Sellers are (and as to certain assets, Agway is) the sole and
lawful owners of the Purchased Assets. The assumption, assignment and sale
of the Purchased Assets to ___________ is and will be a legal, valid and
effective transfer of the Purchased Assets, and will vest _________ with
all right, title and interest in and to the Purchased Assets, free and
clear of all liens, security interests, encumbrances, claims, and interests
which have or could have been asserted by Agway or its creditors in
connection with its chapter 11 case.
4
Q. No consents or approvals, other than those expressly provided for
in the Agreement or expressly set forth herein, are required for the Debtor
or Sellers to consummate the transactions contemplated in the Agreement.
R. Time is of the essence in closing the transaction and the Debtor,
Sellers and _________ intend to close the assumption, assignment and sale
of the Purchased Assets to _________ as soon as possible.
S. Adequate assurance exists that __________ will fully perform all
future obligations under the executory contracts and unexpired leases being
assumed and assigned to __________ under the Agreement (collectively, the
"Assigned Agreements").
ACCORDINGLY, IT IS HEREBY ORDERED on this _____ day of December, 2003, as
follows:
1. The Motion is hereby granted. All objections to the Motion or the
relief requested therein that have not been withdrawn, waived, or settled,
and all reservations of rights included in such objections, are overruled
on the merits and denied.
2. The Agreement and all of the transactions contemplated thereby are
approved.
3. Pursuant to Section 363(b) of the Bankruptcy Code, the Debtor is
authorized and directed to enter into, perform under, comply with,
implement and to take all other action as is necessary to consummate the
terms of the Agreement including, but not limited to, execute and deliver
all additional agreements, instruments and documents that _________ deems
necessary or appropriate to the performance of the obligations as
contemplated by the Agreement, all without any further corporate
authorization or Order of this Court.
5
4. Pursuant to Sections 365(b), (c) and (f), the Debtors and the
Sellers are hereby authorized to assume and assign the Assigned Agreements
to __________. Any pre-Closing defaults under the Assigned Agreements shall
be cured by the Debtor.
5. Pursuant to Sections 105 and 363(f) of the Bankruptcy Code, the
Purchased Assets shall be assigned, sold and transferred to __________ and,
upon the Closing Date (as defined in the Agreement), shall be free and
clear of all liens, security interests, encumbrances, claims and interests
("Liens and Claims") which have or could have been asserted by Agway or its
creditors in Agway's Chapter 11 case, if any, with all such Liens and
Claims of any kind or nature whatsoever to attach to the net proceeds that
Agway realizes from the sale (after satisfaction of all of the Sellers'
collective indebtedness) in the order of their priority, with the same
validity, force and effect that they now have as against the Purchased
Assets, subject to any claims and defenses the Debtor may possess with
respect thereto.
6. The assumption, assignment, sale and transfer of the Purchased
Assets to ________ pursuant to the Agreement constitutes a legal, valid and
effective transfer of the Purchased Assets and shall vest ________ with all
right, title and interest of the Sellers in and to the Purchased Assets
free and clear of all Liens and Claims which have or could have been
asserted by Agway or its creditors in connection with its chapter 11 case.
7. Pursuant to sections 105(a) and 1146(c) of the Bankruptcy Code, the
transfer of the Purchased Assets is not subject to taxation under any
federal, state, local, municipal or other law imposing or purporting to
impose a stamp, transfer, recording or
6
any other similar tax on any of the Debtor's transfers or conveyances of
the Purchased Assets, which includes real estate, personal property, and
any other assets.
8. This Order and the Agreement shall be binding in all respects upon,
and shall inure to the benefit of, Agway, its estate, its creditors and
equity interest holders, the Sellers, and _________, and their respective
affiliates, successors and permitted assigns including, without limitation,
any chapter 11 or 7 trustee hereinafter appointed for the Debtor. Nothing
contained in any chapter 11 plan confirmed in this case or in the order
confirming any such chapter 11 plan shall conflict with or derogate from
the provisions of the Agreement or this Order.
9. Consummation of the Agreement and the transactions contemplated
therein and thereby do not effect a de facto merger or consolidation of the
Debtor and the Sellers with _________. ________ is not the alter ego of, a
successor-in-interest to, or a continuation of the Debtor or the Sellers,
and shall not be liable for the Debtor's and Sellers' debts and
obligations, except as otherwise explicitly provided in the Agreement.
10. All entities who may be in possession of some or all of the
Purchased Assets to be conveyed to ___________ on the Closing Date are
hereby directed to surrender possession of the Purchased Assets to
__________ on the Closing Date.
11. The Agreement is not a sub rosa chapter 11 plan for which approval
has been sought without the protections that a disclosure statement would
afford, and is not in violation of creditors' and equity security interest
holders' voting rights.
12. The purchase by _______ is a purchase in good faith for fair value
within the meaning of Section 363(m) of the Bankruptcy Code, and _______ is
entitled to the protection of Section 363(m) of the Bankruptcy Code if this
Order or any authorization
7
contained herein is reversed or modified on appeal. Accordingly, the
reversal, modification or appeal of the authorization provided herein to
consummate the Agreement and to sell the Purchased Assets shall not affect
the validity of the assumption, assignment and sale of the Purchased Assets
to _________, unless such authorization is duly stayed pending such appeal
before the Closing Date.
13. The sale approved by this Order is not subject to avoidance
pursuant to Section 363(n) of the Bankruptcy Code. The consideration
provided by __________ for the Purchased Assets under the Agreement
constitutes reasonably equivalent value and fair consideration.
14. On the Closing Date, each of the Debtor's creditors is authorized
and directed to execute such documents and take all other actions as may be
necessary to release its interest in the Purchased Assets, if any, as such
interests may have been recorded or may otherwise exist.
15. Regardless of whether the Debtor's creditors execute the releases
set forth in the above paragraph, this Order (a) shall be effective as a
determination that, on the Closing Date, all liens, claims, security
interests and interests of any kind or nature whatsoever existing with
respect to the Seller and the Purchased Assets prior to the Closing have
been unconditionally released, discharged and terminated, and that the
conveyances described herein have been effected, and (b) shall be binding
upon and shall govern the acts of all entities including without
limitation, all filing agents, filing officers, title agents, title
companies, recorders of mortgages, recorders of deeds, registrars of deeds,
administrative agencies, governmental departments, secretaries of state,
federal, state, and local officials, and all other persons and entities who
may be required by
8
operation of law, the duties of their office, or contract, to accept, file,
register or otherwise record or release any documents or instruments, or
who may be required to report or insure any title or state of title in or
to any of the Purchased Assets.
16. The failure specifically to include any particular provisions of
the Agreement in this Order shall not diminish or impair the effectiveness
of such provision, it being the intent of the Court that the Agreement be
authorized and approved in its entirety.
17. The Agreement and any related agreements, documents or instruments
may be modified, amended or supplemented by the parties thereto and in
accordance with the terms hereof, without further order of the Court,
provided that any such modification, amendment, or supplement does not have
a material adverse effect on the Debtor's estate.
18. As provided by Fed. R. Bankr. P. 6004(g), 6006(d) and 7062, this
Order shall be effective and enforceable immediately upon its entry.
19. The provisions of this Order are non-severable and mutually
dependent.
20. This Court shall retain exclusive jurisdiction to enforce and
implement the terms and provisions of, and to resolve any dispute(s)
concerning, this Order, the Agreement, all amendments thereto, each of the
agreements, documents and instruments executed in connection therewith, and
the rights and duties of the parties thereunder including, but not limited
to, all issues and disputes arising in connection with the relief
authorized herein, inclusive of those concerning the transfer of the
Purchased Assets free and clear of Liens and Claims.
__________________________________
HON. STEPHEN D. GERLING, U.S.B.J.
9
Exhibit B
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF NEW YORK
- ---------------------------------------------
In re: : (Hon. Stephen D. Gerling)
:
: Chapter 11
:
AGWAY, INC., : Case No. 02-65872-6-SDG
:
Debtor-in-Possession. :
:
- ---------------------------------------------
ORDER: (A) AUTHORIZING AND SCHEDULING AN AUCTION
FOR THE SALE OF SUBSTANTIALLY ALL OF THE ASSETS OF
AGWAY ENERGY PRODUCTS, LLC, AGWAY ENERGY SERVICES, INC.
AND AGWAY SERVICES PA, INC. TO SUBURBAN PROPANE, L.P.,
SUBJECT TO HIGHER OR BETTER OFFERS (B) Approving The
Terms And Conditions Of Such Auction, Including
Bidding Procedures And, Under Certain Circumstances, Termination
Payments to Suburban, (C) Establishing Date
And Time For Sale Hearing To Consider Approval Of
Proposed Sale AND (D) Approving Form, Manner And
Sufficiency Of Notice Of the (i) Auction And Sale Hearing
and (ii) Debtor's Proposed Assumption and Assignment
of Certain Executory Contracts and Unexpired Leases
Upon the motion of Agway, Inc. (the "Debtor") for orders: (A)
Authorizing And Scheduling An Auction For the Sale Of Substantially All of the
Assets of Agway Energy Products, LLC, Agway Energy Services, Inc. And Agway
Energy Services PA., Inc. (collectively, "Sellers") to Suburban Propane, L.P.
("Suburban") subject to higher or better offers, (B) Approving The Terms And
Conditions Of Such Auction, Including Bidding Procedures And, Under Certain
Circumstances, Termination Payments to Suburban, (C) Establishing Date And Time
For Sale Hearing To Consider Approval Of Proposed Sale (D) Approving Form,
Manner And Sufficiency Of Notice Of the (i) Auction And Sale Hearing and (ii)
Debtor's Proposed Assumption and Assignment to Suburban (or other successful
bidder) of
Certain Executory Contracts and Unexpired Leases, (E) Authorizing Debtor To
Assume And Assign Certain Executory Contracts And Unexpired Leases, (F)
Authorizing Debtor to Assign and Transfer certain Real Property (as defined in
the Motion), (G) Approving the Asset Purchase Agreement with Suburban, or with
the successful bidder, and (H) Granting Other Related Relief (the "Motion"); and
it appearing that good and sufficient notice of the Motion was provided to all
creditors and parties-in-interest as evidenced by the affidavit of service filed
with the Court; and the Court having held an interim hearing on November 20,
2003 (the "Hearing") in respect of the relief requested pursuant to the Motion
(as described at items (A) - (D) above) (the "Preliminary Relief"), and having
considered the pleadings in support of the Motion, the opposition thereto, if
any, and the oral arguments of counsel, if any, at the Hearing; and it appearing
that entry of this Order is in the best interests of the Debtor, its estate and
all parties-in-interest; and it appearing that the Court has jurisdiction over
the matter; and upon the Motion, the record of the Hearing and all other
proceedings had before the Court; and after due deliberation and good cause
appearing therefor, it is hereby
ORDERED as follows:
1. For the purposes set forth herein, the Debtor is hereby authorized to
execute and to cause Sellers to execute the "stalking horse" Asset Purchase
Agreement with Suburban, in substantially the form attached as Exhibit "A" to
the Motion (the "Suburban Agreement"), for the sale of substantially all of the
Sellers' assets, and to enter into certain other related transactions, all of
which are more particularly described in the Suburban Agreement, which, except
as expressly provided herein, shall be subject to further approval of this Court
at the Sale Hearing (as defined below).
2. The Debtor and Sellers are hereby authorized to agree to an expense
reimbursement in the amount of $3,675,000 (the "Expense Reimbursement") and a
break-up fee
2
in the amount of $5,000,000 (the "Breakup Fee") in favor of Suburban
(collectively, the "Termination Payments"). The Debtor and Sellers shall pay the
Breakup Fee to Suburban, in the event that the Debtor and the Sellers consummate
an Alternative Transaction (as defined in Section 7.5 of the Suburban
Agreement), in cash, concurrently with the closing on the Alternative
Transaction. The Sellers shall pay the Expense Reimbursement, in accordance with
the provisions of Section 4.7(b) of the Suburban Agreement within five (5) days
of written notice thereof from Suburban. To the extent payable before
confirmation of the Debtor's plan of reorganization in accordance with the
preceding sentence, the Termination Payments shall constitute a super-priority
administrative expense of the Debtor's estate pursuant to Section 364(c) of the
Bankruptcy Code, with priority over any and all administrative expenses of the
kind described in sections 503(b), 506(c), 507(a) or 507(b) of the Bankruptcy
Code.
3. The Debtor and Sellers are authorized to conduct an auction ("Auction")
for the sale of the purchased assets at the United States Bankruptcy Court, 10
Broad Street, Utica, New York, on December 20, 2003 at 2:00 p.m. (EST). The
Auction shall be conducted on the following terms and conditions (the "Bidding
Procedures"):
(a) The Termination Payments authorized by the Suburban Agreement
shall not be applicable to any bidders other than Suburban.
(b) In order to bid, a potential bidder must (i) submit to Debtor's
counsel a written irrevocable offer for the purchased assets that (as
determined by the Debtor and the Sellers, in consultation with the official
committee of unsecured creditors (the "Creditors' Committee")) constitutes
a higher or better bid, in view of the purchase price offered, the
existence of any proposed holdbacks, escrows or indemnification provisions,
the overall terms and conditions of the proposed contract, and after taking
into account the Termination Payments that may be triggered under the
Suburban Agreement and (ii) deliver an earnest money deposit to Debtor's
counsel of no less than $10,500,000.00 (the "Deposit") in the form of a
certified check or wire transfer payable to the trust account of Debtor's
counsel at least three (3) business days before the Auction (as defined
below) (the "Bid Deadline"). The bid must identify the bidder
3
and contain such documents and information so as to establish that the
bidder can pay the purchase price at closing.
(c) Bids must not be subject to financing, environmental, due
diligence or any other contingencies not provided for in the Suburban
Agreement.
(d) Only those bids that meet the requirements of the preceding three
(3) subparagraphs will be considered a "Qualified Bid." For all purposes
herein, Suburban's bid to acquire the purchased assets pursuant to the
Suburban Agreement shall constitute a Qualified Bid.
(e) If a Qualified Bid (other than Suburban's) is received by the Bid
Deadline, the Debtor and the Sellers shall conduct the Auction for the sale
of the purchased assets in this Court, on the 18th day of December, 2003,
at 2:00 p.m. If no Qualified Bids are received by the Bid Deadline, then
the Auction will not be held, Suburban will be deemed to be the successful
bidder, the Suburban Agreement will constitute the Successful Bid (as
defined below), and at the hearing held to request approval of the proposed
sale to Suburban, (the "Sale Hearing"), the Debtor will seek approval of
and authority to consummate the transactions contemplated by the Suburban
Agreement.
(f) Only bidders who have submitted a Qualified Bid ("Qualified
Bidders") will be eligible to participate at the Auction. Only the
authorized representatives of each of the Qualified Bidders, the Creditors'
Committee Suburban, the Debtor, and the Sellers shall be permitted to
attend the Auction.
(g) Bidding at the Auction shall start at the purchase price stated in
the highest or otherwise best Qualified Bid, as determined by the Debtor
and the Sellers, in consultation with the Creditors' Committee and as
announced to all Qualified Bidders before the commencement of the Auction.
At the Auction, Qualified Bidders may improve their bids in increments of
$1,000,000.00. Suburban shall be entitled to bid-in all or any part of the
Termination Payments at the Auction. Should overbidding occur, Suburban
shall have the right, but not the obligation, to participate in the bidding
and to be approved as the Successful Bidder (as defined below) at the Sale
Hearing based on any such subsequent successful overbid. The bidding shall
be continuous and competitive and shall not end until all bidders have
submitted their last and best offers.
(h) At the conclusion of the Auction, if any, the Debtor and the
Sellers will announce the highest or best Qualified Bid (the "Successful
Bid").
4
(i) All Deposits shall be held by Debtor's counsel in an
interest-bearing bank account (assuming the bidder provides a Tax ID
number), with interest for the account(s) of the bidder(s). Within two (2)
business days after the Auction, Deposits (plus accrued interest, if any)
shall be returned to all bidders except the bidder that submitted the
Successful Bid (the "Successful Bidder"). The Successful Bidder's Deposit
shall be held until the closing on the sale of the purchased assets and
applied (plus accrued interest, if any) in accordance with the Successful
Bid.
THE FAILURE OF ANY BIDDER TO COMPLY WITH THESE REQUIREMENTS SHALL DISQUALIFY THE
BIDDER FROM PARTICIPATION IN THE AUCTION.
4. Pursuant to Bankruptcy Rule 2002, notice of the proposed Auction and
Sale Hearing in the form annexed hereto as Exhibit "A," shall be served on or
prior to [insert date], by facsimile transmission or overnight delivery, where
possible, on all parties who have made written expressions of interest in
acquiring the Sale Assets within six (6) months prior to the date of this
Procedures Order, and by first class mail on or prior to [insert date], on (i)
the United States Trustee, (ii) the attorneys for the Debtor's postpetition
lenders, (iii) the attorneys for the Creditors' Committee, (iv) the attorneys
for the Retiree Committee, (v) all nondebtor contracting parties with respect to
the Assigned Agreements, (vi) all appropriate federal, state and local taxing
and non-taxing authorities, (vii) all known persons holding a lien on any of the
Sale Assets, and (viii) all parties having filed a notice of appearance in the
Debtor's chapter 11 case pursuant to Bankruptcy Rule 2002, and shall constitute
good and sufficient notice of the Sale Transaction, Auction and Sale Hearing.
5. Pursuant to Bankruptcy Rule 2002, notice of the proposed assumption and
assignment of the assigned agreements, in the form annexed hereto as Exhibit "B"
which shall reflect the Cure Amounts that Agway believes must be paid to cure
all defaults under the assigned agreements, shall be served on or prior to
[insert date], to all counterparties to the
5
assigned agreements, and shall constitute good and sufficient notice of the
Debtor's intent to assume and assign certain executory contracts and unexpired
leases.
6. Pursuant to Bankruptcy Rule 2002(1), Seller is authorized to publish, at
least seven (7) days prior to the Auction, Notice of the Auction and Sale
Hearing, once, in the form annexed hereto as Exhibit "A," in each of the
Syracuse Post-Standard and the national editions of the New York Times and the
Wall Street Journal.
7. Pursuant to Bankruptcy Rule 2002(a)(2), (a) the Sale Hearing shall be
held on December 18, 2003 in this Court, 10 Broad Street, Utica, New York, at
2:00 p.m. (EST), and (b) objections to approval of the relief requested in the
Sale Motion (other than the Preliminary Relief provided herein), if any, shall
be in writing, shall state the name of the objecting party, shall state with
particularity the reasons and basis for the objection, and shall be filed with
the Court and served upon (i) the attorneys for the Debtors, Weil, Gotshal &
Manges LLP, 767 Fifth Avenue, New York, New York 10153 (Attn: Marvin E. Jacob,
Esq. and Judy G. Z. Liu, Esq.) and Menter, Rudin & Trivelpiece, P.C., 500 South
Salina Street, Suite 500, Syracuse, New York 13202 (Attn: Jeff Dove, Esq.); (ii)
the attorneys for the Debtor's postpetition lenders, Paul, Hastings, Janofsky &
Walker LLP, 1055 Washington Boulevard, Stamford, Connecticut 06901 (Attn: Leslie
A. Plaskon, Esq. and W. Andrew P. Logan, Esq.); (iii) the attorneys for the
Creditors' Committee, Pachulski, Stang, Ziehl, Young Jones & Weintraub P.C., 461
Fifth Avenue, 25th Floor, New York, New York 10017-6234 (Attn: William P.
Weintraub, Esq. and Robert J. Feinstein, Esq.); (iv) the attorneys for Suburban,
Cole, Schotz, Meisel, Forman & Leonard, P.A., Court Plaza North, 25 Main Street,
Hackensack, New Jersey 07601 (Attn: Michael D. Sirota, Esq.); and (v) the Office
of the United States Trustee, 10 Broad Street, Utica,
6
New York 13502 (Attn: Guy A. VanBaalen), so as to be actually received by such
persons no later than December 15, 2003 at 4:00 p.m. (EST).
8. The Court shall retain jurisdiction over any matter or dispute arising
from or relating to the interpretation or implementation of this Order.
Dated: __________________ , 2003 ___________________________________
Hon. Stephen D. Gerling, U.S.B.J.
7
Exhibit B
Exhibit A
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF NEW YORK
- ------------------------------------------------
In re Agway, Inc.,
Debtor.
- ------------------------------------------------ Chapter 11
In re Agway General Agency, Inc., Case No. 02-65872 through
Case No. 02-65877
Debtor.
- ------------------------------------------------
In re Brubaker Agronomic Consulting Service LLC, Jointly Administered
Debtor.
- ------------------------------------------------
In re Country Best Adams, LLC,
Debtor.
- ------------------------------------------------
In re Country Best-DeBerry LLC,
Debtor.
- ------------------------------------------------
In re Feed Commodities International LLC,
Debtor
- ------------------------------------------------
NOTICE OF AUCTION AND HEARING TO CONSIDER APPROVAL
OF THE SALE OF SUBSTANTIALLY ALL OF THE ASSETS OF
AGWAY ENERGY PRODUCTS, LLC, AGWAY
ENERGY SERVICES, INC. AND AGWAY ENERGY SERVICES PA, INC.
NOTICE IS HEREBY GIVEN, as follows:
1. On November __, 2003, Agway, Inc. ("Agway"), one of the above debtors
and debtors-in-possession (the "Debtor") filed a motion (the "Sale Motion") with
the Bankruptcy Court for orders (i) authorizing, pursuant to sections 105(a),
363(b) and (f), 365(a), (c) and (f), and 1146(c) of the Bankruptcy Code, Agway
to conduct an auction sale (the
"Auction") of substantially all of the assets of its non-debtor subsidiaries,
Agway Energy Products, LLC ("AEP"), Agway Energy Services, LLC ("AES") and Agway
Energy Services PA, Inc. ("AES-PA"), (ii) scheduling a date for the Auction (the
"Auction Date"), (iii) approving, pursuant to Bankruptcy Rule 6004(f)(1), the
terms and conditions of the Auction, including bidding procedures, a break-up
fee and expense reimbursement (the "Bidding Procedures"), (iv) scheduling a date
and time for a hearing to consider approval of the proposed sale resulting from
the Auction (the "Sale Hearing"), (v) authorizing, pursuant to Bankruptcy Rule
2002, the form, manner and sufficiency of notice for the Auction and Sale
Hearing (as defined below) and for notifying contract parties of the assumption
and assignment to the successful bidder of certain assigned agreements, (vi)
authorizing Agway to assume and assign to the successful bidder the assigned
agreements, (vii) establishing, pursuant to sections 105(a) and 365 of the
Bankruptcy Code, cure amounts, if any, with respect to the assigned agreements,
(viii) authorizing Agway to assign and transfer to the successful bidder certain
real property, (ix) approving the Asset Purchase Agreement with Suburban
Propane, L.P. or its designee ("Suburban"), or with the successful bidder, to be
effective upon a closing of the sale transaction, and (x) other relief related
to all of the foregoing.
2. By order dated [November __, 2003] (the "Procedures Order"), the
Bankruptcy Court authorized the Debtor, among other things, to conduct an
Auction at the United States Bankruptcy Court, 10 Broad Street, Utica, New York,
on December 18, 2003 at 2:00 p.m. (EST).
3. The Debtor will conduct the Auction pursuant to the following Bidding
Procedures:
o The Termination Payments authorized by the Suburban Agreement shall
not be applicable to any bidders other than Suburban.
2
o In order to bid, a potential bidder must (i) submit to Debtor's
counsel a written irrevocable offer for the purchased assets that (as
determined by the Debtor and the Sellers, in consultation with the
official committee of unsecured creditors (the "Creditors'
Committee")) constitutes a higher or better bid, in view of the
purchase price offered, the existence of any proposed holdbacks,
escrows or indemnification provisions, the overall terms and
conditions of the proposed contract, and after taking into account the
Termination Payments that may be triggered under the Suburban
Agreement and (ii) deliver an earnest money deposit to Debtor's
counsel of no less than $10,500,000.00 (the "Deposit") in the form of
a certified check or wire transfer payable to the trust account of
Debtor's counsel at least three (3) business days before the Auction
(as defined below) (the "Bid Deadline"). The bid must identify the
bidder and contain such documents and information so as to establish
that the bidder can pay the purchase price at closing.
o Bids must not be subject to financing, environmental, due diligence or
any other contingencies not provided for in the Suburban Agreement.
o Only those bids that meet the requirements of the preceding three (3)
subparagraphs will be considered a "Qualified Bid." For all purposes
herein, Suburban's bid to acquire the purchased assets pursuant to the
Suburban Agreement shall constitute a Qualified Bid.
o If a Qualified Bid (other than Suburban's) is received by the Bid
Deadline, the Debtor and the Sellers shall conduct the Auction for the
sale of the purchased assets in this Court, on the 18th day of
December, 2003, at 2:00 p.m. If no Qualified Bids are received by the
Bid Deadline, then the Auction will not be held, Suburban will be
deemed to be the successful bidder, the Suburban Agreement will
constitute the Successful Bid (as defined below), and at the hearing
held to request approval of the proposed sale to Suburban, (the "Sale
Hearing"), the Debtor will seek approval of and authority to
consummate the transactions contemplated by the Suburban Agreement.
o Only bidders who have submitted a Qualified Bid ("Qualified Bidders")
will be eligible to participate at the Auction. Only the authorized
representatives of each of the Qualified Bidders, the Creditors'
Committee Suburban, the Debtor, and the Sellers shall be permitted to
attend the Auction.
o Bidding at the Auction shall start at the purchase price stated in the
highest or otherwise best Qualified Bid, as determined by the Debtor
and the Sellers, in consultation with the Creditors' Committee and as
announced to all Qualified Bidders before the commencement of the
Auction. At the Auction, Qualified Bidders may improve their bids in
increments of $1,000,000.00. Suburban shall be entitled to bid-in all
or any part of the
3
Termination Payments at the Auction. Should overbidding occur,
Suburban shall have the right, but not the obligation, to participate
in the bidding and to be approved as the Successful Bidder (as defined
below) at the Sale Hearing based on any such subsequent successful
overbid. The bidding shall be continuous and competitive and shall not
end until all bidders have submitted their last and best offers.
o At the conclusion of the Auction, if any, the Debtor and the Sellers
will announce the highest or best Qualified Bid (the "Successful
Bid").
o All Deposits shall be held by Debtor's counsel in an interest-bearing
bank account (assuming the bidder provides a Tax ID number), with
interest for the account(s) of the bidder(s). Within two (2) business
days after the Auction, Deposits (plus accrued interest, if any) shall
be returned to all bidders except the bidder that submitted the
Successful Bid (the "Successful Bidder"). The Successful Bidder's
Deposit shall be held until the closing on the sale of the purchased
assets and applied (plus accrued interest, if any) in accordance with
the Successful Bid.
4. The Procedures Order further provides that the Sale Hearing will be held
following the Auction on December 18, 2003 at 2:00 p.m. (EST), before the
Honorable Stephen D. Gerling, Chief United States Bankruptcy Judge, at the
United States Bankruptcy Court, 10 Broad Street, Utica, New York. The Sale
Hearing may be adjourned from time to time without further notice other than an
announcement in open court of the adjourned date or dates at the Sale Hearing or
an adjourned hearing.
5. At the Sale Hearing, the Debtor shall request that the Court enter an
order (a) approving the sale of the purchased assets to the successful
bidder(s), (b) approving the proposed sale Agreement , (c) establishing cure
amounts, if any, in respect of certain assigned agreements, (d) authorizing the
Debtor's assumption and assignment of such agreements to the successful bidder
and (e) approving the Debtor's transfer of certain real property to the
successful bidder.
6. At the Sale Hearing, the Court may enter such orders as it deems
appropriate under applicable law and as required by the circumstances and
equities of these
4
cases. Objections, if any, to the relief requested in the Sale Motion, other
than the relief granted in the Procedures Order, shall be in writing, shall
conform to the Federal Rules of Bankruptcy Procedure and the Local Rules of the
Bankruptcy Court for the Northern District of New York, shall set forth the name
of the objectant, the nature and amount of any claims or interests held or
asserted against the Debtor's estate or property, the basis for the objection
and the specific grounds therefor, and shall be served upon (i) the attorneys
for the Debtor, Menter, Rudin & Trivelpiece, P.C., 500 South Salina Street,
Suite 500, Syracuse, New York 13202 (Attn: Jeff Dove, Esq.) and Weil, Gotshal &
Manges LLP, 767 Fifth Avenue, New York, New York 10153 (Attn: Marvin E. Jacob,
Esq. and Judy G. Z. Liu, Esq.), (ii) the attorneys for the postpetition lenders,
Paul, Hastings, Janofsky & Walker LLP, 1055 Washington Boulevard, Stamford,
Connecticut 06901 (Attn: Leslie A. Plaskon, Esq. and W. Andrew P. Logan, Esq.)
and Hancock & Estabrook, LLP, MONY Tower I, P.O. Box 4976, Syracuse, New York
13221-4976 (Attn: Stephen A. Donato, Esq.), (iii) the attorneys for the
Committee, Pachulski, Stang, Ziehl, Young Jones & Weintraub P.C., 461 Fifth
Avenue, 25th Floor, New York, New York 10017-6234 (Attn: William P. Weintraub,
Esq. and Robert J. Feinstein, Esq.), (iv) the attorneys for the Retiree
Committee, Martin, Martin & Woodard, One Lincoln Center, Syracuse, New York
13202 (Attn: Lee E. Woodard, Esq.), (v) the attorneys for Suburban, Cole,
Schotz, Meisel, Forman & Leonard, P.A., Court Plaza North, 25 Main Street,
Hackensack, New Jersey 07601 (Attn: Michael D. Sirota, Esq.) and (vi) the Office
of the United States Trustee, 10 Broad Street, Utica, New York 13502 (Attn: Guy
A. VanBaalen, Esq.), so as to be actually received no later than December 15,
2003 at 4:00 p.m. (EST).
7. A copy of the proposed sale Agreement is annexed as Exhibit "A" to the
Sale Motion. All requests for information concerning the sale should be directed
to Goldsmith,
5
Agio, Helms & Lynner, LLC, Attn: Scott Sanderson, Managing Director, 233 South
Wacker Drive, 92nd Floor, Chicago, IL 60606, 312 928 7076, ssanderson@agio.com
or Goldsmith, Agio, Helms & Lynner, LLC, Attn: Steve R. Beck, Vice President,
225 South Sixth Street, 46th Floor, Minneapolis, MN 55402, (612) 371-6505,
sbeck@agio.com.
Dated: Syracuse, New York
[insert date]
MENTER, RUDIN & TRIVELPIECE, P.C.
By:_________________________
Jeffrey A. Dove, Esq.
Bar No. 101532
500 South Salina Street, Suite 500
Syracuse, New York 13202
Telephone: (315) 474-7541
-and-
WEIL, GOTSHAL & MANGES LLP
Marvin E. Jacob, Esq.
Bar Roll No. 508380
Judy G.Z. Liu, Esq.
Bar Roll No. 511552
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Attorneys for Debtors
and Debtors in Possession
6
Exhibit B
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF NEW YORK
- --------------------------------------------------
In re Agway, Inc.,
Debtor.
- -------------------------------------------------- Chapter 11
In re Agway General Agency, Inc., Case No. 02-65872 through
Case No. 02-65877
Debtor.
- --------------------------------------------------
In re Brubaker Agronomic Consulting Service LLC, Jointly Administered
Debtor.
- --------------------------------------------------
In re Country Best Adams, LLC,
Debtor.
- --------------------------------------------------
In re Country Best-DeBerry LLC,
Debtor.
- --------------------------------------------------
In re Feed Commodities International LLC,
Debtor.
- --------------------------------------------------
NOTICE OF DEBTOR'S INTENT TO ASSUME AND
ASSIGN CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES
PLEASE TAKE NOTICE that Agway, Inc. ("Agway"), one of the above debtors and
debtors in possession (the "Debtor") has filed a motion, dated [November __,
2003] (the "Motion"), requesting orders (i) authorizing, pursuant to sections
105(a), 363(b) and (f), 365(a), (c) and (f), and 1146(c) of the Bankruptcy Code,
Agway to conduct an auction sale (the "Auction") of substantially all of the
assets of its non-debtor subsidiaries, Agway Energy Products, LLC ("AEP"), Agway
Energy Services, LLC ("AES") and Agway Energy Services PA, Inc., ("AES-PA"),
which together comprise
7
Agway's energy business, (ii) scheduling a date for the Auction, (iii)
approving, pursuant to Bankruptcy Rule 6004(f)(1), the terms and conditions of
the Auction, including bidding procedures, a break-up fee and expense
reimbursement (the "Bidding Procedures"), (iv) authorizing, pursuant to
Bankruptcy Rule 2002, the form and manner of notice for the Auction and for
notifying contract parties of the Debtor's assumption and assignment to the
successful bidder of certain executory contracts, (v) scheduling a date and time
for a hearing to consider approval of the proposed sale resulting from the
Auction (the "Sale Hearing"), (vi) establishing, pursuant to sections 105(a) and
365 of the Bankruptcy Code, cure amounts, if any, with respect to the assigned
agreements, (vii) authorizing Agway to assume and assign to the successful
bidder the assigned agreements, (viii) authorizing Agway to assign and transfer
to the successful bidder certain real property, (ix) approving the Asset
Purchase Agreement with Suburban Propane, L.P. or its designee ("Suburban"), or
with the successful bidder, to be effective upon a closing of the sale
transaction, and (x) other relief related to all of the foregoing.
PLEASE TAKE FURTHER NOTICE that pursuant to the Motion, Agway intends to
assume and assign to Suburban (or other successful bidder), subject to a closing
of the proposed sale, those executory contracts and unexpired leases (together,
the "Assigned Agreements") listed on Exhibit "A" annexed hereto, pursuant to
Sections 363 and 365 of the Bankruptcy Code.
PLEASE TAKE FURTHER NOTICE that Agway has indicated on Exhibit A annexed
hereto the cure amounts that Agway believes must be paid to cure all defaults
under the Assigned Agreements to which you are a party (in each instance, the
8
"Cure Amount"). Agway believes that there are no non-monetary defaults (other
than the filing of these chapter 11 cases) that will not be cured by payment of
the Cure Amount.
PLEASE TAKE FURTHER NOTICE that Suburban's (or the successful bidder's)
obligation to pay the amounts arising under the Assigned Agreements after the
closing constitutes adequate assurance of future performance of the Assigned
Agreements in accordance with section 365(f)(2)(b) of the Bankruptcy Code.
PLEASE TAKE FURTHER NOTICE that any party seeking to (i) object to the Cure
Amount as determined by Agway or otherwise assert that any other amounts,
defaults, conditions or pecuniary losses must be cured or satisfied under any of
the Assigned Agreements in order for such contract, lease and/or lease to be
assumed and/or assigned or (ii) object to the assumption and assignment of any
Assigned Agreements on any other basis, must file a written objection (an
"Assumption/Assignment Objection") setting forth the cure amount the objector
asserts to be due, the specific types and dates of the alleged defaults,
pecuniary losses and conditions to assumption and assignment and the support
therefor, and the basis for the objection. Moreover, any party filing an
Assumption/Assignment Objection with respect to any unliquidated claims or
adjustments for percentage rent, real estate taxes, common area maintenance, or
similar adjustable charges (the "Unliquidated Charges") must provide in such
Assumption/Assignment Objection a good faith estimate (if possible) of the
amount of such Unliquidated Charges and a description of the factors used in
calculating such charges (in all cases with appropriate documentation in support
thereof). All Assumption/Assignment Objections must be served so as to be
received no later than 4:00 p.m. (EST) on December 15, 2003 (the
"Assumption/Assignment Objection
9
Deadline") on (i) the attorneys for the Debtor, Menter, Rudin & Trivelpiece,
P.C., 500 South Salina Street, Suite 500, Syracuse, New York 13202 (Attn:
Jeffrey A. Dove, Esq.) and Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New
York, New York 10153 (Attn: Marvin E. Jacob, Esq. and Judy G. Z. Liu, Esq.),
(ii) the attorneys for the postpetition lenders, Paul, Hastings, Janofsky &
Walker LLP, 1055 Washington Boulevard, Stamford, Connecticut 06901 (Attn: Leslie
A. Plaskon, Esq. and W. Andrew P. Logan, Esq.) and Hancock & Estabrook, LLP,
MONY Tower I, P.O. Box 4976, Syracuse, New York 13221-4976 (Attn: Stephen A.
Donato, Esq.), (iii) the attorneys for the Creditors' Committee, Pachulski,
Stang, Ziehl, Young Jones & Weintraub P.C., 461 Fifth Avenue, 25th Floor, New
York, New York 10017-6234 (Attn: William P. Weintraub, Esq. and Robert J.
Feinstein, Esq.), (iv) the attorneys for Suburban, Cole, Schotz, Meisel, Forman
& Leonard, P.A., Court Plaza North, 25 Main Street, Hackensack, New Jersey 07601
(Attn: Michael D. Sirota, Esq.), (v) the attorneys for the Retiree Committee,
Martin, Martin & Woodard, One Lincoln Center, Syracuse, New York 13202, and (vi)
the Office of the United States Trustee, 10 Broad Street, Utica, New York 13502
(Attn: Guy A. VanBaalen, Esq.), (collectively, the "Notice Parties").
PLEASE TAKE FURTHER NOTICE that unless an Assumption/Assignment Objection
is filed and served before the Assumption/Assignment Objection Deadline, all
parties shall (i) be forever barred from asserting any cure or other amounts
with respect to the Assigned Agreements other than as set forth on Exhibit "A",
and Agway and the successful bidder shall be entitled to rely thereon; (ii) be
deemed to have consented to the assumption and assignment; and (iii) be forever
barred and estopped from asserting or claiming against Agway or the successful
10
bidder that any additional amounts are due or other defaults exist, that
conditions to assumption and assignment must be satisfied under such Assigned
Agreements or that there is any objection or defense to the assumption and
assignment of such Assigned Agreements.
PLEASE TAKE FURTHER NOTICE that hearings with respect to the
Assumption/Assignment Objections may be held (a) at the Sale Hearing, or (b) at
such other date as the Court may designate upon motion by Agway and the
successful bidder provided, that, if the subject Assigned Agreements are assumed
and assigned, the cure amount asserted by the objecting party (or such lower
amount as may be agreed to by the parties or fixed by the Court) shall be
deposited by Agway and held in a segregated account by Agway pending further
order of the Court or mutual agreement of the parties.
PLEASE TAKE FURTHER NOTICE that a properly filed and served
Assumption/Assignment Objection shall reserve the objecting party's rights only
as to the assumption and assignment of the Assigned Agreements, but shall not
constitute an objection to the relief generally requested in the Sale Motion.
Parties wishing to otherwise object to the relief requested in the Sale Motion
must file and serve a separate objection, stating with particularity such
party's grounds for objection, so as to be received by each of the Notice
Parties listed above no later than 4:00 p.m. (EST) on December 15, 2003.
PLEASE TAKE FURTHER NOTICE that if you agree that there are no cure amounts
due under your lease or contract, and otherwise do not object to the
11
Agway's assumption and assignment of your lease or contract, you need not take
any further action.
PLEASE TAKE FURTHER NOTICE that the Agway's decision to assume and assign
to the successful bidder the Assigned Agreements is subject to Court approval
and consummation of the closing of the proposed sale transaction. Accordingly,
Agway shall be deemed to have assumed and assigned each of the Assigned
Agreements as of the date of, and effective only upon the closing of the sale,
and the successful bidder's decision to take assignment of the Assigned
Agreements. Absent such closing, each of the Assigned Agreements shall not be
deemed assumed nor assigned, and shall in all respects be subject to further
administration under the Bankruptcy Code. The inclusion of any document on the
list of Assigned Agreements shall not constitute or be deemed to be a
determination or admission by Agway or the successful bidder that such document
is, in
12
fact, an executory contract or unexpired lease within the meaning of the
Bankruptcy Code (all rights with respect thereto being expressly reserved).
Dated: Syracuse, New York
[insert date], 2003
MENTER, RUDIN & TRIVELPIECE, P.C.
By:_________________________
Jeffrey A. Dove, Esq.
Bar No. 101532
500 South Salina Street, Suite 500
Syracuse, New York 13202
Telephone: (315) 474-7541
-and-
WEIL, GOTSHAL & MANGES LLP
Marvin E. Jacob, Esq.
Bar Roll No. 508380
Judy G.Z. Liu, Esq.
Bar Roll No. 511552
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Attorneys for Debtors
and Debtors in Possession
13
Exhibit A
Proposed Contracts and Leases to be Assumed and Assigned (and Cure Amounts)
- ------------------------------------------------------------------------------------------------------------------
Counterparty Contract Description Cure Amount Contract Party Address City, State, Zip Code
- ------------------------------------------------------------------------------------------------------------------
Exhibit C
PURCHASE PRICE DEPOSIT ESCROW AGREEMENT
THIS PURCHASE PRICE DEPOSIT ESCROW AGREEMENT, dated as of November 10, 2003
("Escrow Agreement"), is by and among AGWAY ENERGY PRODUCTS, LLC, a Delaware
limited liability company, AGWAY ENERGY SERVICES, INC., a Delaware corporation,
and AGWAY ENERGY SERVICES PA, INC., a Delaware corporation (collectively,
"Seller"); SUBURBAN PROPANE, L.P., a Delaware limited partnership ("Purchaser");
and NATIONAL CITY BANK OF PENNSYLVANIA, a national banking association, as
Escrow Agent hereunder ("Escrow Agent").
BACKGROUND
A. Seller and Purchaser have entered into an Asset Purchase Agreement (as
amended, the "Asset Purchase Agreement"), dated as of November 10, 2003, a copy
of which is attached hereto as Exhibit 1 to this Escrow Agreement, pursuant to
which Purchaser is required to create the Purchase Price Deposit Escrow Fund.
The Asset Purchase Agreement provides that Purchaser shall deposit the Escrow
Funds (defined below), which is an amount in cash equal to $10,500,000, with the
Escrow Agent as an earnest money deposit.
B. Escrow Agent has agreed to accept, hold, and disburse the funds
deposited with it and the earnings thereon in accordance with the terms of this
Escrow Agreement.
C. Pursuant to the Asset Purchase Agreement, Seller and Purchaser have
appointed the Representatives (as defined below) to represent them for all
purposes in connection with the funds to be deposited with Escrow Agent and this
Escrow Agreement.
D. In order to establish the escrow of funds and to effect the provisions
of the Asset Purchase Agreement, the parties hereto have entered into this
Escrow Agreement.
STATEMENT OF AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, for
themselves, their successors and assigns, hereby agree as follows:
1. Definitions. Terms not otherwise defined herein shall have the meanings
ascribed to them in the Asset Purchase Agreement. The following terms shall have
the following meanings when used herein:
"Business Day" shall mean any day other than a Saturday, Sunday or any day
on which commercial banks in Pennsylvania or the city in which Escrow Agent is
located are required or permitted by law to be closed.
"Escrow Funds" shall mean the Purchase Price Deposit deposited with Escrow
Agent pursuant to Section 3 of this Agreement, together with any interest and
other income thereon.
"Escrow Period" shall mean the period commencing on the date hereof and
ending on the last day that the Escrow Funds are held in escrow by the Escrow
Agent pursuant to the terms hereof.
"Joint Written Direction" shall mean a written direction executed by the
Representatives and directing Escrow Agent to disburse all or a portion of the
Escrow Funds or to take or refrain from taking an action pursuant to this Escrow
Agreement.
"Purchaser Representative" shall mean the persons so designated on Schedule
A hereto or any other person designated in a writing signed by Purchaser and
delivered to Escrow Agent and the Seller Representative in accordance with the
notice provisions of this Escrow Agreement, to act as its representative under
this Escrow Agreement.
"Representatives" shall mean the Seller Representative and the Purchaser
Representative.
"Seller Representative" shall mean the person so designated on Schedule A
hereto or any other person designated in a writing signed by Seller and
delivered to Escrow Agent and the Purchaser Representative in accordance with
the notice provisions of this Escrow Agreement, to act as its representative
under this Escrow Agreement.
2. Appointment of and Acceptance by Escrow Agent. Seller and Purchaser
hereby appoint Escrow Agent to serve as escrow agent hereunder. Escrow Agent
hereby accepts such appointment and, upon receipt by wire transfer of the Escrow
Funds in accordance with Section 3 below, agrees to hold, invest and disburse
the Escrow Funds in accordance with this Escrow Agreement.
3. Deposit of Escrow Funds. Simultaneously with the execution and delivery
of this Escrow Agreement, Purchaser will transfer the Escrow Funds in the amount
set forth on Schedule A hereto to Escrow Agent, by wire transfer of immediately
available funds, to the account of the Escrow Agent referenced on Schedule A
hereto (the "Escrow Account"). Sellers shall be deemed the owner of all Escrow
Funds and investments in the Escrow Account and shall be responsible for the
preparation of all tax returns associated with the investments therein and shall
pay all costs relating to such returns, and all taxes, fines and penalties and
interest. The Escrow Account shall be assigned the federal tax identification
number of Sellers as set forth on Schedule A hereto. Sellers shall provide
Escrow Agent, at any time upon request of Escrow Agent, with a Form W-8 or W-9
to evidence Sellers is not subject to any back-up withholding under the United
States Internal Revenue Code. Sellers shall report all income, if any, that is
earned on, or derived from, the Escrow Funds as its income, in the taxable year
or years in which such
2
income is properly includible and pay any taxes attributable thereto. Escrow
Agent shall have a lien, which shall be paramount and prior in right of all
other persons, upon all monies and other property that shall have been received
by it under this Agreement, to secure the payment to it of fees and expenses
hereunder due to Escrow Agent. Escrow Agent shall not be required without its
consent to relinquish, deliver or pay over any instrument, money or other
property deposited with it in this Agreement unless and until it shall have been
paid and reimbursed its fees and expenses.
4. Disbursement of Escrow Funds. Each of Sellers and Purchaser covenant and
agree to execute and deliver a Joint Written Direction to the Escrow Agent at
such time as the Escrow Funds are to be released in accordance with the terms of
the Asset Purchase Agreement. If Escrow Agent receives Joint Written Direction
to the effect that (i) the Asset Purchase Agreement has been terminated, or (ii)
the transactions contemplated by the Asset Purchase Agreement have been
consummated, then within three (3) Business Days after the receipt of the Joint
Written Direction, Escrow Agent shall (1) disburse to Sellers or Purchaser, as
the case may be, and by the method specified in the Joint Written Direction, out
of the Escrow Funds, the dollar amount claimed in the Joint Written Direction
(or, if the amount of the Joint Written Direction exceeds the amount of the
Escrow Funds, the amount of the Escrow Funds), and (2) deliver written
confirmation to Sellers and Purchaser that such disbursement has been made.
5. Suspension of Performance; Disbursement Into Court. If, at any time, (i)
there shall exist any dispute between Seller, Purchaser or the Representatives
with respect to the holding or disposition of all or any portion of the Escrow
Funds or any other obligations of Escrow Agent hereunder, (ii) Escrow Agent is
unable to determine, to Escrow Agent's sole satisfaction, the proper disposition
of all or any portion of the Escrow Funds or Escrow Agent's proper actions with
respect to its obligations hereunder, including, without limitation, arising
from adverse or conflicting claims made to any portion of the Escrow Funds or
(iii) the Representatives have not within thirty (30) days of the furnishing by
Escrow Agent of a notice of resignation pursuant to Section 7 hereof, appointed
a successor Escrow Agent to act hereunder, then Escrow Agent may, in its sole
discretion, take either or both of the following actions:
a. suspend the performance of any of its obligations (including without
limitation any disbursement obligations) under this Escrow Agreement until such
dispute or uncertainty shall be resolved to the sole satisfaction of Escrow
Agent or until a successor Escrow Agent shall have been appointed (as the case
may be).
b. petition (by means of an interpleader action or any other appropriate
method) any court of competent jurisdiction in any venue convenient to Escrow
Agent, for instructions with respect to such dispute or uncertainty, and to the
extent required or permitted by law, pay into such court, for holding and
disposition in accordance with the instructions of such court, all Escrow Funds,
after deduction and payment to Escrow Agent of all fees and expenses (including
court costs and attorneys' fees) payable to,
3
incurred by, or expected to be incurred by Escrow Agent in connection with the
performance of its duties and the exercise of its rights hereunder. In the event
such suit is brought, Seller and Purchaser shall jointly and severally agree to
pay Escrow Agent in excess of the Escrow Funds deducted or paid to Escrow Agent,
all costs, expenses and attorneys' fees that it may expend or incur in such
interpleader suit, the amount thereof to be fixed and a judgment therefore to be
rendered by the court in such suit.
Escrow Agent shall have no liability to Seller, Purchaser, their respective
shareholders, partners or members or any other person with respect to any such
suspension of performance or disbursement into court, specifically including any
liability or claimed liability that may arise, or be alleged to have arisen, out
of or as a result of any delay in the disbursement of the Escrow Funds or any
delay in or with respect to any other action required or requested of Escrow
Agent. Escrow Agent may obey and comply with any order or process of a court
(whether or not such court shall have jurisdiction) commanding it to do or to
refrain from some act in relation to the subject matter of this Escrow
Agreement. Escrow Agent may rely and continue to rely conclusively upon such
orders or process, notwithstanding it may be found subsequently to be void or
voidable, until one of the officers of Escrow Agent, shall have actual knowledge
that such order or process shall have been modified, annulled, set aside,
vacated or quashed.
6. Investment of Funds. The Escrow Agent is herein directed and instructed
to initially invest and reinvest the Escrow Funds in the investment indicated on
Schedule A hereto. Escrow Agent may make any investments through its or an
affiliate's bond or investment department, for which Escrow Agent or any of its
affiliates may serve as investment advisor and receive compensation with respect
to any investment direction hereunder. The Escrow Agent shall provide to
Purchaser and Seller a statement, on a monthly basis, reporting the current
balance of the Escrow Funds and the amount of the investment earnings or losses.
With the execution of this Escrow Agreement, Seller and Purchaser acknowledge
receipt of prospectuses and/or disclosure materials associated with the
investment vehicle, either through means of hardcopy or via access to the
website associated with the investment selected by Seller and Purchaser. The
parties hereto acknowledge that they have discussed the investment and are in
agreement as to the selected investment. The Seller and Purchaser may provide
instructions changing the investment of the Escrow Funds (subject to applicable
minimum investment requirements) by the furnishing of a Joint Written Direction,
specifying the type and identity of the investments to be purchased and/or sold,
any particular settlement procedures required, if any (which settlement
procedures shall be consistent with industry standards and practices), and such
other information as Escrow Agent may require to the Escrow Agent, and Escrow
Agent may make or cause to be made such investments subject to such additional
terms and conditions as Escrow Agent may determine appropriate under the
circumstances; provided, however, that no investment or reinvestment may be made
except in the following:
4
a. direct obligations of the United States of America or obligations the
principal of and the interest on which are unconditionally guaranteed by the
United State of America;
b. certificates of deposit issued by any bank, bank and trust company, or
national banking association (including Escrow Agent and its affiliates), which
certificates of deposit are insured by the Federal Deposit Insurance Corporation
or a similar governmental agency;
c. repurchase agreements with any bank, trust company, or national banking
association (including Escrow Agent and its affiliates); or
d. any institutional money market fund offered by Escrow Agent, including
any institutional money market fund managed by Escrow Agent or any of its
affiliates.
If Escrow Agent has not received a Joint Written Direction at any time that
an investment decision must be made, Escrow Agent shall invest the Escrow Funds,
or such portion thereof as to which no Joint Written Direction has been
received, in investments described in clause (d) above. Each of the foregoing
investments shall be made in the name of Escrow Agent. No investment shall be
made in any instrument or security that has a maturity of greater than six (6)
months. Notwithstanding anything to the contrary contained herein, Escrow Agent
may, without notice to the Representatives, sell or liquidate any of the
foregoing investments at any time if the proceeds thereof are required for any
disbursement of Escrow Funds permitted or required hereunder. All investment
earnings shall become part of the Escrow Funds and investment losses shall be
charged against the Escrow Funds when realized. Escrow Agent shall not be liable
or responsible for loss in the value of any investment made pursuant to this
Escrow Agreement, or for any loss, cost or penalty resulting from any sale or
liquidation of the Escrow Funds. Escrow Agent may use a broker-dealer of its own
selection, including a broker-dealer owned by or affiliated with Escrow Agent or
any of its affiliates.
7. Resignation of Escrow Agent. Escrow Agent may resign and be discharged
from the performance of its duties hereunder at any time by giving ten (10) days
prior written notice to the Seller and Purchaser specifying a date when such
resignation shall take effect. Such resignation shall take effect upon the
earlier of: (i) the appointment of a successor Escrow Agent as provided herein
or (ii) thirty (30) days after delivery of such notice of resignation. Upon any
such notice of resignation, the Representatives jointly shall appoint a
successor Escrow Agent hereunder prior to the effective date of such
resignation. The retiring Escrow Agent shall transmit all records pertaining to
the Escrow Funds and shall pay all Escrow Funds and transfer all investments to
the successor Escrow Agent, after making copies of such records as the retiring
Escrow Agent deems advisable and after deduction and payment to the retiring
Escrow Agent of all reasonable fees and expenses (including court costs and
attorneys' fees) payable to,
5
incurred by, or expected to be incurred by the retiring Escrow Agent in
connection with the performance of its duties and the exercise of its rights
hereunder. After any retiring Escrow Agent's resignation, the provisions of this
Escrow Agreement shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Escrow Agent under this Escrow Agreement. Any
corporation or association into which the Escrow Agent may be merged or
converted or with which it may be consolidated, or any corporation or
association to which all or substantially all of the escrow business of the
Escrow Agent's corporate trust line of business may be transferred, shall be the
Escrow Agent under this Escrow Agreement without further act.
8. Liability of Escrow Agent. The Escrow Agent undertakes to perform only
such duties as are expressly set forth herein and no duties shall be implied or
otherwise imposed upon or against Escrow Agent, and Escrow Agent shall not be
liable except for the performance of such duties and obligations as are
specifically set out in this Escrow Agreement. The Escrow Agent shall have no
liability under and no duty to inquire as to the provisions of any agreement
other than this Escrow Agreement. The Escrow Agent shall not be liable for any
action taken or omitted by it in good faith except to the extent that a court of
competent jurisdiction determines that the Escrow Agent's gross negligence or
willful misconduct was the primary cause of any loss to the Seller or Purchaser.
Escrow Agent's sole responsibility shall be for the safekeeping and disbursement
of the Escrow Funds in accordance with the terms of this Escrow Agreement.
Escrow Agent shall have no implied duties or obligations and shall not be
charged with knowledge or notice of any fact or circumstance not specifically
set forth herein. Escrow Agent may rely upon any notice, instruction, request or
other instrument, not only as to its due execution, validity and effectiveness,
but also as to the truth and accuracy of any information contained therein,
which Escrow Agent shall believe to be genuine and to have been signed or
presented by the person or parties purporting to sign the same. In no event
shall Escrow Agent be liable for incidental, indirect, special, consequential or
punitive damages (including, but not limited to lost profits), even if the
Escrow Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action. Escrow Agent shall not be obligated to take
any legal action or commence any proceeding in connection with the Escrow Funds,
any account in which Escrow Funds are deposited, this Escrow Agreement or the
Asset Purchase Agreement, or to appear in, prosecute or defend any such legal
action or proceeding. Escrow Agent may consult legal counsel selected by it in
the event of any dispute or question as to the construction of any of the
provisions hereof or of any other agreement or of its duties hereunder, or
relating to any dispute involving any party hereto, and shall incur no liability
and shall be fully indemnified from any liability whatsoever in acting in
accordance with the opinion or instruction of such counsel. Seller and
Purchaser, jointly and severally, shall promptly pay, upon demand, the
reasonable fees and expenses of any such counsel. As between Seller and
Purchaser, each shall be responsible for the payment of fifty (50%) percent of
such fees and expenses.
6
The Escrow Agent is authorized, in its sole discretion, to comply with
orders issued or process entered by any court with respect to the Escrow Funds,
without determination by the Escrow Agent of such court's jurisdiction in the
matter. If any portion of the Escrow Funds is at any time attached, garnished or
levied upon under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or enjoined by any
court order, or in case any order, judgment or decree shall be made or entered
by any court affecting such property or any part thereof, then and in any such
event, the Escrow Agent is authorized, in its sole discretion, to rely upon and
comply with any such order, writ, judgment or decree which it is advised by
legal counsel selected by it is binding upon it without the need for appeal or
other action; and if the Escrow Agent complies with any such order, writ,
judgment or decree, it shall not be liable to any of the parties hereto or to
any other person or entity by reason of such compliance even though such order,
writ, judgment or decree may be subsequently reversed, modified, annulled, set
aside or vacated.
9. Indemnification of Escrow Agent. From and at all times after the date of
this Escrow Agreement, Seller and Purchaser, jointly and severally, shall, to
the fullest extent permitted by law, defend, indemnify and hold harmless Escrow
Agent and each director, officer, employee, attorney, agent and affiliate of
Escrow Agent (collectively, the "Indemnified Parties") against any and all
actions, claims (whether or not valid), losses, damages, liabilities, costs and
expenses of any kind or nature whatsoever (including without limitation
reasonable attorneys' fees, costs and expenses) incurred by or asserted against
any of the Indemnified Parties from and after the date hereof, whether direct,
indirect or consequential, as a result of or arising from or in any way relating
to any claim, demand, suit, action or proceeding (including any inquiry or
investigation) by any person, including without limitation Seller or Purchaser,
whether threatened or initiated, asserting a claim for any legal or equitable
remedy against any person under any statute or regulation, including, but not
limited to, any federal or state securities laws, or under any common law or
equitable cause or otherwise, arising from or in connection with the
negotiation, preparation, execution, performance or failure of performance of
this Escrow Agreement or any transactions contemplated herein, whether or not
any such Indemnified Party is a party to any such action, proceeding, suit or
the target of any such inquiry or investigation; provided, however, that no
Indemnified Party shall have the right to be indemnified hereunder for any
liability which resulted from the gross negligence or willful misconduct of such
Indemnified Party. Each Indemnified Party shall, in its sole discretion, have
the right to select and employ separate counsel with respect to any action or
claim brought or asserted against it, and the reasonable fees of such counsel
shall be paid upon demand by the Seller and Purchaser jointly and severally. The
obligations of Seller and Purchaser under this Section 9 shall survive any
termination of this Escrow Agreement and the resignation or removal of Escrow
Agent. As between Seller and Purchaser, each shall be responsible for the
payment of fifty (50%) percent of such fees.
7
The parties agree that neither the payment by Seller or Purchaser of any
claim by Escrow Agent for indemnification hereunder nor the disbursement of any
amounts to Escrow Agent from the Escrow Funds in respect of a claim by Escrow
Agent for indemnification shall impair, limit, modify, or affect, as between
Seller and Purchaser, the respective rights and obligations of Seller, on the
one hand, and Purchaser, on the other hand, under the Asset Purchase Agreement.
The parties further agree that as between the Seller and the Purchaser, each
shall be responsible for the payment of fifty (50%) percent of the amount of
indemnification sought by the Escrow Agent.
10. Fees and Expenses of Escrow Agent. Seller and Purchaser shall
compensate Escrow Agent for its services hereunder in accordance with Schedule A
attached hereto and, in addition, shall reimburse Escrow Agent for all of its
reasonable out-of-pocket expenses, including attorneys' fees, travel expenses,
telephone and facsimile transmission costs, postage (including express mail and
overnight delivery charges), copying charges and the like. The additional
provisions and information set forth on Schedule A are hereby incorporated by
this reference, and form a part of this Escrow Agreement. All of the
compensation and reimbursement obligations set forth in this Section 10 shall be
payable by Seller and Purchaser, jointly and severally, upon demand by Escrow
Agent. As between the Seller and the Purchaser, each shall be responsible for
the payment of fifty (50%) percent of such fees and costs. The obligations of
Seller and Purchaser under this Section 10 shall survive any termination of this
Escrow Agreement and the resignation or removal of Escrow Agent. Seller and
Purchaser shall promptly pay such compensation and reimbursement amounts to
Escrow Agent or any Indemnified Party upon receipt of an itemized invoice.
11. Representations and Warranties; Legal Opinions. Each of Seller and
Purchaser respectively makes the following representations and warranties to
Escrow Agent:
(i) It is duly organized, validly existing, and in good standing under the
laws of the state of its incorporation or organization, and has full power and
authority to execute and deliver this Escrow Agreement and to perform its
obligations hereunder.
(ii) This Escrow Agreement has been duly approved by all necessary action,
including any necessary shareholder or membership approval, has been executed by
its duly authorized officers, and constitutes its valid and binding agreement
enforceable in accordance with its terms.
(iii) The execution, delivery, and performance of this Escrow Agreement is
in accordance with the Asset Purchase Agreement and will not violate, conflict
with, or cause a default under its articles of incorporation, articles of
organization, bylaws, management agreement or other organizational document, as
applicable, any applicable law or regulation, any court order or administrative
ruling or
8
decree to which it is a party or any of its property is subject, or any
agreement, contract, indenture, or other binding arrangement, including without
limitation the Asset Purchase Agreement, to which it is a party or any of its
property is subject.
(iv) The applicable persons designated on Schedule A hereto have been duly
appointed to act as its representatives hereunder and have full power and
authority to execute and deliver any Joint Written Direction, to amend, modify
or waive any provision of this Escrow Agreement and to take any and all other
actions as the Representatives under this Escrow Agreement, all without further
consent or direction from, or notice to, it or any other party.
(v) Other than General Electric Capital Corporation, if the Escrow Funds
are to be disbursed to Sellers in accordance with the Asset Purchase Agreement,
no party other than the parties hereto has, or shall have, any lien, claim or
security interest in the Escrow Funds or any part thereof. No financing
statement under the Uniform Commercial Code is on file in any jurisdiction
claiming a security interest in or describing (whether specifically or
generally) the Escrow Funds or any part thereof.
(vi) All of its representations and warranties contained herein are true
and complete as of the date hereof and will be true and complete at the time of
any disbursement of the Escrow Funds.
12. Identifying Information. Seller and Purchaser acknowledge that a
portion of the identifying information set forth on Schedule A is being
requested by the Escrow Agent in connection with the USA Patriot Act,
Pub.L.107-56 (the "Act"), and Seller and Purchaser agree to provide any
additional information requested by the Escrow Agent which is required under the
Act or any similar legislation or regulation to which Escrow Agent is subject,
in a timely manner. The Seller and the Purchaser each represent that all
identifying information set forth on Schedule A, including without limitation,
its Taxpayer Identification Number assigned by the Internal Revenue Service or
any other taxing authority, is true and complete on the date hereof and will be
true and complete at the time of any disbursement of the Escrow Funds.
13. Consent to Jurisdiction and Venue. In the event that any party hereto
commences a lawsuit or other proceeding relating to or arising from this Escrow
Agreement, the parties hereto agree that the United States Bankruptcy Court for
the Northern District of New York or any other court having jurisdiction over
the bankruptcy case captioned In re Agway, Inc., Case No. 02-65872-6-SDG (the
"Bankruptcy Case") shall have the sole and exclusive jurisdiction over any such
proceeding. If the Bankruptcy Case has closed, or such court lacks federal
subject matter jurisdiction, the parties agree that the Commercial Division,
Civil Branch of the Supreme Court of the State of New York sitting in New York
County and any appellate court from any thereof shall have sole and exclusive
jurisdiction. Any of these courts shall be proper venue for any such lawsuit or
judicial proceeding and the parties hereto waive any objection to such
9
venue. The parties hereto consent to and agree to submit to the jurisdiction of
any of the courts specified herein and agree to accept service of process to
vest personal jurisdiction over them in any of these courts.
14. Notice. All notices, approvals, consents, requests, and other
communications hereunder shall be in writing and shall be deemed to have been
given when the writing is delivered if given or delivered by hand, overnight
delivery service or facsimile transmitter (with confirmed receipt) to the
address or facsimile number set forth on Schedule A hereto, or to such other
address as each party may designate for itself by like notice, and shall be
deemed to have been given on the date deposited in the mail, if mailed, by
first-class, registered or certified mail, postage prepaid, addressed as set
forth on Schedule A hereto, or to such other address as each party may designate
for itself by like notice.
15. Amendment or Waiver. This Escrow Agreement may be changed, waived,
discharged or terminated only by a writing signed by the Representatives and
Escrow Agent. No delay or omission by any party in exercising any right with
respect hereto shall operate as a waiver. A waiver on any one occasion shall not
be construed as a bar to, or waiver of, any right or remedy on any future
occasion.
16. Severability. To the extent any provision of this Escrow Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Escrow Agreement.
17. Governing Law. This Escrow Agreement shall be construed and interpreted
in accordance with the internal laws of the State of New York without giving
effect to the conflict of laws principles thereof.
18. Entire Agreement. This Escrow Agreement constitutes the entire
agreement between the parties relating to the holding, investment and
disbursement of the Escrow Funds and sets forth in their entirety the
obligations and duties of Escrow Agent with respect to the Escrow Funds.
19. Binding Effect. All of the terms of this Escrow Agreement, as amended
from time to time, shall be binding upon, inure to the benefit of and be
enforceable by the respective successors and assigns of Seller, Purchaser and
Escrow Agent.
20. Execution in Counterparts. This Escrow Agreement and any Joint Written
Direction may be executed in two or more counterparts, which when so executed
shall constitute one and the same agreement or direction.
21. Termination. Upon the first to occur of the termination of the Escrow
Period, the disbursement of all amounts in the Escrow Funds pursuant to Section
3 hereof
10
or the disbursement of all amounts in the Escrow Funds into court pursuant to
Section 5 or Section 8 hereof, this Escrow Agreement shall terminate and Escrow
Agent shall have no further obligation or liability whatsoever with respect to
this Escrow Agreement or the Escrow Funds.
22. Dealings. The Escrow Agent and any stockholder, director, officer or
employee of the Escrow Agent may buy, sell, and deal in any of the securities of
the Seller or Purchaser and become pecuniarily interested in any transaction in
which the Seller or Purchaser may be interested, and contract and lend money to
the Seller or Purchaser and otherwise act as fully and freely as though it were
not Escrow Agent under this Escrow Agreement. Nothing herein shall preclude the
Escrow Agent from acting in any other capacity for the Seller or Purchaser or
for any other entity.
[remainder of page intentionally left blank]
11
IN WITNESS WHEREOF, the parties hereto have caused this Purchase Price
Deposit Escrow Agreement to be executed as of the date first above written.
SELLER:
WITNESS: AGWAY ENERGY PRODUCTS, LLC
By:
- --------------------------------- -------------------------------------
Name: Michael R. Hopsicker
Title: President and Chief Executive
Officer
ATTEST: AGWAY ENERGY SERVICES, INC.
By:
- --------------------------------- -------------------------------------
Secretary Name: Michael R. Hopsicker
Title: President and Chief Executive
Officer
ATTEST: AGWAY ENERGY SERVICES PA, INC.
By:
- --------------------------------- -------------------------------------
Secretary Name: Michael R. Hopsicker
Title: President and Chief Executive
Officer
WITNESS: PURCHASER:
SUBURBAN PROPANE, L.P.
By:
- --------------------------------- -------------------------------------
Name:
Title:
12
NATIONAL CITY BANK OF PENNSYLVANIA,
as Escrow Agent
By:
-------------------------------------
Name:
Title:
13
SCHEDULE A
1. Escrow Funds.
Purchase Price Deposit: $10,500,000
Escrow Funds wiring instructions:
National City Bank
ABA# 041000124
Account # 2171150005490
ATTN: Corporate Trust -
Bond Administration
Re: Agway Energy; NCS #
2. Escrow Agent Fees.
Acceptance Fee: $__1,000_____________
Annual Escrow Fee: $__6,000_____________
TOTAL $__7,000_____________
The Acceptance Fee and the Annual Escrow Fee are payable upon execution of
the escrow documents. In addition to the foregoing, Seller and Purchaser
shall be charged: (i) $100 per investment (i.e., purchase, sale, receipt or
delivery) that is not an Armada Fund investment and (ii) $25 per
disbursement for every disbursement over the first 12 disbursements that
occur in any twelve (12) month period. In the event the escrow is not
funded, the Acceptance Fee and all related expenses, including attorneys'
fees, remain due and payable, and if paid, will not be refunded. Annual
fees cover a full year in advance, or any part thereof, and thus are not
pro-rated in the year of termination.
The fees quoted in this schedule apply to services ordinarily rendered in
the administration of an Escrow Account and are subject to reasonable
adjustment based on final review of documents, or when the Escrow Agent is
called upon to undertake unusual duties or responsibilities, or as changes
in law, procedures, or the cost of doing business demand. Services in
addition to and not contemplated in this Agreement, including, but not
limited to, document amendments and revisions, non-standard cash and/or
investment transactions, calculations, notices and reports, and legal fees,
will be billed as extraordinary expenses.
Unless otherwise indicated, the above fees relate to the establishment of one
escrow account. Additional sub-accounts governed by the same Escrow Agreement
may incur an additional charge. Transaction costs include charges for wire
transfers, checks, internal transfers and securities transactions.
A-1
SCHEDULE A. continued
3. Taxpayer Identification Numbers.
Seller: 16-1551524
Purchaser: 22-3410352
4. Investment Instructions.
[List specific investment instructions here. If selecting a money market
fund, include fund name, fund number and class, describe any additional
transaction fees applicable to the investment and, if applicable, include
the following statement relating to sweep fees:
The minimum fee for sweeping funds into or out of the fund selected is
an annualized amount of ________ of _____% (_____ basis points) and is
deducted from the interest posted to the account.]
5. Representatives.
The following person is hereby designated and appointed as Seller
Representative under the Purchase Price Deposit Escrow Agreement:
Michael R. Hopsicker
--------------------------------- --------------------------------
Name Specimen signature
The following person is hereby designated and appointed as Purchaser
Representative under the Purchase Price Deposit Escrow Agreement:
Janice Meola
--------------------------------- --------------------------------
Name Specimen signature
A-2
SCHEDULE A. continued
6. Representative Information.
The following information should be provided to Escrow Agent separately by
each Representative and any future Representative:
1. Date of Birth
2. Address
3. Mailing Address, if different
4. Social Security Number
7. Notice Addresses.
Principal Place of Business,
if different
If to Seller at: c/o Agway, Inc. __________________________
PO Box 4933 __________________________
Syracuse, New York 13221 __________________________
ATTN: Karen Ohliger __________________________
Facsimile: 315-449-6435
Telephone: 315-449-6147
E-mail: kohliger@agway.com
With a copy to: Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, New York 10153
ATTN: David E. Zeltner, Esq.
Facsimile: (212) 310-8007
If to Purchaser at: Suburban Propane, L.P.
240 Route 10 West
Whippany, New Jersey 07981
ATTN: Janice Meola, General Counsel
Facsimile: (973) 503-9184
Telephone: (973) 503 9987
E-mail: jmeola@suburbanpropane.com
With a copy to: Cole, Schotz, Meisel, Forman & Leonard, P.A.
Court Plaza North
25 Main Street
Hackensack, New Jersey 07601
ATTN: Michael D. Sirota, Esq.
Facsimile: (201) 678-6262
A-3
SCHEDULE A. continued
If to the Escrow
Agent at: National City Bank of Pennsylvania, as Escrow Agent
101 West Washington Street
Suite 655S
Indianapolis, Indiana 46255
Attention: Karen Franklin
Telephone: (317)267-7025
Facsimile: (317) 267-3685
A-4
Exhibit D
GENERAL ESCROW AGREEMENT
THIS GENERAL ESCROW AGREEMENT, dated as of , 2003 ("Escrow Agreement"), is
by and among AGWAY ENERGY PRODUCTS, LLC, a Delaware limited liability company,
AGWAY ENERGY SERVICES, INC., a Delaware corporation, and AGWAY ENERGY SERVICES
PA, INC., a Delaware corporation (collectively, "Depositor"); SUBURBAN PROPANE,
L.P., a Delaware limited partnership ("Recipient"); and NATIONAL CITY BANK OF
PENNSYLVANIA, a national banking association ("Escrow Agent").
BACKGROUND
A. Depositor and Recipient have entered into an Asset Purchase Agreement
(as amended, the "Asset Purchase Agreement"), dated as of November 10, 2003, a
copy of which is attached hereto as Exhibit 1 to this Escrow Agreement, pursuant
to which Depositor has agreed to deposit in escrow (a) $10,000,000 (as to such
amount actually deposited with Escrow Agent, the "Credit Balance Escrow
Deposit") for the purpose of providing Recipient with a source of funds to
satisfy any "Warm Weather Adjustment" (as defined in the Purchase Agreement) and
(b) $4,000,000 (as to such amount actually deposited with Escrow Agent, the
"General Indemnity Escrow Deposit") (which includes the Tax Escrow Amount) for
the purpose of providing Recipient with a source of funds to satisfy Depositor's
indemnification obligations under Sections 10.2 and 10.5(b)(iii) of the Asset
Purchase Agreement.
B. Subject to the terms and provisions of this Escrow Agreement, Depositor
and Recipient desire to appoint Escrow Agent as an escrow agent hereunder for
the purposes of establishing certain escrow accounts to satisfy, if any, such
adjustments and indemnification claims, and Escrow Agent desires to accept such
appointment and hold, and disburse the funds deposited with it and the earnings
thereon in accordance with the terms of this Escrow Agreement.
C. Pursuant to the Asset Purchase Agreement, Depositor and Recipient have
appointed the Representatives (as defined below) to represent them for all
purposes in connection with this Escrow Agreement.
D. In order to establish the escrow of funds and to effect the provisions
of the Asset Purchase Agreement, the parties hereto have entered into this
Escrow Agreement.
STATEMENT OF AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, for
themselves, their successors and assigns, hereby agree as follows:
1. Definitions. Capitalized terms used herein that are defined in the Asset
Purchase Agreement shall, unless defined herein, have the meanings ascribed to
them in the Asset Purchase Agreement. In addition to the terms defined elsewhere
herein, the following terms shall have the following meanings when used herein:
"Business Day" shall mean any day other than a Saturday, Sunday or any day
on which commercial banks in Pennsylvania or the city in which Escrow Agent is
located are required or permitted by law to be closed.
"Closing Date" shall mean ___________, 200_.
"Credit Balance Escrow Funds" shall mean the Credit Balance Escrow Deposit
deposited with Escrow Agent pursuant to Section 3 of this Escrow Agreement,
together with any interest or other income thereon.
"Depositor Representative" shall mean the person so designated on Schedule
A hereto or any other person designated in a writing signed by Depositor and
delivered to Escrow Agent and the Recipient Representative in accordance with
the notice provisions of this Escrow Agreement, to act as its representative
under this Escrow Agreement.
"Escrow Account" shall have the meaning set forth in Section 3(b) of this
Escrow Agreement.
"Escrow Funds" shall mean the Credit Balance Escrow Funds, Tax Escrow Funds
and General Indemnity Escrow Funds.
"Escrow Period" shall mean the period commencing on the date hereof and
ending on the last day that the Escrow Funds are held in escrow by the Escrow
Agent pursuant to the terms hereof.
"General Indemnity Escrow Funds" shall mean the General Indemnity Escrow
Deposit (less the Tax Escrow Amount) deposited with Escrow Agent pursuant to
Section 3 of this Escrow Agreement, together with any interest or other income
thereon.
"General Indemnity Escrow Termination Date" shall mean the date that is
fifteen (15) months after the Closing Date.
"Joint Written Direction" shall mean a written direction executed by the
Representatives and directing Escrow Agent to disburse all or a portion of the
Escrow Funds or to take or refrain from taking an action pursuant to this Escrow
Agreement.
"Recipient Representative" shall mean the persons so designated on Schedule
A hereto or any other person designated in a writing signed by Recipient and
delivered to Escrow Agent and the Depositor Representative in accordance with
the notice provisions of this Escrow Agreement, to act as its representative
under this Escrow Agreement.
2
"Representatives" shall mean the Depositor Representative and the Recipient
Representative.
"Sub-Escrow Accounts" shall mean ledger basis accounts established in the
Escrow Account as more particularly described in Section 3 of this Escrow
Agreement.
"Tax Escrow Amount" shall mean $500,000.
"Tax Escrow Funds" shall mean the portion of the General Indemnity Escrow
Deposit equal to the Tax Escrow Amount, together with any interest or other
income thereon.
"Tax Indemnity Escrow Termination Date" shall mean the date that is three
(3) years after the Closing Date.
2. Appointment of and Acceptance by Escrow Agent. Depositor and Recipient
hereby appoint Escrow Agent to serve as escrow agent hereunder. Escrow Agent
hereby accepts such appointment and, upon receipt by wire transfer of the Escrow
Funds in accordance with Section 3 below, agrees to hold, invest and disburse
the Escrow Funds in accordance with this Escrow Agreement.
3. Deposit of Escrow Funds; Escrow Account.
a. Deposits. Simultaneously with the execution and delivery of this Escrow
Agreement, Depositor shall deposit the Credit Balance Escrow Deposit and the
General Indemnity Escrow Deposit with Escrow Agent, in immediately available
funds pursuant to the wire instructions set forth on Schedule A hereto.
b. Escrow Account. Upon receipt of the Credit Balance Escrow Deposit and
the General Indemnity Escrow Deposit, Escrow Agent agrees to hold the funds in a
separate escrow account (the "Escrow Account") and to establish the following
Sub-Accounts:
(i) the Credit Balance Escrow Account;
(ii) the General Indemnity Escrow Account; and
(iii) the Tax Escrow Account.
Depositor shall be deemed the owner of all Escrow Funds and investments in the
Escrow Account and shall be responsible for the preparation of all tax returns
associated with the investments therein and shall pay all costs relating to such
returns, and all taxes, fines and penalties and interest. The Escrow Account
shall be assigned the federal tax identification number of Depositor. Depositor
shall provide Escrow Agent, at any time upon request of Escrow Agent with a Form
W-8 or W-9 to evidence Depositor is not
3
subject to any back-up withholding under the United States Internal Revenue
Code. Depositor shall report all income, if any, that is earned on, or derived
from, the Escrow Funds as its income, in the taxable year or years in which such
income is properly includible and pay any taxes attributable thereto. Escrow
Agent shall have a lien, which shall be paramount and prior in right of all
other persons, upon all monies and other property that shall have been received
by it under this Escrow Agreement, to secure the payment to it of fees and
expenses hereunder due to Escrow Agent. Escrow Agent shall not be required
without its consent to relinquish, deliver or pay over any instrument, money or
other property deposited with it in this Escrow Agreement unless and until it
shall have been paid and reimbursed its fees and expenses.
4. Disbursement of Escrow Funds.
a. Credit Balance Escrow Funds. Section 3.5 of the Asset Purchase Agreement
shall govern disbursement of the Credit Balance Escrow Funds. Any notice given
by Depositor or Recipient pursuant to Section 3.5 of the Asset Purchase
Agreement shall also be given the Escrow Agent. As soon as practicable after
March 31, 2004, but no later than April 15, 2004, Recipient shall calculate the
Warm Weather Adjustment, and deliver to Depositor and Escrow Agent the Credit
Balances Settlement Statement (as defined in the Asset Purchase Agreement) and
the Cash Settlement of Credit Balances (as defined in the Asset Purchase
Agreement). After the Escrow Agent and Depositor receive the Credit Balances
Settlement Statement and the Cash Settlement of Credit Balances, the Escrow
Agent shall promptly disburse all of the Credit Balance Escrow Funds to
Depositor if the Cash Settlement of Credit Balances indicates that none of the
Credit Balance Escrow Funds should be disbursed to Recipient. If the Cash
Settlement of Credit Balances indicates that any portion of the Credit Balance
Escrow Funds should be disbursed to Recipient, then the Escrow Agent shall
disburse the Credit Balance Escrow Funds in accordance with the Cash Settlement
of Credit Balances if ten (10) Business Days elapse after the Escrow Agent's and
Depositor's receipt of the Cash Settlement of Credit Balances without the
Recipient and the Escrow Agent receiving notice from Depositor disputing the
calculation of the Cash Settlement of Credit Balances (a "Dispute Notice"). If
the Escrow Agent and Recipient receive a Dispute Notice from Depositor within
ten (10) Business Days after the Escrow Agent's and Depositor's receipt of the
Cash Settlement of Credit Balances, then the Escrow Agent shall disburse the
Credit Balance Escrow Funds in accordance with and upon the receipt of either
(i) a Joint Written Direction or (ii) the report of the Accounting Referee (as
defined in the Asset Purchase Agreement) setting forth its calculation of the
Cash Settlement of Credit Balances.
b. General Indemnity Escrow Funds.
(i) If the Losses for which Recipient is entitled to indemnification
and payment from the General Indemnity Escrow Fund pursuant to Sections
10.2 and 10.5(b) of the Asset Purchase Agreement exceed the
4
De Minimis Amount set forth in Section 10.5(b)(i) of the Asset Purchase
Agreement and in the aggregate exceed the Deductible set forth in Section
10.5(b)(ii) of the Asset Purchase Agreement, Recipient shall be entitled to
deliver to Depositor and Escrow Agent a written notice of the amount of
such Losses inclusive of the Deductible (an "Indemnity Draw Down Request").
(ii) By no later than 5:00 p.m., New York City time, on the tenth
(10th) Business Day following receipt by Depositor and Escrow Agent of an
Indemnity Draw Down Request (as to such ten (10) - Business Day period, the
"Indemnity Draw Down Request Period"), Depositor may notify Escrow Agent
and Recipient in writing, in accordance with Section 14 hereof, of
Depositor's objection to the Indemnity Draw Down Request, which notice
shall state with specificity the grounds for such objection (an "Indemnity
Draw Down Request Counternotice"). In the event Depositor does not object
within the Indemnity Draw Down Request Period, Depositor shall be deemed to
have waived Depositor's right to contest the Indemnity Draw Down Request,
the dollar amount claimed by Recipient as set forth in the Indemnity Draw
Down Request shall be deemed fixed for purposes of this Escrow Agreement,
whereupon within three (3) Business Days after the expiration of the
Indemnity Draw Down Request Period, Escrow Agent shall (A) disburse at the
direction of Recipient by the method specified in the Indemnity Draw Down
Request, out of the General Indemnity Escrow Funds, the dollar amount
claimed in the Indemnity Draw Down Request (or, if the amount of the
Indemnity Draw Down Request exceeds the remaining amount of the General
Indemnity Escrow Funds, the remaining amount of the General Indemnity
Escrow Funds) and (B) deliver written confirmation to Depositor and
Recipient that such disbursement has been made. The sole bases for an
objection by Depositor to an Indemnity Draw Down Request pursuant to this
Section 4(b)(ii) shall be that the Losses incurred by Recipient (A) did not
exceed the De Minimis Amount, (B) in the aggregate did not exceed the
Deductible, or (C) were not eligible for payment from the General Indemnity
Escrow Funds pursuant to the terms of the Asset Purchase Agreement.
(iii) If an Indemnity Draw Down Request Counternotice is properly
given with respect to an Indemnity Draw Down Request within the Indemnity
Draw Down Request Period that also provides that portions of the claims set
forth in the Indemnity Draw Down Request are not disputed ("Undisputed
Indemnity Portions"), then the dollar amount of the Undisputed Indemnity
Portions claimed by Recipient as set forth in the Indemnity Draw Down
Request shall be deemed fixed for purposes of this Escrow Agreement,
whereupon within three (3) Business Days after the expiration of the
Indemnity Draw Down Request Period, Escrow Agent shall disburse at the
direction of Recipient by the method specified in the Indemnity Draw Down
Request, out of the General Indemnity Escrow Funds, the dollar amount of
the Undisputed Indemnity Portions
5
claimed in the Indemnity Draw Down Request, and shall give written
confirmation to Depositor and Recipient that such disbursement has been
made.
(iv) If an Indemnity Draw Down Request Counternotice is properly given
with respect to a Indemnity Draw Down Request within the Indemnity Draw
Down Request Period, subject to Section 4(b)(iii) of this Escrow Agreement
with respect to Undisputed Indemnity Portions, Escrow Agent may refuse to
comply with any demands made upon it with respect to the underlying claim
until it receives (A) a Joint Written Direction that such claim has been
resolved by mutual agreement or (B) a final binding arbitration decision as
contemplated by Section 5 of this Escrow Agreement, and in doing so, Escrow
Agent shall not incur any liability to any party or person interested in
the subject matter of this Escrow Agreement. Escrow Agent may rely and
continue to rely conclusively upon such arbitration decision or Joint
Written Direction, notwithstanding that it may be found subsequently to be
void or voidable, until one of the officers of Escrow Agent, shall have
actual knowledge that such arbitration decision or Joint Written Direction
shall have been modified, annulled, set aside, vacated or quashed.
(v) Within any Indemnity Draw Down Request Period, Recipient may amend
any Indemnity Draw Down Request and Depositor may amend any Indemnity Draw
Down Request Counternotice, in each case by giving written notice to the
other party and Escrow Agent.
(vi) By no later than 5:00 p.m., New York City time, ten (10) Business
Days prior to the General Indemnity Escrow Termination Date, Escrow Agent
shall notify Depositor and Recipient in writing (a "General Indemnity
Escrow Notice") that it is prepared to disburse the remaining amount of
General Indemnity Escrow Funds to Depositor. If Recipient objects to the
disbursement of all or a portion of the General Indemnity Escrow Funds, it
shall give written notice (a "General Indemnity Escrow Objection Notice")
to Escrow Agent and Depositor not later than 5:00 p.m., New York City time,
five (5) Business Days after receiving the General Indemnity Escrow Notice
from Escrow Agent (as to such five (5)-Business Day period, the "General
Indemnity Escrow Objection Notice Period"). The General Indemnity Escrow
Objection Notice shall state whether there exists any pending claims which
are indemnifiable under Sections 10.2 and 10.5(b)(iii) of the Asset
Purchase Agreement and the amount of the General Indemnity Escrow Funds to
be retained by Escrow Agent with respect thereto (the "General Indemnity
Holdback").
(vii) If Escrow Agent receives a General Indemnity Escrow Objection
Notice from Recipient within the General Indemnity Escrow Objection Notice
Period, the General Indemnity Holdback shall be retained by Escrow Agent
pending resolution thereof and within three (3) Business Days after the
expiration
6
of the General Indemnity Escrow Objection Notice Period, Escrow Agent shall
(A) disburse from the General Indemnity Escrow Funds an amount equal to the
General Indemnity Escrow Funds less the General Indemnity Holdback to
Depositor pursuant to written instructions from Depositor and (B) give
written confirmation to Depositor and Recipient that such disbursement has
been made. Recipient shall thereafter make demand as set forth in Section
4(b)(i) of this Escrow Agreement for disbursement of General Indemnity
Escrow Funds from the General Indemnity Holdback for Losses incurred with
respect to such pending claims, whereupon the rights and obligations of the
parties set forth in Sections 4(b)(ii)-(v) of this Escrow Agreement shall
apply.
(viii) If the Escrow Agent does not receive a General Indemnity Escrow
Objection Notice from Recipient within the General Indemnity Escrow
Objection Notice Period, Recipient shall be deemed to have waived
Recipient's right to contest the General Indemnity Escrow Notice, the
dollar amount of the General Indemnity Escrow Funds shall be deemed fixed
for purposes of this Escrow Agreement, whereupon within three (3) Business
Days after the expiration of the General Indemnity Escrow Objection Notice
Period, Escrow Agent shall (A) disburse to Depositor the remaining amount
of the General Indemnity Escrow Funds in accordance with the written
direction provided by Depositor to Escrow Agent and (B) deliver written
confirmation to Depositor and Recipient that such disbursement has been
made.
c. Tax Escrow Funds.
(i) If the Losses for which Recipient is entitled to indemnification
and payment from the Tax Escrow pursuant to Sections 10.2 and 10.5(b)(iii)
of the Asset Purchase Agreement exceed the De Minimis Amount set forth in
Section 10.5(b)(i) of the Asset Purchase Agreement and in the aggregate
exceed the Deductible set forth in Section 10.5(b)(ii) of the Asset
Purchase Agreement, Recipient shall be entitled to deliver to Escrow Agent
and Depositor a written notice of the amount of such Losses inclusive of
the Deductible (a "Tax Draw Down Request").
(ii) By no later than 5:00 p.m., New York City time, ten (10)
- Business Days of receipt of a Tax Draw Down Request, Depositor may notify
Escrow Agent and Recipient, in accordance with Section 14 hereof, of
Depositor's objection to the Tax Draw Down Request, which notice shall
state with specificity the grounds for such objection (a "Tax Draw Down
Request Counternotice"). In the event Depositor does not object within the
Tax Draw Down Request Period, Depositor shall be deemed to have waived
Depositor's right to contest the Tax Draw Down Request, the dollar amount
claimed by Recipient as set forth in the Tax Draw Down Request shall be
deemed fixed for purposes of this Escrow Agreement, whereupon within three
(3) Business Days
7
after the expiration of the Tax Draw Down Request Period, Escrow Agent
shall (A) disburse at the direction of Recipient by the method specified in
the Tax Draw Down Request, out of the Tax Escrow Funds, the dollar amount
claimed in the Tax Draw Down Request (or, if the amount of the Tax Draw
Down Request exceeds the remaining amount of the Tax Escrow Funds, the
remaining amount of the Tax Escrow Funds) and (B) deliver written
confirmation to Depositor and Recipient that such disbursement has been
made.
(iii) If a Tax Draw Down Request Counternotice is properly given with
respect to a Tax Draw Down Request within the Tax Draw Down Request Period
that also provides that portions of the claims set forth in the Tax Draw
Down Request are not disputed ("Undisputed Tax Draw Portions"), then the
dollar amount of the Undisputed Tax Draw Portions claimed by Recipient as
set forth in the Tax Draw Down Request shall be deemed fixed for purposes
of this Escrow Agreement, whereupon within three (3) Business Days after
the expiration of the Tax Draw Down Request Period, Escrow Agent shall (A)
disburse at the direction of Recipient by the method specified in the Tax
Draw Down Request, out of the Tax Escrow Funds, the dollar amount of the
Undisputed Tax Draw Portions claimed in the Tax Draw Down Request, and (B)
deliver written confirmation to Depositor and Recipient that such
disbursement has been made.
(iv) If a Tax Draw Down Request Counternotice is properly given with
respect to a Tax Draw Down Request within the Tax Draw Down Request Period,
subject to Section 4(c)(iii) of this Escrow Agreement with respect to
Undisputed Tax Draw Portions, Escrow Agent may refuse to comply with any
demands made upon it with respect to the underlying claim until it receives
(A) a Joint Written Direction that such claim has been resolved by mutual
agreement or (B) a final binding arbitration decision as contemplated by
Section 5 of this Escrow Agreement, and in doing so, Escrow Agent shall not
incur any liability to any party or person interested in the subject matter
of this Escrow Agreement. Escrow Agent may rely and continue to rely
conclusively upon such arbitration decision or Joint Written Direction,
notwithstanding that it may be found subsequently to be void or voidable,
until one of the officers of Escrow Agent, shall have actual knowledge that
such arbitration decision or Joint Written Direction shall have been
modified, annulled, set aside, vacated or quashed.
(v) Within any Tax Draw Down Request Period, Recipient may amend any
Tax Draw Down Request and Depositor may amend any Tax Draw Down Request
Counternotice, in each case by giving written notice to the other party and
Escrow Agent.
(vi) By no later than 5:00 p.m., New York City time, ten (10) Business
Days prior to the Tax Escrow Termination Date, Escrow Agent shall
8
notify Depositor and Recipient in writing (a "Tax Draw Escrow Notice") that
it is prepared to disburse from the Tax Escrow Funds to Depositor. If
Recipient objects to the disbursement of all or a portion of the Tax Escrow
Funds, it shall give written notice (a "Tax Draw Escrow Objection Notice")
to Escrow Agent and Depositor not later than 5:00 p.m., New York City time,
five (5) Business Days after receiving the Tax Draw Escrow Notice from
Escrow Agent (as to such five (5)-Business Day period, the "Tax Draw Escrow
Objection Notice Period"). The Tax Draw Escrow Objection Notice shall state
whether there exists any pending claims which are indemnifiable under
Sections 10.2 and 10.5(b)(iii) of the Asset Purchase Agreement and the
amount of the Tax Escrow Funds to be retained by Escrow Agent with respect
thereto (the "Tax Holdback").
(vii) If Escrow Agent receives a Tax Draw Escrow Objection Notice from
Recipient within the Tax Draw Escrow Objection Notice Period, the Tax
Holdback shall be retained by Escrow Agent pending resolution thereof and
within three (3) Business Days after the expiration of the Tax Draw Escrow
Objection Notice Period, Escrow Agent shall (A) disburse from the Tax
Escrow Funds an amount equal to the Tax Escrow Funds less the Tax Holdback
to Depositor pursuant to written instructions from Depositor to Escrow
Agent and (B) give written confirmation to Depositor and Recipient that
such disbursement has been made. Recipient shall thereafter make demand as
set forth in Section 4(c)(i) of this Escrow Agreement for disbursement of
Tax Escrow Funds from the Tax Holdback for Losses incurred with respect to
such pending claims, whereupon the rights and obligations of the parties
set forth in Sections 4.1(c)(ii)-(v) of this Escrow Agreement shall apply.
(viii) If Escrow Agent does not receive a Tax Draw Escrow Objection
Notice from Recipient within the Tax Draw Escrow Objection Notice Period,
Recipient shall be deemed to have waived Recipient's right to contest the
Tax Draw Escrow Notice, the dollar amount of the Tax Escrow Funds shall be
deemed fixed for purposes of this Escrow Agreement, whereupon within three
(3) Business Days after the expiration of the Tax Draw Escrow Objection
Notice Period, Escrow Agent shall (A) disburse at the direction of
Depositor by the method specified in writing by Depositor to Escrow Agent,
the Tax Escrow Funds and (B) deliver written confirmation to Depositor and
Recipient that such disbursement has been made.
5. Dispute Resolution.
a. Unless otherwise provided herein, any dispute, controversy, or claim
between Depositor and Recipient arising out of or relating to this Escrow
Agreement (a "Dispute"), whether arising during the term of this Escrow
Agreement or after its termination, shall be resolved in accordance with the
procedures specified in this
9
Section 5, which shall be the sole and exclusive procedures for the binding
resolution of any Dispute.
b. Both Depositor and Recipient may give the other party written notice of
any Dispute (a "Dispute Notice"). Unless otherwise agreed between Depositor and
Recipient, within fifteen (15) Business Days after delivery of a Dispute Notice,
the receiving party shall submit to the other a written response (a "Dispute
Response"), not to be longer than five (5) type-written pages. The Dispute
Notice and Dispute Response shall include (a) a statement of each party's
position and a summary of arguments supporting that position, and (b) the name
and title of the representative who will represent that party and of any other
person who will accompany the party to a meeting to discuss the dispute. Within
five (5) Business Days after delivery of the disputing party's notice, the
representatives of both parties shall meet at a mutually acceptable time and
place to attempt to resolve the Dispute.
c. If the Dispute has not been resolved by negotiation within thirty (30)
Business Days after the delivery of the Dispute Notice, or if the parties fail
to meet within ten (10) Business Days unless otherwise agreed by both parties in
writing, an arbitrator, to be mutually agreed upon by Depositor and Recipient,
shall be chosen. If no such agreement is reached, Depositor shall name five (5)
potential arbitrators who shall be lawyers with at least ten (10) years
experience in overseeing matters relevant to the Dispute, and Recipient shall
select one of the potential arbitrators selected by Depositor to arbitrate the
Dispute. The arbitrator so chosen shall then arbitrate the Dispute in accordance
with the standards of the American Arbitration Association, and his or her
decision shall be binding on Depositor and Recipient.
d. The arbitrator shall determine the location of any arbitration
proceedings and the rules governing such proceedings.
e. The non-prevailing party to an arbitrated Dispute shall pay the costs
incurred by the prevailing party as a result of either party initiating the
dispute resolutions procedures as established this Section 5, including
reasonable legal expenses.
6. Suspension of Performance; Disbursement Into Court. If, at any time, (i)
Escrow Agent is unable to determine, to Escrow Agent's sole satisfaction, the
proper disposition of all or any portion of the Escrow Funds or Escrow Agent's
proper actions with respect to its obligations hereunder, including, without
limitation, arising from adverse or conflicting claims are made to any portion
of the Escrow Funds, or (ii) the Representatives have not within thirty (30)
days of the furnishing by Escrow Agent of a notice of resignation pursuant to
Section 8 of this Escrow Agreement, appointed a successor Escrow Agent to act
hereunder, then Escrow Agent may, in its sole discretion, take either or both of
the following actions:
10
a. Suspend the performance of any of its obligations (including without
limitation any disbursement obligations) under this Escrow Agreement until such
dispute or uncertainty shall be resolved to the sole satisfaction of Escrow
Agent or until a successor Escrow Agent shall have been appointed (as the case
may be).
b. Petition (by means of an interpleader action or any other appropriate
method) any court of competent jurisdiction in any venue convenient to Escrow
Agent, for instructions with respect to such dispute or uncertainty, and to the
extent required or permitted by law, pay into such court, for holding and
disposition in accordance with the instructions of such court, all Escrow Funds,
after deduction and payment to Escrow Agent of all fees and expenses (including
court costs and attorneys' fees) payable to, incurred by, or expected to be
incurred by Escrow Agent in connection with the performance of its duties and
the exercise of its rights hereunder. In the event such suit is brought,
Depositor and Recipient shall jointly and severally agree to pay Escrow Agent in
excess of the Escrow Funds deducted or paid to Escrow Agent, all costs, expenses
and attorney's fees that it may expend or incur in such interpleader suit, the
amount thereof to be fixed and a judgment therefore to be rendered by the court
in such suit.
Escrow Agent shall have no liability to Depositor, Recipient, their
respective shareholders, partners or members or any other person with respect to
any such suspension of performance or disbursement into court, specifically
including any liability or claimed liability that may arise, or be alleged to
have arisen, out of or as a result of any delay in the disbursement of the
Escrow Funds or any delay in or with respect to any other action required or
requested of Escrow Agent. Escrow Agent may obey and comply with any order or
process of a court (whether or not such court shall have jurisdiction)
commanding it to do or to refrain from some act in relation to the subject
matter of this Escrow Agreement. Escrow Agent may rely and continue to rely
conclusively upon such orders or process, notwithstanding that it may be found
subsequently to be void or voidable, until one of the officers of Escrow Agent,
shall have actual knowledge that such order or process shall have been modified,
annulled, set aside, vacate or quashed.
7. Investment of Funds. Escrow Agent is herein directed and instructed to
initially invest and reinvest the Escrow Funds in the investment indicated on
Schedule A hereto. Escrow Agent may make any investments through its or an
affiliate's bond or investment department, for which Escrow Agent or any of its
affiliates may serves as investment advisor and receive compensation with
respect to any investment direction hereunder. The Escrow Agent shall provide to
Depositor and Recipient a statement, on a monthly basis, reporting the current
balance of the Escrow Funds and the amount of the investment earnings or losses.
With the execution of this Escrow Agreement, Depositor
11
and Recipient hereto acknowledge receipt of prospectuses and/or disclosure
materials associated with the investment vehicle, either through means of
hardcopy or via access to the website associated with the investment selected by
Depositor and Recipient. Depositor and Recipient acknowledge that they have
discussed the investment and are in agreement as to the selected investment.
Depositor and Recipient may provide instructions changing the investment of the
Escrow Funds (subject to applicable minimum investment requirements) by the
furnishing of a Joint Written Direction--specifying the type and identity of the
investments to be purchased and/or sold, any particular settlement procedures
required, if any (which settlement procedures shall be consistent with industry
standards and practices), and such other information as Escrow Agent may
require--to the Escrow Agent, and Escrow Agent may make or cause to be made such
investments subject to such additional terms and conditions as Escrow Agent may
determine appropriate under the circumstances; provided, however, that no
investment or reinvestment may be made except in the following:
a. direct obligations of the United States of America or obligations
the principal of and the interest on which are unconditionally guaranteed
by the United State of America;
b. certificates of deposit issued by any bank, bank and trust company,
or national banking association (including Escrow Agent and its
affiliates), which certificates of deposit are insured by the Federal
Deposit Insurance Corporation or a similar governmental agency;
c. repurchase agreements with any bank, trust company, or national
banking association (including Escrow Agent and its affiliates); or
d. any institutional money market fund offered by Escrow Agent,
including any institutional money market fund managed by Escrow Agent or
any of its affiliates.
If Escrow Agent has not received a Joint Written Direction at any time that
an investment decision must be made, Escrow Agent shall invest the Escrow Funds,
or such portion thereof as to which no Joint Written Direction has been
received, in investments described in clause (d) above. Each of the foregoing
investments shall be made in the name of Escrow Agent. No investment shall be
made in any instrument or security that has a maturity of greater than six (6)
months. Notwithstanding anything to the contrary contained herein, Escrow Agent
may, without notice to the Representatives, sell or liquidate any of the
foregoing investments at any time if the proceeds thereof are required for any
disbursement of Escrow Funds permitted or required hereunder. All investment
earnings shall become part of the Escrow Funds and investment losses shall be
charged against the Escrow Funds when realized. Escrow Agent shall not be liable
or responsible for loss in the value of any investment made pursuant to this
Escrow Agreement, or for any loss, cost or penalty resulting from any sale or
liquidation of the Escrow Funds.
12
Escrow Agent may use a broker-dealer of its own selection, including a
broker-dealer owned by or affiliated with Escrow Agent or any of its affiliates.
8. Resignation of Escrow Agent. Escrow Agent may resign and be discharged
from the performance of its duties hereunder at any time by giving ten (10) days
prior written notice to the Depositor and Recipient specifying a date when such
resignation shall take effect. Such resignation shall take effect upon the
earlier of (i) the appointment of a successor Escrow Agent as provided herein or
(ii) thirty (30) days after delivery of such notice of resignation. Upon any
such notice of resignation, the Representatives jointly shall appoint a
successor Escrow Agent hereunder prior to the effective date of such
resignation. The retiring Escrow Agent shall transmit all records pertaining to
the Escrow Funds and shall pay all Escrow Funds and transfer all investments to
the successor Escrow Agent, after making copies of such records as the retiring
Escrow Agent deems advisable and after deduction and payment to the retiring
Escrow Agent of all reasonable fees and expenses (including court costs and
attorneys' fees) payable to, incurred by, or expected to be incurred by the
retiring Escrow Agent in connection with the performance of its duties and the
exercise of its rights hereunder. After any retiring Escrow Agent's resignation,
the provisions of this Escrow Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Escrow Agent under this
Escrow Agreement. Any corporation or association into which the Escrow Agent may
be merged or converted or with which it may be consolidated, or any corporation
or association to which all or substantially all of the escrow business of the
Escrow Agent's corporate trust line of business may be transferred, shall be the
Escrow Agent under this Escrow Agreement without further act.
9. Liability of Escrow Agent. The Escrow Agent undertakes to perform only
such duties as are expressly set forth herein and no duties shall be implied or
otherwise imposed upon or against Escrow Agent, and Escrow Agent shall not be
liable except for the performance of such duties and obligations as are
specifically set out in this Escrow Agreement. The Escrow Agent shall have no
liability under and no duty to inquire as to the provisions of any agreement,
including, without limitation, the Asset Purchase Agreement (except for those
sections of the Asset Purchase Agreement expressly referred to herein), other
than this Escrow Agreement. The Escrow Agent shall not be liable for any action
taken or omitted by it in good faith except to the extent that a court of
competent jurisdiction determines that the Escrow Agent's gross negligence or
willful misconduct was the primary cause of any loss to the Depositor or
Recipient. Escrow Agent's sole responsibility shall be for the safekeeping and
disbursement of the Escrow Funds in accordance with the terms of this Escrow
Agreement. Escrow Agent shall have no implied duties or obligations and shall
not be charged with knowledge or notice of any fact or circumstance not
specifically set forth herein. Escrow Agent may rely upon any notice,
instruction, request or other instrument, not only as to its due execution,
validity and effectiveness, but also as to the truth and accuracy of any
information contained therein, which Escrow Agent shall believe to be genuine
and to have been signed or
13
presented by the person or parties purporting to sign the same. In no event
shall Escrow Agent be liable for incidental, indirect, special, consequential or
punitive damages (including, but not limited to lost profits), even if the
Escrow Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action. Escrow Agent shall not be obligated to take
any legal action or commence any proceeding in connection with the Escrow Funds,
any account in which Escrow Funds are deposited, this Escrow Agreement or the
Asset Purchase Agreement, or to appear in, prosecute or defend any such legal
action or proceeding. Escrow Agent may consult legal counsel selected by it in
the event of any dispute or question as to the construction of any of the
provisions hereof or of any other agreement or of its duties hereunder, or
relating to any dispute involving any party hereto, and shall incur no liability
and shall be fully indemnified from any liability whatsoever in acting in
accordance with the opinion or instruction of such counsel. Depositor and
Recipient, jointly and severally, shall promptly pay, upon demand, the
reasonable fees and expenses of any such counsel. As between Depositor and
Recipient, each shall be responsible for the payment of fifty (50%) percent of
such fees and expenses.
The Escrow Agent is authorized, in its sole discretion, to comply with
orders issued or process entered by any court with respect to the Escrow Funds,
without determination by the Escrow Agent of such court's jurisdiction in the
matter. If any portion of the Escrow Funds is at any time attached, garnished or
levied upon under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or enjoined by any
court order, or in case any order, judgment or decree shall be made or entered
by any court affecting such property or any part thereof, then and in any such
event, the Escrow Agent is authorized, in its sole discretion, to rely upon and
comply with any such order, writ, judgment or decree which it is advised by
legal counsel selected by it is binding upon it without the need for appeal or
other action; and if the Escrow Agent complies with any such order, writ,
judgment or decree, it shall not be liable to any of the parties hereto or to
any other person or entity by reason of such compliance even though such order,
writ, judgment or decree may be subsequently reversed, modified, annulled, set
aside or vacated.
10. Indemnification of Escrow Agent. From and at all times after the date
of this Escrow Agreement, Depositor and Recipient, jointly and severally, shall,
to the fullest extent permitted by law, defend, indemnify and hold harmless
Escrow Agent and each director, officer, employee, attorney, agent and affiliate
of Escrow Agent (collectively, the "Indemnified Parties") against any and all
actions, claims (whether or not valid), losses, damages, liabilities, costs and
expenses of any kind or nature whatsoever (including without limitation
reasonable attorneys' fees, costs and expenses) incurred by or asserted against
any of the Indemnified Parties from and after the date hereof, whether direct,
indirect or consequential, as a result of or arising from or in any way relating
to any claim, demand, suit, action or proceeding (including any inquiry or
investigation) by any person, including without limitation Depositor or
Recipient,
14
whether threatened or initiated, asserting a claim for any legal or equitable
remedy against any person under any statute or regulation, including, but not
limited to, any federal or state securities laws, or under any common law or
equitable cause or otherwise, arising from or in connection with the
negotiation, preparation, execution, performance or failure of performance of
this Escrow Agreement or any transactions contemplated herein, whether or not
any such Indemnified Party is a party to any such action, proceeding, suit or
the target of any such inquiry or investigation; provided, however, that no
Indemnified Party shall have the right to be indemnified hereunder for any
liability which resulted from the gross negligence or willful misconduct of such
Indemnified Party. Each Indemnified Party shall, in its sole discretion, have
the right to select and employ separate counsel with respect to any action or
claim brought or asserted against it, and the reasonable fees of such counsel
shall be paid upon demand by the Depositor and Recipient jointly and severally.
The obligations of Depositor and Recipient under this Section 10 shall survive
any termination of this Escrow Agreement and the resignation or removal of
Escrow Agent. As between Depositor and Recipient, each shall be responsible for
the payment of fifty (50%) percent of such fees.
The parties agree that neither the payment by Depositor or Recipient of any
claim by Escrow Agent for indemnification hereunder nor the disbursement of any
amounts to Escrow Agent from the Escrow Funds in respect of a claim by Escrow
Agent for indemnification shall impair, limit, modify, or affect, as between
Depositor and Recipient, the respective rights and obligations of Depositor, on
the one hand, and Recipient, on the other hand, under the Asset Purchase
Agreement. The parties further agree that as between the Depositor and the
Recipient, each shall be responsible for the payment of fifty (50%) percent of
the amount of indemnification sought by the Escrow Agent.
11. Fees and Expenses of Escrow Agent. Depositor and Recipient shall
compensate Escrow Agent for its services hereunder in accordance with Schedule A
attached hereto and, in addition, shall reimburse Escrow Agent for all of its
reasonable out-of-pocket expenses, including attorneys' fees, travel expenses,
telephone and facsimile transmission costs, postage (including express mail and
overnight delivery charges), copying charges and the like. The additional
provisions and information set forth on Schedule A are hereby incorporated by
this reference, and form a part of this Escrow Agreement. All of the
compensation and reimbursement obligations set forth in this Section 11 shall be
payable by Depositor and Recipient, jointly and severally, upon demand by Escrow
Agent. As between the Depositor and the Recipient, each shall be responsible for
the payment of fifty (50%) percent of such fees and costs. The obligations of
Depositor and Recipient under this Section 11 shall survive any termination of
this Escrow Agreement and the resignation or removal of Escrow Agent. Depositor
and Recipient shall promptly pay such compensation and reimbursement amounts to
Escrow Agent or any Indemnified Party upon receipt of an itemized invoice.
15
12. Representations and Warranties. Each of Depositor and Recipient
respectively makes the following representations and warranties to Escrow Agent:
a. It is duly organized, validly existing, and in good standing under the
laws of the state of its incorporation or organization, and has full power and
authority to execute and deliver this Escrow Agreement and to perform its
obligations hereunder.
b. This Escrow Agreement has been duly approved by all necessary action,
including any necessary shareholder or membership approval, has been executed by
its duly authorized officers, and constitutes its valid and binding agreement
enforceable in accordance with its terms.
c. The execution, delivery, and performance of this Escrow Agreement is in
accordance with the Asset Purchase Agreement and will not violate, conflict
with, or cause a default under its articles of incorporation, articles of
organization, bylaws, management agreement or other organizational document, as
applicable, any applicable law or regulation, any court order or administrative
ruling or decree to which it is a party or any of its property is subject, or
any agreement, contract, indenture, or other binding arrangement, including
without limitation the Asset Purchase Agreement, to which it is a party or any
of its property is subject.
d. The applicable persons designated on Schedule A hereto have been duly
appointed to act as its representatives hereunder and have full power and
authority to execute and deliver any Joint Written Direction, to amend, modify
or waive any provision of this Escrow Agreement and to take any and all other
actions as the Representatives under this Escrow Agreement, all without further
consent or direction from, or notice to, it or any other party.
e. No party other than the parties hereto has, or shall have, any lien,
claim or security interest in the Escrow Funds or any part thereof. No financing
statement under the Uniform Commercial Code is on file in any jurisdiction
claiming a security interest in or describing (whether specifically or
generally) the Escrow Funds or any part thereof.
f. All of its representations and warranties contained herein are true and
complete as of the date hereof and will be true and complete at the time of any
disbursement of the Escrow Funds.
13. Identifying Information. Depositor and Recipient acknowledge that a
portion of the identifying information set forth on Schedule A is being
requested by the Escrow Agent in connection with the USA Patriot Act,
Pub.L.107-56 (the "Act"), and Depositor and Recipient agree to provide any
additional information requested by the Escrow Agent which is required under the
Act or any similar legislation or regulation to which Escrow Agent is subject,
in a timely manner. The Depositor and the Recipient each
16
represent that all identifying information set forth on Schedule A hereto,
including without limitation, its Taxpayer Identification Number assigned by the
Internal Revenue Service or any other taxing authority, is true and complete on
the date hereof and will be true and complete at the time of any disbursement of
the Escrow Funds.
14. Notice. All notices, approvals, consents, requests, and other
communications hereunder shall be in writing and shall be deemed to have been
given when the writing is delivered if given or delivered by hand, overnight
delivery service or facsimile transmitter (with confirmed receipt) to the
address or facsimile number set forth on Schedule A hereto, or to such other
address as each party may designate for itself by like notice, and shall be
deemed to have been given on the date deposited in the mail, if mailed, by
first-class, registered or certified mail, postage prepaid, addressed as set
forth on Schedule A hereto, or to such other address as each party may designate
for itself by like notice.
15. Amendment or Waiver. This Escrow Agreement may be changed, waived,
discharged or terminated only by a writing signed by the Representatives and
Escrow Agent. No delay or omission by any party in exercising any right with
respect hereto shall operate as a waiver. A waiver on any one occasion shall not
be construed as a bar to, or waiver of, any right or remedy on any future
occasion.
16. Severability. To the extent any provision of this Escrow Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Escrow Agreement.
17. Governing Law. This Escrow Agreement shall be construed and interpreted
in accordance with the internal laws of the State of New York without giving
effect to the conflict of laws principles thereof.
18. Entire Agreement. This Escrow Agreement and the Asset Purchase
Agreement constitutes the entire agreement between the parties relating to the
holding, investment and disbursement of the Escrow Funds, and this Escrow
Agreement sets forth in their entirety the obligations and duties of Escrow
Agent with respect to the Escrow Funds.
19. Binding Effect. All of the terms of this Escrow Agreement, as amended
from time to time, shall be binding upon, inure to the benefit of and be
enforceable by the respective successors and assigns of Depositor, Recipient and
Escrow Agent.
20. Conflict. In the event of any ambiguity or inconsistency between the
terms of the Asset Purchase Agreement and the terms hereof, the terms of the
Asset Purchase Agreement shall prevail.
17
21. Execution in Counterparts. This Escrow Agreement and any Joint Written
Direction may be executed in two or more counterparts, which when so executed
shall constitute one and the same agreement or direction.
22. Termination. Upon the first to occur of the termination of the Escrow
Period, the disbursement of all amounts in the Escrow Funds pursuant to Section
4 hereof or the disbursement of all amounts in the Escrow Funds into court
pursuant to Section 6 or Section 9 hereof, this Escrow Agreement shall terminate
and Escrow Agent shall have no further obligation or liability whatsoever with
respect to this Escrow Agreement or the Escrow Funds.
23. Dealings. The Escrow Agent and any stockholder, director, officer or
employee of the Escrow Agent may buy, sell, and deal in any of the securities of
the Depositor or Recipient and have a pecuniary interest in any transaction in
which the Depositor or Recipient may be interested, and contract and lend money
to the Depositor or Recipient and otherwise act as fully and freely as though it
were not Escrow Agent under this Escrow Agreement. Nothing herein shall preclude
the Escrow Agent from acting in any other capacity for the Depositor or
Recipient or for any other entity.
[remainder of page intentionally left blank]
18
IN WITNESS WHEREOF, the parties hereto have caused this General Escrow
Agreement to be executed as of the date first above written.
DEPOSITOR:
WITNESS: AGWAY ENERGY PRODUCTS, LLC
By:
- ------------------------------------- ------------------------------------
Name:
Title:
ATTEST: AGWAY ENERGY SERVICES, INC.
By:
- ------------------------------------- ------------------------------------
Secretary Name:
Title:
ATTEST: AGWAY ENERGY SERVICES PA, INC.
By:
- ------------------------------------- ------------------------------------
Secretary Name:
Title:
WITNESS: RECIPIENT:
SUBURBAN PROPANE, L.P.
By:
- ------------------------------------- ------------------------------------
Name:
Title:
19
ESCROW AGENT:
NATIONAL CITY BANK OF PENNSYLVANIA
By:
------------------------------------
Name:
Title:
20
SCHEDULE A
1. Escrow Funds.
a) Credit Balance Escrow Deposit $10,000,000
b) General Indemnity Escrow Deposit $4,000,000
Total Escrow Funds amount: $14,000,000
Escrow Funds wiring instructions:
a) With respect to the Credit Balance National City
Bank Escrow Deposit: ABA#
Account #
ATTN: Corporate Trust -
Bond Administration
Re: [Account Name, NCS #]
b) With respect to the General Indemnity National
City Bank Escrow Deposit: ABA#
Account #
ATTN: Corporate Trust -
Bond Administration
Re: [Account Name, NCS #]
2. Escrow Agent Fees.
Acceptance Fee: $1,000
Annual Escrow Fee: $8,000
The Acceptance Fee and the first Annual Escrow Fee are payable upon
execution of the escrow documents. In addition to the foregoing, Depositor
and Receiver shall be charged (i) $100 per investment (i.e., purchase,
sale, receipt or delivery) that is not an Armada Fund investment and (ii)
$25 per disbursement for every disbursement over the first 12 disbursements
that occur in any twelve (12)-month period. In the event the escrow is not
funded, the Acceptance Fee and all related expenses, including attorneys'
fees, remain due and payable, and if paid, will not be refunded. Annual
fees cover a full year in advance, or any part thereof, and thus are not
pro-rated in the year of termination.
A-1
SCHEDULE A, continued
The fees quoted in this schedule apply to services ordinarily rendered in
the administration of an Escrow Account and are subject to reasonable
adjustment based on final review of documents, or when the Escrow Agent is
called upon to undertake unusual duties or responsibilities, or as changes
in law, procedures, or the cost of doing business demand. Services in
addition to and not contemplated in this Escrow Agreement, including, but
not limited to, document amendments and revisions, non-standard cash and/or
investment transactions, calculations, notices and reports, and legal fees,
will be billed as extraordinary expenses.
Unless otherwise indicated, the above fees relate to the establishment of
one escrow account. Additional sub-accounts governed by the same Escrow
Agreement may incur an additional charge. Transaction costs include charges
for wire transfers, checks, internal transfers and securities transactions.
3. Taxpayer Identification Numbers.
Depositor: 16-1551524
Recipient: 22-3410352
4. Investment Instructions.
[List specific investment instructions here. If selecting a money market
fund, include fund name, fund number and class, describe any additional
transaction fees applicable to the investment and, if applicable, include
the following statement relating to sweep fees:
The minimum fee for sweeping funds into or out of the fund selected is an
annualized amount of ________ of _____% (_____ basis points) and is
deducted from the interest posted to the account.]
5. Representatives.
The following person is hereby designated and appointed as Depositor
Representative under the General Escrow Agreement:
Michael R. Hopsicker
----------------------------------------------------------------------
Name Specimen signature
The following person is hereby designated and appointed as Recipient
Representative under the General Escrow Agreement:
Janice Meola
----------------------------------------------------------------------
Name Specimen signature
A-2
SCHEDULE A, continued
6. Representative Information.
The following information should be provided to Escrow Agent separately by
each Representative and any future Representative:
1. Date of Birth
2. Address
3. Mailing Address, if different
4. Social Security Number
7. Notice Addresses.
Principal Place of Business,
if different
If to Depositor at: c/o Agway, Inc. _____________________________
PO Box 4933 _____________________________
Syracuse, New York 13221 _____________________________
ATTN: Karen Ohliger _____________________________
Facsimile: 315-449-6435
Telephone: 315-449-6147
E-mail: kohliger@agway.com
With a copy to: Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, New York 10153
ATTN: David E. Zeltner, Esq.
Facsimile: (212) 310-8007
If to Recipient at: Suburban Propane, L.P. _____________________________
240 Route 10 West _____________________________
Whippany, New Jersey 07981 _____________________________
ATTN: Janice Meola, _____________________________
General Counsel
Facsimile: 973-503-9184
Telephone: 973-503-9987
E-mail: jmeola@suburbanpropane.com
With a copy to: Cole, Schotz, Meisel, Forman & Leonard, P.A.
Court Plaza North
25 Main Street
Hackensack, New Jersey 07601
ATTN: Michael D. Sirota, Esq.
Facsimile: (201) 678-6262
A-3
SCHEDULE A, continued
If to the Escrow
Agent at: National City Bank of Pennsylvania, as Escrow Agent
101 West Washington Street
Suite 655S
Indianapolis, Indiana 46255
ATTENTION: Karen Franklin
Facsimile: (317) 267-3685
A-4
Exhibit E
BILL OF SALE
THIS BILL OF SALE is made and delivered this ____ day of ______________,
2003, by Agway Energy Products, LLC, a Delaware limited liability company, Agway
Energy Services, Inc., a Delaware corporation, and Agway Energy Services PA,
Inc., a Delaware corporation (collectively the "Sellers"), pursuant to the terms
of that certain Asset Purchase Agreement dated ____________, 2003 (the "Asset
Purchase Agreement"), by and among the Sellers, Suburban Propane, L.P., a
Delaware limited partnership ("Purchaser"), and Agway, Inc., a Delaware
corporation, and in consideration for the purchase price set forth in the Asset
Purchase Agreement and other good and valuable consideration all as more
particularly set forth in the Asset Purchase Agreement, the receipt and
sufficiency of which is hereby acknowledged, Sellers do hereby sell, transfer,
assign, convey and deliver to Purchaser all of Sellers' right, title and
interest in, to and under the Purchased Assets (as such term is defined in
Section 2.1 of the Asset Purchase Agreement) free and clear of all Liens (as in
the Asset Purchase Agreement) of Agway Inc.'s creditors.
TO HAVE AND TO HOLD the same unto the said Purchaser, its successors and
assigns, forever.
Sellers do hereby agree to execute and deliver such further instruments of
conveyance, transfer and assignment and to take such other and further action
without further consideration as Purchaser reasonably may request more
effectively to convey, transfer and assign any of the Purchased Assets conveyed
hereunder, to confirm title thereto and to put Purchaser in actual possession
and operating control of the Purchased Assets and to assist Purchaser in
exercising all rights with regard thereto.
This Bill of Sale is delivered in connection with the Asset Purchase
Agreement and is subject to and shall be governed by the terms and conditions
thereof.
Nothing in this Bill of Sale, express or implied, is intended to or shall
be construed to modify, expand or limit in any way the terms of the Asset
Purchase Agreement. All of the terms and conditions of the Asset Purchase
Agreement are incorporated herein by reference, and in the event of any
ambiguity or inconsistency between the terms of the Asset Purchase Agreement and
the terms hereof, the terms of the Asset Purchase Agreement shall prevail.
The Sellers hereby constitute and appoint Purchaser the true and lawful
attorney of Sellers, with full power of substitution, in the name of Sellers or
Purchaser, but on behalf of and for the benefit of Purchaser: (i) to demand and
receive from time to time any and all of the Purchased Assets and to make
endorsements and give receipts and releases for and in respect of the same and
any part thereof; (ii) to institute, prosecute, compromise and settle any and
all actions or proceedings that Purchaser may deem proper in order to collect,
assert or enforce any claim, right or title of any kind in or to the Purchased
Assets; (iii) to defend or compromise any or all actions or proceedings in
respect of any of the Purchased Assets; and (iv) to do all such acts and things
in relation to the matters set forth in the preceding clauses (i) through (iii)
as Purchaser shall deem desirable. Sellers hereby acknowledge that the
appointment hereby made and the powers hereby granted are coupled with an
interest and are not and shall not be revocable by them in any manner or for any
reason.
This Bill of Sale shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and performed in such
State.
IN WITNESS WHEREOF, the Sellers have executed this Bill of Sale on the date
set forth above.
AGWAY ENERGY PRODUCTS, LLC
By: _______________________________
Name:
Title:
AGWAY ENERGY SERVICES, INC.
By: _______________________________
Name:
Title:
AGWAY ENERGY SERVICES PA, INC.
By: _______________________________
Name:
Title:
2
Exhibit F
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made this ____ day of
______________, 2003, by and between SUBURBAN PROPANE, L.P., a Delaware limited
partnership (the "Purchaser") and AGWAY ENERGY PRODUCTS, LLC, a Delaware limited
liability company, AGWAY ENERGY SERVICES, INC., a Delaware corporation, and
AGWAY ENERGY SERVICES PA, INC., a Delaware corporation (collectively the
"Sellers"). Purchaser and Sellers are hereinafter sometimes together referred to
as the "Parties" or individually as a "Party", and this Assignment and
Assumption Agreement shall hereinafter be referred to as this "Agreement".
WHEREAS, Sellers, Purchaser and Agway, Inc., a Delaware corporation, are
parties to that certain Asset Purchase Agreement dated ______________, 2003 (the
"Asset Purchase Agreement"), under which Sellers have agreed to sell, assign,
transfer and convey to Purchaser and Purchaser has agreed to purchase, accept
and assume from Sellers all of Sellers' rights, title and interest in and to the
Purchased Assets (as such term is defined in Section 2.1 of the Asset Purchase
Agreement);
WHEREAS, pursuant to the terms and conditions of the Asset Purchase
Agreement, Purchaser desires to assume the Assumed Liabilities (as such term is
defined in Section 2.3 of the Asset Purchase Agreement) in accordance with the
terms, conditions, covenants, and agreements hereinafter set forth; and
WHEREAS, each of Purchaser and Sellers deem it in their best interest to
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, and for good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereby agree as follows:
1. Assignment and Assumption.
(a) Effective as of the date hereof, subject to the limitations herein,
Sellers hereby assign, transfer, deliver and convey to Purchaser, absolutely,
and Purchaser hereby accepts and assumes from Sellers, the entire right, title
and interest of Sellers in, to and under the Assumed Liabilities.
(b) Effective as of the date hereof, subject to the limitations set forth
herein, Purchaser hereby assumes, covenants and agrees to timely pay, perform,
observe and otherwise discharge any and all of the undertakings, obligations,
and liabilities under the Assumed Liabilities in accordance with the terms of
the Asset Purchase Agreement.
(c) It is expressly understood and agreed by the Parties that this
Agreement relieves Sellers from any and all undertakings, obligations and
liabilities
under the Assumed Liabilities including, without limitation, the making of
monthly lease payments, the payment of annual fees or dues, and the fulfillment
and performance of all covenants, conditions, obligations, and agreements
provided in any agreement, document or instrument evidencing any of the Assumed
Liabilities.
(d) Without limiting the Purchaser's obligations under the Asset Purchase
Agreement, nothing contained herein shall require Purchaser to pay or discharge
any debts or obligations expressly assumed hereby so long as Purchaser shall in
good faith contest or cause to be contested the amount or validity thereof.
(e) Other than as specifically stated above or in the Asset Purchase
Agreement, Purchaser assumes no debt, liability or obligation of Sellers,
including without limitation the Excluded Liabilities (as such term is defined
in the Asset Purchase Agreement), by this Agreement, and it is expressly
understood and agreed that all debts, liabilities and obligations not assumed
hereby by Purchaser shall remain the sole obligation of Sellers, their
successors and assigns.
(f) No Person other than Sellers, their successors and assigns shall have
any rights under this Agreement or the provisions contained herein.
2. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the Parties hereto, and their successors and permitted assigns. No
Party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other Parties.
3. Further Assurances. The Parties shall execute and deliver such further
and additional instruments, agreements, and other documents as may be necessary
to give full force and effect to the terms and conditions of this Agreement and
the transactions contemplated hereunder.
4. Modification and Waiver. No alterations or variations of the terms and
provisions of this Agreement shall be valid unless made in writing and signed by
all of the Parties hereto or their successors or permitted assigns.
5. Governing Law and Jurisdiction. This Agreement shall be construed and
governed by the laws of the State of New York without regard to its conflict of
law rules.
6. Severability. If any provision of this Agreement is held to be invalid
or unenforceable, such will not affect the validity or enforceability of the
other provisions of this Agreement.
7. Conflict. All of the terms and conditions of the Asset Purchase
Agreement are incorporated herein by reference , and in the event of any
ambiguity or inconsistency between the terms of the Asset Purchase Agreement and
the terms hereof, the terms of the Asset Purchase Agreement shall prevail.
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8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which may be deemed an original and all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Assignment and Assumption Agreement has been
executed by the Parties as of the date first above written.
SUBURBAN PROPANE, L.P.
By: ______________________________
Name:
Title:
AGWAY ENERGY PRODUCTS, LLC
By: ______________________________
Name:
Title:
AGWAY ENERGY SERVICES, INC.
By: ______________________________
Name:
Title:
AGWAY ENERGY SERVICES PA, INC.
By: ______________________________
Name:
Title:
3
Exhibit G
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (the "Agreement") is made and entered into
this ___ day of __________, 2003 (the "Effective Date") by and among Agway,
Inc., a Delaware corporation, Agway Energy Products, LLC, a Delaware limited
liability company, Agway Energy Services PA, Inc., a Delaware corporation, Agway
Energy Services, Inc., a Delaware corporation (collectively, the "Restricted
Parties"), and Suburban Propane, L.P., a Delaware limited partnership (the
"Company"). Each of the foregoing may be referred to herein as a "Party" and
collectively as the "Parties."
*************
WHEREAS, the Company, either directly or through its subsidiaries, is in
the business of the retail and wholesale marketing of propane and propane and
natural gas related appliances and services including, but not limited to,
heating, ventilation, and air conditioning services (the "Business"); and
WHEREAS, pursuant to an Asset Purchase Agreement (the "Asset Purchase
Agreement") dated [ ], 2003, by and among the Restricted Parties and the
Company, the Restricted Parties have agreed to the sale, assignment, transfer,
conveyance and delivery to the Company of the Purchased Assets (as defined in
the Asset Purchase Agreement); and
WHEREAS, the entry into this Agreement is integral to the transactions
contemplated in the Asset Purchase Agreement and the full execution hereof is a
condition precedent to Company's obligation to consummate said transactions.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Parties agree as
follows:
1. Restrictive Covenants. As an inducement for the Company to enter into
the Asset Purchase Agreement, each Restricted Party hereby covenants and agrees
that, commencing on the date hereof and continuing for a period of ten (10)
years thereafter (the "Restricted Period"), it shall not (without the prior
written consent of the Company), in any manner, directly or indirectly, whether
as a shareholder, joint venture party, partner, member, investor, consultant,
independent contractor or otherwise, alone, or in association with or on behalf
of any other person, firm, corporation, or other business organization:
(a) anywhere in the United States, engage or participate in a Competing
Business, or assist, advise or be connected with, or permit its name to be used
by a Competing Business or render services that compete with the Business for,
any person or entity that is engaged in a Competing Business;
(b) take any action in connection with a Competing Business which might
divert from the Company or any of its affiliates any opportunity which would be
(at the time of such action) within the scope of the Company's or any such
affiliate's Business;
(c) solicit or attempt to induce any person or entity who is or has been a
customer of the Company at any time during the Restricted Period, to purchase
competing products or services from any person or entity (other then the
Company), or to cease doing business with the Company;
(d) take any actions which are calculated to persuade any person or entity
who is a director, officer or agent of the Company or any of its affiliates to
terminate their association with the Company or such affiliates;
(e) solicit or hire any person or entity who is or was a director, officer,
employee or agent of the Company or any of its affiliates to perform services
for any entity other than the Company and its affiliates; or
(f) attempt or threaten any of the foregoing.
As used herein, a "Competing Business" shall mean a business which engages,
in whole or part, in a business substantially similar to the Business of the
Company.
2. Confidential Information. Each Restricted Party will not, at any time,
communicate or divulge to any person, firm or corporation, either directly or
indirectly, any non-public, confidential information relating to the Business,
trade secrets, customers, suppliers, products, technology, equipment, know-how,
or other affairs of the Company including without limitation, business plans,
price schedules and information, financial information including margins,
customer and employee lists, product lists and catalogs, marketing plans and
policies, methods and techniques of operations and software programs.
3. Specific Remedies. Each Restricted Party acknowledges and agrees that
the restrictive covenants contained in this Agreement impose a fair and
reasonable constraint on it and are reasonably required to protect the interests
of the Company and each Restricted Party acknowledges that any breach or
threatened breach by it of any provision of this Agreement will cause
irreparable damage to the Company, the exact amount of which will be difficult
or impossible to ascertain, and that remedies of law for any such breach or
threatened breach will be inadequate to compensate the Company. Accordingly, the
Company shall be entitled, in addition to any other rights or remedies existing
in its favor to obtain, without the necessity for any bond or other security or
for proving actual damages, specific performance or injunctive relief in order
to enforce, or prevent the breach of, any such provision.
2
4. Independence, Severability and Non-Exclusivity. Each of the rights
enumerated in Sections 1 or 2 hereof and the remedies enumerated in Section 3
hereof shall be independent of the others and shall be in addition to and not in
lieu of any other rights and remedies available to the Company at law or in
equity. If any of the covenants contained in Sections 1 or 2, or any part of any
of them, is hereafter construed or adjudicated to be invalid or unenforceable,
the same shall not affect the remainder of the covenant or covenants or rights
or remedies that shall be given full effect without regard to the invalid
portions. Any covenant shall be interpreted in the broadest sense that will
allow enforceability, with court imposed restrictions applied to the minimum
extent necessary for enforceability.
5. Miscellaneous.
(a) Successors. This Agreement and all rights of the Parties hereunder
shall inure to the benefit of, and be enforceable by, the Parties or their
heirs, successors and assigns. Notwithstanding the foregoing, each of the
Restricted Party's duties and obligations under this Agreement and any extension
hereof are personal and, therefore, may not be delegated. Any purported
assignment of this Agreement by any Restricted Party shall be null and void and
of no effect
(b) Governing` Law and Jurisdiction. This Agreement shall be construed,
interpreted and governed by the laws of the State of New York without giving
effect to the principles of conflicts of laws. The Parties hereto irrevocably
consent to the jurisdiction of the United States Bankruptcy Court for the
Northern District of New York or any other court having jurisdiction over the
Bankruptcy Case (as defined in the Asset Purchase Agreement); provided, however,
that if the Bankruptcy Case has closed, the Parties agree to unconditionally and
irrevocably submit to the exclusive jurisdiction of the Commercial Division,
Civil Branch of the Supreme Court of the State of New York sitting in New York
County and any appellate court from any thereof, for the resolution of any such
claim or dispute.
(c) Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(d) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if:
(a) personally delivered, (b) sent by certified mail, return receipt requested,
(c) sent by facsimile (with transmission confirmation), or (d) sent by reliable
overnight courier (i.e., Fed Ex) to the Parties, in each case at the following
addresses and facsimile numbers (or to such other address or facsimile number as
a Party may have specified by notice given to the other Party pursuant to this
provision):
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If to the Restricted Parties to: c/o Agway, Inc.
PO Box 4933
Syracuse, New York 13221
Facsimile: (315) 449-6435
Attention: Karen Ohliger
With a copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Facsimile: (212) 310-8007
Attention: David E. Zeltner, Esq.
If to the Company to: Suburban Propane, L.P.
240 Route 10 West
Whippany, New Jersey 07981
Facsimile: (973) 503-9184
Attention: Janice Meola, General Counsel
With a copy to: Cole Schotz Meisel Forman & Leonard, P.A.
25 Main Street, P.O. Box 800
Hackensack, New Jersey 07602-0800
Facsimile: (201) 489-1536
Attn: Michael D. Sirota, Esq.
(e) Waiver. Waiver by any Party hereto of a breach hereof shall not be
deemed to be a waiver of any subsequent breach, whether similar or not.
(f) Severability. In case any one (1) or more of the provisions of this
Agreement shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected thereby and shall remain in full force
and effect.
(g) Entire Agreement. This Agreement is intended by the Parties hereto to
be the final expression of their agreement with respect to the subject matter
hereof and is the complete and exclusive statement of the terms thereof
notwithstanding any representations, statements or agreements to the contrary
heretofore made. This Agreement may be modified only by a written instrument
signed by each of the Parties hereto.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the Parties hereto have executed this Non-Competition
Agreement as of the date first above written.
SUBURBAN PROPANE, L.P.
By:___________________________
Name:
Title:
AGWAY, INC.
By: ___________________________
Name:
Title:
AGWAY ENERGY PRODUCTS, LLC
By: ______________________________
Name:
Title:
AGWAY ENERGY SERVICES, INC.
By: ______________________________
Name:
Title:
AGWAY ENERGY SERVICES PA, INC.
By: ______________________________
Name:
Title:
5
Exhibit H
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (this "Agreement") is entered into as of
this ___ day of December, 2003, by Agway, Inc., a Delaware corporation as
debtor-in-possession ("Agway"), Agway Energy Products, LLC, a Delaware limited
liability company, Agway Energy Services, Inc., a Delaware corporation, and
Agway Energy Services, PA, Inc., a Delaware corporation (collectively, "Agway
Energy Sellers", and together with Agway, "Sellers"), and Suburban Propane,
L.P., a Delaware limited partnership ("Buyer").
RECITALS
A. Pursuant to that certain Asset Purchase Agreement dated November __,
2003, as amended, by and between the Agway Energy Sellers and Buyer (the "Asset
Purchase Agreement"), the Agway Energy Sellers have agreed to sell, and Buyer
has agreed to purchase, certain assets owned by the Agway Energy Sellers. Agway
is the parent corporation of the Agway Energy Sellers. Sellers and Buyer are
sometimes referred to herein as a "Party" and collectively as the "Parties."
Capitalized terms used herein and not otherwise defined herein have the meanings
given to such terms in the Asset Purchase Agreement.
B. In connection therewith, and as a condition to the consummation of the
transactions contemplated by the Asset Purchase Agreement, Buyer and Sellers
desire that Sellers provide Buyer with certain transition services with respect
to the operation of the Business, as more fully set forth herein.
NOW, THEREFORE, in consideration of the premises and covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Sellers and Buyer agree as follows:
AGREEMENT
1. Transition Services.
1.1 From the date hereof through June 30, 2004, Sellers shall provide, or
cause one or more of their affiliates to provide, to Buyer, upon the terms and
subject to the conditions hereof, all services now provided by Sellers in the
way of central support functions with respect to the Business, including,
without limitation, billing, payroll, accounts receivable collection and cash
application, accounts payable monitoring and payment, financial reporting,
inventory management, tax reporting, information systems, call center, product
supply, marketing, fleet services, purchasing, real estate, environmental and
safety and training services, employee benefit administration, human resources,
and such other functions as are necessary to assist Buyer in the operation of
the Business (collectively, the "Transition Services"), in each case in the
manner and at a
relative level of service consistent in all material respects with Sellers'
normal business practices with respect to the Business; provided, however, that
notwithstanding the foregoing, nothing in this Agreement shall require Sellers
to favor Buyer over their own business operations.
1.2 It is the intention and agreement of the Buyer and Sellers that Buyer's
use of any Transition Service shall not be greater than the level of use
required by Sellers for the Business prior to the acquisition of the Purchased
Assets by Buyer. In no event will Buyer be entitled to any new service or to
increase its use of any of the Transition Services above that level of use
without the prior written consent of Seller.
2. Payment for Transition Services.
2.1 Reimbursement. As reimbursement for the Transition Services, Buyer will
pay or reimburse the Sellers for those expenses set forth on Schedule A hereto
which are actually incurred or paid by the Sellers in connection with their
provision of the Transition Services, plus __%, in all cases upon presentation
of reasonably detailed expense statements and expense reports, receipts,
vouchers or such other supporting information as the Buyer reasonably and
customarily may require ("Back-Up").
2.2 Invoices. Within thirty (30) days after the end of each calendar month,
Sellers will submit one invoice to Buyer for all Transition Services provided to
Buyer during such calendar month pursuant to this Agreement, together with
copies of the Back-Up.
2.3 Time of Payment. Buyer will pay all amounts due pursuant to this
Agreement within ten (10) business days after receipt of each invoice and
applicable Back-Up hereunder, provided that in the event that Buyer, in good
faith and upon reasonable grounds, questions any cost or expense, payment of
that cost or expense may be made only after resolution of such question.
3. Termination. Sellers shall have no obligation to provide any Transition
Services to Buyer after June 30, 2004, nor shall Buyer be required to reimburse
Sellers for any services provided or costs and expenses incurred after June 30,
2004, unless otherwise agreed to in writing by both parties. Commencing on the
thirtieth (30th) day following the date hereof, and continuing every thirty (30)
days thereafter during the term hereof, Buyer shall provide Sellers with a
written notice of those Transition Services which it no longer desires be
provided by Sellers (the "30 Day Notice"). The Sellers shall cease to provide
any Transition Service set forth in the 30 Day Notice on the thirtieth (30th)
day following the date the 30 Day Notice is provided; provided, however, if a
Transition Service to be so eliminated cannot be eliminated within such thirty
(30) day period because Sellers are contractually obligated to use a third
party's services to provide such Transitions Service (a "Third Party
Agreement"), Sellers' shall continue to provide such Transition Service, and
Buyer's shall continue to be obligated to
2
compensate Sellers for their provision of such Transition Service until the
first to occur of (i) the ninetieth (90th) day following the date the 30 Day
Notice is provided, (ii) the termination of the Third Party Agreement, or (ii)
June 30, 2004. The Parties acknowledge and agree that as Transition Services are
eliminated pursuant to this Section 3, the invoiced costs will reflect a
decrease in the fees and expenses set forth on Schedule A.
4. Personnel. Unless a particular individual is designated on Schedule A or
is otherwise agreed upon in writing by Buyer and Sellers, Sellers will have the
right, in their sole discretion, to designate which personnel they will assign
to perform the Transition Services. Sellers also will have the right, in their
sole discretion, to remove and replace any such personnel at any time or
designate a third-party provider; provided, however, that Sellers will use their
best efforts to limit the disruption to Buyer in the transition of the
Transition Services to different personnel or a third party, and any delegation
of Transition Services to a third party provider not engaged by Sellers on the
Closing Date will require prior written approval of Buyer. Sellers will pay for
all personnel expenses, including, without limitation, wages, of their employees
performing the Transition Services. Buyer will cooperate with Sellers'
reasonable request for assistance and information in providing the Transition
Services contemplated hereunder.
5. Assignment. This Agreement may not be assigned by either Party without
the prior written consent of the other Party, and any attempted assignment shall
be null and void.
6. Confidentiality. Except as may be necessary to perform the Transition
Services, each Party hereto shall, and shall cause each of its affiliates and
each of their officers, directors, employees, agents, representatives,
successors and assigns to hold all information relating to the business of the
other Party disclosed to it by reason of this Agreement confidential and will
not disclose any of such information to any party unless legally compelled to
disclose such information; provided, however, that to the extent that either
Party may become so legally compelled such Party may only disclose such
information if it shall first have used reasonable efforts to, and, if
practicable, shall have afforded the other Party the opportunity to obtain, an
appropriate protective order or other satisfactory assurance of confidential
treatment for the information required to be so disclosed.
7. Representations and Warranties: Indemnification Relationship of Parties.
7.1 Representations and Warranties. Sellers agree to use their reasonable
best efforts to provide the Transition Services at a level and quality
consistent with the provision and performance of the Transition Services by
Sellers to the Business prior to the Closing.
3
7.2 Indemnification.
(a) Except insofar as the same relate to Sellers' breach of this Agreement
or Sellers' bad faith or intentional misconduct, Buyer shall indemnify, defend
and hold harmless Sellers, their subsidiaries and affiliates, and their
directors, officers, employees, agents and representatives (collectively, the
"Seller Indemnified Party") from and against any liability, cost, damage,
expense or loss (including court costs and reasonable attorneys' fees) which the
Seller Indemnified Party may sustain or incur by reason of any claim, demand,
suit or recovery by any person or entity resulting from acts or omissions
committed by Sellers in providing the Transition Services pursuant to
instructions from Buyer with respect to such Transition Services.
(b) Except insofar as the same relate to Buyer's breach of this Agreement
or Buyer's bad faith or intentional misconduct, Sellers shall indemnify, defend
and hold harmless Buyer, its subsidiaries and affiliates, and their directors,
officers, employees, agents and representatives (collectively, the "Buyer
Indemnified Party") from and against any liability, cost, damage, expense or
loss (including court costs and reasonable attorneys' fees) which the Buyer
Indemnified Party may sustain or incur by reason of any claim, demand, suit or
recovery by any person or entity resulting from Sellers' negligence, bad faith,
or intentional misconduct in providing the Transition Services.
7.3 Relationship of the Parties. Sellers shall and will remain at all times
independent contractors of Buyer in the performance of all Transition Services
hereunder. In all matters relating to this Agreement, each Party hereto will be
solely responsible for the acts of its employees and agents, and employees or
agents of one Party shall not be considered employees or agents of the other
Party. Except as otherwise provided herein, no Party will have any right, power
or authority to create any obligation, express or implied, on behalf of any
other party nor shall either Party act or represent or hold itself out as having
authority to act as an agent or partner of the other Party, or in any way bind
or commit the other Party to any obligations. Nothing in this Agreement is
intended to create or constitute a joint venture, partnership, agency, trust or
other association of any kind between the parties or persons referred to herein.
8. Compliance with Laws. Each Party will comply with all applicable laws,
rules, ordinances and regulations of any governmental entity or regulatory
agency governing the Transition Services to be provided hereunder. No Party will
take any action in violation of any applicable law, rule, ordinance or
regulation that could result in liability being imposed on the other Party.
9. Procurement of Insurance. Buyer agrees to procure and maintain during
the term of this Agreement, at Buyer's own cost and expense, insurance as set
forth below. Buyer agrees, however, that the procurement and maintenance of such
insurance coverage shall not limit or affect any liability which Buyer may have
by virtue of this
4
Agreement. Concurrently with the execution of this Agreement, Buyer shall
provide Sellers with a certification of insurance evidencing the required
coverage which certificate of insurance shall name Sellers as an additional
insured. In addition, Buyer shall not, during the term of this Agreement cancel
or make any change in the insurance coverage required under this Agreement
without Sellers' prior approval.
The insurance to be carried by Buyer pursuant to this section shall, at all
times meet the following minimum standards: (1) Workers Compensation in
compliance with all applicable state and federal laws, rules, and regulations at
all sites where any of the Transition Services are provided; (2) Commercial
General Liability insurance, including contractual liability insuring Buyer's
obligations hereunder, including, but not limited to, the indemnity agreement
set forth in this Agreement with limits of not less than $10,000,000 applicable
to bodily injury, sickness or death or damage to property in any one occurrence
and $10,000,000 in the aggregate; and (3) Automobile Liability Insurance with
limits of not less than $10,000,000 applicable to bodily injury, sickness or
death or damage to property in any one occurrence.
The Sellers shall be specifically named by endorsement as an additional
insured on Buyer's primary auto liability policy and on Buyer's lead umbrella
liability policy and such other umbrella liability policies as are necessary to
obtain minimum limits of $10,000,000. The endorsements shall specifically
stipulate that the coverage extended to Sellers are primary, and not
contributory, with respect to any similar insurance that Sellers may have.
Buyer hereby waives all subrogation rights against Sellers for any and all
loss or damage covered by Buyer's insurance. Buyer's insurance policies,
including, without limitation, auto liability, general liability and worker's
compensation, shall contain in substance the following endorsement:
"This insurance shall not be invalidated if, prior to a loss, the insured
waives in writing any or all right of recovery against any party for loss."
Buyer and all parties claiming under Buyer hereby waive and shall not make
any claims against or seek to recover from Sellers any loss or damage covered by
insurance, regardless of whether the loss or damage is due to the carelessness
or negligence of Sellers, their servants, agents and/or employees.
10. General.
10.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware.
5
10.2 Successors and Assigns. This Agreement inures to the benefit of, and
is binding upon, the successors and permitted assigns of the Parties hereto.
Neither Party may assign its rights or obligations under this Agreement without
the express written consent of the other Party, which will not be unreasonably
withheld; provided, however, that Sellers may delegate their duties hereunder to
such third parties as may be qualified to provide the Transition Services.
10.3 Entire Agreement; Amendments. This Agreement, together with Schedule A
hereto, contains the entire understanding of the Parties with regard to the
subject matter contained herein, and supersede all prior agreements or
understandings between Buyer and Sellers with respect to the subject matter of
this Agreement. This Agreement will not be amended, modified or supplemented
except by a written instrument signed by an authorized representative of each of
the Parties.
10.4 Force Majeure. Neither party will be deemed in default if delayed or
prevented from performing its obligations under this Agreement, in whole or in
part, due to an act of God, fire, flood, explosion, civil disorder, strike,
lockout or other labor trouble, material shortages of utilities, equipment,
materials or facilities, delay in transportation, breakdown or accident, riot,
war, or other cause beyond its control (a "Force Majeure Event"); provided that
it shall resume full performance of this Agreement as soon as practicable
following the conclusion of the Force Majeure Event.
10.5 Interpretation; No Strict Construction. Article titles and headings to
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. 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 Party hereto.
10.6 Partial Invalidity. If any provision of this Agreement, or the
application thereof, is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the provisions of this Agreement, will
in no way be effected, impaired or invalidated, and to the extent permitted by
applicable law, any such provision will be restricted in applicability or
reformed to the minimum extent required for such provision to be enforceable.
10.7 No Third Party Beneficiary. This Agreement will not confer any rights
or remedies on any person other than the Parties hereto and their respective
successors and permitted assigns.
10.8 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the Parties and delivered to the other parties.
6
10.9 Notices. Wherever under this Agreement one Party is required or
permitted to give written notice to the other, such notice will be deemed given
if made in accordance with the terms of the Asset Purchase Agreement.
10.10 Nonwaiver. No alleged waiver, modification or amendment to this
Agreement shall be effective against either Party hereto, unless in writing,
signed by the Party against which such waiver, modification or amendment is
asserted, and referring specifically to the provision hereof alleged to be
waived, modified or amended. The failure or delay of either Party to insist upon
the other Party's strict performance of the provisions in this Agreement or to
exercise in any respect any right, power, privilege, or remedy provided for
under this Agreement shall not operate as a waiver or relinquishment thereof,
nor shall any single or partial exercise of any right, power, privilege, or
remedy preclude other or further exercise thereof, or the exercise of any other
right, power, privilege, or remedy; provided, however, that the obligations and
duties of either Party with respect to the performance of any term or condition
in this Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives as of the date and year first set forth
above.
AGWAY, INC., as debtor-in-possession
By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
AGWAY ENERGY PRODUCTS, LLC
By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
AGWAY ENERGY SERVICES, INC.
By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
AGWAY ENERGY SERVICES PA, INC.
By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
7
SUBURBAN PROPANE, L.P.
By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
8
Schedule A
Reimbursable Expenses and Designated Employees
Transition Services Approximate Maximum Monthly Cost
(does not include 10% Service fee)
800051 - Data Center $600,000
800312 - After Hours $125,000
800313 - Cash Application $80,000
800901 - Building Charges $80,000
800970 - Business Development $60,000
800973 - Equipment Purchasing $22,000
800974 - Supply and Purchasing $80,000
800977 - Accounting $230,000
800978 - PSS Application &
Support Services $205,000
800981 - Safety $25,000
800982 - Training $40,000
800983 - AES Support $75,000
800984 - Transportation and Safety $27,000
800985 - Engineering $23,000
800987 - HR $153,000
800991 - D.O.T. Compliance $30,000
800990 - Accounts Payable $33,000
800890 - Marketing $140,000
9
800891 - Commercial Support $15,000
10
Exhibit I
Compensation Order
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF NEW YORK
- ---------------------------------------------------
IN RE:
CASE NO. 02-65872 through
AGWAY, INC. 02-65877
Chapter 11
Debtor Jointly Administered
- ---------------------------------------------------
IN RE:
AGWAY GENERAL AGENCY, INC. FILED
APR 21 2003
Debtor
- --------------------------------------------------- OFFICE OF THE
BANKRUPTCY CLERK
UTICA, NY
IN RE:
BRUBAKER AGRONOMIC CONSULTING SERVICE LLC
Debtor
- ---------------------------------------------------
IN RE:
COUNTRY BEST ADAMS, LLC
Debtor
- ---------------------------------------------------
IN RE:
COUNTRY BEST-DEBERRY LLC,
Debtor
- ---------------------------------------------------
IN RE:
FEED COMMODITIES INTERNATIONAL LLC
Debtor
- ---------------------------------------------------
2
APPEARANCES:
WEIL, GOTSHAL & MANGES LLP JUDY G.Z. LIU, ESQ.
Attorneys for Debtors Of Counsel
767 Fifth Avenue
New York, New York 10153-0119
MENTER, RUDIN & TRIVELPIECE, P.C. JEFFREY A. DOVE, ESQ.
Attorneys for Debtors Of Counsel
500 South Salina Street, Suite 500
Syracuse, New York 13202-3300
PACHULSKI, STANG, ZIEHL, YOUNG, WILLIAM P. WEINTRAUB, ESQ.
JONES & WEINTRAUB, P.C. Of Counsel
Attorneys for Official Unsecured
Creditors Committee
461 Fifth Avenue, 25th Floor
New York, New York 10017-6234
HANCOCK & ESTABROOK, LLP CAMILLE HILL, ESQ.
Attorneys for GECC Of Counsel
1500 MONY Tower I
P.O. Box 4976 Syracuse, New York 13202
MARTIN, MARTIN & WOODARD LEE B. WOODARD, ESQ.
Attorneys for Unofficial Creditors Committee Of Counsel
of Agway Retirees
One Lincoln Center
Syracuse, New York 13202
LACY, KATZEN, RYEN & DAVID D. MACKNIGHT, ESQ.
MITTLEMAN, LLP
Attorneys for CY Farms
130 East Main Street
Rochester, New York 14604
GUY A. VAN BAALEN, ESQ.
Assistant U.S. Trustee
10 Broad Street
Utica, New York 13501
Hon. Stephen D. Gerling, Chief U.S. Bankruptcy Judge
MEMORANDUM-DECISION, FINDINGS OF FACT,
CONCLUSIONS OF LAW AND ORDER
Presently before the Court is a motion ("Compensation Motion") filed on
March 10, 2003, on behalf of Agway, Inc. ("Agway") and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors") seeking an order approving certain modifications to Agway's employee
compensation programs pursuant to ss.ss. 363(b), 363(c) and 105(a) of the United
States Bankruptcy Code, 11 U.S.C. ss.ss. 101-1330 ("Code"). A Statement of
Position ("Committee's Statement") of the Official Unsecured Creditors'
Committee ("Committee") was also filed on March 10, 2003, expressing support for
the Compensation Motion "with some degree of reluctance, but with the knowledge
that this issue had to be laid to rest for this case to move ahead."(1) On March
21, 2003, a response was filed on behalf of General Electric Capital
Corporation, as Agent for certain pre- and post-petition lenders, indicating
that in its opinion the Compensation Motion "is fair and reasonable in light of
the circumstances." Opposition to the Compensation Motion was filed on March 21,
2003, on behalf of what is referred to as an "unofficial unsecured creditors'
committee" comprised of Agway retirees
- ----------
1 On October 22, 2002, the Court heard oral argument on the Committee's
motion ("Reconsideration Motion") seeking reconsideration of certain first day
orders, including one authorizing the Debtors to pay prepetition wages,
compensation, and employee benefits, including "special incentive programs" in
the approximate aggregate amount of $4,800,000 and "paid time off' obligations
totaling $9,100,000. The Committee sought information concerning, inter alia,
"any bonus or incentive programs, or any severance or pay to stay programs [to
the extent they] are assumed, approved or implemented." See P. 34 of Committee's
Reconsideration Motion. That aspect of the motion has been carried on the
Court's calendar along with Agway's motion now under consideration. According to
the Committee, "[t]he compromise embodied within the Compensation Motion
resolves all remaining issues raised by the motion for reconsideration." See
Committee's Statement at 5 n.1.
4
("Retirees"), some of whom allegedly ran the company for 30 years.(2) Agway
filed a response to their opposition on March 25, 2003.
The Compensation Motion was heard at the Court's regular motion term in
Utica, New York, on March 25, 2003. Following oral argument, the Court adjourned
the Compensation Motion to April 1, 2003, in Syracuse, New York, in order for
the Debtors to provide the Retirees with additional information. The Retirees,
having reviewed the materials provided by Agway, submitted a Confidential
Supplemental Affidavit to the Court on March 31, 2003, expressing its continued
opposition to the Compensation Motion.
Following further oral argument on April 1, 2003, the Court indicated that
it would take the matter under advisement, affording the parties an opportunity
to file memoranda of law by April 15, 2003, with particular focus on the
statutory basis for the Compensation Motion.
JURISDICTIONAL STATEMENT
The Court has core jurisdiction over the parties and subject matter of this
contested matter pursuant to 28 U.S.C. ss.ss. 1334(b), 157(a), (b)(1) and
(b)(2)(A) and (M).
BACKGROUND
The Debtors filed voluntary petitions pursuant to chapter 11 of the Code on
October 1,
- ----------
2 According to the Debtors, although there are approximately 5,100 such
retirees, there are only an estimated 500 retirees that actually are creditors
in the Debtors' cases.
5
2002. Agway is an agricultural cooperative engaged in a number of business
activities and it and its subsidiaries, to the extent they have not been
liquidated during the pendency of the case, have continued to operate and manage
their businesses as debtors in possession pursuant to Code ss.ss. 1107(a) and
1108.
Prepetition, Agway had in place various compensation arrangements for its
employees, including base salary, incentive compensation, severance benefits,
supplemental severance benefits for certain key employees and special separation
compensation arrangements for the most senior executives. There were also
allegedly retention and bonus plans for employees of businesses that were
expected to be discontinued or sold such as the Agronomy and Seedway businesses,
as well as Telmark.(3)
According to Debtors' counsel, following extensive negotiations with the
Committee over a five month period, the proposed compensation package presented
to the Court for its approval represents a downward modification from that which
existed at the time of the Debtors' filing and is expected to result in an
estimated savings to Agway's estate of approximately $5.0-5.5 million.(4) See
Compensation Motion at P. 18 and Exhibit A(5), attached to Committee's Position
Statement.
- ----------
3 The Agronomy and Seedway businesses were sold postpetition to Growmark,
Inc. upon approval by the Court on November 13, 2002. The Court approved the
sale of substantially all of Telmark's assets to Wells Fargo Financial Leasing,
Inc. on February 27, 2003.
4 The Committee points out that the savings of approximately $5.0 to 5.5
million "does not acknowledge the $5.5 million KERP (`key employee retention
plan') payments originally sought by Agway and later dropped at the Committee's
insistence." See Committee's Position Statement at 9 n.5.
5 Exhibit A provides a comparison of costs under the original proposed
agreement and under the final agreement, as well as a summary of the various
payment terms under the proposed compensation agreement.
6
The Committee describes a reduction in bonus arrangements for "discontinued
operations," which include the Agronomy and Seedway businesses. The retention
bonuses for certain employees of those businesses were reduced by 20% and are
now general unsecured claims. Fifty percent of the remaining 80% will be paid
immediately in cash, after crediting $458,862 in payments received before the
petition date, "with the balance being `earned' by the employees based upon
Agway's realization of the deferred balance of the Growmark purchase price." Id.
at P. 11. In addition, the Committee alleges that it was able to negotiate a 20%
reduction of the Telmark retention bonuses, originally estimated at $1,744,756,
and the capping of the pro rata incentive compensation payment at $1,542,474, a
decrease from $1,888,272 for seventeen Telmark employees.(6)
According to the Committee, Agway had wanted to keep base salary and
incentive compensation arrangements in place and also to provide for a
substantial bonus or retention plan for fifty key employees at an estimated cost
of $5,428,000. The Committee objected to this and also took issue with the
payment of $545,819 in special bonuses paid to seven employees in September 2002
on the eve of bankruptcy as a reward to those employees who had assisted with
"readying" Agway for the bankruptcy filing.
Agway agreed, at the Committee's insistence, to drop the bonus program and
to make the "`incentive' piece of Agway's traditional preexisting compensation .
.. . more contingent upon performance than it had been in the past."(7) Id. at P.
17. Also eliminated is the long term incentive
- ----------
6 According to Debtors' counsel, employees of its energy and leasing
businesses, including Telmark, although nondebtors, agreed to a reduced
compensation package.
7 Under the current program, referred to by Debtors as the "Management
Target Annual Incentive Program," key employees receive a straight salary
component and an incentive
7
plan payments to six members of senior management at an estimated savings of
$1,510,978.(8) With respect to the "bonuses" paid in September 2002 to seven
employees, the Committee asserts that it insisted on the recapture of these
monies through an offset against the first incentive or severance payments due.
Accordingly, these payments will be deducted from the amounts such employees
would otherwise be entitled to for fiscal year 2003. If the 2003 target
incentive is not achieved and the employee is unable to apply the September
payment against the 2003 target incentive, it will be deducted from the
employee's 2004 target incentive payment.
At the hearing on March 25, 2003, Guy A.Van Baalen, Esq., of the office of
the United States Trustee ("UST"), indicated that he too had concerns with the
application of the September payment to an employee's 2004 target incentive. An
agreement was reached with Agway and the Committee to further modify the
Compensation Motion. See Letter of Judy G.Z. Liu, Esq., of the law firm of Weil,
Gotshal & Manges LLP, dated March 19, 2003. Under the agreement, 50% of an
employee's 2003 target incentive will be paid in July 2003. The remaining 50%
will be paid on the earliest to occur of
(i) the sale of the business unit for which the employee performs
services, (ii) the involuntary termination of the employee, and (iii)
the confirmation of a chapter 11 plan; provided, however, that solely
as to the employees of Agway Energy, the date "December 26, 2003" will
be an additional event for purposes of determining
- ----------
component which is based on their meeting certain performance targets as set for
their respective divisions. According to the Debtors, it is "designed with the
objective of providing total compensation to the employee at market levels if
the target is met." See Debtors' Motion at 8. Furthermore, employees are
entitled to receive all or a portion of the target incentive if separated from
Agway. Also certain managers are eligible for continuation of employee benefits
following separation of employment.
8 It is unclear whether these savings include a "change of control" payment
to the president of Telmark of $230,022 which was eliminated.
8
the earliest date upon which such employees' remaining FY `03 Target
Incentive will be paid.
See id.
The parties also agreed that 75% of the "paid time off" obligations to
employees for 2002 would be treated as a prepetition unsecured claim and 25% as
a postpetition claim. See Committee's Position Statement at P. 20.
The Committee indicates that its support for the Compensation Motion "is
dampened by its recognition that Agway's preexisting compensation arrangements
with its employees were already quite generous and that Agway management's
generosity with itself may be an affront to general unsecured creditors. . . ."
See Committee's Position Statement at P. 6. Nevertheless, according to
Committee's counsel, the proposed compensation package represents a delicate
balance between overcompensation and not giving enough to the employees to
provide an incentive for remaining in the employment of the Debtors
postpetition. It was represented to the Court that if it turns out that there is
going to be a complete liquidation of the Debtors' businesses, it is essential
that it be on a "going concern" basis so as to maximize value for the unsecured
creditors. The Committee notes that these reductions were obtained without the
cost of depositions and litigation involving, for example, alleged fraudulent
transfers of monies paid to certain employees in September 2002, immediately
prior to filing. It is also pointed out that while a significant portion of the
package consists of severance, it is hoped that little of that will be paid out
if the employees are retained in the process of liquidation of any of the
ongoing businesses.
With respect to Agway's severance programs, there are three according to
Michael R.
9
Hopsicker, Agway's current Chief Executive Officer ("Hopsicker"). These include:
a. "Separation Compensation": covers four (4) current and two (2)
former senior executives based on individual compensation agreements
adopted annually in the first few months of Agway's fiscal year.(9)
b. "Additional Retirement Benefit": the ARB program was adopted by the
Board of Directors in February 2002, effective for separations on and
after April 1, 2002. The ARB, which benefits all Agway employees,
replaced Agway's Severance Pay program which also benefitted all
employees. Program modifications adopted in February 2002 provide for
benefits to be paid by Agway's over-funded pension plan, thereby
preserving Agway cash.
c. "Supplemental Severance": memorialization in August 2002 of long
standing practice of providing additional severance to certain
executives and key employees upon involuntary termination without
cause.(10) Historical payments have ranged from 50% to 200% of base
salary. The Supplemental Severance Program that the Company is
proposing proposes benefits ranging from 50% to 100% of base salary,
less ARB payments.
See Affidavit of Hopsicker, sworn to April 1, 2003, at 3-4.
Agway's Compensation Motion seeks Court approval of "a" and "c" above.
Severance payments for employees of continuing operations has been reduced and
capped at $6.4 million. See Committee Position Statement at P. 18. The Committee
explains that under the modification, it traded the certainty of paying $5.5
million to key employees to stay for the probability that $6.4 million will
never be paid because of the likelihood that key employees will not be
involuntarily terminated should a particular subsidiary be sold, as it is
reasonable to believe that the purchaser would wish to keep key employees on in
some capacity.
- ----------
9 Agway's fiscal year ends on June 30th of each year.
10 This particular benefit allegedly applies to approximately fifty
individuals.
10
Finally, Agway's previous CEO, Donald P. Cardarelli, who was terminated
effective April 18, 2003, is to receive a lump sum cash payment in the amount of
$1,026,740 as his severance. See Exhibit A, attached to Debtors' Compensation
Motion. According to the Debtors, this represents 22 months of salary. See
Debtor's Compensation Motion at 12. He was not entitled to any annual incentive
for the 2003 fiscal year or any long-term incentive payment. See Exhibit A,
attached to Debtors' Compensation Motion. It is alleged that this is less than
half of what he was originally entitled prior to the modifications. See Letter
from Hopsicker, dated March 7, 2003, attached as Exhibit C of Retirees'
Opposition, received March 21, 2003.
At the hearing on March 25, 2003, the Court heard arguments from the
attorney for the Retirees. He argued that insufficient information had been
provided for there to be an informed decision about the Compensation Motion. He
raised questions with respect to when the various compensation packages had been
effected and whether they had been approved by the Debtors' Board of Directors.
He also questioned why their approval could not wait until plan confirmation. At
the hearing on April 1, 2003, having been provided with extensive documentation
from the Debtors, he expressed concerns about what he referred to as "corporate
excess" over recent years at a time when Agway was experiencing a downward turn
in its gross revenues. He asserted that between 1994 and 2000 management
compensation had increased by 200% and that the "corporate culture" had changed
and Agway had become "a Wall Street compensation package firm" when it was
merely "an agricultural co-op in upstate New York."
11
DISCUSSION
Last year the Employee Abuse Prevention Act of 2002 ("EAP Act") was
introduced unsuccessfully in Congress to "protect employees and retirees from
corporate practices that deprive them of their earnings and retirement savings
when a business files for bankruptcy . . . ." H.R. 5221, 107th Cong., 2d Sess.;
S. 2798, 107th Cong., 2d Sess. (2002). Whether or not this proposed legislation
will again be considered in the current Congress is unknown. However, in the
wake of the national uproar over such mega filings as Enron and WorldCom, the
Court feels it necessary to approach any request concerning severance packages
and management stay bonuses prior to plan confirmation with caution despite the
lack of statutory guidance that the proposed EAP Act otherwise might have
provided.(11)
At the hearing on April 1, 2003, the Court inquired about the statutory
basis for Agway's
- ----------
11 For example, the proposed EAP Act would have amended Code ss. 503 to
require that a transfer made to an insider of the debtor for the purpose of
inducing such person to remain with the debtor's business would not be allowed
absent a finding by the court based on evidence in the record that (i) the
transfer or obligation is essential to retention of the person because the
individual has a bona fide job offer from another business at the same or
greater rate of compensation; (ii) the services provided by the person are
essential to the survival of the business . . . .
Furthermore, under the EAP Act, Code ss. 503 would also have prevented a
severance payment to an insider of the debtor, unless
(i) the payment is part of a program that is generally applicable to all
full-time employees; and (ii) the amount of the payment is not greater than
10 times the amount of the mean severance pay given to non-management
employees during the calendar year in which the payment is made. . . .
12
motion and whether it was actually a motion pursuant to Code ss. 365 seeking to
assume certain prepetition executory contracts or pursuant to Rule 9019 of the
Federal Rules of Bankruptcy Proceeding to approve a settlement of the
Committee's Reconsideration Motion. Agway's counsel had filed the motion in
reliance on Code ss. 363(b), ss. 363(c) and ss. 105(a). The Court asked that the
parties brief the issue and upon review of the memoranda of law submitted on
behalf of Agway and the Committee, it is clear that other bankruptcy courts
asked to approve key employees retention programs and severance packages, such
as proposed by these Debtors, have done so under the statutory umbrella of Code
ss. 363(b). See In re Aerovox, Inc., 269 B.R. 74, 80 (Bankr. D. Mass. 2001)
(citations omitted); see generally, In re Dornier Aviation (North America),
Inc., 2002 WL 31999222 at *8 (Bankr. E.D. Va.) (noting that such agreements do
not fall within the category of agreements that are considered "in the ordinary
course of business" and require notice to creditors and court approval,
particularly when they involve executives or other key employees, whether they
be existing employment policies or new severance or retention agreements). It is
under that statutory umbrella that the Court will consider Agway's Compensation
Motion.
"The determination of whether to approve such plans turns on the facts and
circumstances of each particular case." In re Montgomery Ward Holding Corp., 242
B.R. 147, 154 (D. Del. 1999) (citations omitted). The Debtors' business
judgment, as applied to discretionary actions or decisions of corporate
directors, is to be given considerable weight by this Court, sitting "as an
overseer of the wisdom with which the bankruptcy estate's property is being
managed . . . and not, as it does in other circumstances, as the arbiter of
disputes between creditors and the estate." Aerovox, 269 B.R. at 80, quoting In
re Orion Pictures Corp., 4 F.3d 1095, 1099 (2d Cir. 1993).
13
As long as the Court finds the compensation program fair and reasonable and the
Debtors' business decision sound and not based on "bad faith, or whim or
caprice," it should be approved. See In re Logical Software, 66 B.R. 683, 686
(Bankr. D. Mass. 1986), remanded sub nom. Infosystems Technology, Inc. v.
Logical Software, Inc., 1987 WL 13806 (D. Mass. 1987) (citation omitted).
In this case, not only does the Court have the request of the Debtors to
approve the compensation packages, it also has the Committee's statement of
support for the agreement which resulted from several months of negotiations
with the Debtors. What the Court does not have, however, is any evidence of
approval by the Debtors' Board of Directors in the exercise of its business
judgment. The Retirees allude to approval by the Debtors' Board of Directors on
August 28, 2002. However, the compensation plan for which Court approval is
currently sought was negotiated by the Debtor and the Committee sometime after
October 15, 2002, when the Committee first requested reconsideration of certain
first day orders entered in the case.
In Aerovox the debtor sought authority pursuant to Code ss. 363(b) and ss.
105(a) to implement a key employee retention program consisting of a bonus plan
for seventeen middle management employees and a severance package for four
executives. See Aerovox, 269 B.R. at 75. The debtor's motion was opposed by the
creditors' committee and an evidentiary hearing was held to determine whether to
approve the program in full, in part or not at all. The debtor and the committee
were able to reach a stipulation concerning the retention program for the middle
management employees; however, they were unable to reach agreement concerning
the severance package for the four senior executives. Id. Like the Debtors
herein, the goal of the debtor in Aerovox was to find a buyer for the debtor's
assets while maintaining the going concern
14
value of the debtor.
The court in Aerovox, inter alia, heard the testimony of one of the
debtor's directors, who had served on its board for four years. Id. at 78. He
testified about the collective experience of the entire board of directors,
including five "outside directors." He testified that the board's decision to
approve the proposed compensation package was based on their collective business
judgment and went on to explain in detail the due diligence conducted by the
board in reaching its decision. Id. at 79.
The matter now under consideration by this Court is to be distinguished
from that in Aerovox in that the Committee herein has agreed to the entire
modified compensation package presented by Agway allegedly in reliance on
Agway's business judgment. However, there is nothing in Agway's papers to
indicate that the proposed modifications received the prior acceptance and
approval by a majority of disinterested Board members. The Court also has no
information concerning whether any of the members of the Board are directly
impacted by the modifications. The Court also has no evidence of the due
diligence conducted in this regard. Agway and the Committee have indicated that
the proposed compensation package represents a downward modification of that
which existed at the time of the filing; nevertheless, the Court is left without
any basis for determining whether it is based upon sound business judgment under
the facts and circumstances of this case. Accordingly, the Court deems it
appropriate to schedule an evidentiary hearing at which testimony may be
presented by at least one member of Agway's Board of Directors, who shall be
subject to cross-examination, on the issue of sound business
15
judgment as referenced above.(12)
Based on the foregoing, it is hereby
ORDERED that an evidentiary hearing on Agway's Compensation Motion shall be
held on Wednesday, the 7th day of May 2003 at 9:00 a.m. at the U.S. Courthouse,
10 Broad Street, Utica, New York 13501.
Dated at Utica, New York
this 21st day of April 2003
/s/ Stephen D. Gerling
-----------------------------------
STEPHEN D. GERLING
Chief U.S. Bankruptcy Judge
- ----------
12 In the alternative, the Court will accept an affidavit from a
disinterested and authorized member of Agway's Board of Directors setting forth
the basis for the Board's decision to approve the compensation package, as
modified post-petition. The Court will review said affidavit without the need
for a further hearing upon written acceptance of same by counsel for the
Committee, counsel for the Retirees and the UST. Indication of acceptance in
lieu of a hearing shall be communicated to the Court at least 24 hours prior to
the date of the hearing.
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF NEW YORK
CHAMBERS OF THE BANKRUPTCY JUDGE
HON. STEPHEN D. GERLING 220 U.S. COURTHOUSE
CHIEF U.S BANKRUPTCY JUDGE UTICA, NEW YORK 13501
(315) 793-8111
FAX: 793-8792
Judy G.Z. Liu, Esq. Jeffrey A. Dove, Esq.
Weil, Gotshal & Manges LLP Menter, Rudin & Trivelpiece, P.C.
767 Fifth Avenue 500 S. Salina Street, Suite 500
New York, New York 10153-0119 Syracuse, New York 13202-3300
Robert J. Feinstein, Esq. Lee B. Woodard, Esq.
Pachulski Stang Ziehl Young, Jones & Martin, Martin & Woodard, LLP
Weintraub, P.C. One Lincoln Center
464 Fifth Avenue, 25th Floor Syracuse, New York 13202
New York, New York 10017-6234
Stephen A. Donato, Esq. Guy A. Van Baalen, Esq.
Hancock & Estabrook, LLP Assistant U.S. Trustee
1500 MONY Tower I 10 Broad Street
P.O. Box 4976 Utica, New York 13501
Syracuse, New York 13202-4976
Re: Agway, Inc.
Agway General Agency, Inc.
Brubaker Agronomic Consulting Service, LLC FILED
Country Best Adams, LLC MAY 09 2003
Country Best-DeBerry, LLC OFFICE OF THE
Feed Commodities International, LLC BANKRUPTCY CLERK
Case No. 02-65872 Chapter 11 Jointly Administered UTICA, NY
LETTER DECISION AND ORDER
On April 21, 2003, in response to a motion ("Compensation Motion") filed on
March 10, 2003, on behalf of Agway, Inc. ("Agway") and certain of its direct and
indirect subsidiaries (collectively, the "Debtors"), the Court issued a Decision
ordering an evidentiary hearing on the Compensation Motion to be held on
Wednesday, May 7, 2003.(1) In the alternative, Agway was asked
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1 Memorandum-Decision, Findings of Fact, Conclusions of Law and Order,
dated April 21, 2003.
2
to submit an affidavit from a disinterested member of its Board of Directors
setting forth the basis for the Board's decision to approve the compensation
package under consideration by the Court. On May 2, 2003, the affidavit of
Andrew Gilbert ("Gilbert"),(2) sworn to that date ("Gilbert Affidavit"), was
filed with the Court. As set forth in the Decision, the Court has received
written acceptance of the Gilbert Affidavit from counsel for the Official
Unsecured Creditors' Committee ("Committee"), the United States Trustee ("UST")
and counsel for an unofficial committee comprised of Agway retiree ("Retirees"),
making the evidentiary hearing unnecessary.(3)
As indicated in its Decision, the Court had certain concerns regarding
whether the proposed compensation package had received approval by the Board of
Directors and the basis for the Board's approval. At the time, the Court had
only the recommendation of Agway's counsel and the Committee, as well as a
description of the compensation program by Agway's chief executive officer
("CEO"), Michael R. Hopsicker ("Hopsicker").
The Court makes the following findings based on a review of the Gilbert
Affidavit:
1. Agway's Board of Directors is comprised of ten outside directors who are
farm-members of Agway.(4) None of the current directors have any financial
stake in the
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2 Gilbert indicates that he has been a member of Agway's Board since 1995
and currently serves as vice chairman of the Board, as well as chairman of the
Board's Human Resources Management Committee. He is a farmer member of Agway and
operates a 1,087 acre dairy farm in Potsdam, New York. He holds a Bachelor of
Science degree from Cornell University and is a graduate of Cornell's
Agricultural Leadership Institute.
3 The Court had given the parties, including the Retirees who had opposed
the Compensation Motion, an opportunity to have an evidentiary hearing in order
to cross-examine a disinterested member of Agway's Board of Directors. No one
opted to take advantage of that opportunity.
4 According to Agway's "Board Manual", "[f]rom the 2002 Annual Meeting
until the 2003 Annual Meeting, there are 13 member directors, two other
directors and the CEO. After the 2003 Annual Meeting, there are 12 member
directors, two other directors and the CEO." See Exhibit A at C-1, attached to
Gilbert Affidavit. There is no explanation given for the discrepancy between
3
proposed modifications to the existing compensation and benefit programs
which are being considered by the Court. See Gilbert Affidavit at P. 4.
"Many of the Board members are, however, unsecured creditors of the company
as a result of having invested in Agway securities, and/or as a result of
having deferred the payment of their directors' fees. The unsecured claims
of these directors range from less than $10,000 to over $300,000." Id. at
note 2.
2. Hopsicker, as CEO of Agway, is a member of the Board of Directors. Except
for him, none of the other members of the Board are employees of Agway. See
Exhibit A at C-1, attached to Gilbert Affidavit.
3. Hopsicker is responsible for "implementing the policies approved by the
Board and for reporting all aspects of Agway's operations to the Board."
See Gilbert Affidavit at P. 7.
4. It is the Human Resources Management Committee that has responsibility for
(a) evaluating the performance of the CEO, and setting the CEO's annual
salary, incentive plan and performance objectives; (b) reviewing the
compensation and incentive plans established by the CEO for executive
management for each fiscal year; authorizing any incentive payouts under
management incentive plans for the prior fiscal year; and (d) authorizing
and amending major employee benefit programs from time to time. See Gilbert
Affidavit at P. 8.
5. The Board reviewed and adopted or modified a series of compensation and
benefit programs after consultation with the compensation and benefit
consulting and design firm of Towers Perrin, attorneys at Weil, Gotshal &
Manges, LLP and attorneys at Bond, Schoeneck & King, PLLC, for the purpose
of striking "an appropriate balance between encouraging employees to stay
as long as needed and avoiding needless expenditure of the company's cash."
See Gilbert Affidavit at P. P. 10-11.
6. Under the compensation package for which approval is being sought, there
are no new programs being added to those in existence on the date the
bankruptcy cases were commenced. The compromise, which was negotiated by
Hopsicker and the Committee, "affects the payments to be made to the
employees under the existing programs but does not change the programs
themselves. See Gilbert Affidavit at P. 14.
7. During the negotiation process, Agway's Board and the Human Resources
Management Committee were provided with continual updates and received a
requested analysis of the financial impact of the proposed compensation
package.
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Gilbert's statement that there are 10 member directors and the 12 or 13 set
forth in the Board Manual.
4
See Gilbert Affidavit at P. P. 15-16 and 19 (setting forth twelve separate
occasions between October 25, 2002 and March 7, 2003 when the compensation
and benefits programs and/or compromise were discussed).
8. The Compensation Motion presently under consideration by this Court had the
full knowledge and approval of the Board and the Human Resources Management
Committee. See Gilbert Affidavit at P. 21.
According to Mr. Gilbert,
[t]he Board and HR Committee were convinced, based on their review of
independent compensation consultant reports, discussions with counsel
and analysis of market data, that the various programs detailed
herein, and the compromise reached with the Committee, provide an
array of incentives that are calculated to enable Agway to retain its
valued employees and ensure that they are compensated in a fair and
reasonable manner. Moreover, the Board and Human Resources Management
Committee believed that by approving the compromise, the likelihood of
preserving or enhancing the going concern values for Agway's business
units will be maximized.
See Gilbert Affidavit at P. 22.
Based on a review of the Gilbert Affidavit and recognizing the weight that
is to be given to the actions and decisions of corporate directors, the Court
finds that its concerns have been addressed and concludes that it will grant the
Compensation Motion as being in the best business judgment of Agway.
IT IS SO ORDERED.
Dated at Utica, New York
this 9th day of May 2003
/s/ Stephen D. Gerling
-------------------------------
STEPHEN D. GERLING
Chief U.S. Bankruptcy Judge
FILED
MAY 09 2003
OFFICE OF THE
BANKRUPTCY CLERK
UTICA, NY
ENTERED ON DOCKET
5/9/03
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INITIALS: RM
Exhibit J
ENVIRONMENTAL INDEMNITY ESCROW AGREEMENT
THIS AGREEMENT made this ________________by and between:
AGWAY ENERGY PRODUCTS, LLC, a Delaware limited liability company, AGWAY
ENERGY SERVICES, INC., a Delaware corporation, and AGWAY ENERGY SERVICES
PA, INC., a Delaware corporation ("Sellers");
and
SUBURBAN PROPANE, L.P., a Delaware limited partnership ("Purchaser");
and
NATIONAL CITY BANK OF PENNSYLVANIA (hereinafter referred to as "Escrow
Agent").
W I T N E S S E T H:
WHEREAS, by Asset Purchase Agreement, dated November 10, 2003 (the "Asset
Purchase Agreement"), a copy of which is attached hereto as Exhibit 1 to this
Escrow Agreement, Sellers have agreed to fund the Environmental Indemnity Escrow
Fund as described therein;
WHEREAS, the Environmental Indemnity Escrow Fund shall be administered as
provided in this Environmental Indemnity Escrow Agreement ("Escrow Agreement");
NOW, THEREFORE, in consideration of the mutual undertakings set forth
herein, it is agreed as follows:
1. Definitions. Capitalized terms in this Escrow Agreement not defined
herein shall have the meanings ascribed thereto in the Asset Purchase Agreement.
In addition to the terms defined elsewhere herein, the following terms shall
have the following meanings when used herein:
"Business Day" shall mean any day other than a Saturday, Sunday or any day
on which commercial banks in Pennsylvania or the city in which Escrow Agent is
located are required or permitted by law to be closed.
"Escrow Termination Date" shall mean the date that is the third anniversary
of the Closing Date.
"Joint Written Directions" shall mean a written direction executed by the
Representatives and directing Escrow Agent to disburse all or a portion of the
Escrow Funds or to take or refrain from taking an action pursuant to this Escrow
Agreement.
"Purchaser Representative" shall mean the persons so designated on Schedule
A hereto or any other person designated in a writing signed by Purchaser and
delivered to Escrow Agent and the Sellers Representative in accordance with the
notice provisions of this Escrow Agreement, to act as its representative under
this Escrow Agreement.
"Representatives" shall mean the Sellers Representative and the Purchaser
Representative.
"Seller's Representative" shall mean the persons so designated on Schedule
A hereto or any other persons designated in a writing signed by Sellers and
delivered to Escrow Agent and the Purchaser Representative in accordance with
the notice provisions of this Escrow Agreement, to act as their representative
under this Escrow Agreement.
2
2. Escrow Funds and Escrow Agent.
(a) Appointment of Agent. Sellers and Purchaser hereby appoint the Escrow
Agent to act as escrow agent hereunder, and the Escrow Agent hereby accepts such
appointment.
(b) Creation of Escrow. At the closing of the transaction contemplated by
the parties to the Asset Purchase Agreement, there shall be delivered to the
Escrow Agent the sum of Fifteen Million Dollars ($15,000,000) in immediately
available funds pursuant to the wire instructions set forth on Schedule A hereto
("Environmental Indemnity Escrow Fund").
(c) Escrow Account. Upon receipt of the Environmental Indemnity Escrow
Fund, Escrow Agent agrees to hold the funds in a separate escrow account (the
"Escrow Account").
Seller shall be deemed the owner of the Environmental Indemnity Escrow Fund
and any interest or other income thereon (collectively, "Escrow Funds"), and
investments in the Escrow Account and shall be responsible for the preparation
of all tax returns associated with the investments therein and shall pay all
costs relating to such returns, and all taxes, fines and penalties, and
interest. The Escrow Account shall be assigned the federal tax identification
number of Sellers. Sellers shall provide Escrow Agent, at any time upon request
of Escrow Agent with a Form W-8 or W-9 to evidence Sellers are not subject to
any back-up withholding under the United States Internal Revenue Code. Sellers
shall report all income, if any, that is earned on, or derived from, the Escrow
Funds as their income, in the taxable year or years in which such income is
properly includible and pay any taxes attributable thereto. Escrow Agent shall
have a lien, which
3
shall be paramount and prior in right of all other persons, upon all monies and
other property that shall have been received by it under this Escrow Agreement,
to secure the payment to it of fees and expenses hereunder due to Escrow Agent.
Escrow Agent shall not be required without its consent to relinquish, deliver or
pay over any instrument, money or other property deposited with it in this
Escrow Agreement unless and until it shall have been paid and reimbursed its
fees and expenses.
(d) Use of Escrow Funds. Purchaser shall be entitled to withdraw funds from
the Escrow Account (i) to fund any financial assurance requirements pursuant to
ISRA in the form of remediation trust fund agreements ("ISRA Financial Assurance
Funds"), (ii) to pay for all costs of Remediation of Sellers' Properties
("Remediation Costs") and (iii) to pay for all of Purchaser's costs arising from
the other Environmental Liabilities as described at Section 10.10 of the Asset
Purchase Agreement. In the event any of the Sellers' Properties are subject to
ISRA, at the Closing, Escrow Agent shall fund the ISRA Financial Assurance Funds
as required by ISRA from the Environmental Escrow Indemnity Fund, naming
Purchaser as the grantor.
(e) Release from Escrow Funds. For the purpose of notice pursuant to this
section 2(e), all references to "Sellers" shall mean Sellers or its designee or
other entity designated by order of the United States Bankruptcy Court For the
Northern District of New York or any other court having jurisdiction over the
Bankruptcy Case from time to time.
(i) Remediation Costs. (A) With respect to any Remediation Costs, Purchaser
shall deliver to the Sellers proposals for Remediation of Hazardous
4
Materials, describing in reasonable detail proposed Remediation activities
("Proposal"). Within ten (10) business days of receipt of such notice, Sellers
may notify Escrow Agent and Purchaser, in accordance with paragraph 4 hereof, of
its objection to the Proposal. In the event Sellers do not object within such
ten (10) business day period, Sellers shall be deemed to have waived Sellers'
right to contest the activities described in the Proposal. The sole basis for an
objection by Sellers to a Proposal shall be that the activities proposed therein
are not eligible for payment pursuant to the terms of the Asset Purchase
Agreement.
(B) To withdraw funds from the Escrow Fund, Purchaser shall deliver to
Escrow Agent and Sellers evidence of all Remediation Costs incurred by Purchaser
("Remediation Costs Draw Down Request") together with copies of all supporting
invoices and other evidence of incurrence of such costs ("Back Up"). By no later
than 5:00 p.m., New York City time, on the tenth (10th) Business Day following
receipt by Sellers and the Escrow Agent of a Remediation Costs Draw Down Request
(as to such ten (10)-Business Day period, the "Remediation Costs Drawn Down
Request Period"), Sellers may notify Escrow Agent and Purchaser in writing, in
accordance with Section 4 hereof, of Sellers' objection to the Remediation Costs
Draw Down Request, which notice shall state with specificity the grounds for
such objection (a "Remediation Costs Drawn Down Counternotice"). In the event,
Sellers do not object within the Remediation Costs Draw Down Request Period,
Sellers shall be deemed to have waived Sellers' right to contest the Remediation
Costs Draw Down Request and, the dollar amount claimed by Purchaser as set forth
in the Remediation Costs Draw Down Request shall be deemed fixed for purposes of
this Escrow Agreement, whereupon within three
5
(3) Business Days after the expiration of the Remediation Costs Draw Down
Request Period, Escrow Agent shall (A) disburse at the direction of Purchaser by
the method specified in the Remediation Costs Draw Down Request, out of the
Escrow Funds, the dollar amount claimed in the Remediation Costs Draw Down
Request (or, if the amount of the Remediation Costs Draw Down Request exceeds
the amount of the Escrow Funds, the amount of the Escrow Funds), and (B) deliver
written confirmation to Sellers and Purchaser that such disbursement(s) has or
have been made. Sellers shall not have the right to object to the performance of
any activities which were described in a Proposal to which Sellers did not
object pursuant to this section 2(e)(i)(B). The sole bases for an objection by
Sellers to a Remediation Costs Draw Down Request pursuant to this section
2(e)(i)(B) shall be that (x) that the activities for which costs were incurred
were not included in an approved Proposal and are not eligible for payment
pursuant to the terms of the Asset Purchase Agreement or (y) that the costs
incurred were not reasonable at the time such costs were incurred.
(C) If a Remediation Costs Draw Down Counternotice is properly given with
respect to a Remediation Costs Craw Down Request within the Remediation Costs
Draw Down Request Period that also provides that portions of the Remediation
Costs set forth in the Remediation Costs Draw Dawn Request are not disputed
("Undisputed Remediation Costs Portions"), the dollar amount of the Undisputed
Remediation Costs Portions claimed by Purchaser as set forth in the Remediation
Costs Draw Down Request shall be deemed fixed for purposes of this Escrow
Agreement, whereupon within three (3) Business Days after the expiration of the
Remediation Costs Draw Down Request Period, Escrow Agent shall (A) disburse at
the
6
direction of Purchaser by the method specified in the Remediation Costs Draw
Down Request, out of the Escrow Funds, the dollar amount of the Undisputed
Remediation Costs Portions claimed in the Remediation Costs Draw Down Request,
and (B) deliver written confirmation to Depositor and Recipient that such
disbursement has been made.
(D) If a Remediation Costs Draw Down Counternotice is properly given with
respect to a Remediation Costs Draw Down Request within the Remediation Costs
Draw Down Request Period, subject to Section 2(e)(i)(C) of this Escrow Agreement
with respect to Undisputed Remediation Costs Portions, Escrow Agent may refuse
to comply with any demands made upon it with respect to the underlying
Remediation Costs until it receives (i) a Joint Written Direction that such
dispute has been resolved by mutual agreement or (ii) a final binding
arbitration decision as contemplated by Section 12 of this Escrow Agreement, and
in doing so, Escrow Agent shall not incur any liability to any party or person
interested in the subject matter of this Escrow Agreement. Escrow Agent may rely
and continue to rely conclusively upon such arbitration decision or Joint
Written Direction, notwithstanding that it may be found subsequently to be void
or voidable, until one of the officers of Escrow Agent, shall have actual
knowledge that such arbitration decision or Joint Written Direction shall have
been modified, annulled, set aside, vacated or quashed.
(E) Within the Remediation Costs Draw Down Request Period, Purchaser may
amend any Remediation Costs Draw Down Request and Sellers may amend any written
notice to the other party and Escrow Agent.
(F) In the event Purchaser submits a Remediation Costs Draw Down Request
for Remediation Costs incurred pursuant to an ISRA Remediation
7
Agreement, the parties shall comply with the provisions of this section 2(e),
except that, in the absence of an objection by Sellers pursuant to section
2(e)(i)(C), Purchaser shall be entitled to seek the release of the Remediation
Costs Draw Down Amount from the ISRA Financial Assurance Fund, or at Purchaser's
option (or if such funds cannot be obtained from the ISRA Financial Assurance
Funds) from the Escrow Fund.
(ii) Environmental Liabilities. (A) For all other Environmental Liabilities
for which Purchaser shall be entitled to payment from the Escrow Fund pursuant
to the Asset Purchase Agreement, Purchaser shall deliver to Escrow Agent and
Sellers evidence of all costs incurred by Purchaser as a result of such
Environmental Liabilities ("Environmental Liabilities Draw Down Request")
together with copies of all Back Up. By no later than 5:00 p.m. , New York City
time, on the tenth (10th) Business Day following receipt by Sellers and Escrow
Agent of an Environmental Liabilities Draw Down Request (as to such ten
(10)-Business Day Period, the Environmental Liabilities Draw Down Request
Period"), Sellers may notify Escrow Agent and Purchaser in writing in accordance
with Section 4 hereof, of Sellers' objection to the Environmental Liabilities
Draw Down Request, which notice shall state with specificity the grounds for
such objection (an "Environmental Liabilities Draw Down Request Counternotice").
In the event Sellers do not object within the Environmental Liabilities Draw
Down Request Period, the dollar amount claimed by Recipient as set forth in the
Environmental Liabilities Draw Down Request shall be deemed fixed for purposes
of this Escrow Agreement, whereupon within three (3) Business Days after the
expiration of the Environmental Liabilities Draw Down Request Period, Escrow
Agent shall (A) disburse at the direction of Purchaser by the method specified
in the Environmental Liabilities
8
Draw Down Request, out of the Escrow Funds, the dollar amount claimed in the
Environmental Liabilities Draw Down Request (or, if the amount of the Escrow
Funds, exceeds the remaining amount of the Escrow Funds, the remaining amount of
the Escrow Funds), and (B) deliver written confirmation to Sellers and Purchaser
that such disbursement(s) has or have been made. The sole bases for an objection
by Sellers to an Environmental Liabilities Draw Down Request pursuant to this
section 2(e)(ii)(A) shall be that (x) the costs incurred by Purchaser were not
eligible for payment from the Escrow Fund pursuant to the terms of the Asset
Purchase Agreement or (y) the costs incurred were unreasonable at the time such
costs were incurred.
(B) If an Environmental Liabilities Draw Down Request Counternotice is
properly given with respect to an Environmental Liabilities Draw Down Request
within the Environmental Liabilities Draw Down Request Period that also provides
that portions of the claims set forth in the Environmental Liabilities Draw Down
Request are not disputed ("Undisputed Environmental Liabilities Portions"), then
the dollar amount of the Undisputed Environmental Liabilities Portions claimed
by Purchaser as set forth in the Environmental Liabilities Draw Down Request
shall be deemed fixed for purposes of this Escrow Agreement, whereupon within
three (3) Business Days after the expiration of the Environmental Liabilities
Draw Down Request Period, Escrow Agent shall disburse at the direction of
Purchaser by the method specified in the Environmental Liabilities Draw Down
Request, out of the Escrow Funds, the dollar amount of the Undisputed
Environmental Liabilities Portions claimed in the Environmental Liabilities Draw
Down Request, and shall give written confirmation to Sellers and Purchaser that
such disbursement(s) has or have been made.
9
(C) If an Environmental Liabilities Draw Down Request Counternotice is
properly given with respect to an Environmental Liabilities Draw Down Request
within the Environmental Liabilities Draw Down Request Period, subject to
Section 2(e)(ii)(A) of this Escrow Agreement with respect to Undisputed
Environmental Liabilities Portions, Escrow Agent may refuse to comply with any
demands made upon it with respect to the underlying claim until it receives (A)
a Joint Written Direction that such claim has been resolved by mutual agreement
or (B) a final binding arbitration decision as contemplated by Section 12 of
this Escrow Agreement, and in doing so, Escrow Agent shall not incur any
liability to any party or person interested in the subject matter of this Escrow
Agreement. Escrow Agent may rely and continue to rely conclusively upon such
arbitration decision or Joint Written Direction, notwithstanding that it may be
found subsequently to be void or voidable, until one of the officers of Escrow
Agent, shall have actual knowledge that such arbitration decision or Joint
Written Direction shall have been modified, annulled, set aside, vacated or
quashed.
(D) Within any Environmental Liabilities Draw Down Request Period,
Purchaser may amend any Environmental Liabilities Draw Down Request and Sellers
may amend any Environmental Liabilities Draw Down Request Counternotice, in each
case by giving written notice to the other party and Escrow Agent.
(iii) (A) Release of Balance of Escrow. By no later than 5:00 p.m., New
York City time, ten (10) Business Days prior to the Escrow Termination Date,
Escrow Agent shall notify Sellers and Purchaser in writing ("Escrow Notice")
that it is prepared to disburse the Escrow Funds to Sellers. If Purchaser
objects to the disbursement of all or a portion of the Escrow Funds, it shall
give written notice
10
("Escrow Objection Notice") to Escrow Agent and Sellers not later than 5:00
p.m., New York City time, five (5)-Business Days after the Escrow Notice from
Escrow Agent (as to such five (5)-Business Day Period, the "Escrow Objection
Notice Period"). The Escrow Objection Notice shall state whether there exists
any pending Remediations or other claims for Environmental Liabilities pending
on the third anniversary of the Closing Date, and the amount of the Escrow Funds
to be retained by the Escrow Agent with respect thereto which amounts shall, in
the aggregate, equal the total of the reasonably estimated amounts of such
Remediations and other Environmental Liabilities (or, if the reasonably
estimated amounts of such Remediations and other Environmental Liabilities
exceeds the amount in the Escrow Fund, the remaining amount of such funds) (the
"Holdback").
(B) If Escrow Agent receives an Escrow Objection Notice from Purchaser
within the Escrow Objection Notice Period, the Holdback shall be retained by
Escrow Agent pending, in the case of a Remediation, receipt by Purchaser of a
written determination from the Governmental Body with jurisdiction over the
Remediation that no further Remediation is required for Hazardous Materials on,
at, under or migrating from the property ("NFA") or, in the case of other
Environmental Liabilities, the resolution of such other Environmental
Liabilities. Within three (3) Business Days after the expiration of the Escrow
Objection Notice Period, Escrow Agent shall (A) disburse the Escrow Funds less
the Holdback to Sellers pursuant to written instructions from Purchaser and (B)
give written confirmation to Seller and Purchaser that such disbursement(s) has
or have been made. Purchaser shall thereafter make demand as set forth in
Section 2(e)(i) and (ii) of this Escrow Agreement for disbursement
11
of Escrow Funds from the Holdback for costs and Losses incurred with respect to
such Remediations and Environmental Liabilities, whereupon the rights and
obligations of the parties set forth in Sections 2(e)(ii)(A)-(D) of this Escrow
Agreement shall apply.
(C) If the Escrow Agent does not receive an Escrow Objection Notice from
Purchaser within the Escrow Objection Notice Period, Purchaser shall be deemed
to have waived Purchaser's right to contest the Escrow Notice, the dollar amount
of the Escrow Funds shall be deemed fixed for purposes of this Escrow Agreement,
whereupon within three (3) Business Days after the expiration of the Escrow
Objection Notice Period, Escrow Agent shall (A) disburse at the direction of
Sellers by the method specified in writing by Sellers to Escrow Agent, the
Escrow Funds, and (B) deliver written confirmation to Sellers and Purchaser that
such disbursement has been made.
(iv) ISRA Financial Assurance Funds. Notwithstanding the foregoing, any
ISRA Financial Assurance Funds shall remain on deposit, to the extent not
released pursuant to Section 2(e)(i) or (ii), until Purchaser receives an NFA
for the Remediation for which the ISRA Financial Assurance Fund was established
("ISRA NFA"). In the event that Purchaser receives an ISRA NFA prior to the
third anniversary of the Closing Date, any remaining funds in such ISRA
Financial Assurance Fund shall be released to Escrow Agent and Escrow Agent
shall promptly deposit such funds into the Escrow Account. In the event that
Purchaser receives an ISRA NFA on or after the third anniversary of the Closing
Date, any remaining funds in the ISRA Financial Assurance Fund, less any
outstanding Remediation Costs of Purchaser, shall be released to Sellers.
Notwithstanding the foregoing, if Purchaser obtains an ISRA NFA on or after
12
the third anniversary of the Closing Date and (i) there are pending Remediations
or other claims for Environmental Liabilities and (ii) the amount remaining in
the Escrow Account is less than the total of the reasonably estimated amounts of
such pending Remediation and other Environmental Liabilities, then any amounts
remaining in the ISRA Financial Assurance Fund shall be released to Escrow
Agent. Escrow Agent shall deposit the amount which is equal to the difference
between the amount remaining in the Escrow Account and the amount of the total
of the reasonably estimated amounts of such Remediation and other Environmental
Liabilities into the Escrow Account and Escrow Agent shall immediately release
any remaining funds, less any outstanding Remediation Costs incurred by
Purchaser, to Sellers.
(f) Investment of Funds. The Escrow Agent is herein directed and instructed
to initially invest and reinvest the Escrow Funds in the investment indicated on
Schedule A hereto. Escrow Agent may make any investments through its or an
affiliate's bond or investment department, for which Escrow Agent or any of its
affiliates may serve as investment advisor and receive compensation with respect
to any investment direction hereunder. With the execution of this Escrow
Agreement, Sellers and Purchaser hereto acknowledge receipt of prospectuses
and/or disclosure materials associated with the investment vehicle, either
through means of hardcopy or via access to the website associated with the
investment selected by Sellers and Purchaser. Sellers and Purchaser acknowledge
that they have discussed the investment and are in agreement as to the selected
investment. The Purchaser and Sellers may provide instructions changing the
investment of the Escrow Funds (subject to applicable minimum investment
requirements) by the furnishing of a Joint Written Direction specifying the type
and
13
identity of the investments to be purchased and/or sold, any particular
settlement procedures required, if any (which settlement procedures shall be
consistent with industry standards and practices), and such other information as
Escrow Agent may require to the Escrow Agent, and Escrow Agent may make or cause
to be made such investments subject to such additional terms and conditions as
Escrow Agent may determine appropriate under the circumstances; provided,
however, that no investment or reinvestment may be made except in the following:
(i) direct obligations of the United States of America or obligations the
principal of and the interest on which are unconditionally guaranteed by the
United State of America;
(ii) certificates of deposit issued by any bank, bank and trust company, or
national banking association (including Escrow Agent and its affiliates), which
certificates of deposit are insured by the Federal Deposit Insurance Corporation
or a similar governmental agency;
(iii) repurchase agreements with any bank, trust company, or national
banking association (including Escrow Agent and its affiliates); or
(iv) any institutional money market fund offered by Escrow Agent, including
any institutional money market fund managed by Escrow Agent or any of its
affiliates.
If Escrow Agent has not received a written direction from Purchaser and
Sellers at any time that an investment decision must be made, Escrow Agent shall
invest the Environmental Indemnity Escrow Funds, or such portion thereof as to
which no joint written direction has been received, in investments described in
clause (iv) above. Each
14
of the foregoing investments shall be made in the name of Escrow Agent. No
investment shall be made in any instrument or security that has a maturity of
greater than six (6) months. Notwithstanding anything to the contrary contained
herein, Escrow Agent may, without notice to the Purchaser and Sellers, sell or
liquidate any of the foregoing investments at any time if the proceeds thereof
are required for any disbursement of Escrow Funds permitted or required
hereunder. All investment earnings shall become part of the Escrow Funds and
investment losses shall be charged against the Escrow Funds when realized.
Escrow Agent shall not be liable or responsible for loss in the value of any
investment made pursuant to this Escrow Agreement, or for any loss, cost or
penalty resulting from any sale or liquidation of the Escrow Funds. Escrow Agent
may use a broker-dealer of its own selection, including a broker-dealer owned by
or affiliated with Escrow Agent or any of its affiliates.
(g) Resignation of Escrow Agent. Escrow Agent may resign and be discharged
from the performance of its duties hereunder at any time by giving ten (10) days
prior written notice to the Purchaser and Sellers specifying a date when such
resignation shall take effect. Such resignation shall take effect upon the
earlier of: (i) the appointment of a successor Escrow Agent as provided herein
or (ii) thirty (30) days after delivery of such notice of resignation. Upon any
such notice of resignation, the Purchaser and Sellers jointly shall appoint a
successor Escrow Agent hereunder prior to the effective date of such
resignation. The retiring Escrow Agent shall transmit all records pertaining to
the Escrow Funds and shall pay all Escrow Funds and transfer all investments to
the successor Escrow Agent, after making copies of such records as the
15
retiring Escrow Agent deems advisable and after deduction and payment to the
retiring Escrow Agent of all reasonable fees and expenses (including court costs
and attorneys' fees) payable to, incurred by, or expected to be incurred by the
retiring Escrow Agent in connection with the performance of its duties and the
exercise of its rights hereunder. After any retiring Escrow Agent's resignation,
the provisions of this Escrow Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Escrow Agent under this
Escrow Agreement. Any corporation or association into which the Escrow Agent may
be merged or converted or with which it may be consolidated, or any corporation
or association to which all or substantially all of the escrow business of the
Escrow Agent's corporate trust line of business may be transferred, shall be the
Escrow Agent under this Escrow Agreement without further act.
(h) Liability of Escrow Agent. The Escrow Agent undertakes to perform only
such duties as are expressly set forth herein and no duties shall be implied, or
otherwise imposed upon or against Escrow Agent, and Escrow Agent shall not be
liable except for the performance of such duties and obligations as are
specifically set out in this Escrow Agreement. The Escrow Agent shall have no
liability under and no duty to inquire as to the provisions of any agreement,
including, without limitation, the Asset Purchase Agreement, other than this
Escrow Agreement. The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith except to the extent that a court of competent
jurisdiction determines that the Escrow Agent's gross negligence or willful
misconduct was the primary cause of any loss to the Purchaser and Sellers.
Escrow Agent's sole responsibility shall be for the safekeeping and disbursement
of the Escrow Funds in accordance with the terms of this Escrow Agreement.
Escrow Agent shall have
16
no implied duties or obligations and shall not be charged with knowledge or
notice of any fact or circumstance not specifically set forth herein. Escrow
Agent may rely upon any notice, instruction, request or other instrument, not
only as to its due execution, validity and effectiveness, but also as to the
truth and accuracy of any information contained therein, which Escrow Agent
shall believe to be genuine and to have been signed or presented by the person
or parties purporting to sign the same. In no event shall Escrow Agent be liable
for incidental, indirect, special, consequential or punitive damages (including,
but not limited to lost profits), even if the Escrow Agent has been advised of
the likelihood of such loss or damage and regardless of the form of action.
Escrow Agent shall not be obligated to take any legal action or commence any
proceeding in connection with the Escrow Funds, any account in which Escrow
Funds are deposited, this Escrow Agreement or the Asset Purchase Agreement, or
to appear in, prosecute or defend any such legal action or proceeding. Escrow
Agent may consult legal counsel selected by it in the event of any dispute or
question as to the construction of any of the provisions hereof or of any other
agreement or of its duties hereunder, or relating to any dispute involving any
party hereto, and shall incur no liability and shall be fully indemnified from
any liability whatsoever in acting in accordance with the opinion or instruction
of such counsel. Purchaser and Sellers, jointly and severally, shall promptly
pay, upon demand, the reasonable fees and expenses of any such counsel. As
between Purchaser and Sellers, each shall be responsible for the payment of
fifty (50%) percent of such fees and expenses.
The Escrow Agent is authorized, in its sole discretion, to comply with
orders issued or process entered by any court with respect to the Escrow Funds,
without
17
determination by the Escrow Agent of such court's jurisdiction in the matter. If
any portion of the Escrow Funds is at any time attached, garnished or levied
upon under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or enjoined by any
court order, or in case any order, judgment or decree shall be made or entered
by any court affecting such property or any part thereof, then and in any such
event, the Escrow Agent is authorized, in its sole discretion, to rely upon and
comply with any such order, writ, judgment or decree which it is advised by
legal counsel selected by it is binding upon it without the need for appeal or
other action; and if the Escrow Agent complies with any such order, writ,
judgment or decree, it shall not be liable to any of the parties hereto or to
any other person or entity by reason of such compliance even though such order,
writ, judgment or decree may be subsequently reversed, modified, annulled, set
aside or vacated.
(i) Indemnification of Escrow Agent. From and at all times after the date
of this Escrow Agreement, Purchaser and Sellers, jointly and severally, shall,
to the fullest extent permitted by law, defend, indemnify and hold harmless
Escrow Agent and each director, officer, employee, attorney, agent and affiliate
of Escrow Agent (collectively, the "Indemnified Parties") against any and all
actions, claims (whether or not valid), losses, damages, liabilities, costs and
expenses of any kind or nature whatsoever (including without limitation
reasonable attorneys' fees, costs and expenses) incurred by or asserted against
any of the Indemnified Parties from and after the date hereof, whether direct,
indirect or consequential, as a result of or arising from or in any way relating
to any claim, demand, suit, action or proceeding (including any inquiry or
18
investigation) by any person, including without limitation Purchaser and
Sellers, whether threatened or initiated, asserting a claim for any legal or
equitable remedy against any person under any statute or regulation, including,
but not limited to, any federal or state securities laws, or under any common
law or equitable cause or otherwise, arising from or in connection with the
negotiation, preparation, execution, performance or failure of performance of
this Escrow Agreement or any transactions contemplated herein, whether or not
any such Indemnified Party is a party to any such action, proceeding, suit or
the target of any such inquiry or investigation; provided, however, that no
Indemnified Party shall have the right to be indemnified hereunder for any
liability which resulted from the gross negligence or willful misconduct of such
Indemnified Party. Each Indemnified Party shall, in its sole discretion, have
the right to select and employ separate counsel with respect to any action or
claim brought or asserted against it, and the reasonable fees of such counsel
shall be paid upon demand by the Purchaser and Sellers jointly and severally.
The obligations of Purchaser and Sellers under this Section 2(h) shall survive
any termination of this Escrow Agreement and the resignation or removal of
Escrow Agent. As between Purchaser and Sellers, each shall be responsible for
the payment of fifty (50%) percent of such fees.
The parties agree that neither the payment by Purchaser and Sellers of any
claim by Escrow Agent for indemnification hereunder nor the disbursement of any
amounts to Escrow Agent from the Escrow Funds in respect of a claim by Escrow
Agent for indemnification shall impair, limit, modify, or affect, as between
Purchaser and Sellers, the respective rights and obligations of Sellers, on the
one hand, and Purchaser, on the other hand, under the Asset Purchase Agreement.
The parties further agree that as
19
between the Purchaser and Sellers, each shall be responsible for the payment of
fifty (50%) percent of the amount of indemnification sought by the Escrow Agent.
(j) Fees and Expenses of Escrow Agent. Purchaser and Sellers shall
compensate Escrow Agent for its services hereunder in accordance with Schedule A
attached hereto and, in addition, shall reimburse Escrow Agent for all of its
reasonable out-of-pocket expenses, including attorneys' fees, travel expenses,
telephone and facsimile transmission costs, postage (including express mail and
overnight delivery charges), copying charges and the like. The additional
provisions and information set forth on Schedule A are hereby incorporated by
this reference, and form a part of this Escrow Agreement. All of the
compensation and reimbursement obligations set forth in this Section 10 shall be
payable by Purchaser and Sellers, jointly and severally, upon demand by Escrow
Agent. As between the Purchaser and Sellers, each shall be responsible for the
payment of fifty (50%) percent of such fees and costs. The obligations of
Purchaser and Sellers under this Section 2(i) shall survive any termination of
this Escrow Agreement and the resignation or removal of Escrow Agent. Purchaser
and Sellers shall promptly pay such compensation and reimbursement amounts to
Escrow Agent or any Indemnified Party upon receipt of an itemized invoice.
3. Indemnification; Limits of Liability. Sellers shall indemnify, defend
and hold the Purchaser and Purchaser shall indemnify, defend and hold Sellers
harmless from and against any and all claims, liabilities, losses, damages or
costs, foreseen or unforeseen, including without limitation, counsel (including,
without limitation, to enforce this indemnity), engineering and other
professional or expert fees, which the
20
individual party may incur by reason of the breach of indemnifying party's
obligations under this Escrow Agreement.
4. Notices. All notices, approvals, consents, requests, and other
communications hereunder shall be in writing and shall be deemed to have been
given when the writing is delivered if given or delivered by hand, overnight
delivery service or facsimile transmitter (with confirmed receipt) to the
address or facsimile number set forth on Schedule A hereto, or to such other
address as each party may designate for itself by like notice, and shall be
deemed to have been given on the date deposited in the mail, if mailed, by
first-class, registered or certified mail, postage prepaid, addressed as set
forth on Schedule A hereto, or to such other address as each party may designate
for itself by like notice.
5. Entire Agreement; Amendments. This Escrow Agreement, the Asset Purchase
Agreement, and the Schedules and any other writings referred to herein or
delivered pursuant hereto which form a part hereof, contain the entire
understanding of the parties with respect to its subject matter. This Escrow
Agreement may be amended only by written instrument executed by all parties. Any
condition to a party's obligations hereunder shall only be waived if made in
writing by such party.
6. Authority to Execute and Deliver. Each signatory to this Escrow
Agreement which executes this Escrow Agreement on behalf of a corporation is
authorized to execute and deliver this document on behalf of such corporation.
7. Headings. The headings contained in this Escrow Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Escrow Agreement.
21
8. Counterparts. This Escrow Agreement may be executed simultaneously in
identical counterparts, each of which will be deemed an original, but which
together will constitute one in the same Escrow Agreement.
9. Governing Law. This Escrow Agreement shall be governed by, and construed
and enforced in accordance with the internal laws of the State of New York,
without giving effect to the conflicts of laws principles thereof.
10. Binding Agreement. This Escrow Agreement shall be binding on the
parties hereto, their heirs, successors and assigns.
11. Waiver of Jury Trial. Each party to this Escrow Agreement waives any
right to trial by jury in any action, matter or proceeding regarding this Escrow
Agreement or any provision thereof.
12. Dispute Resolution. Any dispute, controversy, or claim between Sellers
and Purchaser arising out of or relating to this Escrow Agreement (a "Dispute"),
whether arising during the term of this Escrow Agreement or after its
termination, shall be resolved in accordance with the procedures specified in
this Section 12, which shall be the sole and exclusive procedures for the
binding resolution of any Dispute.
(i) Sellers and Purchaser may give the other party written notice of any
Dispute (a "Dispute Notice"). Unless otherwise agreed among Sellers and
Purchaser, within fifteen (15) Business Days after delivery of a Dispute Notice,
the receiving party shall submit to the other a written response (a "Dispute
Response"), not to be longer than five (5) type-written pages. The Dispute
Notice and the Dispute Response shall include (a) a statement of each party's
position and a summary of arguments supporting that position, and (b) the name
and title of the representative who will
22
represent that party and of any other person who will accompany the party to a
meeting to discuss the dispute. Within five (5) Business Days after delivery of
the disputing party's notice, the representatives of both parties shall meet at
a mutually acceptable time and place to attempt to resolve the Dispute.
(ii) If the Dispute has not been resolved by negotiation within thirty (30)
Business Days after the delivery of the Dispute Notice, or if the parties fail
to meet within ten (10) Business Days unless otherwise agreed by both parties in
writing, an arbitrator, to be mutually agreed upon by Sellers and Purchaser,
shall be chosen. If no such agreement is reached, Purchaser shall name five (5)
potential arbitrators who shall be environmental lawyers with at least ten (10)
years experience in overseeing matters relevant to the Dispute, and Sellers
shall select one of the potential arbitrators selected by Purchaser to arbitrate
the Dispute. The arbitrator so chosen shall then arbitrate the Dispute in
accordance with the standards of the American Arbitration Association and his or
her decision shall be binding on Purchaser and Sellers.
(iii) The arbitrator(s) shall determine the location of any arbitration
proceedings and the rules governing such proceedings.
(iv) The non-prevailing party to an arbitrated Dispute shall pay the costs
incurred by the prevailing party as a result of either party initiating the
dispute resolutions procedures as established in this section 12, including
reasonable legal expenses.
13. Survival of Terms. The representations, warranties and agreements
contained herein shall survive the closing referenced in the Asset Purchase
Agreement and delivery of the documents contemplated therein.
23
14. Enforcement. The parties hereby agree that any breach of the provisions
of this Escrow Agreement shall be enforceable by injunction.
15. Identifying Information. Purchaser and Sellers acknowledge that a
portion of the identifying information set forth on Schedule A is being
requested by the Escrow Agent in connection with the USA Patriot Act,
Pub.L.107-56 (the "Act"), and Purchaser and Sellers agree to provide any
additional information requested by the Escrow Agent which is required under the
Act or any similar legislation or regulation to which Escrow Agent is subject,
in a timely manner. The Purchasers and Sellers each represent that all
identifying information set forth on Schedule A, including without limitation,
its Taxpayer Identification Number assigned by the Internal Revenue Service or
any other taxing authority, is true and complete on the date hereof and will be
true and complete at the time of any disbursement of the Escrow Fund. ]]
16. Intentionally Deleted.
17. Suspension of Performance; Disbursement Into Court. If, at any time,
(i) Escrow Agent is unable to determine, to Escrow Agent's sole satisfaction,
the proper disposition of all or any portion of the Escrow Funds or Escrow
Agent's proper actions with respect to its obligations hereunder, including,
without limitation, arising from adverse or conflicting claims made to any
portion of the Escrow Funds, or (ii) the Purchasers and Sellers have not within
thirty (30) days of the furnishing by Escrow Agent of a notice of resignation
pursuant to Section 2(f) hereof, appointed a successor Escrow Agent to act
hereunder, then Escrow Agent may, in its sole discretion, take either or both of
the following actions:
24
a. Suspend the performance of any of its obligations (including without
limitation any disbursement obligations) under this Escrow Agreement until such
uncertainty shall be resolved to the sole satisfaction of Escrow Agent or until
a successor Escrow Agent shall have been appointed (as the case may be).
b. Petition (by means of an interpleader action or any other appropriate
method) any court of competent jurisdiction in any venue convenient to Escrow
Agent, for instructions with respect to such uncertainty, and to the extent
required or permitted by law, pay into such court, for holding and disposition
in accordance with the instructions of such court, the Escrow Fund, after
deduction and payment to Escrow Agent of all fees and expenses (including court
costs and attorneys' fees) payable to, incurred by, or expected to be incurred
by Escrow Agent in connection with the performance of its duties and the
exercise of its rights hereunder. In the event such suit is brought, Sellers and
Purchaser shall jointly and severally agree to pay Escrow Agent in excess of the
Escrow Funds deducted or paid to Escrow Agent, all costs, expenses and
attorney's fees that it may expend or incur in such interpleader suit, the
amount thereof to be fixed and a judgment therefore to be rendered by the court
in such suit.
Escrow Agent shall have no liability to Purchaser and Sellers and their
respective shareholders, partners or members or any other person with respect to
any such suspension of performance or disbursement into court, specifically
including any liability or claimed liability that may arise, or be alleged to
have arisen, out of or as a result of any delay in the disbursement of the
Escrow Fund or any delay in or with respect to any other action required or
requested of Escrow Agent. Escrow Agent may obey and comply with
25
any order or process of a court (whether or not such court shall have
jurisdiction) commanding it to do or to refrain from some act in relation to the
subject matter of this Escrow Agreement. Escrow Agent may rely and continue to
rely conclusively upon such orders or process, notwithstanding that it may be
found subsequently to be void or voidable, until one of the officers of Escrow
Agent, shall have actual knowledge that such order or process shall have been
modified, annulled, set aside, vacated or quashed.
18. Termination. Upon the disbursement of all amounts of the Escrow Fund
pursuant to Section 2 hereof or the disbursement of all of the Escrow Fund into
court pursuant to Section 2(g) or Section 17 hereof, this Escrow Agreement shall
terminate and Escrow Agent shall have no further obligation or liability
whatsoever with respect to this Escrow Agreement or the Escrow Fund.
19. Dealings. The Escrow Agent and any stockholder, director, officer or
employee of the Escrow Agent may buy, sell, and deal in any of the securities of
the Purchaser or Sellers and become peculiarly interested in any transaction in
which the Purchaser or Sellers may be interested, and contract and lend money to
the Purchaser or Sellers and otherwise act as fully and freely as though it were
not Escrow Agent under this Escrow Agreement. Nothing herein shall preclude the
Escrow Agent from acting in any other capacity for the Purchaser or Sellers or
for any other entity.
20. Conflict. In the event of any ambiguity or inconsistency between the
terms of the Asset Purchase Agreement and the terms hereof, the terms of the
Asset Purchase Agreement shall prevail.
[Remainder of Page Intentionally Blank]
26
IN WITNESS WHEREOF, the parties to this Environmental Indemnity Escrow
Agreement have hereunto set their hands and seals or caused these presents to be
signed by their proper officers the day and year first above written.
SUBURBAN PROPANE, L.P.
By: _______________________
Name: ____________________
Title: _____________________
AGWAY ENERGY PRODUCTS, LLC
By: _______________________
Name: ____________________
Title: _____________________
AGWAY ENERGY SERVICES, INC.
By: _______________________
Name: ____________________
Title: _____________________
AGWAY ENERGY SERVICES PA, INC.
By: _______________________
Name: ____________________
Title: _____________________
27
Escrow Agent:
NATIONAL CITY BANK OF PENNSYLVANIA as Escrow Agent
By: _______________________
Name: ____________________
Title: _____________________
28
SCHEDULE A
1. Total Environmental $15,000,000.00
Indemnity Escrow Funds
amount:
Escrow Funds wiring instructions: National City Bank of
Pennsylvania
ABA#
Account #
ATTN: Corporate Trust - Bond
Administration
Re: [Account Name, NCS #]
2. Escrow Agent Fees.
Acceptance Fee: $_______________
Annual Escrow Fee: $_______________
Out-of-Pocket Expenses: $_______________
[Transactional Costs]: $_______________
[Other Fees/Attorney, etc.]: $_______________
TOTAL $_______________
The Acceptance Fee and the first Annual Escrow Fee are payable upon
execution of the escrow documents. In addition to the foregoing, Sellers
and Purchaser shall be charged (i) $100 per investment (i.e., purchase,
sale, receipt or delivery) that is not an Armada Fund investment and (ii)
$25 per disbursement for every disbursement over the first twelve (12)
disbursements that occur in any twelve (12)-month period. In the event the
escrow is not funded, the Acceptance Fee and all related expenses,
including attorneys' fees, remain due and payable, and if paid, will not be
refunded. Annual fees cover a full year in advance, or any part thereof,
and thus are not pro-rated in the year of termination.
The fees quoted in this schedule apply to services ordinarily rendered in
the administration of an Escrow Account and are subject to reasonable
adjustment based on final review of documents, or when the Escrow Agent is
called upon to undertake unusual duties or responsibilities, or as changes
in law, procedures, or the cost of doing business demand. Services in
addition to and not contemplated in this Escrow Agreement, including, but
not limited to, document amendments and revisions, non-standard cash and/or
investment transactions, calculations, notices and reports, and legal fees,
will be billed as extraordinary expenses.
Unless otherwise indicated, the above fees relate to the establishment of
one escrow account. Additional sub-accounts governed by the same Escrow
A-1
Agreement may incur an additional charge. Transaction costs include charges
for wire transfers, checks, internal transfers and securities transactions.
A-2
3. Taxpayer Identification Numbers.
Purchaser: 22-3410352
Seller: 16-1551524
4. Investment Instructions.
[List specific investment instructions here. If selecting a money market
fund, include fund name, fund number and class, describe any additional
transaction fees applicable to the investment and, if applicable, include
the following statement relating to sweep fees:
The minimum fee for sweeping funds into or out of the fund selected is an
annualized amount of ________ of _____% (_____ basis points) and is
deducted from the interest posted to the account.]
5. Notice Addresses.
If to Seller: c/o Agway, Inc.
PO Box 4933
Syracuse, New York 13221
ATTN: Karen Ohliger
Facsimile: 315-449-6435
Telephone: 315-449-6147
E-mail: kohliger@agway.com
With a copy to: Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, New York 10153
Attn:: David E. Zeltner, Esq.
Facsimile: (212) 310-8007
If to Purchaser at: Suburban Propane, L.P.
240 Route 10 West
Whippany, New Jersey 07981
Attn: Janice Meola, General Counsel
Facsimile: 973-503-9184
Telephone: 973-503-9987
E-mail: jmeola@suburbanpropane.com
A-3
With a copy to: Cole, Schotz, Meisel, Forman & Leonard, P.A.
Court Plaza North
25 Main Street
Hackensack, New Jersey 07601
Attn: Michael D. Sirota, Esq.
Facsimile: (201) 678-6262
If to the Escrow Agent at: National City Bank of Pennsylvania,
as Escrow Agent
101 West Washington Street
Suite 655S
Indianapolis, Indiana 46225
Attn: Karen Franklin
Facsimile: (317) 267-3685
A-4
Exhibit K
STANDBY IRREVOCABLE POWER OF ATTORNEY
THIS STANDBY IRREVOCABLE POWER OF ATTORNEY is made on ____________, 2003
between Agway Energy Products, LLC, a Delaware limited liability company, Agway
Energy Services, Inc., a Delaware corporation and Agway Energy Services PA,
Inc., a Delaware corporation; and Suburban Propane, L.P., a Delaware limited
partnership
WHEREAS, Sellers and Purchaser entered into an ASSET PURCHASE AGREEMENT,
dated as of November __, 2003, by and among Agway Energy Products, LLC, a
Delaware limited liability company ("Energy LLC"), Agway Energy Services, Inc.,
a Delaware corporation ("Energy Services, Inc."), and Agway Energy Services PA,
Inc., a Delaware corporation ("Services PA") (each a "Seller", collectively,
"Sellers"), Suburban Propane, L.P., a Delaware limited partnership ("Purchaser")
and Agway, Inc., a Delaware Corporation ("Agway");
WHEREAS, the parties agreed that Purchaser shall have the right to file
claims under Sellers' Policies to recover Environmental Liabilities and shall
have the right to pursue any rights, claims and causes of action of any Seller
against third parties, other than the Sellers;
WHEREAS, Sellers agreed to cooperate with Purchaser, with respect to
recovery of Environmental Liabilities pursuant to Sellers' Policies and any
rights, claims and causes of action against any third party; and
WHEREAS, the parties agreed that, in the event Sellers fail to continue to
diligently cooperate with Purchaser after thirty (30) days written notice and
opportunity to cure, Purchaser shall be deemed to be granted an irrevocable
power of attorney to pursue such insurance and any rights, claims and causes of
action;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter contained, the parties hereby agree as follows:
Definitions. The following terms shall have the following meanings:
"Environmental Laws" means any foreign, federal, state or local statute,
regulation, ordinance, or rule of common law relating to the protection of human
health and safety or the environment including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C.ss. 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
App.ss. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.ss.
6901 et seq.), the Clean Water Act (33 U.S.C.ss. 1251 et seq.), the Clean Air
Act (42 U.S.C.ss. 7401 et seq.) the Toxic Substances Control Act (15 U.S.C.ss.
2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C.ss. 136 et seq.), and the
Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.), and the
regulations promulgated pursuant thereto
"Environmental Liabilities" means any and all losses, liabilities,
obligations, damages, costs and expenses ("Losses") of Purchaser arising from:
(i) the presence of Pre-Existing Hazardous Materials on, at, under or migrating
from the Property, including, without limitation, all costs of Remediation of
Hazardous Materials on, at, under or migrating from any Property pursuant to
Environmental Laws including Remediation of Sellers' Properties to standards
under Environmental Laws applicable to non-residential use, whether such
Remediation is voluntary or involuntary; (ii) any violation of Environmental
Laws that occurred prior to the date hereof by any Seller or for which any
Seller has Liability; (iii) compliance with Environmental Laws at any property
to which any Seller sent materials for disposal or for which Seller has
Liability under Environmental Laws arising from an occurrence prior to the date
hereof; and (iv) any and all Losses based upon, attributed to, or resulting from
a breach of Sections 5.17 or 7.16 of the Asset Purchase Agreement by and between
Agway, Inc. Sellers and Purchasers executed simultaneously herewith.
"Hazardous Material" means any substance, material or waste which is
regulated by any Government Body including, without limitation, petroleum and
its by-products, asbestos, and any material or substance which is defined as a
"hazardous waste," "hazardous substance," "hazardous material," "restricted
hazardous waste," "industrial waste," "solid waste," "contaminant," "pollutant,"
"toxic waste" or "toxic substance" under any provision of Environmental Law.
"Liability" means any debt, liability or obligation (whether direct or
indirect, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, or due or to become due), and including all costs and expenses
relating thereto.
"Pre-Existing Hazardous Materials" means Hazardous Materials Released prior
to the date hereof, including any migration or dispersal of such Hazardous
Materials.
"Property" means any property currently or formerly owned, leased or used
by any Seller.
"Remediation" means all reasonably necessary actions to investigate,
monitor and/or cleanup, including, without limitation, the preliminary
assessment, site investigation, remedial investigation, remedial selection and
remedial action, in accordance with Environmental Laws.
"Sellers' Policies" means general liability insurance policies, excess
liability insurance policies and environmental liability policies that were in
effect at any time prior to the date hereof.
"Sellers' Properties" means all real property and interests in real
property owned in fee by Sellers and all real property and interests in real
property leased by Sellers as of the date hereof.
2
Grant of Authority. Sellers appoint Purchaser to act as Sellers' agent
(attorney-in-fact) to do each and every act Sellers are empowered to do for the
following purpose:
Powers. In accordance with Section 10.10 of the Asset Purchase Agreement,
Sellers give Purchaser all power and authority Sellers can legally give to
Purchaser to recover all of Purchaser's costs arising from the Environmental
Liabilities by pursuing claims against Sellers' Policies and by pursuing all
rights, claims and causes of action of Sellers or any Seller against any other
party.
Signatures. By signing below the parties acknowledge that they have
received a copy of this power of attorney and agree to its terms.
WITNESS: SUBURBAN PROPANE, L.P.
______________________________ By:________________________
Name:
Title:
______________________________
WITNESS: AGWAY ENERGY PRODUCTS, LLC
______________________________ By:________________________
Name:
Title:
______________________________
3
WITNESS: AGWAY ENERGY SERVICES, INC.
______________________________ By:________________________
Name:
Title:
______________________________
WITNESS: AGWAY ENERGY SERVICES PA, INC.
______________________________ By:________________________
Name:
Title:
______________________________
4
STATE OF )
) SS.:
COUNTY OF )
BE IT REMEMBERED, that on this _____ day of ___________, 2003, before me,
the subscriber, a of , personally appeared ________________, a representative of
SUBURBAN PROPANE, L.P., who stated that he is authorized to execute this Power
of Attorney on behalf of SUBURBAN PROPANE, L.P., and thereupon he acknowledged
that he executed, sealed and delivered the same on behalf of SUBURBAN PROPANE,
L.P. for the uses and purposes therein expressed.
______________________________
STATE OF )
) SS.:
COUNTY OF )
BE IT REMEMBERED, that on this _____ day of ___________, 2003, before me,
the subscriber, a of , personally appeared ________________, a representative of
AGWAY ENERGY PRODUCTS, LLC, who stated that he is authorized to execute this
Power of Attorney on behalf of AGWAY ENERGY PRODUCTS, LLC, and thereupon he
acknowledged that he executed, sealed and delivered the same on behalf of AGWAY
ENERGY PRODUCTS, LLC for the uses and purposes therein expressed.
______________________________
5
STATE OF )
) SS.:
COUNTY OF )
BE IT REMEMBERED, that on this _____ day of ___________, 2003, before me,
the subscriber, a of , personally appeared ________________, a representative of
AGWAY ENERGY SERVICES, INC., who stated that he is authorized to execute this
Power of Attorney on behalf of AGWAY ENERGY SERVICES, INC., and thereupon he
acknowledged that he executed, sealed and delivered the same on behalf of AGWAY
ENERGY SERVICES, INC. for the uses and purposes therein expressed.
______________________________
STATE OF )
) SS.:
COUNTY OF )
BE IT REMEMBERED, that on this _____ day of ___________, 2003, before me,
the subscriber, a of , personally appeared ________________, a representative of
AGWAY ENERGY SERVICES PA, INC., who stated that he is authorized to execute this
Power of Attorney on behalf of AGWAY ENERGY SERVICES PA, INC., and thereupon he
acknowledged that he executed, sealed and delivered the same on behalf of AGWAY
ENERGY SERVICES PA, INC. for the uses and purposes therein expressed.
______________________________
6
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