EXHIBIT 10.23
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ASSET PURCHASE AGREEMENT
between
STERLING FIBERS, INC.
STERLING CHEMICALS, INC.
STERLING CHEMICALS HOLDINGS, INC.
CYTEC ACRYLIC FIBERS INC.,
CYTEC TECHNOLOGY CORP.,
and
CYTEC INDUSTRIES INC.,
Dated as of December 23, 1996
Sale of Acrylic Fibers Business
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions and Terms
SECTION 1.01. Definitions................................. 2
SECTION 1.02. Interpretation.............................. 21
ARTICLE II
Purchase and Sale of Acquired Assets
SECTION 2.01. Purchase and Sale........................... 22
SECTION 2.02. Definitions of Acquired Assets and
Excluded Assets.......................... 22
SECTION 2.03. Assumption of Certain Liabilities........... 26
SECTION 2.04. Consideration............................... 29
SECTION 2.05. Reconciliation of the Consideration......... 30
ARTICLE III
The Closing
SECTION 3.01. Closing Date................................ 32
SECTION 3.02. Transactions To Be Effected at the
Closing.................................. 32
SECTION 3.03. Prorations.................................. 33
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of
the Cytec Parties........................ 34
SECTION 4.02. Representations and Warranties of
Purchaser................................ 50
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ARTICLE V
Covenants
SECTION 5.01. Covenants of the Cytec Parties
Relating to Conduct
of Business.............................. 52
SECTION 5.02. Purchaser's Access to Information
Prior to Closing......................... 55
SECTION 5.03. Records; Financial Information;
Attorney Work Product.................... 56
SECTION 5.04. Conditions to Closing....................... 58
SECTION 5.05. Employee Matters............................ 58
SECTION 5.06. Expenses.................................... 64
SECTION 5.07. Transfer Taxes.............................. 64
SECTION 5.08. Brokers or Finders.......................... 64
SECTION 5.09. Bulk Transfer Laws.......................... 65
SECTION 5.10. Purchase Price Allocation................... 65
SECTION 5.11. No Additional Representations............... 65
SECTION 5.12. Post-Closing Exposure to
Acrylonitrile and Asbestos............... 66
SECTION 5.13. Amendment of Intercompany
Licenses................................. 67
SECTION 5.14. Real Property Easement; Santa ▇▇▇▇
First Refusal and
Lease Agreement.......................... 67
SECTION 5.15. Actions of Purchaser........................ 67
SECTION 5.16. Signs; Use of "Cytec" or "Cyanamid"
Name..................................... 67
SECTION 5.17. Products, Supplies and Documents............ 68
SECTION 5.18. Delivery of Assets.......................... 68
SECTION 5.19. No Solicitation............................. 69
SECTION 5.20. Audited Financial Statements................ 69
SECTION 5.21. Pilko Assessment............................ 70
SECTION 5.22. Title Policy................................ 77
SECTION 5.23. Further Assurances.......................... 78
SECTION 5.24. Reimbursement for Certain Excess
Medical Claims and Expenses.............. 78
SECTION 5.25. Services Agreement Issue.................... 78
SECTION 5.26. Certain Matters Related to Cyanamid......... 78
SECTION 5.27. Amendment to Disclosure Schedule ........... 80
ARTICLE VI
Conditions Precedent
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SECTION 6.01. Conditions to Each Party's
Obligations.............................. 80
SECTION 6.02. Conditions to the Obligations of the
Sterling Parties......................... 81
SECTION 6.03. Conditions to the Obligations of the
Cytec Parties............................ 83
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination................................. 85
SECTION 7.02. Amendments and Waivers...................... 87
ARTICLE VIII
Indemnification
SECTION 8.01. Indemnification by the
Cytec Parties............................ 88
SECTION 8.02. Indemnification by Purchaser,
Guarantee of STX Chemicals............... 91
SECTION 8.03. Losses Net of Insurance, etc................ 93
SECTION 8.04. Termination of Indemnification.............. 94
SECTION 8.05. Procedure................................... 94
SECTION 8.06. Payment .................................... 97
SECTION 8.07. No Consequential Damages .................. 97
SECTION 8.08. Effect of Certain Breaches
and Inaccuracies......................... 97
ARTICLE IX
General Provisions
SECTION 9.01. Notices..................................... 99
SECTION 9.02. Headings.................................... 100
SECTION 9.03. Survival of Representations,
Warranties and Covenants................. 100
SECTION 9.04. Severability................................ 101
SECTION 9.05. Counterparts................................ 101
SECTION 9.06. Entire Agreement; No Third Party
Beneficiaries............................ 101
SECTION 9.07. Governing Law............................... 102
SECTION 9.08. Consent to Jurisdiction..................... 102
SECTION 9.09. Publicity................................... 103
SECTION 9.10. Assignment.................................. 103
SECTION 9.11. Amendments and Waivers...................... 103
SECTION 9.12. Remedies.................................... 104
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SECTION 9.13. Prevailing Party Costs...................... 104
SECTION 9.14. No Liability of Natural Person.............. 104
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Exhibits
--------
Exhibit A Acrylonitrile Assignment and
Assumption
Exhibit B Form of Special Warranty Deed
Exhibit C Form of Earn-Out Agreement
Exhibit D Form of Easement Agreement
Exhibit E Form of Environmental Permits
Assignment and Assumption
Exhibit F Form of Intellectual Property
Assignments
Exhibit F-1 Form of Cytec Technology Assignment
of Trademark Registration
Exhibit F-2 Form of Agreement to Assign Foreign
Trademarks between Cytec
Technology and Purchaser
Exhibit F-3 Form of Assignment of Know-How to
Purchaser among Parent, Cytec
Technology and Purchaser
Exhibit F-4 Form of Assignment of U.S. Patents
and Patent Applications to
Purchaser among Parent, Cytec
Technology and Purchaser
Exhibit F-5 Form of Assignment of Foreign patent
and Patent Applications to
Purchaser between Cytec Technology
and Purchaser
Exhibit G Form of Non-Competition Agreement
Exhibit H Form of Occupancy Agreements
Exhibit I Form of Designation of Rights
Exhibit J Form of Santa ▇▇▇▇ First Refusal and
Lease Agreement
Exhibit K Form of Services Agreement
Exhibit L Form of Trademark License Agreement
Exhibit M Form of Assumption Agreement
Exhibit N Form of Legend for Preferred Stock
Certificate
Exhibit O Form of General Conveyance, Transfer
and Assignment
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Appendices
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Appendix A List of Certain Business Employees
Appendix B List of Business Equipment located
outside the Santa ▇▇▇▇ Facility
Appendix C List of Cytec Santa ▇▇▇▇ Employees
Appendix C-1 List of Most Senior 25% of Acquired
Employees
Appendix C-2 List of Certain Acquired Employees
Appendix D Description of Excluded Real
Property located in Santa ▇▇▇▇
County
Appendix E Certain Environmental Conditions
Appendix F [Intentionally Omitted]
Appendix G Computation of Certain Business
Inventory and Cytec Services
Payable
Appendix H List of Deep Well System
Appendix I List of Certain Permitted Liens
Appendix J Description of Santa ▇▇▇▇ Facility
Appendix K Specified Cytec Representatives
Appendix L Specified Sterling Representatives
Appendix M Acrylonitrile Assets Being
Transferred to Purchaser
Appendix N Pro Forma Balance Sheet Data
Appendix O Scope of Work for Pilko Assessment
Disclosure Schedules
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Schedule 4.01(a) Organization, Standing and Power
Schedule 4.01(b) Corporate Authority
Schedule 4.01(c)-1 Exclusions to the Unaudited Financial
Statements
Schedule 4.01(c)-2 Cost of Acrylonitrile Purchases
Schedule 4.01(d) Undisclosed Liabilities
Schedule 4.01(e) Compliance with Applicable Laws
Schedule 4.01(f) Litigation; Decrees
Schedule 4.01(g) Permits
Schedule 4.01(i) Products
Schedule 4.01(k) Real Property
Schedule 4.01(l) Business Accounts Receivable
Schedule 4.01(m) Certain Changes or Events
Schedule 4.01(n) Intellectual Property
Schedule 4.01(n)-1 Cytec Owned Intellectual Property
Schedule 4.01(n)-2 Other Intellectual Property
Schedule 4.01(n)-3 Licenses and Other Rights
Schedule 4.01(n)-4 Interferences or Other Consented
Schedule 4.01(p) Environmental Matters
Schedule 4.01(q) Sufficiency of Acquired Assets
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Schedule 4.01(r) Contracts
Schedule 4.01(s) Employee Pension Benefit Plan
Schedule 4.01(w) Triggering of Obligations
Schedule 4.01(x) Future Commitments
Schedule 4.01(y) Bonus Agreements
Schedule 4.01(z) Bonds
Schedule 4.01(aa) Labor Matters
Cytec Industries Inc. agrees to furnish supplementally to the Commission the
foregoing appendices, exhibits and schedules upon request.
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ASSET PURCHASE AGREEMENT dated as of December 23, 1996
(this "Agreement"), between STERLING FIBERS, INC., a Delaware
corporation ("Purchaser"), STERLING CHEMICALS, INC., a
Delaware corporation ("STX Chemicals"), STERLING CHEMICALS
HOLDINGS, INC., a Delaware corporation and the indirect sole
stockholder of Purchaser and the direct stockholder of STX
Chemicals ("STX"), CYTEC ACRYLIC FIBERS INC., a Delaware
corporation ("Seller"), CYTEC TECHNOLOGY CORP., a Delaware
corporation ("Cytec Technology"), and CYTEC INDUSTRIES INC., a
Delaware corporation and the sole stockholder of Seller and
Cytec Technology.
WHEREAS Parent (as defined below), through Seller,
is engaged in the Business (as defined below); and
WHEREAS Parent, through Cytec Technology, owns certain of the
Business Intellectual Property (as defined below); and
WHEREAS Parent wishes to sell and to cause Seller to sell to
Purchaser, and Purchaser wishes to purchase from Parent and Seller,
substantially all the assets of the Business and Purchaser is willing to assume
substantially all the liabilities of the Business, in each case upon the terms
and subject to the conditions set forth in this Agreement; and
WHEREAS Cytec Technology wishes to transfer all of the Business
Intellectual Property owned by it to Purchaser, upon the terms and subject to
the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable
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consideration, the receipt and sufficiency of which are acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
Definitions and Terms
SECTION 1.01. Definitions. As used in this Agreement, the following
terms shall have the meanings
provided below:
"Acquired Assets" shall have the meaning given such term in Section
2.02(a).
"Acquired Contracts" shall mean (i) all Contracts (including
Acquired Employee Contracts) to which any Cytec Party is a party on the Closing
Date that relate primarily to or arise primarily out of the operation of the
Business and which were entered into in the ordinary course of the Business;
provided that "Acquired Contracts" shall not include any Excluded Contracts.
"Acquired Employee Contract" shall mean any employment contract
with a Business Employee who is offered employment by Purchaser and accepts such
offer within the requisite time periods in Section 5.05
"Acquired Employees" shall have the meaning given such term in
Section 5.05(a).
"Acquisition Transaction" shall have the meaning given such term in
Section 5.19.
"Acrylonitrile Assignment and Assumption" shall mean the Assignment
and Assumption Agreement dated as of the Closing Date between Seller and
Purchaser in the form of Exhibit A.
"Acrylonitrile Supply Agreement" shall mean the Acrylonitrile
Supply Agreement dated as of September 1, 1996, between Parent and Seller.
"Affiliate" shall mean, with respect to any person, any other
person that directly or indirectly Controls, is Controlled by or is under common
Control with such first person. A person shall be deemed to "Control" another
person if such first person has the power to direct or cause the direction of
such other person, whether through ownership of securities, by contract or
otherwise. Each of the Cytec Parties is deemed to be an Affiliate of the other
Cytec
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Parties and none of the Cytec Parties shall be deemed to be an Affiliate of
Cyanamid. Each of the Sterling Parties is deemed to be an Affiliate of the other
Sterling Parties.
"Ancillary Agreements" shall mean the Earn-Out Agreement, the
Services Agreement, the Occupancy Agreements, the Assumption Agreement, the
Acrylonitrile Assignment and Assumption, the Acrylonitrile Supply Agreement, the
Non- Competition Agreement, the Easement Agreement, the Trademark License
Agreement, the Intellectual Property Assignments, the Conveyance Documents, the
Santa ▇▇▇▇ First Refusal and Lease Agreement and the Environmental Permits
Assignment and Assumption.
"Arbitrator" shall have the meaning given such term in Section
2.05(c).
"Assumed Liabilities" shall have the meaning given such term in
Section 2.03(a).
"Assumption Agreement" shall have the meaning given such term in
Section 2.03(a).
"Attorney Work Product" shall mean all notes, memoranda,
correspondence or similar material reflecting the legal conclusions,
recommendations or work product of Parent's attorneys acting as counsel for any
Cytec Party in matters relating to the Business on or prior to the Closing Date,
whether such materials are in the files of Parent's in-house law division, in
the files of managers or other personnel of Parent or any of its Affiliates or
in the files of Parent's outside counsel.
"Audited Financial Statements" shall have the meaning given such
term in Section 5.20.
"Balance Sheet Data" shall have the meaning given such term in
Section 4.01(c).
"Benefit Plan" shall have the meaning given such term in Section
4.01(s).
"Business" shall mean the development, manufacture, marketing, sale
and distribution by or on behalf of Seller or Parent of acrylic fiber and the
unrelated manufacture at the Santa ▇▇▇▇ Facility by or on behalf of Seller or
Parent of chemicals for Omniglow Corporation, a California corporation.
"Business Accounts Payable" shall mean, without duplication, all
Intercompany Payables and all liabilities of the Cytec Parties of the types set
forth in the Balance Sheet
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Data under the line items: "Acrylonitrile Payable", "Vouchered Invoice Accrual",
"Unvouchered Invoice Accrual", "Unvouchered Inventory Accrual", "Accrued Freight
Payable", "Cytec Services Payable", "Construction Retainage", "Accrued
Utilities", "Accrued Property Taxes" and "Accrued Sales & Use Tax", "Accrued
Wages, Holiday & Vacation", and "Customer Claims/Sales Allowances", but only if
and to the extent such liabilities relate primarily to or arise primarily out of
the operation of the Business and, in the case of such liabilities incurred
after September 30, 1996, only if and to the extent such liabilities were
incurred in the ordinary course of business.
"Business Accounts Receivable" shall mean, without duplication, (i)
all assets of the Cytec Parties of the types set forth in the Balance Sheet Data
under the line items: "Employee Cash Advance", "Miscellaneous Receivables",
"Accounts Receivable" (less "Reserves") and "Miscellaneous Prepayments", but
only if and to the extent such assets relate primarily to or arise primarily out
of the operation of the Business and, in the case of such assets acquired by the
Cytec Parties after September 30, 1996, only if and to the extent such assets
were acquired in the ordinary course of business and (ii) all notes, bonds and
other evidences of indebtedness relating to the assets and accounts receivable
referred to in clause (i) above, including any security interests related
thereto and any rights of the Cytec Parties with respect to any third party
collection procedures or any other actions or proceedings which have been or may
be commenced in connection therewith.
The term "business day" shall mean any day other than a Saturday,
Sunday or other day on which banks in the City of New York or the City of
Houston are permitted or required to close by Governmental Rule.
"Business Employee" shall mean (i) each employee of any of the
Cytec Parties that is employed by such Cytec Party immediately prior to the
Closing in connection with the Business at the Santa ▇▇▇▇ Facility and (ii) each
person listed on Appendix A or a replacement of any such person of which Seller
shall have given Purchaser prompt written notice prior to the Closing Date.
"Business Equipment" shall mean (i) all machinery and equipment,
tools, furniture, appliances, fixtures, trucks, trailers, automobiles and other
tangible personal property in each case that are (A) located at or used
primarily in respect of the Santa ▇▇▇▇ Facility or the office that is the
subject of the New York Lease and (B) used or held for use primarily in
connection with the Business and (ii) the items listed on
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Appendix B located outside the Santa ▇▇▇▇ Facility; provided that "Business
Equipment" shall not include any Business Records.
"Business Intellectual Property" shall mean all Intellectual
Property listed on Schedule 4.01(n) (including all trade names listed on such
Schedule), and all copyrights and Know How owned or held by any Cytec Party that
relate primarily to or arise primarily out of the Business; provided, however,
that "Business Intellectual Property" shall not include the Licensed
Intellectual Property.
"Business Inventory" shall mean all Inventory (including Inventory
in transit or located at customers' premises on consignment) that relates
primarily to or arises primarily out of the operation of the Business and are
included in Inventory in a manner consistent with Parent's and Seller's standard
historical practices, together with all rights against suppliers of such
Inventory (including claims receivable for rejected Inventory).
"Business Records" shall mean all the files, books, records,
correspondence, lists, papers and other instruments and data of the Cytec
Parties, of whatever nature and wherever located, that relate primarily to the
Business or the Acquired Assets or arise primarily out of the operation of the
Business, including accounting, tax and financial records, personnel and labor
relations records, maintenance and production records, environmental records and
reports, sales records, customer lists, supplier lists, blueprints,
specifications, plats, maps, surveys and building and machinery diagrams;
provided that "Business Records" shall not include any Excluded Records.
"Capital Expenditure Deficiency" shall mean the excess, if any, of
the Required Capital Expenditure Amount over the aggregate amount of all
expenditures capitalized in accordance with GAAP and Seller's standard
historical practice and that are incurred by the Cytec Parties with respect to
the Business from January 1, 1996 through December 31, 1996. "Required Capital
Expenditure Amount" shall mean (i) $5,000,000 or, if the Closing occurs prior to
December 31, 1996, such amount pro rated in accordance with the number of days
from January 1, 1996, through the Closing Date, less (ii) the estimated amount
of expenditures capitalized in accordance with GAAP and Seller's standard
practice as of the date hereof, that are proposed to be incurred by the Cytec
Parties with respect to the Business in respect of which Purchaser has withheld
its consent as permitted by Section 5.01.
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"Cash Amount" shall have the meaning given such term in Section
2.04(a)(i).
"Closing" and "Closing Date" shall have the respective meanings
given such terms in Section 3.01.
"Closing Date Cash Payment" shall have the meaning given such term
in Section 2.04(b)(iii).
"Closing Date Net Working Capital" shall mean the Net Working
Capital as of the Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall have the meaning given such term
in Section 5.02.
"Contracts" shall mean contracts, leases, inden tures, agreements,
commitments, purchase orders and all other legally binding arrangements, whether
in existence on the date hereof or subsequently entered into.
"Conveyance Documents" shall have the meaning given such term in
Section 3.02(a).
"Corporate Software" shall mean any software owned or licensed by
any Cytec Party that is not unique to the Santa ▇▇▇▇ Facility.
"Cost of Remediation" shall have the meaning given such term in
Section 5.21(a).
"Current Environmental Laws" shall mean, with respect to any
determination made under Section 5.21, all Environmental Laws in effect on the
date of such determination and all Environmental Laws not in effect on such date
but which are reasonably expected to be in effect on the later of the Closing
Date and Outside Date, but, in each case, only to the extent that such
Environmental Laws apply to the Acquired Assets in accordance with their
Pre-Closing Use. "Pre-Closing Use" shall include levels of product throughput,
emissions of Hazardous Substances subject to any Environmental Permit, the water
supply for any Acquired Asset, and the overall use of the Acquired Asset in
question.
"Cyanamid" shall mean American Cyanamid Company.
"Cytec Defined Benefit Plan" shall mean the Cytec Salaried and
Nonbargaining Employees Retirement Plan.
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"Cytec Determined Actions" shall have the meaning given such term
in Section 5.21(a).
"Cytec Escambia Bay Liabilities" shall have the meaning given such
term in Section 8.01(b).
"Cytec Facilities" shall mean the Santa ▇▇▇▇ Facility and each other
manufacturing plant owned or operated by Parent or any of its subsidiaries prior
to the Closing Date.
"Cytec Knowledge Loss" shall mean any Loss arising out of,
resulting from or in connection with any liability or obligation that is the
subject of an inaccuracy in or breach of any representation or warranty made by
any Cytec Party in this Agreement or any of the Ancillary Agreements, but only
to the extent that a Specified Cytec Executive had actual knowledge of such
breach or inaccuracy as of the date of this Agreement or as of the Closing Date.
"Cytec Party" shall mean each of Parent, Seller and Cytec
Technology.
"Cytec Santa ▇▇▇▇ Employee" shall mean any person employed by
Parent or any of its subsidiaries at the Santa ▇▇▇▇ Facility on or prior to the
Closing Date (i) who is listed on Appendix C, or (ii) who is not an Acquired
Employee as of the Closing and who is not at any time after the Closing employed
by STX or any of its subsidiaries at the Santa ▇▇▇▇ Facility.
"Cytec Savings Plan" shall mean the Cytec Savings and Profit
Sharing Plan.
"Cytec Specified Exposure Liability" shall mean any obligation or
liability that results from, arises out of or is in any way connected with a
claim, demand or cause of action for or relating to injury to or death of any
Cytec Santa ▇▇▇▇ Employee arising out of, attributable to or occasioned by
exposure to acrylonitrile or asbestos at any Cytec Facility, whether such
exposure occurs before or after the Closing.
"Cytec Technology" has the meaning specified in the introductory
paragraph hereof.
"Disclosure Schedules" shall mean the Schedules attached hereto
that are referred to in Section 4.01 of this Agreement, as such Schedules may be
amended in accordance with Section 5.27.
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"Earn-Out Agreement" shall mean the Earn-Out Agreement dated as of
the Closing Date between Parent and the Purchaser in the form of Exhibit C.
"Earn-Out Payment" shall have the meaning given such term in the
Earn-Out Agreement.
"Easement Agreement" shall mean the Easement Agreements dated as of
the Closing Date between Purchaser and Parent in the form of ▇▇▇▇▇▇▇▇ ▇-▇, ▇-▇
and D-3.
"Environmental Arbitrator" shall have the meaning given such term
in Section 5.21(d)(i).
"Environmental Law" shall mean any and all Governmental Rules,
including any judgment, Environmental Permit, approval, decision or
determination, pertaining to the environment, now or hereafter in effect and
applicable to the Acquired Assets or the Business, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. ss.
9601 et seq., as amended by the Superfund Amendment and Reauthorization Act of
1986 (collectively, "CERCLA"), the Federal Water Pollution Control Act, 33
U.S.C. ss. 1251 et seq., the Solid Waste Disposal Act of 1976, 42 U.S.C. ss.
6901 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 Hazardous Materials
Transportation Act, 49 Ap. U.S.C.A. ss. 1801 et seq., the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. ss. 136 et seq. and comparable state and
local Governmental Rules, and other environmental conservation and protection
Governmental Rules.
"Environmental Permit" shall have the meaning given such term in
Section 4.01(p)(i)(A).
"Environmental Permits Assignment and Assumption" shall mean the
Environmental Permits Assignment and Assumption Agreement dated as of the
Closing Date between Purchaser and Parent in the form of Exhibit E.
"ERISA" shall have the meaning given such term in Section 4.01(s).
"Escambia Bay" shall mean the bay commonly known as Escambia Bay
adjoining the Santa ▇▇▇▇ Facility.
"Escambia Bay Liabilities" shall mean all obligations and
liabilities arising out of, as a result of or in connection with the Release or
alleged Release of any Hazardous Substance or nutrient by any Cytec Party or
from the
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Santa ▇▇▇▇ Facility prior to the Closing Date into Escambia Bay.
"Estimated Closing Date Net Working Capital" shall have the meaning
given such term in Section 2.04(b)(iii).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" shall have the meaning given such
term in Section 2.02(b).
"Excluded Contracts" shall mean (i) all Contracts that relate
primarily to the Excluded Assets, (ii) all Benefit Plans other than the
Transferred Benefit Plans, (iii) all Contracts that relate primarily to the
Leased Property, including the leases described in Schedule 4.01(k), (iv)
subject to the Environmental Permits Assignment and Assumption, (A) the Letter
of Credit Issued to the Florida Department of Regulation issued to the Florida
Department of Environmental Regulation issued by First Union National Bank in
the amount of $315,311 and the related Underground Injection Control Standby
Trust Fund Agreement and (B) any agreement in respect of a financial assurance
provided by a Cytec Party under the Resource Conversation and Recovery Act (v)
all Contracts required to be listed on Schedule 4.01(y) and (vi) subject to
Section 5.05, any Contract with a current or former director, officer, employee
or agent of Parent or any of its Affiliates providing for any severance
payments, termination payments, bonuses or other forms of compensation on
account (wholly or partially) of the sale of the Acquired Assets to Purchaser
pursuant to this Agreement.
"Excluded Liabilities" shall have the meaning given such term in
Section 2.03(b).
"Excluded Real Property" shall mean the real prop erty that is owned
or leased by Parent, Seller or any other subsidiary of Parent (i) located in
Santa ▇▇▇▇ County, Florida, and described as "Excluded Real Property" in
Appendix D or (ii) located outside Santa ▇▇▇▇ County, Florida, including real
property located in Stamford, Connecticut, West Paterson, New Jersey, Charlotte,
North Carolina or the Netherlands.
"Excluded Records" shall mean (i) copies of Business Records
retained by the Cytec Parties pursuant to Section 5.03(a), (ii) the Retiree
Records, (iii) Attorney Work Product, (iv) tax returns and work papers, and any
related correspondence, in respect of Taxes based on gross receipts,
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income or profits, and (v) files, books, records, correspondence, lists, papers
and other instruments and data of the Cytec Parties, of whatever nature or
wherever located, that relate primarily to the Excluded Assets or the Excluded
Liabilities.
"Facility Conditions" shall mean the environmental conditions at the
Santa ▇▇▇▇ Facility as of the Closing Date.
"Financing" shall mean the financing of Purchaser's acquisition of
the Business, as contemplated by the commitment letter from The Chase Manhattan
Bank dated as of December 20, 1996, a copy of which has been delivered to
Parent, or pursuant to other terms (including with respect to conditions to
funding) reasonably acceptable to Parent.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Entity" shall mean any nation or government, any
federal, state, county, province, city, town, municipality, local or other
political subdivision thereof or thereto and any court, tribunal, department,
commission, board, bureau, instrumentality, agency, council or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of government and any other governmental entity with authority over
the applicable person, assets or properties.
"Governmental Rule" shall mean any law, judgment, order, decree,
statute, ordinance, rule or regulation issued or promulgated by any Governmental
Entity.
"Hazardous Substances" shall have the same meaning as such term is
given in the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, 42 U.S.C. ss. 9601 et seq., (CERCLA), as amended by the Superfund
Amendment and Reauthorization Act of 1986, and equivalent state law provisions
and shall also mean any hazardous or toxic substances or contaminated materials
including asbestos (friable, nonfriable or any other form), polychlorinated
biphenyls and any flammable materials, explosives, radioactive materials,
hazardous materials, hazardous waste, hazardous or toxic or regulated substances
or related materials defined in or under any Environmental Law and any other
substance, waste, pollutant, contaminant or material, including petroleum
products and derivatives, crude oil or fractions thereof or any chemical which
causes cancer or reproductive effects, which are defined by applicable
Governmental Rule as hazardous or toxic or the use, transport, disposal,
storage, treatment,
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recycling, handling or Release of which is regulated or governed by any
applicable Governmental Rules.
"Holdings Pension Plans" shall mean the Sterling Chemicals, Inc.
Salaried Employees Pension Plan and the Sterling Chemicals, Inc. Hourly Pension
Plan.
"HSR Act" shall mean ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"Immaterial Environmental Breaches" shall mean (i) environmental
conditions or breaches of Environmental Laws that are identified in Appendix E
and (ii) violations of Environmental Laws that (A) do not require Remedial
Action, (B) do not otherwise apply to the correction of a condition in order to
allow the continued operation of any Acquired Asset as it was operated prior to
Closing and (C) would not reasonably be expected to result in the imposition of
material fines or penalties by any Governmental Entity.
"Intellectual Property" shall mean (i) patents (including reissues,
divisions, contributions and extensions thereof), patent applications,
trademarks, trademark regis trations, service marks, trade names, copyrights,
brand names, inventions, designs and all pending applications for and
registrations of patents, trademarks, service marks and copy rights, (ii)
Know-How and (iii) rights to use any of the fore going.
"Intellectual Property Assignments" shall mean the following
assignments and agreements, each dated as of the Closing Date: (i) the
Assignment of Trademark Registration by Cytec Technology in the form of Exhibit
F-1; (ii) the Agreement to Assign Foreign Trademarks between Cytec Technology
and Purchaser in the form of Exhibit F-2; (iii) the Assignment of Know-How to
Purchaser among Parent, Cytec Technology and Purchaser in the form of Exhibit
F-3; (iv) the Assignment of U.S. Patents and Patent Applications to Purchaser
among Parent, Cytec Technology and Purchaser in the form of Exhibit F-4; and (v)
the Assignment of Foreign Patent and Patent Applications to Purchaser between
Cytec Technology and Purchaser in the form of Exhibit F-5.
"Intercompany Payable" shall mean any payable owed to Parent or any
subsidiary of Parent for acrylonitrile or any other product or service purchased
by or provided to the Business in the ordinary course of business.
"Inventory" shall mean raw materials, work-in-progress, finished
goods, supplies, parts, packaging materials and other accessories related
thereto and other inventories.
12
"Know-How" shall mean (i) trade secrets, (ii) know-how, (iii)
formulae, (iv) processes, (v) product and other designs, (vi) specifications,
(vii) quality control procedures, (viii) manufacturing, engineering and other
drawings, (ix) technology and (x) technical information.
"Leased Property" shall have the meaning given such term in Section
4.01(k).
"Licensed Intellectual Property" shall mean the Intellectual
Property that is the subject of the Trademark License Agreement.
"Lien" shall mean any mortgage, claim, charge, lien, security
interest, easement, right of way, pledge, restriction or encumbrance of any
nature whatsoever.
"Loss" shall mean any loss, liability, claim, obligation, demand,
fine, penalty, judgment, deficiency, damage or cost or expense, including court
costs and reason able legal fees and expenses.
"Marketing Materials" shall mean all advertising materials,
customer lists, training materials and market research materials.
"Material Adverse Effect" shall mean a material adverse effect on
(i) the business, operations, assets, condition (financial or otherwise) or
results of operations of the Business taken as a whole, (ii) the prospects of
the Business taken as a whole (excluding any effect on such prospects caused by
economic, tax or other matters of general applicability or matters generally
affecting the industry in which the Business operates), (iii) any Cytec Party's
ability to comply with or satisfy in any material respect any material covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement or any of the Specified Ancillary Agreements, (iv) the ability of
Purchaser to operate the Business in the manner currently conducted immediately
after the Closing Date as a result of a Service Agreement Issue or (v) any Cytec
Party's ability to consummate the Closing by the date of termination pursuant to
Section 7.01(a)(iv) or 7.01(a)(v).
"Material Contract" shall have the meaning given such term in
Section 4.01(r).
"Net Working Capital" shall mean, as of any date, the excess of (i)
the aggregate amount of (A) all Business
13
Accounts Receivable as of such date, net of reasonable reserves, in each case
computed in accordance with GAAP in a
14
manner consistent with Parent's and Seller's historical prac ▇▇▇▇, and (B) all
Business Inventory as of such date, valued at the standard cost of such
inventory less any lower of cost or market adjustment, and, in the case of
Business Inventory of acrylonitrile and Business Inventory of acrylic fiber, com
puted in accordance with Appendix G, over (ii) the sum of (A) the Capital
Expenditure Deficiency, if any, and (B) the aggregate amount of all Business
Accounts Payable as of such date, computed in accordance with GAAP in a manner
consistent with Parent's and Seller's historical practice, except in the case of
the Intercompany Payable and the Cytec Services Payables, which shall be
computed as set forth in Appendix G.
"New York Lease" shall mean the Lease Agreement dated as of March
15, 1996, between Parent and ▇▇▇▇▇▇ ▇. ▇▇▇▇, Landlord.
"Non-Competition Agreement" shall mean the Non-Competition
Agreement dated as of the Closing Date, among Purchaser and the Cytec Parties in
the form of Exhibit G.
"Non-Permitted Names" shall have the meaning given such term in
Section 5.16.
"Notice of Disagreement" shall have the meaning given such term in
Section 2.05(b).
"Occupancy Agreements" shall mean the Occupancy Agreements dated as
of the Closing Date between Purchaser and Parent in the form of Exhibit H in
respect of Purchaser's occupancy of certain property located in each of
Stamford, Connecticut; Charlotte, North Carolina; and West Paterson, New Jersey.
"Off-Site Environmental Liabilities" shall mean all obligations and
liabilities arising as a result of the treating, storing, transporting,
handling, recycling, reclaiming, disposal, or Release, or arranging for any of
the same, of Hazardous Substances prior to the Closing Date by any of the Cytec
Parties or in respect of the Santa ▇▇▇▇ Facility, but only to the extent that
such treating, storing, transporting, handling, recycling, reclaiming disposal
or Release occurred at, in connection with, or to a location outside the Santa
▇▇▇▇ Facility; provided, however, that "Off- Site Environmental Liabilities"
shall not include (i) the Escambia Bay Liabilities or (ii) any obligation or
liability occurring solely at, or solely in connection with, the deep well
system described on Appendix H.
"Operative Documents" shall mean this Agreement and the Ancillary
Agreements.
15
"OSHA" shall mean the Federal Occupational Safety and Health Act,
29 U.S.C. ▇▇.▇▇. 651 et seq., and the regulations promulgated thereunder.
"Outside Date" means January 31, 1997, unless an arbitration
proceeding may be available under Section 5.21 or a Services Agreement Issue has
arisen, in which event such term shall mean the later of (i) January 31, 1997
and (ii) the date that is two business days after the arbitrator announces its
arbitral award in respect of the Threshold Issue or such Services Agreement
Issue has been resolved; provided, however, that in no event shall the Outside
Date be later than February 14, 1997.
"Parent" shall mean Cytec Industries Inc., a Delaware corporation
and the sole stockholder of Seller and Cytec Technology, and, for any period
prior to December 17, 1993, shall also be deemed to refer to Cyanamid.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permits" shall mean permits, licenses, consents, franchises,
approvals and authorizations by or from any Governmental Entity; provided,
however, that "Permits" shall not include any Environmental Permits.
"Permitted Lien" shall mean:
(a) any Lien disclosed in Appendix I or any encroachment,
easement or right-of-way referred to in the Survey;
(b) any mechanics', carriers', workmen's, repair men's, and
other like Lien securing obligations (except to the extent such
obligations are Excluded Liabilities) that (i) relate primarily to
the operation of the Business, (ii) were incurred in the ordinary
course of business prior to the Closing and (iii) are not yet due
and payable or are past due but may be paid at any time without
penalty and are reflected in the Balance Sheet Data or in the
calculation of Closing Date Net Working Capital, as applicable,
but excluding any such Lien that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect;
(c) any Lien arising prior to the Closing for Taxes
relating primarily to the operation of the Business (i) that are
not yet due and payable or that are being contested in good faith
by appropriate proceedings diligently pursued and which would not
reasonably be
16
expected to have a Material Adverse Effect and (ii) with respect to
which appropriate reserves (determined in accordance with GAAP) are
reflected in the Balance Sheet Data or in the calculation of
Closing Date Net Working Capital, as applicable;
(d) with respect to the Santa ▇▇▇▇ Facility, (i) easements,
covenants, rights-of-way, and other encumbrances or restrictions
of record to the extent not reflected on Appendix I, (ii) any
recorded grants or recorded reservations of surface or subsurface
rights of others in and to the removal and mining of oil, gas or
minerals, including rights of ingress and egress with respect
thereto, (iii) zoning, building, land use and other restrictions
imposed under any Governmental Rule (other than any Lien arising
as a result of any Environmental Law) and (iv) Liens arising as a
result of any Environmental Law, unrecorded easements, covenants,
rights-of-way or other encumbrances, restrictions or imperfections
of title, but excluding any of the foregoing in clause (i), (ii),
(iii) or (iv) which, individually or in the aggregate, materially
interfere with the use of the Santa ▇▇▇▇ Facility in the Business
as presently conducted and any of the foregoing which,
individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect;
(e) any imperfection of title or other encumbrance that,
individually or in the aggregate with other such imperfections and
encumbrances, (i) is not substantial in character or amount, (ii)
does not materially interfere with the use of the Acquired Assets
in the Business as presently conducted and (iii) would not
reasonably be expected to have a Material Adverse Effect; and
(f) Liens created by or arising as a result of any
circumstances particular to any of the Sterling Parties.
Notwithstanding the foregoing, Permitted Liens shall not include any Lien (other
than Liens of the type described in clause (f) above) imposed by ERISA.
The term "person" shall mean any individual, corporation,
partnership, limited liability company, joint ven ture, trust, business
association, organization, Governmental Entity or other entity.
"Phase I Study" shall mean the report for the Phase I Study
conducted by Pilko at Purchaser's direction prior to the date hereof, a copy of
which has been delivered to Seller.
17
"Pilko" shall have the meaning given such term in Section 5.21(a).
"Pilko Assessment" shall have the meaning given such term in
Section 5.21(a).
"Post-Closing Actions" shall have the meaning given such term in
Section 5.21(d).
"Preferred Stock" shall mean 100,000 shares of the Preferred Stock
of STX with the terms, limitations, relative rights and preferences set forth in
Exhibit I.
"Purchaser" has the meaning specified in the introductory paragraph
hereof.
"Purchaser Indemnified Person" has the meaning specified in Section
8.01(a).
"Purchaser Indemnity Obligations" shall have the meaning given such
term in Section 8.02(e).
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment.
"Remedial Action" shall mean (i) any soil removal, soil or
groundwater treatment, or containment of Hazardous Substances (including, in the
case of containment, any deed restriction) or (ii) any studies or investigations
related to the foregoing; provided, however, that Remedial Action shall not
include (A) any activity in connection with the retrofit or closure of, or any
post-closure activity at, any landfill or closed landfill at the Santa ▇▇▇▇
Facility, (B) the removal of any asbestos; (C) the removal of any underground
storage tank abandoned in place not in violation of any Environmental Law or
Environmental Permit; or (D) the purchase or repair of any equipment, including
any pollution control equipment (other than monitoring ▇▇▇▇▇ or equipment
necessary in connection with soil removal or soil or groundwater treatment).
"Reportable Event" shall mean a "reportable event" as defined in
Section 4043 of ERISA.
"Retiree Records" shall mean all records relating primarily to a
retired employee of Parent or Seller.
"Santa ▇▇▇▇ Facility" shall mean the real property located in Santa
▇▇▇▇ County, Florida on which the Business is operated, as such real property is
more specifically described
18
in Appendix J, including all tenements, hereditaments, easements, rights-of-way,
rights, licenses, estates, patents, privileges and appurtenances belonging,
pertaining or relating to such real property and the entire right, title and
interest of the Cytec Parties, if any, in, to or under all streets, ways,
alleys, passages, gores, pipes, pipelines, sewers, sewer rights, ditches,
waters, water courses, water rights and powers, railroad sidings, minerals,
mineral rights and mineral interests upon, above, in, under or pertaining to
such real property and all claims or demands whatsoever of the Cytec Parties,
either in law or in equity, with respect to such real property, together with
all buildings, fixtures, structures, facilities and improvements thereon;
provided that "Santa ▇▇▇▇ Facility" shall not include any Excluded Real
Property.
"Santa ▇▇▇▇ First Refusal and Lease Agreement" shall mean the Lease
Agreement, dated as of the Closing Date between the Cytec Parties and Purchaser
in the form of Exhibit J.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Seller" has the meaning specified in the introductory paragraph
hereof.
"Seller Indemnified Person" has the meaning specified in Section
8.02(a).
"Services Agreement" shall mean the Services Agreement dated as of
the Closing Date between Purchaser and Parent in the form of Exhibit K.
"Services Agreement Issue" shall mean the inability of the Cytec
Parties to perform in any material respect any Service (as defined in the
Services Agreement).
"Specified Ancillary Agreements" shall mean the Acrylonitrile
Supply Agreement, the Easement Agreement, the Trademark License Agreement, the
Environmental Permits Assignment and Assumption and the Non-Competition
Agreement.
"Specified Cytec Representatives" shall mean the persons listed on
Appendix K.
"Specified Sterling Representatives" shall mean the persons listed
on Appendix L.
19
"Statement" shall have the meaning given such term in Section
2.05(a).
"Sterling Determined Actions" shall have the meaning given such
term in Section 5.21(c).
"Sterling Escambia Bay Liabilities" shall mean all Escambia Bay
Liabilities other than the Cytec Escambia Bay Liabilities.
"Sterling Specified Exposure Liability" shall mean any obligation
or liability that results from, arises out of or is in any way connected with a
claim, demand or cause of action for or relating to injury to or death of any
person, other than a Cytec Santa ▇▇▇▇ Employee, arising out of, attributable to
or occasioned by exposure to acrylonitrile or asbestos at the Santa ▇▇▇▇
Facility, whether such exposure occurs before or after the Closing.
"Sterling Party" shall mean each of STX, Purchaser and STX
Chemicals.
"STX" has the meaning specified in the introductory paragraph
hereof.
"STX Chemicals" has the meaning specified in the introductory
paragraph hereof.
"STX Guarantee Cap" shall have the meaning given such term in
Section 8.02(e).
"Survey" has the meaning specified in Section 4.01(ee).
"Tax" shall mean all Federal, state, local and foreign taxes,
charges, fees, levies and other assessments, including any income, alternative
or add-on minimum tax, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, withholding, payroll, employment, excise, stamp,
property, environmental or other tax, together with all interest, penalties and
additions with respect thereto.
"Texas City Facility" shall mean the manufacturing facilities
located at Texas City, Texas that are owned or operated by STX Chemicals.
"Title Commitment" shall have the meaning given such term in
Section 4.01(ee).
"Trademark License Agreement" shall mean the Trademark License
Agreement dated as of the Closing Date,
20
among Purchaser, Parent and Cytec Technology in the form of Exhibit L.
"Transactions" shall mean the transactions contemplated by the
Operative Documents, including the
Financing.
"Transferred Benefit Plans" shall have the meaning given such term
in Section 5.05(g).
"Unaudited Financial Statements" shall have the meaning given such
term in Section 4.01(c).
"WARN Act" shall have the meaning given such term in Section
5.05(i).
SECTION 1.02. Interpretation. (a) When used in this Agreement, the
words "include" and "including" shall be deemed to be followed by the words
"without limitation".
(b) When used in this Agreement, the word "primarily" shall be
deemed to be followed by the words "or exclusively".
(c) Any terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(d) When used in this Agreement, unless a contrary intention is
evident, the word "or" is not exclusive.
(e) All references to Articles, Sections, Exhibits, Schedules and
Appendices shall be deemed references to Articles, Sections, Exhibits, Schedules
and Appendices to this Agreement.
(f) Unless otherwise specified, all accounting terms not defined in
this Agreement shall have the meanings determined by GAAP.
(g) This Agreement shall be deemed drafted jointly by all the
parties hereto and shall not be specifically construed against any party hereto
based on any claim that such party or its counsel drafted this Agreement.
(h) When used in this Agreement, the words "hereof", "herein" and
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular provision of this Agreement.
21
(i) Reference in this Agreement to any Contract means
such Contract as amended, supplemented or modified from time to
time in accordance with the terms thereof.
(j) Unless otherwise specified, reference to any
Governmental Rule, any Permit or any Environmental Permit means
such Governmental Rule, Permit or Environmental Permit as amended,
modified, codified, reenacted, supplemented or superseded in whole
or in part, and in effect from time to time.
ARTICLE II
Purchase and Sale of Acquired Assets
SECTION 2.01. Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, the Cytec Parties shall sell,
assign, transfer, convey and deliver to Purchaser, and Purchaser shall purchase,
acquire and accept, all of the right, title and interest in, to and under the
Acquired Assets held by the Cytec Parties.
SECTION 2.02. Definitions of Acquired Assets and Excluded Assets.
(a) The term "Acquired Assets" shall mean the properties, assets, goodwill and
rights of whatever kind and nature, real or personal, tangible or intangible,
other than the Excluded Assets existing on the Closing Date that relate
primarily to or arise primarily out of the operation of the Business, including:
(i) the Santa ▇▇▇▇ Facility;
(ii) all Business Equipment;
(iii) all Business Inventory;
(iv) all Business Accounts Receivable;
(v) all Business Intellectual Property;
(vi) subject to Section 2.02(c), all Acquired
Contracts;
(vii) all Marketing Materials in the possession of the
Cytec Parties (or any of them) that relate primarily to or arise
primarily out of the operation of the Business;
(viii) all Business Records;
22
(ix) subject to Section 2.02(c), all Permits and
Environmental Permits that relate primarily to or arise primarily
out of the operation of the Business;
(x) the Transferred Benefit Plans;
(xi) all insurance proceeds and insurance claims of
any Cytec Party under insurance policies (excluding any insurance
policies of Cyanamid or any of its Affiliates) which relate
primarily to or arise primarily out of any part of the Acquired
Assets, net of any applicable deductibles and other limitations and
net of any costs of collection (excluding, however, (A) any such
proceeds or claims relating to any damage, defect or other
impairment that is repaired or corrected in all material respects
prior to the Closing and (B) any such proceeds or claims under
workers compensation insurance policies, unless the relevant claim
is filed by an Acquired Employee more than one year after the
Closing Date and then to the extent and only to the extent that no
Cytec Party would be obligated to reimburse the insurer for any
amount of such claim); and, to the extent transferable, the benefit
of and the right to enforce covenants and warranties, if any, which
any of the Cytec Parties are entitled to enforce with respect to
the Acquired Assets against their predecessors in title (excluding
Cyanamid) to the Acquired Assets; and
(xii) all prepaid rentals and other prepaid expenses,
bonds and deposits relating to any of the Acquired Assets or the
Business.
(b) The term "Excluded Assets" shall mean the following:
(i) cash on hand or in banks and cash equivalents
owned by any Cytec Party relating to the operations of the
Business;
(ii) all rights of the Cytec Parties under the
Operative Documents and the agreements, instruments and
certificates delivered in connection with this Agreement;
(iii) all files, books, records, correspondence,
lists, papers and other instruments prepared in connection with the
sale of the Business, including the bids and other information
received from third persons in respect of the Business and analyses
relating to the sale of the Business;
(iv) any assets under any Benefit Plan;
23
(v) all rights relating to the Excluded Liabilities;
(vi) the Excluded Contracts;
(vii) the Excluded Real Property (other than the
rights of Purchaser created by the Occupancy Agreements);
(viii) the Licensed Intellectual Property (other than
the rights of Purchaser created by the Trademark License
Agreement);
(ix) the Excluded Records;
(x) all properties, assets and rights that are related
to Parent's business of manufacturing and selling acrylonitrile,
other than the items listed on Appendix M;
(xi) all rights of Parent or Seller to obtain draw
backs of customs duties paid prior to the Closing Date on materials
used directly or indirectly in the manufacture of acrylic fiber or
any other product produced in the Business, based on the export
prior to the Closing of acrylic fiber or such other products,
except to the extent such drawback is reflected in the calculation
of Closing Date Net Working Capital;
(xii) subject to Sections 5.16 and 5.17, all rights,
title and interests to the trademark "Cytec" alone or as part of a
trademark and the trade names "Cytec Industries Inc.", "Cytec
Acrylic Fibers Inc." and "Cytec Technology Corp."; and
(xiii) the Corporate Software (other than the rights
of Purchaser created by the Services Agreement).
(c) Nothing in this Agreement shall be construed as an attempt by
any Cytec Party to assign any Acquired Contract or to transfer any Permit or
Environmental Permit to the extent that such Acquired Contract, Permit or
Environmental Permit is not assignable without the necessary consent of the
other party or parties thereto. The Cytec Parties shall use commercially
reasonable efforts, in cooperation with Purchaser, (i) to secure any necessary
consent to the assignment to Purchaser at Closing of all Acquired Contracts
which require such consent, (ii) to the extent that any such consent has not
been obtained as of Closing, to secure any such consent as soon as practicable
thereafter and (iii) to make any requisite filings or deliver any requisite
notices to be made or delivered by any Cytec Party in connection with the
transfer of any transferable Permits or Environmental Permits; provided,
however, that none of the Cytec Parties shall be
24
required to make any payment to any person or forego any benefits in order to
obtain any such consent. If the Closing is consummated notwithstanding the
absence of all third party consents necessary to the assignment of any Acquired
Contract, or the transfer of any transferable Permits or Environmental Permits,
at such time as such consents have been obtained, or such requisite filings and
notices have been made or delivered, as applicable, such Acquired Contract,
Permit or Environmental Permit shall be assigned or transferred to Purchaser
automatically without any other conveyance or other action by Purchaser or any
of the Cytec Parties. At any time after the Closing during which any Acquired
Contract has not been assigned to Purchaser due to the absence of consent of any
third party, or any transferable Permit or Environmental Permit has not been
transferred to Purchaser in accordance with the requirements for such transfer,
the Cytec Parties shall hold such Acquired Contract or, to the extent permitted
by applicable law, Permit or Environmental Permit, for the exclusive benefit of
Purchaser. Notwithstanding anything in this Agreement to the contrary, each
Acquired Contract which should be set forth on the Disclosure Schedules and
which may not be assigned to Purchaser without the consent of a third party
shall constitute an Excluded Contract, and any and all liabilities and
obligations thereunder shall constitute Excluded Liabilities, until the earliest
to occur of (i) the obtaining of such consent, (ii) the receipt by Purchaser of
a benefit under such Acquired Contract after the Cytec Parties have complied
with the second sentence of this Section 2.02(c), (iii) the performance by such
third party of any of its obligations under such Acquired Contract after the
Cytec Parties have complied with the second sentence of this Section 2.02(c) and
(iv) any act or course of conduct that constitutes a waiver by such third party
of its rights and remedies relating to the assignment of such Acquired Contract
without such third party's consent. Until such time as the consent to the
transfer of any Permit or Environmental Permit referred to in the second
preceding sentence is obtained, to the extent that Purchaser is not receiving
the benefits of such Permit or Environmental Permit as contemplated by this
Section 2.02(c), such Permit or Environmental Permit shall constitute an
Excluded Asset and any and all liabilities and obligations under such Permit or
Environmental Permit shall constitute Excluded Liabilities.
SECTION 2.03. Assumption of Certain Liabilities. (a) Upon the terms
and subject to the conditions of this Agreement, Purchaser and the Cytec Parties
shall execute and deliver at the Closing an Assumption Agreement, in the form of
Exhibit M (the "Assumption Agreement"), pursuant to which Purchaser shall assume
and agree to pay, perform and discharge when due, all liabilities or obligations
whatsoever, whether
25
arising before or after the Closing and whether known or unknown, fixed or
contingent, other than the Excluded Liabilities, that relate primarily to or
arise primarily out of the operation of the Business (the "Assumed
Liabilities"), including:
(i) all obligations and liabilities of Parent (which
term, for purposes of this Section 2.03(a), shall exclude Cyanamid)
or Seller under the Acquired Contracts;
(ii) all Business Accounts Payable in existence as of
the Closing Date;
(iii) all obligations and liabilities in respect of
any and all acrylic fiber or activator sold by the Business at any
time, including obligations and liabilities for refunds,
adjustments, allowances, repairs, exchanges, returns and warranty,
merchantability and other claims;
(iv) all obligations and liabilities of Parent or
Seller in respect of amounts paid by any customer of the Business
in excess of amounts owed by such customer;
(v) all obligations and liabilities arising as a
result of the ownership or occupancy of Parent or Seller, or the
operation of the activities conducted at, the Santa ▇▇▇▇ Facility
or any Leased Property, other than the Excluded Real Property,
including all obligations and liabilities relating to personal
injury or Environmental Laws, other than Off-Site Environmental
Liabilities and Escambia Bay Liabilities;
(vi) all obligations and liabilities of Parent or
Seller to or in respect of any current or former
26
employee of the Business, other than any obligations
or liabilities arising under or in connection with the
Excluded Contracts;
(vii) all the obligations and liabilities arising
under or in connection with the Benefit Plans to the extent assumed
by Purchaser under Section 5.05;
(viii) any obligation or liability for Taxes attrib
utable to the Business or relating to the Acquired Assets, other
than Taxes based on gross receipts, income or profits for any
periods (or portions thereof) ending on or prior to the Closing
Date and other than Taxes that are the responsibility of any of the
Cytec Parties pursuant to Section 5.07; and
(ix) subject to Section 2.02(c), all obligations and
liabilities arising out of the Business which pertain to Business
Intellectual Property;
(x) any Sterling Specified Exposure Liability; and
(xi) any Sterling Escambia Bay Liability.
Notwithstanding anything contained herein or in the Assumption Agreement to the
contrary, Purchaser shall not be responsible for, and the Assumed Liabilities
shall not include, the Excluded Liabilities, all of which the Cytec Parties
agree to retain, pay, perform, fulfill, discharge and remain responsible for.
Nothing in this Section 2.03(a) or in any Ancillary Agreement is intended to
negate or impair the indemnification obligations of the Cytec Parties under
Article VIII or elsewhere in this Agreement.
(b) The term "Excluded Liabilities" shall mean:
(i) all obligations or liabilities of the Cytec
Parties under the Operative Documents (other than the obligations
and liabilities assigned to Purchaser under the Acrylonitrile
Assignment and Assumption);
(ii) all obligations or liabilities under the Excluded
Contracts;
(iii) all obligations and liabilities relating to the
Excluded Assets;
(iv) any obligation or liability for Taxes that are
the responsibility of any of the Cytec Parties pursuant to Section
5.07;
27
(v) any obligation or liability of Parent or Seller
for Taxes based on gross receipts, income or profits attributable
to the Business or relating to the Acquired Assets for any periods
(or portions thereof) ending on or prior to the Closing Date;
(vi) except as otherwise provided in Section 5.05, any
obligation or liability of Parent or Seller arising under or in
connection with any Benefit Plan;
(vii) any Off-Site Environmental Liability;
(viii) any Intercompany Payable to the extent such
Intercompany Payable is not a Business Accounts Payable;
(ix) any obligation or liability in respect of any
breach or alleged breach by any Cytec Party or any director,
officer, employee or agent of any Cytec Party of any Governmental
Rule in respect of antitrust matters (other than the Transactions);
(x) any obligation or liability of the Cytec Parties,
other than those obligations and liabilities to be assumed by
Purchaser pursuant to Section 5.05 and other than those obligations
and liabilities included in the definition of "Business Accounts
Payable", relating to any salaries, bonuses, wages or other
compensation or any employee benefit of whatsoever nature
(including payments relating to retirement, death, illness, sick
leave, vacations and severance) arising out of service to or
employment by any of the Cytec Parties or any of their Affiliates
prior to the Closing Date;
(xi) any Cytec Specified Exposure Liability; and
(xii) any Cytec Escambia Bay Liability.
SECTION 2.04. Consideration. (a) The total consideration to be paid
by Purchaser to the Cytec Parties for the Acquired Assets shall consist of:
(i) the payment to Parent of cash in the amount of
$56,000,000, plus the Closing Date Net Working Capital (the "Cash
Amount");
(ii) the delivery to Parent of the Preferred Stock;
(iii) the assumption by Purchaser of the Assumed
Liabilities pursuant to the Assumption Agreement; and
(iv) the Earn-Out Payments, if any.
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(b) As of Closing, Purchaser shall:
(i) deliver to Parent a certificate, registered in the
name of Parent, evidencing the Preferred Stock, such certificate to
bear the legend set forth in Exhibit N;
(ii) execute and deliver the Assumption Agreement;
and
(iii) pay to Parent an amount in cash equal to the
Closing Date Cash Payment. For purposes hereof, the "Closing Date
Cash Payment" shall equal the sum of $56,000,000 plus 95% of the
Estimated Closing Date Net Working Capital. Not later than five
business days prior to the Closing Date, Parent shall deliver to
Purchaser an estimate of Net Working Capital as of the Closing Date
(the "Estimated Closing Date Net Working Capital"), including an
estimate of the amount of each of the Business Accounts Receivable,
Business Inventory and Business Accounts Payable as of the Closing
Date.
(c) After the Closing:
(i) in accordance with Section 2.05, (A) Purchaser
shall pay to Parent the excess, if any, of the Cash Amount over the
Closing Date Cash Payment, if any, plus interest on such excess
accruing from the Closing Date through the date such excess is paid
at a rate per annum equal to 6% or (B) Parent shall pay to
Purchaser the excess of the Closing Date Cash Payment over the Cash
Amount, if any, plus interest on such excess accruing from the
Closing Date through the date such excess is paid at a rate per
annum equal to 6%; and
(ii) in accordance with the Earn-Out Agreement,
Purchaser shall pay to Parent the Earn-Out Payments, if any.
Any payment required to be made pursuant to Section 2.04(c)(i) shall be made in
immediately available funds within ten business days after the Statement becomes
final and binding on the parties.
SECTION 2.05. Reconciliation of the Consideration. (a) Within 30
days after the Closing Date, Parent shall prepare and deliver to Purchaser a
statement (the "Statement"), certified by an officer of Parent and Seller,
setting forth the Closing Date Net Working Capital, including the amount of each
of Business Accounts Receivable, Business Inventory, Business Accounts Payable
and the Capital Expenditure Deficiency as of the Closing Date. Purchaser and
29
its auditors shall have the right to observe any physical count of the Business
Inventory for purposes of determining Closing Date Net Working Capital. If
requested by Parent, Purchaser shall assist Parent in the preparation of the
Statement and shall provide Parent and its accountants access at all reasonable
times to the personnel, properties, books and records of the Business for such
purpose.
(b) During the 30-day period following Purchaser's receipt of the
Statement (the "Review Period"), Parent and Seller shall provide Purchaser and
its independent auditors access to the working papers of Parent or Parent's
auditors relating to the Statement. The Statement shall become final and binding
upon the parties at the end of the Review Period, unless Purchaser gives written
notice of its disagreement with the Statement ("Notice of Disagreement") to
Parent prior to the end of the Review Period. Any Notice of Disagreement shall
specify in reasonable detail the nature of any dis agreement so asserted. If a
Notice of Disagreement is received by Parent in a timely manner, then the
Statement (as revised in accordance with clause (i) or (ii) below) shall become
final and binding upon the Cytec Parties and the Sterling Parties on the earlier
of (i) the date Parent and Purchaser resolve in writing any differences they
have with respect to the matters specified in the Notice of Disagreement or (ii)
the date any disputed matters are finally resolved in writing by the Arbitrator.
(c) During the 30-day period following the delivery of a Notice of
Disagreement, Parent and Purchaser shall seek in good faith to resolve in
writing any differences which they may have with respect to the matters
specified in the Notice of Disagreement. During such period, (i) Parent and its
auditors shall have access to the working papers of Purchaser or Purchaser's
auditors relating to the Notice of Disagreement and (ii) Purchaser and its
auditors shall have access to the working papers of Parent and Parent's auditors
relating to the disputed matters identified in the Notice of Disagreement. If,
at the end of such 30-day period, Parent and Purchaser have not so resolved such
differences, Parent and Purchaser shall submit to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (Chicago
office) or such other nationally recognized independent public accounting firm
as Purchaser and Parent may mutually agree upon in writing (the "Arbitrator")
for arbitration, all matters which remain in dispute and which were properly
included in the Notice of Disagreement. The Arbitrator will base its decision on
a calculation of the Closing Date Net Working Capital that is determined in all
respects by reference to this Agreement. The Arbitrator shall render a decision
resolving the matters in dispute within 30 days following the submission
thereto. Such decision shall be final and binding on the Cytec Parties
30
and the Sterling Parties as an arbitral award. Except as specified in the next
sentence, the cost of any arbitration (including the fees and expenses of the
Arbitrator) pursuant to this Section 2.05(c) shall be borne by Purchaser and the
Cytec Parties in inverse proportion as they may prevail on matters resolved by
the Arbitrator, which proportionate allocations shall also be determined by the
Arbitrator at the time the determination of the Arbitrator is rendered on the
merits of the matters submitted. The fees and disbursements of the Cytec
Parties' counsel and independent auditors incurred in connection with the
preparation of the Statement and its review of any Notice of Disagreement or any
arbitration shall be borne by the Cytec Parties, and the fees and disbursements
of Purchaser's counsel and independent auditors incurred in connection with
their review of the Statement or any arbitration shall be borne by Purchaser.
(d) During the period of time from and after the Closing Date
through the resolution of any adjustment contem plated by this Section 2.05,
Purchaser shall not knowingly take any actions with respect to the accounting
books and records of the Business on which the Statement is to be based that are
not consistent with the past practices of the Business in any material respects
except to the extent required by GAAP. Also during such period, Purchaser shall
afford to Parent and any accountants, counsel or financial advisers retained by
Parent in connection with any adjustment to the Purchase Price contemplated by
this Section 2.05 reasonable access during normal business hours to all the
properties, books, contracts, personnel and records of the Business relevant to
the adjustment contemplated by this Section 2.05. Likewise, during such period,
Parent shall afford to Purchaser and any accountants, counsel or financial
advisors retained by Purchaser in connection with any adjustment to the Purchase
Price contemplated by this Section 2.05 reasonable access during normal business
hours to all the books, contracts, personnel and records of Parent or Seller
relevant to the adjustment contemplated by this Section 2.05.
ARTICLE III
The Closing
SECTION 3.01. Closing Date. The closing of the sale and transfer of
the Acquired Assets (hereinafter called the "Closing") shall take place at the
offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., 4200 Texas Commerce Tower, ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., Houston, Texas time, on the second business
day following the satisfaction of the conditions set
31
forth in Article VI, or at such other time, date and place as shall be fixed by
agreement among the parties hereto (such date of the Closing being hereinafter
referred to as the "Closing Date").
SECTION 3.02. Transactions To Be Effected at the Closing. At the
Closing:
(a) each of the Cytec Parties, as appropriate, shall duly execute
and deliver to Purchaser (i) a General Conveyance, Transfer and Assignment
covering all of the Acquired Assets in the form of Exhibit O, (ii) a special
warranty deed in the form of Exhibit B, in recordable form, covering the real
property included in the Acquired Assets and (iii) such other deeds, bills of
sale, assignments and other instruments of conveyance and transfer, consistent
with the provisions of this Agreement, as Purchaser may reasonably request
(collectively, the "Conveyance Documents").
(b) the Cytec Parties shall deliver or cause to be delivered to
Purchaser the documents required to be delivered by them and referred to in
Section 6.02, in each case appropriately executed;
(c) the Sterling Parties shall deliver or cause to be delivered to
Seller (i) the documents required to be delivered by them and referred to in
Section 6.03, in each case appropriately executed, (ii) the stock certificate in
respect of the Preferred Stock, and (iii) the Closing Date Cash Payment by wire
transfer in immediately available funds to the bank account or accounts
designated in writing by Parent at least five business days prior to the Closing
Date; and
(d) each other person party to an Ancillary Agreement shall execute
and deliver such Ancillary Agreement.
SECTION 3.03. Prorations. At the Closing, ad valorem, property and
similar Taxes on or with respect to the Acquired Assets, except those included
in the calculation of Closing Date Net Working Capital, shall be prorated
between Parent and Purchaser as of the Closing Date, with Parent liable to the
extent such items relate to any time period prior to the Closing Date and
Purchaser liable to the extent such items relate to periods subsequent to the
Closing Date. Except as otherwise agreed by Parent and Purchaser, the net amount
of all such prorations will be settled and paid on the Closing Date. If the
Closing shall occur before the tax rate applicable to the year in which the
Closing occurs is fixed, the apportionment of taxes shall be based upon the
estimated tax rate for such year.
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ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of the Cytec Parties.
Each of the Cytec Parties hereby represents and warrants to each of the Sterling
Parties as follows:
(a) Organization, Standing and Power. Each Cytec Party is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has the requisite power and authority to own the Acquired Assets
owned by it and each of Parent and Seller has the requisite power and authority
to carry on the Business as currently conducted. Each Cytec Party is qualified
or registered to do business and is in good standing in each jurisdiction in
which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified and in good standing will not, when taken together
with all other such failures, have a Material Adverse Effect. Parent has made
available to Purchaser true and complete copies of the Certificate of
Incorporation and By-laws of each Cytec Party, in each case as amended through
the date of this Agreement. Except as described in Schedule 4.01(a), no portion
of the Business is conducted by any Affiliate of Parent other than Seller and
Cytec Technology.
(b) Authority. Each of the Cytec Parties has all corporate power and
authority to execute and deliver the Operative Documents to which it is a party
and to consummate the Transactions. The execution and delivery by each Cytec
Party of the Operative Documents to which it is a party and the consummation of
the Transactions by such Cytec Party have been duly authorized by all necessary
corporate action on the part of such Cytec Party, and do not and will not
require the approval of the stockholders of Parent. This Agreement has been duly
executed and delivered by each of the Cytec Parties and constitutes, and each
Ancillary Agreement to be entered into by such Cytec Party will be duly executed
and delivered at the Closing and when so executed and delivered will constitute,
a legal, valid and binding obligation of such Cytec Party enforceable against
such Cytec Party in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws affecting creditors' rights generally from time to time in effect and to
general principles of equity (including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing) regardless of whether
considered in a proceeding in equity or at law.
33
Except as set forth on Schedule 4.01(b), the execution and delivery of this
Agreement do not, and the consummation of the Transactions and the compliance
with the terms thereof will not (i) violate in any material respect any material
Governmental Rule applicable to any Cytec Party, the Business or the Acquired
Assets, (ii) conflict with any provision of the certificate of incorporation or
By-laws of any Cytec Party, (iii) conflict in any material respect with any
material provision contained in, or constitute a material default under, any
material Permit applicable to the Business or any material Contract to which any
Cytec Party is a party or by which any Cytec Party or any of its property is
bound, (iv) result in the creation of any Lien upon any of the Acquired Assets
other than liens created by a Sterling Party or (v) require any material
consent, approval, order or authorization of, or the registration, declaration
or filing with, any Governmental Entity or any other person, except, in the case
of Parent, (A) for the filing of a premerger notification report by Parent under
the HSR Act and (B) the filing by Parent with the SEC of such reports under
Section 13(a) of the Exchange Act as may be required in connection with this
Agreement.
(c) Financial Statements. Appendix N sets forth the unaudited pro
forma balance sheet data of the Business as of September 30, 1996 (the "Balance
Sheet Data"), and the unaudited Pro Forma Statements of Operations of the
Business for the fiscal years ended December 31, 1994 and December 31, 1995, and
for the nine-month period ended September 30, 1996 (such pro forma statements,
together with the Balance Sheet Data, being referred to collectively as the
"Unaudited Financial Statements"). Each of (i) the Unaudited Financial
Statements and (ii) Parent's financial statements (which have been prepared in
accordance with GAAP) have been prepared from the books and records of Parent.
The Unaudited Financial Statements fairly present in all material respects the
financial condition and results of operations of the Business for the periods
indicated, except in each case as described on Schedule 4.01(c)-1 and as may be
described in the notes included therein. The cost of acrylonitrile purchases
reflected in the Unaudited Financial Statements since January 1, 1994 is set
forth in Schedule 4.01(c)-2.
(d) Undisclosed Liabilities. The Business does not have any
liabilities or obligations (whether or not accrued or contingent), and none of
the Acquired Assets are subject to any liabilities or obligations, in either
case, which would be required to be reflected in the Balance Sheet Data (or
disclosed in a footnote thereto) if the Balance Sheet Data were prepared as a
balance sheet prepared in accordance with GAAP, consistent with the historical
practices of the
34
Business, except (i) as disclosed in the Balance Sheet Data or in Schedule
4.01(d), (ii) for liabilities incurred in the ordinary course of business,
consistent with past practice since the date of the Balance Sheet Data which are
not, individually or in the aggregate, material and (iii) for Excluded
Liabilities. Except as disclosed in the Disclosure Schedules, none of the Cytec
Parties has knowledge of any material contingent liabilities of the Business.
(e) Compliance with Applicable Laws. Each Cytec Party is in
compliance in all material respects with all material Governmental Rules which
relate to the Business or the Acquired Assets. Except as set forth in Schedule
4.01(e), no Cytec Party has received any written notice since December 17, 1993,
and, to the knowledge of any Cytec Party, since December 31, 1986, of any
asserted material violation of any such material Governmental Rules and no Cytec
Party has received any written notice that any material unresolved investigation
or review by any Governmental Entity with respect to the Business or the
Acquired Assets is pending or that any such investigation or review is
contemplated. This Section 4.01(e) does not relate to environmental matters,
which are the subject exclusively of Section 4.01(p).
(f) Litigation; Decrees. Schedule 4.01(f) sets forth a list of
certain lawsuits, claims, actions, investiga tions and proceedings relating to
the Business. Except as set forth in such Schedule, there are no material suits,
claims, actions, investigations or proceedings pending or, to the knowledge of
any Cytec Party, threatened, and there are no material judgments, orders,
injunctions or decrees of any Governmental Entity or arbitrational tribunal, in
each case against or affecting any Cytec Party, the Business or the Acquired
Assets or that challenges or seeks to enjoin or prevent the Transactions. None
of the Cytec Parties is in default in any material respect under any material
Governmental Rule or any judgment, order, injunction or decree of any
Governmental Entity or arbitrational tribunal relating to the Business or the
Acquired Assets. This Section 4.01(f) does not relate to environmental matters,
which are the subject exclusively of Section 4.01(p).
(g) Permits. The Cytec Parties possess all the Permits listed in
Schedule 4.01(g), and such Permits (i) constitute all Permits necessary to
conduct the Business as now being conducted except for Permits, the absence or
loss of which would not reasonably be expected to (A) have a Material Adverse
Effect, (B) restrict, interfere with or otherwise adversely affect, in any
material respect, the ability of Seller to conduct the Business as now being
conducted, or (C) result in the imposition of material fines
35
or penalties on Seller by one or more Governmental Entities and (ii) have not
been revoked and have not expired in accordance with their terms. All Permits
listed in Schedule 4.01(g), except as otherwise set forth therein, are either
(i) assignable to Purchaser without the consent or approval of any Governmental
Entity or third party or (ii) of such ministerial nature that suitable
replacements are generally readily obtainable in due course upon proper
application therefor and without substantial risk of any material civil penalty.
There are no Administrative Proceedings, suits, demands or investigations
pending or, to the knowledge of the Cytec Parties, threatened which seek the
revocation, cancellation, suspension or any adverse modification of any Permit
listed in Schedule 4.01(g). None of the Cytec Parties is in violation of the
terms of any such Permits, except for violations that, singly or in the
aggregate, would not be reasonably expected to result in a Material Adverse
Effect.
(h) Business Inventory. None of the Business Inventory fails to meet
Seller's applicable quality and shipping specifications for such Inventory as in
effect on the date hereof. In the event of a breach of the representation in the
immediately preceding sentence, the aggregate amount of the Loss arising from or
in connection with such breach for purposes of Section 8.01 shall equal the book
value of the Business Inventory not meeting such specifications as of the
Closing Date, and, if Purchaser elects to seek indemnification pursuant to
Section 8.01 with respect to such breach, Purchaser shall promptly return to
Seller, free carrier Santa ▇▇▇▇ Facility, the Business Inventory not meeting
such specifications. The amount of Business Inventory reflected in the Balance
Sheet Data and in Closing Date Net Working Capital reflects the amount of the
actual Business Inventory as of September 30, 1996 or the Closing Date, as
applicable, booked in accordance with Seller's standard historical practice and
as of the date hereof, computed in a manner consistent with GAAP, except to the
extent set forth in Appendix G or Schedule 4.01(c)-1.
(i) Products. Except as set forth in Schedule 4.01(i) and except for
customer credits in the ordinary course of business, which do not in the
aggregate exceed $250,000, the Cytec Parties have not (i) received payment under
any Acquired Contract which requires delivery in the future of any products or
services for which such payment was received and which, when aggregated with all
other such payments, exceed $100,000 (other than any payment the amount of which
is offset against any receivable included in Business Accounts Receivable in the
Balance Sheet Data or the calculation of Closing Date Net Working Capital) or
36
(ii) delivered under any such Acquired Contract materially more products or
services than any third party is obligated to acquire thereunder.
(j) Title to Acquired Assets. The Cytec Parties have good, valid and
marketable title to all the Acquired Assets free and clear of all Liens other
than Permitted Liens. This paragraph (j) does not relate to real property or
Leased Property, which are the subject exclusively of Section 4.01(k), or to
Intellectual Property, which is exclusively the subject of Section 4.01(n).
(k) Real Property. Seller has good and marketable title (within the
meaning of Florida real property law) to the Santa ▇▇▇▇ Facility, free and clear
of all Liens other than Permitted Liens. Schedule 4.01(k) sets forth a list of
all real property and interests in real property (other than the New York Lease)
leased by any of the Cytec Parties and used with respect to the operations of
the Business (each parcel of such real property and each such interest in real
property being herein called a "Leased Property"). Each agreement listed on
Schedule 4.01(k) creates, in favor of the relevant Cytec Party, a valid
leasehold interest in the Leased Property covered thereby. To the knowledge of
the Cytec Parties, none of the Cytec Parties is in default, and no notice of
alleged default has been received by any of the Cytec Parties, under any
agreement listed on Schedule 4.01(k), no lessor is in default or alleged to be
in default thereunder and there exists no condition or event which, after notice
or lapse of time or both, would constitute a default by any party thereto,
except for such defaults or alleged defaults that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
(l) Business Accounts Receivable. All the accounts receivable
included under the line item "Accounts Receivable" in the Balance Sheet Data
represent, and all the other Business Accounts Receivable represent, arms'
length sales or transactions actually made or entered into in the ordinary
course of the Business. All of the Business Accounts Receivable, net of
reserves, are due within 12 months after the Closing and, except as would not be
material in the aggregate to the Business taken as a whole, (i) are not subject
to any counterclaim or set-off (other than normal consumer product return
rights) and (ii) are not in dispute. Schedule 4.01(l) contains an aged schedule
as of its date of items in the line item "Accounts Receivable" that are the
Business Accounts Receivable.
(m) Absence of Certain Changes or Events. Except as set forth in
the Disclosure Schedules, including
37
Schedule 4.01(m), since the date of the Balance Sheet Data, (i) Parent has
conducted the Business, or has caused Seller to conduct the Business, in the
ordinary course consistent with past practice, (ii) to the knowledge of the
Cytec Parties, there has not occurred any event or condition which, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect and (iii) there has not occurred any event or condition which would be
prohibited by Section 5.01 if such event or condition had taken place without
the consent of Purchaser after the date hereof and prior to the Closing Date.
(n) Intellectual Property. Schedule 4.01(n)-1 sets forth a true and
complete list of all Intellectual Property owned or held by any Cytec Party that
arises primarily out of the Business, other than any copyrights or Know-How. To
the extent indicated on such Schedule, such Intellectual Property has been duly
registered in, filed in or issued by the United States Patent and Trademark
Office and other designated jurisdictions. To the extent such Intellectual
Property is shown as registered in Schedule 4.01(n)-1, such Intellectual
Property has been properly registered in all material respects, all material
pending registrations and applications have been properly made and filed and
each annuity, maintenance, renewal or other fee relating to material
registrations or applications are current. Except as set forth on Schedule
4.01(n)-2, a Cytec Party is the sole and exclusive owner or holder of all of the
Business Intellectual Property and since December 17, 1993, and, to the
knowledge of any Cytec Party, since December 31, 1986, no Cytec Party has
received any written notice, the subject of which has not been resolved, from
any other person challenging the right of any Cytec Party to use any of the
Business Intellectual Property or any rights thereunder. To the knowledge of the
Cytec Parties, (i) the Business has been and is being conducted without material
infringement of, and the Business Intellectual Property does not infringe in any
material respect on, any Intellectual Property of any person and (ii) no person
is infringing upon the Business Intellectual Property. Except as set forth on
Schedule 4.01(n)-3, no Cytec Party has granted any licenses or other rights and
none of them has any obligation to grant licenses or other rights to any of the
Business Intellectual Property to any other person. Except as set forth on
Schedule 4.01(n)-4, there are no inter ferences or other contested proceedings,
either pending or, to the knowledge of any Cytec Party, threatened in the United
States Copyright Office, the United States Patent and Trade ▇▇▇▇ Office or any
Federal, state or local court or before any other governmental agency or
tribunal, relating to any pending application with respect to any of the
Business Intellectual Property.
38
(o) Title to Seller and Cytec Technology Shares. Parent is the sole
stockholder of Seller and Cytec Technology and, in such capacity, Parent has
consented to the Transactions and to the execution, delivery and performance by
Seller and Cytec Technology of the Operative Documents to which they are a
party.
(p) Environmental Matters. (i) Except as
disclosed on Schedule 4.01(p) or except as would not,
individually or in the aggregate, have a Material Adverse
Effect:
(A) Seller possesses all permits, licenses, consents, franchises,
approvals and authorizations necessary or required under any Environmental
Law (each such permit, license, consent, franchise or approval being
referred to as an "Environmental Permit") for the conduct of the Business
as it is currently being conducted, including those on Schedule
4.01(p)(i)(A);
(B) since December 17, 1993, and, to the knowledge of each Cytec
Party, since December 31, 1986, each of Parent and Seller is and has been
in compliance with all Environmental Permits and with all Environmental
Laws applicable to the Business or the Acquired Assets, except to the
extent such noncompliance has been cured or resolved without any
compliance order or schedule of compliance;
(C) since December 17, 1993, and, to the knowledge of each Cytec
Party, since December 31, 1986, neither Parent nor Seller has received any
written notices, demand letters or written requests for information from
any Governmental Entity or any third party indicating that any of the
Cytec Parties is or may be in violation of, or liable under, any
Environmental Law applicable to the Business or the Acquired Assets or any
Environmental Permit, except to the extent that the subject of such
notices, letters or requests has been cured or resolved without any
compliance order or schedule of compliance;
(D) there are no civil, criminal or administrative actions, suits,
demands, claims, hearings, investigations or proceedings pending or, to
the knowledge of Parent or Seller, threatened against Parent or Seller (I)
alleging that any of the Cytec Parties may be in violation of, or liable
under, any Environmental Law applicable to the Business or the Acquired
Assets or (II) seeking to revoke, cancel, suspend or modify any of the
Environmental Permits applicable to the Business or the Acquired Assets;
39
(E) since December 17, 1993, and, to the knowledge of each Cytec
Party, since December 31, 1986, no reports have been filed, or are
required to be filed, with any Governmental Entity by Parent or Seller
concerning the Release of any Hazardous Substance in violation of any
Environmental Law applicable to the Santa ▇▇▇▇ Facility;
(F) Seller has made available to Purchaser copies of all
environmental investigations, studies, audits, tests, reviews or other
analyses in the possession or under the control of any Cytec Party
regarding compliance or noncompliance by the Business with any
Environmental Law.
(ii) The Santa ▇▇▇▇ Facility is not currently on and has never been
on, and, to the knowledge of Parent or Seller, is not listed and has never been
proposed for listing on, any federal or state "superfund" or "super lien" list,
including CERCLA, and neither Parent nor Seller is currently taking, nor has it
ever been required to take, any material corrective action with respect to the
Santa ▇▇▇▇ Facility under the Resource Conservation and Recovery Act or any
other Environmental Law, except for any such actions covered by an Environmental
Permit.
(iii) All financial assurances required by or under any
Environmental Laws for the conduct of the Business as presently conducted are,
to the knowledge of the Cytec Parties after due inquiry, in place.
(q) Sufficiency of Acquired Assets. Except as set forth on Schedule
4.01(q), the Acquired Assets, together with the rights and services to be
provided to Purchaser pursuant to the Operative Documents, are sufficient for
the operation of the Business immediately after the Closing in substantially the
same manner as it is currently operated; provided, however, that no
representation is made pursuant to this Section 4.01(q) with respect to any
restriction or condition on the ability of any Sterling Party to own or operate
the Business arising out of facts or circumstances that are attributable to any
of the Sterling Parties.
(r) Contracts. Except for Contracts listed on Schedule 4.01(r)(i)
through (xviii), which correspond to the numbered categories in the definition
of "Material Contract" provided below, 4.01(s), 4.01(x), 4.01(y) or 4.01(z), and
except for Excluded Contracts, none of the Cytec Parties is a party to or bound
by any Material Contract. "Material Contract" shall mean any Contract of the
types (whether one or
40
more) listed below which relates primarily to the Business, the Acquired Assets
or the Assumed Liabilities or which, by its terms or by operation of law, would
be binding on Purchaser or the Business immediately after the Closing (it being
understood that no representation is made pursuant to this Section 4.01(r) with
respect to any restriction or condition on the ability of any Sterling Party to
own or operate the Business arising out of facts or circumstances that are
attributable to any of the Sterling Parties):
(i) a Contract for the employment of any person with an annual base
salary in excess of $50,000 or any consulting agreement involving
aggregate future financial obligations of any Cytec Party in excess of
$50,000;
(ii) a Contract, other than a Benefit Plan, with any person
providing any term of employment or compensation guarantee that is not
terminable without penalty prior to the first anniversary of the date of
this Agreement;
(iii) except for Contracts set forth on Schedule 4.01(w) or Schedule
4.01(y), a Contract with or for the benefit of, any person providing for
severance payments, termination payments or other benefits, the amount,
nature, vesting or payment of which is contingent upon, or will be
accelerated or otherwise affected by, a "change of control" or other
similar event or occurrence;
(iv) a Contract with any labor union or association;
(v) a Contract with, or for the benefit of, any director, officer
or Affiliate of any of the Cytec Parties;
(vi) an indenture, note, loan or credit agreement or other Contract
relating to the borrowing of money by any of the Cytec Parties or to the
direct or indirect guarantee or assumption by any of the Cytec Parties of
the obligation of any other person in excess of $100,000;
(vii) any Contract containing a covenant not to
compete or a material agreement to keep confidential any
information of a third party;
(viii) a lease or similar agreement under which any of the Cytec
Parties is a lessee of, or holds or operates, any real property owned by
any third party;
(ix) a Contract involving future payment for goods or services by
any of the Cytec Parties of more than $100,000 (unless terminable at the
option of such Cytec
41
Party (or, immediately after the Closing, Purchaser) without payment or
penalty upon no more than 60 days' notice);
(x) a Contract involving the obligation of any of the Cytec Parties
to deliver in the future products or services for payment of more than
$100,000 (unless terminable at the option of such Cytec Party without
payment or penalty upon no more than 60 days' (or, immediately after the
Closing, Purchaser) notice);
(xi) a Contract for the sale of any of the Acquired Assets (other
than sales of Inventory in the ordinary course of business) for more than
$50,000 individually or $250,000 in the aggregate with all other Contracts
containing such obligation or the grant of any preferential rights (it
being understood that licenses and exclusive dealing arrangements are not
considered to be preferential rights for this purpose) to purchase any of
the Acquired Assets or requiring the consent of any person to the transfer
of any of the Acquired Assets;
(xii) a Contract evidencing or creating any Lien on the Acquired
Assets (other than Permitted Liens arising for matters occurring on or
before the Closing Date);
(xiii) a Contract with any Governmental Entity (which Contract does
not otherwise come within the definition of Material Contract), the loss
of which would reasonably be expected, individually or in the aggregate,
(a) to have a Material Adverse Effect, (b) to restrict, interfere with or
otherwise adversely affect, in any material respect, any Cytec Party's
(or, immediately after the Closing, Purchaser's) ability to conduct the
Business in substantially the same manner in which it is currently
conducted or (c) to result in the imposition of any material fines or
penalties on any Cytec Party (or, immediately after the Closing,
Purchaser) by one or more Governmental Entities;
(xiv) any Contract that would restrict, in any material respect, the
ability of such Cytec Party (or, immediately after the Closing, Purchaser)
(a) to incur or assume indebtedness, (b) to sell, transfer, convey,
encumber or otherwise dispose of the Business or any material item of the
Acquired Assets or (c) to continue to conduct the Business in
substantially the same manner in which it is currently conducted;
(xv) a Contract with, or for the benefit of, Cyanamid
or any of its Affiliates;
42
(xvi) a Contract involving a joint venture, profit sharing or
similar arrangement (other than the Benefit Plans and commission
arrangements entered into in the ordinary course of business);
(xvii) a Contract obligating or that would obligate any of the Cytec
Parties (or, immediately after the Closing, Purchaser) to make a loan or
advance in excess of $50,000 to, or an investment in excess of $50,000
individually or $250,000 in the aggregate with all other Contracts
containing such obligation, any person, other than extensions of credit in
connection with sales of Inventory or the rendering of services by the
Business in the ordinary course of business; or
(xviii) a Contract obligating any of the Cytec Parties to pay monies
in excess of $250,000, but excluding any such Contract which is terminable
at the option of the applicable Cytec Party without payment or penalty
upon no more than 60 days' notice.
Complete and correct copies of all Material Contracts, together with all
modifications and amendments thereto, have been delivered to Purchaser by
Parent. Each Acquired Contract that is a Material Contract is a valid and
binding obligation of the Cytec Parties a party thereto. None of the Cytec
Parties is in default in any material respect, and no notice of alleged material
default has been received by any of the Cytec Parties under any Acquired
Contract. To the knowledge of any Cytec Party, (x) no other person is in default
in any material respect or alleged to be in default in any material respect
under any of the Acquired Contracts and (y) there exists no condition or event
which, after notice of lapse of time or both, would constitute a material
default by any party thereto.
(s) Employee Benefits. (i) Schedule 4.01(s) contains a list and
brief description of each "employee pension benefit plan" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA), stock option, stock purchase, stock appreciation, stock bonus, deferred
compensation plan, program or arrangement, and each other employee fringe
benefit plan, program or arrangement maintained, provided or contributed to or
required to be maintained, provided or contributed to by any of the Cytec
Parties or any of their Affiliates (excluding Cyanamid and any of its
Affiliates) for the benefit of, or relating to, any present or former Business
Employees or their beneficiaries (all the foregoing being herein called "Benefit
Plans"). The Unaudited Financial Statements reflect an
43
allocation of costs relating to the Benefit Plans by the Parent to the Business
in accordance with Schedule 4.01(c)-2. Except as set forth in Schedule
4.01(c)-2, the allocated costs of the Benefit Plans reflected in the Unaudited
Financial Statements are not different in any material respect from the actual
costs therefor. Parent has made available to Purchaser true, complete and
correct copies of (i) each Benefit Plan (or, in the case of any unwritten
Benefit Plan, a description thereof) and (ii) the most recent summary plan
description for each Benefit Plan (if any such description was required).
(ii) No Benefit Plan is a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA), and, since December 17, 1993, none of the Cytec
Parties has ever contributed nor been obligated to contribute to any such
multiemployer plan. Each of the Cytec Savings Plan and the Cytec Defined Benefit
Plan is in compliance in all material respects with ERISA and all other
applicable material laws, and has been administered in accordance with its terms
in all material respects.
(t) Terminations, Proceedings, Penalties, Etc. Since December 17,
1993, with respect to each employee benefit plan (including the Benefit Plans)
that relates to the Business or any present or former Business Employees and
that is subject to the provisions of Title IV of ERISA and in respect of which
any of the Cytec Parties (excluding Cyanamid) or any of their respective assets
and properties may, directly or indirectly, be subject to any liability,
contingent or otherwise, or the imposition of any Lien (whether by reason of the
complete or partial termination of any such plan, the funded status of any such
plan, any "complete withdrawal" (as defined in Section 4203 of ERISA) or
"partial withdrawal" (as defined in Section 4205 of ERISA) by any person from
any such plan, or otherwise):
(i) no such plan has been terminated so as to subject, directly or
indirectly, any of the Acquired Assets to any liability or the imposition
of any Lien under Title IV of ERISA;
(ii) no proceeding has been initiated or, to the knowledge of any of
the Cytec Parties, threatened by any person (including the PBGC) to
terminate any such plan;
(iii) no Reportable Event has occurred with respect to
any such plan; and
(iv) no such plan which is subject to Section 302 of ERISA or
Section 412 of the Code has incurred any "accumulated funding deficiency"
(as defined in
44
Section 302 of ERISA and Section 412 of the Code, respectively) whether or
not waived.
(u) Prohibited Transactions. There have been no "prohibited
transactions" by any Cytec Party within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code for which a statutory or administrative
exemption does not exist with respect to any Benefit Plan.
(v) Full Funding. As of December 31, 1995, except as disclosed in
Parent's Annual Report to Shareholders for 1995 (a copy of which has been
delivered to Purchaser), the funds available under the Cytec Defined Benefit
Plan and the Cytec Past Service Retirement Plan equal or exceed the amounts
required to be paid, on account of rights vested or accrued as of December 31,
1995 (using the actuarial methods and assumptions used at December 31, 1995 by
the Cytec Parties' actuaries in connection with the funding of such plans).
(w) No Triggering of Obligations; Controlled Group; Affiliated
Service Group. (i) The consummation of the Transactions will not, except as
disclosed on Schedule 4.01(w) or as otherwise contemplated by this Agreement,
(A) entitle any Acquired Employee to severance pay or unemployment compensation
or (B) accelerate the time of vesting of compensation due to any Acquired
Employee.
(ii) Since December 17, 1993, none of the Cytec Parties has been a
member of an "affiliated service group" within the meaning of Section 414(m) of
the Code. The consummation of the Transactions will not result in any prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code for
which an exemption is not available.
(x) Future Commitments. Except as set forth in Schedule 4.01(x),
none of the Cytec Parties has announced any plan or legally binding commitment
to create any additional Benefit Plans or to amend or modify any existing
Benefit Plan which plans, commitments, amendments and modifications, in the
aggregate, would result in the Benefit Plans thereafter not being substantially
equivalent in value to the Benefit Plan as in effect since January 1, 1996.
(y) Bonus Agreements. Except for those agreements listed on Schedule
4.01(y), no Cytec Party nor any subsidiary of any Cytec Party has any agreement
with any Acquired Employee that entitles such employee to any bonus or other
incentive compensation in connection with the consummation of the Transactions
or for which the consummation of the
45
Transactions would accelerate the time of payment or increase the amount of
compensation due to any Acquired Employee.
(z) Bonds. Schedule 4.01(z) is a complete and accurate list and
description of all bonds, deposits, financial assurances and insurance coverage
required by Governmental Rule to be submitted to Governmental Entities in
connection with the conduct of the Business as presently being conducted, except
for bonds, deposits, financial assurances and insurance coverage the failure of
which to provide would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(aa) Labor Matters. Except as disclosed on Schedule 4.01(aa) or as
would not individually or in the aggregate reasonably be expected to have a
Material Adverse Effect, (i) since December 17, 1993, and, to the knowledge of
each Cytec Party, since December 31, 1986, none of the Cytec Parties has
experienced any labor disputes, demands for certification or any work stoppage
due to labor disagreements, (ii) there is no unfair labor practice charge or
complaint pending or, to the knowledge of any of the Cytec Parties, threatened
against any Cytec Party in respect of the Business, (iii) there is no labor
strike, dispute, request for representation, slowdown or stoppage actually
pending or, to the knowledge of any of the Cytec Parties, threatened against or
affecting any of the Cytec Parties in respect of the Business nor any secondary
boycott with respect to any products produced by the Business, (iv) no grievance
is pending, nor has any arbitration proceeding arising out of or under
collective bargaining agreements been requested, and no such arbitration
proceeding is pending or scheduled, in each case in respect of the Business, (v)
there are no Administrative Proceedings or suits against any of the Cytec
Parties in respect of the Business concerning alleged employment discrimination
or other employment related matters pending or, to the knowledge of any of the
Cytec Parties, threatened before the U.S. Equal Employment Opportunity
Commission or any state or federal court or Governmental Entity, and (vi) no
person has, to the knowledge of any of the Cytec Parties, asserted that any of
the Cytec Parties is liable in any material amount for any arrears of wages or
any taxes or penalties for failure to comply with any of the foregoing.
(bb) Investment Representation. The acquisition of the Preferred
Stock by Parent is for Parent's own account, is for investment purposes and is
not with a view to, or for offer or sale for STX in connection with, the
distribution of any shares of Preferred Stock in violation of the Securities Act
or any state securities laws. Parent has no present
46
intention of selling or otherwise disposing of any shares of Preferred Stock.
Parent has reviewed all information relating to STX and its subsidiaries that
Parent deems necessary or desirable in connection with its decision to acquire
the Preferred Stock.
(cc) Taxes. Each of the Cytec Parties has filed and properly
completed all Tax returns and other reports that it is required by Governmental
Rule to file on or before the date hereof or the Closing Date, as applicable,
with respect to the Business or the Acquired Assets and has paid all Taxes that
are due and payable for periods ending on or before the date hereof or the
Closing Date, as applicable, pursuant to such returns and reports, the
non-payment of which might (i) subject the Acquired Assets to sale, forfeiture
or loss, (ii) interfere in any material respect with the use or disposition of
any Acquired Asset or (iii) have a Material Adverse Effect.
(dd) No Knowledge of Misrepresentations. The Specified Cytec
Representatives have no actual knowledge that the representations and warranties
of any Sterling Party made in this Agreement are not true.
(ee) Survey and Title Commitment. The Cytec Parties have heretofore
delivered to Purchaser (i) a true and correct copy of a land survey prepared by
▇▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc. dated December 20, 1996, with respect to the Santa
▇▇▇▇ Facility (the "Survey") and (ii) a true and correct copy of a current
owner's ALTA title policy commitment prepared by Lawyer's Title Insurance
Corporation dated October [27], 1996 (the "Title Commitment").
SECTION 4.02. Representations and Warranties of Purchaser. Each of
the Sterling Parties hereby represents and warrants to Parent as follows:
(a) Organization, Standing and Power. Each of the Sterling Parties
(i) is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the requisite power and authority to
carry on its business as now being conducted and (ii) is qualified or registered
to do business and is in good standing in each jurisdiction in which the
properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing will not, when taken together with all
other such failures, have a material adverse effect on the business, operations,
assets, condition (financial or otherwise) or results of operations of STX and
its subsidiaries, taken as a whole. Purchaser has heretofore made
47
available to Parent true and complete copies of the certificates of
incorporation and by-laws of the Sterling Parties, in each case as amended
through the date of this Agreement.
(b) Authority. Each of the Sterling Parties has all corporate power
and authority to execute and deliver the Operative Documents to which it is a
party and to consummate the Transactions, and STX has all corporate power and
authority to issue the Preferred Stock. The execution and delivery by each
Sterling Party of the Operative Documents to which it is a party and the
consummation of the Transactions by such Sterling Party have been duly
authorized by all necessary corporate action on the part of such Sterling Party,
and do not and will not require the approval of the stock holders of STX. This
Agreement has been duly executed and delivered by each Sterling Party and
constitutes, and each Ancillary Agreement to which such Sterling Party is a
party will be duly executed and delivered by such Sterling Party at the Closing
and when so executed and delivered will consti tute, a legal, valid and binding
obligation of such Sterling Party enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity (including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing) regardless of whether considered in a proceeding in equity or at law.
The execution and delivery of this Agreement by the Sterling Parties do not, and
the consummation of the Transactions by the Sterling Parties will not, (i)
violate any Governmental Rule applicable to it, (ii) conflict with any provision
of the certificate of incorporation or by-laws of any Sterling Party, (iii)
conflict with any provision contained in, or constitute a default under, any
material Contract to which any Sterling Party is a party or by which any
Sterling Party or any of their respective properties are bound or (iv) require
the consent, approval, order or authorization of, or the registration,
declaration or filing with, any Governmental Entity or other person, except as
provided in paragraph (d) below and except for (A) the filing of a premerger
notification report by Purchaser under the HSR Act and (B) the filing by STX
with the SEC of such reports under Section 13(a) of the Exchange Act as may be
required in connection with this Agreement.
(c) Litigation; Decrees. There are no (i) judgments, orders,
injunctions or decrees of any Governmental Entity or arbitrational tribunal
against any Sterling Party, (ii) suits, claims, actions, investigations or
proceedings pending or, to the knowledge of Purchaser,
48
threatened in writing against or affecting any Sterling Party which, in the
cases of clauses (i) or (ii), would reasonably be expected to prevent or
materially delay the ability of such Sterling Party to perform its obligations
hereunder.
(d) No Knowledge of Misrepresentations. The Specified Sterling
Representatives have no actual knowledge that the representations and warranties
of any Cytec Party made in this Agreement or any Ancillary Agreement are not
true.
(e) Preferred Stock. When delivered to Parent in accordance with
this Agreement, the Preferred Stock will be duly authorized, validly issued,
fully-paid and nonassessable. All corporate action (including stockholder
approval) required on the part of STX for the authorization, issue and sale of
the Preferred Stock has been duly and validly taken, except for the filing of an
appropriate certificate of designation relating to the Preferred Stock in
accordance with the Delaware General Corporation Law and the Certificate of
Incorporation and Bylaws of STX.
(f) SEC Reports; Phase I Study. Purchaser has heretofore provided to
Parent true and complete copies of (i) STX's annual report on Form 10-K for the
fiscal year ended September 30, 1996, (ii) STX's proxy statement dated July 19,
1996 relating to a special meeting of its stockholders held on August 20, 1996,
(iii) Amendment No. 3 to STX's Registration Statement on Form S-1 (Registration
No. 333-04343), as filed with the SEC on August 12, 1996, including all exhibits
thereto which have been requested by Parent, (iv) the Phase I Study and (v) the
Holdings Pension Plans. The audited financial statements included in the annual
report referred to in clause (i) above have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated therein or in the notes thereto) and fairly present the
consolidated financial position and operations of STX and its subsidiaries on
the date and for the period covered thereby (except as may be indicated thereon
or in the notes thereto).
(g) Financing. Purchaser has obtained the commitment of The Chase
Manhattan Bank in respect of the Financing and such commitment has neither been
revoked nor expired in accordance with its terms.
(h) Capital Stock. The authorized capital stock of STX consists of
20,000,000 shares of Common Stock, par value $0.01 per share and 2,000,000
shares of preferred stock ("STX Preferred Stock"). As of the date hereof, no
shares of STX Preferred Stock are outstanding. No shares of Senior Stock or
49
Parity Stock (each as defined in the Designation of Rights in respect of the
Preferred Stock) are outstanding.
ARTICLE V
Covenants
SECTION 5.01. Covenants of the Cytec Parties Relating to Conduct of
Business. During the period from the date of this Agreement and continuing until
the Closing, each of the Cytec Parties agrees (except as expressly provided in
this Agreement or Schedule 5.01 hereto, or to the extent that Purchaser shall
otherwise consent in writing) that:
(a) Ordinary Course. Each of the Cytec Parties shall (i) operate the
Business and the Acquired Assets in the ordinary course in substantially the
same manner as presently conducted, (ii) maintain the Business Records in
substantially the same manner as presently maintained, (iii) use commercially
reasonable efforts to preserve intact the Business' present business
organization and reputation in all material respects, (iv) to the extent
consistent with the past practices of the Business in the ordinary course of its
business, keep available the services of substantially all of the Business'
present officers and employees, (v) prevent the Business Employees from being
exposed to acrylonitrile or asbestos at the Santa ▇▇▇▇ Facility at levels above
those permitted by OSHA (it being understood that the sole liability of the
Cytec Parties for breach of this clause (v) shall be for the incremental Losses
from exposure of such persons to acrylonitrile or asbestos between the date
hereof and the Closing Date), (vi) to the extent consistent with the past
practices of the Business in the ordinary course of its business, preserve the
Business' relationships and goodwill with customers, suppliers and others having
business dealings with the Business and (vii) maintain its current repair and
maintenance practices for capital equipment and real property (including
improvements thereon and fixtures thereto); provided, however, that nothing
contained in this paragraph shall be deemed to require the expenditure of any
funds out side the ordinary course of business.
(b) No Dispositions, Etc.; Limitation on Acquisitions. None of the
Cytec Parties shall, directly or indirectly, (i) sell, lease, transfer or
otherwise dispose of, or agree to sell, lease, transfer or otherwise dispose of,
any of the Acquired Assets other than sales of Business Inventory and other
dispositions in the ordinary course of business consistent with prior practice
and except that (A) Parent may transfer any Acquired Assets owned by it to
Seller and
50
(B) Cytec Technology may transfer any Business Intellectual Property owned by it
to Seller, (ii) purchase, acquire or lease any assets or properties which would
constitute Acquired Assets and the accounts payable in respect of which will be
included as Business Account Payables on the Closing Date, other than in the
ordinary course of business consistent with prior practice or (iii) pledge or
encumber any of the Acquired Assets other than in the ordinary course of
business consistent with past practice.
(c) Employees. None of the Cytec Parties shall, directly or
indirectly, (i) enter into or amend, or commit itself to enter into or amend,
any employment, severance, consulting, compensation or special pay Contract,
with respect to termination of employment or otherwise, or other similar
Contracts with any Business Employees except in the ordinary course of business
consistent with past practice, (ii) pay or agree to pay any material pension,
retirement, allowance or other employee benefit to any present Business
Employee, other than for benefit entitlements under Benefit Plans in effect on
the date of the Balance Sheet Data in accordance with the terms of such Benefit
Plans, (iii) adopt, enter into or amend, or commit itself to adopt, enter into
or amend, any of the Benefit Plans, except (A) to comply with changes in
applicable Governmental Rules, (B) as made on a basis applicable to Parent and
its subsidiaries on a company-wide basis (in which case Parent shall promptly
advise Purchaser thereof) or (C) to the extent all such adoptions, entrances and
commitments would result in the benefits under the Benefit Plans thereafter not
being substantially equivalent in value to the Benefit Plans as of the date
hereof, or (iv) increase the salary of any Business Employee, except as required
pursuant to existing employment Contracts or in the ordinary course of business
consistent with prior practice.
(d) Material Contracts. Notwithstanding anything in this Agreement
to the contrary, none of the Cytec Parties shall, directly or indirectly, enter
into any Material Contract, including any Material Contract for the purchase of
capital assets, without the prior written consent of Purchaser (which consent
shall not be unreasonably withheld). None of the Cytec Parties shall amend,
modify or terminate, or agree to amend, modify or terminate, any Acquired
Contract, in each case in any material respect, other than in the ordinary
course of business consistent with past practice. The Cytec Parties shall
promptly deliver to Purchaser a copy of any such amendment, modification or
termination.
(e) Other Actions. None of the Cytec Parties shall, directly or
indirectly, take any action that would reasonably be expected to (i) result in
any of the
51
representations and warranties of any Cytec Party set forth in this Agreement
becoming untrue in any material respect, (ii) result in any of the conditions of
the Closing set forth in Article VI not being satisfied in a timely manner or
(iii) individually or in the aggregate, have a Material Adverse Effect.
(f) Advise of Changes. Parent shall advise Purchaser in writing
within a reasonable time thereafter of the occurrence after the date hereof and
on or prior to the Closing Date of any matter or event that (i) has had or would
be reasonably expected, individually or in the aggregate, to have a Material
Adverse Effect, (ii) has caused or would reasonably be expected to cause any of
its representations or warranties in this Agreement to be untrue or incorrect
from the date hereof to the Closing Date or (iii) has caused or would reasonably
be expected to cause any of the conditions set forth in Article VI to not be
satisfied in a timely manner; provided, however, that the delivery of any such
notice pursuant to this paragraph (f) shall not limit or otherwise affect the
remedies hereunder of Purchaser.
SECTION 5.02. Purchaser's Access to Information Prior to Closing.
The Cytec Parties shall afford to the Sterling Parties and their respective
directors, officers, employees, accountants, financial advisors, financing
sources, environmental consultants, counsel and other representatives reasonable
access upon reasonable advance notice and during normal business hours during
the period prior to the Closing to all the Acquired Assets, the Business
Employees and other personnel who perform duties in respect of the Acrylic
Fibers Business and, to the extent that they relate in any material respect to
the Acquired Assets, the Assumed Liabilities or the Acquired Employees, the
Excluded Records; provided, however, that the Cytec Parties shall not be
required to disclose any information with respect to an Acquired Employee to the
extent that such disclosure is prohibited by applicable law. The Cytec Parties
consent and agree that Purchaser and its directors, officers, employees,
accountants, financial advisors, financing sources, environmental consultants,
counsel and other representatives shall be entitled at any time to solicit
information from and to otherwise contact any and all Governmental Entities and
other third parties with respect to matters involving the Business or the
Acquired Assets, including compliance with Environmental Laws. The Sterling
Parties shall have the right, at their sole expense, to make and retain copies,
extracts and summaries of all such reports, books and records and information
made available hereunder. Subject to Sections 4.02(d) and 5.12, no investigation
by or on behalf of the Sterling Parties shall affect in any manner the
representations, warranties,
52
covenants or indemnities of the Cytec Parties contained in the Operative
Documents, the right of the Sterling Parties to rely upon such representations
and warranties or the conditions to the obligations of any party to consummate
the Closing. Purchaser acknowledges that any information being provided to it or
its representatives by Parent pursuant to this Agreement is subject to the terms
of a confidentiality agreement between The Sterling Group, Inc. and ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co., on behalf of Parent, dated May 31, 1996 (the "Confidentiality
Agreement"), which terms are incorporated herein by reference.
SECTION 5.03. Records; Financial Information; Attorney Work Product.
(a) On the Closing Date, the Cytec Parties shall deliver or cause to be
delivered to Purchaser all of the Business Records; provided, however, that the
Cytec Parties shall be entitled to retain copies of such Business Records as it
deems appropriate. Each of the Cytec Parties agrees that, at its own expense, it
(i) shall preserve and keep all Excluded Records for a period of (A) in the case
of tax returns, schedules, work papers and other supporting documentation, for a
period of seven years from the Closing Date, or for any longer periods as may be
required by any Governmental Entity or as may be prudent in connection with any
ongoing litigation or Administrative Proceeding, and (B) in the case of all
other Excluded Records, for a period of four years, and (ii) shall make the
foregoing available to the Sterling Parties after the Closing during normal
business hours as may be reasonably requested. In the event any Cytec Party
wishes to destroy any of the Excluded Records after the time specified above, it
shall first give 60 days' prior written notice to the Sterling Parties,
whereupon the Sterling Parties shall have the right, at their option and
expense, and upon prior written notice given to such Cytec Party within such
60-day period, to take possession of all or any portion of such Excluded
Records.
(b) Purchaser agrees that, at its own expense, it (i) shall preserve
and keep the Business Records delivered to it at the Closing by the Cytec
Parties (A) in the case of tax returns, schedules, work papers and other
supporting documentation, for a period of seven years from the Closing Date, or
for any longer periods as may be required by any Governmental Entity or as may
be prudent in connection with ongoing litigation or Administrative Proceedings,
and (B) in the case of all other Business Records, for a period of four years,
and (ii) shall make the foregoing available to Parent after the Closing during
normal business hours as may be reasonably requested. In the event Purchaser
wishes to destroy such Business Records after the time specified above, it shall
first give 60 days' prior written notice to Parent, whereupon Parent shall have
the right, at its option and
53
expense, and upon prior written notice given to Purchaser within such 60-day
period, to take possession of all or any portion of such Business Records.
(c) All information received or retained by the Cytec Parties or any
representative of either of them pursuant to paragraph (a) or (b) of this
Section 5.03 shall be treated as confidential by each of them and such
representatives and, except to the extent such information is or becomes
generally available, the Cytec Parties and their respective representatives
shall use all reasonable efforts to maintain the confidentiality of such
information, all upon and subject to the terms and conditions set forth in the
Confidentiality Agreement. If any of the Cytec Parties or any of their
respective representatives is required to disclose any such information by or to
any Governmental Entity, Parent shall, to the extent feasible, prior to such
disclosure, notify the Sterling Parties of such requirement. The Sterling
Parties shall have the right, at its own expense, to seek confidential treatment
of any information to be so disclosed.
(d) After the Closing, upon reasonable written notice, the Sterling
Parties shall furnish to the Cytec Parties and their accountants, counsel and
other representatives access, during normal business hours, to such information
(including records pertinent to the Business and the Acquired Assets) as is
reasonably necessary (i) for financial reporting and accounting matters or the
preparation and filing of any returns, reports or forms, (ii) for the defense of
any Tax claim or assessment, (iii) to comply with applicable Governmental Rules
or (iv) for other legitimate purposes.
(e) After the Closing, upon reasonable written notice, each of the
Cytec Parties shall furnish to the Sterling Parties and their accountants,
counsel and other representatives access, during normal business hours, to such
information (including records pertinent to the Business and the Acquired
Assets) and assistance relating to the Business and the Acquired Assets as is
reasonably necessary (i) for financial reporting and accounting matters or the
preparation and filing of any returns, reports or forms, (ii) for the defense of
any Tax claim or assessment, (iii) to comply with applicable Governmental Rules
or (iv) for other legitimate purposes.
(f) After the Closing, upon any of the Sterling Parties' reasonable
request, each of the Cytec Parties shall furnish or cause to be furnished to the
Sterling Parties and their counsel copies of such Attorney Work Product and
Excluded Records as is reasonable or necessary for any of the
54
Sterling Parties' defense of any claim or threatened claim by any third party
(other than any Cytec Party or any Affiliate thereof) or prosecution of any
patent application or trademark registration in connection with the Business. In
the event that copies of any Attorney Work Product and Excluded Records are
transferred to the Sterling Parties, such copies shall only be accepted by the
Sterling Parties on the understanding that such copies are merely supplied as an
aid to the Sterling Parties' understanding the background and nature of various
issues, and that such files do not and shall not be deemed to be representations
or legal opinions on which the Sterling Parties or any other person is entitled
to rely.
SECTION 5.04. Conditions to Closing. (a) Each Sterling Party and
each Cytec Party shall take all reasonable actions necessary to cause each of
the conditions specified with respect to such party in Article VI to be met as
promptly as practicable and to comply promptly with all legal require ments
which may be imposed on it with respect to the Closing (including (i) the prompt
filing of the premerger notification report under the HSR Act and the furnishing
of all information required under the HSR Act and (ii) the prompt filing of all
preclosing notices or applications required under Environmental Laws), and shall
cooperate with and furnish information to each other and to other parties in
connection with any such legal requirements.
(b) Each party shall use commercially reasonable efforts to take all
actions necessary to obtain (and will cooperate with the other parties in
obtaining), any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other third party necessary to consummate the
Closing as contemplated by this Agreement.
SECTION 5.05. Employee Matters. (a) Offer of Employment. Prior to
the Closing Date and at a time chosen in consultation with the Cytec Parties,
Purchaser shall offer employment, effective on the Closing Date, in a comparable
position, at the same location and at no less favorable base salary and annual
bonus arrangements (other than gain- sharing), to each Business Employee,
including each such Business Employee receiving disability benefits or otherwise
on leave from active employment; excluding, however, (i) any Business Employee
receiving long-term disability benefits, (ii) any Business Employee on temporary
disability leave from active employment who has been on such leave for six
months or more as of the Closing Date and (iii) any Business Employee on
temporary disability leave from active employment as of the Closing Date who
does not actually return to work within six months after the date such temporary
disability leave commenced. All Business Employees who accept Purchaser's
55
offer of employment within one day after the Closing Date or, in the case of a
Business Employee who returns to work within six months from taking temporary
disability leave, within one day after the date of return from temporary
disability, shall become employees of Purchaser effective as of the later of
such acceptance and the Closing Date, and shall be referred to herein as
"Acquired Employees". It is specifically understood and agreed that (A) any
offer of employment by Purchaser to a Business Employee on temporary disability
leave from active employment as of the Closing Date shall be contingent upon the
return of such Business Employee to full time employment within six months after
the date such temporary disability leave commenced (or if required by law, any
such later date) and (B) any such Business Employee's employment by Purchaser
shall be deemed to commence on the date such Business Employee actually returns
to full time employment with Purchaser. The Sterling Parties hereby agree to
reimburse the Cytec Parties for the actual wages or salary of each person who
becomes an Acquired Employee and who was on temporary disability leave as of the
Closing Date for the period commencing on the Closing Date through the return
date of such person.
(b) Maintenance of Benefits. Purchaser shall main tain (or cause its
Affiliates to maintain) for a period of one year after the Closing Date, without
interruption, benefit plans and arrangements that will provide benefits to
Acquired Employees that are, in the aggregate, substantially equivalent in value
to those provided pursuant to the Benefit Plans as of the date hereof, excluding
any such Benefit Plans in respect of incentive compensation, gain-sharing and
equity-based compensation such as stock options, restricted stock grants, stock
appreciation rights and stock bonuses. For purposes of calculating value, the
Benefit Plans referred to in clauses (c), (d), (e), (f) and (g) below shall be
included.
(c) Severance Payments. (i) The Cytec Parties shall indemnify and
hold harmless the Sterling Parties for (A) any severance payments due to any
Business Employees who do not accept Purchaser's offer of employment made in
accordance with Section 5.05(a) and (B) any bonuses or other compensation due to
any Acquired Employee pursuant to any agreement required to be listed in
Schedule 4.01(y).
(ii) The Sterling Parties hereby agree that prior to the first
anniversary of the Closing Date, they will not, and will not permit their
subsidiaries to, hire as an employee or consultant any Business Employee who
does not accept Purchaser's offer of employment pursuant to Section 5.05(a)
unless prior to such hiring, the Sterling Parties have paid the Cytec Parties an
amount equal to the amount of any severance payments referred to in clause
(i)(A) of the
56
immediately preceding paragraph in respect of such Business Employee plus an
amount equal to the amount of any pension payment paid by any of the Cytec
Parties to such Business Employee under the Cytec Defined Benefit Plan during
the period commencing on the Closing Date and ending on the date that any of the
Sterling Parties or their subsidiaries hire such employee.
(iii) Purchaser shall indemnify and hold harmless the Cytec Parties
for any severance payments due to any Acquired Employee as a result of the
Transactions. Notwithstanding anything herein to the contrary, for a period of
one year following the Closing Date, Purchaser shall provide (or cause its
Affiliates to provide) to each Acquired Employee severance benefits and
severance pay that are no less favorable than those provided under the Benefit
Plans in effect on the date of this Agreement.
(iv) Parent shall indemnify and hold harmless the Sterling Parties
for any severance payments due to any Business Employees to whom Purchaser has
offered employment in a comparable position at no less favorable base salary and
bonus levels who does not accept Purchaser's offer of employment and become an
Acquired Employee.
(d) Participation in Benefit Plans. Acquired Employees shall be
given credit by Purchaser for all service with the Cytec Parties (or service
credited by the Cytec Parties, including service with Cyanamid and its
Affiliates) under all employee benefit plans and arrangements of Purchaser or
any of its subsidiaries in which such Acquired Employees become participants for
purposes of eligibility and vesting (but not for purposes of benefit
calculations, except with respect to the roll-up feature of the Cytec Defined
Benefit Plan as provided in Section 5.05(e)), to the same extent as if such
service were rendered to Purchaser. Purchaser shall cause to be waived any
pre-existing condition limitation under its welfare plans that might otherwise
apply to an Acquired Employee. Purchaser agrees to recognize (or cause to be
recognized) the dollar amount of all expenses incurred by Acquired Employees
during the calendar year in which the Closing occurs for purposes of satisfying
the calendar year deductibles and co-payments limitations for such year under
the relevant benefit plans of Purchaser.
(e) Pension Benefits. Notwithstanding Section 5.05(b), for a period
of one year after the Closing Date, Purchaser shall provide (or cause its
Affiliates to provide) pension benefits to each Acquired Employee pursuant to
(i) one of the Holdings Pension Plans or (ii) a defined benefit plan that is
identical in all material respects
57
(including with respect to the roll-up feature) to, or more advantageous to such
Acquired Employee than, the Cytec Defined Benefit Plan as in effect on the
Closing Date; provided, however, that Purchaser shall not be required to give
past service credit for service with or credited by any of the Cytec Parties for
purposes of benefit calculations, except, in the case of clause (ii), with
respect to the roll-up feature of the Cytec Defined Benefit Plan.
(f) Post-retirement Benefits. Notwithstanding any thing to the
contrary contained herein, with respect to any Acquired Employee who, as of the
Closing Date, (i) was at least 55 years old and had completed at least 10 years
of service with any of the Cytec Parties (including, prior to January 1, 1994,
Cyanamid) or any of their respective Affiliates, (ii) at July 31, 1990, had
combined age plus years of service with Cyanamid equal to at least 65, or (iii)
is identified on Schedule 5.05(f) and who remains employed by Purchaser until
the later of such Acquired Employee's 55th birthday or the time such Acquired
Employee has at least 10 years of service with the Cytec Parties (including,
prior to January 1, 1994, Cyanamid), Purchaser or any of their respective
Affiliates, Purchaser shall continue to provide postretirement medical and life
insurance benefits for such Acquired Employee that are no less favorable to such
Acquired Employee than those benefits provided by Parent or Seller under the
plans set forth on Schedule 4.01(s) as in effect on the date hereof, and
Purchaser shall not reduce the level of such benefits without the prior written
consent of Parent; provided, that such consent shall not be withheld to the
extent that any of the Cytec Parties or Cyanamid has similarly reduced the level
of such benefits. For purposes of this Agreement, an increase in premiums
required to be paid for postretirement benefits shall be considered a reduction
in such benefits. Parent shall notify Purchaser in writing to the extent that
Parent becomes aware of a reduction in postretirement medical and life insurance
benefits under the plans set forth on Schedule 4.01(s).
(g) Medical Benefits. Notwithstanding Section 5.05(b), Purchaser
shall provide (or cause its Affiliates to provide) to each Acquired Employee for
as long as such Acquired Employee remains employed by Purchaser or any of its
Affiliates or employed in connection with the Business (i) for a period of 18
months following the Closing Date, medical benefits that are no less favorable
to such Acquired Employee than those medical benefits provided to such Acquired
Employee by Parent or Seller on the date hereof, including benefits under the
agreements with Principal Health HMO and Health Options (Blue Cross/Blue Shield)
HMO, which agreements (the "Transferred Benefit Plans") will be assigned to and
58
assumed by Purchaser as of the Closing Date, and (ii) after 18 months following
the Closing Date, medical benefits with an annual benefit level of at least $100
per Acquired Employee.
(h) Vacation and Other Pay. Purchaser shall assume the obligations
of the Cytec Parties with respect to accrued but untaken vacation and sick and
holiday pay earned by Acquired Employees as of the Closing Date to the extent
such obligations are reflected in the calculation of Closing Date Net Working
Capital or such obligations relate to 1997 vacation pay that is not reflected in
the calculation of Closing Date Net Working Capital in accordance with the Cytec
Parties' historical practices.
(i) WARN Act. Purchaser agrees to provide any required notice under
the Worker Adjustment and Retraining Notification Act, as amended (the "WARN
Act"), and any similar statute, and to otherwise comply with any such statute
with respect to any "plant closing" or "mass layoff" (as defined in the WARN
Act) or similar event affecting Acquired Employees and occurring on or after the
Closing Date. Purchaser shall indemnify and hold harmless Parent and its
Affiliates with respect to any liability under the WARN Act or similar statute
arising from the actions of Purchaser or its Affiliates on or after the Closing
Date. Parent shall indemnify Purchaser for any WARN Act liability arising prior
to the Closing Date from the actions of the Cytec Parties taken prior to the
Closing Date.
(j) Workers Compensation. Parent shall be responsible for workers'
compensation liabilities with respect to any claim (or relevant portion thereof)
of any Acquired Employee that is filed within one year after the Closing Date to
the extent the incident or alleged incident giving rise to such claim occurred
prior to the Closing Date. The foregoing shall not apply to any Sterling
Specified Exposure Liability.
(k) Vesting. Parent shall cause each Acquired Employee to be fully
vested in his or her account balance, if any, as of the Closing Date under the
Cytec Savings Plan. Parent shall also cause each Acquired Employee to be fully
vested in his or her accrued benefit, if any, under the Cytec Defined Benefit
Plan or shall continue to provide service credit, for vesting purposes only,
under the Cytec Defined Benefit Plan for the term of such Acquired Employee's
employment with Purchaser and its Affiliates. Purchaser hereby agrees to deliver
written notification to Parent of the date of termination of employment by
Purchaser and its Affiliates of each Acquired Employee and any change in marital
status of any Acquired Employee addressed to Director,
59
Employee Benefits, Cytec Industries Inc., Five ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(l) Savings Plans. The parties hereto agree that Parent shall
transfer the account balances of each Acquired Employee under the Cytec Savings
Plan to a trust under a savings plan maintained by a Sterling Party (the
"Purchaser Savings Plan") as soon as practicable after the date of such Acquired
Employee's employment by Purchaser. The account balances of the Acquired
Employees shall be determined as of the transfer date. The transfer of the
account balances shall be made in cash or marketable assets, as agreed by the
parties, and, to the extent applicable, participant promissory notes. In
consideration of such transfer, the applicable Sterling Party shall assume all
obligations in respect of such transferred account balances to the Acquired
Employees under the Cytec Savings Plan and shall indemnify and hold harmless the
Cytec Parties in respect of such obligations. Such transfer shall be made in
accordance with all applicable laws and the regulations thereunder, and the
parties hereby agree to make all filings required under applicable law in
connection therewith. Prior to the Closing Date, the Sterling Parties shall
deliver to Parent a copy of the determination letter from the Internal Revenue
Service with respect to the Purchaser Savings Plan, which letter shall indicate
that the Purchaser Savings Plan is qualified under Section 401(a) of the Code
and the trust thereunder is exempt from tax under Section 501(a) of the Code.
SECTION 5.06. Expenses. Whether or not the Closing takes place,
except as otherwise provided in this Agreement, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses.
SECTION 5.07. Transfer Taxes. Parent shall pay or cause to be paid
all sales, use, transfer, stamp or documentary Taxes applicable to the
conveyance, assignment and transfer from any Cytec Party to Purchaser of the
Acquired Assets and any other transfer or documentary Taxes or any filing or
recording fees and related expenses applicable to such conveyance, assignment
and transfer (including filing fees and recording fees with respect to the
transfer and recording of the Business Intellectual Property but excluding such
intangible or documentary taxes incurred solely in connection with the
Financing); provided, however, that Purchaser shall be responsible for the costs
of preparing any forms to be filed. Each Cytec Party shall prepare and file in a
timely manner all returns and other documents required in connection with the
foregoing Taxes and shall provide Purchaser with evidence of filing of such
returns and
60
documents and payment of such Taxes promptly thereafter. Purchaser shall prepare
and make all filings and recordings in respect of the transfer of Business
Intellectual Property; provided, however, that to the extent Purchaser has
chosen not to make any filing or recording, Parent shall pay to Purchaser 50% of
the filing or recording fees which would otherwise have been payable therefor.
SECTION 5.08. Brokers or Finders. Each of the Sterling Parties and
the Cytec Parties represents, as to itself and its Affiliates, that no agent,
broker, investment banker or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement based in any way on
any agreement, understanding or arrangement with such party, except, as to
Parent and its Affiliates, ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. whose fees and expenses will be
paid by Parent and, as to Purchaser and its Affiliates, The Sterling Group,
Inc., whose fees and expenses will be paid by Purchaser. Each of Purchaser and
Parent respectively agrees to indemnify and hold the other harmless from and
against any and all claims, liabilities or obligations with respect to any other
fees, commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or its Affiliates.
SECTION 5.09. Bulk Transfer Laws. Purchaser hereby waives compliance
by the Cytec Parties with the provisions of any so-called "bulk transfer law" of
any jurisdiction in connection with the sale of the Acquired Assets to
Purchaser. The Cytec Parties shall indemnify and hold harmless Purchaser against
any and all liabilities that may be asserted by third parties against Purchaser
as a result of noncompliance with any such bulk transfer law.
SECTION 5.10. Purchase Price Allocation. Parent and STX shall
cooperate in determining an allocation of the consideration to be paid by
Purchaser among the Acquired Assets consistent with Section 1060 of the Code and
the regulations thereunder that is mutually acceptable. None of the Cytec
Parties nor the Sterling Parties (nor any of their respective Affiliates or
representatives) shall take any position on any Tax return, including Form 8594,
or with any taxing authority or in any judicial proceeding that is inconsistent
with the allocation of the Purchase Price as finally determined pursuant to this
Section 5.10. Parent shall deliver to STX, and STX shall deliver to Parent, a
copy of such Form 8594 of such party at least 10 days prior to the filing
thereof.
61
SECTION 5.11. No Additional Representations. (a) Each Sterling Party
acknowledges that, to its knowledge, it and its representatives have been
permitted full and complete access to the Acquired Assets that it and its
representatives have desired or requested to see or review, and that, to its
knowledge, its representatives have had an opportunity to meet with the officers
and employees of Parent and Seller to discuss the Business. Each Sterling Party
acknowledges that none of the Cytec Parties or any other person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding the Business or the Acquired Assets
except as expressly set forth in this Agreement and the Disclosure Schedules.
Each Sterling Party further acknowledges that none of the Cytec Parties nor any
other person will be subject to any liability to any of the Sterling Parties or
any other person resulting from (i) the distribution to Purchaser, or
Purchaser's use of, the Confidentiality Memorandum prepared by ▇▇▇▇▇▇▇, Sachs &
Co. dated May, 1996 or any of the documents or materials examined by Purchaser
in the "data room" organized by Parent in connection with the Transactions or
(ii) the management presentation heretofore made by Parent and Seller to STX
Chemicals and STX in connection with the Transactions; provided, however, that
nothing in this sentence is intended to or shall in any manner (A) affect any
representation, warranty, covenant or indemnity of the Cytec Parties (or any of
them) contained in the Operative Documents (or any of them) or (B) relieve,
release or discharge any of the Cytec Parties or any other person from liability
resulting from or attributable to its fraud, bad faith or wilful misconduct;
and, provided further, that none of the Sterling Parties or the Specified
Sterling Representatives shall be deemed for any purpose to have knowledge of
any information contained in the documents or materials referred to in clause
(i) above solely as a result of such information's inclusion in the data room.
Purchaser acknowledges that, should the Closing occur, Purchaser will acquire
the Acquired Assets without any representation or warranty as to merchantability
or fitness for any particular purpose, in an "as is" condition and on a "where
is" basis, except as other wise expressly represented or warranted in this
Agreement or the Conveyance Documents.
(b) Each Cytec Party acknowledges that (i) it and its
representatives have been permitted full and complete access to the business,
properties and records of the Sterling Parties that it and its representatives
have desired or requested to see or review, (ii) its representatives have had an
opportunity to meet with the officers and employees of the Sterling Parties to
discuss the business, properties, affairs and financial condition of the
Sterling Parties and (iii) none
62
of the Sterling Parties has made any representation or warranty (express or
implied) to the Cytec Parties except as set forth in this Agreement.
SECTION 5.12. Post-Closing Exposure to Acrylonitrile and Asbestos.
The Sterling Parties hereby agree that they will not, and will not permit any of
their Affiliates to, cause or permit any of the persons listed in Appendix C to
be exposed to acrylonitrile or asbestos at the Santa ▇▇▇▇ Facility at levels
above those permitted by OSHA (it being understood that the sole liability of
the Sterling Parties for breach of this Section 5.12 shall be for the
incremental Losses from such exposure of such persons).
SECTION 5.13. Amendment of Intercompany Licenses. Prior to the
Closing, the Cytec Parties shall amend or cause to be amended each agreement or
other arrangement pursuant to which any Cytec Party has granted licenses or
other rights to any of the Business Intellectual Property to any subsidiary of
Parent in order to delete or remove the Business Intellectual Property from each
such agreement or arrangement.
SECTION 5.14. Real Property Easement; Santa ▇▇▇▇ First Refusal and
Lease Agreement. At the Closing, Purchaser and Seller shall (i) execute and
deliver the Easement Agreement, the Santa ▇▇▇▇ First Refusal and Lease Agreement
and (ii) cause to be recorded such agreements or, in each case, a memorandum
thereof.
SECTION 5.15. Actions of Purchaser. (a) General. Purchaser shall not
take any action that would reasonably be expected to (i) result in any of the
representations or warranties of any Sterling Party set forth in this Agreement
becoming untrue in any material respect, (ii) result in any of the conditions of
the Closing set forth in Article VI not being satisfied in a timely manner or
(iii) result in any of the conditions to the Financing not being satisfied.
(b) Advise of Changes. Purchaser shall advise Parent in writing
within a reasonable time thereafter of the occurrence after the date hereof and
on or prior to the Closing Date of any matter or event that would be reasonably
expected to cause any of its representations and warranties in this Agreement to
be untrue or incorrect from the date hereof to the Closing Date, to cause any of
the conditions set forth in Article VI to not be satisfied in timely manner or
to cause any of the conditions to the Financing to not be satisfied.
SECTION 5.16. Signs; Use of "Cytec" or "Cyanamid"
Name. As soon as practicable, and in any event within 60 days
after the Closing Date, Purchaser, at its own expense, shall
63
remove (or, if necessary, on an interim basis cover up) any and all exterior and
interior signs and identifiers which refer or pertain to Parent or any of its
subsidiaries at the Santa ▇▇▇▇ Facility. After such period, subject to Section
5.17, Purchaser shall not use or display the name "Cytec" or "Cyanamid" or
variations thereof, or other trade marks, trade names, logos or identifiers
using such name or otherwise owned by or licensed to any Cytec Party which have
not been assigned or licensed to Purchaser (collectively, "Non-Permitted
Names"), without the prior written consent of Parent.
SECTION 5.17. Products, Supplies and Documents. Purchaser shall have
the right to use existing products, supplies and documents (including purchase
orders, forms, labels, shipping materials, catalogues, sales brochures,
operating manuals, instructional documents and similar mate rials, and
advertising material) being transferred to it pursuant hereto which have
imprinted thereon or otherwise use a Non-Permitted Name for a period not to
exceed 180 days following the Closing Date; provided, however, that Purchaser
agrees (i) to use only those such supplies and documents existing in inventory
as of the Closing Date and (ii) not to order or utilize in any manner any
additional supplies and documents which have imprinted thereon or otherwise use
a trademark or trade name of Parent or any of its subsidiaries, except as
expressly permitted by the Trademark License Agreement.
SECTION 5.18. Delivery of Assets. The Cytec Parties shall make the
Acquired Assets available to Purchaser (a) at the locations where the Acquired
Assets are currently located if such premises are part of the Acquired Assets or
the Leased Real Property and (b) at any location under clause (a) if the
Acquired Assets (other than Business Inventory in transit or on consignment at
customers' premises) are currently located at premises which are not part of the
Acquired Assets; provided, however, that the Business Equipment and other
tangible items of Acquired Assets associated with any Business Employee (or
replacement therefor) who becomes an Acquired Employee and who is transferred
prior to the Closing Date to another location of the Business may be transferred
to such other location. The Cytec Parties shall be solely responsible for any
and all costs, fees, charges and expenses incurred in connection with the
movement of any of the Acquired Assets referred to in clause (b) of the
immediately preceding sentence to a location referred to in clause (a) of the
immediately preceding sentence. If, at any time after the Closing Date, any of
the Cytec Parties discovers in its possession or under its control any other
Acquired Assets, such Cytec Party shall forthwith
64
deliver such Acquired Assets to Purchaser at the sole cost and expense of such
Cytec Party.
SECTION 5.19. No Solicitation. Each of the Cytec Parties shall
immediately cease any discussions or negotiations with any parties (other than
Purchaser and its Affiliates) that may be ongoing with respect to the direct or
indirect acq uisition or purchase of all or any substantial amount of the
Business or the Acquired Assets or any capital stock or other equity interests
of Seller, whether by merger, consolidation, business combination, sale of
assets, sale of securities, recapitalization, liquidation, dissolution or
otherwise, and whether for cash, securities or any other consideration or
combination thereof (other than, in any case, in connection with an acquisition
or purchase of other assets of Parent, in which case such acquisition or
purchase to the extent applicable to the Business shall be subject to this
Agreement) (each such transaction, an "Acquisition Transaction"). After the date
hereof and prior to the Closing or earlier termination of this Agreement:
(i) none of the Cytec Parties shall, and each of the
Cytec Parties shall not permit any of its Affiliates to, (A)
solicit, initiate, encourage (including by way of furnishing
information) or take any other action to facilitate any Acquisition
Transaction or (B) participate in any discussions or negotiations
regarding any Acquisition Transaction, and
(ii) each of the Cytec Parties shall, and shall cause
each of its Affiliates to, use its reasonable best efforts to cause
its officers, directors and employees and any investment banker,
financial advisor, attorney, accountant or other agent or
representative retained by it to not, (A) solicit, initiate,
encourage (including by way of furnishing information) or take any
other action to facilitate any Acquisition Transaction or (B)
participate in any discussions or negotiations regarding any
Acquisition Transaction.
SECTION 5.20. Audited Financial Statements. Within 45 days after
the Closing Date, Parent shall cause its auditors to provide to Purchaser, at
Parent's expense, audited financial statements for calendar year 1996 addressed
to STX and relating to the Business (the "Audited Financial Statements"), and
Parent shall provide to Purchaser unaudited financial statements, relating to
the Business, but in each case only to the extent required to be filed or that
Purchaser needs to complete information that is required to be filed under the
Securities Act or the Exchange Act in connection with any filings with the SEC.
The Audited Financial
65
Statements shall be accompanied by a consent, executed by the auditors
performing the audit, permitting the Sterling Parties to file the Audited
Financial Statements and such auditor's report with the SEC. Such Audited
Financial Statements and unaudited financial statements shall comply as to form
with the published rules and regulations of the SEC. Parent will provide
reasonable assistance to Purchaser in obtaining any opinions, certificates,
consents, letters or schedules relating to the Audited Financial Statements, as
may be required under the Securities Act or Exchange Act in connection with any
filings of the Audited Financial Statements with the SEC.
SECTION 5.21. Pilko Assessment. (a) Initial Determination. Seller
shall promptly engage Pilko & Associates, Inc. ("Pilko") to undertake a Phase II
environmental assessment of the Acquired Assets, for which the scope of work
shall be set forth in Appendix O (the "Pilko Assessment"). The terms of Pilko's
engagement (i) shall provide for expedited laboratory testing for testing
required in connection with the Pilko Assessment, where necessary, (ii) shall
require Pilko to make the determination described in Section 5.21(b) below, as
necessary, and to otherwise comply with such Section and (iii) shall provide
that each of Purchaser and Seller shall be responsible (severally and not
jointly) for 50% of the costs and expenses in respect of the Pilko Assessment.
On or prior to January 8, 1997, Pilko shall produce a final written report,
addressed to the Cytec Parties, setting forth the results of the Pilko
Assessment. Within the five business day period after delivery of the Pilko
Assessment (the "Cytec Evaluation Period"), Seller shall make a good faith
determination, based on the results of the Pilko Assessment, of the actual
out-of-pocket costs and expenses to the Cytec Parties of the Remedial Actions
required in order to bring the Facility Conditions into compliance with Current
Environmental Laws (such determination being referred to as the "Cost of
Remediation"); provided, however, that the Cytec Parties shall not consider in
its determination any Remedial Actions to address or correct Immaterial
Environmental Breaches. In determining the Cost of Remediation, Seller shall
consider the Remedial Actions that the Cytec Parties would undertake in
accordance with the Cytec Parties' historical practice at the Santa ▇▇▇▇
Facility (such Remedial Actions being referred to as the "Cytec Determined
Actions"). Seller shall notify Purchaser of Seller's Cost of Remediation of the
Cytec Determined Actions not later than the last day of the Cytec Determination
Period.
(b) Termination Right of Seller. If Seller's good faith
determination of the Cost of Remediation of the Cytec Determined Actions exceeds
$10,000,000 and Seller desires to
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terminate this Agreement, then on or prior to the last day of the Cytec
Evaluation Period, Parent shall notify Purchaser and Pilko of such
determination. Within the five business day period following any such
notification, Pilko shall make a determination of the Cost of Remediation of the
Cytec Determined Actions, and deliver a letter to each of Purchaser and Seller
setting forth such determination. If Pilko's determination of the Cost of
Remediation of the Cytec Determined Actions exceeds $10,000,000, Seller, at
Seller's sole option, may terminate this Agreement and in such case the Cytec
Parties shall not have any obligation to deliver the Pilko Assessment to any
Sterling Party.
(c) Termination Rights of Purchaser and Seller. In the event that
Seller chooses not to terminate this Agreement notwithstanding its right to do
so pursuant to Section 5.21(b), or Seller does not have the right to terminate
this Agreement pursuant to Section 5.21(b), on the last day of the Cytec
Evaluation Period, Seller shall deliver the Pilko Assessment and a description
of the Cytec Determined Actions to Purchaser. Upon its receipt of such delivery,
Purchaser shall immediately engage Pilko to undertake a Phase II environmental
assessment of the Acquired Assets, which shall be addressed to Purchaser and the
banks participating in the Financing or their agent (such assessment being
referred to as "Purchaser's Phase II"). The scope of work for Purchaser's Phase
II shall be the same scope of work as that of the Pilko Assessment. As of and
after Purchaser's engagement of Pilko as contemplated above, Purchaser shall
have the unconditional right to independently consult with Pilko personnel,
review all materials in any way relating to the Pilko Assessment or performance
thereof, including all technical materials and reports, and Pilko is hereby
unconditionally authorized to independently consult with Purchaser and its
counsel, and to disclose all such materials. Purchaser's Phase II shall be
completed and delivered to Purchaser within the two business day period
following Seller's delivery of the Pilko Assessment to Purchaser. The Sterling
Parties shall be responsible for all costs and expenses in respect of
Purchaser's Phase II. Within the five business day period following delivery of
Purchaser's Phase II to Purchaser (the "Sterling Determination Period"),
Purchaser shall make a good-faith determination of the Cost of Remediation of
the specific Remedial Actions required to bring the Facility Conditions into
compliance with Current Environmental Laws, based on remediation standards
deemed appropriate by the Sterling Parties; provided, however, that Purchaser
shall not consider in its determination any Remedial Actions to address or
correct Immaterial Environmental Breaches ("Sterling's Initial Determination").
If Sterling's Initial Determination exceeds $10,000,000, Purchaser, at its
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sole option, may terminate this Agreement. In the event that Purchaser chooses
not to terminate this Agreement notwithstanding its right to do so pursuant to
this Section 5.21(c), on the last day of the Sterling Determination Period,
Purchaser shall deliver to the Cytec Parties its good-faith determination of the
Cost of Remediation of the specific Remedial Actions required to bring the
Facility Conditions into compliance with Current Environmental Laws, based on
Purchaser's good faith belief of the alternative risk-based remediation
standards for industrial properties historically applied by the Sterling Parties
(such Remedial Actions being referred to as the "Sterling Determined Actions");
provided, however, that the Sterling Determined Actions shall not include any
Remedial Actions to address or correct Immaterial Environmental Breaches. Within
three business days after the end of the Sterling Determination Period (the
"Cytec Reevaluation Period"), Seller, at its sole option, may terminate this
Agreement, unless the Sterling Parties unconditionally agree to pay all Costs of
Remediation of Post-Closing Actions in excess of $10,000,000, in which event
Seller shall not have the right to terminate this Agreement.
(d) Mutual Determination. (i) In the event that neither Purchaser
nor Seller chooses to terminate this Agreement notwithstanding its right to do
so pursuant to Section 5.21(c), or neither Purchaser nor Seller has the right to
terminate this Agreement pursuant to Section 5.21(c), then during the three
business day period following the last day of the Sterling Determination Period
or the Cytec Reevaluation Period, as applicable (the "Mutual Determination
Period"), Seller and Purchaser shall use their reasonable best efforts to agree
upon a list of actions, taken from the Cytec Determined Actions and the Sterling
Determined Actions, that the Cytec Parties will be required to undertake after
the Closing Date (the "Post-Closing Actions"), it being understood that the
Post-Closing Actions shall not include Remedial Actions to address or correct
Immaterial Environmental Breaches. If Seller and Purchaser cannot agree upon the
Post- Closing Actions, then the Post-Closing Actions, to the extent required,
shall be determined by binding arbitration conducted in accordance with the
provisions hereof and the rules of the American Arbitration Association. Such
arbitration shall be conducted in the State of Florida or such other place as
Seller and Purchaser shall mutually agree by Law Engineering, Inc. (Florida
office) or, if it is not available or unwilling to act as arbitrator, then
Seller and Purchaser together shall select one consultant from a list of three
other nationally recognized environmental consulting firms provided by Law
Engineering, Inc. (other than Pilko or any of its Affiliates) generally
recognized as having current competence with respect
68
to the environmental laws of the State of Florida and the United States, or if
the parties fail to agree within five business days such firm as selected by the
American Arbitration Association (such firm being referred to as the
"Environmental Arbitrator"). The fees and expenses of the Environmental
Arbitrator shall be borne equally by Seller and Purchaser.
(ii) If Purchaser's determination of the Cost of Remediation of the
Sterling Determined Actions is less than $10,000,000 and Seller believes in good
faith that the Cost of Remediation of the Sterling Determined Actions is greater
than $10,000,000, the Environmental Arbitrator shall first consider whether or
not the Cost of Remediation of the Sterling Determined Actions is reasonably
likely to exceed $10,000,000 (the "Threshold Issue"). If the Environmental
Arbitrator decides that such Cost of Remediation is reasonably likely to exceed
$10,000,000, Seller may terminate this Agreement, unless the Sterling Parties
unconditionally agree to pay all Costs of Remediation of Post-Closing Actions in
excess of $10,000,000. Unless this Agreement has been terminated, the
Environmental Arbitrator shall then determine the Post-Closing Actions by
choosing the Cytec Determined Actions, except to the extent that (A) a Cytec
Determined Action conflicts with a Sterling Determined Action and (B) the
Environmental Arbitrator determines that a conflicting Sterling Determined
Action is (I) a Remedial Action that is consistent with the historical practices
of the Sterling Parties (in accordance with alternative risk-based remediation
standards for industrial properties historically applied by the Sterling
Parties) at the Texas City Facility, if applicable, (II) a Remedial Action
mandated by a Governmental Entity, if the applicable Facility Condition would
not arise at the Texas City Facility because of differences in the operations at
the Texas City Facility and the Santa ▇▇▇▇ Facility (other than in respect of
landfills or spray irrigation), or (III) a Remedial Action that is in accordance
with standard chemical industry practices (in accordance with alternative
risk-based remediation standards for industrial properties), if the applicable
Facility Condition is in respect of a landfill or spray irrigation, in which
case the Environmental Arbitrator shall choose the Sterling Determined Actions.
The Environmental Arbitrator shall determine the Post-Closing Actions within 15
business days of its appointment. The Environmental Arbitrator shall furnish
Seller and Purchaser with a written report of its determination within the
15-business day period referred to above, which report shall (i) be signed by
the Environmental Arbitrator, and (ii) identify and describe the Post-Closing
Actions, to the extent required. The determination of the matters resolved by
the Environmental Arbitrator shall be final and binding on the
69
Cytec Parties and the Sterling Parties as an arbitral award. The Closing may
occur notwithstanding the commencement of an arbitration proceeding contemplated
hereby, unless the Environmental Arbitrator is to determine the Threshold Issue
and has not done so.
(e) Remediation; Responsibility for Costs Thereof. If the Closing
occurs, then Parent shall undertake to complete all Post-Closing Actions,
subject to the last sentence of this Section 5.21(e), and shall undertake such
Post-Closing Actions in a reasonably expeditious, cost-efficient manner. The
Cytec Parties shall be responsible for the Costs of Remediation in respect of
the Post-Closing Actions that are Cytec Determined Actions. Each of the Cytec
Parties, on the one hand, and the Sterling Parties, on the other hand, shall be
responsible for, and the Sterling Parties shall reimburse the Cytec Parties on a
monthly basis for, 50% of the excess out-of-pocket costs and expenses of the
Cytec Parties for completing any Post-Closing Actions that are not Cytec
Determined Actions over the out-of-pocket costs and expenses of completing the
comparable Cytec Determined Actions; provided, however, that the Cytec Parties
shall not be responsible for Costs of Remediation in respect of any Post-Closing
Actions in excess of $10,000,000, or for undertaking any Remedial Actions after
such Costs of Remediation have exceeded $10,000,000, if the Sterling Parties
have unconditionally agreed in writing to pay all such Costs of Remediation in
excess of $10,000,000 pursuant to this Section 5.21. Subject to the following
sentence, in the event that any Governmental Entity involved in the approval or
oversight of the conduct or completion of the Post-Closing Actions requires that
any action not contemplated by the Post- Closing Actions be taken in order to
bring a Facility Condition into compliance with Environmental Laws, or that any
Remedial Action be taken through a different method or to a more stringent
extent, the Cytec Parties shall, at their sole cost and expense, complete any
such required action that is a Remedial Action required to bring the relevant
Facility Condition into compliance with Current Environmental Laws (other than
any Remedial Action to address or correct an Immaterial Environmental Breach),
and the Sterling Parties shall, at their sole cost and expense, complete all
other such actions. The Sterling Parties hereby agree that they will not, and
will not permit their Affiliates to, take any actions (other than actions
required by law) for the purpose of causing, or which could reasonably be
expected to cause, (a) any Governmental Entity which has any involvement,
jurisdiction or influence over the Post-Closing Actions, to modify, alter or
adjust such Post-Closing Actions, as determined in accordance with this
Agreement, in any manner which would be adverse to the Cytec Parties or (b) the
involvement of any Governmental Entity with the carrying out
70
of the Post-Closing Actions (or to the extent any Governmental Entity is
involved, to increase such involvement), provided, however, that nothing
contained in this sentence shall be deemed or construed to prohibit any of the
Sterling Parties from bringing any action before a court or tribunal of
competent jurisdiction for the purpose of enforcing the obligations of the Cytec
Parties to complete the Post-Closing Actions, as determined in accordance with
the terms of this Agreement. The Cytec Parties shall provide the Sterling
Parties with copies of all correspondence, reports, plans, laboratory data and
other papers filed with, sent to or received from any such Governmental Entity
which are related to the Post-Closing Actions as promptly as practicable under
the circumstances.
(f) Notwithstanding anything to the contrary contained herein, the
Sterling Parties shall not be obligated to indemnify any Seller Indemnified
Person (pursuant to Article VIII hereof or otherwise) for the costs and expenses
of the Post-Closing Actions that are the responsibility of the Cytec Parties
pursuant to this Section 5.21. Notwithstanding anything to the contrary
contained herein, the Cytec Parties shall not be obligated to indemnify any
Purchaser Indemnified Person (pursuant to Article VIII hereof or otherwise) for
the costs and expenses of the Post-Closing Actions that are the responsibility
of the Sterling Parties.
(g) Responsibility for Costs of Pilko Assessment. If the Closing
occurs, Purchaser shall, at the Closing, reimburse Seller for the 50% of the
costs and expenses in respect of the Pilko Assessment paid by Seller. If the
Closing does not occur, on the date of termination of this Agreement, Purchaser
shall reimburse Seller for the 50% of the costs and expenses in respect of
preparing the Pilko Assessment paid by Seller, unless (i) this Agreement is
terminated by Seller pursuant to Section 5.21(b), 5.21(c) or 5.21(d) or by
Purchaser pursuant to Section 5.21(c) or (ii) the conditions set forth in
Section 6.01(c) or Section 6.02 (other than Section 6.02(f)) shall not have been
satisfied. In the case of clause (i) or (ii) of the immediately preceding
sentence, Seller shall reimburse Purchaser for the 50% of the costs and expenses
in respect of the Pilko Assessment paid by Purchaser.
(h) Access; Cooperation. (i) The Sterling Parties hereby agree to
provide access to Parent after the Closing during normal business hours upon
reasonable prior notice from Parent to the extent necessary to enable Parent to
comply with Section 5.21(e) above. The Sterling Parties further agree to fully
cooperate with the Cytec Parties in order that the Cytec Parties may fulfill
their obligations under this Section 5.21,
71
including by causing the cooperation of the employees of the Sterling Parties,
and none of the Sterling Parties shall take any actions with respect to the
Santa ▇▇▇▇ Facility which would be reasonably expected to interfere, including
by increasing the costs associated therewith, with any Post- Closing Action. To
the extent that as a result of any Post- Closing Action, any discussions or
negotiations with any Governmental Entity shall be required, Parent shall be
entitled to direct such discussions and negotiations, including the negotiations
of any clean-up levels and remediation strategies, and Purchaser shall be
entitled to observe such discussions and negotiations. Parent shall consult with
the Sterling Parties during the course of any such discussion or negotiations.
(ii) In conducting the Post-Closing Actions, the Cytec Parties shall
use commercially reasonable efforts so as not to (A) interfere in any material
respect with the ability of Purchaser to perform its obligations (other than any
such obligations that are solely for the benefit of the Cytec Parties), or
exercise or enforce its rights, in either case under this Agreement, the
Acrylonitrile Supply Agreement, the Acrylonitrile Assignment and Assumption or
the Assumption Agreement, (B) interfere in any material respect with the ability
of Purchaser to perform its obligations under, or to comply with, any
Governmental Rule, Permit or Environmental Permit applicable to the Business or
the Acquired Assets, (C) interfere with the operation or maintenance of the
plant at the Santa ▇▇▇▇ Facility or the conduct of the Business in the ordinary
course as currently conducted if such interference would reasonably be expected
to have a material adverse effect on the financial condition of Purchaser or the
Business, (D) cause the revocation or termination of any Permit or Environmental
Permit necessary for the operation of the plant at the Santa ▇▇▇▇ Facility or
the conduct of the Business in the ordinary course of business substantially as
currently conducted or (E) require the shutdown of all or any significant part
of the plant at the Santa ▇▇▇▇ Facility, other than a shutdown which will
coincide with a scheduled shutdown of such plant substantially in accordance
with current practices.
SECTION 5.22. Title Policy. On or prior to the Closing Date, Seller,
at its sole cost and expense, shall cause to be issued to Purchaser an ALTA form
of Owner's Title Policy (the "Title Policy"), which shall insure in the amount
of the fair market value of the Santa ▇▇▇▇ Facility good and marketable fee
simple title in Purchaser to the Santa ▇▇▇▇ Facility (it being understood that
any insurance coverage in excess of $7,400,000 shall be at the cost and expense
of the Sterling Parties), including any appurtenant easement tracts,
72
and shall provide for extended coverage over the general exceptions for survey
matters normally contained therein and rights of parties in possession. The
Title Policy shall provide, by way of affirmative endorsements, (i) that the
Santa ▇▇▇▇ Facility parcels of land are contiguous and (ii) such other coverage
or endorsements as may reasonably be required by Purchaser or The Chase
Manhattan Bank, N.A., as lender to Purchaser, subject, in each case, only to (A)
Permitted Liens and (B) such additional standard printed exceptions (other than
general exceptions as are to be deleted or insured against as provided herein)
customarily contained in such form of owner's ALTA title insurance policy. The
Title Policy shall indicate (i) that the Santa ▇▇▇▇ Facility has an unencumbered
and unobstructed right of access to a public road and (ii) which Permitted Liens
pertain to which parcel or tract of land at the Santa ▇▇▇▇ Facility.
SECTION 5.23. Further Assurances. The Cytec Parties and the Sterling
Parties will use commercially reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary to carry out
all of their respective obligations under this Agreement and the Ancillary
Agreements and to consummate and make effective the Transactions.
SECTION 5.24. Reimbursement for Certain Excess Medical Claims and
Expenses. Parent hereby agrees to reimburse the Sterling Parties for claims for
reimbursement of medical expenses under the Transferred Benefit Plans incurred
prior to the Closing Date and other expenses in connection with Transferred
Benefit Plans incurred prior to the Closing Date, but only to the extent that
such costs and expenses which have not been previously paid by the Cytec Parties
exceeds $400,000.
SECTION 5.25. Services Agreement Issue. If, as of January 31, 1997,
or any date thereafter prior to February 14, 1997, a Services Agreement Issue
arises, the Cytec Parties and the Sterling Parties shall use commercially
reasonable efforts to identify alternative arrangements for the provision of the
applicable Service.
SECTION 5.26. Certain Matters Related to Cyanamid. (a) Each Sterling
Party hereby irrevocably and unconditionally agrees that it shall not, and shall
not permit any Purchaser Indemnified Person to, make any claims against, or seek
any indemnity from, Cyanamid or any of Cyanamid's successors in interest (other
than a Cytec Party, but excluding Cyanamid) in respect of any Loss relating to
the Business, the Acquired Assets or the Assumed Liabilities (i) for which the
Sterling Parties are obligated to indemnify any
73
of the Cytec Parties pursuant to this Agreement and (ii) for which any Cytec
Party is obligated to indemnify Cyanamid under the Transfer and Distribution
Agreement or the Environmental Matters Agreement, each dated December 17, 1993,
between Parent and Cyanamid including, in each case, any agreements listed as
exhibits to such documents.
(b) Each Sterling Party hereby agrees that prior to the sale by it
to any person (including any Affiliate of such Sterling Party) (any such person,
a "Transferee") of the Business or all or substantially all of the Acquired
Assets, or a substantial part of the Santa ▇▇▇▇ Facility and prior to the
assumption of all or a substantial part of the Assumed Liabilities by any
Transferee, such Sterling Party shall notify such Transferee of the terms of
this Section 5.26 and the provisions of this Agreement related hereto, and shall
cause such Transferee to execute an acknowledgment that such Transferee is bound
by the provisions of this Section 5.26 and such provisions, as a successor to
such Sterling Party.
(c) Purchaser hereby agrees to perform the obligations of Parent
pursuant to Section 5.1 of the Environmental Matters Agreement dated as of
December 17, 1993, between Cyanamid and Parent (the "Environmental Matters
Agreement") to the extent, but only to the extent, such obligations relate to
the Santa ▇▇▇▇ Facility, except that (i) Purchaser shall deliver any reports
required to be delivered under Section 5.1 of the Environmental Matters
Agreement to Parent, rather than the Environmental Oversight Committee (as
defined in the Environmental Matters Agreement) and (ii) each report required to
be submitted under such Section shall be submitted to Parent no later than
August 1 and February 1 of each year; provided, however, that Purchaser shall
not be required to perform any obligations pursuant to this Section 5.26(c) that
any Cytec Party is required to perform under Section 5.21.
(d) Purchaser hereby agrees to conduct any remediation, other than
remediation the Cytec Parties are required to complete under Section 5.21, in
accordance with Environmental Laws and with generally accepted industry
practices.
(e) Parent hereby agrees to seek the consent of Cyanamid to the
assignment of the Transfer Agreement (Project 7) dated December 17, 1993,
between Parent and Cyanamid within 30 days after the date of this Agreement, it
being understood
74
that Parent shall not have any obligation to negotiate the terms of such consent
with Cyanamid.
SECTION 5.27. Amendment to Disclosure Schedule. Not later than
January 15, 1997, the Cytec Parties, in their sole discretion, may elect to
deliver to Purchaser one or more revised Schedules chosen by the Cytec Parties;
provided, however, that no such Schedule shall include an addition of any matter
that was not previously listed in another Schedule prior to the revision thereof
(it being understood that the disclosure of such matter shall be as deemed
appropriate by the Cytec Parties). The parties hereto agree that (i) the
Disclosure Schedules shall thereafter be deemed to be amended and restated as
set forth in such revised Disclosure Schedules and (ii) disclosure of any matter
therein shall not be deemed an admission by Parent that such disclosure is
material or constitutes a Material Adverse Effect.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligations. The respective
obligations of the Sterling Parties and the Cytec Parties to consummate the
Closing shall be subject to the satisfaction on or prior to the Closing Date of
the following conditions:
(a) HSR. Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(b) No Injunctions or Restraints. No statute, rule, regulation or
executive order shall have been enacted or issued by a Governmental Entity, and
no decree, temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other Governmental
Entity, and no other legal restraint or prohibition preventing the consummation
of the Transactions shall be in effect; provided, however, that each of the
parties to this Agreement shall have used commercially reasonable efforts to
prevent the entry of any such injunction or other order or decree and to appeal
as promptly as possible any injunction or other order or decree that may be
entered.
(c) Remediation Matters. No Threshold Issue shall have been
submitted to the Environmental Arbitrator which has not been resolved by the
Environmental Arbitrator and there shall not be a possibility that a Threshold
Issue may later arise.
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SECTION 6.02. Conditions to the Obligations of the Sterling Parties.
The obligations of the Sterling Parties to consummate the Closing is subject to
the satisfaction on and as of the Closing Date of each of the following
additional conditions:
(a) Representations and Warranties. The representations and
warranties of the Cytec Parties set forth in this Agreement shall be true and
correct on and as of the Closing as though made on and as of the Closing, (i)
except to the extent such representations and warranties are made as of a
specified earlier date (in which case such representations and warranties shall
be true and correct in all material respects as of such earlier specified date)
and (ii) except for breaches of representations and warranties as to matters
that, individually or in the aggregate (and without regard to any materiality
qualifications contained therein) are not reasonably likely to have a Material
Adverse Effect, and Purchaser shall have received a certificate signed by an
authorized officer of each Cytec Party to such effect.
(b) Performance of Obligations of the Cytec Parties. Each of the
Cytec Parties shall have performed or complied in all material respects with all
obligations, conditions and covenants required to be performed by it under this
Agreement at or prior to the Closing, and Purchaser shall have received a
certificate signed by an authorized officer of each Cytec Party to such effect.
(c) Opinion of Counsel to the Cytec Parties. Purchaser shall have
received an opinion dated the Closing Date of Cravath, Swaine & ▇▇▇▇▇, counsel
to the Cytec Parties, to the effect that:
(i) Each of the Cytec Parties is a corporation duly organized,
validly existing and in good standing under the laws of Delaware.
(ii) Each of the Cytec Parties has the corporate power and authority
to execute and deliver the Operative Documents to which it is a party and
to consummate the Transactions. The execution and delivery by each of the
Cytec Parties of the Operative Documents to which it is a party and the
consummation of the Transactions by each of the Cytec Parties have been
duly authorized by all necessary corporate action and will not require the
approval of the stockholders of Parent. Each of the Operative Documents to
which any Cytec Party is a party has been duly executed and delivered by
such Cytec Party and such Operative Document constitutes a legal, valid
and binding obligation of such Cytec Party enforceable
76
against such Cytec Party in accordance with its respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights
generally from time to time in effect and to general public policy
considerations and principles of equity (including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing)
regardless of whether considered in a proceeding in equity or at law.
(iii) The execution and delivery by each of the Cytec Parties of the
Operative Documents to which it is a party do not, and the consummation by
each of the Cytec Parties of the Transactions will not, (A) violate any
Federal law or the General Corporation Law of the State of Delaware or (B)
conflict with any provision of the certificate of incorporation or by-laws
of any of the Cytec Parties. Such counsel need not express any opinion,
however, as to any violation of any law or regulation which may have
become applicable to a Cytec Party as a result of the involvement of
Purchaser in the Transactions because of Purchaser's legal or regulatory
status or because of any other facts specifically pertaining to Purchaser.
In rendering such opinion, such counsel may rely, to the extent it deems it
appropriate to do so, on certificates of officers or employees of the Cytec
Parties and of public officials as to matters of fact and authenticity of
documents and on opinions of counsel in other states as to questions of law of
such states.
(d) Ancillary Agreements. Each of the Cytec Parties shall have
executed and delivered the Ancillary Agreements to which it is a party.
(e) Other Documents. Each of the Cytec Parties shall have furnished
to Purchaser such other documents relating to such Cytec Party's corporate
existence and authority, including copies of resolutions of the board of
directors of each Cytec Party, as Purchaser may reasonably request.
(f) Financing. All of the conditions to the availability of the
Financing, as set forth in the commitment letter previously delivered to Parent
(or, if Parent has given its written approval of alternative financing terms
proposed by Purchaser, the terms of the written commitment in respect thereof),
shall have been met and Purchaser shall have obtained the Financing.
77
(g) No Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred any change that constitutes, and no event or
events shall have occurred since the date of this Agreement which have resulted
in or constitute a Material Adverse Effect.
(h) Title Policy; Survey Certification; Estoppel Letter. The Cytec
Parties shall have delivered to Purchaser (i) the Title Policy, (ii) a
certification of the Survey by ▇▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc., and (iii) a zoning
estoppel letter addressed to Purchaser and the banks party to the Financing
(which may be included on the Survey).
SECTION 6.03. Conditions to the Obligations of the Cytec Parties.
The obligations of the Cytec Parties to consummate the Closing is subject to the
satisfaction on and as of the Closing Date of each of the following additional
conditions:
(a) Representations and Warranties. The repre sentations and
warranties of the Sterling Parties set forth in this Agreement shall be true and
correct in all material respects as of the Closing as though made on and as of
the Closing, except to the extent such representations and warranties were made
as of an earlier specified date (in which case such representations and
warranties shall be true and correct in all material respects as of such
specified earlier date), and Parent shall have received a certificate signed by
an authorized officer of each of the Sterling Parties to such effect.
(b) Performance of Obligations of the Sterling Parties. The Sterling
Parties shall have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the Closing, and
Parent shall have received a certificate signed by an authorized officer of each
Sterling Party to such effect.
(c) Opinion of Purchaser's Counsel. Parent shall have received an
opinion dated the Closing Date of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., counsel to the
Sterling Parties, to the effect that:
(i) Each of the Sterling Parties is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(ii) Each of the Sterling Parties has the requisite
corporate power and corporate authority to execute and
deliver the Operative Documents to which it is a party
and to consummate the Transactions. The execution and
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delivery by each Sterling Party of the Operative Documents to which it is
a party and the consummation of the Transactions by such Sterling Party
have been duly authorized by all necessary corporate action on the part of
such Sterling Party and will not require the approval of STX's
stockholders. Each Sterling Party has duly executed and delivered each
Operative Document to which it is a party and such Operative Document
constitutes a legal, valid and binding obligation of such Sterling Party
enforceable against such Sterling Party in accordance with their
respective terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws
affecting creditors' rights generally from time to time in effect and to
public policy considerations and general principles of equity (including,
without limitation, concepts of materiality, reasonableness, good faith
and fair dealing) regardless of whether considered in a proceeding in
equity or at law.
(iii) The execution and delivery by each Sterling Party of the
Operative Documents to which it is a party do not, and the consummation by
such Sterling Party of the Transactions will not, (A) violate any Federal
law or the General Corporation Law of the State of Delaware or (B)
conflict with any provision of the certificate of incorporation or by-laws
of Purchaser. Such counsel need not express any opinion, however, as to
any violation of any law or regulation which may have become applicable to
Purchaser as a result of the involvement of any Cytec Party in the
Transactions because of any Cytec's Party's legal or regulatory status or
because of any other facts specifically pertaining to any Cytec Party.
(iv) STX has duly authorized the issuance of the Preferred Stock to
Parent in accordance with this Agreement. When so issued, the Preferred
Stock shall be duly authorized, validly issued, fully-paid and
nonassessable. The issuance of the Preferred Stock to Parent in accordance
with this Agreement will not conflict with any provision of the
Certificate of Incorporation or Bylaws of STX.
In rendering such opinion, counsel may rely, to the extent it deems it
appropriate to do so, on certificates of officers or employees of any of the
Sterling Parties and of public officials as to matters of fact and authenticity
of documents, on opinions of counsel in other states as to questions of law of
such states and on opinions of attorneys in STX's in-house law department. In
addition, counsel may presume that the delivery of the Preferred Stock to Parent
in accordance with
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the Transactions is exempt from the registration requirements under the
Securities Act and the Securities Exchange Act of 1934, as amended.
(d) Ancillary Agreements. Purchaser shall have executed and
delivered the Ancillary Agreements to which it is a party.
(e) Other Documents. Purchaser shall have furnished to Parent such
other documents relating to the corporate existence and authority of the
Sterling Parties, including copies of resolutions of the respective boards of
directors of the Sterling Parties, as Parent may reasonably request.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. (a) Notwithstanding anything to the
contrary in this Agreement, this Agreement may be terminated and the
Transactions abandoned at any time prior to the Closing:
(i) by mutual written consent of Seller and Purchaser;
(ii) by Seller if any of the conditions set forth in Sections 6.01
or 6.03 shall have become incapable of fulfillment and shall not have been
waived by Parent, provided that no Cytec Party is in breach in any
material respects of any of its representations, warranties, covenants or
agreements contained in this Agreement;
(iii) by Purchaser if any of the conditions set forth in Sections
6.01 or 6.02 shall have become incapable of fulfillment and shall not have
been waived by Purchaser, provided that no Sterling Party is in breach in
any material respects of any of its representations, warranties, covenants
or agreements contained in this Agreement;
(iv) by Purchaser if the Closing has not occurred by the Outside
Date, unless the failure to do so by such time is due to a breach of any
representation or warranty contained in this Agreement or a breach of any
agreement or covenant in this Agreement by, or otherwise on account of
material delay or default on the part of, any Sterling Party;
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(v) by Seller if the Closing has not occurred by the Outside Date,
unless the failure to do so by such time is due to a breach of any
representation or warranty contained in this Agreement or a breach of any
agreement or covenant contained in this Agreement by, or otherwise on
account of material delay or default on the part of, any Cytec Party; or
(vi) by Seller or Purchaser, as provided in Section 5.21.
(b) In the event of termination by Seller, on the one hand, or
Purchaser, on the other hand, pursuant to this Section 7.01, written notice
thereof shall forthwith be given to the other party and the transactions
contemplated by this Agreement shall be terminated, without further action by
any party. If this Agreement is terminated pursuant to this Section 7.01:
(i) to the extent provided in the Confidentiality Agreement,
Purchaser shall return all documents and other material received from the
Cytec Parties relating to the Transactions, whether so obtained before or
after the execution hereof, to Parent;
(ii) all confidential information received by Purchaser with respect
to the Cytec Parties or the Business shall be treated in accordance with
the Confidentiality Agreement, which shall remain in full force and effect
notwithstanding the termination of this Agreement;
(iii) to the extent provided in the Confidentiality Agreement, each
Cytec Party shall return all documents and other material received from
the Sterling Parties relating to the Transactions, whether so obtained
before or after the execution hereof, to Purchaser; and
(iv) all confidential information received by the Cytec Parties with
respect to the Sterling Parties shall be treated in accordance with the
Confidentiality Agreement.
(c) If this Agreement is terminated pursuant to this Section 7.01,
this Agreement shall become null and void and of no further force and effect,
except that the provisions of the last sentence of Section 5.02 and the
provisions of Sections 5.03, 5.06, 5.08, 5.21(c) and 7.01 and Articles VIII and
IX shall survive such termination (but, in the case of Article VIII, only to the
extent such Article relates to Sections of this Agreement that survive such
termination).
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Nothing in this Section 7.01 shall be deemed to release any party from any
liability for any breach by such party of any of the terms and provisions of
this Agreement.
SECTION 7.02. Amendments and Waivers. This Agreement may not be
amended except by an instrument in writing signed on behalf of Parent and
Purchaser. By an instrument in writing, Purchaser may (i) extend the time for
the performance of any of the obligations or other acts of the Cytec Parties,
(ii) waive any inaccuracies in the representations and warranties of the Cytec
Parties contained herein or (iii) waive compliance by any Cytec Parties with any
term or provision of this Agreement that such Cytec Party was or is obligated to
comply with or perform. By an instrument in writing, Parent may (i) extend the
time for the performance of any of the obligations or other acts of any Sterling
Party, (ii) waive any inaccuracies in the representations and warranties of any
Sterling Party contained herein or (iii) waive compliance by any Sterling Party
with any term or provision of this Agreement that such Sterling Party was or is
obligated to comply with or perform. Any agreement on the part of any party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party by one of its duly authorized
officers. The failure of any party hereto to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
Indemnification
SECTION 8.01. Indemnification by the Cytec Parties. (a) In addition
to their other indemnification obligations contained herein, the Cytec Parties
hereby agree, jointly and severally, to indemnify the Sterling Parties and their
Affiliates and their respective officers, directors, employees and agents and
their respective heirs, executors, personal representatives, administrators,
successors and assigns (the "Purchaser Indemnified Persons"), against, and agree
to defend and hold them harmless from and against, any Loss which may be imposed
on, incurred by or asserted against any of Purchaser Indemnified Persons to the
extent such Loss arises out of or results from or in connection with the
following:
(i) any inaccuracy in or breach by any Cytec Party
of any representation or warranty contained in this
Agreement;
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(ii) any breach by any Cytec Party of any of its
covenants or agreements contained in this Agreement; or
(iii) any Excluded Liability, other than any Cytec
Escambia Bay Liability;
provided, however, that the Cytec Parties shall not have any liability under
this Section 8.01(a) for any Assumed Liabilities; and provided, further, that
(x) no Cytec Party shall have any liability for any claim pursuant to Section
8.01(a)(i) above unless the Loss in respect thereof exceeds $10,000; (y) no
Cytec Party shall have any liability pursuant to Section 8.01(a)(i) above unless
and until the aggregate of all Losses for all claims under Section 8.01(a)(i)
above exceeds on a cumulative basis an amount equal to $1,000,000 and then only
to the extent of any such excess; and (z) the total indemnification to be paid
by the Cytec Parties under Section 8.01(a)(i) shall not in any event exceed
$29,000,000.
(b) In addition to their other indemnification obligations contained
herein, the Cytec Parties hereby agree, jointly and severally, to indemnify each
Purchaser Indemnified Person against, and agree to defend and hold harmless each
Purchaser Indemnified Person from the following (the following liabilities being
referred to as the "Cytec Escambia Bay Liabilities"):
(i) to the extent that a notice of claim in respect of each such
Loss is delivered to the Cytec Parties prior to the fifth anniversary of
the Closing Date:
(A) 50% of the amount of the first $5,000,000 of Losses
imposed on, incurred by or asserted against the Purchaser
Indemnified Persons arising out of Escambia Bay Liabilities;
(B) the remaining 50% of the amount of the first $5,000,000 of
Losses imposed on, incurred by or asserted against the Purchaser
Indemnified Persons arising out of Escambia Bay Liabilities, but
only to the extent that each such Loss does not occur after any
environmental survey or assessment, other than the testing of
wastewater generated from the Santa ▇▇▇▇ Facility, conducted or
directed by, or at the expense of, any Sterling Party or any of
their respective Affiliates, unless such survey or assessment is
consistent with the historical practices of the Cytec Parties
regarding surveys or assessments in Escambia Bay or required by any
Environmental Law or Environmental Permit; and
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(C) in the event that the Cytec Parties have fully indemnified
the Purchaser Indemnified Persons pursuant to clause (A) above and
have not been obligated to make any indemnity payments pursuant to
clause (B) above, the next $2,500,000 of Losses in excess of the
first $5,000,000 of Losses imposed on, incurred by or asserted
against the Purchaser Indemnified Persons arising out of Escambia
Bay Liabilities, but only to the extent that a notice of claim in
respect of each such Loss is delivered to the Cytec Parties prior to
the fifth anniversary of the Closing Date; and
(ii) in the event that Purchaser Indemnified Persons have actually
made payments in excess of $29,000,000 (net of any indemnity payments from
the Cytec Parties pursuant to this Section 8.01(b) and net of any amounts
recovered or recoverable under insurance policies upon the use of
commercially reasonable efforts) in respect of Losses arising out of
Escambia Bay Liabilities, the amount of all additional Losses arising out
of Escambia Bay Liabilities that are imposed on, incurred by or asserted
against any Purchaser Indemnified Person, whether or not the notice of
claim in respect of any such Loss is delivered to the Cytec Parties prior
to the fifth anniversary of the Closing Date.
(c) The Sterling Parties acknowledge and agree that their sole and
exclusive remedy with respect to any and all claims relating to any breach of
any representation or warranty, or, except as otherwise specifically provided
herein, any failure to perform any covenant (exclusive of indemnification
obligations), contained in this Agreement, the Assumption Agreement or the
General Conveyance, Transfer and Assignment shall be pursuant to the
indemnification provisions set forth in this Agreement.
(d) Notwithstanding anything in this Article VIII to the contrary,
the Cytec Parties shall not have any liability under this Section 8.01 for any
portion of any Losses resulting from or attributable to (i) any fraud or willful
misconduct of a Purchaser Indemnified Person in connection with the Transactions
or (ii) any gross negligence of a Purchaser Indemnified Person in connection
with the Transactions excluding, however, any gross negligence of such Purchaser
Indemnified Person in making any representation or warranty or in the
preparation of the Disclosures Schedules or Appendices related thereto in
connection with the Transactions.
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SECTION 8.02. Indemnification by Purchaser, Guarantee of STX
Chemicals. (a) In addition to its other indemnification obligations contained
herein, Purchaser hereby agrees to indemnify each Cytec Party (excluding,
however, Cyanamid) and its Affiliates and their respective officers, directors
and employees and agents and their respective heirs, executors, personal
representatives, administrators, successors and assigns (the "Seller Indemnified
Persons") against, and agrees to defend and hold them harmless from and against
any Loss which may be imposed on, incurred by or asserted against any Seller
Indemnified Person to the extent such Loss arises out of, or results from or in
connection with:
(i) any inaccuracy in or breach by any Sterling
Party of any representation or warranty contained in this
Agreement;
(ii) any breach by any Sterling Party of any covenant
contained in this Agreement;
(iii) the operation of the Business after the Closing
Date, including in respect of environmental matters; or
(iv) any Assumed Liability, including any obligation or liability
included in Section 2.03(a)(v) (other than those matters for which the
Cytec Parties are responsible pursuant to Section 5.21);
provided, however, that Purchaser shall not have any liability under this
Section 8.02(a) for any Excluded Liabilities; and, provided, further, that (x)
Purchaser shall not have any liability for any claim pursuant to Section
8.02(a)(i) above unless the Loss in respect thereof exceeds $10,000, (y)
Purchaser shall not have any liability pursuant to Section 8.02(a)(i) above
unless and until the aggregate of all Losses for all claims pursuant to Section
8.02(a)(i) above exceeds on a cumulative basis an amount equal to $1,000,000 and
then only to the extent of such excess; and (z) the total indemnification to be
paid by Purchaser under Section 8.02(a)(i) shall not in any event exceed
$15,000,000. Notwithstanding anything in this Article VIII, other than Section
8.02(b) below, to the contrary, (x) in no event shall any of the Sterling
Parties have any liability under Section 8.02(a)(iv) for any portion of any
Losses resulting from or attributable to a breach by any Cytec Party of its
representations, warranties or obligations under this Agreement (irrespective of
the expiration of any such representation or warranty), and (y) except to the
extent that any Cytec Party is required to indemnify, hold harmless or defend
Cyanamid (other than with respect to Excluded
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Liabilities), in no event shall any of the Sterling Parties be obligated or
required to indemnify, hold harmless or defend Cyanamid under this Section 8.02
with respect to any Loss or any other matter whatsoever, it being specifically
understood and agreed that all direct indemnity obligations of any Sterling
Party contained in the Operative Documents are solely for the benefit of the
Seller Indemnified Persons.
(b) In addition to its other indemnification obligations contained
herein, Purchaser hereby agrees to indemnify each Seller Indemnified Person
against, and agrees to defend and hold them harmless from and against any Loss
that may be imposed on, incurred by or asserted against any Seller Indemnified
Person to the extent such Loss arises out of, or results from or in connection
with any Assumed Liability that is the subject of an inaccuracy in or breach of
any representation or warranty made by any Cytec Party in this Agreement;
provided, however, that (x) Purchaser shall not have any liability for claims
pursuant to this Section 8.02(b) in respect of Cytec Knowledge Losses unless and
until the aggregate of all Cytec Knowledge Losses in respect of claims pursuant
to this Section 8.02(b) exceeds on a cumulative basis an amount equal to
$1,000,000, and then only to the extent of such excess, and (y) the total
indemnification to be paid by Purchaser under this Section 8.02(b) shall not in
any event exceed $15,000,000.
(c) The Cytec Parties acknowledge and agree that their sole and
exclusive remedy with respect to any and all claims relating to any breach of
any representation or warranty or, except as otherwise specifically provided
herein, any failure to perform any covenant (exclusive of indemnification
obligations), contained in this Agreement, the Assumption Agreement or the
General Conveyance Transfer and Assignment, shall be pursuant to the
indemnification provisions set forth in this Agreement.
(d) Notwithstanding anything in this Article VIII to the contrary,
Purchaser and STX Chemicals shall not have any liability under this Section 8.02
for any portion of any Losses resulting from or attributable to (i) any fraud or
willful misconduct of a Seller Indemnified Person in connection with the
Transactions or (ii) any gross negligence of a Seller Indemnified Person in
connection with the Transactions excluding, however, any gross negligence of
such Seller Indemnified Person in making any representation or warranty or in
the preparation of the Disclosure Schedules or Appendices related thereto in
connection with the Transactions.
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(e) STX Chemicals hereby guarantees to the Seller Indemnified
Parties the due and punctual payment of all indemnity obligations of Purchaser
under this Section 8.02 (the "Purchaser Indemnity Obligations"); provided,
however, that the aggregate liability of STX Chemicals under this Section
8.02(e) as of any date shall not exceed the STX Guarantee Cap at such date. STX
Chemicals waives presentation to, demand of, payment from and protest to any
Seller Indemnified Party of any Purchaser Indemnity Obligations, and also waives
notice of protest for nonpayment. STX Chemicals further agrees that the
guarantee set forth herein constitutes a guarantee of payment when due and not
of collection. Upon payment by STX Chemicals of any sums to any Seller
Indemnified Person as provided herein, all rights of STX Chemicals against
Purchaser arising as a result thereof by way of right of subrogation or
otherwise shall in all respects be subordinate and junior in rights of payment
to the prior payment in full of the Purchaser Indemnity Obligations and any
other amounts due and payable from time to time by Purchaser to any Cytec Party
under any Operative Document. The "STX Guarantee Cap" shall mean, at any time,
the lesser of (i) $15,000,000 minus the aggregate amount of all Purchaser
Indemnity Obligations actually paid by STX Chemicals as of such date and (ii)
$30,000,000 minus the sum of (A) the aggregate amount of Earn-Out Payments
received by the Cytec Parties as of such date, (B) the aggregate amount of cash
dividends paid on the Preferred Stock as of such date and two-thirds of the
liquidation value of all Additional Shares issued as of such date, (C) the
aggregate amount paid by STX for the redemption of shares of Preferred Stock as
of such date, (D) the aggregate amount of all Purchaser Indemnity Obligations
actually paid by Purchaser as of such date and (E) the aggregate amount of all
Purchaser Indemnity Obligations actually paid by STX Chemicals as of such date.
SECTION 8.03. Losses Net of Insurance, etc. The amount of any Loss
for which indemnification is provided under this Article VIII shall be net of
any amounts recovered or recoverable with the use of commercially reasonable
efforts by the indemnified party under insurance policies with respect to such
Loss.
SECTION 8.04. Termination of Indemnification. (a) The obligations of
the Cytec Parties pursuant to Section 8.01(a)(i) shall terminate, in the case of
each representation or warranty of the Cytec Parties contained in this
Agreement, when the applicable representation or warranty terminates pursuant to
Section 9.03, unless notice of a claim shall have been delivered to the Cytec
Parties prior to the expiration of the applicable survival period specified in
Section 9.03 with respect to the applicable representation or
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warranty, in which case the obligations of the Cytec Parties pursuant thereto
shall not terminate until such claim is resolved. The obligations of the Cytec
Parties pursuant to the other clauses of Section 8.01 shall not terminate.
(b) The obligations of Purchaser pursuant to Section 8.02(a)(i)
shall terminate, in the case of each representation or warranty of the Sterling
Parties contained in this Agreement, when the applicable representation or
warranty terminates pursuant to Section 9.03 unless notice of a claim shall have
been delivered to the Sterling Parties prior to expiration of the applicable
survival period specified in Section 9.03 with respect to such representation or
warranty, in which case the obligations of Purchaser pursuant to Section
8.02(a)(i) with respect to such representation or warranty shall not terminate
until such claim is resolved. The obligations of Purchaser pursuant to the other
clauses of Section 8.02 shall not terminate. The obligations of STX Chemicals
pursuant to Section 8.02(e) with respect to each Purchaser Indemnity Obligation
shall terminate on the earlier of (i) the date on which such Purchaser Indemnity
Obligation terminates pursuant to this Section 8.04(b) and (ii) the date on
which the STX Guarantee Cap is first reduced to zero.
SECTION 8.05. Procedure. (a) In order for any indemnified party (the
"indemnified party") to be entitled to any indemnification provided for under
this Agreement, such indemnified party shall, within 15 business days following
the actual discovery of the matters giving rise to any Loss, notify the
indemnifying party (the "indemnifying party") in writing of its claim for
indemnification for such Loss, specifying in reasonable detail the nature of
such Loss and the amount of the liability estimated to accrue therefrom;
provided, however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the indemnifying party
shall have been actually and materially prejudiced as a result of such failure.
There after, the indemnified party shall deliver to the indemnifying party,
promptly and in any event within ten business days' after the indemnified
party's receipt thereof, all information and documentation reasonably requested
by the indemnifying party with respect to such Loss.
(b) In the event that a Loss arises out of or results from matters
in respect of a claim made by a third party (a "Third Party Claim"), the
indemnifying party shall be entitled to participate in the defense of such Third
Party Claim and, if it so chooses, to assume the defense of such Third Party
Claim with counsel selected by the indemnifying party; provided, however, that
the indemnifying party shall
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elect to assume such defense within 10 business days of receipt of initial
notice of such Third Party Claim from the indemnified party, unless the
indemnifying party and the indemnified party would not be prejudiced in any
material respect by the assumption of such claim at a later date. Should the
indemnifying party so elect to assume the defense of a Third Party Claim, the
indemnifying party shall not be liable to the indemnified party for any legal
expenses subsequently incurred by the indemnified party in connection with the
defense thereof. If the indemnifying party assumes such defense, the indemnified
party shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
indemnifying party, it being understood that the indemnifying party shall
control such defense. The indemnifying party shall be liable for the fees and
expenses of counsel employed by the indemnified party for any period during
which the indemnifying party has not assumed the defense thereof. Whether or not
the indemnifying party elects to defend or prosecute a Third Party Claim, all of
the parties hereto shall cooperate in the defense or prosecution of such Third
Party Claim. Such cooperation shall include the retention and (upon the request
of the party defending or prosecuting such Third Party Claim) the provision to
the defending or prosecuting party of records and information which are
reasonably relevant to such Third Party Claim, and making employees, officers
and directors and agents available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. If
the indemnifying party elects to defend or prosecute any Third Party Claim, the
indemnifying party will not settle, compromise or discharge such Third Party
Claim without the consent of the Indemnified party (such consent to not be
unreasonably withheld or delayed); provided, however, that the indemnified party
shall consent to any settlement, compromise or discharge of such Third Party
Claim which the indemnifying party may recommend and which by its terms
obligates the indemnifying party to pay the full amount of the liability in
connection with such Third Party Claim, provided that (x) such settlement,
compromise or discharge does not impose any form of injunctive relief applicable
to the indemnified party and (y) fully releases the indemnified party from any
further claims with respect to the matters giving rise to such Third Party
Claim. In the event that the indemnifying party recommends any such settlement,
compromise or discharge of such Third Party Claim and the indemnified party
unreasonably withholds its consent thereto and the ultimate resolution of such
Third Party Claim results in an amount of Losses in excess of the amount of
Losses which would have been payable or suffered under such settlement,
compromise or discharge, the indemnifying party shall not be
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obligated to indemnify the indemnifying party to the extent of
such excess.
(c) If the indemnifying party does not assume the defense of any
Third Party Claim, the indemnified party will have the right to defend, settle,
compromise or discharge such Third Party Claim or consent to the entry of a
judgment with respect to such Third Party Claim, on behalf of and for the
account and risk of the indemnifying party, and the indemnifying party shall
thereafter have no right to challenge the indemnified party's defense,
settlement, compromise, discharge or consent to judgment of such Third Party
Claim, except to the extent such defense, settlement, compromise, discharge or
consent to judgment would impose any form of injunctive relief applicable to the
indemnifying party without the consent of the indemnifying party (such consent
not to be unreasonably withheld) or to the extent that notwithstanding the
foregoing, the indemnified party or the indemnifying party would not be fully
released from further claims with respect to the matters giving rise to such
Third Party Claim. In the event that the indemnified party recommends any
settlement, compromise or discharge of a Third Party Claim that would impose any
form of injunctive relief applicable to the indemnifying party and the
indemnifying party unreasonably withholds its consent thereto and the ultimate
resolution of such Third Party Claim results in Losses by the indemnified party,
the indemnifying party shall be obligated to indemnify the indemnified party
therefor.
SECTION 8.06. Payment. Within 30 days after demand therefor, the
indemnifying party shall pay the indemnified party any amount due under this
Article VIII (including reasonable attorneys' fees) and, within 30 days after
demand therefor, shall reimburse each indemnified party for all reasonable
expenses for which the indemnified party is entitled to be indemnified
hereunder. Upon judgment, determination, discharge, settlement or compromise of
any Third Party Claim, the indemnifying party shall promptly pay on behalf of
the indemnified party, and/or to the indemnified party in reimbursement of any
amount theretofore required to be paid by it, the amount so determined by such
judgment, determination, discharge, settlement or compromise and all other
claims of the indemnified party with respect thereto, unless in the case of a
judgment or determination the indemnifying party intends to appeal such judgment
or determination; provided, however, that if the indemnifying party desires to
appeal from an adverse judgment or determination, then the indemnifying party
shall post and pay the cost of the security or bond to stay execution of the
judgment or determination pending appeal and shall pay the full cost of appeal.
Upon the payment in full by the
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indemnifying party of all of such amounts, the indemnifying party shall succeed
to the rights of the indemnified party, to the extent such rights are not waived
in settlement, against the third party who made such Third Party Claim.
SECTION 8.07. No Consequential Damages. Notwithstanding any
provision of this Agreement to the contrary, in no event shall (i) the Cytec
Parties be obligated under this Agreement to indemnify the Purchaser Indemnified
Persons for any special or consequential damages or (ii) Purchaser or STX
Chemicals be obligated under this Agreement to indemnify the Seller Indemnified
Persons for any special or consequential damages.
SECTION 8.08. Effect of Certain Breaches and Inaccuracies. (a)
Subject to Section 4.01(dd) but notwithstanding anything else in this Agreement
to the contrary, unless a Specified Cytec Representative has actual knowledge of
the applicable breach or inaccuracy, (i) none of the rights or remedies of the
Cytec Parties under this Agreement or any Ancillary Agreement will be impaired
or adversely affected in any respect by or on account of any knowledge by any
person that the representations and warranties of any Sterling Party made in
this Agreement or any Ancillary Agreement are not true, (ii) none of the
Sterling Parties shall be relieved, released or discharged in any respect of any
of their representations, warranties, covenants or indemnities contained in this
Agreement or any Ancillary Agreement by or on account of any knowledge by any
person that the representations and warranties of any Sterling Party made in
this Agreement or any Ancillary Agreement are not true and (iii) none of the
Cytec Parties nor any other person shall have or be subject to any liability
resulting from or based on any knowledge by any person that the representations
and warranties of any Sterling Party made in this Agreement or any Ancillary
Agreement are not true.
(b) Subject to Section 4.02(d) but notwithstanding anything else in
this Agreement to the contrary, unless any Specified Sterling Representative has
actual knowledge of the applicable breach or inaccuracy, (i) none of the rights
or remedies of the Sterling Parties under this Agreement or any Ancillary
Agreement shall be impaired or adversely affected in any respect by or on
account of any knowledge by any person that the representations and warranties
of any Cytec Party made in this Agreement or any Ancillary Agreement are not
true, (ii) none of the Cytec Parties shall be relieved, released or discharged
in any respect of any of their respective representations, warranties, covenants
or indemnities contained in this Agreement or any Ancillary Agreement by or on
account of any knowledge by any person that
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the representations and warranties of any Cytec Party made in this Agreement or
any Ancillary Agreement are not true and (iii) none of the Sterling Parties nor
any other person shall have or be subject to any liability resulting from or
based on any knowledge by any person that the representations and warranties of
any Cytec Party made in this Agreement or any Ancillary Agreement are not true.
ARTICLE IX
General Provisions
SECTION 9.01. Notices. All notices, requests and other
communications hereunder shall be in writing and shall be sent, delivered or
mailed, addressed as follows:
(a) if to a Sterling Party, to the applicable
Sterling Party:
c/o Sterling Chemicals Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: F. ▇▇▇▇▇▇▇ ▇▇▇▇▇, General Counsel
with a copy (which shall not constitute
notice) to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
4200 Texas Commerce Tower
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) if to a Cytec Party, to:
Cytec Industries Inc.
Five Garret ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
with a copy (which shall not constitute
notice) to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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Each such notice, request or other communication shall be given (i) by hand
delivery, (ii) by certified mail or (iii) by nationally recognized courier
service. Each such notice, request or communication shall be effective when
delivered at the address specified in this Section 9.01 (or in accordance with
the latest unrevoked direction from the receiving party).
SECTION 9.02. Headings. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 9.03. Survival of Representations, Warranties and Covenants.
All representations, warranties, covenants and agreements of the Cytec Parties
or the Sterling Parties in the Operative Documents shall survive the execution
and delivery of the Operative Documents and the Closing, regardless of any
investigation made by or on behalf of any party; provided, however, that:
(a) the representations and warranties of the Cytec Parties
contained in the Operative Documents, other than those referred to in
clauses (b), (c) and (d) below and other than those contained in Section
4.01(dd) (which shall survive indefinitely), shall terminate and have no
further force or effect after the expiration of the one-year period
commencing on the Closing Date, unless notice of a claim relating thereto
shall be delivered by a Purchaser Indemnified Person to Parent prior to
the expiration of such one-year period, in which case such representation
or warranty shall survive following such period solely with respect to
such claim until such claim is resolved;
(b) the representations and warranties of the Cytec Parties
contained in Section 4.01(p) which relate to (A) matters in respect of the
exposure of the Cytec Santa ▇▇▇▇ Employees to acrylonitrile or asbestos,
or (B) Releases or alleged Releases of Hazardous Substances into Escambia
Bay shall terminate and have no further force and effect as of the
Closing;
(c) the representations and warranties of the Cytec Parties
contained in Section 4.01(j) and 4.01(k) shall terminate and have no
further force and effect after the expiration of the three-year period
commencing on the Closing Date, unless notice of a claim relating thereto
shall be delivered by a Purchaser Indemnified Person to Parent prior to
the expiration of such three-year period, in which case such
representation or warranty shall
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survive following such period solely with respect to such
claim until such claim is resolved;
(d) the representations and warranties of the Cytec Parties
contained in Sections 4.01(s)(ii), 4.01(t), 4.01(u), 4.01(v), 4.01(w)(ii),
and 4.01(cc) shall terminate and have no further force or effect upon the
expiration of the statute of limitations period applicable thereto, unless
notice of a claim relating thereto shall be delivered by a Purchaser
Indemnified Person to Parent prior to the expiration of the applicable
period, in which case such representations or warranties shall survive
following such period solely with respect to such claim until such claim
is resolved; and
(e) the representations and warranties of the Sterling Parties
contained in the Operative Documents, other than those contained in
Sections 4.02(d) (which shall survive indefinitely), shall terminate and
have no further force or effect after the expiration of the one-year
period commencing on the Closing Date, unless notice of a claim relating
thereto shall be delivered by a Seller Indemnified Person to Purchaser
prior to the expiration of such one-year period, in which case such
representation or warranty shall survive following such period solely with
respect to such claim until such claim is resolved.
SECTION 9.04. Severability. If any provision of this Agreement, or
the application thereof to any person, place or circumstances, shall be held by
a court of competent jurisdiction to be invalid, unenforceable, or void, the
remainder of this Agreement and such provisions as applied to other persons,
places, and circumstances shall remain in full force and effect.
SECTION 9.05. 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, it being understood that
all parties need not sign the same counterpart.
SECTION 9.06. Entire Agreement; No Third Party Beneficiaries. This
Agreement, the Ancillary Agreements and the Confidentiality Agreement set forth
all of the promises, agreements, conditions, understandings, representations and
warranties among the parties with respect to the Transactions and supersede all
prior agreements and understandings, both
94
written and oral, among the parties hereto and thereto with respect to the
subject matter hereof and thereof. Except as specifically provided in Article
VIII with respect to Purchaser Indemnified Persons and Seller Indemnified
Persons, such agreements are not intended to confer upon any person other than
the parties hereto and thereto any rights or remedies hereunder or thereunder.
Notwithstanding anything to the contrary contained in the Operative Documents,
nothing contained in any Operative Document is intended to confer any benefit on
Cyanamid.
SECTION 9.07. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.
SECTION 9.08. Consent to Jurisdiction. Each of the Sterling Parties
and the Cytec Parties irrevocably submits to the exclusive jurisdiction of any
Delaware state court and any Federal court located in Delaware for the purposes
of any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each of the Sterling Parties and the Cytec
Parties further agrees that service of any process, summons, notice or document
by U.S. registered mail to such party's respective address set forth in Section
9.01 shall be effective service of process for any action, suit or proceeding in
Delaware with respect to any matters to which it has submitted to jurisdiction
as set forth above in the immediately preceding sentence. Each of the Sterling
Parties and the Cytec Parties irrevocably and uncon ditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in any Delaware state
court and any Federal Court located in the State of Delaware and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. Except to the extent required to
enforce any order (including any order for injunctive relief), award or judgment
of or by a Delaware state court or a Federal court located in Delaware, each of
the Sterling Parties and the Cytec Parties agrees not to pursue any legal action
against any party to this Agreement in respect of the Transactions or any matter
related thereto other than in a Delaware state court or a Federal court located
in Delaware.
SECTION 9.09. Publicity. Neither the Cytec Parties, on the one hand,
nor the Sterling Parties, on the other hand, shall issue or cause the
publication of any press
95
release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld, except to the extent required for
such party to meet the requirements or regulations of any applicable
Governmental Rule or stock exchange on which the securities of such party may be
listed, in which case such party shall notify the other party and give such
other party opportunity to comment.
SECTION 9.10. Assignment. Except for the assignment for collateral
purposes of this Agreement to secure indebtedness of Purchaser or its Affiliates
and except as permitted below, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties and any attempt to
do so shall be null and void. The rights of any assignee contemplated by the
foregoing sentence shall be subject in all respects to any defense, set-off,
counterclaim or similar right against the assignor by the non-assigning party
hereto (including any defense, set-off, counterclaim or other right arising
after such assignment is made) and any assignee shall have no greater rights
than those of the assignor. Any assignment by any of the parties hereto pursuant
to the preceding sentences shall not relieve such party of any of its
obligations under this Agreement or the other Operative Documents to which it is
a party. Subject to the preceding sentences, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns. Each party shall require any
successor, other than a successor by operation of law, to all or substantially
all of the business and/or assets of such party to expressly and unconditionally
assume and agree to perform this Agreement in the same manner and to the same
extent that such party would be required to perform it if no succession had
taken place.
SECTION 9.11. Amendments and Waivers. No amendment, modification,
restatement or supplement of this Agreement shall be valid unless the same is in
writing and signed by the parties hereto. No waiver of any provision of this
Agreement shall be valid unless in writing and signed by the party against whom
that waiver is sought to be enforced. No failure or delay on the part of any
party hereto in exercising any right, power or privilege hereunder and no course
of dealing between or among any of the parties hereto shall operate as a waiver
of any right, power or privilege hereunder. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. No
notice to or demand on any party in
96
any case shall entitle such party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of any party
to any other or further action in any circumstances without notice or demand.
SECTION 9.12. Remedies. The parties agree that the obligations
contained in this Agreement relate to special, unique and extraordinary matters
and that a violation of any of the terms hereof or thereof would cause
irreparable injury in an amount which would be impossible to estimate or
determine and for which any remedy at law would be inadequate. As such, the
parties agree that if any party fails or refuses to fulfill any of its
obligations under this Agreement or to make any payment or deliver any
instrument required hereunder or thereunder, then the other parties shall have
the remedy of specific performance, which remedy shall be cumulative and
nonexclusive and shall be in addition to any other rights and remedies otherwise
available under any other Contract or at law or in equity and to which such
parties might be entitled.
SECTION 9.13. Prevailing Party Costs. Notwithstanding anything
contained herein or in any Ancillary Agreement to the contrary, if any party
commences an action against any other party to enforce any of the terms,
covenants, conditions or provisions of this Agreement or any Ancillary Agreement
or because of a breach by a party of its obligations under this Agreement or any
Ancillary Agreement, the prevailing party in any such action shall be entitled
to recover its Losses, including reasonable attorneys' fees, incurred in
connection with the prosecution or defense of such action, from the losing
party.
SECTION 9.14. No Liability of Natural Persons. Notwithstanding
anything to the contrary contained in this Agreement or any Ancillary Agreement,
no person who is a former, present or future officer, director, employee,
stockholder or agent of any Cytec Party or any Sterling Party, and no other
natural person shall have any liability under this Agreement or any of the
Ancillary Agreements;
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provided, however, that nothing contained in this Section 9.14 shall release any
person from liability for such person's fraud, bad faith or wilful misconduct.
This Section 9.14 shall not be deemed to release or limit any claim that a Cytec
Party shall have against any person who is an officer, director or employee of
any Cytec Party or any of its Affiliates prior to or after the Closing Date.
IN WITNESS WHEREOF, the Sterling Parties and each of the Cytec
Parties have caused this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the date first written above.
STERLING FIBERS, INC.
by
--------------------------------
Name:
Title:
STERLING CHEMICALS, INC.,
by
--------------------------------
Name:
Title:
STERLING CHEMICALS HOLDINGS,INC.,
by
--------------------------------
Name:
Title:
CYTEC ACRYLIC FIBERS INC.,
by
--------------------------------
Name:
Title:
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CYTEC TECHNOLOGY CORP.,
by
--------------------------------
Name:
Title:
CYTEC INDUSTRIES INC.,
by
--------------------------------
Name:
Title: