EXHIBIT 10.50
ASSET PURCHASE AGREEMENT
DATED AS OF DECEMBER 29, 1997
BY AND AMONG
NL INDUSTRIES, INC.,
RHEOX, INC., RHEOX INTERNATIONAL, INC.,
HARRISONS AND CROSFIELD PLC,
HARRISONS AND CROSFIELD (AMERICA) INC.,
AND
ELEMENTIS ACQUISITION 98, INC.
TABLE OF CONTENTS
Page
ARTICLE I. PURCHASE OF ASSETS..................... 2
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1.1. Purchase and Sale of Assets.................................. 2
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1.1.1. Accounts Receivable.................................. 2
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1.1.2. Contract Rights...................................... 2
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1.1.3. Inventories and Stores and Supplies.................. 2
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1.1.4. Tangible Personal Property........................... 3
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1.1.5. Manufacturers' and Vendors' Warranties............... 3
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1.1.6. Intellectual Property................................ 3
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1.1.7. Real Property........................................ 4
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1.1.8. Governmental Licenses, Permits, and Approvals........ 4
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1.1.9. Books and Records.................................... 4
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1.1.10. Prepaid Items....................................... 4
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1.1.11. Acquired Subsidiaries and Enenco.................... 4
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1.1.12. Marketing and Other Materials....................... 5
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1.1.13. Rights Against Third Parties........................ 5
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1.1.14. Going Concern Value................................. 5
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1.1.15. Tax Refunds......................................... 5
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1.1.16. Cash and Cash Equivalents........................... 5
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1.1.17. Miscellaneous Assets................................ 5
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1.2. Excluded Assets.............................................. 5
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1.2.1.Ordinary Course of Business Dispositions............... 6
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1.2.2.Contracts Terminated in the Ordinary Course of Business 6
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1.2.3.Corporate Documents.................................... 6
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1.2.4.Employee Benefit Plans................................. 6
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1.2.5.[Intentionally omitted]................................ 6
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▇.▇.▇.▇▇▇▇▇▇▇▇▇.............................................. 6
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▇.▇.▇.▇▇▇ Refunds............................................ 6
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1.2.8.Intercompany Agreements................................ 7
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1.2.9.Rights under this Agreement............................ 7
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1.2.10. Other Excluded Assets................................ 7
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1.3. Nonassignable Contracts and Permits.......................... 7
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1.3.1.Nonassignability....................................... 7
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1.3.2.Seller to Use Commercially Reasonable Efforts.......... 7
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1.3.3.If Waivers or Consents Cannot Be Obtained.............. 8
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i
ARTICLE II. ASSUMPTION OF LIABILITIES................. 8
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2.1. Assumed Liabilities.......................................... 8
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2.2. Retained Liabilities......................................... 9
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ARTICLE III. PURCHASE PRICE...................... 11
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3.1. Unadjusted Purchase Price.................................... 11
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3.2. Adjustments to the Purchase Price............................ 11
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3.3. Allocation of Purchase Price................................. 13
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ARTICLE IV. THE CLOSING........................ 14
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4.1. Date of Closing.............................................. 14
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ARTICLE V. REPRESENTATIONS AND WARRANTIES............... 14
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5.1. Representations and Warranties of Seller..................... 14
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5.1.1.Organization and Good Standing......................... 15
5.1.2.A Acquired Subsidiaries and Enenco.................... 15
5.1.2.B Capital Stock.............................................. 15
5.1.3.Authorization and Effect of Agreement.................. 16
▇.▇.▇.▇▇ Restrictions Against Sale of the Purchased Assets;
Required Consents...................................... 17
▇.▇.▇.▇▇ Third Party Options................................. 17
5.1.6.A Seller Financial Statements......................... 17
5.1.6.BEnenco Financial Statements.................................. 18
5.1.7.Accounts Receivable.................................... 18
5.1.8.Inventory.............................................. 19
5.1.9. Absence of Undisclosed Liabilities........................... 19
5.1.10.Contracts and Commitments.................................... 19
5.1.11.Title to Assets....................................... 21
5.1.12.Intellectual Property................................. 22
5.1.13.Sufficiency and Condition of Assets................... 23
5.1.14.Real Property................................................ 23
▇.▇.▇▇.▇▇▇▇▇▇▇▇▇............................................. 26
5.1.16.Conduct of the Business Since the Interim
Balance Sheet Date ................................... 26
5.1.17.Customers and Suppliers............................... 27
5.1.19.Employee Benefit Plans................................ 29
5.1.20.Litigation; Decrees................................... 29
5.1.21.Compliance With Law; Permits.......................... 30
5.1.22.Environmental Matters................................. 30
5.1.23.Taxes................................................. 33
5.1.24.Certain Business Practices and Regulations............ 35
5.1.25.Warranties and Returns................................ 35
ii
▇.▇.▇▇.▇▇ Implied Warranties................................. 36
5.1.27.Parent's or Seller's Knowledge........................ 36
5.2. Representations and Warranties of H&C, H&C America
and Purchaser .............................................. 36
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5.2.1.Corporate Organization................................. 36
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5.2.2.Authorization and Effect of Agreement.................. 36
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▇.▇.▇.▇▇ Restrictions Against Purchase of the Assets......... 37
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ARTICLE VI. PRE-CLOSING COVENANTS................... 37
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6.1. Access to Information........................................ 37
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6.2. Conduct of Business.......................................... 38
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6.3. Notification................................................. 40
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6.4. Governmental Filings......................................... 40
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6.5. Third Party Consents......................................... 41
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6.6. Compliance with Industrial Site Recovery Act................. 41
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6.7. Confidentiality.............................................. 41
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6.8. No Solicitation.............................................. 42
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6.9. Publicity.................................................... 42
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6.10. Satisfaction of Conditions................................... 42
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6.11. Repayment of Indebtedness; Release of Liens.................. 43
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6.12. Formation and Capitalization of RIMC......................... 43
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6.13. Termination of Intercompany Agreements....................... 44
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6.14. Cancellation of Intercompany Notes........................... 44
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ARTICLE VII. CONDITIONS TO CLOSING.................. 44
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7.1. Conditions Precedent to Obligations of Purchaser............. 44
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7.1.1.Representations, Warranties and Covenants.............. 44
7.1.2.Closing Documents...................................... 45
7.1.3.Governmental Consents or Approvals..................... 45
7.1.4.HSR Act................................................ 45
▇.▇.▇.▇▇ Adverse Proceedings................................. 45
7.1.6.Third Party Consents................................... 45
7.1.7.Material Adverse Effect................................ 45
7.1.8.ISRA Compliance........................................ 46
7.1.9.Transitional Services Agreements....................... 46
7.1.10.[Intentionally omitted]................................ 46
7.1.11.Purchaser's Shareholders Approval...................... 46
7.1.12.Opinion of New Jersey Counsel.......................... 46
▇.▇.▇▇.▇▇▇ Deeds.............................................. 46
▇.▇.▇▇.▇▇ Software License.................................... 46
7.2. Conditions Precedent to Obligations of Seller and Parent..... 46
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▇.▇.▇.▇▇ Material Misrepresentation or Breach................ 46
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iii
7.2.2.Closing Documents...................................... 47
7.2.3.Governmental Consents or Approvals..................... 47
7.2.4.HSR Act................................................ 47
▇.▇.▇.▇▇ Adverse Proceedings................................. 47
7.2.6.Transitional Services Agreements....................... 47
▇.▇.▇.▇▇▇ Deeds.............................................. 47
▇.▇.▇.▇▇ Software License.................................... 47
ARTICLE VIII. DOCUMENTS TO BE DELIVERED AT THE CLOSING........ 48
8.1. Documents to be Delivered by Parent and Seller............... 48
8.1.1.Transfer Documents..................................... 48
8.1.2.Certified Resolutions.................................. 48
8.1.3.Officer's Certificate.................................. 48
8.1.4.Good Standing Certificates............................. 48
8.1.5.Other Documents........................................ 48
8.2. Documents to be Delivered by Purchaser....................... 48
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8.2.1.Purchase Price......................................... 48
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8.2.2.Assumption Agreement................................... 49
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8.2.3.Certified Resolutions.................................. 49
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8.2.4.Officer's Certificate.................................. 49
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8.2.5.Good Standing Certificates............................. 49
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8.2.6.Other Documents........................................ 49
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ARTICLE IX. POST-CLOSING COVENANTS.................. 49
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9.1. Employee Benefits Plans and Practices........................ 49
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9.2. Maintenance of Books and Records............................. 53
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9.3. Payments Received............................................ 53
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9.4. Use of Name.................................................. 54
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9.5. UCC Matters.................................................. 54
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9.6. Covenant Not to Compete...................................... 54
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9.7. Post-Closing Confidentiality................................. 55
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9.8. Post-Closing Notifications................................... 56
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9.9. Transfer Taxes............................................... 56
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9.10. Insurance.................................................... 57
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9.11. Restrictions on Hiring of Seller's Employees................. 57
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9.12. Certain Tax Matters.......................................... 57
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9.13. German Tax Deed.............................................. 58
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ARTICLE X. SURVIVAL AND INDEMNIFICATION................ 58
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10.1. Survival of Representations, Warranties, and Covenants....... 58
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10.2. Limitations on Liability..................................... 59
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iv
10.3. Indemnification.............................................. 61
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10.4. Defense of Claims............................................ 63
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10.5. Conduct of Remedial Actions.................................. 64
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10.6. Adjustment to Purchase Price................................. 66
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ARTICLE XI. TERMINATION........................ 66
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11.1. Termination.................................................. 66
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11.2. Effect of Termination........................................ 67
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ARTICLE XII. MISCELLANEOUS PROVISIONS................. 67
12.1. Specific Performance......................................... 67
12.2. Notices...................................................... 67
12.3. Expenses..................................................... 69
12.4. Successors and Assigns....................................... 69
12.5. Waiver....................................................... 70
12.6. Entire Agreement............................................. 70
12.7. Amendments and Supplements................................... 70
12.8. Rights of the Parties........................................ 70
12.9. Brokers...................................................... 71
12.10. Further Assurances........................................... 71
12.11. Governing Law................................................ 71
12.12. Severability................................................. 71
12.13. Execution in Counterparts.................................... 71
12.14. Titles and Headings.......................................... 71
12.15. Passage of Title and Risk of Loss............................ 71
12.16. Certain Interpretive Matters and Definitions................. 72
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Exhibits
Exhibit A List of Subsidiaries
Exhibit B Terms of Transitional Services Agreement(s)
Exhibit C Terms of NL Software License
Exhibit D Form of Opinion of Seller's Counsel
Exhibit E-1 Form of U.K. Tax Deed
Exhibit E-2 Form of German Tax Deed
Exhibit F U.K. Pension Schedule
Schedules
Schedule 1.1.2 Contract Rights
Schedule 1.1.4 Tangible Personal Property
Schedule 1.1.6(a) Intellectual Property
Schedule 1.1.6(b) Trademarks
Schedule 1.1.7(a) Owned Real Property
Schedule 1.1.7(b) Real Property Leases
Schedule 1.1.8 Permits
Schedule 1.1.11 Acquired Subsidiaries and Enenco
Schedule 1.2.8 Intercompany Agreements
Schedule 1.2.10 Other Excluded Assets
Schedule 3.2(b) Sample Calculation of Net Book Value
Schedule 3.2(d) Form of Consolidated Statement of Income
Schedule 3.3 Allocation of Purchase Price
Schedule 5.1.1 Foreign Qualifications
Schedule 5.1.2.A Acquired Subsidiaries and Enenco
Schedule 5.1.2.B Capital Stock
Schedule 5.1.4 Required Governmental and Third Party Consents
Schedule 5.1.5 Third Party Options
Schedule 5.1.6.A Seller Financial Statements
Schedule 5.1.6.B Enenco Financial Statements
Schedule 5.1.8 Inventory
Schedule 5.1.9 Undisclosed Liabilities
Schedule 5.1.10 Contracts
Schedule 5.1.11 Title to Assets
Schedule 5.1.12(a) Intellectual Property
Schedule 5.1.12(b) Acquired Subsidiary Intellectual Property
Schedule 5.1.13 Business Arrangements with Related Parties
Schedule 5.1.14(a) Real Property
Schedule 5.1.14(b) Real Property Leases
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Schedule 5.1.14(g) Flood Plains
Schedule 5.1.15 Insurance
Schedule 5.1.16(f) Capital Expenditures
Schedule 5.1.17 Customers and Suppliers Schedule 5.1.18(a) Agreements Relating
to Employees Schedule 5.1.18(b) List of Employees Schedule 5.1.18(c) Collective
Bargaining Agreements Schedule 5.1.18(d) Other Employee Matters Schedule
5.1.19(a) Employee Plans Schedule 5.1.19(b) Employees and Former Bargaining Unit
Employees Schedule 5.1.20(a) Litigation Schedule 5.1.20(b) Product Liability
Claims Schedule 5.1.21(a) Compliance With Law Schedule 5.1.21(a)(1) Material
Permits Schedule 5.1.22 Environmental Matters Schedule 5.1.23 Taxes Schedule
5.1.24 Interests in Customers, Suppliers, Etc. Schedule 5.1.25 Warranties and
Returns Schedule 5.1.27 Parent's and Seller's Knowledge Schedule 5.2.3 Required
Governmental Consents Schedule 6.2 Pre-Closing Conduct Schedule 6.13 Agreements
with Affiliates Schedule 6.14 Intercompany Notes Schedule 7.1.6 Third Party
Consents Schedule 8.1.1(a) UK Completion Schedule 8.1.1(b) Germany Completion
Schedule 8.1.1(c) Belgium Completion
Schedule 9.1(a) Non-Bargaining Employees Not Being Offered Employment
Schedule 9.1(c) Purchaser's Benefit Plans
Schedule 9.1(g) Medical Benefits - Bargaining Unit Employees
Index of Defined Terms
Accountants SS 3.2(d)
Acquired Subsidiaries Recitals & Exhibit A
Acquired Subsidiary Intellectual Property SS 5.1.12(b)
Acquired Subsidiaries Closing Cash SS 3.2(c)
Affiliate SS 12.16(a)(vi)
Agreement Recitals
Assumed Liabilities SS 2.1
Book Value Adjustment SS 3.2(a)
vii
Business Recitals
Cash Adjustment SS 3.2(c)
Closing SS 4.1
Closing Date SS 4.1
Closing Cash Statement SS 3.2(c)
Closing Statement SS 3.2(b)
Closing Statement Date SS 3.2(b)
Code SS 3.3
Continued Employees SS 9.1(a)
Contracts SS 1.1.2
Direct Claim SS 10.4(d)
Downward Book Value Adjustment SS 3.2(a)
Employee Plans SS 5.1.19(a)
Employees SS 5.1.19(b)
Enenco SS 1.1.11
Enenco Financial Statements SS 5.1.6.B
Enenco Shares SS 1.1.11
Environmental Claim SS 10.3(a)(iv)
Environmental Costs and Liabilities SS 5.1.22(j)
Environmental Law SS 5.1.22(j)
Environmental Permit SS 5.1.22(j)
Excluded Assets SS 1.2
Financial Statements SS 5.1.6.A
GAAP SS 3.2(b)
Governmental Entity SS 1.1.8
H&C Recitals
H&C America Recitals
Hazardous Material SS 5.1.22(j)
HSR Act SS 5.1.4
Indemnifiable Losses SS 10.2(a)(iv)
Indemnifying Party SS 10.2(a)(iii)
Indemnitee SS 10.2(a)(ii)
Indemnity Payment SS 10.2(a)(i)
Intellectual Property SS 1.1.6(b)
Intercompany Note Amount SS 3.1
Intercompany Notes SS 3.1
Interim Balance Sheet SS 5.1.6.A
Interim Balance Sheet Date SS 5.1.6.A
Inventories SS 1.1.3
Income Tax SS 1.2.7
ISRA SS 6.6
viii
Law SS 1.3.1
liabilities SS 12.16(a)(vii)
Liens SS 1.1
Material Adverse Effect SS 5.1.1
Net Book Value SS 3.2(b)
NJDEP SS 6.6
Nonassignable Contract or Permit SS 1.3.1
Noncompetition Term SS 9.6
Nordenham Lease SS 7.1.10
Other Leased Real Property SS 5.1.14(b)
Other Owned Real Property 5.1.14(a)
Other Permits SS 5.1.21
Other Real Property SS 5.1.14(b)
Other Real Property Leases SS 5.1.14(b)(i)
Owned Real Property SS 1.1.7(a)
Parent Recitals
Patent-Related Assets SS 1.1.6(a)
Permits SS 1.1.8
Permitted Liens SS 5.1.11
Person SS 12.16(a)(ix)
Prepaid Items SS 1.1.10
Preparing Party SS 3.2(d)
Products SS 9.6(a)
Purchase Price SS 3.1
Purchased Assets SS 1.1
Purchaser Recitals
Purchaser Ancillary Documents SS 5.2.2
Purchaser Benefit Plans SS 9.1(c)
Real Property SS 1.1.7(b)
Real Property Leases SS 1.1.7(b)
Release SS 5.1.22(j)
Remedial Action SS 10.3(a)(iv)
Retained Liabilities SS 2.2
RII Recitals
Seller Recitals
Seller Ancillary Documents SS 5.1.3
Subsidiary Employees SS 5.1.19(b)
Subsidiaries Recitals & Exhibit A
Tangible Personal Property SS 1.1.4
Tax Deed SS 7.1.13
Tax or Taxes SS 5.1.23(g)
ix
Tax Return SS 5.1.23(g)
Third Party Claim SS 10.2(a)(v)
to Parent's knowledge SS 5.1.27
to Seller's knowledge SS 5.1.27
Unadjusted Purchase Price SS 3.1
Upward Book Value Adjustment SS 3.2(a)
$ SS 12.16(a)
x
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (which together with the Exhibits and
Schedules attached hereto is referred to as this "Agreement") is made and
entered into as of the 29th day of December, 1997, by and among NL Industries,
Inc., a New Jersey corporation ("Parent"), Rheox, Inc., a Delaware corporation
and wholly owned subsidiary of Parent ("Seller"), Rheox International, Inc., a
Delaware Corporation and a wholly owned subsidiary of Seller ("RII"), Harrisons
& Crosfield plc, a public limited company formed under the laws of the United
Kingdom ("H&C"), Harrisons & Crosfield (America) Inc., a Delaware corporation
("H&C America") and a wholly owned subsidiary of H&C, and Elementis Acquisition
98, Inc., a Delaware corporation and an indirect wholly owned subsidiary of H&C
America ("Purchaser").
WHEREAS, Seller, itself and through its Subsidiaries (as hereinafter
defined), presently conducts the business of developing, manufacturing,
marketing, and selling specialty chemical products consisting primarily of
rheological additives (the "Business");
WHEREAS, on the terms and subject to the conditions contained in this
Agreement, Seller desires to sell, transfer, and assign to Purchaser (except as
described in the next paragraph hereof) or, as applicable, cause RII, to sell,
transfer, and assign to Purchaser (except as described in the next paragraph
hereof), and Purchaser (except as described in the next paragraph hereof)
desires to purchase from Seller, or, as applicable, RII, all of the Purchased
Assets (as defined in Section 1.1 hereof);
WHEREAS, on the terms and subject to the conditions contained in this
Agreement, H&C or one or more designees or assignees of H&C (to the extent
permitted pursuant to Section 12.4 hereof) (the "H&C Assignees"), desires to
purchase from Seller or RII as a part of the Purchased Assets, and Seller or RII
desires to sell to H&C or such H&C Assignees, all of the outstanding shares of
capital stock of RIMC, Inc., a Delaware corporation ("RIMC") and all of the
outstanding shares of capital stock of the subsidiaries of RII identified on
Exhibit A hereto (the "Acquired Subsidiaries" and, collectively with RII and
RIMC, the "Subsidiaries"), in each case as described in clause (i) of Section
1.1.11 hereto; and
WHEREAS, on the terms and subject to the conditions contained in this
Agreement, Seller wishes to assign to Purchaser, or, as applicable, cause RII to
assign to Purchaser, and Purchaser is willing to assume, the Assumed Liabilities
(as defined in Section 2.1 hereof);
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, promises and covenants herein contained, the
parties hereto agree as follows:
ARTICLE I. PURCHASE OF ASSETS
1.1. Purchase and Sale of Assets. On the terms and subject to the
conditions hereof, at the Closing (as defined in Section 4.1), Seller will sell,
transfer, convey, assign, and deliver to Purchaser or the H&C Assignees, as the
case may be, or, as applicable, cause RII to sell, transfer, assign, and deliver
to Purchaser or the H&C Assignees, as the case may be, and Purchaser or the H&C
Assignees, as the case may be, will purchase and accept, all right, title, and
interest of Seller or, as applicable, RII in and to all rights, properties, and
assets of every kind, character, and description, wherever located and whether
tangible or intangible, real or personal or fixed or contingent, owned, held,
used, conceived, developed, or offered for sale by Seller or RII, in each case
free and clear of all mortgages, liens, pledges, security interests, charges,
claims on title, restrictions with respect to title, and encumbrances of any
nature, including without limitation licenses, pledges, defect or objection
liens, conditional and installment sales agreements, easements, or
encroachments, other title or interest retention arrangements, reservations, or
limitations of any nature whatsoever (collectively, "Liens") except the
Permitted Liens described in clauses (a) and (b) of Sections 5.1.11 and each of
the Liens identified with an asterisk on Schedule 5.1.11 hereto (as defined in
Section 5.1.11), including without limitation the rights, properties, and assets
of Seller and RII (but not of any Acquired Subsidiary) described in this Section
1.1 (collectively, the "Purchased Assets"):
1.1.1. Accounts Receivable. All accounts or notes receivable of,
and any other amounts due to, Seller or RII, including receivables from
Affiliates;
1.1.2. Contract Rights. All right, title, and interest as of the
date hereof and, to the extent entered into subsequent to the date hereof in
accordance with the terms hereof (including Section 6.2 hereof), as of the
Closing, in and to all contracts, agreements, leases, licenses, joint venture,
purchase orders (as vendor or purchaser), commitments, and other agreements and
arrangements, whether oral or written (collectively, "Contracts"), of Seller or
RII, including without limitation such of the foregoing as are described on
Schedule 1.1.2;
1.1.3. Inventories and Stores and Supplies. All raw materials,
components, work-in-process, finished products, packaging materials, stores and
supplies, spare parts, and samples (collectively, "Inventories") of Seller or
RII, wherever located;
1.1.4. Tangible Personal Property. All machinery and equipment,
tools, spare and maintenance parts, furniture, fixtures, vehicles, tools, jigs,
dies, leasehold
2
improvements, and all other tangible personal property of Seller or RII,
wherever located, including without limitation, the tangible personal property
listed on Schedule 1.1.4 (collectively, the "Tangible Personal Property");
1.1.5. Manufacturers' and Vendors' Warranties. All rights under
manufacturers' and vendors' warranties relating to items included in the
Purchased Assets and all similar rights against third parties relating to items
included in the Purchased Assets;
1.1.6. Intellectual Property.
(a) (i) all patents and patent applications owned by the Seller or
RII, all licenses to patents and patent applications to and from third
parties, in each case as set forth on Schedule 1.1.6(a) hereto, (ii)
research and development data and results, manufacturing and other
processes, trade secrets, know how, inventions, ideas, conceptions, mask
work, designs, technology, proprietary data or information, formulae, and
manufacturing, engineering, and other technical information, whether owned
by the Seller or RII or licensed to the Seller or RII by third parties or
Affiliates, (iii) all copyrights (registered or otherwise) and
registrations and applications for registration thereof owned or licensed
by Seller or RII, (iv) all copies and tangible embodiments of all the
foregoing, in whatever form or medium, (v) all rights to ▇▇▇ for present
and past infringement of any of the foregoing, (vi) all notebooks,
records, reports, and data relating thereto, and (vii) all applications
and registrations for any of the foregoing (collectively, the assets
referred to in clauses (i) through (vii) are referred to herein as the
"Patent-Related Assets");
(b) (i) all trademarks, trade names, service marks, trade dress,
logos, and corporate names (including the name Rheox and any derivatives
thereof), or any applications and registrations for any of the foregoing,
in each case as listed on Schedule 1.1.6(b) hereto, (ii) except as may
otherwise be provided in the transition services agreement (as described
in more detail on Exhibit B hereto) computer programs, software and data
bases licensed by the Seller or RII from third parties, with all
maintenance fees therefor arising for any period after Closing to be paid
by Purchaser, (iii) all copies and tangible embodiments of all the
foregoing, in whatever form of medium, (iv) all rights to ▇▇▇ for present
and past infringement of any of the foregoing, and (v) an irrevocable,
perpetual, non-exclusive, fully paid up, worldwide right and license to
use proprietary software developed by Affiliates of Seller or RII that are
used in the Business (the "NL Software License") on the terms set forth on
Exhibit C hereto, in each case as listed on Schedule 1.1.6(b)
(collectively all of the foregoing assets, whether or not listed on
Schedule 1.1.6(b) hereto, together with the Patent-Related Assets, are
referred to herein as the "Intellectual Property");
3
1.1.7. Real Property. (a) The real property owned in fee by Seller
or RII and listed and described on Schedule 1.1.7(a), together with all
appurtenant easements thereunto and all structures, fixtures, and improvements
located thereon, and any minerals and mining rights of Seller or RII with
respect thereto, including, without limitation, any and all patented and
unpatented mining and millsite claims (the "Owned Real Property"), and (b) the
rights and incidents of interests of Seller or RII as lessee in and to all real
property leases (the "Real Property Leases") used or held for use primarily in
connection with the operations of the Business, including but not limited to
those listed or described on Schedule 1.1.7(b), and all of Seller's and RII's
rights as of the Closing in all of the structures, fixtures, and improvements
located thereon (the "Leased Real Property" and, together with the Owned Real
Property, the "Real Property");
1.1.8. Governmental Licenses, Permits, and Approvals. All rights,
title, and interest of Seller or RII in and to all licenses, permits,
franchises, authorizations, orders, registrations, certificates, variances,
approvals, and similar rights of Seller and RII (collectively, "Permits") issued
by any domestic or foreign court, government, governmental agency, authority,
entity, or instrumentality ("Governmental Entity"), including without limitation
such of the foregoing as are listed in Schedule 1.1.8;
1.1.9. Books and Records. All the books and records of Seller or
RII, including without limitation all books and records relating to employees,
the purchase of materials, supplies, and services, financial, accounting and
operations matters, product, research and development, manufacture and sale of
products and all customer and vendor lists relating to the operation of the
Business and all files and documents (including credit information) relating to
customers and vendors of the Business;
1.1.10. Prepaid Items. All prepaid items, deposits, costs, and
fees, including rights under insurance policies covering periods through the
Closing Date ("Prepaid Items");
1.1.11. Acquired Subsidiaries and Enenco. (i) All of the issued
and outstanding shares of capital stock and other equity interests of the
Acquired Subsidiaries as described on Schedule 1.1.11(A), (ii) all of the issued
and outstanding shares of capital stock and other equity interests of Enenco,
Inc., a New York corporation ("Enenco"), owned by Seller or any Affiliate of
Seller, as described on Schedule 1.1.11(B) (the "Enenco Shares") and (iii) all
of the issued and outstanding shares of capital stock and other equity interests
of RIMC, Inc.;
1.1.12. Marketing and Other Materials. All marketing brochures and
materials and other printed and written materials relating to Sellers' or RII's
ownership of or operation of the Purchased Assets or the Business that the
Seller or RII is not required by Law (as defined in Section 1.3.1) to retain (of
which the Seller or RII may retain duplicates so long
4
as the confidentiality thereof is maintained by the Seller or RII, unless
disclosure thereof is required by Law);
1.1.13. Rights Against Third Parties. All rights under or pursuant
to all warranties, representations, and guarantees made by suppliers,
manufacturers, contractors, and other third parties or Affiliates in connection
with the operation of the Business or affecting any of the Purchased Assets or
Assumed Liabilities and all of Seller's or RII's rights, claims, credits, causes
of action, or rights of set-off against third parties relating to the Business
or the Purchased Assets, whether liquidated or unliquidated, fixed or
contingent, including all claims under any Contracts of Seller or RII, except as
such rights relate to a Retained Liability, an Excluded Asset, or a matter for
which Seller must indemnify Purchaser;
1.1.14. Going Concern Value. The value of the Business as a going
concern and all goodwill relating to the Purchased Assets;
1.1.15. Tax Refunds. Seller's or RII's rights to receive any
refund attributable to, or right to offset against, any Taxes (as defined in
Section 5.1.23), other than Income Taxes (as defined in Section 1.2.7)
attributable to periods ending on or prior to the Closing Date or to the
Pre-Closing portion of any taxable period that includes but does not end on the
Closing Date;
1.1.16. Cash and Cash Equivalents. All cash and cash equivalents
held by Seller or RII accounted for on the Closing Statement prepared pursuant
to Section 3.2(c); and
1.1.17. Miscellaneous Assets. Except for Excluded Assets (as
defined in Section 1.2), all other rights, properties, and assets owned by
Seller or RII, wherever located.
1.2. Excluded Assets. Notwithstanding anything contained in this Agreement
to the contrary, the following rights, properties, and assets (collectively, the
"Excluded Assets") will not be included in the Purchased Assets:
1.2.1. Ordinary Course of Business Dispositions. All of the
Accounts Receivable, Inventories, Tangible Personal Property, or Prepaid Items
which have been sold, transferred, consumed, or otherwise disposed of by Seller
or RII prior to the Closing, in each case in the ordinary course of the conduct
of the Business consistent with past practice and the provisions of Section 6.2;
1.2.2. Contracts Terminated in the Ordinary Course of Business.
All Contracts of Seller or RII that have terminated or expired prior to the
Closing in the ordinary course of the conduct of the Business consistent with
past practice and the provisions of Section 6.2;
5
1.2.3. Corporate Documents. Seller's or RII's corporate seal,
minute books, charter documents, corporate stock record books, and such other
books and records as pertain to the organization, existence, or share
capitalization of Seller or RII, all books and records that pertain either to
other Excluded Assets or any Retained Liabilities, and duplicate copies of such
records included in the Purchased Assets as are reasonably necessary (a) to
enable Seller or RII to file its tax returns and reports, (b) to prepare its
financial statements, or (c) defend or pursue any claim, action, lawsuit or
other proceeding which constitutes a Retained Liability or relates to any
Excluded Asset (provided in each case that the confidentiality thereof is
maintained except where disclosure thereof is required by Law), and any other
records or materials relating to Seller or RII generally and not involving or
relating to the Purchased Assets or the operation or operations of the Business,
including but not limited to tax returns, reports, books and records of RII,
Bentone Sud S.A. and RK Export, Inc.;
1.2.4. Employee Benefit Plans. Except as otherwise provided in
Section 9.1, all Employee Plans (as defined in Section 5.1.19) which cover
Employees (as defined in Section 5.1.19) and all assets relating thereto,
including any contracts, insurance policies, trusts, or other similar assets.
1.2.5. [Intentionally omitted].
1.2.6. Insurance. Subject to Section 1.1.10, all contracts of
insurance of Seller or RII;
1.2.7. Tax Refunds. Seller's or RII's rights to receive any refund
attributable to, or right of offset against, any Income Taxes attributable to
periods ending on or prior to the Closing Date or to the pre-Closing portion of
any taxable period that includes but does not end on the Closing Date; for
purposes of this Agreement, "Income Tax" means (i) all Taxes however denominated
(including franchise taxes and premium taxes) that are based upon or measured by
gross income, net income, or gross receipts (solely when used to compute income
Tax), (ii) minimum and tax preference based Taxes, (iii) Taxes arising from
actual or deemed dividend distributions, (iv) capital gain Taxes, and (v) any
interest, fines, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any Tax described in clauses (i)
and (ii) or any contest, dispute or refund thereof;
1.2.8. Intercompany Agreements. Except as listed in Schedule 1.2.8
or as otherwise expressly contemplated by this Agreement, all Contracts entered
into prior to the Closing Date between or among Parent or any Affiliate of
Parent (other than Seller or RII), on the one hand, and Seller and RII, on the
other hand;
1.2.9. Rights under this Agreement. Seller's rights arising out of
or relating to this Agreement or the transactions contemplated hereby; and
6
1.2.10.Other Excluded Assets. Seller's or RII's ownership interest
in Bentone Sud S.A. and RK Export, Inc., furniture, equipment, supplies, and
contracted-for third party services currently utilized by employees of
Affiliates of Seller located in Seller's Hightstown, New Jersey offices, and any
other right, property, or asset which is described on Schedule 1.2.10.
1.3. Nonassignable Contracts and Permits.
1.3.1. Nonassignability. Without limiting or otherwise affecting
the rights of Purchaser pursuant to Articles VII or X, to the extent that any
Contract or Permit to be assigned pursuant to the terms of Sections 1.1.2,
1.1.6, 1.1.7(b), or 1.1.8 is not capable of being assigned (each a
"Nonassignable Contract or Permit"), without the consent, approval, or waiver of
any Person (including without limitation a Governmental Entity), or if such
assignment or attempted assignment would constitute a breach thereof or a
violation of any applicable foreign or United States federal, state, or local
law, statute, ordinance, regulation, order, writ, injunction, or decree ("Law"),
nothing in this Agreement will constitute an assignment or require the
assignment thereof prior to the time at which all consents, approvals, and
waivers necessary for such assignment shall have been obtained.
1.3.2. Seller to Use Commercially Reasonable Efforts.
Notwithstanding anything contained in this Agreement to the contrary, Seller
will not be obligated to assign to Purchaser, or cause RII to assign to
Purchaser, any of its rights or obligations in, to, or under any of the
Nonassignable Contracts or Permits without first having obtained all consents,
approvals, and waivers necessary for such assignment; provided, however, that
Seller shall use its commercially reasonable efforts to obtain all such
consents, approvals, and waivers prior to and after the Closing Date and will
otherwise comply with the provisions of Sections 6.4 and 6.5.
1.3.3. If Waivers or Consents Cannot Be Obtained. To the extent
and for so long as all consents, approvals, and waivers required for the
assignment of any Nonassignable Contracts or Permits shall not have been
obtained by Seller, Seller shall use its commercially reasonable efforts to, and
shall cause RII to use its commercially reasonable efforts to, (a) provide to
Purchaser the financial and business benefits of any such Nonassignable Contract
or Permit and (b) enforce, at the request of Purchaser, for the account and at
the expense of Purchaser, any rights of Seller or RII arising from any such
Nonassignable Contract or Permit (including without limitation the right to
elect to terminate in accordance with the terms thereof upon the advice of
Purchaser, provided Purchaser agrees to indemnify Seller from and against any
Indemnifiable Losses (as defined in Section 10.2(a) hereof) that Seller may
incur as a result of such termination). Following the Closing, Seller shall not
terminate, modify, or amend, and shall cause RII not to terminate, modify, or
amend, any Nonassignable Contract or Permit without the Purchaser's prior
written consent.
7
ARTICLE II. ASSUMPTION OF LIABILITIES
2.1. Assumed Liabilities. Subject to Section 2.2 hereof, as of the
Closing, Purchaser will assume and thereafter in due course pay and fully
satisfy, as and when the same shall become due and payable, all liabilities and
obligations of Seller or RII in respect of the Business or the Purchased Assets,
whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due (the "Assumed Liabilities"), including without
limitation:
(a) all liabilities and obligations of Seller or RII under the
agreements, contracts, leases, licenses, and other arrangements referred
to in the definition of Purchased Assets other than those pertaining to
Excluded Assets;
(b) solely to the extent of the amount accrued on the Closing
Statement (as defined in Section 3.2(c)), (i) unpaid wages, vacation,
holiday pay and bonuses relating to any period prior to the Closing Date
and employment taxes thereon and an additional 8% of such unpaid
compensation for retirement benefits with respect thereto (and such amount
shall be accrued on the Closing Statement prepared in accordance with
Section 3.2(c) to the extent not otherwise accrued on the Closing
Statement), (ii) post-retirement medical benefits coverage of bargaining
unit Employees and their eligible dependents with respect to claims
arising for medical services whether rendered before, on or after the
Closing Date and (iii) post-retirement life insurance coverage of
bargaining unit Employees and their eligible spouses;
(c) to the extent accrued on the Closing Statement, all
obligations of Seller to Employees under the collective bargaining
agreements set forth in Schedule 5.1.18(a); and
(d) all liabilities accrued in the Closing Statement prepared
pursuant to Section 3.2(c); and
(e) Subject to Article X, all liabilities and obligations of
Seller and RII relating to the Business and the Purchased Assets with
respect to environmental matters, including without limitation those
arising under Environmental Laws (as defined in Section 5.1.22).
provided, however, that the Assumed Liabilities shall not include any liability
which is included within the definition of Retained Liability in Section 2.2.
8
2.2. Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Purchaser does not assume or agree to pay, satisfy,
discharge, or perform, and will not be deemed by virtue of the execution and
delivery of this Agreement or any document delivered at the Closing pursuant to
this Agreement, or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed, or to have agreed to pay,
satisfy, discharge, or perform, any liability, obligation, or indebtedness set
forth below (such liabilities and obligations retained by Seller or RII being
referred to herein as the "Retained Liabilities"):
(a) all obligations or liabilities of Seller or RII or any
predecessor or Affiliate thereof (including, without limitation, with
respect to any environmental matters) which relate to any of the Excluded
Assets or which relate to any business or operations (other than the
Business or the Purchased Assets) conducted by Parent, Kronos Inc., Seller
or any of their respective Affiliates;
(b) all obligations or liabilities of Seller or RII or any
predecessor or Affiliate thereof relating to Income Taxes with respect to
the Business attributable to periods ending on or prior to the Closing
Date or to the pre-Closing portion of any taxable period that includes but
does not end on the Closing Date, including, without limitation, (i) any
liability of Seller or RII for any Income Taxes arising because Seller or
RII is transferring the Purchased Assets or because Seller or RII has an
excess loss account (within the meaning of Treas. Reg. SS1.1502-19) in the
stock of any of the Subsidiaries, or because Seller or RII has deferred
gain on any deferred intercompany transaction (within the meaning of
Treas. Reg. SS1.1502-13) and (ii) all liabilities of Seller and RII for
the unpaid Income Taxes of persons other than Seller and Subsidiaries
under Treas. Reg. SS1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise;
(c) all obligations or liabilities of Seller or RII arising out of
or relating to this Agreement or the transactions contemplated hereby and
all obligations or liabilities for any legal, accounting, investment
banking, brokerage, or similar fees or expenses incurred by Seller or RII
in connection with, resulting from, or attributable to the transactions
contemplated by this Agreement;
(d) all obligations or liabilities for any indebtedness for
borrowed money incurred with respect to the Business prior to the Closing
Date pursuant to any indenture, mortgage, loan, letter of credit, or other
credit Contract under which the Seller or RII has borrowed or is entitled
to borrow any money or issued any note, bond, indenture, or other evidence
of indebtedness for borrowed money, or any guarantee or other contingent
liability in respect of any indebtedness of any other Person, including,
without limitation any obligations or liabilities of Seller or RII
9
pursuant to the Amended and Restated Bank Credit Agreement dated as of
January 30, 1997 among Seller, certain of the Subsidiaries, The Chase
Manhattan Bank, N.A., and the other lenders named therein; and
(e) except (x) as specifically provided in Sections 2.1(b), 2.1(c)
and 9.1, or (y) to the extent of the amount accrued on the Closing
Statement prepared pursuant to Section 3.2(c), all obligations or
liabilities (contingent or otherwise) of Seller arising from or relating
to (i) the employment or termination of employment of any Employee before
the Closing Date, (ii) Employee Plans (including claims arising thereunder
and relating to the period prior to the Closing Date) and (iii)
post-retirement medical and/or life insurance benefits coverage of current
or former non-bargaining unit Employees and their eligible dependents.
ARTICLE III. PURCHASE PRICE
3.1. Unadjusted Purchase Price. At the Closing, in addition to assuming
the Assumed Liabilities, Purchaser (together with the H&C Assignees) will pay
for the Purchased Assets and the covenants of Seller included herein an
aggregate purchase price in the amount of U.S. $445,000,000 (the "Unadjusted
Purchase Price"), subject to adjustment as provided in Section 3.2 and Section
10.6 (as adjusted, the "Purchase Price"). The Unadjusted Purchase Price shall be
paid by wire transfer of immediately available funds to such account as shall
have been designated by Seller to Purchaser prior to the Closing. In so
designating such account, Seller shall be acting as agent for RII and shall have
the exclusive responsibility for the delivery to RII of such portion of the
Unadjusted Purchase Price to which it may be entitled.
3.2. Adjustments to the Purchase Price
(a) If the amount of the Net Book Value of the Business
(determined in accordance with Section 3.2(b) as of the Closing Statement Date
(as hereinafter defined) is: (i) less than $62,343,000, the Unadjusted Purchase
Price shall be decreased by an amount equal to the amount by which such Net Book
Value is less than $62,343,000, (the "Downward Book Value Adjustment"); or (ii)
is greater than $62,343,000, the Unadjusted Purchase Price shall be increased by
an amount equal to the amount by which such Net Book Value is greater than
$62,343,000, but such increased amount shall not in any event exceed the amount
of cash and cash equivalents included in the Closing Statement plus $5,000,000
(the "Upward Book Value Adjustment" and, together with the Downward Book Value
Adjustment, the "Book Value Adjustment"). Payment of any Book Value Adjustment
shall be made pursuant to Section 3.2(f).
10
(b) As used herein, the term "Net Book Value" shall mean the sum
of the consolidated assets of the Business minus the sum of the amount of the
consolidated liabilities of the Business as reflected on the Closing Statement,
(i) provided there shall be excluded from the consolidated assets: (A) any
Excluded Assets; and, (B) any assets of the Acquired Subsidiaries relating to
Income Taxes and deferred Income Taxes with respect to the Business attributable
to periods ending on or prior to the Closing Date or to the pre-Closing portion
of any taxable period that includes but does not end on the Closing Date; and
(ii) provided there shall be excluded from the consolidated liabilities: (A) any
Retained Liabilities and (B) any liabilities of the Acquired Subsidiaries
relating to Income Taxes and deferred Income Taxes with respect to the business
attributable to periods ending on or prior to the Closing Date or to the
pre-Closing portion of any taxable period that includes but does not end on the
Closing Date.
(c) The term "Closing Statement" shall mean the statement of Net
Book Value as of the Closing Date or, if the Closing Date does not fall on the
last business day of the month, as of the month-end following the Closing Date
(as applicable, the "Closing Statement Date"). The Closing Statement shall be
prepared by Purchaser and shall be delivered to Seller as promptly as
practicable, and in any event within 60 days after the Closing Statement Date.
The Closing Statement (i) shall be prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied in a manner consistent
with the application of those principles in the audited balance sheet of the
Seller and its Subsidiaries as of December 31, 1996 and (ii) shall present
fairly the Net Book Value as of the Closing Statement Date and the amount of the
Book Value Adjustment resulting therefrom; provided, however, that no prepaid
expense shall be included on the Closing Statement unless Purchaser will
actually realize the benefit thereof subsequent to the Closing Date. For
illustrative purposes, set forth on Schedule 3.2(b) hereof is calculation of the
projected Net Book Value of the Business as of December 31, 1997.
(d) If the Closing Date occurs on any date other than the last
business day of the month, then the Book Value Adjustment shall be decreased by
an amount equal to the "Profit Adjustment" as defined below. The Profit
Adjustment shall be calculated by using the Consolidated Statement of Income
(which will be present in the form set out in Schedule 3.2(d)) for the month in
which the Closing Date occurs (the "Closing Month"). Purchaser shall prepare the
Consolidated Statement of Income in accordance with GAAP and consistent with the
principles applied in the audited consolidated financial statements of Seller
and its Subsidiaries for the year ended December 31, 1996. The "Profit
Adjustment" shall be the amount obtained by taking the net income (as set out in
the Consolidated Statement of Income) for the Closing Month multiplied by the
adjustment factor. The adjustment factor will be calculated as the number of
days from the Closing Date to and including the Closing Statement Date divided
by the total number of days in the Closing Month.
11
(e) Seller shall have the opportunity to examine the work papers,
schedules, and other documents prepared by Purchaser, in connection with its
preparation of the Closing Statement and Profit Adjustment, as applicable. The
Closing Statement and Profit Adjustment shall be final and binding on the
parties unless, within 60 days after delivery to Seller notice is given by the
Seller of its objection setting forth in reasonable detail its basis for
objection. If notice of objection is given, the parties shall consult with each
other with respect to the items in dispute. If the parties are unable to reach
agreement within 20 days after the notice of objection has been given, the items
in dispute shall be referred for resolution to the U.S. national office of KPMG
Peat Marwick LLP (the "Accountants") as promptly as practicable. The Accountants
will make a determination as to each of the items in dispute, which
determination will be (i) in writing, (ii) furnished to each of the parties
hereto as promptly as practicable after the items in dispute have been referred
to the Accountants, (iii) made in accordance with this Agreement, and (iv)
conclusive and binding upon each of the parties hereto. In connection with their
determination of the disputed items, the Accountants will be entitled to rely
on, if any, the workpapers, trial balances, and similar materials prepared by
Purchaser's auditors in connection with such firm's examination of the financial
statements of Seller and Purchaser, and the fees and expenses of the Accountants
will be shared by Purchaser and Seller in such proportions as the Accountants
determine and deem equitable (after taking into account, among other things, the
difference between the positions taken by Purchaser and Seller, and the
conclusion determined by the Accountants to be appropriate). Each of Purchaser
and Seller will use commercially reasonable efforts to cause the Accountants to
render their decision as soon as reasonably practicable, including without
limitation by promptly complying with all reasonable requests by the Accountants
for information, books, records, and similar items.
(f) Parent and Seller jointly and severally agree, within 5 days
after the date of determination of the Book Value Adjustment and the Profit
Adjustment, to pay to Purchaser (or to the H&C Assignees, as applicable) the
amount of any Downward Book Value Adjustment, plus interest thereon from the
Closing Statement Date to the date of determination at a rate of five percent
(5%) per annum (subject to applicable withholding Taxes as may be required by
Law), accruing daily and compounding annually, as an adjustment to the Purchase
Price by wire transfer of immediately available funds to such account or
accounts as shall be designated by Purchaser to Seller. Purchaser, H&C and H&C
America jointly and severally agree, within 5 days after the date of
determination of the Book Value Adjustment, to pay (or cause to be paid in the
case of the H&C Assignees) to Seller (or to such Persons as Seller may
designate) the amount of any Upward Book Value Adjustment, plus interest thereon
from the Closing Statement Date to the date of determination at a rate of five
percent (5%) per annum (subject to applicable withholding Taxes as may be
required by Law), accruing daily and compounding annually, as an adjustment to
the Purchase Price by wire transfer of immediately available funds to such
account or accounts as shall be designated by Seller to Purchaser.
12
3.3. Allocation of Purchase Price. Seller and Purchaser agree that the
Unadjusted Purchase Price shall be allocated to and among the shares of capital
stock of the Acquired Subsidiaries as set forth on Schedule 3.3 hereof. Seller
and Purchaser agree that the remaining portion of the Unadjusted Purchase Price
of the Purchased Assets (including the amount of the Assumed Liabilities) will
be allocated among the Purchased Assets and the covenants of Parent and Seller
included herein within 60 Business Days after the Closing Date by mutual
agreement between Purchaser and Seller, and Purchaser and Seller agree to be
bound by such allocation. Such allocation shall comply with Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code"), and Treasury Regulations
promulgated thereunder. Subject to the requirements of any applicable tax law,
all Tax Returns and reports including, without limitation, IRS form 8594, filed
by the Purchaser and the Seller shall be prepared consistently with such
allocation and neither the Purchaser nor the Seller shall take a position
contrary thereto. In the event of any purchase price adjustment hereunder, the
Purchaser (and the H&C Assignees, as the case may be) and the Seller agree to
adjust such allocation to reflect such purchase price adjustment and to file
consistently any tax returns and reports including, without limitation, IRS form
8594, required as a result of such purchase price adjustment. Any disputes
regarding the allocation of the Unadjusted Purchase Price of the Purchased
Assets and the Assumed Liabilities shall be referred for resolution to the
Accountants, and the fees and expenses of the Accountants will be shared by
Purchaser and Seller in such proportions as the Accountants determine and deem
equitable (after taking into account, among other matters, the difference
between the allocation proposed by Seller and Purchaser, respectively, and the
allocation determined by the Accountants to be appropriate). Each of Purchaser
and Seller will use commercially reasonable efforts to cause the Accountants to
render their decision as soon as reasonably practicable, including without
limitation by promptly complying with all reasonable requests by the Accountants
for information, books, records, and similar items.
ARTICLE IV. THE CLOSING
4.1. Date of Closing. The consummation of the purchase and sale of the
Purchased Assets contemplated hereby (the "Closing") shall take place on January
30, 1998, at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or at such other place as the parties may designate) or on
such other date designated by the parties in writing, after each of the
conditions specified in Article VII has been fulfilled (or waived by the party
entitled to waive that condition). The date on which the Closing is effected is
referred to in this Agreement as the "Closing Date." At the Closing, the parties
shall execute and deliver the documents referred to in Article VIII.
13
ARTICLE V. REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of Seller. Each of Seller and Parent,
jointly and severally, makes the following representations and warranties to
H&C, H&C America and Purchaser, each of which is true and correct as of the date
hereof and shall be true and correct as of the Closing Date, and, except as
otherwise provided in Section 10.1 hereof, shall be unaffected by any
investigation heretofore or hereafter made by or on behalf of H&C, H&C America,
or Purchaser. Except with respect to the representations and warranties
contained in the second sentence of Section 5.1.6(B) and Section 5.1.11(i), the
representations and warranties contained in this Article V with respect to
Enenco or the Enenco Shares are made to the knowledge of Parent and Seller.
5.1.1. Organization and Good Standing. Each of Seller, Parent, and
RII is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware, New Jersey, and Delaware respectively.
Each of Seller and RII has the requisite corporate power and authority to own,
lease, or otherwise hold the Purchased Assets owned, leased, or otherwise held
by it and to carry on the Business as presently conducted by it. Except as
described on Schedule 5.1.1, each of Seller and RII is in good standing and duly
qualified to conduct business as a foreign corporation in every state of the
United States in which its ownership or lease of property or conduct of its
business activities makes such qualification necessary, except where the failure
to be so qualified would not, individually or in the aggregate, have a material
adverse effect on the Purchased Assets or the condition (financial or otherwise)
or results of operations of the Business, taken as a whole, or on the ability of
Purchaser to conduct the Business after the Closing ("Material Adverse Effect").
The states in which Seller and RII are so qualified are listed on Schedule
5.1.1.
5.1.2.A Acquired Subsidiaries and Enenco. Each of the Acquired
Subsidiaries and Enenco is a corporation duly organized, validly existing, and
in good standing under the laws of its jurisdiction of organization or
incorporation set forth on Schedule 5.1.2A, and each of the Acquired
Subsidiaries and Enenco has the requisite corporate power and authority to own,
lease, or otherwise hold the assets owned, leased, or otherwise held by it and
to carry on the business presently conducted by it. None of the Acquired
Subsidiaries has filed in the last ten years for bankruptcy or composition
proceedings. Except as described on Schedule 5.1.2A, each of the Acquired
Subsidiaries and Enenco is duly qualified to conduct business as a foreign
corporation in each jurisdiction in which its ownership or lease of property or
assets or the conduct of its business activities makes such qualification
necessary, except where the failure to be so qualified would not, individually
or in the aggregate, have a Material Adverse Effect. The jurisdictions in which
the Acquired Subsidiaries are so qualified are listed on Schedule 5.1.2A. Except
for the Subsidiaries and Enenco, and except as otherwise set forth in Section
1.2.10 and on Schedule 5.1.2A, no shares of any corporation or any ownership or
other investment interest, either of record, beneficially, or equitably, in any
association, partnership, joint venture, limited liability company, trust, or
other legal entity are owned or held, directly or indirectly, by Seller or RII.
14
5.1.2.B Capital Stock. The authorized and outstanding capital
stock and, as applicable, nominal values, of each Acquired Subsidiary and Enenco
is as set forth on Schedule 5.1.2B. All of the issued and outstanding shares of
capital stock of each Acquired Subsidiary and all of the Enenco Shares have been
duly authorized and validly issued, are fully paid and nonassessable with no
personal liability attaching thereto and were not issued in violation of any
preemptive rights or federal or state securities Laws, and are owned
beneficially and of record in the amounts (or in the nominal values) and by the
Persons as disclosed in Schedule 5.1.2B. Except as set forth on Schedule 5.1.2B,
all of the outstanding capital stock of each of the Acquired Subsidiaries and
the Enenco Shares are free and clear of all Liens. Except as set forth on
Schedule 5.1.2B, there are no outstanding securities, rights (preemptive or
other), subscriptions, calls, warrants, options, or other agreements (except for
this Agreement) that give any person the right to purchase, subscribe for, or
otherwise receive or be issued any shares of capital stock of any Acquired
Subsidiary or Enenco or any security convertible into or exchangeable or
exercisable for any shares of capital stock of any Acquired Subsidiary or
Enenco. Except as set forth on Schedule 5.1.2B, there are no proxies,
stockholder agreements, voting trusts, or other agreements or understandings to
which Parent, Seller, any Subsidiary, or Enenco is a party or by which it is
bound relating to the voting of any shares of capital stock of any Acquired
Subsidiary or Enenco and, except for rights held by Parent, Seller, or any
Subsidiary and except as set forth on Schedule 5.1.2B, there are no rights to
participate in the equity, income, or election of directors or officers of any
Acquired Subsidiary or Enenco. With respect to the Acquired Subsidiaries
organized under the laws of Germany, no direct or indirect repayments of stock
capital have been made.
5.1.3. Authorization and Effect of Agreement. Each of Seller and
Parent has the requisite corporate power to execute and deliver this Agreement
and the agreements to be entered into by them at the Closing pursuant hereto
(the "Seller Ancillary Documents") and to perform the transactions contemplated
hereby and thereby to be performed by it. The execution and delivery by each of
Seller and Parent of this Agreement and the Seller Ancillary Documents and the
performance by each of them of the transactions contemplated hereby and thereby
to be performed by it have been or, in the case of the Seller Ancillary
Documents, will at the Closing be duly authorized by any necessary corporate and
shareholder action on the part of Seller and Parent. This Agreement has been,
and each Seller Ancillary Document will at the Closing be, duly executed and
delivered by duly authorized officers of each of Seller and Parent and, assuming
the due execution and delivery of this Agreement and, as applicable, any Seller
Ancillary Document, by Purchaser, constitutes a valid and binding obligation of
Seller and Parent enforceable against them in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium, or
other similar laws affecting the enforcement of creditors' rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at Law).
15
5.1.4. No Restrictions Against Sale of the Purchased Assets;
Required Consents. The execution and delivery of this Agreement and each Seller
Ancillary Document by Seller or Parent does not or, in the case of the Seller
Ancillary Documents, will not, and the performance by Seller, Parent, or any
Subsidiary of the transactions contemplated hereby or thereby to be performed by
any of them will not (a) conflict with or violate any provision of the articles
or certificate of incorporation or by-laws (or other organizational documents)
of Seller, Parent, any Subsidiary, or Enenco (b) except as set forth on Schedule
5.1.4, conflict with, or result in any violation of, or constitute a default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation, or acceleration of any obligation or to loss
of a benefit under, any provision of any Contract or Permit to which any of
Seller, Parent, any Subsidiary, or Enenco is a party or by which any of them or
any of their respective properties are bound, (c) constitute a violation of any
Law applicable to any of Seller, Parent, any Subsidiary, or Enenco, or the
Purchased Assets, or (d) result in the creation of any Lien (other than any
Permitted Lien) upon any of the Purchased Assets, except in the case of clauses
(b) or (c) above, for such conflicts, violations, breaches, defaults,
accelerations, terminations, modifications, or cancellations that would not,
individually or in the aggregate, (i) have a Material Adverse Effect, (ii)
materially impair the ability of Parent or Seller to perform its obligations
hereunder or under any Seller Ancillary Document, or (iii) prevent or materially
delay the consummation of the purchase and sale of the Purchased Assets
contemplated hereby. No consent, approval, order, or authorization of, or
registration, declaration, or filing with, any Governmental Entity is required
to be obtained or made by or with respect to Seller, Parent, any Subsidiary, or
Enenco in connection with the execution and delivery of this Agreement or any
Seller Ancillary Document by Seller, Parent, or any Subsidiary or the
performance by Seller, Parent, or any Subsidiary of the transactions
contemplated hereby to be performed by either of them, except for (i) such of
the foregoing as are listed or described on Schedule 5.1.4 and (ii) any filings,
if required, with the Federal Trade Commission and Department of Justice
pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR Act").
5.1.5. No Third Party Options. Except as described on Schedule
5.1.5, there are no existing agreements with, options, or rights of, or
commitments to any Person to acquire any of the Purchased Assets or any interest
therein, except for those Contracts entered into in the normal course of
business consistent with past practice.
5.1.6.A Seller Financial Statements. Seller has delivered to
Purchaser true and complete copies of (a) the consolidated balance sheets of
Seller and its Subsidiaries at December 31, 1994, 1995, and 1996 and the related
statements of income, changes in stockholder's equity (deficit), and cash flows
for the fiscal years then ended, audited by Coopers & ▇▇▇▇▇▇▇ LLP; and (b) an
unaudited balance sheet of Seller and its consolidated Subsidiaries at September
30, 1997 and related statements of income, changes in stockholder's equity
(deficit), and cash flows for the period then ended (collectively, the
"Financial
16
Statements"). Except as set forth on Schedule 5.1.6, such Financial Statements
have been prepared in accordance with GAAP and such balance sheets, including
the related notes, fairly present the financial position, assets, and
liabilities of Seller and its consolidated Subsidiaries at the dates indicated
and such statements of income, changes in stockholder's equity (deficit), and
cash flow fairly present the results of operations, changes in stockholder's
equity (deficit), and cash flow of Seller and its consolidated Subsidiaries for
the periods indicated; provided, however, that the unaudited financial
statements included in the Financial Statements are subject to normal year-end
adjustments (none of which individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect). References in this Agreement to the
"Interim Balance Sheet" shall mean the balance sheet of the Business as of
September 30, 1997 referred to above, and references in this Agreement to the
"Interim Balance Sheet Date" shall be deemed to refer to September 30, 1997. The
books, records, and accounts of Seller and its Subsidiaries maintained with
respect to the Business fairly reflect, in reasonable detail, the transactions
and the assets and liabilities of Seller and its Subsidiaries with respect to
the Business. Neither Seller nor RII has engaged in any material transaction
with respect to the Business, maintained any bank account for the Business, or
used any of the funds of Seller or any Subsidiary in the conduct of the Business
except for transactions, bank accounts, and funds which have been and are
reflected in the normally maintained books and records of the Business.
5.1.6.B Enenco Financial Statements. Seller has delivered to
Purchaser true and complete copies of (a) the consolidated balance sheets of
Enenco at December 31, 1994, 1995, and 1996 and the related statements of income
and retained earnings and cash flows for the fiscal years then ended, audited by
Ernst & Young LLP ("Audited Enenco Financial Statements"); and (b) an unaudited
balance sheet of Enenco at September 30, 1997 and related statements of income
and retained earnings and cash flows for the period then ended. Except as set
forth on Schedule 5.1.6.B., to the actual knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇ without
inquiry, there is no reason to believe that such Audited Enenco Financial
Statements have not been prepared in accordance with GAAP and such balance
sheets, including the related notes, do not fairly present the financial
position, assets, and liabilities of Enenco at the dates indicated and such
statements of income and retained earnings and cash flows do not fairly present
the results of operations and retained earnings and cash flows of Enenco for the
periods indicated.
5.1.7. Accounts Receivable. The accounts receivable of Seller and
its Subsidiaries arising from the Business as set forth on the Interim Balance
Sheet or arising since the date thereof are valid; and have arisen solely out of
bona fide sales and deliveries of goods, performance of services, and other
business transactions in the ordinary course of business consistent with past
practice.
17
5.1.8. Inventory. All Inventory of Seller and its Subsidiaries
used in the conduct of the Business, including without limitation raw materials,
work-in process, and finished goods, reflected on the Interim Balance Sheet or
acquired since the date thereof was acquired and has been maintained in the
ordinary course of the Business; is of good and merchantable quality; consists
substantially of a quality, quantity, and condition usable, leasable or saleable
in the ordinary course of the Business; and, net of related inventory valuation
reserves, is valued at the lower of cost or market. Except as described on
Schedule 5.1.8, neither Seller nor any Subsidiary is under any liability with
respect to the return of Inventory in the possession of wholesalers, retailers,
or other customers.
5.1.9. Absence of Undisclosed Liabilities. Except as set forth on
Schedule 5.1.9, to the knowledge of Parent or Seller, neither Seller nor any
Subsidiary has any liabilities with respect to the Business except (a) those
liabilities set forth on the Interim Balance Sheet and not heretofore paid or
discharged and (b) those liabilities incurred in the ordinary course of business
consistent with past practice since the Interim Balance Sheet Date.
5.1.10.Contracts and Commitments.
(a) Except as described on Schedule 5.1.10, neither Seller nor any
Subsidiary is a party to any written or oral:
(i)employment or consulting Contract with an employee or
former employee, director, agent, consultant, or similar representative;
(ii)collective bargaining agreement with any labor union;
(iii)Contract for the future purchase of, or payment for,
supplies or products, or for the performance of services by a third party
which supplies services to the Seller or any Subsidiary, involving in
excess of (A) $500,000 with respect to the Seller's U.S. Business and (B)
$1,000,000 with respect to the Seller's Non-U.S.
Business;
(iv)Contract to sell or supply products or to perform
services in excess of $800,000;
(v)Contract for capital expenditures or the acquisition
or construction of fixed assets involving in excess of the amounts in
Schedule 5.1.16(f);
(vi)Contract in excess of $50,000 relating to cleanup,
abatement, or other actions in connection with, or which result or may
reasonably be expected to
18
result in the incurrence of, Environmental Costs or Liabilities (as
defined in Section 5.1.22(j));
(vii)Contract granting to any Person a first-refusal,
first-offer, or similar preferential right to purchase or acquire any of
the Purchased Assets or any assets of the Acquired Subsidiaries except for
Contracts relating to the sale of Inventory in the ordinary course of
business consistent with past practice and Contracts involving sales of
Purchased Assets which do not exceed $250,000 in the aggregate;
(viii)indenture or mortgage (without qualification), and
any loan, letter of credit, or other credit Contract under which the
Seller or any Subsidiary has borrowed or is entitled to borrow any amounts
in excess of $50,000 or issued any note, bond, indenture, or other
evidence of indebtedness for borrowed money in an amount in excess of
$50,000, or any indemnity, guarantee, or other contingent liability in
respect of any indebtedness of any other Person in an amount in excess of
$50,000;
(ix) material Contract with any manufacturer's
representative, distributor, or other sales agent;
(x)material Contract under which Seller or any
Subsidiary is (A) a lessee of, or holds or uses, any machinery, equipment,
vehicle, or other tangible personal property owned by any other Person,
(B) a lessor of, or makes available for use by any other Person, any
tangible personal property owned by any Seller or any Subsidiary, or (C) a
lessee of, or holds or uses, any Leased Real Property;
(xi)except for the agreements disclosed pursuant to
Schedule 5.1.10(xiv) hereto, management service, investment advisory,
investment banking, or other similar Contract;
(xii)material Contract limiting the freedom of the Seller
or any Subsidiary to sell any products or services of any other Person,
engage in any line of business, or to compete with or obtain products from
any other Person;
(xiii)material Contract pursuant to which the Seller or any
Subsidiary has agreed to indemnify or hold harmless any Person;
(xiv)Contract with any officer, director, Affiliate, or
stockholder of the Seller or any Subsidiary or with any holder of any
securities convertible into or exchangeable or exercisable for any shares
of capital stock of the Seller or any Subsidiary;
19
(xv)Contract or commitment for any charitable or
political contribution relating to the Business in an amount involving in
excess of $25,000;
(xvi)material license, franchise, distributorship, or
other Contract which relates in whole or in part to any software, patent,
trademark, trade name, service ▇▇▇▇, or copyright or to any ideas,
technical assistance or other know-how of or used by Seller or any
Subsidiary in the conduct of the Business; or
(xvii)material Contract relating to the Business not
made in the ordinary course of business.
(b) Each of the Contracts and other instruments, documents, and
undertakings listed or required to be listed on Schedule 5.1.10, or not required
to be listed therein because of the amount thereof, under which H&C or Purchaser
is to directly or indirectly acquire rights or obligations hereunder is, to the
knowledge of Parent and Seller, valid and enforceable in accordance with its
terms; Seller and each Subsidiary is, and to Parent's and Seller's knowledge all
other parties thereto are, in compliance with the provisions thereof; neither
Seller nor any Subsidiary is, and to Parent's and Seller's knowledge no other
party thereto is, in material default in the performance, observance, or
fulfillment of any obligation, covenant, or condition contained therein; and no
event has occurred which with or without the giving of notice or lapse of time,
or both, would constitute a default thereunder.
5.1.11.Title to Assets. Except as listed or described on Schedule
5.1.11, (i) Seller and RII has, and following the Closing, Purchaser will have,
good, valid, and marketable title to the Purchased Assets, and each Acquired
Subsidiary has, and (ii) Enenco has, good and marketable title to the assets and
properties owned or used by it, free and clear of all Liens, other than with
respect to both clauses (i) and (ii), (a) Liens for Taxes, assessments, and
other governmental charges which are not due and payable or which may thereafter
be paid without penalty, and (b) mechanics', carriers', workmen's, repairmen's,
and other like Liens arising or incurred in the ordinary course of business
consistent with past practice. The items listed or described on Schedule 5.1.11,
and those referred to in clauses (a) and (b) of the immediately preceding
sentence are hereinafter referred to as "Permitted Liens".
5.1.12.Intellectual Property.
(a) Except as set forth on Schedule 5.1.12(a), the Intellectual
Property and the Acquired Subsidiary Intellectual Property, together with the
intellectual property provided pursuant to the transitional services agreement
described in more detail on Exhibit B hereto or the NL Software License,
includes all of the intellectual property rights owned or licensed by Seller and
its Subsidiaries and used in the operation of the Business. Except as set forth
on Schedule 5.1.12, Seller, directly or indirectly through its Subsidiaries, has
good and
20
marketable title to, the Intellectual Property and the Acquired Subsidiary
Intellectual Property owned by Seller and its Subsidiaries, free and clear of
all Liens (other than Permitted Liens), and, subject to the receipt of consents
referred to in Schedule 5.1.12, Seller and RII have the power to transfer the
Intellectual Property to Purchaser and, except as set forth in Schedule 5.1.12,
no Person other than Seller and its Subsidiaries has rights to use, market, or
exploit the Intellectual Property or the Acquired Subsidiary Intellectual
Property owned by Seller and its Subsidiaries or any portion thereof. Except as
set forth in Schedule 5.1.12, there are no pending, or to the knowledge of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ after due inquiry,
proceedings threatened affecting the Intellectual Property or the Acquired
Subsidiary Intellectual Property owned by Seller and its Subsidiaries. Schedule
5.1.12 lists all notices or claims currently pending or received within the past
3 years by Seller or RII with respect to claims of infringement by others which
claim infringement of any third-party domestic or foreign letters patent, patent
applications, patent licenses, software licenses and know-how licenses, trade
names, trademark registrations and applications, trademarks, service marks,
copyrights, copyright registrations or applications, trade secrets, technical
knowledge, know-how, or other confidential proprietary information. Except as
(i) set forth on Schedule 5.1.12 and (ii) for those matters which could not
reasonably be expected to have a Material Adverse Effect, there is, to the
knowledge of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, after due
inquiry, no infringement or misappropriation of any domestic or foreign letters
patent, patents, trade names, trademark registrations, trademarks, service
marks, copyrights, copyright registrations or applications, trade secrets,
technical knowledge, know-how or other confidential proprietary information held
or owned by another Person. The patents and trademark registrations listed on
Schedule 1.1.6(a), 1.1.6(b), 5.1.12(b), are in effect, and none of Seller, any
Subsidiary, or, to the knowledge of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, after due inquiry, any other Person, is in default or violation
under any of the licenses specified on Schedule 1.1.6(a), 1.1.6(b), 5.1.12.
(b) For the purposes hereof, the term "Acquired Subsidiary
Intellectual Property" shall mean (i) all patents and patent applications owned
by any Acquired Subsidiary, all licenses to patents and patent applications to
and from third parties, in each case as set forth on Schedule 5.1.12(b) hereto,
(ii) research and development data and results, manufacturing and other
processes, trade secrets, know how, inventions, ideas, conceptions, mask work,
designs, technology, proprietary data or information, formulae, and
manufacturing, engineering, and other technical information, whether owned by
the Acquired Subsidiaries or licensed to the Acquired Subsidiaries by third
parties or Affiliates, (iii) all copyrights (registered or otherwise) and
registrations and applications for registration thereof owned or licensed by any
Acquired Subsidiary, (iv) all copies and tangible embodiments of all the
foregoing, in whatever form or medium, (v) all notebooks, records, reports, and
data relating thereto, (vi) all applications and registrations for any of the
foregoing, (vii) all trademarks, trade names, service marks, trade dress, logos,
and corporate names (including the name Rheox and any derivatives thereof), or
any applications and registrations for any of the
21
foregoing, in each case as listed on Schedule 5.1.12(b) hereto, (viii) except as
may otherwise be provided in the transition services agreement described in more
detail on Exhibit B hereto, all computer programs, software and databases
licensed by any Acquired Subsidiary from third parties, (ix) all copies and
tangible embodiments of all the foregoing, in whatever form of medium, and (x)
all rights to ▇▇▇ for present and past infringement of any of the foregoing.
5.1.13.Sufficiency and Condition of Assets. The Purchased Assets
constitute all of the rights, properties, and assets of every kind, character,
and description, wherever located and whether tangible or intangible, real or
personal, or fixed or contingent, that are owned, held, used, conceived,
developed, or offered for sale or license by Seller or RII in connection with
the conduct of the Business as presently conducted, except the Excluded Assets;
provided, however, that such representations and warranties with respect to
Intellectual Property are provided in Section 5.1.12(a) above. All the Purchased
Assets and all of the assets held or used by the Subsidiaries are in good
operating condition and repair, subject to normal wear, maintenance, and
obsolescence and are usable in the regular and ordinary course of business.
Schedule 5.1.13 lists all material business arrangements between any Affiliates
of Seller or Parent, on the one hand, and Seller and the Subsidiaries, on the
other hand. Schedule 5.1.13 lists those material assets, tangible or intangible,
owned by any Affiliate of Seller or Parent which are used in the Business of any
of Seller and the Subsidiaries.
5.1.14.Real Property.
(a) Title to Owned Real Property. At Closing, title to the Owned
Real Property and to all real property owned by the Acquired Subsidiaries and
Enenco listed and described on Schedule 5.1.14(a), together with all appurtenant
easements thereunto and all structures, fixtures, and improvements located
thereon, and any minerals and mining rights with respect thereto (the "Other
Owned Real Property") shall be good and marketable, free and clear of all Liens
and other matters affecting Seller's, the Subsidiaries' or Enenco's title to or
possession of such Owned Real Property and other Owned Real Property, including,
but not limited to, all encroachments, boundary disputes, covenants,
restrictions, burdens, conditions, servitudes, occupancy rights, charges,
diligences, easements, rights of way, mortgages, security interests, leases,
encumbrances and title objections, excepting only the Permitted Liens and such
easements, restrictions, and covenants presently of record, which easements,
restrictions, and covenants are listed on Schedule 5.1.14(a). Without limiting
the generality of the foregoing, to Parent's and Seller's knowledge, all
unpatented mining claims included in the Owned Real Property are believed by
Seller to be properly located, have been properly maintained, and in good
standing. At Closing, (i) title to the Owned Real Property shall be insurable by
Lawyers Title Insurance Company, pursuant to the most recent version of the ALTA
Owner's form of policy, and (ii) title to the Other Owned Real Property owned by
the Acquired Subsidiaries (to the extent available in the country in which such
Other Owned Real Property is located) shall be insurable by a title insurance
company selected by Purchaser
22
pursuant to such owner's form of policy as is customary in such country at such
insurer's customary rates, in each case free of all exceptions except the
aforesaid easements, restrictions, and covenants; provided that, in the case of
each of the foregoing clauses (i) and (ii), Parent and Seller make no
representation as to the availability of such title insurance to the extent that
Purchaser seeks to obtain title insurance in an amount and scope that is more
comprehensive in the aggregate than the title insurance obtained by Chase
Manhattan Bank pursuant to the title policies listed on Schedule 5.1.14(a).
(b) Leased Real Property. With respect to the Leased Real Property
and all real property leased by any Acquired Subsidiary and Enenco (the "Other
Leased Real Property" and, together with the Other Owned Real Property, the
"Other Real Property"):
(i)Schedule 5.1.14(b) describes each Real Property Lease
and each lease with respect to the Other Leased Real Property ("Other Real
Property Leases") by listing the name of the landlord or sublandlord, a
description of the leased premises, and the commencement and expiration
dates of the current term;
(ii)each Real Property Lease and each Other Real Property
Lease is, and at Closing shall be, in full force and effect and, except as
contemplated hereby, has not been assigned, modified, supplemented, or
amended, and none of Seller, the Subsidiaries or Enenco is in default
(with or without notice or lapse of time, or both) under any of the Real
Property Leases or Other Real Property Leases; and
(iii)the applicable Acquired Subsidiary has good and
marketable title to the real property lease located in Livingston,
Scotland.
(c) Utility Services. The water, electric, gas, and sewer utility
services and the septic tank and storm drainage facilities currently available
to each material parcel of the Real Property and Other Real Property are
adequate for the present use of the Real Property and Other Real Property by
Seller, the Subsidiaries, and Enenco, are not being appropriated by Seller, any
Subsidiary, or Enenco but rather are being supplied to Seller, the Subsidiaries,
and Enenco by utility companies or municipalities, and to the knowledge of
Parent and Seller there is no condition which could reasonably be expected to
result in the termination of the present access from the Real Property or the
Other Real Property to such utility services and other facilities, except where
the termination would not have a Material Adverse Effect.
(d) Assessments or Hazards. None of Seller, any Subsidiary, or
Enenco has received any written notices from any Governmental Entity that the
assessed value of any material parcel of the Real Property or Other Real
Property has been determined to be materially greater than that upon which
county, township or school tax was paid for the 1996
23
tax year applicable to each such tax, or, within past twelve months, in writing
from any insurance carrier of Seller, any Subsidiary, or Enenco of fire hazards
with respect to the Real Property or Other Real Property, except as set forth on
Schedule 5.1.14 hereto.
(e) Eminent Domain. None of Seller, any Subsidiary, or Enenco has
received any written notices from any Governmental Entity having the power of
eminent domain over the Real Property or the Other Real Property that such
Governmental Entity has commenced or intends to exercise the power of eminent
domain or a similar power with respect to all or any material part of the Real
Property or Other Real Property.
(f) No Violations. To the knowledge of Seller and Parent, the Real
Property or Other Real Property and the present uses thereof comply in all
material respects with all applicable Laws, and none of Seller, any Subsidiary,
or Enenco has received any written notices from any Governmental Entity that the
Real Property or Other Real Property or any improvements erected or situate
thereon, or the uses conducted thereon or therein, violate any applicable Laws,
except for violations that could not reasonably be expected to have a Material
Adverse Effect.
(g) Flood Plain. To the knowledge of Seller and Parent, and except
as set forth on Schedule 5.1.14(g), no material part of the Real Property or
Other Real Property (other than the Hightstown leased property) contains, is
located within, or abuts any flood plain, navigable water, or other body of
water, tideland, wetland, marshland, or any other area which is subject to
special state, federal, or municipal regulation, control, or protection.
▇.▇.▇▇.▇▇▇▇▇▇▇▇▇. Set forth in Schedule 5.1.15 is a list of all
fire, liability, and other forms of insurance and all fidelity bonds held by or
applicable to Seller, the Subsidiaries, the Purchased Assets, the Business, or
Enenco setting forth, in respect of each such policy, the policy name, policy
number, carrier, term, type of coverage, and annual premium. Except as noted on
Schedule 5.1.15, all such insurance will remain, to the knowledge of Seller and
Parent, in full force and effect with respect to periods before the Closing;
provided, that Parent and Seller will continue to pay premiums on policies held
by or applicable to Seller and RII when due and will not otherwise take any
action to modify or cancel any such insurance policies except for renewals or
replacements of such policies made in the ordinary course of business. To the
knowledge of Seller and Parent, no event has occurred, including, without
limitation, the failure by Seller, or any Subsidiary or Enenco to give any
notice or information or Seller, any Subsidiary, or Enenco giving any inaccurate
or erroneous notice or information, which materially limits or impairs the
rights of Seller, such Subsidiary, or Enenco under any such insurance policies.
24
5.1.16.Conduct of the Business Since the Interim Balance Sheet
Date. Since the Interim Balance Sheet Date neither Seller, any Subsidiary or, in
case of clauses (a), (c), (d), (i), or (j), Enenco has:
(a) incurred any liabilities, other than liabilities incurred in
the ordinary course of business consistent with past practice, or failed
to pay or discharge when due any liabilities of which the failure to pay
or discharge has caused or will cause any material damage or material loss
to it or its assets or properties;
(b) sold, encumbered, assigned, or transferred any of its assets
or properties (to the extent, in the case of Seller and RII, such assets
or properties would have been included in the Purchased Assets), except
for the replacement or betterment of equipment and the sale of Inventory
in the ordinary course of business consistent with past practice;
(c) made or suffered any amendment or termination (other than in
accordance with its terms) of any Contract listed on Schedule 5.1.10(a),
Permit, or Other Permit (as defined in Section 5.1.21), or canceled,
modified, or waived any substantial debts or claims held by it or waived
any rights of material value, whether or not in the ordinary course of
business;
(d) suffered any damage, destruction, or loss, whether or not
covered by insurance, of any item or items carried on its books of account
individually or in the aggregate at more than $250,000, or suffered any
repeated, recurring, or prolonged shortage, cessation, or interruption of
supplies or utility or other services required to conduct the Business;
(e) received notice of any actual, or written notice of any
threatened, labor trouble, strike, or other material occurrence, event, or
condition of any similar character;
(f) made binding commitments or Contracts for capital expenditures
or capital additions or betterments exceeding the amounts specified in
Schedule 5.1.16(f), except such as may be involved in ordinary repair,
maintenance, or replacement of the Purchased Assets or assets or
properties of any Acquired Subsidiaries;
(g) except in the ordinary course of business consistent with past
practice, increased the salaries or other compensation of, or made any
advance (excluding advances for ordinary and necessary business expenses)
or loan to, any of its employees or made any increase in, or any addition
to, other benefits to which any of its employees may be entitled;
25
(h) except where the effect of the change would not be material,
changed any of the accounting principles followed by it or the methods of
applying such principles;
(i) entered into any transaction other than in the ordinary course
of business consistent with past practice involving in excess of $100,000
individually or $250,000 in the aggregate; or
(j) suffered any event or circumstance that individually or in the
aggregate has had or could reasonably be expected to have a Material
Adverse Effect.
5.1.17.Customers and Suppliers. Schedule 5.1.17 sets forth (a) a
list of the ten largest customers (excluding customers which are distributors or
agents, but including sales known to be through distributors or agents) of
Seller and the Subsidiaries (taken as a whole) based on sales during the fiscal
year ended December 31, 1996 and forecast sales for the year ended December 31,
1997, showing the approximate total sales by Seller and the Subsidiaries to each
such customer during such periods, and (b) a list of the nine largest suppliers
of Seller and the Subsidiaries (taken as a whole) based on purchases during the
fiscal year ended December 31, 1996, and the nine months ended September 30,
1997 showing the approximate total purchases by Seller and the Subsidiaries from
each such supplier during such periods.
5.1.18.Labor Matters.
(a) Seller is a not a party to or bound by any written employment,
consulting, collective bargaining agreement or other labor agreement, except as
set forth on Schedule 5.1.18(a). A copy of each such agreement has been provided
to Purchaser or included in the data room in Hightstown, New Jersey.
(b) Schedule 5.1.18(b) hereto contains a true and complete list of
all persons currently employed by the Seller solely in connection with the
Business as of December 29, 1997, including position, date of hire, salary or
hourly wage rate, a description of material compensation arrangements (other
than employee benefit plans set forth in Schedule 5.1.19), and a list of other
material terms of any and all agreements affecting such persons.
(c) Except as described on Schedule 5.1.18(c), Seller has not
agreed to recognize any union or other collective bargaining unit, nor has any
union or other collective bargaining unit been certified as representing any of
Seller's employees. Neither Parent nor Seller has any knowledge of any
organizational effort currently being made or threatened in writing by or on
behalf of any labor union with respect to employees of the Seller. There is
26
no labor strike, slowdown, work stoppage, or lockout actually pending or, to the
knowledge of Parent and Seller, threatened within the preceding 12 months
against Seller.
(d) Except as described on Schedule 5.1.18(d), Seller (i) does not
have any written personnel policy applicable to Employees, (ii) is not or within
the past 5 years has not been in violation in any material respect of any
applicable Laws regarding employment and employment practices, including without
limitation, those Laws relating to terms and conditions of employment, wages,
and hours, occupational safety and health and workers' compensation or is
engaged in any unfair labor practices, (iii) does not have any unfair labor
practice charges or complaints pending or threatened in writing against it
before the National Labor Relations Board, (iv) does not have any grievances
pending or, to the knowledge of Parent and Seller, threatened in writing against
it, and (v) does not have any charges pending before the Equal Employment
Opportunity Commission of any state or local agency responsible for the
prevention of unlawful employment practices.
5.1.19.Employee Benefit Plans.
(a) All "employee benefit plans," as defined by Section 3(3) of
ERISA (including non-United States plans which are not subject to ERISA), and
all bonus or other incentive compensation, severance, disability, salary
continuation, vacation, holiday, educational assistance, and service award plan,
policy, or agreement as to which the Seller has any obligation or liability
(contingent or otherwise) with respect to Employees or Subsidiary Employees (the
"Employee Plans") are listed on Schedule 5.1.19(a). Schedule 5.1.19(a)
identifies the Employee Plans separately for each country.
(b) Seller has provided to Purchaser or included in the data room
in Hightstown, New Jersey, a correct and complete copy of the applicable plan
documents (except for post-retirement medical benefit and life insurance plans),
summary plan descriptions, and collective bargaining agreements pertaining to
post-retirement medical and life insurance benefit obligations to bargaining
unit Employees and Subsidiary Employees. Seller has provided, or will prior to
Closing provide, to Purchaser or, with respect to clause (ii) hereof, set forth
on Schedule 5.1.19(b) is, a correct and complete list of all (i) current
Employees and Subsidiary Employees, together with their date of hire, date of
birth, salary or hourly wage rate, and work location and (ii) former bargaining
unit Employees who are currently receiving post-retirement medical or life
insurance benefits.
(c) For purposes of this Agreement, (i) "Employees" shall mean (x)
current or former living employees of Seller, and (y) current employees of
Kronos Titan GmbH, Kronos International, Inc., Kronos Canada, Inc., and Societe
Industriele du Titane, SA, who perform and had performed services solely with
respect to the business of the Seller
27
and Acquired Subsidiaries, and (ii) "Subsidiary Employees" shall mean current or
former living employees of Acquired Subsidiaries.
5.1.20.Litigation; Decrees.
(a) There are no judicial or administrative actions, proceedings,
or investigations pending or, to Parent's or Seller's knowledge, currently
threatened that question the validity of this Agreement or any action taken or
to be taken by Seller or any Subsidiary in connection with this Agreement.
Except as listed or described on Schedules 5.1.20(a), there are no (i) lawsuits,
written claims, administrative, or other proceedings or investigations relating
to the conduct of the Business or Enenco pending or, to Seller's or Parent's
knowledge, currently threatened by, against, or affecting Seller, any
Subsidiary, any of the Purchased Assets or Enenco or (ii) judgments, orders, or
decrees of any Governmental Entity binding on the Seller, any Subsidiary, any of
the Purchased Assets, or Enenco.
(b) All lawsuits within the past 3 years asserting that any
product manufactured or sold by Seller or any Subsidiary in the conduct of the
Business was defective or caused any injury or harm to any person, including
without limitations all such claims and allegations relating to returns,
warranty claims, failure to warn, breach of warranties of merchantability or
fitness for any purpose or use, or similar matters are described on Schedule
5.1.20(b). Schedule 5.1.20(b) sets forth, to the knowledge of Parent and Seller,
all complaints by customers of Seller and its Subsidiaries within the past
twelve months that products sold by Seller and its Subsidiaries have failed to
perform as anticipated.
5.1.21.Compliance With Law; Permits. To the knowledge of Parent
and Seller, Seller, the Subsidiaries, and Enenco have complied with each Law to
which Seller, any Subsidiary, Enenco, or its business, operations, assets, or
properties is subject and is not currently in violation in any respect of any of
the foregoing, except where the failure to comply or where such violation could
not reasonably be expected to have a Material Adverse Effect. To the knowledge
of Parent and Seller, Seller, each Subsidiary, and Enenco owns, holds,
possesses, or lawfully uses in the operation of its business all Permits and
Other Permits, as applicable, which are necessary for it to conduct its business
as now conducted or for the ownership and use of its assets, except where the
failure to own, hold, possess, or lawfully use any such Permit could not
reasonably be expected to have a Material Adverse Effect. All Permits are listed
and described on Schedule 1.1.8, and all licenses, permits, franchises,
authorizations, orders, registrations, certificates, variances, approvals, and
similar rights of any Acquired Subsidiary or Enenco issued by any Governmental
Entity (collectively, "Other Permits") are listed on Schedule 5.1.21(a). None of
Seller, any Subsidiary, or Enenco is in default, nor has any of Seller, Parent,
any Subsidiary or Enenco received any written notice of any claim of default,
with respect to any Permits or Other Permits, listed on Schedule 5.1.21(a)(1)
hereto, except for such defaults that could not reasonably be expected to
28
have a Material Adverse Effect. To the knowledge of Seller and Parent, no
shareholder, director, officer, employee, or former employee of Seller, any
Subsidiary, or any Affiliates of Seller or any Subsidiary, or any other Person,
owns or has any material proprietary, financial, or other direct interest in any
Permits or any Other Permits which Seller or any Subsidiary owns, possesses, or
uses in the operation of the Business.
5.1.22.Environmental Matters. Except as set forth in Schedule
5.1.22, to the knowledge of Patent and Seller:
(a) the operation of the Business and the operation of Enenco's
business is in compliance with all Environmental Laws applicable to the
respective jurisdictions in which such Business or business is conducted, except
where the failure to comply would not have a Material Adverse Effect;
(b) (i) Seller, each Subsidiary, and Enenco has obtained and
currently maintains all Environmental Permits necessary for its operations and
is in compliance with such Environmental Permits, except where the failure to
have such Environmental Permits or be in compliance therewith would not have a
Material Adverse Effect, (ii) there are no judicial or administrative actions,
proceedings or investigations pending or currently threatened to revoke such
Environmental Permits, and (iii) neither Seller nor any Subsidiary has received
any written notice from any Governmental Entity or written notice from any
Person to the effect that there is lacking any material Environmental Permit
required for the current use or operation of any property owned, operated, or
leased by Seller, any Subsidiary, or Enenco;
(c) there are no judicial or administrative actions, proceedings,
or investigations pending or currently threatened against Seller, any
Subsidiary, or Enenco alleging the violation of, or liability pursuant to, any
Environmental Law or Environmental Permit, except for liabilities or violations
which could not reasonably be expected to have a Material Adverse Effect;
(d) none of Seller, any Subsidiary, or Enenco or, to Parent's or
Seller's knowledge any predecessor of Seller, any Subsidiary, or Enenco has
filed any material notice under any Environmental Law indicating past or present
treatment, storage, or disposal of or reporting a Release or currently
threatened Release of Hazardous Material into the environment, except for such
Releases that could not reasonably be expected to have a Material Adverse
Effect;
(e) none of Seller, any Subsidiary, or Enenco or, to Parent's or
Seller's knowledge, any of Seller's, any Subsidiary's, or Enenco's past or
current facilities and operations or any predecessor of Seller, any Subsidiary,
or Enenco, is subject to any outstanding written order, injunction, judgment,
decree, ruling, assessment, or arbitration
29
award or any agreement with any Governmental Entity or other Person, or to any
federal, state, local, or foreign investigation respecting (i) Environmental
Laws or (ii) the Release or currently threatened Release of any Hazardous
Material, except in either case for such orders, injunctions, judgments,
decrees, rulings, assessments, arbitration awards, or agreements which could not
reasonably be expected to have a Material Adverse Effect;
(f) all the Real Property or Other Real Property owned by Seller,
any Subsidiary, or Enenco and all real property formerly owned, operated, or
leased by Seller, any Subsidiary, or Enenco or any predecessor of Seller, any
Subsidiary, or Enenco, is free of contamination by or from any Hazardous
Materials, except for such contamination that could not reasonably be expected
to have a Material Adverse Effect;
(g) none of the operations of Seller, any Subsidiary, or Enenco or
any predecessor of Seller, any Subsidiary, or Enenco or of any owner or operator
of premises currently leased or operated by Seller, any Subsidiary, or Enenco
involves or previously involved the generation, transportation, treatment,
storage, or disposal of hazardous waste, as defined under 40 C.F.R. Parts
260-270 or any state, local, or foreign equivalent, except for such as could not
reasonably be expected to have a Material Adverse Effect; and
(h) there is not now, nor has there been in the past, on, in, or
under the Real Property or any Other Real Property currently or formerly owned,
leased, or operated by Seller, any Subsidiary, Enenco or any predecessor of
Seller, any Subsidiary, or Enenco (i) any underground storage tanks,
above-ground storage tanks, dikes, or impoundments, (ii) any asbestos-containing
materials, (iii) any polychlorinated biphenyls or (iv) any radioactive
substances, except where the presence of such items could not reasonably be
expected to have a Material Adverse Effect.
(i) No facts or circumstances exist which could reasonably be
expected to result in the Seller, any Subsidiary, or Enenco incurring
Environmental Costs and Liabilities in an amount which could reasonably be
expected to have a Material Adverse Effect.
(j) For purposes of the foregoing Section 5.1.22:
"Environmental Costs and Liabilities" shall mean any and all
losses, liabilities, obligations, damages, fines, penalties, judgments,
actions, claims, costs, and expenses (including reasonable fees,
disbursements, and expenses of legal counsel, experts, engineers, and
consultants and the costs of investigation and feasibility studies,
remedial, or removal actions and cleanup activities) arising from or under
any Environmental Law or any order or agreement now in effect with any
Governmental Entity or other Person.
30
"Environmental Law" means any Law as in effect on the Closing Date
(including common law) relating to the environment, natural resources, or
public and employee health and safety and includes, but is not limited to,
the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. SS 9601, et seq., the Hazardous Materials Transportation Act, 49
U.S.C. SS 1801, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. SS 6901, et seq., the Clean Water Act, 33 U.S.C. SS 1251 et seq.,
the Clean Air Act, 33 U.S.C. SS 2601, et seq., the Toxic Substances
Control Act, 15 U.S.C. SS 2601, et seq., the Federal Insecticide,
Fungicide, and Rodenticide Act, 7 U.S.C. SS 136, et seq., the Oil
Pollution Act of 1990, 33 U.S.C. SS 2701, et seq., the Federal Safe
Drinking Water Act, 42 U.S.C. SS 300F, et seq., and the Occupational
Safety and Health Act, 29 U.S.C. SS651, et, seq.; as such Laws have been
amended or supplemented through the Closing Date, and the regulations
promulgated pursuant thereto through the Closing Date, and all analogous
state or local statutes in effect on the Closing Date.
"Environmental Permit" means any permit, approval, authorization,
license, variance, registration, or permission required under any
applicable Environmental Law.
"Hazardous Material" means any substance, material, or waste which
is regulated by any Governmental Entity as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous substance,"
"restricted hazardous waste," "contaminant," "toxic waste," or "toxic
substance" under any provision of Environmental Law, which includes, but
is not limited to, petroleum, petroleum products (including crude oil and
any fraction thereof), asbestos, asbestos-containing materials, urea
formaldehyde, and polychlorinated biphenyls.
"Release" means any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching, or migration on or into the environment or out of any
property.
5.1.23.Taxes.
(a) All Tax Returns (as defined in Section 5.1.23(g)) that are
required to be filed on or before the date hereof by Seller, any Subsidiary, or
Enenco have been duly filed on a timely basis with the appropriate Federal,
state, local and foreign governments or foreign agencies. All such Tax Returns
were complete and accurate in all material respects. Except as described in
Schedule 5.1.23(a), all Taxes owed by Seller, any Subsidiary or Enenco have been
paid by it, whether or not such Taxes are disputed. Except as described in
Schedule 5.1.23(a), none of Seller, any Subsidiary, or Enenco has executed or
filed with the Internal Revenue Service or any other taxing authority any
agreement extending the period for filing any Tax Return.
31
(b) Except as described in Schedule 5.1.23(b), no claim for
assessment or collection of Taxes has been asserted against Seller, any
Subsidiary, or Enenco. Except as described in Schedule 5.1.23(b), none of
Seller, any Subsidiary, or Enenco is a party to any pending action, proceeding,
audit, or investigation by any Governmental Entity for the assessment or
collection of Taxes nor does Parent or Seller have knowledge of any such
currently threatened action, proceeding, or investigation.
(c) Except as described in Schedule 5.1.23(c), no waivers of
statutes of limitation in respect of any Tax Returns have been given or
requested by Seller, any Subsidiary, or Enenco, nor has Seller, any Subsidiary,
or Enenco agreed to any extension of time with respect to a Tax assessment or
deficiency. To the knowledge of Parent and Seller, no claim has been made by a
Governmental Entity in a jurisdiction where Seller, any Subsidiary, or Enenco
does not currently file Tax Returns that it is or may be subject to taxation by
that jurisdiction nor is Seller or Parent aware that any such assertion of
jurisdiction is currently threatened. No security interests have been imposed
upon or asserted against any of the Purchased Assets as a result of or in
connection with any failure, or alleged failure, to pay any Tax.
(d) Each of Seller, the Subsidiaries, and Enenco has withheld and
paid all Taxes required to be withheld in connection with any amounts paid or
owing to any employee, creditor, independent contractor, or other third party.
(e) The performance of the transactions contemplated hereby will
not (either alone or upon the occurrence of any additional or subsequent event)
result in any payment that would constitute an "excess parachute payment" within
the meaning of Section 280G of the Code. None of the Purchased Assets is (i)
"tax-exempt use" property within the meaning of Section 168(h) of the Code; (ii)
required to be treated as owned by another person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986; or (iii) "tax
exempt bond financed property" within the meaning of Section 168(g) of the Code.
(f) Except as described in Schedule 5.1.23(f), none of Seller, any
Subsidiary, or Enenco is a party to any tax allocation agreement, tax sharing
agreement, tax indemnity agreement, or similar agreement, arrangement, or
practice with respect to Taxes (including any advance pricing agreement, closing
agreement, private letter ruling, or other agreement relating to Taxes with any
Tax authority). Notwithstanding the foregoing, each of Seller, RII, and RIMC is
a party to an Income Tax sharing agreement with Parent.
(g) For purposes of this Agreement, the terms "Tax" and "Taxes"
shall mean all federal, state, local, or foreign Income Taxes, payroll, employee
withholding, unemployment insurance, and social security contributions (of
whatever nature, type, purpose
32
and charged by whatever means), sales, use, service, service use, leasing,
leasing use, excise, franchise, gross receipts, value added, alternative or
add-on minimum, estimated, occupation, real and personal property, stamp,
transfer, workers' compensation, severance, windfall profits, environmental
including taxes under Section 59A of the Code), or other tax of the same or of a
similar nature, including any interest, penalty, or addition thereto, whether
disputed or not. The term "Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating to Taxes or any
amendment thereto, and including any schedule or attachment thereto.
(h) Neither the Seller nor RII is a foreign person within the
meaning of Section 1445 of the Code.
5.1.24.Certain Business Practices and Regulations.
(a) To the knowledge of Seller and Parent, none of Seller, any
Subsidiary, Enenco, or any directors, officers, agents, or employees of Seller
or any Subsidiary has (i) used any corporate funds for unlawful contributions,
gifts, entertainment, or other unlawful expenses relating to political activity,
(ii) made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds or violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended, or (iii) in their capacity as directors, officers, agents,
or employees of Seller or any Subsidiary made any other unlawful payment.
(b) To the knowledge of Parent and Seller, except as disclosed on
Schedule 5.1.24, none of (i) the officers or directors of Parent, or of any
Subsidiary or entity controlled by any of the foregoing, (ii) any security
holder who is known to the Parent to own of record or beneficially more than
five percent of any class of the Parent's voting securities, or (iii) any member
of the immediate family of any of the foregoing persons, has a direct or
indirect material interest in any transaction or series of transactions to which
the Seller or any of its Subsidiaries is or is to be a party, in which the
amount involved exceeds $60,000. Terms in this subsection not otherwise defined
in this Agreement have the meanings given them in Item 404 of Regulation S-K
promulgated by the U.S. Securities and Exchange Commission as in effect on the
Closing Date.
5.1.25.Warranties and Returns. Schedule 5.1.25 sets forth a
summary of present practices and policies followed by Seller and its
Subsidiaries with respect to guarantees, warranties, and servicing of any
products manufactured or sold and services rendered by it. Except as set forth
on Schedule 5.1.25, to the knowledge of Parent and Seller, there are no written
statements, citations, or decisions by any Governmental Entity stating that any
product actually sold by Seller or any Subsidiary is defective or unsafe or
fails to meet any standards promulgated by any such person within the past 3
years. Except as set forth on
33
Schedule 5.1.25, there is not presently, nor has there been, any failure of a
product sold by Seller or any Subsidiary such as to require a general recall or
replacement campaign with respect to such product or a reformulation or change
of such product. Except as set forth on Schedule 5.1.25, to the knowledge of
Parent or Seller, there is no (a) fact relating to any product of Seller or any
Subsidiary that may reasonably be expected to impose upon Seller or any
Subsidiary a duty to recall any such product or a duty to warn customers of a
defect in any such product, (b) material design, manufacturing, or other defect
in any such product, or (c) material liability for warranty claims, returns, or
servicing with respect to any such product not fully reflected on the Interim
Balance Sheet.
▇.▇.▇▇.▇▇ Implied Warranties. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER SELLER NOR PARENT NOR
ANY SUBSIDIARY MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW
OR IN EQUITY, IN RESPECT OF SELLER OR ANY OF THE ASSETS, LIABILITIES OR
OPERATIONS OF SELLER OR ANY SUBSIDIARY, INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED REPRESENTATION OR WARRANTY AS TO THE CONDITION, MERCHANTABILITY,
SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND PURCHASER, H&C AND H&C
AMERICA EXPRESSLY DISCLAIMS ANY SUCH REPRESENTATION OR WARRANTY.
5.1.27.Parent's or Seller's Knowledge. As used in this Article V,
the terms "to Parent's knowledge," "to Seller's knowledge," and similar words or
phrases shall mean the actual knowledge, after due inquiry, of the persons
listed on Schedule 5.1.27.
5.2. Representations and Warranties of H&C, H&C America and Purchaser.
Each of H&C, H&C America and Purchaser, jointly and severally, makes the
following representations and warranties to Parent and Seller, each of which is
true and correct as of the date hereof and shall be true and correct as of the
Closing Date and, except as otherwise provided in Section 10.1, shall be
unaffected by any investigation heretofore or hereafter made by Parent or
Seller.
5.2.1. Corporate Organization. Each of H&C, H&C America and
Purchaser is a corporation duly organized, validly existing, and in good
standing under the laws of the state or jurisdiction of its organization and has
the requisite corporate power and authority to own, lease, or otherwise hold its
properties and assets and to carry on its business as presently conducted.
5.2.2. Authorization and Effect of Agreement. Each of H&C, H&C
America and Purchaser has the requisite corporate power to execute and deliver
this Agreement and the agreements to be entered into by them at the Closing
pursuant hereto (the
34
"Purchaser Ancillary Documents") and to perform the transactions contemplated
hereby and thereby to be performed by it. The execution and delivery by each of
H&C, H&C America and Purchaser of this Agreement and the Purchaser Ancillary
Documents and the performance by it of the transactions contemplated hereby and
thereby to be performed by it have been or, in the case of the Purchaser
Ancillary documents, will at the Closing be, duly authorized by all necessary
corporate action on the part of each of H&C, H&C America and Purchaser. This
Agreement has been, and each Purchaser Ancillary Document will at the Closing
be, duly executed and delivered by duly authorized officers of each of H&C, H&C
America and Purchaser and, assuming the due execution and delivery of this
Agreement and, as applicable, any Purchaser Ancillary Document, by Parent and
Seller, constitutes a valid and binding obligation of Purchaser, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium, or other
similar Laws affecting the enforcement of creditors' rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at Law).
5.2.3. No Restrictions Against Purchase of the Assets. The
execution and delivery of this Agreement and each Purchaser Ancillary Document
by each of H&C, H&C America and Purchaser does not or, in the case of the
Purchaser Ancillary Documents will not, and the performance by each of H&C, H&C
America and Purchaser of the transactions contemplated hereby or thereby to be
performed by it will not (a) conflict with the certificate or articles of
incorporation (or other organizational documents) or by-laws of H&C, H&C America
or Purchaser, (b) conflict with, or result in any violation of, or constitute a
default (with or without notice or lapse of time, or both) under, any provision
of any contract or permit to which H&C, H&C America or Purchaser is a party or
by which it is bound, or (c) constitute a violation of any Law, except in the
case of clauses (b) or (c) above, for such conflicts, violations, breaches, or
defaults that would not, individually or in the aggregate, (i) materially impair
the ability of Purchaser to perform its obligations hereunder or (ii) prevent or
materially delay the consummation of the purchase and sale of the Purchased
Assets contemplated hereby. No consent, approval, order, or authorization of, or
registration, declaration, or filing with, any Governmental Entity is required
to be obtained or made by or with respect to H&C, H&C America or Purchaser in
connection with the execution and delivery of this Agreement by H&C, H&C America
or Purchaser or the performance by H&C, H&C America or Purchaser of the
transactions contemplated hereby to be performed by it, except for (i) such of
the foregoing are listed or described on Schedule 5.2.3 and (ii) any filings, if
required, with the Federal Trade Commission or Department or Justice pursuant to
the HSR Act.
35
ARTICLE VI. PRE-CLOSING COVENANTS
6.1. Access to Information. Prior to the Closing, upon reasonable notice
from Purchaser to Seller, and subject to the provisions of that certain
confidentiality agreement between Parent and H&C dated as of September 29, 1997,
Seller will afford to the officers, attorneys, accountants, or other authorized
representatives (including, without limitation, environmental consultants) of
Purchaser reasonable access, after consultation with Seller, during normal
business hours to the employees, the Purchased Assets, facilities, and the books
and records of Seller and its Subsidiaries so as to afford Purchaser a full
opportunity to make such review, examination, and investigation of the Business
as Purchaser may desire to make, including without limitation an environmental
evaluation of Seller and its Subsidiaries reasonably satisfactory to Seller and
Parent. Purchaser will be permitted to make extracts from or to make copies of
such books and records as may be reasonably necessary in connection therewith.
Prior to the Closing, and subject to the provisions of that certain
confidentiality agreement between Parent and H&C dated as of September 29, 1997,
Seller will promptly furnish or cause to be furnished to Purchaser such
financial and operating data and other information as Purchaser may reasonably
request.
6.2. Conduct of Business. Except (x) as set forth in Schedule 6.2, or (y)
as consented to by H&C, H&C America and Purchaser in writing, during the period
from the date of the Agreement and continuing until the Closing, Seller will and
will cause the Subsidiaries to, and will use commercially reasonable efforts to
cause Enenco (to the extent it has the power to do so) to, (i) conduct the
Business and the business of Enenco only in the ordinary course of business and
consistent with past practices, (ii) maintain in good repair all of the
Purchased Assets and, in the case of Enenco, all of Enenco's assets, and (iii)
preserve intact the Seller's, its Subsidiaries' and Enenco's present business
operations, keep available the services of the Seller's, its Subsidiaries' and
Enenco's officers and employees, and preserve the Seller's, its Subsidiaries'
and Enenco's relationships with suppliers, customers, licensors, and others
having business relationships with the Seller, any Subsidiary or Enenco. Without
limiting the generality of the foregoing, the Seller will and will cause the
Subsidiaries to:
(a) not fail to pay or discharge when due any liabilities of which
the failure to pay or discharge may reasonably be expected to cause any
material damage or material loss to it or any of the Purchased Assets;
(b) not sell, assign, or transfer any of the Purchased Assets,
except in the ordinary course of business consistent with past practice,
and not permit any of the Purchased Assets to be subjected to any Lien
(other than the Permitted Liens);
(c) except as expressly contemplated by this Agreement, not make
or suffer any material amendment or termination of any Contract listed on
Schedule
36
5.1.10 or Permit or waive any rights of substantial value, except in the
ordinary course of business;
(d) not make commitments or Contracts for capital expenditures in
excess of the amounts specified in Schedule 5.1.16(f), or except such as
may be involved in ordinary repair, maintenance, or replacement of the
Purchased Assets;
(e) not acquire or agree to acquire any assets that would
constitute Purchased Assets except in the ordinary course of business
consistent with past practice;
(f) not increase the salaries or other compensation of, or make
any advance (excluding advances for ordinary and necessary business
expenses) or loan to, any of its employees or make any increase in, or any
addition to, other benefits to which any of its employees may be entitled
except in the ordinary course of business consistent with past practice;
(g) except where the effect of such change would not be material,
not change any of the accounting principles followed by it or the methods
of applying such principles;
(h) not take or omit to take any action as a result of which any
representation or warranty of Parent or Seller in Article IV would be
rendered untrue or incorrect if such representation or warranty were made
immediately following the taking or failure to take such action;
(i) not enter into any Contract or other transaction (except as
contemplated by the Contracts specified in Schedule 5.1.10(a)(xiv) hereto)
with Parent or any Affiliate of Parent or any officer or director of
Parent or any Affiliate of Parent;
(j) maintain its books, accounts, and records in the usual,
regular, and ordinary manner or a basis consistent with prior years;
(k) maintain in full force and effect all insurance described in
Schedule 5.1.15, except for renewals and replacements in the ordinary
course of business consistent with past practice;
(l) not authorize, issue, or dispose of any shares of any Acquired
Subsidiary's capital stock or other equity securities nor grant any
option, warrant, or right calling for the authorization or issuance of
such shares; and
37
(m) not commit to any of the foregoing.
6.3. Notification.
(a) Parent and Seller shall provide prompt written notice to H&C,
H&C America and Purchaser, and H&C, H&C America and Purchaser shall provide
prompt written notice to Parent and Seller (in each case within 5 business
days), of any litigation, arbitration, or administrative proceeding pending or,
to its knowledge, threatened against Parent, Seller, or any Subsidiary, on the
one hand, or H&C, H&C America, or Purchaser, on the other hand, which challenges
the transactions contemplated hereby.
(b) Parent and Seller will promptly notify Purchaser (in any event
within 15 business days) of any development or upon learning of additional
information causing or which constitutes or would at the Closing constitute a
breach of any of its representations and warranties contained in Sections 5.1.4
through 5.1.25 above. Unless Purchaser has the right to terminate this Agreement
pursuant to Section 11.1 below by reason of the development or information and
exercises that right pursuant to such Section 11.1 below, the written notice
pursuant to this Section 6.3(b) will be deemed to have qualified the
representations and warranties as to which such notice relates, and to have
cured any misrepresentation or breach of warranty that otherwise might have
existed hereunder by reason of the development.
(c) Each Party will give prompt written notice to the other Party
of any material adverse development causing or which constitutes a breach of any
of its own representations and warranties in Sections 5.1.1 through 5.1.3 and
5.2.1 through 5.2.3 above. No disclosure by any party pursuant to this Section
6.3(c), however, shall be deemed to amend or supplement the representations or
warranties of that Party or to prevent or cure any misrepresentation or breach
of warranty.
6.4. Governmental Filings. Each of H&C, H&C America, and Purchaser, on the
one hand, and Parent and Seller, on the other hand, shall as promptly as
practicable following the execution and delivery of this Agreement, file with
the United States Federal Trade Commission and the United States Department of
Justice, the notification and report form under the HSR Act required for the
transactions contemplated hereby and any supplemental information requested in
connection therewith pursuant to the HSR Act. Each of H&C, H&C America and
Purchaser, on the one hand, and Parent and Seller, on the other hand, shall as
promptly as practicable comply with any other Laws of any country and the
European Union which are applicable to any of the transactions contemplated
hereby and pursuant to which any consent, approval, order, or authorization of,
or registration, declaration, or filing with any Governmental Entity or any
other Person in connection with such transactions is necessary. Each of H&C, H&C
America and Purchaser, on the one hand, and Parent and Seller, on the other
hand, shall furnish to the other such necessary information and reasonable
assistance as
38
the other may request in connection with its preparation of any filing,
registration, or declaration which is necessary under the HSR Act or any other
such Laws. Each of H&C, H&C America and Purchaser, on the one hand, and Parent
and Seller, on the other hand, shall keep each other apprised of the status of
any communications with, and any inquiries or requests for additional
information from, any Governmental Entity, and shall comply promptly with any
such inquiry or request.
6.5. Third Party Consents. Each of H&C, H&C America, and Purchaser, on the
one hand, and Parent and Seller, on the other hand, will cooperate and use their
respective commercially reasonable efforts to obtain as promptly as practicable
all consents, approvals, and waivers required by third Persons to transfer the
Purchased Assets (including the Contracts, the Leased Real Property, the
Permits, the Environmental Permits, and the Intellectual Property) to Purchaser
in a manner that will avoid any default, conflict, or termination of rights in
respect thereof.
6.6. Compliance with Industrial Site Recovery Act. Seller will comply
promptly with all requirements of the Industrial Site Recovery Act ("ISRA"), NJ
Stat. ▇▇▇. SS 13:1K-7 et seq., in connection with the transactions contemplated
by this Agreement as may be required by the New Jersey Department of
Environmental Protection ("NJDEP") and shall take all actions necessary to cause
the transaction contemplated hereby to be effected in compliance with ISRA. The
Seller, after consultation with Purchaser, will determine which actions must be
taken prior to or after the Closing to comply with ISRA, it being agreed that
the scope, extent, and method of such actions are matters to be agreed upon by
and between Seller (after consultation with Purchaser) and the NJDEP, provided
that such actions do not unreasonably interfere with the use of the facilities
by Purchaser. Seller will provide Purchaser with any documents to be submitted
to the NJDEP in a reasonable time (in any event within five days or such shorter
period necessary to meet the deadlines of NJDEP) prior to submission. All costs
and expenses incurred in connection with compliance with ISRA, including
reasonable attorneys fees, engineering and other professional or expert fees,
prior to or after the Closing will be borne solely and exclusively by Seller.
From and after the Closing Date, Purchaser will cooperate with Seller and will
provide Seller access to the facilities at reasonable times in order to
accomplish any actions required to comply with ISRA, in connection with this
transaction, or in connection with ECRA/ISRA Case No. 86917.
6.7. Confidentiality. Each of H&C, H&C America, and Purchaser, on the one
hand, and Parent and Seller, on the other hand, shall keep confidential all
information obtained by it or them with respect to the other in connection with
this Agreement and the negotiations preceding this Agreement, and will use such
information solely in connection with the transactions contemplated by this
Agreement, and if the transactions contemplated hereby are not consummated, each
shall, upon request, return to the other or destroy (and certify to the other
that it has so destroyed), without retaining a copy thereof, any schedules,
documents, or
39
other written information, and any reports, notes, computer files, or other
evidence, whether written or electronic, that reflect, refer to or contain such
information obtained from the other in connection with this Agreement and the
transactions contemplated hereby. Notwithstanding the foregoing, no party shall
be required to keep confidential or return any information which (a) is required
to be disclosed by Law, pursuant to an order or request of a judicial authority
or Governmental Entity having competent jurisdiction, or pursuant to the rules
and regulations of any national stock exchange applicable to the disclosing
party and its Affiliates (provided the party seeking to disclose such
information provides the other party with reasonable prior notice thereof), or
(b) which can be shown to have been generally available to the public otherwise
than as a result of a breach of this Section 6.7.
6.8. No Solicitation. Except for the transactions contemplated by this
Agreement, from and after the date of this Agreement, neither Parent nor Seller
shall, nor shall they authorize or permit any officer, director, or employee of,
or any investment banker, attorney, accountant, or other representative retained
by, Parent, Seller, or any Subsidiary to, directly or indirectly, solicit,
initiate, encourage or entertain (including by way of furnishing information)
discussions, inquiries, offers, or proposals, or participate in any discussions
or negotiations for the purpose or with the intention of leading to any proposal
or offer from any Person which constitutes or concerns, or may reasonably be
expected to lead to, any proposal for a merger or other business combination
involving Seller or any Subsidiary or any proposal or offer to acquire any of
the outstanding shares of capital stock of Seller or any Subsidiary or any
material portion of the Purchased Assets.
6.9. Publicity. Prior to the Closing, no party to this Agreement will
issue or cause the publication of any press release or other public announcement
with respect to this Agreement or the transactions contemplated hereby without
the prior consent of all other parties, which consent will not be unreasonably
withheld; provided, however, that nothing herein will prohibit any party from
issuing or causing publication of any such press release or public announcement
to the extent that such party determines such action to be required by Law or
the rules of any national stock exchange applicable to it or its Affiliates, in
which event the party making such determination will allow all other parties a
period of time that is reasonable under the circumstances to comment on such
release or announcement in advance of its issuance.
6.10. Satisfaction of Conditions. Without limiting the generality or
effect of any provision of Article VII, prior to the Closing, each of the
parties will use commercially reasonable efforts with due diligence and in good
faith to satisfy promptly all conditions required hereby to be satisfied by such
party in order to expedite the consummation of the transactions contemplated
hereby. Without limiting the generality of the foregoing, if any Governmental
Entity having jurisdiction over any party issues or otherwise promulgates any
injunction, decree, or similar order prior to the Closing which prohibits the
consummation of
40
the transactions contemplated hereby, the parties will use their respective
commercially reasonable efforts to have such injunction dissolved or otherwise
eliminated as promptly as possible and, prior to or after the Closing, to pursue
the underlying litigation diligently and in good faith.
6.11. Repayment of Indebtedness; Release of Liens. Parent and Seller
shall, at or immediately prior to the Closing, cause each of the Acquired
Subsidiaries to pay all amounts owing in respect of indebtedness including (A)
all obligations of any Acquired Subsidiary for borrowed money or evidenced by
bonds, debentures, notes, letters of credit, or similar instruments, (B) all
obligations as lessee under capital leases, (C) all obligations to pay the
deferred purchase price of property or securities, except accounts payable
arising in the ordinary course of business consistent with past practice, and
(D) all similar obligations to others guaranteed by any Acquired Subsidiary or
secured by a Lien or any of the assets of any Acquired Subsidiary. In addition,
Parent and Seller shall, at or immediately prior to the Closing, cause each of
the Acquired Subsidiaries to obtain the release of any Liens (other than
Permitted Liens) on the properties and assets of the Acquired Subsidiaries.
6.12. RII Distribution of Assets and Liabilities. Notwithstanding anything
to the contrary contained in this Agreement, it is contemplated that Parent,
Seller and RII will, prior to Closing, take or cause to be taken the following
actions:
(i)RII will distribute to Seller, by dividend, all of
its assets and liabilities (including, without limitation, the license
from RIMC); and
(ii)RII will be dissolved or liquidated.
6.13. Termination of Intercompany Agreements. Except as otherwise provided
on Schedule 6.13, all Contracts entered into prior to the Closing Date between
or among Parent, Seller, or RII or any Affiliate of Parent, Seller, or RII
(other than any Acquired Subsidiary), on the one hand, and any Acquired
Subsidiary, on the other hand, shall be terminated at or prior to the Closing
(without penalty, prejudice or cost to Purchaser).
6.14. Cancellation of Intercompany Notes. Parent and Seller shall take
such action as is necessary to cancel the intercompany notes of Rheox Ltd. and
Rheox GmbH listed on Schedule 6.14 hereto (the "Intercompany Notes") in exchange
for the issuance to Seller or RII of additional shares of capital stock of Rheox
Ltd. or Rheox Gmbh, as the case may be. Upon issuance of such additional shares
of capital stock, Seller shall promptly provide to Purchaser amended Schedules
5.1.2.B and 1.1.11.A to reflect the foregoing transactions.
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ARTICLE VII. CONDITIONS TO CLOSING
7.1. Conditions Precedent to Obligations of Purchaser. The obligations of
Purchaser under this Agreement to consummate the transactions contemplated
hereby will be subject to the satisfaction, at or prior to Closing, of all of
the following conditions, any one or more of which may be waived at the option
of Purchaser:
7.1.1. Representations, Warranties and Covenants.
(a) All representations and warranties of Parent and Seller made
in this Agreement or in any Exhibit, Schedule, or document delivered pursuant
hereto (including any Seller Ancillary Documents) which include any
qualification or limitation with respect to materiality (whether by reference to
"Material Adverse Effect" or otherwise) or any threshold amount (whether
expressed individually or in the aggregate), shall be true and correct in all
respects as of the date hereof and at and as of the Closing, and all
representations and warranties of Parent and Seller made in this Agreement or in
any Exhibit, Schedule, or document delivered pursuant hereto (including any
Seller Ancillary Documents) which are not so qualified or otherwise limited with
respect to materiality (whether by reference to "Material Adverse Effect" or
otherwise) or any threshold amount (whether expressed individually or in the
aggregate), shall be true and correct in all material respects as of the date
hereof and at and as of the Closing, in each case with the same effect as though
such representations and warranties were made at and as of the Closing.
(b) Parent and Seller shall have performed and complied with, in
all material respects, all the covenants and agreements required by this
Agreement to be performed or complied with prior to the Closing.
(c) H&C, H&C America, and Purchaser shall have received a
certificate, dated as of the Closing Date, executed on behalf of Parent and
Seller by authorized officers thereof, certifying in such detail as H&C, H&C
America, and Purchaser may reasonably request that the conditions specified in
Sections 7.1.1(a) and (b) hereof have been fulfilled.
7.1.2. Closing Documents. Parent and Seller shall have delivered
to H&C, the H&C Assignees, H&C America, and Purchaser the documents identified
in Section 8.1.
7.1.3. Governmental Consents or Approvals. Each of the approvals,
consents, or waivers of any Governmental Entity listed on Schedules 5.1.4 and
5.2.3 shall have been obtained.
7.1.4. HSR Act. If applicable, the waiting period under the HSR
Act shall have expired or terminated.
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7.1.5. No Adverse Proceedings. No suit, action, claim, or
governmental proceeding shall be pending against, and no order, decree, or
judgment of any court, agency, or Governmental Entity shall have been rendered
against, any party hereto which would render it unlawful, as of the Closing
Date, to effect the transactions contemplated by this Agreement in accordance
with its terms.
7.1.6. Third Party Consents. The Seller shall have obtained and
shall have delivered to H&C, H&C America, and Purchaser the third-party consents
(which shall be in form and substance reasonably satisfactory to H&C, H&C
America, and Purchaser and which in any event shall not, except with the prior
written consent of H&C, H&C America, and Purchaser, be conditioned upon or
subject to the payment of any additional consideration or modification of the
terms of any Contract or Permit included within the Purchased Assets or any
Other Permit) necessary to transfer the Purchased Assets listed on Schedule
7.1.6.
7.1.7. Material Adverse Effect. Between the date of this Agreement
and the Closing Date, there shall not have occurred any event or circumstance
that individually or in the aggregate has had or could reasonably be expected to
have a Material Adverse Effect.
7.1.8. ISRA Compliance. Seller shall have obtained a writing
executed by the NJDEP authorizing the transaction contemplated by this Agreement
to occur in accordance with ISRA, including, without limitation, any of the
following: (i) a determination that ISRA is not applicable to the transaction
pursuant to N.J.A.C. 7:26B-2.2; (ii) an approval of a Negative Declaration;
(iii) an approval of a Remedial Action Workplan; (iv) a No Further Action letter
as defined by N.J.S.A. 13:1K-9(d); (v) a Remedial Agreement pursuant to N.J.S.A.
13:1K-9(e); or (vi) an authorization to transfer operations pursuant to N.J.S.A.
13:1K-11.2 or N.J.S.A. 13:1K-11.5.
7.1.9. Transitional Services Agreements. Parent and Seller shall
have entered into the transitional services agreement(s) and other arrangements
described in more detail on Exhibit B hereto.
7.1.10.[Intentionally omitted].
7.1.11.Purchaser's Shareholders Approval. H&C shall have obtained
the requisite consent or vote of its shareholders to the consummation of the
transactions contemplated hereby.
7.1.12.Opinion of New Jersey Counsel. H&C, H&C America, and
Purchaser shall have received the opinion of ▇▇▇▇▇▇▇▇ & English, special counsel
to Parent, to the effect set forth on Exhibit D hereto.
43
▇.▇.▇▇.▇▇▇ Deeds. Parent and Seller shall have entered into the
U.K. Tax Deed and German Tax Deed in the form attached hereto as Exhibit E-1 and
E-2 hereto (the "Tax Deeds").
▇.▇.▇▇.▇▇ Software License. Parent shall have entered into the NL
Software License.
7.2. Conditions Precedent to Obligations of Seller and Parent. The
obligations of Seller and Parent under this Agreement to consummate the
transactions contemplated hereby will be subject to the satisfaction, at or
prior to the Closing, of all the following conditions, any one or more of which
may be waived at the option of Seller and Parent:
7.2.1. No Material Misrepresentation or Breach.
(a) All representations and warranties of H&C, H&C America, and
Purchaser made in this Agreement or in any Exhibit, Schedule, or document
delivered pursuant hereto (including any Purchaser Ancillary Document), shall be
true and correct in all material respects as of the date hereof and at and as of
the Closing, with the same effect as though such representations and warranties
were made at and as of the Closing.
(b) All of H&C, H&C America, and Purchaser shall have performed
and complied with, in all material respects, all the covenants and agreements
required by this Agreement to be performed or complied with prior to the
Closing.
(c) Parent and Seller shall have received a certificate, dated as
of the Closing Date, executed on behalf of each of H&C, H&C America, and
Purchaser by an authorized officer thereof, certifying in such detail as Parent
and Seller may reasonably request that the conditions specified in Sections
7.2.1(a) and (b) have been fulfilled.
7.2.2. Closing Documents. H&C, the H&C Assignees, H&C America, and
Purchaser shall have delivered to Parent and Seller the documents and other
items identified in Section 8.2.
7.2.3. Governmental Consents or Approvals. Each of the approvals,
consents, or waivers of any Governmental Entity listed on Schedules 5.1.4 and
5.2.3 shall have been obtained.
7.2.4. HSR Act. If applicable, the waiting period under the HSR
Act shall have expired or terminated.
44
7.2.5. No Adverse Proceedings. No suit, action, claim, or
governmental proceeding shall be pending against, and no order, decree, or
judgment of any court, agency, or other Governmental Entity shall have been
rendered against, any party hereto which would render it unlawful, as of the
Closing Date, to effect the transactions contemplated by this Agreement in
accordance with its terms.
7.2.6. Transitional Services Agreements. Purchaser (or one or more
of its Affiliates) shall have entered into the transitional services
agreement(s) and other arrangements described in more detail on Exhibit B
hereto.
7.2.7. Tax Deeds. H&C (or its designee or assignee) shall have
entered into the Tax Deeds
7.2.8. NL Software License. H&C (or an H&C Assignee) shall have
entered into the NL Software License.
ARTICLE VIII. DOCUMENTS TO BE DELIVERED AT THE CLOSING
8.1. Documents to be Delivered by Parent and Seller. At the Closing,
Parent and Seller will deliver to H&C, the H&C Assignees, as applicable, H&C
America, and Purchaser, and will cause the Subsidiaries to deliver to the H&C,
H&C America, and Purchaser, the following, at the expense of Parent and Seller
and in proper form for recording when appropriate:
8.1.1. Transfer Documents. Such bills of sale, assignments, deeds,
and other instruments of transfer as Purchaser may reasonably request conveying
and transferring to Purchaser title to the Purchased Assets, which shall be in
form and substance reasonably satisfactory to Purchaser, on the one hand, and
Parent and Seller, on the other hand, including, without limitation, such
instruments of transfer and other documents relating to the transfer of the
shares of the Acquired Subsidiaries as are described in Schedules 8.1.1(a),
8.1.1(b), and 8.1.1(c).
8.1.2. Certified Resolutions. Certified resolutions of the Boards
of Directors of Parent, Seller, and RII approving the execution and delivery of
this Agreement and the Seller Ancillary Documents and authorizing the
consummation of the transactions contemplated hereby and thereby.
8.1.3. Officer's Certificate. A certificate, dated the Closing
Date, executed on behalf of the Parent and Seller in the form described in
Section 7.1.1.
45
8.1.4. Good Standing Certificates. Governmental certificates
showing that Seller and each Subsidiary is duly incorporated and in good
standing in the state or jurisdiction of its incorporation and in good standing
in each state listed on Schedule 5.1.1 or 5.1.2, as applicable, certified as of
a date not more than 5 days before the Closing Date.
8.1.5. Other Documents. Such additional information and materials
as H&C, H&C America, and Purchaser shall reasonably request.
8.2. Documents to be Delivered by Purchaser. At the Closing, H&C, the H&C
Assignees, as applicable, H&C America and Purchaser will deliver to Parent and
Seller, at the expense of H&C, H&C America and Purchaser:
8.2.1. Purchase Price. A wire transfer of immediately available
funds in the amount of the Unadjusted Purchase Price as provided in Section 3.1.
8.2.2. Assumption Agreement. Such assumption agreements as Seller
may reasonably request relating to Purchaser's assumption of the Assumed
Liabilities.
8.2.3. Certified Resolutions. Certified resolutions of the Board
of Directors of H&C, H&C America, and Purchaser approving the execution and
delivery of this Agreement and the Purchaser Ancillary Documents and authorizing
the consummation of the transactions contemplated hereby and thereby.
8.2.4. Officer's Certificate. A certificate, dated the Closing
Date, executed on behalf of H&C, H&C America, and Purchaser in the form
described in Section 7.2.1.
8.2.5. Good Standing Certificates. Governmental certificates
showing that each of H&C, H&C America, and Purchaser is duly incorporated and in
good standing in the state of its incorporation certified as of a date not more
than 5 days before the Closing Date
8.2.6. Other Documents. Such additional information and materials
as Seller shall reasonably request.
ARTICLE IX. POST-CLOSING COVENANTS
9.1. Employee Benefits Plans and Practices.
(a) Employment.
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Bargaining Unit Employees. Purchaser shall assume on the Closing
Date the collective bargaining agreements set forth on Schedule 5.1.18(a) and
shall employ each of the United States bargaining unit Employees who are
employed on the Closing Date and are covered by such agreements; provided,
however, except to the extent of the amount accrued on the Closing Statement
prepared in accordance with Section 3.2(c), Seller shall remain responsible for
employee welfare benefits for U.S. bargaining unit Employees who are not
actively at work on the Closing Date until the date such employees commence
active work with Purchaser or any of its Affiliates.
Non-Bargaining Unit Employees. All of the non-bargaining unit
Employees (other than the individuals set forth on Schedule 9.1(a)) who are
actively working on the Closing Date shall be offered employment with the
Purchaser as of the Closing Date, and such Employees who continue employment
after the Closing Date shall be hereafter referred to as "Continued Employees."
Each such offer of employment to such non-bargaining unit Employees shall be at
the same salary and cash bonus opportunity (in the aggregate) or hourly wage
rate and position in effect on the Closing Date. Purchaser shall also offer
employment to each non-bargaining unit Employee who is employed but is
temporarily absent from active employment on the Closing Date upon termination
of such temporary absence within 6 months following the Closing Date provided
such Employee is able to perform the essential functions of the position he or
she previously held with the Seller prior to such absence, and any such U.S.
Employee shall be treated as a Continued Employee from and after his or her date
of employment with Purchaser.
(b) [Intentionally Omitted]
(c) Purchaser Benefit Plans. Effective immediately as of the
Closing Date, except as otherwise specifically provided in this Section 9.1,
Purchaser will provide or cause any of its subsidiaries to provide Continued
Employees at such time with coverage initially under the applicable benefit
plans described in Schedule 9.1(c) ("Purchaser Benefit Plans"). Purchaser has
provided or will provide prior to Closing (to the extent available prior to
Closing) a copy (or, if a copy is not available, a written description) of each
Purchaser Benefit Plan to Seller.
(d) Past Service Credit and Continued Credit. Purchaser shall
amend the Purchaser Benefit Plans to the extent necessary or appropriate to
credit Continued Employees under such plans for their period of employment with
the Seller or any of its Subsidiaries or Affiliates solely for purposes of
eligibility, vesting and eligibility for levels of benefits under such plans and
will waive pre-existing conditions to the same extent waived by Seller under
similar Employee Plans. Seller shall, subject to the Closing, fully vest
Continued Employees in their accrued benefits under the Seller's retirement
plans and continue to credit those Continued Employees who are presently
eligible for early retirement with their service
47
with Purchaser and its subsidiaries or affiliates solely for purposes of
eligibility for early or normal retirement benefits under the Seller's
retirement plans.
(e) Unpaid Wages. On the Closing Date, Purchaser agrees that with
respect to current bargaining unit Employees on the Closing Date and Continued
Employees it shall be responsible and liable for (and Purchaser shall pay or
cause the relevant subsidiary to pay in the ordinary course) solely to the
extent accrued on the Closing Statement all accrued and unpaid wages for
services rendered, vacation, and cash bonuses. Seller shall pay all other salary
continuation payments (including, but not limited to, disability or paid leaves
of absence) to Employees with respect to the period prior to their commencement
of active work with Purchaser or any of its Affiliates.
(f) Union Benefit Plans. In the case of contracts relating to
employee benefits coverage for bargaining unit Employees, Purchaser may seek to
adopt or cause a subsidiary to adopt substantially identical contracts with
respect to the period following the Closing Date, and Seller shall reasonably
cooperate with and assist Purchaser with respect to such contracts.
(g) Medical and Death Benefits. Schedule 9.1.(g) lists the former
bargaining unit Employees or their surviving spouses who are covered by
post-retirement medical and life insurance benefits. Schedule 9.1.(g) lists the
type of post-retirement medical and life insurance plan applicable to such
former bargaining unit Employees (including the type of coverage (i.e., single
or family).
(i) Seller shall provide post-retirement medical benefits
in accordance with the current terms of the Employee Plans to any
Continued Employee who retires from Purchaser or its Affiliates prior to
1999 and was eligible for such benefits if they had retired on the Closing
Date.
(ii) Medical Claims. Seller shall continue to administer in
accordance with past practices all claims for medical and dental services
rendered before the Closing Date with respect to Employees.
(h) 401(k) Plan. After the Seller receives a favorable
determination by the Internal Revenue Service on the qualification of the NL
Industries Retirement Savings Plan under Section 401 of the Code, Seller shall
promptly cause such plan to transfer to Purchaser's 401(k) plan which Purchaser
shall cause to accept such transfer, in a trust-to-trust transfer in compliance
with applicable Laws, an amount in cash equal to the vested and non-vested
account balances as of the last day of a calendar month of all Continued
Employees and all bargaining unit Employees, together with earnings thereon at
the applicable rate available under such plan to the actual date of transfer.
Seller and Purchaser shall each provide the
48
other with reasonable assurances that its 401(k) plan qualifies under Section
401 of the Code. Purchaser shall cause its 401(k) plan to comply with Code
Section 411(d)(6) with respect to the amounts so transferred.
(i) Amendment of Plans, Severance Pay. Nothing in this Agreement
shall limit, subject to applicable Laws, Purchaser's right, at any time, to
dismiss any or all Continued Employees or Subsidiary Employees at any time, with
or without cause, and to change the terms and conditions of their employment
(including compensation and employee benefits provided to them); provided that
any such Continued Employee or Subsidiary Employee dismissed without cause
within 12 months following the Closing Date shall be entitled to receive from
Purchaser severance pay, in accordance with the severance policy disclosed on
Schedule 5.1.18 (a complete and correct copy of each such policy has been
provided to Purchaser). Nothing in this Agreement shall preclude amendment or
termination of any of Purchaser Benefit Plans or the Employee Plans, as to which
Purchaser has no present intention to amend or terminate, at any time without
notice to Employees or any other affected individual. Purchaser has no present
intention to materially reduce the compensation of any Continued Employee or
Subsidiary Employee after Closing.
(j) Cooperation. Purchaser, Parent, Acquired Subsidiaries and
Seller agree to cooperate in collecting and providing information as may be
required by any of them in order to discharge its respective obligations under
this Section 9.1. Purchaser, Parent, Acquired Subsidiaries and Seller each
agrees to promptly make all payments and perform all obligations with respect to
which they have retained liability under Section 9.1.
(k) Employee Notices and Certificates. Purchaser shall be
responsible for issuing certificates or notices in lieu of certificates intended
to comply with the Health Insurance Portability and Accountability Act with
respect to Continued Employees, and Seller and Purchaser shall reasonably
cooperate with each other to ensure that such certificates or notices are timely
provided to such Employees. Purchaser agrees not to take any action or omit to
take any action in connection with the hiring process that would subject Seller
to any responsibility or liability under the Workers Adjustment and Retraining
Notification Act with respect to Continued Employees.
(l) Withholding. Seller agrees to transfer to Purchaser any
records (including, but not limited to, Forms W-4 and Employee Withholding
Allowance Certificates) relating to withholding and payment of income and
employment taxes (federal, state, and local) and FICA taxes with respect to
wages paid by Seller during the current calendar year to Continued Employees.
Purchaser agrees, to the extent permitted by applicable Law, to provide such
employees with Forms W-2, Wage and Tax Statements for the current calendar year
setting forth the wages and taxes withheld with respect to such employees for
the current calendar year by Seller and Purchaser, as predecessor and successor
employers, respectively.
49
Seller and Purchaser also agree to comply with the filing requirements set forth
in Revenue Procedure 96-60 to implement this Section.
(m) Insurance. Seller shall maintain through the last day of the
calendar month in which the Closing Date occurs the insurance policies (and not
administration service obligation contracts) in effect immediately prior to the
Closing Date under the applicable Employee Plan.
(n) No Third Party Beneficiaries. Nothing contained in this
Section 9.1 shall be construed to grant to any Continued Employees a right to
employment by Purchaser for any particular length of time or to otherwise
provide to any such Continued Employee any rights or remedies under or by reason
of this Agreement.
(o) U.K. Pension Schedule. The parties will take such actions as
may be required to be taken pursuant to the U.K. pension schedule attached
hereto as Exhibit F, which schedule is deemed to be incorporated into this
Agreement for all purposes (including for the purposes of Article X hereof).
9.2. Maintenance of Books and Records. Seller shall and shall cause RII
to, and Purchaser shall and shall cause each Acquired Subsidiary to, preserve
until the eighth anniversary of the Closing Date all records possessed or to be
possessed by such party relating to any of the assets or liabilities of the
Business, or the operation of the Business, prior to the Closing Date. After the
Closing Date, where there is a legitimate purpose, such party shall provide the
other parties with access, upon prior reasonable written request specifying the
need therefor, during regular business hours, to (a) the officers and employees
of such party and (b) the books of account and records of such party, but, in
each case, only to the extent relating to the assets, liabilities or business of
the Business prior to the Closing Date, and the other parties and their
representatives shall have the right to make copies of such books and records;
provided, however, that the foregoing right of access shall not be exercisable
in such a manner as to interfere unreasonably with the normal operations and
business of such party; and provided, further that, as to so much of such
information as constitutes trade secrets or confidential business information of
such party, the requesting party and its officers, directors, and
representatives will use due care to not disclose such information except to the
extent such information (a) is required to be disclosed by Law or pursuant to an
order or request of a judicial authority or Governmental Entity having competent
jurisdiction (provided the party seeking to disclose such information provides
the other party or parties with reasonable prior notice thereof) or (b) which
can be shown to have been generally available to the public otherwise than as a
result of a breach of this Section 9.2. Such records may nevertheless be
destroyed by a party if such party sends to the other parties written notice of
its intent to destroy records, specifying with particularity the contents of the
records to be destroyed. Such records may then be destroyed after the 30th day
after such notice is given unless another party
50
objects to the destruction, in which case the party seeking to destroy the
records shall either agree to retain such records or deliver such records to the
objecting party.
9.3. Payments Received. After the Closing, Seller will and will cause RII
to, and Purchaser will and will cause each Acquired Subsidiary to, hold and
promptly transfer and deliver to the other, from time to time as and when
received by them, any cash, checks with appropriate endorsements (using their
best efforts not to convert such checks into cash), or other property that they
may receive on or after the Closing which properly belongs to the other party,
including without limitation any insurance proceeds, and will account to the
other for all such receipts.
From and after the Closing, Purchaser shall have the right and authority
to endorse without recourse the name of Seller or RII on any check or other
evidence of indebtedness received by the Purchaser on account of the Business or
the Purchased Assets transferred to the Purchaser hereunder.
9.4. Use of Name. From and after the Closing Date, Parent and Seller will,
and will cause RII and each of its Affiliates to, sign such consents and take
such other action as Purchaser shall reasonably request in order to permit
Purchaser to use the name "Rheox," "Bentone," and variants thereof. From and
after the Closing Date, Seller will not itself, and will cause RII and its
Affiliates not to, use the name "Rheox," "Bentone," or any names similar thereto
or variants thereof and shall use commercially reasonable efforts to promptly
amend and cause RII and each Affiliate to amend its charter or other
organizational documents to remove such reference.
9.5. UCC Matters. From and after the Closing Date, Seller will and will
cause RII to promptly refer all inquiries with respect to ownership of the
Purchased Assets or the Business to Purchaser. In addition, Seller will and will
cause RII to execute such documents and financing and termination statements as
Purchaser may reasonably request from time to time to evidence transfer of the
Purchased Assets to Purchaser and the release of any Liens therefrom.
9.6. Covenant Not to Compete. Until the fifth anniversary of the Closing
Date (such period of time being referred to herein as the "Noncompetition
Term"), each of Parent and Seller severally agrees to refrain from, anywhere in
the world, directly or indirectly through any controlled Affiliate (whether
individually or as a principal, officer, director, employee, shareholder,
investor, consultant, advisor, partner, joint venturer, agent, equity owner, or
in any other capacity whatsoever):
(a) engaging or participating in any activity with respect to the
development, manufacturing, marketing, and sale of rheological products or
products
51
using the same or similar chemistry ("Products") that compete with the
Business as presently conducted; provided, however, that the foregoing
shall not be construed to preclude Parent, Seller, or any of their
respective Affiliates from (i) making any investments in the securities of
any person, whether or not engaged in competition with the Business as
presently conducted, to the extent that such securities are actively
traded on a national securities exchange or in the over-the-counter market
in the United States or any foreign securities exchange and such
investment does not exceed five percent of the issued and outstanding
shares of such Person or give Parent, Seller, or any of their respective
Affiliates the right or power to control or participate directly in making
the policy decisions of such Person or (ii) acquiring all or substantially
all of the assets or voting stock of any person which is engaged primarily
in a business not in competition with the Business as presently conducted
but which has a direct or indirect division, subsidiary, or other business
unit which competes with the Business (the "Competing Business Unit"),
provided that Parent, Seller, or such Affiliates shall use their
respective commercially reasonable efforts to sell or otherwise dispose of
such Competing Business promptly following the consummation of such
acquisition; or
(b) causing or attempting to cause (A) any customer to whom the
Business supplies Products to terminate any purchase or other similar
Contract, or relationship with the Business after the Closing or to
replace the Business as a supplier of Products, in whole or in part, with
any other Person, or (B) any supplier from whom the Business purchases raw
materials and other products to terminate any supply or other similar
Contract or relationship with the Business; or
(c) except as otherwise contemplated by this Agreement
encouraging, soliciting, or inducing any manager, officer, supervisor, or
other employee of the Business to terminate his or her employment
relationship with the Business or to become employed by any Person other
than the Business.
Each of Parent and Seller severally acknowledges that the geographic boundaries,
scope of prohibited activities and the Noncompetition Term contained in this
Section 9.6 are reasonable and no broader than necessary to protect the
investment by Purchaser in the Purchased Assets being acquired pursuant to this
Agreement and Purchaser's and its Affiliates ongoing interests in the Business
and do not and will not impose any unreasonable burden upon any of Parent,
Seller, or their respective Affiliates. Each of Parent and Seller severally
agree that (i) any breach by it of any of the provisions contained in this
Section 9.6 would cause irreparable damage to Purchaser for which monetary
damages and other remedies at law may not be adequate, and (ii) Purchaser will
be entitled to seek a restraining order, an injunction, specific performance, or
other form of equitable or extraordinary relief from any court of competent
jurisdiction to restrain any threatened or further breach of this Section 9.6
above or to require any of Parent or Seller to perform his or its respective
obligations under this Section 9.6,
52
which right to equitable or extraordinary relief will not be exclusive of but
will be in addition to all other remedies to which Purchaser may be entitled
under this Agreement, at law, or in equity (including, the right to recover
monetary damages). As consideration for the agreements set forth in this Section
9.6, Purchaser agrees to pay to Parent at the Closing $20,000,000 by delivery of
cash payable by wire transfer of immediately available funds.
9.7. Post-Closing Confidentiality.
(a) For a period of 5 years after the Closing Date, Parent and
Seller shall and shall cause RII, and shall cause their respective officers,
directors, employees, affiliates, agents, and other representatives to, hold in
confidence (and not release or disclose to any Person other than H&C, H&C
America, and Purchaser and their respective authorized representatives) and not
use for any purpose any (i) proprietary or other information regarding H&C, H&C
America, Purchaser, or any of their respective affiliates described to Seller or
Parent or any of the other foregoing persons in connection with the negotiation
or preparation of this Agreement or otherwise in connection with the
transactions contemplated hereby or (ii) proprietary or other information
relating to the Purchased Assets or the Business that remains after the Closing
in the possession of Parent or Seller or any of the other foregoing persons.
Notwithstanding the foregoing, the confidentiality obligations of this Section
9.7(a) shall not apply to information which (x) is required to be disclosed by
Law or pursuant to an order or request of a judicial authority or Governmental
Entity having competent jurisdiction (provided Parent or Seller provides H&C,
H&C America, and Purchaser with reasonable prior notice thereof), or (y) which
can be shown to have been generally available to the public otherwise than as a
result of a breach of this Section 9.7(a).
(b) For a period of 5 years after the Closing Date, Purchaser, H&C
America, and H&C shall and shall cause the Acquired Subsidiaries to, and shall
cause their respective officers, directors, employees, affiliates, agents, and
other representatives to, hold in confidence (and not release or disclose to any
Person other than Parent or Seller and their authorized representatives) and not
use for any purpose any proprietary or other information regarding Parent or
Seller or any of their respective Affiliates (other than any of the Acquired
Subsidiaries or any information relating to the Purchased Assets or Assumed
Liabilities) disclosed to Purchaser, H&C America, H&C, or any of the other
foregoing persons in connection with the negotiation or preparation of this
Agreement or otherwise in connection with the transactions contemplated hereby.
Notwithstanding the foregoing, the confidentiality obligations of this Section
9.7(b) shall not apply to information which (x) is required to be disclosed
pursuant to Law or an order or request of a judicial authority or Governmental
Entity having competent jurisdiction (provided Purchaser, H&C, or H&C America
provides Parent and Seller with reasonable prior notice thereof), or (y) which
can be shown to have been generally available to the public otherwise than as a
result of a breach of this Section 9.7(b).
53
9.8. Post-Closing Notifications. Each of H&C, H&C America, and Purchaser
will, and will cause the Acquired Subsidiaries to, and Parent and Seller will,
comply with any post-Closing notification or other requirements, to the extent
then applicable to such party, of any antitrust, trade competition, investment,
or control, export, or other Law of any Governmental Entity having jurisdiction
over H&C, H&C America, Purchaser, Parent, Seller, or such Acquired Subsidiaries,
as applicable.
9.9. Transfer Taxes. All sales, use, transfer, stamp, conveyance, value
added or other similar taxes, duties, excises or governmental charges imposed by
any taxing jurisdiction, domestic or foreign, and all recording or filing fees,
notarial fees, and other similar costs of Closing with respect to the transfer
of the Purchased Assets or otherwise on account of this Agreement or the
transactions contemplated hereby will be borne one-half by H&C and Purchaser and
one-half by Parent and Seller.
9.10. Insurance. With respect to any loss, liability, or damage relating
to, resulting from, or arising out of the conduct of the Business on or prior to
the Closing Date which constitutes an Assumed Liability and for which Seller or
RII would be entitled to assert, or cause any Affiliate or other Person to
assert, a claim for recovery under any policy of insurance maintained by or for
the benefit of Seller or RII or Affiliate thereof in respect of the Business or
the Purchased Assets, at the request of Purchaser, Seller will use commercially
reasonable efforts to assert, or to assist Purchaser to assert, one or more
claims under such insurance covering such loss, liability, or damage if
Purchaser is not itself entitled to assert such claim but Seller is so entitled.
In the case of any damage to or destruction of the Purchased Assets or the
assets of the Acquired Subsidiaries occurring prior to Closing that is covered
by insurance maintained by Seller or RII or any Affiliate, Seller shall deliver
all insurance proceeds realized therefrom to Purchaser at Closing or as soon
thereafter as collected by Seller or RII or any Affiliate.
9.11. Restrictions on Hiring of Seller's Employees. Except as otherwise
contemplated by this Agreement, for a period of five years following the Closing
Date, H&C, H&C America, and Purchaser shall, and shall cause their respective
controlled Affiliates to, refrain from encouraging, soliciting, or inducing any
manager, officer, supervisor, or other employee of Parent, Seller or any
controlled Affiliate of Parent or Seller to terminate his or her employment
relationship with the such Person or to become employed by any Person other than
any such Person.
9.12. Certain Tax Matters.
(a) (i) Seller and Purchaser hereby agree to make an election
under Section 338(h)(10) of the Code to treat the purchase and sale of the
stock of RIMC pursuant to this Agreement as a sale of assets for federal
(and, to the extent applicable,
54
State and local) Income Tax purposes. Allocation of the deemed purchase
price of RIMC's assets shall be determined in accordance with Section 3.3.
(ii) Seller and Purchaser agree to (A) sign all federal, state,
and local Tax Returns prepared in accordance with Sections 9.12(c) and (d)
hereof and all forms and documents relating to the Section 338(h)(10)
election as prepared by Purchaser; (B) do all other acts necessary to
ensure that the section 338(h)(10) election is timely and effectively
filed; (C) take all other actions as are required in order to give effect
to the election for state and local Income Taxes purposes to the greatest
extent permitted by Law; and (D) report all federal, state, and local
income Taxes in a manner consistent with such election.
(b) Any agreement between Parent, Seller, and RIMC regarding
allocation or payment of Income taxes or amounts in lieu of Taxes shall be
terminated at and as of the Closing.
(c) Seller will be responsible for the preparation and filing of
all Income Tax returns for RIMC for all periods as to which Income Tax returns
are due after the Closing Date (including the consolidated, unitary, and
combined Income Tax returns for Parent and Seller which include the operations
of RIMC for any period prior to the Closing Date). Seller will make all payments
required with respect to any such Tax return.
(d) Purchaser will be responsible for the preparation and filing
of all Income Tax returns for RIMC for all periods as to which Income Tax
returns are due after the Closing Date (other than for Income Taxes with respect
to periods for which the consolidated, unitary, and combined Income Tax returns
of Seller will include the operations of Seller and RIMC). Purchaser will make
all payments required with respect to any such Income Tax return; provided,
however, that Parent and Seller jointly and severally agree to reimburse
Purchaser concurrently therewith to the extent any payment Purchaser is making
relates to the operations of RIMC for any period ending on or before the Closing
Date.
9.13. German Tax Deed. Seller and Parent will indemnify and hold Purchaser
harmless from and against any Tax liability of Rheox GmbH, Bentone Chemie GmbH,
and Rheox Europe S.A./N.V. in accordance with the Tax Deed in the form of
Exhibit E-2.
ARTICLE X. SURVIVAL AND INDEMNIFICATION
10.1. Survival of Representations, Warranties, and Covenants.
55
(a) Except as to (i) the representations and warranties contained
in Sections 5.1.1, 5.1.2.A, 5.1.2.B, 5.1.3, 5.2.1, and 5.2.2, which shall
survive the Closing until the expiration of the statute of limitations
applicable thereto and (ii) the representations and warranties contained in
Section 5.1.23, which shall survive the Closing until the expiration of the last
day on which any Tax may be validly assessed by the IRS or any other
Governmental Entity against Seller, any Subsidiary, the Purchased Assets, or the
Business, the representations and warranties of Seller and Parent and of H&C,
H&C America, and Purchaser contained in this Agreement shall survive the Closing
until the expiration of three years from the Closing Date; provided, however,
that no representation or warranty shall survive the Closing if the party for
whose benefit the representation of warranty is made had actual knowledge that
the representation or warranty was not true when made or at the time of Closing;
provided, further, that for the purposes of the preceding clause, the term
"actual knowledge" as it relates to H&C, H&C America, or Purchaser shall mean
the actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. Any claim for indemnification with
respect to any of such matters which is not asserted by notice given as herein
provided relating thereto within such specified period of survival may not be
pursued and is hereby irrevocably waived after such time. Any claim for an
Indemnifiable Loss (as defined in Section 10.2) asserted within such period of
survival as herein provided will be timely made for purposes hereof.
(b) Unless a specified post-Closing survival period is set forth
in this Agreement (in which event such specified period will control), (i) the
covenants in this Agreement (other than those contained in this Article X) will
survive the Closing and remain in effect for the applicable statute of
limitations, (ii) the covenant contained in Section 10.3(a)(iv) shall survive
until the expiration of four years from the Closing Date, and (iii) the other
covenants contained in this Article X and the covenant contained in Section 9.13
shall survive indefinitely.
10.2. Limitations on Liability.
(a) For purposes of this Agreement, (i) "Indemnity Payment" means
any amount of Indemnifiable Losses required to be paid pursuant to this
Agreement, (ii) "Indemnitee" means any Person entitled to indemnification under
this Agreement, (iii) "Indemnifying Party" means any Person required to provide
indemnification under this Agreement, (iv) "Indemnifiable Losses" means any and
all damages, losses, liabilities, obligations, costs, and expenses, and any and
all claims, demands, or suits (by any Person, including without limitation any
Governmental Entity), including without limitation the costs and expenses of any
and all actions, suits, proceedings, demands, assessments, judgments,
settlements, and compromises relating thereto and including reasonable
attorneys' fees and out-of-pocket expenses in connection therewith, and (v)
"Third Party Claim" means any claim,
56
action, or proceeding made or brought by any Person who or which is not a party
to this Agreement or an Affiliate of a party to this Agreement.
(b) Notwithstanding any other provision hereof or of any
applicable Law, no Indemnitee will be entitled to make a claim under Sections
10.3(a)(i) or 10.3(b)(i) against an Indemnifying Party in respect of any breach
of a representation or warranty (other than those contained in Sections 5.1.1,
5.1.2.A, 5.1.2.B, 5.1.3, 5.1.22, 5.1.23, 5.2.1, and 5.2.2), unless and until the
aggregate amount of claims in respect of breaches of representations and
warranties asserted for Indemnifiable Losses under Section 10.3(a)(i) or
10.3(b)(i), as applicable, exceeds $4,000,000, in which event the Indemnitee
will be entitled to make a claim against the Indemnifying Party to the extent
that such Indemnifiable Losses exceed $2,000,000.
(c) Notwithstanding any other provision hereof or of any
applicable Law, none of H&C, the H&C Assignees, H&C America, or Purchaser will
be entitled to make a claim against Parent or Seller pursuant to Section
10.3(a)(i) in respect of a breach of any representation or warranty contained in
Section 5.1.22 or pursuant to Section 10.3(a)(iv) unless and until the aggregate
amount of claims asserted for Indemnifiable Losses under such Sections exceeds
$500,000, in which event the H&C, the H&C Assignees, H&C America, and Purchaser
will be entitled to make a claim against Parent or Seller only to the extent of
further such Indemnifiable Losses; provided, however, that any such
Indemnifiable Losses under Section 10.3(a)(i) in respect of a breach of any
representation or warranty contained in Section 5.1.22 or pursuant to Section
10.3(a)(iv) hereof which exceed $20,000,000 shall be borne one-half by Parent
and Seller, and one-half by H&C, H&C America, and Purchaser.
(d) No Indemnifying Party shall be liable for Indemnifiable Losses
pursuant hereto (other than in respect of a breach of any representation and
warranty contained in Sections 5.1., 5.1.2.A, 5.1.2.B, 5.1.3, 5.2.1 and 5.2.2
and other than pursuant to a claim for indemnification pursuant to Section
10.3(a)(iii), Section 10.3(a)(v), or pursuant to the Tax Deeds) to the extent
(but only to the extent) that the aggregate amount of Indemnifiable Losses
exceeds $120,000,000.
(e) Except as otherwise expressly provided in this Agreement, all
Parties acknowledge and agree that the indemnification provisions in this
Article X shall be the exclusive remedy of Purchaser, H&C, H&C America, and
their Affiliates with respect to Seller, Parent and their Affiliates, and the
exclusive remedy of Seller, Parent and their Affiliates with respect to
Purchaser, H&C, H&C America, and their Affiliates with respect to any breach of
any representation, warranty, covenant, or agreement contained in this Agreement
or any certificate delivered pursuant hereto. Without limiting the generality of
the foregoing sentence, Purchaser, H&C, and H&C America understand and agree
that their right to indemnification under Section 10.3(a)(iv) shall constitute
its sole and exclusive remedy
57
against Seller with respect to any environmental, health, or safety matter
relating to the past, current, or future facilities, properties, or operations
of Seller and the Subsidiaries, and all of their respective predecessors or
Affiliates, including without limitation any such matter arising under any
Environmental Laws, but excluding any such matter that constitutes a Retained
Liability. Subject to Purchaser's rights and remedies under this Agreement as
described in the preceding sentence, Purchaser, H&C, and H&C America each hereby
waives any right, whether arising at law or in equity, to seek contribution,
cost recovery, damages, or any other recourse or remedy from Seller, Parent, and
their respective Affiliates, and hereby release Seller, Parent, and their
respective Affiliates from any claim, demand, or liability, with respect to any
such environmental, health, or safety matter (including without limitation any
arising under any Environmental Laws, including without limitation under the
Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"), any analogous state law, or the common law).
10.3. Indemnification.
(a) Subject to Sections 10.1 and 10.2, Seller and Parent jointly
and severally agree to indemnify, defend, and hold harmless H&C, the H&C
Assignees, H&C America, and Purchaser and their respective Affiliates and
directors, officers, partners, employees, agents, and representatives (the "H&C
Indemnified Parties") from and against any and all Indemnifiable Losses to the
extent relating to, resulting from, or arising out of:
(i)any breach of representation or warranty of Seller or
Parent under the terms of this Agreement and any certificate delivered
pursuant hereto (which representations and warranties shall be deemed for
the purposes of this Section 10.3(a)(i) not to include any qualification
or limitation with respect to materiality (whether by reference to
"Material Adverse Effect" or otherwise), whether expressed individually or
in the aggregate);
(ii)any breach or nonfulfillment of any agreement or
covenant of Seller or Parent under the terms of this Agreement and any
certificate delivered pursuant hereto;
(iii)any Retained Liabilities;
(iv)subject to Section 10.5, any Environmental Claim or
Remedial Action based upon the operation of Seller, the Business, or any
of the Subsidiaries or any predecessor of the Seller, the Business, or any
of the Subsidiaries prior to the Closing or the ownership, use, or
operation at or on any of the real property owned, operated, or leased by
Seller or any Subsidiary or any predecessor thereof to the extent the
underlying claim is attributable to acts or omissions occurring prior to
the Closing,
58
including liability imposed strictly under Environmental Laws. For the
purposes of the foregoing: "Environmental Claim" means any notice of
violation, action, claim, environmental lien, demand, abatement, or other
order or directive (conditional or otherwise) by any Governmental Entity
or any other Person for personal injury (including sickness, disease, or
death), tangible or intangible property damage, damage to the environment,
nuisance, pollution, contamination, or other adverse effects on the
environment, or for fines, penalties, or restrictions resulting from or
based upon (i) the existence, or the continuation of the existence, of a
Release (including, without limitation, sudden or non-sudden accidental or
non-accidental Releases) of, or exposure to, any Hazardous Substance,
odor, or audible noise in, into, or onto the environment (including,
without limitation, the air, soil, surface water, or groundwater) at, in,
by, from, or related to any property owned, operated, or leased by the
Seller or any activities or operations thereof; (ii) the transportation,
storage, treatment, or disposal of Hazardous Materials in connection with
any property owned, operated, or leased by the Seller or its operations or
facilities; or (iii) the violation, or alleged violation, of any
Environmental Law or Permit of or from any Governmental Entity relating to
environmental matters connected with any property owned, leased, or
operated by the Seller or any of the Subsidiaries; and "Remedial Action"
means all actions, including, without limitation, any capital
expenditures, required to (i) clean up, remove, treat, or in any other way
address any Hazardous Material or other substance; (ii) prevent the
Release or threat of Release, or minimize the further Release of any
Hazardous Material or other substance so it does not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment; (iii) perform pre-remedial studies and investigations or
post-remedial monitoring and care; or (iv) bring facilities on any
property owned, operated, or leased by the Seller or any Subsidiary and
the facilities located and operations conducted thereon into compliance
with all Environmental Laws and Environmental Permits; provided, however,
no Remedial Action shall be undertaken unless required by a Governmental
Authority or Environmental Laws or is necessary to achieve or maintain
compliance with Environmental Laws; and
(v)the transactions to be effected pursuant to Section
6.12 hereto and the conduct of business by RIMC prior to Closing
(including without limitation, any obligations or liabilities of RIMC
relating to Taxes attributable to periods ending on or prior to the
Closing Date or to the pre-Closing portion of any taxable period that
includes but does not end on the Closing Date).
(b) Subject to Section 10.1 and 10.2, H&C, H&C America and
Purchaser jointly and severally agree to indemnify, defend, and hold harmless
Parent and Seller and their respect Affiliates and directors, officers,
partners, employees, agents, and representatives from
59
and against any and all Indemnifiable Losses to the extent relating to,
resulting from, or arising out of:
(i)any breach of representation or warranty of H&C, H&C
America or Purchaser under the terms of this Agreement and any certificate
delivered pursuant hereto;
(ii)any breach or nonfulfillment of any agreement or
covenant of H&C, H&C America or Purchaser under the terms of this
Agreement and any certificate delivered pursuant hereto; and
(iii)any Assumed Liabilities.
10.4. Defense of Claims.
(a) If any Indemnitee receives notice of assertion or commencement
of any Third Party Claim against such Indemnitee with respect to which an
Indemnifying Party is obligated to provide indemnification under this Agreement,
the Indemnitee will give such Indemnifying Party reasonably prompt written
notice thereof, but in any event not later than 10 calendar days after receipt
of such notice of such Third Party Claim. Such notice will describe the Third
Party Claim in reasonable detail, will include copies of all material written
evidence thereof, and will indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have the right to participate in, or, by
giving written notice to the Indemnitee, to assume, the defense of any Third
Party Claim at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel (reasonably satisfactory to the Indemnitee), and the
Indemnitee will cooperate in good faith in such defense.
(b) If, within 10 calendar days after giving notice of a Third
Party Claim to an Indemnifying Party pursuant to Section 10.4(a), an Indemnitee
receives written notice from the Indemnifying Party that the Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in the
last sentence of Section 10.4(a), the Indemnifying Party will not be liable for
any legal expenses subsequently incurred by the Indemnitee in connection with
the defense thereof; provided, however, that if the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party Claim
within 10 calendar days after receiving written notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps or
if the Indemnifying Party has not undertaken fully to indemnify the Indemnitee
in respect of all Indemnifiable Losses relating to the matter, the Indemnitee
may assume its own defense, and the Indemnifying Party will be liable for all
reasonable costs or expenses paid or incurred in connection therewith. Without
the prior written consent of the Indemnitee, the Indemnifying Party will not
enter into any
60
settlement of any Third Party Claim which would lead to liability or create any
obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder.
(c) A failure to give timely notice or to include any specified
information in any notice as provided in Sections 10.4(a) or 10.4(b) will not
affect the rights or obligations of any party hereunder except and only to the
extent that, as a result of such failure, any party which was entitled to
receive such notice was actually prejudiced as a result of such failure.
(d) The Indemnifying Party will have a period of 30 calendar days
within which to respond in writing to any claim by an Indemnitee on account of
an Indemnifiable Loss which does not result from a Third Party Claim (a "Direct
Claim"). If the Indemnifying Party does not so respond within such 30 calendar
day period, the Indemnifying Party will be deemed to have rejected such claim,
in which event the Indemnitee will be free to pursue such remedies as may be
available to the Indemnitee on the terms and subject to the provisions of this
Article X.
(e) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an Indemnity Payment, is reduced by recovery,
settlement, or otherwise under or pursuant to any insurance coverage, or
pursuant to any claim, recovery, settlement, or payment by or against any other
Person, the amount of such reduction, less any costs, expenses, premiums or
taxes incurred in connection therewith will promptly be repaid by the Indemnitee
to the Indemnifying Party. Upon making any Indemnity Payment the Indemnifying
Party will, to the extent of such Indemnity Payment, be subrogated to all rights
of the Indemnitee against any Person that is not an Affiliate of the Indemnitee
in respect of the Indemnifiable Loss to which the Indemnity Payment related;
provided, however, that (i) the Indemnifying Party shall then be in compliance
with its obligations under this Agreement in respect of such Indemnifiable Loss
and (ii) until the Indemnitee recovers fully payment of its Indemnifiable Loss,
any and all claims of the Indemnifying Party against any such Person on account
of said Indemnity Payment will be subrogated and subordinated in right of
payment to the Indemnitee's rights against such Person. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee and
Indemnifying Party will duly execute upon request all instruments reasonably
necessary to evidence and perfect the above-described subrogation and
subordination rights.
10.5. Conduct of Remedial Actions.
(a) The obligations of Seller and Parent to indemnify the H&C
Indemnified Parties for any Remedial Action pursuant to Sections 10.3(a)(i) (as
it relates to a breach of any representation or warranty contained in Section
5.1.22) or 10.3(a)(iv) hereof shall be subject to the following:
61
(i)any Remedial Action (1) must be required by a
Governmental Authority or Environmental Laws or be necessary to achieve or
maintain compliance with Environmental Laws; (2) shall be performed in a
commercially reasonable, cost-effective manner; and (3) shall use cleanup
criteria no more stringent than (A) if specific applicable cleanup
criteria are specified by applicable Environmental Laws, that specific
cleanup criteria, or (B) otherwise, cleanup criteria that are commercially
reasonable and appropriate to comply with applicable Environmental Laws
(in all cases where permitted and appropriate such cleanup criteria shall
be that applicable to real property that is used for industrial purposes);
(ii)if a need for Remedial Action arises, Purchaser shall
provide Seller notice thereof as soon as reasonably practicable under the
circumstances; provided, however that the failure to give such notice to
Seller should not affect the obligations hereunder unless Seller has been
materially prejudiced as a result thereof; and
(iii)prior to the commencement of any Remedial Action,
Purchaser shall provide Seller with a plan as to its intended course of
action. Seller shall have the right to review such plan with Purchaser, to
consult with Purchaser with respect to the finalization and implementation
of such plan and, if Seller does not concur in Purchaser's proposed plan
of action, to provide alternative proposals for the undertaking and
completion of such Remedial Action. Notwithstanding the foregoing, if
Purchaser and Seller, after due consultation, cannot agree as to the
method of proceeding, or the reasonable costs and expenses to be incurred
in connection therewith, Purchaser shall have the right to assume the
obligation to complete such Remedial Action, which is subject to
indemnification hereunder.
(b) The party conducting the Remedial Action shall (i) comply in
all material respects with Environmental Laws, (ii) in a timely manner, but no
less often than once every three months, provide the other party with progress
reports with respect to the Remedial Action, and (iii) provide the other party
with all substantive correspondence to or from any Governmental Authority, all
reports, all sampling results, and all other relevant and significant documents
relating to the Remedial Action and endeavor to provide the other party with the
opportunity to participate in any material discussions with such Governmental
Authority.
(c) Any party incurring costs hereunder, a portion of which is to
be paid by another party hereto (for purposes of this Section 10.5, an
"Obligated Party") pursuant to Article X, shall deliver to the Obligated Party,
on a quarterly basis, invoices for any Remedial Action effected during such
quarterly period, along with appropriate back-up documentation, setting forth in
reasonable detail the work done during such period and a detailed break-down
62
of the fees and expenses incurred in connection therewith and included in such
invoice. The Obligated Party shall pay such invoices within 30 days after
receipt thereof, except with respect to any portion thereof which they claim by
written notice to the other party, delivered within 20 days after receipt of any
such invoice, does not conform to the terms of this indemnification plus, in the
event payment is not made within such 30 day period as required hereby, interest
thereon at a rate of seven percent (7%) per annum, accruing daily and
compounding annually.
(d) With respect to any invoices disputed by an Obligated Party
hereunder, the parties shall use reasonable efforts to resolve such matter or
matters on or before the due date of the relevant invoice; if the parties cannot
resolve any such dispute, said matters shall be referred for resolution to an
independent engineering consulting firm mutually agreed upon by the parties,
whose determination with respect to any such disputed matters shall be final and
binding upon Parent, Seller, H&C and Purchaser.
10.6. Adjustment to Purchase Price. Any Indemnity Payment hereunder shall
be treated as an adjustment to the Purchase Price.
ARTICLE XI. TERMINATION
11.1. Termination. Notwithstanding anything contained in this Agreement to
the contrary, this Agreement may be terminated at any time prior to the Closing,
if, in the case of a termination pursuant to Section 11.1(b), 11.1(d), or 11(e)
the party seeking to terminate is not then in material default or breach of any
representations, warranties, covenants, or agreements contained in this
Agreement:
(a) By the mutual written consent of H&C, H&C America, Purchaser,
Parent, and Seller;
(b) By H&C, H&C America, and Purchaser, on the one hand, or Parent
and Seller, on the other hand, if the Closing shall not have occurred on
or before February 20, 1998;
(c) By H&C, H&C America, and Purchaser, on the one hand, or Parent
and Seller, on the other hand, if there shall have been entered a final,
nonappealable order or injunction of any Governmental Entity restraining
or prohibiting the consummation of the transactions contemplated hereby or
any material part thereof;
(d) By H&C, H&C America, and Purchaser by giving written notice to
Seller at any time prior to the Closing in the event (A) Seller has within
the then
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previous 15 business days given Buyer any notice pursuant to Section
6.3(b) above and (B) the development that is the subject of the notice,
together with any developments that are or were the subject of any prior
notice pursuant to Section 6.3(b) (whether or not such prior notices were
given during the previous 15 business days), has had or could reasonably
be expected to have a Material Adverse Effect; or
(e) By H&C, H&C America, and Purchaser, on the one hand, or Parent
and Seller, on the other hand, if, prior to the Closing Date, the other
party is in breach in any material respect of any representation,
warranty, covenant, or agreement herein contained (other than a
representation and warranty which is subject to the notice provisions of
Section 6.3(b) and the termination provisions of Section 11.1(d) above)
and such breach shall not be cured within 5 business days of the date of
notice of breach served by the party claiming such breach.
11.2. Effect of Termination. If this Agreement is validly terminated
pursuant to Section 11.1, this Agreement, except for the provisions of Sections
6.7, 11.2, 12.3, 12.4, 12.5, 12.6, 12.7, 12.8, 12.9, 12.12, 12.13, 12.14, 12.15,
and 12.17, shall become null and void and of no further force and effect and all
obligations of the parties hereto shall terminate and there shall be no
liability or obligation of any party hereto, except that nothing in this Section
11.2 shall relieve any party from liability for its default under or breach of
any of its representations, warranties, covenants, or agreements under this
Agreement prior to its termination.
ARTICLE XII. MISCELLANEOUS PROVISIONS
12.1. Specific Performance. The parties recognize that if any other party
refuses to perform under the provisions of this Agreement, monetary damages
alone will not be adequate to compensate such party for its injuries. Each party
shall therefore be entitled, in addition to any other remedies that may be
available, to obtain specific performance of the terms of this Agreement. If any
action is brought to obtain specific performance of the terms of this Agreement,
the parties against whom such action is brought shall waive the defense that
there is an adequate remedy at Law. In the event of a default which results in
the filing of a lawsuit for damages, specific performance, or other remedies,
the prevailing party shall be entitled to reimbursement by the non-prevailing
party of reasonable legal fees and expenses incurred by them.
12.2. Notices. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or when
dispatched by electronic facsimile transfer or one business day after having
been dispatched by an internationally recognized
64
overnight courier service (providing regular international service) to the
appropriate party at the address specified below:
(a) If to Parent or Seller, to:
c/o NL Industries, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
with a copy to:
Bartlit ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
(b) If to H&C America or Purchaser, to:
Harrisons & Crosfield (America) Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
(c) If to H&C, to:
Harrisons & Crosfield plc
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Facsimile No.: 011-44-171-711-1473
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
65
with copies to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
12.3. Expenses. Except as otherwise expressly provided in this Agreement,
Parent and Seller will pay any expenses incurred by it or any of the
Subsidiaries incident to this Agreement and in preparing to consummate and
consummating the transactions provided for herein. H&C, H&C America and
Purchaser will pay any expenses incurred by them incident to this Agreement and
in preparing to consummate and consummating the transactions provided for
herein.
12.4. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, but will not be assignable or delegable by any party without
the prior written consent of the other party which shall not be unreasonably
withheld; provided, however, that (a) nothing in this Agreement is intended to
limit Purchaser's ability to sell or to transfer any or all of the Purchased
Assets following the Closing Date, (b) prior to the Closing, upon notice to
Seller, Purchaser may assign or delegate to any direct or indirect wholly owned
subsidiary of H&C America, H&C, or Purchaser the right to acquire part or all of
the Purchased Assets and its obligation to assume any Assumed Liabilities in
connection therewith provided that H&C and H&C America jointly and severally
guarantee the performance of such assignee or delegatee, (c) prior to Closing,
H&C shall notify Parent and Seller of the H&C Assignee(s) which have been
designated by it to purchase the Acquired Subsidiaries, and (d) each of H&C, the
H&C Assignees, H&C America and Purchaser may make a collateral assignment of its
rights under this Agreement to any lender who provides funds to H&C, the H&C
Assignees, H&C America and Purchaser for the acquisition of the Purchased Assets
provided that the rights of Seller and Parent under this Agreement are not
diminished or their obligations increased in any way by such collateral
assignment. Seller agrees to execute acknowledgments of such assignment(s) and
collateral assignments reflecting all of the conditions of such assignment(s)
and collateral assignments in such forms as H&C, H&C America and Purchaser or
H&C, H&C America's or Purchaser's lender(s) may from time to time reasonably
request. In the event of such a proposed assignment by H&C, H&C America and
Purchaser, the provisions of this Agreement shall inure to the benefit of and be
binding upon H&C's, H&C America's and Purchaser's assigns.
66
12.5. Waiver. Purchaser (on behalf of itself, H&C and H&C America) and
Seller (on behalf of itself, Parent, and RII) by written notice to the other
referring to this Agreement may (a) extend the time for performance of any of
the obligations of the other under this Agreement, (b) waive any inaccuracies in
the representations or warranties of the other contained in this Agreement or in
any document delivered in connection herewith, (c) waive compliance with any of
the conditions or covenants of the other contained in this Agreement, or (d)
waive or modify performance of any of the obligations of the other under this
Agreement; provided, however, that no such party may, without the prior consent
of the other party in a writing referring to this Agreement, make or grant such
extension of time, waiver of inaccuracies, or compliance or waiver or
modification of performance with respect to its (or any of its Affiliates)
representations, warranties, conditions, or covenants hereunder. Except as
provided in the immediately preceding sentence, no action taken pursuant to this
Agreement will be deemed to constitute a waiver of compliance with any
representations, warranties, conditions, or covenants contained in this
Agreement and will not operate or be construed as a waiver of any subsequent
breach, whether of a similar or dissimilar nature.
12.6. Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto and any other documents and instruments delivered pursuant
hereto) supersedes any other agreement, whether written or oral, that may have
been made or entered into by any party or any of their respective Affiliates (or
by any director, officer, or representative thereof) relating to the matters
contemplated hereby. This Agreement (together with the Exhibits and Schedules
hereto and any other documents and instruments delivered pursuant hereto)
constitutes the entire agreement by and among the parties hereto and there are
no agreements or commitments by or among such parties or their Affiliates except
as expressly set forth herein.
12.7. Amendments and Supplements. This Agreement may be amended or
supplemented at any time by additional written agreements referring to this
Agreement signed by the parties hereto.
12.8. Rights of the Parties. Except as provided in Articles II, IX and X
or in Section 12.4, nothing expressed or implied in this Agreement is intended
or will be construed to confer upon or give any person or entity other than the
parties hereto and their respective Affiliates any rights or remedies under or
by reason of this Agreement or any transaction contemplated hereby.
12.9. Brokers. H&C, H&C America and Purchaser agree to jointly and
severally indemnify and hold harmless Parent and Seller, and Seller and Parent
agree to jointly and severally indemnify and hold harmless H&C, H&C America and
Purchaser, from and against any liability, claim, loss, damage, or expense
incurred by H&C, H&C America and Purchaser or by Parent and Seller,
respectively, relating to any fees or commissions owed or allegedly
67
owed to any broker, finder, or financial advisor as a result of actions taken by
H&C, H&C America or Purchaser or by Parent or Seller, respectively, in
connection with this Agreement or the transactions contemplated hereby.
12.10. Further Assurances. From time to time, as and when requested by
either party, the other party will execute and deliver, or cause to be executed
and delivered, all such documents and instruments as may be reasonably necessary
to consummate the transactions contemplated by this Agreement.
12.11. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware applicable to contracts
made and to be performed entirely in the State of Delaware, regardless of the
laws that might otherwise govern under applicable principles of conflict of
laws.
12.12. Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable Law, this Agreement shall be
construed with the invalid, illegal, or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
12.13. Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
12.14. Titles and Headings. Titles and headings to sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
12.15. Passage of Title and Risk of Loss. Legal title, equitable title,
and risk of loss with respect to the Purchased Assets will not pass to Purchaser
(or the H&C Assignees, as applicable) until such Purchased Assets are
transferred at the Closing, which transfer, once it has occurred, will be deemed
effective for tax, accounting, and other computational purposes as of the time
of the close of business at on the Closing.
12.16. Certain Interpretive Matters and Definitions.
(a) Unless the context otherwise requires, (i) all references to
Sections, Articles, Schedules, or Exhibits are to Sections, Articles, Schedules,
or Exhibits of or to this Agreement, (ii) each term defined in this Agreement
has the meaning assigned to it, (iii) each accounting term not otherwise defined
in this Agreement has the meaning assigned to it in accordance with GAAP, (iv)
"or" is disjunctive but not necessarily exclusive, (v) words in the
68
singular include the plural and vice versa, (vi) the term "affiliate" or
"Affiliate" has the meaning given to such term in Rule 12b-2 of Regulation 12B
under the 1934 Act, (vii) the phrase "liabilities" shall include, without
limitation, any direct or indirect indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, obligation or responsibility, whether
fixed or contingent, known or unknown, asserted or unasserted, ▇▇▇▇▇▇ or
inchoate, liquidated or unliquidated, secured or unsecured, (viii) the word
"including" and similar terms following any statement will not be construed to
limit the statement to matters listed after such word or term, whether a phrase
of nonlimitation such as "without limitation" is used, (ix) the term "person" or
"Person" shall mean any individual, corporation, partnership, limited liability
company, joint venture, trust, unincorporated organization, or other form of
business or legal entity or Governmental Entity and (x) references to any State
of Delaware or United States legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court, official or any other
legal concept shall, in respect of any foreign jurisdiction, be deemed to
include the legal concept which most nearly approximates in that jurisdiction to
the State of Delaware or United States legal term. All references to "$" or
dollar amounts will be to lawful currency of the United States of America.
(b) No provision of this Agreement will be interpreted in favor
of, or against, either of the parties hereto by reason of the extent to which
either such party or its counsel participated in the drafting thereof or by
reason of the extent to which any such provision is inconsistent with any prior
draft hereof or thereof.
69
* * * * * * * * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NL INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President & Chief Financial Officer
RHEOX, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
RHEOX INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
HARRISONS & CROSFIELD (AMERICA) INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
70
HARRISONS & CROSFIELD PLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Company Secretary
ELEMENTIS ACQUISITION 98, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
71
