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EXHIBIT 2(A)
AGREEMENT FOR SALE AND PURCHASE
OF ASSETS
BETWEEN
THE ▇.▇.▇▇▇▇▇▇▇▇ COMPANY
("Seller")
AND
PMD GROUP INC.
("Buyer")
DATED AS OF NOVEMBER 28, 2000
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TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE OF ASSETS...................................2
Section 1.1. Transaction; Sale Assets......................................2
Section 1.2. Excluded Assets...............................................4
Section 1.3. Title to Sale Assets..........................................6
Section 1.4. Excluded Liabilities..........................................6
Section 1.5. Assumed Liabilities...........................................7
Section 1.6. Purchase Price................................................8
Section 1.7. Allocation of Purchase Price..................................8
Section 1.8. Closing.......................................................9
Section 1.9. Purchase Price Adjustment.....................................9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER.....................12
Section 2.1. Organization; Power..........................................12
Section 2.2. Capitalization...............................................13
Section 2.3. Authority; No Violation......................................13
Section 2.4. Ownership of Stock and Equity Interest.......................14
Section 2.5. Title to Sale Assets and Related Matters.....................14
Section 2.7. Other Tangible Property......................................14
Section 2.8. No Sales or Options..........................................15
Section 2.9 Financial Statements.........................................15
Section 2.10. Actions Pending..............................................15
Section 2.11. Absence of Changes or Events.................................16
Section 2.12. Compliance with Laws: No Default............................16
Section 2.13. Real Property................................................17
Section 2.14. Material Contracts...........................................17
Section 2.15. Licenses and Permits.........................................19
Section 2.16. Intellectual Property........................................20
Section 2.17. Environmental Matters........................................21
Section 2.18. Labor Relations; Employees...................................23
Section 2.19. Employee Benefit Plans.......................................24
Section 2.20. Tax Matters..................................................26
Section 2.21. Brokers' or Finders' Fee.....................................28
Section 2.22. No Other Representations and Warranties......................28
Section 2.23. No Gifts or Similar Benefits.................................29
Section 2.24. Affiliate Transactions.......................................29
Section 2.25. Suppliers and Customers......................................29
Section 2.26. Product Liability Claims.....................................29
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER......................29
Section 3.1. Organization; Power..........................................30
Section 3.2. Authority; No Violation; Etc.................................30
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Section 3.3. Consents and Approvals.......................................30
Section 3.4. Actions Pending..............................................31
Section 3.5. Disclaimer as to Condition of Sale Assets....................31
Section 3.6. Nonreliance..................................................31
Section 3.8. Investment Intent............................................31
Section 3.9. Legend.......................................................31
Section 3.10. Brokers' or Finders' Fees....................................32
Section 3.11. Financing....................................................32
Section 3.12. Buyer Investment Plan........................................32
Section 3.13. No Other Representations Or Warranties.......................32
ARTICLE IV PRE-CLOSING COVENANTS OF SELLER..............................32
Section 4.1. Maintenance of Corporate and Entity Status...................32
Section 4.2. Operation of the Business....................................32
Section 4.3. Other Offers.................................................35
Section 4.4. Access to Information........................................35
Section 4.5. Insurance....................................................36
Section 4.6. Required Consents and Approvals..............................36
Section 4.7. Pre-Transaction Notification, Transfer Statutes..............36
Section 4.8. Seller's Actions.............................................38
Section 4.9. Notice of Material Adverse Change............................38
Section 4.10. Cooperation..................................................38
Section 4.11. Intercompany Accounts........................................39
Section 4.12. Acquisition of Rights to Confidentiality.....................39
Section 4.13. Textile Consolidation Project................................39
Section 4.14. Satisfaction of Indebtedness.................................39
Section 4.15. Transfer of Excluded Real Property...........................39
ARTICLE V PRE-CLOSING COVENANTS OF BUYER...............................40
Section 5.1. Required Consents and Approvals..............................40
Section 5.2. Pre-Transaction Notification.................................40
Section 5.3. Buyer's Actions..............................................41
Section 5.4. Notice of Material Adverse Change............................41
Section 5.5. Cooperation..................................................41
ARTICLE VI CONDITIONS PRECEDENT TO PERFORMANCE OF BUYER.................41
Section 6.1. Accuracy of Representations and Warranties of Seller.........41
Section 6.2. Compliance...................................................42
Section 6.3. Approval.....................................................42
Section 6.4. Authorization................................................42
Section 6.5. Litigation...................................................42
Section 6.6. Closing Deliveries...........................................43
Section 6.7. Material Adverse Effect......................................43
Section 6.8 Financing....................................................43
ARTICLE VII CONDITIONS PRECEDENT TO PERFORMANCE OF SELLER................43
Section 7.1. Accuracy of Representations and Warranties of Buyer..........43
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Section 7.2. Compliance...................................................43
Section 7.3. Approval.....................................................44
Section 7.4. Authorization................................................44
Section 7.5. Litigation...................................................44
Section 7.6. Closing Deliveries...........................................44
ARTICLE VIII TERMINATION..................................................45
Section 8.1. Termination by Mutual Agreement..............................45
Section 8.2. Termination by Buyer.........................................45
Section 8.3. Termination by Seller........................................45
Section 8.4. Termination with Respect to Antitrust Matters................45
Section 8.5. Effect of Termination........................................46
ARTICLE IX ADDITIONAL AGREEMENTS........................................46
Section 9.1. Confidentiality..............................................46
Section 9.2. Obligations with Respect to Seller's Employees...............46
Section 9.3. Certain Costs................................................54
Section 9.4. Option to Purchase EMD Business..............................55
Section 9.5. Title to Real Property.......................................55
Section 9.6. Product Liability Claims.....................................55
Section 9.7. Bulk Transfer Laws...........................................55
Section 9.8. Name Changes of Stock Group Subsidiaries.....................56
Section 9.9. Provision of Transition Services.............................56
Section 9.10. Further Assurances...........................................56
Section 9.11. Accounting and Other Assistance..............................58
Section 9.12. Tax Matters..................................................59
Section 9.13. Noncompetition...............................................66
Section 9.14. Directors' and Officers' Insurance...........................67
Section 9.15. Operating Cash...............................................67
Section 9.16. Aerospace Lease..............................................67
Section 9.17. EMD Lease....................................................67
Section 9.18. Sublicense of Lemelson License...............................67
ARTICLE X CLOSING DELIVERIES...........................................68
Section 10.1. Deliveries to Buyer at the Closing...........................68
Section 10.2. Deliveries to Seller at the Closing..........................69
Section 10.3. Third-Party Consents.........................................70
ARTICLE XI INDEMNIFICATION..............................................71
Section 11.1. Indemnification By Seller....................................71
Section 11.2. Indemnification by Buyer.....................................71
Section 11.3. Indemnity and Cost Sharing with Respect to
Environmental Costs..........................................72
Section 11.4. Claims.......................................................79
Section 11.5. Survival of Representations and Warranties...................80
Section 11.6. Indemnification Limitations..................................80
Section 11.7. Exclusive Remedy.............................................81
Section 11.8. Lost Profits and Special Damages.............................81
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ARTICLE XII MISCELLANEOUS PROVISIONS.....................................82
Section 12.1. Counterparts.................................................82
Section 12.2. Entire Agreement.............................................82
Section 12.3. Exhibits and Disclosure Statement............................82
Section 12.4. Expenses.....................................................82
Section 12.5. Interpretation...............................................82
Section 12.6. Governing Law................................................82
Section 12.7. Headings.....................................................82
Section 12.8. Interpretation...............................................82
Section 12.9. Modification and Waiver......................................83
Section 12.10. Notices......................................................83
Section 12.11. Press Release................................................85
Section 12.12. Rights of Parties Assignability; Binding Effect..............85
Section 12.13. Currency.....................................................85
Section 12.14. Severability.................................................85
Appendix A. Certain Definitions.........................................A-1
Exhibits
--------
A May 31, 2000 Balance Sheet
B May 31, 2000 Working Capital Statement
C Terms of Seller Note
D Commitment Letters
E Terms of Aerospace Lease Agreement
F Terms of EMD Lease Agreement
Schedules
---------
B(i) Stock Selling Subsidiaries; Stock Subsidiaries
B(ii) Asset Subsidiaries
D Equity Subsidiaries
E Indirect Subsidiaries
1.1(a) Real Property Acquired by Asset Purchase
1.1(e) Certain Contracts Assigned by Asset Purchase
1.1(f) Certain Intangible Acquired by Asset Purchase
1.2(j) Retained Intellectual Property
1.2(l) EMD Assets
1.2(m) Brecksville Vacant Land
1.2(n) Closed Facilities
1.2(o) Textile Dyes Business
1.2(p) Other Excluded Assets
1.5 Other Assumed Liabilities
1.7 Allocation of Purchase Price
1.9 Principles for Preparation of Seller's Working Capital Statement
4.2(a) Capital Expenditures
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4.2(b) Operation of Business
4.4 Access to Information
4.10 Cooperation
4.13 Textile Consolidation Project
6.4(b) Material Consents
9.1 Confidentiality Agreement
9.2(d) Transition Arrangements
9.5 Surveys/Title Commitments
9.10(d) Defined Remediation Projects
11.3(c) Certain Identified Facilities
11.3(e)(ii) Apportionment
11.3(g) Certain Identified Areas
A Persons Deemed to Have Knowledge
Disclosure Schedule
-------------------
Section 2.1(a) List of Subsidiaries
Section 2.2(a) Capitalization of corporate Subsidiaries that are part of
Stock Group
Section 2.2(b) Capitalization of Equity Subsidiaries
Section 2.2(d) Incumbent Directors and Officers
Section 2.3 Defaults and Violations
Section 2.5 Title to Sale Assets
Section 2.7 Other Tangible Property
Section 2.8 Sales or Options
Section 2.9(a) Financial Statements
Section 2.9(b) Liabilities Not Reflected in Financial Statements
Section 2.9(c) Debt For Borrowing Money
Section 2.10 Actions Pending
Section 2.11 Change or Events
Section 2.12 Compliance with Laws; Defaults
Section 2.13(a) Owned Real Property
Section 2.13(b) Condemnation Proceedings
Section 2.13(c) Leased Real Property
Section 2.14 Material Contracts
Section 2.15 Licenses and Permits
Section 2.16(a) Intellectual Property
Section 2.16(b) Intellectual Property Restrictions
Section 2.16(c) Infringement of Intellectual Property
Section 2.16(d) Intellectual Property Licensed to Third Parties
Section 2.16(e) Intellectual Property License or Royalty Fees Arrangements
with Third Parties
Section 2.16(f) Actions Pending regarding Intellectual Property
Section 2.16(g) Infringements on Intellectual Property
Section 2.16(h) Intellectual Property Agreements to be Assigned to Buyer
(except patents and trademarks)
Section 2.17(a) Environmental Compliance
Section 2.17(b) Environmental Matters
Section 2.17(g) Connecticut and New Jersey Operations
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Section 2.18 Collective Bargaining Agreement; Labor Relations
Section 2.19(a) Employee Plans
Section 2.19(d) Certain Payments due upon Consummation of Transaction
Section 2.19(f) Retiree Benefit Plans
Section 2.20 Tax Matters
Section 2.20(a) Tax Group
Section 2.20(c) Tax Returns of Stock Subsidiaries and Equity Subsidiaries
Section 2.20(g) Other Tax Returns
Section 2.23 Gifts and Similar Benefits
Section 2.24 Affiliate Transactions
Section 2.25 Suppliers and Customers
Section 2.26 Product Liability Claims
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AGREEMENT FOR SALE AND PURCHASE
OF ASSETS
This Agreement for Sale and Purchase of Assets (the "Agreement") dated
as of November 28, 2000 is by and between THE ▇.▇.▇▇▇▇▇▇▇▇ COMPANY, a New York
corporation ("Seller"), and PMD GROUP INC., a Delaware corporation ("Buyer").
R E C I T A L S
A. Seller's Performance Materials business segment develops,
manufactures, markets, distributes and sells a broad range of specialty
thermoplastic materials and polymer additives, thickeners, emulsions and other
additives for consumer and industrial applications (the "Business").
B. Each of the companies listed in Schedule B(i) (the "Stock Selling
Subsidiaries") and the companies listed in Schedule B(ii) (the "Asset
Subsidiaries") is a direct or indirect wholly owned subsidiary of Seller;
C. Seller and each of the Stock Selling Subsidiaries is the registered
and beneficial owner of the share capital of those companies set forth opposite
their respective names in Schedule B(i) (the "Stock Subsidiaries");
D. Seller is the beneficial owner of the membership or ownership
interest of those companies set forth in Schedule D (the "Equity Subsidiaries").
E. Each Stock Subsidiary is the beneficial owner of share capital or
other ownership interest of those companies for which it is identified as the
"Stock Selling Subsidiary" in Schedule E (the "Indirect Subsidiaries" and,
collectively with the Stock Subsidiaries and the Equity Subsidiaries, the "Stock
Group").
F. The Business is carried on through Seller, the Asset Subsidiaries,
and the members of the Stock Group (the Asset Subsidiaries and the members of
the Stock Group are collectively referred to as the "Subsidiaries").
G. Seller desires to sell or cause to be sold to Buyer (the "Sale") and
Buyer desires to purchase from Seller, the Stock Selling Subsidiaries and the
Asset Subsidiaries (the "Purchase") (i) the Stock and the Equity Interest (as
defined below) and (ii) all of the assets that are used, held for use or useful
solely or primarily in connection with the operation of the Business, on the
terms, and subject to the conditions, set forth herein.
H. Seller is acting in its own name and on behalf of the Stock Selling
Subsidiaries and the Asset Subsidiaries.
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I. Capitalized terms used in this Agreement shall have the meaning
ascribed to such terms in Appendix A attached to this Agreement.
A G R E E M E N T S
In consideration of the mutual representations, warranties, covenants,
agreements and conditions contained herein and in order to set forth the terms
and conditions of the Purchase and the Sale (together, the "Transaction") and
the manner of effecting the Transaction, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
SECTION 1.1. TRANSACTION; SALE ASSETS. On the Closing Date:
Stock. Seller shall, and shall cause each relevant Stock
Selling Subsidiary to, transfer, assign and deliver to Buyer (or its designee)
all of the issued and outstanding shares of capital stock (the "Stock") of the
Stock Subsidiaries;
Equity Interest. Seller shall, and shall cause each relevant
Stock Selling Subsidiary to, transfer, assign, and deliver to Buyer (or its
designee) all of its membership or ownership interest (the "Equity Interest") in
and to the Equity Subsidiaries; and
Assets. Seller shall, and shall cause each Asset Subsidiary
to, sell, transfer, assign and deliver to Buyer (or its designee) all of their
respective right, title and interest in and to all other assets owned, on the
Closing Date, by Seller or by any Asset Subsidiaries that are used, held for use
or useful solely or primarily in connection with the operation of the Business
(the "Assets," and together with the Stock and the Equity Interest, the "Sale
Assets").
Buyer (or its designee) shall purchase the Sale Assets from Seller, the
Asset Subsidiaries and the Stock Selling Subsidiaries, all for the consideration
and upon and subject to the other terms and conditions hereinafter set forth.
The Assets include, without limitation, the following assets, rights,
interests and other properties of Seller and the Asset Subsidiaries, but the
Assets specifically exclude the Excluded Assets as described in Section 1.2:
(a) Real Property. All of Seller's and the Asset Subsidiaries'
right, title and interests in the Owned Real Property (each parcel of which is
described in Schedule 1.1(a)) (the "Real Property Acquired by Asset Purchase"),
together with all buildings, improvements, fixtures and appurtenances thereto.
(b) Inventory and Supplies. All right, title and interest of
Seller and any Asset Subsidiaries in inventory and supplies on the Closing Date
that are used, held for use or useful solely or primarily in connection with the
operation of the Business, including without limitation,
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raw materials, work-in-process and finished goods, inventory and supplies in
transit or on consignment and any and all other supplies stored, kept or
maintained by or on behalf of Seller and the Asset Subsidiaries, wherever
located, (the "Inventory and Supplies Acquired by Asset Purchase").
(c) Tangible Property. All right, title and interest of Seller
and any Asset Subsidiaries in the tangible property, other than the Inventory
and Supplies Acquired by Asset Purchase, on the Closing Date that is used, held
for use or useful solely or primarily in connection with the operation of the
Business, including, without limitation, all leasehold improvements, equipment,
furniture and fixtures, machinery, vehicles, tools and other fixed assets and
all records relating thereto including operating and engineering records (the
"Other Tangible Property Acquired by Asset Purchase").
(d) Accounts Receivable. All right, title and interest of
Seller and any Asset Subsidiaries in accounts, notes and other receivables of
the Business on the Closing Date, and any collateral or other security relating
thereto and all proceeds thereof (the "Receivables Acquired by Asset Purchase").
(e) Contract Rights. Subject to Section 10.3, all of Seller's
and the Asset Subsidiaries' rights under those contracts, sales and purchase
orders, customer orders, leases for real and personal property, licenses,
commitments and agreements to which any of Seller and the Asset Subsidiaries are
a party on the Closing Date that are used, held for use or useful solely or
primarily in connection with the operation of the Business including, but not
limited to, those set forth on Schedule 1.1(e) (the "Contracts Assigned by Asset
Purchase").
(f) Intellectual Property Rights. Except as provided in
Sections 1.2(i) and 1.2(j), below, all of Seller's and the Asset Subsidiaries'
rights in domestic and foreign patents, trademarks, software licenses, trade
names, service marks, copyrights, government approvals, permits and
authorizations (irrespective of whether such governmental approvals, permits and
authorizations apply to intellectual property matters, but excluding Permits
which are non-transferable under applicable law), together with all applications
and registrations for any of the foregoing, customer lists, supplier lists,
technical know-how, utility models, designs, proprietary software, trade
secrets, confidential information and other similar intangible assets and all
licenses, agreements and permissions related to the foregoing owned by Seller
and the Asset Subsidiaries on the Closing Date and used, held for use, or useful
solely or primarily in connection with the operation of the Business, including,
but not limited to, the items set forth on Schedule 1.1(f) (the "Intangibles
Acquired by Asset Purchase").
(g) Books and Records. Originals of all books and records of
Seller and the Asset Subsidiaries relating solely to the Business and copies of
portions of such of the books and records to the extent they relate primarily to
the Business which, in the reasonable discretion of Buyer, will be necessary or
useful to Buyer in connection with the operation of the Business following the
Closing Date (the "Books and Records Acquired by Asset Purchase").
(h) Certain Prepaid Expenses. All non-refundable and
transferable prepaid expenses, prepaid assets and deposits paid by Seller or the
Asset Subsidiaries prior to the Closing
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Date related solely or primarily to the Business for which Buyer will receive
the benefit after the Closing Date (the "Assigned Prepaid Expenses Acquired by
Asset Purchase").
(i) Causes of Action. All of Seller's and the Asset
Subsidiaries' rights, credits, causes of action or rights of set-off against
third parties relating to the Sale Assets or any assets of the members of the
Stock Group, including, without limitation, unliquidated rights under
manufacturer's and vendor warranties.
(j) Goodwill. All goodwill associated with the Business or the
Sale Assets, together with the right to represent to third parties that the
Buyer is the successor to the Business.
(k) Other Assets. Except as provided in Section 1.2 below, the
right, title and interest of Seller and any Asset Subsidiaries in all other
tangible and intangible assets on the Closing Date that are used, held for use,
or useful solely or primarily in connection with the operation of the Business.
SECTION 1.2. EXCLUDED ASSETS. Notwithstanding anything in Section 1.1
above to the contrary, specifically excluded from the Transaction are the
following assets none of which shall be a part of the Assets or assets held by
any member of the Stock Group (the "Excluded Assets"):
(a) All cash, cash equivalents, securities available for sale,
bank accounts, and certificates of deposit other than cash in the amount of Five
Million Dollars ($5,000,000), as described in Section 9.15 and other than any
cash taken into account in calculating the Purchase Price pursuant to Section
1.9(a)(ii).
(b) All prepaid expenses, prepaid assets and deposits, any of
which are non-transferable and are refundable to Seller or any of its
Subsidiaries (including without limitation prepaid insurance and related rights
to the refund of unearned premiums as of the Closing Date, cash on deposit with
the Internal Revenue Service, state or foreign taxing authorities, public
utilities and other service providers) and owned by Seller or any of its
Subsidiaries on the Closing Date, but only to the extent such assets are
excluded for purposes of calculating Net Working Capital of the Business as of
the Closing Date.
(c) Tax Returns and tax records of Seller and its Subsidiaries
(other than the Tax Returns and Tax records of the members of the Stock Group)
and all rights of Seller or any of its Subsidiaries to any claims for any
federal, state, local or foreign tax refunds relating to the operation of the
Business or the ownership of the Sale Assets during periods prior to the Closing
Date, but only to the extent such claims for refunds are excluded for purposes
of calculating Net Working Capital of the Business as of the Closing Date.
(d) All books, files, papers and records (including without
limitation minute books and stock transfer records) relating solely or primarily
to general corporate affairs of Seller, the Stock Selling Subsidiaries and the
Asset Subsidiaries and any records or instruments relating solely or primarily
to the Excluded Assets.
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(e) All policies of insurance of Seller and its Subsidiaries
and all of Seller's and its Subsidiaries' rights thereunder.
(f) Permits which are non-transferable under applicable law.
(g) Except to the extent provided in Section 9.2, (i) all of
the assets of the Employee Benefit Plans, (ii) any insurance contract, trust,
third party administrator contract, or other funding arrangement for such plans,
(iii) any contracts with third parties relating to the administration of such
plans, and (iv) any monies held by Seller or its Subsidiaries in any account
dedicated to the payment of benefits or insurance premiums relating to any such
plan.
(h) Any software computer programs and data bases which are
not solely or primarily used or held for use in the Business.
(i) Except as otherwise set forth in Section 9.8, all of
Seller's and its Subsidiaries' rights to use the name "▇▇▇▇▇▇▇▇," "▇.▇.
▇▇▇▇▇▇▇▇" and "BFG," alone or in combination with any other words or terms or
variations of such words or terms.
(j) Any intellectual property of Seller or its Subsidiaries,
including, patents, licenses, trademarks, trade names, copyrights, know-how and
trade secrets (i) that are not solely or primarily used, held for use or useful
in connection with the operation of the Business, or (ii) that are listed on
Schedule 1.2(j) ("Retained Intellectual Property").
(k) Except as otherwise set forth in Section 4.12, (i)
information relating to Seller's negotiations for the sale or other ownership
arrangement of all or a portion of the Business and any other transaction with
Buyer or any third party who or which was interested in the Business or any
other businesses, divisions, commercial business units or assets of Seller or
its Subsidiaries or affiliates and (ii) any confidential information of third
parties which is contained within records exclusively dedicated for and relating
to the Business, or otherwise held under an obligation of confidentiality, which
is subject to an obligation of confidentiality which is not assumed by Buyer
pursuant to this Agreement or otherwise or for which consent for such assumption
is necessary and not obtained.
(l) Subject to Section 9.4, all of the assets directly related
to Seller's Electronic Materials Business ("EMD Business") including but not
limited to those assets described on Schedule 1.2(l).
(m) That certain parcel of vacant land of approximately 150
acres in Brecksville, Ohio, as depicted on the map attached to Schedule 1.2(m)
(the "Brecksville Vacant Land").
(n) All of the real property of those facilities described on
Schedule 1.2(n) (the "Closed Facilities") along with all of the tangible
personal property located at the Closed Facilities.
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(o) All of the real property described on Schedule 1.2(o) (the
"Textile Dyes Facilities") along with all of the assets directly related to the
Textile Dyes business, including, but not limited to, those described on
Schedule 1.2(o).
(p) All other assets of Seller or the Asset Subsidiaries not
used or useful solely or primarily in connection with the Business and/or
otherwise listed in Schedule 1.2(p).
SECTION 1.3. TITLE TO SALE ASSETS. At the Closing, the Sale Assets
shall be sold, transferred, assigned and conveyed to Buyer free and clear of any
and all liens, mortgages, pledges, security interests, conditional sales
agreements, charges, claims, options, conditions, easements and restrictions of
record and any other encumbrances of any kind or nature whatsoever
(collectively, "Encumbrances"), except (in the case of the Assets) for Permitted
Encumbrances and except as otherwise expressly provided in this Agreement. On
the Closing Date, Seller shall, and shall cause the Stock Selling Subsidiaries
to, transfer to Buyer (or its designee) good and marketable title to the Stock
and the Equity Interest, free and clear of all Encumbrances, proxies, voting
rights or agreements and other restrictions and limitations of any kind.
SECTION 1.4. EXCLUDED LIABILITIES. Except as expressly set forth in
Section 1.5, Buyer shall neither assume nor become responsible for any
Liabilities of Seller or its Subsidiaries or affiliates at the Closing
(collectively, the "Excluded Liabilities"). All Excluded Liabilities shall
remain the sole obligation and responsibility of Seller, its Subsidiaries or
affiliates or predecessors (in each case, who are not members of the Stock
Group), as applicable. The Excluded Liabilities include, without limitation, the
following:
(a) Liabilities relating to or arising in respect of any of
the Excluded Assets;
(b) Liabilities in respect of Taxes, or any reporting
requirement or estimated Tax payable with respect thereto, including all Taxes
resulting from or with respect to the Assets prior to the Closing (except as
provided in Section 9.12);
(c) the fees and expenses incurred by the Seller or any of its
Subsidiaries or affiliates in connection with negotiating, preparing, closing
and carrying out the provisions of this Agreement and the Transaction,
including, but not limited to, the fees, disbursements and expenses for Seller's
attorneys, accountants, financial advisers and any other consultants;
(d) except as provided in Section 9.2, all liabilities with
respect to Employee Benefit Plans, including liabilities for post-retirement
health and life insurance benefits, Management Continuity Agreements, Retention
Agreements, Management Retention Agreements and Supplemental Executive
Retirement Plan Agreements;
(e) any indebtedness for borrowed money of Seller or any of
its Subsidiaries or affiliates to third parties or to Seller or any of its
Subsidiaries or affiliates (other than amounts owed between any members of the
Stock Group) and any guarantees or obligations to reimburse a bank or any other
Person under any letter of credit or similar obligations, and any interest,
fees, prepayment premium and other amounts payable in respect thereof;
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(f) all Liabilities against which Seller has agreed to
indemnify Buyer pursuant to this Agreement but only to the extent of such
obligation to indemnify;
(g) Liabilities arising in connection with any (i) disposition
prior to the Closing by Seller or any of its affiliates of stock or assets
(whether by stock or asset sale, merger or other transaction) formerly
comprising a product line, segment, portion or division of the Business,
including without limitation, Liabilities arising in connection with the
dispositions of Tremco, Inc. and Tremco Autobody Technologies, Inc. or (ii)
product line, segment, portion or division of the Business discontinued prior to
the Closing;
(h) Liabilities arising in connection with product lines of
the Business manufactured, sold or delivered prior to the Closing Date
(including, without limitation, Liabilities under any warranty or product
liability claims or product recalls or defects, including defective material,
design or manufacturing claims) which product lines are not, as of the date
hereof or as of the Closing Date, currently manufactured or sold by the
Business; and
(i) Other Liabilities expressly assumed or retained by Seller
under this Agreement.
SECTION 1.5. ASSUMED LIABILITIES. Notwithstanding anything in this
Agreement to the contrary, at the Closing, Buyer shall assume and agree to pay,
perform and discharge as and when due the following Liabilities of the Seller or
the Asset Subsidiaries (the "Assumed Liabilities"):
(a) bona fide liabilities of the Business (other than any
non-current Liability described in Section 1.4(a) through Section 1.4(i)) as
reflected, or for which amounts are reserved for, on the Closing Balance Sheet
to the extent such liabilities are of the type reflected on the May 31, 2000
Balance Sheet or are of a different type and arose subsequent thereto and are
taken into account in the calculation of the Net Working Capital as of the
Closing Date;
(b) Except as provided in Section 1.4(f), Liabilities relating
to or arising out of or incurred in connection with the performance after the
Closing Date of all Contracts Assigned by Asset Purchase (other than items set
forth in Section 1.4(d));
(c) Except as provided in Sections 1.4(h) or 9.6, Liabilities
under any warranty or product liability claims, or product recalls or defects,
including defective material, design or manufacturing claims and merchandise
returns made or received after the Closing Date with respect to products of the
Business manufactured, sold or delivered by Seller or its Subsidiaries prior to,
on or after the Closing Date;
(d) Liabilities of the Business constituting Permitted
Encumbrances;
(e) Other Liabilities expressly assumed by Buyer under this
Agreement or listed on Schedule 1.5; and
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(f) Except as otherwise specifically provided in this
Agreement, Liabilities arising from events relating to the ownership of the
Assets and/or operation of the Business or Assets with respect to the period
after the Closing Date.
SECTION 1.6. PURCHASE PRICE. The purchase price to be paid by Buyer for
the Sale Assets shall be ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars
($1,400,000,000) (as such number may be adjusted pursuant to the immediately
succeeding sentence and Section 1.9, the "Purchase Price"). The Purchase Price
(as adjusted pursuant to Section 1.9(i)) shall be paid at the Closing as
follows: (i) the delivery of a promissory note, containing those terms set forth
on Exhibit C, in the amount of Two Hundred Million Dollars ($200,000,000)
("Seller Note") and (ii) the remainder of the Purchase Price in immediately
available funds in United States Dollars to an account designated in writing by
Seller; provided that, at Buyer's option (exercisable anytime prior to the
Closing) the principal amount of the Seller Note may be reduced by up to Seventy
Five Million Dollars ($75,000,000) and the cash portion of the Purchase Price
increased by an amount equal to 80% of any such principal amount reduction. The
Purchase Price (as adjusted pursuant to the immediately preceding sentence and
Section 1.9(i)) shall be subject to a post-closing adjustment as provided in
Section 1.9.
SECTION 1.7. ALLOCATION OF PURCHASE PRICE.
(a) Buyer shall prepare (and send to Seller) a proposed
allocation of the Purchase Price and the Assumed Liabilities to the Sale Assets
in accordance with the guidelines set forth in Schedule 1.7 no later than
forty-five (45) days after the Determination Date. The parties acknowledge that
such allocation shall be determined based on the fair market values of the Sale
Assets in accordance with Section 1060 of the Code, or under Section 338 of the
Code, in each case to the extent such Section applies to the Transaction. If
Seller disagrees with Buyer's proposed allocation, the parties will negotiate in
good faith in an attempt to resolve such disagreement. If the parties are unable
to solve such disagreement, the parties agree to submit such dispute to Deloitte
& Touche LLP pursuant to procedures similar to those set forth in Section
1.9(f). If Deloitte & Touche LLP determines that Buyer's proposed allocation
with respect to any disputed items reflects a reasonable estimate of the
relative fair market values of the Sale Assets, Seller agrees to abide by such
determination. If Deloitte & Touche LLP determines that Buyer's proposed
allocation with respect to any disputed items does not reflect a reasonable
estimate of the relative fair market values of the Sale Assets, Deloitte &
Touche LLP shall determine the relative fair market values with respect to any
disputed items, together with any appropriate corresponding allocation, provided
that such determination must reflect the minimum allocations set forth on
Schedule 1.7, and Buyer and Seller agree to abide by Deloitte & Touche LLP's
determination of fair market value. The parties shall report (including with
respect to the filing of Form 8594 with the Internal Revenue Service, to the
extent such Form is applicable hereto) the sale and purchase of the Sale Assets
for all income tax purposes in a manner consistent with such agreed allocations
and shall not, in connection with the filing of applicable Tax Returns, make any
allocation of the Purchase Price and Assumed Liabilities which is contrary to
such agreed allocations. The parties agree to consult with one another with
respect to any tax audit, controversy, or litigation relating to such
allocations.
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(b) Buyer shall use reasonable efforts to prepare a tentative
allocation of the Purchase Price and deliver such allocation to Seller, prior to
Closing, provided that such tentative allocation shall be limited to the
appropriate portions of the Purchase Price that are to be allocated to the
following entities: BFGoodrich F.C.C., Inc., BFGoodrich Chemical Belgie BVBA,
and BFGoodrich Chemical Spain S.A. Buyer and Seller agree that such tentative
allocations may be revised without prejudice when included in the allocation
prepared pursuant to (a) above.
(c) Buyer and Seller agree for all relevant tax purposes, to
the extent (i) the Purchase Price is properly allocable under the provisions of
paragraph (a) to Sale Assets that are not directly owned by Seller but are
instead owned by an Asset Subsidiary or a Stock Selling Subsidiary, and (ii) the
appropriate portion of the Purchase Price is paid to Seller in lieu of such
Asset Subsidiary or Stock Subsidiary, that in such event the allocable portion
of the Purchase Price received by Seller shall be held by Seller as collection
agent for, and for the benefit of, the appropriate Asset Subsidiary or Stock
Selling Subsidiary, and that such Subsidiary shall be deemed to possess the
beneficial ownership of such allocable portion of the Purchase Price. Buyer and
Seller agree that they shall cooperate in the preparation and execution of any
documentation determined to be necessary or desirable in effectuating the intent
of this provision to the extent Buyer and Seller mutually determine that such
documentation is appropriate.
SECTION 1.8. CLOSING. The consummation of the Transaction contemplated
hereby (the "Closing") shall take place at 9:00 a.m., Eastern Standard Time, on
the later of: (i) February 26, 2001 or (ii) ten (10) business days after the
satisfaction or waiver of the conditions set forth in a Article VI and VII
(other than those conditions that by their nature are to be satisfied at
Closing, but subject to the satisfaction of such conditions), in the offices of
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, or at such other time and place as Buyer and Seller shall mutually
agree (the date on which the Closing takes place being referred to as the
"Closing Date"). All actions scheduled in this Agreement for the Closing Date
shall be deemed to occur simultaneously. For accounting purposes, the Closing
shall be deemed to be effective at 5:00 p.m., Eastern Standard Time, on the
Closing Date.
SECTION 1.9. PURCHASE PRICE ADJUSTMENT.
(a) A Purchase Price adjustment to the Purchase Price shall be
made as follows: (i) the amount of any indebtedness for borrowed money of Seller
or any of its affiliates from third parties that Buyer is assuming pursuant to
this Agreement and the amount of any indebtedness for borrowed money of any
consolidated members of the Stock Group from third parties shall be subtracted
from the Purchase Price; (ii) the amount of cash and cash equivalents in excess
of Five Million Dollars ($5,000,000) held in or by the wholly owned members of
the Stock Group as of the Closing Date shall be added to the Purchase Price,
(iii) the change in Net Working Capital as of the Closing Date (as finally
determined below) shall be added to or subtracted from the Purchase Price, and
(iv) the amount, if any, of the adjustment derived in Section 1.9(i) shall be
subtracted from the Purchase Price, provided that such adjustment shall be
effectuated solely through reduction of the Seller Note as described in Section
1.9(i).
(b) left blank intentionally.
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(c) Within sixty (60) days following the Closing, Seller shall
prepare and deliver to Buyer an audited consolidated statement of assets to be
sold and liabilities to be assumed of the Business as of the Closing Date
("Closing Balance Sheet") as reported on by Ernst & Young LLP, together with a
computation of the Net Working Capital as of the Closing Date ("Seller's Closing
Working Capital Statement") prepared in a manner consistent with the
consolidated statement of assets to be sold and liabilities to be assumed of the
Business as of May 31, 2000, attached as Exhibit A hereto (the "May 31, 2000
Balance Sheet") and the computation of the Net Working Capital as of May 31,
2000, attached as Exhibit B hereto ("May 31, 2000 Working Capital Statement").
The Closing Balance Sheet and Seller's Closing Working Capital Statement shall
be, and the May 31, 2000 Balance Sheet and May 31, 2000 Working Capital
Statement were, prepared consistent with past practice, in accordance with
accounting principles generally accepted in the United States consistently
applied, and in accordance with the principles set forth in the financial policy
manual of Seller, previously delivered to Buyer (the "Guide"), except in the
case of the May 31, 2000 and the Seller's Closing Working Capital Statement, as
provided in Schedule 1.9. In the event the Seller's Closing Working Capital
Statement cannot be prepared both in accordance with generally accepted
accounting principles and in a manner consistent with the Guide, compliance with
generally accepted accounting principles shall be given priority, it being
understood that the Guide is intended to be an interpretation of generally
accepted accounting principles. As used in this Agreement, "Net Working Capital"
shall be determined in accordance with Schedule 1.9. Subject to (g) and (h)
below, (i) to the extent the Net Working Capital as of the Closing Date as
finally determined is greater than $197,119,757, the Purchase Price shall be
increased by the amount of such difference pursuant to Section 1.9(a)(iii) up to
a maximum of Twenty-Five Million Dollars ($25,000,000), and (ii) to the extent
the Net Working Capital as of the Closing Date as finally determined is less
than $197,119,757, the Purchase Price shall be decreased by the amount of such
difference pursuant to Section 1.9(a)(iii).
(d) Buyer and its representatives shall have the right to
observe the work performed by Seller and/or its representatives in connection
with the preparation of the Closing Balance Sheet and Seller's Closing Working
Capital Statement, to examine and make copies of the work papers and other
documents generated or reviewed in connection with the preparation of the
Closing Balance Sheet and Seller's Closing Working Capital Statement and the May
31, 2000 Balance Sheet and the May 31, 2000 Working Capital Statement, and to
access the books and records of Seller related to the Closing Balance Sheet and
Seller's Closing Working Capital Statement and the May 31, 2000 Balance Sheet
and the May 31, 2000 Working Capital Statement.
(e) Buyer shall have forty-five (45) days after the receipt of
Seller's Closing Working Capital Statement to review Seller's Closing Working
Capital Statement, the work papers and other documents generated or reviewed by
Seller in connection with the preparation of Seller's Closing Working Capital
Statement, and the books and records of Seller related to Seller's Closing
Working Capital Statement ("Buyer's Review Period"). If, within Buyer's Review
Period, Buyer disputes any item(s) on Seller's Closing Working Capital
Statement, Buyer shall give Seller written notice of such disagreement
specifically identifying the item(s) and amount(s) in dispute and the basis for
such dispute (the "Buyer's Notice"). The parties shall
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use their reasonable efforts to reach agreement with respect to such disputed
items within forty-five (45) days following the delivery of Buyer's Notice, or
such longer period as may be agreed upon by the parties (the "Resolution
Period"). Any item(s) on Seller's Closing Working Capital Statement not
specifically identified in writing as a disputed item before the end of Buyer's
Review Period shall be deemed to have been accepted by Buyer and shall not be
subject to any further dispute, review or change.
(f) If the parties fail to reach a mutually agreeable
determination with respect to Seller's Closing Working Capital Statement within
the Resolution Period, the disputed item(s) shall be resolved and, as a result
thereof, the amount of the Net Working Capital on the Closing Date shall be
definitely and finally resolved by Deloitte & Touche LLP, or if Deloitte &
Touche LLP does not agree in writing to serve in such capacity, a
nationally-recognized firm of independent public accountants agreed upon by both
Seller and Buyer (in either case, the "Accounting Firm"), who shall act as
experts not as arbitrators and whose determination shall be final and binding.
The Accounting Firm shall have agreed in writing to serve in such capacity
pursuant to the terms herein described within fifteen (15) days following the
end of the Resolution Period, and the determination of the Net Working Capital
shall be completed by the Accounting Firm within forty-five (45) days following
the end of the Resolution Period. The Accounting Firm shall address only those
issues in dispute, and may not assign a value to any item greater than the
greatest value for such item claimed by either party or less than the smallest
value for such item claimed by either party. The fees, costs and expenses of the
Accounting Firm shall be borne proportionately by Buyer and Seller to the extent
that each party's calculation of Net Working Capital differs from the Net
Working Capital as finally determined by the Accounting Firm. The allocation of
cost by the Accounting Firm shall be final and binding on the parties. The
Accounting Firm's determination of Net Working Capital shall be completed in a
manner consistent with the principles set forth in this Section 1.9.
(g) If, as a result of the post-closing adjustment as
described in (a) above, the Purchase Price is to be reduced, the amount of such
reduction, with interest thereon calculated as indicated below (the "Reduction
Amount") shall be paid by wire transfer of immediately available funds to an
account designated in writing by Buyer, within ten (10) business days following
the date (the "Determination Date") of the final determination of the Net
Working Capital as of the Closing Date pursuant to the foregoing procedures. The
interest shall be calculated at the rate(s) of interest per annum announced from
time to time by Citibank N.A. (or its successor) as its U.S. prime rate minus 1%
from the Closing Date through the payment date (the "Applicable Rate"). The
Reduction Amount shall be treated for income tax purposes as an adjustment to
the Purchase Price.
(h) If, as a result of the post-closing adjustment as
described in (a) above, the Purchase Price is to be increased, the amount of
such increase with interest on such amount (the "Increased Amount") shall be
paid within ten (10) business days following the Determination Date. The
interest shall be calculated at the Applicable Rate from the Closing Date
through the payment date. The Increased Amount shall be paid by wire transfer of
immediately available funds to an account designated in writing by Seller, and
shall be treated for income tax purposes as an adjustment to the Purchase Price.
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(i) If the earnings of the Business before interest, taxes,
depreciation and amortization ("EBITDA") for the fiscal quarter ending December
31, 2000 are less than $52,500,000 then the principal amount of the Seller Note
shall be reduced by an amount equal to 6.5 times the difference between EBITDA
for such quarter and $52,500,000 and any associated interest shall be
eliminated. EBITDA will be calculated from the results of operations of the
Business as publicly reported by Seller in the ordinary course of business,
adjusted on a pro-forma basis for this purpose to (i) exclude revenue and
expenses associated with the EMD Business, (ii) reflect pension expense and
retiree health care expenses in a manner identical to the pro-forma period for
the first three (3) quarters of 2000, (iii) exclude the effect of research and
development expenses associated with the Business' drug delivery systems, (iv)
exclude the results of the Textile Dyes business (as well as any gain or loss or
transaction costs associated with the sale of this business), (v) exclude costs
and expenses associated with implementation of the Textile Consolidation
Project, (vi) exclude costs and expenses associated with matters that constitute
Excluded Liabilities under the Agreement, and (vii) exclude any costs or
expenses associated with the Business divestiture process.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement to Buyer to enter into this Agreement and to
consummate the Purchase, Seller represents and warrants to Buyer as of the date
hereof and as of the Closing Date as follows:
SECTION 2.1. ORGANIZATION; POWER.
(a) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York. Each of the
Subsidiaries and the Stock Selling Subsidiaries is a corporation or other
business entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, as listed for each on Section
2.1(a) of Seller's Disclosure Schedule attached to this Agreement (the
"Disclosure Schedule").
(b) Seller and each of the Asset Subsidiaries, Stock
Subsidiaries and the Stock Selling Subsidiaries have all requisite power and
authority to own, lease and operate the Sale Assets (and, in the case of the
members of the Stock Group that are affiliates of Seller, their assets), to
carry on the Business as it is now being conducted by each, respectively, and to
enter into, execute and deliver this Agreement and to consummate the
Transaction.
(c) Seller and each of the Asset Subsidiaries, Stock
Subsidiaries, the members of the Stock Group and the Stock Selling Subsidiaries
is duly qualified to do business as a foreign corporation or business entity in
each jurisdiction where the conduct of its business or ownership of its
properties requires such qualification, except where the failure to qualify
would not reasonably be expected to have a Material Adverse Effect.
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SECTION 2.2 CAPITALIZATION.
(a) The authorized, issued and outstanding capital stock of
each member of the Stock Group (other than the Equity Subsidiaries) is as set
forth in Section 2.2(a) of the Disclosure Schedule, and all of the issued and
outstanding shares of stock of members of the Stock Group have been duly
authorized and validly issued, and are fully paid and nonassessable, and have
not been issued in violation of the preemptive rights of any Person and are
owned by the Person identified as such in Section 2.2(a) of the Disclosure
Schedule, free and clear of Encumbrances.
(b) The ownership interest of each member or owner of each of
the Equity Subsidiaries is as set forth in Section 2.2(b) of the Disclosure
Schedule and all such interests have been validly issued and are fully paid,
have not been issued in violation of the preemptive rights of any Person and are
owned by the Person indicated in Section 2.2(b) of the Disclosure Schedule free
and clear of Encumbrances.
(c) Neither Seller nor any of the Stock Selling Subsidiaries
or the members of the Stock Group that are affiliates of Seller are a party to
any outstanding subscriptions, contracts to purchase capital stock or other
securities, conversion privileges, options, warrants or rights of any kind, with
respect to the purchase, sale or voting of any of the Stock, any of the stock of
any member of the Stock Group or any of the Equity Interest.
(d) Set forth on Section 2.2(d) of the Disclosure Schedule is
a true and complete list of the incumbent directors and officers of each member
of the Stock Group.
SECTION 2.3. AUTHORITY; NO VIOLATION.
(a) The execution and delivery of this Agreement and the
consummation of the Transaction have been duly and validly authorized by all
necessary corporate or other action on the part of Seller, the Asset
Subsidiaries, the members of the Stock Group and the Stock Selling Subsidiaries.
This Agreement is a valid and binding obligation of Seller, the Subsidiaries,
the members of the Stock Group that are affiliates of Seller and the Stock
Selling Subsidiaries, enforceable against each of them in accordance with its
terms, except as the enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws relating to or
limiting creditors' rights generally or by general principles of equity,
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
(b) Except as set forth in Section 2.3 of the Disclosure
Schedule, neither the execution and delivery of this Agreement, nor the
consummation of the Transaction, nor compliance by Seller, the Subsidiaries, the
members of the Stock Group and the Stock Selling Subsidiaries with any of the
provisions of the Agreement, will conflict with, violate, result in a breach of,
constitute a default (or an event that, with notice or lapse of time, or both,
would constitute a default) under, or give rise to any right of termination,
cancellation or acceleration, result in the creation of any material Encumbrance
upon any of the Sale Assets, or the assets of any member of the Stock Group, or
require any authorization, consent, approval, exemption or
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other action by or notice to any court or other governmental body or any other
Person under (i) any provision of the constitutional documents of Seller, the
Subsidiaries, the members of the Stock Group or the Stock Selling Subsidiaries,
or (ii) (x) any of the terms, conditions or provisions of any material
indenture, lease, mortgage, loan agreement, contract or other agreement or to
which Seller, any Subsidiary, any Stock Selling Subsidiary or any member of the
Stock Group is bound or which is a Contract Assigned by Asset Purchase, or (y)
any material Permit, law, rule or regulation of any governmental body, agency or
authority, or any judgment, order, writ, injunction or decree of any court,
arbitrator or governmental body, agency or authority to which Seller, the
Subsidiaries, the Stock Selling Subsidiaries, the members of the Stock Group,
the Sale Assets or the assets of any member of the Stock Group are subject.
SECTION 2.4. OWNERSHIP OF STOCK AND EQUITY INTEREST. Seller or one of
the Stock Selling Subsidiaries has good and marketable title to the Stock, free
and clear of any Encumbrance, and has the right, power and authority to sell and
transfer the Stock to Buyer (or its designee) in the manner provided herein. One
of the Stock Subsidiaries or another member of the Stock Group has good and
marketable title to the shares of capital stock or other ownership interests of
the Indirect Subsidiaries as reflected in Sections 2.2(a) and (b) of the
Disclosure Schedule ("Indirectly Owned Stock"), free and clear of any
Encumbrances. None of the Stock or the Indirectly Owned Stock is subject to any
voting trust or voting agreement, nor is any proxy in effect with respect
thereto. Seller has good and marketable title to the Equity Interest, free and
clear of any Encumbrance, and has the right, power and authority to sell and
transfer the Equity Interest to Buyer (or its designee) in the manner provided
herein. The Equity Interest is not subject to any voting trust or voting
agreement, nor is any proxy in effect with respect thereto. Except for the
Stock, the Indirectly Owned Stock and the Equity Interest, no member of the
Stock Group owns any stock, or other equity or ownership rights in any Person.
SECTION 2.5. TITLE TO SALE ASSETS AND RELATED MATTERS. Except as set
forth in Section 2.5 of the Disclosure Schedule, Seller or one of its
Subsidiaries has, and, subject to the receipt of any required consents, after
giving effect to the Transaction Buyer will have, good and marketable title to,
or uses under valid and subsisting leases or licenses, all of the Assets and, in
the case of the members of the Stock Group, their respective assets (including
those reflected on the May 31, 2000 Balance Sheet, except for assets sold,
consumed or otherwise disposed of in the ordinary course of business since the
date of the May 31, 2000 Balance Sheet), in all cases free and clear of all
Encumbrances, except Permitted Encumbrances.
SECTION 2.6. LEFT BLANK INTENTIONALLY
SECTION 2.7. OTHER TANGIBLE PROPERTY. The Sale Assets and the assets of
the members of the Stock Group include all of the properties, assets and rights
that are used, held for use or useful solely or primarily in the conduct of the
Business as currently conducted. Except as provided in Section 2.7 of the
Disclosure Schedule, the Other Tangible Property is adequate for the conduct of
the Business as currently conducted. Except as provided in Section 2.7 of the
Disclosure Schedule, the machinery and equipment included in the Other Tangible
Property Acquired by Asset Purchase has been maintained in a manner sufficient
to permit the conduct of the Business in the ordinary course, and may be so
operated in such a manner at the Closing in all material respects.
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SECTION 2.8. NO SALES OR OPTIONS. Except for this Agreement and except
as set forth in Section 2.8 of the Disclosure Schedule, neither Seller nor any
of its affiliates have entered into any agreement for the sale or lease of, or
given any Person an option to lease or purchase, all or any part of the Sale
Assets or assets of any member of the Stock Group, except for sales of inventory
items in the ordinary course of the Business, sales of supplies in the ordinary
course of the Business, consistent with past practice, or the disposal of
machinery or equipment in the ordinary course of the Business, consistent with
past practice.
SECTION 2.9 FINANCIAL STATEMENTS.
(a) Seller has delivered to Buyer (i) the unaudited balance
sheets and statements of income and cash flows of the Business as of and for the
nine-month period ended September 30, 1999 and 2000, (ii) the May 31, 2000
Balance Sheet and (iii) the audited balance sheets and statements of income and
cash flows of the Business for the years ended December 31, 1997, 1998, 1999
together with the notes to such financial statements, accompanied in the case of
this clause (iii), by an unqualified opinion of Ernst &Young LLP (the financial
statements described above, together with the notes to such financial
statements, collectively, the "Financial Statements.") Except as described in
Section 2.9(a) of the Disclosure Schedule, the Financial Statements (i) were
prepared in accordance with accounting principles generally accepted in the
United States, consistently applied; and (ii) present fairly in all material
respects the financial condition and results of operations of the Business for
the periods referred to therein (or, in the case of the May 31, 2000 Balance
Sheet, the assets and liabilities of the Business as held for sale in connection
with the Transaction).
(b) Neither Seller, nor any Asset Subsidiary (to the extent
related to the Business), nor any member of the Stock Group has any liabilities
or obligations of any nature (whether accrued, absolute, contingent, unasserted,
known, unknown or otherwise), except (i) as set forth as a liability on the May
31, 2000 Balance Sheet, (ii) as are Excluded Liabilities, (iii) items disclosed
in Section 2.9(b) of the Disclosure Schedule, (iv) liabilities and obligations
incurred since the date of the May 31, 2000 Balance Sheet in the ordinary course
of business and not in violation of any of the terms of this Agreement, (v)
liabilities and obligations arising under any contract or agreement or (vi)
other liabilities which in the aggregate would not have Material Adverse Effect.
(c) Except as set forth in Section 2.9(c) of the Disclosure
Schedule, no member of the Stock Group has outstanding any debt for borrowed
money or any finance leases required by accounting principles generally accepted
in the United States to be capitalized and the Assumed Liabilities do not
include obligations under any such finance leases.
SECTION 2.10. ACTIONS PENDING. Except as set forth in Section 2.10 of
the Disclosure Schedule, there are no material actions, suits, claims, written
notices, hearings or proceedings (excluding actions, suits, claims, notices,
hearings or proceedings related to Taxes) pending or, to Seller's Knowledge,
threatened against Seller or any of the Subsidiaries or any properties or rights
of Seller or the Subsidiaries related to the Business, by or before any court,
arbitrator or governmental body, agency or authority. Except as set forth in
Section 2.10 of the Disclosure
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Schedule, to Seller's Knowledge there are no material inquiries or
investigations (excluding inquires or investigations relating to Taxes) pending
or threatened against Seller or any of the Subsidiaries or any properties or
rights of Seller or the Subsidiaries related to the Business, by or before any
court, arbitrator or governmental body, agency or authority. Except as set forth
on Schedule 2.10, neither Seller nor any Subsidiary is subject to any order,
writ, injunction or decree of any court or any federal, state, municipal or
other domestic or foreign governmental department, commission, board, bureau,
agency or instrumentality (other than as relating to Permits), in each case
relating and material to the Business.
SECTION 2.11. ABSENCE OF CHANGES OR EVENTS. Except as contemplated by
this Agreement or as described in Section 2.11 of the Disclosure Schedule, since
December 31, 1999, the Business has in all material respects been conducted only
in the ordinary course, and neither Seller nor any of its affiliates has:
(a) Mortgaged, pledged or subjected to any Encumbrance any
material portion of the Sale Assets or any material portion of the assets of any
members of the Stock Group;
(b) Encountered any actual or, to Seller's Knowledge,
threatened labor union organizing activity or collective bargaining agreement
negotiation, had any actual or, to Seller's Knowledge, threatened employee
strikes, work stoppages, slow-downs or lock-outs, or experienced any material
change in its relationship with employees or the agents, consultants,
salespersons, distributors or independent contractors of the Business;
(c) Except for the Transition Arrangements, made any change in
the rate of compensation, commission, bonus or other direct or indirect
remuneration payable, or paid or agreed to pay, conditionally or otherwise, any
bonus, extra compensation, pension, severance or vacation pay, to any director,
officer, Employee, consultant, sales representative, distributor or independent
contractor of the Business, other than in the ordinary course of the Business,
consistent with past practice; entered into any employment contract with any
officer or salaried employee, or instituted any employee welfare, bonus, stock
option, profit-sharing, retirement or similar plan or arrangement other than in
the ordinary course of the Business, consistent with past practice;
(d) Suffered any change, event or condition that, in any
individual case or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect;
(e) Taken any action which, if it had been taken after the
date of this Agreement, would have been a breach of Section 4.2; or
(f) Entered into any agreement or contract, made any
commitment or otherwise obligated itself to take any of the types of action
described in subsections (a) through (e) of this Section 2.11.
SECTION 2.12. COMPLIANCE WITH LAWS: NO DEFAULT. Except as described in
Section 2.12 of the Disclosure Schedule, and except for those matters regarding
any Environmental Laws, Seller and its affiliates are in compliance in all
material respects with each
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applicable law, rule, regulation, ordinance, writ, injunction, permit,
resolution, approval, order, decree, policy or guideline of any court,
arbitrator or governmental agency, body or authority to which they or the Sale
Assets or any assets of the members of the Stock Group are subject (including
without limitation applicable laws, rules and regulations relating to antitrust,
civil rights, and occupational health and safety).
SECTION 2.13. REAL PROPERTY.
(a) Section 2.13(a) of the Disclosure Schedule contains a list
of all of the Owned Real Property and the name of the record title holder
thereof. With respect to such Owned Real Property either the Seller or one of
the Subsidiaries owns good and marketable title to such real property, free and
clear of all Encumbrances other than Permitted Encumbrances. Except as described
in Section 2.13(a) of the Disclosure Schedule, there are no leases, subleases,
licenses, concessions or other agreements granting to any Person the right of
use or occupancy of any material portion of such Owned Real Property; and there
are no outstanding options or rights of first refusal to purchase any parcel of
such Owned Real Property, any portion thereof or interest therein. The Owned
Real Property, together with the Leased Real Property, includes all real
property that is used, held for use or useful solely or primarily in the conduct
of the Business, except for Excluded Assets.
(b) Except as described in Section 2.13(b) of the Disclosure
Schedule, there is no current, or to Seller's Knowledge, proposed condemnation
proceeding, requisition or taking proposal by any public authority of any
material portion of the Owned Real Property.
(c) Section 2.13(c) of the Disclosure Schedule contains a list
of all Leased Real Property and the names of the lessee and lessor thereof. To
Seller's Knowledge, the leases with respect to such property are in full force
and effect, and Seller or one of the Subsidiaries holds a valid and existing
leasehold interest under each of the leases free and clear of all Encumbrances
except for Permitted Encumbrances. Buyer either has been supplied with, or has
been given access to, complete and accurate copies of each of the leases and
none of such leases have, to Seller's Knowledge, been modified in any material
respect, except to the extent that such modifications are disclosed by the
copies delivered to Buyer. Neither Seller nor one of the Subsidiaries is, to
Seller's Knowledge, in default in any material respect under any of such leases,
and, to Seller's Knowledge, none of the landlords or lessors are in default in
any material respect thereunder.
SECTION 2.14. MATERIAL CONTRACTS.
(a) Section 2.14 of the Disclosure Schedule lists all
agreements and contracts, including all amendments thereto, that relate solely
or primarily to the Business to which Seller or its Subsidiaries or affiliates
are parties or to which they are subject or by which the Sale Assets or Seller
or its Subsidiaries or affiliates are bound, and that fall into one or more of
the following categories (the "Material Contracts"):
(i) All agreements and contracts entered into with
customers and suppliers that individually involve the payment at an annual
amount in excess of Three Million
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Dollars ($3,000,000) and are not cancelable upon notice without payment or
consent within ninety (90) days;
(ii) All agreements and contracts relating to capital
expenditures at an annual amount in excess of Five Hundred Thousand Dollars
($500,000);
(iii) All agreements and contracts relating to the
grant or receipt by Seller or any of its Subsidiaries of any license or royalty
fees or other similar payment obligations to or from any Person that Seller
reasonably believes will be in excess of Eight Hundred Thousand Dollars
($800,000) in the calendar year 2000;
(iv) any covenant not to compete, or other covenant,
contained in a contract or agreement restricting Seller's and its Subsidiaries'
development, manufacture, marketing or distribution of any current product lines
of the Business with at least Five Million Dollars ($5,000,000) of annual sales
other than (i) restrictions on the use of Intellectual Property contained in
patent, license or joint development agreements which are customary for those
types of agreements and (ii) those contained in distributorship agreements or
grants of exclusive territories entered into in the ordinary course of business;
(v) left blank intentionally;
(vi) any lease or similar agreement for the lease or
use of (as lesser or lessee) any machinery, equipment, vehicle or other tangible
personal property owned by any Person in each case, other than leases entered
into in the ordinary course of business and providing for payments of not more
than One Million Dollars ($1,000,000) per year;
(vii) other than (i) purchase orders or other
agreements executed in the ordinary course of business extending repayment terms
to third parties and (ii) lines of credit and secured debt of the affiliates of
the Seller supporting payroll, working capital, capital expenditures and other
ordinary course operations of the legal entity; and (iii) debt instruments of
the various joint venture entities of which Seller is a member, partner or
shareholder, any agreement, contract or other instrument entered into with any
third party under which any affiliate of the Seller has borrowed any money from,
or issued any note, bond, debenture or other evidence of indebtedness to, any
Person or any other note, bond, debenture or other evidence of indebtedness
issued to any Person;
(viii) (i) other than agreements executed in the
ordinary course of business, including, but not limited to, performance
guarantees and parent-subsidiary guarantees of performance, any agreement,
contract or other instrument under which any Person has, directly or indirectly,
guaranteed liabilities or obligations of any member of the Stock Group or the
Business or (ii) any agreement pursuant to which any member of the Stock Group
or the Business has, directly or indirectly, guaranteed liabilities or
obligations of any Person;
(ix) any agreement, contract, or other instrument
under which (i) any Person other than Seller has, directly or indirectly,
guaranteed indebtedness for borrowed money
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of any member of the Stock Group or the Business or (ii) any member of the Stock
Group or the Business has, directly or indirectly, guaranteed indebtedness for
borrowed money of any Person;
(x) other than purchase orders or other agreements
executed in the ordinary course of business extending repayment terms to third
parties, any agreement, contract or other instrument entered into with any third
party under which any member of the Stock Group has, directly or indirectly,
made any advance, loan, extension of credit or capital contribution to, or other
investment in, any Person;
(xi) other than agreements executed in the ordinary
course of business, including, but not limited to, purchase and sale orders,
leases and license agreements, any agreement or instrument providing for
indemnification of any Person with respect to material liabilities relating to
any current or former business;
(xii) to Seller's Knowledge any prior acquisition or
disposition by Seller or any of its affiliates from or to, as applicable, any
third party of stock or assets formerly (in the case of dispositions) comprising
a product line, segment, portion or division of the Business (by way of merger,
consolidation, sale or otherwise) where any member of the Stock Group or the
Business has any continuing obligations thereunder other than agreements
relating to acquisitions or dispositions by Seller, its affiliates or the
Business with a purchase price of less than Five Million Dollars ($5,000,000);
and
(xiii) any joint venture or partnership agreement.
(b) All of the Material Contracts are the valid and binding
obligations of the Seller, Asset Subsidiaries or member of the Stock Group, a
party thereto, and to Seller's knowledge, the other parties thereto, are in full
force and effect and as to Seller and/or its respective affiliates are
enforceable in accordance with their respective terms, except as the enforcement
may be limited by bankruptcy, insolvency, moratorium or other laws relating to
or limiting creditors' rights generally or by general principles of equity,
regardless of whether such enforceability is considered in a proceeding at law
or in equity. Neither Seller nor one of the Subsidiaries is in breach or default
in any material respect under any Material Contract and, to Seller's Knowledge,
no other party to any of the Material Contracts is in breach or default in any
material respect thereunder.
SECTION 2.15. LICENSES AND PERMITS. Except as provided in Section 2.15
of the Disclosure Schedule, Seller and the Subsidiaries own, hold, possess or
lawfully use all licenses, permits, certificates, approvals, resolutions,
consents and other authorizations ("Permits") which are necessary in order to
operate in all material respects the Sale Assets and the assets of the members
of the Stock Group as now operated by them or to conduct the Business as now
conducted by them.
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SECTION 2.16. INTELLECTUAL PROPERTY.
(a) All patents, patent applications, including utility and
design patents and patent applications, trademarks, trademark applications,
trade names, service marks, and registered copyrights, which are owned and
currently in use by Seller or its Subsidiaries and used or held for use solely
or primarily in connection with the operation of the Business are listed or
described in Section 2.16(a) of the Disclosure Schedule (the "Intellectual
Property"). As used herein, the term "Intellectual Property Agreements" means
those agreements which are listed in Schedules 2.16 (d), (e) and (h) hereof. The
Intellectual Property together with the Intellectual Property Agreements are
sufficient for the conduct of the Business as it is presently conducted by
Seller and its Subsidiaries. Except as disclosed in Section 2.16 of the
Disclosure Schedule, Seller has no Knowledge of any written notice from a third
party unambiguously alleging that any patent listed or described in Section
2.16(a) of the Disclosure Schedule is invalid except for such notices which are
not reasonably expected to have a material effect on a material product line of
the Business. Except as disclosed on Section 2.16(a) of the Disclosure Schedule,
Seller or its Subsidiaries have title and ownership interests to the
Intellectual Property, as described in Section 2.16(a) of the Disclosure
Schedule (other than trade secrets).
(b) Except as specified in Sections 1.2(i) and 1.2(j) and
Section 2.16(b) of the Disclosure Schedule, there are no restrictions or
limitations on Seller's or the relevant Subsidiaries' right to use any
Intellectual Property or any rights obtained through the Intellectual Property
Agreements, except for any restrictions or limitations which would not
reasonably be expected to have a Material Adverse Effect. Except as specified in
Sections 1.2(i) and 1.2(j) and Section 2.16(b) of the Disclosure Schedule, and
subject to the receipt of any required consent, there are no prohibitions on the
transfer to Buyer of any Intellectual Property or Intellectual Property
Agreements as such transfer is contemplated by this Agreement, except for any
prohibitions which would not reasonably be expected to have a material effect on
a material product line of the Business. Except as provided in Sections 1.2(i)
and 1.2(j) above, all of Seller's or the relevant Subsidiaries' rights in and to
such Intellectual Property and the Intellectual Property Agreements will be
conveyed to Buyer pursuant to this Agreement subject to the receipt of any
required consents.
(c) Except as disclosed in Section 2.16(c) of the Disclosure
Schedule, to Seller's Knowledge, neither Seller nor any of its affiliates have
received written notice that the Business infringes or misappropriates any
intellectual property rights of others, and neither Seller nor any of its
Subsidiaries that are affiliates have been charged nor, to Seller's Knowledge,
threatened in writing to be charged with infringing or misappropriating the
intellectual property rights of others, except in either case for any
infringements which would not reasonably be expected to have a Material Adverse
Effect.
(d) Except as disclosed on Section 2.16(d) of the Disclosure
Schedule, neither Seller nor any of its affiliates have licensed any third party
to use any Intellectual Property or any rights obtained through the Intellectual
Property Agreements that is material to the Business.
(e) Except as described on Section 2.16(e) of the Disclosure
Schedule, neither Seller nor any of its affiliates have entered into any
contract or made any arrangement pursuant
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to which any third party is entitled to any royalty or other compensation for
the use of any Intellectual Property that is material to the Business. Except as
disclosed in Section 2.16(e) of the Disclosure Schedule, after the Closing Date
no license or royalty fee or other compensation shall be payable to any third
party with respect to the use of any of the Intellectual Property that is
material to the Business.
(f) Except as set forth on Section 2.16(f) of the Disclosure
Schedule, there are no pending or, to Seller's Knowledge, threatened material
legal or governmental proceedings, including opposition, cancellation,
interferences, proceedings or suits, directly relating to the Intellectual
Property and the Intellectual Property Agreements.
(g) Except as set forth on Section 2.16(g) of the Disclosure
Schedule, to Seller's Knowledge, no Person is infringing upon or is otherwise
violating any of the Intellectual Property and the Intellectual Property
Agreements, except for any infringement and violations which would not
reasonably be expected to have a Material Adverse Effect.
(h) Except for agreements entered into in the ordinary course
of business, including, but not limited to, confidentiality agreements and
consulting agreements, Section 2.16(h) of the Disclosure Schedule contains a
list of the material agreements exclusively dedicated to Intellectual Property
that are to be assigned to Buyer. To Seller's Knowledge, Section 2.16(h) of the
Disclosure Schedule is complete and accurate in all material respects, and
Seller and its relevant affiliates have the right to assign the items on Section
2.16(h) of the Disclosure Schedule to the Buyer, except as provided otherwise in
Sections 1.2(i) or 1.2(j) above (subject to the receipt of any required
consents) and each license, sublicense, agreement or permission disclosed in
Schedule 2.16(h) of the Disclosure Schedule is a valid and binding obligation of
the Seller, Asset Subsidiaries or member of the Stock Group, a party thereto,
and to Seller's Knowledge, the other parties thereto, to Seller's Knowledge is
in full force and effect and, as to Seller and/or its respective affiliates, is
enforceable in accordance with its respective terms, except as such enforcement
may be limited by bankruptcy, insolvency, moratorium or other laws relating to
or limiting creditors' rights generally or by general principles of equity,
regardless of whether such enforceability is considered in a proceeding at law
or in equity. To Seller's Knowledge, Seller or a relevant Subsidiary is not in
breach or otherwise in default in any material respect of the agreements listed
in Schedule 2.16(h), and, to Seller's Knowledge, no event has occurred which
with notice or lapse of time would constitute a material breach or default or
permit termination, modification or acceleration thereunder.
SECTION 2.17. ENVIRONMENTAL MATTERS.
(a) Except as set forth in Section 2.17(a) of the Disclosure
Schedule, and except for any breach of Section 2.17(a) that is not reasonably
expected to result in Environmental Costs exceeding $100,000 (it being
understood and agreed that such $100,000 is a threshold and not a deductible),
the Seller and each Asset Subsidiary (to the extent related to the Business),
the Business, each member of the Stock Group, the Owned Real Property and the
Leased Real Property and the operations conducted thereon (i) are in compliance
with all applicable Environmental Laws, (ii) have obtained, and are in
compliance with, all permits, licenses, authorizations, registrations and other
governmental consents required by applicable
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Environmental Laws ("Environmental Permits"), and have made all required filings
for issuance or renewal of such Environmental Permits; and (iii) there are no
claims, notices, civil, criminal or administrative actions, suits, hearings,
investigations, inquiries or proceedings pending or, to Seller's Knowledge,
threatened against the Seller or any Asset Subsidiary or any member of the Stock
Group that allege non-compliance;
(b) Except as set forth in Section 2.17(b) of the Disclosure
Schedule, and except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, there is no contamination of, and
there have been no releases or threatened releases of Hazardous Materials at the
Owned Real Property, the Leased Real Property, or any other real property owned,
leased or operated by Seller or the Asset Subsidiaries in connection with the
Business or by any member of the Stock Group (or, to Seller's Knowledge, any
real property formerly owned, leased or operated by Seller or the Asset
Subsidiaries (or any predecessor of Seller or its Subsidiaries) in connection
with the Business or by any member of the Stock Group);
(c) Except as set forth in Section 2.17(b) of the Disclosure
Schedule, and except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, there are no claims, notices,
civil, criminal or administrative actions, suits, hearings, investigations,
inquiries or proceedings pending or, to Seller's Knowledge, threatened against
the Seller or any Asset Subsidiary (in connection with the Business) or any
member of the Stock Group that are based on or related to any Environmental
Matters;
(d) Except as set forth in Section 2.17(b) of the Disclosure
Schedule, neither the Owned Real Property, the Leased Real Property, any other
property currently or formerly owned, leased, or operated by Seller or the Asset
Subsidiaries in connection with the Business or by any member of the Stock
Group, nor (to Seller's Knowledge) any site at or to which Seller or the Asset
Subsidiaries (in connection with the Business) or any member of the Stock Group
has disposed of, transported, or arranged for the transportation of, any
Hazardous Materials, has been listed on, or proposed for listing on, the
National Priorities List, the Comprehensive Environmental Response, Compensation
and Liability Information System ("CERCLIS") list, or any comparable State list
of properties to be investigated and/or remediated; and
(e) Except as set forth in Section 2.17(b) of the Disclosure
Schedule, and except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, there are no past or present
conditions, events, circumstances, facts, activities, practices, incidents,
actions, omissions or plans that could reasonably be expected to (A) interfere
with or prevent continued compliance by the Business or any member of the Stock
Group with Environmental Laws and the requirements of Environmental Permits or
(B) give rise to any liability or other obligation under any Environmental Laws
that would require the Business or any member of the Stock Group to incur any
Environmental Costs.
(f) The Seller has delivered or made available to Buyer true
and complete copies and results of any material reports, studies, analyses,
tests, or monitoring possessed or initiated by Seller or its Subsidiaries with
respect to Environmental Matters relating to the Business or, to Seller's
knowledge, any Member of the Stock Group.
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(g) Except as set forth in Section 2.17(g) of the Disclosure
Schedule, none of the Seller or any Asset Subsidiary (to the extent related to
the Business) or any member of the Stock Group owns, leases or operates or has
owned, leased or operated, any property in Connecticut or New Jersey.
SECTION 2.18. LABOR RELATIONS; EMPLOYEES. Except as described in
Section 2.18 of the Disclosure Schedule:
(a) Labor Relations
(i) except as mandated by law (other than U.S.
federal, state and local laws) neither
Seller nor its Subsidiaries are party to any
collective bargaining or similar agreement
with respect to the Business work force or
any portion thereof;
(ii) no material employee strike, work stoppage,
lock-out or labor dispute is pending or, to
Seller's Knowledge, threatened against or
involving the Business;
(iii) no material unfair labor practice or similar
charge or complaint against the Business is
pending, or to Seller's Knowledge,
threatened; and neither Seller nor any of
its Subsidiaries have engaged in any
material unfair labor practices within the
meaning of the National Labor Relations Act
and the Railway Labor Act;
(iv) no material union grievance or similar
complaint is pending or, to Seller's
Knowledge, threatened with respect to the
Business;
(v) no material collective bargaining or similar
agreement is currently being negotiated or
is currently subject to negotiation or
renegotiation by Seller or its Subsidiaries
with respect to employees of the Business;
and
(vi) no material action, suit or complaint, by or
before any court, arbitrator or governmental
body, agency or authority has been brought
against Seller or any of its Subsidiaries by
or on behalf of any employee or former
employee of the Business and is pending or,
to Seller's Knowledge, is threatened.
(b) Employment Matters. The Seller and each of its
Subsidiaries (i) is in compliance in all material respects with all applicable
federal, state and local laws, rules and regulations (U.S. and non-U.S.)
respecting employment, employment practices, labor, terms and conditions of
employment, occupational safety and wages and hours, in each case, with respect
to employees of the Business; (ii) has withheld all amounts required by law or
by agreement to be withheld from the wages, salaries and other payments to
employees of the Business (other
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than employment taxes); (iii) is not liable for any arrears of wages or any
penalty for failure to comply with any of the foregoing; (iv) is not liable for
any payment to any trust or other fund or to any governmental or administrative
authority, with respect to unemployment compensation benefits, social security
or other benefits for employees of the Business; and (v) has not classified any
individual as "independent contractor" or of similar status who, according to
the law of the jurisdiction, should have been classified as an employee or of
similar status and which classification could result in a material Loss.
SECTION 2.19. EMPLOYEE BENEFIT PLANS.
(a) Schedule 2.19(a) contains a true and complete list of each
material Employee Benefit Plan other than any plan mandated by law (other than
U.S. federal, state and local laws) or covering less than 25 participants and
each Employee Agreement providing for an annual base salary of more than U.S.
$100,000 or its non-U.S. equivalent. Buyer has received a copy of the Transition
Arrangements that Seller established for employees of the Business. All Employee
Benefit Plans and Employee Agreements have been maintained, operated and/or
complied with in all material respects in accordance with both their terms and
with the requirements of all applicable statutes, orders, rules and regulations,
including without limitation ERISA and the Code. All contributions required to
be made to Employee Benefit Plans have been made. Seller has made available to
Buyer the following documents with respect to each Employee Benefit Plan and
each Employee Agreement: (i) a true and complete copy of all written documents
comprising each such Employee Benefit Plan (including but not limited to
amendments, insurance contracts, and individual agreements relating thereto) and
Employee Agreement or, if there is no such written document, an accurate and
complete description of the Employee Benefit Plan or Employee Agreement; (ii)
the two (2) most recent Forms 5500 (or such other applicable Forms 5500),
including all schedules thereto, if applicable; (iii) the two (2) most recent
financial statements and actuarial reports, if any; (iv) the summary plan
description currently in effect and all material modifications thereof, if any;
(v) the most recent Internal Revenue Service determination letter, if any; and
(vi) any material communication to any Employee or Employees relating to any
Employee Benefit Plan that is materially inconsistent with the plan documents
described in clause (i) of this Section 2.19(a).
(b) With respect to each Employee Benefit Plan: (i) each plan
which is intended to be "qualified" within the meaning of Section 401(a) of the
Code (or any equivalent non-U.S. statute) has been determined to be so qualified
by the Internal Revenue Service or applicable non-U.S. governmental authority
and is so qualified, and each related trust is exempt from taxation under
Section 501 (a) of the Code, if applicable; (ii) there has been no "prohibited
transaction," as such term is defined in Section 4975 of the Code or Section 406
of ERISA, within the last five (5) years, (iii) within the last five (5) years,
no such plan has been terminated under either a distress or standard termination
as provided in Title IV of ERISA, nor has any notice of intent to terminate any
plan been filed with the Pension Benefit Guaranty Corporation ("PBGC"), nor has
the PBGC issued notice of intent to terminate a plan; (iv) no plan has incurred
any "accumulated funding deficiency," as such term is defined in Section 412 of
the Code and Section 302 of ERISA (whether or not waived) within the last five
(5) years; (v) all reporting and disclosure requirements applicable under Title
I of ERISA (or any equivalent non-
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U.S. statute) have been satisfied; (vi) no plan is under audit or investigation
by the IRS, the Department of Labor, the PBGC or other regulatory agency or
applicable non-U.S. governmental authority, and to the Knowledge of the Seller
no such audit or investigation is pending or threatened; and (vii) no liability
under any plan has been funded nor has any such obligation been satisfied with
the purchase of a contract from an insurance company as to which the Seller or
any of its Subsidiaries has received notice that such insurance company is
insolvent or is in rehabilitation or any similar proceeding. There are no
material actions, suits or other claims pending with respect to any Employee
Benefit Plan, other than routine claims for benefits, qualified domestic
relations orders (as defined in ERISA Section 206(d)) and qualified medical
child support orders (as defined in ERISA Section 609) and to Seller's
Knowledge, no such actions, suits or other claims are threatened.
(c) With respect to each Employee Pension Benefit Plan, all
contributions which are due (including all employer contributions and employee
salary reduction contributions) have been paid to such plan. With respect to all
other Employee Benefit Plans, all premiums and other payments which are due have
been paid. The funded status of any non-U.S. Employee Pension Benefit Plan as
reflected in the May 2000 report of Price Waterhouse Coopers, which has been
provided to Buyer, is accurate.
(d) Except as disclosed in Section 2.19(d) of the Disclosure
Schedule, as otherwise provided in this Agreement or as is required under
Section 411(d)(3) of the Code, neither the execution nor delivery of this
Agreement, nor the consummation of the Transaction (either alone or together
with any other event), will (i) result in any payment (including without
limitation any bonus, severance, unemployment compensation, forgiveness of
indebtedness, or golden parachute payment) becoming due to any employee of the
Business, (ii) increase any benefit otherwise payable under any of the Employee
Benefit Plans or (iii) result in the acceleration of the time of payment,
vesting or funding, of any such benefit.
(e) Neither Seller nor any ERISA Affiliate (including the
Subsidiaries) has or will have any liability (contingent or otherwise) to or in
connection with (i) any multiemployer plan (within the meaning of Section 3(37)
of ERISA), or (ii) any other Employee Benefit Plan, which would result in any
liability to Buyer or any of the Subsidiaries or have a material adverse impact
upon the Sale Assets or subject the Sale Assets to any lien under ERISA or the
Code or the laws of any country.
(f) Except as set forth in Section 2.19(f) of the Disclosure
Schedule, neither the Seller nor any of its Subsidiaries (i) maintains or
contributes to any Employee Benefit Plan (excluding any plan mandated by law
(other than U.S. federal, state and local laws) and any plan covering less than
25 participants based outside the United States) which provides, or has any
liability to provide, life insurance, medical, severance or other employee
welfare benefits to any employee of the Business upon his retirement or
termination of employment, except as may be required by Section 4980B of the
Code; or (ii) has ever represented, promised or contracted in written form to
any employee (either individually or to employees as a group) that such
employee(s) would be provided with life insurance, medical, severance or other
employee welfare benefits upon their retirement or termination of employment,
except to the extent required by Section 4980B of the Code.
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SECTION 2.20. TAX MATTERS. Except as disclosed in Section 2.20 of the
Disclosure Schedule:
Representations Solely with Respect to members of the Tax Group.
(a) All Income Tax Returns (other than those that relate to
municipal taxes) and all Tax Returns that relate to Taxes in excess of $20,000,
in each case required to be filed with respect to each of the members of the
Stock Group, other than the members of the Stock Group listed on Section 2.20(a)
of the Disclosure Schedule (the Stock Group, less such scheduled exceptions, the
"Tax Group"), have been filed. All such Tax Returns were correct and complete in
all material respects. All Taxes required to be paid by or with respect to
members of the Tax Group have been or will be timely paid, or are being
contested in good faith. None of the members of the Tax Group currently are the
beneficiary of any extension of time within which to file any Income Tax Returns
(other than those that relate to municipal taxes) or any Tax Returns that relate
to Taxes in excess of $20,000.
(b) There is no litigation, dispute, or claim concerning any
Tax liability in excess of $20,000 of any of the members of the Tax Group either
(A) claimed or raised by any tax authority in writing or (B) as to which any of
the officers of Seller or of any of the members of the Tax Group, or the Tax
Director of the Business, has knowledge based upon personal contact with any
agent of such authority. No member of the Stock Group is required to include in
income any adjustment pursuant to Section 481(a) or 482 of the Code or any
analogous provision of state, local or foreign law as a result of any prior
audit, proceeding, or agreement with any taxing authority (nor has any taxing
authority proposed in writing any such adjustment). All Tax deficiencies in
excess of $20,000 that have been claimed, proposed, or assessed against any
member of the Tax Group have been fully paid or finally settled, or are being
contested in good faith by appropriate proceedings.
(c) Section 2.20(c) of the Disclosure Schedule lists all
federal, state, local, and foreign Tax Returns filed with respect to each of the
members of the Tax Group for Taxable Periods ended on or after December 31,
1996, indicates those Tax Returns that have been audited, and indicates those
Tax Returns that currently are the subject of audit. Except as so indicated, all
Tax Returns filed with respect to each of the members of the Tax Group through
the Tax year ended December 31, 1996 have been examined and closed or are Tax
Returns with respect to which the applicable period for assessment under
applicable law, after giving effect to extensions or waivers, has expired.
Seller has made available to the Buyer correct and complete copies of all such
federal, state, local, and foreign Tax Returns, and statements of deficiencies
assessed against, or agreed to by any of the members of the Tax Group since
December 31, 1996. Seller has made available to Buyer complete and accurate
copies of all audit and examination reports, letter rulings, and technical
advice memoranda relating to United States federal, state, local and foreign
Taxes with respect to each member of the Tax Group, and any closing agreements
with respect to any member of the Tax Group with any taxing authority, in each
case which could affect the liability for Taxes of any member of the Tax Group
after the Closing. None of the members of the Tax Group has
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waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency.
(d) None of the members of the Tax Group has filed a consent
under Code Section 341(f) concerning collapsible corporations. None of the
members of the Tax Group has been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the applicable
period specified in Code Section 897(c)(1)(A)(ii). None of the members of the
Tax Group is a party to any Tax allocation or sharing agreement that will
survive the Closing and will have no liability or obligation under such an
agreement. None of the members of the Tax Group (A) has been a member of an
affiliated group filing a consolidated combined, or unitary federal, state,
local or foreign Income Tax Return or VAT Return (other than a group the common
parent of which was the Seller) or (B) has any liability for the Taxes of any
Person (other than Taxes of the Seller and any member of its consolidated group)
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract, or otherwise.
No taxing authority in a jurisdiction where a member of the Tax Group does not
file Tax Returns has made a claim, assertion or threat that such member is or
may be subject to taxation by such jurisdiction. All amounts required to be
collected or withheld by members of the Tax Group with respect to Taxes have
been duly collected or withheld and any such amounts that are required to be
remitted to any taxing authority have been duly remitted. To the Knowledge of
the officers of Seller or of any of the members of the Tax Group, or of the Tax
Director of the Business, no taxing authority, body, or official in any
jurisdiction has challenged any transaction to which any member of the Tax Group
has been a party on the basis that its main purpose, or one of its main
purposes, was the avoidance of Tax. Neither Seller nor any member of the Tax
Group has participated in or cooperated with an international boycott within the
meaning of Section 999 of the Code or has been requested to do so in connection
with any transaction or proposed transaction. To the Knowledge of the officers
of Seller or of any of the members of the Tax Group, or of the Tax Director of
the Business, no member of the Tax Group has income in excess of $20,000 that
has been accrued under GAAP prior to the Closing, but which has not been accrued
for Income Tax purposes prior to the Closing. None of the Sale Assets nor the
assets owned by any members of the Tax Group is: (i) subject to a tax benefit
transfer lease executed in accordance with Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended or (ii) "tax-exempt use property" within the
meaning of Section 168(h) of the Code.
(e) (i) Each member of the Tax Group organized under the laws
of, or doing business in, any country that has a Value Added Tax ("VAT") (y) is
duly registered for VAT in respect of the Business and has maintained all
requisite records for that purpose and (z) has complied with all relevant VAT
legislation.
(ii) To the Knowledge of the officers of Seller and
of any member of the Stock Group, or of the Tax Director of the Business, there
have been no circumstances that would give rise to the application to ▇▇▇▇▇▇▇▇
Canada, Inc. of Section 80, 80.01, 80.02, or 80.04 of the Income Tax Act
(Canada) of the similar provisions of any applicable provincial tax legislation.
(iii) To the Knowledge of the officers of Seller and
of any member of the Tax Group, or of the Tax Director of the Business, each
member of the Tax Group has duly
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stamped all documents which are material to the business of such entity or to
the Business, in each jurisdiction where relevant.
Representations with Respect to Seller and its Subsidiaries, other than
members of the Tax Group.
(f) Each of the Seller and its Subsidiaries (other than
members of the Tax Group) has filed all Income Tax Returns (other than those
that relate to municipal taxes) and all Tax Returns that relate to Taxes in
excess of $20,000 that it was required to file, and has timely paid all Taxes in
excess of $20,000 required to be paid by it, to the extent such Tax Returns and
Taxes are related to the Business or the Sale Assets.
(g) Section 2.20(g) of the Disclosure Schedule lists all Tax
Returns filed with respect to the Business or the Sale Assets by Seller or any
of the Subsidiaries (other than members of the Tax Group), in either case for
Taxable Periods ended on or after December 31, 1996, indicates those Tax Returns
that have been audited, and indicates those Tax Returns that currently are the
subject of audit. Seller has made available to the Buyer correct and complete
copies of all such federal, state, and local Tax Returns (or the relevant
portions thereof), examination reports, and statements of deficiencies assessed
against or agreed to by any of the Seller and its Subsidiaries (other than
members of the Tax Group) since December 31, 1996, to the extent such Returns,
reports, or statements relate to the Business.
(h) Neither Seller nor any of its Subsidiaries (other than
members of the Tax Group) are a party to any Tax allocation or sharing agreement
that will (i) remain in effect subsequent to the Transaction and (ii) impose any
obligation on Buyer or any of its affiliates or any member of the Stock Group.
(i) No taxing authority in a jurisdiction where the Seller or
any of its Subsidiaries does not file Tax Returns with respect to the Business
or Sale Assets has made a claim, assertion or threat that such entity is or may
be subject to taxation by such jurisdiction with respect to the Business or Sale
Assets.
(j) All amounts with respect to the Business or the Sales
Assets required to be collected or withheld by Seller and each of its
Subsidiaries (other than members of the Stock Group) with respect to Taxes have
been duly collected or withheld and any such amounts that are required to be
remitted to any taxing authority have been duly remitted.
SECTION 2.21. BROKERS' OR FINDERS' FEE. Except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated (whose fees shall be paid by Seller), no agent, broker, investment
banker or other Person or firm acting on behalf of Seller, its Subsidiaries, or
any of their respective directors, officers or affiliates, or under the
authority of any of them, is or will be entitled to any broker's or finder's fee
or any other commission or similar fee, directly or indirectly, from Seller or
its Subsidiaries in connection with the Transaction.
SECTION 2.22. NO OTHER REPRESENTATIONS AND WARRANTIES. EXCEPT AS SET
FORTH IN THIS AGREEMENT, NEITHER SELLER NOR ANY OF ITS SUBSIDIARIES MAKES, AND
NO PARTY SHALL BE ENTITLED TO RELY UPON, ANY REPRESENTATION OR
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WARRANTY AS TO ANY FACT OR MATTER OTHER THAN AS EXPRESSLY SET FORTH HEREIN.
SECTION 2.23. NO GIFTS OR SIMILAR BENEFITS. Except as provided in
Section 2.23 of the Disclosure Schedule, since January 1, 1998, neither the
Seller nor any of its affiliates nor, to the Knowledge of Seller, any of their
respective directors, officers, agents, employees or Persons acting on their
behalf has, in connection with the conduct of the Business, directly or
indirectly, given or agreed to give any significant gift or similar benefit to
any supplier, customer, governmental employee or other Person who was, is or may
be in a position to help or hinder the Business (or assist in connection with
any actual or proposed transaction) under circumstances that involve a violation
of any governmental law or regulation which is then in effect and which could
reasonably be expected to subject the Business to any material damage or
penalty.
SECTION 2.24. AFFILIATE TRANSACTIONS. Except as set forth in Section
2.24 of the Disclosure Schedule, neither Seller (other than through its interest
in the Assets) nor any of its affiliates (other than the members of Stock Group)
(i) has any interest in any property (real or personal, tangible or intangible)
or Contract material to the Business (other than property or Contracts being
conveyed to Buyer (or its designee) pursuant to this Agreement), (ii) has any
direct or indirect interest in any Person with which Seller (to the extent
related to the Business) or any member of the Stock Group competes in any
material product or service category or has a material business relationship or
(iii) provides material services to the Business or any member of Stock Group.
SECTION 2.25. SUPPLIERS AND CUSTOMERS. Section 2.25 of the Disclosure
Schedule lists the top 20 suppliers and customers (by dollar value) from or to
whom the Business purchased or sold goods for the period from January 1, 1999 to
December 31, 1999. To Seller's Knowledge, except as set forth on Section 2.25 of
the Disclosure Schedule, since the date of the May 31, 2000 Balance Sheet, there
has not been any material adverse change in the business relationship with any
supplier or customer named in Section 2.25 of the Disclosure Schedule or the
customers or suppliers of the Business, taken as a whole, except for such
changes reflecting either general economic or industry conditions.
SECTION 2.26. PRODUCT LIABILITY CLAIMS. Section 2.26 of the Disclosure
Schedule lists all product liability claims in excess of Two Million Dollars
($2,000,000) per claim (related to the Business), filed against Seller or any of
its affiliates on or after January 1, 1996 and, in each case, any amounts paid
in connection with the resolution thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to Seller to enter into this Agreement and to
consummate the Sale, Buyer represents and warrants to Seller as of the date
hereof and as of the Closing Date as follows:
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SECTION 3.1. ORGANIZATION; POWER.
(a) Buyer is a corporation duly organized, validly existing
and in good standing under the laws of Delaware.
(b) Buyer has all the requisite corporate power and authority
to own, lease and operate its assets, to carry on its business as it is now
being conducted and to enter into, execute and deliver this Agreement, to
consummate the Transaction, and to comply with and fulfill the terms and
conditions of this Agreement.
SECTION 3.2. AUTHORITY; NO VIOLATION; ETC.
(a) The execution and delivery of this Agreement and the
consummation of the Transaction have been duly and validly authorized by all
necessary corporate action on the part of Buyer. This Agreement is a valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except as the enforcement may be affected by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws relating to or
limiting creditors' rights generally or by general principles of equity,
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
(b) Neither the execution and delivery of this Agreement, nor
the consummation of the Transaction, nor compliance by Buyer with any of the
provisions of the Agreement, will:
(i) conflict with, violate, result in a breach of,
constitute a default (or an event that, with notice or lapse of time, or both,
would constitute a default) under, or give rise to any right of termination,
cancellation or acceleration under any provision of the Certificate of
Incorporation or Bylaws of Buyer, or any of the terms, conditions or provisions
of any note, lien, bond, mortgage, indenture, license, lease, contract,
commitment, agreement, understanding, arrangement, restriction or other
instrument or obligation to which Buyer is a party or by which Buyer may be
bound; or
(ii) violate in any material respect any law, rule or
regulation of any governmental body, agency or authority or any material
judgment, order, writ, injunction or decree of any court, arbitrator or
governmental body, agency or authority to which Buyer or its assets are subject.
SECTION 3.3. CONSENTS AND APPROVALS. Except for the expiration or early
termination of the applicable waiting period under the HSR Act and
investigations and approvals of the Transaction by, or the expiration of any
deadlines for banning the Transaction without prohibitory order from, each
Antitrust Authority, the execution, delivery and performance of this Agreement
by Buyer, and the consummation of the Transaction, will not require any notice
to, action of, filing with or consent, authorization, order or approval from,
any court, arbitrator or governmental body, agency or authority, or any other
third party, except any such notice, action, filing, consent, authorization,
order or approval not reasonably expected to materially delay the Transaction.
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SECTION 3.4. ACTIONS PENDING. There are no actions, suits, proceedings
pending or, to Buyer's Knowledge, threatened against Buyer or any properties or
rights of Buyer by or before any court, arbitrator or governmental body, agency
or authority which, in any manner, challenges or seeks to prevent, enjoin, alter
or materially delay the Transaction.
SECTION 3.5. DISCLAIMER AS TO CONDITION OF SALE ASSETS. It is the
express intention of Buyer and Seller that (except to the extent expressly
provided in this Agreement) the Sale Assets shall be acquired by or conveyed to
Buyer "as is" and in their present condition and state or repair and without any
implied or express warranties of any type whatsoever except as expressly set
forth herein.
SECTION 3.6. NONRELIANCE. In connection with its decision to purchase
the Sale Assets, Buyer, on behalf of itself and its affiliates and related
parties, acknowledges, understands and agrees that (a) Buyer is a sophisticated
party with such knowledge and experience in business matters that it appreciates
the merits and risks of purchasing the Sale Assets and consummating the
Transaction, (b) Buyer is not relying upon the representations and warranties
and information set forth in the Offering Memorandum dated May 2000 and
distributed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, (or any information made
available to Buyer in data rooms or by presentations of the management of the
Business) except that Seller represents and warrants to Buyer that the pro forma
adjustments reflected in the financial statements and data contained in the
Offering Memorandum were based on assumptions that Seller in good faith believed
to be reasonable, (c) Buyer is not relying upon any forward looking projections,
forecasts, budgets, financial data or any other forward looking information
(written or oral) with respect to the Sale Assets or the Business prepared by or
furnished to it by or on behalf of Seller ("Forward Looking Data") except that
Seller represents and warrants to Buyer that the Forward Looking Data was
prepared in good faith by Seller, (d) Buyer recognizes that significant
uncertainties are inherent in such Forward Looking Data and that, except as set
forth in 3.6(c) above, Seller and its Subsidiaries have not made any
representations or warranties, expressed or implied, relating to the Forward
Looking Data, and (e) Buyer takes full responsibility for making its own
evaluation as to the adequacy and accuracy of such Forward Looking Data.
SECTION 3.7. LEFT BLANK INTENTIONALLY.
SECTION 3.8. INVESTMENT INTENT. Buyer (or its designee) is acquiring
the Stock and Equity Interest for its own account for investment purposes only
and not with a view to, or for sale or resale in connection with, any public
distribution thereof or with any present intention of selling, distributing or
otherwise disposing of the Stock or Equity Interest in violation of applicable
securities laws.
SECTION 3.9. LEGEND. Buyer understands that the Stock of the Stock
Subsidiaries incorporated in the United States is characterized as "restricted
securities" under the federal securities laws inasmuch as it is being acquired
from Seller in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act of 1933, as amended, only in certain
limited circumstances. It is understood that the certificates evidencing the
Stock of the Stock Subsidiaries incorporated in the United States shall bear the
following legend:
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"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD EXCEPT AS PERMITTED
UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR AN EXEMPTION THEREFROM."
SECTION 3.10. BROKERS' OR FINDERS' FEES. No agent, broker, investment
banker or other Person or firm acting on behalf of Buyer or its directors,
officers or affiliates, or under the authority of any of them, is or will be
entitled to any broker's or finder's fee or any other commission or similar fee,
directly or indirectly, from Seller or its Subsidiaries (other than the members
of the Stock Group) in connection with the Transaction.
SECTION 3.11. FINANCING. Buyer has delivered complete and accurate
financing Commitment Letters (the "Commitment Letters") to Seller, copies of
which are attached as Exhibit D.
SECTION 3.12. BUYER INVESTMENT PLAN. With respect to the Buyer
Investment Plan (as defined in Section 9.2(f)), (a) Buyer shall take all action
required of Buyer pursuant to Section 9.2, including action required after the
Closing Date, (b) at the time of the transfer of assets pursuant to Section
9.2(f), such plan will be tax-qualified under Section 401(a) of the Code, each
related trust will be exempt from taxation under Section 501(a) of the Code, and
(c) to Buyer's Knowledge, at the time of such transfer, such plan and trust will
have been maintained and operated substantially in accordance with both their
terms and the requirements of all applicable statutes, orders, rules and
regulations, including without limitation ERISA and the Code.
SECTION 3.13. NO OTHER REPRESENTATIONS OR WARRANTIES. EXCEPT AS SET
FORTH IN THIS AGREEMENT, BUYER MAKES NO, AND NO PARTY SHALL BE ENTITLED TO RELY
UPON, ANY REPRESENTATION OR WARRANTY AS TO ANY FACT OR MATTER OTHER THAN AS
EXPRESSLY SET FORTH HEREIN.
ARTICLE IV
PRE-CLOSING COVENANTS OF SELLER
Seller covenants and agrees that between the date hereof and the
Closing:
SECTION 4.1. MAINTENANCE OF CORPORATE AND ENTITY STATUS. Seller shall
maintain itself as a corporation, validly existing under the laws of the State
of New York. Seller shall cause each of the Subsidiaries that are affiliates and
the Stock Selling Subsidiaries to maintain its status as a corporation or other
business entity, validly existing under the laws of their jurisdictions of
incorporation or organization.
SECTION 4.2. OPERATION OF THE BUSINESS. Except as otherwise described
on Schedule 4.2(b), Seller shall operate or cause the Business to be operated
diligently and only in the regular
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and ordinary course and in a manner consistent with past practices. Without
limiting the generality of the foregoing:
(a) Seller shall:
(i) use reasonable efforts to preserve the
organization of the Business intact;
(ii) duly file all Tax Returns required to be filed
by Seller and its Subsidiaries that are affiliates and to pay promptly all Taxes
and governmental charges (including unemployment insurance and workers
compensation payments) as and when due, except for such as are disputed in good
faith;
(iii) use reasonable efforts to maintain in full
force and effect all Permits required for the operation of the Business as
presently conducted;
(iv) use reasonable efforts to continue and preserve
constructive relationships with suppliers, customers and employees of the
Business and with others having business dealings or relationships with the
Business;
(v) use reasonable efforts to keep available and
maintain the services of all officers, employees, agents and representatives of
the Business on the same or substantially the same terms;
(vi) use reasonable efforts to maintain all of the
Other Tangible Property, in a manner consistent with past practices, ordinary
wear and tear excepted; and
(vii) continue to make capital expenditures in
accordance with the budgets set forth
on Schedule 4.2(a).
(b) Except as otherwise contemplated by this Agreement, or as
described on Schedule 4.2(b), Seller shall not, and shall cause the Subsidiaries
that are affiliates and the Stock Selling Subsidiaries not to, without the prior
written consent of Buyer, which consent shall not be unreasonably withheld or
delayed:
(i) make any change in the authorized capital stock
of the Stock Subsidiaries, certificate of incorporation or articles of
association or bylaws of any member of the Stock Group or organizational
documents of the Equity Subsidiaries, or merge or consolidate any member of the
Stock Group;
(ii) issue, sell or redeem any shares of the Stock or
securities convertible into or exchangeable for Stock or the shares of any
Indirect Subsidiary or any interests in the Equity Subsidiaries;
(iii) issue any stock options or warrants in any
member of the Stock Group;
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(iv) terminate, amend or grant any waiver under any
Material Contract (or enter into any contract that would be a Material Contract)
or cancel, modify or waive any material debts or claims held by Seller or its
Subsidiaries or waive any rights material to the Business, except in the
ordinary course of the Business;
(v) knowingly do any act, omit to do any act, or
permit any omission to act within its control, which will cause a breach or
default in any of the Material Contracts;
(vi) mortgage, pledge or subject to any other
Encumbrance any portion of the Sale Assets or the assets of the members of the
Stock Group;
(vii) sell, transfer or otherwise dispose of any of
the Sale Assets or any assets of the members of the Stock Group, except for
sales of inventory items and other transfers and dispositions, in each case, in
the ordinary course of the Business;
(viii) except in the ordinary course of the Business,
change or increase the rate of compensation paid to, or enter into any new
employment agreements with, any employees or agents of the Business, except for
the Transition Arrangements and any "Retention Agreements" with employees of the
Business, in each case, as set forth on Schedule 9.2(d) and 2.19, respectively.
(ix) incur any debt for borrowed money, other than in
the ordinary course of business consistent with past practice;
(x) acquire any assets or properties outside the
ordinary course of business or any businesses;
(xi) make any change in its fiscal year or its
accounting methods or practices except as required by reason of a concurrent
change in accounting principles generally accepted in the United States;
(xii) make or change any Tax election or Tax
accounting method, settle any audit or file any Tax Returns, except in the
ordinary course of business consistent with past practice;
(xiii) enter into any material joint venture,
partnership or other commitment or Contract;
(xiv) make capital expenditures or commitments for
additions to property, plant or equipment constituting capital assets other than
in the ordinary course of business consistent with past practice;
(xv) make any material change in any pricing,
inventory or credit practice or policy;
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(xvi) take any action that would make any
representation or warranty of Seller hereunder inaccurate in any material
respects; or
(xvii) enter into any agreement to do any of the
foregoing.
SECTION 4.3. OTHER OFFERS. From the date of this Agreement until it is
terminated in accordance with Article VIII, Seller shall not, and shall cause
its affiliates, officers, directors, employees and other agents not to, take any
action to: (i) encourage, solicit or initiate the submission of any Acquisition
Proposal (as defined below) with respect to any third party, (ii) enter into any
agreement with respect to any Acquisition Proposal with respect to any third
party or (iii) participate in any way in discussions or negotiations with, or
furnish any information to, any Person in connection with, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
with respect to any third party. Seller will promptly communicate to Buyer that
such a solicitation has been received by it, or that any such information has
been requested from it or that such negotiations or discussions have been sought
to be initiated with it or that it has received a written communication with
respect to an Acquisition Proposal with respect to it. The term "Acquisition
Proposal" as used herein means any offer or proposal for, or any indication of
interest in, a sale, other disposition, merger or other business combination
involving all or any portion of the Business including any of the Stock or the
Indirectly Owned Stock or a material portion of the Assets, other than the
Transaction.
SECTION 4.4. ACCESS TO INFORMATION. Subject to the provisions of the
Confidentiality Agreement, Seller shall afford the officers, employees,
accountants, attorneys and authorized representatives of Buyer reasonable access
at reasonable business hours to the facilities, properties, books and records of
the Business. Other than as described in Schedule 4.4, prior to the Closing Date
Buyer shall not communicate with any customer, supplier, agent, co-owner or
joint venture partner ("Representatives") of Seller, its Subsidiaries, or the
Business about the Transaction or about the Business without the prior consent
of the Seller, which consent shall not be unreasonably withheld or delayed. The
officers of Seller shall furnish Buyer with such additional financial and
operating data and other information relating to the business, properties and
assets of the Business as Buyer may reasonably request from time to time. Buyer
shall be entitled, at its sole cost and expense, to: (i) have the Owned Real
Property surveyed or; (ii) to conduct physical inspections (including Phase I
environmental assessments or audits, but excluding invasive testing or other
procedure likely to result in a release, spill, emission, draining or discharge
of any Hazardous Materials that may exist) of the Owned or Leased Real Property
or improvements located thereon; provided, however, that, whether or not the
Transaction is consummated, except as otherwise expressly set forth in this
Agreement, all costs and expenses of the tests and acts described in this
Section 4.4 shall be borne solely by Buyer; provided, further, that Buyer shall
indemnify, defend, and hold Seller and its Subsidiaries free and harmless from
and against any Losses related to any physical injury or damage to persons or
property arising out of any such survey or inspection. Buyer's liabilities and
obligations under this Section 4.4 shall survive termination of this Agreement
pursuant to any provision of this Agreement; and, provided, further, that so
long as the Closing shall not have occurred, Seller may, at its sole discretion,
refuse to grant Buyer access to facilities, properties, books and records
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of the Business relating to (i) Excluded Assets or (ii) any proprietary or
confidential technology or know how, or any contracts or research and
development activities of the Business, which are expressly subject to
confidentiality obligations or agreements with third parties. No investigation
by Buyer or other information received by Buyer shall operate as a waiver or
otherwise affect any representation or warranty or agreement, given or made by
Seller hereunder.
SECTION 4.5. INSURANCE. Seller shall maintain or cause to be maintained
the types and levels of insurance currently in effect to insure the Sale Assets,
the assets of the members of the Stock Group and the Business against risk of
loss or damage.
SECTION 4.6. REQUIRED CONSENTS AND APPROVALS. Seller shall use
commercially reasonable efforts to preserve all consents and approvals already
obtained, and to obtain all consents and approvals not yet obtained which are
required to be obtained pursuant to this Agreement.
SECTION 4.7. PRE-TRANSACTION NOTIFICATION, TRANSFER STATUTES.
(a) Promptly after the execution of this Agreement, Seller
shall file all notifications, applications and reports required of Seller
including any filing under the HSR Act or any Antitrust Law and any filings
required by each Antitrust Authority, and shall take such other action that is
required to be taken by it, with any other governmental body, agency or
authority in connection with the Transaction.
(b) Seller shall (i) cooperate with the Buyer in connection
with all filings required by the HSR Act or by any Antitrust Law or other
applicable law to be made by Buyer to consummate the Transaction, (ii) promptly
supply any additional information that may be required by any Antitrust
Authority or governmental authority in connection with a review of the
Transaction, and (iii) coordinate and cooperate with Buyer in exchanging
information and providing reasonable assistance as may be required to complete
such filings and supply any additional information that may be requested.
Without limiting the foregoing, Seller will use all reasonable
efforts to obtain all authorizations, consents, orders and approvals of federal,
state and foreign regulatory bodies and officials (including Environmental
Permits) which may be or become necessary for its execution and delivery of, and
the performance of its obligations pursuant to, this Agreement and any related
ancillary agreements.
Without limiting the foregoing, Seller shall use all
reasonable efforts to resolve any objections, if any, as may be asserted by any
Antitrust Authority with respect to the Transaction contemplated by Antitrust
Laws. In connection therewith, if any administrative or judicial action or
proceeding is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement as violative of any Antitrust Law,
and, if by mutual agreement, Seller and Buyer decide that litigation is in their
best interests, Seller shall cooperate with Buyer and use all reasonable efforts
vigorously to contest and resist any such action or proceeding and to have
vacated, lifted, reversed, or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent, that is in effect and
that prohibits,
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prevents, or restricts consummation of any such transaction. Notwithstanding
anything else contained in this Agreement, (i) neither Seller nor any of its
Subsidiaries shall be required to divest any of their respective businesses,
product lines or assets, or to take or agree to take any other action or agree
to any limitation that could reasonably be expected to have a Material Adverse
Effect, and (ii) neither Seller nor any of its Subsidiaries shall be required to
take or agree to take any other action or agree to any limitation that could
reasonably be expected to have a material adverse effect on their respective
business, assets, condition (financial or otherwise), results of operations or
prospects of Seller and its Subsidiaries taken as a whole.
(c) Seller shall give all notices to third parties and take
such other action as may be required to be given or taken by it under any
Permit, lease, note, mortgage, indenture, agreement or other instrument or any
law, rule, regulation, demand or court or administrative order in connection
with the Transaction, and shall use its reasonable efforts to obtain all other
consents and approvals necessary to enable Seller to consummate the Transaction.
(d) (i) Notwithstanding anything in Section 11.3 to the
contrary Seller shall take all actions, at its sole cost and expense, to obtain
a written determination issued by the New Jersey Department of Environmental
Protection ("NJDEP") authorizing the Transaction to occur with respect to all
Owned Real Property, Leased Real Property or Closed Facilities located in the
State of New Jersey, including, without limitation, a "No Further Action" letter
as defined by N.J.S.A. 13:l K-9(d) ("NFA Letter") or a "Remediation Agreement"
under N.J.S.A. 13:I K-9(e) or an authorization letter pursuant to N.J.A.C.
7:26B-1.8(c) in accordance with the requirements of the Industrial Site Recovery
Act, NJSA 13:1 K-1 et seq. ("ISRA"). Prior to Seller's submission to the NJDEP
of any application or any other document intended to secure a written
determination referred to in the previous sentence, Seller shall present such
application or other document to Buyer and obtain its approval in writing, which
approval shall not be unreasonably withheld or delayed.
(ii) Notwithstanding anything in Section 11.3 to the
contrary, Seller shall be the sole ordered party under any Remediation
Agreement. Seller shall be solely responsible for fulfilling all requirements
thereunder, including, without limitation, establishing and maintaining in full
force and effect until released by NJDEP, a "remediation funding source" (as
such term is defined under ISRA) satisfactory in form, content and amount to
NJDEP.
(iii) Notwithstanding anything in Section 11.3 to the
contrary: (A) following the Closing Seller shall take all actions, at its sole
cost and expense, to achieve Compliance with ISRA with respect to Owned Real
Property or the Leased Real Property or the Closed Facilities located in the
State of New Jersey; (B) "Compliance with ISRA" shall mean performance by Seller
of any requirements imposed under ISRA as a result of this Transaction, and
shall be deemed completed upon the receipt by Seller of a NFA Letter with
respect to the ISRA proceeding related to the Transaction if any, and full
satisfaction of any and all conditions or requirements established by NJDEP in
such nfa Letter; (C) Seller shall control all Environmental Claims that are its
responsibility under this Section 4.7(d) provided that , (I) no compromise or
settlement in response to such matters may be reached by Seller without Buyer's
written consent (which shall not be unreasonably withheld or delayed), and (II)
Seller shall provide Buyer with reasonable advance notice of, and an opportunity
to comment on, any planned activities and any documents proposed to be submitted
to governmental entities or other
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third parties, and an opportunity for Buyer to participate in any meetings or
material negotiations with any third party (excluding counsel, consultants or
other experts retained by Seller); (D) Buyer shall timely cooperate with
Seller's efforts to comply with ISRA and this provision including that Buyer
shall give access to all such real property after the Closing on reasonable
terms to be reflected in a mutually acceptable access agreement to be executed
and recorded at Closing; (E) Buyer shall consent to and permit remediation of
all such property in a Lowest-Cost Commercially Reasonable manner (as defined in
Section 11.3(g)(iii) below); and (F) Buyer shall execute any and all
submissions, filings, applications, recordings and deed notices as may be
reasonably necessary or appropriate to assist Seller in achieving Compliance
with ISRA in a Lowest-Cost Commercially Reasonable manner.
(e) Seller shall pay all filing fees required in connection
with all filings by Seller under the HSR Act and with any foreign Antitrust
Authority with respect to the Transaction.
SECTION 4.8. SELLER'S ACTIONS. From the date of this Agreement through
the Closing: (a) Seller shall use its reasonable efforts to cause the conditions
to the obligations of Seller set forth in Article VII to be satisfied to the
extent that the satisfaction of such conditions is within the control of Seller
or its Subsidiaries or affiliates; and (b) Seller shall not take any action or
omit to take any action within its reasonable control to the extent such action
or omission might result in a breach of any covenant or agreement of Seller or
its Subsidiaries or affiliates in this Agreement or in any representation or
warranty made by any of them in this Agreement being inaccurate or incorrect on
and as of the Closing Date.
SECTION 4.9. NOTICE OF MATERIAL ADVERSE CHANGE. Seller shall promptly
advise Buyer in writing of (i) any change in the Sale Assets, any of the assets
of the members of the Stock Group, the Business, or the financial condition or
results of operations of the Business or any other facts or circumstances that
would reasonably be expected to have a Material Adverse Effect, (ii) any
lawsuit, litigation or claim of any third party which, if adversely determined,
would reasonably be expected to restrain, enjoin or otherwise prohibit the
consummation of the Transaction, (iii) any material breach of any representation
or warranty made by the Seller in this Agreement and (iv) any failure by the
Seller to comply in all material respects with any covenant or agreement
required to be performed by it pursuant to this Agreement.
SECTION 4.10. COOPERATION. Seller shall generally cooperate with Buyer
and its officers, employees, attorneys, accountants and other agents and do such
other acts and things in good faith as may be reasonable, necessary or
appropriate to timely effectuate the intent and purposes of this Agreement and
the consummation of the Transaction, including, without limitation, providing
all reasonable cooperation in connection with, and assisting Buyer in connection
with the documentation reasonably required for, Buyer's financing arrangements.
If Buyer so requests at least 15 days prior to Closing, Seller shall permit
Buyer to form wholly owned Persons to consummate the purchase of Assets, Stock
or Equity Interests, as applicable, which would otherwise be purchased directly
by Buyer hereunder and, with respect to those entities listed on Schedule 4.10,
to purchase the assets, in lieu of the stock or other equity of such entities,
provided that in each such case, (i) Seller has not notified Buyer within seven
(7) days of receipt of such notice that the granting of such request adversely
affects Seller's contemplated benefits or increase its obligations, liabilities
or expense (including additional Taxes) under this
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Agreement; (ii) Buyer at all times shall remain liable for all of the covenants,
agreements and obligations of Buyer set forth in or contemplated by this
Agreement; and (iii) to the extent that there are any inconsistencies between
this Agreement and any other agreements or instruments executed pursuant to this
Section 4.10, this Agreement shall control.
SECTION 4.11. INTERCOMPANY ACCOUNTS. Except as mutually agreed upon
between Buyer and Seller, all intercompany accounts providing for payment of any
amount between Seller or any of its affiliates, on the one hand, and any member
of the Stock Group, on the other hand, shall be settled prior to Closing. Except
as otherwise contemplated in this Agreement, all agreements between Seller or
any of its affiliates, on the one hand, and any member of the Stock Group, on
the other hand, shall be terminated as of the Closing and shall, thereafter, be
of no further force or effect.
SECTION 4.12. ACQUISITION OF RIGHTS TO CONFIDENTIALITY. At the Closing,
Seller shall assign to Buyer, to the extent assignable, all rights of Seller
under any confidentiality agreements between Seller and Persons other than the
Buyer that were entered into in connection with or relating to the possible
purchase or sale of all or any portion of the Business (other than the ordinary
course of business sale of inventory or replacement of assets), any Subsidiary
or any equity securities of any Subsidiary, or any merger, business combination
or recapitalization involving the Business or any Subsidiary, including, without
limitation, the right to enforce all terms of such confidentiality agreements.
If Seller's rights under any confidentiality agreement are not assignable,
Seller shall cooperate with Buyer in taking any action reasonably requested by
Buyer, to enforce for the benefit of Buyer any and all rights of Seller against
a third party thereto.
SECTION 4.13. TEXTILE CONSOLIDATION PROJECT. As requested by Buyer,
Seller will at its sole expense implement the consolidation project for its
Textile Performance Chemicals commercial business unit (the "Textile
Consolidation Project"), as described on Schedule 4.13. To the extent not
completed by Seller prior to Closing, (i) appropriate reserves for the
unfinished portion of the Textile Consolidation Project will be placed on the
Closing Balance Sheet and taken into account in determining Net Working Capital
as of the Closing Date and (ii) Buyer shall complete the Textile Consolidation
Project including the closure or decommissioning of the Allach and Taylors
facilities (as referenced in Schedule 4.13). In such event: (i) Seller shall
provide Buyer with necessary access to such facilities to permit Buyer to
fulfill its obligations under this Section 4.13, and (ii) Buyer shall perform
its obligations under this Section 4.13 in accordance with the requirements
noted in Schedule 4.13.
SECTION 4.14. SATISFACTION OF INDEBTEDNESS. If so requested by Buyer,
Seller shall cause any indebtedness for borrowed money owed to Seller or third
parties by any member of the Stock Group (including without limitation, any
indebtedness described on Schedule 2.9(c)) to be repaid in full, and any
associated security interests to be fully released, immediately prior to
Closing.
SECTION 4.15. TRANSFER OF EXCLUDED REAL PROPERTY. Prior to the Closing,
Seller shall use commercially reasonable efforts to cause all real property
which is (i) an Excluded Asset and (ii) owned by any member of the Stock Group
to be transferred, in accordance with applicable
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law (including ISRA), to an entity which is not a member of the Stock Group. Any
cost or Liabilities associated with such transfer prior to, at or after Closing
shall be borne solely by Seller.
ARTICLE V
PRE-CLOSING COVENANTS OF BUYER
Buyer covenants and agrees that between the date hereof and the
Closing:
SECTION 5.1. REQUIRED CONSENTS AND APPROVALS. Buyer shall use all
reasonable efforts to preserve all consents and approvals already obtained, and
to obtain all consents and approvals not yet obtained, which are necessary to
enable it to consummate the Transaction.
SECTION 5.2. PRE-TRANSACTION NOTIFICATION.
(a) Promptly after the execution of this Agreement, Buyer
shall file all notifications, applications and reports required of Buyer
including any filing under the HSR Act or any Antitrust Law and any filings
required by each Antitrust Authority, and shall take such other action that is
required to be taken by it, with any other governmental body, agency or
authority in connection with the Transaction.
(b) Buyer shall (i) cooperate with the Seller in connection
with all filings required by the HSR Act or by any Antitrust Law or other
applicable law to be made by Seller to consummate the Transaction, (ii) promptly
supply any additional information that may be required by any Antitrust
Authority or governmental authority in connection with a review of the
Transaction, and (iii) coordinate and cooperate with Seller in exchanging
information and providing reasonable assistance as may be required to complete
such filings and supply any additional information that may be requested.
Without limiting the foregoing, Buyer will use all reasonable
efforts to obtain all authorizations, consents, orders and approvals of federal,
state and foreign regulatory bodies and officials which may be or become
necessary for its execution and delivery of, and the performance of its
obligations pursuant to, this Agreement and any related ancillary agreements.
Without limiting the foregoing, Buyer shall use all reasonable
efforts to resolve any objections, if any, as may be asserted by any Antitrust
Authority with respect to the Transaction contemplated by Antitrust Laws. In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, and, if by
mutual agreement, Seller and Buyer decide that litigation is in their best
interests, Buyer shall cooperate with Seller and use all reasonable efforts
vigorously to contest and resist any such action or proceeding and to have
vacated, lifted, reversed, or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent, that is in effect and
that prohibits, prevents, or restricts consummation of any such transaction.
Notwithstanding anything else contained in this Agreement, (i) neither Buyer nor
any of its affiliates shall be required to divest any of its businesses, product
lines, or assets and (ii) Buyer shall not be required to take or agree
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to take any other action or agree to any limitation that could reasonably be
expected to have a material adverse effect on the business, assets, condition
(financial or otherwise), results of operations or prospects of Buyer or any of
its affiliates or the Business taken as a whole.
(c) Buyer shall cooperate with Seller in giving all notices to
third parties and taking all other action required to be given or taken by
Seller under any Permit, lease, note, mortgage, indenture, agreement or other
instrument or any law, rule, regulation, demand or court or administrative order
in connection with the Transaction, and shall use its reasonable efforts to
assist Seller in obtaining all consents and approvals necessary to enable Buyer
to consummate the Transaction.
(d) Buyer shall pay all filing fees required in connection
with all filings by Buyer under the HSR Act and with any foreign Antitrust
Authority with respect to the Transaction.
SECTION 5.3. BUYER'S ACTIONS. From the date of this Agreement through
the Closing: (a) Buyer shall use its reasonable efforts to cause the conditions
to the obligations of Buyer set forth in Article VI to be satisfied to the
extent that the satisfaction of such conditions is within the control of Buyer;
and (b) Buyer shall not take any action or omit to take any action within its
reasonable control to the extent that such action or omission might result in a
breach of any covenant or agreement of Buyer in this Agreement or in any
representation or warranty made by Buyer in this Agreement being inaccurate or
incorrect on and as of the Closing Date.
SECTION 5.4. NOTICE OF MATERIAL ADVERSE CHANGE. Buyer shall promptly
advise Seller in writing of (i) any material adverse change in Buyer, its assets
or the financial condition, results of operations, businesses or properties of
Buyer and its subsidiaries considered as a whole, (ii) any lawsuit, litigation
or claim of any third party which, if adversely determined, would reasonably be
expected to restrain, enjoin, or otherwise prohibit the consummation of the
Transaction, (iii) any material breach of any representation or warranty made by
Buyer in this Agreement and (iv) any failure by Buyer to comply in any material
respect with any covenant or agreement required to be performed by it pursuant
to this Agreement.
SECTION 5.5. COOPERATION. Buyer shall generally cooperate with Seller
and its officers, employees, attorneys, accountants and other agents and do such
other acts and things in good faith as may be reasonable, necessary or
appropriate timely to effectuate the intent and purposes of this Agreement and
the consummation of the Transaction.
ARTICLE VI
CONDITIONS PRECEDENT TO PERFORMANCE OF BUYER
The obligation of Buyer to consummate the Purchase pursuant to the
terms of this Agreement is subject to the satisfaction, at the Closing, of each
of the following conditions (any of which may be waived by Buyer):
SECTION 6.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES OF SELLER. Each
of the representations and warranties of Seller contained in this Agreement
which are qualified by the
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term "material," "Material Adverse Effect" or similar phrase shall be true and
correct in all respects as of the date of this Agreement and at and as of the
Closing Date as though then made, and the other representations and warranties
of Seller contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and at and as of the Closing Date as
though then made. On the Closing Date, Seller shall have delivered to Buyer a
certificate signed by an officer of Seller to the foregoing effect.
SECTION 6.2. COMPLIANCE. Seller, its Subsidiaries or its affiliates
shall have performed, complied with and fulfilled in all material respects all
of the covenants, agreements, obligations and conditions required by this
Agreement to be performed, complied with or fulfilled by it or them at or prior
to the Closing. On the Closing Date, Seller shall have delivered to Buyer a
certificate signed by an officer of Seller to the foregoing effect.
SECTION 6.3. APPROVAL. The execution and delivery of this Agreement by
Seller, and the performance by Seller and its affiliates of their covenants and
obligations hereunder, shall have been duly authorized by all necessary
corporate action on the part of Seller, the Asset Subsidiaries, the members of
the Stock Group and the Stock Selling Subsidiaries respectively.
SECTION 6.4. AUTHORIZATION.
(a) All Permits, authorizations, approvals and consents of,
and notices to, any federal, state, local or foreign governmental body, agency
or authority, which may be required by law, regulation, rule, ordinance, order
or decree in order to consummate the Transaction or to permit Buyer to operate
the Business after the Closing substantially in the same manner as it is
currently being operated, shall have been obtained or made on terms and
conditions reasonably satisfactory to Buyer, and any applicable waiting period
(and any extensions thereof) under the HSR Act or other Antitrust Law shall have
expired or otherwise been terminated and approval of the Transaction shall have
been granted by, or the deadline for banning or imposing conditions on the
Transaction shall have elapsed without prohibitory order from, each Antitrust
Authority.
(b) (i) all Permits, authorizations, approvals and consents of
any other third party, which may be required under any agreement, lease or other
instrument or document to which Seller or its Subsidiaries are a party, or by
which Seller, its Subsidiaries or the Sale Assets or the assets of the members
of the Stock Group are bound, in order to consummate the Transaction or to
permit Buyer to operate the Business after the Closing substantially in the same
manner as it is currently being operated, and (ii) those consents specifically
listed on Schedule 6.4(b) ("Material Consents"), shall have been obtained or
made on terms or conditions reasonably satisfactory to Buyer.
SECTION 6.5. LITIGATION. No order, decree, writ or ruling of any court,
arbitrator or governmental body, agency, or authority shall be in effect that
restrains, enjoins, or otherwise prohibits the consummation of the Transaction.
There shall not be threatened, instituted or pending any action or proceeding by
any Person before any court or governmental authority or agency, domestic or
foreign, (i) seeking to restrain, prohibit or otherwise interfere with the
ownership or operation by Buyer or any of its affiliates of all or any material
portion of the Business or Sale Assets or the business or assets of Buyer or any
of its affiliates or to compel
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Buyer or any of its affiliates to dispose of all or any material portion of the
Business or Sale Assets or the business or assets of Buyer or any of its
affiliates or (ii) seeking to require divestiture by Buyer or any of its
affiliates of any of the Business or Sale Assets. There shall not be any action
taken, or any statute, rule, regulation, injunction, order or decree proposed,
enacted, enforced, promulgated, issued or deemed applicable to the purchase of
the Business or the Sale Assets, by any court, government or governmental
authority or agency, domestic or foreign, other than the application of the
waiting period provisions of the HSR Act or other Antitrust Law to the purchase
of the Business or Sale Assets, that, could, directly or indirectly, reasonably
be expected to result in any of the consequences referred to in clause (i) or
(ii) above.
SECTION 6.6. CLOSING DELIVERIES. Buyer shall have received from Seller
all of the instruments, documents and considerations described in Section 10.1,
and the form and substance of all such deliveries shall be reasonably
satisfactory in all material respects to Buyer.
SECTION 6.7. MATERIAL ADVERSE EFFECT. There shall not have occurred
since the date of this Agreement any material adverse change in the assets,
liabilities, business, financial condition or results of operations of the
Business, taken as a whole.
SECTION 6.8 FINANCING. The funds contemplated by the Commitment Letters
shall have been made available to Buyer pursuant to the terms thereof.
ARTICLE VII
CONDITIONS PRECEDENT TO PERFORMANCE OF SELLER
The obligation of Seller to consummate the Sale pursuant to the terms
of this Agreement is subject to the satisfaction, at the Closing, of each of the
following conditions (any of which may be waived by Seller):
SECTION 7.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES OF BUYER. Each
of the representations and warranties of Buyer contained in this Agreement which
are qualified by the term "material," "material adverse effect" or similar
phrase shall be true and correct in all respects as of the date of this
Agreement and at and of the Closing Date as though then made and the other
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
at and as of the Closing Date as though then made. On the Closing Date, Buyer
shall have delivered to Seller a certificate signed by an officer of Buyer to
the foregoing effect.
SECTION 7.2. COMPLIANCE. Buyer shall have performed, complied with and
fulfilled in all material respects all the covenants, agreements, obligations
and conditions required by this Agreement to be performed, complied with or
fulfilled by it at or prior to the Closing. On the Closing Date, Buyer shall
have delivered to Seller a certificate signed by an officer of Buyer to the
foregoing effect.
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SECTION 7.3. APPROVAL. The execution and delivery of this Agreement by
Buyer, and the performance of Buyer's covenants and obligations hereunder, shall
have been duly authorized by all necessary corporate action on the part of
Buyer.
SECTION 7.4. AUTHORIZATION.
(a) All Permits, authorizations, approvals and consents of,
and notices to, any federal, state, local or foreign governmental body, agency
or authority, which may be required by law, regulation, rule, ordinance, order
or decree in order to consummate the Transaction, shall have been obtained or
made on terms and conditions reasonably satisfactory to Seller, and any
applicable waiting period (and any extensions thereof) under the HSR Act or
other Antitrust Law shall have expired or otherwise been terminated and approval
of the Transaction shall have been granted by, or the deadline for banning or
imposing conditions on the Transaction shall have elapsed without prohibitory
order from, each Antitrust Authority.
(b) All Permits, authorizations, approvals and consents of any
other third party, which may be required under any agreement, lease or other
instrument or document to which Buyer is a party, or by which Buyer or its
assets are bound, in order to consummate the Transaction shall have been
obtained or made on terms and conditions reasonably satisfactory to Seller.
SECTION 7.5. LITIGATION. No order, decree, writ or ruling of any court,
arbitrator or governmental body, agency, or authority shall be in effect that
restrains, enjoins, or otherwise prohibits the consummation of the Transaction.
There shall not be threatened, instituted or pending any action or proceeding by
any Person before any court or governmental authority or agency, domestic or
foreign, (i) seeking to restrain, prohibit or otherwise interfere with the
ownership or operation by Seller or any of its Subsidiaries or affiliates of all
or any material portion of the Business or Sale Assets or the business or assets
of Seller or any of its Subsidiaries or affiliates or to compel Seller or any of
its Subsidiaries or affiliates to dispose of all or any material portion of the
Business or Sale assets or the business or assets of Seller or any of its
Subsidiaries or affiliates or (ii) seeking to require divestiture by Seller or
any of its Subsidiaries or affiliates of any of the Business or Sale Assts.
There shall not be any action taken, or any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated, issued or
deemed applicable to the sale of the Business or the Sale Assets, by any court,
government or governmental authority or agency, domestic or foreign, other than
the application of the waiting period provisions of the HSR Act or other
Antitrust Law to the sale of the Business or Sale Assets, that, could, directly
or indirectly, reasonably be expected to result in any of the consequences
referred to in clause (i) or (ii) above.
SECTION 7.6. CLOSING DELIVERIES. Seller shall have received from Buyer
all of the instruments, documents and considerations described in Section 10.2,
and the form and substance of all such deliveries shall be reasonably
satisfactory in all material respects to Seller.
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ARTICLE VIII
TERMINATION
SECTION 8.1. TERMINATION BY MUTUAL AGREEMENT. This Agreement may be
terminated by the mutual agreement in writing of the parties hereto at any time
prior to the Closing.
SECTION 8.2. TERMINATION BY BUYER. Subject to the provisions of Section
8.4, this Agreement and any obligations of Buyer hereunder may be terminated
upon written notice of termination by Buyer at any time prior to or at the
Closing, if (a) Seller or any of its affiliates shall have breached or failed to
perform in any material respect any of its covenants or obligations under this
Agreement and such breach or failure to perform cannot be or is not cured within
forty five (45) days of notice thereof; (b) any representation or warranty of
Seller contained in this Agreement is false or misleading in any material
respect and cannot be or is not cured within forty five (45) days of notice
thereof; (c) any other material condition precedent to Buyer's performance of
its obligations under this Agreement is not capable of being met by the latest
of (i) February 26, 2001, (ii) ten business days after delivery to Buyer of an
audited balance sheet of the Business as of December 31, 2000 and audited
statements of income and cash flows for the Business for the fiscal year ended
December 31, 2000, provided that such financial statements are delivered no
later than March 31, 2001 or (iii) the end of the applicable cure period
described in (a) or (b) above ("Buyer's Outside Date"); or (d) the Transaction
shall not have been consummated by Buyer's Outside Date.
SECTION 8.3. TERMINATION BY SELLER. Subject to the provisions of
Section 8.4, this Agreement and any obligations of Seller hereunder may be
terminated upon written notice of termination by Seller at any time prior to or
at the Closing, if (a) Buyer shall have breached or failed to perform in any
material respect any of its covenants or obligations under this Agreement and
such breach or failure to perform cannot be or is not cured within forty five
(45) days of notice thereof; (b) any representation or warranty of Buyer
contained in this Agreement is false or misleading in any material respect and
cannot be or is not cured within forty five (45) days of notice thereof; (c) any
other material condition precedent to Seller's performance of its obligations
under this Agreement is not capable of being met by the latest of (i) February
26, 2001, (ii) ten business days after delivery to Buyer of an audited balance
sheet of the Business as of December 31, 2000 and audited statements of income
and cash flows for the Business for the fiscal year ended December 31, 2000,
provided that such financial statements are delivered no later than March 31,
2001 or (iii) the end of the applicable cure period described in (a) or (b)
above ("Seller's Outside Date"); or (d) the Transaction shall not have been
consummated by Seller's Outside Date.
SECTION 8.4. TERMINATION WITH RESPECT TO ANTITRUST MATTERS. The dates
contained in Section 8.2(c) and (d) and Sections 8.3 (c) and (d) shall be
automatically extended for such period of time as may be necessary to comply
with the requirements of the HSR Act or of any Antitrust Authority, or to seek
to prevent or to vacate the entering in any judicial or administrative
proceeding brought under any Antitrust Law of any injunction or order preventing
or materially delaying consummation of the Transaction, but, in any event, not
later than the later of (i) February 26, 2001 and (ii) ten business days after
delivery to Buyer of an audited balance sheet of the Business as of December 31,
2000 and audited statements of income and cash flows
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for the Business for the fiscal year ended December 31, 2000, provided that such
financial statements are delivered no later than March 31, 2001. This Agreement
may terminated at any time prior to the Closing by either Buyer or Seller by
giving written notice to the other party, in the event that any governmental
authority shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the consummation of the
Transaction and such order, decree, ruling or other action shall have become
final and nonappealable; provided, however, that the right to terminate this
Agreement pursuant to this Section 8.4 shall not be available to a party whose
failure to fulfill any obligation under this Agreement shall have been the cause
of, or shall have resulted in, such order, decree, ruling or other action by
such governmental authority.
SECTION 8.5. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Seller or Buyer, as provided above, this Agreement shall
forthwith terminate and there shall be no liability on the part of either Seller
or Buyer or their respective officers, directors, employees, agents and
affiliates, provided however that termination of this Agreement shall not
relieve any defaulting or breaching party from any liability to the other party
hereto; and provided, further, that the obligations of the parties set forth in
Sections 4.7, 5.2(d), 9.1 and 12.4, and the liabilities and obligations of Buyer
and Seller under Section 4.4, shall survive such termination.
ARTICLE IX
ADDITIONAL AGREEMENTS
SECTION 9.1. CONFIDENTIALITY.
(a) Seller and Buyer agree that the Confidentiality Agreements
listed on Schedule 9.1 between Buyer and Seller shall remain in full force and
effect and binding upon Seller and Buyer at all times prior to the Closing Date
in accordance with its terms and after any termination of this Agreement, and
each agrees to comply with the terms of such agreement.
(b) Seller will hold, and will use its reasonable best efforts
to cause its affiliates and the respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents of Seller and its
affiliates to hold, in confidence, except as otherwise required by law, all
confidential documents and information concerning the Business, except to the
extent that such information can be shown to have been (i) previously known on a
nonconfidential basis by Seller, (ii) in the public domain through no fault of
Seller or its affiliates or (iii) later lawfully acquired by Seller or such
affiliate from sources other than those related to its prior ownership of the
Business. The obligation of Seller and its affiliates to hold by such
information in confidence shall be satisfied if they exercise the same care with
respect to such information as they would take to preserve the confidentiality
of their own similar information.
SECTION 9.2. OBLIGATIONS WITH RESPECT TO SELLER'S EMPLOYEES.
(a) General Obligation. Buyer shall offer employment to all
Active Employees of the Business (other than employees of members of the Stock
Group) effective as
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of the Closing Date. If an Active Employee of the Business is not actively
employed as of the Closing Date, Buyer may require such person to return to
active employment within three (3) months of the Closing Date as a condition of
acceptance of its offer of employment. All obligations to any person who does
not so return to active employment (other than any person on a leave covered by
the Family and Medical Leave Act of 1993 or the Uniformed Services Employment
and Reemployment Rights Act of 1994) shall be the obligation of the Seller.
Buyer shall also provide specific employee benefit plans and arrangements as is
provided in this Section. For Active Employees of the Business who accept
employment, immediately following the Closing Date, and until April 9, 2001 for
employees who are "Eligible Employees" under the Transition Arrangements, Buyer
shall offer or cause the members of the Stock Group to offer, employee benefit
plans (excluding equity-based, change in control, supplemental retirement,
excess benefit and retiree medical plans (other than required pursuant to
collectively bargained agreements)) that, in the aggregate, are substantially
comparable to those provided pursuant to the employee benefit plans in effect on
the date of this Agreement. Except as explicitly set forth, this Section 9.2
does not in any way obligate Buyer to provide benefits for any time other than
immediately following the Closing; nor does it in any way prohibit the Buyer or
any member of the Stock Group from terminating the employment of any employee
following the Closing Date.
(b) Union Employees. Buyer shall assume each collective
bargaining agreement to which Seller or any of its Subsidiaries is a party, that
relate to employees of the Business, as of the Closing Date, and shall assume
Seller's and its applicable Subsidiaries' obligations as of the Closing Date to
negotiate in good faith with respect to such collective bargaining agreements,
if any. Buyer shall continue to observe European national master agreements
applicable to employees of the Business.
(c) Local Customs and Legislation. Buyer understands its
obligations to comply with local customs and legislation relating to employment
(including staff councils where required) and, where applicable, to negotiate
collective bargaining agreements.
(d) Transition Arrangements. Buyer shall assume the Transition
Arrangements and maintain them through April 9, 2001. Except as the parties
otherwise agree, Buyer shall indemnify and hold Seller and its Subsidiaries
harmless from and against any payments and benefits due under the Transition
Arrangements.
(e) Defined Benefit Pension Plans. (i)Neither Buyer nor its
subsidiaries or affiliates shall become sponsoring employers of the BFG Pension
Plan for Salaried Employees ("Seller's Salaried Pension Plan") or the BFG
Pension Plan for Wage Employees ("Seller's Wage Pension Plan") (collectively,
"Seller's U.S. Pension Plans"). Members of the Stock Group who are participating
employers under the Seller's U.S. Pension Plans shall cease to be participating
employers under such plans as of the Closing Date. Former PM Employees who are
participants in such plans shall be entitled to the payment of benefits under
such plans solely in accordance with their terms and this Section 9.2(e).
(ii) As of the Closing Date, Seller shall have caused
all Former PM Employees to become fully vested in their accrued benefits under
Seller's U.S. Pension Plans.
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(iii) As of the Closing, Seller shall have amended
Seller's Salaried Pension Plan to provide that the accrued benefit of each
Former PM Employee shall be increased at a rate of 4% per annum, compounded
annually, from the Closing Date until the earlier of (I) the third anniversary
of the Closing Date, (II) the termination of employment of such Former PM
Employee with the Business or portion thereof (it being understood that a
termination does not occur by reason of a sale by Buyer or its affiliates of all
or a portion of the Business), or (III) the date that such Former PM Employee
commences payment of his benefits under Seller's Salaried Pension Plan.
Seller shall amend Seller's Salaried Pension Plan to
provide that Former PM Employees shall have their employment with Buyer and its
affiliates credited for purposes of determining eligibility for an Early
Retirement Pension, supplemental, survivor and similar benefits. In addition,
such amendment shall provide that if the Business is sold to a Qualified
Salaried Plan Successor of Buyer, Former PM Employees shall cease to have their
employment with Buyer and its affiliates credited for purposes of determining
eligibility for an Early Retirement Pension, supplemental, survivor and similar
benefits; and Former PM Employees shall have their employment with the Qualified
Salaried Plan Successor and its affiliates credited for purposes of determining
eligibility for an Early Retirement Pension, supplemental, survivor and similar
benefits under Seller's Salaried Pension Plan, as long as the Qualified Salaried
Plan Successor continues to own and operate the Business.
For purposes of this Section 9.2(e)(iii), a
"Qualified Salaried Plan Successor" of Buyer shall mean a person who (I)
acquires all or part of the Business from the Buyer and its affiliates, (II) as
a result of such acquisition, becomes the employer of substantially all of the
Former PM Employees who are then employed by the Buyer and its affiliates, and
(III) provides, during the remainder of the five year period immediately
following the Closing Date, for the Former PM Employees who are participants in
Seller's Salaried Pension Plan, defined benefit pension plan benefits that
satisfy the requirements that would be imposed upon Buyer's Salaried Pension
Plan pursuant to this Section 9.2(e), if the Former PM Employees continued to be
employed by the Buyer or its affiliates.
Notwithstanding the foregoing, Seller's Salaried
Pension Plan shall provide that any Former PM Employee who is not eligible to
retire as of the Closing Date shall not be entitled to an Early Retirement
Pension until such participant terminates employment with Buyer and all
affiliates of Buyer (or, if applicable, any Qualified Salaried Plan Successor
and its affiliates).
Notwithstanding the foregoing, Seller's Salaried
Pension Plan shall provide that with respect to any Former PM Employee who has
less than thirty (30) years of Benefit Service as of the Closing Date, Seller's
Salaried Pension Plan shall only pay a fraction of any "supplement" payable
under Section 4.2(b)(i) of the plan. For this purpose, the term supplement shall
mean the difference between the amount that is payable under Section 4.2(b)(i)
of Seller's Salaried Pension Plan and the amount that subsequently becomes
payable under Section 4.2(b)(ii) of the plan; and the fractional amount that is
to be paid by Seller's Salaried Pension Plan shall be equal to the number of a
Former PM Employee's full and partial years of
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Benefit Service (as defined in Seller's Salaried Pension Plan) as of the Closing
Date, divided by thirty (30).
(iv) Following the Closing Date, for Former PM
Employees who are participants in Seller's Salaried Pension Plan, Buyer shall
adopt a Buyer Pension Plan ("Buyer's Salaried Pension Plan"). Except as provided
below in this Section 9.2(e)(iv), Buyer's Salaried Pension Plan shall mirror in
all material respects the benefits provided under Seller's Salaried Pension Plan
as of the Closing Date or such lesser benefits as may be provided under Seller's
Salaried Pension Plan after the Closing Date to employees who are participants
in Seller's Salaried Pension Plan as of the Closing Date.
Buyer's Salaried Pension Plan shall provide two
alternative formulas that will be used for purposes of determining the accrued
Normal Retirement Pension of a participant under the plan: a "Total Service
Formula" and a "Future Service Formula". Each formula shall provide for an
accrual of benefits using the Normal Retirement Pension formula of Seller's
Salaried Pension Plan. The Total Service Formula shall take into account (I) all
prior service and compensation of a Former PM Employee with Seller and its
affiliates (to the extent that such service and compensation would be credited
under Seller's Salaried Pension Plan) and (II) all service and compensation with
Buyer and its affiliates, subject to an offset for the benefits provided under
Seller's Salaried Pension Plan. The "Future Service Formula" shall only take
into account a Former PM Employee's service and compensation with Buyer and its
affiliates. In addition, Buyer's Salaried Pension Plan shall provide that a
Former PM Employee's accrual of benefits under the Total Service Formula shall
cease at such time as the Former PM Employee commences payment of benefits under
Seller's Salaried Pension Plan before normal retirement.
Buyer's Salaried Pension Plan shall provide that if a
plan participant commences payment of an Early Retirement Pension under Seller's
Salaried Pension Plan prior to the date of his retirement under Buyer's Salaried
Pension Plan, any Early Retirement Pension payable under Buyer's Salaried
Pension Plan shall not be more than a benefit which is the actuarial equivalent
of the participant's Normal Retirement Pension under Buyer's Salaried Pension
Plan.
Buyer's Salaried Pension Plan shall provide that if a
Former PM Employee is terminated because of a Reduction in Force (as defined in
Seller's Salaried Pension Plan), the difference between the Deferred Vested
Pension (as defined in Section 3.3 of the Seller's Salaried Pension Plan) and
the Special Deferred Vested Pension (as defined in Section 3.4 of Seller's
Salaried Pension Plan) shall be paid under Buyer's Salaried Pension Plan.
Buyer shall maintain Buyer's Salaried Pension Plan
with the foregoing provisions in effect until the earlier of five (5) years from
the Closing Date or the date that the Business is sold to a Qualified Salaried
Plan Successor (as defined above).
(v) As of the Closing Date, the Seller shall have
amended Seller's Wage Pension Plan to provide that the benefits payable to each
Former PM Employee thereunder shall be increased to reflect any scheduled
increases in the fixed dollar portion of the benefit formula that exist as of
the Closing Date (including as may be required by any Benefit Schedule
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(as such term is defined in the Seller's Wage Pension Plan) or by any collective
bargaining agreement in effect at the Closing Date).
Subject to the conditions set forth below in Section
9.2(e)(vi), Seller shall amend Seller's Wage Pension Plan to provide that Former
PM Employees shall have their employment with Buyer and its affiliates credited
for purposes of determining eligibility for an Early Retirement Pension,
supplemental benefits; survivor benefits and similar benefits. In addition, such
amendment shall provide that if the Business is sold to a Qualified Wage Plan
Successor of Buyer, Former PM Employees shall cease to have their employment
with Buyer and its affiliates credited for purposes of determining eligibility
for an Early Retirement Pension, supplemental benefits; survivor benefits and
similar benefits; and Former PM Employees shall have their employment with the
Qualified Wage Plan Successor and its affiliates credited for purposes of
determining eligibility for an Early Retirement Pension, supplemental benefits;
survivor benefits and similar benefits under Seller's Wage Pension Plan, as long
as the Qualified Wage Plan Successor continues to own and operate the Business.
For purposes of this Section 9.2(e)(v), a "Qualified
Wage Plan Successor" of Buyer shall mean a person who (I) acquires all or part
of the Business from the Buyer and its affiliates, (II) as a result of such
acquisition, becomes the employer of substantially all of the Former PM
Employees who are then employed by the Buyer and its affiliates, and (III)
provides, during the remainder of the five year period immediately following the
Closing Date, for the Former PM Employees who are participants in Seller's Wage
Pension Plan, defined benefit pension plan benefits that satisfy the
requirements that would be imposed upon Buyer's Wage Pension Plan pursuant to
this Section 9.2(e), if the Former PM Employees continued to be employed by the
Buyer.
Notwithstanding the foregoing, Seller's Wage Pension
Plan shall provide that with respect to any Former PM Employee who does not have
the requisite service to be entitled to a supplemental pension benefit as of the
Closing Date, Seller's Wage Pension Plan shall only pay a fraction of any such
supplement that becomes payable under the plan. For this purpose, the fractional
amount that is to be paid by Seller's Wage Pension Plan shall be equal to the
number of a Former PM Employee's full and partial years of service as of the
Closing Date, divided by the number of years of service needed to qualify for
the supplement.
Notwithstanding the foregoing, Seller's Wage Pension
Plan shall be amended to provide that any Former PM Employee who is not eligible
to retire as of the Closing Date shall not be entitled to an Early Retirement
Pension until such participant terminates employment with Buyer and all
affiliates of Buyer (or, if applicable, any Qualified Wage Plan Successor and
its affiliates).
Notwithstanding the foregoing, on and after the
Closing Date, Seller's Wage Pension Plan shall not provide for the payment of
any Plant Closure benefit under Section 3.6 of Seller's Wage Pension Plan (and
any Benefit Schedule related thereto) or any Lump Sum benefit under Section 3.5
of Seller's Wage Pension Plan (and any Benefit Schedule related thereto),
whether on account of disability, plant closure, layoff or otherwise.
Accordingly, in the case of any such Plant Closure by Buyer and its affiliates,
any Qualified Wage Plan Successor
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and its affiliates, or any other employer of the Former PM Employees, or in the
case of the payment of a Lump Sum benefit under Buyer's Wage Pension Plan, the
obligations of Seller's Wage Pension Plan shall be limited solely to the payment
of Early Retirement Pensions and other benefits as is otherwise provided under
the terms of Seller's Wage Pension Plan (modified as otherwise provided above)
on account of the Former PM Employee's Severance from Service Date (as defined
in Seller's Wage Pension Plan).
(vi) As a condition precedent to Seller amending
Seller's Wage Pension Plan as provided above in Section 9.2(e)(v) for any group
of Former PM Employees who are represented by a collective bargaining
representative, Buyer shall obtain a written agreement of the bargaining unit
representative for such Former PM Employees that Buyer shall maintain a Buyer
Pension Plan ("Buyer's Wage Pension Plan") that meets all of the requirements of
subparagraphs (A), (B) and (C) below, at least for the five year period
following the Closing Date. To the extent that Buyer cannot satisfy such
condition precedent with respect to any group of Former PM Employees, Seller
shall not be obligated to amend Seller's Wage Pension Plan as provided above for
such group of Former PM Employees.
(A) Buyer's Wage Pension Plan shall mirror
in all material respects the benefits provided under Seller's Wage Pension Plan
as of the Closing Date, except as provided below in subparagraphs (B) and (C).
(B) Buyer's Wage Pension Plan shall provide
two alternative formulas for the accrual of benefits thereunder: a "Total
Service Formula" and a "Future Service Formula". The Total Service Formula shall
take into account (I) all prior service of a Former PM Employee with Seller and
its affiliates (to the extent that such service would be credited under Seller's
Wage Pension Plan) and (II) all service with Buyer and its affiliates, subject
to an offset for the benefits provided under Seller's Wage Pension Plan. The
"Future Service Formula" shall only take into account a Former PM Employee's
service with Buyer and its affiliates. In addition, Buyer's Wage Pension Plan
shall provide that a Former PM Employee's accrual of benefits under the Total
Service Formula shall cease at such time as the Former PM Employee commences
payment of benefits under Seller's Wage Pension Plan before normal retirement.
(C) Buyer's Wage Pension Plan shall provide
that if a plan participant commences payment of an Early Retirement Pension
under Seller's Wage Pension Plan prior to the date of his retirement under
Buyer's Wage Pension Plan, any Early Retirement Pension payable under Buyer's
Wage Pension Plan shall not be more than a benefit which is the actuarial
equivalent of the participant's normal retirement pension under Buyer's Wage
Pension Plan.
(vii) Buyer shall provide a written report to Seller
for each month that contains the name and termination date of any Former PM
Employee whose employment with Buyer has terminated during the preceding month.
If Buyer sells the Business or any portion of the Business to an entity that is
intended to be a Qualified Salaried Plan Successor or Qualified Wage Plan
Successor of Buyer, it shall contractually require the successor to provide
monthly reports as described above. Buyer shall indemnify Seller from any
liability or expense incurred by Seller or Seller's U.S. Pension Plans as a
result of the failure of Buyer or a successor owner of any portion of the
Business to provide such monthly reports. Seller shall provide reports to
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Buyer (and to any Qualified Salaried Plan Successor and Qualified Wage Plan
Successor) of benefits accrued under Seller's U.S. Pension Plans and other
information that is needed for Buyer (and any such successors) to administer its
pension plans as provided herein. Seller shall indemnify Buyer for a failure to
provide such information.
(viii) Seller shall indemnify and hold harmless the
Buyer and its subsidiaries from and against any Losses which may occur in
connection with Seller's U.S. Pension Plans.
(f) Defined Contribution Pension Plans.
(i) Neither Buyer nor its subsidiaries or affiliates
shall become sponsoring employers under the Seller's Retirement Plus Savings
Plan or Seller's Retirement Plus Savings Plan for Wage Employees (collectively,
"Seller's Investment Plans"). As of the Closing, Seller shall have caused all
Former PM Employees to become fully vested in their accrued benefits under the
Seller's Investment Plans. As soon as practicable after the Closing Date, Buyer
shall establish and maintain or cause to be established and maintained, a
defined contribution plan (the "Buyer's Investment Plan") to provide benefits to
the Former PM Employees who, on the Closing Date, are participants ("Investment
Plan Participants") in the Seller's Investment Plans. The Buyer's Investment
Plan shall provide the Investment Plan Participants credit for service with
Seller and its affiliates and their respective predecessors prior to the Closing
Date for all purposes of such plan.
(ii) As soon as practicable after the Closing Date,
Seller shall cause the trustee of the Seller's Investment Plans to transfer to
the trust forming a part of the Buyer's Investment Plan in kind assets and/or
cash as agreed to by Seller and Buyer (or with respect to participant loans
granted prior to the Closing Date, if any, such loans and any promissory notes
or other documents evidencing such loans), in an amount equal to the account
balances of Investment Plan Participants as of the date immediately preceding
the date (the "Transfer Date") of transfer (the "Account Balances"); provided,
however, that Seller may cause the transfer of shares of its common stock which
are held under Seller's Investment Plans by Investment Plan Participants as of
the Transfer Date. Notwithstanding the foregoing, the Account Balances shall not
be transferred until such time as Buyer receives a representation from Seller
that, as of the Transfer Date, Seller's Investment Plans have been determined to
be "qualified" within the meaning of Section 401(a) of the Code by the Internal
Revenue Service, and are so qualified, and each related trust is exempt from
taxation under Section 501 (a) of the Code.
(iii) On or before the Closing Date, Seller shall
cause all Investment Plan Participants to be fully vested in their Account
Balances.
(iv) Prior to the Transfer Date, the Seller shall
cause employer matching contributions for Former PM Employees to be made under
the Seller Investment Plan for the period up to and including the Closing Date;
and in no event shall such amounts be recorded as a liability on the Closing
Balance Sheet for purposes of Section 1.9(c) and its Associated Working Capital
Adjustment.
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(g) Collectively Bargained Retiree Welfare Plans. With respect
to Active Employees of the Business who are located in the United States and
become employees of Buyer, Buyer shall assume all of Seller's obligations to
provide benefits under Collectively Bargained Retiree Welfare Plans; and Buyer
shall indemnify and hold Seller and its Subsidiaries harmless from and against
any Losses with respect to any such liability. Buyer shall provide such benefits
to such employees pursuant to the terms of an Employee Welfare Benefit Plan of
Buyer. Seller shall retain all other liabilities of its Collectively Bargained
Retiree Welfare Plans.
(h) Other Employee Welfare Benefit Plans. Buyer shall not
assume any Employee Welfare Benefit Plans of Seller. Thus, Former PM Employees
shall cease participation in such Plans as of the Closing Date. Buyer and Seller
acknowledge and agree that (i) Seller shall be responsible for all liabilities
and obligations for medical, dental, health and life insurance benefits pursuant
to the terms of its and its Subsidiaries plans with respect to any claims
incurred by Former PM Employees and their dependents on or before the Closing
Date, whether or not reported as of the Closing Date, and (ii) Buyer shall be
responsible for all liabilities and obligations for medical, dental, health and
life insurance benefits pursuant to the terms of its Welfare Benefit Plans with
respect to any claims incurred by Former PM Employees and their dependents after
the Closing Date. For purposes of this Section 9.2(h), a claim shall be deemed
to have been incurred upon the incurrence by a Former PM Employee or dependent
of a qualified expense for which reimbursement or payment is sought.
Following the Closing, Seller shall provide retiree medical
and/or life insurance benefits under any Employee Welfare Benefit Plan of Seller
(other than a Collectively Bargained Retiree Welfare Plan) to any Former PM
Employee who would have satisfied the eligibility requirements (as such
eligibility requirements existed on November 1, 2000) for such benefits if such
Former PM Employee's service with the Business or any portion thereof during the
period beginning on the Closing Date and ending on December 31, 2002 were
service with the Seller. Seller shall indemnify and hold harmless the Buyer and
its Subsidiaries from and against any Losses which may occur in connection with
Seller's obligations to provide benefits as set forth above.
(i) Management Incentive and Other Similar Plans. Seller shall
pay all amounts that are required to be paid to employees of the Business prior
to the Closing Date under (i) Seller's Management Incentive Plan, and (ii)
Seller's or its affiliates' sales incentive, gain-sharing or similar programs.
Buyer shall pay all amounts which are accrued on the Closing Balance Sheet and
required to be paid on or after the Closing Date to Former PM Employees under
(i) Seller's Management Incentive Plan, and (ii) Seller's or its affiliates'
sales incentive, gain-sharing or similar program. Prior to the Closing Date,
Seller shall cause such plans to be maintained and administered on behalf of
Former PM Employees on the same terms as exist on the date hereof. Buyer and
Seller shall hold harmless each other with respect to their respective
obligations under this Section 9.2(i).
(j) Enforceability. This Section 9.2 shall survive
consummation of the Transaction, is intended to benefit Seller and its
Subsidiaries and Buyer and its subsidiaries or affiliates, and shall be binding
on Buyer and Seller, their successors and assigns. No one shall be
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considered a third party beneficiary of this Section 9.2 (or any related
provisions of this Agreement). Accordingly, no one other than the parties to
this Agreement shall have the right to enforce the provisions of this Section
9.2 (or any related provisions of this Agreement) or to maintain any other legal
or equitable action of any kind with respect to such provisions.
(k) Obligations. Within 30 days of the Closing Date (or if
later, when due), Buyer shall (i) pay all salaries, sales commissions and
consulting fees accrued in the ordinary course of business but not yet payable
as of the Closing Date to any current or former employees or agents of the
Business for services rendered during periods prior to the Closing Date, (ii)
pay all accrued payroll taxes and/or withholding taxes with respect to such
payments, and (iii) undertake all payroll processing and tax reporting
obligations with respect to such payments.
(l) Obligation to Provide Benefits. Except as expressly
provided in this Subsection 9.2, nothing in this Agreement shall (i) require
Buyer or any of its affiliates to continue the employment of any Former PM
Employee after the Closing Date, (ii) to establish or continue any particular
employee benefit plan, practice, program or policy for any particular period of
time after the Closing Date or (iii) prohibit or in any way limit Buyer's
ability to amend or terminate any such plan, practice, program or policy. Buyer
and its affiliates shall not assume any obligation to Former PM Employees that
is not expressly provided for herein. Except as set forth in Section 9.2(g),
nothing in this Agreement shall require Buyer or any of its affiliates to
provide retiree medical benefits. Buyer shall have no obligation to employees of
Seller or its Subsidiaries other than the Former PM Employees, whether or not
such employees received salary continuation or other payments or benefits under
any plan or policy of Seller.
(m) Communications. Prior to the Closing Date, Seller shall
make no communications to employees of Seller or its affiliates regarding
benefits to be provided to employees of the Business after the Closing Date
without the prior written consent of Buyer, which consent shall not be
unreasonably withheld.
(n) Treatment of Excess Benefit Plans. Seller shall take all
actions reasonably requested by Buyer and consented to by a participant in any
Seller nonqualified deferred compensation plan to cause all or a portion of such
participant's account balance to be assumed by Buyer prior to the Closing Date,
and in connection with any such assumption Seller shall simultaneously transfer
to Buyer an amount of cash equal to the amount of the liability so assumed.
SECTION 9.3. CERTAIN COSTS. In connection with consummating the
Transaction, Buyer and Seller shall each pay for one-half of the costs of any
title insurance and surveys with respect to the Owned Real Property or Leased
Real Property, and shall each pay for one-half of the costs of any real estate
recording fees, title insurance premium, exam and endorsement fees and other
similar fees contemplated hereby or incurred as a result of the Transaction.
Buyer and Seller shall each pay for one-half of the costs when due, and each
shall comply with all relevant formalities relating to, any conveyance,
transfer, sales, use, stamp, registration, notarial, recording and other similar
taxes and fees, including any penalties and interest, arising out of or in
connection with the transfer of the Sale Assets to Buyer, including, without
limitation, real estate transfer Taxes and sales Taxes on vehicles or
watercraft. Buyer's and Seller's
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responsibility for such taxes and fees shall also include responsibility for
transfer taxes that arise as an indirect result of the transactions contemplated
hereby including, without limitation, real estate transfer taxes that are
imposed on the transfer of an equity interest in an entity that owns real
estate. Buyer and Seller shall each file, or cause to be filed, all Tax Returns
that relate to any of the foregoing transfer or similar taxes that they are
required to file. In addition, notwithstanding the agreement that each party
shall pay one-half of all costs associated with such taxes, if either Buyer or
Seller fails to comply with its obligations hereunder, such party shall bear any
interest, penalties, or additions to tax that become payable as a result of such
failure, and shall indemnify the other party against any such incremental
expense.
SECTION 9.4. OPTION TO PURCHASE EMD BUSINESS. Buyer shall have the
right and option to purchase the EMD Business at the Closing for cash at the
Closing Date in the amount of Thirty Million Dollars ($30,000,000), provided
that Buyer gives written notice of such intention to purchase the EMD business
on or before December 31, 2000. In the event that Buyer fails to provide notice
of its intention to purchase the EMD Business on or prior to December 31, 2000,
Buyer's right and option to the EMD Business shall terminate and be of no force
or effect. In the event Buyer exercises the option to purchase the EMD Business
pursuant to this Section 9.4, the term "Business" shall include the EMD Business
for all purposes under this Agreement, and no force or effect shall be given to
Sections 1.2(l), 1.9(i), 9.17, 10.1(s), 10.2(j) or Exhibit F of this Agreement.
SECTION 9.5. TITLE TO REAL PROPERTY. Seller has provided, or will
provide promptly upon completion and prior to Closing, surveys of each of the
Owned Real Property identified as such on Schedule 9.5 and title commitments for
each of the Owned Real Property identified as such on Schedule 9.5, subject to
Buyer's obligation to pay its portion of the costs specified in Section 9.3.
SECTION 9.6. PRODUCT LIABILITY CLAIMS. Seller shall assume
responsibility for, and indemnify Buyer against, any Liabilities relating to
product warranty or product liability or product defect claims, including
defective material, design or manufacturing claims or product recalls or product
defects which are (i) made after the Closing Date, but prior to the ten year
anniversary of the Closing Date, (ii) relate to products of the Business
manufactured, sold or delivered by Seller or its Subsidiaries prior to or on the
Closing Date and (iii) exceed Two Million Dollars ($2,000,000) "per occurrence",
it being agreed and understood that Seller shall assume Liability for, and
indemnify Buyer against, all Liabilities relating to any claims, recalls or
defects described in this sentence, and not only with respect to that portion of
the Liability in excess of Two Million Dollars ($2,000,000). For purpose of this
Section 9.6, "an occurrence" means any claim or series of claims which are
attributable to the same event, condition, cause, product defect, hazard or
negligent act. Seller shall retain all Liabilities with respect to products
described in Section 1.4(h).
SECTION 9.7. BULK TRANSFER LAWS. Buyer hereby waives compliance by
Seller with the provisions of any so-called "bulk transfer law" (including those
applicable to Taxes) of any jurisdiction in connection with the Transaction. In
accordance with the terms of Section 11.1, Seller agrees to indemnify and hold
harmless Buyer from and against any and all Losses (as defined in Section 11.1)
that may be asserted by third parties against Buyer as a result of noncompliance
with any such bulk transfer law.
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SECTION 9.8. NAME CHANGES OF STOCK GROUP SUBSIDIARIES.
(a) No later than three (3) months after the Closing Date,
Buyer shall amend the certificates of incorporation, bylaws and other
organizational documents of the Subsidiaries that are a part of the Stock Group
to exclude any reference to "▇.▇. ▇▇▇▇▇▇▇▇," "▇▇▇▇▇▇▇▇" and "BFG" alone or in
combination with any other words or terms or variation of such words or terms.
Except as provided in (b), no later than three (3) months after the Closing
Date, Buyer shall cease doing business under or utilizing as a trademark or
service ▇▇▇▇, or any of the foregoing names;
(b) In connection with the same, Buyer shall remove or cover,
or shall have caused to be removed or covered, within a period of nine (9)
months after the Closing Date, (i) the trademarks and/or trade names "▇.▇.
▇▇▇▇▇▇▇▇," "▇▇▇▇▇▇▇▇" or "BFG," or any derivative of such name or ▇▇▇▇, and (ii)
any other marks belonging to Seller or its Subsidiaries, not included in the
Sale Assets that in the case of clause (ii) Buyer knows, or has received written
notice from Seller, that such marks belong to Seller or its Subsidiaries, from
labels, containers, signs, panels, flags, brochures, manuals, literature, real
property signage, vehicles and other material or matter (regardless of medium)
included in the Sale Assets.
(c) Notwithstanding anything to the contrary contained in this
Section 9.8, Buyer shall have an additional period of three (3) months to comply
with the requirements of Sections 9.8(a) and (b) above, but only with respect to
those items that cannot reasonably, after diligent efforts, be accomplished
within the initial periods described in Section 9.8(a) and (b) because of the
inaction or delay by a governmental authority.
SECTION 9.9. PROVISION OF TRANSITION SERVICES. Buyer and Seller agree
to execute a transition services agreement in the form reasonably agreed to by
Buyer and Seller with respect to the provision of transition services reasonably
requested by Buyer from and after the Closing Date. Buyer shall pay the lesser
of (i) the cost being allocated to the Business at the Closing Date (adjusted as
necessary to convert annualized costs to daily or monthly costs) and (ii) the
cost Buyer would pay in an arms length transaction with a third party for any
such service.
SECTION 9.10. FURTHER ASSURANCES.
(a) From and after the Closing, upon reasonable request of
Seller or Buyer, the other party shall do such further acts as may be reasonably
necessary or appropriate to carry out the transactions contemplated by this
Agreement, including, without limitation, obtaining consents from any third
party. Notwithstanding the foregoing, from and after the Closing, upon
reasonable request of Buyer, Seller shall do, execute, acknowledge and deliver,
and shall cause its affiliates to do, execute, acknowledge and deliver, all such
further acts, assurances, deeds, assignments, transfers, conveyances, powers of
attorney and other instruments and papers (including duly executed foreign
patent assignments and foreign trademark assignments) as may be reasonably
required to sell, assign, transfer, convey and deliver to and vest in Buyer
ownership of all the Sale Assets intended to be sold, assigned, transferred,
conveyed and delivered pursuant to, and consistent with the terms of, this
Agreement. The fees and expenses
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of the parties incurred pursuant to this Section 9.10 shall be allocated in a
manner consistent with Section 9.3.
(b) Each party recognizes that the other party may need
financial or other data with respect to the Sale Assets and the Business
covering several fiscal periods prior to or after the Closing Date in order to
comply with the rules and regulations of the United States Securities and
Exchange Commission, courts or other governmental organizations and agencies.
The parties shall render reasonable cooperation to each other and their auditors
to provide such information. The party requesting assistance shall bear all
reasonable out-of-pocket costs and expenses incurred by such assisting party
(excluding salaries and wages and related costs of benefits of its employees)
and such assistance shall be subject to compliance by the requesting party with
the assisting party's usual requirements regarding security and confidential
treatment of information and shall not unreasonably interfere with the conduct
of its business. No party shall be liable to any other party for any such
information or data given, or for the accuracy or completeness thereof.
(c) On and after the Closing, Seller will afford promptly to
Buyer and its agents reasonable access to its books of account, financial and
other records (including, without limitation, accountant's work papers),
information, employees and auditors to the extent reasonably necessary or useful
for Buyer in connection with any audit, investigation, dispute or litigation or
any other reasonable business purpose relating to the Business; provided that
any such access by Buyer shall not unreasonably interfere with the conduct of
the business of Seller.
(d) From and after the Closing, Buyer shall provide the
services identified on Schedule 9.10(d) to the extent and in the manner
currently being provided by Seller as of the date hereof with costs allocated as
set forth thereon. Buyer shall provide such other services as may be necessary
to support the Defined Remediation Projects that are reasonably available
through Buyer ("Additional Requested Services"), provided that Buyer shall only
be obligated to provide such Additional Requested Services and the services
reflected in the third column of Schedule 9.10(d) to the extent that Buyer
receives reimbursement therefor from a third party or Seller. Reimbursement of
Buyer under this Section 9.10(d) shall be limited to the out-of-pocket cash
costs incurred by Buyer in providing such services. Buyer shall assume and
complete all obligations of Seller relating to the Defined Remediation Projects
arising from and after the tenth (10th) anniversary of Closing, except to the
extent that Seller has indemnity obligations to Buyer under Section 11.3(d)
remaining after the tenth (10th) anniversary of Closing. "Out of pocket cash
costs" as used in this Section 9.10 shall include, without limitation, (i) costs
relating to or arising out of any bond, letter of credit or similar instrument
posted, issued or granted by or on behalf of Buyer or its Affiliates, and (ii)
all amounts drawn under such bond, letter of credit or similar instrument,
provided it is understood and agreed that, with respect to amounts drawn under
such bond, letter of credit or similar instrument after Seller's obligations to
reimburse Buyer under this Section 9.10(d) terminates, Seller shall remain
liable to reimburse Buyer only for amounts drawn to satisfy obligations that
relate specifically to the period during which Seller was responsible to
reimburse Buyer hereunder.
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SECTION 9.11. ACCOUNTING AND OTHER ASSISTANCE.
(a) Following the Closing, Buyer shall assist Seller in the
completion of the accounting of the Business for the calendar month or part
thereof (or both) preceding the Closing and in connection therewith shall use
all reasonable efforts to assist Seller and its Subsidiaries in the completion
of the accounting of the relevant month's transactions.
(b) From time to time, as may be reasonably required, in
connection with claims or actions brought by or against third parties based upon
events or circumstances of the Business occurring prior to the Closing Date,
duly authorized representatives of Seller and its Subsidiaries shall, upon
reasonable prior notice to Buyer and at Seller's cost and expense, have access
to the Sale Assets during normal business hours at mutually agreed upon times,
provided that the operations and business of such Sale Assets are not adversely
affected thereby. In addition to the rights of access provided in this Section
9.11, Buyer shall, at the request of Seller, provide reasonable information or
documents (or reasonable assistance in collecting such information or documents)
in Buyer's possession necessary for the prosecution or defense of such claims or
actions at mutually agreed upon times and will use reasonable efforts to make
Buyer's employees available as witnesses in connection with such claims or
actions when reasonably requested by Seller provided that such access shall not
unreasonably interfere with the conduct of the business of Buyer. Seller shall
reimburse Buyer for all reasonable out-of pocket costs and expenses incurred by
Buyer (excluding salaries and wages and related costs of benefits of its
employees) in providing such assistance.
(c) Subject to Seller's customary records retention policy,
Seller shall, upon Buyer's reasonable request, use reasonable efforts to make
available to Buyer information relating to the Business or the Sale Assets
contained in Seller's and its Subsidiaries' business records which are Excluded
Assets, for the period beginning three (3) years prior to the Closing Date, to
the extent such records are in Seller's or its Subsidiaries' possession or
control.
(d) In the event that, after the Closing Date, Seller or Buyer
shall require the participation of officers and employees employed by the other
to aid in the defense or settlement of litigation or claims by third parties,
and so long as there exists no conflict of interest between the parties, Seller
and Buyer shall use reasonable efforts to make such officers and employees
available to participate in such defense, provided that (except as provided in
Article XI), the party requiring the participation of such officers or employees
shall pay all reasonable out-of-pocket costs, charges and expenses arising from
such participation.
(e) All records relating to the Sale Assets transferred by
Seller to Buyer shall be maintained by Buyer for such period as may be required
by law or three (3) years, whichever is greater. Buyer shall afford Seller (at
its expense), reasonable access to any and all such records that are in its
possession during normal business hours upon reasonable advance request by
Seller for access.
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SECTION 9.12. POST-CLOSING TAX MATTERS.
(a)(i) Seller shall indemnify the Buyer and its affiliates,
including the members of the Stock Group, and hold them harmless from and
against, without duplication, any loss, claim, liability, expense, or other
damage attributable to (x) all Taxes (or the non-payment thereof) of the members
of the Stock Group for all Pre-Closing Tax Periods (and, for the avoidance of
doubt, (i) any degrouping charge imposed under United Kingdom tax law related to
▇▇ ▇▇▇▇▇▇▇▇ Chemicals LTD, (ii) any stamp taxes payable with respect to
documents that are material to the business of any member of the Stock Group or
the Business and which were executed in a Pre-Closing Tax Period, and (iii) any
Taxes (or liability of Seller pursuant to Section 8.1 of the Limited Liability
Company Agreement between Seller and Cymetech, LLC) that may arise in the event
of any termination (pursuant to Section 708 of the Code) of Cymetech, LLC as a
partnership, to the extent such termination is the result of any action on or
prior to the Closing, including the transactions contemplated by this Agreement,
shall be treated as a Tax arising in a Pre-Closing Tax Period), (y) any and all
Taxes of any member of an affiliated, consolidated, combined or unitary group,
including any fiscal unity, of which any member of the Stock Group (or any
predecessor of the foregoing) is or was a member on or prior to the Closing
Date, including pursuant to Treasury Regulations Section 1.1502-6 or any
analogous or similar state, local or foreign law or regulation and (z) any and
all Taxes of any Person imposed on any member of the Stock Group as a transferee
or successor, by contract or pursuant to any law, rule or regulation; provided,
however, that in the case of clauses (x) and (z) above, Seller shall be liable
only to the extent provided in Section 9.12(a)(ii) below.
(ii) Seller's liability for Taxes pursuant to clauses (x)
and (z) of Sections 9.12(a)(i), 9.12(c)(i), 9.12(c)(ii)(A), and 9.12(c)(v)(A)
shall in all cases be limited to the amount of such Taxes that exceeds the
amount accrued for such Taxes on the Closing Working Capital Statement
(including amounts specified as "accrued income taxes payable," "accrued
non-income taxes payable," or accruals for Taxes contained within other current
payables, but excluding amounts specified as "deferred tax assets," "deferred
tax," or "deferred tax liabilities"). In the event (x) the amount accrued for
any Tax on the Closing Working Capital Statement exceeds the amount required to
be paid with respect to such Tax at the time the relevant Tax Return is filed,
and (y) Seller is required (at any time) to make any payment in connection with
its liability for any other Taxes pursuant to clauses (x) and (z) of Sections
9.12(a)(i), 9.12(c)(i), 9.12(c)(ii)(A), and 9.12(c)(v)(A), Seller shall be
permitted to reduce (but not below zero) the amount of such required payment by
the amount of the excess accrual referred to in clause (x). In the event Seller
has previously made one or more such required payments, and no offset is
available under clause (y), Buyer shall be obligated to refund to Seller the
amount of the over-accrual referred to in clause (x) but in no event shall Buyer
be obligated to refund to Seller any amount in excess of the aggregate required
payments previously made by Seller pursuant to clauses (x) and (z) of Sections
9.12(a)(i), 9.12(c)(i), 9.12(c)(ii)(A), and 9.12(c)(v)(A). Buyer and Seller
agree that for purposes of determining the amount of any accruals for Taxes on
the Closing Working Capital Statement, to the extent Buyer, any affiliate of
Buyer, or any member of the Stock Group makes a payment of Taxes subsequent to
the Closing Date, and such payment relates to Taxes for which an accrual was
established on the Closing Working Capital Statement, such payment will be
deemed to reduce such accrual for
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purposes of determining Seller's liability therefor in the event of a future
redetermination of such Tax.
(iii) Buyer and Seller agree that, notwithstanding the
provisions of Section 9.12(a)(ii), with respect to any member of the Stock Group
that is not a member of the Tax Group, the amount of any indemnity required to
be paid hereunder shall not be reduced by any accrual on the Closing Working
Capital Statement and that Seller's liability shall be limited to the product of
(x) the amount of the indemnity otherwise required to be paid and (y) the
percentage of equity in such entity acquired in the Purchase.
(b) Buyer agrees that it will not make any election under
Section 338 of the Code (whether under Section 338(g) of the Code or under
Section 338(h)(10) of the Code), or any comparable election under state or local
law, with respect to the acquisition of ▇▇ ▇▇▇▇▇▇▇▇ FCC, Inc. With respect to
other members of the Stock Group, Buyer and Seller shall make elections under
Section 338(h)(10) of the Code (and any comparable provisions of state and local
law) as Buyer and Seller shall mutually agree upon, and Buyer may make elections
under Section 338(g) of the Code (and any comparable provisions of state and
local law), as it deems appropriate; provided, however, that if Buyer makes an
election under Section 338(g) with respect to any member of the Stock Group
incorporated under the laws of a country other than the United States, and as a
result of a change in law occurring after the date hereof, such election creates
a Tax liability for Seller in the country in which such entity was incorporated,
Buyer shall indemnify Seller against such Tax liability, reduced by any tax
benefit realized by Seller (including a reduction in Taxes associated with the
sale of stock of such member of the Stock Group that would have been payable,
absent such election).
(c) The following provisions shall govern the allocation of
responsibility as between Buyer and Seller for certain tax matters following the
Closing Date:
(i) Taxable Periods Ending on or Before the Closing
Date. Seller shall prepare or cause to be prepared and shall timely file or
cause to be timely filed all Tax Returns that are required to be filed for the
Stock Group for all Taxable Periods ending on or prior to the Closing Date,
provided that, with respect to any such Tax Returns to be filed after the
Closing Date, Seller shall prepare or cause to be prepared and Buyer shall file
or cause to be filed such Tax Return. All such Tax Returns shall be prepared in
a manner consistent with prior practice of the relevant member of the Stock
Group. Seller shall pay, or cause to be paid, all Taxes due with respect to such
taxable periods, provided that with respect to any such Tax Returns to be filed
after the Closing Date, Buyer shall pay or cause to be paid all such Taxes, and
Seller shall reimburse Buyer for Taxes of such Subsidiaries with respect to such
periods within fifteen (15) days after payment by Buyer of such Taxes, in each
case to the extent provided in Section 9.12(a)(ii).
(ii) Taxable Periods Beginning Before and Ending
After the Closing Date.
(A) Buyer shall prepare or cause to be
prepared and file or cause to be filed any Tax Returns of the Stock Group that
are required to be filed for Taxable Periods which begin before the Closing Date
and end after the Closing Date. Buyer shall
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provide to Seller copies of all such Returns at least twenty (20) calendar days
before such Returns are required to be filed, taking into account all
extensions, for Seller's approval, which approval shall not be unreasonably
withheld. Seller shall notify Buyer of any proposed revisions that relate to the
Pre-Closing Portion (as defined below) of such Returns within fifteen (15)
calendar days after receipt of such Returns from Buyer. Buyer and Seller agree
to attempt to resolve in good faith any dispute concerning the reporting of any
item on such Return. In the event Buyer and Seller are unable to resolve such
dispute, Buyer shall determine the final form of such Return without prejudice
to Seller's right to dispute the amount of the Pre-Closing Portion of such Tax,
and Buyer and Seller shall select an independent public accounting firm to
determine such amount, and agree that the decision of such firm shall be binding
and conclusive on both Buyer and Seller. If Seller does not dispute the amount
of the Pre-Closing Portion of any Tax, based on the amount shown to be due on
any Tax Return prepared pursuant to this paragraph (A), it shall pay that
amount. If Seller does dispute the amount of the Pre-Closing Portion of any Tax,
and such dispute is not resolved prior to the time that the Tax is required to
be paid, Seller shall pay the undisputed portion of such Tax to the Buyer. In
either case, such amount shall be paid by Seller to Buyer within fifteen (15)
calendar days after the date on which Taxes are paid with respect to such
periods. In the event that any dispute regarding the Pre-Closing Portion of such
Taxes is resolved following the date on which Taxes are paid with respect to
such period, and Seller's liability, as so determined, exceeds the amount
previously paid by Seller hereunder, Seller shall make an additional payment
equal to such excess, together with interest thereon at the Applicable Rate.
Notwithstanding the foregoing, any payment by Seller pursuant to this paragraph
9.12(c)(ii)(A) shall be required only to the extent provided in Section
9.12(a)(ii).
(B) For purposes of this Section 9.12, in
the case of any Taxes for a Taxable Period that includes (but does not end on)
the Closing Date, the portion of such Tax that relates to the portion of such
Taxable Period ending on the Closing Date (the "Pre-Closing Portion") shall be
determined as follows:
(I) In the case of any Income Tax,
the Pre-Closing Portion of such Tax shall be deemed equal to the amount that
would be payable if the relevant Taxable Period ended at the close of business
on the Closing Date (and for such purpose, the taxable period of any partnership
or other pass-through entity in which any member of the Stock Group holds a
beneficial interest shall be deemed to terminate at such time).
(II) Real and personal property
Taxes shall be prorated based on the ratio of (x) the number of days in the
relevant taxable period up to and including the Closing Date to (y) the actual
number of days in the relevant taxable period with respect to which such Tax is
due. Sales and use taxes shall be deemed to accrue as property is purchased,
sold, used, or transferred. All other taxes (other than those specified in
clause (I)) shall accrue in accordance with generally accepted accounting
principles in the United States.
(C) All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent with
prior practice of the relevant Stock Subsidiary or Equity Subsidiary.
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(iii) Refunds and Credits. Any Tax refunds and any
amounts credited against Tax that are actually realized by or with respect to
members of the Stock Group that relate to Pre-Closing Tax Periods (other than as
are attributable to Tax Assets of the Stock Group arising after the Closing
Date) shall be for the account of Seller, and Buyer shall pay over to Seller the
net amount of any such refund or credit within fifteen (15) days after receipt
or entitlement thereto, to the extent that such amount exceeds the amount of any
asset reflected on the Closing Working Capital Statement that is (I) related to
Taxes and (II) directly associated with such Tax refund or credit (excluding any
deferred tax asset).
(iv) Tax Assets
(A) Buyer may, at its option, cause any
member of the Stock Group to elect, where permitted by applicable law, to carry
forward any Tax Asset arising in a Post-Closing Tax Period that would, absent
such election, be carried back to a Pre-Closing Tax Period in which such member
was included in a consolidated, combined or unitary Tax return filed by Seller
or any of its Affiliates.
(B) Seller agrees that the net amount of any
federal, state, local or foreign Tax benefit actually realized by any member of
the Stock Group, Seller or any of its affiliates in any Pre-Closing Tax Period
from the carryback of any Tax Asset of any member of the Stock Group arising in
a Post-Closing Tax Period shall be for the benefit of Buyer. Any such benefit
realized by any member of the Stock Group shall be retained by it, and any such
benefit realized by Seller (or its affiliates) shall be promptly paid over to
Buyer. Buyer agrees to repay Seller any amount paid by Seller to Buyer pursuant
to this paragraph (B) to the extent that the carryback with respect to such
payment is subsequently disallowed by the relevant taxing authority, following
receipt from Seller of reasonable written explanation of the nature of such
disallowance and appropriate documentation, to the extent available, provided
that Seller shall not be required to disclose to Buyer any portion of any Tax
Return.
(C) Seller agrees to file, or cause its
affiliates to file, Tax Returns (including amended Returns and claims for Tax
refunds) reflecting the benefits to which it is entitled from the carrybacks
described in this Section 9.12(c)(iv).
(v) Audits and Adjustments.
(A) Seller will conduct and control all Tax
audits of Tax Returns relating to the Tax Group for all periods ending on or
prior to the Closing Date, provided, however, that to the extent that the
settlement of an issue raised in such an audit could Materially affect the
liability for Taxes of Buyer or its affiliates (including members of the Stock
Group), Seller shall not settle such issue without the consent of Buyer, which
shall not be unreasonably withheld. In the event Buyer withholds its consent to
any final settlement relating to such issue, the Buyer may continue or initiate
further proceedings, at its own expense, and the Tax liability of the Seller
with respect to such issue shall not exceed the Tax liability that would have
resulted from the proposed final settlement (including for the avoidance of
doubt, interest, additions to tax and penalties that have accrued at that time),
and the Buyer shall indemnify the Seller for any such excess that relates to
such issue. Seller shall keep Buyer informed of the
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progress of any such Tax audits. Seller shall be responsible for the payment of
any deficiency resulting from such audit to the extent provided in Section
9.12(a)(ii).
(B) If any adjustments shall be made to any
federal or foreign Income Tax Returns relating to Seller, any Stock Selling
Subsidiary, or any member of the Tax Group for any Pre-Closing Tax Period as a
result of or in settlement of any audit, other administrative proceeding or
judicial proceeding or as the result of the filing of an amended return to
reflect the consequences of any determination made in connection with any such
audit or proceeding and if such adjustment results in (I) any deduction from
income taken by Seller (or any Stock Selling Subsidiary) or any member of the
Tax Group for (or related to) Pre-Closing Tax Periods being disallowed or the
income for tax purposes of Seller (or any Stock Selling Subsidiary) or any
member of the Tax Group otherwise being increased for such period and (II) Buyer
(or any member of the Tax Group) realizing either Material increased deductions
or a Material reduction in gross income for or in periods ending on or prior to
December 31, 2002 as a direct result of such action, then Buyer shall reimburse
Seller for the net amount of Tax benefits actually realized by Buyer (or any
member of the Tax Group) during such periods. Such sum shall be paid to Seller
within thirty (30) days of the filing of the Tax Return on which such Tax
benefit is reflected. Seller agrees to repay to Buyer any amount paid by Buyer
to Seller pursuant to this paragraph (B) to the extent that Buyer (or any member
of the Tax Group) later determines that it did not actually realize the related
tax benefit, following receipt from Buyer of reasonable written explanation of
the nature of such loss of tax benefit and appropriate documentation, to the
extent available, provided that Buyer shall not be required to disclose to
Seller any portion of any Tax Return.
(vi) Cooperation on Tax Matters.
(A) Buyer, each member of the Stock Group,
Seller and each Stock Selling Subsidiary and Asset Subsidiary shall provide the
other with such material and relevant information, as and to the extent
reasonably requested by the other party, in connection with the filing of Tax
Returns pursuant to this Section and any audit, litigation or other proceeding
with respect to Taxes imposed on Buyer, Seller, any Subsidiary or any entity
affiliated with any of the foregoing. Such cooperation shall include the
retention and (upon the other party's request, at the other party's cost and
expense and at the time and place mutually agreed upon by the parties) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder, to the extent such information and/or
explanation is readily available and within the control of the party to which
such request is made. The responsibility to retain records and information shall
include the responsibility to (I) retain such records and information as are
required to be retained by any applicable Tax authority and (II) retain such
records and information in machine-readable format where appropriate (to the
extent such records and information are in such format as of the Closing Date)
such that the requesting party shall be able to readily access such records and
information. Each of the members of the Stock Group, Buyer, Seller, and each
Stock Selling Subsidiary and Asset Subsidiary agree (A) to retain all books and
records with respect to Tax matters pertinent to each of the members of the
Stock Group, relating to any Taxable Period beginning before the Closing Date
until the expiration of the statute of limitations (and, to the extent notified
by Buyer or Seller, any extensions
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thereof) of the respective Taxable Periods, or longer as required by law, and to
abide by all record retention arrangements entered into with any taxing
authority, and (B) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other party so requests, any of the members of the Stock Group, or Seller, and
each Stock Selling Subsidiary and Asset Subsidiary as the case may be, shall
allow the other party to take possession of such books and records at its sole
cost and expense. The requesting party shall reimburse the other party for any
reasonable out-of-pocket expenses, or costs of making employees available, upon
receipt of reasonable documentation of such expenses or costs; provided that,
Buyer shall not be required to reimburse Seller for employee expenses associated
with preparation of Tax Returns for periods that begin before and end after the
Closing Date. Any information or explanation obtained pursuant to this Section
9.12 shall be maintained in confidence, except (i) as may be legally required in
connection with claims for refund or in conducting or defending any Tax audit or
other proceeding or (ii) to the extent the disclosing party provides written
permission for such disclosure.
(B) Buyer, Seller, and each Stock Selling
Subsidiary and Asset Subsidiary further agree, upon request, to use their
reasonable efforts to obtain any consents, rulings, certificates or other
documents from any governmental authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, the transactions contemplated hereby).
(C) Buyer and Seller further agree, upon
request, to provide the other party with all information that either party may
be required to report pursuant to Section 6043 of the Code and all Treasury
Regulations promulgated thereunder.
(vii) Tax Sharing Agreements. All tax sharing
agreements or similar agreements with respect to or involving any member of the
Stock Group shall be terminated as of the Closing Date and, after the Closing
Date, no member of the Stock Group shall be bound thereby or have any liability
thereunder.
(viii) Buyer Covenants and Indemnity. Buyer shall
pay, or cause to be paid, and Buyer and the members of the Stock Group shall
indemnify Seller and its affiliates against and hold them harmless from any
liability for, (i) Taxes arising from any sale or other disposition of assets
out of the ordinary course of business by any member of the Stock Group after
the Closing on the Closing Date (but for the avoidance of doubt, not including
any deemed asset sale under Section 338 made pursuant to Section 9.12(b)) and
(ii) any increase in Taxes payable by Seller pursuant to Sections 9.12(c)(i) or
(ii) to the extent such increase is caused by Buyer's failure to timely prepare
or file any Tax Return it is required to prepare or file thereunder.
(ix) Absence of Tax Control. The foregoing provisions
of this Section 9.12(c) shall not apply, as necessary, in any instance where
Seller, immediately prior to the Closing, or Buyer, immediately following the
Closing, does not have direct or indirect control over the relevant tax affairs
of the appropriate member of the Stock Group.
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(d) It is the intention of the Seller and the Buyer that, in
relation to value added tax, the provisions of Articles of 5(8) and 6(5) of the
Sixth Directive of the Council of the European Communities of 17 May 1977
(77/388/EEC) shall, subject to and in accordance with the applicable laws of any
member state of the European Union, apply to the transfer by Seller or any Asset
Subsidiary of Sale Assets to Buyer and accordingly:
(i) Buyer, Seller, and each Asset Subsidiary shall
use all reasonable efforts to ensure that the transfer of the Sale Assets
satisfies all conditions that are required to be satisfied pursuant to relevant
value added tax law such that the transfer of Sale Assets to Buyer constitutes
neither a supply of goods nor a supply of services for value added tax purposes;
to the extent that unavailability of relief is due to a failure on the part of
either Buyer or Seller, such party shall pay to the other party an amount equal
to all interest, fines, charges and penalties that become payable but that would
not have become payable but for such failure;
(ii) Seller, each Asset Subsidiary, and Buyer shall
cooperate together to the extent reasonable to do all such things as may be
necessary to ensure that the transfer of the Sale Assets pursuant to this
Agreement is treated as neither a supply of goods nor a supply of services for
the purposes of value added tax and shall each give notice of the transfer to
the relevant taxing authorities as required by law;
(iii) If, notwithstanding paragraphs (i) and (ii)
above, a taxing authority determines that value added tax is chargeable in
respect of the sale of any of the Sale Assets pursuant to this Agreement, then
the Seller shall immediately notify the Buyer of such determination and Buyer
shall, against delivery of a valid tax invoice in respect thereof, pay the
appropriate amount of value added tax in addition to the consideration otherwise
provided under this Agreement to be paid, such value added tax to be paid to
Seller at Closing or, if the relevant tax invoice is not delivered at Closing,
within fifteen business days of the delivery of such invoice, but such payment
shall be without prejudice to the right of the Buyer under this Agreement to
call upon the Seller to make or join an appeal against the aforesaid
determination subject to the provisions of clause (v) below.
(iv) Where the applicable value added tax laws of the
relevant member state require the value added tax records to be preserved by
Seller or any Asset Subsidiary following Closing, the Seller shall on the
Closing Date deliver to Buyer such records and Buyer shall ensure that such
records are preserved in the form, and for the period, required by the
applicable value added tax laws and shall ensure that Seller or the applicable
Asset Subsidiary is given such access as may be reasonably required to make any
return for value added tax purposes or to reply to any inquiries from any tax
authorities relating to value added tax.
(v) The Buyer at its sole discretion (but after
consultation with the Seller) may, within ten days of notification by the Seller
of a determination having been made by a taxing authority, dispute that
determination or request the Seller to dispute or join with the Buyer or any
other person in disputing that determination, including the making of a formal
appeal to the Value Added Tax Tribunal (or similar court or tribunal) and such
higher court of law as may subsequently be required to reach a decision on the
dispute. Seller shall promptly comply with any reasonable request hereunder but
shall not be obligated to take action under this
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clause unless the Buyer shall indemnify Seller against all costs and expenses so
incurred, including payment of any Tax required to maintain such dispute.
(e) Except to the extent such treatment is inconsistent with
other provisions of this Agreement (including but not limited to Section
11.6(f)), and except as otherwise required by law, any payments made pursuant to
the provisions of this Agreement (other than the payment of the Purchase Price)
shall be treated by both Buyer and Seller for income tax purposes as an
adjustment to the Purchase Price.
(f) Seller agrees to take all reasonable efforts, and to take
all necessary steps, to reinstate Kalama Foreign Sales Corporation as a
corporation in good standing under the laws of Guam, provided that Seller shall
not be required to spend more than $10,000 in satisfaction of its obligations
hereunder.
SECTION 9.13. NONCOMPETITION. Seller agrees, for a period of five (5)
years beginning on the Closing Date, that, it will not engage or permit any of
its affiliates to engage, directly or indirectly, anywhere in the world, in
competition with Buyer, in the Business as conducted as of the Closing Date (the
"Prohibited Activities"). Notwithstanding the preceding sentence, Seller or its
affiliates may (i) acquire (by merger or otherwise) any business (an "Acquired
Business") that includes a business which is then engaged in one or more of the
Prohibited Activities (such portion of the Acquired Business which is then
engaged in one or more of the Prohibited Activities, being a "Competitive
Business") if the acquisition of the Competitive Business is incidental to the
merger or acquisition of the Acquired Business and the Competitive Business
represents less than thirty percent (30%) of the aggregate sales revenues of the
entire Acquired Business for the twelve (12) calendar months immediately
preceding the closing of the acquisition of the Acquired Business. Seller or its
affiliates, as applicable, shall within twenty four months (24) from the date of
the closing of the Acquired Business, sell, exchange or transfer the Competitive
Business and during such twenty-four (24) month time period, neither Seller nor
its affiliates shall use the name "▇.▇. ▇▇▇▇▇▇▇▇", "▇▇▇▇▇▇▇▇" or "BFG" or any
derivative of such name in any material commercial context in connection with
the Competitive Business, (ii) acquire for pension or other passive investment
purposes an equity position of less than ten percent (10%) of the voting
interest of a third party who engages in one or more of the Prohibited
Activities or (iii) make investments through or for any pension or benefit plan
of Seller or its affiliates in the ordinary course of business.
Seller also agrees, for a period of two (2) years beginning on the
Closing Date, that, it will not directly or indirectly, solicit or attempt to
solicit, cause or induce, or attempt to cause or induce, any employee of the
Business as of the Closing who remains, and is at that time, an employee of the
Business to violate the term of such Person's employment agreement, if any, or
to terminate such Person's employment.
If any provision contained in this Section shall for any reason be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Section, but this
Section shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. It is the intention of the parties
that if any of the restrictions or covenants contained herein is held to cover a
geographic area or to be for a length of time which is not permitted by
applicable law, or in any way construed to be too
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broad or to any extent invalid, such provision shall not be construed to be
null, void and of no effect, but to the extent such provision would be valid or
enforceable under applicable law, a court of competent jurisdiction shall
construe and interpret or reform this Section to provide for a covenant having
the maximum enforceable geographic area, time period and other provisions (not
greater than those contained herein) as shall be valid and enforceable under
such applicable law. Seller acknowledges that Buyer would be irreparably harmed
by any breach of this Section and that there would be no adequate remedy at law
or in damages to compensate Buyer for any such breach. Seller agrees that Buyer
shall be entitled to injunctive relief requiring specific performance by Seller
of this Section, and Seller consents to the entry thereof.
SECTION 9.14. DIRECTORS' AND OFFICERS' INSURANCE. For a period of six
(6) years from the Closing Date, Buyer agrees to maintain run-off directors' and
officers' liability insurance policies for the past and current officers and
directors of the Subsidiaries that are part of the Stock Group, provided that
any such insurance shall cover claims which arise, in whole or in part, from
facts or circumstances which occurred prior to Closing, with limits of not less
than $25,000,000, provided, further that in no event shall Buyer be required to
expend more than $125,000 to maintain coverage. Seller further agrees not to
amend the Certificate of Incorporation, Bylaws or other organizational documents
of such Subsidiaries to reduce or eliminate the level of indemnification
provided by such Subsidiaries to the past and current officers and directors of
such Subsidiaries.
SECTION 9.15. OPERATING CASH. Seller agrees to cause there to be cash
in the Business at Closing held in accounts reasonably designated in writing by
Buyer no later than five (5) days prior to the Closing and located in the United
States or Belgium in the amount of not less than Five Million Dollars
($5,000,000).
SECTION 9.16. AEROSPACE LEASE. Buyer and Seller agree to execute a
Lease Agreement in the form reasonably agreed to by Buyer and Seller ("Aerospace
Lease Agreement") for the lease to Seller of certain space in the Brecksville,
Ohio facility described in Exhibit E and containing those terms set forth in
Exhibit E.
SECTION 9.17. EMD LEASE. Buyer and Seller agree to execute a Lease
Agreement in the form reasonably agreed to by Buyer and Seller ("EMD Lease
Agreement") for the lease to Seller of certain space in the Brecksville, Ohio
facility described in Exhibit F and containing those terms set forth in Exhibit
F.
SECTION 9.18. SUBLICENSE OF LEMELSON LICENSE. Buyer and Seller agree to
execute a sublicense in the form reasonably agreed by Buyer and Seller as
anticipated by Paragraph 11 of that certain Supplier Agreement between the
Lemelson Medical, Education and Research Foundation and Seller with an effective
date of December 31, 1999, conveying to Buyer from and after the Closing all
benefits and rights related to the Business that Seller is entitled to confer to
Buyer pursuant to such supplier agreement (provided that in no event shall
Seller be required to pay additional licensing fees or other fees on behalf of
Buyer).
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ARTICLE X
CLOSING DELIVERIES
SECTION 10.1. DELIVERIES TO BUYER AT THE CLOSING. At the Closing and
simultaneously with the deliveries to Seller specified in Section 10.2, Seller
shall execute and/or deliver, or cause to be executed and/or delivered, to Buyer
or to such Persons or entities as Buyer shall identify in writing, the following
items:
(a) A copy of all resolutions adopted by the Board of
Directors of Seller and its Subsidiaries that are affiliates authorizing the
execution and delivery of this Agreement and the consummation of the
Transaction, together with a certificate, duly executed by the Secretary or
Assistant Secretary of Seller, stating that such copies are true, complete and
correct, and that the resolutions have been duly adopted by the Seller's or such
Subsidiaries' Board of Directors, and have not been amended since adoption, and
remain in full force and effect.
(b) The certificates of an officer of Seller described in each
of Sections 6.1 and 6.2.
(c) Certificates of Title for any cars or titled vehicles that
are part of the Other Tangible Property Acquired by Asset Purchase, transferring
such cars and titled vehicles to Buyer.
(d) Bills of sale transferring the Inventory and Supplies
Acquired by Asset Purchase, the Other Tangible Property Acquired by Asset
Purchase and the Intangibles Acquired by Asset Purchase that can be transferred
by ▇▇▇▇ of sale, to Buyer free and clear of any Encumbrances other than
Permitted Encumbrances.
(e) The Transition Services Agreement.
(f) An instrument or instruments of assignment assigning the
Receivables Acquired by Asset Purchase, the Contracts Assigned by Asset
Purchase, other Intangibles Acquired by Asset Purchase and the Assigned Prepaid
Expenses Acquired by Asset Purchase to Buyer free and clear of any Encumbrances
other than Permitted Encumbrances.
(g) Limited warranty deeds or bargain and sale deeds in the
form reasonably satisfactory to counsel for Buyer and counsel for Seller duly
executed by the record owner of the Real Property Acquired by Asset Purchase
conveying the good, marketable and insurable title to the fee simple estate in
the Real Property Acquired by Asset Purchase to Buyer.
(h) A certificate of the Secretary or Assistant Secretary of
Seller (with exhibits) in a form reasonably satisfactory to Buyer, and such
other organizational documents as Buyer shall reasonably require.
(i) A certificate of valid existence and good standing of
Seller and each of the Subsidiaries that are a part of the Stock Group issued
not earlier than twenty (20) days prior to the Closing Date.
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(j) Certificate certifying to Buyer the incumbency of the
officers of Seller and its Subsidiaries that are affiliates, and bearing the
authentic signatures of all such officers who have executed this Agreement or
agreements contemplated hereby.
(k) The resignation of those directors and officers of the
members of the Stock Group that Buyer, with reasonable notice to Seller prior to
Closing, requests (provided, however, that with respect to directors and
officers of any members of the Stock Group that are not wholly owned, Seller
shall be required to deliver resignations of only those directors and officers
appointed and/or controlled directly or indirectly by Seller).
(l) Delivery of the bylaws, minute books, stock record books,
and all similar corporate or organizational records of the Subsidiaries that are
part of the Stock Group other than those Subsidiaries not controlled directly or
indirectly by Seller.
(m) A receipt, executed by Seller, acknowledging receipt of
payment for the Stock and the other Sale Assets.
(n) Certificates evidencing all of the Stock duly endorsed by
and in proper form for transfer to Buyer or accompanied by duly executed stock
powers, evidencing all of the Stock.
(o) The Material Consents described in Section 6.4 herein.
(p) Such other and further instruments, documents and other
considerations as Buyer may reasonably deem necessary or desirable, or as may be
required, to consummate the Transaction.
(q) With respect to each Seller, either (i) an affidavit of
non-foreign status conforming to the model certification in Section
1.1445-2(b)(2) of the Treasury Regulations or (ii) a statement conforming to the
requirements of Section 1.1445-2(c)(3) of the Treasury Regulations that provides
that each interest that such Seller is selling pursuant to this Agreement is not
a "United States real property interest", as applicable.
(r) The Aerospace Lease Agreement.
(s) The EMD Lease Agreement.
SECTION 10.2. DELIVERIES TO SELLER AT THE CLOSING. At the Closing, and
simultaneously with the deliveries to Buyer specified in Section 10.1, Buyer
shall execute and/or deliver, or cause to be executed and/or delivered, to
Seller or to such persons or entities as Seller shall identify in writing, the
following items:
(a) A copy of all resolutions adopted by the Board of
Directors of Buyer and shareholders of Buyer, if appropriate or required,
authorizing the execution and delivery of this Agreement and the consummation of
the Transaction, together with a certificate, duly executed by the Secretary or
Assistant Secretary of Buyer, stating that such copy is true, complete and
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correct, and that the resolutions have been duly adopted by Buyers' Board of
Directors, have not been amended since adoption, and remain in full force and
effect.
(b) The certificate of an officer of Buyer described in each
of Sections 7.1 and 7.2.
(c) The Purchase Price, calculated as of the Closing Date as
provided elsewhere herein, which shall be paid in accordance with Section 1.6.
(d) The Transition Services Agreement.
(e) An Agreement in form and substance mutually satisfactory
to the parties, pursuant to which Buyer shall assume and agree to pay, perform
and discharge as and when due all Assumed Liabilities (other than Assumed
Liabilities assumed by Buyer by other instrument provided herein) ("Assumption
Agreement").
(f) A certificate of the Assistant Secretary or Secretary of
Buyer (with exhibits) in a form reasonably satisfactory to Seller and such other
organizational documents as Seller shall reasonably require.
(g) A receipt, executed by Buyer, acknowledging receipt of
certificates evidencing all of the Stock.
(h) Such other and further instruments, documents and other
considerations as Seller may reasonably deem necessary or desirable, or as may
be required, to consummate the Transaction.
(i) The Aerospace Lease Agreement.
(j) The EMD Lease Agreement.
SECTION 10.3. THIRD-PARTY CONSENTS. To the extent that Seller's or its
Subsidiaries' rights under any agreement, contract, commitment, lease, Permits
or other Asset to be assigned to Buyer under this Agreement may not be assigned
without the consent of another Person which has not been obtained as of the
Closing Date (other than the Material Consents), this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful. Seller shall use commercially
reasonable efforts to obtain consents to the assignment to Buyer by such other
Persons of all such agreements where in the opinion of Buyer's counsel such
consent is required or advisable. If any such consent shall not be obtained or
if any attempted assignment would be ineffective or would impair Buyer's rights
under the Sale Asset in question such that Buyer would not in effect acquire the
benefit of all such rights, then, to the maximum extent permitted by law, the
parties hereto agree to cooperate with the other in any reasonable alternative
arrangement (including, without limitation, subcontracting, sublicensing,
subleasing and delegation of performance), which will give Buyer the full
benefits of such Sale Assets. If Buyer requests that Seller enforce rights under
any such contract and such enforcement entails the filing by Seller of a suit or
other legal proceeding,
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Buyer will reimburse Seller for any reasonable costs Seller incurs as a result
of Buyer's request and hold Seller harmless from and against any liability
arising from the action requested by Buyer except for liabilities for which
Buyer is indemnified by Seller elsewhere herein.
ARTICLE XI
INDEMNIFICATION
SECTION 11.1. INDEMNIFICATION BY SELLER. Seller shall indemnify, defend
and hold harmless Buyer, its successors and assigns, and its officers,
directors, employees, agents and affiliates ("Buyer's Indemnified Persons"),
from and against any and all losses, liabilities, damages, costs and expenses
(including, without limitation, reasonable attorneys' fees) (collectively,
"Losses"), arising out of, based upon or relating to:
(a) any misrepresentation in or breach of any representation
or warranty made by Seller in this Agreement (or any section of the Disclosure
Schedule);
(b) the nonfulfillment of or failure to perform any covenant
or other obligation of Seller or any of its Subsidiaries or affiliates, set
forth in this Agreement;
(c) any Excluded Liabilities;
(d) any violation of the so called "bulk transfer laws"
described in Section 9.7;
(e) enforcement of this Section 11.1;
(f) the Reorganization (provided that Seller's indemnification
for such Reorganization is limited to Losses with respect to periods or portions
of periods which end on or before the Closing Date arising as a direct result of
such Reorganization); or
(g) any of the Subsidiaries (including members of the Stock
Group) being jointly and/or severally liable, on, before or after the Closing,
under Code Sections 412, 4971 or 4980B, or ERISA Section 302, or Sections 601
through 609 or Title IV of ERISA, by reason of being considered to have been an
ERISA Affiliate with the Seller or any of Seller's ERISA Affiliates.
SECTION 11.2. INDEMNIFICATION BY BUYER. Buyer shall indemnify, defend
and hold harmless Seller and its Subsidiaries and their respective successors,
assigns, officers, directors, employees, agents and affiliates, from and against
any and all Losses arising out of, based upon or relating to:
(a) any misrepresentation in or breach of any representation
or warranty made by Buyer in this Agreement;
(b) the nonfulfillment or failure to perform of any covenant
or other obligation of the Buyer set forth in this Agreement;
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(c) any Assumed Liabilities;
(d) enforcement of this Section 11.2; or
(e) any liability for Buyer's failure to meet obligations to
employees under Section 9.2 of this Agreement.
SECTION 11.3. INDEMNITY AND COST SHARING WITH RESPECT TO ENVIRONMENTAL
COSTS.
(a) This Section 11.3, together with Sections 4.7(d) and
9.10(d), exclusively govern the allocation of Environmental Costs between Buyer
and Seller as such costs relate to the Owned Real Property, the Leased Real
Property and the ownership and operation of the Business. Buyer and Seller each
release and discharge each other from any and all claims or defenses that either
might now or hereafter have under any Environmental Laws (including without
limitation the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. ss.ss.9601, et seq.) relating to the Business
or the Sale Assets or the assets of any member of the Stock Group.
(b) Buyer shall defend, indemnify and hold harmless Seller and
its Subsidiaries from and against all Environmental Costs relating to the Owned
Real Property, the Leased Real Property and ownership or operation of the
Business to the extent that such Environmental Costs arise from the ownership or
operation of the Business from and after Closing (it being understood that such
Environmental Costs do not include Environmental Costs indemnified by Seller
under this Section 11.3 or that are the responsibility of Seller under Sections
4.7(d) or 9.10(d)).
(c) (i) Seller shall defend, indemnify and hold harmless Buyer
Indemnified Persons from and against (A) all fines or penalties imposed by
governmental entities under Environmental Laws relating to ownership or
operation of the Business or relating to the operation of any member of the
Stock Group, in each case, on or before the Closing; and (B) all Environmental
Costs relating to or arising from (I) any location other than Owned Real
Property or Leased Real Property, including without limitation any off-site
location used by or in connection with the ownership or operation of the
Business or by or on behalf of any member of the Stock Group on or prior to the
Closing (including, without limitation, the use, storage, transportation or
arranging for transportation, disposal of or arranging for disposal of, Release
or threatened Release of any Hazardous Material to or at any such third-party or
offsite location), (II) any divested or former entity, business, facility or
property of Seller, any Asset Subsidiary or any member of the Stock Group, or
any of their respective affiliates including in each case, predecessors of any
of the foregoing whether formerly related to the Business or otherwise, and
(III) the facilities identified on Schedule 11.3(c); in each case without
limitation as to time or amount; and
(ii) (A) Seller shall have the right to control the
defense and resolution of all matters subject to indemnification pursuant to
Section 11.3(c)(i); (B) if Buyer and Seller are both named as defendants in a
matter subject to indemnity under this Section 11.3(c)(i) and,
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if there would be a Conflict of Interest for a counsel and/or consultant to
represent both Buyer and Seller in connection with such matter, then Seller
shall bear the costs and expenses of separate counsel and/or consultant of Buyer
in connection with such matter; (C) with respect to any such matter in which
Buyer is named as a party or that would unreasonably interfere with Buyer's
operation of the Business or Buyer's use of the Owned Real Property, Leased Real
Property or Sale Assets, (I) no compromise or settlement in response to such
matters may be reached by Seller without Buyer's written consent (which shall
not be unreasonably withheld or delayed), and (II) Seller shall provide Buyer
with reasonable advance notice of, and an opportunity to comment on, any planned
activities and any documents proposed to be submitted to governmental entities
or other third parties, and an opportunity for Buyer to participate in any
meetings or material negotiations with any third party (excluding counsel,
consultants or other experts retained by Seller).
(d) (i) Schedule 11.3(d) sets forth a list of environmental
remediation projects (the "Defined Remediation Projects") at the Charlotte, NC,
Cincinnati, OH, Louisville, KY and Kalama, WA facilities. Subject to the terms
of this Section 11.3(d), Seller shall be responsible for and shall defend,
indemnify and hold harmless Buyer Indemnified Persons from and against all
out-of-pocket cash Environmental Costs (including capital costs) relating to or
arising from the Defined Remediation Projects. Any Environmental Costs that do
not relate to or arise from the Defined Remediation Projects shall not be
subject to this Section 11.3(d).
(ii) (A) Buyer shall have the right to control the
Defined Remediation Projects, subject to the rights of any third party
indemnitor (including such indemnitor's rights, if any, to control the Defined
Remediation Projects), and Seller shall have the right to control the defense
and resolution of any third party claims asserted or threatened in connection
with or arising from a Defined Remediation Project subject to this Section
11.3(d), unless in Buyer's reasonable judgment the defense or resolution of such
third party claim would unreasonably interfere with Buyer's operation of the
Business or Buyer's use of the Owned Real Property, the Leased Real Property or
the Sale Assets, in which case Buyer shall have the right to control the defense
and resolution of such third party claim; (B) if Buyer and Seller are both named
as defendants in a matter subject to indemnity under this Section 11.3(d) and
there would be a Conflict of Interest for a counsel and/or consultant to
represent both Buyer and Seller in connection with such matter, then Seller
shall bear the costs and expenses of separate counsel and/or consultant of Buyer
in connection with such matter; (C) no compromise or settlement may be reached
by the party controlling a Defined Remediation Project (or any related
third-party claim) without the non-controlling party's written consent (which
shall not be unreasonably withheld or delayed); (D) the party controlling a
Defined Remediation Project (or any related third-party claim) shall provide the
non-controlling party with reasonable advance notice of, and an opportunity to
comment on, any planned activities and any documents proposed to be submitted to
governmental entities or other third parties, and an opportunity for the
non-controlling party to participate in any meetings or material negotiations
with any third party (excluding counsel, consultants or other experts retained
by the controlling party); and (E) Seller's consent and participation rights set
forth in Subsections 11.3(d)(ii)(C) and (D) above shall not survive the
termination of Seller's indemnification obligations under this Section 11.3(d)
as set forth in Section 11.3(d)(iii).
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(iii) Seller's obligations under this Section 11.3(d)
shall terminate on the tenth (10th) anniversary of the Closing, except with
respect to any claims relating to or arising from a Defined Remediation Project
that are asserted by a third party on or before the tenth (10th) anniversary of
Closing which shall survive until their final resolution. Buyer shall assume and
complete all obligations of Seller relating to the Defined Remediation Projects
arising from and after the tenth (10th) anniversary of Closing, except to the
extent that Seller has indemnity obligations to Buyer under Section 11.3(d)
remaining after the tenth (10th) anniversary of Closing.
(iv) Notwithstanding the foregoing, Buyer shall be
responsible for providing the services identified on Schedule 9.10(d) in
accordance with Section 9.10(d).
(v) In connection with the Defined Remediation
Project at Cincinnati, Ohio, in the event that, as a result of an act by or on
behalf of Buyer after Closing, an Environmental Cost that had theretofore been
paid or provided for by a third party in connection with an indemnification
obligation for the benefit of the Business under an agreement existing on the
date hereof is no longer paid or provided for by such third party, such
Environmental Cost shall be borne by Buyer.
(e) (i) Except for the matters covered in Subsections
11.3(e)(ii), 11.3(e)(iii) and 11.3(e)(iv) below, Seller shall be responsible for
and shall defend, indemnify and hold harmless Buyer Indemnified Persons from and
against 50% of any out-of-pocket cash Environmental Costs (including capital
costs) resulting from a breach of Seller's representations in Section 2.17(a) of
this Agreement, provided that
(A) Any such Environmental Claim must be
asserted within 18 months of the Closing; and
(B) Any such Environmental Claim relating to
soil or groundwater contamination resulting from an alleged violation of
Environmental Law prior to the Closing shall be subject to the terms of Section
11.3(f) hereof, unless otherwise subject to Sections 11.3(c) or (d).
(ii) Responsibility for certain Environmental Costs
with respect to certain matters at the ▇▇▇▇▇, IL, Vadodara, India, Oevel,
Belgium and Barcelona, Spain facilities shall be apportioned between Buyer and
Seller as described on Schedule 11.3(e)(ii).
(iii) Seller shall be responsible for and shall
defend, indemnify and hold harmless Buyer from and against 50% of all
out-of-pocket cash Environmental Costs (including capital costs) arising out of
or relating to the matters identified on Schedule 11.3(e)(iii); provided that
Seller shall not be responsible for such Environmental Costs identified in
Schedule 11.3(e)(iii) as being Buyer's responsibility.
(iv) To the extent any of the matters identified on
the portion of Section 2.17(a) of the Disclosure Schedule titled "Items in
Capital Budget" would constitute a breach of Section 2.17(a) of the Agreement
(without regard to any disclosure in Section 2.17(a)), then
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Seller shall be responsible for and shall defend, indemnify and hold harmless
Buyer Indemnified Persons from and against 50% of all out-of-pocket cash
Environmental Costs (including capital costs) resulting from such breach in
excess of amounts budgeted therefor, subject to the limitations in subsections
11.3(e)(i)(A) and (B) above.
(v) Costs paid by Buyer pursuant to Section 11.3(e),
other than the costs to be paid by Buyer identified in Schedule 11.3(e)(ii),
shall apply to the indemnity deductible in Section 11.6 hereof and the $20
million cap and $2 million per calendar year limitation in Section 11.3(f)(i)(A)
hereof.
(vi) Buyer shall exclusively control the defense,
negotiation or resolution of any matters subject to indemnification pursuant to
this Section 11.3(e) and any related fines or penalties indemnified pursuant to
Section 11.3(c)(i), provided that: (A) no compromise or settlement may be
reached by Buyer without Seller's written consent (which shall not be
unreasonably withheld or delayed); and (B) Buyer shall provide Seller reasonable
advance notice of, and an opportunity to comment on, any planned activities and
any documents proposed to be submitted to governmental entities or other third
parties, and an opportunity for Seller to participate in any meetings or
material negotiations with any third party (excluding counsel, consultants or
other experts retained by Buyer).
(f) (i) Seller shall defend, indemnify and hold harmless Buyer
Indemnified Persons from and against all Environmental Costs resulting from any
conditions, events or activities occurring or existing at or before Closing at,
on, in or migrating to or from any Owned Real Property or Leased Real Property
or Sale Assets or otherwise relating to any member of the Stock Group, other
than matters indemnified pursuant to Sections 11.3(c), 11.3(d) and 11.3(e)
hereof (it being understood that any off-site migration of contaminants from
Owned Real Property or Leased Real Property other than any offsite migration
subject to indemnification by Seller pursuant to Sections 11.3(c) or 11.3(d) in
accordance with the respective terms thereof, shall be subject to this Section
11.3(f)) provided that:
(A) Buyer shall be responsible for 50% of
all Environmental Costs not otherwise actually paid or indemnified by a third
party, provided that Buyer's share of costs under this Section 11.3(f) shall not
exceed $2 million in any one calendar year or $20 million in the aggregate, with
any Buyer share in excess of $2 million in any one calendar year being carried
forward, with no term limit, until fully paid by Buyer up to $20 million, and
further provided that all payments by Buyer under Section 11.3(f) shall count
towards the deductible in Section 11.6; and
(B) Seller shall not be obligated to
indemnify Buyer Indemnified Persons pursuant to this Section 11.3(f) with
respect to an Environmental Claim under this Section 11.3(f) unless
Environmental Costs relating to, resulting from or attributable to such
Environmental Claim exceed $100,000 (it being understood that such limitation
shall be considered a threshold rather than a deductible).
(ii) Buyer shall control any Environmental Claim
under this Section 11.3(f), provided that at any time following Seller's written
agreement to pay 100% of
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Environmental Costs incurred after Buyer's assumption of control, Seller can
assume control of all or part of any such Environmental Claim, subject to the
terms of Section 11.3(j) hereof (a "Seller Controlled Project"), provided
further that (A) Buyer, upon written notice to Seller, may retain or reassume
control of any Seller Controlled Project if, in Buyer's reasonable judgment,
allowing Seller to assume or retain control would adversely impact Buyer's
operations at the site or unreasonably interfere with Buyer's conduct of the
Business at the site or otherwise (in which event Environmental Costs incurred
after Buyer's assumption of control shall be shared as provided in Section
11.3(f)(i) above), (B) any costs of a Seller Controlled Project would be exempt
from Buyer's cap in Section 11.3(f)(i)(A), (C) Buyer will provide access as
reasonably necessary to the relevant Owned Real Property or Leased Real Property
and limited services reasonably available through Buyer to support such Seller
Controlled Project (including plant utilities, maintenance, and site security),
(D) only Buyer's out-of-pocket cash costs of providing such service with respect
to a Seller Controlled Project will be subject to the indemnity, (E) no
compromise or settlement in response to a Seller Controlled Project may be
reached by Seller without Buyer's written consent (which shall not be
unreasonably withheld or delayed), and (F) Seller shall provide Buyer with
reasonable advance written notice of, and an opportunity to comment on, any
planned activities and any documents proposed to be submitted to governmental
entities or other third parties, and an opportunity for Buyer to participate in
any meetings or material negotiations with any third party (excluding counsel,
consultants or other experts retained by Seller);
(iii) Seller's indemnification obligations under this
Section 11.3(f) shall terminate on the tenth (10th) anniversary of the Closing,
provided that (A) any soil or groundwater remediation projects (including
without limitation, investigation, remediation, removal, corrective action
and/or monitoring) that are covered by this Section 11.3(f) or any claim by a
government authority, or (B) any Environmental Claims by a third party (other
than a governmental authority) under this Section 11.3(f) asserted, but in each
case not resolved, prior to the tenth (10th) anniversary of the Closing shall
continue until their final resolution, provided further that any cost sharing
obligations of Seller pursuant to Section 11.3(f) with respect to Environmental
Costs described in clause (A) above after the tenth (10th) anniversary of
Closing shall be limited to: 40% of Environmental Costs incurred in the year
following the 10th anniversary of the Closing; 30% of Environmental Costs
incurred in the year following the 11th anniversary of the Closing; 20% of
Environmental Costs incurred in the year following the 12th anniversary of the
Closing; and 10% of Environmental Costs incurred in the year following the 13th
anniversary of the Closing, with no cost sharing obligation of Seller after the
14th anniversary of Closing (it being understood with respect to any Seller
Controlled Project costs, Seller's indemnification obligation shall be borne
100% by Seller and shall continue until resolution thereof).
(g) Notwithstanding all other provisions in this Section 11.3,
Seller shall be obligated under Sections 11.3(e) and 11.3(f) only to the extent
that:
(i) Environmental Costs result from (A) requirements
(I) ordered, directed, or imposed by a government entity or court order, (II)
otherwise required under applicable Environmental Law (provided that, in the
case of (I) and (II) Buyer shall not be required to appeal an unlawful
government requirement, if in Buyer's reasonable judgment, (x)
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the cost of appeal would exceed the cost of compliance, or (y) such appeal would
not likely succeed), or (III) by a third party (pursuant to contract obligations
of Seller existing at Closing) or (B) claims by third parties;
(ii) Buyer has not taken any voluntary action that is
not required by Environmental Law or ordered, directed, or imposed by any
governmental entity or Environmental Permit or by a third party (pursuant to
contract obligations of Seller existing on or prior to Closing) that would
reasonably be expected to initiate or accelerate any Environmental Costs, except
to the extent such voluntary action is (A) reasonably necessary to respond to an
emergency, (B) reasonably necessary to avoid liability under any Environmental
Law, or (C) in connection with routine operation or expansion of the Business or
sale of a facility (in any event, not including costs that would not have been
incurred but for a facility closure); and
(iii) Buyer has acted only in a "Lowest-Cost
Commercially Reasonable" manner, which, for purposes of this Agreement, shall
mean the lowest cost methods for investigation, remediation, removal, corrective
action, containment and/or monitoring permitted by applicable Environment Laws
determined from the perspective of a reasonable business person acting (without
regard to the availability of indemnification hereunder) to achieve compliance
with applicable Environmental Law or to minimize liability under Environmental
Laws or to third parties, it being understood that such Lowest-Cost Commercially
Reasonable manner shall where appropriate, include the use of risk-based
remedies, institutional or engineering controls, or deed restrictions, provided
such controls do not unreasonably interfere with Buyer's use of the Owned Real
Property, Leased Real Property or the Sale Assets for industrial purposes (or
commercial purposes, where such property was being used for commercial purposes
as of the Closing) or Buyer's ability to conduct the Business, it being further
understood that, in the event of an actual conflict between (A) a requirement
under applicable Environmental Law or an order, direction or mandate by a
governmental entity and (B) what would otherwise be a Lowest-Cost Commercially
Reasonable manner, the requirement, order, direction or mandate shall be deemed
the Lowest-Cost Commercially Reasonable manner.
(h) Buyer or Seller, as the case may be, shall provide prompt
written notice to the other party of any order, demand, notice of potential
liability, complaint or claim for indemnification by any governmental authority
or other third party, or any other claim for indemnification that is not the
subject of a third party claim in each case that may result in indemnifiable
Environmental Costs (an "Environmental Claim"), provided that any failure of
Buyer or Seller, as the case may be, to give such notice shall relieve Buyer or
Seller of its obligations only to the extent that Buyer or Seller is actually
prejudiced by such failure.
(i) Except as otherwise expressly provided herein, Buyer shall
exclusively control the defense, negotiation or resolution of any Environmental
Claim for which Buyer or Seller is entitled to indemnification pursuant to
Sections 11.3(c), 11.3(d), 11.3(e) or 11.3(f) concerning any Owned Real
Property, Leased Real Property or Sale Assets ("On-Site Claim"). Buyer may
select counsel and environmental consultants which, so long as Seller may have
surviving indemnification obligations with respect to such On-Site Claim, are
reasonably acceptable to Seller. So long as Seller may have surviving
indemnification obligations with respect to such On-Site Claim under Section
11.3, no compromise or settlement in response to an
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On-Site Claim may be reached by Buyer without Seller's prior written consent
(which shall not be unreasonably withheld or delayed). If Buyer and Seller are
both named as defendants in or are both the subject of an On-Site Claim and
there would be a Conflict of Interest in counsel representing both Buyer and
Seller in such claim then Seller shall pay the costs and expenses of separate
counsel or consultants of Buyer in accordance with its respective
indemnification obligations. In connection with any On-Site Claim managed by
Buyer, upon request, Buyer shall, to the extent practical, provide Seller with
reasonable advance notice of, and an opportunity to comment on, any planned
activities, and any documents proposed to be submitted to governmental entities
or other third parties and an opportunity for Seller to participate in any
meetings or material negotiations with any third party (excluding counsel,
consultants or other experts retained by Buyer).
(j) In connection with any Environmental Claim under this
Section 11.3: (A), Seller shall not unreasonably interfere with Buyer's use of
the Owned Real Property, Leased Real Property or Sale Assets or Buyer's ability
to conduct the Business, and shall take all reasonable efforts to minimize any
interference with Buyer's ability to conduct the Business and (B) Buyer will
cooperate with all reasonable requests of Seller, including without limitation
providing reasonable access to property, business records and data, and use of
plant utilities, maintenance and site security or other similar services
controlled by Buyer (it being understood that Seller shall reimburse Buyer for
the use of plant utilities, maintenance and site security or other similar
services to the extent provided for in this Section 11.3 and Section 9.10(d)).
(k) Buyer and Seller shall use all reasonable efforts to
maintain and enforce any third-party indemnities available or potentially
available to either Buyer or Seller, even if the indemnity being maintained or
enforced would benefit only the other party (it being understood that any costs
incurred in maintaining and enforcing such third-party indemnities shall be
allocated to Buyer or Seller in accordance with their respective apportionment
of responsibility in this Section 11.3). On the tenth (10th) anniversary of the
Closing Date, Seller shall use commercially reasonable efforts to assign to
Buyer any third-party indemnities. To the extent any indemnities are not
assigned to Buyer, Seller shall use its commercially reasonable efforts to
enforce such indemnities and shall pay to Buyer any benefits relating to any
Environmental Claim that Seller actually recovers pursuant to any third-party
indemnities, net of costs of collection.
(l) Seller shall not be obligated to indemnify Buyer pursuant
to this Section 11.3 to the extent Environmental Costs result from (A) Buyer's
unreasonable disturbance of the areas identified on Schedule 11.3(l) that are
subject to long-term closure requirements under Environmental Laws, or (B)
Buyer's failure to take commercially reasonable measures to avoid disturbance of
the "areas of concern" noted on Schedule 11.3(l).
(m) "Out of pocket Environmental Costs" as used in this
Section 11.3 and Section 11.3(e)(iii) of the Seller's Disclosure Schedule shall
include, without limitation, (i) capital costs, (ii) costs relating to or
arising out of any bond, letter of credit or similar instrument posted, issued
or granted by or on behalf of Buyer or its Affiliates, and (iii) all amounts
drawn under such bond, letter of credit or similar instrument, provided that it
is understood and agreed, with respect to any amounts drawn under such bond,
letter of credit or similar instrument after
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Seller's obligations to indemnify Buyer under this Section 11.3 terminate,
Seller shall remain liable to Buyer only for its allocable share (as determined
pursuant to this Section 11.3) of amounts drawn to satisfy obligations that
relate specifically to the period during which Seller was responsible to
indemnify Buyer hereunder.
SECTION 11.4. CLAIMS.
(a) Except as set forth in Section 11.3, upon the occurrence
of any event that a party hereto (the "Indemnified Party") asserts to be the
basis for a claim for indemnification against the other party (the "Indemnifying
Party") under this Article XI (a "Claim"), then the Indemnified Party shall
promptly give notice (a "Claim Notice") to the Indemnifying Party thereof in
writing, which Claim Notice shall set forth the basis for the Claim, and, to the
extent reasonably practicable, the amount necessary to satisfy such Claim;
provided, however, that no delay on the part of the Indemnified Party in
notifying the Indemnifying Party shall relieve the Indemnifying Party from any
obligation under this Agreement except to the extent the Indemnifying Party
thereby is prejudiced.
(b) If the Claim involves the claim of any third Person (a
"Third-Party Claim"), the Indemnifying Party shall have the right to assume and
control the defense of the Third-Party Claim with counsel of its own choice
reasonably satisfactory to the Indemnified Party, so long as the Indemnifying
Party notifies the Indemnified Party of such defense in writing within thirty
(30) days after the Indemnified Party has given notice of the Third-Party Claim
and the Indemnifying Party conducts the defense of the Third-Party Claim
actively and diligently; provided, however, that the Indemnified Party may
retain separate co-counsel at its sole cost and expense and participate in the
defense of the Third-Party Claim (except that in the event of a Conflict of
Interest, the Indemnifying Party shall pay the reasonable fees of the separate
co-counsel, provided that such separate co-counsel shall not be the independent
counsel rendering the written opinion regarding the existence of the Conflict of
Interest).
(c) So long as the Indemnifying Party has assumed and is
conducting the defense of the Third-Party Claim in accordance with Section
11.4(b): (i) the Indemnifying Party shall not consent to the entry of any
judgment or enter into any settlement with respect to the Third-Party Claim
without the prior written consent of the Indemnified Party (not to be
unreasonably withheld), and (ii) the Indemnified Party shall not consent to the
entry of any judgment or enter into any settlement with respect to the
Third-Party Claim without the prior written consent of the Indemnifying Party
(not to be unreasonably withheld).
(d) In the event the Indemnifying Party does not assume and
conduct the defense of the Third-Party Claim in accordance with Section 11.4(b),
the Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third-Party Claim in
any manner it reasonably may deem appropriate (and the Indemnified Party need
not consult with or obtain any consent from the Indemnifying Party in connection
therewith).
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(e) Whenever the Indemnified Party shall have given a Claim
Notice to the Indemnifying Party that does not involve a Third-Party Claim, the
Indemnifying Party may, within thirty (30) days after receipt of such Claim
Notice, notify the Indemnified Party that the Indemnifying Party disputes the
Claim for indemnification set forth in such Claim Notice and the basis for such
dispute (a "Dispute Notice"). If, with respect to the claim for indemnification
set forth in a Claim Notice, no Dispute Notice is given to the Indemnified Party
within such thirty (30) day period, the Claim shall be deemed valid, and the
Indemnifying Party shall be obligated to pay to the Indemnified Party the amount
specified in the Claim Notice with respect to such Claim. If a Dispute Notice is
given to the Indemnified Party, the dispute that is the subject of such notice
shall be resolved as follows: The Indemnified Party and the Indemnifying Party
shall first attempt to resolve the dispute through a good faith discussion of
the Claim. If such discussion does not result in a resolution acceptable to
either the Indemnified Party or the Indemnifying Party, either party may resort
to any remedies available in law or in equity in a court of competent
jurisdiction.
SECTION 11.5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of each party contained in this Agreement shall
survive the Closing Date for a period of eighteen (18) months following the
Closing Date; provided, however, that (i) the representations and warranties of
Seller contained in Sections 2.1 (Organization; Power), 2.2 (Capitalization),
2.3(a) (Authority), 2.4(a) (Ownership of Stock and Equity Interest), 2.5 (Title)
shall survive indefinitely; (ii) the representations and warranties of Seller
contained in Section 2.17 (relating to environmental matters) shall not survive
the Closing Date (except for the representations in Section 2.17(a) which shall
survive the Closing for a period of eighteen (18) months following the Closing
Date), and (iii) the representations and warranties of Seller contained in
Section 2.20 (relating to taxes) shall survive the Closing Date until the
expiration of the applicable statute of limitations (in each case, the "Survival
Period"). No Claim for indemnification under Section 11.1(a) shall be made
unless a Claim Notice has been delivered to the Indemnifying Party within the
applicable Survival Period, except that any Claim relating to Section 2.20
(relating to taxes) may be asserted until 60 days after the expiration of the
applicable Survival Period. Notwithstanding the expiration of any Survival
Period, if a Claim Notice has been given by Buyer to Seller with respect to a
representation or warranty of Seller within the applicable Survival Period, then
the relevant representation or warranty shall survive, solely as to such Claim
as is asserted in the Claim Notice, until such Claim has been finally resolved.
SECTION 11.6. INDEMNIFICATION LIMITATIONS.
(a) Except for those Losses relating to Section 2.4(a),
Section 2.5, Section 2.17(a) or Section 2.20, as to which the limitations of
this Section 11.6(a) shall not apply, Buyer's Indemnified Persons may not assert
any Claim for Losses under Section 11.1(a) until the aggregate amount of such
Claims under this Agreement exceeds Ten Million Dollars ($10,000,000) (as such
amount may be reduced pursuant to Section 11.3(e)(v) or Section 11.3(f)(i)A),
and then Buyer's Indemnified Persons may only assert such Claims for the excess
of such aggregate Claims over such amount. In no event shall the aggregate
liability of the Seller for all Claims for Losses under Section 11.1(a) exceed
fifty percent (50%) of the Purchase Price prior to any closing or post-closing
adjustments.
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(b) The Indemnified Party shall take all reasonable steps to
mitigate all indemnifiable Losses upon and after becoming aware of any event
which could reasonably be expected to give rise to any Losses that are
indemnifiable hereunder.
(c) All Losses recoverable by an Indemnified Party under
Section 11.1 or 11.2 shall be net of insurance proceeds (less the reasonable
cost of recovering the amount of coverage from the insurer) and recoveries from
third parties actually received by such Indemnified Party. If such Losses are
covered by insurance or subject to other third party recoveries, the Indemnified
Party shall use all reasonable efforts to recover the amount of coverage or
claim from the insurer or such third party.
(d) The amount of any indemnification payment related to a
Loss arising under Section 11.3 (environmental losses) shall be reduced to take
account of any net Tax savings actually realized by the Indemnified Party
arising from the incurrence or payment of any such Loss in the taxable year in
which such Loss is incurred or in any preceding taxable year as a result of the
use of net operating loss carrybacks. In computing the amount of any such Tax
benefit, the Indemnified Party shall be deemed to recognize all other items of
income, gain, loss, deduction, or credit before recognizing any item arising
from the receipt of any indemnity payment hereunder or the incurrence or payment
of any indemnified Loss. In the event that the Indemnified Party does not
realize any net Tax savings in the taxable year in which such Loss is incurred
(or in any preceding taxable year), but does realize a net Tax savings in a
subsequent year, the Indemnified Party shall promptly pay over to the
Indemnifying Party the amount of such net Tax Savings when actually realized.
(e) For the avoidance of doubt in determining any Loss arising
from a breach of the representations in Section 2.20, the amount of any
indemnity payable by Seller under this Section 11.6 shall be calculated after
giving effect to any indemnity payable by Seller under Section 9.12 which
relates to the same item or transaction as resulted in the Loss arising from a
breach of the representations in Section 2.20.
SECTION 11.7. EXCLUSIVE REMEDY. Buyer and Seller hereby acknowledge and
agree that, except in the case of fraud, from and after the Closing, their sole
remedy with respect to any and all claims arising under this Agreement, shall be
pursuant to the indemnification provisions set forth in this Agreement. In
furtherance of the foregoing, Buyer and Seller and their respective related
parties and affiliates hereby waive, from and after the Closing, to the fullest
extent permitted by law, any and all rights, claims and causes of action they
may have against any other party hereto or its officers, directors, employees,
agents, representatives and affiliates, except those arising pursuant to this
Agreement. Without limiting the generality of the foregoing, Buyer shall have no
right of rescission following the Closing with respect to the Transaction.
SECTION 11.8. LOST PROFITS AND SPECIAL DAMAGES. Notwithstanding any
other provision of this Agreement to the contrary, neither Seller nor Buyer
shall be required to indemnify, hold harmless or otherwise compensate the other
party or any of the respective affiliates or related parties for damage to
reputation, lost business opportunities, lost profits, mental or emotional
distress, incidental, special, exemplary, indirect or consequential damages.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. COUNTERPARTS. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
SECTION 12.2. ENTIRE AGREEMENT. This Agreement and the agreements to be
delivered pursuant to this Agreement and the Confidentiality Agreement between
the parties constitute the entire agreement among the parties pertaining to the
subject matter contained herein and therein and supersede all other prior and
contemporaneous agreements, representations and understandings of the parties.
SECTION 12.3. EXHIBITS AND DISCLOSURE SCHEDULE. All exhibits, schedules
and appendices attached to this Agreement and all matters set forth in the
Disclosure Schedule and the recitals to this Agreement are incorporated herein
and made a part hereof in the same manner and to the same extent as if such
matters were set forth at length herein. All matters disclosed in any section of
the Disclosure Schedule shall be deemed to be disclosed in each section of the
Disclosure Schedule to which such disclosure is reasonably apparent, provided
that only those disclosures set forth on Section 2.17(a) of the Disclosure
Schedule shall be deemed disclosed for purposes of Section 2.17(a) of this
Agreement.
SECTION 12.4. EXPENSES. Except as expressly set forth in this
Agreement, each of the parties shall pay all costs and expenses incurred by it
in negotiating and preparing this Agreement and consummating the Transaction.
SECTION 12.5. INTERPRETATION. Any reference to the masculine, feminine
or neuter gender shall be deemed to include the masculine, feminine and neuter
genders unless the context otherwise requires. Any reference to the term
"including" shall be deemed to be a reference to "including, without
limitation".
SECTION 12.6. GOVERNING LAW. This Agreement and all transactions
contemplated hereby shall be governed, construed and enforced in accordance with
the laws of the State of New York, notwithstanding any state's choice of law
rules to the contrary.
SECTION 12.7. HEADINGS. The subject headings of the articles and
sections of this Agreement are included for purposes of convenience only, and
shall not affect the construction or interpretation of any of its provisions.
SECTION 12.8. INTERPRETATION. Buyer and Seller have each had this
Agreement reviewed by experienced and qualified counsel and the opportunity to
negotiate fully all of the provisions of this Agreement. This Agreement shall be
construed and interpreted without regard to any maxim or principle of law which
provides that any ambiguity in any provision in this Agreement
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should be construed against the party whose counsel drafted the particular
provision or any other part of the Agreement.
SECTION 12.9. MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by the
parties. The party for whose benefit a representation, warranty, covenant or
condition is intended may in writing waive any inaccuracies in the
representations and warranties contained in this Agreement or waive compliance
with any of the covenants or conditions contained herein and so waive
performance of any of the obligations of the other party hereto, and any
defaults hereunder; provided, however, that such waiver shall not affect or
impair the waiving party's rights with respect to any other representation,
warranty, covenant or condition or any default hereunder, nor shall any waiver
constitute a continuing waiver.
SECTION 12.10. NOTICES. All notices, requests, demands, waivers and
other communications required to be given under this Agreement shall be in
writing and shall be deemed to have been duly given on (a) the date of service
if served personally on the party to whom notice is to be given, (b) the date
sent if given by confirmed facsimile transmission addressed to the party to whom
notice is to be given and a confirming copy is mailed on such date to the party
to whom notice is to be given by first class mail, (c) the day after sending if
sent to the party to whom notice is to be given by private courier (e.g. FedEx
or UPS) for next day delivery, or (d) the third day after mailing if mailed to
the party to whom notice is to be given by certified mail, return receipt
requested, and properly addressed as follows:
If to Buyer:
PMD Group Inc.
c/o ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
PMD INVESTORS I LLC
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇ ▇▇▇▇▇
DLJ Merchant Banking Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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and to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President,
Human Resources and Corporate Services,
General Counsel and Secretary
The ▇.▇.▇▇▇▇▇▇▇▇ Company
Four Coliseum Centre
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President and Treasurer
The ▇.▇.▇▇▇▇▇▇▇▇ Company
Four Coliseum Centre
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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Any party may change the address to which notice is to be sent or the telephone
number for facsimile transmission pursuant to this Section 12.10 by giving
written notice thereof in compliance with this section.
SECTION 12.11. PRESS RELEASE. During the period prior to the Closing,
each party shall obtain the other party's consent before issuing any press
release or otherwise making any public announcement with respect to this
Agreement or the Transaction, and shall not, except as may be required by law or
by obligations under any listing agreement with a stock exchange, issue any such
press release or make any such public announcement prior to obtaining such
consent, which consent shall not be unreasonably withheld or delayed.
SECTION 12.12. RIGHTS OF PARTIES; ASSIGNABILITY; BINDING EFFECT.
Neither this Agreement nor any of the rights or obligations hereunder may be
assigned by any party without the express written consent of the other party;
provided, however, that Buyer may assign this Agreement to a third party
purchaser of all or substantially all of the assets of Buyer without Seller's
express written consent so long as written notice of such assignment is provided
to Seller. Nothing in this Agreement, whether express or implied, is intended to
confer any rights or remedies under or by reason of this Agreement on any Person
other than the parties to it and their respective successors and permitted
assigns, nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third Person to any party to this Agreement, nor
shall any provision give any third Person any right of subrogation or action
over or against any party to this Agreement. Subject to the foregoing, this
Agreement shall be binding on, and shall inure to the benefit of, the parties
and their respective successors, assigns and personal representatives.
SECTION 12.13. CURRENCY. All references to "Dollars" or "$" in this
Agreement shall mean United States Dollars.
SECTION 12.14. SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
[signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement for Sale
and Purchase of the Sale Assets as of the day and year first above written.
"Seller"
THE ▇.▇.▇▇▇▇▇▇▇▇ COMPANY
By:
---------------------------------
Its:
--------------------------------
"Buyer"
PMD GROUP INC.
By:
---------------------------------
Its:
--------------------------------
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APPENDIX A
CERTAIN DEFINITIONS.
"Account Balances" shall have the meaning defined in Section 9.2(f) of the
Agreement.
"Accounting Firm" shall have the meaning defined in Section 1.9(f).
"Acquired Business" shall have the meaning defined in Section 9.13 of the
Agreement.
"Acquisition Proposal" shall have the meaning defined in Section 4.3 of the
Agreement.
"Active Employee of the Business" means any employee of the Business who is
actively at work on the Closing Date, and also shall include any employee of the
Business who, as of the Closing Date, is absent from employment because of short
term disability, vacation, approved leave of absence, or other form of absence
from employment. For purposes of this Agreement, the term Active Employee of the
Business shall not include any employee on leave of absence on the Closing Date
who does not return to work within three (3) months of the Closing Date unless
the leave of absence is subject to the Family and Medical Leave Act of 1993 or
the Uniformed Services Employment and Reemployment Rights Act of 1994.
"Aerospace Lease Agreement" shall have the meaning defined in Section 9.16 of
the Agreement.
"affiliates" shall have the same meaning as such term is defined in Rule 12b-2
under the Securities Exchange Act of 1934.
"Agreement" shall have the meaning defined in introductory paragraph of the
Agreement.
"Antitrust Authority" shall mean the Federal Trade Commission, the Antitrust
Division, the attorneys general of the several states of the United States and
any other governmental authority having jurisdiction with respect to the
Transaction pursuant to applicable Antitrust Laws.
"Antitrust Laws" shall mean the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal, state, and foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
the monopolization or restraint of trade or creation of cartels.
"Applicable Rate" shall have the meaning defined in Section 1.9(g) of the
Agreement.
"Asset Subsidiaries" shall have the meaning defined in Recital B on Page 1.
"Assets" shall have the meaning defined in Section 1.1 of the Agreement.
"Assigned Prepaid Expenses Acquired by Asset Purchase" shall have the meaning
defined in Section 1.1(h) of the Agreement.
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"Assigned Prepaid Expenses" means all non-refundable and transferable prepaid
expenses, prepaid assets and deposits paid by Seller or its Subsidiaries prior
to the Closing Date for which Buyer will receive the benefit after the Closing
Date.
"Assumed Liabilities" shall have the meaning defined in Section 1.5 of the
Agreement.
"Assumption Agreement" shall have the meaning defined in Section 10.2(e) of the
Agreement.
"Benefit Plan" means each plan, program, policy, payroll practice, contract,
agreement or other arrangement providing for severance, termination pay,
retirement pay benefits, performance awards, stock or stock-related awards,
fringe benefits or other employee benefits of any kind, whether formal or
informal, funded or unfunded, written or oral and whether or not legally
binding, including, without limitation, each "employee benefit plan," within the
meaning of Section 3(3) of ERISA and each "multi-employer plan" within the
meaning of Sections 3(37) or 4001(a)(3) of ERISA.
"BFG Pension Plan for Salaried Employees" means the ▇.▇. ▇▇▇▇▇▇▇▇ Retirement
Program for Salaried Employees.
"BFG Pension Plan for Wage Employees" means the ▇.▇. ▇▇▇▇▇▇▇▇ Company Wage
Employees' Pension Plan.
"Books and Records Acquired by Asset Purchase" shall have the meaning defined in
Section 1.1(g) of the Agreement.
"Brecksville Vacant Land" shall have the meaning defined in Section 1.2(m) of
the Agreement.
"Business" shall have the meaning defined in Paragraph A of Recitals on Page 1.
"Buyer Indemnified Persons" shall have the meaning defined in Section 11.1 of
the Agreement.
"Buyer Pension Plan" shall mean a Benefit Plan which is both (a) established or
maintained by Buyer or Buyer and one or more of its Subsidiaries, and (b) a
defined benefit pension plan intended to be tax-qualified under Section 401(a)
of the Code.
"Buyer's Investment Plan" shall have the meaning defined in Section 9.2(f) of
the Agreement.
"Buyer's Notice" shall have the meaning defined in Section 1.9(e) of the
Agreement.
"Buyer's Outside Date" shall have the meaning defined in Section 8.2 of the
Agreement.
"Buyer's Review Period" shall have the meaning defined in Section 1.9(e) of the
Agreement.
"Buyer" shall have the meaning defined in introductory paragraph.
"CERCLIS" shall have the meaning defined in Section 2.17 of the Agreement.
"Claim Notice" shall have the meaning defined in Section 11.4(a) of the
Agreement.
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"Claim" shall have the meaning defined in Section 11.4(a) of the Agreement.
"Closed Facilities" shall have the meaning defined in Section 1.2(n) of the
Agreement.
"Closing" shall have the meaning defined in Section 1.8 of the Agreement.
"Closing Balance Sheet" shall have the meaning defined in Section 1.9(c) of
Agreement.
"Closing Date" shall have the meaning defined in Section 1.8 of the Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collectively Bargained Retiree Welfare Plan" means an Employee Welfare Benefit
Plan of Seller that provides retiree medical or retiree life insurance benefits
to one or more groups of retired employees of the Business who are covered under
such plan pursuant to the terms of one or more collective bargaining agreements.
"Commitment Letters" shall have the meaning defined in Section 3.11 of the
Agreement.
"Competitive Business" shall have the meaning defined in Section 9.13 of the
Agreement.
"Confidentiality Agreement" shall have the meaning defined in Section 9.1 of the
Agreement.
"Conflict of Interest" means the situation where either (i) Buyer and Seller
mutually agree that the representation of both Seller and Buyer by the same
counsel or consultant would create an impermissible conflict of interest or (ii)
an independent counsel mutually agreed upon by Buyer and Seller determines in a
written opinion to Buyer and Seller that the representation of both Seller and
Buyer by the same counsel or consultant would create a conflict of interest. In
the case of (ii) in the previous sentence, Buyer and Seller agree to split the
cost of the independent counsel in connection with rendering such written
opinion.
"Contracts" means all of Seller's and its affiliates' rights and obligations
under those contracts, purchase orders, customer orders, leases for real and
personal property and agreements, whether written or oral, to which any of
Seller and its affiliates are a party on the Closing Date that are used or held
for use solely or primarily in connection with the operation of the Business.
"Contracts Assigned by Asset Purchase" shall have the meaning defined in Section
1.1(e) of the Agreement.
"Defined Remediation Projects" shall have the meaning defined in Section
11.3(d)(i) of the Agreement.
"Determination Date" shall have the meaning defined in Section 1.9(g) of the
Agreement.
"Disclosure Schedules" shall have the meaning defined in Section 2.1(a) of the
Agreement.
"Dispute Notice" shall have the meaning defined in Section 11.4(e) of the
Agreement.
"EMD Business" shall have the meaning defined in Section 1.2(l) of the
Agreement.
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"EMD Lease Agreement" shall have the meaning defined in Section 9.17 of the
Agreement.
"Employee Agreement" means each management, employment, severance, retirement,
change-in-control, consulting, non-compete, confidentiality, or similar
agreement or contract between the Seller or any of its Subsidiaries and any
employee of the Business.
"Employee Benefit Plan" means each Benefit Plan (other than an Employee
Agreement) which is now or previously has been sponsored, maintained,
contributed to, or required to be contributed to by the Seller or any of its
Subsidiaries or pursuant to which Seller or any of its Subsidiaries has or may
have any liability, contingent or otherwise, in each case for the benefit of any
employee of the Business.
"Employee Pension Benefit Plan" means each Employee Benefit Plan that provides
retirement pay benefits for 25 or more participants, including, without
limitation, any plan described in Section 3(2) of ERISA, but not including any
plans mandated by law (other than U.S. federal, state and local laws).
"Employee Welfare Benefit Plan" means each Employee Benefit Plan that provides
benefits of a type described in Section 3(1) of ERISA and any associated
"cafeteria plan" that is designed to meet the requirements of Section 125 of the
Code.
"Encumbrances" shall have the meaning defined in Section 1.3 of the Agreement.
"Environmental Claim" shall have the meaning defined in Section 11.3(h) of the
Agreement.
"Environmental Costs" means, without limitation, any actual or threatened
investigation, cleanup, remediation, removal, or other response costs (which
without limitation shall include costs to cause the Business to come into
compliance with Environmental Laws), expenses (including without limitation fees
and disbursements of consultants, counsel, and other experts in connection with
any environmental investigation, testing, audits or studies, response actions,
or litigation), losses, liabilities or obligations (including without
limitation, liabilities or obligations under any lease or other contract),
payments, damages (including without limitation any actual, punitive or
consequential damages under any statutory laws, common law cause of action or
contractual obligations or otherwise, including without limitation damages (a)
of third parties for personal injury or property damage, or (b) to natural
resources), civil or criminal fines or penalties, judgments, and amounts paid in
settlement arising out of or relating to or resulting from any Environmental
Matter regardless of whether such costs, expenses, losses, liabilities,
obligations, payments, damages, fines, penalties, judgments or amounts arise as
a result of the negligence, strict liability or any other liability under any
theory of law or equity.
"Environmental Laws" shall mean all applicable international, federal, state and
local statutes, laws, regulations, ordinances, orders or other legally binding
directives, common law, and similar provisions having the force or effect of
law, concerning any Environmental Matter, including but not limited to, the
Clean Air Act, 42 U.S.C. `7401 et. seq., the Clean Water Act, 33 U.S.C. `1251 et
seq., the Resource Conservation Recovery Act ("RCRA"), 42 U.S.C. `6901 et seq.,
the Toxic Substances Control Act, 15 ▇.▇.▇ ▇▇▇▇▇ et seq., the Occupational
Safety and Health Act, 29 U.S.C.
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▇▇.▇▇. 641, et seq., and the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA"), 42 U.S.C. `9601 et seq.
"Environmental Matter" means, any matter arising out of, relating to, or
resulting from pollution, contamination, protection of the environment, human
health or safety, health or safety of employees, sanitation, and any matter
arising out of, relating to, or resulting from emissions, discharges,
disseminations, releases or threatened releases, of Hazardous Materials into the
air (indoor or outdoor), surface water, groundwater, soil, land surface or
subsurface, buildings, facilities, real or personal property or fixtures or
otherwise arising out of, relating to, or resulting from the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
handling, release or threatened release of Hazardous Materials.
"Environmental Permits" shall have the meaning defined in Section 2.17 of the
Agreement.
"Equity Interest" shall have the meaning defined in Section 1.1 of the
Agreement.
"Equity Subsidiaries" shall have the meaning defined in Recital D of Page 1.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" means, with respect to any Person, any trade or business
(whether or not incorporated) that is part of the same controlled group, or
under common control with, or part of an affiliated service group that includes
such Person, within the meaning of Code Sections 414(b), (c), (m), or (o) and/or
ERISA Section 4001(a)(14).
"Excluded Assets" shall have the meaning defined in Section 1.2 of the
Agreement.
"Excluded Liabilities" shall have the meaning defined in Section 1.4 of the
Agreement.
"Financial Statements" shall have the meaning defined in Section 2.9 of the
Agreement.
"Former PM Employee" shall mean an Active Employee of the Business who becomes
an employee of Buyer or a subsidiary of Buyer on or shortly after the Closing
Date, or continues in employment with a member of the Stock Group (other than an
Equity Subsidiary) after the Closing Date.
"Forward Looking Data" shall have the meaning defined in Section 3.6 of the
Agreement.
"Guide" shall have the meaning defined in Section 1.9(c) of the Agreement.
"Hazardous Materials" means all materials or substances subject to regulation
under any Environmental Laws, including without limitation any substance
regulated as hazardous (under CERCLA, RCRA, or otherwise), dangerous, explosive,
flammable, toxic or radioactive, or any petroleum or petroleum-derived substance
or waste.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended.
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"Income Tax" or "Income Taxes" means any federal, state, local or foreign Tax or
Taxes (i) based upon, measured by, or calculated with respect to, net income or
net receipts, proceeds or profits, or (ii) based upon, measured by, or
calculated with respect to multiple bases (including, without limitation,
corporate franchise or occupation Taxes) if such Tax may be based upon, measured
by, or calculated with respect to one or more bases described in (i) above.
"Increased Amount" shall have the meaning defined in Section 1.9(h) of the
Agreement.
"Indirect Subsidiaries" shall have the meaning defined in Paragraph E of
Recitals on Page 1.
"Indirectly Owned Stock" shall have the meaning defined in Section 2.4 of this
Agreement.
"Indemnified Party" shall have the meaning defined in Section 11.4(a) of the
Agreement.
"Intangibles Acquired by Asset Purchase" shall have the meaning defined in
Section 1.1(f) of the Agreement.
"Intellectual Property" shall have the meaning defined in Section 2.16(a) of the
Agreement.
"Interim Period" shall have the meaning defined in Section 9.2(e) of the
Agreement.
"Inventory and Supplies Acquired by Asset Purchase" shall have the meaning
defined in Section 1.1(b) of the Agreement.
"Inventory and Supplies" means all inventory and supplies that are used, held
for use or useful solely or primarily in connection with the operation of the
Business, including without limitation, raw materials, work-in-progress and
finished goods, inventory and supplies in transit or on consignment and any and
all other supplies stored, kept or maintained by or on behalf of Seller and its
Subsidiaries, wherever located.
"Investment Plan Participants" shall have the meaning defined in Section 9.2(f)
of the Agreement.
"Knowledge," "to the Knowledge of" or words of like import mean that the party
to which the statement is attributed is actually aware of the particular fact or
other matter to which the statement refers. Seller will be deemed to have
"Knowledge" of a particular fact or other matter if any Person listed on
Schedule A has knowledge of such fact or other matter.
"Leased Real Property" means all of Seller's and its Subsidiaries' leasehold
interest in and to the real property described in Section 2.13(c) of the
Disclosure Schedule.
"Liabilities" means any liabilities or obligations of any kind whatsoever,
including without limitation, liabilities based on negligence or strict
liability whether known or unknown, liquidated or contingent, or any claims or
demands based thereon or attributable thereto.
"Lowest-Cost Commercially Reasonable" shall have the meaning defined in Section
11.3(g)(iii) of the Agreement.
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"Losses" shall have the meaning defined in Section 11.1 of the Agreement.
"Management Incentive Plan" shall have the meaning defined in Section 9.2(i) of
the Agreement.
"Material Adverse Effect" shall mean any change, event or occurrence which is
materially adverse to the assets, liabilities, business, financial condition or
results of operations of the Business taken as a whole.
"Material Consents" shall have the meaning defined in Section 6.4(b) of the
Agreement.
"Material Contracts" shall have the meaning defined in Section 2.14 of the
Agreement.
"May 31, 2000 Balance Sheet" shall have the meaning defined in Section 1.9(a) of
the Agreement.
"May 31, 2000 Working Capital Statement" shall have the meaning defined in
Section 1.9(c) of the Agreement.
"Net Working Capital" shall have the meaning defined in Section 1.9(c) of the
Agreement.
"On-Site Claim" shall have the meaning defined in Section 11.3(i) of the
Agreement.
"Other Tangible Property Acquired by Asset Purchase" shall have the meaning
defined in Section 1.1(c) of the Agreement.
"Other Tangible Property" means all the tangible property, other than Inventory
and Supplies, owned by Seller and its affiliates and used or useful solely or
primarily in connection with the operation of the Business, including without
limitation, all leasehold improvements, equipment, furniture and fixtures,
machinery, vehicles, tools and other fixed assets and all related thereto
including operating and engineering records.
"Owned Real Property" means all of Seller's and its Subsidiaries' right, title
and interest in the real property described in Section 2.13(a) of the Disclosure
Schedule, together with all buildings, improvements, fixtures and appurtenances
thereto.
"Party" or "parties" shall refer to Buyer and Seller, as the specific context
requires.
"Permits" shall have the meaning defined in Section 2.15 of the Agreement.
"Permitted Encumbrances": means: (i) liens for taxes, assessments or
governmental charges not yet due and payable, or being diligently contested in
good faith and by appropriate proceedings (ii) Encumbrances (other than
mortgages, security interests, deeds of trust or pledges) which do not,
individually or in the aggregate, materially interfere with the present use of
the Assets, and which do not materially detract from their value, (iii) liens
imposed by law, such as carriers', warehousemen's and mechanics' liens with
respect to which the underlying obligations are not delinquent or being
diligently contested in good faith and by appropriate proceedings, (iv) purchase
money security interest for the purchase or leasing of office equipment,
computers,
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vehicles and other items of tangible personal property, (v) zoning, entitlement
or other land use regulations, (vi) items that are reflected on any current or
updated survey of the Owned or Leased Real Property that has been provided to
Buyer prior to the date of this Agreement, and (vii) all Encumbrances (other
than mortgages, security interests, deeds of trust or pledges) disclosed in
policies of title insurance or title commitments that have been provided to
Buyer prior to the date of this Agreement.
"PBGC" shall have the meaning defined in Section 2.19(b).
"Person" means any individual, partnership, firm, corporation, limited liability
company, association, trust, unincorporated organization or other entity.
"Post-Closing Tax Period" means any Taxable Period beginning after the Closing
Date; and, with respect to a Taxable Period that begins on or before the Closing
Date and ends thereafter, the portion of such Taxable Period beginning after the
Closing Date.
"Pre-Closing Tax Period" means any Taxable Period ending on or before the
Closing Date; and, with respect to a Taxable Period that begins on or before the
Closing Date and ends thereafter, the portion of such Taxable Period beginning
on or before the Closing Date and ending on the Closing Date.
"Prohibited Activities" shall have the meaning defined in Section 9.13 of the
Agreement.
"Purchase" shall have the meaning defined in Paragraph G of Recitals on Page 1.
"Purchase Price" shall have the meaning defined in Section 1.6 of the Agreement.
"Real Property Acquired by Asset Purchase" shall have the meaning defined in
Section 1.1(a) of the Agreement.
"Receivables" means all accounts receivable of the Business owed to Seller or
its Subsidiaries on the Closing Date.
"Receivables Acquired by Asset Purchase" shall have the meaning defined in
Section 1.1(d) of the Agreement.
"Reduction Amount" shall have the meaning defined in Section 1.9(g) of the
Agreement.
"Release" means any spilling, emitting, leaking, pumping, pouring, emptying,
escaping, leaching, dumping or disposing, injecting, depositing, or discharging
in, onto, into or through the environment (including ambient air, surface water,
groundwater, or soils); it being understood that a Release shall include the
abandonment or discarding of barrels, containers and other closed receptacles
containing any Hazardous Material.
"Reorganization" means (i) the intercompany sales by BFGoodrich Chemical Belgie
BVBA to BFGoodrich Chemical Holding B.V. (Netherlands) of the stock of (a)
▇▇▇▇▇▇▇▇ Holding UK Ltd. and (b) BFGoodrich Holding S.A. (France), (ii) the
contribution of certain assets by BFGoodrich Diamalt GmbH (Germany)("Diamalt")
to a German partnership to be acquired or formed by
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Diamalt and related transactions, (iii) the conversion of BFGoodrich Chemical
Spain S.A. from S.A. into an S.L.; and (iv) the merger of International
BFGoodrich Technology Corporation into Mitech Holding Corporation.
"Representatives" shall have the meaning defined in Section 4.4 of the
Agreement.
"Resolution Period" shall have the meaning defined in Section 1.9(e) of the
Agreement.
"Retained Intellectual Property" shall have the meaning defined in Section
1.2(j) of the Agreement.
"Salaried Pension Plan Participants" shall have the meaning defined in Section
9.2(e) of the Agreement.
"Sale Assets" shall have the meaning defined in Section 1.1 of the Agreement.
"Sale" shall have the meaning defined in Paragraph G of Recitals on Page 1.
"Seller Group" means, with respect to Federal Taxes, the affiliated group of
corporations (as defined in Section 1504(a) of the Code) of which Seller is a
member, and with respect to Taxes other than Federal Taxes, any affiliated,
consolidated, combined or unitary group of which Seller or any of its affiliates
is a member.
"Seller's Closing Working Capital Statement" shall have the meaning defined in
Section 1.9(c) of the Agreement.
"Seller's Outside Date" shall have the meaning defined in Section 8.3 of the
Agreement.
"Seller" shall have the meaning defined in introductory paragraph on Page 1.
"Seller Note" shall have the meaning defined in Section 1.6 of the Agreement.
"Stock" shall have the meaning defined in Section 1.1 of the Agreement.
"Stock Group" shall have the meaning defined in Recital E on Page 1.
"Stock Selling Subsidiaries" shall have the meaning defined in Recital B on Page
1.
"Stock Subsidiaries" shall have the meaning defined in Recital C on Page 1.
"Subsidiaries" shall have the meaning defined in Paragraph F of Recitals on Page
1.
"Survival Period" shall have the meaning defined in Section 11.5 of the
Agreement.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
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added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Asset" means any net operating loss, net capital loss, investment tax
credit, foreign tax credit, charitable deduction or any other credit or tax
attribute that could be carried forward or back to reduce Taxes (including
without limitation deductions and credits related to alternative minimum Taxes).
"Tax Group" shall have the meaning defined in Section 2.20(a) of the Disclosure
Schedule.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Tax Sharing Agreements" means all existing agreements or arrangements (whether
or not written) binding any member of the Stock Group that provide for the
allocation, apportionment, sharing or assignment of any Tax liability or
benefit, or the transfer or assignment of income, revenues, receipts, or gains
for the purpose of determining any person's Tax liability.
"Taxable Period" means any period for which Taxes are owed to a federal, state,
local or foreign taxing authority, or for which a Tax Return is required to be
filed by Seller, any Subsidiary or Buyer.
"Textile Consolidation Project" shall have the meaning defined in Section 4.13
of the Agreement.
"Textile Dyes Facilities" shall have the meaning defined in Section 1.2(o) of
the Agreement.
"Third-Party Claim" shall have the meaning defined in Section 11.4(b) of the
Agreement.
"Transaction" shall have the meaning defined in the Agreements section on Page
1.
"Transfer Date" shall have the meaning defined in Section 9.2(f) of the
Agreement.
"Transition Arrangements" means The ▇.▇. ▇▇▇▇▇▇▇▇ Company Performance Materials
Transition Arrangements Plan, as disclosed on Schedule 9.2(d).
"Transition Services Agreement" shall have the meaning defined in Section 9.9 of
the Agreement.
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