EXHIBIT 2.2
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LLC INTEREST SALE AND PURCHASE AGREEMENT
among
▇▇▇▇▇ CORNING;
LINCOLN YARNS, LLC; and
GLASS HOLDINGS, CORP;
Dated as of July 31, 1998
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TABLE OF CONTENTS
PAGE
1 SALE OF INTEREST; PURCHASE PRICE AND ADJUSTMENTS............................. 2
1.1 Sale of Interest............................................................. 2
1.2 Purchase Price............................................................... 2
1.3 Payment of Purchase Price.................................................... 2
1.4 Purchase Price Adjustment.................................................... 2
2 REPRESENTATIONS AND WARRANTIES OF SELLER..................................... 6
2.1 Corporate Existence.......................................................... 6
2.2 LLC Organization and Qualification........................................... 6
2.3 Capitalization of the LLC.................................................... 7
2.4 Corporate Authority.......................................................... 7
2.5 No Conflicts................................................................. 8
2.6 Governmental Approvals; Consents............................................. 9
2.7 Financial Statements......................................................... 10
2.8 Absence of Changes........................................................... 12
2.9 Real and Personal Properties................................................. 13
2.10 Contracts.................................................................... 16
2.11 Litigation................................................................... 18
2.12 Intangible Property Rights................................................... 19
2.13 Insurance.................................................................... 20
2.14 Tax Matters.................................................................. 20
2.15 Employment and Benefits...................................................... 21
2.16 Compliance with Laws......................................................... 23
2.17 Finders; Brokers............................................................. 23
2.18 Environmental Matters........................................................ 23
2.19 Entire Business.............................................................. 25
2.20 Disclaimer of Warranty....................................................... 25
2.21 Inventory.................................................................... 25
2.22 Accounts Receivable.......................................................... 25
2.23 No Other Representations or Warranties....................................... 26
3 REPRESENTATIONS OF BUYER..................................................... 26
3.1 Corporate Existence.......................................................... 26
3.2 Corporate Authority.......................................................... 26
3.3 No Conflicts................................................................. 27
3.4 Governmental Approvals; Consents............................................. 27
3.5 Finders; Brokers............................................................. 28
3.6 Financial Capacity........................................................... 28
3.7 Knowledge of Buyer........................................................... 28
3.8 No Other Representations or Warranties....................................... 29
4 AGREEMENTS OF BUYER AND SELLER............................................... 29
4.1 Operation of the Business.................................................... 29
4.2 Investigation of the Business; Confidentiality............................... 31
4.3 Mutual Cooperation; No Inconsistent Action................................... 34
4.4 Public Disclosures........................................................... 36
4.5 Patent and Know How.......................................................... 36
4.6 Non-Solicitation............................................................. 37
4.7 Financing.................................................................... 37
4.8 Services Agreement........................................................... 37
4.9 Glass Marbles Supply Agreement............................................... 37
4.10 Alloy Services Agreement..................................................... 38
4.11 Huntingdon Lease Agreement................................................... 38
4.12 ▇▇▇▇▇▇▇ Facility Supply Agreement............................................ 38
4.13 Guelph Facility Supply Agreement............................................. 39
4.14 Sanitary Sewer and Stormwater Agreements..................................... 39
4.15 Non-Compete Agreement........................................................ 39
4.16 Manufacturing Services Agreement............................................. 39
4.17 Intentionally Omitted........................................................ 39
4.18 Air Modelling Agreements..................................................... 40
4.19 Wastewater Treatment Agreement............................................... 40
4.20 Operating Agreement.......................................................... 40
4.21 Trademark Assignment/Master Patent and Know How Assignment................... 40
4.22 Use of Packaging............................................................. 41
4.23 Sliver Supply Agreement...................................................... 41
4.24 Borates Supply Agreement..................................................... 41
4.25 Carly Sublease............................................................... 42
4.26 Pitney ▇▇▇▇▇ 1997 Sublease................................................... 42
4.27 Pitney ▇▇▇▇▇ 1996 Sublease................................................... 42
4.28 Landfill Agreement........................................................... 42
4.29 NVOC and OCC Assets.......................................................... 43
4.30 "GLAS Marks"................................................................. 43
4.31 No Solicitation.............................................................. 44
4.32 Casualty to Assets; Eminent Domain........................................... 45
4.33 Intentionally Omitted........................................................ 46
4.34 Employees and Employee Benefits.............................................. 46
4.35 Forward-Underwriting Commitment.............................................. 54
4.36 Cash Assets.................................................................. 55
4.37 Contribution of Assets of the Company........................................ 55
4.38 Post-Closing Distributions by the Company.................................... 55
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5 CONDITIONS................................................................... 56
5.1 Conditions Precedent to the Obligations of Buyer and Seller.................. 56
5.2 Conditions Precedent to the Obligation of Seller............................. 56
5.3 Conditions Precedent to the Obligation of Buyer.............................. 57
6 CLOSING...................................................................... 58
6.1 Closing Date................................................................. 58
6.2 Buyer Deliveries............................................................. 59
6.3 Seller Deliveries............................................................ 59
7 TAX MATTERS.................................................................. 59
7.1 Asset Allocation............................................................. 59
8 INDEMNIFICATION.............................................................. 60
8.1 Survival of Representations and Warranties; Time for Assertion of Claims..... 60
8.2 Indemnification by Seller.................................................... 60
8.3 Indemnification by Buyer..................................................... 63
8.4 Indemnification Calculations................................................. 65
8.5 Cooperation.................................................................. 67
9 TERMINATION.................................................................. 67
9.1 Termination Events........................................................... 67
9.2 Effect of Termination........................................................ 68
10 MISCELLANEOUS AGREEMENTS OF THE PARTIES...................................... 68
10.1 Notices...................................................................... 68
10.2 Transaction Taxes............................................................ 69
10.3 Expenses..................................................................... 70
10.4 Non-Assignability............................................................ 70
10.5 Amendment; Waiver............................................................ 71
10.6 Schedules and Exhibits....................................................... 71
10.7 Third Parties................................................................ 72
10.8 Governing Law................................................................ 72
10.9 Consent to Jurisdiction...................................................... 72
10.10 Definitions.................................................................. 73
10.11 Entire Agreement............................................................. 84
10.12 Section Headings; Table of Contents.......................................... 84
10.13 Severability................................................................. 84
10.14 Counterparts................................................................. 84
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Exhibits
EXHIBIT A - Form of Patent and Know How License Agreements
EXHIBIT B - Intentionally Omitted
EXHIBIT C - Form of Glass Marble Supply Agreement
EXHIBIT D - Form of Alloy Services Agreement
EXHIBIT E - Form of Huntingdon Lease Agreement
EXHIBIT F - Form of ▇▇▇▇▇▇▇ Facility Supply Agreement
EXHIBIT G - Form of Guelph Facility Supply Agreement
EXHIBIT H-1 - Form of Sanitary Sewer Agreement
EXHIBIT H-2 - Form of Stormwater Agreement
EXHIBIT I - Form of Non-Compete Agreement
EXHIBIT J - Form of Manufacturing Services Agreement
EXHIBIT K - Intentionally Omitted
EXHIBIT L-1 - Form of Aiken Air Modeling Agreement
EXHIBIT L-2 - Form of Huntington Air Modeling Agreement
EXHIBIT M - Form of Wastewater Treatment Agreement
EXHIBIT N - Form of Amended and Restated Limited Liability Operating
Agreement
EXHIBIT O-1 - Form of Trademark Assignment
EXHIBIT O-2 - Form of Master Patent and Know How Assignment
EXHIBIT P - Form of Sliver Supply Agreement
EXHIBIT Q - Form of Borates Supply Agreement
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EXHIBIT R - Form of Carly Sublease
EXHIBIT S - Form of Pitney ▇▇▇▇▇ 1997 Sublease
EXHIBIT T - Form of Pitney ▇▇▇▇▇ 1996 Sublease
EXHIBIT U - Form of Landfill Agreement
EXHIBIT V - Form of NVOC Asset Purchase Agreement
EXHIBIT W - Form of OCC Asset Purchase Agreement
v
LLC INTEREST SALE AND PURCHASE AGREEMENT
This LLC Interest Sale and Purchase Agreement, dated as of July 31, 1998,
among ▇▇▇▇▇ CORNING, a Delaware corporation ("Seller"); LINCOLN YARNS, LLC, a
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Delaware limited liability Company (the "Company") and GLASS HOLDINGS, CORP., a
Delaware corporation ("Buyer").
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WITNESSETH:
WHEREAS, the Company is engaged in the business of manufacturing and
selling glass fiber yarns and specialty materials (the "Business");
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WHEREAS, Seller owns a 51% membership interest in the Company (the "Buyer
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Interest").
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WHEREAS, Buyer desires to purchase from Seller and Seller desires to sell
to Buyer, on the terms and subject to the conditions of this Agreement, the
Buyer Interest;
WHEREAS, capitalized terms used in this Agreement shall have the meanings
ascribed to them in Section 10.10 and all monetary amounts specified in this
Agreement are in United States Dollars.
NOW, THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1 SALE OF INTEREST; PURCHASE PRICE AND ADJUSTMENTS
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1.1 Sale of Interest.
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Subject to the satisfaction or waiver of the conditions set forth in
this Agreement, at the Closing and as of the Closing Date, Seller shall sell,
assign, transfer, convey and deliver to Buyer, free of all liens and
encumbrances, and Buyer shall purchase, the Buyer Interest.
1.2 Purchase Price.
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The aggregate purchase price for the Buyer Interest shall be three
hundred fifty-seven million Dollars ($357,000,000) in the aggregate, subject to
adjustment as provided in Section 1.4 (the "Purchase Price").
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1.3 Payment of Purchase Price.
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The Purchase Price shall be payable on the Closing Date by wire
transfer of immediately available federal funds to such bank account or accounts
as shall be designated by Seller to Buyer prior to the Closing.
1.4 Purchase Price Adjustment.
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(a) Calculation of the Purchase Price Adjustment. The Purchase Price
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shall be increased or decreased, on a dollar-for-dollar basis, by 51% of the
amount by which the Net Asset Value of the Company as of the Closing Date (the
"Closing NAV"), as finally determined pursuant to Section 1.4(d) below, is
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greater or less than twenty nine million two hundred seventy thousand dollars
($29,270,000) (the "Base NAV"). The calculation of the Base NAV is set forth on
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Schedule 1.4(a). If the Closing NAV is greater than the Base NAV, then Buyer
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shall pay to Seller 51% of the amount of such excess. If the Closing NAV is
less than the Base NAV, then
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Seller shall pay to Buyer 51% of the amount of such deficiency. Such Purchase
Price adjustment shall be paid as set forth in Sections 1.4(b) and (e) below.
(b) Estimated Adjustment. On the Closing Date, Seller shall deliver
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to Buyer a statement (the "Estimated Closing Statement") prepared in accordance
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with GAAP setting forth a calculation of Seller's good faith estimate of the
Closing NAV (the "Estimated Closing NAV"). If the Estimated Closing NAV as set
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forth on the Estimated Closing Statement is in excess of the Base NAV, the
Purchase Price payable at the Closing shall be increased by an amount equal to
51% of such excess. If the Estimated Closing NAV as set forth on the Estimated
Closing Statement is less than the Base NAV, then the Purchase Price payable at
the Closing shall be decreased by an amount equal to 51% of such deficiency.
(c) Closing NAV. Within ninety (90) days after the Closing,
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Seller will prepare and deliver to Buyer a balance sheet of the Company as of
the Closing Date prepared in accordance with GAAP together with a statement
setting forth a calculation of the Closing NAV (the "Closing Statement"). At
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the option of the Buyer, exercisable in writing on or before the Closing Date,
the Closing Statement shall be audited by PricewaterhouseCoopers LLP, the cost
of such audit shall be borne by the Company. Buyer shall cooperate fully and
shall cause the Company to provide Seller with all assistance and access to
books and records necessary for Seller to prepare the Closing Statement. In
connection therewith, Buyer and Seller will jointly conduct a physical inventory
of the Inventory as of the Closing Date in accordance with the procedures to be
mutually agreed by Buyer and Seller acting reasonably and in good faith] and, at
Buyer's option, such physical inventory will be observed by Buyer's auditors,
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PricewaterhouseCoopers LLP, and at Seller's option, such physical inventory will
be observed by Seller's auditors, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP.
(d) Closing Calculation.
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(i) Buyer shall be entitled to full access to the relevant
records and working papers prepared by or for Seller, and to Seller's employees
involved in such preparation, to aid in its review of the calculation of the
Closing NAV set forth on the Closing Statement. If Buyer believes that the
Closing NAV calculation (hereinafter the "Closing Calculation") has not been
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properly calculated in accordance with the calculation methodologies set forth
in this Section 1.4, it shall, within thirty (30) days after receipt of the
Closing Calculation, give written notice (the "Buyer's Objection") to Seller,
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setting forth the basis of the Buyer's Objection in reasonable detail and, to
the extent practicable, the adjustments to the Closing Calculation which Buyer
believes should be made. Failure to so notify Seller within such thirty (30) day
period shall constitute acceptance and approval of the Closing Calculation.
There shall be no adjustment to the Closing Calculation unless the cumulative
amount of Buyer's Objection equals or exceeds one million dollars
($1,000,000.00) and provided that any individual item of adjustment contained in
Buyer's Objection which is less than fifty thousand dollars ($50,000.00) shall
be excluded in its entirety. If Seller agrees that any change proposed by Buyer
is appropriate, the change shall be made to the Closing Calculation, whereupon
Buyer shall be deemed to have accepted and approved the Closing Calculation with
respect to such change and any other non-disputed item of the Closing
Calculation. If the proposed change is disputed by Seller, then Seller and Buyer
shall negotiate in good faith to resolve such dispute as expeditiously as
possible. If, after a period of thirty (30) days following the date on which
Buyer
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gives Seller notice of any such proposed change, any such proposed change still
remains disputed, then:
(ii) KPMG Peat Marwick LLP (the "Neutral Accounting Firm") shall
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be engaged to resolve any remaining disputes. The Neutral Accounting Firm shall
act as an arbitrator to determine, based solely on presentations submitted by
Seller and Buyer, and not by independent review, only those issues still in
dispute. Each of Buyer and Seller shall have made its complete submission to
the Neutral Accounting Firm within ten (10) days following the expiration of the
thirty (30) day negotiation period described in Section 1.4(d)(i). The failure
by either party to make a complete submission prior to the expiration of such
ten (10) day period shall be deemed a waiver of such party's right to make a
submission or a further submission to the Neutral Accounting Firm. The Neutral
Accounting Firm's determination, based upon the calculation methodologies set
forth in this Section 1.4, shall be made within thirty (30) days following the
date on which the dispute is submitted, shall be set forth in a written
statement delivered to Seller and Buyer, and shall be final, binding and
conclusive. The fees and any expenses of the Neutral Accounting Firm shall be
shared equally by Seller and Buyer. In the event a party does not comply with
the procedure and time requirements contained herein, the Neutral Accounting
Firm shall render a decision based solely on the evidence it has which was
timely filed by either of the parties.
(e) Payment of Cash Purchase Price Adjustment. If the
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Closing NAV shown on the Closing Statement exceeds the Estimated Closing NAV,
then the Purchase Price shall be increased by an amount equal to 51% of such
excess and if the Closing NAV shown on the Closing Statement is less than the
Estimated Closing NAV, then the Purchase Price shall be
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decreased by an amount equal to 51% of such deficiency. Payment of any
adjustment in the Purchase Price pursuant to this Section 1.4(e) shall be made
by wire transfer to an account designated by Seller or Buyer, as the case may
be, in United States Dollars, in immediately available federal funds within
three (3) business days after the Closing Calculation has been finally
determined together with interest from the Closing Date to the date of payment
at the "base rate" of Citibank, N.A. or any successor thereto in New York, New
York in effect on the Closing Date, based on a 360-day year.
2 REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller represents and warrants to Buyer that:
(2.1) Corporate Existence.
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Seller is a Delaware corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
(2.2) LLC Organization and Qualification.
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The Company is a limited liability company duly formed, validly
existing and in good standing under the laws of Delaware and the Company has the
requisite power and authority to own, lease and operate the Assets and to carry
on the Business as the same is now being conducted, except where the failure to
do so would not have a material adverse effect on the results of operations,
financial condition or business of the Business, taken as a whole, or upon the
ability of Seller or its Affiliates to consummate the transaction contemplated
hereby or perform their obligations under the Agreement or the Ancillary
Agreements (a "Material Adverse Effect"). The Company is duly authorized,
qualified or licensed to do business as a foreign limited liability company and
in good standing in every jurisdiction wherein, by reason of the
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nature of the Business or the character of the Assets, the failure to be so
qualified would have a Material Adverse Effect. Seller has delivered to Buyer
complete, true and correct copies of the Company's Certificate of Formation and
its Operating Agreement. The Company has no assets other than those related to
the Business and conducts no business other than the Business. Except as may be
contemplated by Section 4.29, the Company has no subsidiaries and on the Closing
Date will have no subsidiaries.
2.3 Capitalization of the LLC.
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The Company has authorized capitalization consisting solely of
ownership interests as described in the Operating Agreement (the "Interests").
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Seller is the owner of the Buyer Interest and Jefferson Holdings Inc., a
Delaware corporation and a wholly-owned subsidiary of Seller, owns the remaining
49% ownership interest of the Company. All of the Interests have been duly
authorized, validly issued and are fully paid. None of the Interests has been
issued in violation of any preemptive right. The Company has no other equity
securities or other evidences of ownership outstanding other than the Interests.
Except as contemplated by this Agreement, there are no outstanding
subscriptions, options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, plans or other agreements of any character providing for the
purchase, issuance, transfer or sale of any of the Interests or any other equity
securities of the Company or other evidence of ownership in the Company. There
are no voting trusts, proxies or other agreements or understandings with respect
to the Interests.
2.4 Corporate Authority.
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The execution and delivery of this Agreement, the Ancillary Agreements
to which Seller, NVOC and OCC are parties and the consummation of all of the
transactions provided for
7
herein and therein have been or, in the case of NVOC and OCC, will be duly
authorized by the Board of Directors of each of Seller, NVOC and OCC and no
other corporate or stockholder approval is required to be obtained prior to the
Closing. The execution and delivery of this Agreement has been duly authorized
by the Company. Each of Seller, NVOC and OCC has the corporate power and
authority to execute and deliver this Agreement and/or the Ancillary Agreements
(as applicable) and to perform its obligations hereunder and thereunder. The
Company has the power and authority to execute and deliver this Agreement. This
Agreement has been and the Ancillary Agreements will be duly executed and
delivered by each of Seller and, to the extent they are parties thereto, NVOC
and OCC, and constitutes or will constitute a valid and legally binding
obligation of Seller, NVOC and OCC (as applicable) enforceable in accordance
with its terms, except as enforceability may be (i) limited by bankruptcy,
insolvency, fraudulent conveyance or other similar laws affecting the
enforcement of creditor's rights, or (ii) subject to general principles of
equity. This Agreement has been duly executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company enforceable in
accordance with its terms, except as enforceability may be (i) limited by
bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting
the enforcement of creditor's rights, or (ii) subject to general principles of
equity.
2.5 No Conflicts.
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The execution and delivery of this Agreement and the Ancillary
Agreements do not and the performance by Seller of its obligations under this
Agreement and the consummation of the transactions contemplated hereby and
thereby will not (a) conflict with or result in a violation or breach of any
provision of the Certificate of Incorporation or By-Laws or any similar
8
documents of Seller, NVOC or OCC and, in the case of the Company, conflict with
or breach any provision of the Certificate of Formation of the Company or its
Operating Agreement; (b) assuming receipt of the Required Consents, violate any
provisions of Law to which Seller or the Company, NVOC or OCC are subject, or by
which the Assets are bound, except for any such violation which would not have a
Material Adverse Effect; or (c) except as disclosed on Schedule 2.5, conflict
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with, result in a violation or breach of or constitute a default or result in
the creation of any material Encumbrance upon any of the Assets under the terms
of any Material Contract to which Seller, the Company, NVOC or OCC is a party or
is otherwise subject or by which the Assets are bound, or violate any material
statute, rule, regulation, ordinance, code, order, judgment, ruling, writ,
injunction, decree or award to which Seller, the Company, NVOC, OCC or the
Assets are subject, except for any such violations, breaches or defaults which
individually or in the aggregate would not have a Material Adverse Effect.
2.6 Governmental Approvals; Consents.
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Neither Seller nor the Company, NVOC or OCC is subject to any order,
judgment or decree which would prevent the consummation of the transactions
contemplated hereby. No claim, legal action, suit, arbitration, governmental
investigation, action or other legal or administrative proceeding is pending or,
to the knowledge of Seller, threatened against Seller, the Company, NVOC or OCC
which would enjoin or delay the transactions contemplated hereby. Except as set
forth on Schedule 2.6 hereto, no consent, approval, order or authorization of,
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license or permit from, notice to or registration, declaration or filing with,
any governmental authority or entity, domestic or foreign, or any third party
under any Material Agreement is or has been required on the part of Seller, the
Company, NVOC or OCC in connection with the
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execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for such consents, approvals, orders or
authorizations of, licenses or permits, notices, registrations, declarations or
filings which have already been obtained or made or the failure to obtain or
make would not have a Material Adverse Effect.
2.7 Financial Statements.
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Schedule 2.7 contains a copy of (i) the audited Statement of Net
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Assets of the Aiken and Huntingdon Manufacturing Facilities (including the OCC
Assets) as of December 31, 1996 and 1997 and the related Statements of Revenues
and Certain Expenses for the three years ended December 31, 1997 (the
"Historical Annual Financial Statements"), (ii) the unaudited statement of Net
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Assets of the Aiken and Huntingdon Manufacturing Facilities (including the OCC
Assets) as of March 31, 1998 and the related Statement of Revenues and Certain
Expenses for the three-month period ended March 31, 1998 (the "Historical
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Interim Financial Statements" and, together with the Historical Annual Financial
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Statements, the "Historical Financial Statements") (iii) the Pro Forma
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Statements of Net Assets To Be Sold of the Business, NVOC and OCC as of December
31, 1997 and the related Pro Forma Statements of Revenues and Certain Expenses
for the year ended December 31, 1997 and (iv) the Interim Pro Forma Statement of
Net Assets to be sold of the Business, NVOC and OCC as of March 31, 1998 and the
related Interim Pro Forma Statement of Revenues and certain expenses for the
three month period ended March 31, 1998 (the "Pro Forma Information" and
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together with the Historical Financial Statements, the "Financial Statements").
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The Historical Annual Financial Statements have been prepared to present the net
assets of the Aiken and Huntingdon Manufacturing Facilities (including the OCC
Assets). The Historical Annual Financial Statements present
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fairly, in all material respects, the net assets of the Aiken and Huntingdon
Manufacturing Facilities (including the OCC Assets) as of December 31, 1996 and
1997 and the related revenues and certain expenses of the Aiken and Huntingdon
Manufacturing Facilities for the three years ended December 31, 1997, in
conformity with GAAP on the basis specified in the notes thereto. The Historical
Interim Financial Statements have been prepared in accordance with GAAP and
present fairly, in all material respects, the net assets of the Aiken and
Huntington Manufacturing facilities (including the OCC Assets) as of March 31,
1998 and the revenues and certain expenses of the Aiken and Huntington
Manufacturing facilities (including the OCC Assets) for the three months ended
March 31, 1998, subject to normal year-end adjustments. The Pro Forma
Information has been prepared to give effect to the events described in Notes 1
and 2 of the Pro Forma Information and should be read in conjunction with the
Historical Financial Statements. The Pro Forma Information is unaudited and is
not necessarily indicative of the results that would have actually occurred had
the sale been consummated, or of the results which may be obtained in the
future; however, subject to the foregoing, the Pro Forma Information reasonably
presents the assets and liabilities and revenues and certain expenses of the
Business as of the dates and for the periods presented, pro forma for the events
described in Notes 1 and 2 of the Pro Forma Information. All Financial
Statements and Historical Interim Financial Statements are qualified by the fact
that the Business has not operated as a separate "stand-alone" entity within
Seller and as a result, the Business received certain allocated charges and
credits as discussed more fully in the notes accompanying such Financial
Statements. Such charges and credits, while believed by Seller to be reasonable,
do not necessarily reflect the amounts which would have resulted from arm's-
length transactions. In order to present the Financial Statements
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and Historical Interim Financial Statements for the Business, a number of
significant assumptions regarding the basis of presentation have been made, all
of which are believed by Seller to be reasonable and are outlined in the notes
to such Financial Statements.
The books, records, and accounts of Seller maintained with respect to
the Business accurately and fairly reflect, in all material respects, the assets
and liabilities of the Business on the basis described in the Notes to the
Financial Statements.
2.8 Absence of Changes.
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Except as otherwise disclosed on Schedule 2.8 or as contemplated by
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this Agreement or the ACA, since March 31, 1998, (i) the Business has been
conducted in all material respects in the ordinary course consistent with past
practice; and (ii) there has not been any:
(i) change in the Business, other than seasonal changes,
changes relating to the economy in general or changes relating to the industry
in which the Business operates in general, none of which individually or in the
aggregate has had a Material Adverse Effect;
(ii) material change in accounting methods, principles or
practices utilized by Seller with respect to the Business, or the Company except
as required by law or by generally applicable changes instituted in the
accounting profession;
(iii) material damage, destruction or loss (whether or not
covered by insurance) to a material tangible Asset;
(iv) waiver or release of any material right or claim of Seller
or the Company with respect to the Business;
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(v) increase in the rate of compensation payable or to become
payable to any employee of the Business, except increases in the ordinary course
of business or pursuant to a collective bargaining agreement;
(vi) adverse change in employee relations having a Material
Adverse Effect;
(vii) amendment, cancellation or termination (other than a
scheduled termination as set forth therein) of any Material Contract;
(viii) sale, assignment or transfer of any material portion of
the Assets, other than pursuant to the Asset Contribution Agreement or in the
ordinary course of business of the Business;
(ix) material changes in payment terms with material customers
or suppliers;
(x) failure to make capital expenditures in the ordinary
course consistent with past practice;
(xi) failure to maintain the Assets in the ordinary course
consistent with past practice; or
(xii) agreement by Seller, the Company, NVOC or OCC (as
applicable) to do any of the things described in the preceding clauses (i)
through (xi) other than as expressly provided for herein.
2.9 Real and Personal Properties.
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(a) The Company has or will have on the Closing Date good title to,
or a valid and binding leasehold interest in, the real or personal property
included in the Assets, free and
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clear of all liens, charges and other encumbrances, except (i) as set forth on
Schedule 2.9(a); (ii) as disclosed in the Financial Statements; (iii) liens for
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Taxes not yet due and payable or, if due, (A) not delinquent or (B) being
contested in good faith by appropriate proceedings during which collection or
enforcement against the property is stayed; (iv) mechanics', workmen's,
repairmen's, warehousemen's, carriers' or other like liens arising or incurred
in the ordinary course of business if the underlying obligations are not past
due, original purchase price conditional sales contracts and equipment leases
with third parties entered into in the ordinary course of business; (v) with
respect to real property, (A) easements, licenses, covenants, rights-of-way and
other similar restrictions, including, without limitation, any other agreements
or restrictions shown by the current title reports described on Schedule
2.9(a)(v)(A), (B) any conditions that may be shown by a current survey, title
report or physical inspection and (C) zoning, building and other similar
restrictions, so long as none of (A), (B) or (C) renders the title of such real
property unmarketable or prevents the use of such real property substantially as
currently used; (vi) other liens, charges or other encumbrances which would not
have a Material Adverse Effect and (vii) with respect to the Leased Real
Property, liens or encumbrances created by, through or under the lessor thereof
or its predecessors in interest, (such liens, charges and encumbrances described
in clauses (i)-(vii) hereof are referred to herein as "Permitted Liens").
---------------
(b) Schedule 2.9(b) contains a list of the Owned Real Property and
---------------
all Real Property Leases principally used in the Business (the real property
covered by such Real Property Leases is hereinafter referred to the "Leased Real
-----------
Property" and, together with the Owned Real Property, the "Real Property"),
-------- -------------
including all buildings, structures and other improvements situated thereon
(individually referred to as a "Facility" and, collectively, as the
--------
14
"Facilities"). Except as set forth on Schedule 2.9(b) and except in each case
---------- ---------------
as would not have a Material Adverse Effect, (i) there are no parties in
possession of any portion of the Owned Real or the Leased Real Properties
included in the Assets as lessees, tenants at sufferance or trespassers other
than the Company; and (ii) to the knowledge of Seller, there is no pending
special assessment affecting the Owned Real Properties or any part thereof
included in the Assets. Except as provided on Schedule 2.9(b), Seller has
---------------
received no actual notice, and Seller otherwise has no actual knowledge, that
the location, construction, occupancy, operation or use of the buildings located
on the Owned Real Properties or the Leased Real Properties included in the
Assets violates any restrictive covenant or deed restriction or any other
governmental laws, orders, rules or regulations, except for such violations or
restrictions which would not have a Material Adverse Effect.
(c) All Inventory, whether reflected on the Financial Statements or
subsequently acquired, (i) has been or will be manufactured by Seller or the
Company in the ordinary course of business consistent with past practice or
acquired by Seller or the Company only in bona fide transactions entered into in
the ordinary course of business, (ii) is of good and merchantable quality except
to the extent adequately reserved for in the Financial Statements consistent
with past practice, (iii) is not now and at the Closing Date will not be subject
to any write-down or write-off in excess of the reserves established based on
past practice, and (iv) is valued at the lesser of cost or net realizable market
value, with appropriate adjustments for stale and slow-moving Inventory in
accordance with GAAP.
(d) All Accounts Receivable shown on the Financial Statements
represent, and the Accounts Receivable of Seller or the Company outstanding on
the Closing Date will
15
represent, sales actually made or services actually performed in the ordinary
course of business in bona fide transactions completed materially in accordance
with the terms and provisions contained in any documents relating thereto. The
reserves for uncollectible Accounts Receivable reflected on the Financial
Statements were established in accordance with GAAP and in accordance with
Seller's historical methods and practices in establishing such reserves.
2.10 Contracts.
---------
(a) Schedule 2.10(a) sets forth a true, correct and complete list of
----------------
all Contracts of the following categories (Contracts disclosed on Schedule
2.10(a) are hereafter referred to as "Material Contracts"):
------------------
(i) Employment contracts and severance agreements, including,
without limitation, Contracts (A) to employ or terminate executive officers or
other personnel and other contracts with present or former employees of the
Business currently in effect or (B) that will result in the payment by, or the
creation of any commitment or obligation (absolute or contingent) to pay on
behalf of Seller or the Company any severance, termination, "golden parachute,"
or other similar payments to any present or former employees of the Business
following termination of employment or otherwise as a result of the consummation
of the transactions contemplated by this Agreement;
(ii) Material distribution, franchise, license, sales,
commission, consulting agency or advertising contracts which are not cancelable
on thirty (30) calendar days notice;
(iii) Material options to buy or sell any property, real or
personal, included in the Assets;
16
(iv) Contracts, NVOC Contracts and OCC Contracts each
individually involving aggregate expenditures of $100,000 or aggregate receipts
in excess of $1,000,000;
(v) Contracts containing covenants limiting the freedom of the
Company to compete with any Person during any period following the Closing;
(vi) Partnership and joint venture agreements related to the
Business; and
(vii) Commitments for capital expenditures that have been
approved or made prior to the date of this Agreement in excess of $250,000 by
Seller in respect of the Business or the Company and that remain outstanding as
of the date hereof.
(b) Each of Seller, the Company, NVOC or OCC (as applicable)
has furnished or shall have made available to Buyer prior to the Closing a true
and correct and complete copy of each Material Contract. Each Material Contract
assigned or to be assigned (i) by Seller to the Company pursuant to the ACA,
(ii) by NVOC to the Company pursuant to the NVOC Asset Purchase Agreement, or
(iii) by OCC to the Company pursuant to the OCC Asset Purchase Agreement, is
valid and in full force and effect according to its terms. Except in regard to
collective bargaining agreements (which is the subject of Section 2.15), each of
Seller, the Company, NVOC, or OCC (as applicable) has duly performed all of its
material obligations under such Material Contracts to the extent those
obligations to perform have accrued and no material violation of, or material
default or breach under, such Material Contracts by Seller, the Company, NVOC or
OCC (as applicable) has occurred. To the Knowledge of Seller, the Company, NVOC
or OCC (as applicable), the other parties to any of the Material Contracts are
not in material default or breach under any such Material Contract nor has
Seller, the Company,
17
NVOC or OCC received notice that with notice or lapse of time or both such other
parties would be in violation or breach of or default under any such Material
Contract.
(c) Except for those Material Contracts listed on Schedule 2.10(c),
----------------
no Material Contract assigned to the Company pursuant to the Asset Contribution
Agreement, assigned by NVOC to the Company pursuant to the NVOC Asset Purchase
Agreement or assigned by OCC to the Company pursuant to the OCC Asset Purchase
Agreement requires the consent of any other party thereto to effectuate the
assignment thereof to the Company or its subsidiaries.
(d) Except as indicated on Schedule 2.10(d), neither Seller nor the
----------------
Company has received written notice of any actual or threatened termination,
cancellation, or limitation of, or any amendment, modification, or change to (i)
any Material Contract, (ii) the business relationship of Seller or the Company
with any customer, distributor or related group of customers or distributors
whose purchases individually or in the aggregate are material to the operations
and financial condition of the Business, (iii) the requirements of any customer
or related group of customers of Seller or the Company whose purchases
individually or in the aggregate are material to the operations and financial
condition of the Business, or (iv) the business relationship of Seller or the
Company with any material supplier to the Business, which termination,
cancellation, limitation, amendment, modification or change would have a
Material Adverse Effect.
2.11 Litigation.
----------
Except as set forth on Schedule 2.11, there are no actions, suits,
-------------
proceedings or investigations pending or, to the Knowledge of Seller, threatened
in law or in equity, or before
18
any governmental agency (a) related to or affecting the Assets or the Business,
(b) seeking to delay, limit or enjoin the transactions contemplated by this
Agreement or (c) that would materially impair the abilities of Seller or its
Affiliates to perform their respective obligations under this Agreement or any
of the Ancillary Agreements. Except as set forth on Schedule 2.11, neither
-------------
Seller nor the Company is in default under any judgment, order, injunction or
decree of any court or government agency relating to the Business. There are no
unsatisfied judgments against the Assets or Seller, the Company, NVOC or OCC.
2.12 Intangible Property Rights.
--------------------------
The Proprietary Rights, together with the Intellectual Property Rights
licensed to the Company pursuant to the Patent and Know How License Agreement
(the "Licensed Proprietary Rights"), constitute all of the material Intellectual
Property Rights as: (a) are in use, or have been used, or are or were under
development for use, in the Manufacturing Facilities to manufacture Business
Products on or before the Closing Date; (b) are necessary to the use of the
Business Manufacturing Technology; or (c) are necessary to the continued
manufacture of the Business Products using the Business Manufacturing
Technology. Except as set forth on Schedule 2.12, (a) the Company will on the
-------------
Closing Date own and possess all right, title and interest in and to all of the
Proprietary Rights and will have valid and subsisting licenses to continue to
use the Licensed Proprietary Rights in a manner consistent with past business
practices of the Business; (b) no claim by any third party contesting the
validity, enforceability, use or ownership of any of the Proprietary Rights or
the Licensed Proprietary Rights is pending or, to Seller's Knowledge, is
threatened and (c) neither Seller nor the Company has received any notice of,
and neither Seller nor the Company has any Knowledge of, any infringement or
19
misappropriation by any third party with respect to the Proprietary Rights or
the Licensed Proprietary Rights by the manufacture, use or sale of Business
Products, or any claim that any Proprietary Rights or Licensed Proprietary
Rights is invalid or unenforceable by Seller or the Company; and (d) to Seller's
Knowledge, the Company's use of the Proprietary Rights is not infringing upon or
otherwise violating the rights of any third party. All Proprietary Rights are
assignable by Seller to the Company, and all Licensed Proprietary Rights may be
licensed by Seller or one or more of its Affiliates to the Company in the manner
contemplated by the Master Patent and Know How Assignment Agreement and the
Patent and Know How License Agreement.
2.13 Insurance.
---------
Seller has in force the policies of insurance set forth on Schedule
--------
2.13. Seller has not been refused any insurance with respect to the Business,
----
by any insurance carrier to which it has applied for insurance or with which it
has carried insurance during the past five (5) years. There are no outstanding
requirements or recommendations by any current insurer or underwriter with
respect to the Business or the Assets which require changes in the conduct of
the Business, or require any repairs or other work to be done with respect to
any of the Assets or operations of the Business.
2.14 Tax Matters.
-----------
(a) Liens. There are no liens (other than Permitted Liens) for Taxes
-----
on any of the Assets.
(b) Safe Harbor Lease Property; Tax Exempt Use Property; Security
-------------------------------------------------------------
for Tax-Exempt Obligations. None of the Assets (i) are required to be treated
--------------------------
as being owned by any
20
other person pursuant to the so-called safe harbor lease provisions of former
Section 168(f)(8) of the Code; (ii) directly or indirectly secures any debt the
interest on which is tax-exempt under Section 103(a) of the Code or (iii) is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(c) United States Person. Seller is a United States person within
--------------------
the meaning of 7701(a)(30) of the Code.
2.15 Employment and Benefits.
-----------------------
(a) Labor Controversies. Except as described on Schedule 2.15(a) or
------------------- ----------------
as a result of the transactions contemplated by the ACA, (i) Seller and the
Company are in compliance in all material respects with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours; (ii) Seller and the Company have no material
Liability for non-compliance with any collective bargaining agreement related to
the Business; (iii) there is no unfair labor practice complaint against Seller
or the Company pending before the National Labor Relations Board; (iv) there is
no labor strike, dispute, slowdown or stoppage actually pending or threatened
against or affecting Seller or the Company; (v) within the past five years,
neither Seller nor the Company has experienced any strike, work stoppage or
other labor difficulty; and (vi) neither Seller nor the Company is a party to,
or subject to, a collective bargaining agreement, and no collective bargaining
agreement relating to employees included within the Business is currently being
negotiated.
(b) Employee Benefit Plans.
----------------------
(i) For purposes of this Agreement, "Benefit Plans" shall mean
-------------
all employee benefit plans and programs (including any "employee benefit plan"
within the meaning
21
of Section 3(3) of ERISA) maintained or contributed to by Seller for the benefit
of any Business Employee (or any dependent thereof). Schedule 2.15(b)(i) sets
-------------------
forth a list of each material Benefit Plan. No Benefit Plan is a multiemployer
plan as defined in Section 4001(a)(3) or 3(37) of ERISA.
(ii) With respect to each material Benefit Plan, Seller has made
available to Buyer (A) copies of any written plan document relating thereto and
any description thereof, (B) the most recent determination or opinion issued by
the Internal Revenue Service, if applicable, (C) the most recent Form 5500
filing, if applicable, and (D) lists of certain data relating to Business
Employees.
(iii) Except as described on Schedule 2.15(b)(iii), each material
---------------------
Benefit Plan has been established and administered in accordance with its terms
and in material compliance with the applicable provisions of ERISA, the Code and
other applicable laws. Each Benefit Plan intended to qualify under Section
401(a) of the Code is the subject of a favorable determination from the Internal
Revenue Service as to its qualified status, and to the knowledge of Seller, no
event has occurred since the date of such letter which would adversely affect
such qualified status.
(c) Employment Contracts. Except as described on Schedule 2.15(c),
-------------------- ---------------
there are no employment bonus, severance or similar contracts between the
Company, and any employee included within the Business on the other hand, other
than contracts representing the standard terms and conditions prevailing between
the Company and the Business Employees.
22
2.16 Compliance with Laws.
--------------------
To the best of Seller's knowledge, except as disclosed on Schedule
--------
2.16 and except for violations or defaults the existence of which would not have
----
a Material Adverse Effect, none of Seller, the Company, NVOC or OCC is in any
material respect in violation of or default under any Law with respect to the
operation of the Business or the Assets or has received any notification
thereof.
2.17 Finders; Brokers.
----------------
With the exception of fees and expenses payable to SBC Warburg Dillon
Read Inc., which shall be Seller's sole responsibility, neither Seller nor the
Company is a party to any agreement with any finder or broker, or in any other
way obligated to any finder or broker, for any commissions, fees or expenses in
connection with the origin, negotiation, execution or performance of this
Agreement.
2.18 Environmental Matters.
---------------------
Except as disclosed on Schedule 2.18 and except as a result of the
-------------
transactions contemplated by the ACA:
(a) Seller is in compliance and on the Closing Date the Company will
be in compliance with all Environmental Laws applicable to the Business as
presently conducted, except for violations of such Environmental Laws that would
not have a Material Adverse Effect.
(b) Seller holds and is in compliance with, and on the Closing
Date the Company will hold and be in compliance with, all Licenses and Permits
required under Environmental Laws applicable to the Assets or the conduct of the
Business as presently
23
conducted, except for the absence of, or the noncompliance with, such Licenses
and Permits that would not have a Material Adverse Effect.
(c) Neither Seller nor the Company has received any written or, to
Seller's knowledge, other notice of any pending lawsuit, action, proceeding,
investigation or claim by any person or private or governmental entity alleging
a violation of or liability under any Environmental Law arising from the conduct
of the Business or with respect to any Real Property, except in all such cases
that would not have a Material Adverse Effect.
(d) There has been no Release of any Hazardous Substance at any Real
Property or any real property previously owned, leased or operated by Seller or
the Company in respect of the Business that is in violation of or is reasonably
likely to lead to any liability arising under any Environmental Law, except for
any such violations or liability that would not have a Material Adverse Effect.
(e) There is no material environmental assessment, investigation,
study, test, review, or audit report prepared by or for Seller or the Company in
relation to the Business or the Assets that has not been delivered to or made
available to Buyer prior to the date hereof.
(f) Neither Seller nor the Company has transported or arranged for
the treatment, storage, or disposal of any Hazardous Substances to any off-site
location in connection with the Business that has resulted in or could result in
a liability to Seller or the Company under applicable Environmental Laws, except
for any such liability that would not have a Material Adverse Effect.
24
2.19 Entire Business.
---------------
Except as set forth on Schedule 2.19, the Assets, together with the
-------------
rights and services made available in the agreements described in Sections 4.5,
4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20,
4.21, 4.22, 4.23, 4.24, 4.25, 4.26, 4.27, 4.28 and 4.29, constitute all the
assets, properties and rights necessary to conduct the Business in all material
respects as currently conducted.
2.20 Disclaimer of Warranty.
----------------------
SELLER MAKES NO WARRANTY WITH RESPECT TO THE VALUE, CONDITION OR USE
OF THE ASSETS OWNED OR USED BY THE COMPANY, WHETHER EXPRESSED OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
2.21 Inventory.
---------
Neither Seller, in respect of the Business, nor the Company is under
any liability or obligation with respect to the return of inventory in the
possession of distributors or other customers which shall not be reserved
against in the Closing Statement.
2.22 Accounts Receivable.
-------------------
The Accounts Receivable outstanding on the Closing Date will be
subject to no defenses, counterclaims or rights of setoff other than those
arising in the ordinary course of business and for which adequate reserves will
have been established in the Closing Statement.
25
2.23 No Other Representations or Warranties.
--------------------------------------
Except for the representations and warranties contained in this
▇▇▇▇▇▇▇ ▇, ▇▇▇▇ of Seller, the Company or any other person makes any other
express or implied representation or warranty on behalf of Seller or the
Company, including, without limitation, as to the probable success or
profitability of the ownership, use or operation of the Business or the Assets
by the Company after the Closing.
3 REPRESENTATIONS OF BUYER
------------------------
Buyer represents and warrants that:
3.1 Corporate Existence.
-------------------
Buyer is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite power and authority to acquire the Buyer Interest. Buyer is duly
authorized, qualified or licensed to do business as a foreign corporation and in
good standing in every jurisdiction wherein, by reason of the nature of the
Business or the character of the Assets, the failure to be so qualified would
have a material adverse effect on the Company or the ability of Buyer to
consummate the transactions contemplated hereby (a "Buyer Material Adverse
----------------------
Effect").
------
3.2 Corporate Authority.
-------------------
The execution and delivery of this Agreement, the Ancillary Agreements
and the consummation of all of the transactions provided for herein and therein
have been duly authorized by the Board of Directors of Buyer, and no other
corporate or stockholder approval is required to be obtained by Buyer prior to
the Closing. Buyer has the corporate power and authority to execute and deliver
this Agreement and the Ancillary Agreements to which it is a
26
party and to perform its obligations hereunder and thereunder. This Agreement
has been duly executed and delivered by Buyer, and constitutes a valid and
legally binding obligation of Buyer, enforceable in accordance with its terms,
except as enforceability may be (i) limited by bankruptcy, insolvency,
fraudulent conveyance or other similar laws affecting the enforcement of
creditor's rights, or (ii) subject to general principles of equity.
3.3 No Conflicts.
------------
The execution and delivery of this Agreement by Buyer and the
Ancillary Agreements to which it is a party and the consummation by Buyer of the
transactions contemplated hereby and thereby will not violate or conflict with
any provision of the Certificate of Incorporation or By-Laws of Buyer, or result
in any breach or constitute any material default under any contract, indenture,
mortgage, lease, note or other agreement or instrument to which Buyer is a party
or otherwise subject, except for any such violation, breach or default which
would not have a Buyer Material Adverse Effect.
3.4 Governmental Approvals; Consents.
--------------------------------
Neither Buyer nor any of its Affiliates is subject to any order,
judgment or decree which would prevent the consummation of the transactions
contemplated hereby. No claim, legal action, suit, arbitration, governmental
investigation, action or other legal or administrative proceeding is pending or,
to the knowledge of Buyer, threatened against Buyer or any of its Affiliates
which would enjoin or delay the transactions contemplated hereby. Except as set
forth on Schedule 3.4 hereto, no consent, approval, order or authorization of,
------------
license or permit from, notice to or registration, declaration or filing with,
any governmental authority or entity, domestic or foreign, or of any third
party, is or has been required on the part of Buyer in
27
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby and, except for such consents,
approvals, orders or authorizations of, licenses or permits, notices,
registrations, declarations or filings which have already been obtained or made
or the failure of which to obtain or make would not have a Buyer Material
Adverse Effect.
3.5 Finders; Brokers.
----------------
With the exception of fees and expenses payable to First Union Capital
Markets, Buyer is not a party to any agreement with any finder or broker, or in
any other way obligated to any finder or broker, for any commissions, fees or
expenses in connection with the origin, negotiation, execution or performance of
this Agreement.
3.6 Financial Capacity.
------------------
Buyer has in hand cash and binding commitment letters (the "Commitment
----------
Letters"), which are currently in effect and true and correct copies of which
-------
are attached hereto as Schedule 3.6, with a reputable financial institution or
------------
institutions, to provide all funds necessary to enable Buyer and the Company to
consummate the transactions described in this Agreement (including the Company
Financing, the "Financings").
----------
3.7 Knowledge of Buyer.
------------------
In the course of performing its due diligence investigation, neither
Buyer nor its Affiliates, their respective officers, directors, agents,
employees or advisors have identified any facts which would render any of
Seller's representations incorrect, false or misleading.
28
3.8 No Other Representations or Warranties.
--------------------------------------
Except for the representations and warranties contained in this
Section 3, neither Buyer nor any other person makes any other express or implied
representation or warranty on behalf of Buyer.
4 AGREEMENTS OF BUYER AND SELLER
------------------------------
4.1 Operation of the Business.
-------------------------
Except as otherwise contemplated by this Agreement, the ACA or as
disclosed on Schedule 4.1, Seller covenants that until the Closing it will and
------------
it will cause the Company to use all reasonable efforts to operate the Business
in a manner consistent with the past practices of the Business, to maintain and
preserve intact the Business and to maintain the ordinary and customary
relationships of the Business with its suppliers, customers and others having
business relationships with it with a view toward preserving to and after the
Closing Date the Business, the Assets and the goodwill associated therewith.
Until the Closing Date, Seller shall cause the Company to continue to operate
and conduct the Business in the ordinary course and maintain its books and
records in accordance with Seller's past practices with respect to the Business
and will cause the Company not to, without the prior written approval of Buyer
or as otherwise contemplated by this Agreement, Schedule 4.1 or the existing
------------
business plans related to the Business, take any of the following actions:
(a) sell, transfer or otherwise dispose of or encumber any of the
properties or assets pertaining to the Business, other than (A) in the ordinary
course of business consistent with past practice, (B) any property or asset
which is not material to the results of operations,
29
financial condition or business of the Business and (C) the subdivision of
Seller's Aiken, South Carolina property as contemplated by the ACA;
(b) cancel any debt or waive any claim or right pertaining to the
Business, except in the ordinary course of business consistent with past
practice;
(c) grant any increase in the compensation of officers or employees
principally engaged in the Business (including any such increase pursuant to any
bonus, pension, profit sharing or other plan or commitment) or enter into any
employment agreement with any employee of the Business, except for increases (i)
in the ordinary course of business and consistent with past practice, (ii) as a
result of the collective bargaining described on Schedule 4.1(c) or (iii) as
---------------
required by any Benefit Plan;
(d) make any capital expenditure or commitment pertaining to the
Business or prepay any obligation related to the Business or the Assets, other
than (A) in the ordinary course of business consistent with past practice, (B)
pursuant to existing commitments disclosed to Buyer prior to the execution of
this Agreement or (C) those which are not material to the results of operations,
financial condition or business of the Business;
(e) except with respect to endorsement of negotiable instruments in
the ordinary course of the Business, incur, assume or guarantee any indebtedness
for borrowed money;
(f) dispose of or permit to lapse, other than through expiration by
operation of law (or in the case of the Licensed Proprietary Rights pursuant to
the terms of the relevant license) any rights to the Proprietary Rights or the
Licensed Proprietary Rights or any of the intellectual property to be licensed
to the Company under the Seller License Agreement;
30
(g) enter into, materially modify, materially amend or terminate any
Material Contract, License or Permit intended to be assumed by the Company
pursuant to the ACA other than in the ordinary course of business consistent
with past practice (including the entering into any license in respect of
Proprietary Rights other than those described on Schedule 4.1(g));
(h) commence any litigation other than consistent with past practice
or settle any litigation involving liability for material money damages or
restrictions which will have a Material Adverse Effect on the operation of the
Business or the use of the Assets or on the ability of Seller to perform its
material obligations under this Agreement; or
(i) agree, whether in writing or otherwise, to do any of the
foregoing.
4.2 Investigation of the Business; Confidentiality.
----------------------------------------------
(a) Buyer may, prior to the Closing Date, make or cause to be made
such investigation of the business and properties of the Business and of its
financial and legal condition as Buyer deems necessary or advisable. Seller will
cause the Company to permit Buyer, Buyer's lenders and their respective counsel,
accountants, technical consultants and, to the extent reasonably acceptable to
Seller and the Company, other agents or representatives of each of them, to have
full access to the properties, books and records of the Business at reasonable
hours to review information and documentation relative to the properties, books,
contracts, commitments and other records of the Business; provided, however,
-------- -------
that Buyer shall not have access to customer lists (or other customer-specific
information) or trade secrets prior to the Closing.
(b) Seller covenants that, from and after the date of this Agreement
(including after the Closing), it will not and it shall cause the Company to
not, without the prior written
31
consent of the Buyer, disclose to any person confidential information relating
to or concerning the Company, the Assets, the Business, or the Buyer obtained
by, or in the possession of, the Seller or the Company prior to the Closing Date
(the "Buyer Confidential Information"), except to its officers, directors,
------------------------------
employees and representatives who need to know such information for purposes of
taxes, accounting, litigation and other matters necessary in respect of the
Seller's ownership, prior to the Closing, of its Interest in the Company, the
Assets or the Business, unless, (i) upon the advice of the Seller's counsel,
disclosure is required to be made under the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, any other applicable Law or the
Regulations of the New York Stock Exchange or any other relevant securities
exchange or trading market or (ii) disclosure is necessary in the conduct of the
Business. In the event that Seller or the Company is requested or required by
subpoena, civil investigative demand, interrogatories, requests for information,
or other similar process to disclose any Buyer Confidential Information which
otherwise may not be disclosed except as set forth in the preceding sentence,
Seller will provide Buyer with prompt notice of such request or demand or other
similar process so that Buyer may seek an appropriate protective order or, if
such request, demand or other similar process is not mandatory, waive Seller's
and the Company's compliance with the provisions of this Section 4.2(b), as
appropriate. Notwithstanding the foregoing, neither Seller nor the Company shall
be obligated to comply with the terms of the immediately preceding sentence if
such compliance could result in the imposition of any liability, civil or
criminal on Seller or the Company. The term "Buyer Confidential Information"
does not include information which (i) becomes generally available to the public
other than as a result of disclosure by Seller or the Company, (ii) was
available on a
32
non-confidential basis prior to its disclosure by Seller or the Company, or
(iii) becomes available to Seller or the Company on a non-confidential basis
from a source other than the Business, provided that such source is not bound by
a confidentiality agreement with Buyer or its representatives.
(c) Buyer covenants that, from and after the date of this Agreement
(including after the Closing), it will not, without the prior written consent of
Seller, disclose to any person confidential information relating to or
concerning Seller (the "Seller Confidential Information"), except to its
-------------------------------
officers, directors, employees and representatives who need to know such
information for purposes of taxes, accounting, litigation and other matters
necessary in respect of Buyer's ownership, subsequent to the Closing, of the
Buyer Interest, unless, (i) upon the advice of Buyer's counsel, disclosure is
required to be made under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, any other applicable Law or the regulations of
any relevant securities exchange or trading market or (ii) disclosure is
reasonably necessary in the conduct of the Business and such disclosure would
not have an adverse effect on Seller. In the event the Buyer is requested or
required by subpoena, civil investigative demand, interrogatories, requests for
information, or other similar process to disclose any Seller Confidential
Information which otherwise may not be disclosed except as set forth in the
preceding sentence, Buyer will provide Seller with prompt notice of such
request, demand or other similar process so that Seller may seek an appropriate
protective order or, if such request, demand or other similar process is not
mandatory, waive Buyer's compliance with the provisions of this Section 4.2(c),
as appropriate. Notwithstanding the foregoing, Buyer shall not be obligated to
comply with the terms of the immediately preceding sentence if such compliance
33
could result in the imposition of any liability, civil or criminal, on Buyer.
The term "Seller Confidential Information" does not include information which
(i) becomes generally available to the public other than as a result of
disclosure by Buyer, (ii) was available on a non-confidential basis prior to its
disclosure by Buyer, or (iii) becomes available to Buyer on a non-confidential
basis from a source other than Seller, provided that such source is not bound by
a confidentiality agreement with Seller or its representatives.
(d) For purposes of Sections 4.2(b) and 4.2(c), "Seller" shall
include Seller, its subsidiaries and Affiliates, and any of their respective
directors, officers, employees and representatives, and "Buyer" shall include
Buyer, its subsidiaries and Affiliates, and any of their respective directors,
officers, employees and representatives.
(e) No failure or delay by either party hereto in exercising any
right, power or privilege under Section 4.2(b) or 4.2(c) shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder.
4.3 Mutual Cooperation; No Inconsistent Action.
------------------------------------------
(a) Subject to the terms and conditions hereof, Seller and Buyer
agree to use their reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including all of the following: (i) obtain prior to the Closing all
licenses, certificates, permits, approvals, authorizations, qualifications and
orders of governmental authorities as are necessary for the consummation of the
transactions
34
contemplated hereby and (ii) effect all necessary registrations and filings.
Seller and Buyer shall cooperate fully with each other to the extent reasonable
in connection with the foregoing.
(b) Buyer and Seller shall timely and promptly make all filings which
may be required by each of them in connection with the consummation of the
transactions contemplated hereby including but not limited to those set forth on
Schedule 4.3(b). Each party shall furnish to each other such necessary
---------------
information and assistance as the other party may reasonably request in
connection with the preparation of any necessary filings or submissions by it to
any U.S. or foreign governmental agency.
(c) Each of Seller and Buyer shall notify and keep the other advised
as to (i) any litigation or administrative proceeding pending and known to such
party, or to its knowledge threatened, which challenges the transactions
contemplated hereby and (ii) any event or circumstance which would constitute a
breach of their respective representations and warranties in this Agreement;
provided, however, that the failure of Seller or Buyer to comply with clause
-------- -------
(ii) shall not subject Seller or Buyer to any liability hereunder except as and
to the extent Seller or Buyer would be responsible for a breach of such
representations and warranties pursuant to Section 8 (including, without
limitation, the limitations on recovery and the time periods for bringing claims
thereunder). Subject to the provisions of Section 8 hereof, Seller and Buyer
shall not take any action inconsistent with their obligations under this
Agreement or which would materially hinder or delay the consummation of the
transactions contemplated by this Agreement.
(d) Seller and Buyer shall use their reasonable efforts to obtain
at the earliest practicable date and prior to the Closing all Contractual
Consents contemplated herein, and will
35
provide to each other copies of each such Contractual Consent promptly after it
is obtained. To the extent any such approval, waiver or consent is not received
prior to the Closing, Seller and Buyer shall continue for a reasonable time
after Closing to use their reasonable efforts to obtain at the earliest
practicable date all such approvals, waivers or consents.
4.4 Public Disclosures.
------------------
Prior to the Closing Date, no party to this Agreement will issue any
press release or make any other public disclosures concerning this transaction
or the contents of this Agreement without the prior written consent of the other
party. Notwithstanding the above, nothing in this Section will preclude any
party from making any disclosures required by law or regulation or necessary and
proper in conjunction with the filing of any Tax Return or other document
required to be filed with any federal, state or local governmental body,
authority or agency; provided, however, that the party required to make the
-------- -------
release or statement shall allow the other party reasonable time to comment on
such release or statement in advance of such issuance.
4.5 Patent and Know How License Agreement.
-------------------------------------
On the Closing Date, Seller shall execute and deliver, and Buyer shall
cause the Company to and the Company shall execute and deliver, a license
agreement, substantially in the form attached as Exhibit A hereto (the "Patent
and Know How License Agreement"), pursuant to which Seller shall grant to the
Company, and Company shall grant to the Seller, a license to use certain patents
and know-how as set forth therein.
36
4.6 Non-Solicitation.
----------------
Until the Closing shall actually have occurred, Buyer acknowledges
that it remains subject to the term of the Confidentiality Agreement dated
February 24, 1998 by and between Seller and Groupe Porcher Industries.
4.7 Financing.
---------
If Buyer requires the Financings to consummate the transactions
contemplated by this Agreement, Buyer will use its best efforts to obtain, and
to cause the Company to obtain, and Seller shall reasonably cooperate in
obtaining and causing the Company to obtain the Financings on and subject to
substantially the same terms and conditions as those previously set forth in the
Commitment Letters. Buyer shall use its best efforts to satisfy at or before
the Closing all requirements which are conditions to its closing all
transactions constituting the Financings and to its and the Company's drawing
down the cash proceeds thereunder. Buyer expressly acknowledges that the
consummation of any financing transaction shall not be a condition to Buyer's
obligations under this Agreement.
4.8 Services Agreement.
------------------
Following the date hereof Seller and Buyer shall negotiate in good
faith a transitional services agreement to be executed at the Closing pursuant
to which Seller and the Company shall agree to provide each other agreed upon
transactional services for periods and upon terms to be agreed between the
parties.
4.9 Glass Marbles Supply Agreement.
------------------------------
On the Closing Date, Seller shall execute and deliver, and Buyer shall
cause the Company to and the Company shall execute and deliver, an agreement,
substantially in the form
37
attached hereto as Exhibit C (the "Glass Marbles Supply Agreement"), pursuant to
------------------------------
which Seller shall agree to supply glass marbles to the Company on the terms and
subject to the conditions set forth therein.
4.10 Alloy Services Agreement.
------------------------
On the Closing Date, Seller shall execute and deliver, and Buyer shall
cause the Company to and the Company shall execute and deliver, an agreement,
substantially in the form attached hereto as Exhibit D (the "Alloy Services
--------------
Agreement"), pursuant to which Seller shall agree to provide alloy services to
---------
the Company on the terms and subject to the conditions set forth therein.
4.11 Huntingdon Lease Agreement.
--------------------------
On the Closing Date, Seller shall execute and deliver, and Buyer shall
cause the Company to and the Company shall execute and deliver, an agreement,
substantially in the form attached hereto as Exhibit E (the "Huntingdon Lease
----------------
Agreement"), pursuant to which the Company shall agree to lease a portion of the
---------
Huntingdon property to Seller on the terms and subject to the conditions set
forth therein.
4.12 ▇▇▇▇▇▇▇ Facility Supply Agreement.
---------------------------------
On the Closing Date, Seller shall cause NVOC and Buyer shall cause the
Company to and the Company shall execute and deliver an agreement, substantially
in the form attached hereto as Exhibit F (the "▇▇▇▇▇▇▇ Facility Supply
-----------------------
Agreement"), pursuant to which NVOC shall supply heavy yarns to the Company
through NVOC's facility in ▇▇▇▇▇▇▇, Belgium (the "▇▇▇▇▇▇▇ Facility") on the
----------------
terms and subject to the conditions set forth therein.
38
4.13 Guelph Facility Supply Agreement.
--------------------------------
On the Closing Date, Seller shall cause OCC and Buyer shall cause the
Company to and the Company shall execute and deliver, an agreement,
substantially in the form attached hereto as Exhibit G (the "Guelph Facility
---------------
Supply Agreement"), pursuant to which OCC shall supply heavy yarns to the
----------------
Company through OCC's Facility in ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (the "Guelph
------
Facility") on the terms and subject to the conditions set forth therein.
--------
4.14 Sanitary Sewer and Stormwater Agreements.
----------------------------------------
On the Closing Date, Seller shall execute and deliver, and Buyer shall
cause the Company to and the Company shall execute and deliver (i) a Sanitary
Sewer Agreement and (ii) a Stormwater Agreement substantially in the forms
attached hereto as Exhibit H-1 and H-2 (the "Sanitary Sewer and Stormwater
-----------------------------
Agreements").
----------
4.15 Non-Compete Agreement.
---------------------
On the Closing Date, Buyer Groupe Porcher Industries, the Company and
Seller shall execute and deliver a Non-Compete Agreement substantially in the
form attached hereto as Exhibit I (the "Non-Compete Agreement").
---------------------
4.16 Manufacturing Services Agreement.
--------------------------------
On the Closing Date, Seller shall execute and deliver, and Buyer shall
cause the Company to and the Company shall execute and deliver, an agreement
substantially in the form attached hereto as Exhibit J (the "Manufacturing
-------------
Services Agreement"), pursuant to which the Company shall provide to Seller
------------------
certain manufacturing services on the terms and subject to the conditions set
forth therein.
4.17 Intentionally Omitted
---------------------
39
4.18 Air Modeling Agreements.
-----------------------
On the Closing Date, Seller shall execute and deliver, and Buyer shall
cause the Company to and the Company shall execute and deliver (i) a joint
modeling agreement in respect of the Aiken facility and (ii) a joint modeling
agreement in respect of the Huntington facility, substantially in the forms
attached hereto as Exhibit, L-1 and L-2 (the "Air Modeling Agreements").
4.19 Wastewater Treatment Agreement.
------------------------------
On the Closing Date, Seller shall execute and deliver, and Buyer shall
cause the Company to, and the Company shall, execute and deliver, a Wastewater
Treatment Services Agreement, substantially in the form attached hereto as
Exhibit M (the "Wastewater Treatment Agreement"), pursuant to which the Company
------------------------------
shall provide to Seller Waste Water Treatment Services with respect to the
retained portion of Seller's Aiken, South Carolina Facility on the terms and
subject to the conditions set forth therein.
4.20 Operating Agreement.
-------------------
On the Closing Date, Seller shall cause Jefferson Holdings, Inc. and
Buyer shall execute and deliver the Lincoln Yarns LLC Amended and Restated
Limited Liability Operating Agreement, substantially in the form attached hereto
as Exhibit N (the "Operating Agreement").
-------------------
4.21 Trademark Assignment/Master Patent and Know How Assignment.
----------------------------------------------------------
On the Closing Date, Seller shall and shall cause ▇▇▇▇▇-▇▇▇▇▇▇▇
Fiberglas Technology, Inc. to execute and deliver a (i) trademark assignment
(the "Trademark Assignment") and (ii) Master Patent and Know How Assignment (the
--------------------
"Master Patent and Know
----------------------
40
How Assignment") substantially in the form attached hereto as Exhibits O-1 and
--------------
O-2, respectively.
4.22 Use of Packaging.
----------------
Buyer acknowledges that Seller and the Company have agreed that,
following the Closing Date, the Company may use the existing inventory of
packaging materials displaying Seller's trademarks for a period of six (6)
months. After such six-month period, the Company shall destroy any such unused
packaging material; provided, however, that the Company shall not be required to
-------- -------
repackage any finished goods which on the Closing Date shall have already been
packaged in packaging material displaying the Company's trademarks. After such
six (6) month period, Company may only continue to use pallets and recyclable
materials if any of Seller's trademarks thereon are obliterated or obscured.
The Company shall not manufacture new pallets or recyclable materials bearing
Seller's trademarks.
4.23 Sliver Supply Agreement.
-----------------------
On the Closing Date, Seller shall execute and deliver, and Buyer shall
cause the Company to and the Company shall execute and deliver, an agreement
substantially in the form attached hereto as Exhibit P (the "Sliver Supply
-------------
Agreement"), pursuant to which the Company shall supply Seller certain products
---------
on the terms and subject to the conditions set forth therein.
4.24 Borates Supply Agreement.
------------------------
On the Closing Date, Seller shall execute and deliver, and Buyer shall
cause the Company to and the Company shall execute and deliver, an agreement
substantially in the form attached hereto as Exhibit Q (the "Borates Supply
--------------
Agreement"), pursuant to which Seller shall supply the Company certain products
---------
on the terms and subject to the conditions set forth therein.
41
4.25 Carly Sublease.
--------------
On the Closing Date, Seller and the Company shall execute and deliver
an agreement substantially in the form attached hereto as Exhibit R (the "Carly
-----
Sublease"), pursuant to which Seller shall sublease to the Company certain
--------
equipment on the terms and subject to the conditions set forth therein.
4.26 Pitney ▇▇▇▇▇ 1997 Sublease.
--------------------------
On the Closing Date, Seller shall execute and deliver, and Buyer shall
cause the Company to and the Company shall execute and deliver, an agreement
substantially in the form attached hereto as Exhibit S (the "Pitney ▇▇▇▇▇ 1997
-----------------
Sublease"), pursuant to which Seller shall sublease to the Company certain
--------
equipment on the terms and subject to the conditions set forth therein.
4.27 Pitney ▇▇▇▇▇ 1996 Sublease.
--------------------------
On the Closing Date, Seller shall execute and deliver, and Buyer shall
cause the Company to and the Company shall execute and deliver, an agreement
substantially in the form attached hereto as Exhibit T (the "Pitney ▇▇▇▇▇ 1996
-----------------
Sublease"), pursuant to which Seller shall sublease to the Company certain
--------
equipment on the terms and subject to the conditions set forth therein.
4.28 Landfill Agreement.
------------------
On the Closing Date, Seller shall execute and deliver, and Buyer shall
cause the Company to and the Company shall execute and deliver, an agreement
substantially in the form attached hereto as Exhibit U (the "Landfill
--------
Agreement").
---------
42
4.29 NVOC and OCC Assets.
-------------------
(a) Seller shall cause its subsidiary, NVOC, to execute and deliver
and Buyer shall cause the Company, or an Affiliate of the Company, to and the
Company shall execute and deliver an Asset Purchase Agreement in the form of
Exhibit V (the "NVOC Asset Purchase Agreement") concerning the sale of the
-----------------------------
assets described therein (the "NVOC Assets") and the assumption of the
-----------
liabilities described therein by the Company or its wholly-owned subsidiary.
(b) Seller shall cause its subsidiary, OCC, to execute and deliver
and Buyer shall cause the Company, or an Affiliate of the Company, to and the
Company shall execute and deliver an Asset Purchase Agreement in the form of
Exhibit W (the "OCC Asset Purchase Agreement") concerning the sale of the assets
----------------------------
described therein (the "OCC Assets") and the assumption of the liabilities
----------
described therein by the Company or its wholly-owned subsidiary.
4.30 "GLAS Marks".
----------
Buyer acknowledges that, as between the parties, Seller is the owner of all
right, title and interest in and to the GLAS family of GLAS marks (the "GLAS
----
Marks") in any form or embodiment thereof and is also the owner of the goodwill
-----
attached or which shall become attached to the GLAS Marks. Neither Buyer nor the
Company shall, at any time, knowingly do or permit to be done any act or thing
which may in any way adversely affect any rights of Seller in and to the GLAS
Marks or any registrations thereof or which, directly or indirectly, may reduce
the value of the GLAS Marks or detract from their reputation, other than at the
express request of Seller. Neither Buyer nor the Company shall join any name or
names with the GLAS Marks so as to form a new ▇▇▇▇. Neither Buyer nor the
Company shall use any name or names in connection with the GLAS Marks in any
advertising, publicity, labeling, packaging or printed
43
matter of any kind, unless and until Seller consents to these particular uses in
writing. At Seller's request, Buyer and the Company shall execute any documents
reasonably required by Seller to confirm Seller's ownership of all rights in and
to the GLAS Marks and the respective rights of LALLC and the Surviving Company
pursuant to this Agreement.
4.31 No Solicitation.
---------------
(a) Seller will not, and will ensure that the Company and their
respective directors, officers, employees or other Affiliates or representatives
do not, directly or indirectly encourage, solicit, participate in or initiate
discussions or negotiation with, or provide any information to, any person or
entity (other than Buyer or its directors, officers, employees or other
Affiliates or representatives) with respect to any sale, disposition, lease or
other transfer of any of the Assets (except as contemplated by the ACA or sales
of inventory and other routine sales of assets in the ordinary course of
business consistent with past practice) or the Business (an "Acquisition
Transaction"). Seller shall notify Buyer upon receipt of any bona-fide proposal
concerning an Acquisition Transaction and the terms thereof.
(b) In the period between the date of this Agreement and the Closing
and for 12 months after the Closing Date, neither Seller nor any of its
Affiliates shall, directly or indirectly, on its own behalf or in the service or
on behalf of others, initiate any solicitation of or offer employment to any
Business Employee until the employee rejects Company's offer of employment or,
as to any Transferred Employee, while such employee is employed by Company or
any of its Affiliates. For this purpose, the general posting of placement of job
openings and descriptions by Seller on newspapers, magazines, intranet or
internet websites, bulletin boards or any other form of communication or
advertisement not specifically targeted at the Business or
44
Transferred Employees or through any other method of general solicitation will
not be deemed to be an act of initiating solicitation of a Business or
Transferred Employee. The Business Employees shall not be treated as employees
of Seller or its Affiliates for the purposes of any "hiring freeze" or "job
transfer" program of Seller or any of its Affiliates.
4.32 Casualty to Assets; Eminent Domain.
----------------------------------
(a) If on or prior to the Closing Date any of the tangible Assets
shall have suffered loss or damage on account of fire, flood, accident, act of
war, civil commotion, or any other cause or event beyond the reasonable power
and control of Seller or the Company (whether or not similar to the foregoing)
which has a Material Adverse Effect, Seller shall promptly notify the Buyer and
Buyer shall have the right to elect within fourteen (14) days from and after
such notice, by notice to Seller either (a) to terminate this Agreement and all
of Buyer's obligations hereunder (other than those set forth in Section 4.2(c)
hereof) without incurring any liability to Seller as a result of such
termination or (b) to consummate the transactions provided for herein provided
that the full amount of all insurance proceeds, if any, paid or payable to
Seller for the benefit of the Company in respect of such loss plus an amount
equal to any deductible applicable to such loss shall be paid to the Company. If
under the circumstances described in the foregoing sentence, Buyer shall elect
to consummate the transactions provided for herein, Seller shall, on demand,
pay, or assign its right to receive, to the Company at or after the Closing the
full amount of any insurance proceeds actually received by Seller for the
benefit of the Company in respect of any such loss together with the amount of
any deductible applicable to such loss. If Buyer does not elect to terminate
this Agreement within the aforesaid fourteen (14) day period, Buyer shall be
deemed to have elected to consummate the transactions contemplated hereby.
45
(b) If, after the date hereof and prior to the Closing, Seller or the
Company receives notice of the commencement or threatened commencement of
eminent domain or other like proceedings against the Real Properties or any
portion thereof which has a Material Adverse Effect, Seller shall promptly
notify Buyer, and Buyer shall have the right to elect within fourteen (14) days
from and after such notice, by notice to Seller, to terminate this Agreement and
all of Buyer's obligations hereunder (other than those set forth in Section
4.2(c)). If Buyer does not make such election within the aforesaid fourteen (14)
day period, Buyer shall be deemed to have elected to consummate the transactions
contemplated hereby.
4.33 Intentionally Omitted.
---------------------
4.34 Employees and Employee Benefits.
-------------------------------
(a) Hiring of Employees. Buyer shall cause the Company to offer
-------------------
employment as of the Closing Date to each employee of Seller engaged in the
Business who is listed on Schedule 4.34(a) (collectively, the "Business
Employees"), which schedule shall be provided as soon as practicable after the
date hereof and shall be updated from time to time prior to the Closing Date,
and shall include current annual salary or wage rates; provided, however, that
-------- -------
if any such Business Employee is on leave of absence as of the Closing, such
offer of employment shall be effective upon the employee's return to active
employment, provided such return is within two (2) years following the Closing
Date. Each such offer shall be on at least the same wage rates or cash salary
levels, and on such other terms and conditions including benefit plan coverages)
that are, in the aggregate, no less favorable than those in effect immediately
prior to the Closing Date. With respect to each such Business Employee who
accepts the Company's offer of employment (a "Transferred Employee"), Buyer
--------------------
shall cause the Company to (i) maintain
46
such equivalent or higher cash salary levels and substantially similar terms and
conditions from the Closing Date until at least December 31, 1999 (or shall
maintain such other terms and conditions and for such period as may be required
pursuant to any collective bargaining agreement assumed pursuant to clause (iii)
below), and (ii) credit periods of service prior to the Closing for purposes of
determining seniority, eligibility, vesting and benefit entitlement under all
compensation and benefit plans, programs and policies maintained by the Company
after the Closing . If Seller materially amends or terminates any Benefit Plan,
the Company shall have the right to amend or terminate its corresponding plan in
the same or similar manner. Seller shall notify the Company of any such material
amendment or termination.
(b) Health and Life Coverages; Workers Compensation. Without limiting
-----------------------------------------------
the scope of Section 4.34(a), Buyer shall cause the Company to cause each
Transferred Employee (and his or her eligible dependents) to be covered
immediately following the Closing by a group health plan that provides health
benefits (within the meaning of Section 5000(b)(1) of the Code) that (i) does
not limit or exclude coverage on the basis of any pre-existing condition of such
Transferred Employee or dependent, and (ii) that provides each Transferred
Employee full credit, for the year during which the Closing occurs, with any
deductible already incurred by the Transferred Employee under Seller's group
health plan and with any other out-of-pocket expenses that count against any
maximum out-of-pocket expense provision of Seller's or the Company's group
health plan (or if the Company's plan does not provide such credit, Buyer will
cause the Company to reimburse each Transferred Employee for such deductibles
and out-of-pocket expenses incurred under Seller's plan during the calendar year
in which the Closing occurs). In addition, from the Closing Date until at least
December 31, 1999 (or such other
47
period as may be required pursuant to any collective bargaining agreement
assumed hereunder) following the Closing Date, Buyer shall cause the Company to
provide Transferred Employees with post-retirement health and life coverage at
levels that are substantially similar to the levels provided to such employees
under Seller's group health and life plans immediately prior to the Closing. The
Company shall be solely responsible for, and Buyer shall indemnify Seller
against, any and all claims by a Transferred Employee or his dependents for
retiree health and life benefits, and Seller shall remain responsible for such
benefits as to any employee or former employee of the Business other than a
Transferred Employee. Following the Closing, Buyer shall cause the Company to
provide continuation health coverage to all Transferred Employees or any
qualified beneficiary thereof who incur a qualifying event after the Closing in
accordance with the continuation health care requirements of "COBRA" and Seller
shall provide such COBRA coverage to any employee or former employee of the
Seller engaged in the Business, or any qualified beneficiary thereof who incurs
a qualifying event on or prior to the Closing. Seller shall remain responsible
for, and shall indemnify the Company and Buyer against, any and all claims
incurred by Transferred Employees prior to the Closing Date that are covered (or
alleged to be covered) under Seller's group health plans. For purposes of
clarity, a claim shall be considered incurred when the treatment for a given
condition is provided, and not when the condition arose. Workers Compensation
benefits for any Transferred Employee shall be the responsibility of Seller only
if the claim therefor was properly filed by the Transferred Employee prior to
the Closing Date, and otherwise shall be the responsibility of the Company.
(c) Severance. Without limiting the scope of Section 4.34(a), with
---------
respect to each Transferred Employee whose employment is terminated by the
Company within one year of
48
the Closing Date, Buyer shall cause the Company to provide severance benefits
which are no less favorable than those to which such Transferred Employee would
have been entitled under Seller's severance policies set forth on Schedule
--------
2.15(b)(i) had such Transferred Employee been terminated by Seller immediately
----------
prior to the Closing.
(d) Accrued Vacation. With respect to any accrued but unused vacation
----------------
time to which any Transferred Employee is eligible to take pursuant to the
vacation policy applicable to such Transferred Employee immediately prior to
Closing, Buyer shall cause the Company to allow such Transferred Employee to use
such accrued vacation. The Company shall have no obligation to provide any cash
payments for unused vacation.
(e) Disability Benefits. Without limiting the scope of Section
-------------------
4.34(a), Buyer shall cause the Company to provide long-term disability benefits
to any Transferred Employee who becomes disabled after the Closing Date. Any
Business Employee who was on short-term disability leave immediately prior to
the Closing and who subsequently satisfies the eligibility requirements for
long-term disability benefits on or after the Closing Date (including any
benefit elimination period) shall be covered under Seller's long-term disability
plan. Any Business Employee who was on short-term disability leave immediately
prior to the Closing and who subsequently is able to return to work before
qualifying for long-term disability coverage shall be offered employment by the
Company as required pursuant to Section 4.34(a). If the offer of employment is
accepted, Buyer shall cause the Company to reimburse Seller its cost of
providing short-term disability payments to such employee from the Closing Date
until the date such employee commences employment with the Company. Seller shall
retain responsibility for the making of long-term disability payments for
employees who are receiving long-term disability payments as of the Closing. If
any former employee of the Business who is identified to Buyer as receiving
long-term disability
49
payments as of the Closing is, subsequent to the Closing, legally entitled to be
re-employed by Seller, Buyer shall cause the Company to offer employment to such
employee as if such employee were a Transferred Employee on the Closing Date.
(f) Flexible Spending Accounts. Without limiting the scope of Section
--------------------------
4.34(a), effective as of the Closing and through at least December 31, 1998,
Buyer shall cause the Company to establish flexible spending accounts for
medical and dependent care expenses, and shall credit such accounts with the
amount credited as of the Closing under comparable accounts maintained with
Seller from the beginning of the plan year to the Closing. As soon as
practicable after the Closing, (A) Seller shall pay to the Company in cash the
amount, if any, by which aggregate contributions made by Transferred Employees
to Seller's flexible spending accounts exceeded the aggregate benefits provided
to Transferred Employees as of the Closing, or (B) Buyer shall cause the Company
to pay to Seller in cash the amount, if any, by which the aggregate benefits
provided to Transferred Employees under Seller's flexible spending accounts
exceeded the aggregate contributions made by Transferred Employees as of the
Closing. The Company shall have no obligation to contribute to or allow
contributions to any flexible spending accounts that exceed Seller's prior
obligation to contribute or allow contributions.
(g) Defined Benefit Plans. Seller shall cause each Transferred
---------------------
Employee to become fully vested in his accrued benefit under any tax-qualified
defined benefit pension plan maintained by Seller (a "Seller Pension Plan") in
-------------------
which such Transferred Employee participates as of the Closing. Seller will
amend each Seller Pension Plan to provide for the continuing
50
eligibility for early retirement of each Transferred Employee who does not, as
of the Closing Date, qualify for an early retirement benefit thereunder, and for
this purpose shall treat service with the Company as service with Seller. If any
such Transferred Employee remains employed by the Company until he qualifies for
early retirement, then such plans will treat such Transferred Employee as having
elected early retirement when he retires from the Company. Such early retirement
benefit shall be based solely upon service and compensation earned prior to the
Closing. The Company will provide Seller with as much notice as possible of the
retirement of any such Transferred Employee. Seller shall calculate the
difference between the lump sum benefit payable to such Transferred Employee as
an early retiree and the lump sum benefit payable to such Transferred Employee
as a deferred vested benefit on the date of retirement from the Company and
under the provisions of the applicable Seller Pension Plan, determined in the
same manner that such plan calculates lump sum benefits at the time such
Transferred Employee shall retire. The Company shall pay Seller such difference
within 60 days of such transferred Employee's retirement. In addition, should
the Company institute any reduction in force, early retirement window program or
otherwise provide any financial inducement that results in the termination of
employment of any Transferred Employee who, as of the Closing, qualifies for an
early retirement benefit under a Seller Pension Plan, Buyer shall cause the
Company to promptly pay to Seller an amount equal to the incremental cost of
providing such early retirement benefit. Such cost shall be determined by an
enrolled actuary engaged by Seller based on the excess of the present value of
such subsidized early retirement benefits for all such Transferred Employees
over the present value of the accrued benefits for all such Transferred
Employees determined as if such employees had not elected to commence
51
retirement benefits and using normal actuarial assumptions with respect to
projected retirement dates.
(h) 401(k) Plan. Without limiting the scope of Section 4.34(a), as
-----------
of the Closing, Buyer shall cause the Company to make available, and maintain
from the Closing Date until at least December 31, 1999 (or such other period as
may be required pursuant to any collective bargaining agreement assumed
hereunder), a tax-qualified defined contribution plan or plans with a cash or
deferred feature (a "Company 401(k) Plan") for the benefit of each Transferred
-------------------
Employee who was eligible (or would have been eligible but for any waiting
period) to participate in a tax-qualified defined contribution plan maintained
by Seller with a cash or deferred feature (a "Seller 401(k) Plan"). Immediately
------------------
prior to the Closing, Seller shall cause all account balances of all Transferred
Employees under each Seller 401(k) Plan to become fully vested as of the
Closing, and as soon as practicable after the Closing (or, if Transitional
Coverage is provided under a Seller 401(k) Plan, after cessation of such
Transitional Coverage) shall cause such account balance to be transferred to a
Company 401(k) Plan, and Buyer shall cause such Company 401(k) Plan to accept
such transfer. Prior to such transfer, Buyer shall cause the Company to provide
to Seller such evidence or assurance as reasonably requested by Seller as to the
tax-qualified status of each Company 401(k) Plan (including an IRS determination
letter, a submission therefor and/or an opinion of counsel). The transfer shall
be made in cash, provided that (i) the portion of the transferred accounts
represented by participant loans shall be transferred in kind, and (ii) the
portion of the transferred accounts invested in an ▇▇▇▇▇ Corning stock fund
shall be transferred in kind. The Company may, in its discretion, prohibit
additional investment into such stock fund, but shall notify affected
participants of its intention to liquidate
52
such stock fund at least two years prior to such liquidation; provided, however,
-------- -------
that liquidation of the ▇▇▇▇▇ Coring stock fund shall be allowed at any time if
a fiduciary of the plan reasonably determines that failure to liquidate the
stock fund would cause the fiduciary to breach his fiduciary obligations under
ERISA. The parties shall comply with all provisions of the Code and ERISA
applicable to such transfer, including Sections 414(l) and 411(d)(6) of the Code
and the corresponding provisions of ERISA. After such transfer, Buyer shall be
solely responsible for, and shall indemnify Seller against, all liabilities
relating to the transferred accounts. Each Transferred Employee participating in
a Seller 401(k) Plan as of the Closing shall be eligible for an allocation of
any profit sharing contribution made by Seller thereto with respect to Seller's
1998 fiscal year based on such Transferred Employee's participation therein
through the Closing, provided that such Transferred Employee would otherwise
have been eligible for an allocation had he remained an employee of Seller
through the end of such year. The Company shall reimburse Seller for the profit
sharing contribution allocated to such Transferred Employees.
(i) Stock Options. With respect to vesting and exercisability of
-------------
outstanding options to purchase Seller common stock held by Transferred
Employees as of the Closing, Seller shall treat employment with the Company as
employment with Seller.
(j) Performance Awards. With respect to Seller's 1998 fiscal year,
------------------
the Company shall pay to Transferred Employees performance share bonuses under
Seller's Global Stock Plan and bonuses under Seller's Annual Corporate Incentive
Plan in the amounts that such employees would have been paid by Seller had they
remained employed by Seller through the end of such fiscal year.
53
(k) Transitional Coverage. If requested by Company, Seller shall
---------------------
allow Transferred Employees to continue to participate in, be covered by, or
accrue benefits under any Benefit Plan of Seller that provides pension or
welfare coverage (any such continued participation, coverage or accrual
hereinafter referred to as "Transitional Coverage"). Such Transitional Coverage
---------------------
shall be made available only to the extent permitted by applicable law, and in
any event shall not in extend beyond December 31, 1999. Buyer shall cause the
Company to reimburse Seller for the cost of providing the Transitional Coverage.
Buyer agrees that the provision (or subsequent cessation) of such Transitional
Coverage shall not relieve Buyer of its obligations contained elsewhere in the
Section 4.35 (i.e., Buyer shall remain responsible for the retiree medical
obligations of all Transferred Employees, even those who retire and are provided
Transitional Coverage through a Seller retiree medical plan).
(l) No Third-Party Beneficiary. Nothing herein, expressed or
--------------------------
implied, shall confer upon any employee or former employee of Seller or Company
or any of their Affiliates (including, without limitation, the Transferred
Employees), any rights or remedies including, without limitation, any right to
employment or continued employment for any specified period) of any nature or
kind whatsoever, under or by reason of this Agreement.
4.35 Forward-Underwriting Commitment.
-------------------------------
Buyer agrees that if the Financings are not consummated by October 15,
1998, Buyer will consummate the Financing through the execution of their bridge
financing with First Union Capital Markets or by other means.
54
4.36 Cash Assets.
-----------
Buyer agrees and acknowledges that immediately prior to the closing
all cash and cash equivalents, including, without limitation, bank deposits,
investments in so-called "money market" funds, commercial paper funds,
Certificates of Deposits, Treasury bills and accrued interest thereon, of the
Company will be withdrawn or otherwise transferred from the Company to Seller
and/or Jefferson Holdings, Inc.
4.37 Contribution of Assets of the Company.
-------------------------------------
On or prior to the Closing, Seller shall have consummated any and all
transactions contemplated in the ACA and shall have caused all of its rights and
title to the Business Assets to be transferred to the Company in accordance with
the terms of the ACA.
4.38 Post-Closing Distributions by the Company.
-----------------------------------------
Immediately upon the Closing, the parties shall cause the Company to
and the Company shall make a cash distribution in the aggregate amount of four
hundred twenty-five million Dollars ($425,000,000) to its members, pro rata in
accordance with their then respective ownership interests in the Company, and
Buyer shall have caused the Company to obtain any and all financing necessary to
fund such cash distribution (the "Company Financing") in accordance with the
-----------------
terms and conditions set forth in the Commitments.
4.39 Toll Manufacturing.
------------------
The parties agree that prior to Closing they will discuss the
possibility that Seller may be willing to toll manufacture for the Company
products with TEX up to 400 (including low TEX type 30) that have historically
been manufactured by the Business but are not Business Products.
55
5 CONDITIONS
----------
5.1 Conditions Precedent to the Obligations of Buyer and Seller.
-----------------------------------------------------------
The respective obligations of Buyer and Seller to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
at or prior to the Closing Date of the following conditions:
(a) No Injunction, etc. At the Closing Date, there shall be no
------------------
injunction, restraining order or decree of any nature of any court or
governmental agency or body of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the purchase or the transfer to Buyer
by Seller of the Buyer Interest.
(b) Regulatory Authorizations. All (i) consents, approvals,
-------------------------
authorizations and orders of federal, state and foreign governmental and
regulatory authorities as are necessary in connection with the transfer of the
Buyer Interest to Buyer or which if not obtained would be reasonably likely to
subject Buyer or Seller, or any officer, director or agent of any such person,
to civil or criminal liability or could render such transfer void or voidable
(the "Required Consents") shall have been obtained, except for Required Consents
-----------------
the failure of which to obtain are not material, individually or in the
aggregate, to the operations of the Business taken as a whole and the failure of
which to obtain would not subject Buyer or Seller, or any officer, director or
agent of any such person, to civil or criminal liability.
5.2 Conditions Precedent to the Obligation of Seller.
------------------------------------------------
The obligation of Seller to consummate the transactions provided for
in this Agreement is subject to fulfillment of each of the following conditions:
56
(a) Accuracy of Buyer's Representations and Warranties; Covenants of
----------------------------------------------------------------
Buyer. The representations and warranties of Buyer contained in this Agreement
-----
that are qualified as to materiality shall be true and correct and the
representations and warranties of Buyer set forth in this Agreement that are not
so qualified shall be true and correct in all material respects, in each case on
the date of this Agreement (except to the extent cured prior to the Closing
Date) and on the Closing Date as though made on the Closing Date, except to the
extent such representations and warranties speak as of an earlier date; Buyer
shall have complied in all material respects with all covenants contained in
this Agreement to be performed by it prior to the Closing; and Seller shall have
received a certificate signed by an authorized officer of Buyer to such effect.
(b) Ancillary Agreements. Buyer and the Company shall have executed
--------------------
the Ancillary Agreements to which they are parties or shall have caused the
Company to and the Company shall have executed the Ancillary Agreements to which
it is a party.
(c) Company Financing. Buyer and the Company shall have executed and
-----------------
delivered any and all agreement, documents and instruments required to effect
the Company Financing and no further conditions shall exist to the funding of
the Company Financing other than the consummation of the Closing.
5.3 Conditions Precedent to the Obligation of Buyer.
-----------------------------------------------
The obligation of Buyer to consummate the transactions provided for in
this Agreement is subject to fulfillment of each of the following conditions:
(a) Accuracy of Representations and Warranties of Seller; Covenants
---------------------------------------------------------------
of Seller. The representations and warranties of Seller contained in this
---------
Agreement that are
57
qualified as to materiality shall be true and correct and the representations
and warranties of Seller set forth in this Agreement that are not so qualified
shall be true and correct in all material respects, in each case on the date of
this Agreement (except to the extent cured prior to the Closing Date) and on the
Closing Date as though made on the Closing Date, except to the extent such
representations and warranties speak as of an earlier date; Seller shall have
complied in all material respects with all covenants contained in this Agreement
to be performed by it prior to the Closing; and Buyer shall have received a
certificate signed by an authorized officer of Seller to such effect.
(b) Ancillary Agreements. Seller, NVOC and OCC shall have executed
--------------------
the Ancillary Agreements to which they are parties.
(c) Contractual Consents. All contractual approvals, waivers and
--------------------
consents set forth on Schedule 5.3(c) ("Contractual Consents") shall have been
--------------------
obtained and shall remain in full force and effect.
6 CLOSING
-------
6.1 Closing Date.
------------
Unless this Agreement shall have been terminated and the transactions
herein shall have been abandoned pursuant to Section 8 hereof, the closing of
the transactions contemplated by this Agreement (the "Closing") shall take place
-------
at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, at 10:00 a.m., New York City
time, on September 30,1998 (or as soon as practicable thereafter as all of the
conditions to the Closing set forth in Section 5 hereof are satisfied or
waived), or such other date, time and place as shall be agreed upon by Seller
and
58
Buyer (the actual date and time being herein called the "Closing Date"). The
------------
Closing shall be deemed effective as of 12:01 a.m. on the Closing Date.
6.2 Buyer Deliveries.
----------------
At the Closing, Buyer shall deliver to Seller or one or more of its
Affiliates (as directed by Seller) (i) the Purchase Price as provided in Section
1.2 hereof, (ii) the documents described in Section 5.2 hereof and (iii) such
other documents and instruments as counsel for Buyer and Seller mutually agree
to be reasonably necessary to consummate the transactions described herein.
6.3 Seller Deliveries.
-----------------
At the Closing, Seller shall deliver or cause one or more of its
Affiliates to deliver to Buyer (i) the documents described in Section 5.3
hereof, (ii) the Buyer Interest and (iii) such other documents and instruments
as counsel for Buyer and Seller mutually agree to be reasonably necessary to
consummate the transactions described herein.
7 TAX MATTERS
-----------
7.1 Asset Allocation.
----------------
Buyer and Seller each agrees that Schedule 7.1 attached hereto
------------
reflects (i) the fair market value of each category of Company assets listed
thereon, including all property of the Company that constitutes "unrealized
receivables" of the Company for purposes of Section 751 of the Code, and (ii)
the Seller's interest and gain in each such category of Company assets. The
parties further agree that the valuations listed on Schedule 7.1 shall be used
by Buyer, Seller and the Company for any and all income tax purposes, including,
without limitation, adjustments to the tax basis of the Company's assets
pursuant to Section 743(b) of the Code.
59
8 INDEMNIFICATION
---------------
8.1 Survival of Representations and Warranties; Time for Assertion of
-----------------------------------------------------------------
Claims.
------
Subject to the limitations and other provisions of this Agreement, and
regardless of any investigation made by or on behalf of Seller or Buyer, (i) the
representations and warranties of the parties hereto contained herein shall
survive the Closing and shall remain in full force and effect, for a period of
one year after the Closing Date; provided, however, that the representations and
-------- -------
warranties set forth in Section 2.18 (environmental) and Section 2.14 (tax)
shall remain in full force and effect for a period of five (5) years after the
Closing Date and (ii) the covenants and agreements of the parties hereto
contained herein shall survive the Closing and shall remain in full force and
effect for a period of one year after the date on which performance of such
covenant or agreement was due (in each case, the "Termination Date"). Any right
----------------
of indemnification pursuant to this Section 8 shall expire on the Termination
Date of the respective representation, warranty, covenant or agreement claimed
to be breached unless, on or prior to the Termination Date, a Claim (as defined
below) has been timely made to the party from whom indemnification is sought, in
which case such Claim may continue to be asserted beyond the respective
Termination Date.
8.2 Indemnification by Seller.
-------------------------
(a) Seller shall defend, indemnify and hold Buyer and its Affiliates
(including the Company after the Closing) harmless from and against and in
respect of any and all actual losses, liabilities, damages, demands, claims,
suits, proceedings, judgments, settlements, assessments, costs and expenses,
including reasonable attorneys' fees, incurred directly by Buyer or its
Affiliates (hereinafter "Buyer Losses") which arise out of (i) any breach of any
------------
of the
60
representations and warranties contained in Section 2 hereof or the certificate
delivered pursuant to Section 5.3(a), or (ii) any breach by Seller of any of its
covenants in this Agreement but not of any Ancillary Agreement which shall be
governed by the terms thereof. Buyer shall give Seller prompt written notice of
any third party claim which may give rise to any indemnity obligation under this
Section, together with the estimated amount of such claim, and Seller shall have
the right to assume the defense of any such claim through counsel of its own
choosing, by so notifying Buyer within thirty (30) days of receipt of Buyer's
written notice; provided, however, that Seller's counsel shall be reasonably
-------- -------
satisfactory to Buyer. Failure to give prompt notice shall not affect the
indemnification obligations hereunder in the absence of actual prejudice. If
Buyer desires to participate in any such defense assumed by Seller, it may do so
at its sole cost and expense. If Seller declines or fails to assume any such
defense, it shall be liable for all reasonable costs and expenses of defending
such claim incurred by Buyer, including reasonable fees and disbursements of
counsel. Neither party shall, without the prior written consent of the other
party, which shall not be unreasonably withheld, settle, compromise or offer to
settle or compromise any such claim or demand on a basis which would result in
the imposition of a consent order, injunction or decree which would restrict the
future activity or conduct of the other party or any subsidiary or Affiliate
thereof or if such settlement or compromise involves a finding or admission of
any violation of law, or if such settlement or compromise does not include an
unconditional release of the other party for any liability arising out of such
claim or demand or any related claim or demand.
(b) The foregoing obligation to indemnify Buyer set forth in Section
8.2(a) shall be subject to each of the following limitations:
61
(i) No reimbursement for Buyer Losses asserted against Seller
under Section 8.2(a)(i) shall be required unless and until the cumulative
aggregate amount of such Buyer Losses equals or exceeds seven million five
hundred thousand dollars ($7,500,000) (the "Threshold") and then only to the
---------
extent that the cumulative aggregate amount of Buyer Losses, as finally
determined, exceeds the Threshold; provided that in calculating the Threshold
--------
any Buyer Losses which individually total less than fifty thousand dollars
($50,000.00) each ("De Minimis Buyer Losses") shall be excluded in their
-----------------------
entirety and Seller in any event shall have no liability hereunder to Buyer and
its Affiliates for any such De Minimis Buyer Losses.
(ii) Seller's liability to Buyer under Section 8.2(a)(i) for
Buyer Losses in excess of the Threshold shall not exceed one hundred fifty
million dollars ($150,000,000.00).
(iii) Seller's indemnification obligation for any breach of the
representation and warranties contained in Section 2.18 with respect to matters
relating to the investigation, remediation, cleanup, removal or monitoring of
Hazardous Substances at or migrating from the Real Property ("Remedial Action")
shall be limited to compliance with standards established under applicable
Environmental Laws, (including, without limitation the imposition of
institutional or engineering controls, deed restrictions, natural attenuation,
capping and site-specific risk-based standards) based on the existing use of the
relevant Real Property as of the Closing Date.
(iv) Notwithstanding anything to the contrary in this Agreement
or the ACA, Seller shall have satisfied its indemnification obligation and shall
be released from any further indemnification obligation or liability for any
Remedial Action in the event and to the extent it receives a notice of final
approval (including, without limitation, a no further action
62
letter, certificate of completion, or release-and-covenant-not-to-▇▇▇) from a
state or federal Governmental or Regulatory Authority with jurisdiction over the
relevant Real Property pursuant to a clean-up program, voluntary or otherwise.
(c) The indemnities provided in this Section 8.2 shall survive the
Closing. Except as expressly provided in this Agreement, the indemnity provided
in this Section 8.2 shall be the sole and exclusive remedy of the indemnified
party against the indemnifying party at law or equity for any matter covered by
Sections 8.2(a) and 8.2(b); provided, that nothing in this Section 8 shall
prevent or otherwise limit Buyer from seeking temporary or permanent injunctive
relief for any breach by Seller of Section 4.2(b).
(d) In no event shall Seller be liable to Buyer for special,
indirect, incidental, consequential or punitive damages but, to the extent Buyer
is required to pay punitive damages to a third party, such payment shall
constitute an indemnifiable expense.
8.3 Indemnification by Buyer.
------------------------
(a) Buyer shall defend, indemnify and hold Seller and the Company
harmless from and against and in respect of any and all actual losses,
liabilities, damages, demands, claims, suits, proceedings, judgments,
settlements, assessments, costs and expenses, including reasonable attorney's
fees, incurred directly by Seller, the Company and their respective Affiliates
(hereinafter "Seller Losses"; together with Buyer Losses, "Losses") arising out
------------- ------
of (i) any breach of any of the representations and warranties contained in
Section 2 hereof or (ii) any breach by Buyer of any of its covenants in this
Agreement other than in the Ancillary Agreements which shall be governed by the
terms thereof. Seller shall give Buyer prompt written notice of any third party
claim which may give rise to any indemnity obligation under
63
this section, together with the estimated amount of such claim, and Buyer shall
have the right to assume the defense of any such claim through counsel of its
own choosing, by so notifying Seller within thirty (30) days of receipt of
Seller's written notice; provided, however, that Buyer's counsel shall be
-------- -------
reasonably satisfactory to Seller. Failure to give prompt notice shall not
affect the indemnification obligations hereunder in the absence of actual
prejudice. If Seller desires to participate in any such defense assumed by
Buyer, it may do so at its sole cost and expense. If Buyer declines or fails to
assume any such defense, it shall be liable for all costs and expenses of
defending such claim incurred by Seller, including reasonable fees and
disbursements of counsel. Neither party shall, without the prior written consent
of the other party, which shall not be unreasonably withheld, settle, compromise
or offer to settle or compromise any such claim or demand on a basis which would
result in the imposition of a consent order, injunction or decree which would
restrict the future activity or conduct of the other party or any subsidiary or
Affiliate thereof or if such settlement or compromise involves a finding or
admission of any violation of law, or if such settlement or compromise does not
include an unconditional release of the other party for any liability arising
out of such claim or demand.
(b) The foregoing obligation to indemnify Seller and the Company set
forth in Section 8.3(a) shall be subject to each of the following limitations:
(i) No reimbursement for Seller Losses asserted against Buyer
under Section 8.3(a)(i) above shall be required unless and until the cumulative
aggregate amount of such Seller Losses equals or exceeds seven million five
hundred thousand dollars ($7,500,000.00) (the "Buyer Threshold") and then only
---------------
to the extent that the cumulative aggregate amount of Seller Losses, as finally
determined, exceeds the Buyer Threshold; provided
--------
64
that in calculating the Buyer Threshold, any Seller Losses which individually
total less than fifty thousand dollars ($50,000.00) each ("De Minimis Seller
-----------------
Losses") shall be excluded in their entirety and Buyer in any event shall have
------
no liability hereunder to Seller or the Company for any such De Minimis Seller
Losses; and
(ii) Buyer's liability to Seller and the Company under Section
8.2(a)(i) for Seller Losses in excess of the Buyer Threshold shall not exceed
one hundred fifty million dollars ($150,000,000.00).
(c) The indemnities provided in this Section 8.3 shall survive the
Closing. Except as expressly provided in this Agreement, the indemnity provided
in this Section 8.3 shall be the sole and exclusive remedy of the indemnified
party against the indemnifying party at law or equity for any matter covered by
paragraphs (a) and (b); provided, that nothing in this Section 8 shall prevent
or otherwise limit Seller from seeking temporary or permanent injunctive relief
for any breach by Buyer of Section 4.2(c).
(d) In no event shall Buyer be liable to Seller or its Affiliates for
special, indirect, incidental, consequential or punitive damages but, to the
extent Seller is required to pay punitive damages to a third party, such payment
shall constitute an indemnifiable expense.
8.4 Indemnification Calculations.
----------------------------
(a) The amount of any Seller Losses or Buyer Losses for which
indemnification is provided under this Section 8.4 shall be computed net of any
insurance proceeds received by the indemnified party in connection with such
Losses. If the amount with respect to which any claim is made under this
Section 8.4 (an "Indemnity Claim") gives rise to a currently realizable Tax
---------------
Benefit to the party making the claim, the indemnity payment shall be
65
reduced by the amount of the Tax Benefit available to the party making the
claim. To the extent such Indemnity Claim does not give rise to a currently
realizable Tax Benefit, if the amount with respect to which any Indemnity Claim
is made gives rise to a subsequently realized Tax Benefit to the party that made
the claim, such party shall refund to the indemnifying party the amount of such
Tax Benefit when, as and if realized. For the purposes of this Agreement, any
subsequently realized Tax Benefit shall be treated as though it were a reduction
in the amount of the initial Indemnity Claim, and the liabilities of the parties
shall be redetermined as though both occurred at or prior to the time of the
indemnity payment. For purposes of this Section 8.4, a "Tax Benefit" means an
amount by which the tax liability of the party (or group of corporations
including the party) is reduced (including, without limitation, by deduction,
reduction of income by virtue of increased tax basis or otherwise, entitlement
to refund, credit or otherwise) plus any related interest received from the
relevant taxing authority. Where a party has other losses, deductions, credits
or items available to it, the Tax Benefit from any losses, deductions, credits
or items relating to the Indemnity Claim shall be deemed to be realized
proportionately with any other losses, deductions, credits or items. For the
purposes of this Section 8.4, a "Tax Benefit" is "currently realizable" to the
extent it can be reasonably anticipated that such Tax Benefit will be realized
in the current taxable period or year or in any Tax Return with respect thereto
(including through a carry-back to a prior taxable period) or in any taxable
period or year prior to the date of the Indemnity Claim. In the event that there
should be a determination disallowing the Tax Benefit, the indemnifying party
shall be liable to refund to the indemnified party the amount of any related
reduction previously allowed or payments previously made to the indemnifying
party pursuant to this Section 8.4.
66
(b) The parties agree that any indemnification payments made pursuant
to this Agreement shall be treated for tax purposes as an adjustment to the
Purchase Price, unless otherwise required by applicable law, in which case such
payments shall be made in an amount sufficient to indemnify the relevant party
on a net after-tax basis.
8.5 Cooperation.
-----------
Each party will provide, and will cause its Affiliates to provide, to
the other party and its Affiliates, with reasonable access during business hours
to all records, documents and relevant personnel of such party relating to any
third party Claim asserted against such party or its Affiliates or against such
other party and its Affiliates in order to assist each party in defending any
such third party Claim.
9 TERMINATION
-----------
9.1 Termination Events.
------------------
Without prejudice to other remedies which may be available to the
parties by law or this Agreement, this Agreement may be terminated and the
transactions contemplated herein may be abandoned:
(a) by mutual consent of the parties hereto;
(b) by Seller, in its sole discretion, after the date which is thirty
(30) days after the date of this Agreement, if Seller shall not have received
either (i) evidence, in form and substance reasonably satisfactory to Seller,
that Buyer has sufficient cash on hand to consummate the transactions
contemplated by this Agreement or (ii) copies of definitive written agreements
(the "Definitive Financing Agreements") with reputable financial institutions to
-------------------------------
provide at the Closing, subject only to customary conditions, all of the
Financing, in form and substance
67
reasonably satisfactory to Seller, or if at any time thereafter any such
Definitive Financing Agreements shall cease to be in full force and effect;
(c) by any party by notice to the other party if the Closing shall
not have been consummated on or before December 31, 1998, unless extended by
written agreement of the parties hereto, so long as the party terminating this
Agreement shall not be in default or breach hereunder;
(d) by Seller if Buyer shall fail to consummate the Financing by
October 15, 1998; and
(e) by Buyer under the circumstances described in Section 4.32.
9.2 Effect of Termination.
---------------------
In the event of any termination of the Agreement as provided in
Section 9.1 above, this Agreement shall forthwith become wholly void and of no
further force and effect and there shall be no liability on the part of Buyer or
Seller, except that (i) the obligations of Buyer and Seller under Sections 4.2
(relating to confidentiality only), 4.5 and 10.3 of this Agreement shall remain
in full force and effect and (ii) termination shall not preclude either party
from suing the other party for breach of this Agreement.
10 MISCELLANEOUS AGREEMENTS OF THE PARTIES
---------------------------------------
10.1 Notices.
-------
All communications provided for hereunder shall be in writing and
shall be deemed to be given when delivered in person or by private courier with
receipt, when telecopied and received, or three (3) days after being deposited
in the United States mail, first-class, registered or certified, return receipt
requested, with postage paid and,
68
If to Buyer: Glass Holdings Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: President
With a copy to: ▇▇▇▇▇▇ & Bird LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. , ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
If to Seller : ▇▇▇▇▇ Corning World Headquarters
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Corporate Secretary
With a copy to: ▇▇▇▇▇ Corning World Headquarters
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Law Department
or to such other address as any such party shall designate by written notice to
the other parties hereto.
10.2 Transaction Taxes.
-----------------
Buyer and Seller agree that they shall cause the Company to discharge
any liability for the payment of all sales, use, transfer, vehicle transfer,
real property transfer (including any deed recording fee), recording, gains and
other similar taxes, if any, payable with respect to Seller's contribution of
the Assets to the Company or the sale of the Buyer's Interest to the Buyer. The
Company shall file all necessary documentation and Tax Returns with respect to
such taxes and, to the extent any exemptions from such taxes are available,
Buyer and Seller
69
shall cooperate to prepare any certificates or other documents necessary to
claim such exemptions. For purposes of Section 1.4, the amount of any taxes paid
or payable by the Company pursuant to this Section 10.2 shall not reduce (or
shall be added back to) the Closing NAV of the Company.
10.3 Expenses.
--------
Subject to Section 10.2, Seller and Buyer shall each pay their
respective expenses (such as legal, investment banking and accounting fees)
incurred in connection with the origination, negotiation, execution and
performance of this Agreement. The Company and Buyer shall be solely
responsible for any costs incurred in connection with the Financing.
10.4 Non-Assignability.
-----------------
This Agreement shall inure to the benefit of and be binding on the
parties hereto and their respective successors and permitted assigns. Except as
otherwise expressly provided in this Agreement, this Agreement shall not be
assigned by either party hereto without the express prior written consent of the
other party, and any attempted assignment, without such consents, shall be null
and void. Notwithstanding any non-assignment provisions contained in this
Section 10.4 Buyer may assign or otherwise transfer all of its rights and/or
obligations hereunder (i) to any entity or entities, providing financing for the
transactions contemplated by this Agreement or to any entity or entities
providing to Buyer or Buyer's Affiliates financing relating to the Business or
(ii) to any Affiliate of Buyer, provided that (x) such Affiliate shall agree
with Seller and its permitted assignees or transferees, if any, in writing to
assume the Buyer's obligations hereunder and (y) any such assignment to an
Affiliate of the Buyer shall not relieve the Buyer from its obligations
hereunder.
70
10.5 Amendment; Waiver.
-----------------
This Agreement may be amended, supplemented or otherwise modified only
by a written instrument executed by the parties hereto. No waiver by either
party of any of the provisions hereof shall be effective unless explicitly set
forth in writing and executed by the party so waiving. Except as provided in
the preceding sentence, no action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein, and
in any documents delivered or to be delivered pursuant to this Agreement and in
connection with the Closing hereunder. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
10.6 Schedules and Exhibits.
----------------------
All exhibits and schedules hereto are hereby incorporated by reference
and made a part of this Agreement. Any fact or item which is clearly disclosed
on any Schedule or Exhibit to this Agreement or in the Financial Statements in
such a way as to make its relevance to a representation or representations made
elsewhere in this Agreement or to the information called for by another Schedule
or other Schedules (or Exhibit or other Exhibits) to this Agreement readily a
shall be deemed to be an exception to such representation or representations or
to be disclosed on such other Schedule or Schedules (or Exhibit or Exhibits), as
the case may be, notwithstanding the omission of a reference or cross reference
thereto. Any fact or item disclosed on any Schedule or Exhibit hereto shall not
by reason only of such inclusion be
71
deemed to be material and shall not be employed as a point of reference in
determining any standard of materiality under this Agreement.
10.7 Third Parties.
-------------
Except as provided herein, this Agreement does not create any rights,
claims or benefits inuring to any person that is not a party hereto nor create
or establish any third party beneficiary hereto.
10.8 Governing Law.
-------------
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to a contract executed and
performed in such State without giving effect to the conflicts of laws
principles thereof, except that matters herein strictly within the purview of
the matters covered by the Limited Liability Company Act of the State of
Delaware shall be governed by such Limited Liability Company Act.
10.9 Consent to Jurisdiction.
-----------------------
Each of the parties hereto, irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York located in the borough of Manhattan in the City of New York, or if such
court does not have jurisdiction, the Supreme Court of the State of New York,
New York County, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby. Each of
the parties hereto, further agrees that service of any process, summons, notice
or document by U.S. registered mail to such party's respective address set forth
in Section 10.1 shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately preceding sentence.
72
Each of the parties hereto, irrevocably and unconditionally waives any objection
to the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in (a) the United States
District Court for the Southern District of New York or (b) the Supreme Court of
the State of New York, New York County, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
10.10 Definitions.
-----------
(a) As used in this Agreement, the following defined terms shall have
the meanings indicated below:
"ACA" means the Amended and Restated Asset Contribution Agreement
---
dated as of July 30, 1998 by and between Seller and the Company.
"Acquisition Transaction" has the meaning ascribed to it in Section
-----------------------
4.31.
"Affiliate" means any Person that directly, or indirectly through one
---------
or more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by Contract or otherwise and, in
any event and without limitation of the previous sentence, any Person owning ten
percent (10%) or more of the voting securities of a second Person shall be
deemed to control that second Person.
"Agreement" means this Asset Purchase Agreement and the Exhibits and
---------
the Schedules hereto.
73
"Alloy Services Agreement" has the meaning ascribed to it in Section
------------------------
4.10.
"Ancillary Agreements" shall mean the Agreements contained in Exhibits
--------------------
A through W.
"Assets" means the Business Assets, the NVOC Assets and the OCC
------
Assets.
"Base NAV" has the meaning ascribed to it in Section 1.4(a).
--------
"▇▇▇▇▇▇▇ Facility" has the meaning ascribed to in Section 4.12.
----------------
"▇▇▇▇▇▇▇ Facility Supply Agreement" has the meaning ascribed to it in
---------------------------------
Section 4.12.
"Benefit Plans" has the meaning ascribed to it in Section 2.15(b).
-------------
"Borates Supply Agreement" has the meaning ascribed to it in Section
------------------------
4.24.
"Business" has the meaning ascribed to it in the forepart of this
--------
Agreement.
"Business Assets" means all of the assets, rights, properties, claims,
---------------
contracts and business of Seller, which, except as expressly provided in the
ACA, are principally related to the Business, other than Excluded Assets.
"Business Manufacturing Technology" means the manufacturing equipment,
---------------------------------
machinery, tooling, and processes which are or have been in use, operational,
ordered, or being refurbished on or prior to the Closing: (i) in the
Manufacturing Facilities to manufacture Business Products; or (ii) in the
▇▇▇▇▇▇▇ or Guelph facilities dedicated exclusively to the manufacture of
Business Products.
"Business Products" means glass fiber specialty products made of:
-----------------
(i) untwisted glass fibers or filaments with a maximum nominal
diameter of 13.96 (micronage values herein shall refer to maximum or minimum
nominal values in common usage in the industry, in this instance, a K filament),
which products have a
74
linear density of a TEX value of less than or equal to 300 g/km, and which
filaments are continuous;
(ii) chopped strands or fibers having a maximum nominal
diameter of 13.96 and a fiber length greater than 1.5" as dry chop for use in
carding processes;
(iii) any glass fiber products of any TEX or micronage
mechanically twisted and/or plied in a secondary operation;
(iv) S Glass products in any form;
(v) conventional or assembled roving of glass fiber coated
with a conductive material to produce a roving having a resistance greater than
3,000 /m for use in applications in which such resistance is a required
property;
(vi) air texturized glass fiber strands with a maximum nominal
diameter of greater than 12.70; and
(vii) waste products from the production of any of the Business
Products defined in (i) through (iii) in the form of chopped glass fiber strands
made with twisted bobbin input, dry chopped glass fiber with starch-based
sizing, and ▇▇▇▇▇ (cut forming packages), provided that such waste products not
exceed 3% of the production of the underlying product;
Business Products as defined in (i) through (iii) shall not include:
(viii) any air texturized product made of glass filaments or
fibers having a minimum nominal diameter of 13.97; or
75
(ix) assembled or multiend roving of fibers except for the
purpose of making (i) texturized strands, (ii) textile yarn beams, or (iii)
wound products currently made at the Huntingdon, Pennsylvania facility.
"Buyer" has the meaning ascribed to it in the forepart of this
-----
Agreement.
"Buyer Confidential Information" has the meaning ascribed to it in
------------------------------
Section 4.2(b).
"Buyer Interest" has the meaning ascribed to it in the forepart of
--------------
this Agreement.
"Buyer Losses" has the meaning ascribed to it in Section 8.2(a).
------------
"Buyer Material Adverse Effect has the meaning ascribed to it in
-----------------------------
Section 3.1.
"Buyer Threshold" has the meaning ascribed to it in Section 8.3(b).
---------------
"Buyer's Objection" has the meaning ascribed to it in Section 1.4(d).
-----------------
"Carly Sublease" has the meaning ascribed to it in Section 4.25.
--------------
"Claim" means a written notice asserting a breach of a representation,
-----
warranty, covenant, agreement or obligation specified in this Agreement, which
shall reasonably set forth, in light of the information then known to the party
giving such notice, a reasonably detailed description of and estimate (if then
reasonable to make) of the amount involved in such breach.
"Closing" has the meaning ascribed to it in Section 6.1.
-------
"Closing Calculation" has the meaning ascribed to it in Section
-------------------
1.4(d).
"Closing Date" has the meaning ascribed to it in Section 6.1.
------------
"Closing NAV" has the meaning ascribed to it in Section 1.4(a).
-----------
"Closing Statement" has the meaning ascribed to it in Section 1.4(c).
-----------------
"Commitment Letters" has the meaning ascribed to it in Section 3.6.
------------------
"Company 401(k) Plan has the meaning ascribed to it in Section
-------------------
4.34(g).
76
"Company Financing" has the meaning ascribed to it in Section 4.38.
-----------------
"Company Pension Plan" has the meaning ascribed to it in Section
--------------------
4.34(f).
"Contracts" means all commitments, contracts, indentures and
---------
agreements, written or oral, to which Seller transferred to the Company pursuant
to the ACA.
"Contractual Consents" has the meaning ascribed to it in Section
--------------------
5.3(c).
"Cross License Agreement" has the meaning ascribed to it in Section
-----------------------
4.19.
"Definitive Financing Agreements" has the meaning ascribed to it in
-------------------------------
Section 9.1(b).
"De Minimis Buyer Losses" has the meaning ascribed to it in Section
-----------------------
8.2(b).
"De Minimis Seller Losses" has the meaning ascribed to it in Section
------------------------
8.3(b).
"Disclosed Contracts" has the meaning ascribed to in Section 2.10(a).
-------------------
"Environmental Law" means any applicable law, order, regulation,
-----------------
decree, permit, license, ordinance, or other federal, state or local
governmental requirements relating to pollution, the protection of human health
and the environment, the discharge or Release of Hazardous Substances into the
environment, or the exposure to Hazardous Substances (including odors) in the
work place.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the rules and regulations promulgated thereunder.
"Estimated Closing NAV" has the meaning ascribed to it in Section
---------------------
1.4(b).
"Estimated Closing Statement" has the meaning ascribed to it in
---------------------------
Section 1.4(b).
"Facilities" has the meaning ascribed to it in Section 2.9(b).
----------
"Financial Statements" has the meaning ascribed to it in Section 2.7.
--------------------
"Financing" has the meaning ascribed to it in Section 3.6.
---------
77
"GAAP" means United States generally accepted accounting principles,
----
consistently applied throughout the specified period and in the immediately
prior comparable period.
"GLAS Marks" has the meaning ascribed to it in Section 4.30.
----------
"Glass Marbles Supply Agreement" has the meaning ascribed to it in
------------------------------
Section 4.9.
"Governmental or Regulatory Authority" means any court, tribunal,
------------------------------------
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Guarantees" has the meaning ascribed to it in Section 4.33.
----------
"Guelph Facility" has the meaning ascribed to it in Section 4.13.
---------------
"Guelph Facility Supply Agreement" has the meaning ascribed to it in
--------------------------------
Section 4.13.
"Hazardous Substance" means petroleum, petroleum by-products,
-------------------
polychlorinated biphenyls and any other chemicals, materials, substances or
wastes which are currently defined or regulated as "hazardous substances,"
--------------------
"hazardous materials," "hazardous wastes," "extremely hazardous wastes,"
-------------------- ---------------- ---------------------------
"restricted hazardous wastes," "toxic substances," "toxic pollutants," "toxic
---------------------------- ---------------- ---------------- -----
air pollutants," "pollutants," or "contaminants" under any Environmental Law.
-------------- ---------- ------------
"Historical Annual Financial Statements" has the meaning ascribed to
--------------------------------------
it in Section 2.7.
"Historical Financial Statements" has the meaning ascribed to it in
-------------------------------
Section 2.7.
"Historical Interim Financial Statements" has the meaning ascribed to
---------------------------------------
it in Section 2.7
78
"Huntingdon Lease Agreement" has the meaning ascribed to it in Section
--------------------------
4.11.
"Indebtedness" of any Person means all obligations of such Person (i)
------------
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"Indemnity Claim" has the meaning ascribed to it in Section 8.4(a).
---------------
"Intellectual Property Rights" means copyrights, patents, trademarks,
----------------------------
know how, design marks, service marks, logos and trade names and other
intangible property, including any and all related goodwill, and foreign and
domestic registrations and applications.
"Interests" has the meaning ascribed to it in Section 2.3.
---------
"Inventory" has the meaning ascribed to it in the ACA.
---------
"Knowledge of Seller, the Company, NVOC or OCC" means the actual
---------------------------------------------
knowledge of any of the following individuals: ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
"Landfill Agreement" has the meaning ascribed to it in Section 4.28.
------------------
"Law" means any law (including common law), statute, code, rule,
---
regulation, reporting, permitting or licensing requirement, ordinance and other
pronouncement having the effect of law of the United States, any foreign country
or any domestic or foreign state, county, city or other political subdivision,
including those promulgated or enforced by any Governmental or Regulatory
Authority.
79
"Leased Real Property" has the meaning ascribed to it in Section
--------------------
2.9(b).
"Liabilities" means all Indebtedness, obligations and other
-----------
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"Licensed Proprietary Rights" has the meaning ascribed to it in
---------------------------
Section 2.12.
"Licenses and Permits" means the licenses, permits, certificates of
--------------------
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority
transferred by Seller to the Company pursuant to the ACA.
"Losses" has the meaning ascribed to it in Section 8.3(a).
------
"Manufacturing Facilities" means the portions of Seller's facilities
------------------------
at Aiken, South Carolina, Huntingdon, Pennsylvania, and South ▇▇▇▇, ▇▇▇▇▇▇▇▇ to
be transferred to Buyer which do not include the portions of the Aiken and
Huntingdon facilities at which Seller manufactures continuous filament mat or
wet process mat.
"Manufacturing Services Agreement" has the meaning ascribed to it in
--------------------------------
Section 4.16.
"Material Adverse Effect" has the meaning ascribed to it in Section
-----------------------
2.1.
"Material Contracts" has the meaning ascribed to it in Section
------------------
2.10(a).
"Net Asset Value" means the sum of Other Current Assets less Current
---------------
Liabilities as reflected in the Pro Forma Statement of Net Assets to be sold as
of 12/31/97 but excluding Trade Payables (which shall be paid in full
immediately prior to the Closing Date), with such amounts determined in
accordance with GAAP using the same assumptions reflected in the 12/31/97
Historical Financial Statements.
80
"Neutral Accounting Firm" has the meaning ascribed to it in Section
-----------------------
1.4(d)(ii).
"Non-Compete Agreement" has the meaning ascribed to it in Section
---------------------
4.15.
"NVOC" shall mean N.V. ▇▇▇▇▇ Corning S.A., a Belgian corporation and a
----
subsidiary of Seller.
"NVOC Assets" has the meaning ascribed to it in Section 4.29(a).
-----------
"NVOC Asset Purchase Agreement" has the meaning ascribed to it in
-----------------------------
Section 4.29(a).
"OCC" shall mean ▇▇▇▇▇-▇▇▇▇▇▇▇ Canada, Inc., a Canadian corporation
---
and a subsidiary of Seller.
"OCC Assets" has the meaning ascribed to it in Section 4.29(b).
----------
"OCC Asset Purchase Agreement" has the meaning ascribed to it in
----------------------------
Section 4.29(b).
"Owned Real Property" means those parcels of real property transferred
-------------------
by Seller to the Company pursuant to the ACA Agreement.
"Patent and Know How License Agreement" has the meaning ascribed to it
-------------------------------------
in Section 4.5.
"Permitted Liens" has the meaning ascribed to it in Section 2.9(a).
---------------
"Person" means any natural person, corporation, general partnership,
------
limited partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"Pitney ▇▇▇▇▇ 1997 Sublease" has the meaning ascribed to it in Section
--------------------------
4.26.
"Pitney ▇▇▇▇▇ 1996 Sublease" has the meaning ascribed to it in Section
--------------------------
4.27.
81
"Pro Forma Information" has the meaning ascribed to it in Section 2.7.
---------------------
"Proprietary Rights" has the meaning ascribed to it in Section 1.1(e)
------------------
of the ACA.
"Purchase Price" has the meaning ascribed to it in Section 1.2.
--------------
"Real Property" has the meaning ascribed to it in Section 2.9(b).
-------------
"Real Property Leases" means the leases and subleases of real property
--------------------
transferred by Seller to the Company pursuant to the ACA.
"Release" means any spilling, leaking, pumping, pouring, emitting,
-------
emptying, discharging, injecting, escaping, leaching, dumping, or disposing of a
Hazardous Substance into the environment.
"Required Consents" has the meaning ascribed to it in Section 5.1(b).
-----------------
"Schedule" means the record delivered to Buyer by Seller herewith and
--------
dated as of the date hereof, containing all lists, descriptions, exceptions and
other information and materials as are required to be included therein by Seller
pursuant to this Agreement.
"Seller" has the meaning ascribed to it in the forepart of this
------
Agreement.
"Seller 401(k) Plan" has the meaning ascribed to it in Section
------------------
4.34(g).
"Seller Confidential Information" has the meaning ascribed to it in
-------------------------------
Section 4.2(c).
"Seller Losses" has the meaning ascribed to it in Section 8.3(a).
-------------
"Seller Pension Plan" has the meaning ascribed to it in Section
-------------------
4.34(f).
"Services Agreement" has the meaning ascribed to it in Section 4.8.
------------------
"Sliver Supply Agreement" has the meaning ascribed to it in Section
-----------------------
4.23.
"Tax" or "Taxes" shall mean all federal, state, local or foreign net
--- -----
or gross income, gross receipts, net proceeds, sales, use, ad valorem, value
----------
added, franchise, bank shares,
82
withholding, payroll, employment, excise, property, alternative or add-on
minimum, environmental or other taxes, assessments, duties, fees, levies or
other governmental charges of any nature whatever, whether disputed or not,
together with any interest, penalties, additions to tax or additional amounts
with respect thereto;
"Tax Benefit" has the meaning ascribed to it in Section 7.4.
-----------
"Termination Date" has the meaning ascribed to it in Section 8.1.
----------------
"Threshold" has the meaning ascribed to it in Section 8.2(b).
---------
"Trade Payables" shall mean the obligations of the Business recorded
--------------
in the captions "Accounts Payable-Trade and Accounts Payable-Marbles" in the Pro
Forma Statement of Net Assets to be Sold.
"Trademark Assignment" has the meaning ascribed to it in Section 4.21.
--------------------
"Transferred Employee" HAS THE MEANING ASCRIBED TO IT IN SECTION 4.34.
--------------------
"Transitional Coverage" has the meaning ascribed to it in Section
---------------------
4.34.
"Waste Water Treatment Services Agreement" has the meaning ascribed to
----------------------------------------
it in Section 4.19.
(b) Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender, (ii) words using the singular or
plural number also include the plural or singular number, respectively, (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement, (iv) the term "Section" refers to the specified Section
of this Agreement, (v) the phrases "ordinary course of business" and "ordinary
course of business consistent with past practice" refer to the business and
practice of Seller in connection
83
with the Business. All accounting terms used herein and not expressly defined
herein shall have the meanings given to them under GAAP.
10.11 Entire Agreement.
----------------
This Agreement, the Schedules and Exhibits and the other agreements
referred to herein hereto set forth the entire understanding of the parties
hereto, and no modifications or amendments to this Agreement shall be binding on
the parties unless in writing and signed by the party or parties to be bound by
such modification or amendment.
10.12 Section Headings; Table of Contents.
-----------------------------------
The section headings contained in this Agreement and the Table of
Contents to this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
10.13 Severability.
------------
If any provision of this Agreement shall be declared by any court of
competent jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement shall not be affected and shall remain in full
force and effect.
10.14 Counterparts.
------------
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original and all of which together shall be deemed to be one and
the same instrument.
84
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
▇▇▇▇▇ CORNING
By: /s/
------------------------------------
Name:
Title:
GLASS HOLDINGS CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name:
Title:
LINCOLN YARNS, LLC
By: ▇▇▇▇▇ Corning, Member
By: /s/
------------------------------------
Name:
Title:
85