Exhibit 2.1
ASSET PURCHASE AGREEMENT
by and between
▇▇▇▇ CORPORATION
and
ARCO CHEMICAL COMPANY
dated as of
October 9, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS AND USAGE........................................... 1
1.1 Certain Definitions........................................ 1
1.2 Terms Generally............................................ 17
ARTICLE II THE TRANSACTION................................................. 17
2.1 Sale and Purchase of Assets................................ 17
2.2 Purchase Price............................................. 17
2.3 Closing Working Capital Adjustment......................... 18
2.4 Assumption of Assumed Liabilities; Non-Assumed Liabilities. 19
2.5 Closing.................................................... 21
2.6 Deliveries and Proceedings at the Closing.................. 21
2.7 Consent of Third Parties................................... 23
2.8 Allocation of Consideration................................ 23
2.9 Prorations................................................. 24
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER....................... 25
3.1 Qualification; Interests in Other Entities................. 25
3.2 Authorization and Enforceability........................... 26
3.3 No Violation of Laws or Agreements......................... 26
3.4 Financial Statements; Services............................. 26
3.5 No Changes................................................. 27
3.6 Contracts.................................................. 28
3.7 Permits and Compliance With Laws Generally................. 29
3.8 Environmental Matters...................................... 30
3.9 Consents................................................... 31
3.10 Title..................................................... 31
3.11 Acquired Real Property.................................... 31
3.12 Taxes..................................................... 32
3.13 Patents and Intellectual Property Rights.................. 33
3.14 Product Warranties and Guarantees......................... 34
3.15 Labor Relations........................................... 35
3.16 Employees; Employee Benefit Plans......................... 35
3.17 No Pending Litigation or Proceedings...................... 37
3.18 Supply of Utilities....................................... 37
3.19 Insurance................................................. 37
3.20 Customers................................................. 37
3.21 WARN Act.................................................. 37
3.22 Condition of Assets....................................... 37
3.23 Brokerage................................................. 38
3.24 All Assets................................................ 38
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TABLE OF CONTENTS
(continued)
PAGE
3.25 Products Liability........................................ 38
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER......................... 39
4.1 Organization and Good Standing............................. 39
4.2 Authorization and Enforceability........................... 39
4.3 No Violation of Laws or Agreements......................... 39
4.4 Consents................................................... 40
4.5 Financing.................................................. 40
4.6 Brokerage.................................................. 40
ARTICLE V ADDITIONAL COVENANTS............................................. 40
5.1 Conduct of Business........................................ 40
5.2 Mutual Covenants........................................... 42
5.3 Filings and Authorizations................................. 42
5.4 Public Announcement........................................ 43
5.5 Investigation.............................................. 43
5.6 Taxes...................................................... 44
5.7 Financial Reports.......................................... 44
5.8 Consents................................................... 44
5.9 Real Estate Matters........................................ 45
5.10 Environmental............................................. 48
5.11 Reasonable Best Efforts................................... 54
5.12 Negotiations.............................................. 54
5.13 Supplemental Information.................................. 54
5.14 Foreign-Held Assets....................................... 55
5.15 Removal of Material Liens................................. 55
ARTICLE VI CONDITIONS PRECEDENT............................................ 55
6.1 Conditions Precedent to Obligations of Buyer............... 55
6.2 Conditions Precedent to Obligations of Seller.............. 58
ARTICLE VII CERTAIN ADDITIONAL COVENANTS................................... 59
7.1 Certain Taxes and Expenses................................. 59
7.2 Maintenance of Books and Records........................... 59
7.3 Financial Statements....................................... 60
7.4 Non-Competition/Non-Solicitation........................... 60
7.5 Bonds...................................................... 61
7.6 Confidential Information................................... 61
7.7 Buyer's License of Patents and Technology.................. 61
7.8 Seller's License of Patents and Technology................. 62
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TABLE OF CONTENTS
(continued)
PAGE
7.9 Restrictions On Buyer's and Seller's Licenses................62
7.10 Binding On Successors.......................................62
7.11 Provision of Notices, Etc...................................62
7.13 Bio-Lab.....................................................63
ARTICLE VIII SURVIVAL; INDEMNIFICATION.......................................63
8.1 Survival.....................................................63
8.2 Indemnification by Seller....................................64
8.3 Indemnification by Buyer.....................................68
8.4 Notification of Claims.......................................70
8.5 Procedures for Tax Contests..................................73
ARTICLE IX EMPLOYEES AND EMPLOYEE BENEFITS...................................74
9.1 Employment...................................................74
9.2 Accrued Vacation.............................................75
9.3 Union Representation.........................................76
9.4 Benefit Plans................................................76
9.5 Other Benefit Plans and Arrangements.........................81
9.6 WARN Act.....................................................81
9.7 Cooperation; Employment Records..............................81
9.8 Workers Compensation.........................................81
9.9 Employment Taxes.............................................82
ARTICLE X TERMINATION; MISCELLANEOUS.........................................82
10.1 Termination.................................................82
10.2 Further Assurances..........................................83
10.3 Entire Agreement; Amendments; Waivers.......................83
10.4 Benefit; Assignment.........................................83
10.5 No Presumption..............................................84
10.6 Notices.....................................................84
10.7 Counterparts; Headings......................................85
10.8 Severability................................................85
10.9 Third Party Beneficiaries...................................85
10.10 Governing Law..............................................85
10.11 Submission to Jurisdiction; Waivers........................85
10.12 Bulk Transfer and Sales Tax Successor Liability............85
10.13 Use of Names...............................................86
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LIST OF SCHEDULES
-----------------
Schedule 1.1 [Part A] Real Property
Schedule 1.1 [Part B] Equipment
Schedule 1.1 [Part C] Biolab, Reagent and Arcadian Contracts
Schedule 1.1 [Part D] Ancillary Agreements
Schedule 1.1 [Part E] Permitted Liens
Schedule 1.1 [Part F] Base Working Capital
Schedule 3.1(b) Ownership Interests
Schedule 3.3 No Violation of Laws or Agreements
Schedule 3.4(a) [Part A] Annual Financial Statements
Schedule 3.4(a) [Part B] Interim Financial Statements
Schedule 3.4(a) [Part C] Undisclosed Acquired Assets
Schedule 3.4(b) Seller's Services
Schedule 3.5 No Changes
Schedule 3.6(a) [Part A] Contracts
Schedule 3.6(a) [Part B] Contract Breaches
Schedule 3.6(c) Restrictive Contracts
Schedule 3.6(f) Reagent Draft Agreement
Schedule 3.7(a) Permit Modifications
Schedule 3.8(a) [Part A] Environmental Losses
Schedule 3.8(a) [Part B] Hazardous Wastes
Schedule 3.8(b) Underground Storage Tanks
Schedule 3.9 Seller Consents
Schedule 3.11(a) [Part A] Leases of Real Property
Schedule 3.11(a) [Part B] Floodplain
Schedule 3.11(b) [Part A] Condemnation
Schedule 3.11(b) [Part B] Expropriation
Schedule 3.12 Taxes
Schedule 3.13(a) Intellectual Property
Schedule 3.13(b) Royalties
Schedule 3.13(c) Intellectual Property/Licenses In
Schedule 3.13(d)
Schedule 3.13(e) Intellectual Property/Licenses Out
Schedule 3.14 Product Warranties
Schedule 3.15 [Part A] Union Organizing
Schedule 3.15 [Part B] Strikes
Schedule 3.15 [Part C] Existing Unions & Unfair Labor Charges
Schedule 3.16 [Part A] Plant Employees
Schedule 3.16 [Part B] Benefit Plans
Schedule 3.17 No Pending Litigation or Proceedings
Schedule 3.19 Insurance
Schedule 3.20 [Part A] Customer Relations
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LIST OF SCHEDULES
-----------------
(continued)
Schedule 3.20 [Part B] Supplier Relations
Schedule 3.22 Condition of Assets
Schedule 3.24 All Assets
Schedule 5.1 Conduct of Business
Schedule 5.1(a) TDI Joint Venture
Schedule 5.1(d) Capital Expenditures
Schedule 5.9(b) Triple Net Lease and Seller Mortgage Principal Terms
Schedule 5.10(c) TDI Matter Practices
Schedule 5.10(g)(i) Environmental Permits to be Transferred to Buyer
Schedule 5.10(g)(ii) Environmental Permits to be Retained by Seller
Schedule 5.10(h) Shared Permits
Schedule 6.1(c) Required Consents
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of October 9, 1996, by and between
▇▇▇▇ Corporation, a Virginia corporation ("Seller"), and ARCO Chemical Company,
a Delaware corporation ("Buyer").
Seller is engaged in, among other things, the business of developing,
manufacturing, packaging, marketing, using and selling toluene diisocyanate,
aliphatic diisocyanate, dinitrotoluene and nitric acid (such specified business
is referred to herein as the "Business").
Buyer desires to purchase substantially all of the assets, properties and
rights of the Business, and Seller desires to sell, and to cause the sale of,
such assets, properties and rights, and Seller desires to assign certain
liabilities of the Business, and Buyer desires to assume such liabilities, all
on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
---------
DEFINITIONS AND USAGE
-----------------------
1.1 Certain Definitions. As used in this Agreement, the following
-------------------
terms shall have the respective meanings ascribed to them in this Section.
"Accounts Receivable" has the meaning set forth in paragraph (d)
of the definition of Acquired Assets.
"Acquired Assets" means all of the assets, properties and rights
owned, used or held for use primarily in connection with the Business of every
kind, nature and description (other than the Excluded Assets), wherever such
assets, properties and rights are located and whether such assets, properties
and rights are real, personal or mixed, tangible or intangible, and whether or
not any of such assets, properties and rights have any value for accounting
purposes or are carried or reflected on or specifically referred to in Seller's
books or financial statements, including all of the following assets, properties
and rights:
(a) all real property and interests in real property, together
with all fixtures, fittings, buildings, structures and other improvements
erected thereon, and easements, rights of way, water lines, rights of use,
licenses, hereditaments, tenements, privileges and other appurtenances
thereto (such as appurtenant rights in and to public streets) ("Real
Property") owned in fee by Seller and used or held for use by Seller
primarily in connection with the Business (including the Real Property
described on Part A of Schedule 1.1) ("Owned Real Property");
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(b) to the extent not included in clause (a) above, all tangible
assets and properties owned, used or held for use by Seller primarily in
connection with the Business, including cars, trucks and other
transportation equipment, machinery and equipment, tools, spare parts,
furniture, office equipment, furnishings and fixtures and machinery and
equipment under order or construction (including the tangible assets and
properties described on Part B of Schedule 1.1) ("Equipment");
(c) all inventories, including finished goods, work-in-progress,
raw materials, operating chemical and catalysts, parts, accessories,
packaging, manufacturing, administrative and other supplies on hand, goods
held for sale or lease or to be furnished under Contracts and other
inventories owned, used or held for use by Seller primarily in connection
with the Business, including, to the extent provided in Section 5.10(c),
the TDI Matter (the "Inventories");
(d) all billed and unbilled accounts receivable and all notes
receivable relating to the Business ("Accounts Receivable");
(e) all credits, prepaid expenses, deferred charges, advance
payments, security deposits and deposits owned, used or held for use by
Seller primarily in connection with the Business, including with respect to
the Third Party Contracts;
(f) all service marks, trademarks and tradenames, all product
names, all assumed or fictitious names and the logos associated therewith,
copyrights, applications for the foregoing, licenses and other contractual
rights with respect to the foregoing and other such property and intangible
rights owned, used or held for use by Seller primarily in connection with
the Business, together with the goodwill of the Business in connection with
which such trademarks, tradenames, product names and service marks are used
and all Patents ("Intellectual Property");
(g) all formulae, processes, procedures, designs, ideas, research
records, inventions, records of inventions, test information, technical
information, engineering data, marketing know-how, proprietary information,
manufacturing information, know-how, and trade secrets (and all related
manuals, books, files, journals, models, instructions, patterns, drawings,
blueprints, plans, designs specifications, equipment lists, parts lists,
descriptions, data, art work, software, computer programs and source code
data related thereto including all current and historical data bases)
owned, used or held for use by Seller primarily in connection with the
Business ("Technology");
(h) subject to Section 2.7, (i) all written and oral contracts,
licenses, commitments, agreements and instruments, including all customer
contracts, operating contracts and distribution contracts, primarily
relating to the Business including the leases for the Railcars storing the
TDI Matter at the Closing Date (but only to the extent provided in Section
5.10(c)), (ii) all sales and purchase orders and supply agreements and
other agreements primarily relating to the Business, (iii) all leases of
Equipment and Real Property to Seller, as lessee, primarily relating to the
Business (such leased Real Property being hereafter referred to as the
"Leased Real Property" and, together with the Owned
3
Real Property, the "Acquired Real Property"), (iv) all contracts, licenses,
commitments, agreements and instruments (or portions thereof) set forth and
described on Part C of Schedule 1.1 (the "Third Party Contracts"), and
(v) all contracts with any Governmental Entity or utility which provide for
Inducements to the extent relating to the Business or the Acquired Assets
(collectively, the "Contracts");
(i) subject to Sections 2.7, 5.10(g) and (h), all franchises,
approvals, permits, authorizations, licenses, orders, registrations,
certificates, variances, and other similar permits or rights obtained from
any Governmental Entity relating to the conduct of the Business or to the
Acquired Real Properties and all pending applications therefor (the
"Permits");
(j) all books, records, ledgers, files, documents (including
originally executed copies of written Contracts), customer and supplier
lists (past, present or future), correspondence, memoranda, forms, lists,
plats, architectural plans, drawings and specifications (including
engineering drawings, plans, specifications and other documents related to
capital improvements related to the "debottlenecks" building and Equipment
expansions and modifications and other similar capital projects), copies of
documents evidencing Intellectual Property or Technology, new product
development materials, creative materials, advertising and promotional
materials, studies, reports, sales and purchase correspondence, books of
account and records relating to the Transferred Employees, photographs,
records of plant operations and materials used, quality control records and
procedures, equipment maintenance records, manuals and warranty
information, research and development files, data and laboratory books,
inspection processes, in each case, whether in hard copy or magnetic
format, in each instance, to the extent owned, used or held for use by
Seller primarily in connection with the Business or the Transferred
Employees;
(k) all rights or choses in action related to any portion of the
Business or the Acquired Assets, including third party warranties and
guarantees and all related claims, credits, rights of recovery and set-off
and other similar contractual rights, as to third parties held by or in
favor of Seller and primarily arising out of, resulting from or relating to
the Business or the Acquired Assets (other than any rights to refunds or
credits in respect of Taxes to the extent that such refunds or credits
relate to periods prior to Closing); and
(l) all rights to insurance and condemnation proceeds relating to
any damage, destruction, taking or other impairment of the Acquired Assets
which damage, destruction, taking or other impairment occurs on or prior to
the Closing Date.
"Acquired Real Property" has the meaning set forth in
paragraph (h) of the definition of Acquired Assets.
"Active Employees" has the meaning set forth in Section 9.1(a).
4
"Active Remedial or Corrective Action" means Remedial Action
required under Environmental Laws and resulting in soil removal, soil or
groundwater treatment, or containment of Contaminants.
"Affiliate" of any Person means any Person, directly or
indirectly controlling, controlled by or under common control with such Person.
"Agreement" means this Asset Purchase Agreement, together with
the Schedules and Exhibits attached hereto, as the same may be amended from time
to time in accordance with the terms hereof.
"Air Products" shall mean Air Products, Incorporated and/or Air
Products and Chemicals, Inc., as the case may be.
"Ancillary Agreements" means the agreements set forth on Part D
of Schedule 1.1.
"Antitrust Division" means the Antitrust Division of the United
States Department of Justice.
"Assumed Liabilities" shall mean (a) all current liabilities of
the Business to the extent included in the Final Closing Working Capital,
(b) the obligations under the Contracts arising exclusively from, and accruing
exclusively with respect to, the operation after the Closing Date of the
Business, whether known or unknown, absolute, contingent or otherwise and
whether due or to become due, and (c) liabilities and obligations relating to
the Transferred Employees expressly assumed by Buyer pursuant to Article IX.
"Base Purchase Price" means Five Hundred Sixty-Five Million
Dollars ($565,000,000).
"Base Working Capital" means the working capital of the Business
as of June 30, 1996 which Seller has calculated as set forth on Part F of
Schedule 1.1.
"Basket Amount" means 0.75% of the Final Purchase Price.
"Benefit Plan" has the meaning set forth in Section 3.16(b).
"Benefited Property" has the meaning set forth in Section 5.9(c).
"Bio-Lab Lease" means the Land Lease dated December 20, 1994
between Seller and Bio-Lab, Inc.
"Burdened Property" has the meaning set forth in Section 5.9(c).
"Business" has the meaning set forth in the recitals hereto.
5
"Business Day" means any day other than a Saturday, Sunday, or a day
on which banking institutions in the City of New York are authorized or
obligated by law or executive order to close.
"Business Employees" means the employees of Seller or its Affiliates
based in the United States and employed primarily in connection with the
Business.
"Business Real Property" has the meaning set forth in Section 3.8(a).
"Buyer Indemnified Parties" has the meaning set forth in
Section 8.2(a).
"Buyer Objection Notice" has the meaning set forth in Section 5.10(c).
"Buyer's 401(k) Plan" has the meaning set forth in Section 9.4(b).
"Buyer's Non-Bifurcated Permits" has the meaning set forth in
Section 5.10(g).
"Buyer's Nonqualified Pension Plans" has the meaning set forth in
Section 9.4(a).
"Buyer's Pension Plans" means, collectively, Buyer's Nonqualified
Pension Plans and Buyer's Qualified Pension Plan.
"Buyer's Qualified Pension Plan" has the meaning set forth in
Section 9.4(a).
"CEOP" has the meaning set forth in Section 9.4(b).
"Claim" means any claim or notice of any nature whatsoever, including
any demand, liability, obligation, debt, cause of action, suit, proceeding,
judgment, award, assessment, or, insofar as it relates to Environmental Matters,
request for information.
"Closing" has the meaning set forth in Section 2.5.
"Closing Accountant's Report" has the meaning set forth in
Section 2.3(b).
"Closing Date" has the meaning set forth in Section 2.5.
"Closing Working Capital" shall mean, as of the Closing Date, (i) the
current assets of the Business included in the Acquired Assets minus (ii) the
current liabilities of the Business consisting of accounts payable and accrued
liabilities of the Business (excluding any Excluded Current Liabilities), in
each case determined on a basis consistent with, and using, the methods and
methodologies used in preparing the Interim Balance Sheet; provided, however,
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that, if any line item or category (e.g., accounts receivable, inventory, etc.)
included in the determination of the Final Closing Working Capital was not
included in the determination of or
6
referred to on the Interim Balance Sheet, such item or category shall be
determined in accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" has the meaning set forth in Section 7.6.
"Confidentiality Agreement" means that certain confidentiality
agreement dated August 6, 1996 between Seller and Buyer.
"Contaminant" means any substance which is deemed by any Governmental
Entity to be, alone or in any combination, hazardous, Hazardous Waste, toxic,
radioactive, or a pollutant, or is otherwise regulated by or the subject of
Environmental Laws.
"Contamination" means the uncontained presence of any Contaminant,
including the degradation of naturally occurring water, air or soil quality
which is either the direct or indirect result of human activity.
"Contracts" has the meaning set forth in paragraph (h) of the
definition of Acquired Assets.
"Cross Easement Agreement" has the meaning set forth in
Section 5.9(c).
"Dealing" means using, generating, manufacturing, refining, treating,
transporting, storing, handling, labeling, documenting, recycling, disposing of,
depositing, transferring, producing or processing any substance, or contracting
to do any of the foregoing.
"DNT Contracts" means the agreements set forth under the heading "Air
Products Agreements" on Part A of Schedule 3.6(a).
"Environmental Arbitrator" has the meaning set forth in
Section 5.10(b)(iv).
"Environmental Laws" means all applicable Laws now or hereafter
enacted concerning (a) on-site or off-site Contamination, (b) occupational
health and safety, (c) Releases of Contaminants into the environment, (d) the
Dealing in chemical substances, products, or Contaminants, and (e) reclamation
and restoration of real property.
"Environmental Losses" means all Losses imposed by, incurred under or
pursuant to Environmental Laws (regardless of the existence of a violation of
Environmental Laws) or attributable to Environmental Matters, including all
Losses related to Remedial Actions, to the extent such Losses are based on,
arise out of or are otherwise in respect of:
(a) the ownership or operation of the Business, the Acquired
Assets, or any assets related to the Business, in each case, prior to the
Closing;
7
(b) any conditions relating to the Business or any of the Acquired
Assets existing, in each case, prior to the Closing;
(c) expenditures necessary to cause the operations of the Business,
the Acquired Assets, or assets, equipment or facilities either related to
the Business or the Acquired Assets, or owned, leased or operated by the
Business to comply with any and all provisions under Environmental Laws in
effect at the time of the Closing, including expenditures in connection
with Seller's obtaining required Environmental Permits or permit
modifications required as of the Closing;
(d) expenditures necessary to effect the requirements of closure,
decommissioning, relocation, or rehabilitation of any of the operations of
the Business, the Acquired Assets, or the assets, equipment or facilities,
either related to the Business or the Acquired Assets, or owned, leased or
operated by the Business, in each case, prior to the Closing imposed by or
incurred under or pursuant to Environmental Law in effect as of the
Closing;
(e) liability for personal injury or property damage, including
damages assessed for the maintenance of a public or private nuisance, in
each such case, arising out of or otherwise related to pre-Closing acts,
omissions, conditions, or circumstances; and
(f) any other pre-Closing matter affecting the Business or, the
Acquired Assets, as directed, imposed, requested or required by any
Governmental Entity administering any Environmental Law.
"Environmental Matters" shall mean any matter (a) arising out of,
relating to, or resulting from (i) pollution, Contamination, protection of the
environment, human health or safety, health or safety of employees, sanitation,
or (ii) Releases or threatened Releases of Contaminants into the air, surface
water, groundwater, soil, land surface or subsurface, buildings or facilities or
(b) otherwise arising out of, relating to, or resulting from the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Contaminants.
"Environmental Permits" means Permits issued by any Governmental
Entity pursuant to any Environmental Law.
"Equipment" has the meaning set forth in paragraph (b) of the
definition of Acquired Assets.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means (a) any corporation included with Seller in a
controlled group of corporations within the meaning of Section 414(b) of the
Code, (b) any trade or business (whether or not incorporated) which is under
common control with Seller within the meaning of Section 414(c) of the Code,
(c) any member of an affiliated service group of which
8
Seller is a member within the meaning of Section 414(m) of the Code or (d) any
other person or entity treated as an affiliate of Seller under Section 414(o) of
the Code.
"Estimated Closing Working Capital" has the meaning set forth in
Section 2.3(a).
"Excess Environmental Loss" has the meaning set forth in
Section 5.10(b)(iii).
"Excess TDI Matter Railcars" means (a) with respect to the period from
the Closing Date until the end of calendar quarter that is at least 30 days
after the Closing Date (the "Initial TDI Matter Period"), the number of Railcars
equal to the excess, if any, of (i) the product of (A) the Monthly Requisite
Number of Railcars and (B) the number of months (rounded to the nearest whole
number of months) in the Initial TDI Matter Period minus (ii) the amount by
which the Initial Railcar Number exceeds the number of Railcars containing TDI
Matter located on the Business Real Property as of the end of the Initial TDI
Matter Period; and (b) with respect to each successive calendar quarter during
the period from and after the end of the Initial TDI Matter Period through
June 30, 1998, the number of Railcars equal to the excess, if any, of (i) the
product of (A) the Monthly Requisite Number of Railcars and (B) the number of
months (rounded to the nearest whole number of months) from the Closing Date
until the end of such calendar quarter, minus (ii) the amount by which the
Initial Railcar Number exceeds the number of Railcars containing TDI Matter
located on the Business Real Property as of the end of such calendar quarter.
"Excluded Assets" means:
(a) cash, marketable securities and other cash equivalents in
transit, in hand or in bank accounts;
(b) all accounts owing, and all contracts, agreements and
instruments, between and among Seller and its Affiliates;
(c) except as otherwise expressly set forth herein, assets
attributable or related to any Benefit Plan;
(d) subject to Section 10.13, any right, title or interest in the
"Olin" name and any derivation thereof;
(e) all assets utilized at Seller's Brandenburg, Kentucky plant
and all real property located at that plant;
(f) all assets exclusively utilized in or for Seller's
hydrazine/ketazine plant and caustic terminals at Lake Charles, Louisiana
and the Excluded Real Property;
(g) all rights of Seller under this Agreement and the Transaction
Documents;
9
(h) duplicate copies of all books and records transferred to Buyer;
(i) all rights and claims (including refunds, credits and claims
thereto) of Seller with respect to Taxes of the Business attributable to
the period prior to and including the Closing Date;
(j) all insurance policies of Seller;
(k) all documents and analyses prepared by Seller for its internal
evaluation purposes in connection with the sale of the Business (but
excluding any documents described in paragraph (j) of the definition of
Acquired Assets or used in connection with the determination of Final
Closing Working Capital);
(l) all rights or choses in action to the extent arising out of
occurrences before the Closing and related to any litigation for which any
liability would constitute a Non-Assumed Liability, including third party
warranties and guarantees and all related claims, credits, rights of
recovery and set-off and other similar contractual rights, as to third
parties held by or in favor of Seller;
(m) the Japanese Assets;
(n) TDI Matter, Railcars containing TDI Matter as of the Closing
Date and the leases with respect to such Railcars, in each case, to the
extent not included in the Acquired Assets pursuant to Section 5.10(c); and
(o) OMNX control software.
"Excluded Current Liabilities" means all current liabilities of the
Business excluded from the Base Working Capital computation as set forth on
Part F of Schedule 1.1.
"Excluded Real Property" means the real property described on Part A
of Schedule 1.1 as being retained by Seller, including the real property
utilized in or for Seller's hydrazine/ketazine plant and the caustic terminals
at Lake Charles, Louisiana, and all other Real Property owned by Seller at Lake
Charles, Louisiana that is not described on Part A of Schedule 1.1.
"Final Closing Working Capital" has the meaning set forth in
Section 2.3(b).
"Final Purchase Price" shall mean the Base Purchase Price (i) plus an
amount, if any, equal to the amount by which the Final Closing Working Capital
exceeds the Working Capital Upper Limit or (ii) minus an amount, if any, equal
to the amount by which the Working Capital Lower Limit exceeds the Final Closing
Working Capital, as the case may be; provided, however, that if neither the
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foregoing clause (i) or (ii) is applicable, the Final Purchase Price shall equal
the Base Purchase Price.
"Financial Statements" has the meaning set forth in Section 3.4.
10
"FIRPTA Certificate" has the meaning set forth in Section 2.6(a)(vii).
"First Offer Agreement" has the meaning set forth in
Section 5.9(d)(iii).
"First Offer" has the meaning set forth in Section 5.9(d)(i).
"First Offer Notice" has the meaning set forth in Section 5.9(d)(i).
"First Offer Period" has the meaning set forth in Section 5.9(d)(i).
"FTC" means the United States Federal Trade Commission.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"Governmental Entity" means (a) any multinational, federal,
provincial, state, municipal, local or other governmental or public department,
court, commission, board, bureau, agency, legislative or quasi-legislative body,
or instrumentality, domestic or foreign, (b) any subdivision, agent, commission,
board, department, authority, or similar body or instrumentality of any of the
foregoing, or (c) any quasi-governmental or private body exercising any
regulatory, expropriation or taxing governmental authority under or for the
account of any of the foregoing.
"Hazardous Waste" has the meaning set forth in the Resource
Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Inactive Employees" has the meaning set forth in Section 9.1(a).
"Indemnification Claim" has the meaning set forth in Section 8.4(a).
"Indemnified Party" has the meaning set forth in Section 8.4(a).
"Indemnifying Party" has the meaning set forth in Section 8.4(a).
"Inducements" has the meaning set forth in Section 3.11(b)(iii).
"Initial Cash Payment" means the Base Purchase Price as adjusted
pursuant to Section 2.3(a).
"Initial Railcar Number" means the number of Railcars (not exceeding
128) that exist on the Business Real Property as of the Closing Date and set
forth on the certificate referred to in Section 2.6(a)(x).
11
"Initial TDI Matter Period" has the meaning set forth in clause (a) of
the definition of Excess TDI Matter Railcars.
"Intellectual Property" has the meaning set forth in paragraph (f) of
the definition of Acquired Assets.
"Interim Balance Sheet" has the meaning set forth in Section 3.4.
"Inventories" has the meaning set forth in paragraph (c) of the
definition of Acquired Assets.
"IRS" means the United States Internal Revenue Service.
"Japanese Assets" means all of Seller's direct or indirect interest in
Asahi-▇▇▇▇ ▇▇▇▇▇ Kaisha, a Japanese corporation (the "Japanese Venture"), and
the Japanese Venture's assets, investments and contract rights, and all rights
of Seller under those agreements relating to the Japanese Venture to which
Seller is a party.
"Japanese Venture" has the meaning set forth in the definition of
"Japanese Assets."
"Known Contaminants" means (a) as of any date, those Contaminants
specifically described in Seller's Environmental Plan and (b) as of the Closing
Date, any specifically identified Contaminants which require Remedial Action
under Environmental Laws and which became known to Seller on or prior to the
Closing Date.
"Known Contaminated Areas" means (a) as of any date, those geographic
areas specifically described in Seller's Environmental Plan and (b) any other
specific geographic areas in which there is a Known Contaminant (as defined
under clause (b) of the definition thereof) as of the Closing Date.
"Laws" means all laws, constitutions, statutes, codes, ordinances,
decrees, rules, regulations, municipal by-laws, judicial or arbitral or
administrative or ministerial or departmental or regulatory judgments, orders,
decisions, rulings or awards, consent orders, consent decrees, policies,
voluntary restraints, guidelines, or any provisions or interpretations of the
foregoing, including general principles of common and civil law and equity,
binding on or affecting the Person referred to in the context in which such word
is used.
"LDEQ" means the Louisiana Department of Environmental Quality.
"Leased Lake ▇▇▇▇▇▇▇ Real Property" has the meaning set forth in
Section 5.9(b).
"Leased Real Property" has the meaning set forth in paragraph (h) of
the definition of Acquired Assets.
12
"Lien" means any lien, charge, claim, pledge, security interest,
conditional sale agreement or other title retention agreement, lease, mortgage,
security agreement, right of first refusal, option, restriction, tenancy,
license, covenant, right of way, easement or other encumbrance (including the
filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or statute or law of any jurisdiction).
"Losses" means any losses, costs, expenses, damages, including
compensatory, exemplary, or punitive damages, Taxes, penalties, fines, charges,
demands, liabilities, obligations and Claims of any kind (including interest,
penalties and reasonable attorneys' and consultants' fees, expenses and
disbursements).
"Management Plan" has the meaning set forth in Section 5.1(a).
"Material Adverse Effect" means a change or effect (or series of
related changes or effects) which has or is reasonably likely to have a material
adverse change in or effect upon the business (including the possession, use,
occupancy or operation of the Business), assets, liabilities, condition
(financial or otherwise) or results of operations of the Business or the
Acquired Assets, taken as a whole.
"Materially Reduced" has the meaning set forth in Section 5.9(c).
"MCB" means monochlorobenzene.
"Monthly Requisite Number of Railcars" means the amount, rounded up to
the nearest whole number of Railcars, equal to (i) the Initial Railcar Number
divided by (ii) the number of months (rounded to the nearest whole number of
months) contained in the period from the Closing Date until June 30, 1998.
"1997 Accrued Vacation Liability" has the meaning set forth in
Section 9.2.
"No Further Action Letter" means a letter or other formal written
communication from the LDEQ and/or other Governmental Entity having jurisdiction
(a) indicating that no further Remedial Action is necessary regarding the Known
Contaminant in the Known Contaminated Area or (b) otherwise stating in
equivalent language that the LDEQ or such Governmental Entity will require no
further Remedial Action with respect to such Known Contaminant in such Known
Contaminated Area (including approval by the LDEQ and/or such other Governmental
Entity of a plan or report submitted by Seller to LDEQ or such Governmental
Entity recommending no further action with respect to such Known Contaminant in
such Known Contaminated Area). It is understood and agreed that if the only
qualification set forth in such letter or other formal written communication is
a statement to the effect that the determination is made "at this time" (or such
equivalent language), the parties shall consider such a letter or other formal
written communication to be a "No Further Action Letter" with respect to the
applicable Known Contaminant within the applicable Known Contaminated Area.
"Non-Assumed Liabilities" has the meaning set forth in Section 2.4(b).
13
"Off-Site Environmental Liabilities" shall mean all Losses arising as
a result of Seller's or its Affiliates' disposal, or arranging for disposal, or
transportation for disposal, of Contaminants at a landfill, dump, surface
impoundment or other surficial location other than the Business Real Property,
prior to the Closing.
"▇▇▇▇-DNT Limited Partnership" has the meaning set forth in
Section 6.1(g).
"Option Real Property" means the real property containing the portions
of Excluded Real Property leased by Seller as of the date hereof to Tetra-Chlor
Inc. and Liquid Carbonic Industries Corporation.
"OSHA" has the meaning set forth in Section 3.7(a).
"Other Employees" has the meaning set forth in Section 9.1(a).
"Owned Real Property" has the meaning set forth in paragraph (a) of
the definition of Acquired Assets.
"Parent" means Atlantic Richfield Company, a Delaware corporation.
"Partnership Agreement" has the meaning set forth in Section 6.1(g).
"Patents" means all foreign and domestic patents (including all
reissues, divisions, continuations and extensions thereof), patent rights,
applications for the foregoing, and licenses and other contractual rights with
respect to the foregoing owned, used or held for use by Seller primarily in
connection with the Business.
"PBGC" has the meaning set forth in Section 3.16(e).
"Permits" has the meaning set forth in paragraph (i) of the definition
of Acquired Assets.
"Permitted Liens" means (a) the Liens set forth on Part E of
Schedule 1.1, (b) Liens securing Taxes, assessments, governmental charges or
levies, all of which are not yet due and payable or as to which adequate
reserves have been established that are included in the Final Closing Working
Capital and that may thereafter be paid without penalty, (c) Liens (other than
any Lien imposed by ERISA) incurred or deposits made in the ordinary course of
the Business consistent with past practice in connection with worker's
compensation, unemployment insurance or other types of social security,
(d) mechanics', carriers', workmen's, repairmen's and other similar Liens
incurred in the ordinary course of the Business consistent with past practice,
(e) in the case of Leased Real Property, Liens (not attributable to Seller as
lessee) affecting the landlord's (and any underlying landlord's) interest in any
Leased Real Property or (f) such other Liens which, individually and in the
aggregate, do not and would not materially detract from the value of, or
materially impair the present use, or any future use contemplated by the
Management Plan, of, any Acquired Asset or portion thereof; it being understood
that to the extent a Permitted
14
Lien relates to or arises from a Non-Assumed Liability, Seller shall still be
liable for such Non-Assumed Liability to the extent set forth herein.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a firm, a Governmental Entity, a trust or
other entity or organization.
"Plant Employee" has the meaning set forth in Section 9.1(a).
"Prime Rate" means the rate per annum announced from time to time
during the reference period by Citibank, N.A. as its United States prime,
reference or base rate for commercial loans.
"PTO" means the United States Patent and Trademark Office.
"Railcars" has the meaning set forth in Section 5.10(c).
"Real Property" has the meaning set forth in paragraph (a) of the
definition of Acquired Assets.
"Release" means to pump, pour, empty, eject, spill, leak, emit,
deposit, discharge, disseminate, ▇▇▇▇▇, migrate, dispose, dump, inject or place
into the environment, or to allow any of the foregoing.
"Remedial Action" means any action undertaken to (a) clean up, remove,
treat or in any other way respond to any presence, Release or threat of Release
of any Contaminants, (b) prevent any Release of Contaminants where such Release
would violate any Environmental Laws or would endanger or threaten to endanger
public health or welfare or the environment, or (c) perform studies,
investigations or monitoring related to the foregoing.
"Retiree Medical Eligible Employees" has the meaning set forth in
Section 9.4(c)(ii).
"Retirement Incentive Package" has the meaning set forth in
Section 9.4(c)(ii).
"Seller Indemnified Parties" has the meaning set forth in
Section 8.3(a).
"Seller Mortgage" has the meaning set forth in Section 5.9(b).
"Seller's Accountant" has the meaning set forth in Section 2.3(b).
"Seller's Environmental Plan" means Seller's plan with respect to
Remedial Action, if any, in connection with the Business Real Property as
specifically set forth in the following documents, as such documents may be or
have been from time to time modified, supplemented, superseded, or amended (with
respect to the matters identified therein) as required by the LDEQ:
15
1. RCRA Facility Investigation Phase I Interim Report, Volumes I,
II, and III, prepared by ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Consultants, dated
November 1994;
2. RCRA Facility Investigation Phase II/Phase III Workplan,
prepared by ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Consultants, dated November 1994;
3. Site Assessment Plan for Proposed Dinitrotoluene (DNT)
Manufacturing Facility: ▇▇▇▇ Corporation, Lake ▇▇▇▇▇▇▇ ▇▇▇▇▇,
dated July 10, 1995;
4. Groundwater Assessment Report for Proposed Dinitrotoluene
(DNT) Manufacturing Facility: ▇▇▇▇ Corporation, Lake ▇▇▇▇▇▇▇
▇▇▇▇▇, dated July 10, 1995;
5. Site Assessment Report, Proposed DNT Plant, ▇▇▇▇ Chemicals,
Lake Charles, Louisiana, prepared by ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Consultants, dated December 1995;
6. TDI Residue Shed Closure Plan dated April 3, 1985; and
7. Aquaterra Final Report, Soil, Groundwater and Process Water
Sampling Analyses, ▇▇▇▇ Chemicals TCCA Unit [now Bio-Lab],
dated December 1994.
"Seller's Non-Bifurcated Permits" has the meaning set forth in
Section 5.10(g).
"Seller's Nonqualified Pension Plans" has the meaning set
forth in
Section 9.4(a).
"Seller's Pension Plans" means, collectively, Seller's
Nonqualified Pension Plans and Seller's Qualified Pension Plans.
"Seller's Process" has the meaning set forth in
Section 5.10(c).
"Seller's Qualified Pension Plans" has the meaning set forth
in Section 9.4(a).
"Seller's Vacation Portion" has the meaning set forth in
Section 9.2.
"Sewer Repairs" has the meaning set forth in Section 5.10(d).
"Sewer Report" has the meaning set forth in Section 5.10(d).
"Shared Permits" has the meaning set forth in Section 5.10(h).
"Shared Tax" has the meaning set forth in Section 2.9.
16
"Special Payment" has the meaning set forth in Section 3.5(b).
"Specified Properties" has the meaning set forth in
Section 5.9(d)(i).
"Tax Claim" has the meaning set forth in Section 8.5.
"Tax Indemnity Agreement" has the meaning set forth in
Section 8.2(a)(x).
"Taxes" means any federal, state, local and foreign income,
payroll, withholding, excise, sales, use, lease, personal and other property,
use and occupancy, business and occupation, mercantile, real estate, gross
receipts, license, employment, severance, stamp, premium, windfall profits,
social security (or similar unemployment), disability, transfer, registration,
value added, alternative, or add-on minimum, estimated, or capital stock and
franchise and other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not.
"TDI" means toluene diisocyanate.
"TDI Matter" has the meaning set forth in Section 5.10(c).
"TDI Matter Costs" has the meaning set forth in
Section 5.10(c).
"Technology" has the meaning set forth in paragraph (g) of the
definition of Acquired Assets.
"Third Party Contracts" has the meaning set forth in clause
(iv) of paragraph (h) of the definition of Acquired Assets.
"Third Party Indemnification Claim" has the meaning set forth
in Section 8.4(b).
"Trademarks" has the meaning set forth in Section 10.13.
"Transaction Documents" has the meaning set forth in
Section 3.2.
"Transferred Employees" has the meaning set forth in
Section 9.1(a).
"Triple Net Lease" has the meaning set forth in
Section 5.9(b).
"Unknown Environmental Losses" has the meaning set forth in
Section 8.2(a)(vi).
"WARN Act" means the Worker Adjustment and Retraining
Notification Act, as codified at 29 U.S.C. Sections 2101 - 2109, as amended.
17
"Working Capital Lower Limit" means an amount equal to (a) the
Base Working Capital minus (b) $10,000,000.
"Working Capital Upper Limit" means an amount equal to (a) the
Base Working Capital plus (b) $10,000,000.
1.2 Terms Generally. (a) (i) Words in the singular shall be held
---------------
to include the plural and vice versa and words of one gender shall be held to
include the other genders as the context requires, (ii) the terms "hereof,"
"herein," and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including all of the
Schedules and Exhibits hereto) and not to any particular provision of this
Agreement, and Article, Section, paragraph, Exhibit and Schedule references are
to the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement
unless otherwise specified, (iii) the word "including" and words of similar
import when used in this Agreement shall mean "including, without limitation,"
unless otherwise specified, (iv) the word "or" shall not be exclusive, and (v)
references to a Person are also references to its permitted successors and
assigns.
(b) As used in this Agreement, the terms "real property" and "real
estate" shall be deemed to include immovable property, the term "personal
property" shall be deemed to include movable property, the term "tangible
property" shall be deemed to include corporeal property, the term "intangible
property" shall be deemed to include incorporeal property, the term "easement"
shall be deemed to include servitude, and the term "fee simple" shall be deemed
to include full ownership.
(c) The Third Party Contracts set forth on Part C of Schedule 1.1
and the Real Property that is leased under such Third Party Contracts shall be
deemed to be "owned, used or held for use by Seller primarily in connection with
the Business."
ARTICLE II
----------
THE TRANSACTION
-----------------
2.1 Sale and Purchase of Assets. Subject to the terms and
---------------------------
conditions of this Agreement, at the Closing, Seller shall sell, assign,
transfer, deliver and convey to Buyer, and Buyer shall purchase, the Acquired
Assets, free and clear of all Liens other than Permitted Liens, for the purchase
price specified in Section 2.2.
2.2 Purchase Price. Subject to the terms and conditions of this
--------------
Agreement, the aggregate purchase price to be paid by Buyer for the purchase of
the Acquired Assets shall be (i) the Final Purchase Price and (ii) the Assumed
Liabilities. Subject to the terms and conditions of this Agreement, the Initial
Cash Payment shall be paid by Buyer on the Closing Date by wire transfer of
immediately available funds to the account designated by Seller in writing at
least two (2) Business Days prior to the Closing Date.
18
2.3 Closing Working Capital Adjustment. (a) At least five
----------------------------------
Business Days prior to the Closing Date, Seller shall deliver to Buyer its good
faith written estimate of the Closing Working Capital (with any adjustment
thereto proposed by Buyer and agreed to by Seller prior to the Closing Date (the
"Estimated Closing Working Capital")). Seller shall make available to Buyer all
workpapers and other books and records utilized in preparing the Estimated
Closing Working Capital and shall make available to Buyer the appropriate
personnel involved in the preparation of such estimate. If the Estimated
Closing Working Capital is greater than the Working Capital Upper Limit, the
Base Purchase Price shall be increased by the amount of such excess. If the
Estimated Closing Working Capital is less than the Working Capital Lower Limit,
the Base Purchase Price shall be decreased by the amount of such deficiency. In
all other cases, there shall be no adjustment of the Base Purchase Price at the
Closing.
(b) As promptly as practicable, but in no event later than
90 days, after the Closing Date, Seller shall cause its independent auditors,
KPMG Peat Marwick LLP ("Seller's Accountant"), to deliver to Buyer and Seller in
writing its calculation of Closing Working Capital (the "Final Closing Working
Capital"), together with a written report and certificate of Seller's Accountant
to the effect that the Final Closing Working Capital has been prepared in
compliance with the requirements of this Section 2.3 and the other applicable
provisions of this Agreement (the "Closing Accountant's Report"). During the 90-
day period following the Closing, Seller and Buyer shall make available to
Seller's Accountant during normal business hours the appropriate personnel and
the books and records of Seller and Buyer to assist in the preparation of the
Closing Accountant's Report. Seller's Accountant will provide Seller and Buyer
and Buyer's firm of independent certified public accountants with copies of
drafts of the Closing Accountant's Report and access to Seller's Accountant and
their working papers related thereto at least 10 Business Days prior to issuance
of such report and will consider any comments and questions raised by Seller or
Buyer prior to rendering the Closing Accountant's Report. In no event shall
Seller's Accountant provide drafts of the Closing Accountant's Report or provide
information with respect thereto to one party unless substantially
contemporaneous therewith such drafts or information are provided to the other
party. Seller's Accountant's calculation of the Final Closing Working Capital as
set forth in the Closing Accountant's Report shall be final and binding upon the
parties hereto absent manifest error (it being understood that manifest error
means error that is solely evident on the face of the Closing Accountant's
Report or in tying the related working papers and the books and records of Buyer
and Seller with respect to the Business to the Closing Accountant's Report). The
fees and expenses of Seller's Accountant in connection with the preparation of
the Closing Accountant's Report shall be split equally by the parties hereto.
(c) If the Final Purchase Price is greater than the Initial
Cash Payment, Buyer shall pay to Seller the amount of such excess, or if the
Initial Cash Payment is greater than the Final Purchase Price, Seller shall pay
to Buyer the amount of such excess, plus in either case interest on such excess
for the period from the Closing Date through (but excluding) the date of such
payment at the Prime Rate.
(d) The payment to be made pursuant to Section 2.3(c) shall
be made by wire transfer of immediately available funds to a bank account
designated by Seller or Buyer,
19
as the case may be, to the other party within five Business Days after the Final
Closing Working Capital becomes final and binding on the parties hereto.
2.4 Assumption of Assumed Liabilities; Non-Assumed Liabilities.
----------------------------------------------------------
(a) Subject to the terms and conditions of this Agreement, at the Closing,
Buyer shall assume the Assumed Liabilities.
(b) Notwithstanding anything to the contrary contained
herein, Buyer shall not assume or be bound by or be obligated or responsible for
any duties, responsibilities, commitments, expenses, obligations or liabilities
of Seller or relating to the Acquired Assets or the Business (or which may be
asserted against or imposed upon Buyer as a successor or transferee of Seller as
an acquirer of the Acquired Assets or the Business or otherwise as a matter of
law) of any kind or nature (fixed or contingent, known or unknown, warranties,
employee benefit plan obligations or claims), that are not Assumed Liabilities
(the "Non-Assumed Liabilities"). Without limitation to the foregoing, all of the
following shall be considered Non-Assumed Liabilities for the purposes of this
Agreement:
(i) any product liability, toxic tort or similar Claim for
injury to person or property, regardless of when made or asserted, that
arises out of or is based upon (A) any express or implied representation,
warranty, agreement or guarantee made by Seller or any of its Affiliates,
or alleged to have been made by any of such Persons, or that is imposed or
asserted to be imposed by operation of law, in connection with any service
performed or product, co-product, by-product, intermediate or Contaminant
generated, delivered, manufactured, distributed, sold, used or handled by
or on behalf of Seller or any of its Affiliates, (B) any condition existing
as of the Closing, including any claim relating to any product, co-product,
by-product, intermediate or Contaminant generated, delivered, manufactured,
distributed, sold, used or handled by Seller or any of its Affiliates and
any Claim relating thereto seeking recovery for consequential damages, lost
revenue or income or (C) exposure to or ingestion of any product, co-
product, by-product, intermediate or Contaminant generated or present on
the Business Real Property on or prior to the Closing; provided, that,
notwithstanding the foregoing, Seller shall not be liable for any such
Claim for any product, co-product, by-product, or intermediate generated or
manufactured by Seller or its Affiliates on or prior to the Closing and
sold, delivered, or distributed by or on behalf of Buyer or any of its
Affiliates following the Closing if such product, co-product, by-product,
or intermediate has been sold, delivered, or distributed by Buyer or any of
its Affiliates (x) after such period of time following such generation or
manufacture that its quality and/or condition has been materially adversely
affected by the passage of time (except that Seller shall be liable for any
such Claims involving allegations other than deteriorated product quality)
or (y) for a purpose other than that for which it was intended;
(ii) any Tax, including any Tax (A) payable with respect to
the Business, assets, properties or operations of Seller or any member of
any affiliated group of which it is a member, and (B) incident to or
arising as a consequence of the negotiation
20
or consummation by Seller or any member of any affiliate group of which
Seller is a member of this Agreement and the transactions contemplated
hereby;
(iii) except for liabilities and obligations relating to the
Transferred Employees expressly assumed by Buyer pursuant to Article IX,
any liability or obligation arising (whether before or after the Closing)
under or with respect to any Benefit Plan or any other compensation or
employee benefit plan, policy or arrangement or collective bargaining
agreement maintained, contributed to, or entered into at any time by Seller
or any of its Affiliates or with respect to the employment of any employee,
agent or independent contractor with Seller or any of its Affiliates
(whether or not employed by Buyer after Closing), including any liability
or obligation with respect to workers compensation, unemployment insurance
premiums or any claims arising under any federal, state or local tax
withholding, employment, labor or discrimination laws;
(iv) any Environmental Losses;
(v) liabilities and obligations relating to the operation
of the Business prior to the Closing arising by operation of law under any
common law or statutory doctrine (including successor liability or de facto
merger);
(vi) any liability or obligation arising under any Contract
(A) that relates to or arises out of any breach or default (or that relates
to an event which would, with the passing of time or the giving of notice,
or both, constitute a breach or default) under any Contract or to any
products or services provided or to be provided by Seller under any such
Contract arising out of or relating to any time on or prior to the Closing
Date, (B) required by the terms thereof to be discharged on or prior to the
Closing Date, or (C) that, subject to Section 2.7, was not capable of being
assigned to Buyer as of the Closing without violating the terms thereof
until such time that such Contract has effectively been assigned to Buyer
after obtaining all requisite consents;
(vii) any liability or obligation in respect of the Excluded
Assets;
(viii) any liability or obligation to the extent the existence
of which constitutes a breach, as of the date of this Agreement or as of
the Closing Date, of any representation or warranty of Seller contained in
or made pursuant to this Agreement;
(ix) except for the liabilities or obligations referred to
in clauses (a) and (c) of the definition of Assumed Liabilities, any
liability or obligation arising out of or relating to the ownership or
operation of the Acquired Assets or the Business prior to the Closing Date
(including any predecessor operations), any obligations, liabilities, or
litigation arising out of or relating to events or conditions occurring on
or before the Closing Date, and any liability or obligation associated with
any other business of Seller and its Affiliates;
(x) except for the liabilities and obligations referred to
in clause (b) of the definition of Assumed Liabilities, any liabilities of
Seller as general partner, under the
21
Agreement of Limited Partnership described on Schedule 3.1(b) or otherwise,
arising out of or relating to events or conditions occurring on or before
the Closing Date;
(xi) any liability or obligation relating to the items set
forth on Schedule 3.17; and
(xii) any liability or obligation with respect to the Special
Payment.
(c) Without limitation of Seller's rights under Sections
8.3(a)(v), and 8.3(a)(vii) Seller hereby irrevocably waives and releases, and
has caused its Affiliates to waive and release, Buyer from all Non-Assumed
Liabilities, including any liabilities or obligations created or which arise by
statute or common law.
2.5 Closing. Subject to the terms and conditions of this
-------
Agreement, the closing of the sale and purchase of the Acquired Assets (the
"Closing") shall take place at 10 a.m., New York City time, on a date mutually
satisfactory to Buyer and Seller which is no later than the fifth Business Day
after satisfaction (or waiver) of the conditions to the Closing set forth in
Sections 6.1 and 6.2 (other than those conditions which require the delivery of
any documents or the taking of other action at the Closing) at the offices of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, One Battery Park Plaza, New York, New York, or on
such other date and at such other time or place as may be mutually agreed upon
by the parties hereto (the "Closing Date").
2.6 Deliveries and Proceedings at the Closing. Subject to the
-----------------------------------------
terms and conditions of this Agreement, at the Closing:
(a) Deliveries to Buyer. Seller shall deliver to Buyer:
-------------------
(i) bills of sale and instruments of assignment, in
forms reasonably satisfactory to Seller and Buyer, to evidence the
transfer to Buyer of the Acquired Assets (other than the Owned Real
Property) in accordance herewith, duly executed by Seller;
(ii) consents to the transfer of all Contracts and
Permits requiring such consent to the extent obtained prior to the
Closing;
(iii) title certificates to any motor vehicles
included in the Acquired Assets, duly executed by Seller (together with
any other transfer forms necessary to transfer title to such vehicles);
(iv) one or more limited warranty deeds of conveyance
to Buyer of the Owned Real Property, in forms reasonably satisfactory to
Seller and Buyer, sufficient to transfer to Buyer good, marketable and
insurable fee simple title (subject only to the Permitted Liens) to the
Owned Real Property in accordance herewith, duly executed and
acknowledged by Seller and in recordable form; such deeds shall conform
to the applicable Laws of the State of Louisiana and shall include a
warranty of title covering acts of Seller substantially equivalent to a
New York bargain and sale deed with
22
covenant against grantor's acts; or if required by Section 5.9(b), the Triple
Net Lease, Seller Mortgage and appropriate amendments to this Agreement;
(v) U.C.C. termination statements in recordable form and
other appropriate releases, in form and substance reasonably satisfactory to
Buyer, with respect to all recorded Liens on the Acquired Assets (other than
Permitted Liens with respect to the Acquired Real Property);
(vi) a receipt for the payment of the Initial Cash Payment
duly executed by Seller;
(vii) the Foreign Investment in Real Property Tax Act
Certificate, in form reasonably satisfactory to Buyer, duly executed by Seller
(the "FIRPTA Certificate");
(viii) the certificate required to be delivered by Seller
pursuant to Section 6.1(a) and the certified resolutions evidencing the
authority of Seller as set forth in Section 3.2;
(ix) a certificate executed by a senior executive officer of
Seller certifying as to, and setting forth, the Initial Railcar Number;
(x) all such other documents (including affidavits of title
and the Cross Easement Agreement) and instruments of conveyance as shall be
reasonably necessary to transfer to Buyer the Acquired Assets in accordance
herewith and to obtain the title insurance referred to in Section 6.1(f) duly
executed by Seller and, where necessary or appropriate, in recordable form; and
(xi) possession of the Acquired Assets.
(b) Deliveries By Buyer to Seller. Buyer will deliver to Seller:
-----------------------------
(i) wire transfer of immediately available funds in an
amount equal to the Initial Cash Payment;
(ii) an assumption agreement, in form reasonably
satisfactory to Seller and Buyer, to evidence the assumption by Buyer of the
Assumed Liabilities in accordance herewith, the Cross Easement Agreement and the
First Offer Agreement, each duly executed by Buyer and, where necessary or
appropriate, in recordable form;
(iii) the certificate required to be delivered by Buyer
pursuant to Section 6.2(a) and the certified resolutions evidencing the
authority of Buyer as set forth in Section 4.2; and
(iv) all such other documents and instruments of assumption
as shall be reasonably necessary for Buyer to assume the Assumed Liabilities in
accordance herewith.
23
(c) Deliveries By Buyer and Seller. Buyer and Seller shall
------------------------------
execute and deliver (i) agreements in the form of the Ancillary Agreements
and (ii) the First Offer Agreement, in form and substance reasonably
satisfactory to Buyer and Seller and, if necessary or appropriate, in
recordable form;
2.7 Consent of Third Parties. Anything in this Agreement to the
------------------------
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any of the Contracts or Permits or any claim or right or any benefit
arising thereunder or resulting therefrom if an attempted assignment thereof,
without the consent of a third Person thereto, would constitute a breach or
other contravention thereof or in any way adversely affect the rights of Buyer
thereunder. Seller will use reasonable best efforts to obtain the consent of
the other parties to any such Contract or Permit for the assignment thereof to
Buyer. If such consent is not obtained prior to the Closing, or if an attempted
assignment thereof would be ineffective or would adversely affect the rights of
Seller thereunder so that Buyer would not in fact receive all such rights,
Seller and Buyer will cooperate to achieve a mutually agreeable arrangement
under which Buyer would obtain the benefits and assume the obligations
thereunder (but only to the extent such obligations would have constituted
Assumed Liabilities if such assignment occurred on the Closing Date) from and
after the Closing Date in accordance with this Agreement, including
subcontracting, sublicensing or subleasing to Buyer, or under which Seller would
enforce for the benefit of Buyer, with Buyer assuming Seller's obligations to
the same extent as if it would have constituted an Assumed Liability and any and
all rights of Seller against a third Person thereto. Seller will pay promptly
to Buyer when received all monies received by Seller after the Closing Date
under any of the Contracts or any claim or right or any benefit arising
thereunder to the extent that Buyer would be entitled thereto pursuant hereto.
In addition, without limiting the foregoing, Buyer agrees that to the extent any
of the service agreements listed on Part A of Schedule 3.6(a) that Seller is a
party to with respect to Tetra-Chlor, Inc., Liquid Carbonic Industries
Corporation, Bio-Lab, Inc. or Fertilizer Acquisition Company III are not
assigned to Buyer on the Closing Date as a result of the failure to obtain any
required third party consent, Buyer shall assume Seller's obligations thereunder
to the same extent as if it would have constituted an Assumed Liability to
provide such services on behalf of Seller as Seller's subcontractor, and Seller
shall enforce its rights under such service agreements for the benefit of Buyer.
The provisions of this Section 2.7 shall in no way limit the Closing condition
set forth in Section 6.1(c).
2.8 Allocation of Consideration. Buyer and Seller shall use their
---------------------------
reasonable best efforts to agree prior to Closing on a basis for allocation of
the Final Purchase Price to the Acquired Assets and the non-compete agreement
referred to in Section 7.4. If Buyer and Seller agree to such allocation prior
to Closing, Buyer and Seller covenant and agree that the values assigned to the
Acquired Assets and the non-compete agreement by the parties' mutual agreement
shall be conclusive and final for all purposes of this Agreement. In such case,
Buyer and Seller shall each report the federal, state and local income and other
tax consequences of the transactions contemplated by this Agreement and the
Transaction Documents in a manner consistent with any agreed to allocation,
including the preparation and filing of Form 8594 under Section 1060 of the Code
(or any successor form or successor provision of any future tax law, or any
comparable provisions of state, or local tax law) with their respective federal,
state and local
24
income tax returns for the taxable year that includes the Closing Date. In such
case, Buyer and Seller further covenant and agree not to take a position on any
Tax return before any Governmental Entity charged with the collection of any
Taxes or in any judicial proceeding that is in any way inconsistent with the
allocation determined by such parties' mutual agreement in accordance herewith.
Notwithstanding the foregoing, if Buyer and Seller do not agree on such
allocation prior to the Closing, Buyer and Seller shall have no obligation to
the other with respect to the positions they take on any Tax return with respect
to any allocation of the Final Purchase Price.
2.9 Prorations. The parties hereto agree that the following
----------
expenses shall be calculated and pro rated as of the Closing Date, with Seller
responsible for such expenses for the period before and including the Closing
Date, and Buyer to be responsible for the period after the Closing Date
(provided, however, that, to the extent that any of the following expense
--------- -------
categories are included in the Final Closing Working Capital, such expense shall
not be pro-rated pursuant to this Section 2.9):
(a) personal and real property taxes, in each case to the
extent relating to the Business and except as otherwise provided in Section 7.1;
(b) electric, fuel, gas, telephone, sewer and utility
charges, in each case to the extent relating to the Business;
(c) rentals and other charges under Contracts to be assumed
by Buyer pursuant hereto; and
(d) charges under maintenance and service contracts and
other Contracts to be assumed by Buyer pursuant hereto, and fees under Permits
to be transferred to Buyer as part of the Acquired Assets.
In the event any personal or real property tax relating to the Business (other
than those Taxes provided for in the first sentence of Section 7.1) is assessed
against or payable with respect to both an Acquired Asset and an Excluded Asset
as a single unit (a "Shared Tax"), the parties hereto shall promptly apply to
have the Shared Tax separately assessed or payable based upon the respective
fair market values of such Acquired Asset and Excluded Asset. The party hereto
that is billed for the payment of a Shared Tax shall, promptly after receipt of
a notice or ▇▇▇▇ therefor, (x) send a copy to the other party and (y) before any
penalties, interest or other charges for the late payment thereof accrue, pay
the Shared Tax. Promptly after demand from such paying party, the other party
shall reimburse such paying party for the portion thereof allocated to it
pursuant to this Section 2.9. However, if such allocation has not been
determined when the reimbursement payment is requested, the payment shall be
made promptly after such determination is made. For so long as any such tax is
a Shared Tax, the parties hereto shall allocate such Shared Tax as follows: (i)
the parties hereto shall promptly request the assessor or other governmental
official who determines the Shared Tax or basis therefor to allocate the Shared
Tax based upon the respective fair market values as set forth above; (ii) if
said official does not do so within sixty (60) days after any such request, the
parties shall, in good faith, attempt to allocate the Shared Tax based upon the
respective fair market values as set forth
25
above; and (iii) if the parties hereto do not agree on an allocation within
thirty (30) days following written notice from one to the other requesting such
agreement, the allocation will, upon the demand of either party hereto, be
finally determined by binding arbitration in New York, New York by a single
arbitrator pursuant to the Expedited Procedures of the Commercial Arbitration
Rules of the American Arbitration Association, and judgment on the award entered
by the arbitrator may be entered in any court having jurisdiction.
Notwithstanding the foregoing, the parties hereto agree that if the assessor or
other governmental official who determines the Shared Tax establishes separate
assessments for such Acquired Asset and Excluded Asset prior to the time the
parties reach an agreement regarding allocation pursuant to clause (ii) above,
and prior to determination by binding arbitration pursuant to clause (iii)
above, the allocation hereunder shall be in accordance with such separate
assessments. Such allocation shall be without prejudice to either party's
exercise of its right to challenge or otherwise seek reduction of any such
assessment.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES
------------------------------
OF SELLER
---------
Seller represents and warrants to Buyer as follows:
3.1 Qualification; Interests in Other Entities. (a) Seller is a
------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Virginia and has all requisite corporate power and
authority to own, lease and operate the Acquired Assets and the Business as
presently being conducted. Seller is qualified to do business and is in good
standing as a foreign corporation in all jurisdictions wherein the nature of the
Business or Seller's ownership or use of the Acquired Assets make such
qualification necessary except such failures to be qualified or to be in good
standing, if any, which when taken together with all such other failures of
Seller do not have a Material Adverse Effect.
(b) Except as set forth on Schedule 3.1(b), no shares of any
corporation or any ownership or other investment interest, either of record,
beneficially or equitably, in any Person are included in the Acquired Assets.
3.2 Authorization and Enforceability. Seller has full corporate
--------------------------------
power and authority to execute, deliver and perform this Agreement and all other
agreements and instruments to be executed in connection herewith, including the
Ancillary Agreements (such other agreements and instruments being hereinafter
referred to collectively as the "Transaction Documents"), to which Seller is a
party. The execution, delivery and performance by Seller of this Agreement and
the Transaction Documents to which Seller is a party have been duly authorized
by all necessary corporate action on the part of Seller. This Agreement has
been duly executed and delivered by Seller, and, as of the Closing Date, the
other Transaction Documents to which Seller is a party will be duly executed and
delivered by Seller. This Agreement is a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its
26
terms. As of the Closing Date, each of the other Transaction Documents to which
Seller is a party will be duly executed and delivered by Seller and will
constitute the legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with its terms.
3.3 No Violation of Laws or Agreements. The execution, delivery,
----------------------------------
and performance by Seller of this Agreement and the Transaction Documents to
which Seller is a party do not, and the consummation by Seller of the
transactions contemplated hereby and thereby, will not, (a) contravene any
provision of the Restated Articles of Incorporation, as amended, or Bylaws, as
amended, of Seller or (b) except as set forth on Schedule 3.3, violate, conflict
with, result in a breach of, or constitute a default (or an event which would,
with the passage of time or the giving of notice or both, constitute a default)
under, or result in or permit the termination, modification, acceleration, or
cancellation of, or result in the creation or imposition of any Lien of any
nature whatsoever upon any of the Acquired Assets or give to others any
interests or rights therein under (i) any indenture, mortgage, loan or credit
agreement, license, instrument, lease, contract, plan, permit or other agreement
or commitment, oral or written, to which Seller is a party, or by which the
Business or any of the Acquired Assets may be bound or affected, except for such
violations, conflicts, breaches, terminations, modifications, accelerations,
cancellations, Liens, interests or rights which, individually and in the
aggregate, do not have a Material Adverse Effect, or (ii) any judgment,
injunction, writ, award, decree, restriction, ruling, or order of any arbitrator
or Governmental Entity or any applicable Law to which Seller or the Acquired
Assets is subject, other than those violations or conflicts which individually
and in the aggregate would not have a Material Adverse Effect.
3.4 Financial Statements; Services. (a) True, correct and
------------------------------
complete copies of the unaudited combined balance sheets of the Business as of
December 31, 1994 and 1995 and the unaudited combined statements of income and
cash flows for the twelve-month periods ended December 31, 1993, 1994 and 1995
are attached hereto as Part A of Schedule 3.4(a) and true, correct and complete
copies of the unaudited combined balance sheet of the Business (the "Interim
Balance Sheet") as of June 30, 1996 and the related unaudited combined
statements of income and cash flows for the six-month period then ended are
attached hereto as Part B of Schedule 3.4(a) (all such financial statements and
all attachments thereto are referred to herein collectively as the "Financial
Statements"). The Financial Statements are in accordance with the books and
records of the Business and fairly present, in all material respects, the
financial position and results of operations of the Business as of the dates and
for the periods indicated, in each case in conformity with GAAP throughout the
periods specified, except as expressly set forth in the Financial Statements and
except that all the Financial Statements may omit footnotes and the Interim
Balance Sheet and the related statements of income and cash flow are subject to
normal year-end adjustments which are not, in the aggregate, material; provided,
--------
however, that this sentence does not constitute a representation as to any item
-------
included in the Final Closing Working Capital. All Acquired Assets are
disclosed on the Interim Balance Sheet as of June 30, 1996 except (A) as
disclosed on Part C of Schedule 3.4(a), (B) the Excluded Assets and (C) as
disposed of or transferred between June 30, 1996 and the Closing Date in the
ordinary course of the Business consistent with past practice and in accordance
with this Agreement.
(b) Schedule 3.4(b) sets forth a complete and accurate list or
general
27
description of all types of services and other support provided to the Business
by Seller and its Affiliates since December 31, 1994.
3.5 No Changes. Since June 30, 1996, Seller has conducted the
----------
Business only in the ordinary course of the Business consistent with past
practice and, except as set forth on Schedule 3.5 or as expressly contemplated
by this Agreement, there has not been:
(a) any Material Adverse Effect other than changes generally
affecting the chemical industry or the economy;
(b) any change in the salaries or other compensation payable or
to become payable to, or any advance (excluding advances for ordinary business
expenses) or loan to, any Business Employee, or material change or material
addition to, or material modification of, other benefits (including any bonus,
profit-sharing, pension or other plan in which any of the Business Employees
participate) to which any of the Business Employees may be entitled, or any
payments to any pension, retirement, profit-sharing, bonus or similar plan
(except for salary or other compensation increases in the ordinary course of the
Business consistent with past practice and except for one-time-only performance
awards granted and paid to certain Business Employees by Seller prior to the
Closing (the "Special Payment"));
(c) any change or modification in any manner of Seller's existing
inventory management and collection and payment policies, procedures and
practices with respect to inventories and accounts receivable and accounts
payable, respectively, of the Business, including acceleration of collections of
receivables, failure to make or delay in making collections of receivables
(whether or not past due), acceleration of payment of payables or failure to pay
or delay in payment of payables, and any change in Seller's existing policies,
procedures and practices with respect to the provision of discounts, rebates or
allowances insofar as they relate to the Business;
(d) any change or, to the best of Seller's knowledge, any threat
(including any threat existing as of June 30, 1996) of any change in any of its
relations with, or any loss or, to the best of Seller's knowledge, threat
(including any threat existing as of June 30, 1996) of loss of, any of the
suppliers (including suppliers of water, electricity, gas, oil and coal),
clients, distributors, customers or employees of the Business which,
individually or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect, other than any change generally affecting the chemical
industry or the economy;
(e) any cancellation or waiver of any right material to the
Business or any cancellation or waiver of any debts of or claims of the Business
against Seller or any Affiliate of Seller;
(f) any disposition of or failure to keep in effect any rights
in, to or for the use of any Permit of the Business which individually or in the
aggregate would have a Material Adverse Effect;
28
(g) any damage, destruction or loss affecting the Business which
individually or in the aggregate would have a Material Adverse Effect whether or
not covered by insurance;
(h) any change by Seller in its method of accounting or keeping
its books of account or accounting practices with respect to the Business except
as required by GAAP;
(i) any relocation of any employee of Seller to or from the
operations of the Business at Lake Charles, Louisiana or any other relocation of
any Business Employee (other than in the ordinary course of Seller's business
consistent with past practice in connection with the replacement of former
employees of Seller and its Affiliates who have died, become disabled or have
ceased to be employees of Seller and its Affiliates); or
(j) any sale, transfer or other disposition of any material
assets, properties or rights of the Business (other than the sale of Inventory
in the ordinary course of the Business consistent with past practice).
3.6 Contracts. (a) As of the date of this Agreement, Part A of
---------
Schedule 3.6(a) contains a list of (i) all Contracts relating to the Leased Real
Property and (ii) all other Contracts included in the Acquired Assets, including
the Contracts set forth on Part C of Schedule 1.1 (except (A) purchase orders
entered into in the ordinary course of the Business consistent with past
practice, (B) Contracts terminable by Seller without any liability upon no more
than 60 days' notice and (C) each Contract with respect to which Seller's total
annual liability or expense is less than $250,000; provided, however, that
-------- -------
Seller's total annual liability or expense for all Contracts not listed on
Schedule 3.6(a) (other than those not required to be disclosed thereon pursuant
to Section 3.6(a)(ii)(A) or (B)) shall not exceed $3,000,000). Seller has
delivered to Buyer a correct and complete copy of each written agreement and a
written description of each oral agreement listed on Part A of Schedule 3.6(a)
and Part C of Schedule 1.1. Part A of Schedule 3.6(a) contains a list of all
Contracts evidencing indebtedness for borrowed money. Except as set forth on
Part B of Schedule 3.6(a), with respect to each Contract, neither Seller nor, to
the best of Seller's knowledge, any other party thereto, is in breach or default
and no event has occurred which with notice or lapse of time would constitute a
breach or default, or permit termination, modification, or acceleration, under
such Contract, except for such breaches, terminations, modifications,
accelerations or defaults which, individually and in the aggregate, are not
reasonably likely to have a Material Adverse Effect. Except as set forth on
Part B of Schedule 3.6(a), there are no disputes pending or, to the best of
Seller's knowledge, threatened, under or in respect of any of the Contracts,
other than those that, individually and in the aggregate, are not reasonably
likely to have a Material Adverse Effect.
(b) Each of the Contracts is in full force and effect and
constitutes the legal and binding obligation of, and is legally enforceable
against, Seller, and, to the best of Seller's knowledge, any other party
thereto, in accordance with its terms, other than such failures to be legal and
binding obligations and enforceable as are not reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect.
29
(c) Except as set forth on Schedule 3.6(c), no Contract contains
any provision which, after the Closing, will restrict Buyer from conducting any
portion of the Business in any jurisdiction, except such Contracts which may be
terminated by Buyer without penalty or liability upon 30 days notice.
(d) Except as designated with two asterisks on Part A of Schedule
3.6(a), there are no contracts, licenses, commitments, agreements or instruments
pursuant to which Seller has any liability or obligation as a general partner of
the ▇▇▇▇-DNT Limited Partnership.
(e) Except as set forth on Part A of Schedule 3.6(a) or as
described in Section 6.1(g), no consent, approval or authorization of, or
registration or filing with or notice to, any Person is required to be obtained
or made in order to permit the assignment to Buyer of all of the rights and
obligations of Seller as Seller, or in its capacity as general partner of the
▇▇▇▇-DNT Limited Partnership under the DNT Contracts, to the extent such rights
and obligations are to be assigned to or assumed by Buyer hereunder without
giving effect to Section 2.7. The acquisition by Buyer of the Business pursuant
hereto constitutes an acquisition of all of the "TDI business" as such term (or
its equivalent) is used in each of the DNT Contracts. Other than ordinary course
purchase orders, the DNT Contracts represent all of the agreements and
understandings, whether written or oral, to which Seller is a party related to
the subject matter of any of the DNT Contracts.
(f) The draft agreement set forth as Schedule 3.6(f) embodies in
all material respects all of the terms and provisions of the oral Contract
between Seller and Reagent Chemical and Research Inc. with respect to the lease
of a certain parcel of Acquired Real Property, which Contract is an Acquired
Asset.
3.7 Permits and Compliance With Laws Generally. (a) Except as set
------------------------------------------
forth on Schedule 3.17, Seller possesses and is in compliance with all Permits
required to operate the Business as presently operated and to own, lease or
otherwise hold the Acquired Assets under all applicable Laws, including
Environmental Laws, except to the extent that any failure to possess, or to
comply with, any Permits would not, individually or in the aggregate, have a
Material Adverse Effect. Except as set forth on Schedule 3.17, the Business is
conducted by Seller in compliance with, and the use, construction and operation
of all Real Property constituting any part of the Acquired Assets conforms to,
all applicable Laws (including the Occupational Safety and Health Act and the
rules and regulations thereunder ("OSHA"), zoning, building and similar laws and
Environmental Laws), and all restrictions and conditions affecting title, except
for such failures to comply which would not individually or in the aggregate
have a Material Adverse Effect. All Permits of Seller relating to the operation
of the Business are in full force and effect, other than those the failure of
which to be in full force and effect would not individually or in the aggregate
have a Material Adverse Effect. Other than those revocations, cancellations,
suspensions and, except as set forth on Schedule 3.7(a), modifications, which
would not, individually or in the aggregate, have a Material Adverse Effect,
there are no proceedings pending or, to the best of Seller's knowledge,
threatened that seek the revocation, cancellation, suspension or any adverse
modification of any such Permits presently possessed by Seller and
30
Seller is aware of no facts, conditions or circumstances reasonably likely to
result in the revocation, cancellation, suspension, or adverse modification of
any Permit.
(b) Except as set forth on Schedule 3.17(b), no outstanding
notice, citation, summons or order has been issued, no outstanding complaint has
been filed, no outstanding penalty has been assessed and no investigation or
review is pending or, to the best of Seller's knowledge, threatened, by any
Governmental Entity or other Person with respect to any alleged (i) violation by
Seller or any Affiliate of Seller relating to the Business or the Acquired
Assets of any applicable Law or (ii) failure by Seller or any Affiliate thereof
to have any Permit required in connection with the conduct of the Business or
otherwise applicable to the Business (including the Acquired Assets), except in
the case of the foregoing clauses (i) and (ii) where such violations or
failures, individually and in the aggregate, would not have a Material Adverse
Effect.
3.8 Environmental Matters. (a) With such exceptions to the
---------------------
following clauses (i) through (iv) which individually and in the aggregate would
not have a Material Adverse Effect, (i) in the past five years, no Contaminants
have been Released at, on, or under any Acquired Real Property or Equipment
(collectively, the "Business Real Property") which Releases require reporting to
a Governmental Entity pursuant to Environmental Law, (ii) except as set forth in
Seller's Environmental Plan with respect to Contaminants as to which Active
Remedial or Corrective Action is proposed by Seller as of the date of this
Agreement, there are no portions of the Business Real Property that have surface
or subsurface Contamination, (iii) except as set forth on Part A of Schedule
3.8(a), Seller is not subject to any Environmental Losses, or to any liability,
existing or inchoate, actual or contingent, under any Environmental Law, and
(iv) except as set forth on Part B of Schedule 3.8(a), there is no Hazardous
Waste stored at or on the Business Real Property.
(b) Except as set forth on Schedule 3.8(b), no underground
storage tanks are or, to the best of Seller's knowledge, have been located at
the Business Real Property.
(c) No polychlorinated biphenyls (other than those contained in
fluorescent light ballasts) and no asbestos-containing materials (other than
those specifically set forth in the asbestos survey to be provided by Seller to
Buyer pursuant to Section 5.10(e)) are located at, in, or upon any Business Real
Property.
(d) Seller has made available to Buyer true, complete and correct
copies of all reports, studies, analyses, tests, or monitoring possessed or
initiated by Seller or any of its Affiliates within the last five years
pertaining to Contaminants at, in, on, or under the Business Real Property.
3.9 Consents. No consent, approval or authorization of, or
--------
registration or filing with, any Person (governmental or private) is required in
connection with the execution, delivery and performance by Seller of this
Agreement, the other Transaction Documents to which Seller is a party, or the
consummation by Seller of the transactions contemplated hereby or thereby,
including in connection with the assignment of the Contracts and Permits
contemplated hereby, except (a) as required by the HSR Act, (b) as set forth on
Schedule 3.9 and (c) for such
31
other consents, approvals, authorizations, registrations or filings the failure
of which to obtain or make would not individually or in the aggregate have a
Material Adverse Effect.
3.10 Title. Seller has and will transfer and convey to Buyer at
-----
the Closing (a) good and valid title to all of the Acquired Assets (other than
the Acquired Real Property), (b) good, marketable and insurable title in fee
simple to all of the Owned Real Property and (c) good and valid leasehold title
to all of the Leased Real Property, in each case, free and clear of Liens
subject only to the Permitted Liens.
3.11 Acquired Real Property. (a) Part A of Schedule 1.1 sets forth
----------------------
a correct list of all Real Property constituting any part of the Acquired Assets
or otherwise owned (beneficially or of record) or leased by Seller in the
conduct of the Business, and identifies the current zoning of such Real
Property, all surveys and title insurance policies in Seller's possession (true
copies of which have been delivered to Buyer) covering any of, and all leases
(whether as tenant or landlord) relating to, such properties. Other than as
provided in this Agreement or as set forth on Part A of Schedule 3.11(a), there
are no leases, subleases, options or other agreements, written or oral, granting
to any Person the right to purchase, use or occupy the Acquired Real Property or
any portion thereof (other than rights of landlords under leases of Leased Real
Property). As of the Closing, Seller shall have provided Buyer with originals
(or photocopies if originals are not available) of all certificates of occupancy
(if legally required) and other Permits for the Owned Real Property. Seller has
not received any written or oral notice or order by any Governmental Entity, any
insurance company which has issued a policy with respect to any of such
properties or any board of fire underwriters or other body exercising similar
functions which (i) relates to violations of building, safety, fire or other
ordinances or regulations, (ii) claims any defect or deficiency with respect to
any of such properties or (iii) requests the performance of any repairs,
alterations or other work to or in any of such properties or in the streets
bounding the same, except such as do not individually or in the aggregate have a
Material Adverse Effect. Seller has delivered to Buyer true, correct and
complete copies of all leases and financing documents affecting all or any
portion of the Acquired Real Property, all of which are listed on Part A of
Schedule 3.6(a). Other than as set forth on Part B of Schedule 3.11(a), none of
the Acquired Real Property is located within a 100-year floodplain.
(b) (i) Seller has not received any written or oral notice that
the Acquired Real Property is to be revalued or reassessed for real
property tax purposes except as set forth on Part A of Schedule
3.11(b) or that assessments for public improvements have been made
against the Acquired Real Property which remain unpaid, and, to the
best of Seller's knowledge, no such assessment has been proposed.
(ii) There is no pending condemnation, expropriation, eminent
domain or similar proceeding affecting all or any portion of any of
the Acquired Real Property and, to the best of Seller's knowledge, no
such proceeding is threatened.
32
(iii) Except as set forth on Part B of Schedule 3.11(b), neither
the Acquired Assets nor the Business benefit from any industrial or
other real or personal property tax abatements or exemptions or other
incentives or inducements provided by any Governmental Entity or
utility ("Inducements"), including Inducements with respect to
enterprise zones, sales tax, income tax, franchise tax, power or
otherwise. The information set forth on Part B of Schedule 3.11(b) is
accurate and complete. Except as disclosed on Part B of Schedule
3.11(b), each of the Contracts described on Part B of Schedule 3.11(b)
is in full force and effect and constitutes the legal and binding
obligation of, and is legally enforceable against, Seller, and, to the
best of Seller's knowledge, any other party thereto, in accordance
with its terms, and neither Seller, nor to the best of Seller's
knowledge, any other party thereto, is in breach or default, and no
event has occurred which with notice or lapse of time would constitute
a breach or default, or permit termination, modification, or loss of
any of the Inducements provided for under such Contract, except for
such failures to be legal and binding obligations and enforceable and
such breaches, defaults, terminations, modifications, or losses which,
individually and in the aggregate, are not reasonably likely to have a
Material Adverse Effect.
(c) All Acquired Real Property has a legal right of access over
currently utilized facilities and land to such public roads, owned roads and
driveways presently in use, and such utilities and other services, as are
necessary for the uses thereof and the conduct of the Business, and neither
Seller nor, to the best of Seller's knowledge, any other Person has applied for
any change in the zoning or land use classification of any such real property.
3.12 Taxes. Seller has (a) timely filed all material returns and
-----
reports for Taxes, including information returns, that are required to have been
filed in connection with or relating to the Business, which returns and reports
were true, correct and complete in all material respects to the best of Seller's
knowledge at the time of filing thereof, (b) paid all material Taxes that are
shown as due pursuant to such returns or reports and (c) paid all other material
Taxes not required to be reported on returns in connection with, relating to, or
imposed on the property of the Business for which a notice of assessment or
demand for payment has been received or which have otherwise become due. All
such returns or reports have been prepared in accordance with all applicable
Laws and requirements in all material respects. Except as set forth on Schedule
3.12, there are in effect no agreements, waivers or other arrangements providing
for an extension of time or the statute of limitations with regard to the
assessment of any Tax, or any deficiency with respect thereto, against Seller in
connection with or relating to the Business. Except as set forth on Schedule
3.12, there are no material actions, suits, proceedings, investigations or
claims now pending, nor, to the best of Seller's knowledge, proposed against
Seller in connection with or relating to the Business, nor are there any
material matters under discussion with, or pending audits by, the Internal
Revenue Service or other Governmental Entity relating to any Taxes or
assessments, or any claims or deficiencies asserted with respect thereto in
connection with or relating to the Business. The U.S. consolidated income tax
returns for Seller and the members of its consolidated group through the year
1988 have been audited by the Internal Revenue Service, and there are no
unresolved issues arising under such audits in
33
connection with or relating to the Business. None of the Acquired Assets (i) is
property that is required to be treated as owned by another Person pursuant to
the "safe harbor lease" provisions of former Section 168(f)(8) of the Code, (ii)
is "tax-exempt use property" within the meaning of Section 168(h) of the Code,
(iii) directly or indirectly secures any debt the interest on which is tax-
exempt under Section 103(a) of the Code; or (iv) is property that is "tax-exempt
bond financed property" under Section 168(g)(5) of the Code. Section 168(g) of
the Code will not apply to determine Buyer's depreciation deductions with
respect to any of the Acquired Assets.
3.13 Patents and Intellectual Property Rights. (a) Schedule
----------------------------------------
3.13(a) contains a true, correct and complete list of all Intellectual Property,
including a true, correct and complete list of all Intellectual Property which
has been registered in, filed in or issued by the PTO, the United States
Copyright Office, any state trademark offices and the patent, trademark,
copyright and other corresponding offices of foreign jurisdictions. All such
registrations have been duly filed, registered and issued and are in full force
and effect.
(b) Except as set forth on Schedule 3.13(b), at the Closing,
Seller will transfer to Buyer all Intellectual Property and Technology without
payment of royalties (either upon the Closing or at any time thereafter) and
free and clear of any Liens other than Permitted Liens. Other than as set forth
in the DNT Contracts, Seller owns, and at the Closing will transfer to Buyer,
without payment of royalties (either upon the Closing or at any time thereafter)
and free and clear of any Liens other than Permitted Liens, all Intellectual
Property and Technology, other than Intellectual Property and Technology which
is generally commercially available from suppliers of either equipment or
computer programs or is in the public domain, with respect to Seller's unique
process for making DNT and/or required in connection with Seller's performance
of its obligations under the DNT Contracts. Air Products has no rights to any
Intellectual Property and Technology owned by Seller related to DNT other than
as set forth in the DNT Contracts.
(c) Except as set forth on Schedule 3.13(c), there are no
licenses or other agreements from or with third parties under which Seller uses
or exercises any rights with respect to any of the Intellectual Property or
Technology.
(d) To the best of Seller's knowledge, except as set forth on
Schedule 3.13(d), neither Seller nor any Affiliate of Seller has received (and
Seller has no knowledge of) any notice from any other Person challenging the
right of Seller (or any of its Affiliates or any other Person) to use any of the
Intellectual Property or any Technology, and there is no interference,
opposition, cancellation, reexamination or other contest proceeding,
administrative or judicial, pending or threatened with respect to any
Intellectual Property or Technology.
(e) Except as set forth on Schedule 3.13(e), no licenses have
been granted and Seller has no obligation to grant licenses with respect to any
Intellectual Property or Technology. To the best of Seller's knowledge, no
claims have been made by Seller or any of its Affiliates of any violation or
infringement by others of rights with respect to any Intellectual Property or
Technology, and there is no basis for the making of any such claim. To the best
of Seller's knowledge, the use by Seller and its Affiliates of the Intellectual
Property and
34
Technology (past and present) has not violated or infringed any rights of other
Persons, or constituted a breach of any Contract (or other agreement or
commitment).
(f) The Intellectual Property and Technology will not be
adversely affected by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(g) There are no licenses or service, maintenance or other
agreements or obligations of any nature whatsoever regarding the Intellectual
Property or Technology between or among Seller, on the one hand, and any
Affiliate of Seller, on the other hand. The Japanese Venture does not have any
rights in any of the Intellectual Property or Technology.
(h) To the best of Seller's knowledge, all statements and
representations made by Seller or any of its Affiliates in any pending patent,
copyright and trademark applications with respect to the Intellectual Property
were true in all material respects as of the time they were made.
(i) The Acquired Assets include all material written
documentation of the Intellectual Property and Technology.
3.14 Product Warranties and Guarantees. Set forth on Schedule 3.14
---------------------------------
are true, complete and correct copies of Seller's standard written product and
service warranties and guarantees given, made or agreed to by Seller or any of
its Affiliates in connection with the sale of products and services of or
otherwise with respect to the Business, and all written and oral product and
service warranties and guarantees for the Business are no more favorable to the
customer than those contained in the standard product and service warranties and
guarantees set forth on Schedule 3.14.
3.15 Labor Relations. Except as set forth on Part A of Schedule
---------------
3.15, there have been no union organizing efforts with respect to the Business
conducted within the last three (3) years and there are none now being conducted
with respect to the Business. Except as set forth on Part B of Schedule 3.15,
Seller has not at any time during the three (3) years prior to the date of this
Agreement had, nor, to the best of Seller's knowledge, is there now threatened,
a strike, work stoppage or work slowdown with respect to or affecting the
Business which had or is reasonably likely to have a Material Adverse Effect.
Except as set forth on Part C of Schedule 3.15, (i) no Business Employee is
represented by any union or other labor organization and (ii) there is no unfair
labor practice charge pending or, to the best of Seller's knowledge, threatened
against Seller relating to any of the Business Employees, which individually or
in the aggregate is reasonably likely to have a Material Adverse Effect.
3.16 Employees; Employee Benefit Plans. (a) Set forth on Part A
---------------------------------
of Schedule 3.16 is a true, complete and correct list (as of a date not more
than two business days prior to the date hereof) showing the name, job title,
base salary or wage rate and bonus entitlement of each Plant Employee and
whether or not such employee is actively at work and, if not, the reason that
such employee is not actively at work. At the Closing, Seller shall provide an
35
updated Schedule which shall provide all of the information required under the
preceding sentence as of the most recent practicable date prior to the Closing.
(b) Set forth on Part B of Schedule 3.16 is a true, complete and
correct list of (i) each "employee benefit plan" within the meaning of Section
3(3) of ERISA, (ii) any other employee benefit plan, arrangement or policy,
including without limitation, any stock option, stock purchase, deferred
compensation, retirement, health, life insurance, flexible spending, dependent
care, fringe benefit, vacation pay, holiday pay, disability, sick pay, workers
compensation, unemployment, severance pay, employee loan, educational
assistance, incentive or bonus plan, policy or arrangement, and (iii) any
employment, indemnification, consulting or severance agreement, whether written
or oral, which is sponsored or maintained by Seller or any of its Affiliates, or
to which Seller or any of its Affiliates contributes or is required to
contribute, on behalf of Business Employees or their beneficiaries or dependents
(each, a "Benefit Plan"). Neither Seller nor any of its Affiliates has formally
adopted or authorized any additional Benefit Plan or any change in or
termination of any existing Benefit Plan or has communicated to present or
former employees of the Business any such change in or termination of any
existing Benefit Plan other than in the ordinary course of the Business
consistent with past practice.
(c) Seller has delivered to Buyer true, complete and correct
copies of each Benefit Plan, or written summaries of any unwritten Benefit Plan,
any collective bargaining agreement covering employees of the Business, any
summary plan description, any employee handbook or policy manual applicable to
employees of the Business, and, with respect to the CEOP, any related trust
agreements or insurance contracts, the latest IRS determination letter, the
latest annual financial statement, the most recent annual report on IRS Form
5500 (including all required schedules and accountant's reports), and any plan
administrator's interpretations or rulings.
(d) The CEOP is and has been operated and administered, in all
material respects, in accordance with its terms, the terms of any applicable
collective bargaining agreement and all applicable Laws. Each employee benefit
plan which is a "group health plan," within the meaning of Section 4980B of the
Code, maintained by Seller or any of its ERISA Affiliates for the benefit of
Business Employees or former employees of the Business is and has been operated
and administered, in all material respects, in compliance with the continuation
coverage requirements of Section 4980B of the Code and Part 6 of Title I of
ERISA. The CEOP has received a favorable determination letter from the Internal
Revenue Service as to its tax-qualified status under the Code and nothing has
occurred since the date of such favorable determination letter which would
adversely affect the qualified status of such plan.
(e) No Benefit Plan to which Seller is obligated to contribute in
respect of Business Employees is a "multiemployer plan" within the meaning of
Section 3(37) of ERISA and neither Seller nor any of its Affiliates has
maintained a multiemployer plan in the last six years with respect to which it
contributed, or was required to contribute, in respect of any Business Employees
or former employees of the Business. With respect to each "defined benefit
plan" within the meaning of Section 3(35) of ERISA which is or was maintained by
Seller or any of its ERISA Affiliates: (i) no such plan has incurred an
"accumulated funding deficiency,"
36
within the meaning of Section 412 of the Code, whether or not waived; (ii) all
contributions required to have been made to any such plan under Section 412 of
the Code or Section 302 of ERISA have been made when due; and (iii) no action
has been taken to terminate such a plan in a "distress termination" subject to
Section 4041(c) of ERISA; (iv) no proceedings to terminate any such plan have
been instituted by the Pension Benefit Guaranty Corporation ("PBGC") and no
event or condition has occurred which might constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any such plan; (v) no amendment has been adopted which has or could
reasonably be expected to subject the plan to the requirements of Section
401(a)(29) of the Code; and (vi) neither Seller nor any of its ERISA Affiliates
has incurred any liability under Title IV of ERISA (contingent or otherwise)
other than for PBGC premiums not yet due which, in each case, would be
reasonably likely to have a Material Adverse Effect.
(f) There are no pending or, to the best of Seller's knowledge,
threatened, actions, suits or claims (other than routine claims for benefits)
with respect to the CEOP and the CEOP is not under audit or investigation by any
governmental agency.
(g) Neither Seller nor any of its ERISA Affiliates nor, to the best of
Seller's knowledge, any other Person, has taken any action or failed to take any
action with respect to any Benefit Plan that may subject Buyer or any Benefit
Plan under which liabilities are to be assumed by Buyer under Article IX to any
tax, penalty, fine or other liability under the Code or ERISA.
(h) To the best of Seller's knowledge, no Business Employee employed
in the United States on a visa will have such visa revoked solely as a result of
the transactions contemplated by this Agreement.
3.17 No Pending Litigation or Proceedings. Except as set forth on
------------------------------------
Schedule 3.17, there are no Claims, actions, suits, grievances, investigations
or proceedings pending against or affecting, or, to the best of Seller's
knowledge, threatened against, Seller, the Business or any of the Acquired
Assets before any arbitrator or Governmental Entity (including the United States
Environmental Protection Agency, the United States Equal Employment Opportunity
Commission or any similar Governmental Entity of the State of Louisiana) which
is reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect. Except as set forth on Schedule 3.17, there are no outstanding
judgments, decrees, writs, injunctions or orders of any arbitrator or
Governmental Entity against Seller, which relate to or arise out of the conduct
of the Business or the ownership, condition or operation of the Business or the
Acquired Assets which individually or in the aggregate is reasonably likely to
have a Material Adverse Effect.
3.18 Supply of Utilities. The Acquired Real Property has adequate
-------------------
arrangements for supplies of water, electricity, gas, oil, and/or coal for all
operations at the 1995 or current operating levels, whichever is greater.
37
3.19 Insurance. Schedule 3.19 lists Seller's policies and
---------
contracts in effect as of the date hereof for insurance covering the Acquired
Assets or Assumed Liabilities and the operation of the facilities constituting
the Business owned or held by Seller.
3.20 Customers. Except as set forth on Part A of Schedule 3.20, as
---------
of the date hereof, Seller does not have any current customer which accounted
for more than 5% of the net sales of the Business for the 12-month period ending
August 31, 1996. Except as set forth on Part B of Schedule 3.20, as of the
date hereof, Seller and its Affiliates have received no notice of, and know of
no reasonable basis for, any development which indicates that any of the top 10
customers of the Business during 1995 will not purchase products of the Business
from Buyer following the Closing in amounts at least equal (on a pro rata basis)
--- ----
to such purchases from Seller in 1995.
3.21 WARN Act. Within six months prior to the date of this
--------
Agreement, (a) Seller has not effectuated (i) a "plant closing" (as defined in
the WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of the Business or
(ii) a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of the Business, (b) Seller has not been affected by any
transaction or engaged in layoffs or employment terminations with respect to the
Business sufficient in number to trigger application of any similar state or
local law, and (c) none of Seller's employees who are employed in connection
with the Business has suffered an "employment loss" (as defined in the WARN
Act).
3.22 Condition of Assets. Except as set forth on Schedule 3.22,
-------------------
the buildings, machinery, equipment, tools, furniture, improvements, sewers,
pipes, pipelines, transportation equipment and other fixed tangible assets of
the Business other than Inventory (a) included in the Acquired Assets or (b)
subject to any Contract included in the Acquired Assets are in good operating
condition and repair, reasonable wear and tear excepted, other than such
defaults and defects as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect. The tangible Acquired Assets are
suitable for the purposes for which they are presently used and presently
proposed to be used, are structurally sound and free from patent and latent
defects, and have the capacity on the Closing Date to permit the manufacture of
all products presently manufactured by the Business in accordance with (i) 1995
operating levels of the Business and the stated capacities, if any, of such
assets and (ii) the current specifications as of the Closing Date required by
current customers of the Business, and there is no material expenditure
presently required in order to maintain such condition and state of repair or
replace any such tangible Acquired Assets, other than such exceptions to the
foregoing as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect.
3.23 Brokerage. Except for any fees payable by Seller to ▇▇▇▇▇▇▇
---------
Sachs & Co., neither Seller nor any of its Affiliates has made any agreement or
taken any other action which might cause any Person to become entitled to a
broker's or finder's fee or commission as a result of the transactions
contemplated hereunder.
38
3.24 All Assets. Except (a) as set forth on Schedule 3.24, (b) for
----------
the assets, properties and rights to be supplied to Buyer pursuant to the
Ancillary Agreements and (c) for the Excluded Assets, the Acquired Assets
(including any assets, properties and rights subject to any Contract included in
the Acquired Assets) constitute all the assets, properties and rights owned,
used, or held for use in connection with, or that are otherwise related to or
required for the conduct of, the Business as presently conducted by Seller on
the date of this Agreement. Except as set forth on Schedule 3.24, none of the
Acquired Assets are owned, in whole or in part, by any Person other than Seller.
3.25 Products Liability. Except as set forth on Schedule 3.17,
------------------
there are no liabilities of Seller, fixed or contingent, asserted or, to the
best of Seller's knowledge, unasserted, (a) with respect to any product
liability or any similar claim that relates to any product manufactured by the
Business and sold by Seller to others prior to the Closing, or (b) with respect
to any claim for the breach of any express or implied product warranty or any
other similar claim with respect to any product manufactured by the Business and
sold by Seller to others prior to the Closing, other than standard warranty
obligations (to replace, repair or refund) made by Seller in the ordinary course
of the conduct of the Business to buyers of the respective products, and except,
in each case, where such liabilities do not or are not individually and in the
aggregate reasonably likely to have a Material Adverse Effect.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES
------------------------------
OF BUYER
--------
Buyer represents and warrants to Seller as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate the Acquired Assets and the Business as presently being conducted.
4.2 Authorization and Enforceability. Buyer has full corporate
--------------------------------
power and authority to execute, deliver and perform this Agreement and all other
Transaction Documents to which Buyer is a party. The execution, delivery and
performance by Buyer of this Agreement and the Transaction Documents to which
Buyer is a party have been duly authorized by all necessary corporate action on
the part of Buyer. This Agreement has been duly executed and delivered by
Buyer, and, as of the Closing Date, the other Transaction Documents to which
Buyer is a party will be duly executed and delivered by Buyer. This Agreement
is a legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms. As of the Closing Date, each of the other
Transaction Documents to which Buyer is a party will be duly executed and
delivered by Buyer and will constitute the legal, valid and binding obligations
of Buyer, enforceable against Buyer in accordance with its terms.
39
4.3 No Violation of Laws or Agreements. The execution, delivery
----------------------------------
and performance by Buyer of this Agreement and the Transaction Documents to
which Buyer is a party do not, and the consummation by Buyer of the transactions
contemplated hereby and thereby, will not, (a) contravene any provision of the
Certificate of Incorporation or Bylaws of Buyer or (b) violate, conflict with,
result in a breach of, or constitute a default (or an event which would, with
the passage of time or the giving of notice or both, constitute a default)
under, or result in or permit the termination, modification, acceleration or
cancellation of, (i) any indenture, mortgage, loan or credit agreement, license,
instrument, lease, contract, plan, permit or other agreement or commitment, oral
or written, to which Buyer is a party, or by which any of its assets or
properties may be bound or affected, except for such violations, conflicts,
breaches, terminations, modifications, accelerations, cancellations, interests
or rights which, individually and in the aggregate, do not have a material
adverse effect on its ability to perform its obligations under this Agreement
and the Transaction Documents to which it is a party, or (ii) any judgment,
injunction, writ, award, decree, restriction, ruling, or order of any arbitrator
or Governmental Entity or any applicable Law to which Buyer is subject, other
than those violations and conflicts which individually and in the aggregate
would not have a material adverse effect on its ability to perform its
obligations under this Agreement and the Transaction Documents to which Buyer is
a party.
4.4 Consents. No consent, approval or authorization of, or
--------
registration or filing with, any Person (governmental or private) is required in
connection with the execution, delivery and performance by Buyer of this
Agreement, the other Transaction Documents to which Buyer is a party, or the
consummation by Buyer of the transactions contemplated hereby or thereby except
(a) as required by the HSR Act and (b) for such other consents, approvals,
authorizations, registrations or filings the failure of which to obtain or make
would not individually or in the aggregate have a material adverse effect on its
ability to perform its obligations under this Agreement and the Transaction
Documents to which it is a party.
4.5 Financing. Buyer has, and at the Closing Date Buyer will have,
---------
sufficient resources to pay the Initial Cash Payment.
4.6 Brokerage. Except for any fees payable by Buyer to ▇▇▇▇▇▇
---------
▇▇▇▇▇▇▇ & Co., Incorporated, neither Buyer nor any of its Affiliates has made
any agreement or taken any other action which might cause any Person to become
entitled to a broker's or finder's fee or commission as a result of the
transactions contemplated hereunder.
ARTICLE V
---------
ADDITIONAL COVENANTS
--------------------
5.1 Conduct of Business. Except (i) as otherwise specifically
-------------------
permitted by this Agreement, (ii) as set forth on Schedule 5.1 hereto or (iii)
with the prior written consent of Buyer, from and after the date of this
Agreement and until the Closing Date, Seller agrees that:
40
(a) Seller shall conduct the Business as presently conducted and only
in the ordinary course of the Business consistent with past practice and in
accordance with the plans of the management of the Business as in effect on
August 20, 1996 (the "Management Plan"); provided, however, that Seller shall
-------- -------
not proceed with the proposed joint venture referred to on Schedule 5.1(a)
without the prior written consent of Buyer;
(b) Seller shall use its reasonable best efforts consistent with past
practice to preserve the business organization of the Business substantially
intact, to keep available to Buyer the services of the Business Employees, to
preserve for Buyer the goodwill of the suppliers, distributors, customers and
others having business relationships with the Business;
(c) Seller shall promptly inform Buyer in writing of any specific
event or circumstance of which it is aware, or of which it receives notice, that
has or is likely to have, individually or in the aggregate, taken together with
the other events or circumstances, a Material Adverse Effect;
(d) Seller shall make capital expenditures in connection with the
Business in accordance with Schedule 5.1(d); provided, however, that Seller
-------- -------
shall not be required to make such capital expenditures to the extent the
failure to make such capital expenditures will not, in Seller's good faith
reasonable judgment, result in a delay in any material respect in the mechanical
completion and start-up of the DNT-plant or the high-pressure phosgenation
process from the start-up dates of which Seller has notified Buyer prior to the
date of this Agreement; and
(e) Seller shall not:
(i) change or modify any existing inventory management or
credit, collection or payment policies, procedures and practices with
respect to accounts receivable or accounts payable, in any case, relating
to the Business or the Acquired Assets;
(ii) enter into any contract or commitment, waive any right or
enter into any other transaction, in each case, which is reasonably likely
to have a Material Adverse Effect;
(iii) mortgage, pledge or subject to any Lien (other than
Permitted Liens) any of the Acquired Assets;
(iv) change any compensation or benefits or grant any material
new compensation or benefits payable to or in respect of any Business
Employee (except for salary or other compensation increases in the ordinary
course of the Business consistent with past practice and except for (A) any
changes or new grants of benefits that are generally applicable to all
employees of Seller and (B) the Special Payment);
(v) sell, lease or otherwise transfer any assets necessary, or
otherwise material to the conduct of, the Business which would constitute
Acquired
41
Assets (other than the sale of Inventory in the ordinary course of the
Business consistent with past practice);
(vi) change the Seller's method of accounting or keeping
its books of account or accounting practices with respect to the Business,
except as required by GAAP;
(vii) (A) terminate the employment of (1) any Business
Employee other than for cause or in the ordinary course of the Business
consistent with past practice or (2) the current plant manager in Lake
Charles, Louisiana (other than for cause) or (B) hire a new plant manager
in Lake Charles, Louisiana;
(viii) relocate any employee of Seller to or from the
Business located at Lake Charles, Louisiana or otherwise relocate any
Business Employee (other than in the ordinary course of Seller's business
consistent with past practice in connection with the replacement of former
employees of Seller and its Affiliates who have died, become disabled or
have ceased to be employees of Seller and its Affiliates) or promote any
Business Employee (except for promotions of any Business Employee in the
ordinary course of the Business consistent with past practice); or
(ix) enter into any Contract which would constitute an
Acquired Asset or an Assumed Liability which is reasonably likely to result
in annual liability to Buyer in excess of $250,000.
5.2 Mutual Covenants. The parties hereto mutually covenant from
----------------
the date of this Agreement to the Closing Date (and subject to the other terms
of this Agreement):
(a) to cooperate with each other in determining whether filings
are required to be made or consents required to be obtained in any jurisdiction
in connection with the consummation of the transactions contemplated by this
Agreement and in making or causing to be made any such filings promptly and in
seeking to obtain timely any such consents (each party hereto shall furnish to
the other and to the other's counsel all such information as may be reasonably
required in order to effectuate the foregoing action);
(b) to advise the other party promptly if such party determines
that any condition to the Closing set forth in Article VI will not be satisfied
in a timely manner;
(c) not to take, or omit to take, any action that, in any such
case, would constitute or result in a breach of any representation or warranty
of such party set forth herein; and
(d) not to take any action that would, or that would be
reasonably likely to, result in any of the conditions to the Closing set forth
in Article VI not being satisfied.
5.3 Filings and Authorizations. The parties hereto will, as
--------------------------
promptly as practicable, and in the case of filings under the HSR Act no later
than five Business Days after
42
the date of this Agreement, make or cause to be made all such filings and
submissions under Laws applicable to them or their Affiliates as may be required
to consummate the terms of this Agreement, including all notifications and
information to be filed or supplied pursuant to the HSR Act. The parties hereto
shall also provide as promptly as possible full responses to any requests for
additional information made of them under the HSR Act. Any such filings,
including any supplemental information and requests for additional information
under the HSR Act, will be in substantial compliance with the requirements of
the applicable Law. Each of the Parent and Buyer, on the one hand, and Seller,
on the other, shall furnish to the other such necessary information and
reasonable assistance as the other may request in connection with its
preparation of any filing or submission which is necessary under the HSR Act.
Seller and Buyer shall keep each other apprised of the status of any
communications with, and inquiries or requests for additional information from,
any Governmental Entity, including the FTC and the Antitrust Division, and shall
comply promptly with any such inquiry or request. Each of Seller and Buyer shall
use its reasonable best efforts to obtain any clearance required under the HSR
Act for the purchase and sale of the Acquired Assets in accordance with the
terms and conditions hereof, including by initiating, pursuing or defending any
litigation or other legal proceedings, whether judicial or administrative,
against or involving any Governmental Entity (including the Antitrust Division
and the FTC) with respect thereto (and including seeking to have any stay or
temporary restraining order entered by any Governmental Entity vacated or
reversed). Nothing contained in this Agreement, including under this Section 5.3
and Sections 5.2, 5.8 and 5.11, will require or obligate Parent or Buyer or
their respective Affiliates (a) to agree or otherwise become subject to any
limitations on (i) the right of Buyer or its Affiliates effectively to control
or operate the Business, (ii) the right of Buyer or its Affiliates to acquire or
hold the Business, or (iii) the right of Buyer to exercise full rights of
ownership of the Business or all or any portion of the Acquired Assets, or (b)
to agree or otherwise be required to sell or otherwise dispose of, hold separate
(through the establishment of a trust or otherwise), or divest itself of all or
any portion of the business, assets or operations of the Parent, Buyer, any
Affiliate of Buyer or the Business. The parties agree that no representation,
warranty or covenant of Buyer contained in this Agreement shall be breached or
deemed breached as a result of the failure by Parent or Buyer to take any of the
actions specified in the immediately preceding sentence.
5.4 Public Announcement. No party hereto shall make or issue, or
-------------------
cause to be made or issued, any public announcement or written statement
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party hereto (which will not be unreasonably
withheld or delayed), unless counsel to such party advises that such
announcement or statement is required by any Law or securities exchange (in
which case the parties hereto shall make reasonable best efforts to consult with
each other prior to such required announcement).
5.5 Investigation. Seller shall give Buyer and its representatives
-------------
(including Buyer's accountants, consultants, counsel and employees), upon
reasonable notice and during normal business hours, full access to the
properties (including any Equipment and any Acquired Real Property), contracts,
employees, books, records and affairs of Seller to the extent relating to the
Business and the Acquired Assets, and shall cause its officers, employees,
agents and representatives to furnish to Buyer all documents, records and
information (and copies thereof),
43
to the extent relating to the Business and the Acquired Assets, as Buyer may
reasonably request. No investigation or receipt of information by Buyer pursuant
to, or in connection with, this Agreement, shall diminish or obviate any of the
representations, warranties, covenants or agreements of Seller under this
Agreement or the conditions to the obligations of Buyer under this Agreement.
Buyer shall provide copies to Seller promptly (and in any event prior to the
Closing Date) of all formal written reports, other than any reports prepared by
or for counsel, relating to environmental and manufacturing audits performed by
or on behalf of Buyer at the Lake Charles, Louisiana facility in connection with
the transactions contemplated hereby that are received after the date of this
Agreement and prior to the Closing Date and all such copies shall be subject to
the confidentiality provisions of Section 7.6. All information provided to Buyer
under this Agreement shall be held subject to the terms and conditions of the
Confidentiality Agreement.
5.6 Taxes. Seller and Buyer shall (a) each provide the other with
-----
such assistance as may reasonably be requested by either of them in connection
with the preparation of any Tax return, any audit or other examination by any
taxing Governmental Entity or any judicial or administrative proceeding with
respect to Taxes, (b) each retain and provide the other with any records or
other information which may be relevant to such return, audit, examination or
proceeding, redacted, in the case of clauses (a) and (b), to provide only the
information thereon relevant to the Acquired Assets, and (c) each provide the
other with the relevant redacted portion of any final determination of any such
audit or examination, proceeding or determination that affects any amount
required to be shown on any Tax return of the other for any period (which shall
be maintained confidentially). Without limiting the generality of the
foregoing, Buyer and Seller shall retain, until the applicable statutes of
limitations (including all extensions) have expired, copies of all Tax returns,
supporting workpapers, and other books and records or information which may be
relevant to such returns for all Tax periods or portions thereof ending before
or including the Closing Date, and shall not destroy or dispose of such records
or information without first providing the other party with a reasonable
opportunity to review and copy the relevant redacted portions of the same. With
respect to Taxes incurred in connection with, relating to or arising out of the
Business prior to the Closing that are not yet due or owing as of the Closing,
Seller will (i) timely file when due all returns and reports for such Taxes,
including information returns, that are required to be filed, (ii) timely pay
when due the Taxes that are shown to be due pursuant to such returns or reports,
and (iii) timely pay when due all other such Taxes not required to be reported
on returns.
5.7 Financial Reports. By October 31, 1996, Seller shall furnish
-----------------
Buyer with a copy of the September 30, 1996 quarterly financial statements for
the Business (consisting of unaudited balance sheet and income and cash flow
statements for the quarter and the nine months ended September 30, 1996). In
addition, within thirty (30) days after the end of each month during the period
from the date of this Agreement to the Closing Date, Seller shall furnish Buyer
with a copy of the monthly financial statements for the Business prepared after
September 30, 1996 (consisting of unaudited balance sheet and income and cash
flow statements for each such month and the fiscal year to the end of such
month). All of the foregoing financial statements shall comply with the
requirements concerning financial statements set forth in Section 3.4. In
addition, Seller shall furnish Buyer, upon request, with copies of regular
management reports, if
44
any, concerning the operation of the Business within ten (10) days after such
reports are prepared.
5.8 Consents. Each of the parties hereto will use its reasonable
--------
best efforts and will cooperate with the other parties hereto to obtain all
consents required from third Persons, whose consent or approval is required
pursuant to any Contract or Permit to consummate the transactions contemplated
hereby. Prior to the Closing, Seller shall deliver to Air Products all notices,
opinions and other documents and instruments required to assign to Buyer the DNT
Contracts and all of Seller's rights as general partner under the Partnership
Agreement.
5.9 Real Estate Matters.
-------------------
(a) Surveys. As soon as practicable after the date of this
-------
Agreement, Buyer shall obtain current, as-built ALTA surveys of the Owned Real
Property and the Excluded Real Property; the costs of such surveys shall be
shared equally by Buyer and Seller, and Seller shall cooperate with the
surveyors selected by Buyer. Such surveys shall be performed by licensed
surveyors designated by Buyer and shall be certified to Buyer, Buyer's title
insurance companies and others as Buyer shall reasonably request; with respect
to the Excluded Real Property, such surveys shall be certified to Seller and
others as Seller shall reasonably request. The surveys shall be in form
sufficient to cause Buyer's title insurance companies to insure such surveys,
and shall meet all detail and accuracy requirements adopted by ALTA and ACSM
which are selected by Buyer. The legal descriptions contained in the deeds to be
delivered by Seller, and in the Cross Easement Agreement and First Offer
Agreement, shall be based upon such surveys.
(b) Subdivision Approval. Seller shall, at its sole cost, obtain
--------------------
any necessary consents and approvals of, and make all necessary filings with,
any Governmental Entities or other Person in accordance with, and as required
by, any Laws governing the subdivision of Real Property that apply to the sale
or lease of any of the Acquired Real Property to Buyer. Notwithstanding the
foregoing, in the alternative, Seller may obtain written waivers or exemptions
in favor of Seller and Buyer from the Calcasieu Parish Police Jury and the
Calcasieu Parish Division of Planning and Development stating that the Laws
governing the subdivision of Real Property will not have to be complied with in
connection (i) with the sale and lease of the Acquired Real Property
contemplated hereby, (ii) any future sale, lease or mortgage thereof (assuming
the same configuration of parcels of Acquired Real Property as in effect on the
Closing Date), and (iii) further stating that such Laws would not prohibit the
present or future issuance of building permits or the provision of utility
services by the Parish of Calcasieu with respect to the Acquired Real Property
(assuming the same configuration of parcels of Acquired Real Property as in
effect on the Closing Date) (such waivers or exemptions to be in form and
substance reasonably acceptable to Buyer and Buyer's title insurance company);
provided that the requirement set forth in clause (ii) above shall be deemed
--------
satisfied as long as the face of the waivers or exemptions received from the
Police Jury and the Division of Planning and Development do not contain anything
which would give Buyer a reasonable concern that any such future action referred
to in such clause (ii) would not be so approved (or not receive such a
45
waiver or exemption) at such future time. Seller shall use reasonable best
efforts to comply, prior to the Closing, with the foregoing provisions of this
Section 5.9(b), and Buyer shall use its reasonable best efforts to assist Seller
in this regard. Buyer shall have the right to participate in (and Seller shall
provide Buyer with reasonable notice of) all meetings and other efforts in this
regard. If Seller shall not have been able, prior to the Closing, to comply with
said provisions, Seller shall continue to use reasonable best efforts to comply
after the Closing (and Buyer shall continue to use its reasonable best efforts
to assist Seller), and, at the Closing, in lieu of the delivery of any deed for
which such compliance is necessary, Seller and Buyer shall enter into a lease
(the "Triple Net Lease") of the land and appurtenances that were to be conveyed
by said deed(s) (the "Leased Lake ▇▇▇▇▇▇▇ Real Property") and Seller shall
deliver a first priority mortgage of the Leased Lake ▇▇▇▇▇▇▇ Real Property and
Seller's interest in the Triple Net Lease and all other property owned by it in
Lake Charles, Louisiana, subject only to Permitted Liens, to and in favor of
Buyer (the "Seller Mortgage") on the terms outlined on Schedule 5.9(b), which
Triple Net Lease and Seller Mortgage shall be duly executed and acknowledged, in
recordable form and in form and substance reasonably satisfactory to Buyer and
Seller. The Triple Net Lease and Seller Mortgage shall have the same substantive
effect as if the Leased Lake ▇▇▇▇▇▇▇ Real Property had been conveyed to Buyer at
the Closing pursuant hereto. All buildings and improvements on the Leased Lake
▇▇▇▇▇▇▇ Real Property shall be conveyed to Buyer at the Closing pursuant hereto
in any event. For all purposes hereof, except delivery of said deed, the Leased
Lake ▇▇▇▇▇▇▇ Real Property shall be deemed to be Owned Real Property (with the
effect that, among other things, Buyer shall receive leasehold and mortgage
title insurance for the Triple Net Lease and Seller Mortgage substantially in
accordance with Section 6.1(f)), and all other provisions of this Agreement that
require modification so that the Buyer's acceptance of the Triple Net Lease is
otherwise the equivalent of the conveyance of the Owned Real Property to Buyer,
and so that Buyer shall have the obligation to consummate the Closing without
acquiring fee title to the Owned Real Property (provided that all other
conditions precedent to Buyer's obligations under this Agreement have been
satisfied as of the Closing), shall be made at the reasonable request of Buyer
or Seller to ensure that Buyer is in the same position under the Triple Net
Lease and Seller Mortgage as if Buyer had acquired the Owned Real Property.
(c) Cross-Easement Agreement. If an Excluded Real Property or an
------------------------
Owned Real Property (in each case, a "Benefited Property") now has access
through, or receives a utility service, raw material or other product through
pipes, wires or other conduits over, across or through, an Owned Real Property
or an Excluded Real Property (in each case, a "Burdened Property"), at Closing
the parties hereto shall enter into an agreement, duly executed and acknowledged
and in recordable form ("Cross Easement Agreement"), providing for the grant (or
reservation) of a perpetual, non-exclusive easement for (i) access and right of
way over the portions of the Burdened Property now used for such access and
right of way, by foot, railcar or other vehicle, to gain access to the Benefited
Property for the uses to which such Benefited Property is currently used and
(ii) the right to maintain, repair and replace existing pipes, wires, other
conduits and related poles and equipment with substantially similar facilities
in the present location. Without limiting the foregoing, Seller and Buyer also
agree that the terms and provisions contained in this Section 5.9(c) and the
Cross Easement Agreement shall also apply to easements granted across Burdened
Property for the benefit of third party tenants located as of the date of this
Agreement on a Benefited Property, in addition to the owner of such Benefited
46
Property. Furthermore, the Cross Easement Agreement shall contain provisions
permitting either party thereto, subject to the approval of the other (such
approval not to be unreasonably withheld), to establish additional easement
areas for future uses, including the installation, maintenance, repair and
replacement of additional pipelines to transport raw materials and other
chemicals and substances. In this regard, Seller agrees that Buyer shall have
an easement for a new pipeline to transport chlorine along a direct route from
the Owned Real Property, across the Excluded Real Property, to real property now
owned by PPG Industries. The owner of the Burdened Property shall have no
obligation to repair or maintain the easement area. The Burdened Property's
owner may, at its cost, use and improve the easement area and grant rights
therein to others; provided, that the Benefited Property's easement and right of
--------
way is not materially interfered with and the use thereof is not materially more
costly ("Materially Reduced"). The Burdened Property's owner may relocate the
easement area, in which event it shall relocate all permitted roads, railroad
tracks, pipes, wires, other conduits and related poles and equipment, at its
cost, provided the Benefited Property's owner's use thereof is not Materially
Reduced. The Benefited Property's owner shall keep all permitted roads,
railroad tracks, pipes, wires, other conduits and related poles and equipment in
good and safe condition and in compliance with Law. The Benefited Property's
owner shall be liable for and indemnify and hold the Burdened Property's owner
harmless from and against all Losses to the extent caused by (A) a breach of the
Cross Easement Agreement by the Benefited Property's owner, its officers,
employees, tenants, customers, suppliers, invitees and others permitted on its
property, (B) the Release of Contaminants on the Burdened Property, or the
failure to comply with Environmental Law, in connection with the exercise of
such easement rights or (C) any other negligent or willfully wrong act or
omission on the Burdened Property by the Benefited Property's owner, its
officers, employees, tenants, customers, suppliers, invitees and others
permitted on its property. The parties shall include in the Cross Easement
Agreement such other provisions, not inconsistent with the provisions hereof, as
either party reasonably shall request, but if agreement is not reached before
the Closing, the Closing shall not be delayed by reason thereof, and the
parties, after the Closing, shall amend the Cross Easement Agreement to reflect
such additional provisions.
(d) Right of First Offer.
--------------------
(i) From time to time from and after the Closing Date to
the tenth anniversary of the Closing Date, Seller shall notify Buyer in
writing (each, a "First Offer Notice") of Seller's intention to sell any or
all of the Option Real Property prior to negotiating with any third party
purchaser (it being understood that the sale of one or more parcels of
Option Real Property shall not alter Buyer's right of first offer set forth
in this Section 5.9(d) with respect to the other parcels of Option Real
Property). The First Offer Notice shall specify which of the parcels of the
Option Real Properties Seller intends to sell (the "Specified Properties").
Buyer shall then have the option during the 30 days following receipt of
the First Offer Notice to submit in writing to Seller an offer for all (but
not less than all) of the Specified Properties (such offer, as it may have
been last amended by Buyer from time to time during the applicable First
Offer Period, the "First Offer"). The First Offer shall set forth in
reasonable detail the price and any other material terms of such offer.
Seller shall then either accept the First Offer and sell the
47
Specified Properties to Buyer in accordance therewith, or decline the First
Offer. If Seller declines the First Offer, at Buyer's request, Seller and
Buyer shall enter into good faith negotiations for a 15-day period
regarding modifications to the First Offer, during which period Seller may
accept or decline the First Offer (as so modified). The "First Offer
Period" with respect to the Specified Properties commences on the date on
which the First Offer Notice is delivered and ends on the earlier of the
date on which such 15-day period ends or on which Seller declines the First
Offer relating to such Specified Properties if Buyer elects not to request
such 15-day period.
(ii) Prior to the end of the applicable First Offer Period
with respect to given Specified Properties, Seller shall not negotiate with
any prospective third party purchaser for such Specified Properties. If
Seller shall not have accepted the First Offer for such Specified
Properties by the end of the applicable First Offer Period with respect
thereto, then Seller shall be free to enter into negotiations with third
parties regarding the Specified Properties, and to enter into a definitive
agreement to sell all (but not less than all) the Specified Properties to a
third party on terms that, in the aggregate, are no more favorable to the
third party purchaser than those contained in the First Offer (provided,
--------
that if the price offered by the third party and accepted by Seller is more
than 2% below that contained in the First Offer, the terms of such third-
party offer shall be deemed to be more favorable to such third party and
such sale shall not be consummated). In the event that such permitted
definitive agreement to sell the Specified Properties is not executed
within 180 days, then such Specified Properties shall again be subject to
Buyer's right of first offer set forth in this Section 5.9(d).
(iii) Buyer's rights hereunder shall be set forth in a
separate agreement to be entered into at the Closing, duly executed and
acknowledged and in recordable form ("First Offer Agreement"). The parties
hereto shall include in the First Offer Agreement such other provisions as
may be necessary to comply with any applicable Laws, including Louisiana
Civil Code Article 2628.
(e) Inducements. Seller and Buyer shall use reasonable best
-----------
efforts to arrange for all Inducements, to the extent relating to the Business
or the Acquired Assets, to be transferred to Buyer within ninety (90) days
following the Closing. In addition, no later than 30 days after the Closing, the
parties hereto shall identify and agree upon the portions of the Inducement
Contracts set forth on Part B of Schedule 3.11(b) which relate to the Business
or the Acquired Assets, including the extent to which any contract that includes
certain property which is not a part of the Business or the Acquired Assets
should be retained by Seller (with the balance of such contract to be
transferred to Buyer).
5.10 Environmental. (a) Seller shall give Buyer and its
---------------
representatives (including Buyer's environmental consultants) upon reasonable
notice, full access to the Business Real Property and to all of Seller's books
and records pertaining to environmental, health, and safety matters and to
compliance with any Environmental Law, reasonably necessary for the purpose of
Buyer's conducting a thorough and comprehensive Phase I environmental assessment
of the Business Real Property. Prior to the Closing, Buyer will not be
permitted to
48
conduct any sampling or drilling at the Business Real Property. No investigation
or receipt of information by Buyer pursuant to, or in connection with, this
Section 5.10 shall diminish or obviate any of the representations, warranties,
covenants or agreements of Seller under this Agreement or the conditions to the
obligations of Buyer under this Agreement.
(b) (i) Until a No Further Action Letter is obtained as to
any Known Contaminant in a Known Contaminated Area, Seller shall pursue in
an expeditious, reasonably cost-efficient manner Remedial Action of such
Known Contaminant in such Known Contaminated Area, but only to the extent
necessary to comply with Environmental Laws. Seller shall bear all costs of
the Remedial Action relating thereto. After the Closing, Buyer shall
provide access to Seller during normal business hours upon reasonable prior
notice for the purpose of allowing Seller to perform any such Remedial
Action.
(ii) From and after the Closing and until Seller's receipt
of a No Further Action Letter as to all Known Contaminants in all Known
Contaminated Areas, except as required (1) under Environmental Laws or (2)
to enforce Buyer's rights under this Agreement (except that the exception
in this clause (2) shall not be construed to permit Buyer to conduct
sampling or drilling on the Business Real Property prior to making a claim
for indemnity under this Agreement other than sampling or drilling to
establish baselines which are intended to determine whether environmental
losses are Unknown Environmental Losses or post-Closing environmental
losses), from and after the Closing, Buyer shall not intentionally take any
actions primarily for the purpose of (A) increasing or exacerbating
Seller's liability for Remedial Action at any Known Contaminated Area, (B)
having any Contaminant classified as a Known Contaminant under this
Agreement or (C) increasing the geographic scope of Known Contaminated
Areas.
(iii) If prior to the earlier to occur of (A) Seller's
receipt of a No Further Action Letter as to all Known Contaminants in all
Known Contaminated Areas or (B) the date that is 18 months after the
Closing Date, Buyer provides data to the LDEQ from Buyer's invasive testing
or excavation at the Business Real Property (except for such testing,
excavation and provision of data required by Environmental Laws, including
the LDEQ's groundwater certification policy) that results in Environmental
Losses arising from Known Contaminants in Known Contaminated Areas that
exceed Environmental Losses for which Seller would otherwise be responsible
under this Agreement but for Buyer's provision of such data to the LDEQ
("Excess Environmental Loss"), then such Excess Environmental Loss shall be
designated an Unknown Environmental Loss for purposes of this Agreement.
(iv) In the event that a dispute arises under paragraph
(iii) above with respect to (A) whether, after the Closing, Buyer conducted
invasive testing or excavation at the Business Real Property (except as
required by Environmental Laws), (B) whether any resulting data was
submitted to the LDEQ (except as required by Environmental Laws, including
the LDEQ's groundwater certification policy),
49
(C) whether Buyer's data provided to the LDEQ resulted in an Excess
Environmental Loss or (D) the amount of such Excess Environmental Loss,
then the parties hereto shall select a nationally recognized environmental
consultant to arbitrate such dispute in accordance with the procedures set
forth in subparagraph (v) below. If the parties hereto cannot agree on one
such environmental consultant within thirty (30) days, each party hereto
shall select its own nationally recognized environmental consultant within
thirty (30) days thereafter, which consultants shall jointly select a third
environmental consultant to arbitrate such dispute. The agreed upon or
selected environmental consultant shall be deemed the "Environmental
Arbitrator." The arbitration provided for in this subparagraph (iv) and in
subparagraph (v) below shall be such parties' exclusive remedy in respect
of a dispute concerning subparagraphs (iii) or (iv) of this Section
5.10(b).
(v) In accordance with the then current Expedited
Procedures of the Commercial Arbitration Rules of the American Arbitration
Association, the parties hereto shall submit (A) disputes related to
Section 5.10(b)(iv)(A), (B), (C) or (D) to the Environmental Arbitrator for
a final, binding resolution and (B) with respect to disputes related to
Section 5.10(b)(iv)(D), their respective estimates of the Excess
Environmental Loss, and the Environmental Arbitrator shall choose one or
the other of such estimates as the final amount of Excess Environmental
Loss. The arbitration shall be conducted in a location selected by the
Environmental Arbitrator, with preference given to New York, New York. No
transcript or recording shall be made of any arbitration session. The
decision of the Environmental Arbitrator shall be final and binding on the
parties for all purposes and may be entered in any court of competent
jurisdiction. The losing party shall pay the expenses of the Environmental
Arbitrator; provided, that Seller shall be the losing party unless each of
--------
the disputes relating to Sections 5.10(b)(iv)(A), (B), (C) and (D) are
decided in favor of Seller.
(c) Seller and Buyer hereby agree that the leases covering the
railcars (the "Railcars") containing TDI dissolved in MCB (with process
impurities) ("TDI Matter"), of which as of the date of this Agreement Seller
represents and warrants to Buyer that there are leases covering no more than 128
Railcars, constitute Acquired Assets subject to the following terms and
conditions. As soon as practicable after the date of this Agreement, Buyer and
Seller shall meet with the LDEQ to request that agency's approval of Seller's
pre-Closing inventory and storage practices, reblending, reworking, shipping and
incineration operations relating to the TDI Matter (a description of such
practices and operations is attached hereto as Schedule 5.10(c) (such process
with any changes approved by Buyer (such approval not to be unreasonably
withheld) is referred to as "Seller's Process")) (it being understood and agreed
that, prior to the Closing, neither party hereto shall initiate any contact with
the LDEQ with respect to the TDI Matter or Seller's Process without the other
party hereto and if the LDEQ contacts either party hereto with respect to such
matters, such party shall promptly notify the other party of such contact and
the substance thereof unless prohibited by the LDEQ). The parties hereto shall
make a joint presentation to the LDEQ in support of such request, which
presentation shall contain a full and complete description of the past TDI
Matter storage practices and the proposed solution for rework and disposal
thereof, which proposal shall be consistent with Seller's Process. If, in
50
the reasonable good faith judgment of Buyer, the LDEQ objects to Seller's
Process, then within 25 weeks (or such earlier period as the LDEQ may require)
after Buyer delivers written notice (the "Buyer Objection Notice") to Seller of
such judgment (or such earlier time as may be required by Law) Seller will, at
its own cost and expense, remove all of the Railcars containing TDI Matter from
the Lake ▇▇▇▇▇▇▇ ▇▇▇▇▇ facility site and cause the disposition of such Railcars
and TDI Matter in accordance with all applicable Laws and such Railcars (and
related leases) and TDI Matter will not constitute Acquired Assets or Assumed
Liabilities. At the Closing, if Buyer has not delivered the Buyer Objection
Notice by such time, the leases relating to the Railcars containing TDI Matter
as of the Closing (but in any event leases covering no more than 128 Railcars)
and the TDI Matter contained therein shall constitute Acquired Assets and Buyer
shall thereafter undertake reasonable best efforts to rework and incinerate such
TDI Matter as part of its normal business operations at and on the Acquired Real
Property to the maximum extent possible without adversely affecting such normal
operations of any portion of the Business. Buyer and Seller both acknowledge
that it is uncertain to what extent that reworking can be accomplished without
adversely affecting normal business operations (it being understood and agreed
that Buyer shall not be required to take any action under the immediately
preceding sentence that could interfere with the performance or productivity of
the Acquired Assets or the Business).
To the extent that there are any Excess TDI Matter Railcars at the end
of the Initial TDI Matter Period or at the end of each succeeding calendar
quarter thereafter through June 30, 1998, (i) Buyer shall ship the Excess TDI
Matter Railcars off-site for incineration at Seller's cost and expense on
commercially reasonable terms; or (ii) if Buyer is unable to transport and
arrange for off-site incineration on commercially reasonable terms, Seller
shall, promptly upon the request of Buyer, (A) take possession of such Excess
TDI Matter Railcars including the TDI Matter contained therein, (B) assume all
leases related to the Excess TDI Matter Railcars, (C) arrange for off-site
transportation and disposal of such TDI Matter, and (D) permanently remove all
of the Excess TDI Matter Railcars from the Acquired Real Property. Buyer shall
use reasonable best efforts to inform Seller of the cost of incinerating the TDI
Matter off-site at least two Business Days prior to any such incineration. In
addition, at any time prior to June 30, 1998, and from time to time, Seller
shall have the option, upon prior notice to Buyer, to take back possession of
all TDI Matter remaining at the time of such notice and the Railcars containing
such TDI Matter (and related leases) (or any Excess TDI Matter Railcars (and
related leases) and the TDI Matter contained therein as of the end of the
Initial TDI Matter Period or any succeeding calendar quarter), in which event
Seller shall arrange, at Seller's cost and expense, for the prompt removal of
the same from the Acquired Real Property, and all obligations of Buyer with
respect thereto shall thereupon cease and terminate upon such request by Seller.
In the case of either of the immediately preceding and third preceding
sentences, the TDI Matter and Railcars (and related leases) repossessed by
Seller pursuant to either such sentence and the associated leases shall be
deemed to have constituted Excluded Assets and Non-Assumed Liabilities from and
after the Closing for all purposes of this Agreement. The net profits derived
from reworking and incinerating the TDI Matter (whether on-site or off-site)
(i.e., the amount realized by Buyer from the recovery of TDI and MCB from the
TDI Matter less the costs ("TDI Matter Costs"), including allocations of plant
overhead on the same basis as historically utilized by Seller with respect to
allocation of overhead among all of the plants at the Lake ▇▇▇▇▇▇▇,
51
Louisiana facility, of reworking and incinerating, storing and inventorying such
TDI Matter and any other materials remaining after such reworking (other than
the recovered TDI and MCB)) shall be shared equally by Buyer and Seller. For
purposes of the immediately preceding sentence, "amount realized" shall mean (x)
with respect to MCB, (aa) for MCB that is recovered after the Closing Date and
prior to July 1, 1998 which Buyer is able to use and consume in a commercially
reasonable period of time, the average prices therefore set forth in the
Chemical Marketing News published during the quarter in which such MCB is
recovered, (bb) if Buyer is not able to use and consume such MCB as provided in
the foregoing clause (aa), the best market price at which Buyer, using its
reasonable best efforts, is able to sell such MCB or (cc) if Buyer is not able
to sell such MCB as provided in the foregoing clause (bb), zero ($0.00), or (y)
with respect to TDI, the amount equal to the product of the then average sales
price for TDI of Buyer during such period and the volume of recovered TDI
(assuming a 90% yield from underlying TDI Matter processed less the aggregate
amount purged in the incineration process). On a quarterly basis, Buyer shall
provide Seller with a reasonably detailed report containing information relating
to the calculation of such net profits, and Seller shall have the right to audit
at its own expense any such information. Seller shall indemnify and hold
harmless Buyer from any Losses incurred by Buyer in connection with the TDI
Matter and the Railcars (and the leases thereof) and the foregoing actions,
including the reworking and incineration thereof and any fines or penalties
incurred in connection therewith, including fines imposed due to Seller's
Process, including Seller's storage of TDI Matter, violating any Laws; provided,
--------
however, that Seller shall not be required to indemnify Buyer pursuant to this
-------
sentence (i) for TDI Matter Costs to the extent they are offset by Buyer's share
of the net profits or (ii) to the extent any Losses result from Buyer's gross
negligence or willful misconduct in implementing the express terms of Seller's
Process. Without limitation, the foregoing indemnity obligation of Seller shall
include any Losses incurred by Buyer under the leases relating to the Railcars
for damages to the Railcars caused by the TDI Matter and for returning such
Railcars to the lessor thereof or any other Person upon termination of the
related lease and under all indemnity provisions of such leases, subject to the
terms of clause (ii) of the proviso of the immediately preceding sentence. Buyer
shall be indemnified and reimbursed by Seller for all such Losses, including TDI
Matter Costs, referred to in this paragraph no less frequently than quarterly.
To the extent Seller is entitled to a share of net profits under this Section
5.10(c), Buyer shall make such payments quarterly as soon as practicable after
providing Seller with the requisite calculation of net profits.
(d) As soon as practicable, but in no event more than four months
after the date of this Agreement, Seller shall undertake all steps necessary to
commission and implement a complete study of certain process sewers associated
with the TDA/TDI processing unit areas, including associated drains, piping,
outfalls, and treatment facilities. The study shall include internal inspections
of the process sewer facilities to be conducted by drawing a remotely operated
video camera system through the facilities to allow observation of internal
surfaces for the purpose of determining if any leakage is, or could reasonably
be expected to be, caused by slumping, cracking, fracturing, or other defects in
the facilities. The results of this study shall be presented in a written report
(the "Sewer Report"), a copy of which shall be provided to Buyer as soon as
practicable, but in any event no later than four months after the date of this
Agreement. The Sewer Report shall set forth (i) any areas that are in need of
repair to avoid or prevent leakage, (ii) specific repairs to be made, and (iii)
any Contamination in or around the process
52
sewer areas that, pursuant to the Resource Conservation and Recovery Act, the
Hazardous and Solid Waste Amendments of 1984, and/or applicable standards
promulgated under Louisiana law or imposed by the LDEQ, is in need of any
Remedial Action ((i), (ii) and (iii) collectively, the "Sewer Repairs"). As soon
as practicable after the issuance of the Sewer Report, Seller shall make the
Sewer Repairs. Furthermore, as soon as practicable after the issuance of such
report, Seller shall remove from the Business Real Property any debris and other
material, including contaminated soil, generated in the course of performing the
Sewer Study and effecting Sewer Repairs. In the event that the Sewer Repairs are
not commenced or completed before the Closing Date, the Closing shall not be
delayed by reason thereof, and after the Closing Date, Buyer shall provide
access to Seller during normal business hours upon reasonable prior notice for
the purpose of allowing Seller to complete the Sewer Repairs. If the Sewer
Repairs are not completed before the Closing, such Sewer Repairs shall be
completed by Seller as soon as practicable after the Closing. Seller shall bear
the costs of (A) the aforementioned study, including the costs associated with
preparation of the Sewer Report, and (B) the Sewer Repairs.
(e) On or before the Closing Date, Seller shall use reasonable best
efforts to conduct an asbestos survey of the Business Real Property and, as soon
as practicable after such survey is completed, to remove or ▇▇▇▇▇ asbestos
identified in such survey as necessary in order to comply with Environmental
Laws. Seller shall provide Buyer with a copy of the survey within ten days of
its completion. In the event that any such necessary removal or abatement is
not completed before the Closing Date, the Closing shall not be delayed by
reason thereof, and Buyer shall provide access to Seller during normal business
hours, upon reasonable prior notice, for the purpose of allowing Seller to
complete, and Seller shall complete, such removal or abatement as soon as
practicable, but in no event more than twelve months after the date of this
Agreement, and with due regard for non-interference with Buyer's operations.
Seller shall bear the cost of such survey, and all costs of such removal or
abatement.
(f) On or before the Closing Date, Seller shall use reasonable best
efforts to remove from the Acquired Real Property (i) all Hazardous Waste in
containers having a capacity of 55 gallons or more and (ii) any marked drums not
containing raw materials or Inventory and all unmarked drums. In the event that
such removal is not completed before the Closing Date, the Closing shall not be
delayed by reason thereof, and after the Closing Date Buyer shall provide Seller
access to the Acquired Real Property during normal business hours, upon
reasonable prior notice, for the purpose of allowing Seller to complete such
removal, which removal must be completed within 30 days after the Closing Date.
Seller shall bear the costs of removal, transportation and disposal thereof. To
the extent that Seller does not remove any Excluded Assets from the Acquired
Real Property prior to the Closing, at Buyer's option, such assets shall be
deemed to have been abandoned by Seller and, in Buyer's sole discretion and for
no additional consideration, Buyer may retain possession of any of such
abandoned Excluded Assets and such assets shall thereafter be deemed to be
Acquired Assets.
(g) As soon as practicable after the date hereof, and subject to the
provisions of Section 5.10(h), Seller shall use reasonable best efforts to cause
all Governmental Entities with the authority to issue Environmental Permits
relating to Acquired Assets on the Business Real Property to transfer to Buyer
all Environmental Permits necessary for Buyer's
53
operation of such Acquired Assets. Seller shall retain the Environmental Permits
and remain the permittee for all Environmental Permits associated solely with
the Excluded Assets. The Environmental Permits to be transferred to Buyer are
set forth on Schedule 5.10(g)(i); the Environmental Permits to be retained by
Seller are set forth on Schedule 5.10(g)(ii). In the event that Seller is unable
to effect a bifurcation of permits as described above and Buyer becomes the
permittee in connection with any assets or real property other than the Acquired
Assets or the Business Real Property ("Buyer's Non-Bifurcated Permits"), the
Closing shall not be delayed by reason thereof, and Seller shall indemnify
Buyer, pursuant to Section 8.2(a)(ix), to the extent that any Losses are caused
by Seller's actions or omissions associated with Buyer's Non-Bifurcated Permits.
In the event that Seller is unable to effect a bifurcation of permits as
described above and Seller remains the permittee in connection with certain of
the Acquired Assets or Business Real Property ("Seller's Non-Bifurcated
Permits"), the Closing shall not be delayed by reason thereof, and Buyer shall
indemnify Seller pursuant to Section 8.3(a)(vi) to the extent that any Losses
(other than Environmental Losses) are caused by Buyer's actions or omissions
associated with Seller's Non-Bifurcated Permits.
(h) Seller represents and warrants to Buyer that the
Environmental Permits currently relating to both Acquired Assets and Excluded
Assets that are to be shared between the parties hereto are set forth on
Schedule 5.10(h) ("Shared Permits"). As soon as practicable after the date of
this Agreement, Seller shall use reasonable best efforts to cause all
Governmental Entities with the authority to modify those Shared Permits to list
Seller and Buyer as joint permittees effective as of the Closing Date; provided,
--------
that the Closing shall not be delayed whether or not such actions have been
taken by such Government Entities. As soon as practicable after the Closing,
Seller and Buyer shall use reasonable best efforts to bifurcate the
Environmental Permits and pending permit actions to the extent set forth on
Schedule 5.10(h) and to the extent such bifurcation does not result in
substantial increased costs to either party. Until or unless Shared Permits are
bifurcated, Seller shall indemnify Buyer pursuant to Section 8.2(a)(ix) to the
extent any Losses in connection with the Shared Permits are caused by Seller's
actions or omissions and Buyer shall indemnify Seller pursuant to Section
8.3(a)(vi) to the extent any Losses (other than Environmental Losses) in
connection with the Shared Permits are caused by Buyer's actions or omissions.
5.11 Reasonable Best Efforts. Without limiting the specific
-----------------------
obligations of any party hereto under any covenant or agreement hereunder, each
party hereto shall use reasonable best efforts to take all action and do all
things necessary in order to promptly consummate the transactions contemplated
hereby, including satisfaction, but not waiver, of the Closing conditions set
forth in Article VI.
5.12 Negotiations. From the date hereof until the termination of
------------
this Agreement in accordance with its terms, Seller, on behalf of itself and its
Affiliates, agrees that Seller and its Affiliates will negotiate exclusively and
in good faith with Buyer with respect to any transaction involving the sale,
transfer or other disposition of the Acquired Assets or the Business; and
neither Seller nor its Affiliates nor any of its officers, directors, employees,
lenders, investment banking firms, advisors or other agents, or any Person
acting on its behalf will solicit any inquiries or proposals by, or engage in
any discussions or negotiations with, or
54
furnish any nonpublic information to or enter into any agreement with any Person
other than Buyer concerning the sale or other disposition of the Acquired Assets
or the Business or the merger, consolidation, sale of securities or other
transaction involving Seller, if such merger, consolidation, sale or other
transaction would be inconsistent, in any respect, with the transactions
contemplated by this Agreement, and will promptly notify Buyer of the substance
of any inquiry or proposal concerning any such transaction that may be received
by Seller or its Affiliates.
5.13 Supplemental Information. Seller shall provide Buyer, within
------------------------
five (5) days of the execution or the date of receipt thereof, a copy of (a)
each Contract (other than with respect to which the Business' total annual
liability or expense is less than $250,000 per such Contract) entered into by
Seller after the date hereof and prior to the Closing Date, (b) a copy of any
written notice for assessments for public improvements against the Acquired Real
Property received after the date hereof and prior to the Closing Date, (c) a
copy of the filing of any condemnation, expropriation, eminent domain or similar
proceeding affecting all or any portion of any of the Acquired Real Property
received after the date hereof but prior to the Closing Date, and (d) a copy of
any Contract where Seller is a lessee relating to the use or occupancy of the
Leased Real Property and where such Contract involves annual payments in excess
of $250,000 entered into by Seller after the date hereof and prior to the
Closing Date.
5.14 Foreign-Held Assets. At the Closing, Seller shall cause its
-------------------
subsidiaries to transfer to Buyer the assets described in the second paragraph
of Schedule 3.24 and thereafter such assets shall be deemed to be "Acquired
Assets" for all purposes of this Agreement and no consideration shall be payable
therefor by Buyer except for the Final Purchase Price payable hereunder.
5.15 Removal of Material Liens. In the event that any Lien or
-------------------------
Liens set forth on Part E of Schedule 1.1, individually or in the aggregate,
materially impair the present use, or any future use contemplated by the
Management Plan, of any Acquired Asset or portion thereof, and Buyer so notifies
Seller, from time to time, prior to Closing, or within 120 days after the
Closing Date, Seller shall, within 180 days following the receipt of any such
notice from Buyer, (a) cause such Lien or Liens to be removed or otherwise no
longer to be a Lien or Liens, (b) modify such Lien or Liens in such a manner
that it or they shall no longer, individually or in the aggregate, materially
impair the present use, or any future use contemplated by the Management Plan,
of any Acquired Asset or portion thereof, or (c) bond to the reasonable
satisfaction of Buyer any such Lien that is for a calculable monetary sum.
Notwithstanding anything herein to the contrary, no action or inaction by Seller
under this Section 5.15 shall constitute a failure to satisfy any condition set
forth in Section 6.1.
ARTICLE VI
----------
CONDITIONS PRECEDENT
--------------------
6.1 Conditions Precedent to Obligations of Buyer. The obligations
--------------------------------------------
of Buyer to purchase the Acquired Assets and assume the Assumed Liabilities and
to consummate the
55
other transactions contemplated hereby are subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions (any one or more
of which may be waived in writing in whole or in part by Buyer in its sole
discretion):
(a) Representations, Warranties and Covenants. Each of the
-----------------------------------------
representations and warranties of Seller contained in this Agreement and in any
certificate, document or instrument delivered in connection herewith shall be
true and correct in all material respects on and as of the date of this
Agreement and at and as of the Closing with the same effect as though such
representations and warranties had been made at and as of the Closing, except
for representations and warranties that speak as of a specific date or time
other than the Closing (which need only be true and correct in all material
respects as of such date or time); provided, however, that if any such
-------- -------
representation or warranty is already qualified by materiality, for purposes of
determining whether this condition has been satisfied, such representation or
warranty as so qualified shall be true and correct in all respects. Seller
shall have performed and complied in all material respects with all covenants
and agreements required by this Agreement to be performed or complied with by it
at or prior to the Closing. Seller shall furnish Buyer with a certificate dated
the Closing Date and signed by a senior executive officer of Seller to the
effect that the conditions set forth in this Section 6.1(a) have been satisfied.
(b) HSR Act. The applicable waiting period under the HSR Act with
-------
respect to the transactions contemplated hereby shall have expired or been
terminated.
(c) Required Consents. Subject to the following provisions of this
-----------------
Section 6.1(c), Seller shall have obtained (i) the statutory and regulatory and
other third party consents and approvals listed on Schedule 6.1(c) and (ii) all
other statutory and regulatory consents and approvals which are required under
any applicable Laws in order to consummate the transactions contemplated hereby
and to permit Buyer to conduct the Business as conducted as of the date of this
Agreement and, other than with respect to the DNT Contracts or any Contracts
shown on Part A of Schedule 3.6(a) to require consent to assignment, all other
necessary consents and approvals of third Persons to the transactions
contemplated hereby, other than those the failure of which to obtain,
individually and in the aggregate, would not have a Material Adverse Effect. If
any consent with respect to the assignment of any Contract required pursuant to
the immediately preceding sentence has not been obtained prior to the Closing,
the condition set forth in the immediately preceding sentence shall be deemed
satisfied with respect to such Contract if, at the Closing Seller has provided
Buyer with alternative, binding contractual arrangements in form reasonably
satisfactory to Buyer which provides Buyer with the same products and/or
services, for the same price (after giving effect to Seller's contractual
indemnity obligation contemplated hereunder), term and on substantially the same
terms and other conditions and which places Buyer in substantially the same
economic position as if such Contract had been assigned to and assumed by Buyer
at the Closing in accordance herewith. Seller may satisfy its obligations under
the immediately preceding sentence by agreeing to retain the Contract and
provide the products and/or services to Buyer pursuant to a "back-to-back"
arrangement in form and substance reasonably satisfactory to Buyer. In
connection with fulfilling its obligations under this paragraph, Seller shall
reimburse Buyer for additional costs or expenses, if any, incurred by Buyer in
obtaining such products and/or services under the
56
alternative arrangements provided under this paragraph in excess of those
applicable under the Contract. Notwithstanding the foregoing, if the Isophorone
Diamine ("IPDA") Conversion Agreement dated as of January 1, 1995, between
Seller and E.I. du Pont de Nemours is not assigned to Buyer at the Closing due
to the failure to obtain the requisite consent and Seller so requests prior to
the Closing, Buyer will agree to make available to Seller IPD for Seller's use
in complying with the terms of such IPDA agreement and tolling such IPD into
IPDA on Buyer's behalf.
(d) Injunction; Litigation; Legislation. (i) Neither Seller nor Buyer
-----------------------------------
shall be subject to any order or injunction restraining or prohibiting the
consummation of the transactions contemplated hereby, (ii) no action or
proceeding shall have been instituted before any Governmental Entity to restrain
or prohibit, or to obtain substantial damages in respect of, the consummation of
the transactions contemplated hereby, (iii) none of the parties hereto shall
have received written notice from any Governmental Entity of (A) its intention
to institute any action or proceeding to restrain, enjoin or nullify this
Agreement or the transactions contemplated hereby, or to commence any
investigation (other than a routine letter of inquiry, including a routine civil
investigative demand) into the consummation of the transactions contemplated
hereby or (B) the actual commencement of such investigation, (iv) there shall
not be any pending or threatened litigation, suit, action or proceeding by any
Person which would reasonably be expected to materially adversely affect or
limit Buyer's ownership of the Acquired Assets and (v) no statute, rule or
regulation shall have been promulgated or enacted by any Governmental Entity,
which would prevent or make illegal the consummation of the transactions
contemplated hereby.
(e) Intercompany and Intracompany Accounts. Seller shall have caused
--------------------------------------
the cancellation and/or settlement of all intercompany and intracompany accounts
involving the Business, on the one hand, and Seller and any Affiliate of Seller
other than the Business, on the other hand.
(f) Receipt of Title Insurance. At Buyer's expense, First American
--------------------------
Title Insurance Company (or such other title insurance company as Buyer shall
designate) shall be irrevocably committed to issue to Buyer its standard form of
ALTA owner's title insurance policy in an amount designated by Buyer at standard
rates, containing such endorsements and affirmative and extended coverage as
Buyer shall request and with all standard exceptions for such policy deleted,
insuring that (a) upon delivery to such title company for recording of the deeds
executed by Seller in favor of Buyer, Buyer shall have acquired good and
marketable fee simple title to the Owned Real Property, subject only to the
Permitted Liens, and (b) upon delivery to such title company of the Cross
Easement Agreement and the First Offer Agreement, Buyer shall have acquired good
and marketable easement interests with respect to the Excluded Real Property and
rights of first offer with respect to the Option Real Property described in such
respective agreements, subject, in each case, only to Permitted Liens. Buyer
agrees, in good faith, to use reasonable best efforts to obtain such a
commitment for title insurance and shall, among other things, provide its title
insurance company with the ALTA surveys to be obtained by Buyer pursuant to
Section 5.9(a). Seller agrees to provide its reasonable cooperation in this
regard.
57
(g) DNT Partnership. Seller shall have delivered, or caused to be
---------------
delivered, to Buyer and Air Products (i) the opinions referred to in Section
8.2(b) and Section 8.2(d) of the Agreement of Limited Partnership of ▇▇▇▇-DNT
Limited Partnership (the "▇▇▇▇-DNT Limited Partnership"), dated May 9, 1995, by
and between Seller and Air Products and Chemicals, Inc. (the "Partnership
Agreement") and (ii) the written consent of the general partner required under
Section 8.2 of the Partnership Agreement and all other documents, and
information required under Section 8.2(a) and (c) of the Partnership Agreement,
in each case, to permit (x) the transfer and assignment to Buyer of all of
Seller's rights under (including its Interest (as defined in the Partnership
Agreement) in) the ▇▇▇▇-DNT Limited Partnership and the Partnership Agreement
and (y) the admission of Buyer as the general partner of the ▇▇▇▇-DNT Limited
Partnership; provided, however that Buyer shall not be permitted to assert the
-------- -------
failure of this condition if it does not deliver to Seller and Air Products the
assumption agreement contemplated by Section 8.2(a) and the information required
by Section 8.2(c) of the Partnership Agreement.
(h) Subdivision Approval. Seller shall have (i) obtained the
--------------------
subdivision consents and approvals and made all related filings contemplated by
the first sentence of Section 5.9(b), or (ii) obtained the written waivers or
exemptions and other assurances contemplated by the second sentence of Section
5.9(b), or (iii) if Seller shall have been unable to comply with the foregoing
clause (i) or (ii), Seller shall have entered into and delivered to Buyer the
Triple Net Lease and Seller Mortgage and any modification to this Agreement,
required by Section 5.9(b), such Triple Net Lease, Seller Mortgage and
modification to this Agreement to be in form and substance reasonably
satisfactory to Buyer.
(i) Documents. Seller shall have delivered to Buyer at the Closing
---------
such other executed documents and instruments as shall be reasonably necessary
to transfer to Buyer the Acquired Assets as contemplated by this Agreement.
6.2 Conditions Precedent to Obligations of Seller. The obligations
---------------------------------------------
of Seller to sell the Acquired Assets and to consummate the other transactions
contemplated hereby are subject to the satisfaction, on or prior to the Closing
Date, of each of the following conditions (any one or more of which may be
waived in writing in whole or in part by Seller in its sole discretion):
(a) Representations, Warranties and Covenants. Each of the
-----------------------------------------
representations and warranties of Buyer contained in this Agreement and in any
certificate, document or other instrument delivered in connection herewith shall
be true and correct in all material respects on and as of the date of this
Agreement and at and as of the Closing with the same effect as though such
representations and warranties had been made at and as of the Closing, except
for representations and warranties that speak as of a specific date or time
other than the Closing (which need only be true and correct in all material
respects as of such date or time); provided, however, that if any such
-------- -------
representation or warranty is already qualified by materiality, for purposes of
determining whether this condition has been satisfied, such representation or
warranty as so qualified shall be true and correct in all respects. Buyer shall
have performed and complied in all material respects with all covenants and
agreements required
58
by this Agreement to be performed or complied with by it at or prior to the
Closing. Buyer shall furnish Seller with a certificate dated the Closing Date
and signed by a senior executive officer of Buyer to the effect that the
conditions set forth in this Section 6.2(a) have been satisfied.
(b) HSR Act. The applicable waiting period under the HSR Act with
-------
respect to the transactions contemplated hereby shall have expired or been
terminated.
(c) Injunction; Litigation; Legislation. (i) Neither Seller nor
-----------------------------------
Buyer shall be subject to any order or injunction restraining or prohibiting the
consummation of the transactions contemplated hereby, (ii) no action or
proceeding shall have been instituted before any Governmental Entity to restrain
or prohibit, or to obtain substantial damages in respect of, the consummation of
the transactions contemplated hereby, (iii) none of the parties hereto shall
have received written notice from any Governmental Entity of (A) its intention
to institute any action or proceeding to restrain, enjoin or nullify this
Agreement or the transactions contemplated hereby, or to commence any
investigation (other than a routine letter of inquiry, including a routine civil
investigative demand) into the consummation of the transactions contemplated
hereby or (B) the actual commencement of such investigation and (iv) no statute,
rule or regulation shall have been promulgated or enacted by any Governmental
Entity, which would prevent or make illegal the consummation of the transactions
contemplated hereby.
(d) Subdivision Approval. In the event Seller shall have been unable
-------------------
to comply with the provisions of the first or second sentences of Section
5.9(b), Buyer shall have entered into and delivered the Triple Net Lease and any
modification to this Agreement required by Section 5.9(b), and Buyer shall have
accepted the Seller Mortgage, such Triple Net Lease, Seller Mortgage and
modification to this Agreement to be in form and substance reasonably
satisfactory to Seller.
(e) Documents. Buyer shall have delivered to Seller at the Closing
---------
such other executed documents and instruments as shall be reasonably necessary
for the assumption by Buyer of the Assumed Liabilities as contemplated by this
Agreement.
ARTICLE VII
-----------
CERTAIN ADDITIONAL COVENANTS
----------------------------
7.1 Certain Taxes and Expenses. Seller shall be responsible for
--------------------------
all state and local sales, use, transfer, real property transfer, documentary
stamp, recording and other similar taxes arising from and with respect to the
sale and purchase of the Acquired Assets. Except as otherwise expressly
provided in this Agreement, each of the parties hereto shall each bear its
respective accounting, legal and other expenses incurred in connection with the
transactions contemplated by this Agreement.
7.2 Maintenance of Books and Records. Seller and Buyer shall
--------------------------------
cooperate fully with each other after the Closing so that (subject to any
limitations that are reasonably required to preserve any applicable attorney-
client privilege) each party hereto has access to the
59
business records, contracts and other information existing on the Closing Date
and relating in any manner to the Acquired Assets, the Assumed Liabilities or
the conduct of the Business (whether in the possession of Seller or Buyer). No
files, books or records existing on the Closing Date and relating in any manner
to the Acquired Assets or the conduct of the Business prior to the Closing Date
shall be destroyed by any party hereto for a period of six years after the
Closing Date without giving the other party at least 30 days prior written
notice, during which time such other party shall have the right (subject to the
provisions hereof) to examine and to remove any such files, books and records
prior to their destruction. The access to files, books and records contemplated
by this Section 7.2 shall be during normal business hours and upon not less than
two (2) business days prior written request, shall be subject to such reasonable
limitations as the party having custody or control thereof may impose to
preserve the confidentiality of information contained therein, and shall not
extend to material subject to a claim of privilege unless expressly waived by
the party entitled to claim the same.
7.3 Financial Statements. Upon the request of Buyer from time to
--------------------
time, Seller shall, as promptly as practicable (but in no event later than the
earlier of (a) five Business Days prior to the date Buyer is required to file
the same with the Securities Exchange Commission or (b) sixty days after any
such request), provide Buyer with such financial statements relating to the
Business as may be required under Rule 3-05, Article 11 of Regulation S-X or
other rule or regulation promulgated under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, in connection with
the preparation and filing of any registration statement or periodic report of
Buyer and its Parent pursuant to such laws, including unqualified opinions
thereon of independent public accountants and consents therefor as required by
such laws and the rules and regulations thereunder. Buyer will reimburse Seller
for its actual out-of-pocket costs for its independent auditors in complying
with this Section 7.3; provided, however, that on no more than three occasions
-------- -------
may Buyer request that Seller prepare financial statements covering different
periods from any previously requested by Buyer under this Section 7.3.
Notwithstanding anything herein to the contrary, no action or inaction by Seller
under this Section 7.3 shall constitute a failure to satisfy the condition set
forth in the next-to-last sentence of Section 6.1(a).
7.4 Non-Competition/Non-Solicitation. (a) Seller covenants and
--------------------------------
agrees that, if the Closing is consummated, for a period of three years after
the Closing Date, it will not, and will cause its subsidiaries not to, engage in
the Business or any portion thereof in any jurisdiction or location in which
Seller or its subsidiaries engages in the Business as of the day before the
Closing Date; provided, however, that nothing herein shall be construed to
-------- -------
prevent Seller or any of its subsidiaries from owning up to 2% of the stock or
equity interest in any Person that engages in the Business. It is the desire
and intent of the parties hereto that the provisions of this Section 7.4 shall
be enforced to the fullest extent permitted under the laws and public policies
of each jurisdiction in which enforcement is sought. If any court determines
that any provision of this Section 7.4 is unenforceable, such court shall have
the power to reduce the duration or scope of such provision, as the case may be,
or terminate such provision and, in reduced form, such provision shall be
enforceable; it is the intention of the parties that the foregoing restrictions
shall not be terminated, unless so terminated by a court, but shall be deemed
amended to the extent
60
required to render them valid and enforceable, such amendment to only apply with
respect to the operation of this Section 7.4 in the jurisdiction of the court
that has made the adjudication.
(b) Seller covenants and agrees that, if the Closing is consummated,
for a period of three years after the Closing Date, it will not, and will cause
its subsidiaries not to, directly or indirectly, solicit for employment, either
as an employee or a consultant, any employee or independent contractor of Buyer
or any of its Affiliates who is engaged in the Business and was an employee or
independent contractor of Seller or any of its subsidiaries engaged in the
Business as of the Closing Date to become an employee or consultant or otherwise
provide services to Seller or any of its subsidiaries.
(c) The parties acknowledge and agree that the restrictions contained
in Sections 7.4(a) and (b) are a reasonable and necessary protection of the
immediate interests of Buyer, and any violation of these restrictions would
cause substantial injury to Buyer and that Buyer would not have entered into
this Agreement without receiving the additional consideration offered by Seller
in binding itself to these restrictions. In the event of a breach or a
threatened breach by Seller or any of its subsidiaries of these restrictions,
Buyer shall be entitled to apply to any court of competent jurisdiction for an
injunction restraining such Person from such breach or threatened breach
(without the necessity of proving the inadequacy of money damages as a remedy);
provided, however, that the right to apply for injunctive relief shall not be
-------- -------
construed as prohibiting Buyer from pursuing any other available remedies for
such breach or threatened breach.
7.5 Bonds. As soon as practicable after the date of this
-----
Agreement, and in any event no later than five days after a request by Buyer,
Seller shall provide Buyer with a bond or other equivalent assurance, in each
case reasonably satisfactory to Buyer, with respect to the payment or discharge
of all Permitted Liens described in clause (d) of the definition of Permitted
Liens.
7.6 Confidential Information. Seller and its Affiliates shall
------------------------
maintain the confidentiality of, and shall not use for the benefit of itself or
others, any confidential information concerning the Business or the Acquired
Assets, including any information with respect to the Intellectual Property or
Technology (the "Confidential Information"); provided, however, that this
-------- -------
Section 7.6 shall not restrict (a) any disclosure by Seller of any Confidential
Information required by applicable Law, securities exchange or any court of
competent jurisdiction; provided, that Buyer is given notice and an adequate
--------
opportunity to contest such disclosure, (b) any disclosure on a confidential
basis to Seller's attorneys, accountants, lenders and investment bankers and (c)
any disclosure of information (i) which is available publicly as of the date of
this Agreement, (ii) which, after the date of this Agreement, becomes available
publicly through no fault of the disclosing party or (iii) is received by Seller
from a third party not, to the best of Seller's knowledge, subject to any
obligation of confidentiality with respect thereto.
7.7 Buyer's License of Patents and Technology. As of the Closing,
-----------------------------------------
Buyer hereby grants to Seller an irrevocable, perpetual, royalty free,
worldwide, nonexclusive license,
61
with the right to sublicense, to use the Patents and Technology sold by Seller
to Buyer hereunder, to make, have made, import, use in urethanes, offer for sale
and sell, outside of the Business, products other than toluene diisocyanate,
aliphatic diisocyanates, toluene diamine, dinitrotoluene and nitric acid;
provided, that no license is granted by Buyer with respect to the making, having
--------
made, import, offer for sale or sale of, toluene diisocyanate, aliphatic
diisocyanates, toluene diamine, dinitrotoluene and nitric acid; and, provided,
--------
further, that, solely with respect to Patents in Japan, the license to Seller
-------
shall be sole and exclusive as to any particular claims of such Japanese Patents
covering urethanes or polyols.
7.8 Seller's License of Patents and Technology. As of the Closing,
------------------------------------------
Seller hereby grants to Buyer an irrevocable, perpetual, royalty free,
worldwide, nonexclusive license, with the right to sublicense, to use in the
Business the patents and technology, including the OMNX control software, that
are used to make, have made, import, use in urethanes, offer for sale and sell,
in the Business, toluene diisocyanate, all aliphatic diisocyanates and
derivatives thereof, toluene diamine, dinitrotoluene and nitric acid in each
case, owned by Seller as of, and retained by Seller immediately after, the
consummation of the Closing; provided, that no license is granted by Seller to
--------
use its retained patents and technology with respect to the making, having made,
import, offer for sale or sale of polyols.
7.9 Restrictions On Buyer's and Seller's Licenses.
---------------------------------------------
Notwithstanding Sections 7.7 and 7.8, no party hereto grants to any other party
hereto any license with respect to Patents or Technology subject to Section 7.7
or retained patents or technology subject to Section 7.8 if to do so (a) would
violate an agreement with an unrelated third party in effect on or before the
date of this Agreement or (b) would be in violation of any Law. If the
violation can be avoided by a lesser license, then the parties hereto agree to
grant same to the extent possible.
7.10 Binding On Successors. Buyer's obligation to license in
---------------------
Section 7.7 and Seller's obligation to license in Section 7.8 shall be made
binding on any purchaser of or successor to Buyer's or Seller's licensable
property forming the basis of their respective license obligations under
Sections 7.7 and 7.8. As soon as practicable following any such transfer, Buyer
or Seller, as the case may be, shall notify the other party of the name and
address of the transferee and provide the other party with evidence of such
transferee's assumption of such licensing obligations.
7.11 Provision of Notices, Etc. Seller shall use reasonable best
--------------------------
efforts to promptly provide Buyer with copies of all notices, correspondence,
invoices, service of legal process and other written materials received from
third parties, including Governmental Entities, relating to the Acquired Real
Property or the Business, including real estate tax notices, notices relating to
municipal assessments, notices relating to Environmental Matters, and/or eminent
domain proceedings, correspondence from Governmental Entities, public utilities
and adjoining landowners, and notices of pending or threatened proceedings or
claims, and shall otherwise promptly advise Buyer of any oral communications
relating to any of the above. Furthermore, Seller shall permit Buyer to contest
by appropriate legal proceedings (without cost to Seller) any claim or
assessment made by a Governmental Entity or public utility with respect to any
Acquired Real Property.
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7.12 Bio-Lab. From and after the Closing, Seller shall make
-------
available to, and enforce on behalf of, Buyer any rights to indemnification
arising out of the use or operation of the Real Property subject to the Bio-Lab
Lease including any of its rights under the asset purchase agreement between
Seller and Bio-Lab, Inc.
ARTICLE VIII
------------
SURVIVAL; INDEMNIFICATION
-------------------------
8.1 Survival. All representations, warranties, covenants,
--------
indemnities and agreements contained in this Agreement or the Transaction
Documents shall survive (and not be affected in any respect by) the Closing
indefinitely and any investigation conducted by any party hereto.
Notwithstanding the foregoing, (a) the representations and warranties contained
in or made pursuant to this Agreement and the indemnity obligations for breach
of such representations and warranties contained in Sections 8.2(a)(i) and
8.3(a)(i) shall terminate on, and no claim or action with respect thereto may be
brought after, the date eighteen months after the Closing Date, except that (i)
the representations and warranties contained in Sections 3.8 (to the extent
Buyer would not be entitled to any indemnification under Section 8.2(a)(ii)
(only as it relates to indemnification for breaches of Section 5.10(b)), (v),
(vi), (vii) or (viii) in respect of a matter giving rise to a breach of such
representation or warranty), 5.10(h) (the first sentence only) and 3.10 and the
indemnity obligations for breach of such representations and warranties
contained in Section 8.2(a)(i) shall survive until the date three years after
the Closing Date, (ii) the representations and warranties contained in Section
3.8 (to the extent Buyer would be entitled to any indemnification under Section
8.2(a)(ii) (only as it relates to indemnification for breaches of Section
5.10(b)), (v), (vi), (vii) or (viii) in respect of a matter giving rise to a
breach of such representation or warranty) and, Section 3.8 (a)(ii) in all
cases, shall not survive the Closing, (iii) the representations and warranties
contained in Sections 3.11(b)(iii), 3.12 and 3.16 and the indemnity obligations
for breach of such representations and warranties contained in Section 8.2(a)(i)
shall survive until the expiration of the applicable statute of limitations (or
extensions or waivers thereof), and (iv) the representations and warranties
contained in Section 3.6(e) and the indemnity obligations for breach of such
representations and warranties contained in Section 8.2(a)(i) and the indemnity
obligations set forth in Section 8.2(a)(x) (other than as to clause (D) of
Section 8.2(a)(x) which shall survive indefinitely) shall survive until the
earlier of the date on which Air Products shall have consented to the assignment
by Seller to Buyer of the DNT Contracts and Buyer shall have been duly admitted
as the general partner of the ▇▇▇▇-DNT Limited Partnership or a final,
nonappealable judicial determination shall have been made that such Air
Products' consent is not required or that estoppel applies to prevent Air
Products from asserting that such consent is required, (b) the covenant
contained in Section 5.2(b) and the indemnity obligations for breach of such
covenant contained in Section 8.3(a)(ii) shall not survive the Closing, (c) with
respect to a Known Contaminant in a Known Contaminated Area for which Active
Remedial or Corrective Action was required, the covenant contained in Section
5.10(b), the related indemnity obligations for breach of such covenant contained
in Section 8.2(a)(ii) and the indemnity obligations set forth in Section
8.2(a)(v) shall terminate solely with respect to Environmental Losses with
respect to such Remedial Action as to such
63
Known Contaminant in such Known Contaminated Area, but no other Environmental
Losses, upon receipt by Seller of a No Further Action Letter with respect to
such Known Contaminant in such Known Contaminated Area, and (d) the indemnity
obligations of Seller contained in Section 8.2(a)(vi) shall terminate on the
date 21 years after the Closing Date; provided, that the representations and
--------
warranties and indemnity obligation which terminate on the date eighteen months
or three years, as the case may be, after the Closing Date, the representations
and warranties and indemnity obligation referred to in the foregoing clause
(a)(iii) of this Section 8.1, the representation and warranty and indemnity
obligation referred to in the foregoing clause (a)(iv) of this Section 8.1, the
covenant and the indemnity obligations in each case to the extent referred to in
the foregoing clause (c) of this Section 8.1 and the indemnity obligations
referred to in the foregoing clause (d) of this Section 8.1, and the liability
of any party hereto with respect thereto pursuant to this Article VIII, shall
not terminate with respect to any claim, whether or not fixed as to liability or
liquidated as to amount, as to which the Indemnifying Party has been given
written notice setting forth the facts upon which the claim for indemnification
is based (and, if possible, a reasonable estimate of the amount of the claims)
prior to (A) the date eighteen months or three years, as the case may be, after
the Closing Date, (B) the expiration of the applicable statute of limitations
(or extensions or waivers thereof), (C) the applicable expiration time provided
in the foregoing clause (a)(iv) of this Section 8.1, (D) the receipt of the
applicable No Further Action Letter, or (E) the date 21 years after the Closing
Date, as the case may be.
8.2 Indemnification by Seller. (a) Subject to Section 8.1, Seller
-------------------------
shall indemnify and hold Buyer and its employees, officers, directors and agents
(collectively, the "Buyer Indemnified Parties") harmless from and against, and
agree promptly to defend any Buyer Indemnified Party from and reimburse any
Buyer Indemnified Party for, any and all Losses which any Buyer Indemnified
Party may at any time suffer or incur, or become subject to, as a result of or
in connection with:
(i) any breach or inaccuracy as of the date of this Agreement or
the Closing Date of any of the representations and warranties made by
Seller in or pursuant to this Agreement, or in any instrument or
certificate delivered by Seller at the Closing in accordance herewith (it
being understood and agreed that, notwithstanding anything to the contrary
contained in this Agreement, to determine if there had been an inaccuracy
or breach of a representation or warranty of Seller and the Losses arising
from such inaccuracy or breach, such representation and warranty shall be
read as if it were not qualified by materiality, including, without
limitation, qualifications indicating accuracy in all material respects, or
accuracy except to the extent the inaccuracy will not have a Material
Adverse Effect);
(ii) any failure by Seller to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or under any of the Transaction Documents
delivered by Seller pursuant to this Agreement;
(iii) the Non-Assumed Liabilities (other than for Environmental
Losses except Environmental Losses under Sections 2.4(b)(i), (vii), and
(xi));
64
(iv) any failure by Seller to comply with the WARN Act with respect
to any employee of Seller;
(v) subject to Section 5.10(b)(iii), all Environmental Losses to
the extent associated with Known Contaminants in Known Contaminated Areas;
provided, that, upon receipt by Seller of a No Further Action Letter in
--------
respect of a Known Contaminant in a Known Contaminated Area for which no
Active Remedial or Corrective Action was required, any subsequent
Environmental Losses for such Known Contaminant shall be deemed an Unknown
Environmental Loss under this Agreement;
(vi) all Environmental Losses to the extent associated with the
Business Real Property other than Environmental Losses subject to
indemnification pursuant to Section 8.2(a)(v) ("Unknown Environmental
Losses" which term shall include Excess Environmental Losses and
Environmental Losses deemed pursuant to the proviso of Section 8.2(a)(v) to
be Unknown Environmental Losses), incurred by any Buyer Indemnified Party
to the extent of the following:
- 87.5% of Unknown Environmental Losses arising out of, relating to
or resulting from any Environmental Matter or other facts referred to in
any claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Buyer
in writing during the first twelve years following the Closing Date;
- 85% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Buyer
in writing during the thirteenth year following the Closing Date;
- 80% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Buyer
in writing during the fourteenth year following the Closing Date;
- 75% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Buyer
in writing during the fifteenth year following the Closing Date;
- 70% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Buyer
in writing during the sixteenth year following the Closing Date;
65
- 65% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Buyer
in writing during the seventeenth year following the Closing Date;
- 55% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Buyer
in writing during the eighteenth year following the Closing Date;
- 45% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Buyer
in writing during the nineteenth year following the Closing Date;
- 35% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Buyer
in writing during the twentieth year following the Closing Date; and
- 25% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Buyer
in writing during the twenty-first year following the Closing Date;
provided, however, that the indemnification provided pursuant to this
-------- -------
Section 8.2(a)(vi) shall not extend to pre-discovery investigative costs
incurred by Buyer in the course of performing post-Closing environmental
assessments (other than environmental assessments required under
Environmental Laws) in connection with the Business Real Property; and
provided, further, that notwithstanding anything herein to the contrary,
-------- -------
any such Unknown Environmental Losses relating to an indemnification claim
made, no matter when determined or incurred, shall be indemnifiable as if
such Unknown Environmental Losses had been included in the initial related
indemnification claim.
(vii) any Environmental Losses to the extent associated with
Excluded Assets;
(viii) all Off-Site Environmental Liabilities;
(ix) all Losses to the extent caused by Seller's actions or
omissions based on, arising out of, or related to Buyer's Non-Bifurcated
Permits or Shared Permits, as provided in Sections 5.10(g) and (h);
66
(x) all Losses to the extent arising out of or attributable to (A)
Seller's failure to obtain the consent of Air Products and Chemicals, Inc.
to an assignment by Seller to Buyer of Seller's interest in the Agreement
By and Between Air Products and Chemicals, Inc. and Seller dated as of May
9, 1995 (the "Tax Indemnity Agreement"), including any amounts that Buyer
would have been entitled to receive as Seller's assignee under the Tax
Indemnity Agreement had such Tax Indemnity Agreement been assigned in full
to Buyer, (B) the breach of the representations and warranties of Seller
set forth in Section 3.6(e), (C) any actions taken by Buyer to enforce its
rights as assignee of Seller under any of the DNT Contracts as a result of
Air Products' refusal to perform its obligations under any of the DNT
Contracts on the basis that Air Products' consent to such assignment and/or
assumption had not been obtained, (D) any liability or obligation under any
assumption agreement by which Buyer has assumed Seller's obligations under
any DNT Contract that would constitute a Non-Assumed Liability pursuant to
the terms of this Agreement, and (E) Buyer not being duly admitted as the
general partner of the ▇▇▇▇-DNT Limited Partnership effective as of the
Closing as a result of Air Products' refusal to recognize Buyer as the
general partner of the ▇▇▇▇-DNT Limited Partnership on the basis that Air
Products' or any other partner's consent to such admission was not
obtained;
(xi) all Losses arising under the Bio-Lab Lease to the extent they
relate to the asset purchase agreement between Seller and Bio-Lab, Inc.;
(xii) all Losses arising out of the items set forth in Schedule 3.17
and items numbered 19, 20 and 22 set forth in Part E of Schedule 1.1; and
(xiii) all Losses to the extent arising out of Seller's failure to
obtain consents to assignments to Buyer of the Contracts for which consent
is required pursuant to the first sentence of Section 6.1(c) or to provide
to Buyer the alternative arrangements thereof contemplated by Section
6.1(c);
provided, that Buyer shall not be obligated to proceed under clause (vi) above
--------
if indemnification is otherwise available under clause (ii), (iii), (vii),
(viii), (ix), (xi) or (xii) above.
(b) Notwithstanding any other provision herein to the
contrary, (i) Seller shall not be required, pursuant to Section 8.2(a)(i), to
indemnify and hold harmless any Buyer Indemnified Party until the aggregate
amount of the Buyer Indemnified Parties' Losses under Section 8.2(a)(i) exceeds
the Basket Amount after which Seller shall be obligated for all Losses of the
Buyer Indemnified Parties in excess of the Basket Amount (provided, however,
-------- -------
that the provisions of this clause (i) shall not apply to a breach of the
representations and warranties contained in Sections 3.6(e), 3.11(b)(iii), 3.12
and 3.16), (ii) the cumulative indemnification obligation of Seller under
Section 8.2(a)(i) and Section 8.2(a)(vi) shall in no event exceed 42.5% of the
Final Purchase Price (provided, however, that the provisions of this clause (ii)
-------- -------
shall not apply to a breach of the representations and warranties contained in
Sections 3.6(e) and 3.12) and (iii) the indemnity obligations set forth in
Sections 8.2(a)(iii)-(xiii) shall not be applicable unless and until the Closing
is consummated.
67
8.3 Indemnification by Buyer. (a) Subject to Section 8.1, Buyer
------------------------
shall indemnify and hold Seller and its employees, officers, directors and
agents (collectively, the "Seller Indemnified Parties") harmless from and
against, and agree promptly to defend any Seller Indemnified Party from and
reimburse any Seller Indemnified Party for, any and all Losses which any Seller
Indemnified Party may at any time suffer or incur, or become subject to, as a
result of or in connection with:
(i) any breach or inaccuracy as of the date of this
Agreement or the Closing Date of any of the representations and warranties
made by Buyer in or pursuant to this Agreement, or in any instrument or
certificate delivered by Buyer at the Closing in accordance herewith (it
being understood and agreed that, notwithstanding anything to the contrary
contained in this Agreement, to determine if there had been an inaccuracy
or breach of a representation or warranty of Buyer and the Losses arising
from such inaccuracy or breach, such representation and warranty shall be
read as if it were not qualified by materiality, including, without
limitation, qualifications indicating accuracy in all material respects, or
accuracy except to the extent the inaccuracy will not have a material
adverse effect on the ability of Buyer to perform its obligations under
this Agreement and the other Transaction Documents to which it is a party);
(ii) any failure by Buyer to carry out, perform, satisfy
and discharge any of its covenants, agreements, undertakings, liabilities
or obligations under this Agreement or under any of the Transaction
Documents delivered by Buyer pursuant to this Agreement;
(iii) the Assumed Liabilities;
(iv) except for the Non-Assumed Liabilities and any Losses
for which Seller has any indemnification obligation pursuant to Section
8.2(a) or 10.12, to the extent associated with the ownership or operation
of the Business and the Acquired Assets after the Closing Date;
(v) all Unknown Environmental Losses incurred by any
Seller Indemnified Party to the extent of the following:
- 12.5% of Unknown Environmental Losses arising out of, relating to
or resulting from any Environmental Matter or other facts referred to in
any claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Seller
in writing during the first twelve years following the Closing Date;
- 15% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Seller
in writing during the thirteenth year following the Closing Date;
68
- 20% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Seller
in writing during the fourteenth year following the Closing Date;
- 25% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Seller
in writing during the fifteenth year following the Closing Date;
- 30% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Seller
in writing during the sixteenth year following the Closing Date;
- 35% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Seller
in writing during the seventeenth year following the Closing Date;
- 45% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Seller
in writing during the eighteenth year following the Closing Date;
- 55% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Seller
in writing during the nineteenth year following the Closing Date;
- 65% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Seller
in writing during the twentieth year following the Closing Date;
- 75% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made
69
by a third party), made by Seller in writing during the twenty-first year
following the Closing Date; and
- 100% of Unknown Environmental Losses arising out of, relating to or
resulting from any Environmental Matter or other facts referred to in any
claim, whether or not fixed as to liability or liquidated as to amount
(including notice of any such claim made by a third party), made by Seller
in writing after the twenty-first year following the Closing Date;
provided, that, notwithstanding anything herein to the contrary, any such
--------
Unknown Environmental Losses relating to an indemnification claim made, no
matter when determined or incurred, shall be indemnifiable as if such
Unknown Environmental Losses had been included in the initial related
indemnification claim;
(vi) all Losses (other than Environmental Losses) to the extent
caused by Buyer's actions or omissions based on, arising out of, or related
to Seller's Non-Bifurcated Permits or Shared Permits, as provided in
Sections 5.10(g) and (h); and
(vii) all Losses to the extent associated with Remedial Action
for a Known Contaminant in a Known Contaminated Area after the date on
which a No Further Action Letter was received by Seller following Active
Remedial or Corrective Action in respect of such Known Contaminant in such
Known Contaminated Area.
(b) Notwithstanding any other provision herein to the contrary, (i)
Buyer shall not be required, pursuant to Section 8.3(a)(i), to indemnify and
hold harmless any Seller Indemnified Party until the aggregate amount of the
Seller Indemnified Parties' Losses under Section 8.3(a)(i) exceeds the Basket
Amount after which Buyer shall be obligated for all Losses of the Seller
Indemnified Parties in excess of the Basket Amount, (ii) the cumulative
indemnification obligation of Buyer under Section 8.3(a)(i) and Section
8.3(a)(v) shall in no event exceed 42.5% of the Final Purchase Price, and (iii)
the indemnity obligations set forth in Sections 8.3(a)(iii)-(vii) shall not be
applicable unless and until the Closing is consummated.
(c) Notwithstanding any other provision herein to the contrary, Buyer
shall have control over any Remedial Action ordered by any Governmental Entity
after the Closing for a Known Contaminant in a Known Contaminated Area after
Seller receives a No Further Action Letter in respect of such Known Contaminant
in such Known Contaminated Area.
8.4 Notification of Claims. (a) If any Buyer Indemnified Party, on
----------------------
the one hand, or Seller Indemnified Party, on the other hand (an "Indemnified
Party"), has a claim or receives notice of any claim or the commencement of any
action or proceeding which could give rise to an obligation on the part of
Seller or Buyer, as the case may be, to provide indemnification (the
"Indemnifying Party") pursuant to Section 8.2 or 8.3, respectively, the
Indemnified Party shall promptly give the Indemnifying Party written notice
thereof (an "Indemnification Claim"); provided, however, that the failure to
-------- -------
give such prompt written notice shall not prevent any Indemnified Party from
being indemnified hereunder for any Losses, except to the extent that the
failure to so promptly notify the Indemnifying Party actually damages the
Indemnifying Party.
70
(b) In the event of a claim or the commencement of any action or
proceeding by a third party which could give rise to an obligation to provide
indemnification pursuant to Section 8.2 or 8.3, the Indemnified Party will give
the Indemnifying Party prompt written notice thereof (the "Third Party
Indemnification Claim"); provided, however, that the failure of the Indemnified
-------- -------
Party to so promptly notify the Indemnifying Party shall not prevent any
Indemnified Party from being indemnified for any Losses, except to the extent
that the failure to so promptly notify actually damages the Indemnifying Party.
(c) Any Indemnification Claim or Third Party Indemnification Claim
will describe the claim in reasonable detail, will include copies of all
material written evidence thereof and will indicate the estimated amount if
reasonably practicable (and in the case of an Environmental Loss, shall include
details regarding the nature and scope of such Environmental Loss and related
Environmental Matter together with any technical information such as sampling
and testing results) of the Loss, that has been or may be sustained by the
Indemnified Party. If the Indemnifying Party confirms in writing to the
Indemnified Party within 15 days after receipt of the Third Party
Indemnification Claim the Indemnifying Party's responsibility to indemnify and
hold harmless the Indemnifying Party therefor in accordance herewith and within
such 15-day period demonstrates to the Indemnified Party's reasonable
satisfaction that, as of such time the Indemnifying Party has sufficient
financial resources in order to indemnify for the full amount of any potential
liability in connection with such claim, the Indemnifying Party may elect to
compromise or defend, at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, which counsel shall be reasonably satisfactory
to the Indemnified Party, any such matter involving the asserted liability of
the Indemnified Party. If the Indemnifying Party elects to compromise or defend
any such asserted liability in accordance herewith, it shall within 15 days (or
sooner, if the nature of the asserted liability so requires) notify the
Indemnified Party of its intent to do so, and the Indemnified Party shall
cooperate, at the expense of the Indemnifying Party, in the compromise of, or
defense against, any such asserted liability; provided, that (i) the Indemnified
--------
Party may, if it so desires, employ counsel at its own expense to assist in the
handling of any such third party claim, (ii) the Indemnifying Party shall keep
the Indemnified Party advised of all material events with respect to any such
third party claim, (iii) the Indemnifying Party shall obtain the prior written
approval of the Indemnified Party (which approval may not be unreasonably
withheld) before ceasing to defend against such third party claim or entering
into any settlement, adjustment or compromise of such third party claim
involving injunctive or similar equitable relief being asserted against any
Indemnified Party or any of their Affiliates and (iv) no Indemnifying Party
will, without the prior written consent of each Indemnified Party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
demand, claim, action or cause of action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Indemnified
Party is a party to such demand, claim, action or cause of action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of all such Indemnified Parties from all liability arising
out of such claim, action, suit or proceeding. Notwithstanding anything
contained herein to the contrary, (A) the Indemnifying Party shall not be
entitled to have and the Indemnified Party shall have sole control over the
defense, settlement, adjustment or compromise of any third party non-monetary
claim that seeks an order, injunction or other equitable relief against any
Indemnified Party or its Affiliates which, if successful, could
71
reasonably be expected to materially interfere with the business, assets,
liabilities, obligations, financial condition or results of operations of the
Indemnified Party or any of its Affiliates and (B) (x) if Seller is the
Indemnifying Party and the matter involving the asserted liability of the
Indemnified Party is an Environmental Matter or (y) Seller is seeking
indemnification under Section 8.3(a)(v) or (vii), Buyer shall have sole control
over the defense, settlement, adjustment and compromise of all claims and
potential claims with respect to such matter, subject to Section 8.4(d) below.
If the Indemnifying Party elects not to compromise or defend against the
asserted liability, or fails to notify the Indemnified Party of its election as
herein provided, the Indemnified Party may, at the Indemnifying Party's expense,
pay, compromise or defend against such asserted liability. The party hereto
controlling the defense of any Indemnification Claim or Third Party
Indemnification Claim shall use reasonable best efforts to diligently pursue any
relevant claims against third parties (including tenants on the Acquired Real
Property) which could serve to reduce the amount of the Losses with respect to
the Indemnification Claim or Third Party Indemnification Claim, as the case may
be, but in no event shall such party be required to take any action that would
require such party to incur any expense or liability in connection therewith;
provided, that to the extent that such party is successful in its pursuit of
--------
such claims the amount recovered pursuant thereto (net of any expenses incurred
in pursuit of such recovery) shall be deemed to be a reduction of any related
Losses of such party (it being understood that any such net recovery in respect
of Unknown Environmental Losses shall be applied to reduce such Unknown
Environmental Losses prior to applying any cost sharing as contemplated by
Sections 8.2(a)(vi) and 8.3(a)(v)).
(d) In any case in which the Indemnified Party or Buyer, as the case
may be, has control of the defense, settlement, adjustment or compromise of any
Claim relating to an Environmental Matter, the Indemnified Party or Buyer, as
the case may be, shall provide the Indemnifying Party or Seller, as the case may
be, with the opportunity to consult reasonably in advance with the Indemnified
Party or Buyer, as the case may be, and give reasonable consideration to the
Indemnifying Party's or Seller's, as the case may be, requests, comments and
advice with respect to (i) the scope and type of any Remedial Action to be taken
or implemented, (ii) the selection of consultants, contractors and other third
parties with respect to any such Remedial Action, and (iii) the form and
substance of any plan, report or submission to be transmitted to any
Governmental Entity regarding any such Remedial Action (including with respect
to the scope and type of such Remedial Action). The Indemnifying Party's or
Seller's, as the case may be, requests, comments, and advice in all respects
shall be advisory only and not binding in any way upon the Indemnified Party or
Buyer, as the case may be. The Indemnifying Party or Seller, as the case may
be, shall be entitled to participate, at its own expense, in any meetings
between the Indemnified Party or Buyer, as the case may be, and/or its
consultants and representatives with any Governmental Entity relating to any
such Remedial Action. The Indemnifying Party or Seller, as the case may be,
shall maintain as confidential, except as otherwise required by Law, any non-
public information exchanged or obtained in the course of any such consultation
or meeting. In addition, the Indemnified Party or Buyer, as the case may be,
shall (A) retain and, upon the Indemnifying Party's request, provide to the
Indemnifying Party or Seller, as the case may be, any records and information
that are reasonably relevant to such Remedial Action, (B) provide the
Indemnifying Party or Seller, as the case may be, during normal business hours
and upon prior request, reasonable access to any area on the Acquired
72
Real Property related to such Remedial Action, and (C) make employees of the
Indemnified Party or Buyer, as the case may be, available on a mutually
convenient basis to provide additional relevant information.
(e) With respect to Environmental Losses, whether or not arising out
of or resulting from third-party claims, Buyer shall be entitled to
reimbursement for reasonable out-of-pocket costs of remedying, correcting, or
otherwise addressing in a reasonably cost-efficient manner the conditions giving
rise to such Environmental Losses for which indemnification is sought, but only
to the extent necessary to bring such condition into compliance with
Environmental Laws, it being understood that the cost of remedying, correcting,
or otherwise addressing a condition will include the costs of investigations,
studies, sampling and analysis.
8.5 Procedures for Tax Contests. Notwithstanding Section 8.4, if
---------------------------
an Indemnified Party receives notice of any claim, potential claim or the
commencement of any action or proceeding relating to Taxes ("Tax Claim") which
could give rise to an obligation on the part of the Indemnifying Party to
provide indemnification pursuant to Section 8.2 or 8.3, respectively, the
Indemnified Party shall promptly give the Indemnifying Party notice thereof;
provided, however, that the failure to give such prompt notice shall not prevent
any Indemnified Party from being indemnified hereunder for any Losses, except to
the extent that the failure to so promptly notify the Indemnifying Party
actually damages the Indemnifying Party. If the Tax Claim involves an amount
not in excess of $25,000, then the Indemnified Party shall control all
proceedings taken in connection with such Tax Claim (including selection of
counsel) and, without limiting the foregoing, may in its sole discretion pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with any taxing authority with respect thereto, and may, in its sole
discretion, either pay such Tax claimed and ▇▇▇ for a refund where applicable
law permits such refund suits or contest such Tax Claim in any permissible
manner. If the Tax Claim involves an amount in excess of $25,000 and does not
involve Taxes the determination of which could reasonably be expected to affect
the Indemnified Party's liability for non-indemnified Taxes, the Indemnified
Party shall use its reasonable best efforts to cause such Tax Claim to be
determined in a proceeding separate from other Tax issues involving the
Indemnified Party or any affiliate thereof. If the Indemnified Party can
accomplish the separation of a Tax Claim described in the immediately preceding
sentence, the Indemnifying Party shall control all proceedings taken in
connection with such Tax Claim (including selection of counsel) and, without
limiting the foregoing, may in its sole discretion pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with any Taxing
authority with respect thereto, and may, in its sole discretion, either pay such
Tax claimed and ▇▇▇ for a refund where applicable law permits such refund suits
or contest such claim for Taxes in any permissible manner. In such a case, the
Indemnifying Party shall keep the Indemnified Party reasonably informed of
developments in the proceeding. If the Indemnified Party is not required to
attempt to or cannot accomplish the separation of a Tax Claim in excess of
$25,000, then the Indemnifying Party shall be entitled to participate in the
proceeding through its own counsel and the Indemnified Party shall consult with
the Indemnifying Party with regard to pursuing or foregoing administrative
appeals, proceedings, hearings and conferences with any Taxing authority and
whether or not to pay the Tax claimed and ▇▇▇ for a refund or to contest the Tax
73
Claim in some other manner. However, decisions as to the manner of contesting
Taxes, including settlement, adjustment or compromise which may result in a Tax
Claim in such a proceeding shall be made by the Indemnified Party.
ARTICLE IX
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EMPLOYEES AND EMPLOYEE BENEFITS
-------------------------------
9.1 Employment.
----------
(a) Continuation of Employment. Buyer shall offer employment (i) to
--------------------------
each employee of Seller or any of its Affiliates who is based in the United
States and primarily engaged in the Business and whose principal place of
employment is at the Lake ▇▇▇▇▇▇▇ facility (other than at Seller's
hydrazine/ketazine plant and the caustic terminals) (a "Plant Employee") and who
is actively at work on the Closing Date or who is not actively at work on the
Closing Date due solely to a temporary short-term absence such as vacation,
holiday, personal leave or jury duty provided such employee returns to active
employment immediately following such absence ("Active Employees"), (ii) to each
Plant Employee who is not actively at work on the Closing Date due solely to
leave of absence, sick leave, short or long-term disability leave, military
leave or layoff with recall rights and who returns to active employment
immediately following such absence and within 180 days of the Closing Date or
such later date as required under applicable law ("Inactive Employees"), and
(iii) in Buyer's discretion, which discretion shall be exercised no later than
60 days after the Closing Date, to each other employee of Seller or its
Affiliates selected by Buyer and whose name is set forth on a list of other
employees provided by Seller to Buyer as soon as practicable after the date of
this Agreement but in no event later than 15 days after the date of this
Agreement, which list shall include all of those research and development and
sales, marketing and other commercial services employees of Seller primarily
involved in the Business, other than up to four of such employees designated by
Seller in writing within 15 days after the date of this Agreement as being
excluded from such list, the exclusion of whom individually or in the aggregate
shall not have a material adverse effect on the ability of Buyer to conduct the
Business in the manner that it is being conducted by Seller as of the date of
this Agreement (and as to whom Buyer shall not offer employment) ("Other
Employees"); provided, however, that no offer of employment shall be made by
-------- -------
Buyer to an Other Employee without Buyer giving Seller at least 30 days' advance
written notice of such offer. The period of such employment shall, in the case
of Active Employees, begin on the Closing Date and, in the case of Inactive
Employees and Other Employees, on the date that they first commence employment
with the Buyer. For purposes of this Agreement, Active Employees, Inactive
Employees and Other Employees who accept the Buyer's offer of employment and who
become employees of the Buyer shall be referred to herein collectively as
"Transferred Employees." Seller shall be responsible for any obligation to
provide employee benefits to a Transferred Employee prior to such employee's
date of hire by Buyer to the extent otherwise provided under Seller's applicable
plans.
(b) Compensation and Benefits. Subject to Sections 9.2 through 9.9,
-------------------------
Buyer's offer of employment under Section 9.1(a) above shall provide base wages
or base salary
74
(excluding the Special Payment) on an individual basis equivalent to that in
effect immediately prior to the Closing Date, and benefit plans and arrangements
which, in the aggregate for Transferred Employees as a group, are comparable to
the benefits (excluding the Special Payment) in effect on the date of this
Agreement. It is expressly understood and agreed by Buyer and Seller that
nothing in this Agreement shall obligate Buyer to provide compensation, benefit
plans or arrangements identical to those in effect on the date of this Agreement
or to continue any specified level of compensation or any benefit plans or
arrangements for any specified period of time whatsoever; provided, however,
-------- -------
that Buyer shall provide severance benefits to each Transferred Employee
terminated by Buyer within one year following the Closing Date which benefits
are no less favorable than the basic and enhanced cash severance benefits
provided by Seller and its Affiliates under Seller's applicable severance plans
and arrangements set forth on Part B of Schedule 3.16 as in effect on the date
of this Agreement (copies of which have been provided to Buyer prior to
the date of this Agreement); provided, further, that no severance benefits
-------- -------
shall be payable to any Transferred Employee with respect to a termination that
would not have been covered under Seller's severance plans and arrangements. It
is also expressly agreed by Buyer and Seller that nothing in this Agreement
shall obligate Buyer to continue the employment of any Transferred Employee.
Buyer shall have welfare benefit plans in effect on the Closing
Date providing medical and dental benefits, life insurance and disability
benefit coverage for the Transferred Employees and their dependents who
immediately prior to the Closing were covered under similar welfare benefit
plans of Seller. Buyer shall recognize each Transferred Employee's service with
Seller and its Affiliates as of such Transferred Employee's date of hire by
Buyer as service with Buyer for purposes of determining eligibility and benefit
levels as applicable in Buyer's medical and dental plans, disability plans, life
insurance plans and vacation plans. Buyer shall: (i) cause to be waived any pre-
existing condition limitation under the Buyer's medical plans applicable to
Transferred Employees or their dependents (except to the extent that any such
pre-existing condition limitation would not have been waived under Seller's
medical plans), and (ii) recognize (or cause to be recognized) the dollar amount
of all covered expenses incurred by Transferred Employees and their dependents
under Seller's applicable medical plans during the calendar year in which the
Closing Date occurs for purposes of satisfying such calendar year's deductibles
and co-payment limitations under the applicable medical plans of Buyer;
provided, that the Transferred Employee enrolls in the applicable medical plan
--------
maintained by Buyer at such time and in such manner as is reasonably specified
by Buyer.
9.2 Accrued Vacation. As soon as practicable after the Closing
----------------
Date, Seller shall pay each Transferred Employee for any unused vacation days
and any personal and sickness days which a Transferred Employee is eligible to
take during calendar year 1996 (including any carryover vacation and personal
and sickness days, if any, from calendar years earlier than 1996) in accordance
with the vacation and personnel policies and labor agreements of Seller or its
Affiliates in effect as of the Closing Date, and Buyer shall have no
responsibility to Transferred Employees therefor. If the Closing occurs after
December 31, 1996, Seller and Buyer shall allocate liabilities for vacation days
entitled to be taken by Transferred Employees during calendar year 1997 as
follows: Seller shall determine the aggregate accrued vacation liability for
Transferred Employees for calendar year 1997 based upon compensation and service
75
data as of January 1, 1997, in accordance with Seller's vacation policy as in
effect on the date of this Agreement and consistent with past practice (the
"1997 Accrued Vacation Liability"). Seller's portion of the 1997 Accrued
Vacation Liability shall be determined by the product of the 1997 Vacation
Liability multiplied by a fraction, the numerator of which is the number of days
elapsed during calendar year 1997 as of the day immediately preceding the
Closing Date and the denominator of which is 365 ("Seller's Vacation Portion").
To the extent that the vacation time actually used as of the Closing (as
determined by multiplying each vacation period used by a Transferred Employee
multiplied by his base compensation or salary as in effect on January 1, 1997
for such period) exceeds the Seller's Vacation Portion, Buyer shall reimburse
Seller for such difference as soon as practicable after the Closing. On the
other hand, if the vacation time actually used as of the Closing is less than
Seller's Vacation Portion, Seller shall reimburse Buyer for such difference as
soon as practicable after the Closing. If the Closing occurs after December 31,
1996, (a) Buyer shall honor unused 1997 vacation periods of Transferred
Employees accrued on or after January 1, 1997 under Seller's vacation policy in
effect on the date of this Agreement and Seller shall be liable for any
increased vacation costs resulting from any changes in such vacation policy
after such date and (b) Buyer may offset against any 1997 vacation periods to
which Transferred Employees would otherwise become entitled under Buyer's
vacation policy all 1997 vacation periods accrued on and after January 1, 1997
under Seller's vacation policy as in effect on the date of this Agreement.
9.3 Union Representation. Buyer agrees to recognize each union
--------------------
which at the Closing Date represents any of the Transferred Employees as the
collective bargaining representative of such employees as of the Closing Date.
It is expressly understood and agreed by Buyer and Seller that nothing in this
Agreement shall obligate Buyer to assume or honor any collective bargaining
agreements pertaining to Transferred Employees; provided, however, that Buyer
-------- -------
shall not attempt to renegotiate any existing collective bargaining agreements
pertaining to Transferred Employees prior to the Closing without Seller's prior
written consent and will not amend any such collective bargaining agreement or
the employee benefits provided under such collective bargaining agreement prior
to the expiration of 90 days following the Closing Date without the agreement of
the collective bargaining representative of the Transferred Employees or, absent
such representative's agreement, without Seller's prior written consent, which
consent shall not be unreasonably withheld or delayed.
9.4 Benefit Plans.
-------------
(a) Pension Plan. Seller shall, effective as of the Closing,
------------
adopt amendments to its qualified defined benefit plans (referred to herein as
"Seller's Qualified Pension Plans") that will (i) fully vest the benefits of the
Transferred Employees under Seller's Qualified Pension Plans effective as of the
Closing, (ii) credit future service of Transferred Employees with Buyer for
purposes of determining the eligibility of Transferred Employees for early
retirement and ancillary benefits (other than retiree death benefits for
Transferred Employees who are not Retiree Medical Eligible Employees) under
Seller's Qualified Pension Plans, and (iii) in the case of any Transferred
Employee who is not covered by a collective bargaining agreement in effect
immediately prior to the Closing, increase the accrued benefit as of the Closing
Date of each such Transferred Employee under any Seller Qualified Pension Plan
76
(as determined under the terms of such Seller's Qualified Pension Plan as in
effect on the Closing Date) by 3% for each twelve-month period (.25% for each
full month) during which a Transferred Employee remains in continuous employment
with Buyer or any of its Affiliates following the Closing. Buyer shall promptly
notify Seller of the termination of employment of each Transferred Employee with
Buyer and its Affiliates. Seller shall, effective as of the Closing, also adopt
amendments to its nonqualified pension plans ("Seller's Nonqualified Pension
Plans") corresponding to those set forth in the preceding sentence.
Buyer shall, effective as of the Closing, establish one or more
defined benefit plans (or designate one or more existing defined benefit plans
of Buyer) intended to qualify under Section 401(a) of the Code (such new or
existing defined benefit plan(s) of Buyer being referred to herein as "Buyer's
Qualified Pension Plan") and providing benefits to Transferred Employees who
immediately prior to the Closing were participating in, and accruing eligibility
service under, the Seller's Qualified Pension Plans. Buyer shall also include
in its nonqualified pension plans ("Buyer's Nonqualified Pension Plans") each
Transferred Employee who was a participant immediately prior to the Closing in
one or more of Seller's Nonqualified Pension Plans. Each Transferred Employee
participating in Seller's Pension Plans prior to the Closing shall become a
participant in Buyer's Pension Plans as of the date of hire of such Transferred
Employee by Buyer with credit for all service with Seller and its Affiliates for
purposes of eligibility (including eligibility for early retirement and
ancillary benefits) and vesting but not benefit accruals.
Upon the termination of a Transferred Employee's employment with the
Buyer and its Affiliates after the Closing, such Transferred Employee shall be
entitled to a distribution of his or her vested accrued benefit (if any),
including any early retirement benefit to which he or she is then entitled,
under the Seller's Pension Plans in accordance with the respective terms of such
plans as in effect on the date of this Agreement but giving effect to the
amendments to such plans that are required by this Agreement. Transferred
Employees shall not be eligible for disability benefits under Seller's Pension
Plans.
(b) Savings Plan. Seller shall, effective as of the Closing, adopt
------------
amendments to Seller's Contributing Employee Ownership Plan (the "CEOP") that
will fully vest the accrued benefits of the Transferred Employees under the
CEOP.
Effective as of the Closing Date, Buyer shall have in effect one or
more defined contribution plans that include a qualified cash or deferred
arrangement within the meaning of Section 401(k) of the Code ("Buyer's 401(k)
Plan") providing benefits as of the Closing to Transferred Employees
participating in the CEOP as of the Closing. Each Transferred Employee shall
immediately become eligible to participate in Buyer's 401(k) Plan as of such
Transferred Employee's date of hire by Buyer. Transferred Employees shall
receive credit for all service with Seller and its Affiliates for purposes of
eligibility and vesting under Buyer's 401(k) Plan.
Upon receipt by Buyer of a favorable determination letter to the
effect that Buyer's 401(k) Plan is qualified under Section 401(a) of the Code
(or an opinion of Buyer's
77
counsel, reasonably satisfactory to Seller, to such effect), and subject to
Buyer's approval which shall not be unreasonably withheld, Seller shall cause to
be transferred from the CEOP to Buyer's 401(k) Plan assets having a fair market
value as of the date of transfer equal to the aggregate value of the account
balances in the CEOP of Transferred Employees who (i) immediately prior to the
Closing are participants in the CEOP and (ii) elect to have their respective
accounts transferred to Buyer's 401(k) Plan, such transfer to include accounts
receivable representing any outstanding loans to Transferred Employees from
their account balances with the balance in cash, and shall be subject to any
-------
applicable qualified domestic relations orders, within the meaning of Section
414(p) of the Code. Buyer's 401(k) Plan shall provide for the receipt of such
transfer. The CEOP shall retain the accounts of all Transferred Employees who
elect not to transfer their CEOP accounts to the Buyer's 401(k) Plan. The CEOP
shall retain all assets and liabilities thereunder with respect to the accounts
of retirees or other former employees who were employed at the Lake ▇▇▇▇▇▇▇
facility and who terminated employment with Seller prior to the Closing.
Solely with respect to the performance-based matching
contribution which may be made by the Seller in respect of the 1996 plan year
under the CEOP, if the applicable performance criteria for such plan year are
achieved and if the Closing occurs on or prior to December 31, 1996, each
Transferred Employee who is a participant in the CEOP, whether or not he or she
elects to have his or her account balance under the CEOP transferred to the
Buyer's 401(k) Plan, shall be entitled to have a performance-based matching
contribution credited to his or her CEOP account in accordance with the terms of
the CEOP as soon as practicable after the end of the CEOP's 1996 plan year and
Seller shall take all action necessary to amend the CEOP to so provide.
(c) Medical and Disability Benefits; Life Insurance.
-----------------------------------------------
(i) Seller shall be responsible in accordance with its applicable
welfare plans for all medical and dental claims for expenses incurred prior
to the date of hire by Buyer of Transferred Employees and their dependents.
Reimbursement of Transferred Employees and their dependents for such
medical and dental expenses shall be determined in accordance with the
terms of Seller's medical and dental programs. Seller shall terminate
coverage of Transferred Employees and their dependents effective for claims
for medical and dental expenses incurred on and after the date of hire of
such Transferred Employees by Buyer. Buyer shall be responsible in
accordance with its applicable welfare plans for all medical and dental
claims made by Transferred Employees and their dependents for expenses
incurred on and after the date of hire by Buyer of such Transferred
Employees. Reimbursement of Transferred Employees and their dependents for
such medical and dental expenses shall be determined in accordance with the
terms of Buyer's medical and dental programs. Notwithstanding the
foregoing, Seller shall be responsible for all medical and dental expenses
incurred by a Transferred Employee or any dependent thereof who is
hospitalized or institutionalized on an in-patient basis on the Closing
Date during such continuous hospitalization or institutionalization. For
purposes of this Section 9.4(c)(i), a medical or dental claim otherwise
covered under Seller's or Buyer's applicable welfare benefit plan shall be
78
deemed incurred when the services giving rise to the claim are rendered
(regardless of when such claim is billed by the service provider or filed
by the Transferred Employee).
(ii) Seller shall retain all liability in accordance with Seller's
applicable post-retirement medical plan for post-retirement medical claims
of Transferred Employees and their dependents who are eligible to retire
under the Seller's post-retirement medical plan on the Closing Date or
would otherwise become eligible to retire under such plan as in effect on
the date of this Agreement within four years of the Closing Date ("Retiree
Medical Eligible Employees"); provided, however, that such Retiree Medical
-------- -------
Eligible Employees (and their eligible dependents) shall not become
eligible for such post-retirement medical benefits until their retirement
from Buyer or its Affiliates; and provided, further, that Seller shall only
-------- -------
be liable for expenses incurred on or after the retirement date of any such
Transferred Employee. For purposes hereof, a post-retirement medical claim
incurred by a Retiree Medical Eligible Employee (or his eligible
dependents) shall be covered under Seller's applicable post-retirement
medical plan if the expense giving rise to the claim is for services
rendered on or after such Retiree Medical Eligible Employee's retirement
date; provided, however, that any expense for services rendered prior to,
-------- -------
on or following such retirement date during a hospital or institutional
confinement on an in-patient basis which hospitalization or
institutionalization commenced prior to such retirement date and which
continues uninterrupted to a date on or following such retirement date
shall be covered, if at all, under Buyer's applicable medical plan and not
under Seller's applicable post-retirement medical plan. Notwithstanding
the foregoing, if Buyer shall offer any Retiree Medical Eligible Employees
any compensation or benefit package not presently provided under any of
Buyer's benefit plans and arrangements the principal purpose of which is to
encourage such individuals to retire from employment with Buyer or any of
its Affiliates (a "Retirement Incentive Package"), Buyer shall become
liable to Seller for an amount determined as follows: the actuaries for
Seller's and Buyer's respective company-wide tax-qualified defined benefit
plans shall jointly determine the cost for the additional post-retirement
medical benefits borne by Seller as a consequence of the Retirement
Incentive Package offered by Buyer, and such amount shall be paid by Buyer
to Seller as soon as practicable following the determination of such
amount. Any dispute between the Seller's and Buyer's respective actuaries
as to any actuarial assumption used to calculate said costs shall be
resolved by a third actuary jointly selected by the Seller and Buyer whose
decision shall be final, binding and conclusive upon the parties and the
cost of which third actuary shall be shared equally by Seller and Buyer.
(iii) Seller shall be responsible for any continuation of group
health coverage required under Section 4980B of the Code or Sections 601
through 608 of ERISA with respect to any Transferred Employee or any
"qualified beneficiary" (as defined in Section 4980B of the Code) of any
such employee who incurs a "qualifying event" (as defined in Section 4980B
of the Code) prior to his hiring by Buyer, including any such qualifying
event incurred by reason of the employee's termination of employment with
Seller. Buyer shall be responsible for any continuation of group health
coverage required under Section 4980B of the Code or Sections 601 though
608 of ERISA with respect to
79
any Transferred Employee or any "qualified beneficiary" (as defined in
Section 4980B of the Code) of any such employee who incurs a "qualifying
event" (as defined in Section 4980B of the Code) after the employee's
hiring by Buyer.
(iv) Buyer shall be responsible in accordance with its applicable
disability plans for all short-term and long-term disability income
benefits payable to Transferred Employees with respect to a disability
incurred after hiring by Buyer of each Transferred Employee. Seller shall
be responsible in accordance with its applicable disability plans for all
other short-term and long-term disability benefits payable with respect to
a disability incurred by an employee or former employee at the Lake ▇▇▇▇▇▇▇
facility. Each Transferred Employee who commences employment with Buyer
shall be deemed not to be disabled and any disability claims made on or
after such date of hire by the Transferred Employee shall be deemed
incurred on or after such date of hire.
(v) Buyer shall be responsible for all life insurance coverage of
Transferred Employees and their dependents for claims incurred by such
employees or their dependents on and after the date of hire by Buyer of
such Transferred Employees. Seller shall be responsible for all claims
incurred prior to the date of hire by Buyer of Transferred Employees.
Notwithstanding the foregoing, Seller shall retain liability for the $5,000
post-retirement death benefits of the Transferred Employees who are
eligible to retire under the Seller's Qualified Pension Plans on the
Closing Date or would otherwise become eligible to retire under such plans
as in effect on the date of this Agreement within four years of the Closing
Date.
9.5 Other Benefit Plans and Arrangements. With respect to any
------------------------------------
other compensation and benefit plans and arrangements not specifically addressed
in Sections 9.2, 9.3 and 9.4 above, including but not limited to incentive
plans, bonus plans, equity-based compensation plans, severance plans, tuition
assistance plans, matching gift programs, employee discounts, and fringe benefit
plans, Seller shall retain all liability for benefits accrued or expenses
incurred on or prior to the Closing Date for Transferred Employees and Buyer
shall have no liability therefor. Transferred Employees shall participate in
such other benefit plans and arrangements as Buyer may, in its discretion,
determine on or after the Closing Date, with recognition thereunder for service
of Transferred Employees with Seller and its Affiliates prior to the Closing
Date solely for purposes of eligibility and vesting.
9.6 WARN Act. Seller agrees to provide any required notice under
--------
the WARN Act, and any similar state or local law, and otherwise to comply with
any such statute with respect to any "plant closing" or "mass layoff" (as
defined in the WARN Act) or similar event affecting Transferred Employees or
former employees of the Business and occurring up through and including the
Closing.
9.7 Cooperation; Employment Records. The parties agree to furnish
-------------------------------
each other with such information concerning employees and employee benefit
plans, and to take all such other action, as is necessary and appropriate to
effect the transactions contemplated by Article IX of this Agreement (including
the furnishing by Seller of any plan administrator's
80
interpretations or rulings with respect to any Benefit Plan to the extent that
Buyer determines to establish a plan with features similar thereto for the
benefit of Transferred Employees). Without limiting the generality of the
foregoing, as soon as practicable following the Closing, Seller shall provide to
Buyer the personnel and medical files of the Transferred Employees, subject,
with respect to such medical files, to any restrictions imposed under applicable
law and the receipt by Seller of any required authorizations from Transferred
Employees (which authorizations Seller shall make good faith efforts to obtain).
As soon as practicable after the date of this Agreement, Seller will deliver to
Buyer all relevant information in Seller's files (including I-9's) relating to
the visa status of any Business Employee employed in the United States on a
visa, subject to the receipt by Seller of any required authorizations from
Transferred Employees (which authorizations Seller shall make good faith efforts
to obtain).
9.8 Workers Compensation. Seller shall be responsible for all
--------------------
workers compensation claims filed by or on behalf of a Transferred Employee to
the extent attributable to events, occurrences or exposures prior to the
Closing; provided, however, that Seller shall not be responsible for any claims
-------- -------
filed by or on behalf of Transferred Employees at any time following the eighth
anniversary of the Closing Date. Buyer shall be responsible for all workers
compensation claims filed by or on behalf of a Transferred Employee to the
extent attributable to events, occurrences or exposures following the Closing
and for any claims filed by or on behalf of Transferred Employees following the
eighth anniversary of the Closing Date.
9.9 Employment Taxes. The parties agree that, to the extent
----------------
permissible under applicable law, Buyer shall be a successor employer for
purposes of the Federal Insurance Contributions Act, as codified at 26 U.S.C.
Sections 3101-3128, the Federal Unemployment Tax Act, as codified at 26 U.S.C.
Sections 3301-3311, and under any applicable state unemployment compensation
laws and Seller agrees to provide Buyer with such wage, tax and other
information with respect to Transferred Employees as Buyer may reasonably
require for those purposes.
ARTICLE X
---------
TERMINATION; MISCELLANEOUS
--------------------------
10.1 Termination. (a) This Agreement may be terminated and the
-----------
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date, as follows:
(i) by the mutual written agreement of Buyer and Seller;
(ii) by Buyer or Seller if the Closing has not occurred on or before
July 31, 1997; provided, that the termination right under this clause (ii)
--------
may not be exercised by a terminating party if such terminating party is
then in material breach of its obligations hereunder;
(iii) by Seller, upon written notice to Buyer, if there has been any
material violation or material breach by Buyer of any representation,
warranty, covenant or obligation contained in this Agreement that has
rendered the satisfaction of any condition
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to the obligations of Seller under Section 6.2 impossible to fulfill prior
to the date on which Seller would otherwise have the right to terminate
pursuant to this Section 10.1(a); provided, that Seller shall have given
--------
Buyer thirty (30) days' advance written notice setting forth in
reasonable detail the information upon which Seller bases its right to
terminate; and provided, further, that (A) such violation or breach shall
-------- -------
not have been cured by the end of such 30-day period and (B) the
termination right under this clause (iii) may not be exercised by a
terminating party if such terminating party is then in material breach of
its obligations hereunder; or
(iv) by Buyer, upon written notice to Seller, if there has been any
material violation or material breach by Seller of any representation,
warranty, covenant or obligation contained in this Agreement that has
rendered the satisfaction of any condition to the obligations of Buyer
under Section 6.1 impossible to fulfill prior to the date on which Buyer
would otherwise have the right to terminate pursuant to this Section
10.1(a); provided, that Buyer shall have given Seller thirty (30) days'
--------
advance written notice setting forth in reasonable detail the information
upon which Buyer bases its right to terminate; and provided, further, that
-------- -------
(A) such violation or breach shall not have been cured by the end of such
30-day period and (B) the termination right under this clause (iv) may not
be exercised by a terminating party if such terminating party is then in
material breach of its obligations hereunder.
(b) Except for the obligations contained in Section 7.1, the
last sentence of Section 5.5 and this Article X (other than Sections 10.2,
10.12, and 10.13) which shall survive any termination of this Agreement, upon
the termination of this Agreement pursuant to Section 10.1, this Agreement shall
forthwith become null and void, and no party hereto or any of its officers,
directors, employees, agents, consultants, stockholders or principals shall have
any rights, liabilities or obligations hereunder or with respect hereto;
provided, however, that nothing contained herein shall relieve any party hereto
-------- -------
from liability for any knowing breach or inaccuracy of any representation or
warranty contained herein or any willful failure to comply with any covenant or
agreement contained herein.
10.2 Further Assurances. From time to time prior to, at and after
------------------
the Closing Date, Buyer and Seller shall execute and deliver or cause to be
executed and delivered such further documents, certificates, instruments of
conveyance, assignment and transfer and take such further action as Buyer or
Seller may reasonably request in order more effectively to sell, assign, convey,
transfer, reduce to possession and record title to any of the Acquired Assets to
Buyer or to better enable Buyer to complete, perform and discharge any of the
Assumed Liabilities. Buyer and Seller agree to cooperate with each other in all
reasonable respects to assure to Buyer the continued title to and possession of
the Acquired Assets in the condition and manner contemplated by this Agreement.
Each party hereto shall cooperate and deliver such instruments and take such
action as may be reasonably requested by any other party hereto in order to
carry out the provisions and purposes of this Agreement and the transactions
contemplated hereby. Buyer and Seller shall cooperate and shall cause their
respective Affiliates, officers, employees, agents and representatives to
cooperate to ensure the orderly transition of the
82
Business from Seller to Buyer and to minimize the disruption to the Business
resulting from the transactions contemplated hereby.
10.3 Entire Agreement; Amendments; Waivers. This Agreement, the
-------------------------------------
Confidentiality Agreement, the Transaction Documents and the other documents
referred to herein and to be delivered pursuant hereto constitute the entire
agreement between the parties hereto pertaining to the subject matter hereof,
and supersede all prior agreements, understandings, negotiations and discussions
of the parties, whether oral or written. No amendment, supplement,
modification, waiver or termination of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision or breach of this Agreement, whether or not similar, unless
otherwise expressly provided.
10.4 Benefit; Assignment. This Agreement shall be binding upon and
-------------------
inure to the benefit of and shall be enforceable by the parties hereto and their
respective successors and permitted assigns. This Agreement shall not be
assigned by any party hereto without the prior written consent of the other
party hereto; provided, however, that Buyer may assign any or all of its rights
-------- -------
hereunder to one or more Affiliates of Buyer without the consent of Seller
provided that Buyer shall continue to be obligated to perform all of its
obligations hereunder. Any assignment in violation of this Section 10.4 shall
be null and void.
10.5 No Presumption. Buyer and the Seller have participated
--------------
jointly in the negotiation and drafting of this Agreement. In the event any
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by Buyer and the Seller, and no presumption
or burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any of the provisions of this Agreement.
10.6 Notices. Notices and other communications provided for herein
-------
shall be in writing and shall be deemed given only if delivered to the party
personally or sent to the party by telecopy, by registered or certified mail
(return receipt requested) with postage and registration or certification fees
thereon prepaid, or by any nationally recognized overnight courier, addressed to
the party at its address set forth below:
If to Seller: ▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, General Counsel
and Secretary
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
83
If to Buyer: ARCO Chemical Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager-Isocyanate
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as a party may from time to time designate in writing
in accordance with this section. All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.
10.7 Counterparts; Headings. This Agreement may be executed in
----------------------
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same Agreement. The
Article and Section headings in this Agreement are inserted for convenience of
reference only and shall not constitute a part hereof.
10.8 Severability. If any provision, clause or part of this
------------
Agreement or the application thereof under certain circumstances is held invalid
or unenforceable, the remainder of this Agreement, or the application of such
provision, clause or part under other circumstances, shall not be affected
thereby.
10.9 Third Party Beneficiaries. This Agreement is not intended and
-------------------------
will not be construed to confer upon any Person, other than the parties hereto,
the Buyer Indemnified Parties, the Seller Indemnified Parties and any assignees
permitted by Section 10.4, any rights or remedies hereunder.
10.10 Governing Law. This Agreement shall be construed and
-------------
interpreted according to the laws of the State of New York, without regard to
the conflict of law principles thereof.
10.11 Submission to Jurisdiction; Waivers. The parties hereto
-----------------------------------
hereby irrevocably and unconditionally agree that:
(a) Except as otherwise expressly provided herein, all actions
and proceedings arising out of or relating to this Agreement shall be heard and
determined in a New York state or federal court sitting in the City of New York,
and the parties hereto hereby irrevocably submit to the exclusive jurisdiction
of such courts in any such action or proceedings and irrevocably waive the
defense of an inconvenient forum to the maintenance of any such action or
proceeding.
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(b) Service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party at its
address as provided in Section 10.6.
10.12 Bulk Transfer and Sales Tax Successor Liability. The parties
-----------------------------------------------
hereto hereby waive compliance with the provisions of any applicable bulk sales
law of any jurisdiction in connection with the transactions contemplated hereby
and no representation, warranty or covenant contained in this Agreement shall be
deemed to have been breached as a result of such non-compliance. Seller hereby
agrees to indemnify, defend and hold Buyer harmless from and against any and all
Losses arising out of or relating to claims which may be asserted by third
parties, including Governmental Entities, against the Acquired Assets or any
Buyer Indemnified Parties (a) as a result of non-compliance with any applicable
bulk sales law or (b) pursuant to ▇▇.▇▇. 47:308 and regulations thereunder.
10.13 Use of Names. During the first 180 days after the Closing
------------
Date, Buyer shall have the right to use all of the logos, trademarks and trade
identification of Seller as are located at the Acquired Real Property or on the
Acquired Assets (collectively, the "Trademarks"). Buyer's use of the Trademarks
shall be in accordance with such reasonable quality control standards as shall
be promulgated by Seller and provided to Buyer. If Seller shall notify Buyer in
writing of Buyer's material failure to comply with such reasonable quality
control standards and Buyer continues to not comply with such reasonable quality
control standards for more than 20 days after receipt of such notice, Seller
shall have the right to terminate Buyer's right under this Section 10.13 to use
the Trademarks.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
ARCO CHEMICAL COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President and Chief
Operating Officer