EXHIBIT 2.1
EXECUTION VERSION
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
POLYONE CORPORATION
AND
OLMEC LLC
DATED AS OF JUNE 28, 2004
TABLE OF CONTENTS
PAGE
ARTICLE 1: DEFINITIONS............................................................................... 1
ARTICLE 2: PURCHASE AND SALE OF ASSETS............................................................... 9
2.1 Assets to be Transferred...................................................................... 9
2.2 Retained Assets............................................................................... 12
2.3 Nonassignable Items; Stock of Chinese Subsidiary.............................................. 13
ARTICLE 3: LIABILITIES............................................................................... 13
3.1 Assumed Liabilities........................................................................... 13
3.2 Retained Liabilities.......................................................................... 15
ARTICLE 4: PURCHASE PRICE............................................................................ 17
4.1 Payment of Purchase Price..................................................................... 17
4.2 Purchase Price Adjustment..................................................................... 17
4.3 Allocation of Purchase Price.................................................................. 20
4.4 Allocation of Taxes Other Than Income Taxes................................................... 20
4.5 Allocation of Income Taxes.................................................................... 21
ARTICLE 5: CLOSING AND CLOSING DELIVERIES............................................................ 21
5.1 Closing....................................................................................... 21
5.2 Deliveries by the Seller...................................................................... 21
5.3 Deliveries by the Buyer....................................................................... 23
5.4 Deliveries by Management...................................................................... 24
ARTICLE 6: REPRESENTATIONS AND WARRANTIES OF THE SELLER.............................................. 25
6.1 Organization, Existence and Good Standing..................................................... 25
6.2 Capitalization................................................................................ 25
6.3 Power and Authority to Conduct the E&PA Business.............................................. 26
6.4 Authority; Due Execution and Delivery; Validity and Enforceability............................ 26
6.5 No Conflict................................................................................... 26
6.6 Filings, Notices and Consents................................................................. 26
6.7 Financial Statements.......................................................................... 27
6.8 Taxes......................................................................................... 28
6.9 Title; Assets................................................................................. 29
6.10 Real Property................................................................................. 29
6.11 Necessary Property............................................................................ 30
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TABLE OF CONTENTS
PAGE
6.12 Intellectual Property......................................................................... 30
6.13 Litigation.................................................................................... 32
6.14 Compliance with Laws.......................................................................... 32
6.15 Labor and Employee Matters.................................................................... 32
6.16 Contracts..................................................................................... 33
6.17 Permits....................................................................................... 35
6.18 Environmental Matters......................................................................... 35
6.19 Employee Benefits............................................................................. 36
6.20 Brokers....................................................................................... 37
6.21 Absence of Changes; No Material Adverse Effect................................................ 37
6.22 Inventories................................................................................... 37
6.23 Warranty and Product Liability Claims......................................................... 37
6.24 Insurance..................................................................................... 38
6.25 Material Customers and Suppliers.............................................................. 38
6.26 Transactions with Related Parties............................................................. 38
6.27 Accuracy of Books and Records................................................................. 38
6.28 Liabilities of Transferred Subsidiaries....................................................... 39
6.29 Accredited Investor........................................................................... 39
ARTICLE 7: REPRESENTATIONS AND WARRANTIES OF THE BUYER............................................... 39
7.1 Organization, Existence and Good Standing..................................................... 39
7.2 Power......................................................................................... 39
7.3 Validity and Enforceability................................................................... 39
7.4 No Conflict................................................................................... 39
7.5 Consents...................................................................................... 40
7.6 Financial Ability............................................................................. 40
7.7 Brokers....................................................................................... 40
7.8 No Reliance................................................................................... 40
7.9 Subordinated Promissory Note.................................................................. 41
7.10 HSR........................................................................................... 41
7.11 Investment Intent............................................................................. 41
7.12 Knowledge and Sophistication.................................................................. 41
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TABLE OF CONTENTS
PAGE
7.13 Accredited Investor........................................................................... 41
ARTICLE 8: COVENANTS AND AGREEMENTS.................................................................. 41
8.1 Conduct of E&PA Business...................................................................... 41
8.2 Reasonable Access; Confidentiality............................................................ 43
8.3 Publicity..................................................................................... 44
8.4 Records....................................................................................... 44
8.5 Injunctions................................................................................... 44
8.6 Further Assurances; Subsequent Transfers...................................................... 44
8.7 Post-Closing Receipts......................................................................... 45
8.8 Commercially Reasonable Efforts............................................................... 45
8.9 Name and ▇▇▇▇ Usage........................................................................... 46
8.10 Cancellation of Intercompany Obligations...................................................... 46
ARTICLE 9: CONDITIONS TO CLOSING..................................................................... 47
9.1 Conditions Precedent to Obligations of the Buyer and the Seller............................... 47
9.2 Additional Conditions Precedent to Obligations of the Buyer................................... 47
9.3 Additional Conditions Precedent to Obligations of the Seller.................................. 48
ARTICLE 10: ADDITIONAL COVENANTS AND AGREEMENTS....................................................... 48
10.1 Cooperation; Audits........................................................................... 48
10.2 Transfer Taxes................................................................................ 49
10.3 Employees and Employee Benefits............................................................... 49
10.4 WARN Act...................................................................................... 52
10.5 Additional Purchased Assets................................................................... 52
10.6 No Solicitation............................................................................... 52
10.7 Insurance..................................................................................... 52
10.8 Tax Controversies............................................................................. 53
10.9 Transfer of State Unemployment Tax Experience and Reserves.................................... 53
10.10 Notification Regarding Dyersburg, Tennessee................................................... 53
ARTICLE 11: TERMINATION OF AGREEMENTS................................................................. 54
11.1 Termination................................................................................... 54
11.2 Effect of Termination......................................................................... 55
ARTICLE 12: REMEDIES.................................................................................. 55
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TABLE OF CONTENTS
PAGE
12.1 General Indemnification Obligation............................................................ 55
12.2 Notice and Opportunity to Defend.............................................................. 55
12.3 Survivability; Limitations.................................................................... 57
12.4 Specific Performance.......................................................................... 58
12.5 Environmental Remediation for Certain Retained Liabilities.................................... 59
ARTICLE 13: MISCELLANEOUS............................................................................. 60
13.1 Expenses...................................................................................... 60
13.2 Successors and Assigns; No Assignment......................................................... 60
13.3 Third Party Beneficiaries..................................................................... 60
13.4 Headings...................................................................................... 61
13.5 Integration, Modification and Waiver.......................................................... 61
13.6 Construction.................................................................................. 61
13.7 Severability.................................................................................. 61
13.8 Disclosure Schedule Supplements............................................................... 61
13.9 Notices....................................................................................... 62
13.10 Governing Law; Waiver of Jury Trial........................................................... 63
13.11 Counterparts.................................................................................. 64
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LIST OF EXHIBITS
Exhibit A Form of Subordinated Promissory Note
Exhibit B Form of ▇▇▇▇ of Sale and Instrument of Assignment and
Assumption
Exhibit C Form of Purchased Intellectual Property Assignment
Exhibit D Form of Seller Non-competition Agreement
Exhibit E Terms of Supply Agreement
Exhibit F Form of Transition Services Agreement
Exhibit G Form of Brand License Agreement
Exhibit H Form of Legal Opinion of Seller's Counsel
Exhibit I Form of Seller Confidentiality Agreement
Exhibit J Form of PolyOne Receivable
Exhibit K Terms of Services Agreement
Exhibit L Form of Patent and Technology License
Exhibit M Form of Receipt
Exhibit N Form of Buyer Confidentiality Agreement
Exhibit O Form of Legal Opinion of Buyer's Counsel
Exhibit P Form of Management Certificate
Exhibit Q-1/Q-2 Debt Commitment Letters
Exhibit R-1/R-2 Equity Commitment Letters
Exhibit S Forms of Mexican Stock Purchase Agreements
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INDEX OF SCHEDULES
Schedule 2.1(c) Owned Real Property
Schedule 2.1(d) Leased Real Property
Schedule 2.1(r) Off Premise Fixed Assets
Schedule 2.2(d) Certain U.K. Assets
Schedule 2.2(h) Property Retained by the Seller to be Sold to Suppliers
and/or Customers of E&PA and Other Property
Schedule 4.1 Management Bonuses
Schedule 4.2 Working Capital Statement
Schedule 4.3 Allocation of Purchase Price
Schedule 5.2(d) Closing Consents
Schedule 5.4 Management
Schedule 6.2 Capitalization
Schedule 6.5 No Conflict
Schedule 6.6 Consents
Schedule 6.7 Financial Statements
Schedule 6.8(c) Taxes
Schedule 6.8(g) Affiliated Group
Schedule 6.9 Title
Schedule 6.10 Real Property
Schedule 6.11 Necessary Property
Schedule 6.12(a) Intellectual Property
Schedule 6.12(b) Intellectual Property Claims
Schedule 6.12(c) Intellectual Property Licenses
Schedule 6.12(e) Abandoned Filings
Schedule 6.13 Litigation
Schedule 6.14 Compliance with Laws
Schedule 6.15 Labor Matters
Schedule 6.16 Contracts
Schedule 6.17 Permits
Schedule 6.18 Environmental Matters
Schedule 6.19 Employee Benefits
Schedule 6.20 Seller's Brokers
Schedule 6.21 Absence of Change
Schedule 6.22 Inventories
Schedule 6.23 Warranty and Product Liability Claims
Schedule 6.24 Insurance
Schedule 6.25 Material Customers and Suppliers
Schedule 6.26 Transactions With Related Parties
Schedule 6.28 Liabilities of Transferred Subsidiaries
Schedule 7.5 Buyer's Consents
Schedule 7.7 Buyer's Brokers
Schedule 8.1 Conduct of E&PA Business
Schedule 10.3(a) Transferred Employees
Schedule 10.3(e) Premium Information
vi
Schedule 10.3(f) Retiree Medical Coverage
Schedule 10.5 Additional Purchased Assets
Schedule 12.5(a) Environmental Consultants
vii
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
this 28th day of June, 2004, is by and between Olmec LLC, a Delaware limited
liability company (the "BUYER"), and PolyOne Corporation, an Ohio corporation
(the "SELLER").
RECITALS
A. The Seller, by and through its Elastomers & Performance
Additives group, is engaged in the business of compounding, mixing and selling
(i) thermoset elastomers, (ii) additives for thermoset elastomers and (iii)
colorants for thermoset elastomers, at the following locations: ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇; ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇; ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇;
LaNoria ▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇; ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇; and Factory Building ▇▇. ▇, ▇▇▇▇▇
▇▇, ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Industrial Zone, Shanghai 201300
China (together with the UK Business (as defined below), the "E&PA BUSINESS");
B. The Seller desires to sell to the Buyer, and the Buyer
desires to purchase and acquire from the Seller, upon the terms and subject to
the conditions set forth in this Agreement, substantially all of the Seller's
assets, property, rights and interests used or held for use in the operation of
the E&PA Business as further described below, in consideration of certain
payments by the Buyer and the assumption by the Buyer of certain liabilities and
obligations of the Seller specifically described in this Agreement; and
C. The Seller desires to retain all of its assets, property,
rights, interests, liabilities and obligations not transferred to, or assumed
by, the Buyer under this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
representations and upon the terms and subject to the conditions set forth in
this Agreement, and other good and valuable consideration, had and received, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE 1: DEFINITIONS
"ACCOUNTS RECEIVABLE" means any and all accounts receivable,
notes and other amounts receivable from third parties arising out of the
operation of the E&PA Business, whether or not in the Ordinary Course of
Business, including, without limitation, any such account receivable from
customers and employees, together with any unpaid financing charges accrued
thereon.
"ADDITIONAL PURCHASED ASSETS" has the meaning set forth in
SECTION 10.5.
"AFFILIATE" of any Person means any Person, directly or
indirectly, through one or more intermediaries, Controlling, Controlled by, or
under common Control with, any such Person and any officer, director or
Controlling person of such Person.
"AGREEMENT" has the meaning set forth in the preamble.
"ALTERNATE TRANSACTION" means (a) any stock purchase, merger,
consolidation, reorganization, change in organizational form, spin-off,
split-off, recapitalization, sale of equity interests or other similar
transaction involving the E&PA Business or any legal entity formed to hold any
assets of the E&PA Business, or (b) any sale of all or any significant portion
of the assets of the E&PA Business, or (c) any other transaction in respect of
the Seller or the E&PA Business that results directly or indirectly, in a change
of ownership of the E&PA Business, or (d) any other transaction or series of
transactions that has substantially similar economic effects, in each such case,
in which transaction the Buyer does not participate in a manner that preserves
the ability of the Buyer to purchase the E&PA Business on the terms and
conditions set forth in this Agreement.
"ANCILLARY AGREEMENTS" means the ▇▇▇▇ of Sale and Instrument
of Assumption and Assignment, the Purchased Intellectual Property Assignment,
the Seller Non-competition Agreement, the Buyer Confidentiality Agreement, the
Seller Confidentiality Agreement, the Supply Agreement, the Transition Services
Agreement, the Services Agreement, the Receipt, the Brand License Agreement, the
Patent and Technology License, the PolyOne Receivable, the Subordinated
Promissory Note, the Mexican Stock Purchase Agreements and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by the Buyer or the Seller in connection with the consummation of the
transactions contemplated by this Agreement, in each case only as applicable to
the relevant party or parties to such Ancillary Agreement, as indicated by the
context in which such term is used.
"ARBITRATION FIRM" has the meaning set forth in SECTION
4.2(c).
"ASSUMED CONTRACTS" has the meaning set forth in SECTION
2.1(h).
"ASSUMED LIABILITIES" has the meaning set forth in SECTION
3.1.
"AUDITED DECEMBER FINANCIAL STATEMENTS" has the meaning set
forth in SECTION 6.7.
"AUDITED FINANCIAL STATEMENTS" has the meaning set forth in
SECTION 6.7.
"BRAND LICENSE AGREEMENT" has the meaning set forth in SECTION
5.2(n).
"BUYER" has the meaning set forth in the preamble.
"BUYER CONFIDENTIALITY AGREEMENT" has the meaning set forth in
SECTION 5.3(e).
"BUYER PLANS" has the meaning set forth in SECTION 10.3(c).
"BUYER SAVINGS PLANS" has the meaning set forth in SECTION
10.3(d).
"BUYER WELFARE PLAN" has the meaning set forth in SECTION
10.3(e).
"CASH" means all cash, cash equivalents, cash in transit, bank
accounts, marketable securities, notes, checks, drafts and similar instruments.
"CERCLA" has the meaning set forth in SECTION 6.18(f).
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"CHINESE CONSENTS" has the meaning set forth in SECTION
2.3(b).
"CHINESE STOCK" has the meaning set forth in SECTION 2.3(b).
"CLAIMS NOTICE" has the meaning set forth in SECTION 12.2(a).
"CLOSING" has the meaning set forth in SECTION 5.1.
"CLOSING DATE" has the meaning set forth in SECTION 5.1.
"CLOSING NET WORKING CAPITAL" means the amount by which (a)
the sum of all net Accounts Receivable and net Inventories of the E&PA Business,
in each case as included in the Purchased Assets, is greater than (b) the trade
accounts payable (including liabilities and obligations for outstanding checks
in transit (including outstanding checks, drafts and similar instruments) not
cashed as of the Closing Date), as of the opening of business on the Closing
Date, prepared in a manner consistent with past practice and SCHEDULE 4.2;
provided, however that the Closing Net Working Capital does not include the
PolyOne Receivable as an Account Receivable (but instead includes the PolyOne
Receivable in Inventory) or include claims for refunds of Taxes described in
SECTION 2.2(f).
"COBRA" has the meaning set forth in SECTION 10.3(b).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT LETTERS" has the meaning set forth in SECTION 7.6.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in
SECTION 8.2(b).
"CONSENTS" has the meaning set forth in SECTION 6.6.
"CONTRACTS" means all contracts, agreements, leases (whether
real or personal property), sale and purchase orders, commitments, instruments,
licenses, sublicenses and guarantees.
"CONTROL" means, as to any Person, the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise and the
terms "CONTROLLED" or "CONTROLLING" have a correlative meaning.
"DEBT COMMITMENT LETTERS" has the meaning set forth in SECTION
7.6.
"DEDUCTIBLE" has the meaning set forth in SECTION 12.3(b).
"DISCLOSURE SCHEDULES" has the meaning set forth in SECTION
13.8.
"E&PA BALANCE SHEET" means the audited balance sheet as of
December 31, 2003 for the E&PA Business.
"E&PA BUSINESS" has the meaning set forth in the preamble.
3
"EMPLOYEE PLANS" has the meaning set forth in SECTION 6.19(a).
"ENVIRONMENT" means surface waters, groundwater, sediments,
surface or subsurface strata, air and natural resources such as wetlands, flora
and fauna.
"ENVIRONMENTAL LAW" means any Laws, including principles of
common law or Orders, relating to pollution or protection of human health or the
Environment, including those relating to the manufacture, use, transport,
treatment, storage, disposal, Release or threatened Release of Hazardous
Materials.
"EQUITY COMMITMENT LETTERS" has the meaning set forth in
SECTION 7.6.
"ERISA" has the meaning set forth in SECTION 6.19(a).
"ESTIMATED NET WORKING CAPITAL" has the meaning set forth in
SECTION 4.2(a).
"EXCLUDED REPRESENTATIONS" has the meaning set forth in
SECTION 12.3(a).
"EXPIRATION DATE" has the meaning set forth in SECTION
12.3(a).
"FINAL CASH PORTION" has the meaning set forth in SECTION
4.2(e).
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION
6.7.
"GAAP" means U.S. generally accepted accounting principles.
"GENERAL ENFORCEABILITY EXCEPTIONS" has the meaning set forth
in SECTION 6.4.
"GOVERNMENTAL AUTHORITY" means any government or political
subdivision or regulatory or administrative body, whether federal, state,
provincial, local or foreign, or any agency, commission or instrumentality of
any such government or political subdivision or regulatory authority, or any
federal, state, local or foreign court, tribunal, or judicial or arbitral body.
"HAZARDOUS MATERIAL" means any pollutant, contaminant,
substance, waste or material including petroleum, or petroleum-containing
materials, radiation and radioactive materials and polychlorinated biphyenyls,
asbestos and asbestos-containing materials and contaminants, which is subject to
regulation or could give rise to liability under any Environmental Law.
"HOLDCO" has the meaning set forth in SECTION 7.6.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"INCLUDING" has the meaning set forth in SECTION 13.6.
"INCOME TAXES" has the meaning set forth in SECTION 4.4.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION
12.2(a).
4
"INDEMNIFYING PARTY" has the meaning set forth in SECTION
12.2(a).
"INITIAL PURCHASE PRICE" has the meaning set forth in SECTION
4.1.
"INSURANCE POLICIES" has the meaning set forth in SECTION
6.24.
"INTELLECTUAL PROPERTY" means any and all : (i) patents and
patent applications and reissues, reexaminations, extensions, divisionals and
continuations thereof; (ii) trademarks, service marks, trade dress, logos, other
indicia of origin, and Internet domain names, URLs, and registrations and
applications for registration thereof together with all of the goodwill
associated therewith; (iii) copyrights, copyright registrations and applications
for copyright registration (including copyrights in computer software, data,
databases, website content and documentation thereof) and database rights; (iv)
proprietary information and trade secrets (whether technical or business
information, including recipes, formulas, compositions, inventions, know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, financial and marketing plans and customer and supplier lists and
information); and (v) foreign equivalent or counterparts to the foregoing issued
or recognized by any Governmental Authority. "LISTED INTELLECTUAL PROPERTY"
means clauses (i) through (iii) and (v) to the extent clause (v) relates to
clauses (i) through (iii), and "UNLISTED INTELLECTUAL PROPERTY" means clause
(iv) and clause (v) to the extent it relates to clause (iv).
"INVENTORY" means all inventories of raw materials, supplies,
works-in-process, merchandise, finished goods, inventory held for sale, spare
parts, packaging, storeroom contents and similar items primarily used or held
for use in the operation of the E&PA Business; provided, that Inventory excludes
any commingled inventory held in the Seller warehouses located at Halls,
Tennessee, Elyria, Ohio and Houston, Texas on the date hereof; provided further,
for purposes of calculating the Closing Net Working Capital, Inventory includes
the PolyOne Receivable.
"KNOWLEDGE" has the meaning set forth in SECTION 13.6.
"LAW" means any federal, state, provincial, local or foreign
law, statute, code, ordinance, regulation, rule, order or other requirement of
any Governmental Authority.
"LEASED REAL PROPERTY" has the meaning set forth in SECTION
2.1(d).
"LIABILITY CLAIM" has the meaning set forth in SECTION
12.2(a).
"LIEN" means any mortgage, deed of trust, lien, pledge,
encumbrance, security interest, hypothecation, lease, claim, or charge.
"LION" means Lion Chemical Capital, LLC.
"LOSSES" has the meaning set forth in SECTION 12.1.
"MANAGEMENT" has the meaning set forth in SECTION 5.4.
5
"MANAGEMENT BONUSES" means the management retention bonuses
granted by the Seller to certain members of the management of the E&PA Business
and payable either at or subsequent to the occurrence of the Closing as set
forth on SCHEDULE 4.1.
"MATERIAL ADVERSE EFFECT" means any event or change that
results in, or has, a materially adverse change in or effect on the business,
assets, liabilities, results of operations, or condition (financial or
otherwise) of the E&PA Business (including the Transferred Subsidiaries) or on
the Seller's ability to perform its obligations under this Agreement or any
Ancillary Agreement, except for such (a) changes that affect generally the
thermoset elastomer, thermoset elastomer additives and thermoset elastomer
colorants industries and do not disproportionately affect the E&PA Business or
(b) changes or effects resulting from entering into this Agreement or the
Ancillary Agreements, the announcement thereof or the consummation of the
transactions contemplated hereby or thereby.
"MEXICAN ACQUISITIONCO" has the meaning set forth in the
definition of Mexican Stock Purchase Agreements.
"MEXICAN STOCK PURCHASE AGREEMENTS" means those certain stock
purchase agreements, dated as of the Closing Date, among the Buyer, a Mexican
variable stock corporation or other Person affiliated with the Buyer ("MEXICAN
ACQUISITIONCO"), PolyOne Controladora, S.A. de C.V. and PolyOne de Mexico, S.A.
de C.V. pursuant to which PolyOne Controladora, S.A. de C.V. and PolyOne de
Mexico, S.A. de C.V. shall transfer to the Buyer and Mexican AcquisitionCo all
of the issued and outstanding shares of capital stock of each of PolyOne E.C. de
Mexico, S.A. de C.V., PolyOne E.C. Servicios S.A. de C.V., in substantially the
form attached hereto as EXHIBIT S.
"ORDER" means any order, judgment, injunction, award, decree,
stipulation, ruling, charge or writ of any Governmental Authority.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of the
E&PA Business consistent with past custom and practice.
"OUTSIDE DATE" has the meaning set forth in SECTION 11.1(b).
"OWNED REAL PROPERTY" has the meaning set forth in SECTION
2.1(c).
"PATENT AND TECHNOLOGY LICENSE" has the meaning set forth in
SECTION 5.2(u).
"PERMIT" means any permit, franchise, license, approval,
variance, consent or authorization issued by a Governmental Authority.
"PERMITTED LIENS" has the meaning set forth in SECTION 6.9.
"PERSON" means any individual, sole proprietorship, general or
limited partnership, corporation, limited liability company, unincorporated
society or association, firm, trust, Governmental Authority or other entity.
"POLYONE RECEIVABLE" means a receivable to the Buyer from the
Seller equal to an amount not to exceed $3,000,000, representing the value of
the commingled inventory held in
6
the Seller's warehouses located at Halls, Tennessee, Elyria, Ohio and Houston,
Texas, established as a part of Estimated Net Working Capital as provided for in
SECTION 4.2(a).
"PRELIMINARY CASH PORTION" has the meaning set forth in
SECTION 4.2(a).
"PRODUCT LIABILITY CLAIMS" has the meaning set forth in
SECTION 3.1(h).
"PURCHASE ORDERS" has the meaning set forth in SECTION 2.1(i).
"PURCHASE PRICE" has the meaning set forth in SECTION 4.1.
"PURCHASED ASSETS" has the meaning set forth in SECTION 2.1.
"PURCHASED INTELLECTUAL PROPERTY" has the meaning set forth in
SECTION 2.1(k).
"PURCHASED INTELLECTUAL PROPERTY ASSIGNMENT" has the meaning
set forth in SECTION 5.2(e).
"PURCHASED STOCK" has the meaning set forth in SECTION 2.1(o).
"RECORDS" has the meaning set forth in SECTION 8.4.
"RELEASE" means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of a Hazardous Material into the Environment.
"RETAINED ASSETS" has the meaning set forth in SECTION 2.2.
"RETAINED LIABILITIES" has the meaning set forth in SECTION
3.2.
"RETAINED TRADE NAMES" has the meaning set forth in SECTION
8.9.
"SANTA FE VACATION" means the accrued vacation that will
become due and payable on the Closing Date to certain employees of the E&PA
Business employed in Santa Fe Springs, California.
"SELLER" has the meaning set forth in the preamble.
"SELLER CONFIDENTIALITY AGREEMENT" has the meaning set forth
in SECTION 5.2(q).
"SELLER NON-COMPETITION AGREEMENT" has the meaning set forth
in SECTION 5.2(g).
"SELLER SAVINGS PLAN" has the meaning set forth in SECTION
10.3(d).
"SELLER WELFARE PLANS" has the meaning set forth in SECTION
10.3(e).
"SERVICES AGREEMENT" has the meaning set forth in SECTION
5.2(t).
"STRADDLE PERIOD" has the meaning set forth in SECTION 3.1(i).
7
"SUBORDINATED PROMISSORY NOTE" has the meaning set forth in
SECTION 4.1.
"SUPPLY AGREEMENT" has the meaning set forth in SECTION
5.2(h).
"TAX" means any tax, assessment, charge, duty, fee, levy or
other governmental charge, including, without limitation, any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, value added, transfer, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, personal, premium,
property, estimated environmental or windfall profit tax, custom, duty or other
tax, governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest penalties, additions to tax or additional amounts
imposed by any Taxing Authority and will include any liability for such amounts
as a result either of being a member of a combined, consolidated, unitary or
affiliated group or of a contractual obligation to indemnify any Person or other
entity.
"TAX MATTER" has the meaning set forth in SECTION 10.8(a).
"TAX RETURNS" means all tax returns, statements, forms and
reports (including elections, declarations, disclosures, schedules, estimates
and information returns) for Taxes.
"TAXING AUTHORITY" means any Governmental Authority
responsible for the imposition of any Tax.
"TRANSFERRED EMPLOYEES" has the meaning set forth in SECTION
10.3(a).
"TRANSFERRED SUBSIDIARIES" means PolyOne E.C. de Mexico, S.A.
de C.V., a Mexican Sociedad Anonima de Capital Variable, PolyOne E.C. Servicios
S.A. de C.V., a Mexican Sociedad Anonima de Capital Variable and PolyOne
Elastomers & Performance Additives (Shanghai) Co., Ltd., a Chinese limited
liability company.
"TRANSFERRED SUBSIDIARIES' GOVERNING DOCUMENTS" has the
meaning set forth in SECTION 5.2(k).
"TRANSITION PERIOD" has the meaning set forth in SECTION
10.3(e).
"TRANSITION PLAN" has the meaning set forth in SECTION
10.3(a).
"TRANSITION SERVICES AGREEMENT" has the meaning set forth in
SECTION 5.2(i).
"U.K. BUSINESS" means the business engaged in by the Seller in
the United Kingdom, by and through its Elastomers & Performance Additives group,
of compounding and selling thermoset elastomer roll compounds.
"UNAUDITED APRIL FINANCIAL STATEMENTS" has the meaning set
forth in SECTION 6.7.
"UNAUDITED DECEMBER FINANCIAL STATEMENTS" has the meaning set
forth in SECTION 6.7.
8
"UNAUDITED FINANCIAL STATEMENTS" has the meaning set forth in
SECTION 6.7.
"URL" has the meaning set forth in SECTION 6.12(a).
"WARN ACT" has the meaning set forth in SECTION 6.15(b).
"WARRANTY CLAIMS" has the meaning set forth in SECTION 3.1(g).
"WARRANTY AND PRODUCT LIABILITY CLAIMS" has the meaning set
forth in SECTION 6.23.
"WORKING CAPITAL STATEMENT" has the meaning set forth in
SECTION 4.2(b).
ARTICLE 2: PURCHASE AND SALE OF ASSETS
2.1 ASSETS TO BE TRANSFERRED. At the Closing and effective as
of the Closing Date, the Buyer shall purchase, acquire and accept from the
Seller, and the Seller shall, or shall cause its Affiliates to, sell, transfer,
assign, convey and deliver to the Buyer, all of the Seller's assets, properties,
rights, agreements and other interests primarily used or held for use in the
operation of the E&PA Business by the Seller and its Affiliates, in each case,
whether tangible or intangible, owned, leased or licensed, real, personal or
mixed, as the same will exist on the Closing Date (collectively, the "PURCHASED
ASSETS"). In addition to and without limiting the immediately preceding sentence
(except with respect to those categories of assets specifically described below,
with respect to which the specific description set forth below will govern), the
Purchased Assets will include all of the Seller's right, title and interest
(free and clear of any Liens, other than Permitted Liens) in the following:
(a) Cash. All Cash held by, or for the benefit of the
E&PA Business by, any Transferred Subsidiary on the Closing Date;
(b) Prepaids. All prepaid expenses, advance payments,
deposits and other similar assets relating solely to the E&PA Business;
(c) Owned Real Property. All real property described
on SCHEDULE 2.1(c), including all buildings, structures, improvements
and fixtures located thereon and all appurtenant rights, privileges and
easements and right, title and interest of the Seller and the
Transferred Subsidiaries thereto, including all such right, title and
interest in and to all public and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇,
alleys or passageways (open or proposed) that relate to such real
property (the "OWNED REAL PROPERTY");
(d) Leased Real Property. The Seller's and the
Transferred Subsidiaries' right, title and interest in and under the
real estate leases described on SCHEDULE 2.1(d) and, to the extent
covered by the real estate leases, all buildings, structures,
improvements, fixtures and other property attached thereto or located
thereon (the "LEASED REAL PROPERTY");
(e) Fixed Assets. Except as provided for on SCHEDULE
2.2(h), all tangible personal property and equipment (including, but
not limited to, all furniture, fixtures, equipment, copiers, telephones
and laptop computers, machinery and other
9
tangible personal property) used or held for use in the operation of
the E&PA Business and located at the Owned Real Property and the Leased
Real Property locations;
(f) Inventory. All Inventory located at the Owned
Real Property, the Leased Real Property locations and all inventories
of raw materials, supplies, works-in-process, merchandise, finished
goods, inventory held for sale, spare parts, packaging, storeroom
contents and similar items at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇;
(g) Accounts Receivable. All Accounts Receivable and
the PolyOne Receivable;
(h) Contracts. All rights of, and benefits accruing
to, the Seller in and to all Contracts entered into by or on behalf of
the Seller relating solely to the E&PA Business, including the
Contracts listed on SCHEDULE 6.16 (the "ASSUMED CONTRACTS");
(i) Purchase Orders. All open purchase and sales
orders relating solely to the E&PA Business (the "PURCHASE ORDERS");
(j) Bids and Quotations. All outstanding bids,
quotations or proposals that have been submitted or made by or on
behalf of the Seller to the extent relating to the E&PA Business;
(k) Purchased Intellectual Property. All rights,
titles and interests in, to and under (i) the Listed Intellectual
Property owned or controlled by the Seller primarily used or held for
use in the operation of the E&PA Business and (ii) the Unlisted
Intellectual Property owned or controlled by the Seller solely used or
held for use in the operation of the E&PA Business (collectively, the
"PURCHASED INTELLECTUAL PROPERTY");
(l) Permits. All Permits and similar rights obtained,
issued or granted to or for the benefit of the Seller primarily used in
the operation of the E&PA Business;
(m) Books and Records. Copies of all books and
records, including all computerized books and records and all
Contracts, files, documents, invoices, forms, correspondence, Tax
records, customer and supplier records, promotional and advertising
materials, technical data, operating records, operating manuals,
instructional documents, employee files, accounting records (which such
copies, in the case of accounting records maintained in electronic
format, may be delivered in the form of access to the appropriate
electronic database) and other printed or written materials, to the
extent primarily used or held for use in the operation of the E&PA
Business; provided, however, that the Seller shall provide the Buyer
and its authorized agents and representatives access to the original
versions of such accounting records on the terms and conditions as set
forth in SECTION 10.1 of this Agreement and otherwise retain and not
dispose of such accounting records and files other than as set forth in
SECTION 8.4 of this Agreement;
(n) Insurance Rights. Any rights of every nature or
description under or arising out of the Seller's Insurance Policies to
the extent such rights relate solely to: (i) one or more Assumed
Liabilities or (ii) the Purchased Assets to the extent that such rights
are rights of the Seller in respect of the Purchased Assets and arise
as a result of a
10
loss or other event occurring between the date of this Agreement and
the Closing Date; provided, however, that, without affecting any other
rights of the Seller under this Agreement, the Seller is not
responsible for paying or reimbursing the Buyer for any deductible
related to any of the insurance rights described in this SECTION
2.1(n).
(o) Stock of Subsidiaries. All of the issued and
outstanding shares of capital stock of each of PolyOne E.C. de Mexico,
S.A. de C.V., PolyOne E.C. Servicios S.A. de C.V. and, subject to
SECTION 2.3(b), all of the issued and outstanding ownership interest in
PolyOne Elastomers & Performance Additives (Shanghai) Co., Ltd. (the
"PURCHASED STOCK");
(p) Other Intangible Assets. All goodwill and similar
intangible assets, including all income and payments due or payable at
the Closing or thereafter (including damages and payments for past or
future infringements or misappropriations thereof and the right to ▇▇▇
and recover for past infringement thereof), relating solely to the E&PA
Business;
(q) Certain Rights. Except as set forth in SECTION
2.2(b), all rights, claims, privileges, security, escrow or similar
deposits, rights to refunds, causes of action, choses in action, rights
of recovery and rights of set-off, third-party indemnities, bonds,
fidelity, surety, judgments, of any kind (including rights under and
pursuant to all warranties, representations and guarantees made by
suppliers of products, materials or equipment, or components thereof),
pertaining to or arising primarily from the operation of the E&PA
Business, the Purchased Assets or the Assumed Liabilities (whether
known or unknown, contingent or otherwise);
(r) Off Premise Fixed Assets. All tangible personal
property and equipment (including, but not limited to, all furniture,
fixtures, equipment, copiers, telephones and laptop computers,
machinery and other tangible personal property) set forth on SCHEDULE
2.1(r);
(s) Certain U.K. Assets. All assets, properties,
rights and interests used primarily in the U.K. Business and not set
forth on SCHEDULE 2.2(d);
(t) Other Rights. All of the Seller's right, title
and interest in and to all other assets, rights and claims of every
kind and nature solely used or held for use in the operation of the
E&PA Business, except for the Retained Assets; and
(u) Intercompany Obligations. All of the rights and
interest of the Seller and its Affiliates (other than the Transferred
Subsidiaries) in any obligation or liability (including indebtedness
for borrowed money) owed by the E&PA Business and/or the Transferred
Subsidiaries to the Seller and/or its Affiliates (other than the
Transferred Subsidiaries) incurred on or prior to the Closing Date to
the extent such obligations or liabilities have not been cancelled
pursuant to SECTION 8.10.
2.2 RETAINED ASSETS. Notwithstanding anything in SECTION 2.1
to the contrary, the Purchased Assets exclude the following assets, properties,
rights and interests (collectively, the "RETAINED ASSETS"), and the Buyer will
in no way be construed to have
11
purchased or acquired (or to be obligated to purchase or to acquire) any
interest whatsoever in any of the Retained Assets:
(a) All Cash, except for any Cash held on the Closing
Date by, or for the benefit of the E&PA Business by, any Transferred
Subsidiary;
(b) All amounts resulting from any antitrust or
price-fixing litigation, action, suit, claim, proceeding or
investigation arising out of actions taken or not taken by suppliers of
the E&PA Business or suppliers of the Seller prior to the Closing Date;
it being understood that, without limiting the right of the Seller to
control the prosecution or settlement of any such litigation, action,
suit, claim, proceeding or investigation, the Seller shall not retain
any right to receive any benefit from any changes in terms to the
Buyer, its subsidiaries or the E&PA Business at any time after the
Closing Date, whether or not such changes in terms result, directly or
indirectly, from any litigation, action, suit, claim, proceeding, or
investigation;
(c) All tangible assets and property (other than
inventory specified in SECTION 2.1(f)), and rights and interests
therein, of the Seller located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
and ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ that are not listed on
SCHEDULE 2.1(r);
(d) All assets, property, rights and interests
therein of the Seller used in the U.K. Business that are listed on
SCHEDULE 2.2(d);
(e) The Retained Trade Names;
(f) Any refund of Taxes attributable to any taxable
period ending before the Closing Date or, with respect to a Straddle
Period, attributable to the portion of such Straddle Period ending on
and including the Closing Date, however generated, but excluding any
refund to the extent received as a result of the carry back of a net
operating or capital loss arising in any taxable period beginning after
the Closing Date;
(g) All rights and interests of the Seller under (i)
this Agreement and the Ancillary Agreements and (ii) any rights and
interests of the Seller or any of its Subsidiaries under, or any
tangible or intangible assets or property that are the subject of, the
Services Agreement, the Supply Agreement, the Brand License Agreement,
the Patent and Technology License, the PolyOne Receivable and the
Transition Services Agreement, subject in the case of clause (ii) to
the Buyer's rights under such agreements;
(h) The equipment set forth on SCHEDULE 2.2(h); and
(i) All rights, title and interest in, to and under
any assets of the same nature as the categories of assets covered by
SECTIONS 2.1(h), 2.1(i), 2.1(k)(ii), 2.1(n), 2.1(p) and 2.1(t) to the
extent such assets are not Purchased Assets as defined in those
sections.
12
2.3 NONASSIGNABLE ITEMS; STOCK OF CHINESE SUBSIDIARY.
(a) Notwithstanding anything in this Agreement to the
contrary, this Agreement does not constitute an agreement to sell,
transfer, assign, convey and deliver any Purchased Asset, including any
Assumed Contract, Purchase Order or Permit, if an attempted sale,
transfer, assignment, conveyance or sublease of such Purchased Asset is
prohibited by the terms of any such Assumed Contract, Purchase Order or
Permit or any other Contract governing any such Purchased Asset or by
applicable Law without the consent of another Person ("NONASSIGNABLE
ITEMS") unless and until such consent is given. To the extent permitted
by applicable Law, in the event the relevant consents cannot be
obtained, such Nonassignable Items will be held, as and from the
Closing Date, by the Seller in trust for the Buyer and the covenants
and obligations thereunder will be performed by the Buyer in the
Seller's name and all benefits and obligations thereunder will be for
the Buyer's account. The Seller shall take or cause to be taken, at the
Buyer's expense, such action, in its name or otherwise as the Buyer may
reasonably request so as to provide the Buyer with the benefits of the
Nonassignable Items and to effect collection of money or other
consideration to become due and payable under the Nonassignable Items,
and the Seller shall promptly pay over to the Buyer all money or other
consideration received in respect of all Nonassignable Items.
(b) Notwithstanding SECTION 2.1(o), the issued and
outstanding ownership interest in PolyOne Elastomers & Performance
Additives (Shanghai) Co., Ltd. (the "CHINESE STOCK") will not be
transferred by the Seller to the Buyer until such time as the requisite
consents to such transfer are received from the relevant Chinese
Governmental Authorities (the "CHINESE CONSENTS"). If such consents are
not obtained prior to the Closing Date, from and after the Closing Date
and prior to the transfer of the Chinese Stock to the Buyer, the Seller
shall hold the Chinese Stock in trust for, and operate PolyOne
Elastomers & Performance Additives (Shanghai) Co., Ltd. in accordance
with the direction of, and for the account of, the Buyer, all subject
to the provisions of the Transition Services Agreement (which agreement
will provide that (i) the Buyer shall indemnify and hold harmless the
Seller for any loss or damage suffered by the Seller in connection with
operating PolyOne Elastomers & Performance Additives (Shanghai) Co.,
Ltd. in accordance with the direction of the Buyer and (ii) if the
Chinese Consents have not been received before October 31, 2004, the
Buyer shall acquire M.A. ▇▇▇▇▇ Asia Holding Company, a Delaware
corporation, from the Seller for $1.00.
ARTICLE 3: LIABILITIES
3.1 ASSUMED LIABILITIES. At the Closing and effective as of
the Closing Date, the Buyer shall assume and become responsible for, and shall
thereafter pay, perform and discharge as and when due, the following liabilities
and obligations arising out of or relating to the E&PA Business (collectively,
the "ASSUMED LIABILITIES"):
(a) Trade Accounts Payable. All liabilities and
obligations for trade accounts payable to the extent reflected in the
corresponding line item on the Working Capital Statement;
13
(b) Accrued Liabilities. All accrued liabilities as
of the Closing Date, including salaries and wages payable (but not in
excess of $1,353,000), gainsharing payable, and accrued vacation
(excluding the Santa Fe Vacation), but specifically excluding incurred
but not reported medical liabilities;
(c) Real Estate Leases. All liabilities and
obligations arising out of or relating to the Leased Real Property to
the extent that the Seller's rights thereunder are actually (with
consent where required) assigned to the Buyer, provided that the Buyer
is not assuming any obligations or liabilities arising prior to the
Closing Date and to be performed or satisfied prior to the Closing
Date, or for any breach or default under the real estate leases and the
other Assumed Contracts related to the Leased Real Property outstanding
at the time of the Closing, or resulting from any event occurring
before the Closing Date, which with (i) the giving of a notice required
to be delivered by such real estate lease or other Assumed Contract
related to the Leased Real Property in order to constitute a breach or
a default and/or (ii) the expiration of any relevant cure or notice
period included in such real estate lease or Assumed Contract, or both,
would result in a breach or default;
(d) Contracts. All liabilities and obligations
arising out of or relating to the Purchase Orders and the Assumed
Contracts to the extent that the Seller's rights thereunder are
actually (with consent where required) assigned to the Buyer; provided,
that the Buyer is not assuming any obligations or liabilities arising
prior to the Closing Date and to be performed or satisfied prior to the
Closing Date, or for any breach or default under the Assumed Contracts
or Purchase Orders outstanding at the time of the Closing, or resulting
from any event occurring before the Closing Date, which with (i) the
giving of a notice required to be delivered by such Purchase Order or
Assumed Contract in order to constitute a breach or a default and/or
(ii) the expiration of any relevant cure or notice period included in
such Purchase Order or Assumed Contract, or both, would result in a
breach or default;
(e) Employee Liabilities. All liabilities and
obligations arising out of or relating to (i) the employment of the
Transferred Employees after the Closing Date and accrued compensation
and vacation with respect to the Transferred Employees (other than the
Santa Fe Vacation, which will be paid within 15 business days of the
Closing Date by the Seller), except, in all cases, for those
liabilities and obligations to be retained by the Seller or paid by the
Seller pursuant to ARTICLE 10 of this Agreement;
(f) Workers' Compensation Claims. All liabilities and
obligations arising out of or relating to workers' compensation claims
asserted by any Transferred Employee relating to accidents or incidents
occurring on or after the Closing Date, including any occupational
disease losses and any recurrences of any prior injuries, and all
liabilities and obligations arising out of or relating to claims (other
than those arising out of or relating to such workers' compensation
claims) asserted by any Transferred Employee on or after the Closing
Date;
(g) Warranty Claims. All liabilities and obligations
(other than liabilities in respect of litigation set forth on SCHEDULE
6.13) arising out of or relating to products delivered, manufactured or
sold or services performed by the E&PA Business
14
for product warranties, product recalls, refunds or sales returns,
repair or replacement and all performance guarantees and similar
obligations (collectively, "WARRANTY CLAIMS"), regardless of whether
such liabilities and obligations arise out of or relate to periods or
events occurring before or after the Closing Date;
(h) Product Liability. All liabilities and
obligations (other than liabilities in respect of litigation set forth
on SCHEDULE 6.13) arising out of or relating to personal or bodily
injury (including death) or property damage (collectively, "PRODUCT
LIABILITY CLAIMS") relating to any products delivered, manufactured or
sold or services performed by the E&PA Business on or after the Closing
Date;
(i) Taxes. All liabilities and obligations for Taxes
relating to the E&PA Business or the Purchased Assets attributable to
any taxable period beginning after the Closing Date or, with respect to
any taxable period that begins before the Closing Date and ends after
the Closing Date (a "STRADDLE PERIOD"), the portion of such taxable
period that begins immediately after the Closing Date (including
liabilities for Taxes allocated to the Buyer pursuant to SECTIONS 4.4,
SECTION 4.5 and 10.2 of this Agreement);
(j) Environmental Liability. All liabilities and
obligations relating to the ownership or operation of the Purchased
Assets, the Owned Real Property or the Leased Real Property arising
under Environmental Laws, but only to the extent that such liabilities
and obligations arise from (i) environmental circumstances or
conditions first occurring on or after the Closing Date; (ii) acts or
omissions of the Buyer other than those acts or omissions that
contribute to environmental conditions that are covered by clause (iii)
of this paragraph; (iii) environmental conditions existing on the
Closing Date, but only if, and to the extent that, the Buyer has
contributed after the Closing Date to the environmental condition
giving rise to such liabilities or obligations (it being understood
that, for the avoidance of doubt, in such case, (A) the Buyer will only
assume the liabilities or obligations resulting from the Buyer's
contribution after the Closing Date to such environmental condition,
and (B) the mere discovery and/or the remediation with due care of any
such environmental condition or liability by the Buyer will not be
deemed to be a contribution to such environmental condition or
liability); and (iv) any amendment to, or change in the interpretation
of, any Environmental Law, or any environmental circumstance or
condition in existence on the Closing Date, but only to the extent that
such amendment or change in interpretation does not require remediation
or further remediation of property on account of any environmental
condition or circumstance existing on the Closing Date; and
(k) Post-Closing Liability. All other liabilities and
obligations arising out of or relating to the E&PA Business to the
extent such liabilities and obligations arise out of or relate to
periods beginning on or after the Closing Date.
3.2 RETAINED LIABILITIES. Notwithstanding any other provision
of this Agreement, other than the Assumed Liabilities, the Seller shall retain,
and the Buyer shall not assume, any liability or obligation of the Seller
arising out of or relating to the E&PA Business or otherwise (collectively, the
"RETAINED LIABILITIES"). No assumption by the Buyer of any of the Assumed
Liabilities will relieve or be deemed to relieve the Seller from any obligation
or
15
liability under this Agreement with respect to any representations or warranties
made by any of them to the Buyer. Without limiting the immediately two preceding
sentences, the Retained Liabilities include, but are not limited to, all of the
Seller's liability or obligations in the following, all of which will be
retained, paid, performed and discharged when due by the Seller:
(a) All liabilities and obligations for Taxes
relating to the E&PA Business or the Purchased Assets attributable to
any taxable period ending before the Closing Date or, with respect to a
Straddle Period, the portion of such Straddle Period ending on and
including the Closing Date (including liabilities for Taxes allocated
to the Seller pursuant to SECTIONS 4.4, 4.5 and 10.2 of this
Agreement);
(b) All liabilities and obligations of the Seller and
its Subsidiaries relating to the ownership or operation of the
Purchased Assets, the Owned Real Property or the Leased Real Property
arising under Environmental Laws not expressly assumed by the Buyer
pursuant to this Agreement, including, in any case, liabilities and
obligations to the extent associated with or arising from (i) disposal
of Hazardous Material at the ▇▇▇▇▇▇▇ Cove Landfill, and (ii) soil and
groundwater contamination arising from historical operation and use of
underground and aboveground storage tanks and associated piping and
dispensers at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇;
(c) All liabilities and obligations of the Seller
arising out of any litigation, action, suit, claim, arbitration,
proceeding, inquiry or investigation by any Person or arbitration,
administrative proceeding or other proceeding by or before any
Governmental Authority (including, without limitation, those listed or
required to be listed on SCHEDULE 6.13) relating to the Seller, the
Transferred Subsidiaries or the operation or business practices in
respect of the E&PA Business prior to the Closing Date, in each case if
and to the extent such suit, claim, arbitration, proceeding, inquiry
investigation, administrative proceeding or other proceeding exists as
of the Closing Date;
(d) All liabilities and obligations arising out of
the intentional misconduct or negligent acts or omissions of the Seller
or any of its directors, equity holders, officers, or employees;
(e) All liabilities and obligations arising out of
the failure of the Seller to comply prior to the Closing Date with any
and all applicable Laws and Orders (including, without limitation, in
respect of (i) any direct or indirect use of any funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate
funds; (iii) any of any provision of the U.S. Foreign Corrupt Practices
Act of 1977, as amended, or any similar treaties of the United States;
or (iv) any direct or indirect bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government or party official or employee);
(f) All liabilities and obligations of the Seller
under this Agreement or any of the Ancillary Agreements;
16
(g) All liabilities of the Seller and its
Subsidiaries relating to any restructuring initiatives, employee
separation and/or plant phaseout that occurred prior to the Closing
Date with respect to the E&PA Business, including, without limitation,
any liabilities for severance benefits, employee outplacement, external
consulting, lease termination, facility closing and/or similar costs,
except for the Buyer's obligations to the Seller with regard to
severance benefits under SECTION 10.3(a);
(h) All liabilities and obligations (including
premium adjustments, audits and collateral requirements) related to the
Seller's insurance policies and self-insurance programs covering the
Purchased Assets;
(i) All liabilities and obligations related to the
roofing business previously conducted by the Seller through the E&PA
Business;
(j) All liabilities relating to or arising out of the
Retained Assets;
(k) All liabilities and obligations relating to or
arising under any Employee Plan, except as set forth in SECTION 10.3;
and
(l) All incurred but not reported medical liabilities
arising out of or
relating to the E&PA Business.
ARTICLE 4: PURCHASE PRICE
4.1 PAYMENT OF PURCHASE PRICE. At the Closing, the Buyer shall
pay or cause to be paid to the Seller an amount equal to $120,000,000 and
increased by an amount equal to any Cash held by, or for the benefit of the E&PA
Business by, any Transferred Subsidiary, and not retained by the Seller, on the
Closing Date (the "INITIAL PURCHASE PRICE"), $14,000,000 of which will be paid
in the form of a subordinated promissory note issued by Buyer in substantially
the form attached as EXHIBIT A (the "SUBORDINATED PROMISSORY NOTE") and the
balance of which will be paid in cash by wire transfer of immediately available
funds to an account designated in writing by the Seller. The Assumed
Liabilities, together with any amounts paid pursuant to SECTION 4.2 and the
Initial Purchase Price, are referred to in this Agreement as the "PURCHASE
PRICE." At the Closing, the Seller shall pay the Management Bonuses that are due
on the Closing Date in the amounts and to the Persons set forth on SCHEDULE 4.1,
and thereafter, at the Buyer's option, the Seller shall, or shall provide to the
Buyer the cash amounts needed to pay and thereafter the Buyer shall, pay any
remaining Management Bonuses that come due after Closing at the time that such
Management Bonuses are required to be paid as set forth on SCHEDULE 4.1.
4.2 PURCHASE PRICE ADJUSTMENT.
(a) Estimated Working Capital. Within five business
days prior to the Closing Date, the Seller, after having consulted in
good faith with the Buyer, shall deliver to the Buyer a good faith
estimate of the Closing Net Working Capital which estimate will be
prepared in a manner consistent with the standards required for SECTION
4.2(b) (such estimate, the "ESTIMATED NET WORKING CAPITAL"). If the
Estimated Net Working Capital is less than $39,500,000, the cash
portion of the Purchase Price will be reduced by an amount equal to the
difference between (i) $39,500,000 and (ii) the Estimated Net
17
Working Capital, subject to further adjustment as set forth in this
SECTION 4.2. If the Estimated Net Working Capital is greater than
$41,800,000, the cash portion of the Purchase Price will be increased
by an amount equal to the difference between the Estimated Net Working
Capital and $41,800,000, which amount will be paid by the Buyer, within
30 days following the Seller's delivery of the Estimated Net Working
Capital to the Buyer, by wire transfer of immediately available funds
to an account designated in writing by the Seller and will be subject
to further adjustment as set forth in this SECTION 4.2. If the
Estimated Net Working Capital is greater than $39,500,000, but less
than $41,800,000, the cash portion of the Purchase Price will not be
reduced, but may be further adjusted as set forth in this SECTION 4.2.
The cash portion of the Purchase Price as adjusted pursuant to this
SECTION 4.2(a) is sometimes referred to herein as the "PRELIMINARY CASH
PORTION."
(b) Working Capital Statement. Within 90 days after
the Closing Date, the Buyer shall cause to be prepared and delivered to
the Seller a statement of the Closing Net Working Capital as of the
close of business on the date immediately preceding the Closing Date
(the "WORKING CAPITAL STATEMENT"). The Working Capital Statement is to
be prepared in a manner consistent with past practice and as set forth
on SCHEDULE 4.2.
(c) Within 30 days following receipt by the Seller of
the Working Capital Statement, the Seller shall deliver written notice
to the Buyer of any dispute it has with respect to the preparation or
content of the Working Capital Statement, which dispute will be based
solely on the failure to comply with the standards set forth in SECTION
4.2(b) and SCHEDULE 4.2, and a description in reasonable detail of the
basis therefor. If the Seller does not notify the Buyer of a dispute
with respect to the Working Capital Statement within such 30-day
period, such Working Capital Statement will be final, conclusive and
binding on the parties. In the event of such notification of a dispute,
the Seller and the Buyer shall negotiate in good faith to resolve such
dispute. If the Seller and the Buyer, notwithstanding such good faith
effort, fail to resolve such dispute within 30 days after the Seller
advises the Buyer of its objections, then the Seller and the Buyer
jointly shall engage the firm of PriceWaterhouseCoopers (or such other
firm as mutually agreed to by the Seller and the Buyer) (the
"ARBITRATION FIRM") to resolve such dispute. As promptly as practicable
thereafter, the Seller and the Buyer shall each prepare and submit a
written presentation to the Arbitration Firm. The Seller and the Buyer
shall use commercially reasonable efforts to cause the Arbitration Firm
to resolve such dispute on the basis of the standards set forth in
SECTION 4.2(b) and on SCHEDULE 4.2, and based on the presentations
submitted to it. Within 30 days after the Seller and the Buyer have
submitted their presentations to the Arbitration Firm, the Arbitration
Firm shall deliver a written report resolving such dispute. In
resolving such dispute, the Arbitration Firm shall limit its review to
the disputes initially identified in reasonable detail by the Seller in
the aforementioned notice (and the determinations of the Arbitration
Firm will either be fully in favor of the presentation submitted by the
Buyer or fully in favor of the presentation submitted by the Seller
(based on the Arbitration Firm's determination of which presentation is
the most accurate and correct of the presentations submitted)), and all
other items included in the Working Capital Statement that are not
identified in reasonable detail by the Seller as disputed items in such
notice will be final and binding upon the parties. Notwithstanding the
provisions in SECTION 13.1, the losing party in any
18
dispute resolved by the Arbitration Firm shall pay the fees and
expenses of the Arbitration Firm. All determinations made by the
Arbitration Firm will be final, conclusive and binding on the parties.
(d) Access. For purposes of complying with the terms
set forth in this SECTION 4.2, each party shall cooperate with and make
available to the Arbitration Firm, the other party and their respective
officers, employees and authorized representatives and agents all
information, records, data and working papers, and shall permit access
to its facilities and personnel, as may be reasonably required in
connection with the preparation and analysis of the Working Capital
Statement and the resolution of any disputes relating to the Working
Capital Statement.
(e) Adjustments to Purchase Price; Payment of
Adjustment. The final cash portion of the Purchase Price (the "FINAL
CASH PORTION") will be determined, and any final adjustment will be
paid, as follows:
(i) If the Closing Net Working Capital (as
determined pursuant to SECTION 4.2(c)) is less than
$39,500,000, then the Final Cash Portion will be deemed to be
fixed at an amount equal to $106,000,000 less an amount equal
to the difference between $39,500,000 and the Closing Net
Working Capital.
(ii) If the Closing Net Working Capital (as
determined pursuant to SECTION 4.2(c)) is greater than
$39,500,000 but less than $41,800,000, then the Final Cash
Portion will be deemed to be fixed at an amount equal to
$106,000,000.
(iii) If the Closing Net Working Capital (as
determined pursuant to SECTION 4.2(c)) is greater than
$41,800,000, then the Final Cash Portion will be deemed to be
fixed at an amount equal to $106,000,000 plus an amount equal
to the difference between the Closing Net Working Capital and
$41,800,000.
(iv) If the Final Cash Portion is less than the
Preliminary Cash Portion, the Seller shall pay to the Buyer,
by wire transfer of immediately available funds to an account
designated in writing by the Buyer, an amount in cash equal to
the difference between the Preliminary Cash Portion and the
Final Cash Portion. The Seller shall make such payment within
five business days from the date on which the Closing Net
Working Capital is finally determined. If the Final Cash
Portion is greater than the Preliminary Cash Portion, the
Buyer shall pay to the Seller, by wire transfer of immediately
available funds to an account designated in writing by the
Seller, an amount in cash equal to the difference between the
Final Cash Portion and the Preliminary Cash Portion. The Buyer
shall make such payment within five business days from the
date on which the Closing Net Working Capital is finally
determined.
(f) Any payment required to be made by the Buyer or
the Seller pursuant to SECTION 4.2(f) will bear interest from the
Closing Date through the date of payment at the interest rate per annum
equal to 3.75%.
19
4.3 ALLOCATION OF PURCHASE PRICE.
(a) The Purchase Price (including the Assumed
Liabilities) will be allocated among each of the Transferred
Subsidiaries and the Purchased Assets (other than the Transferred
Subsidiaries) in accordance with SCHEDULE 4.3 attached hereto. The
allocation on SCHEDULE 4.3 is to be adjusted to the extent the Seller
and the Buyer mutually agree that such an adjustment is necessary to
reflect the fair market values of the Transferred Subsidiaries and the
Purchased Assets (other than the Transferred Subsidiaries) as of the
Closing Date.
(b) Notwithstanding anything to the contrary in this
Agreement, the Seller and the Buyer agree to allocate the portion of
the aggregate Purchase Price (including the Assumed Liabilities)
allocated to the Purchased Assets (other than the Transferred
Subsidiaries) under SECTION 4.3(a) in conformance with SCHEDULE 4.3 and
in accordance with Section 1060 of the Code and the Treasury
Regulations thereunder (and any similar provision of state, local or
foreign law, as appropriate). The Seller and the Buyer agree that the
Buyer shall prepare and provide to the Seller a draft allocation of the
Purchase Price among the Purchased Assets (other than the Transferred
Subsidiaries) within 150 days after the Closing Date. The Seller shall
notify the Buyer within 30 days of receipt of such draft allocation of
any objection the Seller may have thereto. The Seller and the Buyer
agree to resolve any disagreement with respect to such allocation in
good faith. If the Seller and the Buyer, notwithstanding such good
faith effort, fail to resolve such disagreement within 30 days after
the Seller advises the Buyer of its objections, then the Seller and the
Buyer jointly shall engage the Arbitration Firm to resolve such dispute
in a manner consistent with the procedures set forth in SECTION 4.2(c).
(c) The Seller and the Buyer shall adhere to, and
shall be bound by, the allocations determined pursuant to this SECTION
4.3 for U.S. federal income tax purposes and shall take no position
contrary to such allocations unless required to do so by applicable Tax
law.
4.4 ALLOCATION OF TAXES OTHER THAN INCOME TAXES. Taxes
attributable to any Straddle Period will be apportioned between the Seller and
the Buyer as follows: (i) in the case of Taxes other than Taxes imposed on or
measured by income or profits ("INCOME TAXES"), sales and use and withholding
Taxes, on a per diem basis, and (ii) except as otherwise set forth in SECTION
10.2, in the case of sales and use and withholding Taxes, as determined from the
books and records of the Seller and the Transferred Subsidiaries as though the
taxable year of the Seller and the Transferred Subsidiaries terminated at the
close of business on the Closing Date. The Seller shall be liable for Taxes with
respect to the E&PA Business (including Taxes with respect to the Transferred
Subsidiaries) that are attributable to the portion of the Straddle Period ending
on and including the Closing Date and the Buyer shall be liable for Taxes with
respect to the E&PA Business (including Taxes with respect to the Transferred
Subsidiaries) that are attributable to the portion of the Straddle Period
beginning on the day following the Closing Date.
4.5 ALLOCATION OF INCOME TAXES. Income Taxes with respect to
the E&PA Business (including such taxes with respect to the Transferred
Subsidiaries) attributable to a
20
Straddle Period will be apportioned between the Seller and the Buyer as
determined from the books and records of the Seller and the Transferred
Subsidiaries as though the taxable year of the Seller and the Transferred
Subsidiaries terminated at the close of business on the Closing Date. The Seller
shall be liable for income taxes with respect to the E&PA Business (including
income taxes with respect to the Transferred Subsidiaries) that are attributable
to the portion of the Straddle Period ending on and including the Closing Date
and the Buyer shall be liable for income taxes with respect to the E&PA Business
(including income taxes with respect to the Transferred Subsidiaries) that are
attributable to the portion of the Straddle Period beginning on the day
following the Closing Date.
ARTICLE 5: CLOSING AND CLOSING DELIVERIES
5.1 CLOSING. The closing of the transactions contemplated by
this Agreement (the "CLOSING") will take place at the offices of White & Case
LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other
location as the Buyer and the Seller agree, on the second business day following
the day on which the last of the conditions set forth in ARTICLE 9 (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions) have been fulfilled,
satisfied or waived, or at such other time as the Buyer and the Seller shall
agree (the "CLOSING DATE"). All proceedings to be taken and all documents to be
executed and delivered by all parties at the Closing will be deemed to have been
taken and executed simultaneously and no proceedings will be deemed to have been
taken nor documents executed or delivered until all have been taken, executed
and delivered.
5.2 DELIVERIES BY THE SELLER. At the Closing, the Seller shall
deliver or cause to be delivered to the Buyer the following items:
(a) Limited or special warranty deeds (or their
equivalent) duly executed by the Seller conveying the Owned Real
Property to the Buyer;
(b) A ▇▇▇▇ of sale and instrument of assignment and
assumption, in substantially the form attached hereto as EXHIBIT B, and
such other duly executed deeds, assignments and other instruments of
transfer relating to the Purchased Assets (including separate
assignment and assumption agreements for each real estate lease) in
form and substance reasonably satisfactory to the Buyer, in each case
duly executed by the Seller evidencing the assignment of the Purchased
Assets (other than the Owned Real Property) to the Buyer;
(c) Appropriate termination statements under the
Uniform Commercial Code and other instruments to extinguish all
security interests other than Permitted Liens related to the Purchased
Assets, in form and substance reasonably satisfactory to the Buyer;
(d) Evidence reasonably satisfactory to the Buyer
that the Seller has obtained the Consents listed on SCHEDULE 5.2(d);
(e) Assignment agreements, in substantially the form
attached hereto at EXHIBIT C, relating to the transfer of the Purchased
Intellectual Property listed on
21
SCHEDULE 6.12(a) (the "PURCHASED INTELLECTUAL PROPERTY ASSIGNMENT"),
duly executed by the Seller;
(f) A certificate of the Secretary of the Seller, in
the form set forth in Treasury Regulation Section
1.1445-2(b)(2)(iv)(b), certifying that the Seller is not a foreign
person;
(g) A non-competition agreement, in substantially the
form attached hereto as EXHIBIT D (the "SELLER NON-COMPETITION
AGREEMENT"), duly executed by the Seller;
(h) A supply agreement, based substantially upon the
terms set forth on EXHIBIT E and otherwise on terms, and subject to
conditions, mutually acceptable to the Buyer and the Seller (the
"SUPPLY AGREEMENT"), duly executed by the Seller;
(i) A transition services agreement, in substantially
the form attached hereto as EXHIBIT F and otherwise on terms, and
subject to conditions, mutually acceptable to the Buyer and the Seller
(the "TRANSITION SERVICES AGREEMENT"), duly executed by the Seller;
(j) (i) Stock certificates representing the Purchased
Stock with duly executed stock powers attached in proper form for
transfer to the Buyer, (ii) the Mexican Stock Purchase Agreements and
(iii) any other documents acceptable to the Buyer that are necessary to
transfer to the Buyer title to the Purchased Stock;
(k) Certified copies, or the original, if such
original is reasonably available, of the Certificate of Incorporation,
and the Bylaws, or comparable governing documents, of each of the
Transferred Subsidiaries (the "TRANSFERRED SUBSIDIARIES' GOVERNING
DOCUMENTS"), certified by either a Mexican public notary or an officer
of the Seller, as applicable;
(l) The original corporate record books and stock
transfer books, or comparable record books, for each of the Transferred
Subsidiaries;
(m) A certificate from an officer of the Seller,
given by him or her on behalf of the Seller and not in his or her
individual capacity, to the effect that the conditions set forth in
SECTIONS 9.2(a) and 9.2(b) have been satisfied;
(n) A non-exclusive brand license agreement, in
substantially the form attached hereto as EXHIBIT G (the "BRAND LICENSE
AGREEMENT"), duly executed by the Seller;
(o) A good standing certificate (to the extent such
concept is applicable) issued by the Secretary of State or similar
Governmental Authority of the state or place of incorporation, and
dated as of a date no more than 15 days prior to the Closing Date, for
the Seller;
(p) A legal opinion by the Seller's counsel in
substantially the form of EXHIBIT H;
22
(q) A confidentiality agreement, in substantially the
form attached hereto as EXHIBIT I (the "SELLER CONFIDENTIALITY
AGREEMENT"), duly executed by the Seller;
(r) Copies of resolutions of the Board of Directors
of the Seller approving the execution, delivery and performance of this
Agreement and the Ancillary Agreements, and the consummation of the
transactions contemplated hereby and thereby, in each case certified by
an authorized officer of the Seller or one of the Transferred
Subsidiaries, as the case may be; and
(s) The PolyOne Receivable, in substantially the form
attached hereto as EXHIBIT J;
(t) An information technology and long-term services
agreement, based substantially upon the terms set forth on EXHIBIT K
and otherwise on terms, and subject to conditions, mutually acceptable
to the Buyer and the Seller (the "SERVICES AGREEMENT"), duly executed
by the Seller;
(u) A patent and technology license agreement, in
substantially the form attached hereto as EXHIBIT L (the "PATENT AND
TECHNOLOGY LICENSE"), duly executed by the Seller; and
(v) Such other documents as the Buyer or its counsel
may reasonably request to demonstrate satisfaction of the conditions
and compliance with the covenants set forth in this Agreement.
Simultaneously with the delivery of the foregoing items, the Seller shall take
all such steps as may reasonably be required to put the Buyer in actual
possession and operating control of the Purchased Assets.
5.3 DELIVERIES BY THE BUYER. At the Closing, the Buyer shall
deliver or cause to be delivered to the Seller the following items:
(a) The cash portion of the Initial Purchase Price,
payable as set forth in SECTION 4.1, as adjusted by SECTION 4.2;
(b) The Subordinated Promissory Note, duly executed
by the Buyer;
(c) A ▇▇▇▇ of sale and instrument of assignment and
assumption, in substantially the form attached hereto as EXHIBIT B,
duly executed by the Buyer evidencing the assumption of the Assumed
Liabilities by the Buyer;
(d) A receipt, in substantially the form attached
hereto as EXHIBIT M, evidencing the Buyer's receipt of the Purchased
Assets, duly executed by the Buyer;
(e) A confidentiality agreement, in substantially the
form attached hereto as EXHIBIT N (the "BUYER CONFIDENTIALITY
AGREEMENT"), duly executed by the Buyer;
23
(f) The Supply Agreement, duly executed by the Buyer;
(g) Copies of certificates or similar documents
required by applicable Law evidencing the Tax exempt nature of the
Buyer's purchase of any Purchased Assets for which the Buyer is not
remitting sales Tax;
(h) Copies of resolutions of the Board of Directors
of the Buyer approving the execution, delivery and performance of this
Agreement and the Ancillary Agreements, and the consummation of the
transactions contemplated hereby and thereby, certified by an officer
of the Buyer;
(i) A certificate from an officer of the Buyer, given
by him or her on behalf of the Buyer and not in his or her individual
capacity, to the effect that the conditions set forth in SECTION 9.3(a)
and 9.3(b) have been satisfied;
(j) A good standing certificate issued by the
Secretary of State of the State of Delaware and dated as of a date no
more than 15 days prior to the Closing Date for the Buyer;
(k) A legal opinion by the Buyer's counsel in
substantially the form of EXHIBIT o;
(l) The Services Agreement, duly executed by the
Buyer;
(m) The Mexican Stock Purchase Agreements;
(n) The Patent and Technology License, duly executed
by the Buyer; and
(o) Such other documents as the Seller or its counsel
may reasonably request to demonstrate satisfaction of the conditions
and compliance with the covenants set forth in this Agreement.
5.4 DELIVERIES BY MANAGEMENT. At the Closing and at any time
that the Seller delivers an update to the Disclosure Schedules as contemplated
by SECTION 13.8, each of the individuals listed on SCHEDULE 5.4 (collectively,
"MANAGEMENT"), shall deliver or cause to be delivered to the Seller a
certificate, in substantially the form attached hereto as EXHIBIT P, dated as of
the Closing Date and duly executed by such individual.
ARTICLE 6: REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as follows:
6.1 ORGANIZATION, EXISTENCE AND GOOD STANDING. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio and is duly qualified to do business as a foreign
corporation and is in good standing in each other jurisdiction in which the
property owned, leased or operated by it in connection with the E&PA Business,
or the nature of the E&PA Business conducted by it, makes such qualification
necessary, except for such jurisdictions in which the failure to so qualify
could not reasonably be
24
expected to have a Material Adverse Effect. Each of PolyOne Controladora, S.A.
de C.V., PolyOne de Mexico, S.A. de C.V., PolyOne E.C. de Mexico, S.A. de C.V.
and PolyOne E.C. Servicios S.A. de C.V. is duly organized and validly existing
under the laws of the United Mexican States and has been duly organized as a
variable stock corporation and is validly existing in each other jurisdiction in
which the property owned or the nature of the business conducted by it makes
such qualification necessary, except for such jurisdictions in which the failure
to so qualify could not reasonably be expected to have a Material Adverse
Effect. PolyOne Elastomers & Performance Additives (Shanghai) Co., Ltd. is a
duly organized limited liability company validly existing under the laws of the
People's Republic of China with a business license (No. 0413163) issued by the
Shanghai Administration of Industry and Commerce and is validly existing in each
other jurisdiction in which the property owned or the nature of the business
conducted by it makes such qualification necessary, except for such
jurisdictions in which the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect.
6.2 CAPITALIZATION. The Seller, PolyOne Controladora, S.A. de
C.V. or PolyOne de Mexico, S.A. de C.V. is the only holder of equity interests,
equity rights, profit participation rights, or similar rights in the Transferred
Subsidiaries. PolyOne E.C. de Mexico, S.A. de C.V. has an authorized
capitalization consisting of a minimum fixed capital of 50,000 pesos and
variable capital of 144,356,718 pesos, all of which has been validly issued and
is fully subscribed and paid. PolyOne E.C. Servicios S.A. de C.V. has an
authorized capitalization consisting of a minimum fixed capital of 50,000 pesos
and variable capital of 487,017 pesos, all of which has been validly issued and
is fully subscribed and paid. PolyOne Elastomers & Performance Additives
(Shanghai) Co., Ltd. has a registered capital of $529,000, of which $125,000 has
been fully paid. Except as set forth on SCHEDULE 6.2, there are no outstanding
warrants, rights, calls or obligations on either of PolyOne E.C. de Mexico, S.A.
de C.V. and PolyOne E.C. Servicios S.A. de C.V. to issue any additional shares
of its capital stock. Except as set forth on SCHEDULE 6.2, there are no
outstanding warrants, rights, calls or obligations on PolyOne Elastomers &
Performance Additives (Shanghai) Co., Ltd. to alter the registered capital. The
Purchased Stock represents the only issued and outstanding shares of capital
stock or the outstanding ownership interest, as applicable, of the Transferred
Subsidiaries. Except as set forth on SCHEDULE 6.2, there are no agreements,
commitments or contracts relating to the issuance, sale, transfer or voting of
any equity securities or other securities of the Transferred Subsidiaries.
6.3 POWER AND AUTHORITY TO CONDUCT THE E&PA BUSINESS. The
Seller has the corporate power and authority to (a) own, operate and lease the
Purchased Assets and (b) carry on the E&PA Business as currently conducted. Each
of PolyOne E.C. de Mexico, S.A. de C.V. and PolyOne E.C. Servicios S.A. de C.V.
has the corporate power and authority to own, operate and lease its assets and
carry on its business as currently conducted. PolyOne Elastomers & Performance
Additives (Shanghai) Co., Ltd. has the limited liability company power and
authority to own and operate its assets and carry on its business as set forth
in the scope of business in its business license as currently conducted.
6.4 AUTHORITY; DUE EXECUTION AND DELIVERY; VALIDITY AND
ENFORCEABILITY. The execution, delivery and performance of this Agreement and
the Ancillary Agreements, and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
corporate and shareholder action on the part of the Seller and
25
the Transferred Subsidiaries and the Seller has the corporate power and capacity
to execute and deliver this Agreement and the Ancillary Agreements and
consummate the transactions hereby and thereby, including the sale, assignment,
transfer and conveyance of the Purchased Assets pursuant to this Agreement. No
further corporate or stockholder action on the part of the Seller and the
Transferred Subsidiaries is necessary to authorize the execution, delivery and
performance of this Agreement and the other Ancillary Agreements contemplated
hereby by the Seller and the consummation of the transactions contemplated
hereby and thereby. When executed and delivered by the Seller, this Agreement
and the Ancillary Agreements will constitute the valid and legally binding
obligations of the Seller enforceable against it in accordance with their terms,
except to the extent that their enforceability may be limited by (a) applicable
bankruptcy, reorganization, insolvency, moratorium or other similar Laws
affecting the enforcement of creditors' rights generally from time to time in
effect and (b) the availability of equitable remedies (regardless of whether
enforceability is considered in a proceeding at law or in equity) (collectively,
the "GENERAL ENFORCEABILITY EXCEPTIONS").
6.5 NO CONFLICT. Except as set forth on SCHEDULE 6.5, neither
the execution and delivery of this Agreement or the Ancillary Agreements by the
Seller, nor the performance by the Seller of its obligations hereunder or
thereunder, will (a) violate or conflict with the Seller's Articles of
Incorporation or Code of Regulations, the Transferred Subsidiaries' governing
documents or, subject to the receipt of the Consents set forth on SCHEDULE 6.6,
any applicable Law or Order, (b) violate, conflict with or result in a breach or
termination of, or otherwise give any Person the right to terminate or
accelerate, or constitute (with notice or lapse of time, or both) a default
under the terms of, (i) subject to the receipt of the Consents set forth on
SCHEDULE 6.6, any Assumed Contract, (ii) any Contract attached as an exhibit
pursuant to Item 601(b)(10) of Regulations S-K to Seller's latest Annual Report
on Form 10-K or (iii) any Contract providing for the Seller's indebtedness for
borrowed money or capital leases of which the Seller is the obligor, or (c)
result in the creation or imposition of any Lien (other than Permitted Liens)
with respect to any of the Purchased Assets.
6.6 FILINGS, NOTICES AND CONSENTS. Except as required under
the HSR Act, as set forth on SCHEDULE 6.6, no filing with, notice to or consent,
approval, authorization or other action of any Governmental Authority and no
material notice to or consent, approval, authorization or other action of any
third party (collectively, the "CONSENTS") is required in connection with the
execution and delivery by the Seller of this Agreement or the Ancillary
Agreements or the consummation of the transactions contemplated hereby or
thereby.
6.7 FINANCIAL STATEMENTS.
(a) SCHEDULE 6.7 attached hereto contains (i) the
audited combined balance sheets as of December 31, 2003 and 2002 and
the audited combined statements of operations and cash flows for the
three years in the period ended December 31, 2003 for the E&PA
Business, the audited balance sheets as of December 31, 2003 and the
audited statements of operations and cash flows for the year ended
December 31, 2003 for the E&PA Business (the "AUDITED DECEMBER
FINANCIAL STATEMENTS," and together with the other audited balance
sheets and audited statements of operations and cash flows in this
clause (i) the "AUDITED FINANCIAL STATEMENTS"), (ii) the unaudited
balance sheet as of April 30, 2004 and the unaudited statement of
operations for the four-month period ended April 30, 2004 for the E&PA
Business (collectively, the "UNAUDITED APRIL
26
FINANCIAL STATEMENTS") and (iii) the unaudited balance sheet as of
December 31, 2003 and the unaudited statement of operations for the
year ended December 31, 2003 (collectively, the "UNAUDITED DECEMBER
FINANCIAL STATEMENTS," and together with the Unaudited April Financial
Statements, collectively, the "UNAUDITED FINANCIAL STATEMENTS," and,
the Unaudited Financial Statements together with the Audited Financial
Statements, collectively, the "FINANCIAL STATEMENTS"), in each case
together with the notes and schedules thereto. At Closing, for the
purposes of this SECTION 6.7, the Unaudited Financial Statements will
be deemed to include (x) the unaudited statement of cash flows for the
E&PA Business for (A) the four-month period ended April 30, 2004 and
(B) the year ended December 31, 2003 and (y) the unaudited balance
sheet as of June 30, 2004 and the unaudited statement of operations and
the unaudited statement of cash flows for the six-month period ended
June 30, 2004 for the E&PA Business, each of which will be provided by
the Seller to the Buyer prior to the Closing Date.
(b) The Audited Financial Statements have been
prepared in accordance with GAAP consistently applied throughout the
periods, and the Financial Statements have been derived from the books
and records of the Seller, except as set forth on SCHEDULE 6.7. The
differences between the Unaudited December Financial Statements and the
Audited December Financial Statements are set forth in (i) the
footnotes to the Audited December Financial Statements and (ii) the
Unaudited Financial Statements. The Unaudited April Financial
Statements have been prepared on a basis consistent in all material
respects with the Unaudited December Financial Statements. The
Financial Statements fairly present in all material respects the
financial condition of the E&PA Business at the date thereof and the
related statements of income and cash flows fairly present in all
material respects the results of the operations and cash flows of the
E&PA Business for the periods indicated therein.
6.8 TAXES.
(a) The Transferred Subsidiaries have filed all
material Tax Returns required to be filed on or before the Closing
Date, and have paid all Taxes shown thereon as owing. Such Tax Returns
are, and will be, true, correct and complete in all material respects.
(b) All material Taxes and Tax liabilities due by or
with respect to the income, assets or operations of the Transferred
Subsidiaries for all taxable years or other taxable periods that end on
or before the Closing Date and, with respect to any Straddle Period,
the portion of such Straddle Period ending on and including the Closing
Date, have been or will, prior to the Closing, be timely paid in full
or (x) with respect to taxable years or periods (or portions thereof)
ending on or prior to December 31, 2003, accrued and fully provided for
in accordance with GAAP on the Financial Statements and (y) with
respect to taxable years or periods (or portions thereof) beginning
after December 31, 2003, accrued on the books and records of the Seller
as of the Closing Date in accordance with GAAP or other applicable
non-U.S. accounting standards and to the extent not paid when due (i)
with respect to Taxes due on or prior to the date hereof, disclosed in
writing to Buyer prior to the date hereof and (ii) with respect to
Taxes due after the date hereof, but on or prior to the Closing Date,
disclosed in writing to the Buyer prior to the Closing Date.
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(c) Except as set forth on SCHEDULE 6.8(c), no
action, suit, proceeding or audit regarding Taxes has been commenced or
is pending against the Transferred Subsidiaries or the Seller with
respect to the E&PA Business.
(d) No Transferred Subsidiary has waived any statute
of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(e) No Transferred Subsidiary is a party to any Tax
allocation or sharing agreement.
(f) No written claim has ever been made by any taxing
authority in a jurisdiction where any Transferred Subsidiary does not
file Tax Returns that any Transferred Subsidiary is or may be subject
to taxation by that jurisdiction.
(g) Except as set forth on SCHEDULE 6.8(g), none of
the Transferred Subsidiaries has been a member of any "affiliated
group," as defined in Section 1504(a) of the Code or the corresponding
tax laws of any nation, state or locality, filing a "consolidated,"
"unitary" or "combined" Tax Return in the United States or any such
foreign jurisdiction or any state or locality with respect to Taxes for
any taxable period for which the statute of limitations has not
expired.
(h) None of the Transferred Subsidiaries has applied
for, been granted, or agreed to any accounting method change for which
it will be required to take into account any adjustment after the
Closing Date under Section 481 of the Code or any similar provision of
the Code or the corresponding tax laws of any nation, state or
locality.
(i) The Seller is not a "foreign person" within the
meaning of Section 1445 of the Code.
6.9 TITLE; ASSETS. The Seller or a Transferred Subsidiary has,
and at the Closing will deliver to the Buyer, good and marketable fee simple
title to the Owned Real Property (subject to the Permitted Liens), or valid and
enforceable leasehold interests in and to the Leased Real Property, and good and
valid title to all other Purchased Assets (subject to the Permitted Liens). The
Seller's or any Transferred Subsidiary's title or interest, as the case may be,
in the Purchased Assets is free and clear of all Liens other than (a) Liens for
current (but not respread) Taxes, assessments, fees and other charges by
Governmental Authorities that are not due and payable as of the Closing Date,
(b) those matters that are set forth on SCHEDULE 6.9, (c) any and all matters of
record that do not materially adversely affect the use and value of the Owned
Real Property or the Leased Real Property and (d) matters revealed by the
existing surveys of the Owned Real Property, copies of which have been provided
to the Buyer (collectively, the "PERMITTED LIENS"). All of the Purchased Assets,
when considered as a whole, are in good operating condition and repair, ordinary
wear and tear excepted, and are adequate for the purposes for which such
tangible Assets are being used, except for such failures to be in such operating
condition and repair or such failures to be adequate for the purposes for which
such Assets are being used as could not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
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6.10 REAL PROPERTY.
(a) SCHEDULE 6.10 contains a complete and accurate
list of all the Owned Real Property and Leased Real Property. The Owned
Real Property and Leased Real Property listed on SCHEDULE 6.10
comprises all real property interests used or held for use in the
conduct and operations of the E&PA Business as now conducted. All
Leased Real Property is held under leases or subleases that are, in all
material respects, valid instruments enforceable in accordance with
their respective terms, except as limited by the General Enforceability
Exceptions. The Seller has delivered to the Buyer true and complete
copies of all leases, subleases and other documents pertaining to the
Leased Real Property. All Owned Real Property and Leased Real Property
is available for immediate use in the conduct and operations of the
E&PA Business.
(b) With regard to the Owned Real Property, no Lien
exists that prohibits the use of any of the Owned Real Property as it
is currently being used. No written notice has been received by the
Seller or a Transferred Subsidiary that any buildings, structures or
appurtenances situated on any of the Owned Real Property, or the
operation or maintenance thereof, violates any restrictive covenant or
any provision of any Law or Order. There is no pending or, to the
knowledge of the Seller, threatened condemnation, eminent domain or
similar proceeding with respect to any Owned Real Property.
(c) With regard to each lease required to be set
forth on SCHEDULE 6.10 and except as set forth thereon, such lease has
not been modified, supplemented, amended or assigned; all rents and
additional rents due to date on each such lease have been paid; in each
case, the lessee has been in peaceable possession since the
commencement of the original term of such lease and, except as set
forth on SCHEDULE 6.10, there exists no default with respect to any
material term or provision of such lease and, to the knowledge of the
Seller, no event, occurrence, condition or act which, with the giving
of notice, the lapse of time or the happening of any further event or
condition, would become a default with respect to any material term or
provision of such lease or other instruments relative to such lease
(including any guaranty thereof), or would give rise to a right of
termination of such lease or such other instruments. Neither the Seller
nor any Transferred Subsidiary has received written notice that it has
violated any of the terms or conditions under any such lease in any
material respect, which violation remains uncured and, to the knowledge
of the Seller, all of the material covenants to be performed have been
fully performed. Each Leased Real Property is available for the
purposes for which such property is currently being utilized and is
required to be used under the terms of the applicable lease. The Seller
has received no notice of any violation of applicable Laws relating to
zoning, except as disclosed in the existing surveys of the Owned Real
Property, copies of which have been provided to the Buyer. To the
knowledge of the Seller, no lessor under any such lease is in material
default.
6.11 NECESSARY PROPERTY. Except as set forth on SCHEDULE 6.11,
the Purchased Assets, when transferred to the Buyer, will be (i) adequate and
sufficient to permit the Buyer to conduct the E&PA Business as conducted by the
Seller and the Transferred Subsidiaries immediately prior to the Closing Date
and (ii) all of the assets material to the E&PA Business. Except for PolyOne
Corporation U.K., Ltd. and M.A. ▇▇▇▇▇ Asia Holding Company, the Seller
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and the Transferred Subsidiaries are the only entities through which the E&PA
Business is conducted and all of the Purchased Assets used by the Seller to
conduct the E&PA Business are owned or leased by the Seller or a Transferred
Subsidiary.
6.12 INTELLECTUAL PROPERTY.
(a) SCHEDULE 6.12(a) identifies each and every U.S.
and non-U.S. patent, patent application, registered trademark,
registered copyright, Internet domain name, Universal Resource Locator
("URL"), application for registration of any of the foregoing or
foreign equivalent or counterpart to any of the foregoing which is
included in the Purchased Intellectual Property. Except as set forth on
SCHEDULE 6.12(a), the Seller owns all right, title and interest in and
to all Purchased Intellectual Property listed on SCHEDULE 6.12(a) free
and clear of all Liens.
(b) Except as set forth on SCHEDULE 6.12(b), there is
no claim pending or, to the knowledge of the Seller, threatened that
(i) challenges the rights of the Seller in respect of, or the scope of,
any of the Purchased Intellectual Property or is otherwise adverse to
the use, registration, right to use, validity, enforceability or
ownership of any of the Purchased Intellectual Property or (ii) asserts
that the operation of the E&PA Business as conducted by the Seller is
infringing, violates or misappropriates any Intellectual Property of
any other Person. To the knowledge of the Seller, no Person is
infringing upon the Purchased Intellectual Property and the operation
of the E&PA Business as conducted by the Seller as of the date of this
Agreement does not infringe upon, misappropriate or otherwise violate
the valid Intellectual Property rights of any Person.
(c) SCHEDULE 6.12(c) sets forth each and every
license or other agreement by which the E&PA Business (or the Seller or
one of its Affiliates on its behalf) has obtained or acquired (e.g., as
licensee) or granted (e.g., as licensor) rights under any Intellectual
Property excluding click-wrap and shrink wrap software licenses,
together with, except as set forth on SCHEDULE 6.12(c), the identity of
the licensor and licensee, the type of rights licensed, and the
Intellectual Property licensed. Each such agreement is a legal, valid
and binding obligation of the Seller and the relevant other parties
thereto, is in full force and effect and enforceable in accordance with
the terms thereof and the transactions contemplated by this Agreement
will not breach the terms thereof.
(d) The Purchased Intellectual Property and rights
under licenses and agreements set forth on SCHEDULE 6.12(c), together
with the Intellectual Property that is the subject of the Brand License
Agreement, the Patent and Technology License, the Retained Trade Names,
the Supply Agreement, the Services Agreement and the Transition
Services Agreement, includes all Intellectual Property rights necessary
or material to the conduct of the E&PA Business as and where conducted
on the Closing Date and the E&PA Business does not use any Intellectual
Property that is not Purchased Intellectual Property, licensed under an
agreement listed on SCHEDULE 6.12(c) or that is the subject of the
Brand License Agreement, the Patent and Technology License, the
Retained Trade Names, the Supply Agreement, the Services Agreement and
the Transition Services Agreement.
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(e) To the knowledge of the Seller, each item of
Purchased Intellectual Property listed on SCHEDULE 6.12(a), shown as
registered, filed, issued or applied for, has been duly and validly
registered in, filed in or issued by, the official governmental
registrars and/or issuers (or officially recognized issuers) of
patents, trademarks, copyrights or Internet domain names, in the
various jurisdictions indicated therein. Except as set forth on
SCHEDULE 6.12(e), each such registration, filing and/or issuance (i)
has not been abandoned, canceled or otherwise compromised, (ii) has
been maintained effective by all requisite filings, renewals and
payments, and (iii) remains in full force and effect as of the Closing
Date.
(f) To the knowledge of the Seller, the Seller, on
behalf of the E&PA Business, has secured valid written assignments from
all consultants, contractors and employees who contributed to the
creation or development of Intellectual Property used in the E&PA
Business, of the rights to such contributions that Seller does not
already own by operation of law.
(g) The Seller, on behalf of the E&PA Business, has
taken reasonable steps to protect and preserve the confidentiality of
all trade secrets and other confidential information included in the
Purchased Intellectual Property or licensed under the Patent and
Technology License.
6.13 LITIGATION. Except as set forth on SCHEDULE 6.13, there
exists no (a) litigation, action, suit, claim, proceeding or, to the Seller's
knowledge, investigation, pending at Law or in equity, by any Person or (b)
arbitration or administrative or other proceeding or inquiry by or before any
Governmental Authority or, to the Seller's knowledge, threatened against the
Seller or its Affiliates that (x) relates to the Purchased Assets or the E&PA
Business (other than matters in which the potential liability of the Seller or
the E&PA Business does not exceed $25,000 individually or $100,000 in the
aggregate) or (y) could reasonably be expected to materially adversely affect
the transactions contemplated by this Agreement or any Ancillary Agreement. None
of the Seller or any Transferred Subsidiary is a party to, subject to or in
default under any Order of any Governmental Authority that relates to the E&PA
Business, except for the effect of such Orders as could not reasonably be
expected to have a Material Adverse Effect.
6.14 COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE
6.14, the Seller and the Transferred Subsidiaries are in compliance with all
Laws and Orders applicable to the Purchased Assets and the E&PA Business, except
for such noncompliance as could not reasonably be expected to have a Material
Adverse Effect. The Seller has not received any written notice from any
Governmental Authority that any violation of the foregoing is being alleged.
6.15 LABOR AND EMPLOYEE MATTERS.
(a) Except as set forth on SCHEDULE 6.15, (i) none of
the Seller or any Transferred Subsidiary is a party to or bound by any
union contract, collective bargaining agreement, employment contract,
independent contractor agreement, consultation agreement or other
similar type of contract in connection with the E&PA Business, (ii)
none of the Seller or any Transferred Subsidiary has agreed to
recognize any union or
31
other collective bargaining unit in connection with the E&PA Business,
and (iii) no union or collective bargaining unit has been certified as
representing the employees of the Seller or any Transferred Subsidiary
in connection with the E&PA Business and, to the knowledge of the
Seller, no organizational attempt has been made or threatened by or on
behalf of any labor union or collective bargaining unit with respect to
any employees of the Seller or any Transferred Subsidiary employed in
connection with the E&PA Business. On or prior to the date hereof, the
Seller has provided the Buyer with a true and correct list of all
employees of the Seller employed in the E&PA Business, specifying
whether they are salaried or hourly; their annual salary or wage rate,
target annual bonus and other compensation and benefits; their accrued
vacation and paid time off; the location at which they work; whether
they are subject to a collective bargaining agreement, and, if so,
which agreement; whether they are employed solely or partially in
connection with the E&PA Business (and, if partially, the percentage of
their working hours spent in the E&PA Business) and indicating which
such employees are on leave of absence, layoff, short-term disability,
or long-term disability and, in the case of a leave of absence or
disability, the date of commencement of such leave or onset of
disability.
(b) Except as set forth on SCHEDULE 6.15, (i) no
grievance or arbitration proceeding arising out of or under a
collective bargaining agreement is pending and no claim thereunder
exists or, to the Seller's knowledge, is threatened with respect to the
E&PA Business that could reasonably be expected to have a Material
Adverse Effect; (ii) neither the Seller nor any of the Transferred
Subsidiaries has any Equal Employment Opportunity Commission charges or
other claim of employment discrimination pending or, to the Seller's
knowledge, currently threatened against the E&PA Business that could
reasonably be expected to have a Material Adverse Effect; (iii) there
is no wage and hour department investigation pending, or to the
Seller's knowledge, currently threatened with respect to the E&PA
Business; (iv) during the last two years and without consideration of
any action taken by the Buyer or any Transferred Subsidiary after the
Closing Date, neither the Seller nor any of the Transferred
Subsidiaries has effectuated: (A) a "plant closing" (as defined in the
Worker Adjustment and Retraining Notification Act (the "WARN ACT"))
affecting any site of employment or one or more facilities or operating
units within any site of employment or facility, in each case engaged
in the manufacturing of the products of the type manufactured in the
E&PA Business; or (B) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of the E&PA Business; nor
has the E&PA Business been affected by any transaction or engaged in
layoffs or employment terminations sufficient in number to trigger
application of any similar state or local law; and (v) without
consideration of any action taken by the Buyer or any Transferred
Subsidiary after the Closing Date, none of the E&PA Business' employees
has suffered an "employment loss" (as defined in the WARN Act) within
90 days prior to the date hereof.
6.16 CONTRACTS. SCHEDULE 6.16 sets forth an accurate and
complete list, as of the date hereof, of the following Contracts regarding the
E&PA Business to which the Seller and/or its Affiliates is a party or by which
it or they are bound:
(a) Each Contract (or group of related Contracts)
requiring payment in excess of $100,000 per year, except those that are
terminable at the option of the Seller or
32
its Subsidiaries, as applicable, upon thirty days' notice or less
without penalty or further payment;
(b) Each Contract covering (i) the lease, purchase or
service of tangible personal property to which the Seller is a party
requiring payments in excess of $100,000 in the aggregate per year and
(ii) each lease related to the Leased Real Property;
(c) Each Contract concerning a partnership, joint
venture, strategic alliance, shareholder's agreement, tolling,
co-marketing, co-promotion, joint development or similar arrangement;
(d) Each Contract granting or evidencing a Lien
(other than a Permitted Lien) on any properties or assets of the E&PA
Business;
(e) Each management, service, consulting, employment,
severance or similar Contract requiring the payment of compensation to
a Transferred Employee in excess of $50,000 in the aggregate (including
bonuses) annually to which a Seller or its Affiliate is a party and any
other management service, consulting, financial advisory or any other
similar type of Contract and any Contract with any investment bank or
commercial bank;
(f) Each Contract under which any amount has been
advanced or loaned to any employees of the E&PA Business outside the
Ordinary Course of Business;
(g) Each collective bargaining agreement;
(h) Each Contract with any manufacturer's
representative, distributor or sales agent;
(i) Each Contract under which the Seller or an
Affiliate agreed to restrict the E&PA Business' ability to compete in
any market or geographic location;
(j) Each Contract involving, or relating to the
making of, (i) a loan (other than accounts receivable from trade
debtors in the Ordinary Course of Business) or advance to (other than
travel and entertainment allowances to the employees of the E&PA
Business extended in the Ordinary Course of Business), or investment
in, any Person;
(k) Each Contract (x) relating to (i) any Assumed
Liability or (ii) indebtedness for borrowed money or capitalized leases
(including any guarantees of any such indebtedness) of the E&PA
Business, other than, in each case, Contracts that when aggregated
together do not exceed $100,000 or (y) relating to any indebtedness for
borrowed money or capitalized leases (including any guarantees of any
such indebtedness) of any Transferred Subsidiary;
(l) Each Contract (other than this Agreement and any
agreement or instrument entered into pursuant to this Agreement) with
(i) the Seller or any Affiliate of the Seller or (ii) any current or
former officer or director of the E&PA Business;
33
(m) Each Contract (including letters of intent)
involving the future disposition or acquisition of assets or properties
included in the Purchased Assets or any merger, consolidation or
similar business combination transaction related solely to the
Transferred Subsidiaries, whether or not enforceable;
(n) Each material Contract involving any resolution
or settlement within two years from the date hereof of any actual or
threatened litigation, arbitration, claims or other dispute (or series
of actual or threatened litigation, arbitration, claim or other
disputes) related to the E&PA Business;
(o) Each Contract involving a non-solicitation,
confidentiality, standstill or similar arrangement relating to the
conduct of the E&PA Business or any related Intellectual Property;
(p) Each material warranty, service, and repurchase
Contract relating to the conduct of the E&PA Business;
(q) Each Contract containing "earn out" or other
deferred compensation arrangements relating to the conduct of the E&PA
Business; and
(r) Each Contract in respect of the Purchased Stock
or the Seller's and its Affiliates' investment in the Transferred
Subsidiaries.
Except as indicated on SCHEDULE 6.16, the Seller has provided to the Buyer true
and complete copies of the Assumed Contracts and any other Contract set forth on
SCHEDULE 6.16 (or required to be set forth on SCHEDULE 6.16), as amended to
date. Each of the Assumed Contracts and the other Contracts set forth on
SCHEDULE 6.16 (or required to be set forth on SCHEDULE 6.16) is in full force
and effect and constitutes a valid, binding and enforceable obligation of the
Seller or its Affiliates, as applicable, and, to the knowledge of the Seller,
each other party thereto, enforceable in accordance with its terms except as may
be limited by the General Enforceability Exceptions, and (a) neither the Seller
nor, to the Seller's knowledge, any other party thereto is in default under or
in violation with respect to any material term or provision contained therein;
(b) no event, occurrence, condition or act (including the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements) has
occurred which, with notice or lapse of time or both, would constitute such a
default or violation by the Seller or, to the Seller's knowledge, any other
party thereto, thereunder; and (c) the Seller has not released any of its
material rights thereunder. To the knowledge of the Seller, all of the covenants
to be performed by any other party thereto have been fully performed in all
material respects.
6.17 PERMITS. SCHEDULE 6.17 sets forth a complete and accurate
list and description of all Permits (other than immaterial Permits but including
all permits required under Environmental Laws) of any Governmental Authority
held by the Seller or any Transferred Subsidiary and used or maintained by them
in the conduct of the E&PA Business as currently conducted. Except as could not
reasonably be expected to have a Material Adverse Effect, the E&PA Business and
the Transferred Subsidiaries have obtained, and are in compliance with, all
Permits required to operate the E&PA Business under applicable Laws (including
such Permits required under Environmental Laws). To the Seller's knowledge,
there is no pending or threatened termination, expiration or revocation of any
such Permits. There are no facts,
34
circumstances, or conditions existing on the Closing Date relating to such
Permits that would prevent such Permits from being transferred to the Buyer or
renewed upon expiration in the Ordinary Course of Business and without material
expense to the Buyer.
6.18 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE
6.18 (which matters are Retained Liabilities),
(a) The E&PA Business has been and is being operated
in material compliance with all applicable Environmental Laws;
(b) To the actual knowledge of the Seller without any
inquiry, there are no facts, circumstances or conditions relating to
the past or present operation of the E&PA Business or the Transferred
Subsidiaries, or to the ownership or use of the Purchased Assets
(including the disposal of any wastes, hazardous substances or other
materials), that could reasonably be expected to give rise to any
claim, proceeding or action, or to any liability, under Environmental
Laws.
(c) There has been no material Release of any
Hazardous Material on, under or from the Owned Real Property or Leased
Real Property in violation of any Environmental Law;
(d) None of the Seller and the Transferred
Subsidiaries, with respect to the Purchased Assets, has (i) received
notice under the citizen suit provisions of any Environmental Law; (ii)
received any request for information, notice, demand letter,
administrative inquiry or formal or informal complaint or claim under
any Environmental Law; or (iii) been subject to or threatened in
writing with any governmental or citizen enforcement action with
respect to any Environmental Law;
(e) With respect to the Purchased Assets, none of the
Seller and the Transferred Subsidiaries is conducting any investigation
or other response or corrective action under any Environmental Law, nor
is it obligated under any Order to conduct such investigation or other
corrective or remedial action; and
(f) None of the Owned Real Property or the Leased
Real Property is (i) listed or proposed for listing on the National
Priorities List promulgated under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended
("CERCLA"), (ii) listed on the Comprehensive Environmental Response,
Compensation and Liability Information System promulgated under CERCLA,
or (iii) listed on any comparable list promulgated or published by an
Governmental Authority (including any such list relating to gasoline or
petroleum or oil). No Lien has been recorded under any Environmental
Law with respect to any of the Owned Real Property and the Leased Real
Property or any other Purchased Assets.
6.19 EMPLOYEE BENEFITS.
(a) SCHEDULE 6.19 sets forth a complete list of (i)
all material "employee benefit plans," as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), (ii) all other material current severance pay, salary
continuation, bonus, incentive, stock option, retirement, pension,
profit
35
sharing or deferred compensation plans, Contracts, programs, funds, or
arrangements of any kind, and (iii) all other material employee benefit
plans, Contracts, programs, funds, or arrangements sponsored, or
contributed to, by the Seller or any of its Affiliates, in which
employees of the E&PA Business participate as of the date of this
Agreement (the "EMPLOYEE PLANS").
(b) An application for a favorable determination
letter was submitted to the Internal Revenue Service within the
applicable remedial amendment period with regard to the Seller's
Savings Plan and the Seller will take all action reasonably requested
by the Internal Revenue Service in order to obtain a favorable
determination letter with regard to the Seller's Savings Plan. The
Seller has not incurred, directly or indirectly, any unsatisfied
liability (including, without limitation, any indirect, contingent or
secondary liability) of the Seller under Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA arising in connection with any
employee pension benefit plan covered or previously covered by Title IV
of ERISA or such sections of the Code or ERISA.
(c) Copies of the following materials have been
delivered or made available to the Buyer: (i) all current plan
documents for each Employee Plan and (ii) all current summary plan
descriptions and summaries of material modifications for each Employee
Plan.
6.20 BROKERS. Except as set forth on SCHEDULE 6.20, no Person
has acted directly or indirectly as a broker, finder or financial advisor for
the Seller in connection with the negotiations relating to the transactions
contemplated by this Agreement, and no Person is entitled to any fee or
commission or like payment in respect thereof based in any way on any agreement,
arrangement or understanding made by or on behalf of the Seller.
6.21 ABSENCE OF CHANGES; NO MATERIAL ADVERSE EFFECT. Except as
set forth on SCHEDULE 6.21, since the date of the E&PA Balance Sheet, there has
not been a Material Adverse Effect with respect to E&PA Business, no fact,
circumstance or event exists or has occurred which could reasonably be expected
to result in a Material Adverse Effect with respect to the E&PA Business and the
Seller has not taken any actions described in clauses (i) through (xii) in
SECTION 8.1 of this Agreement.
6.22 INVENTORIES. Except as set forth on SCHEDULE 6.22, (i)
the Inventories of the Seller relating to the E&PA Business are in the physical
possession of the Seller or in transit to or from a customer or supplier of the
Seller and (ii) none of the Inventories has been pledged as collateral or
otherwise is subject to any Lien (other than Permitted Liens or any Lien imposed
as a matter of Law) or is held on consignment from others. The Inventories
reflected in the E&PA Balance Sheet were, and the inventory reflected on the
Seller's books of account have been, determined and valued at the lower of cost
or market in accordance with GAAP. The Inventories were acquired or produced in
the Ordinary Course of Business. Except as reflected in the reserve for obsolete
Inventory on the E&PA Balance Sheet, the Inventories are good and merchantable,
not obsolete and are of a quality and quantity presently useable and salable in
the Ordinary Course of Business.
36
6.23 WARRANTY AND PRODUCT LIABILITY CLAIMS. Except as set
forth on SCHEDULE 6.23, there are no pending nor, to the Seller's knowledge,
threatened Warranty Claims or Product Liability Claims ("WARRANTY AND PRODUCT
LIABILITY CLAIMS") in respect of products or services sold or provided in the
operation of the E&PA Business against the Seller or its Affiliates, which
Warranty and Product Liability Claims exceed $100,000, in the aggregate or are
not covered by insurance or with respect to which the Seller has received a
reservation of rights or declination of coverage from its insurance carriers.
Except as set forth on SCHEDULE 6.23, the Seller does not make any material
representation or warranty to its customers with respect to products sold or
services delivered by it.
6.24 INSURANCE. Set forth on SCHEDULE 6.24 is an accurate and
complete list of each insurance policy and insurance arrangement which covers
the Assumed Liabilities or employees (including self insurance, but excluding
insurance policies providing benefits under Seller Welfare Plans) of the E&PA
Business (the "INSURANCE POLICIES"). Such Insurance Policies are in full force
and effect, all premiums thereon have been paid, and the Seller is otherwise in
compliance in all material respects with the terms and provisions of such
Insurance Policies. The Seller is not in default under any of the Insurance
Policies set forth on SCHEDULE 6.24 (or required to be set forth on SCHEDULE
6.24) and, to the Seller's knowledge, there exists no event, occurrence,
condition or act that, with the giving of notice, the lapse of time or both,
would become a default thereunder. The Seller has not received any notice of
cancellation or non-renewal of any such Insurance Policies nor has the
termination of any such Insurance Policies been threatened.
6.25 MATERIAL CUSTOMERS AND SUPPLIERS. SCHEDULE 6.25 sets
forth (x) each customer accounting for more than $250,000 of the sales of the
E&PA Business (including the top 25 customers in each business segment of the
E&PA Business) and (y) each supplier of raw materials accounting for more than
$100,000 of the purchases of the E&PA Business for the last twelve months before
the date hereof. Except as set forth on SCHEDULE 6.25, no such supplier or
customer has canceled or otherwise terminated, or, to the Seller's knowledge,
threatened to cancel or otherwise terminate its relationship with the E&PA
Business. Except as set forth on SCHEDULE 6.25, neither the Seller nor any of
its Affiliates has received written notice that any such supplier or customer
may cancel or otherwise materially and adversely modify its relationship with
the E&PA Business or limit its services, supplies or materials to the E&PA
Business, or its usage or purchase of the services and products of the E&PA
Business, either as a result of the transactions contemplated hereby or
otherwise.
6.26 TRANSACTIONS WITH RELATED PARTIES. Except as set forth on
SCHEDULE 6.26, (a) there are no Contracts or liabilities between the Seller or
the E&PA Business, on the one hand, and an Affiliate of the Seller, on the other
hand, relating to the E&PA Business and (b) neither the Seller, any Affiliate of
the Seller nor any officer or director of the Seller possesses, directly or
indirectly, any financial interest in, or is a director or officer of, any
Person which is a client, supplier, customer, lessor, lessee, or competitor of
the E&PA Business. Ownership of securities of a company whose securities are
registered under the Securities Exchange Act of 1934, as amended, of 2% or less
of any class of such securities is deemed not to be a financial interest for
purposes of this SECTION 6.26.
6.27 ACCURACY OF BOOKS AND RECORDS. The respective minute
books of the Seller and its Transferred Subsidiaries relating to the conduct of
the E&PA Business, as
37
previously made available to the Buyer and its representatives, contain accurate
records of all meetings of, and corporate action taken by (including action
taken by written consent), the respective members, shareholders and Boards of
Directors of the Seller and each Transferred Subsidiary. Neither the Seller nor
any Transferred Subsidiary has any of its records, systems, controls, data or
information relating to the E&PA Business recorded, stored, maintained, operated
or otherwise wholly or partly dependent on or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
which (including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of the Seller or any Transferred
Subsidiary.
6.28 LIABILITIES OF TRANSFERRED SUBSIDIARIES. Except as set
forth on SCHEDULE 6.28, none of the Transferred Subsidiaries have any
indebtedness for borrowed money or have guaranteed any indebtedness for borrowed
money of any other Person and there is no existing condition, situation or set
of circumstances that would result in any of the Transferred Subsidiaries
incurring any indebtedness for borrowed money or guaranteeing any indebtedness
for borrowed money of any other Person.
6.29 ACCREDITED INVESTOR. The Seller is an "accredited
investor" as defined under Regulation D of the Securities Act of 1933, as
amended.
ARTICLE 7: REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller as
follows:
7.1 ORGANIZATION, EXISTENCE AND GOOD STANDING. The Buyer is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware.
7.2 POWER. The Buyer has the limited liability company power
and authority to execute, deliver and perform fully its obligations under this
Agreement and the Ancillary Agreements.
7.3 VALIDITY AND ENFORCEABILITY. The Buyer has the capacity to
execute, deliver and perform its obligations under this Agreement and the
Ancillary Agreements. The execution, delivery and performance of this Agreement
and the Ancillary Agreements, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary limited liability company action on the part of the Buyer and, when
executed and delivered by the Buyer, this Agreement and the Ancillary Agreements
will constitute the valid and legally binding obligations of the Buyer
enforceable against the Buyer in accordance with their terms, except as may be
limited by the General Enforceability Exceptions. No further limited liability
company action on the part of the Buyer is or will be required in connection
with the transactions contemplated by this Agreement or the Ancillary
Agreements.
7.4 NO CONFLICT. Neither the execution and delivery of this
Agreement or the Ancillary Agreements by the Buyer, nor the performance by the
Buyer of its obligations hereunder or thereunder, will (a) violate or conflict
with the Buyer's Certificate of Formation or Limited Liability Company Agreement
or, to the Buyer's knowledge, any Law or Order, or (b) to the Buyer's knowledge,
violate, conflict with or result in a breach or termination of, or otherwise
give any Person the right to terminate or accelerate, or constitute (with notice
or lapse of time, or
38
both) a default under the terms of, any material Contract to which the Buyer is
a party, other than violations or conflicts that would not result or could not
reasonably be expected to result in a material adverse effect on the ability of
the Buyer to perform its obligations under this Agreement or any Ancillary
Agreements.
7.5 CONSENTS. Except as required under the HSR Act or any
foreign competition filings and except as set forth on SCHEDULE 7.5, no Consent
is required in connection with the execution and delivery by the Buyer of this
Agreement or the Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby.
7.6 FINANCIAL ABILITY. The Buyer has received binding
commitment letters from (i) AmSouth Capital Corp. to provide a $60,000,000
Senior Secured Credit Facility (consisting of a $50,000,000 Senior Secured
Revolving Facility and a $10,000,000 Senior Secured Term Loan Facility) and (ii)
Ableco Finance LLC to provide a $50,000,000 Junior Secured Term Loan B Facility,
true and correct copies of which commitment letters are attached as EXHIBIT Q-1
and EXHIBIT Q-2 (together, the "DEBT COMMITMENT LETTERS"). The Buyer has
received a binding commitment letter from Lion to provide $1 million in equity
financing, a true and correct copy of which is attached hereto as EXHIBIT R-1
and Olmec Holdings LLC ("HOLDCO") has received binding commitment letters or
subscription agreements from Lion, ACI Capital Co., Inc. and certain other
equity investors to provide an aggregate of not less than $30,000,000 in equity
financing, true and correct copies of which are attached hereto as EXHIBIT R-2
(collectively, the "EQUITY COMMITMENT LETTERS" and, together with the Debt
Commitment Letters, the "COMMITMENT LETTERS"). The Commitment Letters have not
been modified or terminated and thus remain valid and in full force and effect
in accordance with their terms as of the date of this Agreement. The Buyer is
not aware of any facts or circumstances that, assuming the accuracy of the
representations and warranties of the Seller contained in ARTICLE 6 hereof, as
of the date hereof, would cause any of the conditions set forth in the
Commitment Letters to not be satisfied and, assuming the accuracy of the
representations and warranties of the Seller contained in ARTICLE 6 hereof, as
of the date hereof, the Buyer knows of no facts or circumstances that cause it
to believe the financings contemplated by the Commitment Letters will not be
consummated substantially in accordance with the terms thereof. Assuming that
the parties to the Commitment Letters make the proceeds of the financing
contemplated by the Commitment Letters available to Holdco or the Buyer, as the
case may be, the Buyer will have sufficient funds to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements.
7.7 BROKERS. Except as set forth on SCHEDULE 7.7, no Person
has acted directly or indirectly as a broker, finder or financial advisor for
the Buyer in connection with the negotiations relating to the transactions
contemplated by this Agreement, and no Person is entitled to any fee or
commission or like payment in respect thereof based in any way on any agreement,
arrangement or understanding made by or on behalf of the Buyer.
7.8 NO RELIANCE. The Buyer or its representatives have
inspected and conducted such reasonable review and analysis (financial and
otherwise) of the E&PA Business as desired by the Buyer. The purchase of the
Purchased Assets by the Buyer, and the assumption by it of the Assumed
Liabilities, and the consummation of the transactions contemplated hereunder by
the Buyer, are not done in reliance upon any warranty or representation by, or
information from, the Seller of any sort, oral or written, except the warranties
and representations
39
specifically set forth in this Agreement (including the schedules and exhibits
hereto) and in the Ancillary Agreements, including any certificates required to
be delivered to the Buyer by the Seller hereunder and thereunder.
7.9 SUBORDINATED PROMISSORY NOTE. The Subordinated Promissory
Note to be issued under this Agreement, when issued by the Buyer to the Seller
pursuant to the terms of this Agreement, will have been issued in compliance
with all applicable federal and state securities laws, and will be free and
clear of all Liens.
7.10 HSR. Neither the aggregate total assets nor the aggregate
net sales (as those terms are defined in the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976 and the regulations thereunder (the "HSR ACT")) of
Buyer and all entities controlling, controlled by or under common control with
(as those terms are defined in the HSR Act), Buyer equal or exceed $10,000,000.
7.11 INVESTMENT INTENT. The Buyer represents and warrants that
it is acquiring the Purchased Stock for its own account and is not acquiring the
Purchased Stock with a view to, or for resale in connection with, any
distribution of the Preferred Stock in violation of the Securities Act of 1933,
as amended. The Buyer understands that the Purchased Stock purchased by it
pursuant to this Agreement has not been registered under the Securities Act of
1933, as amended, or the securities laws of any state by reason of specific
exemptions under the provisions thereof, which depend in part upon the
investment intent of the Buyer and upon the other representations made by the
Buyer in this Agreement. The Buyer understands that the Seller is relying upon
the representations, warranties and agreements made by the Buyer in this
Agreement.
7.12 KNOWLEDGE AND SOPHISTICATION. The Buyer (a) has such
knowledge, sophistication and experience in business and financial matters that
it is capable of evaluating the merits and risks of the transactions referred to
in this Agreement, (b) fully understands the nature, scope and duration of the
limitations applicable to the Purchased Stock and (c) is able to bear the
economic risk of the investment in the Purchased Stock.
7.13 ACCREDITED INVESTOR. The Buyer is an "accredited
investor" as defined under Regulation D of the Securities Act of 1933, as
amended.
ARTICLE 8: COVENANTS AND AGREEMENTS
8.1 CONDUCT OF E&PA BUSINESS.
(a) From the date of this Agreement until the Closing
Date, the Seller shall conduct the E&PA Business and operate the
Purchased Assets in the Ordinary Course of Business. Without limiting
the foregoing, prior to the Closing, unless the Buyer shall otherwise
agree in writing, or as set forth on SCHEDULE 8.1, or as otherwise
expressly contemplated by this Agreement, the Seller shall not, and
shall not permit any Transferred Subsidiary to:
(i) Acquire or dispose of any property or
assets used in the E&PA Business or make any capital
expenditures or commitment thereof, in either case in excess
of $50,000 individually and $250,000 in the aggregate (other
40
than in connection with planned capital expenditures related
to the E&PA Business' operations in China and as set forth on
SCHEDULE 8.1) or mortgage or encumber any such property or
assets, except in the Ordinary Course of Business;
(ii) Except in the Ordinary Course of Business,
enter into, amend or become subject to or terminate or fail to
renew any Contract of a type described in SECTION 6.16 in
connection with the conduct of the E&PA Business or transfer
to any party, or permit to lapse, any material rights, or
waive any right of material value under, any Assumed Contract;
(iii) Engage in any transactions with, or enter
into any Contracts with, any Affiliates of the Seller in
connection with the E&PA Business, except in the Ordinary
Course of Business and on terms no less favorable than would
be obtained in an arm's length third party transaction;
(iv) Enter into, adopt, amend or terminate any
Contract relating to the compensation or severance of any
employee associated with the E&PA Business or in the Ordinary
Course of Business, except to the extent required by Law or
any existing Contracts scheduled on SCHEDULE 6.16;
(v) Make any material change to any method,
principles or practice of accounting (including Tax
accounting) for any Transferred Subsidiary except as may be
required by GAAP or make, or permit any Transferred Subsidiary
to make, a Tax election that is inconsistent with the past
practices of the Seller or the Transferred Subsidiaries;
(vi) Amend the rate or method of collection of
Accounts Receivable or payment of any accounts payable or any
other liabilities, or prepay any expenses or other
obligations, other than in the Ordinary Course of Business;
(vii) Transfer any employees currently employed
by the Seller other than in the E&PA Business to the E&PA
Business;
(viii) Change or amend the terms and conditions
of the product warranties, product recalls, refunds or sales
returns, repair or placement and performance guarantees and
similar obligations relating to the products delivered,
manufactured or sold or services performed by the E&PA
Business;
(ix) (A) File or cause to be filed any amended
Tax Returns or claims for refund with respect to the
Transferred Subsidiaries, (B) prepare any Tax Returns for any
Transferred Subsidiary in a manner that is inconsistent with
the past practices of the Transferred Subsidiary, (C) incur
any material liability for Taxes with respect to any
Transferred Subsidiary other than in the Ordinary Course of
Business, or (D) enter into any settlement or closing
agreement with a taxing authority that materially increases or
may materially increase the Tax liability of any Transferred
Subsidiary for any period;
(x) Incur, assume, guarantee or modify any
indebtedness for borrowed money or capitalized leases except
for indebtedness or leases of Seller
41
(and not any Transferred Subsidiary) that would not constitute
an Assumed Liability;
(xi) Offer or give any sales discounts, or
amend or otherwise change the sales practices or policies of
the E&PA Business, other than in the Ordinary Course of
Business;
(xii) Make any advance payments (including any
prepaid expenses or prepaid deposits) or change the rate or
timing of the payment of expenses, in each case other than in
the Ordinary Course of Business; or
(xiii) Agree to take any of the actions
described in SECTIONS 8.1(i) through 8.1(xii) or take any
action that, if taken subsequent to the execution of this
Agreement and on or prior to the Closing Date, would
constitute a breach of the covenants set forth in ARTICLES 8
and 10 of this Agreement.
(b) The Seller shall keep all Insurance Policies
currently maintained with respect to the E&PA Business, the Purchased
Assets and the Assumed Liabilities, or suitable replacements or
renewals, in full force and effect through the close of business on the
Closing Date.
8.2 REASONABLE ACCESS; CONFIDENTIALITY.
(a) From the date of this Agreement until the Closing
Date or the earlier termination of this Agreement, and subject to
applicable Law, the Seller shall give the Buyer and its officers,
directors, employees and other authorized agents and representatives,
upon reasonable notice to the Seller, reasonable access, during normal
business hours and in a manner so as not to interfere with the normal
business operations of the E&PA Business or the Seller, to the assets,
properties, books, records, Contracts and employees of the E&PA
Business and shall permit the Buyer to make such inspections as it may
reasonably require and to furnish the Buyer during such period with all
such information relating to the E&PA Business as the Buyer may from
time to time reasonably request.
(b) Prior to the Closing Date, any information
provided to or obtained by the Buyer pursuant to paragraph (a) above
will be subject to the Confidentiality Agreement, dated November 18,
2003, by and between the Seller and Lion (the "CONFIDENTIALITY
AGREEMENT"), and must be held by the Buyer in accordance with and be
subject to the terms of the Confidentiality Agreement. The Buyer agrees
to be bound by and comply with the provisions of the Confidentiality
Agreement as if such provisions were set forth in this Agreement, and
such provisions are hereby incorporated by reference into this
Agreement.
8.3 PUBLICITY. Except as may be required to comply with the
requirements of any applicable Law or applicable stock exchange rules, the Buyer
and the Seller shall not, and the Buyer and Seller shall cause their respective
Affiliates and other authorized agents and representatives not to, issue any
press release or other public announcement relating to the subject matter of
this Agreement or the transactions contemplated by this Agreement without the
prior approval (which approval will not be unreasonably held or delayed) of the
other party.
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Prior to making any public filings with any third party and/or Governmental
Authority with respect to the transactions contemplated by this Agreement and
the Ancillary Agreements, the parties will consult with each other prior to
making such public filings, except to the extent such consultation is not
practicable as a result of requirements of applicable Law or applicable stock
exchange rules.
8.4 RECORDS.
(a) With respect to the financial books and records,
including purchase and sales records (the "RECORDS"), of the E&PA
Business relating to matters on or prior to the Closing Date: (i) for a
period of seven years after the Closing Date, the Buyer shall not cause
or permit their destruction or disposal without first offering to
surrender them to the Seller; and (ii) where there is legitimate
purpose, including an audit of the Seller by the Internal Revenue
Service or any other Taxing Authority, the Buyer shall allow the Seller
and its representatives access to the Records during regular business
hours.
(b) With respect to accounting records and files
related solely to the E&PA Business and retained by the Seller pursuant
to SECTION 2.1(m) of this Agreement (and any other accounting records
that relate in part to the E&PA Business), (i) for a period of seven
years after the Closing Date, the Seller shall not cause or permit
their destruction or disposal without first offering to surrender them
to the Buyer and otherwise provide the Buyer and its representatives
access to, including the right to make photocopies (at the Buyer's
expense) of, such records in a manner consistent with SECTION 10.1 of
this Agreement; and (ii) where there is legitimate purpose, including
an audit of the Buyer by the Internal Revenue Service or any other
Taxing Authority, the Seller shall allow the Buyer and its
representatives access to the Records during regular business hours.
8.5 INJUNCTIONS. Without limiting the generality or effect of
any provision of ARTICLE 8, if any Governmental Authority having jurisdiction
over any party issues or otherwise promulgates any Order prior to the Closing or
any third party otherwise initiates any action, suit, litigation, arbitration or
hearing conducted or heard by or before, any court or any arbitrator or
arbitration panel, in each case that challenges or prevents the consummation of
any or all of the transactions contemplated by this Agreement, the parties shall
use their respective reasonable best efforts to have such Order dissolved or
otherwise eliminated as promptly as possible and, prior to or after the Closing,
to pursue the underlying litigation diligently and in good faith.
8.6 FURTHER ASSURANCES; SUBSEQUENT TRANSFERS. The Seller and
the Buyer shall execute and deliver such further instruments of conveyance,
transfer and assignment and shall take, or cause to be taken, such other actions
as either of them may reasonably request of the other in order to effectuate the
purposes of this Agreement and the Ancillary Agreements and to carry out the
terms hereof and thereof. Without limiting the generality of the foregoing, at
any time and from time to time after the Closing Date, at the request of the
Buyer and without further consideration therefor, the Seller shall execute and
deliver to Buyer such other instruments of transfer, conveyance, assignment and
confirmation and shall take such action as the Buyer may reasonably deem
necessary or desirable in order to more effectively transfer, convey and assign
to the Buyer and to confirm the Buyer's title to any Purchased Assets, to put
the Buyer in actual possession and operating control thereof and to permit the
Buyer to exercise all rights with
43
respect thereto. In addition, at the request of the Seller and without further
consideration therefor, the Buyer shall execute and deliver to the Seller all
instruments, undertakings or other documents and shall take such other action as
the Seller may reasonably deem necessary or desirable in order to cause the
Buyer to properly assume and discharge the Assumed Liabilities and to relieve
the Seller of any liability with respect thereto and to evidence the same to
third parties.
8.7 POST-CLOSING RECEIPTS.
(a) In the event that the Seller receives any monies
(including, without limitation, as insurance proceeds, any monies
received relating to Accounts Receivables or any other assets reflected
on the Working Capital Statement or other amounts from third parties)
in respect of any Purchased Assets or Assumed Liabilities, then such
monies or assets will be held by the Seller in trust for the Buyer and
the Seller shall promptly remit such monies to the Buyer. In the event
that the Seller is entitled to receive insurance proceeds or is
otherwise indemnified by an unaffiliated third party in respect of any
Assumed Liabilities, then, upon request by the Buyer and at the sole
expense of the Buyer, the Seller shall use its commercially reasonable
efforts to pursue any and all claims on behalf of the Buyer to collect
any amounts owing in respect of such Assumed Liabilities;
alternatively, the Seller will be entitled to assign to the Buyer its
rights in respect of any claims for such amounts (in which case the
Buyer shall accept such assignment and the Seller will no longer have
any obligation under this SECTION 8.7(a) in respect of such assigned
claims).
(b) In the event that the Buyer or any of its
Affiliates receives any monies (including, without limitation, as
insurance proceeds or other amounts from third parties) in respect of
any Retained Assets or Retained Liabilities, then the Buyer shall
promptly remit such monies to Seller.
8.8 COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and
conditions contained herein and except to the extent otherwise required under
applicable laws and regulations, each of the Buyer and the Seller shall use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other party in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement and the Ancillary Agreements, including (a) the
obtaining of all necessary actions or nonactions, waivers, Consents and
approvals from Governmental Authorities and the making of all necessary
registrations and filings (including filings with Governmental Authorities, if
any) and the taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Authority, (b) the obtaining of all necessary Consents, approvals
or waivers from third parties, including the Seller, relating to the E&PA
Business as are necessary for the consummation of the transactions contemplated
hereby, to provide the Buyer with the economic benefit of any Nonassignable
Items as set forth in SECTION 2.3 of this Agreement and (c) otherwise fulfill
the conditions to consummation of the transactions contemplated hereby set forth
in ARTICLE 9 of this Agreement.
8.9 NAME AND ▇▇▇▇ USAGE. The Buyer acknowledges that the
Purchased Intellectual Property does not include the trade names or trademarks
"PolyOne," "Plastone" or
44
"▇▇▇▇-Tone," any variations thereof or any combinations of any of the foregoing
with anything else (the foregoing, the "RETAINED TRADE NAMES") and that, other
than as permitted in this SECTION 8.9 or in the Brand License Agreement, the
Seller does not grant any right or license in, to or under any of the Retained
Trade Names to the Buyer pursuant to this Agreement. Except as provided for in
the Brand License Agreement, from and after 90 days following the Closing Date,
Buyer shall not use any of the Retained Trade Names on or in any correspondence,
stationery, proposals, purchase orders, quotations or invoices. Except as
provided for in the Brand License Agreement, as promptly as practicable after
the Closing Date, but in any event not later than 180 days after the Closing
Date, the Buyer shall discontinue and cease all uses whatsoever of the Retained
Trade Names, including obliterating the same from or destroying all materials
containing or displaying any Retained Trade Name, including signs, packaging and
shipping materials, products, business cards, literature, brochures, or
otherwise. The Seller recognizes that the Buyer may wish to use the term
"PolyCode" after the Closing Date for its current purpose or a substantially
similar purpose and the Seller covenants not to ▇▇▇ the Buyer for its use of the
term "PolyCode" after the Closing Date for its current purpose or a
substantially similar purpose.
8.10 CANCELLATION OF INTERCOMPANY OBLIGATIONS. Prior to the
Closing Date, the Seller shall, and shall cause its Affiliates to, cancel and
release the E&PA Business and Transferred Subsidiaries from any obligation or
liability (including indebtedness for borrowed money) owed by the E&PA Business
and/or the Transferred Subsidiaries to the Seller and/or its Affiliates and
incurred prior to the Closing Date unless the Buyer provides written notice to
the Seller at least ten days prior to the Closing Date of its desire to instead
have such obligation or liability transferred to the Buyer; provided, that the
Seller is not obligated to transfer any such obligation or liability if the
Seller reasonably believes that such transfer would result in adverse tax
consequences to the Seller or the Seller's Subsidiaries; provided further, that
if the Seller cancels and releases, or causes its Affiliates to cancel and
release, the E&PA Business and Transferred Subsidiaries from any obligation or
liability (including indebtedness for borrowed money) owed by the E&PA Business
and/or the Transferred Subsidiaries to the Seller and/or its Affiliates and
incurred prior to the Closing Date, the Seller shall use its commercially
reasonable efforts to minimize the creation of cancellation of debt income for
the Buyer.
ARTICLE 9: CONDITIONS TO CLOSING
9.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER AND THE
SELLER. The respective obligations of the Buyer and the Seller under this
Agreement to consummate the transactions contemplated by this Agreement are
subject to the satisfaction or waiver (if permitted by applicable Law), at or
prior to the Closing, of each of the following conditions:
(a) Neither of the parties to this Agreement will be
subject, whether instituted, threatened or otherwise in effect or
filed, to (i) a preliminary or permanent injunction, temporary
restraining order or other judicial or administrative Order in any
jurisdiction the effect of which challenges or prohibits the
consummation of any or all of the transactions contemplated by this
Agreement and the Ancillary Agreements or the Closing or materially
adversely affects the economic benefits the Buyer or the Seller expects
to receive in consummating such transactions, or (ii) any action, suit,
litigation, arbitration or hearing conducted or heard by or before, any
court or any arbitrator or
45
arbitration panel challenging or preventing the consummation of any or
all of the transactions contemplated by this Agreement and the
Ancillary Agreements; and
(b) The applicable waiting periods under the HSR Act
and any other relevant foreign competition Law will have expired or
been terminated.
9.2 ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
BUYER. The obligations of the Buyer under this Agreement to consummate the
transactions contemplated by this Agreement are subject to the satisfaction or
waiver (if permitted by applicable Law), at or prior to the Closing, of each of
the following additional conditions:
(a) The representations and warranties of the Seller
set forth in this Agreement that are qualified by "materiality,"
"Material Adverse Effect" or other similar qualifiers will be true and
correct in all respects both on the date of this Agreement and on the
Closing Date as though made on the Closing Date (or as of an earlier
date, to the extent that such representations and warranties are made
expressly as of an earlier date, in which case such representations and
warranties qualified as to "materiality," "Material Adverse Effect" or
other similar qualifiers will be true and correct in all respects on or
as of such earlier date), and all representations and warranties of the
Seller contained in this Agreement that are not qualified by
"materiality," "Material Adverse Effect" or other similar qualifiers
will be true and correct in all material respects both on the date of
this Agreement and on the Closing Date as though made on the Closing
Date (or as of an earlier date, to the extent that such representations
and warranties are made expressly as of an earlier date, in which case
such representations and warranties not qualified as to "materiality,"
"Material Adverse Effect" or other similar qualifiers will be true and
correct in all respects on or as of such earlier date);
(b) Each of the obligations, covenants and agreements
of the Seller to be performed and complied with by the Seller pursuant
to this Agreement prior to the Closing Date will have been duly
performed and complied with in all material respects;
(c) The Seller will have delivered to the Buyer the
items required by SECTION 5.2 (other than clause (v) of SECTION 5.2)of
this Agreement; and
(d) The conditions contained in the Debt Commitment
Letters will have been satisfied and the Buyer shall have received the
proceeds of the financing contemplated by the Debt Commitment Letters
on terms not materially less favorable in the aggregate to the Buyer
than those set forth on the term sheets attached thereto.
9.3 ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
SELLER. The obligations of the Seller under this Agreement to consummate the
transactions contemplated by this Agreement are subject to the satisfaction or
waiver (if permitted by applicable Law), at or prior to the Closing, of each of
the following additional conditions:
(a) The representations and warranties of the Buyer
set forth in this Agreement that are qualified by "materiality,"
"Material Adverse Effect" or other similar qualifiers will be true and
correct in all respects both on the date of this Agreement and on the
Closing Date as though made on the Closing Date (or as of an earlier
date to the extent that such representations and warranties are made
expressly as of an earlier date, in
46
which case such representations and warranties qualified as to
"materiality," "Material Adverse Effect" or other similar qualifiers
will be true and correct in all respects on or as of such earlier date)
and all representations and warranties of the Buyer contained in this
Agreement that are not qualified by "materiality," "Material Adverse
Effect" or other similar qualifiers will be true and correct in all
material respects both on the date of this Agreement and on the Closing
Date as though made on the Closing Date (or as of an earlier date to
the extent that such representations and warranties are made expressly
as of an earlier date, in which case such representations and
warranties not qualified as to "materiality," "Material Adverse Effect"
or other similar qualifiers will be true and correct in all respects on
or as of such earlier date);
(b) Each of the obligations, covenants and agreements
of the Buyer to be performed and complied with by the Buyer pursuant to
this Agreement prior to the Closing Date will have been duly performed
and complied with in all material respects; and
(c) The Buyer will have delivered to the Seller the
items required by SECTION 5.3 of this Agreement, and Management will
have delivered to the Seller the items required by SECTION 5.4 of this
Agreement.
ARTICLE 10: ADDITIONAL COVENANTS AND AGREEMENTS
10.1 COOPERATION; AUDITS. In connection with (i) the
preparation of any Tax returns, (ii) audit examinations, (iii) any
administrative or judicial proceedings relating to Tax liabilities imposed on
the Seller for any Tax periods (or portions thereof) ending on or prior to the
Closing Date, (iv) any litigation relating to periods prior to the Closing Date,
(v) an initial public offering of the equity securities of the Buyer or any
other offering of securities by the Buyer or (vi) as otherwise reasonably
requested by the Buyer or the Seller, the Buyer and the Seller shall cooperate
fully with each other, including the furnishing or making available during
normal business hours to the other party (or such other party's officers,
employees, authorized agents and representatives, as the case may be) records
(including accounting records if reasonably requested by the Buyer as set forth
in SECTION 8.4 above), personnel (as reasonably required), books of account,
powers of attorney or other materials necessary or helpful for the preparation
of such returns, the conduct of audit examinations, the defense of claims by
Taxing Authorities as to the imposition of Taxes, the defense of any Tax
litigation relating to periods prior to the Closing Date, the offering of
securities or the taking of other reasonable actions.
10.2 TRANSFER TAXES. The Buyer and the Seller each shall pay
one-half of any transfer, sales, use, stamp, conveyance, value added, recording,
registration, documentary, filing, gross receipts and other similar non-Income
Taxes or fees (including all applicable real estate transfer Taxes and real
property transfer gains Taxes, if any) and related amounts (including any
penalties, interests and additions to Tax) imposed on the Buyer or the Seller in
connection with this Agreement. The Buyer shall cause to be filed all necessary
returns, forms and other documentation with respect to all such Taxes and fees
and shall promptly provide the Seller with copies of any such filings. The Buyer
and the Seller shall each pay one-half of any expenses associated with the
filing of such returns, forms or other documentation.
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10.3 EMPLOYEES AND EMPLOYEE BENEFITS.
(a) The Buyer shall offer "at will" employment to
those employees of the E&PA Business set forth on SCHEDULE 10.3(a) and
the Seller shall terminate the employment of all such employees on the
Closing Date. The Buyer shall offer "at will" employment to those
employees of the E&PA Business who were on short-term or long-term
disability or on approved leave of absence on the Closing Date on the
date such employees are no longer on short-term or long-term disability
or on leave of absence and are ready to commence active work for the
Buyer, and the Seller shall terminate the employment of such employees
on such date. Those employees who accept such offer of employment of
the Buyer shall hereinafter be referred to as "TRANSFERRED EMPLOYEES."
If, during the 365-day period following a Transferred Employee's date
of hire with the Buyer, the Buyer terminates such Transferred
Employee's employment for any reason other than for Serious Cause (as
defined in the PolyOne Employee Transition Plan, amended and restated
effective January 1, 2004, a copy of which was previously delivered to
the Buyer (the "TRANSITION PLAN")), the Buyer shall, within 10 days of
such Transferred Employee's termination of employment with the Buyer,
pay to the Seller an amount equal to the cash value of the benefits
payable by the Seller to such Transferred Employee under the Transition
Plan; provided, that the Seller provides the Buyer with a detailed
statement setting forth how it calculated such amount and the Buyer
agrees that the Seller's calculation of such amount is correct pursuant
to the terms of the Transition Plan; provided, further, that the
Buyer's agreement will not be unreasonably withheld. The Seller shall
retain the responsibility and liability to pay and provide any
severance or similar pay or benefits to any employee who does not
accept the Purchaser's offer of employment.
(b) Following the Closing Date, the Buyer may
determine the compensation and employee benefits plans, programs and
arrangements applicable to all Transferred Employees. Notwithstanding
the foregoing, the Buyer shall compensate each Transferred Employee at
a level of base salary or base hourly rate of pay (excluding (in either
case), for the avoidance of doubt, any bonuses (including, without
limitation, bonuses, severance, retention, change in control or similar
pay or benefits), overtime payments and premiums) no less than that
which such Transferred Employee was compensated at by the Seller on the
day prior to the date hereof. In addition, the Buyer shall make
available to each Transferred Employee for a period of 12 months
following the Closing Date, employee benefit plans, programs and
arrangements that are substantially comparable in the aggregate to the
Employee Plans applicable to such Transferred Employee on the date
hereof, excluding, for purposes of determining substantial
comparability, (i) employee benefit plans that (1) are pension plans
subject to Section 412 of the Code or Section 302 or Title IV of ERISA,
(2) provide post-employment or retiree welfare benefits other than to
the extent required by Section 4980B of the Code and Sections 601 - 609
of ERISA ("COBRA"), (3) provide stock or equity-based compensation and
(4) provide any type of bonus, severance, retention, change in control
or similar pay or benefits and (ii) "Employer Retirement Contributions"
(as set forth in the Seller Savings Plan (as hereinafter defined)) in
excess of an amount equal to two percent of such Transferred Employee's
"Compensation" (as defined in the Seller Savings Plan).
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(c) For purposes of any employee benefit plan,
program or arrangement established for or made available to Transferred
Employees by the Buyer (the "BUYER PLANS"), the Buyer shall credit such
Transferred Employees with service for all periods of service prior to
the Closing Date with the Seller or any predecessor to the Seller in
the same manner as such service was credited under the Employee Plans
applicable to such Transferred Employee on the Closing Date. Such
service will be credited solely for purposes of determining eligibility
for, or vesting in, the Buyer Plans; provided, however, such service
need not be credited to the extent that it would result in duplication
of coverage or benefits.
(d) As soon as administratively practicable following
the Closing Date, the Seller shall cause the account balances of the
Transferred Employees in the PolyOne Retirement Savings Plan (the
"SELLER SAVINGS PLAN"), including any outstanding loan notes, to be
transferred from the Seller Savings Plan to a defined contribution plan
established or maintained by the Buyer (or its Subsidiary or Affiliate,
as applicable) for the benefit of the Transferred Employees (the "BUYER
SAVINGS PLAN"). As a condition precedent to the transfer described in
the previous sentence, the Buyer shall provide the Seller with a copy
of the most recent favorable determination letter for the Buyer Savings
Plan (dated no earlier than January 1, 2002) or such other evidence of
the Buyer Savings Plan's compliance with Section 401(a) of the Code as
is reasonably acceptable to the Seller, and the Seller shall provide
the Buyer with a copy of the most recent favorable determination letter
(dated no earlier than January 1, 2002) for the Seller Savings Plan or
such other evidence of the Seller Savings Plan's compliance with
Section 401(a) of the Code as is reasonably acceptable to the Buyer.
The transfer of assets from the Seller Savings Plan to the Buyer
Savings Plan will be made in cash and promissory notes representing the
outstanding loan balances of the Transferred Employees in the Seller
Savings Plan. The Buyer and the Seller shall cause the transfer
described in this SECTION 10.3(d) to satisfy the requirements of
Section 414(l) of the Code. On or prior to the date of the transfer
described in this SECTION 10.3(d), with respect to all Transferred
Employees, the Seller shall contribute all contributions to the Seller
Savings Plan (i) which are required to be made on or before the Closing
Date under the Seller Savings Plan, and (ii) which relate to service or
employee salary deferral contributions on or prior to the Closing Date,
whether or not required to be made on or prior to the Closing Date
under the Seller Savings Plan.
(e) If requested by the Buyer, effective on the
Closing Date and for a period of no more than six months after the
Closing Date (the "TRANSITION PERIOD"), the Seller shall cause the
Employee Plans that are welfare benefit plans within the meaning of
Section 3(1) of ERISA (the "SELLER WELFARE PLANS") to cover all
Transferred Employees and their respective dependents to the same
extent as those Transferred Employees and their respective dependents
were covered under such Seller Welfare Plans on the day prior to the
Closing Date. The Buyer shall reimburse the Seller for the "premium
cost" of such coverage and the reasonable administrative cost of
providing such coverage within ten business days following the Buyer's
receipt of an invoice setting forth such costs in reasonable detail.
For purposes of this SECTION 10.3(e), the term "premium cost" means (i)
with respect to Seller Welfare Plans that are insured, the 2004 premium
rates for such plans as listed on SCHEDULE 10.3(e) and (ii) with
respect to Seller Welfare Plans that are self-funded medical and dental
plans, the "applicable
49
premium" (as defined in COBRA) charged in 2004 under such plans for
purposes of COBRA, as listed on SCHEDULE 10.3(e). The Buyer shall cause
its plans that are welfare benefit plans within the meaning of Section
3(1) of ERISA (the "BUYER WELFARE PLAN") to provide coverage and
benefits to Transferred Employees (and the eligible dependents of the
Transferred Employees) effective as soon as reasonably practicable
after the Closing Date but in no event later than the sixth month
anniversary of the Closing Date. The Buyer shall cause deductibles and
out-of-pocket payments expended for coverage under the Seller Welfare
Plans in the plan year in which the Buyer Welfare Plan become
applicable to Transferred Employees to be counted towards the
deductibles and out-of-pocket maximums applicable to each Transferred
Employee under the Buyer Welfare Plan. In addition, no pre-existing
condition, limitation, exclusion or waiting period applicable with
respect to any Buyer Welfare Plan will apply to any Transferred
Employee to the extent that such conditions, limitations, exclusions or
waiting periods would have already been satisfied if service credited
for purposes of the Seller Welfare Plans was taken into account or to
the extent that such conditions, limitations, exclusions or waiting
periods exceed those in effect under the Seller Welfare Plans.
(f) Any Transferred Employee listed on SCHEDULE
10.3(f) will, upon such Transferred Employee's retirement from the
Buyer and at the Seller's expense, be entitled to elect coverage under
The PolyOne Medical Plan for Salaried Retirees or The PolyOne Medical
Plan for Wage Retirees in effect as of such Transferred Employee's
retirement from the Buyer upon such terms and conditions as if such
Transferred Employee had retired from the Seller on the date such
Transferred Employee retired from the Buyer (and shall receive credit
under such plan for service with the Buyer as if such service were with
the Seller).
(g) Nothing contained in this Agreement (i)
constitutes an obligation or commitment on the part of the Buyer or its
affiliates to assume or continue any Employee Plan or (ii) is to be
interpreted to prevent or restrict the Buyer or its affiliates from
modifying or terminating the employment or terms of employment of any
Transferred Employee, including, without limitation, the amendment or
termination of any employee benefit or compensation plan, program or
arrangement, after the Closing Date.
(h) The Seller shall make available to the Buyer such
personnel and related information as may be reasonably requested by the
Buyer with respect to any Transferred Employee, including, but not
limited to, compensation and employment records.
10.4 WARN ACT. The Buyer shall not engage in a "mass layoff"
or "plant closing" as defined in the WARN Act without complying with the WARN
Act. The Buyer shall defend, indemnify and hold harmless the Seller and its
Affiliates from any claims, charges, suits, demands, damage, or liability
arising out of or relating either to noncompliance with the WARN Act after the
Closing Date or from the Buyer's decision to terminate any Transferred Employee.
10.5 ADDITIONAL PURCHASED ASSETS. Upon notice given by the
Buyer to the Seller within 180 days after the Closing Date, the Buyer shall
purchase from the Seller, and the Seller shall sell, transfer, assign, convey
and deliver to the Buyer, any or all of the assets and
50
property of the Seller listed or described on SCHEDULE 10.5 and identified by
the Buyer in such notice (the "ADDITIONAL PURCHASED ASSETS" and, singularly, an
"ADDITIONAL PURCHASED ASSET"); provided, however, that (a) the Buyer actually
removes such Additional Purchased Assets from their respective locations within
180 days after the Closing Date without causing damage to the Seller's assets
and property and (b) the Buyer pays or causes to be paid to the Seller by wire
transfer of immediately available funds to an account designated in writing by
the Seller, within 3 business days after the date on which the Buyer first
commences to remove Additional Purchased Assets from their respective locations,
an amount equal to the sum of the net book value as of the opening of business
on the Closing Date, as determined in accordance with GAAP applied on a basis
consistent with the E&PA Balance Sheet, of each Additional Purchased Asset.
10.6 NO SOLICITATION. From the date of this Agreement through
and until the earlier of the termination of this Agreement or the Closing Date,
the Seller shall not, and shall cause its Affiliates, directors, officers,
employees, agents, accountants, consultants, financial advisors, investment
bankers, counsel or representatives not to, take any action to, directly or
indirectly, encourage, initiate, solicit, or engage in discussions or
negotiations with, or provide any information to, any Person other than the
Buyer (and its representatives and financing sources) concerning any Alternate
Transaction.
10.7 INSURANCE. If requested by the Buyer, the Seller shall
use its commercially reasonable efforts to transfer to the Buyer the Seller's
"unemployment insurance rating" or similar rating (as they relate to the E&PA
Business), if any, with the Seller's insurance carriers.
10.8 TAX CONTROVERSIES.
(a) The Buyer shall promptly notify the Seller upon
receipt by the Buyer or any affiliate of the Buyer of written notice of
any inquiries, claims, assessments, audits or similar events with
respect to Taxes with respect to the Transferred Subsidiaries relating
to a taxable period ending on or prior to the Closing Date (any such
inquiry, claim, assessment, audit or similar event, a "TAX MATTER").
The Seller, at its sole expense, has the authority to represent the
interests of the Transferred Subsidiaries with respect to any Tax
Matter before the Internal Revenue Service, any other taxing authority,
any other governmental agency or authority or any court and has the
sole right to control the defense, compromise or other resolution of
any Tax Matter, including responding to inquiries, filing Tax Returns
and contesting, defending against and resolving any assessment for
additional Taxes or notice of Tax deficiency or other adjustment of
Taxes of, or relating to, a Tax Matter; provided, however, that neither
Seller nor any of its Affiliates shall enter into any settlement of or
otherwise compromise any Tax Matter that affects or may affect the Tax
liability of the Buyer or any of its Affiliates for any period ending
after the Closing Date, including the portion of the Straddle Period
that is after the Closing Date, without the prior written consent of
the Buyer, which consent will not be unreasonably withheld or delayed.
The Seller shall keep the Buyer fully and timely informed with respect
to the commencement, status and nature of any Tax Matter. The Seller
shall, in good faith, allow the Buyer to make comments to the Seller or
regarding the conduct of or positions taken in any such proceeding.
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(b) Except as otherwise provided in SECTION 10.8(a)
above, the Buyer has the sole right to control any audit or examination
by any taxing authority, initiate any claim for refund or amend any Tax
Return, and contest, resolve and defend against any assessment for
additional Taxes, notice of Tax deficiency or other adjustment of Taxes
of, or relating to, the Transferred Subsidiaries for all taxable
periods that begin after the Closing Date.
10.9 TRANSFER OF STATE UNEMPLOYMENT TAX EXPERIENCE AND
RESERVES. The Seller shall cooperate with the Buyer in effectuating a transfer
to the Buyer of the state unemployment Tax experience and reserve accounts and
balances attributable to the Business in every state where (1) the Buyer
requests such a transfer, and (2) such a transfer is permitted by applicable
law. Such cooperation includes, but is not limited to, the filing by the Seller
of all applicable forms with appropriate Taxing Authorities evidencing the
Seller's consent to such a transfer.
10.10 NOTIFICATION REGARDING DYERSBURG, TENNESSEE. Prior to
the Closing, the Seller shall contact the relevant state environmental agency
with respect to soil and groundwater sampling events conducted by the Seller
relating to soil contamination in the area of the Dyersburg facility (150 South
▇▇▇▇▇▇▇ Avenue, Dyersburg, Tennessee) located between the plant on the west, the
plant's truck shop on the east, ▇▇▇▇▇▇▇ Street on the north and a railroad spur
on the south.
ARTICLE 11: TERMINATION OF AGREEMENTS
11.1 TERMINATION. Notwithstanding any other provision of this
Agreement, this Agreement may be terminated at any time prior to the Closing:
(a) By the mutual written consent of the Buyer and
the Seller;
(b) By either the Buyer or the Seller, upon written
notice to the other party, if the transactions contemplated by this
Agreement have not been consummated on or prior to September 15, 2004
(the "OUTSIDE DATE"), unless such failure of consummation is due to the
failure of the party seeking such termination to perform or observe in
all material respects the covenants and agreements contained in this
Agreement to be performed or observed by such party;
(c) By either the Buyer or the Seller, upon written
notice to the other party, if there has been entered a final,
nonappealable order, injunction, or any other action of any
Governmental Authority permanently enjoining, restraining or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreement or any material part thereof; provided, however, that the
party seeking to terminate this Agreement pursuant to this clause (c)
has used its reasonable best efforts to remove or terminate such order,
injunction or action;
(d) By the Buyer, upon written notice to the Seller,
if there has been a material breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of the
Seller and (i) the Seller has not cured such breach before the Outside
Date and within 15 days after notice of such breach has been given by
the Buyer to the Seller in accordance with SECTION 13.9 (Notice);
provided, however, that, no cure
52
period will be required for any such breach that by its nature cannot
be cured; or (ii) as a result of such breach, one or more of the
conditions set forth in SECTION 9.1 or SECTION 9.2 would not be
satisfied at or prior to the Closing; or
(e) By the Seller, upon written notice to the Buyer,
if there has been a material breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of the
Buyer and (i) the Buyer has not cured such breach before the Outside
Date and within 15 days after notice of such breach has been given by
the Seller to the Buyer in accordance with SECTION 13.9 (Notice);
provided, however, that, no cure period will be required for any such
breach that by its nature cannot be cured; or (ii) as a result of such
breach, one or more of the conditions set forth in SECTION 9.1 or
SECTION 9.3 would not be satisfied at or prior to the Closing.
Notwithstanding anything to the contrary in this Agreement, neither the
Buyer nor the Seller may rely on the failure of any condition set forth
in SECTION 9.1, SECTION 9.2 and SECTION 9.3, as the case may be, to be
satisfied if such failure was caused by such party's failure to act in
good faith or to use its commercially reasonable efforts pursuant to
SECTION 8.8 ("COMMERCIALLY REASONABLE EFFORTS") to cause such
conditions to be satisfied.
11.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement pursuant to SECTION 11.1, (a) there will be no liability or
obligation on the part of any party or any of their respective Affiliates,
officers, directors, employees, advisors, consultants, agents or other
representatives, except as provided in this SECTION 11.2 and except that nothing
in this Agreement releases, or may be construed as releasing, any party to this
Agreement from any liability or damage to any other party arising out of the
breaching party's willful breach in the performance of any of its covenants or
agreements arising under this Agreement and (b) each party will destroy all
documents, workpapers and other material of any other party relating to the
transactions contemplated by this Agreement, whether obtained before or after
the execution of this Agreement, to the party furnishing the same. The
obligations of the parties to this Agreement under SECTION 8.2(b), this SECTION
11.2, SECTIONS 13.1 through 13.10 and the Confidentiality Agreement will survive
any termination of this Agreement.
ARTICLE 12: REMEDIES
12.1 GENERAL INDEMNIFICATION OBLIGATION.
(a) The Seller shall indemnify and hold harmless the
Buyer and its Affiliates and their respective officers, directors,
employees, advisors, consultants, agents and other representatives from
and against any and all losses, liabilities, claims, damages,
penalties, fines, judgments, awards, settlements, costs, reasonable
fees, reasonable expenses (including reasonable attorneys' fees) and
reasonable disbursements (collectively, the "LOSSES") actually
sustained by any of such Persons based upon, arising out of or relating
to any (i) inaccuracies in or any breach of any (A) representation or
warranty, or (B) covenant or agreement, of the Seller contained in this
Agreement and/or (ii) any Retained Liabilities.
53
(b) The Buyer shall indemnify and hold harmless the
Seller and its Affiliates and their respective officers, directors,
employees, advisors, consultants, agents from and against any and all
Losses actually sustained by any of such Persons based upon, arising
out of or relating to any (i) inaccuracies in or any breach of any (A)
representation or warranty or (B) covenant or agreement, of the Buyer
contained in this Agreement and/or (ii) any Assumed Liabilities.
12.2 NOTICE AND OPPORTUNITY TO DEFEND.
(a) Notice of Asserted Liability. As soon as is
reasonably practicable after the Seller or the Buyer, as the case may
be, becomes aware of any claim that it has under SECTION 12.1 hereof
that would reasonably be expected to result in a Loss (a "LIABILITY
CLAIM"), such party (the "INDEMNIFIED PARTY") shall give notice thereof
(a "CLAIMS NOTICE") to the other party (the "INDEMNIFYING PARTY"). A
Claims Notice must describe the Liability Claim in reasonable detail,
and must indicate the amount (estimated, if necessary and to the extent
feasible) of the Loss that has been or may be suffered by the
Indemnified Party. No delay in or failure to give a Claims Notice by
the Indemnified Party to the Indemnifying Party pursuant to this
SECTION 12.2(a) will adversely affect any of the other rights or
remedies that the Indemnified Party has under this Agreement or will
alter or relieve the Indemnifying Party of its obligation to indemnify
the Indemnified Party to the extent that such delay or failure has not
materially prejudiced the Indemnifying Party.
(b) Opportunity to Defend. The Indemnifying Party has
the right, exercisable by written notice to the Indemnified Party
within 30 days of receipt of a Claims Notice from the Indemnified Party
of the commencement or assertion of any Liability Claim in respect of
which indemnity may be sought under this Agreement, to assume and
conduct the defense of such Liability Claim in accordance with the
limits set forth in this Agreement with counsel selected by the
Indemnifying Party and reasonably acceptable to the Indemnified Party.
If the Indemnifying Party does not assume the defense of a Liability
Claim in accordance with this SECTION 12.2(b), the Indemnified Party
may continue to defend the Liability Claim. If the Indemnifying Party
has assumed the defense of a Liability Claim as provided in this
SECTION 12.2(b), the Indemnifying Party will not be liable for any
legal expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof; provided, however, that an
Indemnifying Party is not entitled to contest and defend third party
claims against Lion, the Buyer or the E&PA Business, such as claims by
customers of the E&PA Business, claims seeking injunction or other
equitable relief, relief for other than money damages or claims
alleging criminal activity; provided, further, that the Indemnified
Party may assume its own defense and employ counsel separate from the
counsel employed by the Indemnifying Party, and the Indemnifying Party
will be liable for all reasonable costs or expenses paid or incurred in
connection therewith, if the Indemnified Party has been advised by
White & Case LLP or other counsel reasonably satisfactory to the
Indemnifying Party that there may be one or more legal defenses
available to it that are different from or additional to those
available to the Indemnifying Party and, in the reasonable judgment of
such counsel, it is advisable for the Indemnified Party to employ
separate counsel in order to effectively assert such defense or
defenses. The Indemnifying Party or the Indemnified Party, as the case
may be, has the right to
54
participate in (but not control), at its own expense, the defense of
any Liability Claim that the other is defending as provided in this
Agreement. With respect to any Liability Claim asserted by any third
party, the parties shall make available to each other all relevant
information in their possession that is material to any such Liability
Claim asserted. The Indemnifying Party, if it has assumed the defense
of any Liability Claim as provided in this Agreement, shall not,
without the prior written consent of the Indemnified Party (such
consent not to be unreasonably withheld), settle, discharge, compromise
or admit any liability with respect to such Liability Claim or consent
to entry of any judgment in respect to any Liability Claim unless such
settlement, discharge, compromise, admission of liability or consent
(x) obligates the Indemnifying Party to pay the full amount of the
liability asserted under the Liability Claim, (y) includes the giving
by the claimant or the plaintiff to the Indemnified Party a full and
unconditional release from all liability in respect of such Liability
Claim, and (z) would not impose any injunctive or non-monetary relief
against the Indemnified Party.
12.3 SURVIVABILITY; LIMITATIONS.
(a) The representations and warranties of the Seller
and the Buyer contained in this Agreement will survive for a period
ending on the eighteen month anniversary of the Closing Date (the
"EXPIRATION DATE"); provided, however, that (i) the Expiration Date for
any Liability Claim relating to a breach of or inaccuracy in the
representations and warranties set forth in SECTION 6.1 (Organization,
Existence and Good Standing), SECTION 6.2 (Capitalization), SECTION 6.3
(Power and Authority to Conduct the E&PA Business), SECTION 6.4
(Authority; Due Execution and Delivery; Validity and Enforceability),
the first sentence of SECTION 6.9 (Title; Assets), SECTION 6.20
(Brokers), SECTION 7.2 (Power), SECTION 7.3 (Validity and
Enforceability), and SECTION 7.7 (Brokers) (collectively referred to as
the "EXCLUDED REPRESENTATIONS") will be indefinite, (ii) with respect
to the representations and warranties set forth in SECTION 6.8 (Taxes)
and SECTION 6.19 (Employee Benefits), the period for making claims will
be until the 15th day after the expiration of the applicable statute of
limitations, (iii) with respect to the representations and warranties
set forth in SECTION 6.18 (Environmental Matters), the period for
making claims will be three years and (iv) any Liability Claim pending
on any Expiration Date for which a Claims Notice has been given in
accordance with SECTION 12.2 or before such Expiration Date may
continue to be asserted and indemnified against until finally resolved.
Except as otherwise limited by this Agreement, all of the covenants and
agreements of the Seller and the Buyer contained in this Agreement will
survive after the date of this Agreement in accordance with their
terms.
(b) Notwithstanding anything to the contrary
contained in this Agreement, the Seller does not have any liability
under SECTION 12.1(a)(i)(A) (other than liability for breaches of the
Excluded Representations): (i) until the aggregate amount of all such
Losses sustained by the Buyer exceeds $1,000,000 (the "DEDUCTIBLE"), in
which case the Seller will be liable for all Losses in excess of
$1,000,000; or (ii) in excess of an aggregate of $30,000,000 in excess
of the Deductible. With respect to any indemnification under SECTION
12.1(a)(i)(A), no event, claim or item of loss will constitute a "LOSS"
and indemnification will not be available with respect to such event,
claim or item of loss (nor will any such event, claim or item of loss
be counted towards the Deductible) unless such event, claim or item of
loss, or such event, claim or item of
55
loss together with a series of similar events, claims or items of loss,
results in a loss or damages of $10,000 or more, in which case the
Indemnified Party will be entitled to indemnification for the full
amount of Losses related to such event, claim or item of loss or series
of similar events, claims or items of loss subject to the Deductible
(and such Losses will be counted towards the Deductible); provided,
however, that for purposes of this sentence, "similar" means an event,
claim or item of loss that shares a common subject matter with another
event, claim or item of loss, as the case may be. It is further
understood that indemnification will not be available under SECTION
12.1(a)(i)(A) for any claims with respect to Losses that occur after
the survival periods set forth in SECTION 12.3(a). Except for a claim
based on fraud, from and after the date of this Agreement, the sole
remedy of the Buyer for any and all Losses will be limited to
indemnification pursuant to this ARTICLE 12 and specific performance as
set forth in SECTION 12.4.
(c) Any determination of Losses actually incurred by
an Indemnified Party will be net of any insurance proceeds or proceeds
from indemnity agreements, in each case actually recovered by the
Indemnified Party with respect to a Liability Claim, but will not be
net of Taxes, to the extent recovered pursuant to rights obtained by
the Buyer under the Seller's Insurance Policies. The Buyer has obtained
rights under the Seller's Insurance Policies in respect of such Losses
arising out of Seller's Insurance Policies to the extent such rights
relate to one or more Assumed Liabilities. The Indemnified Party shall
use commercially reasonable efforts (but shall not be obligated to
commence litigation) to claim and recover any Losses suffered by the
Indemnified Party under any such Insurance Policies; provided, however,
that the Buyer and the E&PA Business will not in any way be obligated
to subrogate any Indemnifying Party to any of the Buyer's or the E&PA
Business' respective insurance benefits otherwise available to them.
Except with respect to Losses actually awarded to a third party in an
action brought against an Indemnified Party, the Indemnified Party is
not entitled to reimbursement pursuant to SECTION 12.1 hereof for
punitive damages, or for lost profits, consequential, exemplary or
special damages. The Buyer is not entitled to reimbursement pursuant to
SECTION 12.1 to the extent that the Buyer has been compensated therefor
pursuant to SECTION 4.2.
(d) Within ten business days of the final
determination of any Losses pursuant to this ARTICLE 12, the
Indemnifying Party shall pay to the Indemnified Party an amount equal
to the Losses by wire transfer in immediately available funds to the
bank account or the accounts designated by the Indemnified Party in a
notice to the Indemnifying Party not less than two business days prior
to such payment. It is agreed that, for purposes of this SECTION
12.3(d), it is not necessary to have ascertained the final cost or
quantum of the aggregate Losses with respect to any Claim in order for
such Losses to be "finally determined," but rather it will be
sufficient if such Losses have (i) been agreed to be (or have been
determined by a court of competent jurisdiction to be) subject to
indemnification hereunder and (ii) that such Losses (or the portion
thereof subject to payment) are quantifiable and have been sustained by
the Indemnified Party.
(e) Except with respect to SECTION 6.7, the last
sentence of SECTION 6.9 and SECTIONS 6.11, 6.16, 6.19 and 6.21, the
last sentence of SECTION 6.23 and SECTION 6.25 and the inclusion of any
"materiality" or "Material Adverse Effect" qualifier in any definition
of any term in this Agreement, in determining whether a breach of any
56
representation and warranty that contains a "materiality," or "Material
Adverse Effect" or similar qualifier has occurred for purposes of
SECTION 12.1(a)(i)(A), all references to such "materiality," or
"Material Adverse Effect," or similar qualifier will be disregarded.
12.4 SPECIFIC PERFORMANCE. Each party's obligation under this
Agreement is unique. If either party breaches its covenants or agreements under
this Agreement, the parties each acknowledge that it would be extremely
impracticable to measure the resulting damages; accordingly, the nonbreaching
party or parties, in addition to any other available rights or remedies, may ▇▇▇
in equity for specific performance, and each party expressly waives the defense
that a remedy in damages will be adequate.
12.5 ENVIRONMENTAL REMEDIATION FOR CERTAIN RETAINED
LIABILITIES.
(a) In the event of a discovery of an environmental
condition at any of the Purchased Assets that constitutes a Retained
Liability or a Claim, the Seller will have the right and the
obligation, at the Seller's sole expense, through any environmental
consultants of its own choosing and listed on SCHEDULE 12.5(a), subject
to the Buyer's approval, which will not be unreasonably withheld,
delayed or conditioned, to remediate (or take such other action as may
be appropriate, if any, under any applicable Environmental Laws, Orders
and applicable industry standards) such environmental condition in a
manner consistent with applicable Environmental Laws and consistent
with the direction of Orders of Governmental Authorities.
(b) The Seller shall provide the Buyer with copies of
all written correspondence between the Seller and the relevant
Governmental Authority, including the results of all soil and
groundwater sampling events. The Seller shall consult with the Buyer
prior to the submission to any Governmental Authority of any remedial
action plan or similar document with respect to any such remedial work
and shall reasonably accommodate the Buyer's comments thereon, but the
Seller has the exclusive right (subject to the immediately succeeding
sentence) to meet with, and negotiate the terms of such remedial action
plan with, the relevant Governmental Authority; provided, that no such
remedial action plan unreasonably interferes with the operation of the
Buyer's business. The Seller shall inform the Buyer of the time,
location and subject matter of any meeting with Governmental
Authorities in respect of any remedial action plan that is the subject
of this paragraph at least three business days prior to the date of
such meeting (or if the giving of three business days' notice is not
practicable, such lesser notice as is practicable) and shall afford the
Buyer the opportunity to have its representatives attend any such
meeting; provided, that, in light of the Seller's rights and
obligations under this SECTION 12.5, it is understood that any
representatives of the Buyer will attend such meeting solely in the
capacity of observers of the meeting; provided further, that the Seller
has no obligation to delay or suspend any meeting if the Buyer is not
present.
(c) For purposes of conducting remedial activities on
any environmental condition that constitutes a Retained Liability or
Claim, the Seller may enter the Owned Real Property and, during the
Buyer's tenancy, the Leased Real Property. Such entry will only be
permitted, however, upon reasonable prior notice to and consultation
with the Buyer in order to plan and conduct such remedial work. Such
57
remedial work will be conducted so as not to interfere unreasonably
with the Buyer's operations.
(d) If the Seller does not meet any obligation to
remediate an environmental condition that constitutes a Retained
Liability or a Claim in a manner (i) required by applicable
Environmental Laws or (ii) consistent with Orders of relevant
Governmental Authorities, the Buyer shall send the Seller a letter
describing the deficiencies in the Seller's conduct of such
remediation. If the Seller within ten business days has not responded
to such letter in a manner reasonably satisfactory to the Buyer, the
Buyer may in writing request a meeting with the Seller to in good faith
discuss and attempt to resolve any disputes with respect to the manner
in which the Seller is conducting such remediation identified in the
Buyer's letter. If the Seller and the Buyer within ten business days
after the date of the Buyer's request for a meeting have not met and
resolved any disputes with respect to the Buyer's position regarding
the deficiencies in Seller's conduct of the remediation, the Buyer
shall have the right, but not the obligation, to assume control of and
complete such remediation, through environmental consultants of its
choosing, at the Seller's reasonable expense, in a manner required by
applicable Environmental Laws and/or in accordance with the terms of
the applicable Orders of relevant Governmental Authorities; provided,
that the Buyer's control of such remediation lasts only until such time
as, upon ten days' written notice from the Seller to the Buyer, the
Seller resumes control of such remediation in a manner reasonably
satisfactory to the Buyer (whose consent will not be unreasonably
withheld, delayed or conditioned); provided further, that the Seller
has the right to resume control of such remediation in accordance with
the immediately preceding proviso only one time. The Seller shall pay
all bills and invoices for such remediation within 20 business days of
receipt thereof from the Buyer.
(e) The provisions of this SECTION 12.5 in no way
limit the indemnification provided in SECTION 12.1(a) or the allocation
of liabilities set forth in SECTIONS 3.1(j) and 3.2(b) of this
Agreement.
ARTICLE 13: MISCELLANEOUS
13.1 EXPENSES. Except as set forth in SECTION 4.2(c)
or in the Ancillary Agreements, whether or not the transactions
contemplated by this Agreement are consummated, each of the parties
shall bear its expenses (including all legal, accounting, broker,
finder or investment banker fees) incurred or to be incurred in
connection with the execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements.
13.2 SUCCESSORS AND ASSIGNS; NO ASSIGNMENT. This Agreement is
binding upon and inures to the benefit of the parties to this Agreement and
their respective successors, executors, administrators and permitted assigns,
but the rights and obligations of the parties under this Agreement may not be
assigned without the prior written consent of the other party to this Agreement;
provided, that the Buyer may assign its rights, interests and obligations
hereunder (i) to any Affiliate of the Buyer, (ii) for the purpose of securing
any financing of the transactions contemplated hereby or (iii) to any Person
that succeeds to all or substantially all of the Buyer's assets and business,
whether by contract or by operation of law; provided, further,
58
that if the Buyer makes any assignment referred to in (i) or (ii) above, the
Buyer will remain liable under this Agreement.
13.3 THIRD PARTY BENEFICIARIES. This Agreement does not
benefit or create any right or cause of action in or on behalf of any Person
other than the parties to this Agreement and, subject to SECTION 13.2, their
respective successors, executors, administrators and permitted assigns.
13.4 HEADINGS. The headings contained in this Agreement are
included for purposes of convenience only, and will not affect the meaning or
interpretation of this Agreement.
13.5 INTEGRATION, MODIFICATION AND WAIVER. This Agreement,
together with the exhibits, schedules and certificates or other instruments
delivered hereunder, constitutes the entire agreement between the parties with
respect to this subject matter and supersedes all prior understandings of the
parties. No supplement, modification or amendment of this Agreement will be
binding unless executed in writing by each of the parties. No waiver of any of
the provisions of this Agreement will be deemed to be or will constitute a
continuing waiver. No waiver will be binding unless executed in writing by the
party making the waiver.
13.6 CONSTRUCTION. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement must be construed as
if drafted jointly by the parties and no presumption or burden of proof must
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law will be deemed also to refer to all rules and regulations
promulgated under such law, unless the context requires otherwise. The word
"INCLUDING" means including without limitation. Any reference to the singular in
this Agreement also includes the plural and vice versa. The word "KNOWLEDGE" as
it relates to the Seller means the actual knowledge after reasonable inquiry of
the following individuals: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, Francisco Viliesiv, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. March and
▇▇▇▇▇▇▇ ▇▇▇▇▇. The word "KNOWLEDGE" as it relates to the Buyer means the actual
knowledge after reasonable inquiry of the following individuals: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. Field.
13.7 SEVERABILITY. If any term, provision, agreement, covenant
or restriction of this Agreement or the application of any term, provision,
covenant or restriction of this Agreement to any party or circumstance is, to
any extent, adjudged invalid or unenforceable, the application of the remainder
of such term, provision, agreement, covenant or restriction to such party or
circumstance, the application of such term, provision, agreement, covenant or
restriction to other parties or circumstances, and the application of the
remainder of the terms, provisions, agreements, covenants and restrictions of
this Agreement will remain in full force and effect and will in no way be
affected, impaired or invalidated so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party hereto. Upon such a determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a reasonably acceptable manner
in order that the transactions contemplated hereby may be consummated as
originally contemplated to the fullest extent possible.
59
13.8 DISCLOSURE SCHEDULE SUPPLEMENTS. The Seller and the Buyer
may, from time to time prior to the Closing Date but in any case no later than
ten days prior to the Closing Date, by written notice delivered in accordance
with this Agreement, supplement or amend the Schedules to this Agreement (the
"DISCLOSURE SCHEDULES") to correct any matter that would constitute a breach of
any representation or warranty contained herein. No such supplemental or amended
Disclosure Schedule will be deemed to cure any breach of such representation or
warranty for the purpose of SECTION 9.2(a) and will not in any way impair the
Buyer's rights thereunder. If, however, the Closing occurs, any such supplement
or amendment of the Disclosure Schedules will be effective to cure and correct
for all purposes any breach of any representation or warranty that would have
existed by reason of the Seller or the Buyer, as the case may be, not having
made such supplement or amendment, other than such breaches that result or could
reasonably be expected to result in a Material Adverse Effect.
13.9 NOTICES. All notices and other communications required or
permitted under this Agreement must be in writing and will be deemed to have
been duly given (a) when delivered in person, (b) when dispatched by electronic
facsimile transfer (if confirmed in writing by mail simultaneously dispatched),
(c) one business day after having been dispatched by a nationally recognized
overnight courier service or (d) three business days after having been
deposited, postage prepaid, certified or registered mail, return receipt
requested, in the United States Mail, to the appropriate party at the address or
facsimile number specified below:
If to the Seller:
PolyOne Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Legal Officer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy (which will not constitute notice) to:
▇▇▇▇▇ Day
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer:
Olmec LLC
c/o Lion Chemical Capital LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
60
with a copy (which will not constitute notice) to:
Lion Chemical Capital, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
ACI Capital Co., Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Ezra Field
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
White & Case LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address or facsimile number for the
purposes of this SECTION 13.9 by giving notice as provided in this Agreement.
13.10 GOVERNING LAW; WAIVER OF JURY TRIAL. This Agreement will
be governed by and construed and enforced in accordance with the laws of the
State of New York without regard to principles of conflicts of law.
Notwithstanding the foregoing, either party may initiate and prosecute any legal
proceeding or seek enforcement of any judgment in respect of this Agreement in
any proper court having jurisdiction in the states of Ohio or New York and, by
execution and delivery of this Agreement, each of the parties to this Agreement
accepts the jurisdiction of such courts, and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this agreement. The prevailing
party in any such litigation will be entitled to receive from the losing party
all costs and expenses, including reasonable counsel fees, incurred by the
prevailing party or parties. Each of the Buyer and Seller hereby waives, to the
fullest extent permitted by applicable Law, any right it may have to a trial by
jury in respect of any litigation as between the parties directly or indirectly
arising out of, under or in connection with this Agreement or the transactions
contemplated hereby or disputes relating hereto. Each of the Buyer and the
Seller (i) certifies that no representative, agent or attorney of the other
party has represented, expressly or otherwise that such other party would not,
in the event of litigation, seek to enforce the foregoing waiver and (ii)
acknowledges that it and the other party have been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications in this
SECTION 13.10.
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13.11 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original, but all of which
together constitute one and the same instrument.
62
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
POLYONE CORPORATION
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: W. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and
Chief Financial Officer
OLMEC LLC
By: Olmec Holdings LLC, its Manager
By: Lion Chemical Capital LLC, its co-
Manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name:
Title: