ASSET PURCHASE AGREEMENT
BY AND BETWEEN
TREDEGAR INDUSTRIES, INC.
AND
EXXON CHEMICAL COMPANY
A DIVISION OF EXXON CORPORATION
FOR THE PURCHASE OF ITS
FILM BUSINESS
APRIL 23, 1999
TABLE OF CONTENTS
1.0 CERTAIN DEFINITIONS........................................................1
2.0 TRANSFER OF ASSETS AND PROPERTIES.........................................14
2.1 Purchased Assets.................................................14
2.1.1 Real Property Owned.......................................14
2.1.2 Real Property Leased......................................15
2.1.3 Equipment, Machinery and Other Tangible Personal Property.15
2.1.4 Contracts Relating to the Business........................15
2.1.5 Customer Lists, Sales and Marketing Materials,
and Business Pla...................ns.....................16
2.1.6 Permits; Licenses.........................................17
2.1.7 Property, Personnel and Accounting Records................17
2.1.8 Goodwill..................................................17
2.1.9 Inventory.................................................17
2.1.10 Accounts Receivable......................................17
2.1.11 Prepaid Expenses.........................................17
2.1.12 Business Application Computer Software...................18
2.1.13 Customer Confidentiality Agreements......................18
2.1.14 Other Intangible Assets..................................18
2.2 Intellectual Property............................................19
2.3 Excluded Assets..................................................19
3.0 CONSIDERATION AND TERMS...................................................21
3.1 Consideration for Purchased Assets...............................21
3.2 Payment of Consideration.........................................22
3.3 Allocation of Purchase Price.....................................22
3.4 Certain Price Adjustments........................................23
3.5 Certain Taxes....................................................24
3.6 Product Returns and Credits......................................25
3.7 FemCare Reimbursement............................................25
4.0 ASSUMPTION OF LIABILITIES; EMPLOYEE MATTERS...............................25
4.1 General Limitation on Assumption of Liabilities..................25
4.2 Assumed Liabilities and Obligations..............................26
4.3 Offer of Employment..............................................26
4.4 Vacation Liability...............................................27
4.5 Other Employee Benefits..........................................27
4.6 WARN Act.........................................................30
5.0 CLOSING...................................................................31
5.1 Time; Location...................................................31
5.2 Documents........................................................31
5.3 Reasonable Steps.................................................32
6.0 REPRESENTATIONS AND WARRANTIES OF SELLER..................................33
6.1 Organization, Good Standing and Power............................33
6.2 Authorization of Agreement and Enforceability....................33
6.3 No Violations; Consents..........................................34
6.4 Financial Statements.............................................35
6.5 Absence of Certain Changes or Events.............................35
6.6 Title to Properties; Absence of Liens and Encumbrances...........38
6.7 Permits; Licenses................................................39
6.8 Compliance with Laws.............................................39
6.9 Legal Proceedings................................................40
6.10 Books and Records...............................................41
6.11 Labor Disputes..................................................41
6.12 Payroll Practices/Employee Arrangements.........................42
6.13 No Finder.......................................................42
6.14 Interest in Business............................................43
6.15 Leases and Contracts............................................43
6.16 Employees of the Business.......................................45
6.17 Accounts Receivable.............................................45
6.18 Taxes...........................................................45
6.19 Inventories.....................................................46
6.20 Year 2000 Matters...............................................46
6.21 Sufficiency, Title and Condition of Purchased Assets............46
6.22 Insurance.......................................................47
6.23 Orders, Commitments and Returns.................................47
6.24 Product Warranties..............................................48
6.25 Affiliated Transactions.........................................48
6.26 Environmental Matters...........................................49
7.0 REPRESENTATIONS AND WARRANTIES OF PURCHASER...............................49
7.1 Organization, Good Standing and Power............................49
7.2 Authorization of Agreement and Enforceability....................50
7.3 No Violations; Consents..........................................50
7.4 Legal Proceedings................................................51
7.5 Financial Capacity...............................................51
7.6 No Finder........................................................51
7.7 Purchaser's Knowledge............................................52
8.0 COVENANTS OF SELLER PRIOR TO CLOSING DATE.................................52
8.1 Required Actions.................................................52
8.1.1 Access to Information.....................................52
8.1.2 Conduct of Business.......................................52
8.1.3 Maintenance of Properties.................................53
8.1.4 Maintenance of Books and Records..........................53
8.1.5 Compliance with Laws and Regulatory Consents..............53
8.1.6 Performance of Obligations................................54
8.1.7 Approvals; Consents.......................................54
8.1.8 Notice of Material Damage.................................54
8.1.9 Advise of Changes.........................................54
8.1.10 Pay Employees to Closing Date............................55
8.1.11 Retain Employees.........................................55
8.1.12 Compliance with Agreement................................55
8.1.13 Title Commitments........................................55
8.1.14 Surveys..................................................56
8.2 Prohibited Actions...............................................56
8.2.1 Sale of Purchased Assets..................................56
8.2.2 Business Changes..........................................56
8.2.3 Incurrence of Material Obligations........................57
8.2.4 Incurrence of Liens.......................................57
8.2.5 Change in Employee Compensation and Benefits..............57
8.2.6 Publicity; Advertisement..................................57
8.2.7 No Release................................................58
8.2.8 No Termination or Modification............................58
8.2.9 No Breach.................................................58
8.2.10 No Negotiations..........................................58
8.3 Other Matters....................................................59
8.3.1 Environmental Assessment..................................59
8.3.2 Confidentiality...........................................59
9.0 COVENANTS OF PURCHASER PRIOR TO CLOSING DATE..............................59
9.1 Required Actions.................................................59
9.1.1 Confidentiality...........................................59
9.1.2 Advise of Changes.........................................60
9.1.3 Compliance with Agreement.................................60
9.1.4 Publicity; Advertisement..................................60
9.2 Investigation....................................................61
9.3 Approvals; Consents..............................................61
10.0 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.........................61
10.1 Accuracy of Representations and Warranties......................61
10.2 Performance of Agreement........................................62
10.3 Seller's Certificate............................................62
10.4 Officer's Certificate...........................................62
10.5 Good Standing Certificates......................................62
10.6 Absence of Proceedings..........................................62
10.7 Actions and Proceedings.........................................63
10.8 HSR Act Waiting Period..........................................63
10.9 Permits and Consents............................................63
10.10 Section 1445 Affidavit.........................................64
10.11 Resin Contract.................................................64
10.12 Proprietary Assets.............................................64
10.13 Required Financial Statements..................................64
10.14 Key Employees..................................................64
10.15 Title Insurance................................................65
10.16 Assignment of Key Customer Contract............................65
11.0 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER........................65
11.1 Accuracy of Representations and Warranties......................66
11.2 Performance of Agreement........................................66
11.3 Purchaser's Certificate.........................................66
11.4 Officer's Certificate...........................................66
11.5 Good Standing Certificates......................................66
11.6 Absence of Proceedings..........................................67
11.7 Actions and Proceedings.........................................67
11.8 HSR Act Waiting Period..........................................67
11.9 Consents........................................................67
12.0 OBLIGATIONS AFTER THE CLOSING DATE.......................................68
12.1 Confidentiality.................................................68
12.2 Covenant Not to Interfere.......................................69
12.3 Transition of Employees.........................................69
12.4 Management Assistance by Seller.................................69
12.5 Further Assurances of Seller....................................70
12.6 Further Assurances of Purchaser.................................70
12.7 Retention of and Access to Records; Cooperation.................71
12.8 Name............................................................71
12.9 Accounts Receivable Payment.....................................72
12.10 Rebates........................................................72
12.11 Access for Remediation.........................................72
12.12 Exxon/Ancon Policies...........................................74
12.13 Return of Excluded Manuals, Documents and other Media.........74
12.14 Noncompetition.................................................74
12.15 Enforcement of Secrecy Agreements with Non-hired Employees.....75
13.0 TERMINATION..............................................................75
13.1 Termination of Agreement........................................75
13.2 Return of Documents.............................................76
13.3 Limitations on Remedies.........................................77
14.0 SCOPE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION....77
14.1 Scope and Survival of Representations and Warranties............77
14.2 Indemnification by Seller.......................................78
14.3 Limitations on Seller's Obligation to Indemnify.................79
14.4 Indemnification by Purchaser....................................80
14.5 Limitations on Purchaser's Obligation to Indemnify..............81
14.6 Environmental Indemnification...................................82
14.7 Procedures for Indemnification..................................86
15.0 GENERAL..................................................................87
15.1 Expenses........................................................87
15.2 Waivers.........................................................88
15.3 Binding Effect; Benefits........................................88
15.4 Notices.........................................................88
15.5 Bulk Transfers Laws.............................................89
15.6 Like-Kind Exchange..............................................89
15.7 Entire Agreement................................................90
15.8 Counterparts....................................................90
15.9 Headings........................................................90
15.10 Construction...................................................91
15.11 Exhibits and Schedules.........................................91
15.12 Governing Law and Choice of Forum..............................91
15.13 Cooperation....................................................91
15.14 Severability...................................................92
15.15 Reservations...................................................92
15.16 Attorneys' Fees................................................92
15.17 Successors and Assigns.........................................92
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1.20(a) -- Employees
Schedule 1.20(b) -- Inactive Employees
Schedule 1.33 -- Financial Statements
Schedule 1.40(a) -- Certain Representatives of Seller
Schedule 1.40(b) -- Certain Purchaser Representatives
Schedule 1.42 -- Leases and Contracts
Schedule 1.51 -- Permitted Encumbrances
Schedule 1.64 -- Real Property Leased
Schedule 1.65(a) -- Real Property Owned - Illinois
Schedule 1.65(b) -- Real Property Owned - Pennsylvania
Schedule 2.1.3(a) -- Equipment, Machinery and Other Tangible
Personal Property
Schedule 2.1.3(b) -- Personal Property Not Located on the
Real Property Owned
Schedule 2.1.9 -- Inventory Not Located on the Real
Property Owned
Schedule 2.1.11 -- Prepaid Expenses
Schedule 2.1.12 -- Excluded Business Application Computer
Software
Schedule 2.1.13 -- Customer Confidentiality Agreements
Schedule 2.3.7 -- Excluded Manuals, Documentation and
Other Media
Schedule 2.3.13 -- Certain Excluded Assets
Schedule 3.3 -- Allocation of Purchase Price
Schedule 3.4.2 -- Historical Working Capital Trends
Schedule 4.2 -- Assumed Liabilities
Schedule 4.5.2 -- Sample Pension Calculation
Schedule 6.4 -- Financial Statements
Schedule 6.5 -- Certain Changes or Events
Schedule 6.6 -- Variances and Permitted Non-Conforming
Uses/Flood Plain
Schedule 6.7 -- Permits
Schedule 6.8 -- Compliance with Laws
Schedule 6.9 -- Legal Proceedings
Schedule 6.11 -- Labor Disputes
Schedule 6.12.1 -- ERISA Plans and Payroll Practices/
Employee Arrangements
Schedule 6.15.8 -- Certain Contractors
Schedule 6.18 -- Tax Matters
Schedule 6.19 -- Inventory Matters
Schedule 6.20 -- Y2k Non-Compliant Systems
Schedule 6.21 -- Sufficiency, Title and Condition of
Purchased Assets
Schedule 6.24 -- Known Warranty Claims
Schedule 6.25 -- Affiliate Transactions
Schedule 7.7 -- Purchaser Knowledge Exceptions
Schedule 8.2.3 -- Incurrence of Material Obligations
Schedule 10.17 -- Freedom to Operate Opinions
Schedule 12.4 -- Management Assistance by Seller
EXHIBITS
Exhibit 1.18 -- Confidentiality Agreement
Exhibit 3.4.1 -- Form of Adjusted Working Capital
Worksheet
Exhibit 5.2.1(a) -- Special Warranty Deed - Illinois
Exhibit 5.2.1(b) -- Special Warranty Deed - Pennsylvania
Exhibit 5.2.2 -- ▇▇▇▇ of Sale
Exhibit 5.2.3 -- Assignment and Assumption Agreement
Exhibit 5.2.4(a) -- Assignment of Trademarks from Exxon
Corporation to Purchaser
Exhibit 5.2.4(b) -- Assignment of Trademarks from Esso
(Schweiz) to Purchaser
Exhibit 5.2.5 -- Form of Technology License Agreement
Exhibit 5.2.7 -- Form of Existing Inventory License
Exhibit 6.16(a) -- Form of Proprietary Information and
Invention Agreement
Exhibit 6.16(b) -- Collective Bargaining Agreements
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into and is effective as of this 23rd
day of April, 1999, by and between Tredegar Industries, Inc., a Virginia
corporation ("Purchaser"), and Exxon Chemical Company, a division of Exxon
Corporation, a New Jersey corporation ("Seller").
RECITALS:
This Agreement (as hereinafter defined) sets forth the terms and conditions upon
which Purchaser is purchasing the assets (other than Excluded Assets, as
hereinafter defined) used in the conduct of the business of Seller's Business
(as hereinafter defined), and Seller is selling to Purchaser such assets (other
than Excluded Assets).
In consideration of the mutual agreements, covenants, representations and
warranties contained herein, and in reliance thereon, the Parties (as
hereinafter defined) hereby agree as follows:
In consideration of the mutual agreements, covenants, representations and
warranties contained herein, and in reliance thereon, the Parties (as
hereinafter defined) hereby agree as follows:
1.0 CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 The term "Accounts Receivable" shall mean any trade accounts
receivable, notes receivable, bid or performance deposits, employee
advances, sales representative advances, and other miscellaneous
receivables associated with the Business and existing on the Closing
Date and which are reflected on the Adjusted Working Capital Worksheet,
other than receivables from an Affiliate of Seller; provided, however,
Accounts Receivables from foreign customers paid to an Affiliate of
Seller shall be included in Accounts Receivables.
1.2 The term "Accrued Expenses" shall mean items which have not been paid
or invoiced which entered into the determination of income on or before
the Closing Date, which determination was made by consistently applying
the accounting methods and principles used to determine accrued
expenses as shown in Schedule 3.4.2, and which are reflected on the
Adjusted Working Capital Worksheet.
1.3 The term "Adjusted Working Capital Worksheet" shall have the meaning
given to it in Section 3.4.1.
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1.4 The term "Affiliate" shall mean any company or other entity (i) in
which the designated Party at the time in question owns or otherwise
controls, directly or indirectly, fifty percent (50%) or more of the
voting stock or other indicia of equity or (ii) which now or hereafter
owns or controls fifty percent (50%) or more of the voting stock or
other indicia of equity of the designated Party. For the purposes of
this definition, stock or other indicia of equity owned or controlled
by a Person shall be deemed to include all stock or other indicia of
equity owned or controlled, directly or indirectly, by any other
company or other legal entity of which such Person owns or controls,
directly or indirectly, fifty percent (50%) or more of the voting stock
or other indicia of equity. For purposes of this definition, under its
present ownership structure, Telasto shall be deemed an Affiliate of
Seller.
1.5 The term "Agreement" shall mean this Asset Purchase Agreement.
1.6 The term "Ancillary Agreements" shall mean, collectively, the real
property conveyance described in Section 5.2.1, the personal property
conveyance described in Section 5.2.2, the Assignment and Assumption
Agreement described in Section 5.2.3, the Assignment of Trademarks
agreements described in Section 5.2.4, the Existing Inventory License
described in Section 5.2.7 and the Resin Supply Agreement described in
Section 5.2.8.
1.7 The term "Assumed Contracts" shall mean the Leases and Contracts to be
performed after the Closing Date and that are assumed by Purchaser
pursuant to Section 2.1.4.
1.8 The term "Assumed Liabilities" shall have the meaning given to it in
Section 4.2.
1.9 The term "Books and Records" shall have the meaning given to it in
Section 6.10.
1.10 The term "BP" shall mean BP Chemicals PlasTec GmbH, incorporated
under the laws of the Federal Republic of Germany.
1.11 The term "Business" shall mean the business of Seller's film group as
presently conducted by Seller, including projects that are being
developed but only as such projects exist as of Closing, at the
Facilities, to manufacture and sell Film Product, as further delineated
in Article 2.0.
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1.12 The term "Closing" shall mean the taking of the actions described in
Article 5.0 of this Agreement and "time of Closing" shall mean the
time such actions are taken.
1.13 The term "Closing Date" shall mean 12:01 a.m., Eastern Time, May 17,
1999 or such other date and time as the Parties shall mutually agree.
1.14 The term "Closing Inventory" shall mean all Inventory relating to the
Business owned by Seller and located at the Facilities, any leased
facilities of Seller, and any such Inventory of Seller in transit (for
which title has not transferred to a third party) on the Closing Date.
1.15 The term "COBRA Coverage" shall have the meaning given to it in
Section 6.12.3.
1.16 The term "Code" shall mean the Internal Revenue Code of 1986, as it may
be amended from time to time, and any successor thereto. Any reference
herein to a specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of future law.
1.17 The term "Confidential Information" shall have the meaning given to it
in Section 12.1.
1.18 The term "Confidentiality Agreement" shall mean that Confidentiality
Agreement between Seller and Purchaser attached hereto as Exhibit 1.18.
1.19 The term "DECG" shall mean Deutsche Exxon Chemical GmbH, incorporated
under the laws of the Federal Republic of Germany.
1.20 The term "Employee" shall mean any individual employed by Seller on the
Closing Date in the conduct of the Business and who is listed on
Schedule 1.20(a) and any individual employed by Seller in the conduct
of the Business who is on disability, family or other leave (whether
contractual or statutory) from the Seller on the Closing Date as listed
on Schedule 1.20(b) (both such Schedules being subject to change
between the date hereof and the Closing Date). Schedule 1.20(a) and
Schedule 1.20(b) set forth: (i) the employment date, job title, service
credit, original hire date, location, hourly salaried-indicator, and
form of employment agreement with Seller, if any, of each person set
forth on such Schedules, and (ii) whether each such person is a
full-time or part-time employee of the Business, and if part-time, the
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average number of hours per week for each such employee during 1998.
The rate of pay of each individual listed on Schedule 1.20(a) or
Schedule 1.20(b) has been delivered separately to Purchaser. For
purposes of this Section 1.20, "part-time employee" means an employee
who is employed for an average of fewer than twenty (20) hours per
week. Between the date hereof and the Closing Date, Seller shall
promptly notify Purchaser in writing at the end of every payroll period
between the date hereof and the Closing Date of any changes to Schedule
1.20(a) and 1.20(b) and shall provide a final list at Closing.
1.21 The term "Encumbrance" shall mean any right to, or interest in, Real
Property, which subsists in a third party and which constitutes a
claim, lien, charge or liability attached to and binding upon the
property, including, but not limited to, a mortgage, judgment lien,
mechanic's lien, lease, security interest, option, right of first
refusal, easement or right-of-way.
1.22 The term "Environmental Assessment" shall mean collectively those
certain reports prepared for Seller by Radian International and
entitled "Phase I Environmental Site Assessment, Pottsville Film Plant,
Pottsville, Pennsylvania, Final Report, October 1998," "Phase I
Environmental Site Assessment, Lake Zurich Film Plant, Lake Zurich,
Illinois, Final Report, October 1998," "Phase II Investigation Lake
Zurich Film Plant, Lake Zurich, Illinois, Final Report, February 1999"
and "Groundwater Investigation, Pottsville Film Plant, Pottsville,
Pennsylvania, Final Report, February 1999."
1.23 The term "Environmental Law" shall mean any currently effective
federal, state or local statute, ordinance or promulgated rule or
regulation, any judicial or administrative order or judgment (whether
or not by consent), any duties imposed by common law and any provision
or condition of any permit, license or other operating authorization
relating to (i) the protection of (x) the environment or (y) the public
or worker welfare from actual or potential exposure (or the effects of
exposure) to any actual or potential release, discharge, disposal or
emission (whether past or present) of any Regulated Substance or (ii)
the manufacture, processing, distribution, use, treatment, labeling,
storage, disposal, transport or handling of any Regulated Substance.
Without limiting the generality of the foregoing, Environmental Law
shall include the Comprehensive Environmental Response Compensation and
Liability Act,
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the Clean Air Act, the Clean Water Act, the Resource Conservation and
Recovery Act, the Endangered Species Act, the Occupational Safety and
Health Act, the Federal Insecticide, Fungicide and Rodenticide Act, the
Hazardous Materials Transportation Act, the Surface Mining Control and
Reclamation Act, the Emergency Planning and Community Right to Know
Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the
Atomic Energy Act, the Coastal Zone Management Act, the National
Environmental Policy Act, the Noise Control Act, and any similar
federal, state or local statutes, ordinances, rules and regulations
promulgated under such statutes or ordinances.
1.24 The term "Environmental Loss" shall mean the "Purchaser Environmental
Loss" and/or the "Seller Environmental Loss," as the context requires.
1.25 The term "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
1.26 The term "ERISA Plans" shall mean any employee benefit plan as defined
in Section 3(3) of ERISA.
1.27 The term "Excluded Assets" shall mean those assets which are not
included in the sale contemplated hereby and as are further defined in
Section 2.3.
1.28 The term "Existing Inventory License" shall mean that agreement
attached hereto as Exhibit 5.2.7.
1.29 The term "Exxon/Ancon Policy(ies)" shall mean any and all property
and/or liability insurance coverage policies issued to Exxon
Corporation and/or its Affiliates, including without limitation, any
property and/or liability insurance coverage policies issued to Exxon
Corporation and/or its Affiliates by Ancon Insurance Company, Inc., a
Vermont corporation, or its predecessor companies, or issued by a
locally admitted insurer and reinsured by Ancon Insurance Company,
Inc., or its predecessor companies.
1.30 The term "Exxon Chemical" shall mean Exxon Chemical Company, a division
of Exxon Corporation.
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1.31 The term "Facilities" shall mean Seller's plants and properties at Lake
Zurich, Illinois and Pottsville, Pennsylvania used in the Business, and
specifically excludes the offices at Buffalo Grove, Illinois.
1.32 The term "Film Product" shall mean the film products manufactured at
the Facilities.
1.33 The term "Financial Statements" shall mean the unaudited balance sheets
of the Business as of December 31, 1997 and 1998, the Pro Forma
Unaudited Balance Sheets as of December 31, 1997 and 1998, and the
unaudited statements of operating income and the unaudited statements
of operating cash flow ("EBITDA") of the Business for the years ended
December 31, 1996, 1997 and 1998 and the last twelve months ended
February 28, 1999, all of which are attached hereto as Schedule 1.33.
1.34 The term "Finished Inventory" shall mean that part of the inventory of
the Business owned by Seller processed for sale to customers meeting
Seller's applicable sales specifications, located at the Facilities,
any facilities leased by Seller, or any such Inventory of Seller in
transit (for which title has not been transferred to a third party) on
the Closing Date.
1.35 The term "GAAP" shall mean generally accepted accounting principles, as
in effect in the United States on the date hereof.
1.36 The term "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, 15 U.S.C. Sec. 18a, and the rules
promulgated thereunder.
1.37 The term "Indemnified Liabilities" shall mean, collectively, Seller
General Liabilities, Seller Environmental Liabilities, Purchaser
General Liabilities and Purchaser Environmental Liabilities.
1.38 The term "Indemnified Party" shall mean either a Seller Indemnified
Party or a Purchaser Indemnified Party, as the context so requires.
1.39 The term "Inventory" shall mean, collectively, the Finished Inventory,
Work-In- Process, Rework Material, Supplies Inventory, Raw Materials,
and Scrap Material and which is reflected on the Adjusted Working
Capital Worksheet.
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1.40 The term "Knowledge" shall mean the actual knowledge after reasonable
inquiry of a particular fact by (i) in the case of Seller, any of the
persons listed in Schedule 1.40(a) (key management of the Business),
subject, however, to the specific section limitations, if any, set
forth in that Schedule for a particular person and (ii) in the case of
Purchaser, any of the persons listed in Schedule 1.40(b), subject,
however, to the specific section limitations, if any, set forth in that
Schedule for a particular person.
1.41 The term "Lake Zurich Facility" shall mean Seller's plant and property
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
1.42 The term "Leases and Contracts" shall mean all written and oral
executory contracts, leases of machinery, equipment and other personal
property, sales orders, purchase orders, service contracts, consulting
contracts, options, guarantees, commitments, instruments and other
agreements in effect as of the Closing Date relating solely and
exclusively to the Business, but shall not include any Excluded Assets.
Schedule 1.42 sets forth all Leases and Contracts, other than those
that by their terms expire prior to the Closing Date, that involve
aggregate financial commitments by Seller, or by a third party to
Seller, of more than Seventy-Five Thousand Dollars ($75,000) per year
(except for Film Product sale or Raw Materials purchase commitments
from a single order unless such order involves a financial commitment
of more than Seventy-Five Thousand Dollars ($75,000) or unless the
aggregate orders from a single customer or supplier exceeded Two
Hundred Fifty Thousand Dollars ($250,000) in 1998) by parties, date,
term, amount of payment made for the period January 1, 1998 to December
31, 1998, type of good, service obligation or commitment, and any
covenant or other restriction preventing or limiting Seller's right to
assign its rights thereunder.
1.43 The term "Losses" shall mean all losses, costs, claims, liabilities,
fines, penalties, judgments, awards, damage, expense (including costs
of investigation and defense and reasonable attorneys' fees and
expenses), in any such case whether or not involving a third-party
claim, including, without limitation, all payments made or damages paid
to third parties, the amount of any write-offs where such equipment has
been disposed of or scrapped or write-downs in accordance with GAAP and
the costs of acquiring replacement properties, commercially reasonable
or court awarded
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payments to vendors and other parties under contracts or to
governmental authorities and expenses arising from mitigation of
damages, but after taking into account the net benefits of any
insurance proceeds received by the Person incurring the Losses.
However, except as specified in the preceding sentence, "Losses" shall
not include any consequential or incidental damages or lost profits,
and the parties hereto waive any right to make a claim pursuant to this
Agreement based on a contrary position. To the extent that any
particular Loss falls within more than one category within this
definition, no amount of such Loss may also be recovered under another
category within this definition.
1.44 [RESERVED]
1.45 The term "Material" or "Materially" shall mean, within the context of a
Section in which it is used, an impact of One Hundred Thousand Dollars
($100,000) or more in the aggregate for all of such Section, as
applicable.
1.46 The term "Party" shall mean either Seller or Purchaser, individually,
as the context so requires, and the term "Parties" shall mean Seller
and Purchaser together.
1.47 The term "Payables" shall mean any of the accounts payable associated
with the Business on the Closing Date, other than to an Affiliate of
Seller, and which are reflected on the Adjusted Working Capital
Worksheet.
1.48 The term "Pro Forma Unaudited Balance Sheets" shall mean the unaudited
balance sheets of the Business as of December 31, 1997 and 1998,
restated to reflect any adjustments required under this Agreement,
attached hereto as part of Schedule 1.33.
1.49 The term "Payroll Practices/Employee Arrangements" shall have the
meaning given to it in Section 6.12.1.
1.50 The term "Permits" shall have the meaning given to it in Section 6.7.
1.51 The term "Permitted Encumbrances" shall mean those Encumbrances as
specifically set forth on Schedule 1.51 hereto.
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1.52 The term "Person" shall mean any individual, corporation, company,
limited or general partnership, trust or estate, joint venture,
association or other entity.
1.53 The term "Pottsville Facility" shall mean Seller's plant and property
located at ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇-▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
1.54 The term "Prepaid Expenses" shall mean payments made by Seller for
items which will enter into the determination of income after the
Closing Date and which are reflected on the Adjusted Working Capital
Worksheet to the extent the benefits of such payments are transferable
to Purchaser.
1.55 The term "Purchase Price" shall have the meaning given to it in Section
3.1.1.
1.56 The term "Purchased Assets" shall have the meaning given to it in
Section 2.1.
1.57 The term "Purchaser" shall have the meaning given to it in the preamble
of this Agreement.
1.58 The term "Purchaser Environmental Liabilities" shall have the meaning
given to it in Section 14.6.3.
1.59 The term "Purchaser Environmental Loss" shall have the meaning given to
it in Section 14.6.1.
1.60 The term "Purchaser General Liabilities" shall have the meaning given
to it in Section 14.4.
1.61 The term "Purchaser Indemnified Party" shall have the meaning given to
it in Section 14.2.
1.62 The term "Raw Materials" shall mean any material that could be
incorporated into Film Product during the manufacturing, finishing and
packaging process, excluding Rework Material or Scrap Material.
1.63 The term "Real Property" shall mean the Real Property Leased and the
Real Property Owned, collectively.
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1.64 The term "Real Property Leased" shall mean the real property leased by
Seller in connection with the Business, which will be transferred to
the Purchaser, as more fully described in Schedule 1.64 hereto.
1.65 The term "Real Property Owned" shall mean the real property owned by
Seller in Lake Zurich, Illinois and Pottsville, Pennsylvania, and used
in connection with the Business as more fully described in Schedule
1.65(a) and Schedule 1.65(b) hereto.
1.66 The term "Regulated Substance" shall mean any substance which is
identified and regulated (or the clean-up of which can be required) by
any Environmental Law. Without limiting the generality of the
foregoing, Regulated Substances shall include (i) "hazardous wastes,"
"hazardous substances," "toxic substances," "pollutants,"
"contaminants" or other similar identified designations in, or
otherwise subject to regulation under, any Environmental Law; (ii)
petroleum, refined petroleum products and any such substances in their
virgin, used or waste state; and (iii) any substance in Subpart Z of
the regulations promulgated under the Occupational Safety and Health
Act, as amended.
1.67 The term "Retained Liabilities" shall mean all liabilities and
obligations of Seller, whether such liabilities and obligations relate
to payment, performance or otherwise, arise before or after the
Closing, are matured or unmatured, are known or unknown, are contingent
or non-contingent, are fixed or undetermined, or are present, future or
otherwise, other than the Assumed Liabilities. All of the Retained
Liabilities shall remain the sole responsibility of and shall be
retained, paid, performed and discharged solely by Seller.
Notwithstanding anything to the contrary contained herein, and without
limiting the foregoing, the following liabilities and obligations of
Seller shall be considered Retained Liabilities for the purposes of
this Agreement:
(i) any liability of, or claim against, Purchaser relating to the
Business to the extent it arises from events occurring prior
to the Closing Date of any kind, other than the Assumed
Liabilities or those liabilities and claims as to which
Purchaser has agreed to indemnify Seller under Article 14.0
hereof;
(ii) any liability or obligation under any Assumed Contract which
arises after the Closing Date to the extent it arises out of
or relates to any breach by Seller that occurred before the
Closing Date;
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(iii) any liability or obligation for (A) Seller's Taxes arising as
a result of Seller's operation of its business or ownership of
the Purchased Assets before the Closing Date except as
included in the Accrued Expenses, and (B) deferred Taxes of
Seller of any nature;
(iv) any liability for vacation entitlement earned for 1998 and
prior years for any Employee who becomes a Hired Employee;
(v) any liability or obligation arising out of any legal
proceeding pending as of the Closing Date, whether or not set
forth in Schedule 6.8 or 6.9, or any legal proceeding
commenced after the Closing Date to the extent it arises out
of, or relates to, any occurrence or event happening before
the Closing Date;
(vi) Wauconda Sand and Gravel Federal Superfund site in Wauconda,
Illinois, except to the extent Purchaser has placed or places
anything at said site; and
(vii) any liability or obligation of Seller based upon Seller's acts
or omissions occurring after the Closing Date, except as
relates to the liabilities and obligations that Purchaser has
expressly agreed to assume under the Transaction Documents.
1.68 The term "Rework Material" shall mean off-specification material
located at the Facilities not meeting the definition of Finished
Inventory but which has been or is designated for reprocessing through
the erema or similar outside process, and which, based on a technical
assessment agreed to by the Parties, may be blended into Finished
Inventory or sold at a discounted selling price.
1.69 The term "Scrap Material" shall mean off-specification material located
at the Facilities which does not meet the definition of Rework
Material.
1.70 The term "Seller" shall have the meaning given to it in the preamble of
this Agreement.
1.71 The term "Seller Environmental Liabilities" shall have the meaning
given to it in Section 14.6.1.
1.72 The term "Seller Environmental Loss" shall have the meaning given to it
in Section 14.6.3.
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1.73 The term "Seller General Liabilities" shall have the meaning given to
it in Section 14.2.
1.74 The term "Seller Indemnified Party" shall have the meaning given to it
in Section 14.4.
1.75 The term "Seller's Proprietary Information" shall mean (i) Knowledge
about and/or documents containing operating, financial and technical
information relating to commercial activities, business ventures or
investments or extensions of existing Business activities into new
areas or plans to divest or disengage existing Business activities and
assessments of Seller's competitive position with the Business to the
extent such knowledge or documents relate to activities of Seller other
than the Business; provided, however, Seller shall disclose to Buyer
the portion of such Knowledge or documents as relates solely to the
Business, (ii) commercial data or technical information in any way
related to any of Seller's operations or businesses other than the
Business; (iii) records relating to Seller's evaluation of the purchase
and sale of the Business and the Purchased Assets; (iv) position papers
on public issues which are approved for internal use only and
strategies relating to external communication of policies together with
information and research reports, software, training materials and
operating manuals not specifically prepared for the conduct of the
Business by Seller, and (v) any information or documents related to the
Business that is subject to a third party confidentiality agreement and
the Seller cannot get the consent of such third party to release such
information or document to Purchaser.
1.76 The term "Supplies Inventory" shall mean product packaging material
(pallets, cores, overwrap film, etc.) and miscellaneous maintenance
materials, excluding capital spares.
1.77 The term "Surveys" shall have the meaning given to it in Section
8.1.14.
1.78 The term "Targeted Working Capital" shall have the meaning given to it
in Section 3.1.1.
1.79 The term "Taxes" shall mean all taxes, duties, charges, fees, levies or
other assessment imposed by any taxing authority, including, without
limitation, income, gross receipts, value-added, excise, withholding,
personal property, real estate, sale,
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use, ad valorem, license, lease, service, severance, stamp, transfer,
payroll, employment, customs, duties, alternative, add-on minimum,
estimated and franchise taxes (including any interest, penalties or
additions attributable to or imposed on or with respect to any such
assessment).
1.80 The term "Technology License Agreement" shall mean those intellectual
property transfer and license agreements pursuant to which certain
intellectual property assets are made available to the Purchaser in
accordance with the agreement attached hereto as Exhibit 5.2.5.
1.81 The term "Telasto" shall mean Telasto Folien GmbH, a German joint
venture between Deutsche Exxon Chemical GmbH and BP Chemicals PlasTec
GmbH, more fully described in that certain Joint Venture Agreement
dated September 27, 1994 between DECG and BP.
1.82 The term "Title Commitments" shall have the meaning given to it in
Section 8.1.13.
1.83 The term "Tonen Affiliate" shall mean Tonen Corporation and any company
or other entity (i) in which Tonen Corporation at the time in question
owns or otherwise controls, directly or indirectly, one hundred percent
(100%) of the voting stock or other indicia of equity or (ii) which now
or hereafter owns or controls one hundred percent (100%) of the voting
stock or other indicia of equity of Tonen Corporation. For the purposes
of this definition, stock or other indicia of equity owned or
controlled by a Person shall be deemed to include all stock or other
indicia of equity owned or controlled, directly or indirectly, by any
other company or other legal entity of which such Person owns or
controls, directly or indirectly, one hundred percent (100%) of the
voting stock or other indicia of equity.
1.84 The term "Trademark Agreements" shall mean that Assignment of
Trademarks from Exxon Corporation to Purchaser attached hereto as
Exhibit 5.2.4(a) and that Assignment of Trademarks from Esso (Schweiz)
to Purchaser attached hereto as Exhibit 5.2.4(b).
1.85 The term "Transaction Documents" shall mean this Agreement, the
schedules and exhibits attached hereto, the Ancillary Agreements, and
the other documents and
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certificates delivered pursuant to this Agreement, but shall not
include the Technology License Agreement.
1.86 The term "Work-in-Process" shall mean partially completed Film Product,
including intermediates, not yet ready for sale.
1.87 The term "Working Capital" shall have the meaning given to it in
Section 3.4.2.
2.0 TRANSFER OF ASSETS AND PROPERTIES
2.1 Purchased Assets.
Subject to the terms and conditions of this Agreement, Seller shall, or
cause its Affiliates to, sell, convey, assign, transfer and deliver to
Purchaser, free and clear of all Encumbrances whatsoever (other than
Permitted Encumbrances) and Purchaser shall purchase from Seller, the
Business as a going concern and all the assets, properties and rights
owned or leased by Seller used, or held for use, exclusively in the
Business and all assets owned or leased by Seller and located on the
Real Property (the "Purchased Assets") as the same shall exist at the
Closing Date (other than the Excluded Assets), including, without
limitation, the following:
2.1.1 Real Property Owned.
The Real Property Owned, together with (i) all rights,
privileges, easements, licenses, hereditaments and other
appurtenances relating thereto and (ii)all right, title and
interest of Seller in and to the buildings, structures,
improvements, paved parking areas and fixtures located on such
real estate;
2.1.2 Real Property Leased.
All of Seller's interest, as lessee, in the Real Property
Leased as set out on Schedule 1.64;
2.1.3 Equipment, Machinery and Other Tangible Personal Property.
All machinery, equipment, tools, tooling, dies, molds, spare
parts, leasehold improvements, trucks, automobiles, supplies,
office furniture and office equipment, laboratory equipment,
and computing and telecommunications
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equipment, together with all other items of personal property
located on the Real Property Owned which are owned by Seller
and used exclusively in the performance of the Business
including, without limitation, those items described in
Schedule 2.1.3(a) hereto, and those items of personal property
not located on the Real Property Owned which are owned or
leased by Seller and used exclusively in the performance of
the Business, including, without limitation, those items
described in Schedule 2.1.3(b) hereto, except for, in each
case, Inventory or other personal property specifically
subject to another subsection of Section 2.1 or Section 2.3,
or that are disposed of in the ordinary course of the Business
between the date of this Agreement and the Closing Date;
provided that Seller may revise or supplement Schedule
2.1.3(a) or Schedule 2.1.3(b) at any time on or before the
time of Closing; and provided, further, that no such revision
or supplement shall change such Schedule so as to reflect any
information which in the aggregate is Materially adverse to
the Purchaser. Schedule 2.1.3(a) will be prepared as of
December 31, 1998, together with a list of projects which may
result in additions or deletions to such Schedule 2.1.3(a);
2.1.4 Contracts Relating to the Business.
Subject to any consent requirements and, except where Seller
has indicated on Schedule 1.42 or Schedule 6.15.8, it will not
be assigned, all of the interest of Seller in the Leases and
Contracts. Seller and Purchaser agree to use commercially
reasonable efforts (without any requirement on the part of
Seller or Purchaser to pay any money or agree to any change in
the terms of any such lease or contract) to obtain the consent
of any third party thereto to the assignment of any such Lease
or Contract to Purchaser in all cases in which such consent is
or may be required for such assignment. Subject to Section
10.9 hereof, if any such consent shall not be obtained, Seller
agrees to cooperate with Purchaser in any commercially
reasonable arrangement designed to provide to Purchaser the
benefits intended to be assigned to Purchaser under the
relevant Lease or Contract, including enforcement at the cost
and for the account of Purchaser of any and all rights of
Seller against the third party thereto arising out of the
breach or cancellation thereof by such third party. If and to
the extent that such arrangement cannot be made,
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Purchaser, upon notice to Seller, shall have no obligation
pursuant to Section 3.1.2 or otherwise with respect to any
such Lease or Contract and any such Lease or Contract shall
not be deemed to be an Assumed Contract or Purchased Asset
hereunder;
2.1.5 Customer Lists, Sales and Marketing Materials, and Business
` Plans.
All customer lists, sales data, catalogs, brochures,
suppliers' names, mailing lists, art work, the environmental
reports referenced in clause (iv) of Section 6.26, photographs
and advertising material which are used exclusively in the
Business, whether in electronic form or otherwise, and
documents containing operating, technical (to the extent not
covered by the Technology License Agreement), and financial
information relating exclusively to commercial activities of
the Business, ventures, investments or extensions of existing
Business activities and assessments of Seller's competitive
position with the Business, unless subject to a third party
confidentiality agreement as to which Seller cannot obtain a
consent from such third party to release such information to
Purchaser;
2.1.6 Permits; Licenses.
Subject to Section 2.3.13, all of Seller's interest in
governmental permits, licenses, registrations, certificates,
consents, orders and approvals applicable to and used in the
conduct of the Business to the extent such permits, licenses,
registrations, certificates, consents, orders and approvals
are transferable to Purchaser, and all waivers or variances,
if any, of any requirements pertaining to such licenses,
permits, registrations, certificates, consents, orders and
approvals to the extent such waivers or variances are
transferable to Purchaser;
2.1.7 Property, Personnel and Accounting Records.
Subject to Section 2.3 and Section 12.7, all other records of
Seller relating exclusively to the Business, including
property records and copies of personnel records of Employees
who become employees of Purchaser;
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2.1.8 Goodwill.
All right, title and interest of Seller in and to the goodwill
incident to the Business;
2.1.9 Inventory.
All Inventory relating to the Business existing at the Closing
Date, including such Inventory not located on the Real
Property Owned which is described in Schedule 2.1.9 hereto;
2.1.10 Accounts Receivable.
All Accounts Receivable relating to the Business existing at
the Closing Date;
2.1.11 Prepaid Expenses.
All Prepaid Expenses, other than prepaid insurance premiums,
of, or for the benefit of, the Business, including those
described in Schedule 2.1.11;
2.1.12 Business Application Computer Software.
All copies at the Facilities of business application software,
owned or licensed by Seller that are used specifically in the
Business at the Facilities or residing on the computers listed
on Schedule 2.1.3(b) prior to the Closing Date for: (a)
general business applications such as accounting, word
processing, graphics, and spreadsheet analysis; or (b)
specific business applications unique to the Business such as
Film Product marketing and shipping software; and (c)
operating systems, security software, and/or programming
software used in connection with the business application
software within this Section 2.1.12(a) or Section 2.1.12(b).
Business application software excluded from this Section
2.1.12 is listed on Schedule 2.1.12;
2.1.13 Customer Confidentiality Agreements.
Subject to any consent requirements, all of the interest of
Seller in the Customer Confidentiality Agreements listed on
Schedule 2.1.13. Seller and Purchaser agree to use
commercially reasonable efforts (without any
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requirement on the part of Seller or Purchaser to pay any
money or agree to any change in the terms of such agreement)
to obtain the consent of any third party thereto to the
assignment of any such confidentiality agreement to Purchaser
in all cases in which such consent is or may be required;
2.1.14 Other Intangible Assets.
Subject to Section 2.3 and except as otherwise covered in
Section 2.2, all other assets (including all causes of action,
rights of action, contract rights and warranty and product
liability claims against third parties not in litigation as of
the Closing Date) relating solely and exclusively to the
Business and not contained within the categories described
above.
2.2 Intellectual Property.
Subject to Section 2.3.3 and 2.3.7, the intellectual property made
available to the Purchaser, including but not limited to, all technical
information and data, patents, patent applications, computer software
covered by the Technology License Agreement, copyrights and trademarks,
including all covenants, representations, warranties and all other
obligations relating thereto, are governed solely by the provisions
contained in the Technology License Agreement and the Trademark
Agreements and shall not be considered a Purchased Asset under the
terms of this Agreement.
2.3 Excluded Assets.
The following assets (collectively, the "Excluded Assets") shall be
excluded from this Agreement, and shall not be assigned or transferred
to Purchaser:
2.3.1 To the extent not reflected on the Adjusted Working Capital
Worksheet as a Prepaid Expense, any insurance policies
maintained by Seller with respect to the Business, unless
otherwise specifically assigned to Purchaser;
2.3.2 All accounts receivable from Affiliates of Seller, including
deferred intercompany items, existing on the Closing Date
whether or not then due and other receivables not reflected on
the Adjusted Working Capital Worksheet;
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2.3.3 Any right, title or interest in the names "Exxon Corporation"
and "Exxon Chemical Company" or any variants thereof
containing the name "Exxon" or the double "xx" in any of the
related logos, trademarks, trade names or service marks
incorporating such names or any variant thereof which are used
by the Business, except as otherwise specifically assigned or
transferred to Purchaser by Seller in the Trademark
Agreements;
2.3.4 Cash and cash equivalents or similar type investments, such as
certificates of deposit, treasury bills and other marketable
securities, and bank accounts, but excluding any bid or
performance deposits included in the definition of Accounts
Receivable;
2.3.5 All Leases and Contracts that are not Assumed Contracts
pursuant to Section 2.1.4 and consulting contract not to be
assumed;
2.3.6 The consideration paid to Seller pursuant to this Agreement;
2.3.7 Seller's Proprietary Information and any other proprietary
manuals, documentation and other media belonging to, or issued
by, Exxon Corporation or one or more of its Affiliates,
including, but not limited to, SMC Basic Standards, Exxon
Accounting Manual, SMC Computing and Telecommunicating
Standards, Exxon Research and Engineering Design Standards,
Safety Management Practices/Environmental Management Practices
documentation, and Operations Integrity Management Practices,
or any other procedures to the extent such proprietary
information was not developed for or used exclusively in the
Business; provided, that the foregoing shall not affect in any
way Purchaser's operation of the Business after the Closing,
which shall be conducted in such manner as determined in the
sole discretion of Purchaser. Any excluded proprietary
manuals, documentation and other media other than as mentioned
in this Section and physically located on the Real Property
Owned is listed on Schedule 2.3.7;
2.3.8 Assets constituting any pension funds or segregated funds for
the benefit of Employees, e.g., thrift and 401(k) plans, and
any claims for insurance or any other funding vehicle for
employee benefit plans;
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2.3.9 Medical records of Employees other than records that are part
of mandated industrial hygiene programs of the Business,
unless the Employee otherwise consents in writing to copies of
such records being given to Purchaser;
2.3.10 Corporate minute books and stock books;
2.3.11 Any claims and rights against third parties (including,
without limitation, insurance carriers), to the extent they
relate to liabilities or obligations which are not assumed by
Purchaser hereunder (except to the extent Purchaser shall have
incurred costs and expenses with respect to such claims and
rights);
2.3.12 Claims for refunds of Taxes and other governmental charges to
the extent such refunds relate to periods ending prior to the
Closing Date;
2.3.13 The assets described or referred to in Schedule 2.3.13,
Certain Excluded Assets;
2.3.14 Any and all Exxon/Ancon Policies, which policies shall be
deemed terminated, commuted and canceled ab initio;
2.3.15 Any and all capital to fund after the Closing Date projects
under development as of the Closing Date; and
2.3.16 Except as otherwise provided herein, all assets of Seller not
associated exclusively with the Business.
3.0 CONSIDERATION AND TERMS
3.1 Consideration for Purchased Assets.
3.1.1 Subject to any adjustments pursuant to Section 3.4 the
aggregate monetary consideration to be paid by Purchaser to
Seller for the Purchased Assets (the "Purchase Price") shall
consist of a cash payment in the amount of (i) One Hundred
Seventy-Seven Million Two Hundred Thousand
Dollars($177,200,000) plus (ii) the dollar amount of the
Targeted Working Capital in the amount of Twenty-Two Million
Eight Hundred Thousand Dollars($22,800,000) (the "Targeted
Working Capital") subject to the terms,
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conditions and adjustments set forth in Section 3.4 less (iii)
the amount determined pursuant to Section 4.5.4 and plus (iv)
the amount determined pursuant to Section 3.7.
3.1.2 Purchaser also shall assume the Assumed Liabilities.
3.2 Payment of Consideration.
Subject to the terms and conditions of this Agreement:
3.2.1 At the Closing, or as otherwise agreed, Purchaser shall
deliver to Seller by wire transfer the aggregate amount due
under Section 3.1.1, subject to any adjustment pursuant to
Section 3.4.
3.2.2 Any wire transfer of funds by Purchaser shall be in immediately
available funds and shall be sent to Seller's bank account as
follows, or to such other bank within the continental United
States as Seller may have designated by at least three (3) days
notice to Purchaser:
Mellon Bank, N.A.
Pittsburgh, Pennsylvania
Federal Routing No. ▇▇▇▇▇▇▇▇▇
For Credit to Exxon Chemical Company
Houston, Texas
Account No. 198-5825
3.3 Allocation of Purchase Price.
The Parties agree that the fair market values of the Purchased Assets
will be reflected in Schedule 3.3. Subject to any adjustments pursuant
to Section 3.4, the Parties further agree that the Purchase Price (plus
that portion of the amount of assumed liabilities constituting part of
the amount realized by Seller for federal income tax purposes) shall be
allocated based upon the fair market values of the Purchased Assets as
reflected in Schedule 3.3, which allocation conforms with the
requirements of Section 1060 of the Code and temporary regulations
thereunder. Purchaser, at its sole cost and expense, may conduct
appraisals of the Purchased Assets, which, subject to the Parties'
agreement, will be used to determine the values reflected in Schedule
3.3. Each Party agrees not to assert, in connection with any tax
return, filing, report or similar filing, tax audit or similar
proceeding, any allocation
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of the Purchase Price (plus that portion of such amount of the assumed
liabilities)that differs from Schedule 3.3, as adjusted as necessary to
reflect any adjustment pursuant to Section 3.4.
3.4 Certain Price Adjustments.
3.4.1 On or as soon as practicable following the Closing Date, but
not later than sixty (60) days thereafter, the Parties shall
jointly determine the actual amount of the Working Capital as
of the Closing Date and shall execute a certificate(the
"Adjusted Working Capital Worksheet") in the form of Exhibit
3.4.1 hereto setting forth the final dollar amount of the
Working Capital. If the dollar amount of the Working Capital
as reflected on the Adjusted Working Capital Worksheet exceeds
Targeted Working Capital by more than $250,000, then the
Purchaser shall pay in cash to Seller the full amount of such
excess over Targeted Working Capital. If the dollar amount of
the Working Capital as reflected on the Adjusted Working
Capital Worksheet is below Targeted Working Capital by more
than $250,000, then Seller shall pay in cash to Purchaser the
full amount of such deficit from Targeted Working Capital.
3.4.2 For purposes of this Agreement, "Working Capital" shall be
determined as of the Closing Date using, on a consistent
basis, the accounts, accounting methods and principles used in
the preparation of Schedule 3.4.2, including the aggregate
dollar value represented by (i) the aggregate book value of
the Accounts Receivable (net of a "bad debt" allowance of One
Hundred Eighty Thousand Dollars $180,000 and exclusive of any
Accounts Receivable from any Affiliate of Seller), (ii) the
value of the inventory on the Closing Date determined by
consistently applying the accounting methods and principles
used to value inventory in Schedule 3.4.2 and (iii) any
Prepaid Expenses, less(x) Payables exclusive of any Payables
due to any Affiliate of Seller and (y)Accrued Expenses. In
order for the Parties to complete the Adjusted Working Capital
Worksheet, the Parties shall, immediately prior to the Closing
Date, jointly determine, based on a physical inventory (taken
by Seller and observed by Purchaser), the quantity and
category, but not the dollar value, of the Closing Inventory.
Notwithstanding the foregoing, Working Capital for
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purposes of this Section 3.4.2 shall exclude any payments made
on equipment and liabilities related to the FemCare project
for Procter & ▇▇▇▇▇▇.
3.4.3 In the event the Parties fail to reach written agreement,
within sixty (60) days after the Closing Date, with respect to
the determination of the amount of the Working Capital as of
the Closing Date, then the Parties shall (i) retain as
arbitrator Ernst & Young, LLP or, failing their agreement to
act as arbitrator, such other independent accounting firm as
may be mutually agreed upon by the Parties to review such
matters as to which written agreement has not been reached and
(ii) request such arbitrator to act as promptly as
practicable, but no later than thirty (30) days to resolve the
matters in dispute in accordance with this Agreement. Upon
resolution by such arbitrator to its satisfaction of all such
disputed matters, such arbitrator shall cause to be prepared
and shall deliver to the Parties a certificate in the form of
Exhibit 3.4.1 hereto. The decision of such arbitrator shall be
final, non- appealable and binding on Seller and Purchaser,
and the fees and expenses, if any, of such arbitrator shall be
paid one-half by Purchaser and one-half by Seller.
3.4.4 Any payments to be made under Section 3.4.1 shall be made
within five (5) days after final determination of the amount
of the Working Capital as of the Closing Date. Any amounts so
paid on or within sixty-five (65) days after the Closing Date
shall be made without interest thereon. Any amounts so paid
thereafter shall be made with interest thereon at seven
percent (7%) per annum from the Closing Date to the date such
payment is made.
3.5 Certain Taxes.
Any real estate and personal property Taxes payable in arrears with
respect to the Purchased Assets or the Business applicable to periods
prior to the Closing Date that are not known as of the Closing Date
shall be estimated based upon such Taxes for the previous period for
purposes of determining Working Capital as of the Closing Date, with a
subsequent cash settlement to be made between Purchaser and Seller, if
necessary, to correct such estimate when the actual amount of Taxes for
such period is available. Except as provided in this Section 3.5 or
otherwise in this Agreement, Purchaser and Seller shall each pay 50% of
all transfer taxes and fees
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(excluding Taxes based on or measured by income) which are or may be
imposed by any government or political subdivision thereof and which
are payable or arise as a result of this Agreement, or any transfer
pursuant to this Agreement, any Ancillary Agreements or any other
agreements described herein to which Purchaser or Seller is a party,
notwithstanding the Party upon which such Taxes are actually imposed.
The Parties shall cooperate to minimize the amount of any such Taxes,
including (without limitation) furnishing to Seller properly completed
exemption certificates for any Taxes from which Purchaser claims to be
exempt.
3.6 Product Returns and Credits.
Any credit memos that are (i) known but unprocessed as of the Closing
Date, (ii) processed within 60 days following the Closing Date, and
(iii) accepted returns of Film Product, in each case for product
manufactured prior to the Closing Date, shall be reflected in the
Working Capital as of the Closing Date. No adjustment shall be made for
Film Product returns after the date that is 60 days after the Closing
Date.
3.7 FemCare Reimbursement.
Purchaser shall reimburse Seller for all costs incurred by Seller
subsequent to April 15, 1999, for production equipment purchased by
Seller in order to execute the FemCare project for ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, as
set out on Schedule 6.5. Seller shall notify Purchaser in writing of
any such costs prior to incurring such costs.
4.0 ASSUMPTION OF LIABILITIES; EMPLOYEE MATTERS
4.1 General Limitation on Assumption of Liabilities.
Except for Permitted Encumbrances and as otherwise provided in Sections
4.2, 4.3, 4.4 and 4.5 and Article 14.0 below, Seller shall transfer the
Purchased Assets to Purchaser free and clear of all Encumbrances, and
without any assumption of liabilities and obligations, and Purchaser
shall not, by virtue of its purchase of the Purchased Assets, assume or
become responsible for any liabilities or obligations of Seller.
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4.2 Assumed Liabilities and Obligations.
As of the Closing Date, Purchaser (i) shall acquire the Purchased
Assets subject only to, and (ii) shall undertake, assume, perform and
otherwise pay, satisfy and discharge, and hold Seller harmless from,
only (x) the liabilities and obligations set forth on Schedule 4.2 and
(y) the liabilities and obligations of Purchaser provided for in
Article 14.0 hereof (collectively, the "Assumed Liabilities").
4.3 Offer of Employment.
Except as set out in this Section 4.3, Purchaser shall offer employment
as of the Closing Date to substantially all Employees listed on
Schedule 1.20(a) (except as set forth herein) at substantially similar
jobs, at substantially the same salaries or wages, as were paid by
Seller immediately prior to the Closing Date; provided, however, that
with respect to any hourly Employee at the Pottsville, Pennsylvania
Facility, Purchaser shall be entitled to offer employment to such
Employee under Purchaser's terms and conditions of employment
(including benefit plans). If Purchaser does not intend to offer
employment to an Employee listed on Schedule 1.20(a) or Schedule
1.20(b), it shall so advise Seller in writing as soon as practicable
after execution of this Agreement, but in no event later than ten (10)
days after such execution. Each Employee on Schedule 1.20(a) or
Schedule 1.20(b) who accepts an offer of employment and subsequently
becomes an actively at-work employee of Purchaser is hereinafter
referred to as a "Hired Employee." Seller shall use its best efforts to
retain all Employees to be hired by Purchaser in their current
positions up to the Closing Date, at substantially the same salary,
except that Seller may terminate any employee for cause or poor
performance consistent with Seller's existing employment practices.
Purchaser shall keep on its payroll at substantially the same salary
all such Hired Employees for at least one (1) year after the Closing
Date, except for (i) those Hired Employees who may be terminated (A)
for cause, or (B) as a result of a force majeure or the loss of a major
customer that significantly adversely affects the economic viability of
the facility at which such Hired Employee is located, (ii) those Hired
Employees who elect to retire or otherwise voluntarily terminate
employment with Purchaser, and (iii) those Hired Employees at the
Pottsville, Pennsylvania Facility that are replaced in the event of a
work stoppage or strike. Except as set out in this Section 4.3,
Purchaser shall offer employment to each
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inactive Employee listed on Schedule 1.20(b) who applies for employment
with Purchaser at the earliest of: (i) the date the Employee is
released to return to work, in the case of a disability-type leave,
(ii) the Employee's expected return to work date as shown in Schedule
1.20(b), or (iii) 180 days from the Closing Date. Within ten (10) days
after Closing, Purchaser shall notify all Employees listed on Schedule
1.20(b) of the condition under which such Employees will be offered
jobs. Purchaser may, consistent with applicable law, condition such
employment on each such individual passing a medical examination as
required by Purchaser. Seller shall assign, and Purchaser shall accept
such assignment of, all written contracts of employment (other than any
collective bargaining agreement) between Seller and the Employees
employed by Purchaser, to the extent such contracts are legally
assignable.
4.4 Vacation Liability.
Purchaser shall assume liability as of the Closing Date for the
vacation entitlement of each Hired Employee earned for 1999, and after
the Closing Date, shall pay each Hired Employee's salary and wages
during their vacation entitlement from Purchaser when taken. If a Hired
Employee's employment with Purchaser is terminated during 1999 with
vacation entitlements remaining, Purchaser shall pay such Hired
Employee a lump sum in cash equal to such remaining vacation
entitlement. If Seller is required by any collective bargaining
agreement to pay cash to any Hired Employee in lieu of 1999 vacation,
Purchaser shall reimburse Seller for the amounts so paid.
4.5 Other Employee Benefits.
4.5.1 Seller agrees that, with respect to claims for workers'
compensation arising solely out of events or illnesses
occurring prior to the Closing Date and all claims under
Seller's employee benefit programs by, or in respect of,
persons employed by Seller in the Business arising solely out
of events or illnesses occurring prior to the Closing Date,
regardless of whether such employment had terminated and
regardless of whether such employee is employed by Purchaser,
whether reported or unreported as of the Closing Date, and
whether insured or uninsured (including, but not limited to,
workers' compensation, life insurance, medical and disability
programs), Seller shall, at its own expense, honor, or cause
its insurance carriers, if any, to honor, such claims in
accordance with the terms and conditions of such programs or
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applicable workers' compensation statutes, including any
construction of such terms or conditions ultimately made by
any court or administrative body having jurisdiction
thereover. Without limiting the scope of the preceding
sentence, Seller and its Affiliates shall be responsible for
any and all claims and liabilities arising out of or relating
to (i) their employment of the Employees or any former
employees of Seller, (ii) except as provided in Section 4.6,
the termination by any of such entities of the employment of
any such Employee, former employee, consultant or other agent
of Seller, and (iii) the provision of any employee benefits to
such Employees, former employees, retirees, disabled
employees, or agents of Seller (and their beneficiaries and
eligible dependents) attributable to their employment with, or
their participation in any plans or programs maintained or
contributed to by, Seller or any of its Affiliates. Purchaser
shall assume liability for all workers' compensation claims of
Hired Employees for industrial injuries and illnesses
occurring on or after the Closing Date in respect to the
Business.
4.5.2 Each Hired Employee shall receive vesting and eligibility
credit for service with the Seller under the Purchaser's
employee benefit plans, policies, and programs maintained by
the Purchaser for Hired Employees as of the Closing Date.
These plans will include, but are not limited to, retiree
welfare, defined benefit pension plan, savings plan, medical
plan (without any exclusion for pre-existing conditions that
would not have been treated as pre-existing conditions under
the Seller's medical plan as of the Closing Date), life and
disability insurance plans. Each Hired Employee shall receive
benefit credit under the Purchaser's disability, vacation,
severance and service award programs for service with the
Seller. Each Hired Employee shall receive credit for benefit
accrual purposes under Purchaser's defined pension plans equal
to the service credited under Seller's pension plans for
benefit accrual purposes. The benefit payable to a Hired
Employee from the defined benefit pension plan or plans of the
Purchaser (the "Purchaser's Plan Benefit") shall be the
difference between (a) and (b) below, with the remainder
actuarially adjusted as provided herein:
a) the annual benefit earned as of the Hired
Employee's retirement date under the
Purchaser's plan or plans, calculated
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as a single life annuity and actuarially
adjusted by any applicable early retirement
reduction factors but not adjusted for any
qualified domestic relations order, as
defined in Section 414 of the Code ("QDRO");
and
b) the annual benefit earned as of the Closing
Date under Seller's plan or plans,
calculated as a single life annuity and
actuarially adjusted by any applicable early
retirement factors as of the Hired
Employee's retirement date under the
Purchaser's plan or plans but not adjusted
for any QDRO or prior lump sum or other
benefit payments.
The Purchaser's Plan Benefit determined in accordance with the
preceding sentence and illustrated in Schedule 4.5.2 shall be
actuarially adjusted for the application of any QDRO, payment
in a form other than a single life annuity and the application
of any temporary early retirement adjustment. The Purchaser
shall have the discretion to determine the Purchaser's Plan
Benefit of each Hired Employee in a manner that is consistent
with the foregoing, the terms of the Purchaser's defined
benefit pension plans and the terms of any collective
bargaining agreement in effect after the Closing Date and the
terms of such plan and any such collective bargaining
agreement shall control in the event of any conflict with the
terms of this Section 4.5.2.
4.5.3 Except for the Hired Employees who are hourly employees at the
Pottsville, Pennsylvania facility and their dependent(s), who
shall be covered by the terms of the collective bargaining
agreement in effect immediately following the Closing, or, in
the absence of such collective bargaining agreement, the terms
and conditions established for such Hired Employees by
Purchaser at the Closing Date, Hired Employees and their
eligible dependent(s) will be eligible to participate in the
hospital, surgical, medical plan available to similarly
situated employees of Purchaser's Films Division. Purchaser
agrees that Purchaser's medical plan will accept Hired
Employees and eligible dependent(s) without a pre-existing
condition exclusion provided that (a) the Hired Employee and
eligible dependent(s) were enrolled in Seller's medical
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plan as of the Closing Date and (b) the Hired Employee and
eligible dependent(s) enroll in Purchaser's medical plan on a
timely basis.
4.5.4 If a Hired Employee has less than the credited service with
Seller to vest and is a participant in the Seller's savings
plans, Purchaser agrees that, if and when such Hired employee
attains 100% vesting under the terms of the Purchaser's
savings plan, Purchaser shall pay to such Hired Employee, as
soon as practicable after attainment of such service, an
amount which is equal to the non-vested company matching
credits in the Seller's savings plans at the Closing Date for
such Hired Employee. The Purchase Price will be reduced by
107.65% of the non-vested company matching credits. Seller
agrees to provide Purchaser with a count of those non-vested
Hired Employees and an estimate of the non-vested company
matching credits in the Seller's savings plans no later than
fifteen (15) days before the Closing Date. Seller shall
provide Purchaser with a list showing the actual non-vested
company matching credits for such non-vested Hired Employees
prior to the completion of the Adjusted Working Capital
Worksheet pursuant to Section 3.4.1. Any difference between
107.65% of the estimated and 107.65% of the actual amount of
such participants non-vested company matching credits shall be
added, or subtracted from, as appropriate, the amount to be
paid pursuant to Section 3.4.1.
4.5.5 Purchaser shall have no claim to, responsibility for, or
obligation regarding Seller's ERISA Plans.
4.6 WARN Act.
Purchaser acknowledges and warrants to Seller that Purchaser's actions
in connection with the transactions contemplated by this Agreement will
not result in a "plant closing" or "mass layoff" within the meaning of
the Worker Adjustment and Retraining Notification Act (WARN Act), and
Purchaser shall indemnify Seller against any expense incurred by
Seller, including attorneys' fees, if applicable, in connection with
the application of the WARN Act to Seller as a result of the
transactions contemplated by this Agreement; provided that, prior to
Closing, Seller will not temporarily or permanently close or shut down
any "single site of employment" or any "facility" or any "operating
unit," "department" or "service" within a single site of
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employment, as such terms are used in the WARN Act, within or
constituting part of the Business. Seller represents that the Business
has not had, and will not have, any such closures or shutdowns within
the period of at least ninety (90) days prior to Closing. Seller agrees
not to take any action or contribute to any liability of Seller or
Purchaser under the WARN Act, including, without limitation, not laying
off any employee between execution of this Agreement and the time of
Closing, without Purchaser's written consent, provided that Seller may
terminate employees for cause or poor employee performance consistent
with Seller's practices without such consent, provided, however, the
aggregate number of employees so terminated without Purchaser's consent
shall not exceed twenty (20). At Closing, Seller shall provide
Purchaser with the number of employees terminated at each Facility
during the ninety (90) day period prior to the time of Closing.
5.0 CLOSING
5.1 Time; Location.
Subject to the conditions contained herein, the Closing shall be held
on the Closing Date at Noon, Chicago, Illinois Time, at the office of
Seyfarth, Shaw, ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other time or place as the
Parties shall mutually agree in writing.
5.2 Documents.
At the Closing, Seller shall execute and/or deliver the following
instruments of transfer and assignment:
5.2.1 Duly executed special warranty deeds substantially in the
forms of Exhibit 5.2.1(a) and Exhibit 5.2.1(b) hereto, in
recordable form, transferring to Purchaser good and marketable
fee simple title to the Real Property Owned, subject only to
Permitted Encumbrances;
5.2.2 A general ▇▇▇▇ of sale substantially in the form of Exhibit
5.2.2 hereto, transferring to Purchaser good title to all of
the tangible personal property included in the Purchased
Assets, subject only to Permitted Encumbrances and the Assumed
Liabilities;
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5.2.3 An Assignment and Assumption Agreement substantially in the
form of Exhibit 5.2.3 hereto, assigning to Purchaser Seller's
right, title and interest in each of the Assumed Contracts and
Permits included in the Purchased Assets;
5.2.4 An Assignment of Trademarks from Exxon Corporation to
Purchaser, substantially in the form of Exhibit 5.2.4(a)
hereto and an Assignment of Trademarks from Esso (Schweiz) to
Purchaser, substantially in the form of Exhibit 5.2.4(b)
hereto;
5.2.5 Technology License Agreement, substantially in the form of
Exhibit 5.2.5 hereto;
5.2.6 Assignments of title to all vehicles included in the Purchased
Assets;
5.2.7 An Existing Inventory License substantially in the form of
Exhibit 5.2.7;
5.2.8 A Resin Supply Contract between Seller and Purchaser
substantially in the form previously agreed to by Seller and
Purchaser; and
5.2.9 An assignment from Seller to Purchaser of the Technology
License Agreement between Telasto and Seller, dated as of
September 27, 1994;
5.2.10 Such additional instruments of conveyance and transfer as
Purchaser may reasonably require in order to more effectively
vest in it, and put it in possession of, the Purchased Assets.
5.3 Reasonable Steps.
Prior to the Closing Date, Seller shall take such reasonable steps as
may be requisite or appropriate so that, no later than the close of
business on the Closing Date, Purchaser shall be placed in actual
possession and control of all of the Purchased Assets.
6.0 REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
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6.1 Organization, Good Standing and Power.
Seller (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of New Jersey, (ii) is duly
licensed or qualified to transact business in each of the jurisdictions
where the nature of the property owned by it or the conduct of the
business transacted by it, requires such licensing or qualification
(except where the failure to so qualify in any such jurisdiction would
not have a Material adverse effect on any of the Purchased Assets or
the results of operations of the Business), and (iii) has all requisite
power and authority to (x) own, lease and operate the properties and
assets it currently owns and leases that are part of the Purchased
Assets and to carry on the Business as currently conducted and (y)
execute and deliver the Transaction Documents and the Technology
License Agreement to be executed and delivered by it, to consummate the
transactions contemplated by this Agreement and to perform all the
terms, conditions and obligations of this Agreement to be performed by
it.
6.2 Authorization of Agreement and Enforceability.
Seller has taken all necessary corporate action to authorize the
execution and delivery of the Technology License Agreement (other than
as set out in the Technology License Agreement) and each of the
Transaction Documents to which Seller is a party, the performance by
Seller of all terms and conditions hereof and thereof to be performed
by Seller and the consummation of the transactions contemplated hereby
and thereby. No other action on the part of Seller is necessary to
authorize the execution, delivery and consummation by Seller of the
Technology License Agreement and each of the Transaction Documents to
which Seller is a party, to give effect to the provisions of this
Agreement and to consummate the transactions contemplated hereby except
as required by the HSR Act or as otherwise contemplated by this
Agreement. This Agreement and the Ancillary Agreements and the
Technology License Agreement and all other agreements and documents
described herein to which Seller is a party, upon Seller's execution
and delivery thereof, will constitute, the legal, valid and binding
obligations of Seller, enforceable in accordance with their terms
except to the extent that enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws presently or hereafter in
effect relating to or affecting the enforcement of creditors' rights
generally and by
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general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
6.3 No Violations; Consents.
The execution, delivery and performance by Seller of the Technology
License Agreement and each of the Transaction Documents to which Seller
is a party and the consummation of the transactions contemplated hereby
and thereby will not to Seller's Knowledge (with or without the giving
of notice or the lapse of time, or both) (i) violate any provision of
the charter or bylaws of Seller, (ii) violate, or, except as required
by the HSR Act or by the permits and licenses referred to in Section
6.7 hereof, require any consent, authorization, approval, exemption, or
filing under any provision of any law, statute, rule or regulation to
which Seller, the Business or the Purchased Assets are subject, (iii)
violate any judgment, order, writ or decree of any court applicable to
Seller, the Business or the Purchased Assets, (iv) except for such
consents or approvals as required by the leases and contracts referred
to in Section 1.42 (which generally require consent to the assignment
thereof) conflict with, result in a breach of, constitute a default
under, or accelerate or permit the acceleration of the performance
required by, or require any consent, authorization or approval under
(x) any mortgage, indenture, loan or credit agreement or any other
agreement or instrument evidencing indebtedness for money borrowed to
which Seller is a party or by which Seller or any of the Purchased
Assets is bound or (y) any other contract, agreement or instrument to
which Seller is a party or any of the Purchased Assets is bound or (v)
result in the creation or imposition of any Encumbrance upon the
Purchased Assets, which violation, conflict, breach, default,
acceleration or Encumbrance, or the failure to make or obtain such
filing, consent, authorization or approval, with respect to the matters
specified in clauses (ii) through (v) could, individually or in the
aggregate, reasonably be expected to have a Material adverse effect on
the Purchased Assets or the results of operations of the Business or
prevent or delay the consummation of the transactions contemplated by
this Agreement.
6.4 Financial Statements.
The Financial Statements are, or will be when prepared in accordance
with this Agreement, subject to any qualifications, assumptions, and
other limitations specified
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therein, or exceptions set forth in Schedule 6.4, accurate and complete
in all Material respects, and have been prepared in accordance with
GAAP applied on a consistent basis. Such Financial Statements present
fairly, in all Material respects, the financial condition and results
of operations of the Business as of the date thereof and for the period
covered thereby and are in accordance with the Books and Records of the
Business unless otherwise noted therein. Except (i) as set forth in
Schedule 6.4 or the Financial Statements, (ii) as incurred in the
ordinary course of the Business subsequent to December 31, 1998, or
(iii) arising in the ordinary course of Business under any agreement,
contract, commitment, lease or plan specifically disclosed on a
Schedule hereto or not required to be disclosed because of the term or
amount involved, Seller has no debts, obligations or other liabilities
(whether absolute or contingent) in respect to the Purchased Assets or
the Business.
For purposes of this Section 6.4, "Material" shall mean a deviation in
the Financial Statements which, when taken together with all other
positive and negative deviations, had or could reasonably be expected
to have, an adverse impact of $100,000 or more on the Purchased Assets
or the results of operations of the Business.
6.5 Absence of Certain Changes or Events.
Except as set forth in Schedule 6.5 hereto, since December 31, 1998, in
its conduct of the Business, Seller has not:
6.5.1 Amended or terminated, any contract listed on any Schedule
attached hereto;
6.5.2 Suffered the occurrence of any events which, individually or
in the aggregate, have had, or could reasonably be expected to
have, an adverse effect on the Purchased Assets or the results
of operations of the Business;
6.5.3 Incurred any damage or destruction having an adverse effect on
the Purchased Assets or the results of operations of the
Business by fire, storm, or similar casualty, whether or not
covered by insurance;
6.5.4 Sold, transferred, replaced or leased any of the Purchased
Assets, except for transactions in the ordinary course of the
Business;
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6.5.5 Waived or released any rights with respect to the Purchased
Assets or the Business;
6.5.6 Except as necessary to carry out the transactions contemplated
by this Agreement, entered into any transaction;
6.5.7 Changed, its methods of accounting or made or permitted any
change to its Books and Records or in its method of keeping
its Books and Records except in the ordinary course of
Business, and consistent with past practice;
6.5.8 Except in preparation of the transactions specifically
contemplated by this Agreement, increased or written down the
value of any Inventory or Accounts Receivable without a
written explanation of the cause furnished to Purchaser;
6.5.9 Permitted any of the Purchased Assets to be subject to any new
Encumbrance except for Permitted Encumbrances or the Assumed
Liabilities;
6.5.10 Increased the compensation of Employees, except following
normal review procedures;
6.5.11 Except as necessary to carry out the transactions contemplated
by this Agreement, altered its conduct in its relations with
suppliers or customers, including altering the rates charged
by the Business for its products and services;
6.5.12 Except as necessary to carry out the transactions contemplated
by this Agreement, otherwise conducted the Business other than
in the usual and ordinary course of the Business;
6.5.13 Received any indication by any customer or supplier of an
intention to discontinue, reduce or change the terms of any
contract or relationship with Seller;
6.5.14 Except as expressly contemplated by this Agreement, adopted,
amended, or increased the payments to or benefits under, any
Employee Plan other than consistent with Seller's past
practice in the operation of the Business;
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6.5.15 Amended or modified, or granted any exception to, its credit
criteria for new or existing customers;
6.5.16 Other than events due to force majeure, suffered any repeated,
recurring or prolonged shortage, cessation or interruption of
inventory shipments, supplies or utility services required to
conduct the Business or suffered any change in its financial
condition or in the nature of its business or operations which
has had or might have an adverse effect on the Business or the
Purchased Assets;
6.5.17 Except in the ordinary course of business, and consistent with
past practice, made or permitted any amendment or termination
of any insurance arrangement with respect to the Business or
the Purchased Assets; or
except in each of the foregoing instances where the matters or conduct
prohibited by this Section 6.5 are taken or occur in the ordinary
course of Business and do not individually or in the aggregate with the
other matters described in this Section 6.5 have, or could reasonably
be expected to have, a Material (solely for purposes of this Section
6.5, "Material" shall mean an impact of $500,000 or more) adverse
effect on the Purchased Assets or the results of operations of the
Business or prevent or delay the consummation of the transactions
contemplated by this Agreement.
6.6 Title to Properties; Absence of Liens and Encumbrances.
6.6.1 (a) Subject to any exceptions or conditions set forth in the
Title Commitments referenced in Section 8.1.13 and Surveys
referenced in Section 8.1.14, Seller owns good and marketable
title to the Real Property Owned free and clear of all
Encumbrances other than Permitted Encumbrances. The Real
Property Leased is leased to Seller pursuant to those Leases
and Contracts listed in Schedule 1.42. Seller is not in
Material default under any terms of any such Leases and
Contracts relating to the Real Property Leased, nor to
Seller's Knowledge is any other party thereto in Material
default thereunder.
(b) Use of the Real Property for the various purposes for
which each are presently being used is permitted as
of right under all applicable zoning legal
requirements and except as listed on Schedule 6.6 is
not
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subject to variances or "permitted non-conforming"
use or structure classifications. There are no
existing or, to the Knowledge of Seller, threatened,
Material violations of any provision of any
applicable building, zoning subdivision or ordinance.
6.6.2 Schedules 1.65(a) and 1.65(b) correctly identify all Real
Property Owned and Schedule 1.64 correctly identifies all Real
Property Leased. Except as set forth in Schedule 1.64 and
Schedule 1.65(a) and Schedule 1.65(b), Seller does not own or
lease any real property used or held for use exclusively in
the conduct of the Business.
6.6.3 Seller has received no notice of, and otherwise has no
Knowledge of, any pending, threatened or contemplated
condemnation, eminent domain or similar proceedings affecting
the Real Property Owned. Seller has no Knowledge of any
pending, threatened or contemplated condemnation, eminent
domain or similar proceedings effecting the Real Property
Leased.
6.6.4 To the Seller's Knowledge, all improvements to the Real
Property are in compliance with all applicable Material legal
requirements, including those pertaining to zoning, building
and the disabled. To Seller's Knowledge, all improvements to
the Real Property are in good repair and in good condition,
ordinary wear and tear excepted, and are free from known
defects. Except as set forth on the Surveys, to Seller's
Knowledge, no part of any such improvement encroaches on any
real property not included in the Real Property and there are
no such improvements primarily situated on adjoining property
which encroach on any part of the Real Property. To Seller's
Knowledge, except as set out on Schedule 6.6, the land for
each of the Facilities abuts on and has direct vehicular
access to a public road or has access to a public road via a
permanent, irrevocable, appurtenant easement benefiting such
land and comprising a part of the Real Property, is supplied
with public or quasi-public utilities and other services
appropriate for the operation of the Facilities located
thereon, and is not located within any flood plain, as such
flood plains are recorded in the applicable city or county
records.
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6.7 Permits; Licenses.
Seller has all necessary permits, licenses, registrations, consents,
certificates, orders and approvals of federal, state or local
government or regulatory bodies that are required to permit Seller
lawfully to operate and conduct the Business (including without
limitation those required under any Environmental Law ) (collectively,
the "Permits") and, except as described in Schedule 6.8, Seller is in
substantial compliance with all Permits other than the failure of which
to have, or the noncompliance with which, would not result in a
Material adverse effect on the Business or the Purchased Assets.
Schedule 6.7 hereto sets forth a correct and complete list of all
Permits, each one of which is in full force and effect, except to the
extent that there would be no Material adverse effect on the Business
or the Purchased Assets. To Seller's Knowledge, no suspension,
revocation, limitation or cancellation of any of the Permits is
threatened or pending nor has Seller received notice of any of the
foregoing, and no cause exists for such suspension, revocation,
limitation or cancellation. Any Permits which cannot be transferred are
identified on Schedule 6.7 hereto.
6.8 Compliance with Laws.
Except as described in Schedule 6.8 hereto, since January 1, 1996,
Seller has conducted the Business so as to comply with all laws,
ordinances and regulations, including but not limited to Environmental
Laws, applicable to the conduct or operation of the Business or the
ownership or use of the Purchased Assets, in each case except where the
failure to comply would not, individually or in the aggregate,
reasonably be expected to have a Material adverse effect on the
Purchased Assets or the results of operations of the Business. Except
as described in Schedule 6.8, with respect to the Business, Seller has
not received, nor is it aware of any outstanding notice of violation of
any law, rule, regulation, ordinance or order of any court or federal,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, in each case except where the notice
of violation would not, individually or in the aggregate, have a
Material adverse effect on the Purchased Assets or the results of
operations of the Business.
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6.9 Legal Proceedings.
Except as described in Schedules 6.8, 6.9 and 6.11 hereto or as set
forth on Schedules X and XI of the Technology License Agreement, there
is no claim, action, suit, proceeding, investigation or inquiry
("Action") pending before any federal, state or other court or
governmental or administrative agency or, to Seller's Knowledge,
threatened against the Business or any of the Purchased Assets, or the
transactions contemplated by this Agreement, which could reasonably be
expected to have a Material adverse effect on the Purchased Assets or
the results of operations of the Business or may prevent or delay or
otherwise interfere with the consummation of the transactions
contemplated by this Agreement. Except as described in Schedules 6.8,
6.9 and 6.11, Seller is not a party to or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality which primarily affects the
Business or the Purchased Assets and which could reasonably be expected
to have a Material adverse effect on the Purchased Assets or the
results of operations of the Business or may prevent or delay or
otherwise interfere with the consummation of the transactions
contemplated by this Agreement; and to the Knowledge of Seller there is
no Action by Seller currently pending or which Seller intends to
initiate that may have a Material adverse effect on the Business or the
Purchased Assets.
6.10 Books and Records.
All books of account and other financial records of Seller directly
relating to the Business and the environmental reports referred to in
Section 6.26(iv) (the "Books and Records") and all customer records and
specifications, plans, drawings, and blueprints exclusively relating to
the Business, are complete and correct in all Material respects and
have been made available to Purchaser. The Books and Records represent
actual, bona fide transactions and have been maintained in accordance
with sound business practices, including the maintenance of an adequate
system of internal controls. All of the Books and Records have been
prepared and maintained in accordance with good business practices and,
where applicable, in conformity with generally accepted accounting
principles (except as otherwise stated on Schedule 6.4) and in
compliance with applicable laws, regulations and other requirements.
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6.11 Labor Disputes.
Except as described in Schedule 6.11 hereto, there are no
discrimination complaints nor any other kind of Material labor-related
disputes against Seller in connection with the Business pending before
or, to Seller's Knowledge, threatened before, any federal, state or
local court or agency and, to Seller's Knowledge, no dispute respecting
minimum wage or overtime claims exists. The Business has not
experienced any Material labor disputes or any Material work stoppage
due to labor disagreements within the past three (3) years. With
respect to the Business and except to the extent set forth in Schedule
6.11, (i) there is no unfair labor practice charge or complaint against
Seller actually pending or, to Seller's Knowledge, threatened, before
the National Labor Relations Board; (ii) there is no labor strike,
slowdown or stoppage actually pending or, to Seller's Knowledge,
threatened against or affecting Seller; and (iii) no attempt to
organize Employees has resulted in an election within the past three
(3) years or, to Seller's Knowledge, is threatened respecting the
Employees.
6.12 Payroll Practices/Employee Arrangements.
6.12.1 Schedule 6.12.1 contains a complete list of each employee
benefit plan subject to ERISA (the "ERISA Plans"), and/or
holiday, vacation, Christmas or other bonus practice or any
other employee pay practice, arrangement, agreement or
commitment not subject to ERISA (the "Payroll
Practices/Employee Arrangements") and maintained by Seller, or
with respect to which Seller has any liability or obligation,
whether actual or contingent, with respect to Employees or
their respective beneficiaries.
6.12.2 Seller has not taken any action which may result in Purchaser
being a party to, or bound by, any Seller ERISA Plan, and
Purchaser shall have no liability under any Seller ERISA Plan
or Payroll Practice/Employee Arrangement following the
consummation of the transactions contemplated hereby.
6.12.3 Seller warrants that no Seller ERISA Plan or other Payroll
Practices/Employee Arrangement of Seller has provided, or
provides, except as may be required under a collateral
bargaining agreement, for the payment of retiree benefits by
Purchaser, including any obligation to pay for the cost of any
post-
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retirement health care or life insurance or similar benefit.
There have been no failures to provide health care
continuation coverage ("COBRA Coverage") under any welfare
benefit plans sponsored by Seller which Sections 601 through
608 of ERISA require or Certificates of Creditable Coverage as
required by the Health Insurance Portability and Accounting
Act of 1996 (the "HIPAA"). Seller shall provide Employees and
former employees of the Business, who are eligible, with COBRA
Coverage upon their termination of employment with Seller,
upon the Closing or otherwise, according to ERISA requirements
and with Certificates of Creditable coverage required by
HIPAA. Seller does not and has not contributed to or
maintained a "multi-employer plan" (as defined in Section
3(37) of ERISA) relating to its film division.
6.13 No Finder.
With the exception of fees payable to Chase Securities, Inc., which
will be paid by Seller, Seller has not taken any action which would
give to any Person a right to a finder's fee or any type of brokerage
commission in relation to, or in connection with, the transactions
contemplated by this Agreement.
6.14 Interest in Business.
Seller has not granted, and there is not outstanding, any option,
right, agreement or other obligation pursuant to which any Person could
claim a right to acquire in any way all or any part of, or interest in,
the Business, other than as contemplated hereby.
6.15 Leases and Contracts.
6.15.1 Schedule 1.42 is a true and complete list of the Leases and
Contracts required by Section 1.42 to be listed thereon, and
true and complete copies (or summaries in the case of oral
Leases and Contracts) of all such Leases and Contracts listed
on Schedule 1.42 have been made available to Purchaser.
Schedule 1.42 indicates which of the Leases and Contracts
listed thereon require a third party consent in order to be
transferred or assigned to Purchaser.
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6.15.2 Except in connection with assigning the Leases and Contracts
to Purchaser or as set forth on Schedule 1.42, none of the
Leases and Contracts listed thereon has been modified,
amended, assigned or transferred since January 1, 1998, except
in the ordinary course of the Business. Each of the Leases and
Contracts is in full force and effect and constitutes a valid
and binding obligation of Seller enforceable against Seller in
accordance with its terms and, to Seller's Knowledge,
enforceable against each other Person who is a party thereto
in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws presently or hereafter in
effect relating to or affecting the enforcement of creditors'
rights generally and by general principles of equity
(regardless of whether enforcement is considered in a
proceeding in equity or at law).
6.15.3 No event or condition has occurred or presently exists which
constitutes a Material default or breach or, after notice or
lapse of time or both, would constitute a Material default or
breach by Seller, or to Seller's Knowledge, any other party
thereto, under any of the Leases and Contracts. There are no
Material counterclaims or offsets existing as of the date of
this Agreement under any of the Leases and Contracts which are
part of the Assumed Liabilities.
6.15.4 There does not exist, and between the date hereof and Closing,
there will not be granted or suffered, any security interest,
lien, encumbrance or claim of others created or suffered to
exist on any interest of Seller created under any of the
Leases and Contracts other than pursuant to the terms of any
such Lease or Contract, the Permitted Encumbrances or the
Assumed Liabilities.
6.15.5 No purchase commitment of or for the Business is in excess of
the Business' ordinary requirements.
6.15.6 Except as identified on Schedule 1.42, none of the leases set
forth on Schedule 1.42 is: (i) a capitalized lease (as defined
by generally accepted accounting principles); or (ii) a lease
with a remaining term of one (1) year or more from Closing
Date and which cannot be canceled within thirty (30) days
without penalty; or (iii) a lease containing an option to
purchase.
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6.15.7 Except as set forth on Schedule 1.42, the assignment to
Purchaser of the Leases and Contracts constituting the Assumed
Contracts will not result in a\ default, alteration or
termination under any such Leases and Contracts, and such
assignment will confer all of Seller's rights thereunder to
Purchaser.
6.15.8 Schedule 6.15.8 sets forth all independent sales
representatives, environmental consultants, technical
consultants and independent technical contractors or
independent technical representatives (collectively, the
"Contractors") utilized by Seller primarily in the operation
of the Business in 1998 or 1999. To Seller's Knowledge, except
as set forth in Schedule 6.15.8, none of such Contractors
necessary to operate the Business as presently conducted
intends to terminate his or her contract with Seller, nor does
Seller have any present intention to terminate the contract of
any Contractor necessary to operate the Business as presently
conducted.
6.16 Employees of the Business.
Except as identified on Schedule 1.20(a) and Schedule 1.20(b) and
except for any proprietary information and invention agreements with
Employees (an example of which is attached hereto as Exhibit 6.16(a))
and collective bargaining agreements (attached hereto as Exhibit
6.16(b)), there are no employment agreements with any Employees and all
Employees are employed on an "at will" basis. True and correct copies
of all forms of proprietary information and invention agreements,
fringe benefits and personnel policies with respect to the Business
have been provided to Purchaser. Schedule 1.20(a) and Schedule 1.20(b)
indicate which Employees signed such proprietary information and
invention agreements.
6.17 Accounts Receivable.
The Accounts Receivable of the Business constituting a part of the
Purchased Assets and reflected on the Balance Sheets were, and those on
hand at the Closing Date will be, bona fide, resulting from sales
actually made or services actually rendered by or operations of the
Business in the ordinary course of Business.
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6.18 Taxes.
Seller has caused to be timely filed with appropriate federal, state,
local and other governmental authorities all Tax returns, information
returns or statements and reports required to be filed with respect to
the Purchased Assets or the Business. All such Tax returns, statements,
and reports are correct and complete in all Material respects, except
for any which, if not so filed, could not have a Material adverse
effect on the Purchased Assets or the results of operations of the
Business and would not result in any liability for Purchaser. Seller
has paid or caused to be paid or made adequate provision (in accordance
with generally accepted accounting principles) for the payment of all
Taxes shown to be due on such returns or reports or otherwise due,
except such Taxes, if any, as are being contested in good faith and as
to which adequate reserves (determined in accordance with generally
accepted accounting principles) have been provided and are disclosed on
Schedule 6.18 and except where the failure to pay such Taxes would not
have a Material adverse effect on the Purchased Assets or the results
of operations of the Business and would not cause Purchaser to incur
any liability. None of the Purchased Assets is subject to any lien for
Taxes, except current Taxes not yet due. None of the Purchased Assets
is subject to a "safe harbor lease" under Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended before the Tax Reform Act of
1984.
6.19 Inventories.
Except as disclosed on Schedule 6.19, all Inventory is of a quality and
quantity usable or saleable in the ordinary and regular course of the
Business. The quantity and quality of all such Inventory has been
determined in a manner consistent with prior years. Inventory now on
hand that was purchased subsequent to December 31, 1998 was purchased
in the ordinary course of Business of Seller at what Seller deemed to
be an appropriate cost at the time of purchase. The quantities of each
item of Inventory (whether raw materials, work-in-process, or finished
goods) are not excessive, but are reasonable in the present
circumstances of the Seller.
6.20 Year 2000 Matters.
To the Seller's Knowledge and except as set out on Schedule 6.20, the
machinery and equipment which are included in the Purchased Assets
(including, without
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limitation, all embedded chips and other date-sensitive equipment such
as security systems, alarms, elevators and HVAC systems) (collectively,
the "Systems") are Year 2000 compliant or will be Year 2000 compliant
by June 30, 1999, except to the extent failure to be Year 2000
compliant would not in the aggregate have a Material adverse impact on
the Business or the Purchased Assets.
6.21 Sufficiency, Title and Condition of Purchased Assets.
(a) Except as set forth in Schedule 6.21, the Purchased Assets to
be conveyed hereunder constitute all of the rights and
property necessary to enable Purchaser to conduct Business in
a substantially similar manner to which it (i) is presently
being conducted by the Seller and (ii) has been conducted for
the period reflected in the Financial Statements. Except as
set forth in Schedule 6.21, none of the Excluded Assets
constitute property or rights necessary for the continued
operation of the Business by Purchaser.
(b) The Seller owns good and marketable title to the Purchased
Assets (excluding the Real Property and leased assets), in
each case free and clear of any Encumbrances, except for
Permitted Encumbrances and any other encumbrances which in the
aggregate do not exceed $100,000.
(c) To the Seller's Knowledge, the fixtures and equipment which
are included in the Purchased Assets are in good operating
condition and repair, subject to ordinary wear and tear, and
are substantially fit for the purposes for which they are
being utilized by the Seller. The tangible personal property
included in the Purchased Assets constitutes substantially all
such property used or held for use by the Seller for use
exclusively in the operation of the Business on the Closing
Date and are free from known defects. No item of tangible
personal property included in the Purchase Assets is in need
of repair or replacement other than as part of routine
maintenance in the ordinary course of Business.
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6.22 Insurance.
All of the insurable Purchased Assets are self-insured in accordance
with the past practices of the Seller, and will be so insured through
the Closing Date, in amounts and against risks reasonably deemed
adequate by Seller.
6.23 Orders, Commitments and Returns.
All accepted and unfilled orders for the sale of Film Products to
customers of the Business and the performance of services for customers
by the Business were made in bona fide transactions in the ordinary
course of Business. To Seller's Knowledge, there are no outstanding
claims that are Material in the aggregate against the Seller or the
Business by customers of the Business related to shortages, credits,
damaged goods and related billing errors or otherwise related to the
shipment of Film Products or provision of services by the Business to
its customers that are not included in Accrued Expenses. The Business
has delivered Film Products in the ordinary course of Business to
customers, retailers or distributors under an understanding that such
Film Products would be returnable only to the extent provided in the
Seller's standard contract of sale, a copy of which is included in
Schedule 6.24, in accordance with an applicable customer contract, or
as may be permitted by statutory or common law, or in the exercise of
reasonable business judgment or for customer relations.
6.24 Product Warranties.
Except as disclosed on Schedule 6.24 attached hereto, (i) Seller has
not provided any unexpired express product warranty with respect to any
product manufactured, processed or sold by the Business, (ii) Seller
has not received any notice of any claim based on any product warranty,
and (iii) to the Knowledge of the Seller, there are no claims (actual
or threatened) based on any product warranty of which the Seller has
not received notice.
6.25 Affiliated Transactions.
Except as disclosed on Schedule 6.25, or as expressly contemplated by
this Agreement, since January 1, 1998, neither the Business nor Seller
in connection with the operation of the Business has, in the ordinary
course of Business or otherwise, purchased, leased or otherwise
acquired any Material property or assets or obtained
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any Material services from, or sold, leased or otherwise disposed of
any Material property or assets or provided any Material services to,
Seller, any director, officer or employee of Seller (except with
respect to remuneration for services rendered as a director, officer or
employee of Seller), or to the Knowledge of Seller, any of their
relatives, or any Affiliate of Seller, any of its directors, officers
or employees or, to the Knowledge of Seller, any of their relatives,
Except as set forth on Schedule 6.25, (a) the Assumed Liabilities do
not include any payable, receivable, obligation or commitment between
the Seller and any Affiliate or any of its respective directors,
officers or employees, or, to the Knowledge of the Seller, any of their
relatives, and (b) the Purchased Assets do not include any receivable
or other obligation or commitment from an Affiliate to the Seller or
any of its respective directors, officers or employees, or to the
Knowledge of the Seller, any of their relatives. It is specifically
understood that transactions conducted at fair market value are not
covered by this Section 6.25 and need not be included on Schedule 6.25.
6.26 Environmental Matters.
To Seller's Knowledge, during the period of Seller's ownership (i)
there has been no release or threatened release of Regulated Substances
at or shipment of Regulated Substances from the Facilities that would
require reporting to any governmental regulatory agency or entity under
the Environmental Laws as they existed as of the date of such shipment
or release that Seller did not report or would result in any Material
liability, under the Environmental Laws; (ii) no Regulated Substances
or underground or above-ground storage tank is contained in or located
at, in, on or under any of the Facilities, except for such Regulated
Substances as are used, stored or maintained in the ordinary course of
the Business and in Material compliance with applicable Environmental
Laws, except as listed in the Environmental Assessment; (iii) none of
the Facilities is listed or proposed for listing on the National
Priorities List pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. 9601 et seq., or
any similar inventory of sites requiring investigation, monitoring or
remediation that is maintained by any state or locality; and (iv)
Seller has provided to Purchaser reasonable access to all environmental
reports, assessments, audits, studies, investigation, data,
environmental permits and other material written environmental
information in its custody, possession or control concerning the
Facilities.
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7.0 REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
7.1 Organization, Good Standing and Power.
Purchaser (i) is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Virginia and (ii)
has all requisite corporate power and authority to (x) own and lease
the Purchased Assets and to carry on the Business and (y) execute and
deliver this Agreement, the Ancillary Agreements and all other
agreements, instruments and documents contemplated by this Agreement to
be executed and delivered by it, to consummate the transactions
contemplated by this Agreement, and to perform all the terms,
conditions and obligations of this Agreement to be performed by it.
Purchaser is, or will be as of the Closing Date, duly licensed or
qualified to do business as a foreign corporation and will be in good
standing in the States of Illinois and Pennsylvania.
7.2 Authorization of Agreement and Enforceability.
Purchaser has taken all necessary corporate action to authorize the
execution and delivery of each of the Transaction documents to which
Purchaser is a party, the performance by Purchaser of all terms and
conditions hereof and thereof to be performed by Purchaser and the
consummation of the transactions contemplated hereby and thereby. No
other action on the part of Purchaser is necessary to authorize the
execution, delivery and consummation by Purchaser of each of the
Transaction documents to which Purchaser is a party, to give effect to
the provisions of this Agreement and to consummate the transactions
contemplated hereby, except as required by the HSR Act or as otherwise
contemplated by this Agreement. This Agreement constitutes, and the
Ancillary Agreements and all other agreements and documents described
herein to which Purchaser is a party, upon Purchaser's execution and
delivery thereof, will constitute, the legal, valid and binding
obligations of Purchaser enforceable in accordance with their terms
except to the extent that enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws presently or hereafter in
effect relating to or affecting the enforcement of creditors' rights
generally and by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
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7.3 No Violations; Consents.
The execution, delivery and performance by Purchaser of each of the
Transaction Documents to which Purchaser is a party and the
consummation of the transactions contemplated hereby and thereby will
not (with or without the giving of notice or the lapse of time, or
both) (i) violate any provision of the articles of incorporation or
bylaws of Purchaser, (ii) violate, or, except as required by the HSR
Act, require any consent, authorization, approval, exemption, or filing
under any provision of any law, statute, rule or regulation to which
Purchaser is subject, (iii) violate any judgment, order, writ or decree
of any court applicable to Purchaser (iv) conflict with, result in a
breach of, constitute a default under, or accelerate or permit the
acceleration of the performance required by, or require any consent,
authorization or approval under (x) any mortgage, indenture, loan or
credit agreement or any other agreement or instrument evidencing
indebtedness for money borrowed to which Purchaser is a party or by
which Purchaser or any of its assets is bound or (y) any other
contract, agreement or instrument to which Purchaser is a party or any
of its assets are bound or (v) result in the creation or imposition of
any Encumbrance upon its assets, which violation, conflict, breach,
default, acceleration or Encumbrance, or the failure to make or obtain
such filing, consent, authorization or approval, with respect to the
matters specified in clauses (ii) through (v) could, individually or in
the aggregate, reasonably be expected to have a Material adverse effect
on Purchaser or prevent or delay the consummation of the transactions
contemplated by this Agreement.
7.4 Legal Proceedings.
There is no claim, action, suit, proceeding, investigation or inquiry
pending before any federal, state or other court or governmental or
administrative agency or, to Purchaser's Knowledge, threatened against
Purchaser or any of Purchaser's properties, assets, operations or
businesses that might prevent or delay the consummation of the
transactions contemplated hereby.
7.5 Financial Capacity.
Purchaser possesses, or will possess as of the Closing Date, the
financial capacity to perform in a full and timely manner each and all
of its obligations under each of the Transition Documents to which
Purchaser is a party.
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7.6 No Finder.
With the exception of fees payable to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. which
will be paid by Purchaser, Purchaser has not taken any action which
would give to any Person a right to a finder's fee or any type of
brokerage commission in relation to, or in connection with, the
transactions contemplated by this Agreement.
7.7 Purchaser's Knowledge.
Except as set forth in Schedule 7.7, Purchaser has no Knowledge that
any of Seller's representations and warranties are incorrect or untrue.
8.0 COVENANTS OF SELLER PRIOR TO CLOSING DATE
8.1 Required Actions.
Between the date of this Agreement and the time of Closing, in its
conduct of the Business, Seller shall:
8.1.1 Access to Information.
Give to Purchaser and its counsel, accountants, consultants
and other representatives, at their sole expense and risk,
reasonable access under suitable terms and conditions, during
normal business hours, to such of the properties, books,
accounts, personnel (with representatives of Seller present),
contracts and records of Seller as are relevant to the
Purchased Assets and the Business, and furnish or otherwise
make available to Purchaser all such information concerning
the Purchased Assets and the Business as Purchaser may
reasonably request, to the extent such access and disclosure
would not violate the terms of any agreement to which Seller
is bound or any applicable law or regulation, provided that
the confidentiality of any data or information so acquired
shall be maintained by Purchaser and its representatives in
accordance with Section 9.1.1.
8.1.2 Conduct of Business.
Except as permitted or required hereby or as Purchaser may
otherwise consent to in writing (which consent shall not be
unreasonably withheld),
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operate the Business only in the usual, regular and ordinary
manner as such Business was conducted prior to the date of
this Agreement and, to the extent consistent with such
operation, use commercially reasonable efforts until the time
of Closing to (i) preserve and keep intact the Business, (ii)
keep available the services of the Employees, and (iii)
preserve its relationships with customers, suppliers and
others having business dealings with Seller in connection with
the Business.
8.1.3 Maintenance of Properties.
Maintain the Purchased Assets, whether owned or leased, in
good repair, order and condition, in accordance with
manufacturers' instructions and Seller's past practices,
reasonable wear and tear excepted. Except as permitted by
Section 12.11.2, Seller and any party in possession of all or
part of the Real Property will not perform any material
grading or excavation, construction or removal of any
improvement, or make any material change or improvement upon
or about the Real Property without the consent of the
Purchaser.
8.1.4 Maintenance of Books and Records.
Maintain the Books and Records in the usual, regular and
ordinary manner, on a basis consistent with past practice.
8.1.5 Compliance with Laws and Regulatory Consents.
Except for items listed or described on Schedule 6.8 that may
be continuous in nature, comply with all statutes, laws,
ordinances and regulations including, but not limited to
Environmental Laws, except in each case as would not have a
Material adverse effect on the Purchased Assets or on the
results of the operations of the Business; hold and maintain
all Permits necessary for the operation of the Business and
the Purchased Assets except for those Permits as to which the
failure to hold and maintain would not have a Material adverse
effect on the Business or the Purchased Assets; and make and
cause to be made all filings and give and cause to be given
all notices
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which may be necessary on its part under the Leases and
Contracts in order to consummate the transactions contemplated
by this Agreement.
8.1.6 Performance of Obligations.
Perform all the obligations of Seller relating to the
Purchased Assets and the Business without Material default in
accordance with the past practices of Seller.
8.1.7 Approvals; Consents.
Except as otherwise approved by Purchaser in writing, which
approval shall not be unreasonably withheld, (i) promptly file
the notification required of it under the HSR Act relating to
the purchase and sale contemplated hereby with the United
States Department of Justice and the Federal Trade Commission,
(ii) respond to inquiries from the United States Department of
Justice and the Federal Trade Commission in connection with
such notification, (iii) request early termination or waiver
of the waiting period under the HSR Act (iv) assist Purchaser
and its Affiliates in fulfilling Purchaser's covenants in
Section 9.3 and (v) use commercially reasonable efforts to
obtain, in writing, as promptly as possible, all other
approvals and consents required to be obtained by Seller in
order to effectuate the transactions contemplated hereby
transfer all Permits (to the extent assignable) and to deliver
to Purchaser copies of such approvals and consents. Seller
shall use commercially reasonable efforts to obtain the
consents to assignment referred in Schedule 1.42 and to obtain
the consent of any third party whose consent is required to
assign or make available to Purchaser any secrecy agreement
relating exclusively to the Business.
8.1.8 Notice of Material Damage.
Give to Purchaser prompt written notice of any Material damage
by fire or other casualty to the Purchased Assets or the
Business.
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8.1.9 Advise of Changes.
Advise Purchaser promptly in writing of any fact which, if
known on the date hereof, or at the time of Closing, would
have been required to be set forth or disclosed in or pursuant
to this Agreement, or which would result in the breach in any
Material respect by Seller of any of its representations,
warranties, covenants or agreements hereunder.
8.1.10 Pay Employees to Closing Date.
Pay all wages, salaries and other sums due Employees, and
payroll taxes thereon, through the close of business on the
day prior to the Closing Date and all vacation included as
part of the Retained Liabilities, except that with respect to
the hourly employees at the Lake Zurich, Illinois Facility,
and Pottsville, Pennsylvania Facility, Seller shall pay such
hourly employees through the last shift ending before 12:01
a.m.
on the Closing Date.
8.1.11 Retain Employees.
Use its best efforts to retain all Employees to be hired by
Purchaser in their current positions through the Closing Date,
except that Seller may terminate any Employee for cause or
poor performance consistent with Seller's existing employment
practices.
8.1.12 Compliance with Agreement.
Seller shall use commercially reasonable efforts to do all
such acts and take all such measures as may be reasonably
necessary to comply with the representations, agreements,
conditions and other provisions of this Agreement.
8.1.13 Title Commitments.
Seller has furnished Purchaser a copy of a Commitment for
Title Insurance prepared by Chicago Title Insurance Company,
Order No: 1409 000617734 LK, Effective Date: August 3, 1998,
for the Real Property Owned in Lake Zurich, Illinois as shown
on Schedule 1.65(a), together with a copy of the
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documents referenced in Schedule B of that commitment. Seller
has also furnished Purchaser a copy of a Commitment for Title
Insurance prepared by Chicago Title Insurance Company,
Commitment Number: 907378C, Effective Date: September 21,
1998, for the Real Property Owned in Pottsville, Pennsylvania
as shown on Schedule 1.65(b), together with a copy of the
documents referenced in Schedule B of that commitment.
Collectively, the commitments are referred to herein as the
"Title Commitments". Seller shall have no further duties or
obligations to Purchaser with respect to title insurance
matters or the Title Commitments.
8.1.14 Surveys.
Seller has furnished to Purchaser a survey of the Real
Property Owned in Lake Zurich, Illinois as shown on Schedule
1.65(a) prepared by ▇. ▇▇▇▇▇▇▇▇▇▇ & Associates, Inc., dated
February 13, 1996 as Order No. 96021. Purchaser may, at
Purchaser's sole cost and expense, cause to be prepared and
delivered to Purchaser and Seller on or before the Closing
Date, any update to the survey on the Real Property Owned in
Lake Zurich, Illinois that is desired by Purchaser and a
survey of the Real Property Owned in Pottsville, Pennsylvania
as shown on Schedule 1.65(b), by surveyors registered as such
under the laws of the state in which the relevant Real
Property Owned is located. Collectively, the surveys are
referred to herein as the "Surveys". Seller shall have no
further duties or obligations to Purchaser with respect to
survey matters or the Surveys.
8.2 Prohibited Actions.
Except as expressly contemplated by this Agreement, between
the date of this Agreement and the Closing Date, in its
conduct of the Business, Seller shall not:
8.2.1 Sale of Purchased Assets.
Sell, transfer, assign, lease, encumber or otherwise dispose
of any of the Purchased Assets other than in the ordinary
course of the Business.
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8.2.2 Business Changes.
Change in any Material respect the character of the Business.
8.2.3 Incurrence of Material Obligations.
Except as set forth on Schedule 8.2.3, incur any fixed or
contingent obligation or enter into any agreement, commitment
or other transaction or arrangement that is not in the
ordinary course of the Business and that is Material to the
Business individually or in the aggregate.
8.2.4 Incurrence of Liens.
Subject any of the Purchased Assets to any Material lien,
security interest or any other Encumbrance, other than
Permitted Encumbrances.
8.2.5 Change in Employee Compensation and Benefits.
Increase the rate of compensation paid, or pay any bonus, to
Employees of the Business, except for those increases or
bonuses planned to be given to Employees prior to the date of
this Agreement effective on or after the date of this
Agreement (as disclosed in writing separately to Purchaser).
Seller further agrees not to establish or adopt any new
pension or profit-sharing plan, deferred compensation
agreement or employee benefit arrangement of any kind
whatsoever covering or affecting Employees; however, Seller
may amend its Payroll Practices/Employee Arrangements or ERISA
Plans so that all vested Employees can obtain whatever
benefits are due to them consistent with Seller's Payroll
Practices/Employee Arrangements, ERISA Plans and the Code;
provided, however, that Seller may change or institute any pay
or benefits it deems necessary as a result of Seller's
bargaining regarding sale of the Pottsville, Pennsylvania
Facility with the Union representing Employees at the
Pottsville, Pennsylvania Facility which does result in an
obligation for Purchaser.
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8.2.6 Publicity; Advertisement.
Except as required by law or as mutually agreed by the
Parties, publicize, advertise or announce, and shall use
commercially reasonable efforts not to permit any of its
officers, directors, employees, agents or representatives to
publicize, advertise or announce, to any third party, except
as required pursuant to this Agreement to obtain the consent
of such third party, and except as required in the interest of
the Business, the entering into of this Agreement, the terms
of this Agreement or the transactions contemplated hereby.
8.2.7 No Release.
Except in the ordinary course of the Business, cancel, release
or relinquish any individual Material debts of or claims
against others held by Seller with respect to the Business or
waive any rights relating to the Business.
8.2.8 No Termination or Modification.
Except to the extent required to transfer the Business or
unless agreed to by Purchaser in writing, terminate or
Materially modify any lease, contract, governmental license,
permit or other authorization or agreement affecting the
Business or the Purchased Assets or the operation thereof
other than arrangements with Affiliates, or agreements or
permits that will not be assigned to Purchaser.
8.2.9 No Breach.
Do or omit any act that would cause a Material default by
Seller under, or breach by Seller of, any of the Leases or
Contracts that are Assumed Contracts.
8.2.10 No Negotiations.
Directly or indirectly (through a representative or otherwise
including its directors, officers, employees, representatives
or agents) solicit, initiate, respond favorably to, condone
inquiries or proposals from, encourage or
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furnish any information to any prospective buyer, commence or
continue presently ongoing negotiations with any party other
than the Purchaser, or enter into any agreement with any party
other than the Purchaser concerning the offer to sell or the
sale of the Business or the Purchased Assets or any part
thereof.
8.3 Other Matters.
8.3.1 Environmental Assessment.
On or before the date hereof, Seller shall provide
Purchaser with an environmental assessment performed
by a competent professional, and constituting at
least a records search and visual inspection
("Environmental Assessment"), with respect to the
Facilities and the Real Property Owned. The work
product of the Environmental Assessment will be owned
by Seller but the results shall be available to both
Parties.
8.3.2 Confidentiality.
Subject to the Closing, and as an inducement to Purchaser to
execute this Agreement and complete the transactions
contemplated hereby, and in order to preserve the goodwill
associated with the Business, Seller hereby covenants and
agrees that Seller shall not at any time prior to the time of
Closing, except as explicitly requested by Purchaser, disclose
any Confidential Information (as defined in Section 12.1)
concerning the Business other than in the ordinary course of
the Business.
9.0 COVENANTS OF PURCHASER PRIOR TO CLOSING DATE
9.1 Required Actions.
Between the date of this Agreement and the time of Closing, in
Purchaser's conduct of its business, Purchaser shall:
9.1.1 Confidentiality.
Not publish or disclose or use and not authorize or permit any
of its officers, employees, directors, agents or
representatives or any third party to publish
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or disclose or use, except as required by law, any trade
secrets or other Confidential Information or any data or
business or financial books, records or other information of
or pertaining to Seller, which have been furnished to
Purchaser by Seller or to which Purchaser, or any of its
officers, employees, directors, agents, attorneys or
accountants, or any financial institution have had access
during any investigation made in connection with this
Agreement and which is not otherwise available to Purchaser,
and Purchaser shall observe and perform all of its commitments
as set forth in the Confidentiality Agreement.
9.1.2 Advise of Changes.
Advise Seller promptly in writing of any fact which, if known
at the date hereof or at the time of Closing, would have been
required to be set forth or disclosed in or pursuant to this
Agreement, or which would result in the breach in any Material
respect by Purchaser of any of its representations,
warranties, covenants or agreements hereunder.
9.1.3 Compliance with Agreement.
Purchaser shall use commercially reasonable efforts to do all
such acts and take all such measures as may be reasonably
necessary to comply with the representations, agreements,
conditions and other provisions of this Agreement.
9.1.4 Publicity; Advertisement.
Except as required by law or as mutually agreed by the
Parties, not publicize, advertise or announce, and use
commercially reasonable efforts not to permit any of its
officers, directors, employees, agents or representatives to
publicize, advertise or announce, to anyy third party the
entering into of this Agreement, the terms of this Agreement
or the transactions contemplated hereby.
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9.2 Investigation.
Prior to the Closing, Purchaser shall use commercially reasonable
efforts to conduct its investigation of the Business in such a manner
as to prevent disruption of relations with the employees, customers and
suppliers of Seller.
9.3 Approvals; Consents.
Except as otherwise approved by Seller in writing, which approval shall
not be unreasonably withheld, Purchaser shall, and shall cause each of
its Affiliates to, (i) promptly file any notification and make any
payment required of it under the HSR Act relating to the purchase and
sale contemplated hereby with the United States Department of Justice
and the Federal Trade Commission, (ii) respond to inquiries from the
United States Department of Justice and the Federal Trade Commission in
connection with such notification, (iii) request early termination or
waiver of the waiting period under the HSR Act and (iv) assist Seller
in fulfilling its covenants in Section 8.1.7.
10.0 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder are subject to the fulfillment
at the time of Closing of each of the following conditions:
10.1 Accuracy of Representations and Warranties.
Except as affected by transactions contemplated hereby, the
representations and warranties of Seller contained in this Agreement,
the Ancillary Agreements and all other agreements described herein to
which Seller is a party shall be true in all Material respects at and
as of the time of Closing with the same force and effect as though made
at and as of the date hereof. Seller may revise or supplement the
Exhibits or Schedules attached to this Agreement at any time at or
prior to the time of Closing, provided, however, that, except as
provided in Sections 1.20 and 2.1.3, no such revision or supplement
shall be made (A) unless consented to by Purchaser or (B) unless such
revision or supplement shall not (i) individually, (ii) in the
aggregate, with all other revisions or supplements, result in a
Material adverse effect on the Business or the Purchased Assets and
exceed $500,000.
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10.2 Performance of Agreement.
All obligations, agreements and covenants and conditions contained in
this Agreement to be performed or complied with by Seller at or prior
to the time of Closing (considered individually and collectively) shall
have been duly performed and complied with in all Material respects).
10.3 Seller's Certificate.
Purchaser shall have received a certificate from Seller, dated as of
the time of Closing, reasonably satisfactory in form and substance to
Purchaser and its counsel, certifying as to the fulfillment of all
matters specified in Section 10.1 and Section 10.2 hereof.
10.4 Officer's Certificate.
Purchaser shall have received a certificate, dated as of the time of
Closing, of an officer of Seller with respect to the incumbency and
specimen signature of each officer or representative of Seller
executing this Agreement, the certificate referred to in Section 10.3
and the Ancillary Agreements to which Seller is a party.
10.5 Good Standing Certificates.
Purchaser shall have received from Seller certificates from the office
of the Secretary of State of New Jersey with respect to Seller dated
within ten (10) business days before the Closing Date to the effect
that Seller is in good standing under the laws of such state.
10.6 Absence of Proceedings.
Except for items listed or described on Schedule 6.7 or Schedule 6.8,
6.9 or 6.11 that may be continuous in nature, no action, suit or
proceeding before any court or any governmental agency or authority
shall have been commenced or threatened, and no investigation by any
governmental or regulatory authority shall have been commenced or
threatened, against Purchaser, Seller or any of the officers or
directors of each of them, seeking to restrain or prevent the
transactions contemplated hereby, or challenging the validity or
legality of any such transactions,
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or seeking damages in excess of One Hundred Thousand Dollars ($100,000)
in connection with such transactions, or imposing a condition or
restriction that Materially and adversely may affect the Purchased
Assets or the condition or operations of the Business.
10.7 Actions and Proceedings.
All corporate actions, proceedings, instruments and documents required
to carry out the transactions contemplated by this Agreement or
incidental thereto and all other related legal matters shall be
reasonably satisfactory to counsel for Purchaser, and such counsel
shall have been furnished with such certified copies of such corporate
actions and proceedings and such other instruments and documents as it
shall have reasonably requested.
10.8 HSR Act Waiting Period.
Any waiting period applicable to the consummation of the transactions
contemplated by this Agreement under the HSR Act shall have expired or
terminated, and any other statutory requirements for the valid
consummation of the transactions contemplated hereby shall have been
fulfilled.
10.9 Permits and Consents.
Any third party and governmental permits, consents, certificates,
approvals, licenses, waivers, transfers of intellectual property, or
authorizations necessary for the valid consummation of the transactions
contemplated hereby and necessary to operate the Business from and
after Closing shall have been obtained and shall be in full force and
effect. Notwithstanding the foregoing and except for those consents
which are identified on Schedule 1.42 by the Purchaser to require the
receipt of such consent as a condition to Closing, receipt of the
consent of any third party to the assignment of any Lease and Contract
shall not be a condition to Purchaser's obligation to close, provided
that the aggregate of all such Leases and Contracts for which consents
have not been obtained does not represent a substantial portion of the
revenues or expenditures of the Business.
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10.10 Section 1445 Affidavit.
Seller shall have executed and provided to Purchaser a certificate to
the effect that Seller is not a "foreign person," "foreign
corporation," "foreign partnership," "foreign trust," or "foreign
estate" under Section 1445 of the Code and containing all such other
information as is required to comply with the requirements of such
Section 1445.
10.11 Resin Contract.
Seller shall have executed and delivered to Purchaser the Resin Supply
Contract referenced in Section 5.2.8 hereof.
10.12 Proprietary Assets.
Seller shall have executed and delivered to Purchaser the (i)
Technology License Agreement referenced in Section 5.2.5 and (ii)
Trademark Agreements referenced in 5.2.4.
10.13 Required Financial Statements.
Purchaser shall have obtained, at its sole expense, all financial
statements and supporting information, and the unqualified report of
PricewaterhouseCoopers LLP relating thereto, required by Rule 3-05 of
Regulation S-X promulgated by the Securities and Exchange Commission
with respect to Purchaser's acquisition of the. Business. purchaser
agrees to use its commercially reasonable efforts to complete the
process of obtaining such statements, information and report by five
(5) days before Closing, subject to Seller's compliance with Section
8.1.1.
10.14 Key Employees.
(i) Eighty percent (80%) of the Employees listed by Purchaser in a side
letter, dated the date hereof and delivered simultaneously with the
execution of this Agreement (the "Key Employees"), shall have accepted
employment with Purchaser as of the time of Closing and (ii) with
respect to the Sales and Marketing and Technology functional headings
set forth in the side letter, not more than three (3) of the Key
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Employees listed under either one of those two functional headings
shall have declined Purchaser's offer of employment.
10.15 Title Insurance.
Purchaser shall have obtained from Chicago Title Insurance Company
policies of title insurance consistent with the Title Commitments
provided pursuant to Section 8.1.13 hereof, dated the Closing Date, in
face amounts and in form reasonably satisfactory to Purchaser insuring
Purchaser's interest in the Real Property subject only to Permitted
Encumbrances and such other exceptions thereto as are reasonably
satisfactory to Purchaser.
10.16 Assignment of Key Customer Contracts.
Seller (i) shall have assigned to Purchaser the FemCare supply
agreement for Europe and the letter of intent, if any, for North
America between Procter & ▇▇▇▇▇▇ (the "Key Customer") and the Business
upon substantially the same terms (including price and volumes) and
conditions contained in such FemCare supply agreement or letter of
intent (as applicable) on the date hereof, (ii) shall have provided to
the Key Customer any notice required in connection with such
assignments, and (iii) the Key Customer shall not have objected to such
assignment within the applicable time period set forth in such
agreement and letter of intent (if any).
10.17 Seller shall have delivered to Purchaser commercially reasonable
Freedom of Operation or Validity Opinions as listed on Schedule 10.17.
11.0 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligations of Seller hereunder are subject to the fullfillment at
the time of Closing of each of the following conditions:
11.1 Accuracy of Representations and Warranties.
Except as affected by transactions contemplated hereby, the
representations and warranties of Purchaser contained in this
Agreement, the Ancillary Agreements and all other agreements described
herein, to which either is a party shall be true in all
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Material respects on and as of the time of Closing with the same force
and effect as though made on and as of the date hereof.
11.2 Performance of Agreement.
All obligations, agreements and covenants contained in this Agreement
to be performed or complied with by them at or prior to the time of
Closing (considered individually and collectively) shall have been duly
performed and completed within all Material respects.
11.3 Purchaser's Certificate.
Seller shall have received a certificate from Purchaser, dated as of
the time of Closing, reasonably satisfactory in form and substance to
Seller and its counsel, certifying as to the fulfillment of all matters
specified in Section 11.1 and Section 11.2 hereof.
11.4 Officer's Certificate.
Seller shall have received a certificate, dated as of the time of
Closing, of an officer of Purchaser with respect to the incumbency and
specimen signature of each officer or representative of Purchaser
executing this Agreement, the certificate referred to in Section 11.3
and the Ancillary Agreements to which Purchaser is a party.
11.5 Good Standing Certificates.
Seller shall have received from Purchaser certificates from the office
of the State Corporation Commission of the Commonwealth of Virginia
with respect to Purchaser dated within ten (10) business days before
the Closing Date to the effect that Purchaser is in good standing under
the laws of such state.
11.6 Absence of Proceedings.
Except for items listed or described on Schedule 6.7 or Schedule 6.8 or
Schedule 6.9 or Schedule 6.11 that may be continuous in nature, no
action, suit or proceeding before any court or any governmental agency
or authority shall have been commenced or threatened, and no
investigation by any governmental or regulatory authority shall have
been commenced or threatened, against Purchaser, Seller, or
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any of the officers or directors of any of them, seeking to restrain or
prevent the transactions contemplated hereby, or challenging the
validity or legality of any such transactions or seeking damages in
excess of One Hundred Thousand Dollars ($100,000) in connection with
such transactions or imposing a condition or restriction that
Materially and adversely may affect the Purchased Assets or the
condition or operations of the Business.
11.7 Actions and Proceedings.
All corporate actions, proceedings, instruments and documents required
to carry out the transactions contemplated by this Agreement or
incidental thereto and all other related legal matters shall be
reasonably satisfactory to counsel for Seller, and such counsel shall
have been furnished with such certified copies of such corporate
actions and proceedings and such other instruments and documents as it
shall have reasonably requested.
11.8 HSR Act Waiting Period.
Any waiting period applicable to the consummation of the transactions
contemplated by this Agreement under the HSR Act shall have expired or
terminated, and any other statutory requirements for the valid
consummation of the transactions contemplated hereby shall have been
fulfilled.
11.9 Consents.
Any third-party and governmental consents, approvals or authorizations
necessary for the valid consummation of the transactions contemplated
hereby shall have been obtained.
12.0 OBLIGATIONS AFTER THE CLOSING DATE
12.1 Confidentiality.
(a) Unless this Agreement is terminated prior to the time of Closing,
Seller hereby covenants and agrees that for a period of five (5) years
following the Closing Date, except as may be required by law, rule or
regulation or court order, or except as required pursuant to this
Agreement to obtain the consent of a third party, it will not
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reveal, divulge or make known to any Person (other than Purchaser or
its agents or Affiliates) any information as it relates to this
Agreement, the transactions contemplated hereby or the Business,
including, but not limited to, customer lists or other customer
information, marketing plans or proposals, and other items described in
Section 2.1.5, financial information or any data, written material,
written summaries or oral materials, records or documents solely used
by or solely relating to the Business which are of a confidential
nature (collectively, the "Confidential Information"). Confidential
Information includes any such information whether or not such
information was developed, devised or otherwise created in whole or in
part by the efforts of Seller. After the Closing Date, Purchaser shall
continue to observe and perform all its agreements and undertakings set
forth in the Confidentiality Agreement with respect to all Confidential
Information provided by Seller to Purchaser which does not relate
solely and exclusively to the Business, the Purchased Assets or the
Assumed Liabilities. Notwithstanding the above, the obligations of
Seller and Purchaser pursuant to this Section 12.1 shall not extend to
any information which (i) is compelled to be disclosed by judicial or
administrative process (including without limitation in connection with
obtaining the necessary approvals of this Agreement and the
transactions contemplated hereby) or by other requirements of law; (ii)
was already known to Purchaser or Seller at the time of disclosure as
is evidenced by written documentation, except for Seller's obligation
to keep Confidential Information about the Business confidential from
third parties; (iii) is or becomes generally available to the public
other than as a result of disclosure by Purchaser or Seller, as the
case may be; (v) is disclosed by someone who is not bound by a
confidentiality obligation to Purchaser or Seller, as the case may be,
with respect to the information disclosed or (v) nothing in this
Section, however, shall prohibit the use of Confidential Information as
in the reasonable opinion of the Counsel of the Party wishing to do a
filing are necessary or appropriate for a governmental filing, provided
that the Party making such a filing shall give prior notice to the
other Party of such filing.
(b) Each of the parties hereto recognizes that any breach of this
Section would result in irreparable harm to the other party to this
Agreement and therefore either Purchaser or Seller shall be entitled to
an injunction, or any other form of equitable relief, to prohibit any
such breach or anticipated breach without the necessity of
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posting a bond, cash or otherwise, in addition to all of their other
legal and equitable remedies.
12.2 Covenant Not to Interfere.
Seller and Purchaser hereby covenant and agree that, unless this
Agreement is terminated, for a period of five (5) years after the
Closing Date, they will not, whether for their own account or for the
account of any other Person, endeavor to entice away from the other
Party any person who is an employee of such Party (except with the
written permission of the employer or as otherwise specifically
contemplated by this Agreement).
12.3 Transition of Employees.
From and after the Closing Date, Purchaser and Seller shall cooperate
to ensure an orderly transition of the Hired Employees, and the
administration of Seller's and Purchaser's employee benefit plans,
programs and policies.
12.4 Management Assistance by Seller.
Seller shall provide such accounting and other support services to
Purchaser following the Closing Date as are reasonably required in
connection with the transfer of the Business to Purchaser in accordance
with the terms set forth in Schedule 12.4. Seller shall cooperate with
Purchaser's auditors in connection with (i) the preparation of income
statements for the period January 1, 1999 through the Closing Date, a
statement of cash flow for such period and a balance sheet as of the
Closing Date and (ii) the preparation of any report or filing required
in connection with the transactions contemplated hereby, such
cooperation to be provided by Seller at no cost to Purchaser. Seller
shall not, however, be required to disclose to Purchaser any of
Seller's Proprietary Information.
12.5 Further Assurances of Seller.
Seller shall execute, acknowledge and deliver to Purchaser, without
further consideration, all such further assignments, conveyances,
endorsements, deeds, special powers of attorney, consents and other
documents, and take such other action, as Purchaser may reasonably
request (i) to transfer to and vest in Purchaser,
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and protect its rights, title and interest in, all the Purchased Assets
and (ii) otherwise to consummate the transactions contemplated by this
Agreement. In addition, from and after the Closing Date, Seller shall
afford to Purchaser and its attorneys, accountants and other
representatives access, during normal business hours, to any books and
records relating to the Business that Seller may retain as may
reasonably be required in connection with the preparation of financial
information or tax returns of Purchaser. Subject to Section 12.4,
Purchaser shall reimburse Seller for all reasonable out-of-pocket costs
and expenses paid to third parties whose assistance is requested by
Purchaser pursuant to this Section 12.5.
12.6 Further Assurances of Purchaser.
From and after the Closing Date, Purchaser shall afford to Seller and
its attorneys, accountants and other representatives access, during
normal business hours, to such books and records relating to the
Business as may reasonably be required. Purchaser shall cooperate in
all reasonable respects with Seller with respect to its former interest
in the Business and in connection with financial account closing and
reporting, and claims and litigation asserted by or against third
parties, including, but not limited to, making employees available to
assist with, or provide information in connection with, financial
account closing and reporting and claims and litigation, provided, that
Seller reimburses Purchaser for its reasonable out-of- pocket expenses
in connection therewith.
12.7 Retention of and Access to Records; Cooperation.
For a period of not less than ten (10) years after the Closing Date,
Purchaser shall preserve and retain the corporate, accounting, legal,
auditing and other books and records of the Business (including, but
not limited to, any environmental records, disposal manifests and other
disposal records, governmental or non-governmental actions, suits,
proceedings or investigations arising out of the conduct and operations
of the Business prior to the Closing Date); provided, however, that
such ten (10)-year period shall be extended in the event that any
action, suit, proceeding or investigation has been commenced or is
pending or threatened at the termination of such ten (10)-year period
and such extension shall continue until any such action, suit,
proceeding or investigation has been settled through judgment or
otherwise or is no longer pending or threatened. Notwithstanding the
foregoing, Purchaser may discard or
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destroy any of such books and records prior to the end of such ten-year
period or period of extension, if applicable, if it has given Seller
sixty (60) days' prior written notice of its intent to do so and Seller
has not taken possession of such books and records, at its expense,
within such sixty (60)-day period. Notwithstanding anything to the
contrary in this Section 12.7, Seller shall retain all tax records of
the Business prepared prior to the Closing Date. Purchaser shall
provide reasonable access to Seller to review any records that
Purchaser retains and to make copies thereof and shall cooperate fully
with Seller (including, without limitation, making available employees
to assist Seller at reasonable rates to be agreed by the Parties) in
preparation and documentation of all necessary financial statements,
tax returns and reports, or the resolution of any tax audits, claims,
litigation or disputes concerning Seller's tax liabilities or the
Assumed Liabilities or for any other reasonable business purpose. In
the event Purchaser sells or otherwise transfers the Business before
the tenth (10th) anniversary of the Closing Date, Purchaser agrees to
include in the documents transferring such Business a provision
obligating the new purchaser or transferee to abide by these
provisions.
12.8 Name.
As soon as reasonably practicable after the Closing Date, but in no
event later than thirty (30) days after the Closing Date in the case of
exterior signs and office and lobby suite signs and sixty (60) days
after the Closing Date for the other matters covered by this paragraph,
Purchaser shall remove from all of the Purchased Assets (unless agreed
to by Seller or as set forth in the Existing Inventory License) all
signs and other materials containing the name "Exxon" or any variant
thereof, and make any requisite filings with, and provide any requisite
notices to, the appropriate federal, state or local agencies to place a
title or other indicia of ownership in a name other than Exxon. Except
as provided in the preceding sentence or the Existing Inventory
License, at no time after the Closing Date shall Purchaser use the name
referenced above. Purchaser may use existing Inventory only as set out
in the Existing Inventory License attached hereto as Exhibit 5.2.7.
12.9 Accounts Receivable Payment.
In the event that either Party receives any funds from any third party
that are properly payable to the other Party, the Party receiving such
funds shall promptly remit (and in
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no event more than five (5) Business Days) such funds to the Party
entitled to such funds.
12.10 Rebates.
To the extent not already reflected on the Adjusted Working Capital
Worksheet any and all rebates paid on assigned Contracts and Leases
will be prorated between the Purchaser and Seller, and settled up
within thirty (30) days of receipt of such rebate.
12.11 Access for Remediation.
12.11.1 For so long as Seller's indemnification with respect to any
Seller Environmental Liabilities shall be in effect, Purchaser
shall provide to Seller a copy of all information or reports
that are provided by Purchaser to any federal, state or local
agency, with regard to any matter related to Regulated
Substances that may constitute or result in Seller
Environmental Liabilities. Purchaser shall promptly provide to
Seller copies of all reports or other information (including
photographs) prepared, produced or obtained by Purchaser
relating to any such matter.
12.11.2 To the extent necessary or reasonably desirable with respect
to potential or actual Seller Environmental Liabilities,
Purchaser shall afford Seller, its employees, agents and
contractors, and all governmental employees, agents and
contractors having jurisdiction over the Real Property and/or
Facilities, for no additional consideration, reasonable access
to and rights to investigate the Real Property and the
Facilities (including, but not limited to, the right to enter
upon the Real Property and into the Facilities; take
photographs; drill, monitor and pump ▇▇▇▇▇; take soil borings;
test wastes and any other materials or substances; excavate,
cap and use available land for the testing and implementation
of remedial technologies; interview Purchaser's employees; and
inspect and copy all relevant documents and records relating
to any matter for which Seller has, or is alleged to have,
responsibility). However, except to the extent prohibited by
applicable law or regulatory action, the following conditions
and agreements shall apply with respect to the foregoing: (i)
no entry or investigation upon such property shall be made
except during normal business hours and then only
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upon at least five (5) business days' notice to Purchaser;
(ii) Purchaser shall be entitled to require that any persons
entering upon such property shall be accompanied by
representatives of Purchaser at all times; (iii) intrusive
investigations, such as well-drilling or soil boring or
testing of any substances, shall be permitted only to the
extent that they do not Materially interfere with the
operations of the Business, upon demonstrated reasonable
cause, and upon such bases and to such extent as are consented
to by Purchaser, such consent not to be unreasonably withheld;
(iv) any samples taken shall be split between Purchaser's and
Seller's representatives if so requested by Purchaser; (v)
Seller shall provide to Purchaser within five (5) days after
receipt thereof a copy of any report or other written
information delivered to Seller by any representative thereof
or governmental representative with regard to any
investigations or other activities of such representative upon
the property of the Business or the results of such
investigations or other activities; and (vi) to the extent the
condition of any of the Business' property is disturbed in any
Material respect as a result of any such activities, Seller
shall cause the property to be restored to substantially its
condition prior to the occurrence of such activities. Seller
shall indemnify Purchaser with respect to any personal injury
or property damage arising from the exercise of Seller's
rights under this Section 12.11.2, except to the extent caused
by Purchaser's negligence.
Subject to the availability of capacity and Purchaser's
reasonable constraints to protect health and safety and
minimize business disruption, and provided that Seller's
activities are legally permitted and do not unreasonably
interfere with Purchaser's operations, Purchaser shall make
available, and allow Seller to have access to its facilities
and use of its utilities on the Real Property for the purpose
of Seller's activities in discharge of its obligations and
liabilities under this Section 12.11. Within thirty (30) days
after billing, Seller shall reimburse Purchaser for its out-
of-pocket costs.
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12.12 Exxon/Ancon Policies.
No claims regarding any matter whatsoever, whether or not arising from
events occurring prior to Closing, shall be made by Purchaser, its
successors or assigns, against or with respect to any Exxon/Ancon
Policy, regardless of such Exxon/Ancon Policy's date of issuance.
12.13 Return of Excluded Manuals, Documents and other Media.
If Purchaser discovers, finds or comes into possession of any of
Seller's proprietary manuals, documentation or other media excluded
from this Agreement and not assigned or transferred to Purchaser,
Purchaser shall treat such materials as confidential, not copy or use
the materials in any way, and immediately return the materials to
Seller.
12.14 Noncompetition.
Seller agrees that, for a period of five (5) years from the Closing
Date, it will not, directly or indirectly, by itself or through
Affiliates, manufacture or sell, or act as an agent for any Person that
manufactures or sells, Film Products or film products generally
considered within the industry to be competitive with Film Products;
provided that, Seller may acquire or merge with a business or
manufacturing operation, an ancillary portion of which produces or
sells products which compete with Film Products (an "Ancillary
Business"); and provided further, that Seller and its Affiliates shall
be permitted to purchase or resell films that are used as an ancillary
portion of their business, by way of example and not by way of
limitation on wrapping of pallets or boxes of products; and provided
further, that this noncompetition obligation shall not apply to
activities of Telasto for six (6) months after Closing, during which
▇▇▇▇ ▇▇▇▇▇▇ shall divest Seller's entire interest in Telasto; and
provided further, that if Tonen Corporation becomes an Affiliate of
Seller, this noncompetition obligation shall not apply to activities of
any Tonen Affiliate as conducted by such Tonen Affiliate at the time
Tonen Corporation becomes an Affiliate of Seller; provided, however,
that Tonen Affiliates' activities that would be covered by this Section
12.14 are not expanded beyond the products and geographic scope that
exists at the time Tonen Corporation becomes an Affiliate of Seller.
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12.15 Enforcement of Secrecy Agreements with Non-hired Employees.
Seller shall use its commercially reasonable best efforts and shall
assist Purchaser in its efforts to enforce the confidentiality
provisions of all agreements relating to the Business or Purchased
Assets of all agreements between Seller and each Employee who is not
hired by Purchaser.
12.16 Liquidation Proceeds.
Upon the liquidation or other divestiture by Seller of its interest in
Telasto, Seller shall pay to Purchaser, within thirty (30) calendar
days of Seller's receipt thereof, fifty percent (50%) of the net
proceeds received by Seller as a result of such liquidation or
divestiture.
13.0 TERMINATION
13.1 Termination of Agreement.
This Agreement may be terminated:
(i) by the mutual consent of Seller and Purchaser;
(ii) by Seller or Purchaser if the Closing has not taken place on
or before June 15, 1999; provided, however, that no Party then
in breach of any obligations hereunder shall have the right to
so terminate;
(iii) by Seller or Purchaser if any bona fide action or proceeding
shall be pending against either Party at the time of Closing
that could result in an unfavorable judgment, decree or order
that would prevent or make unlawful the performance of this
Agreement and such action or proceeding has not been dismissed
or resolved within thirty (30) days after the Closing Date;
(iv) by Seller or Purchaser if any agency of the federal or of any
state government shall have objected at or before the time of
Closing to the acquisition contemplated herein or to any other
action required by, or in connection with, this Agreement;
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(v) by Purchaser if, at the time of Closing, any of the conditions
set forth in Article 10.0 hereof have not been met or have not
been waived by Purchaser;
(vi) by Seller if, at the time of Closing, any of the conditions
set forth in Article 11.0 hereof have not been met or have not
been waived by Seller;
(vii) by Seller if FTC approval has not been granted within
seventy-five (75) days of the date on which the last of
Purchaser's or Seller's HSR filing is made; and
(viii) by Seller or Purchaser if the other Party to this Agreement
has breached a covenant or obligation under this Agreement and
such breach has not been waived.
13.2 Return of Documents.
If this Agreement is terminated for any reason pursuant to this Article
13.0, each Party shall return to the other Party all documents and
copies thereof which shall have been furnished to it by such other
Party or, with the agreement of the other Party, shall destroy all such
documents and copies thereof and certify in writing to the other Party
any such destruction.
13.3 Limitations on Remedies.
In the event of any termination of this Agreement as provided in this
Article 13.0, this Agreement shall forthwith become wholly void and of
no further force or effect and there shall be no liability on the part
of Purchaser, Seller or their respective officers or directors, except
that the provisions of Sections 9.1.1, 13.2, 15.1, and 15.12 shall
remain in full force and effect. If this Agreement is terminated by
Seller or Purchaser as permitted under Section 13.1 and not as a result
of the negligent or willful failure of either Party to perform its
obligation hereunder, such termination shall be without liability of
either Party or any shareholder, director, officer, employee, agent or
representative of such Party. If any condition precedent to Purchaser's
obligation is not met and such condition is set forth on Schedule 7.7
or Purchaser otherwise waives in writing such condition on or prior to
the time of Closing, Seller shall have no liability or obligation
whatsoever to Purchaser by reason of any act or omission of Seller, or
by reason of its breach of any representation, warranty, covenant or
agreement set forth herein, solely as such act, omission or breach
relates to the
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failure of such condition precedent. If any condition precedent to
Seller's obligation is not met and Seller waives in writing such
condition on or prior to the time of Closing, Purchaser shall have no
liability or obligation whatsoever to Seller by reason of any act or
omission of Purchaser, or by reason of its breach of any
representation, warranty, covenant or agreement set forth herein,
solely as such act, omission or breach relates to the failure of such
condition precedent.
14.0 SCOPE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
14.1 Scope and Survival of Representations and Warranties.
14.1.1 Except as and to the extent set forth in Sections 6.1 through
6.26 inclusive, or specifically set forth in other Transaction
Documents or Technology License Agreement executed or
delivered by Seller, Seller makes no other representations or
warranties whatsoever, and disclaims all liabilities and
responsibilities for any representation, warranty, statement
or information made or communicated (orally or in writing) to
Purchaser (including, but not limited to, any opinion,
information or advice which may have been provided to
Purchaser by any officer, shareholder, director, employee,
agent, consultant or representative of Seller or by Seller's
counsel or any other agent, consultant or representative)
other than any intentional misrepresentation or statement
furnished to Purchaser by any of such persons not subsequently
corrected by any of such persons. All representations and
warranties of Seller set forth in Sections 6.1, 6.2, 6.3 and
6.6 and of Purchaser set forth in Sections 7.1, 7.2 and 7.3
shall survive until two (2) years after the Closing Date. All
other representations and warranties of the Parties shall
survive until eighteen (18) months after the Closing Date
(other than those in Section 6.18, which shall survive until
sixty (60) days after the expiration of the applicable period
of limitations (including any extensions thereof) for the
assessment of Taxes. There shall be no termination of any
representation or warranty as to which a bona fide claim has
been asserted prior to the termination of the relevant
survival period, but only with respect to such claim. Except
as otherwise expressly provided in this Agreement, all
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covenants, agreements, undertakings and indemnities set forth
in this Agreement shall survive indefinitely.
14.2 Indemnification by Seller.
"Seller General Liabilities" shall mean all Losses (other than
Environmental Loss which shall be governed by Section 14.6 and other
than those related, directly or indirectly, to intellectual property as
described in Section 2.2 which shall be governed solely by the
Technology License Agreement) resulting from, arising out of, or
incurred by any of Purchaser or its Affiliates, any of their officers
and directors, or any of their respective successors or assigns (each a
"Purchaser Indemnified Party") after the Closing Date in connection
with (i) any breach of any of the representations or warranties made by
Seller in any of the Transaction Documents, excluding the Technology
License Agreement; and (ii) any default by Seller in respect of any of
the covenants or agreements made by Seller in any of the Transaction
Documents, excluding the Technology License Agreement; and, (iii) any
Retained Liability or any attempt (whether or not successful) by any
Person to cause or require Purchaser to pay or discharge any Retained
Liability. Subject to the provisions of Section 13.3 and to the further
provisions of this Article 14.0, Seller covenants and agrees with
Purchaser that Seller shall pay, and shall indemnify all Purchaser
Indemnified Parties, and hold them harmless from, against and in
respect of, any and all Seller General Liabilities. For purposes of
determining Losses based upon clause (i) of this Section, any
"Material" qualifier contained in any representation or warranty
referrenced in such clause (i) shall be disregarded, so that such
Losses shall be recoverable (subject to any other limitations contained
in this Article 14.0) in full and not only to the extent of any excess
over the $100,000 "Material" threshold.
14.3 Limitations on Seller's Obligation to Indemnify.
14.3.1 Seller shall have no obligation to indemnify any Purchaser
Indemnified Party for any Loss based upon: (a) clause (i) of
Section 14.2 as to which Seller has not received notice of a
claim to indemnification within eighteen months after the
Closing Date, except for claims to indemnify any Purchaser
Indemnified Party (i) based on a
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breach of the representations and warranties in Sections 6.1,
6.2, 6.3 and 6.6 for which the period during which notice of
claims must be given will be two (2) years following the
Closing Date, or (ii) based on a breach of a representation or
warranty in Section 6.18 for which the period during which
notice of claims must be given will be sixty (60) days after
the expiration of the applicable period of limitations
(including any extensions thereof) for the assessment of
Taxes; or (b) clause (ii) of Section 14.2 as to which Seller
has not received notice of a claim to indemnification within
one (1) year after the expiration date, if any, of such
covenant. Notwithstanding anything in this Agreement to the
contrary, Section 14.6 sets out the controlling notice
required for indemnification of Purchaser Environmental Loss.
14.3.2 Subject to Section 14.6 (which shall provide the sole and
exclusive indemnification obligation of Seller for the matters
covered therein), the aggregate indemnification liability of
Seller for any Loss based upon clause (i) of Section 14.2
shall not exceed fifteen percent (15%) of the Purchase Price
less the sum of any amounts recovered from Seller pursuant to
the indemnification provisions of the Technology License
Agreement and Section 14.6.1 that in the aggregate exceed 10%
of the Purchase Price. It is agreed by the parties hereto that
the aggregate obligation of Seller under this Section, Section
14.6.1 and the Technology License Agreement shall not exceed
25% of the Purchase Price.
14.3.3 Seller shall have no indemnification obligation to any
Purchaser Indemnified Party for any Loss based upon a breach
of clauses (i) or (ii) of Section 14.2 unless and until the
total amount of all such Losses based upon clauses (i) and
(ii) of Section 14.2 for which Seller shall have been finally
determined to have an indemnification obligation to all
Purchaser Indemnified Parties shall exceed One Million Dollars
($1,000,000), and then only to the extent of the amount of
such excess.
14.3.4 Notwithstanding anything to the contrary in Section 14.3.2 or
Section 14.3.3, any breach of the representations and
warranties in Section 6.8 and 6.26 that constitutes a
Purchaser Environmental Loss shall be governed solely and
exclusively by the indemnification provisions contained in
Section 14.6.
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14.3.5 No amount shall be recovered from Seller for the breach or
untruth of any of Seller's representations or warranties to
the extent that Purchaser had Knowledge of such breach or
untruth at or prior to the time of Closing.
14.3.6 Notwithstanding anything to the contrary in this Article 14.0,
Seller shall have an absolute obligation to make the payments
and satisfy its obligations under Sections 3.4, 3.5, 4.5, 4.6,
clause (iii) of 14.2, 15.1 and 15.5 of this Agreement without
regard to the time and monetary limitations of this Article
14.0.
14.4 Indemnification by Purchaser.
"Purchaser General Liabilities" shall mean all Losses (other than
Environmental Loss which shall be governed by Section 14.6) resulting
from, arising out of, or incurred by any of Seller or its Affiliates,
any of their officers and directors, or any of their respective
successors or assigns (each a "Seller Indemnified Party") after the
Closing Date in connection with (i) any breach of any of the
representations or warranties made by Purchaser in this Agreement, (ii)
any default by Purchaser in respect of any of the covenants or
agreements made by Purchaser in the Transaction Documents , (iii) any
Assumed Liability or any attempt (whether or not successful) by any
Person to cause or require Seller to pay or discharge any Assumed
Liability; (iv) any claim made after the Closing against or with
respect to any of the Exxon/Ancon Policies, regardless of said
Exxon/Ancon Policy's date of issuance, by Purchaser, its successors or
assigns; or (v) any liability arising out of or related to the
operation of the Business after the Closing Date, other than Retained
Liabilities. Subject to the provisions of Section 13.3 and to the
further provisions of this Article 14.0, Purchaser covenants and agrees
with Seller that Purchaser shall pay, and shall indemnify all Seller
Indemnified Parties, and hold them harmless from, against and in
respect of, any and all Purchaser General Liabilities.
14.5 Limitations on Purchaser's Obligation to Indemnify.
14.5.1 Purchaser shall have no obligation to indemnify any Seller
Indemnified Party for any Loss based upon: (a) clause (i) of
Section 14.4 as to which Purchaser has not received notice of
a claim to indemnification within eighteen months after the
Closing Date, except for claims to indemnify any Seller
Indemnified
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Party based on a breach of the representations and warranties
in Sections 7.1, 7.2 and 7.3 for which the period during which
notice of claims must be given will be two (2) years after the
Closing Date; or (b) clause (ii) of Section 14.4 as to which
Purchaser has not received notice of a claim to
indemnification within one year after the expiration date, if
any, of such covenant. Notwithstanding anything in this
Agreement to the contrary, Section 14.6 sets out the sole
notice requirements for indemnification of Seller
Environmental Loss.
14.5.2 Purchaser shall have no indemnification obligation to any
Seller Indemnified Party for any Loss based upon clauses (i)
and (ii) of Section 14.4 unless and until the total amount of
all Losses listed under clauses (i) and (ii) of Section 14.4
for which Purchaser shall have been finally determined to have
an indemnification obligation to all Seller Indemnified
Parties shall exceed One Million Dollars ($1,000,000), and
then only to the extent of the amount of such excess. Subject
to Section 14.6.3 (which shall provide the sole and exclusive
indemnification obligation of Purchaser for the matters
covered therein), the aggregate indemnification liability of
Purchaser for any Loss based upon clause (i) of Section 14.4
shall not exceed fifteen percent (15%) of the Purchase Price
less the sum of any amounts recovered from Purchaser pursuant
to the indemnification provisions of the Technology License
Agreement and Section 14.6.3 that in the aggregate exceed 10%
of the Purchase Price. It is agreed by the parties hereto that
the aggregate obligation of Purchaser under this Section,
Section 14.6.3 and the Technology License Agreement shall not
exceed 25% of the Purchase Price.
14.5.3 No amount shall be recovered from Purchaser for the breach or
untruth of any of Purchaser's representations or warranties to
the extent that Seller or any of its Affiliates had Knowledge
of such breach or untruth at or prior to the time of Closing.
14.5.4 Notwithstanding anything to the contrary set forth in this
Article 14.0, Purchaser shall have an absolute obligation to
make the payments and satisfy its obligations under Sections
3.2.1, 3.4, 3.5, 3.7, 4.3, 4.4, 4.5, 4.6, clauses
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(iii), (iv) and (v) of Section 14.4 and 15.1 of this Agreement
without regard to the time and monetary limitations of this
Article 14.0.
14.6 Environmental Indemnification.
14.6.1 "Seller Environmental Liabilities" shall mean all Losses
incurred by any Purchaser Indemnified Party after the Closing
Date (i) following discovery of a Regulated Substance on or
beneath the Real Property in connection with the release,
placement or deposit, prior to the Closing Date, of the
Regulated Substance on, from or beneath the Real Property or
(ii) as a result of Seller's release, placement, disposal or
arranging for disposal of a Regulated Substance from the Real
Property at an offsite location prior to the Closing Date or
(iii) as a result of Seller's non-compliance with
Environmental Law prior to the Closing Date ("Purchaser
Environmental Loss"). Subject to the provisions of Section
14.7, Seller covenants and agrees with Purchaser that Seller
as set out below, shall indemnify all Purchaser Indemnified
Parties, and hold them harmless, from and against any and all
Seller Environmental Liabilities. For purposes of determining
Seller Environmental Liabilities under this Section 14.6,
"Environmental Law" and "Regulated Substance" as such terms
are used in the definition of Purchaser Environmental Loss
shall be limited to Environmental Law in effect as of, and
Regulated Substances as such, on the Closing Date.
14.6.2 (a) Seller shall have no obligation to indemnify any Purchaser
Indemnified Party for Losses due to any Regulated Substance,
or any portion thereof, which is placed or deposited on or
beneath the Real Property Owned or Leased after the Closing
Date.
(b) Seller's aggregate liability for Seller Environmental
Liabilities shall not exceed five percent (5%) of the
Purchase Price, less the sum of any amounts recovered
from Seller pursuant to the indemnification
provisions of the Technology License Agreement and
Section 14.3.2 that in the aggregate exceed 20% of
the Purchase Price. It is agreed by the parties
hereto that the aggregate obligation under this
Section, Section 14.3.2 and the Technology License
Agreement shall not exceed 25% of the Purchase Price.
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(c) Subject to the five percent (5%) limitation set forth
in Section 14.6.2(b), Seller's duty of
indemnification for any Seller Environmental
Liabilities shall be further limited as follows:
(i) Where notice of claim for indemnification is
received by Seller within twelve (12) months
after the Closing Date, Seller shall
indemnify for one hundred percent (100%) of
Purchaser Environmental Loss; even if costs
are actually incurred more than twelve (12)
months following the Closing Date;
(ii) Where notice of claim for indemnification is
received by Seller between twelve (12) to
twenty-four (24) months after the Closing
Date, Seller shall indemnify for
seventy-five percent (75%) of Purchaser
Environmental Loss, even if costs are
actually incurred more than twenty-four (24)
months following the Closing Date;
(iii) Where notice of claim for indemnification is
received by Seller between twenty-four (24)
and thirty-six (36) months after the Closing
Date, Seller shall indemnify for fifty
percent (50%) of Purchaser Environmental
Loss, even if costs are actually incurred
more than thirty-six (36) months following
the Closing Date;
(iv) Where notice of claim for indemnification is
received by Seller between thirty-six (36)
and forty-eight (48) months after the
Closing Date, Seller shall indemnify for
twenty-five percent (25%) of any Purchaser
Environmental Loss, even if costs are
incurred more than forty-eight (48) months
following the Closing Date; and
(v) Where notice of claim for indemnification is
received by Seller more than forty-eight
(48) months following the Closing Date,
Seller shall have no obligation to indemnify
for any Purchaser Environmental Loss.
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(d) Subject to the further provisions of this Section
14.6.2, Seller shall indemnify Purchaser to the
extent Purchaser incurs reasonable costs to mitigate
emergency situations, to respond to judicial orders
or to obtain immunity from further enforcement, which
reasonably appear to be potential Seller
Environmental Liabilities, provided however, that
Purchaser shall promptly notify Seller of its intent
to undertake such mitigation.
14.6.3 "Purchaser Environmental Liabilities" shall mean all Losses
incurred by any Seller Indemnified Party after the Closing
Date (i) following discovery of a Regulated Substance on or
beneath the Real Property in connection with the placement,
release or deposit after the Closing Date, of the Regulated
Substance on, from or beneath the Real Property (ii) as a
result of Purchaser's release, placement, disposal or
arranging for disposal of a Regulated Substance from the Real
Property at an offsite location, after the Closing Date or
(iii) as a result of Purchaser's non-compliance with
Environmental Laws on or after the Closing Date ("Seller
Environmental Loss"). Subject to the provisions of this
Section 14.7, Purchaser covenants and agrees with Seller that
Purchaser shall pay, and shall indemnify all Seller
Indemnified Parties, and hold them harmless from and against
any and all Purchaser Environmental Liabilities regardless of
when notice of the claim is given by Seller. For the purposes
of determining Purchaser Environmental Liabilities arising
under this Section 14.6, "Environmental Law" and "Regulated
Substance" as such terms are used in the definition of Seller
Environmental Loss shall be limited to Environmental Law in
effect as of and Regulated Substances treated as such on the
date of the claim.
14.6.4 (a) Purchaser shall have no obligation to indemnify any Seller
Indemnified Party for Losses due to any Regulated Substance,
or any portion thereof, which was placed or deposited on or
beneath or released from the Real Property Owned or Leased
prior to the Closing Date.
(b) Purchaser's aggregate liability for Purchaser
Environmental Liabilities shall not exceed five
percent (5%) of the Purchase Price, less the sum of
any amounts recovered from Purchaser pursuant to the
indemnification provisions of the Technology License
Agreement and
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Section 14.5.2 that in the aggregate exceed 20% of
the Purchase Price. It is agreed by the parties
hereto that the aggregate obligation under this
Section, Section 14.5.2 and the Technology License
Agreement shall not exceed 25% of the Purchase Price.
(c) Subject to five percent (5%) limitation set forth in
Section 14.6.4(b), Purchaser's duty of
indemnification for any Purchaser Environmental
Liabilities shall be further limited as follows:
(i) Where notice of claim for indemnification is
received by Purchaser within forty-eight
(48) months after Closing Date, Purchaser
shall indemnify for one hundred percent
(100%) of Seller Environmental Loss; even if
costs are actually incurred more than
forty-eight (48) months following the
Closing Date.
(ii) Where notice of claim for indemnification is
received by Purchaser more than forty-eight
(48) months following the Closing Date,
Purchaser shall have no obligation to
indemnify for any Seller Environmental Loss.
14.7 Procedures for Indemnification.
14.7.1 Each Indemnified Party shall promptly give notice hereunder to
the indemnifying party after becoming aware of any claim as to
which recovery may be sought against the indemnifying party
because of the indemnity in this Article 14.0, and, if such
indemnity shall arise from the claim of a third party, so long
as the indemnifying party assumes liability (as between the
Parties) for such claim, the Indemnified Party shall permit
the indemnifying party to assume the defense of any such claim
and any litigation or other proceeding resulting from such
claim; provided that any indemnifying party and any
Indemnified Party may, in any event, at its own expense,
monitor the defense of any such claim or litigation.
Notwithstanding the foregoing, the right to indemnification
hereunder shall not be affected by any failure of an
Indemnified Party to give such notice (or by delay by an
Indemnified Party in giving such notice) unless, and then only
to the extent that, the rights and remedies of the
indemnifying party shall have been prejudiced as a result of
the
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failure to give, or delay in giving, such notice. The notice
required hereunder shall specify the basis for the claim for
indemnification and the Indemnified Liabilities arising
therefrom to the extent ascertainable at the time of the
notice. Failure by an indemnifying party to notify an
Indemnified Party of its election to defend any such claim or
action by a third party within twenty-one (21) days after
notice thereof shall have been given to the indemnifying party
shall be deemed a waiver by the indemnifying party of its
right to defend such claim or action. Notwithstanding the
foregoing, the indemnifying party may, at its own expense,
monitor the defense of any such claim or action.
14.7.2 The indemnifying party shall not, in the defense of such claim
or any litigation resulting therefrom, consent to entry of any
judgment (other than a judgment of dismissal on the merits
without costs) or enter into any settlement, except with the
written consent, which consent shall not be unreasonably
withheld, of the Indemnified Party, which does not include as
an unconditional term thereof the giving by the claimant or
the plaintiff to the Indemnified Party a release from all
liability in respect of such claim or litigation.
14.7.3 If the indemnifying party shall not assume the defense of any
such claim by a third party, or litigation resulting
therefrom, after receipt of notice from the Indemnified Party,
the Indemnified Party may defend against such claim or
litigation in such manner as it deems appropriate.
14.7.4 If an indemnifying party shall not, within thirty (30) days
after its receipt of the notice required by Section 14.7.1
hereof, advise the Indemnified Party that the indemnifying
party denies or disputes the right of the Indemnified Party to
indemnity in respect of the claim, then the amount of such
claim, if specified, shall be deemed to be finally determined
between the Parties hereto in the amount of such claim. If the
indemnifying party shall notify the Indemnified Party that it
denies or disputes any claim made by the Indemnified Party,
then the Parties hereto shall endeavor to settle and
compromise such claim, and if unable to agree on any
settlement or compromise, such claim for indemnification shall
be settled by appropriate litigation, and any liability
established by reason of such settlement, compromise or
litigation shall be deemed to be finally determined. Any claim
that is finally determined in the
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manner set forth above shall be paid promptly by the
indemnifying party in cash.
15.0 GENERAL
15.1 Expenses.
Except as otherwise provided in this Agreement, and whether or not the
transactions herein contemplated shall be consummated, Purchaser and
Seller shall pay their own fees, expenses and disbursements, including
the fees and expenses of their respective counsel, accountants and
other experts, in connection with the subject matter of this Agreement
and all other costs and expenses incurred in performing and complying
with all conditions to be performed under this Agreement.
15.2 Waivers.
The waiver by either Party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach.
15.3 Binding Effect; Benefits.
This Agreement shall inure to the benefit of the Parties hereto, and
shall be binding upon the Parties hereto and their respective
successors and assigns. Except as otherwise set forth herein, nothing
in this Agreement, express or implied, is intended to confer on any
Person other than the Parties hereto, or their respective successors
and assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
15.4 Notices.
15.4.1 All notices, requests, demands, elections and other
communications which either Party may desire or be required to
give hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, by a reputable
courier service which requires a signature upon delivery, by
mailing the same by registered or certified first class mail,
postage prepaid, return receipt requested, or by telecopying
with receipt confirmation (followed by a first class mailing
of the same) to the Party to whom the same is so given or
made. Such notice, request, demand, waiver, election or other
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communication will be deemed to have been given on the earlier
of the date so delivered or electronically transmitted or
seven (7) days after mailing thereof.
15.4.2 If to Seller, to:
Exxon Chemical Company
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice-President, Polyolefins Americas
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Exxon Chemical Company
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Attorney-Special Projects
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
15.4.3 If to Purchaser, to:
Tredegar Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Hunton & ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, III, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as either Party shall have specified by notice
to the other Party hereto.
15.5 Bulk Transfers Laws.
Purchaser hereby waives compliance by Seller with the provisions of any
applicable bulk transfers laws of any U.S. jurisdiction (including
Section 1403 of Title 72 of the Pennsylvania Consolidated Statutes and
Section 5/902(d) and 120/5j of Chapter 35 of the Illinois Compiled
Statutes). Seller shall promptly pay and discharge when due, or contest
or litigate all claims of creditors that are asserted against Purchaser
by
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reason of Seller's non-compliance with such laws provided that the
foregoing shall not affect in any way Purchaser's obligations with
respect to the Assumed Liabilities and agrees to indemnify and hold
Purchaser harmless from and against and shall reimburse Purchaser for
any and all Losses suffered by Purchaser by reason of Seller's failure
to pay and discharge any such claims.
15.6 Like-Kind Exchange.
In the event Seller so elects and notifies Purchaser before the Closing
Date, Purchaser agrees to accommodate Seller in effecting a
tax-deferred exchange under Internal Revenue Code Section 1031 of all
or part of the Purchased Assets. Purchaser shall execute such escrow
instructions, documents, agreements or instruments to effect an
exchange as Seller may reasonably request. Seller may assign its rights
and delegate its duties under this Agreement to an exchange
intermediary selected by Seller, as necessary to effect a tax-deferred
exchange. Notwithstanding the foregoing, Purchaser's obligations under
this Section 15.6 shall not require it to incur any cost, expense, or
liability, and Seller shall indemnify Purchaser against and hold
Purchaser harmless from any cost, expense, or liability incurred in
connection with this Section 15.6.
15.7 Entire Agreement.
This Agreement (including the Exhibits and Schedules hereto) and the
documents delivered pursuant hereto constitute the entire agreement and
understanding between the Parties hereto as to the matters set forth
herein and supersede and revoke all prior agreements and
understandings, oral and written, between the Parties hereto or
otherwise with respect to the subject matter hereof, but not including
the Confidentiality Agreement and any other agreements executed between
the Parties of even date herewith or hereafter. No change, amendment,
termination or attempted waiver of any of the provisions hereof shall
be binding upon any Party unless said act is in writing signed by the
Party to be bound by its respective successors in interest.
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15.8 Counterparts.
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
15.9 Headings.
The article, section and other headings contained in this Agreement are
for reference purposes only and shall not be deemed to be a part of
this Agreement or to affect the meaning or interpretation of this
Agreement.
15.10 Construction.
Within this Agreement, the singular shall include the plural and the
plural shall include the singular, and any gender shall include all
other genders, all as the meaning and the context of this Agreement
shall require.
15.11 Exhibits and Schedules.
All Exhibits and Schedules hereto have been delivered by the Parties to
each other previously or simultaneously herewith.
15.12 Governing Law and Choice of Forum.
THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (EXCEPT FOR ANY LAW WHICH WOULD MAKE THE LAWS OF ANY OTHER
JURISDICTION APPLICABLE). ALL CLAIMS, DISPUTES OR CAUSES OF ACTION
(WITH THE EXCEPTION OF THOSE TO BE ARBITRATED IN ACCORDANCE WITH
SECTION 3.4.3) RELATING TO OR ARISING OUT OF THIS AGREEMENT SHALL BE
BROUGHT, HEARD AND RESOLVED SOLELY AND EXCLUSIVELY BY AND IN A FEDERAL
OR STATE COURT SITUATED IN NEW YORK, NEW YORK. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF SAID COURTS AND FURTHER
AGREES THAT PERSONAL JURISDICTION OF SAID COURT SHALL BE PROPER FOR ALL
PURPOSES OF THIS AGREEMENT.
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15.13 Cooperation.
The Parties hereto shall cooperate fully at their own expense, except
as otherwise provided in this Agreement, with each other and their
respective counsel and accountants in connection with all steps to be
taken as part of their obligations under this Agreement.
15.14 Severability.
If any term, covenant, condition or provision of this Agreement or the
application thereof to any circumstance shall be invalid or
unenforceable to any extent, the remaining terms, covenants, conditions
and provisions of this Agreement shall not be affected thereby and each
remaining term, covenant, condition and provision of this Agreement
shall be valid and shall be enforceable to the fullest extent permitted
by law. If any provision of this Agreement is so broad as to be
unenforceable, such provision shall be interpreted to be only as broad
as is enforceable.
15.15 Reservations.
Except as otherwise agreed by the Parties under this Agreement, the
Parties reserve all rights and remedies they may have at law.
15.16 Attorneys' Fees.
If a dispute arises among the Parties as a result of which an action is
commenced to interpret or enforce any of the terms of this Agreement,
or if there is a breach of any of the terms of this Agreement, the
losing or defaulting Party shall pay to the prevailing Party reasonable
out-of-pocket attorneys' fees, costs and expenses incurred in
connection with the prosecution or defense of such action.
15.17 Successors and Assigns.
The covenants, agreements and conditions contained herein or granted
hereby shall be binding upon and shall inure to the benefit of
Purchaser and its designated lenders and Seller, and each of their
respective successors and permitted assigns. Neither Seller nor
Purchaser shall assign, license or otherwise transfer any interest in
this Agreement or any property which is the subject of this Agreement
to any other
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Person or entity except for a Person or entity which is an Affiliate of
Purchaser or a purchaser from Purchaser who will remain liable
hereunder. In no event shall Seller's or Purchaser's rights or
obligations under Article 14.0 hereof be assignable without the consent
of the other Party, except to an Affiliate of the assigning Party at
the time of the assignment, and then only where the assignment is part
of an overall assignment by the assigning Party of its entire chemical
fabricated products business to the assignee, provided, however the
assigning Party will guaranty the performance by an Assignee of its
obligations under this Agreement pursuant to a Guaranty Agreement in
form and substance reasonably acceptable to the other Party hereto. It
is specifically agreed that Seller's assignment of the Purchase Price
to a trust in preparation for a like-kind exchange is not an assignment
under this Section 15.17.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed in their
respective names by an officer or representative thereof duly authorized to be
effective on the date first above written.
. TREDEGAR INDUSTRIES, INC.
. By: /s/ ▇. ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
EXXON CHEMICAL COMPANY, a
division of EXXON CORPORATION
By: /s/ A. K. ▇▇▇▇▇▇
-----------------------------------
Name: A. K. ▇▇▇▇▇▇
Title: V.P. Polyolefin Americas
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