Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NOVEON INTERNATIONAL, INC.,
THE LUBRIZOL CORPORATION
AND
LUBRIZOL ACQUISITION CORPORATION
APRIL 15, 2004
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS...................................................................................1
Section 1.1 Definitions............................................................................1
Section 1.2 Terms Generally........................................................................7
ARTICLE II. THE MERGER....................................................................................8
Section 2.1 The Merger.............................................................................8
Section 2.2 Conversion of Securities...............................................................8
Section 2.3 Payment of Cash for Merger Shares......................................................9
Section 2.4 Treatment of Options..................................................................11
Section 2.5 Dissenting Company Stock..............................................................11
ARTICLE III. THE SURVIVING CORPORATION....................................................................12
Section 3.1 Articles of Incorporation.............................................................12
Section 3.2 Bylaws................................................................................12
Section 3.3 Directors and Officers................................................................12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................12
Section 4.1 Corporate Existence and Power.........................................................12
Section 4.2 Corporate Authorization...............................................................13
Section 4.3 Governmental Authorization............................................................14
Section 4.4 Non-Contravention.....................................................................14
Section 4.5 Capitalization........................................................................14
Section 4.6 Company Subsidiaries..................................................................15
Section 4.7 Reports and Financial Statements......................................................15
Section 4.8 Absence of Certain Changes or Events..................................................16
Section 4.9 Litigation............................................................................18
Section 4.10 Taxes.................................................................................18
Section 4.11 ERISA.................................................................................20
Section 4.12 Labor Matters.........................................................................22
Section 4.13 Compliance with Laws..................................................................22
Section 4.14 Finders' Fees.........................................................................23
Section 4.15 Environmental Matters.................................................................23
Section 4.16 Insurance.............................................................................24
Section 4.17 Contracts.............................................................................24
Section 4.18 Legal Matters.........................................................................26
Section 4.19 Intellectual Property.................................................................26
Section 4.20 Related Party Transactions............................................................27
Section 4.21 Real Property.........................................................................28
Section 4.22 No Other Information..................................................................28
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB......................................29
Section 5.1 Corporate Existence and Power.........................................................29
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Section 5.2 Corporate Authorization...............................................................29
Section 5.3 Governmental Authorization............................................................29
Section 5.4 Non-Contravention.....................................................................30
Section 5.5 Finders' Fees.........................................................................30
Section 5.6 Adequate Funds........................................................................30
ARTICLE VI. COVENANTS OF THE COMPANY.....................................................................30
Section 6.1 Conduct of the Company and Subsidiaries...............................................30
Section 6.2 Other Actions by the Company..........................................................32
Section 6.3 Access to Information; Right of Inspection............................................32
Section 6.4 Other Potential Acquirers.............................................................33
Section 6.5 Resignation of Directors..............................................................34
Section 6.6 ISRA Filings..........................................................................34
Section 6.7 FIRPTA Certificate....................................................................34
ARTICLE VII. COVENANTS OF PARENT AND MERGER SUB...........................................................34
Section 7.1 Director and Officer Liability........................................................34
ARTICLE VIII. COVENANTS OF THE PARTIES.....................................................................35
Section 8.1 Reasonable Best Efforts...............................................................35
Section 8.2 Certain Filings.......................................................................36
Section 8.3 Public Announcements..................................................................37
Section 8.4 Further Assurances....................................................................37
Section 8.5 Notices of Certain Events.............................................................37
Section 8.6 Disposition of Litigation.............................................................38
Section 8.7 Employee Matters......................................................................38
Section 8.8 Confidentiality Agreement.............................................................39
ARTICLE IX. CONDITIONS TO THE MERGER.....................................................................39
Section 9.1 Conditions to the Obligations of Each Party...........................................39
Section 9.2 Conditions to the Obligations of Parent and Merger Sub................................40
Section 9.3 Conditions to the Obligations of the Company..........................................40
ARTICLE X. TERMINATION..................................................................................41
Section 10.1 Termination...........................................................................41
Section 10.2 Effect of Termination.................................................................42
ARTICLE XI. MISCELLANEOUS................................................................................42
Section 11.1 Notices...............................................................................42
Section 11.2 Survival of Representations and Warranties............................................43
Section 11.3 Amendments No Waivers.................................................................43
Section 11.4 Expenses..............................................................................43
Section 11.5 Transfer Taxes........................................................................43
Section 11.6 Successors and Assigns................................................................44
Section 11.7 Governing Law.........................................................................44
Section 11.8 Counterparts; Effectiveness; Third Party Beneficiaries................................44
Section 11.9 Severability..........................................................................44
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Section 11.10 Specific Performance..................................................................44
Section 11.11 Entire Agreement......................................................................44
Section 11.12 Jurisdiction; Waiver of Jury Trial....................................................44
Section 11.13 Authorship............................................................................45
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AGREEMENT AND PLAN OF MERGER
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This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and
entered into as of this 15th day of April, 2004 by and among Noveon
International, Inc., a Delaware corporation (the "COMPANY"), The Lubrizol
Corporation, an Ohio corporation ("PARENT"), and Lubrizol Acquisition
Corporation, a Delaware corporation and direct or indirect subsidiary of Parent
("MERGER SUB").
RECITALS
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A. The parties intend that Merger Sub be merged with and into the
Company (the "MERGER"), with the Company surviving the Merger as a direct or
indirect subsidiary of Parent (the "SURVIVING CORPORATION").
B. The Board of Directors of the Company has unanimously determined
that the Merger and this Agreement are fair to and in the best interests of the
Company.
C. The Board of Directors of the Company also has unanimously (i)
approved this Agreement and declared its advisability and (ii) resolved to
recommend that the Company shareholders adopt this Agreement.
D. The shareholders of the Company, by the vote or written consent of
the holders of at least a majority of the outstanding Common Shares of the
Company, have adopted this Agreement and approved and authorized the Merger.
E. The Board of Directors of Merger Sub has approved this Agreement and
declared its advisability. Parent, as the sole shareholder of Merger Sub, has
adopted this Agreement and has approved the Merger and the transactions
contemplated hereby.
F. The Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe certain conditions to the Merger, as set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. For purposes of this Agreement, the following
terms have the respective meanings set forth below:
"AFFILIATE" means, with respect to any Person, any other Person,
directly or indirectly, controlling, controlled by, or under common control
with, such Person. For purposes of this definition, the term "CONTROL"
(including the correlative terms "CONTROLLING," "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") means the possession, directly or indirectly, of the power
to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"AFFILIATED ENTITY" of a Person means any joint venture, corporation or
other entity, including a Subsidiary, of which securities or other ownership
interests representing 10% or more of the total outstanding securities or other
ownership interests, or having 10% or more of the ordinary voting power to elect
a majority of the Board of Directors or other persons performing similar
functions, are at the time directly or indirectly owned by such Person.
"BALANCE SHEET" means the consolidated balance sheet of the Company as
of December 31, 2003 (and the notes thereto) set forth in the Company S-1.
"BALANCE SHEET DATE" means December 31, 2003.
"BUSINESS DAY" means any day on which banks are not required or
authorized to close in the City of New York.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act, as amended by the Superfund Amendments and Reauthorization
Act.
"CLOSING" has the meaning set forth in Section 2.1(d).
"CLOSING DATE" has the meaning set forth in Section 2.1(d).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON SHARES" means the shares of Common Stock.
"COMMON STOCK" means the common stock of the Company, par value $0.01
per share.
"COMPANY" has the meaning set forth in the Preamble.
"COMPANY EMPLOYEES" has the meaning set forth in Section 8.7(a).
"COMPANY OPTIONS" means outstanding options to acquire Common Shares,
whether vested or unvested.
"COMPANY SEC REPORTS" has the meaning set forth in Section 4.7(a).
"COMPANY SECURITIES" has the meaning set forth in Section 4.5(b).
"COMPANY S-1" means Amendment No. 1 to the registration statement of
the Company on Form S1/A as filed with the SEC (Commission File No.
333-112991).
"CONFIDENTIALITY AGREEMENT" means, the Confidentiality Agreement dated
March 24, 2004, between the Company and Parent.
"CONTRACTS" has the meaning set forth in Section 4.17(b).
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"CURRENT COMPANY SEC REPORTS" means Noveon, Inc.'s annual report on
Form 10-K for the fiscal year ended December 31, 2003, and the Company S-1.
"CURRENT POLICIES" has the meaning set forth in Section 7.1(a).
"DELAWARE LAW" means the General Corporation Law of the State of
Delaware.
"DESIGNATED PRODUCTS" has the meaning set forth in Section 4.15(f).
"DISBURSING AGENT" has the meaning set forth in Section 2.3(b).
"DISCLOSURE LETTER" has the meaning set forth in the preamble to
Article IV.
"EFFECTIVE TIME" has the meaning set forth in Section 2.1(b).
"EMPLOYEE BENEFIT PLAN" has the meaning set forth in Section 4.11(a).
"EMPLOYMENT AGREEMENT" means a contract, offer letter or agreement of
the Company or any of its Subsidiaries with or addressed to any individual who
is rendering or has rendered services thereto as an employee or consultant
pursuant to which the Company or any of its Subsidiaries has any liability or
obligation to provide compensation and/or benefits in consideration for past,
present or future services.
"END DATE" means July 15, 2004.
"ENVIRONMENTAL LAWS" means any and all applicable federal, state,
local, municipal and foreign Laws relating to the protection of the environment
or to Releases of Hazardous Substances or the notification, investigation or
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means, with respect to any entity, any trade or
business (whether or not incorporated) that is a member of a controlled group
including such entity or that is under common control with such entity within
the meaning of Section 414 of the Code.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"EXECUTIVE CHANGE OF CONTROL AGREEMENTS" means the executive change of
control agreements provided to Parent.
"EXISTING CONTRACTS" has the meaning set forth in Section 6.1(b).
"GAAP" means United States generally accepted accounting principles.
"XXXXXXXX" has the meaning set forth in Section 4.17(e).
"XXXXXXXX AGREEMENTS" has the meaning set forth in Section 4.17(e).
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"XXXXXXXX APA" has the meaning set forth in Section 4.17(e).
"GOVERNMENTAL AUTHORITY" means any agency, public or regulatory
authority, instrumentality, department, commission, court, arbitrator, ministry,
tribunal or board of any nation or government or political subdivision thereof,
whether foreign or domestic and whether national, supranational, federal,
tribal, provincial, state, regional, local or municipal.
"HAZARDOUS SUBSTANCES" means any wastes, substances or materials which
are defined as "hazardous materials," "hazardous wastes," "hazardous
substances," "wastes" or other similar designations in any Environmental Laws,
including, without limitation, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead-based paints and petroleum or petroleum products
(including, without limitation, crude oil).
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"INSURANCE POLICIES" means all material fire and casualty, general
liability, business interruption, workers compensation, product liability, and
sprinkler and water damage insurance policies and other forms of insurance or
bonds currently maintained by the Company or any of its Subsidiaries.
"INTELLECTUAL PROPERTY" means all material patents, patent
applications, including utility and design patents and patent applications,
trademark registrations and applications for registration thereof, including
service xxxx and trade name registrations and applications, and registered
copyrights that are owned and currently in use by the Company or its
Subsidiaries.
"INTELLECTUAL PROPERTY AGREEMENT" means all material agreements
relating to the use by the Company or any of its Subsidiaries of the
intellectual property rights of others, or the use by any third party of the
Intellectual Property rights.
"KNOWLEDGE," when used in reference to the Company, shall mean the
actual knowledge of the following officers and employees of the Company: (i) Xx.
Xxxxxx X. Xxxxxxxxx, (ii) Xx. Xxxxxxxxxxx X. Xxxxx, (iii) Xx. Xxxxxxx X. Friday,
(iv) Xx. Xxxxx Xxxx, (v) Xx. Xxxx X. Xxxxx, (vi) Xx. Xxxxx XxXxxxxx and (vii)
Xx. Xxxxxxx Xxxxxxxx.
"LAW" means applicable statutes, common laws, rules, ordinances,
regulations, codes, orders, judgments, injunctions, writs, decrees, licenses,
permits, rules and bylaws, in each case, of a Governmental Authority.
"LEASED REAL PROPERTY" has the meaning set forth in Section 4.21(b).
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
"MANAGEMENT AND ADVISORY SERVICES AGREEMENTS" means the Amended and
Restated Management Agreement dated as of June 26, 2001 by and between Noveon,
Inc. (formerly PMD Group, Inc.) and DLJ Merchant Banking Partners III, LP, the
Management Agreement dated as of February 5, 2001 by and between Noveon, Inc.
and MidOcean Capital/PMD Investors LLC
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(formerly DB Capital/PMD Investors, LLC), the Management Agreement dated as of
February 5, 2001 by and between Noveon, Inc. and AEA Investors, Inc. and the
Advisory Services Letter Agreement dated as of February 5, 2001 executed by
Noveon, Inc. and Credit Suisse First Boston Corporation, as the same may be
assigned or amended from time to time.
"MATERIAL ADVERSE EFFECT ON THE COMPANY" has the meaning set forth in
Section 4.8(a).
"MATERIAL EMPLOYMENT AGREEMENT" means (i) an Employment Agreement
pursuant to which the Company or any of its Subsidiaries has or could reasonably
be expected to have any obligation to provide base salary compensation in an
amount in excess of $200,000 per year and (ii) the Executive Change of Control
Agreements.
"MERGER" has the meaning set forth in the Recitals.
"MERGER CONSIDERATION" means an amount per Common Share equal to the
result obtained by dividing (a) $920.2 million, plus the aggregate exercise
price of all of the Company Options, minus (i) the amount of payments made or
required to be made at or before the Effective Time by the Company or any of its
Subsidiaries pursuant to the last sentence of Section 6.1 of this Agreement,
including all payments that are to be made at or before the Effective Time
pursuant to the Executive Change of Control Agreements, and (ii) Transaction
Costs in excess of $2.5 million by (b) the number of Common Shares outstanding
as at the Effective Time plus the number of Common Shares issuable upon exercise
of all then outstanding Company Options, without interest thereon.
"MERGER SHARES" has the meaning set forth in Section 2.2(c).
"MERGER SUB" has the meaning set forth in the Preamble.
"MERGER SUB COMMON SHARES" means the common stock of Merger Sub, par
value $0.01 per share.
"MULTIEMPLOYER PLAN" has the meaning set forth in Section 4.11(c).
"NEW PLANS" has the meaning set forth in Section 8.7(b).
"NJDEP" has meaning set forth in Section 6.6.
"NOVEON, INC." means Noveon, Inc., a Delaware corporation and a wholly
owned subsidiary of the Company.
"OLD PLANS" has the meaning set forth in Section 8.7(b).
"OTHER ANTITRUST LAWS" means any Law enacted by any Governmental
Authority relating to antitrust matters or regulating competition, including
Council Regulation No. 4064/89 of the European Community and any analogous or
similar Laws of any foreign jurisdiction.
"OWNED REAL PROPERTY" has the meaning set forth in Section 4.21(b).
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"PARENT" has the meaning set forth in the Preamble.
"PERMITS" means any governmental licenses, franchises, permits,
certificates, consents, approvals or other similar authorizations required under
applicable Law.
"PERMITTED LIENS" means (i) the liens and security interests set forth
in Section 4.21 of the Disclosure Letter, (ii) liens for taxes not yet due and
payable or that are being contested in good faith and by appropriate proceedings
and for which the Company has maintained adequate reserves, (iii) mechanics',
materialmen's or other liens or security interests arising in the ordinary
course of business for sums that are immaterial in amount and not yet due and
payable, or (iv) any other liens, encumbrances, security interests, easements,
rights-of-way, encroachments, restrictions, conditions and similar encumbrances
arising in the ordinary course of business that are not material in amount and
do not materially detract from the value of or materially impair the existing
use of the property affected by such encumbrance.
"PERSON" means any individual, corporation, limited liability company,
partnership, association, trust or any other entity or organization, including
any government or political subdivision or any agency or instrumentality
thereof.
"PROCEEDING" has the meaning set forth in Section 4.9.
"RELATED PARTIES" has the meaning set forth in Section 4.20.
"RELEASE" means any emission, spill, seepage, leak, escape, leaching,
discharge, injection, ejection, pumping, pouring, emptying, dumping, disposal,
or release of Hazardous Substances into or upon the environment, including the
air, soil, surface water or groundwater.
"REPLACEMENT POLICIES" has the meaning set forth in Section 7.1(a).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SINGLE EMPLOYER PLAN" has the meaning set forth in Section 4.11(g).
"SUBSIDIARY" of a Person means any corporation or other entity of which
securities or other ownership interests representing 50% or more of the total
outstanding securities or other ownership interests is owned, directly or
indirectly, by such Person and/or of which securities or other ownership
interests having ordinary voting power to elect a majority of the Board of
Directors or other persons performing similar functions are at the time owned,
directly or indirectly, by such Person.
"SURVIVING CORPORATION" has the meaning set forth in the Recitals.
"TAX" (including "TAXES") means (i) all federal, state, local, foreign
and other taxes of any kind, levies or other like kind assessments, customs,
duties, imposts, charges or fees, including net income, gross income, gross
receipts, gains, ad valorem, value added, excise,
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import, export, registration duties, real or personal property, asset, sales,
use, stock transfer, real estate transfer, documentary, stamp, recording,
license, payroll, transaction, capital, net worth, franchise, estimated,
employment, social security, workers compensation, occupation, utility,
severance, production, unemployment compensation, occupation, premium,
environmental, windfall profits and withholding taxes, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any Governmental Authority responsible for the imposition of any such tax (a
"TAX AUTHORITY" or "TAXING AUTHORITY"), (ii) any liability for payment of
amounts described in clause (i) whether as a result of transferee liability,
joint and several liability for being a member of an affiliated, consolidated,
combined or unitary group for any period, or otherwise by operation of law and
(iii) any liability for the payment of amounts described in clause (i) or (ii)
as a result of any tax sharing, tax indemnity or tax allocation agreement or any
other express or implied agreement to pay or indemnify any other person.
"TAX RETURN" means any return, report or statement filed with any
Governmental Authority with respect to Taxes.
"THIRD PARTY" means any Person (which includes a "person" as such term
is defined in Section 13(d)(3) of the Exchange Act) other than Parent, Merger
Sub or their respective Affiliates.
"THIRD PARTY ACQUISITION" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger or otherwise by any Third
Party, (ii) the acquisition by a Third Party of twenty percent (20%) or more of
the assets of the Company and its Subsidiaries taken as a whole, other than the
sale of products in the ordinary course of business or (iii) the acquisition by
a Third Party of twenty percent (20%) or more of the outstanding Common Shares
or the issuance by the Company of preferred stock of a new series.
"TRANSACTION COSTS" means any fees, costs and expenses incurred by the
Company or any of its Subsidiaries to third parties relating to the transactions
contemplated by this Agreement and in connection with the Company's proposed
initial public offering (including fees and disbursements of counsel,
accountants and other advisors), other than, for the avoidance of doubt, the
fees, costs and expenses to be paid pursuant to the last sentence of Section
6.1.
"TRANSFER TAXES" has the meaning set forth in Section 11.5.
Section 1.2 Terms Generally. The definitions in Section 1.1 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including" shall
be deemed to be followed by the phrase "without limitation," unless the context
expressly provides otherwise. All references herein to Sections, paragraphs,
subparagraphs, clauses, Exhibits or Schedules shall be deemed references to
Sections, paragraphs, subparagraphs or clauses of, or Exhibits or Schedules to
this Agreement, unless the context requires otherwise. Unless otherwise
expressly defined, terms defined in this Agreement have the same meanings when
used in any Exhibit or Schedule hereto, including when used in the Disclosure
Letter. The words "herein," "hereof," "hereto" and "hereunder" and other words
of similar import refer to this Agreement as a whole (including the Schedules
and Exhibits) and not to any particular provision of this Agreement.
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ARTICLE II.
THE MERGER
Section 2.1 The Merger.
(a) At the Effective Time, in accordance with the Delaware Law,
and upon the terms and subject to the conditions set forth in this Agreement,
Merger Sub shall be merged with and into the Company, at which time the separate
existence of Merger Sub shall cease and the Company shall survive the Merger as
a direct or indirect subsidiary of Parent.
(b) As soon as reasonably practicable on the Closing Date, the
Company and Merger Sub will file a certificate of merger meeting the
requirements of the Delaware Law with the Secretary of State of the State of
Delaware. The Merger shall become effective at such time as the certificate of
merger is duly filed with the Secretary of State of the State of Delaware, or at
such later time as the Company and Merger Sub may agree and specify in the
certificate of merger (such time as the Merger becomes effective, the "EFFECTIVE
TIME").
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, powers, privileges and franchises and be subject
to all of the obligations, liabilities, restrictions and disabilities of the
Company and Merger Sub, all as provided under the Delaware Law.
(d) The closing of the Merger (the "CLOSING") shall take place
(i) at the offices of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP located at
Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, as soon as practicable (but in any event
no later than the second Business Day) after the day on which the last condition
to the Merger is satisfied or validly waived (other than those conditions that
by their nature cannot be satisfied until the Closing, but subject to the
satisfaction or valid waiver of such conditions) or (ii) at such other place and
time or on such other date as the Company and Merger Sub may agree in writing
(the actual date of the Closing, the "CLOSING DATE").
Section 2.2 Conversion of Securities. At the Effective Time, pursuant
to this Agreement and by virtue of the Merger and without any action on the part
of the Company, Parent, Merger Sub or the holders of the Common Stock:
(a) Each share of Common Stock held by the Company as treasury
stock or owned by Parent, Merger Sub or any Company Subsidiary immediately prior
to the Effective Time, if any, shall be canceled and retired and shall cease to
exist, and no payment or distribution shall be made or delivered with respect
thereto.
(b) Each Merger Sub Common Share issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
newly issued, fully paid and non-assessable share of common stock of the
Surviving Corporation, and the foregoing shall constitute the only outstanding
shares of capital stock of the Surviving Corporation.
(c) Each Common Share issued and outstanding immediately prior to
the Effective Time, other than Common Shares to be canceled pursuant to Section
2.2(a), automatically shall be canceled and converted into the right to receive
the Merger Consideration,
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payable to the holder thereof upon surrender of the stock certificate formerly
representing such Common Share in the manner provided in Section 2.3. Such
Common Shares, other than those canceled pursuant to Section 2.2(a), sometimes
are referred to herein as the "MERGER SHARES."
(d) If between the date of this Agreement and the Effective Time,
the number of outstanding Common Shares is changed into a different number of
shares or a different class by reason of any stock dividend, subdivision,
reclassification, recapitalization, split-up, combination, exchange of shares or
the like, other than pursuant to the Merger, the amount of Merger Consideration
payable per Common Share shall be correspondingly adjusted.
(e) The Company Options shall be treated as provided in Section
2.4 below.
Section 2.3 Payment of Cash for Merger Shares.
(a) Parent and the Company will use good faith efforts to agree
upon a form of letter of transmittal promptly after the date hereof, in
accordance with the provisions set forth in Section 2.3(c). If the Company
determines to do so, it may mail the agreed form of letter of transmittal to
each or any record holder of Merger Shares prior to the Closing Date. No later
than five days prior to the Closing Date, the Company may deliver to Parent a
schedule (the "Section 2.3 Schedule") setting forth the names of those Persons
who have returned duly executed letters of transmittal, the number of Merger
Shares held by those Persons and wire instructions for those Persons. At the
Closing and upon surrender by the Person(s) named in the Section 2.3 Schedule of
the stock certificate or certificates representing the Merger Shares held by
such Person(s) and a properly completed and duly executed letter of transmittal
and any other documents Parent may reasonably request, Parent shall pay (by wire
transfer in immediately available funds to the account specified in the Section
2.3 Schedule) to the Persons complying with the foregoing, the Merger
Consideration payable in exchange for the Merger Shares so surrendered, less any
amounts required to be withheld under any applicable Tax Law.
(b) Prior to the Closing Date, Parent shall designate a bank or
trust company that is reasonably satisfactory to the Company, that is organized
and doing business under the laws of the United States or any state thereof and
that has a combined capital and surplus of at least $1,000,000,000 to serve as
the disbursing agent for the Merger Consideration and payments in respect of
Company Options (the "DISBURSING AGENT"). At or prior to the Closing, Parent
will cause to be deposited with the Disbursing Agent cash in the aggregate
amount sufficient to pay the Merger Consideration in respect of all Merger
Shares outstanding immediately prior to the Effective Time (less any amount to
be paid at Closing pursuant to Section 2.3(a)), and any cash necessary to pay
for Company Options pursuant to Section 2.4. Pending distribution of the cash
deposited with the Disbursing Agent and subject to the completion of the Merger,
such cash shall be held in trust for the benefit of the holders of Merger Shares
and such Company Options and shall not be used for any other purposes; provided
however, that Parent may direct the Disbursing Agent to invest such cash in
obligations of or guaranteed by the United States of America, as long as no such
investments have maturities that could prevent or delay payments to be made
pursuant to Section 2.3(c) or Section 2.4 hereof.
(c) As promptly as practicable after the Effective Time (but no
later than two Business Days after the Effective Time), the Surviving
Corporation shall send, or cause the
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Disbursing Agent to send, to each record holder of Merger Shares as of
immediately prior to the Effective Time which have not already returned a letter
of transmittal under Section 2.3(a) a letter of transmittal and instructions for
exchanging their Merger Shares for the Merger Consideration payable therefor.
The letter of transmittal will be in customary form and will specify that
delivery of Merger Shares will be effected, and risk of loss and title will
pass, only upon delivery of the stock certificates representing the Merger
Shares to the Disbursing Agent. In addition to the terms and conditions set
forth in this Section 2.3, the letter of transmittal will include other
customary terms and conditions applicable to the surrender of stock certificates
and payment of the Merger Consideration, including, without limitation, as may
be required under the Delaware Law, notice of appraisal rights to such holders
of Common Shares entitled thereto. Upon surrender of such stock certificate or
certificates to the Disbursing Agent together with a properly completed and duly
executed letter of transmittal and any other documentation as the Disbursing
Agent may reasonably require, the record holder thereof shall be entitled to
receive the Merger Consideration payable in exchange therefor, less any amounts
required to be withheld under any applicable Tax Law. Until so surrendered and
exchanged, each such certificate shall, after the Effective Time, be deemed to
represent only the right to receive the Merger Consideration, and until such
surrender and exchange, no cash shall be paid to the holder of such outstanding
certificate in respect thereof.
(d) If payment is to be made to a Person other than the
registered holder of the Merger Shares represented by the certificate or
certificates surrendered in exchange therefor, it shall be a condition to such
payment that the certificate or certificates so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting such payment shall pay to the Parent or Disbursing Agent (as the case
may be) any applicable stock transfer taxes or establish to the satisfaction of
the Parent or Disbursing Agent (as the case may be) that such stock transfer
taxes have been paid or are not payable.
(e) After the Effective Time, there shall be no further transfers
on the stock transfer books of the Surviving Corporation of the Common Shares
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates representing Merger Shares are presented to the
Surviving Corporation, such shares shall be canceled and exchanged for the
consideration provided for, and in accordance with the procedures set forth, in
this Article II.
(f) If any cash deposited with the Disbursing Agent remains
unclaimed six months after the Effective Time, such cash shall be returned to
the Surviving Corporation upon demand, and any such holder who has not
surrendered his Merger Shares certificates for the Merger Consideration prior to
that time shall thereafter look only to the Surviving Corporation for payment of
the Merger Consideration. Notwithstanding the foregoing, the Surviving
Corporation shall not be liable to any holder of Merger Shares for an amount
paid to a public official pursuant to any applicable unclaimed property laws.
Any amounts remaining unclaimed by holders of Merger Shares, as of a date
immediately prior to such time that such amounts would otherwise escheat to or
become property of any Governmental Authority, shall to the extent permitted by
applicable Law, become the property of the Surviving Corporation free and clear
of any claims or interest of any Person previously entitled thereto.
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(g) No dividends or other distributions with respect to capital
stock of the Surviving Corporation with a record date after the Effective Time
shall be paid to the holder of any unsurrendered certificate for Common Shares.
(h) From and after the Effective Time, the holders of Common
Shares outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Common Shares, other than the right to receive
the Merger Consideration as provided in this Agreement.
(i) In the event that any Merger Share certificate has been lost,
stolen or destroyed, and upon the making of an affidavit of that fact by the
Person claiming such Merger Share certificate to be lost, stolen or destroyed,
in addition to the posting by such holder of any bond in such reasonable amount
as the Surviving Corporation may direct as indemnity against any claim that may
be made against the Surviving Corporation with respect to such Merger Share
certificate, the Disbursing Agent will issue in exchange for such lost, stolen
or destroyed Merger Share certificate the proper amount of the Merger
Consideration.
(j) Parent, Surviving Corporation and the Disbursing Agent shall
be entitled to deduct and withhold from the Merger Consideration otherwise
payable hereunder any amounts required to be deducted and withheld under any
applicable Tax Law. To the extent any amounts are so withheld, such withheld
amounts shall be treated for all purposes as having been paid to the holder from
whose Merger Consideration the amounts were so deducted and withheld.
Section 2.4 Treatment of Options.
(a) As of the Effective Time, each Company Option will be
cancelled, and the holder thereof will receive an amount equal to the excess of
(A) the Merger Consideration times the number of Common Shares subject to the
Company Option over (B) the aggregate exercise price of such Company Option,
without interest and less any amounts required to be deducted and withheld under
any applicable Tax Law. All payments with respect to canceled Company Options
shall be made by the Disbursing Agent as promptly as reasonably practicable
after the Effective Time from funds deposited with the Disbursing Agent by or at
the direction of Parent to pay such amounts.
(b) Prior to the Effective Time, the Company (i) will cause the
Company's stock option plans to be terminated effective at or prior to the
Effective Time and to otherwise make any amendments permitted by such plans and
the agreements thereunder to the terms of such stock option plans or the grants
made thereunder necessary to effectuate the actions contemplated by this Section
2.4 and (ii) will effectuate the actions contemplated by this Section 2.4.
Section 2.5 Dissenting Company Stock. Notwithstanding any
provision of this Agreement to the contrary, Common Shares that are issued and
outstanding immediately prior to the Effective Time and which are held by
holders of such Common Shares who have properly exercised appraisal rights with
respect thereto in accordance with Section 262 of the Delaware Law (the
"Dissenting Company Stock") will not be exchangeable for the right to receive
the Merger Consideration, and holders of such shares of Dissenting Company Stock
will be entitled
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to receive payment of the appraised value of such Common Shares in accordance
with the provisions of such Section 262 unless and until such holders fail to
perfect or effectively withdraw or lose their rights to appraisal and payment
under the Delaware Law. If, after the Effective Time, any such holder fails to
perfect or effectively withdraws or loses such rights, such Common Shares will
thereupon be treated as if they had been converted into and to have become
exchangeable for, at the Effective Time, the right to receive the Merger
Consideration, without any interest thereon. The Company will give Parent prompt
notice of any demands received by the Company for appraisals of Common Shares
prior to the Effective Time. The Company shall not, except with the prior
written consent of Parent, make any payment with respect to any demands for
appraisal or offer to settle or settle any such demands.
ARTICLE III.
THE SURVIVING CORPORATION
Section 3.1 Articles of Incorporation. The articles of incorporation of
Merger Sub as in effect immediately prior to the Effective Time shall be the
articles of incorporation of the Surviving Corporation until thereafter amended
in accordance with the terms thereof and as provided by applicable Law.
Section 3.2 Bylaws. The bylaws of Merger Sub in effect at the Effective
Time shall be the bylaws of the Surviving Corporation until thereafter amended
in accordance with the terms thereof and as provided by applicable Law.
Section 3.3 Directors and Officers. From and after the Effective Time,
(i) the directors of Merger Sub at the Effective Time shall be the directors of
the Surviving Corporation, and (ii) the officers of the Company at the Effective
Time shall be the officers of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed and qualified in
accordance with applicable Law.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in this Agreement, the Current Company SEC Reports
(other than the matters described under the caption "Risk Factors" in the
Company S-1 and other similar general cautionary language set forth in the
Current Company SEC Reports) or in the corresponding sections of the Disclosure
Letter delivered to Merger Sub by the Company concurrently with entering into
this Agreement (the "DISCLOSURE LETTER") (it being understood that any
information set forth in a particular section of the Disclosure Letter shall be
deemed to be disclosed to each other section thereof to which the relevance of
such information is reasonably apparent and on which a reasonably clear cross
reference is made), the Company hereby represents and warrants to Parent and
Merger Sub:
Section 4.1 Corporate Existence and Power.
(a) Each of the Company and its Subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation. The Company has all corporate powers and
authority required to own, lease and operate its properties and to carry on its
business as now conducted. The Subsidiaries of the
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Company have all corporate powers and authority required to own, lease and
operate their respective properties and to carry on their business as now
conducted.
(b) Each of the Company and its Subsidiaries is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
(c) The Company has made available to Parent and Merger Sub true
and complete copies of the currently effective articles of incorporation and
bylaws or similar organizational and governing documents of the Company and its
material domestic Subsidiaries.
(d) Section 4.1(d) of the Disclosure Letter sets forth a list of
all the directors and officers of the Company and Noveon, Inc.
Section 4.2 Corporate Authorization.
(a) The execution, delivery and performance by the Company of
this Agreement and the consummation by the Company of the Merger and the other
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors and shareholders of the Company, and no Company corporate or
shareholder action is necessary to authorize this Agreement or to consummate the
Merger and the other transactions contemplated hereby, except for the filing of
the certificate of merger as provided in Section 2.1(b). The only Company
shareholder action required to adopt this Agreement is an affirmative vote in
favor, or approval, of this Agreement by the holders of a majority of the
outstanding Common Shares, which shareholder action has been duly taken.
(b) This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due and valid execution and delivery
by Parent and Merger Sub, constitutes a legal, valid and binding agreement of
the Company enforceable against the Company in accordance with its terms, except
(i) as rights to indemnity hereunder may be limited by federal or state
securities Laws or the public policies embodied therein, (ii) as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar Laws affecting the enforcement of creditors' rights
generally and (iii) as the remedy of specific performance and other forms of
injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(c) On or prior to the date hereof, the Board of Directors of the
Company, has unanimously adopted resolutions (i) approving this Agreement and
declaring that the Merger and the other transactions contemplated by this
Agreement are advisable and (ii) resolving to recommend that the Company
shareholders adopt this Agreement. All such resolutions are in full force and
effect and have not been amended or superseded as of the date hereof.
(d) The shareholders who have voted in favor of adoption of this
Agreement as of the date hereof are holders of at least 98% of the Common Shares
outstanding as of the date hereof, and no such shareholder shall have taken any
action to rescind or revoke its vote prior to the Effective Time.
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Section 4.3 Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
by the Company require no action by the Company in respect of, or filing by the
Company with, any Governmental Authority other than (i) the filing of the
certificate of merger described in Section 2.1(b), (ii) compliance with any
applicable requirements of the HSR Act and any applicable Other Antitrust Laws
specified on Section 4.3 of the Disclosure Letter, (iii) compliance with any
applicable requirements of the Exchange Act and Securities Act, (iv) compliance
with any applicable foreign or state securities or Blue Sky Laws, (v) the filing
of appropriate documents with the relevant authorities of the jurisdictions in
which the Company and its Subsidiaries are qualified to do business and (vi)
other actions or filings, which if not taken or made, would not, individually or
in the aggregate, be reasonably expected to have a Material Adverse Effect on
the Company and would not, individually or in the aggregate, reasonably be
expected to adversely affect in any material respect, or materially to delay,
the Company's ability to observe and perform its obligations hereunder.
Section 4.4 Non-Contravention. The execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (i) contravene or conflict
with the organizational or governing documents of the Company or any of its
Subsidiaries, (ii) assuming compliance with the matters referenced in Section
4.3, contravene or conflict with or constitute a violation of any provision of
any Law binding upon or applicable to the Company or any of its Subsidiaries or
any of their respective properties or assets, (iii) constitute a default under
or give rise to a right of termination, cancellation or acceleration of any
right or obligation of the Company or any of its Subsidiaries or to a loss of
any benefit to which the Company or any of its Subsidiaries is entitled under
any provision of any agreement, contract or other instrument applicable to or
binding upon the Company or any of its Subsidiaries except those set forth on
Section 4.4(iii) of the Disclosure Letter or (iv) result in the creation or
imposition of any Lien on any material asset of the Company or any of its
Subsidiaries (other than any such Lien arising from any actions taken by Parent
or Merger Sub), except, in the case of clauses (ii), (iii) and (iv), as would
not, individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect on the Company.
Section 4.5 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
4,100,000 Common Shares, of which, as of the date hereof, there are 3,606,133
shares issued and outstanding. As of the date hereof, there are outstanding
Company Options to purchase an aggregate of 350,611 Common Shares. Section
4.5(a) of the Disclosure Letter sets forth a list of all of the outstanding
Company Options, indicating the holder of each Company Option, the number of
Common Shares corresponding to each Company Option and the exercise prices
applicable to each Company Option. All outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
non-assessable and were not issued in violation of any preemptive or similar
rights.
(b) Except as set forth in this Section 4.5 and except for
changes after the date hereof resulting from the exercise of Company Options
outstanding on such date, there are no outstanding, and there have not been
reserved for issuance, any (i) shares of capital stock or other voting
securities of the Company, (ii) securities of the Company or any Subsidiary
convertible
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into or exchangeable for shares of capital stock or voting securities of the
Company or its Subsidiaries, (iii) Company Options or other rights or options to
acquire from the Company or its Subsidiaries, or obligations of the Company or
its Subsidiaries to issue, any shares of capital stock, voting securities or
securities convertible into or exchangeable for shares of capital stock or
voting securities of the Company or such Subsidiaries or (iv) equity equivalent
interests in the ownership or earnings of the Company or its Subsidiaries or
other similar rights (the items in clauses (i) through (iv) collectively,
"COMPANY SECURITIES"). There are no outstanding obligations of the Company or
any Subsidiary to repurchase, redeem or otherwise acquire any Company
Securities. Except as set forth in Section 4.5(b) of the Disclosure Letter,
there are no stockholder agreements, voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party or by
which it is bound relating to the voting or registration of any shares of
capital stock of the Company or any of its Subsidiaries or preemptive rights
with respect thereto. Except as set forth in Section 4.5(b) of the Disclosure
Letter, to the Knowledge of the Company, there are no agreements among the
stockholders of the Company relating to the transfer or voting of any shares of
capital stock of the Company or the management of the business and affairs of
the Company.
(c) Other than the issuance of Common Shares upon exercise of
Company Options, and except as set forth in Section 4.5(c) of the Disclosure
Letter, since the Balance Sheet Date, the Company has not declared or paid any
dividend or distribution in respect of any Company Securities, and neither the
Company nor any Subsidiary of the Company has issued, sold, repurchased,
redeemed or otherwise acquired any Company Securities, and their respective
Boards of Directors have not authorized any of the foregoing.
Section 4.6 Company Subsidiaries.
(a) Except for such Company Subsidiaries and the investments
described in Section 4.6(a) of the Disclosure Letter, (i) each of the Company
Subsidiaries is wholly owned (directly or indirectly) by the Company and (ii)
the Company does not directly or indirectly own any equity interest in any other
Person.
(b) All equity interests held by the Company or any of its
Subsidiaries in any Affiliated Entity of the Company or any of its Subsidiaries
are fully paid and non-assessable and were not issued in violation of any
preemptive or similar rights. Except as described on Section 4.6(b) of the
Disclosure Letter, all such equity interests are free and clear of any Liens or
any other limitations or restrictions on such equity interests (including any
limitation or restriction on the right to vote, pledge or sell or otherwise
dispose of such equity interests).
Section 4.7 Reports and Financial Statements.
(a) The Company has filed, or has caused Noveon, Inc. to file,
with or otherwise furnished to the SEC all forms, reports, schedules,
statements, certifications and other documents required to be filed or furnished
by it or Noveon, Inc. under the Securities Act or the Exchange Act since
February 28, 2001 (such documents, as supplemented or amended since the time of
filing, the "COMPANY SEC REPORTS"). No Company Subsidiary, other than Noveon,
Inc., is required to file with or furnish to the SEC any such forms, reports,
schedules, statements, certifications or other documents. As of their respective
dates, the Company SEC Reports,
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including any financial statements or schedules included or incorporated by
reference therein, at the time filed (and, in the case of registration
statements and proxy statements, on the dates of effectiveness and the dates of
mailing, respectively) (i) complied as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(b) The audited consolidated financial statements and unaudited
consolidated interim financial statements included in the Company S-1 (including
any related notes and schedules) fairly present, in all material respects, the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods set forth therein, and in each
case were prepared in accordance with GAAP consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto and
subject, in the case of financial statements for quarterly periods, to normal
year-end adjustments that would not be material in amount).
(c) There are no liabilities or obligations of the Company or any
Company Subsidiary (whether accrued, contingent, absolute, determined,
determinable or otherwise) which would be required by GAAP to be reflected on a
consolidated balance sheet (or in the notes thereto) of the Company other than
(i) liabilities or obligations disclosed or provided for in the Company Balance
Sheet or disclosed in the notes thereto, (ii) liabilities or obligations
incurred after the Balance Sheet Date in the ordinary course of business
consistent with past practice, (iii) liabilities or obligations under this
Agreement or incurred in connection with the transactions contemplated hereby or
disclosed in Section 4.14 of the Disclosure Letter and (iv) other liabilities or
obligations that do not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(d) The Quarterly Report on Form 10-Q of Noveon, Inc. for the
quarterly period ended March 31, 2004, when filed with the SEC, including any
financial statements or schedules included or incorporated by reference therein
(i) will comply as to form in all material respects with the applicable
requirements of the Exchange Act and (ii) will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements included in such Quarterly Report on Form 10-Q (including
any related notes and schedules), when filed with the SEC, will fairly present,
in all material respects, the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and their consolidated cash flows for the periods
set forth therein, and in each case will have been prepared in accordance with
GAAP consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto and subject to normal year-end adjustments that
would not be material in amount).
Section 4.8 Absence of Certain Changes or Events.
(a) Except as set forth in Section 4.8 of the Disclosure Letter,
since the Balance Sheet Date and prior to the date hereof, the business of the
Company and its
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Subsidiaries has been conducted in all material respects in the ordinary
course of business consistent with past practice. Since the Balance Sheet Date,
there has not been any event, occurrence or development that, individually or in
the aggregate, has had, or would reasonably be expected to have, a Material
Adverse Effect on the Company. For purposes of this Agreement, "MATERIAL ADVERSE
EFFECT ON THE COMPANY" means any circumstance, event, change, development or
occurrence that, either individually or in the aggregate with all other
circumstances, events, changes, developments or occurrences, has had,
constitutes or would reasonably be expected to result in a material adverse
effect on (i) the business, results of operations or financial condition of the
Company and its Subsidiaries, taken as a whole, but excluding any such
circumstance, event, change, development or occurrence resulting from or arising
out of (A) general national, international or regional economic, financial or
business conditions, (B) conditions (including changes in economic, financial
market, regulatory or political conditions and any change in Law or GAAP)
affecting generally the industries in which the Company and its Subsidiaries
participate or (C) the execution, announcement and performance of this
Agreement, or any actions taken, delayed or omitted to be taken by the Company
in accordance with the terms and conditions of this Agreement or at the written
request of Parent, Merger Sub or any of their representatives or (ii) the
ability of the Company to consummate the Merger in accordance with the terms and
conditions of this Agreement.
(b) Without limiting the generality of the foregoing Section
4.8(a), since the Balance Sheet Date and prior to the date hereof, other than in
the ordinary course of business, there has not been:
(i) any material damage, destruction or loss to any of the
material assets or properties of the Company or any of its material
Subsidiaries (whether or not insured);
(ii) any amendment or change in the Company's organizational
or governing documents;
(iii) any declaration, setting aside or payment of any
dividend or distribution or capital return in respect of any shares of
the Company's capital stock or any redemption, purchase or other
acquisition by the Company or any of its Subsidiaries of any shares of
the Company's capital stock or any amendment of any material term of
any outstanding capital stock of the Company or any of its
Subsidiaries;
(iv) any sale, assignment, transfer, lease or other
disposition or agreement to sell, assign, transfer, lease or otherwise
dispose of any Owned Real Property, Leased Real Property or any other
asset of the Company that is material, individually or in the
aggregate, other than the sale of inventory in the ordinary course of
business;
(v) any acquisition (by merger, consolidation, or acquisition
of stock or assets) by the Company or any of its Subsidiaries of any
corporation, partnership or other business organization or division
thereof or any equity interest therein;
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(vi) any (A) incurrence of or guarantee with respect to or
provision of credit support for any indebtedness for borrowed money by
the Company or any of its Subsidiaries, other than pursuant to the
Company's or any Company Subsidiary's existing credit facilities in the
ordinary course of business, (B) event of default or default under the
Company's or any Company Subsidiary's existing credit facilities or
outstanding loans, or (C) creation, sufferance or assumption by the
Company or any of its Subsidiaries of any material Lien on any material
asset, other than Permitted Liens;
(vii) any change in any method of accounting or accounting
principle or practice used by the Company or any of its Subsidiaries,
other than such changes required by Law or a change in GAAP;
(viii) any material Tax election or the institution of or any
compromise or settlement of any proceeding or proposed adjustment with
respect to any material Tax liability of the Company and its
Subsidiaries;
(ix) any material loan, advance or capital contribution made
by the Company or any of its Subsidiaries to, or investment in, any
Person other than loans, advances or capital contributions made to a
Company Subsidiary or by a Company Subsidiary to the Company;
(x) any amendment, alteration or modification in any material
term of any currently outstanding Company Options, or any issuance by
the Company or any of its Subsidiaries of any options, warrants or
other rights to purchase any capital stock or other equity interests in
the Company or such Subsidiaries (as the case may be) or any securities
exchangeable or exercisable for or convertible into the same; or
(xi) any agreement to take any actions specified in this
Section 4.8(b), except for this Agreement.
Section 4.9 Litigation. Except as set forth in Section 4.9 of the
Disclosure Letter, there is no material action, material suit, material claim,
material investigation, material arbitration or material proceeding pending or,
to the Knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries or their respective assets or properties before any
arbitrator or Governmental Authority (a "PROCEEDING"). No grand jury proceedings
or criminal indictments are pending or, to the Knowledge of the Company,
threatened against the Company or any of its Subsidiaries or any of the
Company's directors or officers relating to the actions or omissions of any such
individuals in connection with their respective roles as directors or officers
of the Company.
Section 4.10 Taxes.
(a) The Company and each of its Subsidiaries have timely filed or
caused to be timely filed or will timely file or cause to be timely filed with
the appropriate Taxing Authorities all material Tax Returns that are required to
be filed on or prior to the Closing Date (taking into account extensions) by, or
with respect to, the Company and its Subsidiaries. The Tax Returns have
accurately reflected and will accurately reflect all material liability for
Taxes of the Company and its Subsidiaries for the periods covered thereby.
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(b) All material Taxes of the Company and each of its
Subsidiaries for all taxable years or periods that end as of or before the
Effective Time, and, with respect to any taxable year or period beginning before
and ending after the Effective Time, the portion of such taxable year or period
ending as of the Effective Time, have been timely paid or accrued on the books
and records of the Company in accordance with GAAP. The provision for Taxes in
the Balance Sheet is sufficient in all material respects to cover all Tax
liabilities, fixed or contingent, attributable to all taxable years or periods
ending on or prior to the Balance Sheet Date.
(c) Except as set forth in Section 4.10 of the Disclosure Letter,
since the date of formation of the Company, neither the Company nor any of its
Subsidiaries has been included in any "consolidated," "unitary" or "combined"
Tax Return provided for under the law of the United States or any nation, state,
locality or other jurisdiction with respect to Taxes for any taxable period for
which the statute of limitations has not expired, other than a "consolidated,"
"unitary" or "combined" group of which the Company or any of its Subsidiaries
was the common parent.
(d) All material Taxes which the Company or any of its
Subsidiaries is (or was) required by law to withhold or collect have been duly
withheld or collected and have been timely paid over to the proper authorities
to the extent due and payable.
(e) The Company has not been a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(f) There are no tax sharing, allocation, indemnification or
similar agreements or arrangements in effect as between the Company or any
predecessor or Affiliate or Subsidiary thereof and any other party (including
any of the Company's shareholders, but excluding the Company and its
Subsidiaries) under which the Company or any of its Subsidiaries could be liable
for any Taxes or other claims of any such other party.
(g) Neither the Company nor any of its Subsidiaries has applied
for, been granted, or agreed to any accounting method change for which it will
be required to take into account any adjustment under Section 481 of the Code
(or, to the Knowledge of the Company, any similar provision of the Code or the
corresponding tax laws of any nation, state, locality or other jurisdiction).
(h) There are no Liens for Taxes upon the assets of the Company
or any of its Subsidiaries except Liens for current Taxes not yet due.
(i) Except for those transactions fully disclosed in Section 4.10
of the Disclosure Letter for which full documentation has been provided to
Parent, to the Knowledge of the Company, neither the Company nor any of its
Subsidiaries has participated in a reportable transaction under Section 6011 of
the Code and Treasury Regulations promulgated thereunder.
(j) Except as set forth in Section 4.10(j) of the Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to any
agreement that would require it to make any payment that would constitute an
"excess parachute payment" for purposes of Sections 280G and 4999 of the Code.
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(k) Since March 1, 2001, excluding the transactions contemplated
by this Agreement, to the Knowledge of the Company, there has not been an
ownership change (within the meaning of Section 382 of the Code) of the Company.
Section 4.11 ERISA.
(a) Section 4.11(a) of the Disclosure Letter contains an accurate
and complete list of (i) all material domestic "employee benefit plans," within
the meaning of Section 3(3) of ERISA, (ii) all material domestic bonus, stock
option, stock purchase, restricted stock, incentive, profit-sharing, pension,
retirement, deferred compensation, medical, life, disability, severance and
supplemental retirement plans, programs and/or arrangements (whether or not
insured) (other than the Executive Change of Control Agreements) and (iii) all
Material Employment Agreements (other than the Executive Change of Control
Agreements) for active, retired or former employees or directors that are
maintained or contributed to (or with respect to which an obligation to
contribute has been undertaken) and with respect to which any potential
liability is borne by the Company or any of its Subsidiaries (each such plan or
program an "EMPLOYEE BENEFIT PLAN"). Except for the Executive Change of Control
Agreements and the agreements and arrangements set forth in Section 4.11(a) of
the Disclosure Letter, neither the Company nor its Subsidiaries is a party to
any Material Employment Agreement.
(b) Except as set forth in Section 4.11(b) of the Disclosure
Letter, and except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, each Employee Benefit Plan has at
all times been maintained and operated in compliance in all material respects
with its terms and the requirements of all applicable Laws, including, without
limitation, ERISA and the Code. Except as set forth in Section 4.11(b) of the
Disclosure Letter, neither the Company nor any of its Subsidiaries has any
commitment, intention or understanding to create, modify or terminate any
Employee Benefit Plan.
(c) Except as set forth in Section 4.11(c) of the Disclosure
Letter, and except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, neither the Company nor any of its
ERISA Affiliates has incurred any withdrawal liability (including any contingent
or secondary withdrawal liability) within the meaning of Section 4201 or 4204 of
ERISA to any Employee Benefit Plan which is a "multiemployer plan" (as such term
is defined in Section 4001(a)(3) of ERISA) ("MULTIEMPLOYER PLAN") and no event
has occurred and no condition or circumstance has existed that presents a
material risk of the occurrence of any withdrawal from or the partition,
termination, reorganization or insolvency of any such Multiemployer Plan which
could result in any liability of the Company or any of its Subsidiaries to any
such Multiemployer Plan.
(d) Except as set forth in Section 4.11(d) of the Disclosure
Letter or as described in the Company SEC Reports, neither the Company nor any
of its ERISA Affiliates maintains any Employee Benefit Plan (whether qualified
or nonqualified within the meaning of Section 401(a) of the Code) providing for
retiree health and/or life benefits.
(e) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect (i) there are no
actions, suits or claims pending, or, to the Knowledge of the Company,
threatened, anticipated or expected to be asserted against any
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Employee Benefit Plan or the assets of any such plan (other than routine claims
for benefits and appeals of denied routine claims), (ii) no civil or criminal
action brought pursuant to the provisions of Title I, Subtitle B, Part 5 of
ERISA is pending, threatened, anticipated, or expected to be asserted against
the Company or any of its Subsidiaries or any fiduciary of any Employee Benefit
Plan, in any case with respect to any Employee Benefit Plan and (iii) and except
as set forth in Section 4.11(e) of the Disclosure Letter, no Employee Benefit
Plan or any fiduciary thereof has been the direct or indirect subject of an
audit, investigation or examination by any governmental or quasi-governmental
agency.
(f) Except as set forth in Section 4.11(f) of the Disclosure
Letter, full payment has been made of all amounts which the Company or any of
its Subsidiaries is required, under applicable Law or under any Employee Benefit
Plan or any agreement relating to any Employee Benefit Plan to which the Company
or any of its Subsidiaries is a party, to have paid as contributions thereto as
of the last day of the most recent fiscal year of such Employee Benefit Plan
ended prior to the date hereof.
(g) Except as set forth in Section 4.11(g) of the Disclosure
Letter, since the Balance Sheet Date, there has been (i) no material adverse
change in the financial condition of any Employee Benefit Plan which is covered
by Title IV of ERISA and which is a "Single Employer Plan" (as such term is
defined in Section 4001(a)(15) of ERISA) ("SINGLE EMPLOYER PLAN") by reason of
any increase in benefits, (ii) no change in the actuarial assumptions with
respect to any Single Employer Plan and (iii) no increase in benefits under any
Single Employer Plan as a result of plan amendments, written interpretations or
announcements (whether written or not), change in applicable Law or otherwise.
(h) Neither the Company nor any of its ERISA Affiliates sponsors,
maintains or contributes to or has any obligation to contribute to any
Multiemployer Plan.
(i) Each Employee Benefit Plan intended to be qualified under
Section 401(a) of the Code has been determined to be so qualified, as to form,
by the Internal Revenue Service. Each trust established in connection with any
Employee Benefit Plan which is intended to be exempt from Federal income
taxation under Section 501(a) of the Code has been determined to be so exempt by
the Internal Revenue Service. Since the date of each most recent determination
referred to in this paragraph (i), to the Knowledge of the Company, no event has
occurred and no condition or circumstance has existed that resulted or is
reasonably likely to result in the revocation of any such determination or that
could adversely affect the qualified status of any such Employee Benefit Plan or
the exempt status of any such trust in a manner that cannot be corrected without
material liability.
(j) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, neither the Company
nor any of its Subsidiaries nor any of their respective directors, officers,
employees or, to the Knowledge of the Company, other persons who participate in
the operation of any Employee Benefit Plan or related trust or funding vehicle
has engaged in any transaction with respect to any Employee Benefit Plan or
breached any applicable fiduciary responsibilities or obligations under Title I
of ERISA that (i) would subject any of them to a tax, penalty or liability for
prohibited transactions under ERISA or the
-21-
Code or (ii) would result in any claim being made under, by or on behalf of any
such Employee Benefit Plan by any party with standing to make such claim.
(k) Except as set forth in Section 4.11(k) of the Disclosure
Letter (i) the execution of this Agreement and the consummation of the
transactions contemplated hereby do not constitute a triggering event under any
Employee Benefit Plan, policy, arrangement, statement, commitment or agreement,
whether or not legally enforceable, which (either alone or upon the occurrence
of any additional or subsequent event) will or may result in any payment
(whether of severance pay or otherwise), acceleration, vesting or increase in
benefits to any employee or former employee or director of the Company or any of
its Subsidiaries or (ii) no Employee Benefit Plan provides for the payment of
severance benefits upon the termination of an employee's employment.
(l) The Company has made available to Parent true and complete
copies of all material plan documents in connection with each Employee Benefit
Plan, including, without limitation (where applicable): (i) all Employee Benefit
Plans as in effect on the date hereof, together with all amendments thereto,
including, in the case of any Employee Benefit Plan not set forth in writing, a
written description thereof, (ii) all current summary plan descriptions and
summaries of material modifications, (iii) all current trust agreements,
declarations of trust and other documents establishing other funding
arrangements (and all amendments thereto), (iv) the most recent Internal Revenue
Service determination letter obtained with respect to each Employee Benefit Plan
intended to be qualified under Section 401(a) of the Code or exempt under
Section 501(a) of the Code, (v) the annual report on Internal Revenue Service
Form 5500-series for the last year for each Employee Benefit Plan required to
file such form, (vi) the most recently prepared actuarial valuation report for
each Employee Benefit Plan covered by Title IV of ERISA and (vii) the most
recently prepared financial statements.
Section 4.12 Labor Matters.
(a) Except as would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on the Company (i) the
Company and each of its Subsidiaries is in material compliance with all federal,
state and other applicable Laws, domestic or foreign, respecting employment and
employment practices, terms and conditions of employment and wages and hours. No
material unfair labor practice complaint against the Company or any of its
Subsidiaries is pending or, to the Knowledge of the Company, threatened before
the National Labor Relations Board or any comparable Governmental Authority in
any nation, state or other jurisdiction.
(b) Except as set forth in Section 4.12 of the Disclosure Letter
(i) there is no labor strike, dispute, slowdown or stoppage actually pending
against, or, to the Knowledge of the Company, threatened against or involving,
the Company or any of its Subsidiaries, and during the past year there has not
been any such action and (ii) in respect of the United States only, neither the
Company nor any of its Subsidiaries is a party to any collective bargaining
agreement and no collective bargaining agreement is currently being negotiated
by the Company or any of its Subsidiaries.
Section 4.13 Compliance with Laws.
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(a) Except as would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on the Company, the
Company and each of its Subsidiaries are in compliance with all Laws applicable
to the Company, its Subsidiaries and their respective businesses and activities.
Except as would not, individually or in the aggregate, be reasonably expected to
have a Material Adverse Effect on the Company, neither the Company nor any of
its Subsidiaries has Knowledge of its being under investigation with respect to,
or has it been threatened in writing to be charged with or been given notice of
any violation of, any applicable Law.
(b) Except as would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on the Company, (i) the
Company and each Company Subsidiary has and maintains in full force and effect,
and is in compliance with, all Permits necessary for the Company and each
Subsidiary to carry on their respective businesses as currently conducted and
(ii) neither the Company nor any Subsidiary has received notice that the Person
issuing or authorizing any such Permit intends to terminate or will refuse to
renew or reissue any such Permit upon its expiration.
Section 4.14 Finders' Fees. Except as set forth in Section 4.14 of
the Disclosure Letter, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of the
Company or any of its Subsidiaries and that might be entitled to any fee or
commission from the Company or any of its Affiliates in connection with the
transactions contemplated by this Agreement. The Company has provided Parent
with true and complete copies of all engagement letters or other agreements
providing for the payment of the fees and commissions described in Section 4.14
of the Disclosure Letter, and no such letters or agreements have been amended or
superseded.
Section 4.15 Environmental Matters. Except as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company, and except as disclosed in Section 4.15 of the Disclosure Letter:
(a) the Company and each of its Subsidiaries are in compliance
with all applicable Environmental Laws and have no liability, fixed or
contingent, for a violation of any Environmental Law, except for such
noncompliance and/or liabilities that are adequately reserved against in the
Balance Sheet;
(b) there are no pending or, to the Company's Knowledge,
threatened actions, suits, requests for information, orders, judgments,
investigations, claims or proceedings by or before any Governmental Authority or
any other Person against the Company or any of its Subsidiaries that pertain to
(i) any obligations or liabilities under any Environmental Law, (ii) any alleged
violations of any Environmental Law or (iii) responsibility, or potential
responsibility, for the clean-up of any Hazardous Substances, including off site
contamination;
(c) (i) all Permits required to be obtained or filed by the
Company or any of its Subsidiaries under any Environmental Laws have been duly
obtained or filed and are in full force and effect and (ii) the Company and each
of its Subsidiaries are in compliance with all such Permits applicable to it;
-23-
(d) to the Company's Knowledge, none of the real property
currently owned or leased by the Company or any of its Subsidiaries is listed or
proposed to be listed on the National Priorities List pursuant to CERCLA or on
an equivalent state or foreign list of sites required to be investigated or
cleaned up under any Environmental Law;
(e) to the Company's Knowledge, no Person has treated, stored,
disposed of, transported to or released any Hazardous Substances on or under any
real property currently owned or leased by the Company or any of its
Subsidiaries, in each case, except in material compliance with applicable
Environmental Laws;
(f) (i) since February 28, 2001, neither the Company nor any of
its Subsidiaries has manufactured or sold any asbestos, lead or products that
incorporate asbestos or lead ("DESIGNATED PRODUCTS") and (ii) no claim is
pending or, to the Company's Knowledge, threatened against the Company or any of
its Subsidiaries with respect to the use of, handling of, exposure to or the
manufacture, sale or disposal of any Designated Products; or
(g) neither the Company nor any of its Subsidiaries has taken or
caused to be taken any action that (i) is reasonably likely pursuant to Section
11.3(g)(ii) of the Xxxxxxxx APA to limit or impair in any material respect the
rights of the Company against Xxxxxxxx under Section 11.3(e) or Section 11.3(f)
of the Xxxxxxxx APA, (ii) is reasonably likely pursuant to Section 11.3(d)(v) of
the Xxxxxxxx APA to limit or impair in any material respect the rights of the
Company against Xxxxxxxx under Section 11.3(d) of the Xxxxxxxx Agreements, or
(iii) is reasonably likely to limit or impair in any material respect the rights
of the Company against third parties, or any rights of the Company against
Xxxxxxxx, in connection with any indemnification obligation that is the subject
of Section 11.3(k) of the Xxxxxxxx APA.
Section 4.16 Insurance. All Insurance Policies are with reputable
insurance carriers and are in character and amount and with such deductibles and
exclusions at least equivalent to that carried by persons engaged in similar
businesses and subject to the same or similar perils or hazards. A correct and
accurate list of all Insurance Policies has been made available to Parent. To
the Company's Knowledge, each Insurance Policy is in full force and effect,
valid and enforceable, and sufficient for compliance by the Company and its
Subsidiaries with all requirements of applicable Law. Except as set forth in
Section 4.16 of the Disclosure Letter, in the period from February 28, 2001
until the date hereof, no material claim on any Insurance Policy has been made
by the Company or any of its Subsidiaries.
Section 4.17 Contracts.
(a) The Company has made available to Parent the following
contracts (other than purchase orders and ordinary course vendor contracts):
(i) contracts for the sale of goods and services with the ten
customers with the highest dollar volume of purchases from the Company
and its Subsidiaries, taken as a whole, during 2003;
(ii) contracts for the purchase of goods or services with the
ten suppliers with the highest dollar volume of sales to the Company
and its Subsidiaries, taken as a whole, during 2003;
-24-
(iii) each partnership or joint venture agreement to which the
Company or any of its Subsidiaries is a party (other than such
agreements where the Company or its Subsidiaries are the only
partners); and
(iv) contracts for the acquisition or sale of a material
business or line of products (other than in the ordinary course of
business), whether through the purchase of stock, assets or otherwise,
under which the Company or any of its Subsidiaries or any other party
thereto has continuing rights or obligations.
(b) Neither the Company nor any of its Subsidiaries is a party to
or bound by, as of the date hereof, any material contract, undertaking,
commitment or agreement (other than the material contracts, undertakings,
commitments or agreements set forth in Section 4.17 of the Disclosure Letter
(collectively with the contracts referred to in clause (a) of this Section 4.17,
the "CONTRACTS"), the employee benefit matters set forth in Section 4.11(a) of
the Disclosure Letter, the real property leases set forth in Section 4.21 of the
Disclosure Letter and any vendor contracts entered in the ordinary course of
business) of the following categories:
(i) promissory notes, loans, agreements, indentures, evidences
of indebtedness or other instruments providing for the borrowing or
lending of money, whether as a borrower, lender or guarantor in excess
of $1,000,000;
(ii) contracts containing covenants that materially limit the
freedom of the Company or any of its material Subsidiaries to engage in
any line of business or compete with any Person in any product line or
line of business, or to operate at any location other than
distributorship agreements entered into in the ordinary course of
business;
(iii) contracts between the Company or any of its Subsidiaries
and any of the Company's stockholders other than an Employee Benefit
Plan or Material Employment Agreement; or
(iv) any other contract, agreement, arrangement or
understanding that is material to the Company or any of its respective
material Subsidiaries, the termination, or breach or default of which
could, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on the Company.
(c) As of the date hereof, each of the Contracts (which defined
term shall include the Xxxxxxxx Agreements) is a valid and binding obligation of
the Company (or the Subsidiaries party thereto), and to the Company's Knowledge,
the other parties thereto, enforceable against the Company and its Subsidiaries
and, to the Company's Knowledge, the other parties thereto in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium, reorganization, arrangement or similar laws affecting creditors'
rights generally and by general principles of equity.
(d) As of the date hereof, neither the Company nor any of its
Subsidiaries is, nor to the Knowledge of the Company is any other party, in
material breach, default or violation (and no event has occurred or not occurred
through the Company's action or inaction or, to the Knowledge of the Company,
through the action or inaction of any third parties, which with
-25-
notice or the lapse of time or both could constitute a material breach, default
or violation) of any term, condition or provision of any Contract to which the
Company or any of its Subsidiaries is now a party, or by which any of them or
any of their respective properties or assets may be bound.
(e) Without limiting the foregoing, the Agreement for Sale and
Purchase of Assets, dated as of November 28, 2000, between The X.X. Xxxxxxxx
Company ("XXXXXXXX") and the Company (the "XXXXXXXX APA") relating to the
acquisition by the Company of the Performance Materials business segment of
Xxxxxxxx, the "Confidentiality Agreement" (as defined therein) and the other
documents contained in the transaction "bible" relating to such acquisition
(together the "XXXXXXXX AGREEMENTS)," that the Company made available to Parent
constitute the entire agreement among the parties to the Xxxxxxxx Agreement
pertaining to such transaction. Copies of the Phase I environmental studies
performed by URS for or on behalf of the Company in connection with the
aforementioned Xxxxxxxx transaction have been made available to Parent. Other
than the amendments and supplements included in the "bible" or set forth in
Section 4.17(e) of the Disclosure Letter, the Xxxxxxxx Agreements have not been
amended or supplemented in any material respect. All of the pending indemnity
claims made pursuant to the Xxxxxxxx Agreements have been made available to
Parent.
Section 4.18 Legal Matters. The Company has taken all action necessary
to exempt the Merger, this Agreement and the transactions contemplated hereby
from Section 203 of the Delaware Law, and, accordingly, neither such Section nor
any other antitakeover or similar statute or regulation in effect as of the date
hereof applies or purports to apply to any such transactions.
Section 4.19 Intellectual Property.
(a) A list of all of the Intellectual Property has been made
available to Parent.
(b) Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company, and
except as specified in Section 4.19 of the Disclosure Letter:
(i) the Company or it Subsidiaries own or have a right to use
all of the Intellectual Property;
(ii) there are no material restrictions on the Company's or
the relevant Subsidiary's right to use any Intellectual Property;
(iii) the execution, delivery and performance by the Company
of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not constitute a
default giving rise to a right of termination, cancellation or
acceleration of any right or obligation of the Company or any of its
Subsidiaries or to a loss of any material benefit to which the Company
or any of its Subsidiaries is entitled under any of the Intellectual
Property Agreements;
(iv) to the Company's Knowledge, neither the Company nor any
of its Subsidiaries is infringing or misappropriating, and has not
infringed or misappropriated,
-26-
any intellectual property rights of others, and neither the Company nor
any of its Subsidiaries has received written notice of any such
infringement or misappropriation;
(v) there is no pending or, to the Company's Knowledge,
threatened legal or governmental Proceeding challenging the validity of
any Intellectual Property, and, to the Company's Knowledge, the Company
has not received any written notice from a third party alleging that
any Intellectual Property is invalid;
(vi) neither the Company nor any of its Subsidiaries have
entered into any material contract or made any material arrangement
pursuant to which any third party is entitled to any royalty or other
compensation for the use of any of the Intellectual Property;
(vii) each Intellectual Property Agreement is a valid and
binding obligation of the Company or the relevant Subsidiary and, to
the Company's Knowledge, is a valid and binding obligation of the other
parties thereto;
(viii) to the Company's Knowledge, each Intellectual Property
Agreement is in full force and effect and is enforceable in accordance
with its terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other laws relating to or limiting creditors'
rights generally or by general principles of equity, regardless of
whether such enforceability is considered in a proceeding at law or in
equity; or
(ix) to the Company's Knowledge, neither the Company nor any
of its Subsidiaries is in material breach of or in material default of
its obligations under any of the Intellectual Property Agreements and
none of the other parties to the Intellectual Property Agreements are
in material breach of or material default under any of their
obligations under the Intellectual Property Agreements.
Section 4.20 Related Party Transactions. Except for (i) the Executive
Change of Control Agreements, (ii) the Noveon, Inc. 11% senior subordinated
notes, (iii) as will not continue after the Effective Time and (iv) arms-length
arrangements between the Company or its Subsidiaries on the one hand and any
"portfolio company" of any Related Party on the other hand, none of (a) any
beneficial owner of 10% or more of the Company's outstanding capital stock, (b)
any officer or director of the Company or (c) any Person (other than the
Company) in which any such beneficial owner, officer or director owns any
beneficial interest (other than a publicly held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market and
less than 5% of the stock of which is beneficially owned by all such Persons)
((a) through (c) collectively, "RELATED PARTIES") has any interest in:
(i) any contract, agreement, arrangement or understanding with, or relating to,
the business or operations of, the Company or any of its Subsidiaries, (ii) any
loan, arrangement, understanding, agreement or contract for or relating to
indebtedness of the Company or any of its Subsidiaries or (iii) any property
(real, personal or mixed), tangible or intangible, used in the business or
operations of the Company or any of its Subsidiaries, or any property that
benefits from a contract or other arrangement by which the Company or any of its
Subsidiaries provides services or facilities or other benefits to such property,
excluding any such contract, arrangement, understanding or
-27-
agreement constituting an Employee Benefit Plan. Following the Effective Time,
except for (i) the Executive Change of Control Agreements, (ii) the Noveon, Inc.
11% senior subordinated notes, (iii) obligations expressly disclosed in Section
4.20 of the Disclosure Letter and (iv) any arrangements with Parent or its
Affiliated Entities, neither the Company nor any of its Subsidiaries will have
any obligations to any Related Party. As of the date hereof, neither the Company
nor any of its Subsidiaries is party to any engagement letter with any
investment bank that would entitle that investment bank or its Affiliates to a
fee from the Company or its Affiliates after the Effective Time.
Section 4.21 Real Property.
(a) Section 4.21(a) of the Disclosure Letter sets forth a
complete and accurate list of all real property owned in fee or real property
leased as of the date hereof by each of the Company or any of its Subsidiaries.
(b) Except as set forth in Section 4.21(b) of the Disclosure
Letter and except as would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect on the affected property: (x) as to
the real property shown in Section 4.21(a) of the Disclosure Letter as owned in
fee by the Company and/or its Subsidiaries (the "OWNED REAL PROPERTY"), (i) the
Company and/or its Subsidiaries has good and marketable fee title to the Owned
Real Property, (ii) the Owned Real Property is not subject to any mortgages,
deeds of trust or other security instruments of a similar nature and (iii) since
February 28, 2001, the Company or its Subsidiaries have not sold any material
portion of the Owned Real Property and (y) as to the real property shown on
Section 4.21(a) of the Disclosure Letter as leased by the Company and/or its
Subsidiaries (the "LEASED REAL PROPERTY"), (i) the Leased Real Property is not
subject to any mortgages, deeds of trust or other security instruments of a
similar nature securing any indebtedness of the Company or its Subsidiaries,
(ii) the Company and/or its Subsidiaries is in possession of the Leased Real
Property and there are no subleases, subtenancies or other occupancies affecting
the Leased Real Property in any material respect and (iii) the Company has made
available to Parent true, correct and complete copies of all the leases or
subleases which create the Leased Real Property located in the United States.
(c) Except as set forth in Section 4.21(c) of the Disclosure
Letter, neither the Company nor any of its Subsidiaries has received written
notice of any pending or proposed condemnation or eminent domain proceedings
affecting in any material respect any Owned Real Property and, to the Company's
Knowledge, there are no such proceedings threatened.
(d) Section 4.21(d) of the Disclosure Letter indicates those
parcels of Owned Real Property that are the subject of any agreements pursuant
to which the Company or its Subsidiaries is supplied with material utility
services by another Person whose primary line of business is not supplying
utility services. As of the date hereof, the plant services agreements to which
the Company and its Subsidiaries are a party provide the Company and its
Subsidiaries with the access to the plant services necessary for the conduct of
their respective businesses as currently conducted.
Section 4.22 NO OTHER INFORMATION. NEITHER THE COMPANY NOR ANY OTHER
PERSON HAS MADE OR MAKES ANY REPRESENTATION OR WARRANTY
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EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, AND SPECIFICALLY NEITHER THE
COMPANY NOR ANY OTHER PERSON HAS MADE OR MAKES ANY REPRESENTATION OR WARRANTY
WITH RESPECT TO ANY PROJECTIONS, ESTIMATES OR BUDGETS DELIVERED TO OR MADE
AVAILABLE TO PARENT OR MERGER SUB OR TO ANY OF THEIR RESPECTIVE AFFILIATES OR
ANY REPRESENTATION OF FUTURE REVENUES, FUTURE RESULTS OF OPERATIONS (OR ANY
COMPONENT THEREOF), FUTURE CASH FLOWS OR FUTURE FINANCIAL CONDITION (OR ANY
COMPONENT THEREOF) OF THE COMPANY AND ITS SUBSIDIARIES OR OF THE FUTURE BUSINESS
AND OPERATIONS OF THE COMPANY AND ITS SUBSIDIARIES.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company that:
Section 5.1 Corporate Existence and Power. Each of Parent and Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization and has all corporate powers and
authority required to execute and deliver this Agreement and to consummate the
Merger and the other transactions contemplated hereby and to perform each of its
obligations hereunder.
Section 5.2 Corporate Authorization. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the consummation by
Parent and Merger Sub of the transactions contemplated hereby are within the
respective corporate powers of Parent and Merger Sub and have been duly
authorized by all necessary corporate and shareholder action. This Agreement has
been duly and validly executed and delivered by Parent and Merger Sub and,
assuming the due and valid execution and delivery of the Agreement by the
Company, constitutes a valid and binding agreement of each of Parent and Merger
Sub, enforceable against Parent and Merger Sub in accordance with its terms,
except (i) as rights to indemnity hereunder may be limited by federal or state
securities Laws or the public policies embodied therein, (ii) as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar Laws affecting the enforcement of creditors' rights
generally and (iii) as the remedy of specific performance and other forms of
injunctive relief may be subject to equitable defenses and subject to the
discretion of any court before which any proceeding therefor may be brought.
Section 5.3 Governmental Authorization. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the consummation by
Parent and Merger Sub of the transactions contemplated by this Agreement will
not require any action by Parent or Merger Sub in respect of, or filing by
Parent or Merger Sub with, any Governmental Authority other than (i) the filing
of the certificate of merger in accordance with Delaware Law, (ii) compliance
with any applicable requirements of the HSR Act and any applicable Other
Antitrust Law, (iii) compliance with the applicable requirements of the Exchange
Act, (iv) compliance with the
-29-
applicable requirements of the Securities Act, (v) compliance with any
applicable foreign or state securities or Blue Sky laws and (vi) such other
items the failure of which to do or be obtained would not, individually or in
the aggregate, reasonably be expected to adversely affect in any material
respect, or materially to delay, Parent's or Merger Sub's ability to observe and
perform the respective obligations of each hereunder.
Section 5.4 Non-Contravention. The execution, delivery and performance
by Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the transactions contemplated hereby do not and will not (i)
contravene or conflict with the organizational or governing documents of Parent
or Merger Sub, (ii) assuming compliance with the items specified in Section 5.3,
contravene, conflict with or constitute a violation of any provision of Law
binding upon Parent or Merger Sub or (iii) constitute a default under or give
rise to any right of termination, cancellation or acceleration of any right or
obligation of Parent or Merger Sub or to a loss of any material benefit to which
Parent or Merger Sub is entitled under any agreement, contract or other
instrument.
Section 5.5 Finders' Fees. Except as otherwise disclosed in writing to
the Company, there is no investment banker, broker, finder or other intermediary
that has been retained by or is authorized to act on behalf of Parent or Merger
Sub or any of their respective Affiliates and that would be entitled to any fee
or commission from Parent, Merger Sub, the Company, any Subsidiary of the
Company or from any of their respective Affiliates in connection with the
transactions contemplated by this Agreement.
Section 5.6 Adequate Funds. Parent will have at the Effective Time
sufficient funds for the payment of the aggregate Merger Consideration and to
perform its obligations under this Agreement.
ARTICLE VI.
COVENANTS OF THE COMPANY
Section 6.1 Conduct of the Company and Subsidiaries. Except for matters
set forth in Section 6.1 of the Disclosure Letter or as specifically provided in
this Agreement, unless Parent shall otherwise consent in writing (which consent
shall not be unreasonably withheld, conditioned or delayed), from the date of
this Agreement to the Effective Time, the Company shall, and shall cause its
Subsidiaries to, conduct their respective businesses in all material respects in
the ordinary and usual course consistent with past practice and shall use its
reasonable best efforts to (i) preserve substantially intact the present
business organization of the Company and its Subsidiaries, (ii) maintain in
effect all material Permits that are required for the Company or any of its
Subsidiaries to carry on their respective businesses, (iii) keep available the
services of present officers and key employees (as a group) of the Company and
its Subsidiaries and (iv) maintain the current relationships with its lenders,
suppliers and other Persons with which the Company or its Subsidiaries have
significant business relationships. Without limiting the generality of the
foregoing, and except for matters set forth in Section 6.1 of the Disclosure
Letter or in the ordinary and usual course of business consistent with past
practice or as expressly contemplated or permitted by this Agreement, without
the prior written consent of Parent (which consent shall not be unreasonably
withheld, conditioned or delayed), the Company shall not, and shall not permit
its Subsidiaries to:
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(a) enter into any new line of business, discontinue any line of
business or, change in its organizational or governing documents;
(b) except for transactions among the Company and its
Subsidiaries, (i) acquire (by merger, consolidation, acquisition of stock or
assets, joint venture or otherwise) any Person or a material amount of assets,
or sell, lease or otherwise dispose of a material amount of assets (other than
the purchase and sale of inventory and raw materials in the ordinary course of
business), (ii) waive, release, grant, or transfer any rights of material value,
(iii) modify or change in any material respect, allow to expire or lapse or fail
to renew any material Permit or material Insurance Policy, (iv) incur, assume or
prepay any indebtedness for borrowed money except pursuant to its existing
credit facilities in the ordinary course of business, consistent with past
practice, (v) assume, guarantee, endorse or take any action to otherwise become
liable or responsible (whether directly, contingently or otherwise) for any
indebtedness for borrowed money or trade payables of any other Person, except in
the ordinary course of business consistent with past practice, (vi) make any
loans, advances or capital contributions to, or investments in, any other
Person, except in the ordinary course of business consistent with past practice
or as required by existing contracts to which the Company or any of its
Subsidiaries is a party ("EXISTING CONTRACTS"), (vii) authorize any material
capital expenditures not designated on Section 6.1(b)(vii) of the Disclosure
Letter, (viii) pledge or otherwise encumber shares of capital stock or other
voting securities of any of the Company's Subsidiaries, (ix) mortgage or pledge
any of its material assets, tangible or intangible, or create any Lien thereupon
(other than Permitted Liens), (x) enter into any contract or agreement other
than in the ordinary course of business consistent with past practice that would
be material to the Company and its Subsidiaries, taken as a whole or (xi) amend,
modify or waive in any material respects any material right under any material
Existing Contract;
(c) (i) split, combine or reclassify any Company Securities or
amend the terms of any Company Securities, (ii) declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of Company Securities other than any
distribution by a wholly owned Company Subsidiary to its parent corporation in
the ordinary course of business, or (iii) redeem, repurchase or otherwise
acquire or offer to redeem, repurchase, or otherwise acquire any Company
Securities, or issue any Company Options or other Company Securities, other than
in connection with the exercise of Company Options outstanding on the date
hereof;
(d) adopt or materially amend any Employee Benefit Plan or any
agreement with any director or employee of the Company or any of its
Subsidiaries or materially increase in any manner the compensation or fringe
benefits of any such director or employee, in each case, except as required by
ERISA or other applicable Law or by existing contract in accordance with the
terms of such contract in effect as of the date hereof;
(e) (i) pay any bonus to any director or employee of the Company
or any of its Subsidiaries, except pursuant to the terms of any existing
agreement in accordance with the terms of such agreement as in effect as of the
date hereof and except as contemplated by the Executive Change of Control
Agreements, (ii) enter into any agreement, commitment or obligation to pay any
bonus, change-of-control payment or severance payment to any director or
employee of the Company or any of its Subsidiaries or (iii) enter into any
employment
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agreement with any director or officer of the Company or any of its Subsidiaries
or with any employee of the Company or any of its Subsidiaries that provides for
annual base salary in excess of $100,000;
(f) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent or
otherwise) except as permitted by clause (i) below;
(g) make any election relating to Taxes or settle or compromise
any material Tax liability;
(h) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets, liabilities or
results of operations of the Company and its Subsidiaries, except insofar as may
have been required by a change in GAAP or Regulation S-X of the Exchange Act and
after consulting with independent accountants;
(i) alter the corporate structure or ownership of any of its
Subsidiaries, through merger, liquidation, reorganization, restructuring or any
other fashion;
(j) settle, pay or discharge, any litigation, investigation,
arbitration, proceeding or other claim, liability or obligation arising from the
conduct of business except in the ordinary course; or
(k) authorize, agree or commit to do any of the foregoing.
Notwithstanding the foregoing, at Closing the Company shall, or shall
cause Noveon, Inc. to, make the payments described in the letter delivered to
Parent on or prior to the date hereof.
Section 6.2 Other Actions by the Company. The Company will, and will
cause its Subsidiaries to, at the request of Parent, provide such cooperation as
Parent may reasonably request so that, at or as soon as practicable at or after
the Effective Time, Parent can refinance the Noveon, Inc. 11% senior
subordinated notes, the Company's 13% senior subordinated notes and any other
indebtedness for borrowed money of the Company and its Subsidiaries.
Section 6.3 Access to Information; Right of Inspection.
(a) The Company will provide and will cause its Subsidiaries and
its and their respective representatives to provide Parent and Merger Sub and
their respective authorized representatives, during normal business hours and
upon reasonable advance notice (i) access to the offices, properties, personnel
(including without limitation the managers in charge of operations and the
managers responsible for environmental, intellectual property, human resources,
tax, insurance, accounting and treasury), books and records of the Company (so
long as such access does not unreasonably interfere with the operations of the
Company) as Parent or Merger Sub may reasonably request, (ii) access to the
Owned Real Property and Leased Real Property (including any facilities located
thereon) of the Company and each of its Subsidiaries for purposes of performing
Phase I environmental site assessments as Parent shall determine to be necessary
or appropriate in connection with its due diligence review (provided, however,
that in no event shall Parent be permitted to conduct any sampling or intrusive
investigation of air,
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soil, sediment, groundwater or surface water in connection with such
assessments) and (iii) all documents that Parent or Merger Sub may reasonably
request relating to the Company or any of its Subsidiaries or any of their
respective businesses including, without limitation, a list of all of the
directors and officers of the Company's Subsidiaries and each representative of
the Company or any of its Subsidiaries serving as a director or officer of any
Affiliated Entity of the Company or any of its Subsidiaries and all Insurance
Policies. Notwithstanding the foregoing, Parent, Merger Sub and their
representatives shall not have access to any books, records and other
information the disclosure of which would, in the Company's good faith opinion
after consultation with legal counsel, result in the loss of attorney-client
privilege with respect to such books, records and other information or cause the
Company or any of its Subsidiaries or their representatives to violate Law or
any contracts to which they are party (provided that, in the case of any
contract that restricts the Company or its Subsidiaries from permitting third
parties to review such contract, the Company shall use its reasonable best
efforts to obtain the consent of the applicable parties under the contract to
the review of such agreement by Parent and its representatives and provided
further that the Company will not invoke the attorney-client privilege to
prevent Parent from gaining access to the Company's environmental reports and
assessments). Any information provided to Parent or Merger Sub or their
representatives pursuant to this Section 6.3 shall be subject to the
Confidentiality Agreement.
(b) If Parent elects to obtain updated surveys of any or all of
the Owned Real Property or the Leased Real Property, the Company shall provide
access to the sites to be surveyed and shall cooperate with the Parent in
arrangement for expeditious completion of the survey work on site.
(c) At the request of the Parent, the Company shall request
estoppel certificates, in form and substance reasonably acceptable to the Parent
and the Company, from any party other than the Company and its Subsidiaries to
the lease documents for Leased Real Properties, and shall use its reasonable
efforts to assist the Parent in obtaining such estoppel certificates.
(d) Between the date of this Agreement and the Closing, the
Company shall from time to time, during normal business hours and upon the
reasonable request of Parent, provide details to Parent and its officers
regarding the operations and financial performance of the Company and its
Subsidiaries.
Section 6.4 Other Potential Acquirers.
(a) The Company shall immediately terminate, and shall cause its
Subsidiaries and its and their representatives to immediately terminate, all
existing discussions or negotiations, if any, with any Person (other than Parent
and Merger Sub) with respect to, or that would reasonably be expected to lead
to, a Third Party Acquisition.
(b) Neither the Company nor any of its Subsidiaries or controlled
Affiliates shall, nor shall the Company authorize or permit any of its or their
respective officers and directors to, and the Company shall use its reasonable
best efforts to cause its and their respective non-controlled Affiliates,
employees, representatives and agents not to, directly or indirectly, knowingly
encourage, solicit or engage in discussions or negotiations with or provide
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any non-public information to, or afford access to any of the properties, books
or records of the Company or its Subsidiaries to, any Third Party or its
representatives concerning any Third Party Acquisition. The Company shall
promptly notify Parent and Merger Sub in the event it receives any proposal or
inquiry concerning (or that would reasonably be expected to lead to) a Third
Party Acquisition, including (to the extent permitted) the material terms and
conditions thereof and the identity of the party making such proposal or
inquiry, and shall keep them reasonably apprised as to the status and any
material developments concerning the same.
Section 6.5 Resignation of Directors. Prior to the Effective Time, the
Company shall deliver to Parent and Merger Sub evidence reasonably satisfactory
to Parent and Merger Sub of the resignations (effective as of the Effective
Time) of (i) all directors of the Company and each of its Subsidiaries and (ii)
the officers of the Company and each of its Subsidiaries, as shall be requested
by Parent prior to the Effective Time.
Section 6.6 ISRA Filings. Prior to Closing, the Company shall use
reasonable efforts to cooperate to obtain, or cause to be obtained, in
connection with the transactions contemplated by this Agreement, from the New
Jersey Department of Environmental Protection ("NJDEP"), in accordance with the
provisions of the New Jersey Industrial Site Recovery Act, N.J.S.A. Section
13:1K-6 et seq., (i) a "Negative Declaration," (ii) "No Further Action Letter,"
(iii) a "remedial action workplan," (iv) a "remediation agreement," (v) approval
of an expedited review application under N.J.S.A. 13:1K-11.2, (vi) approval of a
remediation in progress waiver application under N.J.S.A. 13:1K-11.5, or (vii) a
determination that the transactions contemplated by this Agreement may proceed
without further approvals by NJDEP and without further actions by the Company;
in each case, with respect to the Owned Real Property and Leased Real Property,
as the case may be, located in New Jersey.
Section 6.7 FIRPTA Certificate. Prior to the Effective Time, (i) the
Company shall deliver to Parent and Merger Sub a certificate signed under
penalties of perjury by an officer of the Company to the effect that the Company
is not or has not been a United States real property holding company, as defined
in Section 897(c)(2) of the Code, during the applicable period described in
Section 897(c)(1)(A)(ii) of the Code.
ARTICLE VII.
COVENANTS OF PARENT AND MERGER SUB
Section 7.1 Director and Officer Liability.
(a) The Surviving Corporation shall, and after the Effective Time
Parent shall cause the Surviving Corporation to, comply with all of the
Company's and its respective Subsidiaries' obligations to indemnify and hold
harmless (including any obligations to advance funds for expenses) the present
and former officers and directors thereof in respect of acts or omissions
occurring prior to or at the Effective Time to the extent provided under the
Company's or such Subsidiaries' respective organizational and governing
documents in effect on the date hereof, and such obligations shall survive the
Merger and shall continue in full force and effect in accordance with the terms
of the Surviving Corporation's articles of incorporation and bylaws from the
Effective Time until the expiration of the applicable statue of limitations with
respect to any claims against such directors or officers arising out of such
acts or omissions. Any
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determination required to be made with respect to whether the conduct of an
individual seeking indemnification has complied with the standards set forth
under applicable Law shall be made by independent counsel mutually acceptable to
the Surviving Corporation and such individual. For a period of six years after
the Effective Time, the Surviving Corporation shall cause to be maintained in
effect the current policies of officers' and directors' liability insurance
maintained by the Company and its respective Subsidiaries (the "CURRENT
POLICIES"); provided however, that the Surviving Corporation may, and in the
event of the cancellation or termination of such policies the Surviving
Corporation shall, substitute such policies with equally reputable and
financially sound carriers and that are reasonably satisfactory to the covered
persons providing at least the same coverage and amount and containing terms and
conditions that are no less favorable to the covered persons (the "REPLACEMENT
POLICIES") in respect of claims arising from facts or events that existed or
occurred prior to or at the Effective Time under the Current Policies; provided
further however, that in no event will the Surviving Corporation be required to
expend annually in excess of 200% of the annual premium currently paid by the
Company for such coverage (or to provide more than that amount of coverage as is
available for no more than 200% of such current annual premium); provided
further however, that in lieu of the foregoing insurance coverage, with the
consent of Parent (which consent shall not be unreasonably withheld), the
Company may purchase "tail" insurance coverage that provides coverage no less
favorable than the coverage described above.
(b) This Section 7.1 shall survive the consummation of the Merger
and is intended to be for the benefit of, and shall be enforceable by, present
or former directors or officers of the Company or its Subsidiaries, their
respective heirs and personal representatives and shall be binding on the
Surviving Corporation, Parent and their respective successors and assigns, and
the agreements and covenants contained herein shall not be deemed to be
exclusive of any other rights to which any such present or former director or
officer is entitled, whether pursuant to Law, contract or otherwise. Nothing in
this Agreement is intended to, shall be construed to or shall release, waive or
impair any rights to directors' and officers' insurance claims under any policy
that is or has been in existence with respect to the Company or any of its
Subsidiaries or their respective officers, directors and employees, it being
understood and agreed that the indemnification provided for in this Section 7.1
is not prior to or in substitution for any such claims under any such policies.
(c) If Parent or the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity or (ii) transfers
or conveys substantially all of its properties and assets to any person, then
and in each case to the extent reasonably necessary, proper provision shall be
made so that the successors and assigns of Parent or the Surviving Corporation
shall assume the obligations set forth in this Section 7.1.
ARTICLE VIII.
COVENANTS OF THE PARTIES
The parties hereto agree that:
Section 8.1 Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each party will (and will cause its Affiliates to)
use its reasonable best efforts to take,
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or cause to be taken, all actions, to file, or cause to be filed, all documents
and to do, or cause to be done, all things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement, including obtaining
all necessary consents, waivers, approvals, authorizations, Permits or orders
from all Governmental Authorities or other Persons; provided that in no event
shall the Company or any of its Affiliates be required to pay prior to the
Effective Time any material fee, penalties or other consideration to any third
party to obtain any consent or approval required for the consummation of the
Merger under any material contracts. Each party shall also (and will cause its
Affiliates to) refrain from taking, directly or indirectly any action (including
making acquisitions), that would be reasonably likely to result in a failure of
any of the conditions to the Merger in this Agreement being satisfied or
restrict such party's ability to consummate the Merger and the other
transactions contemplated hereby. Without limiting the foregoing, the Company
shall use its reasonable best efforts (i) to take all action necessary so that
no takeover, anti-takeover, moratorium, "fair price," "control share" or other
similar statute or regulation is or becomes applicable to the Merger or any of
the other transactions contemplated by this Agreement and (ii) if any such Law
is or becomes applicable to any of the foregoing, to take all action necessary
so that the Merger and the other transactions contemplated by this Agreement may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger and the other transactions contemplated by this Agreement.
Section 8.2 Certain Filings.
(a) The parties shall cooperate with one another (i) in
determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals or
waivers are required to be obtained from any parties to any material contracts,
in connection with the consummation of the transactions contemplated by this
Agreement and (ii) in seeking and obtaining any such actions, consents,
approvals or waivers or making any such filings, furnishing information required
in connection therewith; provided that the conditions to the parties' respective
obligations to consummate the transactions contemplated hereby shall be limited
to those conditions specified in Article IX. The parties shall have the right to
review in advance, and to the extent reasonably practicable each will consult
the other on, all the information relating to the other and each of their
respective Subsidiaries that appears in any filing made with, or written
materials submitted to, any Governmental Authority in connection with the Merger
and the other transactions contemplated by this Agreement. Each of the Company
and Parent shall promptly notify and provide a copy to the other party of any
written communication received from any Governmental Authority with respect to
any filing or submission or with respect to the Merger and the other
transactions contemplated by this Agreement. Each of the Company and Parent
shall give the other reasonable prior notice of any communication with, and any
proposed understanding, undertaking or agreement with, any Governmental
Authority regarding any such filing or any such transaction. Neither the Company
nor Parent shall, nor shall they permit their respective representatives to,
participate independently in any meeting or engage in any substantive
conversation with any Governmental Authority in respect of any such filing,
investigation or other inquiry without giving the other party prior notice of
such meeting or conversation and without giving, unless prohibited by such
Governmental Authority, the opportunity of the other party to attend or
participate. The parties to this Agreement will consult and cooperate with one
another in connection with any analyses, appearance, presentations, memoranda,
briefs, arguments, opinions, and proposals made or
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submitted by or on behalf of any party to this Agreement in connection with
proceedings under or related to the HSR Act or Other Antitrust Laws.
(b) The parties (i) shall use their respective reasonable best
efforts to take or cause to be taken such actions as may be required to be taken
under the Exchange Act and state securities or applicable Blue Sky Laws in
connection with the Merger and (ii) shall promptly prepare and file all
necessary documentation, effect all necessary applications, notices, petitions
and filings, and use all reasonable efforts to obtain all necessary consents
from any Governmental Authorities necessary to consummate the Merger (including,
without limitation, any filing under the HSR Act or any applicable Other
Antitrust Law).
(c) If required, each of the Company, Parent and Merger Sub shall
take all reasonable action necessary (i) to file as soon as practicable
notifications or other required items under the HSR Act and any applicable Other
Antitrust Law, (ii) to respond as promptly as practicable to any inquiries from
the Federal Trade Commission and the Antitrust Division of the Department of
Justice for additional information or documentation, (iii) to comply with the
requirements of, and respond as promptly as reasonably practicable to all
inquiries and requests for additional information received from any Governmental
Authority in connection with, the HSR Act or Other Antitrust Laws related to the
Merger or the other transactions contemplated by this Agreement and (iv) to use
reasonable best efforts to avoid or eliminate each and every impediment under
the HSR Act or any Other Antitrust Law that may be asserted by any Governmental
Authority with respect to the Merger so as to enable the Closing to occur as
soon as reasonably possible and in any event no later than the End Date.
Section 8.3 Public Announcements. So long as this Agreement is in
effect, the parties will use reasonable best efforts to consult with each other
before issuing any press release or making any public statement with respect to
this Agreement or the transactions contemplated hereby and, except for any press
release or public statement a party determines may be required by applicable Law
or the New York Stock Exchange, will not issue any such press release or make
any such public statement without the consent of the other parties (not to be
unreasonably delayed, conditioned or withheld).
Section 8.4 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets of the Company.
Section 8.5 Notices of Certain Events. Each of the parties hereto shall
reasonably promptly notify the other party of:
(a) the receipt by such party of any notice or other
communication from any Person alleging that the consent of such Person is or may
be required in connection with the transactions contemplated by this Agreement;
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(b) the receipt by such party of any notice or other
communication from any Governmental Authority in connection with the
transactions contemplated by this Agreement; and
(c) its learning of any actions, suits, claims, investigations or
proceedings commenced against, or affecting such party that, if they were
pending on the date of this Agreement, would have been required to be disclosed
pursuant to this Agreement or which relate to the consummation of the
transactions contemplated by this Agreement.
(d) its learning of any events, circumstances, developments or
facts that would make any of the representations and warranties of such party
contained in this Agreement untrue or any of the covenants or conditions
contained in this Agreement incapable of being satisfied.
Section 8.6 Disposition of Litigation. The Company will consult with
Parent and Merger Sub with respect to any action by any Third Party to restrain
or prohibit or otherwise oppose the Merger or the other transactions
contemplated by this Agreement and will use reasonable best efforts to resist
any such effort to restrain or prohibit or otherwise oppose the Merger or the
other transactions contemplated by this Agreement. In addition, the Company will
not encourage or cooperate with any Third Party to restrain or prohibit or
otherwise oppose the Merger or the other transactions contemplated by this
Agreement, and the Company will reasonably cooperate with Parent and Merger Sub
to resist any such effort to restrain or prohibit or otherwise oppose the Merger
or the other transactions contemplated by this Agreement.
Section 8.7 Employee Matters.
(a) From and after the Effective Time, Parent shall assume and
honor, or shall cause the Company and its Subsidiaries to honor, all Employee
Plans and all Employment Agreements in accordance with their terms as in effect
immediately before the Effective Time. For a period of not less than one year
following the Effective Time, Parent shall provide, or shall cause to be
provided, to current and former employees of the Company and its Subsidiaries
(the "COMPANY EMPLOYEES") employee benefits that are, in the aggregate,
substantially comparable to those provided to the Company Employees immediately
before the Effective Time, with the exception of those changes collectively
bargained with authorized union representatives. The foregoing shall not be
construed to prevent (i) the amendment or termination of any particular Employee
Benefit Plan or Employment Agreement to the extent permitted by, and in
accordance with, its terms and the terms of any contract related thereto, as in
effect immediately before the Effective Time or (ii) the termination of
employment of any individual Company Employee.
(b) For all purposes (other than benefit accrual under defined
benefit pension plans) under the employee benefit plans of Parent and its
Subsidiaries providing benefits to any Company Employees after the Effective
Time (the "NEW PLANS"), except as would result in a duplication of benefits,
each Company Employee shall be credited with all years of service for which such
Company Employee was credited before the Effective Time under any similar
Employee Benefit Plans. In addition and without limiting the generality of the
foregoing: (i) each Company Employee shall be immediately eligible to
participate, without any waiting time or satisfaction of any other eligibility
requirements, in any and all New Plans to the extent coverage under such New
Plan replaces coverage under a comparable Employee Benefit Plan in
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which such Company Employee participated immediately before the Effective Time
(such plans, collectively, the "OLD PLANS") and (ii) for purposes of each New
Plan providing medical, dental, pharmaceutical and/or vision benefits to any
Company Employee, Parent shall cause all pre-existing condition exclusions and
actively-at-work requirements of such New Plan to be waived for such employee
and his or her covered dependents, and any expenses incurred by any Company
Employee and his or her covered dependents during the portion of the plan year
of the Old Plan ending on the date such employee's participation in the
corresponding New Plan begins to be taken into account under such New Plan for
purposes of satisfying all deductible, coinsurance and maximum out-of-pocket
requirements applicable to such employee and his or her covered dependents for
the applicable plan year as if such amounts had been paid in accordance with
such New Plan.
Section 8.8 Confidentiality Agreement. The parties acknowledge that the
Company and Parent entered into the Confidentiality Agreement, which agreement
shall be deemed incorporated herein as if it were set forth in its entirety, and
shall continue in full force and effect in accordance with its terms until the
earlier of (i) the Effective Time or (ii) the expiration of that Confidentiality
Agreement according to its terms. Notwithstanding the foregoing or anything
herein or in the Confidentiality Agreement to the contrary, any party to this
Agreement (and their employees, representatives or other agents) may disclose to
any and all persons, without limitation of any kind, the tax treatment and tax
structure of the transactions contemplated by this Agreement and all material of
any kind (including opinions or other tax analysis) that are provided to such
party relating to such tax treatment and tax structure; provided however, that
this sentence shall not permit any disclosure that otherwise is prohibited by
this Agreement, the Confidentiality Agreement or any other confidentiality
agreement between or among the parties as of the date hereof or where such
disclosure would result in a violation of federal or state securities Laws or to
the extent not related to the tax aspects of the transactions contemplated
hereby. Moreover, nothing in this Agreement shall be construed to limit in any
way any party's ability to consult any tax advisor regarding the tax treatment
or tax structure of the transactions contemplated hereby.
ARTICLE IX.
CONDITIONS TO THE MERGER
Section 9.1 Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or, where permitted, waiver of the following
conditions:
(a) any applicable waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have expired or been terminated
and any other consents, approvals or authorizations applicable to the Merger
under the Other Antitrust Laws specified as Closing Conditions on Section 4.3 of
the Disclosure Letter shall have been received or waived by the appropriate
Governmental Authority or the applicable waiting period shall have expired or
been terminated; and
(b) no Law shall have been adopted, promulgated, issued or
entered, which is then in effect and which prohibits, enjoins or renders illegal
the consummation of the Merger.
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Section 9.2 Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate the Merger are subject to the
satisfaction or waiver of the following further conditions:
(a) (i) the Company shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior to
the Effective Time, (ii) the representations and warranties of the Company
contained in Article IV of this Agreement shall be true and correct (without
giving effect to any qualification therein as to "materiality" or as to whether
any matter would or would be expected to have a Material Adverse Effect on the
Company) as of the Closing Date (except that representations and warranties made
as of a specific date are required to be true and correct only as of such date),
except where the failure to be so true and correct would not, individually or in
the aggregate, have, constitute or reasonably be expected to have a Material
Adverse Effect on the Company and (iii) Parent and Merger Sub shall have
received a certificate signed by a senior officer of the Company to the
foregoing effect;
(b) since the Balance Sheet Date, no event, change, development
or occurrence shall have occurred that, individually or in the aggregate, has
had or would be reasonably likely to have a Material Adverse Effect on the
Company, and Parent and Merger Sub shall have received a certificate signed by a
senior officer of the Company to the foregoing effect;
(c) Parent shall have received (i) written confirmation from the
Company regarding the amount of the payments required to be made pursuant to the
Executive Change of Control Agreements, (ii) written confirmations from the
Company's shareholders (or their Affiliates) and financial advisors regarding
the amount of fees required to be paid to them by the Company or any of its
Subsidiaries in connection with the transactions contemplated by this Agreement,
and (iii) written confirmation from the Company that all such fees and expenses
have been paid pursuant to the last sentence of Section 6.1;
(d) the Management and Advisory Services Agreements and the
Stockholders Agreement, dated November 28, 2000, between Noveon International,
Inc. (formerly know as PMD Group Holdings, Inc.), PMD Investors I LLC, PMD
Investors II LLC, DLJMB Funding III, Inc. and MidOcean Capital/PMD Investors,
LLC (formerly known as DB Capital/PMD Investors, LLC) (the "STOCKHOLDERS
AGREEMENT")shall have been terminated; and
(e) Parent shall have received a certificate from the chief
financial officer of the Company certifying as to the total amount of the
Transaction Costs.
Section 9.3 Conditions to the Obligations of the Company. The
obligation of the Company to consummate the Merger is subject to the
satisfaction or waiver of the following further conditions:
(a) Each of Parent and Merger Sub shall have performed in all
material respects all of its respective obligations hereunder required to be
performed by it at or prior to the Effective Time;
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(b) the representations and warranties of Parent and Merger Sub
contained in this Agreement and in any certificate or other writing delivered by
them pursuant hereto that are qualified as to materiality shall be true and
correct in accordance with their terms as of the Closing Date, and those that
are not qualified as to materiality will be true and correct in all material
respects as of the Closing Date as if made at and as of such date (provided that
representations made as of a specific date shall be required to be true as of
such date only); and
(c) the Company shall have received a certificate signed by a
senior officer of each of Parent and Merger Sub to the foregoing effect.
ARTICLE X.
TERMINATION
Section 10.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any prior approval of this Agreement by the shareholders of the Company):
(a) by mutual written consent of the Company, on the one hand,
and Parent and Merger Sub, on the other hand;
(b) by any of the Company, Parent or Merger Sub, if:
(i) the Merger has not been consummated by the End Date,
provided that the failure of the Merger to be consummated by such date
is not the result of, or caused by, the failure of the party seeking to
exercise such termination right to fulfill any of its obligations under
this Agreement; or
(ii) there shall be any Law that makes consummation of the
Merger illegal or otherwise permanently prohibited, provided that, in
the case of any such Law issued by a court, it shall be final and
non-appealable; provided however, that the right to terminate this
Agreement pursuant to this Section 10.1(b)(ii) shall not be available
to any party whose breach of any provision of this Agreement results in
the application or imposition of such Law;
(c) by the Company, if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of Parent or Merger
Sub set forth in this Agreement shall have occurred which would cause any of the
conditions set forth in Sections 9.3(a) or (b) to be unable to be satisfied by
the End Date; provided however, that the Company is not then in material breach
of this Agreement; or
(d) by Parent or Merger Sub, if a breach of or failure to perform
any representation, warranty, covenant or agreement on the part of the Company
set forth in this Agreement shall have occurred which would cause the condition
set forth in Section 9.2(a) to be unable to be satisfied by the End Date;
provided however, that Parent or Merger Sub is not then in material breach of
this Agreement.
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The party desiring to terminate this Agreement pursuant to Sections 10.1(b)
through (d) shall give written notice of such termination to the other party in
accordance with Section 11.1 of this Agreement.
Section 10.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 10.1, this Agreement shall forthwith become null and void,
and there shall be no liability or obligation on the part of the Company,
Parent, Merger Sub or their respective Subsidiaries or Affiliates, except (i)
Sections 10.2 and Article XI (other than Sections 11.2, 11.9 and 11.10) will
survive the termination hereof and (ii) with respect to any liabilities for
damages incurred or suffered by a party as a result of the breach by any other
party of any of its representations, warranties, covenants or other agreements
set forth in this Agreement.
ARTICLE XI.
MISCELLANEOUS
Section 11.1 Notices. All notices, requests and other communications to
any part hereunder shall be in writing (including facsimile or similar writing)
and shall be given:
if to Parent or Merger Sub, to:
The Lubrizol Corporation
00000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Facsimile: 000-000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxx Xxxx LLP
0000 Xxx Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: 000-000-0000
if to the Company, to:
Noveon International, Inc.
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxxxxxxx Xxxxx, Esq.
Facsimile: 000-000-0000
with a copy (which shall not constitute notice) to:
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Xxxxx, Xxxxx, Harris, Xxxxxxx & Xxxxxxxx LLP
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 0000
Attention: Xxxxxxxxxxx Xxxx, Esq.
Facsimile: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify
for by notice to the other parties hereto. Each such notice, request or other
communication shall be effective (i) if given by facsimile, when such telecopy
is transmitted to the telecopy number specified above and the appropriate
facsimile confirmation is received or (ii) if given by any other means, when
delivered at the address specified in this Section 11.1.
Section 11.2 Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall survive until (but not beyond) the
Effective Time, such survival being the case prior to the Effective Time
irrespective of whether any party undertakes any investigation into the subject
matter of any representation or warranty. This Section 11.2 shall not limit any
covenant or agreement of the parties that by its terms contemplates performance
in whole or in part after the Effective Time. For the avoidance of doubt, the
parties agree that the shareholders of the Company will have no liability to
Parent or its Affiliates with respect to the transactions contemplated by this
Agreement.
Section 11.3 Amendments No Waivers.
(a) Any provision of this Agreement may be amended or waived
prior to the Effective Time only by amendment or waiver in writing and signed:
(i) in the case of an amendment to this Agreement, by the Company, Parent and
Merger Sub or (ii) in the case of a waiver, by the party against whom the waiver
is to be effective; provided however, that any proposed amendment that by Law
requires further approval by the shareholders of the Company shall not be
effective without such further shareholder approval.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any other
rights or remedies herein provided or available at Law or in equity.
Section 11.4 Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
Section 11.5 Transfer Taxes. Subject to Section 2.3(c), all stock
transfer, real estate transfer, documentary, stamp, recording and other similar
taxes (including interest, penalties and additions to any such taxes) ("TRANSFER
TAXES") incurred in connection with the transactions contemplated by this
Agreement shall be paid by either Parent, Merger Sub or the Surviving
Corporation, and such parties shall cooperate with each other in preparing,
executing and filing any returns with respect to such Transfer Taxes.
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Section 11.6 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto. Any purported assignment in
violation of this provisions shall be null and void ab initio.
Section 11.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without giving
effect to the conflicts or choice of law principles of those states.
Section 11.8 Counterparts; Effectiveness; Third Party Beneficiaries.
This Agreement may be executed by facsimile signatures and in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective only when actually signed by each party hereto and each
such party has received counterparts hereof signed by all of the other parties
hereto. No provision of this Agreement is intended to or shall confer upon any
Person other than the parties hereto any rights or remedies hereunder or with
respect hereto, except with respect to the matters provided in Section 2.3 and
Section 7.1.
Section 11.9 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by virtue of any
Law, or due to any public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby
are fulfilled to the extent possible.
Section 11.10 Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to consummate the Merger, will cause irreparable injury to the other
parties, for which damages, even if available, will not be an adequate remedy.
Accordingly, each party hereby consents to the issuance of injunctive relief by
any court of competent jurisdiction to compel performance of such party's
obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder, in addition to any other rights or
remedies available hereunder or at law or in equity.
Section 11.11 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to its subject matter and
supersedes all oral or written prior or contemporaneous agreements and
understandings among the parties with respect to such subject matter.
Section 11.12 Jurisdiction; Waiver of Jury Trial. Except as otherwise
expressly provided in this Agreement, the parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought exclusively in the Court of
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Chancery of the State of Delaware, County of New Castle or, if such court does
not have jurisdiction over the subject matter of such proceeding or if such
jurisdiction is not available, in the United State District Court for the
District of Delaware, and each of the parties hereby irrevocably consents to the
exclusive jurisdiction of those courts (and of the appropriate appellate courts
therefrom) in any suit, action or proceeding and irrevocably waives, to the
fullest extent permitted by Law, any objection that such party may now or
hereafter have to the laying of the venue of any suit, action or proceeding in
any of those courts or that any suit, action or proceeding that is brought in
any of those courts has been brought in an inconvenient forum. Process in any
suit, action or proceeding may be served on any party at the applicable address
provided in Section 11.1, whether within or without the jurisdiction of any of
the named courts. Without limiting the foregoing, each party agrees that service
of process on it by notice as provided in Section 11.1 shall be deemed effective
service of process. Each of the parties to this Agreement hereby irrevocably
waives any right it may have to trial by jury in any court or jurisdiction in
respect to any matter arising out of or relating to this Agreement or the
transactions contemplated hereby.
Section 11.13 Authorship. The parties agree that the terms and language
of this Agreement were the result of negotiations between the parties, and as a
result, there shall be no presumption that any ambiguities in this Agreement
shall be resolved against any party. Any controversy over construction of this
Agreement shall be decided without regard to events of authorship.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
THE COMPANY
NOVEON INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President & CEO
PARENT
THE LUBRIZOL CORPORATION
By: /s/ X. X. Xxxxx
---------------------------------------
Name: X. X. Xxxxx
Title: Chairman and Chief
Executive Officer
MERGER SUB
LUBRIZOL ACQUISITION CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President
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