Exhibit 2.3
Execution Copy
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PURCHASE AGREEMENT
DATED AS OF AUGUST 2, 2002
BY AND BETWEEN
AKZO NOBEL SINO COATINGS B.V.
ON ONE HAND
AND
FERRO CORPORATION
ON THE OTHER HAND
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TABLE OF CONTENTS
PAGE
PREAMBLE ............................................................................................... 1
RECITALS ............................................................................................... 1
TERMS AND CONDITIONS ................................................................................... 1
ARTICLE 1 - GENERAL PROVISIONS ................................................................ 1
1.1 Definitions ................................................................. 1
1.2 Construction ................................................................ 1
ARTICLE 2 - PURCHASE AND SALE ................................................................ 2
2.1 Transaction ................................................................ 2
2.2 Purchase Price .............................................................. 2
2.3 Adjustment .................................................................. 2
(A) Working Capital Adjustment ............................................ 2
(1) Preliminary Working Capital Statement .......................... 2
(2) Ferro's Review ................................................. 3
(3) Dispute Resolution ............................................. 3
(4) Final Determination ............................................ 3
(5) Base-Line Working Capital ...................................... 4
(6) Closing Working Capital ........................................ 4
(7) Amount of the Working Capital Adjustment ....................... 4
(B) Cash Items Adjustment ................................................. 4
(C) Amount of Adjustment .................................................. 4
2.4 Payment of Purchase Price ................................................... 4
(A) Payment at Closing .................................................... 4
(B) Final Payment ......................................................... 4
2.5 Refund of Adjustment ........................................................ 5
2.6 Method of Payment ........................................................... 5
(A) Directed Payments ..................................................... 5
(B) Other Payments ........................................................ 5
ARTICLE 3 - ACTIONS BEFORE CLOSING ............................................................ 5
3.1 Access to Records ........................................................... 5
3.2 Interim Conduct of the Powder Coatings Business ............................. 5
3.3 Akzo Nobel China's Approval of Certain Transactions ......................... 6
3.4 Negotiation of Other Agreements ............................................. 7
3.5 Coordination of Public Announcements ........................................ 7
3.6 Government Approvals ....................................................... 8
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ARTICLE 4 - CONDITIONS ....................................................................... 8
4.1 Conditions to Akzo Nobel China's Obligations ................................ 8
4.2 Conditions to Ferro's Obligations ........................................... 9
4.3 Parties' Best Efforts ....................................................... 10
ARTICLE 5 - CLOSING ........................................................................... 10
5.1 The Closing ................................................................. 10
5.2 Date, Time, and Place of Closing ............................................ 10
5.3 Akzo Nobel China's Obligations .............................................. 10
5.4 Ferro's Obligations ......................................................... 10
5.5 Local Formalities ........................................................... 10
ARTICLE 6 - ACTIONS AFTER CLOSING ............................................................. 11
6.1 Further Conveyances ......................................................... 11
6.2 Accounting Reports .......................................................... 11
6.3 Noncompetition .............................................................. 11
6.4 Use of Ferro Name and Xxxx .................................................. 12
6.5 Access to Former Business Records ........................................... 12
6.6 Access to Former Employees .................................................. 13
6.7 Termination of Insurance Coverage ........................................... 13
6.8 Trade Secrets................................................................ 13
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES..................................................... 13
7.1 Ferro's General Representations and Warranties .............................. 13
(A) Organization and Existence ............................................ 13
(B) Power and Authority ................................................... 14
(C) Authorization ......................................................... 14
(D) Binding Effect ........................................................ 14
(E) No Default ............................................................ 14
(F) Finders ............................................................... 14
(G) Consents and Approvals ................................................ 14
(H) Existence and Capitalization of the Subsidiary......................... 14
(I) Ownership of the Shares ............................................... 14
(J) No Knowledge of Akzo Nobel China's Default ............................ 14
7.2 Ferro's Representations and Warranties Concerning the
Disclosure Package .......................................................... 15
(A) Organization .......................................................... 15
(B) Financial Statements .................................................. 15
(C) Inventories ........................................................... 15
(D) Trade Accounts Receivable ............................................. 15
(E) Trade Accounts Payable ................................................ 15
(F) Real Property ......................................................... 15
(G) Tangible Personal Property ............................................ 16
(H) Intellectual Property ................................................. 16
(I) Indebtedness .......................................................... 16
(J) Litigation ............................................................ 16
(K) Contracts ............................................................. 16
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(L) Employees and Employee Benefits ....................................... 17
(M) Compliance with Environmental Laws ................................... 17
(N) Compliance with Health and Safety Laws ................................ 17
(O) Compliance with Other Laws ............................................ 17
(P) Taxes ................................................................. 17
(Q) Insurance ............................................................. 18
(R) No Material Events .................................................... 18
7.3 Akzo Nobel China's Representations and Warranties ........................... 18
(A) Organization and Existence ............................................ 18
(B) Power and Authority ................................................... 18
(C) Authorization ......................................................... 18
(D) Binding Effect ........................................................ 18
(E) No Default ............................................................ 18
(F) Finders ............................................................... 18
(G) No Knowledge of Ferro's Default ....................................... 18
(H) Consents and Approvals ................................................ 19
7.4 Meaning of "Ferro's Knowledge" .............................................. 19
7.5 Disclaimer .................................................................. 19
ARTICLE 8 - SPECIFIC OBLIGATIONS .............................................................. 19
8.1 Employee Obligations ........................................................ 19
(A) Severance ............................................................. 19
(B) Non-Interference ...................................................... 19
8.2 Environmental Obligations ................................................... 20
(A) Identified Environmental Matters ...................................... 20
(B) Pre-Closing Environmental Matters...................................... 20
(C) Post-Closing Environmental Matters .................................... 20
(D) Mixed Post-Closing Environmental Matters .............................. 20
(E) Akzo Nobel China's Phase 2 Study ..................................... 21
(F) Responsibilities With Regard To Economic
Remediation Plans ..................................................... 22
(G) Limitations On Ferro's Obligations .................................... 22
(H) Release of Claims ..................................................... 22
8.3 Other Obligations............................................................ 22
(A) Akzo Nobel China's Responsibilities ................................... 22
(B) Ferro's Responsibilities .............................................. 23
8.4 Akzo Nobel China's Sole Remedy .............................................. 24
8.5 Collection of Trade Accounts Receivable...................................... 25
ARTICLE 9 - INDEMNIFICATION ................................................................... 25
9.1 Indemnification of Ferro .................................................... 25
9.2 Indemnification of Akzo Nobel China ......................................... 26
9.3 Claims ...................................................................... 26
(A) Notice ................................................................ 26
(B) Responsibility for Defense ............................................ 26
(C) Right to Participate .................................................. 27
(D) Settlement ............................................................ 27
9.4 Disputed Responsibility ..................................................... 27
9.5 Quantum Limitation on Indemnification ....................................... 28
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9.6 Time Limitation on Indemnification .......................................... 28
9.7 Actual Amount ............................................................... 28
9.8 Exclusive Remedies .......................................................... 29
9.9 Indemnity Payments as Adjustments ........................................... 29
ARTICLE 10 - DISPUTE RESOLUTION .............................................................. 29
10.1 Dispute Notice .............................................................. 29
10.2 Informal Negotiations ....................................................... 29
10.3 Dispute Resolution Proceedings .............................................. 29
(A) Designation of Representatives ..................................... 30
(B) Selection of Neutral ............................................... 30
(C) Procedures and Process ............................................. 30
(D) Decision ........................................................... 30
10.4 Equitable Relief ............................................................ 30
10.5 Binding Effect .............................................................. 31
ARTICLE 11 - AMENDMENT, WAIVER, AND TERMINATION................................................ 31
11.1 Amendment ................................................................... 31
11.2 Waiver ...................................................................... 31
11.3 Termination ................................................................. 31
ARTICLE 12 - MISCELLANEOUS .................................................................... 31
12.1 Cooperation ................................................................. 31
12.2 Severability ................................................................ 31
12.3 Costs and Expenses .......................................................... 31
12.4 Notices ..................................................................... 32
12.5 Assignment and Appointment .................................................. 32
12.6 No Third Parties ............................................................ 32
12.7 Incorporation by Reference .................................................. 32
12.8 Governing Law ............................................................... 32
12.9 Counterparts ................................................................ 33
12.10 Complete Agreement .......................................................... 33
APPENDICES
Appendix A - Definitions
Appendix B - Form of Preliminary Working Capital Statement
Appendix C - Accounting Principles
Appendix D - Documents to Be Delivered by Ferro at the Closing
Appendix E - Documents to Be Delivered by Akzo Nobel China at the Closing
Appendix F - Contents of the Powder Coatings Disclosure Package
Appendix G - Due Diligence Certifications
Appendix H - Identified Environmental Matters
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PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Purchase Agreement") is dated as of August
2, 2002, and is by and among:
AKZO NOBEL SINO COATINGS B.V. ("Akzo Nobel China"), a Dutch private
company with limited liability (besloten vennootschap),
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FERRO CORPORATION ("Ferro"), an Ohio corporation.
RECITALS
X. Xxxxx (Ningbo) Powder Coatings, Ltd., a Chinese wholly-owned foreign
enterprise and a wholly-owned subsidiary of Ferro (the "Subsidiary"), is
engaged in the business (the "Powder Coatings Business") of designing,
developing, formulating, manufacturing, and selling
thermosetting-formulated powder surface coatings (the "Products") for a
variety of decorative and protective end-use applications within the
appliance, automotive, and general industrial industries in the
Asia/Pacific region. (The term "Powder Coatings Business" does not,
however, include the powder coatings business conducted by Ferro and its
Affiliates in Europe or North and South America.)
B. Akzo Nobel China is an indirect wholly-owned subsidiary of Xxxx Xxxxx XX
("Akzo Nobel"), a Dutch corporation (naamloze vennootschap).
C. Akzo Nobel China desires to purchase from Ferro, and Ferro desires to sell
to Akzo Nobel China, the Shares on and subject to the terms and conditions
of this Purchase Agreement.
TERMS AND CONDITIONS
In consideration of the matters recited above and of other good and valuable
consideration, and intending to be legally bound by this Purchase Agreement,
Akzo Nobel China and Ferro hereby agree as follows:
ARTICLE 1 - GENERAL PROVISIONS
1.1 DEFINITIONS. Appendix A sets forth the definitions of certain terms used
in this Purchase Agreement. Those terms shall have the meanings set forth
on Appendix A where used in this Purchase Agreement and identified with
initial capital letters.
1.2 Construction. FOR PURPOSES OF THIS PURCHASE AGREEMENT, EXCEPT WHERE THE
CONTEXT OTHERWISE REQUIRES --
(A) The term "parties" means Akzo Nobel China and Ferro.
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(B) The term "person" includes any natural person, firm, association,
partnership, corporation, limited liability company, limited
liability partnership, governmental agency or other entity. The term
"third-party" means any person other than the parties and their
Affiliates.
(C) The term "today" means August 2, 2002.
(D) All currency amounts stated in this Purchase Agreement are in United
States Dollars. (Other currency amounts will translate into United
States Dollar amounts at the exchange rate or rates quoted in the
Currency Trading table of the Central Edition of The Wall Street
Journal on the business day immediately preceding the date as of
which translation is to occur.)
(E) References to "days" mean calendar days. (If, however, an action or
obligation is due to be undertaken by or on a day other than a
business day, i.e., a Saturday, Sunday, or public holiday, in the
United States, then that action or obligation will be deemed to be
due on the next following business day.)
(F) When introducing a series of items, the term "including" is not
intended to limit the more general description that precedes the
items listed.
(G) The Table of Contents and the headings of the Articles and Sections
are included for convenience of reference only and are not intended
to affect the meaning of the operative provisions to which they
relate.
ARTICLE 2 - PURCHASE AND SALE
2.1 TRANSACTION. On and subject to the terms and conditions of this Purchase
Agreement, at the Closing,
(A) Akzo Nobel China will purchase from Ferro, and Ferro will sell,
transfer, and assign to Akzo Nobel China, all of the Shares; and
(B) Akzo Nobel China will pay Ferro the Purchase Price as provided in
Section 2.2.
2.2 PURCHASE PRICE. For purposes of this Purchase Agreement, the term
"Purchase Price" means $10,000,000 plus or minus the amount of the
Adjustment (and, if applicable, any further adjustment(s) pursuant to
Section 9.9).
2.3 ADJUSTMENT. The Adjustment will be determined as follows:
(A) WORKING CAPITAL ADJUSTMENT.
(1) PRELIMINARY WORKING CAPITAL STATEMENT. As promptly as
practicable, but in any event within 45 days after the Closing
Date, Akzo Nobel China will prepare and deliver to Ferro a
statement (the "Preliminary Working Capital Statement") of the
Working Capital of the Subsidiary at and as of the Closing
Date substantially in the form set forth in Part 1 of Appendix
B. The Preliminary Working Capital Statement will be prepared
in
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accordance with the accounting methods, policies, practices
and procedures set forth on Appendix C (the "Accounting
Principles").
(2) FERRO'S REVIEW. If Ferro disagrees with any items shown on the
Preliminary Working Capital Statement, Ferro will notify Akzo
Nobel China in writing of such disagreement within 45 days
after delivery of the Preliminary Working Capital Statement,
which notice shall describe the nature of any such
disagreement in reasonable detail, identify the specific items
involved and the dollar amount of each such disagreement.
After the end of such 45-day period, Ferro may not introduce
additional disagreements with respect to any item in the
Preliminary Working Capital Statement or increase the amount
of any disagreement, and any item not so identified will be
deemed to be agreed to by Ferro and will be final and binding
upon the parties. During the 45-day period of its review,
Ferro and its representatives will have reasonable access to
any documents, schedules or workpapers used in the preparation
of the Preliminary Working Capital Statement.
(3) DISPUTE RESOLUTION. Ferro and Akzo Nobel China agree to
negotiate in good faith to resolve any such disagreement
relating to items included on the Preliminary Working Capital
Statement. If Ferro and Akzo Nobel China are unable to resolve
all disagreements properly identified by Ferro pursuant to
Section 2.3(A)(2) within sixty (60) days after delivery to
Akzo Nobel China of written notice of such disagreement, then
such disagreements will be submitted for final and binding
resolution to Price Waterhouse Coopers or, if Price Waterhouse
Coopers should decline such engagement, such other
internationally recognized accounting firm as Ferro and Akzo
Nobel China shall mutually agree (the "Accountants"). The
Accountants so selected will only consider those items and
amounts set forth in the Preliminary Working Capital Statement
as to which Ferro and Akzo Nobel China have disagreed within
the time periods and on the terms specified above and must
resolve the matter in accordance with the terms and provisions
of the Agreement. The Accountants will be instructed to
deliver to Ferro and Akzo Nobel China, as promptly as
practicable and in any event within one hundred and twenty
(120) days after its appointment, a written report setting
forth the resolution of any such disagreement determined in
accordance with the terms of this Purchase Agreement. The
Accountants will make their determination based solely on
presentations and supporting material provided by the parties
and not pursuant to any independent review. The determination
of the Accountants shall be final and binding upon Ferro and
Akzo Nobel China. Ferro and Akzo Nobel China will each bear
one-half the fees, expenses and costs of the Accountants.
(4) FINAL DETERMINATION. The Preliminary Working Capital Statement
will be deemed final for the purposes of this Section 2.3(A)
upon the earliest of (A) the failure of Ferro to notify Akzo
Nobel China of a dispute with 45 days of Akzo Nobel China's
delivery of the Preliminary Working Capital Statement to
Ferro, (B) the resolution of all disputes, pursuant to Section
2.3(A)(3), by Ferro and Akzo Nobel China and (C) the
resolution of all disputes, pursuant to Section 2.3(A)(3), by
the Accountants.
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(5) BASE-LINE WORKING CAPITAL. The "Base-Line Working Capital"
will be an amount equal to $4,841,002 (the details of which
are set forth in Part 2 of Appendix B).
(6) CLOSING WORKING CAPITAL. The "Closing Working Capital" will be
an amount equal to the Working Capital of the Subsidiary at
and as of the Closing as determined under Sections
2.3(A)(1)-(4) above.
(7) AMOUNT OF THE WORKING CAPITAL ADJUSTMENT. If the Closing
Working Capital is -
(A) Less than the Base Line Working Capital, then the
Working Capital Adjustment will be a negative amount
equal to the amount by which the Closing Working Capital
is less than the Base-Line Working Capital; or
(B) More than the Base Line Working Capital, then the
Working Capital Adjustment will be a positive amount
equal to the amount by which the Closing Working Capital
is greater than the Base-Line Working Capital.
(B) CASH ITEMS ADJUSTMENT. The Cash Items Adjustment will be a positive
or negative amount equal to -
(1) The amount of Cash on the books of the Subsidiary as of the
Closing, minus
(2) The amount of Financial Debt on the books of the Subsidiary as
of the Closing.
(C) AMOUNT OF ADJUSTMENT. The Adjustment will be an amount, positive or
negative, equal to the Working Capital Adjustment plus the Cash
Items Adjustment.
The Purchase Price will finally be determined on the date the amount of
the Working Capital Adjustment is finally determined.
2.4 PAYMENT OF PURCHASE PRICE. Akzo Nobel China will pay the Purchase Price as
follows:
(A) PAYMENT AT CLOSING. At the Closing, Akzo Nobel China will pay Ferro
the total sum of $10,000,000; and
(B) FINAL PAYMENT. If the Adjustment is a positive amount, Akzo Nobel
China will, within 10 business days after the final determination of
the Purchase Price, pay Ferro the amount of the Adjustment, together
with interest thereon at the Prescribed Rate for the period from the
Closing Date through and including the date on which the Adjustment
is paid.
(Payments of further adjustments pursuant to Section 9.9 will be made as
provided in Article 9.)
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2.5 REFUND OF ADJUSTMENT. If the Adjustment is a negative amount, then Ferro
will, within 10 business days after the final determination of the
Purchase Price, refund to Akzo Nobel China the amount of the Adjustment,
together with interest thereon at the Prescribed Rate for the period from
the Closing Date through and including the date on which the Adjustment is
paid.
2.6 METHOD OF PAYMENT. All payments under this Purchase Agreement will be made
by delivery to the payee as follows:
(A) DIRECTED PAYMENTS. If a party which is entitled to a payment under
this Purchase Agreement provides the other party five days' advance
written designation of a bank and account number into which the
payee wishes payment to be made, then the payor will make such
payment by wire transfer (in immediately available funds) to the
designated account of the payee.
(B) OTHER PAYMENTS. In all other cases, the party obligated to make a
payment under this Purchase Agreement will do so by delivering to
the payee a bank cashier's check (in immediately available funds)
payable to the order of the payee.
ARTICLE 3 - ACTIONS BEFORE CLOSING
3.1 ACCESS TO RECORDS. From today until the Closing, Ferro will cause the
Subsidiary to afford duly authorized representatives of Akzo Nobel China
free and full access during normal business hours to all of the assets,
properties, books, and nonprivileged records of the Subsidiary and will
permit such representatives to make abstracts from, or take copies of,
such books, records, or other documentation, or to obtain temporary
possession of any thereof as may be reasonably required by Akzo Nobel
China. During such period, Ferro will furnish to Akzo Nobel China such
information concerning the Subsidiary and its assets, liabilities, or
condition as Akzo Nobel China may request. Notwithstanding the foregoing,
Ferro will not be obligated to disclose or make available to Akzo Nobel
China any information concerning the Subsidiary that, in the opinion of
Ferro's counsel, should not be disclosed to Akzo Nobel China as a matter
of law, by contract or to protect a claim of privilege; provided, however,
that in all cases, Ferro represents and warrants to Akzo Nobel China that
such withheld information, both individually and in the aggregate, is not
materially adverse to the Subsidiary.
3.2 INTERIM CONDUCT OF THE POWDER COATINGS BUSINESS. From today until the
Closing, Ferro will conduct the business of the Subsidiary and the Powder
Coatings Business only in the ordinary and usual course, subject to Akzo
Nobel China's approval of certain transactions pursuant to Section 3.3.
Without limiting the generality of the foregoing, insofar as the
Subsidiary is concerned, Ferro will use their reasonable efforts to:
(A) Preserve substantially intact the Subsidiary's relationships with
suppliers, customers, employees, creditors, and others having
business dealings with the Subsidiary;
(B) Maintain in full force and effect its existing policies of insurance
which materially affect the Subsidiary;
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(C) Continue performance in the ordinary course of its obligations under
contracts, commitments, or other obligations to which it or the
Subsidiary is a party; and
(D) Keep all the financial statements and records and other documents in
connection with the Subsidiary and/or the Powder Coatings Business
in a manner consistent with the historical and ordinary course of
business.
3.3 AKZO NOBEL CHINA'S APPROVAL OF CERTAIN TRANSACTIONS. Except as may
otherwise be required under this Purchase Agreement, from today until the
Closing, Ferro will not permit the Subsidiary to do any of the following
without the prior approval with written confirmation of Akzo Nobel China,
which approval shall not be unreasonably withheld:
(A) Purchase or dispose of any real property or interests in real
property;
(B) Enter into any lease for real property involving a term of more than
one year or rental obligation exceeding $250,000 (or the equivalent
thereof in local currency) per annum in any single case;
(C) Enter into any lease for personal property involving a term of more
than one year or rental obligation exceeding $100,000 (or the
equivalent thereof in local currency) per annum in any single case;
(D) Voluntarily permit to be incurred any Encumbrances on assets of the
Subsidiary except in the ordinary course of business;
(E) Except for any changes required by applicable law and except for any
changes generally affecting Ferro's salaried employees, increase the
rate of compensation for any of the employees of the Subsidiary or
otherwise enter into or alter any employment, consulting, or
managerial services agreement affecting the Subsidiary;
(F) Except for pension benefit plans and insurance plans that are
required to be executed under the applicable laws, and except for
any changes generally affecting Ferro's salaried employees,
commence, enter into, or alter any pension, retirement,
profit-sharing, employee stock option or stock purchase, bonus,
deferred compensation, incentive compensation, life insurance,
health insurance, fringe benefit, or other employee benefit scheme,
plan, or arrangement affecting employees of the Subsidiary;
(G) Make any single new commitment or increase any single previous
commitment for capital expenditures for the Subsidiary in an amount
exceeding $375,000 (or the equivalent thereof in local currency);
(H) Accelerate or delay the sale of Products except as may be necessary
in the ordinary course of business;
(I) Except for the resolution of any grievance, enter into, modify or
terminate any labor or collective bargaining agreement relating to
the Subsidiary or, through negotiation or otherwise, make any
commitment or incur any liability to any labor organization relating
to employees of the Subsidiary;
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(J) Enter into any transaction or make or enter into any Contract
relating to the Subsidiary which by reason of its size or otherwise
is not in the ordinary course of business;
(K) With respect to the Subsidiary, authorize, propose, enter into or
agree to enter into any acquisition of assets for a price in excess
of $375,000 (or the equivalent thereof in local currency);
(L) Waive any claims or rights under any Material Contract;
(M) Terminate any Material Contract or voluntarily consent to the
termination of any Material Contract (including, without limitation,
any lease) by any other party thereto;
(N) Except as otherwise provided in this Section 3.3, enter into any
contract, agreement or arrangement with respect to any of the
foregoing;
(O) Make any amendment to the Articles of Association or other
constitutional document of the Subsidiary except for the purpose of
the transactions under this Purchase Agreement; or
(P) Waive any claim or right in any judicial or administrative
proceedings.
3.4 NEGOTIATION OF OTHER AGREEMENTS. From today until the Closing, the parties
will negotiate in good faith and enter into such other and further
agreements as they may deem appropriate or necessary for the orderly
transfer of the Shares from Ferro to Akzo Nobel China, including -
(A) Assignment to Akzo Nobel China of the Agreement on Assignment of
Related Agreements by and between Ferro Far East Limited and Ferro
dated June 7, 1999; and
(B) Termination of that certain Trademark License Agreement by and
between Ferro and the Subsidiary dated as of May 13, 1998.
(Such agreements, as well as any other agreements into which the parties
enter in connection with the transactions contemplated by this Purchase
Agreement which make specific reference to this Section 3.4, are
collectively referred to as the "Other Agreements.")
3.5 COORDINATION OF PUBLIC ANNOUNCEMENTS. From today until the Closing,
neither party will make any public announcement concerning the
transactions contemplated by this Purchase Agreement without having
previously consulted with and having received the consent of the other
party, such consent not to be withheld unreasonably. Nothing in the
preceding sentence, however, will prevent either party from making any
announcement required by law, by the rules of any securities exchange, or
by any listing agreement with a securities exchange to which such party is
a party or by which it is bound. The parties will cooperate in the
planning, preparation, and issuance of any and all public announcements
concerning this Purchase Agreement and the transactions contemplated by
this Purchase Agreement.
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3.6 GOVERNMENT APPROVALS. Immediately after the execution and delivery of this
Purchase Agreement, the parties will promptly proceed with the preparation
and filing of any required filings and applications necessary in order to
obtain the approval or authorization of those governmental agencies or
instrumentalities whose approval or authorization is necessary in order to
consummate the transactions contemplated by this Purchase Agreement (the
"Government Approvals"). If any of the foregoing governmental authorities
require, as a condition to granting any such approval or authorization, or
as a condition to not issuing a request for additional information or not
commencing a second-phase investigation of the transactions contemplated
by this Purchase Agreement, then the parties will cooperate in good faith
to take such action as may reasonably be necessary to prevent or
ameliorate any actual or perceived anti-competitive consequences of the
transactions contemplated by this Purchase Agreement so as to make
possible consummation of the transactions contemplated by this Purchase
Agreement at the earliest practicable date; provided, however, that under
no circumstances will Akzo Nobel China be required to hold separate or
dispose (directly or indirectly) of any assets or business units.
ARTICLE 4 - CONDITIONS
4.1 CONDITIONS TO AKZO NOBEL CHINA'S OBLIGATIONS. The obligation of Akzo Nobel
China to consummate the transactions contemplated by this Purchase
Agreement is subject to the satisfaction of the following conditions at
the Closing:
(A) The representations and warranties of Ferro contained in Section 7.1
of this Purchase Agreement shall be true, accurate and complete as
of today and as of the Closing (except with respect to the effect of
transactions contemplated or permitted by this Purchase Agreement);
(B) The representations and warranties of Ferro contained in Section 7.2
of this Purchase Agreement shall be true, accurate and complete in
all material respects as of today and as of the Closing (as if such
representations and warranties had been made anew as of the Closing)
except with respect to the effect of transactions contemplated or
permitted by this Purchase Agreement, changes resulting from the
passage of time on dated material in the Powder Coatings Disclosure
Package and transactions in the ordinary course of business not in
breach of Ferro's obligations under this Purchase Agreement;
(C) Ferro, in all material respects, shall have performed and complied
with all undertakings required by this Purchase Agreement to be
performed or satisfied by Ferro before the Closing including
entering into the Other Agreements;
(D) Ferro shall have taken all corporate and other proceedings or
actions necessary to be taken by Ferro for consummation of the
transactions contemplated by this Purchase Agreement;
(E) Ferro shall be prepared to deliver the documents listed in Appendix
D at the Closing;
(F) There shall not have been issued and in effect any injunction or
similar legal order prohibiting or restraining consummation of any
of the transactions contemplated in this Purchase Agreement; and
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(G) The Government Approvals shall have been obtained.
4.2 CONDITIONS TO FERRO'S OBLIGATIONS. The obligation of Ferro to consummate
the transactions contemplated by this Purchase Agreement is subject to the
satisfaction of the following conditions at or before the Closing:
(A) The representations and warranties of the Akzo Nobel China contained
in Section 7.3 of this Purchase Agreement shall be true, accurate,
and complete in all material respects as of today and as of the
Closing (except with respect to the effect of the transactions
contemplated or permitted by this Purchase Agreement);
(B) Akzo Nobel China, in all material respects, shall have performed and
complied with all undertakings required by this Purchase Agreement
to be performed or satisfied by Akzo Nobel China before the Closing
including entering into the Other Agreements;
(C) Akzo Nobel China shall have taken all corporate and other
proceedings or actions necessary to be taken by Akzo Nobel China for
consummation of the transactions contemplated by this Purchase
Agreement;
(D) Akzo Nobel China shall be prepared to deliver the documents listed
in Appendix E at the Closing;
(E) If Akzo Nobel China has assigned its rights and delegated its duties
under this Purchase Agreement to an Affiliate, Akzo Nobel China
shall provide the Guarantee;
(F) There shall not have been issued and in effect any injunction or
similar legal order prohibiting or restraining consummation of any
of the transactions contemplated in this Purchase Agreement;
(G) The Government Approvals shall have been obtained; and
(H) All of the conditions precedent to the closing contemplated in a
Purchase Agreement dated today's date by and among Rohm and Xxxx
Company and Ferro, Ferro B.V., Ferro Spain S.A., and Ferro (Great
Britain) Ltd. (with respect to the sale of Ferro's powder coatings
business in Europe) and in a Purchase Agreement dated today's date
by and among Akzo Nobel China and Ferro, Ferro Enamel Argentina S.A.
and Ferro Mexicana S.A. de C.V. (with respect to the sale of Ferro's
powder coatings business in the Americas) and in a Purchase
Agreement dated today's date by and between Ferro and Akzo Nobel
Coatings International B.V. (with respect to the sale of Ferro's
powder coatings business in Korea) shall have been duly satisfied
and/or waived and the parties thereto shall be prepared to proceed
with such closings simultaneously with the Closing contemplated by
this Purchase Agreement.
4.3 PARTIES' BEST EFFORTS. Except with respect to the condition set forth in
Section 4.2(H), from today until the Closing, the parties will cooperate
and use their respective reasonable best efforts to cause the conditions
set forth in this Article 4 over which they
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may respectively have influence or control to be satisfied as soon as
reasonably practicable.
ARTICLE 5 - CLOSING
5.1 THE CLOSING. For purposes of this Purchase Agreement, the term "Closing"
means the time at which the transactions contemplated by this Purchase
Agreement will be consummated after satisfaction or waiver of the
conditions set forth in Article 4 of this Purchase Agreement.
5.2 DATE, TIME, AND PLACE OF CLOSING. The Closing will occur at 10:00 a.m.
(Eastern Time) on the later to occur of August 30, 2002, or a date to be
mutually agreed by the parties not later than 30 days after the date on
which the last of the conditions set forth in Sections 4.1 and 4.2 and
comparable provisions in the purchase agreements referred to in Subsection
4.2(H) shall have been satisfied or waived (the "Closing Date"). The
Closing will take place at the offices of Squire, Xxxxxxx & Xxxxxxx, 4900
Key Tower, 127 Public Square, Cleveland, Ohio, or at such other place as
the parties may agree in writing. The Closing will be deemed to have
occurred as of 11:59 p.m. on the Closing Date (the "Closing Time").
5.3 AKZO NOBEL CHINA'S OBLIGATIONS. At the Closing, Akzo Nobel China will
deliver to Ferro the following:
(A) The documents, certificates, and other items referred to in Appendix
E;
(B) The amount specified in Section 2.4(a).
5.4 FERRO'S OBLIGATIONS. At the Closing, Ferro will deliver to Akzo Nobel
China the following:
(A) The documents, certificates, and other items referred to in Appendix
D;
(B) Ownership of the Shares; and
(C) Such deeds, bills of sale, and such other instruments as may be
necessary or appropriate to reflect Ferro's conveyance of the Shares
to Akzo Nobel China.
5.5 LOCAL FORMALITIES. If either party desires that the specific terms and
conditions (including price allocation) of this Purchase Agreement
applicable to a given jurisdiction be put in writing in a separate
agreement or instrument, then the parties will cooperate to prepare and
execute such separate agreement, but such separate agreement will (unless
the parties expressly agree otherwise in a signed document that refers to
this Section 5.5) in all events be interpreted consistently with and as
subordinate to the terms and conditions of this Purchase Agreement.
ARTICLE 6 - ACTIONS AFTER CLOSING
6.1 FURTHER CONVEYANCES. After the Closing Ferro will, without further cost or
expense to Akzo Nobel China, except as otherwise provided in Section
12.3(C), execute and deliver to Akzo Nobel China (or cause the same to be
executed and delivered to Akzo Nobel China), such additional instruments
of conveyance, and Ferro will take such other and
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further actions as Akzo Nobel China may reasonably request and which are
ordinarily provided by a seller, more completely to sell, transfer, and
assign to Akzo Nobel China and vest in Akzo Nobel China Ownership to the
Shares.
6.2 ACCOUNTING REPORTS. Akzo Nobel China will cause the management of the
Subsidiary to provide to Ferro such records and accounts as are prepared
by Akzo Nobel China in accordance with its normal accounting procedures
and such other records, accounts or reports as Ferro may reasonably
request or, in the alternative to the latter, access to all such other
information as may reasonably be requested by Ferro, in order to permit
Ferro to complete their financial statements and reports relating to the
pre-Closing activities of the Subsidiary; provided that Akzo Nobel China
will be under no obligation to generate independent records or accounts
for Ferro.
Akzo Nobel China will also cause management of the Subsidiary to afford
Ferro internal and external auditors reasonable access upon at least three
days prior notice and during normal business hours to the books and
records of the Subsidiary as they may need in order for Ferro to satisfy
normal quarterly and year-end reporting and audit requirements.
6.3 NONCOMPETITION. In order to protect the goodwill of the Subsidiary, Ferro
undertakes that for a period of five years after the Closing neither Ferro
nor any of its Affiliates will, directly or indirectly, engage in, or have
an ownership interest in or act as agent, advisor, or consultant of or to
any third-party that is engaged in, the business of designing, developing,
formulating, manufacturing, or selling thermosetting-formulated powder
surface coatings for decorative or protective end-use applications of the
nature currently sold by the Subsidiary (the "Noncompete Business") in
Asia nor during such period will Ferro sell or license (in a stand-alone
transaction not in connection with a sale of substantially all of the
assets of Ferro) the use of the Ferro name or the Ferro
"Check-In-A-Circle" logo to any third party for use in connection with the
conduct of a Noncompete Business. Nothing in this Section 6.3, however,
will be deemed to prohibit or restrict Ferro, nor any of their Affiliates
or any successor or assign of any of the foregoing -
(A) From continuing to conduct any business in which any of such
companies (other than the Subsidiary) are currently engaged, or, in
the case of any successor or assign of any of the foregoing, any
business in which such successor or assign was engaged prior to
succeeding to the business of such company (whether by share
acquisition, asset acquisition or otherwise), and logical extensions
(by product line or technology) of such businesses, including
comparable businesses conducted by Ferro and/or its Affiliates in
conducting similar businesses from outside Asia;
(B) From acquiring or owning less than a controlling equity interest in
any publicly-traded company (whether or not such company is engaged
in a business that competes with the Noncompete Business);
(C) From acquiring a controlling equity interest in any company or other
entity that is engaged in a business that competes with the
Noncompete Business if the annual sales from such entity's competing
business or entity do not exceed 20% of such business' or entity's
total revenues in the 12-month period immediately preceding such
acquisition provided that the acquisition of such competing business
was not the principal purpose of such acquisition; or
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(D) From acquiring a controlling equity interest in any company or other
entity that is engaged in a business that competes with the
Noncompete Business if the annual sales from such entity's competing
business or entity exceed 20% provided that (1) the acquisition of
such competing business was not the principal purpose of such
acquisition and (2) the acquiring company makes a good faith effort
to dispose of any such competing business within one year after its
acquisition.
6.4 USE OF FERRO NAME AND XXXX. As soon as practicable after Closing, but in
no event no later than nine (9) months after the Closing Date, Akzo Nobel
China shall discontinue all use in any manner whatsoever of the Ferro
name, the Ferro "Check-In-A-Circle" logo and all similar names and logos;
provided, however, that during such period prior to ceasing all use, Akzo
Nobel China shall be permitted to use the Ferro name and the Ferro
"Check-In-A-Circle" logo solely in connection with the operation of the
Powder Coatings Business and substantially in the same manner as the name
and logo were used by Ferro in connection with the operation of the Powder
Coatings Business immediately prior to Closing. Under no circumstances
whatsoever will Akzo Nobel China use the Ferro name or the Ferro
"Check-In-A-Circle" logo in connection with the conduct of any other
business or operation of Akzo Nobel China or any of its Affiliates,
including any other powder coatings business presently conducted by Akzo
Nobel China or any of its Affiliates. Akzo Nobel China shall not take any
action or fail to take any action that could be reasonably expected to
have an adverse effect on the Ferro name or the Ferro "Check-In-A-Circle"
logo.
6.5 ACCESS TO FORMER BUSINESS RECORDS. For a period of 10 years after the
Closing, or until any audits of Ferro's Tax returns relating to periods
before or including the Closing are completed, whichever occurs later,
Akzo Nobel China will retain all business records associated with or
related to the Subsidiary when acquired. During such period, Akzo Nobel
China upon at least three days notice, and during normal business hours
will afford duly authorized representatives of Ferro free and full access
to all of such records and will permit such representatives, at Ferro's
expense, to make abstracts from, or to take copies of any of such records
created, produced, or obtained before the Closing, as may be reasonably
requested by Ferro. During such period, Akzo Nobel China will cooperate
with Ferro, and cause employees of the Subsidiary to cooperate with Ferro,
in furnishing information, evidence, testimony, and other assistance in
connection with any action, proceeding, or investigation relating to the
Subsidiary before the Closing and the calculation of the "earn out"
referred to in Section 8.3(B)(7), and Ferro will provide reimbursement for
all out-of-pocket expenses incurred by Akzo Nobel China or such employees
in connection with providing the assistance contemplated in this Section
6.5.
6.6 ACCESS TO FORMER EMPLOYEES. After the Closing, each party will make
available to the other party employees of Akzo Nobel China, Ferro, and the
Subsidiary whom the other party may reasonably need in order to defend or
prosecute any legal or administrative action to which Ferro or Akzo Nobel
China are a party and which relates to the Subsidiary before the Closing.
The requesting party will pay or reimburse the other party for all
reasonable expenses which may be incurred by such employees in connection
therewith, including all travel, lodging, and meal expenses, and will
further compensate the other for the number of whole business days spent
by each such employee in providing such services at the rate of 130% of
the average daily gross pay per business day (excluding the value of
employee benefits) of such employee during the calendar month in which
such services are performed.
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6.7 TERMINATION OF INSURANCE COVERAGE. At or after the Closing, Ferro and its
Affiliates will have the right to terminate any and all insurance coverage
affecting the Subsidiary with the effect that Akzo Nobel China will have
no right of recovery with respect to any claim under policies or for
refunds of premiums of insurance that previously covered the Subsidiary.
Akzo Nobel China will, however, continue to be entitled to recoveries (net
of deductibles and out-of-pocket claims handling costs) after the Closing
under occurrence-based insurance policies to the extent the recovery
relates to a claim made prior to Closing. Ferro will be responsible for
the administration of claims for such recoveries.
6.8 TRADE SECRETS. From and after the Closing, Ferro will not, and will use
its reasonable best efforts to cause its employees not to, disclose to any
third-party any trade secrets of the Subsidiary or any other information
regarding the Powder Coatings Business of a type held in confidence under
the practices and policies of the Subsidiary or the Powder Coatings
Business immediately prior to Closing. Such information shall not include
information that (A) is or becomes generally available to the public other
than as a result of a disclosure by Ferro or any of its employees or (B)
became available to Ferro or any of its employees on a non-confidential
basis from a source other than Ferro or any employee of Ferro that was an
employee of the Subsidiary or relating to the Powder Coatings Business at
any time prior to the Closing. The provisions of this Section 6.8 shall
not apply to any disclosure of information to the extent (1) Akzo Nobel
China or any Affiliate of Akzo Nobel China has given its prior written
consent to such disclosure, or (2) such disclosure is required by law or
by any applicable ruling, decree or order of a governmental agency or
judicial or regulatory authority; provided, however, that in such an
event, Ferro will give Akzo Nobel China notice of such requirement to
disclose in order to provide Akzo Nobel China with the opportunity to
challenge the disclosure, the scope of the disclosure and/or obtain a
protective order regarding the disclosure.
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES
7.1 FERRO'S GENERAL REPRESENTATIONS AND WARRANTIES. Ferro represents and
warrants to Akzo Nobel China the following:
(A) ORGANIZATION AND EXISTENCE. Ferro is a corporation duly organized,
validly existing, and in good standing under the laws of the State
of Ohio; and
(B) POWER AND AUTHORITY. Ferro has full power and authority under its
constitutive documents and the laws of the jurisdictions in which
they respectively are organized to execute, deliver, and perform
this Purchase Agreement.
(C) AUTHORIZATION. The execution, delivery, and performance of this
Purchase Agreement by Ferro has been duly authorized by all
requisite corporate action on the part of Ferro.
(D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and
enforceable legal obligation of Ferro, except as enforceability may
be limited by principles of equity and by bankruptcy and insolvency
laws generally.
(E) NO DEFAULT. Neither the execution and delivery of this Purchase
Agreement nor Ferro's full performance of its obligations under this
Purchase Agreement will violate or breach, or otherwise constitute
or give rise to (with the giving of notice
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or passage of time or both) a Default under, the terms or provisions
of Ferro's and the Subsidiary's respective constitutive documents or
of any material contract, commitment, or other obligation to which
any of Ferro is a party or by which they are bound, except for any
such Default which would not, either individually or in the
aggregate, have a material adverse effect on the ability of Ferro to
consummate the transaction contemplated hereby.
(F) FINDERS. With the sole exception of Xxxxxxx Xxxxx Xxxxxx Inc., Xxxxx
has not engaged and are not directly or indirectly obligated to any
third-party acting as a broker, finder, or similar capacity in
connection with the transactions contemplated by this Purchase
Agreement.
(G) CONSENTS AND APPROVALS. No consent, approval, license, permit, order
or authorization of, or notice to, or registration, declaration or
filing with, any Governmental Authority or any other third-party is
required to be obtained or made by or with respect to Ferro in
connection with the execution, delivery or performance of this
Purchase Agreement by Ferro or the consummation of the transactions
contemplated hereby by Ferro or in order to preclude any
termination, suspension, acceleration, modification or impairment of
any of the Contracts or any legal or contractual right, privilege,
license or franchise other than (i) the Government Approvals and
(ii) any such consents, approvals, licenses, permits, orders or
authorizations, notices, registrations, declarations or filings the
failure of which to obtain or be made, in each case, would not have
a material adverse effect on the Powder Coatings Business Condition.
(H) EXISTENCE AND CAPITALIZATION OF THE SUBSIDIARY. Except as otherwise
disclosed in Part A of the Disclosure Package, the Subsidiary is a
wholly foreign owned enterprise duly organized and existing under
the laws of the Peoples Republic of China with registered capital of
$9,000,000.
(I) OWNERSHIP OF THE SHARES. Ferro Owns all of the Shares.
(J) NO KNOWLEDGE OF AKZO NOBEL CHINA'S DEFAULT. Ferro has no knowledge
that any of Akzo Nobel China's representations and warranties are
untrue, incorrect, or incomplete or that Akzo Nobel China is in
Default under any term or provision of this Purchase Agreement.
7.2 FERRO'S REPRESENTATIONS AND WARRANTIES CONCERNING THE DISCLOSURE PACKAGE.
Simultaneously with the execution and delivery of this Purchase Agreement,
Ferro is delivering to Akzo Nobel China a bound volume of disclosure
materials (the "Disclosure Package") entitled the "Powder Coatings
Disclosure Package" and consisting of 18 Parts, consecutively lettered
A-R, inclusive. Ferro represents and warrants to Akzo Nobel China that the
Disclosure Package contains the information described in Appendix F. In
addition, Ferro represents and warrants to Akzo Nobel China the following
with respect to the Disclosure Package:
(A) ORGANIZATION. Except as otherwise disclosed on Part A of the
Disclosure Package, Ferro neither owns nor holds any other equity
interest, directly or indirectly, in any company, corporation,
partnership, joint venture, business, firm, or other entity which,
to Ferro's knowledge, engages in any business in competition with
the Powder Coatings Business in Asia.
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(B) FINANCIAL STATEMENTS. Except as otherwise disclosed on Part B, the
financial statements contained in Subparts B-1 to B-6 are true and
correct copies of financial reports derived from management accounts
created and maintained by Ferro in the ordinary course in accordance
with its standard practice. To Ferro's knowledge, such financial
reports present fairly, in all material respects, the financial
position of the Subsidiary as of the dates thereof.
(C) INVENTORIES. Except as otherwise disclosed on Part C, (1) the
Subsidiary Owns all Inventories described on Part C; (2) such
Inventories have been valued on the books of the Subsidiary in
accordance with the Accounting Principles and (3) all Inventories
are saleable in the ordinary course of business.
(D) TRADE ACCOUNTS RECEIVABLE. Except as otherwise disclosed on Part D,
(1) the Subsidiary Owns all of the Trade Accounts Receivable listed
or described on Part D; (2) none of such Trade Accounts Receivable
is owing to Ferro or any of their Affiliates; (3) all of the Trade
Accounts Receivable are genuine and were entered into in the
ordinary course conduct of the Powder Coatings Business; and (4) to
the best of Ferro's knowledge, the Subsidiary has complied with all
laws and customs necessary to maintain the collectibility of such
Trade Accounts Receivable.
(E) TRADE ACCOUNTS PAYABLE. Except as otherwise disclosed on Part E, (1)
all of the liabilities reflected on the books of the Subsidiary
arose out of the ordinary course conduct of the Powder Coatings
Business; and (2) no such liabilities are owing to Ferro or any of
their Affiliates.
(F) REAL PROPERTY. Except as otherwise disclosed on Part F of the
Disclosure Package, (1) the Subsidiary Owns all of the land use
rights to real properties listed as "owned" on Subpart F-1; (2) the
leases under which the real property listed as "leased" on Subpart
F-2 are valid and subsisting; (3) the Subsidiary is not in Default
in any material respect under any lease of any such real properties;
and (4) the improvements to the real property listed on Part F are,
taking into account their age and prior use, in good condition and
repair, ordinary wear and tear excepted.
(G) TANGIBLE PERSONAL PROPERTY. Except as otherwise disclosed on Part G
of the Disclosure Package, (1) the Subsidiary Owns all tangible
personal property listed as "owned" on Subparts G-1 to G-3; (2) the
leases under which the tangible personal property listed as "leased"
on Subparts G-4 to G-5 are leased are valid and subsisting; (3) the
Subsidiary is not in Default in any material respect under any lease
listed on Part G in any manner likely to be materially adverse to
the Powder Coatings Business Condition; and (4) the items of
tangible personal property listed on Part G are, taking into account
their age and prior use, in good condition and repair, ordinary wear
and tear excepted.
(H) INTELLECTUAL PROPERTY. Except as otherwise disclosed on Part H of
the Disclosure Package, (1) the Subsidiary Owns all of the
intellectual property listed as "owned" on Subparts H-1 to H-4; (2)
the license, technology, or similar agreements to employ the
intellectual property listed as "licensed by" on Subpart H-5 are
valid and subsisting agreements; (3) except with respect to the
items
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listed in such Subpart H-5, to Ferro's knowledge, the Subsidiary is
not obligated to pay any amount, whether as a royalty, license, fee,
or other payment to any person in order to use any of the
intellectual property used by the Subsidiary; (4) the license,
technology, or similar agreements to employ the intellectual
property listed as "licensed to" on Subpart H-6 are valid and
subsisting agreements; (5) except with respect to the items listed
in such Subpart H-7, the Subsidiary has not granted any rights or
interest to any person in connection with any of the intellectual
property described in Part H; and (6) Ferro has no knowledge of any
infringement by the Subsidiary in its conduct of the Powder Coatings
Business of the intellectual property rights of any person in any
manner likely to be materially adverse to the Powder Coatings
Business Condition.
(I) INDEBTEDNESS. Except as otherwise disclosed on Part I of the
Disclosure Package, the Subsidiary is not in Default in any material
respect under any note, bond, debenture, mortgage, indenture,
security agreement, guaranty, or other instrument of indebtedness
for borrowed money.
(J) LITIGATION. Except as otherwise disclosed on Part J of the
Disclosure Package, to Ferro's knowledge, (1) there exists no
litigation, proceedings or actions affecting the Powder Coatings
Business Condition or claims or investigations that would have a
material adverse effect on the Powder Coatings Business Condition,
in either case pending or threatened against the Subsidiary; and (2)
the Subsidiary is not subject to any writ, injunction, order, or
decree of any court, agency, or other governmental authority
affecting the Powder Coatings Business Condition.
(K) CONTRACTS. Except as otherwise disclosed on Part K of the Disclosure
Package, (1) each of the contracts, commitments, and other
obligations listed on Part K is a valid and binding obligation of
the Subsidiary and, to Ferro's knowledge, the other party or parties
thereto; (2) neither the Subsidiary nor, to Ferro's knowledge, any
other party thereto has terminated, cancelled, or substantially
modified any contract, commitment, or other obligation identified in
Part K; and (3) neither the Powder Coatings Business nor, to Ferro's
knowledge, any other party thereto is in Default in any material
respect under any contract, commitment, or other obligation
identified in Part K.
(L) EMPLOYEES AND EMPLOYEE BENEFITS. Except as otherwise disclosed on
Part L of the Disclosure Package or Appendix F of this Purchase
Agreement, (1) the Subsidiary has not entered into any employment
contract; (2) the Subsidiary does not have any pension, retirement,
profit-sharing, deferred compensation, employee share option or
share purchase, bonus, or incentive compensation plans, schemes, or
arrangements; (3) the Subsidiary does not have any employee health,
dental, vision, life insurance, long-term or short-term disability,
vacation, tuition reimbursement, redundancy, severance or other
social plans, schemes, or arrangements; and (4) the Subsidiary has
substantially performed all material obligations owing to their
respective employees.
(M) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as otherwise disclosed on
Part M of the Disclosure Package, to Ferro's knowledge, (1) the
Subsidiary is in compliance with all Environmental Laws applicable
to the Subsidiary relating to emissions, discharges, and releases of
Hazardous Materials into land, soil,
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ambient air, water, and the atmosphere the noncompliance with which
is likely to have a materially adverse effect on the Powder Coatings
Business Condition; and (2) the Subsidiary is in compliance with all
Environmental Laws applicable to the generation, treatment, storage,
transportation, and disposal of Hazardous Materials the
noncompliance with which is likely to have a materially adverse
effect on the Powder Coatings Business Condition.
(N) COMPLIANCE WITH HEALTH AND SAFETY LAWS. Except as otherwise
disclosed on Part N of the Disclosure Package, to Ferro's knowledge,
the Subsidiary is in compliance with all Health and Safety Laws
applicable to the Subsidiary the noncompliance with which is likely
to have a materially adverse effect on the Powder Coatings Business
Condition.
(O) COMPLIANCE WITH OTHER LAWS. Except as otherwise disclosed on Part O
of the Disclosure Package, to Ferro's knowledge the Subsidiary is in
compliance with all statutes, ordinances, regulations, and other
governmental requirements (other than Environmental Laws and Health
and Safety Laws) the noncompliance with which is likely to have a
materially adverse effect on the Powder Coatings Business Condition.
(P) TAXES. Except as otherwise disclosed in Part P of the Disclosure
Package, (1) all Tax returns required to be filed by the Subsidiary
before Closing have been or will be filed on or before the Closing;
(2) all Taxes due and payable before Closing on such returns have
been or will be paid when required by law; (3) any Taxes relating to
the Subsidiary with respect to any transaction or any period
beginning on or before the Closing Date required to have been or to
be paid prior to Closing have been or will be paid; and (4) the
assets of the Subsidiary are not encumbered by any Encumbrance
arising out of unpaid Taxes.
(Q) INSURANCE. Except as otherwise disclosed in Part Q of the Disclosure
Package, the Subsidiary has insured or self-insured the assets and
properties of the Subsidiary against those insurable risks and to an
extent the Subsidiary deems reasonably necessary for its continued
conduct of the Powder Coatings Business and for protection against
injury, damage, or loss.
(R) NO MATERIAL EVENTS. Except as otherwise disclosed in Part R of the
Disclosure Package, (1) the business of the Subsidiary and the
Powder Coatings Business has been conducted only in the ordinary and
usual course since March 1, 2002, and (2) no Material Events have
occurred since March 1, 2002.
7.3 AKZO NOBEL CHINA'S REPRESENTATIONS AND WARRANTIES. Akzo Nobel China
represents and warrants to Ferro the following:
(A) ORGANIZATION AND EXISTENCE. Akzo Nobel China is a Dutch private
company with limited liability (besloten vennootschap) corporation
duly organized, validly existing and in good standing under the laws
of The Netherlands.
(B) POWER AND AUTHORITY. Akzo Nobel China has full corporate power and
authority under its constitutive documents and under the laws of The
Netherlands to execute, deliver, and perform this Purchase
Agreement.
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(C) AUTHORIZATION. The execution, delivery, and performance of this
Purchase Agreement have been duly authorized by all requisite
corporate actions on the part of Akzo Nobel China.
(D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and
enforceable legal obligation of Akzo Nobel China except as
enforceability may be limited by principles of equity and by
bankruptcy and insolvency laws generally.
(E) NO DEFAULT. Neither the execution and delivery of this Purchase
Agreement nor Akzo Nobel China's full performance of its obligations
under this Purchase Agreement will violate or breach, or otherwise
constitute or give rise to (with the giving of notice or passage of
time or both) a Default under, the terms or provisions of Akzo Nobel
China's constitutive documents or of any material contract,
commitment, or other obligation to which Akzo Nobel China is a party
or by which it is bound except for any such Default which would not,
either individually or in the aggregate, have a material adverse
effect on the ability of Akzo Nobel China to consummate the
transaction contemplated hereby.
(F) FINDERS. Akzo Nobel China has not engaged and is not directly or
indirectly obligated to any third-party acting as a broker, finder,
or similar capacity in connection with the transactions contemplated
by this Purchase Agreement other than Xxxxxxx Associates.
(G) NO KNOWLEDGE OF FERRO'S DEFAULT. Akzo Nobel China has no knowledge
that any of the representations and warranties of Ferro contained in
this Purchase Agreement are untrue, incorrect, or incomplete or that
Ferro is in Default of any term or provision under this Purchase
Agreement.
(H) CONSENTS AND APPROVALS. Except for the Government Approvals, no
consent, approval, license, permit, order or authorization of, or
notice to, or registration, declaration or filing with, any
Governmental Authority or any other third-party is required to be
obtained or made by or with respect to Akzo Nobel China in
connection with the execution, delivery or performance of this
Purchase Agreement by Akzo Nobel China or the consummation of the
transactions contemplated hereby by Akzo Nobel China or in order to
preclude any termination, suspension, acceleration, modification or
impairment of any of the Contracts or any legal or contractual
right, privilege, license or franchise, the failure of which to
obtain or be made, in each case, would not have a material adverse
effect on the Closing of the contemplated transaction in this
Purchase Agreement.
7.4 MEANING OF "FERRO'S KNOWLEDGE". Where any statement contained in this
Article 7 is said to be to the "Ferro' knowledge" (or words of similar
import) such expression means that, after having conducted a due diligence
review and in reliance on due diligence certifications, both as described
in Appendix H, senior Ferro management believes the statement to be true,
accurate and complete in all material respects, but that Ferro makes no
further representation or warranty concerning facts or circumstances that
might have come to Ferro's attention if it conducted a broader or more
thorough investigation of the Subsidiary. For purposes of this Section
7.4, the term "senior Ferro management" means those Ferro executives who
report directly to Ferro's Chairman and Chief Executive Officer and the
Director of Ferro's Industrial Coatings MBU, the
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Group Controller of Ferro's Industrial Coatings MBU, the Regional
Controller - Asia/Pacific and the Subsidiary's General Manager and Finance
Director.
7.5 DISCLAIMER. The warranties stated in this Article 7 are the only
representations and warranties either party has given the other party in
connection with the transactions contemplated by this Purchase Agreement.
Except as set forth in this Article 7, neither party has made, and each
party expressly disclaims, any other or further representation or
warranty, either express or implied, concerning the subject matter of this
Purchase Agreement. All other warranties either party or anyone purporting
to represent either party gave or might have given, or which might be
provided or implied by law or commercial practice, are hereby excluded.
ARTICLE 8 - SPECIFIC OBLIGATIONS
8.1 EMPLOYEE OBLIGATIONS. The parties' respective obligations with respect to
Employees will be as follows:
(A) SEVERANCE. If Akzo Nobel China terminates the employment of any
Employee within one year after the Closing in circumstances in which
such Employee would have been entitled to severance pay and/or
benefits if he or she had terminated employment with a Subsidiary
immediately before the Closing, then Akzo Nobel China will assure
that such terminated Employee's severance pay and benefits will be
substantially equivalent to the severance pay and benefits the
employee would have received under the Subsidiary's severance policy
as of the Closing.
(B) NON-INTERFERENCE. Ferro will neither employ nor offer employment to
any employee of the Subsidiary who was an employee of the Subsidiary
at Closing during the 24-month period following the Closing without
the prior written consent of Akzo Nobel China. During such period,
Akzo Nobel China will not, without the prior written consent of
Ferro, employ or offer employment to any former employee of the
Subsidiary who retired from or voluntarily terminated employment
with Ferro during the six-month period preceding the Closing.
Nothing in this Section 8.1(B), however, will be deemed to prohibit
either party from hiring an Employee who responds to a general
public advertisement of employment or who is identified as a
consequence of a non-directed executive search or who is
involuntarily terminated.
Ferro's duties and obligations arising out of the foregoing provisions of
this Section 8.1 are the "Ferro' Employee Obligations." Akzo Nobel China's
duties and obligations arising out of the foregoing provisions of this
Section 8.1 are the "Akzo Nobel China's Employee Obligations."
8.2 ENVIRONMENTAL OBLIGATIONS. The Parties' respective obligations with
respect to Environmental Matters will be as follows:
(A) IDENTIFIED ENVIRONMENTAL MATTERS. Ferro will be solely responsible,
and will indemnify Akzo Nobel China, for any action, condition, or
event giving rise to an Environmental Loss with respect to the
Environmental Matters identified on Appendix I (the "Identified
Environmental Matters").
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(B) PRE-CLOSING ENVIRONMENTAL MATTERS. Ferro will be solely responsible,
and will indemnify Akzo Nobel China, for any action, condition, or
event giving rise to an Environmental Loss arising out of the
ownership or operation of the Powders Coatings Business to the
extent caused by actions or omissions or conditions that occurred or
arose on or before the Closing Date.
(C) POST-CLOSING ENVIRONMENTAL MATTERS. Akzo Nobel China will be solely
responsible, and will indemnify Ferro, for any action, condition, or
event giving rise to an Environmental Loss arising out of the
ownership of the Shares to the extent caused by actions or omissions
by Akzo Nobel China or conditions that occur or arise as the result
of conduct by the Subsidiary after the Closing Date.
(D) MIXED POST-CLOSING ENVIRONMENTAL MATTERS. If any action, condition,
or event giving rise to an Environmental Loss results from both (i)
actions or omissions by Akzo Nobel China or conditions that occur or
arise as the result of conduct by Akzo Nobel China after the
Closing, and (ii) actions or omissions by Ferro or conditions that
occur or arise as the result of conduct by Ferro after the Closing
and/or conditions that are caused by actions or omissions or
conditions that occurred or arose before the Closing, then the
liability for such mixed Environmental Loss ("Mixed Loss") will be
apportioned between Akzo Nobel China and Ferro as follows:
(1) FERRO WILL BE RESPONSIBLE FOR ANY MIXED LOSS IN AN AMOUNT
EQUAL TO THE TOTAL MIXED LOSS TIMES THE APPROPRIATE ONE OF THE
FOLLOWING TWO FRACTIONS -
(a) If the Mixed Loss resulting from the Environmental
Matter is directly proportional to the amount of
Hazardous Materials that were used, emitted, discharged
or released and the amount of Hazardous Materials is
known or estimable based on credible, objective
evidence, then a fraction (A) the numerator of which is
the amount of Hazardous Materials contributed by Ferro
to the Environmental Matter before the Closing and (B)
the denominator of which is the total amount of
Hazardous Materials contributed both before and after
the Closing; or
(b) If either the Mixed Loss resulting from the
Environmental Matter is not directly proportional to the
amount of Hazardous Materials that were used, emitted,
discharged or released or the amount of Hazardous
Materials is not known or not estimable based on
credible, objective evidence, then a fraction (A) the
numerator of which is 12 months and (B) the denominator
of which is 12 months plus the number of months from the
Closing Date until the date Akzo Nobel China delivers a
Notice described in Section 8.2(F)(2) below.
(2) AKZO NOBEL CHINA WILL BE SOLELY RESPONSIBLE FOR ANY MIXED LOSS
IN AN AMOUNT EQUAL TO THE TOTAL MIXED LOSS MINUS THE
PROPORTION ALLOCABLE TO FERRO AS CALCULATED IN SECTION
8.2(D)(1).
(E) AKZO NOBEL CHINA'S PHASE 2 STUDY. Immediately after the execution
and delivery of this Purchase Agreement, Akzo Nobel China will
conduct a Phase 2
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environmental study to determine whether remedial action is legally
required under Environmental Laws (which, for purposes of this
Section 8.2(E) only, shall include any applicable local regulations
concerning permissible noise levels and spill containment) with
respect to conditions existing at the Subsidiary's manufacturing
site as of the Closing.
(1) If, as a consequence of such study, Akzo Nobel China
determines in good faith that remedial action is legally
required under Environmental Laws with respect to such
Environmental Matter and may be the responsibility of Ferro
pursuant to this Section 8.2, then Akzo Nobel China will give
Ferro notice without undue delay of the facts and
circumstances that caused Akzo Nobel China to conclude that
remedial action is legally required and may be the
responsibility of Ferro.
(2) After giving Ferro such notice, Akzo Nobel China will in good
faith design, develop, and deliver to Ferro a plan or program
(a "Remediation Plan") for remediating the Environmental
Matter. Akzo Nobel China will assure such plan or program
corrects or ameliorates any existing violation of
Environmental Laws in the most economical manner reasonably
possible, including the use of institutional controls and deed
restrictions limiting future use of the Subsidiary's real
property for industrial purposes so long as such institutional
controls and deed restrictions allow Akzo Nobel China to
conduct the Powder Coatings Business as it was conducted at
the time of the Closing. (A Remediation Plan that satisfies
the requirements of the preceding sentence is referred to
below as an "Economic Remediation Plan".)
(3) Ferro will promptly review Akzo Nobel China's Remediation Plan
and will advise Akzo Nobel China if and in what respects (if
any) Ferro do not believe the Remediation Plan qualifies as an
Economic Remediation Plan.
(4) If Ferro and Akzo Nobel China agree that Akzo Nobel China's
Remediation Plan or an agreed modified Remediation Plan
constitutes an Economic Remediation Plan, then Akzo Nobel
China will obtain any necessary government approvals and
proceed with implementing such Remediation Plan.
(5) If Ferro and Akzo Nobel China do not agree on a Remediation
Plan that both believe is an Economic Remediation Plan, then
Akzo Nobel China will proceed with implementing Akzo Nobel
China's Remediation Plan and either party will have the right
to initiate the dispute resolution process set forth in
Article 10 to resolve the dispute over whether Akzo Nobel
China's Remediation Plan is an Economic Remediation Plan, in
which case the dispute will be finally resolved as provided in
Article 10.
(F) RESPONSIBILITIES WITH REGARD TO ECONOMIC REMEDIATION PLANS. Ferro
will be solely responsible for the Actual Amount of any Economic
Remediation Plan.
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(G) LIMITATIONS ON FERRO'S OBLIGATIONS.
(1) In no event will Ferro have any responsibility for any
Environmental Matter for which Akzo Nobel China has not given
Ferro notice in accordance with Section 8.2(E)(2) above on or
before 5:00 PM (Eastern Time) on December 31, 2007.
(2) In no event will Ferro have any responsibility for any
Environmental Losses that relate solely to actions or
practices that Akzo Nobel China carried out after the Closing
and that Ferro did not carry out before the Closing.
(H) RELEASE OF CLAIMS. Except as expressly provided in this Section 8.2,
Ferro and Akzo Nobel China (and their respective parent and
subsidiary corporations) hereby agree to release each other from any
and all claims of any kind under applicable statutes arising out of
any Environmental Matters relating to the Subsidiary.
Ferro's duties and obligations arising out of the foregoing provisions of
this Section 8.2 are the "Ferro's Environmental Obligations." Akzo Nobel
China duties and obligations arising out of the foregoing provisions of
this Section 8.2 are the "Akzo Nobel China's Environmental Obligations."
8.3 OTHER OBLIGATIONS. The parties respective obligations with respect to
other liabilities and obligations of the Subsidiary will be as follows:
(A) AKZO NOBEL CHINA'S RESPONSIBILITIES. As between the parties, Akzo
Nobel China will be solely responsible for the following:
(1) All Trade Accounts Payable and Other Current Liabilities;
(2) All Financial Debt;
(3) All liabilities and obligations that arise after the Closing
under the Contracts, Leases, Licenses, and Permits;
(4) All liabilities and obligations arising out of, relating to,
or resulting from any claims that Products manufactured and
sold by the Subsidiary following the Closing are or were
defective or failed to meet warranted specifications other
than those retained by Ferro pursuant to Section 8.3(B);
(5) Any and all liabilities, duties and obligations of, and claims
against (including any claim or action, whether founded upon
negligence, breach of warranty, strict liability in tort
and/or other similar legal theory, seeking compensation or
recovery for injury to third-parties or damage to property
alleged to have been caused by a Product manufactured and sold
by the Subsidiary after the Closing), or relating to, or
incurred by, the Subsidiary, or the operation of the Powder
Coatings Business or the ownership, possession or use of any
of the assets of the Subsidiary, after the Closing; and
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(6) Costs and expenses for which Akzo Nobel China is responsible
under Section 12.3.
(B) FERRO'S RESPONSIBILITIES. As between the parties, Ferro will be
solely responsible for the following:
(1) All liabilities and obligations that have been fully
discharged or satisfied by the Subsidiary before the Closing
in transactions in the ordinary course of business and not in
breach of this Purchase Agreement;
(2) All liabilities, undertakings, and obligations incurred by
Ferro in connection with the conduct of businesses other than
the Powder Coatings Business, including liabilities,
undertakings, and obligations incurred by Ferro and/or its
Affiliates in conducting similar businesses from outside
China;
(3) All liabilities and obligations in excess of $1,000 in any
single case or in excess of $10,000 in the aggregate arising
out of, relating to, or resulting from any claims that
Products manufactured and sold by the Subsidiary before the
Closing are or were defective or failed to meet warranted
specifications if and to the extent -
(a) Such claims are made in good faith by a customer
unrelated to Akzo Nobel China without solicitation or
encouragement by or collusion with Akzo Nobel China,
(b) Akzo Nobel China notifies Ferro of such claims within 18
months from the date of the Closing Date, and
(c) Akzo Nobel China takes no action to admit, compromise or
settle such claims; if Akzo Nobel China elects to admit,
compromise or settle any such claim, Ferro shall have no
further obligation hereunder with respect to such claim.
In the event Ferro desires to compromise or settle, or shall
become obligated for, any such claim for which Ferro is liable
under this Section 8.3(C), Akzo Nobel China shall sell to the
Ferro replacement Products at Akzo Nobel China's raw material
and actual manufacturing costs;
(4) Costs and expenses for which Ferro is responsible under
Section 12.3.
(5) All liabilities and obligations for the payment of Taxes
accrued by the Subsidiary with respect to periods or events
occurring before the Closing;
(6) Any and all liabilities, duties and obligations of, and claims
against (including any claim or action, whether founded upon
negligence, breach of warranty, strict liability in tort
and/or other similar legal theory, seeking compensation or
recovery for injury to third-parties or damage to property
alleged to have been caused by a Product manufactured and sold
by the
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Subsidiary before the Closing, or relating to, or incurred by,
the Subsidiary, or to the operation of the Powder Coatings
Business or the ownership, possession or use of any assets of
the Subsidiary, on or prior to the Closing, in each case
whether accrued, unaccrued, matured, unmatured, absolute,
contingent, known or unknown, asserted or unasserted, and
whether now existing or arising at any time prior to, at, or
after the Closing;
(7) Any obligation to the former owner of the Subsidiary that may
come due and payable as a consequence of the so-called "earn
out" provision in the agreement pursuant to which Ferro
purchased the Subsidiary.
Ferro's duties and obligations arising out of the foregoing provisions of
this Section 8.3 are the "Ferro's Other Obligations." Akzo Nobel China
duties and obligations arising out of the foregoing provisions of this
Section 8.3 are the "Akzo Nobel China's Other Obligations."
8.4 AKZO NOBEL CHINA'S SOLE REMEDY. Akzo Nobel China acknowledges that Akzo
Nobel China's right of indemnity under Section 9.2(B) for nonperformance
of Ferro's Employee Obligations, Ferro's Environmental Obligations and
Ferro's Other Obligations is Akzo Nobel China's sole and exclusive remedy
with respect thereto and Akzo Nobel China hereby waives any other or
further rights of recovery Akzo Nobel China might otherwise have against
Ferro with respect to such matters on grounds of misrepresentation or
breach of warranty, breach of covenant, or otherwise. Akzo Nobel China
also hereby releases and discharges Ferro from any other claims that Akzo
Nobel China may now or hereafter have against Ferro under any
Environmental Law.
8.5 COLLECTION OF TRADE ACCOUNTS RECEIVABLE. With respect to the Trade
Accounts Receivable listed or described on Part D of the Disclosure
Package (the "Collection Accounts"):
(A) Between Closing and the first anniversary of the Closing, (1) the
Subsidiary will serve as Ferro's agent for collection of the
Collection Accounts, (2) Akzo Nobel China will use, and will cause
the Subsidiary to use, their good faith, reasonable efforts to
collect the Collection Accounts in full as promptly as possible, (3)
payments received by the Subsidiary shall, for purposes of
calculating the payment required in Section 8.5(C), be applied to
the Collection Accounts (whether or not identified as being a
payment on or of a Collection Account) as payments are received form
each obligor under the Collection Accounts until such time as such
obligor's duty to pay Collection Accounts has been fully discharged
(subject only to any bona fide customer disputes as to quality or
delivery of Products sold by the Subsidiary before the Closing), and
(4) Akzo Nobel China will cause the Subsidiary not to take any
action to settle any of the Collection Accounts for less than their
face values or otherwise compromise or impair the full
collectability of the Collection Accounts without Ferro's prior
written consent.
(B) Between the Closing and the first anniversary of the Closing, a
Collection Accounts Committee, consisting of an equal number of
members appointed by both Ferro and Akzo Nobel China, will meet no
less than once a month to review the Collection Accounts. Each of
the members of the Collection Accounts Committee shall have equal
right to participate in the meetings and to receive
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copies of all committee meeting minutes and all correspondence
relating to the Collection Accounts.
(C) Promptly after the first anniversary of the Closing, Akzo Nobel
China will deliver to Ferro a detailed statement of all Collection
Accounts outstanding as of the first anniversary of Closing. Subject
to Section 8.5(A), no later than 14 days after delivery of such
statement, Ferro will pay to Akzo Nobel China an amount equal to 90%
of the difference between (1) the unpaid portion of those Collection
Accounts that have not been paid in full, if any, on or before the
first anniversary of the Closing less (2) the amount of the reserve
on the books of the Subsidiary for bad debt as of the Closing.
Together with such payment, Akzo Nobel China will cause the
Subsidiary to take such steps as are necessary or appropriate to
transfer to Ferro (or its designee) the corresponding Collection
Accounts.
ARTICLE 9 - INDEMNIFICATION
9.1 INDEMNIFICATION OF FERRO. Akzo Nobel China, subject to the limitations set
forth in this Article 9, will indemnify and (in the case of third party
claims) defend Ferro, and hold Ferro harmless, from and against the Actual
Amount of any and all liabilities, damages, claims, costs, and expenses
(including reasonable attorneys' fees) arising out of or resulting from --
(A) Any misrepresentation or breach of warranty by Akzo Nobel China
under Section 7.3;
(B) Nonperformance by Akzo Nobel China of any obligations to be
performed by or on the part of Akzo Nobel China under this Purchase
Agreement, including Akzo Nobel China's obligations with respect to
the Assumed Liabilities and Akzo Nobel China's obligations under
Article 8; or
(C) Akzo Nobel China's use of the Ferro name or the Ferro
"Check-In-A-Circle" logo in any manner whatsoever (other than
instances where there is a claim of infringement by a third-party
involving the name or the logo).
9.2 INDEMNIFICATION OF AKZO NOBEL CHINA. Subject to the limitations set forth
in this Article 9, Ferro will indemnify and (in the case of third party
claims) defend Akzo Nobel China, and hold Akzo Nobel China harmless, from
and against the Actual Amount of any and all liabilities, damages, claims,
costs, and expenses (including reasonable attorneys' fees) arising out of
or resulting from --
(A) Any misrepresentation or breach of warranty by Ferro under Sections
7.1 or 7.2;
(B) Nonperformance by Ferro of any obligation to be performed by or on
the part of Ferro under this Purchase Agreement, including Ferro's
obligations with respect to Ferro's obligations under Article 8;
(C) Any liability resulting from non-compliance with any so called "bulk
sales" law or similar law requiring creditor notice in the
jurisdiction of China.
9.3 CLAIMS. If either party desires to make a claim against the other under
Section 9.1 or 9.2 which does not involve a claim by any third-party, then
such party shall make such
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claim by delivering written notice to the other within a reasonable period
of time. If either Akzo Nobel China or Ferro (the "Claimant") desires to
make a claim against the other (the "Indemnitor") under Section 9.1 or 9.2
which involves a claim by a third-party, then such claim will be made in
the following manner and be subject to the following terms and conditions:
(A) NOTICE. The Claimant will give notice to the Indemnitor within a
reasonable period of time of any demand, claim, or threat of
litigation or the actual institution of any action, suit, or
proceeding (collectively, a "Claim") at any time served on or
instituted against the Claimant with respect to which the Claimant
believes it would have a right of indemnification under Section 9.1
or 9.2. In providing such notice, the Claimant shall only state the
existence of such Claim and shall not admit or deny the validity of
the facts or circumstances out of which such Claim arose. Solely for
purposes of determining whether the Claimant is entitled to
indemnification under Section 9.1 or 9.2, the alleged facts or
circumstances on which such Claim is based shall be treated as if
they were true pending final resolution of the facts and
circumstances out of which such Claim arose.
(B) RESPONSIBILITY FOR DEFENSE. Within 30 days after receipt of any such
notice, but not less than five working days before the time the
Claimant is required to respond to a Claim, the Indemnitor will, by
giving written notice to the Claimant, have the right to assume
responsibility for the defense of the Claim in the name of the
Claimant or otherwise as the Indemnitor may elect; provided that the
Indemnitor also agrees that it does or might have responsibility to
indemnify the Claimant with respect to such Claim. Otherwise, the
Claimant will have responsibility for the defense of the Claim.
Subject to the provisions of subsections 9.3(C) and (D) below, the
party having responsibility for defense of a Claim (the "Defending
Party") will have the full authority to defend, cure, adjust,
compromise, or settle such Claim or appeal any judgment or ruling of
a court or other tribunal in connection with such Claim in its own
name and/or in the name of the other party.
(C) RIGHT TO PARTICIPATE. Notwithstanding a Defending Party's
responsibility for the defense of a Claim, the other party shall
have the right to participate, at its own expense and with its own
counsel, in the defense of a Claim and the Defending Party will
consult with the other party from time to time on matters relating
to the defense of such Claim. The Defending Party will provide the
other party with copies of all pleadings and material correspondence
relating to such Claim.
(D) SETTLEMENT. A Defending Party will provide the other party with
timely written notice of any proposed adjustment, compromise, or
other settlement, including equitable or injunctive relief, of a
Claim which the Defending Party intends to propose or accept. If the
other party fails to provide the Defending Party with timely written
notice of objection to such settlement, then the Defending Party
shall have the authority to propose or accept such settlement and
enter into any agreement, in its own name and/or in the name of the
other party, giving legal effect to all aspects of such settlement.
If the other party objects to such settlement, then the Defending
Party may, if it so elects, tender the defense to the other party by
paying to such other party the amount of money proposed to be paid
in settlement of the Claim, in which case the Defending Party shall
have no further liability to the other party under this Purchase
Agreement with respect
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to such Claim and the other party shall have full authority for the
future defense of such Claim and full responsibility for any and all
liabilities, obligations, costs, and expenses resulting therefrom.
9.4 DISPUTED RESPONSIBILITY. If, after receiving a written indemnification
notice under Section 9.3(A), the party receiving such notice disputes --
(A) The fact that such party in fact made a misrepresentation or breach
a warranty under this Purchase Agreement giving rise to the claim to
which the notice relates or that any such misrepresentation or
breach in fact gave rise to the liabilities, damages, claims, costs,
or expenses for which the other party seeks indemnification under
this Article 9, or
(B) The fact that such party in fact failed to perform any obligation to
be performed on the part of that party under this Purchase Agreement
giving rise to the claim to which the notice relates or that any
such failure in fact gave rise to the liabilities, damages, claims,
costs, or expenses for which the other party seeks indemnification
under this Article 9,
then such party will have the right to initiate the dispute resolution
mechanism set forth in Article 10, in which case the dispute will be
finally resolved as provided in Article 10. In such case, however, pending
final resolution of the disputed item, the parties will proceed as if the
party receiving the indemnification notice had in fact made a
misrepresentation, breached a warranty, or failed to perform an obligation
to be performed on the part of that party under this Purchase Agreement
and as if such act or failure in fact gave rise to the liabilities,
damages, claims, costs, or expenses for which the other party seeks
indemnification under this Article 9. If the disputed item is resolved in
whole or in part in favor of the party receiving the indemnification
notice, then such party will be entitled to an equitable reimbursement
from the other party of any amounts expended or incurred in carrying out
the receiving party's indemnification obligations under this Article 9.
9.5 QUANTUM LIMITATION ON INDEMNIFICATION. Notwithstanding the provisions of
Section 9.2, Ferro will not be obligated to indemnify or defend Akzo Nobel
China, or hold Akzo Nobel China harmless, from or against any liability,
damage, claim, cost, or expense (including attorneys' fees) arising out of
a misrepresentation or breach of warranty by Ferro pursuant to Section 9.2
unless and to the extent the Actual Amount of all claims exceeds $250,000.
In no event will Ferro's total obligation to Akzo Nobel China under
Section 8.2(F) or Section 9.2 exceed, in the aggregate, $3,250,000.
9.6 TIME LIMITATION ON INDEMNIFICATION. Notwithstanding the provisions of
Section 9.2, Ferro will not be obligated to indemnify or defend Akzo Nobel
China, or hold Akzo Nobel China harmless, from or against any liability,
damage, claim, cost, or expense (including attorneys' fees) arising out of
a misrepresentation or breach of warranty by Ferro pursuant to Section
9.2, and any cause of action based thereupon shall expire and terminate,
unless Akzo Nobel China delivers to Ferro notice and a full explanation of
the alleged breach on or before 5:00 p.m. (Eastern Time)
(A) In the case of claims by Akzo Nobel China for misrepresentations or
breaches of warranty of Ferro's Tax warranties under Section 7.2(P),
90 days after expiration
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of the applicable statute of limitation period with respect to the
particular Tax at issue; and
(B) In the case of any other claim, the 18 month anniversary of the
Closing Date.
The foregoing time limitations shall not apply with respect to any breach
of the representations and warranties set forth in Section 7.1(A), (B),
(C) or (D), which representations and warranties shall survive
indefinitely or to any breach of the representations and warranties set
forth in Section 7.2(M) or (N), any breach of which shall be governed
solely by Section 8.2.
9.7 ACTUAL AMOUNT. For purposes of the parties' respective obligations under
Sections 8.2, 9.1 and 9.2, in computing the "Actual Amount" of any
liability, damage, claim, loss, cost, or expense, the following principles
will apply:
(A) The amount will be reduced to give full effect to any provision or
reserve on the books of the Subsidiary as of the Closing with
respect to the particular item or category of items out of which the
misrepresentation, breach or nonperformance in question arose;
(B) The amount will be reduced to give full effect to any indemnity,
contractual or noncontractual recoveries the indemnified party
receives (or, in the event the indemnified party fails to use
reasonable efforts to pursue any such recoveries it might otherwise
be entitled to receive, the amount that it might otherwise be
entitled to receive) from any third-party as a consequence of the
fact, condition or circumstance giving rise to the
misrepresentation, breach or nonperformance in question;
(C) The amount will be reduced to give full effect to any act or
omission of the indemnified party that either was the cause of or
increased the ultimate amount of any liability, damage, claim, loss,
cost or expense incurred by the indemnified party; and
(D) The amount will be reduced to give full effect to any failure by any
indemnified party to take reasonable efforts to mitigate any
liability, damage, claim, loss, cost or expense incurred by such
indemnified party.
9.8 EXCLUSIVE REMEDIES. The remedies provided in this Article 9 and in Section
8.2 will be the parties' exclusive remedies for claims arising out of or
resulting from any misrepresentation, breach of warranty, breach of
covenant, breach of undertaking, or nonperformance any obligation to be
performed on the part of either party under this Purchase Agreement.
Neither party shall be liable to the other party as the result of any
breach or alleged breach of this Purchase Agreement for any (A) damages
for loss or harm to business reputation, or (B) damages that are not the
proximate and foreseeable consequence of the breach or alleged breach of
this Purchase Agreement. Under no circumstances will either party be
responsible to another party for any consequential, incidental, special,
or punitive damages or damages resulting from lost profits or lost
business opportunity arising out of or relating to any such Claim. The
foregoing shall not be interpreted, however, to limit indemnification for
losses incurred as a result of the assertion by a claimant (other than the
parties hereto and their successors and assigns) in a third-party claim of
claims for damages of the foregoing type.
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9.9 INDEMNITY PAYMENTS AS ADJUSTMENTS. All indemnity payments under this
Article 9 will constitute and be treated as adjustments to the Purchase
Price.
ARTICLE 10 - DISPUTE RESOLUTION
IF THE PARTIES EVER HAVE A DISPUTE INVOLVING THEIR RESPECTIVE RIGHTS AND
OBLIGATIONS UNDER THIS PURCHASE AGREEMENT OR ANY OF THE OTHER AGREEMENTS (OTHER
THAN WITH RESPECT TO THE DETERMINATION OF THE AMOUNT OF THE ADJUSTMENT), THEN
THE PARTIES WILL RESOLVE SUCH DISPUTE AS FOLLOWS:
10.1 DISPUTE NOTICE. Either Akzo Nobel China or Ferro may at any time deliver
to the other a written dispute notice setting forth a brief description of
the issues for which such notice initiates the dispute resolution
mechanism set forth in this Article 10. Such dispute notice shall also
specify the provision or provisions of this Purchase Agreement and the
facts or circumstances that are the subject matter of the dispute.
10.2 INFORMAL NEGOTIATIONS. During the 60-day period following delivery of a
dispute notice described in Section 10.1, the parties will cause their
representatives to meet and seek to resolve the disputed items cordially
through informal negotiations
10.3 DISPUTE RESOLUTION PROCEEDINGS. If representatives of the parties are
unable to resolve disputed items through the informal negotiations
described in Section 10.3, then within 30 days after the informal
negotiation period the parties will refer the disputed issues to a dispute
resolution panel for final resolution as follows:
(A) DESIGNATION OF REPRESENTATIVES. Within seven days after such
informal negotiation period, Akzo Nobel China and Ferro will each
designate one representative to serve on the dispute resolution
panel. (If either party fails or refuses to designate a
representative, then the other party will be entitled to have a
representative appointed for such party by the CPR Institute.)
(B) SELECTION OF NEUTRAL. Promptly after they have been designated, the
designated representatives will meet and select a neutral
third-party (the "Neutral") to serve as the third member of the
dispute resolution panel. If the designated representatives of
parties cannot agree on a Neutral, then either representative may
request the CPR Institute to select the Neutral.
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(C) PROCEDURES AND PROCESS. At the time the matter is referred to the
dispute resolution panel, Akzo Nobel China and Ferro will jointly
establish the procedures to be followed with respect to the
presentation of the parties' respective positions and the process by
which the dispute resolution panel will reach and render its
decision on the disputed issues. Such procedures and processes will,
at a minimum, assure that
(a) Each party will have the right to submit evidence to the
dispute resolution panel,
(b) Each party will have the right to present a written statement
concerning that party's position with respect to the disputed
item, and
(c) Before reaching a decision concerning the disputed item, the
dispute resolution panel will convene a hearing at which both
parties may be represented.
If Akzo Nobel China and Ferro cannot agree on such procedures and
processes, then the Neutral will establish such procedures and
process which will, in all events, be consistent with the foregoing.
(D) DECISION. The dispute resolution panel will act by majority vote.
The dispute resolution panel will base its decision on applicable
provisions of this Purchase Agreement or, if the provisions of this
Purchase Agreement do not resolve the matter, on general principles
of substantive Ohio law. (The dispute resolution panel may, if it so
desires, seek the opinion of an attorney licensed to practice law in
the State of Ohio on any matter of substantive Ohio law on which the
panel desires clarification.)
10.4 EQUITABLE RELIEF. Notwithstanding any other provision of this Article 10,
either party may seek from a court of competent jurisdiction interim
injunctive relief in order to maintain the status quo or protect such
party's rights under this Purchase Agreement pending resolution of a
dispute pursuant to this Article 10.
10.5 BINDING EFFECT. The decisions of the dispute resolution panel under this
Article 10 will be binding on both Ferro and Akzo Nobel China and will be
neither appealable, contestable, or subject to collateral attack by Ferro
or Akzo Nobel China.
ARTICLE 11 - AMENDMENT, WAIVER, AND TERMINATION
11.1 AMENDMENT. The parties may amend this Purchase Agreement at any time
before the Closing, but only by written instrument executed by both
parties.
11.2 WAIVER. Either party may at any time waive compliance by the other with
any undertakes or conditions contained in this Purchase Agreement but only
by written instrument executed by the party waiving such compliance. No
such waiver, however,
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shall be deemed to constitute the waiver of any such undertaking or
condition in any other circumstance or the waiver of any other undertaking
or condition.
11.3 TERMINATION. The parties may terminate this Purchase Agreement at any time
before the Closing, but only by written instrument signed by both parties.
This Purchase Agreement will terminate automatically, and without further
action by either party, if the Closing has not occurred within 120 days
following the execution of this Purchase Agreement unless the parties
otherwise extend this Purchase Agreement by a written instrument executed
by both parties.
ARTICLE 12 - MISCELLANEOUS
12.1 COOPERATION. Akzo Nobel China and Ferro will cooperate with the other
party(ies), at the other party's(ies') request and expense, in furnishing
information, testimony and other assistance in connection with any
actions, proceedings, arrangements, and disputes with other third-parties
or governmental inquiries or investigations involving the Subsidiary or
the transactions contemplated by this Purchase Agreement.
12.2 SEVERABILITY. If any provision of this Purchase Agreement shall finally be
determined to be unlawful, then such provision will be deemed to be
severed from this Purchase Agreement and replaced by a lawful provision
which carries out, as closely as possible, the intention of the parties
and preserves the economic bargain contemplated by this Purchase Agreement
and, in such case, each and every other provision of this Purchase
Agreement will remain in full force and effect.
12.3 COSTS AND EXPENSES. The parties will be responsible for the following
costs and expenses arising out of the transactions contemplated by this
Purchase Agreement as follows:
(A) Ferro will be solely responsible for the fees and expenses of
Xxxxxxx Xxxxx Xxxxxx Inc. whether or not the transactions are
consummated;
(B) Akzo Nobel China will be solely responsible for any filing fees that
may be required in connection with any necessary regulatory
applications and notifications; and
(C) If the transactions are consummated, all registration fees, stamp
duties, or other transfer fees, Taxes or imposts, if any, which
arise out of or result from the transfer of the Shares from Ferro to
Akzo Nobel China will be shared equally by the parties.
Otherwise, each party will bear its own expenses incurred in connection
with this Purchase Agreement and the transactions contemplated by this
Purchase Agreement, whether or not the transactions are consummated.
12.4 NOTICES. All notices, requests and other communications under this
Purchase Agreement shall be in writing and shall be deemed to have been
duly given at the time of receipt if delivered by hand or communicated by
telefax, or, if mailed, three (3) days after mailing registered or
certified mail, return receipt requested, with postage prepaid:
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If to Akzo Nobel China, to: Akzo Nobel Sino Coatings B.V.
c/o International Paint, Inc.
0 Xxxxxxxxxxx Xxx.
Xxxxx Xxxxx, Xxx Xxxx 00000-0000
Attention: General Counsel
Telefax: 0.000.000.0000
If to Ferro, to: Ferro Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
XXX
Attention: General Counsel
Telefax: 0.000.000.0000
Either party may change its notice address above to a different address by
giving the other party written notice of such change.
12.5 ASSIGNMENT AND APPOINTMENT. This Purchase Agreement will be binding upon
and inure to the benefit of the successors of the parties, but will not be
assignable by either party without the prior written consent of the other
party.
12.6 NO THIRD PARTIES. Neither this Purchase Agreement nor any provisions set
forth in this Purchase Agreement is intended to, or shall, create any
rights in or confer any benefits upon any third-party, including any
employee of the Subsidiary.
12.7 INCORPORATION BY REFERENCE. The Appendices to this Purchase Agreement and
the Disclosure Package constitute integral parts of this Purchase
Agreement and are hereby incorporated into this Purchase Agreement by this
reference.
12.8 GOVERNING LAW. This Purchase Agreement will be governed by and construed
in accordance with the internal substantive laws of the State of Ohio,
except where the internal substantive laws of another jurisdiction
mandatorily apply.
12.9 COUNTERPARTS. More than one counterpart of this Purchase Agreement may be
executed by the parties hereto, and each fully executed counterpart shall
be deemed an original without production of the others.
12.10 COMPLETE AGREEMENT. This Purchase Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter of
this Purchase Agreement and supersedes all prior letters of intent,
agreements, undertakes, arrangements, communications, representations, or
warranties, whether oral or written, by any officer, employee, or
representative of either party relating thereto.
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To evidence their agreement as stated above, AKZO NOBEL SINO COATINGS B.V.
and FERRO CORPORATION have each caused their respective duly authorized
directors, officers, or attorneys to execute this Purchase Agreement as of
August 2, 2002.
AKZO NOBEL SINO COATINGS B.V. FERRO CORPORATION
By: /s/ X.X. Xxxxx By: /s/ Xxxxxxxxx X. Xxxxx
----------------------------- ----------------------------------
Name: X.X. Xxxxx Name: Xxxxxxxxx X. Xxxxx
Title: Authorized Signatory Title: Vice President
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Appendix A
DEFINITIONS
The following terms identified with initial capital letters are defined in
the following Sections of the Purchase Agreement:
TERM CROSS REFERENCE
Accountants .................................................. Section 2.3(A)(3)
Accounting Principles ........................................ Section 2.3(A)(1)
Actual Amount ................................................ Section 9.7
Adjustment.................................................... Section 2.3(C)
Akzo Nobel ................................................... Recital B
Akzo Nobel China ............................................. Preamble
Akzo Nobel China's Employee Obligations ...................... Section 8.1
Akzo Nobel China's Environmental Obligations ................. Section 8.2
Akzo Nobel China's Other Obligations ......................... Section 8.3
Base-Line Working Capital .................................... Section 2.3(A)(5)
Cash Items Adjustment ........................................ Section 2.3(B)
Claim ........................................................ Section 9.3(A)
Claimant ..................................................... Section 9.3
Closing ...................................................... Section 5.1
Closing Date ................................................. Section 5.2
Closing Time ................................................. Section 5.2
Closing Working Capital ...................................... Section 2.3(A)(6)
Defending Party .............................................. Section 9.3(B)
Economic Remediation Plan .................................... Section 8.2(E)(3)
Employees .................................................... Section 8.1
Ferro ........................................................ Preamble
Ferro's Employee Obligations ................................. Section 8.1
Ferro's Environmental Obligations ............................ Section 8.2
Ferro's Other Obligations .................................... Section 8.3
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Appendix A
TERM CROSS REFERENCE
Government Approvals ......................................... Section 3.6
Identified Environmental Matter .............................. Section 8.2(A)
Indemnitor ................................................... Section 9.3
Neutral ...................................................... Section 10.3(B)
Noncompete Business .......................................... Section 6.4
Other Agreements ............................................. Section 3.4
Powder Coatings Business ..................................... Recital A
Powder Coatings Disclosure Package ........................... Section 7.2
Preliminary Working Capital Statement ........................ Section 2.3(A)(1)
Products .................................................... Recital A
Purchase Agreement ........................................... Preamble
Purchase Price ............................................... Section 2.2
Remediation Plan.............................................. Section 8.2(E)(3)
Subsidiary.................................................... Recital A
Working Capital Adjustment ................................... Section 2.3(A)(7)
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Appendix A
In addition, the following terms have the meanings set forth below where
used in the Purchase Agreement and identified with initial capital letters:
TERM MEANING
Affiliate With respect to a party, any other entity controlling,
controlled by, or under common control with such party.
Business Records Business books and records, including financial, operating,
inventory, legal, personnel, payroll, and customer records
and all sales and promotional literature, correspondence,
and records held or used by the Subsidiary.
Cash Cash and cash equivalent items held by the Subsidiary as of
the Closing, including certificates of deposit, time
deposits, marketable securities, and the proceeds of
accounts receivable paid on or before the Closing Date,
held or used by the Subsidiary.
Contracts Collectively, the Purchase Contracts, the Sales Contracts,
and the Other Business Contracts.
CPR Institute CPR Institute for Dispute Resolution, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx.
Default An occurrence which constitutes a breach or default under a
contract, order, or other commitment, after the expiration
of any grace period provided without such breach or default
being cured within such period.
Encumbrance Any encumbrance or lien, including, without limitation, any
mortgage, judgment lien, materialman's lien, mechanic's
lien, security interest, encroachment, easement, or other
restriction, in each case having a material adverse effect
on the thing or right so encumbered.
Environmental Laws The relevant laws, regulations, orders, decrees, standards,
ordinances, codes, and other governmental mandates and
restrictions in effect today that are applicable to the
Subsidiary and relate to emissions, discharges, and
releases of Hazardous Materials into land, soil, ambient
air, water, and atmosphere, and/or the generation,
treatment, storage, transportation, and disposal of
hazardous wastes.
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TERM MEANING
Environmental Loss Any liability, damage, cost, expense, claim or action,
whether in law or equity, arising under Environmental Laws
or any other theory of recovery, including but not limited
to nuisance, negligence, and strict liability relating to
emissions, discharges, and releases of Hazardous Materials
into land, soil, ambient air, water, and atmosphere, and/or
the generation, treatment, storage, transportation, and
disposal of hazardous wastes at or from the Real Property.
Environmental Matter Any action, condition, or event giving rise to a legal
obligation under the Environmental Laws that relate to the
Subsidiary.
Financial Debt All indebtedness for money borrowed incurred by the
Subsidiary.
Governmental Authority Any nation or government, any state or other political
subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory administrative functions
of or pertaining to government, whether U.S. or foreign.
Hazardous Materials Any material or condition that is defined as "hazardous" or
is subject to regulation under an Environmental Law,
including pollutants, chemicals, contaminants, petroleum
and petroleum products, asbestos, PCBs, radioactive
materials and other hazardous or toxic substances.
Health and Safety Laws The relevant laws, regulations, orders, ordinances, codes,
and other governmental mandates and restrictions applicable
to the Subsidiary relating to the health and/or safety of
employees or others having business dealings with the
Subsidiary.
Inventories Inventories, wherever located, including inventories of raw
materials, components, assemblies, subassemblies,
work-in-process, finished goods, replacement parts, spare
parts, operating supplies, and packaging held or used by
the Subsidiary.
Leases Collectively, the Real Property Leases and the Personal
Property Leases
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TERM MEANING
Licenses Licenses and similar rights of the Subsidiary affording the
right to use or enjoy intangible property or intangible
property rights, including software.
Material Contract Any contract listed, or required to be listed, in items 1
through 4 on Part K of the Disclosure Package.
Material Event Any condition, circumstance, occurrence, or other event
which has had or is reasonably likely to have a material
and adverse effect on the Powder Coatings Business
Condition, including (without limitation) any of such event
resulting from any --
(1) Act of God, flood, windstorm, earthquake,
accident, fire, explosion, casualty, riot,
requisition or taking of property by governmental
authority, war, embargo, or other event outside
Ferro's control;
(2) Termination, cancellation, or substantial
modification of any Contract, Lease, License, or
Permit;
(3) Default by Ferro under any Contract, Lease,
License, or Permit; or
(4) Filing (whether voluntary or involuntary) of a
petition in bankruptcy or commencement of any
other action involving creditors' rights or
debtors' remedies affecting Ferro.
Other Business Contracts Contracts other than Purchase Contracts and Sales Contract
to which the Subsidiary is a party or to which the
Subsidiary is bound.
Other Current Assets Those miscellaneous and other current assets of the
Subsidiary as the same shall exist at Closing.
Other Current Liabilities Those current liabilities of the Subsidiary as the same
shall exist at Closing, including accrued expenses,
customer rebates and payroll expenses, bonuses, incentives,
benefits, taxes and other current liabilities incurred in
the ordinary course of business.
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TERM MEANING
Owns or Ownership Such ownership as confers upon the party or third-party
having it good and marketable title to and control over the
thing or right owned, free and clear of any and all
Encumbrances except Permitted Encumbrances.
Permits Permits, approvals, and qualifications issued by any
government or governmental unit, agency, board, body, or
instrumentality and all applications for such items held or
used by the Subsidiary.
Permitted Encumbrances The following:
(1) Liens for Taxes accrued but not yet payable;
(2) Liens arising as a matter of law in the ordinary
course of business (provided the Subsidiary is
not delinquent in respect of the obligations
secured by such liens); and
(3) Such other imperfections of title and other
encumbrances which, singly or taken together, do
not and are not likely to have a material adverse
effect on the Powder Coatings Business Condition.
Personal Property Leases Leases and similar contractual rights of the Subsidiary
affording the right to use or enjoy tangible personal
property or tangible personal property rights.
Powder Coatings Business The properties, assets, liabilities (fixed and otherwise),
Condition and condition (financial and otherwise) of the Subsidiary
taken as a whole.
Prescribed Rate The rate of interest publicly announced by Xxxxxxxx Xxxx
Xxxx, Xxxxxxxxx, Xxxx, from time to time as its prime or
base rate for U.S. Dollar loans.
Prepaid Items Prepaid and similar items of the Subsidiary, including
prepaid expenses, deferred charges, advance payments,
supplier rebates and other prepaid items arising out of the
conduct of the Powder Coatings Business.
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TERM MEANING
Purchase Contracts Orders, contracts, and commitments for the purchase of
goods and/or services, including, without limitation, such
items relating to the purchase of capital, tooling,
products, supplies, and software, to which the Subsidiary
is a party, except, in all cases, those contracts listed in
Subpart K-5 of the Disclosure Package.
Real Property The following real properties, including all land,
buildings, improvements, fixtures, and appurtenances
thereto:
(1) Subsidiary's powder coatings plant site located at
Ningchun Road, Wuxiang Town, Ningbo, Zhejiang, China.
Real Property Leases Those leases, grants of land use rights, and similar
contractual rights affording the right to use and enjoy
certain real property listed in Subpart F-2 of the
Disclosure Package
Sales Contracts Orders, contracts, commitments, and proposals for the sale
of Products, including such items relating to repair,
restoration, maintenance, preservation, and similar
operations, to which the Subsidiary is a party.
Shares An undivided equity participation with a registered capital
of $9,000,000 in the Subsidiary.
Tangible Personal Property Tangible personal property (whether owned, leased, or
otherwise), including all machinery, equipment, tooling,
dies, molds, jigs, patterns, gauges, materials handling
equipment, furniture, office equipment, cars, trucks, and
other vehicles held or used by the Subsidiary and listed in
Part G of the Disclosure Package.
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TERM MEANING
Tax All Federal, state, foreign and other net income, gross
receipts, gains, sales, use, employment, social security,
withholding, occupation, franchise, profits, excise, real
and personal property, land, value added, capital,
consumption, national insurance, registration, custom,
stamp, transfer, environmental, alternative minimum or
other taxes, fees, duties, assessments or charges of any
kind whatsoever whether payable directly or by withholding,
together with any interest and penalties, additions to Tax
or additional amounts with respect thereto, imposed by any
taxing authority.
Third-Party Claims Causes of action, rights of action, and warranty and
product liability claims of the Subsidiary against other
third-parties.
Trade Accounts Payable Third-party notes, accounts, and other items payable of the
Subsidiary, including all such amounts owing under
Contracts, Leases, and Licenses.
Trade Accounts Receivable Third-party notes and accounts receivable of the Subsidiary.
Working Capital The difference between (X) the sum of (i) Trade Accounts
Receivable, (ii) Inventories, (iii) Prepaid Items and (iv)
Other Current Assets, and (Y) the sum of (i) Trade Accounts
Payable and (ii) Other Current Liabilities, all as
reflected on the books of the Subsidiary in accordance with
the Accounting Principles as of a given date.
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