Exhibit 2.2
DISTRIBUTION AGREEMENT
by and among
▇. ▇. ▇▇▇▇▇ & CO.
▇. ▇. ▇▇▇▇▇ & CO.-CONN.,
and
GRACE SPECIALTY CHEMICALS, INC.
(to be renamed "▇. ▇. ▇▇▇▇▇ & Co.")
Dated as of March 30, 1998
TABLE OF CONTENTS
Page
----
I. DEFINITIONS................................................. 2
1.1 General................................................ 2
1.2 References to Time..................................... 13
II. CERTAIN TRANSACTIONS PRIOR TO THE DISTRIBUTION DATE......... 14
2.1 Transfer of Packco Assets; Assumption of Packco
Liabilities.......................................... 14
2.2 Certain Foreign Transfers.............................. 15
2.3 Certificate of Incorporation; By-laws; Rights Plan 18
2.4 Issuance of Stock...................................... 18
2.5 Other Agreements; Shared Facilities.................... 18
2.6 Financing.............................................. 19
2.7 Grace Recapitalization................................. 20
2.8 Registration and Listing............................... 21
2.9 Grace and New Grace Boards............................. 22
2.10 Transfers Not Effected Prior to the Distribution;
Transfers Deemed Effective as of the Distribution
Date................................................. 22
2.11 Intercompany Accounts and Distribution Payments........ 22
III. THE DISTRIBUTION............................................ 23
3.1 Record Date and Distribution Date...................... 23
3.2 The Agent.............................................. 23
3.3 Delivery of Share Certificates to the Agent............ 23
3.4 The Distribution....................................... 23
IV. SURVIVAL AND INDEMNIFICATION................................ 23
4.1 Survival of Agreements................................. 23
4.2 Indemnification........................................ 23
4.3 Procedures for Indemnification for Third-Party Claims.. 24
4.4 Remedies Cumulative.................................... 26
V. CERTAIN ADDITIONAL COVENANTS................................ 26
5.1 Notices to Third Parties............................... 26
5.2 Licenses and Permits................................... 26
5.3 Intercompany Agreements................................ 26
5.4 Guarantee Obligations.................................. 27
5.5 Further Assurances..................................... 28
5.6 Environmental Claims Cooperation....................... 28
VI. ACCESS TO INFORMATION....................................... 28
6.1 Provision of Corporate Records......................... 28
6.2 Access to Information.................................. 29
6.3 Production of Witnesses................................ 30
6.4 Retention of Records................................... 30
6.5 Confidentiality........................................ 31
6.6 Cooperation with Respect to Government Reports and
Filings.............................................. 31
VII. NO REPRESENTATIONS OR WARRANTIES............................ 32
7.1 No Representations or Warranties....................... 32
VIII. MISCELLANEOUS............................................... 32
8.1 Conditions to Obligations.............................. 32
8.2 Use of Grace Name and ▇▇▇▇............................. 34
8.3 Complete Agreement..................................... 34
8.4 Expenses............................................... 34
8.5 Governing Law.......................................... 35
8.6 Notices................................................ 35
8.7 Amendment and Modification............................. 36
8.8 Successors and Assigns; No Third-Party Beneficiaries... 36
8.9 Counterparts........................................... 36
8.10 Interpretation......................................... 36
8.11 Severability........................................... 36
8.12 References; Construction............................... 37
8.13 Termination............................................ 37
8.14 SAC Reasonable Consent................................. 37
SIGNATURES........................................................ 38
Schedules to Distribution Agreement
Exhibit A Form of Employee Benefits Allocation Agreement
Exhibit B Form of Tax Sharing Agreement
Exhibit C Form of New Grace Certificate of Incorporation
Exhibit D Form of New Grace Bylaws
Exhibit E Form of New Grace Preferred Share Purchase Rights Plan
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT (this "Agreement"), dated as of
March 30, 1998, by and among ▇. ▇. ▇▇▇▇▇ & Co., a Delaware corporation
("Grace"), ▇. ▇. ▇▇▇▇▇ & Co.-▇▇▇▇., a Connecticut corporation and a
wholly owned subsidiary of Grace ("Grace-Conn.") and Grace Specialty
Chemicals, Inc., a Delaware corporation and a wholly owned subsidiary of
Grace ("New Grace").
RECITALS
--------
A. The Merger Agreement. Grace and Sealed Air Corporation, a
Delaware corporation ("SAC"), have entered into an Agreement and Plan of
Merger, dated as of August 14, 1997 (the "Merger Agreement"), pursuant to
which, at the Effective Time (as defined therein), a wholly owned subsidiary
of Grace will merge with and into SAC, with SAC being the surviving
corporation (the "Merger"), and Grace being renamed "Sealed Air Corporation".
B. The Distribution Agreement. This Agreement and the Other
Agreements (as defined herein) set forth certain transactions that SAC has
required as a condition to its willingness to consummate the Merger, and
the purpose of this Agreement is to make possible the Merger by divesting
Grace of the businesses and operations to be conducted by New Grace and its
subsidiaries, including Grace-Conn.
C. The Contribution. Prior to the Effective Time, and subject
to the terms and conditions set forth in this Agreement, Grace intends to
cause the transfer to a wholly owned subsidiary of Grace-Conn. ("Packco") of
certain assets and liabilities of Grace and its subsidiaries predominantly
related to the Packaging Business (the "Contribution"), as contemplated by
this Agreement and the Other Agreements.
D. Financing. It is the intention of the parties hereto that,
prior to the Distribution: (i) Grace and/or Packco shall enter into new
financing arrangements and shall make, or cause to be made, the New Grace
Capital Contribution (as defined herein); and (ii) the parties shall cooperate
with one another with respect to the foregoing.
E. The Distribution. Following the Contribution and prior to
the Effective Time, subject to the conditions set forth in this Agreement, (i)
the capital stock of Packco will be distributed to Grace (the "Intragroup
Spinoff"), (ii) the capital stock of Grace-Conn. will be contributed to New
Grace and (iii) all of the issued and outstanding shares of the common stock
of New Grace (together with the New Grace Rights, "New Grace Common Stock")
will be distributed on a pro rata basis (the "Distribution") to the holders
as of the Record Date of the common stock of Grace, par value $.1 per share
("Grace Common Stock"), other than shares held in the treasury of Grace.
F. The Recapitalization. Following the Distribution and
immediately prior to the Effective Time, Grace intends to consummate the
Recapitalization in which each holder of a share of Grace Common Stock shall
hold, immediately thereafter, the Per Share Common Consideration and the Per
Share Preferred Consideration.
G. Intention of the Parties. It is the intention of the
parties (i) to this Agreement that, for United States federal income tax
purposes, the Contribution and associated transactions shall qualify as a
tax-free transaction under Section 351 of the Internal Revenue Code of
1986, as amended (the "Code"), the Contribution and the Intragroup Spinoff
(and associated transactions) shall qualify as a tax-free transaction under
Sections 355 and 368 of the Code, the Distribution and associated
transactions shall qualify as a tax-free transaction under Sections 355 and
368 of the Code, and the Recapitalization shall be tax-free to Grace and
its shareholders under the Code, and (ii) to this Agreement and the Merger
Agreement that the Merger shall qualify as a "reorganization" within the
meaning of Section 368 of the Code and the Merger will be tax free under
the Code to Grace, SAC and their respective shareholders.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 General. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
Adjusted Foreign Transfer Taxes: as defined in Section 2.2(c)
hereof.
Affiliate: with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person;
provided, however, that, for purposes of this Agreement, no member of either
Group shall be deemed to be an Affiliate of any member of the other Group.
Agent: the distribution agent to be appointed by Grace to
distribute the shares of New Grace Common Stock pursuant to the Distribution.
Agreement: as defined in the preamble to this Agreement.
Asset: any and all assets and properties, tangible or intangible,
including, without limitation, the following: (i) cash, notes and accounts
and notes receivable (whether current or non-current); (ii) certificates of
deposit, banker's acceptances, stock, debentures, evidences of indebtedness,
certificates of interest or participation in profit-sharing agreements,
collateral-trust certificates, preorganization certificates or subscriptions,
transferable shares, investment contracts, voting-trust certificates,
fractional undivided interests in oil, gas or other mineral rights, puts,
calls, straddles, options and other securities of any kind; (iii) intangible
property rights, inventions, discoveries, know-how, United States and foreign
patents and patent applications, trade secrets, confidential information,
registered and unregistered trademarks, service marks, service names, trade
styles and trade names and associated goodwill; statutory, common law and
registered copyrights; applications for any of the foregoing, rights to use
the foregoing and other rights in, to and under the foregoing; (iv) rights
under leases, contracts, licenses, permits, distribution arrangements, sales
and purchase agreements, other agreements and business arrangements; (v) real
estate and buildings and other improvements thereon; (vi) leasehold
improvements, fixtures, trade fixtures, machinery, equipment (including
transportation and office equipment), tools, dies and furniture; (vii) office
supplies, production supplies, spare parts, other miscellaneous supplies and
other tangible property of any kind; (viii) computer equipment and software;
(ix) raw materials, work-in-process, finished goods, consigned goods and other
inventories; (x) prepayments or prepaid expenses; (xi) claims, causes of
action, choses in action, rights under express or implied warranties, rights
of recovery and rights of setoff of any kind; (xii) the right to receive mail,
payments on accounts receivable and other communications; (xiii) lists of
customers, records pertaining to customers and accounts, personnel records,
lists and records pertaining to customers, suppliers and agents, and books,
ledgers, files and business records of every kind; (xiv) advertising
materials and other printed or written materials; (xv) goodwill as a going
concern and other intangible properties; (xvi) employee contracts,
including any rights thereunder to restrict an employee from competing in
certain respects; and (xvii) licenses and authorizations issued by any
governmental authority.
Benefits Agreement: the Employee Benefits Allocation Agreement to
be entered into prior to the Distribution between Grace and New Grace,
substantially in the form of Exhibit A hereto, with such changes as are
acceptable to Grace, New Grace, Grace-Conn. and SAC.
Business: the New Grace Business or the Packaging Business.
Code: as defined in the Recitals to this Agreement.
Contribution: as defined in the Recitals to this Agreement.
Debt Costs: as defined in Section 2.6(b) hereof.
Deemed Foreign Tax Credits: as defined in Section 2.2(c) hereof.
Deemed Repatriations: as defined in Section 2.2(c) hereof.
Distribution: as defined in the Recitals to this Agreement.
Distribution Date: the date as of which the Distribution shall be
effected, to be determined by, or under the authority of, the Board of
Directors of Grace consistent with this Agreement and the Merger Agreement.
Effective Time: as defined in the Merger Agreement.
Environmental Law: as defined in the Merger Agreement.
Excess Short-Term Payables: as defined in Section 2.2(c) hereof.
Excess Shares: as defined in Section 2.7(b) hereof.
Exchange Act: the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
Exchange Agent: the exchange agent to be retained in connection
with effecting the Recapitalization (which may also be the Exchange Agent with
respect to the Merger and/or the Agent).
Foreign Exchange Rate: with respect to any currency other than
United States dollars as of any date, the rate on such date at which such
currency may be exchanged for United States dollars as quoted in The Wall
Street Journal.
Foreign New Grace Subsidiaries: as defined in the Tax Sharing
Agreement.
Foreign NOLs: as defined in Section 2.2(c) hereof.
Foreign Packco Subsidiaries: as defined in the Tax Sharing
Agreement.
Foreign Tax Credits: as defined in Section 2.2(c) hereof.
Foreign Transfer Taxes: as defined in Section 2.2(c) hereof.
Foreign Transfers: as defined in Section 2.2(a) hereof.
Grace: as defined in the preamble to this Agreement.
Grace Certificate of Incorporation: as defined in the Merger
Agreement.
Grace Common Stock: as defined in the Recitals to this Agreement.
Grace-Conn.: as defined in the preamble to this Agreement.
Grace-Conn. Assets: all of the Assets owned by Grace or its
Subsidiaries immediately prior to the Distribution, other than any Packco
Assets.
Grace-Conn. Liabilities: all of the Liabilities of Grace or its
Subsidiaries immediately prior to the Distribution, other than Packco
Liabilities.
Grace-Conn. Public Debt: (i) the outstanding indebtedness of
Grace-Conn. under its 8.% Notes Due 2004, 7.4% Notes Due 2000 and 7.75% Notes
Due 2002 (other than any such indebtedness owned by Grace-Conn. or another
member of the New Grace Group) and (ii) with respect to any indebtedness
described in clause (i), any amendments, modifications, refinancings,
extensions, renewals, refundings or replacements of, or indebtedness exchanged
for, such indebtedness which in each case is guaranteed by Grace (other than
any such indebtedness owned by Grace-Conn. or another member of the New Grace
Group).
Grace Credit Agreement: the credit agreement or other financing
agreements or arrangements to be entered into by Grace and/or Packco prior to
the Distribution Date to fund the New Grace Capital Contribution and fees and
expenses of Packco (or Grace) in connection with the transactions contemplated
hereby and to provide Packco with working capital.
Group: the Packco Group or the New Grace Group.
Indemnifiable Losses: all losses, Liabilities, damages, claims,
demands, judgments or settlements of any nature or kind, including all
reasonable costs and expenses (legal, accounting or otherwise as such costs
are incurred) relating thereto, suffered (and not actually reimbursed by
insurance proceeds) by an Indemnitee, including any reasonable costs or
expenses of enforcing any indemnity hereunder.
Indemnifying Party: a Person who or which is obligated under this
Agreement to provide indemnification.
Indemnitee: a Person who or which may seek indemnification under
this Agreement.
Indemnity Payment: an amount that an Indemnifying Party is
required to pay to or in respect of an Indemnitee pursuant to Article IV.
Information: all records, books, contracts, instruments, computer
data and other data and information.
Intragroup Spinoff: as defined in Recital E to this Agreement.
Joint Proxy Statement: as defined in the Merger Agreement.
Liabilities: all debts, liabilities and obligations, whether
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, and whether or not
the same would properly be reflected on a balance sheet.
Litigation Matters: actual, threatened or future litigations,
investigations, claims or other legal matters that have been or may be
asserted against, or otherwise adversely affect, Grace and/or New Grace (or
members of either Group).
Merger: as defined in the Recitals to this Agreement.
Merger Agreement: as defined in the Recitals to this Agreement.
Net Benefit Amount: the amount (whether positive or negative)
equal to (i) minus (ii), where (i) is the sum of the U.S. Plan Assets and the
Foreign Plan Assets (each as defined below) and (ii) is the sum of the U.S.
Benefit Plan Liabilities and the Foreign Benefit Plan Liabilities (each as
defined below).
"U.S. Plan Assets" means the aggregate fair market value, as of the
Distribution Date, of the assets of the Union Retirement Plan (as
defined in the Benefits Agreement) and the assets that will be
transferred to the Packco Hourly Non-Union Retirement Plan (as defined
in the Benefits Agreement) pursuant to Section 4.1(d) of the Benefits
Agreement, in each case as reasonably determined by Actuarial Sciences
Associates ("ASA"). "Foreign Plan Assets" means the aggregate fair
market value, as of the Distribution Date, of the assets that will be,
pursuant to the Foreign Plans Agreement (as defined in the Benefits
Agreement), transferred from a Noninsured Foreign Pension Plan (as
defined in the Benefits Agreement) that is a New Grace Benefit Plan (as
defined in the Benefits Agreement) (a "Transferring New Grace Foreign
Plan") to a Packco Benefit Plan or retained by a Noninsured Foreign
Pension Plan that is a Packco Benefit Plan (a "Retained Grace Foreign
Plan"), in each case as reasonably determined by the Local Actuary (as
defined in the Benefits Agreement) for the relevant Transferring New
Grace Foreign Plan or Retained Grace Foreign Plan.
"U.S. Benefit Plan Liabilities" means the sum of the Accrued
Benefit Obligation, calculated in accordance with FAS 87 ("ABO"), for
(i) benefits of Packco Participants (as defined in the Benefits
Agreement) under the Union Retirement Plan and (ii) benefits of Packco
Participants under the Hourly Non-Union Retirement Plan (as defined in
the Benefits Agreement) that are assumed by the Packco Hourly Non-Union
Retirement Plan pursuant to Section 4.1(d) of the Benefits Agreement.
"Foreign Benefit Plan Liabilities" means the greater of (i) the sum of
the ABOs for the Assumed Foreign Benefits (as defined below) plus $10
million and (ii) the sum of the Projected Benefit Obligations,
calculated in accordance with FAS 87 ("PBO"), for the Assumed Foreign
Benefits. The "Assumed Foreign Benefits" means the aggregate amount of
the retirement benefits of Packco Participants under each Noninsured
Foreign Pension Plan that are, pursuant to the Foreign Benefits
Agreement, either assumed by a Packco Benefit Plan from a Transferring
New Grace Foreign Plan or retained by a Retained Grace Foreign Plan.
The determination of U.S. Benefit Plan Liabilities shall be made
by ASA in accordance with the actuarial and other assumptions set forth on
Schedule 1.1(f). The determination of the ABOs and PBOs for the Assumed
Foreign Benefits shall in each case be made by AON Consulting ("AON") as of
the Distribution Date based upon the actuarial and other assumptions used
by AON to determine the ABO or PBO (as applicable) of the relevant
Transferring New Grace Foreign Plan or Retained Grace Foreign Plan for
purposes of Grace's fiscal 1996 year-end financial disclosures, if such ABO
or PBO is reported thereon, which actuarial and other assumptions are set
forth on Schedule 1.1(f), provided, in the case of the assumptions relating
to each Noninsured Foreign Pension Plan, that such assumptions are
reasonable. To the extent that the ABO or PBO for a particular
Transferring New Grace Foreign Plan or Retained Grace Foreign Plan was not
so reported, such assumptions shall be reasonable assumptions developed by
AON in the manner most typically used by AON to develop assumptions for
determining ABO or PBO for FAS 87 purposes for substantially similar plans
in the applicable jurisdiction.
ASA, the Local Actuaries and AON (collectively, the "Actuaries")
shall initially make the determinations called for by this definition on a
good-faith estimated basis not later than December 31, 1997 or such other date
as the parties hereto shall request. In making such initial determinations,
the local Actuaries shall be entitled to rely upon the advice of Grace and New
Grace with respect to the anticipated terms and conditions of the Foreign
Plans Agreement (if it has not yet been signed) and the manner in which its
terms and conditions will be implemented. Final determinations shall be made
by the Actuaries as and when the asset transfers and assumptions of
liabilities contemplated by the Foreign Plans Agreement and Section 4.1(d) of
the Benefits Agreement are completed, and the New Grace Capital Contribution
shall be adjusted as necessary to reflect the Net Benefit Amount as so finally
determined. Grace and New Grace agree to cooperate in supplying the Actuaries
with all information reasonably requested by them in connection with making
such determinations, including, without limitation, information concerning
Plan participants, assets and benefits. Grace, New Grace and SAC shall be
entitled to review and comment on the Actuaries' analyses as the Actuaries are
in the process of making their determinations.
New Grace: as defined in the preamble to this Agreement.
New Grace Business: all of the businesses and operations
conducted by Grace and its Subsidiaries at any time, whether prior to, on
or after the Distribution Date, other than the Packaging Business.
New Grace Capital Contribution: the capital contribution,
distribution or other transfer to be received by Grace-Conn. at or shortly
prior to the Distribution, in the aggregate amount of:
(a) $1,200,000,000;
plus (b) the aggregate amount of cash held by Packco or any Packco
Subsidiaries immediately prior to the Distribution;
minus (c) the amount by which
(i) the aggregate amount of (x) withholding Taxes that would
be imposed by foreign jurisdictions on a deemed
distribution to Packco by each Foreign Packco Subsidiary
immediately following the Distribution, of an amount of
cash equal to the excess of (I) the amount of cash held
by such Foreign Packco Subsidiary immediately prior to
the Distribution over (II) the sum of (A) the amount of
debt that may be repaid without penalty plus current
accrued but unpaid Taxes of such Subsidiary as of the
Distribution Date and (B) Excess Short-Term Payables of
such Subsidiary; provided, however, that such amount of
cash shall be determined taking into account the
principles, as applied to Packco, set forth in the
proviso in Section 2.2(c)(v), and (y) Taxes that would be
imposed by the United States or any political subdivision
thereof in excess of the Foreign Tax Credits of Packco in
respect of Taxes paid by Packco or deemed paid by Packco
as a result of such deemed distributions of such cash;
exceeds (ii) the aggregate amount of Packco Repatriation Tax Costs;
plus (d) the Net Benefit Amount; and
plus (e) the aggregate amount of Transaction Costs, if any,
payable by Grace to New Grace pursuant to Section 8.4
of this Agreement, as of the Distribution Date.
New Grace Common Stock: as defined in the Recitals to this
Agreement.
New Grace Group: New Grace, Grace-Conn. and the other New Grace
Subsidiaries.
New Grace Group Excess Cash: as defined in Section 2.2(c) hereof.
New Grace Indemnitees: New Grace, each Affiliate of Grace-Conn.
(other than members of the Packco Group) and each of their respective
Representatives and each of the heirs, executors, successors and assigns of
any of the foregoing.
New Grace Repatriation Tax Costs: as defined in Section 2.2(c)
hereof.
New Grace Rights: the preferred share purchase rights of New
Grace.
New Grace Subsidiaries: all direct and indirect Subsidiaries of
Grace, including foreign subsidiaries of Grace-Conn. to be formed pursuant to
the Tax Sharing Agreement or Section 2.2 hereof, other than Packco and any
Packco Subsidiary.
Newco Common Stock: the shares of common stock, par value $.10
per share, of Grace.
Newco Convertible Preferred Stock: the Series A Convertible
Preferred Stock of Grace, par value $.10 per share, the terms of which are
described in Exhibit E to the Merger Agreement.
NYSE: New York Stock Exchange, Inc.
Other Agreements: the Benefits Agreement, the Tax Sharing
Agreement, an insurance procedures agreement, an intellectual property license
agreement, an interim services agreement, the shared facilities agreements and
the other agreements entered into or to be entered into in connection with the
Distribution as contemplated by Article II of this Agreement.
Packaging Business: all of the worldwide packaging businesses,
operations and investments conducted or owned by Grace and its Subsidiaries at
any time, whether prior to, on or after the Distribution Date, including
Cryovac[Registered] flexible plastic packaging systems,
Omicron[Registered] rigid plastic cups and tubs for dairy foods and
Formpac[Registered] foam trays for supermarket and institutional food service,
provided that the Packaging Business shall not include the worldwide
businesses, operations and investments at or prior to the Distribution Date
conducted or owned by Grace and its Subsidiaries of its container business
group (which was, until 1996, operated as a separate business unit known as
Grace Container Products and any extensions of such former business unit since
such time and through the Distribution Date), including, without limitation,
Darex[Registered] container sealants and coatings.
Packco: as defined in the Recitals to this Agreement.
Packco Assets: collectively and except as otherwise provided in
any of the Other Agreements, (i) all of the right, title and interest
immediately prior to the time of the Distribution of Grace and its
Subsidiaries in all Assets that are predominantly used or held for use in or
predominantly relating to or to the extent arising from the Packaging Business;
(ii) the rights to use shared Assets as provided in Article II; (iii) all
other Assets of Grace and its Subsidiaries to the extent specifically assigned
to or retained by any member of the Packco Group pursuant to this Agreement or
any Other Agreement; (iv) the capital stock of Packco and all Packco
Subsidiaries; and (v) the Assets set forth on Schedule 1.1(a) hereto; provided
that
(a) all cash and marketable securities held by any member
of the Packco Group immediately prior to the Distribution shall
be Grace-Conn. Assets;
(b) intellectual property rights shall be Packco Assets
in the form and to the extent provided in Section 2.1(d);
(c) with respect to leased or owned real property
included in the Packco Assets that is not used exclusively by
the Packaging Business, Packco Assets shall include only real
property used or held for use in the Packaging Business as of
the Distribution Date and shall not include any vacant or
unoccupied property otherwise owned or leased by Grace or any
of its Subsidiaries (except in the case of vacant or unoccupied
property (I) on a site that is engaged predominantly in the
Packaging Business, to provide a reasonable buffer area for
such operations, to the extent practicable or (II) that is used
or held for use in the Packaging Business);
(d) other than as provided herein or in the Other
Agreements, Packco Assets shall not include any general
corporate or corporate service operations of Grace conducted in
its Boca Raton, Florida headquarters and the other locations
set forth on Schedule 1.1(b) hereto;
(e) all right, title and interest of Grace and its
Subsidiaries in the real property identified on Schedule 1.1(a)
shall be Packco Assets; and
(f) Packco Assets shall not include (I) the Woburn, MA
Grace facility or the Scuffletown Rd., South Carolina facility
previously used by the Packaging Business (or any Assets
located at or relating to such facilities); (II) Assets
relating to any divested business or product line of Grace or
any of its Subsidiaries (including rights to payment and
indemnification thereunder, but Packco Assets shall include
rights to indemnification relating to amounts paid by the
Packco Group pursuant to clause (a)(II) of the definition of
Packco Liabilities); (III) any interim service or tolling
agreements entered into in connection with any divestiture by
Grace or any of its Subsidiaries prior to the Distribution
Date; and (IV) the Assets set forth on Schedule 1.1(c).
Packco Group: Grace, Packco and the Packco Subsidiaries.
Packco Group Excess Cash: as defined in Section 2.2(c) hereof.
Packco Indemnities: Grace, Packco, each Affiliate of Packco and
each of their respective Representatives and each of the heirs, executors,
successors and assigns of any of the foregoing.
Packco Liabilities: collectively, and in each case except to the
extent otherwise provided in any Other Agreement, (i) all Liabilities of Grace
and its Subsidiaries to the extent relating to or arising from the Packaging
Business or the Packco Assets; (ii) all Liabilities of Grace and its
Subsidiaries to the extent assigned to or assumed by Grace and Packco under
this Agreement or any Other Agreement; (iii) all Liabilities of Grace and/or
Packco under the Grace Credit Agreement; and (iv) all Liabilities set forth on
Schedule 1.1(d) hereto, provided that Packco Liabilities shall not, in any
event, include:
(a) Liabilities of Grace and its Subsidiaries (I) arising under any
Environmental Law relating to any facility or Asset that was used or
held for use in the Packaging Business prior to but not on or after the
Distribution Date (including formerly owned or leased facilities and
former offsite disposal facilities) or (II) relating to any business or
product line that was part of, or any facility or Asset that was used or
held for use in, the Packaging Business that, in each case, has been
divested prior to the Distribution Date; provided that, except as
otherwise provided below, 25% of such Liabilities described in this
clause not to exceed $10 million in the aggregate shall be Packco
Liabilities;
(b) Liabilities arising under any Environmental Law relating to or
arising from the Woburn, MA Grace facility or the Scuffletown Road, SC
facility;
(c) Liabilities for any indebtedness, other than indebtedness
under the Grace Credit Agreement and indebtedness to unaffiliated
persons outstanding on the date hereof;
(d) Liabilities of Grace or any of its Subsidiaries relating to or
arising from any interim service or tolling agreements entered into in
connection with any divestiture by Grace or any of its Subsidiaries;
(e) Liabilities, whether such Liabilities relate to events,
occurrences or circumstances occurring or existing, or whether such
Liabilities arise, before, on or after the Distribution Date, relating
to asbestos or asbestos-containing materials manufactured and/or sold
(collectively, "Asbestos Activities") by Grace, Grace-Conn. or any of
their respective Subsidiaries, affiliates or predecessors (but this
clause shall not include such Liabilities to the extent relating to
Asbestos Activities, if any, conducted after the Distribution Date of
any member of the Packco Group or any of their Affiliates after the
Distribution Date);
(f) Liabilities relating to or arising from any violation or
alleged violation on or prior to the Distribution Date by Grace,
Grace-Conn. or any of their respective Subsidiaries, affiliates or
predecessors of any federal, state or foreign securities laws; and
(g) Liabilities relating to or arising from any breach or alleged
breach of fiduciary duties by any director or executive officer of
Grace, Grace-Conn. or any of their respective Subsidiaries, affiliates
or predecessors prior to the Distribution Date.
Packco Repatriation Tax Costs: as defined in Section 2.2(c)
hereof.
Packco Subsidiaries: all direct and indirect Subsidiaries of
Grace to be transferred to or formed by Packco in connection with the
Contribution or the Foreign Transfers (including any such Subsidiary to be
formed pursuant to the Tax Sharing Agreement or Section 2.2).
Per Share Common Consideration: the shares (or fraction of a
share) of Newco Common Stock issuable in the Recapitalization per share of
Grace Common Stock outstanding as of the Record Date, such amount to be
determined by dividing (a) the amount equal to (I) 40,895,000, increased by
the product, if any, of (x) 1.7027 and (y) the net increase in outstanding
Sealed Air Common Shares between August 14, 1997 and the Distribution Date,
minus (II) the Net Option Number, by (b) the aggregate number of shares of
Grace Common Stock outstanding as of the Record Date, the result being rounded
to the nearest one-thousandth (or, in the event there is no nearest number,
rounded up to the next one-thousandth). "Net Option Number" means
(i) the aggregate number of shares of Newco Common Stock into
which all outstanding options to purchase shares of Grace
Common Stock outstanding as of the Distribution Date and
held by Packco Employees are or may be exercisable
(whether or not then exercisable) immediately after the
Effective Time (such number calculated as provided in the
Benefits Agreement, the "Newco Options"), multiplied by
the amount by which:
(I) the average of the arithmetic mean between the highest
and lowest sales prices of a share of Newco Common
Stock on the New York Stock Exchange Composite Tape on
each of the five trading days beginning on the ex-
dividend date for the Distribution (the "SAC Stock
Price")
exceeds (II) the weighted average per-share
exercise price for the Newco Options, calculated as
provided in the Benefits Agreement;
divided by (ii) the SAC Stock Price.
Fractional shares otherwise issuable to a Grace shareholder shall be treated
as provided in Section 2.7(b). In the event that shares of Grace Common Stock
are issued between the Record Date and the Effective Time, including pursuant
to the exercise of stock options granted by Grace (but not including issuances
in the Recapitalization), such Consideration shall be appropriately adjusted.
Per Share Preferred Consideration: the shares (or fraction of a
share) of Newco Convertible Preferred Stock issuable in the Recapitalization
per share of Grace Common Stock outstanding as of the Record Date, such amount
to be calculated by dividing 36,000,000 by the aggregate number of shares of
Grace Common Stock outstanding as of the Record Date, the result being rounded
to the nearest one-thousandth (or, in the event there is no nearest number,
rounded up to the next one-thousandth). Fractional shares otherwise issuable
to a Grace shareholder shall be treated as provided in Section 2.7(b). In the
event that shares of Grace Common Stock are issued between the Record Date and
the Effective Time, including pursuant to the exercise of stock options
granted by Grace (but not including issuances in the Recapitalization), such
Consideration shall be appropriately adjusted.
Person: an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
Pre-Distribution Period: as defined in the Tax Sharing Agreement.
Privileged Information: with respect to either Group, Information
regarding a member of such Group, or any of its operations, Assets or
Liabilities (whether in documents or stored in any other form or known to
its employees or agents) that is or may be protected from disclosure
pursuant to the attorney-client privilege, the work product doctrine or
other applicable privileges, that a member of the other Group may come into
possession of or obtain access to pursuant to this Agreement or otherwise.
Recapitalization: as defined in Section 2.7 hereof.
Record Date: the close of business on the date to be determined
by the Board of Directors of Grace as the record date for determining
shareholders of Grace entitled to receive the Distribution and the
Recapitalization, which date shall be the day of, or the business day
immediately preceding the day of, the Effective Time.
Registration Statements: a registration statement on Form 10 (or,
if such form is not appropriate, the appropriate form pursuant to the
Securities Act) to be filed by New Grace with the SEC to effect the
registration of the New Grace Common Stock and the New Grace Rights pursuant
to the Exchange Act (or, if applicable, pursuant to the Securities Act) and
the registration statement to be filed by Grace with the SEC in connection
with the Recapitalization and the Merger pursuant to the Securities Act.
Representative: with respect to any Person, any of such Person's
directors, officers, employees, agents, consultants, advisors, accountants,
attorneys and representatives.
SAC: as defined in the Recitals to this Agreement.
SEC: the Securities and Exchange Commission.
Securities Act: the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
Severance Costs: as defined in Section 8.4 hereof.
Shared Facilities: other than Shared Regional Headquarters, any
production, manufacturing, sales office or other facility (whether owned or
leased) of Grace or any of its subsidiaries in which operations of both the
Packaging Business and the New Grace Business are conducted as of the
Distribution Date, including the facilities listed on Schedule 1.1(e)
hereto.
Shared Regional Headquarters: regional headquarters of Grace in
which services are provided, as of the Distribution Date, to both the
Packaging Business and the New Grace Business.
Subsidiary: with respect to any specified Person, any corporation
or other legal entity of which such Person or any of its subsidiaries controls
or owns, directly or indirectly, more than 50% of the stock or other equity
interest entitled to vote on the election of members to the board of directors
or similar governing body.
Subsidiary Excess Cash: as defined in Section 2.2(c) hereof.
Tax: as defined in the Tax Sharing Agreement.
Tax Benefit: as defined in the Tax Sharing Agreement.
Tax Sharing Agreement: the Tax Sharing Agreement to be entered
into prior to the Distribution between Grace and New Grace, substantially in
the form of Exhibit B hereto, with such changes as are acceptable to Grace,
New Grace, Grace-Conn. and SAC.
Third-Party Claim: any claim, suit, derivative suit, arbitration,
inquiry, proceeding or investigation by or before any court, any governmental
or other regulatory or administrative agency or commission or any arbitration
tribunal asserted by a Person who or which is neither a party hereto nor an
Affiliate of a party hereto.
Transaction Agreements: as defined in the Merger Agreement.
Transaction Costs: as defined in Section 8.4 hereof.
Withholding Taxes: as defined in Section 2.2(c) hereof.
SECTION 1.2 References to Time. All references in this
Agreement to times of the day shall be to New York City time.
ARTICLE II
CERTAIN TRANSACTIONS PRIOR TO THE
DISTRIBUTION DATE
SECTION 2.1 Transfer of Packco Assets; Assumption of Packco
Liabilities. (a) Prior to the Distribution Date but subject to Section
2.2, Grace shall transfer, or cause to be transferred to Packco or, at
Packco's option, to a Packco Subsidiary effective as of the Distribution
Date all of the Packco Assets. Immediately prior to the Distribution, the
capital stock of Packco shall be distributed to Grace. Grace shall also
transfer, or cause to be transferred, the capital stock of any Subsidiary
such that, as of the Distribution Date, the Packco Subsidiaries shall be
wholly owned (except for shares held by directors or officers to comply
with applicable law) by a member of the Packco Group and the New Grace
Subsidiaries shall be wholly owned (except for shares held by directors or
officers to comply with applicable law) by a member of the New Grace Group.
Effective as of the Distribution Date, the transfers described in this
Section will result in Packco or another member of the Packco Group
obtaining all of the rights, title and interests of Grace and its
Subsidiaries in the Packco Assets, subject to Sections 2.5 and 2.10.
(b) Effective as of the Distribution Date and subject to
Section 2.2, Packco shall, or shall cause a Packco Subsidiary to, assume,
pay, perform, and discharge in due course all of the Packco Liabilities.
(c) Separation of Assets. The Packco Assets and Grace-Conn.
Assets (including Assets that are, or are contained in, the Shared
Facilities) shall, to the extent reasonably practicable (including taking
into account the costs of any actions taken), be severed, divided or
otherwise separated from each other so that a member of the respective
Group will own and control their respective Assets as of the Distribution
Date, provided that neither Grace nor New Grace shall be obligated to make
significant expenditures to effect such separation prior to the
Distribution Date. Actions taken and expenditures incurred to separate the
Shared Facilities shall be subject to the agreement of Grace, New Grace and
SAC. Such separation may include subdivision of real property, subleasing
or other division of shared buildings or premises and allocation of shared
working capital, equipment and other Assets. Such separation shall be
effected in a manner that does not unreasonably disrupt either the
Packaging Business or the New Grace Business and minimizes, to the extent
practicable, current and future costs (and losses of tax or other economic
benefits) of the respective Businesses. With respect to any Asset that
cannot reasonably be separated or otherwise allocated as provided above,
(i) all right, title and interest of Grace and its Subsidiaries shall be
allocated to the Group as to which such Asset is predominantly used or held
for use or predominantly relates and (ii) the other Group shall have a
right to use such Assets in its Business in a manner consistent with past
practice for a period which is coterminous with the life of the Asset
described in (i) (and the coextensive obligation to pay its allocable
share of any costs or expenses related to such Asset pursuant to the last
sentence of this Section 2.1(c)). To the extent the separation of Assets
cannot be achieved in a reasonably practicable manner, the parties will
enter into appropriate arrangements regarding the shared Asset. Any costs
related to the use of a shared Asset that is not separated as of the
Distribution Date shall be allocated, with respect to the two-year period
beginning immediately after the Distribution Date, based on the methodology
historically used by Grace, and, for any period thereafter, using such
reasonable manner as agreed by New Grace and Grace.
(d) Intellectual Property. Notwithstanding the foregoing or
anything else contained herein, any intellectual property rights of Grace
or any of its Subsidiaries that are Packco Assets shall be licensed to or
transferred to Packco, as the case may be, as follows. With respect to
intellectual property rights used or held for use solely in connection with
the Packaging Business, Packco shall have full ownership (to the extent of
Grace's rights therein) of such rights. Except as otherwise provided in
Schedule 2.1(d), with respect to intellectual property rights that are used
or held for use in both the Packaging Business and the New Grace Business,
title to such rights shall be owned by the New Grace Group and the Packco
Group shall have an exclusive, worldwide, fully paid, perpetual, royalty-
free license to use the intellectual property rights for the field of use
described in the next sentence hereof. The field of use shall be (i) the
businesses engaged in by Packco and the Packco Group as of the Distribution
Date and the businesses of SAC as of the Distribution Date, including, in
each case, reasonable extensions thereof, provided, however, that such
field of use shall not include the field described in the proviso to the
definition of "Packaging Business" as well as (to the extent not described
in such proviso) the business of (A) closures, closure sealant compositions
and multifunctional can ends which are used on or with rigid containers and
(B) coatings, sealants, compositions and equipment used or held for use in
the manufacture of cans and other rigid containers, in each case including
reasonable extensions thereof; and (ii) notwithstanding (i), with respect
to reasonable extensions referred to in the first part of clause (i) that
overlap with the reasonable extensions described in the proviso in clause
(i), the field of use shall include such overlap but the license therefor
shall be non-exclusive and the New Grace Group shall also have title to use
such intellectual property in the area of overlap. Such licenses shall not
unduly restrict the subsequent transfer or license (within the applicable
field of use) of the intellectual property. Such arrangements shall not
restrict or limit in any way the rights of SAC to use any intellectual
property that is not a Packco Asset.
(e) The costs (and other out-of-pocket losses) attributable to
the separation of the Assets, including, without limitation, the Shared
Facilities, shall be allocated pursuant to Section 8.4.
SECTION 2.2 Certain Foreign Transfers. (a) Prior to the
Distribution Date, Grace shall use its reasonable best efforts to effect
the legal separation of the Packco Assets and Packco Liabilities, on the
one hand, from the Grace-Conn. Assets and Grace-Conn. Liabilities, on the
other hand, that are located in jurisdictions outside the United States.
Such separation may include asset transfers, stock transfers, spin-offs,
mergers, reorganizations, consolidations or other transfers which may be
effected before, simultaneously with or after the Distribution
(collectively, the "Foreign Transfers"). Any Foreign Transfer that occurs
after the Distribution shall be effected pursuant to a binding commitment
in existence prior to the Distribution Date.
(b) The Adjusted Foreign Transfer Taxes shall be allocated
between the New Grace Group and the Packco Group as provided in Section
8.4. Each party shall reimburse the other to the extent that such other
party pays Foreign Transfer Taxes in excess of the amount of Adjusted
Foreign Transfer Taxes allocable to such other party pursuant to Section
8.4. Such payment shall, for Tax purposes, be characterized as an
adjustment of the New Grace Capital Contribution.
(c) (i) "Adjusted Foreign Transfer Taxes" shall mean the
excess, if any, of (I) the sum of the Foreign Transfer Taxes, Packco
Repatriation Tax Costs and New Grace Repatriation Tax Costs over (II) the
present value using a discount rate of 5% (or, in the case of value added
taxes, the gross value) of any Tax Benefits (including foreign tax credits
for United States federal income tax purposes ("Foreign Tax Credits") other
than Foreign Tax Credits attributable to Foreign Transfer Taxes or
Withholding Taxes that in the aggregate do not exceed the Tax imposed by
the United States and any political subdivision thereof on the Deemed
Repatriation) that may or would arise as a result of the Foreign Transfers,
the payment of the Foreign Transfer Taxes or the Deemed Repatriations.
Such Tax Benefits shall be presumed to be utilized in the first year in
which they arise (or are deemed to arise). All amounts relating to the
calculation of Adjusted Foreign Transfer Taxes and the amount calculated
pursuant to clause (c) of the definition of "New Grace Capital
Contribution" shall be calculated in local currency and translated into
U.S. Dollars at the Foreign Exchange Rate for such currency as of the
Distribution Date.
(ii) "Foreign Transfer Taxes" shall mean net Taxes that may be
imposed by any jurisdiction other than the United States or any political
subdivision thereof in connection with the Foreign Transfers (and any Tax net
of associated foreign tax credits imposed by the United States or a political
subdivision thereof on the Foreign Transfer in Venezuela) on any member of the
New Grace Group or the Packco Group; provided, however, that the Foreign NOLs
shall be taken into account in calculating the amount of Foreign Transfer
Taxes.
(iii) "Packco Repatriation Tax Costs" and "New Grace Repatriation
Tax Costs", respectively, shall mean the sum of the (I) withholding Taxes that
would be imposed by a foreign jurisdiction on a deemed distribution of Packco
Group Excess Cash to Packco or of New Grace Group Excess Cash to New Grace,
respectively (the "Deemed Repatriations"), on the day immediately following
the Distribution ("Withholding Taxes") and (II) Taxes that would be imposed by
the United States or any political subdivision thereof on a Deemed
Repatriation (without taking into account any net operating loss or other
deduction) in excess of the Foreign Tax Credits of Packco or Grace-Conn.,
respectively, in respect of Taxes paid or deemed paid by Packco or
Grace-Conn., respectively, as a result of such Deemed Repatriation ("Deemed
Foreign Tax Credits").
(iv) "Packco Group Excess Cash" and "New Grace Group Excess
Cash", respectively, shall mean the sum of the amount of Subsidiary Excess
Cash for all Foreign Packco Subsidiaries or Foreign New Grace Subsidiaries.
(v) "Subsidiary Excess Cash" shall mean the cash transferred to
a Foreign Packco Subsidiary or Foreign New Grace Subsidiary pursuant to a
Foreign Transfer in excess of the sum of (I) the amount of debt that may be
repaid without penalty plus current accrued unpaid Taxes of such Subsidiary
as of the Distribution Date and (II) the excess of trade and other short-
term payables over trade and other short-term receivables of such
Subsidiary ("Excess Short-Term Payables"); provided, however, that each
party shall take steps (including causing the Subsidiary to loan cash to an
Affiliate organized in a foreign jurisdiction to the extent that such
Affiliate can use such cash to repay its debt or to pay current accrued
unpaid Taxes and Excess Short-Term Payables) and cooperate in good faith to
minimize the amount of Subsidiary Excess Cash, taking into account Tax and
financial considerations as if each party were bearing the full amount of
its respective Repatriation Tax Cost.
(vi) The "Foreign NOLs" shall mean net operating losses for
German income tax purposes of Grace GmbH and Grace Multiflex GmbH, and net
operating losses for other foreign income tax purposes of any other Foreign
Packco Subsidiary, attributable to the Pre-Distribution Period to the
extent, in either case, that such net operating losses would be an Overall
Tax Benefit (or Hypothetical Pre-Distribution Overall Tax Benefit),
calculated without regard to any Tax Item arising on the Foreign Transfer
involving such Subsidiary, that does not exceed the amount of income or
gain arising, for purposes of the applicable foreign income tax, on the
Foreign Transfer involving such Subsidiary.
(d) In connection with the Foreign Transfers, certain Assets
(including cash) or Liabilities that, without the agreement of the parties
as required by this Section 2.2(d), would be Grace-Conn. Assets or Grace-
Conn. Liabilities, as the case may be, may be retained by Packco or a
Packco Subsidiary (or Assets or Liabilities that, without the agreement of
the parties as required by this Section 2.2(d), would be Packco Assets or
Packco Liabilities, may be retained by New Grace or a New Grace Subsidiary)
if agreed between Grace and New Grace and reasonably satisfactory to SAC.
(e) Neither SAC nor any member of the Packco Group or the New
Grace Group shall take any action, or fail or omit to take any action where
the taking of such action or the failure or omission to take such action
would disturb the tax treatment assumed by the parties in calculating the
Foreign Transfer Taxes and cause any Indemnifiable Loss to a member of the
other Group, including an increase in the amount of Adjusted Foreign
Transfer Taxes borne by the other Group. Grace agrees to indemnify and
hold the Grace-Conn. Indemnitees harmless, and Grace-Conn. agrees to
indemnify and hold the Packco Indemnitees harmless, from and against any
such Indemnifiable Loss without regard to any limitation contained in
Section 8.4.
(f) Adjusted Foreign Transfer Taxes shall be recalculated upon
any audit adjustment, Final Determination or any other change (i) of a
Foreign Transfer Tax or another foreign Tax or Tax Item that would change
the amount of Deemed Foreign Tax Credit or otherwise alter Packco
Repatriation Tax Costs or New Grace Repatriation Tax Costs or (ii) that
changes the amount of a Foreign NOL. Appropriate payment shall be made
between the parties such that Foreign Transfer Taxes, as so redetermined,
and Adjusted Foreign Transfer Taxes, as so recalculated, are shared
according to the principles of Section 2.2(b).
SECTION 2.3 Certificate of Incorporation; By-laws; Rights
Plan. Prior to the Distribution Date, Grace shall contribute the capital
stock of Grace-Conn. to New Grace, as well as the capital stock of any
other Subsidiary of Grace formed in connection with the Foreign Transfers
that is not a Packco Subsidiary. In addition, prior to the Distribution
Date, the parties hereto shall take all action necessary so that, at the
Distribution Date, New Grace's name shall be "▇. ▇. ▇▇▇▇▇ & Co."
(b) Prior to the Distribution Date, Grace and New Grace shall
take all action necessary so that the certificate of incorporation and by-
laws of New Grace and the preferred share purchase rights plan of New Grace
shall be in effect as specified by New Grace, each in the form of Exhibits
C, D and E hereto, respectively (with such changes as Grace and New Grace
may find appropriate).
(c) Prior to the Distribution Date, Grace and Packco shall
take all action necessary so that the certificate of incorporation and by-
laws of Packco shall be substantially similar to the customary form of
certificate of incorporation and by-laws for a wholly owned Delaware
subsidiary and reasonably acceptable to SAC.
SECTION 2.4 Issuance of Stock. Prior to the Distribution
Date, the parties hereto shall take all steps necessary so that the number
of shares of New Grace Common Stock outstanding and held by Grace shall
equal the number of shares of Grace Common Stock outstanding on the Record
Date.
SECTION 2.5 Other Agreements; Shared Facilities. Each of
Grace and New Grace shall, prior to the Distribution Date, enter into, or
cause the appropriate members of the Group of which it is a member to enter
into, the Other Agreements in connection with the Distribution, including,
without limitation, agreements with respect to (i) insurance procedures,
(ii) interim services (including, without limitation, services to be
provided by the Shared Regional Headquarters consistent with current
operations of the respective Businesses, and services to be provided by
country organizations to operations of the other Business consistent with
past practice), which shall be charged at allocated cost based on Grace's
historical methodology, subject to applicable tax laws in any jurisdiction,
(iii) intellectual property licenses as contemplated by Section 2.1, (iv)
and other matters as may be advisable. The Other Agreements (or, in the
case of the forms of agreement attached hereto, any amendments thereto)
shall be on terms reasonably acceptable to Grace, New Grace and SAC.
Agreements regarding interim services (including country services) shall
generally have a term not to exceed 24 months (subject to earlier
termination on six months' notice (or such shorter period as does not
impose additional costs on the providing party) by the party receiving the
services) and will provide, in the case of agreements pursuant to which
Packco is to provide services to New Grace, for services at least as
extensive as any obligations contained in interim service and tolling
agreements entered into prior to the Distribution Date between Grace and a
third party. Such Agreements regarding interim services (including country
services) will also provide that any value added taxes imposed on such
services shall be paid and borne, as between the parties, by the party
receiving such services. The parties shall use reasonable efforts to
conclude the Other Agreements prior to the time the other conditions to the
Distribution have been satisfied.
(b) The parties acknowledge and agree that operation by
members of the Packco Group or New Grace Group of the Shared Facilities
after the Distribution Date may continue to require the joint occupation or
use by the parties of certain related premises or facilities (such as waste
disposal, utilities, security and other matters). The parties shall enter
into appropriate arrangements regarding cost allocation and service
provision with respect to these matters, which allocation shall be as
described in Section 2.1(c) and 2.5(a), as applicable. The agreements
described in this paragraph (b) shall be included in the Other Agreements.
SECTION 2.6 Financing. (a) Prior to the Distribution Date,
Grace and/or Packco shall enter into the Grace Credit Agreement, which
shall be on terms reasonably acceptable to Grace and SAC, and Grace and/or
Packco shall contribute, or cause to be contributed, the New Grace Capital
Contribution to Grace-Conn., all as described in this Section. No member
of the New Grace Group shall have any Liability or obligation with respect
to the Grace Credit Agreement. At the election of New Grace and subject to
the consent of Grace and SAC, which will not be unreasonably withheld, a
portion of the New Grace Capital Contribution may be contributed to foreign
Subsidiaries of New Grace. It is contemplated that the New Grace Capital
Contribution shall be effected as follows; provided, however, that Packco
shall not borrow an amount in excess of the tax basis, for U.S. federal
income tax purposes, of Grace-Conn. in the stock of Packco: (i) each of
Grace and Packco shall borrow agreed-upon amounts; (ii) Packco
distributes a portion of the New Grace Capital Contribution to Grace-Conn.
which uses such funds to pay creditors; (iii) the Intragroup Spinoff
occurs; (iv) Grace contributes the remaining amount of the New Grace
Capital Contribution to New Grace as well as the capital stock of Grace-
Conn.; and (v) New Grace loans the amount described in clause (iv) to
Grace-Conn. in the form of a security.
(b) Prior to the Distribution, Grace-Conn. may consummate a
cash tender offer in accordance with applicable securities laws for any and
all Grace-Conn. Public Debt. Grace-Conn. may also elect, in its
discretion, to defease or otherwise acquire any portion of the Grace-Conn.
Public Debt. To the extent that upon consummation of the Distribution,
there remains outstanding (other than to the extent owned by Grace-Conn. or
New Grace) in excess of $50 million in principal amount of the Grace-Conn.
Public Debt, New Grace or Grace-Conn. shall obtain an "evergreen" letter of
credit, with an initial expiration date no sooner than 364 days after the
Effective Time, from a financial institution or group of financial
institutions reasonably acceptable to Grace and SAC for the benefit of
Grace with respect to such outstanding amount from time to time in excess
of $50 million.
The letter of credit shall be in form and substance reasonably
acceptable to SAC and shall entitle Grace to draw thereunder if Grace shall be
required to make (and makes) any payment pursuant to the terms of its
guarantee of any Grace-Conn. Public Debt. The expiration date of such letter
of credit shall be automatically extended for successive 364-day periods, with
an absolute expiration date on the date that is the 91st day after the date on
which the outstanding principal amount of the Grace-Conn. Public Debt shall
have been reduced to no more than $50 million, unless, prior to such 91st day,
any payments shall have been made that are subject to avoidance pursuant to a
bankruptcy or similar proceeding, in which case such letter of credit shall be
extended (with respect to the applicable payments) until such payments are no
longer subject to such avoidance, unless notice of termination is given by the
issuing bank or banks, in which case Grace shall be entitled to draw thereunder
(whether or not any demand for payment in respect of its guarantee shall have
been made), provided that, to the extent such funds are not used to make
payments on the Grace-Conn. Public Debt, Grace shall hold such proceeds
separate in an interest-bearing escrow account with a financial institution
and pursuant to escrow arrangements reasonably acceptable to Grace-Conn. To
the extent that the amount held in such escrow account is greater than (i) the
outstanding Grace-Conn. Public Debt minus (ii) $50 million, Grace shall remit
such excess amount to Grace-Conn. The amount of the letter of credit may be
reduced from time to time, but shall not at any time be less than the amount
by which the outstanding principal amount of the Grace-Conn. Public Debt
(other than such debt owned by a member of the New Grace Group) exceeds $50
million.
"Debt Costs" shall mean the costs incurred by Grace or Grace-Conn.
in connection with a tender offer, defeasance, retirement or other acquisition
of Grace-Conn. Public Debt, which costs shall consist of (i) any incremental
costs, fees, expenses and payments incurred in connection with such action,
and in the case of a tender offer shall include all costs, fees, expenses and
payments incurred in connection with a tender offer that are, in the
aggregate, in excess of the outstanding principal amount and accrued interest
of the Grace-Conn. Public Debt so acquired; plus (ii) any costs associated
with terminating or re-negotiating any related interest rate swap agreements
with respect to the amount of Grace-Conn. Public Debt acquired, defeased or
retired; and plus (iii) the costs of the letter of credit described above.
SECTION 2.7 Grace Recapitalization. (a) Immediately prior to
the Effective Time, Grace shall consummate a recapitalization of the Grace
Common Stock, such that each share of Grace Common Stock outstanding as of
the Record Date shall be exchanged for the Per Share Common Consideration
and the Per Share Preferred Consideration (the "Recapitalization").
Options to purchase shares of Grace Common Stock previously granted by
Grace or a predecessor and outstanding as of the time of the
Recapitalization shall be treated as provided in the Benefits Agreement.
In connection with the Recapitalization and the Merger, the Grace
Certificate of Incorporation shall be amended so that the par value of the
Newco Common Stock will be $.10 per share, as well as otherwise provided in
the Merger Agreement. Grace shall retain an Exchange Agent or transfer
agent as appropriate and take other appropriate actions to effect the
Recapitalization, including customary procedures with respect to the
exchange of share certificates.
(b) No fractional shares of Newco Common Stock or Newco
Convertible Preferred Stock shall be issued in the Recapitalization. In
lieu of any such fractional shares, each person who would otherwise have
been entitled to a fraction of a share of Newco Common Stock or Newco
Convertible Preferred Stock upon surrender of former shares of Grace Common
Stock for exchange pursuant to the Recapitalization shall be paid an amount
in cash (without interest) equal to such holder's proportionate interest in
the net proceeds from the sale or sales in the open market by the Exchange
Agent, on behalf of all such holders, of the aggregate fractional shares of
Newco Common Stock or Newco Convertible Preferred Stock issued pursuant to
this paragraph. As soon as practicable following the Distribution Date,
the Exchange Agent shall determine the excess of (i) the number of full
shares of Newco Common Stock or Newco Convertible Preferred Stock, as the
case may be, delivered to the Exchange Agent over (ii) the aggregate number
of full shares of Newco Common Stock or Newco Convertible Preferred Stock
to be distributed in respect of Grace Common Shares (such excess, the
"Excess Shares"), and the Exchange Agent, as agent for the former holders
of such Grace Common Shares, shall sell the Excess Shares at the prevailing
prices on the open market. The sale of the Excess Shares by the Exchange
Agent shall be executed on a public exchange through one or more firms and
shall be executed in round lots to the extent practicable. Grace shall pay
all commissions, transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent, incurred in
connection with such sale of Excess Shares. Until the net proceeds of such
sale or sales have been distributed, the Exchange Agent shall hold such
proceeds in trust for such former stockholders. As soon as practicable
after the determination of the amount of cash to be paid in lieu of any
fractional interests, the Exchange Agent shall make available in accordance
with this Agreement such amounts to such former stockholders.
SECTION 2.8 Registration and Listing. Prior to the
Distribution Date:
(a) The parties shall take such efforts regarding the
Registration Statements and the Joint Proxy Statement as is provided in the
Merger Agreement. After such Registration Statements become effective,
Grace shall cause the Joint Proxy Statement and the information statement
(or prospectus, as the case may be) for the New Grace Common Stock forming
a part of the Registration Statement for New Grace to be delivered to all
holders of record of Grace Common Stock as of the record date for the
meeting of Grace shareholders to which the Joint Proxy Statement relates.
(b) The parties hereto shall use reasonable efforts to take
all such action as may be necessary or appropriate under state securities
and blue sky laws in connection with the transactions contemplated by this
Agreement.
(c) New Grace and Grace shall prepare, and New Grace and Grace
shall file and seek to make effective, an application for the listing of
the New Grace Common Stock on the NYSE, and an application for the listing
on the NYSE of the Newco Common Stock and the Newco Convertible Preferred
Stock to be issued in connection with the Recapitalization and the Merger,
in each case subject to official notice of issuance.
(d) The parties hereto shall cooperate in preparing, filing
with the SEC and causing to become effective any registration statements or
amendments thereto which are necessary or appropriate in order to effect
the transactions contemplated hereby or to reflect the establishment of, or
amendments to, any employee benefit plans contemplated hereby or by the
Employee Benefits Agreement requiring registration under the Securities
Act.
SECTION 2.9 Grace and New Grace Boards. The parties hereto
shall take all steps necessary so that, effective immediately after the
Distribution, the Board of Directors of each of Grace and New Grace, so
long as the common stock of such company is registered under Section 12 of
the Exchange Act, shall at all times be comprised of a majority of
independent directors (other than due to temporary vacancies).
SECTION 2.10 Transfers Not Effected Prior to the Distribution;
Transfers Deemed Effective as of the Distribution Date. To the extent that
any transfers contemplated by this Article II shall not have been
consummated on the Distribution Date, including, without limitation, any
Foreign Transfers, the parties shall cooperate to effect such transfers as
promptly following the Distribution Date as shall be practicable. Nothing
herein shall be deemed to require the transfer of any Assets or the
assumption of any Liabilities which by their terms or operation of law
cannot be transferred or assumed; provided, however, that Grace and New
Grace and their respective Subsidiaries shall cooperate to obtain any
necessary consents or approvals for the transfer of all Assets and
Liabilities contemplated to be transferred pursuant to this Article II. In
the event that any such transfer of Assets or Liabilities has not been
consummated, effective as of and after the Distribution Date, the party
retaining such Asset or Liability shall thereafter hold such Asset in trust
for the use and benefit of the party entitled thereto (at the expense of
the party entitled thereto) and retain such Liability for the account of
the party by whom such Liability is to be assumed pursuant hereto, and take
such other action as may be reasonably requested by the party to which such
Asset is to be transferred, or by whom such Liability is to be assumed, as
the case may be, in order to place such party, insofar as reasonably
possible, in the same position as would have existed had such Asset or
Liability been transferred as contemplated hereby. As and when any such
Asset or Liability becomes transferable, such transfer shall be effected
forthwith. The parties agree that, as of the Distribution Date, each party
hereto shall be deemed to have acquired complete and sole beneficial
ownership over all of the Assets, together with all rights, powers and
privileges incident thereto, and shall be deemed to have assumed in
accordance with the terms of this Agreement all of the Liabilities, and all
duties, obligations and responsibilities incident thereto, which such party
is entitled to acquire or required to assume pursuant to the terms of this
Agreement.
SECTION 2.11 Intercompany Accounts and Distribution Payments.
After the Distribution Date, the parties shall be obligated to pay only
those intercompany accounts between members of the New Grace Group and
members of the Packco Group that arose in connection with transfers of
goods and services in the ordinary course of business, consistent with past
practices (which the parties shall use reasonable efforts to settle prior
to the Distribution Date), and all other intercompany accounts shall be
settled without transfer of non-financial assets as of the Distribution
Date.
ARTICLE III
THE DISTRIBUTION
SECTION 3.1 Record Date and Distribution Date. Subject to the
satisfaction of the conditions set forth in Section 8.1(a), the Board of
Directors of Grace, in its sole discretion and consistent with the Merger
Agreement, shall establish the Record Date and the Distribution Date and
any appropriate procedures in connection with the Distribution.
SECTION 3.2 The Agent. Prior to the Distribution Date, New
Grace shall enter into an agreement with the Agent providing for, among
other things, the payment of the Distribution to the holders of Grace
Common Stock in accordance with this Article III.
SECTION 3.3 Delivery of Share Certificates to the Agent.
Prior to the Distribution Date, Grace shall deliver to the Agent a share
certificate representing (or authorize the related book-entry transfer of)
all of the outstanding shares of New Grace Common Stock to be distributed
in connection with the payment of the Distribution. After the Distribution
Date, upon the request of the Agent, New Grace shall provide all
certificates for shares (or book-entry transfer authorizations) of New
Grace Common Stock that the Agent shall require in order to effect the
Distribution.
SECTION 3.4 The Distribution. Subject to the terms and
conditions of this Agreement, New Grace shall instruct the Agent to
distribute, as of the Distribution Date, one share of New Grace Common
Stock in respect of each share of Grace Common Stock held by holders of
record of Grace Common Stock on the Record Date.
ARTICLE IV
SURVIVAL AND INDEMNIFICATION
SECTION 4.1 Survival of Agreements. All covenants and
agreements of the parties hereto contained in this Agreement shall survive
the Distribution Date.
SECTION 4.2 Indemnification. Except as specifically otherwise
provided in the Other Agreements, the New Grace Group shall indemnify,
defend and hold harmless the Packco Indemnitees from and against (i) all
Indemnifiable Losses arising out of or due to the failure or alleged
failure of any member of the New Grace Group (x) to pay any Grace-Conn.
Liabilities (including, without limitation, all Liabilities specifically
excluded from the definition of Packco Liabilities herein), whether such
Indemnifiable Losses relate to events, occurrences or circumstances
occurring or existing, or whether such Indemnifiable Losses are asserted,
before or after the Distribution Date, or (y) to perform any of its
obligations under this Agreement (including the obligation to effect the
transfers as provided in the last sentence of Section 2.1(a)); (ii) all
Indemnifiable Losses arising out of or based upon any untrue statement or
alleged untrue statement of a material fact, or omission or alleged
omission to state a material fact required to be stated, in the
Registration Statements or the Joint Proxy Statement or any preliminary or
final form thereof or any amendment thereto, or necessary to make the
statements therein not misleading, except that such indemnifications shall
not apply to any Indemnifiable Losses that arise out of or are based upon
any statement or omission, or alleged statement or omission, in any of the
portions of the Registration Statements or the Joint Proxy Statement, or
any preliminary or final form thereof or any amendment thereto, solely with
respect to information relating to SAC supplied by SAC specifically for use
in the preparation thereof or relating to Newco after the Merger; and (iii)
all Indemnifiable Losses arising from or relating to all existing
litigation brought by pre-Merger shareholders of Grace acting in such
capacity and all litigation to be brought by pre-Merger shareholders of
Grace acting in such capacity and relating to any events or transactions
occurring prior to the Effective Time or to the transactions contemplated
by the Transaction Agreements.
(b) Except as specifically otherwise provided in the Other
Agreements, the Packco Group shall indemnify, defend and hold harmless the
New Grace Indemnitees from and against (i) all Indemnifiable Losses arising
out of or due to the failure or alleged failure of any member of the Packco
Group to pay any Packco Liabilities or to perform any of its obligations
under this Agreement after the Distribution Date; and (ii) all
Indemnifiable Losses arising out of or based upon any untrue statement or
alleged untrue statement of a material fact, or omission or alleged
omission to state a material fact required to be stated, in any portion of
the Registration Statements or the Joint Proxy Statement (or any
preliminary or final form thereof or any amendment thereto) solely with
respect to information relating to SAC supplied by SAC specifically for use
in the preparation thereof or relating to Newco after the Merger (including
the pro forma financial information relating to Newco contained in the
Registration Statements (other than the historical information relating to
Grace and the Packaging Business)), or necessary to make the statements
therein not misleading.
(c) If any Indemnity Payment required to be made hereunder or
under any Other Agreement is denominated in a currency other than United
States dollars, such payment shall be made in United States dollars and the
amount thereof shall be computed using the Foreign Exchange Rate for such
currency determined as of the date on which such Indemnity Payment is made.
(d) Notwithstanding anything to the contrary set forth herein,
indemnification relating to any arrangements between any member of the
Packco Group and any member of the New Grace Group for the provision after
the Distribution of goods and services in the ordinary course shall be
governed by the terms of such arrangements and not by this Section or as
otherwise set forth in this Agreement and the Other Agreements.
SECTION 4.3 Procedures for Indemnification for Third-Party
Claims. Grace shall, and shall cause the other Packco Indemnitees to,
notify New Grace in writing promptly after learning of any Third-Party
Claim for which any Packco Indemnitee intends to seek indemnification from
New Grace under this Agreement. New Grace shall, and shall cause the other
New Grace Indemnitees to, notify Grace in writing promptly after learning
of any Third-Party Claim for which any New Grace Indemnitee intends to seek
indemnification from Grace under this Agreement. The failure of any
Indemnitee to give such notice shall not relieve any Indemnifying Party of
its obligations under this Article except to the extent that such
Indemnifying Party or its Affiliate is actually prejudiced by such failure
to give notice. Such notice shall describe such Third-Party Claim in
reasonable detail considering the Information provided to the Indemnitee.
(b) Except as otherwise provided in paragraph (c) of this
Section, an Indemnifying Party may, by notice to the Indemnitee and to
Grace, if New Grace is the Indemnifying Party, or to the Indemnitee and New
Grace, if Grace is the Indemnifying Party, at any time after receipt by
such Indemnifying Party of such Indemnitee's notice of a Third-Party Claim,
undertake (itself or through another member of the Group of which the
Indemnifying Party is a member) the defense or settlement of such Third-
Party Claim. If an Indemnifying Party undertakes the defense of any Third-
Party Claim, such Indemnifying Party shall thereby admit its obligation to
indemnify the Indemnitee against such Third-Party Claim, and such
Indemnifying Party shall control the investigation and defense or
settlement thereof, and the Indemnitee may not settle or compromise such
Third-Party Claim, except that such Indemnifying Party shall not (i)
require any Indemnitee, without its prior written consent, to take or
refrain from taking any action in connection with such Third-Party Claim,
or make any public statement, which such Indemnitee reasonably considers to
be against its interests, nor (ii) without the prior written consent of the
Indemnitee and of Grace, if the Indemnitee is a Packco Indemnitee, or the
Indemnitee and of New Grace, if the Indemnitee is a New Grace Indemnitee,
consent to any settlement that does not include as a part thereof an
unconditional release of the Indemnitees from liability with respect to
such Third-Party Claim or that requires the Indemnitee or any of its
Representatives or Affiliates to make any payment that is not fully
indemnified under this Agreement or to be subject to any non-monetary
remedy; and subject to the Indemnifying Party's control rights, as
specified herein, the Indemnitees may participate in such investigation and
defense, at their own expense. Following the provision of notices to the
Indemnifying Party, until such time as an Indemnifying Party has undertaken
the defense of any Third-Party Claim as provided herein, such Indemnitee
shall control the investigation and defense or settlement thereof, without
prejudice to its right to seek indemnification hereunder.
(c) If an Indemnitee reasonably determines that there may be
legal defenses available to it that are different from or in addition to
those available to its Indemnifying Party which make it inappropriate for
the Indemnifying Party to undertake the defense or settlement thereof, then
such Indemnifying Party shall not be entitled to undertake the defense or
settlement of such Third-Party Claim; and counsel for the Indemnifying
Party shall be entitled to conduct the defense of such Indemnifying Party
and counsel for the Indemnitee (selected by the Indemnitee) shall be
entitled to conduct the defense of such Indemnitee, it being understood
that both such counsel shall cooperate with each other to conduct the
defense or settlement of such action as efficiently as possible. The above
provisions of this paragraph (c) shall not apply to Third-Party Claims
relating to asbestos claims described in the proviso to the definition of
Packco Liabilities. Rather, with respect to such asbestos claims, with the
consent of Grace-Conn., which shall not be unreasonably withheld, counsel
for the Indemnifying Party shall be entitled to conduct the defense of such
Third-Party Claim to the extent the legal defenses available to the
Indemnifying Party and the Indemnitee are substantially similar, but
counsel for the Indemnitee shall be entitled to assert and conduct its own
defense to the extent, but only to the extent, of any additional legal
defenses available to it.
(d) In no event shall an Indemnifying Party be liable for the
fees and expenses of more than one counsel for all Indemnitees (in addition
to its own counsel, if any) in connection with any one action, or separate
but similar or related actions, in the same jurisdiction arising out of the
same general allegations or circumstances.
(e) New Grace shall, and shall cause the other New Grace
Indemnitees to, and Grace shall, and shall cause the other Packco
Indemnitees to, make available to each other, their counsel and other
Representatives, all information and documents reasonably available to them
which relate to any Third-Party Claim, and otherwise cooperate as may
reasonably be required in connection with the investigation, defense and
settlement thereof, subject to the terms and conditions of a mutually
acceptable joint defense agreement. Any joint defense agreement entered
into by New Grace or Grace with any third party relating to any Third-Party
Claim shall provide that New Grace or Grace may, if requested, provide
information obtained through any such agreement to the New Grace
Indemnitees and/or the Packco Indemnitees.
SECTION 4.4 Remedies Cumulative. The remedies provided in
this Article IV shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any other remedies against
any Indemnifying Party. However, the procedures set forth in Section 4.3
shall be the exclusive procedures governing any indemnity action brought
under this Agreement, except as otherwise specifically provided in any of
the Other Agreements.
ARTICLE V
CERTAIN ADDITIONAL COVENANTS
SECTION 5.1 Notices to Third Parties. In addition to the
actions described in Section 5.2, the members of the Packco Group and the
members of the New Grace Group shall cooperate to make all other filings
and give notice to and obtain consents from all third parties that may
reasonably be required to consummate the transactions contemplated by this
Agreement, the Merger Agreement and the Other Agreements.
SECTION 5.2 Licenses and Permits. Each party hereto shall
cause the appropriate members of its Group to prepare and file with the
appropriate licensing and permitting authorities applications for the
transfer or issuance, as may be necessary or advisable in connection with
the transactions contemplated by this Agreement, the Other Agreements and
the Merger Agreement, to its Group of all material governmental licenses
and permits required for the members of its Group to operate its Business
after the Distribution Date. The members of the New Grace Group and the
members of the Packco Group shall cooperate and use all reasonable efforts
to secure the transfer or issuance of the licenses and permits.
SECTION 5.3 Intercompany Agreements. All contracts, licenses,
agreements, commitments or other arrangements, formal or informal, between
any member of the Packco Group, on the one hand, and any member of the New
Grace Group, on the other hand, in existence as of the Distribution Date,
pursuant to which any member of either Group makes payments in respect of
Taxes to any member of the other Group or provides to any member of the
other Group goods or services (including, without limitation, management,
administrative, legal, financial, accounting, data processing, insurance or
technical support), or the use of any Assets of any member of the other
Group, or the secondment of any employee, or pursuant to which rights,
privileges or benefits are afforded to members of either Group as
Affiliates of the other Group, shall terminate as of the close of business
on the day prior to the Distribution Date, except as specifically provided
herein or in the Other Agreements. From and after the Distribution Date,
no member of either Group shall have any rights under any such contract,
license, agreement, commitment or arrangement with any member of the other
Group, except as specifically provided herein or in the Other Agreements.
SECTION 5.4 Guarantee Obligations. Grace and New Grace shall
cooperate, and shall cause their respective Groups to cooperate, to
terminate, or to cause a member of the Packco Group to be substituted in
all respects for any member of the New Grace Group in respect of, all
obligations of any member of the New Grace Group under any Packco
Liabilities for which such member of the New Grace Group may be liable, as
guarantor, original tenant, primary obligor or otherwise. If such a
termination or substitution is not effected by the Distribution Date, (i)
Grace shall indemnify and hold harmless the New Grace Indemnitees for any
Indemnifiable Loss arising from or relating thereto, and (ii) without the
prior written consent of the Chief Financial Officer, Treasurer or any
Assistant Treasurer of New Grace, from and after the Distribution Date,
Grace shall not, and shall not permit any member of the Packco Group or any
of its Affiliates to, renew or extend the term of, increase its obligations
under, or transfer to a third party, any loan, lease, contract or other
obligation for which any member of the New Grace Group is or may be liable
unless all obligations of the New Grace Group with respect thereto are
thereupon terminated by documentation reasonably satisfactory in form and
substance to the Chief Financial Officer, Treasurer or any Assistant
Treasurer of New Grace, provided that the limitations in clause (ii) shall
not apply in the event that a member of the Packco Group obtains a letter
of credit from a financial institution reasonably acceptable to New Grace
and for the benefit of New Grace with respect to such obligation of the New
Grace Group.
(b) Grace and New Grace shall cooperate, and shall cause their
respective Groups to cooperate, to terminate, or to cause a member of the
New Grace Group to be substituted in all respects for any member of the
Packco Group in respect of, all obligations of any member of the Packco
Group under any Grace-Conn. Liabilities for which such member of the
Packco Group may be liable, as guarantor, original tenant, primary obligor
or otherwise. The foregoing sentence does not apply to the Grace-Conn.
Public Debt, which is governed by Section 2.6. If such a termination or
substitution is not effected by the Distribution Date, (i) New Grace shall
indemnify and hold harmless the Packco Indemnitees for any Indemnifiable
Loss arising from or relating thereto, and (ii) without the prior written
consent of the Chief Financial Officer, Treasurer or any Assistant
Treasurer of Grace, from and after the Distribution Date, New Grace shall
not, and shall not permit any member of the New Grace Group to, renew or
extend the term of, increase its obligations under, or transfer to a third
party, any loan, lease, contract or other obligation for which any member
of the Packco Group is or may be liable unless all obligations of the
Packco Group with respect thereto are thereupon terminated by documentation
reasonably satisfactory in form and substance to the Chief Financial
Officer, Treasurer or any Assistant Treasurer of Grace, provided that the
limitations contained in clause (ii) shall not apply in the event that a
member of the New Grace Group obtains a letter of credit from a financial
institution reasonably acceptable to Grace and for the benefit of Grace
with respect to such obligation of the Packco Group.
SECTION 5.5 Further Assurances. In addition to the actions
specifically provided for elsewhere in this Agreement, each of the parties
hereto shall use reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things reasonably necessary,
proper or advisable under applicable laws, regulations and agreements to
consummate and make effective the transactions contemplated by this
Agreement. Without limiting the foregoing, each party hereto shall
cooperate with the other party, and execute and deliver, or use reasonable
efforts to cause to be executed and delivered, all instruments, and to make
all filings with, and to obtain all consents, approvals or authorizations
of, any governmental or regulatory authority or any other Person under any
permit, license, agreement, indenture or other instrument, and take all
such other actions as such party may reasonably be requested to take by any
other party hereto from time to time, consistent with the terms of this
Agreement, the Merger Agreement and the Other Agreements, in order to
effectuate the provisions and purposes of this Agreement.
SECTION 5.6 Environmental Claims Cooperation. With respect to
claims relating to Environmental Laws described in clause (a) of the
definition of Packco Liabilities, the New Grace Group and the Packco Group
shall cooperate to minimize the costs incurred in connection with such
claims and shall generally cooperate and provide appropriate information to
the other party with respect to such claims. Notwithstanding any other
provision of this Agreement, including Article IV, Grace shall be entitled
to participate in the defense of any such claims but New Grace shall
control the resolution of any such claims; provided that New Grace shall
not consent to entry of any judgment or enter into any settlement without
the approval of Grace, which approval shall not be unreasonably withheld.
ARTICLE VI
ACCESS TO INFORMATION
SECTION 6.1 Provision of Corporate Records. Prior to or as
promptly as practicable after the Distribution Date, Grace shall retain
complete and accurate copies but shall deliver to New Grace all corporate
books and records of the New Grace Group in its possession and copies of
the relevant portions of all corporate books and records of the Packco
Group relating directly and predominantly to the Grace-Conn. Assets, the
New Grace Business, or the Liabilities of the New Grace Group, including,
in each case, all active agreements, active litigation files and government
filings. Grace shall also retain complete and accurate copies but deliver
to New Grace all corporate board and committee minute books of Grace. From
and after the Distribution Date, all such books, records and copies shall
be the property of New Grace. Prior to or as promptly as practicable after
the Distribution Date, New Grace shall deliver to Grace all corporate books
and records of the Packco Group in its possession and copies of the
relevant portions of all corporate books and records of the New Grace Group
relating directly and predominantly to the Packco Assets, the Packaging
Business, or the Liabilities of the Packco Group, including, in each case,
all active agreements, active litigation files and government filings.
From and after the Distribution Date, all such books, records and copies
shall be the property of Grace. The costs and expenses incurred in the
provision of records or other information to a party shall be paid for
(including reimbursement of costs incurred by the providing party) by the
requesting party.
SECTION 6.2 Access to Information. From and after the
Distribution Date, each of Grace and New Grace shall afford to the other
and to the other's Representatives reasonable access and duplicating rights
during normal business hours to all Information within the possession or
control of such party's Group relating to the other party's Group's pre-
Distribution business, Assets or Liabilities or relating to or arising in
connection with the relationship between the Groups on or prior to the
Distribution Date, insofar as such access is reasonably required for a
reasonable purpose, subject to the provisions below regarding Privileged
Information. Without limiting the foregoing, Information may be requested
under this Section 6.2 for audit, accounting, claims, litigation and Tax
purposes, as well as for purposes of fulfilling disclosure and reporting
obligations.
In furtherance of the foregoing:
(a) Each party hereto acknowledges that: Each of Grace
and New Grace (and the members of the Packco Group and the New
Grace Group, respectively) has or may obtain Privileged
Information; (ii) there are a number of Litigation Matters
affecting each or both of Grace and New Grace; (iii) both Grace
and New Grace have a common legal interest in Litigation Matters,
in the Privileged Information and in the preservation of the
confidential status of the Privileged Information, in each case
relating to the pre-Distribution business of the Packco Group or
the New Grace Group or relating to or arising in connection with
the relationship between the Groups on or prior to the
Distribution Date; and (iv) both Grace and New Grace intend that
the transactions contemplated hereby and by the Merger Agreement
and the Other Agreements and any transfer of Privileged
Information in connection therewith shall not operate as a waiver
of any potentially applicable privilege.
(b) Each of Grace and New Grace agrees, on behalf of
itself and each member of the Group of which it is a member, not
to disclose or otherwise waive any privilege attaching to any
Privileged Information relating to the pre-Distribution business
of the New Grace Group or the Packco Group, respectively, or
relating to or arising in connection with the relationship between
the Groups on or prior to the Distribution Date, without providing
prompt written notice to and obtaining the prior written consent
of the other, which consent shall not be unreasonably withheld and
shall not be withheld if the other party certifies that such
disclosure is to be made in response to a likely threat of
suspension or debarment or similar action; provided, however, that
Grace and New Grace may make such disclosure or waiver with
respect to Privileged Information if such Privileged Information
relates solely to the pre-Distribution business of the Packco
Group in the case of Grace or the New Grace Group in the case of
New Grace. In the event of a disagreement between any member of
the Packco Group and any member of the New Grace Group concerning
the reasonableness of withholding such consent, no disclosure
shall be made prior to a resolution of such disagreement by a
court of competent jurisdiction, provided that the limitations in
this sentence shall not apply in the case of disclosure required
by law and so certified as provided in the first sentence of this
paragraph.
(c) Upon any member of the Packco Group or any member of
the New Grace Group receiving any subpoena or other compulsory
disclosure notice from a court, other governmental agency or
otherwise which requests disclosure of Privileged Information, in
each case relating to pre-Distribution business of the New Grace
Group or the Packco Group, respectively, or relating to or arising
in connection with the relationship between the Groups on or prior
to the Distribution Date, the recipient of the notice shall
promptly provide to the other Group (following the notice
provisions set forth herein) a copy of such notice, the intended
response, and all materials or information relating to the other
Group that might be disclosed. In the event of a disagreement as
to the intended response or disclosure, unless and until the
disagreement is resolved as provided in paragraph (b) of this
Section, the parties shall cooperate to assert all defenses to
disclosure claimed by either party's Group, and shall not disclose
any disputed documents or information until all legal defenses and
claims of privilege have been finally determined.
SECTION 6.3 Production of Witnesses. Subject to Section 6.2,
after the Distribution Date, each of Grace and New Grace shall, and shall
cause each member of the Packco Group and the New Grace Group,
respectively, to make available to New Grace or Grace or any member of the
New Grace Group or of the Packco Group, as the case may be, upon written
request, such Group's directors, officers, employees and agents as
witnesses to the extent that any such Person may reasonably be required in
connection with any Litigation Matters, administrative or other proceedings
in which the requesting party may from time to time be involved and
relating to the pre-Distribution business of the Packco Group or the New
Grace Group or relating to or in connection with the relationship between
the Groups on or prior to the Distribution Date.
SECTION 6.4 Retention of Records. Except as otherwise agreed
in writing, or as otherwise provided in the Other Agreements, each of Grace
and New Grace shall, and shall cause the members of the Group of which it
is a member to, retain all Information in such party's Group's possession
or under its control relating directly and predominantly to the pre-
Distribution business, Assets or Liabilities of the other party's Group
until such Information is at least ten years old or until such later date
as may be required by law, except that if, prior to the expiration of such
period, any member of either party's Group wishes to destroy or dispose of
any such Information that is at least three years old, prior to destroying
or disposing of any of such Information, (a) the party whose Group is
proposing to dispose of or destroy any such Information shall provide no
less than 30 days' prior written notice to the other party, specifying the
Information proposed to be destroyed or disposed of, and (b) if, prior to
the scheduled date for such destruction or disposal, the other party
requests in writing that any of the Information proposed to be destroyed or
disposed of be delivered to such other party, the party whose Group is
proposing to dispose of or destroy such Information promptly shall arrange
for the delivery of the requested Information to a location specified by,
and at the expense of, the requesting party.
SECTION 6.5 Confidentiality. Subject to Section 6.2, which
shall govern Privileged Information, from and after the Distribution Date,
each of Grace and New Grace shall hold, and shall use reasonable efforts to
cause its Affiliates and Representatives to hold, in strict confidence all
Information concerning the other party's Group obtained by it prior to the
Distribution Date or furnished to it by such other party's Group pursuant
to this Agreement or the Other Agreements and shall not release or disclose
such Information to any other Person, except its Affiliates and
Representatives, who shall be bound by the provisions of this Section 6.5,
and each party shall be responsible for a breach by any of its Affiliates
or Representatives; provided, however, that any member of the Packco Group
or the New Grace Group may disclose such Information to the extent that (a)
disclosure is compelled by judicial or administrative process or, in the
opinion of such Person's counsel, by other requirements of law, or (b) such
party can show that such Information was (i) available to such Person on a
nonconfidential basis (other than from a member of the other party's Group)
prior to its disclosure by the other party's Group, (ii) in the public
domain through no fault of such Person or (iii) lawfully acquired by such
Person from another source after the time that it was furnished to such
Person by the other party's Group, and not acquired from such source
subject to any confidentiality obligation on the part of such source known
to the acquiror. Notwithstanding the foregoing, each of Grace and New
Grace shall be deemed to have satisfied its obligations under this Section
6.5 with respect to any Information (other than Privileged Information) if
it exercises the same care with regard to such Information as it takes to
preserve confidentiality for its own similar Information.
SECTION 6.6 Cooperation with Respect to Government Reports and
Filings. Grace, on behalf of itself and each member of the Packco Group,
agrees to provide any member of the New Grace Group, and New Grace, on
behalf of itself and each member of the New Grace Group, agrees to provide
any member of the Packco Group, with such cooperation and Information as
may be reasonably requested by the other in connection with the preparation
or filing of any government report or other government filing contemplated
by this Agreement or in conducting any other government proceeding relating
to the pre-Distribution business of the Packco Group or the New Grace
Group, Assets or Liabilities of either Group or relating to or in
connection with the relationship between the Groups on or prior to the
Distribution Date. Such cooperation and Information shall include, without
limitation, promptly forwarding copies of appropriate notices and forms or
other communications received from or sent to any government authority
which relate to the Packco Group, in the case of the New Grace Group, or
the New Grace Group, in the case of the Packco Group. Each party shall
make its employees and facilities available during normal business hours
and on reasonable prior notice to provide explanation of any documents or
Information provided hereunder.
ARTICLE VII
NO REPRESENTATIONS OR WARRANTIES
SECTION 7.1 No Representations or Warranties. Except as
expressly set forth herein or in any other Transaction Agreement (including
Article II and Sections 4.1, 4.2 and 5.5), New Grace and Grace-Conn.
understand and agree that no member of the Packco Group is, in this
Agreement or in any other agreement or document, representing or warranting
to New Grace or any member of the New Grace Group in any way as to the
Grace-Conn. Assets, the New Grace Business or the Grace-Conn.
Liabilities, it being agreed and understood that New Grace and each member
of the New Grace Group shall take all of the Grace-Conn. Assets "as is,
where is." Except as expressly set forth herein or in any other Transaction
Agreement and subject to Sections 4.1, 4.2 and 5.5, New Grace and each
member of the New Grace Group shall bear the economic and legal risk that
the Grace-Conn. Assets shall prove to be insufficient or that the title of
any member of the New Grace Group to any Grace-Conn. Assets shall be other
than good and marketable and free from encumbrances. Except as expressly
set forth herein or in any other Transaction Agreement (including Article
II and Sections 4.1, 4.2 and 5.5), Grace understands and agrees that no
member of the New Grace Group is, in this Agreement or in any other
agreement or document, representing or warranting to Grace or any member of
the Packco Group in any way as to the Packco Assets, the Packaging Business
or the Packco Liabilities, it being agreed and understood that Grace,
Packco and each other member of the Packco Group shall take all of the
Packco Assets "as is, where is." Except as expressly set forth herein or in
any other Transaction Agreement and subject to Sections 4.1, 4.2 and 5.5,
Grace and each member of the Packco Group shall bear the economic and legal
risk that the Packco Assets shall prove to be insufficient or that the
title of any member of the Packco Group to any Packco Assets shall be other
than good and marketable and free from encumbrances. The foregoing shall
be without prejudice to any rights under Article II, Section 4.1, Section
4.2 or Section 5.5 or to the covenants otherwise contained in this
Agreement or any other Transaction Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Conditions to Obligations. (a) The obligations
of the parties hereto to consummate the payment of the Distribution are
subject to the satisfaction of each of the following conditions:
(i) the transactions contemplated hereby (including the
Distribution, the Recapitalization, the Merger, the amendment to the
Grace Certificate of Incorporation and otherwise as required by
applicable law and stock exchange regulations) shall have been duly
approved by Grace shareholders;
(ii) all conditions to the Merger set forth in the Merger Agreement
(other than that the Distribution be consummated) shall have been
satisfied or waived;
(iii) all third-party consents and governmental approvals required
in connection with the transactions contemplated hereby shall have
been received, except where the failure to obtain such consents or
approvals would not have a material adverse effect on either (A) the
ability of the parties to consummate the transactions contemplated by
this Agreement, the Other Agreements or the Merger Agreement or (B)
the business, assets, liabilities, financial condition or results of
operations of Grace-Conn. or Packco and their respective
subsidiaries, taken as a whole;
(iv) the transactions contemplated by Article II shall have been
consummated in all material respects, to the extent required to be
consummated prior to the Distribution;
(v) the shares of New Grace Common Stock to be issued in the
Distribution, and the shares of Newco Common Stock and the Newco
Convertible Preferred Stock to be issued in the Recapitalization and
the Merger, as the case may be, shall have been authorized for
listing on the NYSE, in each case subject to official notice of
issuance;
(vi) the Board of Directors of New Grace, composed as contemplated
by Section 2.9, shall have been duly elected;
(vii) the Registration Statements shall have been declared
effective under the Exchange Act or the Securities Act, as the case
may be, by the SEC and no stop order suspending the effectiveness of
either of the Registration Statements shall have been issued by the
SEC and, to the knowledge of Grace and New Grace, no proceeding for
that purpose shall have been instituted by the SEC;
(viii) the applicable parties shall have entered into each of the
Other Agreements;
(ix) (A) the Board of Directors of Grace shall have received
customary opinions of a nationally recognized investment banking or
appraisal firm in form and substance reasonably satisfactory to such
Board to the effect that, after giving effect to the transactions set
forth in Article II hereof, neither Grace nor New Grace and Grace-
Conn. will be insolvent (such opinions to be dated as of the date of
the Merger Agreement, the date the Board of Directors of Grace
declares the Distribution and the Distribution Date) and (B) the
financial condition of each of Grace and Grace-Conn. satisfies the
requirements of Section 170 of the Delaware General Corporation Law
and Section 33-687 of the Connecticut Business Corporation Act,
respectively, such that the distribution of the common stock of
Packco to Grace by Grace-Conn. and the Distribution may be effected
without violating such Sections, and the Board of Directors of Grace
and the Board of Directors of Grace-Conn. shall in good faith have
determined that such requirements have been satisfied; and
(x) the transactions contemplated hereby shall be in compliance
with all applicable federal and state securities laws.
(b) Any determination made by the Board of Directors of Grace or
Grace-Conn. on behalf of such party hereto prior to the Distribution Date
concerning the satisfaction or waiver of any or all of the conditions set
forth in this Section shall be conclusive.
SECTION 8.2 Use of Grace Name and ▇▇▇▇. ▇▇▇▇▇ acknowledges
that Grace-Conn. shall own all rights in the "Grace" name and logo and
related tradenames and marks. Effective at the Distribution Date, Grace
shall change its name to a name that does not use the word "Grace" or any
variation thereof and shall itself, and shall cause each member of the
Packco Group to, cease all use of the "Grace" name as part of any corporate
name. As promptly as practicable after the Distribution Date, Grace shall,
and shall cause each member of the Packco Group to, cease all other use of
the "Grace" name and logo and related tradenames and marks, provided that
Grace may use inventory including any such name, logo, tradenames or marks
in existence as of the Distribution Date. Grace shall cause the Packco
Group to use such names, logos and marks during such transition period only
to the extent consistent with past practice and as Grace reasonably
believes is appropriate, and during the period of such usage Grace shall
cause the Packco Group to maintain the same standards of quality with
respect to such names, logos and marks as previously exercised. No such
material shall be used by the Packco Group after the six-month anniversary
of the Distribution Date.
SECTION 8.3 Complete Agreement. This Agreement, the Exhibits
and Schedules hereto and the agreements and other documents referred to
herein shall constitute the entire agreement between the parties hereto
with respect to the subject matter hereof (other than the Merger Agreement
and the schedules and exhibits thereto) and shall supersede all previous
negotiations, commitments and writings with respect to such subject matter.
SECTION 8.4 Expenses. Except as otherwise specifically
provided herein or in any other Transaction Agreement, New Grace shall bear
all costs and expenses (including all Debt Costs, Adjusted Foreign Transfer
Taxes, Severance Costs and losses of benefits) incurred by Grace, New Grace
and/or any members of their respective Groups (collectively, the
"Transaction Costs") in connection with the transactions contemplated by
this Agreement and the Other Agreements (including the Contribution (and
the related transfers, separations and/or allocations of Assets and
Liabilities), the Intragroup Spinoff, the Distribution and the
Recapitalization)); provided that Grace (for the account of Newco after the
Merger) agrees to bear: (i) the lesser of $50 million and 37% of the
aggregate amount of all Debt Costs, Adjusted Foreign Transfer Taxes and
Severance Costs; (ii) the lesser of $10 million and 37% of all other
Transaction Costs (excluding any Debt Costs, Adjusted Foreign Transfer
Taxes, Severance Costs and costs and expenses payable by New Grace or Grace
pursuant to Section 6.12 of the Merger Agreement) and (iii) the fees and
costs incurred in connection with the Grace Credit Agreement. "Severance
Costs" means the costs associated with the termination in connection with
the transactions contemplated hereby (including the Merger) of employment
of employees of Grace and Grace-Conn. located at the Grace corporate
headquarters. To the extent Transaction Costs are not included in the New
Grace Capital Contribution, Newco or New Grace shall promptly pay its share
of any such costs upon receipt of reasonable documentation relating to such
costs. Appropriate payment shall be made between the parties in respect of
Adjusted Foreign Transfer Taxes on the Distribution Date so that Adjusted
Foreign Transfer Taxes are borne in the proportions described above in this
Section 8.4. Appropriate payment shall be made between the parties in
respect of Adjusted Foreign Transfer Taxes and the amount calculated
pursuant to clause (c) of the definition of "New Grace Capital
Contribution" to the extent that such amounts estimated as of the
Distribution Date may be recalculated in a more accurate manner. New Grace
agrees that it shall pay, or cause Grace-Conn. to pay, all amounts payable
by New Grace pursuant to Section 6.12(a) of the Merger Agreement. Any
amount paid by one party to the other under this Agreement in respect of
Transaction Costs shall be treated, for tax purposes, as an adjustment to
the portion of the New Grace Capital Contribution contributed from Grace to
New Grace.
SECTION 8.5 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware
(other than the laws regarding choice of laws and conflicts of laws that
would apply the substantive laws of any other jurisdiction) as to all
matters, including matters of validity, construction, effect, performance
and remedies.
SECTION 8.6 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given
(and shall be deemed to have been duly given upon receipt) by delivery in
person, by standard form of telecommunications, by courier, or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to Grace or any member of the Packco Group:
Sealed Air Corporation
Park ▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to New Grace or any member of the New Grace Group:
▇. ▇. ▇▇▇▇▇ & Co.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section.
SECTION 8.7 Amendment and Modification. This Agreement may be
amended, modified or supplemented only by a written agreement signed by all
of the parties hereto and subject to the reasonable consent of SAC.
SECTION 8.8 Successors and Assigns; No Third-Party
Beneficiaries. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests and obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other parties. Except for
the provisions of Sections 4.2 and 4.3 relating to indemnities, which are
also for the benefit of the Indemnitees, this Agreement is solely for the
benefit of the parties hereto and their Subsidiaries and Affiliates and is
not intended to confer upon any other Persons any rights or remedies
hereunder.
SECTION 8.9 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 8.10 Interpretation. (a) The Article and Section
headings contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties hereto and shall
not in any way affect the meaning or interpretation of this Agreement.
(b) The parties hereto intend that the Distribution shall be a
distribution pursuant to the provisions of Section 355 of the Code, so that
no gain or loss shall be recognized for federal income tax purposes as a
result of such transaction, and all provisions of this Agreement shall be
so interpreted. The parties hereto do not intend to submit the
Distribution to the Internal Revenue Service for a private letter ruling
with respect to such nonrecognition, and any ultimate ruling or decision
that any gain or loss should be recognized for federal income tax purposes
shall not permit a rescission or reformation of this Agreement or
transactions contemplated hereby.
SECTION 8.11 Severability. If any provision of this Agreement
or the application thereof to any person or circumstance is determined by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to
persons or circumstances other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall
in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party.
SECTION 8.12 References; Construction. References to any
"Article," "Exhibit," "Schedule" or "Section," without more, are to
Articles, Exhibits, Schedules and Sections to or of this Agreement. Unless
otherwise expressly stated, clauses beginning with the term "including" set
forth examples only and in no way limit the generality of the matters thus
exemplified.
SECTION 8.13 Termination. Notwithstanding any provision
hereof, following termination of the Merger Agreement, this Agreement may
be terminated and the Distribution abandoned at any time prior to the
Distribution Date by and in the sole discretion of the Board of Directors
of Grace without the approval of any other party hereto or of Grace's
shareholders. In the event of such termination, no party hereto or to any
Other Agreement shall have any Liability to any Person by reason of this
Agreement or any Other Agreement.
SECTION 8.14 SAC Reasonable Consent. The parties hereto agree
that any actions to be taken by Grace or New Grace under this Agreement
that are not specifically required herein and that relate to Packco or the
Packaging Business (including, without limitation, the transactions
described in Article II) must be reasonably satisfactory to SAC.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
▇. ▇. ▇▇▇▇▇ & CO.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
▇. ▇. ▇▇▇▇▇ & CO.-CONN.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
GRACE SPECIALTY CHEMICALS, INC.
(to be renamed ▇. ▇. ▇▇▇▇▇ & Co.)
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
