EXHIBIT 10.1(a)
EXECUTION COPY
STOCK PURCHASE AGREEMENT
by and among
IMERYS USA, INC.
IMERYS, S.A.
and
ALLEGHANY CORPORATION
dated as of May 19, 2005
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS...................................................................... 2
1.1 General............................................................................... 2
1.2 Definitions........................................................................... 3
ARTICLE II. THE TRANSFERS; PURCHASE AND SALE OF THE SHARES................................... 16
2.1 The Transfers; Purchase and Sale of the Shares........................................ 16
2.2 The Closing........................................................................... 17
2.3 Deliveries at the Closing............................................................. 18
2.4 Adjustment to Exhibit C............................................................... 19
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLER..................................... 19
3.1 Organization and Qualification of the Seller.......................................... 19
3.2 Authorization, Validity and Enforceability............................................ 19
3.3 No Conflicts.......................................................................... 19
3.4 Consents and Approvals................................................................ 20
3.5 Organization and Qualification of the Company and the Subsidiaries.................... 20
3.6 Capitalization of the Company......................................................... 21
3.7 Capitalization, Organization and Qualification of Subsidiaries........................ 21
3.8 Title to Shares....................................................................... 22
3.9 Financial Statements.................................................................. 22
3.10 Liabilities........................................................................... 23
3.11 Inventory; Receivables................................................................ 23
3.12 Absence of Changes.................................................................... 23
3.13 Tax Matters........................................................................... 26
3.14 Employees; Collective Bargaining Agreements........................................... 27
3.15 Company Plans; International Plans; ERISA............................................. 28
3.16 Labor Relations....................................................................... 31
3.17 Real Property......................................................................... 32
3.18 Leasehold Interests................................................................... 36
3.19 Mining Claims, Surface Rights and Water Rights........................................ 37
3.20 Title to Assets....................................................................... 39
3.21 Condition and Sufficiency of Assets................................................... 39
3.22 Intellectual Property................................................................. 39
3.23 Joint Venture Interests............................................................... 40
3.24 Company Insurance Policies............................................................ 41
3.25 Certain Contracts..................................................................... 41
3.26 Compliance with Applicable Law........................................................ 43
3.27 Litigation............................................................................ 43
3.28 Warranties and Product Liability...................................................... 44
3.29 Environmental Matters................................................................. 44
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3.30 Transactions with Affiliates.......................................................... 46
3.31 No Brokers............................................................................ 46
3.32 Related Party Transactions............................................................ 46
3.33 Accounting Practices.................................................................. 47
3.34 Seller Umbrella Policies.............................................................. 47
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.................................. 47
4.1 Organization of the Purchaser......................................................... 47
4.2 Authorization, Validity and Enforceability............................................ 47
4.3 No Conflicts.......................................................................... 47
4.4 Consents and Approvals................................................................ 48
4.5 Investment Intent..................................................................... 48
4.6 Financing............................................................................. 48
4.7 No Brokers............................................................................ 48
ARTICLE V. COVENANTS........................................................................ 48
5.1 Conduct of Business Pending the Closing............................................... 48
5.2 Access to Information and Records; Confidentiality.................................... 52
5.3 Public Announcements.................................................................. 52
5.4 Furnishing Information................................................................ 53
5.5 Certain Notifications................................................................. 53
5.6 Commercially Reasonable Efforts....................................................... 53
5.7 Non-Competition....................................................................... 54
5.8 Interim Financial Statements.......................................................... 55
5.9 Intercompany Agreements............................................................... 55
5.10 Options............................................................................... 55
5.11 Employee Benefits..................................................................... 55
5.12 Oracle Contract....................................................................... 58
5.13 U.K. Pension.......................................................................... 58
5.14 Indemnification of Brokerage.......................................................... 59
5.15 WARN ACT.............................................................................. 59
5.16 Transfer Taxes........................................................................ 59
5.17 Notification of Certain Matters....................................................... 60
5.18 Repayment of Credit Agreement......................................................... 60
5.19 Termination of Oracle Contract........................................................ 60
5.20 Employee Shares....................................................................... 60
5.21 Option Shares......................................................................... 61
ARTICLE VI. CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO CLOSE........................... 61
6.1 Representations and Warranties........................................................ 61
6.2 Covenants............................................................................. 61
6.3 Consents.............................................................................. 61
6.4 No Proceedings........................................................................ 61
6.5 Antitrust Approvals................................................................... 62
6.6 Resignation of Directors.............................................................. 62
6.7 No Material Adverse Change............................................................ 62
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6.8 Deliveries............................................................................ 62
ARTICLE VII. CONDITIONS TO THE OBLIGATIONS OF THE SELLER TO CLOSE............................. 63
7.1 Representations and Warranties........................................................ 63
7.2 Covenants............................................................................. 64
7.3 Consents.............................................................................. 64
7.4 No Proceedings........................................................................ 64
7.5 Antitrust Approvals................................................................... 64
7.6 Deliveries............................................................................ 64
ARTICLE VIII. INDEMNIFICATION.................................................................. 65
8.1 Survival.............................................................................. 65
8.2 Indemnification Provisions for Benefit of the Purchaser............................... 66
8.3 Indemnification Provisions for Benefit of the Seller.................................. 68
8.4 Matters Involving Third Parties Other Than Tax Claims................................. 69
8.5 Matters Not Involving Third-Party Claims.............................................. 70
8.6 Collateral Source Recoveries.......................................................... 71
8.7 Purchase Price Adjustment............................................................. 71
8.8 Exclusive Remedy...................................................................... 71
ARTICLE IX. CERTAIN MATTERS.................................................................. 71
9.1 Seller Indemnity for Products Liability Claims........................................ 72
9.2 Indemnification Procedures............................................................ 74
9.3 Other Available Recoveries............................................................ 76
9.4 Workers' Compensation Claims.......................................................... 79
9.5 Disbursement of Holdback Amount....................................................... 80
9.6 Payment of Interest on Holdback Amount................................................ 82
9.7 Indemnification for Breach............................................................ 82
9.8 Treatment of Article IX Claim and Workers' Compensation Indemnity Payments............ 82
9.9 Exclusive Remedy for Products Liability Claims and for Workers' Compensation Claims... 83
ARTICLE X. TAX MATTERS...................................................................... 83
10.1 Tax Returns........................................................................... 83
10.2 Post-Closing Tax Matters.............................................................. 85
10.3 Section 338(h)(10) Elections.......................................................... 87
10.4 Seller Indemnity for Income Taxes..................................................... 90
10.5 Matters Involving Tax Claims.......................................................... 91
10.6 Purchaser's Tax Agreements............................................................ 92
10.7 Effect on Purchase Price.............................................................. 92
10.8 Exclusive Remedy for Income Tax Matters............................................... 92
10.9 Non-U.S. Income Taxes................................................................. 92
ARTICLE XI. TERMINATION...................................................................... 93
11.1 Termination of Agreement.............................................................. 93
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11.2 Effect of Termination................................................................. 93
ARTICLE XII. MISCELLANEOUS.................................................................... 94
12.1 Notices............................................................................... 94
12.2 Fees and Expenses..................................................................... 95
12.3 Entire Agreement; Amendments.......................................................... 95
12.4 Assignment; Binding Effect............................................................ 96
12.5 Severability.......................................................................... 96
12.6 No Third-Party Beneficiaries.......................................................... 96
12.7 Governing Law......................................................................... 96
12.8 Consent to Jurisdiction............................................................... 96
12.9 Waiver of Jury Trial.................................................................. 97
12.10 Interpretation........................................................................ 97
12.11 Captions.............................................................................. 97
12.12 Counterparts.......................................................................... 97
12.13 Extension; Waiver..................................................................... 97
12.14 Guarantee............................................................................. 97
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EXHIBIT EXHIBIT NAME
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A Form of International Agreement
B Description of Severance Plan and Completion Bonuses
C Cash Adjustment Schedule
D List of Environmental Audit Reports
E List of Title Reports
F Required Antitrust Approvals
G Special Indemnity
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of May 19, 2005 by and between IMERYS USA, Inc., a Delaware corporation
(the "Purchaser"), IMERYS, S.A., a French corporation (joining solely for the
purposes of Sections 12.1, 12.8, 12.9 and 12.14 hereunder) (the "Parent"), and
ALLEGHANY CORPORATION, a Delaware corporation (the "Seller").
RECITALS
WHEREAS, the Seller owns 1,033,870 shares of the common stock of
Mineral Holdings, Inc., a Delaware corporation (the "Company"), representing all
of the issued and outstanding shares of capital stock of the Company other than
the Outstanding Option Shares (such 1,033,870 shares of common stock of the
Company which are owned by the Seller as of the date hereof being herein
referred to as the "Shares"); and
WHEREAS, through its various direct and indirect Subsidiaries which
are corporations or other legal entities formed under the laws of the United
States or any State thereof (together with the Company, the "U.S. Companies")
and through its various direct and indirect Subsidiaries and interests in Joint
Ventures which are corporations or other legal entities formed under the laws of
jurisdictions other than the United States or any State thereof (the
"International Companies"), the Company is engaged in a worldwide filtration and
minerals business (the "Filtration and Minerals Business") consisting
principally of (i) mining, processing and distributing diatomite for various
uses including as a filtration aid and functional filler, and (ii) mining,
processing and distributing perlite for various uses including ceiling tiles,
filter aids and insulation boards; and
WHEREAS, the Seller wishes to sell, and the Purchaser wishes to
acquire, the Filtration and Minerals Business and the Shares; and
WHEREAS, the Purchaser and the Seller anticipate that, prior to the
Closing, the Purchaser or one or more of its Affiliates and various Subsidiaries
of the Company will enter into separate purchase agreements, each of which will
be substantially in the form of Exhibit A hereto (in each case, with such
changes thereto as may be mutually agreed by the Purchaser and the Seller),
providing for the purchase by the Purchaser or by an Affiliate of the Purchaser
of all or some of the International Companies and of all or some of the Joint
Venture Parent Companies (collectively, the "International Agreements"); and
WHEREAS, this Agreement sets forth the terms and conditions upon
which the Purchaser agrees to purchase from the Seller, and the Seller agrees to
sell to the Purchaser, the Shares;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties, intending to be legally bound hereby, agree as follows:
ARTICLE I.
DEFINITIONS
1.1 General. For all purposes of this Agreement, except as
otherwise expressly provided:
(a) the terms defined in this Article I have the meanings ascribed
to them herein, and include the plural as well as the singular;
(b) except as set forth herein, all accounting terms not otherwise
defined herein have the meanings ascribed thereto under GAAP;
(c) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections and
other subdivisions of the body of this Agreement, which are inserted for ease of
reference only and shall not affect the interpretation of this Agreement;
(d) all references in this Agreement to designated "Exhibits" and
"Schedules" are to the designated Exhibits and Schedules of this Agreement;
(e) pronouns, whether neuter or of either gender, shall include, as
appropriate, the other pronoun forms;
(f) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision;
(g) whenever the words "include," "includes," or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation," and shall not be deemed to be limited to matters of a
similar nature to those enumerated;
(h) references to "dollars" and the symbol "$" refer to the currency
of the United States, and the symbol "(pound)" refers to the British pound;
(i) a condition, event or circumstance is "material" to the Business
or any aspect thereof only if it is material in the context of the Minerals
Group taken as a whole and the term "material" or "materially" shall be so
understood; provided, however, the phrase "present fairly in all material
respects" in Section 3.9 shall have the meaning ordinarily ascribed to such
phrase in the accounting profession in the United States generally;
(j) the specification of any dollar amount in this Agreement is not
intended to imply that such amounts, or higher or lower amounts, are or are not
material, and the fact that something is disclosed in a Schedule does not
necessarily mean that it is relevant to such Schedule or that it meets the
materiality standard of such Schedule; and
(k) whenever amounts are expressed in a currency other than the
currency of the United States and such amounts are to be converted into the
United States currency
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pursuant to this Agreement, the exchange rate published in the WALL STREET
JOURNAL on the Business Day prior to the date on which such conversion is to be
made shall be used to calculate the exchange.
1.2 Definitions. The following terms when used in this
Agreement (including the Schedules and Exhibits hereto) shall have the following
meanings:
"Actuary's Certificate" has the meaning set forth in Section 5.13.
"Actuary's Wind Up Certificate" has the meaning set forth in Section
5.13.
"Affiliate" means with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. A Person will be deemed to control a Person if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
that with respect to the Purchaser, any Person who would be deemed to be an
Affiliate under the foregoing solely by reason of such Person's ownership of
shares of the Parent shall not be considered an Affiliate of the Purchaser for
purposes of this Agreement.
"Affiliate Agreements" has the meaning set forth in Section 3.30.
"Agreement" has the meaning set forth in the Preamble to this
Agreement.
"Applicable Law" means any applicable order, law, statute,
regulation, rule, ordinance, writ, injunction, directive, judgment, decree,
principle of common law, constitution or treaty enacted, promulgated, issued,
enforced or entered by any Governmental Entity, including any amendments thereto
that may be adopted from time to time.
"Applicable Rate" means, at any date of determination, the rate of
interest most recently announced by the United States Treasury Department as the
rate of interest on its ten-year notes as published in the WALL STREET JOURNAL.
"Approved Investments" means (i) the pending acquisition of assets
from Basin Perlite Company on terms which have been approved in writing by the
Purchaser, and (ii) any other acquisition from a third party of a business or an
equity interest in a company made by a member of the Minerals Group between the
date hereof and the Closing Date with the prior written approval of the
Purchaser.
"Arbiter" has the meaning set forth in Section 10.3(a).
"Article IX Claim" has the meaning set forth in Section 9.2(a).
"Audited Financial Statements" means the audited Group GAAP
Consolidated Balance Sheets of the Minerals Group as of December 31, 2004 and
2003 and the related Consolidated Statements of Operations, Consolidated
Statements of
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Stockholder's Equity and Consolidated Statements of Cash Flows for the years
then ended, including in each case the related notes and the auditor's report
thereon.
"Benefit Plans" has the meaning set forth in Section 5.11(c).
"Bonus Payments" has the meaning set forth in Section 5.11(f).
"Bonus Plan" means the World Minerals Inc. Management Incentive
Plan.
"Business" means the Filtration and Minerals Business conducted by
the Minerals Group, taken as a whole.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City are required or authorized by law
to be closed.
"Cash Adjustment" means an amount equal to the sum of the amounts
set forth in the last column of Exhibit C.
"Celite" means Celite Corporation, a Delaware corporation and a
wholly-owned Subsidiary of World Minerals.
"Closing" means the closing of the purchase and sale of the Shares
under this Agreement.
"Closing Date" means the date on which the Closing occurs.
"COBRA" means the health care continuation coverage described in
Section 4980B of the Code, Sections 601 through 608 of ERISA and any applicable
state law which requires the continuation of health care coverage.
"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.
"Collective Bargaining Agreements" means, collectively, the U.S.
Collective Bargaining Agreements and the International Collective Bargaining
Agreements.
"Company" has the meaning set forth in the First Recital of this
Agreement.
"Company Approvals" has the meaning set forth in Section 3.26.
"Company Insurance Policies" has the meaning set forth in Section
3.24.
"Company Options" means options to purchase shares of common stock
of the Company granted to participants in the Option Plan.
"Company Plans" has the meaning set forth in Section 3.15(a).
"Compensation Payments" has the meaning set forth in Section
5.11(d).
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"Competing Business" has the meaning set forth in Section 5.7(a).
"Completion Bonuses" has the meaning set forth in Section 5.11(a).
"Confidentiality Agreement" means the Confidentiality Agreement
between the Purchaser and the Seller dated October 20, 2003, as amended on May
26, 2004.
"Consents" has the meaning set forth in Section 3.4.
"Contracts" means all contracts, agreements, undertakings,
indentures, notes, debentures, bonds, loans, instruments, leases, mortgages,
commitments or binding arrangements.
"Credit Agreement" means the Credit Agreement, dated as of March 12,
2003, by and among the Company, World Minerals, designated Subsidiary borrowers,
the Banks named therein and Union Bank of California, N.A., as Sole Lead
Arranger, Administrative Agent and Collateral Agent, as amended or otherwise
modified from time to time.
"Credit Agreement Debt" means, at any date, the sum of the aggregate
principal amount of indebtedness outstanding under the Credit Agreement plus the
amount of interest accrued thereon.
"Credit Agreement Lien" means a Lien on any assets of the Company
and its Subsidiaries (including the Lien on the outstanding capital stock of
certain direct and indirect Subsidiaries of the Company) securing any
Liabilities under the Credit Agreement.
"Customer Contracts" has the meaning set forth in Section 3.25(a).
"Debt Repayment" has the meaning set forth in Section 2.1(b).
"Deferred Compensation Payment" means the amounts payable pursuant
to the Letter Agreement to Pay Deferred Compensation, made by Dicalite Espanola,
S.A. ("Espanola") for the benefit of Xxxx Xxxxxx Xxxxx (Operations Manager Rubi
(Barcelona)), dated March 29, 1991, as amended by a certain Acknowledgement of
Payment and Recalculation, dated November 20, 1995, from Xxxxx to Espanola and
the Letter Agreement to Pay Deferred Compensation, made by Espanola for the
benefit of X. Xxxxxx Mallart Estalella (Area Sales Manager, Southern Europe),
dated March 29, 1991, as amended by a certain Acknowledgement of Payment and
Recalculation, dated November 20, 1995, from Mallart to Espanola.
"Dividend" means any dividend or distribution in respect of the
capital stock of the Company declared or paid by the Company to the Seller. For
the avoidance of doubt, "Dividend" does not include any payment made by any of
the International Companies to any member of the Minerals Group.
"Dividend Equivalent Plan" means the World Minerals Inc. 2003
Dividend Equivalent Incentive Plan.
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"Domestic LTIP" means, collectively, the World Minerals Inc. 2002
Long Term Incentive Plan and the World Minerals Inc. 2004 Long Term Incentive
Plan.
"Effective Tax Rate" means the agreed upon rate for each Cash
Adjustment item to be applied to future payments or refunds of payments in
respect of such item as set forth on Exhibit C.
"Employee" means each current full-time or part-time employee of any
member of the Minerals Group, whether employed by a U.S. Company or by an
International Company, including any such employee who is on disability or leave
of absence.
"Employee Benefit Plans" has the meaning set forth in Section
3.15(a).
"Employment Agreements" has the meaning set forth in Section 3.14.
"Employment Tax Rate" means the agreed upon rate of employment taxes
for each Compensation Payment item to be applied to future payments or refunds
in respect of such item as set forth in Exhibit C, which rate is calculated net
of the benefit of any Income Tax deductions for such employment taxes.
"Environment" means all air, surface water, groundwater, or land,
including land surface or subsurface, including all fish, wildlife, biota and
all other natural resources.
"Environmental Approvals" means Permits issued under applicable
Environmental Laws.
"Environmental Audit Reports" means the environmental audit reports
listed on Exhibit D hereto, copies of which have previously been delivered to
the Purchaser.
"Environmental Claim" means any and all claims (including any
cross-claim or counterclaim, demand, chose in or cause of action, suit,
litigation, arbitral proceeding or proceeding by or before any Governmental
Entity or by any other Person) pursuant to or relating to any applicable
Environmental Law by any Governmental Entity or by any other Person based upon,
alleging, asserting, or claiming any (i) violation of or liability under any
Environmental Law, (ii) violation of any Environmental Approval, or (iii)
liability for investigatory costs, cleanup costs, removal costs, remedial costs,
response costs, natural resource damages, property damage, personal injury,
fines, or penalties arising out of, based on, resulting from, or related to
parts (i) and (ii) of this subparagraph or to the presence, Release, or
threatened Release into the Environment, of any Hazardous Substances at any
location, including any location to which Hazardous Substances or materials
containing Hazardous Substances were sent for handling, storage, treatment, or
disposal; provided, however, that the term "Environmental Claim" shall not
include any Products Liability Claim.
"Environmental Laws" means any and all federal, state, local, and
foreign statutes, civil and criminal laws (including principles of common law
and decisional law), statutes, codes, regulations, rules, decrees, orders,
judgments, injunctions, ordinances,
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Permits, or requirements of any Governmental Entity relating to the Environment,
safety, or health of humans or other living organisms, worker health and safety,
and/or governing the handling, use, generation, treatment, storage,
transportation, disposal, manufacture, distribution, formulation, packaging,
labeling, or Release of Hazardous Substances, whether now existing or
subsequently amended or enacted prior to Closing, including, without limitation
(i) the Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C. Sections 9601 et seq. ("CERCLA"), (ii) the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901
et seq., ("RCRA"), (iii) the Emergency Planning and Community Right to Know Act
(42 U.S.C. Sections 11001 et seq.), (iv) the Clean Air Act (42 U.S.C. Sections
7401 et seq.), (v) the Federal Water Pollution Control Act (33 U.S.C. Sections
1251 et seq.), (vi) the Toxic Substances Control Act (15 U.S.C. Sections 2601 et
seq.), (vii) the Hazardous Materials Transportation Act (49 U.S.C. Sections 5101
et seq.), (viii) the Safe Drinking Water Act (41 U.S.C. Sections 300f et seq.),
(ix) the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Section
136 et seq.), (x) the Oil Pollution Act of 1990 (33 U.S.C. Section 2701 et
seq.), (xi) any state, county, municipal or local statutes, laws or ordinances
similar or analogous to the federal statutes listed in parts (i) - (x) of this
subparagraph applicable to the U.S. Companies or the International Companies,
(xii) any amendments to the statutes, laws or ordinances listed in parts (i) -
(xi) of this subparagraph, regardless of whether in existence on the date hereof
but prior to Closing, (xiii) any rules, regulations, directives, orders or other
requirements of any Governmental Entity adopted pursuant to or implementing the
statutes, laws, ordinances and amendments listed in parts (i) - (xii) of this
subparagraph and (xiv) any common law doctrine, including, but not limited to,
negligence, nuisance, trespass, personal injury, or property damage related to
or arising out of the presence, Release, or exposure to a Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means any entity that is, or ever has been during
the prior six years, required to be aggregated with the Company as a single
employer under Sections 414(b), (c), (m) or (o) of the Code.
"Escrow Agent" means BNP Paribas or such other bank or trust company
as may be mutually agreed by the Purchaser and the Seller.
"Escrow Agreement" means an agreement to be entered into by and
among the Purchaser, the Seller and the Escrow Agent setting forth the terms of
the escrow of the Escrow Cash and the Stock Certificate contemplated by Section
2.2(b) hereof.
"Escrow Cash" has the meaning set forth in Section 2.2(b) hereof.
"Excess Oracle Payment" has the meaning set forth in Section 5.12.
"Excess Payments" has the meaning set forth in Section 5.11(d).
"Executive Payments" means certain payments to be made by World
Minerals, after the Closing, to the current Chief Executive Officer of World
Minerals pursuant to the Letter Agreement.
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"Federal Income Tax Payments" has the meaning set forth in Section
10.2(e).
"Filtration and Minerals Business" has the meaning set forth in the
Second Recital to this Agreement.
"Final Allocation" has the meaning set forth in Section 10.3(a).
"Final Seller's Tax Cost" has the meaning set forth in Section
10.3(a).
"Financing Documents" has the meaning given such term in the Credit
Agreement.
"First Holdback Release Payment" has the meaning set forth in
Section 9.5(c).
"GAAP" means generally accepted accounting principles as in effect
in the United States.
"General Liability Claim" means any claim brought by a third party
arising out of the operation of the Business during the Seller Period which is
eligible for coverage under any of the Seller Umbrella Policies, provided,
however, that the term "General Liability Claim" shall exclude any claim which
is a Products Liability Claim.
"Governmental Entity" means any federal, state, local or foreign
government, political subdivision, legislature, court, agency, department,
bureau, commission or other governmental or regulatory authority, body or
instrumentality, including any insurance or securities regulatory authority.
"Group GAAP" means generally accepted accounting principles and
methodologies as applied by the Minerals Group for the purpose of preparing the
Audited Financial Statements, in compliance with GAAP, including those described
in the footnotes to the 2004 Audited Financial Statements.
"Harborlite" means Harborlite Corporation, a Delaware corporation
and a wholly-owned Subsidiary of World Minerals.
"Hazardous Substance" means any pollutant, contaminant, hazardous
substance, hazardous waste, medical wastes, special waste, toxic substance,
petroleum, petroleum hydrocarbons, petroleum products, or petroleum-derived
substance, waste, or additive and any constituents thereof, asbestos or
asbestos-containing materials, polychlorinated biphenyls (PCBs), pesticides,
radon, urea formaldehyde, radioactive material, lead-based paint, or other
substance regulated by or under any Environmental Law, including when used in
connection with the U.S. Companies, RCRA hazardous wastes and CERCLA hazardous
substances.
"Holdback Amount" has the meaning set forth in Section 2.1(d).
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"Holdback Indemnification Payment" has the meaning set forth in
Section 9.5(a).
"Holdback Release Payment" means the First Holdback Release Payment
and each Subsequent Holdback Release Payment.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Income Tax" means all Taxes (x) based upon, measured by, or
calculated with respect to, net income or net receipts, proceeds or profits, or
(y) based upon, measured by, or calculated with respect to multiple bases
(including, but not limited to, corporate franchise and occupation Taxes) if
such Tax is primarily based upon, measured by, or calculated with respect to one
or more bases described in clause (x) above (for the avoidance of doubt, it is
agreed that, for purposes of this Agreement, the Italian IARP is an Income Tax).
"Income Tax Return" means a Tax Return in respect of an Income Tax.
"Indebtedness" means indebtedness for borrowed money owed by the
Company or (without duplication) any other member of the Minerals Group to any
bank, lending institution or other Person not a member of the Minerals Group.
"Indemnified Party" and "Indemnifying Party" have the respective
meanings set forth in Section 8.4(a).
"International Agreement" has the meaning set forth in the Fourth
Recital of this Agreement.
"International Business" means the filtration and minerals business
conducted by the International Companies, taken as a whole.
"International Collective Bargaining Agreements" has the meaning set
forth in Section 3.14(a).
"International Companies" has the meaning set forth in the Second
Recital of this Agreement. For purposes of this Agreement, World Minerals
Americas LLC BV is deemed to be an International Company.
"International Income Tax Payments" has the meaning set forth in
Section 10.2(e).
"International LTIP" means the World Minerals Inc. 2002
International Long-Term Incentive Plan.
"International Plans" has the meaning set forth in Section 3.15(a).
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"International Proceeds" means an amount equal to the aggregate
proceeds of sale of the International Companies received by the Company and its
Affiliates pursuant to the International Agreements.
"International Real Property" has the meaning set forth in Section
3.17(b)(i).
"International Section 338 Election" has the meaning set forth in
Section 10.3.
"International Transfer Taxes" has the meaning set forth in Section
5.14.
"Investment Broker" has the meaning set forth in Section 3.31.
"IRS" means the Internal Revenue Service.
"Joint Venture Agreements" mean the agreements related to the
formation of the Joint Ventures, together with all amendments thereto entered
into prior to the date of this Agreement.
"Joint Venture Parent Company" means each of (i) Celite Jilin Inc.,
which as of the date hereof owns 71.76% of Changbai Celite Diatomite Company
Limited, (ii) Celite Minerals China Corporation, which as of the date hereof
owns 73.48% of Linjiang Xxx-Xxx Celite Diatomite Company Limited, and (iii)
Celite China Inc., which as of the date hereof owns 77.33% of Linjiang Celite
Diatomite Company China Limited.
"Joint Ventures" means each of (i) Changbai Celite Diatomite Company
Limited, (ii) Linjiang Xxx-Xxx Celite Diatomite Company Limited, and (iii)
Linjiang Celite Diatomite Company Limited.
"Knowledge," "Knowing" and other correlative terms mean (x) with
respect to the Company, any fact or matter actually known to Xxxxxx X. Xxxxx,
Xxxxxx X. Xxxx, Xxxxx X. Xxxxxx, Xxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxx X. Xxxxxxxxxx,
Xxxx X. Xxxxxxx, J. Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxxxxx or Xxxxx xxx Xxxxxx and
(y) with respect to the Seller, any fact or matter actually known to Xxxxxx X.
Xxxxx, Xxxxxx X. Xxxx or Xxxxx X. Xxxxxx. For purposes of Sections 3.17, 3.18,
3.19 and 3.29 of this Agreement, the term "Knowledge" shall include Knowledge
obtained after due inquiry. The parties agree that for purposes of the preceding
sentence, (i) verbal inquiry of the plant managers of the plants operated by the
Principal Subsidiaries, (ii) review of the Environmental Audit Reports, and
(iii) review of the Title Reports, taken together, will be deemed sufficient to
constitute due inquiry. With regard to both the Company and the Seller, the term
"Knowledge" does not include any fact or matter actually known to Xxxxxx X.
Xxxx, unless Xx. Xxxx obtained such Knowledge solely and exclusively in his
capacity as Secretary and/or Senior Vice President of Seller and did not obtain
such Knowledge as a result of any attorney-client communication in his capacity
as General Counsel of Seller. The parties acknowledge and agree that no fact or
matter that Xx. Xxxx knows as a result of any attorney-client communication in
his capacity as General Counsel of Seller has been or will be provided to
Purchasers. The parties further acknowledge and agree that no Knowledge of Xx.
Xxxx in any way touches upon, relates to, compromises, or waives the
attorney-client privilege between Seller and Xx. Xxxx.
10
"KPMG" means KPMG LLP, certified public accountants.
"Latest Balance Sheet" means the balance sheet as of December 31,
2004 included in the Audited Financial Statements.
"Leasehold Interests" has the meaning set forth in Section 3.18(a).
"Letter Agreement" means the letter agreement between World Minerals
and the current Chief Executive Officer of World Minerals amending his
Employment Agreement.
"Liability" means any direct or indirect indebtedness, liability, or
other obligation, whether fixed or unfixed, secured or unsecured, accrued,
absolute, contingent or otherwise.
"Lien" means any lien, pledge, mortgage, security interest, charge,
adverse claim or other encumbrance of any kind.
"Loan Parties" has the meaning set forth in the Credit Agreement.
"Losses" has the meaning set forth in Section 8.2.
"Manville" means, collectively, Xxxxx Xxxxxxxx Corporation, Inc.,
f/k/a/ Xxxxx Xxxxxxxx International, Inc., f/k/a/ Manville Sales Corporation,
and its Affiliates.
"Manville Agreement" means, collectively, the Manville Asset
Purchase Agreement, the European Stock Purchase Agreement (as defined in the
Manville Asset Purchase Agreement) and the Joint Venture Stock Purchase
Agreement (as defined in the Manville Asset Purchase Agreement).
"Manville Asset Purchase Agreement" means the Asset Purchase
Agreement, dated as of July 1, 1991, by and among Celite Holdings Corporation,
Celite Corporation, a wholly-owned subsidiary of Celite Holdings Corporation, as
buyer, and Manville Sales Corporation, as seller.
"Manville Business" means the filtration and minerals business
operated by Manville prior to the closing of the Manville Agreement on July 31,
1991.
"Manville Claims" has the meaning set forth in the first paragraph
of Article IX.
"Manville Indemnification Obligation" has the meaning set forth in
the first paragraph of Article IX.
"Manville Period" means the period prior to July 31, 1991 during
which Manville operated the Manville Business.
11
"Material Adverse Effect" means any material adverse effect on the
business, operations, financial condition or results of operations of the
Minerals Group, taken as a whole, other than effects caused by (i) changes in
general economic or securities market conditions, (ii) changes in interest rate
levels, (iii) changes in currency exchange rates, (iv) the identity of the
Purchaser as the buyer of the Minerals Group, (v) the announcement of the
purchase of the Minerals Group by the Purchaser, or (vi) the conduct of the
Purchaser prior to the Closing.
"Material Contracts" has the meaning set forth in Section 3.25(a).
"Minerals Group" means, collectively, the Company, the U.S.
Companies and the International Companies.
"Mining Law of 1872" has the meaning set forth in Section
3.19(a)(i).
"No-Deductible Periods" has the meaning set forth in Section 9.4(b).
"Non-U.S. Income Taxes" has the meaning set forth in Section 10.9.
"Obligations" has the meaning set forth in Section 12.14.
"Option Plan" means the World Minerals Inc. 2001 Stock Option Plan.
"Option Shares" means shares of common stock of the Company issued
upon the exercise of Company Options, including the Outstanding Option Shares.
"Oracle Contract" means Ordering Document Number
US-343455-OD-27-JUL-2004 by and between World Minerals and Oracle Corporation,
with an effective date of July 27, 2004, as such ordering document may have been
or may be amended, modified or terminated prior to or subsequent to the date of
this Agreement.
"Outstanding Option Shares" means the 550 Option Shares which are
issued and outstanding as of the date of this Agreement.
"Overpayments" has the meaning set forth in Section 5.11(d).
"Parent" has the meaning set forth in the Preamble to this
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" means all licenses, certificates of authority, permits,
orders, consents, approvals, registrations, authorizations, qualifications and
filings under any applicable federal, state, local or foreign law or with any
Governmental Entity.
"Permitted Debt" means (i) indebtedness under the Credit Agreement
and (ii) other Indebtedness permitted by the Credit Agreement.
"Permitted Liens" means (i) Liens for water and sewer charges and
Taxes not yet due and payable or being contested in good faith (and, in each
case, for which adequate
12
accruals or reserves have been established by the Company), (ii) mechanics',
carriers', workers', repairers', materialmen's, warehousemen's and other similar
liens arising or incurred in the ordinary course of business with respect to a
Liability that is not yet due or delinquent and that is not material in amount,
and (iii) as related to the U.S. Real Property and the International Real
Property only, easements, covenants, conditions and restrictions (including
building and use restrictions) of record that do not materially interfere with
the use of such U.S. Real Property or International Real Property as currently
used.
"Person" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint stock company, trust,
unincorporated organization, Governmental Entity or other entity or
organization.
"Post-Closing Tax Period" means any Taxable Period that begins after
the Closing Date and that portion of any Straddle Period for which the Seller is
not responsible as set forth in Section 10.4.
"Pre-Closing Income Tax Return" has the meaning set forth in Section
10.1(b).
"Pre-Closing Tax Period" means any Taxable Period ending on or
before the Closing Date and the portion of any Straddle Period for which the
Seller is responsible as set forth in Section 10.4.
"Principal Subsidiaries" means World Minerals, Celite, Harborlite,
Celite Mexico S.A. de C.V., Celite Hispanica, S.A. and Europerlita Espanola,
S.A.
"Products Liability Claim" means any claim brought by a third party
arising out of any bodily or personal injury, property damage or economic loss
to the extent such injury or loss arises from the alleged defective design or
hazardous or toxic nature of products or materials mined, manufactured,
warehoused, handled, distributed or sold or services performed by (i) the
Manville Business at any time during the Manville Period or (ii) the Business at
any time from and after July 31, 1991.
"Property" means any real, personal or mixed property, whether
tangible or intangible.
"Proposed Allocation" has the meaning set forth in Section 10.3(a).
"Proprietary Rights" has the meaning set forth in Section 3.22.
"Purchase Price" has the meaning set forth in Section 2.1(c).
"Purchaser" has the meaning set forth in the Preamble to this
Agreement.
"Purchaser Claims" has the meaning set forth in Section 9.1(d).
"Purchaser Deductible" has the meaning set forth in Section 8.3.
"Purchaser Indemnitees" has the meaning set forth in Section 8.2.
13
"Purchaser Period" means the period from and after the Closing.
"Purchaser's Fee" has the meaning set forth in Section 4.7.
"Qualifying Loss" has the meaning set forth in Section 9.5(a).
"Release" shall mean any release, pumping, pouring, emptying,
injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge,
disposal or emission.
"Representatives" means, with regard to any party, the accountants,
counsel and other authorized representatives of such party.
"Section 338 Elections" has the meaning set forth in Section
10.3(a).
"Section 338 Forms" has the meaning set forth in Section 10.3(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning set forth in the Preamble to this
Agreement.
"Seller Claims" has the meaning set forth in Section 9.1(b).
"Seller Deductible" has the meaning set forth in Section 8.2.
"Seller Indemnitees" has the meaning set forth in Section 8.3.
"Seller Period" means the period from July 31, 1991 through the
Closing.
"Seller Umbrella Policies" means the umbrella insurance policies
maintained by the Seller on a group-wide basis for the benefit of the Seller and
its Subsidiaries (including the Minerals Group) for policy periods commencing on
and after April 1, 1996 and ending on or prior to April 30, 2005.
"Seller's Fee" has the meaning set forth in Section 3.31.
"Seller's Tax Cost" has the meaning set forth in Section 10.3(a).
"Seller's 338 Companies" has the meaning set forth in Section
10.3(a).
"SERP" means the World Minerals Inc. Supplemental Executive
Retirement Plan, as amended, effective January 1, 2004 and the letter agreement
from Xxxx X. Xxxxx, Xx., as Chairman of the Compensation Committee, to Xxxxxxx
X. Xxxxx, Xx. dated July 7, 1999.
"Severance Plan" has the meaning set forth in Exhibit B.
"Shares" has the meaning set forth in the First Recital of this
Agreement.
"Special Indemnity" has the meaning set forth in Exhibit G.
14
"Specified 3.24 Matter" has the meaning set forth in Section 8.2.
"State Income Taxes" has the meaning set forth in Section 10.2(e).
"Stock Certificate" has the meaning set forth in Section 2.2(b).
"Straddle Period" means a Taxable Period that begins before and ends
after the Closing Date.
"Subsequent Holdback Release Payment" has the meaning set forth in
Section 9.5(c) hereof.
"Subsidiary" and "Subsidiaries" means, with respect to any Person,
any corporation, partnership, limited liability company, joint venture or other
entity in which such Person (i) owns, directly or indirectly, fifty percent
(50%) or more of the outstanding voting securities, equity interests, profits
interest or capital interest, (ii) is entitled to elect at least a majority of
the board of directors or similar governing body, or (iii) in the case of a
limited partnership or limited liability company, is a general partner or
managing member, respectively; provided, however, that for purposes of this
Agreement and the International Agreements, the term "Subsidiary" shall exclude
the Joint Ventures.
"Tax" and "Taxes" mean all income, profits, gains, gross receipts,
net worth, premium, value added, ad valorem, sales, use, excise, stamp,
transfer, franchise, withholding, payroll, employment, occupation, workers'
compensation, disability, severance, unemployment insurance, social security and
property taxes, and all other taxes, levies, fees, imposts, duties and charges
of any kind whatsoever, together with any interest, penalties and additions
thereto imposed by any Governmental Entity ("Taxing Authority"), including all
amounts imposed as a result of being a member of an affiliated or combined
group.
"Tax Claim" has the meaning set forth in Section 10.5.
"Tax Return" means all returns, reports, elections, estimates,
declarations, information statements and other forms and documents (including
all schedules, exhibits, and other attachments thereto) relating to, and
required to be filed or maintained in connection with the calculation,
determination, assessment or collection of, any Taxes (including estimated
Taxes).
"Tax Sharing Agreement" means the Tax Sharing Agreement in effect
between the Company and the Seller as of the date of this Agreement.
"Taxable Period" means any taxable year or any other period that is
treated as a taxable year (including any taxable period ending on the Closing
Date or beginning on the day following the Closing Date) with respect to which
any Tax may be imposed under any statute, rule, or regulation.
"Third-Party Claim" has the meaning set forth in Section 8.4(a).
15
"Title Reports" means the title reports listed on Exhibit E hereto.
"Transfer" means the transfer and delivery by the appropriate
Subsidiary of the Company of the stock certificate or other instrument
representing the ownership interest in each International Company or Joint
Venture Parent Company to be purchased pursuant to an International Agreement,
in exchange for receipt from the Purchaser of the purchase price therefor,
pursuant to the terms of the applicable International Agreement.
"Transfer Date" means the date on which the Transfers take place
(or, if the Transfers do not all take place on the same day, the date on which
the first Transfer takes place).
"Transfer Taxes" has the meaning set forth in Section 5.14.
"Treasury Regulations" means the final, temporary and proposed
income tax regulations promulgated under the Code by the United States Treasury
Department, as amended from time to time.
"Union Bank" means Union Bank of California, N.A.
"U.K. Pension Scheme" means The Harborlite/Celite U.K. Pensions
Scheme.
"U.S. Business" means the filtration and minerals business conducted
by the U.S. Companies taken as a whole.
"U.S. Collective Bargaining Agreements" has the meaning set forth in
Section 3.14.
"U.S. Companies" has the meaning set forth in the Second Recital of
this Agreement.
"U.S. Real Property" has the meaning set forth in Section
3.17(a)(i).
"Unpatented Mining Claims" has the meaning set forth in Section
3.19(a)(i).
"WARN Act" means the Worker Adjustment and Retraining Notification
Act of 1988.
"World Minerals" means World Minerals Inc., a Delaware corporation
and a wholly-owned Subsidiary of the Company.
ARTICLE II.
THE TRANSFERS; PURCHASE AND SALE OF THE SHARES
2.1 The Transfers; Purchase and Sale of the Shares.
(a) The Purchaser and the Seller agree that the International
Proceeds are expected to be in an amount that, when taken together with the
available cash on hand at the
16
Company and its Subsidiaries, will be sufficient to effect the Debt Repayment as
contemplated by Section 2.1(b) below. The Purchaser agrees that, to the extent
the sum of the International Proceeds and available cash on hand at the Company
and its Subsidiaries is not sufficient to effect the Debt Repayment, the
Purchaser will make a loan to the Company and/or its Subsidiaries in the amount
of the difference.
(b) It is the intention of the parties that all of the Transfers
will take place either on the Business Day prior to the Closing Date or
immediately prior to the Closing hereunder. Prior to the Closing hereunder, at
the direction of the Seller, the Company will, and will cause its Subsidiaries
to, take all required action to cause all or a portion of the International
Proceeds to be applied to the repayment of the Credit Agreement Debt (the "Debt
Repayment"). The Debt Repayment will be made after the completion of all of the
Transfers and prior to the Closing hereunder.
(c) Upon the terms and subject to the conditions set forth in this
Agreement, the Purchaser agrees to purchase from the Seller, and the Seller
agrees to sell, assign, transfer and deliver to the Purchaser, the Shares, free
and clear of all Liens (other than any restrictions on the transferability of
the Shares expressly provided in the Securities Act and any applicable state
securities laws), for a purchase price (the "Purchase Price") equal to (x)
$230,000,000 less (y) the Cash Adjustment.
(d) Subject to and in accordance with the provisions of this
Agreement, at the Closing, the Purchaser shall cause to be held back from the
Purchase Price and retain in its own accounts, as security for the Seller's
obligation to indemnify the Purchaser for certain Seller Claims as set forth in
Section 9.1(b) hereof, an amount equal to $10,000,000 (such amount, as it is
reduced from time to time pursuant to the provisions of Section 9.5 hereof, the
"Holdback Amount"). The Holdback Amount shall be disbursed from time to time
during the period from the Closing Date through the tenth anniversary thereof in
accordance with the provisions of Section 9.5 hereof. Interest shall be payable
on the Holdback Amount as set forth in Section 9.6 hereof.
2.2 The Closing.
(a) Subject to the satisfaction or waiver of all of the conditions
to the Closing set forth in Articles VI and VII, the Closing shall take place at
the offices of Xxxxx Xxxxxxxxxx LLP, 1301 Avenue of the Americas, New York, New
York at 10:00 a.m., New York City time, on the last Business Day of the month in
which all of the conditions set forth in Articles VI and VII (other than those
conditions that are contemplated to be satisfied at the Closing itself) have
been satisfied or waived, or at such other time or place as may be mutually
agreed upon by the parties hereto. The date on which the Closing occurs is
referred to herein as the "Closing Date."
(b) In the event that all of the Transfers do not take place on the
Transfer Date, or that the Closing does not take place on the Transfer Date,
then (i) all of the Transfers, when they have occurred, will be deemed to have
occurred on the Transfer Date and (ii) when the Closing occurs, the Closing
shall be given effect as of the Transfer Date. If the Closing does not take
place on the Transfer Date, then, prior to the first Transfer, (i)
17
the Seller shall deliver to the Purchaser on the Transfer Date the certificates
described in Section 6.8 hereof, which certificates shall be dated the Transfer
Date, and upon delivery of such certificates from the Seller to the Purchaser,
the conditions to Closing set forth in Sections 6.1, 6.2, 6.7 and 6.8 hereof
shall be deemed to be satisfied, (ii) the Seller shall cause the Persons listed
on Schedule 6.6 hereto to deliver the resignations required to be delivered by
Section 6.6 hereof, and upon delivery of such resignations, the condition to
Closing set forth in Section 6.6 hereof shall be deemed to be satisfied, (iii)
the Purchaser shall deliver to the Seller a certificate, which certificate shall
be dated the Transfer Date and signed by an executive officer of the Purchaser,
stating that the conditions to Closing set forth in Sections 6.3, 6.4 and 6.5
are satisfied or, to the extent not satisfied, waived, and upon the delivery of
such certificate from the Purchaser to the Seller, the conditions to Closing set
forth in Sections 6.3, 6.4 and 6.5 shall be deemed to be satisfied, (iv) the
Purchaser shall deliver to the Seller on the Transfer Date the certificates
described in Section 7.6 hereof, which certificates shall be dated the Transfer
Date, and upon the delivery of such certificates from the Purchaser to the
Seller, the conditions to Closing set forth in Section 7.1, 7.2 and 7.6 hereof
shall be deemed to be satisfied, and (v) the Seller shall deliver to the
Purchaser a certificate, which certificate shall be dated the Transfer Date and
signed by an executive officer of the Seller, stating that the conditions to
Closing set forth in Sections 7.3, 7.4 and 7.5 are satisfied or, to the extent
not satisfied, waived, and upon the delivery of such certificate from the Seller
to the Purchaser, the conditions to Closing set forth in Sections 7.3, 7.4 and
7.5 shall be deemed to be satisfied. Upon the delivery on the Transfer Date of
all of the certificates, resignations and evidence required to be delivered on
the Transfer Date by the preceding sentence of this Section 2.2(b) in the event
that the Closing does not take place on the Transfer Date, (x) all of the
conditions to Closing set forth herein shall be deemed to be satisfied, (y) the
Purchaser shall deposit with the Escrow Agent an amount in cash equal to the
Purchase Price less the Holdback Amount (the "Escrow Cash") and (z) the Seller
shall deposit with the Escrow Agent certificates representing the Shares, duly
endorsed in blank for transfer or accompanied by stock powers duly endorsed in
blank and with all appropriate stock Transfer Tax stamps affixed (the "Stock
Certificate"). Following such deposit, the Escrow Agent shall hold the Escrow
Cash and the Stock Certificate in accordance with the terms set forth in the
Escrow Agreement.
2.3 Deliveries at the Closing. At the Closing:
(a) the Seller shall deliver to the Purchaser (i) the Stock
Certificate and (ii) except as set forth in Section 2.2(b) above with regard to
the certificates and resignations required to be delivered on the Transfer Date
in the event that the Closing does not take place on the Transfer Date, all
other documents and instruments required hereunder to be delivered by the Seller
to the Purchaser at the Closing; and
(b) the Purchaser shall (i) pay to the Seller the Purchase Price
less the Holdback Amount by wire transfer of immediately available funds to an
account or accounts designated by the Seller in a written notice delivered to
the Purchaser not later than seven (7) Business Days prior to the Closing Date,
and (ii) except as set forth in Section 2.2(b) above with regard to the
certificates required to be delivered on the Transfer Date in the event that the
Closing does not take place on the Transfer Date, deliver to the Seller all
other
18
documents and instruments required hereunder to be delivered by the Purchaser to
the Seller at the Closing.
2.4 Adjustment to Exhibit C. At least five (5) Business Days
prior to the proposed Closing Date, the Seller shall cause the chief financial
officer of World Minerals to deliver a certificate setting forth any changes to
the amounts set forth in the first column of Exhibit C, Cash Adjustments (other
than for the items identified as the U.K. Pension, the Spanish Deferred
Compensation and the Executive Payments, which shall not be changed), based upon
changes in such amounts through and including the date fifteen (15) days prior
to the proposed Closing Date, which certificate shall be accompanied by such
documentation in support of the changes set forth on such certificate as the
Purchaser shall reasonably request. Prior to the Closing, Exhibit C shall be
amended to change the amounts in the first column based on such certificate,
with further adjustments based on the Employment Tax Rate and the Effective Tax
Rate as set forth on Exhibit C (which rates also shall not be changed) to arrive
at the new cash adjustment for each such item in column six, Cash Adjustment, of
Exhibit C. In addition (and notwithstanding the parenthetical in the immediately
preceding sentence), the Seller and the Purchaser will consult in good faith and
reasonably agree to correct, prior to the Closing, the amount of the Employment
Tax Rate on Exhibit C only in respect of recipients of such payments resident in
Spain and France, so as to more accurately reflect the employment-type Taxes
imposed on the payor of such compensation as a result of the payment of that
type of additional compensation to the specified individual.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as
follows:
3.1 Organization and Qualification of the Seller. The Seller
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite power and authority to own,
lease and operate its assets and Properties (including the Shares) and to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby, including the sale of the
Shares.
3.2 Authorization, Validity and Enforceability. The execution,
delivery and performance of this Agreement by the Seller and the consummation of
the transactions contemplated hereby by the Seller have been duly and validly
authorized by all necessary corporate action on the part of the Seller. This
Agreement has been duly executed and delivered by the Seller and constitutes the
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms.
3.3 No Conflicts. Assuming compliance with the matters
referred to in Section 3.4 below, except as set forth in Schedule 3.3, the
execution, delivery and performance by the Seller of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
conflict with, result in any breach or violation of,
19
constitute a default under (or an event that with the giving of notice or the
lapse of time or both would constitute a default under) (a) the certificate of
incorporation, bylaws or other charter or organizational documents of the
Seller, the Company or any of its Subsidiaries, (b) any material Contract to
which any of the Seller, the Company or any of its Subsidiaries is a party or by
or to which any of them or their assets or Properties (including the Shares) may
be bound or subject, or (c) any applicable order, writ, judgment, injunction,
award, decree, law, statute, ordinance, rule or regulation, other than, in the
case of each of (b) and (c), any such items that would not be reasonably likely
to, individually or in the aggregate, have a Material Adverse Effect or a
material adverse effect on the ability of the Seller to execute and deliver this
Agreement, to perform its obligations hereunder or to consummate the
transactions contemplated hereby; provided, however, that no representation is
made in this Section 3.3 regarding any conflict, breach, violation or default
which may arise as a result of the change in control of any of the International
Companies caused by the purchase of such International Company by the Purchaser
under the applicable International Agreement unless such conflict, breach,
violation or default would also have arisen if the Purchaser had indirectly
acquired beneficial ownership of such International Company under this
Agreement.
3.4 Consents and Approvals. Except (i) for compliance with (x)
the applicable requirements of the HSR Act, (y) any other applicable
requirements of foreign antitrust, competition, trade regulation or investment
laws, and (z) any applicable environmental transfer statutes and (ii) as set
forth in Schedule 3.4, no consent, approval, authorization, license or order of,
registration or filing with, or notice to (collectively, "Consents"), any
Governmental Entity or any other Person is required to be obtained, made or
given by the Seller, the Company or any of its Subsidiaries in connection with
the execution and delivery by the Seller of this Agreement, the performance by
the Seller of its obligations hereunder and the consummation of the transactions
contemplated hereby, except Consents which, if not obtained or made, would not
be reasonably likely to, individually or in the aggregate, have a Material
Adverse Effect or a material adverse effect on the ability of the Seller to
execute and deliver this Agreement, to perform its obligations hereunder or to
consummate the transactions contemplated hereby; provided, however, that no
representation is made in this Section 3.4 regarding any Consent that may be
required as a result of the purchase of any of the International Companies by
the Purchaser under the applicable International Agreement unless such Consent
would also have been required if the Purchaser had indirectly acquired
beneficial ownership of such International Company under this Agreement.
3.5 Organization and Qualification of the Company and the
Subsidiaries. Except as set forth in Schedule 3.5, the Company and each of its
Subsidiaries are corporations duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation and
have all requisite corporate power and authority to own their Properties and to
conduct their respective businesses as currently being conducted. The Company
and each of its Subsidiaries which is a U.S. Company are duly qualified or
licensed to do business and are in good standing as a foreign entity in each of
the jurisdictions set forth in Schedule 3.5. The Company and each of its
Principal Subsidiaries are duly qualified and in good standing as a foreign
corporation in all jurisdictions in which the nature of their respective
businesses or the ownership of their
20
respective Properties makes such qualification necessary, in each case with such
exceptions as would not be reasonably likely to, individually or in the
aggregate, have a Material Adverse Effect.
3.6 Capitalization of the Company.
(a) Schedule 3.6(a) sets forth the designation, par value and the
number of authorized, issued and outstanding shares of capital stock of the
Company. The issued and outstanding capital stock of the Company consists solely
of the Shares. Except as set forth in Schedule 3.6(a), no other class of equity
securities, preferred stock, bonds, debentures, notes, other evidences of
indebtedness for borrowed money or other securities of any kind of the Company
(except for the Shares) is authorized, issued or outstanding. All of the Shares
are duly authorized, validly issued, fully paid and non-assessable, and are
owned of record and beneficially by the Seller, free and clear of any Lien
(other than any restrictions on the transferability of the Shares expressly
provided in the Securities Act and any applicable state securities laws).
(b) The Company has not issued any securities in violation of any
preemptive or similar rights. Except for this Agreement, the Company Options
granted under the Option Plan and as set forth in Schedule 3.6(b), there are no
subscriptions, options, warrants, calls, commitments, preemptive rights or other
rights of any kind (absolute, contingent or otherwise) to purchase or otherwise
receive, nor are there any securities or instruments of any kind convertible
into or exchangeable for, any capital stock (including outstanding, authorized
but unissued, unauthorized, treasury or other shares thereof) or other equity
interest or evidence of indebtedness for borrowed money of the Company. Except
as set forth in Schedule 3.6(b), neither the Company nor the Seller is a party
to any agreement with a third party which places any restriction upon, or which
creates any voting trust, proxy, or other agreement or understanding with
respect to, the voting, purchase, redemption, acquisition or transfer of, or the
declaration or payment of any dividend or distribution on, the Shares.
3.7 Capitalization, Organization and Qualification of
Subsidiaries.
(a) Schedule 3.7(a) lists each of the Company's directly and
indirectly owned Subsidiaries. Schedule 3.7(a) sets forth the designation, par
value and the number of authorized, issued and outstanding shares of capital
stock for each of the Company's Subsidiaries and the number and percentage
ownership interest of the Company (if direct) or of the Company's Subsidiary (if
indirect) in each such Subsidiary. Except as set forth in Schedule 3.7(a)
hereto, no other class of equity securities, preferred stock, bonds, debentures,
notes, other evidences of indebtedness for borrowed money or other securities of
any kind of any of the Company's Subsidiaries is authorized, issued or
outstanding. All of the outstanding shares of capital stock of each of the
Company's Subsidiaries are duly authorized, validly issued, fully paid and
non-assessable. As of the date of this Agreement, except for shares of
International Companies which are owned by Employees, all of the outstanding
shares of capital stock of each of the Company's Subsidiaries are owned of
record and beneficially by the Company or one or more of its Subsidiaries, in
each case free and clear of any Lien except for the Credit Agreement Lien. At
the time of the Closing,
21
except for shares of International Companies which are owned by Employees as set
forth on Schedule 3.7(a), all of the outstanding shares of capital stock of each
of the Company's Subsidiaries will be owned of record and beneficially by the
Company or one or more of its Subsidiaries free and clear of any Lien.
(b) The Company's Subsidiaries have not issued any securities in
violation of any preemptive or similar rights. Except as set forth in Schedule
3.7(b), there are no subscriptions, options, warrants, calls, commitments,
preemptive rights or other rights of any kind (absolute, contingent or
otherwise) to purchase or otherwise receive, nor are there any securities or
instruments of any kind convertible into or exchangeable for, any capital stock
(including outstanding, authorized but unissued, unauthorized, treasury or other
shares thereof) or other equity interest or evidence of indebtedness for
borrowed money of any of the Company's Subsidiaries. Except as set forth in
Schedule 3.7(b), neither the Company nor any of its Subsidiaries is a party to
any agreement with a third party (other than the Company or another Subsidiary
of the Company) which places any restriction upon, or which creates any voting
trust, proxy, or other agreement or understanding with respect to, the voting,
purchase, redemption, acquisition or transfer of, or the declaration or payment
of any dividend or distribution on, any shares of the capital stock of any of
the Subsidiaries of the Company. Except as set forth in Schedule 3.7(b), there
are no restrictions upon, or voting trusts, proxies, or other agreements or
understandings with respect to, the voting, purchase, redemption, acquisition or
transfer of, or the declaration or payment of any dividend or distribution on,
any shares of capital stock of any of the Subsidiaries of the Company.
3.8 Title to Shares. The issued and outstanding capital stock
of the Company consists solely of the Shares. The sale and delivery of the
Shares as contemplated by this Agreement are not subject to any preemptive right
or right of first refusal or other right or restriction (other than any
restrictions on transferability of the Shares provided in the Securities Act and
any applicable state securities laws). Upon the delivery of the Shares as
provided in Section 2.3, the Purchaser will acquire title to the Shares, free
and clear of any Lien (other than any restrictions on transferability of the
Shares expressly provided in the Securities Act and any applicable state
securities laws).
3.9 Financial Statements. Prior to the date hereof, copies of
the Audited Financial Statements have been delivered to the Purchaser. The
Audited Financial Statements were prepared in accordance with Group GAAP
consistent with past practices throughout the periods involved (except as may be
indicated in the notes thereto). The Audited Financial Statements have been
audited by KPMG and present fairly in all material respects the consolidated
financial position of the Minerals Group at the respective dates thereof and the
consolidated results of operations of the Minerals Group for the respective
periods then ended. Prior to the date hereof, the Company has delivered to the
Purchaser true and complete copies of the audited financial statements for the
fiscal years ended December 31, 2004 and 2003 for each of the Subsidiaries of
the Company for which audited financial statements are prepared in the ordinary
course of business.
22
3.10 Liabilities.
Except for (a) Liabilities set forth in Schedule 3.10, (b)
Liabilities incurred since December 31, 2004 in the ordinary course of business
consistent with past practice, and (c) Liabilities arising under or resulting
from this Agreement or any of the International Agreements, (i) at December 31,
2004, neither the Company nor any of its Subsidiaries had any Liability that
would be required by Group GAAP to be and was not reflected or reserved against
in the Latest Balance Sheet, and no such Liability has arisen since December 31,
2004 and (ii) to the Knowledge of the Company, at December 31, 2004, neither the
Company nor any of its Subsidiaries had any Liability other than a Liability
that was reflected or reserved against in the Latest Balance Sheet that was
material, whether or not required by Group GAAP to be reflected or reserved
against in the Latest Balance Sheet or disclosed on the notes to the Audited
Financial Statements, and no such Liability that is material has arisen since
December 31, 2004.
3.11 Inventory; Receivables.
(a) Except as set forth in Schedule 3.11(a), all finished product
inventories of the Business reflected on the Latest Balance Sheet, net of
reserves for obsolete and excess inventory, were, as of the date of the Latest
Balance Sheet, in salable condition and were located at a location owned or
leased by the Company or a Subsidiary or a Joint Venture or in transit thereto.
All work-in-process inventories of the Business reflected on the Latest Balance
Sheet, net of reserves for obsolete and excess inventory, were, as of the date
of the Latest Balance Sheet, capable of being processed or made into salable
condition in the ordinary course of business, and were located at a location
owned or leased by the Company or a Subsidiary or Joint Venture. All packaging
materials, purchased raw materials and fuels inventories of the Business
reflected on the Latest Balance Sheet, net of reserves for obsolete and excess
inventory, were, as of the date of the Latest Balance Sheet, in usable
condition.
(b) The reserves for uncollectible notes and accounts receivable
reflected on the Latest Balance Sheet were established in accordance with Group
GAAP.
3.12 Absence of Changes.
(a) Except as set forth in Schedule 3.12(a), since December 31, 2004
through the date hereof, no change or event has occurred or condition exists
that, individually or in the aggregate, has had or would be reasonably likely to
have a Material Adverse Effect.
(b) Except as set forth in Schedule 3.12(b) and except for the
transactions contemplated hereby and by the International Agreements, since
December 31, 2004 through the date hereof, the Minerals Group has operated the
Business, including payment of notes and accounts payable and efforts to collect
notes and accounts receivable, in the ordinary course of business consistent
with past practice.
(c) Except as set forth in Schedule 3.12(c), and except for the
transactions contemplated hereby and by the International Agreements, since
December 31, 2004
23
through the date hereof, neither the Company nor any of its Subsidiaries nor any
of the Joint Ventures has:
(i) except for borrowings of Permitted Debt and except for issuances
of Option Shares and grants of Company Options, issued or sold, or agreed
or committed to issue or sell (whether through the issuance or granting of
options, warrants, calls, rights to purchase or otherwise) any stock of
any class or series or any other equity interest, or any bonds,
debentures, notes, other evidences of indebtedness for borrowed money or
other securities of any kind;
(ii) materially written down or materially written up the value of
any inventory, except for write-downs, write-ups and write-offs in the
ordinary course of business consistent with past practice;
(iii) (A) cancelled or compromised any material claim, or (B) waived
any other right of substantial value, or provided a discount from a
previously invoiced amount to any one customer in an amount in excess of
$250,000, or sold, transferred or otherwise disposed of any individual
Property or asset used in the Business having a book value, or disposed of
for an amount, in either case in excess of $250,000, except, in the case
of each of clauses (A) and (B), in the ordinary course of business
consistent with past practice (including sales of inventory);
(iv) disposed of or permitted to lapse any patent, application for
patent, trademark, application for trademark, assumed name, servicemark,
application for servicemark, trade name, copyright, application for
copyright or license material to the operation of the Business, or
disposed of or disclosed to any Person (other than the Purchaser and its
Representatives) any trade secret, formula, process or know-how material
to the operation of the Business, except in each case in the ordinary
course of business consistent with past practice;
(v) granted any general uniform increase in the compensation of
Employees (including any increase or change pursuant to any bonus,
pension, profit-sharing, retirement or other plan or commitment), or any
increase in any such compensation (including bonus) payable or to become
payable to any officer or Employee, except in accordance with its
customary compensation policies (including a general increase in
compensation levels which took effect on January 1, 2005) and except for
the Completion Bonuses described in Exhibit B hereto;
(vi) hired any Employee with an annual base salary in excess of
$150,000, or hired any Employee with special benefit or incentive programs
outside of the ordinary course of business or not of general applicability
or with a severance agreement that could result in a severance payment to
such Employee in excess of one year of such Employee's base salary;
provided, however, that for purposes of this clause (vi), relocation
payments made in the ordinary course of business to newly hired Employees
shall not be deemed to be a special benefit or incentive program;
24
(vii) except as required by GAAP and disclosed on Schedule 3.12(c),
made any change in its accounting methods or practices;
(viii) except as required by Applicable Law or by any Governmental
Entity, and except as contemplated by Section 5.1 or Section 5.11 hereof
or by Exhibit B hereto, taken any action to amend in any material respect
any Company Plan or International Plan or any Collective Bargaining
Agreement;
(ix) made or authorized (A) any investment other than in the
ordinary course of business consistent with past practice in an amount
(including the amount of any Indebtedness incurred, or Liability assumed)
which exceeds $250,000 individually or $1,000,000 in the aggregate or (B)
any capital expenditures not provided for in the 2005 Capital Expenditure
Plan approved by the Board of Directors of World Minerals in January 2005,
except in the case of each of clauses (A) and (B) for Approved
Investments;
(x) made any purchase of inventory other than in the ordinary course
of business consistent with past practice;
(xi) agreed to incur any obligation or Liability (absolute or
contingent) in respect of the Business except in the ordinary course of
business consistent with past practice and except for borrowings under the
Credit Agreement and for Indebtedness incurred and Liabilities assumed in
connection with Approved Investments and investments and capital
expenditures permitted under clause (ix) above;
(xii) mortgaged, encumbered by deed of trust, pledged or incurred
any Lien, charge or other encumbrance with respect to any of the material
Properties or assets of the Business, except in the ordinary course of
business consistent with past practice and except for the Credit Agreement
Lien and other Liens securing Permitted Debt;
(xiii) failed to perform all of its obligations under, defaulted
under or terminated (other than on the stated expiration date) any
Material Contract, except in the ordinary course of business consistent
with past practice (it being understood and agreed by the parties that
disputes and warranty claims arising under Customer Contracts which are
dealt with in the ordinary course of business shall not be considered to
be failures to perform or defaults under Material Contracts);
(xiv) amended, terminated or waived any material Permit with respect
to the Business;
(xv) permanently closed, permanently downsized or permanently
stopped operations at any industrial site;
(xvi) committed to move the existing Milan facility of World
Minerals Italia S.r.l. or secured any site for its potential future
relocation;
25
(xvii) except for Approved Investments, made a binding commitment to
acquire any company or any business; or
(xviii) agreed, whether in writing or otherwise, to take any of the
actions set forth in this Section 3.12.
(d) Except as set forth in Schedule 3.12(d), since December 31,
2004, the Company has not (i) declared or paid any Dividend, (ii) made any
redemption, purchase or other acquisition of any shares of its capital stock, or
(iii) amended its certificate of incorporation or bylaws, or merged with or into
or consolidated with any other Person, subdivided or in any way reclassified any
shares of its capital stock or changed or agreed to change in any manner the
rights of its outstanding capital stock.
3.13 Tax Matters.
(a) The Seller is the common parent of an affiliated group of
corporations (within the meaning of Section 1504(a) of the Code) eligible to
file consolidated federal Income Tax Returns, of which each of the U.S.
Companies is a member. Except as otherwise stated or disclosed in Schedule
3.13(a), from January 1, 2001 through the Closing Date, the Seller has included
(or, with respect to the taxable year ending on the Closing Date, will include)
each of the U.S. Companies in its consolidated federal Income Tax Return as a
member of the affiliated group of which the Seller is the common parent.
(b) Except as otherwise stated or disclosed in Schedule 3.13(b), (i)
for all periods ending on or prior to the Closing Date during which a Subsidiary
was a member of the Minerals Group, such Subsidiary filed (or joined in the
filing of) when due (after taking into account all properly requested
extensions) all material Tax Returns required by Applicable Law to be filed with
respect to such Subsidiary and all Taxes shown to be due on such Tax Returns
have been paid; (ii) all such Tax Returns were true, correct and complete in all
material respects as of the time of such filing or after taking into account any
changes thereto reflected on any amended Tax Returns; (iii) all Taxes of the
members of the Minerals Group relating to all periods ending on or prior to the
Closing Date for which the members of the Minerals Group may be liable (other
than any liability under Treasury Regulations Section 1.1502-6 or any analogous
state, local or foreign law or regulation), whether or not shown on any Tax
Return, if required to have been paid, have been paid (except for Taxes which
are being contested in good faith and that have been adequately provided for in
the Audited Financial Statements or interim Financial Statements in accordance
with Group GAAP); (iv) the statute of limitations for tax years of the U.S.
Companies has closed for all years ending prior to January 1, 2001; (v) to the
Knowledge of the Company, there is no action, suit, proceeding, investigation,
audit or claim now pending against, or with respect to, the members of the
Minerals Group in respect of any Tax or assessment, nor has any claim for
additional Tax or assessment been asserted in writing by any Taxing Authority;
(vi) since January 1, 2001 for the U.S. Companies and since the applicable
period in which the applicable statute of limitations remains open for each
International Company, no claim has been threatened or made by any Taxing
Authority in writing in a jurisdiction where a member of the Minerals Group does
not currently file a Tax Return that it is or may be subject to Tax by such
jurisdiction; (vii) there is no outstanding request for any extension of
26
time within which to pay any Taxes; (viii) there has been no waiver or extension
of any applicable statute of limitations for the assessment or collection of any
Taxes of the members of the Minerals Group and no power of attorney granted by
or with respect to the members of the Minerals Group for Taxes is currently in
force; moreover, no closing agreement pursuant to Section 7121 of the Code (or
any predecessor provision) or any similar provision of any state, local or
foreign law has been entered into by or with respect to the members of the
Minerals Group that could affect the liability of the members of the Minerals
Group for any period after the Closing; (ix) no property of any of the U.S.
Companies is "tax-exempt use property" within the meaning of Section 168(h) of
the Code; no member of the Minerals Group is a party to any agreement other than
with the Seller, whether written or unwritten, providing for the payment of
Taxes, payment for Tax losses, entitlement to refunds or similar Tax matters;
(x) no ruling with respect to Taxes (other than a request for determination of
the status of a Company Plan) has been requested by or on behalf of the members
of the Minerals Group that could affect the liability of the members of the
Minerals Group for any period after the Closing; (xi) the members of the
Minerals Group have withheld and paid all Taxes required to be withheld in
connection with any material amounts paid or owing to any employee, creditor,
independent contractor or other Person, (xii) none of the International
Companies that are eligible for benefits under an income tax treaty between the
United States and the applicable foreign jurisdiction has a "permanent
establishment" in the United States, as that term is defined in the applicable
treaty, and none of the International Companies that are not eligible for
benefits under such a treaty are engaged in a trade or business within the
United States (within the meaning of Section 864(b) of the Code; and (xiii) none
of Seller or any of the U.S. Companies has ever engaged in any transaction that
is the same as, or substantially similar to, a transaction that would be a
"reportable transaction" for purposes of Treasury Regulations Section
1.6011-4(b) (including any transaction which the IRS has determined to be a
"listed transaction" for purposes of Treasury Regulations Section
1.6011-4(b)(2)).
(c) Schedule 3.13(c) sets forth all jurisdictions in which a
favorable Tax regime directly resulting from a Tax holiday granted to, or a Tax
ruling applied for by or on behalf of any of the U.S. Companies or International
Companies is in place with respect to any of the U.S. Companies and
International Companies, including any conditions required to maintain the
benefit of such favorable Tax regime.
(d) For purposes of the representations in this Section 3.13 and in
applying Article X, notwithstanding any provision of this Agreement to the
contrary, each of World Minerals Luxembourg S.a.r.l., World Minerals Italia,
S.r.l., Celite B.V. (Luxembourg), World Minerals Espana S.L., Europerlite B.V.
(Luxembourg), World Minerals Italiana, S.r.l., Harborlite France, S.A. and
Celite France, S.A., during the period an election was effective pursuant to
Treasury Regulation Section 301.7701-3(c), and World Minerals Americas LLC B.V.,
during the period it was a dual resident company, shall be treated as if such
International Company were also a U.S. Company in addition to their status in
their respective local jurisdictions.
3.14 Employees; Collective Bargaining Agreements. Prior to the
date hereof, the Seller has delivered to the Purchaser a list setting forth the
name, title and total compensation (payable by the Company or any of its
Subsidiaries) of each officer and
27
director of the Company and its Subsidiaries and of each other Employee,
consultant and agent of the Company and its Subsidiaries whose total
compensation (so payable and including bonuses and commissions) for the year
ended December 31, 2004 equaled or exceeded $100,000. Schedule 3.14 sets forth
(a) a list of all employment agreements in effect as of the date of this
Agreement between the Company or any of its Subsidiaries and any Person (as such
employment agreements may have been amended prior to the date hereof, the
"Employment Agreements"), (b) a list of all collective bargaining agreements
relating to the operation of the Business to which any of the U.S. Companies is
a party, including all amendments thereto (the "U.S. Collective Bargaining
Agreements"), and (c) a list of all collective bargaining agreements to which
any of the Principal Subsidiaries which is not a U.S. Company is a party,
including all amendments thereto, but excluding any plan, program, policy,
practice or arrangement of general applicability that employers are required
under Applicable Law of the relevant jurisdiction to maintain or establish (the
"International Collective Bargaining Agreements"). Complete and correct copies
of all of the Employment Agreements and Collective Bargaining Agreements, along
with all memoranda of understanding, letter agreements or any other binding
agreements related to the Collective Bargaining Agreements, have been made
available to the Purchaser.
3.15 Company Plans; International Plans; ERISA.
(a) Schedule 3.15(a) attached hereto sets forth a true and complete
list of (i) any "employee benefit plan" (as such term is defined in section 3(3)
of ERISA), and any other retirement, pension, profit-sharing, thrift, savings,
target benefit, employee stock ownership, cash or deferred, deferred or
incentive compensation, bonus, stay bonus, stock option, employee stock
purchase, phantom stock, stock appreciation, change in control, retention
compensation, medical, dental, vision, psychiatric or other counseling, employee
assistance, tuition reimbursement, vacation, holiday, sick pay, disability,
salary continuation, termination allowance, severance, employee relocation,
death benefit, survivor income, dependent care assistance, legal assistance or
fringe benefit (cash or noncash) plan, program, policy, practice or arrangement,
or any cafeteria plan under Section 125 of the Code (the "Employee Benefit
Plans"), to which any of the U.S. Companies contributes or is obligated to
contribute, or with respect to which any of the U.S. Companies has or may have
liability (contingent or otherwise), in each case, for or to any of their
current or former Employees, directors, officers or consultants located
primarily in the United States, but excluding any plan, program, policy,
practice or arrangement that an employer is required under Applicable Law to
maintain or establish in respect of such employer's employees (collectively, the
"Company Plans"), and (ii) all Employee Benefit Plans to which any of the
International Companies contributes or is obligated to contribute, or with
respect to which any of the International Companies has or may have liability
(contingent or otherwise), in each case, for or to any of their current or
former employees, directors, officers or consultants located primarily outside
the United States, but excluding any plan, program, policy, practice or
arrangement that an employer is required under Applicable Law to maintain or
establish in respect of such employer's employees (collectively, the
"International Plans"). No ERISA Affiliate maintains, or is obligated to make
any contribution to, a Company Plan which provides any benefit to an Employee.
28
With respect to each Company Plan and International Plan, the Seller
has previously delivered or made available to the Purchaser true and complete
copies to the extent applicable of (i) such Company Plan or International Plan
(including all amendments thereto, and a written summary thereof in the case of
an oral Company Plan or International Plan), (ii) the summary plan description
(if any) for such Company Plan or International Plan, and (iii) the most recent
IRS determination, opinion or notification letter, annual report (Form 5500
series) and accompanying schedules, actuarial report or valuation, asset
valuation statement, insurance contract or policy, PBGC Form 1 and letter of
exemption under Section 501(c)(9) of the Code for such Company Plan. Each
Company Plan and International Plan has been maintained and administered in all
material respects in accordance with its terms and all Applicable Laws. There
are no uncorrected nonexempt prohibited transactions (as defined in Section 406
of ERISA), unpaid penalties with respect to any prohibited transactions, or
taxes due or payable under sections 4971 through 4980G or section 5000 of the
Code with respect to any Company Plan.
(b) Except as set forth on Schedule 3.15(b), other than continuation
coverage which must be provided under a group health plan under COBRA, no
Company Plan or International Plan provides, or would provide, any
post-retirement or post-termination medical or death benefit to any Employee or
former Employee.
(c) Each Company Plan which is a "welfare plan," as defined in
Section 3(1) of ERISA, is either funded through insurance or is unfunded, and no
such Company Plan has any reserves, assets, surplus or prepaid premiums. Except
for loans granted under the Celite Corporation Retirement Savings 401(k) Plan,
Celite Hourly Retirement Savings 401(k) Plan and the Harborlite Corporation
Hourly 401(k) Plan, there are no outstanding loans between any Company Plan and
any Employee or former Employee.
(d) No ERISA Affiliate has incurred any liability or penalty under
Section 412 or 4971 of the Code or under Section 302 or Title IV of ERISA which
arose in connection with a Company Plan, and which could, after the Closing
Date, become an obligation of Purchaser, any of its Affiliates, or any member of
the Minerals Group.
(e) Each Company Plan which is intended to qualify under Section
401(a) of the Code does so qualify, and is covered by a favorable determination,
opinion or notification letter from the IRS. Neither the Company nor any of the
U.S. Companies has incurred any material liability under Title IV of ERISA which
arose in connection with the termination of any Company Plan, and which could,
after the Closing Date, become an obligation of Purchaser, any of its Affiliates
or any member of the Minerals Group. Except as set forth on Schedule 3.15(e),
the current value of the assets of each Company Plan which is subject to Title
IV of ERISA or Section 412 of the Code exceeds the value of such Company Plan's
"projected benefit obligation," as defined in Statement of Financial Accounting
Standards No. 87 and determined on the basis of reasonable actuarial methods and
assumptions.
(f) Except as set forth on Schedule 3.15(f), no Employee of any of
the U.S. Companies is, or while employed by one of the U.S. Companies has been,
covered by any "multiemployer plan," as defined in Section 3(37) of ERISA, or by
any Company Plan
29
under which an employer other than such U.S. Company or an ERISA Affiliate makes
contributions.
(g) Except as set forth on Schedule 3.15(g), the consummation of the
transactions contemplated by this Agreement will not (x) accelerate the time of
payment, increase the vesting, or increase the amount of any compensation or
benefits due under a Company Plan or International Plan to any Employee, (y)
otherwise result in the receipt by any Employee located in the United States of
an excess parachute payment within the meaning of Section 280G of the Code under
any Company Plan, or (z) entitle any Employee to severance pay, termination
indemnities, redundancy pay, unemployment compensation or any similar payment
under any Company Plan or International Plan. Except as required by Applicable
Law or as otherwise provided in any Employment Agreement or in any Collective
Bargaining Agreement that is disclosed in Schedule 3.14 or except as otherwise
disclosed in Schedule 3.15(g), none of the U.S. Companies or International
Companies is (and following the Closing Date, Purchaser will not be) required,
under any Company Plan or International Plan, to (x) continue to employ any of
the Employees or any group of the Employees, or (y) continue to cover any of the
Employees or any group of the Employees under any Company Plan or International
Plan. The U.S. Companies are entitled to terminate any Company Plan at any time
with respect to any of the Employees or any group of the Employees. Except as
otherwise restricted under Applicable Law as disclosed on Schedule 3.15(g), each
of the International Companies may terminate any International Plan at any time
with respect to any of the Employees or group of Employees.
(h) There is no arrangement or contract with any director, officer
or independent contractor of any of the U.S. Companies or International
Companies which requires any deferred compensation or benefit to be paid or
provided to such individual following the termination of his or her service to
such U.S. Company or International Company, as applicable.
(i) Each International Plan and any Employee Benefit Plan required
under Applicable Law to be separately established or maintained, or to which
contributions must be made under Applicable Law solely, by the International
Companies for any of their current or former employees, directors, officers, or
consultants located primarily outside the United States required to be
registered or approved under Applicable Law of a country other than the United
States has been so registered or approved and has been maintained in good
standing with applicable regulatory authorities in such country.
(j) There are no unresolved claims or disputes under the terms or,
or in connection with, any Company Plan or International Plan other than claims
for benefits in the ordinary course. No litigation has been commenced with
respect to any Company Plan or International Plan and, to the Knowledge of the
Company, no such litigation is threatened.
(k) The Seller has previously provided or made available to the
Purchaser true and complete copies of: (i) the report dated July 15, 2004 by Aon
Consultants as of January 1, 2004 of the Celite Hourly Retirement Plan (and with
respect to such report, all future benefit increases that have been negotiated
or promised are included in the calculation
30
of the projected benefit obligation and net periodic pension expense); (ii) the
report dated July 15, 2004 by Aon Consultants as of January 1, 2004 of the
Celite Employees Retirement Plan; (iii) the report dated January 17, 2005 by Aon
Consulting titled "Disclosure in the Company's Financial Statements as of
December 31, 2004" showing results for all defined benefit retirement plans
(including non-qualified plans); and (iv) the actuarial reports prepared by Aon
Consulting as of January 1, 2004 and 2005 with respect to the SERP.
3.16 Labor Relations.
(a) Except as set forth in Schedules 3.14 and 3.16(a), no Employees
who are employed by the U.S. Companies are represented by any labor
organization, and, as of the date of this Agreement, no labor organization or
group of Employees who are employed by the U.S. Companies has made a demand for
recognition, has filed a petition seeking a representation proceeding or given
any of the U.S. Companies notice of any intention to hold an election of a
collective bargaining representative and no strike, work stoppage or labor
disturbance exists or, to the Knowledge of the Company, is threatened which
involves any Employees of the U.S. Companies.
(b) The Collective Bargaining Agreements, and all amendments thereto
including Memoranda of Understanding related to such Collective Bargaining
Agreements, are in full force and effect in accordance with their terms and
neither the Company nor, to the Knowledge of the Company, any other party
thereto is in default with respect to any of its obligations thereunder and, to
the Knowledge of the Company, there has not occurred any event which, with
notice or lapse of time or both, would constitute such default. Except as set
forth in Schedule 3.16(b), as of the date of this Agreement, (i) to the
Knowledge of the Company, there are no existing violations of any Collective
Bargaining Agreement, and (ii) there are no pending grievance proceedings or
claims under any Collective Bargaining Agreement.
(c) Except as set forth in Schedule 3.16(c), as of the date of this
Agreement, there are no complaints or charges against any of the U.S. Companies
filed or pending with any Governmental Entity which allege discrimination
against any Employee or group of Employees who are employed by the U.S.
Companies, and, to the Knowledge of the Company, no such complaints or charges
are threatened.
(d) Except as set forth in Schedule 3.16(d), hours worked by and
payments made to Employees who are employed by the U.S. Companies have not been
in violation of the federal Fair Labor Standards Act or any other applicable
state or local law dealing with such matters.
(e) Except as disclosed on Schedule 3.16(e), as of the date of this
Agreement, no International Company is the subject of any material proceeding or
grievance asserting that it has committed an unfair labor practice or seeking to
compel it to bargain with any labor union or labor organization, nor is there
pending or, to the Knowledge of the Company, threatened, nor has there been for
the past five (5) years, any labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving any International Company, except for any such
(i) proceeding or grievance, the outcome of
31
which, or (ii) any labor strike, dispute, walkout, work stoppage, slow-down or
lockout which, in the case of each of clauses (i) and (ii), has not had and
would not be reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect. The International Companies are in compliance in all
respects with Applicable Law (whether applying to U.S. Employees or non-U.S.
Employees) respecting employment and employment practices, terms and conditions
of employment and wages and hours and collective bargaining, and are not engaged
in any unfair labor practice, failure to comply with which or engagement in
which, as the case may be, has had or would be reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect.
(f) To the Knowledge of the Company, there are no pending Office of
Federal Contract Compliance Programs compliance reviews or investigations, and
there are no other pending United States Department of Labor or state department
of labor compliance reviews or investigations.
(g) Neither the Company nor any of its Subsidiaries is bound by any
consent decree or settlement agreement with any Governmental Entity or any other
Person relating to employment decisions or relations with Employees, independent
contractors or applicants for employment that would reasonably be expected to,
individually or in the aggregate, materially impair or interfere with the
ability of the Minerals Group, taken as a whole, to conduct the Business
substantially in the manner in which the Business is now being conducted.
3.17 Real Property.
(a) With regard to the U.S. Business:
(i) Schedule 3.17(a)(i) sets forth a true and complete list and
legal description of all the land (including patented mining claims,
mineral rights only and surface rights only, except mineral rights of the
type described in Section 3.19(a)(i) hereof) owned by the U.S. Company
designated on such Schedule 3.17(a)(i) and, with respect to each parcel,
briefly describes all improvements located thereon, the use of such parcel
and/or improvements thereon in the operation of the U.S. Business, and
certain other details as set forth in Schedule 3.17(a)(i) (all said land,
claims, rights, and improvements thereon being collectively called the
"U.S. Real Property"). Except as set forth in Schedule 3.17(a)(i), the
applicable U.S. Company owns good and marketable fee simple title to such
portion of the U.S. Real Property designated on Schedule 3.17(a)(i),
including all mining claims and mineral rights appertaining thereto, free
and clear of any Lien other than (x) Permitted Liens and (y) Liens that do
not materially adversely affect either the use of such U.S. Real Property
as currently used or as reserved for use or the value of such U.S. Real
Property. If any of the U.S. Real Property is encumbered by a mortgage or
deed of trust (as noted on Schedule 3.17(a)(i)), no notice has been
received by any of the U.S. Companies from any mortgagee, or trustee or
beneficiary thereunder, asserting that a default or breach exists
thereunder, and, to the Knowledge of the Company, no default or breach
exists thereunder and there has not occurred any event which with notice
or lapse of time or both would constitute such a default or breach. With
32
respect to the U.S. Real Property other than the real property located at
Lompoc, California, which is addressed in the following sentence, there
are no encroachments or projections of improvements located on any other
property onto any part of such U.S. Real Property, nor do any improvements
located on any part of such U.S. Real Property encroach or project upon
other properties. With respect to the U.S. Real Property located at
Lompoc, California, there are no material encroachments or projections of
improvements located on any other property onto any part of such U.S. Real
Property that would materially interfere with either the use of such U.S.
Real Property as currently used or the value of such U.S. Real Property,
nor do any improvements located on any part of such U.S. Real Property
encroach or project upon other properties.
(ii) Except as set forth in Schedule 3.17(a)(ii), there are no
pending, or to the Knowledge of the Company, threatened, actions, suits or
proceedings, including zoning, Tax, condemnation or similar proceedings,
against or affecting the U.S. Real Property or any portion thereof, or
relating to or arising out of the interest of any of the U.S. Companies in
the U.S. Real Property or any portion thereof, in any court or before or
by any federal, state, county or municipal department, commission, board,
bureau, agency, or other governmental instrumentality which, if decided
adversely to the interests of such U.S. Company, would be reasonably
likely to, individually or in the aggregate, have a Material Adverse
Effect. Except as set forth in Schedule 3.17(a)(ii), to the Knowledge of
the Company, no special assessment is pending or has been proposed against
any portion of the U.S. Real Property.
(iii) To the Knowledge of the Company, no portion of the U.S. Real
Property is in violation of, or used or occupied in a manner in violation
of, any building code, zoning ordinance, certificate of occupancy, or any
other federal, state or municipal law, ordinance, order or regulation or
statute applicable thereto, which violation would be reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect. To the
Knowledge of the Company, all of the U.S. Real Property used by any of the
U.S. Companies or reserved for use by any of the U.S. Companies in
connection with the U.S. Business conforms with the uses permitted by the
applicable zoning ordinances (without benefit of the prior nonconforming
use doctrine) or pursuant to an existing permanent variance, permit or
exception to such ordinance in all instances except where the failure to
so conform or the failure to have such variance, permit or exception would
not be reasonably likely to, individually or in the aggregate, have a
Material Adverse Effect.
(iv) Except as set forth on Schedule 3.17(a)(iv), to the Knowledge
of the Company, the improvements situated on the U.S. Real Property which
are necessary to operate the U.S. Business as currently conducted are
structurally sound and in serviceable condition, order and repair, taking
into account their current use, age, ordinary wear and tear and normal
maintenance. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY
PROVIDED FOR HEREIN, SUCH IMPROVEMENTS ARE SOLD TO THE PURCHASER "WHERE
IS" AND "AS IS" WITHOUT IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR
INTENDED USE OR OTHERWISE.
33
(v) Schedule 3.17(a)(v) sets forth a true and complete list of all
material unrecorded licenses, leases, use agreements and understandings
(in each case, whether oral or written) currently in effect and relating
to the use or occupancy of the U.S. Real Property by others. Except as set
forth in Schedule 3.17(a)(v), all such licenses, leases, use agreements
and understandings are in full force and effect in accordance with their
terms and neither any of the U.S. Companies nor, to the Knowledge of the
Company, any other party thereto is in default with respect to any of its
obligations thereunder, and to the Knowledge of the Company, there has not
occurred any event which with notice or the lapse of time or both would
constitute such default, and all such licenses, leases, use agreements and
understandings are terminable on not more than six months prior written
notice by the U.S. Company party thereto.
(vi) Except as set forth in Schedule 3.17(a)(vi), the U.S. Companies
have unrestricted legally enforceable access to and from railroad rights
of way, public highways, roads or streets sufficient to permit the conduct
of the U.S. Business as currently conducted on the U.S. Real Property, and
to the Knowledge of the Company, there is no currently existing fact or
condition which would result in the interference with or termination of
such access.
(vii) Except as set forth in Schedule 3.17(a)(vii), to the Knowledge
of the Company (x) no portion of the U.S. Real Property has ever been used
as a cemetery or Indian burial grounds; (y) none of the U.S. Companies has
received any written notice that there are any endangered or threatened
species of animal or plant which at any time during the past five (5)
years have lived on any of the U.S. Real Property; and (z) none of the
U.S. Companies has received any written notice that any portion of the
U.S. Real Property is a "wetland," as that term is used under any Federal
law, rule or regulation or under any state or local law, rule or
regulation applicable in the state and locality in which the U.S. Real
Property is situated.
(viii) All public utilities required for the present activities of
the U.S. Business on the U.S. Real Property connect into the U.S. Real
Property or are available to the U.S. Real Property at the boundaries
thereof.
(ix) Except as set forth in Schedule 3.17(a)(ix), no Person has any
option to purchase, or right of first refusal with respect to, any
material portion of the U.S. Real Property, or is party to any agreement
which, under any circumstances, could become such an option or right of
first refusal. Schedule 3.17(a)(ix) contains a list of all options to
purchase or acquire any interest in real property, or rights of first
refusal with respect to any interest in real property (including any
interest which, upon acquisition, would be a Leasehold Interest), which
options or rights of first refusal are held by the U.S. Companies. With
respect to each such option or right of first refusal so listed on
Schedule 3.17(a)(ix), said Schedule includes the legal description of the
land as to which there is an option or right of first refusal and a brief
description of any improvements thereon.
34
(b) With regard to the International Business:
(i) Schedule 3.17(b)(i) attached hereto sets forth a true and
complete list of all the real property (including patented mining claims,
mineral rights only and surface rights only, except mineral rights of the
type described in Section 3.19(b)(i) hereof) owned by the International
Companies (collectively, the "International Real Property") and, with
respect to each element thereof, identifies the applicable International
Company that owns such element, and also describes the use of such parcel
and/or improvements thereon, and certain other details as set forth in
Schedule 3.17(b)(i). Except as set forth in Schedule 3.17(b)(i), the
applicable International Company owns good and marketable title to, and is
the beneficial owner of, each element of International Real Property it
owns, including all mineral rights appertaining thereto, free and clear of
any Lien other than Permitted Liens.
(ii) Except as set forth in Schedule 3.17(b)(ii), there are no
pending, or, to the Knowledge of the Company, threatened, actions, suits
or proceedings, including Tax, zoning, condemnation or similar
proceedings, against or affecting the International Real Property or any
portion thereof, or relating to or arising out of the interest of any of
the International Companies in the International Real Property or any
portion thereof, in any court or before or by any governmental department,
commission, board, bureau, agency, or other governmental instrumentality
which, if decided contrary to the interests of such International Company,
would be reasonably likely to, individually or in the aggregate, have a
Material Adverse Effect.
(iii) The International Real Property listed in Schedule 3.17(b)(i)
includes each element of International Real Property on which mining or
quarrying operations are conducted or on which diatomaceous earth or
perlite deposits have been identified. Except as set forth in Schedule
3.17(b)(iii), the applicable International Company has rights to use such
element of International Real Property freely and without limitation for
mining or quarrying of diatomaceous earth or perlite deposits.
(iv) Except as set forth in Schedule 3.17(b)(iv), the applicable
International Company has unrestricted legally enforceable access to and
from railroad rights of way, public highways, roads or streets sufficient
to permit the exploitation of diatomaceous earth and perlite, as
appropriate, as currently exploited or reserved for exploitation, on the
International Real Property and the processing thereof, and, to the
Knowledge of the Company, there is no currently existing fact or condition
which would result in the interference with or termination of such access.
(v) Except as set forth in Schedule 3.17(b)(v), to the Knowledge of
the Company, no portion of the International Real Property is in violation
of, or used or occupied in a manner in violation of, any existing or, to
the Knowledge of the Company, proposed building code, planning or land-use
law or regulation, certificate of occupancy or other law, ordinance, order
or regulation or statute applicable thereto, which violation would be
reasonably likely to, individually or in the aggregate, have a Material
Adverse Effect. To the Knowledge of the Company, all of the International
Real Property used or reserved for use by any of the International
35
Companies in connection with the International Business conforms with the
uses permitted by the applicable zoning ordinances (without benefit of the
prior nonconforming use doctrine) or pursuant to an existing permanent
variance, permit or exception to such ordinance in all instances except
where the failure to so conform or the failure to have such variance,
permit or exception would not be reasonably likely to, individually or in
the aggregate, have a Material Adverse Effect.
(vi) To the Knowledge of the Company, the improvements situated on
the International Real Property which are necessary to operate the
International Business as currently conducted are structurally sound and
in serviceable condition, order and repair, taking into account their
current use, age, ordinary wear and tear and normal maintenance. EXCEPT
FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY PROVIDED FOR HEREIN,
SUCH IMPROVEMENTS ARE SOLD TO THE PURCHASER "WHERE IS" AND "AS IS" WITHOUT
IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR INTENDED USE OR
OTHERWISE.
(vii) Except as set forth in Schedule 3.17(b)(vii), to the Knowledge
of the Company, (x) no portion of the International Real Property has ever
been used as a cemetery; and (y) none of the International Companies has
received any written notice that there are any endangered or threatened
species of animal or plant which at any time during the past five (5)
years have lived on any of the International Real Property.
(viii) Except as set forth in Schedule 3.17(b)(viii), to the
Knowledge of the Company, during the past five (5) years there has been no
complaint, whether oral or written, from any Governmental Entity,
individual, corporation, partnership or other entity, concerning any
actual, proposed, threatened or imagined activity on any of the
International Real Property, which, if decided contrary to the interests
of the International Companies, would be reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect.
(ix) Except as set forth in Schedule 3.17(b)(ix), no Person has any
option to purchase, or right of first refusal with respect to, any
material portion of the International Real Property, or is party to any
agreement which, under any circumstances, could become such an option or
right of first refusal. Schedule 3.17(b)(ix) contains a list of all
options to purchase or acquire any interest in real property, or rights of
first refusal with respect to any interest in real property (including any
interest which, upon acquisition, would be a Leasehold Interest), which
options or rights of first refusal are held by the International
Companies.
3.18 Leasehold Interests.
(a) Schedule 3.18(a) sets forth a true and complete list of all
material leases, subleases, rental or other occupancy agreements relating to any
real property and any rights to use or occupy real property, or rights or
interests therein, held by the Company or any of its Subsidiaries as lessee or
sublessee (in each case, whether recorded or unrecorded)
36
and used or held for use in or relating to the Business and, with respect to
each such lease, sublease, rental or other occupancy or use agreement, briefly
describes the use of such interest in the operation of the Business, any leased
reserves, and certain other details as set forth in Schedule 3.18(a) (the
"Leasehold Interests"). All of the Leasehold Interests are in full force and
effect in accordance with their terms and neither the applicable lessee or
sublessee, nor, to the Knowledge of the Company, any other party thereto is in
default or breach with respect to any of its obligations thereunder and there
has not occurred any event which, with notice or lapse of time or both, would
constitute such default or breach. All payments required under all Leasehold
Interests, including all rents, royalties, taxes, maintenance or concession
fees, annual filings, and additional rents have been made in accordance with the
terms of the applicable lease or use agreement, as required by such Governmental
Authority, or as required by the grantor of such concession. For all Leasehold
Interests relating to mining rights that are not actively mined, such right to
mine has not been terminated, expired or forfeited, except for such
terminations, expirations or forfeitures which would not be reasonably likely
to, individually or in the aggregate, have a Material Adverse Effect. The
Company has not received any written notice that there are any underlying
mortgages or deeds of trust affecting any leased real property and having
priority over the Leasehold Interest, or rights or interests therein, used by
the Company. The Company is in full use or possession of the real property or
portion thereof subject to the Leasehold Interests, or rights or interests
granted therein. To the Knowledge of the Company, the Company is not using any
real property or interest therein subject to a Leasehold Interest in violation
of any Applicable Law.
(b) With regard to Leasehold Interests held by any of the U.S.
Companies as lessee or sublessee, the representations and warranties set forth
in Sections 3.17(a)(ii), 3.17(a)(iii), 3.17(a)(iv), 3.17(a)(vi), 3.17(a)(vii)
and 3.17(a)(viii) shall be deemed to apply to the real property, or interests
granted therein, which is the subject of such Leasehold Interest; provided,
however, that for this purpose the representations made in Section 3.17(a)(vi)
and 3.17(a)(viii) shall be limited to the Knowledge of the Company.
(c) With regard to Leasehold Interests held by any of the
International Companies as lessee or sublessee, the representation and
warranties contained in Sections 3.17(b)(ii), 3.17(b)(iv), 3.17(b)(v),
3.17(b)(vi) and 3.17(b)(vii) shall be deemed to apply to the real property, or
interests granted therein, which is the subject of such Leasehold Interest;
provided, however, that for this purpose the representations made in Section
3.17(b)(iv) shall be limited to the Knowledge of the Company.
3.19 Mining Claims, Surface Rights and Water Rights.
(a) With respect to the U.S. Business:
(i) Schedule 3.19(a)(i) sets forth a true and complete list of all
unpatented mining claims located and held by any of the U.S. Companies
under the Mining Law of 1872, as amended (30 U.S.C. Section 21 et seq.)
(the "Mining Law of 1872") which relate to the Business (the "Unpatented
Mining Claims").
37
(ii) With respect to Unpatented Mining Claims, subject only to the
paramount title of the United States, to the Knowledge of the Company: (1)
the unpatented mining claims were laid out and monumented consistent with
industry practices on federal lands which were open to entry under the
Mining Law of 1872 at the time of location; (2) location notices and
certificates were properly recorded and filed with appropriate
Governmental Authorities; (3) affidavits of assessment work, notices of
intent to hold, or verified reports were timely and duly recorded and
filed with appropriate agencies for each of the Unpatented Mining Claims
for each year, through the year ended December 31, 2004, in which such
affidavit, notice or report was required to be filed; (4) the work and
expenditures described in said affidavits, notices and reports were in
fact made and performed in a good faith effort to satisfy assessment work
requirements; (5) except as set forth in Schedule 3.19(a)(ii), the
Unpatented Mining Claims are free and clear of Liens, production
royalties, advance royalties, rents, bonuses or bonus payments or finder's
fees in favor of any party; (6) to the Knowledge of the Company, there are
no material conflicting claims or activities or possession by third
parties in anticipation of such claims, except as set forth in Schedule
3.19(a)(ii); and (7) the Company has located each such Unpatented Mining
Claim in the good faith expectation of discovering valuable minerals. The
Company has made available to the Purchaser copies of all filings made as
described in this Section 3.19(a)(ii).
(iii) Where ownership of Unpatented Mining Claims by one of the U.S.
Companies does not provide it with surface rights of ingress and egress
and use of the surface of such mining claims for mining and related
purposes, such U.S. Company has valid and enforceable agreements with the
owners of such surface rights permitting it access to such claims for
mining and related purposes to the extent set forth in Schedule
3.19(a)(iii), and such U.S. Company is not in default with respect to any
of its obligations thereunder and, to the Knowledge of the Company, there
has not occurred any event which, with notice or lapse of time or both,
would constitute such default. The agreements set forth in Schedule
3.19(a)(iii) by their terms do not require compensation to the surface
owner other than for damage to crops, improvements or pasture land.
(b) With regard to the International Business:
(i) Schedule 3.19(b)(i) hereto sets forth a true and complete list
of all rights to extract minerals from properties that are not owned in
fee by any of the International Companies or are leased by any of the
International Companies from third parties which relate to the
International Business.
(ii) With respect to mining claims that are included in Schedule
3.19(b)(i), title to same is good and marketable in such International
Company and, except as stated in Schedule 3.19(b)(ii), subject to no
material defects, liens, claims, charges and encumbrances, production
royalties, advance royalties, rents, bonuses or bonus payments or finder's
fees in favor of any party not disclosed in Schedule 3.19(b)(i).
38
(iii) If any of the mining claims listed in Schedule 3.19(b)(i) are
held by an International Company under lease from any third party, the
interests of such International Company in such mining claims shall be
deemed Leasehold Interests subject to Section 3.18 above.
(iv) Where the ownership of mining claims by one of the
International Companies does not provide it with surface rights of ingress
and egress and use of the surface of such mining claims for mining and
related purposes, such International Company has valid and enforceable
agreements with the owners of such surface rights permitting it access to
such claims for mining and related purposes to the extent set forth in
Schedule 3.19(b)(iv), and such International Company is not in default
with respect to any of its obligations thereunder and, to the Knowledge of
the Company, there has not occurred any event which, with notice or lapse
of time or both, would constitute such default.
(v) The list of mining claims in Schedule 3.19(b)(i) shall be deemed
to include, whether or not specifically described therein, all water and
water rights, ditches and ditch rights, reservoirs and reservoir rights,
xxxxx and well rights or permits appurtenant to such mining claims that
are owned, held or used by any of the International Companies on such
mining claims or in connection with operations related to such mining
claims.
3.20 Title to Assets. Except as set forth in Schedule 3.20, as of
the date of the Latest Balance Sheet, the Company and its Subsidiaries had good
and legal title to all of the Properties and assets reflected as Properties and
assets owned by the Company or any of its Subsidiaries in the Latest Balance
Sheet, free and clear of all Liens other than (x) the Credit Agreement Lien, (y)
other Permitted Liens and (z) other Liens that did not (and do not) materially
adversely affect the use or value of such Properties and assets.
3.21 Condition and Sufficiency of Assets. Except as set forth
in Schedule 3.21, the facilities, machinery, furniture and equipment which are
necessary to operate the Business as currently conducted are in operating
condition, order and repair, taking into account their current use, age,
ordinary wear and tear and normal maintenance. The Company, the Subsidiaries of
the Company and the Joint Ventures, taken as a whole, possess all assets and
rights necessary to carry on the Business in all material respects as currently
conducted. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY PROVIDED
FOR HEREIN, ALL OF THE TANGIBLE ASSETS OWNED BY THE COMPANY AND ITS SUBSIDIARIES
ARE SOLD TO THE PURCHASER "WHERE IS" AND "AS IS" WITHOUT IMPLIED WARRANTY OR
MERCHANTABILITY, FITNESS FOR INTENDED USE OR OTHERWISE.
3.22 Intellectual Property. Except as set forth in Schedule
3.22 (which Schedule includes all related patents and patent applications owned
by the Company or any of its Subsidiaries claiming priority to those listed on
such Schedule), neither the Company nor any of its Subsidiaries owns any patent
or patent application relating to any product which it sells or to any process
used in the manufacture of any such product, nor has any license under any
patent been granted to the Company or any of its Subsidiaries relating
39
to any such product or any such process, and, to the Knowledge of the Company,
there is no United States patent or patent application (except for those listed
in Schedule 3.22) which would cover any such product or any such process, and
neither the Company nor any of its Subsidiaries owns any registered copyright,
registered trademark or trade name, nor has any license to use any registered
copyright, registered trademark or trade name been granted to the Company or any
of its Subsidiaries. Except as set forth in Schedule 3.22, the Company and its
Subsidiaries own or have the right to use all patents, copyrights, trademarks,
trade names, know-how, trade secrets and other proprietary rights (collectively,
the "Proprietary Rights") necessary to conduct the Business in the manner in
which it has heretofore been conducted, except where the failure to have such
Proprietary Rights, individually or in the aggregate, has not had and would not
be reasonably likely to have a Material Adverse Effect. Except as set forth in
Schedule 3.22, to the Knowledge of the Company, there is no claim, nor is there
a basis for any claim, that the Company or any of its Subsidiaries has infringed
any proprietary right of any other Person.
3.23 Joint Venture Interests.
(a) Schedule 3.23 sets forth a true and correct list of all of the
interests of the Joint Venture Parent Companies in the Joint Ventures. Schedule
3.23 also sets forth the jurisdiction in which each of the Joint Ventures is
incorporated or organized. Each of the Joint Ventures is duly licensed or
qualified to do business in each jurisdiction in which the ownership of its
Properties or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed or qualified would not
be reasonably likely to, individually or in the aggregate, have a Material
Adverse Effect.
(b) Except as set forth in the Joint Venture Agreements or on
Schedule 3.23, no other class of equity securities, preferred stock, bonds,
debentures, notes, other evidences of indebtedness for borrowed money or other
securities of any kind of any of the Joint Ventures is authorized, issued or
outstanding. The equity interests in the Joint Ventures held by the Subsidiaries
of the Company that hold such interests have been duly authorized, validly
issued and fully paid. As of the date of this Agreement, the equity interests in
the Joint Ventures held by the Subsidiaries of the Company that hold such
interests are held free and clear of any Lien.
(c) The Joint Ventures have not issued any securities in violation
of any preemptive or similar rights. Except as set forth in the Joint Venture
Agreements, there are no subscriptions, options, warrants, calls, commitments,
preemptive rights or other rights of any kind (absolute, contingent or
otherwise) to purchase or otherwise receive, nor are there any securities or
instruments of any kind convertible into or exchangeable for, any capital stock
(including outstanding, authorized but unissued, unauthorized, treasury or other
shares thereof) or other equity interest or evidence of indebtedness for
borrowed money of any of the Joint Ventures. Except as set forth in the Joint
Venture Agreements, neither the Company nor any of the Subsidiaries holding an
equity interest in a Joint Venture is a party to any agreement with a third
party (other than the Company or another Subsidiary of the Company) which places
any restriction upon, or which creates any voting trust, proxy, or other
agreement or understanding with respect to, the voting, purchase, redemption,
acquisition or transfer of, or the declaration or payment of any dividend or
distribution on
40
the equity interests in the Joint Ventures held by the Subsidiaries of the
Company that hold such interests. Except as set forth in the Joint Venture
Agreements, there are no restrictions upon, or voting trusts, proxies, or other
agreements or understandings with respect to, the voting, purchase, redemption,
acquisition or transfer of, or the declaration or payment of any dividend or
distribution on, any equity interest in the Joint Ventures held by the
Subsidiaries of the Company that hold such interests.
3.24 Company Insurance Policies.
Schedule 3.24 sets forth a complete and accurate list of all
material policies of insurance which have been maintained by the Company or by
any of the Subsidiaries of the Company since August 1, 1991 (collectively, the
"Company Insurance Policies"). Prior to the date of this Agreement, true and
correct copies of the Company Insurance Policies have been delivered to the
Purchaser. With regard to each of the Company Insurance Policies, (i) all
required payments of premium have been made, (ii) no written notice of
cancellation or termination has been received by the Company or any of its
Subsidiaries, and (iii) no releases have been granted to any of the insurers
under the Company Insurance Policies. Except as set forth in Schedule 3.24,
since December 31, 2004 there has been no material increase in premiums under
the Company Insurance Policies. There is no pending material dispute between the
Company or any Subsidiary of the Company, on one hand, and any insurer, on the
other hand, with respect to any of the Company Insurance Policies concerning any
matter, including coverage or the amount of an insurable loss. Schedule 3.24
sets forth a list of all claims for coverage in respect of Products Liability
Claims which have been formally submitted by the Company and its Subsidiaries to
insurers under the Company Insurance Policies for coverage, and, as of the date
of this Agreement, except as set forth in Schedule 3.24, no written denial of
coverage for any Products Liability Claim set forth in Schedule 3.24 has been
received by the Company or any of its Subsidiaries from any insurer under the
Company Insurance Policies.
3.25 Certain Contracts.
(a) Schedule 3.25(a) sets forth a true and complete list of all of
the following Contracts (other than Company Plans and International Plans and
other than Collective Bargaining Agreements) in effect as of the date of this
Agreement to which the Company or any of its Subsidiaries or Joint Ventures is a
party or by which any of the Properties or assets of the Company or any of its
Subsidiaries or Joint Ventures is bound (collectively, the "Material
Contracts"):
(i) any consulting Contract involving payment of more than $250,000
annually, and any other Contract for services, other than Contracts
relating to energy and utilities, involving payment of more than
$1,000,000 annually;
(ii) any Contract for services relating to energy and utilities
involving payment of more than $1,000,000 annually;
41
(iii) any Contract of purchase or sale (including Contracts with
distributors) involving an amount exceeding $1,000,000 annually, except
for Contracts relating to the purchase or sale of inventory;
(iv) any loan agreement or other instrument, other than the Credit
Agreement, evidencing Indebtedness other than Indebtedness which is
Permitted Debt;
(v) any stand-by letter of credit, guarantee or performance bond
involving an amount exceeding $250,000;
(vi) any Contract or agreement restricting the freedom or ability of
the Company or any of its Subsidiaries or Joint Ventures to engage in any
line of business or to engage in business in any geographical area
anywhere in the world;
(vii) all written Contracts with any direct customer of the Business
which, for the year ended December 31, 2004, was included among the twenty
largest direct customers of the Business and, in the case of direct
customers among the twenty largest direct customers of the Business for
the year ended December 31, 2004 who do not have written Contracts, a
written description of the terms and conditions of the arrangements with
such direct customers (such written Contracts and descriptions,
collectively, the "Customer Contracts");
(viii) any material Contract that cannot be terminated with less
than six (6) months' notice of termination;
(ix) any Contract the termination of which would require payment of
a termination fee or penalty in an amount exceeding $250,000;
(x) any material Contract that contains an exclusivity period with a
duration of more than one year;
(xi) the Joint Venture Agreements;
(xii) the Oracle Contract; and
(xiii) any other Contract which is material to the Business.
Prior to the date of this Agreement, copies of each of the Material
Contracts which is a written Contract, together with copies of all amendments
thereto, have been made available to the Purchaser. Schedule 3.25(a) includes a
brief description of the terms of each Material Contract which is not a written
Contract.
(b) Neither the Company nor any of its Subsidiaries or Joint
Ventures is in default in any material respect under any Material Contract. To
the Knowledge of the Company, there is no default in any material respect, and
there is no basis for a claim of such default, under any Material Contract by
any party to such Material Contract.
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(c) Except as set forth in Schedule 3.25(c), no Material Contract
includes any change of control provision or requires any Consent by any third
party for the consummation of the transactions contemplated by this Agreement.
(d) Each of the Material Contracts is a valid and binding obligation
of the Company and/or its Subsidiaries or Joint Ventures party thereto and, to
the Knowledge of the Company, is a valid and binding obligation of each other
Person party thereto, and is in full force and effect enforceable against the
parties thereto in accordance with its terms.
3.26 Compliance with Applicable Law. The Company and its
Subsidiaries hold all Permits with and under Applicable Law which are required
to carry on the Business as presently conducted, except for such Permits the
absence of which would not be reasonably likely to, individually or in the
aggregate, have a Material Adverse Effect (the "Company Approvals"). All Company
Approvals are in full force and effect and, to the Knowledge of the Company, no
suspension or cancellation of any of them is threatened. Except as set forth in
Schedule 3.26 or Schedule 3.29, the Company and its Subsidiaries or Joint
Ventures are conducting the Business in compliance with all Applicable Laws
except where the failure to so comply would not be reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect. To the
Knowledge of the Company, except for violations of Environmental Laws which are
either set forth on Schedule 3.29 or, pursuant to the provisions of Section
3.29, not required to be included on Schedule 3.29, and except as set forth in
Schedule 3.26, neither the Company nor any of the Subsidiaries of the Company
has received any written notice since January 1, 2004 alleging that it is in
violation of any Applicable Law.
3.27 Litigation.
(a) Except with regard to Products Liability Claims, as to which no
representation and warranty is made other than that set forth in Section 3.28,
Schedule 3.27(a) lists all claims, actions, suits, proceedings or investigations
which, as of the date of this Agreement, are pending or, to the Knowledge of the
Company, threatened against any member of the Minerals Group that, if determined
adversely to the interests of the Minerals Group, would be reasonably likely to
(x) result in Losses in excess of $250,000 or (y) materially impair or interfere
with the ability of the Minerals Group, taken as a whole, to conduct the
Business substantially in the manner in which the Business is now being
conducted.
(b) Except with regard to Products Liability Claims, as to which no
representation and warranty is made other than that set forth in Section 3.28,
and except as set forth in Schedule 3.27(a) or Schedule 3.27(b), there are no
claims, actions, suits, proceedings or, to the Knowledge of the Company,
investigations pending against any member of the Minerals Group that, if decided
adversely to the interests of the Minerals Group, would be reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect.
(c) Except as set forth in Schedule 3.27(c), the Company and its
Subsidiaries are not subject to any outstanding order, injunction (whether
temporary,
43
preliminary or permanent), ruling, decree (including any consent decree), writ,
subpoena, verdict, charge, assessment, or other decision entered, issued, made
or rendered by any Governmental Entity or by an arbitrator that would be
reasonably expected to, individually or in the aggregate, materially impair or
interfere with the ability of the Minerals Group, taken as a whole, to conduct
the Business substantially in the manner in which the Business is now being
conducted.
3.28 Warranties and Product Liability.
(a) Schedule 3.28(a) lists (i) the standard printed warranty used in
connection with the sale of products manufactured or sold by the Business; (ii)
the customer indemnity form offered in the Business; and (iii) the aggregate
value of all credits issued and/or payments made to customers during the period
from January 1, 2004 to March 31, 2005 in respect of product quality or
performance defects.
(b) Except as set forth in Schedule 3.28(b), as of the date of this
Agreement, there are no actions, suits, inquiries, proceedings or, to the
Knowledge of the Company, investigations by or before any Governmental Entity
pending or, to the Knowledge of the Company, threatened, which relate to the
alleged hazardous or toxic nature of any product alleged to have been
manufactured or sold by the Company or any of the Subsidiaries of the Company.
3.29 Environmental Matters.
(a) Schedule 3.29(a) sets forth a true and complete list of all
Environmental Approvals required to carry on the Business as presently conducted
except for Environmental Approvals the absence of which would not be reasonably
likely to, individually or in the aggregate, have a Material Adverse Effect. All
such Environmental Approvals are in full force and effect and, to the Knowledge
of the Company, no suspension or cancellation of any of them is threatened.
(b) Except as set forth in Schedule 3.29(b), the Company and its
Subsidiaries are and have been conducting the Business and operating the U.S.
Real Property and the International Real Property in compliance with all
applicable Environmental Approvals and Environmental Laws except where the
failure to so comply would not be reasonably likely to, individually or in the
aggregate, have a Material Adverse Effect. Except as set forth in Schedule
3.29(b), neither the Company nor any of its Subsidiaries has received any
written notice asserting that it or any condition or circumstance at any of the
U.S. Real Property or the International Real Property is or was in violation of
any Environmental Law except for such violations that (i) have been cured and
any related Environmental Claims resolved or (ii) would not be reasonably likely
to, individually or in the aggregate, have a Material Adverse Effect.
(c) Except as set forth in Schedule 3.29(c), (i) there are no
Environmental Claims pending and, since April 1, 2000, no Environmental Claim
has been pending, by or against the Company or any of its Subsidiaries under any
Environmental Law, and (ii) to the Knowledge of the Company, no such
Environmental Claim is threatened, which, in the case
44
of each of clauses (i) and (ii), if decided adversely to the Company's
interests, would be reasonably likely to, individually or in the aggregate, have
a Material Adverse Effect. Except as set forth in Schedule 3.29(c), neither the
Company nor any of its Subsidiaries is subject to any outstanding order,
injunction (whether temporary, preliminary or permanent), ruling, decree
(including any consent decree), writ, subpoena, verdict, charge, assessment or
other decision entered, issued, made or rendered by any Governmental Entity
under any Environmental Law that would be reasonably expected to, individually
or in the aggregate, materially impair or interfere with the ability of the
Minerals Group, taken as a whole, to conduct the Business substantially in the
manner in which the Business is now being conducted.
(d) Except as set forth in Schedule 3.29(d), and except as would not
be reasonably likely to, individually or in the aggregate, have a Material
Adverse Effect, to the Knowledge of the Company, there has been no Release or
threatened Release of any Hazardous Substance on, at, in, from or beneath any of
the U.S. Real Property or the International Real Property, except for such
Releases which are in compliance with Environmental Approvals. Except as set
forth in Schedule 3.29(d), to the Knowledge of the Company, no Hazardous
Substances are present on, at, in, from or beneath any of the U.S. Real Property
or the International Real Property (i) that require notification or reporting to
a Governmental Entity or investigation, removal, remediation, or cleanup under
Environmental Law, or (ii) that have given rise or would reasonably be expected
to give rise to an Environmental Claim against the Company or any of its
Subsidiaries which, in the case of each of clauses (i) and (ii), if decided
adversely to the Company's interests, would be reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect.
(e) Except as set forth in Schedule 3.29(e), none of the U.S.
Companies or International Companies (i) has transported, treated or disposed
of, nor has any of them arranged for the transport, treatment or disposal of,
any Hazardous Substance to or at any location listed on the CERCLA National
Priorities List, or on any similar U.S. state list of sites requiring
investigation or cleanup, or (ii) has received written notice prior to the date
of this Agreement from any Governmental Entity or Person that it is or may be
potentially liable for the cleanup of any site under CERCLA or any similar law.
Except as set forth in Schedule 3.29(e), to the Knowledge of the Company,
neither the Company nor any Subsidiary of the Company nor any predecessor of the
Company or any of the Subsidiaries of the Company has transported or arranged
for the treatment, storage, handling, disposal, or transportation of any
Hazardous Substance to any location at, from, in, to, on or under which a
Release of Hazardous Substances has occurred that has given rise or would
reasonably be expected to give rise to an Environmental Claim against the
Company or any of its Subsidiaries which, if decided adversely to the Company's
interests, would be reasonably likely to, individually or in the aggregate, have
a Material Adverse Effect.
(f) To the Knowledge of the Company, and except as set forth on
Schedule 3.29(f), there are no underground storage tanks located on any of the
U.S. Real Property or the International Real Property, and all underground
storage tanks removed by the Company or any of its subsidiaries from the U.S.
Real Property or the International Real Property were removed in material
compliance with all Environmental Laws in effect at the time of such removal.
45
(g) To the Knowledge of the Company, Schedule 3.29(g) contains a
true, complete and accurate listing of all environmental site assessments and
other environmental data, reports and studies conducted by, at the expense of,
or on behalf of the Company or any of its Subsidiaries and relating to real
property owned by the Company or by a Subsidiary of the Company or to the
Business or that are otherwise in the Seller's possession.
(h) Except for liabilities and obligations assumed pursuant to the
terms of the Leasehold Interests set forth in Schedule 3.18(a) and except as set
forth in Schedule 3.29(h), (i) neither the Company nor any of its Subsidiaries
has entered into any written agreement with any Governmental Entity or with any
other Person whereby it has assumed responsibility for any liability or
obligation of any other Person arising under or relating to Environmental Laws,
and (ii) to the Knowledge of the Company, neither the Company nor any of its
Subsidiaries has assumed any such liability or obligation by operation of law,
except, in the case of clause (ii), for such liabilities and obligations the
performance of which, individually or in the aggregate, have not had, and would
not reasonably be expected to have, a Material Adverse Effect.
3.30 Transactions with Affiliates. Schedule 3.30 sets forth
(a) a list of all transactions between the Company or any other member of the
Minerals Group, on the one hand, and the Seller or a Subsidiary of the Seller
(other than the Company or any other member of the Minerals Group), on the other
hand, since January 1, 2005; (b) a list of all material assets, Properties and
services of the Company or any other member of the Minerals Group used by the
Seller or a Subsidiary of the Seller (other than the Company or any other member
of the Minerals Group), or vice versa, at any time since January 1, 2005; and
(c) a list of all Contracts (such Contracts, the "Affiliate Agreements") between
the Company or any other member of the Minerals Group, on the one hand, and the
Seller or a Subsidiary of the Seller (other than the Company or any other member
of the Minerals Group), on the other hand.
3.31 No Brokers. Except for XXXX Capital, LLC, no broker,
finder or investment banker (an "Investment Broker") acting on behalf of the
Seller, the Company or any of its Subsidiaries is or will be entitled to any
brokerage, finder's or other fee, compensation or commission from the Seller,
the Company or any of its Subsidiaries in connection with the transactions
contemplated by this Agreement (the "Seller's Fee"). The Seller will be solely
responsible for all fees and other payments to XXXX Capital, LLC, in connection
with the transactions contemplated by this Agreement.
3.32 Related Party Transactions. Except as set forth in
Schedule 3.32, and except for shares of International Companies which are owned
by Employees, neither the Company nor any Subsidiary of the Company is a party
to any transaction (other than employee compensation and other agreements
related to employment) and none is now proposed with any Person who is a
director, officer or employee of the Company or any Subsidiary of the Company,
or with the Seller or any Subsidiary of Seller (other than the Company or a
Subsidiary of the Company).
46
3.33 Accounting Practices. The books and records of the
Company and the Subsidiaries of the Company are complete and accurate in all
material respects.
3.34 Seller Umbrella Policies. Prior to the date of this
Agreement, true and correct copies of the Seller Umbrella Policies have been
delivered to the Purchaser. With regard to each of the Seller Umbrella Policies,
(i) all required payments of premium have been made and (ii) no written notice
of cancellation or termination has been received by the Seller. Except as set
forth in Schedule 3.34, no payments have been made under the Seller Umbrella
Policies, and no releases have been granted to insurers under the Seller
Umbrella Policies, which would cause less than $30,000,000 of coverage to be
available for any Seller Umbrella Policy period. There is no pending material
dispute between the Seller, on the one hand, and any insurer, on the other hand,
with respect to any matter, including coverage or the amount of an insurable
loss. Schedule 3.34 sets forth a list of all claims for coverage in respect of
Products Liability Claims which have been formally submitted to insurers under
the Seller Umbrella Policies for coverage, and, as of the date of this
Agreement, no written denial of coverage for any Products Liability Claim set
forth in Schedule 3.34 has been received by the Seller from any insurer under
the Seller Umbrella Policies.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as
follows:
4.1 Organization of the Purchaser. The Purchaser is a
wholly-owned Subsidiary of the Parent. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has all requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
4.2 Authorization, Validity and Enforceability. The execution,
delivery and performance of this Agreement by the Purchaser and the consummation
of the transactions contemplated hereby by the Purchaser have been duly and
validly authorized by all necessary action on the part of the Purchaser. This
Agreement has been duly executed and delivered by the Purchaser and constitutes
the legal, valid and binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms.
4.3 No Conflicts. Assuming compliance with the matters
referred to in Section 4.4 below, the execution, delivery and performance by the
Purchaser of this Agreement and the consummation of the transactions
contemplated hereby do not and will not conflict with, result in any breach or
violation of, or constitute a default under (or an event which with the giving
of notice or the lapse of time or both would constitute a default under) (a) the
certificate of incorporation, bylaws or other charter or organizational
documents of the Purchaser, (b) any material Contract to which the Purchaser is
a party or by or to which it or its assets or Properties may be bound or
subject, or (c) any applicable order, writ, judgment, injunction, award, decree,
law, statute, ordinance, rule or regulation,
47
other than, in the case of each of (b) and (c), any such terms that would not be
reasonably likely to, individually or in the aggregate, have a material adverse
effect on the ability of the Purchaser to execute and deliver this Agreement, to
perform its obligations hereunder or to consummate the transactions contemplated
hereby.
4.4 Consents and Approvals. Except for compliance with (i) the
applicable requirements of the HSR Act, (ii) any other applicable requirements
of foreign antitrust, competition, trade regulation or investment laws, and
(iii) any applicable environmental transfer statutes, no Consent of any
Governmental Entity or any other Person is required to be obtained, made or
given by the Purchaser in connection with the execution and delivery by the
Purchaser of this Agreement, the performance by the Purchaser of its obligations
hereunder and the consummation of the transactions contemplated hereby, except
for Consents which, if not obtained or made, would not be reasonably likely to,
individually or in the aggregate, have a material adverse effect on the ability
of the Purchaser to execute and deliver this Agreement, to perform its
obligations hereunder or to consummate the transactions contemplated hereby.
4.5 Investment Intent. The Shares will be acquired by the
Purchaser or its designated Affiliate for its own account without a view to a
distribution or resale thereof, it being understood that the Purchaser or its
designated Affiliate shall have the right to sell or otherwise dispose of any of
the Shares pursuant to a registration or an exemption therefrom under the
Securities Act, and any applicable state securities laws.
4.6 Financing. On the Transfer Date, the Purchaser will cause
its Affiliates to have sufficient funds to pay the purchase price for the
International Companies as provided in the International Agreements. At the
Closing, the Purchaser will, or will cause its relevant Affiliate to, have
sufficient funds to pay the Purchase Price for the Shares.
4.7 No Brokers. Except for Credit Suisse First Boston (Europe)
Limited, no Investment Broker acting on behalf of the Purchaser is or will be
entitled to any brokerage, finder's or other fee, compensation or commission
from the Purchaser in connection with the transactions contemplated by this
Agreement (the "Purchaser's Fee"). The Purchaser shall be solely responsible for
all fees and other payments to Credit Suisse First Boston (Europe) Limited in
connection with the transactions contemplated by this Agreement.
ARTICLE V.
COVENANTS
5.1 Conduct of Business Pending the Closing.
(a) From the date hereof until the Closing, except as otherwise
required or permitted under this Agreement or the International Agreements or to
the extent otherwise consented to by the Purchaser in writing, the Minerals
Group will operate the Business, including payment of notes and accounts payable
and efforts to collect notes and accounts receivable, in the ordinary course of
business consistent with past practice. From
48
the date hereof until the Closing, except as otherwise required or permitted
under this Agreement or the International Agreements, and except for
transactions occurring wholly between and among members of the Minerals Group
(other than transactions with the Joint Ventures), without the prior written
consent of Purchaser (which consent will not be unreasonably conditioned,
withheld or delayed), neither the Company nor any of its Subsidiaries or Joint
Ventures shall:
(i) except for borrowings of Permitted Debt (x) necessary to operate
the Business in the ordinary course of business consistent with past
practice or (y) made in connection with Approved Investments, and except
for issuances of Option Shares upon exercise of Company Options, issue or
sell, or agree or commit to issue or sell (whether through the issuance or
granting of options, warrants, call, rights to purchase or otherwise) any
stock of any class or series or any other equity interest, or any bonds,
debentures, notes, other evidences of indebtedness for borrowed money or
other securities of any kind;
(ii) materially write down or materially write up the value of any
inventory, except for write-downs, write-ups and write-offs in the
ordinary course of business consistent with past practice;
(iii) (A) cancel or compromise any material claim, or (B) waive any
other right of substantial value, or provide a discount from a previously
invoiced amount to any one customer in an amount in excess of $250,000, or
sell, transfer or otherwise dispose of any individual Property or asset
used in the Business having a book value, or disposed of for an amount, in
either case in excess of $250,000, except, in the case of each of clauses
(A) and (B), in the ordinary course of business consistent with past
practice (including sales of inventory);
(iv) dispose of or permit to lapse any patent, application for
patent, trademark, application for trademark, assumed name, servicemark,
application for servicemark, trade name, copyright, application for
copyright or license material to the operation of the Business, or dispose
of or disclose to any Person (other than the Purchaser and its
Representatives) any trade secret, formula, process or know-how material
to the operation of the Business, except in each case in the ordinary
course of business consistent with past practice;
(v) grant any general uniform increase in the compensation of
Employees (including any increase or change pursuant to any bonus,
pension, profit-sharing, retirement or other plan or commitment), or any
increase in any such compensation (including bonus) payable or to become
payable to any officer or Employee, except in accordance with its
customary and existing compensation policies;
(vi) hire any employee with an annual base salary in excess of
$150,000, or, hire any employee with special benefit or incentive programs
outside of the ordinary course of business or not of general applicability
or with a severance agreement that could result in a severance payment to
such employee in excess or one year of such employee's base salary;
provided, however, that for purposes of this
49
clause (vi), relocation payments made to newly hired employees shall not
be deemed to be a special benefit or incentive programs;
(vii) except as required by GAAP, made any change in its accounting
methods or practices;
(viii) except as required by Applicable Law or by any Governmental
Entity, and except as contemplated by Section 5.11 hereof or by Exhibit B
hereto, take any action to establish or to amend in any material respect
any Company Plan or International Plan or any Collective Bargaining
Agreement;
(ix) make or authorize (A) any investment other than in the ordinary
course of business consistent with past practice in an amount (including
the amount of any Indebtedness incurred or Liability assumed) which
exceeds $250,000 individually or $1,000,000 in the aggregate or (B) any
capital expenditures not provided for in the 2005 Capital Expenditure Plan
approved by the Board of Directors of World Minerals in January 2005,
except in the case of clause (A) for a loan to or an equity investment in
a Joint Venture (which equity investment increases the Minerals Group
equity ownership in such Joint Venture) in an amount which does not exceed
$1,000,000 in the aggregate, provided that the Seller determines and
notifies the Purchaser that alternative third party financing is not
reasonably available, and except in the case of each of clauses (A) and
(B) for Approved Investments;
(x) make any purchase of inventory other than in the ordinary course
of business consistent with past practice;
(xi) agree to incur any obligation or liability (absolute or
contingent) in respect of the Business except in the ordinary course of
business consistent with past practice and except for borrowings under the
Credit Agreement, Approved Investments and investments and capital
expenditures permitted under clause (ix) above;
(xii) mortgage, encumber by deed of trust, pledge or incur any Lien,
charge or other encumbrance with respect to any of the material Properties
or assets of the Business, except in the ordinary course of business
consistent with past practice and except for the Credit Agreement Lien;
(xiii) fail to perform all of its obligations under, default under
or terminate (other than on the stated expiration date) any Material
Contract, except in the ordinary course of business consistent with past
practice (it being understood and agreed by the parties that disputes and
warranty claims arising under Customer Contracts which are dealt with in
the ordinary course of business shall not be considered failures to
perform or defaults under Material Contracts);
(xiv) amend, terminate or waive any material Permit with respect to
the Business;
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(xv) permanently close, permanently downsize or permanently stop
operations at any industrial site;
(xvi) commit to move the existing Milan facility of World Minerals
Italia S.r.l. or secure any site for its potential future relocation;
(xvii) except for Approved Investments, make a binding commitment to
acquire any company or any business;
(xviii) make any cash contribution to the SERP or to any Company
Plan or any International Plan, except for cash contributions required to
be made before Closing by Applicable Law;
(xix) settle or make any settlement payment (other than in respect
of a settlement entered into prior to the date of this Agreement) in
respect of any of the matters set forth on Schedule 3.27(a);
(xx) enter into any new Contract that would be a Material Contract
as defined herein;
(xxi) purchase any new insurance policy or amend or terminate any
Company Insurance Policy, except for replacements or renewals of existing
Company Insurance Policies under substantially the same terms and
conditions (including comparable amount of premiums);
(xxii) except as contemplated by Section 5.11 hereof or by Exhibit B
hereto, enter into any Contract with any of its Affiliates or any
director, officer, or shareholder of the Company or any of its Affiliates;
or
(xxiii) agree, whether in writing or otherwise, to take any of the
actions set forth in this Section 5.1(a).
(b) From the date hereof until the Closing, except as otherwise
required or permitted under this Agreement or the International Agreements,
without the prior written consent of the Purchaser (which consent will not be
unreasonably conditioned, withheld or delayed), the Company will not (i) declare
or pay any Dividend, (ii) make any redemption, purchase or other acquisition of
any shares of its capital stock, or (iii) amend its certificate of incorporation
or bylaws, or merge with or into or consolidate with any other Person, subdivide
or in any way reclassify any shares of its capital stock or change or agree to
change in any manner the rights of its outstanding capital stock.
(c) In the event that, from the date hereof until the Closing, any
of the Company Insurance Policies is replaced as permitted by Section
5.1(a)(xxi) above or otherwise consented to by the Purchaser, Schedule 3.24 may
be updated prior to the Closing to reflect such replacement).
(d) The Company shall not, prior to Closing, issue a severance
policy or xxxxx xxxxxxxxx in excess of the amount described in the Severance
Plan in Exhibit B
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(except in accordance with an Employment Agreement) without the express written
consent of the Vice President of Human Resources of Purchaser, which consent
shall not be unreasonably withheld, delayed or conditioned.
(e) The Company shall not without "cause" terminate the employment
of any Employee who is a party to an Employment Agreement prior to Closing
without the express written consent of the Vice President of Human Resources of
Purchaser, which consent shall not be unreasonably withheld, delayed or
conditioned. In the case of any other salaried exempt Employee, the Company
shall inform (and consult with) the Vice President of Human Resources of
Purchaser prior to terminating any such Employee (other than in the case of a
termination for "cause"), but nothing contained herein shall be construed to
restrict the Company's exercise of its absolute discretion with respect to the
termination of any such salaried exempt Employee.
(f) The Purchaser and the Seller acknowledge that the lease of the
Nanterre, France office space expires on July 1, 2005, and agree to cooperate
with one another to determine what action should be taken in connection with the
renewal or extension of such lease.
5.2 Access to Information and Records; Confidentiality.
(a) Between the date of this Agreement and the Closing Date, the
Seller will, and will cause the Company and its Subsidiaries to, provide the
Purchaser and its Representatives with reasonable access, during normal business
hours, to any and all premises, Properties (including conducting Phase I
environmental site assessments), contracts, commitments, books, records and
other information (including Tax returns filed and those in preparation, and any
data and documents to assist the Purchaser in assessing various Company Employee
Benefit Plan and International Plan obligations) relating to the Business and
will cause its officers to furnish to the Purchaser and its Representatives any
and all financial, technical and operating data and other information pertaining
to the Business and the Properties and the assets of the Company and its
Subsidiaries as the Purchaser shall from time to time reasonably request;
provided, however, that neither the Purchaser nor its Representatives shall be
permitted to collect or analyze any environmental samples (including building
materials, indoor and outdoor air, surface and ground water, and surface and
substructure soils) without the written consent of the Seller, which consent may
be withheld by the Seller in its sole discretion.
(b) Prior to the Closing, the Purchaser and its Representatives
shall keep confidential all information and documents provided under this
Section 5.2 in accordance with the terms of the Confidentiality Agreement.
5.3 Public Announcements. The Seller and the Purchaser agree
to consult promptly with each other prior to issuing any press releases or
otherwise making public statements with respect to the transactions contemplated
hereby and by the International Agreements, and shall not issue any such press
release or make any such public statement without the prior written consent of
the other party (which consent shall not be unreasonably conditioned, withheld
or delayed), except as may be required by Applicable
52
Law or by obligations pursuant to any listing agreement with any national
securities exchange.
5.4 Furnishing Information. Each of the parties hereto will,
as soon as practicable after reasonable request therefor, furnish all the
information concerning it required for inclusion in any statement or application
made by any of them to any Governmental Entity in connection with the
transactions contemplated by this Agreement. In the event any action, suit,
proceeding or investigation of the nature specified in Section 6.4 or Section
7.4 hereof is commenced, whether before or after the Closing Date, each of the
parties hereto agrees to cooperate and to use commercially reasonable efforts to
defend against and respond thereto.
5.5 Certain Notifications. At all times prior to the Closing,
each party hereto shall as promptly as reasonably practicable notify the other
in writing of the occurrence of any event of which it obtains knowledge which
will result, or in the opinion of such party has a reasonable prospect of
resulting, in the failure to satisfy the conditions specified in Article VI
hereof with regard to the Purchaser's obligation to close or in the failure to
satisfy the conditions specified in Article VII hereof with regard to the
Seller's obligation to close.
5.6 Commercially Reasonable Efforts.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto agrees to use commercially reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement and shall use commercially reasonable efforts to
promptly obtain all waivers, Permits and Consents which are in the reasonable
opinion of the Seller or the Purchaser necessary or desirable in connection with
the transactions contemplated by this Agreement, including filings to the extent
required under any applicable competition laws, whether state, national or
international (including without limitation, under the HSR Act and the European
Commission Directorate-General for Competition Law). In seeking to obtain such
waivers, Permits and Consents which are required under the HSR Act or any other
applicable competition law, the parties hereto will consult and cooperate with
one another, and consider in good faith the views of one another, in connection
with any analyses, appearances, presentations, memoranda, briefs, arguments,
opinions and proposals made or submitted by or on behalf of any party hereto in
connection with proceedings under or relating to the HSR Act or any other
applicable competition law; provided, however, that (x) the Purchaser shall be
entitled to direct any such proceedings or negotiations related to any of the
foregoing and (y) the Purchaser shall not be required to agree to any condition,
restriction or undertaking required to obtain such waiver, Permit or Consent.
The Purchaser and the Seller may, as each deems advisable and as is reasonable,
designate any competitively sensitive information provided to the other under
this Section 5.6(a) as "outside counsel only," in which case such material and
the information contained therein will be given only to the outside legal
counsel of the recipient and will not be disclosed by such outside counsel to
the employees, officers or directors of the recipient unless express permission
is obtained in
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advance from the source of the materials (the Purchaser or the Seller, as the
case may be) or its outside legal counsel.
(b) Each of the parties hereto agrees to use commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to comply with any state
property transfer statutes to the extent applicable to the transactions
contemplated hereby and to cause the transactions contemplated hereby to be
effected in compliance with such statutes.
5.7 Non-Competition.
(a) During the period between the Closing Date and the third (3rd)
anniversary of the Closing Date, the Seller shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, anywhere in the world, own,
manage, operate or control, any business that is engaged in a Competing Business
(as defined below); provided, however, that nothing herein shall limit the
ability of the Seller and its Subsidiaries to (i) acquire and own, directly or
indirectly, solely as an investment, securities of any Person traded on any
national securities exchange that engages in a Competing Business if the Seller
or a Subsidiary of Seller is not a member of a group that controls such Person
and does not, directly or indirectly, own 9.9% or more of any class of
securities of such Person, or (ii) purchase an entity or entities that are
directly or indirectly engaged in, or assets that are used in, a Competing
Business at the time of such acquisition, so long as (x) such acquired entity is
primarily engaged, or the assets constitute a portion of a greater amount of
acquired assets which taken as a whole are used primarily in, activities which
are not Competing Businesses or (y) the Seller promptly disposes of any portion
of such acquired entity (or acquired assets) that is engaged in a Competing
Business.
For purposes of this Section 5.7(a), a "Competing Business" means
(i) the mining, manufacture or sale (including distribution) of (x) industrial
minerals, or products manufactured therefrom, similar to those presently being
mined, manufactured or sold by the Business, or (y) products which are currently
the subjects of ongoing research projects disclosed in a letter which has been
delivered by World Minerals to the Seller (with a copy to the Purchaser) prior
to the date hereof, or (ii) the manufacture or sale of products utilizing
crossflow filtration technology or of filtration membranes. For purposes of this
Section 5.7(a), an acquired entity or group of acquired assets which, based upon
financial statements for its most recently completed fiscal year, generated
twenty percent (20%) or more of total revenues from Competing Businesses shall
be deemed to be primarily engaged, or the assets primarily used, in activities
which are Competing Businesses.
(b) Since the Purchaser will be irreparably damaged and its remedy
at law will be inadequate in the event of a breach of Section 5.7(a), the
Purchaser shall be entitled to an injunction restraining any violation of such
Section or any other appropriate decree of specific performance, without showing
any actual damage or that monetary damages would not provide an adequate remedy.
Such remedies shall not be exclusive and shall be in addition to any other
remedy which the Purchaser may have, including the right to monetary damages for
the period preceding such specific enforcement.
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(c) If any provision of this Section 5.7 is held to be unenforceable
because of the scope, duration or area of its applicability, the court making
such determination shall have the power to modify such scope, duration or area
or all of them, and such provision shall then be applicable in such modified
form.
5.8 Interim Financial Statements. From the date hereof until
the Closing Date, as soon as practicable after they become available, the Seller
shall cause the Company to deliver to the Purchaser true and complete copies of
the quarterly or annual Group GAAP consolidated financial statements of the
Company and its Subsidiaries for each quarterly or annual period ending on or
after the date hereof. All such Group GAAP consolidated financial statements
shall be prepared in accordance with Group GAAP consistently applied throughout
the periods involved (except as may be indicated in the notes thereto), and
shall be delivered to the Purchaser within forty-five (45) days after the end of
each calendar quarter or within seventy-five (75) days after the end of the
fiscal year. The Seller shall also cause the Company to furnish to the Purchaser
as soon as practicable after completion, but in any event within twenty (20)
days following the end of each calendar month, copies of the consolidated
monthly financial statements of the Company and its Subsidiaries prepared by the
Company in the ordinary course of business consistent with past practice.
5.9 Intercompany Agreements. Except as set forth in Schedule
5.9, the Seller shall cause all intercompany accounts receivable or payable
(whether or not currently due or payable) between (x) the Company or any other
member of the Minerals Group, on the one hand, and (y) the Seller or any of its
Affiliates (other than the Company or any other member of the Minerals Group),
on the other hand, to be settled in full (without any premium or penalty, and at
values mutually agreed upon by the parties hereto) at or prior to the Closing.
In addition, all Affiliate Agreements shall be terminated and discharged without
any further Liability or obligation thereunder effective at or prior to the
Closing. For the avoidance of doubt, the Seller Umbrella Policies will not be
deemed to be Affiliate Agreements for purposes of this Section 5.9.
5.10 Options. The Seller and/or the Company shall use
commercially reasonable efforts to ensure that, immediately prior to the
Closing, all outstanding Company Options shall be canceled and shall be of no
further force or effect. Either (x) the Seller and/or the Company will provide
the Purchaser with evidence of such cancellation prior to the Closing or (y) the
Seller shall fully indemnify the Company and the Purchaser for any Losses
associated with the failure to cancel any Company Options outstanding at the
time of the Closing.
5.11 Employee Benefits.
(a) The Purchaser agrees that, from and after the Closing Date, it
will cause the Company and the other members of the Minerals Group to perform
all of their obligations in respect of (i) the Employment Agreements, as amended
prior to the date of this Agreement, and (ii) the SERP, in each case in
accordance with the terms thereof. The Purchaser further agrees that, from and
after the Closing Date, it will cause the Company and the other members of the
Minerals Group to perform all of their obligations under the
55
employee retention program (the "Completion Bonuses") and to provide at least
the severance benefits for the period and in the amounts described in Exhibit B
hereof to those Employees of the Company and the other members of the Minerals
Group identified in Exhibit B hereto. The Purchaser agrees that it will cause
the Company and the other members of the Minerals Group to make the payments of
the Completion Bonuses when such amounts are payable in accordance with their
terms.
(b) During the period from the date hereof through the Closing Date,
no further grants will be made under the Option Plan or the International LTIP.
At or prior to the Closing, the Seller shall cause the Company and the other
members of the Minerals Group to terminate the Option Plan, the Dividend
Equivalent Plan and the International LTIP.
(c) As of and after the Closing, all Employees still employed by any
member of the Minerals Group as of the Closing will, at Purchaser's option,
either become participants in the pension and welfare benefit plans (the
"Benefit Plans") of Purchaser or will continue to participate in the existing
Company Plans or International Plans (other than the International LTIP, the
Option Plan and the Dividend Equivalent Plan) in which such Employee
participated immediately prior to the Closing. Employees who become participants
in the Purchaser's Benefit Plans will receive credit for service with the
Company and its Subsidiaries for eligibility and vesting purposes, but not for
purposes of benefit accrual.
As of and after the Closing, the Purchaser shall, or shall cause the
Company and the other members of the Minerals Group to, honor all unused
vacation, holiday, sickness and personal days accrued by the Employees prior to
the Closing under the plans, arrangements, programs, policies and practices of
the Company and the other members of the Minerals Group as in effect immediately
prior to the Closing. With respect to any welfare benefit coverage provided to
an Employee after the Closing under a Benefit Plan, the Purchaser shall cause
such Benefit Plan to (i) waive all waiting periods, limitations as to
preexisting conditions, and other exclusions from participation and coverage
requirements, except to the extent that any such period, limitation or exclusion
applied to such Employee under the corresponding Company Plan or International
Plan immediately prior to the Closing and (ii) provide such Employee with credit
for any co-payments, deductibles and out-of-pocket expenses paid by such
Employee prior to the Closing under the corresponding Company Plan or
International Plan.
As of and after the Closing, the Purchaser, the Company and the
other members of the Minerals Group, and not the Seller or any of its
post-Closing ERISA Affiliates, shall have all responsibility and liability for
meeting all requirements under COBRA with respect to each Person who (i) becomes
an "M & A qualified beneficiary," within the meaning of Treasury Regulation Sec.
54.4980B-9, Q/A-4(b), on account of the transactions contemplated by this
Agreement, or (ii) is or was an Employee (or is or was a spouse or dependent
child of an Employee) of one of the U.S. Companies and, immediately prior to the
Closing, is entitled to receive, or is receiving, COBRA coverage under any group
health care plan of the Company or any other member of the Minerals Group.
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(d) In the event that the amounts set forth in the first column of
Exhibit C in respect of each of the repurchase of the Company Options, the
termination of the Dividend Equivalent Plan, the termination of the Domestic
LTIP, the termination of the International LTIP, the Bonus Payments, the
Executive Payments, and the Completion Bonuses (collectively, the "Compensation
Payments") are lower than the amounts actually paid by the Company and the other
members of the Minerals Group in respect of each such Compensation Payment, then
the Seller, upon receipt of a schedule showing the actual amount of such
Compensation Payment (such amount in excess of the amount set forth on the first
column of Exhibit C being referred to as the "Excess Payments"), shall promptly
pay to Purchaser an amount equal to (x) the sum of (i) the Excess Payments and
(ii) the Employment Tax Rate applicable to each item included in the Excess
Payments as set forth on Exhibit C to such Excess Payment, less (y) the Excess
Payments multiplied by the Effective Tax Rate applicable to each such item
included in the Excess Payments as set forth on Exhibit C. To the extent that
the amounts set forth in the first column of Exhibit C in respect of the
Compensation Payments are higher than the amounts actually paid by the Company
and the Minerals Group in respect of each item of the Compensation Payments (the
amount set forth on the first column of Exhibit C that exceeds the amount
actually paid being referred to as the "Overpayments"), then the Purchaser shall
promptly pay to Seller (following the payment of all amounts due in respect of
such Compensation Payments) an amount equal to (x) the sum of (i) the
Overpayments and (ii) the Overpayments multiplied by the Employment Tax Rate
applicable to such Overpayments, less (y) the Overpayments multiplied by the
Effective Tax Rate applicable to each such item included in the Overpayments as
set forth on Exhibit C.
(e) Except as specifically provided in Sections 5.11(a) and as
otherwise provided in this Section 5.11(e) and in Exhibit B hereto, after the
Closing, nothing in this Agreement shall preclude the Company or any of its
Subsidiaries from amending, reducing or terminating any benefits for any
Employees at any time. Notwithstanding the above, no such amendment made within
one year of the Closing Date shall be inconsistent with the last sentence of the
first paragraph of Section 5.11(c) or the second or third paragraphs of Section
5.11(c).
(f) Purchaser shall cause the Company to pay following the Closing
Date to each Employee who had received an award in respect of the calendar year
2005 under the Bonus Plan and who is either (i) employed by the Company on the
date fifteen (15) days after the Closing Date or (ii) was employed by the
Company on the Closing Date and was terminated thereafter without "cause", a
payment "on account" of the amount, if any, to be earned by such Employee
thereunder. The payment to each such Employee shall equal (x) that percentage
which the number of days in 2005 that have elapsed until the Closing Date is to
365 times (y) the payment that would be due under the Bonus Plan for 2005 (based
upon each such Employee's target opportunities) calculated by (i) annualizing
the financial results achieved during the period from January 1, 2005 through
the end of the calendar month preceding the Closing Date for the full calendar
year 2005 and (ii) assuming that each Employee's satisfaction of the Employee's
individual objectives in respect of calendar year 2005 were equal to the
satisfaction of the Employee's individual objectives in 2004 (the aggregate of
such payments being referred to herein as the "Bonus Payments.")
57
5.12 Oracle Contract. In the event that the amount set forth
in the first column of Exhibit C in respect of the Oracle Contract is not
sufficient to fully pay and discharge all obligations of World Minerals arising
under or related to the implementation of the Oracle Contract from and after
April 11, 2005 (including any third-party consulting or subcontractor fees or
out-of-pocket expenses related thereto (but not internal time charges)), then
the Seller, upon receipt of reasonable documentation evidencing the payment of
such amounts in excess of the amount set forth in respect of the Oracle Contract
in the first column of Exhibit C (the "Excess Oracle Payment"), shall promptly
pay to Purchaser an amount equal to (x) 1 minus the Effective Tax Rate
(expressed as a percentage) applicable to the Oracle Contract as set forth on
Exhibit C multiplied by (y) the Excess Oracle Payment.
5.13 U.K. Pension. Seller shall promptly pay to Purchaser,
upon receipt from time to time but on or before the third anniversary of the
Closing Date of a certificate of the appointed actuary to the U.K. Pension
Scheme (the "Actuary's Certificate") certifying the amount of the Minimum
Funding Deficit, an amount equal to (x) one (1) minus the Effective Tax Rate
(expressed as a percentage) applicable to the U.K. Pension Scheme as set forth
on Exhibit C multiplied by (y) the amount by which the Minimum Funding Deficit
in such Actuary's Certificate exceeds the amount of (Pound) 845,000 plus the
amount of the Minimum Funding Deficit set forth in any prior Actuary's
Certificate, where (i) the "Minimum Funding Deficit" means the amount by which
the Liabilities exceed the Assets on the Closing Date, the "Assets" means the
assets of the UK Pension Scheme on the Closing Date determined in accordance
with section 56 Pensions Act 1995 and with Financial Accounting Standards Board
Statement No. 87, and the "Liabilities" means the liabilities of the UK Pension
Scheme on the Closing Date determined in accordance with section 56 Pensions Act
1995 and with Financial Accounting Standards Board Statement No. 87.
If any action or proceeding is commenced to wind up the UK Pension
Scheme on or before the third anniversary of the Closing Date and as a direct
result thereof demand is made upon Purchaser for the payment of the Buy-Out
Deficit, then the Seller shall promptly pay to Purchaser, upon receipt of a
certificate of the appointed actuary to the UK Pension Scheme (the "Actuary's
Wind Up Certificate") certifying the amount of the Buy-Out Deficit, an amount
equal to (x) one (1) minus the Effective Tax Rate (expressed as a percentage)
applicable to the U.K. Pension Scheme as set forth on Exhibit C multiplied by
(y) the amount by which the Buy-Out Deficit in such Actuary's Wind Up
Certificate exceeds the amount of (Pound) 845,000 plus the amount, if any, of
the Minimum Funding Deficit. The "Buy-Out Deficit" means the amount of the cash
contribution required from any of the entities contributing to the UK Pension
Scheme (collectively, the "UK Subsidiaries") by the trustee of the UK Pension
Scheme under section 75 Pensions Xxx 0000. Notwithstanding the foregoing, the
Seller shall have no obligation to make any payment to Purchaser with respect to
the winding up of the UK Pension Scheme if such winding up is caused by or
attributable to (i) the failure of any of the UK Subsidiaries to comply with any
of their obligations to the UK Pension Scheme, (ii) any change in the business
or operations of any of the UK Subsidiaries, including any dissolution,
liquidation or business cessation of any of the UK Subsidiaries, howsoever
effected, (iii) the termination of the obligation of any of the UK Subsidiaries,
or any failure by any of the UK Subsidiaries timely, to contribute to the
58
UK Pension Scheme or (iv) an order of The Pensions Regulator or the Pension
Protection Fund, other than an order attributable to any of the acts or
omissions of the UK Subsidiaries before the Closing Date.
If any third party shall notify any the Purchaser or the UK
Subsidiaries with respect to any matter which may give rise to a claim against
the Seller under this Section 5.13, then the Purchaser shall, as promptly as
practicable (and in any event within twenty (20) Business Days after receiving
written notice of a potential claim), notify the Seller in writing; provided,
however, that failure to provide such written notice on a timely basis shall not
release the Seller from any of its obligations under this Section 5.13 except to
the extent that the Seller is prejudiced by such failure. Upon receipt of such
notice, the Seller shall be entitled to participate in or to assume, at the
Seller's own expense, the defense, appeal or settlement of such claim with
counsel of the Seller's own choosing, and the Purchaser and the UK Subsidiaries
shall fully cooperate with the Seller in connection therewith including
contesting such claim, and the Seller shall have the right to consent to entry
of any judgment or enter into any settlement involving only the payment of
money, without the consent of the Purchaser or the UK Subsidiaries. If the
Seller does not assume the defense, appeal or settlement of a claim, the
Purchaser or the UK Subsidiaries may proceed in such manner as they may deem
appropriate with regard to such claim; provided, that they shall not settle such
claim without providing notice and a description of the proposed settlement to
the Seller.
5.14 Indemnification of Brokerage. The Seller agrees to pay
the Seller's Fee and to indemnify and hold harmless the Purchaser from any claim
or demand for commission or other compensation by any Investment Broker claiming
to have been employed by or on behalf of the Company, any of its Subsidiaries or
the Seller in connection with the transactions contemplated hereby, and to bear
the cost of legal expenses incurred in defending against any such claim. The
Purchaser agrees to pay the Purchaser's Fee and to indemnify and hold harmless
the Seller from any claim or demand for commission or other compensation by any
Investment Broker claiming to have been employed by or on behalf of the
Purchaser in connection with the transactions contemplated hereby, and to bear
the cost of legal expenses incurred in defending against any such claim.
5.15 WARN ACT. The Purchaser agrees that, at each "single site
of employment" (as such term is defined in 20 CFR Section 639.3(i)) located
within the United States that is part of the Business, the number of Employees
still employed by any member of the Minerals Group as of the Closing who will
have an "employment loss" (as such term is defined in 20 CFR Section 639.3(f))
during the ninety (90) day period following the Closing Date shall be less than
(i) in the case of a "plant shutdown" (as such term is defined in 20 CFR Section
639.3(b)), fifty (50) such Employees, or (ii) in any other case, the lesser of
(x) five hundred (500) such Employees or (y) the greater of fifty (50) such
Employees or one-third (33.33%) of the total number of such Employees at such
site.
5.16 Transfer Taxes. The Seller, the Company and the Purchaser
shall cooperate in the preparation, execution and filing of all returns,
applications or other documents regarding any real property transfer, stock
transfer, transfer gains or similar taxes (including penalties and interest)
which become payable in connection with the sale of the
59
Shares pursuant to this Agreement (collectively, "Transfer Taxes") and shall
cooperate in taking all reasonable steps to mitigate or eliminate such Transfer
Taxes. The Seller and the Purchaser each shall pay one-half of any Transfer
Taxes. The Purchaser alone shall pay all real property transfer, stock transfer,
value added, capital, transfer gains or similar taxes (including penalties and
interest) which become payable in connection with the transactions contemplated
by the International Agreements ("International Transfer Taxes"). Seller shall
cooperate in taking all reasonable steps requested by Purchaser to mitigate or
eliminate any applicable International Transfer Taxes.
5.17 Notification of Certain Matters.
(a) If at any time after the date hereof and prior to the Closing
Date, to the knowledge of the Seller, any new event shall occur or new matter
shall arise (or Seller shall become aware of an event or matter occurring or
arising prior to the date hereof but not previously disclosed) which would cause
any of the representations and warranties made by the Seller in this Agreement
to be untrue or inaccurate in any material respect as of the Closing Date (or,
in the case of any representation or warranty that is qualified as to
materiality, to be untrue or inaccurate in any respect as of the Closing Date),
the Seller shall promptly notify the Purchaser in writing. Except as provided in
the last paragraph of Section 8.2 hereof, (i) no disclosure made by the Seller
pursuant to this Section 5.17 shall be deemed to amend or supplement the
Schedules to this Agreement or to prevent or cure any misrepresentation or
breach of warranty, and (ii) no disclosure made by the Seller pursuant to this
Section 5.17 shall affect or otherwise limit the remedies available hereunder to
the Purchaser.
(b) Each of the Seller and the Purchaser agrees to promptly inform
the other of any notice or written communication or any request for additional
information or documentary materials by, any Governmental Entity in connection
with the transactions contemplated hereby.
5.18 Repayment of Credit Agreement. The Seller shall cause the
Company and its Subsidiaries to apply all or a portion of the International
Proceeds to the payoff of all obligations of the Loan Parties under the Credit
Agreement with the effect that Union Bank, as collateral agent under the
Financing Documents, shall terminate and release the Credit Agreement Lien. The
Seller shall cause the Company and its Subsidiaries to obtain from Union Bank a
payoff letter addressed to one or more of the Loan Parties in Union Bank's
customary form.
5.19 Termination of Oracle Contract. Prior to the Closing, the
Seller shall cause World Minerals to terminate the Oracle Contract (including
any related third party consulting or subcontracting agreements).
5.20 Employee Shares. Prior to the Closing, the Seller shall
use commercially reasonable efforts to cause each of the Employees who is
designated on Schedule 3.7(a) as an owner of shares of International Companies
to execute an instrument in a form to be furnished by the Purchaser providing
for the transfer of such shares, for no
60
consideration, to the Purchaser or to such Person or entity as may be designated
by the Purchaser.
5.21 Option Shares. Prior to the Closing, the Seller shall
purchase all Option Shares (including the Outstanding Option Shares) and, at the
Closing, shall deliver all such purchased Option Shares to the Purchaser.
ARTICLE VI.
CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO CLOSE
The obligation of the Purchaser to purchase the Shares at the
Closing shall be subject to the satisfaction of the following conditions at or
prior to the Closing (unless waived by the Purchaser):
6.1 Representations and Warranties. Each of the
representations and warranties of the Seller contained in this Agreement which
are qualified as to materiality shall be true and correct in all respects, and
each of those not so qualified shall be true and correct in all material
respects, both as of the date of this Agreement and, except for any such
representations and warranties which are made as of and relate solely to a
particular date (which shall be true and correct as of such date), as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date.
6.2 Covenants. The Seller shall have performed and complied in
all material respects with all covenants and agreements required to be performed
or complied with by the Seller hereunder on or prior to the Closing Date.
6.3 Consents. All Consents required in connection with the
Transfers and with the purchase and sale of the Shares shall have been duly
obtained, made or given and shall be in full force and effect, except in the
case of Consents (i) required to be obtained, made or given as a result of the
purchase of any of the International Companies by the Purchaser under the
applicable International Agreement which Consent would not have been required to
be obtained, made or given if the Purchaser had indirectly acquired beneficial
ownership of such International Company under this Agreement, (ii) the absence
of which would not result in civil or criminal sanctions being imposed upon the
Purchaser or any of its Affiliates or (iii) where the failure to obtain any such
Consents would not be reasonably expected to, individually or in the aggregate,
(x) materially impair or interfere with the ability of the Purchaser and its
Subsidiaries, taken as a whole, to conduct its business substantially in the
manner in which such business is now being conducted or (y) have a Material
Adverse Effect. All such Consents which have been obtained shall have been
obtained on terms which would not be reasonably expected to, individually or in
the aggregate, (x) materially impair or interfere with the ability of the
Purchaser and its Subsidiaries, taken as a whole, to conduct its business
substantially in the manner in which such business is now being conducted or (y)
have a Material Adverse Effect.
6.4 No Proceedings. No injunction, order, decree or judgment
shall have been issued by any Governmental Entity of competent jurisdiction and
be in
61
effect, and no statute, rule or regulation shall have been enacted or
promulgated by any Governmental Entity and be in effect, which, in either case,
restrains or prohibits the consummation of the purchase and sale of the Shares.
No action or proceeding before any court or regulatory authority, domestic or
foreign, shall have been instituted or threatened by (i) any Governmental Entity
which seeks to prevent or delay the consummation of the purchase and sale of the
Shares or which challenges the validity or enforceability of this Agreement or
(ii) by any other Person which seeks to prevent or delay the consummation of the
purchase and sale of the Shares or which challenges the validity or
enforceability of this Agreement, unless the Seller agrees to fully indemnify
the Purchaser Indemnitees from any and all Losses resulting from or arising out
of such action or proceeding, including any settlement thereof, in accordance
with the provisions of Article VIII hereof.
6.5 Antitrust Approvals. The applicable waiting period
(including any extension thereof) under the HSR Act relating to the purchase and
sale of the Shares shall have expired or been earlier terminated, and the
required antitrust approvals set forth on Exhibit F hereto shall have been
obtained.
6.6 Resignation of Directors. On or prior to the Closing Date
(or, if earlier, on or prior to the Transfer Date), the Persons listed on
Schedule 6.6 hereto who serve as directors of the Company or any of its
Subsidiaries shall have resigned from such positions.
6.7 No Material Adverse Change. Since the date of this
Agreement, no change or event shall have occurred or condition exist that,
individually or in the aggregate, has had or would be reasonably likely to have
a Material Adverse Effect.
6.8 Deliveries. The Seller shall have delivered to the
Purchaser at the Closing the following:
(a) A certificate, in form and substance reasonably acceptable to
the Purchaser, dated the Closing Date and signed by an executive officer of the
Seller, certifying as to the fulfillment of the conditions set forth in Section
6.1, Section 6.2 and Section 6.7;
(b) A certificate in form and substance reasonably acceptable to the
Purchaser, dated the Closing Date, executed by an executive officer of the
Seller, and attested to by the Secretary or Assistant Secretary of the Seller,
and certifying: (i) that attached thereto is a true, correct and complete copy
of the Certificate of Incorporation of the Seller, including all amendments
thereto, as in effect on the Closing Date; (ii) that attached thereto is a true
and complete copy of the resolutions duly adopted by the Board of Directors of
the Seller authorizing the execution and delivery of this Agreement, and that
such resolutions have not been modified, rescinded or amended and are in full
force and effect as of the Closing Date; and (iii) as to the incumbency of the
officers of the Seller executing this Agreement and the certificates delivered
hereunder and their signatures;
(c) A certificate in form and substance reasonably acceptable to the
Purchaser, dated the Closing Date, executed by an executive officer of the
Company, and attested to by the Secretary or Assistant Secretary of the Company,
and certifying: (i) that
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attached thereto is a true, correct and complete copy of the Certificate of
Incorporation of the Company, including all amendments thereto, as in effect on
the Closing Date; (ii) that attached thereto is a true and complete copy of the
resolutions duly adopted by the Boards of Director of each Subsidiary of the
Company which is a party to one or more of the International Agreements
authorizing the execution and delivery of such International Agreements, and
that such resolutions have not been modified, rescinded or amended and are in
full force and effect as of the Closing Date;
(d) Certificates of good standing of the Company and each of its
Subsidiaries which is a U.S. Company from the Secretaries of State of each
jurisdiction listed on Schedule 3.5 in which the Company and each of its
Subsidiaries which is a U.S. Company are authorized to conduct business as a
foreign corporation, each dated not earlier than ten (10) Business Days prior to
the Closing Date; and
(e) A certificate of existence for the Seller from the Secretary of
State of the State of Delaware.
With regard to the conditions to the Closing set forth above, if the
Closing does not take place on the Transfer Date, then, prior to the first
Transfer, (i) the Seller shall deliver to the Purchaser the certificates
described in Section 6.8 above, which certificates shall be dated the Transfer
Date, and, upon delivery of such certificates by the Seller to the Purchaser,
the conditions to Closing set forth in Sections 6.1, 6.2, 6.7 and 6.8 above
shall be deemed to be satisfied, (ii) the Seller shall cause the Persons listed
on Schedule 6.6 hereto to deliver the resignations required to be delivered by
Section 6.6 hereof, and upon delivery of such resignations, the conditions to
Closing set forth in Section 6.6 shall be deemed to be satisfied, and (iii) the
Purchaser shall deliver to the Seller a certificate, which certificate shall be
signed by dated the Transfer Date and signed by an executive officer of the
Purchaser, stating that the conditions to Closing set forth in Sections 6.3, 6.4
and 6.5 are satisfied or, to the extent not satisfied, waived, and upon the
delivery of such certificate from the Purchaser to the Seller the conditions to
Closing set forth Sections 6.3, 6.4 and 6.5 shall be deemed to be satisfied.
ARTICLE VII.
CONDITIONS TO THE OBLIGATIONS OF THE SELLER TO CLOSE
The obligations of the Seller to sell the Shares at the Closing
shall be subject to the satisfaction of the following conditions at or prior to
the Closing (unless waived by the Seller):
7.1 Representations and Warranties. Each of the
representations and warranties of the Purchaser contained in this Agreement
which are qualified as to materiality shall be true and correct in all respects,
and each of those not so qualified shall be true and correct in all material
respects, both as of the date of this Agreement and, except for any such
representations and warranties which are made as of and relate solely to a
particular date (which shall be true and correct as of such date), as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date.
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7.2 Covenants. The Purchaser shall have performed and complied
in all material respects with all covenants and agreements required to be
performed or complied with by the Purchaser hereunder on or prior to the Closing
Date.
7.3 Consents. All Consents required in connection with the
Transfers and with the purchase and sale of the Shares shall have been duly
obtained, made or given and shall be in full force and effect, except in the
case of Consents (i) the absence of which would not result in civil or criminal
sanctions being imposed upon the Seller or any of its Affiliates or (ii) where
the failure to obtain any such Consents would not be reasonably expected to,
individually or in the aggregate, materially impair or interfere with the
ability of the Seller and its Subsidiaries, taken as a whole (but excluding the
Minerals Group), to conduct its business (other than the Business being
conducted by the Minerals Group) substantially in the manner in which such
business is now being conducted. All such Consents which have been obtained
shall have been obtained on terms which would not be reasonably expected to,
individually or in the aggregate, materially impair or interfere with the
ability of the Seller and its Subsidiaries, taken as a whole (but excluding the
Minerals Group), to conduct its business substantially in the manner in which
such business is now being conducted.
7.4 No Proceedings. No injunction, order, decree or judgment
shall have been issued by any Governmental Entity of competent jurisdiction and
be in effect, and no statute, rule or regulation shall have been enacted or
promulgated by any Governmental Entity and be in effect, which, in either case,
restrains or prohibits the consummation of the purchase and sale of the Shares.
No action or proceeding before any court or regulatory authority, domestic or
foreign, shall have been instituted or threatened by (i) any Governmental Entity
which seeks to prevent or delay the consummation of the purchase and sale of the
Shares or which challenges the validity or enforceability of this Agreement or
(ii) by any other Person which seeks to prevent or delay the consummation of the
purchase and sale of the Shares or which challenges the validity or
enforceability of this Agreement, unless the Purchaser agrees to fully indemnify
the Seller Indemnitees from any and all Losses resulting from or arising out of
such action or proceeding, including any settlement thereof, in accordance with
the provisions of Article VIII hereof.
7.5 Antitrust Approvals. The applicable waiting period
(including any extension thereof) under the HSR Act relating to the purchase and
sale of the Shares shall have expired or been earlier terminated, and the
required antitrust approvals set forth on Exhibit F hereto shall have been
obtained.
7.6 Deliveries. The Purchaser shall have delivered to the
Seller at the Closing the following:
(a) A certificate, in form and substance reasonably acceptable to
the Seller, dated the Closing Date and signed by an executive officer of the
Purchaser, certifying as to the fulfillment of the conditions set forth in
Section 7.1 and Section 7.2;
(b) A certificate in form and substance reasonably acceptable to the
Seller, dated the Closing Date, executed by an executive officer of the
Purchaser, and
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attested to by the Secretary or Assistant Secretary of the Purchaser, and
certifying: (i) that attached thereto is a true and complete copy of the
resolutions duly adopted by the Board of Directors of the Purchaser authorizing
the execution and delivery of this Agreement, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect as of the
Closing Date; and (ii) as to the incumbency of the officers of the Purchaser
executing this Agreement and the certificates delivered hereunder and their
signatures;
(c) A certificate in form and substance reasonably acceptable to the
Seller, dated the Closing Date, executed by an executive officer of the Parent,
and attested to by the Secretary or Assistant Secretary of the Parent, and
certifying: (i) that attached thereto is a true and complete copy of the
resolutions duly adopted by the Board of Director of the Parent authorizing the
execution and delivery of this Agreement, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect as of the
Closing Date and (ii) as to the incumbency of the officer of the Parent
executing this Agreement and his or her signature;
(d) A certificate of existence for the Purchaser from the Secretary
of State of the State of Delaware; and
(e) A certificate of incorporation of Parent ("extrait K-bis").
In the event that the Closing does not take place on the Transfer
Date, then, prior to the first Transfer, (i) the Purchaser shall deliver to the
Seller on the Transfer Date the certificates described in Section 7.6 hereof,
which certificate shall be dated the Transfer Date, and upon the delivery of
such certificates from the Purchaser to the Seller, the conditions to Closing
set forth in Sections 7.1, 7.2 and 7.6 hereof shall be deemed to be satisfied,
and (ii) the Seller shall deliver to the Purchaser a certificate, which
certificate shall be dated the Transfer Date and signed by an executive officer
of the Seller, stating that the conditions to Closing set forth in Sections 7.3,
7.4 and 7.5 are satisfied or, to the extent not satisfied, waived, and upon the
delivery of such certificate from the Seller to the Purchaser, the conditions to
Closing set forth in Sections 7.3, 7.4 and 7.5 shall be deemed to be satisfied.
ARTICLE VIII.
INDEMNIFICATION
8.1 Survival. The representations, warranties, covenants and
agreements of the parties contained in this Agreement shall survive the Closing
hereunder and continue in full force and effect as follows:
(a) the representations and warranties set forth in Section 3.2
(Authorization, Validity and Enforceability), Section 3.5 (Organization and
Qualification of the Company and the Subsidiaries), Section 3.8 (Title to
Shares) and Section 3.23 (Joint Venture Interests) of this Agreement shall
survive indefinitely as shall the covenants and agreements set forth in Article
IX (provided that the rights to indemnification granted in Article IX are
subject to the time limits expressly set forth in Section 9.1(c)) and in Section
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8.2 and in Section 8.3 (provided that the rights to indemnification granted in
clause (a) of Section 8.2 and in clause (a) of Section 8.3 are subject to the
time limits expressly set forth in this Section 8.1);
(b) the covenants and agreements set forth in Article X (Tax
Matters) of this Agreement and the representations and warranties set forth in
Sections 3.13 (Tax Matters) and 3.15 (Company Plans; International Plans; ERISA)
of this Agreement shall survive until thirty (30) days after expiration of the
applicable statutes of limitation;
(c) the representations and warranties set forth in Sections 3.17
(Real Property), 3.18 (Leasehold Interests), 3.19 (Mining Claims, Surface Rights
and Water Rights), 3.24 (Company Insurance Policies) and 3.29 (Environmental
Matters) of this Agreement shall expire on the fifth (5th) anniversary of the
Closing Date, except that, with regard to Specified 3.24 Matters, the
representation and warranties set forth in Section 3.24 (Company Insurance
Policies) shall expire on July 31, 2016;
(d) the representations set forth in Section 3.34 (Seller Umbrella
Policies) of this Agreement shall expire on July 31, 2016;
(e) the representations and warranties set forth in this Agreement
(other than those referred to in Sections 8.1(a), 8.1(b), 8.1(c) and 8.1(d)
above) shall expire on the second (2nd) anniversary of the Closing Date; and
(f) no claim or action for breach of any representation or warranty
shall be asserted or maintained by any party hereto after the expiration thereof
pursuant to the preceding clauses (a), (b), (c), (d) and (e) except for claims
made in writing after the Closing Date and prior to such expiration and except
for actions commenced prior to such expiration or threatened in writing prior to
such expiration and commenced promptly thereafter.
All rights in respect of any breach of any covenant or agreement set
forth in this Agreement shall survive until the expiration of the applicable
statute of limitations, unless otherwise expressly provided for herein or
therein. For the avoidance of doubt, the survival period for those covenants and
agreements set forth in Article IX shall be governed by Section 8.1(a) above,
and the survival period for the covenants and agreements set forth in Article X
shall be governed by Section 8.1(b) above.
8.2 Indemnification Provisions for Benefit of the Purchaser.
This Section 8.2 and the other provisions of this Article VIII shall not apply
to (i) any Products Liability Claim, which shall be governed exclusively by the
provisions of Article IX of this Agreement, (ii) any breach of any
representation or warranty of the Seller contained in Section 3.24 of this
Agreement to the extent that such breach relates to the applicability of, or
availability of coverage under, a Company Insurance Policy to a Products
Liability Claim (a "Specified 3.24 Matter"), which shall be governed exclusively
by the provisions of Article IX of this Agreement, (iii) any breach of any
representation or warranty of the Seller contained in Section 3.34 of this
Agreement, which shall be governed exclusively by the provisions of Article IX
of this Agreement, or (iv) any Tax Claim, which shall be governed exclusively by
the provisions of Article X of this Agreement. Subject to the limitations set
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forth in Section 8.1 above and except as provided in the preceding sentence, the
Seller agrees to indemnify the Purchaser and its successors, permitted assigns,
directors, officers, employees and Affiliates (including, from and after the
Closing Date, the Company and the other members of the Minerals Group) (the
"Purchaser Indemnitees") from and against all liabilities, losses, expenses, and
fees, including court costs, reasonable attorneys' fees, judgments and
settlements (collectively, "Losses;" any Loss expressed in a foreign currency
shall be paid in the local currency or converted into United States dollars on
the payment date), arising out of or resulting from (a) any breach of any
representation or warranty of the Seller (other than breach of a Specified 3.24
Matter or breach of Section 3.34) contained in this Agreement, (b) the breach or
nonperformance of any covenant or agreement of the Seller contained in this
Agreement (except an agreement which is governed by Article IX or by Article X
of this Agreement and except an agreement which, pursuant to the express terms
of this Agreement, is not to survive and is to expire or be terminated upon the
Closing or termination of this Agreement), (c) any Losses attributable to any
Employee Benefit Plan established, maintained or contributed to by Seller and
its ERISA Affiliates but excluding any Employee Benefit Plan established,
maintained or contributed to by any member of the Minerals Group, and (d) the
Special Indemnity. Notwithstanding the foregoing, for purposes of the
indemnification provided under clause (a) of this Section 8.2 (other than in
respect of the breach or inaccuracy of Sections 3.2, 3.5, 3.8 and 3.23 of this
Agreement, to which the Seller Deductible shall not apply) and for purposes of
the Litigation Indemnity provided for in the Special Indemnity, the Seller shall
have no obligation to indemnify the Purchaser Indemnitees until such time, if
any, as, and only to the extent that, the aggregate amount of the Losses arising
out of all such breaches exceeds $2,500,000 (the "Seller Deductible"); provided,
further, that (i) for the purposes of the indemnification provided in clause (a)
of this Section 8.2, the obligation of Seller to indemnify the Purchaser
Indemnitees with respect to any Losses relating to breach of any representation
or warranty relating to any Joint Venture, shall be limited to the amount of
such Loss multiplied by a percentage equal to the Minerals Group's percentage
ownership interest in such Joint Venture as set forth in Schedule 3.23, and (ii)
for purposes of the indemnification provided in clause (a) of this Section 8.2
(other than in respect of the breach or inaccuracy of the representations and
warranties set forth in Sections 3.2, 3.5, 3.8 and 3.23, to which no limitation
on the amount of indemnification shall apply) and for purposes of the Litigation
Indemnity provided for in the Special Indemnity, the obligation of the Seller to
indemnify the Purchaser Indemnitees shall be limited to indemnification in an
aggregate amount equal to (x) $130,000,000 less (y) an amount equal to 50% of
the Cash Adjustment at Closing.
For purposes of the indemnification provided in clause (a) of this
Section 8.2, in determining whether any of the representations or warranties set
forth in this Agreement has been breached, no effect will be given to any
materiality (or Material Adverse Effect) qualification set forth in such
representation or warranty, and, for indemnification purposes hereunder, any
such materiality (or Material Adverse Effect) qualification shall be
disregarded. For illustrative purposes, in determining whether indemnification
is available for breach of a representation set forth in the first sentence of
Section 3.26 (Compliance with Applicable Law), the first sentence of Section
3.26 would be deemed to read in its entirety as follows: "The Company and its
Subsidiaries hold all Permits with and under Applicable Law which are required
to carry on the Business as presently conducted." For the purposes of the
indemnification provided for in clause (a) of this Section 8.2 to which the
Seller
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Deductible applies, and for purposes of the Litigation Indemnity set forth in
the Specified Indemnity, only those single claims for indemnification in excess
of $100,000 (but the entire amounts of such claims, and not just the portions in
excess of $100,000) shall be counted toward the Seller Deductible.
In the event of a breach of any representation or warranty of the
Seller contained in this Agreement, the Purchaser shall have all rights and
remedies for such breach available to it under the provisions of this Agreement,
whether at law or equity, regardless of any Knowledge of, disclosure to, or
investigation made by or on behalf of, the Purchaser on or before the Closing
Date; provided, however, that in the event that the Seller specifically
discloses to the Purchaser in writing, prior to the Closing, pursuant to Section
5.17 hereof or otherwise, a breach of a representation or warranty which would
have or be reasonably likely to have a Material Adverse Effect and so cause the
condition to the Purchaser's obligation to effect the Closing set forth in
Section 6.7 hereof not to be satisfied and the Purchaser nonetheless chooses to
proceed with the Closing, then (i) the Purchaser shall be deemed to have waived
the conditions to the Purchaser's obligation to effect the Closing set forth in
Sections 6.1, 6.7 and 6.8(a) which would otherwise fail to be satisfied as a
result of such breach and (ii) the Seller shall have no obligation under the
indemnification provided in clause (a) of this Section 8.2 to indemnify the
Purchaser in respect of such breach.
8.3 Indemnification Provisions for Benefit of the Seller.
Subject to the limitations set forth in Section 8.1 above, the Purchaser agrees
to indemnify the Seller and its successors, permitted assigns, directors,
officers, employees and Affiliates (the "Seller Indemnitees") from and against
all Losses arising out of or resulting from (a) any breach of any representation
or warranty of the Purchaser contained in this Agreement or (b) the material
breach or nonperformance of any covenant or agreement of the Purchaser contained
in this Agreement (except an agreement which, pursuant to the express terms of
this Agreement, is not to survive and is to expire or be terminated upon the
Closing or termination of this Agreement); provided, however, that for purposes
of the indemnification provided under clause (a) of this Section 8.3 (other than
in respect of the breach or inaccuracy of Section 4.6, to which the Purchaser
Deductible shall not apply), the Purchaser shall have no obligation to indemnify
the Seller Indemnitees until such time, if any, as, and only to the extent that,
the aggregate amount of the Losses arising out of all such breaches exceeds
$2,500,000 (the "Purchaser Deductible"); provided, further, that for purposes of
the indemnification provided in clause (a) of this Section 8.3 (other than in
respect of the breach or inaccuracy of Section 4.6, to which no limitation on
the amount of indemnification shall apply), the obligation of the Purchaser to
indemnify the Seller Indemnitees shall be limited to indemnification in an
aggregate amount equal to (x) $50,000,000 less (y) an amount equal to 20% of the
Cash Adjustment at Closing.
For purposes of the indemnification provided in clause (a) of this
Section 8.3, in determining whether any of the representations or warranties set
forth in this Agreement has been breached, no effect will be given to any
materiality qualification set forth in such representation or warranty, and, for
indemnification purposes hereunder, any such materiality qualification shall be
disregarded. For the purposes of indemnification provided for in clause (a) of
this Section 8.3, only those single claims for indemnification in excess of
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$100,000 (but the entire amounts of such claims, and not just the portions in
excess of $100,000) shall be counted toward the Purchaser Deductible.
8.4 Matters Involving Third Parties Other Than Tax Claims.
(a) If any third party shall notify any party (the "Indemnified
Party") with respect to any matter (a "Third-Party Claim") which may give rise
to a claim for indemnification against any other party (the "Indemnifying
Party") under this Article VIII, then the Indemnified Party shall, as promptly
as practicable (and in any event within twenty (20) Business Days after
receiving written notice of the Third-Party Claim), notify the Indemnifying
Party thereof in writing; provided, however, that failure to provide such
written notice on a timely basis shall not release the Indemnifying Party from
any of its obligations under this Article VIII except to the extent that the
Indemnifying Party is prejudiced by such failure.
(b) The Indemnifying Party, upon receipt of notice of a Third-Party
Claim and upon its notifying the Indemnified Party within twenty (20) Business
Days of receipt of such notice that it, unconditionally or subject to a
reservation of rights, agrees to indemnify the Indemnified Party in respect of
such matter, shall be entitled to participate in or to assume, at the
Indemnifying Party's own expense, the defense, appeal or settlement of such
Third-Party Claim with counsel of the Indemnifying Party's own choosing, and the
Indemnified Party shall fully cooperate with the Indemnifying Party in
connection therewith including contesting such Third-Party Claim or making any
counterclaim against the Person asserting such Third-Party Claim; provided,
however, that if the Indemnifying Party assumes the defense, appeal or
settlement of such Third-Party Claim, the Indemnifying Party shall reimburse the
Indemnified Party for out of pocket expenses incurred by the Indemnified Party
(such as travel costs, but not internal time charges) within ninety (90) days
after receipt of a written request for reimbursement of such expenses together
with reasonable documentation of the amounts requested. Any Indemnified Party is
hereby authorized, prior to the date on which it receives written notice from
the Indemnifying Party that the Indemnifying Party intends to assume the
defense, appeal or settlement of such Third-Party Claim, to file any motion,
answer or other pleading and take such other action which it shall reasonably
deem necessary to protect its interest or that of the Indemnifying Party until
the date on which the Indemnified Party receives such notice from the
Indemnifying Party; provided that, prior to filing such motion, answer or other
pleading or taking such other action, the Indemnified Party shall have made
reasonable efforts to consult with the Indemnifying Party. In the event that the
Indemnifying Party fails to notify the Indemnified Party of its election to
assume the defense, appeal or settlement of a Third-Party Claim within twenty
(20) days after receipt of notice thereof from the Indemnified Party, the
Indemnifying Party shall be deemed to have waived its right to assume the
defense, appeal or settlement of such Third-Party Claim, and the Indemnified
Party shall have the right to undertake the defense or appeal of or to settle or
compromise such Third-Party Claim on behalf of and for the account and risk of
the Indemnifying Party.
(c) If the Indemnifying Party assumes the defense, appeal or
settlement of a Third-Party Claim, the Indemnifying Party shall not consent to
entry of any judgment or enter into any settlement other than a judgment or
settlement involving only the payment of
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money, all of which will be paid by the Indemnifying Party, without the consent
of the Indemnified Party, which shall not be unreasonably conditioned, delayed
or withheld; provided, however, that if, in the opinion of the Indemnified
Party, the monetary settlement of a Third-Party Claim would have a material
adverse effect on the conduct of the Business or would prejudice the Indemnified
Party's future ability to avoid similar third-party claims, then no judgment or
settlement may be made without the consent of the Indemnified Party and the
Indemnified Party shall then be entitled to control the defense, compromise and
settlement of such Third-Party Claim and the Losses for the Indemnifying Party
shall then be capped at the date the Indemnified Party assumes control of the
defense to the Losses incurred to date, plus the amount at which the
Indemnifying Party was otherwise willing to pay the third party under the
Third-Party Claim based upon the third party's bona fide offer to settle the
Third-Party Claim for that amount. At such time as the Indemnifying Party
decides to enter into a settlement under this subsection 8.4(c), the
Indemnifying Party shall promptly provide the Indemnified Party with written
notice of the decision to settle, including the proposed maximum amount of such
settlement. The proposed settlement shall be deemed accepted and consented to by
the Indemnified Party unless the Indemnifying Party receives written notice
otherwise from the Indemnified Party within ten (10) days after the Indemnified
Party's receipt of the Indemnifying Party's notice of proposed settlement.
If the Indemnifying Party does not assume the defense, appeal or
settlement of a Third-Party Claim, the Indemnified Party may proceed in such
manner as it may deem appropriate with regard to such Third-Party Claim;
provided, that the Indemnified Party shall not settle such Third-Party Claim
without providing notice and a description of the proposed settlement to the
Indemnifying Party. Unless the Indemnified Party receives from the Indemnifying
Party, within ten (10) days of the Indemnifying Party's receipt of the notice of
such proposed settlement, a written statement from the Indemnifying Party of its
reasonable objection to such proposed settlement, accompanied by an
acknowledgment by the Indemnifying Party that the Third-Party Claim which is the
subject of the proposed settlement is subject to indemnification pursuant to the
provisions of this Article VIII, the Indemnified Party shall be free to settle
such Third-Party Claim on the terms described in the notice of the proposed
settlement. In the case of any such settlement, the Indemnifying Party shall
reimburse the Indemnified Party for the amount of all Losses incurred by the
Indemnified Party in connection with the defense against or settlement of such
Third-Party Claim within ninety (90) days of a written request for reimbursement
of such Losses together with reasonable documentation of amounts requested. If
no settlement of such Third-Party Claim is made, the Indemnifying Party shall
reimburse the Indemnified Party for all Losses with respect to such Third-Party
Claim within ninety (90) days of a written request for reimbursement of such
Losses together with reasonable documentation of amounts requested; provided
that the Indemnified Party has contested any such Third-Party Claim in good
faith.
8.5 Matters Not Involving Third-Party Claims. Any
indemnifiable claim that is not a Third-Party Claim shall be asserted by written
notice to the Indemnifying Party with reasonable specificity stating the basis
for such claim and the amount of such claim.
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8.6 Collateral Source Recoveries. The amount of an
indemnification payment in respect of a Loss required to be made to any
Purchaser Indemnitee or Seller Indemnitee hereunder shall be limited to the
amount of any Loss that remains after deduction therefrom of any actual and
realized Tax benefits received by the Indemnified Party as a direct result of
the Loss; provided, however, that nothing in this Section 8.6 shall limit in any
way the ability of the Seller or the Purchaser to take (or refrain from taking,
as the case may be) any position for Tax purposes that the Seller or the
Purchaser determines to take (or refrain from taking) in its sole discretion.
Any Loss which would otherwise be indemnifiable under the provisions of this
Article VIII shall be reduced by the amount of any third-party insurance
recovery.
8.7 Purchase Price Adjustment. The Purchaser and the Seller
agree to treat any payments under this Article VIII as an adjustment to the
Purchase Price for all Tax purposes.
8.8 Exclusive Remedy. Except for the matters addressed by the
provisions of Article IX (Certain Matters) and Article X (Tax Matters), which
shall be exclusively governed thereby, if the Closing occurs, the
indemnification provided for in this Article VIII shall be the exclusive remedy
in any action seeking damages or any other form of monetary relief brought by
any party to this Agreement.
ARTICLE IX.
CERTAIN MATTERS
The Purchaser and the Seller acknowledge that: (i) the Minerals
Group acquired the major portion of the Business from Manville; (ii) pursuant to
the terms of the Manville Asset Purchase Agreement, which closed on July 31,
1991, the Minerals Group did not assume any liability in respect of the Manville
Business except as expressly provided therein; (iii) the Minerals Group did not
assume any liability for Products Liability Claims relating to the Manville
Period (the "Manville Claims") pursuant to the provisions of the Manville Asset
Purchase Agreement; (iv) the Manville Agreement provides certain indemnification
rights to the Minerals Group (the "Manville Indemnification Obligation") in
respect of Losses arising from Manville Claims, and for a proportionate share of
Losses arising from Products Liability Claims relating to both the Manville
Period and to periods from and after July 31, 1991; (v) unless extended,
pursuant to the terms of the Manville Agreement, the Manville Indemnification
Obligation will expire on July 31, 2006; (vi) pursuant to the terms of the
Manville Agreement, the Minerals Group did not assume, and Manville will
continue to be responsible for, Products Liability Claims relating to the
Manville Period and for a proportionate share of Products Liability Claims
relating to both the Manville Period and to periods from and after July 31,
1991, notwithstanding the expiration of the Manville Indemnification Obligation;
and (vii) as an inducement to the Purchaser to enter into this Agreement, the
Purchaser has requested, and the Seller has agreed to provide, certain
indemnification to the Purchaser Indemnitees in respect of Products Liability
Claims, all as and to the extent set forth in this Article IX, and subject to
the terms, provisions and limitations set forth in this Article IX.
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9.1 Seller Indemnity for Products Liability Claims.
(a) Subject to the limitations set forth in this Article IX, the
Seller agrees to indemnify the Purchaser Indemnitees from and against all Losses
arising out of or resulting from Manville Claims (including those set forth on
Schedule 3.27); provided, however, that the Seller shall have no obligation to
indemnify the Purchaser Indemnitees pursuant to this Section 9.1(a) to the
extent that payment in respect of Losses arising out of or resulting from any
Manville Claim is recovered by the Purchaser Indemnitees from Manville, under
the Manville Indemnification Obligation or otherwise; provided, further, that
the obligations of the Seller to indemnify the Purchaser Indemnitees pursuant to
this Section 9.1(a) shall be limited to aggregate payments equal to (x) one
hundred percent (100%) of the first $100,000,000 of Losses suffered by the
Purchaser Indemnitees in respect of Manville Claims and (y) fifty percent (50%)
of the second $100,000,000 of Losses suffered by the Purchaser Indemnitees in
respect of Manville Claims. Under no circumstances shall the amount of
indemnification payments required to be made by the Seller to the Purchaser
Indemnitees in respect of Manville Claims exceed $150,000,000. The
indemnification obligations of the Seller under this Section 9.1(a) are further
subject to the provisions of Section 9.1(c) and Section 9.3(b) below.
(b) Subject to the limitations set forth in this Article IX, the
Seller agrees to indemnify the Purchaser Indemnitees from and against all Losses
arising out of or resulting from Products Liability Claims (including those set
forth on Schedule 3.27) relating to the Seller Period (the "Seller Claims");
provided, however, that the Seller shall have no obligation to indemnify the
Purchaser Indemnitees pursuant to this Section 9.1(b) to the extent that payment
in respect of Losses arising out of or resulting from any Seller Claim is
recovered by the Purchaser Indemnitees under any of the Company Insurance
Policies or the Seller Umbrella Policies; provided, further, that the
obligations of the Seller to indemnify the Purchaser Indemnitees pursuant to
this Section 9.1(b) for Losses suffered by the Purchaser Indemnitees in respect
of Seller Claims shall be limited to aggregate payments equal to (A) the sum of
(x) the Holdback Amount and (y) $20,000,000 less (B) any payment made by the
Seller under the workers' compensation indemnity provided for in Section 9.4
below less (C) any payment made by the Seller under the indemnification for
breach of any Specified 3.24 Matter and for breach of any representation or
warranty set forth in Section 3.34 provided for in Section 9.7 below. Under no
circumstances shall the aggregate amount of indemnification payments required to
be made by the Seller to the Purchaser Indemnitees in respect of Seller Claims
and under the indemnification obligations of the Seller provided for in Section
9.4 and in Section 9.7 below exceed $30,000,000 (inclusive of the $10,000,000
Holdback Amount). For the avoidance of doubt, any amount collected by the Seller
for the benefit of the Minerals Group in respect of Seller Claims under the
portion of the Seller Umbrella Policies ($30,000,000 per policy period) made
available to the members of the Minerals Group under Section 9.3(a) below shall
not be applied toward the Seller's aggregate indemnification obligation of
$30,000,000 provided for in this Section 9.1(b), but any amount collected by the
Seller in respect of Seller Claims under the Seller Umbrella Policies in excess
of the portion of the Seller Umbrella Policies made available to the members of
the Minerals Group under Section 9.3(a) below shall be applied toward the
Seller's aggregate indemnification obligation in respect of Seller Claims
provided for in this Section 9.1(b). For illustrative purposes (assuming no
prior Losses or recoveries in respect
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of Seller Claims arising from occurrences during a particular policy period), in
the event a Seller Claim arising from an occurrence during a particular policy
period resulted in a Loss of $40,000,000, all $40,000,000 of which was recovered
under a Seller Umbrella Policy in effect for such policy period, the first
$30,000,000 of such recovery would be attributed to the portion of the Seller
Umbrella Policy made available to the members of the Minerals Group under
Section 9.3(a) below, and the remaining $10,000,000 recovered under the Seller
Umbrella Policy in effect for such policy period would be applied toward the
Seller's maximum indemnification obligation in respect of Seller Claims and
under the indemnification obligations of the Seller provided for in Section 9.4
and in Section 9.7 below of $30,000,000 (equal to $20,000,000 plus the
$10,000,000 Holdback Amount).
Moreover, to the extent that, after the Closing, a member of the
Minerals Group asserts a General Liability Claim under the portion of the Seller
Umbrella Policy in respect of a particular policy period made available to the
members of the Minerals Group under Section 9.3(a) below, any recovery under a
Seller Umbrella Policy in respect thereof shall be applied as a credit to the
Seller's indemnification obligation in respect of Seller Claims. For
illustrative purposes (assuming no prior Losses or recoveries in respect of
Seller Claims arising from occurrences during a particular policy period), in
the event a Seller Claim arising from an occurrence in a particular policy
period resulted in a Loss of $40,000,000 and a member of the Minerals Group had
previously collected $5,000,000 in respect of a General Liability Claim under
the Seller Umbrella Policy applicable to that policy period, the remaining
$25,000,000 of coverage made available to the members of the Minerals Group
under such Seller Umbrella Policy would be available to cover such Loss, the
next $5,000,000 (equal to the amount previously recovered under such Seller
Umbrella Policy in respect of the General Liability Claim) of such Loss would be
applied as a credit to the Seller's indemnification obligation, and the
remaining $10,000,000 of such Loss would be paid by the Seller and would be
applied toward the Seller's maximum indemnification obligation in respect of
Seller Claims and under the indemnification obligations of the Seller provided
for in Section 9.4 and in Section 9.7 below of $30,000,000 (equal to $20,000,000
plus the $10,000,000 Holdback Amount).
The indemnification obligations of the Seller under this Section
9.1(b) are further subject to the provisions of Section 9.1(c) and Section
9.3(c) below.
(c) The indemnification obligations of the Seller with regard to
Manville Claims pursuant to Section 9.1(a) above shall expire on July 31, 2016.
The indemnification obligations of the Seller with regard to the Seller Claims
pursuant to Section 9.1(b) above shall expire on the tenth (10th) anniversary of
the Closing Date. No claims for indemnification under Section 9.1(a) or 9.1(b),
as the case may be, shall be asserted or maintained by any Purchaser Indemnitee
after the expiration of the indemnification obligation provided for therein as
set forth in the preceding two sentences of this Section 9.1(c), except for
actions commenced prior to such expiration or threatened in writing prior to
such expiration and commenced promptly thereafter.
(d) Under no circumstances shall the Seller have any obligation to
indemnify any Purchaser Indemnitee in respect of Products Liability Claims in
amounts exceeding the limitation on the Seller's aggregate indemnification
obligations in respect
73
thereof set forth in Sections 9.1(a) and 9.1(b) above. For the avoidance of
doubt, the Seller shall have no responsibility to indemnify the Purchaser
Indemnitees in respect of Products Liability Claims to the extent that such
Products Liability Claims relate to the Purchaser Period (the "Purchaser
Claims").
(e) The Losses in respect of any Products Liability Claim that
relates to more than one of the Manville Period, the Seller Period and the
Purchaser Period shall be allocated and treated as a Manville Claim, a Seller
Claim and a Purchaser Claim based upon the length in time of the plaintiff's
exposure during each such period divided by the length in time of the
plaintiff's total exposure to the products of the Manville Business and the
Business alleged in such Products Liability Claim.
9.2 Indemnification Procedures.
(a) If any third party shall notify a Purchaser Indemnitee with
respect to any matter which may give rise to a claim for indemnification in
respect of a Products Liability Claim under this Article IX (an "Article IX
Claim"), then such Purchaser Indemnitee shall, as promptly as practicable (and
in any event within twenty (20) Business Days after receiving written notice of
any such matter), notify the Seller thereof in writing; provided, however, that
failure to provide such written notice on a timely basis shall not release the
Seller from any of its obligations under this Article IX except to the extent
that the Seller is prejudiced by such failure.
(b) The Seller, upon receipt of notice of an Article IX Claim and
upon the Seller's notifying the Purchaser Indemnitee within twenty (20) Business
Days of receipt of such notice that the Seller, unconditionally or subject to a
reservation of rights, agrees to indemnify the Purchaser Indemnitee in respect
of such Article IX Claim, shall be entitled to participate in or to assume, at
the Seller's own expense, the defense, appeal or settlement of such Article IX
Claim with counsel of the Seller's own choosing, and the Purchaser Indemnitee
shall fully cooperate with the Seller in connection therewith including
contesting such Article IX Claim or making any counterclaim against the Person
asserting such Article IX Claim; provided, however, that if the Seller assumes
the defense, appeal or settlement of such Article IX Claim, the Seller shall
reimburse the Purchaser Indemnitee for out of pocket expenses incurred by the
Purchaser Indemnitee (such as travel costs, but not internal time charges)
within ninety (90) days of a written request for reimbursement together with
reasonable documentation of the amounts requested. Any Purchaser Indemnitee is
hereby authorized, prior to the date on which it receives written notice from
the Seller that the Seller intends to assume the defense, appeal or settlement
of such Article IX Claim, to file any motion, answer or other pleading and take
such other action which it shall reasonably deem necessary to protect its
interest or that of the Seller until the date on which the Purchaser Indemnitee
receives such notice from the Seller; provided that, prior to filing such
motion, answer or other pleading or taking such other action, the Purchaser
Indemnitee shall have made reasonable efforts to consult with the Seller. In the
event that the Seller fails to notify the Purchaser Indemnitee of its election
to assume the defense, appeal or settlement of an Article IX Claim within twenty
(20) days after receipt of notice thereof from the Purchaser Indemnitee, the
Seller shall be deemed to have waived its right to assume the defense, appeal or
settlement of such Article IX Claim, and the Purchaser Indemnitee shall have the
74
right to undertake the defense or appeal of or to settle or compromise such
Article IX Claim on behalf of and for the account and risk of the Seller.
(c) If the Seller assumes the defense, appeal or settlement of an
Article IX Claim, the Seller shall not consent to entry of any judgment or enter
into any settlement other than a judgment or settlement involving only the
payment of money, all of which will be paid by the Seller (or, to the extent
that such judgment or settlement constitutes a Qualifying Loss for purposes of
Section 9.5, paid as a Holdback Indemnification Payment from the Holdback
Amount) without the consent of the Purchaser Indemnitee, which shall not be
unreasonably conditioned, delayed or withheld; provided, however, that if, in
the opinion of the Purchaser Indemnitee, the monetary settlement of an Article
IX Claim would have a material adverse effect on the conduct of the Business or
would prejudice the Purchaser Indemnitee's future ability to avoid similar
Article IX Claims, then no judgment or settlement may be made without the
consent of the Purchaser Indemnitee and the Purchaser Indemnitee shall then be
entitled to control the defense, compromise and settlement of such Article IX
Claim and the Losses for the Seller shall then be capped at the date the
Purchaser Indemnitee assumes control of the defense to the Losses incurred to
date, plus the amount at which the Seller was otherwise willing to pay the third
party under the Article IX Claim based upon the third party's bona fide offer to
settle the Article IX Claim for that amount. At such time as the Seller decides
to enter into a settlement of an Article IX Claim, the Seller shall promptly
provide the Purchaser Indemnitee with written notice of the decision to settle,
including the proposed maximum amount of such settlement. The proposed
settlement shall be deemed accepted and consented to by the Purchaser Indemnitee
unless the Seller receives written notice otherwise from the Purchaser
Indemnitee within ten (10) days after the Purchaser Indemnitee's receipt of the
Seller's notice of proposed settlement.
If the Seller does not assume the defense, appeal or settlement of
an Article IX Claim, the Purchaser Indemnitee may proceed in such manner as it
may deem appropriate with regard to such Article IX Claim; provided, that the
Purchaser Indemnitee shall not settle such Article IX Claim without providing
notice and a description of the proposed settlement to the Seller. Unless the
Purchaser Indemnitee receives from the Seller, within ten (10) days of the
Seller's receipt of the notice of such proposed settlement, a written statement
from the Seller of its reasonable objection to such proposed settlement,
accompanied by an acknowledgment by the Seller that the Article IX Claim which
is the subject of the proposed settlement is subject to indemnification by the
Seller pursuant to the provisions of this Article IX, the Purchaser Indemnitee
shall be free to settle such Article IX Claim on the terms described in the
notice of the proposed settlement. In the case of any such settlement, the
Seller shall reimburse the Purchaser Indemnitee for the amount of all reasonable
expenses, legal or otherwise, incurred by the Purchaser Indemnitee in connection
with the defense against or settlement of such Article IX Claim within ninety
(90) days of a written request for reimbursement of such Losses together with
reasonable documentation of amounts requested. If no settlement of such Article
IX Claim is made, the Seller shall reimburse the Purchaser Indemnitee for the
amount of any final judgment rendered with respect to such Article IX Claim and
for the amount of all Losses incurred by the Purchaser Indemnitee in the defense
of such Article IX Claim within ninety (90) days of written request for
reimbursement of such Losses together with reasonable documentation of
75
amounts requested; provided that the Purchaser Indemnitee has contested any such
Article IX Claim in good faith.
(d) The conduct of the defense of a Products Liability Claim that
relates to more than one of the Manville Period, the Seller Period and the
Purchaser Period, including the selection of counsel, shall be controlled by the
party which has the greater share of the potential risks and Losses arising out
of such Products Liability Claim. For purposes of determining whether the
Purchaser or the Seller has the greater share of potential risks and Losses in
respect of such Products Liability Claim, the length in time of the plaintiff's
exposure to the products of the Manville Business shall be deemed to be for the
account of the Seller.
9.3 Other Available Recoveries.
(a) The Seller agrees that, from and after the Closing Date, the
Seller will not, and will not permit any Subsidiary of the Seller to, assert any
claim under a Seller Umbrella Policy which would cause an amount of less than
$30,000,000 per policy period to be potentially available for claims which might
be asserted thereunder by the Minerals Group in respect of Seller Claims and/or
in respect of General Liability Claims. The Purchaser agrees that, from and
after the Closing Date, it will cause the Minerals Group to assert any claim
under a Seller Umbrella Policy only through the Seller, and the Seller agrees to
use good faith efforts to recover all amounts available under portions of the
Seller Umbrella Policies made available by the Seller to the members of the
Mineral Group in respect of Seller Claims and/or General Liability Claims which
are so asserted on behalf of the Minerals Group. The Purchaser further agrees
that it will not permit the Minerals Group to assert any claim which, together
with all other claims asserted by the Minerals Group, would cause the aggregate
amount of claims asserted by the Minerals Group under the Seller Umbrella
Policies in respect of Seller Claims and in respect of General Liability Claims
to exceed $30,000,000 for any policy period. All contacts and negotiations with
the insurers under the Seller Umbrella Policies in connection with efforts to
recover amounts in respect of Seller Claims and General Liability Claims shall
be conducted by the Seller, unless the Seller shall direct the Company or a
Subsidiary or the Company to engage in direct discussions with the insurers
under the Seller Umbrella Policies, in which case such discussions shall be
conducted as directed by the Seller. For the avoidance of doubt, the Seller
makes no representation or warranty as to the availability of any insurance
coverage in respect of Products Liability Claims or General Liability Claims to
the Minerals Group under any Seller Umbrella Policy after the Closing Date.
(b) The Purchaser and the Seller agree that, with regard to Losses
incurred by Purchaser Indemnitees in respect of Manville Claims, it is the
intention of the parties that recovery of such Losses first be sought from
Manville (under the Manville Indemnification Obligation or otherwise), and that
the indemnification obligations of the Seller under Section 9.1(a) above are
intended to indemnify the Purchaser Indemnitees for Losses in respect of
Manville Claims which are not paid by Manville within a reasonable period of
time after recovery is sought from Manville. The parties further agree that, for
purposes of the preceding sentence, any payment which is not made by Manville
within six months after written demand for such payment is made to Manville
shall be deemed to be
76
unreasonably delayed, and that the Purchaser Indemnitee shall then be entitled
to seek payment of such Loss from the Seller under the indemnification provided
in Section 9.1(a) above. Under such circumstances, the Purchaser and the members
of the Minerals Group shall assign their rights or cause the Seller to be
subrogated to their rights against Manville, or take such comparable action as
the Seller may reasonably request, in respect of such Loss.
(c) The Purchaser and the Seller agree that, with regard to Losses
incurred by Purchaser Indemnitees in respect of Seller Claims, it is the
intention of the parties that recovery of such Losses be sought first, by the
Company or a Subsidiary of the Company under the Company Insurance Policies, and
second, by the Seller, upon the request and for the benefit of a member of the
Minerals Group, under the portion of the Seller Umbrella Policies made available
to the Minerals Group under Section 9.3(a) above, and that the indemnification
obligations of the Seller under Section 9.1(b) above are intended to indemnify
the Purchaser Indemnitees for Losses in respect of Seller Claims for which
coverage under the Company Insurance Policies and under the Seller Umbrella
Policies is not available and for Losses in respect of Seller Claims which are
not paid by the insurers under the Company Insurance Policies or under the
Seller Umbrella Policies within a reasonable period of time after recovery is
sought from such insurers. The parties further agree that, for purposes of the
preceding sentence, any payment which is not made by the insurers under the
Company Insurance Policies and under the Seller Umbrella Policies within six
months after written demand for such payment is made to such insurers shall be
deemed to be unreasonably delayed, and that the Purchaser Indemnitee shall then
be entitled to seek payment of such Loss from the Seller under the
indemnification provided in Section 9.1(b) above. Under such circumstances, the
Purchaser and the members of the Minerals Group shall assign their rights or
cause the Seller to be subrogated to their rights against such insurers, or take
such comparable action as the Seller may reasonably request, in respect of such
Loss. In addition, to the extent that a Seller Claim is asserted and recovered
in whole or in part under a Company Insurance Policy or a Seller Umbrella
Policy, the Purchaser Indemnitees shall be entitled to seek indemnification from
the Seller under Section 9.1(b) above for any deductible amount associated with
such recovery.
(d) Until the earlier of the expiration of all indemnification
obligations of the Seller pursuant to this Article IX (including the final
resolution of any actions commenced prior to the expiration dates set forth in
Section 9.1(c) above and the final resolution of any actions threatened in
writing prior to such expiration dates and commenced promptly thereafter as
provided in the last sentence of Section 9.1(c)) and the time that Seller has
paid an amount equal to its maximum $30,000,000 indemnification obligation
(inclusive of the $10,000,000 Holdback Amount) provided for in Section 9.1(b)
above, the Seller shall have the exclusive right to control all actions related
to efforts to recover from third parties (including Manville and the Seller
Umbrella Policies) amounts in respect of Article IX Claims. The Seller shall be
entitled to employ counsel of the Seller's own choosing, at the Seller's own
expense, in connection with such recovery efforts, and the Purchaser shall fully
cooperate with the Seller in connection therewith; provided, that if requested
by the Seller, the Purchaser shall (or shall cause the Company or a Subsidiary
of the Company to) undertake such effort on behalf of the Seller, under the
direction of the Seller and at the expense of the Seller. Notwithstanding the
foregoing, the members of the Minerals Group shall have the exclusive right to
control all actions related to efforts to
77
recover amounts in respect of Seller Claims under the Company Insurance
Policies, provided, that the Purchaser agrees to cause the members of the
Minerals Group to use good faith efforts to recover all amounts in respect of
Seller Claims available under the Company Insurance Policies, and to consult
with the Seller in their efforts to obtain such recoveries.
(e) The Purchaser agrees that, after the Closing, it will cause the
Company and its U.S. Subsidiaries to continue the current document retention
policies for a period of at least five years. If the current document retention
policies would permit destruction prior to the fifteenth (15th) anniversary of
the Closing Date, the retention period for the following categories of books and
records existing and available as of Closing, which are required for or
necessary in the defense of existing or potential Article IX Claims, shall be
extended (as applicable) to fifteen (15) years from the Closing Date: all
industrial hygiene data and studies for all plants and all customers; all
environmental studies listed on Schedule 3.29(g); exemplars of all MSDS sheets;
exemplars of all labeling, packaging, brochures, sales and warranty materials
for all products; all sales data (including products, quantities and prices);
all trip and sales reports; and exemplars of all training and handling materials
provided to Employees and to customers and employees of customers. After the
expiration of the applicable fifteen (15) year period, the Purchaser may destroy
or dispose of any such books and records that would have previously been
destroyed or disposed of pursuant to the Company's document retention policies,
unless the Seller has, within twenty (20) Business Days after the fifteenth
(15th) anniversary of the Closing Date, provided written notice requesting that
such books and records continue to be maintained at the expense of the Seller.
Books and records necessary for the defense of existing or future Article IX
Claims will be made available to the Seller and its Representatives for
examination and copying (at the Seller's expense). Failure of the Purchaser to
comply with the terms of this Section 9.3(e) shall not relieve the Seller of its
obligations contained in this Article IX, except to the extent that the Seller
is adversely affected by such failure. The Purchaser further agrees to cause the
Company and its Subsidiaries to cooperate with the Seller and its
Representatives in their review and examination of materials related to Article
IX Claims and potential Article IX Claims and to make the personnel of the
Company and its Subsidiaries available to assist in such review. In addition, if
requested by the Seller, the Purchaser will designate an in-house counsel or
other Person qualified to monitor matters which are or potentially could become
Article IX Claims, to keep the Seller advised of developments related to such
matters and to assist in efforts to collect from third parties in respect of
such matters. If the Seller makes such request, the Seller will periodically and
promptly reimburse the Purchaser for a portion of such designated Person's
salary and other compensation proportionate to the amount of such designated
Person's time spent on such matters.
(f) The Seller shall have the right to direct the conduct of all
contacts and negotiations by the Company and its Subsidiaries with Manville
regarding any amendment, replacement or extension of the Manville
Indemnification Obligation. The Seller agrees that it will not take any action
that would adversely affect the existing rights of the Minerals Group under the
Manville Agreement without the consent of the Purchaser. The Purchaser agrees
that, upon the Seller's reasonable request, the Purchaser will cause the Company
and its Subsidiaries to enter into a written agreement or other instrument with
Manville that extends the term of the Manville Indemnification Obligation or
sets forth the terms of any
78
new agreement or arrangement with regard to Products Liability Claims agreed
upon by the Seller and Manville.
(g) The Purchaser and the Seller acknowledge that, prior to the date
of this Agreement, it has been the practice of Manville and the Minerals Group
to share any cost in respect of the defense of a Products Liability Claim on a
50%/50% basis, in contemplation of a reimbursement by either to the other in the
event of an ultimate determination, by a court or by agreement of the parties,
that a different cost sharing is warranted. The Seller agrees that, so long as
such 50%/50% cost sharing arrangement (or another cost sharing arrangement
acceptable to both the Purchaser and the Seller) is in effect, the Seller will
be required to reimburse the Minerals Group for amounts paid by the Minerals
Group in respect of Seller Claims under such cost sharing arrangement, to the
extent that such costs are not recovered under the Company Insurance Policies.
The Purchaser agrees that, to the extent the Minerals Group ultimately receives
payment or other credit from Manville for payments in respect of Seller Claims
previously reimbursed by the Seller because a different cost sharing arrangement
than that originally agreed upon by Manville and the Minerals Group is
determined to apply, such excess payments will be refunded to the Seller. For so
long as any Holdback Amount remains available, any payment otherwise required to
be made by the Seller under this Section 9.3(g) shall be deemed to be a
Qualifying Loss under Section 9.5(a).
9.4 Workers' Compensation Claims. The Seller agrees to
indemnify the Purchaser Indemnitees in respect of certain workers' compensation
claims brought by Employees or former employees who were employed by one of the
U.S. Companies during the Seller Period, as follows:
(a) Subject to the limitations set forth in this Section 9.4, the
Seller will indemnify the Purchaser Indemnitees for claims relating to bodily
injuries (or death) arising from inhalation of silica or silica dust during the
term of such Employee's or former employee's period of employment by a U.S.
Company under the workers' or workmens' compensation law or occupational disease
law of a state of the United States of America where such Employee or former
employee was employed, during the Seller Period, by a U.S. Company.
(b) The amount of indemnification payable by the Seller in respect
of each workers' compensation claim described in Section 9.4(a) above shall be
equal to the amount required to be paid by a member of the Minerals Group, after
the Closing, as a deductible under the workers' compensation insurance policy or
policies maintained by a member of the Minerals Group applicable to such
workers' compensation claim. In this regard, the Purchaser acknowledges that
there were no deductibles under the workers' compensation policies maintained by
the Minerals Group for the policy years commencing August 1 on each of years
1995, 1996, 1997, 1998 and 1999 (the "No-Deductible Periods"); that there were
deductibles of $250,000 under the workers' compensation policies maintained by
the Minerals Group for the policy years commencing August 1 on each of years
1991, 1992, 1993, 1994, 2000, 2001 and 2002; and that there were deductibles of
$350,000 under the workers' compensation policies maintained by the Minerals
Group for the policy years commencing August 1 on each of years 2003 and 2004.
79
(c) Any workers' compensation claim covered by this Section 9.4
which alleges bodily injury (or death) based upon inhalation of silica or silica
dust over a multi-year period of employment shall initially be apportioned as a
Purchaser responsibility or as a Seller responsibility based upon the period of
employment of such injured worker which occurred during the Purchaser Period and
during the Seller period. Following such apportionment, the parties shall
allocate financial responsibility for such multi-year claim on a fair and
equitable basis, with appropriate credit being given to the Seller for the
period of employment which occurred during No-Deductible Periods, and also
taking into account the varying levels of the deductibles under the Minerals
Group workers' compensation policies for periods other than No-Deductible
Periods.
(d) Upon its request made with reasonable notice, the Seller shall
have the right to an accounting from the Purchaser of any apportionment of
workers' compensation claims made pursuant to Section 9.4(c) above, and the
Seller shall further have the right to inspect any relevant books and records of
the Purchaser and of the U.S. Companies related to workers' compensation.
(e) The Seller shall have no obligation to provide indemnification
in respect of a workers' compensation claim otherwise eligible for
indemnification under this Section 9.4 unless the Purchaser or a member of the
Minerals Group notifies the Seller in writing of the assertion of such workers'
compensation claim as promptly as practicable (and in any event within twenty
(20) Business Days of the Business Day that the Purchaser or a member of the
Minerals Group is first notified of such workers' compensation claim), provided,
however, that failure to provide such written notice on a timely basis shall not
release the Seller from its obligation to provide indemnification under this
Section 9.4 except to the extent that the Seller is prejudiced by such failure.
(f) The indemnification obligations of the Seller under this Section
9.4 shall expire on the tenth anniversary of the Closing Date.
(g) The sum of all indemnification payments made by the Seller
pursuant to this Section 9.4, in respect of Seller Claims under Section 9.1(b)
above and pursuant to Section 9.7 below shall in no event exceed an aggregate
amount equal to $30,000,00 ($20,000,000 plus the $10,000,000 Holdback Amount).
Any indemnification payment which the Seller is required to make under this
Section 9.4 shall be deemed to be a Qualifying Loss for purposes of Section
9.5(a) so that, for so long as the Holdback Amount equals or exceeds the amount
of the indemnification payment that the Seller would otherwise be required to
make under this Section 9.4, in lieu of the Seller's payment of such amount, the
Purchaser shall pay such amount to the Purchaser Indemnitee from the Holdback
Amount.
9.5 Disbursement of Holdback Amount.
(a) The Seller shall not be required to pay any amount to a
Purchaser Indemnitee in respect of a Loss arising from a Seller Claim for which
the Seller is required to provide indemnification pursuant to Section 9.1(b)
above or in respect of a workers' compensation claim for which the Seller is
required to provide indemnification pursuant to
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Section 9.4 above or in respect of a breach of a Specified 3.24 Matter or a
breach of a representation or warranty set forth in Section 3.34 for which the
Seller is required to provide indemnification pursuant to Section 9.7 below, and
the Seller shall be entitled to reimbursement for any payment that the Seller
makes in respect of the defense or settlement of any Seller Claim for which the
Seller is required to provide such indemnification (in either case, a
"Qualifying Loss"), for so long as the Holdback Amount equals or exceeds the
amount of the Qualifying Loss. At such time as either a Purchaser Indemnitee or
the Seller has actually incurred a Qualifying Loss, the Purchaser shall pay from
the Holdback Amount an amount equal to the Qualifying Loss (a "Holdback
Indemnification Payment") to the Purchaser Indemnitee or to the Seller, as the
case may be.
(b) Within ten (10) Business Days after the end of each calendar
quarter, the Purchaser shall notify the Seller in writing of the amount of any
Holdback Indemnification Payment made in respect of Qualifying Losses incurred
during such calendar quarter and shall provide to the Seller reasonable evidence
of the underlying Qualifying Losses. In the event that the Seller seeks
reimbursement of a payment that it has made in respect of the defense or
settlement of a Seller Claim, the Seller shall submit to the Purchaser a request
that the Purchaser make a Holdback Indemnification Payment to the Seller along
with reasonable evidence of the underlying Qualifying Loss, and if the Purchaser
does not disagree with such request for reimbursement, the Purchaser shall
promptly make a Holdback Indemnification Payment in the amount of the Qualifying
Loss to the Seller. In the event that either the Seller receives notice of a
Holdback Indemnification Payment made to a Purchaser Indemnitee with which the
Seller does not agree, or that the Purchaser receives from the Seller a request
for a Holdback Indemnification Payment with which the Purchaser does not agree,
such objection and the reasons for such objection shall promptly be communicated
in writing by the Seller to the Purchaser, or by Purchaser to the Seller, as the
case may be, and the parties shall cooperate with each other and use
commercially reasonable efforts to resolve their differences with regard to such
Holdback Indemnification Payment.
(c) On the fifth anniversary of the Closing Date, the Purchaser
shall make a payment to the Seller (the "First Holdback Release Payment") equal
to $5,000,000 less the aggregate amount of all Holdback Indemnification Payments
made prior to such date. On each of the sixth through tenth anniversaries of the
Closing Date, the Purchaser shall make a payment to the Seller (each, a
"Subsequent Holdback Release Payment") equal to one-fifth of the amount
remaining as the Holdback Amount after giving effect to the First Holdback
Release Payment; provided, however, that if any additional Holdback
Indemnification Payment is made after the date of the First Holdback Release
Payment, then the parties shall agree upon an amount by which each Subsequent
Holdback Release Payment made after the date of such Holdback Indemnification
Payment (and any later Holdback Indemnification Payments) shall be reduced in a
manner reasonably expected to result in a proportionate reduction of each of the
remaining Holdback Release Payments. The final Holdback Release Payment shall be
made on the tenth anniversary of the Closing Date, and the effect of that final
Holdback Release Payment shall be to reduce the Holdback Amount to zero.
(d) Notwithstanding the provisions of Section 9.5(c) above, the
Purchaser shall not be required to make any Holdback Release Payment if and to
the extent that, after
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giving effect thereto, the Holdback Amount remaining would not be sufficient to
make Holdback Indemnification Payments for Qualifying Losses incurred but not
yet paid as of the date such Holdback Release Payment is scheduled to be made.
(e) All Holdback Indemnification Payments made to the Seller and all
Holdback Release Payments shall be made in cash by wire transfer of immediately
available funds to an account designated by the Seller.
9.6 Payment of Interest on Holdback Amount. The Holdback
Amount shall accrue interest at a rate per annum equal to the Applicable Rate
and such Applicable Rate shall be set for the first year on the Closing Date and
then reset for each subsequent year on each anniversary date of the Closing Date
(or, if such anniversary date is not a Business Day, then on the next Business
Day). Accrued interest on the Holdback Amount shall be paid to the Seller
annually on the anniversary of the Closing Date (or, if such anniversary date is
not a Business Day, then on the next Business Day); provided, however, that in
the event a Holdback Release Payment is made to the Seller on a date which is
not an interest payment date, such Holdback Release Payment shall be accompanied
by payment of interest on the amount of such Holdback Release Payment at the
Applicable Rate then in effect. For purposes of computing interest due on each
interest payment date, the Holdback Amount shall be reduced by the amount of all
Holdback Indemnification Payments and all Holdback Release Payments made prior
to the date thereof. All payments of interest on the Holdback Amount shall be
made in cash by wire transfer to an account designated by the Seller.
9.7 Indemnification for Breach. The Seller agrees to indemnify
the Purchaser Indemnitees for any losses arising from any breach of a Specified
3.24 Matter or from any breach of any representation or warranty of the Seller
contained in Section 3.34 of this Agreement; provided, however, that the
indemnification obligations of the Seller with respect to any such breach shall
be subject to the same limits on indemnification as are set forth in Section
9.1(b) above with regard to the indemnification obligations of the Seller with
regard to Seller Claims; and any indemnification payment which the Seller is
required to make under this Section 9.7 shall be deemed to be an indemnification
payment made in respect of a Seller Claim, so that the sum of all
indemnification payments made by the Seller in respect of Seller Claims under
Section 9.1(b) above, pursuant to Section 9.4 above and pursuant to this Section
9.7 shall in no event exceed an aggregate amount equal to $30,000,000
($20,000,000 plus the $10,000,000 Holdback Amount). Any indemnification payment
which the Seller is required to make under this Section 9.7 shall be deemed to
be a Qualifying Loss for purposes of Section 9.5(a) so that, for so long as the
Holdback Amount equals or exceeds the amount of the indemnification payment that
the Seller would otherwise be required to make under this Section 9.7, in lieu
of the Seller's payment of such amount, the Purchaser shall pay such amount to
the Purchaser Indemnitee from the Holdback Amount.
9.8 Treatment of Article IX Claim and Workers' Compensation
Indemnity Payments. The Purchaser and the Seller agree to treat any
indemnification payments made by the Seller in respect of Products Liability
Claims pursuant to the provisions of this Article IX, under the workers'
compensation indemnity provided for in
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Section 9.4 or under the indemnity for breaches of Specified 3.34 Matters and
for breaches of Section 3.34 provided for in Section 9.7, as an adjustment to
the Purchase Price for all Tax purposes.
9.9 Exclusive Remedy for Products Liability Claims and for
Workers' Compensation Claims. The indemnification obligations of the Seller
provided for in this Article IX shall be the exclusive remedy against the Seller
or any Affiliate of the Seller available to the Purchaser Indemnitees in respect
of any Products Liability Claim brought by any Person at any time. The
indemnification obligations of the Seller provided for in Section 9.4 hereof
shall be the exclusive remedy against the Seller or any Affiliate of the Seller
available to the Purchaser Indemnitees in respect of any workers' compensation
claim brought by any Employee or former employee who was employed by a U.S.
Company at any time during the Seller Period. The indemnification obligations of
the Seller provided for in Section 9.7 hereof shall be the exclusive remedy
against the Seller or any Affiliate of the Seller available to the Purchaser
Indemnitees in respect of any breach of any Specified 3.24 Matter and in respect
of any breach of any representation or warranty set forth in Section 3.34 of
this Agreement.
ARTICLE X.
TAX MATTERS
10.1 Tax Returns.
(a) The Seller shall, or shall cause one or more members of the
Minerals Group to, prepare and file all Tax Returns of or including the members
of the Minerals Group that are required to be filed (with extensions) on or
before the Closing Date and shall pay all Taxes shown as due on such Tax
Returns. All such Tax Returns will be made and filed by the Seller and the
members of the Minerals Group in a manner consistent with the prior practice of
the Seller and the members of the Minerals Group, except as required by law. The
Purchaser shall, or shall cause one or more members of the Minerals Group to,
prepare and file all Tax Returns (other than any federal Income Tax Returns) of
or including the members of the Minerals Group that are required to be filed
(with extensions) following the Closing Date for all Taxable Periods ending
prior to, or that include, the Closing Date and, subject to the Seller's
performance of its obligation to pay the Purchaser in respect to the Income Tax
shown on such Pre-Closing Income Tax Return, the Purchaser shall pay all Taxes
shown as due on such Tax Returns. All such Tax Returns will be made and filed by
the Purchaser and the members of the Minerals Group in a manner consistent with
the prior practice of the Seller and the members of the Minerals Group. The
Seller or the Purchaser, as the case may be, shall bear all costs and expenses
for any Tax Return or Tax schedules, forms and information such party is
required to prepare pursuant to this Section 10.1.
(b) In the case of any Income Tax Return of any member of the
Minerals Group that is not a federal Income Tax Return and that is required to
be filed (with extensions) after the Closing Date with respect to any Taxable
Period that ends before or includes the Closing Date (each, a "Pre-Closing
Income Tax Return"), the Purchaser shall use its commercially reasonable best
efforts to provide Seller with a copy of such completed
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Pre-Closing Income Tax Return or a pro-forma of such Pre-Closing Income Tax
Return, where appropriate, together with the related work papers and such other
documents as Seller shall reasonably request, no later than thirty (30) days
before the due date for the filing of such Pre-Closing Income Tax Return. Seller
and its Representatives shall have the right to review the Pre-Closing Income
Tax Returns received from the Purchaser pursuant to this Section 10.1(b). If the
Pre-Closing Income Tax Return is not for a Straddle Period, the Purchaser shall
make such changes to such Pre-Closing Income Tax Return as requested by the
Seller for which there is a reasonable basis in fact and law, and if the
Pre-Closing Income Tax Return is for a Straddle Period and Seller disputes the
treatment of any items on the Income Tax Returns prepared by the Purchaser, the
Seller and the Purchaser agree to consult with each other and attempt to resolve
in good faith any such dispute. If the parties are unable to resolve any dispute
with respect to a Pre-Closing Income Tax Return for a Straddle Period within
sixty (60) days after the receipt of any such Pre-Closing Income Tax Return, the
parties shall submit such dispute to a mutually acceptable national accounting
firm (which shall not be the accountants who regularly audit the financial
statements of the Seller or the Purchaser), whose decision shall be conclusive
and binding on the parties. The Seller and the Purchaser shall each pay one-half
of the fees and expenses of such accounting firm. Within thirty (30) days after
the receipt of such Pre-Closing Income Tax Return or pro-forma Pre-Closing
Income Tax Return, the Seller shall pay to the Purchaser an amount equal to the
Income Tax shown on such Pre-Closing Income Tax Return, or if the Pre-Closing
Income Tax Return is for a Straddle Period, the amount of such Income Tax that
is attributable to the Seller pursuant to Section 10.4, in each case, reduced by
the amount of the State Income Tax Payments or the International Income Tax
payments attributable thereto. However, if any dispute relating to a Pre-Closing
Income Tax Return for a Straddle Period has not been resolved prior to the due
date for the filing of such Pre-Closing Income Tax Return, the Pre-Closing
Income Tax Return in question, to the extent any issues thereon remain
unresolved, shall be filed (and the Seller shall make payments pursuant to this
Section 10.1(b)) in accordance with the positions taken by the Purchaser;
provided that the fact that such Pre-Closing Income Tax Return will have been
filed in accordance with the Purchaser's position shall not be taken into
account for purposes of any dispute resolution under this Section 10.1(b). If a
determination is made through the dispute resolution process after a Pre-Closing
Income Tax Return is filed that the Purchaser's position was inappropriate, the
Purchaser shall promptly file an amended Pre-Closing Income Tax Return in
respect of such Taxable Period (to the extent permitted by Applicable Law)
reflecting the final decision of the accounting firm and an adjusting payment
will be made by the Seller to the Purchaser or by the Purchaser to the Seller,
as the case may be, to reflect any difference between the Income Tax due with
respect to the amended Pre-Closing Income Tax Return and the Pre-Closing Income
Tax due with respect to the Pre-Closing Income Tax Return as originally filed.
(c) For each taxable year of the Seller for which any of the U.S.
Companies is included for all or any part of such taxable year on any
consolidated federal Income Tax Return of the Seller that is due (with
extensions) to be filed after the Closing Date, the Purchaser shall prepare, or
shall cause the U.S. Companies to prepare, in a manner consistent with the prior
practice of the U.S. Companies, and use its commercially reasonable best efforts
to deliver to the Seller no later than July 31st of the immediately following
calendar year and, in any event to deliver by no later than August 15th, all
relevant
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Tax schedules, forms and information relating to the U.S. Companies, correct and
complete in all material respects, to permit their inclusion in the consolidated
federal Income Tax Returns of the Seller for each such taxable year.
(d) The Seller and the Purchaser agree that for Income Tax purposes
the Taxable Period of the U.S. Companies which began on January 1 of the
calendar year in which the Closing Date occurs shall be terminated as of the
close of business on the Closing Date in accordance with Treasury Regulations
Section 1.1502-76(b)(1) (other than transactions properly allocable thereunder
to the portion of the day after the Closing shall occur) and items of income,
gain, loss, deduction or credit shall be apportioned based upon a closing of the
books for Income Tax purposes in accordance with Treasury Regulation Section
1.1502-76(b). No election shall be made under Treasury Regulation Section
1.1502-76(b)(2)(ii) (relating to ratable allocation of a year's items), and
Treasury Regulation Section 1.1502-76(b)(2)(iii) will be applied to ratably
allocate the items (other than extraordinary items, including, without limiting
the generality of the foregoing, compensation items) for the month which
includes the Closing Date. The Seller and the Purchaser further agree to file
all Tax Returns (including all State Income Tax Returns), handle the contest of
any audit and otherwise act for all Tax purposes consistent with the provisions
of this paragraph (d).
(e) Except as set forth in Schedule 10.1 or any of the other
Schedules hereto, or as otherwise expressly contemplated by this Agreement, from
the date hereof to and including the Closing Date, the Seller will not without
the prior written consent of the Purchaser (which consent shall not be
unreasonably conditioned, delayed or withheld), permit any member of the
Minerals Group to directly or indirectly (i) make, change or revoke, or permit
to be made, changed or revoked, any election or method of accounting, with
respect to Income Taxes affecting any member of the Minerals Group for
Post-Closing Tax Periods (but, for the avoidance of doubt, the foregoing shall
not restrict the Seller from making any change in its Income Tax methods of
accounting or practices or making any election with respect to Income Taxes,
even if any member of the Minerals Group is required to conform to, or is bound
by, such change or election), (ii) enter into, or permit to be entered into, any
closing or other agreement or settlement with respect to Taxes of any member of
the Minerals Group affecting or relating to Post-Closing Tax Periods, or (iii)
enter into any transaction or series of transactions other than in the ordinary
course of business or as contemplated or required by this Agreement, or take any
position on any Income Tax Return for any Pre-Closing Tax Period, that would
reasonably be expected to have the effect of increasing Income Tax liability for
any Post-Closing Tax Period of any member of the Minerals Group, then the Seller
upon demand shall promptly reimburse Purchaser for the amount, if any, by which
the sum of the Federal Income Tax Payments, State Income Tax Payments and
International Income Tax Payments exceeds the amount set forth in the first
column of Exhibit C in respect of Income Tax Payment.
10.2 Post-Closing Tax Matters.
(a) The Seller shall cause any tax sharing agreement or similar
arrangement with respect to Taxes involving the U.S. Companies, on the one hand,
and the Seller or any Affiliates of the Seller (other than the U.S. Companies),
on the other hand, to
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be terminated effective as of the Closing Date. To the extent any such agreement
or arrangement relates to any of the U.S. Companies, from and after the Closing
Date neither such U.S. Company nor the Seller and/or its Affiliates shall have
any obligation to the other with respect to Taxes, whether to make a payment or
otherwise, under any such agreement or arrangement for any past, present or
future Taxable Period.
(b) The Purchaser agrees that none of the U.S. Companies, or any
affiliated group (within the meaning of Section 1504(a) of the Code), which
includes any of the U.S. Companies shall claim in, or carryback to, any taxable
year for which a consolidated federal Income Tax Return was filed by the Seller
any item of loss, deduction or credit arising in any Post-Closing Tax Period.
The Purchaser shall not allow or cause any of the U.S. Companies to take, or
fail to take, any reasonable action or omit to take any reasonable action after
the Closing Date (which the Seller has notified the Purchaser on or before the
Closing Date and which relates to an accrual by the Seller for any Pre-Closing
Tax Period) if the taking of such action or the failure to take such action
would reasonably be expected to increase the Taxes of any of the U.S. Companies
for any Pre-Closing Tax Period.
(c) Each of the Seller and the Purchaser will provide the other (and
the other's Representatives) with, and the Purchaser, after the Closing Date,
shall, and shall cause each member of the Minerals Group to, cooperate in good
faith (including the copying of relevant records and providing access to
relevant personnel) with the Seller (and the Seller's Representatives) in
connection with the preparation of any Income Tax Returns (including any amended
Income Tax Returns), the determination of the requesting party's own liability
for Taxes, any audit or other examination by any Taxing Authority, or any
judicial or administrative proceedings relating to liability for Taxes. The
party requesting assistance hereunder shall (i) make such request in writing and
(ii) reimburse the other party for reasonable out-of-pocket expenses (but not
internal time charges) incurred in providing such assistance. Any information
obtained pursuant to this Section 10.2(c) shall be held in strict confidence and
shall be used solely in connection with the reason for which it was requested.
(d) Any refund of Income Taxes with respect to any member of the
Minerals Group that is received with respect to any Pre-Closing Tax Period shall
be for the account of the Seller. To the extent that the Purchaser or any member
of the Minerals Group thereof receives any such refund of Income Taxes after the
Closing Date with respect to any such Pre-Closing Tax Period, the amount of such
refund of Income Taxes shall be promptly paid to the Seller. In addition, if the
State Income Tax Payments exceeds the sum of (i) the aggregate Income Tax shown
on all state and local Pre-Closing Income Tax Returns that are not for a
Straddle Period and (ii) for all state and local Pre-Closing Income Tax Returns
that are for a Straddle Period, the aggregate Income Tax shown on such
Pre-Closing Income Tax Return that is attributable to the Seller pursuant to
Section 10.4, then the Purchaser shall, or shall cause the Company to, pay such
excess promptly to Seller on the due date for the filing (with extensions) the
last of such state and local Pre-Closing Income Tax Returns. Furthermore, if the
International Income Tax Payments exceeds the sum of (i) the aggregate Income
Tax shown on all International Pre-Closing Income Tax Returns that are not for a
Straddle Period and (ii) for all International Pre-Closing Income Tax Returns
that are for a
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Straddle Period, the aggregate Income Tax shown on such Pre-Closing Income Tax
Return that is attributable to the Seller pursuant to Section 10.4, then the
Purchaser shall, or shall cause the Company to, pay such excess promptly to
Seller on the due date (with extensions) for the filing the last of
International Pre-Closing Income Tax Returns.
(e) The amount set forth in the first column of Exhibit C in respect
of Income Taxes is intended to equal the amount (i) the Company or any of the
U.S. Companies paid as estimated federal Income Tax in respect of their taxable
year that began on January 1, 2005 and ends on the Closing Date (but the
foregoing is not intended to require the Seller to reimburse the Company or any
of the U.S. Companies prior to the Closing Date pursuant to the Tax Sharing
Agreement for any federal Income Taxes of the Company or any of the U.S.
Companies in respect of any prior taxable year) (such aggregate amount being
referred to herein as the "Federal Income Tax Payments"), (ii) the Company and
the U.S. Companies paid on each estimated Income Tax payment date as estimated
state or local Income Tax in respect of their taxable year that began on January
1, 2005 and ends on the Closing Date (such aggregate amount being referred to
herein as the "State Income Tax Payments"), and (iii) the members of the
Minerals Group paid as estimated Non-U.S. Income Taxes on or before the earlier
of (x) the Closing Date or (y) June 30, 2005, in respect of any taxable period
that began on or after January 1, 2005 and includes the Closing Date or June 30,
2005, if earlier (such aggregate amount being referred to herein as the
"International Income Tax Payments"). In the event that the amount set forth in
the first column of Exhibit C in respect of Income Taxes does not equal the
amount of the Federal Income Tax Payments, State Income Tax Payments and
International Income Tax Payments, then the Seller, upon demand, shall promptly
pay to the Purchaser the amount, if any, by which the sum of the Federal Income
Tax Payments, the State Income Tax Payments and the International Income Tax
Payments exceeds the amount set forth in the first column of Exhibit C in
respect of Income Taxes.
10.3 Section 338(h)(10) Elections.
(a) As soon as reasonably practicable after the date of this
Agreement, the Purchaser shall furnish the Seller with the Purchaser's
determination (which shall be based upon the Purchase Price calculated without
deduction for either the International Proceeds or the Holdback Amount) of the
ADSP (as defined in applicable Treasury Regulations under Section 338 of the
Code) and the allocation (at the Purchaser's cost and expense) of the ADSP among
the assets of the Minerals Group (determined for this purpose without regard to
any of the transactions contemplated by the International Agreements) and other
relevant items (the "Proposed Allocation"). The Purchaser and the Seller each
agree to consult in good faith with regard to the proposed determination and the
Proposed Allocation (although the entire Holdback Amount shall be first
allocated among, and treated as proceeds from, assets in Classes VII, VI and I
(as such terms are used in Treasury Regulation Section 1.1060-1), then to
property not excluded from installment sale treatment under Section 453 of the
Code (other than the portion of such proceeds from the sale of any property
resulting in "recapture income" under Section 453(i) of the Code), before
allocation of the Holdback Amount to any other property); provided, that the
Seller shall accept the Purchaser's final determination of the ADSP and the
Proposed Allocation to the extent that they are reasonable and consistent with
Applicable Law (which, when accepted, shall
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become the "Final Allocation"). Within thirty (30) days after the determination
of the Final Allocation, the Seller shall deliver to the Purchaser a schedule
setting forth in reasonable detail the additional amount of cash ("Seller's Tax
Cost") that the Seller reasonably estimates is necessary to ensure that the net
proceeds derived by the Seller from the sale of the Shares if the Purchaser
elects to make the elections provided for under Section 338(h)(10) of the Code
with respect to all of the U.S. Companies and any similar elections required to
be, or treated as, made under any applicable state or local Tax laws as a result
of the federal election (collectively, the "Section 338 Elections") is not less
than the amount of net proceeds the Seller would have derived from the sale of
the Shares solely in the absence of the Section 338 Elections (giving effect to
all transactions effected by the Seller, including those pursuant to the
International Agreements) and, for the avoidance of doubt, all such calculations
shall be made by the Seller as if the entire Holdback Amount were payable in
cash on the Closing Date, regardless of any elections made by the Seller with
respect to the method of accounting for the Holdback Amount. The Purchaser and
the Seller each agree to consult in good faith with regard to the determination
and calculation of the Seller's Tax Cost. The Purchaser shall accept the
Seller's final determination of the Seller's Tax Cost to the extent that it is
reasonable and consistent with Applicable Law; provided, however, that if there
is a disagreement between the Purchaser and the Seller with respect to an
interpretation of the tax law as applied to an aspect of the computation of the
Seller's Tax Cost, and such disagreement cannot be resolved between the parties,
they shall submit the issue for resolution to a mutually acceptable national
accounting firm or law firm (the "Arbiter"), whose decision shall be conclusive
and binding on the parties. All fees and expenses of such Arbiter shall be paid
solely by the Purchaser, provided that if the Arbiter determines that the
Seller's position did not have a reasonable basis in Applicable Law, then the
Seller shall pay such costs and expenses. Such procedure shall be diligently
pursued in a manner designed to ensure that the matter will be resolved at least
30 days prior to the due date for filing the Section 338 Elections. The
resulting computation shall become the "Final Seller's Tax Cost".
Within fifteen (15) days after the receipt by the Purchaser of the
schedule of the Final Seller's Tax Cost, the Purchaser shall notify the Seller
of the Purchaser's decision as to whether Purchaser elects to make the Section
338 Elections and specifying the U.S. Companies subject to such Section 338
Elections. If the Purchaser decides to make the Section 338 Elections, the
Purchaser shall be solely responsible (at the Purchaser's cost and expense) for
preparing drafts of all forms, attachments and schedules necessary to effectuate
the Section 338 Elections, including IRS Form 8023 or applicable successor form,
and any similar forms or applicable successor forms under applicable state or
local income tax laws (the "Section 338 Forms"), and the Purchaser shall furnish
a copy of the draft Section 338 Forms to the Seller for the Seller's review and
comment, which the Seller agrees to do promptly. The Seller shall cooperate in
good faith with the Purchaser's preparation of the Section 338 Forms, and the
Seller agrees to promptly provide to the Purchaser true, correct and complete
information regarding the Seller reasonably requested by the Purchaser and
necessary to complete the Section 338 Forms.
If the Purchaser elects to make the Section 338 Elections: (i) the
Purchaser shall deliver to the Seller, and the Seller agrees to execute and
deliver to the Purchaser the final Section 338 Forms within seven (7) days after
the receipt of the Section 338 Forms
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from Purchaser, provided that the Purchaser shall have theretofore paid to the
Seller (by wire transfer in United States dollars of immediately available funds
to the bank account specified in writing by the Seller to the Purchaser) an
amount equal to the Final Seller's Tax Cost, (ii) the Seller shall report the
acquisition of the Company by the Purchaser in a manner consistent with the
making of the Section 338 Elections, and (iii) the Seller shall not take a
position in any Income Tax Return or audit or any proceeding before any Taxing
Authority or otherwise inconsistent with the Section 338 Elections, including
the determination of the ADSP and the Final Allocation shown thereon, unless and
to the extent required to do so pursuant to a determination (as defined in
Section 1313(a) of the Code or any similar state or local law).
If the Purchaser does not elect to make the Section 338 Elections
for all of the U.S. Companies, the Seller may elect to make the Section 338
Elections for all or any of the U.S. Companies for which the Purchaser does not
elect to make the Section 338 Elections (the U.S. Companies for which the
Purchaser did not elect to make the Section 338 Elections but for which the
Seller elects to make the Section 338 Elections being referred to herein as the
"Seller's 338 Companies"). The Purchaser shall have no obligation to make a
payment to the Seller of Seller's Final Tax Cost attributable to any of Seller's
338 Companies, although the Purchaser shall remain obligated to pay the Final
Seller's Tax Cost in respect of the U.S. Companies, if any, as to which the
Purchaser is making the Section 338 Elections. If the Seller decides to make any
such Section 338 Elections for Seller's 338 Companies, the Seller shall be
solely responsible (at the Seller's cost and expense) for preparing drafts of
the Section 338 Forms for Seller's 338 Companies, and the Seller shall furnish a
copy of the draft Section 338 Forms to the Purchaser for the Purchaser's review
and comment, which the Purchaser agrees to do promptly. The Purchaser shall
cooperate in good faith with the Seller's preparation of the Section 338 Forms
for Seller's 338 Companies, and the Purchaser agrees to promptly provide to the
Seller true, correct and complete information regarding the Purchaser reasonably
requested by the Seller and necessary to complete the Section 338 Forms for
Seller's 338 Companies.
If the Seller elects to make the Section 338 Elections for Seller's
338 Companies: (i) the Seller shall deliver to the Purchaser, and the Purchaser
agrees to execute and deliver to the Seller the final Section 338 Forms for
Seller's 338 Companies within seven (7) days after the receipt of the Section
338 Forms from Seller, (ii) the Purchaser shall report the acquisition of the
Seller's 338 Companies by the Purchaser in a manner consistent with the making
of the Section 338 Elections for Seller's 338 Companies, and (iii) the Purchaser
shall not take a position in any Income Tax Return or audit or any proceeding
before any Taxing Authority or otherwise inconsistent with the Section 338
Elections for Seller's 338 Companies, including the determination of the ADSP
and the Final Allocation shown thereon, unless and to the extent required to do
so pursuant to a determination (as defined in Section 1313(a) of the Code or any
similar state or local law).
(b) Without the consent of the Seller, which consent may be granted
or withheld by the Seller in its sole discretion, the Purchaser shall not make,
nor allow any Affiliate to make, the election permitted to be made under Section
338(g) of the Code with respect to the International Companies (the
"International Section 338 Election"). However, if requested by the Seller, the
Purchaser shall make the International Section 338 Election.
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If the International Section 338 Election is made in accordance with the
provisions of this Section 10.3, neither the Purchaser nor the Seller shall have
any obligation to compensate the other for any Tax consequences to the other
party as a result of the making of the International Section 338 Election. On or
prior to the Closing, Seller shall reasonably determine whether Purchaser could
make the International Section 338 Election without any adverse Tax consequences
to Seller or the consolidated group filing a federal Income Tax Returns of which
the Seller is the common parent and shall so advise Purchaser of its
determination on or before the Closing Date. If Seller advises Purchaser that it
has reasonably determined that Purchaser can make the International Section 338
Election without any adverse Tax consequences to Seller or the consolidated
group filing federal Income Tax Returns of which the Seller is the common
parent, then notwithstanding anything to the contrary in this Section 10.3(b),
Purchaser in its discretion may make the International Section 338 Election with
respect to all or any of the International Companies.
10.4 Seller Indemnity for Income Taxes.
(a) The Seller shall indemnify and hold harmless the Purchaser, and
each member of the Minerals Group and their respective successors and permitted
assigns from all Losses without duplication resulting from or relating to: (i)
Income Taxes of each member of the Minerals Group for all Pre-Closing Tax
Periods and the Seller's portion of the Straddle Period (as set forth below);
(ii) the several liability of each member of the Minerals Group in respect of
Income Taxes of any other Person pursuant to Treasury Regulations Section
1.1502-6 or any analogous state, local or foreign law or regulation or by reason
of any member of the Minerals Group having been a member of any consolidated,
combined or unitary group on or prior to the Closing Date; and (iii) Income
Taxes of any other Person pursuant to any agreement or contract, whether written
or unwritten, entered into by any member of the Minerals Group on or before the
Closing Date, or as a transferee or successor, by contract or otherwise. In the
case of a Straddle Period, the Seller shall be solely responsible for all Income
Taxes attributable to the portion of the period ending on, and which includes,
the Closing Date, and the Purchaser shall be solely responsible for all Income
Taxes attributable to the portion of the period which begins after the Closing
Date; provided, however, that, consistent with Section 10.9 hereof, in applying
this sentence in the case of any Non-U.S. Income Tax, if the Closing has not
occurred by June 30, 2005, the Closing Date shall be deemed to have occurred on
June 30, 2005. For purposes of this Agreement, the portion of any Income Tax
that is attributable to the Seller shall be the Income Tax that would be due
with respect to the portion of the Straddle Period through and including the
Closing Date if such portion of the Straddle Period were a separate Pre-Closing
Tax Period, except that exemptions, allowances, deductions or credits that are
calculated on an annual basis (such as the deduction for depreciation or capital
allowances) were apportioned on a per diem basis, and for avoidance of doubt,
exemptions, allowances deductions or credits resulting from events, decisions or
actions that are taken after the Closing Date will not be apportioned on a per
diem basis.
(b) Notwithstanding any provision in this Agreement to the contrary,
the Seller shall have no obligation to indemnify and hold harmless, pay or
reimburse the Purchaser, any member of the Minerals Group or any of their
respective successors and permitted assigns for (i) if the Section 338 Election
is made, any Taxes imposed upon any
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member of the Minerals Group (whether in a Pre-Closing Tax Period or
Post-Closing Tax Period) as a result of any allocation (or proposed allocation)
by any Taxing Authority of all or any part of the ADSP (as defined in applicable
Treasury Regulations under Section 338 of the Code) in a manner different than
the Final Allocation, (ii) any Taxes imposed upon any member of the Minerals
Group (whether in a Pre-Closing Tax Period or Post-Closing Tax Period) as a
result of the transactions contemplated by the International Agreements, and
(iii) Taxes imposed upon, or collected from, any member of the Minerals Group
with respect to any Pre-Closing Tax Period as a result of any acts or failures
to act by Purchaser, its Affiliates or any member of the Minerals Group on or
after the Closing Date (or, in respect of the International Companies purchased
pursuant to an International Agreement, on or after the Transfer Date). For the
avoidance of doubt, in applying this Agreement, any Taxes referred to in the
preceding sentence that occurs in any Straddle Period shall be treated as being
incurred in the Purchaser's portion of the Straddle Period.
10.5 Matters Involving Tax Claims. If a claim is made or
threatened by any Taxing Authority that, if successful, may result in an
indemnity payment under Section 10.4 (a "Tax Claim"), the Purchaser shall
promptly notify the Seller, stating the nature and basis of such claim and the
amount thereof, to the extent known. Failure to give such notice shall not
relieve the Seller from any liability that it may have on account of this
indemnification or otherwise, unless the Seller is prejudiced in the defense of
such Tax Claim thereby. The Seller will have the right, at its option, upon
timely notice to the Purchaser, to assume at its own expense control of any
audit or other defense of any Tax Claim (other than a Tax Claim relating solely
to Income Taxes of any member of the Minerals Group for a Straddle Period) with
its own counsel. The Seller's right to control a Tax Claim will be limited to
issues in respect of which amounts in dispute would be paid by the Seller or for
which the Seller would be liable pursuant to Section 10.4. Costs of such Tax
Claims are to be borne by the Seller unless the Tax Claim relates to a Straddle
Period, in which event such costs shall be fairly apportioned. The Purchaser and
each member of the Minerals Group at their own expense shall cooperate with the
Seller in contesting any Tax Claim, which cooperation shall include the
retention and, upon the Seller's request, the provision of records and
information that are reasonably relevant to such Tax Claim and making employees
available on a mutually convenient basis to provide additional information or
explanation of any material provided hereunder. Notwithstanding the foregoing,
the Seller shall neither consent nor agree to the settlement of any Tax Claim
with respect to any liability for Income Taxes that reasonably would be expected
to affect the liability for any state, federal or foreign Income Tax of the
members of the Minerals Group or any affiliated group (as defined in Section
1504(a) of the Code) of which any of the members of the Minerals Group is a
member for any Post-Closing Tax Period without the prior written consent of the
Purchaser, which consent shall not be unreasonably conditioned, delayed or
withheld, and neither the Seller, nor any entity related to the Seller, shall
file an amended Tax Return that reasonably would be expected to increase the
liability for Taxes of any of the members of the Minerals Group for any
Post-Closing Tax Period without the prior written consent of the Purchaser,
which consent shall not be unreasonably conditioned, delayed or withheld. The
Purchaser and the Seller shall jointly control all proceedings taken in
connection with any claims for Taxes relating solely to a Straddle Period of any
members of the Minerals Group and each party shall bear its own out-of-pocket
costs and expenses of
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the contest and all joint costs and expenses of the contest shall be borne in
the same ratio as the applicable proposed Tax would be allocated.
10.6 Purchaser's Tax Agreements. Except as otherwise permitted
by the Seller, from the Closing Date through and including the end of the
calendar year in which the Closing occurs, the Purchaser shall not (i) allow any
of the International Companies to make or pay or otherwise engage in any
transaction (including, by way of illustration and not by way of limitation, any
sales of stock or the distribution of any dividend (within the meaning of
Section 301 of the Code)) that would have the effect of reducing the post-1986
undistributed earnings (within the meaning of Section 902(c) of the Code) of
such International Company; (ii) allow any of the International Companies to
make any material change in its business or engage in any transaction outside of
the ordinary course of business that could result in the realization of "Subpart
F income" (within the meaning of Section 952 of the Code); provided, however,
that the foregoing will not preclude or limit Purchaser's taking any actions
with respect to the business operations of the International Companies. In
addition, regardless of whether any such adjustment in the Income Tax of any of
the International Companies may be indemnified by the Seller pursuant to Section
10.4, the Purchaser agrees that it shall promptly notify the Seller of any
change in, or adjustment to, any Income Tax of any of the International
Companies that can reasonably be expected to result in a change in the foreign
tax credits claimed by, or available to, the Seller (or the affiliated group of
which the Seller is the common parent). If Purchaser or an Affiliate, in
accordance with Section 10.3(b), makes the International Section 338 Election
with respect to all of the International Companies, then the Purchaser's
obligations in the first sentence of this Section 10.6 shall be null and void.
10.7 Effect on Purchase Price. The Purchaser and the Seller
agree to treat any payments under this Article X as an adjustment to the
Purchase Price for all Tax purposes.
10.8 Exclusive Remedy for Income Tax Matters. Any Tax Claim or
any other matter relating to Income Taxes and Tax Returns shall be governed
exclusively by the provisions of this Article X and no other remedy shall be
available to the Purchaser or to the Seller in respect thereof.
10.9 Non-U.S. Income Taxes.. Notwithstanding any provision in
this Agreement to the contrary, in the case of any Income Tax imposed by any
government or governmental authority outside of the United States ("Non-U.S.
Income Taxes"), this Agreement shall be applied by treating the Closing Date as
if it were the earlier of the Closing Date or June 30, 2005, so that, among
other things, in the case of any Non-U.S. Income Tax, a Pre-Closing Tax Period
will mean any Taxable Period ending on the earlier of the Closing Date or June
30, 2005. For the avoidance of doubt, with respect to any Non-U.S. Income Tax,
the Seller shall have no obligation to indemnify and hold harmless, pay or
reimburse the Purchaser, any member of the Minerals Group or any of their
respective successors and permitted assigns for any Non-U.S. Income Taxes
attributable to any period or portion of a period ending after or which includes
the earlier of (x) the Closing Date or (y) June 30, 2005.
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ARTICLE XI.
TERMINATION
11.1 Termination of Agreement. This Agreement may be
terminated prior to the Closing:
(a) by either the Seller, on the one hand, or by the Purchaser, on
the other hand, upon written notice to the other if, without fault of the
terminating party, the Closing shall not have occurred on or before September
30, 2005; provided, however, that the right to terminate this Agreement under
this Section 11.1(a) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such dates;
(b) at any time by mutual agreement in writing of the parties
hereto;
(c) by the Seller or the Purchaser if: (i) there shall be a final,
non-appealable order of a federal, state or foreign court in effect preventing
consummation of the transactions contemplated hereby; or (ii) there shall be any
final action taken, or any final statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the transactions contemplated
hereby by any Governmental Entity that would make consummation of the
transactions contemplated hereby illegal; provided, however, that the right to
terminate this Agreement under this Section 11.1(c) shall not be available to
any party whose breach of any provision or whose failure to perform any
obligation under this Agreement has been the cause of such order, action,
statute, rule or regulation;
(d) by the Purchaser if an event occurs that makes it impossible to
satisfy any condition to Closing set forth in Article VI; provided, however,
that the right to terminate this Agreement pursuant to this Section 11.1(d)
shall not be available to the Purchaser if any breach on the part of the
Purchaser of any provision of this Agreement has been the cause of, or resulted
in, such impossibility; and
(e) by the Seller if an event occurs that makes it impossible to
satisfy any condition to Closing set forth in Article VII; provided, however,
that the right to terminate this Agreement pursuant to this Section 11.1(e)
shall not be available to the Seller if any breach on the part of the Seller of
any provision of this Agreement has been the cause of, or resulted in, such
impossibility.
11.2 Effect of Termination. In the event of the termination of
this Agreement by the Seller or the Purchaser, written notice of such
termination shall be given to the other party specifying the provision of this
Agreement pursuant to which termination is made and this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned; provided,
however, that the provisions of Section 5.3 (Public Announcements), Section 5.12
(Indemnification of Brokerage), Article XII (Miscellaneous) and this Section
11.2 shall survive any such termination and the Confidentiality Agreement shall
continue in full force and effect in accordance with its terms; provided,
further, that nothing herein shall relieve any party from liability for any
breach of this Agreement. Any
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termination of this Agreement shall also constitute a termination of each of the
International Agreements.
ARTICLE XII.
MISCELLANEOUS
12.1 Notices. Any notices and other communications required to
be given pursuant to this Agreement shall be in writing and shall be effective
upon delivery by hand or upon receipt if sent certified or registered mail
(postage prepaid and return receipt requested) or by a nationally recognized
overnight courier service (appropriately marked for overnight delivery) or upon
transmission if sent by telex or facsimile (with request for immediate
confirmation of receipt in a manner customary for communications of such
respective type and with physical delivery of the communication being made by
one of the other means specified in this Section 12.1 as promptly as practicable
thereafter). Notices are to be addressed as follows:
(a) If to the Seller to:
Alleghany Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxx, Esq.
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
(b) If to the Purchaser to:
Imerys USA, Inc.
000 Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxxxx, General Counsel North America
Telecopy No.: (000) 000-0000
94
with a copy to:
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxx XxXxxxx, Esq.
Telecopy No.: (000) 000-0000
(c) If to the Parent, to:
Imerys, S.A.
000/000, xxx xx x'Xxxxxxxxxx
00000, Xxxxx
Xxxxxx
Attn: Xxxxx Xxxxxx, General Counsel
Telecopy No.: (011) x00 00-000-0000
with a copy to:
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxx XxXxxxx, Esq.
Telecopy No.: (000) 000-0000
or to such other respective addresses as any of the parties hereto shall
designate to the others by like notice, provided that notice of a change of
address shall be effective only upon receipt thereof.
12.2 Fees and Expenses. Except as provided herein, each of the
parties hereto shall pay its own respective fees and expenses (including the
fees of its Representatives) incurred in connection with this Agreement and the
transactions contemplated hereby, whether or not such transactions are
consummated, including fees and expenses incurred in connection with obtaining
waivers, Permits and Consents which are required under the HSR Act or any other
applicable competition law.
12.3 Entire Agreement; Amendments. This Agreement (including
the Exhibits and Schedules hereto and the documents and instruments referred to
herein), together with the International Agreements, contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes all prior written or oral agreements and understandings
with respect thereto other than the Confidentiality Agreement which shall remain
in effect until the Closing and thereupon cease to be of any force and effect.
No party hereto has relied on any oral or written statement, representation,
warranty, covenant, condition, understanding or agreement made by any other
party or any representative, agent or employee thereof, except for those
expressly set forth in this
95
Agreement or the International Agreements or in the Exhibits and Schedules
hereto or the certificates delivered pursuant hereto. Disclosure on any one of
the Schedules hereto constitutes disclosure on each other Schedule as applicable
(to the extent that the relevance of such disclosure for each other Schedule is
evident from the text thereof). This Agreement may be amended or modified only
by an instrument in writing executed and delivered by all parties hereto.
12.4 Assignment; Binding Effect. This Agreement may not be
assigned or delegated, in whole or in part, by any party hereto without the
prior written consent of the other parties hereto. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Notwithstanding
the foregoing, the Purchaser may assign any of its rights and obligations under
this Agreement prior to Closing to any of its Affiliates; provided, however,
that the Purchaser shall remain primarily obligated to perform its obligations
under this Agreement.
12.5 Severability. If any provision of this Agreement shall be
declared invalid or unenforceable by a court of competent jurisdiction in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent declared invalid or unenforceable without affecting the validity or
enforceability of the other provisions of this Agreement, and the remainder of
this Agreement shall remain binding on the parties hereto.
12.6 No Third-Party Beneficiaries. This Agreement is for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not intended to confer upon any other Person any rights or
remedies hereunder, except as provided in Section 5.11 and Exhibit B hereto.
12.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the principles of conflicts of law thereof.
12.8 Consent to Jurisdiction. Except as otherwise expressly
provided in this Agreement, each of the Parent, the Purchaser and the Seller
agree that any suit, action or proceeding seeking to enforce any provision of,
or based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby shall be brought in the United States
District Court for the Southern District of New York or any New York State court
sitting in the Borough of Manhattan, and each of the Parent, the Purchaser and
the Seller hereby consents to the exclusive jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Process may be served on any party in any manner by which
notice is permitted to be given by Section 12.1 hereof, and, without limiting
the foregoing, each party
96
agrees that service of process on such party as provided in this Section 12.8
shall be deemed effective service of process on such party.
12.9 Waiver of Jury Trial. EACH OF THE PARENT, THE PURCHASER
AND THE SELLER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
12.10 Interpretation. This Agreement is the result of
arm's-length negotiations between the parties hereto and has been prepared
jointly by the parties. In applying and interpreting the provisions of this
Agreement, there shall be no presumption that the Agreement was prepared by any
one party or that the Agreement shall be construed in favor of or against any
one party.
12.11 Captions. The Article and Section headings in this
Agreement are inserted for convenience of reference only, and shall not affect
the interpretation of this Agreement.
12.12 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
12.13 Extension; Waiver. At any time prior to the Closing
Date, any party may (a) extend the time for the performance of any of the
obligations or other acts of any other party, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement of any other party or (c) waive compliance
with any of the agreements or conditions contained in this Agreement of any
other party. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. No delay on the part of any party in exercising any right
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right nor any single or partial exercise of any such right
preclude any further exercise thereof or the exercise of any other such right.
Notwithstanding the foregoing, the Closing of the transactions contemplated
hereunder shall constitute a waiver of all conditions to the Closing.
12.14 Guarantee.
(a) The Parent hereby guarantees that, at the Closing, the Purchaser
will have the funds available to pay the Purchase Price. The Parent hereby
further guarantees to the Seller the payment and performance, when due, of the
liabilities and obligations of the Purchaser (including any assignee of the
Purchaser permitted under Section 12.4 hereof) to the Seller hereunder, in
accordance with the terms of this Agreement and pursuant to all amendments,
supplements, renewals and restatements of the Agreement (the "Obligations");
provided that the enforcement by the Seller of the guarantee against the Parent
shall be subject to the terms of this Section 12.14.
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(b) If the Purchaser (including any assignee of the Purchaser
permitted under Section 12.4 hereof) fails to pay or perform any Obligations for
which it is liable, when and as the same shall become due and payable or
performable (whether by acceleration or otherwise), the Seller shall make
written demand on the Purchaser for the payment or performance of such
Obligations, as the case may be, and if the Seller is unable to obtain such
payment or performance from the Purchaser, as the case may be, and such
Obligations are not in dispute between the Seller and the Purchaser, then after
thirty (30) days from the date of the written demand, the Seller may make
written demand on the Parent for such non-disputed Obligations. In the event any
Obligation is in dispute between the Seller and the Purchaser, the Seller and
the Purchaser must have fully resolved such dispute either by the agreement of
the Seller or the Purchaser or pursuant to final resolution of the dispute
through litigation or arbitration before the Seller shall be entitled to make
written demand on the Parent pursuant to this Section 12.14. Subject to the
preceding sentence, in the event that the Seller makes a demand on the Parent
for an Obligation that is the subject of a dispute between the Seller and the
Purchaser, the Parent shall have no obligation under this Agreement to pay or
perform, as the case may be, such Obligation.
(c) Nothing in this Agreement shall be deemed to guarantee any
obligation of Purchaser other than as specifically stated in the first sentence
of Section 12.14(a) above and other than the Purchaser's Obligations to the
Seller and arising out of this Agreement.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement
as of the date first written above.
ALLEGHANY CORPORATION
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and chief executive officer
IMERYS USA, INC.
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Chairman of the Board and President
IMERYS S.A. (solely for the purpose of Sections
12.1, 12.8, 12.9 and 12.14 hereto)
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Chief Executive Officer
