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Exhibit 4.5
PURCHASE AGREEMENT
BETWEEN
FIBERITE, INC.,
FIBERITE HOLDINGS, INC.
AND
ICI AMERICAN HOLDINGS INC.
With respect to all of
the outstanding shares of
common stock of
ICI COMPOSITES INC.
Dated October 6, 1995
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms.......................................... 1
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale.............................................. 6
2.2 Closing........................................................ 6
2.3 Adjustment to Purchase Price................................... 6
2.4 Excluded Assets/Included Assets................................ 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Organization and Authority of Seller........................... 8
3.2 No Conflict; Consents and Approvals............................ 8
3.3 Litigation..................................................... 8
3.4 Composites..................................................... 9
3.5 Licenses, Permits and Qualifications........................... 10
3.6 Compliance with Laws........................................... 10
3.7 Properties..................................................... 10
3.8 Bank Accounts.................................................. 11
3.9 Environmental Protection....................................... 11
3.10 Intellectual Property.......................................... 13
3.11 Material Agreements and Bids; Breaches......................... 13
3.12 Financial Statements........................................... 15
3.13 Absence of Certain Changes or Events........................... 15
3.14 Tax Matters.................................................... 16
3.15 Employee Benefits.............................................. 16
3.16 Labor and Employment Matters................................... 18
3.17 Insurance...................................................... 19
3.18 Maintenance of Business with Customers......................... 19
3.19 Related Party Transactions..................................... 19
3.20 Disclosure Schedules........................................... 19
3.21 No Other Representations....................................... 19
3.22 Finders' Fees.................................................. 19
3.23 Payments....................................................... 20
3.24 Aviation Legal Liability Insurance............................. 20
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.1 Organization and Authority of Purchaser........................... 20
4.2 No Conflict....................................................... 20
4.3 Absence of Litigation............................................. 20
4.4 Consents and Approvals............................................ 20
4.5 Due Diligence Investigation....................................... 21
4.6 Finders' Fees..................................................... 21
ARTICLE V
COVENANTS
5.1 Noncompetition.................................................... 21
5.2 Use of ICI Name................................................... 22
5.3 Post-Closing Access to Tax and
Other Records................................................... 22
5.4 Sales and Transfer Taxes.......................................... 23
5.5 Further Assurances................................................ 23
5.6 Section 338(h)(10) Election....................................... 23
5.7 Retained Seller Information....................................... 24
5.8 Retained Business Information..................................... 25
5.9 Refunds........................................................... 25
5.10 Filing of Returns................................................. 25
5.11 Prosecution, Maintenance and Turnover of
Intellectual Property Files..................................... 25
ARTICLE VI
EMPLOYEE MATTERS
6.1 Retention of Employees............................................ 26
6.2 Employee Benefit Plans............................................ 27
6.3 Composites Post Retirement Benefits............................... 31
6.4 Certain Unfunded Liabilities...................................... 31
6.5 Flexible Spending Account......................................... 32
6.6 Motor Vehicle Lease Agreements.................................... 32
6.7 No Third-Party Beneficiaries...................................... 32
6.8 Stock Option Plan................................................. 32
6.9 Exempt Loans...................................................... 32
6.10 Leased Employees.................................................. 32
6.11 Cooperation....................................................... 32
ARTICLE VII
INDEMNIFICATION
7.1 Survival.......................................................... 33
7.2 Indemnification by Purchaser...................................... 33
7.3 Indemnification by Seller......................................... 33
7.4 Indemnification Procedures........................................ 36
7.5 Third Party Reimbursement; Aviation Liability Insurance........... 38
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7.6 Mitigation ................................................. 38
7.7 Limitation on Damages ...................................... 38
7.8 Purchase Price Adjustment .................................. 38
7.9 Remediation Procedures ..................................... 39
7.10 Exclusive Remedy ........................................... 40
ARTICLE VIII
MISCELLANEOUS
8.1 Amendment .................................................. 41
8.2 Waiver of Compliance: Consents ............................. 41
8.3 Attorneys' Fees ............................................ 41
8.4 Expenses ................................................... 41
8.5 Notices .................................................... 41
8.6 Headings ................................................... 42
8.7 Severability ............................................... 42
8.8 Entire Agreement ........................................... 43
8.9 Successors and Assigns ..................................... 43
8.10 Governing Law .............................................. 43
8.11 Counterparts ............................................... 43
8.12 Guarantee .................................................. 43
SCHEDULES
1.1 Excluded Assets
2.3(a) Statement of Working Capital Exceptions
3.2(a) Consents and Approvals
3.3 Claims and Litigation
3.4(c) Corporate Records
3.5(a) Licenses and Permits
3.5(b) Qualifications
3.7(a) Liens
3.7(b) Properties
3.7(c) Leased Property Exceptions
3.8 Bank Accounts
3.9 Environmental Matters
3.10(a) Intellectual Property
3.10(c) Intellectual Property Claims and Conflicts
3.10(d) Infringements
3.11 Material Agreements Exceptions
3.11(a)(i) Material Agreements
3.11(a)(vii) Price Adjustment Requests
3.11(b)(1) Breaches
3.11(b)(2) Notices
3.12 Financial Statements
3.12(a) Financial Statements Exceptions
3.13 Changes or Events since the Balance Sheet Date
3.13(f) Transferred Property Exceptions
3.14(b) Tax Matters
3.14(c) Tax Waivers
3.14(d) Tax Powers
3.14(e) Tax Agreements
3.14(f) 280G Agreements
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3.15 Employee Benefits
3.16 Labor and Employment Matters
3.16(e) Labor Settlement Agreements
3.17 Insurance Policies for ICI Composites Inc.
3.18 Maintenance of Business with Customers
3.19 Related Party Transactions
3.23 Payments
3.24 Aviation Legal Liability Insurance
4.5 Due Diligence Investigation
5.11(a) Patents and Trademarks
5.11(d) Jointly Owned Patents/Applications
6.1(a) Composites Severance Plan
6.1(b) Individual Severance Arrangements
6.2 Pension Transfer Agreement
6.2(b) Composites ABO Assumptions and Methods
6.2(e) Composites Employees on Short-term Disability
6.4 Unfunded Liabilities
6.6 Motor Vehicle Lease Agreements
6.8(a) Management Group
6.8(b) Stock Option Plan
6.9 Exempt Loans
6.10 Leased Employees
7.4(a) Power of Attorney
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PURCHASE AGREEMENT
PURCHASE AGREEMENT dated as of October 6, 1995, between ICI American
Holdings Inc. ("Seller"), a Delaware corporation, Fiberite, Inc. ("Purchaser"),
a Delaware corporation, and Fiberite Holdings, Inc. ("Guarantor"), a Delaware
corporation.
WHEREAS, Purchaser desires to acquire from Seller, and Seller desires
to sell to Purchaser, all of the outstanding shares of capital stock of ICI
Composites Inc. ("Composites"), a Delaware corporation, on the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. (a) As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person. A Person shall not be deemed to be an Affiliate of any other
Person solely as a result of being a director or officer of such other Person.
"Ancillary Agreements" means the Transition Services Agreement, the
Xxxxxxx Master Service Agreement, the ICI-Am Master Service Agreement and the
ICI Canada Services Agreement.
"Aviation Product" means "Aviation Product" as defined in Schedule 3.24.
"Balance Sheet" means the balance sheet set forth in the audited
financial statements of Composites dated December 25, 1994.
"Balance Sheet Date" means December 25, 1994.
"Business" means the business currently conducted by Composites.
"Business Day" means a day of the year on which banks are not required
or authorized to be closed in the City of New York.
"Closing" means the closing of the purchase and sale of the Shares.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Composites Employee Plan" means an Employee Plan sponsored or
maintained by Composites or another ICI Company for the benefit of current or
former employees of Composites.
"Current Assets" means accounts receivable, inventory (including raw
materials, work in process, finished goods and supplies), prepaid expenses,
other pre-payments and all other current assets of Composites, less related
reserves.
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"Current Liabilities" means accounts payable, employee accruals, other
accrued expenses and all other current liabilities of Composites, excluding
Income Taxes.
"Employee Plan" means any (i) employee benefit plan as that term is
defined in Section 3(3) of ERISA and (ii) any other material compensation or
benefit, plan, policy or arrangement currently maintained or contributed to by
Composites or an ERISA Affiliate for its current or former employees.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any corporation or trade or business other than
Composites that is a member of any group of organizations (i) described in
Section 414(b) or (c) of the Code of which Composites is a member and (ii)
solely for purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Code and the lien created under Section 302(f) of
ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the
Code of which Composites is a member.
"Excluded Assets" means (i) all cash or cash equivalents, (ii) all
intercompany balances between Composites and Seller in favor of Composites
existing on or prior to the Closing Date, and (iii) all assets owned or used
by Seller or any ICI Company in the provision of services to Composites
(including, without limitation, all corporate credit, telephone and similar
cards held by Composites Employees where such cards have been provided to
Composites Employees in connection with any ICI Company and including all
computer and information technology rights and systems owned or operated by
Seller or any ICI Company for the benefit of Composites) other than Included
ICI Assets.
"GAAP" means United States generally accepted accounting principles.
"Xxxxxxx Master Service Agreement" means the Master Service Agreement
dated as of the Closing Date between The Xxxxxxx Company and Composites.
"Hourly Pension Plan" means the ICI Composites Service Related Pension
Plan.
"ICI" means Imperial Chemical Industries PLC, a corporation organized
under the laws of England.
"ICI-Am Master Service Agreement" means the Master Service Agreement
dated as of the Closing Date between ICI Americas Inc. and Composites.
"ICI Canada Services Agreement" means the Services Agreement dated as
of the Closing Date between ICI Canada Inc. and Composites.
"ICI Company" means ICI or any Affiliate of ICI (excluding Composites
and Fiberite Europe GmbH).
"Included ICI Assets" means all assets owned by Seller or any other ICI
Company and used by Seller or any ICI Company exclusively or principally for
the provision of services to Composites (excluding all corporate credit,
telephone and similar cards held by Composites Employees where such cards have
been provided to Composites Employees in connection with any ICI Company,
excluding all computer and information technology rights and systems owned or
operated by Seller or any other ICI Company for the benefit of Composites and
excluding any assets owned by Seller or any ICI Company and utilized in the
performance of the Ancillary Agreements) in the operation of the Business as
presently conducted, other than the Excluded Assets and those assets set forth
in Schedule 1.1
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"Income Taxes" means any liability for Taxes that arises in relation
to a Tax that is based upon, measured by, or calculated with respect to income,
profits or gross receipts (other than sales or use Taxes).
"Indemnifiable Taxes" means Taxes due and payable by Composites
pertaining to any taxable period (or portion thereof) ending on or prior to the
Closing Date, including any Tax resulting from any transaction pursuant to
which the Excluded Assets remain or become the property of the Seller or any
Affiliate of the Seller. With respect to a taxable period that begins before
the Closing Date and ends after the Closing Date, the portion of any Taxes
attributable to such period that will be treated as Taxes of a Pre-Closing Tax
Period will be deemed to be: (i) in the case of any Other Tax (other than sales
and use Taxes), the amount of such Other Tax for the entire period multiplied
by a fraction, the numerator of which is the number of days in the period
ending on the Closing Date and the denominator of which is the number of days
in the entire period, (ii) in the case of any Income Taxes, the Income Tax for
the entire taxable period, multiplied by a fraction, the numerator of which is
the hypothetical Income Tax for the Pre-Closing Tax Period (determined on the
basis of an interim closing of the books, without annualization) and the
denominator of which is the sum of such numerator plus the hypothetical Income
Tax for the balance of the taxable period (determined on the basis of such
interim closing, without annualization); the hypothetical Tax for any period
shall be zero (in the case where no Tax is due) or a positive amount, and (iii)
in the case of any sales or use Tax, the Tax arising with respect to property
sold or acquired in a Pre-Closing Tax Period. Indemnifiable Taxes shall in no
event include any interest, any penalties or any additions to Tax, or any
interest on penalties or additions to Tax resulting from any action or failure
to act, following the Closing, on the part of Composites or Purchaser, except
to the extent resulting from any act or omission of Seller. No Tax shall be
included in Indemnifiable Taxes to the extent the liability for such Tax is
reflected in the Statement of Working Capital.
"Intellectual Property" means inventions, patents, and patent
applications; trademarks, trademark registrations and applications therefor;
trade names, symbols and logos; copyrights; service marks; service xxxx
registrations and applications therefor; know-how; and trade secrets.
"Management Group" means the Composites Employees identified in
Schedule 6.8(a).
"Manufacturing Facilities" means the manufacturing and office
facilities owned or leased by Composites located at (i) Tempe, Arizona, (ii)
Orange, California, (iii) Winona, Minnesota, (iv) Delano, Pennsylvania, and (v)
Greenville, Texas.
"Material Adverse Effect" means a material adverse effect on the
financial condition, business, assets, net worth or results of operations of
Composites taken as a whole.
"Occurrence" means "Occurrence" as defined in Schedule 3.24.
"Other Taxes" means any liability for Taxes that arises in relation to
Taxes that are not Income Taxes.
"Person" means an individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Qualified Plan" means an employee pension benefit plan within the
meaning of Section 3(2) of ERISA that meets the qualification requirements of
Section 401(a) of the Code, and whose trust or other funding medium is exempt
from federal income tax under Section 501(a) of the Code.
"Post-Closing Tax Period" means any period (or portion thereof) ending
after the Closing Date.
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"Pre-Closing Tax Period" means any period (or portion thereof) ending
on or before the Closing Date.
"Salaried Pension Plan" means the ICI Composites Pension Plan
established pursuant to a spinoff from the ICI Americas Pension Plan.
"Separate Composites Plan" means a Composites Employee Plan that only
covers Composites Employees, former employees of Composites, their dependents,
and/or their beneficiaries.
"Shares" means all of the issued and outstanding shares of common
stock, par value $1.00 per share, of Composites.
"Tax" or "Taxes" means (i) all federal, state, county, local, foreign
and other taxes and similar governmental charges or assessments (including,
without limitation, net income, alternative or add-on minimum tax, profits,
premium, estimated, excise, sales, use, occupancy, gross income, gross
receipts, franchise, ad valorem, stamp, severance, capital levy, production,
transfer, withholding, license, employment and payroll, and property taxes,
environmental or windfall profits taxes and import duties) imposed by any
governmental authority responsible for the imposition of any such tax, whether
attributable to statutory or nonstatutory rules and including interest,
penalties, additions to tax, and interest on penalties or additions to tax;
(ii) any liability of Composites or any subsidiary for the payment of any
amounts described in clause (i) as a result of being a member of an affiliated
group of corporations (within the meaning of Section 1504(a) of the Code)
filing a consolidated U.S. federal income tax return, or a group of
corporations filing a consolidated, combined or unitary tax return for state or
local tax purposes, for periods prior to the Closing Date, including any
liability pursuant to Treasury Regulation Section 1.1502-6; and (iii) any
liability of Composites for amounts described in clause (i) under any Tax
sharing or Tax allocation agreement entered into prior to the date hereof.
"Transition Services Agreement" means the Transition Services Agreement
dated as of the Closing Date between ICI Americas Inc. and Composites.
"Working Capital" means Current Assets less Current Liabilities.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
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Allocation 5.6(c)
Arbitrated Amount 2.3(d)
Authorizations 3.9(a)
Audited Financial Statements 3.12
Xxxxxxxx 3.11(a)(viii)
CERCLA 3.9(e)
Claim Costs 7.3
COBRA Coverage 6.2(d)(iv)
Collective Bargaining Agreement 3.16(a)
Composites ABO 6.2(b)(iii)
Composites Employee 6.1
Consequential damages 7.7
Cost Effective Cleanup 7.9(e)
Designated Representatives 7.9(d)
Environmental Law 3.9(l)
Files 5.11(a)
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Financial Statements 3.12
Government Bid 3.11(a)(vi)
Government Contract 3.11(a)(vi)
Hazardous Materials 3.9(e)
HCFA 7.3(i)
ICI Letters 5.2(a)
Indirect Damages 7.7
Indemnified Party 7.4(a)
Indemnifying Party 7.4(a)
Independent Accounting Firm 2.3(d)
Material Agreement 3.11(a)(v)
MICP 6.2(g)
Necessity Test 7.9(f)(ii)
Liens 3.7(a)
Off-site Remediation Liabilities 7.9(a)
On-site Cleanup 7.9(b)
On-site Remediation Liabilities 7.9(a)
Pension Transfer Agreement 6.2(b)(ii)
Permits 3.5(a)
Permitted Liens 3.7(a)
Purchase Price 2.1(b)
Purchaser Indemnitees 7.3
Purchaser's Amount 2.3(d)
Purchaser's Medical Plan 6.2(d)(i)
Purchaser's Pension Trust 6.2(b)(iv)
Purchaser's Savings Plan 6.2(c)
Real Property 7.9(a)
Relevant Factors 7.9(f)(ii)
Retained Seller Information 5.7
Retained Business Information 5.8
Section 338(h)(10) Election 5.6(b)
Seller Indemnitees 7.2
Seller's Accountants 2.3(a)
Seller's Amount 2.3(d)
Seller's Medical Plan 6.2(d)(i)
Seller's Pension Trust 6.2(b)(iv)
Seller's Savings Plan 6.2(c)
Settlement Agreement 3.11(a)(viii)
Statement of Working Capital 2.3(a)
Tax Returns 3.14(a)
Testing 7.9(f)
Third Party Claim 7.4(b)
Transaction Costs 5.6(c)
Warranties 3.20
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ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale.
(a) Subject to the terms and conditions set forth in this Agreement,
Seller agrees to sell to Purchaser, and Purchaser agrees to purchase from
Seller, on the Closing Date, the Shares.
(b) Subject to any adjustment as provided in Section 2.3, the aggregate
Purchase Price (the "Purchase Price") for the Shares shall be $107,966,167.26
which Purchase Price shall be allocated in accordance with Section 5.6.
2.2 Closing. At the Closing:
(a) Seller will deliver to Purchaser the certificate representing the
Shares, duly endorsed or accompanied by stock powers duly endorsed in blank,
with any required documentary stamps affixed thereto.
(b) Purchaser shall deliver (or cause to be delivered) to Seller
$107,966,167.26 in immediately available funds by wire transfer to a bank
account designated by Seller by notice delivered to Purchaser not later than two
Business Days prior to the Closing Date.
(c) Purchaser and Seller will each deliver, or cause to be delivered,
duly executed counterparts of the Ancillary Agreements.
2.3 Adjustment to Purchase Price.
(a) Statement of Working Capital. As soon as practicable, but in any
event within forty-five Business Days following the Closing Date, Seller shall
deliver to Purchaser a statement of the Working Capital of Composites (the
"Statement of Working Capital") as of the close of business on the Closing Date,
together with a report thereon of KPMG, independent accountants for Seller
("Seller's Accountants"), to the effect that the amounts reflected therein
have, except as set forth in Schedule 2.3(a), been prepared in accordance
with the policies and procedures used to prepare the 1994 audited financial
statements as described in Section 3.12.
(b) Cooperation. Purchaser shall provide Seller and Seller's
Accountants full access to the books, records, facilities and employees of
Composites (which employees shall assist Seller's Accountants in carrying out
procedures necessary in preparing the Statement of Working Capital) and shall
cooperate fully with Seller and Seller's Accountants, in each case to the
extent required by Seller and Seller's Accountants in order to prepare the
Statement of Working Capital and to investigate any disputes or other matters
relating thereto; provided, that any such investigation shall be conducted in
such a manner as not to interfere unreasonably with the operation of
Composites.
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(c) Adjustment of Purchase Price.
(i) In the event that the amount of Working Capital set forth on the
Statement of Working Capital exceeds $22,300,000.00, the Purchase Price shall
be increased by an amount equal to such excess and Purchaser shall deliver to
Seller an amount in cash equal to such excess.
(ii) In the event that the amount of Working Capital set forth on the
Statement of Working Capital is less than $17,600,000.00, the Purchase Price
shall be reduced by an amount equal to such deficit and Seller shall deliver to
Purchaser an amount in cash equal to such deficit.
(iii) For the avoidance of doubt, in the event that the amount of
Working Capital set forth on the Statement of Working Capital is not more than
$22,300,000.00 and not less than $17,600,000.00, there shall be no adjustment
of the Purchase Price pursuant to this Section 2.3(c).
(d) Disputes. Subject to this Section 2.3(d), the Statement of
Working Capital delivered by Seller to Purchaser shall be final, binding and
conclusive on the parties hereto. Within twenty Business Days of Purchaser's
receipt of the Statement of Working Capital, Purchaser may dispute any amounts
reflected on the Statement of Working Capital by notifying Seller in writing of
each disputed item, specifying the amount thereof in dispute and setting forth,
in detail, the basis for such dispute. During such twenty Business Day period,
independent accountants for Purchaser shall have reasonable access to all
working papers, supporting analyses, computations, accounting records and
general ledger reports used by Seller or Seller's Accountants to prepare the
Statement of Working Capital. Purchaser's notice shall also set forth the
amount it believes was the Working Capital of Composites as of the close of
business on the Business Day preceding the Closing Date ("Purchaser's Amount").
In the event of such a dispute, Purchaser and Seller shall attempt to reconcile
their differences and any resolution by them as to any disputed amounts shall
be final, binding and conclusive on the parties. If Purchaser and Seller are
unable to reach a resolution within twenty Business Days of Purchaser's written
notice of dispute to Seller, Purchaser and Seller shall submit the items
remaining in dispute for resolution to an independent accounting firm of
national reputation mutually appointed by Seller and Purchaser (the "Independent
Accounting Firm"), which shall, within twenty Business Days of such submission,
determine and report to Seller and Purchaser upon such remaining disputed items
and on the amount of Working Capital of Composites as of the close of business
on the Business Day preceding the Closing Date (the "Arbitrated Amount"), which
amount shall in no event be less than Purchaser's Amount or greater than the
amount of Working Capital set forth on the Statement of Working Capital
delivered by Seller ("Seller's Amount"). The report of the Independent
Accounting Firm shall be final, binding and conclusive on Seller and Purchaser.
The fees and disbursements of the Independent Accounting Firm shall be paid by
Purchaser and Seller in the following percentages: (i) in the case of Seller, A
divided by C and (ii) in the case of Purchaser, B divided by C, where (x) A
equals the difference between Seller's Amount and the Arbitrated Amount, (y) B
equals the difference between the Arbitrated Amount and Purchaser's Amount and
(z) C equals the difference between Seller's Amount and Purchaser's Amount.
(e) Payments. Any payment required to be made pursuant to Section
2.3(c) hereof will be made in immediately available funds no later than twenty
Business Days after receipt by Purchaser of the Statement of Working Capital;
provided that if Purchaser timely delivers a dispute notice pursuant to Section
2.3(d) hereof, such payment so made shall be net of the amount in dispute,
with the balance to be made within five Business Days following the delivery of
the report determining the Arbitrated Amount.
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2.4 Excluded Assets/Included Assets. Notwithstanding the sale of the
Shares hereunder, the parties acknowledge and will ensure that the Excluded
Assets remain or will with effect from the Closing become the property of the
Seller or any ICI Company nominated by the Seller and that the Included ICI
Assets will with effect from the Closing become the property of Composites. The
parties agree to co-operate with each other and to take any action which is
reasonably necessary after the Closing in order to give effect to this Section.
Seller shall be responsible for any Taxes relating to any transfers of assets
pursuant to this Section.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants as of the Closing as follows:
3.1 Organization and Authority of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all necessary corporate power and authority to enter into and
perform this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by Seller and
constitutes a legal, valid and binding obligation of Seller, enforceable
against it in accordance with its terms.
3.2 No Conflict: Consents and Approvals.
(a) Except as set forth in Schedule 3.2(a), the execution, delivery and
performance of this Agreement by Seller do not (i) conflict with or violate any
law, rule, regulation, order, judgment, injunction, decree, determination or
award applicable to Seller, (ii) violate or conflict with any law, rule,
regulation, order, judgment, injunction, decree, determination or award
applicable to Composites, (iii) violate or conflict with the certificate of
incorporation or by-laws of either Seller or Composites; or (iv) require any
material pre-Closing consent, notice, authorization or approval under, result
in any breach of, or constitute a default (or event which with notice or lapse
of time, or both, would become a default) under, or result in the creation of
any lien or other encumbrance on any of the properties or assets of Composites
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument to which Composites or Seller or
any of their Affiliates is a party or by which any of them or any of their
respective properties is bound or affected, except in the case of Sections
3.2(a)(i) and (ii), for such conflicts, violations, breaches and defaults, and
for such consents and approvals the failure of which to obtain, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) The execution and delivery of this Agreement by Seller do not, and
the performance of this Agreement by Seller does not require any consent,
approval, authorization or other action by, or filing with or notification to,
any domestic or foreign governmental or regulatory authority or any other
person, except for the filing of forms with the Internal Revenue Service as
contemplated by Section 5.6 hereof and, except where failure to obtain such
consents, approvals, authorizations or actions, or to make such filings or
notifications, would not (i) prevent Seller from performing any of its
obligations under this Agreement or (ii) otherwise prevent the consummation of
the transactions contemplated herein by Seller.
3.3 Litigation. Except as set forth in Schedule 3.3, there are no
claims, actions, suits or proceedings pending, or to the knowledge of each of
Seller and Composites threatened,
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nor to the knowledge of each of Seller and Composites are there any
investigations pending or threatened, against or specifically affecting Seller
or Composites or to which their respective properties or assets are subject,
before any court, arbitrator, or administrative, governmental or regulatory
authority or body, domestic or foreign, that (i) challenge or otherwise put in
issue the authority of Seller to enter into or perform this Agreement, (ii)
challenge or otherwise put in issue the validity of this Agreement or any of
the transactions contemplated hereby, (iii) if adversely decided, would
materially adversely affect the ability of Seller to consummate the
transactions contemplated hereby or (iv) if adversely decided, would reasonably
be expected to have a Material Adverse Effect (other than with respect to those
matters described in Sections 3.3(i), (ii) and (iii), and, to the knowledge of
each of Seller and Composites, there is no factual basis upon which any such
claim, action, suit or proceeding would reasonably be likely to be asserted or
commenced. Composites is not subject to any order, judgment, injunction,
decree, determination or award which has or would reasonably be expected to
have a Material Adverse Effect.
3.4 Composites.
(a) Composites is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own its properties and assets and to carry on
the Business.
(b) Composites is duly qualified to transact business and is in good
standing in each state or jurisdiction in which it owns material assets or
transacts a material part of its business, except where the failure to so
qualify would not reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth in Schedule 3.4(c), Seller has made available
to Purchaser complete and correct copies of (i) the Articles of Incorporation
of Composites, as amended to the Closing Date, certified by the appropriate
governmental official; (ii) the By-laws of Composites as presently in effect,
certified by the Secretary of Composites; (iii) the minutes of all meetings of
the shareholders and board of directors of Composites and any committees
thereof, and (iv) all written consents in lieu of meetings of the shareholders
and board of directors of Composites and any committees thereof. Except as set
forth in Schedule 3.4(c), such copies are true, correct and complete and
contain all amendments through the date of this Agreement. Copies of such
Articles of Incorporation and By-laws of Composites are attached to Schedule
3.4(c).
(d) Composites is not the legal or beneficial owner of any equity
securities or other ownership interests of any corporation, partnership, joint
venture, trust, business association or other legal entity.
(e) The capital stock of Composites consists solely of 1,000 shares of
common stock, par value $1.00 per share, of which 1,000 shares are issued and
outstanding. All of the Shares are owned legally, beneficially and of record by
Seller, and will be conveyed to Purchaser at the Closing, free and clear of all
security interests, liens, charges, encumbrances and adverse claims, except for
those arising by reason of an action or inaction by, or with respect to, the
Purchaser. The Shares are validly issued and are fully paid and nonassessable,
and Composites is under no obligation to register any of its securities
pursuant to any law, statute, regulation or other governmental act applicable
to the sale, exchange or issuance of securities, including, but not limited to,
the Securities Act of 1933, as amended.
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(f) There are no agreements or understandings with respect to the
voting of the Shares. There are no options, convertible securities, warrants,
rights or other instruments or agreements to which Composites or Seller or any
other ICI Company is a party or by which Composites or Seller or any other ICI
Company is bound, calling for the issuance, sale, transfer or delivery of any
equity or debt security of Composites or of any security convertible into
exchangeable for or requiring the issuance, sale, transfer or delivery of any
such equity or debt security, other than this Agreement.
3.5 Licenses, Permits and Qualifications.
(a) Except as set forth in Schedule 3.5(a), Composites possesses all
permits, licenses, orders and approvals of foreign, federal, state or local
governmental or regulatory bodies that are required in order to permit
Composites to carry on the Business, except for those permits, licenses, orders
and approvals the failure of which to obtain would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect
(hereinafter referred to as the "Permits"). Except as set forth in Schedule
3.5(a), the Permits are in full force and effect and, to the knowledge of each
of Seller and Composites, no suspension or cancellation of the Permits is
threatened.
(b) To the knowledge of Composites, all products sold by Composites
pursuant to qualification requirements established by Composites' customers were
produced in a manner consistent with the requirements of such qualifications
where the failure to do so, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect. To its knowledge, Composites held
all necessary qualifications for its products from its customers pursuant to
which sales were made to such customers during the periods covered by the
Financial Statements. Except as set forth in Schedule 3.5(b), neither Seller nor
Composites has, since July 1, 1990, received any notification that any material
qualifications for Composites' commercially manufactured products as established
by Composites' customers have been revoked or terminated as a result of the
failure of products manufactured by Composites to meet the specifications
required by such qualifications, and to the knowledge of each of Seller and
Composites, no such revocation or termination is threatened or contemplated.
3.6 Compliance with Laws. Composites is not in violation of any
foreign, federal, state or local law, statute, ordinance or regulation in
effect on or prior to the Closing Date, except for laws, statues, ordinances,
or regulations dealing with environmental, tax, employee benefits, and labor
and employment matters, improper payments (which matters are exclusively the
subject of Sections 3.9, 3.14, 3.15, 3.16 and 3.23, respectively) and except
for such violations which individually or in the aggregate would not reasonably
be expected to have a Material Adverse Effect.
3.7 Properties.
(a) Except for property (other than real property) and assets sold
since the Balance Sheet Date in the ordinary course of business which, other
than finished goods in inventory, did not in the aggregate exceed property and
assets having a fair market value in excess of $100,000, and except in the case
of Intellectual Property, which is exclusively the subject of Section 3.10,
Composites has good and valid title to or rights in, or in the case of leased
property has valid leasehold interests in, all material personal property and
assets (whether tangible or intangible) reflected on the Balance Sheet or
acquired after the Balance Sheet Date. Except as set forth in Schedule 3.7(b),
Composites has good and marketable, indefeasible, fee simple title to, or in
the case of leased real property has valid leasehold interests in, all real
property reflected on the Balance Sheet or acquired after the Balance Sheet
Date. None of such
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property or assets (whether real or personal) is subject to any liens, security
interests, claims or other charges ("Liens"), except (i) Liens for Taxes not
yet due, (ii) mechanic's, materialman's, and other common law or statutory Liens
of vendors not perfected or recorded under law, (iii) Liens that do not
materially detract from the value or materially interfere with the present use
of the assets to which they apply and (iv) Liens disclosed in Schedule 3.7(a)
(collectively, "Permitted Liens").
(b) Schedule 3.7(b) sets forth (i) all real property owned by
Composites and the most recent ALTA surveys and title reports of such property
possessed by Composites, (ii) all real property leased by Composites and any
ALTA surveys of such property possessed by Composites (and the annual rental
for such property), (iii) all personal property leased by Composites requiring
annual payments in excess of $100,000 (and the annual rental for such
property), and (iv) all personal property owned by Composites with a book value
of $100,000 or more. Except as set forth in Schedule 3.7(b), the property
listed in Schedule 3.7(b) and all other personal property owned or leased by
Composites is all that used to carry on the Business as currently conducted.
Composites conducts reasonable maintenance in the ordinary course of business
consistent with past practice with respect to all machinery and equipment
presently being utilized by it in the manufacture of its products.
(c) Except as set forth in Schedule 3.7(c), the leases of real and
personal property described in Section 3.7(b) are in full force and effect, all
rentals or other payments due and payable thereunder prior to the date hereof
have been duly paid and Composites is in compliance with all material
provisions of each such lease. To the knowledge of each of Seller and
Composites, no default or event of default exists and no event which, with
notice or lapse of time, or both, would constitute a default or event of
default has occurred and is continuing, under the terms or provisions, express
or implied, of any of such leases, nor has Seller or Composites received notice
of any claim of such default or event of default.
(d) There are no eminent domain proceedings pending or, to the
knowledge of each of Seller and Composites threatened, against any property
owned by Composites or any material portion thereof which proceedings (if
resulting in a taking) would reasonably be expected to have a material adverse
effect on the use of such property as currently used in the operation of the
Business.
(e) Seller has made available to Purchaser true and correct copies of
the most recent title insurance commitments, title insurance policies and
surveys in Composites' possession relating to real properties owned or leased
by Composites.
(f) Neither Seller nor Composites has received any notice or has
knowledge of violations of any local zoning or land use or other similar
regulations in respect of the real property listed on Schedule 3.7(b) which are
in effect or remain unresolved.
3.8 Bank Accounts. Schedule 3.8 sets forth the name and number of each
Composites bank account together with the name and address of the bank for each
account.
3.9 Environmental Protection. Except as would not reasonably be
expected to have a Materially Adverse Effect or as set forth in Schedule 3.9
hereto:
(a) Composites has obtained all permits, licenses and other
authorizations (hereinafter collectively referred to as "Authorizations") which
are required with respect to the current operation of the Business, its assets
and the use, ownership and operation of the Manufacturing Facilities and any
real property under any Environmental Law and each such
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Authorization is in full force and effect.
(b) Composites is in compliance with all terms and conditions of the
Authorizations specified in subsection 3.9(a) above, and is also in compliance
with, and not subject to liability under, any Environmental Law (including,
without limitation, compliance with standards, schedules and timetables therein
having the force of law).
(c) There is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice of violation, proceeding, notice or demand letter or
request for information pending or, to the knowledge of Seller or Composites,
threatened, nor to the knowledge of Seller or Composites is there any
investigation pending or threatened, under any Environmental Law against
Composites or against any person or entity whose liability for any such matter
Composites has retained or assumed either by agreement or by operation of law.
(d) No Lien is in effect under any Environmental Law with respect to
any assets, facility or real property owned, operated, leased or controlled by
Composites.
(e) Neither Seller nor Composites has received notice that Composites
has been identified as a potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA") or any
comparable state or foreign law nor has either Seller or Composites received
any notification that any hazardous substances or any pollutant or contaminant,
as defined in CERCLA and its implementing regulations, or any toxic substance,
hazardous waste, hazardous constituents, asbestos or asbestos containing
material, petroleum, including crude oil and any fractions thereof, or other
wastes, chemicals, substances or materials subject to regulation under any
Environmental Law (collectively "Hazardous Materials") that Composites has
used, generated, stored, treated, handled, transported or disposed of or
arranged for transport for disposal or treatment of, or arranged for disposal
or treatment of, has been found at any site at which any governmental agency or
private party is, to the knowledge of each of Seller and Composites, conducting
or planning to conduct an investigation or other action pursuant to any
Environmental Law.
(f) Since July 1, 1985, except as may have occurred in compliance with
an Authorization, there have been no releases (i.e., any releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping) of Hazardous Materials by Composites
on, at, upon, into or from any of the real properties owned, leased, operated
or used by Composites or facilities thereon.
(g) There is no asbestos in, on, or at any real property or facility or
equipment owned, leased or operated by Composites.
(h) No real property owned, leased or operated by Composites is (i)
listed or publicly proposed for listing on the National Priorities List under
CERCLA or is (ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated pursuant to CERCLA,
or on any comparable published list maintained by any foreign or state
governmental authority.
(i) No notice or other filing, or consent or approval is required under
any Environmental Law in connection with or as a result of the transactions
contemplated by this Agreement.
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(j) There are no underground storage tanks or related piping located
at, on or under any real properties owned, leased or operated by Composites.
(k) Composites has delivered or otherwise made available for inspection
to Purchaser or its agents true, complete and correct copies of any reports,
studies, assessments, analyses, evaluations, test or monitoring results in each
case prepared since July 1, 1990, possessed, available to or initiated by or on
behalf of Composites pertaining to Hazardous Materials in, on, beneath or
adjacent to any of the Manufacturing Facilities or real properties owned,
leased, operated or used by Composites or regarding Composites' compliance with
or liability under any Environmental Law.
(l) For purposes of this Agreement, "Environmental Law" means the
common law and any applicable foreign, federal, state and local laws or
regulations, codes, ordinances, rules, orders, decrees or judgments in effect
on or prior to the Closing Date relating to pollution or protection of public
or employee health or the environment, including, without limitation, those
relating to (i) any releases or threats of releases of Hazardous Materials into
the environment (including, without limitation, ambient air, indoor air,
surface water, groundwater, land surface or subsurface) and (ii) underground or
above ground storage tanks, and related piping, and releases or threatened
releases therefrom.
3.10 Intellectual Property. (a) Schedule 3.10(a) sets forth or
describes all domestic and foreign patents, patent applications, patent
licenses, written know-how licenses, trade names, material secrecy agreements,
registered trademarks, registered copyrights, registered service marks,
trademark and service xxxx applications currently used or held for use in the
Business.
(b) To Seller's knowledge, Composites owns, licenses or has rights to
use all Intellectual Property to the extent used or held for use in connection
with the Business.
(c) Except as set forth in Schedule 3.10(c), in the last 7 years, no
claim has been asserted against Seller or Composites, and Seller and Composites
have no knowledge, that the conduct of the Business as now operated conflicts
with valid patents, patent rights, licenses, trademarks, service marks,
trademark rights, trade names, trade name rights or copyrights of others in any
way that would reasonably be expected to have a Material Adverse Effect.
(d) Except as set forth in Schedule 3.10(d), to the knowledge of each
of Seller and Composites, no other entity's use of any Intellectual Property
infringes any rights in Intellectual Property held by Composites.
3.11 Material Agreements and Bids; Breaches.
(a) Except as set forth in Schedule 3.11:
(i) Schedule 3.11(a)(i) hereto sets forth a complete and correct
list of all Material Agreements in effect on the Closing Date. All Material
Agreements are valid and binding on the parties thereto in accordance with
their terms and are in full force and effect in all material respects.
(ii) No show-cause notices, stop work orders, cure notices,
default terminations, written notices of default (claimed or actual) or
similar notices or negative determinations of responsibility are in effect
or remain unresolved against Composites with respect to any Material
Agreement.
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(iii) With respect to all Government Contracts and Government Bids,
there are no pending, and to the knowledge of each of Seller and Composites,
there are no contemplated or threatened (A) civil fraud or criminal
investigations by any government investigative agency, (B) suspension or
debarment proceedings (or equivalent proceedings) against Composites, (C)
requests by the government for a contract price adjustment based on a claimed
disallowance by the Defense Contract Audit Agency or similar agency, or claim
of defective pricing in excess of $100,000 individually or $500,000 in the
aggregate, (D) disputes between Composites and the government which have
resulted in a government contracting officer's final decision where the amount
in controversy exceeds or would reasonably be expected to exceed $100,000
individually or $500,000 in the aggregate, or (E) claims or equitable
adjustments by Composites against the government or any third party in excess
of $100,000 individually or $500,000 in the aggregate.
(iv) To the knowledge of Seller and Composites, there is no fact which
would prevent the transfer of facility security clearances held by Composites
to Purchaser after Closing other than Composites' current level of activity.
(v) For purposes of this Agreement, "Material Agreement" means any
agreement (including, without limitation, any legally binding purchase order)
or Government Contract which (A) has a stated value, including options, greater
than $100,000, (B) is a contractual obligation of Composites greater than
$100,000, or (C) is a material lease.
(vi) For purposes of this Agreement, "Government Contract" means any
prime contract, subcontract, basic ordering agreement, letter contract,
purchase order or delivery order of any kind in writing, including all
amendments, modifications, and options thereunder or relating thereto, in
existence as of the date hereof, between Composites and (A) the U.S.
Government, (B) any prime contractor of the U.S. Government, or (C) any
subcontractor to any contract described in clauses (A) or (B) above. The term
"Government Bid" shall mean any written quotation, bid or proposal outstanding
as of the date hereof made by Composites that, if accepted or awarded, would
lead to a contract with (A) the U.S. Government, (B) any prime contractor of
the U.S. Government, or (C) any subcontractor to any contract described in
clauses (A) or (B) above.
(vii) With respect to any Government Contract which expired, or was
terminated, or for which final payment was made within three (3) years prior
to the date hereof, and except as set forth in Schedule 3.11(a)(vii) hereto, to
the knowledge of Seller and Composites, there are no requests by the U.S.
Government for a contract price adjustment based upon a claim of defective
pricing in excess of $100,000.
(viii) The Settlement Agreement (the "Settlement Agreement") between
Composites and Xxxxxxxx Companies, Inc. ("Xxxxxxxx") dated May 31, 1994
constitutes the legal, valid and binding obligation of each of the parties
thereto and is enforceable on the Closing Date against each such party in
accordance with its terms, including, but not limited to, with respect to the
asbestos litigation set forth on Schedule 3.3. Composites is not, nor to
Seller's or Composites' knowledge is Xxxxxxxx in breach of its obligations
under the Settlement Agreement and Composites has not received any notice of
any alleged failure on its part to perform any of its obligations under the
Settlement Agreement.
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(b) Breaches. Except as set forth in Schedule 3.11(b)(1), Composites is
not in violation of its Certificate of Incorporation or By-laws or in default in
the performance or observance of any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise, or of any provision of any
judgment, decree, order, statute, rule (including cost accounting standards),
or regulation applicable to or binding upon Composites which individually, or
in the aggregate, would reasonably be expected to have a Material Adverse
Effect. Except as set forth in Schedule 3.11(b)(2), no notice of any alleged
failure on Composites' part to perform any obligation under any Material
Agreement or of the proposed termination or nonrenewal of any Material
Agreement is in effect or remains unresolved by reason of (i) alleged
deficiencies in products manufactured and/or sold by Composites, or (ii)
Composites' alleged failure to perform its contractual obligations on a timely
basis. There is no other actual or, to the knowledge of each of Seller and
Composites, alleged breach by Composites or, to the knowledge of each of Seller
and Composites, by any other party thereto which would warrant termination or
nonrenewal of a Material Agreement.
3.12 Financial Statements. Attached hereto as Schedule 3.12 are the
audited financial statements of Composites for the periods ending December 26,
1993 and December 25, 1994 (the "Audited Financial Statements") and the
unaudited management accounts of Composites for the period January 1995 through
August 1995 (said Audited Financial Statements and said management accounts
collectively referred to as the "Financial Statements"). The Audited Financial
Statements present fairly in all material respects the financial positions of
Composites as described therein and the results of operations of Composites for
the periods stated therein, including, without limitation, the Working Capital,
as of the dates therein referred to, and in each case are presented in
accordance with Seller's normal accounting practices, which are in accordance
with GAAP, except as disclosed in Schedule 3.12(a) and the notes to the
Financial Statements, consistently applied throughout the periods of the
Financial Statements involved. Said management accounts have been prepared in
accordance with the policies and procedures consistently applied in the
preparation of the management accounts of Composites since 1991.
3.13 Absence of Certain Changes or Events. Except as set forth in
Schedule 3.13, since the Balance Sheet Date, the Business has been conducted in
the ordinary course consistent with past practice and there has been no event
or series of events that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect. Except as set forth in Schedule
3.13, since the Balance Sheet Date, Composites has not:
(a) incurred any obligation, commitment or liability (fixed or
contingent), except trade or business obligations incurred in the ordinary
course of business, which trade or business obligations individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect;
(b) transferred or granted any material rights under or with respect to
any Intellectual Property;
(c) (i) made or granted any wage or salary increase (other than in the
ordinary course and consistent with past practice), (ii) engaged any new
officer or employee at an annual rate of compensation in excess of $50,000 per
annum, or (iii) entered into, or increased the annual rate of compensation
paid by Composites pursuant to, any employment agreement or other arrangement
with any person which provides for an annual rate of compensation or other
payments which, together with all other payments and benefits, would provide
aggregate annual compensation in excess of $50,000 and which may not be
terminated by Composites without any payment, other than pursuant to the ICI
Composites Severance Plan, except by notice of at least 30 days;
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(d) increased the benefits in an existing Composites Employee Plan or
any commitment to adopt any additional Composites Employee Plan, terminated or
made any arrangement to terminate any Composites Employee Plan, or determined
that an event has occurred which might result in the involuntary termination
of any Employee Benefit Plan under Title IV of ERISA.
(e) made or entered into any contract or commitment to make capital
expenditures in excess of $150,000 individually or $750,00 in the aggregate; or
(f) made any transfer of property (other than cash, Excluded Assets,
and those items included in Schedules 1.1 and 3.13(f), or incurred or
guaranteed any indebtedness, to or for the benefit of Seller or its Affiliates,
other than any dividends (comprising cash, Excluded Assets or items included in
Schedules 1.1 and 3.13(f)) paid to Seller on or prior to the Closing Date.
(g) suffered any Material Adverse Effect from damage, destruction or
casualty loss to any property of Composites.
3.14 Tax Matters. (a) Composites or an ICI Company, has filed or
Seller, to the extent responsible for filing under Section 5.10 hereof, will
file or cause to be filed in a timely manner with the applicable taxing
authorities of the United States, states, localities, foreign countries and
political subdivisions of foreign countries all of Composites' Tax returns,
reports or other filings (other than IRS Forms 5500 and such other returns,
reports or other filings as they relate to employee benefit plans) which are
required to be filed on or before the Closing Date (the "Tax Returns"). All
Taxes shown on the Tax Returns to be due and payable have been paid by
Composites or will be accrued as a liability in the Statement of Working
Capital.
(b) To the knowledge of each of Seller and Composites, except as set
forth in Schedule 3.14(b), with respect to Taxes (i) Composites is not a party,
directly or through a tax sharing arrangement, to any pending action or
proceeding by any domestic or foreign governmental authority for assessment or
collection of Taxes and (ii) there is no (A) current audit, or (B)
administrative or court proceeding currently pending with regard to any Tax or
Tax Returns of Composites by any taxing authority.
(c) Except as set forth in Schedule 3.14(c), Composites has not
executed any waivers or comparable consents regarding the application of the
statute of limitations with respect to any Taxes or Tax Returns.
(d) Except as otherwise provided in Section 7.4(a) or set forth in
Schedule 3.14(d), no power of attorney currently in force has been granted by
Composites concerning any Tax matter.
(e) Except as set forth in Schedule 3.14(e), Composites is not a party
to any agreement relating to the allocation or sharing of Taxes.
(f) Except as set forth in Schedule 3.14(f), Composites is not a party
to any agreement, contract or arrangement that would result, separately or in
the aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code.
3.15 Employee Benefits.
(a) (i) Except as otherwise set forth in Schedule 3.15, all material
and legally binding obligations for salaries, vacation pay and bonuses which
were due and payable to
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the employees of Composites on or before the Closing Date have been paid or
adequate accruals therefor have been provided.
(ii) Schedule 3.15 sets forth, as of the date specified in said
schedule, a materially correct and complete list of the names of the employees
of Composites and their salary or wage rates.
(b) Set forth in Schedule 3.15 is a correct and complete list of each
Composites Employee Plan. Except as set forth in Schedule 3.15, Seller provided
to Purchaser the most recent copy of each such Composites Employee Plan. To the
extent any such Composites Employee Plan is not in writing, a short summary of
the plan has been set forth in Schedule 3.15.
(c) Except as set forth in Schedule 3.15, none of the Composites
Employee Plans is a Multiemployer Plan (as defined in Section 3(37) of ERISA).
Neither Composites nor any ERISA Affiliate has made within the preceding six
plan years, or expects to make prior to the Closing, a complete or partial
withdrawal from any Multiemployer Plan so as to incur withdrawal liability as
defined in Section 4201 of ERISA or contingent withdrawal liability under
Section 4204 of ERISA for which Composites would be liable. The total aggregate
withdrawal liability which would result under Section 4201 of ERISA if
Composites were to withdraw in a complete withdrawal (as defined in Section
4203 of ERISA) on the Closing Date from each Composites Employee Plan that is a
Multiemployer Plan would not result in a Material Adverse Effect.
(d) Except as set forth in Schedule 3.15, Seller previously has provided
to Purchaser the most recent summary plan description of each Composites
Employee Plan disseminated to employees of Composites; and the most recent
annual report (Form 5500) with attached schedules for those Composites Employee
Plans that only cover employees of Composites, and in the case of such a plan
which is a defined benefit Qualified Plan, the most recent actuarial valuation
report.
(e) Except as set forth in Schedule 3.15, there is no obligation or
liability to provide post retirement welfare benefits to current or future
retirees of Composites (other than those required by Section 601 et seq. of
ERISA).
(f) Except as set forth in Schedule 3.15, each Composites Employee Plan
has been administered in material compliance with its terms, and to the extent
applicable, with ERISA and the Code.
(g) Except as set forth in Schedule 3.15, with respect to any
Composites Employee Plan, there are: (i) no prohibited transactions, within the
meaning of Section 406 of ERISA or Section 4975 of the Code, which have been
committed and which would reasonably be expected to result in a Material
Adverse Effect; (ii) no pending, or to the knowledge of Seller, threatened
suits, claims, investigations or proceedings against a Composites Employee Plan
by a Composites Employee or former employee of Composites (other than routine
claims for benefits; and (iii) no claims or other matters currently pending,
nor to the knowledge of Seller, are there any investigations or claims
threatened or pending, by, with or before the Internal Revenue Service,
Department of Labor, Pension Benefit Guaranty Corporation or other federal
governmental agency.
(h) All contributions, premiums and other payments required to be paid
prior to the Closing Date to Composites Employee Plans by Composites, under
applicable law or the terms of such plans, have been paid. Except as set forth
in Schedule 3.15, each Composites
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the employees of Composites on or before the Closing Date have been paid or
adequate accruals therefor have been provided.
(ii) Schedule 3.15 sets forth, as of the date specified in said
schedule, a materially correct and complete list of the names of the employees
of Composites and their salary or wage rates.
(b) Set forth in Schedule 3.15 is a correct and complete list of each
Composites Employee Plan. Except as set forth in Schedule 3.15, Seller provided
to Purchaser the most recent copy of each such Composites Employee Plan. To the
extent any such Composites Employee Plan is not in writing, a short summary of
the plan has been set forth in Schedule 3.15.
(c) Except as set forth in Schedule 3.15, none of the Composites
Employee Plans is a Multiemployer Plan (as defined in Section 3(37) of ERISA).
Neither Composites nor any ERISA Affiliate has made within the preceding six
plan years, or expects to make prior to the Closing, a complete or partial
withdrawal from any Multiemployer Plan so as to incur withdrawal liability as
defined in Section 4201 of ERISA or contingent withdrawal liability under
Section 4204 of ERISA for which Composites would be liable. The total aggregate
withdrawal liability which would result under Section 4201 of ERISA if
Composites were to withdraw in a complete withdrawal (as defined in Section 4203
of ERISA) on the Closing Date from each Composites Employee Plan that is a
Multiemployer Plan would not result in a Material Adverse Effect.
(d) Except as set forth in Schedule 3.15, Seller previously has
provided to Purchaser the most recent summary plan description of each
Composites Employee Plan disseminated to employees of Composites; and the most
recent annual report (Form 5500) with attached schedules for those Composites
Employee Plans that only cover employees of Composites, and in the case of such
a plan which is a defined benefit Qualified Plan, the most recent actuarial
valuation report.
(e) Except as set forth in Schedule 3.15, there is no obligation or
liability to provide post retirement welfare benefits to current or future
retirees of Composites (other than those required by Section 601 et seq. of
ERISA).
(f) Except as set forth in Schedule 3.15, each Composites Employee Plan
has been administered in material compliance with its terms, and to the extent
applicable, with ERISA and the Code.
(g) Except as set forth in Schedule 3.15, with respect to any
Composites Employee Plan, there are: (i) no prohibited transactions, within the
meaning of Section 406 of ERISA or Section 4975 of the Code, which have been
committed and which would reasonably be expected to result in a Material
Adverse Effect; (ii) no pending, or to the knowledge of Seller, threatened
suits, claims, investigations or proceedings against a Composites Employee Plan
by a Composites Employee or former employee of Composites (other than routine
claims for benefits): and (iii) no claims or other matters currently pending,
nor to the knowledge of Seller, are there any investigations or claims
threatened or pending, by, with or before the Internal Revenue Service,
Department of Labor, Pension Benefit Guaranty Corporation or other federal
governmental agency.
(h) All contributions, premiums and other payments required to be paid
prior to the Closing Date to Composites Employee Plans by Composites, under
applicable law or the terms of such plans, have been paid. Except as set forth
in Schedule 3.15, each Composites
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Employee Plan which is a "group health plan" (as defined in the Code and ERISA)
is and has been operated in material compliance with the requirements of part 6
of Subtitle B of Title 1 of ERISA and Section 4980B of the Code with respect to
former employees of Composites. Except as set forth in Schedule 3.15, neither
Composites nor any ERISA Affiliates has incurred any liability to the Pension
Benefit Guaranty Corporation, except for annual premiums that have been paid
when due. Composites and its ERISA Affiliates have made all contributions
required under Section 302 of ERISA of Section 412 of the Code with respect to
all Employee Plans. Composites and its ERISA Affiliates have made all
contributions required during the preceding five plan years under Section 302 of
ERISA or Section 412 of the Code when due with respect to the Hourly Pension
Plan and the Salaried Pension Plan.
(i) Except as required by this Agreement or disclosed in Schedule
3.15, the execution, delivery and performance of this Agreement will not result
in any increase in the compensation or benefits payable by Composites or
otherwise payable to a Composites Employee or the acceleration of the time of
payment or vesting of any such compensation or benefits.
(j) The ICI Americas Pension Plan and each other Composites Employee
Plan (other than the Salaried Pension Plan) which is intended to be a Qualified
Plan has received a favorable determination letter from the Internal Revenue
Service to the effect that such plan so qualifies, or an application for such a
letter has been applied for prior to April 1, 1995, and such application is
pending and no event has occurred and no condition exists as of the Closing
Date which would reasonably be expected to result in the loss of Qualified Plan
status or the imposition of any material liability, penalty or tax on
Composites under ERISA or the Code with respect to said Qualified Plans and
which cannot be cured retroactively without any liability (other than
compliance with the amendment or modification referred to in this sentence) by
an amendment or modification to the Qualified Plan document. The Salaried
Pension Plan is a Qualified Plan and no event has occurred and no condition
exists as of the Closing Date which would reasonably be expected to result in
the loss of Qualified Plan status or the imposition of any material liability,
penalty or Tax on Composites under ERISA or the Code with respect to said
Salaried Pension Plan and which cannot be cured retroactively without any
liability (other than compliance with the amendment or modification referred to
in this sentence) by an amendment or modification to the Qualified Plan
document.
(k) Composites does not as of the Closing have any material liability
under the joint and several liability provisions of the Code or Title IV of
ERISA as the result of pre-Closing Date liabilities of its ERISA Affiliates.
(l) No liability under any Composites Employee Plan has been funded
nor has any such obligation been satisfied with the purchase of a contract from
an insurance company as to which Seller, Composites or any ERISA Affiliate has
received notice that such insurance company is in rehabilitation.
3.16 Labor and Employment Matters. (a) Except as set forth in
Schedule 3.16, Composites is not a party to any collective bargaining agreement
or other labor union contract applicable to persons employed by it in
connection with the operation of the Business ("Collective Bargaining
Agreement"). Except as set forth in Schedule 3.16, there are no strikes,
slowdowns, work stoppages or lockouts, by or with respect to any employees of
Composites in connection with the operation of the Business and, to the
knowledge of each of Seller and Composites, no such actions are threatened.
(b) Except as set forth in Schedule 3.16, Composites is in material
compliance with all federal and state laws respecting employment and employment
practices, terms and conditions of employment and wages and hours and is not
engaged in any unfair labor practice.
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Except as set forth in Schedule 3.16, there is no unfair labor practice
complaint against Composites pending before the National Labor Relations Board
or any comparable state or local agency and, to the knowledge of Seller and
Composites, no such complaint is threatened.
(c) No grievance which would reasonably be expected to have a Material
Adverse Effect nor any material arbitration proceeding arising out of or under
a Collective Bargaining Agreement is pending.
(d) To Seller's and Composites' knowledge, there are no trade union
organizing efforts currently under way at any facility.
(e) Except as set forth in Schedule 3.16(e), there are no existing
material written labor settlement agreements (other than the Collective
Bargaining Agreements) or court orders or National Labor Relations Board
decisions which by their terms affect all the members of a collective
bargaining unit.
3.17 Insurance. Immediately prior to the Closing Date, Composites, or
an ICI Company for the benefit of Composites, maintained policies of fire,
casualty, liability and other forms of insurance, a list of such policies is
provided as set forth in Schedule 3.17. No such policies and other forms of
insurance will be in place on or after the Closing Date.
3.18 Maintenance of Business with Customers. Except as set forth in
Schedule 3.18, and excluding change orders and contract modifications and
terminations having a value not exceeding $100,000 in any individual case,
since the Balance Sheet Date, there has been no termination, cancellation or
material limitation of, or any material modification or change in, the business
relationship of Composites with any customer or group of customers whose
purchases individually or in the aggregate provided more than 7% of the gross
revenues of Composites, or of any supplier or group of suppliers whose
provision of inventory or services individually or in the aggregate constituted
more than $250,000.
3.19 Related Party Transactions. Except as set forth in Schedule
3.19, after the Closing, Composites will have no liabilities or obligations to
Seller or any other ICI Company, except as otherwise contemplated by this
Agreement and the Ancillary Agreements.
3.20 Disclosure Schedules. Information fairly disclosed in a Schedule
shall, where the context permits, be an exception to, and a qualification of,
all of the representations and warranties made in this Article III (the
"Warranties"), whether or not the Schedule is identified as being an exception
to any of the Warranties in question and whether or not any of the Warranties
identifies a different Schedule as containing exceptions to any of the
Warranties in question.
3.21 No Other Representations. Except as expressly provided in this
Agreement all warranties and representations on the part of Seller, Composites
or any ICI Company whether express or implied, statutory or otherwise are, to
the extent permitted by law, hereby expressly excluded and Purchaser hereby
acknowledges to Seller that it has not relied on any warranties,
representations, statements as to fact, undertakings or disclosures other than
those expressly set out in this Agreement (including the Schedules) and that no
other warranties, representations, undertakings or indemnities have been given
by or on behalf of Seller, Composites or any ICI Company.
3.22 Finders' Fees. Neither Composites nor any ICI Company has
retained any finder, broker or financial advisor in connection with the
transactions contemplated by this Agreement. Seller hereby agrees to indemnify
and hold harmless Purchaser from and against any
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liability for commissions or compensation in the nature of a finder's fee to
any broker or other person or firm (as well as the costs and expenses of
defending against such liability or asserted liability) for which Seller or any
of its employees or representatives may be responsible by reason of this
Agreement or the transactions contemplated hereby.
3.23 Payments. Except as set forth in Schedule 3.23, to the knowledge
of each of Seller and Composites, no manager or employee of Composites has,
during the past ten years, violated the Foreign Corrupt Practices Act of 1977,
as amended (15 U.S.C. Section 78dd-1, Section 78dd-2 and Section 78m(b)), the
Anti-Kickback Act of 1986, as amended (41 U.S.C. Section 51 et seq.) or 18
U.S.C. Section 201.)
3.24 Aviation Legal Liability Insurance. Prior to the Closing (but not
earlier than July 1, 1985), Composites was covered under a policy or policies
of aviation legal liability insurance having policy wording substantially
identical to that described in the Sedgwick Cover Note dated 26 June 1995 and
the Sedgwick 1994/95 policy wording dated 2 October 1995 set forth in Schedule
3.24 and which provided for sums insured of at least $150,000,000.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants as of the Closing as follows:
4.1 Organization and Authority of Purchaser. Purchaser is a corporation
duly organized and validly existing under the laws of the State of Delaware and
has all necessary corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly authorized, executed and delivered by Purchaser and constitutes a legal,
valid and binding obligation of Purchaser enforceable against Purchaser in
accordance with its terms.
4.2 No Conflict. The execution, delivery and performance of this
Agreement by Purchaser do not and will not (i) violate or conflict with any
material law, rule, regulation, order, judgment, injunction, decree,
determination or award applicable to Purchaser (ii) violate or conflict with
the certificate of incorporation or by-laws of Purchaser, or (iii) require any
material pre-Closing consent, notice, authorization or approval under, result
in any material breach of, or constitute a material default (or event which
with notice or lapse of time or both would become a material default) under, or
result in the creation of any material lien or other encumbrance on any of the
properties or assets of Purchaser pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument to which Purchaser or any of its Affiliates is a party or by which
any of them, any of its or their respective properties is bound or affected,
which might have a material adverse affect on the consummation of the
transactions contemplated hereby.
4.3 Absence of Litigation. No claim, action, suit or proceeding is
pending or, to the knowledge of Purchaser, threatened, and to the knowledge of
Purchaser, no investigation is pending or threatened, which seeks to delay or
prevent the consummation of the transactions contemplated hereby.
4.4 Consents and Approvals. The execution and delivery of this
Agreement by Purchaser do not, and the performance of this Agreement by
Purchaser does not require any consent, approval, authorization or other action
by, or filing with or notification to, any domestic or foreign governmental or
regulatory authority or any other person, except for the filing of forms with
the Internal Revenue Service, as contemplated by Section 5.6 hereof and except
where
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failure to obtain such consents, approvals, authorizations or actions, or to
make such filings or notifications, would not (i) prevent Purchaser from
performing any of its obligations under this Agreement, or (ii) otherwise
prevent the consummation of the transactions contemplated herein by Purchaser.
4.5 Due Diligence Investigation. Purchaser acknowledges that it has had
the opportunity to review the due diligence materials supplied or made
available by Seller, including, without limitation, the types of information
described in Schedule 4.5.
4.6 Finders' Fees. Neither Purchaser nor any Affiliate of Purchaser has
retained any finder or broker other than Valufinder Group, Inc. in connection
with the transactions contemplated by this Agreement. Purchaser hereby agrees
to indemnify and hold harmless Seller from and against any liability for
commissions or compensation in the nature of a finder's fee to any broker or
other person or firm including Valufinder Group, Inc. (as well as the costs and
expenses of defending against such liability or asserted liability) for which
purchaser or any of its employees or representatives may be responsible by
reason of this Agreement or the transactions contemplated hereby.
ARTICLE V
COVENANTS
5.1 Noncompetition. (a) For a period commencing on the Closing Date and
continuing thereafter for five (5) years, Seller or any ICI Company (excluding
any ICI Company in Australia or New Zealand with respect to polyester resins)
shall not engage in the manufacture, sale, marketing or distribution of any
products manufactured, sold, marketed or distributed by Composites on the
Closing Date in any territory where Composites has manufactured, sold, marketed
or distributed such products in the 12 month period immediately preceding and
including the Closing Date. The parties agree that if a court of competent
jurisdiction shall hold the foregoing restriction on competition to be
unreasonable, then such restriction shall be construed to refer only to such
period of time or such geographical areas as such court shall deem reasonable.
For the avoidance of doubt, nothing in this Section 5.1 shall be deemed to
apply to any ICI Company in Australia or New Zealand with respect to polyester
resins.
(b) Nothing in Section 5.1(a) or in this Agreement shall prevent Seller
or any ICI Company from purchasing any corporation or business a part of which
has an interest in any products subject to Section 5.1(a) unless more than 15%
of the turnover of such corporation or business in its last accounting year
was generated by its interest in such products. In the event that Seller or any
ICI Company purchases any corporation or business which does have such interest
in such products but such interest did not account for 15% of its turnover (as
calculated above) than as soon as practicable after such purchase taking place,
Seller or the relevant ICI Company that has acquired such corporation or
business shall, if not prohibited by applicable law, offer for sale to
Purchaser the interest relating to any such products as aforesaid and Seller
(or the relevant ICI Company) shall, if requested to do so by Purchaser, enter
into good faith exclusive negotiations with Purchaser for the sale of such
interest. In the event that Purchaser does not purchase such interest from
Seller (or the relevant ICI Company) then Seller (or the relevant ICI Company)
shall be free to keep the said interest with the consent of Purchaser (such
consent not to be unreasonably withheld or delayed provided the negotiations
referred to above were conducted in good faith (including with respect to price
and other material terms)). In the circumstances that such consent is
reasonably withheld, then Seller (or the relevant ICI Company) shall use
reasonable efforts to divest the said interest within 12 months of such consent
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having been withheld. Prior to the consummation of any sale of said interest to
a third party at a price together with other material terms in the aggregate
more favorable than offered to Purchaser pursuant hereto. Seller (or the
relevant ICI Company) shall make an irrevocable offer to Purchaser (which may
be accepted by the Purchaser within sixty days following such offer) to sell
such interest to Purchaser or one of its Affiliates on substantially identical
terms. In the event Purchaser fails to accept such offer within sixty days, or
if so accepted, the sale to Purchaser is not completed within sixty days of
such acceptance and Seller (or the relevant ICI Company) has negotiated in good
faith with Purchaser, Seller (or the relevant ICI Company) shall have no
further obligation to Purchaser hereunder.
5.2. Use of ICI Name. (a) Purchaser acknowledges and agrees that ICI
shall retain all rights to use the letters "ICI" and all trademarks, trade
names and service marks that include the letters "ICI" (including without
limitation the ICI roundel) (collectively, the "ICI Letters"). Except as
otherwise provided in this Section 5.2, after the Closing neither Purchaser nor
Composites nor any of their Affiliates will have any ownership interest in or
any right to use any trademark, trade name or service xxxx that includes the
ICI Letters.
(b) After the Closing, Composites shall have the right to sell existing
inventory and to use existing stocks of packaging, labelling, containers,
supplies, advertising materials, technical data sheets and any similar
materials bearing the ICI Letters until the earlier of (i) the date existing
stocks are exhausted or (ii) six (6) months following the Closing Date. After
six (6) months following the Closing Date, Purchaser shall cause Composites to
relabel any such remaining inventory and stocks. The obliteration of the ICI
Letters shall be deemed compliance with this covenant. For a period not to
exceed six (6) months after the Closing Date, Composites shall have the right
to use the ICI Letters in advertising that cannot be changed by its using
reasonable efforts.
(c) Purchaser shall cause Composites to use reasonable efforts to cease
using the ICI Letters on buildings, cars, trucks, and other fixed assets as
soon as practicable but in no event shall Composites use, nor shall Seller
permit Composites to use, the ICI letters later than three months after the
Closing Date.
(d) Within five Business Days after the Closing Date, Purchaser will
cause Composites to change its name to a name not including the ICI Letters.
5.3 Post-Closing Access to Tax and Other Records. (a) Seller and
Purchaser (for itself and on behalf of Composites) will provide each other with
such cooperation and information as either of them reasonably may request of
the other in filing any Tax Return, amended return or claim for refund,
determining a liability for Taxes or a right to a refund of Taxes, or in
conducting any audit or other proceeding in respect of Taxes. Except with
respect to any state or local taxing jurisdiction where Composites files a
separate return (i.e., a return other than a combined, unitary or consolidated
return) and that does not treat Composites as a new corporation for income tax
purposes on the day after the Closing Date or does not otherwise provide
treatment similar to that accorded under Section 338(h)(10) of the Code, such
cooperation and information shall not include providing copies of income or
franchise tax returns or portions thereof; provided, that Seller will make
available to Purchaser the portion of a consolidated, unitary or combined
return that pertains solely to Composites and Seller will make available to
Purchaser's professional representatives a copy of a combined, consolidated or
unitary Tax Return in the event that the Purchaser or Composites establishes to
Seller's reasonable satisfaction that the same is necessary in connection with
a material matter relating to the determination of Purchaser's or Composites'
liability for Taxes. Such professional representatives shall not disclose any
such Tax Return to Purchaser or Composites. Each party shall make its employees
available on a mutually convenient basis to provide explanation of any
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documents or information provided hereunder. Each party will retain all
returns, schedules and work papers and all material records or other documents
in its possession relating to Tax matters of Composites for the taxable year
ending after the Closing Date and for all previous years, until the expiration
of the statute of limitations of the taxable years to which such returns and
other documents relate (and, to the extent notified by the other party in
writing, any extensions thereof).
(b) Each party (and in the case of Purchaser for itself and on behalf
of Composites) will afford or cause to be afforded to the other party and its
agents reasonable access to the properties, books, records (including but not
limited to Tax (subject to Section 5.3(a) above) and environmental matters and
in connection with the assertion of claims respecting canceled Government
Contracts), employees and auditors of such party to the extent necessary to
permit the other party to determine any matter relating to the Business or its
rights and obligations hereunder.
(c) Each party (and in the case of Purchaser, for itself and on behalf
of Composites) will hold, and will cause its officers, directors, employees,
accountants, counsel, consultants, professional representatives, advisors
(including without limitation, any lenders and/or financial advisors to or
shareholders of the Purchaser) and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
other party's business provided to it pursuant to this Section.
(d) Notwithstanding anything to the contrary in this Agreement, Seller
shall use its reasonable efforts to require that Seller's Accountants deliver
to Purchaser and Composites, and permit the use by Purchaser and Composites of,
reports and opinions of Seller's Accountants relating to the Financial
Statements and, if Seller's Accountants refuse, Seller shall allow reasonably
necessary access to the books, records and workpapers required to enable
Purchaser's Accountants to audit the financial statements of Composites for the
three full fiscal years prior to the Closing Date.
5.4 Sales and Transfer Taxes. Purchaser and Seller shall share equally
all sales, transfer, documentary and similar taxes, if any, incurred in
connection with, by reason of or measured by the transactions contemplated by
this Agreement, except for Taxes relating to the transactions described in
Section 2.4 hereof, which shall be payable by the Seller.
5.5 Further Assurances. Each of the parties hereto shall execute, or
cause to be executed, such documents and other papers and take, or cause to be
taken, such further actions as may be reasonably required to carry out the
provisions hereof and the transactions contemplated hereby. Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use its
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement and to obtain in a timely manner all necessary waivers, consents
and approvals and to effect all necessary registrations and filings. Seller
shall exercise best efforts (a) to cause The Xxxxxxx Company to amend paragraph
2(a) of the Xxxxxxx Master Service Agreement to provide for an exit term of six
(6) months and (b) to amend each of the Ancillary Agreements to allow for
assignment on the same basis as this Agreement.
5.6 Section 338(h)(10) Election.
(a) Seller represents and warrants that Composites (i) is a member of
the affiliated group of corporations within the meaning of Section 1504(a) of
the Code of which
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Seller is a member and (ii) will be included in the consolidated United States
federal income tax return that includes the Seller for Composites' taxable
period ending on the Closing Date.
(b) Seller and Purchaser agree to make a timely, effective and
irrevocable election under Section 338(h)(10) of the Code and under any
comparable statutes in any other jurisdiction with respect to Seller and
Composites (the "Section 338(h)(10) Election"), and to timely file such
election in accordance with applicable regulations. Internal Revenue Service
Form 8023-A shall be completed and signed by Seller and Purchaser and filed
with the Internal Revenue Service on or prior to the date when legally due.
(c) Within six months following the Closing Date, Purchaser and Seller
shall endeavor but not be required to agree upon the deemed purchase and sale
price of the assets of Composites for federal and applicable state and local
tax purposes and the proper allocation (the "Allocation") of such deemed
purchase and sale price among the assets of Composites as of the Closing Date
in accordance with Section 338(b)(5) of the Code and Treasury Regulation
Section 1.338(h)-1. The Allocation shall not include the respective investment
banking, legal, accounting and other fees or costs incurred by each of
Purchaser and Seller as a result of the transactions contemplated by this
Agreement ("Transaction Costs"). Seller will calculate the gain or loss, if
any, resulting from the Section 338(h)(10) Election in a manner consistent with
the Allocation and will not take any position inconsistent with the Section
338(h)(10) Election or the Allocation in any Tax Return or otherwise: provided,
however, that Seller shall be entitled to take into account its Transaction
Costs when calculating its modified aggregate deemed sale price for purposes of
determining gain or loss from the deemed disposition of the assets of
Composites. Purchaser will allocate the adjusted grossed-up basis in the Shares
among the assets of Composites in a manner consistent with the Allocation and
will not take any position inconsistent with the Section 338(h)(10) Election or
the Allocation in any Tax Return or otherwise; provided, however, that
Purchaser will be entitled to add its Transaction Costs to its adjusted
grossed-up basis in the Shares for purposes of allocating such amount among the
assets of Composites.
(d) Purchaser shall prepare a draft of the Allocation, which shall be
supported by an appraisal obtained at its cost and expense from an independent,
nationally-recognized appraisal firm, and shall submit such draft to Seller,
together with the appraisal report, for Seller's review and comment no later
than 3 months before the last date on which the Section 338(h)(10) Election may
be filed. The appraisal report shall provide that Seller shall be permitted to
rely on the same in filing its Tax Returns with respect to the Section
338(h)(10) Election. Purchaser and Seller shall thereupon endeavor but shall
not be required to enter into an agreement setting forth the Allocation in
accordance with such appraisal. If the parties cannot agree, each party shall
be entitled to make its own Allocation.
5.7 Retained Seller Information. Purchaser acknowledges that, on and
after the Closing, there may be information at the Manufacturing Facilities
which does not relate to the Business ("Retained Seller Information").
Purchaser agrees to allow Seller all reasonable access (upon the Seller giving
reasonable notice to the Purchaser) to the Retained Seller Information.
Furthermore, Purchaser agrees to maintain (and agrees to cause Composites to
maintain) in confidence and not to use any Retained Seller Information. To the
extent that Retained Seller Information is contained in books and records,
Purchaser agrees not to (and shall not allow Composites to) dispose of or
destroy such books and records for a period of at least four (4) years
following the Closing Date unless it shall have first notified Seller at least
sixty (60) days before such disposition or destruction and given Seller the
opportunity (at the expense of Seller) to remove and retain the books and
records proposed to be disposed of or destroyed. Nothing in this section shall
require Purchaser or Composites to maintain in confidence, or not to use, any
information (a) that is now publicly available, (b) that subsequently becomes
publicly available other than by action of the Purchaser or Composites, but
only after it has become publicly
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available, (c) that Purchaser obtains from a third party other than Composites
not under any obligation to Seller or an Affiliate of Seller respecting such
information, but only after Purchaser so obtains such information, or (d) that
Purchaser, prior to the Closing Date, already has in its possession.
5.8 Retained Business Information. Seller acknowledges that, on and
after the Closing, there may be information at the facilities of the Seller and
other ICI Companies which relates exclusively or principally to the Business
and which is material to the day to day operations of the Business ("Retained
Business Information"). Seller agrees to allow Purchaser all reasonable access
(upon the Purchaser giving reasonable notice to the Seller) to the Retained
Business Information. Furthermore, Seller agrees to maintain in confidence and
not to use any Retained Business Information other than in relation to its
other businesses. To the extent that Retained Business Information is contained
in books and records, Seller agrees not to dispose of or destroy such books and
records for a period of at least four (4) years following the Closing Date or
such longer period as is required by a Material Agreement, a Government
Contract or by law unless it shall have first notified Purchaser at least sixty
(60) days before such disposition or destruction and given Purchaser the
opportunity (at the expense of Purchaser) to remove and retain the books and
records proposed to be disposed of or destroyed. Nothing in this section shall
require Seller or any ICI Company to maintain in confidence, or not to use, any
information (a) that is now publicly available, (b) that subsequently becomes
publicly available other than by action of the Seller or any ICI Company, but
only after it has become publicly available or (c) that Seller or any ICI
Company obtains from a third party not under any obligation to Purchaser or an
Affiliate to Purchaser respecting such information, but only after Seller or
any ICI Company so obtains such information.
5.9 Refunds. Any refunds of Indemnifiable Taxes received by Purchaser
or Composites shall be paid over to Seller immediately upon receipt. Any claim
for a refund of an Indemnifiable Tax shall be subject to Section 7.4(b).
5.10 Filing of Returns. Seller shall be responsible for filing or
causing an ICI Company to file Tax Returns on behalf of Composites of the type
customarily filed by the Tax Department of ICI Americas Inc. in the ordinary
course of business prior to the Closing Date with respect to periods prior to
the Closing Date. Composites or Purchaser shall be responsible for filing all
other Tax returns.
5.11 Prosecution, Maintenance and Turnover of Intellectual Property
Files.
(a) Within two months after the Closing Date, or earlier if requested
by Purchaser, Seller will deliver to Purchaser the files relating to the
patents, patent applications, patent licenses, trademarks, trademark
applications, service marks and service xxxx applications set forth in Schedule
5.11(a) (the "Files"). Purchaser will notify Seller of a location for delivery
of the Files as soon as reasonably practicable after the Closing Date but in
any event no later than one month after the Closing Date, failing which, the
Files will be delivered to Purchaser at the address specified in Section 8.5
hereof. Prior to delivery of the Files, Seller will, to the extent reasonably
practicable, provide information contained in the Files as requested by
Purchaser for the purposes of enabling Purchaser to docket maintenance fees,
annuities, office actions and other items.
(b) After the Closing Date and until such time as Seller delivers the
Files to Purchaser or unless and to the extent Purchaser requests Seller not to
take certain actions or not to pay certain fees, Seller will use its reasonable
efforts to take any actions and pay any fees in order to avoid lapse of the
patents, trademarks, and service marks. All annuity fees and other fees paid by
the Seller under this Section after the Closing Date, shall be billed to and
payable by
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Purchaser, regardless of the portion of the lifetime of the Intellectual
Property rights for which such payments are made.
(c) Purchaser agrees that neither Seller nor any ICI Company,
including any of their employees and agents, shall be liable to Purchaser or any
of its Affiliates in connection with the performance of any actions as
contemplated by Section 5.11(b) and Section 5.11(d) to the extent such actions
did not involve gross negligence or willful misconduct on the part of Seller or
any ICI Company or any agent or employee thereof. Purchaser waives any claim
(whether in contract, tort, or equity) that it may have against Seller and each
ICI Company as a result of Seller's actions as contemplated by Section 5.11(b)
and Section 5.11(d) other than claims based on gross negligence or willful
misconduct. Purchaser shall indemnify and hold Seller and each ICI Company
harmless from any costs, expenses, losses or liabilities, including reasonable
attorneys' fees, suffered or incurred by Seller and each ICI Company as a result
of Seller taking any actions as contemplated by Section 5.11(b) and Section
5.11(d), other than as set forth in the Transition Services Agreement.
(d) (i) The patent and patent applications set forth in Schedule
5.11(d) are jointly owned by ICI and Composites. After Closing Seller will
cause ICI to use its reasonable efforts to continue to prosecute and to grant
all such patent applications and to maintain such patents in force for the full
terms thereof. ICI shall keep the Purchaser advised in writing on a reasonably
regular basis as to any steps taken by it or on its behalf in the prosecution
of such applications for patents and in the maintenance or extension of such
patents and shall, on request, furnish Purchaser with a copy of any patent
application, patent or other document pertinent to the prosecution or
maintenance of such applications and patents. Purchaser shall pay to ICI,
within 30 days of receipt of an invoice from ICI, fifty percent of all costs,
including both in-house and outside costs, incurred by ICI in connection with
such prosecution, maintenance or extension, other than as set forth in the
Transition Services Agreement.
(ii) In the event that either ICI or Purchaser is no longer
willing to pay its fifty percent share of the costs referred to in paragraph
(i), it shall advise the other party in writing and shall assign its joint
interest in such patent or patent application to the other party, where ICI
assigns its interest to Purchaser, ICI shall thereafter have no responsibility
for prosecution or maintenance of the assigned patent or application.
ARTICLE VI
EMPLOYEE MATTERS
6.1 Retention of Employees. Purchaser shall cause Composites to retain
all employees of Composites listed in Schedule 3.15 (hereafter, "Composites
Employee") with base salary or wage rates equal to or greater than the base
salary or wage rates in effect immediately prior to the Closing Date for at
least one year following the Closing Date; provided, that during said year
Composites may terminate the employment of a Composites Employee so long as
Composites pays severance and other benefits in accordance with the ICI
Composites Severance Plan, as set out in Schedule 6.1(a) with respect to non
union Composites Employees, and complies with the terms of any individual
severance arrangements listed in Schedule 6.1(b), if any, applicable to the
terminated Composites Employees.
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6.2 Employee Benefit Plans.
(a) Back Service Credit. Service of a Composites Employee prior to the
Closing Date which is recognized by a Composites Employee Plan shall be
recognized by the comparable post Closing Employee Plan of Purchaser or
Composites for all purposes to include, without limitation, vesting, benefit
accrual, participation, eligibility for benefits, level of benefits, and
optional forms of payment.
(b) ICI Single Employer Pension Plans.
(i) From the Closing Date, Purchaser or Composites shall assume
sponsorship and all responsibility and liability for the Hourly Pension Plan
and the Salaried Pension Plan to include, without limitation, the liability for
any contribution due after the Closing Date.
(ii) Purchaser acknowledges that the transfer of assets from
the ICI Americas Pension Plan to the Salaried Pension Plan may not be complete
by the Closing Date. Irrespective of whether such transfer of assets is
completed prior to the Closing Date, Purchaser and Composites agree that the
amount of assets allocated by the ICI Americas Pension Plans to the Salaried
Pension Plan complies with Section 414(1) of the Code and that neither
Purchaser nor Composites will consent such allocation provided that the
allocation is performed by an enrolled actuary of the Philadelphia Office of
Towers Xxxxxx in accordance with the Pension Transfer Agreement by and between
ICI Americas Inc. and Composites, a copy of which is set out in Schedule 6.2
("Pension Transfer Agreement"). Seller shall cause the Salaried Pension Plan to
provide that each participant for whom benefits are transferred pursuant to the
Pension Transfer Agreement will have all rights with respect to such
transferred benefits preserved to the extent required in accordance with
Section 411(d)(6) of the Code and the regulations thereunder.
(iii) If the fair market value on the Closing Date of the assets
allocated or allocable from the ICI Americas Pension Plan to the Salaried
Pension Plan pursuant to the Pension Transfer Agreement is less than the
Financial Accounting Standards Board Statement 87 Accumulated Benefit
Obligation of the Salaried Pension Plan, determined as of the Closing Date by
an enrolled actuary of Towers Xxxxxx, (and subject to agreement by Purchaser's
actuary, which agreement will not be unreasonably withheld using the
assumptions and methods set out in Schedule 6.2(b) (which do not require
agreement of Purchaser's actuary) but without regard to benefits accrued under
the Salaried Pension Plan after the Closing Date (hereafter the "Composites
ABO"), Seller or one of its Affiliates shall pay to Purchaser an amount in cash
equal to sixty percent (60%) of such difference with interest at eight percent
(8%) from the Closing Date through the day before payment is made. If the fair
market value on the Closing Date of the assets spun off from the ICI Americas
Pension Plan is greater than the Composites ABO, Purchaser shall pay to Seller
or to an Affiliate of Seller, designated by Seller, an amount in cash equal to
sixty percent (60%) of such excess with interest at eight percent (8%) from the
Closing Date through the day before payment is made. Any payments made
hereunder shall be treated as an adjustment of the Purchase Price.
(iv) After the Closing Date, Purchaser shall establish a trust
qualified under Section 401(a) of the Code and exempt from taxation under
Section 501(a) of the Code (the "Purchaser's Pension Trust") for the purpose of
receiving a transfer of the assets of the Salaried Pension Plan and the Hourly
Pension Plan from the Trust for Defined Benefit Plans of ICI American Holdings
Inc. (the "Seller's Pension Trust"). Prior to any transfer the Purchaser shall
deliver to Seller an executed copy of the Purchaser's Pension Trust. Within
thirty (30) days of Seller's receipt of the executed copy of the Purchaser's
Pension Trust, Seller shall cause the Seller's Pension Trust to transfer all of
the assets of the Salaried Pension Plan and Hourly
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Pension Plan to the Purchaser's Pension Trust. Notwithstanding the previous
sentence, if the actuary has not finished the ERISA Section 4044 calculation
required by the Pension Transfer Agreement by October 31, 1995, the assets of
the Salaried Pension Plan will be transferred to the Purchaser's Pension Trust
in accordance with the following rules:
(A) By the later of (x) the thirtieth (30th) day
following Seller's receipt of executed copy of the Purchaser's Pension Trust or
(y) December 31, 1995. Seller shall cause the Seller's Pension Trust to transfer
to Purchaser's Pension Trust from the plan account of the Salaried Pension Plan
an amount equal to eighty percent (80%) of an estimate prepared by an enrolled
actuary of Towers Xxxxxx of the amount of assets that will be allocated to the
Salaried Pension Plan as of July 1, 1995, from the ICI Americas Pension Plan in
accordance with Section 4044 of ERISA and the Pension Transfer Agreement,
adjusted for post June 30, 1995 payments of benefits.
(B) Within thirty (30) days following the completion of
the allocation of assets from the ICI Americas Pension Plan to the Salaried
Pension Plan in accordance with the Pension Transfer Agreement, but not later
than April 30, 1996, Seller shall cause the Seller's Pension Trust to transfer
the remaining assets of the Salaried Pension Plan to the Purchaser's Pension
Trust.
(v) Purchaser may cause Composites to amend the Salaried Pension
Plan to stop benefit accrual for the Management Group effective any day
following the Closing Date. With respect to such cessation of accrual, Purchaser
shall cause Composites to comply with Section 204(h) of ERISA.
(vi) Unless otherwise agreed by the Purchaser and Seller, the
assets to be transferred from the Seller's Pension Trust to the Purchaser's
Pension Trust shall be in cash or readily marketable securities reasonably
acceptable to Purchaser.
(vii) Notwithstanding any provision in the Pension Transfer
Agreement to the contrary, all costs relating to the transfer of assets and
liabilities from the ICI Americas Pension Plan to the Salaried Pension Plan
shall be borne by Seller.
(c) Savings Plans. As soon as practicable after the Closing Date,
Purchaser shall (or shall cause Composites to) establish or designate one or
more defined contribution Qualified Plans (the "Purchaser's Savings Plan") to
provide benefits from and after the Closing Date which are substantially
similar to the respective benefits (to include, without limitation, the current
rate of employer matching contributions) provided to the Composites Employees
under the ICI Americas Deferred Compensation Plan or the ICI Americas Deferred
Compensation Plan For Non-Exempt Employees (collectively, the "Seller's Savings
Plans"). Within ninety (90) days after the Closing Date, Purchaser shall
deliver to Seller a copy of Purchaser's Savings Plan with an opinion of
counsel, reasonably satisfactory to Seller, that such plan is qualified as to
form under Section 401(a) of the Code, and Seller shall deliver to Purchaser an
opinion of its internal counsel, reasonably satisfactory to Purchaser, that the
ICI Americas Deferred Compensation Plan and the ICI Americans Deferred
Compensation Plan for Non-Exempt Employees (collectively, the "Seller's Savings
Plans") are qualified as to form under Section 401(a) of the Code. As soon as
practicable after receipt of such copy of the Purchaser's Savings Plan and said
legal opinions, Seller shall cause to be transferred to Purchaser's Savings
Plan the account balances of all Composites Employees, former employees of
Composites, or their beneficiaries in Seller's Savings Plans. With the
exception of notes evidencing loans made by Seller's Savings Plan, the account
balance shall be transferred in cash based on the value of the assets,
determined by the trustees of the appropriate Seller's Savings Plan as of the
monthly valuation date of Seller's Savings Plans coincident with or immediately
preceding the transfer. Seller's Savings Plans shall transfer an
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estimate of the aggregate amount to be transferred to Purchaser's Savings Plan
within five (5) days of said monthly valuation date with a reconciliation to be
completed before the next monthly valuation date. With respect to notes
evidencing plan loans, Seller's Savings Plans will assign such notes to
Purchaser's Savings Plan. The account balances transferred from Seller's
Savings Plans to Purchaser's Savings Plan shall be fully vested under
Purchaser's Savings Plan. Upon receipt of said account balances, Purchaser's
Savings Plan shall assume the liability of Seller's Savings Plans with respect
thereto.
(d) MEDICAL PLAN.
(i) Effective January 1, 1996, Purchaser shall, (or
shall cause Composites to) with respect to the Composites Employees, establish
or designate one or more plans (the "Purchaser's Medical Plan") to provide
medical, dental, and prescription drug benefits substantially similar to the
benefits provided under the ICI Americas Health and Dental Care Plan (the
"Seller's Medical Plan") for those Composites Employees and their dependents who
were covered by Seller's Medical Plan on December 31, 1995. As of January 1,
1996, Purchaser shall (or shall cause Composites to) enroll all such Composites
Employees and their dependents, without any waiting period, in Purchaser's
Medical Plan. Purchaser's Medical Plan shall waive any restrictions and
limitations for pre-existing conditions. Purchaser's Medical Plan shall only be
responsible for the medical, dental and prescription drug expenses of such
persons to the extent covered under the terms of Purchaser's Medical Plan and
incurred on or after January 1, 1996. Expenses for medical services, dental
services and prescription drugs shall be considered incurred at the time the
services are rendered or the prescription drugs are purchased, as the case may
be.
(ii) Seller's Medical Plan will continue to cover the
Composites Employees and their dependents who were covered by Seller's Medical
Plan on the day before the Closing Date through December 31, 1995. Seller's
Medical Plan shall only be responsible for medical, dental and prescription
drug expenses of such persons to the extent such expenses are covered under the
terms of Seller's Medical Plan and are incurred prior to January 1, 1996. With
regard to any such person who is in the hospital on December 31, 1995, Seller's
Medical Plan shall be responsible for the hospital care expenses (to the extent
covered by Seller's Medical Plan) until such person is discharged from the
hospital. Notwithstanding the above, Purchaser or Composites shall (except as
provided below with respect to COBRA Coverage) pay to Seller or Seller's
Medical Plan within the time and in accordance with the procedures set forth in
the Transition Services Agreement, an amount equal to the amounts paid by
Seller, any other ICI Company or Seller's Medical Plan after the Closing Date
with respect to the medical, dental and prescription drug expenses incurred
under Seller's Medical Plan by any Composites Employees or their dependents
after the Closing Date.
(iii) With respect to the ICI Composites Benefit Plan,
Seller will be responsible for paying medical, dental, and prescription drug
expenses of Composites Employees, former employees of Composites, and their
dependents to the extent covered under the terms of the ICI Composites Benefit
Plan and which are incurred prior to the Closing Date.
(iv) With respect to any former employee of Composites
or dependent thereof (to include a divorced spouse) that has elected health
and/or dental continuation coverage required to be offered by Seller's Medical
Plan under Sections 601 et seq. of ERISA ("COBRA Coverage") as the result of a
qualifying event that occurred prior to the Closing Date, Seller's Medical Plan
shall retain COBRA Coverage. With respect to any Composites Employee or
dependent thereof (to include any divorced spouse) that has elected COBRA
coverage under Seller's Medical Plan as the result of a qualifying event
occurring prior to January 1, 1996, Seller's Medical Plan shall retain COBRA
Coverage; provided, that to the extent the COBRA premium collected for a
Composites Employee or a dependent of a Composites Employee (to
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include any divorced spouse) is less than the (A) sum of the amount charged by
a third party administrator to administer the COBRA coverage of said person and
(B) the amounts disbursed to said person from the Seller's Medical Plan,
Purchaser shall pay to Seller an amount equal to such difference within the
time and in accordance with the procedures set out in the Transition Services
Agreement.
(e) DISABILITY. After the Closing Date, Purchaser shall (or
shall cause Composites to) waive all restrictions and limitations for
pre-existing conditions under plans of Purchaser or Composites providing
disability or worker's compensation benefits. Purchaser or Composites and its
plans shall assume all responsibility for worker's compensation, short-term
disability and long-term disability claims made by any Composites Employee on
or after the Closing Date irrespective of whether such claim relates to an
event prior to the Closing; provided, however, that Purchaser shall not be
responsible for long-term disability claims made by any Composites Employee who
is on short-term disability on the Closing Date and who does not return to
active employment with Composites. With respect to any such Composites Employee
on short-term disability on the Closing Date, Purchaser or Composites shall, at
its expense, continue short-term disability coverage substantially similar to
that provided by Composites. Schedule 6.2(e) contains a list of all Composites
Employees on short-term disability as of seven calendar days prior to the
Closing Date, and, to the knowledge of Seller, there has not been a material
increase in the number of Composites Employees on short-term disability in the
seven calendar days preceding the Closing Date. Seller shall be responsible for
claims for workers compensation benefits which were made prior to the Closing
Date. Composites shall not be liable for long-term disability benefits for
Composites Employees who qualify for long-term disability benefits under the
ICI Americas Long Term Disability Insurance Plan.
(f) NON-UNION WELFARE PLANS. Purchaser shall (or shall cause
Composites to) establish for non-union Composites Employees welfare benefit
plans which shall be in the aggregate substantially similar to the following
plans:
(i) the ICI Americas Long-Term Disability Insurance
Plan as disclosed in the ICI Select summary plan description;
(ii) the ICI Americas Employee Life Insurance Plan and
Group Term Life Insurance Plan for employees of ICI Americas Inc. as disclosed
in the ICI Select summary plan description;
(iii) the ICI Americas Personal Accident Insurance Plan
as disclosed in the ICI Select summary plan description;
(iv) the Business Travel Risk Accident Insurance Plan;
and
(v) the applicable short-term disability plan as
disclosed in the ICI Composites Inc. Policies and Procedures Manual.
(g) MICP. Purchaser shall cause Composites to maintain, without
modification, the ICI Composites Management Incentive Compensation Plan
("MICP") through at least December 31, 1995, and to make the payments due under
the MICP for 1995 by March 15, 1996. Effective January 1, 1996, Purchaser may
cause Composites to replace the MICP with a new short term bonus plan for the
Composites Employees eligible for the MICP on the Closing Date.
(h) PLAN AMENDMENTS. Notwithstanding any provision of this
Agreement to the contrary, Composites or Purchaser may, in its reasonable
discretion, amend, modify or terminate any employee benefit plan maintained for
Composites Employees after one year following the
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Closing Date. During the one year period following the Closing Date, neither
Purchaser nor Composites may amend, modify or terminate a Separate Composites
Plan or an employee benefit plan established as a substitute for a Composites
Employee Plan pursuant to this Article VI; provided, that (i) the provisions of
any such plan may be amended if the plan, as so amended, is substantially
similar to Seller's corresponding plan on the Closing Date or to Seller's
corresponding plan at the time of the plan amendment; and (ii) the Salaried
Pension Plan may be amended as provided in Section 6.2(b)(v) hereof.
(i) MISCELLANEOUS. Promptly upon receipt thereof, Seller shall
deliver to Purchaser a copy of any determination letters received from the
Internal Revenue Service with respect to the ICI Americas Pension Plan, the
Hourly Pension Plan or the Seller's Savings Plans, and at such xxxx Xxxxxx
shall also deliver to Purchaser a copy of any amendments to such plans required
by the Internal Revenue Service as a condition to issuance of such
determination letters. Prior to October 15, 1995 Seller shall prepare and
deliver either to Purchaser or the participants any notice to participants
required for the 1995 plan year pursuant to Section 4011 of ERISA with respect
to the Hourly Pension Plan or the Salaried Pension Plan. Seller shall cause all
amendments required to be made to the Hourly Pension Plan to be adopted prior
to the Closing Date. Seller shall be responsible for preparing the 1995
actuarial valuation report for the Hourly Pension Plan.
6.3 COMPOSITES POST RETIREMENT BENEFITS. Purchaser shall (or
shall cause Composites to) provide to the Composites Employees post-retirement
medical, dental and life insurance benefits substantially similar to those
provided by Composites prior to Closing. With respect to former employees of
Composites, their spouses, and other dependents who are entitled to
post-retirement medical, dental, and life insurance benefits on the day prior
to the Closing Date, Purchaser or Composites shall provide post-retirement
benefits, without any waiting period or restrictions or limitations for
pre-existing conditions, which are substantially similar to those enjoyed by
such former employees, their spouses, and their other dependents prior to
Closing. Post retirement medical and dental expenses incurred prior to January
1, 1996 for such former employees, their spouses, and their other dependents
shall be paid by a medical and/or dental plan of Seller and Purchaser or
Composites shall reimburse Seller in accordance with the procedure set out in
Section 6.2(d)(ii) or (iii) for those expenses incurred after the Closing Date.
6.4 CERTAIN UNFUNDED LIABILITIES. Except as otherwise provided
in this Section 6.4, Seller shall assume or retain, as the case may be, the
liabilities and obligations under the nonqualified employee pension benefit
plans of the ICI Companies which are listed in Schedule 6.4. Notwithstanding
the preceding sentence, the Purchaser or Composites shall assume or retain the
obligations and liabilities, as the case may be, for pension benefits of the
Composites Employees listed on Section 6.4 under the ICI Excess Benefit Plan
and the Executive Pension Plan if, prior to December 31, 1996, Seller pays in
cash to Purchaser an amount equal to the Financial Accounting Standards Board
Statement 87 Accumulated Benefit obligation determined as of the Closing Date
by an enrolled actuary of Towers Xxxxxx, (and subject to agreement by
Purchaser's actuary, which agreement will not be unreasonably withheld) using
the assumptions and methods set out in Schedule 6.2(b) (which do not require
agreement of Purchaser's actuary) but without regard to benefits accrued under
said plans after the Closing Date, reduced for any pension payments made by any
ICI Company under said plans on or after the Closing Date and increased by
interest at 8.0% from Closing Date through date of payment. Purchaser or
Composites shall retain the liabilities and obligations under the individual
unfunded arrangements identified in Schedule 6.4 with respect to Composites
employees identified therein. Neither Purchaser nor Composites is obligated to
replicate any nonqualified employee pension benefit plan maintained for
Composites Employees prior to the Closing Date.
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6.5 Flexible Spending Account. Purchaser's Medical Plan shall include a
healthcare spending account effective January 1, 1996. Effective January 1,
1996, Purchaser or Composites shall establish a dependent care spending
account. Composites Employees shall remain in the ICI Americas Flexible
Spending Account Plan through December 31, 1995. Purchaser or Composites shall
take all necessary actions to ensure timely payment to the ICI Americas
Flexible Spending Account Plan of all salary deferral amounts due with respect
to participating Composites Employees for the year ending December 31, 1995.
6.6 Motor Vehicle Lease Agreements. As promptly as practicable after
the Closing Date, Purchaser or Composites shall purchase from Seller and its
Affiliates the leased executive vehicles listed in Schedule 6.6 at the value
listed in said Schedule, and the relevant seller shall assign to Purchaser or
Composites its right, title, and interest in the Motor Vehicle Lease Agreements
listed in Schedule 6.6. To the extent assignable, Seller shall (or shall cause
an Affiliate to) assign to Purchaser or Composites all of its (or such
Affiliate's) rights under those additional vehicle lease agreements listed in
Schedule 6.6 and Purchaser or Composites shall assume the obligations of Seller
and its Affiliates thereunder.
6.7 No Third-Party Beneficiaries. No provision of this Article VI shall
create any third-party beneficiary rights in any person or organization,
including, without limitation, employees or former employees (including any
beneficiary or dependent thereof) of Seller, Composites, Purchaser or any of
their respective Affiliates or other representatives of such employees or
former employees, or trustees, administrators, participants or beneficiaries of
any employee benefit plan.
6.8 Stock Option Plan. Effective on the Closing Date, Guarantor shall
establish the stock option plan for the Composites Employees identified as the
Management Group on Schedule 6.8(a). Purchaser shall allocate at least two and
one half percent (2.5%) of the common stock of Composites to the stock option
plan. The stock option plan document is attached at Schedule 6.8(b).
6.9 Exempt Loans. With respect to the outstanding loans of Composites
Employees and former employees of Composites under the ICI Exempt Employee Loan
Program which are listed in Schedule 6.9, Purchaser or Composites shall
purchase on the Closing Date the notes evidencing said loans for an amount
equal to the outstanding balance of said loans on the date said notes are so
purchased.
6.10 Leased Employees. Seller shall lease to Composites and Purchaser
the services of the person(s) listed in Schedule 6.10 under the terms of a
Leased Employee Agreement to be entered into by the parties contemporaneous
with the Closing.
6.11 Cooperation. Seller and Purchaser shall cooperate in all
reasonable respects with each other with respect to administrative issues
arising out of this Agreement which relate to the employee benefit plans of
Seller, Composites or Purchaser or any of their respective affiliates. Without
limiting the generality of the foregoing, Seller and Purchaser shall cooperate
in all reasonable respects with Purchaser in completing any questionnaires
received from the Health Care Financing Administration which request
information pertaining to periods prior to the Closing Date.
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ARTICLE VII
INDEMNIFICATION
7.1 Survival. The covenants, agreements, representations and warranties
of the parties hereto contained in this Agreement or in any certificate or
other writing delivered pursuant hereto or in connection herewith shall survive
the Closing until eighteen (18) months after the Closing Date; provided that
(i) the covenants and agreements contained in Section 5.1 shall survive for the
period set forth therein, (ii) the representations and warranties contained in
Section 3.1 and Section 3.4 and the representations, warranties, covenants and
agreements contained in Sections 5.2 through 5.11 inclusive, Article VI,
Article VII and Article VIII shall survive indefinitely, or, as the case may be,
for any lesser period set forth therein, (iii) the representations and
warranties contained in Section 3.9 shall survive until the fifth anniversary
of the Closing Date and (iv) the representations and warranties contained in
Section 3.14 shall survive through the 90th day following the last day of the
applicable statute of limitations without regard to any extension or waiver
executed by Purchaser or Composites after the Closing Date. Except with respect
to claims based on fraud, no claims for indemnification with respect to a
covenant, agreement, representation or warranty may be made after the
expiration of the relevant survival period referred to herein. Notwithstanding
the preceding sentences, any covenant, agreement, representation or warranty in
respect of which indemnity may be sought under this Agreement shall survive the
time at which it would otherwise terminate pursuant to the preceding sentence
if notice of the inaccuracy or breach thereof giving rise to such right of
indemnity shall have been given in accordance with this Agreement to the party
against whom such indemnity may be sought prior to such time.
7.2 Indemnification by Purchaser. Purchaser agrees, subject to the
other terms and conditions of this Agreement, to indemnify and defend Seller
and each other ICI Company and their respective officers, directors, employees,
agents, successors and permitted assigns (collectively, "Seller Indemnitees")
against, and hold each of them harmless from, all claims, demands, judgments,
damages, penalties, fines, losses, liabilities and expenses (including
reasonable attorneys' and experts' fees and expenses and all other reasonable
costs of investigation and defense of third party claims, but excluding
internal expenses) incurred by or asserted against any of said Seller
Indemnitees arising out of or resulting by reason of:
(a) the breach of any representation, warranty, covenant or agreement
of Purchaser herein,
(b) any liabilities of Composites or any of the Seller Indemnitees
relating to the Business for which Seller is not obligated to indemnify
Purchaser pursuant to Section 7.3, and
(c) a failed Section 338(h)(10) Election attributable to an act or
omission of Purchaser.
7.3 Indemnification by Seller. Seller agrees, subject to the other
terms and conditions of this Agreement, including, without limitation the time
periods set forth in Section 7.1, to indemnify and defend Purchaser and each
Affiliate of Purchaser and their respective officers, directors, employees,
agents, successors and permitted assigns (collectively "Purchaser Indemnitees")
against, and hold each of them harmless from, all claims, demands, judgments,
damages, penalties, fines, losses, liabilities and expenses (including
reasonable attorneys' and experts' fees and expenses and all other reasonable
costs of investigation and defense of third party claims, but excluding
internal expenses) (collectively "Claim Costs") incurred by or asserted against
any of said Purchaser Indemnitees arising out of or resulting by reason of:
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(a) the breach of any representation, warranty, covenant or agreement
of Seller herein;
(b) any Indemnifiable Tax;
(c) any federal, state and local income tax liability resulting from
the deemed sale of assets pursuant to an effective Section 338(h)(10) Election
of Composites described in Section 5.6 hereof;
(d) a failed Section 338(h)(10) Election attributable to an act or
omission of Seller;
(e) any Tax liability resulting from any transaction pursuant to
Section 2.4 by which the Excluded Assets remain or become the property of the
Seller or any Affiliate of the Seller or by which the Included Assets become
the property of Composites;
(f) any liability (excluding any liability which Purchaser or
Composites assumes under Article VI) resulting from claims relating to employee
benefit plans not assumed by Purchaser or Composites including any claim made
by any governmental customer of Composites to recover any excess funding to
such employee benefit plan either through a direct move towards assets with
such plans, or through reduction of future allowable contract pricing rates,
(g) (i) any claim asserted against any of the Purchaser Indemnitees by a
third party prior to the fifth anniversary of the Closing Date pursuant to any
Environmental Law to the extent any such claim is attributable to an event,
circumstance or condition relating to the Manufacturing Facilities or any
operations of Composites or any of its predecessors-in-interest, or any real
property, facility, site or assets owned, leased, operated or used by Composites
or any of its predecessors-in-interest at any time on or prior to the Closing
Date, or to any acts or omissions of Composites or any of its
predecessors-in-interest, including, without limitation, disposal or arranging
for disposal of Hazardous Materials at a third party site, occurring or existing
on or prior to the Closing Date, or (ii) the requirements of any Environmental
Law (including, without limitation, any failure to take reasonable steps to
achieve compliance with those requirements of Environmental Law which exist on
or prior to the Closing Date and which require compliance on or prior to June
30, 1997) to the extent (x) any Claim Costs are attributable to an event,
circumstance or condition relating to the Manufacturing Facilities or any
operations of Composites or any of its predecessors-in-interest or any real
property, facility, site or assets owned, leased, operated or used by Composites
or any of its predecessors-in-interest at any time on or prior to the Closing
Date, or to any acts or omissions of Composites or any of its
predecessors-in-interest, and (y) Claim Costs in connection therewith are
incurred or asserted prior to the fifth anniversary of the Closing Date or (iii)
any liability pursuant to any Environmental Law arising out of or resulting by
reason of the Winona Incident and the Orange Incident (in each case as referred
to in Schedule 3.9) incurred or asserted prior to the fifteenth anniversary of
the Closing Date;
(h) any liability resulting from any government action for defective
pricing under any Government Contract, or adjustments to contract pricing for
differences in allowable and for allocable costs resulting in net aggregate
contract price adjustments, after taking into account any credits or positive
adjustments, in excess of $100,000 for work performed under Government
Contracts prior to the Closing;
(i) any claim asserted by the Health Care Financing administration
("HCFA") against Purchaser Indemnitees prior to the last day of the eighteenth
(18th) month following the
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Closing Date resulting from the pre-Closing Date failure of the ICI Composites
Benefit Plan to comply with the Medicare secondary payer laws, provided, that
any claim by HCFA for Medicare Secondary Payer liability with respect to
employees covered by the HCFA questionnaire referenced in Schedule 3.15 may be
asserted within the statute of limitations;
(j) any claim by the Department of Labor or the Internal
Revenue Service asserted against Purchaser Indemnitees prior to the last day of
the eighteenth (18th) month following the Closing Date resulting from the
failure of Composites or Seller to file timely and accurate Forms 5500, 5310,
5310A, or 5330 due prior to the Closing Date with respect to a Separate
Composites Plan; provided, that any such claim with respect to the failure to
file Form 5500s disclosed in Schedule 3.15 may be asserted within the statute
of limitations;
(k) any penalty (along with interest thereon) imposed by HCFA
resulting from Composites' failure to respond to a pre-Closing Date
questionnaire from HCFA with respect to the ICI Composites Benefit Plan;
(l) any penalty (along with interest thereon) imposed by the
Pension Benefit Guaranty Corporation resulting from the failure of Composites
to file 1995 PBGC Form ES-1 for the Salaried Pension Plan and timely pay the
premium shown as due on said form;
(m) any claim asserted by a third party within the statute of
limitations resulting from the failure of the transfer of assets and
liabilities from the ICI Americas Pension Plan to the Salaried Pension Plan to
comply with Section 414(l) of the Code;
(n) any claim asserted by a third party against any of the
Purchaser Indemnitees to the extent any such claim is attributable to an
Occurrence relating to an Aviation Product occurring prior to the Closing Date
and since, but not earlier than, July 1, 1985, and for which Composites carried
insurance, but only to the extent such insurance actually provides coverage
therefor, prior to the Closing Date, and since, but not earlier than, July 1,
1985;
(o) any claim asserted against any of the Purchaser
Indemnitees by AVCO Corporation arising out of the matter described in Schedule
3.11(b)(2); provided, however, that the maximum amount indemnifiable under this
Section 7.3(o) shall in no event exceed 60% of Claim Costs in connection
therewith; and
(p) any claim for defective pricing asserted against any of
the Purchaser Indemnitees prior to the fourth anniversary of the Closing Date
by Lockheed Missiles & Space Company, Inc. arising out of the matter referred
to as the "Lockheed Missiles & Space Claim" under "Other Claims Pending" in
Schedule 3.3.
provided, that (i) Seller shall not be liable under this Section 7.3 unless the
aggregate amount of Claim Costs with respect to all matters referred to in this
Section 7.3 exceeds $587,000.00 and then only to the extent of such excess and
(ii) Seller's maximum liability under this Section 7.3 shall not exceed
$56,400,000.00. If the amount of Claim Costs arising in respect of any
individual matter referred to in this Section 7.3 is less than $25,000, then
that amount shall not be included for the purpose of calculating the aggregate
amount referred to in subparagraph (i) of this provision. Notwithstanding the
foregoing, Seller shall have no obligation to indemnify any of the Purchaser
Indemnitees under this Section 7.3 (x) to the extent that any Claim Costs are
incurred or increased as a result of any law, judicial interpretation, order,
decree, statute, ordinance, or regulation not in effect on or prior to the
Closing Date, or as a result of any change therein thereafter, (y) to the
extent that the facts, matters or circumstances giving rise to such Claim Costs
arise pursuant to Section 7.3(a) and have been fairly disclosed in the
Schedules or in any document listed or specifically referred to therein, or
(z) to the extent such Claim Costs are
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reflected in the Audited Financial Statements or in the Statement of Working
Capital. Notwithstanding anything to the contrary contained in this Agreement,
no provision of Section 7.3 following Section 7.3(p) hereof shall apply to (i)
Section 7.3(b) (other than subparagraph (z)), Section 7.3(c), Section 7.3(e)
and Section 7.3(n) hereof, and (ii)(A) the failure of a party hereto to observe
any of its obligations under any covenant or agreement in this Agreement, (B)
Section 7.3(o) hereof and (C) Section 7.3(p) (other than, with respect to this
clause (ii), the provision that Seller's maximum liability under this Section
7.3 shall not exceed $60,000,000). For the avoidance of doubt, the inclusion of
any facts, matters or circumstances on any Schedule hereto shall not relieve
Seller of its obligations under Section 7.3(g) hereof and Section 7.3(o).
Further for the avoidance of doubt, Seller shall have no obligation to
indemnify any of the Purchaser Indemnitees as a result of any reduction in
emissions of volatile organic compounds at the manufacturing Facility located
in Orange, California required under the existing Regional Clean Air Incentives
Market Program adopted by the California South Coast Air Quality Management
District pursuant to Section 4044.1 of the California Health and Safety Code.
7.4 Indemnification Procedures.
(a) Any party seeking indemnification under this Article VII (the
"Indemnified Party") shall promptly upon becoming aware of the circumstances
giving rise to the claim for indemnification, notify the party against whom a
claim for indemnification is sought hereunder (the "Indemnifying Party") in
writing, which notice shall specify, in reasonable detail, the nature and
estimated amount, if determinable, of the claim. Such notification shall be a
condition precedent to any liability on the part of the Indemnifying party.
Except as otherwise provided herein, Purchaser and Composite shall appoint
Seller or one of Seller's Affiliates, selected by Seller, as attorney in fact
with exclusive authority to collect, settle, or pay any amount due to or owed
by Composites with respect to an Indemnifiable Tax or for filing any return due
or a claim for refund for an Indemnifiable Tax. Such appointment of Seller or
its Affiliate as attorney in fact shall be pursuant to a power of attorney in
the form set forth in Schedule 7.4(a). Any audit, claim, investigation,
administrative proceeding, suit or other action by a third party relating to
any Indemnifiable Tax shall be governed by the provisions of this Section 7.4.
(b) If any third party shall assert a claim against the Indemnified
Party with respect to any matter (a "Third Party Claim") for which the
Indemnified Party intends to seek indemnification against the Indemnifying
Party under this Article VII, then the Indemnified Party shall promptly (and in
any case within ten (10) days of such claim having been asserted) notify the
Indemnifying Party thereof in writing (to include a description thereof in
reasonable detail), which notification shall be a condition precedent to any
obligation on the part of the Indemnifying Party to indemnify the Indemnified
Party under this Article VII; provided, that no notice shall be required to be
given with respect to any proceedings pertaining to an Indemnifiable Tax which
has been assessed or, to Seller's knowledge, is the subject matter of a current
audit examination by a taxing authority. The following provisions shall apply
with respect to any such Third Party Claim:
(i) The Indemnifying Party shall have the right to assume the defense
of the Third Party Claim with counsel of its choice reasonably satisfactory to
the Indemnified Party (it being understood that if in the Indemnified Party's
reasonable judgment a conflict of interest is likely to exist between such
Indemnified Party or the Indemnifying Party or any of their respective
Affiliates with respect to such counsel, such Indemnified Party shall be
entitled to require the Indemnifying Party to select other counsel pursuant to
this Section 7.4) at any time within 60 days after the Indemnified Party has
given notice of the Third Party Claim; provided, however, that (A) the
Indemnifying Party shall conduct the defense of the Third Party Claim actively
and diligently thereafter in order to preserve its rights in this regard; (B)
the Indemnified Party shall have (w) the right to participate fully in the
defense of the Third Party Claim,
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including through separate counsel of its own choosing at its sole cost and
expense, (x) the right to receive reasonable advance notice from the
Indemnifying Party of any hearings or proceedings, (y) the right, if possible,
to review in advance and comment on any pleadings, briefs or other documents to
be filed and (z) the opportunity to participate in any meetings concerning the
strategy to be adopted in opposing the Third Party Claim or any efforts to
settle the same; and (C) the Indemnified Party shall have the right at any time
to assume the sole right to defend or settle any Third Party claim upon written
waiver of its right to indemnity hereunder (in form and substance reasonably
satisfactory to the Indemnifying Party) with respect to such Third Party Claim.
(ii) So long as the Indemnifying Party has assumed and is conducting the
defense of the Third Party Claim in accordance with Section 7.4(b)(i) above, (A)
the Indemnifying Party shall not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be unreasonably withheld or
delayed) unless (x) the judgment or proposed settlement involves only the
payment of money damages by the Indemnifying Party and does not impose an
injunction or other equitable relief upon the Indemnified Party, and includes
the giving by the claimant or the plaintiff to the Indemnified Party of a
release from those liabilities which are the subject of the claim for
indemnification hereunder in form and substance reasonably satisfactory to the
Indemnified Party, or (y) in a matter relating to an Indemnifiable Tax subject
to this Section 7.4(b)(ii), is not reasonably likely to materially adversely
affect Composites' or Purchaser's liability for Taxes in a Post-Closing Tax
Period, and (B) the Indemnified Party shall not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party. With respect to any
proposed settlement for an Indemnifiable Tax subject to Section 7.4(b)(ii)(A)(y)
to which the Purchaser Indemnitee does not consent, Seller may pay the amount of
any such proposed settlement to the Purchaser Indemnitee and upon such payment
be released from any and all liability to Purchaser Indemnitee with respect to
such Indemnifiable Tax.
(iii) In the event the Indemnifying Party does not assume and conduct
the defense of the Third Party Claim in accordance with Section 7.4(b)(i)
above, however, (A) the Indemnified Party may defend against, and consent to
the entry of any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, the
Indemnifying Party in connection therewith) and (B) the Indemnifying Party
shall remain obligated to indemnify the Indemnified Party to the extent
provided pursuant to this Article VII.
(iv) The Indemnified Party will use all reasonable efforts to make
available to the Indemnifying Party those employees whose assistance, testimony
or presence is necessary to assist the Indemnifying Party in evaluating and
defending any such claim; provided that the Indemnifying Party shall be
responsible for any out-of-pocket expenses (excluding wages, benefits, and
other direct or indirect costs of employment) associated with any employees made
available hereunder. The Indemnified Party, at its expense, shall also make
available to the Indemnifying Party or its representatives on a timely basis
all documents, records and other materials in the possession of the Indemnified
Party reasonably required by the Indemnifying Party for its use in defending
any claim, and shall otherwise cooperate on a timely basis with the
Indemnifying Party in the defense of such claim.
(v) Section 7.4(b)(i)(B) and Section 7.4(b)(ii) shall not apply to any
(A) federal Tax (unless an effective Section 338(h)(10) election shall not have
been made through no fault of Purchaser) nor (B) to any state or local Tax
which is an Income Tax where the taxing jurisdiction treats Composites as a new
corporation or otherwise provides treatment similar to that accorded under
Section 338(h)(10) of the Code. For purposes of an Indemnifiable Tax with
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respect to which Section 7.4(b)(i)(B) applies and a consolidated, combined or
unitary Tax Return is required, the Purchaser Indemnitees shall not have the
right to the advance notice of (x), right to review of (y), nor the opportunity
to participate in meetings under (z) of that Section 7.4(b)(i)(B) with respect
to matters that do not pertain to Indemnifiable Taxes.
(c) Notwithstanding anything herein to the contrary, the failure of an
Indemnified Party to notify the Indemnifying Party of any claim of
indemnification as required pursuant to Section 7.4(a) or 7.4(c) shall not
affect the indemnification obligations of any party hereto, unless and only to
the extent that the Indemnifying Party is materially prejudiced thereby.
7.5 Third Party Reimbursement: Aviation Liability Insurance.
(a) The indemnities provided by this Article VII shall apply only to
damages, losses, liabilities and expenses for which the party seeking
indemnification cannot obtain reimbursement from third parties (other than third
party insurers), provided that the Indemnified Party shall not be obligated to
assert a claim against any such third party unless the Indemnifying Party shall
have agreed in form and substance reasonably satisfactory to the Indemnified
Party to reimburse the Indemnified Party for all reasonable out-of-pocket costs,
fees and expenses incurred in connection therewith.
(b) Seller will ensure that no ICI Company will take any action or fail
to take any action, in each case, which would prohibit claims by such ICI
Company under the policies providing coverage of the type described in Section
3.24 hereof which would impair its rights under such policies. As soon as there
is any indication that a claim relating to Composites under any such policy
could reasonably be expected to exceed the limits of liability of any such
policy or if any underwriter of such policy or claims adjustor or party
affiliated with any such underwriter or claims adjustor indicates that coverage
might not be afforded under a policy relating to Composites, representatives of
Composites and/or Purchaser shall be notified immediately and shall be entitled
to fully participate in any and all further matters relating to such claim.
Seller will ensure that the relevant ICI Company will act in good faith with
respect to seeking coverage under such policies.
7.6 Mitigation. Each party will use reasonable efforts to mitigate
any liabilities and damages for which it may claim indemnification under this
Article VII. To the extent that the operations of Composites after the Closing
Date contribute to or aggravate any liabilities or damages as to which
indemnification is available under Section 7.3, Seller's indemnification
obligation will be reduced by the value of such contribution or aggravation.
7.7 Limitation on Damages. Notwithstanding any other provision in
this Agreement, the liability of any party to another party arising with
respect to the matters addressed herein, regardless of the form of the claim or
cause of action (whether based in contract, infringement, negligence, strict
liability, other tort or otherwise), shall be limited to actual damages, which
shall in no event include any indirect, consequential, incidental or punitive
damages, whether arising under contract, in tort, at law, or in equity, of such
other party; provided that, for purposes of this Agreement, actual damages
suffered by an Indemnified Party, shall include, only if and to the extent
arising from or related to a Third Party Claim, any such indirect,
consequential, incidental or punitive damages and other costs and expenses for
which such Indemnified Party is liable to a third party. "Indirect" and
"consequential" damages shall include, but not be limited to, loss of
anticipated profits, loss of use, loss of revenue, cost of capital and loss or
damage of property or equipment.
7.8 Purchase Price Adjustment. Any payments made as indemnification
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pursuant to Section 7.2 or 7.3 shall be treated as an adjustment to the
Purchase Price.
7.9 Remediation Procedures.
(a) For purposes of this Section 7.9, "On-Site Remediation Liabilities"
means liabilities and obligations imposed under any Environmental Law for the
clean-up or remediation of conditions existing at the Real Property prior to the
Closing Date and for which Seller is obligated to indemnify Purchaser pursuant
to Section 7.3 hereof; "Off-Site Remediation Liabilities" means liabilities and
obligations of Composites imposed under any Environmental Law for the clean-up
or remediation of conditions existing at real property other than the Real
Property prior to the Closing Date and for which Seller is obligated to
indemnify Purchaser pursuant to Section 7.3 hereof; and "Real Property" means
the real property owned by Composites and included within the Manufacturing
Facilities.
(b) Purchase shall, to the extent Purchaser has the legal right to do
so, make all reasonable efforts to:
(i) consult with Seller (x) prior to entering into any
agreement with any third party, including but not limited to any
governmental entity, regarding the scope and nature of and
schedule for any cleanup or remediation for which Purchaser has
sought indemnification respecting an On-Site Remediation
Liability under Section 7.3 of this Agreement ("On-Site
Cleanup"), and (y) prior to submitting to any third party any
work plan or material report for any On-Site Cleanup;
(ii) provide drafts to Seller for review and comment
of material documents for any On-Site Cleanup, including
without limitation, any work plan, testing results, compliance
schedule, compliance or consent order or agreement; and
(iii) provide prior notice to Seller of any reportable
release of any Hazardous Materials resulting from any On-Site
Cleanup.
(c) Purchaser shall promptly and at its own expense provide Seller with
final copies of all reports, workplans and other documents received from or
provided to any third party, including but not limited to, any governmental
authority.
(d) As promptly as possible following Seller's receipt of a notice from
Purchaser pursuant to Section 7.4 regarding a claim made by or threatened
against Purchaser by a third party, including but not limited to any
governmental authority for On-Site Cleanup, Seller and Purchaser shall each
designate one or more representatives ("Designated Representatives") to
represent them in their dealings with each other respecting On-Site Cleanup
activities and notify each other of the name, title, address, and telephone and
facsimile numbers for each such Designated Representative.
(e) Purchaser shall conduct any On-Site Cleanup in accordance in all
material respects with any applicable Environmental Law. Unless otherwise agreed
to by the Purchaser and Seller, and to the extent permitted under such
Environmental Law, Purchaser shall propose to and advocate to governmental
entities and conduct any On-Site Cleanup, with the objective of accomplishing an
On-Site Cleanup in a cost effective manner which complies with applicable
Environmental Law taking into account the cost of commercially available
alternative cleanup technologies, the likelihood of success of the chosen
technology and whether the chosen technology will accomplish cleanup in a
reasonable period of time (hereinafter referred to as the "Cost Effective
Cleanup").
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(f) in the event Purchaser proposes soil or groundwater or other
intrusive testing ("Testing") in connection with an On-Site Cleanup, then:
(i) Purchaser shall, as soon as reasonably practicable prior
to undertaking Testing, notify Seller of its election to do so and Purchaser
and Seller agree to confer with each other in good faith in regard to
whether Purchaser should perform such Testing. If the parties cannot reach
agreement on the issue of whether Purchaser should perform Testing, either
party may invoke the dispute resolution procedures set forth in Section
7.9(g).
(ii) In the event that Purchaser proposes On-Site Cleanup under
this Section 7.9(f) and Seller believes that such cleanup (A) would not be
mandated by the applicable governmental authority if the underlying
environmental problems with respect to which the On-site Cleanup was
proposed were disclosed to such governmental authority (the "Necessity
Test") based on cleanup required by such governmental authority at similar
sites, where possible in the same jurisdiction, with contamination of
similar type, concentration and media and taking into account the relevant
site specific conditions at the parcel of Real Property involved (the
"Relevant Factors") or (B) is not a Cost Effective Cleanup which would be
acceptable to the applicable government authority if it were to exercise
jurisdiction over the parcel or Real Property in question and were to take
into account the Relevant Factors, Seller or Purchaser may initiate the
dispute resolution procedures contained in Section 7.9(g).
(g) In the event of a dispute (excluding any dispute as to the
construction or interpretation of this Section 7.9 or to the liability of the
parties under this Agreement) respecting the On-Site Cleanup arises among the
Purchaser's and Seller's Designated Representatives which cannot be resolved by
such Designated Representatives after timely (but not more than ten (10)
business days) diligent and good faith efforts, Purchaser and Seller shall each
submit the dispute for consideration and resolution to their respective chief
executive officers (or their designees). In the event that the dispute remains
unresolved after timely (but not more than thirty (30) business days) diligent
and good faith efforts by such chief executive officers, the Purchaser's
decision shall control, provided, however, that any such decision by the
Purchaser shall be without prejudice to any claim by the Seller that any
amounts relating to such dispute are not subject to indemnification by the
Seller under Section 7.3.
(h) Seller and Seller's Designated Representatives shall have the
right upon reasonable prior notice to enter the Real Property during normal
business hours and at other agreed upon times for the purposes of (i) observing
any On-Site Cleanup conducted by Purchaser and (ii) obtaining at Seller's sole
cost and expense, split or duplicate samples of Testing conducted for any
On-Site Cleanup. This subsection shall not limit Purchaser's and Seller's
obligations pursuant to Section 7.4.
(i) Nothing contained in this Section 7.9 shall restrict Purchaser
from taking any action where required by any Environmental Law, or, without
prejudice to any claim by the Seller that any such action is not subject to
indemnification by the Seller under Section 7.3, where the failure to take such
action would reasonably be expected to result in a violation of any
Environmental Law.
(j) No failure by Purchaser to comply with the requirements of this
Section 7.9 shall limit or relieve Seller's indemnity obligation hereunder
except to the extent Seller is materially prejudiced thereby.
7.10 Exclusive Remedy. The indemnification obligations of Seller
under this Article VII shall be the sole and exclusive remedy for any claims by
Purchaser against Seller or any ICI Company arising out of or relating to the
purchase of the Shares by Purchaser pursuant to this
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Agreement and the transactions contemplated hereby (other than those
contemplated in the Ancillary Agreements) and the Purchaser hereby waives any
and all other rights or remedies at law or in equity in connection therewith.
ARTICLE VIII
MISCELLANEOUS
8.1 Amendment. This Agreement may not be amended or modified except by
an instrument in writing signed by Seller and Purchaser.
8.2 Waiver of Compliance: Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any
obligation, covenant, agreement or condition herein may be waived by the party
or parties entitled to the benefits thereof only by a written instrument signed
by the party granting such waiver, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in
this Section 8.2.
8.3 Attorneys' Fees. In any action, suit or proceeding to enforce the
obligations of any party hereto, the prevailing party shall be entitled (in
addition to all other relief to which it may be entitled) to recover all
attorneys' fees and related expenses reasonably incurred by it in the
prosecution or defense of such action, suit or proceeding.
8.4 Expenses. Unless otherwise agreed between the parties, all costs
and expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall have occurred.
8.5 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or mailed if delivered personally or by
facsimile transmission or mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice,
except that notices of changes of address shall be effective only upon receipt
thereof):
(a) if to Seller:
ICI American Holdings Inc.
Concord Plaza
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: The Secretary
Facsimile: (000) 000-0000
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with a copy to:
President and General Counsel
ICI Americas Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
(b) if to Purchaser:
President
Fiberite, Inc.
0000 X. Xxxxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxx Xxxxxxxx, Esquire
Xxxxxx Xxxxxx & Xxxxxxx
Eighty Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
(c) if to Guarantor:
Fiberite Holdings, Inc.
x/x XXX Merchant Banking, Inc.
000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxx Xxxxxxxx, Esquire
Xxxxxx Xxxxxx & Xxxxxxx
Eighty Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
8.6 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
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manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner
to the end that transactions contemplated hereby are fulfilled to the extent
possible.
8.8 Entire Agreement. This Agreement and the Ancillary Agreements
constitute the entire agreement and supersede all prior agreements and
undertakings, both written and oral, between Seller and Purchaser with respect
to the subject matter hereof and, except as otherwise expressly provided
herein, are not intended to confer upon any other person any rights or remedies
hereunder.
8.9 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights, interests or
obligations under this Agreement without the consent of the other party hereto,
such consent not to be unreasonably withheld or delayed; provided further that
no such consent shall be required if (a) as a result of any and all such
assignments, only a single assignee would be entitled to indemnification
pursuant to Article VII, (b) such assignment would not relieve the assigning
party of its obligations under this Agreement and the Ancillary Agreements, (c)
the assignee agrees with the assigning party to assume the assigning party's
obligations under this Agreement and the Ancillary Agreements and (d) the
assigning party notifies the Seller prior to any such assignment, which
notification shall include the identity of the assignee, a description of the
terms of such assignment and a certification by an officer of the Purchaser that
the conditions set forth in subparagraphs 8.9(a) and (b) have been satisfied.
Notwithstanding the foregoing, the Purchaser shall be entitled to assign a
security interest in its rights hereunder in connection with a collateral
assignment to one Person acting on behalf of one or more of Purchaser's
lenders, (it being understood that with respect to such collateral assignment,
such Person is not assuming any of the Purchaser's obligations under this
Agreement as a result of such collateral assignment).
8.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
conflicts of law rules of such state.
8.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
8.12 Guarantee. Guarantor hereby agrees to pay, perform and discharge
all of the covenants, agreements, obligations and liabilities of Purchaser
under this Agreement and the Ancillary Agreements to the extent such covenants,
agreements, obligations and liabilities are not paid, performed or discharged
by Purchaser in accordance with the terms hereof and thereof.
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IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
PURCHASER:
FIBERITE, INC.
Witness /s/ By: /s/
----------------------- -------------------------
Title: Chief Financial Officer
SELLER:
ICI AMERICAN HOLDINGS INC.
Witness /s/ By: /s/
------------------------ ------------------------
Title: Attorney-in-fact
GUARANTOR:
FIBERITE HOLDINGS, INC.
Witness /s/ By: /s/ Xxxxxxxx Xxxx
------------------------ ------------------------
Title: President
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