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Exhibit 2.1
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STOCK PURCHASE AGREEMENT
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BETWEEN
RHODIA CHIMIE S.A.
(TRANSFEROR)
AND
X
(BUYER)
AND
GEO SPECIALTY CHEMICALS, INC.
(GEO)
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STOCK PURCHASE AGREEMENT
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This STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of this 6th day of
August 1999, by and between:
Rhodia Chimie, a French ("societe anonyme") with a capital of FRF 2,883,675,200,
having its registered office at 00, xxxx Xxxx Xxxxxx, 00000 Xxxxxxxxxx, Xxxxxx,
recorded in the Register of Companies of Nanterre under Xx. 000 000 000 XXX
Xxxxxxxx, represented by Xx. Xxxxxx-Xxxxx Xxxxxx duly authorized ("TRANSFEROR")
Party of the first part
AND
GEO Specialty Chemicals, Inc., an Ohio corporation with principal offices at
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, X.X.X. ("GEO"),
represented by Xx. Xxxxxx Xxxxxx, Chairman of the Board of Directors.
Party of the second part.
RECITALS
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WHEREAS:
1. The Transferor owns and operates a complete and autonomous branch of
activity for the extraction, purification, marketing and sale of gallium
which is conducted at two different sites: (i) in France at the Salindres
site in the Gard region where the Transferor operates a gallium
purification unit ("SALINDRES SITE"), and (ii) in Germany through Ingal
Stade GmbH, a German corporation with a capital of DM 50,000 with its
registered office at Xxxxxx-Xxxxxx-Xxxxx Xxxxxxx, 00000 Stade ("INGAL
STADE") whose entire share capital (the "INGAL STADE SHARES") is, on the
date of this Agreement, held by Rhodia Deutschland GmbH, a German entity
with its registered office at Rhodia Deutschland, Xxxxxxxx Xxxxxxx 0, 00000
Xxxxxxxx, (collectively, the "GALLIUM BUSINESS"). (Detailed corporate
information regarding Ingal Stade can be found in APPENDIX 8.1.1.(b)(ii)).
2. As part of the Transferor's strategy to divest non-core units and
concentrate on its strategic specialty chemicals activities, the Transferor
wishes to sell the Gallium Business.
3. GEO wishes to purchase the Gallium Business incorporated in an independent
and immediately operational company, and the parties desire to avoid the
complex administrative and legal formalities associated with the creation
of a new company, the transfer of personnel and dispersed assets.
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4. GEO wishes to purchase the Gallium Business through a French holding
company that GEO intends to create before the Transfer Date (the "BUYER"
shall hereinafter refer to the entity (as between the French holding
company to be created by GEO or GEO) actually purchasing the shares
pursuant to this Agreement).
5. On the date hereof, the Transferor, together with the Nominee Shareholders,
own one-hundred percent of the shares forming the issued and outstanding
capital of Rhod Six, a French societe anonyme with a capital of FRF 250
000, with its registered office at 25, quai Xxxx Xxxxxx, 92408 Courbevoie
recorded in the Register of Companies of Nanterre under No. 423 113 349 RCS
Nanterre (hereinafter referred to as the "COMPANY").
6. The parties agreed that prior to the completion of the transactions
contemplated herein, the Transferor would transfer or cause the transfer of
the Gallium Business to the Company through (i) a Contribution Agreement in
the form of APPENDIX A hereto pursuant to Article 387 of the Companies Act
of July 24, 1966 by a private deed, and (ii) the sale of the Ingal Stade
Shares by Rhodia Deutschland GmbH to the Company.
7. In consideration of the contribution of the Gallium Business to the
Company, the Company shall increase its share capital by FRF 129,997,203
from FRF 250,000 to FRF 130,150,000 by issuing to the Transferor 1,299,000
fully paid-up new shares of FRF 100, accompanied by a total call premium of
FRF 97,203.94.
8. GEO desires to purchase through the Buyer or directly if the Buyer is not
constituted on or before the Transfer Date all of the issued and
outstanding shares of the Company, and the Transferor desires to sell such
shares, all upon the terms and conditions hereinafter set forth.
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NOW THEREFORE IT HAS BEEN AGREED AS FOLLOWS :
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ARTICLE 1
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DEFINITIONS
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"ACQUIRING PERSON" shall have the meaning set forth in SECTION 10.1(g)(v)(D).
"AGREEMENT" shall mean this stock purchase agreement.
"BENEFICIARY" shall have the meaning set forth in SECTION 9.4(a).
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a bank
holiday in France, Germany or the U.S.A.
"BUYER" shall mean have the meaning ascribed to it in Recital 4 herein.
"CLOSING" shall have the meaning set forth in SECTION 3.1 and shall occur on the
Transfer Date.
"COMPANIES" shall mean the Company and Ingal Stade.
"COMPANY" shall have the meaning set forth in recital 4 above.
"COMPANY'S INDEBTEDNESS" shall mean the indebtedness of the Company towards
Rhodia S.A. as a result of the purchase of the Ingal Stade Shares and shall be
equal to four million, one hundred sixty-seven five hundred French Francs (FRF
4,167,500).
"COMPETING ACTIVITY" shall have the meaning set forth in SECTION 10.1(g)(v)(A).
"COMPETING BUSINESS" shall have the meaning set forth in SECTION 10.1(g)(v)(A).
"CONTAMINANT" shall mean a substance whose Release is regulated by, or forms the
basis of, liability under any Environmental Laws (including, without limitation,
any Hazardous Material).
"CONTRIBUTION" shall mean the partial asset contribution ("apport partiel
d'actif") by the Transferor to the Company of the gallium activity conducted at
the Salindres Site, pursuant to Article 387 of the Companies Act of July 24,
1966, representing all of the assets and liabilities appearing on the Reference
Position (except the Ingal Stade Shares).
"CONTRIBUTION AGREEMENT" shall mean the private deed that was executed on August
2, 1999 in Courbevoie between the Transferor and the Company by which the
Transferor shall perform the Contribution, a copy of which is attached hereto as
APPENDIX A.
"CONTRIBUTION INDEBTEDNESS" shall mean the indebtedness of the Company towards
the Transferor as a result of the Contribution and shall be equal to zero.
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"CONTROL POSITION" shall mean the balance sheet of the Company as at the close
of business on September 1, 1999, prepared in accordance with U.S. GAAP
consistently applied in accordance with past practice, and certified by the
Transferor's auditors (PriceWaterhouseCoopers) (which shall exclude the effect
of the payments provided for in SECTION 7.3, but shall include any tax, and
levies owed by the Company (i) in respect of the period prior to September 1,
1999 and (ii) as a result of the sale of the Shares; it being understood and
agreed between the parties that all taxes on profits made by the French Gallium
Business from January 1, 1999 to September 1, 1999 will be paid directly by the
Transferor).
"DIRECT CLAIM" shall have the meaning set forth in SECTION 9.4(d).
"DISPUTED ITEMS" shall have the meaning set forth in SECTION 4.3(a).
"DRAFTS" shall have the meaning set forth in SECTION 8.1.1(i).
"ENCUMBRANCES" shall have the meaning set forth in SECTION 8.1.1(b)(i).
"ENVIRONMENTAL ASSESSMENT" shall mean the environmental studies included in
APPENDIX 8.1.1.(q)(i) hereto, identifying the nature, extent and degree of soil
and groundwater contamination existing in, on or under the Sites on the dates of
such assessments.
"ENVIRONMENTAL INDEMNIFIABLE LOSSES" shall mean any and all damages, costs,
claims, losses, liabilities, obligations, fines, judgments and expenses
(including reasonable legal and consulting fees but excluding consequential
damages ("dommages indirects et/ou pertes d'exploitations") arising as a result
of a Remedial Action.
"ENVIRONMENTAL LAW" shall mean all any laws, statutes, directives, regulations,
notices, judgments, decrees or orders including applicable E.U. Directives from
any competent government entity having force of law applicable on the date
hereof in France and Germany relating to pollution, contamination or protection
of the environment or to the storage, labeling, handling, release, treatment,
manufacture, processing, deposit, transportation or disposal of substances.
"EXPERT" shall have the meaning set forth in SECTION 4.3(a).
"FINAL CONTROL POSITION" shall have the meaning set forth in SECTION 4.3(b)
hereof.
"FINAL GROUP CONTROL POSITIONS" shall mean the Final Control Position and the
Final IS Control Position.
"FINAL IS CONTROL POSITION" shall have the meaning set forth in SECTION 6.3(b)
hereof.
"FINAL IS NET BOOK VALUE" shall have the meaning set forth in SECTION 6.3(b)
hereof.
"FINAL NET BOOK VALUE" shall have the meaning set forth in SECTION 4.3(b)
hereof.
"FORCE MAJEURE" shall mean have the meaning ascribed to it in the Related
Agreements.
"U.S. GAAP" shall mean generally accepted accounting principles in the United
States of
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America consistently applied and followed in the preparation of the Reference
Position.
"GALLIUM BUSINESS" shall have the meaning ascribed to it in Recital 1.
"GEO" shall mean GEO Specialty Chemicals, Inc., an Ohio corporation with
principal offices at 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000,
X.X.X.
"GEO GROUP" shall mean GEO, the Buyer and any company in which GEO directly or
indirectly owns more than 50% of the capital or voting rights.
"GERMAN GAAP" shall mean generally accepted accounting principles in Germany
consistently applied and followed in the preparation of the IS Reference
Position.
"GROUP CONTROL POSITIONS" shall mean the Control Position and the IS Control
Position.
"GROUP REFERENCE POSITIONS" shall mean the Reference Position and the IS
Reference Position.
"HAZARDOUS MATERIALS" shall mean all pollutants, contaminants, waste, chemical
or other material or substances regulated as explosive, flammable, toxic,
radioactive, corrosive, reactive or otherwise hazardous substances pursuant to
any Environmental Laws.
"INDEBTEDNESS FOR BORROWED MONEY" shall mean financial debt (other than trade
payables) for borrowed money of the Company and Ingal Stade, whether short or
long term, including amounts due in respect of capital leases, loans by members
of the Rhodia Group, banks and other financial institutions, and accrued
interest, prepayment penalties, and other amounts payable in respect of such
indebtedness.
"INDEMNITOR" shall have the meaning set forth in SECTION 9.4(a).
"INGAL STADE" shall mean Ingal Stade GmbH, a German corporation with a capital
of DM 50,000, with its registered office at Xxxxxx-Xxxxxx-Xxxxx Xxxxxxx, 00000
Stade.
"INGAL STADE SHARES" shall mean one-hundred percent (100%) of the issued and
outstanding share capital of Ingal Stade.
"INTELLECTUAL PROPERTY RIGHTS AND PATENT RIGHTS shall have the meaning set forth
in SECTION 8.1.1(f)(i).
"IS CONTROL POSITION" shall mean the balance sheet of Ingal Stade as at the
close of business on September 1, 1999 prepared in accordance with German GAAP,
consistently applied in accordance with past practice and certified by the
Transferor's auditors (PriceWaterhouseCoopers) which shall include any tax,
levies or duties to be borne by Ingal Stade (i) in respect of the period prior
to September 1, 1999 and (ii) as a result of the sale of the Ingal Stade
Shares.
"IS INDEBTEDNESS" shall mean the indebtedness of Ingal Stade towards Rhodia
Deutschland set forth in the "cash pool "line item and any other Indebtedness
for Borrowed Money of Ingal Stade.
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"IS 1998 NET BOOK VALUE" shall mean the sum of the following balance sheet items
computed as at December 31, 1998 on the basis of the IS Reference Position:
- subscribed capital: DM 50,000 (FRF 167,500)
- profit-loss: DM 88,564 (FRF 296,692)
"IS NET BOOK VALUE" shall mean the sum of the following balance sheet items
computed as at the close of business on September 1, 1999, on the basis of the
IS Control Position:
- subscribed capital: DM 50,000 (FRF 167,500)
- profit-loss
"IS REFERENCE POSITION" shall mean the balance sheet of Ingal Stade as at
December 31, 1998 prepared in accordance with German GAAP consistently applied
in accordance with past practice and certified by the Transferor's auditors
(PriceWaterhouseCoopers). A copy of the IS Reference Position is attached hereto
as APPENDIX B.
"LEASE(S)" shall have the meaning set forth in SECTION 8.1.1(p)(iii).
"LEASED REAL PROPERTY" shall have the meaning set forth in SECTION
8.1.1(p)(iii).
"LOSSES" shall have the meaning set forth in SECTION 9.1(a).
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" shall mean any material
adverse change or changes in the assets, liabilities, financial condition or
results of operations of the Gallium Business taken as a whole which for the
purpose hereof, shall be deemed not to comprise a change or changes that result
from general market, economic or political conditions or other conditions
affecting the gallium industry generally. References to "material" appearing
elsewhere in this Agreement shall not be so construed.
"MATERIAL CONTRACTS" shall mean all contracts material to the operation of the
Gallium Business as currently being conducted (whether written or oral) in force
on the date hereof or on the Transfer Date of the Companies or the Transferor,
in the latter case, relating to the Gallium Business, including but not limited
to, each of the following contracts and commitments to which either of the
Companies is a party or is bound or which relate to the Gallium Business:
(a) contracts with any sales agent, representative or distributor;
(b) contracts that (i) entail the expenditure of more than FRF 500,000 (five
hundred thousand French Francs) in any year or (ii) have a term of more
than six (6) months and cannot be terminated earlier by the Companies on
notice of thirty (30) days or less;
(c) contracts and arrangements for employment or consulting services;
(d) contracts to sell or supply products or to perform services in connection
with the Gallium Business involving in any one case obligations or payments
of FRF 500,000 (five hundred thousand French Francs) or more;
(e) contracts and arrangements providing for any severance, change-of-control
or stay-in-place payment, whether or not, as a result of the transactions
contemplated by this Agreement;
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(f) contracts limiting the right of either of the Companies to compete or do
business in any territory;
(g) contracts or arrangements for financing, granting an interest in any asset
of the Companies or undertaking or guarantying the indebtedness or
obligations of a third party;
(h) contracts with a governmental entity;
(i) barter contracts or contracts or arrangements for consignment; and
(j) contracts which have been concluded between either of the Companies and the
Transferor or one of its affiliates.
"NET BOOK VALUE" shall mean the "equity" line item computed as at the close of
business on September 1, 1999 on the basis of the Control Position.
"1998 NET BOOK VALUE " shall mean the "equity" line item computed as at December
31, 1998 on the basis of the Reference Position (including the projection for
Kazakh stock).
"NEW CONTAMINANT" shall mean a Contaminant which has not been used prior to the
Transfer Date in connection with the Gallium Business.
"NOMINEE SHAREHOLDERS" shall mean Rhodia Participations, Rhodia Investissement,
Rhodia Finance, Rhodia Services, Compagnie Industrielle et Miniere and Mme.
Laure du Manoir.
"PERMITS" shall have the meaning set forth in SECTION 8.1.1(m)(ii).
"PINJARRA" shall mean Rhodia Pinjarra PTY Ltd., an Australian company with its
registered offices located at Xxx 0, Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxx Xxxxxxxxx
0X00.
"PLAN" shall have the meaning set forth in SECTION 9.5(d).
"PURCHASE OPTION AGREEMENT" shall mean the agreement to be entered into on the
Transfer Date between the Transferor, the Buyer and GEO containing an option to
purchase the issued and outstanding shares of Pinjarra.
"REFERENCE DATE IS INDEBTEDNESS" shall mean the actual amount of the IS
Indebtedness as of December 31, 1998 equal to nine million one-hundred, sixty
thousand three hundred and sixty (FRF 9,160,360) French Francs.
"REFERENCE POSITION" shall mean the balance sheet ("Comptes retraites") of the
Company as at December 31, 1998 prepared in accordance with U.S. GAAP, as if the
Contribution and the purchase of the Ingal Stade Shares, had occurred on that
date, except that any and all taxes, levies or duties owed by the Company and
incurred or arising by virtue of the Contribution or the transfer of the Ingal
Stade Shares shall not be reflected in the Reference Position but shall be
included in the Control Position. A copy of the Reference Position is attached
hereto at APPENDIX C.
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"RELATED AGREEMENTS" shall have the meaning set forth in SECTION 10.3(e) hereof.
"RELEASE" shall mean any spill, emission, leaking, pumping, injection, deposit
or discharge of any Contaminant, in onto or through the environment (including
ambient air, surface water, groundwater or surface or subsurface soil).
"REMEDIAL ACTION" shall mean the removal, cure, containment, neutralization, or
remediation of any Release required:
(i) by a written final and irrevocable order from an administrative or
judicial authority;
(ii) by Environmental Laws; or
(iii) in the event of a proven material and imminent hazard.
"RHODIA GROUP" shall mean the Transferor, the direct or indirect owner of the
Transferor, and any company in which the Transferor (or the direct or indirect
owner of the Transferor) directly or indirectly owns more than 50% of the
capital or voting rights and which it controls within the meaning of Article
355.1 of the Companies Act of 24 July 1966.
"RHODIA INC." shall mean a company whose head office is located at 000
Xxxxxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxxxx 00000, Xxxxxx Xxxxxx of America.
"RHODIA INC. INVENTORIES" shall mean the gallium inventories owned by Rhodia
Inc. in the amount of FRF 1,2 million to be purchased by GEO on the Transfer
Date.
"SALINDRES SITE" shall mean the Transferor's gallium purification site in the
Gard region (France).
"SHARES" shall have the meaning set forth in SECTION 2.1 HEREOF.
"SITES" shall mean the Salindres Site and the Ingal Stade gallium extraction
facilities.
"THIRD PARTY CLAIM" shall have the meaning set forth in SECTION 9.4(a).
"THRESHOLD" shall have the meaning set forth in SECTION 9.3(c).
"TO THE TRANSFEROR'S KNOWLEDGE" shall mean the knowledge of any of Xx. Xxxxxx
Xxxxxxx, Xx. Xxxxxx Bajolet, Xx. Xxxxx Xxxxxxxx and the two plant managers at
the Sites
"TRANSFER DATE" shall have the meaning set forth in SECTION 3.1 HEREOF.
"TRANSFER DATE IS INDEBTEDNESS" shall mean the amount of the IS Indebtedness as
at September 1, 1999 as reflected in the Final IS Control Position.
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"TRANSFER PRICE" shall have the meaning set forth at SECTION 5.1(a) HEREOF
"TRANSFEROR" shall mean Rhodia Chimie S.A., a societe anonyme organized under
the laws of France with a corporate capital of FRF 2,883,675,200, whose head
office is located at 25 quai Xxxx Xxxxxx, 92408 Courbevoie Cedex, registered
with the Registry of Commerce and Companies of Nanterre under No. 642 014 526
RCS Nanterre.
ARTICLE 2
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TRANSFER OF SHARES/RHODIA INC. INVENTORIES
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2.1. Subject to the terms and conditions of this Agreement, the Transferor
hereby agrees to transfer, or cause to be transferred on the Transfer
Date (as defined in ARTICLE 3 below), subject to all ordinary and de-jure
warranties as well as the warranties stipulated herein, to the Buyer,
which accepts, one-hundred percent (100%) of the outstanding and issued
shares constituting the entire share capital of the Company (after the
Contribution and the increase in share capital described in Recitals 5, 6
and 7 and the transfer of the Ingal Stade Shares) (the "SHARES"), with a
nominal value of FRF 100 each and (ii) the Rhodia Inc. Inventories.
2.2. On the date of this Agreement, the Shares are held by the Transferor and
the Nominee Shareholders, as described below :
NUMBER OF SHARES
- Rhodia Chimie 1
- Rhodia Participations 2,494
- Rhodia Investissement 1
- Rhodia Services 1
- Rhodia Finance 1
- Compagnie Industrielle et Miniere 1
- Madame Laure du Manoir 1
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i.e. Total equal to total Shares outstanding 2,500
2.3. Subject to the terms and conditions hereof, the Buyer agrees, and GEO
agrees to cause the Buyer to purchase (i) the Shares from the Transferor,
and (ii) the Rhodia Inc. Inventories from Rhodia Inc. on the Transfer
Date.
ARTICLE 3
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COMPLETION OF TRANSFER
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3.1 TRANSFER
The transfer of the Shares (including all right and title thereto free of
all Encumbrances), and of the Rhodia Inc. Inventories, shall be completed
on September 8, 1999 the
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"TRANSFER DATE"), by the simultaneous delivery by each of the Transferor
and the Buyer of the following documents to the registered office of the
Transferor at 25 quai Xxxx Xxxxxx, 92408 Courbevoie Cedex, ("CLOSING") :
(a) BY THE TRANSFEROR:
(i) Share transfer orders ("ordres de mouvement") providing for the
transfer of the Shares (including the shares issued in connection
with the increase in share capital of the Company pursuant to the
Contribution) to Buyer and the notarial deed providing for the
transfer of the Ingal Stade Shares from Rhodia Deutschland to the
Company.
(ii) The Company's share transfer registers and share accounts and the
equivalent documents or records applicable to Ingal Stade.
(iii) The records of resolutions and the attendance registers of the
Company's Board of Directors and General Shareholders Meetings
together with the corporate books of Ingal Stade.
(iv) Letters of resignation of the directors and corporate
representatives of the Company and Ingal Stade.
(v) Each of the Related Agreements duly executed by the appropriate
member of the Rhodia Group.
(vi) An invoice in the amount of one million two hundred thousand
French Francs (FRF 1,200,000) for the Rhodia Inc. Inventories.
(b) BY THE BUYER:
(i) Payment of the Transfer Price (as defined below) to the
Transferor.
(ii) Repayment by the Buyer, on behalf of the Company and Ingal Stade
respectively, of the Company's Indebtedness, the Contribution
Indebtedness, and the Reference Date IS Indebtedness.
(iii) Each of the Related Agreements duly executed.
(iv) Payment to Rhodia Inc. of one million two hundred thousand French
Francs (FRF 1,200,000) for the Rhodia Inc. Inventories.
3.2 TITLE TO SHARES/SUBROGATION
The Buyer shall own and have all rights and full enjoyment (jouissance)
to the Shares with effect from the Transfer Date.
With effect from the Transfer Date, the Buyer shall be subrogated in all
of the Transferor's rights in connection with the Shares.
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3.3 TRANSFER OF MANAGEMENT
The Buyer shall manage the Companies with effect from the Transfer Date.
ARTICLE 4
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ADJUSTMENT ON CONTRIBUTION
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REFERENCE POSITION
Attached hereto as APPENDIX C is a copy of the Reference Position.
4.2 CONTROL POSITION
As soon as practicable and, in any event, not later than forty-five (45)
days after the Transfer Date, the Transferor shall deliver to the Buyer
(i) the Control Position and (ii) the Net Book Value and will, upon
request, deliver to the Buyer the work papers of the Transferor and the
work papers of the Transferor's accountants generated in the preparation
of such statement.
4.3 DETERMINATION OF THE ADJUSTMENT
(a) After delivery to the Buyer of the Control Position and the Net Book
Value, the Buyer shall have thirty (30) days to review such documents.
Unless the Buyer notifies the Transferor in writing within the thirty
(30) days period of any good faith objection to the Control Position or
the Net Book Value specifying in reasonable detail the items and amounts
subject to such objection ("DISPUTED ITEMS"), the Control Position and
the Net Book Value shall be conclusive and binding on the parties. If
within the thirty (30) day period the Buyer notifies the Transferor in
writing of any such objection, then the Buyer and the Transferor shall
use reasonable efforts for twenty (20) days to resolve in good faith
their differences and agree upon any adjustments to the Control Position
and/or the Net Book Value. Any Disputed Items which are not resolved by
the mutual agreement of the Buyer and the Transferor within such twenty
(20) days shall be submitted for resolution to the Paris office of Xxxxxx
Xxxxxxxx or if Xxxxxx Xxxxxxxx refuses its mission, Ernst & Young or to
their German offices as Xxxxxx Xxxxxxxx or Xxxxx & Xxxxx, as the case may
be, deem necessary ("EXPERT"). If the Expert refuses its mission, either
party shall be entitled within ten (10) Business Days to request the
designation of an Expert by the President of the Court of Commerce of
Paris. The Transferor and the Buyer shall instruct the Expert to limit
its examination to the unresolved Disputed Items affecting the Control
Position and/or the Net Book Value, and to use its best efforts to make
its determination thereon within twenty (20) days after referral to it of
the matters in dispute. The resolution of any such previously unresolved
Disputed Items by such Expert shall be made in writing in English
delivered to the Buyer and the Transferor (which writing shall set forth
the rules and reasoning applied) and the Control Position and the Net
Book Value as so determined shall be final, conclusive and binding upon
the Transferor and the Buyer in accordance with Articles 1592 et seq. of
the French Civil Code. The fees and expenses charged by the Expert with
respect to Disputed Items shall be shared equally between the Buyer and
the Transferor.
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(b) The Net Book Value to which the Buyer does not object or to which the
Transferor and the Buyer agree, or as otherwise conclusively determined
by the Expert shall be referred to herein as the "FINAL NET BOOK VALUE".
The Control Position to which the Buyer does not object, or to which the
Transferor and the Buyer agree or as otherwise conclusively determined by
the Expert shall be referred to herein as the "FINAL CONTROL POSITION".
(c) Agreement between the parties on the Control Position or, failing
agreement between the parties, the determination of the Control Position
by the Expert, shall entail full and final discharge (quitus) of the
Transferor's directors and the Company's directors for their management
during the period from the Company's incorporation date to the Transfer
Date. This agreement shall relate only to the directors of the Transferor
and the Company in their individual capacity and shall not affect any
right the Buyer may have against the Transferor as a corporate entity.
4.4 ADJUSTMENT
(a) If the Final Net Book Value is higher than the 1998 Net Book Value, the
amount of the excess shall be due and payable by the Company to the
Transferor pursuant to the current account mechanism, (compte courant)
set forth in the Contribution Agreement.
(b) If the Final Net Book Value is lower than the 1998 Net Book Value, the
amount of the difference shall be due and payable by the Transferor to
the Company pursuant to the current account mechanism set forth in the
Contribution Agreement.
(c) It is agreed that the current account adjustments above shall not affect
determination of the Transfer Price in any way and shall merely amount to
adjustment within the framework of the Contribution.
(d) All payments to be made under this SECTION 4.4 shall be made with ten
(10) days of the determination of the Final Control Position and the
Final Net Book Value.
ARTICLE 5
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TRANSFER PRICE - PRICE OF RHODIA INC. INVENTORIES
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5.1. TRANSFER PRICE - PRICE OF RHODIA INC. INVENTORIES
(a) The Buyer shall pay the transfer price of the Shares to the Transferor
(the "TRANSFER PRICE") which shall be equal to one hundred forty three
million five hundred seventy five thousand and sixty three French Francs
(FRF 143,575,063), less the amount of the Company's Indebtedness, the
Contribution Indebtedness, the IS Reference Date Indebtedness and any
other Indebtedness for Borrowed Money disclosed in the written notice to
be given by the Transferor to the Buyer pursuant to Section 7.1 (i.e the
Transfer Price shall, assuming no Indebtedness for Borrowed Money other
than those described in this sentence, be equal to one hundred and thirty
million, two hundred and forty seven thousand and two hundred and three
French Francs (FRF 130,247,203), subject to the adjustment set forth in
Article 6 below. The Transfer Price shall be paid as follows:
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(i) one hundred and ten million, four hundred and seventy two
thousand, one hundred and forty French Francs (FRF 110,472,140) on
the Transfer Date; and
(ii) nineteen million, seven hundred and seventy five thousand and
sixty three French Francs (FRF 19,775,063) on the date of payment
of the adjustment as set forth in Section 6.4 (c) below.
(b) GEO shall pay the price for the Rhodia Inc. Inventories in the amount of
one million two hundred thousand French Francs (FRF 1,200,000) to Rhodia
Inc. on the Transfer Date. The Transferor shall cause Rhodia Inc. to
permit GEO or the Buyer to inspect and assess the value of the Rhodia,
Inc. Inventories in the five Business Days prior to the Transfer Date.
5.2. METHOD OF MAKING PAYMENT
All cash payments under this Agreement shall be made to the receiving
party by depositing, by bank wire transfer, the required amount in
immediately available funds in an account designated by the receiving
party for such purpose.
5.3. LATE PAYMENT-TAXES
(a) In the event any of the parties do not pay an amount due under this
Agreement at its due date, the party to whom such amount is due shall
automatically charge late-payment interest on such amount, without
notice, without prejudice to all its other rights and remedies. Said
interest shall accrue from its due date to its actual payment date at a
rate equal to the arithmetic average of the weighted average rates
published daily by the Banque de France during the period concerned, plus
5 %. The charging of late-payment interest, which shall be due
immediately on demand, does not imply agreement to deferral of payment or
waiver of any right accruing to the non-defaulting party under this
Agreement.
(b) The Buyer shall pay all duties, taxes and levies in relation to the
transfer of the Shares not exceeding twenty thousand French Francs (FRF
20,000).
ARTICLE 6
---------
TRANSFER PRICE ADJUSTMENT
-------------------------
6.1 IS REFERENCE POSITION
Attached hereto as APPENDIX B is a copy of the IS Reference Position.
6.2 CONTROL POSITIONS
As soon as practicable, and in any event, not later than forty five (45)
days after the Transfer Date, the Transferor shall deliver to the Buyer
(i) the IS Control Position, (ii) the IS Net Book Value, and will, upon
request, deliver to the Buyer the work papers of the Transferor or, if
the Transferor's accountants agree, the work papers of the Transferor's
accountants generated in the preparation of such statements.
15
6.3. DETERMINATION OF ADJUSTMENTS
(a) After delivery to the Buyer of the IS Control Position and the IS Net
Book Value, the Buyer shall have thirty (30) days to review such
documents. The Buyer shall be entitled to conduct an audit of the kazakh
stock to ensure its quality and quantity and to ensure that it is validly
reflected in the Control Position. Unless the Buyer notifies the
Transferor in writing within the thirty (30) day period of any good faith
objection to the IS Control Position, and/or the IS Net Book Value
specifying in reasonable detail the Disputed Items, the IS Control
Position and/or the IS Net Book Value shall be conclusive and binding on
the Buyer and the Transferor. If within the thirty (30) day period the
Buyer notifies the Transferor in writing of any such objection, then the
Buyer and the Transferor shall use reasonable efforts for twenty (20)
days after the expiration of the thirty (30) day period to resolve in
good faith their differences and agree upon any adjustments to the IS
Control Position and the IS Net Book Value. Any Disputed Items which are
not resolved by the mutual agreement of the Buyer and the Transferor
within such twenty (20) Business Day period shall be submitted for
resolution to the Expert. The Transferor and the Buyer shall instruct the
Expert to limit its examination to the unresolved Disputed Items
affecting the IS Control Position and the IS Net Book Value and to use
its best efforts to make its determination thereon within twenty (20)
Business Days after the date that the dispute is referred to it. The
resolution of any such previously unresolved Disputed Items by such
Expert shall be made in writing in English delivered to the Buyer and the
Transferor (which writing shall set forth the rules and reasoning
applied) and the IS Control Position and the IS Net Book Value as
determined shall be final, conclusive and binding upon the Transferor and
the Buyer in accordance with Articles 1592 et seq. of the French Civil
Code. The fees and expenses charged by the Expert with respect to
Disputed Items shall be shared equally between the Buyer and the
Transferor.
(b) The IS Net Book Value to which the Buyer does not object or to which the
Transferor and the Buyer agree, or as otherwise conclusively determined
by the Expert shall be referred to herein as the "FINAL IS NET BOOK
VALUE". The IS Control Position to which the Buyer does not object or to
which the Transferor and the Buyer agree, or as otherwise conclusively
determined by the Expert shall be referred to herein as the "FINAL IS
CONTROL POSITION".
6.4 ADJUSTMENTS
(a) If the Final IS Net Book Value is higher than the IS 1998 Net Book Value,
the amount of the excess shall be due and payable by the Buyer to the
Transferor.
(b) If the Final IS Net Book Value is lower than the IS 1998 Net Book Value,
the amount of the difference shall be due and payable by the Transferor
to the Buyer.
(c) All payments to be made under this SECTION 6.4 shall be made within ten
(10) days of the determination of the Final IS Control Position.
(d) No action by the Buyer in connection with the acceptance or determination
of the Final Control Position, the Final IS Control Position, the Final
Net Book Value and Final IS Net Book Value shall be deemed to be a waiver
by Buyer of any claim Buyer may have
16
that any of the representations or warranties contained in SECTION 8.1.1
is or was untrue or misleading or has been breached. In no event shall
any upward or downward movement in the level of the Final Net Book Value
or Final IS Net Book Value be counted twice in the adjustment mechanisms
contained in ARTICLES 4 OR 6 and neither GEO, nor the Buyer or Rhodia
shall be entitled to double recovery pursuant to (i) the adjustment
mechanism under ARTICLES 4 AND 6 and (ii) the indemnification mechanism
under ARTICLE 9.
(e) The parties acknowledge and agree that the Transfer Price adjustment
shall not be based on the balance sheet used for the Contribution.
ARTICLE 7
---------
LOAN REPAYMENT
--------------
7.1 ESTIMATED INDEBTEDNESS
Not later than three (3) Business Days before the Transfer Date, the
Transferor shall provide the Buyer with written confirmation that there
is no and, as of the Transfer Date, there will be no Indebtedness for
Borrowed Money other than the Company's Indebtedness, the Contribution
Indebtedness and the Reference Date IS Indebtedness to the extent that
any such Indebtedness for Borrowed Money does exist, it shall be deducted
from the Transfer Price.
7.2 PAYMENT ON TRANSFER DATE
On the Transfer Date, the Buyer shall refinance and cause the Company and
Ingal Stade to reimburse to the Transferor and Rhodia Deutschland
respectively, the Company's Indebtedness, the Contribution Indebtedness
and the Reference Date IS Indebtedness.
7.3 ADJUSTMENT
Within ten (10) days following the determination of the Final IS Control
Position the following adjustments shall be made:
(a) If the Transfer Date IS Indebtedness is higher than the Reference Date IS
Indebtedness, the Transferor shall repay the amount of the excess to the
Buyer, and the Buyer shall cause Ingal Stade to repay Rhodia Deutschland
such amount.
(b) If the Transfer Date IS Indebtedness is lower than the Reference Date IS
Indebtedness, the Transferor shall cause Rhodia Deutschland to pay to
Ingal Stade the amount of the difference and the Buyer shall pay to the
Transferor such amount.
17
ARTICLE 8
---------
WARRANTIES AND REPRESENTATIONS
------------------------------
8.1. WARRANTIES AND REPRESENTATIONS
8.1.1. WARRANTIES AND REPRESENTATIONS OF THE TRANSFEROR
The Transferor accepts vis-a-vis the Buyer that any breach of these
warranties and representations shall be sanctioned in accordance with
ARTICLE 9 of this Agreement. The Transferor represents and warrants to
the Buyer as follows on the date hereof and as of the Transfer Date
(unless otherwise specified herein).
(a) INCORPORATION OF THE COMPANIES
(i) The Companies are duly incorporated and validly existing under the
laws of their respective jurisdictions, and the Company and Ingal
Stade operate in accordance with their Articles of Association or
applicable charter documents and in all material respects in
accordance with applicable laws and regulations and have done so
since the date of their incorporation.
(ii) The books and registers of the Companies reflect all of the
resolutions adopted by the Boards of Directors and General
Meetings of the Companies and have been regularly kept and are up
to date. All decisions adopted by the Companies' management bodies
have been validly taken and are duly recorded in the said
registers in accordance with the applicable laws.
(iii) Transfers of shares or other securities that represent the capital
or voting rights of the Companies made by or in favor of the
Transferor or the Companies or its or their predecessors were
regularly made and are perfectly valid and give the companies
holding the said shares or securities full and unencumbered
ownership, as evidenced inter alia by the regularly kept and
up-to-date share transfer registers (or any equivalent document
under the laws applicable to Ingal Stade), the corporate decisions
and the Articles of Association or applicable charter documents of
the Companies.
(iv) The certificates of incorporation and good standing ("Kbis"
extracts from the Register of Companies or equivalent registers
for Ingal Stade) listing current corporate information about the
Company and Ingal Stade, as appended in APPENDIX 8.1.1.(a)(iv),
record the latest changes at the date of this Agreement.
(v) The current directors (or their equivalents under applicable law)
of the Companies are listed in APPENDIX 8.1.1.(a)(v).
18
(b) CAPITAL AND SHARES OF THE COMPANIES
(i) The capital of the Companies has been issued validly and legally
and is fully paid up. All shares in the Companies are free of any
lien, charge, encumbrance, pledge, security interest, claim,
option, right of preemption or other type of interest of a third
party ("ENCUMBRANCES").
(ii) The amount of capital of each of the Companies, the number of
securities issued by them and their shareholders on the date
hereof and as applicable on the Transfer Date is set forth in
APPENDIX 8.1.1.(b)(ii).
(iii) Each of the securities issued by each of the Companies gives, by
class, the same voting rights at the General Meetings of the
shareholders of the company concerned and the same rights to
corporate profits.
(iv) The Companies have not issued any debt or equity securities other
than those described in APPENDIX 8.1.1.(b)(ii). In particular, the
Companies have not issued any security giving its holder a right
to a share in their capital or voting rights by exchange,
repayment or conversion, and the Companies have no commitments by
virtue of which they can be obliged to create, issue or convert
any security of any kind.
(v) Except as set forth in APPENDIX 8.1.1.(b)(v), the Companies have
no subsidiary or interest in any other company, association,
grouping or entity of any kind whatsoever and have not invested in
any other company or grouping by virtue of which they may have any
liability whether limited, unlimited, joint and/or several.
(c) SHARE TRANSFER
(i) The Transferor is the owner of the Shares to be sold by it and has
the right to sell them. As of the Closing, the Company will be the
owner of the Ingal Stade Shares, free of all Encumbrances.
(ii) The Transferor has the unreserved right, power and capacity to
transfer the Shares to the Buyer. Rhodia Deutschland has the
unreserved right, power, and capacity to transfer the Ingal Stade
shares to the Company.
(iii) The transactions contemplated herein (including the Contribution
and the transfer of the Ingal Stade Shares by Rhodia Deutschland
to the Company), shall be carried out in accordance with
applicable laws and regulations and shall validly (i) transfer the
full title to the Shares to the Buyer, (ii) effect the
Contribution and (iii) transfer the full title to the Ingal Stade
Shares to the Company, in each case free from all Encumbrances.
(iv) Neither the Transferor nor any other person benefits directly or
indirectly from any option, preference right or similar right to
securities issued by the Companies.
(v) No provision in the Articles of Association or applicable charter
documents of the
19
Companies or Rhodia Deutschland prevents transfer of the Shares by
the Transferor to the Buyer or the Ingal Stade Shares by Rhodia
Deutschland to the Company. As a result, on the Transfer Date, the
Buyer shall acquire sole ownership of the Shares and the Company
shall acquire sole ownership of the Ingal Stade Shares by virtue
of said transfers.
(vi) The execution and delivery of this Agreement and the performance
by the Transferor, the Company and Rhodia Deutschland of the
transactions contemplated hereby (including the Contribution and
the sale of the Ingal Stade Shares by Rhodia Deutschland to the
Company) have been duly authorized by all necessary corporate
action on the part of each applicable entity. This Agreement has
been duly executed and delivered by the Transferor, and assuming
the due authorization and execution by GEO, this Agreement
constitutes a valid and binding agreement of the Transferor,
enforceable against it in accordance with the terms hereof.
(vii) Neither the execution of this Agreement by the Transferor nor the
performance by the Transferor, the Company and Rhodia Deutschland
of the transactions contemplated herein (including the
Contribution and the sale of the Ingal Stade Shares by Rhodia
Deutschland to the Company) (A) will violate or conflict with any
of the provisions of the Articles of Association of the Transferor
or of the constitutive documents of the Companies or Rhodia
Deutschland, or (B), except as set forth in APPENDIX
8.1.1.(c)(vii), will violate or constitute a default under, or be
the grounds for termination of, any contract, agreement, mortgage
or other instrument to which the Transferor (with respect to the
Gallium Business) or any of the Companies or Rhodia Deutschland
(in relation to the latter with respect to the Gallium Business)
is a party or by which any of their respective assets or
properties are bound or any law or any order, judgment or ruling
of any governmental authority applicable to the Transferor (with
respect to the Gallium Business), the Companies or Rhodia
Deutschland (in relation to the latter with respect to the Gallium
Business) or (C) will result in the creation of any Encumbrance
upon any of the assets or properties of the Companies, except in
the case of the Transferor to the extent that would not prohibit
or in any way interfere with the ability of the Transferor to
perform any of its obligations hereunder.
(D) FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES, ENTIRE BUSINESS
Except as set forth in APPENDIX 8.1.1.(d):
(i) The Reference Position was prepared in accordance with U.S. GAAP
and the IS Reference Position (and their annexes including the
profit and loss accounts of the business of the Company and Ingal
Stade for the year ending December 31, 1998) attached hereto as
Appendix 8.1.1.(d) were prepared in accordance with German GAAP,
consistently applied, and give a true and fair view (image fidele
et sincere) of the assets, liabilities, financial position and the
results of operations of the Companies and the Gallium Business at
the dates and for the periods indicated.
(ii) Neither the Company nor Ingal Stade have any liability or loss
contingency, fixed or contingent, whether or not required by U.S.
GAAP or German GAAP, respectively, to be disclosed in financial
statements, other than liabilities or loss
20
contingencies reflected or adequately reserved against in the
Group Reference Positions.
(iii) The assets owned or leased by the Companies on the Transfer Date
and the services, assets and properties to be provided by the
Rhodia Group and others pursuant to the Related Agreements
constitute collectively all of the assets, properties and rights
necessary to conduct the Gallium Business as conducted by the
Rhodia Group up to the date of this Agreement and will constitute
as of the Transfer Date all assets, properties and rights
necessary to conduct the Gallium Business as conducted on the
Transfer Date.
(e) DISPUTES
(i) Except as set forth in APPENDIX 8.1.1.(e)(i), there is no action,
suit or judicial, administrative or arbitration proceedings
(whether for tax or other reasons) currently pending against the
Companies or with an impact on the Companies' assets and
businesses, in which the Companies are parties, and to the
Transferor's Knowledge, there are no grounds for any such action,
suit, proceedings, enquiry, verification or claim as of the
Transfer Date.
(ii) The Companies have complied in all material respects with laws,
regulations and instructions applicable to their activities,
including, but not limited to laws and regulations with respect to
job-related safety, environmental protection, and competition
matters (including under Articles 85 and 86 of the Treaty of Rome
or other similar national laws).
(iii) The Companies have duly filed all mandatory tax and social
security returns and have paid or adequately provisioned or will
pay or adequately provision all taxes, levies and social security
contributions due thus far and up until the Transfer Date in
either the Group Reference Positions or the Group Control
Positions. The Companies are not currently subject (and have not
been subject for the last 3 years) to any audit by the tax
authorities or social security agencies or any similar
organization. The Companies have filed in a timely manner all
returns required for all taxes, levies, duties and tax,
tax-related and social security charges to which they are subject,
and all taxes, levies, duties and tax, tax-related and social
security charges owed by the Companies have been fully paid in a
timely manner in adequate amounts and in accordance with
applicable laws and regulations. Except as disclosed in APPENDIX
8.1.1.(e)(iii), neither of the Companies is party to a tax
consolidation structure that includes companies other than the
Companies.
(f) INTELLECTUAL PROPERTY RIGHTS AND PATENT RIGHTS
(i) Subject to the provisions in APPENDIX 8.1.1.(f)(iv), the Companies
(following the Contribution) will fully own the names, models,
trademarks, logos, copyrights and derivative rights and, in
general, all intellectual property rights, patent rights and
know-how used to carry on the Gallium Business as currently
conducted, including all trademarks, logos, designs and models not
actually used but registered for precautionary reasons
(hereinafter referred to as the "INTELLECTUAL PROPERTY RIGHTS AND
PATENT RIGHTS"), the Intellectual Property Rights and Patent
Rights owned by
21
the Companies are listed in APPENDIX 8.1.1.(f)(i).
(ii) Except as set forth in APPENDIX 8.1.1.(f)(ii), the Intellectual
Property Rights and Patent Rights have been registered, renewed
and protected in the name of the Companies by which they are held,
enabling said Companies to exercise validly their Intellectual
Property Rights and Patent Rights in those countries where they
carry on their activities. All royalties have been paid on their
due dates or, properly provisioned in the Group Reference
Positions or will be properly provisioned in the Final Group
Control Positions.
(iii) Except as set forth in APPENDIX 8.1.1.(f)(ii) the Intellectual
Property Rights and Patent Rights registrations have been
regularly made or concluded, are valid, enforceable against third
parties and in compliance, in all material respects with the
applicable laws and regulations.
(iv) Copies of the license or other agreements under which the
Companies have been granted the right to use Intellectual Property
Rights or Patent Rights not owned by them can be found in APPENDIX
8.1.1.(f)(iv). Said agreements are valid, enforceable against
third parties, in compliance with the applicable laws and
regulations.
(v) Subject to the provisions in APPENDIX 8.1.1.(f)(v), the Companies
have not directly or indirectly signed any agreement with third
parties concerning the use or acquisition by such third party of
one or more of the Intellectual Property Rights and Patent Rights.
(vi) Subject to the provisions in APPENDIX 8.1.1.(f)(vi), no judicial
action or other claim with respect to the Intellectual Property
Rights and Patent Rights has been brought or made against the
Companies in the countries where these rights have been registered
and/or used.
(vii) To the Transferor's Knowledge, none of the Intellectual Property
Rights and Patent Rights owned by the Companies is subject to any
type of counterfeiting or infringement on the part of any third
party.
(g) CONTRACTS
APPENDIX 8.1.1.(g) identifies all of the Material Contracts. Each of the
Material Contracts is in full force and effect and constitutes a valid
and binding obligation of the Transferor or the applicable Company and,
to the Transferor's Knowledge, the other party thereto. None of the
Companies or the Transferor in respect of the Gallium Business, where
relevant, is in material breach or material default under any of the
Material Contracts, and to the Transferor's Knowledge, no event has
occurred and no condition or state of fact exists which, with the passage
of time or the giving of notice or both, would constitute such a default
or breach. The Transferor has delivered to the Buyer true, correct and
complete copies of each of the Material Contracts or, in the case of any
oral Material Contract, true, correct and complete descriptions of the
material terms thereof.
22
(h) EMPLOYMENT CONTRACTS
(i) APPENDIX 8.1.1.(h)(i) includes a list of all employees of the
Gallium Business who will, by virtue of the Contribution, become
employees of the Company and all employees of Ingal Stade,
including the name, current position, age and total gross annual
compensation (including any variable remuneration) of each
employee. APPENDIX 8.1.1.(h)(i) also describes:
(a) all agreements governing loans granted by the Transferor to
the employees of the Gallium Business or by the Companies
to any employee (including the amounts concerned);
(b) all agreements governing any material debts of the
Transferor to the employees of the Gallium Business or the
Companies to any employee (including the amounts
concerned); and
(c) the characteristic features, if any, of each employment
contract (notably non competition clauses, severance,
welfare, medical benefit, benefits in kind, bonuses, profit
sharing, savings plan, commissions, layoff compensations,
insurance, retirement liabilities and post retirement
pension benefit,, etc.).
There is no former employee or other person of the Gallium
Business who could claim a priority right to being hired or
reinstated in the Company or Ingal Stade, subject to the
stipulations in APPENDIX 8.1.1.(h)(i).
(ii) Subject to the stipulations in APPENDIX 8.1.1.(h)(ii), the
Companies' employees are not entitled to any special benefit in
addition to those provided by laws, regulations and customs
applicable to employees, including any applicable collective
bargaining agreements.
(iii) Employment contracts signed with the Companies' employees have
been signed in accordance with the applicable laws and regulations
and any applicable collective bargaining agreements.
(iv) There is no pension fund system for the Companies' employees
(except as stipulated in APPENDIX 8.1.1.(h)(ii), and the Companies
do not and shall not owe their employees any money under such
systems and the Companies do not have any retirement system other
than that resulting from the applicable laws or the applicable
collective bargaining agreements listed in APPENDIX 8.1.1.(h)(ii).
(v) The Companies have not signed any individual or collective
contract in relation to layoffs, life insurance or
welfare-benefits other than those described in APPENDIX
8.1.1.(h)(ii).
(vi) No employee of the Companies is being laid off or has reported
plans to resign (except as stipulated in APPENDIX 8.1.1.(h)(vi)).
(vii) There are no collective bargaining agreements other than those
mentioned in the APPENDIX 8.1.1.(h)(ii).
23
(i) DISTRIBUTION AGREEMENTS SIGNED WITH COMPANIES OF THE RHODIA GROUP
APPENDIX D contains the drafts (the "DRAFTS") of the distribution
agreements that will govern the relationships between the Companies and
certain companies owned by the Rhodia Group. The Drafts contain economic
terms which are not worse (for the Gallium Business) than those in force
in relation to the Gallium Business prior to the date hereof, it being
understood and agreed that the legal structure of the distribution
agreement is different than the one in force prior to the Transfer Date
as set forth in Appendix 8.1.1.(i).
It is expressly agreed that the agreements between the members of the
Rhodia Group and the Transferor relating to the Gallium Business or the
Companies shall be replaced (without any termination or indemnity payment
being due from the Company other than payments provided in the Drafts and
Related Agreements ) by agreements to be entered into on the terms of the
Drafts on the Transfer Date. By agreement, the Buyer and the companies of
the Rhodia Group may nevertheless amend an existing agreement already in
force at the Transfer Date.
(j) SECURITY INTERESTS, GUARANTEES
Neither the Transferor (in relation to the Gallium Business) nor the
Companies have granted or are bound by any security interest, pledge or
guarantee whatsoever in favor of any third party or related party.
(k) BANKRUPTCY - COURT-ORDERED LIQUIDATION
Neither of the Companies is unable to pay its debts. No court has ordered
either of the Companies to undergo reorganization or to go into
liquidation (or any equivalent decision under the laws applicable to
them). Similarly, neither of them has been subjected to a conciliation
procedure within the meaning of Article 33 of the Act of 1 March 1984 or
any equivalent procedure under the laws applicable to them.
(l) INSURANCE
(i) All assets owned or operated by the Companies or by the Transferor
(in relation to the Gallium Business), their operating risks,
their civil liability and their business liability are covered by
valid insurance policies listed in APPENDIX 8.1.1.(l)(i).
(ii) The Companies are duly insured against the consequences of the
acts of their employees and agents and the employees and agents of
the Transferor relating to the Gallium Business and against the
risks attached to their businesses.
(iii) The Transferor and/or the Companies have paid all premiums and
made all other payments due under these policies, have not
materially violated any provision of these policies and have
accomplished all formalities necessary to claim their rights to
indemnification for all insured losses incurred or likely to be
incurred.
(iv) The Companies have performed all their obligations, notably all
obligations to file
24
declarations, vis-a-vis their insurance companies and have taken
all steps necessary to be indemnified under optimum conditions
pursuant to the terms of the insurance policies listed in APPENDIX
8.1.1.(l)(i)(a) for all insured losses incurred or are likely to
be incurred.
(m) COMPLIANCE WITH REGULATIONS
(i) The Transferor (in relation to the Gallium Business) and the
Companies are now and have been in compliance in all material
respects with applicable laws and regulations and to the
Transferor's Knowledge there is no event that could result in a
notification of non-compliance by a governmental authority or
other person or entity.
(ii) Subject to the provisions in APPENDIX 8.1.1.(m)(ii)(a) the
Transferor (in relation to the Gallium Business) and the Company
and Ingal Stade have obtained all material authorizations,
permits, licenses, classifications or other approvals required by
applicable laws and regulations to carry on their activities as
currently conducted (hereinafter the "PERMITS") and have filed the
declarations and notifications required to carry on their
activities as currently conducted, including all Permits required
to operate their existing businesses. All of the Permits are
listed in APPENDIX 8.1.1.(m)(ii)(b).
(n) BANKS
APPENDIX 8.1.1.(n) contains the name of each bank at which the Companies
have an account or credit facility, the numbers of the bank accounts and
the names of the persons currently authorized to use said accounts and
credit facilities. The Companies have the free disposal of any sums on
said bank accounts.
(o) ASSETS
(i) The Transferor in relation to the Gallium Business and the
Companies are the sole owners of all movable and real properties
reflected in the Group Reference Positions as being owned by them.
(ii) All assets owned by the Companies will be reflected in the Final
Group Control Positions. All movable assets owned by the Companies
and the Rhodia Inc. Inventories are in good working order and
repair and well maintained, subject to ordinary wear and tear, and
do not have any material defect that may affect their sale,
operation, exploitation or use in the ordinary course of business,
in accordance with past practice. The assets owned by the
Companies are free from any Encumbrances, except as stipulated in
APPENDIX 8.1.1.(o)(ii)(a). APPENDIX 8.1.1(o)(ii)(b) sets forth a
summary list by category of the Rhodia Inc. Inventories as of the
date hereof. Rhodia Inc. Inventories has and will at the Closing
have good title to all of the Rhodia Inc. Inventories, free and
clear of Encumbrances. The Rhodia Inc. Inventories are of
appropriate quality, quantity and mix to be sold in the ordinary
course of business. None of the Rhodia Inc. Inventories are
subject to any write-down or write-off. The price to be paid by
GEO for the Rhodia Inc. Inventories properly represents the lower
of cost or net realizable value for the
25
Rhodia, Inc. Inventories.
(iii) Except as set forth in APPENDIX 8.1.1.(o)(iii), the Transferor (in
relation to the Gallium Business) and the Companies have filed all
statements and/or effected all registrations and publications in
accordance with the laws and regulations applicable to all assets
owned by them.
(iv) Except as provided in APPENDIX 8.1.1.(o)(iv), the fixed assets
owned by the Transferor (in relation to the Gallium Business) and
by the Companies are structurally sound and in normal working
condition for the purpose for which they are intended, with no
material defects, subject to routine maintenance and repairs,
provided wear and tear is excepted.
(v) A list of all fixed assets owned by the Companies can be found in
APPENDIX 8.1.1.(o)(v). The Companies are duly entitled to occupy
the buildings listed in APPENDIX 8.1.1.(o)(v).
(vi) The buildings in which the Transferor (in relation to the Gallium
Business) and the Companies carry on their businesses have been
constructed in all material respects in compliance with all legal
and regulatory standards and/or authorizations in force at the
time of their construction (notably those with respect to town
planning, construction, environmental protection and respect for
the rights of third parties in general).
(vii) The assets owned by the Companies are not currently encumbered by
any lien or right of third parties other than those granted and
discharged in the ordinary course of business or those disclosed
in APPENDIX 8.1.1.(o)(ii).
(viii) The assets owned and/or leased by the Companies include all assets
used to conduct the Gallium Business in all material respects in
accordance with past practice.
(p) LEASES
(i) The leases and/or finance leases held by the Transferor (in
relation to the Gallium Business) and the Companies are in force
and are not subject to disputes with third parties and the
corresponding rights have not been pledged in favor of third
parties.
(ii) There is no fact or dispute with an owner or third party, or
contractual provision capable of limiting or affecting the
Companies' full and entire enjoyment of the premises for which the
Companies hold a lease.
(iii) The Transferor (in relation to the Gallium Business) and/or the
Companies are tenants under those leases of real property
(individually, a "LEASE" and collectively, the "LEASES") described
on APPENDIX 8.1.1.(p)(iii), which Leases pertain to the real
property described on APPENDIX 8.1.1.(p)(iii) (the "LEASED REAL
PROPERTY"). At the Transfer Date, neither of the Companies will
lease any other real property. To the Transferor's Knowledge no
condition exists with respect to the Leases that, with the passage
of time or giving of notice, or both, would constitute a default
by the Transferor, the Company or Ingal Stade under the Leases.
26
(iv) The Company is in exclusive possession of the Leased Real
Property. None of the material structures on the Leased Real
Property encroaches upon real property of another person or entity
and, no structure of any other person or entity encroaches upon
any of the Leased Real Property.
(v) The Leased Real Property is contiguous to and has direct vehicular
and pedestrian access to public roads or otherwise has direct
vehicular and pedestrian access to public roads by valid and
subsisting easements, providing access to such roads for entry to
and exit from all plants, buildings and structures thereon, and
further except as set forth in the Related Agreements, has access
to all appropriate public utilities, in each case to the extent
necessary for the conduct of the Gallium Business (including
parking requirements).
(q) ENVIRONMENT, SAFETY, HEALTH
(i) The Companies are in compliance in all material respects with the
environmental regulations applicable in the countries where they
carry on their activities, notably those with respect to water
pollution, safety, health, noise, air, and except as stipulated
hereinafter in APPENDIX 8.1.1.(q)(i).
(ii) To the Transferor's knowledge, neither the Transferor nor the
Companies have taken any action which may result in the closing of
the Salindres Site or Ingal Stade Site or which may have a
Material Adverse Effect.
(iii) All buildings, machines and equipment used by the Transferor in
relation to the Gallium Business, the Company and Ingal Stade for
their activities are in compliance in all material respects with
the applicable environmental laws and regulations, except as
provided in Appendix 8.1.1.(q)(i).
(r) ORDINARY COURSE OF BUSINESS SINCE DECEMBER 31, 1998
Since December 31, 1998, except as set forth in APPENDIX 8.1.1.(r),
neither the Transferor (in relation to the Gallium Business) nor the
Companies have (other than in relation to the Contribution, all related
transactions to the Contribution, the purchase of the Ingal Stade shares,
the sale of the Rhodia Inc. Inventories, and the Related Agreements):
(i) declared or paid any dividend or other distribution in kind in
respect of the Shares;
(ii) been the subject of any merger, partial spin-off, increase or
decrease in capital, issuance of any securities which may give any
right to share capital;
(iii) acquired, sold or transferred material assets except in the
ordinary course of business;
(iv) suffered any material damage or destruction;
(v) sold, assigned, or granted rights under any Intellectual Property
Right or Patent Right;
27
(vi) failed to undertake any material planned capital expenditures
except in the ordinary course of business;
(vii) granted or extended any power of attorney or acted as guarantor,
surety or indemnitor except in the ordinary course of business;
(viii) written down any inventory or written off any receivable except in
the ordinary course of business.
(ix) increased the rate or terms of compensation payable or to become
payable by any Company to any director, officer, or employee or
increased the rate or terms of any bonus, severance payment right,
pension, or other employee benefit plan covering any director,
officer, or employee except in the ordinary course of business and
consistent with past practice.
(x) made any change in any method of accounting or accounting
principle or practice; or
(xi) agreed or otherwise committed, whether in writing or otherwise, to
do any of the foregoing.
(s) NO BROKER
The Transferor does not know of any broker, finder or financial advisor
acting or who has acted on its behalf, or of any person, firm or
corporation entitled to receive any brokerage or finder's or financial
advisory fee from the Transferor or the Companies in connection with the
transactions contemplated by this Agreement.
(t) DISCLOSURE
To the Transferor's Knowledge, no representation or warranty by the
Transferor contained in this Agreement as qualified by the APPENDICES
hereto, and no information or statement contained in any Appendix
furnished to the Buyer and GEO pursuant to the provisions hereof,
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make such statements herein or
therein not misleading in light of the circumstances under which they
were made.
8.1.2 WARRANTIES AND REPRESENTATIONS OF GEO AND THE BUYER
GEO and the Buyer accept vis-a-vis the Transferor that any breach of these
warranties and representations shall be sanctioned in accordance with ARTICLE 9
of this Agreement. GEO and the Buyer represent and warrant to the Transferor as
follows on the date hereof and as of the Transfer Date (unless otherwise
specified herein).
(a) CORPORATE STATUS
The Buyer will be a corporation duly organized and validly existing and
will have all requisite corporate power to own its properties and carry
on its business. A copy of the
28
Buyer's Articles of Association and certificate of incorporation true and
correct as of the Transfer Date will be attached hereto as APPENDIX
8.1.2.(a). GEO is an Ohio corporation duly organized and validly existing
and has all requisite corporate power to own its properties and carry on
its business as now being conducted, except to the extent that would not
prohibit or in any way interfere with the ability of GEO to perform its
obligations hereunder.
(b) NO BROKER
Neither GEO nor the Buyer knows of any broker, finder or financial
advisor acting or who has acted in either or on both of their behalf, or
of any person, firm or corporation entitled to receive any brokerage or
finder's or financial advisory fee from any party in connection with the
transactions contemplated by this Agreement.
(c) RESTRICTIONS
The consummation of the transactions contemplated hereby will not result
in a breach of, or give rise to a right of termination of, any agreement,
permit or authorization to which the Buyer or GEO (or any company of the
GEO Group) is subject or a party, or violate any of the provisions of the
charter documents of the Buyer or GEO (or any company of the GEO Group)
except to the extent that would not prohibit or in any way interfere with
the ability of GEO or the Buyer to perform any of their obligations
hereunder.
(d) NO LAWSUITS; CONSENTS.
There is no lawsuit, arbitration or proceeding pending or, to the
knowledge of the Buyer and GEO, threatened against the Buyer or GEO (or
any company of its group) which might prevent the consummation of any of
the transactions contemplated by this Agreement, and no approval or
authorization of any governmental entity or of any third party on the
part of the Buyer or GEO (or any company of its group) is required in
connection with the execution, delivery and performance of this
Agreement, the Related Agreements and the other documents contemplated
hereby and thereby.
(e) EXECUTION AND EFFECT OF AGREEMENT
(i) GEO and the Buyer have the full corporate power and authority to
enter into this Agreement, the Related Agreements, and the other
documents contemplated hereby. The execution and delivery of this
Agreement, and other documents contemplated hereby and the
consummation of the transactions contemplated hereby have been
duly authorized by the necessary corporate bodies of GEO and the
Buyer. This Agreement has been duly executed and delivered by GEO
and the Buyer, and assuming the due authorization and execution by
the Transferor, this Agreement constitutes a valid and binding
obligation of GEO and the Buyer, enforceable against GEO and the
Buyer in accordance with its terms.
(ii) Neither the execution of this Agreement by GEO and the Buyer nor
the performance by GEO and the Buyer of the transactions
contemplated herein (A) will violate or conflict with any of the
provisions of the Articles of Association of GEO or the Buyer, or
(B) will violate or constitute a default under, or be the
29
grounds for termination of, any contract, agreement, mortgage or
other instrument to which GEO or the Buyer is a party or by which
any of their respective assets or properties are bound or any law
or any order, judgment or ruling of any governmental authority
applicable to GEO or the Buyer or any of their respective assets
or properties, except to the extent that would not prohibit or in
any way interfere with the ability of either GEO and/or the Buyer
to perform any of their obligations hereunder.
(f) FINANCIAL CAPACITY
GEO has and as at the Transfer Date the Buyer will have the requisite
financial capacity to pay the Transfer Price, the price of the Rhodia
Inc. Inventories, the Company's Indebtedness, the Contribution
Indebtedness and the IS Indebtedness pursuant to this Agreement.
8.1.3 ACCESS TO DOCUMENTS AND MANAGEMENT
GEO acknowledges for itself and the Buyer that during the due diligence
process which commenced on May 21, 1999, they enjoyed full and complete
access to the documents listed in APPENDIX 8.1.2.(g). GEO also
acknowledges that it has had the opportunity to conduct site visits of
the Sites and that it has met with key employees of the Companies.
Except to the extent disclosed in the Appendices hereto, this
acknowledgement shall not be deemed a general disclosure of the contents
of the information referenced in APPENDIX 8.1.2.(g), or be deemed a
waiver by the Buyer or GEO of any claim that it may have hereunder that
any of the representations or warranties given by the Transferor is or
was untrue or misleading, has been breached, or has not been adequately
disclosed against in an Appendix to this Agreement.
ARTICLE 9
---------
INDEMNIFICATION
---------------
9.1 INDEMNIFICATION OBLIGATIONS
(a) Subject to the terms and conditions of this Agreement and of SECTIONS
9.2, 9.3. and 9.4 below, the Transferor shall indemnify the Buyer for any
loss, cost, liability, obligations, claim, fines, judgements or expense
(including costs and expenses of litigation and reasonable consulting and
legal fees but excluding any and all incidental or consequential damages
"dommages indirects et/ou pertes d'exploitation") (all of which are
referred to as "LOSSES") that may be incurred by the Buyer as a result of
(i) the incorrectness or breach of any of the representations or
warranties made by the Transferor in this Agreement, (ii) the breach of
any of the covenants or agreements made by the Transferor in this
Agreement, or (iii) any of the assets contributed pursuant to the
Contribution Agreement being subject to a mortgage (hypotheque) or a
pledge (nantissement).
30
(b) Subject to the terms and conditions of this Agreement and of SECTIONS
9.2, 9.3. and 9.4, the Buyer shall indemnify the Transferor for any
Losses that may be incurred by the Transferor as a result of (i) the
incorrectness or breach of any of the representations or warranties made
by GEO and/or the Buyer in this Agreement, or (ii) the breach of any of
the covenants or agreements made by GEO and/or the Buyer in this
Agreement.
(c) Subject to the terms and conditions of this Agreement and of SECTIONS
9.2, 9.3 and 9.4 herein, the Transferor shall indemnify the Buyer, the
Company or Ingal Stade from and against any and all Environmental
Indemnifiable Losses suffered or incurred by the Buyer, the Company, or
Ingal Stade, to the extent the Release(s) relate solely to activities
conducted at any of the Sites prior to the Transfer Date. The Buyer
agrees to indemnify the Transferor from and against any and all
Environmental Indemnifiable Losses suffered or incurred by the Transferor
to the extent the Release(s) relate solely to activities conducted at any
of the Sites after the Transfer Date.
(d) To the extent the Release(s) relate to activities conducted at either of
the Sites both prior to and after the Transfer Date, responsibility for
such Environmental Indemnifiable Losses shall be allocated between the
Transferor and the Buyer, the Transferor bearing responsibility for
Environmental Indemnifiable Losses attributable to Contaminants in
existence as at the Transfer Date and the Buyer bearing responsibility
for Environmental Indemnifiable Losses attributable to Contaminants
released subsequent to such date as well as New Contaminants, PROVIDED,
HOWEVER, that the Buyer shall bear the costs of any additional
Environmental Indemnifiable Losses resulting from (i) a change in
Environmental Law after the Transfer Date, and (ii) a change in the use
of raw materials, industrial procedures or processes and/or activities by
the Companies at any of the Sites after the Transfer Date.
(e) The allocation of responsibility between the Buyer and the Transferor
shall be determined on the basis of the third party Environmental
Assessments set forth in APPENDIX 8.1.1.(q)(i) hereto establishing the
level and nature of contamination of the Sites and the usage of Sites as
of the 1995 for the Company and 1994 for Ingal Stade. The allocation of
responsibility between the Buyer and the Transferor shall also be made on
the basis of any and all information provided by the Buyer to the
Transferor in accordance with the terms of SECTION 9.5 hereof and other
information available to the parties. Any dispute regarding the
allocation of responsibility herein that cannot be resolved by good faith
negotiation among the parties shall be submitted to such independent
environmental consulting group as may be mutually agreed between the
Buyer and the Transferor. In the event no agreement can be reached
between the Buyer and the Transferor within a fifteen (15) Business Day
period, either party shall be entitled to request the designation of an
environmental consulting group by the President of the Commercial Court
of Nanterre. Such consulting group shall make a determination as to the
appropriate allocation of responsibility for Remedial Action, based upon
its evaluation of the respective responsibilities of the parties with
regard to the relevant Releases that are subject of the Remedial Action,
taking the Environmental Assessment and any and all information provided
by the Buyer to the Transferor, in accordance with SECTION 9.5 hereof and
other relevant information, into consideration. The fees and expenses of
such consulting group shall be shared equally by the parties. The
decision of such consulting group shall be final, conclusive and binding
upon the Transferor and the Buyer in accordance with Articles 1592 and
2044 et seq. of the French Civil Code. In the event the consulting
31
group cannot allocate the responsibility between the Buyer and the
Transferor, the dispute shall be submitted to French courts pursuant to
ARTICLE 16 hereof.
9.2 SURVIVAL OF INDEMNIFICATION
(a) The representations and warranties of the Transferor that are contained
in this Agreement shall survive the Transfer Date as follows:
(i) the representations and warranties entitled "Financial Statements,
No Undisclosed Liabilities, Entire Business" set forth in SECTION
8.1.1.(d) shall survive the Transfer Date for a twelve (12) month
period; provided, however, that claims in respect of assets not
reflected in the Group Reference Positions shall be made only
within a period of six (6) months following the Transfer Date;
(ii) the representations and warranties entitled "Capital and Shares of
the Companies", "Share Transfer" set forth at SECTIONS 8.1.1.(b)
and 8.1.1.(c) hereof, shall survive the Transfer Date for an
indefinite term;
(iii) the representations and warranties made under SECTION
8.1.1.(e)(iii) pertaining to tax matters shall survive the
Transfer Date until the expiration of the applicable statute of
limitations (in France or Germany, as the case may be);
(iv) the indemnity obligations of the Transferor pertaining to the
Release of Contaminants not related to the conduct of the Gallium
Business as set forth at SECTION 9.1(c) shall survive the Transfer
Date for a period of forty (40) years;
(v) the indemnity obligations pertaining to the Release of
Contaminants related to the conduct of the Gallium Business as set
forth at SECTION 9.1(c) AND (d) shall survive the Transfer Date
for a period of ten (10) years.
(vi) the remainder of the representations and warranties shall survive
the Transfer Date for a period of twenty-four (24) months.
(b) The representations and warranties of Buyer that are contained in this
Agreement shall survive the Transfer Date until the expiration of the
applicable statute of limitations.
(c) Except when another time period is specified herein, all of the
covenants in this Agreement will survive until they have been performed
in full. Once notice of a claim has been properly served, that claim
will survive until it has been agreed between the parties or finally
determined by a competent authority as specified herein.
9.3 LIMITATIONS ON INDEMNIFICATION
(a) The maximum aggregate indemnification liability of the Transferor under
this Agreement shall be as follows:
(i) sixty million French Francs (FRF 60,000,000) in the aggregate for
(a) all breaches of representations and warranties pursuant to
this Agreement, and (b) Remedial Actions or Environmental
Indemnifiable Losses pertaining to the Release of
32
Contaminants related to the conduct of the Gallium Business prior
to the Transfer Date; provided, however, that in no event shall
the Transferor's liability under this Agreement for Remedial
Actions or Environmental Indemnifiable Losses pertaining to the
Release of Contaminants related to the Gallium Business exceed the
following maximum amounts:
Year 1 FRF 60 million
Year 2 FRF 54 million
Year 3 FRF 48 million
Year 4 FRF 42 million
Year 5 FRF 36 million
Year 6 FRF 30 million
Year 7 FRF 24 million
Year 8 FRF 18 million
Year 9 FRF 12 million
Year 10 FRF 6 million
Year 11 FRF 0
(ii) unlimited for Environmental Indemnifiable Losses pertaining to the
Release, prior to the Transfer Date, of Contaminants not related
to the Gallium Business; provided, however, that in the event the
Environmental Indemnifiable Loss results from a spill, an
accident, a permanent or temporary cessation (other than a
cessation of the Gallium Business brought about as a direct result
of the Transferor's or its affiliates actions hereunder or under
any of the Related Agreements) of the Gallium Business or any
material change in the conduct of the Gallium Business, after the
Transfer Date, the Transferor's liability pursuant to this clause
(ii), shall be limited to sixty million French Francs (FRF
60,000,000).
(b) The maximum aggregate liability of GEO and the Buyer under this Agreement
shall be equal to sixty million French Francs (FRF 60,000,000).
(c) Subject to the last sentence of this Section 9.3(c), neither the Buyer or
GEO, nor the Transferor shall be entitled to indemnification for breach
of representations and warranties under SECTION 9.1 of this Agreement
unless the Losses (as defined in SECTION 9.1(a)) or, the Environmental
Indemnifiable Losses incurred by the Transferor, or the Buyer, as the
case may be, exceed two million French Francs (FRF 2,000,000) (the
"THRESHOLD") on the understanding that the unit amount of Loss (or the
aggregate Loss, when related to the same matter) to be indemnified shall
not be less than fifty thousand French Francs (FRF 50,000). If the
aggregate amount of such Losses or the Environmental Indemnifiable Losses
exceeds the threshold, the Indemnitor will be required to pay only the
amount in excess of the threshold. No threshold or minimum unit amount of
Loss shall apply in relation to any claim made by the Buyer in respect of
the Rhodia Inc. Inventories or the indemnity set forth in Section
9.1(a)(iii).
9.4 INDEMNIFICATION PROCEDURE
(a) Promptly after receipt by GEO and/or the Buyer or the Transferor, as the
case may be (in any such case, the "BENEFICIARY") and in any event within
the time periods set forth at paragraph (e) below of notice of any claim
or potential claim or the commencement of
33
any action by any person that is not a party to this Agreement (a "THIRD
PARTY CLAIM"), which could give rise to a right to indemnification
pursuant to SECTION 9.1, the Beneficiary shall give the party who may
become obligated to provide indemnification hereunder (the "INDEMNITOR")
written notice describing the Third Party Claim in reasonable detail.
(b) The Indemnitor shall have the right, at its option, to participate in or,
by giving written notice to the Beneficiary to elect to assume the
defense of such Third Party Claim, at the Indemnitor's own expense and by
its own counsel. If the Indemnitor undertakes to assume the defense of
any Third Party Claim, it shall promptly notify the Beneficiary of its
intention to do so, and the Indemnitor shall not be liable for any
expenses subsequently incurred by the Beneficiary in connection with the
defense thereof; provided, that the Indemnitor has taken reasonable steps
necessary to defend diligently such Third Party Claim. If the Indemnitor
decides not to assume the defense of the Third Party Claim, the
Beneficiary may assume the defense of such Third Party Claim. The
Beneficiary shall cooperate fully with, and provide appropriate
documentation as reasonably requested by, the Indemnitor and its counsel
in the compromise of, or defense against, any such Third Party Claim. In
any event, the Beneficiary shall have the right, at its own expense, to
participate in the defense of any Third Party Claim as to which the
Indemnitor has assumed the defense and compromise.
(c) Neither party shall have the right to settle a claim without the prior
written consent of the other party, which consent shall not be
unreasonably withheld.
(d) Any claim by a Beneficiary on account of Losses that does not result from
a Third Party Claim (a "DIRECT CLAIM") shall be asserted by giving the
Indemnitor prompt written notice of the nature of such claim and the
nature of any Losses that are or may be indemnifiable hereunder (promptly
after they become known by the Beneficiary).
(e) All notices of a Third Party Claim or a Direct Claim as set forth herein
must be given within thirty (30) days of the date that such party has
actual knowledge of facts or circumstances that could reasonably be
expected to give rise to such claim, or earlier if the notification
within the thirty (30) day period would increase the Indemnitor's
liability hereunder. All notices shall be in writing and shall describe
the claims in reasonable detail, provide all necessary documentation in
the possession of the party making the claim, and estimate the amount
claimed, if one is not given. Notwithstanding the foregoing, any tax
reassessment notice shall be notified to the Indemnitor within eight (8)
Business Days of receipt. If the party notifying such claim fails to do
so within the thirty (30) day period or the eight (8) Business Day
period, as the case may be, the party notifying such claim shall not be
entitled to claim against and, as the case may be shall be liable to the
Indemnitor for any Losses resulting from any increase to the Indemnitor's
liability under such claim due to such late notification.
(f) In the event of a Third Party Claim, the Indemnitor, its representatives
or outside consultants, shall be allowed during normal business hours
reasonable access to books, documents, and documentation of the Company
or of Ingal Stade, as the case may be, which are or could be relevant to
the Third Party Claim and shall benefit from the full cooperation of the
Company's and/or Ingal Stade's employees. All reasonable expenses
incurred by such employees shall be reimbursed by the Indemnitor.
34
(g) In the event a Third Party Claim is a claim by a governmental agency or
if a Direct Claim arises from a claim by a governmental agency, the
Beneficiary shall request all reasonable stays, extended delays or other
measures applicable to such claim in order to delay the payment of any
Losses (or Environmental Indemnifiable Losses) until the resolution of
such claim.
9.5 PROCEDURE FOR REMEDIAL ACTION
(a) From and after the Transfer Date, the Buyer shall inform the Transferor
in writing of:
(i) the results of all such measurements and sampling of
Contaminants on any of the Sites as may be undertaken by the
Buyer, the Company or Ingal Stade or any of their affiliates
and which the Buyer has reasonable basis to believe may give
rise to a claim for Environmental Indemnifiable Losses against
the Transferor.
(ii) any Release required to be reported to governmental entities
under Environmental Laws or which, the Buyer has reasonable
basis to believe, may give rise to a claim for Environmental
Indemnifiable Losses against the Transferor; and
(iii) any material changes in the use of raw materials and/or
industrial procedures or processes, in the activities on the
Sites, and/or the use of New Contaminants to the extent such
changes may be relevant to the allocation of responsibility
between the Buyer and the Transferor pursuant to this SECTION
9.5.
(b) Subject to the terms and conditions of SECTION 9.4 of this Agreement, if
a Third Party Claim (including from a governmental entity and whether
oral or written) is made against the Buyer with respect to a Remedial
Action to be indemnified by the Transferor pursuant to this Agreement,
the Buyer shall promptly inform the Transferor of any pending or
threatened claim or enforcement action, the nature and basis of such
claim, the estimated claim amount, and notify in advance and afford the
Transferor the opportunity to participate in any proposed meeting or
proceeding with such third party. The Buyer shall also provide to the
Transferor all relevant information and documents received from such
third party or in its possession or in the possession of the Companies.
The Transferor shall have the right to visit the Sites which are the
object of a Remedial Action and to conduct or cause to be conducted (at
its own expense and risk) environmental inspections thereof. The
Transferor shall use all reasonable efforts to reduce any intrusion upon
the Buyer's, the Company's or Ingal Stade's operations attendant to any
environmental inspection.
(c) The Transferor shall be entitled to conduct or cause an independent
consultant of its choice to conduct the Remedial Action until full
completion; it being understood and agreed between the parties that the
Buyer shall, fully cooperate with the Transferor in the performance of
the Remedial Action in order to allow the Remedial Action to be performed
at the lowest cost and in a timely manner. The Transferor shall use all
reasonable efforts not to unreasonably disrupt the Buyer's, the Company's
or Ingal Stade's operations attendant to any environmental inspection or
Remedial Action.
35
(d) If the Transferor does not promptly choose to conduct the Remedial Action
itself or through an independent consultant, the Buyer and the Transferor
shall agree on the scope, nature, methodology and cost of such Remedial
Action in accordance with Environmental Laws, prior to the conduct of the
Remedial Action. To this effect, the parties shall jointly prepare a
written document describing in detail the timing, scope, nature,
methodology and cost of Remedial Actions ("PLAN"), unless the Transferor
has not used its best efforts to promptly agree on the Plan. The Plan
shall also include the name of the entity in charge of the conduct of the
Remedial Actions. Any amendment to the Plan shall be made through the
written consent of both parties. The Transferor shall not be liable for
any amendments to the Plan made without its prior written consent or for
any Remedial Action taken outside the scope of the Plan with the same
purpose as the Plan. In case of dispute regarding the Plan, the parties
shall cause an independent environmental consulting firm mutually
agreeable to them, to resolve the dispute. In the event no agreement can
be reached between the Buyer and the Transferor within a fifteen (15)
Business Day period, either party shall be entitled to request the
designation of an environmental consulting group by the President of the
Commercial Court of Nanterre. In the event the consulting group cannot
make a final determination on the Plan, the dispute shall be submitted to
the French courts pursuant to ARTICLE 16 hereof.
(e) It is understood and agreed between the parties that all Remedial Actions
shall be conducted at the lowest costs available provided that the use of
the lowest cost Remedial Action shall not unduly interfere with the
Buyer's business or the quality of work performed.
(f) The Buyer shall not take any environmental action that may materially
increase the Transferor's liability hereunder without the Transferor's
prior written approval (in particular, the Buyer shall not initiate
contact or provide information to any environmental governmental
authority with respect to any Release or Remedial Action), except (i) as
required by law, (ii) in the event of a serious emergency or (iii) where
the Transferor's consent to such action is being unreasonably withheld or
delayed.
9.6 PAYMENT
(a) All indemnification payments made under this ARTICLE 9 shall be payable
with respect to any claim concerning Losses (including Environmental
Indemnifiable Losses) upon (i) the resolution of such claim by mutual
agreement between the Transferor and the Buyer, (ii) the issuance of a
final judgement, award, order or other ruling (from which an appeal has
not been promptly lodged or which is not subject to appeal or with
respect to which the time for appeal has elapsed) by a court or arbitral
tribunal having jurisdiction over the parties and the subject matter of
such claim or to which such claim was submitted for resolution by joint
agreement between the Transferor and the Buyer (iii), the final
settlement of such claim with a third party pursuant to mutual
authorization by the Transferor and the Buyer or (iv) upon the existence
of a payment obligation of the Companies vis-a-vis the tax
administration.
(b) The amount of any indemnity payable hereunder on account of Losses or
Environmental Indemnifiable Losses shall be reduced by any insurance
proceeds received by the Beneficiary with respect thereto (subject to the
provisions of clause (f) below), and further reduced by the value of any
net tax benefit or tax savings realized by the
36
Beneficiary as a result of or related to the foregoing (including without
limitation a tax deduction or loss, basis adjustment and/or shifting of
income, deductions, gains, loss and/or credits), and increased by any tax
incurred by the Beneficiary as a result of or related to the foregoing
(including without limitation any tax related to the inclusion, if
required by law, in gross income of insurance proceeds or a payment
pursuant hereto). Furthermore it is understood and agreed that neither
party shall be entitled to double recovery under this Agreement.
(c) Any indemnity payment by any party on account of Environmental
Indemnifiable Losses or related to a Direct Claim shall be understood to
constitute damages and not a reduction in the Transfer Price. Such
payment shall be made to the entity which shall have directly suffered
the damage, provided that, upon request, the payment of Losses (or
Environmental Indemnifiable Losses) by the Indemnitor with respect to a
Third Party Claim may be made directly to the third party claimant.
(d) Each party shall have the right to request the other party to take any
reasonable action or to cause any of the Companies to take any reasonable
action, to mitigate the consequences of any tax reassessment (including
actions vis-a-vis customers or suppliers to mitigate the consequences of
VAT reassessment), provided that costs incurred by the other party as a
result thereof be reimbursed by the party requesting the mitigating
actions.
(e) The parties hereby acknowledge that the provisions of this ARTICLE 9
shall be their sole and exclusive monetary remedy for any claim arising
out of this Agreement (except for SECTION 10.1.(g)) and each party hereby
waives any claim against the other not explicitly provided for herein for
indemnification, contribution or other recourse for monetary damages.
(f) The parties hereby undertake and agree on their behalf and on behalf of
their insurance companies not to initiate any action against the other
party's insurance company with respect to claims arising in connection
with this Agreement
ARTICLE 10
----------
COVENANTS
---------
10.1 COVENANTS OF THE TRANSFEROR
The Transferor hereby covenants and agrees that:
(a) BUSINESS IN ORDINARY COURSE
Between the date of this Agreement and the Transfer Date, the Transferor
shall, and shall procure that the Companies shall conduct the Gallium
Business in the ordinary course and consistent with past practice. In
addition, between the date of this Agreement and the Transfer Date except
in relation to the Contribution, or the purchase of the Ingal Stade
shares by the Company, the Transferor shall not (in relation to the
Gallium Business) and shall procure that the Companies shall not, without
the consent of the Buyer or GEO:
37
(i) purchase or sell, or make any commitment to purchase or sell, any
machinery, equipment or product valued in excess of FRF 500,000
(five hundred thousand French Francs);
(ii) make any capital expenditure in excess of FRF 500,000 (five
hundred thousand French Francs);
(iii) borrow any funds or incur, assume, acquire or guarantee any
obligation or liability (contingent or otherwise) except in the
ordinary course of business and consistent with past practice;
(iv) declare or pay any dividend or other distribution with respect to
the capital stock of the Companies;
(v) purchase, redeem, issue, sell or otherwise acquire or dispose of,
either directly or indirectly, any of the capital stock or
reclassify, split up or otherwise change any of the capital stock
of the Companies or grant or enter into any options, warrants or
calls or other rights to purchase or convert any obligation into
any of the capital stock of the Companies;
(vi) sell, assign, transfer, convey, lease, pledge, encumber or
otherwise dispose of or agree to sell, assign, transfer, convey,
lease or otherwise dispose of any material portion of the assets
or properties of the Transferor (relating to the Gallium Business)
or the Companies, or any other material right except for sales of
Gallium in the ordinary course of business;
(vii) grant or extend any power of attorney or any guarantee;
(viii) increase the rate or terms of compensation payable or to become
payable by any Company to any director, officer, or employee or
increase the rate or terms of any bonus, severance payment right,
pension, or other employee benefit plan covering any director,
officer, or employee;
(ix) enter into any employment or severance agreement with any
employee, officer, or director;
(x) pay, discharge, or satisfy any claims, liabilities, liens, or
obligations (absolute, accrued, contingent, or otherwise) that
exceed FRF 500,000 (five hundred thousand French Francs) in the
aggregate other than in the ordinary course of business;
(xi) mortgage, pledge, or subject to lien or other Encumbrance any of
its property other than in the ordinary course of business;
(xii) make any change in any method of accounting or accounting
principle or practice;
(xiii) write up the value of any inventory or other assets;
(xiv) except as contemplated herein, organize any subsidiary or acquire
any capital stock of any entity or any equity interest in any
business;
38
(xv) agree to do any of the foregoing.
(b) CONTRIBUTION AGREEMENT AND TRANSFER OF INGAL STADE SHARES
Prior to the Transfer Date, the Transferor shall (i) complete the
Contribution and effect the corresponding increase in share capital with
the issuance to the Transferor of the new shares in the Company, and (ii)
cause Rhodia Deutschland to complete the transfer of the Ingal Stade
Shares to the Company.
(c) SUPPLEMENTAL DISCLOSURE
Between the date hereof and the Transfer Date, the Transferor shall be
able to supplement or amend the Appendices hereto or add additional
Appendices with respect to any matter necessary to update any information
called for under this Agreement but only in respect of matters arising
after the date hereof but prior to the Transfer Date; PROVIDED, HOWEVER,
that if any such supplemental disclosure would have an adverse effect on
the Gallium Business or Ingal Stade, the Transferor and the Buyer shall
agree on the monetary amount of such loss, and the Transferor shall
indemnify the Buyer on a Franc for Franc basis the amount of such loss
but only if such amount(s) exceeds fifty thousand French Francs (FRF
50,000) in the aggregate. Following any such Appendix addition,
supplement or amendment, any related representation or warranty of the
Transferor contained in this Agreement shall be deemed to be qualified,
supplemented or amended in accordance therewith.
(d) DIRECTORS' RESIGNATIONS
The Transferor shall cause the Companies' directors to terminate their
offices as directors as of the Transfer Date.
(e) CORPORATE NAME
The Transferor shall cause the Company to change its corporate name to
GEO Gallium effective as of the Transfer Date.
(f) POWERS OF ATTORNEY
The Transferor shall cause the Companies to terminate the powers of
attorney listed in APPENDIX 10.1.(f) hereto, effective on the Transfer
Date.
(g) NON-COMPETITION
(i) For a period of seven (7) years from the Transfer Date, the
Transferor shall not and shall procure that no other member of the
Rhodia Group shall carry on any activity competing with the
activity of the Gallium Business, irrespective of the form or
capacity in which such activity would be carried on and whether
directly or indirectly (including direct or indirect interests in
other companies or entities, corporate functions or offices or the
performance of services).
39
(ii) The non-competition obligation stipulated herein shall also apply
to any and all companies whatsoever, whether persons or entities,
that directly or indirectly, hold at least 50% of the Transferor's
capital or voting rights.
(iii) The non-competition obligation stipulated in the present paragraph
(g) concerns gallium compounds and shall be applicable in Taiwan,
Korea, Singapore, Japan, Israel, Australia, the United States and
Europe (including Russia).
(iv) The Transferor, for itself and on behalf of the members of the
Rhodia Group, agrees that none of them shall solicit any officer,
director or employee employed by any of the Companies.
(v) Notwithstanding the foregoing, the covenants in SECTIONS
10.1(g)(i), (ii), (iii) AND (iv) above shall in no event be
applicable to any of the following:
(A) Any direct or indirect ownership interest of the
Transferor or any member of the Rhodia Group in, but not
any active participation beyond the exercise of shareholder
or similar voting rights in the management, operation or
control of (x) any company engaged in the same activity as
the activity conducted by the Gallium Business (a
"COMPETING BUSINESS"), which derived less than ten percent
(10%) of its consolidated revenues from activities
competitive with the Gallium Business ("COMPETING
ACTIVITY") in its most recent fiscal year for which
published financial information is available, or (y) any
Competing Business, so long as such ownership interest
consists entirely of securities representing less than five
percent (5%) of the outstanding equity interests in such
Competing Business and such securities are listed for
trading on a recognized stock exchange.
(B) The acquisition or ownership, for investment purposes only,
of any publicly traded non convertible debt securities
(including commercial paper) of any Competing Business.
(C) The acquisition or ownership, for investment purposes only,
by any employee savings, retirement or similar benefit
plan, of any ownership interest in, or debt securities
(including commercial paper) of, any Competing Business;
PROVIDED that all of the investment decisions for such
benefit plan in respect thereof are made by an independent
trustee or trustees or an independent investment manager or
managers.
(D) The acquisition by the Transferor or any of its affiliates
(a "ACQUIRING PERSON"), as the case may be, in the context
of any acquisition, merger, joint venture, asset purchase,
or any other business combination, of an ownership interest
in any Competing Business which derived twenty percent
(20%) or more of its consolidated revenues from a Competing
Activity in its most recent fiscal year for which published
financial information is available, so long as the
following procedure is followed:
(i) The Acquiring Person shall use its best efforts to
promptly sell the Competing Activity to a person or
persons who are not an affiliate of
40
the Transferor within one (1) year following the
closing of the acquisition of such Competing
Activity.
(ii) The Buyer shall have a right of first offer with
respect to any sale contemplated in paragraph (i)
above, in accordance with the following procedure:
(x) The Acquiring Person shall provide the Buyer
with exclusive access, for a period of thirty
(30) days from the date the Acquiring Person
initiates its selling efforts, to relevant
business and financial information with
respect to the Competing Activity and shall
negotiate exclusively with the Buyer for such
thirty (30) day period, during which the
parties shall negotiate in good faith with a
view to establishing mutually agreeable
binding terms of purchase and sale.
(y) To the extent the parties are unable to reach
such binding terms within such period, the
Acquiring Person may thereafter provide
information to and enter into negotiations
with third party bidders, PROVIDED that the
Acquiring Person shall not be entitled to
sell such Competing Activity to a party other
than the Buyer at a price lower than the
price initially offered by the Buyer.
(z) If the Acquiring Person does not sell the
Competing Activity in the time period
contemplated by paragraph (D)(i) above and
pursuant to paragraph (D)(ii) above, the
Parties shall negotiate in good faith to find
an alternative solution.
(E) Any other business arrangements with a Competing Business,
PROVIDED that such arrangements do not involve the
Competing Activity and further do not involve any ownership
interests in Competing Business which would not be
permitted under the above provisions of this SECTION
10.1(g)(v).
10.2 GEO AND THE BUYER'S COVENANTS
(a) SHAREHOLDERS' MEETING
On the Transfer Date, the Buyer shall cause the Companies to hold a
shareholders' meeting in order to (i) approve the resignation of their
directors, (ii) appoint new directors, (iii) change the registered
addresses.
(b) INSURANCE
The Buyer acknowledges and agrees that the Companies shall cease to be
covered by the Transferor's group insurance policies effective at the
time of the Closing on the Transfer Date and that the Buyer shall provide
the Companies with adequate insurance coverage for the conduct of the
Gallium Business as of that time on the Transfer Date.
41
(c) "XXXXX-XXXXXXX", "RHO", "RHODIA" AND "RHONE" NAMES AND LOGOS
The Buyer acknowledges and agrees that neither the Buyer, nor the
Companies shall acquire hereunder the right to use the "Xxxxx-Xxxxxxx",
"Rho", "Rhodia" and "Rhone" names and logos. As a general rule, the Buyer
shall, at its own expense, cease using all names, trademarks, graphics
and logos and all other distinctive signs belonging to the Transferor
and/or any member of the Rhodia Group or the Xxxxx-Xxxxxxx group as soon
as possible in connection with the business of the Companies,
irrespective of the medium, and in any event no later than three (3)
months after the Transfer Date.
(d) REGULATORY FILINGS
Promptly after the Transfer Date, the Buyer shall (i) cause the Companies
to file a declaration with the competent environmental governmental
entities regarding the change in control of the Salindres Site and Ingal
Stade, (ii) provide to the Transferor evidence of such filing in a timely
manner and (iii) proceed to all filings and formalities required under
applicable laws to be completed after the purchase of the Shares by the
Buyer. The Transferor shall provide such assistance to the Buyer as may
be reasonably required in regard to the maters referenced in this Section
10.2(d).
(e) MAINTENANCE OF GALLIUM ACTIVITY AT SALINDRES SITE
The Buyer shall maintain the gallium activity on the Salindres Site at
current operational levels for a duration of at least five (5) years, and
shall maintain the current employment level at the Salindres Site for the
minimum five (5) year period, except (i) in the event of a material
downturn in the worldwide Gallium Business; provided, however, that in
any event during the five year period, the Buyer shall not be entitled to
transfer the conduct of the French purification activity to Germany, (ii)
in the event of a Force Majeure but solely for the duration of the Force
Majeure, (iii) in the event the Transferor were to cease its own
activities on the Salindres Site, (iv) in the event the course of
business between AOS and Ingal Stade is materially altered by AOS to the
material detriment of the Gallium Business. If after the five-year
period, the Buyer decides to cease the gallium activity on the Salindres
Site and to sell the buildings thereon (other than in connection with a
sale of the business), the Buyer shall offer to the Transferor a right of
first refusal to purchase such buildings at their net book value, and the
Buyer shall not sell the buildings at a lower price than the price
offered to the Transferor unless the Transferor declines at any lower
price also. The Buyer shall not be obligated under this clause to the
extent any employee retires, resigns or is terminated for good reason by
the Company.
(f) ACCESS TO FILES AND INFORMATION
For the purposes of ARTICLES 4 AND 6 only, the Buyer shall arrange for
the Companies to allow the representatives of the Transferor and the
audit and/or consulting firms concerned reasonable access to the
information and files of the Companies from the Transfer Date, on the
understanding that said access shall not disrupt the ordinary course of
business.
The representatives of the Transferor and the audit and consulting firms
shall keep all
42
information and all documents disclosed to them in this context strictly
confidential.
(g) SOCIAL BENEFITS
The parties acknowledge that the IRP and CAVDI retirement plans will
cease to be applicable to the employees of the Company as of the Transfer
Date. However, the parties have agreed to maintain a provision for
retirement costs in relation to the IRP and CAVDI retirement plans in the
Control Position.
As a result, Buyer hereby undertakes to cause the Company to offer to its
employees a supplemental retirement plan managed by an internationally
recognized insurance policy and offering benefit and coverage globally
similar to the benefit and coverage of the IRP and CAVDI regimes and
corresponding to the provisions in the accounts of the Company.
(h) TRANSFER OF REGISTERED OFFICE
The Buyer shall cause the Company to change the address of its registered
office on the Transfer Date.
(i) GUARANTEE OF GEO
GEO irrevocably and unconditionally guarantees the due and timely
performance by the Buyer of all its obligations undertaken in this
Agreement. All obligations undertaken by the Buyer herein shall be
considered a direct and primary obligation of GEO.
10.3 MUTUAL COVENANTS
(a) CONFIDENTIALITY
Each of the parties, their representatives, employees, directors and
outside consultants shall treat the contents of this Agreement as well as
information obtained on the other party as confidential and shall refrain
from disclosing this Agreement, in whole or in part to any third party,
except as required by any laws or regulations of governmental entities
(including the Securities and Exchange Commission) or by the employees'
representatives or banks financing the transactions contemplated herein
in which case, the disclosing party shall give prior notice to the other
party, and if requested by such other party, the disclosing party shall
seek to obtain a protective order or similar protection. The Transferor
acknowledges that GEO will be required to disclose the terms of this
Agreement in connection with it obligations under the Securities Exchange
Act of 1934. The Transferor will not take any action seeking to prevent
or limit such disclosure. Any breach of this confidentiality obligation
by a representative, employee, director or outside consultant of any
party shall be considered to be a breach of such party's obligations.
(b) PUBLICITY
Subject to the matters referenced in SECTION 10.3(a), the Transferor and
the Buyer agree that, from the date hereof through the Transfer Date, no
public release or announcement concerning the transactions contemplated
hereby shall be issued by either party without the prior consent of the
other party (which consent shall not be unreasonably withheld),
43
except as such release or announcement may be required by law or the
rules or regulations of any governmental entity, in which case the party
required to make the release or announcement shall allow the other party
reasonable time to comment on such release or announcement in advance of
such issuance.
(c) BEST EFFORTS
Subject to the terms and conditions of this Agreement, each party shall
use its best efforts to cause each of the conditions to Closing
applicable to it to be fulfilled.
(d) COOPERATION
Each of GEO and the Buyer and the Transferor shall furnish or cause to be
furnished after the Transfer Date, upon reasonable written notice to the
other party and its employees, counsel, auditors and representatives
access, during normal business hours, such information and assistance
relating to the Companies as is reasonably necessary for financial
reporting and accounting matters, the preparation and filing of any tax
returns, reports or forms or the defense of any tax claim or assessment
or the response to any inquiry made by the tax authorities, as well as
the preparation of any filing or submission which is necessary under any
applicable legislation, rules or regulations including the Law n(degree)
89-935 of December 29, 1989. The Transferor shall provide access to GEO
and its advisors to such material pertaining to the Gallium Business in
the Transferor's possession as may be reasonably necessary in order for
GEO to comply with the provisions of the Securities Exchange Act of 1934
and applicable rules in relation to the transactions contemplated herein.
The Transferor shall provide GEO's advisors with such co-operation as may
be reasonably requested by GEO in connection with the required
disclosures under US securities laws (which may include causing
PriceWaterHouse to conduct the necessary audit of the Gallium Business or
provide such information as may be reasonably requested to have GEO
conduct an audit of the Gallium Business); it being understood that in no
event shall Rhodia be required to give any warranty or representation to
GEO or GEO's auditors in this respect. The Buyer shall provide the
Transferor access to records kept on data processing systems in relation
to any tax reassessment or to any tax audit made by the tax authorities
and concerning the Companies. The Transferor and the Buyer shall keep
each other apprised of the status of any communication with, and any
inquiries or requests for additional information from, any governmental
entity, and shall comply promptly with any such inquiries or requests.
Each of the Transferor and the Buyer shall use its best efforts to obtain
any governmental consents required. It is understood and agreed that the
party requesting information or co-operation from the other party in
respect of this clause shall pay the other party's reasonable expense.
(e) RELATED AGREEMENTS
On the Transfer Date (immediately after the Closing), the parties
hereto shall cause the Companies and companies of the Rhodia Group, as
applicable, to enter into the following agreements:
- Services Agreement;
- Utilities Agreement;
- Research and Development Services Agreement;
44
- Confidentiality Agreement;
- Purchase Option Agreement;
in the form attached hereto as APPENDIX D, (collectively, the "RELATED
AGREEMENTS"), except that it is understood and agreed between the parties
that the Buyer has not had the opportunity to review the Appendices to
the Purchase Option Agreement and therefore the Appendices have yet to be
agreed.
(f) EASEMENTS
The parties hereto acknowledge and agree that (i) in order to conduct the
Gallium Business as currently being conducted, the Company has rights of
access and Easements on the portion of the Salindres Site it does not
own, and (ii) in order to conduct their activities, the Transferor and
other members of the Rhodia Group have rights of access and Easements on
the Salindres Site owned by the Transferor in relation to the Gallium
Business (in particular for the maintenance of pipes). The parties
further acknowledge and agree that the Salindres Site is subject to legal
easements ("servitudes legales" such as "regles d'urbanisme") and these
rights of access and Easements have not been identified and precisely
listed in the Appendices hereto as of the date hereof. The parties
undertake and agree to use their best efforts to identify and formalize
these rights of access and Easements as well as any rights and Easements
necessary for the conduct of their future activities, as soon as possible
following the date hereof by way of a notarized deed. The costs of these
formalities shall be borne by the Transferor. The Transferor agrees to
grant to the Company such rights of access necessary for the proper
operation of the Gallium Business at the Salindres Site as currently
being conducted to the extent it does not unreasonably disrupt the
Transferor's activities and the other activities of third parties on the
Salindres Site. The Transferor also agrees to use its best efforts to
obtain the release of any mortgage ("hypotheque") or pledge
("nantissement") if any, existing as of the Transfer Date on the assets
contributed to the Company.
(g) PINJARRA ASSETS
The parties acknowledge and agree that none of the assets (including the
patents or other intellectual or industrial property rights) of Pinjarra
shall be transferred or acquired by the Buyer or GEO by virtue of this
Agreement. Nothing in this Agreement or in the Appendices hereto shall be
interpreted as a transfer of ownership of these assets to GEO or the
Buyer.
(h) REGISTRATIONS
The parties acknowledge and agree that as set forth in APPENDIX 8.1.1
(f)(ii) the Intellectual Property Rights and Patent Rights are not all
registered in the name of the Transferor or Ingal Stade on the date
hereof. As a result, the Transferor undertakes and agrees to promptly and
diligently proceed to all registration formalities required to register
the Intellectual Property Rights and Patent Rights in the name of the
Company or Ingal Stade and then to proceed to all formalities required in
respect of the Intellectual Property Rights and Patent Rights pursuant to
the Contribution. All relevant costs, fees and expenses shall be borne by
the Transferor.
45
ARTICLE 11
----------
CONDITIONS TO CLOSING
---------------------
11.1 CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer to complete the purchase of the Shares on the
Transfer Date are subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT
The Transferor's representations and warranties made in this Agreement
shall be true and correct in all material respects as of the date hereof
and as of the Transfer Date (except to the extent such representations
and warranties expressly relate to an earlier date, in which case they
shall have been true and correct as of such date).
(b) COMPLIANCE WITH AGREEMENT
The Transferor shall have performed and complied in all material respects
with all of its obligations under this Agreement, or shall have cured any
instance of material non-performance or non-compliance, at or before the
Transfer Date.
(c) CONTRIBUTION AGREEMENT AND TRANSFER OF INGAL STADE SHARES
The Transferor shall have (i) completed the Contribution and effected the
corresponding increase in share capital with the issuance to the
Transferor of the new shares in the Company, and (ii) Rhodia Deutschland
shall have completed the transfer of the Ingal Stade Shares to the
Company.
11.2 CONDITIONS TO OBLIGATIONS OF THE TRANSFEROR
The obligations of the Transferor to complete the sale of the Shares as of the
Transfer Date are subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT
GEO and the Buyer's representations and warranties made in this Agreement
shall be true and correct in all material respects as of the date hereof
and as of the Transfer Date (except to the extent such representations
and warranties expressly relate to an earlier date, in which case they
shall have been true and correct as of such date).
(b) COMPLIANCE WITH AGREEMENT
GEO and the Buyer shall have performed and complied in all respects with
all of its obligations under this Agreement, or shall have cured any
instance of material non-performance or non-compliance, at or before the
Transfer Date.
46
11.3 MUTUAL CONDITIONS
(a) CONSULTATIONS
All statutorily or contractually required consultations, including those
of employees' representatives shall have been made and statutorily or
contractually and required opinions of the employees' representatives
shall have been rendered.
(b) NO REGULATORY IMPEDIMENT
No statute, rule, regulation, executive order, decree, temporary
restraining order, preliminary or permanent injunction or other order
enacted, entered, promulgated, enforced or issued or other legal
restraint or prohibition preventing the purchase of the Shares by the
Buyer shall be in effect.
ARTICLE 12
----------
TERMINATION
-----------
12.1 TERMINATION EVENTS.
This Agreement may, by notice given prior to or at the Closing, be terminated:
(a) by either the Transferor or the Buyer upon ten (10) Business Days prior
notice to the other if a material breach of any provision of this
Agreement has been committed by the other party and such material
breach has not been cured or waived during such ten (10) Business Day
period;
(b) by the Buyer upon simple notice to the Transferor if any of the
conditions precedent in ARTICLE 11.1 has not been satisfied as of
October 1, 1999 or if satisfaction of any such condition precedent is
or becomes impossible (other than as a result of the failure of the
Buyer to comply with its obligations under this Agreement) and the
Buyer has not waived such condition precedent on or before the Closing;
(c) by the Transferor upon simple notice to the Buyer if any of the
conditions precedent in ARTICLE 11.2 has not been satisfied as of
October 1, 1999 or if satisfaction of any such condition precedent is
or becomes impossible (other than as a result of the failure of the
Transferor to comply with its obligations under this Agreement) and the
Transferor has not waived such condition precedent on or before the
Transfer Date;
(d) by either party upon simple notice if the Closing has not occurred on
or before November 1, 1999, or such later date as the parties may agree
upon; provided the terminating party is not in material breach of its
obligations hereunder;
(e) by mutual written consent of the Buyer and the Transferor.
12.2 EFFECT OF TERMINATION.
47
Unless termination of this Agreement is due to the breach of a party's
obligations hereunder, neither party shall be liable to the other regarding this
Agreement or the fact that this Agreement was not consummated, in particular,
but without limitation if termination is a result of any governmental or
regulatory impediment.
ARTICLE 13
----------
MISCELLANEOUS
-------------
(a) COSTS/EXPENSES
Each of the parties shall bear the cost of all expenses incurred by it
prior to execution of this Agreement, notably the fees and costs of its
own lawyers, accountants and other consultants.
(b) APPENDICES/ENTIRE AGREEMENT
The Appendices are an integral part of this Agreement. A disclosure made
in any Appendix to this Agreement by a party hereto shall only be deemed
to have been made by such party in other Appendices in which a disclosure
would be applicable if such disclosure is not materially misleading and
provided that such party shall have attempted in good faith to identify
the representation and warranty to which such disclosure relates. The
provisions in this Agreement and the Appendices shall constitute the
entire agreement between the parties in respect of its purpose and shall
replace and cancel all prior warranties, representations, negotiations,
oral or written communications, acceptances, understandings or agreements
between the parties with respect to the provisions governed by or
provided for in this Agreement. Representations and warranties shall only
be disclosed against if the relevant representation and warranty
references an Appendix (except where an Appendix says "None").
(c) MODIFICATION
This Agreement can only be modified by a written amendment signed by the
parties. In particular, tolerance or failure to act by either party shall
not be construed as a waiver of its rights under this Agreement.
(d) SEVERABILITY
Should one of the Articles or Sections of this Agreement turn out to be
null and void or unenforceable (except for a condition to closing of the
Buyer which has not been satisfied):
(i) the validity and enforceability of the other Articles or Sections
shall in no way be affected and none of the parties shall be
entitled to claim damages solely because of said nullity or
unenforceability.
(ii) the parties shall negotiate in good faith in order to replace the
Article or Section concerned by one or more valid and enforceable
Articles or Sections whose tenor reflects the common intention of
the parties as closely as possible or, if no such
48
common intention can be determined, the intention of the party the
void or unenforceable Article or Section was supposed to protect.
(e) INTERPRETATION
In this Agreement, except if the context of the Article or Section
concerned or its wording shows that another interpretation is necessary :
(i) words used in the singular shall include the plural and
vice-versa;
(ii) references to any document (including this Agreement) shall be
deemed references to such document as amended, reiterated,
completed, modified or replaced at any time;
(iii) references to this Agreement shall be deemed references to this
Agreement, to the Appendices, which are an integral part of this
Agreement and have the same contractual force;
(iv) the titles of the Articles and Sections are for convenience only
and must be ignored in interpreting the Agreement;
(v) references to any of the parties to this Agreement include its
successors and beneficiaries;
(vi) references to a law or laws include reference to all international
treaties, constitutional provisions, decrees, ordinances,
regulations and rules resulting from a senior text (such as a
ruling) or judgement and the term "legal" shall be interpreted in
a similar way;
(vii) reference to a law shall be references to such law as amended,
completed, modified, replaced or interpreted at any time;
(viii) references to a judgement are references to any decision,
injunction, order, judgement, ruling, sentence or award by any
court or arbitrator;
(ix) references to a person are references to any natural or legal
person or any other entity, organization or subsidiary whatsoever,
whether or not it is considered a legal person.
(f) All modifications, claims, affidavits, demands, notices, summons and
other communications by virtue of this Agreement shall be sent in English
in writing and shall be deemed to have been given if sent by registered
letter with notice of receipt or by fax or telex confirmed by registered
letter with notice of receipt to the following addresses:
If the Transferor is the recipient:
Attn: Chief Financial Officer and General Counsel, Rhodia
Address: 00, xxxx Xxxx Xxxxxx - 00000 Xxxxxxxxxx Xxxxx, XXXXXX
Telex: 610500F RHON - Fax: 00-0-00-00-00-00
The date of receipt of the notice or communication shall be the date of
receipt of the
49
registered letter with notice of receipt.
With copy to:
Attn: Xxxxxx X. Xxxxxxx, Xx., Xxxxx, Day, Xxxxxx & Xxxxx
Address: 000 xxx xx Xxxxxxxx Xxxxx Xxxxxx - 00000 Xxxxx, XXXXXX
Fax: 00-0-00-00-00-00
The date of receipt of the notice or communication shall be the date of
receipt of the registered letter with notice of receipt.
If the Buyer is the recipient:
Attn:
Address:
Fax
The date of receipt of the notice or communication shall be the date of
receipt of the registered letter with notice of receipt.
If GEO is the recipient:
Attn: Chief Executive Officer, GEO Specialty Chemicals, Inc.
Address: 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, X.X.X.
Fax: 0-000-000-0000
The date of receipt of the notice or communication shall be the date of
receipt of the registered letter with notice of receipt.
With copy to:
Attn: Xxxxx X. Xxxxxxxx and Xxxxxx Welburn, Thompson, Xxxx & Xxxxx LLP
Address: 0000 Xxx Xxxxxx, 000 Xxxxxx Xxxxxx, Xxxxxxxxx, XX 00000-0000,
U.S.A.
Fax: 0-000-000-0000
The date of receipt of the notice or communication shall be the date of
receipt of the registered letter with notice of receipt.
(g) CURRENCY CHANGES
All payments and valuations pursuant to this Agreement shall be made in
French Francs. Upon the institution of any currency change (including
application of the EURO currency), the new currency shall replace the
French Francs herein in accordance with applicable laws and regulations.
(H) FURTHER ASSURANCES
The parties agree (i) to furnish upon request to each other such further
information, (ii) to execute and deliver to each other such other
documents, and (iii) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the interest
of this Agreement.
50
ARTICLE 14
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ASSIGNMENT
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The rights and obligations under this Agreement may not be assigned or delegated
by any party hereto, in whole or in part, to any third party without the prior
written consent of the other party; provided, however, that the Transferor or
GEO and/or the Buyer may assign this Agreement to a company of the Rhodia Group
or the GEO Group, respectively. Notwithstanding the foregoing, the benefit of
this Agreement shall automatically be transferred to any company or companies
which are successors to the rights of the parties, by way of an acquisition,
merger, partial asset contribution, dissolution and transfer of the business.
The company or companies coming into the rights of the parties shall substitute
the parties for all obligations incumbent on the parties to this Agreement. The
Transferor has no present intention to assign this Agreement.
ARTICLE 15
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REGISTRATION
------------
This Agreement shall be registered and the duties charged in application of
Article 726.1 of the General Tax Code shall be paid by the Buyer.
ARTICLE 16
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GOVERNING LAW - DISPUTES
------------------------
This Agreement shall be governed by French law. All disputes arising out of, or
in connection with, the present Agreement shall be finally settled by the
Commercial Court of Nanterre; provided, however, that if such claim is brought
by the Transferor, the Transferor shall pay the translation costs of documents
required to be translated from French to English. If the claim is brought by the
Buyer, and the Buyer desires a translation of documents which are in the French
language, the Buyer shall bear all translation costs.
51
ARTICLE 17
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ELECTION OF DOMICILE
--------------------
For the purpose of this Agreement and its sequels, each of the parties elects
domicile at its respective registered office.
Done in Courbevoie,
This 6th day of August, 1999
In 3 original copies, one for each of the parties
RHODIA CHIMIE S.A. GEO SPECIALTY CHEMICALS, INC.
/s/ Pierre-Xxxxx Xxxxxx /s/ Xxxxxx X. Xxxxxx
----------------------- ------------------------
By: Pierre-Xxxxx Xxxxxx By: Xxxxxx X. Xxxxxx
Title: Mergers and Acquisitions Title: President
Manager
