EXECUTION COPY
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ASSET PURCHASE AGREEMENT
AMONG
NATURAL SODA AALA, INC.,
AMERALIA, INC.,
WHITE RIVER NAHCOLITE
MINERALS LTD. LIABILITY CO.
AND
IMC GLOBAL INC.
DATED AS OF JANUARY 9, 2003
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND TERMS
Section 1.1 Certain Definitions.......................................................................1
Section 1.2 Other Terms..............................................................................12
Section 1.3 Other Definitional Provisions............................................................12
ARTICLE II PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
Section 2.1 Assets to be Purchased...................................................................12
Section 2.2 Excluded Assets..........................................................................14
Section 2.3 Assumed Liabilities......................................................................15
Section 2.4 Excluded Liabilities.....................................................................17
Section 2.5 Purchase Price; Purchase Price Adjustment................................................18
Section 2.6 Allocation of the Purchase Price; Tax Treatment of Adjustments and
Indemnifications.........................................................................................20
Section 2.7 Closings; Delivery and Payment...........................................................21
Section 2.8 Deliveries by Seller and Parent..........................................................21
Section 2.9 Deliveries by Buyer and AmerAlia.........................................................22
Section 2.10 Arrangement Regarding Outstanding Consents...............................................23
Section 2.11 Transfer Taxes...........................................................................24
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Section 3.1 Organization of Seller...................................................................24
Section 3.2 Authority of Seller and Parent; Binding Effect...........................................25
Section 3.3 Non-Contravention........................................................................25
Section 3.4 Consents and Approvals...................................................................26
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Section 3.5 Financial Information....................................................................26
Section 3.6 Absence of Undisclosed Liabilities.......................................................26
Section 3.7 Absence of Certain Changes or Events.....................................................27
Section 3.8 Litigation and Claims....................................................................27
Section 3.9 Compliance with Laws.....................................................................27
Section 3.10 Environmental Matters....................................................................28
Section 3.11 Material Contracts.......................................................................30
Section 3.12 Intellectual Property....................................................................31
Section 3.13 Taxes....................................................................................32
Section 3.14 Employee Benefit Plans...................................................................33
Section 3.15 Labor Relations and Employment...........................................................35
Section 3.16 Real Property; Personal Property; Sufficiency of Assets..................................36
Section 3.17 Insurance................................................................................37
Section 3.18 Books and Records........................................................................37
Section 3.19 Brokers, Finders Fees....................................................................37
Section 3.20 Bonds....................................................................................37
Section 3.21 No Other Commitments.....................................................................38
Section 3.22 Transactions with Affiliates.............................................................38
Section 3.23 Foreign Sales............................................................................38
Section 3.24 Solvency of Seller.......................................................................38
Section 3.25 Warranty Agreements; Warranty Claims.....................................................38
Section 3.26 Product Sales Orders.....................................................................39
Section 3.27 No Other Representations or Warranties...................................................39
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER AND AMERALIA
Section 4.1 Organization of Buyer and AmerAlia.......................................................39
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Section 4.2 Authority of Buyer and AmerAlia; Binding Effect..........................................40
Section 4.3 Non-Contravention........................................................................40
Section 4.4 Consents and Approvals...................................................................41
Section 4.5 Financial Capability.....................................................................41
Section 4.6 Litigation and Claims....................................................................41
Section 4.7 Compliance with Laws.....................................................................42
Section 4.8 Solvency of Buyer........................................................................42
Section 4.9 Brokers, Finders Fees....................................................................42
Section 4.10 No Other Representations or Warranties...................................................42
ARTICLE V COVENANTS
Section 5.1 Access and Investigation.................................................................42
Section 5.2 Conduct of Business......................................................................44
Section 5.3 Posting of Guaranty or other Security....................................................46
Section 5.4 Title Defects Identified in Title Insurance Commitments..................................46
Section 5.5 Further Assurances.......................................................................46
Section 5.6 Employee Matters.........................................................................48
Section 5.7 Post-Closing Cooperation; Filing of Tax Returns..........................................51
Section 5.8 Books and Records of the Business Post Closing...........................................52
Section 5.9 Customers and Other Business Relationships...............................................53
Section 5.10 Removing Excluded Assets.................................................................53
Section 5.11 No Negotiation...........................................................................53
Section 5.12 Certain Transactions.....................................................................53
Section 5.13 Notice of Breach.........................................................................54
Section 5.14 Nonsolicitation..........................................................................54
Section 5.15 Announcements............................................................................55
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Section 5.16 Confidential Information.................................................................55
Section 5.17 Change of Name; Removal of References to White River Name................................56
Section 5.18 Recordable Intellectual Property Assignments.............................................56
Section 5.19 Distribution Agreement...................................................................57
Section 5.20 Updated Financial Statements.............................................................57
Section 5.21 UIC Permit Transfer......................................................................57
Section 5.22 UIC Permit Revocation and Reissuance.....................................................57
Section 5.23 Extension or Renewal of Certain Contracts................................................57
Section 5.24 Cooperation in Obtaining Certain Governmental Authorizations.............................58
Section 5.25 Consents to Assignment...................................................................58
Section 5.26 Sale of Water Rights.....................................................................58
ARTICLE VI CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations of Buyer and Seller........................................59
Section 6.2 Conditions to the Obligations of Buyer...................................................59
Section 6.3 Conditions to the Obligations of Seller..................................................60
Section 6.4 Frustration of Closing Conditions........................................................60
ARTICLE VII SURVIVAL AND INDEMNIFICATION
Section 7.1 Survival.................................................................................61
Section 7.2 Indemnification by Buyer and AmerAlia....................................................61
Section 7.3 Indemnification by Seller and Parent relating to Matters other than UIC NOV's or
EPA's Failure to Transfer the UIC Permit.................................................................63
Section 7.4 Indemnification by Seller and Parent for UIC NOV's.......................................64
Section 7.5 EPA Failure to Transfer the UIC Permit...................................................64
Section 7.6 Indemnification Procedures...............................................................65
Section 7.7 Computation of Losses Subject to Indemnification.........................................67
Section 7.8 Certain Other Matters....................................................................67
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ARTICLE VIII TERMINATION
Section 8.1 Termination..............................................................................68
Section 8.2 Effect of Termination....................................................................69
ARTICLE IX RESCISSION
Section 9.1 Failure to Transfer UIC Permit...........................................................69
Section 9.2 Rescission...............................................................................70
Section 9.3 Estimated Rescission Adjustment Amount; Dispute Resolution; Payment......................70
Section 9.4 Rescission Closing.......................................................................72
Section 9.5 Documents................................................................................72
Section 9.6 Representations and Warranties of Buyer and AmerAlia.....................................72
Section 9.7 Covenants of Buyer and AmerAlia..........................................................72
Section 9.8 Conduct of Business......................................................................73
Section 9.9 Consents; Posting of Guaranty or Other Security..........................................75
Section 9.10 Arrangements Regarding Outstanding Consents..............................................75
Section 9.11 Indentures and Credit Restrictions.......................................................76
Section 9.12 Further Assurances.......................................................................77
Section 9.13 Intent and Interpretation................................................................77
ARTICLE X MISCELLANEOUS
Section 10.1 Notices..................................................................................78
Section 10.2 Amendment; Waiver........................................................................79
Section 10.3 Assignment...............................................................................79
Section 10.4 Risk of Loss.............................................................................80
Section 10.5 Entire Agreement.........................................................................80
Section 10.6 Expenses.................................................................................80
Section 10.7 GOVERNING LAW............................................................................81
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Section 10.8 Severability.............................................................................81
Section 10.9 Counterparts.............................................................................81
Section 10.10 Interpretation...........................................................................81
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LIST OF EXHIBITS
Section First
Exhibit Title Referenced
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Exhibit A Form of Xxxx of Sale Section 2.8(a)
Exhibit B Form of Deeds and Conveyance Documents of Owned Real Section 2.8(b)
Property
Exhibit C Form of Assignment and Assumption of Leased Real Section 2.8(b)
Property
Exhibit D Form of Assignment of Business Intellectual Property Section 2.8(c)
Exhibit E Form of Sublease Agreement for Railway Xxxxxx Cars Section 2.8(g)
Exhibit F Form of Transition Services Agreement Section 2.8(h)
Exhibit G Form of Instrument of Assumption Section 2.9(b)
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CONFIDENTIAL DRAFT
ASSET PURCHASE AGREEMENT dated as of January 9, 2003, by and among
Natural Soda AALA, Inc., a
Colorado corporation ("Buyer") and AmerAlia, Inc., a
Utah corporation ("AmerAlia"), on the one hand, and White River Nahcolite
Minerals Ltd. Liability Co., a
Colorado limited liability company ("Seller") and
IMC Global Inc., a Delaware corporation and the indirect beneficial owner of all
of the outstanding equity interests in Seller ("Parent"), on the other hand.
WITNESSETH:
WHEREAS, Seller owns and operates the Business (as hereinafter
defined);
WHEREAS, Seller is an indirect wholly-owned Subsidiary of
Parent;
WHEREAS, on the terms and subject to the conditions set forth
herein, Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, substantially all of the assets and rights of the Business (other than
those specifically excluded as described in this Agreement), and to assume
substantially all the liabilities relating thereto (other than those
specifically excluded as described in this Agreement);
WHEREAS, AmerAlia currently is the direct beneficial owner of
all of the outstanding stock of Natural Soda, Inc., which owns all of the
outstanding equity interests in Buyer, and at the time of Closing AmerAlia will
own a majority of the outstanding voting stock of Natural Soda, Inc.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto intending to be legally bound agree as
follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Certain Definitions. As used in this Agreement,
the following terms shall have the meanings set forth or as referenced below:
"Action" shall mean any claim, cause of action, suit,
proceeding or chose in action brought before any Governmental Authority or
arbitrator by any Person who is not a party to this Agreement and is not an
Affiliate of Seller or Buyer.
"Adjustment Amount" shall have the meaning set forth in
Section 2.5(c)(i).
"Adjustment Auditor" shall have the meaning set forth in
Section 2.5(c)(ii).
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with, such Person at anytime during the period for which the
determination of affiliation is being made.
"Agreement" shall mean this Agreement, together with the
Seller Disclosure Letter, the Buyer Disclosure Letter and all exhibits and
schedules, as the same may be amended or supplemented from time to time in
accordance with the terms hereof.
"Allocation" shall have the meaning set forth in Section
2.6(a).
"Appraiser" shall have the meaning set forth in Section
6.3(d).
"Approval of Equityholders" shall have the meaning set forth
in Section 3.2(a).
"Assets" shall have the meaning set forth in Section 2.1.
"Asset Acquisition Statement" shall have the meaning set forth
in Section 2.6.
"Assumed Contracts" shall have the meaning set forth in
Section 2.1(d).
"Assumed Liabilities" shall have the meaning set forth in
Section 2.3.
"Audited Adjustment Amount" shall have the meaning set forth
in Section 2.5(c)(ii).
"Audited Rescission Adjustment Amount" shall have the meaning
set forth in Section 9.3(b).
"Balance Sheet" shall mean the audited balance sheet of Seller
as of June 30, 2002.
"Base Purchase Price" shall have the meaning set forth in
Section 2.5(a).
"Best Efforts" shall mean the efforts that a reasonable Person
desirous of achieving a result would use in similar circumstances to achieve
that result as expeditiously and completely as possible, provided, however, that
a Person required to use Best Efforts under this Agreement will not be thereby
required to take actions that would result in a material adverse change in the
benefits to such Person under this Agreement and the transactions contemplated
hereby or to dispose of or make any material change to its business, expend any
material funds or incur any other material burden that is not otherwise required
in the ordinary course under the terms of any contract, insurance policy or
other instrument to which it is a party.
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"Xxxx of Sale" shall have the meaning set forth in Section
2.8(a).
"Bioproducts Agreement" shall have the meaning set forth in
Section 3.11(c).
"Bioproducts Sales Commitment" shall have the meaning set
forth in Section 2.5(c)(i)(B).
"BLM" shall mean the Bureau of Land Management, an agency of
the Department of the Interior of the United States of America.
"Business" shall mean the entire business and operations of
Seller for the production of sodium bicarbonate at facilities located in Rio
Xxxxxx and Garfield Counties,
Colorado, as currently conducted, including the
business conducted pursuant to contracts and agreements to which Affiliates of
Seller are parties and which are entirely or primarily related to such business.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks in New York City are authorized or obligated by
law or executive order to close or are otherwise generally closed.
"Business Intellectual Property" shall mean the Intellectual
Property used exclusively in the Business.
"Business Tax Item" shall have the meaning set forth in
Section 3.13(b).
"Business Taxes" shall have the meaning set forth in Section
3.13(b).
"Buyer" shall have the meaning set forth in the preamble.
"Buyer Account Plan" shall have the meaning set forth in
Section 5.6(i).
"Buyer Disclosure Letter" shall mean the disclosure letter
delivered by Buyer to Seller on or prior to the date hereof.
"Buyer Group" shall have the meaning set forth in Section
5.1(a)(i).
"Buyer Indemnified Parties" shall have the meaning set forth
in Section 7.3(a).
"Casualty Damages" shall have the meaning set forth in Section
10.4.
"CERCLA" shall have the meaning set forth in Section
3.10(e)(ii).
"Claim" shall have the meaning set forth in Section 7.6.
"Claim Notice" shall have the meaning set forth in Section
7.6.
"Closing" shall mean the closing of the transactions
contemplated hereby.
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"Closing Date" shall have the meaning set forth in Section
2.7.
"Closing Date Net Assets" shall have the meaning set forth in
Section 9.2(d)
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commitment Letter" shall have the meaning set forth in
Section 4.5(a).
"Competitively Sensitive Information Confidentiality
Agreements" shall mean the letter agreements with respect to confidential
information among (i) Parent, Xxxxxx xxx Xxxxxx and AmerAlia dated July 15,
2002, (ii) Parent, AmerAlia, Xxxx Xxxx and Xxxx Xxxxxxxx dated August 13, 2002,
(iii) Parent and ZC Specialty Insurance Company dated July 29, 2002 and (iv)
Parent and Sentient dated August 2, 2002.
"Confidentiality Agreements" shall mean the letter agreement
with respect to confidential information between Parent and AmerAlia dated
January 3, 2001 and the Competitively Sensitive Information Confidentiality
Agreements.
"Contaminant" shall have the meaning set forth in Section
3.10(e)(i).
"Contracts" shall have the meaning set forth in Section
2.1(d).
"Disclosure Letter Update" shall have the meaning set forth in
Section 5.13.
"DMG" shall mean the State of
Colorado Division of Minerals
and Geology.
"Environmental Claim" shall have the meaning set forth in
Section 3.10(e)(ii).
"Environmental Law" shall have the meaning set forth in
Section 3.10(e)(iii).
"Environmental Permit" shall have the meaning set forth in
Section 3.10(e)(iv).
"EPA" shall mean the United States Environmental Protection
Agency.
"Equityholders" shall mean North American Carbonate Company
LLC, North American Bicarbonate Company LLC, WRNM Holdings, LLC and Oldexaer
LLC.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall mean any trade, business or other
entity (whether or not incorporated) that, together with Seller and Parent, is
or at any relevant time would
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have been deemed a "single employer" within the meaning of Section 4001(b) of
ERISA or Section 414 of the Code.
"Estimated Adjustment Amount" shall have the meaning set forth
in Section 2.5(b).
"Estimated Rescission Adjustment Amount" shall have the
meaning set forth in Section 9.3(a).
"Estimated Purchase Price" shall have the meaning set forth in
Section 2.5(b).
"Excluded Assets" shall have the meaning set forth in Section
2.2.
"Excluded Liabilities" shall have the meaning set forth in
Section 2.4.
"Federal Rights-of-Way" shall mean the rights-of-way and land
use permit issued by BLM that are listed in Section 3.16(b) of the Seller
Disclosure Letter.
"Federal Sodium Leases" shall mean the leases issued by BLM
for exploration, drilling and production of sodium deposits that are listed in
Section 3.16(b) of the Seller Disclosure Letter.
"Financial Statements" shall have the meaning set forth in
Section 3.5.
"Financing" shall have the meaning set forth in Section
4.5(a).
"GAAP" shall mean U.S. generally accepted accounting
principles and practices in effect from time to time, consistently applied.
"Governing Documents" shall mean with respect to any
particular entity, (a) if a corporation, its articles or certificate of
incorporation and its bylaws; (b) if a general partnership, its partnership
agreement and any statement of partnership; (c) if a limited partnership, its
limited partnership agreement and its certificate of limited partnership; (d) if
a limited liability company, its articles of organization and operating
agreement; (e) if another type of Person, any charter or similar governing
document adopted or filed in connection with its creation, formation or
organization of its Person; and (f) any amendment, restatement or supplement to
any of its foregoing.
"Governmental Authority" shall mean any court, legislative,
executive, governmental, regulatory or administrative authority or agency of the
United States (and any Federal, state, local, municipal or other political
subdivision thereof).
"HCNA" shall have the meaning set forth in Section 6.2(d).
"Income Taxes" shall mean any and all Taxes based upon, or
measured by, net income, net revenue, or net receipts, including Federal income
and state and local income and franchise Taxes.
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"Indemnified Party" shall have the meaning set forth in
Section 7.6.
"Indemnifying Party" shall have the meaning set forth in
Section 7.6.
"Instrument of Assumption" shall have the meaning set forth in
Section 2.9(b).
"Insurance Policies" shall have the meaning set forth in
Section 3.17.
"Intellectual Property" shall mean all patents and patent
applications; all trademarks (including service marks and trade names, whether
registered or at common law), Internet domain names, designs, logos, slogans and
general intangibles of like nature, together with goodwill, registrations and
applications relating to the foregoing; copyrights (including registrations and
applications for any of the foregoing); and confidential information,
technology, know-how, inventions, processes, formulae, algorithms, models and
methodologies (such confidential items, collectively "Trade Secrets").
"Intercompany Contract" shall have the meaning set forth in
Section 3.22.
"Inventory" shall mean all inventory of Seller, wherever
located, including all merchantable sodium bicarbonate, spare parts and all
other materials and supplies to be used or consumed by Seller in the production
of merchantable sodium bicarbonate.
"Inventory Adjustment" shall have the meaning set forth in
Section 9.2(d).
"Knowledge of Buyer" and "Knowledge of AmerAlia" shall mean
the actual knowledge, or the knowledge after reasonable inquiry, of the
individuals set forth in Section 1.1(a) of the Buyer Disclosure Letter under
Buyer or AmerAlia, as applicable. If any Person set forth in Section 1.1(a) of
the Buyer Disclosure Letter shall cease to serve in the position set forth next
to such Person's name in such Section prior to the Closing, such Person's
successor, or the Person(s) to whom the responsibilities of the Person who
ceased to serve are given, as of the date of such succession or assignment of
responsibility, shall be deemed to be included in place of the Person listed in
such Section for purposes of determining Knowledge of Buyer or Knowledge of
AmerAlia as of the Closing (it being understood that if any Person on Section
1.1(a) of the Buyer Disclosure Letter is not employed by Buyer, AmerAlia or
their Affiliates at the Closing, such Person's knowledge as of the last date of
his or her employment with Buyer, AmerAlia or their Affiliates shall be the only
knowledge of such Person that is charged to Buyer or AmerAlia, as applicable, at
the Closing).
"Knowledge of Seller" and "Knowledge of Parent" shall mean the
actual knowledge, or the knowledge after reasonable inquiry, of the individuals
set forth in Section 1.1(a) of the Seller Disclosure Letter under Seller or
Parent, as applicable. If any Person set forth in Section 1.1(a) of the Seller
Disclosure Letter shall cease to serve in the position set forth next to such
Person's name in such Section prior to the Closing, such Person's successor, or
the Person(s) to whom the responsibilities of the Person who
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ceased to serve are given, as of the date of such succession or assignment of
responsibility, shall be deemed to be included in place of the Person listed in
such Section for purposes of determining Knowledge of Seller or Knowledge of
Parent as of the Closing (it being understood that if any Person on Section
1.1(a) of the Seller Disclosure Letter is not employed by Seller, Parent or
their Affiliates at the Closing, such Person's knowledge as of the last date of
his or her employment with Seller, Parent or their Affiliates shall be the only
knowledge of such Person that is charged to Seller or Parent, as applicable, at
the Closing).
"Laws" shall mean any constitution, treaty, law, statute,
ordinance, rule, regulation or decree of binding legal effect of any
Governmental Authority.
"Leased Real Property" shall have the meaning set forth in
Section 3.16(b).
"Liens" shall mean any lien, mortgage, deed of trust, pledge,
charge, claim, assignment by way of security or similar security interest or
encumbrance, of any type or nature, whether or not recorded.
"Losses" shall have the meaning set forth in Section 7.2(a).
"Material Adverse Effect" shall mean a material adverse effect
on the Assets, the Business or the financial condition, after giving effect to
normal fluctuations in working capital, of the Business; excluding, however,
from the determination of a Material Adverse Effect such adverse effects arising
in connection with or resulting from (i) changes that are generally applicable
to the industries and markets in which Seller operates and that are not caused
by actions or omissions of Seller, Parent or Parent's Other Affiliates (ii)
changes that are generally applicable to the United States economy and (iii)
changes resulting from the execution of this Agreement or the announcement of
this Agreement and the transactions contemplated hereby.
"Material Contracts" shall have the meaning set forth in
Section 3.11(a).
"Mixed Information" shall have the meaning set forth in
Section 5.16.
"NACC" shall have the meaning set forth in Section 6.2(d).
"Net Working Capital Adjustment" shall have the meaning set
forth in Section 9.2(d).
"NLRB" shall mean the National Labor Relations Board or any
successor.
"Notice Period" shall have the meaning set forth in Section
7.6.
"Offered Employees" shall have the meaning set forth in
Section 5.6(a).
"Order" shall mean any order, writ, judgment, injunction or
decree entered by any Governmental Authority or arbitrator.
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"Ordinary Course of Business" shall mean, with respect to a
prudent Person, in the ordinary course of business consistent with past custom
and practice of such Person.
"Outstanding Consent" shall have the meaning set forth in
Section 2.10.
"Outstanding Consent Following Rescission" shall have the
meaning set forth in Section 9.10.
"Overland Park Employees" shall mean the two administrative
employees of IMC Chemicals Inc., an Affiliate of Seller, based in Overland Park,
Kansas.
"Owned Real Property" shall have the meaning set forth in
Section 3.16(a).
"Parent's Other Affiliates" shall mean all Affiliates of
Parent other than Seller.
"Pending Water Court Litigation" shall mean the pending cases
in the District Court in and for Water Division No. 5, State of
Colorado, in
which Seller is either the Applicant or Protestor, and are listed in Section 3.8
of the Seller Disclosure Letter.
"Permits" shall have the meaning set forth in Section 3.9(b).
"Permitted Encumbrances" shall mean with respect to each
parcel of Real Property: (a) zoning, planning and building codes and other land
use Laws regulating the use, development and occupancy of the Real Property and
permits, consents and rules under such Laws; (b) Liens, encumbrances, easements,
rights-of-way, covenants, conditions, restrictions and other matters affecting
title to such Real Property either set forth in Section 3.16 of the Seller
Disclosure Letter or shown on the surveys made available to Buyer or its
Representatives on or prior to the date of this Agreement; (c) in the case of
Leased Real Property, the rights of any lessor or owner or of any such party's
lenders or mortgagees; (d) all easements, encumbrances or other matters which
are necessary for utilities and other similar services relating to the Business
on the Real Property; (e) any conditions that would be shown in a physical
inspection of any of the Real Property made on the date hereof; and (f)
encumbrances, easements, rights-of-way, covenants, conditions, restrictions and
other matters affecting title to such Real Property which do not arise in
connection with or secure indebtedness for money borrowed or owed or the
extension of credit and would not materially impair the current use of the
Assets or materially impair the value of the Real Property.
"Permitted Liens" shall mean (i) Liens identified in the
Section 1.1(b) of the Seller Disclosure Letter, (ii) inchoate mechanics',
carriers', workers', repairers', suppliers', materialmen's, warehousemen's and
other similar Liens arising by operation of Law with respect to liabilities
incurred in the Ordinary Course of Business, (iii) Liens arising under the
Assumed Contracts, except as a result of nonperformance or breach, (iv) Liens
for taxes, assessments and other governmental levies not yet due and payable
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or which are being actively contested in good faith by appropriate proceedings,
(v) Permitted Encumbrances with respect to Real Property; and (vi) such other
Liens which would not materially impair the current use of the Assets or
materially impair the value of the Assets as currently used; provided that
"Permitted Lien" shall not include any encumbrance arising in connection with or
securing indebtedness for money borrowed or owed by Parent or Parent's Other
Affiliates, except for any such encumbrances that will be discharged at or prior
to Closing.
"Person" shall mean an individual, a corporation, a limited
liability company, a partnership, an association, a trust, a Governmental
Authority and/or any other entity or organization.
"Personal Property" shall have the meaning set forth in
Section 3.16(f).
"Plan" shall mean (a) any "employee benefit plan" (within the
meaning of Section 3(3) of ERISA), or (b) any stock purchase, stock option,
stock appreciation right, restricted stock, severance, change-in-control, fringe
benefit, bonus, incentive, deferred compensation or (c) any other employee
benefit or compensation plan, arrangement or agreement, whether or not subject
to ERISA, in any case, maintained (or contributed to or required to be
contributed to) by Parent or Seller or any ERISA Affiliate, or to which Parent,
Seller or any ERISA Affiliate is a party, for the benefit of any employee or
former employee of Seller.
"Protected Information" shall have the meaning set forth in
Section 5.16.
"Purchase Price" shall have the meaning set forth in Section
2.5(a).
"Questar Gas Contact" shall have the meaning set forth in
Section 5.23.
"Railcar Sublease" shall have the meaning set forth in Section
2.8(g).
"Real Property" shall mean the Owned Real Property, the Leased
Real Property and the Water Rights, collectively.
"Related Agreements" shall mean the Xxxx of Sale, the deeds
and instruments of assignment and assumption with respect to Real Property,
instruments of transfer or assignment of Business Intellectual Property, the
Instrument of Assumption and any other agreements and instruments required to be
executed or delivered pursuant to this Agreement.
"Release" shall have the meaning set forth in Section
3.10(e)(v).
"Remedial Action" shall have the meaning set forth in Section
3.10(e)(vi).
"Representatives" shall mean, with respect to a given Person,
any of the officers, directors, employees, accountants, auditors, consultants,
legal counsel, financial advisors, investment bankers, agents and other
representatives of such Person.
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"Rescindable Event" shall have the meaning set forth in
Section 7.5.
"Rescission Adjustment Amount" shall have the meaning set
forth in Section 9.2(d).
"Rescission Closing" shall have the meaning set forth in
Section 9.4.
"Rescission Date" shall have the meaning set forth in Section
9.4.
"Rescission Date Net Assets" shall have the meaning set forth
in Section 9.2(d)
"Rescission Purchase Price" shall have the meaning set forth
in Section 9.2(d).
"Retained Contracts" shall have the meaning set forth in
Section 2.2(h).
"Xxxx Warehouse Lease" shall have the meaning set forth in
Section 3.10(e)(vii).
"Seller" shall have the meaning set forth in the preamble.
"Seller Disclosure Letter" shall mean the disclosure letter
separately delivered by Seller to Buyer on or prior to the date hereof.
"Seller Indemnified Parties" shall have the meaning set forth
in Section 7.2(a).
"Seller's Savings Plan" shall have the meaning set forth in
Section 5.6(i). "Sentient" shall have the meaning set forth in
Section 4.5(a).
"Solvency Letter" shall have the meaning set forth in Section
6.3(d).
"Subsidiary" shall mean, with respect to any Person, any
corporation or other organization, whether incorporated or unincorporated, of
which (a) at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such corporation or other
organization, is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries or (b) such Person or any other Subsidiary of such Person is a
general partner (excluding any such partnership where such Person or any
Subsidiary of such party does not have a majority of the voting interest in such
partnership).
"Taxes" shall mean any and all taxes, charges, duties,
imposts, fees, levies, penalties or other assessments imposed by any Federal,
state, local, or foreign taxing authority, including, but not limited to,
income, alternative or add-on minimum,
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gross receipts, franchise, profits, excise, property, real estate, value added,
sales, use, ad valorem, business license, transfer, stamp, recording,
registration, occupation, premium, withholding, payroll, employment, custom
duty, severance, and windfall profit taxes, including estimated taxes related
thereto and including any interest, penalties or additions attributable thereto.
"Tax Refunds" shall mean any and all rights (presently
existing or arising in the future) to refunds, claims, deposits, estimated Tax
payments, and other similar amounts in respect of (a) Income Taxes imposed on
Seller or its Affiliates, and (b) Taxes paid by Seller and its Affiliates on or
prior to the Closing Date (excluding Transfer Taxes).
"Tax Return" shall mean any return, declaration, report,
estimate, information return or statement required to be filed in respect of any
Taxes.
"Terminated Seller Employees" shall have the meaning set forth
in Section 5.6(b).
"Termination Date" shall have the meaning set forth in Section
8.1(b).
"Title Commitment" shall have the meaning set forth in Section
5.4.
"Title Defect" shall have the meaning set forth in Section
5.4.
"Trade Secrets" shall have the meaning set forth in the
definition of Intellectual Property.
"Transfer Taxes" shall mean any and all excise, sales
(including, without limitation, bulk sales), use, transfer, stamp, registration,
conveyance, ad valorem, documentary, filing, and recording Taxes and any other
similar Taxes (including any interest thereon or penalties or additions
attributable thereto (including interest on such penalties and additions))
incurred in connection with this Agreement and the transactions contemplated
hereby.
"Transferred Employees" shall have the meaning set forth in
Section 5.6(a).
"Transition Services Agreement" shall have the meaning set
forth in Section 2.8(h).
"UIC NOV's" shall have the meaning set forth in Section 7.4.
"UIC Permit" shall mean Underground Injection Control Area
Permit No. CO3358-00696.
"Updated Financial Statements" shall have the meaning set
forth in Section 5.20.
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"XXXX Xxx" shall have the meaning set forth in Section 5.6(f).
"Water Rights" shall mean the water rights specified on
Section 3.16(a) of the Seller Disclosure Letter.
Section 1.2 Other Terms. Other terms may be defined elsewhere
in the text of this Agreement and, unless otherwise indicated, shall have such
meaning throughout this Agreement.
Section 1.3 Other Definitional Provisions.
(a) The words "hereof," "herein," "hereto" and
"hereunder" and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement.
(b) The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United
States dollars, unless otherwise indicated.
(d) The term "control" shall mean, as applied to any
Person, the possession directly or indirectly of the power to direct or cause
the direction of the management and policies of such Person through the
ownership of voting securities or voting interests, by contract or otherwise,
and the terms "controlling" and "controlled" have the correlative meanings.
(e) Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation" unless the context requires otherwise.
ARTICLE II
PURCHASE AND SALE OF
ASSETS AND ASSUMPTION OF LIABILITIES
Section 2.1 Assets to be Purchased. On the terms and subject to the conditions
set forth herein, at the Closing, Seller and certain Affiliates of Seller, as
applicable, shall sell, convey, assign and transfer to Buyer, and Buyer shall
purchase, acquire and accept from Seller and certain Affiliates of Seller, as
applicable, in each case free and clear of all Liens other than Permitted Liens,
all of the rights, title and interests of Seller and such Affiliates of Seller
in and to all of the properties, contracts, rights and other assets (of every
kind, nature, character and description, whether tangible or intangible, whether
accrued, contingent or otherwise and wherever situated), used in the Business as
of the Closing (assuming compliance by Seller and Parent with the terms of this
Agreement) that are not Excluded Assets (the "Assets"), including the following:
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(a) the Real Property;
(b) the Personal Property, including those items
described in Section 2.1(b) of the Seller Disclosure Letter and all spare parts
owned by Seller (other than the spare rotating assembly for the centrifuge)
wherever located;
(c) the Inventory;
(d) Seller's rights under all contracts and agreements
to which it is a party and the rights of Parent and other Subsidiaries or
Affiliates of Parent under contracts entirely or primarily related to the
Business to which Parent or such other Subsidiaries or Affiliates of Parent are
parties (the "Contracts") including (i) the Material Contracts and (ii) any
Contracts entered into by Seller after the date hereof in accordance with the
terms of this Agreement (such Contracts referred to above in this Section 2.1(d)
being referred to as the "Assumed Contracts"), provided that the Assumed
Contracts shall not include any Intercompany Contracts that are not listed in
Section 2.1(d) of the Seller Disclosure Letter or any Retained Contracts;
(e) the Permits and Environmental Permits, which are
listed in Sections 3.9(b) and 3.10(b) of the Seller Disclosure Letter,
respectively, and all pending applications therefor or renewals of any of them;
(f) all data and records primarily related to the
Business or the Assets, including client and customer lists and records,
referral sources, research and development reports and records, production
reports and records, service and warranty records, equipment logs, operating
guides and manuals, financial and accounting records, creative materials,
advertising materials, promotional materials, studies, reports, correspondence
and other similar documents and records and, subject to applicable Law, copies
of all personnel records (other than personnel records relating to the Overland
Park Employees), but excluding all of Seller's books and records relating to
Income Taxes, all books and records relating to the Excluded Assets and Excluded
Liabilities, and any other records that Seller is required by Law to retain in
its possession;
(g) the Business Intellectual Property;
(h) all insurance benefits received after the date
hereof, including rights and proceeds, arising from or relating to the Assets or
the Assumed Liabilities prior to the Closing, unless expended in accordance with
this Agreement;
(i) all rights of Seller or, if applicable, its
Affiliates, including rights of recovery and rights of set off of any kind in
favor of Seller or, if applicable, its Affiliates, against third parties, in any
Action pertaining to or arising out of the Assets, or offsetting any Assumed
Liabilities, including all such Actions listed in Section 2.1(i) of the Seller
Disclosure Letter except to the extent Seller or, if applicable, any of its
Affiliates, is asserting such rights, including rights of recovery and rights of
set-off of any kind in favor of Seller or, if applicable, its Affiliates against
third parties, in any Action pertaining to or arising out of the Excluded Assets
or offsetting any Excluded Liabilities;
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(j) all rights of Seller or, insofar as the rights
relate to the Assets, Affiliates of Seller, relating to deposits and prepaid
expenses, claims for refunds and rights to offset in respect thereof, other than
those listed in Section 2.2(g) of the Seller Disclosure Letter or otherwise
arising from or relating to the Excluded Assets or the Excluded Liabilities; and
(k) all accounts receivable in respect of the
Business, including, accounts receivable to be paid by Persons other than
Affiliates of Seller to Parent or Parent's Other Affiliates under Contracts
entirely or primarily related to the Business but not otherwise including
accounts receivable from Affiliates of Seller.
Section 2.2 Excluded Assets. Notwithstanding anything to the
contrary contained in Section 2.1 or elsewhere in this Agreement, the Assets
shall not include any of Seller's or, if applicable, its Affiliates' right,
title or interest in any of the following (the "Excluded Assets"), which are not
part of the sale and purchase contemplated hereunder, and shall remain the
property of Seller after the Closing:
(a) all rights of Seller under this Agreement or the
Related Agreements;
(b) all rights and incidents of ownership of Seller
in, to and under Seller's Governing Documents, qualifications to conduct
business, arrangements with registered agents, taxpayer and other identification
numbers, seals, minute books, unit transfer books and other documents relating
to the organization, maintenance and existence of Seller as a limited liability
company;
(c) all cash and cash equivalents and short-term
investments of Seller or its Affiliates;
(d) all books and records relating to Income Taxes,
all personnel records relating to Seller's Employees other than the Transferred
Employees, all books and records relating to the Excluded Assets and Excluded
Liabilities, and any other records that Seller is required by Law to retain in
its possession;
(e) all Tax Refunds;
(f) all insurance benefits, including rights and
proceeds, arising from or relating to the Excluded Assets or the Excluded
Liabilities;
(g) all rights relating to deposits and prepaid
expenses, claims for refunds and rights to offset in respect thereof listed in
Section 2.2(g) of the Seller Disclosure Letter or otherwise arising from or
relating to the Excluded Assets or the Excluded Liabilities;
(h) all rights and incidents of ownership of Seller or
any Affiliate of Seller in, to and under all Contracts that are not Assumed
Contracts (the "Retained Contracts"), which Retained Contracts are listed in
Section 2.2(h) of the Seller Disclosure Letter;
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(i) all rights in connection with and assets of the
Plans other than as provided in Section 5.6(g);
(j) the property and assets expressly designated in
Section 2.2(j) of the Seller Disclosure Letter;
(k) all rights of Seller, including rights of recovery
and rights of set-off of any kind in favor of Seller against third parties, in
any Action pertaining to or arising out of the Excluded Assets or offsetting any
Excluded Liabilities; and
(l) all other rights, property, interests (whether
real or personal) and assets (whether tangible or intangible) of Parent and its
Affiliates that are not primarily used in the operation of the Business.
Section 2.3 Assumed Liabilities. On the terms and subject to
the conditions set forth herein, on the Closing Date, and concurrently with the
purchase described in Section 2.1, Buyer shall assume and shall be solely and
exclusively liable and responsible for, and hereby agrees to pay, honor,
discharge or perform in due course and shall be deemed to have assumed and be
responsible for, all debts, obligations and liabilities arising out of the
conduct of the Business before or after the Closing that are not Excluded
Liabilities (as hereinafter defined) (the "Assumed Liabilities") including the
following:
(a) any and all liabilities and obligations of Seller
under any of the Assumed Contracts, including (i) the Material Contracts and
(ii) any Contracts entered into by Seller after the date hereof in accordance
with the terms of this Agreement;
(b) any and all liabilities of Seller arising out of
or relating to any of the Real Property included in the Assets, and with respect
to Leased Real Property, any and all liabilities of any Affiliate of Seller that
leases or subleases such Leased Real Property including, but not limited to, the
obligation of filing all applications for finding of reasonable diligence in the
development of the conditional portion of the Water Rights;
(c) any and all liabilities or obligations arising out
of or relating to Seller's ownership or operation of the Business prior to the
Closing Date that are not Excluded Liabilities in respect of which a third party
seeks to hold Seller or any of its Affiliates liable;
(d) any and all liabilities arising in connection with
the conduct of the Business following the Closing Date;
(e) any and all trade accounts payable (other than
trade accounts payable to Affiliates of Seller) incurred by Seller in the
Ordinary Course of Business that remain unpaid at and not delinquent as of the
Closing and that are (i) reflected on the Balance Sheet or (ii) incurred in the
Ordinary Course of Business between the date of the Balance Sheet and the
Closing;
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(f) any and all liabilities to Seller's or, if
applicable, its Affiliates' customers incurred by Seller or, if applicable, its
Affiliates, in the Ordinary Course of Business, for nondelinquent orders
outstanding as of the Closing and reflected on Seller's books, other than any
liabilities under or with respect to Retained Contracts;
(g) any liability to Seller's or, if applicable, its
Affiliates' customers or end users of sodium bicarbonate distributed by Seller
or, if applicable, its Affiliates under applicable Law or under written warranty
agreements given by Seller or, if applicable, its Affiliates, to its customers
or that would otherwise extend to end-users in the Ordinary Course of Business
prior to the Closing;
(h) any and all liabilities of Seller or any other
Subsidiary of Parent arising from or relating to the arrangements entered into
with respect to the Outstanding Consents pursuant to Section 2.10 hereof,
including Buyer's performance or failure to perform the obligations of Seller or
any other Subsidiary of Parent after the Closing Date under any Permit,
Environmental Permit, approval, agreement, lease or license with respect to
which there is an Outstanding Consent, other than fifty percent of the costs and
expenses of Seller associated with the establishment of any arrangements entered
into with respect to the Outstanding Consents pursuant to Section 2.10 hereof,
which shall be borne by Seller;
(i) any and all Environmental Claims or any health and
safety liabilities arising out of or relating to the operation of the Business
or leasing, ownership or operation of the Assets by Seller or Buyer at any time;
(j) any and all liabilities under the Plans or
relating to payroll, vacation, sick leave, workers' compensation, unemployment
benefits, pension benefits, employee stock option or profit-sharing plans,
health care plans or benefits or any other employee plans or benefits of any
kind, in each case, for Seller's employees or former employees (excluding any
former employee of Seller currently employed by Parent or Parent's Other
Affiliates) or both;
(k) any and all liabilities arising out of or relating
to any employee grievance whether or not the affected employees are hired by
Buyer;
(l) any liability for or relating to Taxes, other than
Income Taxes;
(m) any and all liabilities (i) for or relating to the
negotiation, settlement or defense of the Action set forth in Section 3.8 of the
Seller Disclosure Letter and (ii) for or relating to the indemnification or
reimbursement of Seller, Parent or Parent's Other Affiliates for any and all
out-of pocket costs or expenses incurred after Closing relating to such Action;
and
(n) any and all responsibility, coverage and liability
in and under the UIC Permit as of the Closing Date (subject to the
indemnification and rescission rights set forth in Sections 7.4 and 7.5 hereof),
including sole and exclusive
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liability and responsibility for operating the permitted facility in accordance
with the terms and conditions of the UIC Permit.
Section 2.4 Excluded Liabilities. Notwithstanding anything to
the contrary contained in Section 2.3 or elsewhere in this Agreement, the
Assumed Liabilities shall not include any of the following liabilities of Seller
(the "Excluded Liabilities"), which are not part of the assumption of
liabilities contemplated hereunder and shall remain the sole responsibility of
and shall be retained, paid, performed and discharged solely by Seller:
(a) any and all liabilities of Seller or its
Affiliates for or relating to Income Taxes;
(b) any and all liabilities under any Retained
Contract, including any liability arising out of or relating to Seller's credit
facilities or any security interest related thereto;
(c) any and all liabilities relating to the Overland
Park Employees;
(d) any and all liabilities and obligations to the
extent relating to or arising from the Excluded Assets;
(e) any and all liabilities of Seller and Parent under
this Agreement or any of the Related Agreements;
(f) fifty percent of the costs and expenses of Seller
in connection with the establishment of any arrangements entered into with
respect to the Outstanding Consents pursuant to Section 2.10 hereof;
(g) any and all attorney's, accountants', brokers' or
finder's fees or, except as otherwise provided herein, other costs or expenses
of Seller or Parent incurred in connection with this Agreement or the Related
Agreements or the transactions contemplated hereby or thereby;
(h) any and all liabilities under the Plans or
relating to payroll, vacation, sick leave, workers' compensation, unemployment
benefits, pension benefits, employee stock option or profit-sharing plans,
health care plans or benefits or any other employee plans or benefits of any
kind, for any former employee of Seller currently employed by Parent or Parent's
Other Affiliates;
(i) trade accounts payable to Affiliates of Seller,
and any trade accounts payable that were not incurred by Seller in the Ordinary
Course of Business, that are delinquent as of the Closing, or that are not (i)
reflected on the Balance Sheet or (ii) incurred in the Ordinary Course of
Business between the date of the Balance Sheet and the Closing;
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(j) any worker's compensation liability resulting from
the work-related injury sustained by Seller's employee, Xxx X. Xxxx, which
occurred prior to the date hereof;
(k) any and all liabilities to indemnify, reimburse or
advance amounts to any officer, director, employee or agent of Seller that is
not a Transferred Employee; and
(l) any and all costs and expenses incurred prior to
the Closing in connection with drilling the 6H well and related cavity.
Section 2.5 Purchase Price; Purchase Price Adjustment.
(a) Purchase Price. The aggregate purchase price for
the Assets shall be twenty million seven hundred thousand dollars ($20,700,000)
(the "Base Purchase Price"), plus or minus the Adjustment Amount (the Base
Purchase Price as adjusted by the Adjustment Amount, the "Purchase Price").
(b) At the Closing, Buyer shall pay Seller the Base
Purchase Price, plus or minus an estimate of the Adjustment Amount (the
"Estimated Adjustment Amount"), which estimate shall be prepared by Seller in
good faith and provided (together with an explanation of the methods for
calculation thereof) in writing to Buyer at least five (5) Business Days prior
to the Closing (the Base Purchase Price as adjusted by the Estimated Adjustment
Amount, the "Estimated Purchase Price").
(c) Purchase Price Adjustment.
(i) Adjustment Amount. The "Adjustment
Amount" shall equal the sum of the amounts calculated in (A) and (B),
below:
(A) product of (1) $80.00
multiplied by (2) the difference between the number of tons
contained in the Inventory of merchantable sodium bicarbonate
transferred to Buyer at the Closing and 3,200 tons.
(B) If (1) the sales price listed
in any product sale commitment listed in Section 3.11(c) of
the Seller Disclosure Letter ("Bioproducts Sales Commitment")
is less than $100 per ton F.O.B. Seller's White River plant
for bulk product (or if the price listed in such Bioproducts
Sales Commitment is expressed in other terms and such price,
calculated on a basis equivalent to F.O.B. Seller's White
River plant for bulk product, is less than $100 per ton),
provided, that in each case above, such Bioproducts Sales
Commitment has been agreed to by the customer, then (2) an
amount shall be calculated which is equal to: (a) the
difference between $100 minus the sales
18
price as described in subsection (1), above, multiplied by (b)
the number of tons to be sold pursuant to such Bioproducts
Sales Commitment. The sum of the amounts calculated in
subsection (2), above, for each Bioproducts Sales Commitment
that meets the criteria in subsection (1), above, shall then
be aggregated. If any Bioproducts Sales Commitment which meets
the price criteria in subsection (1) above but has not been
accepted prior to the Closing is accepted during the
three-month period following the Closing, then Seller or
Parent shall pay to Buyer, within twenty (20) Business Days
following receipt of notice from Buyer that such Bioproducts
Sales Commitment has been accepted, an amount calculated in
the manner described in subsection (2) above. If all or part
of the product under any Bioproducts Sales Commitment for
which Seller made a payment to Buyer pursuant to this
provision is not ultimately shipped, then Buyer shall
reimburse Seller for the amount of such payment allocable to
the tons of product not shipped. Such reimbursement shall be
made as soon as practicable after the earlier of (i) such time
as Buyer is no longer obligated to ship the product at the
price contained in the applicable Bioproducts Sales Commitment
or (ii) December 31, 2003.
If the Adjustment Amount is a positive number, the Base Purchase Price
shall be increased by the Adjustment Amount for purposes of calculating
the Purchase Price. If the Adjustment Amount is a negative number, the
Base Purchase Price shall be reduced by the Adjustment Amount for
purposes of calculating the Purchase Price. Seller shall prepare as of
the Closing Date and deliver to Buyer within five (5) Business Days
after the Closing Date, a calculation of the Adjustment Amount and an
explanation of the method for calculation thereof.
(ii) Disputes. If Buyer disagrees with the
amount of the Adjustment Amount as calculated by Seller or any element
relevant to the calculation thereof, Buyer shall notify Parent, of such
disagreement in writing within thirty (30) days following the Closing,
which notice shall set forth in detail the particulars of such
disagreement. In the event that Buyer does not provide such a notice of
disagreement within such thirty (30) day period, Buyer shall be deemed
to have accepted the Adjustment Amount as calculated by Seller as the
Adjustment Amount, and the Adjustment Amount and the Purchase Price
shall be final, binding and conclusive for all purposes hereunder. In
the event any such notice of disagreement is timely provided by Buyer,
Buyer and Parent, on behalf of Seller, shall use their Best Efforts for
a period of twenty (20) days (or such longer period as they may
mutually agree) to resolve any disagreements with respect to the
calculation of the Adjustment Amount. If, at the end of such period,
they are unable to resolve such disagreements, then, upon the written
request of either party, an independent accounting firm of recognized
national standing
19
(other than Buyer's or Parent's independent auditors) mutually selected
by Parent, on behalf of Seller, and Buyer (the "Adjustment Auditor")
shall resolve any remaining disagreements. The Adjustment Auditor shall
determine as promptly as practicable (but in any event within
forty-five (45) days) following the date on which such dispute is
referred to the Adjustment Auditor, based solely on written submissions
forwarded by Buyer and Parent to the Adjustment Auditor within ten (10)
days following the Adjustment Auditor's selection, whether the
Adjustment Amount as calculated by Seller was calculated in accordance
with the standards set forth in this Section 2.5 with respect to any
items identified as disputed in the notice of disagreement and not
previously resolved by the parties, and if not, whether and to what
extent (if any) the Adjustment Amount as calculated by Seller requires
adjustment. Buyer or AmerAlia, on the one hand, and Seller or Parent,
on the other hand, shall share equally the payment of the fees and
expenses of the Adjustment Auditor. The determination of the Adjustment
Auditor shall be final, conclusive and binding on the parties, and the
Adjustment Auditor's determination of the amount of the Adjustment
Amount ("Audited Adjustment Amount") shall then be deemed to be the
Adjustment Amount for all purposes of this Agreement.
(iii) Payment of Adjustment Amount or
Audited Adjustment Amount. Not later than three (3) Business Days after
the final determination of the Adjustment Amount or the Audited
Adjustment Amount, as the case may be, any difference between (x) the
Estimated Adjustment Amount and (y) the Adjustment Amount as calculated
by Seller or the Audited Adjustment Amount, as the case may be, shall
be paid by Buyer or refunded by Seller, as applicable, in either case
by wire transfer of immediately available funds to an account
designated in writing by Buyer or Seller, as the case may be.
Section 2.6 Allocation of the Purchase Price; Tax Treatment of
Adjustments and Indemnifications.
(a) Seller and Buyer recognize their mutual
obligations pursuant to Section 1060 of the Code to timely file IRS Form 8594
(the "Asset Acquisition Statement") with each of their respective Federal income
Tax Returns (or cause such form to be filed with the Federal income Tax Return
on which their respective items of income, gain, deduction and loss are
reported). Accordingly, as soon as practicable following the Closing, Seller and
Buyer shall agree to the allocation of the Purchase Price, subject to adjustment
to reflect any adjustments or payments made pursuant to Section 2.5 or Article
VII, among the Assets to be purchased hereunder (the "Allocation"), which shall
be consistent with the provisions of Section 1060 of the Code and the Treasury
regulations thereunder and which shall be consistent with the allocation
mutually agreed to by the parties that is set forth in Section 2.6 of the Seller
Disclosure Letter. Seller and Buyer agree to cooperate in the preparation of the
Asset Acquisition Statement for timely filing in each of their respective
Federal income Tax Returns (or the Federal income Tax Returns on which their
respective items of income, gain, deduction and loss are reported). Neither
Seller nor Buyer shall take any position (or cooperate in the taking of any
position) with respect to Taxes that is inconsistent with the Allocation.
20
In the event that the Allocation is disputed by any Tax authority, the party
receiving notice of the dispute shall promptly notify the other parties hereto
of the receipt of such notice and consult with such other parties in the
resolution of the dispute.
(b) The parties agree that any payment made pursuant
to this Article II and Article VII (including any indemnification payment but
excluding the payment of the Estimated Purchase Price) shall be treated for all
Tax purposes as an adjustment to the Estimated Purchase Price.
Section 2.7 Closings; Delivery and Payment. The Closing shall
take place at the offices of Buyer's counsel at Suite 3200, 000 Xxxxxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxx 00000, commencing at 10:00 a.m. (local time) on or
before January 29, 2003, unless the conditions to Closing set forth in Article
VI are not satisfied in which case Closing shall take place upon the fifth
Business Day following the satisfaction or waiver of the conditions precedent
specified in Article VI (other than those conditions that by their nature are to
be fulfilled only at the Closing, but subject to the fulfillment or waiver of
such conditions) unless this Agreement shall have been terminated and the
transactions contemplated herein abandoned pursuant to Section 8.1 or at such
other time and place as the parties hereto may mutually agree (such date the
"Closing Date").
Section 2.8 Deliveries by Seller and Parent. At the Closing,
Seller and/or Parent shall deliver or cause to be delivered to Buyer (unless
delivered previously) the following:
(a) a duly executed xxxx of sale and assignment
substantially in the form of Exhibit A (the "Xxxx of Sale") which shall be
executed by Seller, Parent and such of Parent's Other Affiliates as are a party
to any of the Assumed Contracts or owns any of the other Assets;
(b) for each interest in Real Property identified in
Section 3.16, a recordable deed or similar conveyance document substantially in
the form of the deed or other conveyance document pursuant to which the
applicable Owned Real Property, Water Rights or plant and plant site were
granted or conveyed to Seller, in each case, as attached in Exhibit B(1) through
(B) (10), an instrument of assignment and assumption substantially in the form
of Exhibit C(1) with respect to the Leased Real Property (other than the Federal
Sodium Leases and the Federal Rights of Way), and instruments of assignment and
assumption in form substantially similar to the instruments of assignment and
assumption pursuant to which the Federal Sodium Leases and the Federal Rights of
Way were transferred to Seller, subject to any modifications required by Law, in
each case, as attached in Exhibit C(2) through C(7), in each case executed by
Seller;
(c) instruments of transfer or assignment of all the
Business Intellectual Property substantially in the forms attached in Exhibit D,
in each case executed by Seller or certain Affiliates of Seller, as applicable;
(d) certificates executed by Seller and Parent as to
the accuracy of their representations and warranties as of the date of this
Agreement and as of the
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Closing in accordance with Section 6.2(a) and as to their compliance with and
performance of their covenants and obligations to be performed or complied with
at or before the Closing in accordance with Section 6.2(b);
(e) a certification of non-foreign status for Seller
in the form and manner which complies with the requirements of Section 1445 of
the Code and the regulations promulgated thereunder, and a written affirmation
described in Sec. 39-22-604.5(2)(c) of the
Colorado Revised Statutes;
(f) a certificate of the secretary of Seller
certifying, as complete and accurate as of the Closing, attached copies of the
Governing Documents of Seller, certifying and attaching all requisite
resolutions or actions of Seller's managers and Parent approving the execution
and delivery of this Agreement and the Related Agreements and the consummation
of the transactions contemplated hereby, and certifying to the incumbency and
signatures of the officers of Seller and Parent executing this Agreement, the
Related Agreements and any other document relating to the transactions
contemplated hereby and thereby;
(g) a sublease agreement for the sublease of 55
railway xxxxxx cars to Buyer dated as of the date hereof in the form of Exhibit
E (the "Railcar Sublease") duly executed by the Xxxxxxxxxx and Northern Railway
Company;
(h) an agreement for the provision by Parent of
transition services to Buyer for a period after the Closing in the form hereof
of Exhibit F (the "Transition Services Agreement") duly executed by Parent; and
(i) all other documents, instruments and writings
necessary to consummate the transactions contemplated hereby or expressly
required pursuant to the terms of this Agreement to be delivered by Seller at or
prior to the Closing.
Section 2.9 Deliveries by Buyer and AmerAlia. At the Closing,
Buyer and/or AmerAlia shall deliver or cause to be delivered to Seller and
Parent (unless previously delivered) the following:
(a) the Estimated Purchase Price, by wire transfer in
immediately available funds to an account designated by Seller in writing
delivered to Buyer at least three (3) days prior to the Closing;
(b) a duly executed instrument of assumption,
substantially in the form of Exhibit G (the "Instrument of Assumption");
(c) certificates executed by Buyer and AmerAlia as to
the accuracy of their representations and warranties as of the date of this
Agreement and as of the Closing in accordance with Section 6.3(a) and as to
their compliance with and performance of their covenants and obligations to be
performed or complied with at or before the Closing in accordance with Section
6.3(b);
22
(d) a certificate of the secretary of Buyer
certifying, as complete and accurate as of the Closing, attached copies of the
Governing Documents of Buyer and certifying and attaching all requisite
resolutions or actions of Buyer's and of AmerAlia's board of directors approving
the execution and delivery of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby, and certifying to the
incumbency and signatures of the officers of Buyer and of AmerAlia executing
this Agreement, the Related Agreements and any other document relating to the
transactions contemplated hereby;
(e) the Railcar Sublease in the form of Exhibit E duly
executed by Buyer;
(f) the Transition Services Agreement in the form of
Exhibit F duly executed by Buyer; and
(g) all other documents, instruments and writings
necessary to consummate the transactions contemplated hereby or expressly
required pursuant to the terms of this Agreement to be delivered by Buyer at or
prior to the Closing.
Section 2.10 Arrangement Regarding Outstanding Consents.
Notwithstanding Sections 2.1 or 2.8, to the extent any Contract is assignable
only with the consent of a third party or any Contract, Permit or Environmental
Permit is transferable only with the approval of a Governmental Authority and as
of the Closing the parties hereto have been unable to obtain any such required
consent or approval (any such consent or approval, an "Outstanding Consent"),
then, (except for any Contract, Permit or Environmental Permit listed in Section
5.5(d) of the Seller Disclosure Letter), such Contract, Permit or Environmental
Permit shall not be assigned or transferred unless and until the required
consent or approval is obtained and there shall be no breach of Sections 2.1 or
2.8 in respect thereof. Any Contract, Permit or Environmental Permit listed in
Section 5.5(d) of the Seller Disclosure Letter as to which approval of the
applicable Governmental Authority is to be obtained following the Closing shall
be assigned or transferred as between Buyer and Seller; however, the parties
recognize that such assignment or transfer will not be completed until the
assignment or transfer of such Contract, Permit or Environmental Permit is
approved by the applicable Governmental Authorities or the applicable notice
period has ended, as the case may be, and there shall be no breach of Sections
2.1 or 2.8 in respect thereof. In the event that a Contract, Permit or
Environmental Permit is not assigned or transferred as described in the first
sentence of this Section 2.10 or transfer of same has not yet been recognized by
the applicable Governmental Authorities, then the parties shall agree to use
their respective Best Efforts to effectuate an arrangement that provides or
causes to be provided to Buyer the benefits and burdens of the applicable
Contract, Permit or Environmental Permit, it being understood that any such
arrangement shall be reasonable and lawful as to the parties. In connection with
such arrangement, (i) after the Closing, Seller agrees to use its Best Efforts
to enforce for the account of Buyer any rights of Seller, and Parent agrees to
use its Best Efforts to enforce for the account of Buyer any rights of any other
Subsidiary of Parent, arising from any such Contracts, Permits or Environmental
Permits including the right to elect to terminate in accordance with the
23
terms thereof on the advice of Buyer, (ii) Buyer shall use its Best Efforts to
perform or arrange for the performance of the obligations of Seller and any
other Subsidiary of Parent arising after the Closing Date under such Contracts,
Permits or Environmental Permits and (iii) Buyer and AmerAlia, jointly and
severally, shall indemnify and hold harmless Parent, Seller and any other
Subsidiary of Parent from and against any Losses (as hereinafter defined)
arising out of or resulting from Buyer's performance or failure to perform under
such Contracts, Permits and Environmental Permits, except as otherwise provided
in this Agreement. Seller and/or any other Subsidiary of Parent, as applicable,
shall, without further consideration therefor, pay and remit to Buyer promptly
all monies, rights and other considerations received in respect of such
performance or shall direct third parties to pay and remit any such monies,
rights and considerations directly to Buyer (in each case, net of Seller's costs
and taxes in respect thereof). With respect to any Permit, Environmental Permit,
or Contract that was transferred subject to an Outstanding Consent, Seller's
obligations with respect thereto under this Section 2.10 (except as they relate
to the payment of monies and other considerations under the immediately
preceding sentence) shall cease as of approval by the applicable Governmental
Authority. If and when any Outstanding Consent for a Contract, Permit or
Environmental Permit that was not assigned or transferred to Buyer shall be
obtained or the affected Contract, Permit or Environmental Permit shall
otherwise become assignable, Seller and/or any other Subsidiary of Parent, as
applicable, shall promptly assign all its rights and obligations thereunder to
Buyer without the payment of further consideration, and Buyer shall, without the
payment of any further consideration therefor, assume such rights and
obligations and Parent, Seller and any other Subsidiary of Parent, as
applicable, shall be relieved of any and all obligations or liability
thereunder.
Section 2.11 Transfer Taxes. The parties agree that all
Transfer Taxes shall be borne by Buyer. Buyer shall properly prepare and timely
file all Tax Returns required to be filed in respect of Transfer Taxes, timely
pay all Transfer Taxes, and provide Seller reasonable proof of timely payment of
all Transfer Taxes for which Seller has primary or secondary liability under
applicable Law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Seller and Parent hereby represent and warrant to Buyer as
follows:
Section 3.1 Organization of Seller.
(a) Seller is a limited liability company, duly
organized, validly existing and in good standing under the laws of
Colorado and
has all requisite limited liability company power and authority to own and lease
the Assets and operate the Business and to carry on the operations of the
Business as now being conducted by it.
(b) Seller has no Subsidiaries and does not own any
shares of capital stock or other securities of any other Person.
24
(c) Seller previously has supplied Buyer with or made
available to Buyer true and complete copies of its certificate of formation and
limited liability company agreement and all other similar Governing Documents.
Section 3.2 Authority of Seller and Parent; Binding Effect.
(a) Each of Seller and Parent has the requisite power
and authority to execute and deliver this Agreement and the Related Agreements
to which Seller and/or Parent are parties, as the case may be, to consummate the
transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder including, in the case of Parent, the power to cause
each of Parent's Other Affiliates that is a party to any Assumed Contract or
owns any of the other Assets to transfer and convey such Assumed Contract or
other Assets to Buyer. The execution and delivery by each of Seller and Parent
of this Agreement and the Related Agreements to which Seller and/or Parent are
parties, as the case may be, the performance of the obligations of Seller and
Parent hereunder and thereunder, and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action on the part of Seller or Parent, as the case may be. Other than the
approval of the Equityholders of Seller with respect to the change of name of
Seller as set forth in Section 5.17(a) hereto (the "Approval of Equityholders"),
no other action on the part of the equityholders or managers of Seller that has
not been taken is required in connection with the execution, delivery and
performance by Seller of this Agreement or the Related Agreements to which
Seller is a party and the consummation by Seller of the transactions
contemplated hereby and thereby. No other corporate proceedings on the part of
Parent which have not been taken are required in connection with the execution,
delivery and performance by Parent of this Agreement or the Related Agreements
to which Parent is a party and the consummation by Parent of the transactions
contemplated hereby and thereby.
(b) This Agreement has been duly executed and
delivered by Seller and Parent and constitutes, and when executed and delivered,
each of the Related Agreements to be executed and delivered by Seller and
Parent, will constitute, assuming, in each instance, due authorization,
execution and delivery of this Agreement and the Related Agreements by any
parties thereto other than Seller and Parent or Parent's Other Affiliates, a
valid and legally binding obligation of Seller and Parent enforceable against
Seller and Parent, as the case may be, in accordance with its terms, except as
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to creditors rights generally and (ii) general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
Section 3.3 Non-Contravention. Except as set forth in Section
3.3 of the Seller Disclosure Letter, the execution, delivery and performance of
this Agreement and the Related Agreements to which Seller, Parent and/or each of
Parent's Other Affiliates that is a party to any Assumed Contract or owns any of
the other Assets are parties, as the case may be, by Seller and Parent, and the
consummation by Seller and Parent of the transactions contemplated hereby and
thereby, shall not (i) violate any provision of the Governing Documents of
Seller, Parent, or any of Parent's Other
25
Affiliates that is a party to any Assumed Contract or owns any of the other
Assets, (ii) result in the breach or violation of, give rise to any right of
termination, acceleration of any obligation or amendment under, result in the
creation of a Lien on the Assets, or constitute a default under (in each case,
with or without the giving of notice or the lapse of time or both) any of
Seller's, Parent's or Parent's Other Affiliates' mortgage, deed of trust, or
other arrangement or instrument for borrowed money, lease, license, or any
Assumed Contract, Permit or Environmental Permit relating to the Business, or
(iii) assuming that all consents and approvals referred to in Section 3.4 have
been obtained, violate any Law or Order applicable to Seller, Parent or each of
Parent's Other Affiliates that is a party to any Assumed Contract or owns any of
the other Assets, except, with respect to clauses (ii) and (iii), for such
breaches, violations, rights, Liens or defaults which would not, individually or
in the aggregate, reasonably be expected to (x) result in a Material Adverse
Effect or (y) prevent or materially delay the ability of Seller or Parent to
consummate the transactions contemplated hereby.
Section 3.4 Consents and Approvals. Except as set forth in
Section 3.4 of the Seller Disclosure Letter, the execution, delivery and
performance of this Agreement or the Related Agreement to which Seller, Parent
and/or each of Parent's Other Affiliates that is a party to any Assumed Contract
or owns any of the other Assets are parties, as the case may be, by Seller,
Parent or such of Parent's Other Affiliates, and the consummation by Seller,
Parent and such of Parent's Other Affiliates of the transactions contemplated
hereby or thereby does not and shall not violate, or require any authorization,
consent, waiver, approval, exemption, Permit, Environmental Permit or order of,
or any other action by, or notice or declaration to, or filing with, any
Governmental Authority or other Person, under any Law applicable to Seller,
Parent, such of Parent's Other Affiliates or any of the Assets, except where
such violation or the failure to obtain such authorization, consent, waiver,
approval, exemption, Permit, Environmental Permit or order or to make such
notice or declaration or filing would not reasonably be expected to (x) result,
individually or in the aggregate, in a Material Adverse Effect or (y) prevent or
materially delay Seller's, Parent's or such of Parent's Other Affiliates'
ability to consummate the transactions contemplated hereby.
Section 3.5 Financial Information. Prior to the date hereof,
Seller has delivered or made available to Buyer, audited balance sheets for
Seller as of June 30, 2001 and 2002, and the audited statements of income and
cash flows for Seller for the twelve-month periods ended on June 30, 2001 and
2002, together with the notes thereon (collectively, the "Financial
Statements"). Except as set forth in Section 3.5 of the Seller Disclosure
Letter, the Financial Statements have been prepared from, and are consistent
with, the books and records of Seller and fairly present in all material
respects in accordance with GAAP the financial position of and results of
operations of Seller as of the respective dates thereof.
Section 3.6 Absence of Undisclosed Liabilities. Seller does
not have any material liability required to be reflected in a balance sheet for
Seller prepared in accordance with GAAP, except for (i) liabilities disclosed in
Section 3.6 of the Seller Disclosure Letter, (ii) liabilities reflected or
reserved against in the Financial Statements, (iii) environmental liabilities,
which are the subject of Section 3.10, (iv) liability for
26
Actions, which are the subject of Section 3.8, (v) liabilities incurred by
Seller in the Ordinary Course of Business since June 30, 2002 or in accordance
with the terms and conditions of this Agreement and (v) liabilities which
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
Section 3.7 Absence of Certain Changes or Events. Except as
expressly contemplated by this Agreement or as set forth in Sections 3.7, 3.8,
3.9, 3.10 and 3.11 of the Seller Disclosure Letter, since June 30, 2002 until
the date hereof, the Business of Seller has been conducted in all material
respects in the Ordinary Course of Business and there has not occurred any
event, change or development which has had or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect.
Section 3.8 Litigation and Claims. Except as set forth in
Sections 3.8 and 3.10 of the Seller Disclosure Letter and except for any
proceeding relating to Tax matters (which is the subject of Section 3.13), as of
the date hereof, there is no Action pending, or to the Knowledge of Seller or
the Knowledge of Parent threatened against Seller, the Assets, or Parent with
respect to the Assets, and to the Knowledge of Seller or Knowledge of Parent no
facts or circumstances exist which individually or in the aggregate with all
other Actions would reasonably be expected to have a Material Adverse Effect, or
that challenges the validity of this Agreement or the Related Agreements or the
ability of Seller or Parent to perform its obligations hereunder or thereunder,
or which seeks to materially modify, revoke, terminate, suspend or limit any of
the Assumed Contracts. Except as set forth in Section 3.9 and 3.10 of the Seller
Disclosure Letter, and except as would not reasonably be expected to result in a
Material Adverse Effect, none of Seller, the Assets or, with respect to the
Assets, Parent or Parent's Other Affiliates is subject to any material
outstanding Order issued by any Governmental Authority.
Section 3.9 Compliance with Laws.
(a) Except as set forth in Section 3.9(a) of the
Seller Disclosure Letter and except for compliance with Environmental Laws
(which is the subject of Section 3.10), Tax Laws (which is the subject of
Section 3.13) and Laws relating to employee benefits (which is the subject of
Section 3.14), Seller is in compliance with all applicable Laws and Orders
applicable to the Business, the Assets or Seller, except where such
non-compliance would not, individually or in the aggregate, be reasonably
expected to result in a Material Adverse Effect.
(b) Section 3.9(b) of the Seller Disclosure Letter
(except for Environmental Permits which are the subject of Section 3.10)
contains a complete and accurate list of all permits, licenses, authorizations,
certificates, exemptions and approvals of Governmental Authorities that are held
by Seller or that otherwise relate to the Business or the Assets (the
"Permits").
(c) Except as disclosed in Section 3.9(c)(i) of the
Seller Disclosure Letter (and except for environmental matters which are the
subject of Section 3.10), Seller holds all Permits that are required for the
ownership and conduct of the
27
Business, and such Permits are in full force and effect. Except as set forth in
Section 3.9(c)(ii) of the Seller Disclosure Letter (and except for environmental
matters which are the subject of Section 3.10), Seller has not received any
written notice from any competent authority of revocation of or default under
any Permits or of any non-compliance with any applicable Law or Order.
Section 3.10 Environmental Matters.
(a) Except as disclosed in Section 3.8 and Section
3.10 of the Seller Disclosure Letter:
(i) Seller is in compliance with all Environmental
Laws applicable to the Business or the Assets, and with respect to the
Xxxx Warehouse Lease, an Affiliate of Seller is in compliance with all
Environmental Laws applicable to such Leased Real Property, except in
each case for such failures to comply as would not reasonably be
expected to result in a Material Adverse Effect;
(ii) There is no Environmental Claim pending or to
the Knowledge of Seller threatened in writing against Seller with
regard to the Assets, or against an Affiliate of Seller with respect to
the Xxxx Warehouse Lease, which (to the extent not covered by
insurance) would reasonably be expected to result in a Material Adverse
Effect;
(iii) Neither Seller, nor an Affiliate of Seller with
respect to the Xxxx Warehouse Lease, is under any present unsatisfied
obligation under any Environmental Law, as of the date hereof, to
conduct any Remedial Action with respect to Contaminants at the Assets;
and
(iv) None of the Assets is listed on or to the
Knowledge of Seller proposed for listing on the National Priority List
maintained under CERCLA or on an equivalent list maintained pursuant to
state law;
(v) Since November 18, 1992, there has been no
material Release, or to the Knowledge of Seller, a threat of material
Release, at or from the Assets;
(vi) Since April 1, 1998, to the Knowledge of Seller,
at any location used by Seller or any Affiliate in connection with the
Business, neither Seller nor its employees or agents, nor an Affiliate
of Seller insofar as it relates to the Xxxx Warehouse Lease, has caused
or contributed to a material Release or threat of a material Release of
any Contaminants that were generated, manufactured, refined,
transferred, produced, imported, used or processed by Seller at such
location in connection with the Business in a manner that resulted in
any present, unsatisfied obligation by Seller or its Affiliate under
any Environmental Law, as of the date hereof, to conduct any Remedial
Action with respect to such Contaminants.
28
(b) Seller holds all Environmental Permits necessary for
the ownership and conduct of the Business as it is currently conducted, except
such Environmental Permits the absence of which would not reasonably be expected
to result in a Material Adverse Effect, and such Environmental Permits are in
full force and effect. A complete and accurate list of such Environmental
Permits is contained in Section 3.10 of the Seller Disclosure Letter. Except as
disclosed in Section 3.10 of the Seller Disclosure Letter, Seller has not
received written notice from any Government Authority seeking revocation of or
alleging the failure to obtain any Environmental Permits which notice has not
been resolved as of the date hereof;
(c) To the Knowledge of Seller, Seller has delivered or
made available to Buyer or its Representatives true and complete copies and
results of material reports, studies, analyses, tests, or monitoring initiated
on or after November 18, 1992 by Seller, Parent or their Affiliates pertaining
to Contaminants in, on or under the Assets or concerning compliance by Seller
with Environmental Laws; and
(d) The parties agree that the representations and
warranties of this Section 3.10 are Seller's sole and exclusive representations
and warranties regarding compliance with or liabilities under Environmental
Laws.
(e) Environmental Definitions.
(i) "Contaminant" shall mean any pollutant,
contaminant, hazardous substance, hazardous material, toxic substance,
or special or hazardous waste, or any constituent thereof regulated by
any Environmental Law.
(ii) "Environmental Claim" shall mean any claim,
action, cause of action, investigation or written notice by any Person
or entity alleging potential liability (including, without limitation,
potential liability for investigatory costs, remedial costs,
governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil
statute, Environmental Permit, ordinance or registration, common law or
otherwise, arising out of, based on or resulting from (a) a Release or
threatened Release into the environment at any location, owned, leased
or operated by Seller or (b) any violation or alleged violation of any
Environmental Law by Seller.
(iii) "Environmental Law" shall mean any Federal,
state or local law, rule or regulation, ordinance, code, Environmental
Permit, order, decree, or other binding determination of any
Governmental Authority directed to, addressing or imposing liability or
standards of conduct with respect to or otherwise relating to:
protection of the environment; Releases or threatened Releases of
Contaminants into the environment or threats to human health or safety
resulting from Releases of Contaminants; or the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Contaminants. Without limiting the generality of the
foregoing, these
29
Environmental Laws include the Clean Air Act, as amended (42 U.S.C.
Sections 7401 et seq.); the Clean Water Act, as amended (33 U.S.C.
Sections 1251 et seq.); the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections
9601 et seq.) ("CERCLA"); the Resource Conservation and Recovery Act of
1976, as amended (42 U.S.C. Sections 6901 et seq.); any so-called
"Superlien" law; the Toxic Substances Control Act, as amended (15
U.S.C. Sections 2601 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Sections 136 et seq.); the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801 et
seq.); the Occupational Safety and Health Act, as amended (29 U.S.C.
Sections 651 et seq.); Executive Order 11738; Federal Safety and Health
Amendments Act, as amended (30 U.S.C. 801 et seq.); regulations of any
Governmental Authority implementing such Laws; and comparable state or
local laws, regulations, or ordinances.
(iv) "Environmental Permit" shall mean any permit,
license, authorization, certificate, exemption, variance, registration,
or approval of a Governmental Authority required to be held or obtained
under or by virtue of any Environmental Law.
(v) "Release" shall mean release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
escape, leaching or migration of Contaminants into the indoor or
outdoor environment or into or out of any Real Property, including the
movement of Contaminants through or in the air, soil, surface water or
groundwater of Real Property.
(vi) "Remedial Action" shall mean actions required
under Environmental Laws to: (A) clean up, remove, treat or in any
other way address Contaminants in the indoor or outdoor environment;
(B) prevent a Release or threat of a Release or minimize the further
Release; or (C) perform pre-remedial studies and investigations and
post-remedial care.
(vii) "Xxxx Warehouse Lease" shall mean the Lease
dated April 3, 1996 between Xxxx Limited Liability Company and IMC
Chemicals Inc. (f/k/a "North American Chemical Company") for warehouse
premises at 0000 Xxxx 0xx Xxxxxx, Xxxxx, Xx 00000 and Lease Addenda
dated June 18, 1996, April 1, 1997, November 16, 1998, February 1,
1999, January 1, 2000, January 1, 2001, January 1, 2002 and January 1,
2003.
Section 3.11 Material Contracts.
(a) Section 3.11(a) of the Seller Disclosure Letter
contains a complete and accurate list of all Assumed Contracts in effect as of
the date hereof including oral Contracts pertaining to recurring sales of
product, except for: (i) miscellaneous service Contracts terminable at will
without penalty; and (ii) Contracts not involving (A) any monetary obligation in
excess of $20,000 during the remaining term of the Contract or (B) any material
non-monetary obligation ("Material Contracts").
30
Seller has delivered or made available to Buyer true and complete copies of each
of the written Material Contracts, including any amendments thereto.
(b) Each Material Contract is in full force and effect,
and neither Seller, nor, to the Knowledge of Seller, any other party thereto, is
in material breach under any such Material Contract, and no event has occurred
that with notice or passage of time or both would constitute such a material
breach thereunder by Seller, or, to the Knowledge of Seller, any other party
thereto.
(c) Section 3.11(c) of the Seller Disclosure Letter
contains a complete and accurate list of all offers and acceptances provided by
IMC Chemicals Inc. pursuant to the Distribution Agreement dated as of January 1,
2000 between IMC Chemicals Inc. and Bioproducts Incorporated, as amended
("Bioproducts Agreement"), which list details the obligations that will be
assumed by Buyer to deliver Product (as defined in the Bioproducts Agreement)
for 2003 and any subsequent period, including applicable quantity and price
data. (The parties specifically agree that, in the event Closing occurs, Section
3.11(c) of the Seller Disclosure Letter will be updated as of the Closing Date.)
Section 3.12 Intellectual Property.
(a) Section 3.12(a) of the Seller Disclosure Letter sets
forth for the Business Intellectual Property owned by Seller and its Affiliates,
a complete and accurate list, of all U.S., state and foreign: (i) patents and
patent applications; (ii) trademark and service xxxx registrations (including
Internet domain name registrations), trademark and service xxxx applications and
material unregistered trademarks and service marks; and (iii) copyright
registrations, copyright applications and material unregistered copyrights.
(b) Section 3.12(b) of the Seller Disclosure Letter sets
forth a complete and accurate list of all agreements (excluding "shrink wrap"
and "click wrap" agreements, agreements contained in "off the shelf" software,
and the terms of use or service for any website) granting or obtaining any right
to use or practice any rights under Business Intellectual Property to which
Seller or an Affiliate of Seller is a party or is otherwise bound or receives
rights, as licensee, licensor or otherwise thereunder.
(c) Except as set forth in Section 3.12(c) of the Seller
Disclosure Letter or as would not be reasonably likely to have a Material
Adverse Effect:
(i) Seller owns or has the legal right to use all
Business Intellectual Property;
(ii) to the Knowledge of Seller, the conduct of the
Business does not infringe, misappropriate or otherwise violate any
Intellectual Property rights of any third party;
(iii) Seller has not received written notice from any
third party regarding any actual or potential infringement or other
violation of any
31
Intellectual Property rights of any third party, or challenging the
enforceability of any of the agreements listed in Section 3.12 (b) of
the Seller Disclosure Letter;
(iv) Seller takes reasonable measures to protect the
confidentiality of its Trade Secrets; and
(v) the consummation of the transactions contemplated
hereby will not result in the loss or impairment of Buyer's rights to
own or use any of the Business Intellectual Property.
Section 3.13 Taxes. Except as set forth in Section 3.13 of the
Seller Disclosure Letter,
(a) Seller has (i) timely filed with the appropriate
Federal, state, local, and foreign taxing authorities all Tax Returns required
to be filed by it, which Tax Returns are true, correct and complete in all
material respects and (ii) timely paid in full or has made adequate provision in
the Financial Statements for all Taxes of Seller due and payable, except such
Taxes, if any, as are being contested in good faith (which contest is set forth
on Section 3.13(a) of the Seller Disclosure Letter) and as to which adequate
reserves (determined in accordance with GAAP) have been provided;
(b) The Affiliates of Seller have (i) timely filed with
the appropriate Federal, state, local, and foreign taxing authorities all Tax
Returns required to be filed by such entities on which any item resulting from
the ownership or operation of the Business (each such item a "Business Tax
Item") is required to be reported, which Business Tax Items are correctly and
completely reported thereon, and (ii) timely paid in full or have made adequate
provision in the Financial Statements for all Taxes of such entities due and
payable to the extent that such Taxes relate to Business Tax Items ("Business
Taxes"), except such Taxes, if any, as are being contested in good faith (which
contest is set forth on Section 3.13(b) of the Seller Disclosure Letter) and as
to which adequate reserves (determined in accordance with GAAP) have been
provided;
(c) There are no Liens for Taxes upon any of the Assets
other than Permitted Liens;
(d) Neither Seller nor any Affiliate of Seller has
received any written notice of deficiency or assessment from any Federal, state
or local taxing authority with respect to liabilities for Taxes of Seller or
Business Taxes, which have not been fully paid or finally settled;
(e) Seller has timely withheld and paid over to the
relevant taxing authorities all amounts required to be so withheld and paid over
and the Affiliates of Seller have timely withheld and paid over to the relevant
taxing authorities all amounts required to be so withheld and paid over by such
Affiliates in connection with the Business, including withholding in connection
with payments to employees, independent contractors, creditors, shareholders,
partners or other parties which payments arise pursuant to the Business;
32
(f) There are no Federal, state, local, or foreign
audits, actions, suits, proceedings, investigations, or administrative
proceedings relating to Taxes or any Tax Returns of Seller, or any Business
Taxes of any Affiliate of Seller, now pending, and neither Seller nor any
Affiliate of Seller has received any notice of any proposed audits,
investigations, or administrative proceedings relating to such Taxes or any such
Tax Returns;
(g) Seller has not waived or extended any statute of
limitations relating to the payment of Taxes of Seller, and no Affiliate of
Seller has waived or extended any statute of limitations relating to the payment
of Business Taxes, for any taxable period for which the applicable statutes of
limitations has not expired; and
(h) Neither Seller nor any Affiliate of Seller has
received any written notice from any jurisdiction in which Seller or such
Affiliate does not file a Tax Return that Seller is required to file a Tax
Return for such jurisdiction or that such Affiliate is required to file a Tax
Return for such jurisdiction with respect to Business Taxes.
Section 3.14 Employee Benefit Plans.
(a) Section 3.14(a) of the Seller Disclosure Letter
contains a true and complete list of each Plan.
(b) With respect to each Plan, Seller has heretofore
delivered or made available to Buyer true and complete copies of each of the
following documents: (i) a copy of the Plan and any amendments thereto; (ii) a
copy of the most recent annual report and actuarial report, if required under
ERISA, and the most recent report prepared with respect thereto in accordance
with Statement of Financial Accounting Standards No. 87; (iii) a copy of the
most recent Summary Plan Description required under ERISA with respect thereto;
(iv) if the Plan is funded through a trust or any third party funding vehicle, a
copy of the trust or other funding agreement and the latest financial statements
thereof, and (v) the most recent determination letter received from the Internal
Revenue Service with respect to each Plan intended to qualify under Section 401
of the Code.
(c) No liability under Title IV or Section 302 of ERISA
has been incurred by Seller or any ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a material risk to Seller or any
ERISA Affiliate of incurring any such liability, other than liability for
applicable insurance premiums due (which premiums have been paid when due).
Insofar as the representation made in this Section 3.14(c) applies to Sections
4064, 4069 or 4204 of Title IV of ERISA, it is made with respect to any employee
benefit plan, program, agreement or arrangement subject to Title IV of ERISA to
which Seller or any ERISA Affiliate made, or was required to make, contributions
during the five (5)-year period ending on the last day of the most recent plan
year that ended prior to the Closing Date.
(d) All contributions required to be made with respect to
any Plan on or prior to the Closing Date have been timely made in accordance
with Law and
33
past practice or where such payments have been made late no action has been
taken, or to the Knowledge of Seller, except as set forth in Section 3.14(d) of
the Seller Disclosure Letter, is anticipated, by the relevant Governmental
Authority.
(e) None of Seller, any Plan, any trust created
thereunder, nor (to the Knowledge of Seller) any trustee or administrator
thereof has engaged in a transaction in connection with which Seller, any Plan,
any such trust, or any trustee or administrator thereof, or any party dealing
with any Plan or any such trust could be subject to either a material civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material Tax
imposed pursuant to Section 4975 or 4976 of the Code.
(f) Each Plan has been operated and administered in all
material respects in accordance with its terms and applicable law, including but
not limited to, ERISA and the Code. To the extent any operational failures that
are not material have occurred, such failures have been corrected under the
EPCRS program of the IRS or the DFVC or fiduciary program of the DOL.
(g) Each Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a determination letter from
the Internal Revenue Service stating that it is so qualified, and, to the
Knowledge of Seller, no event has occurred since the date of such letter that
would adversely affect such qualification.
(h) No Plan provides medical, surgical, hospitalization,
death or similar benefits (whether or not insured) for employees or former
employees of Seller for periods extending beyond the date of their retirement or
other termination of service, other than (i) coverage mandated by applicable
law, (ii) death benefits under any "pension plan," (iii) benefits the full cost
of which is borne by the current or former employee (or his or her beneficiary)
or (iv) as set forth in the retention and severance arrangements listed in
Section 3.14(a) of the Seller Disclosure Letter.
(i) There are no pending or, to the Knowledge of Seller,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
(j) No temporary employee, seasonal employee, leased
employee or independent contractor providing services to the Business is
eligible to participate in any Plan. All independent contractors providing
services to the Business satisfy the appropriate tests for payroll tax
classification as independent contractors and not employees.
34
Section 3.15 Labor Relations and Employment.
(a) Except as has not had, or would not have, a Material
Adverse Effect, Seller represents as of the date of this Agreement the
following: (i) Seller is neither party to, nor bound by, any collective
bargaining agreement or any other agreements with a labor union; (ii) to the
Knowledge of Seller, there has been no labor union prior to the date hereof
organizing any employees of Seller into one or more collective bargaining units,
(iii) Seller has not received written notice that any representation petition
with respect to the employees of Seller has been filed with the NLRB; (iv) to
the Knowledge of Seller, there is no actual or threatened labor dispute, strike,
slowdown or work stoppage by employees of Seller; (v) to the Knowledge of
Seller, there is no pending or threatened charge or complaint against Seller by
or with the NLRB.
(b) Section 3.15(b) of the Seller Disclosure Letter sets
forth, as of December 16, 2002, the following: (i) a list of the names, titles,
functions, locations, annual salary, stock option grants and other compensation
of all employees, independent consultants and leased or temporary employees of
Seller; and (ii) the wage rates for non-salaried employees of Seller.
(c) Section 3.15(c) of the Seller Disclosure Letter
describes each agreement or arrangement under which Seller has or would
reasonably be expected to have after the Closing Date any liability to
indemnify, reimburse or advance any material amount to any officer, director,
employee or agent of Seller (other than with respect to payroll, travel expense
reimbursement and similar items in the Ordinary Course of Business) and the
nature and amount of each such obligation.
(d) Except as set forth in Section 3.15(d) of the Seller
Disclosure Letter, no employee or former employee of Seller has filed, or to the
Knowledge of Seller threatened in writing to file, any grievance against Seller
which would reasonably be expected to result in any material liability after the
Closing Date.
(e) Section 3.15(e) of the Seller Disclosure Letter
summarizes (i) the number of Persons who have been during the last 24 months, or
currently are, receiving short-term or long-term disability benefits, (ii) the
aggregate term of disability for such Persons and (iii) the aggregate amount of
disability benefits paid to such Persons during such period.
(f) Seller has no obligation to provide pension benefits
or retirement benefits to any employee or former employee of Seller after the
date of this Agreement, other than contributions under Seller's Savings Plan.
(g) To the Knowledge of Seller, as of the date hereof,
Seller has no material liability under the Plans or relating to payroll,
vacation, sick leave, workers' compensation, unemployment benefits, employee
stock option or profit-sharing plans, health care plans or benefits or any other
employee plans or benefits of any kind for any of Seller's former employees.
35
Section 3.16 Real Property; Personal Property; Sufficiency of
Assets.
(a) Section 3.16(a) of the Seller Disclosure Letter
contains a list of all real property owned by Seller including the Water Rights
(collectively, the "Owned Real Property").
(b) Section 3.16(b) of the Seller Disclosure Letter
contains a list of all real property that is leased or subleased by Seller (the
"Leased Real Property") and the leases under which it is held.
(c) Section 3.16(c) of the Seller Disclosure Letter
contains a list of all material fixed assets used in connection with the
operation of the Business.
(d) Seller has delivered or made available to Buyer true
and complete copies of all deeds, leases, easements, rights-of-way, or other
material instruments pursuant to which Seller took title to the Real Property
and material fixed assets used in connection with the operation of the Business
(including any and all amendments and other modifications of such instruments).
(e) Except as set forth in Section 3.16(e)(i) of the
Seller Disclosure Letter, Seller or an Affiliate of Seller has good, valid and
marketable title to all the Owned Real Property, free and clear of all Liens
except for Permitted Liens. Except as set forth in Section 3.16(e)(ii) of the
Seller Disclosure Letter, Seller holds good and valid leasehold title to the
Leased Real Property, free and clear of all Liens except for Permitted Liens, in
each case subject to the provisions of the applicable lease. Seller holds the
entire undivided leasehold estate in the Federal Sodium Leases. Seller is in
actual possession of the Real Property. There are no tenants with any rights of
occupancy or use of any portion of the Real Property except for the lease of a
portion of the Water Rights to Xxxxx X. Xxxxxxxx.
(f) Seller has good title to or a valid leasehold
interest in or other valid right to use all material personal property used in
the Business (the "Personal Property") that is reflected on the Financial
Statements or acquired in the Ordinary Course of Business since the date of the
Financial Statements that would have been required to be reflected on such
Financial Statements if acquired on or prior to such date, other than personal
property disposed of in Seller's Ordinary Course of Business since such date and
except where such failure to have good title to, a valid leasehold interest in
or other valid right to use such property would not reasonably be expected to
result in a Material Adverse Effect.
(g) None of the Owned Real Property, and to the Knowledge
of Seller, none of the Leased Real Property, is subject to any pending suit for
condemnation or other taking by any Governmental Authority or other Person, and
to the Knowledge of Seller, no such condemnation or other taking is threatened
or contemplated, except where such condemnation or other taking would not
reasonably be expected to result in a Material Adverse Effect.
36
(h) Seller is in compliance, in all material respects,
with all of the terms and conditions of the Federal Sodium Leases. As of the
date hereof, Seller has not received any written notice from any Governmental
Authority claiming a default under, or any noncompliance with, the Federal
Sodium Leases that has not been remedied in all material respects prior to the
date hereof, and to the Knowledge of Seller, no such claim of default under or
noncompliance with the Federal Sodium Leases has been threatened in writing.
(i) Except as set forth in Section 3.16(i) of the Seller
Disclosure Letter, other than the Excluded Assets, the Assets constitute all of
the material assets, tangible and intangible, of any nature whatsoever,
necessary to conduct the Business in all material respects. Other than the
Excluded Assets and continuing obligations with respect to filing applications
for findings of reasonable diligence with respect to the Water Rights, to the
Knowledge of Seller, there is no easement or other real property interest, other
than the Real Property, that is required, or has been asserted in writing since
January 1, 2000 by a Governmental Authority or other Person to be required, to
conduct or operate the Business.
(j) Except as set forth in Section 3.16(j) of the Seller
Disclosure Letter, at Closing, Seller shall deliver to Buyer good, valid and
marketable title to all the Assets, free and clear of all Liens other than
Permitted Liens.
Section 3.17 Insurance. Each of the insurance policies
maintained with respect to Seller and the Assets as of the date hereof (the
"Insurance Policies") are listed in Section 3.17 of the Seller Disclosure
Letter. As of the date hereof, all such Insurance Policies are in full force and
effect and all premiums due and payable thereon have been paid in accordance
with their terms, and since January 1, 2000, Seller and Parent have not received
with respect to any Insurance Policy any written notice of cancellation or
notice of premium increase, other than ordinary course premium increases in
connection with policy renewals.
Section 3.18 Books and Records. The books of account and other
financial records of Seller are complete and correct and represent actual, bona
fide transactions and have been maintained in accordance with sound business
practices and the requirements of Section 13(b)(2) of the Securities Exchange
Act of 1934, as amended (regardless of whether Seller is subject to that Section
or not), including the maintenance of an adequate system of internal controls.
Section 3.19 Brokers, Finders Fees. None of Seller, Parent or
Parent's Other Affiliates is committed to any liability for any brokers' or
finders' fees or any similar fees or commission in connection with the
transactions contemplated hereby.
Section 3.20 Bonds. Except as set forth in Section 3.20 of the
Seller Disclosure Letter, there are no lease, reclamation, construction,
fidelity, performance or other bonds, or letters of credit, posted or required
to be posted by Seller in connection with the Business or the Assets.
37
Section 3.21 No Other Commitments. Other than the Excluded
Assets, no material part of the Business or the Assets is directly or indirectly
subject in any manner to any (a) oral or written commitment or arrangement for
the sale, transfer, assignment or disposition thereof, in whole or in part,
except pursuant to this Agreement, or (b) purchase option, preferential right of
purchase, right of first refusal or similar arrangement, in the case of (a) or
(b) which would be triggered by the sale, transfer, assignment or other
disposition of the Business or the Assets.
Section 3.22 Transactions with Affiliates. Except as set forth
in Section 3.22 of the Seller Disclosure Letter and for inter-company services
of an administrative or corporate nature provided by Parent or Parent's Other
Affiliates to Seller in the Ordinary Course of Business, there are no Contracts
between Seller and Parent or Parent's Other Affiliates with respect to the
Business or the Assets ("Intercompany Contract"), other than Contracts that are
terminable by Seller on or before the Closing Date without adversely affecting
the Business, the conduct of the Business or the Assets in any material respect.
Section 3.23 Foreign Sales. Section 3.23 of the Seller
Disclosure Letter lists each country in addition to the United States in which
sodium bicarbonate produced from the Business has been sold or delivered by
Seller, Parent or Parent's Other Affiliates since January 1, 1999 (excluding any
sales or deliveries made by a third party distributor to end users of products
produced by the Business after sale and delivery of product by Seller, Parent
and its Affiliates, to such distributor).
Section 3.24 Solvency of Seller. Seller and Parent are not now
insolvent and at and immediately after the Closing and after delivery of the
Purchase Price and the transactions contemplated hereby, Seller and Parent shall
not be (i) insolvent (either because such party's financial condition is such
that the sum of its debts is greater than the fair value of its assets or
because the present fair saleable value of its assets shall be less than the
amount required to pay its probable liabilities on its debts as they mature),
(ii) have unreasonably small capital with which to engage in its business or
perform its obligations under this Agreement, including with respect to the
Excluded Liabilities or (iii) have incurred or plan to incur debts beyond its
ability to pay as they mature.
Section 3.25 Warranty Agreements; Warranty Claims.
(a) Section 3.25(a) of the Seller Disclosure Letter lists
each type of written warranty given on or after August 31, 1996 (but not
including any warranty given or that may arise in connection with spot sales) by
Seller, Parent or an Affiliate of either of them to customers of the Business
prior to the date of this Agreement, including, without limitation, any warranty
that reasonably could be expected to extend to end users of sodium bicarbonate
produced by the Business, in the Ordinary Course of Business.
(b) Except as disclosed in Section 3.25(b)(i) of the
Seller Disclosure Letter, no distributor, customer or end user of products
produced by the Business has made, or to the Knowledge of Seller threatened in
writing to make, a claim
38
for breach of warranty that remains unresolved as of the date hereof, or could
reasonably be expected to result in material future liability to the Business.
Section 3.25(b)(ii) of the Seller Disclosure Letter sets forth a list of
complaints (without making any representations as to the completeness or
accuracy of the list) made by a distributor, customer or end user of products
produced by the Business that have been recorded by Seller since January 1,
1996.
Section 3.26 Product Sales Orders. Except as set forth in
Section 3.26 of the Seller Disclosure Letter, neither Seller nor any Affiliates
of Seller have any outstanding order to furnish product from the Business,
except for obligations arising (i) under Material Contracts, (ii) in connection
with spot sales of product and (iii) under Contracts involving monetary
obligations for less than $20,000 during the remaining term of the Contract.
Section 3.27 No Other Representations or Warranties. Except
for the representations and warranties contained in this Article III, none of
Seller nor any other Person makes any express or implied representation or
warranty on behalf of Seller or otherwise in respect of Seller or their
respective businesses. Without limiting the generality of the foregoing, Seller
has not made, nor shall be deemed to have made, any representations or
warranties in any presentation of the Business in connection with the
transactions contemplated hereby, and no statement contained any such
presentation shall be deemed a representation or warranty hereunder or
otherwise. No Person, other than Parent as set forth in Article III, has been
authorized by Seller to make any representation or warranty relating to Seller,
the Business or otherwise in connection with the transactions contemplated
hereby and, if made, such representation or warranty must not be relied upon as
having been authorized by Seller. Except for the representations and warranties
set forth in Article IV, Seller acknowledges that it is not relying on any
representation or warranty of Buyer or of any other Person.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND AMERALIA
Buyer and AmerAlia hereby represent and warrant to Seller as
follows:
Section 4.1 Organization of Buyer and AmerAlia.
(a) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Colorado. Buyer has
previously supplied Seller with or made available to Seller true and complete
copies of the certificate of incorporation and by-laws or similar Governing
Documents of Buyer.
(b) AmerAlia is a corporation duly organized, validly
existing and in good standing under the laws of the State of Utah. AmerAlia has
previously supplied Seller with or made available to Seller true and complete
copies of the certificate of incorporation and by-laws or similar Governing
Documents of AmerAlia. As of the
39
date hereof, AmerAlia is the beneficial owner of all of the outstanding stock of
Natural Soda, Inc., which owns all of the outstanding equity interests in Buyer.
At Closing, AmerAlia will own a majority of the outstanding voting stock of
Natural Soda, Inc., which will continue to own all of the outstanding equity
interests in Buyer.
Section 4.2 Authority of Buyer and AmerAlia; Binding Effect.
(a) Each of Buyer and AmerAlia has the requisite
corporate power and authority to execute and deliver this Agreement and the
Related Agreements to which Buyer and/or AmerAlia are parties, as the case may
be, to consummate the transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder. The execution and delivery by
each of Buyer and AmerAlia of this Agreement and the Related Agreements to which
Buyer and/or AmerAlia are parties, as the case may be, the performance of the
obligations of Buyer and AmerAlia hereunder and thereunder, and the consummation
of the transactions contemplated hereby and thereby have been duly authorized by
all requisite corporate action on the part of Buyer and/or AmerAlia, as the case
may be. No other corporate proceedings on the part of Buyer or AmerAlia are
required in connection with the execution, delivery and performance by Buyer
and/or AmerAlia, as the case may be, of this Agreement and the Related
Agreements to which Buyer and/or AmerAlia are parties, as the case may be, or
the consummation by Buyer and AmerAlia, of the transactions contemplated hereby
and thereby.
(b) This Agreement has been duly executed and delivered
by Buyer and AmerAlia and constitutes, and when executed and delivered, each of
the Related Agreements to be executed and delivered by Buyer and AmerAlia, will
constitute, assuming, in each instance, due authorization, execution and
delivery of this Agreement and the Related Agreements by any parties thereto
other than Buyer and AmerAlia, a valid and legally binding obligation of Buyer
and AmerAlia enforceable against Buyer and AmerAlia in accordance with its
terms, except as may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to creditors rights generally and (ii)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).
Section 4.3 Non-Contravention. Except as set forth in Section
4.3 of the Buyer Disclosure Letter, the execution, delivery and performance by
Buyer and AmerAlia of this Agreement and the Related Agreements to which Buyer
and/or AmerAlia are parties, as the case may be, is a party and the consummation
by Buyer and AmerAlia of the transactions contemplated hereby and thereby shall
not (i) violate any provision of the certificate of incorporation, by-laws or
similar organizational documents of Buyer or AmerAlia, (ii) result in the breach
or violation of, give rise to any right of termination, acceleration of any
obligation or amendment under, result in the creation of any Lien on any assets
of Buyer or constitute a default under (in each case, with or without the giving
of notice or the lapse of time or both) any mortgage, deed of trust, or other
arrangement or instrument for borrowed money, contract (including without
limitation the Commitment Letter and, as of the Closing Date, the agreement(s)
contemplated thereby), lease, license, instrument, permit or Environmental
Permit, to which Buyer is a
40
party or is subject or by which any assets of Buyer are bound or (iii) assuming
that all consents and approvals referred to in Section 4.4 have been obtained,
violate any Law or Order, except, as to clause (ii) or (iii), for such breaches,
violations, rights, Liens or defaults which would not, individually or in the
aggregate, reasonably be expected to prevent or delay Buyer's or AmerAlia's
ability to consummate of any of the transactions contemplated hereby.
Section 4.4 Consents and Approvals. Except as set forth in
Section 4.4 of the Buyer Disclosure Letter, the execution, delivery and
performance of this Agreement or the Related Agreements to which Buyer and/or
AmerAlia are parties, as the case may be, by Buyer and AmerAlia and the
consummation by Buyer and AmerAlia of the transactions contemplated hereby and
thereby does not and shall not violate or require any authorization, consent,
waiver, approval, exemption, permit, Environmental Permit or order of, or any
other action by, or notice to or declaration to, or filing with, any
Governmental Authority or other Person under any Law applicable to Buyer,
AmerAlia or any of its assets, except where the violations or failure to obtain
such authorization, consent, waiver, approval, exemption, permit, Environmental
Permit or order or to make such, notice or declaration or filing would not,
individually or in the aggregate, reasonably be expected to prevent or delay the
consummation of any of the transactions contemplated hereby or thereby.
Section 4.5 Financial Capability.
(a) Buyer has received an executed commitment letter
addressed to Buyer (the "Commitment Letter") with respect to the equity and debt
investment in Buyer by The Sentient Group (or funds controlled by The Sentient
Group) of Xxxxxxxx, Xxxxxx, Xxxxxx ("Sentient"), whereby Sentient has committed,
upon the terms and subject to the conditions set forth therein, to make an
investment of at least $25,000,000 in Natural Soda, Inc. in connection with the
transactions contemplated hereby (the "Financing"). Buyer has delivered a
complete and correct copy of the Commitment Letter referred to in this Section
4.5(a) as in effect on the date hereof to Seller. As of the date of this
Agreement, the Commitment Letter is in full force and effect and has not been
amended or rescinded, and Buyer has no reason to believe that any of the
conditions set forth therein will not be satisfied by the Closing Date.
(b) The aggregate proceeds of the Financing will be
sufficient to (i) pay the Purchase Price to Seller and (ii) fund the performance
by Buyer of its obligations under this Agreement, including with respect to the
Assumed Liabilities, following the Closing. Buyer knows of no fact or
circumstance that it believes will prevent it from obtaining the Financing.
Section 4.6 Litigation and Claims. As of the date hereof,
there is no Action pending or to the Knowledge of Buyer or Knowledge of
AmerAlia, threatened against Buyer or AmerAlia that challenges the transactions
contemplated hereby other than any Action that would not reasonably be expected
to prevent, delay, make illegal or otherwise interfere with the consummation of
the transactions contemplated hereby.
41
Section 4.7 Compliance with Laws. Each of Buyer and AmerAlia
is in compliance with all Laws and Orders applicable to Buyer and/or AmerAlia,
as the case may be, except where such non-compliance would not be reasonably
expected to prevent, delay, make illegal or otherwise materially interfere with
the consummation of the transactions contemplated hereby.
Section 4.8 Solvency of Buyer. Buyer is not now insolvent, and
at and immediately after the Closing and after giving effect to the Financing
and the transactions contemplated hereby, Buyer shall not (i) be insolvent
(either because Buyer's financial condition is such that the sum of its debts is
greater than the fair value of its assets or because the present fair saleable
value of its assets shall be less than the amount required to pay its probable
liabilities on its debts as they mature), (ii) have unreasonably small capital
with which to engage in its business and perform its obligations under this
Agreement, including with respect to the Assumed Liabilities, or (iii) have
incurred or plan to incur debts beyond its ability to pay as they mature.
Section 4.9 Brokers, Finders Fees. None of AmerAlia, Buyer or
any other Subsidiary of AmerAlia is committed to any liability for any brokers'
or finders' fees or any similar fees or commission in connection with the
transactions contemplated hereby, other than any fees payable to XxXxxxxxx Xxxxx
Securities Co., which shall be paid by Buyer or AmerAlia and for which Seller
and Parent shall have no liability.
Section 4.10 No Other Representations or Warranties. Except
for the representations and warranties contained in this Article IV, neither
Buyer nor any other Person makes any express or implied representation or
warranty on behalf of Buyer. Buyer acknowledges that it is not relying on any
representation or warranty of Seller or of any other Person except as expressly
set forth in Article III.
ARTICLE V
COVENANTS
Section 5.1 Access and Investigation.
(a) Between the date of this Agreement and the Closing
Date, and upon reasonable advance written notice received from Buyer, Seller
shall in each case subject to the limitations imposed by applicable Laws as
determined in good faith by Seller, and without affecting or limiting the scope
of any of Seller's or Parent's representations, warranties, covenants and
indemnities in this Agreement or any Related Agreements or (except as
contemplated by Sections 7.2(c)(i) and 7.3(c)(i) hereof) limiting liability for
any breach of any of the foregoing:
(i) afford Buyer and its Representatives and
prospective lenders and their Representatives (collectively, "Buyer
Group") reasonable access, during regular business hours, to Seller's
employees, properties, Permits, Environmental Permits, books and
records (including books
42
and records of Parent or Parent's Other Affiliates insofar as they
relate to the Business), the Overland Park Employees, the Assumed
Contracts and other existing documents and data relating to the Assets,
such rights of access to be exercised in a manner that does not
unreasonably interfere with the operations of Seller or Parent or
Parent's Other Affiliates and in each case subject to any limitations
imposed by applicable Law or confidentiality obligations of Seller or
Parent or Parent's Other Affiliates to third parties;
(ii) furnish or make available to Buyer Group during
regular business hours copies of all such Assumed Contracts, Permits,
Environmental Permits, books and records and other existing documents
and data as Buyer may reasonably request, in each case subject to any
limitations imposed by applicable Law or confidentiality obligations of
Seller, Parent or any other Subsidiary of Parent to third parties;
(iii) furnish or make available to Buyer Group during
regular business hours such additional financial, operating and other
relevant data and information as Buyer may reasonably request; and
(iv) otherwise cooperate and assist, to the extent
reasonably requested by Buyer, with Buyer's investigation of the
properties, assets and financial condition of Seller, the Business and
the Assets.
(b) Between the date of this Agreement and the Closing
Date, and upon reasonable advance notice received from Buyer, Buyer shall have
the right to have the Real Property and tangible Personal Property inspected by
Buyer Group, at Buyer's sole cost and expense, for purposes of determining the
physical condition and legal characteristics of the Real Property and tangible
Personal Property, provided that in no event shall subsurface or other
destructive testing be performed by or on behalf of Buyer Group without the
prior written consent of Seller.
(c) Notwithstanding, the foregoing, Buyer shall not
contact in connection with the transactions contemplated by this Agreement any
employees of Seller or any of Seller's suppliers or customers, or subject to
Section 5.1(d), any Governmental Authority governing Seller's business
activities without obtaining the prior written consent of Seller, which consent
shall not be unreasonably withheld or delayed, and that Seller shall have the
opportunity to designate one or more Representatives who shall have the right to
participate in any telephone calls to such Persons and to be present at and
participate in any record review session or other meeting with such Persons, and
who shall make themselves reasonably available for such purposes,
(d) Seller hereby authorizes Buyer to review any records
maintained by Governmental Authorities with respect to the Assets and Business,
and to contact (i) BLM with respect to transfer of the Federal Sodium Leases and
the Federal Rights of Way, (ii) DMG with respect to transfer of Seller's mine
Permit, and (iii) other Governmental Authorities in connection with transfer to
Buyer of other Permits and/or Environmental Permits or obtaining new Permits
and/or Environmental Permits, as
43
necessary; provided, however, that other than commenting on matters that are
open to public comment without violating confidentiality obligations pursuant to
Section 5.1 and 5.16 of this Agreement, Buyer shall not contact any Governmental
Authorities with respect to the Assets or the Business without obtaining the
prior written consent of Seller, which consent shall not be unreasonably
withheld or delayed, and that Seller shall have the opportunity to designate one
or more Representatives who shall have the right to participate in any telephone
calls to such Governmental Authorities and to be present at and participate in
any record review session or other meeting with such Governmental Authorities,
and who shall make themselves reasonably available for such purposes, it being
understood that the limitations set forth in this proviso shall not restrict
Buyer's right to review publicly available information relating to the Assets or
the Business.
(e) All information provided to Buyer and its Affiliates,
and its and their Representatives by or on behalf of Seller or Parent, in
connection with this Agreement and the transactions contemplated hereby shall be
held by Buyer and its Affiliates, and its and their Representatives as
Evaluation Material or, to the extent applicable, IMC Competitively Sensitive
Information, as defined in, and pursuant to the respective terms of, the
Confidentiality Agreements. Buyer shall, and shall direct its Representatives
and funding sources and other Representatives to, hold such information
confidential and otherwise comply with the Confidentiality Agreements with
respect to such information.
Section 5.2 Conduct of Business. Except (i) as expressly
contemplated by this Agreement, (ii) with the consent of Buyer (which shall not
be unreasonably withheld or delayed), or (iii) as otherwise set forth in Section
5.2 of the Seller Disclosure Letter, during the period beginning on the date
hereof and ending at the Closing, Seller shall:
(a) conduct its business only in the Ordinary Course of
Business, and use Best Efforts to (i) preserve intact the Assets, its business
organization and properties and maintain relationships with suppliers,
distributors, employees, landlords, agents and customers of the Business and any
other Persons having business arrangements with the Business and (ii) continue
collection of receivables and payment of trade accounts payable in a manner
consistent with past practices;
(b) maintain the Assets in compliance with applicable Law
and in a state of repair, order and condition that is consistent with the
Ordinary Course of Business subject to ordinary wear and tear;
(c) use Best Efforts to keep in full force and effect,
without amendment except as otherwise agreed by the parties, all Material
Contracts and other material rights relating to the Business and the Assets
(other than by allowing any such Material Contract or material right to expire
in accordance with its terms except as provided in Section 5.23);
44
(d) not sell, transfer or assign any of its Assets other
than in the Ordinary Course of Business, or permit the creation of any Lien on
any of its Assets other than a Permitted Lien or any Lien which will be released
at or prior to Closing;
(e) use Best Efforts to comply with all material
obligations under applicable Law and material contractual obligations applicable
to the Business and the Assets;
(f) not enter into any Assumed Contract that provides for
capital expenditures in excess of $75,000 for any individual contract or
$150,000 for all such contracts in the aggregate, except to the extent Seller in
its reasonable good faith judgment believes is necessary for the preservation of
the Business or the Assets; provided, however, that any such Assumed Contract or
obligation is on commercially reasonable terms and that Seller has provided
reasonable advance written notice thereof to Buyer;
(g) agree to notify Buyer every five (5) Business Days of
(i) any long-term obligation to sell sodium bicarbonate at a specified price,
including an oral Contract providing for recurring sales to customers and (ii)
agreements to provide price reductions as set forth in Section 4(b) of the
Bioproducts Agreement or other material obligations of Seller that shall not be
fulfilled or satisfied at or prior to Closing,
(h) use Best Efforts to continue in full force and effect
the insurance coverage under the policies set forth in Section 3.17 of the
Seller Disclosure Letter or substantially equivalent policies;
(i) except as may be required to comply with Section
5.6(e) or as required to comply with ERISA or to maintain qualification under
Section 401(a) of the Code, not amend, modify or terminate any Plan without the
express written consent of Buyer;
(j) cooperate with Buyer and assist Buyer in identifying
the Permits and Environmental Permits required by Buyer to own and operate the
Business from and after the Closing Date and cooperate with Buyer to effectuate
the transfer of such existing Permits and Environmental Permits to Buyer, where
permissible, or to obtain its own new Permits and/or Environmental Permits (it
being understood that any costs or expenses incurred in connection with the
transfer of any such Permits and Environmental Permits or with Buyer obtaining
new Permits and Environmental Permits shall be borne by Buyer);
(k) maintain all books and records of Seller relating to
the Business in the Ordinary Course of Business;
(l) not take any affirmative action, or fail to take any
reasonable action within its control, as a result of which Seller should be
aware that any of the representations and warranties set forth in Section 3.6 or
3.7 would be untrue or incorrect at the Closing so that the condition set forth
in Section 6.2(a) is not satisfied;
45
(m) use Best Efforts to not allow the levels of raw
materials, supplies or other materials included in the Inventory to vary
materially from the levels maintained in the Ordinary Course of Business, and
not reduce the operating spare part equipment inventory in a manner that would
result in a lack of redundancy with respect to any system that is part of the
Business, except for reductions made in the Ordinary Course of Business and
except for removal of Excluded Assets; and
(n) not enter into any compromise or settlement of any
litigation, proceeding or governmental investigation relating to the Assets, the
Business or the Assumed Liabilities that would materially impair the value of
the Assets or Buyer's ability to operate the Business in a manner substantially
similar to the way in which it currently is operated by Seller.
Section 5.3 Posting of Guaranty or other Security. Buyer and
AmerAlia agree, and each shall take any and all reasonable action to do, or
cause to be done, all things necessary, under applicable Laws or any applicable
Contract to post as soon as practicable any guaranty, bond, letter of credit or
other security required by third parties in connection with the assignment and
assumption of any rights and obligations under any of the Contracts, Permits or
Environmental Permits and agree to cooperate with Seller and Parent in causing
such third parties to release, terminate or cancel any such security posted by
Seller, Parent or, if applicable, its Affiliates under such Contract, Permit or
Environmental Permit so as to enable Seller, Parent or, if applicable, its
Affiliates to be released from such security as soon as practicable following
Closing. Buyer shall reimburse and indemnify Seller, Parent, or, if applicable,
its Affiliates for any Loss as a result of such security not being released as a
result of any failure by Buyer to post replacement security.
Section 5.4 Title Defects Identified in Title Insurance
Commitments. If within seven (7) days after obtaining a commitment to issue a
title insurance policy (a "Title Commitment"), and within ten (10) days prior to
the Closing, Buyer notifies Seller of any Lien (other than a Permitted Lien) or
other matter affecting title to any parcel of Owned Real Property which prevents
access to or which could prevent or impede in any material way the use or
operation of that parcel of Owned Real Property for the purposes for which it is
currently used or operated by Seller (each a "Title Defect"), Seller and Parent
shall use commercially reasonable efforts (but without any requirement to pay
material amounts or undertake any material liability) to, prior to Closing (i)
remove such Title Defects, or (ii) with the consent and at the expense of Buyer,
cause the title company to commit to insure over each such Title Defect; it
being acknowledged and agreed that the Closing shall not be postponed in order
to effect the foregoing obligations, provided that Seller has not sold, leased,
transferred, mortgaged or otherwise further materially encumbered the Real
Property prior to the Closing Date and furthermore it being understood that
Seller agrees to remove any Title Defect arising under any Intercompany Contract
prior to Closing.
Section 5.5 Further Assurances.
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(a) Seller and Buyer agree to cooperate with respect to
the notices and filings required to be made with, and the consents, approvals,
waivers and authorizations required to be obtained prior to the Closing in
connection with the transactions contemplated hereby. Each of Seller and Buyer
(i) shall effect, as promptly as reasonably practicable, the filings and notices
required to be made by it prior to the Closing and (ii) subject to the
limitations set forth in this Agreement, shall use its Best Efforts to obtain,
as promptly as reasonably practicable, the consents, approvals, waivers and
authorizations of Governmental Authorities and other Persons required to be
obtained by it prior to the Closing; in each case in connection with the
transactions contemplated by this Agreement.
(b) Subject to Section 2.10, Seller shall use its Best
Efforts to take or cause to be taken all action, to do or cause to be done, and
upon the request of Seller and in accordance with Seller's instructions, Buyer
shall assist and cooperate with Seller in doing, all things necessary, proper or
advisable under applicable Laws and regulations to obtain any consent, approval
or amendment identified in Section 3.4 of the Seller Disclosure Letter or
otherwise required to assign and convey the Assets to Buyer including completing
credit applications and financial information required in a timely manner;
provided, that in no event shall Buyer contact any Persons (other than Seller
and its Affiliates in accordance with Section 5.1) who are parties to any
agreements, leases, licenses or other Contracts relating to the Business, for
purposes of assisting Seller to obtain the aforementioned consents or otherwise
in connection with this Agreement, without the prior written authorization or
direction of Seller, except as otherwise provided in Section 5.1(d).
(c) Buyer shall use its Best Efforts to obtain as
promptly as practicable the Financing required to be obtained to consummate the
transactions contemplated hereby as described in Section 4.5. Buyer shall not
intentionally take any action that would be reasonably likely to result in the
failure of the consummation of the Financing.
(d) At any time after the Closing Date, Seller, Parent,
Buyer and AmerAlia shall promptly execute, acknowledge and deliver any other
assurances or documents reasonably requested by Seller, Parent, Buyer or
AmerAlia, as the case may be, and necessary for Seller, Parent, Buyer or
AmerAlia, as the case may be, to satisfy their respective obligations hereunder
or obtain the benefits contemplated hereby, provided that in doing so, no party
shall be obligated to incur any out-of-pocket expense or liability not
associated with its obligations hereunder. In particular, Seller and Parent
agree to cooperate with Buyer in its obtaining those approvals of Governmental
Authorities listed on Section 5.5(d) of the Seller Disclosure Letter, which
lists such approvals that are not required to be obtained prior to Closing, and
agree to obtain, provide and file, at Buyer's cost and expense (except for legal
fees incurred by Seller in connection therewith), the documents that are
reasonably required to be furnished by Seller or Parent to any Governmental
Authority in order to obtain such approvals.
(e) Buyer shall use Best Efforts to obtain the approval
of Governmental Authorities listed on Section 5.5(d) of the Seller Disclosure
Letter that
47
were not required to be obtained prior to Closing as promptly as reasonably
practicable following the Closing Date.
(f) Subject to the limitations set forth in this
Agreement, each party shall use its Best Efforts to cause the conditions to its
obligations hereunder to be satisfied (including, without limitation, the
execution and delivery of all agreements contemplated hereunder to be so
executed and delivered and the making and obtaining of all third party and
governmental filings, authorizations, approvals, consents, releases and
terminations).
(g) Without limiting the generality of the foregoing, and
subject to the satisfaction of all of the conditions set forth herein, Buyer and
Seller shall use their Best Efforts to consummate the transactions contemplated
hereby as soon as reasonably practicable.
Section 5.6 Employee Matters.
(a) Within five (5) Business Days following the date of
this Agreement, and in any event prior to the Closing, Buyer shall make an offer
of employment to each employee of Seller, including those on sick leave,
vacation, other authorized leaves of absences or long- or short-term disability
(such employees, the "Offered Employees"), on terms and conditions, including,
but not limited to salary or wages, incentive opportunities and benefits that
are in the aggregate comparable to those provided by Seller and its Affiliates
on the date hereof, for employment commencing on the Closing Date with Buyer.
The benefits that will be offered by Buyer to the Offered Employees are
summarized in Section 5.6(a) of the Buyer Disclosure Letter. Those employees of
Seller who commence employment on the Closing Date with Buyer or its Affiliates
are referred to herein as "Transferred Employees."
(b) Seller shall have the right to terminate, on or after
the Closing Date, any and all Offered Employees who did not commence employment
with Buyer upon the Closing Date (the "Terminated Seller Employees"). Buyer
shall be liable, and shall reimburse Seller, for any severance or other
termination benefits, including, but not limited to, the cost of any notice to
employees required by law, which may become payable to Terminated Seller
Employees in connection with the termination of their employment from Seller.
(c) Buyer shall, and shall cause its Affiliates to, give
the Transferred Employees full credit, for purposes of eligibility, vesting and,
for purposes of vacation benefits, benefit accrual, under any employee benefit
plans, programs or arrangements maintained as of the Closing Date by Buyer and
Buyer's Affiliates, for the Transferred Employees' service with Seller and its
Affiliates to the same extent recognized under the Plans by Seller and its
Affiliates immediately prior to the Closing Date; provided that such crediting
of service does not result in duplication of benefits for the same period of
service.
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(d) Buyer and Buyer's Affiliates shall (i) waive all
limitations as to preexisting conditions exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Transferred
Employees (to the extent that such exclusions or waiting periods were waived or
satisfied pursuant to existing Plans) under any "welfare benefit plans" (as
defined in Section 3(1) of ERISA) that such employees may be eligible to
participate in after the Closing Date and (ii) provide each Transferred Employee
with credit for any co-payments and deductibles paid prior to the Closing Date
in satisfying any applicable deductible or out-of-pocket requirements under any
welfare benefit plans that the Transferred Employees are eligible to participate
in after the Closing Date.
(e) Except as provided in this Section 5.6(e),
Transferred Employees shall cease participation in the Plans as of the Closing
Date. For the period commencing on the date immediately following the Closing
Date and ending twelve months after the Closing Date, Buyer and its Affiliates
shall provide the Transferred Employees benefits and terms and conditions of
employment that are comparable to those provided to such employees immediately
prior to the Closing Date. For the period commencing on the date immediately
following the Closing Date and ending twelve months after the Closing Date,
Buyer and its Affiliates shall provide the Transferred Employees the benefits
described in Section 5.6(a) of the Buyer Disclosure Letter; provided, however,
that with respect to certain benefits hereinafter identified, until the earlier
of ninety (90) days following the Closing Date or such time as Buyer establishes
its comparable plans (which shall be no later than ninety (90) days following
the Closing Date), Seller agrees that the Transferred Employees (and, where
applicable, their covered dependents) shall be permitted to continue
participation in its (1) long-term disability plan, (2) medical plan (including
medical, dental and prescription drug benefits), and (3) life and accidental
death and dismemberment plan. For the post-Closing participation of the
Transferred Employees and their covered dependents in the medical plan (item (2)
above), Buyer shall (i) pay to Seller $3,000 per month for costs of
administration on the first Business Day of the month and (ii) promptly
reimburse Seller for the actual costs incurred by Seller with respect to
coverage and services properly provided under the medical plan for Transferred
Employees and their covered dependents within fifteen (15) days following
receipt of invoice listing such coverage and services from Seller, Parent or its
Affiliates. For the post-Closing participation of the Transferred Employees in
the long-term disability and the life and accidental death and dismemberment
coverages (items (1) and (3) above), Buyer shall pay to Seller monthly on the
first Business Day of the month the premium or other normal charges per employee
for each benefit in the same amounts that are imposed for these coverages on
Seller's participants. Seller acknowledges that it has approved the list of
benefits set forth in Section 5.6(a) of the Buyer Disclosure Letter.
(f) On or before the Closing Date, Seller shall provide a
list of any and all employees of Seller who have experienced an "employment
loss" (as defined by the Worker Adjustment and Retraining Notification Act of
the United States ("WARN Act")) within ninety (90) days prior to the Closing
Date. For a period of ninety (90) days after the Closing Date, Buyer shall not
engage in any conduct which would result in an "employment loss" (as defined by
the WARN Act) for a sufficient number of employees
49
of Seller, which, if aggregated with any such conduct on the part of Seller
prior to the Closing Date, would trigger the WARN Act or any similar applicable
state or local law requiring notice to employees in the event of a plant closing
or mass layoff. In the event that Buyer breaches this covenant, or a WARN Act
event is triggered by the termination of the employment of the Terminated Seller
Employees, Buyer shall indemnify and hold harmless Seller, the Parent and any of
their Affiliates, and any of their directors, officers, employees, agents, or
any of their respective heirs, successors or assigns, from and against any and
all claims, losses, damages, expenses, obligations and liabilities (including
costs of collection, reasonable attorney's fees and other costs of defense)
which they may incur.
(g) Notwithstanding the generality of Section 5.6(e)
above, following the Closing, Buyer shall honor and cause its Affiliates to
honor the arrangements set forth in Section 5.6(g) of the Seller Disclosure
Letter. In addition, Buyer shall recognize accumulated vacation entitlement and
years of service of Transferred Employees for purposes of the common law,
employment standards legislation and pension benefits legislation.
(h) Except as expressly provided herein, nothing
contained herein, express or implied, is intended to confer upon any Transferred
Employee the right to continued employment with Buyer or any of its Affiliates
for any period by reason of this Agreement.
(i) As soon as reasonably practicable after the Closing
Date, Buyer shall take all actions necessary and appropriate to ensure that
Buyer maintains or adopts one or more defined contribution plans and related
trust or trusts (the "Buyer Account Plan") effective as of the Closing Date. The
Buyer Account Plan shall provide for benefits that are comparable in the
aggregate to those provided under the IMC Chemicals Inc. 401(k) Plan ("Seller's
Savings Plan") as of the date hereof, including, without limitation, matching
contributions and provisions for those employer contributions made under the
Seller's Savings Plan to accounts of employees of Seller who are not deferring
income under such plan. Following the Closing and as soon as practicable
following receipt by Seller of (i) a copy of a favorable determination letter
issued by the Internal Revenue Service with respect to the Buyer Account Plan or
(ii) an opinion, satisfactory to Seller's counsel, of Buyer's counsel that the
Buyer Account Plan and its related trust(s) qualify under Section 401(a) and
Section 501(a) of the Code, Seller shall provide each Transferred Employee who
is a participant in the Seller's Savings Plan with the opportunity to receive a
distribution of his or her account balance and shall be given the opportunity to
elect to "roll over" such account balance to the Buyer Account Plan, subject to
and in accordance with the provisions of such Plan and applicable law. Seller
shall provide Buyer with copies of such personnel and other records of Seller
pertaining to the Transferred Employees and such records of any Representative
of Seller pertaining to the Transferred Employees and such records of any
Representative of Seller, in each case pertaining to Seller's Savings Plan and
as Buyer may reasonably request in order to administer and manage the accounts
and assets rolled over to the Buyer Account Plan.
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(j) Seller shall be liable for any claims made or
incurred under the Plans by the Transferred Employees and their beneficiaries
through the Closing Date. For purposes of this Section 5.6(j), a claim under a
Plan shall be deemed made or incurred when the services that are the subject of
the charge are performed. Buyer shall be liable, and shall indemnify Seller, for
any severance payments due to Offered Employees who do not accept employment
with Buyer or its Affiliates.
(k) Buyer agrees to be responsible for, and indemnify and
hold harmless Seller and its Affiliates, and its and their directors, officers,
employees and agents from and against, all direct and indirect costs, expenses,
obligations and liabilities (including, but not limited to, costs of collection,
attorneys' fees and other costs of defense) incurred by Seller and its
Affiliates, and its and their directors, officers, employees and agents arising
from all notices or payments due to any Transferred Employee and all notices,
payments, fines or assessments due to any Governmental Authority, pursuant to
any applicable federal, state or local law, common law, statute, rule or
regulations with respect to the employment, discharge or layoff of employees by
Buyer or any of its Affiliates following the Closing, including but not limited
to the WARN Act, Section 4980B of the Code and any rules or regulations as have
been issued in connection with the foregoing.
(l) No provision of this Section 5.6 shall create any
third-party beneficiaries and no current or former employees, including, but not
limited to, Transferred Employees and Terminated Seller Employees, shall have
any rights under this Section 5.6 with respect to employment or continued
employment with Buyer or any benefits under this Section 5.6.
Section 5.7 Post-Closing Cooperation; Filing of Tax Returns.
(a) After the Closing, upon reasonable written notice,
Buyer and Seller shall, in a prompt and timely manner, furnish or cause to be
furnished to the other party and its Representatives access during normal
business hours on reasonable notice to such information (and assistance,
including but not limited to the assistance of transferred personnel) relating
to Seller as is reasonably necessary for governmental filings, financial
reporting and accounting matters, the preparation and filing of any Tax Returns,
any claims relating to Tax Refunds, reports or forms or the defense of any Tax
audit, claim or assessment. Each party shall reimburse the other for reasonable
out-of-pocket costs and expenses incurred in assisting the other pursuant to
this Section 5.7. Neither party shall be required by this Section 5.7 to take
any action that would unreasonably interfere with the conduct of its business or
unreasonably disrupt its normal operations. Buyer shall retain such information
for at least five (5) years following the Closing Date. If Buyer intends to
dispose of such information within ten (10) years following the Closing Date,
Buyer shall notify Seller of its intention. If Seller notifies Buyer, within
thirty (30) days of the receipt of Buyer's notice, of Seller's desire to acquire
such information, Buyer shall transfer such information to Seller at the expense
of Seller.
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(b) With respect to any Taxes (other than Transfer Taxes,
with respect to which any Tax Returns shall be prepared in accordance with
Section 2.11, and other than Taxes that are the subject of the representations
and warranties contained in Section 3.13) the liability for which is assumed by
Buyer pursuant to Section 2.3 but for which Seller is primarily or secondarily
liable under applicable Law, Buyer shall (i) prepare any Tax Returns required to
be filed in respect of such Taxes, (ii) provide such Tax Returns to Seller at
least ten (10) Business Days prior to the due date of such Tax Returns for
Seller's review and consent which shall not be unreasonably withheld, and (iii)
timely file such Tax Returns (prepared in a manner consented to by Seller) and
timely pay such amounts shown as due thereon to the appropriate taxing authority
(on behalf of Seller, if required).
(c) Within thirty (30) days after Closing, Buyer shall
(i) file with District Court in and for Water Division No. 5 a Notice of
Transfer of Conditional Water Right, (ii) file a motion for substitution of
party for all Pending Water Court Litigation that Buyer wishes to continue to
oppose, and (iii) file with the
Colorado State Engineer a Notice of Change of
Owner and Address with respect to all well permits issued by the
Colorado State
Engineer and with respect to the Water Rights. In the event Buyer does not file
a motion for substitution of party for any or all Pending Water Court Litigation
within thirty (30) days after Closing, Seller may file a motion to withdraw from
any Pending Water Court Litigation with respect to which Buyer has not prior
thereto filed a motion for substitution of party.
(d) After the Closing, Buyer shall have sole right, at
its own cost and expense to assume control of the negotiation, settlement or
defense of the Action set forth in Section 3.8 of the Seller Disclosure Letter,
provided that Buyer shall not agree to any non monetary relief adversely
affecting Seller or to payment by Seller of any amount that is not indemnified
as a result of Buyer's assumption of obligations in Section 2.3(m).
Section 5.8 Books and Records of the Business Post Closing.
Seller agrees to deliver to Buyer or make available to Buyer, at or as soon as
practicable after the Closing all books and records of Seller insofar as such
books and records relate primarily to the Business or the Assets. Seller further
agrees to deliver or make available to Buyer as soon as practicable after the
Closing and at Buyer's request, a copy of that portion of all other books and
records of Parent and any other Subsidiary of Parent insofar as they relate to
the Business or the Assets. Notwithstanding the foregoing, Seller shall not be
obligated to provide (i) any books and records that relate solely to, or (ii)
any distinct portion of any books and records that relate solely to, Parent as a
whole or any businesses, divisions or Subsidiaries of Parent other than the
Business or the Assets. Buyer hereby agrees to allow Seller to retain copies of
all books and records of Seller relating, but not exclusively relating, to the
Business or the Assets. Buyer hereby agrees to furnish or make available to
Seller, Parent or its Affiliates during regular business hours copies of all
books and records and other documents and data as Seller, Parent or its
Affiliates may reasonably request in connection with any audit, litigation,
preparation of tax returns, regulatory filings or similar purposes, in each case
subject to any
52
limitations imposed by applicable Law or confidentiality obligations of Buyer to
third parties.
Section 5.9 Customers and Other Business Relationships. Seller
hereby agrees to notify all vendors (including, without limitation,
warehousemen), suppliers and other Persons other than Seller or Seller's
employees who are in possession of any Assets advising such vendors, suppliers
or other Persons that, as of the Closing Date, the Assets will be owned by Buyer
and shall be treated from and after the Closing Date in accordance with
instructions from Buyer.
Section 5.10 Removing Excluded Assets. On or before the
Closing Date, Seller shall remove all Excluded Assets from all facilities and
other Real Property to be occupied by Buyer. Prior to commencing such removal,
Seller shall provide Buyer with reasonable notice and the opportunity to observe
the removal. Such removal shall be done in such manner as to avoid any damage to
the facilities and other properties to be occupied by Buyer and any disruption
of the business operations to be conducted by Buyer after the Closing.
Section 5.11 No Negotiation. Until such time as this Agreement
shall be terminated pursuant to Section 8.1, neither Seller nor Parent shall
directly or indirectly solicit, initiate or encourage any inquiries or proposals
from, negotiate with or provide any nonpublic information to any Person (other
than Buyer, its agents, advisors and employees) relating to any business
combination transaction involving Seller or the Assets, including the sale by
Parent of Seller's equity interests, the merger or consolidation of Seller or
the sale of all or substantially all of Seller's Business or the Assets (other
than sales of sodium bicarbonate and any obsolete or surplus equipment or parts
in the Ordinary Course of Business); provided that the foregoing shall not be
deemed to restrict any such actions with respect to a business combination
transaction involving the sale of an interest in, Parent or Parent's Other
Affiliates it being understood that any such sale shall not include the sale or
transfer of the Assets by Seller or any of its Affiliates.
Section 5.12 Certain Transactions. Neither Buyer nor any of
its Affiliates shall acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or equity in, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets if the entering into of a definitive agreement
relating to or the consummation of such acquisition, merger or consolidation
would reasonably be expected to (i) impose any material delay in the obtaining
of, or significantly increase the risk of not obtaining, any authorizations,
consents, orders, declarations or approvals of any Governmental Authority
necessary to consummate the transactions contemplated by this Agreement or the
expiration or termination of any applicable waiting period, (ii) significantly
increase the risk of any Governmental Authority entering an order prohibiting
the consummation of the transactions contemplated by this Agreement, (iii)
significantly increase the risk of not being able to remove any such order on
appeal or otherwise or (iv) materially delay or prevent the consummation of the
transactions contemplated by this Agreement.
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Section 5.13 Notice of Breach. Between the date of this
Agreement and the Closing Date, each of the parties hereto shall promptly give
to the other parties written notice with particularity upon having knowledge of
any matter that would reasonably be expected to constitute a breach of any
representation, warranty, agreement or covenant contained in this Agreement (it
being understood and agreed that for purposes of indemnification pursuant to
Article VIII hereof, a breach of this covenant shall be treated only as a breach
of the underlying representation, warranty, agreement or covenant and there
shall be no independent right of indemnification pursuant to Article VIII hereof
as a result of a breach of this covenant). Seller shall have the right to
supplement the Seller Disclosure Letter with respect to any matter arising after
the date hereof which would have been required to be set forth on or described
in such Seller Disclosure Letter (and the parties agree that Section 3.11(c) of
the Seller Disclosure Letter will be updated as of the Closing Date) and Buyer
shall have the right to supplement Buyer Disclosure Letter with respect to any
matter arising after the date hereof which would have been required to be set
forth on or described in such Buyer Disclosure Letter (each a "Disclosure Letter
Update"). Any such supplemental disclosure will not be deemed to have been
disclosed as of the date of this Agreement for purposes of determining whether
the conditions set forth in Article VI have been satisfied, but, if the Closing
occurs, such update shall be deemed to have cured any breach of representation,
warranty, covenant or agreement relating to the matters set forth in such update
for purposes of indemnification pursuant to Article VII. The parties
specifically agree that a breach of the representation and warranty of Seller
and Parent contained in Section 3.11(c) hereof will have occurred if either (a)
the disclosures contained in Section 3.11(c) of the Seller Disclosure Letter as
of the date of this Agreement are not complete and accurate as of the date of
this Agreement, or (b) in the event the Closing occurs, if Section 3.11(c) of
the Seller Disclosure Letter as updated as of Closing Date is not complete and
accurate as of the Closing Date.
Section 5.14 Nonsolicitation.
(a) None of Parent, Seller, nor any other Subsidiary of
Parent, except for Phosphate Resources Partners Limited Partnership, IMC
Phosphates Company and their respective Subsidiaries, shall for a period of two
(2) years following the Closing Date: (i) solicit any Person who is as of the
Closing Date or was during the 12 months prior to the Closing, a customer,
marketer, distributor or supplier of Seller for the purpose of selling products
or services manufactured or provided by the Business prior to the Closing or
(ii) solicit any Person who is as of the Closing Date or was during the 12
months prior to the Closing, an employee of Seller primarily engaged in the
Business for the purpose, or with the intent, of enticing such employee away
from or out of the employ of Buyer; provided, that the restriction in this
clause (ii) shall not prevent Parent, Seller, or any other Subsidiary of Parent
from (A) soliciting the employment of any Persons pursuant to a general
solicitation not specifically targeted at any employees of Buyer or (B)
soliciting the employment of any Persons whose employment has previously been
terminated by Buyer.
(b) If any provision contained in this Section 5.14 shall
for any reason by held invalid, illegal or unenforceable in any respect, such
invalidity, illegality
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or unenforceability shall not affect any other provisions of this Section 5.14,
but this Section 5.14 shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. It is the intention of
the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable Law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable Law, a court of competent jurisdiction shall construe and interpret
or reform this Section 5.14 to provide for a covenant having the maximum
enforceable geographic area, time period and other provisions (not greater than
those contained herein) as shall be valid and enforceable under such applicable
Law.
Section 5.15 Announcements. None of Seller or any of its
Affiliates, on the one hand, or Buyer or any of its Affiliates, on the other
hand, shall issue any press release or otherwise make any public statement with
respect to this Agreement and the transactions contemplated hereby without the
prior consent of the other (which consent shall not be unreasonably withheld or
delayed), except as may be required by applicable law or stock exchange
regulation. Notwithstanding anything in this Section 5.15 to the contrary,
Seller and Buyer shall, to the extent practicable, consult with each other
before issuing (whether directly or through any of their respective Affiliates),
and provide each other the opportunity to review and comment upon, any such
press release or other public statements with respect to this Agreement and the
transactions contemplated hereby whether or nor required by law or stock
exchange requirements.
Section 5.16 Confidential Information. During the period
commencing on the date of this Agreement and ending on the second anniversary of
the Closing Date hereunder, except as required by Law or stock exchange rules,
Seller and its Affiliates shall not, directly or indirectly, disclose to any
third party any material proprietary information of the Business not in the
public domain or generally known in the industry, in any form, acquired prior to
the Closing Date, including but not limited to information regarding customers,
vendors, suppliers, trade secrets, training programs, manuals or materials,
technical information, contracts, systems, procedures, mailing lists, know-how,
improvements, price lists, financial or other data (including the revenues,
costs or profits associated with any of Seller's products or services), business
plans, code books, invoices and other financial statements, computer programs,
software systems, databases, discs and printouts, plans (business, technical or
otherwise), customer and industry lists, correspondence, internal reports,
personnel files, sales and advertising material, telephone numbers, names,
addresses or any other compilation of information, written or unwritten, of
Seller and used solely in connection with the Business (collectively, "Protected
Information"); provided, however, that if any of Seller or its Affiliates are
presently in possession of Protected Information that (x) is required for use in
the Ordinary Course of Business of Parent or any of Parent's Other Affiliates
and (y) cannot reasonably be redacted, segregated or otherwise separated from
information about or owned by Parent or Parent's Other Affiliates which is
required for use in the Ordinary Course of Business of Parent or Parent's Other
Affiliates (hereinafter, "Mixed Information"), then the Protected Information
which is so imbedded in such Mixed Information may be used by Parent or Parent's
Other Affiliates in the Ordinary Course of Business. Upon the request
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of Buyer, Seller, Parent or Parent's Other Affiliates shall reasonably cooperate
with Buyer in the development of procedures intended to further implement the
intent of this Section 5.16. The parties hereto acknowledge and agree that
nothing herein shall limit the right of Parent or Parent's Other Affiliates to
use any information of the Business as Parent deems reasonably required for
purposes of financial reporting, preparing Tax Returns or any other government
filings, maintaining accounting records, participating in judicial proceedings
or otherwise complying with Law, legal or administrative process, or any other
Order of a court or other Governmental Authority.
Section 5.17 Change of Name; Removal of References to White
River Name.
(a) As promptly as practicable following the Closing,
Seller shall (and Parent agrees to cause the Equityholders to) take all action
necessary to change the name of Seller to a name that in the reasonable judgment
of Buyer is sufficiently dissimilar to the present name of Seller to avoid
confusion and file a certificate of amendment to its Certificate of Formation in
accordance with applicable Law and to take any other actions necessary to
effectuate the name change.
(b) As promptly as practicable following the Closing, and
in no event later than thirty (30) days following the Closing, Parent shall (i)
take all action necessary to remove each reference to the trade name[s] and
xxxx[s] WHITE RIVER NAHCOLITE MINERALS LTD. LIABILITY CO., WHITE RIVER
NAHCOLITE, and WHITE RIVER (collectively, the "White River Name") from any
website maintained by or on behalf of Parent or its Affiliates, and (ii) cease
distributing and discard all other materials used by Parent or its Affiliates
that primarily feature the White River Name. Immediately following the Closing,
Parent and its Affiliates shall be prohibited from creating new materials that
reference the White River Name. Notwithstanding the foregoing, Parent and its
Affiliates shall be permitted to (i) use and exhaust its existing inventory of
materials that contain references to, but do not primarily feature, the White
River Name for up to one year following the Closing, (ii) maintain and archive
representative samples of its materials referencing the White River Name for
purposes of keeping records of company history, and (iii) refer to the White
River Name in a historical or "fair use" manner in any new materials, such as,
for example, to describe the Parent's corporate family history or the
transaction contemplated under this Agreement.
Section 5.18 Recordable Intellectual Property Assignments.
(a) With respect to any Business Intellectual Property
being assigned to Buyer in accordance with this Agreement, Seller shall use
commercially reasonable efforts to prepare separate intellectual property
assignment agreements, and corresponding schedules substantially in the form of
Exhibit D, which will be suitable for recordation in the United States Patent
and Trademark Office and the United States Copyright Office, as applicable.
(b) At the Closing, Seller shall execute and deliver to
Buyer all separate intellectual property assignment agreements.
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(c) At Buyer's sole cost and expense, Buyer shall record
such intellectual property assignments in the United States Patent and Trademark
Office and the United States Copyright Office, as applicable.
Section 5.19 Distribution Agreement. Buyer and AmerAlia
acknowledge and agree that after Closing they shall comply with Section 13 of
the Bioproducts Agreement as interpreted by Bioproducts Incorporated in a
written instrument executed by Bioproducts Incorporated and IMC Chemicals Inc.
as set forth in Section 5.19 of the Seller Disclosure Letter.
Section 5.20 Updated Financial Statements. Seller or Parent
shall cause to be prepared and delivered to Buyer prior to the Closing Date the
unaudited balance sheets of Seller as of September 30, 2001 and September 30,
2002 and the unaudited income statements and statements of cash flow of Seller
as of and for the three months ended September 30, 2001 and September 30, 2002
(the "Updated Financial Statements"). Except as set forth in Section 5.20 of the
Seller Disclosure Letter, the Updated Financial Statements shall be prepared
from, and shall be consistent with, the books and records of Seller and shall
fairly present in all material respects in accordance with GAAP the financial
position of and results of operations of Seller as of the date thereof.
Section 5.21 UIC Permit Transfer. The transfer from Seller to
Buyer of the UIC Permit shall be effective no sooner than Closing. To enable
such transfer, Seller shall prepare a written letter conforming to the
requirements of 40 CFR Section 144.38(b) and reasonably acceptable to Buyer
which Seller shall submit to EPA prior to the Closing Date. Such letter shall
request that EPA modify the UIC Permit to transfer the permit to Buyer as the
new permittee as of Closing. Buyer shall cooperate fully in all efforts to
transfer such UIC permit including providing sufficient information to EPA to
satisfy the terms and conditions for permit transfer set forth in 40 CFR Section
144.38(b), especially those terms and conditions related to acceptance of
responsibility, coverage and liability under the permit and satisfaction of
financial responsibility obligations.
Section 5.22 UIC Permit Revocation and Reissuance. Seller
shall notify EPA in writing prior to Closing that, as of the Closing Date and
conditioned upon Closing, Buyer will assume Seller's role in connection with any
activities by EPA to modify or revoke and reissue the UIC Permit. Seller shall
request that effective upon Closing, EPA substitute Buyer's name on any
documentation already submitted by Seller to EPA in connection with such
permitting activities. Buyer hereby covenants that, post-Closing, Buyer shall
pursue such permitting activities diligently, in good faith, and in accordance
with customary industry practice for such activities.
Section 5.23 Extension or Renewal of Certain Contracts. The
parties recognize that the current term of the following Material Contracts ends
on December 31, 2002: (a) Rail Transportation Contracts ICC-UP-C-36490 between
Union Pacific Railroad Company and IMC Chemicals Inc., and (b) the Firm Gas Sale
Agreement dated as of March 1, 1996 between Seller and Questar Energy Trading
Company, as successor to Universal Resources Corporation ("Questar Gas
Contract"). In addition, the parties
57
recognize that, under the Car Service Agreement dated March 17, 1994 between
General American Transportation Corporation and IMC Chemicals Inc., certain
airslide car riders expire November 20, 2002 and December 31, 2002. Seller shall
use its Best Efforts, or in the case of contracts held by IMC Chemicals Inc.,
Parent shall cause IMC Chemicals Inc., to use its Best Efforts, to negotiate
prior to the Closing Date an extension or renewal (x) through January 31, 2003
(or through February 28, 2003 if Closing occurs after January 24, 2003) with
respect to the Questar Gas Contract, and (y) of at least one-year with respect
to the other above-described contracts, it being understood that where a
guaranty, bond, letter of credit or other security is requested, Buyer shall
provide adequate security in a timely manner to fulfill the post-Closing
obligations. Seller and Parent agree to keep Buyer informed of their progress in
obtaining the extensions and renewals, to promptly notify Buyer if the proposed
terms of renewal or extension are substantially less favorable than those
contained in the existing contract, and to obtain the consent of Buyer before
agreeing to such terms.
Section 5.24 Cooperation in Obtaining Certain Governmental
Authorizations. Seller, Buyer and AmerAlia shall cooperate in obtaining from the
EPA, DMG and any other necessary Governmental Authority all authorizations
needed for Buyer to continue operation of the Business during the period between
Closing and transfer to Buyer of applicable Permits and Environmental Permits,
and Seller and Buyer agree to enter into any license to mine or other agreement
reasonably requested by a Governmental Authority to authorize such interim
operations.
Section 5.25 Consents to Assignment. Seller shall use its Best
Efforts to obtain prior to the Closing Date those consents to assignment from
counterparties to Material Contracts listed in Section 3.4 of the Seller
Disclosure Letter that have not been obtained prior to the date hereof.
Section 5.26 Sale of Water Rights. If Buyer or AmerAlia (or
any Affiliate thereof) shall directly or indirectly sell, assign, transfer,
lease or otherwise convey to any Person all or a portion of the Water Rights
prior to the tenth anniversary of the Closing Date (or pursuant to an agreement
entered into prior to such tenth anniversary) then at the closing of such
transaction (or such earlier time that Buyer or AmerAlia or any Affiliate
thereof may receive proceeds from such transaction) and as a condition to such
transaction, Buyer or AmerAlia shall pay or cause to be paid to Parent in cash
fifty percent of the pre-tax proceeds (net of costs which shall not be
unreasonable) received by Buyer, AmerAlia and their Affiliates in connection
therewith. Notwithstanding the foregoing, no payment shall be required to be
paid under this Section 5.26 in respect of (i) sale of the Business
substantially as a whole to an unrelated third party, (ii) the existing lease of
certain of the Water Rights to Xxxxx X. Xxxxxxxx or any similar future lease
providing for use of all or a portion of such Water Rights for irrigation
purposes prior to the time they are needed in connection with the Business, or
(iii) a transfer of the Water Rights or the Business to a Subsidiary of
AmerAlia, Natural Soda Inc. or Buyer; provided that in the case of such a
transfer to such a Subsidiary, the Subsidiary shall jointly and severally assume
by written instrument the obligations of Buyer and AmerAlia set forth herein
(without a release of Buyer and AmerAlia from their obligations); but further
provided that any direct or indirect sale, assignment,
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transfer, lease (except as otherwise provided in (ii), above) or conveyance of
the stock or assets of such Affiliate to any Person in a transaction that does
not result in a conveyance to such Person of the Business substantially as a
whole shall constitute a transaction subject to the first sentence of this
Section 5.26.
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations of Buyer and Seller.
The obligations of the parties hereto to effect the Closing are subject to the
satisfaction (or waiver) prior to the Closing Date of the following conditions:
(a) No Injunctions; Orders. There shall not be in effect
any Order by any Governmental Authority of competent jurisdiction that prohibits
or enjoins the sale or purchase of the Assets or the performance of any material
portion of this Agreement.
(b) Certain Pending Litigation. No material Action shall
be pending nor brought by any Governmental Authority seeking to enjoin or
prohibit the sale or purchase of the Assets.
(c) Consents. The consents set forth on Section 6.1(c) of
the Seller Disclosure Letter shall have been obtained. Buyer and Seller agree
that all such consents have been received and this condition has been satisfied.
Section 6.2 Conditions to the Obligations of Buyer. The
obligation of Buyer to effect the Closing is further subject to the satisfaction
(or waiver by Buyer) on the Closing Date of the following conditions:
(a) Representations and Warranties. The representations
and warranties of Seller and Parent contained herein shall be true and correct
(disregarding qualifications as to "materiality" or "Material Adverse Effect")
in each case as of the date of this Agreement and as of the Closing as if made
as of the Closing (except for changes permitted or contemplated by this
Agreement and except that the representations and warranties that are made as of
a specific date need be true and correct only as of such date) except where the
failure to be so true and correct would not, individually or in the aggregate,
result in a Material Adverse Effect. Buyer shall have received a certificate
from each of Seller and Parent signed by a respective officer thereof with
respect to the foregoing.
(b) Covenants. The covenants and agreements of Seller to
be performed on or prior to the Closing shall have been duly performed in all
material respects. Buyer shall have received a certificate from each of Seller
and Parent signed by a respective officer thereof with respect to the foregoing.
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Section 6.3 Conditions to the Obligations of Seller. The
obligation of Seller to effect the Closing is subject to the satisfaction (or
waiver by Seller) on the Closing Date of the following conditions:
(a) Representations and Warranties. The representations
and warranties of Buyer and AmerAlia contained herein shall be true and correct
(disregarding qualifications as to materiality or "Material Adverse Effect"), in
each case as of the date of this Agreement and as of the Closing as if made as
of the Closing (except for changes permitted or contemplated by this Agreement
and except that the representations and warranties that are made as of a
specific date need be true and correct only as of such date) except where the
failure to be so true and correct would not, individually or in the aggregate,
result in a material adverse change in the benefits to Seller or Parent under
this Agreement and the transactions contemplated hereby or materially increase
their obligations hereunder. Seller shall have received a certificate from each
of Buyer and AmerAlia signed by a respective officer thereof with respect to the
foregoing.
(b) Covenants. The covenants and agreements of Buyer to
be performed on or prior to the Closing shall have been duly performed in all
material respects. Seller shall have received a certificate from each of Buyer
and AmerAlia signed by a respective officer thereof with respect to the
foregoing.
(c) Financial Capability of Buyer. Buyer shall have
available to it the proceeds of the Financing and such other funds sufficient to
pay the Estimated Purchase Price at the Closing.
(d) Solvency Letter. The Chief Financial Officer of
AmerAlia shall have delivered a letter to the effect that, at and immediately
after the Closing and after giving effect to the Financing and the transactions
contemplated hereby, Buyer will not (i) be insolvent (either because Buyer's
financial condition is such that the sum of its debts is greater than the fair
value of its assets or because the present fair saleable value of its assets
will be less than the amount required to pay its probable liabilities on its
debts as they mature), (ii) have unreasonably small capital with which to engage
in its business and perform its obligations under this Agreement, including with
respect to the Assumed Liabilities or (iii) have incurred or plan to incur debts
beyond its ability to pay as they mature, the addressees of which include Parent
and on which Parent is entitled to rely (the "Solvency Letter"). In the event
that Buyer has engaged a nationally recognized appraisal firm (the "Appraiser")
to prepare such a Solvency Letter, Buyer shall have delivered such Solvency
Letter to Parent.
Section 6.4 Frustration of Closing Conditions. Neither Buyer
nor Seller may rely on the failure of any condition set forth in Section 6.1,
6.2 or 6.3, as the case may be, to be satisfied if such failure was caused by
such party's failure to use commercially reasonable efforts, or Best Efforts
where required herein, to consummate the Closing and the other transactions
contemplated by this Agreement.
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ARTICLE VII
SURVIVAL AND INDEMNIFICATION
Section 7.1 Survival. The representations and warranties of
Seller and Buyer contained in this Agreement shall survive the Closing for the
period set forth in this Section 7.1. All of the covenants and agreements of the
parties contained in this Agreement shall survive the Closing in accordance with
their terms without limitation as to time except as expressly provided by their
terms.
(a) All representations and warranties of Seller and
Parent contained in this Agreement, and all claims and causes of action with
respect thereto, shall survive for one year after the Closing Date, except for:
(i) the representations and warranties set forth in Sections 3.1 (Organization
of Seller), 3.2 (Authority of Seller and Parent; Binding Effect), 3.19 (Brokers,
Finders Fees), 3.16(e) - (f) (subsections (e) and (f) of Real Property; Personal
Property; Sufficiency of Assets) and 3.24 (Solvency of Seller) hereof, which
shall survive indefinitely, (ii) the representations and warranties set forth in
Section 3.13 (Taxes) hereof, which shall survive for the applicable statute of
limitations, and (iii) the representations and warranties set forth in Sections
3.5 (Financial Information), 3.6 (Absence of Undisclosed Liabilities), 3.9
(Compliance with Laws), 3.10 (Environmental Matters) and 3.11 (Material
Contracts) hereof, which shall survive for eighteen months after the Closing
Date.
(b) All representations and warranties of Buyer and
AmerAlia contained in this Agreement, and all claims and causes of action with
respect thereto, shall survive for one year after the Closing Date, except for
(i) the representations and warranties set forth in Sections 4.1 (Organization
of Buyer), 4.2 (Authority of Buyer and AmerAlia; Binding Effect), 4.8 (Solvency
of Buyer) and 4.9 (Brokers, Finders Fees) hereof, which shall survive
indefinitely, and (ii) the representations and warranties set forth in Section
4.7 (Compliance with Laws) hereof, which shall survive for eighteen months after
the Closing Date.
(c) Any written notice of any claim for indemnification
under Section 7.2(a)(i) or Section 7.3(a)(i) hereof shall be provided to the
other party in a notice with particularity prior to the date that such
representation or warranty claimed to have been breached would have expired;
provided, however, that if no such notice has been provided, then no claim shall
be deemed to have been made hereunder. In the event written notice of any such
claim shall have been given in accordance with Section 7.6 in good faith prior
to the date that such representation or warranty claimed to have been breached
would have expired, then such claim shall survive until its resolution.
Section 7.2 Indemnification by Buyer and AmerAlia.
(a) Buyer and AmerAlia hereby jointly and severally agree
that from and after the Closing they shall indemnify, defend and hold harmless
Seller, its Affiliates, and its and their respective directors, officers,
managers, shareholders, unitholders, partners, attorneys, accountants, agents
and employees and their heirs,
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successors and assigns (the "Seller Indemnified Parties") from, against and in
respect of any actual damages, claims, losses, charges, actions, suits,
proceedings, deficiencies, interest, penalties, liabilities, obligations, fines,
demands, judgments, settlements, damages and reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' and consultants'
fees and including the reasonable out-of-pocket costs and expenses of
investigating or defending any indemnifiable claim) (collectively but without
duplication, "Losses") imposed on any of Seller Indemnified Parties relating to
or arising out of: (i) any breach of any representation or warranty made by
Buyer and/or AmerAlia contained in this Agreement; (ii) the breach of any
covenant or agreement of Buyer and/or AmerAlia contained in this Agreement;
(iii) any claim (whether or not successful), liability or obligation for payment
of fees and/or expenses as a broker or finder in connection with the origin,
negotiation or execution of this Agreement or the consummation of the
transactions contemplated hereby based upon any alleged agreement, arrangement
or understanding between the claimant and Buyer, AmerAlia or any of their
Representatives, (iv) any Assumed Liabilities, (v) any and all liabilities under
the WARN Act or any similar state or local law that may result from an
"employment loss" (as defined under the WARN Act) caused by any action of Buyer
and (vi) any action brought by a security holder or creditor of, or investor in,
Buyer, AmerAlia or any Affiliates of Buyer or AmerAlia, in its capacity as such
(other than any such action brought by such security holder, creditor, or
investor in its capacity as successor in interest to the rights and assets of
Buyer pursuant to Section 10.3 of this Agreement).
(b) Notwithstanding the provisions of this Article VII,
neither Buyer nor AmerAlia shall be liable to Seller Indemnified Parties for any
Losses with respect to any matters arising under clause (i) of Section 7.2(a)
except to the extent the Losses therefrom in the aggregate exceed $750,000, in
which event either Buyer and AmerAlia shall be jointly and severally liable to
Seller Indemnified Parties for Losses above such amount; provided that the
aggregate liability of Buyer under Section 7.2(a) shall not exceed $12,500,000.
Seller shall not be entitled under this Agreement to multiple recovery for the
same Losses.
(c) Notwithstanding anything to the contrary in this
Agreement,
(i) to the extent that prior to the Closing, to the
Knowledge of Seller a representation or warranty made by Buyer and/or
AmerAlia in this Agreement is untrue or incorrect, taking into account
any Disclosure Letter Update by Buyer, and the Closing occurs, then
neither Seller nor any Seller Indemnified Party shall be entitled to
make any claim for indemnification for Losses relating to or arising
out of such breach; and
(ii) to the extent that any Loss arises from or
relates to any liability suffered by Seller as a result of or in
connection with Seller or Parent providing a warranty or representation
or other form of comfort to a third party in respect of Buyer and
AmerAlia, the Assets or this Agreement, then neither Seller
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nor any Seller Indemnified Party shall be entitled to make any claim
for indemnification for Losses relating to or arising out of such
warranty.
Section 7.3 Indemnification by Seller and Parent relating to
Matters other than UIC NOV's or EPA's Failure to Transfer the UIC Permit.
(a) Seller and Parent hereby jointly and severally agree
that from and after the Closing they shall indemnify, defend and hold harmless
Buyer and its Affiliates and its and their respective directors, officers,
managers, shareholders, unitholders, partners, attorneys, accountants, agents
and employees and their heirs, successors and assigns (the "Buyer Indemnified
Parties") from, against and in respect of any actual Losses imposed on,
sustained, incurred or suffered by any of Buyer Indemnified Parties relating to
or arising out of (i) any breach of any representation or warranty made by
Seller and/or Parent contained in this Agreement; (ii) the breach of any
covenant or agreement of Seller and/or Parent made in this Agreement, (iii) any
claim (whether or not successful), liability or obligation for payment of fees
and/or expenses as a broker or finder in connection with the origin, negotiation
or execution of this Agreement or the consummation of the transactions
contemplated hereby based upon any alleged agreement, arrangement or
understanding between the claimant and Seller, Parent or any of their
Representatives, (iv) the Excluded Liabilities, and (v) any action brought by a
security holder or creditor of Seller, Parent or their Affiliates in their
capacity as such. The parties recognize and agree that the indemnification
provided in this Section 7.3(a) does not apply to Losses relating to nor arising
out of the UIC NOV's or EPA's failure to transfer the UIC Permit, for which the
sole remedies are provided pursuant to Section 7.4 and 7.5 hereof.
(b) Notwithstanding the provisions of this Article VII,
neither Seller nor Parent shall be liable to Buyer Indemnified Parties for any
Losses with respect to any matters arising under clause (i) of Section 7.3(a)
except to the extent the Losses therefrom in the aggregate exceed $750,000, in
which event either Seller and Parent shall be jointly and severally liable to
Buyer Indemnified Parties for Losses above such amount; provided that the
aggregate liability of Seller and Parent under Section 7.3(a) shall not exceed
$12,500,000. Buyer shall not be entitled under this Agreement to multiple
recovery for the same Losses.
(c) Notwithstanding anything to the contrary in this
Agreement,
(i) to the extent that prior to Closing, to the
Knowledge of Buyer a representation or warranty made by Seller and/or
Parent in this Agreement is untrue or incorrect, taking into account
any Disclosure Letter Update by Seller, and the Closing occurs, then
neither Buyer nor any Buyer Indemnified Party shall be entitled to make
any claim for indemnification for Losses relating to or arising out of
such breach; and
(ii) to the extent that any Loss arises from or
relates to any liability suffered by Buyer as a result of or in
connection with Buyer or
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AmerAlia or an Affiliate of Buyer or AmerAlia providing a warranty or
representation or other form of comfort to a third party in respect of
Seller and/or Parent, the Assets or this Agreement, then neither Buyer
nor any Buyer Indemnified Party shall be entitled to make any claim for
indemnification for Losses relating to or arising out of such warranty,
representation or other form of comfort.
Section 7.4 Indemnification by Seller and Parent for UIC
NOV's. Seller and Parent hereby jointly and severally agree that from and after
the Closing they shall indemnify, defend and hold harmless the Buyer Indemnified
Parties from, against and in respect of any fines and penalties resulting from
the three Notices of Violation issued by EPA to Seller on March 8, 2001,
September 24, 2001 and December 4, 2001 respectively and as described in Section
3.10 of the Seller Disclosure Letter ("UIC NOV's"); provided that the aggregate
indemnification payable in respect thereof shall not exceed $250,000. This
indemnity shall expire two (2) years after the Closing Date unless a Claim
Notice is given in accordance with Section 7.6 prior to the end of such two-year
period. If the Claim Notice is timely given, then such Claim shall survive until
its resolution.
Section 7.5 EPA Failure to Transfer the UIC Permit. If a
Rescindable Event shall have occurred, then Buyer shall have the right, by
timely delivery of written notice to Seller and Parent, to require Seller and
Parent to rescind the Agreement and the transactions consummated hereunder as
provided in Article IX. A "Rescindable Event" shall occur if EPA shall not have
transferred the UIC Permit to Buyer by the sixtieth (60th) day following the
Closing; provided, however, that Buyer may not pursue this rescission remedy
(and no Rescindable Event shall be deemed to have occurred) unless EPA has
indicated in writing that it is unwilling to transfer the UIC Permit to Buyer, a
copy of such writing accompanies Buyer's notice to Seller and each of the
following conditions have been satisfied:
(a) Buyer has cooperated fully in all efforts to transfer
the UIC Permit including: (i) providing sufficient information to EPA to satisfy
the terms and conditions for permit transfer set forth in 40 CFR Section
144.38(b); (ii) assuming responsibility, coverage and liability under the terms
of the UIC Permit to EPA's satisfaction; and (iii) satisfying the financial
responsibility provisions applicable to Buyer in respect of the UIC Permit to
EPA's satisfaction;
(b) EPA's failure to transfer the UIC Permit is unrelated
to Buyer's actual or proposed method or magnitude of operating the facility
after Closing, to the extent that the method or magnitude differs materially
from that used by Seller prior to Closing;
(c) EPA's failure to transfer the UIC Permit is unrelated
to the condition or continued usage of the solution mining cavities; and
(d) Buyer has acted diligently, in good faith, and in a
manner that would reasonably be expected to result in transfer of the UIC
Permit.
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Notwithstanding the occurrence of a Rescindable Event, the remedy contained in
this Section 7.5 shall expire sixty (60) days after the Closing Date, unless
written notice of a claim that a Rescindable Event has occurred is given by
Buyer to Seller and Parent prior to end of such 60-day period. There shall be no
monetary remedy available to the Buyer Indemnified Parties with respect to the
remedy contained in this Section 7.5, and the sole remedy in the event of timely
notice of a Rescindable Event is given shall be rescission of the transactions
contemplated by this Agreement (as more specifically provided in Article IX).
Section 7.6 Indemnification Procedures. With respect to
indemnification claims under this Agreement (excluding any claim for rescission
which shall be made and resolved as described in Article IX), all claims for
indemnification by any Buyer Indemnified Party or Seller Indemnified Party, as
applicable (an "Indemnified Party") hereunder shall be asserted and resolved as
set forth in this Section 7.6. In the event that, prior to the expiration of the
survival period in Section 7.1 or 7.4, as applicable, any Indemnified Party
shall incur or suffer any Loss in respect of which indemnification may be sought
under this Article VII or receive a Claim (as defined below), such Indemnified
Party must assert a claim for indemnification by written notice to the party
from whom indemnification is being sought (the "Indemnifying Party") prior to
the expiration of such survival period stating in reasonable detail the nature
of such claim and the amount or estimated amount of Loss to the extent then
feasible (which estimate shall not be conclusive on the final amount of such
claim) (a "Claim Notice"). In the event that any written claim or demand for
which an Indemnifying Party may be liable to any Indemnified Party under this
Article VII (a "Claim") is asserted against or sought to be collected from any
Indemnified Party by a third party, such Indemnified Party shall as promptly as
practicable deliver a Claim Notice to the Indemnifying Party. The failure on the
part of the Indemnified Party to give any such Claim Notice in a reasonably
prompt manner shall not relieve the Indemnifying Party of any indemnification
obligation hereunder, unless such Claim Notice is delivered following the
expiration of the applicable survival period, except to the extent that the
Indemnifying Party is materially prejudiced thereby. The Indemnifying Party
shall have thirty (30) days from the personal delivery or mailing of the Claim
Notice (the "Notice Period") to notify the Indemnified Party in writing (a)
whether or not the Indemnifying Party has sufficient information to assess the
liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such Claim and (b) whether or not it desires to defend the
Indemnified Party against such Claim. In the event that the Indemnifying Party
notifies the Indemnified Party pursuant to the preceding sentence that the
Indemnifying Party does not have sufficient information with which to assess its
liability to the Indemnified Party, the Indemnified Party and the Indemnifying
Party shall promptly cooperate to provide the Indemnifying Party with sufficient
information with which to assess such liability, and with respect to the
notification required pursuant to clause (b) of the preceding sentence, the
Notice Period shall not begin to run until the Indemnifying Party has such
sufficient information. In the event that the Indemnifying Party fails to
provide notice within the Notice Period that it desires to defend the
Indemnified Party against such Claim, the Indemnified Party shall have the right
to defend such Claim and to seek indemnification hereunder.
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Except as hereinafter provided, in the event that the
Indemnifying Party notifies the Indemnified Party within the Notice Period that
it desires to defend the Indemnified Party against a Claim which is asserted
against or sought to be collected from any Indemnified Party by a third party
(other than the Indemnifying Party and its Affiliates), the Indemnifying Party,
at its sole cost and expense, shall have the right to defend the Indemnified
Party by appropriate proceedings and shall have the sole power to direct and
control such defense at its cost; provided, however, that the amount of any
indemnifiable Losses hereunder shall be subject to the limitations set forth in
Section 7.2(b) or 7.3(b) hereof, as applicable. If any Indemnified Party desires
to participate in any such defense it may do so at its sole cost and expense
provided, however, that if the defendants in any Claim shall include both an
Indemnifying Party and any Indemnified Party and such Indemnified Party shall
have reasonably concluded, upon the advice of counsel, that counsel selected by
the Indemnifying Party has a conflict of interest because of the availability of
different or additional defenses to such Indemnified Party, such Indemnified
Party shall have the right to select one separate counsel reasonably acceptable
to the Indemnifying Party to participate in the defense of such Claim on its
behalf, at the expense of the Indemnifying Party subject to the proviso
contained in the immediately preceding sentence and provided further that the
Indemnifying Party shall not be responsible for the expense of more than one
such separate counsel for all Indemnified Parties as a group. The Indemnified
Party shall not settle, admit or in any other way materially prejudice a Claim
for which it is indemnified by the Indemnifying Party without the written
consent of the Indemnifying Party (which shall not be unreasonably withheld or
delayed) unless (i) the Indemnifying Party elects not to defend the Indemnified
Party against such Claim, (ii) the Indemnifying Party shall not notify the
Indemnified Party of its desire to defend the Indemnified Party with respect to
such Claim during the Notice Period or (iii) the Indemnifying Party shall fail
to defend such Claim in good faith and on a timely basis following the
Indemnifying Party's election to defend such Claim. The Indemnifying Party shall
not settle or compromise any action, or consent to the entry of any judgment,
without the prior written consent of the Indemnified Party (which consent shall
not be unreasonably withheld or delayed) provided, that an Indemnified Party
shall not be required to consent to any settlement which (i) does not include as
a term thereof the delivery by the claimant or plaintiff to the Indemnified
Party of a duly executed written unconditional release of the Indemnified Party
from all liability in respect of such Claim or litigation or (ii) involves the
imposition of equitable remedies, imposing any material and adverse obligations
on such Indemnified Party other than financial obligations for which such
Indemnified Party shall be fully indemnified hereunder. Notwithstanding the
foregoing, the Indemnified Party shall have the sole right to defend, settle or
compromise any Claim with respect to which it has agreed in writing to waive its
right to indemnification pursuant to this Agreement. Notwithstanding the
foregoing, the Indemnified Party, during the period the Indemnifying Party is
determining whether to elect to assume the defense of a matter covered by this
Section 7.6, shall take such reasonable actions as it deems necessary to
preserve any and all rights with respect to the matter, without such actions
being construed as a waiver of the Indemnified Party's rights to defense and
indemnification pursuant to this Agreement. If the Indemnifying Party elects not
to defend the Indemnified Party against a Claim, or fails to notify the
Indemnified Party of its desire to
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defend the Indemnified Party with respect to such Claim during the Notice
Period, then any Loss (including reasonable attorneys' fees and expenses) of the
Indemnified Party relating to or arising out of such Claim, or, if the same be
contested by the Indemnified Party, then that portion thereof as to which such
defense is unsuccessful (and the reasonable costs and expenses pertaining to
such defense) shall be the liability of the Indemnifying Party hereunder,
subject to the limitations set forth in Section 7.2(b) or 7.3(b) hereof, as
applicable. To the extent any party shall direct, control or participate in the
defense or settlement of any third party claim or demand, the other parties
shall give such party and its counsel access to, during normal business hours
and upon reasonable notice, the relevant business records and other documents,
and shall permit them to consult with the employees and counsel of the other
party. The Indemnified Party and the Indemnifying Party each shall act in good
faith in the defense of all such Claims. Amounts payable by the Indemnifying
Party to the Indemnified Party in respect of any Losses for which such party is
entitled to indemnification hereunder shall be payable by the Indemnifying Party
as incurred by the Indemnified Party except to the extent contested by the
Indemnifying Party.
Section 7.7 Computation of Losses Subject to Indemnification.
The amount of any Loss for which indemnification is provided under this Article
VII or otherwise in this Agreement, including any Losses resulting from
Environmental Claims, shall be computed to take into account: (i) any insurance
proceeds (including title insurance) which the Indemnified Party or its
Affiliates have recovered or do at any time recover from any other Person with
respect to such Losses; and (ii) any prior or subsequent recovery in respect of
part or all of a Claim by any Indemnified Party, whether by payment, discount,
credit, offset or otherwise. Notwithstanding anything herein to the contrary, if
any Losses for which an Indemnified Party seeks indemnification are covered by
insurance, prior to receiving any indemnification for any Losses under this
Article VII, the Indemnified Party shall use Best Efforts to (x) pursue all
insurance claims in respect of Losses for which it may be entitled to recover
insurance proceeds (which shall not require the filing of any lawsuit against
the insurance company) and (y) obtain payment of such proceeds to the full
amount reasonably available under its insurance policies. To the extent any
Indemnified Party fails to comply with the preceding sentence, the Indemnified
Party shall be deemed to have waived its right to indemnification for such
Losses under this Agreement.
Section 7.8 Certain Other Matters.
(a) There shall be no indemnification by Seller or Buyer
for any special, incidental, punitive or consequential damages, including, but
not limited to, damages for business interruption, lost profits, loss in fair
market value of Real Property, or damages computed on a multiple of earnings or
similar basis, except to the extent required by Law pursuant to a judgment of a
Governmental Authority to be paid by Buyer or Seller, as applicable, to any
Person other than an Indemnified Party and which is otherwise indemnifiable
under Section 7.2 or 7.3, as applicable (subject to the limitations of Section
7.2(b) or 7.3(b), as applicable).
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(b) If the Closing shall occur, the indemnification
provisions of this Article VII shall be the sole and exclusive remedy for any
inaccuracy or breach of any representation or warranty or any breach of any
covenant or agreement made in this Agreement. No party shall be entitled to
seek, and to the fullest extent permitted by applicable Law, the parties hereto
waive, any rights they might otherwise have to rescind the sale and purchase of
the Assets. Without limiting the foregoing, the indemnities provided in this
Article VII shall constitute Buyer Indemnified Party's exclusive remedy for any
Losses arising under Environmental Laws, and Buyer Indemnified Parties expressly
waive and relinquish, on behalf of themselves, their successors and any assigns,
any and all rights, claims or remedies such Person may have against Seller,
Parent or any of their Affiliates under any Environmental Laws, as presently in
force or hereafter enacted, promulgated, or amended (including, without
limitation, under CERCLA, or any similar state or local law) or at common law.
(c) Upon making any payment to an Indemnified Party for
any indemnification claim pursuant to this Article VII, the Indemnifying Party
shall be subrogated, to the extent of such payment, to any rights which the
Indemnified Party or its Affiliates may have against any other Persons with
respect to the subject matter underlying such indemnification claim and the
Indemnified Party shall, at the Indemnifying Party's sole cost and expense, take
such actions as the Indemnifying Party may reasonably require to perfect such
subrogation or to pursue such rights against such other Persons as the
Indemnified Party or its Affiliates may have.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at
any time prior to the Closing Date:
(a) by mutual written agreement of Buyer and Seller;
(b) by either Buyer on the one hand or Seller on the
other hand, by giving written notice of such termination to the other, if the
Closing shall not have occurred on or prior to February 4, 2003 (the
"Termination Date") (unless the failure to consummate the Closing by such date
shall be due to the failure of the party seeking to terminate this Agreement to
have fulfilled any of its obligations under this Agreement, including, without
limitation, the obligations of Buyer and Seller under Section 5.5 hereof);
(c) by either Buyer on the one hand or Seller on the
other hand in the event that any Governmental Authority shall have issued a
final, non-appealable order, decree or ruling or taken any other final,
non-appealable action, or adopted any Law, in each case permanently restraining,
enjoining or otherwise prohibiting any material part of the transactions
contemplated by this Agreement;
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(d) by Seller, so long as Seller is not then in breach of
its obligations under this Agreement, upon a material breach of any covenant or
agreement on the part of Buyer or AmerAlia set forth in this Agreement, or if
any representation or warranty of Buyer or AmerAlia shall be untrue, in each
case such that the conditions set forth in Section 6.3(a) or (b) would not be
satisfied, provided, however, that if any such breach is curable prior to the
Termination Date by Buyer or AmerAlia, for so long as Buyer or AmerAlia,
following written notice from Seller shall be using its Best Efforts to cure
such breach, Seller may not terminate this Agreement pursuant to this Section
8.1(d); or
(e) by Buyer, so long as Buyer is not then in breach of
its obligations under this Agreement, upon a material breach of any covenant or
agreement on the part of Seller or Parent set forth in this Agreement, if any
representation or warranty of Seller or Parent shall be untrue, in each case
such that the conditions set forth in Section 6.2(a) or (b) would not be
satisfied, provided, however, that if any such breach is curable prior to the
Termination Date by Seller or Parent, for so long as Seller or Parent, following
written notice with respect to such breach from Buyer shall be using its Best
Efforts to cure such breach, Buyer may not terminate this Agreement pursuant to
this Section 8.1(e); or
(f) by Buyer, under the terms of Section 10.4.
Section 8.2 Effect of Termination. In the event of the
termination of this Agreement in accordance with Section 8.1 hereof, this
Agreement shall thereafter become void and have no effect except as provided in
Section 3.19 (Brokers, Finders Fees), Section 4.9 (Brokers, Finders Fees),
Section 5.1(e) (Access and Investigation), Section 8.2 (Effect of Termination),
Section 10.6 (Expenses) and Section 10.7 (Governing Law) of this Agreement; and
no party hereto shall have any liability to the other party hereto or their
respective Affiliates, directors, officers or employees except that nothing
herein shall relieve any Party from liability for any willful breach of this
Agreement prior to such termination.
ARTICLE IX
RESCISSION
Section 9.1 Failure to Transfer UIC Permit(a) . If a
Rescindable Event shall have occurred, Buyer has timely notified Seller of its
intention to rescind the transaction and the conditions to rescission set forth
in Section 7.5 are satisfied, then Buyer and Seller shall rescind the
transactions contemplated hereby so that Buyer, AmerAlia, Seller and Parent, to
the extent possible, shall be placed in the positions they would have been had
they never entered into this Agreement and consummated the transactions
contemplated hereby.
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Section 9.2 Rescission. In order to effect a rescission of
this Agreement and the transactions consummated in connection herewith pursuant
to Section 9.1, on the Rescission Date at the Rescission Closing:
(a) all Assets sold, conveyed, assigned or transferred to
Buyer pursuant to Section 2.1 of this Agreement shall be returned, sold,
conveyed, assigned and transferred to Seller (by instrument equivalent in all
material respects to the instrument transferring such Assets to Buyer), free and
clear of all Liens (other than Liens to which such Assets were subject when
transferred by Seller);
(b) all arrangements pursuant to Section 2.10 shall be
rescinded, without prejudice to the indemnification obligations set forth in
clause (iii) of the second sentence of Section 2.10;
(c) Seller shall assume the Assumed Liabilities assumed
by Buyer pursuant to Section 2.3, together with liabilities incurred in the
ordinary course of the Business under the terms of Section 9.8 hereof between
the Closing and the Rescission Date (by instrument equivalent in all material
respects to the instrument by which Buyer assumed such Assumed Liabilities),
provided that such liabilities do not arise out of Buyer's or its Affiliates'
financing activities, misconduct or negligence; and
(d) In consideration of the transfer of the Assets
pursuant to Section 9.2(a), Seller shall return to Buyer the Purchase Price plus
or minus the (i) Net Working Capital Adjustment and the (ii) Inventory
Adjustment (the Purchase Price as adjusted by the Net Working Capital Adjustment
and the Inventory Adjustment, the "Rescission Purchase Price"). The "Net Working
Capital Adjustment" shall equal the absolute value of (y) the current assets
excluding inventory minus the current liabilities excluding debt and any accrued
interest, in each case as of the Closing Date (the "Closing Date Net Assets"),
minus (z) the current assets excluding inventory minus the current liabilities
excluding debt and any accrued interest, in each case as of the Rescission Date
(the "Rescission Date Net Assets"). If the Closing Date Net Assets are greater
than the Rescission Date Net Assets, the Rescission Purchase Price shall be
decreased by the Net Working Capital Adjustment. If the Rescission Date Net
Assets are greater than the Closing Date Net Assets, the Rescission Purchase
Price shall be increased by the Net Working Capital Adjustment. The "Inventory
Adjustment" shall equal the product of (A) $80.00 multiplied by (B) the
difference between the number of tons contained in the Inventory of merchantable
sodium bicarbonate transferred to Seller on the Rescission Date and 3,200 tons.
If the Inventory Adjustment is a positive number, the Rescission Purchase Price
shall be increased by such number. If the Inventory Adjustment is a negative
number, the Rescission Purchase Price shall be decreased by such number. Buyer
shall prepare as of the Rescission Date and deliver to Seller within five (5)
Business Days after the Rescission Date, a calculation of the Net Working
Capital Adjustment and Inventory Adjustment (the "Rescission Adjustment Amount")
and an explanation of the method for calculation thereof.
Section 9.3 Estimated Rescission Adjustment Amount; Dispute
Resolution; Payment(a). Estimated Rescission Adjustment Amount. On the
Rescission
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Date, Seller shall pay Buyer the Purchase Price, plus or minus an estimate of
the Rescission Adjustment Amount (the "Estimated Rescission Adjustment Amount"),
which estimate shall be prepared by Buyer in good faith and provided (together
with an explanation of the methods for calculation thereof) in writing to Seller
at least five (5) Business Days prior to the Rescission Date.
(b) Disputes. If Parent disagrees with the amount of the
Rescission Adjustment Amount as calculated by Buyer or any element relevant to
the calculation thereof, Parent shall notify Buyer, of such disagreement in
writing within thirty (30) days following the Rescission Date, which notice
shall set forth in detail the particulars of such disagreement. In the event
that Parent does not provide such a notice of disagreement within such thirty
(30) day period, Parent shall be deemed to have accepted the Rescission
Adjustment Amount as calculated by Buyer as the Rescission Adjustment Amount,
and the Rescission Adjustment Amount shall be final, binding and conclusive for
all purposes hereunder. In the event any such notice of disagreement is timely
provided by Parent, Parent and Buyer, shall use their Best Efforts for a period
of twenty (20) days (or such longer period as they may mutually agree) to
resolve any disagreements with respect to the calculation of the Rescission
Adjustment Amount. If, at the end of such period, they are unable to resolve
such disagreements, then, upon the written request of either party, the
Adjustment Auditor shall resolve any remaining disagreements. The Adjustment
Auditor shall determine as promptly as practicable (but in any event within
forty-five (45) days) following the date on which such dispute is referred to
the Adjustment Auditor, based solely on written submissions forwarded by Parent
and Buyer to the Adjustment Auditor within ten (10) days following the
Adjustment Auditor's selection, whether the Rescission Adjustment Amount as
calculated by Buyer was calculated in accordance with the standards set forth in
Sections 9.2 and 9.3 with respect to any items identified as disputed in the
notice of disagreement and not previously resolved by the parties, and if not,
whether and to what extent (if any) the Rescission Adjustment Amount as
calculated by Buyer requires adjustment. Buyer or AmerAlia, on the one hand, and
Seller or Parent, on the other hand, shall share equally the payment of the fees
and expenses of the Adjustment Auditor. The determination of the Adjustment
Auditor shall be final, conclusive and binding on the parties, and the
Adjustment Auditor's determination of the amount of the Rescission Adjustment
Amount ("Audited Rescission Adjustment Amount") shall then be deemed to be the
Rescission Adjustment Amount for all purposes of this Agreement.
(c) Payment of Rescission Adjustment Amount or Audited
Rescission Adjustment Amount. Not later than three (3) Business Days after the
final determination of the Rescission Adjustment Amount or the Audited
Rescission Adjustment Amount, as the case may be, any difference between (x) the
Estimated Rescission Adjustment Amount and (y) the Rescission Adjustment Amount
as calculated by Buyer or the Audited Rescission Adjustment Amount, as the case
may be, shall be paid by Seller or refunded by Buyer, as applicable, in either
case by wire transfer of immediately available funds to an account designated in
writing by Buyer or Seller, as the case may be.
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Section 9.4 Rescission Closing. The closing of the rescission
of the Agreement and the transactions consummated hereunder (the "Rescission
Closing") shall take place at the offices of Seller's counsel at Xxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, commencing at 10:00 a.m. (local time) upon the
fifteenth Business Day following the occurrence of a Rescindable Event and
receipt by Seller and Parent of notice thereof from Buyer or at such other time
and place as the parties hereto may mutually agree (such date the "Rescission
Date"), subject to Buyer and AmerAlia having certified in writing to Seller and
Parent that the representations and warranties set forth in Section 9.6 are true
and correct as of the Rescission Date.
Section 9.5 Documents. Documents required to effect the
rescission including instruments of assignment and assumption of Leased Real
Property, Federal Sodium Leases and Rights of Way, an instrument of assignment
of Business Intellectual Property, a xxxx of sale and assignment, an instrument
of assumption and deeds reversing all of the agreements contemplated hereby
executed at or following the Closing shall be executed by the parties on the
Rescission Date. In addition, an agreement terminating the Railcar Sublease
shall be executed on the Rescission Date.
Section 9.6 Representations and Warranties of Buyer and
AmerAlia. At the Rescission Closing, Buyer and AmerAlia shall represent and
warrant (i) as to Buyer and AmerAlia, compliance with the covenants set forth in
Sections 9.7 and 9.8; and (ii) that, except for the occurrence of the
Rescindable Event, there has not occurred any event, change or development which
has had or is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect.
Section 9.7 Covenants of Buyer and AmerAlia. Buyer and
AmerAlia agree that in the event that rescission shall occur:
(a) All the Personal Property received by Buyer under
this Agreement and returned to Seller shall be in the same condition as when
received by Buyer subject to normal wear and tear.
(b) All the Real Property transferred to Buyer under this
Agreement and returned to Seller shall be in the same condition as when
transferred to Buyer subject to normal wear and tear and customary depletion of
reserves consistent with depletion levels of the Business.
(c) Buyer and AmerAlia shall notify all vendors
(including, without limitation, warehousemen), suppliers and other Persons other
than Buyer or Buyer's employees who are in possession of any Assets advising
such vendors, suppliers or other Persons that, as of the Rescission Date, the
Assets will be owned by Seller and shall be treated from and after the
Rescission Date in accordance with instructions from Seller.
(d) Buyer and AmerAlia shall not for a period of two (2)
years following the Closing Date: (i) solicit any Person who is as of the
Closing Date or was during the time period following the Closing, a customer,
marketer, distributor or
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supplier of Buyer for the purpose of selling products or services manufactured
or provided by the Business following the Closing or (ii) solicit any Person who
is as of the Closing Date or was during the time period following the Closing,
an employee of Buyer primarily engaged in the Business for the purpose, or with
the intent, of enticing such employee away from or out of the employ of Seller;
provided, that the restriction in this clause (ii) shall not prevent Buyer from
(A) soliciting the employment of any Persons pursuant to a general solicitation
not specifically targeted at any employees of Seller or (B) soliciting the
employment of any Persons whose employment has previously been terminated by
Seller. If any provision contained in this Section 9.7(d) shall for any reason
by held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Section 9.7(d), but this Section 9.7(d) shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. It is the
intention of the parties that if any of the restrictions or covenants contained
herein is held to cover a geographic area or to be for a length of time which is
not permitted by applicable Law, or in any way construed to be too broad or to
any extent invalid, such provision shall not be construed to be null, void and
of no effect, but to the extent such provision would be valid or enforceable
under applicable Law, a court of competent jurisdiction shall construe and
interpret or reform this Section 9.7(d) to provide for a covenant having the
maximum enforceable geographic area, time period and other provisions (not
greater than those contained herein) as shall be valid and enforceable under
such applicable Law.
(e) As promptly as practicable following the Rescission
Closing, and in any event not later than fifteen (15) days following the
Rescission Closing, Buyer and AmerAlia shall (i) cease using the White River
Name in any corporate name, bank account, letterhead, internet domain name,
advertising or marketing, (ii) remove reference to the White River Name from any
documents and (iii) cease distributing and discard all other materials used by
Buyer or AmerAlia that feature the White River Name. Immediately following the
Rescission Date, Buyer and AmerAlia shall be prohibited from creating new
materials that reference the White River Name. In the event that Buyer has
changed its name to the White River Name, as promptly as practicable following
the Rescission Date and within fifteen (15) days following the Rescission
Closing, Buyer shall (i) take all action necessary to change its name to a name
that in the reasonable judgment of Seller is sufficiently dissimilar to the
present name of Buyer to avoid confusion, (ii) file an amendment to its
certificate of incorporation in accordance with applicable Law and (iii) take
all other actions necessary to effectuate the name change.
Section 9.8 Conduct of Business. During the period beginning
on the Closing Date and ending on the earlier of (x) the date that the UIC
Permit has been transferred and (y) the Rescission Closing, Buyer shall:
(a) conduct its business only in the Ordinary Course of
Business in accordance with applicable Law, and use Best Efforts to (i) preserve
intact the Assets, its business organization and properties and maintain
relationships with suppliers, distributors, employees, landlords, agents and
customers of the Business and any other Persons having business arrangements
with the Business and (ii) continue
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collection of receivables and payment of trade accounts payable in a manner
consistent with past practices;
(b) maintain the Assets in compliance with applicable Law
and in a state of repair, order and condition that is consistent with the
Ordinary Course of Business subject to ordinary wear and tear;
(c) use Best Efforts to keep in full force and effect,
without amendment except as otherwise agreed by the parties, all Material
Contracts and other material rights relating to the Business and the Assets;
(d) not sell, transfer or assign any of its Assets other
than in the Ordinary Course of Business, or permit the creation of any Lien on
any of its Assets;
(e) use Best Efforts to comply with all material
obligations under applicable Law and material contractual obligations applicable
to the Business and the Assets;
(f) not enter into any Contract that provides for capital
expenditures in excess of $75,000 for any individual contract or $150,000 for
all such contracts in the aggregate, except to the extent Buyer in its
reasonable good faith judgment believes is necessary for the preservation of the
Business or the Assets; provided, however, that any such Contract or obligation
is on commercially reasonable terms and that Buyer has provided reasonable
advance written notice thereof to Seller;
(g) agree to notify Seller every five (5) Business Days
of any long-term obligation to sell sodium bicarbonate at a specified price
consistent with the Ordinary Course of Business, including an oral Contract
providing for recurring sales to customers;
(h) not amend or terminate the Bioproducts Agreement as
in effect as of Closing;
(i) contract with insurance companies to continue in full
force and effect with substantially equivalent policies the insurance coverage
under the policies set forth in Section 3.17 of the Seller Disclosure Letter;
(j) maintain the Permits and Environmental Permits
required by Buyer to own and operate the Business from and after the Closing
Date in full force and effect;
(k) maintain all books and records relating to the
Business in the Ordinary Course of Business;
(l) use Best Efforts to not allow the levels of raw
materials, supplies or other materials included in the Inventory to vary
materially from the levels maintained in the Ordinary Course of Business, and
not reduce the operating spare part equipment inventory in a manner that would
result in a lack of redundancy with respect
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to any system that is part of the Business, except for reductions made in the
Ordinary Course of Business;
(m) not enter into any compromise or settlement of any
litigation, proceeding or governmental investigation relating to the Assets, the
Business or the Assumed Liabilities that would materially impair the value of
the Assets or Seller's ability to operate the Business in a manner substantially
similar to the way in which it currently is operated by Seller; and
(n) not, and AmerAlia shall not, directly or indirectly,
disclose to any third party any Protected Information except (i) as required by
Law or stock exchange rules, or (ii) actions taken in the Ordinary Course of
Business including, without limitation (A) discussions between Buyer and
customers of the Business with respect to pricing, product and other data
relevant to Contracts, (B) providing employee data to third parties in
connection with establishing benefits plans for Transferred Employees, (C)
financial reporting, preparing Tax Returns or any other government filings,
maintaining accounting records (including use of third parties in maintaining
such records), participating in judicial proceedings or otherwise complying with
Law, legal or administrative process, or any other Order of a court or other
Governmental Authority, and (D) providing data regarding the Business to any
potential lender who has executed a confidentiality agreement reasonably
satisfactory to Buyer and AmerAlia.
Section 9.9 Consents; Posting of Guaranty or Other Security.
In the event that a Rescindable Event shall occur, Buyer and Seller shall use
their Best Efforts to obtain new consents to transfer back the consents to
assignment executed by the third parties to the Contracts numbered 7 to 25 set
forth in Section 3.4 of the Seller Disclosure Letter. Buyer and Seller shall
have such third parties execute another consent to assignment whereby such third
party shall consent to assigning the rights, titles and interest of Buyer to
such Contract back to Seller. Seller, Parent or the applicable Affiliate of
Parent shall post as soon as practicable any guaranty, bond, letter of credit or
other security required by third parties in connection with the assignment and
assumption of any rights and obligations under any of the Contracts, Permits or
Environmental Permits and agrees to cooperate with Buyer and AmerAlia in causing
such third parties to release, terminate or cancel any such security posted by
Buyer under such Contract, Permit or Environmental Permit so as to enable Buyer
to be released from such security as soon as practicable following Rescission
Closing. Seller and Parent agree to indemnify Buyer and AmerAlia for any Loss as
a result of such security not being released as a result of any failure by
Seller, Parent or the applicable Affiliate of Parent to post replacement
security.
Section 9.10 Arrangements Regarding Outstanding Consents.
Notwithstanding Section 9.2, to the extent any Contract is assignable only with
the consent of a third party or any Contract, Permit or Environmental Permit is
transferable only with the approval of a Governmental Authority and as of the
Rescission Closing the parties hereto have been unable to obtain any such
required consent or approval (any such consent or approval, an "Outstanding
Consent Following Rescission"), then such Contract, Permit or Environmental
Permit shall not be assigned or transferred unless and
75
until the required consent or approval is obtained and there shall be no breach
of Section 9.2 in respect thereof. In the event that a Contract, Permit or
Environmental Permit is not assigned or transferred as described in the
immediately preceding sentence, then the parties shall agree to use their
respective Best Efforts to effectuate an arrangement that provides or causes to
be provided to Seller the benefits and burdens of the applicable Contract,
Permit or Environmental Permit, it being understood that any such arrangement
shall be reasonable and lawful as to the parties. In connection with such
arrangement, (i) after the Rescission Closing, Buyer agrees to use its Best
Efforts to enforce for the account of Seller any rights of Buyer arising from
any such Contracts, Permits or Environmental Permits including the right to
elect to terminate in accordance with the terms thereof on the advice of Seller,
(ii) Seller shall use its Best Efforts to perform or arrange for the performance
of the obligations of Buyer arising after the Rescission Date under such
Contracts, Permits and Environmental Permits. Buyer shall, without further
consideration therefor, pay and remit to Seller promptly all monies, rights and
other considerations received in respect of such performance or shall direct
third parties to pay and remit any such monies, rights and considerations
directly to Seller (in each case, net of Buyer's costs and taxes in respect
thereof). If and when any such Outstanding Consent Following Rescission shall be
obtained or such Contract, Permit or Environmental Permit shall otherwise become
assignable or transferable, Buyer shall promptly assign all its rights and
obligations thereunder to Seller without the payment of further consideration,
and Seller shall, without the payment of any further consideration therefor,
assume such rights and obligations and Buyer shall be relieved of any and all
obligations or liability thereunder.
Section 9.11 Indentures and Credit Restrictions.
Notwithstanding anything herein to the contrary, Seller shall not be obligated
to (i) assume, and Buyer shall at Seller's option (exercised to accommodate any
of the prohibitions, limitations or the restrictions contained in the Indentures
and the Credit Agreement identified below), retain, any liability, indebtedness,
guarantee, lease capitalized for financial statement purposes under GAAP, lien
or other obligation or encumbrance, contingent or absolute, direct or indirect,
or (ii) post any guaranty, bond, letter of credit or other security required by
third parties in connection with the assignment and assumption of any rights and
obligations under any of the Contracts (other than the posting of any guaranty,
bond, letter of credit or other security in the same form and amount and
pursuant to the same terms and conditions as any guaranty, bond, letter of
credit or other security of Seller's or Parent's that Buyer is required under
the terms of this Agreement to replace), Permits or Environmental Permits, in
each case to the extent, but only to the extent, that the assumption,
acceptance, transfer, existence, holding or posting thereof is prohibited,
limited or subject to restriction pursuant to those certain Indentures dated May
17, 2001 relating to Parent's $400,000,000 10.875% Senior Notes due 2008 and
$417,500,000 11.250% Senior Notes Due 2011, as amended or supplemented to the
date of this Agreement, or that certain Credit Agreement, dated as of May 17,
2001, with JPMorgan Chase Bank, Xxxxxxx Xxxxx Credit Partners L.P. and various
other lenders party thereto, as amended to the date of this Agreement. Not less
than five Business Days prior to the Rescission Closing, Buyer shall notify
Seller in writing of any such liability, indebtedness, guarantee, lease, lien or
other obligation or encumbrance, each in reasonable detail, and, as a condition
to Seller's obligations to consummate the Rescission
76
Closing, Buyer shall represent and warrant to Seller as to the existence of any
thereof. For the avoidance of doubt, any liability, indebtedness, guarantee,
lien or other obligation or encumbrance to which any Asset or right to be sold
or transferred to Seller pursuant to this Article IX is subject, shall be deemed
to be a liability, indebtedness, guarantee, lien or other obligation or
encumbrance that Seller shall not be obligated to assume, and that Buyer shall
at Seller's option (exercised to accommodate the restrictions contained in the
Indentures and the Credit Agreement identified above), retain, provided,
however, that Seller may not require Buyer to maintain in effect any guaranty,
bond, letter of credit or other security required by a Governmental Authority
following approval by such Governmental Authority of transfer of the applicable
Contract, Permit or Environmental Permit to Seller. In the event that Seller
shall elect not to assume (such election exercised to accommodate the
restrictions contained in the Indentures and the Credit Agreement identified
above) any such liability, indebtedness, guarantee, lease, lien, bond, letter of
credit or other security, obligation or encumbrance that is incurred by Buyer at
Closing pursuant to this Agreement or thereafter under the terms of Section 9.8
of this Agreement, Seller shall so notify Buyer not less than two Business Days
prior to the Rescission Closing and in such notice cite the applicable provision
or provisions in the Indentures and the Credit Agreement identified above under
which such assumption is prohibited, limited or subject to restriction, and
shall elect to either increase the Rescission Purchase Price by the net present
value, using a discount factor determined by Seller in its reasonable discretion
after consultation with Buyer, of the liability, indebtedness, guarantee, lien
or other obligation or encumbrance or, at its option, to indemnify Buyer and
AmerAlia from any Losses arising therefrom. If Buyer disagrees with the discount
factor determined by Seller, Buyer may notify Seller and Parent in writing
within thirty days following the Rescission Date, which notice shall set forth
in detail the particulars of such disagreement, and the disagreement shall be
resolved in the manner and in accordance with the terms of Section 9.3(b).
Section 9.12 Further Assurances. In the event that rescission
shall occur, if any further action is necessary to carry out, effect and perfect
the rescission, each of the parties shall take such further action, including
the execution, acknowledgement and delivery of such further assurances,
instruments and documents.
Section 9.13 Intent and Interpretation. In the event that
rescission shall occur, it is the intent of the parties to rescind and reverse
this Agreement as though it never occurred, and to place the parties in the same
positions they would have been had they never entered into and closed this
Agreement. Article IX of this Agreement and its terms and conditions shall be
interpreted to accomplish this result. In the event of any ambiguity or doubt as
to the intent of the parties, Article IX of this Agreement and its terms should
be interpreted and enforced in a manner that puts the parties in the same
position or in the position as close to the same as reasonably possible had they
never entered into and closed this Agreement.
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ARTICLE X
MISCELLANEOUS
Section 10.1 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given and made if served by
personal delivery upon the party for whom it is intended, if delivered by
registered or certified mail, return receipt requested, or by an internationally
recognized courier service, or if sent by telecopier or e-mail, provided that
the telecopy or e-mail is promptly confirmed by telephone confirmation thereof,
to the person at the address or number set forth below, or such other address or
number as may be designated in writing hereafter, in the same manner, by such
person:
To Seller and Parent:
White River Nahcolite Minerals Ltd. Liability Co.
c/o IMC Global Inc.
000 Xxxxx Xxxxxxxx Xxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
E-mail address: xxxxxxxx@xxxxxxxxx.xxx
with copies to:
IMC Global Inc.
000 Xxxxx Xxxxxxxx Xxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: General Counsel
Telephone: 000-000-0000
Telecopy: 000-000-0000
and:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Telecopy: 000-000-0000
E-mail address: xxxxxxx@xxxxxxx.xxx
78
To Buyer and AmerAlia:
Natural Soda AALA, Inc.
c/o AmerAlia, Inc.
00000 Xxxx Xxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxx, Chairman
Telephone: 000-000-0000
Telecopy: 000-000-0000
E-mail address: xxxxxxxxx@xxx.xxx
with copies to:
Holland & Xxxx LLP
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Telephone: 000-000-0000
Telecopy: 303-295-8261
E-mail address: xxxxxxxxxx@xxxxxxxxxxx.xxx
and
Xxxxx, Figa &Will, P.C.
0000 X. Xxxxxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx., Esq.
Telephone: 000-000-0000
Telecopy: 000-000-0000
E-mail address: xxxxxxxxxx@xxx-xxx.xxx
Section 10.2 Amendment; Waiver. Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Buyer, AmerAlia, Seller
and Parent, or in the case of a waiver, by the party against whom the waiver is
to be effective. No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
Section 10.3 Assignment. No party to this Agreement may assign
any of its rights or obligations under this Agreement without the prior written
consent of the other party hereto, except that Buyer (i) at any time may assign
its rights under this Agreement to any wholly-owned Subsidiary of Buyer and (ii)
at or after the Closing may assign its rights hereunder to any financial
institution lending funds to Buyer after Closing as collateral in connection
with such transaction, provided in each case set forth in (i) and (ii) that
Buyer and AmerAlia shall remain responsible and liable for the
79
performance of all of its obligations and its liabilities under this Agreement.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon and inure to the benefit of the successors and permitted
assigns of the parties. Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the parties to this Agreement or
their successors or permitted assigns any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision of this
Agreement.
Section 10.4 Risk of Loss. In the event of a theft, fire or
other natural casualty prior to the Closing that results in losses or damages to
the Assets that materially impair the operation of the Business ("Casualty
Damages"), Seller and Parent agree to submit and diligently pursue all
applicable claims and losses under the Insurance Policies in respect of such
Casualty Damages. Seller and Parent shall deliver to Buyer all insurance
proceeds received in respect of the Casualty Damages at the Closing, or, to the
extent such proceeds have not been received prior to the Closing, promptly
following receipt thereof by Seller or Parent. In the event that any such
Casualty Damage shall be sufficiently substantial so as to preclude and prevent
resumption of normal operations of any material portion of the Business or the
replacement or restoration of the lost or damaged property within thirty (30)
days from the occurrence of the event resulting in such loss or damage, Seller
shall immediately notify Buyer in writing of its inability to resume normal
operations or to replace or restore the lost or damaged Assets, and Buyer, at
any time within thirty (30) days after receipt of such notice, may elect by
written notice to Seller to either (i) waive such defect and proceed toward
consummation of the transaction in accordance with terms of this Agreement, or
(ii) terminate this Agreement. If Buyer elects to so terminate this Agreement,
Buyer and Seller shall stand fully released and discharged of any and all
obligations hereunder (except for obligations intended to survive hereunder in
accordance with Section 8.2 (Effect of Termination) hereof).
Section 10.5 Entire Agreement. This Agreement (including
Seller Disclosure Letter and all exhibits hereto and thereto) contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings, oral or written,
with respect to such matters, except for the Confidentiality Agreements.
Section 10.6 Expenses. Except as otherwise expressly provided
in this Agreement, whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be borne by the
party incurring such expenses. Notwithstanding the foregoing, Buyer shall bear
all costs and any and all expenses associated with (i) the payment of Transfer
Taxes as described in Section 2.11 (Transfer Taxes), (ii) notices, filings or
the obtaining of consents, approvals, waivers or authorizations or other actions
reasonably necessary to effect the assignment and transfer of the Assets, in
each case as described in Section 5.5 (Further Assurances) and (iii) the
recordation of any assignments contemplated by this Agreement, including as
described in Section 5.18 (Recordable Intellectual Property Assignments) and
furthermore, Buyer and Seller shall share equally all costs and any and all
expenses associated with the arrangement regarding the Outstanding Consents, as
described in Section 2.10.
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Section 10.7 GOVERNING LAW. THE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW; PROVIDED, HOWEVER, THAT THE RIGHTS AND
OBLIGATIONS OF THE PARTIES WITH RESPECT TO THE REAL PROPERTY AND THE PERSONAL
PROPERTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF COLORADO; AND PROVIDED, FURTHER, THAT THE RIGHTS AND OBLIGATIONS OF THE
PARTIES WITH RESPECT TO THE FEDERAL SODIUM LEASES, THE FEDERAL RIGHTS OF WAY AND
THE FEDERAL LAND USE PERMIT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE UNITED STATES OF AMERICA. With respect to any
Action arising out of or relating to this Agreement or the transactions
contemplated hereby after the Closing Date, Seller, Parent, Buyer and AmerAlia
hereby agree and consent to be subject to the exclusive jurisdiction of the
United States District Court for the Northern District of Illinois and in the
absence of such Federal jurisdiction, the parties consent to be subject to the
exclusive jurisdiction of the Supreme Court of the State of Illinois, County of
Xxxx; provided, however, that in the case of any Action concerning the Real
Property or the Personal Property, Seller, Parent, Buyer and AmerAlia hereby
agree and consent to be subject to the exclusive jurisdiction of the courts of
the State of Colorado, County of Rio Xxxxxx. The parties hereto irrevocably
waive the defense of an inconvenient forum to the maintenance of any such action
or proceeding. Each of Buyer, AmerAlia, Seller and Parent further irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered
airmail, postage prepaid, to such party at its address set forth in this
Agreement, such service of process to be effective upon acknowledgement of
receipt of such registered mail. Nothing in this Section shall affect the right
of any party hereto to serve legal process in any other manner permitted by law.
The consents to jurisdiction set forth in this Section shall not constitute
general consents to service of process in the State of Illinois and shall have
no effect for any purpose except as provided in this Section and shall not be
deemed to confer rights on any Person other than the parties hereto. The parties
hereto agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
Section 10.8 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
Section 10.9 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same agreement.
Section 10.10 Interpretation.
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(a) The heading references herein and the table of
contents hereto are for convenience purposes only, do not constitute a part of
this Agreement and shall not be deemed to limit or affect any of the provisions
hereof. Headings have been inserted on the sections of the Seller Disclosure
Letter for convenience of reference only and shall to no extent have the effect
of amending or changing the express description of such sections as set forth in
this Agreement.
(b) Notwithstanding anything to the contrary contained in
this Agreement or in the Seller Disclosure Letter or Buyer Disclosure Letter any
information disclosed in one Section of the Seller Disclosure Letter or one
Section of the Buyer Disclosure Letter shall be deemed to be disclosed in all
Sections of the Seller Disclosure Letter or the Buyer Disclosure Letter, as
applicable, to which it would reasonably be deemed to be pertinent. Certain
information set forth in the Seller Disclosure Letter or the Buyer Disclosure
Letter is included solely for informational purposes and may not be required to
be disclosed pursuant to this Agreement, and the disclosure of such information
shall not be deemed to constitute an acknowledgment that such information is
required to be disclosed in connection with the representations and warranties
made by Seller and/or Parent and Buyer and/or AmerAlia, as applicable, in this
Agreement or that it is material, nor shall such information be deemed to
establish a standard of materiality.
(c) The parties hereto recognize that each of such
parties has contributed substantially and materially to the preparation of this
Agreement and accordingly agree that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be applied
to the construction or interpretation of this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
NATURAL SODA AALA, INC.
By:
--------------------------------------
Name: Xxxx X. Xxxx
Title: Chairman
AMERALIA, INC.
By:
--------------------------------------
Name: Xxxx X. Xxxx
Title: Chairman
WHITE RIVER NAHCOLITE MINERALS LTD.
LIABILITY CO.
By:
--------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
IMC GLOBAL INC.
By:
--------------------------------------
Name: J. Xxxx Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
83
