Exhibit 2.2
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PURCHASE AGREEMENT
DATED AS OF AUGUST 2, 2002
BY AND AMONG
INTERNATIONAL PAINT INC.
ON THE ONE HAND
AND
FERRO CORPORATION,
FERRO ENAMEL ARGENTINA S.A.,
AND
FERRO MEXICANA S.A. DE C.V.
ON THE OTHER HAND
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TABLE OF CONTENTS
PAGE
PREAMBLE ............................................................................................... 1
RECITALS ............................................................................................... 1
TERMS AND CONDITIONS ................................................................................... 1
ARTICLE 1 - GENERAL PROVISIONS ................................................................ 1
1.1 Definitions ................................................................. 1
1.2 Construction ................................................................ 1
ARTICLE 2 - PURCHASE AND SALE ................................................................ 2
2.1 Transaction ................................................................ 2
2.2 Acquired Assets ............................................................. 2
2.3 Retained Assets ............................................................. 3
2.4 Assumed Liabilities ......................................................... 4
2.5 Retained Liabilities ........................................................ 4
2.6 Purchase Price .............................................................. 6
2.7 Adjustment .................................................................. 6
(A) Preliminary Working Capital Statement ................................. 6
(B) Ferro Sellers' Review ................................................. 6
(C) Dispute Resolution .................................................... 6
(D) Final Determination ................................................... 7
(E) Base Line Working Capital ............................................. 7
(F) Closing Working Capital................................................ 7
(G) Amount of Adjustment .................................................. 7
2.8 Payment of Purchase Price ................................................... 7
(A) Payment at Closing .................................................... 7
(B) Final Payment ......................................................... 7
2.9 Refund of Adjustment ........................................................ 8
2.10 Method of Payment ........................................................... 8
(A) Directed Payments ..................................................... 8
(B) Other Payments ........................................................ 8
2.11 Allocation of Consideration ................................................. 8
2.12 Taxes ....................................................................... 8
ARTICLE 3 - ACTIONS BEFORE CLOSING ............................................................ 8
3.1 Access to Records ........................................................... 8
3.2 Interim Conduct of the Powder Coatings Business ............................. 9
3.3 International Paint's Approval of Certain Transactions ...................... 9
3.4 Negotiation of Other Agreements ............................................. 10
3.5 Consents .................................................................... 11
3.6 Coordination of Public Announcements ........................................ 11
3.7 Regulatory Approvals ........................................................ 12
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3.8 Shared Intellectual Property ................................................ 12
3.9 Hyperlink ................................................................... 13
ARTICLE 4 - CONDITIONS ....................................................................... 13
4.1 Conditions to International Paint's Obligations ............................. 13
4.2 Conditions to the Ferro Sellers' Obligations ................................ 14
4.3 Parties' Best Efforts ....................................................... 14
ARTICLE 5 - CLOSING ........................................................................... 15
5.1 The Closing ................................................................. 15
5.2 Date, Time, and Place of Closing ............................................ 15
5.3 International Paint's Obligations ........................................... 15
5.4 The Ferro Sellers' Obligations .............................................. 15
5.5 Local Formalities ........................................................... 15
ARTICLE 6 - ACTIONS AFTER CLOSING ............................................................. 16
6.1 Further Conveyances ......................................................... 16
6.2 Further Consents ............................................................ 16
6.3 Accounting Reports .......................................................... 16
6.4 Noncompetition .............................................................. 17
6.5 Use of Ferro Name and Xxxx .................................................. 18
6.6 Access to Former Business Records ........................................... 18
6.7 Access to Former Employees .................................................. 18
6.8 Termination of Insurance Coverage ........................................... 19
6.9 Trade Secrets ............................................................... 19
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES..................................................... 19
7.1 Ferro's General Representations and Warranties .............................. 19
(A) Organization and Existence ............................................ 19
(B) Power and Authority ................................................... 20
(C) Authorization ......................................................... 20
(D) Binding Effect ........................................................ 20
(E) No Default ............................................................ 20
(F) Finders ............................................................... 20
(G) Consents and Approvals ................................................ 20
(H) No Knowledge of International Paint's Default ......................... 20
7.2 Ferro's Representations and Warranties Concerning the
Powder Coatings Disclosure Package .......................................... 20
(A) Organization .......................................................... 21
(B) Financial Statements .................................................. 21
(C) Inventories ........................................................... 21
(D) Trade Accounts Receivable ............................................. 21
(E) Trade Accounts Payable ................................................ 21
(F) Real Property ......................................................... 21
(G) Tangible Personal Property ............................................ 22
(H) Intellectual Property ................................................. 22
(I) Indebtedness .......................................................... 22
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(J) Litigation ............................................................ 23
(K) Contracts ............................................................. 23
(L) Employees and Employee Benefits ....................................... 23
(M) Compliance with Environmental Laws ................................... 23
(N) Compliance with Health and Safety Laws ................................ 24
(O) Compliance with Other Laws ............................................ 24
(P) Taxes ................................................................. 24
(Q) Insurance ............................................................. 24
(R) No Material Events .................................................... 24
7.3 International Paint's Representations and Warranties ........................ 24
(A) Organization and Existence ............................................ 24
(B) Power and Authority ................................................... 24
(C) Authorization ......................................................... 24
(D) Binding Effect ........................................................ 25
(E) No Default ............................................................ 25
(F) Finders ............................................................... 25
(G) No Knowledge of Ferro's Default ....................................... 25
7.4 Meaning of Ferro Sellers' Knowledge ......................................... 25
7.5 Disclaimer .................................................................. 25
ARTICLE 8 - SPECIFIC OBLIGATIONS .............................................................. 25
8.1 Employee Obligations ........................................................ 25
(A) Offers of Employment .................................................. 26
(B) Employment ............................................................ 26
(C) Pay and Benefits ...................................................... 26
(D) Workers' Compensation ................................................. 26
(E) Union Contracts ....................................................... 27
(F) Severance ............................................................. 27
(G) Non-Interference ...................................................... 27
8.2 Environmental Obligations ................................................... 27
(A) Identified Environmental Matters ...................................... 27
(B) Pre-Closing Environmental Matters...................................... 27
(C) Post Closing R&D Lab Environmental Matters ............................ 28
(1) Separate Post-Closing R&D Lab Environmental Matters ............... 28
(2) Mixed Post-Closing R&D Lab Environmental Matters .................. 28
(D) Notice and Remediation of Real Property ............................... 29
(E) Post-Closing Acquired Assets Environmental Matters .................... 29
(F) International Paint Responsibilities upon
Identification of an Environmental Matter ............................. 29
(G) Responsibilities with regard to
Economic Remediation Plans ............................................ 30
(H) Limitations on the Ferro Sellers' Obligations ......................... 31
(I) Environmental Assessment and
Remediation of the Nashville Plant .................................... 32
(1) Environmental Assessment of the Nashville Plant ................... 32
(2) Participation of the Ferro Sellers' Consultant .................... 32
(3) Nashville Remediation Program ..................................... 32
(J) Release of Claims ..................................................... 34
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ARTICLE 9 - INDEMNIFICATION .............................................................. 34
9.1 Indemnification of the Ferro Sellers ........................................ 34
9.2 Indemnification of International Paint ...................................... 34
9.3 Claims ...................................................................... 35
(A) Notice .............................................................. 35
(B) Responsibility for Defense ............................................ 35
(C) Right to Participate .................................................. 35
(D) Settlement ............................................................ 36
9.4 Disputed Responsibility ..................................................... 36
9.5 Quantum Limitation on Indemnification ....................................... 36
9.6 Time Limitation on Indemnification .......................................... 37
9.7 Actual Amount .............................................................. 37
9.8 Exclusive Remedies .......................................................... 38
9.9 Indemnity Payments as Adjustments ........................................... 38
ARTICLE 10 - DISPUTE RESOLUTION .............................................................. 38
10.1 Dispute Notice .............................................................. 38
10.2 Informal Negotiations ....................................................... 38
10.3 Dispute Resolution Proceedings .............................................. 38
(A) Designation of Representatives ..................................... 38
(B) Selection of Neutral ............................................... 39
(C) Procedures and Process ............................................. 39
(D) Decision ........................................................... 39
10.4 Equitable Relief ............................................................ 39
10.5 Binding Effect .............................................................. 39
ARTICLE 11 - AMENDMENT, WAIVER, AND TERMINATION................................................ 40
11.1 Amendment .............................................................. 40
11.2 Waiver....................................................................... 40
11.3 Termination ................................................................. 40
ARTICLE 12 - MISCELLANEOUS .............................................................. 40
12.1 Cooperation .............................................................. 40
12.2 Severability .............................................................. 40
12.3 Costs and Expenses .......................................................... 40
12.4 Notices ..................................................................... 41
12.5 Assignment and Appointment .................................................. 41
12.6 No Third Parties ............................................................ 41
12.7 Incorporation by Reference .................................................. 42
12.8 Governing Law .............................................................. 42
12.9 Bulk Sales .............................................................. 42
12.10 Counterparts .............................................................. 42
12.11 Complete Agreement .......................................................... 43
APPENDICES
Appendix A - Definitions
Appendix B - Retained Assets
Appendix C - Retained Liabilities
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Appendix D - Form of Preliminary Working Capital Statement
Appendix E - Accounting Principles
Appendix F - Allocation of Consideration
Appendix G - Terms Sheets - Cleveland Lease Agreement;
Transition Services Agreement; California Transition
Services Agreement
Appendix H - Terms Sheet - Argentina Toll Agreement
Appendix I - Terms Sheet - Joint Marketing Agreement
Appendix J - Terms Sheet - Technology License Agreement
Appendix K - Documents to Be Delivered by the Ferro Sellers at the Closing
Appendix L - Documents to Be Delivered by International Paint at the Closing
Appendix M - Contents of the Powder Coatings Disclosure Package
Appendix N - Due Diligence Certifications
Appendix O - Excluded Employees
Appendix P - Employee Benefit and Welfare Plans
Appendix Q - Identified Environmental Matters
Appendix R - Unconditional Guarantee
Appendix S - Environmental Scope of Work
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PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Purchase Agreement") is dated as of August
2, 2002, and is by and among:
INTERNATIONAL PAINT, INC. ("International Paint"), a Kentucky
corporation, on one hand,
- and -
FERRO CORPORATION ("Ferro"), an Ohio corporation, FERRO ENAMEL
ARGENTINA S.A. ("Ferro Argentina"), an Argentine corporation (sociedad
anonima), and FERRO MEXICANA S.A. DE C.V. ("Ferro Mexico"), a Mexican
corporation with variable capital (sociedad anonima de capital variable),
on the other hand (collectively, the "Ferro Sellers").
RECITALS
A. The Ferro Sellers are engaged in the business (the "Powder Coatings
Business") of designing, developing, formulating, manufacturing, and
selling thermosetting-formulated powder surface coatings (the "Products")
for a variety of decorative and protective end-use applications within the
appliance, automotive, and general industrial industries in the Americas.
(For purposes of this Purchase Agreement, however, the term "Powder
Coatings Business" shall not include any comparable business conducted by
the Ferro Sellers and/or their Affiliates from outside the Americas.)
B. International Paint is an indirect, wholly-owned subsidiary of Xxxx Xxxxx
XX ("Akzo Nobel"), a Dutch corporation (naamloze vennootschap).
C. International Paint desires to purchase from the Ferro Sellers, and the
Ferro Sellers desire to sell to International Paint, the Powder Coatings
Business on and subject to the terms and conditions of this Purchase
Agreement.
TERMS AND CONDITIONS
In consideration of the matters recited above and of other good and valuable
consideration, and intending to be legally bound by this Purchase Agreement,
International Paint and the Ferro Sellers hereby agree as follows:
ARTICLE 1 - GENERAL PROVISIONS
1.1 DEFINITIONS. Appendix A sets forth the definitions of certain terms used
in this Purchase Agreement. Those terms shall have the meanings set forth
on Appendix A where used in this Purchase Agreement and identified with
initial capital letters.
1.2 CONSTRUCTION. For purposes of this Purchase Agreement, except where the
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(A) The term "parties" means International Paint and the Ferro Sellers.
(B) The term "person" includes any natural person, firm, association,
partnership, corporation, limited liability company, limited
liability partnership, governmental agency or other entity. The term
"third-party" means any person other than the parties and their
Affiliates.
(C) The term "today" means August 2, 2002.
(D) All currency amounts stated in this Purchase Agreement are in United
States Dollars. (Other currency amounts will translate into United
States Dollar amounts at the exchange rate or rates quoted in the
Currency Trading table of the Central Edition of The Wall Street
Journal on the business day immediately preceding the date as of
which translation is to occur.)
(E) References to "days" mean calendar days. (If, however, an action or
obligation is due to be undertaken by or on a day other than a
business day, i.e., a Saturday, Sunday, or public holiday, in the
United States, then that action or obligation will be deemed to be
due on the next following business day.)
(F) When introducing a series of items, the term "including" is not
intended to limit the more general description that precedes the
items listed.
(G) The Table of Contents and the headings of the Articles and Sections
are included for convenience of reference only and are not intended
to affect the meaning of the operative provisions to which they
relate.
ARTICLE 2 - PURCHASE AND SALE
2.1 TRANSACTION. On and subject to the terms and conditions of this Purchase
Agreement,
(A) At the Closing, International Paint will purchase from the Ferro
Sellers, and the Ferro Sellers will sell, transfer, and assign to
International Paint, all of the Acquired Assets (as defined in
Section 2.2);
(B) At the Closing, International Paint will assume and become directly
and solely responsible for the payment or discharge when due of all
of the Assumed Liabilities (as defined in Section 2.4);
(C) International Paint will pay the Ferro Sellers the Purchase Price as
provided in Section 2.8.
Notwithstanding such transaction, and without limitation, the Ferro
Sellers will retain the Retained Assets (as defined in Section 2.3) and
the Retained Liabilities (as defined in Section 2.5).
2.2 ACQUIRED ASSETS. For purposes of this Purchase Agreement, the term
"Acquired Assets" means all of the Ferro Sellers' rights, title, and
interest in and to each of the following, as the same shall exist at
Closing:
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(A) All Trade Accounts Receivable;
(B) All Inventories;
(C) All Prepaid Items;
(D) All Real Property;
(E) All Tangible Personal Property;
(F) All Acquired Intellectual Property and all goodwill associated with
the Powder Coatings Business;
(G) The unrestricted right to use the Shared Intellectual Property to
the extent physically located at the Real Property, the Argentina
Facility, the R&D Lab or any of the locations that are the subject
of the Real Property Leases;
(H) All Contracts, Leases, Licenses, and Permits (so far as they can be
or are lawfully assigned, transferred to, or held in trust for
International Paint);
(I) All Third-Party Claims that relate to the Acquired Assets and the
Assumed Liabilities; and
(J) To the extent not privileged, all Business Records.
2.3 RETAINED ASSETS. For purposes of this Purchase Agreement, the term
"Retained Assets" means all of the Ferro Sellers' assets other than the
Acquired Assets including, without limitation, the following rights,
properties, and assets as the same shall exist as of the Closing:
(A) All Cash;
(B) All rights, properties, and assets of the Ferro Sellers that are
used by them in businesses other than the Powder Coatings Business,
including rights, properties, and assets held by and used by the
Ferro Sellers and/or their Affiliates in conducting similar
businesses from outside the Americas;
(C) All Retained Intellectual Property and all Shared Intellectual
Property to the extent not physically located at the Real Property
or at any of the locations subject to the Real Property Leases;
(D) All trademarks used by the Ferro Sellers (or any of them), whether
or not registered, that incorporate the names and trademarks "Ferro"
and "Check-In-A-Circle" logo and the goodwill associated with such
names, marks and logos;
(E) All Third Party Claims that relate to Retained Assets or Retained
Liabilities;
(F) All policies of insurance and claims, subject to Section 6.8, and
rights under such policies of insurance, whether or not related to
the Powder Coatings Business, the Acquired Assets, or the Assumed
Liabilities;
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(G) All privileged Business Records;
(H) All assets of employee benefit plans being retained by the Ferro
Sellers under Article 8; and
(I) All assets, whether or not used by the Ferro Sellers in their
conduct of the Powder Coatings Business, which are identified as
Retained Assets on Appendix B.
2.4 ASSUMED LIABILITIES. For purposes of this Purchase Agreement, the term
"Assumed Liabilities" means the following liabilities and obligations as
the same shall exist as of the Closing:
(A) All Trade Accounts Payable and Other Current Liabilities;
(B) All liabilities and obligations that arise after the Closing under
the Contracts, Leases, Licenses, and Permits assigned to
International Paint under this Purchase Agreement;
(C) All liabilities and obligations arising out of, relating to, or
resulting from any claims that Products manufactured and sold by the
Powder Coatings Business following the Closing are or were defective
or failed to meet warranted specifications other than those retained
by the Ferro Sellers pursuant to Section 2.5(D);
(D) Any and all liabilities, duties and obligations of, and claims
against (including any claim or action, whether founded upon
negligence, breach of warranty, strict liability in tort and/or
other similar legal theory, seeking compensation or recovery for
injury to third-parties or damage to property alleged to have been
caused by a Product manufactured and sold by the Powder Coatings
Business after the Closing), or relating to, or incurred by, the
Powder Coatings Business, or the operation of the Powder Coatings
Business or the ownership, possession or use of any of the Acquired
Assets, after the Closing;
(E) International Paint's Employee Obligations (as defined in Section
8.1);
(F) International Paint's Environmental Obligations (as defined in
Section 8.2); and
(G) Costs and expenses for which International Paint is responsible
under Section 12.3.
2.5 RETAINED LIABILITIES. For the purposes of this Purchase Agreement the term
"Retained Liabilities" means, without limitation, the following
liabilities and obligations as the same shall exist as of the Closing:
(A) All Financial Debt;
(B) All liabilities and obligations that have been fully discharged or
satisfied by the Ferro Sellers before the Closing in transactions in
the ordinary course of business and not in breach of this Purchase
Agreement;
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(C) All liabilities, undertakings, and obligations incurred by the Ferro
Sellers in connection with the conduct of businesses other than the
Powder Coatings Business, including liabilities, undertakings, and
obligations incurred by the Ferro Sellers and/or their Affiliates in
conducting similar businesses from outside the Americas;
(D) All liabilities and obligations in excess of $1,000 in any single
case or in excess of $10,000 in the aggregate arising out of,
relating to, or resulting from any claims that Products manufactured
and sold by any of the Ferro Sellers before the Closing are or were
defective or failed to meet warranted specifications if and to the
extent -
(i) Such claims are made in good faith by a customer unrelated to
International Paint without solicitation or encouragement by
or collusion with International Paint,
(ii) International Paint notifies the Ferro Sellers of such claims
within 18 months from the date of the Closing Date, and
(iii) International Paint takes no action to admit, compromise or
settle such claims; if International Paint elects to admit,
compromise or settle any such claim, the Ferro Sellers shall
have no further obligation hereunder with respect to such
claim.
In the event the Ferro Sellers desire to compromise or settle, or
shall become obligated for, any such claim for which the Ferro
Sellers are liable under this Section 2.5(D), International Paint
shall sell to the Ferro Sellers replacement Products at
International Paint's raw material and actual manufacturing costs.
(E) The Ferro Sellers' Employee Obligations (as defined in Section 8.1);
(F) The Ferro Sellers' Environmental Obligations (as defined in Section
8.2);
(G) Costs and expenses for which the Ferro Sellers are responsible under
Section 12.3;
(H) All liabilities and obligations for the payment of Taxes accrued in
connection with the conduct of the Powder Coatings Business with
respect to periods or events occurring before the Closing;
(I) All liabilities, undertakings, and obligations, whether or not
arising out of the Ferro Sellers' conduct of the Powder Coatings
Business, which are identified as Retained Liabilities on Appendix
C; and
(J) Any and all liabilities, duties and obligations of, and claims
against (including any claim or action, whether founded upon
negligence, breach of warranty, strict liability in tort and/or
other similar legal theory, seeking compensation or recovery for
injury to third-parties or damage to property alleged to have been
caused by a Product manufactured and sold by the Ferro Sellers
before the Closing), or relating to, or incurred by, the Ferro
Sellers or any of them, or to the operation of the Powder Coatings
Business or the ownership, possession or use of any of the
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Acquired Assets, on or prior to the Closing, or to the ownership,
possession or use of any of the Retained Assets, in each case
whether accrued, unaccrued, matured, unmatured, absolute,
contingent, known or unknown, asserted or unasserted, and whether
now existing or arising at any time prior to, at, or after the
Closing, and any Encumbrance against any of the Acquired Assets or
any of the Retained Assets, except only for the Assumed Liabilities.
2.6 PURCHASE PRICE. For purposes of this Purchase Agreement, the term
"Purchase Price" means $56,000,000, plus or minus the amount of the
Adjustment (and, if applicable, any further adjustment(s) pursuant to
Section 9.9).
2.7 ADJUSTMENT. The Adjustment will be determined as follows:
(A) PRELIMINARY WORKING CAPITAL STATEMENT. As promptly as practicable,
but in any event within forty-five (45) days after the Closing Date,
International Paint shall prepare and deliver to the Ferro Sellers a
statement (the "Preliminary Working Capital Statement") of the
Working Capital of the Powder Coatings Business at and as of the
Closing Date, substantially in the form set forth in Part 1 of
Appendix D. The Preliminary Working Capital Statement shall be
prepared in accordance with the accounting methods, policies,
practices and procedures set forth on Appendix E (the "Accounting
Principles").
(B) FERRO SELLERS' REVIEW. If the Ferro Sellers disagree with any items
shown on the Preliminary Working Capital Statement, the Ferro
Sellers shall notify International Paint in writing of such
disagreement within forty-five (45) days after delivery of the
Preliminary Working Capital Statement, which notice shall describe
the nature of any such disagreement in reasonable detail, identify
the specific items involved and the dollar amount of each such
disagreement. After the end of such 45-day period, the Ferro Sellers
may not introduce additional disagreements with respect to any item
in the Preliminary Working Capital Statement or increase the amount
of any disagreement, and any item not so identified shall be deemed
to be agreed to by the Ferro Sellers and will be final and binding
upon the parties. During the 45-day period of its review, the Ferro
Sellers and their representatives shall have reasonable access to
any documents, schedules or workpapers used in the preparation of
the Preliminary Working Capital Statement.
(C) DISPUTE RESOLUTION. The Ferro Sellers and International Paint agree
to negotiate in good faith to resolve any such disagreement relating
to items included on the Preliminary Working Capital Statement. If
the Ferro Sellers and International Paint are unable to resolve all
disagreements properly identified by the Ferro Sellers pursuant to
Section 2.7(B) within sixty (60) days after delivery to
International Paint of written notice of such disagreement, then
such disagreements shall be submitted for final and binding
resolution to Price Waterhouse Coopers or, if Price Waterhouse
Coopers should decline such engagement, such other internationally
recognized accounting firm as the Ferro Sellers and International
Paint shall mutually agree (the "Accountants"). The Accountants so
selected will only consider those items and amounts set forth in the
Preliminary Working Capital Statement as to which the Ferro Sellers
and International Paint have disagreed within the time periods and
on the terms specified above and must resolve the matter in
accordance with the terms and
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provisions of the Agreement. The parties will instruct the
Accountants to deliver to the Ferro Sellers and International Paint,
as promptly as practicable and in any event within one hundred and
twenty (120) days after its appointment, a written report setting
forth the resolution of any such disagreement determined in
accordance with the terms of this Purchase Agreement. The
Accountants shall make its determination based solely on
presentations and supporting material provided by the parties and
not pursuant to any independent review. The determination of the
Accountants shall be final and binding upon the Ferro Sellers and
International Paint. The fees, expenses and costs of the Accountants
shall be borne one-half by the Ferro Sellers and one-half by
International Paint.
(D) FINAL DETERMINATION. The Preliminary Working Capital Statement shall
be deemed final for the purposes of this Section 2.7 upon the
earliest of (A) the failure of the Ferro Sellers to notify
International Paint of a dispute with 45 days of International
Paint's delivery of the Preliminary Working Capital Statement to the
Ferro Sellers, (B) the resolution of all disputes, pursuant to
Section 2.7(C), by the Ferro Sellers and International Paint and (C)
the resolution of all disputes, pursuant to Section 2.7(C), by the
Accountants.
(E) BASE-LINE WORKING CAPITAL. The "Base-Line Working Capital" will be
an amount equal to $8,642,044 (the details of which are set forth in
Part 2 of Appendix D).
(F) CLOSING WORKING CAPITAL. The "Closing Working Capital" will be an
amount equal to the Working Capital of the Powder Coatings Business
at and as of the Closing as determined under Sections 2.7(A)-(D)
above.
(G) AMOUNT OF ADJUSTMENT. If the Closing Working Capital is
(A) Less than the Base Line Working Capital, then the Adjustment
will be a negative amount equal to the amount by which the
Closing Working Capital is less than the Base-Line Working
Capital; or
(B) More than the Base Line Working Capital, then the Adjustment
will be a positive amount equal to the amount by which the
Closing Working Capital is greater than the Base-Line Working
Capital.
The Purchase Price will finally be determined on the date the amount
of the Adjustment is finally determined.
2.8 PAYMENT OF PURCHASE PRICE. International Paint will pay the Purchase Price
as follows:
(A) PAYMENT AT CLOSING. At the Closing, International Paint will pay
Ferro (for itself and as agent for the other Ferro Sellers) the
total sum of $56,000,000; and
(B) FINAL PAYMENT. If the Adjustment is a positive amount, International
Paint will, within 10 business days after the final determination of
the Purchase Price, pay Ferro (for itself and as agent for the other
Ferro Sellers) the amount of the Adjustment, together with interest
thereon at the Prescribed Rate for the period from the Closing Date
through and including the date on which the Adjustment is paid.
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(Payments of further adjustments pursuant to Section 9.9 will be made as
provided in Article 9.)
2.9 REFUND OF ADJUSTMENT. If the Adjustment is a negative amount, then the
Ferro Sellers will, within 10 business days after the final determination
of the Purchase Price, refund to International Paint the amount of the
Adjustment, together with interest thereon at the Prescribed Rate for the
period from the Closing Date through and including the date on which the
Adjustment is paid.
2.10 METHOD OF PAYMENT. All payments under this Purchase Agreement shall be
made by delivery to the payee as follows:
(A) DIRECTED PAYMENTS. If a party which is entitled to a payment under
this Purchase Agreement provides the other party five days' advance
written designation of a bank and account number into which the
payee wishes payment to be made, then the payor will make such
payment by wire transfer (in immediately available funds) to the
designated account of the payee.
(B) OTHER PAYMENTS. In all other cases, the party obligated to make a
payment under this Purchase Agreement will do so by delivering to
the payee a bank cashier's check (in immediately available funds)
payable to the order of the payee.
2.11 ALLOCATION OF CONSIDERATION. The total consideration paid by International
Paint to purchase the Powder Coatings Business from the Ferro Sellers is
the sum of the Purchase Price plus the book amount of the Assumed
Liabilities listed in Appendix D as at the Closing, which consideration
will be allocated by mutual agreement between the Ferro Sellers and
International Paint among the Acquired Assets under the principles set
forth on Appendix F. The allocation for Tax purposes will follow the
principles of section 1060 of the Internal Revenue Code of 1986, as
amended (the "Code"). International Paint and the Ferro Sellers will,
within 120 days following the Closing, agree to the Purchase Price
allocation for Tax purposes consistent with the principles set forth in
Appendix F.
2.12 TAXES. The Purchase Price paid by International Paint will be exclusive of
any transfer taxes, including sales and use, real property recording fees
and taxes, and value added taxes. The parties will use all reasonable
efforts to ensure, to the extent possible, that the transfer of the Powder
Coatings Business in accordance with any local transfer agreement is
treated as a transfer of a business as a going concern or otherwise
qualifies for exemption for the purposes of any applicable transfer taxes
or otherwise falls within another applicable exemption from transfer
taxes.
ARTICLE 3 - ACTIONS BEFORE CLOSING
3.1 ACCESS TO RECORDS. From today until the Closing, the Ferro Sellers will
cause the Powder Coatings Business to afford duly authorized
representatives of International Paint free and full access during normal
business hours to all of the assets, properties, books, and nonprivileged
records of the Powder Coatings Business and will permit such
representatives to make abstracts from, or take copies of, such books,
records, or other documentation, or to obtain temporary possession of any
thereof as may be reasonably
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required by International Paint. During such period, the Ferro Sellers
will furnish to International Paint such information concerning the Powder
Coatings Business and its assets, liabilities, or condition as
International Paint may request. Notwithstanding the foregoing, the Ferro
Sellers will not be obligated to disclose or make available to
International Paint any information concerning the Powder Coatings
Business that, in the opinion of Ferro's counsel, should not be disclosed
to International Paint as a matter of law, by contract or to protect a
claim of privilege; provided, however, that in all cases, the Ferro
Sellers represent and warrant to International Paint that such withheld
information, both individually and in the aggregate, is not materially
adverse to the Powder Coatings Business.
3.2 INTERIM CONDUCT OF THE POWDER COATINGS BUSINESS. From today until the
Closing, the Ferro Sellers will conduct the Powder Coatings Business only
in the ordinary and usual course, subject to International Paint's
approval of certain transactions pursuant to Section 3.3. Without limiting
the generality of the foregoing, insofar as the Powder Coatings Business
is concerned, the Ferro Sellers will use their reasonable efforts to:
(A) Preserve substantially intact the Powder Coatings Business'
relationships with suppliers, customers, employees, creditors, and
others having business dealings with the Powder Coatings Business;
(B) Maintain in full force and effect its existing policies of insurance
which materially affect the Powder Coatings Business; and
(C) Continue performance in the ordinary course of its obligations under
contracts, commitments, or other obligations to be included as part
of the Powder Coatings Business.
Notwithstanding the foregoing, the Ferro Sellers will, prior to Closing,
issue a Termination Notice to Ferro Industrial Products (Proprietary)
Limited under the License and Technical Assistance Agreement indicating
that the license is, as of Closing, fully paid and non-exclusive with
respect to the Products.
3.3 INTERNATIONAL PAINT'S APPROVAL OF CERTAIN TRANSACTIONS. Except as may
otherwise be required under this Purchase Agreement, from today until the
Closing, insofar as the Powder Coatings Business is concerned, the Ferro
Sellers will not do any of the following without the prior approval with
written confirmation of International Paint, which approval shall not be
unreasonably withheld:
(A) Purchase or dispose of any real property or interests in real
property;
(B) Enter into any lease for real property involving a term of more than
one year or rental obligation exceeding $250,000 per annum in any
single case;
(C) Enter into any lease for personal property involving a term of more
than one year or rental obligation exceeding $100,000 per annum in
any single case;
(D) Voluntarily permit to be incurred any Encumbrances on assets of the
Powder Coatings Business except in the ordinary course of business;
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(E) Except for normal merit or cost-of-living increases in accordance
with the Ferro Sellers' past practices or required by Argentinean
legal requirements and except for any changes generally affecting
Ferro's salaried employees, increase the rate of compensation for
any of the employees of the Powder Coatings Business or otherwise
enter into or alter any employment, consulting, or managerial
services agreement affecting the Powder Coatings Business;
(F) Except for pension benefit plans and amendments that are required to
be executed in response to determination letter requests filed with
the Internal Revenue Service, and except for any changes generally
affecting Ferro's salaried employees, commence, enter into, or alter
any pension, retirement, profit-sharing, employee stock option or
stock purchase, bonus, deferred compensation, incentive
compensation, life insurance, health insurance, fringe benefit, or
other employee benefit scheme, plan, or arrangement affecting
employees of the Powder Coatings Business;
(G) Make any single new commitment or increase any single previous
commitment for capital expenditures for the Powder Coatings Business
in an amount exceeding $375,000;
(H) Accelerate or delay the sale of Products except as may be necessary
in the ordinary course of business;
(I) Sell, assign, transfer, license, or convey, abandon or fail to
maintain any of the intellectual property to be included as part of
the Acquired Assets.
(J) Except for the resolution of any grievance, enter into, modify or
terminate any labor or collective bargaining agreement relating to
the Powder Coatings Business or, through negotiation or otherwise,
make any commitment or incur any liability to any labor organization
relating to employees of the Powder Coatings Business;
(K) Enter into any transaction or make or enter into any Contract
relating to the Powder Coatings Business which by reason of its size
or otherwise is not in the ordinary course of business;
(L) With respect to the Powder Coatings Business, authorize, propose,
enter into or agree to enter into any acquisition of assets for a
price in excess of $375,000;
(M) Waive any claims or rights under any Material Contract or with
respect to the Acquired Assets in any material respect;
(N) Terminate any Material Contract or voluntarily consent to the
termination of any Material Contract (including, without limitation,
any lease) by any other party thereto; or
(O) Except as otherwise provided in this Section 3.3, enter into any
contract, agreement or arrangement with respect to any of the
foregoing.
3.4 NEGOTIATION OF OTHER AGREEMENTS. From today until the Closing, the parties
will negotiate in good faith and enter into such other and further
agreements as they may
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deem appropriate or necessary for the orderly transfer of the Powder
Coatings Business from the Ferro Sellers to International Paint,
including -
(A) A Cleveland Facility Lease Agreement (the "Cleveland Lease
Agreement") on substantially the terms set forth on Appendix G, Part
1;
(B) A Transition Services Agreement (the "Transition Services
Agreement") on substantially the terms set forth on Appendix G, Part
2;
(C) An Argentina Toll Agreement (the "Argentina Toll Agreement") on
substantially the terms set forth on Appendix H;
(D) A Joint Marketing Agreement (the "Joint Marketing Agreement") on
substantially the terms set forth on Appendix I;
(E) A Technology License Agreement (the "Technology License Agreement")
on substantially the terms set forth on Appendix J; and
(F) A California Transition Services Agreement (the "California
Transition Services Agreement") on terms and conditions mutually
agreeable to the parties.
(Such agreements, as well as any other agreements into which the parties
enter in connection with the transactions contemplated by this Purchase
Agreement which make specific reference to this Section 3.4, are
collectively referred to as the "Other Agreements.")
3.5 CONSENTS. From today until the Closing, the Ferro Sellers will use their
reasonable efforts to obtain the consents or approvals (or effective
waivers thereof) of assignment from those third parties whose consents or
approvals are required for the assignment or transfer of the Material
Consents. In addition from today until the Closing, International Paint
will use its reasonable efforts to assist the Ferro Sellers in obtaining
the Material Consents and any other consents or approvals (or effective
waivers thereof) of all other third-parties whose consents or approvals
are required for the assignment of the Ferro Sellers' rights under Powder
Coatings Business Contracts, Leases, Licenses, Permits and other similar
items. Failure of the parties to obtain the Material Consents or any other
consents or approvals shall not be deemed to be a breach of this Purchase
Agreement and shall not give rise to monetary damages against either
party; provided that obtaining all Material Consents remains a condition
precedent to Closing under Section 4.1(H).
3.6 COORDINATION OF PUBLIC ANNOUNCEMENTS. From today until the Closing,
neither party will make any public announcement concerning the
transactions contemplated by this Purchase Agreement without having
previously consulted with and having received the consent of the other
parties, such consent not to be withheld unreasonably. Nothing in the
preceding sentence, however, shall prevent any party from making any
announcement required by law, by the rules of any securities exchange, or
by any listing agreement with a securities exchange to which such party is
a party or by which it is bound. The parties will cooperate in the
planning, preparation, and issuance of any and all public announcements
concerning this Purchase Agreement and the transactions contemplated by
this Purchase Agreement.
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3.7 REGULATORY APPROVALS. Immediately after the execution and delivery of this
Purchase Agreement, the parties will promptly proceed with the preparation
and filing of any required filings necessary in order to obtain the
approval or authorization of those governmental agencies or
instrumentalities whose approval or authorization is necessary in order to
consummate the transactions contemplated by this Purchase Agreement,
including the following:
(A) Notification under Title II of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act, as amended, and the rules of the Federal Trade
Commission thereunder;
(B) Such foreign filings as shall be deemed necessary by counsel to the
respective parties hereto.
If any of the foregoing governmental authorities require, as a condition
to granting any such approval or authorization, or as a condition to not
issuing a request for additional information or not commencing a
second-phase investigation of the transactions contemplated by this
Purchase Agreement, then the parties will cooperate in good faith to take
such action as may reasonably be necessary to prevent or ameliorate any
actual or perceived anti-competitive consequences of the transactions
contemplated by this Purchase Agreement so as to make possible
consummation of the transactions contemplated by this Purchase Agreement
at the earliest practicable date; provided, however, that under no
circumstances shall International Paint be required to hold separate or
dispose (directly or indirectly) of any assets or business units.
3.8 SHARED INTELLECTUAL PROPERTY. Between today and the Closing,
(A) The Ferro Sellers will convene a meeting of selected technical
Employees of the Powder Coatings Business and selected technical
employees of Ferro's powder coating business conducted in and from
Europe. The purpose of such meeting will be to allow all such
employees a full and free opportunity to discuss and educate
themselves regarding the current status and development of the Ferro
research and development projects related to Shared Intellectual
Property in regions other than their own. The Ferro Sellers will
select employees to participate in such meeting who are, in the
Ferro Sellers' reasonable opinion, most appropriate to participate
in such an exchange of technical information for the benefit of both
the Powder Coatings Business and the powder coatings business
conducted in and from Europe.
(B) If materials needed for a full understanding of the Shared
Intellectual Property projects being conducted in Europe are not
already physically located at the Real Property, at any of the
locations subject to the Real Property Leases or at the R&D Lab,
then the Ferro Sellers will assemble a copy of such materials and
assure that such copy is physically located at the R&D Lab at the
Closing.
(C) International Paint will negotiate with RandH a Shared Intellectual
Property Agreement (the "Shared Intellectual Property Agreement")
setting forth the terms and conditions under which International
Paint and RandH will share the Shared Intellectual Property after
the Closing.
Under no circumstances will the Ferro Sellers have any liability
whatsoever to International Paint with respect to the transfer of
information regarding the Shared
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Intellectual Property beyond what is stated in this Section 3.8 or as to
the terms of the Shared Intellectual Property Agreement.
3.9 HYPERLINK. For a period of no less than 90 days after the Closing, Ferro
shall maintain on the home page of its website a hyperlink to the
following URL: xxx.xxxxxxxxxxxxxxx.xxx, together with a statement
indicating that the Powder Coatings Business has been sold to
International Paint. The placement and design of such hyperlink shall be
subject to Ferro's sole discretion.
ARTICLE 4 - CONDITIONS
4.1 CONDITIONS TO INTERNATIONAL PAINT'S OBLIGATIONS. The obligation of
International Paint to consummate the transactions contemplated by this
Purchase Agreement is subject to the satisfaction of the following
conditions at the Closing:
(A) The representations and warranties of the Ferro Sellers contained in
Section 7.1 of this Purchase Agreement shall be true, accurate and
complete as of today and as of the Closing (except with respect to
the effect of transactions contemplated or permitted by this
Purchase Agreement);
(B) The representations and warranties of the Ferro Sellers contained in
Section 7.2 of this Purchase Agreement shall be true, accurate and
complete in all material respects as of today and as of the Closing
(as if such representations and warranties had been made anew as of
the Closing) except with respect to the effect of transactions
contemplated or permitted by this Purchase Agreement, changes
resulting from the passage of time on dated material in the Powder
Coatings Disclosure Package and transactions in the ordinary course
of business not in breach of the Ferro Sellers' obligations under
this Purchase Agreement;
(C) The Ferro Sellers, in all material respects, shall have performed
and complied with all undertakings required by this Purchase
Agreement to be performed or satisfied by the Ferro Sellers before
the Closing including entering into the Other Agreements;
(D) The Ferro Sellers shall have taken all corporate and other
proceedings or actions necessary to be taken by the Ferro Sellers
for consummation of the transactions contemplated by this Purchase
Agreement;
(E) The Ferro Sellers shall be prepared to deliver the documents listed
in Appendix K;
(F) There shall not have been issued and in effect any injunction or
similar legal order prohibiting or restraining consummation of any
of the transactions contemplated in this Purchase Agreement;
(G) All regulatory approvals described in Section 3.7 shall have been
obtained; and
(H) The Material Consents shall have been obtained (but only the
Material Consents as defined in Appendix A and under no circumstance
whatsoever shall the failure to obtain any consent or approval,
other than the Material Consents, constitute a condition to
International Paint's obligation to consummate the transactions
contemplated in this Purchase Agreement).
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4.2 CONDITIONS TO THE FERRO SELLERS' OBLIGATIONS. The obligation of the Ferro
Sellers to consummate the transactions contemplated by this Purchase
Agreement is subject to the satisfaction of the following conditions at or
before the Closing:
(A) The representations and warranties of the International Paint
contained in Section 7.3 of this Purchase Agreement shall be true,
accurate, and complete in all material respects as of today and as
of the Closing (except with respect to the effect of the
transactions contemplated or permitted by this Agreement);
(B) International Paint, in all material respects, shall have performed
and complied with all undertakings required by this Purchase
Agreement to be performed or satisfied by International Paint before
the Closing including entering into the Other Agreements;
(C) International Paint shall have taken all corporate and other
proceedings or actions necessary to be taken by International Paint
for consummation of the transactions contemplated by this Purchase
Agreement;
(D) International Paint shall be prepared to deliver the documents
listed in Appendix L and a fully-executed copy of the Shared
Intellectual Property Agreement;
(E) If International Paint has assigned its rights and delegated its
duties under this Purchase Agreement to an Affiliate as permitted
under Section 12.5, International Paint shall provide the Guarantee;
(F) There shall not have been issued and in effect any injunction or
similar legal order prohibiting or restraining consummation of any
of the transactions contemplated in this Purchase Agreement;
(G) The Material Consents shall have been obtained; and
(H) All of the conditions precedent to the closing contemplated in a
Purchase Agreement dated today's date by and among Rohm and Xxxx
Company ("RandH") and Ferro, Ferro Spain S.A., Ferro (Great Britain)
Ltd., Ruhr-Pulverlack GmbH and Xxxxx-Xxxx-Xxxxxx Nordiska AB (with
respect to the sale of Ferro's European powder coatings business)
and all of the conditions precedent to the closings contemplated in
a Purchase Agreement dated today's date by and among International
Paint (or an affiliate of International Paint) and Ferro (with
respect to the sale of Ferro's Chinese powder coatings business) and
a Purchase Agreement dated today's date by and among International
Paint (or an affiliate of International Paint) and Ferro (with
respect to the sale of Ferro's Korean powder coatings business)
shall have been duly satisfied and/or waived and the parties thereto
shall be prepared to proceed with such closing simultaneously with
the Closing contemplated by this Agreement.
4.3 PARTIES' BEST EFFORTS. Except with respect to the condition set forth in
Section 4.2(H), from today until the Closing, the parties will cooperate
and use their respective reasonable best efforts to cause the conditions
set forth in this Article 4 over which they may respectively have
influence or control to be satisfied as soon as reasonably practicable.
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ARTICLE 5 - CLOSING
5.1 THE CLOSING. For purposes of this Purchase Agreement, the term "Closing"
means the time at which the transactions contemplated by this Purchase
Agreement will be consummated after satisfaction or waiver of the
conditions set forth in Article 4 of this Purchase Agreement.
5.2 DATE, TIME, AND PLACE OF CLOSING. The Closing will take place at 10:00
a.m. (Eastern Time) on the later to occur of (A) August 30, 2002, or (B) a
date to be mutually agreed by the parties not later than 30 days after the
date on which the last of the conditions set forth in Sections 4.1 and 4.2
and comparable provisions in the purchase agreements (referred to in
subsection 4.2(H)) with RandH and with International Paint (or an
affiliate of International Paint) (with respect to the sale of Ferro's
European, Chinese and Korean powder coatings businesses) shall have been
satisfied or waived (the "Closing Date"). The Closing will take place at
the offices of Squire, Xxxxxxx & Xxxxxxx, 4900 Key Tower, 127 Public
Square, Cleveland, Ohio, or at such other place or places as the parties
may agree in writing. The Closing will be deemed to have occurred as of
11:59 p.m. on the Closing Date (the "Closing Time").
5.3 INTERNATIONAL PAINT'S OBLIGATIONS. At the Closing, International Paint
will deliver to the Ferro Sellers the following:
(A) The documents, certificates, and other items referred to in Appendix
L and a copy of the fully-executed Shared Intellectual Property
Agreement;
(B) Such instruments as may be necessary or appropriate to reflect
International Paint's assumption of the Assumed Liabilities
effective as of the Closing; and
(C) The amount specified in Section 2.8(a).
5.4 THE FERRO SELLERS' OBLIGATIONS. At the Closing, the Ferro Sellers will
deliver to International Paint the following:
(A) The documents, certificates, and other items referred to in Appendix
K;
(B) Ownership to the Acquired Assets as contemplated in this Purchase
Agreement; and
(C) Such deeds, bills of sale, and such other instruments as may be
necessary or appropriate to reflect the Ferro Sellers' conveyance of
the Acquired Assets to International Paint.
5.5 LOCAL FORMALITIES. If either party desires that the specific terms and
conditions (including price allocation) of this Purchase Agreement
applicable to a given jurisdiction be put in writing in a separate
agreement or instrument, then the parties will cooperate to prepare and
execute such separate agreement, but such separate agreement will (unless
the parties expressly agree otherwise in a signed document that refers to
this Section 5.5) in all events be interpreted consistently with and as
subordinate to the terms and conditions of this Purchase Agreement.
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ARTICLE 6 - ACTIONS AFTER CLOSING
6.1 FURTHER CONVEYANCES. After the Closing the Ferro Sellers will, without
further cost or expense to International Paint, except as otherwise
provided in Section 12.3(C), execute and deliver to International Paint or
(cause the same to be executed and delivered to International Paint), such
additional instruments of conveyance, and the Ferro Sellers shall take
such other and further actions as International Paint may reasonably
request and which are ordinarily provided by a seller, more completely to
sell, transfer, and assign to International Paint and vest in
International Paint Ownership to the Acquired Assets.
6.2 FURTHER CONSENTS. If and to the extent the parties fail to obtain before
Closing the consent or approval (or an effective waiver thereof), other
than a Material Consent, of any third-party required for the assignment of
the Ferro Sellers' rights under Powder Coatings Business Contracts,
Leases, Licenses, Permits or other similar items, then after the Closing--
(A) Until such consent or approval (or an effective waiver thereof) has
been obtained
(1) On behalf of the Ferro Sellers, International Paint will
perform all of the Ferro Sellers' duties with respect to such
item, and
(2) On behalf of International Paint, the Ferro Sellers will
exercise all of the Ferro Sellers' rights with respect to such
item as directed by International Paint.
(B) The parties will use reasonable efforts to obtain from such
third-party the consent or approval (or effective waiver thereof).
(C) If the parties are unable to obtain any such consent, approval, or
waiver, then
(1) This Purchase Agreement shall not constitute or be deemed to
be a contract to assign the same if an attempted assignment
without such consent, approval, or waiver would constitute a
breach of such item or create in the issuer or any party
thereto the right or power to cancel or terminate such item;
and
(2) The Ferro Sellers will cooperate with International Paint in
any reasonable arrangement designed to provide International
Paint with the benefit of the Ferro Sellers' rights under such
item, including enforcement (at International Paint's expense)
of any and all rights of the Ferro Sellers against such
third-party as International Paint may reasonably request.
In use of its reasonable efforts under subsection (C) above, the Ferro
Sellers will not be obligated to pay any additional consideration in order
to obtain any consent, approval, or waiver. The Ferro Sellers will,
however, cooperate with International Paint in obtaining a reasonable and
economic solution with such third-party.
6.3 ACCOUNTING REPORTS. International Paint will cause the management of the
Powder Coatings Business to provide to the Ferro Sellers such records and
accounts as are prepared by International Paint in accordance with its
normal accounting procedures and
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such other records, accounts or reports as the Ferro Sellers may
reasonably request or, in the alternative to the latter, access to the
Ferro Sellers to all such other information as may reasonably be requested
by the Ferro Sellers, in order to permit the Ferro Sellers to complete
their financial statements and reports relating to the pre-Closing
activities of the Powder Coatings Business; provided that International
Paint will be under no obligation to generate independent records or
accounts for Ferro.
International Paint will also cause management of the Powder Coatings
Business to afford Ferro's internal and external auditors reasonable
access upon at least three days prior notice and during normal business
hours to the books and records of the Powder Coatings Business as they may
need in order for Ferro to satisfy normal quarterly and year-end reporting
and audit requirements.
6.4 NONCOMPETITION. In order to protect the goodwill of the Powder Coatings
Business, the Ferro Sellers undertake that for a period of five years
after the Closing neither the Ferro Sellers nor any of their Affiliates
will, directly or indirectly, engage in, or have an ownership interest in
or act as agent, advisor, or consultant of or to any third-party that is
engaged in, the business of designing, developing, formulating,
manufacturing, or selling thermosetting-formulated powder surface coatings
for decorative or protective end-use applications of the nature currently
sold by the Powder Coatings Business (the "Noncompete Business") in the
Americas, nor during such period will the Ferro Sellers sell or license
(in a stand-alone transaction not in connection with a sale of
substantially all of the assets of Ferro) the use of the Ferro name or the
Ferro "Check-In-A-Circle" logo to any third-party for use in connection
with the conduct of a Noncompete Business. Nothing in this Section 6.4,
however, shall be deemed to prohibit or restrict the Ferro Sellers, nor
any of their Affiliates or any successor or assign of any of the
foregoing -
(A) From continuing to conduct any business in which any of such
companies are currently engaged, or, in the case of any successor or
assign of any of the foregoing, any business in which such successor
or assign was engaged prior to succeeding to the business of such
company (whether by share acquisition, asset acquisition or
otherwise), and logical extensions (by product line or technology)
of such businesses, including comparable businesses conducted by the
Ferro Sellers and/or their Affiliates in conducting similar
businesses from outside the Americas;
(B) From acquiring or owning less than a controlling equity interest in
any publicly-traded company (whether or not such company is engaged
in a business that competes with the Noncompete Business);
(C) From acquiring a controlling equity interest in any company or other
entity that is engaged in a business that competes with the
Noncompete Business if the annual sales from such entity's competing
business or entity do not exceed 20% of such business' or entity's
total revenues in the 12-month period immediately preceding such
acquisition provided that the acquisition of such competing business
was not the principal purpose of such acquisition;
(D) From acquiring a controlling equity interest in any company or other
entity that is engaged in a business that competes with the
Noncompete Business if the annual sales from such entity's competing
business or entity exceed 20% provided that (1) the acquisition of
such competing business was not the principal
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purpose of such acquisition and (2) the acquiring company makes a
good faith effort to dispose of any such competing business within
one year after its acquisition; or
(E) From carrying out its obligations under the Joint Marketing
Agreement.
In addition to the foregoing, International Paint will not, and will cause
its Affiliates not to, use, for a period of one year beginning on the
Closing Date and ending on the first anniversary of the Closing Date, any
of the Acquired Intellectual Property or any of the Shared Intellectual
Property in any manner whatsoever in the Republic of South Africa.
6.5 USE OF FERRO NAME AND XXXX. As soon as practicable after Closing, but in
no event no later than nine (9) months after the Closing Date,
International Paint shall discontinue all use in any manner whatsoever of
the Ferro name, the Ferro "Check-In-A-Circle" logo and all similar names
and logos; provided, however, that during such period prior to ceasing all
use, International Paint shall be permitted to use the Ferro name and the
Ferro "Check-In-A-Circle" logo solely in connection with the operation of
the Powder Coatings Business and substantially in the same manner as the
name and logo were used by the Ferro Sellers in connection with the
operation of the Powder Coatings Business immediately prior to Closing.
Under no circumstances whatsoever will International Paint use the Ferro
name or the Ferro "Check-In-A-Circle" logo in connection with the conduct
of any other business or operation of International Paint or any of its
Affiliates, including any other powder coatings business presently
conducted by International Paint or any of its Affiliates. International
Paint shall not take any action or fail to take any action that could be
reasonably expected to have an adverse effect on the Ferro name or the
Ferro "Check-In-A-Circle" logo.
6.6 ACCESS TO FORMER BUSINESS RECORDS. For a period of 10 years after the
Closing, or until any audits of the Ferro Sellers' Tax returns relating to
periods before or including the Closing are completed, whichever occurs
later, International Paint will retain all business records constituting
part of the Acquired Assets. During such period, International Paint, upon
at least three days notice, and during normal business hours will afford
duly authorized representatives of the Ferro Sellers free and full access
to all of such records and will permit such representatives, at the Ferro
Sellers' expense, to make abstracts from, or to take copies of any of such
records created, produced, or obtained before the Closing, as may be
reasonably requested by the Ferro Sellers. During such period,
International Paint will cooperate with the Ferro Sellers, and cause
employees of the Powder Coatings Business to cooperate with the Ferro
Sellers, in furnishing information, evidence, testimony, and other
assistance in connection with any action, proceeding, or investigation
relating to the Ferro Sellers' conduct of the Powder Coatings Business
before the Closing, and Ferro will provide reimbursement for all
out-of-pocket expenses incurred by International Paint or such employees
in connection with providing the assistance contemplated in this Section
6.6.
6.7 ACCESS TO FORMER EMPLOYEES. After the Closing, each party will make
available to the other party employees of International Paint, the Ferro
Sellers, and the Powder Coatings Business whom the other party may
reasonably need in order to defend or prosecute any legal or
administrative action to which the Ferro Sellers or International Paint
are a party and which relates to the conduct of the Powder Coatings
Business before the Closing. The requesting party will pay or reimburse
the other party for all reasonable expenses which may be incurred by such
employees in connection therewith, including
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all travel, lodging, and meal expenses, and will further compensate the
other for the number of whole business days spent by each such employee in
providing such services at the rate of 130% of the average daily gross pay
per business day (excluding the value of employee benefits) of such
employee during the calendar month in which such services are performed.
6.8 TERMINATION OF INSURANCE COVERAGE. At or after the Closing, the Ferro
Sellers and their Affiliates will have the right to terminate any and all
insurance coverage affecting the Powder Coatings Business with the effect
that International Paint will have no right of recovery with respect to
any claim under policies or for refunds of premiums of insurance that
previously covered the Powder Coatings Business. International Paint will,
however, continue to be entitled to recoveries (net of deductibles and
out-of-pocket claims handling costs) after the Closing under
occurrence-based insurance policies to the extent the recovery constitutes
an Acquired Asset as a Third Party Claim related to an Acquired Asset or
an Assumed Liability. The Ferro Sellers will be responsible for the
administration of claims for such recoveries.
6.9 TRADE SECRETS. From and after the Closing, the Ferro Sellers will not, and
will use their reasonable best efforts to cause their employees not to,
disclose to any third-party any trade secrets of the Powder Coatings
Business or any other information regarding the Powder Coatings Business
of a type held in confidence under the practices and policies of the
Powder Coatings Business immediately prior to Closing. Such information
shall not include information that (A) is or becomes generally available
to the public other than as a result of a disclosure by the Ferro Sellers
or any of its employees or (B) became available to the Ferro Sellers or
any of its employees on a non-confidential basis from a source other than
the Ferro Sellers or any employee of the Ferro Sellers that was an
employee of the Powder Coatings Business at any time prior to the Closing.
The provisions of this Section 6.9 shall not apply to any disclosure of
information to the extent (1) International Paint or any Affiliate of
International Paint has given its prior written consent to such
disclosure, (2) such disclosure is required by law or by any applicable
ruling, decree or order of a governmental agency or judicial or regulatory
authority, provided, however, that in such an event, the Ferro Sellers
will give International Paint notice of such requirement to disclose in
order to provide International Paint with the opportunity to challenge the
disclosure, the scope of the disclosure and/or obtain a protective order
regarding the disclosure.
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES
7.1 THE FERRO SELLERS' GENERAL REPRESENTATIONS AND WARRANTIES. The Ferro
Sellers represent and warrant to International Paint the following:
(A) ORGANIZATION AND EXISTENCE. With respect to the Ferro Sellers,
(1) Ferro is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Ohio;
(2) Ferro Argentina is a corporation (sociedad anonima) duly
organized and existing under the laws of Argentina; and
(3) Ferro Mexico is a corporation with variable capital (sociedad
anonima de capital variable) duly organized and existing under
the laws of Mexico.
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(B) POWER AND AUTHORITY. The Ferro Sellers have full power and authority
under their respective constitutive documents and the laws of the
jurisdictions in which they respectively are organized to execute,
deliver, and perform this Purchase Agreement.
(C) AUTHORIZATION. The execution, delivery, and performance of this
Purchase Agreement by the Ferro Sellers have been duly authorized by
all requisite corporate action on the part of the Ferro Sellers.
(D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and
enforceable legal obligation of the Ferro Sellers, except as
enforceability may be limited by principles of equity and by
bankruptcy and insolvency laws generally.
(E) NO DEFAULT. Neither the execution and delivery of this Purchase
Agreement nor the Ferro Sellers' full performance of their
respective obligations under this Purchase Agreement will violate or
breach, or otherwise constitute or give rise to (with the giving of
notice or passage of time or both) a Default under, the terms or
provisions of the Ferro Sellers' respective constitutive documents
or of any material contract, commitment, or other obligation to
which any of the Ferro Sellers are a party or by which they are
bound, except for any such Default which would not, either
individually or in the aggregate have a material adverse effect on
the ability of the Ferro Sellers to consummate the transaction
contemplated hereby.
(F) FINDERS. With the sole exception of Xxxxxxx Xxxxx Xxxxxx Inc., the
Ferro Sellers have not engaged and are not directly or indirectly
obligated to any third-party acting as a broker, finder, or similar
capacity in connection with the transactions contemplated by this
Purchase Agreement.
(G) CONSENTS AND APPROVALS. No consent, approval, license, permit, order
or authorization of, or notice to, or registration, declaration or
filing with, any Governmental Authority or any other third-party is
required to be obtained or made by or with respect to the Ferro
Sellers in connection with the execution, delivery or performance of
this Purchase Agreement by the Ferro Sellers or the consummation of
the transactions contemplated hereby by the Ferro Sellers or in
order to preclude any termination, suspension, acceleration,
modification or impairment of any of the Contracts or any legal or
contractual right, privilege, license or franchise which is included
in the Acquired Assets, other than (i) the Material Consents and
(ii) any such consents, approvals, licenses, permits, orders or
authorizations, notices, registrations, declarations or filings, the
failure of which to obtain or be made, in each case, would not have
a material adverse effect on the Powder Coatings Business Condition.
(H) NO KNOWLEDGE OF INTERNATIONAL PAINT'S DEFAULT. The Ferro Sellers
have no knowledge that any of International Paint's representations
and warranties are untrue, incorrect, or incomplete or that
International Paint is in Default under any term or provision of
this Purchase Agreement.
7.2 THE FERRO SELLERS' REPRESENTATIONS AND WARRANTIES CONCERNING THE
DISCLOSURE PACKAGE. Simultaneously with the execution and delivery of this
Purchase Agreement,
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the Ferro Sellers are delivering to International Paint a bound volume of
disclosure materials (the "Disclosure Package") entitled the "Powder Coatings
Disclosure Package" and consisting of 18 Parts, consecutively lettered A-R,
inclusive. The Ferro Sellers represent and warrant to International Paint that
the Disclosure Package contains the information described in Appendix M. In
addition, the Ferro Sellers represent and warrant to International Paint the
following with respect to the Disclosure Package:
(A) ORGANIZATION. Except as otherwise disclosed on Part A of the
Disclosure Package, the Ferro Sellers neither own nor hold any other
equity interest, directly or indirectly, in any company,
corporation, partnership, joint venture, business, firm, or other
entity which, to the Ferro Sellers' knowledge, engages in any
business in competition with the Powder Coatings Business.
(B) FINANCIAL STATEMENTS. Except as otherwise disclosed on Part B, the
financial statements contained in Subparts B-1 to B-6 are true and
correct copies of financial reports derived from management accounts
created and maintained by Ferro in the ordinary course in accordance
with its standard practice. To the Ferro Sellers' knowledge, such
financial reports present fairly, in all material respects, the
financial position of the Powder Coatings Business as of the dates
thereof.
(C) INVENTORIES. Except as otherwise disclosed on Part C, (1) the Ferro
Sellers Own all Inventories described on Part C; (2) such
Inventories have been valued on the books of the Ferro Sellers in
accordance with the Accounting Principles and (3) all Inventories
are saleable in the ordinary course of business.
(D) TRADE ACCOUNTS RECEIVABLE. Except as otherwise disclosed on Part D,
(1) the Ferro Sellers Own all of the Trade Accounts Receivable
listed or described on Part D; (2) none of such Trade Accounts
Receivable is owing to the Ferro Sellers or any of their Affiliates
and (3) all of the Trade Accounts Receivable are genuine and were
entered into in the ordinary course conduct of the Powder Coatings
Business.
(E) TRADE ACCOUNTS PAYABLE. Except as otherwise disclosed on Part E, (1)
all of the liabilities reflected on the books of the Ferro Sellers
arose out of the ordinary course conduct of the Powder Coatings
Business; and (2) no such liabilities are owing to the Ferro Sellers
or any of their Affiliates.
(F) REAL PROPERTY. Except as otherwise disclosed on Part F of the
Disclosure Package, (1) the Ferro Sellers Own all of the Real
Property; (2) the Real Property Leases are valid and subsisting; (3)
none of the Ferro Sellers is in Default in any material respect
under any of the Real Property Leases; (4) the improvements to the
Real Property and Real Property Leases listed on Part F are, taking
into account their age and prior use, in good condition and repair,
ordinary wear and tear excepted; (5) the Real Property is not
subject to any Encumbrance other than a Permitted Encumbrance; (6)
the Ferro Sellers have not received any written notice within the
two years prior to the date hereof of any pending zoning or other
land-use regulation proceedings or any proposed change in any
applicable laws that could reasonably be expected to have a material
adverse effect on the use or operation of the Real Property or the
Real Property Leases, nor have any of the Ferro Sellers received
written notice prior to the date hereof
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of any special assessment proceedings affecting the Real Property or
Real Property Leases; and (7) the Ferro Sellers have not received
written notice of prior to the date hereof, and, to the Ferro
Sellers' knowledge, there is not pending as of the date hereof, any
eminent domain proceeding relating to the Real Property or the
property covered by the Real Property Leases.
(G) TANGIBLE PERSONAL PROPERTY. Except as otherwise disclosed on Part G
of the Disclosure Package, (1) the Ferro Sellers Own all tangible
personal property listed as "owned" on Subparts G-1 to G-4; (2) the
leases under which the tangible personal property listed as "leased"
on Subparts G-5 to G-6 are leased are valid and subsisting; (3)
neither of the Ferro Sellers is in Default in any material respect
under any lease listed on Part G in any manner likely to be
materially adverse to the Powder Coatings Business Condition; and
(4) the items of tangible personal property listed on Part G are,
taking into account their age and prior use, in good condition and
repair, ordinary wear and tear excepted.
(H) INTELLECTUAL PROPERTY. Except as otherwise disclosed on Part H of
the Disclosure Package, (1) the Ferro Sellers Own all of the
Acquired Intellectual Property listed as "owned" on Subparts H-1 to
H-4; (2) the license, technology, or similar agreements to employ
the Acquired Intellectual Property listed as "licensed by" on
Subpart H-5 to H-6 are valid and subsisting agreements; (3) except
with respect to the items listed in such Subpart H-5 to H-6, to the
Ferro Sellers' knowledge, none of the Ferro Sellers is obligated to
pay any amount, whether as a royalty, license, fee, or other payment
to any person in order to use any of the Acquired Intellectual
Property used by the Powder Coatings Business; (4) the license,
technology, or similar agreements to employ the Acquired
Intellectual Property listed as "licensed to" on Subpart H-7 are
valid and subsisting agreements; (5) except with respect to the
items listed in such Subpart H-7, none of the Ferro Sellers have
granted any rights or interest to any person in connection with any
of the Acquired Intellectual Property described in Part H; (6) the
Ferro Sellers have no knowledge of any infringement by the Ferro
Sellers in their conduct of the Powder Coatings Business of the
intellectual property rights of any person in any manner likely to
be materially adverse to the Powder Coatings Business Condition; (7)
together with the Retained Intellectual Property, the Acquired
Intellectual Property includes all intellectual property currently
used by the Ferro Sellers in connection with its conduct of the
Powder Coatings Business; and (8) the Acquired Intellectual Property
and International Paint's unrestricted right to use the Shared
Intellectual Property as provided in Section 2.2(G) would (if used
with the Ferro name and xxxx) be sufficient for the continued
conduct of the Powder Coatings Business as the same has been and is
currently being conducted. To the Ferro Sellers' knowledge, there is
no infringement of the Acquired Intellectual Property and the Ferro
Sellers have taken reasonable steps to maintain trade secrets,
including, without limitation, requiring its employees in the United
States to sign agreements requiring them to keep such trade secrets
confidential.
(I) INDEBTEDNESS. Except as otherwise disclosed on Part I of the
Disclosure Package, no Ferro Seller is in Default in any material
respect under any note, bond, debenture, mortgage, indenture,
security agreement, guaranty, or other instrument of indebtedness
for borrowed money.
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(J) LITIGATION. Except as otherwise disclosed on Part J of the
Disclosure Package, to the Ferro Sellers' knowledge, (1) there
exists no litigation, proceedings or actions affecting the Powder
Coatings Business Condition or claims or investigations that would
have a material adverse effect on the Powder Coatings Business
Condition, in either case at law or in equity pending or threatened
against the Ferro Sellers; and (2) none of the Ferro Sellers is
subject to any writ, injunction, order, or decree of any court,
agency, or other governmental authority affecting the Powder
Coatings Business Condition.
(K) CONTRACTS. Except as otherwise disclosed on Part K of the Disclosure
Package, (1) each of the contracts, commitments, and other
obligations listed on Part K is a valid and binding obligation of
the Ferro Sellers and, to the Ferro Sellers' knowledge, the other
party or parties thereto; (2) neither the Ferro Seller nor, to the
Ferro Sellers' knowledge, any other party thereto has terminated,
cancelled, or substantially modified any contract, commitment, or
other obligation identified in Part K; and (3) neither the Ferro
Sellers nor, to the Ferro Sellers' knowledge, any other party
thereto is in Default in any material respect under any contract,
commitment, or other obligation identified in Part K.
(L) EMPLOYEES AND EMPLOYEE BENEFITS. Except as otherwise disclosed on
Part L of the Disclosure Package or Appendix P of this Purchase
Agreement, (1) none of the Ferro Sellers has entered into any
employment contract in respect of the Powder Coatings Business or
its employees; (2) none of the Ferro Sellers has any pension,
retirement, profit-sharing, deferred compensation, employee share
option or share purchase, bonus, or incentive compensation plans,
schemes, or arrangements in respect of the Powder Coatings Business
or its employees; (3) none of the Ferro Sellers has any employee
health, dental, vision, life insurance, long-term or short-term
disability, vacation, tuition reimbursement, redundancy, severance
or other social plans, schemes, or arrangements relating and
applicable to the Powder Coatings Business or its employees; and (4)
the Powder Coatings Business has substantially performed all
material obligations owing to their respective employees.
(M) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as otherwise disclosed on
Part M of the Disclosure Package, to the Ferro Sellers' knowledge,
(1) in their conduct of the Powder Coatings Business, the Ferro
Sellers are in compliance with all Environmental Laws applicable to
the Powder Coatings Business relating to emissions, discharges, and
releases of Hazardous Materials into land, soil, ambient air, water,
and the atmosphere the noncompliance with which is likely to have a
materially adverse effect on the Powder Coatings Business Condition;
(2) in their conduct of the Powder Coatings Business, the Ferro
Sellers are in compliance with all Environmental Laws applicable to
the generation, treatment, storage, transportation, and disposal of
Hazardous Materials the noncompliance with which is likely to have a
materially adverse effect on the Powder Coatings Business Condition;
and (3) all Products manufactured and sold by the Powder Coatings
Business during the calendar years 2000, 2001 and 2002, and all
current inventories of finished goods, were manufactured in
accordance with the Toxic Substances Control Act, 15 U.S.C. Section
2601 et. seq., as amended and the California Safe Drinking Water and
Toxic Enforcement Act of 1986.
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(N) COMPLIANCE WITH HEALTH AND SAFETY LAWS. Except as otherwise
disclosed on Part N of the Disclosure Package, to the Ferro Sellers'
knowledge, in their conduct of the Powder Coatings Business, the
Ferro Sellers are in compliance with all Health and Safety Laws
applicable to the Powder Coatings Business the noncompliance with
which is likely to have a materially adverse effect on the Powder
Coatings Business Condition.
(O) COMPLIANCE WITH OTHER LAWS. Except as otherwise disclosed on Part O
of the Disclosure Package, to the Ferro Sellers' knowledge the
Powder Coatings Business is in compliance with all statutes,
ordinances, regulations, permits and approvals and other
governmental requirements applicable to the conduct of the Powder
Coatings Business (other than Environmental Laws and Health and
Safety Laws) the noncompliance with which is likely to have a
materially adverse effect on the Powder Coatings Business Condition.
(P) TAXES. Except as otherwise disclosed in Part P of the Disclosure
Package, (1) all Tax returns required to be filed by the Powder
Coatings Business before Closing with respect to the Powder Coatings
Business have been or will be filed on or before the Closing; (2)
all Taxes due and payable before Closing on such returns have been
or will be paid when required by law; and (3) any Taxes relating to
the Powder Coatings Business with respect to any transaction or any
period beginning on or before the Closing Date required to have been
or to be paid prior to Closing have been or will be paid; (4) the
assets of the Powder Coatings Business are not encumbered by any
Encumbrance arising out of unpaid Taxes.
(Q) INSURANCE. Except as otherwise disclosed in Part Q of the Disclosure
Package, the Ferro Sellers have insured or self-insure the assets
and properties of the Powder Coatings Business against those
insurable risks and to an extent the Ferro Sellers deem reasonably
necessary for their continued conduct of the Powder Coatings
Business and for protection against injury, damage, or loss.
(R) NO MATERIAL EVENTS. Except as otherwise disclosed in Part R of the
Disclosure Package, (1) the Powder Coatings Business has been
conducted only in the ordinary and usual course since March 1, 2002,
and (2) no Material Events have occurred since March 1, 2002.
7.3 INTERNATIONAL PAINT'S REPRESENTATIONS AND WARRANTIES. International Paint
represents and warrants to the Ferro Sellers the following:
(A) ORGANIZATION AND EXISTENCE. International Paint is a corporation
duly organized, validly existing and in good standing under the laws
of Kentucky.
(B) POWER AND AUTHORITY. International Paint has full corporate power
and authority under its constitutive documents and under the laws of
Kentucky to execute, deliver, and perform this Purchase Agreement.
(C) AUTHORIZATION. The execution, delivery, and performance of this
Purchase Agreement have been duly authorized by all requisite
corporate actions on the part of International Paint.
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(D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and
enforceable legal obligation of International Paint except as
enforceability may be limited by principles of equity and by
bankruptcy and insolvency laws generally.
(E) NO DEFAULT. Neither the execution and delivery of this Purchase
Agreement nor International Paint's full performance of its
obligations under this Purchase Agreement will violate or breach, or
otherwise constitute or give rise to (with the giving of notice or
passage of time or both) a Default under, the terms or provisions of
International Paint's constitutive documents or of any material
contract, commitment, or other obligation to which International
Paint is a party or by which it is bound except for any such Default
which would not, either individually or in the aggregate have a
material adverse effect on the ability of International Paint to
consummate the transaction contemplated hereby.
(F) FINDERS. International Paint has not engaged and is not directly or
indirectly obligated to any third-party acting as a broker, finder,
or similar capacity in connection with the transactions contemplated
by this Purchase Agreement other than Xxxxxxx Associates.
(G) NO KNOWLEDGE OF THE FERRO SELLERS' DEFAULT. International Paint has
no knowledge that any of the representations and warranties of the
Ferro Sellers contained in this Purchase Agreement are untrue,
incorrect, or incomplete or that the Ferro Sellers are in Default of
any term or provision under this Purchase Agreement.
7.4 MEANING OF FERRO SELLERS' KNOWLEDGE". Where a statement contained in this
Article 7 is said to be to the "Ferro Sellers' knowledge" (or words of
similar import) such expression means that, after having conducted a due
diligence review and in reliance on due diligence certifications, both as
described in Appendix N, senior Ferro management believes the statement to
be true, accurate and complete in all material respects, but that the
Ferro Sellers make no further representation or warranty concerning facts
or circumstances that might have come to the Ferro Sellers' attention if
they conducted a broader or more thorough investigation of the Powder
Coatings Business. For purposes of this Section 7.4, the term "senior
Ferro management" means those Ferro executives who report directly to
Ferro's Chairman and Chief Executive Officer and the Director of Ferro's
Industrial Coatings MBU and the Group Controller of Ferro's Industrial
Coatings MBU.
7.5 DISCLAIMER. The warranties stated in this Article 7 are the only
representations and warranties either party has given the other party in
connection with the transactions contemplated by this Purchase Agreement.
Except as set forth in this Article 7, neither party has made, and each
party expressly disclaims, any other or further representation or
warranty, either express or implied, concerning the subject matter of this
Purchase Agreement. All other warranties either party or anyone purporting
to represent either party gave or might have given, or which might be
provided or implied by law or commercial practice, are hereby excluded.
ARTICLE 8 - SPECIFIC OBLIGATIONS
8.1 EMPLOYEE OBLIGATIONS. The parties' respective obligations with respect to
Employees will be as follows:
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(A) OFFERS OF EMPLOYMENT. At or before the Closing, International Paint
will make written offers of employment effective as of the Closing
to all employees of the Powder Coatings Business (the "Employees")
except the Employees absent from work due to short term or long-term
disability and the Employees listed on Appendix O (the "Excluded
Employees"). A written offer will be made to any employee currently
on short term disability upon the termination of such disability.
Each such offer to Employees not covered by the Union Contracts will
be on terms and conditions of employment (including employment
location) identical or substantially similar to the existing terms
and conditions of each such Employee's employment other than with
respect to benefits. International Paint will provide the same
International Paint benefits that it provides to similarly situated
International Paint employees. Each offer to Employees covered by
the Union Contracts will be subject to the terms and conditions of
the Union Contracts.
(B) EMPLOYMENT. As of the Closing, all Employees who have accepted
International Paint's written offers of employment pursuant to
Section 8.1(A) (the "Transferred Employees") will become employees
of International Paint (with the effect that no period of
unemployment shall have occurred with respect to any such
Transferred Employees) and all of the Transferred Employees will
cease to be employees of the Ferro Sellers.
(C) PAY AND BENEFITS. The Ferro Sellers will be solely responsible for
all pay and benefits of the Excluded Employees earned or incurred
before or after the Closing and for pay and benefits of the
Transferred Employees earned or incurred before the Closing.
International Paint will be solely responsible for all pay and
benefits of the Transferred Employees earned or incurred at or after
the Closing. The parties' respective obligations with respect to
employee retirement plans and employee welfare plans will be as set
forth on Appendix P.
(D) WORKERS' COMPENSATION. The Ferro Sellers will be solely responsible
for the entire cost and expense of all workers' compensation claims
made by Excluded Employees or by Transferred Employees with respect
to injuries or conditions identifiably occurring and sustained
before the Closing. International Paint will be solely responsible
for the entire cost and expense of all workers' compensation claims
made by Transferred Employees with respect to injuries or conditions
identifiably occurring or sustained after the Closing. With respect
to injuries or conditions without an identifiable date or
occurrence, the parties will share responsibility as follows:
(1) The Ferro Sellers will be solely responsible for the entire
cost and expense of all such workers' compensation claims made
by Transferred Employees before the Closing; and
(2) International Paint will be solely responsible for the entire
cost and expense of all such workers' compensation claims made
by Transferred Employees after the Closing.
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With respect to injuries or conditions with a period of occurrence
both before and after the Closing, the parties will share equitably
based on the duration of such period before and after the Closing.
(E) UNION CONTRACTS. Effective as of the Closing, International Paint
will become the "employer" under the Union Contracts and will assume
all liabilities and obligations of the Ferro Sellers as the
"employer" under the Union Contracts in respect of the Powder
Coatings Business.
(F) SEVERANCE. The Ferro Sellers will be solely responsible for any and
all severance pay and benefits that become due Excluded Employees on
termination of their employment with the Ferro Sellers.
International Paint will be solely responsible for any and all
severance pay and benefits that become due to Transferred Employees
on termination of their employment with International Paint after
the Closing. If International Paint elects to terminate the
employment of any Transferred Employee within one year after the
Closing in circumstances in which such Transferred Employee would
have been entitled to severance pay and/or benefits if his or her
employment with Ferro had terminated immediately before the Closing,
then International Paint will provide to such terminated Transferred
Employee severance pay and benefits that are substantially
equivalent to the severance pay and benefits that similarly situated
employees would be entitled to under International Paint's severance
policy; provided, however, that in no event will any such terminated
Transferred Employee receive severance equal to less than one week
for each year of service the terminated Transferred Employee had
with the Ferro Sellers.
(G) NON-INTERFERENCE. The Ferro Sellers will neither employ nor offer
employment to any Transferred Employee during the 24-month period
following the Closing without the prior written consent of
International Paint. During such period, International Paint will
not, without the prior written consent of the Ferro Sellers, employ
or offer employment to any Excluded Employee. Nothing in this
Section 8.1(G), however, will be deemed to prohibit any party from
hiring an Employee who responds to a general public advertisement of
employment or who is identified as a consequence of a non-directed
executive search or who is involuntarily terminated.
The Ferro Sellers' duties and obligations arising out of the foregoing
provisions of this Section 8.1 are the "Ferro Sellers' Employee
Obligations." International Paint's duties and obligations arising out of
the foregoing provisions of this Section 8.1 are the "International
Paint's Employee Obligations."
8.2 ENVIRONMENTAL OBLIGATIONS. The Parties' respective obligations with
respect to Environmental Matters will be as follows:
(A) IDENTIFIED ENVIRONMENTAL MATTERS. The Ferro Sellers will be solely
responsible for any action, condition, or event giving rise to an
Environmental Loss with respect to the Environmental Matters
identified on Appendix Q (the "Identified Environmental Matters").
(B) PRE-CLOSING ENVIRONMENTAL MATTERS. The Ferro Sellers will be solely
responsible for any action, condition, or event giving rise to an
Environmental
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Loss with respect to the Real Property, the R&D Lab, or Acquired
Assets to the extent caused by actions or omissions or conditions
that occurred or arose on or before the Closing.
(C) POST CLOSING R&D LAB ENVIRONMENTAL MATTERS. The Parties' respective
obligations with respect to post-closing Environmental Matters
regarding the R&D Lab will be as follows:
(1) SEPARATE POST-CLOSING R&D LAB ENVIRONMENTAL MATTERS. The Ferro
Sellers will be solely responsible for any action, condition,
or event giving rise to an Environmental Loss with respect to
the R&D Lab to the extent caused solely by actions or
omissions by the Ferro Sellers or conditions that occur or
arise as the result of conduct by the Ferro Sellers after the
Closing. International Paint will be solely responsible for
any action, condition, or event giving rise to an
Environmental Loss with respect to the R&D Lab to the extent
caused solely by actions or omissions by International Paint
or conditions that occur or arise as the result of conduct by
International Paint after the Closing.
(2) MIXED POST-CLOSING R&D LAB ENVIRONMENTAL MATTERS. If any
action, condition, or event giving rise to an Environmental
Loss with respect to the R&D Lab results from both (i) actions
or omissions by International Paint or conditions that occur
or arise as the result of conduct by International Paint after
the Closing, and (ii) actions or omissions by the Ferro
Sellers or conditions that occur or arise as the result of
conduct by the Ferro Sellers after the Closing and/or
conditions that are caused by actions or omissions or
conditions that occurred or arose before the Closing, then the
liability for such mixed Environmental Loss ("Mixed Loss")
will be apportioned between International Paint and the Ferro
Sellers as follows:
(a) The Ferro Sellers will be responsible for any Mixed Loss
in an amount equal to the total Mixed Loss times the
appropriate one of the following two fractions -
(i) If the Mixed Loss resulting from the Environmental
Matter is directly proportional to the amount of
Hazardous Materials that were used, emitted,
discharged or released and the amount of Hazardous
Materials is known or estimable based on credible,
objective evidence, then a fraction (A) the
numerator of which is the amount of Hazardous
Materials contributed by the Ferro Sellers to the
Environmental Matter before the Closing and (B)
the denominator of which is the total amount of
Hazardous Materials contributed both before and
after the Closing; or
(ii) If either the Mixed Loss resulting from the
Environmental Matter is not directly proportional
to the amount of Hazardous Materials that were
used, emitted, discharged or released or the
amount of Hazardous Materials is not known or not
estimable based on credible, objective
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evidence, then a fraction (A) the numerator of
which is 12 months and (B) the denominator of
which is 12 months plus the number of months from
the Closing Date until the date International
Paint delivers a Notice described in Section
8.2(D) below.
(b) International Paint will be solely responsible for any
Mixed Loss in an amount equal to the total Mixed Loss
minus the proportion allocable to the Ferro Sellers as
calculated in Section 8.2(C)(2)(a) above.
(D) NOTICE AND REMEDIATION OF REAL PROPERTY AND R&D LAB ENVIRONMENTAL
MATTERS. With respect to the Real Property and the R&D Lab, if
International Paint becomes aware of any circumstance that might
constitute an Environmental Matter, International Paint will
immediately notify the Ferro Sellers of such circumstance. The Ferro
Sellers will have sole authority for managing any necessary
environmental remediation at the Real Property or the R&D Lab. The
Ferro Sellers will use all reasonable measures to avoid unreasonable
interference with International Paint's operations in the design and
implementation of any such environmental remediation. International
Paint hereby grants the Ferro Sellers a perpetual easement and
license to enter upon the Real Property or the R&D Lab for the
purpose of carrying out any remediation relating to Environmental
Matters. International Paint will also make available to the Ferro
Sellers at cost such utilities at such sites as the Ferro Sellers
may reasonably require in order to carry out such remediation. Upon
request, the Ferro Sellers shall share with International Paint any
plans, diagrams, studies, reports assessments, maps, surveys,
sampling results, or similar documents generated pursuant to the
environmental remediation of the Real Property or the R&D Lab. To
the extent that environmental remediation of the Real Property or
the R&D Lab will affect International Paint's operations,
International Paint will have the right to review and comment upon
any plans for such environmental remediation before the Ferro
Sellers submit those plans to any Government Authorities.
(E) POST-CLOSING ACQUIRED ASSET ENVIRONMENTAL MATTERS. Except as
otherwise provided in Section 7.2(M) or this Section 8.2,
International Paint will be solely responsible for any Environmental
Loss arising out of the ownership or operation of the Acquired
Assets after the Closing.
(F) INTERNATIONAL PAINT RESPONSIBILITIES UPON IDENTIFICATION OF AN
ENVIRONMENTAL MATTER. If after Closing International Paint becomes
aware of an Environmental Matter (other than an Identified
Environmental Matter) not involving the Real Property or the R&D
Lab, then:
(1) International Paint will conduct a preliminary investigation
to determine whether remedial action is legally required under
Environmental Laws with respect to such Environmental Matter.
(2) If International Paint determines in good faith that remedial
action is legally required under Environmental Laws with
respect to such Environmental Matter and may be the
responsibility of the Ferro Sellers
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pursuant to this Section 8.2, then International Paint will
give the Ferro Sellers notice without undue delay of the facts
and circumstances that caused International Paint to conclude
that remedial action is legally required and may be the
responsibility of the Ferro Sellers.
(3) After giving the Ferro Sellers such notice, International
Paint will in good faith design, develop, and deliver to the
Ferro Sellers a plan or program (a "Remediation Plan") for
remediating the Environmental Matter. International Paint will
assure such plan or program corrects or ameliorates any
existing violation of Environmental Laws in the most
economical manner reasonably possible, including the use of
institutional controls and deed restrictions limiting future
use of the real property for industrial purposes so long as
such institutional controls and deed restrictions allow
International Paint to conduct the Powder Coatings Business as
it was conducted at the time of the Closing. (A Remediation
Plan that satisfies the requirements of the preceding sentence
is referred to below as an "Economic Remediation Plan".)
(4) The Ferro Sellers will promptly review International Paint's
Remediation Plan and will advise International Paint if and in
what respects (if any) the Ferro Sellers do not believe the
Remediation Plan qualifies as an Economic Remediation Plan.
(5) If the Ferro Sellers and International Paint agree that
International Paint's Remediation Plan or an agreed modified
Remediation Plan constitutes an Economic Remediation Plan,
then International Paint will proceed with implementing such
Remediation Plan.
(6) If the Ferro Sellers and International Paint do not agree on a
Remediation Plan that both believe is an Economic Remediation
Plan, then International Paint will proceed with implementing
International Paint's Remediation Plan and either party will
have the right to initiate the dispute resolution process set
forth in Article 10 to resolve the dispute over whether
International Paint's Remediation Plan is an Economic
Remediation Plan, in which case the dispute will be finally
resolved as provided in Article 10.
(G) RESPONSIBILITIES WITH REGARD TO ECONOMIC REMEDIATION PLANS. The
Ferro Sellers and International Paint will share responsibility for
the cost of Economic Remediation Plans (a Remediation Plan not
involving the Real Property or the R&D Lab that meets the criteria
of Section 8.2(F)(3)) on the following basis:
(1) International Paint will responsible for the first
$2,000,000.00 of the Actual Amount of the aggregate costs of
such Economic Remediation Plans.
(2) Subject to the limitations set forth in Section 9.5, the Ferro
Sellers will be responsible for the Actual Amount of the costs
of Economic Remediation Plans as follows:
(a) The total costs in excess of $2,000,000.00 of carrying
out Economic Remediation Plans times
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(b) The appropriate one of the following two fractions --
(i) If the costs resulting from the Environmental
Matter are directly proportional to the amount of
Hazardous Materials that were used, emitted,
discharged or released and the amount of Hazardous
Materials is known or estimable based on credible,
objective evidence, then a fraction (A) the
numerator of which is the amount of Hazardous
Materials contributed by the Ferro Sellers to the
Environmental Matter before the Closing and (B)
the denominator of which is the total amount of
Hazardous Materials contributed by both the Ferro
Sellers before the Closing and International Paint
after the Closing; or
(ii) If either the costs resulting from the
Environmental Matter are not directly proportional
to the amount of Hazardous Materials that were
used, emitted, discharged or released or the
amount of Hazardous Materials is not known or not
estimable based on credible, objective evidence,
then a fraction (A) the numerator of which is 12
months and (B) the denominator of which is 12
months plus the number of months International
Paint has carried on the Powder Coatings Business
from the Closing until the date International
Paint delivers the notice described in Sections
8.2(D) or (F)(2) above.
(iii) International Paint will be responsible for all
costs of carrying out Remediation Plans and for
discharging all other liabilities and obligations
resulting from Environmental Matters for which the
Ferro Sellers are not responsible.
(H) LIMITATIONS ON THE FERRO SELLERS' OBLIGATIONS.
(1) With respect to Environmental Matters not involving the Real
Property or the R&D Lab, in no event will the Ferro Sellers
have any responsibility for any Environmental Matter for which
International Paint has not given the Ferro Sellers notice in
accordance with Sections 8.2(D) or (F)(2) above on or before
5:00 PM (Eastern Time) on December 31, 2007.
(2) With respect to the Real Property, except as specifically
provided for in Section 8.2(I), in no event will the Ferro
Sellers have any responsibility for any Environmental Matter
for which International Paint has not given the Ferro Sellers
notice in accordance with Section 8.2(D) above on or before
5:00 p.m. (Eastern time) on the tenth anniversary of the
Closing Date.
(3) In no event will the Ferro Sellers have any responsibility for
any Environmental Losses that relate solely to actions or
practices that International Paint carried out after the
Closing Date and that the Ferro Sellers did not carry out
before the Closing Date.
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(I) ENVIRONMENTAL ASSESSMENT AND REMEDIATION OF THE NASHVILLE PLANT.
(1) ENVIRONMENTAL ASSESSMENT OF THE NASHVILLE PLANT. Upon notice
to the Ferro Sellers of its intent to do so, and no sooner
than 90 days after the Closing Date, International Paint will
retain Arcadis G&M, Inc. ("Arcadis") to conduct the tests and
studies (including review of records and historical research)
that are described in the scope of work attached hereto as
Appendix S and to prepare and furnish to International Paint
an environmental assessment study (the "Environmental
Assessment") to establish a baseline description of the soil
and groundwater conditions at the Real Property. International
Paint will be solely responsible for the cost of the
Environmental Assessment. International Paint and the Ferro
Sellers will cooperate in all reasonable respects to complete
the Environmental Assessment in a timely and efficient manner.
In addition, International Paint will conduct no other tests,
studies, or environmental assessments at the Real Property
until such time as the Nashville Remediation Program shall
have been completed in accordance with this Section 8.2.
(2) PARTICIPATION OF THE FERRO SELLERS' CONSULTANT. The Ferro
Sellers and the Ferro Sellers' designated consultant shall
have the right to observe and/or participate in the tests and
studies included within the Environmental Assessment provided
such observation and/or participation does not unreasonably
disrupt the conduct of the Environmental Assessment. The Ferro
Sellers' consultant shall participate at The Ferro Sellers'
sole expense. Such observation and/or participation may
include, without limiting the generality of the foregoing,
access to all preliminary data, presence during sampling, and
provisions of split samples. The Ferro Sellers and The Ferro
Sellers' consultant shall be given the opportunity to review
any drafts of the Environmental Assessment or portions thereof
that are provided by Arcadis for International Paint's review.
(3) NASHVILLE REMEDIATION PROGRAM. Upon completion of the
Environmental Assessment, International Paint will provide
Ferro with a copy of the final version of the Environmental
Assessment and the Ferro Sellers will develop a program (the
"Nashville Remediation Program") to remediate any
Environmental Matters identified in the Environmental
Assessment for which remedial action is legally required. In
no case, however, will the Ferro Sellers be required to
remediate the Environmental Matters identified in the
Environmental Assessment beyond the higher (less restrictive)
of the levels required by the State of Tennessee for
industrial facilities or the U.S. Environmental Protection
Agency, Region IX for industrial facilities. The Nashville
Remediation Program may include remediation goals based on
human health and environmental risk assessment methods.
(a) In developing and executing the Nashville Remediation
Program, the Ferro Sellers will have the option to
either (i) apply to the Tennessee Division of Superfund
to proceed under Tennessee's
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Voluntary Cleanup Oversight and Assistance Program and
enter into a Consent Order and Agreement or an Innocent
Party Agreement ("Innocent Party Agreement"), or (ii) to
the extent permissible under Environmental Laws,
remediate the Environmental Matters without the
involvement of Governmental Authorities.
(b) The Parties recognize that the Nashville Remediation
Program may include limiting future use of the Real
Property through the use of institutional controls, deed
restrictions, and/or land use restrictions including a
Notice of Land Use Restriction pursuant to Tennessee
Code Annotated Section 00-000-000. Limitations on future
use of the Real Property may apply to activities on,
over, or under the land, including, but not limited to,
use of property, use of groundwater, building, filling,
grading, excavating, and mining, but may not materially
impair the Real Property's suitability for use as part
of the Powder Coatings Business as it was conducted at
the time of Closing.
(c) The Ferro Sellers will undertake the Nashville
Remediation Program in a prompt and expeditious manner
so as to minimize disruption of the normal operations of
International Paint at the Nashville facility.
(d) The Ferro Sellers will have no further obligation
regarding the Real Property and International Paint
shall, notwithstanding Sections 8.2(B), (D) and (H), be
responsible and indemnify Ferro for any Environmental
Loss with respect to the Real Property when either (i)
the Tennessee Division of Superfund issues a letter of
completion regarding the Innocent Party Agreement or
Ferro fulfills the requirements of any consent order
under Tennessee's Voluntary Cleanup Oversight and
Assistance Program or (ii) the Environmental Matters
identified in the Environmental Assessment have been
remediated such that constituent levels are less than or
equal to the higher (less restrictive) of the levels
required by the State of Tennessee for industrial
facilities or the U.S. Environmental Protection Agency,
Region IX for industrial facilities (upon completion of
such remediation to the levels required in this
Subsection 8.2(I)(3)(d)(ii), the parties shall execute
and deliver a joint letter to one another acknowledging
and agreeing that such remediation has been completed to
the required levels and that the Ferro Sellers have no
further obligations regarding the Real Property; in the
event of any dispute between the parties regarding
completion of such remediation to the required levels,
the disagreement will be finally resolved as provided in
Article 10).
(e) Arcadis will not be requested to determine whether
remedial action is legally required for a specific soil
or groundwater condition identified in the Environmental
Assessment. If the Ferro Sellers and International Paint
do not agree on whether remedial
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action is legally required for a specific soil or
groundwater condition identified in the Environmental
Assessment, then the Ferro Sellers will implement the
Nashville Remediation Program with respect to undisputed
Environmental Matters and either party will have the
right to initiate the dispute resolution process set
forth in Article 10 to resolve the dispute over the
remaining Environmental Matters, in which case the
dispute will be finally resolved as provided in Article
10.
(J) RELEASE OF CLAIMS. Except as expressly provided in this Section 8.2,
the Ferro Sellers and International Paint (and their respective
parent and subsidiary corporations) hereby agree to release each
other from any and all claims of any kind under common law or
statute (including without limitation any claims based on a theory
of strict liability or claims that might exist under the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. ss. 9601 et seq.) arising out of any
Environmental Matters relating to the Acquired Assets, the R&D Lab
or the Real Property.
The Ferro Sellers' duties and obligations arising out of the foregoing
provisions of this Section 8.2 are the "Ferro Sellers' Environmental
Obligations." International Paint duties and obligations arising out of
the foregoing provisions of this Section 8.2 are the "International
Paint's Environmental Obligations."
ARTICLE 9 - INDEMNIFICATION
9.1 INDEMNIFICATION OF THE FERRO SELLERS. International Paint, subject to the
limitations set forth in this Article 9, will indemnify and (in the case
of third party claims) defend the Ferro Sellers, and hold the Ferro
Sellers harmless, from and against the Actual Amount of any and all
liabilities, damages, claims, costs, and expenses (including reasonable
attorneys' fees) arising out of or resulting from --
(A) Any misrepresentation or breach of warranty by International Paint
under Article 7;
(B) Nonperformance by International Paint of any obligations to be
performed by or on the part of International Paint under this
Purchase Agreement, including International Paint's obligations with
respect to the Assumed Liabilities and International Paint's
obligations under Article 8; or
(C) International Paint's use of the Ferro name or the Ferro
"Check-In-A-Circle" logo in any manner whatsoever (other than
instances where there is a claim of infringement by a third-party
involving the name or the logo).
9.2 INDEMNIFICATION OF INTERNATIONAL PAINT. Subject to the limitations set
forth in this Article 9, the Ferro Sellers will indemnify and (in the case
of third party claims) defend International Paint, and hold International
Paint harmless, from and against the Actual Amount of any and all
liabilities, damages, claims, costs, and expenses (including reasonable
attorneys' fees) arising out of or resulting from --
(A) Any misrepresentation or breach of warranty by the Ferro Sellers
under Article 7; provided, however, that under no circumstances
shall International Paint be
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entitled to any indemnity with respect to any breach of the
representations and warranties set forth in Section 7.1(G) until and
so long as the Ferro Sellers have failed to perform its obligations
in all material respects set forth in Section 6.2;
(B) Nonperformance by the Ferro Sellers of any obligation to be
performed by or on the part of the Ferro Sellers under this Purchase
Agreement, including the Ferro Sellers' obligations with respect to
the Retained Liabilities and the Ferro Sellers' obligations under
Article 8; or
(C) Any liability resulting from non-compliance with any so called "bulk
sales" law or similar law requiring creditor notice in any
jurisdiction, except to the extent the associated payable owed to
such creditor constituted an Assumed Liability.
9.3 CLAIMS. If either party desires to make a claim against the other under
Section 9.1 or 9.2 which does not involve a claim by any third-party, then
such party shall make such claim by delivering written notice to the other
within a reasonable period of time. If either International Paint or the
Ferro Sellers (the "Claimant") desires to make a claim against the other
(the "Indemnitor") under Section 9.1 or 9.2 which involves a claim by a
third-party, then such claim will be made in the following manner and be
subject to the following terms and conditions:
(A) NOTICE. The Claimant will give notice to the Indemnitor within a
reasonable period of time of any demand, claim, or threat of
litigation or the actual institution of any action, suit, or
proceeding (collectively, a "Claim") at any time served on or
instituted against the Claimant with respect to which the Claimant
believes it would have a right of indemnification under Section 9.1
or 9.2. In providing such notice, the Claimant shall only state the
existence of such Claim and shall not admit or deny the validity of
the facts or circumstances out of which such Claim arose. Solely for
purposes of determining whether the Claimant is entitled to
indemnification under Section 9.1 or 9.2, the alleged facts or
circumstances on which such Claim is based shall be treated as if
they were true pending final resolution of the facts and
circumstances out of which such Claim arose.
(B) RESPONSIBILITY FOR DEFENSE. Within 30 days after receipt of any such
notice, but not less than five working days before the time the
Claimant is required to respond to a Claim, the Indemnitor will, by
giving written notice to the Claimant, have the right to assume
responsibility for the defense of the Claim in the name of the
Claimant or otherwise as the Indemnitor may elect; provided that the
Indemnitor also agrees that it does or might have responsibility to
indemnify the Claimant with respect to such Claim. Otherwise, the
Claimant will have responsibility for the defense of the Claim.
Subject to the provisions of subsections 9.3(C) and (D) below, the
party having responsibility for defense of a Claim (the "Defending
Party") will have the full authority to defend, cure, adjust,
compromise, or settle such Claim or appeal any judgment or ruling of
a court or other tribunal in connection with such Claim in its own
name and/or in the name of the other party.
(C) RIGHT TO PARTICIPATE. Notwithstanding a Defending Party's
responsibility for the defense of a Claim, the other party shall
have the right to participate, at its own expense and with its own
counsel, in the defense of a Claim and the Defending Party will
consult with the other party from time to time on matters relating
to the
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defense of such Claim. The Defending Party will provide the other
party with copies of all pleadings and material correspondence
relating to such Claim.
(D) SETTLEMENT. A Defending Party will provide the other party with
timely written notice of any proposed adjustment, compromise, or
other settlement, including equitable or injunctive relief, of a
Claim which the Defending Party intends to propose or accept. If the
other party fails to provide the Defending Party with timely written
notice of objection to such settlement, then the Defending Party
shall have the authority to propose or accept such settlement and
enter into any agreement, in its own name and/or in the name of the
other party, giving legal effect to all aspects of such settlement.
If the other party objects to such settlement, then the Defending
Party may, if it so elects, tender the defense to the other party by
paying to such other party the amount of money proposed to be paid
in settlement of the Claim, in which case the Defending Party shall
have no further liability to the other party under this Purchase
Agreement with respect to such Claim and the other party shall have
full authority for the future defense of such Claim and full
responsibility for any and all liabilities, obligations, costs, and
expenses resulting therefrom.
9.4 DISPUTED RESPONSIBILITY. If, after receiving a written indemnification
notice under Section 9.3(A), the party receiving such notice disputes --
(A) The fact that such party in fact made a misrepresentation or breach
a warranty under this Purchase Agreement giving rise to the claim to
which the notice relates or that any such misrepresentation or
breach in fact gave rise to the liabilities, damages, claims, costs,
or expenses for which the other party seeks indemnification under
this Article 9, or
(B) The fact that such party in fact failed to perform any obligation to
be performed on the part of that party under this Purchase Agreement
giving rise to the claim to which the notice relates or that any
such failure in fact gave rise to the liabilities, damages, claims,
costs, or expenses for which the other party seeks indemnification
under this Article 9,
then such party will have the right to initiate the dispute resolution
mechanism set forth in Article 10, in which case the dispute will be
finally resolved as provided in Article 10. In such case, however, pending
final resolution of the disputed item, the parties will proceed as if the
party receiving the indemnification notice had in fact made a
misrepresentation, breached a warranty, or failed to perform an obligation
to be performed on the part of that party under this Purchase Agreement
and as if such act or failure in fact gave rise to the liabilities,
damages, claims, costs, or expenses for which the other party seeks
indemnification under this Article 9. If the disputed item is resolved in
whole or in part in favor of the party receiving the indemnification
notice, then such party will be entitled to an equitable reimbursement
from the other party of any amounts expended or incurred in carrying out
the receiving party's indemnification obligations under this Article 9.
9.5 QUANTUM LIMITATION ON INDEMNIFICATION. Notwithstanding the provisions of
Section 9.2, the Ferro Sellers will not be obligated to indemnify or
defend International Paint, or hold International Paint harmless, from or
against any liability, damage, claim, cost, or expense (including
attorneys' fees) arising out of a misrepresentation or breach of
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warranty by the Ferro Sellers pursuant to Section 9.2 unless and to the
extent by which the Actual Amount of all claims exceeds $1,000,000. In no
event will the Ferro Sellers' total obligation to International Paint
under Section 8.2(G) or Section 9.2 exceed, in the aggregate, $18,000,000.
9.6 TIME LIMITATION ON INDEMNIFICATION. Notwithstanding the provisions of
Section 9.2, the Ferro Sellers will not be obligated to indemnify or
defend International Paint, or hold International Paint harmless, from or
against any liability, damage, claim, cost, or expense (including
attorneys' fees) arising out of a misrepresentation or breach of warranty
by the Ferro Sellers pursuant to Section 9.2, and any cause of action
based thereupon shall expire and terminate, unless International Paint
delivers to the Ferro Sellers notice and a full explanation of the alleged
breach on or before 5:00 p.m. (Eastern Time) -
(A) In the case of claims by International Paint for misrepresentations
or breaches of warranty of the Ferro Sellers' Tax warranties under
Section 7.2(P), 90 days after expiration of the applicable statute
of limitation period with respect to the particular Tax at issue;
and
(B) In the case of any other claim, the 18 month anniversary of the
Closing Date.
The foregoing time limitations shall not apply with respect to any breach
of the representations and warranties set forth in Section 7.1(A), (B),
(C) or (D), which representations and warranties shall survive
indefinitely or to any breach of the representations and warranties set
forth in Section 7.2(M) or (N), any breach of which shall be governed
solely by Section 8.2.
9.7 ACTUAL AMOUNT. For purposes of the parties' respective obligations under
Sections 8.2, 9.1 and 9.2, in computing the "Actual Amount" of any
liability, damage, claim, loss, cost or expense, the following principles
will apply:
(A) The amount will be reduced to give full effect to any provision or
reserve on the books of the Powder Coatings Business as of the
Closing with respect to the particular item or category of items out
of which the misrepresentation, breach or nonperformance in question
arose;
(B) The amount will be reduced to give full effect to any indemnity,
contractual or noncontractual recoveries the indemnified party
receives (or, in the event the indemnified party fails to use
reasonable efforts to pursue any such recoveries it might otherwise
be entitled to receive, the amount that it might otherwise be
entitled to receive) from any third-party as a consequence of the
fact, condition or circumstance giving rise to the
misrepresentation, breach or nonperformance in question;
(C) The amount will be reduced to give full effect to any act or
omission of the indemnified party that either was the cause of or
increased the ultimate amount of any liability, damage, claim, loss,
cost or expense incurred by the indemnified party;
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(D) The amount will be reduced to give full effect to any failure by any
indemnified party to take reasonable efforts to mitigate any
liability, damage, claim, loss, cost or expense incurred by such
indemnified party.
9.8 EXCLUSIVE REMEDIES. The remedies provided in this Article 9 and in Section
8.2 will be the parties' exclusive remedies for claims arising out of or
resulting from any misrepresentation, breach of warranty, breach of
covenant, breach of undertaking, or nonperformance any obligation to be
performed on the part of either party under this Purchase Agreement.
Neither party shall be liable to the other party as the result of any
breach or alleged breach of this Agreement for any (a) damages for loss or
harm to business reputation; or (b) damages that are not the proximate and
foreseeable consequence of the breach or alleged breach of this Agreement.
Under no circumstances will any party be responsible to another party for
any consequential, incidental, special, or punitive damages or damages
resulting from lost profits or lost business opportunity arising out of or
relating to any such Claim. The foregoing shall not be interpreted,
however, to limit indemnification for losses incurred as a result of the
assertion by a claimant (other than the parties hereto and their
successors and assigns) in a third-party claim of claims for damages of
the foregoing type.
9.9 INDEMNITY PAYMENTS AS ADJUSTMENTS. All indemnity payments under this
Article 9 will constitute and be treated as adjustments to the Purchase
Price.
ARTICLE 10 - DISPUTE RESOLUTION. If the parties ever have a dispute involving
their respective rights and obligations under this Purchase Agreement or any of
the Other Agreements (other than with respect to the determination of the amount
of the Adjustment), then the parties will resolve such dispute as follows:
10.1 DISPUTE NOTICE. Either International Paint or the Ferro Sellers may at any
time deliver to the other a written dispute notice setting forth a brief
description of the issues for which such notice initiates the dispute
resolution mechanism set forth in this Article 10. Such dispute notice
shall also specify the provision or provisions of this Purchase Agreement
and the facts or circumstances that are the subject matter of the dispute.
10.2 INFORMAL NEGOTIATIONS. During the 60-day period following delivery of a
dispute notice described in Section 10.1, the parties will cause their
representatives to meet and seek to resolve the disputed items cordially
through informal negotiations
10.3 DISPUTE RESOLUTION PROCEEDINGS. If representatives of the parties are
unable to resolve disputed items through the informal negotiations
described in Section 10.3, then within 30 days after the informal
negotiation period the parties will refer the disputed issues to a dispute
resolution panel for final resolution as follows:
(A) DESIGNATION OF REPRESENTATIVES. Within seven days after such
informal negotiation period, International Paint and the Ferro
Sellers will each designate one representative to serve on the
dispute resolution panel. (If either party fails or refuses to
designate a representative, then the other party will be entitled to
have a representative appointed for such party by the CPR
Institute.)
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(B) SELECTION OF NEUTRAL. Promptly after they have been designated, the
designated representatives will meet and select a neutral
third-party (the "Neutral") to serve as the third member of the
dispute resolution panel. If the designated representatives of
parties cannot agree on a Neutral, then either representative may
request the CPR Institute to select the Neutral.
(C) PROCEDURES AND PROCESS. At the time the matter is referred to the
dispute resolution panel, International Paint and the Ferro Sellers
will jointly establish the procedures to be followed with respect to
the presentation of the parties' respective positions and the
process by which the dispute resolution panel will reach and render
its decision on the disputed issues. Such procedures and processes
will, at a minimum, assure that -
(a) Each party will have the right to submit evidence to the
dispute resolution panel,
(b) Each party will have the right to present a written statement
concerning that party's position with respect to the disputed
item, and
(c) Before reaching a decision concerning the disputed item, the
dispute resolution panel will convene a hearing at which both
parties may be represented.
If International Paint and the Ferro Sellers cannot agree on such
procedures and processes, then the Neutral will establish such
procedures and process which will, in all events, be consistent with
the foregoing.
(D) DECISION. The dispute resolution panel will act by majority vote.
The dispute resolution panel will base its decision on applicable
provisions of this Purchase Agreement or, if the provisions of this
Purchase Agreement do not resolve the matter, on general principles
of substantive Ohio law. (The dispute resolution panel may, if it so
desires, seek the opinion of an attorney licensed to practice law in
the State of Ohio on any matter of substantive Ohio law on which the
panel desires clarification.)
10.4 EQUITABLE RELIEF. Notwithstanding any other provision of this Article 10,
either party may seek from a court of competent jurisdiction interim
injunctive relief in order to maintain the status quo or protect such
party's rights under this Purchase Agreement pending resolution of a
dispute pursuant to this Article 10.
10.5 BINDING EFFECT. The decisions of the dispute resolution panel under this
Article 10 will be binding on both the Ferro Sellers and International
Paint and will be neither appealable, contestable, or subject to
collateral attack by the Ferro Sellers or International Paint.
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ARTICLE 11 - AMENDMENT, WAIVER, AND TERMINATION
11.1 AMENDMENT. The parties may amend this Purchase Agreement at any time
before the Closing, but only by written instrument executed by both
parties.
11.2 WAIVER. Either party may at any time waive compliance by the other with
any undertakes or conditions contained in this Purchase Agreement but only
by written instrument executed by the party waiving such compliance. No
such waiver, however, shall be deemed to constitute the waiver of any such
undertaking or condition in any other circumstance or the waiver of any
other undertaking or condition.
11.3 TERMINATION. The parties may terminate this Purchase Agreement at any time
before the Closing, but only by written instrument signed by both parties.
This Purchase Agreement will terminate automatically, and without further
action by either party, if the Closing has not occurred within 120 days
following the execution of this Purchase Agreement, unless the parties
otherwise extend this Purchase Agreement by a written instrument executed
by both parties.
ARTICLE 12 - MISCELLANEOUS
12.1 COOPERATION. International Paint and the Ferro Sellers will cooperate with
the other party(ies), at the other party's(ies') request and expense, in
furnishing information, testimony and other assistance in connection with
any actions, proceedings, arrangements, and disputes with other
third-parties or governmental inquiries or investigations involving the
Ferro Sellers' conduct of the Powder Coatings Business or the transactions
contemplated by this Purchase Agreement.
12.2 SEVERABILITY. If any provision of this Purchase Agreement shall finally be
determined to be unlawful, then such provision will be deemed to be
severed from this Purchase Agreement and replaced by a lawful provision
which carries out, as closely as possible, the intention of the parties
and preserves the economic bargain contemplated by this Purchase Agreement
and, in such case, each and every other provision of this Purchase
Agreement will remain in full force and effect.
12.3 COSTS AND EXPENSES. The parties will be responsible for the following
costs and expenses arising out of the transactions contemplated by this
Purchase Agreement as follows:
(A) The Ferro Sellers will be solely responsible for the fees and
expenses of Xxxxxxx Xxxxx Xxxxxx Inc. whether or not the
transactions are consummated;
(B) International Paint will be solely responsible for any filing fees
that may be required in connection with any necessary regulatory
applications and notifications except for filing fees under the HSR
Act or any other Antitrust law payable as a result of a filing by
the Ferro Sellers; and
(C) If the transactions are consummated, registration fees, stamp
duties, or other transfer fees, Taxes or imposts, if any, which
arise out of or result from the transfer of the Acquired Assets from
the Ferro Sellers to International Paint will be shared equally
between the parties, provided that International Paint and the Ferro
Sellers shall calculate the portion of any real or personal property
tax due
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relating to a period beginning before the Closing but ending after
the Closing using the most recent Tax assessment as the Tax to be
prorated. The Ferro Sellers shall be liable for the amount prorated
through the date of Closing. International Paint shall be
responsible for the remaining Tax.
Otherwise, each party will bear its own expenses incurred in connection
with this Purchase Agreement and the transactions contemplated by this
Purchase Agreement, whether or not the transactions are consummated.
12.4 NOTICES. All notices, requests and other communications under this
Purchase Agreement shall be in writing and shall be deemed to have been
duly given at the time of receipt if delivered by hand or communicated by
telefax, or, if mailed, three (3) days after mailing registered or
certified mail, return receipt requested, with postage prepaid:
If to International Paint, to: International Paint, Inc.
0 Xxxxxxxxxxx Xxx
Xxxxx Xxxxx, Xxx Xxxx 00000-0000
Attention: General Counsel
Telefax: 0.000.000.0000
If to Ferro Sellers, to: Ferro Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
XXX
Attention: General Counsel
Telefax: 0.000.000.0000
Either party may change its notice address above to a different address by
giving the other party written notice of such change.
12.5 ASSIGNMENT AND APPOINTMENT. This Purchase Agreement will be binding upon
and inure to the benefit of the successors of the parties, but will not be
assignable by any party without the prior written consent of the other
parties. International Paint will have the right, however, if it so
elects, to assign all or an identified portion of its rights and delegate
all or an identified portion of its duties under this Purchase Agreement
to an Affiliate of International Paint provided that at the time of such
assignment and delegation International Paint provides the Ferro Sellers
with an unconditional guarantee (the "International Paint Guarantee") in
the form set forth on Appendix X. Xxxxx Mexico hereby irrevocably appoints
Ferro as its agent for purposes of this Purchase Agreement and grants
Ferro the power to enter into any further agreement or agreements in its
name and on its behalf that Ferro may deem necessary or appropriate for
the orderly administration of this Purchase Agreement.
12.6 NO THIRD PARTIES. Neither this Purchase Agreement nor any provisions set
forth in this Purchase Agreement is intended to, or shall, create any
rights in or confer any benefits upon any third-party, including any
employee of the Powder Coatings Business.
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12.7 INCORPORATION BY REFERENCE. The Appendices to this Purchase Agreement and
the Disclosure Package constitute integral parts of this Purchase
Agreement and are hereby incorporated into this Purchase Agreement by this
reference.
12.8 GOVERNING LAW. This Purchase Agreement will be governed by and construed
in accordance with the internal substantive laws of the State of Ohio,
except where the internal substantive laws of another jurisdiction
mandatorily apply.
12.9 BULK SALES. International Paint hereby waives compliance by the Ferro
Sellers with the provisions of any so-called "bulk sales" law or similar
law requiring creditor notice of any jurisdiction.
12.10 COUNTERPARTS. More than one counterpart of this Purchase Agreement may be
executed by the parties hereto, and each fully executed counterpart shall
be deemed an original without production of the others.
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12.11 COMPLETE AGREEMENT. This Purchase Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter of
this Purchase Agreement and supersedes all prior letters of intent,
agreements, undertakes, arrangements, communications, representations, or
warranties, whether oral or written, by any officer, employee, or
representative of either party relating thereto.
To evidence their agreement as stated above, INTERNATIONAL PAINT, INC., on
one hand, and FERRO CORPORATION, FERRO ENAMEL ARGENTINA S.A., and FERRO MEXICANA
S.A. DE C.V., on the other hand, have each caused their respective duly
authorized directors, officers, or attorneys to execute this Purchase Agreement
as of August 2, 2002.
INTERNATIONAL PAINT, INC. FERRO CORPORATION
By: /s/ X.X. Xxxxx By: /s/ Xxxxxxxxx X. Xxxxx
--------------------------- -------------------------------
Name: X.X. Xxxxx Name: Xxxxxxxxx X. Xxxxx
Title: Authorized Signatory Title: Vice President
FERRO ENAMEL ARGENTINA X.X. XXXXX MEXICANA S.A. DE C.V.
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxxx X. Xxxx
--------------------------- -------------------------------
Name: Xxxxx X. Xxxx Name: Xxxxx X. Xxxx
Title: Attorney-in-Fact Title: Attorney-in-Fact
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APPENDIX A
DEFINITIONS
The following terms identified with initial capital letters are defined in
the following Sections of the Purchase Agreement:
TERM CROSS REFERENCE
Accountants ................................................. Section 2.7(C)
Accounting Principles ....................................... Section 2.7(A)
Acquired Assets ............................................. Section 2.2
Actual Amount ............................................... Section 9.7
Adjustment................................................... Section 2.7
Akzo Nobel .................................................. Recital B
Argentina Toll Agreement .................................... Section 3.4(C)
Assumed Liabilities ......................................... Section 2.4
Base-Line Working Capital ................................... Section 2.7(E)
Base-Line Working Capital Statement ......................... Section 2.7(A)
California Transition Services Agreement .................... Section 3.4(F)
Claim ....................................................... Section 9.3(A)
Claimant .................................................... Section 9.3
Cleveland Lease Agreement ................................... Section 3.4(A)
Closing Section 5.1
Closing Date ................................................ Section 5.2
Closing Time ................................................ Section 5.2
Closing Working Capital ..................................... Section 2.7(F)
Defending Party ............................................. Section 9.3(B)
Economic Remediation Plan ................................... Section 8.2(F)(3)
Employees ................................................... Section 8.1(A)
Excluded Employees .......................................... Section 8.1(A)
Ferro ....................................................... Preamble
Ferro Argentina ............................................. Preamble
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TERM CROSS REFERENCE
Ferro Mexico ................................................ Preamble
Ferro Sellers................................................ Preamble
Ferro Sellers' Employee Obligations ......................... Section 8.1
Ferro Sellers' Environmental Obligations .................... Section 8.2
Identified Environmental Matter ............................. Section 8.2(A)
Indemnitor .................................................. Section 9.3
International Paint ......................................... Preamble
International Paint's Employee Obligations .................. Section 8.1
International Paint's Environmental Obligations ............. Section 8.2
International Paint Guarantee ............................... Section 12.5
Joint Marketing Agreement ................................... Section 3.4(D)
Neutral ..................................................... Section 10.3(B)
Noncompete Business ......................................... Section 6.4
Other Agreements ............................................ Section 3.4
Powder Coatings Business .................................... Recital A
Powder Coatings Disclosure Package .......................... Section 7.2
Preliminary Working Capital Statement ....................... Section 2.7(A)
Products ................................................... Recital A
Purchase Agreement .......................................... Preamble
Purchase Price .............................................. Section 2.6
RandH........................................................ Section 4.2(H)
Remediation Plan............................................. Section 8.2(F)(3)
Retained Assets ............................................. Section 2.3
Retained Liabilities......................................... Section 2.5
Shared Intellectual Property Agreement....................... Section 3.8(C)
Technology License Agreement ................................ Section 3.4(E)
Transferred Employees ....................................... Section 8.1(B)
Transition Services Agreement ............................... Section 3.4 (B)
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In addition, the following terms have the meanings set forth below where
used in the Purchase Agreement and identified with initial capital letters:
TERM MEANING
Acquired Intellectual Property All of the following:
(1) those patents and patent applications (including
all renewals, extensions, modifications,
inventor's certificates, continuations, divisions,
continuations in part, reexaminations and reissues
thereof) listed in Subpart H-1 and H-2 of the
Disclosure Package;
(2) those trade names, trademarks (whether or not
registered), service marks (whether or not
registered) and applications therefor listed in
Subparts H-3 and H-4 of the Disclosure Package;
(3) those domain names, websites, and web pages listed
in Subpart H-8 of the Disclosure Package; and
(4) all rights held or used by the Ferro Sellers in
their conduct of the Powder Coatings Business
consisting of, conferred by or otherwise relating
to:
1 (A) trade secrets, including without limitation,
know-how, inventions (whether or not patentable or
reduced to practice), computerized data and
information, business records, files and data,
discoveries, formulae, production outlines,
product designs, manufacturing information,
processes and techniques, testing and quality
control processes and techniques, drawings and
customer lists, and
(B) copyrights, original works of authorship and
disclaimers of moral rights;
but (in the case of the items listed in part (4)
above) only to the extent the items or matters are
physically located at, or arise out of the conduct
of the Powder Coatings Business at, the Real
Property, the Argentina Facility, the R&D Lab or
any of the locations that are the subject of the
Real Property Leases.
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TERM MEANING
Affiliate With respect to a party, any other entity controlling,
controlled by, or under common control with such party.
Americas Collectively, North, Central and South America
Argentina Facility Those facilities used by the Ferro Sellers in the conduct
of the Powder Coatings Business located at Gibraltar 1365,
1872 Sarandi Providence de Buenos Aires, Argentina.
Business Records Business books and records, including financial, operating,
inventory, legal, personnel, payroll, and customer records
and all sales and promotional literature, correspondence,
and records held or used by the Ferro Sellers primarily in
their conduct of the Powder Coatings Business.
Cash Cash and cash equivalent items held by the Ferro Sellers as
of the Closing, including certificates of deposit, time
deposits, marketable securities, and the proceeds of
accounts receivable paid on or before the Closing Date,
held or used by the Ferro Sellers in their conduct of the
Powder Coatings Business.
Contracts Collectively, the Purchase Contracts, the Sales Contracts,
and the Other Business Contracts.
Control Background The concentration of hazardous materials consistently
present in the environment due to long term localized
industrial or commercial activities.
CPR Institute CPR Institute for Dispute Resolution, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx.
Default An occurrence which constitutes a breach or default under a
contract, order, or other commitment, after the expiration
of any grace period provided without such breach or default
being cured within such period.
Encumbrance Any encumbrance or lien, including, without limitation, any
mortgage, judgment lien, materialman's lien, mechanic's
lien, security interest, encroachment, easement, or other
restriction, in each case having a material adverse effect
on the thing or right so encumbered.
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TERM MEANING
Environmental Laws Laws, regulations, orders, decrees, standards, ordinances,
codes, and other governmental mandates and restrictions in
effect today that are applicable to the Powder Coatings
Business and relate to emissions, discharges, and releases
of Hazardous Materials into land, soil, ambient air, water,
and atmosphere, and/or the generation, treatment, storage,
transportation, and disposal of hazardous wastes, including
(in the case of operations of the Powder Coating Business
in the United States) -
(1) The Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 9601 et.
seq., as amended;
(2) The Solid Waste Disposal Act, 42 U.S.C. Sections 6901 et.
seq., as amended;
(3) The Clean Air Act, 42 U.S.C. Sections 7401 et. seq., as
amended;
(4) The Clean Water Act. 33 U.S.C. Sections 1251 et. seq., as
amended;
(5) The Hazardous Materials Transportation Act, 49
U.S.C.Section 1801 et. seq., as amended;
(6) The Toxic Substances Control Act, 15 U.S.C. Section 2601
et. seq., as amended; and
(7) The Emergency Planning & Community Right-to-Know
Act, 42 U.S.C. Sections 11001 et. seq., as amended;
and comparable legislation in other jurisdictions in which
the Powder Coatings Business is conducted.
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TERM MEANING
Environmental Loss Any liability, damage, cost, expense, claim or action,
whether in law or equity, arising under Environmental Laws
or any other theory of recovery, including but not limited
to nuisance, negligence, and strict liability relating to
emissions, discharges, and releases of Hazardous Materials
into land, soil, ambient air, water, and atmosphere, and/or
the generation, treatment, storage, transportation, and
disposal of hazardous wastes at or from the Real Property
or the Acquired Assets.
Environmental Matter Any action, condition, or event giving rise to a legal
obligation under the Environmental Laws that relate to the
Powder Coatings Business.
Financial Debt All indebtedness for money borrowed incurred by the Ferro
Sellers.
Governmental Authority Any nation or government, any state or other political
subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory administrative functions
of or pertaining to government, whether U.S. or foreign.
Hazardous Materials Any material or condition that is defined as "hazardous" or
is subject to regulation under an Environmental Law,
including pollutants, chemicals, contaminants, petroleum
and petroleum products, asbestos, PCBs, radioactive
materials and other hazardous or toxic substances..
Health and Safety Laws Laws, regulations, orders, ordinances, codes, and other
governmental mandates and restrictions applicable to the
Powder Coatings Business relating to the health and/or
safety of employees or others having business dealings with
the Powder Coatings Business.
Inventories Inventories, wherever located, including inventories of raw
materials, components, assemblies, subassemblies,
work-in-process, finished goods, replacement parts, spare
parts, operating supplies, and packaging held or used by
the Ferro Sellers in their conduct of the Powder Coatings
Business.
Leases Collectively, the Real Property Leases and the Personal
Property Leases
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TERM MEANING
Licenses Licenses and similar rights affording the right to use or
enjoy intangible property or intangible property rights,
including software, arising primarily out of the Ferro
Sellers' conduct of the Powder Coatings Business.
Material Consents The third-party and governmental consents and approvals
required in connection with the transfer of the following:
(1) Lease dated July 7, 1994 and First Amendment to Lease
dated July 13, 1999 with Xxxx-Brecksville Development
Co.
(2) Powder Primer Coatings Agreement dated July 3, 2000
with X. X. XxXxxx de Nemours and Company
(3) Metropolitan Government of Nashville and Davidson
County: Industrial Discharge Permit No. CP-0193
(4) Metropolitan Government of Nashville and Davidson
County: Synthetic Minor Discharge Permit No. 27-12
Material Contract Any contract listed, or required to be listed, in items 1
through 4 on Part K of the Disclosure Package.
Material Event Any condition, circumstance, occurrence, or other event
which has had or is reasonably likely to have a material
and adverse effect on the Powder Coatings Business
Condition, including (without limitation) any of such event
resulting from any --
(1) Act of God, flood, windstorm, earthquake,
accident, fire, explosion, casualty, riot,
requisition or taking of property by governmental
authority, war, embargo, or other event outside
the Ferro Sellers' control;
(2) Termination, cancellation, or substantial
modification of any Contract, Lease, License, or
Permit;
(3) Default by any of the Ferro Sellers under any
Contract, Lease, License, or Permit; or
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TERM MEANING
(4) Filing (whether voluntary or involuntary) of a
petition in bankruptcy or commencement of any
other action involving creditors' rights or
debtors' remedies affecting any of the Ferro
Sellers.
Other Business Contracts Contracts other than Purchase Contracts and Sales Contract
to which the Ferro Sellers are party or to which the Ferro
Sellers and/or Subsidiaries are bound which arise primarily
out of the Ferro Sellers' conduct of the Powder Coatings
Business.
Other Current Liabilities Those current liabilities of the Ferro Sellers arising out
of the Ferro Sellers conduct of the Powder Coatings
Business as the same shall exist at Closing, including
accrued expenses, customer rebates and payroll expenses,
bonuses, incentives, benefits and taxes.
Owns or Ownership Such ownership as confers upon the party or third-party
having it good and marketable title to and control over the
thing or right owned, free and clear of any and all
Encumbrances except Permitted Encumbrances.
Permits Permits, approvals, and qualifications issued by any
government or governmental unit, agency, board, body, or
instrumentality and all applications for such items held or
used by the Ferro Sellers primarily in their conduct of the
Powder Coatings Business at the R&D Lab and held or used by
the Ferro Sellers in their conduct of the Powder Coatings
Business elsewhere.
Permitted Encumbrances The following:
(1) Liens for Taxes accrued but not yet payable;
(2) Liens arising as a matter of law in the ordinary
course of business (provided neither the Ferro
Sellers are delinquent in respect of the
obligations secured by such liens); and
(3) Such other imperfections of title and other
encumbrances which, singly or taken together, do
not and are not likely to have a material adverse
effect on the relevant property.
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TERM MEANING
Personal Property Leases Leases and similar contractual rights affording the right
to use or enjoy tangible personal property or tangible
personal property rights located at the Ferro Sellers'
facilities identified as owned by the Ferro Sellers and
used by the Ferro Sellers in the conduct of the Powder
Coatings Business in Part F of the Disclosure Package and
the Ferro Sellers' facilities identified as leased by the
Ferro Sellers and used by the Ferro Sellers in the conduct
of the Powder Coatings Business in Part F of the Disclosure
Package.
Powder Coatings Business Condition The properties, assets, liabilities (fixed and otherwise),
and condition (financial and otherwise) of the Powder
Coatings Business taken as a whole.
Prescribed Rate The rate of interest publicly announced by Xxxxxxxx Xxxx
Xxxx, Xxxxxxxxx, Xxxx, from time to time as its prime or
base rate for U.S. Dollar loans.
Prepaid Items Prepaid and similar items arising out of the conduct of the
Powder Coatings Business, including prepaid expenses,
deferred charges, advance payments, supplier rebates and
other prepaid items arising out of the Ferro Sellers'
conduct of the Powder Coatings Business.
Purchase Contracts Orders, contracts, and commitments for the purchase of
goods and/or services, including, without limitation, such
items relating to the purchase of capital, tooling,
products, supplies, and software arising primarily out of
the Ferro Sellers' conduct of the Powder Coatings Business,
except, in all cases, those contracts listed in Subpart K-5
of the Disclosure Package.
R&D Lab The real property, including all land, buildings,
improvements, fixtures and appurtenances thereto, leased by
International Paint pursuant to the Cleveland Lease
Agreement.
Real Property The following real properties, including all land,
buildings, improvements, fixtures, and appurtenances
thereto:
Ferro's manufacturing facility located at 20
Culvert Street, Nashville, Tennessee, USA.
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TERM MEANING
Real Property Leases Those leases and similar contractual rights affording the
right to use and enjoy certain real property listed in
Subpart F-2 of the Disclosure Package
Retained Intellectual Property All intellectual property rights held or used by the Ferro
Sellers whatsoever, other than (i) the Acquired
Intellectual Property, and (ii) all financial data relating
to the Acquired Intellectual Property, (iii) all items or
matters of the types listed in part (4) of the definition
of Acquired Intellectual Property to the extent such items
or matters are not physically located at the Real Property
or any of the locations that are the subject of the Real
Property Leases, and (iv) the items listed in Subpart H-9
of the Disclosure Package.
Sales Contracts Orders, contracts, commitments, and proposals for the sale
of Products, including such items relating to repair,
restoration, maintenance, preservation, and similar
operations arising out of the Ferro Sellers' conduct of the
Powder Coatings Business, except, in all cases, those
contracts listed in Subpart K-5 of the Disclosure Package
Shared Intellectual Property That portion of the Retained Intellectual Property that
relates to the following:
(1) Novel formulations for non-traditional substrates
including next-generation in-mold coating;
(2) Low temperature, fast cure products;
(3) Enhanced corrosion resistance coatings;
(4) PCB Banks and Coil coatings; and
(5) Next-generation metalization primer.
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TERM MEANING
Tangible Personal Property All tangible personal property (whether owned, leased, or
otherwise), including all machinery, equipment, tooling,
dies, molds, jigs, patterns, gauges, materials handling
equipment, furniture, office equipment, cars, trucks, and
other vehicles held or used by the Ferro Sellers in their
conduct of the Powder Coatings Business and either (i)
listed in Part G of the Disclosure Package or (ii) located
at the Ferro Sellers' facilities identified as owned by the
Ferro Sellers and used by the Ferro Sellers in the conduct
of the Powder Coatings Business in Part F of the Disclosure
Package and the Ferro Sellers' facilities identified as
leased by the Ferro Sellers and used by the Ferro Sellers
in the conduct of the Powder Coatings Business in Part F of
the Disclosure Package.
Tax All Federal, state, foreign and other net income, gross
receipts, gains, sales, use, employment, social security,
withholding, occupation, franchise, profits, excise, real
and personal property, land, value added, capital,
consumption, national insurance, registration, custom,
stamp, transfer, environmental, alternative minimum or
other taxes, fees, duties, assessments or charges of any
kind whatsoever whether payable directly or by withholding,
together with any interest and penalties, additions to Tax
or additional amounts with respect thereto, imposed by any
taxing authority.
Third-Party Claims Causes of action, rights of action, and warranty and
product liability claims against other third-parties
arising out of the Ferro Sellers' conduct of the Powder
Coatings Business.
Trade Accounts Payable Third-party notes, accounts, and other items payable
arising out of the Ferro Sellers' conduct of the Powder
Coatings Business, including all such amounts owing under
Contracts, Leases, and Licenses.
Trade Accounts Receivable Third-party notes and accounts receivable arising out of
the Ferro Sellers' conduct of the Powder Coatings Business.
Union Contracts The following collective bargaining agreements with the
unions indicated below:
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TERM MEANING
(1) Agreement between Ferro Corporation, Powder Coatings
Division, Nashville, Tennessee, and United Steel
Workers of America, AFL-CIO, CLC, on Behalf of Its
Nashville Local No. 501 (April 22, 2000 through
April 22, 2003); and
(2) Collective Bargaining Agreement between Ferro
Corporation at Its Brecksville, Ohio Plant and
United Steelworkers of America, AFL-CIO, on Behalf
of Its Location Union No. 1170-1 of United
Steelworkers of America, AFL-CIO.
Working Capital The difference between (x) the sum of (i) Trade Accounts
Receivable and (ii) Inventories and (y) Trade Accounts
Payable, all as reflected on the books of the Powder
Coatings Business in accordance with the Accounting
Principles as of a given date.
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