ACQUISITION AGREEMENT
by and among
YORKSHIRE GROUP PLC
YORKSHIRE AMERICAS, INC.
CK WITCO CORPORATION
CROMPTON & XXXXXXX EUROPE S.P.R.L.
UNIROYAL CHEMICAL EUROPEAN HOLDINGS B.V.
and
CROMPTON & XXXXXXX COLORS INCORPORATED
November 29, 1999
Xxxxxxxxx Xxxxx & Co
Xxxxxxxxx Xxxxx
Xxxxx XX0 0XX
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
ACQUISITION AGREEMENT
Table Of Contents*
1. THE ACQUISITION 2
1.1 Purchase and Sale 2
1.2 Excluded Assets 6
1.3 Purchase Price 9
1.4 Adjustments to Purchase Price 9
1.5 Assumption of Certain Liabilities 11
1.6 Obligations Not Assumed; Payment Obligations 11
1.7 Sales Taxes and Stamp Duties 12
1.8 Proration; Customer Rebates 13
1.9 Allocation 13
1.10 Closing 13
1.11 Transactions and Documents at Closing 14
2. ADDITIONAL COVENANTS 16
2.1 Access and Inspection 16
2.2 Cooperation 16
2.3 Expenses 16
2.4 Brokers 17
2.5 Publicity 17
2.6 Certain Governmental Filings 17
2.7 Confidentiality 17
2.8 Covenant Not to Compete 18
2.9 No Solicitation of Third Party Interest 20
2.10 Business Employees and Employee Benefit Matters21
2.11 Compliance with ERISA, Etc. 26
2.12 Admission of Ordinary Shares 27
2.13 Extraordinary General Meeting 28
2.14 Cooperation by Management of CK Witco 28
2.15 Certain Transactions 28
2.16 Certain Relocation Matters and Costs 28
2.17 Limited Use of CK Witco Name 28
2.18 Distributable Profits and Voting with Respect
to Europe 29
2.19 Mail Received after Closing 29
2.20 Notices to Customers; Collection of Receivables29
2.21 Payments for CK Witco European Liabilities 29
2.22 Certain IP Registration Costs 30
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CK WITCO, COLORS,
HOLDINGS AND EUROPE 30
3.1 Existence 31
3.2 Subsidiaries 32
3.3 Authority; Inconsistent Obligations 32
3.4 No Violation; Compliance with Laws 33
3.5 Consents 34
3.6 Possession of Licenses, Etc. 34
3.7 Sufficiency of Assets 34
3.8 Grants and Allowances 35
3.9 Year 2000 Compliance 35
3.10 Financial Statements 35
3.11 Euro-Affected Products and Services 36
3.12 Liabilities 36
3.13 Title to Properties 36
3.14 Receivables 36
3.15 Inventories 36
3.16 Movable Property 37
3.17 Immovable Property 37
3.18 Environmental Matters 38
3.19 Intellectual Property Rights 39
3.20 Contracts 40
3.21 Insurance 41
3.22 Litigation; Contingencies 41
3.23 Taxes 42
3.24 Employment and Labor Matters 42
3.25 Compliance with ERISA, etc. 43
3.26 Other Benefits Plans 46
3.27 Absence of Certain Business Practices 47
3.28 Books and Records 48
3.29 Agreements and Transactions with Related
Parties 48
3.30 No Agreement in Anticipation of Sale 48
3.31 Government Reports 49
3.32 Banking Relationships 49
3.33 Customers and Suppliers 49
3.34 Absence of Changes 49
3.35 Insolvency 50
3.36 Information Warranty 51
3.37 Indebtedness as of 15 October 1999 52
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CK WITCO RELATING
TO THE CONSIDERATION SECURITIES 52
4.1 Investment Intentions 52
4.2 Standstill; Sale of Consideration Securities 52
4.3 Listing Particulars 53
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF YORKSHIRE,
AMERICAS 53
5.1 Organization 53
5.2 Authorization; No Inconsistent Agreements 53
5.3 Dividends in relation to Consideration
Securities 54
5.4 Financing 54
5.5 No Violation; Compliance with Laws 54
5.6 Consents 54
5.7 Financial Statements 54
5.8 Litigation; Contingencies 54
6. CONDUCT OF BUSINESS PENDING CLOSING 55
6.1 Business in the Ordinary Course 55
6.2 No Material Changes 57
6.3 Compensation 57
6.4 Employee Benefit Plans 57
7. CONDITIONS TO OBLIGATIONS OF YORKSHIRE AND THE
YORKSHIRE ENTITIES 57
7.1 Representations and Warranties 57
7.2 Compliance with Covenants and Conditions 58
7.3 Closing Certificates 58
7.4 Consents 58
7.5 Passage of Resolutions 58
7.6 Admission to Official List 58
7.7 No Inconsistent Requirements 58
7.8 No Injunction 58
7.9 Additional Agreements and Closing Documents 59
7.10 Related Party Matters 59
7.11 Adverse Conditions 59
8. CONDITIONS TO OBLIGATIONS OF THE CK WITCO
ENTITIES 59
8.1 Representations and Warranties 59
8.2 Compliance with Covenants and Conditions 59
8.3 Closing Certificates 59
8.4 Consents 60
8.5 Passage of Resolutions 60
8.6 No Inconsistent Requirements 60
8.7 No Injunction 60
8.8 Admission to Official List 60
8.9 Additional Agreements and Closing Documents 60
8.10 Adverse Conditions 60
9. INDEMNITIES 60
9.1 General Indemnification of the Yorkshire
Entities 60
9.2 Payment 61
9.3 Defense of Claims 62
9.4 Indemnification of the CK Witco Entities by Yorkshire and
Americas 63
9.5 Environmental Indemnity 64
9.6 Taxation Schedule Indemnity 76
9.7 No Contribution by Europe or any Acquired Entity76
9.8 Minimum Losses 77
9.9 Maximum Indemnification 77
9.10 Subrogation 78
9.11 Adjustments to Indemnification 78
9.12 Xxxxx Road Indemnity 78
9.13 BCC Indemnity 79
9.14 Dusseldorf Indemnity 79
9.15 Exclusive Remedy 79
9.16 Duty to Mitigate 79
9.17 After-Tax Payments 79
9.18 Pensions Indemnity 81
10. SURVIVAL 81
10.1 Survival 81
11. TERMINATION 82
11.1 Termination for Certain Causes. 82
11.2 Procedure on and Effect of Termination 83
12. MISCELLANEOUS 83
12.1 Notices 83
12.2 Counterparts 85
12.3 Entire Agreement 85
12.4 Governing Law, Dispute Resolution 85
12.5 Successors and Assigns 85
12.6 Partial Invalidity and Severability 85
12.7 Waiver 86
12.8 Headings 86
12.9 Number and Gender 86
12.10 Construction 86
12.11 Time of Performance 86
13. CERTAIN DEFINITIONS; INDEX OF DEFINITIONS 86
13.1 Certain Definitions 86
13.2 Index to Definitions 91
*This Table of Contents does not constitute a part of this
Agreement.
SCHEDULE OF EXHIBITS*
Exhibit Reference Exhibit Name
Exhibit A-1 Xxxxxx Land
Exhibit A-2 Charlotte Land
Exhibit A-3 Greenville Land
Exhibit A-4 Xxxxxx Land
Exhibit B Leased Real Property
Exhibit C BCC Tangible Personal Property
Exhibit D Registered Trademarks and Service
Marks
Exhibit D-1 Excluded Registered Marks
Exhibit E Gibraltar Facility Assets
Exhibit F Americas IPD Business Registered
Marks
Exhibit G Excluded Americas IPD Business
Information
Exhibit H Other Excluded Americas IPD Business
Intellectual Property Rights
Exhibit I Assets Used Exclusively in Monitoring
of Groundwater
Exhibit J Other Excluded Assets and Properties
Exhibit K Balance Sheet Principles
Exhibit L Assumed Liabilities
Exhibit M European Retained Liabilities
Exhibit N Closing Documents
Exhibits O-1 and O-2 CK Witco Supply Contracts
Exhibits P-1 and P-2 Yorkshire Supply Contracts
Exhibit Q Transition Services Agreement
Exhibit R Charlotte Lease Agreement
Exhibit S Gibraltar Lease Agreement
Exhibit T Trademark License Agreement (CK Witco
to Yorkshire)
Exhibit U Trademark License Agreement
(Yorkshire to CK Witco)
Exhibit V Non-European Patent and Technology
License Agreement (CK Witco to
Yorkshire)
Exhibit W European Patent and Technology
License Agreement (CK Witco to
Yorkshire)
Exhibit X Non-European Patent and Technology
License Agreement (Yorkshire to CK
Witco)
Exhibit Y European Patent and Technology
License Agreement (Yorkshire to CK
Witco)
Exhibit Z Groundwater Monitoring Agreement
Exhibit AA Gibraltar Employees
Exhibit BB BCC Reorganization Matters
Exhibit CC Excluded Liability Fund Matters
Exhibit DD IP Registration Costs
Exhibit EE Special Purpose Statement
Exhibit FF Oissel, France Land
Exhibit GG Due Diligence Requests
Exhibit HH Indebtedness as of October 15, 1999
Exhibit II Reviewed Pages - Listing Particulars
Exhibit II-1 Listing Particulars
Exhibit JJ Covered Properties
Exhibit KK Certain Environmental Matters
Exhibit LL Specific Indemnity Issues
Exhibit MM Dispute Resolution Procedures
Exhibit NN Americas IPD Business Territory
*This Schedule of Exhibits does not constitute a part of this
Agreement.
ACQUISITION AGREEMENT
THIS AGREEMENT is made and entered into as of the 29 day of
November, 1999, by and among:
(1) YORKSHIRE GROUP PLC, a public company limited by
shares organized and existing under the laws of England and Wales
("Yorkshire");
(2) YORKSHIRE AMERICAS, INC., a South Carolina
corporation ("Americas");
(3) CK WITCO CORPORATION, a Delaware corporation ("CK
Witco");
(4) CROMPTON & XXXXXXX EUROPE S.P.R.L., a private
company with limited liability incorporated under the laws of
Belgium ("Europe");
(5) UNIROYAL CHEMICAL EUROPEAN HOLDINGS B.V., a private
company with limited liability incorporated under the laws of The
Netherlands ("Holdings"); and
(6) CROMPTON & XXXXXXX COLORS INCORPORATED, a Delaware
corporation ("Colors").
BACKGROUND STATEMENTS
WHEREAS, CK Witco, directly and through its subsidiaries and
Affiliates, is engaged worldwide in the Textile Dyes Business;
and
WHEREAS, CK Witco, directly and through its subsidiaries and
Affiliates, is engaged worldwide in the IPD Business; and
WHEREAS, CK Witco desires to sell, and Yorkshire desires to
acquire, (i) the whole of the Textile Dyes Business and (ii) so
much of the IPD Business as is conducted throughout the world
other than for that IPD Business conducted within the Americas
IPD Business Territory (the acquired portion of the IPD Business
being referred to in this Agreement as the "Acquired IPD
Business"; and together with the Textile Dyes Business, the
"Acquired Businesses"); provided, however, the Acquired
Businesses shall not include that portion of the IPD Business
relating to the development, manufacture, distribution and sale
of goods exclusively within the IPD Business product line for
their own consumption and application as is conducted throughout
the world with the customers Technicolor, Lexmark, Video Jet
Systems International Inc. and ICI Imagedata, and their
respective Affiliates; and
WHEREAS, CK Witco is indirectly the record and beneficial
owner of all of the issued and outstanding capital stock of
Colors; and
WHEREAS, Holdings is the record and beneficial owner of all
of the issued and outstanding capital stock of Europe; and
WHEREAS, the IPD Business that will be retained by CK Witco
and not acquired by Yorkshire hereunder is sometimes referred to
in this Agreement as the "Americas IPD Business", and each Person
(other than Colors, Holdings and Europe) controlled by CK Witco,
Holdings, Colors or Europe that is engaged principally in an
Acquired Business and is not an Excluded Asset is referred to
herein collectively as the "Acquired Entities" and individually
as an "Acquired Entity";
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants and agreements in this Agreement contained,
and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties to this
Agreement agree as follows:
1. THE ACQUISITION
1.1 Purchase and Sale. At the Closing (this term and
other capitalized terms used in this Agreement being defined in
either Paragraph 13.1 of this Agreement or in those parts of this
Agreement identified in Paragraph 13.2), CK Witco, Holdings and
Colors shall, and CK Witco shall cause such other Affiliates of
CK Witco (excluding Europe and the Acquired Entities) as have
ownership, possession or control of, or exercise dominion or
control over, any of the Transferred Assets (collectively with CK
Witco, Holdings and Colors, but only if not (i) Europe or (ii)
otherwise an Acquired Entity, the "CK Witco Entities") to, sell,
transfer, convey and assign to Yorkshire and, except for the
Europe Capital Stock (which shall be sold, transferred, conveyed
and assigned to Yorkshire) such of its Affiliates as Yorkshire
shall designate (collectively with Yorkshire, the "Yorkshire
Entities"), and in reliance on and subject to the terms contained
in this Agreement, the Yorkshire Entities shall purchase and
acquire from the CK Witco Entities, all of their respective
right, title and interest in and to all of the assets and
properties of the CK Witco Entities which are related to the
Acquired Businesses, other than the Excluded Assets (all of such
acquired assets and properties being referred to collectively as
the "Transferred Assets"), which, except to the extent excluded
in Paragraph 1.2, include the following:
(a) all of the following parcels of real estate and
improvements thereon, which are collectively referred to in this
Agreement as the "Owned Real Property":
(i) All that certain lot, tract or parcel of improved
real estate more particularly described on Exhibit A-1 attached
to this Agreement, together with all rights, ways and easements
appurtenant thereto, including all of Color's right, title and
interest in and to the land underlying and the air space
overlying any public or private ways or streets crossing or
abutting such real estate ("Xxxxxx Land"); and all buildings,
structures and other improvements of any and every nature located
on the Xxxxxx Land and all fixtures attached or affixed, actually
or constructively, to the Xxxxxx Land or to any such buildings,
structures or other improvements (the "Xxxxxx Improvements"); and
(ii) All that certain lot, tract or parcel of improved
real estate more particularly described on Exhibit A-2 attached
to this Agreement, together with all rights, ways and easements
appurtenant thereto, including all of Color's right, title and
interest in and to the land underlying and the air space
overlying any public or private ways or streets crossing or
abutting such real estate ("Charlotte Land"); and all buildings,
structures and other improvements of any and every nature located
on the Charlotte Land and all fixtures attached or affixed,
actually or constructively, to the Charlotte Land or to any such
buildings, structures or other improvements (the "Charlotte
Improvements"); and
(iii) All that certain lot, tract or parcel of improved
real estate more particularly described on Exhibit A-3 attached
to this Agreement, together with all rights, ways and easements
appurtenant thereto, including all of Color's right, title and
interest in and to the land underlying and the air space
overlying any public or private ways or streets crossing or
abutting such real estate ("Greenville Land"); and all buildings,
structures and other improvements of any and every nature located
on the Greenville Land and all fixtures attached or affixed,
actually or constructively, to the Greenville Land or to any such
buildings, structures or other improvements (the "Greenville
Improvements"); and
(iv) All that certain lot, tract or parcel of improved
real estate more particularly described on Exhibit A-4 attached
to this Agreement, together with all rights, ways and easements
appurtenant thereto, including all of Color's right, title and
interest in and to the land underlying and the air space
overlying any public or private ways or streets crossing or
abutting such real estate ("Xxxxxx Land"; and together with the
Xxxxxx Land, the Charlotte Land and the Greenville Land, the
"Land"); and all buildings, structures and other improvements of
any and every nature located on the Xxxxxx Land and all fixtures
attached or affixed, actually or constructively, to the Xxxxxx
Land or to any such buildings, structures or other improvements
(the "Xxxxxx Improvements"; and together with the Xxxxxx
Improvements, the Charlotte Improvements and the Greenville
Improvements, the "Improvements"); and
(b) all leasehold or similar interests in real
property leased from third parties or otherwise used by a CK
Witco Entity in the conduct or operation of an Acquired Business
(subject, in each case, to lessor approval) identified on Exhibit
B attached to this Agreement, and all of the CK Witco Entities'
right, title and interest in and to all improvements thereon,
together with all easements, rights of way, licenses and other
interest therein (collectively, the "Leased Real Property"; and
together with the Owned Real Property, the "Acquired
Properties");
(c) all machinery, equipment, tools, furniture,
office equipment, computer hardware, supplies, materials, spare
parts, vehicles and other items of tangible personal property
(other than Inventories) owned or leased by a CK Witco Entity
(wherever located and whether or not carried on a CK Witco
Entity's books) and related to an Acquired Business, including
(i) all research and development equipment and the associated
chemical stocks in laboratories and stock rooms in the Gibraltar
Facility, (ii) such items of tangible personal property relating
to the Belgian Co-Ordination Centre and also known as C&K
Services SPRL (the "BCC") as is set forth on Exhibit C attached
to this Agreement, and (iii) such items as are listed on the
Fixed Asset Registers, in all cases, together with any express or
implied warranty by the manufacturers, sellers or lessors of any
item or component part thereof and all maintenance records and
other documents relating thereto;
(d) (i) all inventories of all types outside the
Americas IPD Business Territory relating to an Acquired Business
and (ii) within the Americas IPD Business Territory, those
inventories relating to an Acquired Business consisting of (A)
that amount of each finished good wherever located having a value
equal to the product of (I) the total value of that finished good
wherever located and (II) a number equal to a quotient (rounded
to the nearest one-thousandth), the numerator of which is the
revenue generated from the sale of that finished good with
respect to the Textile Dyes Business in the Americas IPD Business
Territory during the period from December 27, 1998 through
September 26, 1999, inclusive (the "Measuring Period") and the
denominator of which is the total revenue generated from the sale
of that finished good in the Americas IPD Business Territory
during the Measuring Period; (B) that work in process (other than
Crude Stocks) and those raw materials located at an Acquired
Property, (iii) those intermediates to be used or consumed solely
in the production of finished goods to be sold in an Acquired
Business and in existence at the Effective Date and Time; (iv)
that amount of each intermediate in the Americas IPD Business
Territory to be used or consumed by a CK Witco Entity in the
production of finished goods to be sold or saleable in an
Acquired Business and in existence at the Effective Date and Time
and equal to the product of (I) the total amount of that
intermediate in the Americas IPD Business Territory and (II) a
number equal to a quotient (rounded to the nearest one-
thousandth), the numerator of which is the total amount of that
intermediate consumed in the production of finished goods with
respect to the Textile Dyes Business in the Americas IPD Business
Territory during the Measuring Period, and the denominator of
which is the total amount of that same intermediate consumed in
the America IPD Business Territory during the Measuring Period;
and (iv) all Crude Stocks located at an Acquired Property
(collectively, the "Inventories").
(e) all notes receivable and accounts receivable of
an Acquired Business in existence at the Effective Date and Time,
other than for intercompany accounts (which shall be an Excluded
Asset) (collectively, the "Receivables");
(f) all (i) trademarks, service marks, trade names,
trade dress, symbols, and logos, all registrations and pending
applications therefor, and all goodwill associated therewith,
relating to an Acquired Business, including the registered marks
(and applications therefor) set forth on Exhibit D attached to
this Agreement, but specifically excluding the name "Crompton &
Xxxxxxx", "CK Witco", "Crompton & Xxxxxxx Colors Incorporated"
and "CK Colors", and those registered marks (and applications
therefor) set forth on Exhibit D-1 attached to this Agreement
(all of which shall be Excluded Assets), (ii) business,
proprietary and confidential information, including: trade
secrets, technical information, know-how, ideas, designs,
processes, procedures, algorithms, discoveries, inventions,
computer programs (including documentation and related object and
source code), patents, patent applications, and copyrights, and
all improvements thereof and all registrations and applications
for the foregoing, relating to an Acquired Business, including
the registered patents and product registrations (and
applications therefor) set forth on such Exhibit D, (iii) data,
documents, files, books (including the Research and Development
Library) and records, tax records (excluding generally income tax
records, and only to the extent principally relating to the other
Transferred Assets or an Acquired Business), sales records,
customer information and lists, and order information relating to
an Acquired Business, and (iv) all other information and
Intellectual Property Rights to the extent relating to the
operation of the other Transferred Assets or an Acquired
Business, in each case whether owned outright by a CK Witco
Entity or as to which the relevant Person has rights as a
licensee or otherwise.
(g) all right, title and interest in, to and under
all contracts, leases, non-compete agreements, licenses,
indemnities, agreements, commitments, arrangements, and purchase
and sale orders which relate to an Acquired Business or the
Transferred Assets to which a CK Witco Entity is a party, in
existence on the date of this Agreement, as well as those entered
into after the date hereof in the ordinary and regular course of
an Acquired Business pursuant to Paragraph 6.1, excluding this
Agreement and the Additional Agreements (collectively, the
"Assigned Contracts");
(h) all right, title and interest in and to all
prepaid expenses, advances, deposits, promotional discounts,
rebates, refunds and all similar rights and claims relating to an
Acquired Business or the Acquired Properties;
(i) all warranties and guaranties by, and rights,
choses in action, and claims, known or unknown, matured or
unmatured, accrued or contingent against, third parties,
including rights in and to insurance and indemnity claims
relating to the Transferred Assets or an Acquired Business;
(j) all of those assets described on Exhibit E
attached to this Agreement relating to the research and
development facilities and physically located at the Gibraltar
Facility;
(k) all of the issued and outstanding capital stock
of Europe (the "Europe Capital Stock");
(l) to the extent transferable, all franchises,
certificates, licenses, permits, orders, approvals and other
authorizations from any Government or self-regulatory
organization relating to an Acquired Business;
(m) telephone and facsimile numbers, post office
boxes, forms, labels, shipping material, supplies, catalogs,
brochures, art work, photographs and advertising and promotional
materials relating to an Acquired Business or otherwise
physically located at an Acquired Property;
(n) that value equal to (i) the sum of (A) that
value of raw materials equal to the product of (1) the total
amount of raw materials in the Americas IPD Business Territory
wherever located and (2) a number equal to a quotient (rounded to
the nearest one-thousandth), the numerator of which is the
revenue (the "1999 Americas Textile Dyes Revenue") generated from
the sale of finished goods with respect to the Textile Dyes
Business in the Americas IPD Business Territory during the
Measuring Period and the denominator of which is a number equal
to the sum of (I) the 1999 Americas Textile Dyes Revenue and (II)
the revenue generated from the sale of finished goods with
respect to the Americas IPD Business in the Americas IPD Business
Territory during the Measuring Period, and (B) that value of work
in process (other than Crude Stocks) equal to the sum of the
values of the work in process for each individual finished good
which is produced in the Americas IPD Business Territory, with
each such value equal to the product of (1) the total amount of
the value of the work in process for that finished good in the
Americas IPD Business Territory and (2) a number equal to a
quotient (rounded to the nearest one-thousandth), the numerator
of which is the revenue generated from the sale of that finished
good with respect to the Textile Dyes Business in the Americas
IPD Business Territory during the Measuring Period and the
denominator of which is the total revenue generated from the sale
of that finished good in the Americas IPD Business Territory
during the Measuring Period, minus (ii) the value of the work in
process (other than Crude Stocks) and raw materials included as
Transferred Assets pursuant to Paragraph 1.1(d)(ii)(B) (the
credits referred to in this Paragraph 1.1(n) will be given to
Yorkshire in 6 equal monthly installments over the 6-month period
following the Effective Date and Time); and
(o) all other assets and rights, of every kind and
nature relating to the Transferred Assets or an Acquired
Business.
1.2 Excluded Assets. Notwithstanding anything in this
Agreement to the contrary, the Transferred Assets shall not
include those assets and properties (i) principally related to
the Americas IPD Business, (ii) those assets and properties
specifically identified elsewhere in this Agreement as being
Excluded Assets, (iii) those assets and properties licensed by CK
Witco to Yorkshire pursuant to an Additional Agreement, and (iv)
the following excluded assets and properties (collectively, the
"Excluded Assets"):
(a) all of the following parcels of real estate and
improvements thereon owned or leased by Colors that is not an
Acquired Property (collectively, the "Excluded Properties");
(i) All that land underlying and the air space overlying
CK Witco's facility in Newark, New Jersey, and all buildings,
structures and other improvements of any and every nature located
thereon (the "Newark Facility");
(ii) All that land underlying and the air space
overlying CK Witco's facility in Nutley, New Jersey, and all
buildings, structures and other improvements of any and every
nature located thereon (the "Nutley Facility");
(iii) All that land underlying and the air space
overlying CK Witco's facility in Reading, Pennsylvania, and all
buildings, structures and other improvements of any and every
nature located thereon (the "Reading Facility");
(iv) Except as otherwise expressly set forth in this
Agreement, all that land underlying and the air space overlying
CK Witco's Facility in Gibraltar, Pennsylvania; and all
buildings, structures and other improvements of any and every
nature located on the Gibraltar Land and all fixtures attached or
affixed, actually or constructively, to the Gibraltar Land or to
any such buildings, structures or other improvements (the
"Gibraltar Facility");
(v) Each parcel of Leased Real Property to the extent
any relevant lessor does not consent to the assignment thereof to
Yorkshire;
(b) those (i) trademarks, service marks, trade
names, trade dress, symbols, and logos, all registrations and
pending applications therefor, and all goodwill associated
therewith that are either registered in any of the countries,
territories or possessions in the Americas IPD Business Territory
and principally related to the Americas IPD Business, or those
registrations and pending applications listed on Exhibit F
attached to this Agreement; (ii) patents, patent applications,
and copyrights, and all improvements thereof and all
registrations and applications in connection therewith either
registered in the Americas IPD Business Territory and principally
related to the Americas IPD Business, or those registrations and
pending applications listed on Exhibit F attached to this
Agreement; (iii) business, proprietary and confidential
information, including: trade secrets, technical information,
know-how, ideas, designs, processes, procedures, algorithms,
discoveries, inventions, notebooks (including the notebooks in
the Research and Development Library, laboratory research notes
and files, computer programs (including documentation and related
object and source code), and all improvements thereof and all
registrations and applications therefore, principally related to
the Americas IPD Business and including the information listed on
Exhibit G attached to this Agreement; (iv) the Dyebath Monitoring
System; and (v) all other information and Intellectual Property
Rights principally related to the Americas IPD Business,
including the information listed on the attached Exhibit H, in
each case whether owned by a CK Witco Entity or as to which a CK
Witco Entity has rights as a licensee or otherwise;
(c) any right, title and interest in, to and under
(i) a Royalty and Licensing Agreement by and between Crompton &
Xxxxxxx Corporation and Dyes and Chemicals, Inc. n/k/a Colors,
dated as of January 1, 1995; (ii) Royalty and Licensing Agreement
by and between Crompton & Xxxxxxx Corporation and CK Colors
Incorporated, dated as of January 1, 1998; (iii) License by and
between Crompton & Xxxxxxx (Hong Kong) Ltd., dated as of January
1, 1995; and (iv) License by and between Crompton & Xxxxxxx
Colors Incorporated and Crompton & Xxxxxxx Europe S.P.R.L, dated
as of ____________________ (collectively, the "Colors
Contracts"); provided, however, that the Proprietary Rights being
conveyed or licensed to Yorkshire pursuant to this Agreement or
any Additional Agreement will be conveyed, or as the case may be,
licensed, free and clear of all of the Colors Contracts, and
further CK Witco shall procure that all rights of any parties in
such agreements (notwithstanding express rights to the contrary
contained in the Colors Contracts including provisions to the
effect that such licenses are irrevocable or will continue after
termination) shall terminate at Closing.
(d) (i) any machinery, equipment, tools, furniture
and office equipment, computer hardware, supplies, materials, or
other items of tangible personal property in the customer service
laboratory of the Charlotte Improvements used principally in the
operation of the Americas IPD Business and (ii) equipment and
furniture for the office and cubicle spaces in the Charlotte
Improvements used principally in the operation of the Americas
IPD Business;
(e) the IPD bagger equipment located on the
Greenville Land and within the Greenville Improvements (the "IPD
Bagger");
(f) [INTENTIONALLY OMITTED]
(g) the machinery and equipment owned by Colors,
physically located on the Xxxxxx Land and used exclusively in the
monitoring of groundwater at the Xxxxxx Land pursuant to the
Groundwater Monitoring Agreement, all of which is listed on
Exhibit I attached to this Agreement;
(h) the shares of the capital stock of the BCC
owned of record by Europe on the date of this Agreement;
(i) three (3) uninstalled liquid dye storage tanks
physically located at the date of this Agreement on the Xxxxxx
Land (collectively, the "Liquid Dye Storage Tanks"); and
(j) those assets and properties, if any, identified
on Exhibit J attached to this Agreement.
1.3 Purchase Price. Subject to adjustment as provided
in Paragraph 1.4, the aggregate consideration payable (i) for the
Transferred Assets other than the Europe Capital Stock shall be
an amount of cash equal to US$64,000,000, and (ii) for the Europe
Capital Stock, the Consideration Securities (having an agreed
value of US$8,500,000) and an amount of cash equal to
US$14,000,000 (as may be adjusted pursuant to Paragraph 1.4, the
aggregate amount payable or to be given pursuant to this
Paragraph 1.3 is referred to in this Agreement as the "Purchase
Price"). The Purchase Price will be paid at the Closing as
provided in Paragraph 1.11.
1.4 Adjustments to Purchase Price.
(a) Within one hundred twenty (120) days of the
Effective Date and Time, Yorkshire shall prepare a closing
special purpose statement, in accordance with the accounting
principles (the "Balance Sheet Principles"), and in the format
set out in Exhibit K attached to this Agreement, including a
calculation of the closing statement of net assets in the English
language for the Acquired Businesses as of the Effective Date and
Time applying the Balance Sheet Principles (as so prepared or
determined pursuant to the further provisions of this Paragraph
1.4, the "Closing Special Purpose Statement", including the
"Closing Net Assets") and cause a copy of the same to be
delivered to CK Witco. Together with the Closing Special Purpose
Statement, Yorkshire will deliver to CK Witco its calculation of
the Closing Net Assets as of the Effective Date and Time
(collectively, the "Computations"). Subject to the further
provisions of this Paragraph 1.4, the Computations will be final
and binding on the parties for purposes of calculating the
adjustments as provided for in this Paragraph 1.4.
(b) If within sixty (60) days following delivery of
the Closing Balance Sheet and the Computations, CK Witco has not
given Yorkshire written notice of objection to any or all of the
Closing Special Purpose Statement and the Computations (which
notice must contain a statement in reasonable detail, with
supporting documentation if applicable, of CK Witco's
objections), then the Closing Special Purpose Statement and the
Computations shall be final and binding on all parties for
purposes of calculating the adjustments as provided for in this
Paragraph 1.4. If CK Witco gives such notice of objection, then
Yorkshire and CK Witco shall in good faith attempt to resolve the
issues raised in the notice between themselves. If they are
unable to reach a resolution within thirty (30) days of such
notice, the issues in dispute will be promptly submitted first to
PriceWaterhouseCoopers, and if they are unable to act, then to
Deloitte & Touche, and if they are unable to act, finally to
Xxxxxx Xxxxxxxx (the "Accountants") for resolution, which
disputes shall not be further subject to the dispute resolution
procedures as provided in Paragraph 12.4. The parties agree to
cooperate in approaching, engaging and instructing the
Accountants with regard to the matters addressed in the preceding
sentence. If the issues in dispute are submitted to the
Accountants for resolution: (i) each party will furnish to the
Accountants such work papers and other documents and information
relating to the disputed issues as the Accountants may request
and are available to the party (or its independent public
accountants), and will be afforded the opportunity to present to
the Accountants any material relating to the relevant Closing
Special Purpose Statement and the Computations and to discuss the
same with the Accountants, (ii) the determination by the
Accountants as set forth in a written notice delivered to
Yorkshire and CK Witco by the Accountants will be binding and
conclusive on all parties, and (iii) Yorkshire and CK Witco will
each bear one-half of the fees and expenses of the Accountants in
resolving the issues in dispute. The Accountants will deliver
their written notice of determination within thirty (30) days of
the disputes having been referred to them.
(c) If the Closing Net Assets are less than
US$94,150,000, then CK Witco shall pay over to Yorkshire (or such
other entity that Yorkshire may designate) by way of a pro rata
refund (as between the Europe Capital Stock and the other
Transferred Assets) of a part of the Purchase Price in United
States dollars to such account as Yorkshire may designate the
difference between US$94,150,000 and the Closing Net Assets (as
finally determined in accordance with this Paragraph 1.4) within
five (5) Business Days after a final determination of the Closing
Special Purpose Statement, the Closing Net Assets and the
Computations. There shall be no payment by Yorkshire to CK Witco
if the Closing Net Assets are equal to or greater than
US$94,150,000.
(d) If the provision referred to in Section 1.22 of
the Balance Sheet Principles has not been utilized in full by
December 31, 2001, then such provision will be released in full
and on such date Yorkshire will make a payment to Holdings by way
of additional consideration for the Europe Capital Stock of
US$1,350,000.
(e) On the Closing Date, or on such other date
Prior to the Closing Date as Yorkshire and CK Witco shall
mutually agree, Representatives of Yorkshire and CK Witco shall
jointly conduct and complete a physical inventory to determine a
count for all the Inventories, which physical inventory shall be
summarized in a listing signed by Representatives of Yorkshire
and CK Witco on the Closing Date. Yorkshire and CK Witco shall
thereafter determine the value of the Inventories, based upon the
physical counts from the physical inventory described in this
Paragraph 1.4(e) and valued at the lower of cost and fair market
value in accordance with GAAP. The calculation of the values of
the Inventories as determined by Yorkshire shall be compiled and
delivered to CK Witco as part of the Computations in accordance
with Paragraph 1.4(a).
1.5 Assumption of Certain Liabilities.
(a) On the Closing Date, but effective as of the
Effective Date and Time, the appropriate Yorkshire Entity shall
assume and agree to pay or perform, as appropriate, only the
following specifically enumerated obligations and liabilities of
the CK Witco Entities (the "Assumed Liabilities"): (i)
obligations and liabilities arising on and after the Effective
Date and Time under Assigned Contracts to which a CK Witco Entity
is a party relating to the Textile Dyes Business; and (ii) those
Assumed Liabilities identified on Exhibit L attached to this
Agreement;
(b) Nothing contained in this Paragraph 1.5 or in
any instrument of assumption executed by a Yorkshire Entity at
the Closing shall be deemed to release or relieve any CK Witco
Entity from its representations, warranties, covenants,
agreements and indemnities contained in this Agreement or any
certificate, schedule, instrument or document executed pursuant
to this Agreement or in connection with this Agreement.
1.6 Obligations Not Assumed; Payment Obligations. (a) Except
for the Assumed Liabilities (which shall not include any
obligation or liability arising from any default, breach,
misfeasance, malfeasance or nonfeasance by a CK Witco Entity), no
Yorkshire Entity shall assume any other Liability of any kind,
including: (i) any Liability of a CK Witco Entity related to the
Textile Dyes Business; or (ii) any Liability of any CK Witco
Entity related to the Americas IPD Business, and the relevant CK
Witco Entity shall pay, satisfy and perform all of its
Liabilities (other than the Assumed Liabilities), which may
affect in any way the Transferred Assets or the operation of an
Acquired Business (collectively, the "Excluded Liabilities"). CK
Witco's obligations and responsibilities pursuant to this
Paragraph 1.6 shall not be subject to the monetary or temporal
limitations set forth in Article 9.
(b) Following Closing, and following receipt of
written notice from the relevant Yorkshire Entity and in any
case, only when due, CK Witco shall pay to the relevant creditor
or to the relevant Yorkshire Entity, or cause to be so paid, (i)
all Excluded Liabilities (only when due) and (ii) all Liabilities
(only when due) of Europe and each Acquired Entity that are not
European Retained Liabilities (such Liabilities being referred to
in this Agreement as the "CK Witco European Liabilities", which
shall include (i) any outstanding payments due under a certain
Sale of Business Agreement, dated 18 October 1999, between Europe
and Croda Chemicals International Limited and (ii) US$1,250,000
relating to Pre-Closing Employment Liabilities (as defined in
Exhibit M attached to this Agreement)). Yorkshire on behalf of
itself and each Yorkshire Entity covenants and agrees to give CK
Witco prompt written notice of each Excluded Liability or CK
Witco European Liability assessed against or sought to be
collected from a Yorkshire Entity, Europe or an Acquired Entity
for which CK Witco has responsibility pursuant to this Paragraph
1.6, it being understood that any failure to give such notice or
any delay in giving such notice shall not relieve CK Witco of its
obligations under this Paragraph 1.6. With effect from and after
the Effective Date and Time, Yorkshire shall procure that Europe
or the relevant Acquired Entity shall pay or perform, as
appropriate, all obligations and liabilities arising on and after
the Effective Date and Time under the Contracts, as well as those
arising under or pursuant to those agreements that would
constitute Contracts entered into after the date hereof in the
ordinary and regular course of an Acquired Business pursuant to
Paragraph 6.1, excluding this Agreement and the Additional
Agreements. For purposes of this Agreement, "European Retained
Liabilities" means those Liabilities of Europe and the Acquired
Entities identified as such on Exhibit M attached to this
Agreement.
(c) Notwithstanding any other provision of this
Agreement, the obligations of CK Witco, each other CK Witco
Entity and each Yorkshire Entity pursuant to this Paragraph 1.6
shall survive the Closing and the transactions contemplated by
this Agreement. The party causing any delay in payment of any
debt or obligation covered by this Paragraph 1.6 shall bear the
responsibility for any late fees or interest accruing on or
charged in respect of the underlying debt.
(d) Within 45 days of the Effective Date and Time,
in respect of each of those contracts, leases, non-compete
agreements, licenses, indemnities, agreements, commitments,
arrangements, and purchase and sale orders (i) which relate to an
Acquired Business, and (ii) to which either Europe or an Acquired
Entity is a party, and (iii) which do not otherwise constitute a
Contract (collectively, the "Reviewed Contracts"), Yorkshire
shall review the Reviewed Contracts. Within such 45-day period,
Yorkshire shall assess whether in its commercially reasonable
view (and not considering any of its restructuring plans) it
wishes to treat such Reviewed Contracts as European Retained
Liabilities. If Yorkshire determines not to treat any Reviewed
Contract as a European Retained Liability, then Yorkshire shall
provide written notice to CK Witco that Yorkshire desires to
transfer and assign, or procure the transfer and assignment of,
responsibility for performance of each such Reviewed Contract
(not to be treated as a European Retained Liability) to CK Witco,
and CK Witco shall be obliged to accept such transfer and
assignment (whether or not the counterparty thereto accepts or
consents to such transfer and assignment) and responsibility for
each such Reviewed Contract and the same shall be treated
thereafter for all purposes as a CK Witco European Liability.
With respect to each Reviewed Contract, if Yorkshire does not
provide such notice within such 45-day period, then Yorkshire
shall be deemed to have agreed to treat such Reviewed Contract as
a European Retained Liability. During such 45-day period (or
such shorter period as is from the Effective Date and Time until
the requisite notice is given by Yorkshire) such Reviewed
Contract shall be treated as a European Retained Liability. To
the extent that the counterparty to any Reviewed Contract
transferred or assigned to CK Witco has a consent right in
respect thereof and does not so consent, Yorkshire shall make
available to CK Witco the benefits of such Reviewed Contract to
the extent practicable and such Reviewed Contract shall
thereafter be treated for all purposes as a CK Witco European
Liability.
1.7 Sales Taxes and Stamp Duties. CK Witco and Yorkshire
shall equally share responsibility for the payment of all sales,
use, excise, transfer, value added taxes and stamp or tax duties,
imposed by any Government on the purchase and sale of the
Transferred Assets pursuant to this Agreement or instrument
transferring any title or right to the Transferred Assets to any
Yorkshire Entity, but not Taxes payable in respect of any profit
or gain on the sale or disposal of any Transferred Asset pursuant
to this Agreement.
1.8 Proration; Customer Rebates. (a) There shall be
prorated as of the Effective Date and Time the following accrued
or prepaid items relating to Colors and the Transferred Assets
held by it: (i) ad valorem, real or personal property and
similar taxes, (ii) rents, royalties and other payments due under
the Assigned Contracts, (iii) charges for utilities serving
Acquired Properties, (iv) license fees related to transferable
licenses and Permits, and (v) assessments of any Government and
charges for services.
(b) Without prejudice to the generality of
Paragraph 1.8(a), any customer rebates relating to the Acquired
Businesses will be prorated as of the Effective Date and Time,
and such proration will include the amortized effect of any
ratchet or other adjustment mechanism relating to such rebates
where such mechanism operates by reference to periods both before
and after the Effective Date and Time.
(c) CK Witco, Colors and Holdings will jointly and
severally indemnify Yorkshire, each Yorkshire Entity, Yorkshire's
Affiliates, each Acquired Entity and Europe in respect of all
costs, claims, liabilities and expenses incurred by them in
relation to Paragraphs 1.8(a) and (b) above which arise in
relation to periods prior to the Effective Date and Time,
including for these purposes the effect of any such ratchet or
other adjustment mechanism as is referred to in Paragraph 1.8(b).
(d) Any payments required to be made by CK Witco, Colors
or Holdings to Yorkshire, any Yorkshire Entity, any of
Yorkshire's Affiliates, any Acquired Entity or Europe pursuant to
this Paragraph 1.8 will be made in accordance with the provisions
of Paragraph 1.6(b).
1.9 Allocation. The Purchase Price, other than insofar as it
relates to the Europe Capital Stock, shall be allocated among the
Transferred Assets in accordance with Section 1060(b) of the Code
and the regulations promulgated thereunder. After the Closing
Date, any adjustments required to such allocations shall be made
in accordance with Section 1060 of the Code and the regulations
thereunder, and Yorkshire and CK Witco agree to cooperate in
filing all information required by Section 1060(b) of the Code
and the regulations thereunder, and to take no position on any
income tax return, report or filing inconsistent with such
allocation.
1.10 Closing. The consummation of the transactions
contemplated in this Agreement (the "Closing") shall take place
at the offices of Xxxxxxxxxx Xxxxxxxx LLP, 0000 Xxxxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxx (or at such other place as the
parties may mutually agree), at 13:00 p.m. G.M.T., on the
Business Day on which all conditions to Closing contained in
Articles 7 and 8 have been satisfied or waived in writing, other
than conditions which by their terms are to be satisfied at the
Closing (the "Closing Date"). The Closing shall be effective as
of the actual time of consummation of the transactions the
subject of this Agreement (the "Effective Date and Time").
1.11 Transactions and Documents at Closing.
(a) At the Closing: (i) Holdings shall convey,
transfer and assign the Europe Capital Stock to Yorkshire free
and clear of any and all Liens, and (ii) subject thereto, each
relevant CK Witco Entity shall convey to a designated Yorkshire
Entity all of the other Transferred Assets, free and clear of any
and all Liens, and in furtherance thereof shall deliver those
deeds, bills of sale, assignments, consents, certificates of
title, share certificates, powers of attorney, documents and
other instruments of transfer and conveyance listed and described
on Exhibit N (collectively, the "Closing Documents"); and (iii)
against delivery by Holdings of the Europe Capital Stock (and the
share certificates evidencing the same) to Yorkshire, Yorkshire
shall pay and deliver, or cause to be paid and delivered, to
Holdings (x) either from Yorkshire's own bank account or from
Xxxxxxxxx Xxxxx & Co's client account, the sum of US$14,000,000
by wire transfer of immediately available funds to a U.S. bank
account designated by CK Witco not less than three (3) Business
Days prior to the Closing Date (the "Bank Account"), (y) share
certificates representing the Consideration Securities allotted
to Holdings, and (z) against delivery of all of the other
Transferred Assets, Yorkshire shall pay and deliver, or cause to
be paid and delivered, to CK Witco (if appropriate, such sum to
be paid directly from Yorkshire's lenders) the sum of
US$64,000,000 by wire transfer of immediately available funds to
the Bank Account.
(b) At the Closing, the relevant Persons shall, in
addition to the other documents, agreements, papers and
instruments required to be executed and delivered under or
pursuant to this Agreement, execute and deliver the following
documents, agreements, instruments and papers (all of which are
collectively referred to herein as the "Additional Agreements"
and individually as an "Additional Agreement"):
(i) Supply Contracts (CK Witco to Yorkshire) in the
agreed forms attached to this Agreement as Exhibits O-1 and O-2
(each, a "CK Witco Supply Contract");
(ii) Supply Contracts (Yorkshire to CK Witco) in the
agreed forms attached to this Agreement as Exhibit P-1 and P-2
(each, a "Yorkshire Supply Contract");
(iii) a Transition Services Agreement in the agreed form
attached to this Agreement as Exhibit Q;
(iv) a Lease Agreement (relating to the Charlotte
facility) in the agreed form attached to this Agreement as
Exhibit R;
(v) a Lease Agreement (relating to the Gibraltar
facility) in the agreed form attached to this Agreement as
Exhibit S;
(vi) a Trademark License Agreement (CK Witco to
Yorkshire) in the agreed form attached to this Agreement as
Exhibit T;
(vii) a Trademark License Agreement (Yorkshire to CK
Witco) in the agreed form attached to this Agreement as Exhibit
U;
(viii) a Non-European Patent and Technology License
Agreement (CK Witco to Yorkshire) in the agreed form attached to
this Agreement as Exhibit V;
(ix) a European Patent and Technology License Agreement
(CK Witco to Yorkshire) in the agreed form attached to this
Agreement as Exhibit W;
(x) a Non-European Patent and Technology License
Agreement (Yorkshire to CK Witco) in the agreed form attached to
this Agreement as Exhibit X;
(xi) a European Patent and Technology License Agreement
(Yorkshire to CK Witco) in the agreed Form attached to this
Agreement as Exhibit Y; and
(xii) a Groundwater Monitoring Agreement in the agreed
form attached to this Agreement as Exhibit Z.
(c) All deliveries, payments and other transactions
and documents relating to the Closing shall be interdependent and
none shall be effective unless and until all are effective
(except to the extent that the party entitled to the benefit
thereof has waived satisfaction or performance thereof as a
condition precedent to Closing). All conveyances and transfers
of registered trademarks and patents shall be effected only by
the execution and delivery of the relevant Closing Documents
related thereto, it being understood and agreed that this
Agreement imposes only an obligation to so transfer and convey
and that no transfer or conveyance is effected by this Agreement.
(d) From time to time and at any time, at
Yorkshire's reasonable request, whether on or after the Closing
Date, and without further consideration, Holdings and each
relevant CK Witco Entity shall, and CK Witco shall ensure that
Holdings and each such CK Witco Entity shall, at its expense,
execute and deliver such further documents and instruments of
conveyance, assignment, and transfer and shall take such further
reasonable actions as may be necessary or reasonably desirable,
in the reasonable opinion of Yorkshire, to transfer and convey to
Yorkshire and the other Yorkshire Entities all right, title and
interest in and to the Transferred Assets, free and clear of any
and all Liens (subject to any exclusions set forth in the CK
Witco Disclosure Memorandum), or as may otherwise be necessary or
reasonably desirable to carry out the intent of this Agreement.
2. ADDITIONAL COVENANTS
2.1 Access and Inspection. CK Witco will provide, and CK
Witco will cause each CK Witco Entity to provide, Yorkshire, the
other Yorkshire Entities and their respective Representatives
reasonable access during normal business hours from and after the
date of this Agreement until the Closing, to all of the
Representatives, personnel, books and records of Holdings,
Europe, each Acquired Entity and each CK Witco Entity (including
the right to make copies, extracts and translations) and will
furnish such information concerning each Acquired Business as
Yorkshire and its Representatives may reasonably request, in each
case for the purpose of making a continuing investigation of each
CK Witco Entity (as it relates to the Acquired Business), Europe,
the Acquired Entities, and the Acquired Businesses. CK Witco
shall not, and CK Witco shall ensure that no other CK Witco
Entity, Europe, or Acquired Entity will, provide any other Person
with similar access or information between the date of this
Agreement and any termination or expiration of this Agreement.
No investigation made before or after the date of this Agreement
by or on behalf of any Yorkshire Entity will limit or affect in
any way the representations, warranties, covenants, agreements
and indemnities of any CK Witco Entity or Europe under or
pursuant to this Agreement or any Additional Agreement, each of
which will survive any investigation and the Closing. CK Witco
and its Representatives shall have full access to all relevant
books and records and employees of the Acquired Businesses and
the auditors and their non-proprietary workpapers to the extent
required to perform its review of the Special Purpose Statements,
Closing Special Purpose Statements, Closing Net Assets and the
Computations.
2.2 Cooperation. The parties will cooperate fully with each
other and with their respective Representatives in connection
with any steps required to be taken as part of their respective
obligations under this Agreement, and all parties will use their
best efforts to consummate the transactions contemplated by this
Agreement and to fulfill their obligations under this Agreement,
including causing to be fulfilled at the earliest practical date
the conditions precedent to the obligations of the parties to
consummate the transactions contemplated by this Agreement.
Without the prior written consent of the other parties, no party
to this Agreement may take any intentional actions, or omit to
take any actions, that would cause the conditions precedent to
the obligations of the parties to this Agreement not to be
fulfilled, including, taking or causing to be taken any action
which would cause the representations and warranties made by a
party in this Agreement not to be true, correct and complete as
of the Closing.
2.3 Expenses. Subject to Paragraph 1.7 and except as
otherwise expressly set forth in this Agreement, all expenses
incurred by any Yorkshire Entity in connection with the
authorization, preparation, execution and performance of this
Agreement and the transactions contemplated by this Agreement,
including all fees and expenses of its Representatives, will be
paid by Yorkshire. Subject to Paragraph 1.7 and except as
otherwise expressly set forth in this Agreement, all expenses
incurred by Europe, any CK Witco Entity or any Acquired Entity in
connection with the authorization, preparation, execution and
performance of this Agreement and the transactions contemplated
by this Agreement and the Additional Agreements, including all
fees and expenses of their Representatives, will be borne by CK
Witco without any contribution by or Liability to either Acquired
Business, Europe or any Acquired Entity or the payment out of the
Transferred Assets or any assets of any Acquired Entity or
Europe.
2.4 Brokers. CK Witco represents and warrants to
Yorkshire that no broker or finder has acted on behalf of any CK
Witco Entity in connection with this Agreement or the
transactions contemplated in this Agreement, and CK Witco agrees
to indemnify each Yorkshire Entity and hold it harmless from and
against any and all claims or demands for commissions or other
compensation by any broker, finder or similar agent claiming to
have been employed by or on behalf of them. Yorkshire represents
and warrants that no broker or finder other than N M Rothschild &
Sons has acted on behalf of any Yorkshire Entity in connection
with this Agreement or the transactions contemplated in this
Agreement and agrees to indemnify each CK Witco Entity and hold
it harmless from and against any and all claims or demands for
commissions or other compensation by N M Rothschild & Sons or any
other broker, finder or similar agent claiming to have been
employed by or on behalf of any Yorkshire Entity.
2.5 Publicity. Except to the extent required by
applicable Law, the listing requirements of any stock exchange or
the requirements of any other regulatory authority, all press
releases and other public announcements respecting the subject
matter of this Agreement or any Additional Agreement will be made
only with the mutual agreement of CK Witco and Yorkshire, which
agreement will not be unreasonably withheld, delayed or
conditioned.
2.6 Certain Governmental Filings. The parties will
make, or cause to be made, all filings and submissions required
to be made to any Government in connection with the transactions
contemplated by or resulting from this Agreement, including the
filing of Notification and Report Forms under the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended, with the
United States Federal Trade Commission and the Antitrust Division
of the United States Department of Justice (the "HSR Filing").
Each of the parties will furnish to the other parties any and all
necessary information and reasonable assistance as another party
may reasonably request in connection with its preparation of
necessary filings or submissions to any Government. Yorkshire
shall pay all filing fees required to be paid in connection with
the HSR Filing.
2.7 Confidentiality. On and after the Closing Date and
with effect from the Effective Date and Time, CK Witco on behalf
of itself, each CK Witco Entity and any other Person Affiliated
with CK Witco, agrees that it shall not use or disclose or reveal
to any other Person any trade secrets or other confidential
business information related to any Acquired Business (whether or
not constituting a Transferred Asset and whether or not the
subject of any Additional Agreement), provided that the foregoing
obligations shall not apply to (i) any information which is
generally known in the industry, (ii) any information which
becomes generally known in the industry through no fault of CK
Witco, any CK Witco Entity or any other Person Affiliated with CK
Witco, or (iii) commencing three (3) years after the Effective
Date and Time, any information which does not constitute a trade
secret under applicable Law.
2.8 Covenant Not to Compete.
(a) In order to induce Yorkshire and Americas to
enter into and perform this Agreement, Colors, Holdings, and CK
Witco on behalf of itself and each CK Witco Entity and each Person
Affiliated with CK Witco, agrees that, for a period of five (5)
years beginning on the Closing Date, and effective as of the
Effective Date and Time (the "CK Witco Restricted Period"), it
shall not, without the prior written consent of Yorkshire, for its
own account or jointly or in combination with another Person,
directly or indirectly, for or on behalf of any Person, as
principal, agent or otherwise: (i) engage in, consult with, or
own, control, manage or otherwise participate in the ownership,
control or management of a business competitive with an Acquired
Business, except as an agent or otherwise for and on behalf of any
Yorkshire Entity or otherwise pursuant to the CK Witco Supply
Contracts and then only in strict accordance with their terms; (ii)
solicit, call upon, or attempt to solicit the patronage of any
Person within the CK Witco Service Areas and to whom an Acquired
Business provided products, goods or services during the 12-month
period immediately preceding the Effective Date and Time, for the
purpose of obtaining the patronage of any such Person for the
purchase of any products, goods or services competitive with those
of the relevant Acquired Business, except as an agent and on behalf
of a Yorkshire Entity or pursuant to the CK Witco Supply Contracts
and then only in strict accordance with their terms; or (iii)
solicit or induce, or in any manner attempt to solicit or induce,
any individual who is employed in an Acquired Business at the
Effective Date and Time to leave such employment, whether or not
such employment is pursuant to a written contract or otherwise. In
respect of employees of the Acquired Businesses resident outside of
the United States, neither CK Witco nor any Person Affiliated with
CK Witco shall employ any such individual for a period of two years
following the Effective Date and Time.
(b) Notwithstanding anything herein to the contrary:
(i) it shall not be a breach of the covenants contained in
Paragraph 2.8(a) for CK Witco to own, of record or beneficially,
the Consideration Securities or not more than, in the case of a
Person that has any class of its equity securities quoted or
listed, five percent (5.00%), and in the case of any other Person,
seven and one-half percent (7.50%), of the capital stock or other
equity interest of any Person; (ii) the covenants described in
Paragraph 2.8(a) shall apply only if the transactions contemplated
by this Agreement are consummated; and (iii) it shall not be a
breach of the covenants contained in this Paragraph 2.8 for CK
Witco to supply the products to be supplied by Colors pursuant to
the terms of the Supply Agreement, dated January 15, 1999, by and
between Ingredient Technology Corporation and Colors, as modified
through the date of this Agreement.
(c) Notwithstanding anything herein to the contrary
but subject to the further provisions of this Paragraph 2.8(c), in
the event CK Witco or any of its Affiliates agrees to acquire any
other Person or business, or is acquired by any other Person or
business, whether in the form of a merger, stock purchase, purchase
and assumption, collection of a loan or otherwise, CK Witco or its
Affiliate (or any acquiring entity or its Affiliates, if
applicable) shall be entitled to consummate such transaction,
continue to operate any lines of business in which such Person or
its subsidiaries were engaged at the time of such acquisition, and
expand such Person. If, during the CK Witco Restricted Period, CK
Witco or any of its Affiliates acquires any other Person or
business competitive with an Acquired Business (the competitive
part of such Person or business being referred to herein as the
"Target Competitive Business") and the Target Competitive Business
has annual revenues or turnover in excess of US$10,000,000 (or its
reasonable equivalent in any other currency) for the fiscal year
(whether or not measured or accounted for separately) immediately
preceding the date of acquisition, then CK Witco (or its Affiliate)
shall dispose of such Target Competitive Business within eighteen
(18) months from the closing date of such acquisition (the
"Disposal Period"). If CK Witco and its Affiliates shall not have
disposed of the Target Competitive Business within the Disposal
Period, CK Witco shall pay to Yorkshire as liquidated damages and
not a penalty the sum of ten thousand United States dollars (US$
10,000) for each day after the conclusion of the Disposal Period
for which CK Witco has not disposed of or closed the Target
Competitive Business. CK Witco and Yorkshire each acknowledge and
agree that monetary damages are not readily ascertainable and that
this provision for liquidated damages represents the best estimate
of such damages and that they believe such liquidated damages are a
reasonable estimate of such damages. In addition, if CK Witco or
its Affiliates makes an acquisition of a Person or business that
does not constitute a Target Competitive Business but such Person
or business (together with any other acquired Person or business)
grows during the CK Witco Restricted Period, either through organic
growth or by acquisition, to such a size that if it were then
acquired by CK Witco or its Affiliates it would constitute a Target
Competitive Business, then CK Witco and its Affiliates shall be
bound to the foregoing provisions of this Paragraph 2.8(c) in
respect of such Person or business.
(d) Notwithstanding anything herein to the contrary
and subject to the further provisions of this Paragraph 2.8(d) it
shall not be a breach of the covenants contained in this
Paragraph 2.8 for CK Witco to continue to operate the Americas
IPD Business and to expand the Americas IPD Business within the
Americas IPD Business Territory. If at any time during the CK
Witco Restricted Period CK Witco or its Affiliates dispose of all
or substantially all of the Americas IPD Business to an
unaffiliated Person through a merger, stock purchase, share
exchange or similar transaction, then the restrictions on Colors
and such unaffiliated Person with respect to the Acquired IPD
Business set forth in Paragraph 2.8(a) shall immediately be of no
further force or effect.
(e) Subject to the further provisions of this
Paragraph 2.8(e), in order to induce CK Witco, Europe and
Holdings to enter into and perform this Agreement, Yorkshire and
Americas on behalf of itself and each Person Affiliated with
Yorkshire, agrees that, for a period of five (5) years beginning
on the Closing Date, and effective as of the Effective Date and
Time (the "Yorkshire Restricted Period"), it shall not, without
the prior written consent of CK Witco, for its own account or
jointly or in combination with another Person, directly or
indirectly, for or on behalf of any Person, as principal, agent
or otherwise; (i) engage in, consult with, or own, control,
manage or otherwise participate in the ownership, control or
management of a business engaged in the Americas IPD Business,
except as an agent or otherwise for and on behalf of any CK Witco
Entity or otherwise pursuant to the Yorkshire Supply Contract and
then only in strict accordance with its terms; (ii) solicit, call
upon, or attempt to solicit the patronage of any Person within
the Americas IPD Business Territory and to whom the Americas IPD
Business provided products, goods or services during the 12-month
period immediately preceding the Closing Date, for the purpose of
obtaining the patronage of any such Person for the purchase of
any products, goods or services competitive with those of the
Americas IPD Business except as an agent or otherwise for and on
behalf of CK Witco or any of its Affiliates or otherwise pursuant
to the Yorkshire Supply Contract and only in strict accordance
with its terms; or (iii) solicit or induce, or in any manner
attempt to solicit or induce, any individual who is employed in
the Americas IPD Business at the Effective Date and Time to leave
such employment, whether or not such employment is pursuant to a
written contract or otherwise. In respect of employees of the
Americas IPD Business resident outside of the United States,
neither Yorkshire nor any Person Affiliated with Yorkshire shall
employ any such individual for a period of two years following
the Effective Date and Time. If at any time during the Yorkshire
Restricted Period CK Witco or its Affiliates dispose of all or
substantially all of the Americas IPD Business, whether in the
form of a merger, stock purchase, asset purchase, purchase and
assumption, collection of a loan or otherwise, then the
restrictions set forth in this Paragraph 2.8(e) shall immediately
be of no further force or effect.
(f) Notwithstanding anything herein to the
contrary, it shall not be a breach of the covenants contained in
this Paragraph 2.8 for Yorkshire to continue to sell Yorkshire's
current category of goods throughout the world to each of Xxxxxx
Ink, Keystone and Seller Ink, and their respective Affiliates.
2.9 No Solicitation of Third Party Interest. CK Witco,
on behalf of itself and all CK Witco Entities, Europe and the
Acquired Entities, agrees that none of them nor any of their
respective directors, officers, employees or agents, will (a)
negotiate or discuss with any other Person this Agreement or any
Additional Agreement, or the terms contained in this Agreement or
any Additional Agreement, (b) negotiate or discuss with any other
Person any other transaction involving a sale of all or any of
the capital stock of any CK Witco Entity, Europe, or any Acquired
Entity or the sale of any assets of any CK Witco Entity, Europe,
or any Acquired Entity related to the Acquired Businesses (other
than for sales of inventory in the ordinary course and disposal
of items of tangible personal property in the ordinary course
which is not material to the conduct of the Acquired Businesses)
or any other business combination involving Colors, Europe, any
other CK Witco Entity or any Acquired Entity related to the
Acquired Businesses, (c) reveal the terms of this Agreement or
any Additional Agreement to any Person except for the express
purpose of carrying out the transactions contemplated in this
Agreement or any Additional Agreement, or (d) solicit, encourage,
consider, entertain or accept any offer, bid or proposal from any
other Person respecting any transaction involving, whether
directly or indirectly, a sale of any of the capital of any of
Colors, Holdings, Europe, any other CK Witco Entity or any
Acquired Entity related to the Acquired Businesses, or the sale
of any assets of any of CK Witco or any other business
combination involving Colors, Europe or the Acquired Businesses.
If any proposal of the kind described in the preceding clause (d)
is received prior to the date of the Closing, then CK Witco will
immediately notify Yorkshire of the receipt of a proposal and
will promptly provide Yorkshire with a copy of the proposal (or
if the proposal is not in writing, a written summary of its
terms).
2.10 Business Employees and Employee Benefit Matters.
(a) Business Employees. For purposes of this
Paragraph 2.10, "Business Employees" are hereby defined as
follows: (i) all persons employed by CK Witco or any of its
Affiliates in an U.S. Asset Acquired Business immediately before
the Effective Date and Time; (ii) all employees of CK Witco or
any of its Affiliates who are absent from work with the Acquired
Businesses on account of sickness or leave of absence on the
Effective Date and Time and who are reasonably expected to return
to active employment within 90 days following the date such
employee was first absent from employment, or for whom an
obligation to rehire exists under a collective bargaining
agreement assumed by Yorkshire (as described in Paragraph
2.10(e)); (iii) all employees of CK Witco or any of its
Affiliates who are not employed in the Acquired Businesses
immediately before the Effective Date and Time but who, in the
ordinary course of business become employees of Yorkshire within
60 days after the Effective Date and Time; and (iv) those full-
time, active employees at the Gibraltar Facility listed on
Exhibit AA attached to this Agreement. All Business Employees
described in Paragraph 2.10(a) shall be identified on a schedule
that is made part of the CK Witco Disclosure Memorandum.
(b) Business Employees' Employment and Employee
Benefits. (i) Yorkshire shall offer employment, effective on
the Effective Date and Time (or, in the case of any Business
Employee specified in Paragraph 2.10(a)(iii), effective as of the
date of hiring), to each of the Business Employees described in
Paragraphs 2.10(a) at compensation rates that are equal to those
provided by CK Witco and any of its Affiliates immediately before
the Effective Date and Time.
(ii) Yorkshire shall treat service of each Business
Employee with CK Witco, any of its Affiliates and their
predecessor companies before the Effective Date and Time as if
such service had been with Yorkshire for purposes of determining
eligibility to participate, eligibility for benefits, benefit
calculations, benefit forms and vesting (but not for benefit
accruals under any defined benefit pension plan) under
Yorkshire's employee benefit plans (within the meaning of Section
3(3) of ERISA).
(iii) For a period of not less than one year from and
after the Effective Date and Time, Yorkshire shall provide to
Business Employees employee benefits that are, in the aggregate,
no less favorable than those provided to them immediately prior
to the Effective Date and Time; provided that with respect to
Business Employees who are covered under the Assumed Collective
Bargaining Agreements (as hereinafter defined), Yorkshire shall
provide such compensation and benefits as are from time to time
required by such collective bargaining agreements.
(c) Severance Benefits. (i) From and after the
Effective Date and Time, Business Employees shall be eligible for
benefits in accordance with the terms of the applicable Yorkshire
severance or separation pay policies or plans or the Assumed
Collective Bargaining Agreements, as applicable. Yorkshire shall
recognize the service of each such Business Employee with CK
Witco and its Affiliates for eligibility, vesting, and benefit
determinations under the applicable severance or separation pay
policy or plan on the same basis as such service was recognized
by CK Witco and any of its Affiliates.
(ii) If CK Witco or any of its Affiliates is required to
pay severance benefits or similar payments to a Business Employee
as a result of the Business Employee's failure to accept
employment with Yorkshire where the employment offered by
Yorkshire requires relocation more than 35 miles from the
Business Employee's primary work location immediately prior to
the Effective Date and Time or, as a result of Yorkshire's
failure to offer employment to such Business Employee in
accordance with the requirements of Paragraphs 2.10 (b),
Yorkshire shall reimburse CK Witco for such benefits and payments
in an amount not to exceed fifteen times the weekly salary or
regular weekly compensation of such Business Employee immediately
prior to Effective Date and Time of the severance benefits or
similar payments that are payable to such Business Employee and
if such Business Employee is hired by Yorkshire during the
twelve-month period ending on the first anniversary of the
Effective Date and Time, Yorkshire shall reimburse CK Witco for
the entire amount of the severance benefits or similar payments
that are payable by CK Witco to such Business Employee.
Yorkshire shall make such reimbursement within 10 days of receipt
of notice of payment by CK Witco.
(d) Assumption of Liabilities. Except as
specifically provided otherwise in this Paragraph 2.10, on the
Effective Date and Time, Yorkshire shall assume all employee-
related liabilities and obligations with respect to Business
Employees and their beneficiaries and dependents that accrue or
are incurred or arise on or after the Effective Date and Time.
As of the Effective Date and Time, CK Witco shall not be
responsible for wages, salaries and other employee benefits for
Business Employees for service of such Business Employees with
Yorkshire that accrue or are incurred or arise on or after the
Effective Date and Time. The active participation of all
employees of the Acquired Businesses in each Employee Benefit
Plan shall cease on the Effective Date and Time.
(e) Collective Bargaining Agreements. As of the
Effective Date and Time, Yorkshire shall adopt and assume the
collective bargaining agreements listed on the Disclosure
Memorandum (the "Assumed Collective Bargaining Agreements"). On
and after the Effective Date and Time, any obligations or
liabilities that may be payable under the Assumed Collective
Bargaining Agreements, with respect to hourly Business Employees,
that relate to services performed on or after the Effective Date
and Time, shall be the sole responsibility of Yorkshire.
(f) CK Witco Qualified Defined Contribution Plans.
As of the Effective Date and Time, CK Witco shall, to the extent
permitted by applicable law (i) fully vest the account balances
of each Business Employee participating in the CK Witco
Individual Account Retirement Plan (the "CK Witco 401(k) Plan")
and the CK Witco Employee Stock Ownership Plan (the "CK Witco
ESOP"), and (ii) permit the Business Employees to elect to
receive a lump sum cash distribution of their vested account
balances from the CK Witco 401(k) Plan and CK Witco ESOP in
accordance with provisions of Code Section 401(k)(10)(A)(ii).
Yorkshire agrees to permit Business Employees to directly roll
over distributions from the CK Witco 401(k) Plan and CK Witco
ESOP into a defined contribution plan maintained by Yorkshire
(the "Yorkshire 401(k) Plan"), which plan shall be qualified
under Section 401 and 501 of the Code. The Yorkshire 401(k) Plan
shall provide that each Business Employee shall be given credit
for purposes of determining eligibility to participate,
eligibility for benefits, benefit calculations, benefit forms and
vesting, for the Business Employee's service with CK Witco, any
of its Affiliates and their predecessor companies, to the extent
that the CK Witco 401(k) Plan gave credit for such service.
Business Employees shall not accrue additional benefits on or
after the effective date and time under the CK Witco 401(k) Plan
or CK Witco ESOP. CK Witco shall file as soon as reasonably
practicable following the date hereof a private letter ruling
request with the U.S. Internal Revenue Service seeking a ruling
that the Business Employees may elect to receive a lump-sum cash
distribution of their vested account balances from the CK Witco
401(K) Plan and the CK Witco ESOP following the Effective Date
and Time, and shall diligently pursue the same.
(g) Worker's Compensation. On and after the
Effective Date and Time, Yorkshire shall assume liability under
workers' compensation laws for claims incurred on or after the
Effective Date and Time with respect to Business Employees. CK
Witco shall remain liable for all workers' compensation claims
incurred prior to the Effective Date and Time. A claim for
worker's compensation benefits shall be deemed to be incurred
upon the occurrence of the event giving rise to such claim.
(h) Welfare Benefit Plans. (i) Yorkshire shall
provide Business Employees with credit during the current plan
year under Yorkshire's health benefit plans for payments made by
Business Employees under CK Witco's health benefit plans for
purposes of determining deductibles and out-of-pocket expenses
under Yorkshire's health benefit plans. Buyer shall not impose
on Business Employees pre-existing condition provisions, proof of
insurability requirements, or any similar conditions or
requirements that would delay commencement of Business Employees'
participation in, or limit Business Employees' level of coverage
under, any of Yorkshire's welfare benefit plans (within the
meaning of Section 3(l) of ERISA).
(ii) From and after the Effective Date and Time,
Yorkshire shall pay, discharge, and be responsible for all claims
and liabilities for the welfare benefits of the Business
Employees incurred on or after the Effective Date and Time. For
purposes of this Agreement, the following claims and liabilities
shall be deemed to be incurred as follows: (A) life, accidental
death and dismemberment and business travel accident insurance
benefits, upon the death, disability or accident giving rise to
such benefits; (B) long-term disability, upon the event or
commencement of the condition resulting in the disability giving
rise to such benefit; (C) hospital-provided health, dental,
prescription drug or other benefits, which become payable with
respect to any hospital confinement, upon commencement of such
confinement; and (D) health, dental and/or prescription drug
benefits, upon provision of such services, materials or supplies.
(iii) Yorkshire shall be responsible for health care
continuation obligations under Section 4980B of the Code and
Section 601 through 608 of ERISA ("COBRA") for those Business
Employees who actually become employees of Yorkshire. CK Witco
shall remain responsible for health care continuation obligations
under COBRA for those Business Employees who never become
employees of Yorkshire. CK Witco agrees that it shall retain the
obligation to comply with the certification requirements under
the Health Insurance Portability and Accountability Act of 1996
with respect to all individuals covered under any health or
medical plan sponsored by CK Witco or any CK Witco Entity who
lost coverage at any time prior to the Effective Date and Time.
(i) Vacation Pay. Yorkshire shall assume liability
for all unpaid vacation pay banked or accrued by any Business
Employee prior to the Effective Date and Time, provided such
liability has been accrued by CK Witco and reflected on CK
Witco's balance sheet.
(j) WARN Act. Yorkshire shall be responsible for,
and indemnify and hold harmless CK Witco, with respect to
compliance with and liability under the Worker Adjustment and
Retraining Notification Act of 1988 (the "WARN Act") and any
other similar law, including any requirement to provide any
notifications or pay in lieu of notice, in respect of Business
Employees who are terminated on or after the Effective Date and
Time.
(k) CK Witco Nonqualified Equalization Plan and
Stock Options. As soon as practicable following the Effective
Date and Time, CK Witco shall distribute to Business Employees
the full account balances of such employees under the CK Witco
Nonqualified Equalization Plan in accordance with the terms
thereunder. To the extent options granted under the CK Witco
1998 Long-Term Incentive Plan to Business Employees are not fully
vested, CK Witco shall cause such options to be fully vested and
immediately exercisable for a period of not less than three (3)
years following the employee's cessation of service with CK Witco
or any CK Witco Entity upon the Effective Date and Time.
(l) 1999 Annual Bonuses and Outstanding
Commissions. With respect to the payment of the annual bonuses
and any commissions earned by Business Employees in respect of
the 1999 fiscal year (the "1999 Annual Bonus and Commissions"),
CK Witco shall pay and be solely responsible for the
proportionate share of the 1999 Annual Bonus and Commissions, in
accordance with and on the same basis as the annual bonus and
commission plans and policies of CK Witco as in effect on the
Effective Date and Time, for the period commencing on December
27, 1998 and ending on the Effective Date and Time, and Yorkshire
shall pay and be solely responsible for the proportionate share
of the 1999 Annual Bonus and Commission for the period commencing
on the Effective Date and Time and ending on the last day of CK
Witco's 1999 fiscal year. For purposes hereof, Yorkshire's
proportionate share of the 1999 Annual Bonus and Commissions
shall be equal to the product of the (x) 1999 Annual Bonus and
Commissions and (y) a fraction, the numerator of which is the
number of days from and including the Effective Date and Time
until December 31, 1999 and the denominator of which is 365.
(m) Administration. Yorkshire and CK Witco shall
each make its appropriate employees and data regarding employee
benefit coverage available to the other at such reasonable times
as may be necessary for the proper administration by the other of
any and all matters relating to employee benefits and worker's
compensation claims affecting, its employees.
(n) Transition Agreement. (i) CK Witco shall
provide, or cause to be provided, certain benefits,
administration and payroll services relating to the provision of
benefits during the transition of the Business Employees from
employment with CK Witco to employment with Yorkshire as
described below:
(A) Yorkshire will be unable to provide payroll services
with respect to the Business Employees until it has collected
necessary payroll and employment-related data relating to the
Business Employees. Until Yorkshire is able to process payroll
with respect to the Business Employees (but in no event later
than 30 days following the Effective Date and Time), CK Witco
will continue to administer the payroll with respect to the
Business Employees, including the withholding of employee
contributions under the health benefit plan as provided herein.
CK Witco agrees to transfer directly to Yorkshire (or a
designated service provider) such payroll and employment-related
data as soon as practicable following the Effective Date and
Time.
(B) Yorkshire intends to establish a replacement health
benefit plan for the Business Employees as soon as practicable
following the Effective Date and Time. Until such plan is
operational (but in no event later than 60 days following the
Effective Date and Time), CK Witco will continue to cover the
Business Employees under the CK Witco Health Benefit Plan, and
provide administration services with respect to such plan.
(ii) The cost of providing the transition services and
any benefits described in this Paragraph 2.10(n) shall be
determined based on the actual cost of the service, including
overhead, incurred by CK Witco in providing the service and/or
the actual cost of the benefit provided by CK Witco. CK Witco
will invoice Yorkshire for the cost of such services and benefits
and Yorkshire shall remit payment within 7 days of receipt of
such invoice. Yorkshire agrees to indemnify CK Witco against all
loss, liability, costs and expenses incurred by CK Witco in
connection with transition services performed pursuant to this
Paragraph 2.10(n).
2.11 Compliance with ERISA, Etc. (a) The CK Witco
Disclosure Memorandum lists all plans, programs, and similar
arrangements, commitments or agreements maintained by or on
behalf of CK Witco, any CK Witco Entity or any other party that
provides benefits or compensation to, or for the benefit of,
current or former employees of an U.S. Asset Acquired Business,
including, but not limited to, pension, retirement, deferred
compensation, stock option, stock purchase, stock ownership,
savings, stock appreciation right, profit sharing, group
insurance, severance, and other benefit plans, contracts and
agreements (collectively, the "Employee Benefit Plans"). The CK
Witco Disclosure Memorandum identifies each Employee Benefit Plan
in which Business Employees were eligible to participate prior to
the Effective Date and Time. With respect to each Employee
Benefit Plan, to the extent applicable, CK Witco has supplied
Yorkshire a true and correct copy of (i) the plan document,
including amendments thereto, (ii) the annual report on the
applicable Form 5500 series filed with the IRS for the most
recent three plan years, (iii) each trust agreement, insurance
contract or other funding arrangement relating to such Employee
Benefit Plan, including amendments thereto, (iv) the most recent
Summary Plan Description and material employee communications for
such Employee Benefit Plan, (v) the most recent actuarial report
or valuation, and (vi) the most recent IRS determination letter.
(b) Each of the Employee Benefit Plans (i) is in
substantial compliance with all applicable provisions of ERISA,
the Code, and all other applicable laws, (ii) has been
administered, operated and managed in accordance with its
governing documents, and (iii) has timely filed or distributed
all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or
beneficiaries (including annual reports, summary annual reports
(Form 5500s), summary plan descriptions, actuarial reports, PBGC-
1 Forms, or returns).
(c) All Employee Benefit Plans that are intended to
be qualified under Section 401(a) of the Code are so qualified
and have received a favorable determination letter from the IRS,
and CK Witco is not aware of any circumstances likely to result
in the revocation of any such favorable determination letter.
(d) No Employee Benefit Plan is a "defined benefit
pension plan" (as defined in Section 3(35) of ERISA) or a "multi-
employer plan" (as defined in Section 3(37) of ERISA, subject to
Title IV of ERISA.
(e) With respect to each Employee Benefit Plan,
neither such plan, or any trustee, administrator, fiduciary,
agent or employee thereof, nor CK Witco or any CK Witco Entity
has engaged in any "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code). With respect
to each Employee Benefit Plan, no act, omission or transaction
has occurred which would result in the imposition of (i) breach
of fiduciary duty liability damages under Section 409 of ERISA,
(ii) a civil penalty assessed pursuant to subsection (c), (i) or
(l) of Section 502 of ERISA, or (iii) any excise tax under
applicable provisions of the Code. With respect to each Employee
Benefit Plan, there have been no terminations, partial
terminations or discontinuances of contributions without a
determination by the IRS that such action does not adversely
affect the tax-qualified status of that plan.
(f) No liability has been incurred by or is
reasonably expected to be incurred by CK Witco or any entity,
trade or business that is a member of a group described in
Sections 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes CK Witco, which could subject
Yorkshire to liability under Title IV of ERISA, Section 301 of
ERISA, Sections 412 or 4971 of the Code or the continuation
coverage requirements of Section 601 et seq. of ERISA and Section
4980B of the Code.
(g) No litigation or claims (other than routine
claims for benefits) are pending or, to the knowledge of CK
Witco, threatened against, or with respect to, any of the
Employee Benefit Plans or with respect to any fiduciary,
administrator, sponsor (in their capacities as such), or any
party-in-interest thereof.
(h) The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will
not result in any payment or series of payments by the Acquired
Businesses to any person which is an "excess parachute payment"
(as defined in Section 280G of the Code), increase or secure (by
way of a trust or other vehicle) any benefits payable under any
Employee Benefit Plan, or accelerate time of payment or vesting
of any such benefit.
(i) With respect to each Employee Benefit Plan
qualifying as a "group health plan" under Section 4980B of the
Code or Section 607(l) or 609 of ERISA and related regulations
(relating to the benefit continuation rights imposed by COBRA or
qualified medical child support orders), CK Witco and each CK
Witco Entity has complied in all material respects with all
reporting, disclosure, notice, election and other benefit
continuation and coverage requirements imposed thereunder as and
when applicable to those plans, and has not incurred any direct
or indirect liability or is not subject to any loss, assessment,
excise tax penalty, loss of federal income tax deduction or other
sanction, arising on account of or in respect of any direct or
indirect failure at any time to comply with any such federal or
state benefit continuation of coverage requirement.
2.12 Admission of Ordinary Shares. Yorkshire agrees
that not later than two (2) Business Days following the date of
execution of this Agreement, it shall file the Application with
the London Stock Exchange and shall use its reasonable efforts to
ensure that the application is approved by the London Stock
Exchange. In the circular concerning the transaction the subject
of this Agreement, the Board of Directors of Yorkshire will
unanimously recommend that the Yorkshire members approve this
Agreement and declare this Agreement to be in the best interests
of Yorkshire.
2.13 Extraordinary General Meeting. Yorkshire agrees to
promptly call and hold the Extraordinary General Meeting no later
than 15 December, 1999 (subject to any proper adjournment
thereof) and in accordance with applicable Law and to perform any
and all acts and to do all things as shall be necessary in
accordance with applicable Law to so call and hold the
Extraordinary General Meeting and to put the Resolutions to vote
at that meeting.
2.14 Cooperation by Management of CK Witco. CK Witco
hereby undertakes with Yorkshire to provide, and to use its
reasonable best efforts to procure that the senior management of
CK Witco shall provide, all information known to them or which on
reasonable inquiry ought to be known to them and relating to the
Acquired Businesses or otherwise as Yorkshire may reasonably
require for the purpose of complying with any applicable Law or
the requirements of the London Stock Exchange.
2.15 Certain Transactions. CK Witco agrees to execute
and complete the transactions set forth on Exhibit BB attached
hereto on or before the Closing, including the execution of and
performance under those agreements, documents and instruments
annexed to Exhibit BB. CK Witco agrees not to make any material
changes to the terms of the draft agreements appended to such
Exhibit BB without the prior consent of Yorkshire, which consent
shall not be unreasonably withheld or delayed.
2.16 Certain Relocation Matters and Costs. Within one
(1) year of the Closing Date, CK Witco shall (a) cause the IPD
Bagger to be disassembled and removed from the Greenville Land
and (b) cause the liquid dye storage tanks to be disassembled and
removed from the Xxxxxx Improvements and the Xxxxxx Land, in each
case, at CK Witco's sole cost and expense. Such disassemblies
and removals shall be done in a workmanlike manner and so as to
cause as little disruption as is practicable of the operations
being conducted on the Greenville Land and the Xxxxxx
Improvements and the Xxxxxx Land, as applicable. CK Witco shall
be liable for, and shall indemnify Yorkshire in respect of, all
loss, cost, damage and expenses suffered or incurred by any
Yorkshire Entity related to or arising in connection with such
disassemblies and removals.
2.17 Limited Use of CK Witco Name. For a period of one
hundred eighty (180) days following the Effective Date and Time,
the Yorkshire Entities, Europe and the Acquired Entities shall
have the right to use the CK Witco name for the limited purpose
of depleting and disposing of letterhead, product brochures and
information, and the like, except (i) in the case of Inventories
and product packaging for which the relevant period shall be one
(1) year following the Effective Date and Time and (ii) for the
last one hundred twenty (120) days of the foregoing 180-day
period, all of such letterhead, product brochures and
information, and the like, such items shall also include the
"Yorkshire" name with equal size and prominence as the "CK Witco"
name. Other than as permitted in this Paragraph 2.17, from and
after the Effective Date and Time no Yorkshire Entity, Europe or
any Acquired Entity shall use the name "CK Witco" in any fashion.
Yorkshire shall have a reasonable period of time (not to exceed
forty five (45) days) following the Closing Date to change the
legal name of Europe and each Acquired Entity so as not to
include the "CK Witco" name.
2.18 Distributable Profits and Voting with Respect to Europe.
Yorkshire confirms it is aware of CK Witco's intent to procure
that Europe's Shareholders' Meeting will distribute an interim
dividend in an amount not to exceed the Belgian Francs equivalent
of US$25,000,000 (to the extent lawfully possible) between the
date of this Agreement and the Closing Date. Yorkshire
undertakes, on behalf of itself and Europe, that between the
Closing Date and 1 January 2000 it will not carry out any act
outside the scope of the ordinary daily management of Europe
intended to reduce the distributable profits of Europe (within
the meaning of Article 77bis of the Belgian Company Laws) shown
in Europe's annual accounts for the business year closed on
December 31, 1999, below the amount referred to above.
2.19 Mail Received after Closing. Following the Closing,
Yorkshire may receive and open all mail addressed to CK Witco and
deal with the contents thereof in its discretion to the extent that
such mail and the contents thereof relate to an Acquired Business,
Europe, an Acquired Entity or the Transferred Assets, or any of the
Assumed Liabilities or any European Retained Liabilities. All
other mail received by Yorkshire shall be promptly forwarded to CK
Witco. Following the Closing, CK Witco shall promptly forward, or
cause to be promptly forwarded, to Yorkshire all mail received by
it that relate to an Acquired Business, Europe, an Acquired Entity
or the Transferred Assets, or any of the Assumed Liabilities or any
European Retained Liabilities.
2.20 Notices to Customers; Collection of Receivables. (a)
Between the date hereof and the Closing Date, CK Witco, in
consultation and cooperation with Yorkshire, shall by written
notice direct all customers of the Acquired Businesses to make
payment of amounts owed by such customers to CK Witco and its
Affiliates in respect of an Acquired Business to such bank
account(s) as shall be mutually acceptable to CK Witco and
Yorkshire.
(b) Commencing with the Business Day that immediately
follows the Effective Date and Time, CK Witco hereby grants to
Yorkshire, the Yorkshire Entities and their Affiliates the power,
right and authority, coupled with an interest, to receive, endorse,
cash, deposit, and otherwise deal with, in the name of the
appropriate CK Witco Entity and in a manner consistent with this
Paragraph 2.20, any checks, drafts, documents, and instruments
evidencing payment of Receivables which are payable to, payable to
the order of, or endorsed in favor of, that CK Witco Entity.
2.21 Payments for CK Witco European Liabilities.
Between the date hereof and the Closing Date, CK Witco, in
consultation with Yorkshire, shall establish such bank account(s)
with such level of funds (the "Excluded Liability Fund") as shall
be mutually acceptable to CK Witco and Yorkshire. The purpose of
the Excluded Liability Fund shall be to enable Yorkshire to make
payments to certain specified creditors with respect to certain
CK Witco European Liabilities due soon after the Closing Date.
Commencing with the Business Day that immediately follows the
Effective Date and Time, only when due, and in consultation with
CK Witco, the relevant Yorkshire Entity shall draw from the
Excluded Liability Fund to make payments to relevant creditors on
relevant dates as determined pursuant to Exhibit CC attached to
this Agreement.
2.22 Certain IP Registration Costs.
(a) CK Witco shall reimburse Yorkshire and each
Yorkshire Affiliate for all Duty Costs reasonably required to be
incurred by an Agency and that are paid by Yorkshire or a
Yorkshire Affiliate in order to register title with such Agency
of ownership of those Proprietary Rights listed on Exhibit DD
attached to this Agreement in the name of either CK Witco or
Europe or an Acquired Entity (as the case may be) in so far as
the foregoing is not already the case.
(b) If in so far as at Closing any of the registered
trademarks and patents are not assigned to Yorkshire (or its
designates) pursuant to this Agreement, then, in such case, from
the Closing until the date of such assignment, CK Witco shall not
(and shall ensure that its Affiliates shall not) use, assign,
exploit or create any third party rights in such registered
trademarks and patents other than as envisaged under any of the
Additional Agreements (and any such use or exploitation will
comply with the terms of the relevant Additional Agreement). CK
Witco will, until such registered patents or trademarks are
assigned to Yorkshire (or its designates), forward promptly to
Yorkshire any correspondence that it may receive from the
relevant registry or any third party that relates to such
registered trademarks and patents. CK Witco and Yorkshire shall
use their reasonable commercial efforts to file the assignments
for the registered trademarks and patents to Yorkshire (or its
designates) within thirty (30) days from the Effective Date and
Time. To the extent there is a conflict between the terms of any
relevant trademark assignment or patent assignment and this
Agreement, the terms of this Agreement shall control.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CK
WITCO, COLORS, HOLDINGS AND EUROPE
CK Witco has prepared and delivered to Yorkshire a
disclosure memorandum (the "CK Witco Disclosure Memorandum")
setting forth any and all exceptions or supplemental information
to the representations, warranties and covenants contained in
Articles 3, 4 and 6 of this Agreement, and has delivered to
Yorkshire documents and materials pursuant to or in connection
with this Agreement, and any and all modifications or amendments
to the documents and materials have been or will be delivered to
Yorkshire with the CK Witco Disclosure Memorandum. The
disclosures set forth in the CK Witco Disclosure Memorandum
qualify or supplement only those representations, warranties and
covenants specifically referenced and referred to in the CK Witco
Disclosure Memorandum, and a disclosure or supplement related to
any particular representation, warranty or covenant shall not
qualify or supplement any other representation, warranty or
covenant unless evident by its context or unless expressly
stated. Nothing in the CK Witco Disclosure Memorandum or in any
documents or materials delivered to Yorkshire shall operate to
limit or exclude the liability of CK Witco and Holdings under or
in respect of Part B of the Taxation Schedule or to qualify or
supplement any of the covenants set out in the Taxation Schedule,
it being understood and agreed that the representations,
warranties and covenants set forth in the Taxation Schedule shall
be the exclusive representations, warranties and covenants made
in respect of the matters covered thereby. To induce Yorkshire
to enter into this Agreement and to consummate the transactions
contemplated by this Agreement, subject to the qualifications set
forth in the CK Witco Disclosure Memorandum, CK Witco, Colors,
Holdings and Europe, jointly and severally, represent and warrant
to Yorkshire, Americas, each other Yorkshire Entity, and each
Affiliate of Yorkshire, and covenants and agrees, as of the date
hereof and again as of the Closing Date, as follows:
3.1 Existence.
(a) Each of CK Witco and Colors is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and is
entitled to own or lease its assets and properties and to carry
on its business as and in the places where its business is
conducted and its assets and properties are owned or leased.
Holdings is a private company with limited liability incorporated
under the laws of The Netherlands and Europe is a private company
with limited liability incorporated under the laws of Belgium.
Each of Europe and Holdings has full corporate power and is
entitled to own or lease its assets and properties and to carry
on its business as and in the places where its business is
conducted and its assets and properties are owned or leased.
Each of CK Witco, Colors, Holdings and Europe is authorized,
licensed or qualified in those jurisdictions identified in the CK
Witco Disclosure Memorandum and is not otherwise required to be
authorized, licensed, qualified or domesticated as a foreign
Person in any other jurisdiction. CK Witco has delivered to
Yorkshire true, correct and complete copies of the Certificate of
Incorporation and Bylaws or equivalent organizational documents
and agreements of each of Holdings and Europe, as amended to
date. CK Witco has delivered to Yorkshire the minute book and
statutory records of Holdings and Europe, which in each instance
contains all records of meetings and actions taken by its
respective shareholders and directors, to the extent required by
applicable law, and shows all corporate actions taken by its
respective shareholders and board of directors (and any
committees thereof). Europe's authorized, issued and outstanding
capital is as described in the CK Witco Disclosure Memorandum and
is wholly-owned by those Persons identified in the CK Witco
Disclosure Memorandum. No Person has any option or right to
acquire any of the equity or share capital of Europe. The equity
and share capital of Europe is free and clear of any and all
Liens.
(b) Each CK Witco Entity is identified in the CK
Witco Disclosure Memorandum. Each such CK Witco Entity is an
entity of the type described in the CK Witco Disclosure
Memorandum, in each case having full entity power and authority,
and duly organized, registered and validly existing under the
laws of the jurisdiction of its organization as so identified in
the CK Witco Disclosure Memorandum and is entitled to own or
lease its assets and properties and to carry on its business as
and in the places where its business is conducted and its assets
and properties are owned or leased.
(c) Each Acquired Entity is duly organized,
registered and validly existing under the laws of the
jurisdiction of its organization and has full entity power and is
entitled to own or lease its assets and properties and to carry
on its business as and in the places where its business is
conducted and its assets and properties are owned or leased.
Each Acquired Entity is duly authorized, licensed, qualified or
domesticated as a foreign Person in those jurisdictions outside
of its jurisdiction of organization as listed in the CK Witco
Disclosure Memorandum and is not otherwise required to be
authorized, licensed, qualified or domesticated as a foreign
Person in any other jurisdiction. CK Witco has previously
furnished Yorkshire with true, correct and complete copies of the
organizational documents, as amended to the date hereof, of each
Acquired Entity. CK Witco has delivered to Yorkshire true,
correct and complete copies of the minutes and other similar
records of meetings and actions by the equity holders and
directors (or their equivalent under any applicable Law) of each
Acquired Entity.
(d) The CK Witco Disclosure Memorandum lists: (i)
all locations where Colors, Europe and each Acquired Entity
currently owns or leases real property, has an office or place of
business; (ii) all locations of real or immovable property owned
or leased by any CK Witco Entity, Europe or an Acquired Entity
and used in an Acquired Business by such CK Witco Entity, Europe
or Acquired Entity; and (iii) all trading names under which any
CK Witco Entity, Europe or Acquired Entity or its respective
predecessors has operated, if different from its present legal
name, at any time since December 31, 1995.
(e) The jurisdiction of organization, type of
entity, capitalization and record and beneficial holders of all
share capital of each Acquired Entity is as set forth in the CK
Witco Disclosure Memorandum. No Person has any option or right
to acquire any of the equity or share capital of any Acquired
Entity. The equity and share capital of each Acquired Entity is
free and clear of any and all Liens.
3.2 Subsidiaries. Other than for the Acquired Entities,
neither Colors, Holdings nor Europe, nor any Acquired Entity,
owns, either directly or indirectly, any interest in any Person,
nor does it possess any right, option or commitment to purchase
or otherwise acquire any interest (whether direct or indirect),
in any Person other than for Europe and the Acquired Entities,
and none of CK Witco, any CK Witco Entity, Europe or any Acquired
Entity has any legal responsibility, duty, obligation or
liability in respect of any such Person, nor do any of the
Transferred Assets or the revenues or profits of an Acquired
Business, Colors, Europe or any Acquired Entity stand for any
duty, obligation or liability of any such Person.
3.3 Authority; Inconsistent Obligations.
(a) Each of CK Witco, Colors, Holdings and Europe
has the full right, power and authority to execute and deliver
and to perform and comply with this Agreement and the Additional
Agreements to which any of them is or will be a party. All
proceedings and actions required to be taken by any of CK Witco,
Colors, Europe and Holdings to authorize the execution, delivery
and performance of this Agreement and the Additional Agreements
have been taken. This Agreement and each Additional Agreement to
which any of them is or will be a party, have been, or in the
case of any Additional Agreement will be at the Closing, duly and
validly executed and delivered by each of them, as appropriate,
by its duly authorized officers or representatives. This
Agreement constitutes, and each Additional Agreement when
executed and delivered will constitute, the valid and legally
binding obligation, subject to general equity principles, of each
of CK Witco, Colors, Holdings and Europe, as appropriate,
enforceable in accordance with its respective terms.
(b) Neither the execution and delivery of this
Agreement or of the Additional Agreements by CK Witco, Colors,
Holdings or Europe, nor the consummation of the transactions
contemplated by this Agreement or by any Additional Agreement,
will (i) result in a violation of the Certificate or Articles of
Incorporation and By-Laws or other organizational or foundation
documents of any of them or any CK Witco Entity or Acquired Entity,
(ii) violate any Law or Order applicable to any of CK Witco,
Colors, Europe, the other CK Witco Entities (as it relates to the
Acquired Business) or any Acquired Entity, or (iii) result in a
breach of, conflict with or default under, any term or provision of
any material indenture, note, mortgage, bond, security agreement,
loan agreement, guaranty, pledge, or other instrument, contract,
agreement or commitment to which any of CK Witco, Colors, Europe,
Holdings, any CK Witco Entity (as it relates to the Acquired
Business) or any Acquired Entity is or will be upon consummation of
the transactions contemplated by this Agreement be a party or by
which any of them or any of their respective assets, properties, or
businesses is subject or bound; nor will these actions result in
(x) the creation of any Lien on any of the Transferred Assets or
the share capital, assets, properties, businesses, revenues or
profits of Europe or any Acquired Entity, (y) the acceleration or
creation of any obligation of Colors, Europe, Holdings or any
Acquired Entity, or (z) the forfeiture of any material right or
privilege of an Acquired Business, Colors, Europe or any Acquired
Entity that may affect its ability to perform under this Agreement
or any Additional Agreement or to carry on its business.
3.4 No Violation; Compliance with Laws. None of CK
Witco, Colors, Holdings, Europe or any Acquired Entity is in
default under or in violation of (a) its Certificate or Articles
of Incorporation or By-Laws, or other organizational and
foundation documents, as appropriate, or (b) any Order, and the
operations of each Acquired Business and CK Witco, Colors,
Holdings, Europe and each Acquired Entity have since December 31,
1995, been conducted, in all material respects, in accordance
with, and are in compliance in all material respects with, all
applicable Laws. Since December 31, 1995, none of Colors (in
respect of an Acquired Business), Europe, Holdings or any
Acquired Entity has received any written notification of any
asserted present or past failure by any of them to comply with
any Order or Laws.
3.5 Consents. The execution and delivery by CK Witco,
Colors, Holdings and Europe of this Agreement and the Additional
Agreements to which any of them is to be a party on the Closing
Date, the consummation of the transactions contemplated in this
Agreement or the Additional Agreements, the conduct of the
Acquired Businesses on and after the Effective Date and Time, and
the performance by CK Witco, Colors, Europe, Holdings, the other
CK Witco Entities or any Acquired Entity of its obligations under
or pursuant to this Agreement or any Additional Agreement, as
appropriate, do not (a) require the consent or approval of, or any
filing with or notice to, any Government or other Person, other
than for the HSR Filing, (b) require the consent or approval of CK
Witco's shareholders, or (c) impose any other material term,
condition or restriction on the Acquired Businesses, the
Transferred Assets, Colors, Holdings, Europe, the other CK Witco
Entities or any Acquired Entity pursuant to any Order or Law.
3.6 Possession of Licenses, Etc. Colors, Europe and
each Acquired Entity possesses all material certificates,
licenses, permits and other authorizations from Governments
(collectively, the "Permits") that are necessary for the
ownership, maintenance and operation of the Transferred Assets
and the Acquired Businesses, and none of CK Witco, Colors,
Holdings, Europe, the other CK Witco Entities or any Acquired
Entity is or has been since December 31, 1995, in violation of
any such Permits. All Permits held by each of Colors, Europe,
the other CK Witco Entities or any Acquired Entity in connection
with the Acquired Businesses, are in full force and effect, and
neither the validity nor continuance of which will be adversely
affected by the consummation of the transactions contemplated by
this Agreement.
3.7 Sufficiency of Assets.
(a) The assets of each Acquired Entity and Europe,
and assets the benefit of which is conferred upon the Acquired
Entities or Europe pursuant to an Additional Agreement,
constitute to the knowledge of CK Witco and Holdings and except
for the services of any current employees of any of the CK Witco
Entities, the Acquired Entities or Europe, the assets necessary
to operate the Acquired Businesses outside the Americas IPD
Business Territory substantially in the manner presently operated
by the CK Witco Entities, the Acquired Entities and Europe as of
the Closing Date.
(b) The Transferred Assets constitute, to the
knowledge of CK Witco or Holdings and except for (i) services of
any current employees of the CK Witco Entities or Colors
necessary to operate the U.S. Asset Acquired Businesses and (ii)
any assets the benefit of which may be conferred pursuant to an
Additional Agreement, the assets necessary to operate the U.S.
Asset Acquired Businesses substantially in the manner presently
operated by the CK Witco Entities as of the Closing Date.
3.8 Grants and Allowances. Since December 31, 1995,
there have been no grants, allowances, subsidies or other like
sums paid or pledged to Europe or any Acquired Entity by any
supranational, national or local authority or government agency.
3.9 Year 2000 Compliance.
(a) All of the equipment, Software and computer
hardware, owned or used by a CK Witco Entity, Europe or an
Acquired Entity or to the knowledge of CK Witco or Holdings, used
and operated by third parties on behalf of a CK Witco Entity,
Europe or an Acquired Entity, which performs or is or may be
required to perform functions involving dates or the computation
of dates, or containing date related data, has the programming,
design and performance capabilities to ensure that: it will not
suffer any material Malfunction; and it will not, as a result of
the date change at the end of the twentieth century or the input,
processing, storage or use of dates up to and including December
31, 2000, (i) be adversely affected, (ii) require changes in
inputting or operating practices, (iii) produce materially
invalid or incorrect output or results, (iv) cause any materially
abnormal ending scenario, or (v) suffer any material diminution
in functionality or performance.
(b) All of the equipment, Software and computer
hardware, owned or used by a CK Witco Entity, Europe or an
Acquired Entity or, to the knowledge of CK Witco or Holdings,
used and operated by third parties on behalf of a CK Witco Entity
(as it relates to the Acquired Business), Europe or an Acquired
Entity, includes an indication of century in all date related
user interfaces and data interfaces.
(c) All date related data stored electronically by
or on behalf of a CK Witco Entity (as it relates to the Acquired
Business), Europe or an Acquired Entity is in such form that its
input, processing, storage or use by or on behalf of a CK Witco
Entity, Europe or an Acquired Entity will not, directly or
indirectly, cause any material Malfunction in any of the
equipment, Software or computer hardware.
(d) Attached to the CK Witco Disclosure Memorandum
are true, correct and complete copies of all Year 2000 readiness
and remediation plans related to an Acquired Business.
3.10 Financial Statements. Prior to the date of this
Agreement, CK Witco has delivered to Yorkshire copies of the
Special Purpose Statements of the Acquired Businesses as of and
for the periods ended December 28, 1996, December 27, 1997,
December 26, 1998, and June 26, 1999, together with the report
thereon of KPMG LLP, including a Special Purpose Combined
Statements of Net Assets, Special Purpose Combined Statements of
Revenues and Expenses and Comprehensive Income (Loss), and
Special Purpose Combined Statements of Cash Flows (collectively,
the "Special Purpose Statements"), all of which are attached to
this Agreement as Exhibit EE. The Special Purpose Statements
have been prepared from the books and records of the Acquired
Businesses and have been prepared in accordance with GAAP
consistently applied and present fairly the financial condition
of the Acquired Businesses as at the respective dates of the
Special Purpose Statements and the revenues, expenses and
comprehensive income (loss), net assets and cash flows for the
respective periods then ended.
3.11 Euro-Affected Products and Services. To the extent
that CK Witco's software, hardware, systems, products and
services receive, recognize, use or process financial information
from any one of the Participating Member States planning to
change their currencies to the Euro (collectively, the "Euro-
Affected Products and Services"), and to the knowledge of CK
Witco or Holdings, all of CK Witco's Euro-Affected Products and
Services included within the Transferred Assets or relating to
any other CK Witco Entity, Europe or an Acquired Entity will (i)
operate without material errors, problems, delays or the need for
any further modifications as a result of the introduction of the
Euro in whole or in part as a European currency or currency unit
and (ii) continue to receive, recognize, use and process both
national currency units and Euro units (and permit conversions
from national currency units to Euro units and vice-versa)
without errors, problems, delays or the need for any further
modifications before, during and after the period beginning
January 1, 1999.
3.12 Liabilities. Neither Europe nor any Acquired
Entity has any debt, borrowings, Liability or obligation of any
kind, whether accrued, absolute, contingent or otherwise, except
the European Retained Liabilities.
3.13 Title to Properties. All of the Transferred Assets
and the assets and properties of Europe and each Acquired Entity,
whether personal or movable or immovable or real, tangible or
intangible, are owned exclusively by the relevant CK Witco
Entity, Europe or an Acquired Entity (including the land at
Oissel, France shown hatched on Exhibit FF attached to this
Agreement) free and clear of any and all Liens.
3.14 Receivables. The reserve with respect to
Receivables set forth in the relevant Special Purpose Statement
is adequate in accordance with GAAP consistently applied. All of
the Receivables were, are and will be, valid and, to the
knowledge of CK Witco or Holdings, collectible obligations of the
respective makers or the relevant account debtors and were not,
and are not, subject to any offset, counterclaim or recoupment,
except to the extent reflected in the customer claim account as
shown on the relevant Special Purpose Statement.
3.15 Inventories. Subject to any applicable reserve set
forth in the relevant Special Purpose Statement and to the
knowledge of CK Witco or Holdings, the Inventories less than two
(2) years old are saleable and useable in the ordinary and
regular course of the Acquired Businesses. The Inventories
reflected on the relevant Special Purpose Statement have been
valued at the lower of cost and net realizable value.
3.16 Movable Property
(a) All of the machinery, equipment, vehicles, and other
items of movable or personal property which are included within
the Transferred Assets or owned or leased by Europe or any
Acquired Entity are in good condition and repair in all material
respects, subject to normal wear and tear, suited for the use
intended, and are and have been operated in all material respects
in conformity with all applicable insurance requirements,
manufacturer's operating manuals, manufacturer's warranties, and
applicable Orders and Laws. CK Witco has previously delivered to
Yorkshire the Fixed Assets Registers, which together constitute a
true, correct and substantially complete list of all movable
property owned by Europe or any Acquired Entity or included
within the Transferred Assets. To the best of CK Witco's or
Holdings' knowledge, there are no defects or conditions which
would cause the movable property to be or become inoperable or
unsafe.
(b) To the best of CK Witco's or Holdings' knowledge,
all lessors of any machinery, equipment or other movable property
included with the Transferred Assets or leased by Europe or an
Acquired Entity have in all material respects performed and
satisfied their respective duties and obligations under the
leases, and neither Europe nor any Acquired Entity has brought or
threatened any Action against any relevant lessor for failure to
perform and satisfy its duties and obligations under the relevant
lease.
3.17 Immovable Property.
(a) Neither Europe nor any Acquired Entity owns
any real or immovable property except as listed in the CK Witco
Disclosure Memorandum. The relevant CK Witco Entity is lawfully
occupying and using the Leased Real Property. Europe and each
Acquired Entity is lawfully occupying and using each parcel of
real or immovable property used in its business (each such parcel
of real or immovable property together with the Leased Real
Property being sometimes referred to herein as the "Immovable
Property").
(b) All material agreements with respect to leases,
easements, rights of way, licenses or other interests in
Immovable Property granted to Colors, Europe or any Acquired
Entity or included among the Transferred Assets (collectively,
the "Property Leases") are listed in the CK Witco Disclosure
Memorandum. Each of the Property Leases is freely assignable.
The interest of Colors, Europe and each Acquired Entity, as
applicable, in and under each of the Property Leases is free and
clear of any material defects, claims or Liens and subject to no
present Action or threatened Action.
(c) There is lawfully available to all the Immovable
Property and the Land and Improvements, through private easements
and facilities or properly dedicated public easements and
facilities, all of the water, gas, sewer, electricity and
telephone services which are now being utilized and sufficient to
allow Europe, the CK Witco Entities and the Acquired Entities, as
applicable, to continue to conduct the Acquired Businesses as
presently conducted by them. All of the Immovable Property and
Land has reasonably suitable ingress and egress and each parcel
of Immovable Property and Land has reasonably suitable access to
the existing paved roads and other public rights of way, which
access is not limited or restricted, except as provided in the
Property Leases.
(d) The present use, occupancy and operation of the
Immovable Property, and all aspects of the improvements on and to
the Immovable Property, and the Land and Improvements, are in
compliance in all material respects with all Laws and with all
private restrictive covenants of record, and neither CK Witco nor
Holdings has any knowledge of any proposed change to the
applicable Laws or the private restrictive covenants of record
that would affect any of the Immovable Property or Land, or its
use, occupancy or operation. There exist no conflicts or
disputes with any Government or Person relating to any Immovable
Property or Land or the activities on the Immovable Property or
Land. All Improvements are in good condition and repair,
ordinary wear and tear excepted, suited for the operation of the
Acquired Businesses, as applicable.
3.18 Environmental Matters.
(a) In respect of environmental matters:
(i) The Acquired Businesses comply and have since
December 31, 1995 complied in all material respects with all
applicable Environmental Laws and the conditions of all
Environmental Licenses.
(ii) All Environmental Licences necessary for the operation
of the Acquired Businesses are in full force and effect and there
are no circumstances entitling any such Environmental Licences to
be revoked, suspended, amended, varied, or withdrawn.
(b) In respect of the Oissel Facility:
(i) The purchase price paid under the ICI Agreement was
US$26,000,000.
(ii) The total value of all claims made by any of Holdings,
Europe, or any Acquired Entity under the ICI Agreement as at
today's date is no more than US$250,000.
(iii) To the best of CK Witco's and Holdings' knowledge and
belief, no act, omission, operation or transaction of any CK
Witco Entity, Holdings, Europe or any Acquired Entity, or any of
their respective Affiliates, has affected or compromised the
ability of Europe to make a claim under the ICI Agreement. The
representation and warranty set out in this Paragraph
3.18(b)(iii) shall be of no further force and effect after the
fifth anniversary of the Effective Date and Time.
3.19 Intellectual Property Rights.
(a) A CK Witco Entity, Europe or an Acquired
Entity, as applicable, owns the entire right, title and interest
in and to the following, whether or not registered (all of the
following collectively, the "Proprietary Rights") and such
Proprietary Rights are in full force and effect and not subject
to any application for cancellation or amendment or to the best
of any CK Witco Entity's or Holdings' knowledge not subject to a
license of right or compulsory license: (i) all patents, patent
applications and registrations, trademarks, trademark
applications and registrations, copyright applications and
registrations, trade names and industrial designs, service marks
and service xxxx applications, used by any CK Witco Entity,
Europe or an Acquired Entity in the operation of an Acquired
Business including those to be licensed to Yorkshire and its
Affiliates pursuant to an Additional Agreement, (ii) all trade
secrets, know-how, inventions and other Intellectual Property
Rights owned or used by Europe, a CK Witco Entity or an Acquired
Entity in the operation of an Acquired Business including those
to be licensed to Yorkshire and its Affiliates pursuant to an
Additional Agreement, and (iii) all computer systems and
application software, including all documentation relating to the
computer systems and application software, and the latest
revisions of all related object and source codes therefor, used
by Europe, a CK Witco Entity or an Acquired Entity in the
operation of an Acquired Business. A CK Witco Entity, Europe or
an Acquired Entity, as applicable, owns the entire right, title
and interest in and to all of the Proprietary Rights, free and
clear of any and all Liens and none of them has granted any
license to any third party with relation to any of the
Proprietary Rights. The CK Witco Disclosure Memorandum sets
forth a list of (y) all patents, patent applications and
registrations, trademarks, trademark applications and
registrations, copyright applications and registrations, trade
names and industrial designs and service marks and service xxxx
applications owned or used by Europe, any CK Witco Entity or
Acquired Entity in the operation of an Acquired Business, and (z)
all material computer systems and application software, used by
Europe, a CK Witco Entity or an Acquired Entity in the operation
of an Acquired Business. All of the Proprietary Rights are
included among the Transferred Assets or are licensed to
Yorkshire or its Affiliates pursuant to the relevant Additional
Agreement, (iv) no CK Witco Entity, Europe or Acquired Entity has
granted or is obliged to grant any licenses under any Proprietary
Rights owned by it or licensed to it or furnish know-how to any
person, (v) no CK Witco Entity, Europe or Acquired Entity has
been granted any license or right under or in respect of any
Intellectual Property Rights of a third party and has not
manufactured, sold, supplied or developed anything which is the
subject of any such Intellectual Property Rights, whether
presently existing or (to the knowledge of any CK Witco Entity or
Holdings) applied for and by carrying on the Acquired Businesses
in the ordinary course no CK Witco Entity, Europe or Acquired
Entity is or will become liable to pay any royalty or like fee,
(vi) to the best of each of the CK Witco Entities' or Holdings'
knowledge no act, omission or event has occurred which would
entitle any authority or person to cancel, forfeit or modify any
Proprietary Rights and so far as each CK Witco Entity and
Holdings is aware the Proprietary Rights are valid, (vii) to the
best of each of the CK Witco Entities' or Holdings' knowledge
there exists no actual or threatened infringement (including
misuse of confidential information) or any event likely to
constitute an infringement or breach by any third party of any of
the Proprietary Rights, (viii) all application, renewal and other
official statutory and regulatory fees rendered to and received
by any CK Witco Entity, Europe or Acquired Entity prior to the
date hereof relating to the administration and maintenance of the
Proprietary Rights or for the protection or enforcement thereof
have been duly paid and all commercially reasonable steps have
been taken for their maintenance and protection, (ix) all
inventions made by any employees of any of the CK Witco Entities,
Europe and Acquired Entities and used or enjoyed by the CK Witco
Entities, Europe or Acquired Entities were made in the course of
the normal duties of the employee concerned and no claim for
compensation under section 40 Patents Act 1977 (United Kingdom)
or similar law under any other jurisdiction or otherwise has been
made against any of the CK Witco Entities, Europe or Acquired
Entities nor to the best of the knowledge, information and belief
of each of the CK Witco Entities or Holdings is any such claim
likely to be made, or (x) CK Witco has the right to grant the
licenses set out in the Trade Xxxx License Agreement and the
Patent and Technology License Agreement and neither the granting
of the same nor use or exploitation of the licensed rights by
Yorkshire and its Affiliates (or its sub-licensees) shall
infringe the Intellectual Property Rights of any third party.
(b) There is no existing or, to the best knowledge
of CK Witco or Holdings, threatened, challenge to the use by
Europe, any CK Witco Entity or any Acquired Entity in connection
with an Acquired Business of any of the Proprietary Rights, and,
to the best knowledge of CK Witco or Holdings, the use of the
Proprietary Rights and the Intellectual Property Rights relating
to the Acquired Businesses does not infringe on the rights of any
third party. Except as and to the extent reflected in the
Special Purpose Statements, no royalty or other fee is required
to be paid by Europe, any CK Witco Entity or any Acquired Entity
to any Person in respect of the use of any of the Proprietary
Rights.
(c) No CK Witco Entity, any Acquired Entity or
Europe has received any notice, complaint, threat or claim
alleging infringement of, any patent, trademark, trade name,
copyright, industrial design, trade secret or any other
intellectual property or proprietary right of any Person. To the
best knowledge of CK Witco or Holdings, the conduct of each
Acquired Business and the use of the Proprietary Rights do not
infringe on any patent, trademark, trade name, copyright,
industrial design, trade secret or any other Intellectual
Property Right or Proprietary Right of any Person.
(d) To the best knowledge of CK Witco or Holdings,
there are no rights of third parties with respect to any patent,
patent application, invention, copyrights, trademark, service
xxxx, trade secret, trade name, device or other Intellectual
Property Rights which would have an adverse effect on the
operations or prospects of either Acquired Business, the
Transferred Assets, Europe or any Acquired Entity.
3.20 Contracts. The CK Witco Disclosure Memorandum
contains a true, correct and complete list of all Contracts and
Assigned Contracts. CK Witco has, prior to the date of this
Agreement, delivered to Yorkshire a true, correct and complete
copy of each Assigned Contract and each material written and each
material oral agreement, commitment and arrangement to which
Europe or any Acquired Entity is a party or under which Europe or
any Acquired Entity has any rights or obligations (collectively,
the "Contracts") or, in the case of an oral Contract, provided a
true and correct summary. None of the Assigned Contracts or
Contracts, individually or together, constitute an unlawful
restraint of trade under any applicable Law. All obligations to
be performed by any CK Witco Entity (relating to an Acquired
Business), Europe or any Acquired Entity as of the date of this
Agreement under any Assigned Contract or any Contract to which
any of them is a party have been performed in all material
respects in accordance with their terms and no claim exists in
respect of the Assigned Contracts or the Contracts. Neither any
CK Witco Entity, Europe nor any Acquired Entity is a party to any
agreement or commitment relating to an Acquired Business which
was likely to, at the time it was entered into, result in a loss
upon completion of performance. All of the Assigned Contracts
and the Contracts are valid, binding and enforceable in
accordance with their terms, and are in full force and effect,
subject to the effects of bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights
generally and to general equitable principles; no event has
occurred which would constitute a material default (whether with
or without notice, lapse of time or the happening or occurrence
of any event) under any Assigned Contract or any Contract; all
parties to any Assigned Contract or any Contract have consented
(where any relevant consent is necessary) to the consummation of
the transactions contemplated by this Agreement without requiring
modification in the rights or obligations thereunder; and
consummation of the transactions contemplated by this Agreement,
to the knowledge of CK Witco or Holdings, will not result in any
other party thereto having the right to terminate any such
Assigned Contract or Contract or to accelerate performance
thereunder.
3.21 Insurance. Europe and the Acquired Entities are
the sole owners of their insurance policies, which policies
insure their assets, properties and businesses against the types
of risks and in the amounts as are prudent and customary in the
geographies in which they conduct their respective businesses,
and all relevant policies are in full force and effect. All
premiums due on any relevant policies have been paid, and no CK
Witco Entity or Acquired Entity has received any notice of
cancellation or non-renewal with respect to any insurance policy.
There is no material Liability for premiums or retrospective
premium adjustments for any period prior to the date of this
Agreement in respect of any such insurance policies.
3.22 Litigation; Contingencies. There are no Actions
existing or, to the knowledge of CK Witco or Holdings, threatened
against, by or affecting the Transferred Assets, any CK Witco
Entity (insofar as relates to an Acquired Business), Europe or
any Acquired Entity or any of its property, business, revenues or
assets, in any Forum. No CK Witco Entity (insofar as relates to
an Acquired Business), Europe or any Acquired Entity has been
charged with, or is under investigation with respect to, any
charge concerning any violation of any provision of any Law.
3.23 Taxes. Each U.S. Asset Acquired Business has filed
all Tax Returns that it was required to file, and has paid all
Taxes shown thereon as owing, except where the failure to file
Tax Returns or to pay Taxes would not have a material adverse
effect on the financial condition of the U.S. Asset Acquired
Businesses taken as a whole or would result in a Lien on any of
the Transferred Assets. There have been no material United
States Governmental Tax audits or examinations conducted on, nor
are any material tax audits presently being conducted with
respect to, any U.S. Asset Acquired Business at any time during
the 5-year period immediately preceding the date of this
Agreement. There are no currently effective waivers of the
applicable statutory period of limitation for any Taxes for any
taxable period. No U.S. Asset Acquired Business is a party to
any Tax sharing or Tax allocation agreement, understanding,
arrangement or commitment. Representations relating to taxes of
other than the U.S Asset Acquired Businesses (which are dealt
with exclusively in this Paragraph 3.23) are exclusively as set
out in the Taxation Schedule.
3.24 Employment and Labor Matters.
(a) In respect of U.S. Employees: Except as set
forth in the CK Witco Disclosure Memorandum, Colors is not a
party to any collective bargaining agreement or agreement of any
kind with any union or labor organization, and no union or other
collective bargaining unit has been certified or recognized by
Colors as representing any employee, nor, to the knowledge of CK
Witco or Holdings, is a union or other collective bargaining unit
seeking recognition for such purpose. There are no controversies
pending, or to the knowledge of CK Witco or Holdings' threatened,
between Colors and any labor union or collective bargaining unit
representing, or seeking to represent, any of its employees.
There has been no attempt by any union or other labor
organization to organize any of Color's employees at any time in
the past five years. Colors has complied with all applicable
Laws relating to wages, hours, health and safety, payment of
social security, withholding and other taxes, maintenance of
worker's compensation insurance, labor and employment relations,
and employment discrimination, including the Americans with
Disabilities Act.
(b) In respect of non-U.S. based employees:
(i) The names of the employees of Europe and each
Acquired Entity on the date immediately preceding the date of
this Agreement earning a basic rate of pay of US$50,000 (or its
reasonable equivalent in any other currency) per annum or more
are set out in the list annexed to the CK Witco Disclosure
Memorandum ("European/Asian Employees").
(ii) On the day immediately preceding the date of this
Agreement, no European/Asian Employee has given, or has been
given notice of termination of his employment.
(iii) The principal terms of employment of each
European/Asian Employee are annexed to the CK Witco Disclosure
Memorandum. The rate of each such European/Asian Employee's
emoluments as at April 1999 is stated in that annex and since
that date no change has been made, promised or indicated in the
rate of such emoluments.
(iv) Each of Europe and each Acquired Entity maintain
accurate records in respect of all European/Asian Employees which
comply in all material respects with the legal requirements of
the jurisdiction in which such Employees work.
(v) Within a period of one year preceding the date of this
Agreement, none of Europe or any Acquired Entity has:
(A) made any redundancies; or
(B) been a party to any transfer which has triggered transfer
of undertaking obligations under relevant legislation and none of
Europe or any Acquired Entity has failed to any material extent
to inform and consult any independent trade union and/or Works
council.
(vi) On the date immediately preceding the date of this
Agreement, there is no existing, material dispute between any of
Europe or any Acquired Entity and any material number or category
of its employees, or any trade union or employee representative
body or other organization formed for a similar purpose and there
are no circumstances (other than Closing) which are likely to
give rise to any such dispute.
3.25 Compliance with ERISA, etc.
(a) The CK Witco Disclosure Memorandum lists all
plans, programs, and similar arrangements, commitments or
agreements maintained by or on behalf of CK Witco, any CK Witco
Entity or any other party that provides benefits or compensation
to, or for the benefit of, current or former employees of an U.S
Asset Acquired Business, including, but not limited to, pension,
retirement, deferred compensation, stock option, stock purchase,
stock ownership, savings, stock appreciation right, profit sharing,
group insurance, severance, and other benefit plans, contracts and
agreements (collectively, the "Employee Benefit Plans"). With
respect to each Employee Benefit Plan, to the extent applicable, CK
Witco has supplied Yorkshire a true and correct copy of (i) the
plan document, including amendments thereto, (ii) the annual report
on the applicable Form 5500 series filed with the IRS for the most
recent three plan years, (iii) each trust agreement, insurance
contract or other funding arrangement relating to such Employee
Benefit Plan, including amendments thereto, (iv) the most recent
Summary Plan Description and material employee communications for
such Employee Benefit Plan, (v) the most recent actuarial report or
valuation, and (vi) the most recent IRS determination letter.
(b) Each of the Employee Benefit Plans (i) is in
substantial compliance with all applicable provisions of ERISA, the
Code, and all other applicable laws, (ii) has been administered,
operated and managed in accordance with its governing documents,
and (iii) has timely filed or distributed all reports and other
documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including annual
reports, summary annual reports (Form 5500s), summary plan
descriptions, actuarial reports, PBGC-1 Forms, or returns).
(c) All Employee Benefit Plans that are intended to
be qualified under Section 401(a) of the Code are so qualified and
have received a favorable determination letter from the IRS, and
neither CK Witco nor Holdings is aware of any circumstances likely
to result in the revocation of any such favorable determination
letter.
(d) Neither CK Witco nor any CK Witco Entity
maintains, or within the past 6 years has maintained, for the
benefit of current or former employees of the Acquired Businesses,
a "defined benefit plan" subject to Title IV of ERISA. To the
extent CK Witco or any CK Witco Entity maintains a defined benefit
plan for the benefit of current or former employees of CK Witco
other than those employed in the Acquired Businesses: (i) the fair
market value of the assets of each such defined benefit plan
exceeds the present value of the "benefits liabilities" (as defined
in Section 4001(a)(16) of ERISA) under such plan as of the end of
the most recent plan year, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such
plan; (ii) neither CK Witco nor any CK Witco Entity has incurred,
or reasonably expects to incur within the 12 month period following
the Effective Date and Time, liability to the Pension Benefit
Guaranty Corporation or otherwise with respect to any such defined
benefit plan; and (iii) neither CK Witco nor any CK Witco Entity
anticipates terminating any such defined benefit plan within the 12
month period following the Effective Date and Time.
(e) With respect to each Employee Benefit Plan,
neither such plan, or any trustee, administrator, fiduciary, agent
or employee thereof, nor CK Witco or any CK Witco Entity has
engaged in any "prohibited transaction" (as defined in Section 406
of ERISA or Section 4975 of the Code). With respect to any
Employee Benefit Plan, no act, omission or transaction has occurred
which would result in the imposition of (i) breach of fiduciary
duty liability damages under Section 409 of ERISA, (ii) a civil
penalty assessed pursuant to subsection (c), (i) or (l) of Section
502 of ERISA, or (iii) any excise tax under applicable provisions
of the Code. With respect to each Employee Benefit Plan (i) all
minimum funding standards required by law with respect to funding
of benefits payable or to be payable under such plan have been met;
(ii) there is no accumulated funding deficiency, as defined in
Section 412(a) of the Code and Section 302(a) of ERISA; and (iii)
there have been no terminations, partial terminations, or
discontinuances of contributions without a determination by the IRS
that such action does not adversely affect the tax-qualified status
of that plan.
(f) With respect to Employee Benefit Plans qualifying
as "group health plans" under Section 4980B of the Code or Section
607(l) or 609 of ERISA and related regulations (relating to the
benefit continuation rights imposed by "COBRA" or qualified medical
child support orders), CK Witco and each CK Witco Entity has
complied in all material respects with all reporting, disclosure,
notice, election and other benefit continuation and coverage
requirements imposed thereunder as and when applicable to those
plans, and has not incurred any direct or indirect liability or is
not subject to any loss, assessment, excise tax penalty, loss of
federal income tax deduction or other sanction, arising on account
of or in respect of any direct or indirect failure at any time to
comply with any such federal or state benefit continuation of
coverage requirement.
(g) CK Witco has made, and as of the Effective Date
and Time will have made or accrued, all payments and contributions
required, or reasonably expected to be required, to be made under
the provisions of each Employee Benefit Plan, or required to be
made under applicable laws, rules and regulations, with respect to
any period prior to the Effective Date and Time, such amounts to be
determined using the ongoing actuarial and funding assumptions of
such plan. CK Witco's financial statements reflect the approximate
total pension, medical and other benefit liability for all Employee
Benefit Plans, and no material funding changes or irregularities
are reflected thereon which would cause such statements to be not
representative of prior periods.
(h) Neither CK Witco nor any other entity considered
to be one employer with CK Witco under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate") is, or at any time
during the six-year period ended on the date hereof was, obligated
to contribute to a multiemployer plan, as defined in Section 3(37)
of ERISA.
(i) No litigation or claims (other than routine
claims for benefits) are pending or, to the knowledge of CK Witco
or Holdings, threatened against, or with respect to, any of the
Employee Benefit Plans or with respect to any fiduciary,
administrator, sponsor (in their capacities as such), or any party-
in-interest thereof.
(j) CK Witco has the right to amend, modify, or
terminate any Employee Benefit Plan without incurring any liability
thereunder, except as to any benefits accrued prior to such
amendment, modification, or termination. CK Witco does not have
any obligations for post-retirement or post-employment benefits
under any employee benefit plan that cannot be amended or
terminated upon sixty (60) days advance notice, except as required
by Section 601 of ERISA and Section 4980(b) of the Code. Prior to
the Effective Date and Time, CK Witco agrees not to amend or modify
any Employee Benefit Plan or take any other action which results in
an increase in liability under such Employee Benefit Plan . To the
extent Yorkshire adopts or continues any Employee Benefit Plan,
nothing contained in this Agreement limits or restricts Yorkshire's
right to amend, modify, or terminate any of such plans in such
manner as Yorkshire deems appropriate.
(k) Except as specifically identified in the CK Witco
Disclosure Memorandum, the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will
not result in any payment or series of payments by the Acquired
Businesses to any person which is an "excess parachute payment" (as
defined in Section 280G of the Code), increase or secure (by way of
a trust or other vehicle) any benefits payable under any Employee
Benefit Plan, or accelerate time of payment or vesting of any such
benefit.
3.26 Other Benefits Plans. (a) For the purpose of this
Paragraph 3.26 "Disclosed Schemes" means:
(i) In the UK: Uniroyal Chemical Limited Group Personal
Pension Plan provided through Scottish Widows Company personal
pension builder plan (the "UK Scheme");
(ii) In the Netherlands, a pension assurance agreement dated
1st January 1977 between Althouse Tertre B.V. and Belgische
Maatschappij van Algemene Verzekeringen "Level" N.V. and attached
rules (pensioenreglement).
(iii) In Belgium: Contrat d Assurances Groupe no 4,997 and
5,138 with A.G. de 1824 and its addenda including:
(A) plan Soins de Sante (4997);
(B) plan Pension Salary Invest for workers signed on 25.6.98;
(C) plan Vie et deces signed on 31.5.95 (officers and
employees).
and Group Personnel Accident Insurance with AXA ending on 31.12.99.
(iv) In France: Mandatory pension plans provided by AGIRC
and ARRCO; nonmandatory pension plans provided through CMAV, AXIVA
and IREC; and a defined benefit scheme known as SAD 4000 and the
collective bargaining agreement applicable to chemical industries
(Convention Collective des Industries Chimiques du 30 Decembre 1952
modifee brochure JO: 3108).
(v) In Luxembourg: La Convention d Assurance de Groupe No.
5127/01 and Plan de Pension Extra-Legale Societe Crompton and
Xxxxxxx Luxembourg.
(b) Except for the Disclosed Schemes there is not,
and has not in the past been, in operation any agreement (and no
proposal has been announced to enter into or establish any
agreement) for the provision of pension or lump sum benefits
payable to an employee on or in connection with his reaching
retirement age, or earlier, or on his death, or sickness or
disability benefits for any person employed (or previously
employed) by any of Europe or any of the Acquired Entities. None
of Europe or any of the Acquired Entities have contributed and are
not under any obligation to contribute to any such agreement either
now or in the future and have not given any assurance about the
continuance of any of the Disclosed Schemes.
(c) All material details relating to the Disclosed
Schemes have been supplied and, in particular, details of the rates
at which each of Europe and the Acquired Entities and the members
contribute to each of the Disclosed Schemes and make payments in
respect of the expenses of administration, and management of the
Disclosed Schemes.
(d) All amounts that have become due to be paid to
the Disclosed Schemes have been paid and no amounts are paid to the
Disclosed Schemes in arrears.
(e) So far as CK Witco or Holdings are aware, the
Disclosed Schemes comply and have always complied with all relevant
tax and other regulatory provisions imposed by any national and
European laws, or collective bargaining agreements or Article 119
of the Treaty of Rome now re-numbered Article 141 by the Treaty of
Amsterdam or any decision of the European Court of Justice.
(f) So far as CK Witco or Holdings are aware, each of
Europe and the Acquired Entities has complied with all and any
requirements of national and European laws and legislation
concerning mandatory social security payments, including making any
such payments within any specified time limits and for the correct
amounts.
(g) All benefits payable under each of the Disclosed
Schemes on the death of a member are fully insured under a policy
effected with an insurance company and all premiums due under that
policy have been paid.
(h) No person has made or threatened any claim or
complaint against any of Europe or any of the Acquired Entities or
against any administrator of the Disclosed Schemes (excluding the
administrator of the UK Scheme) in respect of any matter arising
out of or in connection with the Disclosed Schemes.
(i) All benefits accrued up to the Closing under any
of the Disclosed Schemes (except the collective bargaining
agreement applicable to chemical industries in France) have been
properly funded or provision has been made in the Special Purpose
Statements for the full amount of the benefits due to any Person
accrued up to Closing to be paid under the Disclosed Schemes and CK
Witco or Holdings have not received any advice that the funding of
the Disclosed Schemes is inadequate.
3.27 Absence of Certain Business Practices. To the extent
prohibited by applicable law, none of Europe, the CK Witco Entities
nor any Acquired Entity, or any of their respective officers,
directors, employees, agents or Affiliates, nor any other Person
acting on any of their behalf has, directly or indirectly, within
the past five years given or agreed to give any gift or similar
benefit to any Government employee or other Person who is or may be
in a position to help or hinder an Acquired Business (or to assist
any of them in connection with any actual or proposed transaction)
which might subject any Yorkshire Entity or any of Yorkshire's
Affiliates, or any of Yorkshire's or its Affiliates, directors,
officers, employees or agents, to any damage or penalty in any
civil, criminal or Governmental Action.
3.28 Books and Records. The books, records and accounts
of Europe, the Acquired Entities and the Acquired Businesses (i)
have been maintained in accordance with good business practices on
a basis consistent with prior years, (ii) are stated in reasonable
detail and accurately and fairly reflect the transactions related
to the Acquired Businesses, and (iii) accurately and fairly reflect
the basis for the Special Purpose Statements. CK Witco, Europe and
the Acquired Entities have devised and maintained systems of
internal accounting controls sufficient to provide reasonable
assurances that (y) transactions are executed in accordance with
management's general or specific authorization, and (z)
transactions are recorded as necessary (A) to permit preparation of
financial statements in conformity with GAAP and (B) to maintain
accountability for assets.
3.29 Agreements and Transactions with Related Parties. No
CK Witco Entity (insofar as relates to any Transferred Asset or an
Acquired Business), Europe or any Acquired Entity is, directly or
indirectly, a party to any contract, agreement, or lease with, or
any other arrangement with or commitment to, in each case whether
oral or written, any Related Party. No Related Party, directly or
indirectly, owns or controls any assets or properties which are or
have been used in the Acquired Businesses, and no Related Party,
directly or indirectly, engages in or has any significant interest
in or in connection with any business (x) which is or which within
the last three years has been a material competitor, customer or
supplier of the Acquired Businesses or has done a material amount
of business with the Acquired Businesses, or (y) which as of the
date of this Agreement sells or distributes products or services
which are similar or materially related to the products or services
of the Acquired Businesses. As used in this Agreement, the term
"Related Parties" means, collectively, (a) CK Witco, each CK Witco
Entity, any Person owning, or formerly owning, beneficially or of
record, directly or indirectly, at least five percent (5.0%) of any
of the shares in CK Witco, (b) any director or executive officer of
CK Witco, (c) any Person in which any of the foregoing Persons has,
directly or indirectly, at least a ten percent (10.0%) beneficial
interest in the capital or other type of equity interests of that
Person, or (d) any partnership in which CK Witco is a partner.
3.30 No Agreement in Anticipation of Sale. No CK Witco
Entity, Europe nor any Acquired Entity has, directly or indirectly,
taken any action or actions or entered into any agreements in
anticipation of this Agreement. The consummation of the
transactions contemplated by this Agreement will not entitle any
employee of the Acquired Businesses to severance pay nor will it
accelerate the time of payment, vesting or increase the amount of
any compensation or benefits due to any employee of the Acquired
Businesses.
3.31 Government Reports. CK Witco has prior to the date
of this Agreement delivered or made available to Yorkshire, true,
correct and complete copies of, all Tax returns and all material
reports relating to any Employee Benefit Plan, finance and monetary
transactions, employees and employment conditions, compliance with
or violation of Law, and other matters material to the Acquired
Businesses filed with any Government or issued by any Government to
or in respect of, the Acquired Businesses during the past five
years.
3.32 Banking Relationships. The CK Witco Disclosure
Memorandum sets forth a complete and accurate description of all
material arrangements that Europe or any Acquired Entity has with
any banks or other financial institutions providing for accounts,
safe deposit boxes, borrowing arrangements, and certificates of
deposit or otherwise, indicating in each case account numbers, if
applicable, and the person or persons authorized to act or sign on
behalf of them in respect of any of the foregoing.
3.33 Customers and Suppliers. Neither CK Witco nor
Holdings is aware of (i) any supplier or customer of the Acquired
Businesses which intends to discontinue or substantially diminish
or change its relationship with the Acquired Businesses or the
terms of its relationship with the Acquired Businesses, (ii) any
supplier of the Acquired Businesses which intends to materially
increase prices or charges for goods or services presently
supplied, or (iii) of any material supplier to the Acquired
Businesses which is likely to become unable to continue its
relationship with the Acquired Businesses, or supply the goods or
services which it presently supplies to the Acquired Businesses,
without significant change in the terms and conditions of any
relevant relationship or supply arrangement. Other than in the
ordinary course of business, there are no returns or consignment
sales pending.
3.34 Absence of Changes. Except as expressly provided for
in this Agreement, since June 26, 1999 (the "Reference Date"):
(a) there has been no change in the business, assets,
properties, debts, borrowings, Liabilities, affairs, results of
operations condition (financial or otherwise), or cash flows of the
Acquired Businesses, Europe and the Acquired Entities or in their
respective relationships with suppliers, customers, employees,
lessors or others, other than changes in the ordinary course of
business, none of which have had or will have a material adverse
effect;
(b) there has been no damage, destruction or loss to
any of the Transferred Assets or the assets, properties, or
business of Europe or any Acquired Entity, whether or not covered
by insurance;
(c) the Acquired Businesses have been operated in the
ordinary course and consistent with prior practices;
(d) there has been no declaration, setting aside or
payment of any dividend or other distribution on or in respect of
the capital of Europe or any Acquired Entity, nor has there been
any direct or indirect redemption, retirement, purchase or other
acquisition of any of the capital of Europe or any Acquired Entity;
(e) no debt, borrowing or Liability of Europe or any
Acquired Entity has been discharged or satisfied, other than in the
ordinary course of business and consistent with prior practice;
(f) no Acquired Business has discontinued or
determined to discontinue the sale of any material products or
services previously sold;
(g) there has been no sale, transfer, lease or other
disposition of any material asset or assets of an Acquired
Business, except in the ordinary course of business, and no
material debt to, or claim or right of, an Acquired Business has
been canceled, compromised, waived or released;
(h) no Acquired Business has entered into any
agreement, contract, lease or license outside the ordinary course
of business; and
(i) no Acquired Business has delayed or postponed the
payment of any accounts payable and other debts, borrowings or
Liabilities outside the ordinary course of business, and all notes
and accounts receivable relating to the Acquired Businesses have
been collected in the ordinary course of business.
3.35 Insolvency. (a) In relation to Europe and each
Acquired Entity:
(i) no resolution has been passed (and no meeting has been
convened, and no written resolution has been circulated with a view
to any resolution), no petition has been presented and no order has
been made for administration or winding up or for the appointment
of a receiver or provisional liquidator or any equivalent or
comparable proceeding;
(ii) no procedure has been commenced by any Person, with a
view to striking off under relevant legislation;
(iii) no receiver or equivalent has been appointed, no
encumbrance has been enforced, and no floating charge has
crystallized on or over any of its assets, and no event has
occurred or will occur by virtue of the execution and performance
of this Agreement which would cause, or entitle any person to
cause, any of these things to happen;
(iv) it has not stopped paying its creditors, is not insolvent,
and is not unable to pay its debts for the purposes of relevant
legislation;
(v) no distress, execution or other process has been levied
against any of its assets;
(vi) no meeting of its creditors, or any class of them, has
been held or summoned and no proposal has been made for a
moratorium, composition or arrangement in relation to any of its
debts; and
(vii) no event analogous to any of the above has occurred in
any jurisdiction.
(b) In relation to Holdings;
(i) no resolution has been passed, no petition has been
presented and no order has been made for administration or winding
up or for the appointment of a receiver or provisional liquidator;
(ii) no receiver has been appointed, no encumbrance has been
enforced, no floating charge has crystallized and no distress,
execution or other process has been levied, on or over any of the
stock of Europe; and
(iii) no event analogous to any of the above has occurred in
any jurisdiction.
3.36 Information Warranty.
Copies of all agreements or other binding arrangements
between Europe or any Acquired Entity and either trade unions or
relevant state authorities which relate to or impact on the
following areas have been disclosed to Yorkshire in the Index of
Documents or the Written Responses: (i) employee terms of
employment; (ii) employee working conditions; (iii) redundancies;
(iv) the structure of the workforce within the Acquired Businesses.
For the purposes of this Paragraph 3.36:
"Due Diligence Request" means the due diligence request
dated 6 August 1999 sent by Xxxxxxxxxx Xxxxxxxx LLP to Xxxx X.
Xxxxxxxx XX of CK Witco and attached as Exhibit GG.
"Index of Documents" means the index of documents
denominated as such and attached to the CK Witco Disclosure
memorandum.
"Written Responses" means those responses referred to in
Section L1-5 in the Index of Documents.
3.37 Indebtedness as of 15 October 1999. Exhibit HH is a
complete list of all bank accounts relating to the Acquired
Business as at 15 October 1999 and the balances on such accounts as
at such date were as set out in Exhibit HH. As at such date
neither Europe, nor any Acquired Entity, nor any CK Witco Entity
in relation to the Acquired Businesses had any borrowings, other
than as set out in Exhibit HH or trade creditors arising in the
ordinary course of business.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CK WITCO
RELATING TO THE CONSIDERATION SECURITIES
To induce Yorkshire to enter into this Agreement and to issue
the Consideration Securities as contemplated by this Agreement, CK
Witco, represents and warrants to Yorkshire, and covenants and
agrees, as of the date hereof and again as of the Closing Date, as
follows:
4.1 Investment Intentions. CK Witco (i) will be acquiring
the Consideration Securities solely for its account, for investment
purposes only and with no current intention or plan to distribute,
sell, or otherwise dispose of any of the Consideration Securities;
(ii) is not a party to any agreement or other arrangement for the
disposition of any of the Consideration Securities; (iii) is an
"accredited investor" as defined in Securities Act Rule 501(a)
promulgated pursuant to the United States Securities Act of 1933,
as amended; (iv) (A) is able to bear the economic risks of an
investment in the Consideration Securities, (B) can afford to
sustain a total loss of that investment, (C) has such knowledge and
experience in financial and business matters that CK Witco is
capable of evaluating the merits and risks of the proposed
investment in the Consideration Securities, (D) has had an adequate
opportunity to ask questions and receive answers from the officers
of Yorkshire concerning any and all matters relating to the
transactions contemplated hereby, Yorkshire and the Consideration
Securities, including, the plans for the operations of the business
of Yorkshire, the business, operations, and financial condition of
Yorkshire, and any plans of Yorkshire, and (E) has asked all
questions of the nature described in preceding clause (D), and all
those questions have been answered to CK Witco's satisfaction.
4.2 Standstill; Sale of Consideration Securities. CK
Witco agrees that it shall not at any time prior to the first
anniversary of the Effective Date and Time without the prior
written consent of Yorkshire (i) purchase or acquire, either
directly or indirectly, any equity securities, debt securities, any
other instrument convertible into or exchangeable for equity or
debt securities, or any other instrument, option or right to
acquire any of the equity securities or debt securities of
Yorkshire or (ii) sell, convey, transfer, assign or otherwise
dispose of, or hedge or swap its risk in respect of, the
Consideration Securities. For a period of one (1) year after the
first anniversary of the Effective Date and Time, CK Witco agrees
that it shall dispose of the Consideration Securities only after
consultation with Yorkshire's then retained broker with a view to
ensuring an orderly marketing and liquidation of the Consideration
Securities.
4.3 Listing Particulars. CK Witco hereby acknowledges
that it has had a proper opportunity to consider and to comment on
the pages of the Listing Particulars attached to this Agreement as
Exhibit II and the factual information marked "Reviewed" thereon is
true and accurate in all material respects and not misleading
because of any omission or ambiguity and the activities of CK
Witco, Colors, Holdings, Europe, the Acquired Businesses, and the
Acquired Entities are fairly and accurately described in each such
document. Attached to this Agreement as Exhibit II-1 are the
"Listing Particulars".
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF YORKSHIRE,
AMERICAS
As an inducement to CK Witco, Colors, Holdings and Europe to
enter into this Agreement, and to consummate the transactions
contemplated by this Agreement, subject to the qualifications set
forth in the Yorkshire Disclosure Memorandum, Yorkshire and
Americas, jointly and severally, represent, warrant and covenant,
as of the date hereof and again as of the Closing Date, as follows:
5.1 Organization. Yorkshire: (a) is a public company
limited by shares organized and existing under the laws of England
and Wales and (b) is entitled to own or lease, or will own or
lease, its assets and properties and to carry on its business as
and in places where the business is conducted and the properties
are owned or leased. Americas: (a) is a corporation duly
organized, validly existing and in good standing under the laws of
the State of South Carolina, United States of America and (b) is
entitled to own or lease, or will own or lease, its assets and
properties and to carry on its business as and in places where the
business is conducted and the properties are owned or leased.
5.2 Authorization; No Inconsistent Agreements. Each of
Yorkshire and Americas has full corporate power and authority to
make, execute and perform this Agreement and the Additional
Agreements and the transactions contemplated by this Agreement and
the Additional Agreements. This Agreement has been duly and
validly authorized and approved by all necessary corporate action
on the part of Yorkshire (except for the passing of the
Resolutions) and Americas on or prior to the date of this
Agreement. All transactions required under this Agreement to be
performed by each of Yorkshire and Americas will be duly and
validly authorized and approved by all necessary corporate action
on their part prior to the Closing Date. Subject to satisfaction
of the conditions set forth elsewhere in this Agreement, this
Agreement has been duly and validly executed and delivered on
behalf of each of Yorkshire and Americas by its duly authorized
officers, and this Agreement constitutes the valid and legally
binding obligation of each of them, enforceable, subject to general
equity principles, in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors
generally. Neither the execution and delivery of this Agreement or
any Additional Agreement, nor the consummation of the transactions
contemplated by this Agreement or any Additional Agreement, will
constitute a violation or breach of the memorandum and articles of
association or certificate of incorporation or By-Laws of either of
them.
5.3 Dividends in relation to Consideration Securities.
The Consideration Securities will rank pari passu in all respects
with the Ordinary Shares of Yorkshire in issue at the Effective
Date and Time. With respect to the Consideration Securities,
Holdings hereby irrevocably waives any dividend or other
distribution declared, paid or made in respect of the financial
year of Yorkshire ending on 31st December 1999.
5.4 Financing. Yorkshire has no reason to believe that at
the Effective Date and Time it will not have available all funds
necessary to perform its obligations under this Agreement,
including consummating the transactions contemplated by this
Agreement, on the terms contemplated hereby and the payment of all
fees and expenses relating to such transactions. Yorkshire has
obtained commitments from financial institutions with respect to
obtaining of all such funds as are necessary to pay the Purchase
Price.
5.5 No Violation; Compliance with Laws. None of
Yorkshire nor its controlled subsidiaries is in default under or
in violation of (a) its memorandum and articles of association or
other organizational and foundation documents, as appropriate, or
(b) any Order or Law, and their respective operations have been
conducted, in all material respects, in accordance with, and are
in compliance with, all applicable Laws. None of Yorkshire nor
its controlled subsidiaries has received any notification of any
asserted present or past failure by any of them to comply with
any Order or Laws.
5.6 Consents. The execution and delivery by Yorkshire
and Americas of this Agreement and the Additional Agreements to
which any of them is to be a party on the Closing Date, the
consummation of the transactions contemplated in this Agreement
or the Additional Agreements, and their performance under or
pursuant to this Agreement or any Additional Agreement, as
appropriate, do not require the consent, approval or action of,
or any filing with or notice to, any Government or other Person,
other than for the HSR Filing and the approval of the members of
Yorkshire.
5.7 Financial Statements. The financial statements and
accounts of Yorkshire included within the Listing Particulars
have been prepared from the books and records of Yorkshire and
have been prepared in accordance with United Kingdom GAAP
consistently applied and present fairly the financial condition
of Yorkshire as at their respective dates and the results of
operations, shareholders equity and financial position for the
periods then ended.
5.8 Litigation; Contingencies. There are no Actions
existing or, to the knowledge of Yorkshire, threatened against,
by or affecting Yorkshire or any of its controlled subsidiaries
that if determined adversely to them would have a material
adverse effect on the financial condition of Yorkshire taken as a
whole.
6. CONDUCT OF BUSINESS PENDING CLOSING
CK Witco covenants and agrees that, except as may otherwise
be provided or permitted in this Agreement or set forth in the CK
Witco Disclosure Memorandum, without the prior written consent of
Yorkshire, between the date of this Agreement and the Closing
Date:
6.1 Business in the Ordinary Course. The Acquired
Businesses will be conducted only in the ordinary and usual
course and consistent with prior practices, without the creation
of any indebtedness for borrowed money or the creation or
sufferance of any Lien on any of the Transferred Assets, the
Acquired Businesses, or the share capital of any of Colors,
Holdings, Europe or any Acquired Entity. Without limiting the
generality of the foregoing, CK Witco covenants, agrees and
undertakes, on behalf of itself and on behalf of Colors,
Holdings, Europe, and each Acquired Entity, as follows:
(a) their business shall be carried out in the
ordinary course, in a manner consistent with past practices and
professional usage applicable to such business, including but not
limited to (i) keeping Holdings, Europe, Colors and each Acquired
Entity intact, (ii) using reasonable best efforts to keep
available the services of the present employees of each of them,
and (iii) using best efforts to maintain the goodwill associated
with each of them, including but not limited to preserving the
relationships of customers, suppliers and others having business
dealings with each of them,
(b) Yorkshire will be kept fully and regularly
informed of the progress of the business of each of the Acquired
Businesses,
(c) it will not take any significant action or
decision affecting or likely to affect any Acquired Business or
any of Holdings or Europe or any Acquired Entity in a material
manner shall be taken without Yorkshire's prior approval (with
such prior approval not to be unreasonably withheld),
(d) it will not transfer title or use of any of the
Transferred Assets except as required by law or pursuant to
contracts in place as of the date hereof (copies of which are
attached to the CK Witco Disclosure Memorandum (other than those
relating to sales of finished goods in the ordinary course), and
sales of obsolete equipment having an aggregate value of less
than US$150,000 (or its reasonable equivalent in another
currency),
(e) it will maintain the Transferred Assets in good
condition, and except for sales of products in the ordinary
course of business, will not move any material Transferred Asset
to any property not currently owned,
(f) it will not create or permit to be created any
Lien on any of its Transferred Assets nor allow to be created a
situation pursuant to which the above is likely to occur,
(g) it will not incur any liability or obligation
(absolute, accrued, contingent or otherwise) or assume,
guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other Person, other than
in the ordinary course of business,
(h) it will not vary the material terms or
conditions of any material agreement included within, or relating
to other of, the Transferred Assets nor default or remain in
default in the performance thereof,
(i) it will not authorize or issue any additional
equity securities,
(j) it will not change its usual accounting methods
or practices, in particular, as to depreciation and amortization,
except as required by GAAP or applicable law,
(k) it will not exercise puts and calls with
respect to any futures contract, derivative or similar financial
product and more generally modify its current portfolio thereof
except in the usual course or without prior notice to and written
approval of Yorkshire,
(l) it will not take any action which constitutes
or may constitute a default or omit to take such action as may be
required to prevent a default under any relevant agreement,
document or instrument,
(m) it will not change the duties and powers of any
senior executives of Europe or any Acquired Entity, except as
required by law or contract,
(n) it will maintain its books, accounts and
records, or
(o) it will maintain in full force and effect all
its insurance currently in effect.
(p) it will collect from debtors and pay creditors
in the to ordinary course of business consistent with past
practice.
(q) it will not incur any borrowings of any kind
other than normal trade credit;
(r) it will not pay dividends, levy or pay any
management charges or take any other action which will reduce the
Closing Net Assets below the figure referred to Paragraph 1.4(c).
6.2 No Material Changes. Except as may be expressly
permitted by this Agreement, no action will be taken which will
materially alter the organization, capitalization, or financial
structure, practices or operations of the Acquired Businesses,
Colors, Holdings, Europe or any Acquired Entity.
6.3 Compensation. No increase will be made in the
compensation payable or to become payable to any director,
officer, employee or agent of the Acquired Businesses, Colors,
Europe or any Acquired Entity and no bonus or profit sharing
payment or other arrangement (whether current or deferred) will
be made to or with that director, officer, employee or agent
except normal individual increases in compensation to directors,
officers, employees or agents consistent with past practice, or
as required by law or contract. No officer, director or employee
will be hired, and no consultant or agent will be retained, at a
salary or fee in excess of US$50,000 (or its reasonable
equivalent in any other currency).
6.4 Employee Benefit Plans. In respect of employees of U.S.
Asset Acquired Businesses: CK Witco shall take such actions with
respect to the Employee Benefit Plans, and refrain from such
actions, as are necessary to maintain the qualification of each
such plan under Section 401(a) of the Code, and the exemption of
the trust maintained for each such plan under Section 501(a) of
the Code. CK Witco shall timely make all contributions and other
payments to the Employee Benefit Plans which it is obligated to
make as of the date hereof. Other than contributions or payments
declared, required or obligated to be paid to the Employee
Benefit Plans as of the date hereof, no contribution shall be
declared for or paid to any such plan. Except as required by
Applicable Law or contractual commitment existing as of the date
hereof, no amendment or change to the provisions of any Employee
Benefit Plan shall be made or adopted prior to the Effective Date
and Time, and each of such plans shall be continued in accordance
with its terms.
7. CONDITIONS TO OBLIGATIONS OF YORKSHIRE AND THE YORKSHIRE
ENTITIES
The obligations of Yorkshire and the Yorkshire Entities
under this Agreement to acquire the Transferred Assets, Acquired
Businesses, Europe and the Acquired Entities and consummate the
transactions contemplated by this Agreement are subject to the
fulfillment and satisfaction of each and every one of the
following conditions on or prior to the Closing, any or all of
which may be waived in writing in whole or in part by Yorkshire:
7.1 Representations and Warranties. Subject to the
exceptions and supplemental information set forth in the CK Witco
Disclosure Memorandum, the representations and warranties of CK
Witco contained in this Agreement, the Additional Agreements and
in any certificate, instrument, schedule, agreement or other
writing delivered by or on behalf of, or in respect of, the
Transferred Assets, the Acquired Businesses, CK Witco, the other
CK Witco Entities, Europe and the Acquired Entities in connection
with the transactions contemplated by this Agreement or the
Additional Agreements will be true and correct in all material
respects as of the date when made and will be deemed to be made
again at and as of the Closing Date and will be true and correct
in all material respects at and as of the Closing Date.
7.2 Compliance with Covenants and Conditions. CK Witco,
Colors, Europe and each other CK Witco Entity and the Acquired
Entities shall have performed and complied in all material
respects with all covenants, agreements and conditions required
by this Agreement to be performed or complied with by them prior
to or on the Closing Date.
7.3 Closing Certificates. CK Witco, Colors, Europe,
Holdings, the other CK Witco Entities, and the Acquired Entities
will have delivered to Yorkshire certificates, executed by their
appropriate officers or other Representative, dated as of the
Closing, certifying in such detail as Yorkshire may request as to
the fulfillment and satisfaction of the conditions specified in
Paragraphs 7.2 and 7.3.
7.4 Consents. All registrations, permits, filings,
applications, notices, consents, approvals, orders,
qualifications, waivers and waiting periods listed in Paragraph
7.4 of the CK Witco Disclosure Memorandum and indicated therein
as being a condition to the Closing for Yorkshire shall, as
applicable, have been filed, made or obtained, or shall have
expired, and the same shall continue to be in full force and
effect and rescission thereof or other challenge thereto shall
not have been threatened or initiated.
7.5 Passage of Resolutions. The Resolutions shall have
been passed at the Extraordinary General Meeting.
7.6 Admission to Official List. The London Stock Exchange
shall have admitted to the Official List the issued Ordinary
Share capital of Yorkshire (as enlarged by the issue of the
Consideration Securities), subject only to allotment (and such
admission shall have become effective by the announcement by the
London Stock Exchange of its decision to admit such shares for
listing in accordance with the listing rules of the London Stock
Exchange and the London Stock Exchange shall not have withdrawn
such grant before such announcement.)
7.7 No Inconsistent Requirements. No Action will have
been commenced by any Government or Person seeking to enjoin or
prohibit the transactions contemplated by this Agreement or any
Additional Agreement.
7.8 No Injunction. No temporary restraining order,
preliminary or permanent injunction or other order by any court
of competent jurisdiction which prohibits the consummation of the
transactions contemplated in this Agreement will have been issued
and remain in effect on the Closing Date; provided, however, that
Yorkshire will use all reasonable efforts to have each and every
relevant order or injunction vacated or reversed prior to the
Closing Date.
7.9 Additional Agreements and Closing Documents. Yorkshire
will have received duly executed and delivered execution
counterparts of each Additional Agreement and Closing Document,
in each case, signed by each relevant Person.
7.10 Related Party Matters. All agreements and commitments
of any kind between Colors, Holdings, Europe, the CK Witco
Entities, any Acquired Entity, and any other Person Affiliated
with CK Witco, on the one hand, and any Related Party on the
other, will have been terminated to the satisfaction of Yorkshire
without Liability.
7.11 Adverse Conditions. There shall not have been any
material adverse change in the assets, business or financial
condition of the Acquired Businesses.
8. CONDITIONS TO OBLIGATIONS OF THE CK WITCO ENTITIES
The obligations of CK Witco, Colors, Europe, Holdings,
and the other CK Witco Entities under this Agreement to sell the
Transferred Assets, Acquired Businesses, Europe and the Acquired
Entities and consummate the transactions contemplated by this
Agreement are subject to the fulfillment and satisfaction of each
and every one of the following conditions on or prior to the
Closing, any or all of which may be waived in writing in whole or
in part by CK Witco:
8.1 Representations and Warranties. Subject to the
exceptions and supplemental information set forth in the
Yorkshire Disclosure Memorandum, the representations and
warranties of Yorkshire contained in this Agreement, the
Additional Agreements and in any certificate, instrument,
schedule, agreement or other writing delivered by or on behalf
of, any Yorkshire Entity in connection with the transactions
contemplated by this Agreement or the Additional Agreements will
be true and correct in all material respects as of the date when
made and will be deemed to be made again at and as of the Closing
Date and will be true and correct in all material respects at and
as of the Closing Date.
8.2 Compliance with Covenants and Conditions. Each
Yorkshire Entity shall have performed and complied in all
material respects with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by
them prior to or on the Closing Date.
8.3 Closing Certificates. Each Yorkshire Entity will
have delivered to CK Witco certificates, executed by their
appropriate officers or other Representative, dated as of the
Closing, certifying in such detail as CK Witco may request as to
the fulfillment and satisfaction of the conditions specified in
Paragraphs 8.2 and 8.3.
8.4 Consents. All registrations, fillings,
applications, notices, consents, approvals, orders,
qualifications, waivers and waiting periods listed in Paragraph
8.4 of the Yorkshire Disclosure Memorandum and indicated therein
as being a condition to the Closing for CK Witco shall, as
applicable, have been filed, made or obtained, or shall have
expired.
8.5 Passage of Resolutions. The Resolutions shall have
been passed at the Extraordinary General Meeting.
8.6 No Inconsistent Requirements. No Action will have
been commenced by any Government or Person seeking to enjoin or
prohibit the transactions contemplated by this Agreement or any
Additional Agreement.
8.7 No Injunction. No temporary restraining order,
preliminary or permanent injunction or other order by any court
of competent jurisdiction which prohibits the consummation of the
transactions contemplated in this Agreement will have been issued
and remain in effect on the Closing Date; provided, however, that
CK Witco will use all reasonable efforts to have each and every
relevant order or injunction vacated or reversed prior to the
Closing Date.
8.8 Admission to Official List. The London Stock Exchange
shall have admitted to the Official List the issued Ordinary
Share capital of Yorkshire (as enlarged by the issue of the
Consideration Securities), subject only to allotment (and such
admission shall have become effective by the announcement by the
London Stock Exchange of its decision to admit such shares for
listing in accordance with the listing rules of the London Stock
Exchange and the London Stock Exchange shall not have withdrawn
such grant before such announcement.)
8.9 Additional Agreements and Closing Documents. CK
Witco will have received duly executed and delivered execution
counterparts of each Additional Agreement and Closing Document,
in each case signed by each relevant Person.
8.10 Adverse Conditions. There shall not have been any
material adverse change in the assets, business or financial
condition of Yorkshire.
9. INDEMNITIES
9.1 General Indemnification of the Yorkshire Entities.
In accordance with and subject to the further provisions of this
Article 9, CK Witco, Colors and Holdings (each, an "Indemnitor")
will, jointly and severally, indemnify and hold harmless the
Yorkshire Entities, Europe, the Acquired Entities and their
Affiliates, and their respective officers, directors, agents and
employees (collectively, "Indemnitees"), from and against and in
respect of any and all loss, damage, Liability, cost and expense,
including reasonable attorneys' fees and amounts paid in
settlement (collectively, the "Indemnified Losses"), suffered or
incurred by any one or more of the Indemnitees by reason of, or
arising out of:
(a) any misrepresentation, breach of warranty or breach
or nonfulfillment of any agreement of CK Witco, Colors, Holdings,
Europe, any other CK Witco Entity or any Acquired Entity
contained in this Agreement (other than the Taxation Schedule),
any Additional Agreement, or in any Closing Document;
(b) all liabilities and obligations of, or claims,
demands or actions against, Europe, the Acquired Entities, the
Acquired Businesses, or the Transferred Assets, whether known or
unknown, accrued, absolute, contingent or otherwise, existing (i)
as of the date of this Agreement or (ii) at any time hereafter
with respect to periods on or prior to the Effective Date and
Time (without regard as to whether the same also relates to or is
in respect of a period after the Effective Date and Time), to the
extent not an Assumed Liability or a European Retained Liability,
after any adjustment pursuant to Paragraph 1.4;
(c) the ownership, operation or conduct of the Excluded
Properties, the other Excluded Assets and the Americas IPD
Business;
(d) any and all Actions, suits, proceedings, claims, demands,
assessments, judgments, fees and expenses, incident to any of the
foregoing or incurred in investigating or attempting to avoid any
Actions, suits, proceedings, claims, demands, assessments,
judgments, fees and expenses or to oppose the imposition of any
Actions, suits, proceedings, claims, demands, assessments,
judgments, fees and expenses, or in enforcing this Agreement,
including the provisions of this Article 9;
provided that, no Indemnitor shall be obligated to indemnify any
Indemnitee under this Paragraph 9.1 with respect to any
Indemnified Losses under clause (a) of this Paragraph 9.1 (x) to
the extent any such inaccuracy, breach, nonperformance or
violation was disclosed by CK Witco in any written supplement to
the CK Witco Disclosure Memorandum delivered to Yorkshire prior
to the Closing and (y) such inaccuracy, breach, nonperformance or
violation, together with all other inaccuracies, breaches,
failures to perform or violations described in such written
statement would have caused any of the conditions set forth in
either of Paragraphs 7.1 and 7.2 not to be satisfied as of the
Closing Date (without giving effect to any waiver thereof or any
supplement to the CK Witco Disclosure Memorandum).
9.2 Payment. Subject to the provisions of Paragraph
1.6(b) and Paragraph 9.3, (i) after a final, non-appealable
judgment has been rendered or a settlement has been reached in
respect of a third party claim or Action, or (ii) in the case of
a claim for Indemnified Losses arising other than pursuant to a
third party claim or Action, after any award or judgment has been
issued or a settlement has been reached, Indemnitor shall
reimburse the Indemnitees within 30 days of written demand on the
Indemnitor for any amounts to which Indemnitees are entitled to
indemnification pursuant to this Article 9.
9.3 Defense of Claims.
(a) Except as provided in Paragraph 9.3(b) and 9.6, if
any Action by a third party arises after the date of this
Agreement for which Indemnitor may be liable under the terms of
this Agreement (other than under the Taxation Schedule to which
the provisions of that Schedule shall apply in place of the
provisions of this Paragraph 9.3), then the Indemnitees will
notify Indemnitor in accordance with the provisions of this
Article 9, and will give Indemnitor a reasonable opportunity:
(i) to conduct any proceedings or negotiations in
connection with the Action and necessary or appropriate to defend
the Indemnitees;
(ii) to take all other required steps or proceedings to
settle or defend any Action; and
(iii) to employ counsel reasonably acceptable to Indemnitees
to contest any Action in the name of the Indemnitees or
otherwise.
Subject to Paragraph 9.3(b), the expenses of all proceedings,
contests or lawsuits with respect to the Actions will be borne by
Indemnitor.
(b) Notwithstanding Paragraph 9.3(a), if (i) an
Indemnitee determines in good faith that there is a reasonable
probability that such an Action may adversely affect Yorkshire
and its Affiliates other than as a result of monetary damages for
which it would be entitled to indemnification hereunder, or (ii)
the Action seeks injunctive or similar relief, or (iii) it is an
Action brought or initiated by a Government, an Indemnitee may,
by notice to the Indemnitor, assume the exclusive right to
defend, compromise or settle such Action. The Indemnitor shall
be obligated to reimburse the legal fees, costs and expenses of
that defense.
(c) If Indemnitor does not assume the defense of, or if
after so assuming the Indemnitor fails to defend, any such
Action, then the Indemnitees may defend against any claim or
Action in the manner they may deem appropriate and the
Indemnitees may settle any claim or Action on the terms they deem
appropriate, and Indemnitor will promptly reimburse the
Indemnitees for the amount of all expenses, legal and otherwise,
reasonably and necessarily incurred by the Indemnitees in
connection with the defense against and settlement of any claim
or Action. If no settlement of any claim or Action is made,
Indemnitor will satisfy any judgment rendered with respect to any
claim or in any Action, before the Indemnitees are required to do
so, and pay all expenses, legal or otherwise, reasonably and
necessarily incurred by the Indemnitees in the defense of any
claim or Action.
(d) If a judgment is rendered against any of the
Indemnitees in any Action covered by the indemnification under
this Agreement, or any Lien in respect of any judgment attaches
to any of the assets of any of the Indemnitees, Indemnitor will
immediately upon any entry or attachment pay the relevant
judgment in full or discharge the relevant Lien unless, at the
expense and direction of Indemnitor, an appeal is taken under
which the execution of the judgment or satisfaction of the Lien
is stayed. If and when a final judgment is rendered in any
action, Indemnitor will forthwith pay any judgment or discharge
any Lien before any of the Indemnitees is compelled to do so.
(e) Any notice required to be given to Indemnitor
pursuant to Paragraph 9.3(a) shall be given no later than the
latter of: (i) the end of the first half of the term within which
an answer or other response to the Action is required to be made
(the "Answer Period") and (ii) two Business Days after receipt by
an Indemnitee of notice of the Action. Indemnitor shall assume
the defense of any Action, if at all, by notice to Indemnitees
no later than the earlier of: (i) the end of the second third of
the Answer Period and (ii) three Business Days prior to the date
by which an answer or other response to the Action is required to
be made. Indemnitor's failure to notify Indemnitees within the
specified time shall be conclusively deemed an election by
Indemnitor not to assume such defense. Any failure by
Indemnitees to give the requisite notice within the time
specified in this Paragraph 9.3(e) will not relieve Indemnitor of
the obligation to indemnify Indemnitees pursuant to this Article
9 except to the extent that the defense of any Action is
materially prejudiced by the delay.
(f) The Indemnitor or the Indemnitee, as
appropriate, shall have the right to participate in the defense
of any Action related to an Indemnified Loss at its sole cost and
expense and the cost and expense of that participation shall not
be an Indemnified Loss.
9.4 Indemnification of the CK Witco Entities by
Yorkshire and Americas. Yorkshire and Americas, jointly and
severally, will indemnify and hold harmless the CK Witco Entities
from and against and in respect of any and all loss, damage,
Liability, cost and expense, including reasonable attorneys' fees
and amounts paid in settlement, suffered or incurred by any one
or more of them by reason of, or arising out of: (i) any
misrepresentation, breach of warranty or breach or nonfulfillment
of any agreement of a Yorkshire Entity contained in this
Agreement or in any Additional Agreement or Closing Document; and
(ii) any and all Actions, suits, proceedings, claims, demands,
assessments, judgments, fees and expenses, incident to any of the
foregoing or incurred in investigating or attempting to avoid any
Actions, suits, proceedings, claims, demands, assessments,
judgments, fees and expenses or to oppose the imposition of any
Actions, suits, proceedings, claims, demands, assessments,
judgments, fees and expenses, or in enforcing this Agreement,
including the provisions of this Paragraph 9.4 including, any
Action, suit, proceeding, claim, demand, assessment, judgment,
fee or expense related to any breach by Yorkshire after the
Closing Date of any distributorship and sales representative
agreements included as an Assigned Contract or a Contract;
provided, however, that Yorkshire shall not be obligated to
indemnify any Person under this Paragraph 9.4 with respect to any
losses to the extent any such inaccuracy, breach, nonperformance
or violation was disclosed by Yorkshire in any written supplement
to the Yorkshire Disclosure Memorandum delivered to CK Witco
prior to the Closing and such inaccuracy, breach or
nonperformance, together with all other inaccuracies, breaches
and failures to perform, would have caused any of the conditions
set forth in Paragraph 8.1 or 8.2 not to be satisfied as of the
Closing Date (without giving effect to any waiver thereof or any
supplement to the Yorkshire Disclosure Memorandum).
9.5 Environmental Indemnity.
9.5.1 Definitions
9.5.1.1 As used in this Agreement:
"Environmental Law" means any and all laws, decrets,
statutes, rules, regulations, treaties, directives, directions,
codes of practice, orders (including consent orders or decrees),
arretes, notices, demands or decisions of the courts or of any
governmental authority or agency or any regulatory body having
jurisdiction, including, but not limited to, the European Union,
whether or not in force as of the Effective Date and Time,
relating to pollution, protection or conservation of the
environment, including, but not limited to, damage to realty,
personalty, natural resources or human health. The term
"Environmental Law" also includes any common law theory of
recovery for Environmental Damage, whether codified or judge
made, including, but not limited to nuisance, trespass,
ultrahazardous activity or res ipsa loquitur.
"Environmental Damage" means any condition of pollution or
contamination of the environment, damage to realty, personalty or
natural resources or harm to human health resulting from the
release, discharge, emission, entry, introduction, storage,
labeling, handling, treatment, management, manufacture,
processing, transportation, disposal or deposit of any Hazardous
Substance or any waste, pollutants or contaminants, that at the
Effective Date and Time is in contravention of any Environmental
Law, whether or not such condition was a violation of any
Environmental Law at the time the condition was created.
"Environmental License" means any material permit, license,
authorization, consent or other approval required as of the
Effective Date and Time by Yorkshire pursuant to any applicable
Environmental Law so as to enable Yorkshire to carry on the
Acquired Businesses at the Acquired Properties in the same manner
and to the same extent as did CK Witco as of the Effective Date
and Time.
"Environmental Losses" means all and any liabilities,
obligations, commitments, losses, fines, penalties, sanctions,
costs and expenses (including reasonable legal, engineering and
other professional fees) of any kind whatsoever (including any
costs and expenses incurred in defending or resolving any suits,
actions or claims, whether administrative, civil or criminal, or
in appealing against any judgment, notice or award made in
relation thereto), interest, deficiencies, damages or Remedial
Works (but excluding any consequential liability, obligation,
commitment, loss, cost, expense or damage, including without
limitation any such liability, obligation, commitment, loss,
cost, expense or damage attributable to the disruption of the
operations of any business or use or value of any property)
resulting from Environmental Damage, whether incurred alone or
jointly with any other person. Environmental Losses includes,
but is not limited to, all such suits, actions, claims, fines,
penalties and sanctions, regardless of their merits, brought,
asserted or levied by any Environmental Regulator or other third
party.
"Environmental Regulator" means any governmental agency
charged with the enforcement or application of any applicable
Environmental Law.
"Environmental Reports" means those reports prepared on
behalf of Yorkshire in agreed form.
"Hazardous Substance" includes (i) any "hazardous material,"
"hazardous substance," "hazardous waste," "oil," "regulated
substance," "toxic substance," "restricted hazardous waste,"
"special waste" or words of similar import as defined under any
Environmental Law; (ii) polychlorinated biphenyls; (iii) any
substance, the generation, storage, transportation, utilization,
disposal, management, release or location of which, on, under or
from the Covered Properties is prohibited or otherwise regulated
pursuant to any Environmental Law and (iv) asbestos in any form
except asbestos that is wholly contained within the structure and
fixtures of buildings and plants or equipment at the Acquired
Properties.
"Covered Properties" means those parcels of land more
particularly described in Exhibit JJ attached to this Agreement
"Remedial Works" means:
(a) the carrying out of any works or activities required
pursuant to the provisions of this Paragraph 9.5 or under any
Environmental Law; or
(b) any decontamination, clean-up, restoration, modification,
improvement or other work required under the provisions of this
Paragraph 9.5 or in respect of or to avoid or mitigate any
breach of any Environmental Law (which includes, but is not
limited to, the payment of any costs and expenses as is required
by an Environmental Regulator) with respect to the Covered
Properties or any adjoining or third party land.
9.5.1.2 Terms not defined in this Paragraph 9.5.1 will
have the same meaning as elsewhere in this Agreement and the
provisions of Paragraph 9.5 will apply in relation to the
definitions used in and the interpretation of this Paragraph 9.5
except as otherwise specifically provided in this Paragraph
9.5.1.
9.5.2 General Environmental Liability
9.5.2.1 CK Witco, Colors and Holdings will defend,
indemnify and hold harmless Yorkshire, the Yorkshire Entities,
the Acquired Entities and Europe for any Environmental Loss
suffered or incurred by Yorkshire, the Yorkshire Entities,
Affiliates of Yorkshire, the Acquired Entities or Europe after
the Effective Date and Time provided the Environmental Damage
existed as of the Effective Date and Time and is resulting from:
(a) operations or acts or omissions carried out at the
Covered Properties by any person, whether or not controlled by CK
Witco, prior to the Effective Date and Time;
(b) any pollution, contamination on, under or at other
properties or migration of Hazardous Substances onto other
properties which is caused, or alleged by a third party or
Environmental Regulator to be caused, by operations or activities
carried out by any person, whether or not controlled by CK Witco,
at the Covered Properties prior to the Effective Date and Time;
(c) the operation of the Acquired Businesses by CK Witco
prior to the Effective Date and Time.
9.5.2.2 CK Witco will have the right, at its sole
discretion, and at its sole cost, to conduct, or cause to be
conducted, Remedial Works to comply with this Paragraph 9.5.2.
(a) Initial Notification.
(1) Upon Yorkshire's actual knowledge of any
Environmental Damage subject to indemnification under this
Agreement, Yorkshire will, with all reasonable haste, and prior
to incurring costs with respect to such Environmental Damage,
notify CK Witco of such Environmental Damage.
(2) Notwithstanding any other provision of this
Paragraph 9.5.2.2(a), Yorkshire may, without prior notification
to CK Witco, incur costs otherwise reimbursable by CK Witco
without compromising its rights under this Agreement in cases of
emergency, including, but not limited to immediate responses to
demands by Environmental Regulators and immediate threats to
human health or the environment posed by such Environmental
Damage. In such cases of emergency or immediate threats to human
health or the environment, Yorkshire shall notify CK Witco of any
Environmental Damage as soon as practicable but not more than 3
business days after incurring costs associated with such
Environmental Damage.
(b) Notice, Documents. CK Witco will provide Yorkshire
with reasonable and timely written notice prior to the
undertaking of any Remedial Works to satisfy the requirements of
this Paragraph 9.5.2. CK Witco will provide Yorkshire with
written information regarding the nature, scope and schedule of
the planned Remedial Works within a reasonable period of time
under the circumstances after it has received notice from
Yorkshire. Further, CK Witco will also provide Yorkshire with
one copy of any maps, drawings, plans, engineering documents or
work plans relating to any such Remedial Works at the time of
such notice or as soon as practicable after such documents are
available to CK Witco.
(c) Information, Approval of Reports. CK Witco will
provide Yorkshire with copies of all material correspondence
related to the Remedial Works or claim among itself, its
Contractors, third party claimants and Environmental Regulators,
as soon as practicable, including, but not limited to, all
reports, data, drawings, schedules, tables, work plans,
specifications, notices of deficiency and approvals. CK Witco
will allow Yorkshire, upon reasonable request and at Yorkshire's
cost, the opportunity to be present during the conduct of
Remedial Works and to split samples during any sampling or
assessment. CK Witco will submit to Yorkshire, prior to
submission to Environmental Regulators and third party claimants,
all reports, data and other correspondence for review. CK Witco
will not submit such reports, data and other correspondence to
Environmental Regulators without giving Yorkshire reasonable
opportunity to review and comment, unless required to do so under
applicable Environmental Law or other applicable requirement of
law. Yorkshire will review and comment on such correspondence,
reports and data in a timely manner, so as not to delay the
Remedial Work.
(d) Approval, Disruption of Operations, Access and
Compensation
(1) If CK Witco reasonably believes that the proposed
Remedial Works will cause substantial disruption to the
operations of Yorkshire, CK Witco will so advise Yorkshire in
writing, and include the nature, scope and duration of the
disruption. CK Witco will use reasonable efforts to design and
implement proposed Remedial Works to minimize any disruption,
including coordinating with Yorkshire so as to minimize
disruption. CK Witco will not indemnify Yorkshire for any losses
or damages resulting from changes in Yorkshire's operational
procedures required by the Remedial Works or required to comply
with any Environmental Laws or orders of any Environmental
Regulators as a result of such claims.
(2) Yorkshire will cooperate with CK Witco and will not
unreasonably interfere with the conduct of Remedial Works by CK
Witco. Yorkshire will grant to CK Witco reasonable access to the
Acquired Properties for the purposes of designing, implementing,
overseeing and conducting the Remedial Works. Further, Yorkshire
will provide CK Witco with any documents, information,
correspondence or communications related to the Remedial Works as
soon as practicable and via the most expeditious means (i.e.,
facsimile, overnight courier, electronic mail) practicable.
(e) Standards, Damage, Insurance.
(1) Yorkshire will cooperate with CK Witco to minimize
the cost of the Remedial Works, including assisting with
appropriate land use or other environmental restrictions which
may make Remedial Works unnecessary or more feasible or cost
effective, provided, that CK Witco will not seek to unreasonably
impair the reasonable use of the Acquired Properties.
(2) CK Witco will conduct all Remedial Work in a
competent and professional manner, and in compliance with all
material and applicable laws and regulations, including but not
limited to Environmental Laws. Further, CK Witco with obtain all
required licenses, permits and approvals required by
Environmental Regulators and any applicable laws, whether
Environmental Laws or otherwise. If the Remedial Work is
required by an order or directive from an Environmental
Regulator, CK Witco will conduct such Remedial Works to the
satisfaction of such Environmental Regulator, provided, that CK
Witco reserves all right to take administrative, judicial or
other applicable appeals, requests for reconsideration or the
like. CK Witco will provide Yorkshire with evidence of such
satisfaction as soon as practicable after receipt of such
evidence.
(3) For each separate Remedial Work, CK Witco will keep,
at its sole cost, in full force and effect, with insurance
companies licensed to do business in the jurisdiction of the
applicable Remedial Work, commercial general liability and
property damage insurance with a combined single limit of
coverage of no less than US$1,000,000 (or its reasonable
equivalent in another currency). CK Witco will, at its sole
cost, comply with any other insurance statutes or laws arising
from its status as an employer and entity licensed to do business
in the jurisdiction of the Remedial Work, including, but not
limited to carrying sufficient Automobile Liability and Worker's
Compensation Insurance to comply with applicable regulations. CK
Witco will provide Yorkshire with certificates of insurance on
all required policies and name Yorkshire as an additional named
insured on all required policies.
(f) Other Obligations of CK Witco. Election by CK Witco
to conduct Remedial Work under this Paragraph 9.5.2.2 does not
relieve CK Witco of its obligations under Paragraphs 9.5.2 and
9.5.3 to defend, indemnify and hold harmless Yorkshire from
Environmental Losses that can not be addressed by Remedial Work
alone, including, but not limited to fines, penalties and damages,
whether claimed by Environmental Regulators or third parties.
However, Yorkshire will notify CK Witco of any such Environmental
Losses and CK Witco shall have a right to provide a defense at its
sole cost and expense.
(g) Contractors CK Witco may, at its sole discretion and
sole cost, employ contractors and subcontractors ("Contractors") to
conduct Remedial Works required under Paragraphs 9.5.2 and 9.5.3.
CK Witco will notify Yorkshire of its decision to employ a
Contractor as soon as practicable after the decision is made. Any
Contractor employed by CK Witco will be professional and competent
in all skills required in the environmental consulting and
engineering professions. Further such Contractors will be skilled
and competent in any tasks required for the Remedial Works. The
Contractors will have all required licenses, permits and approvals
required by Environmental Regulators and any applicable laws,
whether Environmental Laws or otherwise. The Contractor will carry
insurance policies at such levels as are reasonably satisfactory to
Yorkshire, will provide certificates of insurance acceptable to
Yorkshire and will designate Yorkshire as additional named insured
on all such policies. CK Witco will continue to be bound by all
requirements of Paragraph 9.5.2, including but not limited to
notice requirements, in the event CK Witco chooses to engage a
Contractor to conduct Remedial Works.
(h) Confidentiality
(1) After notice to CK Witco of Environmental Damage and
acknowledgment by CK Witco of its obligations under this Agreement
regarding such Environmental Damage, Yorkshire will not communicate
with any third party regarding such Environmental Damage without
the written consent of CK Witco. Notwithstanding the previous
sentence, Yorkshire may communicate with any third party regarding
such Remedial Work if such communications are required by
Environmental Laws or other applicable laws, including but not
limited to disclosures based on securities laws. If practicable,
Yorkshire will advise CK Witco its intent to engage in
communications covered by this Paragraph 9.5.2.2(h)(1) and permit
CK Witco to review and comment on the nature of the communication
or disclosure or to make such disclosure itself.
(2) CK Witco will not communicate with any third parties,
including Environmental Regulators, regarding any confidential
business, processes or operations of Yorkshire at any time, unless
such communications are required by Environmental Laws or other
applicable laws, including but not limited to disclosures based on
securities laws.
(i) Equipment
(1) All equipment, machinery, devices or implements
purchased for use in the Remedial Works that are to be permanently
affixed or installed at the Acquired Properties and relate or
appertain to the operations and processes of Yorkshire will be
purchased by and at sole cost to CK Witco in the name of Yorkshire
so that all manufacturer's or seller's warranties, express or
implied, general or limited, will inure to the benefit of Yorkshire
as though Yorkshire had purchased the equipment.
(2) All other such equipment purchased for the Remedial
Work, but not related to or appertaining to the operations and
processes of Yorkshire will be purchased by and at sole cost to CK
Witco in CK Witco's name. CK Witco will be responsible for the
repair, maintenance and upkeep of this equipment, whether before or
after the termination of the 5 year period described in Paragraph
9.5.2.6. Such repair and maintenance will be considered part of
the Remedial Work.
(j) Coordination of Remedial Work and Business
Interference
(1) Notwithstanding any other provision of this Agreement,
if CK Witco elects to perform Remedial Work as provided in this
Paragraph 9.5.2.2 to satisfy its obligations under Paragraphs 9.5.2
or 9.5.3, CK Witco will not be responsible for any loss of profits
and business by Yorkshire resulting from the disruption of
Yorkshire's operations due to any Remedial Works conducted by CK
Witco, except that CK Witco will indemnify and hold harmless
Yorkshire for:
(i) the reasonable costs incurred by Yorkshire to purchase,
from reputable suppliers or manufacturers, product equivalent in
function, application and quality to that of Yorkshire, to meet its
obligations under supply contracts existing as of the time of
notification from CK Witco to Yorkshire of the Remedial Work, but
only to the extent that such costs exceed all costs that would have
been incurred by Yorkshire to meet such obligations in the absence
of such Remedial Work;
(ii) the reasonable direct labor costs, including but not
limited to "overtime," incurred by Yorkshire to accelerate
production prior to or after the Remedial Work to meet its
obligations under supply contracts existing as of the time of
notification from CK Witco to Yorkshire of the Remedial Work; or
(iii) a combination of (i) and (ii) when purchasing
replacement product or accelerating production alone will not allow
Yorkshire to satisfy its existing supply contracts or when such
combination will result in lower total costs that are the subject
of the indemnity provided to Yorkshire by CK Witco under this
Paragraph 9.5.2.2(j) than purchasing replacement product or
accelerating production alone.
(2) Yorkshire will notify CK Witco of all supply contracts
that it reasonably believes will be affected by each Remedial Work
within 5 Business Days of notification by CK Witco that it plans to
undertake a Remedial Work. CK Witco will be responsible for only
those supply Contracts with respect to which it has received such
notice from Yorkshire.
9.5.2.3 Notwithstanding any other provision of this
Agreement, CK Witco will not be liable to Yorkshire for any
Environmental Damage, Hazardous Substance, breach of Environmental
Law, or Environmental Losses to the extent that such Environmental
Damage, Hazardous Substance, breach of Environmental Law or
Environmental Losses arise out of or are related to an act or
omission of Yorkshire, its employees or agents or any third party,
after the Effective Date and Time. CK Witco will not be liable to
Yorkshire for Environmental Losses arising from the modification or
alteration of processes or the expansion of operations. Provided,
however, that "the modification or alteration of processes" or "the
expansion of operations" will not be interpreted to include
discovery of unrelated Environmental Damage during any construction
or other activities undertaken in connection with any modification
or alteration of processes or the expansion of operations. This
Paragraph 9.5.2.3 will not apply to any such breach, act or
omission to the extent:
(a) carried out at the specific written request or with
the written permission of CK Witco; or
(b) carried out in order to operate the business in
compliance with applicable laws, including Environmental Laws.
9.5.2.4 Yorkshire will have the right to conduct or
cause or voluntarily permit any person to carry out any
environmental investigations, audits, surveys, testing, sampling or
other actions reasonably necessary in order to continue to operate
and run the Acquired Businesses from the Acquired Properties in
accordance with good business practice after the Effective Date and
Time. However, Yorkshire will not undertake any environmental
investigations, audits, surveys, testing, sampling or other actions
for the purpose of or directed at accelerating or increasing the
likelihood, complexity or amount of a claim, liability, task or
cost associated with or in any way related to an Environmental
Damage or Environmental Loss, unless it is required by applicable
law to do so. In that event and when allowed by applicable law,
Yorkshire will first communicate its intent to take such action,
correspond or communicate with a third party to CK Witco and
permit CK Witco to undertake such action, correspondence or
communication. Yorkshire will take no action that compromises the
rights or obligations of Yorkshire or CK Witco under the ICI
Agreement unless it is required by applicable law to do so.
9.5.2.5 CK Witco will not be liable to Yorkshire, the
Yorkshire Entities, the Acquired Entities and Europe for the first
US$ 750,000 of aggregate Environmental Losses claimed under
Paragraph 9.5.2.1 or, to the extent CK Witco elects to conduct
Remedial Works to meet its obligations under this Paragraph 9.5.2,
of costs incurred by CK Witco in conducting Remedial Works.
Yorkshire shall promptly reimburse CK Witco for any such costs
incurred by CK Witco until such time as Environmental Losses
claimed under Paragraph 9.5.2.1 and the costs of such Remedial Work
equal US$750,000 (or its reasonable equivalent in another currency)
Yorkshire will provide CK Witco with an accounting of all expenses
claimed to be incurred against the US$750,000 (or its reasonable
equivalent in another currency) aggregate amount commencing on the
first anniversary of the Effective Date and Time and on each
succeeding anniversary ending on the fifth anniversary. CK Witco
will provide written notice to Yorkshire within 90 days of receipt
of this yearly accounting of any item or sums challenged as invalid
or excessive under this Agreement. Yorkshire shall promptly
provide any additional background materials, including but not
limited to scopes of work, draft documents, reports, bills,
invoices, correspondence and will permit CK Witco to interview any
persons conducting such work. All costs not challenged and
contained within the yearly accounting will be considered valid and
will reduce the US$750,000 (or its reasonable equivalent in another
currency) aggregate accordingly after 90 days. Notwithstanding the
yearly accounting requirements of this Paragraph 9.5.2.5, Yorkshire
will provide an accounting of costs to CK Witco at any time upon
reasonable request by CK Witco. Claims made under Paragraphs 9.5.3
and 9.5.4 will not apply to the $750,000 aggregate limitation of
this Paragraph 9.5.2.5. CK Witco and Yorkshire will work in good
faith to resolve the challenges made under this Paragraph 9.5.2.5,
and may invoke the alternative dispute resolution procedures of
Exhibit MM if no resolution can be reached within 30 days after
termination of the 90 day period.
9.5.2.6 Save in respect of Environmental Losses
arising in connection with those matters addressed in Paragraph
9.5.3 (which shall survive indefinitely unless otherwise specified
in Paragraph 9.5.3), all claims for Environmental Losses must:
(a) be made by or on behalf of Yorkshire, the Yorkshire
Entities, the Acquired Entities and Europe to CK Witco in writing;
(b) be made within five years after the Effective Date and
Time;
(c) specifically identify the contaminant, its
concentration and the related operation, to the extent that
Yorkshire has actual knowledge of such facts; and
(d) arise or be related to an Environmental Loss suffered
or cost incurred within five years after the Effective Date and
Time.
9.5.2.7 Yorkshire acknowledges receiving a US$500,000
credit for those matters which are referred to in Exhibit KK to
this Agreement and which are excluded for the purposes of making a
claim under Paragraph 9.5.2.1. Expenditures for these matters will
not be included for the purposes of the US$750,000 (or its
reasonable equivalent in another currency) aggregate provided in
Paragraph 9.5.2.5.
9.5.2.8 Certain specific instances of Environmental
Damage are set out in Exhibit LL ("Specific Indemnity Issues").
These Specific Indemnity Issues are the subject of separate
indemnities set out in Paragraph 9.5.3 below. Other specific
instances of Environmental Damage are set out in Exhibit KK and are
not the subject of specific indemnities ("Other Identified
Issues"). No claim shall be made by Yorkshire with respect to such
Specific Indemnity Issues and Other Identified Issues under this
Paragraph 9.5.2.
9.5.2.9 CK Witco will provide Yorkshire with all
reasonable assistance in obtaining transfers or name changes of any
Environmental Licenses necessary for the operation of the Acquired
Businesses at the Acquired Properties in a manner substantially
similar to the operation of the Acquired Businesses at the Acquired
Properties by CK Witco. CK Witco will respond as promptly as
practical to all reasonable requests by Yorkshire for documents or
other assistance related to Environmental Licenses. CK Witco will
cooperate fully with Yorkshire in Yorkshire's dealings with
Environmental Regulators.
9.5.3 Specific Indemnity Issues
9.5.3.1 Subject to the provisions of this Paragraph
9.5.3 CK Witco, Colors and Holdings will defend, indemnify and hold
harmless Yorkshire, the Yorkshire Entities, the Acquired Entities
and Europe for any Environmental Loss (or, where appropriate and in
accordance with terms and conditions to be reasonably agreed by CK
Witco and Yorkshire, undertake Remedial Work with respect thereto)
suffered or incurred by Yorkshire, the Yorkshire Entities, the
Acquired Entities or Europe after the Effective Date and Time
provided the Environmental Damage existed as of the Effective Date
and Time and is resulting from:
(a) The items numbered 1 and 8 in Exhibit LL, save that no
claim may be made with respect to these items unless written notice
thereof will have been given by or on behalf of Yorkshire to CK
Witco within seven years after the Effective Date.
(b) The items numbered 2, 3 and 5 in Exhibit LL;
(c) The items numbered 7 and 9 in Exhibit LL, save that
with respect to these items, "Environmental Losses" shall mean only
fines, costs (including appeal costs) or penalties suffered or
incurred by Yorkshire arising out of a claim by a third party or an
Environmental Regulator.
(d) The item numbered 4 in Exhibit LL, save that with
respect to this item, "Environmental Losses" shall mean only those
costs suffered or incurred by Yorkshire associated with the repairs
and improvements to the effluent holding tank recommended by the
relevant Environmental Report.
(e) The item numbered 6 in Exhibit LL, save that with
respect to this item, "Environmental Losses" shall mean only such
liabilities, obligations, losses, fines, or penalties that arise as
a result of clean closure of the underground storage tank not
having been effected in accordance with Environmental Law.
9.5.3.2 Effluent Pipeline at Tertre Complex.
Pursuant to regulatory requirements relating to the Tertre
Complex, the construction of an effluent pipeline may be required
as more particularly identified and described on page 13 of the
Environmental Report relating to the Tertre Complex. CK Witco
will reimburse Yorkshire for the reasonable cost of construction
of the pipeline if, in the reasonable judgment of Yorkshire, it
must be constructed to meet applicable regulatory requirements,
provided, that, if the additional consideration referred to in
Paragraph 1.4(d) becomes payable by Yorkshire, Yorkshire agrees
to promptly refund to CK Witco all amounts paid by CK Witco to
Yorkshire for the construction of such pipeline.
9.5.4 Additional Environmental Indemnity relating to the Oissel
Facility only
9.5.4.1 For the purposes of the provisions contained
in this Paragraph 9.5.4 only, any capitalized terms will bear the
same meaning as set out in the Share Purchase Agreement between
Crompton & Xxxxxxx X.X. and Imperial Chemical Industries PLC dated
as of April 30 1992 (the "ICI Agreement") but if any capitalized
terms in this Paragraph 9.5.4 are not set out in the ICI Agreement,
they will bear the same meaning as set out in this Agreement.
9.5.4.2 Yorkshire shall cooperate with CK Witco regarding
the enforcement of the ICI Agreement through the fifth (5th)
anniversary of the Effective Date and Time, including but not
limited to permitting CK Witco and its attorneys, at their sole
cost, expense and risk, to pursue claims or to prosecute one or
more legal actions on behalf of Yorkshire with respect to any
matter pertaining to the ICI Agreement. All costs and expenses and
any losses, liability or damages of Yorkshire related to or arising
out of such cooperation shall be born by CK Witco.
CK Witco shall have no obligation to Yorkshire under this
Agreement with respect to the ICI Agreement as of the fifth (5th)
anniversary of the Effective Date and Time except that it will
cooperate with Yorkshire regarding Yorkshire's reasonable requests
to pursue indemnification in accordance with the terms and
conditions of the ICI Agreement. Such cooperation shall only be
required if Yorkshire cannot pursue the indemnification without CK
Witco. All costs and expenses and any losses, liability or damages
of CK Witco related to or arising out of such cooperation shall be
born by Yorkshire.
After Yorkshire has notified CK Witco and the parties
have pursued claims consistent with the terms of the ICI Agreement,
nothing in this Paragraph 9.5.4 will preclude Yorkshire from making
a claim relating to the Oissel site under Paragraphs 9.5.2 or 9.5.3
of this Agreement if they believe a claim under one of those
provisions exists.
9.5.4.3 Subject to all the conditions contained in
the ICI Agreement and except as otherwise limited by this Paragraph
9.5.4, CK Witco, Colors and Holdings hereby agree to indemnify and
hold harmless, at all times after the Effective Date and Time,
Yorkshire and its respective officers, directors, employees,
agents, successors and any controlling persons thereof, from any
and all liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including attorneys',
consultants', engineers', drillers', contractors', laboratories'
fees and other costs and expenses) actually suffered or incurred by
it (hereinafter, a "Purchaser Loss") to the extent arising out of
or resulting from:
(a) Liabilities arising out of events occurring before
30th April 1992, whether such Liabilities arise before or after
30th April 1992, and which were not expressly assumed by CK Witco
under the ICI Agreement, including, without limitation, Liabilities
arising from or relating to:
(i) the handling, generation, release, treatment, storage,
transportation or disposal on or off-site of all mercury-containing
materials, wastes, sludges or other substances existing at the
Oissel Complex prior to 30th April 1992;
(ii) the discharge, emission, or release of any mercury-
containing materials, wastes, liquids, sludges, particles, dust or
other substances through the sewer system, the wastewater treatment
system or in any way from the Oissel Complex, provided that
Yorkshire does not at any time after the Effective Date and Time
use, produce or manufacture mercury-containing materials, wastes,
liquids, sludges, particles or other substances at the Company
Site; or
(iii) the discharge, emission, or release of any PCB-containing
materials, wastes, liquids, sludges, particles, dust or other
substances through the sewer system, the wastewater treatment
system or in any way from the Oissel Complex, provided that
Yorkshire does not at any time after the Effective Date and Time
use, produce or manufacture PCB-containing materials, wastes,
liquids, sludges, particles or other substances at the Company
Site;
(b) the investigation, removal or remediation of any
Hazardous Materials in the soils at or beneath the Company Site on
or after the 30th April 1992 or in the soils at or beneath the
Excluded Site on or after the 30th April 1992 (the "Soils
Indemnity"), or in the groundwater at or beneath the Company Site
on or (except to the extent caused by Yorkshire or where Seller
shall not have completed its obligations pursuant to Item 4 of
Exhibit L to the ICI Agreement, or originating off the Oissel
Complex) after the 30th April 1992 (the "Groundwater Indemnity"),
if such investigation, removal or remediation is (i) required by a
Governmental Authority, (ii) reasonably necessary to avoid or
remove material interference with the operation by Yorkshire of the
Business, or any material legal or operational constraints on the
use, ownership, or occupancy of the Facilities, or (iii)
reasonably necessary to protect the safety or health or employees
at the Facilities.
9.5.4.4 Notwithstanding any other limitation set out in
this Agreement:
(a) the Groundwater Indemnity will continue in effect for a
period of five years after the Effective Date and Time;
(b) the Soils Indemnity will continue in effect for a
period of five years after the Effective Date and Time with respect
to Hazardous Materials which (i) are not used or produced by
Yorkshire in its operation of the Business or (ii) are the source
of contamination of the groundwater at or beneath the Company Site;
and
(c) the Soils Indemnity will continue in effect from the
Effective Date and Time with respect to Hazardous Materials used or
produced by Yorkshire in its operation of the Business with the
indemnity extending to thirty-three percent of covered Purchaser
Losses for the period ending on 30th April 2002 and for twenty-five
percent for the period commencing 1st May 2002 until 30th April
2004. From the day following 30th April 2004 CK Witco will have no
liability under this Paragraph 9.5.4.4(c).
9.5.5 Joint and Several Liability
9.5.5.1 No provision of this Agreement will be
interpreted to require Yorkshire to exhaust any other remedies,
sources of funding or to bring claims against any other person
prior to seeking indemnification from CK Witco for Environmental
Losses covered by this Agreement. Yorkshire will provide CK Witco
with reasonable cooperation in pursuit of legal action against any
third party, except that Yorkshire will not be required to pay any
fees, fines, penalties or incur other costs associated with any
such legal action.
9.5.6 Limitations On Claims
9.5.6.1 For the avoidance of doubt, no limitations on
claims included elsewhere in this Agreement will apply to claims
made under Paragraphs 9.5.2, 9.5.3 and 9.5.4 unless otherwise
expressly provided in Paragraphs 9.5.2, 9.5.3 and 9.5.4.
9.6 Taxation Schedule Indemnity. Yorkshire and its
Affiliates shall be entitled to indemnification as set forth in the
Taxation Schedule to this Agreement, which shall be the exclusive
source of indemnification for the matters covered thereby and which
shall exclusively govern claims thereunder and third party claims
with respect thereto. The provisions of Paragraphs 9.3, 9.8, 9.9,
9.10, 9.11, 9.13 and 9.16 shall be inapplicable with respect
thereto and save as expressly stated by express reference to the
Taxation Schedule or in the Taxation Schedule itself, nothing in
this Agreement, any Additional Agreement, any Closing Document or
the CK Witco Disclosure Memorandum shall operate to limit or
exclude the liability of CK Witco in respect of any Claim under the
Taxation Schedule.
9.7 No Contribution by Europe or any Acquired Entity.
None of Europe or any Acquired Entity will have any Liability to
any CK Witco Entity, nor will any CK Witco Entity have a right of
indemnification or contribution against any of them or any of their
officers or employees, as a result of any misrepresentation or
breach of representation or warranty by it contained in this
Agreement, any Additional Agreement or any certificate, schedule,
instrument, agreement or other writing delivered by or on behalf
of, or in respect of, it pursuant to or in connection with this
Agreement, any Additional Agreement or in connection with the
transactions contemplated by this Agreement or any Additional
Agreement, or the breach of any of its covenants or agreements
contained in this Agreement, any Additional Agreement, Closing
Document or the CK Witco Disclosure Memorandum or any certificate,
schedule, instrument, agreement or other writing by or on behalf
of, or in respect of, it pursuant to or in connection with the
terms of this Agreement or any Additional Agreement or in
connection with the transactions contemplated by this Agreement or
any Additional Agreement.
9.8 Minimum Losses. The parties shall have the right to
obtain indemnification under this Agreement as follows:
(a) with respect to Yorkshire:
(i) and in respect of such Indemnified Losses, once
aggregate Indemnified Losses relating to the Acquired Businesses
and arising from Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxx xxx Xxxxx Xxxxxxx
for which Yorkshire and its Affiliates, and the successors and
assigns of Yorkshire and its Affiliates, are otherwise entitled to
indemnification under this Article 9 exceed US$750,000 (or its
reasonable equivalent in another currency), after which time only
the aggregate amount of such Indemnified Losses in excess of
US$750,000 (or its reasonable equivalent in another currency) shall
be recoverable in accordance with the terms hereof, or
(ii) and in respect of such Indemnified Losses, once
aggregate Indemnified Losses relating to Europe and the Acquired
Entities arising from Europe and Asia for which Yorkshire and its
Affiliates, and the successors and assigns of Yorkshire and its
Affiliates, are otherwise entitled to indemnification under this
Article 9 exceed US$500,000 (or its reasonable equivalent in
another currency), after which time only the aggregate amount of
such Indemnified Losses in excess of US$250,000 (or its reasonable
equivalent in another currency) shall be recoverable in accordance
with the terms hereof, except that this Paragraph 9.8(a)(ii) shall
not apply to liabilities arising out of Paragraph 3.26(ii) relating
to Disclosed Schemes in the Netherlands (listed under Paragraph
3.26(a)(ii)) and Disclosed Schemes in France (listed under
Paragraph 3.26(a)(iv)) provided through AXIVA and IREC and a
defined benefit scheme known as SAD 4000; and
(b) with respect to CK Witco, once aggregate losses for
which CK Witco and its Affiliates, and the successors and assigns
of CK Witco and its Affiliates, are otherwise entitled to
indemnification under this Article 9 exceed US$1,250,000 (or its
reasonable equivalent in another currency), after which time only
the aggregate amount of such losses in excess of US$1,000,000 (or
its reasonable equivalent in another currency) shall be recoverable
in accordance with the terms hereof.
(c) Notwithstanding the provisions of Paragraph 9.8(a),
the foregoing limitations shall not apply to Indemnified Losses in
respect of title to assets, litigation, Taxes, environmental
matters (including claims arising pursuant to Paragraphs 3.18 and
9.5), Liabilities which are neither Assumed Liabilities nor
European Retained Liabilities, or claims arising pursuant to any of
Paragraphs 9.12, 9.13, 9.14 or 9.18.
9.9 Maximum Indemnification. No party shall have any
right to obtain an indemnification payment under this Agreement to
the extent the aggregate of the amounts received by such party and
its Affiliates, and the successors and assigns of such party and
its Affiliates, as indemnification payments hereunder exceeds an
amount equal to (i) US$30,000,000 for Yorkshire or (ii)
US$17,500,000 for CK Witco; provided, however, that the foregoing
limitation shall not apply to Yorkshire and its Affiliates in
respect of Indemnified Losses in respect of title to assets,
litigation, Taxes, environmental matters (including claims arising
pursuant to Paragraphs 3.18 and 9.5), Liabilities which are neither
Assumed Liabilities nor European Retained Liabilities, or claims
arising pursuant to any of Paragraphs 9.12, 9.13, 9.14 or 9.18.
9.10 Subrogation. Any Indemnifying Party shall be
subrogated to any right of action which the Indemnified Party may
have against any other Person with respect to any matter giving
rise to a claim for indemnification hereunder.
9.11 Adjustments to Indemnification. (a) All indemnity
payments made under this Article 9 (excluding payments pursuant to
Paragraph 9.1(b)) shall be treated for accounting purposes as
adjustments to the Purchase Price. All computations of indemnity
payments due under this Article 9 shall reflect the actual present
cash cost of the obligation with respect to which the indemnity
payment relates. If any Indemnified Party receives a Tax benefit
by virtue of having paid or accrued an amount for which an
indemnity payment is provided, the amount of such Tax benefit will
be refunded to the Indemnifying Party making such indemnity payment
when, as and if such Indemnified Party realizes a cash Tax savings
from such Tax benefit.
(b) The amount which any Indemnifying Party is or may be
required to pay any Indemnified Party pursuant to this Article 9
shall be reduced (including retroactively) by any insurance
proceeds or other amounts actually recovered by or on behalf of
such Indemnified Party in reduction of the related Losses. If an
Indemnified Party shall have received the payment required by this
Agreement from an Indemnifying Party in respect of a Loss and shall
subsequently actually receive insurance proceeds or other amounts
in respect of such Loss, then such Indemnified Party shall pay to
such Indemnifying Party a sum equal to the amount of such insurance
proceeds or other amounts actually received (net of any expenses in
obtaining the same).
9.12 Xxxxx Road Indemnity. CK Witco and Yorkshire expressly
acknowledge that the lease dated 24th April 1997 between Foden
Investments Ltd (1), CK Witco (UK) Limited (2) and Europe (3)
relating to offices at Xxxxxxxxx Xxxxxxxxxx Xxxx, Xxxxx Xxxx,
Xxxxxx, XX (the "Lease") is not intended to be assumed by Yorkshire
pursuant to the transaction the subject of this Agreement and CK
Witco, Colors and Holdings jointly and severally agree to indemnify
Yorkshire, each Yorkshire Entity, each Yorkshire Affiliate, each
Acquired Entity and Europe in respect of all costs, claims,
liabilities and expenses (including for the avoidance of doubt,
rent) relating to the Lease, provided that this indemnity shall not
apply to the extent CK Witco (UK) Limited and Europe fail to comply
with their obligations under the Lease (save for their obligations
to pay for rent, service charges and other monetary amounts).
9.13 BCC Indemnity. CK Witco, Colors and Holdings jointly and
severally agree to indemnify Yorkshire, each Yorkshire Affiliate,
each Yorkshire Entity, each Acquired Entity and Europe in respect
of all costs, claims, liabilities and expenses relating to the
transactions referred to in Paragraph 2.15.
9.14 Dusseldorf Indemnity. CK Witco, Colors and Holdings
jointly and severally agree to indemnify Yorkshire, each Yorkshire
Entity, each Yorkshire Affiliate, each Acquired Entity and Europe
in respect of all costs, claims, liabilities and expenses relating
to the closure of the office previously occupied by the relevant
Acquired Entity in Dusseldorf, Germany.
9.15 Exclusive Remedy. Subject to Paragraph 9.6, the right to
indemnification, if any, with respect to breaches of
representations, warranties and covenants pursuant to this
Article 9 shall constitute the sole and exclusive remedy with
respect thereto, shall preclude any other monetary award (whether
at law or in equity), and shall preclude assertion by any party
hereto of any right to any such monetary award from the
Indemnifying Party, other than in the case of fraud or intentional
misconduct, in which case each Person shall have all such remedies
as may be available at law, in equity or otherwise. Nothing in
this Article 9 shall limit the remedies available to an Indemnified
Party to enforce its right to indemnification or to injunctive
relief.
9.16 Duty to Mitigate. Each indemnified party shall
cooperate with each indemnifying party with respect to resolving
any actual or potential Losses arising out of, attributable to, or
resulting from any inaccuracy in or breach of any of the
representations, warranties, covenants or agreements of the other
relevant parties hereto, including by making such commercially
reasonable efforts to mitigate any or all such Losses as the
indemnified party would reasonably use in mitigating its own losses
(assuming it were not indemnified hereunder). In the event that
any indemnified party shall fail to make such efforts as are
described in the preceding sentence, then, notwithstanding anything
else to the contrary contained in this Agreement, the indemnifying
party shall not be required to indemnify any Person to the extent
of any or all of the Losses that could reasonably have been avoided
if the indemnified party had made such efforts, but only to that
extent.
9.17 After-Tax Payments.
9.17.1 All sums payable by CK Witco, Colors,
Holdings or any other CK Witco Entity (each, a "CK Witco Party") to
Yorkshire or Americas or any Acquired Entity or Europe or any
Yorkshire Affiliate (each, a "Yorkshire Party") under this
Agreement (other than Paragraph 1.4) or by a Yorkshire Party to a
CK Witco Party under Paragraph 9.4 or Article 5 shall be paid free
and clear of all deductions or withholdings whatsoever, save only
as may be required by law.
9.17.2 If any deductions or withholdings, not
being in respect of payments of interest in respect of late payment
of sums referred to in Paragraph 9.17.1, are required by law to be
made from any sum payable as mentioned in Paragraph 9.17.1, then
the payor shall pay to the payee, on payment of the relevant sum,
such additional sum as will, after the deduction or withholding has
been made, leave the payee with the same amount as it would have
been entitled to receive in the absence of any such requirement to
make a deduction or withholding.
9.17.3 If any sum payable as mentioned in
Paragraph 9.17.1, not being in respect of payments of interest in
respect of late payment of sums referred to in Paragraph 9.17.1,
shall be subject to Taxes in the hands of the payee (ignoring the
availability of any Relief (as defined in the Taxation Schedule)
not arising from the Underlying Loss (as defined herein)), then the
payor shall pay to the payee an additional sum equal to the amount
of such Taxes which are payable by the payee (or would be payable
in the absence of any such Relief) such additional sum to be paid
within five (5) Business Days of written demand therefor by the
payee.
9.17.4 If any sum payable as mentioned in
Paragraph 9.17.1 is payable with respect to an Indemnified Loss,
Environmental Loss or other loss, damage, liability, cost or
expense, including reasonable attorneys' fees and amounts paid in
settlement (an "Underlying Loss"), and the payee receives a
insurance payment or Tax Benefit with respect to the Underlying
Loss, the amounts otherwise payable under this Paragraph 9.17 shall
be reduced by such insurance payment or Tax Benefit. In the event
that the insurance payment or Tax Benefit is received by the payee
after the payment is made under this Paragraph 9.17, the payee
shall refund to the payor an amount equal to the insurance payment
or Tax Benefit within five (5) Business Days of receipt of such
insurance payment or Tax Benefit.
9.17.5 As used in this Paragraph 9.17, "Tax
Benefit" shall mean the benefit actually realized, through a
reduction in Taxes otherwise due, from any item of deduction, loss
or credit. It shall be assumed for this purpose that all Post-
Closing Reliefs (as defined in the Taxation Schedule) and all other
deductions, losses or credits that are not with respect to
Underlying Losses are used in priority to any deduction, loss or
credit with respect to the Underlying Loss.
9.17.6 For purposes of Paragraph 9.17.3, a sum
payable as mentioned in Paragraph 9.17.1 by a CK Witco Party to a
Yorkshire Party shall not be treated as subject to Taxes merely
because the receipt of such payment results in a reduction in
Yorkshire's tax basis in the Europe Capital Stock or any Yorkshire
Entity's tax basis in other Transferred Assets.
9.17.7 To the extent permitted by applicable
law, but without in any way limiting the obligations of any party
to make any payment, the parties to this Agreement shall treat any
payment paid or received pursuant to this Article 9 as an
adjustment to the Purchase Price for all Tax purposes.
9.17.8 The provisions of this Paragraph 9.17
(including Paragraph 9.17.4)
(i) shall not apply to any amounts payable pursuant to the
Taxation Schedule (to which the corresponding provisions of that
schedule shall apply); and
(ii) with respect to payments by a CK Witco Party to a
Yorkshire Party, shall apply only with respect to sums payable in
relation to Europe or any Acquired Entity.
9.18 Pensions Indemnity. CK Witco, Colors and Holdings
hereby jointly and severally indemnify and hold harmless the
Yorkshire Entities, Yorkshire's Affiliates, Europe and the Acquired
Entities against all and any losses, claims, expenses, damages,
costs and all other liabilities (including, for the avoidance of
doubt, the whole amount of any funding deficit relating to benefits
accrued before Closing which is revealed by the first actuarial
valuation carried out after Closing) relating to and arising from
the Crompton & Xxxxxxx (UK) Limited Retirement Benefits Scheme (the
"Scheme") (being the scheme mentioned in the 1997 report and
accounts of Crompton & Xxxxxxx (UK) Limited). CK Witco will
procure and Yorkshire will co-operate to ensure that Crompton &
Xxxxxxx (UK) Limited will be replaced as the principal employer of
the Scheme with effect from the Closing.
10. SURVIVAL
10.1 Survival. The representations, warranties,
covenants, agreements and indemnities of the parties contained in
this Agreement or any Additional Agreement, or in any writing
delivered pursuant to the provisions of this Agreement or any
Additional Agreement, will survive any investigation prior, on or
subsequent to the date of this Agreement made by any party or its
Representatives and the consummation of the transactions
contemplated in this Agreement, any Additional Agreement or in any
writing delivered pursuant to the provisions of this Agreement or
any Additional Agreement and will continue in full force and effect
for the periods specified below (the "Survival Period"):
(a) representations, warranties, covenants, agreements and
indemnities relating to undisclosed and contingent Liabilities,
title to assets, title to Transferred Assets, employee welfare and
benefits, the reporting or payment of or Liability for Taxes (other
than for Taxes covered by the Taxation Schedule), compliance with
laws, fraud or willful misrepresentation, and fraudulent or willful
incompleteness of disclosure will survive until expiration of any
applicable statute or period of limitations, and any extensions of
the applicable statute or period of limitations;
(b) representations, warranties, covenants, agreements and
indemnities set forth in the Taxation Schedule shall survive as set
forth in the Taxation Schedule; and
(c) all other representations, warranties, covenants,
agreements and indemnities for which no survival period or
termination date is set forth elsewhere in this Agreement, will be
of no further force and effect after June 30, 2001;
provided, however, that the Survival Period will be extended
automatically to include any time period necessary to resolve a
claim for indemnification which arises out of any written notice to
Indemnitor advising Indemnitor of the facts or circumstances that
may give rise to a claim for indemnification, provided notice was
delivered before expiration of the Survival Period. Liability for
any item will continue until the claim will have been finally
settled, decided or adjudicated.
11. TERMINATION
11.1 Termination for Certain Causes.
This Agreement may be terminated at any time prior to or on
the Closing Date by Yorkshire or CK Witco, upon written notice to
the other as follows:
(a) By Yorkshire, if a material adverse change in the business,
properties, financial condition of the Acquired Businesses will
have occurred.
(b) By Yorkshire, if a material adverse change in the business,
properties or financial condition of Yorkshire or the Acquired
Businesses occurs prior to Closing, or there are other factors
outside Yorkshire's reasonable control which in either case cause
Yorkshire's lenders to terminate their obligation to lend to
Yorkshire under its facility agreement of today's date with HSBC
Bank and the other signatories thereto.
(c) By Yorkshire, if the terms, covenants or conditions of this
Agreement to be complied with or performed by any CK Witco Entity,
Europe or any Acquired Entity at or before the Closing Date will
not have been complied with or performed in all material respects
or any other conditions to the obligations of Yorkshire to
consummate the transactions contemplated by this Agreement required
to be satisfied at or before the Closing Date will not have been
complied with or satisfied in all material respects, and any such
material noncompliance or nonperformance will not have been waived
writing by Yorkshire.
(d) By CK Witco, if the terms, covenants or conditions of this
Agreement to be complied with or performed by any Yorkshire Entity
at or before the Closing Date will not have been complied with or
performed in all material respects or any other conditions to the
obligations of CK Witco to consummate the transactions contemplated
by this Agreement required to be satisfied at or before the Closing
Date will not have been complied with or satisfied in all material
respects, and any such material noncompliance or nonperformance
will not have been waived in writing by CK Witco.
(e) By CK Witco or Yorkshire, if any Action will have been
instituted against any party to this Agreement to restrain or
prohibit, or to obtain substantial damages in respect of, this
Agreement or the consummation of the transactions contemplated in
this Agreement, which, in the reasonable and good faith opinion of
any party and upon the written advice of outside counsel, makes
consummation of the transactions contemplated in this Agreement
inadvisable.
(f) By CK Witco or Yorkshire, if the Closing has not occurred
on or before December 31, 1999.
(g) By CK Witco and Yorkshire, by written consent.
11.2 Procedure on and Effect of Termination.
(a) Pursuant to Paragraph 11.1 of this Agreement, written
notice of termination will be given to all other parties by the
party electing to terminate, and this Agreement will terminate upon
the giving of notice, without further action by any of the parties
to this Agreement, with the consequence and effect set forth in
this Paragraph 11.2.
(b) If for any reason on the Closing Date there has been
nonfulfillment of an undertaking by or condition precedent for
Yorkshire on the one hand and CK Witco on the other not waived in
writing by or on behalf of the party in whose favor the
undertaking or condition or undertaking runs, the party in whose
favor the undertaking or condition runs, in addition to any other
right or remedy available to it for breach or non-performance of
this Agreement or any Additional Agreement, may refuse to
consummate the transactions contemplated by this Agreement
without Liability or obligation on its part whatsoever.
Notwithstanding the foregoing, the obligations of the parties
pursuant to Paragraphs 2.3, 2.4, 2.5, 2.7, 10.1, 11.1, 11.2,
12.1, 12.3 and 12.4 will survive any termination.
12. MISCELLANEOUS
12.1 Notices.
(a) All notices, demands or other communications
required or permitted to be given or made under this Agreement
will be in writing and (i) delivered personally, or (ii) sent by
an internationally recognized express courier service to the
intended recipient of the notice, demand or other communication
at its address set forth below. Any notice, demand or
communication will be deemed to have been duly given (x)
immediately if personally delivered, or (y) on the fourth
Business Day after delivery to an international express courier
service, and in proving the giving of any notice, demand or other
communication, it will be sufficient to show that the envelope
containing the notice, demand or other communication was duly
addressed (as evidenced by the courier receipt). The addresses
of the parties for purposes of this Agreement are:
(i) If to any CK Witco Entity, and before Closing, to Europe
or any Acquired Entity: CK Witco Corporation
Xxx Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
XXX
Attn:Xxxxxxx X. Xxxxxxx, Senior Vice
President - Strategy and Development
with copies to (which shall not constitute notice):
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXX
Attn: Xxxxxx X. Xxxxxxx
(ii) If to any Yorkshire Entity, and after Closing,
additionally to Europe or any Acquired Entity:
Yorkshire Group plc
Xxxxxxxxx Xxxx
Xxxxx XX0 0XX
Xxxxxxx
Attn: Group Finance Director
with copies to (which shall not constitute notice):
Xxxxxxxxx Xxxxx & Co
Xxxxxxxxx Xxxxx
Xxxxx XX0 0XX
Xxxxxxx
Attn: Xxx XxXxxxxx
Xxxxxx Xxx
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
XXX
Attn: Xxxxxxx X. Cinnamon
(b) Any party may change the address to which notices,
requests, demands or other communications to the relevant party
will be delivered or mailed by giving notice of the address
change to the other parties to this Agreement in the manner
provided in this Agreement.
12.2 Counterparts. This Agreement may be executed in
any number of counterparts, each of which will be deemed an
original, and all of which will constitute one and the same
instrument.
12.3 Entire Agreement. This Agreement and the
Additional Agreements, together supersede all prior discussions
and agreements between the parties with respect to the subject
matter of this Agreement and the Additional Agreements, including
a certain Letter of Intent, dated 30 July, 1999, as amended and
modified to the date of this Agreement, and this Agreement and
the Additional Agreements contains the sole and entire agreement
among the parties with respect to the matters covered by this
Agreement and the Additional Agreements. This Agreement will not
be altered or amended except by an instrument in writing signed
by or on behalf of the party entitled to the benefit of the
provision against whom enforcement is sought.
12.4 Governing Law; Dispute Resolution. This Agreement
shall be governed by and construed, interpreted and enforced in
accordance with the laws of the State of New York (without
application of its conflicts of laws rules), except that the
choice of law set forth in the Taxation Schedule shall govern
with respect to the matters governed by the Taxation Schedule.
Any and all disputes (each, a "Disputed Matter") arising out of
or in connection with the execution, interpretation, performance
or nonperformance of this Agreement will be resolved by the
procedures set forth on Exhibit MM attached to this Agreement.
12.5 Successors and Assigns. This Agreement will be
binding upon and will inure to the benefit of the parties to this
Agreement and their respective heirs, executors, legal
representatives, successors and assigns, but may not be assigned
by any party without the written consent of all other parties,
except to an Affiliate; provided however Yorkshire shall be
entitled to assign the full benefit of this Agreement and the
Additional Agreements to its lenders from time to time and their
successors in title.
12.6 Partial Invalidity and Severability. All rights
and restrictions contained in this Agreement may be exercised and
will be applicable and binding only to the extent that they do
not violate any applicable laws and are intended to be limited to
the extent necessary to render this Agreement legal, valid and
enforceable. If any term of this Agreement, or part of this
Agreement, not essential to the commercial purpose of this
Agreement will be held to be illegal, invalid or unenforceable by
a court of competent jurisdiction, it is the intention of the
parties that the remaining terms of this Agreement, or part of
this Agreement, will constitute their agreement with respect to
the subject matter of this Agreement and all remaining terms, or
parts of this Agreement, will remain in full force and effect.
To the extent legally permissible, any illegal, invalid or
unenforceable provision of this Agreement will be replaced by a
valid provision which will implement the commercial purpose of
the illegal, invalid or unenforceable provision.
12.7 Waiver. Any term or condition of this Agreement
may be waived at any time by the party which is entitled to the
benefit of the term, but only if the waiver is evidenced by a
writing signed by the relevant party. No failure on the part of
any party to this Agreement to exercise, and no delay in
exercising any right, power or remedy created under this
Agreement, will operate as a waiver thereof, nor will any single
or partial exercise of any right, power or remedy by any party
preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. No waiver by any party to this
Agreement or any breach of or default in any term or condition of
this Agreement will constitute a waiver of or assent to any
succeeding breach of or default in the same or any other term or
condition of this Agreement.
12.8 Headings. The headings of particular provisions of
this Agreement are inserted for convenience only and will not be
construed as a part of this Agreement or serve as a limitation or
expansion on the scope of any term or provision of this
Agreement.
12.9 Number and Gender. Where the context requires, the
use of the singular form in this Agreement will include the
plural, the use of the plural will include the singular, and the
use of any gender will include any and all genders.
12.10 Construction. The word "including" (and, with
correlative meaning, the word "include") means that the
generality of any description preceding such word is not limited,
and the words "shall" and "will" are used interchangeably and
have the same meaning.
12.11 Time of Performance. Time is of the essence.
13. CERTAIN DEFINITIONS; INDEX OF DEFINITIONS
13.1 Certain Definitions. For purposes of this
Agreement, the following capitalized terms will have the meanings
specified below (all terms used in this Agreement which are not
defined in this Paragraph 13.1 but defined elsewhere in this
Agreement, will have for purposes of this Agreement the meanings
set forth elsewhere in this Agreement):
"Action" means any action, suit, complaint, counter-claim,
claim, petition, set-off or administrative proceeding, whether at
law, in equity or otherwise, and whether conducted by or before
any Government or other Person.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by, or under direct or
indirect common control with the former Person from time to time.
A Person will be deemed to control another Person if that Person
possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of the other Person,
whether through the ownership of voting securities, by contract
or otherwise.
"agreed form" means in the form produced to the parties on the
date of this Agreement and initialled by or on behalf of each of
Yorkshire and CK Witco for the purposes of identification.
"Americas IPD Business Territory" means the countries,
territories and possessions listed on the attached Exhibit NN
attached to this Agreement.
"Application" means the application to be made by Yorkshire to
the London Stock Exchange for the admission of its issued
Ordinary Share capital (as enlarged by the issue of the
Consideration Securities) to the Official List subject only to
allotment.
"Article" and "Paragraph" and like references are to this
Agreement unless otherwise specified, and all "Exhibits" are
references to those attached to this Agreement and incorporated
in this Agreement by this reference, unless otherwise specified.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which commercial banks in either New York or London
are required or authorized to be closed.
"CK Witco Service Areas" means those geographies in which CK
Witco conducted an Acquired Business during the 12-month period
immediately preceding the Effective Date and Time.
"Code" means the United States Internal Revenue Code of 1986, as
amended, and all final and temporary regulations promulgated
pursuant thereto.
"Consideration Securities" means a number of new Ordinary Shares
of Section 0.25p each of Yorkshire (not exceeding 15,274,072 in
total and rounded down to the nearest whole share) equal to the
quotient derived by dividing (A) US$8,500,000 by (B) the Average
Share Price. For purposes of this definition of Consideration
Securities, "Average Share Price" will be determined as follows:
(i) the average mid-market price (the "Average Sterling
Share Price") of Yorkshire's Ordinary Shares ("Ordinary Shares")
on the London Stock Exchange for the 10 Business Days ending two
(2) days before the Closing Date as quoted for each such Business
Day in the London Financial Times shall be determined;
(ii) if the Average Sterling Share Price is below 70p per
Ordinary Share, then the Average Sterling Share Price for the
purposes of this Agreement shall be deemed to be 70p per Ordinary
Share, and if the Average Sterling Share Price is above 130p per
Ordinary Share, then the Average Sterling Share Price for the
purposes of this Agreement shall be deemed to be 130p per
Ordinary Share;
(iii) the Average sterling/US$ exchange rate (the "Average
Exchange Rate") for each of the 10 Business Days ending two (2)
days before the Closing Date shall be determined by reference to
the closing mid-point of the buy-sell range as quoted for each
such Business Day (or, if applicable, for those Business Days
during such 10-day period for which the London Financial Times is
published) in the following day's London Financial Times;
(iv) the Average Sterling Share Price will be converted into
US$ by reference to the Average Exchange Rate to produce the
Average Share Price.
"Crude Stocks" means dyes or other products, which have
completed their synthesis process, but are not finished goods or
"work-in-process" (as defined by CK Witco's financial accounting
system at the time of sale).
"Duty Costs" means all duty and filing costs (including
stamp duty and filing costs but excluding attorneys', agent or
advisors costs and fees reasonably required by an Agency,
"Agency" means the United States Patent and Trademark Office, the
United States Copyright Office, or any other federal, state,
local, provincial or other governmental or regulatory agency in
the world which now regulates or may in the future regulate, the
protection, use, or registration of Intellectual Property Rights.
"Extraordinary General Meeting" means the Extraordinary General
Meeting of Yorkshire to be convened for December 15, 1999 (or any
adjournment thereof) to consider (inter alia) the Resolutions.
"Fixed Asset Registers" means those documents
denominated and designated as such by CK Witco and Yorkshire, as
evidenced by their signatures thereon on today's date.
"Forum" means any national, provincial, municipal, local or
foreign court, governmental agency, administrative body or
agency, tribunal, private alternative dispute resolution system,
or arbitration panel.
"GAAP" means United States generally accepted accounting
principles, consistently applied, as in effect from time to time.
"Government" means any national, provincial, state,
municipal, local or foreign government or any ministry,
department, commission, board, bureau, agency, authority,
instrumentality, unit, or taxing authority thereof.
"Intellectual Property Rights" means all patents, registered
designs, trademarks and service marks (whether or not registered
or registerable), copyright, design right and all similar
property rights (whether or not registered or registerable),
including those existing (in any part of the world) in
inventions, design, drawings, computer programmes, confidential
information, business or brand names goodwill or the style of
presentation of goods and services and in any applications for
protection thereof.
"Industrial Dyes" means those dyes (1) combined with or
manufactured in whole or part using Intellectual Property Rights;
and (2) intended to be combined with or applied to any Industrial
Product.
"Industrial Product" or "Industrial Products" means any of the
following products, materials or items other than Textile Dyes,
and specifically including without limitation all of the
following products, materials or items: (a) paper, leather,
wood, wood stains, plastics, resins, paints and printing inks
(including without limitation, inkjet inks for graphic arts,
paper, leather, wood, plastics and resins, but excluding inkjet
inks for other than graphic arts, paper, leather, wood, plastics
and resins; and including without limitation, printing inks for
heat or other transfer or gravure); (b) decorative coatings for
metallic foils and polymeric films, petroleum Dyes and water
tracing; and (c) mass dyeing of molten polymers and other molten
synthetic materials used to form fibers, filaments or yarns.
"IPD Business" means those Persons engaged in (1) the
distribution, use or sale of Industrial Dyes and/or (2) the
manufacture, distribution, or sale of Industrial Products which
contain or incorporate Industrial Dyes.
"Law" means all national, provincial, regional, state,
municipal, local or foreign constitutions, statutes, decrets,
rules, regulations, ordinances, acts, codes, legislation,
treaties, conventions and similar laws and legal requirements, as
in effect from time to time.
"Liability" means any liability or obligation whether known
or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated and whether due
or to become due.
"Lien" means any claim, mortgage, pledge, hypothecation,
security interest, encumbrance, lien or charge of any kind, or
any rights of others, however evidenced or created (including any
agreement to give any of the foregoing, any conditional sale or
other title retention agreement, or any lease having a similar
effect or result).
"London Stock Exchange" means London Stock Exchange Limited.
"Malfunction" means any failure to: (a) accurately recognize
dates falling before, on or after the Year 2000; or (b)
accurately record, store, retrieve and process data input and
date information.
"Notice of EGM" means the notice in the form set out in the
Listing Particulars.
"Orders" means all orders, writs, judgments, decrees,
rulings and awards of any Forum or Government.
"Person" means and include an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization, any legal or juridical entity, the equivalent of
any of the foregoing under any Law, and any Government.
"Representative" of a party means that party's directors,
officers, partners, employees, agents, accountants, lenders,
lawyers, investment bankers, merchant bankers, and other
financial or professional advisors or consultants.
"Research and Development Library" means the research and
development laboratory maintained at the Gibraltar Facility at
today's date and all Proprietary Rights arising with respect
thereto.
"Resolution" means the Resolution set out in the Notice of EGM.
"Software" means all computer software and subsequent versions
thereof, including but not limited to, source code, object code,
objects, comments, screens, user interfaces, report formats,
templates, menus, buttons and icons, and all files, data,
materials, manuals, design notes and other items and
documentation related thereto or associated therewith.
"Taxation Schedule" means the Schedule attached to and
forming a part of this Agreement and denominated as such.
"Taxes" means (other than in the Taxation Schedule) any past,
present or future taxes, levies, imposts or duties of whatever
nature, including income, gross receipts, excise, property,
sales, transfer, license, payroll, withholding, social security,
and franchise taxes, now or hereafter imposed or levied by any
federal, state, local or foreign Government or by any department,
agency or other political subdivision or taxing authority thereof
or therein and all interests, penalties, additions to tax, and
other similar liabilities with respect to the Taxes.
"Textile Dyes" means those dyes (1) combined with or
manufactured in whole or part using Intellectual Property; and
(2) intended to be combined with or applied to any Textile
Product.
"Textile Dyes Business" means those Persons engaged in (1) the
distribution, use or sale of Textile Dyes and/or (2) the
manufacture, distribution, or sale of Textile Products which
contain or incorporate Textile Dyes.
"Textile Product" or "Textile Products" means any of the
following products, materials or items:
(1) woven textiles;
(2) non-woven textiles other than wet-laid or
dry-laid cellulosic non-woven textiles;
(3) knitted textiles;
(4) pre-formed loose fibers, filaments or yarns
(including without limitation pre-formed tufted yarns used to
manufacture carpet); or
(5) inkjet inks for other than graphic arts,
paper, leather, wood, plastic or resin.
"U.S. Asset Acquired Businesses" means those Acquired
Businesses that have their primary operations in the United
States and that are being purchased pursuant to this Agreement by
means of the acquisition of assets rather than of shares.
"US Employees" means full-time, active employees of an Acquired
Business whose principal residence is in the United States.
"Year 2000" means the calendar year 2000 A.D.
"Yorkshire Disclosure Memorandum" means the letter denominated as
such, dated today's date, and executed by Yorkshire in favor of
CK Witco.
13.2 Index to Definitions. The definitions for the
following defined terms used in this Agreement can be found as
follows:
Defined Term Reference
Accountants 1.4(b)
Acquired Businesses Recitals
Acquired Entity(ies) Recitals
Acquired IPD Business (es) Recitals
Acquired Properties 1.1(b)
Additional Agreement(s) 1.11(b)
Americas Preamble
Americas IPD Business Recitals
Answer Period 9.3(e)
Assigned Contracts 1.1(g)
Assumed Collective Bargaining Agreements 2.10(e)
Assumed Liabilities 1.5(a)
Balance Sheet Principles 1.4(a)
Bank Account 1.11(a)
BCC 1.1(c)
Business Employees 2.10(a)
Charlotte Improvements 1.1(a)(ii)
Charlotte Land 1.1(a)(ii)
CK Witco Preamble
CK Witco Disclosure Memorandum Article 3
CK Witco Entities 1.1
CK Witco ESOP 2.10(f)
CK Witco Party 9.17.1
CK Witco Restricted Period 2.8
CK Witco Service Areas 13.1
CK Witco Supply Contract 1.11(b)
CK Witco 401(k) 2.10(f)
Closing 1.10
Closing Date 1.10
Closing Documents 1.11(a)
Closing Net Assets 1.4(a)
Closing Special Purpose Statement 1.4(a)
COBRA 2.10(h)(iii)
Colors Preamble
Colors Contracts 1.2(c)
Computations 1.4(a)
Contracts 3.20
Contractors 9.5.2.2(g)
Covered Properties 9.5.1.1
Xxxxxx Improvements 1.1(a)(iv)
Xxxxxx Land 1.1(a)(iv)
Disclosed Schemes 3.26(a)
Disposal Period 2.8(c)
Disputed Matter 12.4(a)
Due Diligence Request 3.36
Effective Date and Time 1.10
Employee Benefit Plans 3.25(a)
Environmental Damage 9.5.1.1
Environmental Law 9.5.1.1
Environmental License 9.5.1.1
Environmental Losses 9.5.1.1
Environmental Regulator 9.5.1.1
Environmental Reports 9.5.1.1
Euro-Affected Products and Services 3.10
ERISA Affiliate 3.25(h)
Europe Preamble
Europe Capital Stock 1.1(m)
European /Asian Employees 3.24(b)(i)
European Retained Liabilities 1.6(b)
Excluded Assets 1.2
Excluded Liabilities 1.6(b)
Excluded Liability Fund 2.21
Excluded Properties 1.2(a)
Gibraltar Facility 1.2(a)(iv)
Greenville Improvements 1.1(a)(iii)
Greenville Land 1.1(a)(iii)
Groundwater Indemnity 9.5.4.3(b)
Hazardous Substance 9.5.1.1
Holdings Preamble
HSR Filing 2.6
Immovable Property 3.17(a)
Improvements 1.1(a)(iv)
Indemnified Losses 9.1
Indemnitees 9.1
Indemnitors 9.1
Index of Documents 3.36
Inventories 1.1(d)
IPD Bagger 1.2(e)
Land 1.1(a)(iv)
Lease 9.12
Leased Real Property 1.1(b)
Listing Particulars 4.3
Xxxxxx Improvements 1.1(a)(i)
Xxxxxx Land 1.1(a)(i)
Measuring Period 1.1(d)
Newark Facility 1.2(a)(i)
Nutley Facility 1.2(a)(ii)
Other Identified Issues 9.5.2.8
Owned Real Property 1.1(a)
Participants 2.11(a)(i)
Permits 3.6
Property Leases 3.17(b)
Proprietary Rights 3.19(a)
Purchase Price 1.3
Purchaser Loss 9.5.4.4
Reading Facility 1.2(a)(iii)
Receivables 1.1(e)
Reference Date 3.34
Related Parties 3.29
Remedial Works 9.5.1.1
Reviewed Contracts 1.6(b)
Scheme 9.18
Soils Indemnity 9.5.4.3(b)
Specific Indemnity Issues 9.5.2.8
Special Purpose Statements 3.10
Survival Period 10.1
Target Competitive Business 2.8(c)
Tax Benefit 9.17.5
Transferred Assets 1.1
Underlying Loss 9.17.4
UK Scheme 3.25(a)
WARN Act 2.10(j)
Written Responses 3.36
Yorkshire Preamble
Yorkshire Entities 1.1
Yorkshire Party 9.17.1
Yorkshire Restricted Period 2.8(e)
Yorkshire Supply Contract 1.11(b)(ii)
Yorkshire 401(k) Plan 2.10(j)
1999 Americas Textile Dyes Revenues 1.1(d)
1999 Annual Bonus and Commissions 2.10(l)
[Signatures Appear on Following Page]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
Yorkshire Group plc
By:
Print Name:
Title:
Yorkshire Americas, Inc.
By:
Print Name:
Title:
CK Witco Corporation
By:
Print Name:
Title:
Crompton & Xxxxxxx Europe S.P.R.L.
By:
Print Name:
Title:
Uniroyal Chemical European Holdings B.V.
By:
Print Name:
Title:
Crompton & Xxxxxxx Colors Incorporated
By:
Print Name:
Title:
TAXATION SCHEDULE
Part A - General
1. Interpretation
1.1 In this schedule (unless the context otherwise requires):
"Accounts" means in relation to each Company, the audited balance
sheet as at and the profit and loss account and financial
statements for the period ended on the Accounts Date.
"Accounts Date" means 19th December, 1998 or 31st December, 1998
being the date in December 1998 as at which the relevant Company
made up its Accounts.
"Actual Taxation Liability" means a liability, or an increase in
a liability, to make an actual payment of or of an amount in
respect of Taxation whether or not such Taxation is also or
alternatively, directly or indirectly, chargeable against or
attributable to any other person and whether or not any amount in
respect thereof is recoverable from any other person and whether
or not such liability or increased liability is discharged prior
to Closing.
"Auditors" means the auditors for the time being of the Company.
"CK Witco's Group" means CK Witco, Holdings and any company, not
being a Company, which is the holding company from time to time
of CK Witco and any subsidiary from time to time of such holding
company or CK Witco and references to a "member of CK Witco's
Group" shall be construed accordingly and the expressions
"holding company" and "subsidiary" shall have the meanings
ascribed thereto in section 736 of the Companies Xxx 0000 of the
United Kingdom.
"Claim" means any assessment, notice, demand or other document
issued or action taken by or on behalf of any Taxation Authority
or any form of return, computation or self-assessment required by
law from which it appears that the Company is subject to, or is
sought to be made subject to, or will or might become subject to,
any Taxation Liability.
"Deemed Taxation Liability" means the setting off of a Post-
Closing Relief against any Actual Taxation Liability of the
Company in respect of which CK Witco would have been liable under
paragraph 1.1 of Part B or (as the case may be) against Profits
which would have given rise to such an Actual Taxation Liability,
in which event the amount of the Deemed Taxation Liability is in
the former case the amount of the Actual Taxation Liability
eliminated by such setting off and in the latter case the amount
of the Actual Taxation Liability which would have arisen but for
such setting off.
"Event" means any event, occurrence, transaction, circumstance,
act or omission whatsoever (and any event, occurrence,
transaction, circumstance, act or omission deemed or treated or
regarded for any Taxation purpose as having occurred) including
being, or ceasing to be, a member of a group or under the control
of, associated with or related to any person for the purposes of
any Taxation, being or ceasing to be resident in any jurisdiction
for the purposes of any Taxation, the entry into of any agreement
(whether conditional or not) and the execution of this Agreement
and Closing and references to an Event occurring on or before a
particular time or date shall include any Event deemed to have
occurred on or before that time or date for any Taxation purpose.
"Post-Closing Relief" means any Relief which arises in
consequence of or by reference to or is attributable to an Event
occurring or deemed to occur after Closing including any losses
attributable to any Event occurring after Closing or in respect
of or attributable to a period commencing after Closing or which
are apportioned to the Later Period, as defined at paragraph 5.6
of this Part A of the Schedule, in accordance with that
paragraph.
"Pre-Closing Relief" means a Relief arising to a Company which is
not a Post-Closing Relief and which does not arise as a result of
any Event occurring after Closing.
"Relief" means any loss, allowance, exemption, set-off,
deduction, credit or other relief in respect of or against any
Taxation or in computing Profits for the purposes of any Taxation
or otherwise from or relating to any Taxation and any right to a
repayment of Taxation.
"Reorganisation" means the intra-group reorganisations described
in Exhibit BB to the Agreement.
"Taxation" means:
(a) any form of tax, levy, duty, rate, contribution,
charge, impost, hypothecation, deduction, or withholding having
the character of taxation whether governmental, statutory, state,
provincial, local governmental, federal, cantonal or municipal
whenever created or imposed and of whatever jurisdiction or part
of a jurisdiction in the world and, in so far as not covered by
the above:
(i) taxes on gross or net Profits including any income tax,
corporation tax, corporate income tax and capital gains tax;
(ii) any taxes, rates, levies or contributions on receipts,
sales, use, licence, lease, service use, occupation, franchise or
real property;
(iii) stamp duty and other documentary duties or taxes and
any registration fees or duties;
(iv) any value added tax, goods and service tax, purchase
tax, sales tax, wholesale tax, any turnover tax, added value tax
and any investment tax;
(v) environmental taxes, duties or levies, any fuel tax and
any tax on the construction of any building or structure and any
tax relating to any landfill;
(vi) any customs or excise duties or taxes and import taxes;
(vii) any taxes, levies, social security contributions,
national insurance contributions or similar taxes, levies or
contributions payable on or in respect of any employees or
payroll;
(viii) any withholdings (including, without limitation, taxes
parafiscales and redevances) or deductions of or on account of
any tax;
(ix) real estate transfer taxes, real estate and property
taxes;
(x) any capital duty or other tax, duty or levy in respect of
the allotment or issue of any shares or securities or the raising
of any capital;
(xi) insurance taxes;
(xii) any tax in respect of any dividend or distribution or
any deemed or constructive dividend or distribution;
(xiii) any capital transfer tax, wealth tax, net wealth tax,
gift tax or capital appreciation tax and any taxes levied on or
by reference to any asset value; and
(xiv) any other taxes, levies, duties, rates contributions,
charges, imposts, deductions, or withholdings similar to,
corresponding with, or replacing or replaced by any of the
foregoing; and
(b) all charges, surcharge, additions to tax, interest,
penalties, fines and other similar liabilities and costs,
incidental or relating to, or relating to any obligation in
respect of, any Taxation falling within paragraph (a) of this
definition.
"Taxation Authority" means any authority, court, tribunal, body,
institution, person or official in any part of the world
competent to impose, assess, collect or administer any Taxation
or make any decision or ruling on any matter relating to any
Taxation.
"Taxation Benefit" means any Relief or other benefit or advantage
available in the computation or ascertainment of any Taxation
Liability.
"Taxation Liability" means any Actual Taxation Liability and any
Deemed Taxation Liability.
"Taxation Warranties" means the warranties and representations
set out in Part C of this schedule.
"VAT" means value added tax or its equivalent in any jurisdiction
other than the United Kingdom.
"Yorkshire's Group" means Yorkshire and any company, not being a
Company, which is the holding company from time to time of
Yorkshire and any subsidiary from time to time of such holding
company or Yorkshire and references to a "member of Yorkshire's
Group" shall be construed accordingly and the expressions
"holding company" and "subsidiary" shall have the meanings
ascribed thereto in section 736 of the Companies Xxx 0000 of the
United Kingdom.
1.2 In this schedule (unless the context otherwise requires):
(a) references to "the Company", or "a Company", whether
express or implied, shall be read and construed as references to
Europe and each Acquired Entity (as these terms are defined in
the Agreement) individually and as if the provisions of this
schedule were set out in full in respect of each such company;
(b) references to "persons" include an individual,
corporation, partnership, unincorporated association or body or
persons and any state or any agency thereof;
(c) the words and phrases "other", "including" and "in
particular" shall not limit the generality of any preceding words
or be construed as being limited to the same class as the
preceding words where a wider construction is possible;
(d) references to "Profits" shall include any standard or
measure for the purposes of determining any liability for the
purposes of any Taxation and shall include any income, profits or
gains (including capital gains) of any description and from any
source and references to "Profits earned, accrued or received"
shall include Profits which are deemed to have been or treated as
earned, accrued or received for the purposes of any Taxation and
references to Profits earned, accrued or received on or before a
particular date or time or in respect of a particular period
shall include Profits deemed to have been earned, accrued or
received on or before that time or in respect of that period for
any Taxation purpose; and
(e) references to "Parts" are references to Parts of this
schedule and a reference in any Part to a paragraph shall, unless
otherwise stated, be to the paragraph of that Part.
1.3 Notwithstanding any other provision of this Agreement the
liability of CK Witco under this Schedule or Part B or Part C
shall not be excluded, limited or restricted nor increased or
extended in any way by any provision of this Agreement save to
the extent that the provision is expressly stated to apply to
this Schedule or Part B or Part C (as the case may be) and
references in any provision to "this Agreement", "hereunder" or
any similar expression shall be deemed not to be such an express
statement.
1.4 Any payments made pursuant to this schedule shall, so far
as possible, be treated as an adjustment to the consideration
paid by Yorkshire for the Europe Capital Stock under this
Agreement, provided that this paragraph 1.4 shall not operate in
any way to limit the liability of CK Witco under this schedule.
2. Limitations
2.1 CK Witco shall not be liable under Part B or Part C in
respect of any Taxation Liability to the extent (but only to the
extent) that:
(a) such Taxation Liability would not have arisen or
would have been reduced but for:
(i) any voluntary act or omission of the Company or
Yorkshire after Closing otherwise than in the ordinary course of
the business of the Company as carried on at Closing and
otherwise than:
(aa) pursuant to any of the provisions of this Agreement or
any Additional Agreements or any of the Closing Documents;
(bb) pursuant to a legally binding obligation of the
Company in existence at Closing;
(cc) pursuant to any agreement or arrangement (in either
case whether conditional or not) or option entered into by the
Company on or before Closing;
(dd) at the request or with the consent of CK Witco or
any member of CK Witco's Group or any of their duly authorised
representatives where such request is made or such consent is
given pursuant to the provisions of this Agreement or the
Additional Agreements or any of the Closing Documents;
(ee) anything done by CK Witco or any member of CK Witco's
Group on behalf of or in the name of the Company pursuant to an
exercise or purported exercise of any of its rights under this
Schedule or the Agreement or any Additional Agreements or the
Closing Documents;
(ff) anything done by or on behalf of the Company to give
effect to the Reorganisation or any Event or transaction which
forms part of the Reorganisation; or
(gg) anything done or omitted to be done in accordance with
paragraph 2.18 of the Agreement.
Provided that this paragraph 2.1(a) shall not apply to any claim
by Yorkshire under paragraphs 1.1(g), (h), (i) or (j) of Part B
or for a breach of the Taxation Warranties in each of sub-
paragraphs (a) or (b) of paragraph 5 of Part C of this Schedule
and Provided Further that for the purposes of this paragraph
2.1(a) the failure or omission by the Company to make any claim
(including any supplementary claim) for Relief, appeal or further
appeal against any assessment or Claim, application for the
postponement of, or the payment by instalments of, any Taxation,
disclaimer or postponement of Relief shall not be regarded as a
voluntary act or omission of the Company or Yorkshire where the
time limit for the making or doing of such thing expired within
six months after Closing unless CK Witco shall have given written
notice of the requirement or necessity for the making or doing of
such thing to Yorkshire at least 20 Business Days before the
expiry of such time limit.
(ii) any change after Closing in:
(aa) the accounting bases upon which the Company values
its assets;
(bb) the date to which the company makes up its accounts,
save, in any such case, where such change is made to comply with
any law or standard accounting practice in force at the date of
Closing in the jurisdiction in which that Company is
incorporated.
(iii) a failure by Yorkshire to comply with its
obligations under paragraphs 4 and/or 5 of Part A.
(b) such Taxation Liability is an Actual Taxation Liability
of the Company which has been paid or discharged by the Company
on or before Closing;
(c) such Taxation Liability:
(i) arises on payment of a liability included in the Closing
Special Purpose Statement where the Taxation Liability is a
liability to account to a Taxation Authority for any Taxation
which the Company is entitled or required to withhold or deduct
from the amount of the liability on payment; or
(ii) is a liability to pay an amount in respect of Taxation
to a person other than a Taxation Authority and such Taxation
forms part of a liability included in the Closing Special Purpose
Statement;
(d) such Taxation Liability is a liability of the Company to
pay any Taxation Authority any VAT in respect of any VAT period
current at Closing, but only to the extent that such VAT is taken
into account in the Closing Special Purpose Statement;
(e) such Taxation Liability is a liability in respect of any
Taxation (being payroll taxes, national insurance or social
security or similar taxes) which is payable by the Company in
respect of wages, salaries or other remuneration, bonuses or
vacation pay for which an accrual is made in the Closing Special
Purpose Statement ("Payroll Taxes") to the extent that such
Taxation is included in the Closing Special Purpose Statement.
2.2 Each of the sub-paragraphs of paragraph 1.1 of Part B of
this schedule are separate and independent covenants but CK Witco
shall not be liable to pay an amount in respect of a Taxation
Liability pursuant to any sub-paragraph of paragraph 1.1 of Part
B if and to the extent that CK Witco has made a payment to
Yorkshire of an amount in respect of such Taxation Liability
under any other sub-paragraph of paragraph 1.1 of Part B of this
Schedule or to the extent that CK Witco has made a payment to
Yorkshire in respect of such Taxation Liability in respect of a
breach of any of the Taxation Warranties. CK Witco shall not be
liable to make any payment in respect of a Taxation Liability as
a result of a breach of any of the Taxation Warranties to the
extent that CK Witco has made payment to Yorkshire pursuant to
any of the other Taxation Warranties or pursuant to paragraph 1.1
of Part B in respect of such Taxation Liability.
2.3 CK Witco shall not be liable in respect of a claim under
the Taxation Warranties or under Part B of this schedule unless
notice of such claim (specifying, in such detail as shall be
reasonable at the date of the notice, the nature of the claim)
has been given by or on behalf of Yorkshire to CK Witco on or
before the later of:
(a) the tenth anniversary of the date of Closing; and
(b) the date of expiration of the relevant statute of
limitations or other time limit for the making or giving of any
Claim in respect of the Taxation Liability or other matter the
subject of the Claim in the relevant jurisdiction;
provided that where the relevant statute of limitations in a
jurisdiction is extended beyond the tenth anniversary of the date
of Closing solely as a result of any voluntary action taken by
Yorkshire (other than at the request of CK Witco), CK Witco's
liability shall cease on the tenth anniversary of the date of
Closing or, if later, the date on which the relevant statute of
limitations or other time limit would have expired in the absence
of such action by Yorkshire save in respect of any claim made
before such tenth anniversary or (as the case may be) such later
date.
3. Reliefs and Recoveries from Third Parties
3.1 Yorkshire shall at the request of CK Witco require the
Auditors to determine (as experts and not as arbitrators and at
the expense of CK Witco) whether any Taxation Liability (or the
Event giving rise to such Taxation Liability or the discharge of
it) which has resulted in any sum having been paid or becoming
payable by CK Witco under this schedule has given rise to a
Relief which is not a Post-Closing Relief and would not otherwise
have arisen, and to determine whether:
(a) a liability of the Company or Yorkshire to make an
actual payment or increased payment of Taxation has been
satisfied or avoided in whole or in part by the use of that
Relief; or
(b) a right to repayment of Taxation has arisen as a
result of the use of that Relief;
and, if the Auditors so determine, the amount by which that
liability has been satisfied or avoided (as so determined by the
Auditors) or an amount equal to the amount of that repayment as
so determined by the Auditors (as the case may be) shall be dealt
with in accordance with paragraph 3.2 Provided that nothing in
this paragraph 3 shall oblige Yorkshire or any Company to utilise
any Pre-Closing Relief in priority to any Post-Closing Relief or
shall operate to treat Yorkshire or any Company as having
utilised or being required to utilise any Pre-Closing Relief in
priority to any Post-Closing Relief and it shall be assumed that
all available Post-Closing Reliefs are used in priority to any
Pre-Closing Reliefs.
3.2 Where it is provided under paragraph 3.1 that any
amount is to be dealt with in accordance with this paragraph 3.2:
(a) the amount shall first be set off against any
payment then due from CK Witco under this schedule;
(b) to the extent there is an excess, a refund shall be
made to CK Witco of any previous payment made by CK Witco under
this schedule and not previously refunded under this paragraph
3.2 or any other provision of this schedule or the Agreement up
to the amount of such excess; and
(c) to the extent that the excess referred to in
paragraph 3.2(b) is not exhausted thereunder, the remainder of
that excess shall be carried forward and set off against any
future payment which becomes due from CK Witco under this
schedule.
3.3 Where such determination by the Auditors as is
mentioned in paragraph 3.1 has been made, CK Witco or Yorkshire
may request the Auditors to review such determination (as experts
and not as arbitrators and at the expense of the person making
the request) in the light of all relevant circumstances,
including any facts which have become known only since such
determination, and to determine whether such determination
remains correct or whether, in the light of those circumstances,
the amount that was the subject of such determination should be
amended.
3.4 If the Auditors determine under paragraph 3.3 that
an amount previously determined should be amended, that amended
amount shall be substituted for the purposes of paragraph 3.1 in
place of the amount originally determined and such adjusting
payment (if any) as may be required by virtue of such
substitution shall forthwith be made by CK Witco to Yorkshire or,
as the case may be, by Yorkshire to CK Witco.
3.5 If the Company or Yorkshire is entitled to recover from
any third party (including any Taxation Authority but excluding
any Company, Yorkshire, CK Witco or any member of CK Witco's
Group) any sum which it would not have been able to recover but
for any Taxation Liability in respect of which any amount has
been paid or become payable by CK Witco under this schedule
(other than the utilisation of a Relief referred to in Paragraph
3.1 or the utilisation of a Post-Closing Relief) then Yorkshire
shall:
(a) notify CK Witco in writing of such entitlement within 14
days of Yorkshire becoming aware of such entitlement;
(b) subject to Yorkshire and the Company being
indemnified by CK Witco to the reasonable satisfaction of
Yorkshire against all losses, costs (including the cost of
management time of Yorkshire and the Company which shall be
deemed to be incurred or suffered by them for the purposes of
this paragraph 3.5), damages and expenses which may be incurred
or suffered by Yorkshire or the Company in so doing, at the
written request of CK Witco take and procure that the Company
takes such reasonable and appropriate action as CK Witco may
reasonably so request to recover such sum; and
(c) keep CK Witco informed at CK Witco's expense of the
progress of any such action;
and if Yorkshire or the Company shall so recover any such sum
then Yorkshire shall repay to CK Witco a sum equal to the lesser
of:
(i) the amount of any sum so recovered (including any
interest or repayment supplement), after deduction therefrom of
an amount equal to any costs, fees and expenses in obtaining it
(so far as not previously paid by CK Witco) and any Taxation
Liability incurred in respect of it; and
(ii) the amount paid by CK Witco under this schedule in
respect of the Taxation Liability in question, less any part of
such amount previously repaid to CK Witco pursuant to this
provision or any other provision of this schedule or the
Agreement,
within two (2) Business Days after the date the relevant sum
(being cleared funds) is received by Yorkshire or, as the case
may be, the Company, provided that if at the date that the
relevant sum is received by Yorkshire or, as the case may be, the
Company, the due date for payment (determined in accordance with
paragraph 2 of Part B) by CK Witco of an amount equal to the
Taxation Liability in question pursuant to paragraph 1.1 of Part
B has not passed then an amount equal to the amount referred to
in sub-paragraph (i) above shall be set-off against the liability
of CK Witco to pay to Yorkshire the amount which would, but for
such set-off, have become payable by CK Witco on such due date in
respect of such Taxation liability.
3.6 Yorkshire shall at the request and expense of CK
Witco require the Auditors to determine (as experts and not as
arbitrators) whether the Company is entitled to receive from any
Taxation Authority a repayment or credit in respect of Taxation
relating to any period ended on or before Closing (not being a
credit or repayment in respect of VAT in respect of any VAT
period current at Closing and other than in respect of Payroll
Taxes which are included in the Closing Special Purpose
Statement) where such credit or repayment does not arise as the
result of the utilisation of any Post-Closing Relief or any Event
occurring after Closing or as the result of the utilisation of
any Relief referred to in paragraph 3.1 and if the Auditors
determine that the Company has such an entitlement then:
(a) Yorkshire shall give CK Witco details of the entitlement
as soon as reasonably practicable after Yorkshire becomes aware
of the entitlement and in any event within 14 days of Yorkshire
becoming aware of such entitlement; and
(b) subject to Yorkshire and the Company being
indemnified by CK Witco to the reasonable satisfaction of
Yorkshire against all losses, costs, damages and expenses which
may be incurred or suffered by Yorkshire or the Company in so
doing (including the cost of management time of Yorkshire and the
Company which shall be deemed to have been so incurred),
Yorkshire shall at the request and expense of CK Witco take all
reasonable and appropriate steps to procure that the repayment or
credit is obtained, keeping CK Witco fully informed of the
progress of any action taken; and
an amount equal to the amount of the repayment or credit
(including any repayment supplement or interest) as so determined
by the Auditors which is received by the Company shall first be
set off against any amount then due from CK Witco to Yorkshire
under this schedule and any balance shall be paid to CK Witco
within two (2) Business Days after the date the relevant sum
(being cleared funds) is received by the Company or, in the case
of a credit, within two (2) Business Days after the credit gives
rise to any cash saving to the Company. The provisions of
paragraphs 3.3 and 3.4 shall apply to a determination by the
Auditors under this paragraph 3.6 in the same way as they apply
to a determination by the Auditors under paragraph 3.1.
3.7 CK Witco shall pay to Yorkshire any reasonable costs
incurred or suffered by Yorkshire or the Company (including the
cost of time of the management of Yorkshire and the Company which
shall be deemed to have been incurred or suffered for the
purposes of this paragraph 3.7) in connection with any matter
referred to in this paragraph 3.
4. Conduct of Claims
4.1 If Yorkshire or, after Closing, the Company shall
become aware of any Claim which will or may give rise to a
liability of CK Witco under Part B or Part C of this schedule
("Relevant Claim") Yorkshire shall, but not as a conditions
precedent to the liability of CK Witco under this schedule, give
notice thereof or procure that notice thereof is given as soon as
reasonably practicable to CK Witco and in any event within 14
days of Yorkshire and 21 days of the Company becoming aware of
the Relevant Claim.
4.2 Subject to paragraphs 4.5, 4.6 and 4.7, Yorkshire
shall, and shall procure that the Company shall, take such action
to appeal, protest against, mitigate, reduce, avoid, dispute,
resist or compromise the Relevant claim and make available such
documents, information and assistance in connection with the
Relevant Claim as CK Witco may by written notice request provided
that CK Witco shall indemnify and secure Yorkshire and the
Company against all reasonable costs and expenses (including any
Taxation or additional Taxation and including the cost of time of
the management of Yorkshire or the Company which shall be deemed
to have been incurred, or suffered for the purposes of this
paragraph 4) which Yorkshire or the Company incurs as a result of
taking such action or providing such information and assistance,
such reasonable costs and expenses to be paid in cleared,
immediately available funds on or before the date five (5)
Business Days after the date of written notice from Yorkshire of
the amount which CK Witco is required to pay or, if later, on the
last Business Day before the date on which such reasonable costs
and expenses are due for payment. If Yorkshire shall have served
a written notice on CK Witco requesting CK Witco to provide such
indemnity or security and CK Witco shall fail to provide the same
within 30 days thereafter then CK Witco's rights under this
paragraph 4 shall cease and Yorkshire and the Company shall be
entitled to deal with the Relevant Claim on such terms as they
shall in their absolute discretion think fit without prejudice to
their rights and remedies under this schedule.
4.3 Subject to paragraphs 4.5, 4.6 and 4.7 CK Witco may elect
to have any action referred to in paragraph 4.2 conducted by CK
Witco acting in the name of the Company but reporting to
Yorkshire in which event the provisions of paragraph 4.4 shall
apply.
4.4 CK Witco hereby undertakes to Yorkshire to:
(a) keep Yorkshire fully and promptly informed of all
matters relating to the action and deliver to Yorkshire copies of
all correspondence relating to the action;
(b) obtain the prior written approval of Yorkshire to
the settlement or compromise of the action or the agreement of
any matter in the conduct of the action which involves the
utilisation of any Post-Closing Relief;
(c) obtain the prior written approval of Yorkshire (not
to be unreasonably withheld or delayed) to the content and
sending of any written communications relating to the action to a
Taxation Authority;
(d) without prejudice to (b) above, obtain the prior
written approval of Yorkshire (not to be unreasonably withheld or
delayed) to:
(i) the settlement or compromise of the Relevant Claim
which is the subject of the action; and
(ii) the agreement of any matter in the conduct of the
action which is likely to affect the amount of the Relevant
Claim;
(e) deal with all matters relating to the Relevant Claim in a
prompt and diligent manner and within any applicable time limit.
4.5 Yorkshire shall not be obliged to procure that the
Company take any action under this paragraph 4 which involves the
utilisation of any Post-Closing Relief.
4.6 Paragraph 4.3 shall not apply (and no request by CK Witco
pursuant to paragraph 4.2 shall be deemed to be reasonable if it
is a request by CK Witco to have any action referred to in
paragraph 4.2 conducted by CK Witco in the name of the Company)
in circumstances where any fraudulent conduct or fraud or wilful
default or conduct involving dishonesty or any criminal offence
has been committed by CK Witco (whether acting on its own behalf
or in the name of any Company pursuant to paragraph 4.3) in
relation to the Taxation affairs of any Company.
4.7 Any request made by CK Witco pursuant to paragraph
4.2 shall be made within a reasonable time of any notice given by
Yorkshire to CK Witco in accordance with paragraph 4.1 and if:
(a) on the expiry of a period of 14 days commencing on
the date of such notice, CK Witco shall not have given to
Yorkshire notice of CK Witco's intentions in respect of the
Relevant Claim, or
(b) at any time after CK Witco has given notice to
Yorkshire indicating its intention to dispute, resist, appeal
against, compromise or defend the Relevant Claim, CK Witco has
failed promptly and diligently to request action to that effect
under paragraph 4.2 or to progress any action under paragraph
4.3,
Yorkshire and the Company shall be entitled to deal with the
Relevant Claim on such terms as they shall in their absolute
discretion think fit without prejudice to their rights and
remedies under this schedule.
5. Taxation Computations
5.1 Subject to complying with the provisions of
paragraph 5.2 below, CK Witco or its duly authorised agents shall
have the right and obligation, at the cost and expense of CK
Witco and including the cost of time of the management of
Yorkshire or the Company which shall be deemed to have been
incurred or suffered for the purposes of this paragraph 5, to
prepare the Taxation returns and computations of each Company for
all accounting periods or other periods in respect of which the
Company is required to make a return or payment of Taxation to a
Taxation Authority (other than a payment on account of or as an
instalment of any Taxation for or in respect of a period ending
after Closing) ending on or prior to Closing (each a "Relevant
Period") to the extent that the same shall not have been prepared
before Closing (each such Taxation return or computation is
referred to in this paragraph 5 as a "Relevant Return"). CK Witco
or its duly authorised agents shall (subject to paragraph 4 which
shall override all of the provisions of this paragraph 5 in the
event of any conflict between the provisions of this paragraph 5
and paragraph 4) have the right, at the cost and expense of CK
Witco, to prepare all documentation and deal with all matters
(including correspondence and the utilisation of any Pre-Closing
Relief against any Taxation Liability in respect of which it
would otherwise be liable under this Schedule but excluding the
use of any Post-Closing Relief) relating to any Relevant Return
to the extent that the same have not been prepared or dealt with
prior to Closing.
5.2 CK Witco covenants with Yorkshire:
(a) that all Relevant Returns will be prepared (so far
as legally possible) on a basis consistent with past practice and
the assumptions made for the purposes of calculating the
provisions for Taxation in the Accounts and no claim shall be
made in any such Relevant Returns to utilise a Post-Closing
Relief;
(b) to keep Yorkshire and its duly authorised agents and
the Company fully informed of all matters relating to the
submission, negotiation and agreement of each Relevant Return;
(c) that no Relevant Return and no correspondence or
documentation or communication pertaining to the negotiations or
agreement of any Relevant Return shall be made or transmitted to
any Taxation Authority without first being submitted to Yorkshire
and the Company for Yorkshire's approval and shall only finally
be submitted or transmitted on the receipt of the written
approval of Yorkshire or its duly authorised agent, such approval
not to be unreasonably withheld or delayed; and
(d) to deal with all such matters diligently and
promptly and within any applicable time limit.
5.3 In the event that the provisions of paragraph 5.2
have been complied with by CK Witco, Yorkshire shall procure that
the Company shall cause any Relevant Return approved by Yorkshire
under 5.2(c) (which shall incorporate all claims, elections,
disclaimers, surrenders and consents notified by CK Witco to
Yorkshire) to be authorised, signed and submitted to the
appropriate Taxation Authority and generally do all such things
as may be necessary to give effect to such returns, claims,
elections, disclaimers, surrenders or consents provided that the
Company shall not be obliged to sign any Relevant Return which it
considers not to be full, true and accurate in all material
respects.
5.4 Yorkshire shall (if requested in writing by CK
Witco) procure that the Company promptly makes or gives such
Relevant Returns and any such claims, elections, disclaimers,
surrenders and consents as are mentioned in paragraph 5.3 and
generally does all such things as CK Witco shall reasonably
request in writing and which may be necessary to give effect to
such Relevant Returns or any such claims, elections, surrenders
or consents.
5.5 Yorkshire shall procure that there shall be prepared
all Taxation returns and computations for each Company for any
period which begins before Closing and ends after Closing (each
such period being referred to as a "Current Period" and any such
returns and computations being referred to as "Current Returns")
and shall provide CK Witco with copies of all Current Returns and
shall not submit any Current Return or any correspondence
relating to a Current Return to any Taxation Authority or agree
any Current Return with any Taxation Authority without CK Witco's
approval, such approval not to be unreasonably withheld or
delayed. In the case of any return in respect of corporation
tax, corporate income tax or income tax (and any similar tax)
Yorkshire shall provide CK Witco with a copy of the relevant
Current Return at least 30 days before the time limit for
submission of that Current Return to the relevant Taxation
Authority. Yorkshire shall procure that any reasonably requested
amendments to a Current Return (including amendments which
involve the utilisation of a Pre-Closing Relief but not including
amendments which involve the utilisation of a Post-Closing
Relief) are incorporated in the relevant Current Return.
5.6 Each of CK Witco and Yorkshire shall co-operate with
each other to agree as between themselves in relation to any
Current Period the Profits and/or the Reliefs which, in
accordance with the provisions of this paragraph, are
attributable to:
(a) that part of the Current Period which falls on or
before Closing (the "Earlier Period"); and
(b) that part of that Current Period which falls after
Closing (the "Later Period").
CK Witco and Yorkshire hereby agree that any such allocation of
Profits and/or Reliefs shall be made on the following basis:
(i) Income, expenditure, Profits and Reliefs which arise
solely as a result of any Event occurring on or before Closing
and not as a result of any Event occurring after Closing shall be
attributable to the Earlier Period;
(ii) Income, expenditure, Profits and Reliefs which
arise as a result of an Event occurring after Closing shall be
attributable to the Later Period; and
(iii) Income, expenditure, Profits and Reliefs which are
only available in respect of the total period comprised within
the relevant Current Period and not in respect of any particular
part of the Current Period shall be apportioned between the
Earlier Period and the Later Period on a time basis, having
regard to the number of days in the Earlier Period and Later
Period and the Current Period;
It is further agreed by CK Witco and Yorkshire that any Relief
apportioned or allocated to the Later Period in accordance with
this paragraph 5.6 shall for all purposes of this Taxation
Schedule be treated as if it were a Post-Completion Relief.
5.7 Yorkshire shall provide, and shall procure that the
Company provides, CK Witco at the expense of CK Witco and CK
Witco shall provide Yorkshire at (save as otherwise provided in
this schedule) at the expense of Yorkshire with such documents,
information and assistance (including, without limitation, access
to books, accounts, records and personnel) as CK Witco or, as the
case may be, Yorkshire, may reasonably require in connection with
its conduct of the Company's Taxation affairs pursuant to this
paragraph 5 or in relation to the exercise by CK Witco of its
rights under paragraph 4.
6. Gross Up
6.1 All sums payable by CK Witco to Yorkshire under this
schedule and any amount payable by Yorkshire to CK Witco pursuant
to paragraph 3 of Part B shall be paid free and clear of all
deductions or withholdings whatsoever, save only as may be
required by law.
6.2 If any deductions or withholdings, not being in
respect of payments of interest payable pursuant to paragraph 2.3
of Part B, are required by law to be made from any of the sums
payable as mentioned in sub-paragraph 6.1 by CK Witco or
Yorkshire (as the case may be) (the "Paying Party"), the Paying
Party shall be obliged to pay to the other party (the "Receiving
Party") such sum as will, after the deduction or withholding has
been made, leave the Receiving Party with the same amount as it
would have been entitled to receive in the absence of any such
requirement to make a deduction or withholding.
6.3 If any sum, not being in respect of payments of interest
payable as mentioned in paragraph 6.1, shall be subject to
Taxation in the hands of the Receiving Party, the Paying Party
shall be under the same obligation to make an increased payment
so as to ensure that the amount retained by the Receiving Party
after taking into account such Taxation, is equal to the full
amount which would have been received and retained but for such
Taxation.
6.4 Where the Paying Party is required to make any such
deduction or withholding as is referred to in paragraph 6.2 and
to account for that deduction or withholding to any authority or
person, the Paying Party shall:
(a) make such deduction or withholding;
(b) pay the full amount deducted or withheld to the relevant
authority or person in accordance with applicable law; and
(c) forthwith furnish to the Receiving Party the original, or
a certified copy, of a receipt evidencing payment thereof.
7. Consents
CK Witco undertakes to Yorkshire that CK Witco shall ensure that
all necessary notifications, consents, certificates,
authorisations and clearances required to be made in respect of
the Reorganisation will be obtained on or before Closing and will
notify Yorkshire of all notifications, claims for relief and
returns required to be filed after Closing with any Taxation
Authority in respect of any of the Events effected or proposed to
be effected as part of the Reorganisation at least thirty (30)
days before the expiry of the time limit for such filings and
shall procure that Europe shall comply with all Belgian Taxation
laws and regulations in relation to any payment made by Europe to
the BCC for any asset to be transferred to Europe as mentioned in
Exhibit BB to the Agreement.
8. General
8.1 If at any time any provision or part of a provision of
this Schedule shall be or become, or be found by any court of
competent jurisdiction to be illegal, invalid or unenforceable in
any respect under the law of any jurisdiction such illegality,
invalidity or unenforceability shall not in any way affect or
impair the legality, validity or enforceability:
(a) of any other provision or parts of such provision of this
schedule in that jurisdiction all of which shall remain in full
force and effect in such jurisdiction; or
(b) of that provision (or part of a provision) or any other
provision of this schedule in any other jurisdiction all of which
shall remain in full force and effect in every other
jurisdiction.
8.2 Each of the covenants on the part of CK Witco in this
schedule shall be construed separately and none of such covenants
shall limit or govern the extent, application or construction of
any other of them and notwithstanding that any such covenant may
prove to be illegal, invalid or unenforceable the remaining such
covenants shall continue in full force and effect.
8.3 All of the provisions of this Schedule shall survive
Closing and continue in full force and effect after Closing.
8.4 The provisions of this schedule shall be governed and
construed in accordance with the laws of England.
Part B - Taxation Covenants
1. Covenant by CK Witco
1.1 Subject only to the provisions of paragraph 2 of
Part A of this Schedule, CK Witco hereby covenants with
Yorkshire to pay to Yorkshire or such other person as Yorkshire
may direct on the due date for payment ascertained in accordance
with Paragraph 2 of this Part B an amount equal to:
(a) any Actual Taxation Liability of the Company
arising as a result of or, in respect of:
(i) an Event occurring on or before Closing; or
(ii) any Profits earned, accrued or received on or before
Closing or in respect of any period (or part of a period) ended
on or before Closing; or
(iii) insofar as not covered within (i) or (ii) above,
net wealth, asset values, turnover or added value for a period
(or part of a period) ended on or before Closing; or
(iv) any liability to Taxation arising before Closing;
(b) any Deemed Taxation Liability;
(c) any Taxation Liability of the Company (including, for the
avoidance of doubt, any Taxation Liability (not within sub-
paragraph (a) of this paragraph 1.1) for which the Company
becomes jointly and severally liable) which arises as the result
of that Company having been treated as, or having ceased to be, a
member of any group, group registration, organschaft or fiscal
unity (in each case as defined for any Taxation purpose) at any
time prior to Closing or as the result of the filing of any
consolidated return in relation to Taxation in respect of that
Company and any other person relating to any period commencing
prior to Closing (other than a person who is a member of a group
of which the Company becomes a member on or after Closing) or as
a result of any tax sharing arrangements affecting the Company on
or before Closing;
(d) any Taxation Liability for which the Company is or
becomes liable or accountable in consequence of the failure to
pay or discharge any Taxation within a specified time or
otherwise by:
(i) any company (other than a Company):
(aa) which has at any time (before or after Closing) been or
ceased to be a member of a group, group registration,
organschaft, fiscal unity or consolidated return (in each case as
defined for any Taxation purpose) of which the Company has at any
time prior to Closing been a member; or
(bb) from which the Company has received or is deemed to have
received or has or is deemed to have become entitled to receive
on or before Closing any asset or any dividend or other
distribution from or in respect of shares in that other company;
(ii) any other person not being a member of Yorkshire's Group
but only insofar as the Taxation in question relates to any
Profits earned, accrued or received on or before Closing or to
any Event occurring on or before Closing;
(e) any Taxation for which any member of Yorkshire's Group
becomes liable or accountable and for which any Company would
have been liable or accountable but for the merger or
amalgamation after Closing of such Company or its business with
another member of Yorkshire's Group or the dissolution or
liquidation after Closing of such Company and in respect of which
and to the extent only that but for such merger, amalgamation,
liquidation or dissolution Yorkshire could have made a claim
under any of the other provisions of this Part B in respect of
the Company;
(f) any liability of the Company to make any payment for or
in respect of, or to repay in whole or in part any payment
received for or in respect of, or the making available (whether
by surrender or otherwise) of any Tax Benefit pursuant to an
arrangement or agreement entered into by the Company on or before
Closing;
(g) any Taxation Liability of or affecting the Company
or any member of Yorkshire's Group in respect of or arising from
any Event or Events occurring on or before Closing outside the
ordinary course of business of the Company as carried on at any
time on or before Closing or by any member of the CK Witco Group
on or before Closing and which forms part of any combination or
series of Events which include any Event or Events occurring
after Closing which are in the ordinary course of business of the
Company as carried on at any time on or before Closing or which
are effected pursuant to a legally binding obligation or
arrangement (in either case whether conditional or not) entered
into or incurred on or before Closing or which are carried out
pursuant to any request in writing by CK Witco or any member of
the CK Witco Group or their respective representatives pursuant
to any other provision of this Agreement or any Additional
Agreement or any Closing Document or otherwise;
(h) any Taxation Liability of or affecting the Company
or Yorkshire or any member of Yorkshire's Group which arises
(whether before or after Closing) as a result of or in respect of
anything done or failed to be done by Yorkshire or which
Yorkshire procures the Company or any other Company to do or fail
to do pursuant to its obligations under paragraph 2.18 of the
Agreement;
(i) any Taxation Liability of the Company or Yorkshire
or any member of Yorkshire's Group which arises (whether before
or after Closing) as a result of or in respect of anything done
or omitted to be done by or on behalf of the Company to give
effect to the Reorganisation or any Event or transaction which
forms part of the Reorganisation;
(j) any liability to Taxation of the Company (whether
arising before or after Closing) as a result of the holding of,
or the assignment or surrender of, the lease of the property at
Xxxxxxxxx Xxxxxxxxxx Xxxx, Xxxxxx Xxxx, Xxxxxx between Foden
Investments Limited, C&K (UK) Limited and Europe
(k) any costs, fees and expenses reasonably incurred by
Yorkshire or the Company in connection with any such liability or
amount as is referred to in any of paragraphs 1.1(a) to (j)
inclusive or with any Claim in respect thereof or in taking or
defending any action under this schedule.
2. Payment
2.1 If CK Witco is or becomes liable to make a payment under
this Part B in respect of an Actual Taxation Liability, CK Witco
shall pay such amount in cleared, immediately available funds on
or before the date five (5) Business Days after the date of
written notice from Yorkshire of the amount which CK Witco is
required to pay or, if later, on the last Business Day before the
date on which the Actual Taxation Liability in question is due
for payment.
2.2 If CK Witco is or becomes liable to make a payment under
this Part B in respect of a Deemed Taxation Liability, CK Witco
shall pay the relevant amount on or before the date five (5)
Business Days after the date of written notice from Yorkshire of
the amount which CK Witco is required to pay or, if later, on the
date which would have been the due date for payment of the
Taxation which would have been payable (assuming taxable profits)
but for the setting off.
2.3 Any sum payable by CK Witco or by Yorkshire under this
Schedule shall bear interest which shall accrue from day to day
at four per cent (4%) above the base rate from time to time of
HSBC Bank plc (or, in the absence of such base rate, such similar
rate as the person entitled to the payment shall specify) from
the date following the specified or due date up to and including
the day of actual payment of such sums (or the next business day
if such day of actual payment is not a business day) compounded
monthly.
2.4 If any Taxation Liability or other matter which gives
rise to a claim under this schedule relates to, or is payable in,
or was incurred in a currency other than United States Dollars
then CK Witco shall make any payment due from it under this
schedule in respect of such Taxation Liability or other matter in
the currency in which it is payable or was incurred.
3. Yorkshire's Covenant
3.1 Yorkshire covenants with CK Witco to pay to CK
Witco an amount equal to any Actual Taxation Liability of CK
Witco or of any company which is a member of CK Witco's Group
(and any reasonable costs and expenses incurred by CK Witco or
that company in relation to such Actual Taxation Liability) where
such Actual Taxation Liability:
(a) arises as a result of the failure by the Company to
discharge after Completion an Actual Taxation Liability for which
the Company is primarily liable and which does not give rise to a
liability of CK Witco under paragraph 1.1 of this Part B; or
(b) arises as a result of the failure by the Company to
discharge after Completion an Actual Taxation Liability for which
the Company is primarily liable and which does give rise to a
liability of CK Witco under paragraph 1.1 of Part B to the extent
that CK Witco has made a payment under paragraph 1.1 of this Part
B,
but Yorkshire shall have no liability to make any payment
under this paragraph 3.1 unless and until CK Witco and each
member of the CK Witco Group shall have delivered to Yorkshire a
duly executed document whereby CK Witco and each member of the CK
Witco Group waives all rights which it may have (whether
statutory, contractual or otherwise) against Yorkshire (other
than under this paragraph 3.1) or any Company or any member of
Yorkshire's Group to obtain an indemnity or reimbursement in
respect of or by reference to such Actual Taxation Liability.
3.2 If Yorkshire becomes liable to make a payment under
paragraph 3.1 of this Part B, Yorkshire shall pay such amount in
cleared immediately available funds on or before the later of the
last Business Day before that Actual Taxation Liability is
finally due and payable and the date five (5) Business Days after
the date of written demand on Yorkshire by CK Witco.
Part C - The Taxation Warranties
References in this Part C of this Schedule to "material" means
material in relation to the Company concerned.
In relation to any warranty in this Part C which is expressed to
be given as to matters of which CK Witco is aware or within CK
Witco's knowledge or awareness, this shall refer only to matters
directly known to the Executive Officers of CK Witco and no other
matters shall be deemed to be within the CK Witco's knowledge or
awareness. For these purposes, "Executive Officers" mean each of
Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxxx, Xxxxx Xxxxx, Xxxxxxx X.
Xxxxx, Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxxxx XX,
Xxxxxxx X. Xxxxxxx, Jeans Xxxxxxx Xxxxxxxxx, Dominique Balcean
and Xxxxxx Xxxxx.
CK Witco hereby warrants and undertakes to Yorkshire that, save
as fairly disclosed in the CK Witco Disclosure Memorandum, each
of the statements contained in the following paragraphs of this
Part C are true and correct at the date of this Agreement and
will be deemed to be made again as and at the Closing Date
(provided that CK Witco shall have no liability under this Part C
for breach of any Taxation Warranty to the extent that such
breach was disclosed by CK Witco in any written supplement to the
CK Witco Disclosure Memorandum delivered to Yorkshire prior to
the date of this Agreement and again at Closing) and CK Witco
hereby acknowledges that it has represented to Yorkshire in such
terms and CK Witco acknowledges that Yorkshire is entering into
the Agreement in reliance on such Taxation Warranties.
1. Returns and Information
(a) All registrations, returns, computations, accounts,
notices, reports and information which are or have been required
to be made or given by the Company for any Taxation purpose
(i) have been made or given within the requisite periods and on a
proper basis and are up-to-date and correct in all material
respects and (ii) were when made complete and accurate in all
material respects and (iii) none of them is, or, so far as CK
Witco is aware, is likely to be, the subject of any dispute or
disagreement with any Taxation Authority.
(b) None of the Taxation returns or other filings that
include the operations of the Company, or of any group,
organschaft or fiscal unity (as defined for any Taxation purpose)
of which the Company is or has been a member, has, within the
past 10 years been audited (other than by way of an audit which
is of a routine nature in the country in which the Company is
incorporated) or investigated by any Taxation authority and that
Company has received no notice that any such audit (other than by
way of an audit which is of a routine nature in the country in
which the Company is incorporated) or investigation is or may be
undertaken and so far as CK Witco is aware no facts exists which
would constitute grounds for any liability or assessment of any
material amount of additional Taxation by any Taxation Authority
with respect to the taxable years or periods covered in such
Taxation returns and filings.
(c) No material issues have been raised in any examination or
review by any Taxation Authority with respect to the businesses
and operations of the Company which, by application of similar
principles, reasonably could be expected to result in a proposed
adjustment to the liability for Taxation for any other taxable
period not so examined or reviewed.
(d) The Company has not within the period of three years
ending on the date of this Agreement paid or become liable to pay
any penalty, fine, surcharge, interest or similar payment of a
material amount in respect of or relating to any Taxation or any
failure to comply with any obligation relating to Taxation and,
so far as CK Witco is aware there are no facts which are likely
to cause it to become liable to any such penalty, fine,
surcharge, interest or similar amount.
(e) The Company has maintained all material information and
records which it is required to maintain for any Taxation purpose
and the Company is in possession of sufficient information to
enable it to calculate any present or, so far as possible having
regard to the facts and circumstances at the date of this
Agreement, any future liability to Taxation of the Company and
any entitlement of the Company to any Relief insofar as such
liability or Relief arises as a result of or is to be computed by
references to any Event occurring on or before Closing or any
Profits earned, accrued or received on or before Closing or any
dividend or other distribution made or deemed to have been made
on or before Closing or the acquisition of any asset on or before
Closing or the making of any loan, charge, facility or benefit to
or by the Company on or before Closing.
2. Taxation Liabilities and Reliefs
(a) Proper provision or reserve in accordance with standard
accounting practice of the jurisdiction in which it was
incorporated has been made in its Accounts for all material
liabilities for Taxation (whether actual, contingent, deferred or
disputed) for which the Company was or is liable or for which it
is or may become liable or accountable in respect of Profits
earned, accrued or received on or before, or for a period (or
part of a period) ended on or before the Accounts Date or Events
occurring on or before, or for a period (or part of a period)
ended on or before, the Accounts Date and whether incurred as
principal, agent or trustees and whether or not the Company is
primarily or secondarily liable therefor and the Company has not
incurred and will not, on or before Closing, incur any liability
to Taxation in respect of any Event occurring outside the
ordinary course of business of that Company since the Accounts
Date.
(b) Proper provision has been made in its Accounts, in
accordance with standard accounting practice in the jurisdiction
in which the Company is incorporated, for all deferred tax of a
material amount.
(c) Since the Accounts Date no material payment has been made
and no material liability (being a payment or liability on
revenue account) has been incurred by the Company other than in
the normal course of business which will not be deductible in
computing Profits (or tax allowable losses) for Taxation purposes
or in computing Taxation payable by the Company.
(d) The Company has paid all payments of or in relation to
Taxation which it has become liable to pay and which it was
required to pay on or before Closing and the Company has duly
complied with all obligations to deduct or withhold Taxation from
any payments made or treated or regarded as made by it, whether
on its own behalf or as agent or trustee, and to account for any
such Taxation to the relevant Taxation Authority.
(e) The Company has not been required to give or provide any
security or guarantee in respect of any liability of the Company
or any other person to Taxation (whether actual or contingent,
present or future).
(f) The Company is not liable for any Taxation as agent or
Taxation representative of any other person or business and does
not constitute the permanent establishment of any other person,
business or enterprise for any Taxation purpose, and the Company
is not a party to any joint venture, partnership or other
arrangement or contract which is treated as a partnership for any
Taxation purpose. The Company is not liable and so far as CK
Witco is aware there are no circumstances which would render it
liable for any Taxation as a consequence of the failure of any
other person (other than another Company) to discharge any
Taxation within a specified period.
(g) The Company is not, and will not as a result of any Event
occurring on or before Closing become, liable to pay, or to make
reimbursement or indemnity in respect of, any Taxation payable by
or chargeable on or attributable to any other person (or any
amount in respect of or corresponding to any such Taxation).
(h) So far as CK Witco is aware nothing has been done, and no
event or series of events has occurred as a result of any
contract, agreement or arrangement (in either case whether
conditional or not) entered into on or before Closing in relation
to the Company, which might, when taken together with the entry
into this Agreement or Closing or any thing done at or as part of
Closing, directly cause or contribute to the disallowance,
restriction or non-availability to the Company of any Taxation
Benefit.
(i) The CK Witco Disclosure Memorandum sets out with express
reference to this paragraph (i) full particulars of any
agreement, arrangement between the Company and any Taxation
Authority and of any concession, tolerance or abatement operated
by any Taxation Authority and the Company has not taken any
action which has had or will have, and nothing contemplated by
this Agreement will have, the effect of altering, prejudicing or
in any way disturbing any such agreement, arrangement,
concession, tolerance or abatement.
(j) The Company is not a party to and is not otherwise
subject to any arrangement having the effect of or giving rise to
the recognition of a deduction or loss in a taxable period ending
on or before Closing, and a corresponding recognition of taxable
Profits in a taxable period ending after Closing, or any other
arrangement that would have the effect of or give rise to the
recognition of taxable Profits in a taxable period ending after
Closing without the receipt of or entitlement to a corresponding
amount of cash.
(k) The Company is not liable for or subject to any material
amount of Taxation the liability for payment of which is or has
been deferred, suspended or postponed.
3. Company Residence
(a) The Company is and has always been resident for Taxation
purposes in and only in the jurisdiction stated in the CK Witco
Disclosure Memorandum with express reference to this
paragraph (a) and has never been resident anywhere else at any
time since its incorporation and will be so resident at Closing.
For the avoidance of doubt, references to residence in this
Warranty shall be construed as references to residence as
determined by the local law of the jurisdiction stated in the CK
Witco Disclosure Memorandum and not (unless required by the
relevant local law) by reference to the provisions of any
relevant double taxation agreement, treaty or convention.
(b) The Company does not have and has never had a
branch, agency or permanent establishment in, and is not liable
to any Taxation in, any jurisdiction other than that in which it
is stated in the Disclosure Memorandum to be resident for
Taxation purposes.
4. Double Tax Treaties
So far as CK Witco is aware, no relief or other Taxation Benefit
which has been claimed by the Company or which the Company is
entitled to claim under any double taxation agreement treaty or
convention entered into between the jurisdiction in which it is
resident for Taxation purposes and any other relevant
jurisdiction, will or may be disallowed or withdrawn, postponed,
restricted, clawed back or otherwise lost as a result of any
Event occurring on or before Closing.
5. Tax Base Values and Costs of Acquisition
(a) Sufficient provision for deferred tax under FAS 109
has been provided for in the Special Purpose Statement for any
timing difference between the book tax basis in the assets of the
Company and the US GAAP basis.
(b) No action has been taken by the Company or, so far as CK
Witco is aware, any company which is or has been a member of the
same group for any Taxation purpose as the Company in relation to
any asset it currently owns such that any loss on the disposal of
that asset would be restricted or reduced for Taxation purposes.
6. Transactions not at Arm's Length
(a) The Company does not own and has not within the past
three years agreed to acquire, any asset, and has not during the
past three years received or agreed to receive any services or
facilities (including, without limitation, any loan or money or
the benefit of any licences or agreements), the consideration for
the acquisition or provision of which was or will be in excess of
its market value, or otherwise than on an arm's length basis.
(b) The Company has not during the past three years,
disposed, and has not agreed to dispose, of any asset, and has
not provided or agreed to provide any services or facilities
(including, without limitation, any loan of money or the benefit
of any licences or agreements), the consideration for the
disposal or provision of which was or will be materially less
than its market value, or otherwise than on an arm's length
basis.
(c) The Company has not, within the past three years, made
or received any gift of any property or assets of any kind
whatsoever and does not own any property received by way of gift.
7. Anti-Avoidance
The Company has not been engaged in, or been a party to, any
Event or Series of Events or scheme or arrangement of which the
main purpose or one of the main purposes was the avoidance or
deferral of liability to any Taxation in circumstances where the
Company is or may become liable to any fine or penalty as a
result or consequence thereof.
8. Value Added Tax ("VAT") and Turnover Tax
The Company and any other company which has been treated as a
member of the same group of companies as the Company for the
purposes of VAT and (where relevant) turnover taxes have complied
in all material respects with all laws, statutory requirements,
orders, provisions, directions or other conditions made or
imposed thereunder relating to VAT or such turnover taxes,
including (for the avoidance of doubt) the terms of any agreement
reached with respect thereto with any appropriate Taxation
Authority.
9. Stamp Duty
All documents to which the Company is a party, or which form part
of the title to any asset owned or possessed by the Company, or
which the Company may need to enforce or produce in evidence in
any court of law have been duly stamped and (where appropriate)
adjudicated.
10. Distributions
No dividend or distribution has been made nor has anything which,
for Taxation purposes, is deemed or construed as a dividend, been
made or done by the Company during the six years ending on the
date of this Agreement, except as provided for in the audited
accounts of the Company.
11. Reorganisation and Closing
(a) None of the Events effected or proposed to be
effected as part of the Reorganisation or the Events contemplated
by this Agreement, or the entry into, becoming unconditional or
Closing of this Agreement, will give rise to any liability for
Taxation or result in any Profits accruing or being deemed to
accrue to the Company for Taxation purposes.
(b) The Company has not agreed to make and is not required
to make, any adjustment by reason of a change in accounting
methods that affects any taxable year or other taxable period
ending after Closing. No Taxation Authority has proposed to the
Company any such adjustment or change in accounting methods that
affects any taxable year or other taxable period ending after
Closing. The Company has no application pending with any
Taxation Authority requesting permission for any change in
accounting methods that relates to its business or operations and
that affects any taxable year or other taxable period ending
after Closing.
12. Tax Equalisation Payments etc.
(a) The company is not liable to make any payment for the
utilisation, surrender or other transfer of any Taxation Benefit
("Taxation Equalisation Payment"), nor is any Taxation
Equalisation Payment received by the Company liable to be
refunded.
(b) The Company is not under any obligation to surrender or
otherwise transfer any Taxation Benefit and the Company is not a
party to any Taxation sharing agreement with any company which is
not a Company.
(c) There are set out in the CK Witco Disclosure Memorandum,
with express reference to this paragraph (c), full particulars of
all surrenders or other transfer of any Taxation Benefit made or
agreed to be made (whether conditionally or otherwise) by the
Company since the Accounts Date.
13. Groups, Organschafts, Fiscal Unities etc.
Save as disclosed in the CK Witco Disclosure Memorandum, the
Company has never been treated for any Taxation purpose as a
member of a group, a consolidated tax group, a group
registration, an organschaft or fiscal unity and has never been
subject to any consolidated tax return in respect of the Company
and any other person.
