Exhibit 10.1
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STOCK AND ASSET PURCHASE AGREEMENT
by and among
HERCULES INCORPORATED,
FALCON ACQUISITION CORP.
and
GENERAL ELECTRIC COMPANY
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As of February 12, 2002
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TABLE OF CONTENTS
PAGE
ARTICLE I Certain Definitions and Other Matters.............. .....2
Section 1.1 Certain Definitions.................................2
Section 1.2 Terms Defined in Other Sections....................17
Section 1.3 Interpretation.....................................20
ARTICLE II Purchase and Sale of Stock and Assets...................21
Section 2.1 Purchase and Sale of Stock and Assets;
Preliminary Purchase Price.........................21
Section 2.2 Assets and Liabilities.............................21
Section 2.3 Deliveries at the Closing..........................22
Section 2.4 Closing............................................24
Section 2.5 Post-Closing Purchase Price Determination..........26
Section 2.6 Allocation of Final Purchase Price.................29
Section 2.7 Accounting Close...................................30
Section 2.8 Reorganization Tax Prepayment......................30
ARTICLE III Representations and Warranties of the Seller............31
Section 3.1 Organization and Standing..........................31
Section 3.2 Capitalization of the Transferred Subsidiaries.....31
Section 3.3 Corporate Power and Authority......................33
Section 3.4 Conflicts; Consents and Approvals..................33
Section 3.5 No Material Adverse Effect.........................34
Section 3.6 [Reserved].........................................36
Section 3.7 Taxes..............................................36
Section 3.8 Compliance with Law................................39
Section 3.9 Intellectual Property..............................39
Section 3.10 Title to Assets; Sufficiency of Assets.............42
Section 3.11 Environmental Matters..............................43
Section 3.12 Litigation.........................................43
Section 3.13 Brokerage and Finders' Fees........................44
Section 3.14 Special Purpose Financial Statements;
Interim Management Basis Financial Statements......44
Section 3.15 Employee Benefit Plans.............................45
Section 3.16 Contracts..........................................47
Section 3.17 Labor and Employment Matters.......................48
Section 3.18 Undisclosed Liabilities............................49
Section 3.19 Permits; Compliance................................50
Section 3.20 Real Estate........................................50
Section 3.21 Intercompany Services..............................51
Section 3.22 Relationships with Customers.......................52
Section 3.23 Insurance..........................................52
ARTICLE IV Representations and Warranties of the Purchasers........52
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Section 4.1 Organization and Standing..........................52
Section 4.2 Corporate Power and Authority......................52
Section 4.3 Conflicts; Consents and Approvals..................53
Section 4.4 No Material Adverse Effect.........................54
Section 4.5 Investigation by the Purchasers; Financial
Capability.........................................54
Section 4.6 Purchaser Benefit Plans............................54
Section 4.7 Knowledge..........................................54
ARTICLE V Covenants and Agreements................................54
Section 5.1 Access and Information.............................54
Section 5.2 Title Searches.....................................56
Section 5.3 Conduct of Business................................56
Section 5.4 Closing Documents..................................59
Section 5.5 Further Assurances; Environmental Filings..........59
Section 5.6 Certain Covenants..................................62
Section 5.7 Notification by the Parties........................64
Section 5.8 Employees and Employee Benefits....................64
Section 5.9 Tax Matters........................................77
Section 5.10 Ancillary Agreements...............................87
Section 5.11 Assignment of Insurance Proceeds...................89
Section 5.12 Other Insurance Matters............................89
Section 5.13 Access to Records after Closing; Commingled Items..91
Section 5.14 Loan Documents; Intercompany Accounts; Guaranties..93
Section 5.15 Inventory Count....................................94
Section 5.16 [Reserved].........................................94
Section 5.17 Use of Hercules Name; Use of Xxxx Name.............94
Section 5.18 Cooperation with Respect to Financial Reporting....95
Section 5.19 Non-Solicitation of Employees......................95
Section 5.20 Non-Competition....................................96
Section 5.21 Reorganization.....................................97
Section 5.22 No Solicitation....................................98
Section 5.23 Leaseback Leases...................................98
Section 5.24 Escheat............................................99
Section 5.25 Reserved...........................................99
Section 5.26 Other Agreement....................................99
ARTICLE VI Conditions to Closing...................................99
Section 6.1 Mutual Conditions..................................99
Section 6.2 Conditions to the Purchasers' Obligations.........100
Section 6.3 Conditions to the Seller's Obligations............101
ARTICLE VII Termination............................................101
Section 7.1 Termination.......................................101
Section 7.2 Effect of Termination.............................102
ARTICLE VIII Survival of Representations and Warranties;
Indemnification........................................102
Section 8.1 Survival of Representations and Warranties........102
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Section 8.2 Indemnification...................................103
Section 8.3 Procedures for Third Party Claims.................105
Section 8.4 Procedures for Inter-Party Claims................ 106
Section 8.5 Calculation of Damages........................... 107
ARTICLE IX Miscellaneous......................................... 107
Section 9.1 Notices.......................................... 107
Section 9.2 Expenses......................................... 108
Section 9.3 Governing Law; Consent to Jurisdiction........... 108
Section 9.4 Waiver of Jury Trial............................. 109
Section 9.5 Assignment; Successors and Assigns;
No Third Party Rights............................ 109
Section 9.6 Counterparts......................................109
Section 9.7 Titles and Headings...............................109
Section 9.8 Entire Agreement..................................110
Section 9.9 Amendment and Modification........................110
Section 9.10 Publicity; Public Announcements...................110
Section 9.11 Waiver............................................110
Section 9.12 Severability......................................110
Section 9.13 No Strict Construction............................110
Section 9.14 Knowledge.........................................110
Section 9.15 Affiliate Status..................................111
Section 9.16 No Implied Representation by the Seller...........111
Section 9.17 No Implied Representation by the Purchasers.......111
Section 9.18 Designated Affiliates.............................111
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STOCK AND ASSET PURCHASE AGREEMENT
This STOCK AND ASSET PURCHASE AGREEMENT, dated as of February 12, 2002
(this "Agreement"), is entered into by and among HERCULES INCORPORATED, a
Delaware corporation having its principal place of business at Hercules Plaza,
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000 (the "Seller"),
GENERAL ELECTRIC COMPANY, a New York corporation having its principal place of
business at 0000 Xxxxxx Xxxxxxxx, X0, Xxxxxxxxx, Xxxxxxxxxxx 00000 (the "Parent
Purchaser"), and FALCON ACQUISITION CORP., a Delaware corporation having its
principal place of business c/o the Parent Purchaser (the "Purchaser" and,
together with the Parent Purchaser, the "Purchasers").
W I T N E S S E T H:
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WHEREAS, the Water Business (as defined in Article I) is conducted
globally by the Seller and its Subsidiaries (as defined in Article I) identified
on Section 1.1 of the Seller's Disclosure Schedule (as defined in Article I);
WHEREAS, the Seller desires to sell the Water Business as a going
concern to the Purchaser (or its Designated Affiliates) and the Purchaser
desires to purchase the Water Business from the Seller by means of the transfer
from the Seller Entities (as defined in Article I) to the Purchasers of the
assets and liabilities of the Water Business, including all of the issued and
outstanding capital stock of the Purchased Subsidiaries (as defined in Article
I), all in accordance with the terms and subject to the conditions of this
Agreement;
WHEREAS, in those countries where portions of the Water Business are
operated and managed by the Seller and its Subsidiaries in combination with
other Seller businesses, the Seller will take such steps as are necessary or
appropriate either to cause assets, liabilities and/or equity interests relating
to those other businesses to be sold, transferred, assigned or otherwise
conveyed to or assumed by, as applicable, Affiliates (as defined in Article I)
of the Seller (other than the Transferred Subsidiaries (as defined in Article
I)), or to cause assets, liabilities and/or equity interests relating to
portions of the Water Business to be sold, transferred, assigned or otherwise
conveyed to or assumed by, as applicable, the Transferred Subsidiaries, in each
case, effective at or prior to the Closing (as defined in Section 2.4.1), or to
the extent applicable pursuant to Section 2.4.2, such other date, all as more
fully set forth in Section 5.21 (the "Reorganization"), such that, at the
Closing (or such other date in accordance with Section 2.4.2), the Water
Business may be transferred by the Seller Entities to the Purchasers in
accordance with the terms of this Agreement; and
WHEREAS, the Boards of Directors of the Seller and the Parent Purchaser
have, in each case, determined that it is in the best interests of their
respective corporations to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and intending to be legally bound, the parties hereto agree as
follows:
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ARTICLE I
CERTAIN DEFINITIONS AND OTHER MATTERS
Section 1.1 Certain Definitions.
As used in this Agreement and the schedules hereto, the following terms
have the respective meanings set forth below.
"Absent Employee" mean each employee who is, as of the Closing Date,
absent with the right to return to work pursuant to applicable Law or the
applicable policies of the Seller or its applicable Affiliate, due to short-term
disability or approved leave of absence granted before the Closing. Employees
who, as of the Closing Date, are on vacation, holiday or jury duty shall not be
included in Absent Employees, but shall be considered actively at work as of the
Closing Date.
"Action" means any administrative, regulatory, judicial or other formal
proceeding by or before any Governmental Authority or arbitrator.
"Adjusted Base Net Assets" means the Base Net Assets as adjusted as of
the Accounting Closing Date to eliminate the effects of foreign exchange rate
fluctuations and depreciation in accordance with the procedures set forth in
Section 2.5 of the Seller's Disclosure Schedule.
"Adjusted Base Net Assets Statement" means the Base Net Assets
Statement as adjusted as of the Accounting Closing Date to eliminate the effects
of foreign exchange rate fluctuations and depreciation in accordance with the
procedures set forth in Section 2.5 of the Seller's Disclosure Schedule.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the ability
to elect the members of the board of directors or other governing body of a
Person, and the terms "controlled" and "controlling" have correlative meanings.
"Allocated Employee" means any employee of the Seller or any of its
Affiliates, excluding the Transferred Subsidiaries, who allocates on a regular
basis at least 25% but less than 75% of such employee's working time to the
Water Business or any portion thereof (whether or not such individual is an
Absent Employee).
"Ancillary Agreements" means the Blanket Assignment of Leases, the
Leaseback Leases, any Local Assignment of Leases, the Supply Agreements, the
Transition Services Agreement, the Intellectual Property Assignments, the
Intellectual Property License Agreements and the Distribution Agreement, and any
and all other agreements to be executed by the Seller and the Purchasers or, as
applicable, their respective Affiliates in connection with consummating the
transactions contemplated by this Agreement.
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"Antitrust Division" means the Antitrust Division of the United States
Department of Justice.
"Assignment of Leases" means a duly executed blanket assignment of
leases substantially in the form attached hereto as Exhibit I, pursuant to which
the Seller Entities shall transfer and assign all of their respective right,
title and interest in each Real Property Lease relating to, and each Leased Real
Property that is, a Transferred Asset (as detailed on Section 2.2.1 of the
Seller's Disclosure Schedule) to the Purchaser or its Designated Affiliate;
provided that, to the extent required by the lessor of any Leased Real Property
or required by custom and/or applicable Law of the jurisdiction in which a
Leased Real Property is located, the parties hereto (or, in the case of the
Purchaser, its Designated Affiliate) shall enter into a separate assignment of
lease in relation to such Leased Real Property, such separate assignment to be
substantially in the same form as the blanket assignment described above, with
such changes as are required by such lessor, custom or applicable Law, together
with any other transfer declarations or other filings as are necessary to give
effect to such assignment (provided that no such separate assignment or other
declaration or filing shall alter the parties' rights or obligations set forth
in the aforesaid blanket assignment).
"Assumed Water Business Benefit Plan" means any Water Business Benefit
Plan, other than the Xxxx Laboratories Inc. Pension Benefit Restoration Plan and
the Seller Savings Plan.
"Base Net Assets" shall be an amount equal to three hundred twenty-six
million dollars ($326,000,000).
"Base Net Assets Statement" means the statement of Base Net Assets
attached hereto as Exhibit IX.
"Benefit Plan" means each "employee benefit plan" (as defined in
Section 3(3) of ERISA, whether or not such plan is covered by ERISA), including
any "multiemployer plan" (as defined in Section 3(37) of ERISA), and each
profit-sharing, bonus, stock option, stock purchase, stock ownership, pension,
retirement, severance, deferred compensation, excess benefit, supplemental
unemployment, post-retirement medical or life insurance, welfare or incentive
plan, or sick leave, long-term disability, medical, hospitalization, life
insurance, other insurance plan, or other employee benefit plan, program or
arrangement, whether written or unwritten, qualified or non-qualified, funded or
unfunded, maintained or contributed to by the Seller or any of its Affiliates,
or with respect to which the Seller or any of its Affiliates has any
obligations, for the benefit of Business Employees and/or Former Business
Employees with respect to employment in the Water Business or any portion
thereof, but excluding social security and similar programs and other
government-mandated programs that do not result in the accrual of balance-sheet
liabilities by the Seller or any of its Affiliates on the applicable local
balance sheets.
"Xxxx" means BetzDearborn Inc., a Pennsylvania corporation and, prior
to the Closing, a wholly owned Subsidiary of the Seller.
"Xxxx Common Stock" means the common stock, par value $0.01 per share,
of Xxxx.
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"Borrowing Rate" means the prime rate as published in The Wall Street
Journal from time to time during the period from the Closing Date through the
date of refund as determined pursuant to Section 2.5.2.
"Business Day" means a day on which national banks are open for
business in New York, New York and Wilmington, Delaware.
"Business Employees" means the Divisional Employees, the Water Asset
Employees and the Water Subsidiary Employees.
"Claims" means any and all (i) claims, (ii) demands or (iii) causes of
action (in the case of clause (iii), relating to or resulting from an Action).
"Closing Date Net Assets" means, as at the close of business on the
Accounting Closing Date, the aggregate net book value of all (i) the Transferred
Assets, plus (ii) the Water Business assets of the Transferred Subsidiaries,
minus the aggregate amount of all (i) the Transferred Liabilities and (ii)
Liabilities of the Transferred Subsidiaries, in each case as shown on the Final
Closing Date Statement of Net Assets determined in the manner set forth in
Section 2.5 of this Agreement and the related sections of the Seller's
Disclosure Schedule.
"COBRA Coverage" means health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA.
"Code" means the Internal Revenue Code of 1986, as amended.
"Combined Statement of Net Assets" means the Hercules Incorporated -
Water Business - Combined Statement of Net Assets as of December 31, 2000, as
set forth in Section 3.14.1 of the Seller's Disclosure Schedule, including the
notes thereto.
"Confidentiality Agreement" means the Confidentiality Agreement, dated
June 27, 2001, between the Seller and the Parent Purchaser.
"Confidential Business Information" shall mean marketing data,
financial information, customer lists, supplier lists, pricing and cost
information, business and marketing plans and proposals and other non-technical
proprietary business information.
"Consolidated Group" means any consolidated, combined or unitary group
or group relief system or joint filers.
"Contract" means any contract, agreement, indenture, deed of trust,
license, note, bond, mortgage, lease, commitment, guarantee, undertaking,
purchase order, memorandum of understanding, memorandum of agreement and any
similar understanding or arrangement, in each case in a binding written
instrument.
"Credit Facility" means the Amended and Restated Credit Agreement,
dated as of April 19, 1999, as amended, among the Seller, as borrower, the
Subsidiaries of the Seller from time to time parties thereto, the several
Lenders from time to time parties thereto, Bank of America, N.A., formerly
NationsBank, N.A., as Administrative Agent, Bank of America Canada, as
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Canadian Administrative Agent, The Chase Manhattan Bank, Xxxxxx Guaranty Trust
Company of New York and Citibank, N.A., as Co-Syndication Agent and Credit
Suisse First Boston, as Lead Arranger and Book Manager for the Tranche D Term
Loan, as the same may from time to time be amended.
"Criminal Damages" shall mean the amount (1) of any criminal penalties
or fines paid by a Person to a Governmental Authority or (2) any restitution
paid by a Person to a third party, in each case, resulting from the conviction
(including as a result of the entry of a guilty plea, a consent judgment or a
plea of nolo contendre) of such Person of a crime.
"Damages" means (i) all damages, settlement amounts, penalties, losses,
costs and expenses, and (ii) all other Liabilities directly relating to Claims,
including, in each case, reasonable attorney's fees, court costs and other
actual out-of-pocket expenses incurred to a third party as may be reasonably
necessary to defend or investigate an Action or a Claim, but, in each case,
shall not include incidental, indirect or consequential damages (including, to
the extent such damages would constitute consequential damages, damages for lost
profits) or other special damages; provided, however, that Damages shall not
include internal management, administrative or overhead costs that a party
reasonably incurs in connection with the administration, supervision or
performance of actions taken in response to such Claims. Without limiting the
first sentence hereof, as it relates to environmental compliance Claims, Damages
shall include the capital costs of correcting the non-compliance but shall not
include the operating costs (whether internal or external) of a party associated
with any equipment, structure or practices used to achieve or maintain
compliance with Environmental Laws or Environmental Permits. Without limiting
the first sentence hereof, as it relates to Claims for remediating damage to the
environment, Damages shall include the actual out-of-pocket costs (capital or
otherwise) of implementing the remedy as well as long-term operations and
maintenance of the remedy ("O&M").
"Deed" means, with respect to each Transferred Real Property as
detailed on Section 2.2.1 of the Seller's Disclosure Schedule, a duly executed
and acknowledged special warranty deed with a warranty against the relevant
Seller Entity's acts (subject to any applicable Permitted Property Encumbrances
and subject to the limitations in Section 8.2.6 and the Cap Amount and the
Basket Amount) or its reasonable equivalent outside the United States which
shall be (a) in form and substance customary for the jurisdiction in which such
Real Property is located, (b) effective to transfer to the Purchaser (or its
Designated Affiliate) the applicable Seller Entity's title to such Owned Real
Property subject to the Permitted Property Encumbrances and (c) in the
appropriate recordable form for the jurisdiction in which such Owned Real
Property is located, and shall have affixed thereto any requisite transfer tax
and documentary tax stamps in the proper amount (with the cost thereof allocated
pursuant to Section 5.9.13).
"Designated Affiliate" shall mean an Affiliate of the Parent Purchaser
which is designated by the Parent Purchaser and such designation (1) is
reasonably acceptable to the Seller; (2) does not impede or delay in any way the
ability of the parties to close the transactions contemplated by this Agreement
and the Ancillary Agreements; (3) does not directly or indirectly prejudice or
increase the costs (including Tax costs) to the Seller or cause additional
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assets to be included in the definition of Deferred Business; and (4) is made in
accordance with Section 9.5 and 9.18.
"Distribution Agreement" means the distribution agreement to be
executed by the Seller and Xxxx at the Closing, substantially in the form
attached hereto as Exhibit II.
"Divisional Employee" means each individual, other than a Water Asset
Employee, who is, immediately before the Closing, an employee of the Seller or
any of its Affiliates, excluding the Transferred Subsidiaries, spending, on a
regular basis, at least 75% of his or her working time rendering services in the
Water Business or any portion thereof (whether or not such individual is an
Absent Employee).
"Employment Agreement" means a written Contract or offer letter of the
Seller or any of its Affiliates (including the Transferred Subsidiaries) with or
addressed to any Business Employee or Former Business Employee pursuant to which
the Seller or any of its Affiliates (including the Transferred Subsidiaries) has
any actual or contingent liability or obligation to provide compensation and/or
benefits in consideration for past, present or future services.
"Encumbrances" means security interests, liens, Claims, charges, title
defects, deficiencies or exceptions (including, with respect to Real Property,
defects, deficiencies or exceptions in, or relating to, marketability of title,
or leases, subleases or the like affecting title), mortgages, pledges,
easements, encroachments, restrictions on use, rights-of-way, rights of first
refusal, conditional sales or other title retention agreements, covenants,
conditions or other similar restrictions (including restrictions on transfer) or
other encumbrances of any nature whatsoever.
"Environmental Laws" means all Laws relating to pollution or
protection of human health and safety or the environment (including ambient air,
surface water, groundwater, land surface, natural resources or subsurface
strata), including all such Laws relating to Releases or threatened Releases of
Regulated Substances into the environment or work place, or otherwise relating
to the environmental or worker health and safety aspects of manufacturing,
processing, distribution, importation, use, treatment, storage, disposal,
transport or handling of Regulated Substances, including, but not limited to,
chemical inventories in all relevant jurisdictions, and all such Laws relating
to the registration of products of any portion of the Water Business or the
Purchased Subsidiaries under the Federal Insecticide, Fungicide and Rodenticide
Act (FIFRA), the Food Drug and Cosmetic Act, the Toxic Substances Control Act,
the European List of Notified Chemical Substances (ELINCS), the European
Inventory of Existing Commercial Chemical Substances (EINECS) or similar Laws.
"Environmental Permit" means any permit, registration, approval,
identification number, license or other authorization or filing required under
or issued pursuant to any applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any entity which would be aggregated with the
Seller under Section 414 of the Code or Section 4001(b) of ERISA.
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"ESOP Notes" means the $100,000,000 in original aggregate principal
amount of 9.48% Guaranteed Notes Due June 19, 2009 of The BetzDearborn Inc.
Employee Stock Ownership Trust issued pursuant to the Note Purchase Agreement,
dated as of June 19, 1989, as amended (including the Seventh Amendment thereto,
entered into as of July 17, 2001), as the same may from time to time be amended.
"FLSA" means the Fair Labor Standards Act, 29 U.S.C. Section 201, as
amended.
"Foreign Benefit Plan" means a Benefit Plan maintained outside the
United States of America, primarily for the benefit of persons substantially all
of whom are nonresident aliens with respect to the United States of America.
"Foreign Former Business Employee" means a Former Business Employee who
was not employed, immediately before he or she ceased to be employed by the
Seller and its Affiliates, in the United States of America.
"Former Business Employee" means an individual who, immediately before
the Closing, is neither a Business Employee nor an employee of the Seller or any
of its Affiliates, but who was formerly an employee of the Seller or one of its
Affiliates and as to whom it is established by the Seller that he or she would
be a Divisional Employee, a Water Asset Employee or a Water Subsidiary Employee,
if the definition of each of those terms were modified by replacing the phrase
"is, immediately before the Closing" with the phrase "was, at the time of such
individual's last employment with the Seller or any of its Affiliates."
Notwithstanding the foregoing, neither (a) a Specified Divisional Employee who
for any reason does not become a Transferred Employee and who is not retained in
the employ of the Seller and its Affiliates (excluding the Transferred
Subsidiaries) following the Closing Date, nor (b) an Allocated Employee who for
any reason does not become a Transferred Employee, shall be a Former Business
Employee.
"FTC" means the United States Federal Trade Commission.
"Funded Assets" means any trust, insurance policy, or other assets set
aside to fund a Foreign Benefit Plan.
"GAAP" means United States generally accepted accounting principles.
"Governmental Authority" means any supranational, national, federal,
state, provincial, county, municipal or local government, foreign or domestic,
or the government of any political subdivision of any of the foregoing, or any
entity, authority, agency, ministry or other similar body exercising executive,
legislative, judicial, regulatory or administrative authority or functions of or
pertaining to government, including any authority or other quasi-governmental
entity established by a Governmental Authority to perform any of such functions.
"HSR Authority" means the FTC and/or the Antitrust Division.
"Indebtedness" of any Person means, without duplication, (i) all
obligations of such Person for money borrowed; (ii) all obligations of such
Person evidenced by notes, debentures,
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bonds or other similar instruments for the payment of which such Person is
responsible or liable; (iii) all obligations of such Person issued or assumed
for deferred purchase price payments associated with acquisitions, divestments
or material transactions; (iv) all obligations of such Person under leases
required to be capitalized in accordance with GAAP, as consistently applied by
the Seller, except for leases with aggregate capitalized value of up to
$500,000, in the aggregate, incurred in the Ordinary Course of Business; (v) all
obligations of such Person for the reimbursement of any obligor on any letter of
credit, banker's acceptance, guarantees or similar credit transaction, in each
case, that has been claimed against; and (vi) factored accounts receivable that
remain outstanding except for accounts receivable not in excess of $250,000, in
the aggregate, which have been or may be factored in the Ordinary Course of
Business, excluding in all cases in clauses (i) through (vi) current accounts
payable, trade payables and accrued liabilities incurred in the Ordinary Course
of Business.
"Independent Accountant" means a nationally recognized independent
public accounting firm that currently does not audit and has not audited within
the past two years (determined as of the time of appointment of the Independent
Accountant) the Seller or the Purchasers, or any of their respective Affiliates,
as shall be agreed upon by the Seller and the Parent Purchaser or, if an
agreement cannot be reached within 15 days of the expiration of the 45-day
period set forth in the second sentence of Section 2.5.3.3, as shall be selected
by the American Arbitration Association upon the request of either the Seller or
the Parent Purchaser (provided that in the event that the Independent Accountant
is needed for purposes of Section 5.9 ("Tax Purposes") prior to the time the
Independent Accountant is needed for purposes other than Section 5.9 ("Nontax
Purposes"), the designation of a firm as Independent Accountant for Tax Purposes
shall (i) be disregarded for Nontax Purposes and (ii) be made as set forth above
in this definition, except that the word "promptly" shall be substituted for the
words "within 15 days of the expiration of the 45-day period set forth in the
second sentence of Section 2.5.3.3)".
"Insurance Policies" means each insurance policy (other than relating
to Benefit Plans), which, as of the date hereof or hereinafter until the
Closing, is maintained by or on behalf of or provides coverage to (a) any of the
Transferred Subsidiaries with respect to their Water Business businesses and
properties, or (b) the Water Business or any portion thereof, including those
set forth in Section 3.23 of the Seller's Disclosure Schedule.
"Intellectual Property Assignments" means the assignments of the
Purchased Intellectual Property to be executed by the Seller and the Purchaser
(or its Designated Affiliate) at the Closing, substantially in the forms
attached hereto as Exhibit III.
"Intellectual Property License Agreements" means the license agreement
or agreements to be executed by the Seller and the Purchaser (or its Designated
Affiliate) at the Closing, substantially in the forms attached hereto as Exhibit
IV.
"Intellectual Property Rights" means all of the rights arising from or
in respect of the following, whether protected, created or arising under the
Laws of the United States or any other United States or foreign jurisdiction:
(a) patents, inventions (whether patentable or unpatentable and whether or not
reduced to practice), invention disclosures, developments, patent applications,
any reissues, reexaminations, divisionals, continuations, continuations-in-part
and extensions thereof ("Patents"), trademarks, service marks, trade names
(whether registered or
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unregistered), service names, industrial designs, brand names, brand marks,
trade dress rights, Internet domain names, identifying symbols, logos, emblems,
signs or insignia, including all goodwill associated with such marks, designs,
names, logos or symbols (collectively, "Marks"), copyrights, mask work rights
and registrations and applications therefor ("Copyrights"), (b) Trade Secrets,
(c) except to the extent generally available for purchase from a third party,
computer programs, including any and all software implementations of algorithms,
models and methodologies whether in source code, object code or other form,
databases and compilations, including any and all data and collections of data,
descriptions, flow-charts and other work product used to design plan, organize
and develop any of the foregoing and all documentation, including user manuals
and training materials, related to any of the foregoing ("Software"), (d) all
other intellectual property and proprietary rights and rights of a similar
nature, and (e) all applications, registrations, permits and licenses related to
any of the foregoing clauses (a) - (d) above.
"Inventory" means, with respect to a Person, all inventory, wherever
located (including customer sites), including raw materials, work in process,
recycled materials, finished products, supplies, parts and non-capital spare
parts owned by such Person, and any rights of such Person to the warranties
received from suppliers and any related claims, credits, rights of recovery and
setoff with respect to such Inventory.
"IRS" means the Internal Revenue Service of the United States of
America.
"Key Properties" means the Owned Real Property consisting of the 13
manufacturing plants designated as a Key Property in Section 3.20 of the
Seller's Disclosure Schedule.
"Laws" means all United States federal, state or local or foreign laws,
constitutions, statutes, codes, rules, regulations, ordinances, executive
orders, decrees or edicts by a Governmental Authority having the force of law.
"Leaseback Properties" means all of the Owned Real Property that is
located in Addison, Illinois, Langhorne, Pennsylvania and Garland, Texas and
designated as Leaseback Properties in Paragraph B.2 of Section 2.2.1 of the
Seller's Disclosure Schedule.
"Leased Real Property" means any real property leased or subleased to
any of the Seller Entities or the Transferred Subsidiaries primarily for use in
the operation of any portion of the Water Business and set forth (and designated
as leased) in Section 2.2.1 (in Paragraph B.1 therein) or Section 3.20 of the
Seller's Disclosure Schedule.
"Liabilities" means any and all debts, liabilities, commitments and
obligations, whether or not fixed, contingent or absolute, matured or unmatured,
direct or indirect, liquidated or unliquidated, accrued or unaccrued, known or
unknown, whether or not required by GAAP to be reflected in financial statements
or disclosed in the notes thereto.
"Licensed Intellectual Property" means all Intellectual Property Rights
in the Retained Business which are being used, have been used since January 1,
2000, or are held for use in the operation, or the conduct, or for the benefit,
of the Water Business (but not including any Purchased Intellectual Property),
which will be licensed by the Seller or any of its Affiliates
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(other than the Transferred Subsidiaries) to the Purchaser (or its Designated
Affiliates) or any Transferred Subsidiary pursuant to the terms of the Ancillary
Agreements.
"Loan Documents" means the Credit Facility and the ESOP Notes.
"Material Adverse Effect" means, with respect to a Person or the Water
Business, any change, effect, event, occurrence or state of facts which would
reasonably be expected to be materially adverse to the business, operations or
financial condition of such Person, and its Subsidiaries, taken as a whole or
the Water Business; provided, however, that for purposes of this Agreement,
neither (i) any changes, effects, events, occurrences or states of facts (a)
that are generally applicable in the economies of the United States or the
European Union; or (b) generally affecting the industries in which the
Transferred Subsidiaries and (with respect to any portion of the Water Business)
the Seller Entities operate, nor (ii) the implementation of the Reorganization
in accordance with Section 5.21, shall in any case be taken into account or
otherwise considered in determining whether any Material Adverse Effect has
occurred with respect to any of the Seller, the Seller Entities, the Transferred
Subsidiaries or the Water Business.
"Material Benefit Plan" means a Benefit Plan (a) under which the annual
cost to provide benefits exceeds $200,000, (b) under which the accrued
liabilities as of the date hereof, computed in accordance with the actuarial
methods, procedures and assumptions most recently used for purposes of funding
such Benefit Plan, exceed $500,000, (c) which covers 35 or more current or
former employees, or (d) which is a plan as defined in Section 3(3) of ERISA
that is subject to ERISA.
"Material Employment Agreement" means an Employment Agreement that
requires the payment of cash compensation in excess of $100,000 per year or in
excess of $300,000 in the aggregate.
"Ordinary Course of Business" means, with respect to the Water Business
or any of the Transferred Subsidiaries, actions that (a) are consistent with the
past practices since January 1, 1999 of such business or such Subsidiaries, or
(b) are similar in nature, style and magnitude to actions customarily taken in
the ordinary course of the normal day-to-day operations of such business or such
Subsidiaries; provided, however, that, when used in the first sentence of
Section 5.3 of this Agreement, "Ordinary Course of Business" shall be deemed to
include any action that is reasonably consistent with a change in business
practices recently adopted by Ondeo Nalco Company, ChemTreat, Inc. or Ashland
Specialty Chemical Company's Drew Industrial Division with respect to their
respective activities in such company's own business that is comparable to the
Water Business.
"Organizational Restructuring" means any and all actions taken by the
Seller or any of its Affiliates pursuant to (and within the scope of) the
"Global Reorganization Plan," the "Phoenix Plan (Sales Service Reorganization)"
and the "Work Process Redesign Plan," the major elements of which are described
in Section 3.17.4 of the Seller's Disclosure Schedule; it being acknowledged and
agreed that, for purposes of this Agreement, any such action shall be deemed to
have been taken in the Ordinary Course of Business.
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"Outside Date" means August 12 , 2002.
"Owned Real Property" means any real property owned by any Seller
Entity or Transferred Subsidiary primarily used in the operation of any portion
of the Water Business, which is set forth in Section 2.2.1 (Transferred Real
Property) or Section 3.20 of the Seller's Disclosure Schedule (including any and
all buildings, improvements, fixtures and appurtenances located thereon).
"Permitted Encumbrances" means (a) other than with respect to Real
Property, (i) Encumbrances for Taxes not yet due and payable, (ii) Encumbrances
arising in the Ordinary Course of Business of the Water Business, provided that,
in the case of assets material to the Water Business, such Encumbrances do not
and would not reasonably be expected to materially impair the continued use or
operation of such assets, and (iii) Encumbrances disclosed in Section 3.10.1 of
the Seller's Disclosure Schedule; and (b) with respect to Real Property, any
Permitted Property Encumbrances.
"Permitted Property Encumbrances" means, with respect to Real Property,
any of the following:
(i) Encumbrances for Taxes or other assessments or charges by
Governmental Authorities that arise by operation of Law and
are not yet due and payable, or that are being contested in
good faith by appropriate proceedings;
(ii) mechanics', carriers', workers', materialmen's,
warehousemen's and similar liens arising or incurred in the
Ordinary Course of Business for (i) sums not due and
payable, or (ii) payments which are being contested in good
faith by appropriate proceedings;
(iii) (a) the Encumbrances that are disclosed in Section 3.10.1
of the Seller's Disclosure Schedule, or (b) in the case of
Real Property located in jurisdictions outside the United
States, Encumbrances that are customary for similar
properties in such jurisdictions due to local law, custom or
practice and which serve to perfect the ownership interest
of the Seller (or its Affiliates) in such Real Property; or
(iv) Encumbrances which do not have a Property Adverse Impact.
"Person" means an individual, partnership, corporation, limited
liability company, joint stock company, unincorporated organization or
association, trust or joint venture, or a Governmental Authority.
"Post-Closing Period" means any taxable period (or portion thereof)
that begins after the Closing Date, including the Post-Closing Straddle Period.
"Pre-Closing Period" means any taxable period (or portion thereof) that
ends on or before the Closing Date, including the Pre-Closing Straddle Period.
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"Property Adverse Impact" means, with respect to the Real Property, the
effect or impact of (i) materially impairing the present use and operation of
all of the Real Property taken as a whole, as used and operated in the Water
Business as of the date hereof, or (ii) with respect to the Key Properties,
materially impairing, and having a material adverse effect on, the present use
of the Manufacturing Portion of any Key Property as a manufacturing facility
used in the portion of the Water Business containing the Key Property (as such
portion of the Water Business is presently conducted). As used herein, the term
"Manufacturing Portion" means the portion of any Key Property which is used
specifically for manufacturing purposes (and not for warehousing, storage,
support therefor or any other purpose) including portions of Key Properties used
for ingress, egress or access by utilities to such portion used specifically for
manufacturing purposes.
"Purchased Intellectual Property" means all Intellectual Property
Rights (i) of the Transferred Subsidiaries and (ii) in the Transferred Assets.
"Purchased Subsidiaries" means Xxxx and the Water Subsidiaries.
"Purchased Subsidiaries Shares" means, collectively, the shares of Xxxx
Common Stock and the shares of Water Subsidiaries Stock.
"Purchasers' Disclosure Schedule" means the disclosure schedule that
the Purchasers have delivered to the Seller as of the date of this Agreement.
"Real Property" means, collectively, Owned Real Property and Leased
Real Property.
"Real Property Lease" means the lease or sublease agreement pursuant to
which a Leased Real Property is leased or subleased to any of the Seller
Entities or the Transferred Subsidiaries.
"Regulated Substances" means any substance which is listed, defined or
regulated as a pollutant, contaminant, hazardous, dangerous or toxic substance,
material or waste, or is otherwise classified as hazardous, dangerous or toxic
in or pursuant to any Environmental Law or which is or contains any explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products (including waste
petroleum and petroleum products) as regulated under any applicable
Environmental Law.
"Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, dispersal, leaching or migration into the
indoor or outdoor environment (including ambient air, surface water, groundwater
and surface or subsurface strata) or into or out of any property, including the
movement of Regulated Substances through or in the air, soil, surface water,
groundwater or property.
"Reorganization" has the meaning set forth in the Recitals hereto; it
being acknowledged and agreed that, for purposes of this Agreement, any action
taken by the Seller or its Affiliates pursuant to and in accordance with Section
5.21 shall be deemed to have been taken in the Ordinary Course of Business for
the purposes of this Agreement.
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"Retained Business" means: (1) all of the businesses conducted by or
through (a) the Seller and all divisions or groups of the Seller, including the
Pulp and Paper Division, the Brunswick Resins Division and the Specialties
Performance Additives Division; (b) all subsidiaries of the Seller; and (c) all
Affiliates of the Seller, including XX Xxxxx, the Aqualon Company and
Fibervisions L.L.C. and (2) all of the assets and liabilities of the Seller,
Subsidiaries of the Seller and Affiliates of the Seller, not including, in each
case, the Water Business, the Transferred Subsidiaries, the Transferred Assets
and the Transferred Liabilities, but including, in each case, the Excluded
Assets and Excluded Liabilities.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Seller Benefit Plan" means a Benefit Plan that is not a Water Business
Benefit Plan.
"Seller Entities" means (a) the Seller (but only with respect, and to
extent relating, to any portion of the Water Business); and (b) each Affiliate
of the Seller (other than a Transferred Subsidiary) that (i) is engaged in the
operation or conduct of any portion of the Water Business or that has title to
any asset which constitutes a Transferred Asset or is subject to a liability
which constitutes a Transferred Liability, or (ii) owns, directly or indirectly,
any of the capital stock of any of the Transferred Subsidiaries, in each case,
as of the date hereof or at any time prior to the Closing.
"Seller Savings Plan" means the BetzDearborn Inc. Employee Stock
Ownership and 401(k) Plan.
"Seller's Disclosure Schedule" means the disclosure schedule that the
Seller has delivered to the Purchasers as of the date of this Agreement.
"Severance Benefits" means severance pay or benefits, advance notice of
termination, pay in lieu of notice, or other similar pay, benefits or rights,
required under a Benefit Plan, an Employment Agreement or other Contract,
including a termination agreement or Collective Bargaining Agreement, or under
applicable Law, as applicable.
"Straddle Period" with respect to any Transferred Subsidiary or
Transferred Asset means any taxable period that, with respect to such
Transferred Subsidiary or Transferred Asset, includes but does not end on the
Closing Date.
"Subsidiaries" of any entity means, at any date, any Person (a) the
accounts of which would be consolidated with those of the applicable entity in
such entity's consolidated financial statements if such financial statements
were prepared in accordance with GAAP as of such date, or (b) of which
securities or other ownership interests representing more than 50% of the equity
or more than 50% of the ordinary voting power or, in the case of a partnership,
more than 50% of the general partnership interests or more than 50% of the
profits or losses of which are, as of such date, owned, controlled or held by
the applicable entity or one or more subsidiaries of such entity.
"Supply Agreements" means the supply agreements to be executed by the
Seller and Xxxx at the Closing, substantially in the forms attached hereto as
Exhibit V.
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"Tax" means any United States federal, state, local or foreign taxes,
including but not limited to any of the following, imposed by or payable to any
Governmental Authority: any income, gross receipts, license, payroll,
employment, excise, severance, stamp, business, occupation, premium, windfall
profits, environmental (including taxes under section 59A of the Code), capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use, service,
service use, lease, lease use, transfer, registration, value added tax, or
similar tax, any alternative or add-on minimum tax, any estimated tax, and any
levy, impost, duty, assessment, or withholding tax, in each case, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Benefit" means the Tax effect of any item of loss, deduction or
credit or any other item (including increases in Tax basis) which decreases
Taxes paid or required to be paid, including any interest with respect thereto
or interest that would have been payable but for such item.
"Tax Returns" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of Taxes.
"Taxing Authority" means any Governmental Authority having jurisdiction
over the assessment, determination, collection or other imposition of Taxes.
"Trade Secret" means proprietary, confidential or non-public processes,
designs, drawings, specifications, technology, formulae, databases, algorithms,
models, methods, research and development, know-how, manufacturing and
production processes and techniques, inventions, discoveries, concepts, ideas,
trade secrets, technical data and other technical proprietary non-public
information but excluding Confidential Business Information.
"Transfer Approval" means any authorization, approval, order, license,
permit, franchise or consent from any third party, Governmental Authority or
Taxing Authority (other than as required under the Antitrust Laws)
"Transferred Employee" means (a) each Divisional Employee and each
Allocated Employee who is offered employment by the Purchasers or any of their
Affiliates (including the Transferred Subsidiaries) and accepts such employment
as described in Section 5.8.1 hereof, (b) each Water Asset Employee, and (c)
each Water Subsidiary Employee.
"Transferred Insurance" means (i) all insurance policies sold to or
procured by the Transferred Subsidiaries in their name, and (ii) all rights to
seek insurance coverage under insurance policies sold to or procured by the
Seller or its Affiliates, in each case, as provided in Sections 5.11 and 5.12.
"Transferred Real Property" means any Owned Real Property which
constitutes a Transferred Asset, other than the Leaseback Properties.
"Transferred Subsidiaries" means the Purchased Subsidiaries and all
Subsidiaries of the Purchased Subsidiaries.
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"Transition Services Agreement" means the transition services and
facilities license agreement or agreements to be executed by the Seller and the
Purchaser and/or their respective Affiliates at the Closing, substantially in
the form attached hereto as Exhibit VI.
"U.S. Former Business Employee" means a Former Business Employee who
was based, immediately before he or she ceased to be employed by the Seller and
its Affiliates, in the United States of America.
"U.S. Benefit Plan" means a Benefit Plan other than a Foreign Benefit
Plan.
"WARN Act" means the Worker Adjustment and Retraining Notification Act
and any similar state or local law of any jurisdiction in the United States of
America.
"Water Asset Employee" means each individual who, immediately before
the Closing, is an employee of the Seller or any of its Affiliates, excluding
the Transferred Subsidiaries, spending, on a regular basis, 100% of his or her
working time rendering services in any portion of the Water Business (whether or
not such individual is an Absent Employee), and who is listed on the Water Asset
Employee List.
"Water Business" means the businesses described in the following (I)
and (II).
(I) The businesses as conducted through the BetzDearborn Division (BDD)
of Seller as reported in its internal management reporting for the years 2000 or
2001, including the specific services and specific chemicals manufactured and
sold in the following:
(a) water treatment chemicals to effect, enhance, control,
prevent and/or remove corrosion, foaming, phase separation,
clarification, deposits, scale, odors, or biological growth in, or to
otherwise treat, the following: (i) influent and effluent water
systems (including sludge dewatering and filter systems), (ii)
heating, cooling and steam generation (including geothermal and ion
exchange) applications, and (iii) water recycling in the areas
described in (i) and (ii);
(b) chemical treatments applied to reverse osmosis,
ultrafiltration, and nanofiltration membranes for the control of
deposition, for controlling the growth of microorganisms, for cleaning
membrane surfaces, and for enhancing the flux of the membrane by the
application of select polymers to the surface; current uses of the
membranes are for the preparation of ultrapure water, desalination, and
waste treatment;
(c) process treatment chemicals for the control of scale and
corrosion, as well as for cleaning, of the systems used in the
production of sugar and alcohol (methanol & ethanol) from agricultural
sources and for corn milling;
(d) process treatment chemicals, excluding products containing
pine oils, for the protection, sanitation and cleaning of industrial
and commercial cooking and sterilizing equipment for the food industry;
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(e) (i) process treatment chemicals to prepare metal and plastic
surfaces prior to painting, (ii) passivation and protective treatments
applied during manufacturing of fabricated metal and plastic parts,
and (iii) paint detackification products;
(f) (i) treatment chemicals used in the steam flooding operations in
the production systems of natural gas and crude oil, (ii) corrosion
and deposition control treatments for pipelines conveying
hydrocarbons, (iii) process treatment chemicals for all refinery unit
operations, and (iv) additives (stabilizers, cold flow and lubricity
improvers, preservatives, and corrosion inhibitors) to finished fuels;
(g) process treatment chemicals to (i) enhance the production of
petrochemicals by inhibiting polymerization, preventing fouling and
corrosion, breaking emulsions, improving extraction efficiency, and
decoking, (ii) inhibit corrosion of urea-ammonium nitrate solutions
and process equipment for the production of ammonia, and (iii)
maintain coke plant gas lines;
(h) boiler fireside treatment chemicals, excluding black liquor
viscosity modifiers and VinsolTM (dark wood rosin);
(i) process treatment chemicals for the mining and processing of
metals, metal compounds, and metal ores that involve agglomeration
aids, rheology modification for mineral slurries as they are conveyed
in pipelines, viscosity reduction in autoclaves, xxxxx enhancers,
dewatering aids, deposit control, froth flotation, solvent extraction
electrowinning enhancement, and thickening, except that both Aqualon
and BDD may use cellulosics in this sub-field (i);
(j) chemical treatments (excluding sodium formate) for the control of
depostion, corrosion and odor in gas scrubbers; chemical treatments
for clarifying and dewatering scrubber sludge;
(k) chemical treatments applied to control dust and for the cleaning
of glass-lined reactors;
(l) preservatives applied to slurries of kaolin and titanium dioxide
at the point of manufacture; and
(m) the related support equipment, monitoring systems, delivery
systems, chemical feed equipment, software for such support or
monitoring or feed equipment or delivery systems, and consulting
services, all which are used primarily for any of the above (a)
through (l).
(II) The following businesses conducted through the Pulp and Paper
Division (PPD) of Seller and its Affiliates as reported in its internal
management reporting for the years 2000 or 2001:
(a) water treatment chemicals to effect, enhance, control, prevent
and/or remove corrosion, foaming, phase separation, clarification,
deposits, scale, odors or biological
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growth in, or to otherwise treat, the following: (i) influent and
effluent water systems (including sludge dewatering and filter
systems), (ii) heating, cooling and steam generation (including ion
exchange) applications, and (iii) water recycling in the areas
described in (i) and (ii);
(b) chemical treatments applied to reverse osmosis, ultrafiltration,
and nanofiltration membranes for the control of deposition, for
controlling the growth of microorganisms, for cleaning membrane
surfaces, and for enhancing the flux of the membrane by the
application of select polymers to the surface; current uses of the
membranes are for the preparation of ultrapure water, desalination,
and waste treatment;
(c) boiler fireside treatment chemicals, excluding black liquor
viscosity modifiers and VinsolTM;
(d) chemical treatments, excluding sodium formate, for the control of
depostion, corrosion and odor in gas scrubbers; chemical treatments
for clarifying and dewatering scrubber sludge;
(e) chemical treatments applied to control dust (excluding chip yard
and tissue machine dusts); and
(f) the related support equipment, monitoring systems, delivery
systems, chemical feed equipment, software for such support or monitoring or
feed equipment or delivery systems all which are used primarily for any of the
above (a) through (e), and, upon request of Xxxx by Seller, consulting services.
The parties acknowledge and agree that when used in this Agreement, the term
"Water Business" shall mean the Water Business, taken as a whole.
"Water Business Benefit Plan" means a Benefit Plan that (a) is
sponsored exclusively by one or more of the Transferred Subsidiaries or (b)
provides benefits exclusively to Business Employees and Former Business
Employees with respect to employment in any portion of the Water Business.
"Water Subsidiaries" means the Persons specified on Section 1.1 of the
Seller's Disclosure Schedule.
"Water Subsidiaries Stock" means the equity interests of each of the
Water Subsidiaries specified on Section 1.1 of the Seller's Disclosure Schedule.
"Water Subsidiary Employee" means each individual who is, immediately
before the Closing, an employee of any of the Transferred Subsidiaries (whether
or not such individual is an Absent Employee).
Section 1.2 Terms Defined in Other Sections. The following
terms are defined elsewhere in this Agreement in the following Sections:
Accounting Close 2.4.1
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Accounting Closing Inventory Count 5.15
Accounting Closing Date 2.4.1
Additional Financial Information 9.16
Agreement Preamble
Allocated Employee List 3.15.1
Antitrust Laws 5.6.2
Acquiring Person 5.20.1
Basket Amount 8.2.4
Blanket Assignment of Leases 5.10.1
Cap Amount 8.2.4
CapEx Schedule 5.3.2
Closing 2.4.1
Closing Date 2.4.1
Closing Date Statement of Net Assets 2.5.3.1
Collective Bargaining Agreement 3.17.1
Commingled Items 5.13.3
Competing Business 5.20.1
Conditions Satisfaction Date 2.4.1
Control 1.1
Controlled 1.1
Controlling 1.1
Controlling Party 5.9.4(c)
Copyrights 1.1
Covered Employees 5.19
Damages 8.5
Decreased Consideration 2.5.2
Deferral Period 5.8.1.7
Deferred Business 2.4.2(a)
Deferred Transfer Employees 5.8.1.7
Designated Affiliate 9.18
Determination Date 5.8.10.5(b)(iii)
Disputed Amount 5.8.10.7
Divisional Employee List 3.15.1
Estimated Reorganization Tax Amount 2.8
Evaluation Material 5.1.1
Exchange Act 5.18
Excluded Assets 2.2.2
Excluded Employees 5.8.1.1
Excluded Liabilities 2.2.4
Excluded Taxes 5.9.1
Final Closing Date Statement of Net Assets 2.5.3.2
Final Purchase Price 2.5.1
Foreign Seller Benefit Plans 5.8.10.1
Foreign Transferred Employees 5.8.10.1
Foreign Transferred Subsidiary 5.9.14
Foreign Water Business Benefit Plans 5.8.10.1
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Fully Taxable Pre-Closing Transaction 3.7.13
Guaranties 5.14.3
Hire Date 5.8.1.1.
HSR Act 3.4.5
Indemnified Party 8.2.3
Indemnifying Party 8.2.3
Insurance Issues Team 5.12.5
Intercompany Arrangement 3.21
Interest Accrual Date 5.14.3
Interim Management Financial Data 3.14.2
Inventory Counts 5.15
Leaseback Leases 2.3.14
Local Assignment of Leases 5.10.2
Marks 1.1
Net Amount 5.8.10.5(b)(i)
New Plans 5.8.4
Nontax Purposes 1.1
Non-Controlling Party 5.9.4(c)
Notified Party 5.9.4(a)
O & M 1.1
Old Plans 5.8.4
Parent Purchaser Preamble
Part B 5.21(e)
Patents 1.1
Policy Payments 5.12.1, 5.12.6
Post-Closing Straddle Period 5.9.3(d)
Pre-Closing Straddle Period 5.9.3(d)
Preliminary Purchase Price 2.1
Principle 5.9.3(b)
Proposed List 5.8.1.4(a)
Purchaser Preamble
Purchaser Plan 5.8.10.4.1
Purchaser Savings Plan 5.8.6.2
Purchaser's Actuary 5.8.10.7
Purchasers Preamble
Purchasers' Covered Employees 5.19
Records 5.13.1
Registered Intellectual Property Rights 3.9.1.1
Reorganization Recitals
Reorganization Tax Prepayment Amount 2.8
Reorganization Tax Return 5.9.3(b)
Reorganization Transfer 2.4.2(b)
Representatives 8.2.1
Retained Business Contract 5.5.1(c)
Retained Business Intellectual Property Rights 5.10.5
Retained Tax Documents 5.9.6(c)
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Retained U.S. Plans 5.8.3
Roll-Forward Closing Date Net Assets 2.7
Section 5.9.3(b) Return 5.9.3(b)
Seller Preamble
Seller Foreign Plans 5.8.10.4.2
Seller Plan 5.8.10.4.1
Seller Policies 5.12.2
Seller's Actuary 5.8.10.7
Seller's Certificate 2.5.3.1
Seller's Records 5.13.1
Software 1.1
Special Purpose Financial Statements 3.14.1
Specified Divisional Employees 5.8.1.4
Statement 5.9.3(b)
Structural Change 5.21(b)
Survival Period 8.1.2
Tax Attributes 5.9.12
Tax Audit 5.9.4(a)
Tax Purposes 1.1
Third Actuary 5.8.10.7
Third Party Claim 8.3.1
Third Party Registered Intellectual Property Rights 3.9.4
Third Party Requirements 5.8.10.5(a)
Transactional Severance Benefits 5.8.1.6
Transfer 2.4.2(a)
Transfer Provisions 5.8.10.2
Transferred Assets 2.2.1
Transferred Liabilities 2.2.3
Transferred Subsidiary Foreign Plans 5.8.10.4.1
Value 5.8.10.5(b)(ii)
Water Asset Employee List 3.15.1
Water Business Policies 5.12.1
Water Business Records 5.13.1
Water Permits 3.19.1
Water Subsidiary Employee List 3.15.1
Welfare Benefits 5.8.8.1
Section 1.3 Interpretation. Unless otherwise indicated to the contrary
in this Agreement by the context or use thereof: (a) the words, "herein,"
"hereto," "hereof" and words of similar import refer to this Agreement as a
whole and not to any particular Section or paragraph hereof; (b) words importing
the masculine gender shall also include the feminine and neutral genders, and
vice versa; (c) words importing the singular shall also include the plural, and
vice versa; and (d) the word "including" means "including without limitation."
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ARTICLE II
PURCHASE AND SALE OF STOCK AND ASSETS
Section 2.1 Purchase and Sale of Stock and Assets; Preliminary Purchase
Price. Upon the terms and subject to the conditions of this Agreement, at the
Closing, (a) the Seller shall (or cause one of its Affiliates to) (i) sell,
assign, transfer, convey and deliver to the Purchaser (or its Designated
Affiliate) all of the issued and outstanding capital stock of the Purchased
Subsidiaries (free and clear of all Encumbrances), and (ii) sell, assign,
transfer, convey and deliver to the Purchaser (or its Designated Affiliate) the
Transferred Assets (free and clear of all Encumbrances other than Permitted
Encumbrances) and the Transferred Liabilities; and (b) in exchange therefor, the
Purchaser (or its Designated Affiliate) shall, and the Parent Purchaser shall
cause the Purchaser (or its Designated Affiliate) to, (i) accept, assume and
agree to pay, perform or otherwise discharge, in accordance with the respective
terms and subject to the respective conditions thereof, the Transferred
Liabilities and (ii) pay to the Seller (or to such Affiliate of Seller as the
Seller designates in writing prior to the Closing) an amount in cash equal to
One Billion Eight Hundred Million dollars ($1,800,000,000) (the "Preliminary
Purchase Price") by wire transfer of such amount to accounts designated in
writing by the Seller.
Section 2.2 Assets and Liabilities.
2.2.1 Transferred Assets. For purposes of this Agreement, "Transferred
Assets" means all of the assets, properties, rights, agreements and other
interests, whether tangible or intangible (other than the Excluded Assets and
assets indirectly transferring to the Purchasers through the purchase of the
Purchased Subsidiaries Shares), primarily used or held for use in the operation
or conduct of the Water Business or any portion of the Water Business by the
Seller or any of its Affiliates, including those set forth in Section 2.2.1 of
the Seller's Disclosure Schedule, as the same shall exist on the Closing Date;
provided, however, (1) with respect to intangible rights and interests relating
to Intellectual Property Rights and Confidential Business Information, the term
"Transferred Assets" shall only include the assets, properties, rights,
agreements and other interests as referred to in Paragraph E of Section 2.2.1 of
the Seller's Disclosure Schedule, and (2) with respect to intangible rights and
interests relating to the Contracts, the term "Transferred Assets" shall only
include the assets, properties, rights, agreements and other interests as and to
the extent described in Paragraph G of Section 2.2.1 of the Seller's Disclosure
Schedule. For the avoidance of doubt, (x) stock or other equity interests in the
Purchased Subsidiaries is not a Transferred Asset and (y) if due to the
application of Section 2.4.2 or 5.5.1 any Transferred Asset is not sold,
assigned, transferred, conveyed and delivered to the Purchaser (or its
Designated Affiliate) on the Closing Date, such Transferred Assets shall be
sold, assigned, transferred, conveyed and delivered as the same shall exist on
the date of such sale, assignment, transfer, conveyance and delivery.
2.2.2 Excluded Assets. Notwithstanding anything in Section 2.1 to the
contrary, it is hereby acknowledged and agreed that the Purchasers shall not
purchase, acquire or accept from the Seller and its Affiliates, any of the
rights, properties, agreements or assets set forth in Section 2.2.2 of the
Seller's Disclosure Schedule (such rights, properties, agreements and assets
being referred to herein, collectively, as the "Excluded Assets").
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2.2.3 Transferred Liabilities. For purposes of this Agreement, the
term "Transferred Liabilities" means all Liabilities (other than the Excluded
Liabilities and Liabilities indirectly transferring to the Purchasers through
the purchase of the Purchased Subsidiaries Shares) of the Seller or any of its
Affiliates related to the Water Business (including its predecessor businesses,
operations and activities) or the Transferred Assets, including those set forth
in Section 2.2.3 of the Seller's Disclosure Schedule, as the same shall exist on
the Closing Date. For the avoidance of doubt, if due to the application of
Section 2.4.2 or 5.5.1 any Transferred Liability is not accepted, assumed or
agreed to be paid, performed or otherwise discharged, in accordance with the
respective terms and subject to the respective conditions thereof, by the
Purchaser (or its Designated Affiliate) on the Closing Date, such Transferred
Liability shall be accepted, assumed or agreed to be paid, performed or
otherwise discharged, in accordance with the respective terms and subject to the
respective conditions thereof, as the same shall exist on the date of such
acceptance, assumption or agreement.
2.2.4 Excluded Liabilities. Notwithstanding anything in Section 2.1 to
the contrary, it is hereby acknowledged and agreed that the Purchasers shall not
assume or be obligated to pay, perform or otherwise assume or discharge any
Liabilities of the Seller or any of its Affiliates (including the Transferred
Subsidiaries), which are set forth in Section 2.2.4 of the Seller's Disclosure
Schedule (such Liabilities being referred to herein, collectively, as the
"Excluded Liabilities").
2.2.5 Retained Business. Notwithstanding anything in Section 2.1 to
the contrary, it is hereby acknowledged and agreed that the Seller is not
selling, conveying, transferring or assigning to the Purchasers and the
Purchasers are not purchasing, acquiring or accepting from the Seller and its
Affiliates the Retained Business.
2.2.6 Taxes. For purposes of this Agreement, Taxes shall not
be a Transferred Liability or an Excluded Liability.
Section 2.3 Deliveries at the Closing. Upon the terms and subject to the
conditions of this Agreement (including Section 2.4.2), at the Closing:
2.3.1 the Seller shall deliver or cause to be delivered to the
Purchaser (or its Designated Affiliate) one or more stock certificates, together
with stock powers executed in blank, representing all of the issued and
outstanding capital stock of the Purchased Subsidiaries (other than, if any,
director qualifying shares);
2.3.2 the Seller shall, and shall cause the Seller Entities to,
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, to the Purchaser (or its Designated Affiliate) bills of sale,
endorsements and other instruments of sale, conveyance, transfer and assignment
as the Purchaser may reasonably request in order to effect the sale, transfer,
assignment, conveyance and delivery of the Transferred Assets to the Purchaser
(or its Designated Affiliate) in accordance herewith;
2.3.3 the Seller shall deliver to the Purchaser a certificate of a
Vice President of the Seller pursuant to Section 6.2.6 hereof;
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2.3.4 the Parent Purchaser shall deliver to the Seller a certificate
of a Vice President of the Parent Purchaser pursuant to Section 6.3.3 hereof;
2.3.5 the Seller shall, and shall cause the Seller Entities to,
deliver to the Purchaser certificates in form and substance reasonably
satisfactory to the Purchaser, duly executed and acknowledged, certifying that
the Seller and each Affiliate of the Seller transferring assets or liabilities
to the Purchasers hereunder is exempt from withholding under Section 1445 of the
Code;
2.3.6 the Purchaser (or its Designated Affiliates) shall execute,
acknowledge and deliver to the Seller assumption agreements and other
instruments in order to effect the assumption by the Purchaser (or its
Designated Affiliate) of the Transferred Liabilities;
2.3.7 the Purchaser (or its Designated Affiliate) shall deliver, and
the Parent Purchaser shall cause the Purchaser (or its Designated Affiliate) to
deliver, to the Seller (or to such Affiliate of the Seller as the Seller
designates in writing prior to the Closing) the Preliminary Purchase Price;
2.3.8 the Seller shall deliver to the Purchaser (or its Designated
Affiliate) the Reorganization Tax Prepayment Amount;
2.3.9 the Seller and the Purchasers shall deliver, or cause to be
delivered, each of the Ancillary Agreements, executed by them and their
respective Affiliates, as the case may be;
2.3.10 the Seller shall, and shall cause the Seller Entities to,
deliver to the Purchasers a Deed for each Transferred Real Property as listed on
Section 2.2.1 of the Seller's Disclosure Schedule, duly executed by the
appropriate Seller Entity, and the Assignment of Leases for each Leased Real
Property that is a Transferred Asset, duly executed by the appropriate Seller
Entity;
2.3.11 the Seller shall deliver, or cause to be delivered, to the
Purchasers such other customary and commercially reasonable documents and
affidavits in respect of the Real Property as are reasonably requested by
Purchasers' title insurance company in order to insure Purchasers' title
thereto, provided that such other documents and affidavits do not increase the
Seller's liability or obligations under this Agreement (or otherwise);
2.3.12 the Seller shall deliver, or cause to be delivered, to the
Purchasers the resignations (effective as of or prior to the Closing Date) of
all of the directors and officers of the Purchased Subsidiaries;
2.3.13 the Seller shall deliver, or cause to be delivered, to the
Purchasers the written releases and waivers referred to in Section 5.14.1(a)(i)
or other evidences reasonably satisfactory to the Purchasers that the
Encumbrances (other than Permitted Encumbrances) referred to in Section
5.14(a)(i) have been removed;
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2.3.14 the Seller and the Purchasers shall deliver, or cause to be
delivered, lease agreements in the form attached hereto as Exhibit VIII, in
respect of the Leaseback Properties (the "Leaseback Leases"); and
2.3.15 the Seller shall deliver, or cause to be delivered, to the
Purchasers releases from each of the guaranties given by the Transferred
Subsidiaries in respect of any Indebtedness (including pursuant to the Loan
Documents) or other obligations of the Seller or any of its Affiliates (other
than the Transferred Subsidiaries).
Each document of transfer or assumption referred to in this Article II
(or in any related definition set forth in Article I) that is not attached as an
Exhibit to this Agreement shall be in customary form (including with respect to
the country to which it pertains) and shall be reasonably satisfactory in form
and substance to the parties thereto, but shall contain no representations,
warranties, covenants and agreements other than those specifically contemplated
by this Agreement.
Section 2.4 Closing.
2.4.1 The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Wachtell, Lipton, Xxxxx & Xxxx, 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 A.M. on the third business
day following the Conditions Satisfaction Date (as defined below), or at such
other time and place as is mutually agreed in writing by the Parent Purchaser
and the Seller. The date of the Closing is referred to herein as the "Closing
Date." If the Closing Date is not the 28th day of a calendar month, there shall
be a deemed closing of the transactions contemplated hereby (an "Accounting
Close") made as of the 28th day of the month immediately preceding the month in
which the Closing Date occurs (provided that consistent with the Seller's
practices for the entities listed on Section 2.4.1 of the Seller's Disclosure
Schedule, the Accounting Close shall be made as of one month earlier for such
entities) (or if the Closing Date is the 28th day of a month, the Accounting
Close will occur on the Closing Date (provided that consistent with the Seller's
practices for the entities listed on Section 2.4.1 of the Seller's Disclosure
Schedule, the Accounting Close shall be made as of one month earlier for such
entities or such other time as set forth in such schedule)) and the procedures
set forth in Section 2.7 with respect to the roll-forward shall apply. The date
of the Accounting Close is referred to herein as the "Accounting Closing Date."
For purposes of this Agreement, the "Conditions Satisfaction Date" shall be the
date on which the last of the unsatisfied or unwaived conditions set forth in
Article VI has been satisfied or waived (other than those conditions
contemplated to be satisfied at, or only capable of being satisfied at, the
Closing, but subject to the satisfaction or waiver of those conditions).
2.4.2 (a) Subject to the provisions of Article VI (including Section
6.1.2) and the parties having complied with Section 5.5.1(a), if, at the
Closing, the Seller or the Purchasers shall not have obtained any Transfer
Approval (other than from third parties and other than a Transfer Approval
described in paragraph (b) of this Section 2.4.2) required to effect the
transfer of (i) any Transferred Subsidiary or any Transferred Asset, in each
case which would reasonably be expected to have a book value not exceeding
$20,000,000 and would not otherwise be material to the Water Business, or any
Transferred Liability to the Purchaser (or its Designated Affiliate) pursuant to
the terms of this Agreement, or (ii) any property, pursuant to Section 5.23
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or Section 5.27 (any transfer referred to in clause (i) or (ii), a "Transfer");
then, in each such case, from and after the Closing, the Seller and the
Purchasers shall continue to use their commercially reasonable efforts to obtain
all Transfer Approvals (other than from third parties and other than a Transfer
Approval described in paragraph (b) of this Section 2.4.2) relating to such
Transfer(s); provided, however, that this Section 2.4.2(a) shall be of no effect
and shall not be implemented if (x) the Transferred Subsidiaries and Transferred
Assets which are not Transferred on or prior to the Closing pursuant to clause
(i) of this Section 2.4.2(a) are, taken together, material to the Water Business
or would reasonably be expected to have an aggregate book value exceeding
$40,000,000, or (y) doing so would violate a Law the effect of which would be
material to a material portion of the Water Business. Except as provided in
Section 5.5.1(b), 5.5.1(c), 5.5.1(d) and 5.5.1(e) with respect to Contracts,
Retained Business Contracts, Purchased Intellectual Property and Retained
Business Intellectual Property Rights, until such time (after the Closing) as
all assets, liabilities, rights, obligations and/or interests (including equity
interests) relating to such Transfer(s) (the "Deferred Business") have been
transferred, or otherwise disposed of, (i) by the Seller to the Purchaser (or
its Designated Affiliate), in the case of any Transferred Subsidiary or any
Transferred Asset or Transferred Liability, or (ii) by the Purchaser (or its
Designated Affiliate) to the Seller, in the case of any asset, liability, right,
obligation or interest (including equity interest) relating to the Retained
Business, the Excluded Assets or the Excluded Liabilities, such Deferred
Business shall be held, managed and operated by the Seller (or its Affiliates)
and by the Purchaser (or its Designated Affiliate), respectively, in the manner
provided in Exhibit VII.
(b) Notwithstanding anything in Section 2.4.2(a) to the contrary,
if, following satisfaction, waiver or expiration of the condition set forth in
Section 6.3.4, at the Closing, the Seller or the Purchasers shall not
have obtained any Transfer Approval (other than from third parties) with respect
to any step of the Reorganization (including approvals of Taxing Authorities
required to complete the steps described in Section 5.21A of the Seller's
Disclosure Schedule) required to effect the transfer of any subsidiary, asset,
liability, right, obligation or interest (including equity interest) among the
Seller's Affiliates in the manner set forth in Section 5.21A of the Seller's
Disclosure Schedule or as otherwise permitted pursuant to Section 5.21 of this
Agreement (any such transfer, a "Reorganization Transfer"); then, in each such
case, from and after the Closing, the Seller and the Purchasers shall continue
to use their reasonable best efforts to obtain all Transfer Approvals (other
than from third parties) relating to such Reorganization Transfer(s) and to
complete the Reorganization in the manner set forth in Section 5.21A of the
Seller's Disclosure Schedule or as otherwise permitted pursuant to Section 5.21
of this Agreement (it being understood that in all cases, including following
the Closing, the determination of whether to use an alternative step
contemplated by Section 5.21A or B of the Seller's Disclosure Schedule, or any
other action permitted under Section 5.21, shall be made by the Seller, in its
sole discretion); provided, however, that if a Reorganization Transfer is not
obtained by the one hundred eighty day anniversary of the date hereof, any
subsidiary, asset, liability, right, obligation or interest (including equity
interest) referred to above which cannot be transferred pursuant to a step of
the Reorganization by such time will be transferred at such time at the Seller's
cost in a manner other than as set forth in the Reorganization (provided that
the parties will act in good faith to minimize the costs of such transfer). The
parties also agree that until such anniversary the last sentence of Section
2.4.2(a) and Exhibit VII (other than Exhibit VII(c)) shall apply to each
Reorganization Transfer as if the Reorganization Transfer were a
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Transfer for purposes of those provisions. For the avoidance of doubt, at the
Closing, in accordance with Section 2.1, the Seller shall (or shall cause one of
its Affiliates to) sell, assign, transfer, convey and deliver to the Purchasers
(1) the issued and outstanding capital stock of Xxxx, (2) the Transferred Assets
which are not involved in any step of the Reorganization, except to the extent
that Section 2.4.2(a) applies, (3) the Transferred Assets which are involved in
any step of the Reorganization and for which the Transfer Approvals in respect
of such step of the Reorganization have been obtained, except to the extent that
Section 2.4.2(a) applies, and (4) the stock of each Water Subsidiary, if the
Transfer Approvals in respect of any step of the Reorganization as to such Water
Subsidiary and all of the assets and liabilities directly or indirectly held by
such Water Subsidiary have been obtained, except to the extent that Section
2.4.2(a) applies.
(c) Prior to the Closing, in connection with the matters
contemplated by the last sentence of Section 2.4.2(a) and Exhibit VII (including
in each case as applicable to Section 2.4.2(b))(the "Deferral Provisions"), the
Seller (or its Affiliates) and the Purchaser (or its Designated Affiliate) shall
prepare and negotiate in good faith to enter into on or prior to the Closing
such supplemental agreements as are reasonably necessary, in the good faith
judgment of the Seller or the Purchaser, to give effect to the Deferral
Provisions in order, to the extent lawful and the greatest extent practicable,
to place the parties and their Affiliates in the same position as would have
obtained if the Transfer or Reorganization Transfer, as applicable, had occurred
at the Closing; provided that the execution and delivery of such agreements
shall not be a condition to the Closing.
Section 2.5 Post-Closing Purchase Price Determination.
2.5.1 Definition. The term "Final Purchase Price" means (a) the
Preliminary Purchase Price minus (b) the amount, if any, by which the Adjusted
Base Net Assets exceeds the Roll-Forward Closing Date Net Assets (as reflected
in the Final Closing Date Statement of Net Assets prepared pursuant to this
Section 2.5, as rolled-forward pursuant to Section 2.7 of the Seller's
Disclosure Schedule).
2.5.2 Adjustments in the Purchase Price; Decreased Consideration. If
the Final Purchase Price is less than the Preliminary Purchase Price, then,
within three Business Days after final determination of the Roll-Forward Closing
Date Net Assets pursuant to this Section 2.5 and Section 2.7 of the Seller's
Disclosure Schedule and calculation of the amount by which the Preliminary
Purchase Price exceeds the Final Purchase Price (such excess amount, the
"Decreased Consideration"), the Seller shall pay to the Purchaser, by wire
transfer to an account or accounts specified in writing by the Purchaser, an
amount in cash equal to the Decreased Consideration plus interest on the
Decreased Consideration from the Closing Date to the date of such refund at an
annual rate equal to the Borrowing Rate.
2.5.3 Closing Date Statement of Net Assets.
2.5.3.1 Closing Date Statement of Net Assets. As soon as
practicable, but in any event not more than 120 days after the Closing Date, the
Seller shall prepare and furnish to the Purchasers (1) a combined statement of
net assets of the Water Business as at the close of business on the Accounting
Closing Date (without giving effect to the Closing and the
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Organizational Restructuring, but assuming completion of the Reorganization)
prepared in accordance with Section 2.5.3.5 (the "Closing Date Statement of Net
Assets") and (2) a calculation of the Roll-Forward Closing Date Net Assets
prepared in accordance with Section 2.7 of the Seller's Disclosure Schedule. The
Closing Date Statement of Net Assets shall be accompanied by a certificate of
the Seller stating the calculation of the Closing Date Net Assets and the
Roll-Forward Closing Date Net Assets (the "Seller's Certificate"). Following the
Closing, the Purchaser shall, and shall cause the Transferred Subsidiaries to,
give the Seller and the Seller's independent auditors sufficient access to the
Water Business, including its books, records and personnel to prepare and audit
the Closing Date Statement of Net Assets and the Seller's Certificate and
calculate the Roll-Forward Closing Date Net Assets. The Purchaser and the
Purchaser's accountants shall (subject to execution by the Purchasers and the
Purchasers' accountants of such documents as reasonably requested by such
accountants) have the opportunity to consult with and to examine the work
papers, schedules and other documents prepared or reviewed by the Seller's
accountants in connection with the preparation of their report on the Closing
Date Statement of Net Assets and their calculation of Roll-Forward Closing Date
Net Assets.
2.5.3.2 Time for Objections. After the Seller shall have
furnished the Closing Date Statement of Net Assets and its calculation of
Roll-Forward Closing Date Net Assets to the Purchasers, the Purchasers may
object to (i) the Closing Date Statement of Net Assets but only with respect to
events occurring after the date hereof and prior to the Accounting Closing Date
and only on the ground that one or more of the line items of such Closing Date
Statement of Net Assets were not calculated in accordance with this Agreement or
(ii) the calculation of Roll-Forward Closing Date Net Assets, but only on the
grounds that it was not calculated in accordance with procedures specified in
Section 2.7 of the Seller's Disclosure Schedule. If the Purchasers object to the
calculation of any line item of the Closing Date Statement of Net Assets or to
the calculation of Roll-Forward Closing Date Net Assets in accordance with
procedures specified in Section 2.7 of the Seller's Disclosure Schedule, the
Purchasers may give a reasonably detailed written notice of their objection to
the Seller within 30 days after their receipt of the Closing Date Statement of
Net Assets, which notice shall state specifically (i) the disputed line item(s)
or calculation, (ii) the basis for the dispute(s) with respect to each line item
or such calculation, and (iii) the adjustments sought with respect to each such
line item or calculation and each such dispute. If no such notice is delivered
within such 30-day period, or if the Purchasers and the Seller agree upon all
matters in dispute within the 45-day period specified in Section 2.5.3.3, then
the Closing Date Statement of Net Assets and their calculation of Roll-Forward
Closing Date Net Assets, as adjusted to reflect any such agreements, shall be
final and binding upon all parties hereto for the purpose of determining the
Closing Date Net Assets and the Roll-Forward Closing Date Net Assets, and the
Closing Date Statement of Net Assets shall be referred to herein as the "Final
Closing Date Statement of Net Assets."
2.5.3.3 Dispute Resolution. The Purchasers and the Seller will
use commercially reasonable efforts to resolve any matters in dispute, with
respect to the calculation of the Closing Date Net Assets or to the calculation
of Roll-Forward Closing Date Net Assets in accordance with procedures specified
in Section 2.7 of the Seller's Disclosure Schedule, as rapidly as practicable.
If the Purchasers and the Seller are unable to resolve all items in dispute,
with respect to the calculation of the Closing Date Net Assets or to the
calculation of Roll-
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Forward Closing Date Net Assets in accordance with procedures specified in
Section 2.7 of the Seller's Disclosure Schedule, within 45 days after the
Seller's receipt of the Purchasers' written objection to the Closing Date
Statement of Net Assets or to the calculation of Roll-Forward Closing Date Net
Assets in accordance with procedures specified in Section 2.7 of the Seller's
Disclosure Schedule pursuant to Section 2.5.3.2, then those items or
calculations in dispute shall be submitted for resolution to the Independent
Accountant. The parties acknowledge that in submitting disputed items to the
Independent Accountant, the Seller shall be entitled to present items not
disputed in the Purchasers' notice to the Seller under Section 2.5.3.2 and to
present adjustments to the Independent Accountant in the Seller's favor even if
inconsistent with the Closing Date Statement of Net Assets, to the extent such
items are based upon facts, circumstances or positions raised in the Purchasers'
notice delivered pursuant to Section 2.5.3.2 or that the Seller becomes aware of
after delivery of the Closing Date Statement of Net Assets to the Purchasers.
The Independent Accountant shall act as an expert to determine, based solely on
the presentations by the Seller and the Purchasers, and not by independent
review, only those items or calculations still in dispute (or brought into
dispute pursuant to the preceding sentence), and shall resolve such disputes in
accordance with the preceding sentence and Section 2.5.3.5 and Section 2.7 of
the Seller's Disclosure Schedule; provided, however, that in no event shall the
Independent Accountant consider any adjustment of any line item of the Closing
Date Statement of Net Assets or the Closing Date Net Assets, unless the
Purchaser demonstrates that the dispute with respect to such line item relates
specifically to a change occurring after date hereof and prior to the Accounting
Closing Date and then such adjustment shall only be permitted to the extent of
the adjustment caused by such change that has not already been reflected in the
line item of the Closing Date Statement of Net Assets; provided, further, that
in no event shall the Independent Accountant consider any adjustment of the
Roll-Forward Closing Date Net Assets, unless the dispute is with the calculation
of the Roll-Forward Closing Date Net Assets in accordance with procedures
specified in Section 2.7 of the Seller's Disclosure Schedule and then such
adjustment shall only be permitted to the extent necessary to reflect the
correct calculation of the Roll-Forward Closing Date Net Assets in accordance
with procedures specified in Section 2.7 of the Seller's Disclosure Schedule.
The determination of the Independent Accountant with respect to those items in
dispute, which shall be made within 30 days of their selection and shall be set
forth in a written statement delivered to the Seller and the Purchasers,
together with the determinations of the Purchasers and the Seller with respect
to those items accepted by the Purchasers (not otherwise affected by this
Section 2.5.3.3) or otherwise resolved between the Purchasers and the Seller,
shall become the Final Closing Date Statement of Net Assets and shall be final
and binding upon all parties hereto. The determination of the Independent
Accountant with respect to those calculations in dispute shall also be made
within 30 days of their selection and shall be set forth in the written
statement delivered to the Seller and the Purchasers.
2.5.3.4 Payment of Fees. The Seller shall pay the fees of its
accountants, and the Purchasers shall pay the fees of their accountants, in
connection with the preparation and review of the Closing Date Statement of Net
Assets and the Final Closing Date Statement of Net Assets. The fees and
disbursements of or related to the Independent Accountant shall be borne
one-half by the Purchasers and one-half by the Seller.
2.5.3.5 Procedures for Preparing Statement; Inventory. For
purposes of this Section 2.5, the Closing Date Statement of Net Assets shall be
prepared (i) in accordance
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with GAAP, except as expressly identified in (and in accordance with the
procedures, assumptions, conventions and adjustments set forth in) Section
2.5.3.5 of the Seller's Disclosure Schedule, applied on a basis consistent with
the preparation of the Combined Statement of Net Assets (other than with respect
to Taxes) and the Base Net Assets Statement (except as set forth in Section
2.5.5), (ii) in accordance with Section 2.5 of the Seller's Disclosure Schedule
(with respect to foreign currency exchange rates) and (iii) on the assumption
that (v) the Water Business has no assets other than (A) the Water Business
assets of the Transferred Subsidiaries, and (B) the Transferred Assets, (w) the
Water Business has no Liabilities other than (A) those of the Transferred
Subsidiaries (other than any Liabilities of the Transferred Subsidiaries that
are Excluded Liabilities) and (B) the Transferred Liabilities, (x) the
occurrence of the Closing will not, in and of itself, have any effect on the
preparation, (y) the Reorganization has been completed, and (z) the
Organizational Restructuring has not occurred. For the avoidance of doubt, the
parties acknowledge and agree that the Closing Date Statement of Net Assets
shall be prepared using principles under GAAP appropriate for the Water Business
(except as expressly identified in, and in accordance with the procedures,
assumptions, conventions and adjustments set forth in, Section 2.5.3.5 of the
Seller's Disclosure Schedule and Section 2.5.5) which may not be the same as
those used to prepare the financial statements of the Seller and its
consolidated Subsidiaries. For the purposes of preparing the Closing Date
Statement of Net Assets, a physical inventory shall be taken as of the close of
business on the Accounting Closing Date in accordance with Section 5.15;
provided, however, that any disputes over the physical inventory, settled in the
manner described in this Section 2.5 shall be limited to inventory which is
created or obtained between the date hereof and the Accounting Closing Date.
2.5.4 The parties hereto agree and acknowledge that no objection to or
dispute of (1) the Combined Statement of Net Assets, the Base Net Assets, the
Base Net Assets Statement, or the items reflected thereon may be made pursuant
to this Agreement, or (2) the Adjusted Base Net Assets, the Adjusted Base Net
Assets Statement, and the Roll-Forward Closing Date Net Assets or the items
reflected thereon may be made pursuant to this Agreement, except in the case of
clause (2) on the grounds that the calculation of (a) the Adjusted Base Net
Assets, (b) the Adjusted Base Net Assets Statement, or (c) the Roll-Forward
Closing Date Net Assets, respectively, was not made in accordance with the
procedures set forth in Section 2.5 of the Seller's Disclosure Schedule in the
case of (a) or (b) and the procedures set forth in Section 2.7 of the Seller's
Disclosure Schedule in the case of (c).
2.5.5 Notwithstanding any provision of this Agreement to the contrary,
the parties hereto agree and acknowledge that the Base Net Assets Statement and
the Closing Date Statement of Net Assets shall not reflect any Tax assets or Tax
liabilities, in each case, whether current, deferred or otherwise.
Section 2.6 Allocation of Final Purchase Price. The Seller, the
Purchasers, the Transferred Subsidiaries and each of their respective Affiliates
shall report for all Tax purposes consistent with Section 2.6 of the Seller's
Disclosure Schedule, and shall take no Tax position inconsistent with Section
2.6 of the Seller's Disclosure Schedule, except (i) as otherwise required by a
"determination" with respect to such Person within the meaning of Code Section
1313(a), or similar provision of state, local or foreign Law, (ii) to the extent
there is no reasonable basis for reporting for Tax purposes consistent with the
values set forth on Section 2.6 of the Seller's
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Disclosure Schedule or (iii) to the extent that reporting consistent with such
values would reasonably be expected to result in the imposition of penalties by
a Taxing Authority. The Seller and the Purchasers shall, no later than 120 days
after the determination of the Final Purchase Price pursuant to Section 2.5,
attempt in good faith to enter into a Final Purchase Price allocation agreement
(consistent with Section 2.6 of the Seller's Disclosure Schedule (except to the
extent there is no reasonable basis for reporting for Tax purposes consistent
with the values set forth on Section 2.6 of the Seller's Disclosure Schedule or
reporting consistent with such values would reasonably be expected to result in
the imposition of penalties by a Taxing Authority)) providing for the allocation
of the Final Purchase Price among the Purchased Subsidiaries and the Transferred
Assets. If the Seller and the Purchasers shall have agreed on a Final Purchase
Price allocation, then the Seller and the Purchasers shall report for all Tax
purposes consistent with, and shall take no Tax position inconsistent with, such
Final Purchase Price allocation, except as otherwise required by a
"determination" within the meaning of Code Section 1313(a), or similar provision
of state, local or foreign Law.
Section 2.7 Accounting Close. For purposes of this Agreement, the
Seller and the Purchasers will act in accordance with this Section 2.7 and
the procedures set forth in Section 2.7 of the Seller's Disclosure Schedule to
roll-forward the Closing Date Net Assets (which is determined as of the
Accounting Close) to the Closing Date (the Closing Date Net Assets as adjusted,
the "Roll-Forward Closing Date Net Assets").
Section 2.8 Reorganization Tax Prepayment Amount. Upon the
terms and subject to the conditions of this Agreement, at the Closing, following
receipt of the Preliminary Purchase Price, the Seller shall pay to the Purchaser
(or to such Affiliate of the Purchaser as the Purchaser designates) an amount in
cash equal to $8,762,000 (the "Reorganization Tax Prepayment Amount") by wire
transfer of such amount to accounts designated in writing by the Purchaser
(provided that in lieu of making any portion of such payment, the Seller may
instead procure that, at Closing, such portion is held in the form of cash by a
Transferred Subsidiary in an amount that does not exceed the amount set forth on
Section 2.8 of the Seller's Disclosure Schedule in respect of such Transferred
Subsidiary); provided, that nothing herein will prevent the Transferred
Subsidiaries from holding cash in excess of such amounts as of and after the
Closing as otherwise permitted by this Agreement. The Purchasers and the Seller
acknowledge and agree that such Reorganization Tax Prepayment Amount was
determined by discounting at a rate of 12% per annum $9,629,000 (the "Estimated
Reorganization Tax Amount") (which is 110% of the agreed upon estimated
liabilities for which the Seller is responsible pursuant to Section 5.9.1(b) in
respect of amounts to be owed by the Transferred Subsidiaries to a Taxing
Authority) from the estimated Closing Date until the nine month anniversary of
the estimated Closing Date and that the amounts set forth on Section 2.8 of the
Seller's Disclosure Schedule were determined by discounting at the same rate and
over the same period 110% of such estimated liabilities in respect of each
Transferred Subsidiary set forth on such schedule.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as set forth in the Seller's Disclosure Schedule, the Seller
represents and warrants to the Purchasers as follows (it being understood and
agreed that, with respect to any Seller Entity or Transferred Subsidiary not in
existence as of the date hereof or ceasing to exist after the date hereof, as
contemplated by Section 5.21, these representations and warranties are made only
with respect to the period of existence of such Seller Entity or Transferred
Subsidiary):
Section 3.1 Organization and Standing.
3.1.1 Each of the Seller Entities and the Transferred Subsidiaries is
(a) a corporation, limited liability company or other legal entity duly
organized, validly existing and duly qualified or licensed and in good standing
under the Laws of the state or jurisdiction of its organization with full
corporate or other power, as the case may be, and authority to own, lease, use
and operate its properties and to conduct its business, and (b) duly qualified
or licensed to do business and, to the extent applicable, is in good standing in
any other jurisdiction in which the nature of the business conducted by it or
the property it owns, leases, uses or operates requires it to so qualify, be
licensed or be in good standing, except where the failure to be so qualified,
licensed or in good standing would not, individually or in the aggregate, have a
Material Adverse Effect on the Water Business. The Seller has furnished or made
available to the Purchasers a complete and correct copy of the certificate of
incorporation and by-laws (or other comparable organizational documents) for
each of the Transferred Subsidiaries in existence on the date hereof, each as in
effect on the date hereof. Section 3.1.1 of the Seller's Disclosure Schedule
sets forth a list, correct and complete, of (i) the Seller Entities as of the
date of this Agreement, and (ii) the Transferred Subsidiaries as of the date of
this Agreement, and (b) the state or jurisdiction of organization of each of the
Transferred Subsidiaries as of the date of this Agreement.
3.1.2 To the Seller's knowledge, since January 1, 1999, no Seller
Entity, or Transferred Subsidiary has conducted any portion of the Water
Business under or otherwise used, for any purpose or in any jurisdiction, any
fictitious name, assumed name, trade name or other name, other than the names
set forth in Section 3.1.1 of the Seller's Disclosure Schedule.
Section 3.2 Capitalization of the Transferred Subsidiaries.
3.2.1 Xxxx'x authorized capital stock consists of 100 shares of Xxxx
Common Stock, all of which are issued and outstanding. The authorized capital
stock of the Water Subsidiaries consists solely of the shares of Water
Subsidiaries Stock set forth on Section 3.2 of the Seller's Disclosure Schedule,
all of which are issued and outstanding. The Seller owns all of the outstanding
shares of Xxxx Common Stock beneficially and of record, and a Subsidiary (or
more than one Subsidiary in the aggregate) of the Seller owns, or at the Closing
(or at such later date of direct or indirect transfer of a Water Subsidiary as
provided in Section 2.4.2) will own, all of the outstanding shares of Water
Subsidiaries Stock beneficially and of record, in each case, free and clear of
any Encumbrances. There are no shares of capital stock of any of the Purchased
Subsidiaries issued or outstanding other than the Purchased Subsidiaries Shares.
The Seller has
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the sole, absolute and unrestricted right, power and capacity to sell, assign
and transfer all of the outstanding shares of Xxxx Common Stock to the Purchaser
(or its Designated Affiliate), and a Subsidiary of the Seller has, or at the
Closing (or at such later date of direct or indirect transfer of a Water
Subsidiary as provided in Section 2.4.2) will have, the sole, absolute and
unrestricted right, power and capacity to sell, assign and transfer all of the
outstanding shares of Water Subsidiaries Stock to the Purchaser (or its
Designated Affiliate). Upon delivery to the Purchaser (or its Designated
Affiliate) of the certificates representing the Purchased Subsidiaries Shares at
the Closing (or at such later date of direct or indirect transfer of a Water
Subsidiary as provided in Section 2.4.2), except as may be related to facts or
circumstances concerning the Purchasers (or any of their respective Designated
Affiliates), the Purchaser (or its Designated Affiliate) will acquire good and
valid title to such shares, free and clear of any Encumbrances.
3.2.2 The authorized capital stock of each Subsidiary of the Purchased
Subsidiaries, the issued and outstanding shares of stock of each such Subsidiary
and the name of each Person who owns of record any of such shares of stock is
set forth in Section 3.2 of the Seller's Disclosure Schedule. All of the
outstanding shares of capital stock of the Subsidiaries of each of the Purchased
Subsidiaries are owned, or at Closing (or at such later date of direct or
indirect transfer of a Water Subsidiary as provided in Section 2.4.2) will be
owned, beneficially and of record, directly or indirectly by a Purchased
Subsidiary, free and clear of any Encumbrances.
3.2.3 All of the Purchased Subsidiaries Shares (and all of the
outstanding shares of capital stock of the Subsidiaries of each Purchased
Subsidiary) are duly authorized, validly issued, fully paid and nonassessable,
and not issued in violation of any preemptive or similar rights. There are no
outstanding subscriptions, options, warrants, puts, calls, agreements,
understandings, claims or other commitments or rights of any type or other
securities (a) requiring the issuance, sale, transfer, repurchase, redemption or
other acquisition of any shares of capital stock of any Transferred Subsidiary,
(b) restricting the transfer of any shares of capital stock of any Transferred
Subsidiary, or (c) relating to the voting of any shares of capital stock of any
Transferred Subsidiary. There are no issued or outstanding bonds, debentures,
notes or other indebtedness of any Transferred Subsidiary having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote), upon the happening of a certain event or otherwise, on any matters on
which the equity holders of any Transferred Subsidiary may vote.
3.2.4 To the Seller's knowledge none of the Transferred Subsidiaries
is in default or violation (and no event has occurred which, with notice or the
lapse of time or both, would constitute a default or violation) of any term,
condition or provision of the organizational documents of such Subsidiary.
3.2.5 None of the Seller or any of its Subsidiaries (other than the
Transferred Subsidiaries) owns (other than in and through the Transferred
Subsidiaries) any equity interest (other than passive equity interests in public
companies) in any third party that as of the date hereof is engaged primarily in
lines of business that are comparable to lines of business that are material to
the Water Business.
3.2.6 As of the date hereof, none of the Transferred Subsidiaries owns
any material equity interest, or any interest convertible or exchangeable into a
material equity
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interest, in any Person. To the extent a Transferred Subsidiary, as of the date
hereof, owns a material equity interest, or any interest convertible or
exchangeable into a material equity interest, in a Person, all such equity
interests of such Person are owned beneficially and of record by such
Transferred Subsidiary, free and clear of any Encumbrances (other than
Permitted Encumbrances).
Section 3.3 Corporate Power and Authority. The Seller has all requisite
corporate power and authority to enter into and deliver this Agreement and to
consummate the transactions contemplated hereby (including the Reorganization
and the Organizational Restructuring). The Seller and each of its Affiliates
which will be a party to the Ancillary Agreements have all requisite corporate
or other power, as the case may be, and authority to execute and deliver the
Ancillary Agreements and the other agreements, documents and instruments to be
executed and delivered by it in connection with this Agreement or the Ancillary
Agreements and to consummate the transactions contemplated thereby. The
execution, delivery and performance of this Agreement by the Seller and the
consummation by it of the transactions contemplated hereby (including the
Reorganization and the Organizational Restructuring), and the execution,
delivery and performance of the Ancillary Agreements and the other agreements,
documents and instruments to be executed and delivered in connection with this
Agreement or the Ancillary Agreements by the Seller and each of its Affiliates
which is a party thereto and the consummation of the transactions contemplated
thereby, have been duly authorized by all necessary action on the part of each
such Person. No vote or approval of the stockholders of the Seller is required
for the Seller to enter into and deliver this Agreement or the Ancillary
Agreements or for the Seller to consummate the transactions contemplated hereby
(including the Reorganization and the Organizational Restructuring). This
Agreement has been duly executed and delivered by the Seller and constitutes the
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms. The Ancillary Agreements and the other
agreements, documents and instruments to be executed and delivered in connection
with this Agreement or the Ancillary Agreements at the Closing will be duly
executed and delivered by the Seller and its Affiliates which are a party
thereto and will constitute the legal, valid and binding obligations of the
Seller and such Affiliates which are a party thereto, enforceable against each
such Person in accordance with their respective terms.
Section 3.4 Conflicts; Consents and Approvals. Neither the execution and
delivery by the Seller or any of its Affiliates of this Agreement, the
Ancillary Agreements and the other agreements, documents and instruments to
be executed and delivered by any of them in connection with this Agreement and
the Ancillary Agreements, nor the consummation of the transactions contemplated
hereby (including the Reorganization and the Organizational Restructuring) and
thereby, will:
3.4.1 conflict with, or result in a breach of any provision of, the
organizational documents of (a) the Seller, or (b) any Affiliate of the Seller
which is a party to the Ancillary Agreements or any other agreements and
instruments to be executed and delivered in connection therewith;
3.4.2 violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event that, with the giving of
notice, the passage of
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time or otherwise, would constitute a default) under, or entitle any Person
(with the giving of notice, the passage of time or otherwise) to terminate,
accelerate, modify or call a default under, or give rise to any obligation to
make a payment under, or to any increased, additional or guaranteed rights of
any Person under, or result in the creation of any Encumbrance upon any of the
properties or assets of any portion of the Water Business under any of the
terms, conditions or provisions of (a) the organizational documents of the
respective Purchased Subsidiaries, (b) any Contract (other than any Employment
Agreement) to which the Seller or any of its Subsidiaries (including the
Transferred Subsidiaries) is a party or to which any of their respective
properties or assets (including the Transferred Assets) may be bound, or (c) any
permit, registration, approval, license or other authorization or filing to
which the Seller or any of its Subsidiaries (including the Transferred
Subsidiaries) is subject or to which any of their respective properties or
assets (including the Transferred Assets) may be subject;
3.4.3 require any action, consent or approval of any non-governmental
third party;
3.4.4 violate any order, writ, or injunction, or any material decree,
or material Law applicable to the Seller or any of its Subsidiaries (including
the Transferred Subsidiaries) or any of their respective properties or assets
(including the Transferred Assets) or to the Water Business or any portion of
the Water Business; or
3.4.5 require any action, consent or approval of, or review by, or
registration or filing by the Seller or any of its Subsidiaries (including the
Transferred Subsidiaries) or any of their respective Affiliates with, any
Governmental Authority, other than (a) actions required by the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), or other
Antitrust Laws set forth in Section 3.4.5 of the Seller's Disclosure Schedule,
(b) the actions, consents and approvals of, reviews by, or registrations or
filings with, Governmental Authorities set forth in Section 3.4.5 of the
Seller's Disclosure Schedule, and (c) such other actions, consents, approvals,
reviews, registrations and filings as are not material;
except in the case of Sections 3.4.2 and 3.4.3 for any items that would not,
individually or in the aggregate, be materially adverse to the Water Business or
on the ability of the Seller to consummate the transactions contemplated hereby
by the Outside Date.
Section 3.5 No Material Adverse Effect. Except as expressly contemplated
by this Agreement (including with respect to the Reorganization and the
Organizational Restructuring), since December 31, 2000 and through the date of
this Agreement, (a) the Seller Entities and the Transferred Subsidiaries have
operated the Water Business only in the Ordinary Course of Business, (b) no
Material Adverse Effect on the Water Business has occurred, and (c) no event,
occurrence or development that has had, or would reasonably be expected to have,
a material adverse effect on the ability of the Seller to consummate the
transactions contemplated hereby by the Outside Date has occurred. Without
limiting the generality of the foregoing, since December 31, 2000 through the
date hereof, except as expressly contemplated by this Agreement (including with
respect to the Reorganization or the Organizational Restructuring and actions
not prohibited under Section 5.3):
(a) the Seller Entities and the Transferred Subsidiaries
have not sold, leased, transferred, or assigned any of their respective Water
Business assets, tangible or intangible,
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having a value in excess of $2,000,000, other than Inventory sold for fair
consideration in the Ordinary Course of Business and equipment arrangements with
suppliers and customers in the Ordinary Course of Business;
(b) no Person (including the Seller Entities and the
Transferred Subsidiaries) has accelerated, terminated, modified, or canceled any
Contract (or series of related Contracts with the same party) relating to any
portion of the Water Business involving more than $1,000,000 per year
individually or $3,000,000 per year for a series of related Contracts with the
same party;
(c) there has not been any material damage, destruction or
loss, whether or not covered by insurance, exceeding $1,000,000 individually
or $5,000,000 in the aggregate, with respect to the property and assets of any
portion of the Water Business;
(d) the Seller Entities (with respect to any portion of
the Water Business) and the Transferred Subsidiaries have not committed to make
any capital expenditures or capital additions which have not yet been made in
excess of $15,000,000 in the aggregate;
(e) the Seller Entities and the Transferred Subsidiaries have
not made any capital investment in, any loan (which has not yet been repaid) to,
or any acquisition of the securities or assets of, any other Person with respect
to the Water Business or any portion thereof (except for advances made to
Business Employees in the Ordinary Course of Business and equipment arrangements
with suppliers and customers in the Ordinary Course of Business);
(f) the Seller Entities and the Transferred Subsidiaries have
not failed to promptly pay and discharge any current liabilities of any portion
of the Water Business, except for current liabilities amounting to less than
$5,000,000 in the aggregate that are disputed in the Ordinary Course of Business
in good faith by appropriate proceedings;
(g) the Seller Entities and the Transferred Subsidiaries have
not (i) entered into any employment, deferred compensation, severance or similar
agreement (or amended any such agreement) in excess of $100,000 per year with
respect to any Business Employee, (ii) agreed, other than in the Ordinary Course
of Business, to increase the compensation payable or to become payable by it to
any of its Business Employees or agents or representatives employed in any
portion of the Water Business or (iii) increased (other than pursuant to the
terms of any plans, Contracts or arrangements in effect on December 31, 2000) or
agreed to increase the coverage or benefits available to any class or group of
Business Employees, generally, under any severance pay, termination pay,
vacation pay, company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation, insurance, pension
or other employee benefit plan, payment or arrangement made to, for or with such
employees, agents or representatives in connection with any portion of the Water
Business; and
(h) the Seller Entities and the Transferred Subsidiaries, have
not, other than in the Ordinary Course of Business, adopted, amended, modified,
or terminated any Water Business Benefit Plan other than (x) the amended Sales
Incentive Plan, (y) the BetzDearborn Inc. and Subsidiaries Performance Incentive
Compensation Plan and the BetzDearborn Inc. and
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Subsidiaries Employee Profit Sharing Bonus Plan, which have been terminated
effective January 1, 2002, copies of which have been provided to the Purchasers,
and (z) the Retained U.S. Plans.
Section 3.6 [Reserved]
Section 3.7 Taxes.
3.7.1. Each of the Seller Entities with respect to the Water Business
or any portion thereof and each of the Transferred Subsidiaries and each
affiliated group (within the meaning of Section 1504 of the Code) of which
any of the Transferred Subsidiaries is or since June 28, 1996 has been a member
(and as to which Hercules or Xxxx is or was the common parent) (A) has timely
filed (or there has been timely filed on its behalf) with the appropriate
Governmental Authorities all Tax Returns required to be filed, and all such Tax
Returns are true and correct in all material respects, and (B) has paid (or
there has been paid on its behalf) all Taxes shown as due and payable on such
Tax Returns, except, in the case of (A) and (B) for failures that, individually
or in the aggregate, would not have a material adverse effect on the Water
Business. With respect to any period for which Tax Returns have not yet been
filed, or for which Taxes are not yet due or owing, each of the Seller Entities
with respect to the Water Business or any portion thereof and each of the
Transferred Subsidiaries has made due and sufficient current accruals for such
Taxes in its books and records in accordance with GAAP, except for failures
that, individually or in the aggregate, would not have a material adverse effect
on the Water Business. All required current estimated Tax payments sufficient to
avoid any understatement penalties have been made by or on behalf of each of the
Transferred Subsidiaries, except for failures that, individually or in the
aggregate, would not have a material adverse effect on the Water Business.
3.7.2 As of the date hereof, no audit report that is material has been
issued during the shorter of (i) the five (5) year period ending on the date of
this Agreement or (ii) the period during which a Transferred Subsidiary
has been a member of the affiliated group of which the Seller or Xxxx is the
common parent which report relates to Taxes due from or with respect to any of
the Seller Entities in respect of any portion of the Water Business or any
Transferred Subsidiary (for purposes of this Section 3.7.2, "affiliated group"
shall have the meaning set forth in Section 1504 of the Code (provided that for
purposes of this Section 3.7.2, when reference is made to an affiliated group of
which the Seller is the common parent, Section 1504 of the Code shall be applied
without regard to subsection (b) thereof)). All Tax Returns filed in respect of
income or franchise Taxes of any of the Seller Entities or the Transferred
Subsidiaries that reported a Tax liability on such Tax Return in a material
amount in respect of the Water Business, have been examined by the relevant
Taxing Authority, or the applicable statute of limitations on assessment with
respect to such Tax Returns has expired.
3.7.3 As of the date hereof, no claim has been made in writing
by a Taxing Authority in a jurisdiction where a Seller Entity with respect to
any portion of the Water Business or a Transferred Subsidiary does not file Tax
Returns to the effect that such Seller Entity or Transferred Subsidiary is or
may be subject to taxation by that jurisdiction except for any claim which would
not have a material adverse effect on the Water Business.
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3.7.4 All deficiencies asserted or assessments made as of the date
hereof (in each case, that are material in amount, individually or in the
aggregate) as a result of any examinations by the IRS or any other Taxing
Authority of the Tax Returns of, or covering or including any of the Seller
Entities with respect to any portion of the Water Business or any of the
Transferred Subsidiaries, have been fully paid, and as of the date hereof there
are no other actions, suits, investigations, audits or claims by any Taxing
Authority in progress (in each case, that are material, individually or in the
aggregate), nor as of the date hereof has any of the Seller Entities with
respect to any portion of the Water Business or the Transferred Subsidiaries
received any written notice, reasonably expected to relate to a material amount
of Tax, from any Taxing Authority that it intends to conduct such an audit or
investigation. None of the Seller Entities with respect to any portion of the
Water Business or the Transferred Subsidiaries is subject to any private letter
ruling of the IRS or material comparable ruling of any other Taxing Authority
(other than a ruling issued with respect to a transaction that is part of the
Reorganization).
3.7.5 There are no liens (that are material individually or in the
aggregate) for Taxes upon any of the Transferred Assets or the assets of any
of the Transferred Subsidiaries relating to any portion of the Water Business,
except for liens arising as a matter of Law relating to current Taxes not yet
due.
3.7.6 Except for failures that would not individually or in the
aggregate have a material adverse effect on the Water Business, all Taxes
that any of the Seller Entities with respect to any portion of the Water
Business or any of the Transferred Subsidiaries have been or are required by Law
to withhold or to collect for payment have been duly withheld and collected, and
have been paid over to the appropriate Governmental Authority.
3.7.7 Except for failures that individually or in the aggregate would
not have a material adverse effect on the Water Business, none of the Seller
Entities with respect to any portion of the Water Business, or the Transferred
Subsidiaries, or any other Person on their behalf, has as of the date hereof (A)
agreed to make any adjustments (initiated by the Seller) pursuant to Section
481(a) of the Code (or any predecessor provision) or any similar provision of
domestic or foreign state or local Law, (B) any knowledge that the IRS or any
other Taxing Authority has proposed in writing any adjustment set forth in
clause (H), (C) filed a consent pursuant to Section 341(f) of the Code or agreed
to have Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as such term is defined in Section 341(f)(4) of the Code), (D) any
application pending with any Taxing Authority requesting permission for any
changes in accounting methods that relate to any portion of the Water Business,
(E) executed or entered into a closing agreement pursuant to Section 7121 of the
Code or any predecessor provision thereof or any similar provision of domestic
or foreign state or local Law, (F) extended the time (1) within which to file
any Tax Return, which Tax Return has since not been filed or (2) for the
assessment or collection of Taxes, which Taxes have not since been paid, (G)
granted to any Person any power of attorney that is currently in force with
respect to any Tax matter or (H) agreed to make any adjustments (not initiated
by the Seller) pursuant to Section 481(a) of the Code (or any predecessor
provision) or any similar provision of domestic or foreign state or local Law.
3.7.8 None of the Transferred Assets nor property owned by any of the
Transferred Subsidiaries relating to any portion of the Water Business is (A)
property required to
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be treated as being owned by another Person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986, (B)
"tax-exempt use property" within the meaning of Section 168(h)(1) of the Code,
(C) "tax-exempt bond financed property" within the meaning of Section 168(g) of
the Code, (D) subject to Section 168(g)(1)(A) of the Code or (E) "limited use
property" within the meaning of Rev. Proc. 76-30.
3.7.9 Except for any group of which the Seller or any of its
Affiliates is the common parent or is a member, none of the Transferred
Subsidiaries is or was a member of any consolidated, combined or affiliated
group of corporations that filed or was required to file a consolidated,
combined or unitary Tax Return.
3.7.10 None of the Transferred Subsidiaries is a party to, bound by or
obligated under, any material Tax allocation, indemnity, sharing or similar
contract or arrangement (whether or not written).
3.7.11 There is no contract, plan or arrangement that, individually or
collectively, could give rise to the payment of any amount to any Transferred
Employee by any of the Transferred Subsidiaries that would not be deductible by
reason of Section 280G of the Code.
3.7.12 None of the Seller Entities or the Transferred Subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (A) in the
two (2) years prior to the date of this Agreement or (B) in a distribution which
could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
transactions contemplated by this Agreement.
3.7.13 There is no material amount of taxable income (other than (a)
any taxable income resulting from a Tax election, Tax accounting method or other
reporting that is not consistent with past practice but is permitted under
Section 5.9 and (b) any taxable income that would have been recognized had the
Purchaser (or its Designated Affiliate) acquired assets (as distinguished from
shares) of the Transferred Subsidiary the Taxes of which are at issue) of any of
the Seller Entities with respect to any portion of the Water Business or of the
Transferred Subsidiaries that will (solely by reason of events occurring prior
to the Closing) be required under applicable Tax Law to be reported by the
Purchasers or their Affiliates (including the Transferred Subsidiaries) for a
taxable period beginning after the Closing Date which taxable income was
recognized (and reflects economic income arising) prior to the Closing Date on a
Fully Taxable Pre-Closing Transaction. "Fully Taxable Pre-Closing Transaction"
shall mean a transaction (for the avoidance of doubt, other than any transaction
that is an installment sale within the meaning of Section 453 of the Code) (i)
that occurred prior to the Closing Date, (ii) that was fully taxable and on
which all income or gain was recognized at the time the transaction occurred,
(iii) the proceeds on which consisted of cash or other consideration that was
fully taxable when received, (iv) the proceeds on which are not Transferred
Assets, (v) that was not entered into in the ordinary course of business and
(vi) on which the financial accounting income reported by the Seller or its
Affiliate is greater than the taxable income reported by the Seller or its
Affiliate.
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3.7.14 None of the Seller Entities with respect to any portion of the
Water Business or the Transferred Subsidiaries (A) engaged in any "intercompany
transactions" in respect of which gain was and continues to be deferred pursuant
to Treasury Regulation ss. 1.1502-13 or any predecessor or successor thereof or
analogous or similar provision under state, local or foreign Law or (B) has
"excess loss accounts" in respect of the stock of any subsidiary pursuant to
Treasury Regulation ss. 1.1502-19, or any predecessor or successor thereof or
analogous or similar provision under state, local or foreign Law.
Section 3.8 Compliance with Law.
3.8.1 Since January 1, 1999, (a) each of the Seller Entities and, to
the Seller's knowledge, each of such Seller Entities' officers, directors,
employees, and agents has with respect to each portion of the Water Business
complied with all Laws applicable to such portion of the Water Business, except
where the failure to so comply has not or would not result in the payment of
Criminal Damages, and (b) each of the Transferred Subsidiaries has complied with
all Laws applicable to it, except where the failure to so comply has not or
would not result in the payment of Criminal Damages.
3.8.2 Except with respect to matters specifically addressed in Section
3.8.1, since January 1, 1999, (a) each of the Seller Entities has with respect
to each portion of the Water Business complied with all Laws applicable to such
portion of the Water Business, and (ii) each of the Transferred Subsidiaries has
complied with all Laws applicable to it, except, in each case, where the failure
to so comply has not been or would not be, materially adverse to the Water
Business.
3.8.3 Since January 1, 1999 through the date of this Agreement, (a) to
the Seller's knowledge, no investigation or review by any Governmental Authority
with respect to any portion of the Water Business or the Transferred
Subsidiaries, the Transferred Assets or the Transferred Liabilities is or was
pending, or threatened in writing, against the Seller Entities with respect to
any portion of the Water Business or any of the Transferred Subsidiaries, nor
has any Governmental Authority indicated in a writing addressed to or made
available the Seller an intention to conduct the same.
3.8.4 The matters specifically covered by Section 3.11 shall be
excluded from consideration in this Section 3.8.2 and 3.8.3.
Section 3.9 Intellectual Property. For the avoidance of doubt, the defined
terms used in this Section 3.9, except Sections 3.9.3.2 and 3.9.5, shall be
deemed to exclude the term Software; provided, however, that with respect to
Section 3.9.1, the term Registered Intellectual Property Rights shall be deemed
to include patents, patent applications and invention disclosures which relate
to Software.
3.9.1
3.9.1.1 Section 3.9.1 of the Seller's Disclosure Schedule sets
forth a true and complete list of (i) all patents, patent applications,
invention disclosures, registered Marks, and applications for registration of
any Marks and registered Copyrights ("Registered
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Intellectual Property Rights"); and (ii) to the Seller's knowledge, all
unregistered Marks, in the case of each of clauses (i) and (ii), (a) owned by
the Seller or its Subsidiaries (including the Transferred Subsidiaries) and
included in the Purchased Intellectual Property; or (b) included in the Licensed
Intellectual Property. Section 3.9.1 of the Seller's Disclosure Schedule lists
the jurisdictions in which each such Registered Intellectual Property Right has
been issued or registered or in which any application for such issuance or
registration has been filed, and the owner of such Registered Intellectual
Property Right.
3.9.1.2 Except as otherwise set forth in Section 3.9.1 of the
Seller's Disclosure Schedule, the entity identified as the owner is the legal
owner of the entire right, title and interest in and to such Registered
Intellectual Property Right, free and clear of all Encumbrances.
3.9.2
3.9.2.1 Section 3.9.2.1 of the Seller's Disclosure Schedule
sets forth a true and complete list of all royalty bearing license agreements
with respect to any Registered Intellectual Property Rights pursuant to which
the Seller and/or its Subsidiaries (including the Transferred Subsidiaries) have
granted in writing to a third Person or have been granted in writing by a third
Person any rights in, to or under any Registered Intellectual Property Rights
included in the Purchased Intellectual Property or the Licensed Intellectual
Property.
3.9.2.2 To the Seller's knowledge, Section 3.9.2.2 of the
Seller's Disclosure Schedule sets forth a true and complete list of all cross
license agreements with respect to any material Purchased Intellectual Property
and material Licensed Intellectual Property, pursuant to which the Seller and/or
its Subsidiaries (including the Transferred Subsidiaries) has granted in writing
to any third Person, and such third Person has granted in exchange and in
writing to the Seller and/or its Subsidiaries (including the Transferred
Subsidiaries), any explicit right, license or permission to use or to exercise
any rights under the Purchased Intellectual Property or the Licensed
Intellectual Property.
3.9.2.3 To the Seller's knowledge, Section 3.9.2.3 of the
Seller's Disclosure Schedule sets forth a true and complete list of all royalty
bearing, Trade Secret license agreements with respect to any material Trade
Secrets pursuant to which the Seller and/or its Subsidiaries (including the
Transferred Subsidiaries) have granted in writing to a third Person or have been
granted by a third Person in writing any rights in, to or under any material
Trade Secrets included in the Purchased Intellectual Property or the Licensed
Intellectual Property.
3.9.3
3.9.3.1 Except as disclosed in Section 3.9.3.1 of the Seller's
Disclosure Schedule, the Seller and its Subsidiaries (including the Transferred
Subsidiaries) have good and valid title to all of the material Purchased
Intellectual Property and the material Licensed Intellectual Property (other
than Registered Intellectual Property Rights, which are addressed in Section
3.9.1), free and clear of any and all Encumbrances (except for Permitted
Encumbrances).
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3.9.3.2 Except as disclosed in Section 3.9.3.2 of the Seller's
Disclosure Schedule, the Purchased Intellectual Property and the Licensed
Intellectual Property constitute sufficient Intellectual Property Rights to
conduct the Water Business as currently conducted and constitute all of the
material Intellectual Property Rights used by the Seller and its Subsidiaries
(including the Transferred Subsidiaries) to conduct the Water Business as
currently conducted.
3.9.4 Except as disclosed in Section 3.9.4 of the Seller's Disclosure
Schedule, the material Purchased Intellectual Property and the material Licensed
Intellectual Property as used, practiced or commercially exploited in connection
with the Water Business as presently conducted, and the present business
practices and methods of the Water Business, to the Seller's knowledge, do not
infringe, constitute an unauthorized use of, or violate any patents, patent
applications, registered Marks, or registered Copyrights of any third Person
("Third Party Registered Intellectual Property Rights").
3.9.5 The Software described in Section 3.9.5 of the Seller's
Disclosure Schedule is some of the Software included in the Purchased
Intellectual Property. The Seller or its Subsidiaries (including the Transferred
Subsidiaries) own the entire right, title and interest to the described Software
free and clear of all Encumbrances.
3.9.6 Except pursuant to the agreements listed in Section 3.9.6 of the
Seller's Disclosure Schedule, none of the Seller, its Affiliates or the
Transferred Subsidiaries is required, obligated, or under any liability
whatsoever, to make any payments, in an amount exceeding $100,000 per annum, by
way of royalties, fees or otherwise to any third Person with respect to the use
of any Intellectual Property Rights of such third Person in connection with the
operation of the Water Business.
3.9.7 Except as disclosed in Section 3.9.7 of the Seller's Disclosure
Schedule, neither the Seller or any of its Subsidiaries (including the
Transferred Subsidiaries) is a party to or the subject of any pending or, to the
knowledge of the Seller, threatened Action which involves a claim of
infringement, unauthorized use, or violation of any Third Party Registered
Intellectual Property Rights or challenging the ownership, use, validity or
enforceability of any of the Registered Intellectual Property Rights, and, to
the Seller's knowledge, have not received written (including, without
limitation, by electronic mail) notice of any such threatened claim, or a
written offer of a license with respect to any such claim regarding the Third
Party Registered Intellectual Property Rights, and to the knowledge of the
Seller, there are no facts or circumstances which the Seller reasonably believes
are likely to form the basis for any claim of infringement, unauthorized use, or
violation of any Third Party Registered Intellectual Property Rights or
challenging the ownership, use, validity or enforceability of the Registered
Intellectual Property Rights. To the Seller's knowledge, all of the Registered
Intellectual Property Rights owned by the Seller and its Subsidiaries (including
the Transferred Subsidiaries) is in compliance in all material respects with
applicable legal requirements and all such Intellectual Property Rights are
valid and enforceable.
3.9.8 Except as set forth in Section 3.9.8 of the Seller's Disclosure
Schedule, to the Seller's knowledge, no third Person is infringing, violating,
misusing or misappropriating any of the material Purchased Intellectual
Property, and since January 1, 1999, no written claims
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have been made against any third Person by the Seller or any of its Subsidiaries
(including the Transferred Subsidiaries).
3.9.9 There are no judgments, decrees or orders of any Governmental
Authority to which the Seller or any of its Subsidiaries (including the
Transferred Subsidiaries) is a party or by which any of them is bound which
restrict, in any material respect, the rights to use any of the Registered
Purchased Intellectual Property Rights or Registered Licensed Intellectual
Property.
3.9.10 Except as set forth in Section 3.9.10 of the Seller's Disclosure
Schedule, and to the Seller's knowledge, no present Business Employee has any
right, title, or interest, in any Registered Intellectual Property Rights
included in the Purchased Intellectual Property or the Licensed Intellectual
Property. Except as disclosed in Section 3.9.10 of the Seller's Disclosure
Schedule, to the Seller's knowledge no employee, consultant or independent
contractor of the Seller or its Subsidiaries (including the Transferred
Subsidiaries) is, as a result of or in the course of such employee's,
consultant's or independent contractor's engagement by the Seller or its
Subsidiaries (including the Transferred Subsidiaries), in default or breach of
any material term of any employment agreement, non-disclosure agreement,
assignment of invention agreement or similar agreement relating to the
protection, ownership, development, use or transfer of any Registered
Intellectual Property Rights included in the Purchased Intellectual Property or
the Licensed Intellectual Property.
3.9.11 To the Seller's knowledge, Section 3.9.11 of the Seller's
Disclosure Schedule lists all written agreements pursuant to which any of the
Seller or its Subsidiaries (including the Transferred Subsidiaries) have agreed
to indemnify any other third Person against any charge of infringement of one or
more patents of any third Person where such patent(s) are specifically
identified individually or as a group and are the subject of indemnity
provisions of such written agreements (other than standard, boilerplate or
preprinted terms and conditions).
3.9.12 The Seller and the Purchasers acknowledge and agree that if and
to the extent that the Seller or any other Seller Entity makes a representation
or warranty in or pursuant to any Ancillary Agreement (including without
limitation the Intellectual Property Assignment; Patent Assignment; Patent,
Trade Secret and Confidential Business Information Assignment; Trademark
License; Distribution Agreement and Supply Agreements covering any Intellectual
Property Right or any Licensed Intellectual Property, such representation and
warranty shall be deemed and treated as if made in this Section 3.9.12 even
though such representation and warranty physically appears in an Ancillary
Agreement instead of this document. Such representation and warranty shall not
survive the Closing and shall be subject to Article VIII of this Agreement.
Section 3.10 Title to Assets; Sufficiency of Assets.
3.10.1 (a) The Seller Entities have good and valid title to or a valid
and binding leasehold interest or license, or its reasonable equivalent outside
of the United States, (subject to the terms of the relevant lease or license) in
the Transferred Assets (other than (i) the Owned Real Property, which is
addressed in the following clause (c) and (ii) the Intellectual Property Rights
which are addressed in Sections 3.9.1.2, 3.9.3.1 and 3.9.5 of this Agreement),
free and clear of any Encumbrances other than and subject to Permitted
Encumbrances; (b) the
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Transferred Subsidiaries have good and valid title to or a valid and binding
leasehold interest or license, or its reasonable equivalent outside of the
United States, (subject to the terms of the relevant lease or license) in all of
their respective assets, real or personal (other than (i) the Owned Real
Property, which is addressed in the following clause (c) and (ii) the
Intellectual Property Rights which are addressed in Sections 3.9.1.2, 3.9.3.1
and 3.9.5 of this Agreement) free and clear of any Encumbrances other than and
subject to Permitted Encumbrances; and (c) the Seller Entities and the
Transferred Subsidiaries hold good and marketable title, or its reasonable
equivalent outside of the United States, to the Owned Real Property free and
clear of any Encumbrances, other than and subject to Permitted Property
Encumbrances.
3.10.2 The Transferred Assets, together with (a) all assets (whether
real or personal, tangible or intangible) owned, licensed or leased by the
Transferred Subsidiaries other than Excluded Assets, and (b) the Ancillary
Agreements, constitute sufficient assets to conduct the Water Business as
currently conducted and constitute all of the material assets used directly or
indirectly by the Seller to conduct the Water Business as currently conducted.
Section 3.11 Environmental Matters. Except for conditions that would not
result in the Water Business incurring Damages under Environmental Laws in
excess of $1 million individually or $5 million in the aggregate:
3.11.1 the Water Business (and any portion thereof), the Transferred
Subsidiaries and the Transferred Assets are in compliance with, and have since
January 1, 1999 complied with, all applicable Environmental Laws, and to the
Seller's knowledge there are no facts, circumstances or conditions, including
requirements of current Environmental Laws that have been adopted but are not
yet effective, for which reserves or accruals would be required under GAAP, as
consistently applied by the Seller, in addition to those reserves or accruals
reflected in the Special Purpose Financial Statements;
3.11.2 the Water Business (and any portion thereof), the Transferred
Subsidiaries and the Transferred Assets are not subject to any existing,
pending, or, to the Seller's knowledge, threatened Action or Claim by any Person
under any Environmental Laws; and
3.11.3 the Environmental Permits that are required for the conduct of
any portion of the Water Business as it is conducted by the Seller Entities, the
Transferred Subsidiaries and the Transferred Assets are valid, in full force and
effect and enforceable according to their terms, no proceeding is pending or, to
the knowledge of the Seller, threatened, to revoke, modify or terminate such
permits, and the Seller Entities, the Transferred Subsidiaries, and the
Transferred Assets are in compliance with, and have since January 1, 1999
complied with, all such Environmental Permits.
Section 3.11 of the Seller's Disclosure Schedule sets forth all unresolved,
material findings from any internal and external environmental audits and
reports (in each case, relevant to any portion of the Water Business, any of the
Transferred Subsidiaries or any of the Transferred Assets) known to the Seller.
Section 3.12 Litigation.
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3.12.1 There is no Action pending or, to the Seller's knowledge,
threatened, against the Seller or any of its Affiliates (including the
Transferred Subsidiaries) or any executive officer or director thereof in each
case that (a) (1) relates to any portion of the Water Business (except to the
extent involving a Claim which would reasonably be expected to result in
monetary damages of less than $1,000,000 or the granting of other relief with an
adverse effect on the Water Business of less than $1,000,000), (2) is a Claim
made against Xxxx, or (3) is a Claim made against a Transferred Subsidiary
(except to the extent involving a Claim which would reasonably be expected to
result in damages of less than $1,000,000), or (b) as of the date of this
Agreement seeks or is likely to prohibit or restrain the ability of the Seller
to enter into this Agreement or to consummate any of the transactions
contemplated hereby (including the Reorganization and the Organizational
Restructuring) by the Outside Date or the ability of the Seller or any of its
Affiliates to enter into any of the Ancillary Agreements to which it is a party
or to consummate any of the transactions contemplated thereby by the Outside
Date and, to the knowledge of the Seller, there is no reasonable basis for any
such Action; and
3.12.2 There is no Action pending that was instituted by any of the
Seller Entities or the Transferred Subsidiaries with respect to any portion of
the Water Business claiming an amount in excess of $1,000,000, and none of the
Seller Entities or the Transferred Subsidiaries has made any Claim or threatened
to make any such Claim or commence any such Action involving an amount of in
excess of $1,000,000.
3.12.3 As of the date hereof, there are no asbestos-related bodily
injury Actions which have been asserted against Xxxx or the Transferred
Subsidiaries or any portion of the Water Business for which the Seller has
received service of process, and to the Seller's knowledge, as of the date
hereof, there are no other asbestos-related bodily injury Actions which have
been asserted against Xxxx or the Transferred Subsidiaries or any portion of the
Water Business, in each case, other than the matter identified by asterisk in
Section 3.12 of the Seller's Disclosure Schedule under the "Product
Liability/Toxic Tort Claims" subheading.
Section 3.13 Brokerage and Finders' Fees. In connection with the
transactions contemplated by this Agreement or the Ancillary Agreements, none of
the Seller or its Affiliates and their respective stockholders, directors,
officers or employees, has incurred, or will incur, any brokerage, finders' or
similar fee for which the Transferred Subsidiaries are or will be liable.
Section 3.14 Special Purpose Financial Statements; Interim Management
Basis Financial Statements.
3.14.1 Section 3.14.1 of the Seller's Disclosure Schedule contains the
following special purpose audited financial statements (and notes thereto), as
of and for the years ended December 31, 2000 and 1999: (a) the Hercules
Incorporated - Water Business - Combined Statement of Net Assets; and (b) the
related Hercules Incorporated - Water Business - Combined Statement of Pre-tax
Income (together, including the notes thereto, the "Special Purpose Financial
Statements"). The Special Purpose Financial Statements were prepared from and in
accordance with the books and records of the Seller and in accordance with the
procedures, assumptions and adjustments set forth in Section 2.5.3.5 of the
Seller's Disclosure Schedule and present fairly, in all material respects, the
net assets of the Water Business as of December 31, 2000 and 1999, and the line
items contained in the Hercules Incorporated - Water
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Business - Combined Statement of Pre-tax Income for the years then ended, in
conformity with GAAP, consistently applied, except as otherwise expressly set
forth in such Special Purpose Financial Statements. The parties acknowledge and
agree that the Special Purpose Financial Statements have been prepared using
principles under GAAP appropriate for the Water Business, which may not be the
same as those used to prepare the financial statements of the Seller and its
consolidated Subsidiaries.
3.14.2 Section 3.14.2 of the Seller's Disclosure Schedule contains the
interim management basis financial data relating to the BetzDearborn Division as
of and for the nine month periods ended September 30, 2001 and 2000 (the
"Interim Management Financial Data"). The Interim Management Financial Data
reports on a management basis, consistently applied, the financial performance
of the BetzDearborn Division (management basis), as reported internally to the
Seller's management.
3.14.3 Notwithstanding anything in Article III to the contrary, the
Seller is not making any representations or warranties with respect to Taxes (or
any reserve or accrual for Taxes) in Article III (other than Section 3.7).
Section 3.15 Employee Benefit Plans.
3.15.1 Employee Lists. Section 3.15.1 of the Seller's Disclosure
Schedule contains lists, complete and accurate in all material respects, of all
individuals who would meet the definition of Divisional Employees and Allocated
Employees, respectively, in each case, if the date indicated thereon (which is
the most recent practicable date) were the Closing Date (respectively, the
"Divisional Employee List" and the "Allocated Employee List"), together with
their respective dates of hire, job title, base salary or base wages, as
applicable, work location, exempt/non-exempt status under the FLSA (if
applicable), and estimated percentage of working time attributable to the Water
Business. Section 3.15.1 of the Seller's Disclosure Schedule also contains a
list, complete and accurate in all material respects, of all Water Subsidiary
Employees and all Water Asset Employees, respectively, in each case, if the date
thereon (which is the most recent practicable date) were the Closing Date
(respectively, the "Water Subsidiary Employee List" and the "Water Asset
Employee List"), together with their respective dates of hire, job title, base
salary or base wages, as applicable, work location and exempt/non-exempt status
under the FLSA (if applicable). Such lists may be reviewed and revised in a
manner consistent with Section 5.8 hereof.
3.15.2 Benefit Plans. Section 3.15.2 of the Seller's Disclosure
Schedule contains a list, complete and accurate in all material respects, of all
Material Benefit Plans and specifies which is a Water Business Benefit Plan.
With respect to each Material Benefit Plan, the Seller has made available to the
Purchasers true and complete copies of the most recent summary plan description
or, if no summary plan description exists, a written description of all material
terms and conditions of such Material Benefit Plan. With respect to each
Material Benefit Plan that is a Water Business Benefit Plan, the Seller has made
available to the Purchasers a correct and complete copy of all plan documents.
None of the Assumed Water Business Benefit Plans is subject to ERISA. Section
3.15.2A of the Seller's Disclosure Schedule lists all Material Employment
Agreements. Neither the Seller nor any of its Affiliates has any legally binding
commitment, other than pursuant to applicable Law or Contracts that are
disclosed in Sections
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3.15 and 3.17 the Seller's Disclosure Schedule, to create any new Water Business
Benefit Plan or Material Employment Agreement relating to any Business Employee
or to amend any existing Water Business Benefit Plan or Employment Agreement in
a manner that would materially increase the liabilities or obligations of the
Seller and its Affiliates thereunder.
3.15.3 Compliance. (a) Each Material Benefit Plan has been operated in
material compliance with its terms and applicable Law, including ERISA; (b) each
Benefit Plan that is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA, and that is intended to be qualified under Section 401(a)
of the Code, has received a favorable determination letter from the IRS, and
there are no existing circumstances and no events have occurred that would
reasonably be expected to adversely affect the qualified status of any such
Benefit Plan or the related trust; (c) none of the Seller, its Affiliates or any
"party in interest" or "disqualified person" with respect to any Benefit Plans
has engaged in a material non-exempt "prohibited transaction" within the meaning
of Section 4975 of the Code or Section 406 of ERISA that could give rise to any
Liability on the part of any Transferred Subsidiary; (d) no fiduciary has any
material Liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the assets of any
Benefit Plan that could give rise to any Liability on the part of any
Transferred Subsidiary; (e) there is no material violation of ERISA or the Code
with respect to the filing of applicable reports, documents and notices
regarding the Benefit Plans with the Secretary of Labor and the Secretary of the
Treasury or the furnishing of such documents to the participants or
beneficiaries of the Benefit Plans that could give rise to any material
Liability on the part of any Transferred Subsidiary; and (f) there are no
pending actions, claims or lawsuits which have been asserted or instituted
against the Benefit Plans, the assets of any of the trusts under such plans or
the plan sponsor or the plan administrator, or against any fiduciary of the
Benefit Plans with respect to the operation of such plans (other than routine
benefit claims), nor does the Seller or any of its Affiliates have knowledge of
facts which could form the basis for any such claim or lawsuit, in each case
that could give rise to any material Liability on the part of the Purchasers and
their respective Affiliates (including the Transferred Subsidiaries).
3.15.4 Pension Plan. No Benefit Plan is subject to Title IV of ERISA,
other than the Pension Plan of Hercules Incorporated.
3.15.5 Foreign Plans. Section 3.15.2 of the Seller's Disclosure
Schedule contains a list, complete in all material respects, of all Material
Benefit Plans that are Foreign Benefit Plans, identifying such plans by name and
type of plan, country of origin and sponsoring entity. All Material Benefit
Plans that are Foreign Benefit Plans (a) have been maintained in all material
respects in accordance with all applicable requirements, (b) if they are
intended to qualify for special Tax treatment, meet all requirements for such
treatment, and (c) if they are intended to be funded and/or book-reserved, are
funded and/or book reserved, as appropriate, based upon actuarial assumptions
that are reasonable in the aggregate.
3.15.6 Retiree Welfare Benefits. Except as set forth in Section 3.15.6
of the Seller's Disclosure Schedule and except as may be required under the
continuation coverage requirements of Section 601 et seq. of ERISA and Section
4980B of the Code or other applicable Law, none of the Water Business Benefit
Plans provide for post-employment life or health insurance benefits for any
Business Employee or Former Business Employee.
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Section 3.16 Contracts. Section 3.16 of the Seller's Disclosure Schedule
contains a complete list, as of the date hereof, of all Contracts (other than
Benefit Plans and, except as noted below, other than Employment Agreements) to
which any of the Transferred Subsidiaries is a party, or that otherwise relate
to a Transferred Asset or a Transferred Liability, and that fall within any of
the following categories:
(a) each customer agreement which involves the receipt or payment in
2001 or thereafter of more than $1,000,000;
(b) each Contract involving the obligation of any Seller Entity
(with respect to any portion of the Water Business) or any Transferred
Subsidiary to purchase products, materials, supplies, advertising, equipment or
services for more than $1,000,000 annually (unless terminable by the Seller
Entity or Transferred Subsidiary with payment or penalty of not more than
$100,000 upon no more than 90 days' notice);
(c) each joint venture or partnership agreement and each Contract
providing for the formation of a joint venture, long-term alliance or
partnership or involving an equity investment by any Seller Entity (with respect
to any portion of the Water Business) or any Transferred Subsidiary;
(d) each Contract (including an Employment Agreement) that by its
express terms affects or limits the freedom in any material way of the Water
Business or any portion thereof, or any of the Transferred Subsidiaries to
compete in any line of business or with any Person or in any geographic area;
(e) each Contract relating to any outstanding commitment for capital
expenditures in excess of $500,000;
(f) each Contract (or group of related Contracts) under which any
Seller Entity (with respect to any portion of the Water Business) or any
Transferred Subsidiary has created, incurred, assumed, or guaranteed any
Indebtedness or that relates to the lending of amounts, in each case, in excess
of $1,000,000 by any of the Transferred Subsidiaries or providing for the
creation of any Encumbrance securing an obligation likely to exceed $1,000,000
upon any asset of the Transferred Subsidiaries or any Transferred Asset;
(g) each lease, sublease or similar agreement under which any Seller
Entity is a lessee or sublessee of tangible personal property primarily used or
held for use in any portion of the Water Business, or under which any
Transferred Subsidiary is a lessee or sublessee of tangible property, in each
case for an annual rent in excess of $250,000;
(h) each joint research and development agreement involving
expenditures by the Water Business in excess of $500,000 in any calendar year;
(i) each Real Property Lease;
(j) any Contract concerning the marketing or distribution by third
parties of any products or services of the Water Business (including any
Contract requiring the payment of
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any sales or marketing or distribution commissions or granting to any Person
rights to market, distribute or sell such products or services) involving sales
of products of more than $100,000 annually;
(k) any other Contract which was entered into other than in the
Ordinary Course of Business (other than this Agreement) involving payments to or
from third parties in excess of $2,000,000;
(l) any other Contract relating to the Water Business which involves
annual payments in excess of $1,000,000 or is not terminable by the Seller
Entities or the Transferred Subsidiaries without payment or penalty of not more
than $100,000 upon no more than 90 days' notice; and
(m) any Contract the absence of which would reasonably be expected to
have a Material Adverse Effect on the Water Business.
The Seller has made available to the Purchasers or their respective
representatives correct and complete copies of all such Contracts. Each such
Contract is valid, binding and enforceable against the Seller or the applicable
Subsidiary of such Seller and, to the Seller's knowledge, the other parties
thereto in accordance with its terms, and is in full force and effect. None of
the Seller Entities or the Transferred Subsidiaries is in material default under
or in material breach of or is otherwise materially delinquent in performance
under any such Contract (other than agreements between or among any of the
Transferred Subsidiaries), and, to the Seller's knowledge no event has occurred
that, with notice or lapse of time, or both, would constitute such a default. To
the Seller's knowledge each of the other parties thereto has performed in all
material respects all of the obligations required to be performed by it under,
and is not in material default under, any such Contract (other than agreements
between any of the Transferred Subsidiaries) and, to the Seller's knowledge no
event has occurred that, with notice or lapse of time, or both, would constitute
such a default. To the Seller's knowledge there are no material disputes pending
or threatened in writing with respect to any such Contracts.
Section 3.17 Labor and Employment Matters
3.17.1 Section 3.17.1 of the Seller's Disclosure Schedule lists all
collective bargaining agreements, union contracts, applicable social
plans related to restructurings and similar agreements or arrangements in effect
that cover any Business Employee (each, a "Collective Bargaining Agreement") and
a description of the unit of Business Employees covered thereby. Except as set
forth in Section 3.17.1 of the Seller's Disclosure Schedule, there are no
agreements between the Seller or any of its Affiliates (including the
Transferred Subsidiaries) and any works council in effect as of the date hereof
that provide any greater rights to any Business Employees, or to such works
council with respect to any Business Employees, than exist under applicable Law
or regulation or individual employment contracts. Except as set forth on Section
3.17.1 of the Seller's Disclosure Schedule, with respect to any Business
Employee, (a) there is no labor strike, dispute, slowdown, lockout or stoppage
pending or threatened against or affecting any of the Transferred Subsidiaries
or with respect to any Business Employees, and neither of the Transferred
Subsidiaries nor (with respect to any portion of the Water Business) the Seller
Entities has experienced any labor strike, dispute, slowdown,
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lockout or stoppage since December 31, 1998; (b) there are no material written
personnel policies, rules or procedures applicable to any Business Employee the
cost of which exceeds $50,000 in any calendar year, other than those set forth
in Section 3.17.1 of the Seller's Disclosure Schedule, true and correct copies
of which have heretofore been made available to the Purchasers; (c) there is no
unfair labor practice charge or complaint against any of the Transferred
Subsidiaries and (with respect to any portion of the Water Business) the Seller
Entities pending or, to the Seller's knowledge, threatened before the National
Labor Relations Board or before any similar state or foreign agency; (d) there
is no grievance or arbitration arising out of any Collective Bargaining
Agreement or other grievance procedure; and (e) to the Seller's knowledge, no
charges are pending before the Equal Employment Opportunity Commission or any
other agency responsible for the prevention of unlawful employment practices.
3.17.2 Except as set forth on Section 3.17.2 of the Seller's
Disclosure Schedule, at no time within one year prior to the date hereof have
the Seller or any of its Affiliates effectuated any of the following with
respect to any Business Employee: (a) a "plant closing" (as defined in the WARN
Act) affecting any site of employment or one or more facilities or operating
units within any site of employment or facility; (b) a "mass layoff" (as defined
in the WARN Act) affecting any site of employment or facility; nor have any of
the Seller Entities or any Transferred Subsidiary been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law; or (c) any
other event, which under the Laws of any jurisdiction outside of the United
States of America, would require notification and/or consultation with employee
representatives, affected parties or government agencies, a "social plan," or
similar employer action as a result of, or in connection with, employee
terminations or business restructurings.
3.17.3 Except as set forth on Section 3.17.3 of the Seller's
Disclosure Schedule, the Seller Entities (with respect to any portion of the
Water Business) and the Transferred Subsidiaries are in compliance in all
material respects with all Laws, regulations and orders relating to the
employment of labor, including all such Laws, regulations and orders relating to
wages, hours, the WARN Act and any similar state or local "mass layoff" or
"plant closing" Law, collective bargaining, discrimination, civil rights, safety
and health, workers' compensation and the collection and payment of withholding
and/or social security taxes and any similar tax.
3.17.4 Section 3.17.4 of the Seller's Disclosure Schedule separately
describes (a) the major components of the Organizational Restructuring,
including affected work locations and/or work units, cost estimates and the
projected financial benefits to the Water Business in respect thereof and
individuals affected or expected to be affected thereby and (b) as of the date
hereof, affected individuals who have been notified of their layoff under the
Organizational Restructuring but whose layoff has not yet occurred, and affected
individuals who are expected to be notified of such layoff for the first time
after the date hereof but on or prior to the Closing Date, and their respective
work locations, work units, and cost estimates for projected Severance Benefits
associated with their layoff.
Section 3.18 Undisclosed Liabilities.
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Except (a) as and to the extent disclosed or reserved against on the Combined
Statement of Net Assets, (b) as would not be required under GAAP to be disclosed
or reserved against in the Combined Statement of Net Assets (unless to the
Seller's Finance knowledge, as of the date hereof, the Water Business, the
Transferred Assets and the Transferred Subsidiaries are subject to, or
Transferred Liabilities include, a material Liability that would not be required
under GAAP to be disclosed or reserved against in the Combined Statement of Net
Assets), (c) as incurred after the date of the Combined Statement of Net Assets
in the Ordinary Course of Business, provided that such Liability was not
incurred in violation of Section 5.3, or (d) as shall be reflected in the Final
Closing Date Statement of Net Assets, the Water Business, the Transferred Assets
and the Transferred Subsidiaries are not subject to, and Transferred Liabilities
do not include, any material Liabilities; provided, that no representation or
warranty is made in this Section 3.18 with respect to Taxes (or any reserve or
accrual for Taxes).
Section 3.19 Permits; Compliance.
3.19.1 Each of the Seller Entities (with respect to any portion of the
Water Business) and the Transferred Subsidiaries is in possession of all
material franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders necessary to
own, lease and operate its properties and to carry on its business as it is now
being conducted and as it will be conducted through to the Closing
(collectively, the "Water Permits"). There is no material Action pending, or, to
the Seller's knowledge, threatened, regarding any of the Water Permits and each
such Water Permit is in full force and effect. The Seller Entities (with respect
to any portion of the Water Business) and the Transferred Subsidiaries are not
in conflict with, or in material default (or would be in default with the giving
of notice, the passage of time, or both) with, or in violation of, any of the
Water Permits.
3.19.2 For purposes of this Section 3.19, the matters specifically
covered by Section 3.11 shall be excluded from consideration.
Section 3.20 Real Estate.
3.20.1 Section 3.20 of the Seller's Disclosure Schedule includes a
list, complete and accurate in all respects, of all real property that is, as of
the date hereof, owned by any Seller Entity or Transferred Subsidiary and
primarily used in the operation of any portion of the Water Business (other than
any Owned Real Property which constitute Transferred Real Property and are
listed on Section 2.2.1 of the Seller's Disclosure Schedule).
3.20.2 Section 3.20 of the Seller's Disclosure Schedule sets forth a
list, complete and accurate in all respects, of all material real property that
is, as of the date hereof, leased or subleased to any of the Seller Entities or
the Transferred Subsidiaries primarily for use in the operation of any portion
of the Water Business (other than any Leased Real Property which is a
Transferred Asset and is listed on Section 2.2.1 of the Seller's Disclosure
Schedule).
3.20.3 Except as would not have a Property Adverse Impact, the Owned
Real Property and the Leased Real Property, including the improvements
appurtenant thereto and leased pursuant to the Real Property Leases, are
generally, in the aggregate, adequate and
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suitable in all material respects for the uses to which they are being put in
the portions of the Water Business in which they are being used.
3.20.4 Leases of Real Property.
3.20.4.1 Except as would not have a Property Adverse Impact,
each Real Property Lease is valid, binding and enforceable against the Seller or
the applicable Subsidiary of such Seller and, to the Seller's knowledge, the
other parties thereto in accordance with its terms, and is in full force and
effect;
3.20.4.2 None of the Seller Entities or the Transferred
Subsidiaries is in material default under or in material breach of or is
otherwise materially delinquent in performance under any Real Property Lease
(other than leases between or among any of the Transferred Subsidiaries), and,
to the Seller's knowledge, no event has occurred which, with due notice or lapse
of time, or both, would constitute such a default; and
3.20.4.3 There are no material leases or subleases executed by
the Seller Entities or the Transferred Subsidiaries, as lessor, and third
parties, as lessees, with respect to any of the Real Property, except as
disclosed on Sections 2.2.1 or 3.20 of the Seller's Disclosure Schedule.
3.20.5 Except as would not have a Property Adverse Impact, all
certificates of occupancy (or their equivalent under applicable Law) necessary
or useful for the current use and operation of the Real Property have been
issued and are in full force and effect, and the use of the Real Property is in
conformity with such certificates of occupancy.
3.20.6 Except as would not have a Property Adverse Impact, there does
not exist any actual, threatened or contemplated condemnation or eminent domain0
proceedings that affect any material Real Property.
3.20.7 Except as would not have a Property Adverse Impact, the current
use and occupancy of the Real Property and the improvements located thereon are
not in violation of any material recorded covenants, conditions, restrictions,
reservations, easements or agreements affecting the Real Property.
3.20.8 Except as would not have a Property Adverse Impact, no part of
any material improvement located on the Real Property which is material to its
operation is dependent for its access, operation or utility on any land,
building or other improvements not included in the Real Property, and all the
material Real Property has sufficient access to public roads, except as
disclosed in Section 3.10.1 of the Seller's Disclosure Schedule.
Section 3.21 Intercompany Services. Except as set forth in Section 3.21 of
the Seller's Disclosure Schedule, there are no material Contracts pursuant to
which any goods, services, materials or supplies are provided (i) by the Water
Business (or any portion thereof), the Transferred Subsidiaries or the
Transferred Assets, on the one hand, to the Seller or any of its Affiliates
(other than the Transferred Subsidiaries), on the other hand, or (ii) by the
Seller or any of its Affiliates (other than the Transferred Subsidiaries), on
the one hand, to the Water Business (or
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any portion thereof), the Transferred Subsidiaries or the Transferred Assets, on
the other hand (each, an "Intercompany Arrangement").
Section 3.22 Relationships with Customers. Except as set forth in Section
3.22 of the Seller's Disclosure Schedule, to the Seller's knowledge, since
June 30, 2001, the Seller has not received any written communication in which
any customer of any portion of the Water Business who accounted for annual
sales in excess of $1,000,000 during the Seller's immediately preceding fiscal
year states an intention to terminate or reduce in excess of $1,000,000 annually
its purchases from the Water Business.
Section 3.23 Insurance. Section 3.23 of the Seller's Disclosure Schedule
contains an accurate and complete list of all insurance policies known to the
Seller under which as of the date hereof the Seller Entities or the Transferred
Subsidiaries are insured (or potentially insured) with respect to the Water
Business (or any portion thereof), the Transferred Assets or the Transferred
Liabilities. Except as otherwise disclosed in that Schedule, such current
insurance policies, and historical insurance policies which by their terms
continue to provide coverage, (i) are in full force and effect and (ii) as
appropriate, provide (or potentially provide) insurance coverage of the assets
and operations of the Water Business or any portion thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Except as set forth in the Purchasers' Disclosure Schedule, the
Purchasers jointly and severally represent and warrant to the Seller as follows
(it being understood and agreed that, with respect to any Designated Affiliate
not in existence as of the date hereof, these representations and warranties are
made only with respect to the period of existence of such Designated Affiliate;
provided, that the Purchasers covenant that the Designated Affiliate will exist
on or prior to the Closing Date or such later date in accordance with Section
2.4.2):
Section 4.1 Organization and Standing. Each of the Purchasers and their
Designated Affiliates is (a) a corporation, limited liability company or other
legal entity duly organized, validly existing and duly qualified or licensed and
in good standing under the Laws of the state or jurisdiction of its organization
with full corporate or other power, as the case may be, and authority to own,
lease, use and operate its properties and to conduct its business, and (b) duly
qualified or licensed to do business and is in good standing in any other
jurisdiction in which the nature of the business conducted by it or the property
it owns, leases or operates requires it to so qualify, be licensed or be in good
standing, except where the failure to be so qualified, licensed or in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on the Purchasers and their Designated Affiliates.
Section 4.2 Corporate Power and Authority. Each of the Purchasers has all
requisite corporate power and authority to enter into and deliver this Agreement
and to consummate the transactions contemplated hereby. Each of the Purchasers
and their respective Affiliates which will be a party to the Ancillary
Agreements has all requisite corporate or other power, as the case may be, and
authority to execute and deliver the Ancillary Agreements and the other
agreements,
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documents and instruments to be executed and delivered by it in connection with
this Agreement or the Ancillary Agreements and to consummate the transactions
contemplated thereby. The execution, delivery and performance of this Agreement
by the Purchasers and the consummation by the Purchasers of the transactions
contemplated hereby, and the execution, delivery and performance of the
Ancillary Agreements and the other agreements, documents and instruments to be
executed and delivered in connection with this Agreement or the Ancillary
Agreements by each of the Purchasers and their respective Affiliates which is a
party thereto and the consummation of the transactions contemplated thereby,
have been duly authorized by all necessary action on the part of each such
Person. This Agreement has been duly executed and delivered by each Purchaser
and constitutes the legal, valid and binding obligation of each Purchaser,
enforceable against each Purchaser in accordance with its terms. The Ancillary
Agreements and the other agreements, documents and instruments to be executed
and delivered in connection with this Agreement or the Ancillary Agreements at
the Closing will be duly executed and delivered by the Purchasers and their
respective Affiliates which are a party thereto and will constitute the legal,
valid and binding obligations of the Purchasers and their respective Affiliates
which are a party thereto, enforceable against each such Person in accordance
with their respective terms.
Section 4.3 Conflicts; Consents and Approvals. Neither the execution and
delivery by the Purchasers or any of their respective Affiliates of this
Agreement, the Ancillary Agreements and the other agreements, documents and
instruments to be executed and delivered by any of them in connection with this
Agreement and the Ancillary Agreements, nor the consummation of the transactions
contemplated hereby and thereby, will:
4.3.1 conflict with, or result in a breach of any provision of, the
organizational documents of (a) the Purchasers, or (b) any Affiliate of the
Purchaser which is a party to the Ancillary Agreements or any other agreements
and instruments to be executed and delivered in connection herewith;
4.3.2 violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event that, with the giving of
notice, the passage of time or otherwise, would constitute a default) under, or
entitle any Person (with the giving of notice, the passage of time or otherwise)
to terminate, accelerate, modify or call a default under, or give rise to any
obligation to make a payment under, or to any increased, additional or
guaranteed rights of any Person under, or result in the creation of any
Encumbrance upon any of the properties or assets of the Purchasers under any of
the terms, conditions or provisions of (a) any organizational documents of the
Purchasers, (b) any Contract to which the Purchasers or their Designated
Affiliates is a party or to which any of their respective properties or assets
may be bound, or (c) any permit, registration, approval, license or other
authorization or filing to which the Purchasers or their Designated Affiliates
is subject or to which any of their respective properties or assets may be
subject;
4.3.3 violate any order, writ, or injunction, or any material decree,
or material Law applicable to the Parent Purchaser or any of their respective
properties or assets; or
4.3.4 require any action, consent or approval of, or review by, or
registration or filing by the Purchasers or any of their respective Affiliates
with, any Governmental Authority,
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other than (a) actions required by the HSR Act or other Antitrust Laws set forth
in Section 4.3.4 of the Purchasers' Disclosure Schedule, (b) the actions,
consents and approvals of, reviews by, or registrations or filings with,
Governmental Authorities set forth in Section 4.3.4 of the Purchasers'
Disclosure Schedule, and (c) such other actions, consents, approvals, reviews,
registrations and filings as are not material;
except in the case of Section 4.3.2 for any of the items specified therein that
would not, individually or in the aggregate, be materially adverse to the
Purchasers or on the ability of the Purchasers to consummate the transactions
contemplated hereby by the Outside Date.
Section 4.4 No Material Adverse Effect. No event, occurrence or
development exists that would reasonably be expected to have a material adverse
effect on the ability of the Purchasers to consummate the transactions
contemplated hereby prior to the Outside Date.
Section 4.5 Investigation by the Purchasers; Financial Capability. The
Purchasers have conducted their own evaluation of the Water Business and have
such knowledge and experience in financial and business matters that they are
capable of evaluating the merits and risks of their purchase of the Purchased
Subsidiaries Shares and the Transferred Assets and of their assumption of the
Transferred Liabilities. The Purchasers confirm that the Seller has made
available to the Purchasers the opportunity to ask questions of the officers and
management employees of the Seller and its Subsidiaries and to acquire
additional information about the business and financial condition of the Water
Business. The Purchasers are acquiring the Purchased Subsidiaries Shares for
investment and not with a view toward or for sale in connection with any
distribution thereof, or with any present intention of distributing or selling
such stock. The Purchasers agree that the Purchased Subsidiaries Shares may not
be sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of without registration under the Securities Act, except pursuant to an
exemption from such registration available under the Securities Act.
Section 4.6 Purchaser Benefit Plans. The Purchasers have provided the
Seller with complete and accurate information regarding the employee benefit
plans and programs of the Purchasers and their Affiliates in which it is
proposed that Transferred Employees employed in the United States of America
will initially participate.
Section 4.7 Knowledge. As of the date hereof, the Purchasers have no
knowledge of any inaccuracy in the representations and warranties of the Seller.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Access and Information.
5.1.1 Prior to the Closing, except to the extent prohibited by
applicable Law or by Contracts to which the Seller or any of its Subsidiaries is
a party, the Seller will permit (and will cause each of the other Seller
Entities and the Transferred Subsidiaries to permit)
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representatives of the Purchasers to have access in the manner set forth on
Section 5.1.1 of the Seller's Disclosure Schedule during normal business hours
and upon reasonable notice to all premises, properties, personnel, books,
records, contracts, commitments, reports of examination and documents of or
pertaining to each portion of the Water Business, the Transferred Subsidiaries
(to the extent relating to any portion of the Water Business), the Transferred
Assets and the Transferred Liabilities, as may be necessary to permit the
Purchasers to, at their sole expense, make, or cause to be made, such
investigations of any portion of the Water Business, the Transferred
Subsidiaries (to the extent relating to any portion of the Water Business or as
otherwise reasonably requested), the Transferred Assets or the Transferred
Liabilities (including Phase I Environmental Site Assessments in general
conformance with the standards specified by the American Society for Testing and
Materials or other non-invasive environmental investigation, where the
Purchasers have reasonable grounds to believe that there may be present
Regulated Substances, with the assistance of one or more consultants reasonably
acceptable to the Seller, and subject to the Seller's supervision) as the
Purchasers deem necessary or advisable in connection with the consummation of
the transactions contemplated by this Agreement (subject to applicable
competition and antitrust Laws), and the Seller shall (and shall cause the
Seller Entities and the Transferred Subsidiaries to) reasonably cooperate with
any such investigations, including any such non-invasive environmental
investigations in the manner set forth on Section 5.1.1 of the Seller's
Disclosure Schedule; provided, however, that, in the case of any such
investigation of properties leased to any of the Seller Entities or the
Transferred Subsidiaries, the investigation shall be conducted, if at all,
subject to the terms of the applicable leases (but to the extent applicable, the
Seller shall use commercially reasonable efforts to obtain any required consents
under such leases; provided, that in no event shall the Seller or any of its
Affiliates be required to make payments to third parties under such leases in
order to obtain their consent); provided, further, following any environmental
investigations, the Purchasers shall, upon request of the Seller, promptly
provide to the Seller the laboratory analytical results of such investigations
(including copies of any related Quality Assurance and Quality Control data),
and the Purchasers shall, at their sole expense, restore the property to the
condition it was in prior thereto. Anything in the foregoing notwithstanding,
any information with regard to the Retained Business obtained by or provided to
the Purchasers or their respective agents or representatives pursuant to this
Agreement (including in connection with any environmental investigation and any
materials, test results, conclusions or reports generated in connection
therewith) shall be deemed "Evaluation Material" under, and be subject to the
terms of, the Confidentiality Agreement, and in no event shall the Seller be
required to provide access to privileged or attorney work product materials;
provided that neither the Purchasers nor the Seller shall be prohibited from
using reports of environmental investigations performed pursuant to this
Agreement in any negotiation or proceeding between them relating to the
interpretation or enforcement of this Agreement; and provided, further, that,
while neither the Purchasers nor the Seller intend to waive any attorney-client
privilege or work product protection that might otherwise protect any shared
information from disclosure, the Purchasers and the Seller intend to work
cooperatively in their common defense and response to legal obligations or
liabilities that may be associated with the matters identified by such
environmental investigations and will maintain a joint defense privilege or
common interest attorney-client privilege with respect to any shared
attorney-client materials or attorney work product of either the Purchasers or
the Seller or any such materials or work product that is developed jointly in
connection therewith.
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5.1.2 In furtherance of the foregoing, but not in limitation thereof,
the Seller shall (and shall cause each of the other Seller Entities to) (a)
permit the Purchasers and their respective agents and representatives to have
reasonable access to the premises, books and records of the Seller Entities
(with respect to any portion of the Water Business or as otherwise reasonably
requested) and the Transferred Subsidiaries (with respect to any portion of the
Water Business or as otherwise reasonably requested), (b) furnish or cause to be
furnished to the Purchasers such financial and operating data relating to the
Seller Entities (with respect to any portion of the Water Business or as
otherwise reasonably requested) and the Transferred Subsidiaries (with respect
to any portion of the Water Business or as otherwise reasonably requested) as
the Purchasers shall reasonably request from time to time (to the extent
available), and (c) cause their accountants (subject to the execution by the
Purchasers of such documents as shall be reasonably requested by such
accountants) to furnish to the Purchasers and the Purchasers' accountants access
to all work papers relating to any portion of the Water Business for any of the
periods covered by any financial statements delivered to the Purchasers pursuant
to this Agreement, in each case, in accordance with the procedures set forth in
Section 5.1.1 of the Seller's Disclosure Schedule. Prior to the Closing, the
Purchasers shall not (and shall cause their respective Subsidiaries,
representatives and agents not to) use any information obtained pursuant to this
Section 5.1 for any purpose unrelated to the transactions described in this
Agreement. Subject to Section 4.7 of this Agreement, no investigation by the
Purchasers or their respective representatives or advisors prior to or after the
date of this Agreement (including any Additional Financial Information provided
to the Purchasers prior to the date hereof and any information obtained by the
Purchasers pursuant to this Section 5.1) shall diminish, obviate or cure any
breach of any representation, warranty, covenant or agreement contained in this
Agreement or any Ancillary Agreement.
5.1.3 Notwithstanding anything to the contrary in Sections 5.1.1 and
5.1.2, the Purchasers shall not be permitted to conduct any Phase II
Environmental Assessments or similar on-site activities prior to the Closing.
Section 5.2 Title Searches. If the Purchasers shall have any title
searches performed with respect to the Owned Real Property, the Seller shall
reimburse the Purchasers for one half of any reasonable costs or expenses
paid to LandAmerica National Commercial Services (or, with respect to Owned Real
Property located outside of the United States, a similar entity performing such
services) for the performance of such searches. If the Purchaser shall engage
the services of a title company other than LandAmerica National Commercial
Services, the Seller agrees to pay one half of what LandAmerica would have
charged (taking into account the fact that LandAmerica has already performed
title work for some or all of these properties) had LandAmerica been engaged to
perform such services (or bringdown as appropriate). The Purchasers shall
provide the Seller copies of such searches promptly after receipt thereof. The
Purchaser shall be solely responsible for all costs of title insurance and title
searches beyond the portion of the cost of the searches themselves that are
allocated to the Seller pursuant to this Section 5.2.
Section 5.3 Conduct of Business. The Seller covenants and agrees that,
from and after the date hereof until the Closing, except as otherwise expressly
contemplated by this Agreement (including with respect to the Reorganization or
the Organizational Restructuring), and except as
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set forth on Section 5.3A of the Seller's Disclosure Schedule, it shall, and
shall cause its Subsidiaries to, conduct the Water Business and the businesses
of the Transferred Subsidiaries only in the Ordinary Course of Business. The
Seller shall, and shall cause its Subsidiaries to, use commercially reasonable
efforts to preserve the Water Business' and the Transferred Subsidiaries'
operations, physical facilities, working conditions and their respective
business relationships with customers, suppliers, licensors, licensees,
contractors and other persons with whom the Water Business (or any portion
thereof) or any of the Transferred Subsidiaries have significant business
relations. Except as otherwise expressly contemplated by this Agreement
(including with respect to the Reorganization or the Organizational
Restructuring), and, except as set forth on Section 5.3A of the Seller's
Disclosure Schedules from and after the date hereof until the Closing, without
the prior written consent of the Purchasers (which shall not be unreasonably
withheld or delayed) and which shall follow the protocol set forth on Section
5.3B of the Seller's Disclosure Schedule:
5.3.1 the Transferred Subsidiaries shall not, and the Seller shall
cause the Transferred Subsidiaries not to: (a) incur any Indebtedness, except as
otherwise expressly contemplated by this Section 5.3.1; (b) guarantee (directly
or indirectly) any Liability, except any Transferred Subsidiary may guarantee a
Liability of another Transferred Subsidiary or employee of such Transferred
Subsidiary in the Ordinary Course of Business; (c) merge or consolidate with,
purchase substantially all or a material portion of the assets of, or otherwise
acquire any business or any proprietorship, firm, association, limited liability
company, joint venture corporation or other business organization or division
thereof, in each case, except as contemplated by Section 5.21; (d) enter into
any Contract (other than joint development contracts or customer alliances, in
each case, in the Ordinary Course of Business) that by its express terms
restrains, restricts, or limits in any material way the ability of the Water
Business or any portion thereof, or the ability of the Purchasers or any
Subsidiary thereof, to compete with or conduct any business or line of business
in any geographic area; (e) subject to Section 5.14.2, declare or pay any
dividend or make any other distribution whether cash, stock or property with
respect to, or purchase or redeem, shares of the capital stock of any of the
Transferred Subsidiaries, other than any dividend or distribution payable to a
Transferred Subsidiary by a wholly owned Subsidiary thereof; (f) incur any
Liability (that is not an Excluded Liability), other than in the Ordinary Course
of Business; (g) change any of its company policies or general practices with
respect to the collection of receivables or the payment of payables; or (h)
enter into any new, or amend any existing, Collective Bargaining Agreement or
comparable agreements covering Business Employees, except, in each case in this
clause (h), as required to comply with applicable Law;
5.3.2 neither the Seller (with respect to any portion of the Water
Business) nor the Transferred Subsidiaries shall, and the Seller shall cause the
Transferred Subsidiaries not to: (a) sell, transfer, lease, license, pledge,
mortgage, encumber or dispose of any Water Business assets (including those of
any Transferred Subsidiary and any Transferred Assets), other than in the
Ordinary Course of Business; (b) issue, deliver, sell, pledge or otherwise
encumber any shares of capital stock of any of the Transferred Subsidiaries or
issue or grant any subscriptions, options, calls or rights to acquire, warrants,
convertible securities or other agreements or commitments to issue, or enter
into any Contracts obligating any of the Transferred Subsidiaries to issue or
transfer from treasury, any shares of capital stock of any class or kind, or
securities
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convertible into any such shares, in each case, except as set forth in Section
5.3A of the Seller's Disclosure Schedule; (c) incur or create any Encumbrances
(other than Permitted Encumbrances) on any asset of any Transferred Subsidiary
or on any Transferred Asset; (d) make any change in the certificate of
incorporation or by-laws (or comparable organizational documents) of any of the
Transferred Subsidiaries; (e) modify or amend in any material respect, release,
enter into, terminate, extend, waive any material right under, assign or
otherwise change in any material respect any rights under, or discharge any
other party thereunder of any of their obligations under, any material Contracts
which fall into the categories described in Section 3.16 of this Agreement; (f)
transfer any Owned Real Property; (g) assign, amend or terminate any Real
Property Lease except in the Ordinary Course of Business; (h) (x) fail in any
material respect to continue to effect capital expenditures on a commercially
reasonable basis in accordance with the schedule set forth in Section 5.3.2 of
the Seller's Disclosure Schedule (the "CapEx Schedule") or (y) commit to any
capital expenditures more than $1,000,000 in excess of the CapEx Schedule; or
(i) enter into any settlement or release with respect to any material Action or
material Claim with respect to the Water Business or any portion thereof;
5.3.3 neither the Seller (with respect to any portion of the Water
Business) nor the Transferred Subsidiaries shall, and the Seller shall cause the
Transferred Subsidiaries not to, (a) increase the wages or benefits payable to
any Business Employee (including any such increase pursuant to any bonus,
pension, profit sharing or other plan or commitment), or (b) otherwise adopt,
enter into or amend any Benefit Plan or Material Employment Agreement, in either
case except for (i) such actions required by applicable Law or a Contract in
effect as of the date hereof, and (ii) increases in wages in the Ordinary Course
of Business payable to Business Employees who are below the Seller's
compensation "band 4";
5.3.4 the Transferred Subsidiaries on the one hand, and the Seller or
its Affiliates (other than the Transferred Subsidiaries) on the other hand,
shall not enter into any new material Intercompany Arrangement;
5.3.5 neither the Seller (with respect to any portion of the Water
Business) nor the Transferred Subsidiaries shall, and the Seller shall cause the
Transferred Subsidiaries not to, except as required under GAAP, make any changes
to any of its methods of financial accounting or financial accounting practices
or principles, provided that the foregoing shall not prevent the Seller from
changing its method of accounting or financial accounting practices or
principles with respect to its other businesses;
5.3.6 the Seller shall not, and shall not permit any of its Affiliates
to, change or amend any of the (a) Product Specifications, (b) Quality Control
Procedures, (c) Raw Materials Specifications or (d) Manufacturing Methods (each
of (a) through (d) as defined in the Supply Agreement (BetzDearborn to
Hercules)); and
5.3.7 neither the Seller (with respect to any portion of the Water
Business) nor the Transferred Subsidiaries shall, and the Seller shall cause the
Transferred Subsidiaries not to, authorize or enter into any transaction,
agreement or commitment with respect to any of the foregoing.
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Section 5.4 Closing Documents. The Seller shall, prior to or at the
Closing, execute and deliver, or cause to be executed and delivered, to the
Purchasers, the documents or instruments described in Sections 2.3, 6.1 and 6.2
to be delivered by the Seller or its Affiliates prior to or at the Closing. The
Purchasers shall, prior to or at the Closing, execute and deliver, or cause to
be executed and delivered to the Seller, the documents or instruments described
in Sections 2.3, 6.1 and 6.3 to be delivered by the Purchasers or their
respective Affiliates prior to or at the Closing.
Section 5.5 Further Assurances; Environmental Filings.
5.5.1 (a) Subject to the terms and conditions hereof (including, to
the extent applicable, Section 5.6) from time to time whether before, at or
following the Closing, each of the Purchasers and the Seller shall, and shall
cause their respective Affiliates to, make commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things reasonably necessary, proper or advisable, including as required by
applicable Laws, to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, including applying for, obtaining,
or causing to be obtained, authorizations, approvals, orders, licenses, permits,
franchises or consents of all third parties or Governmental Authorities
necessary for the consummation of the transactions contemplated by this
Agreement (including, without limitation, any consents necessary to consummate
the transactions contemplated by this Agreement with respect to (i) the Owned
Real Property listed in Section 3.20 of the Seller's Disclosure Schedule and
located in Soracaba, Brazil, and (ii) the Leased Real Property listed in Section
2.2.1 of the Seller's Disclosure Schedule and located in Jurong Town,
Singapore); provided, however, that, except as provided in Section 5.9.1(b)
(with respect to Transfer Taxes relating to the Reorganization), Section 5.9.13
and Section 5.21 (relating to the Reorganization) with respect to payments to
Governmental Authorities which shall be made and payments to third parties (or
reimbursements of third parties' expenses) which are required to be made and
which shall be made pursuant to the terms of the Seller's Contracts with such
third parties for, or in respect of, consents, waivers or approvals required to
effect any step of the Reorganization, in no event shall the Seller or the
Purchasers or their respective Affiliates be required to make payments to third
parties in order to obtain their consent, waiver or approval, other than as may
be required to implement any step of the Reorganization. Notwithstanding the
foregoing, in the event that a consent, waiver or approval of a third party is
required to effect any step of the Reorganization (other than a consent, waiver
or approval of a third party described in the exception in the proviso of the
preceding sentence), the Seller shall use its reasonable best efforts to obtain
such consent, waiver or approval.
(b) If any Transfer Approval necessary for the assignment or transfer
to, or assumption by, the Purchaser or a Transferred Subsidiary of any Contract
or Purchased Intellectual Property or any claim, right or benefit or any
liability or obligation arising thereunder or resulting therefrom shall not have
been obtained prior to the Closing Date, then as of the Closing, this Agreement
and the Ancillary Agreements, to the extent permitted by Law, shall constitute
an equitable assignment by the Seller to the Purchaser of all of the Seller's
right, title and interest in and to, and an equitable assumption by Purchaser of
all of the Seller's obligations and liabilities under, such Contract and
Purchased Intellectual Property and, in the case of Contracts, the Purchaser
shall be deemed the Seller's agent (without compensation and at the
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Purchaser's cost and expense) for purpose of completing, fulfilling and
discharging all of the Seller's obligations under any such Contract. Subject to
Section 5.5.1(a), the parties shall take all lawfully commercially reasonable
steps and actions to provide the Purchaser with the benefits of such Contracts
and Purchased Intellectual Property, and, in the case of Contracts, to relieve
the Seller of the performance and other obligations thereunder, including entry
into subcontracts or guarantees for the performance thereof.
(c) If any Transfer Approval necessary for the assignment or transfer
to, or assumption by, the Seller or any of its Affiliates (other than the
Transferred Subsidiaries) after the Closing of any Contract included in the
Excluded Assets and obtained directly or indirectly at the Closing by the
Purchaser (or its Designated Affiliate) (the "Retained Business Contract") or
Retained Business Intellectual Property Rights included in the Excluded Assets
and obtained directly or indirectly at the Closing by the Purchaser (or its
Designated Affiliate) or any claim, right or benefit or any liability or
obligation arising thereunder or resulting therefrom shall not have been
obtained immediately after the Closing Date, then as of the Closing, this
Agreement and the Ancillary Agreements, to the extent permitted by Law, shall
constitute an equitable assignment by the Purchaser or its Affiliates (including
the Transferred Subsidiaries) to the Seller of all of the Purchaser's or its
Affiliates' (including the Transferred Subsidiaries') right, title and interest
in and to, and an equitable assumption by the Seller of all of the Purchaser's
or its Affiliates' (including the Transferred Subsidiaries') obligations and
liabilities under, such Retained Business Contract and Retained Business
Intellectual Property Rights and, in the case of Retained Business Contracts,
the Seller shall be deemed the Purchaser's or its Affiliates' (including the
Transferred Subsidiaries') agent (without compensation and at the Seller's cost
and expense) for purpose of completing, fulfilling and discharging all of the
Purchaser's or its Affiliates' (including the Transferred Subsidiaries')
obligations under any such Retained Business Contract. Subject to Section
5.5.1(a), the parties shall take all lawfully commercially reasonable steps and
actions to provide the Seller with the benefits of such Retained Business
Contracts and Retained Business Intellectual Property Rights, and, in the case
of Retained Business Contracts, to relieve the Purchaser or its Affiliates
(including the Transferred Subsidiaries) of the performance and other
obligations thereunder, including entry into subcontracts or guarantees for the
performance thereof.
(d) If the parties hereto shall be unable to make the equitable
assignment and assumption described in Section 5.5.1(b), or if such attempted
assignment and assumption would give rise to any right of termination, or would
otherwise adversely affect the rights or liabilities or obligations of the
Seller or the Purchaser under such Contract or Purchased Intellectual Property,
or would not assign or result in the assumption of all of the Seller's rights or
liabilities or obligations thereunder at the Closing, the Seller and the
Purchaser shall continue to cooperate with each other and, subject to Section
5.5.1(a), use commercially reasonable efforts to provide the Purchaser with all
such rights, subject to the Purchaser bearing all of such liabilities and
obligations. To the extent that any such consents and waivers are not obtained,
or until the impediments to such assignment or assumption are resolved, the
Seller and the Purchaser shall, subject to Section 5.5.1(a), use commercially
reasonable efforts to (i) provide to the Purchaser, at the request of the
Purchaser, the benefits, subject to the liability and obligations under any such
Contract or Purchased Intellectual Property, (ii) cooperate with each other in
any reasonable and lawful arrangement designed to provide such benefits, subject
to such liabilities and obligations
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to the Purchaser, and (iii) enforce, at the request of and for the account of
the Purchaser, any rights of the Seller arising from any such Contract or
Purchased Intellectual Property against any third Person, including the right to
elect to terminate in accordance with the terms thereof upon the advice of the
Purchaser.
(e) If the parties hereto shall be unable to make the equitable
assignment and assumption described in Section 5.5.1(c), or if such attempted
assignment and assumption would give rise to any right of termination, or would
otherwise adversely affect the rights or liabilities or obligations of the
Seller or the Purchaser or its Affiliates (including the Transferred
Subsidiaries) under such Retained Business Contract or Retained Business
Intellectual Property Rights, or would not assign or result in the assumption of
all of the rights or liabilities or obligations thereunder of the Purchaser or
its Affiliates (including the Transferred Subsidiaries) that would exist
immediately after the Closing, the Seller and the Purchasers shall continue to
cooperate with each other and, subject to Section 5.5.1(a), use commercially
reasonable efforts to provide the Seller with all such rights, subject to the
Seller bearing all of such liabilities and obligations. To the extent that any
such consents and waivers are not obtained, or until the impediments to such
assignment or assumption are resolved, the Seller and the Purchaser or its
Affiliates (including the Transferred Subsidiaries) shall, subject to Section
5.5.1(a), use commercially reasonable efforts to (i) provide to the Seller, at
the request of the Seller, the benefits, subject to the liability and
obligations under any such Retained Business Contract or Retained Business
Intellectual Property Rights, (ii) cooperate with each other in any reasonable
and lawful arrangement designed to provide such benefits, subject to such
liabilities and obligations to the Seller, and (iii) enforce, at the request of
and for the account of the Seller, any rights of the Purchaser or its Affiliates
(including the Transferred Subsidiaries) arising from any such Retained Business
Contract or Retained Business Intellectual Property Rights against any third
Person, including the right to elect to terminate in accordance with the terms
thereof upon the advice of the Seller.
(f) Any Contract, Purchased Intellectual Property, Retained Business
Contract or Retained Business Intellectual Property Rights to which this Section
5.5.1 applies and for which a Transfer Approval has not been received shall not
be transferred as of the Closing Date but shall be transferred as of such later
date as provided for in this Section 5.5.1.
5.5.2 Subject to the terms and conditions hereof (including, to the
extent applicable, Sections 2.4.2 and 5.6), from time to time, whether before,
at or following the Closing, each of the Purchasers and the Seller shall, and
shall cause their respective Affiliates to, make commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things reasonably necessary, proper or advisable, including as required by
applicable Laws, to assure fully to the Purchasers and their successors or
permitted assigns, all of Transferred Assets and Transferred Liabilities
intended to be conveyed to or assumed by the Purchasers (or their Designated
Affiliates) under this Agreement and the Ancillary Agreements and to assure
fully to the Seller and the Seller Entities, and their respective successors and
permitted assigns, the maintenance by the Seller of the Excluded Assets and the
assumption by the Purchasers of the Transferred Liabilities intended to be
assumed by the Purchasers under this Agreement and the Ancillary Agreements, and
to otherwise make effective as promptly as practicable the transactions
contemplated hereby and thereby (including (i) transferring back to
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the Seller or the applicable Seller Entity any Excluded Asset, Excluded
Liability or item relating to or included in the Retained Business,
respectively, which Excluded Asset, Excluded Liability or item relating to or
included in the Retained Business was transferred to the Purchaser (directly or
through the purchase of the Purchased Subsidiaries Shares) at the Closing and
(ii) transferring to the Purchaser (or its Designated Affiliate) any asset or
liability contemplated by this Agreement to be a Transferred Asset (or an asset
of a Transferred Subsidiary) or a Transferred Liability (or a Liability of a
Transferred Subsidiary), respectively, which asset or liability was not
transferred to the Purchaser (or its Designated Affiliate) or a Transferred
Subsidiary at the Closing); provided, however, that, except as provided in
Section 5.9.1(b) (with respect to Transfer Taxes relating to the
Reorganization), Section 5.9.13 and Section 5.21 (relating to the
Reorganization) with respect to payments to Governmental Authorities which shall
be made and payments to third parties (or reimbursements of third parties'
expenses) which are required to be made and which shall be made pursuant to the
terms of the Seller's Contracts with such third parties for, or in respect of,
consents, waivers or approvals required to effect any step of the
Reorganization, in no event shall the Seller or the Purchasers or their
respective Affiliates be required to make payments to third parties in order to
obtain their consent, waiver or approval, other than as may be required to
implement any step of the Reorganization. Notwithstanding the foregoing, in the
event that a consent, waiver or approval of a third party is required to effect
any step of the Reorganization (other than a consent, waiver or approval of a
third party described in the exception in the proviso of the preceding
sentence), the Seller shall use its reasonable best efforts to obtain such
consent, waiver or approval. Any existing cash, indebtedness and intercompany
balances after the Closing Date shall be settled in accordance with and to the
extent contemplated by Section 5.14.2 of the Seller's Disclosure Schedule.
5.5.3 The Seller shall, and shall cause its Affiliates to, make
commercially reasonable efforts to cause the Water Permits to be transferred to
the Purchaser or, if any such Water Permits are not transferable, the Seller
shall assist the Purchaser in obtaining new Permits so that it may operate each
portion of the Water Business as of the Closing Date in compliance with
applicable Laws, including Environmental Laws.
5.5.4 In furtherance and without limitation to the foregoing, each of
the Purchasers and the Seller shall, and shall cause their respective Affiliates
to, make commercially reasonable efforts to make or cause to be made all filings
and applications required of each of them or such Affiliates under the
Environmental Laws or the Environmental Permits as promptly as practicable, and
in any event, within 20 Business Days after the date of this Agreement.
Section 5.6 Certain Covenants.
5.6.1 Each of the Purchasers and the Seller shall (a) make or cause to
be made all filings required of each of them or any of their respective
Subsidiaries or Affiliates under the HSR Act or other Antitrust Laws with
respect to the transactions contemplated hereby as promptly as practicable and,
in any event, within 10 Business Days after the date of this Agreement in the
case of all filings required under the HSR Act, and within four weeks in the
case of all other filings required by other Antitrust Laws, except as set forth
in Exhibit X, (b) comply at the earliest practicable date with any request under
the HSR Act or other Antitrust Laws for additional information, documents, or
other materials received by each of them or any of their respective Subsidiaries
from the FTC, the Antitrust Division or any other Governmental
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Authority in respect of such filings or such transactions, and (c) cooperate
with each other in connection with any such filing (including, to the extent
permitted by applicable Law, providing copies of all such documents to the
non-filing parties prior to filing and considering all reasonable additions,
deletions or changes suggested in connection therewith) and in connection with
resolving any investigation or other inquiry of any of the FTC, the Antitrust
Division or other Governmental Authorities under any Antitrust Laws with respect
to any such filing or any such transaction. Each such party shall use reasonable
best efforts to furnish to each other all information required for any
application or other filing to be made pursuant to any applicable Law in
connection with the transactions contemplated by this Agreement. Each such party
shall promptly inform the other parties hereto of any oral communication with,
and provide copies of written communications with, any Governmental Authority
regarding any such filings or any such transaction. No party hereto shall
independently participate in any formal meeting with any Governmental Authority
in respect of any such filings, investigation, or other inquiry without giving
the other parties hereto prior notice of the meeting and, to the extent
permitted by such Governmental Authority, the opportunity to attend and/or
participate. Subject to applicable Law, the parties hereto will consult and
cooperate with one another in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto relating to proceedings under the
HSR Act or other Antitrust Laws. The Seller and the Purchasers may, as each
deems advisable and necessary, reasonably designate any competitively sensitive
material provided to the other under this Section 5.6 as "outside counsel only."
Such materials and the information contained therein shall be given only to the
outside legal counsel of the recipient and will not be disclosed by such outside
counsel to employees, officers, or directors of the recipient, unless express
written permission is obtained in advance from the source of the materials (the
Seller or the Purchasers, as the case may be).
5.6.2 Each of the Purchasers and the Seller shall use reasonable best
efforts to resolve such objections, if any, as may be asserted by any
Governmental Authority with respect to the transactions contemplated by this
Agreement under the HSR Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the Federal Trade Commission Act, as amended, and any other United
States federal or state or foreign statutes, rules, regulations, orders,
decrees, administrative or judicial doctrines or other Laws that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, the "Antitrust Laws"). In
connection therewith, if any Action is instituted (or threatened to be
instituted) challenging any transaction contemplated by this Agreement as a
violation of any Antitrust Law, each of the Purchasers and the Seller shall
cooperate and use reasonable best efforts to contest and resist any such Action,
and to have vacated, lifted, reversed, or overturned any decree, judgment,
injunction or other order whether temporary, preliminary or permanent, that is
in effect and that prohibits, prevents, or restricts consummation of the
transactions contemplated by this Agreement, including by pursuing all available
avenues of administrative and judicial appeal unless, by mutual agreement, the
Purchasers and the Seller decide that litigation is not in their respective best
interests. Each of the Purchasers and the Seller shall use reasonable best
efforts to take such action as may be required to cause the expiration of the
notice periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this Agreement.
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5.6.3 Notwithstanding anything to the contrary in this Agreement, (a)
neither the Purchasers nor the Seller in using their reasonable best efforts as
specified in Sections 5.6.1 and 5.6.2 shall be required in connection with the
execution and performance of this Agreement to hold separate (including by trust
or otherwise) or divest any of their respective businesses or assets owned by
either the Purchasers or the Seller (or their respective Affiliates) as of the
date of this Agreement or agree to any condition, restraint, or limitation
relating to their ability to freely own or operate all or a portion of the
respective businesses or assets owned by either the Purchasers or the Seller as
of the date of this Agreement, and (b) in connection with seeking clearance or
approval from any Governmental Authority, neither the Seller Entities (with
respect to any portion of the Water Business), nor the Transferred Subsidiaries
shall, without the Parent Purchaser's prior written consent, commit to any
divestiture transaction, or commit to alter their businesses or commercial
practices in any way, or otherwise take or commit to take any action that limits
the Purchaser's freedom of action with respect to, or the Purchaser's ability to
retain any of the businesses, product lines or assets of, the Water Business.
Section 5.7 Notification by the Parties. Each party hereto shall use its
commercially reasonable efforts to promptly inform the other parties hereto
in writing if, prior to the consummation of the Closing, it obtains knowledge
that any of the representations and warranties made by such party in this
Agreement ceases to be accurate and complete in any material respect (except for
any representation and warranty that is qualified hereunder as to materiality or
Material Adverse Effect, as to which such notification shall be given if the
notifying party obtains knowledge that such representation and warranty ceases
to be accurate and complete in any respect). Any such notification shall not be
deemed to have cured any breach of any representation, warranty, covenant or
agreement made in this Agreement for any purposes of this Agreement.
Section 5.8 Employees and Employee Benefits.
5.8.1 Employee Lists; Works Councils; Employment of Business
Employees. In addition to the lists described below and in Section 3.15.1, the
Seller shall provide the Purchasers, within 10 business days of the date hereof,
with revised versions, accurate as of the date hereof or such later date as may
be indicated thereon, of the Divisional Employee List, the Allocated Employee
List, the Water Subsidiary Employee List and the Water Asset Employee List. Such
updated lists shall indicate (a) for listed individual who is on approved leave
of absence as of the date indicated on such list, the reason for or nature of
such individual's absence and his or her anticipated date of return to active
employment, if any, and (b) the employing entity for each Divisional Employee
and each Water Asset Employee. The Seller shall promptly notify the Parent
Purchaser of the occurrence of any event after the date hereof and before the
Closing, which under any applicable Laws of any jurisdiction outside of the
United States of America, requires notification and/or consultation with
employee representatives, affected parties or government agencies, a "social
plan," or similar employer action as a result of, or in connection with,
employee terminations or business restructurings affecting Business Employees.
In addition, from the date hereof through the Closing, the Seller shall provide
the Purchasers with such information and documentation as they may reasonably
request relating to any agreements with or obligations to any works councils
with respect to Business Employees or any employee termination agreement with
respect to employees listed on Schedule 3.17.4.
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5.8.1.1. Absent Employees. On or prior to the Closing Date,
the Seller shall, or shall cause one or more of its Affiliates (excluding the
Transferred Subsidiaries) to, (x) hire those Absent Employees who are Water
Subsidiaries Employees employed in the United States and (y) retain in their
employment Absent Employees who are Divisional Employees, Water Asset Employees
and Allocated Employees employed in the United States (the "Excluded
Employees"). The Purchasers or one of their Affiliates shall offer employment to
any Excluded Employee on the terms and conditions required by this Agreement as
if he or she were not an Absent Employee, subject to the following conditions:
(i) if such Excluded Employee is on medical or disability leave, the Excluded
Employee is released by his or her physician to return to active employment and
(ii) such Excluded Employee actually reports for active employment with any of
the Purchasers and their Affiliates (including the Transferred Subsidiaries)
immediately upon such medical release or expiration of the applicable approved
leave; provided, however, that the Purchasers shall not be required to offer
employment under this provision after the reemployment period provided in the
applicable policies of the Seller or after the expiration of any applicable
domestic or foreign federal or state law period, if later. The date on which an
Excluded Employee is required to become an employee of the Purchasers or one of
their Affiliates is hereinafter referred to as his or her "Hire Date." The
Closing Date shall be the "Hire Date" for all other Transferred Employees.
5.8.1.2 Water Subsidiary Employees. The Seller shall provide
the Purchasers with the Water Subsidiary Employee List on Section 3.15.1 of the
Seller's Disclosure Schedule as of the date hereof, and the Purchasers shall
have fifteen days thereafter to examine and review such list and to consult with
the Seller and the Transferred Subsidiaries, which shall make themselves
available for such consultation, to confirm the accuracy and completeness of
such list. The Seller shall have an ongoing duty under this Agreement to
maintain the accuracy of such list through the Closing Date, and shall, as soon
as practicable, inform the Purchasers of any corrective changes needed thereto.
Water Subsidiary Employees who are not Excluded Employees shall initially
continue to be employed by the Transferred Subsidiaries immediately after the
Closing Date and the terms of their employment shall thereafter be governed by
the policies of the Purchasers and their Affiliates (including the Transferred
Subsidiaries), the terms of their Employment Agreements, if any, and applicable
Law. Nothing in this Section 5.8.1.2 shall be construed to guarantee any
continuing right of employment to any such Water Subsidiary Employee.
5.8.1.3 Water Asset Employees. The Seller shall provide the
Purchasers with the Water Asset Employee List as of the date hereof, and the
Purchasers shall have fifteen days thereafter to examine and review such list
and to consult with the Seller and the Transferred Subsidiaries, which shall
make themselves available for such consultation, to confirm the accuracy and
completeness of such list. The Seller shall have an ongoing duty under this
Agreement to maintain the accuracy of such list through the Closing Date, and
shall, as soon as practicable, inform the Purchasers of any corrective changes
needed thereto. The Purchasers shall make, or shall cause one of their
Affiliates to make, offers of employment, effective as of the Closing Date, to
all Water Asset Employees who are not Excluded Employees. Nothing in this
Section 5.8.1.3 shall be construed to guarantee any continuing right of
employment to any such Water Asset Employee.
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5.8.1.4 Divisional Employees. The Seller shall provide the
Purchasers with the Divisional Employee List on Section 3.15.1 of the Seller's
Disclosure Schedule as of the date hereof, and the Purchasers shall have fifteen
days after the date hereof to consult with the Seller and the Transferred
Subsidiaries, which shall make themselves available for such consultation,
regarding the Divisional Employee List, to confirm the accuracy and completeness
of such list. The Purchasers shall make, or shall cause one of their Affiliates
to make, offers of employment, effective as of the Closing Date, to all
Divisional Employees who are not Excluded Employees, other than the Specified
Divisional Employees (as defined in the next sentence), if any. The "Specified
Divisional Employees" shall mean those Divisional Employees agreed to by the
Purchasers and the Seller, not in excess of 50 such Divisional Employees,
determined as follows:
(a) Not later than five days after the end of the consultation
period contemplated above, and in no event less than fifteen days before the
Closing Date, the Purchasers shall provide a written notice to the Seller
setting forth the names of not more than 75 proposed Specified Divisional
Employees (the "Proposed List"). If the Purchasers do not deliver the Proposed
List within such time period, there shall be no Specified Divisional Employees.
(b) The Seller may provide the Purchasers, within ten days
after receiving the Proposed List, with a notice setting forth the names of
any Divisional Employees named on the Proposed List whose severance from
employment is reasonably likely to result in a material Liability or an
additional notification period or obligation to negotiate a social plan, in each
case on the part of the Seller or any of its Affiliates (excluding the
Transferred Subsidiaries) relating to the WARN Act, a social plan related to a
restructuring, a collective dismissal, or similar issues under applicable Law,
in each case, in connection with reorganizations or restructurings currently in
effect or planned as of the date of such determination. If the Seller provides
such a notice within such time period, the Seller and the Purchasers shall
consult and cooperate with one another for the following three days, or such
shorter period as they may agree, seeking to revise the Proposed List so as to
reduce the number of Divisional Employees to not more than 50. If, at the
conclusion of such period of consultation, the Seller reasonably believes that
the severance from employment of any Divisional Employee(s) whom the Purchasers
have not agreed to remove from the Proposed List would result in such a material
Liability or such an additional notification period or obligation to negotiate a
social plan, the Seller shall thereupon notify the Purchasers of such fact and
of the name(s) of such Divisional Employee(s), and such Divisional Employee(s)
shall be removed from the Proposed List and shall not be considered Specified
Divisional Employees.
(c) If, at the conclusion of any period of consultation
required by Section 5.8.1.4(b) above and the removal of any Divisional Employees
as required by the last sentence thereof, the Proposed List still lists more
than 50 Divisional Employees, or if no such period of consultation is required
because the Seller does not deliver the notice provided for therein, the
Purchasers shall select and remove from the Proposed List such number of
Divisional Employees as may be necessary to reduce the number thereof to not
more than 50.
After completion of all of the foregoing steps, the Proposed List shall be
considered final and the Divisional Employees who remain on the final list shall
be the Specified Divisional Employees.
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5.8.1.5 Allocated Employees. The Seller shall provide the
Purchasers with the Allocated Employee List on Section 3.15.1 of the Seller's
Disclosure Schedule as of the date hereof, and the Purchasers shall have fifteen
days thereafter to consult with the Seller and the Transferred Subsidiaries,
which shall make themselves available for such consultation, to confirm the
accuracy and completeness of such list. After the expiration of such fifteen-day
period, the Purchasers shall determine to which Allocated Employees they shall
extend employment offers and shall provide such list to the Seller in writing.
Subject to approval of the Seller, which shall not be unreasonably withheld, the
Purchasers or their Affiliates shall thereafter make offers of employment,
effective as of the Closing Date, to such selected Allocated Employees. As soon
as practicable after receiving such list, the Seller shall inform the Purchasers
in writing of the employing entity for each Allocated Employee to whom such
offers are made. Except as specifically provided elsewhere in this Section 5.8,
the Seller and its Affiliates (excluding the Transferred Subsidiaries) shall
retain all Liabilities with respect to Allocated Employees who reject employment
offers made to them by the Purchasers or their Affiliates and with respect to
those Allocated Employees to whom no employment offer is made by the Purchasers
or their Affiliates pursuant to this Section 5.8.1.5.
5.8.1.6 Severance and Similar Liabilities. Without limiting
the generality of the provisions of this Section 5.8, the Purchasers shall use
all reasonable efforts and the Seller shall consult and cooperate with the
Purchasers, so that the terms and conditions of all offers of employment made by
the Purchasers and its Affiliates to Water Asset Employees, Divisional Employees
and Allocated Employees pursuant to this Section 5.8.1, and the terms and
conditions of the continued employment of the Water Subsidiary Employees after
their respective Hire Dates, shall satisfy all requirements of applicable Law
and shall be sufficient to prevent (to the extent possible under applicable Law)
giving rise to a right, on the part of any Business Employee, to receive any
Severance Benefits or enhanced Severance Benefits arising out of or as a
consequence of the consummation of the transactions contemplated hereby
("Transactional Severance Benefits"). The Purchasers shall be solely responsible
for: (a) any Liabilities relating to Transactional Severance Benefits to which
any Business Employee (including a Divisional Employee or Water Asset Employee
who is considered a Former Business Employee) becomes entitled as a result of a
failure by the Purchasers to comply with their obligations under this Section
5.8 or a failure of such terms and conditions to prevent the right to
Transactional Severance Benefits from arising; and (b) any Liabilities relating
to any Specified Divisional Employee arising as a result of the Purchasers' not
making an offer of employment to such Specified Divisional Employee, including,
Liabilities relating to Severance Benefits and other Liabilities arising under
applicable Law as a result of the selection by the Purchasers of the Specified
Divisional Employees. The Seller and its Affiliates (excluding the Transferred
Subsidiaries) and the Purchaser and their Affiliates (including the Transferred
Subsidiaries) shall each be responsible for one-half of all Liabilities relating
to any other Severance Benefits, if any, to which any Transferred Employee who
accepts an offer of employment from the Purchasers or its Affiliates or who is
an employee of a Transferred Subsidiary immediately prior to the Closing becomes
entitled to receive under applicable Law as a result of transactions
contemplated hereby. The Seller and its Affiliates (excluding the Transferred
Subsidiaries) shall be solely responsible for any and all Liabilities relating
to Severance Benefits to which any Divisional Employee or Water Asset Employee
employed in the United States becomes entitled due to the failure to accept an
offer of employment by the Purchasers, (a) in the case of an "exempt"
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employee under the FLSA, regardless of the location of such employment, and (b)
in the case of a "non-exempt" employee under the FLSA, at the same location of
employment, in either case notwithstanding the Purchasers' compliance with this
Section 5.8. Except as specified in Section 5.8.12, the Seller and its
Affiliates (excluding the Transferred Subsidiaries) shall be solely responsible
for any and all Liabilities relating to Severance Benefits to which any Business
Employee becomes entitled solely as a result of actions by the Seller or its
Affiliates taken before the applicable Hire Date. The Seller shall use
commercially reasonable efforts, but shall not be required, to retain the
Specified Divisional Employees in its employ or that of its Affiliates
(excluding the Transferred Subsidiaries).
5.8.1.7 Deferred Foreign Employee Transfers. Notwithstanding
the foregoing provisions of this Section 5.8.1, in the event that as a result of
applicable Law or otherwise, the Seller and the Purchasers mutually determine
that it is necessary or desirable to defer for a period after the Closing Date
(the "Deferral Period") the transfer to the employ of the Purchasers and their
Affiliates of any individuals or group of individuals employed outside of the
United States of America who would otherwise become Transferred Employees as of
the Closing Date (the "Deferred Transfer Employees"), the Seller and the
Purchasers shall use commercially reasonable efforts to deal with such matters,
including, entering into a mutually agreeable transition services agreement or
employee leasing arrangement, so as to provide for the continued employment of
the Deferred Transfer Employees by the Seller and its Affiliates until such
transfer can be completed, during which period the Deferred Transfer Employees
shall be made available to the Purchasers for work in the Water Business and the
Purchasers shall fully reimburse the Seller and its Affiliates for all
compensation, benefit costs and expenses, and be solely responsible for, all
Liabilities, to or relating the Deferred Transfer Employees or arising out of
the employment and/or services of the Deferred Transfer Employees from and after
the Closing, to the same extent as if the Deferred Transfer Employees'
employment had transferred to the Purchasers and their Affiliates as of the
Closing Date. No Deferral Period hereunder shall exceed six months following the
Closing Date. During any Deferral Period, the Seller shall obtain the written
consent of the Purchasers to any change in the compensation package offered to
any such Deferred Transfer Employees. Notwithstanding the foregoing, if it is
not commercially feasible for the Seller and its Affiliates to continue the
employment of any Deferred Transfer Employees during a Deferral Period, the
parties shall make mutually satisfactorily alternative arrangements.
5.8.2 Compensation and Benefits After the Closing. Subject to
the approval of the GE Pension Board, which approval the Purchasers shall use
their best efforts to obtain with full endorsement: (a) the Purchasers shall, or
shall cause one of their respective Affiliates to, initially provide to
Transferred Employees, a total compensation package of salary, wages and
benefits (on an aggregate basis) that is comparable, in the aggregate, to the
compensation package that they had immediately prior to the applicable Hire
Date, and which includes the Purchasers' "Tier 1" benefits package as of the
applicable Hire Date, and (b) until the first anniversary of the Closing Date,
the Purchasers and their Affiliates shall, with respect to such compensation
package in the aggregate, treat such employees generally in the same manner as
other similarly situated employees of the Purchasers and their Affiliates.
Nothing in this Section 5.8.2 shall be construed to require the Purchasers to
provide any particular benefit or combination of benefits and compensation to
any Transferred Employee on an ongoing basis.
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5.8.3 Liabilities under U.S. Benefit Plans and Employment Agreements.
The Seller and the Purchasers shall take all steps necessary or appropriate so
that, effective not later than immediately following the Closing, and except as
specifically provided elsewhere in this Section 5.8: (a) each of the Seller
Benefit Plans that is a U.S. Benefit Plan and the Xxxx Laboratories Inc. Pension
Benefit Restoration Plan (collectively, the "Retained U.S. Plans") is sponsored
solely by the Seller and/or any of its Affiliates (excluding the Transferred
Subsidiaries), and the Purchasers and their respective Affiliates (including the
Transferred Subsidiaries) shall have no further obligations or Liabilities
thereunder; (b) none of the Transferred Subsidiaries is a fiduciary with respect
to any Retained U.S. Plan; (c) all assets set aside to fund any of the Retained
U.S. Plans (including insurance policies and grantor trusts) are retained by the
Seller and/or its Affiliates (excluding the Transferred Subsidiaries); (d) each
Assumed Water Business Benefit Plan that is a U.S. Benefit Plan is sponsored
solely by one or more of the Purchasers and/or any of their respective
Affiliates (including the Transferred Subsidiaries), and the Seller and its
Affiliates (excluding the Transferred Subsidiaries) shall have no further
obligations or Liabilities thereunder; and (e) all obligations of the Seller and
its Affiliates with respect to benefits of Transferred Employees and Former
Business Employees reflected in their account balances as of the applicable Hire
Date (for Transferred Employees) or as of the Closing Date (for Former Business
Employees) under the Hercules Deferred Compensation Plan have been assumed by
one or more of the Purchasers and/or any of their respective Affiliates
(including the Transferred Subsidiaries) and the Seller and its Affiliates
(excluding the Transferred Subsidiaries) have no further obligation or Liability
with respect thereto. To the extent that the consent of any Transferred Employee
or of any other third party to any of the foregoing is required, the Seller and
the Purchasers shall use commercially reasonable efforts to obtain such consent.
5.8.4 U.S. Service Recognition. Under the employee benefit plans of
the Purchasers and their respective Affiliates providing benefits primarily to
persons employed in the United States of America in which any Transferred
Employees participate after the Closing (the "New Plans"), each Transferred
Employee shall be credited with his or her years of service with the Seller and
its Affiliates and any predecessor employers before his or her Hire Date, to the
same extent as such Transferred Employee was entitled, before such Hire Date, to
credit for such service under any similar Seller Benefit Plans for all purposes
except pension benefit accruals, and except to the extent such credit would
result in a duplication of benefits for such credited period of service. In
addition, and without limiting the generality of the foregoing: (a) each
Transferred Employee employed in the United States of America shall be
immediately eligible to participate, without any waiting time, in any and all
New Plans to the extent coverage under such New Plan replaces coverage under a
comparable Benefit Plan in which such individual previously participated (such
plans, collectively, the "Old Plans"); and (b) for purposes of each New Plan
providing medical, dental, pharmaceutical and/or vision benefits to any such
Transferred Employee, the Purchasers shall cause (i) all pre-existing condition
exclusions and actively-at-work requirements of such New Plan to be waived for
such individual and his or her covered dependents, to the extent waivable under
the comparable Old Plan, and (ii) any eligible expenses incurred by such
individual and his or her covered dependents during the portion of the plan year
of the Old Plan ending on the date such individual's participation in the
corresponding New Plan begins to be taken into account under such New Plan for
purposes of satisfying all deductible, coinsurance and maximum out-of-pocket
requirements applicable to such individual
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and his or her covered dependents for the applicable plan year as if such
amounts had been paid in accordance with such New Plan.
5.8.5 [Reserved].
5.8.6 Savings Plan.
5.8.6.1 The Seller shall take, or cause to be taken, all steps
necessary or appropriate with respect to the Seller Savings Plan so that,
effective no later than the Closing Date: (a) the Seller Savings Plan is
sponsored solely by, or is merged into another plan sponsored solely by, one or
more of the Seller and/or any of its Affiliates (excluding the Transferred
Subsidiaries); and (b) none of the Transferred Subsidiaries is a fiduciary with
respect to the Seller Savings Plan nor an obligor or a guarantor of any
indebtedness of the Seller Savings Plan.
5.8.6.2 As of the Closing Date, the Purchasers shall designate
one or more existing defined contribution savings plans sponsored by any of the
Purchasers and their respective Affiliates (including any Transferred
Subsidiary) that are qualified under Section 401(a) of the Code (such plans,
collectively and separately, the "Purchaser Savings Plan") to provide benefits
to Transferred Employees and to accept the direct cash rollovers described in
the next sentence, and the Purchasers shall provide the Seller with such
assurances as may reasonably be required by the Seller that each Purchaser
Savings Plan is so qualified. The Seller shall cause the Seller Savings Plan to
be amended to the extent necessary to provide that (a) the account balances of
all Transferred Employees shall be fully vested as of the applicable Hire Date,
(b) such account balances shall be eligible for distribution to the Transferred
Employee participants at their election in connection with their becoming
Transferred Employees, and (c) such account balances may be rolled over in cash
to a Purchaser Savings Plan in a direct or indirect rollover. The Seller and the
Purchasers shall cooperate with one another and take all steps necessary or
appropriate (which steps shall include an amendment of the Seller Savings Plan
by the Seller) so that any Transferred Employee whose account balance under the
Seller Savings Plan is not distributed and who has any outstanding participant
loans thereunder may elect, pursuant to appropriate authorization forms
completed by the Transferred Employee, to continue to repay such loans after his
or her Hire Date, for so long as such Transferred Employee remains on the
General Electric Company corporate payroll, by having the required payments with
respect to each such loan withheld from such Transferred Employee's paychecks on
each payroll period and remitted to the trustee of the trust funding the Seller
Savings Plan.
5.8.6.3 The Purchasers and the Seller shall cooperate in (a)
making all filings required under the Code or ERISA and any applicable
securities Laws, (b) implementing all appropriate communications with
participants, (c) transferring appropriate records, and (d) taking all such
other actions as may be necessary and appropriate to implement the provisions of
this Section 5.8.6 in a timely manner.
5.8.7 Pension Plan. As soon as practicable following the Closing Date,
the Purchasers shall designate an existing defined benefit pension plan of the
Purchasers or one of its Affiliates that is tax qualified, to provide future
benefits to Transferred Employees. The Seller shall amend the Pension Plan of
Hercules Incorporated to credit each Transferred Employee who
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is, immediately before the Closing Date, a participant in such plan with vesting
service and additional age based upon his or her service with the Purchasers and
their Affiliates (including the Transferred Subsidiaries) during the period from
the Closing through the fourth anniversary of the Closing. The Purchasers shall
provide the Seller promptly, and from time to time, with such information as it
may reasonably request to enable it to provide the service credit required by
the foregoing amendment, including the hours of service of such Transferred
Employees and notice of the termination of employment of any such Transferred
Employees. The Purchasers shall make four consecutive annual payments to the
Seller of $1.2 million each, on or prior to March 31st of each calendar year
beginning with March 31, 2003, in consideration of such amendment to the
Seller's Plan. The Seller shall continue, or shall cause one of its Affiliates
(excluding the Transferred Subsidiaries) or one of their respective successors
to continue, the Pension Plan of Hercules Incorporated, as so amended, in effect
to the extent necessary to allow each such Transferred Employee who continues to
be employed by the Purchasers and/or their Affiliates (including the Transferred
Subsidiaries) through the fourth anniversary of the Closing Date to accrue four
additional years of vesting service under such amendment. Notwithstanding the
foregoing: (i) the Seller may terminate the Pension Plan of Hercules
Incorporated, provided that it immediately credits all such Transferred
Employees with the additional years of service and age that they would have
received through the fourth anniversary of the Closing Date, assuming they
continued to work for the Purchasers and their Affiliates during that period,
and in such event, the Purchasers shall immediately pay to the Seller the
remainder of the foregoing four payments; and (ii) if the Seller determines that
the amendment required by this Section 5.8.7 would jeopardize the status of the
Pension Plan of Hercules Incorporated as tax-qualified under Section 401(a) of
the Code, then the Seller and the Purchasers shall not be obligated to comply
with the provisions of this Section 5.8.7, but they shall use commercially
reasonable efforts to enter into a mutually agreeable alternative agreement so
as to accomplish, as nearly as possible, the intent hereof without jeopardizing
the tax qualification of such plan.
5.8.8 Welfare Benefits.
5.8.8.1 The Seller and its Affiliates shall be solely
responsible for (a) claims for the type of benefits described in Section 3(1) of
ERISA (whether or not covered by ERISA) under Seller Benefit Plans that are
either (x) Foreign Benefit Plans for which there are neither any book reserves
nor any Funded Assets or (y) U.S. Benefit Plans (collectively, "Welfare
Benefits") that are incurred by or with respect to any Transferred Employee
before the applicable Hire Date and any Former Business Employee at any time;
(b) claims relating to COBRA Coverage under Seller Benefit Plans attributable to
"qualifying events" with respect to any (i) Transferred Employee and his or her
beneficiaries and dependents that occur on or before the applicable Hire Date
and (ii) Former Business Employee and his or her beneficiary or dependents that
occur any time; and; (c) claims for workers compensation that are incurred by or
with respect to any Transferred Employee before the applicable Hire Date. The
Purchasers and their respective Affiliates (including the Transferred
Subsidiaries) shall be solely responsible for (i) all other claims for Welfare
Benefits with respect to Transferred Employees (including claims relating to
COBRA Coverage attributable to "qualifying events" with respect to any
Transferred Employee and his or her beneficiaries and dependents that occur
after the applicable Hire Date), and (ii) claims for workers compensation that
are incurred by or with respect to any Transferred Employee on or after the
applicable Hire Date. For purposes of the foregoing: (A) a
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medical/dental claim shall be considered incurred when the services are rendered
or the supplies are provided, and not when the condition arose; provided that
claims relating to a hospital confinement that begins before the applicable Hire
Date but continues thereafter shall be treated as incurred on or before the
applicable Hire Date; (B) a disability claim shall be considered incurred on or
before the applicable Hire Date if the injury or condition giving rise to the
claim occurs on or before the applicable Hire Date and (C) a claim for workers
compensation shall be considered to be incurred before the applicable Hire Date
only if (I) it arises solely out of an injury or condition that occurred before
the applicable Hire Date and (II) it does not involve an aggravation of an
injury or second injury that occurs on or after the applicable Hire Date.
5.8.8.2 The Seller shall transfer the accounts and experience
of Transferred Employees under Seller Benefit Plans that are health care or
dependent care flexible spending plans to health care or dependent care flexible
spending plans maintained by the Purchasers and/or any of their respective
Affiliates (including the Transferred Subsidiaries), which need not be similar
to the applicable Seller Benefit Plans, to the extent permitted by applicable
plan terms and applicable Law.
5.8.9 Certain Compensation. Except to the extent otherwise required by
applicable Law, the Purchasers and their respective Affiliates (including the
Transferred Subsidiaries) shall assume or retain, as applicable, all Liabilities
and obligations of the Seller and its Affiliates to Transferred Employees for
accrued but unused vacation entitlements through the applicable Hire Date. In
addition, the Purchasers shall pay, or shall cause one of their respective
Affiliates (including the Transferred Subsidiaries) to pay, to each Transferred
Employee who was eligible to earn any incentive pay, bonus or similar
compensation for any period beginning before and ending on or after such
Transferred Employee's Hire Date, such compensation in accordance with the terms
of the applicable Benefit Plan, with such adjustments as may reasonably be
necessary or appropriate to reflect the consummation of the transactions
contemplated hereby without enlargement or diminishment of the Transferred
Employee's incentive opportunity.
5.8.10 Foreign Employees, Compensation and Benefits.
5.8.10.1 Liabilities in General. Except as specifically
provided otherwise in this Section 5.8, (a) the Purchasers and their respective
Affiliates (including the Transferred Subsidiaries) shall assume or retain, as
applicable, all Liabilities relating to (i) compensation of Transferred
Employees employed outside the United States of America (the "Foreign
Transferred Employees") and Foreign Former Employees or (ii) the Water Business
Benefit Plans that are Foreign Benefit Plans (the "Foreign Water Business
Benefit Plans"), in either case whether accrued before, on or after the Closing
Date, and (b) the Seller and its Affiliates (excluding the Transferred
Subsidiaries) shall assume or retain, as applicable, all Liabilities relating to
(I) compensation of their employees and former employees who are or were
employed outside the United States of America, other than the Foreign
Transferred Employees and Foreign Former Business Employees, or (II) the Seller
Benefit Plans that are Foreign Benefit Plans (the "Foreign Seller Benefit
Plans"), in either case whether accrued before, on or after the Closing Date.
The Seller and the Purchasers shall take all steps necessary or appropriate so
that, effective not later than immediately following the Closing, and except as
specifically provided in Section 5.8.10.2, the Purchasers and their respective
Affiliates (including the Transferred Subsidiaries)
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have assumed all obligations and Liabilities of the Seller and its Affiliates
under Employment Agreements relating to Foreign Transferred Employees and
Foreign Former Employees and all obligations and Liabilities of the Seller under
each of the Collective Bargaining Agreements, and the Seller and its Affiliates
have no further obligation or liability with respect to any such obligations and
Liabilities.
5.8.10.2. Transfer of Undertaking. The Seller and the
Purchasers acknowledge and agree that certain transactions contemplated hereby
constitute the "transfer of an undertaking" solely in those jurisdictions that
are subject to the European Community's Directive 77/187/EEC and/or any similar
provisions of other applicable Law within or outside the European Community
(collectively, the "Transfer Provisions"). Notwithstanding any other provision
of this Section 5.8, the Seller and the Purchasers shall comply in all respects
with all Transfer Provisions in connection with the transactions contemplated
hereby and to the extent that such Transfer Provisions apply thereto. Without
limiting the generality of the foregoing, to the extent that the Transfer
Provisions do not permit the retention by the Seller of Liabilities for
compensation or benefits that this Section 5.8 would otherwise make the
responsibility of the Seller, such liabilities and obligations shall instead be
assumed by the Purchasers, but the Seller shall indemnify the Purchasers with
respect thereto under Section 8.2.1 as if no such assumption had been required.
5.8.10.3 Foreign Service Recognition. For all purposes under
the employee benefit plans of the Purchasers and their respective Affiliates
providing benefits primarily to Transferred Employees employed outside the
United States of America after the Closing, each such Transferred Employee shall
be credited with his or her years of service with the Seller and its Affiliates
and any predecessor employers before the Closing as recognized by the applicable
similar Seller Benefit Plans and further to the extent and in the manner
provided for under applicable Law and local custom, except to the extent that
such credit would result in a duplication of benefits for such credited period
of service.
5.8.10.4 Transfers of Plan Assets and Liabilities. Section
5.8.10 of the Seller's Disclosure Schedule sets forth specific agreements
regarding the treatment of specific Foreign Benefit Plans. The provisions of
this Section 5.8.10.4 shall apply with respect to Foreign Benefit Plans except
to the extent inconsistent with applicable Law or Section 5.8.10 of the Seller's
Disclosure Schedule.
5.8.10.4.1 Plans Sponsored by the Transferred Subsidiaries.
Sponsorship of each Foreign Benefit Plan that is sponsored solely by the
Transferred Subsidiaries ("Transferred Subsidiary Foreign Plans") shall be
retained by such Transferred Subsidiaries. If any Transferred Subsidiary Foreign
Plan provides benefits only to Transferred Employees and Former Business
Employees, then from and after the Closing Date, the Seller and its Affiliates
(excluding the Transferred Subsidiaries) shall have no Liabilities in respect
thereof. The liabilities, book reserves and Funded Assets, if any, of each
Transferred Subsidiary Foreign Plan that provides benefits both to Transferred
Employees and/or Former Business Employees, on the one hand, and to other
employees or former employees of the Seller and its Affiliates, on the other
hand, shall be apportioned between the Seller and its Affiliates (excluding the
Transferred Subsidiaries) and the Purchasers and their Affiliates (including the
Transferred Subsidiaries) as follows. Benefit liabilities for Transferred
Employees and Foreign Former Business Employees
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under each such Transferred Subsidiary Foreign Plan shall be retained by such
Transferred Subsidiary Foreign Plan or assumed by another plan sponsored by the
Purchasers or their Affiliates (including the Transferred Subsidiaries) (each, a
"Purchaser Plan"), and all other benefit liabilities thereunder shall be assumed
by a plan sponsored by the Seller or its Affiliates (excluding the Transferred
Subsidiaries) (a "Seller Plan"), provided that such benefit liabilities shall be
allocated in a different manner to the extent required by applicable Law. If
such Transferred Subsidiary Foreign Plan has any book reserves or Funded Assets,
such book reserves or Funded Assets shall be divided between the applicable
Purchaser Plan and the applicable Seller Plan based upon the manner in which
liabilities are allocated pursuant to the preceding sentence, in accordance with
Section 5.8.10.4.3 below.
5.8.10.4.2 Plans Not Sponsored by the Transferred Subsidiaries.
Sponsorship of each Foreign Benefit Plan that is not sponsored solely by the
Transferred Subsidiaries ("Seller Foreign Plans") shall be retained by the
Seller and such Affiliates. The liabilities, book reserves and Funded Assets, if
any, relating to each Seller Foreign Plan shall be apportioned between the
Seller and its Affiliates (excluding the Transferred Subsidiaries) and the
Purchasers and their Affiliates (including the Transferred Subsidiaries) as
follows. Benefit liabilities under each such Seller Foreign Plan for Transferred
Employees and Foreign Former Business Employees shall be assumed by a Purchaser
Plan, and all other benefit liabilities thereunder shall be retained by such
Seller Foreign Plan or assumed by another Seller Plan, provided that such
benefit liabilities shall be allocated in a different manner to the extent
required by applicable Law. If such Seller Foreign Benefit has any book reserves
or Funded Assets, such book reserves or Funded Assets shall be divided between
the applicable Purchaser Plan and the applicable Seller Plan based upon the
manner in which liabilities are allocated pursuant to the preceding sentence, in
accordance with Section 5.8.10.4.3 below.
5.8.10.4.3 Allocation of Book Reserves and Assets. Any book
reserves or Funded Assets, as the case may be, of a Transferred Subsidiary
Foreign Plan or Seller Foreign Plan that is to be divided between a Purchaser
Plan and a Seller Plan shall be allocated as follows. In the case of any such
plan that is an individual account plan, the book reserves or Funded Assets
relating to each individual account shall be allocated to the applicable
Purchaser Plan or Seller Plan that assumes the liabilities associated with such
individual account. In the case of any such plan that is funded with insurance
contracts, such contracts shall be divided and allocated between such plans in
the same proportions as the funded liabilities, to the extent reasonably
practicable under the terms of such contracts. In the case of any such plan that
is a defined benefit pension plan, such book reserves or Funded Assets shall be
divided in the same proportions as the funded liabilities, as determined in
accordance with the actuarial methods, procedures and assumptions most recently
used for purposes of funding such plan, with all liabilities and Funded Asset
valuations being determined as of the Closing Date, with such adjustments as are
necessary to reflect the payment of benefits after the Closing Date and before
completion of the allocation and delivery of such book reserves or Funded
Assets; provided, that in each case such book reserves or Funded Assets shall be
allocated on a different basis to the extent required by applicable Law or local
custom. Funded Assets other than insurance contracts shall be delivered to the
recipient plan in cash; provided, that (a) if and to the extent delivery in cash
is imprudent or illegal or would result in a material financial detriment to the
delivering
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plan, the recipient plan, or both, or (b) if the Seller and the
Purchasers so agree, such delivery shall be made in kind.
5.8.10.5 (a) If any Funded Assets cannot be allocated as
contemplated by the preceding provisions of this Section 5.8.10 due to the
actions or omissions of a third party fiduciary ("Third Party Requirements"), a
purchase price adjustment equal to the Net Amount, plus interest thereon during
the period from the Closing Date through the date of payment, at the 30-day
Treasury note rate as in effect from time to time during such period, shall be
paid by the Seller to the Parent Purchaser (if the Net Amount is negative) or by
the Parent Purchaser to the Seller (if the Net Amount is positive). If the
Seller and the Parent Purchaser so agree, one or more interim payments in
respect of the Net Amount may be made before the Determination Date, in which
event the final payment in respect of the Net Amount after the Determination
Date shall take such interim payments into account.
(b) The following terms used in this Section 5.8.10.5 shall
have the following meanings:
(i) The "Net Amount" means the excess of (1) the aggregate
Values (as defined below) of the Funded Assets actually
allocated to each Purchaser Plan that would have been
allocated to the corresponding Seller Plan under this Section
5.8.10, but for such Third Party Requirements, over (2) the
aggregate Values of the Funded Assets actually allocated to
each Seller Plan that would have been allocated to the
corresponding Purchaser Plan under this Section 5.8.10, but
for such Third Party Requirements. Such determinations shall
be made using the actuarial methods, procedures and
assumptions used for purposes of making the allocations
contemplated by this Section 5.8.10.
(ii) The "Value" of the Funded Assets allocated to a
particular plan shall mean the fair market value, expressed in
U.S. dollars, thereof as of the date when the transfer of
Funded Assets to or from that plan, as the case may be, under
this Section 5.8.10 is completed (or it is determined, as a
result of Third Party Requirements, that no such transfer will
take place). All necessary conversions of values into U.S.
dollars shall be made based upon the exchange rates for
sellers of the applicable other currency, as published in the
most recent edition of the Wall Street Journal on or before
the Determination Date.
(iii) The "Determination Date" means the date on which all
allocations of Funded Assets pursuant to this Section 5.8.10
(as the same may be altered as a result of Third Party
Requirements) have been completed.
5.8.10.6 To the extent that for any reason other than Third
Party Requirements, any of the provisions of this Section 5.8.10 cannot be
implemented, or cannot be implemented practicably on a timely basis, consistent
with applicable Law or local practice or the Transfer Provisions, or to the
extent that either the Seller or the Purchasers will be unable to provide
payroll and/or benefits to any Foreign Transferred Employees immediately
following the Closing, the Seller and the Purchasers shall use commercially
reasonable efforts to deal with such matters, including, entering into a
mutually agreeable transition services agreement or
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plan,employee leasing arrangement, so as to accomplish, as nearly as possible,
the intent hereof and to provide a smooth transition of pay and benefits for
such Foreign Transferred
Employees.
5.8.10.7 The allocations of book reserves, Funded Assets and
liabilities required by this Section 5.8.10 with respect to each plan, and the
Net Amount, shall be determined in accordance with this Section 5.8.10.7, and
the Seller and the Purchasers shall cooperate and use all reasonable efforts so
that the required determinations and allocations are completed promptly and
efficiently. The initial determination of such allocation for each plan and of
the Net Amount shall be made by an actuary selected by the Seller (the "Seller's
Actuary"). The Seller, the Purchasers and an actuary selected by the Purchasers
(the "Purchaser's Actuary") shall each have the right to receive all backup data
and computations used by the Seller's Actuary to make its determinations, and to
comment upon, and consult with the Seller's Actuary and each other regarding,
the accuracy thereof; provided, that neither the Purchasers nor the Purchaser's
Actuary shall have the right to object to the application of the actuarial
methods, procedures and assumptions required by this Section 5.8.10. If, after a
period of 45 days of such consultation and commentary with respect to the
allocations with respect to a particular plan, or with respect to the
determination of the Net Amount, the Seller's Actuary and the Purchaser's
Actuary disagree about either the amount of the book reserve or Funded Assets
allocable to a particular plan or the amount of the Net Amount (each, a
"Disputed Amount"), such disagreement shall be resolved as follows. If the
Disputed Amount according to one actuary exceeds the Disputed Amount according
to the other actuary by more than $200,000 (based upon the exchange rates for
sellers of the applicable other currency, as published in the most recent
edition of the Wall Street Journal on or before the last day of such 45-day
period), then the actuaries shall select another internationally recognized
multinational actuarial firm (the "Third Actuary") to make a final determination
of such amount, which final determination shall be completed within 45 days
after it is determined that there is a Disputed Amount, shall be computed in
accordance with the requirements of this Section 5.8.10 and shall be binding
upon the Seller and the Purchasers. In all other cases, the determination of the
Disputed Amount by the Seller's Actuary shall be binding upon the Seller and the
Purchasers. The fees and expenses of the Seller's Actuary shall be paid by the
Seller; those of the Purchaser's Actuary shall be paid by the Purchaser; and
those of any Third Actuary shall be paid half by the Seller and half by the
Purchaser.
5.8.11 Cooperation and Exchange of Information. The Purchasers
and the Seller shall cooperate with one another, and shall provide each other,
as promptly as practicable, with such information as the other shall reasonably
request, in order to timely and efficiently implement the provisions of this
Section 5.8. All communications by any of the Purchasers or any of their
respective Affiliates with Business Employees and Former Business Employees
regarding the transactions contemplated by this Agreement (including this
Section 5.8) that are made at any time before the date hereof and at or before
the applicable Hire Date shall be approved in advance by individuals designated
by the Seller (which approval shall not be unreasonably withheld or delayed).
5.8.12 Costs Associated With Organizational Restructuring
Program. The Purchasers agree to reimburse the Seller for all costs incurred by
the Seller and its Affiliates pursuant to the Seller's severance pay plan and
practices through the Closing as a result of implementing the Organizational
Restructuring program; provided, that such reimbursements in
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the aggregate shall not exceed 125% of the aggregate projected Severance
Benefits set forth in Section 3.17.4 of the Seller's Disclosure Schedule.
Section 5.9 Tax Matters.
5.9.1 Tax Indemnity by Seller. Subject to the limitation set forth in
Section 8.2.6, the Seller shall be liable for, and shall indemnify, defend and
hold the Purchasers, the Transferred Subsidiaries and any successor entities
thereto or Affiliates thereof harmless from and against, without duplication,
(a) except as provided in Section 5.9.13, all Tax liabilities of the Seller or
its Affiliates or the Transferred Subsidiaries or with respect to the
Transferred Assets for any Pre-Closing Period or imposed on the steps set forth
in Part B of Section 5.21 of the Seller's Disclosure Schedule (other than Tax
liability arising as a result of the application of Treasury Regulation ss.
1.1502-6 or any similar provision of state, local or foreign Tax Law), (b) any
Tax that is imposed on the Reorganization including Transfer Taxes imposed on
the Reorganization (provided that the Seller shall be treated as having paid to
the Purchasers the Estimated Reorganization Tax Amount minus the amount, if any,
paid by the Purchasers to the Seller pursuant to Section 5.9.16 plus the amount,
if any, paid by the Seller to the Purchasers (or on behalf of the Purchasers or
any of the Transferred Subsidiaries) pursuant to Section 5.9.16), (c) any Tax
liability of the Transferred Subsidiaries for a Pre-Closing Period arising as a
result of the application of Treasury Regulation ss. 1.1502-6 or any similar
provision of state, local or foreign Tax Law to the extent such Tax liability
arises from inclusion of any of the Transferred Subsidiaries in the Consolidated
Group of which the Seller or Xxxx (or any Subsidiary of the Seller or Xxxx with
respect to taxable periods during which such Subsidiary is or was a Subsidiary
of the Seller or Xxxx) is or was the common parent (which, for the avoidance of
doubt, does not include any Consolidated Group of which an entity set forth on
Section 5.9.1 of the Seller's Disclosure Schedule (or any Affiliate thereof with
respect to taxable periods during which such Affiliate was an Affiliate of an
entity set forth on Section 5.9.1 of the Seller's Disclosure Schedule) is or was
the common parent), (d) any and all Taxes imposed on or with respect to the
Excluded Assets and Excluded Liabilities, (e) any Tax liability that would not
have arisen but for a breach or inaccuracy in any of the representations
contained in Sections 3.7.7(A) or (C), 3.7.8 or 3.7.13 in each case determined
without regard to materiality or any breach by the Seller of any covenant or
agreement of the Seller contained in Section 2.6 or this Section 5.9, (f) any
Tax for which the Seller is responsible pursuant to Section 5.9.13, (g) an
amount equal to any liability to Tax to which BetzDearborn Limited or Hercules
GB Holdings Limited (together, the "UK Transferred Subsidiaries") are subject
(I) (whether directly or as a consequence of service of a notice on either of
them under s190 UK Taxation of Chargeable Gains Act 1992) in respect of unpaid
Tax arising from the application of s179 U.K. Taxation of Chargeable Gains Xxx
0000 as a result of transactions undertaken in connection with the
Reorganization or the sale of Xxxx Common Stock pursuant to this Agreement, or
(II) as a result of the UK Transferred Subsidiaries being or having been a
member of a value added Tax group which includes or included Hercules Limited or
Hercules Investments Global, provided that this indemnity shall not extend to
any value added Tax for which the UK Transferred Subsidiaries would have been
liable had they been registered for value added Tax and not been members of the
said VAT group and (h) any Tax for which the Seller is responsible under Exhibit
VII hereto (collectively, "Excluded Taxes") provided, however, that Excluded
Taxes shall not include and neither the Seller nor any Seller Affiliate shall be
liable for (I) any Tax liability that would not have arisen
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but for a breach by the Purchasers of any covenant or agreement of the
Purchasers contained in Section 2.6 or this Section 5.9 or Part C of Section
5.21 of the Seller's Disclosure Schedule, or (II) any Tax for which the
Purchaser is responsible under Exhibit VII hereto.
5.9.2 Tax Indemnity by Purchasers. The Purchasers shall be liable for,
and shall indemnify, defend and hold the Seller and any successor entities
thereto or Affiliates thereof harmless from and against any and all Taxes, other
than Excluded Taxes, of or with respect to the Transferred Subsidiaries, the
Transferred Assets, the Purchasers or any of their respective Affiliates and any
Tax for which the Purchasers are responsible pursuant to Section 5.9.13.
5.9.3 Tax Returns. (a) The Seller shall prepare and file or cause to
be filed when due:
(i) all Tax Returns that are required to be filed (taking into account
extensions) by or with respect to the Transferred Subsidiaries or the
Transferred Assets on or before the Closing Date (or such later date, if any, as
such Transferred Subsidiary or Transferred Asset is transferred to the Purchaser
or its Designated Affiliate);
(ii) all Tax Returns of the Seller or any of the Seller Entities;
(iii) all Tax Returns that relate exclusively to Excluded Assets and
Excluded Liabilities; and
(iv) all Tax Returns relating to Taxes of a Consolidated Group that
includes the Seller or any of its Subsidiaries (other than the Transferred
Subsidiaries) on the one hand, and any of the Transferred Subsidiaries on the
other hand
and the Seller shall remit (or cause to be remitted) any Taxes due with respect
to such Tax Returns. To the extent any Tax Returns the Seller is responsible for
preparing pursuant to this Section 5.9.3(a) relate to any portion of the Water
Business, such Tax Returns shall be prepared (including with respect to Tax
elections and Tax accounting methods) in a manner consistent with the prior
practice of the Seller, the Seller Entity, the Transferred Subsidiary or such
other applicable Affiliate of the Seller and in accordance with applicable Law;
provided, however, that (I) the Seller shall have no obligation to prepare any
such Tax Return consistent with such prior practice if (a) deviating from prior
practice would not reasonably be expected to have a Material Adverse Effect on
the Water Business for the Post-Closing Period or (b) the return filing position
that would be inconsistent with prior practice primarily affects the Seller (or
Seller Affiliate) businesses other than the Water Business or is contemplated in
connection with the Reorganization or is required by Law and (II) the Seller may
elect to reattribute losses of any Transferred Subsidiary to the Seller or its
Affiliate under Treasury Regulation ss. 1.1502-20(g) or any comparable provision
of state, local or foreign Law or make an election under alternative or
substitute Tax Laws that are applied or promulgated in lieu of Treasury
Regulation ss. 1.1502-20.
(b) Following the Closing, the Parent Purchaser, at its own expense,
shall file or cause to be filed when due all Tax Returns of or with respect to
any of the Transferred Subsidiaries and any of the Transferred Assets that the
Seller is not obligated to prepare pursuant to Section 5.9.3(a) (a "Section
5.9.3(b) Return") and, subject to Section 5.9.3(c), shall remit (or
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cause to be remitted) any Taxes due with respect to such Tax Returns. To the
extent that any Taxes shown due on any such Tax Return are indemnifiable by the
Seller, such Tax Return shall be prepared (including with respect to Tax
elections and Tax accounting methods) in a manner consistent with prior practice
of the Transferred Subsidiary or with respect to the Transferred Asset and in
accordance with applicable Law, and the Parent Purchaser shall consult with the
Seller regularly with respect to the preparation of any such Tax Returns. The
Parent Purchaser shall provide to the Seller not later than 30 Business Days
before the due date for filing such Tax Returns (including extensions thereof) a
copy of such Tax Return, together with a statement setting forth the amount of
Tax for which the Parent Purchaser believes the Seller is responsible (the
"Statement"). The Seller shall have the right to review such Tax Return and the
Statement prior to the filing of such Tax Return. The Seller and the Parent
Purchaser agree to consult and resolve in good faith any issue arising as a
result of the review of such Tax Return and the Statement and to endeavor to
mutually consent to the filing as promptly as possible of such Tax Return. In
the event the parties are unable to resolve any dispute within 15 Business Days
following the Seller's receipt of such Tax Return and the Statement, the Seller
and the Parent Purchaser shall jointly request the Independent Accountant to
resolve any issue in dispute as promptly as possible consistent with the
principle that Tax Returns are to be prepared in a manner consistent with prior
practice of the Transferred Subsidiary or with respect to the Transferred Asset
and in accordance with applicable Law (the "Principle"). If the Independent
Accountant is unable to make a determination with respect to any disputed issue
within five Business Days prior to the due date (including extensions) for the
filing of the Tax Return in question, then the Parent Purchaser may file or
cause to be filed such Tax Return on the due date (including extensions)
therefor without such determination having been made and without the Seller's
consent. Notwithstanding the filing of such Tax Return, the Independent
Accountant shall make a determination with respect to any disputed issue, and
the amount of Taxes for which the Seller is responsible shall be as determined
by the Independent Accountant consistent with the Principle. To the extent any
Tax Return filed by the Parent Purchaser or any of its Affiliates (including any
of the Transferred Subsidiaries) includes Taxes for which the Seller has an
indemnification obligation pursuant to Section 5.9.1(b) (a "Reorganization Tax
Return"), notwithstanding anything to the contrary in this Section 5.9.3(b), the
Parent Purchaser shall consult with the Seller regularly with respect to the
preparation of any such Tax Returns and such Tax Returns shall be prepared (as
they relate to Taxes imposed on the Reorganization) (i) in a manner that
reflects a Tax Liability consistent with valuing the Excluded Assets transferred
from the Transferred Subsidiaries pursuant to the Reorganization consistent with
the values assigned to such assets on Section 5.9.3(b) of the Seller's
Disclosure Schedule and (ii) consistent with any Tax Return filing position
selected by the Seller; provided, however, in the case of a Reorganization Tax
Return, if (A) no reasonable basis exists for utilizing the values assigned in
Section 5.9.3(b) of the Seller's Disclosure Schedule or utilizing such values
would reasonably be expected to result in the imposition of penalties by a
Taxing Authority or (B) no reasonable basis exists for a Tax Return filing
position selected by the Seller or such position would reasonably be expected to
result in the imposition of penalties by a Taxing Authority, then the disputed
value or the disputed Tax Return filing position, as the case may be, shall be
determined pursuant to the procedure set forth in the preceding sentences of
this Section 5.9.3(b), provided further, however, that, in such event, the
Independent Accountant shall not make its determination consistent with the
Principle but instead shall make its determination consistent with a value or
Tax Return filing position, as the case may be, that will (x) minimize the
Seller's indemnification obligation
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pursuant to Section 5.9.1(b) and (y) result in a value or a Tax Return filing
position for which there is a reasonable basis and which would not reasonably be
expected to result in the imposition of penalties by a Taxing Authority.
(c) The Seller shall, subject to Section 5.9.3(b), pay to the Parent
Purchaser (or its Designated Affiliate) the amount of Taxes with respect to
which the Seller is responsible shown due on a Section 5.9.3(b) Return two
Business Days before the due date for the payment of Taxes with respect to such
Tax Return (provided, however, that the Seller shall be deemed to have paid the
Purchasers the Estimated Reorganization Tax Amount for any Taxes for which the
Seller has an indemnification obligation pursuant to Section 5.9.1(b) and shall
be obligated to pay the Parent Purchaser (or its Designated Affiliate) for Taxes
imposed on the Reorganization under this Section 5.9.3(c) only to the extent
Taxes for which the Seller has an indemnification obligation pursuant to Section
5.9.1(b) exceed the Estimated Reorganization Tax Amount). If a dispute arises
with respect to any Section 5.9.3(b) Return, the Seller shall pay to the Parent
Purchaser (or its Designated Affiliate) an amount equal to the Taxes with
respect to which the Seller is responsible shown due on the Tax Return which are
not in dispute. Such dispute shall be submitted to the Independent Accountant in
accordance with Section 5.9.3(b), and upon resolution of any such dispute the
Seller shall pay to the Parent Purchaser, or the Parent Purchaser shall pay the
Seller, any amount necessary to reflect the Independent Accountant's
determination. Notwithstanding anything to the contrary herein, the Seller shall
be deemed to have satisfied its indemnity obligations pursuant to the applicable
subsection of Section 5.9.1 (and no duplicative payment shall be due) to the
extent of all payments pursuant to this Section 5.9.3(c), provided that no
payment pursuant to this Section 5.9.3(c) shall excuse the Seller from its
indemnity obligations pursuant to Section 5.9.1 if the amount of Taxes
ultimately determined (on audit or otherwise) for the periods covered by such
Tax Return exceeds the payments made pursuant to this Section 5.9.3(c).
(d) To the extent permitted by Law or administrative practice, the
taxable year of each of the Transferred Subsidiaries that includes the Closing
Date shall be treated as closing at the close of business on the Closing Date.
For purposes of this Agreement, where it is necessary to apportion between the
Seller and the Purchasers the Tax liability of an entity or with respect to a
Transferred Asset for a Straddle Period (which is not treated under the
immediately preceding sentence as closing immediately after the close of
business on the Closing Date), such liability shall be apportioned between the
period deemed to end at the close of business on the Closing Date (the
"Pre-Closing Straddle Period") and the period deemed to begin at the beginning
of the day following the Closing Date (the "Post-Closing Straddle Period") on
the basis of an interim closing of the books (provided that property Taxes with
respect to a Transferred Asset shall be apportioned on the basis of the number
of days in the Pre-Closing Straddle Period relative to the number of days in the
Straddle Period).
(e) The Seller shall be entitled to any Tax Benefit arising from any
deduction arising in respect of an Excluded Liability or Excluded Tax and the
Purchasers acknowledge and agree that neither the Purchasers nor any of their
Affiliates shall claim any such deduction on any Section 5.9.3(b) Return;
provided, however, that if any deduction arising in respect of an Excluded
Liability or Excluded Tax is not permitted by Law or administrative practice to
be reported in a Tax Return for which the Seller has filing responsibility and
is permitted by Law or
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administrative practice to be reported in a Section 5.9.3(b) Return, then the
Purchasers shall claim such deduction and pay to Seller the amount of any Tax
Benefit actually realized in cash that results from such deduction and that
would not have arisen but for such deduction.
5.9.4 Tax Contests. (a) If a notice of deficiency, proposed
adjustment, assessment, audit, examination or other administrative or court
proceeding, suit, dispute or other claim by, before or against a Taxing
Authority (a "Tax Audit") shall be delivered, sent, commenced or initiated, in
writing, to or against the Seller, the Purchasers or any of their respective
Affiliates (a "Notified Party") by any Taxing Authority with respect to Taxes
for which the other party may reasonably be expected to be liable pursuant to
Sections 5.9.1 or 5.9.2, the Notified Party shall notify the other party in
writing of such Tax Audit; provided, however, that the failure to provide prompt
notice as provided herein shall not relieve the other party of its indemnity
obligations except to the extent that such other party is actually prejudiced
thereby.
(b) From and after the date hereof, the Seller shall have the sole
right, at its own expense, to control, contest, resolve, settle and defend, and
represent each of the Transferred Subsidiaries' interests in, any Tax Audit to
the extent such Tax Audit relates to any Excluded Taxes (and any Tax Audit of
any Consolidated Group of which the Seller (or any successor thereto or parent
company thereof) is the common parent) and to employ counsel of its choice at
its expense; provided, however, that if such Tax Audit (A) is for a Tax Return
that is not referred to in Section 5.9.3(a)(iii) and is not referred to in
Section 5.9.3(a)(iv) and is not a Tax Audit of any Consolidated Group of which
the Seller (or any successor thereto or parent company thereof) is the common
parent and (B) would bind the Transferred Subsidiaries with respect to the
Post-Closing Period and (C) would reasonably be expected to have a Material
Adverse Effect on the Water Business for the Post-Closing Period, then there
shall be no settlement with respect thereto without the consent of the Parent
Purchaser, which consent shall not be unreasonably withheld (provided that if
the Parent Purchaser withholds consent, then the Seller's responsibility for
Taxes shall be no greater than it would have been under the proposed
settlement); provided further, however, that with respect to (I) any Tax Audit
relating to any Tax liability of the Transferred Subsidiaries for a Pre-Closing
Period arising as a result of the application of Treasury Regulation ss.
1.1502-6 or any similar provision of state, local or foreign Tax Law for which
the Seller is not obligated to indemnify the Purchasers pursuant to Section
5.9.1(c) or (II) a claim with respect to a Deferred Business in a Tax Audit of
any Consolidated Group of which Parent Purchaser or any of its Affiliates (other
than a Transferred Subsidiary) is the common parent, the Purchasers shall have
the sole right (as between the Purchasers and the Seller) to conduct, contest,
resolve, settle and defend and represent each of the Transferred Subsidiaries'
interests (except that, in the case of clause (II) , (x) Parent Purchaser shall
defend any such claim in good faith and on the same basis as if Parent Purchaser
were the party in interest with respect to such claim and (y) Seller's
responsibility for Excluded Taxes in connection with any such Tax Audit shall be
determined by the Independent Accountant taking into account the reasonableness
of the settlement in light of the merits of the claim).
(c) In the case of a Tax Audit for a Straddle Period, the Seller (if
the Tax Audit involves the Reorganization or if the claim for Taxes that are
Excluded Taxes exceeds or reasonably could be expected to exceed in amount the
claim for Taxes that are not Excluded Taxes) or otherwise the Purchasers (the
Seller or the Purchasers, as the case may be, the
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"Controlling Party") shall be entitled to control all proceedings taken in
connection with the defense of such Tax Audit; provided, however, that the other
party (the "Non-Controlling Party") shall be entitled to participate fully (at
the Non-Controlling Party's expense) in the conduct of such Tax Audit, and the
Controlling Party shall not settle any such Tax Audit without the
Non-Controlling Party's consent (which consent will not be unreasonably
withheld) (provided that if the Non-Controlling Party withholds consent, then
the Controlling Party's responsibility for Taxes shall be no greater than it
would have been under the proposed settlement). For the avoidance of doubt, the
above provisions of this Section 5.9.4(c) shall not apply to any Tax Audit for
any Tax Return referred to in Section 5.9.3(a)(iii) or (iv); such Tax Audits
instead shall be governed by Section 5.9.4(b).
(d) The Purchasers shall have the sole right, at their own expense, to
control any other Tax Audit (not relating to an Excluded Tax), and contest,
resolve, settle and defend against any other assessment, notice of deficiency,
or other adjustment or proposed adjustment relating to any and all Taxes with
respect to the Transferred Subsidiaries or the Transferred Assets.
5.9.5 Refunds, Credits and Carrybacks. (a) Except as otherwise
provided in Sections 5.9.5(d) or 5.9.15, the Seller shall be entitled to any
refunds or credits (including foreign Tax credits) of or against or arising
from, or that may be used against, Excluded Taxes.
(b) Except as otherwise provided in Section 5.9.5(d) or 5.9.15, the
Purchasers and the Transferred Subsidiaries shall be entitled to any refunds or
credits (including foreign Tax credits) of or against or arising from, or that
may be used against, Taxes of the Transferred Subsidiaries, other than refunds
or credits of or against or arising from, or that may be used against, Excluded
Taxes.
(c) The Purchasers shall cause the Transferred Subsidiaries promptly to
forward to the Seller or to reimburse the Seller for any refunds or credits due
the Seller (pursuant to the terms of this Section 5.9) after receipt thereof,
and the Seller shall promptly forward to the Purchasers or reimburse the
Purchasers for any refunds or credits due the Purchasers (pursuant to the terms
of this Section 5.9) after receipt thereof, in each case net of any Taxes
attributable to the receipt of such refunds or credits.
(d) To the extent that the Transferred Subsidiaries carry back any item
of loss, deduction or credit which arises in any taxable period ending after the
Closing Date (and, in the case of a Straddle Period, arises in the Post-Closing
Straddle Period) and which relates to or affects any Excluded Tax into a
Pre-Closing Period, the Purchasers shall be entitled to any Tax Benefit actually
realized in cash that results from such carry back and that would not have
arisen but for such carry back; provided, however, that (i) the amount required
to be paid pursuant to this Section 5.9.5(d) shall be recalculated at any time
that facts or circumstances arise or come to light which affect the amount
required to be paid pursuant to this Section 5.9.5(d) and (ii) if such facts or
circumstances arise or come to light after any payment by the Seller to the
Purchasers under this Section 5.9.5(d) which, if known when such payment was
made would have eliminated the Seller's obligation to make such payment or
reduced the amount of such payment, the Purchasers shall be required to remit to
the Seller in cash an amount equal to the excess of (x) the amount of the
payment made by the Seller to the Purchasers under this Section 5.9.5(d) over
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(y) the amount, if any, that would have been paid by the Seller under this
Section 5.9.5(d) had all of the facts and circumstances been known at the time
such payment was made.
5.9.6 Cooperation and Exchange of Information. (a) The Purchasers
shall, and shall cause the Transferred Subsidiaries to, deliver to the Seller
all information (including IRS Form 1120 prepared on a separate basis in
accordance with past practice, together with schedules, statements and
supporting documentation) as the Seller may reasonably request from time to
time, with respect to each of the Transferred Subsidiaries and the Transferred
Assets for the preparation of the income Tax Returns of the Seller for calendar
years 2001 and 2002. All information provided by the Purchasers and the
Transferred Subsidiaries pursuant to this Section 5.9.6(a) shall correctly
reflect, to the knowledge of the Purchasers or the relevant Transferred
Subsidiary, as the case may be, the facts regarding the income, properties,
operations and status of each of the Transferred Subsidiaries and the
Transferred Assets, and shall be prepared in a manner consistent with (i) the
past practice of each such entity, and (ii) Section 2.6 of the Seller's
Disclosure Schedule.
(b) The Purchasers shall provide the Seller with reasonable cooperation
and shall make available to the Seller such information and data concerning the
Transferred Subsidiaries and the Transferred Assets and make available such
knowledgeable employees of the Transferred Subsidiaries as the Seller may
reasonably request, and shall provide the Seller with reasonable access to any
relevant Tax records or information in the Purchasers' possession. Such
cooperation and information shall include promptly forwarding copies of
appropriate notices and forms or other communications received from or sent to
any Taxing Authority which relate to the Transferred Subsidiaries and providing
copies of all relevant Tax Returns, together with accompanying schedules and
related work papers, documents relating to rulings or other determinations by
any Taxing Authority and any existing records concerning the ownership and Tax
basis of property which the Purchasers and the Transferred Subsidiaries may
possess. The Purchasers, and the Transferred Subsidiaries shall make their
employees and facilities available on a mutually convenient basis to provide
explanation of any documents or information provided hereunder. The Seller and
its Affiliates shall provide the Purchasers with similar reasonable cooperation,
information and data to the extent that the Seller or any of its Affiliates has
such records and information in its possession or such employees in its employ.
(c) For a period of 10 years after the Closing Date, or until
expiration of the applicable statute of limitations if later, the Seller, the
Purchasers and the Transferred Subsidiaries shall retain all Tax Returns, books
and records (including computer files) of, or with respect to, the Transferred
Subsidiaries and the Transferred Assets ("Retained Tax Documents") for all
Pre-Closing Periods; provided, however, that (i) no party shall be required to
retain any Retained Tax Documents for any taxable period ending on or before
December 31, 1995 and (ii) either party shall be entitled to dispose of any
Retained Tax Documents provided they have first offered such Retained Tax
Documents to the other parties hereto in writing and the other parties hereto
fail to accept such offer within 60 days of its being made.
(d) The Purchasers and the Seller and their respective Affiliates shall
cooperate in the preparation and filing of all Tax Returns relating in whole or
in part to taxable periods ending on or before or including the Closing Date
that are required or requested by the Seller to be filed after such date. In the
case of any federal, state or local or foreign Consolidated
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Group Tax Returns, such cooperation shall also relate to any other taxable
periods in which one party hereto could reasonably require the assistance of the
other parties hereto in obtaining any necessary information. Such cooperation
shall include furnishing prior years' Tax Returns or return preparation packages
illustrating previous reporting practices or containing historical information
relevant to the preparation of such Tax Returns, and furnishing such other
information within such party's possession requested by the party filing such
Tax Returns as is relevant to their preparation; provided, however, that neither
the Seller and its Subsidiaries and Affiliates nor the Purchasers and their
Subsidiaries and Affiliates shall be required to provide any Person with any
Consolidated Group Tax Return or copy thereof that includes the Seller or any of
its Affiliates or the Purchasers and any of their Affiliates, as the case may
be. To the extent that such Tax Returns would be required to be delivered but
for the proviso in the preceding sentence, the Person that would be required to
deliver such Tax Returns shall instead deliver pro forma Tax Returns relating
solely to the Transferred Subsidiaries or the Transferred Assets, as the case
may be.
5.9.7 Termination of Tax Sharing Agreements. As of the Closing Date,
the Seller shall cause all Tax allocation, Tax sharing, Tax reimbursement and
similar agreements and arrangements between the Seller and its Affiliates, on
the one hand, and the Transferred Subsidiaries, on the other, to be extinguished
and terminated with respect to the Transferred Subsidiaries, and any rights or
obligations existing under any such agreement or arrangement shall be
extinguished and no longer enforceable.
5.9.8 No Section 338 Elections. Neither the Seller, the Purchasers,
nor any of their respective Affiliates shall make or cause to be made any
election under Section 338 of the Code with respect to the purchase of the
Transferred Subsidiaries.
5.9.9 Coordination. Notwithstanding anything in this Agreement to the
contrary, in the event there is a conflict between Section 2.6 or this Section
5.9, on the one hand, and any other provision(s) of this Agreement, on the other
hand, Section 2.6 and this Section 5.9 shall control; provided, however, that if
any provision of this Section 5.9 would result in the payment by the Seller or
any of its Affiliates (excluding the Transferred Subsidiaries) of any amount
that is made, pursuant to Section 5.8, the responsibility of the Purchasers or
any of their respective Affiliates (including the Transferred Subsidiaries), or
for which the Purchasers or any of their respective Affiliates (including the
Transferred Subsidiaries), are required to reimburse the Seller and its
Affiliates (excluding the Transferred Subsidiaries), the provisions of Section
5.8 shall govern rather than those of this Section 5.9.
5.9.10 Survival. The representations and warranties contained in
Section 3.7.7(A) and (C), 3.7.8 and 3.7.13 and the agreements, covenants and
indemnities contained in this Section 5.9 shall survive the Closing Date until
the expiration of the applicable statutory periods of limitation. The remaining
representations and warranties contained in Section 3.7 shall not survive the
Closing.
5.9.11 Tax Treatment of Payments. The Seller, the Purchasers, the
Transferred Subsidiaries and their respective Affiliates shall treat any and all
payments under Sections 5.8.7, 5.8.10.7, this Section 5.9 or Section 8.2 as an
adjustment to purchase price for Tax purposes (which treatment the Purchasers
and the Seller acknowledge is consistent with current Tax Law)
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unless they are required to treat such payments otherwise as a result of a
change in applicable Tax Law or interpretation thereof in a court case or
binding Treasury Regulation, in which case the indemnifying party's
indemnification obligation shall be (i) increased such that the indemnification
payment less any Tax actually paid in cash by the indemnified party with respect
to such indemnification payment equals the Damages giving rise to such
indemnification and (ii) decreased by any Tax Benefit actually realized in cash
by the indemnified party that would not have been realized but for the Damages
giving rise to the indemnification payment. If a Tax or Tax Benefit is actually
paid or realized in cash by the indemnified party subsequent to the time when an
indemnification payment is made hereunder, the amount required to be paid
pursuant to clauses (i) and (ii) shall be recalculated and an appropriate
adjusting payment shall be paid by the indemnifying party to the indemnified
party or by the indemnified party to the indemnifying party promptly after such
Tax or Tax Benefit is actually paid or realized in cash.
5.9.12 Where it is necessary to determine the taxable period (or
portion thereof) to which a Tax relates, such determination shall be made under
applicable Tax Law and the rules set forth in this Section 5.9, not under
principles of financial accounting. Notwithstanding any other provision, it is
hereby agreed and understood that the Seller makes no representation as to the
amount, quality or nature of Tax basis, net operating loss, credits or other Tax
assets or benefits that may exist at any time in or with respect to the
Transferred Subsidiaries or the Transferred Assets ("Tax Attributes"), the
Seller may utilize (or cause to be utilized) any Tax Attributes for Seller's
benefit at the Seller's sole discretion to the extent permitted by Law, in the
Reorganization or otherwise to minimize Excluded Taxes, without any obligation
to compensate the Purchasers for such utilization, the Purchasers may not
withhold consent to any transaction contemplated by the Seller in connection
with the Reorganization or otherwise by reason of the utilization, disallowance,
limitation on or unavailability of any Tax Attributes and the accounting made
for purposes of Section 5.21 shall not include the utilization, disallowance,
limitation on or unavailability of any Tax Attributes.
5.9.13 Transfer Taxes. Each of the Seller (or the relevant Seller
Affiliate, as applicable) and the Parent Purchaser (or the relevant Parent
Purchaser Affiliate, as applicable) shall pay one-half of all documentary,
sales, use, registration, foreign notary, value added, transfer, stamp and
similar Taxes, fees and costs (collectively, "Transfer Taxes") payable as a
result of the transfer of the Transferred Assets and the Transferred
Subsidiaries to the Purchasers or their Affiliates and the other transactions
(other than the Reorganization) contemplated by this Agreement (other than value
added Taxes, all of which will be the responsibility of and be paid by the
Purchasers, except value added Taxes imposed on the Reorganization, all of which
shall be the responsibility of the Seller), other than income Taxes or Taxes on
capital gain or loss. The Parent Purchaser (or the relevant Parent Purchaser
Affiliate, as applicable) will file with the relevant authorities and do all
such things as are necessary in the relevant jurisdictions to ensure the prompt
completion and, where necessary, registration and stamping of the transfer of
the Transferred Assets to the Purchasers. Neither the Seller nor any of its
Affiliates shall be liable to pay any proportion of any additional Taxes,
penalties, interest or similar costs incurred by the delay, failure or default
of the Parent Purchaser or any of its Affiliates to comply with its filing,
registration and stamping obligations under this Section 5.9.13.
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5.9.14 Post-Closing Transactions. For any Transferred Subsidiary that
is organized in a jurisdiction other than the United States (a "Foreign
Transferred Subsidiary"), for the taxable period that includes the Closing Date,
neither the Purchasers nor any of their respective Affiliates shall cause or
permit such Foreign Transferred Subsidiary to enter into any transaction or take
any action (a) that would be considered under the Code to constitute the
declaration or payment of a dividend, including pursuant to Section 304 of the
Code or (b) that would otherwise result in the diminution of the foreign Tax
credits that, absent any such transaction, may be claimed by the Seller or any
of its Affiliates, including any transaction (other than in the Ordinary Course
of Business) that would result in the increase or diminution of any amount of
earnings and profits of such Foreign Transferred Subsidiary under the Code for
periods through the end of any such taxable period or any loss carryback or loss
surrender or other action not in the Ordinary Course of Business that would
reduce the effective rate of creditable Tax paid by such Foreign Transferred
Subsidiary for any such period.
5.9.15 Timing Differences. The Purchasers agree that if as the result
of any Tax Audit adjustment made with respect to any Excluded Tax, the
Purchasers or any of their Affiliates, including the Transferred Subsidiaries,
receive a Tax Benefit, then the Purchasers shall pay to the Seller the amount of
such Tax Benefit within 15 days of filing the Tax Return in which such Tax
Benefit is realized or utilized (or such later date, such as upon resolution of
a Tax Audit, as the Tax Benefit is received). The Seller agrees that if as the
result of any Tax Audit adjustment made with respect to any Taxes of the
Transferred Subsidiaries or with respect to the Transferred Assets, in each
case, other than an Excluded Tax, the Seller or any of its Affiliates receives a
Tax Benefit, then the Seller shall pay to the Purchasers the amount of such Tax
Benefit within 15 days of filing the Tax Return in which such Tax Benefit is
realized or utilized (or such later date, such as upon resolution of a Tax
Audit, as the Tax Benefit is received). For purposes of determining the amount
and timing of any Tax Benefit, the recipient of the Tax Benefit shall be deemed
to pay Tax at the highest marginal rate in effect in the year such Tax Benefit
is realized or utilized and shall be deemed to realize or utilize any Tax
Benefit in the first taxable year that such Tax Benefit may be realized or
utilized under the Law. The Purchasers and the Seller agree that they will use
all reasonable means available to seek any available Tax Benefit (including
seeking it in a Tax Audit), provided, however, that nothing contained in this
Section 5.9.15 shall obligate the Seller, the Purchasers or any of their
Affiliates to file any amended Tax Returns.
5.9.16 Reorganization Tax True-Up. Within 10 Business Days following
the filing by the Purchasers of the last Section 5.9.3(b) Return (not including
any amended Tax Return) that includes Taxes for which the Seller has an
indemnification obligation pursuant to Section 5.9.1(b) (but in no event after
December 31, 2003), the Purchasers shall remit to the Seller the amount, if any,
by which the Estimated Reorganization Tax Amount exceeds the total amount of
Taxes imposed on the Reorganization that are shown due on all then filed Section
5.9.3(b) Returns. The Seller shall remit to the Purchasers the amount, if any,
by which the total amount of Taxes imposed on the Reorganization that are shown
due on all Section 5.9.3(b) Returns that include Taxes for which the Seller has
an indemnification obligation pursuant to Section 5.9.1(b) exceeds the Estimated
Reorganization Tax Amount in accordance with Section 5.9.3(c). Notwithstanding
anything to the contrary herein, no payment by the Purchasers or the
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Seller pursuant to this Section 5.9.16 shall excuse the Seller or the Purchasers
from their respective indemnity obligations pursuant to Section 5.9.1 or 5.9.2.
5.9.17 UK Taxation. Notwithstanding anything in this Agreement to the
contrary (i) any Tax losses sustained by Hercules GB Holdings Limited relating
to interest payments for the Pre-Closing Period shall be surrendered, to the
extent determined by the Seller, to Hercules Limited without payment in
accordance with and subject to the UK Tax rules relating to group relief set out
in Income and Corporation Taxes Xxx 0000 Section 402 to 413 and Schedule 18,
(ii) any Tax losses sustained by Hercules GB Holdings Limited relating to
interest payments for the Pre-Closing Period that are not surrendered to
Hercules Limited pursuant to clause (i) of this Section 5.9.17 shall be
surrendered to BetzDearborn Limited in accordance with and subject to the said
rules relating to group relief and (iii) the Purchasers, Hercules GB Holdings
Limited and BetzDearborn Limited shall take all action that is reasonably
required to enable such surrender to take place and for Hercules Limited and/or
BetzDearborn Limited to obtain such loss relief as is permissible under the said
rules, including signature of any necessary group relief consents and any
amendments to Tax Returns for Hercules GB Holdings Limited or BetzDearborn
Limited relating to the Pre-Closing Period.
5.9.18 Deferred Businesses. In the case of a Deferred Business in the
United States as to which the Seller is the Transferee (within the meaning of
Exhibit VII), the Seller shall take such steps as are necessary for it to file,
and the Seller and the Purchasers shall file, their respective United States
federal income Tax Returns (and corresponding United States state and local
income Tax Returns) on the basis that such Deferred Business is not a Deferred
Business. In the case of a Deferred Business that is not in the United States,
the parties, acting reasonably, shall endeavor to report such Deferred Business
(or cause it to be reported) on the relevant foreign income Tax Returns as not a
Deferred Business.
Section 5.10 Ancillary Agreements.
5.10.1 Blanket Assignment of Leases. At the Closing, the Seller
Entities and the Purchaser will enter into the Assignment of Leases ("Blanket
Assignment of Leases") by which (a) the Seller Entities will transfer and assign
all of their respective right, title and interest in each Leased Real Property
listed in Section 2.2.1 of the Seller's Disclosure Schedule to be transferred to
the Purchaser, and (b) the Purchaser will assume all obligations and liabilities
under the applicable Real Property Leases.
5.10.2 Local Assignment of Leases. At the Closing, to the extent
required by the lessor of any Leased Real Property or custom and/or applicable
Law of the jurisdiction in which any Leased Real Property is located, the Seller
Entities and the Purchaser will enter into any other local assignment of lease
relating to the Leased Real Property ("Local Assignment of Leases"), in
substantially the same form as the Blanket Assignment of Leases or with such
other changes as are required by local custom or applicable Law, provided that
no such changes shall increase the Seller Entities' rights or obligations as set
forth in the Blanket Assignment of Leases.
5.10.3 Supply Agreements. At the Closing, the Seller and Xxxx will
enter into the Supply Agreements, the purpose of which is to, among other
things, provide continuity of supply
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(a) to the Seller, of those Retained Business products produced at Water
Business facilities transferring to the Purchaser as part of the Transferred
Assets and (b) to Xxxx, of those Water Business products produced at Retained
Business facilities remaining with the Seller or its Affiliates as part of the
Excluded Assets.
5.10.4 Distribution Agreement. At the Closing, the Seller and Xxxx will
enter into the Distribution Agreement, the purpose of which is to, among other
things, (a) provide continuity of supply to the Seller, of certain Water
Business products produced at manufacturing facilities transferring to the
Purchaser at Closing and (b) appoint the Seller as the exclusive distributors of
such products for resale to customers in the Pulp and Paper Industry worldwide.
5.10.5 Intellectual Property Assignments and Intellectual Property
License Agreements. At the Closing, the Seller and the Purchaser will enter into
the Intellectual Property Assignments and Intellectual Property License
Agreements, the purposes of which are to, among other things, (a) protect the
Seller's and its Affiliates' rights in any and all of the Intellectual Property
Rights owned or otherwise used by the Seller and its Affiliates as of the
Closing Date and remaining with the Seller and its Affiliates as part of the
Retained Business (the "Retained Business Intellectual Property Rights"), (b)
protect any Purchased Intellectual Property transferring to the Purchaser as
part of the Transferred Assets, (c) grant the Seller and its Affiliates the
rights necessary to use any Purchased Intellectual Property of the Purchaser
that has been or is being used in the Retained Business as of the date of this
Agreement so that the Seller and its Affiliates can continue to use such
Purchased Intellectual Property in the Retained Business after the Closing Date,
and (d) grant the Purchaser the rights necessary to use the Retained Business
Intellectual Property Rights that have been or are being used in the Water
Business as of the date of this Agreement so that the Purchaser can continue to
use such Retained Business Intellectual Property Rights in the Water Business
after the Closing Date.
5.10.6 Transition Services Agreement. At the Closing, the Seller and
Xxxx shall enter into the Transition Services Agreement, the purpose of which is
to, among other things, ensure that (i) to the extent requested and agreed by
the Purchasers, the Seller and its Affiliates provide to Xxxx and its Affiliates
after the Closing the scope and level of services, support and facilities use
which is currently provided by the Seller Entities to the Water Business and
which are reasonably necessary to conduct and operate the Water Business as
presently conducted and operated, and, (ii) to the extent requested and agreed
by the Seller, Xxxx and its Affiliates provide to the Seller and its Affiliates
after the Closing with the scope and level of services, support and facilities
use which is currently provided by the Water Business to the Retained Business
and which are reasonably necessary to conduct and operate the Retained Business
as presently conducted and operated, in each case, for a specified transition
period or, in the case of certain of such services, for such shorter period as
provided for in the Transition Services Agreement. The parties hereto agree to
negotiate reasonable and customary terms of the Transition Services Agreement
and related attachments in good faith.
5.10.7 Other Ancillary Agreements. On or prior to the Closing, (a) the
Purchaser shall, and shall cause its respective Affiliates to, execute and
deliver to the Seller copies of any other Ancillary Agreements to which it is a
party and (b) the Seller shall, and shall cause their Affiliates to, execute and
deliver to the Purchaser copies of any other Ancillary Agreements to which it is
a party.
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Section 5.11 Assignment of Insurance Proceeds. Effective upon the Closing,
(a) the Seller shall (and shall cause the other Seller Entities to) assign and
transfer to the Purchasers or their designees all claims, causes of action,
rights of recovery and rights of set-off of any kind arising under any contract
of insurance or by operation of Law to the extent in favor of or pertaining to
the Water Business or any portion thereof (other than rights in favor of or
pertaining to the Excluded Assets or the Excluded Liabilities); and (b) the
Purchasers shall (and shall cause their Affiliates to) assign and transfer to
the Seller or its designees all claims, causes of action, rights of recovery and
rights of set-off of any kind arising under any contract of insurance or by
operation of Law to the extent in favor of or pertaining to the Excluded Assets
or the Excluded Liabilities (other than rights in favor of or pertaining to the
Water Business or any portion thereof). In the event that any party shall be
unable to make the foregoing assignment, or if such attempted assignment would
give rise to any right of termination of, or would otherwise adversely affect
the rights of either party (or any Seller Entity or Transferred Subsidiary)
under such insurance contracts, then the parties shall cooperate with each other
and use commercially reasonable efforts to provide each other with the benefits
of all such claims, causes of action and rights as set forth in Section 5.12.
Each party shall assert claims against or seek coverage under insurance policies
owned or controlled by the other party only in accordance
with the terms and conditions set forth in Section 5.12.
Section 5.12 Other Insurance Matters.
5.12.1 All Insurance Policies sold to or procured by any of the
Transferred Subsidiaries (the "Water Business Policies") shall remain an asset
of the Transferred Subsidiaries (or otherwise be a Transferred Asset hereunder)
and the Transferred Subsidiaries shall have all rights and retain all
obligations under the Water Business Policies. Such obligations under the Water
Business Policies shall include the payment of all premiums or rating
adjustments, self-insured retentions, deductibles, or other payments owed under,
and all costs associated with (including as a result of unavailability of
insurance due to exhaustion, impairment, carrier insolvency or other event), the
Water Business Policies (collectively, the "Policy Payments"), except to the
extent that any such Policy Payments relate to the Retained Business, the
Excluded Assets or the Excluded Liabilities. The Seller shall, or shall cause
one of its Affiliates to, promptly reimburse the Purchasers or their Affiliates
for any Policy Payments, paid by the Purchasers or their Affiliates from and
after the Closing, which relate to the Retained Business, the Excluded Assets or
the Excluded Liabilities.
5.12.2 All Insurance Policies sold at any time to the Seller or any of
its Affiliates (other than Insurance Policies sold to or procured by the
Transferred Subsidiaries), including all such Insurance Policies providing for
director and officer liability insurance or fiduciary liability insurance (the
"Seller Policies"), shall remain an asset of the Seller (or otherwise be an
Excluded Asset hereunder), and the Seller shall have all rights and retain all
obligations under the Seller Policies. Such obligations under the Seller
Policies shall include the payment of Policy Payments owed under the Seller
Policies, except to the extent that any such Policy Payments relate to the Water
Business (or any portion thereof), the Transferred Assets or the Transferred
Liabilities. The Purchasers shall promptly reimburse the Seller or its
Affiliates for any Policy Payments, paid by the Seller or such Affiliates from
and after the Closing, which relate to the Water Business (or any portion
thereof), the Transferred Assets or the Transferred Liabilities.
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5.12.3 In the event that, after the Closing: (a) the Purchasers or any
of their respective Affiliates (or any of their respective directors, officers
or employees) desire to pursue coverage under any of the Seller Policies for
claims involving the Water Business, the Transferred Assets or the Transferred
Liabilities, the Seller will use commercially reasonable efforts to assist the
Purchasers or such Affiliates in securing coverage under the Seller Policies;
and (b) the Seller or any of its Affiliates desires to pursue coverage under any
of the Water Business Policies for claims involving the Retained Business, the
Excluded Assets or the Excluded Liabilities, the Purchasers will use
commercially reasonable efforts to assist the Seller or such Affiliates in
securing coverage under such Water Business Policies. In all cases, the party
seeking insurance coverage shall be responsible for the satisfaction of any such
deductibles or self-insured retentions as may need to be satisfied prior to
obtaining such insurance coverage, and shall otherwise be responsible for the
payment of any Policy Payments relating thereto.
5.12.4 From and after the Closing: (a) recoveries or other payments
received by the Seller or any of its Affiliates from insurance companies to the
extent related to the Water Business (or any portion thereof), the Transferred
Assets or the Transferred Liabilities shall be paid to the Purchasers (less any
amount actually expended by the Seller and its Affiliates, other than the
Transferred Subsidiaries) for the benefit of the Water Business, the Transferred
Assets or the Transferred Liabilities; and (b) recoveries or other payments
received by the Purchasers or any of their respective Affiliates from insurance
companies to the extent related to the Retained Business, the Excluded Assets or
the Excluded Liabilities shall be paid to the Seller or its designees (less any
amount actually expended by the Transferred Subsidiaries) for the benefit of the
Retained Business, the Excluded Assets or the Excluded Liabilities. Between the
date of the signing of this Agreement and the Closing, recoveries or other
payments received by the Seller or any of its Affiliates (less any amounts
actually expended by the Seller and its Affiliates, other than the Transferred
Subsidiaries) from insurance companies: (a) to the extent related to the loss of
or damage to any of the Transferred Assets, or (b) as reimbursement for monies
paid by Xxxx, any portion of the Water Business or the Transferred Subsidiaries
with respect to an insured liability, shall be treated as an asset of Xxxx, the
Water Business or the Transferred Subsidiaries, as appropriate. As used in this
subparagraph, the term "amounts actually expended" shall include amounts paid
(including defense fees and costs, and indemnity payments) but not reimbursed by
insurance companies and amounts spent in order to obtain such reimbursements
from insurance companies.
5.12.5 The Seller, on the one hand, and the Purchasers, on the other
hand, shall each appoint two (2) representatives (one with responsibility for
insurance and risk management issues) to serve on an "Insurance Issues Team"
which shall be charged with negotiating in good faith any insurance related
issues which may arise between the Seller and the Purchasers, in accordance with
the guidelines set forth in this Section 5.12 and with the goals of: (a)
reaching a result which is fair and equitable to the parties taking into account
all claims then pending against each party, which claims may be insured by the
Insurance Policies at issue; (b) maximizing the recovery of insurance payments
in order to make a party which has incurred costs for a potentially covered loss
(whether for defense or indemnity) as whole as possible (provided that each
party shall remain responsible for any Policy Payments owed by that party,
including the satisfaction of any deductibles or self-insured retentions); and
(c) preserving remaining insurance coverage so that insurance coverage remains
available to cover the claims
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then pending against a party. Should the Insurance Issues Team not be able to
reach resolution of any such issues within 30 days (or such longer time period
as mutually agreed to in writing), then one corporate officer of each of the
Seller and the Purchasers shall meet with the goal of resolving in good faith
the issues in question. Should the corporate officers so appointed not be able
to resolve the issues in question within 30 days of such appointment (or such
longer time period as may be mutually agreed upon in writing), then such issues
shall be resolved through a binding arbitration proceeding conducted in
accordance with the rules of the American Arbitration Association applicable to
commercial disputes. The arbitration shall take place within the City of
Philadelphia and the Laws of the Commonwealth of Pennsylvania shall apply. In
connection therewith, each party shall select one arbitrator which arbitrator
shall have experience in resolving insurance disputes; the two selected
arbitrators shall then select a third arbitrator, which arbitrator shall also
have experience in resolving insurance disputes. The costs of the arbitration
shall be borne equally by the parties; provided, however, that the arbitration
panel may consider an award of costs in connection with its resolution of any
dispute.
5.12.6 For a period of not less than three (3) years after the Closing
Date, the Seller shall maintain in effect those Seller Policies that provide
directors and officers liability insurance or fiduciary liability insurance for
the benefit of persons or plans of any portion of the Water Business or the
Transferred Subsidiaries who or which, prior to the Closing, were insureds under
such policies and were covered by the terms and conditions of those policies.
Notwithstanding anything to the contrary set forth in this Section 5.12, the
term "Policy Payments" shall not include any premium payments paid or to be paid
by the Seller with respect to the insurance policies described in this Section
5.12.6 only.
Section 5.13 Access to Records after Closing; Commingled Items.
5.13.1 The Purchasers recognize that, after the Closing, they may have
documents, books, records, work papers and information, whether in written,
magnetic, electronic or optical form (collectively, "Records") which relate to
(a) the Water Business with respect to the period or matters arising prior to
the Closing, including Records pertaining to the Transferred Assets, the
Transferred Liabilities and the Transferred Subsidiaries' respective employees,
assets and liabilities (the "Water Business Records") or (b) the Retained
Business, the Excluded Assets or the Excluded Liabilities (the "Seller's
Records"). The Purchaser will use, and will cause its respective Affiliates to
use, commercially reasonable efforts not to use (or take any action to use) the
Seller's Records and Confidential Business Information of the Retained Business,
except as provided for in this Agreement or the Ancillary Agreements, and to
preserve the confidentiality of any information contained in the Seller's
Records and Confidential Business Information of the Retained Business (for so
long as it remains non-public including after termination or expiration of this
Agreement) to keep such information confidential, subject to any provisions of
confidentiality in the Ancillary Agreements. The Purchasers further recognize
that the Seller may need access to such Water Business Records and the Seller's
Records after the Closing. Upon the Seller's reasonable request the Purchasers
shall provide the Seller and its employees, representatives and agents access
to, and the right to photocopy (at the Seller's expense), during normal business
hours on reasonable advance notice, such reasonably requested Records. Subject
to Section 5.13.3, the Purchasers shall use commercially reasonable efforts to
maintain all such Records at least until the seventh anniversary of the Closing,
or, at the
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Purchasers' discretion or (at any time) at the Seller's reasonable request (and
expense), transfer any Seller's Records to the Seller.
5.13.2 The Seller recognizes that, after the Closing, it may have Water
Business Records or other Records relating to the Water Business. The Seller
will use, and will cause its respective Affiliates to use, commercially
reasonable efforts not to use (or take any action to use) Water Business Records
and Confidential Business Information of the Water Business, except as provided
for in this Agreement or the Ancillary Agreements, and to preserve the
confidentiality of any information contained in the Water Business Records and
Confidential Business Information of the Water Business and (for so long as it
remains non-public including after termination or expiration of this Agreement)
to keep such information confidential, subject to any provisions of
confidentiality in the Ancillary Agreements. The Seller further recognizes that
the Purchasers may need access to such Water Business Records and other Records
after the Closing. Upon the Purchaser's reasonable request the Seller shall
provide the Purchasers and their respective employees, representatives and
agents access to, and the right to photocopy (at the Purchasers' expense),
during normal business hours on reasonable advance notice, such reasonably
requested Records. Subject to Section 5.13.3, the Seller shall use commercially
reasonable efforts to maintain all such Records at least until the seventh
anniversary of the Closing, or, at the Seller's discretion or (at any time) at
the Purchasers' reasonable request (and expense), transfer any such Records to
the Purchasers.
5.13.3 To the extent that, after the Closing Date, the Purchasers will
have in their possession non-public Seller's Records or the Seller will have in
its possession non-public Water Business Records, in each case, that would be
impractical (notwithstanding the use of commercially reasonable efforts) to
remove, destroy or return to the other party in accordance with the provisions
of Sections 5.13.1 or 5.13.2 (collectively, the "Commingled Items"), the
Commingled Items will not be separated or segregated from the Seller's or the
Purchasers' other Records, as the case may be, but, with respect to the portion
of such Commingled Items which the Seller and the Purchasers, as the case may
be, are not entitled to under the terms of this Agreement, the Seller and the
Purchasers, as the case may be, will use, and will cause their respective
Affiliates to use, their commercially reasonable efforts not to use (or to take
any action to use), and to preserve the confidentiality of, such portion or any
information contained therein, and (for as long as it remains non-public,
including after expiration or termination of this Agreement) to keep such
portion and information confidential.
5.13.4 Notwithstanding any provision herein to the contrary, Records
pertaining to Taxes shall be governed solely by Section 5.9.
5.13.5 In addition to access to Records, as set forth in Section 5.13.1
and 5.13.2, above, each of the Purchasers and the Seller recognize that each may
need access to the others' personnel for various reasons, including for purposes
of: (a) identifying, locating and interpreting Records, and (b) providing
advice, and deposition or trial testimony in connection with Actions or Claims,
concerning (i) Records, (ii) pre-Closing business practices, or (iii) products
manufactured or sold prior to the Closing. Upon reasonable request, the
Purchasers and the Seller shall, and shall cause their respective Affiliates to,
use commercially reasonable efforts to assist the other (including the making
available to the other of personnel) with respect to: (a) identifying, locating
and interpreting Records, and (b) providing advice, and deposition or trial
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testimony in connection with Actions or Claims, concerning (i) Records, (ii)
pre-Closing business practices, or (iii) products manufactured or sold prior to
the Closing; provided, however, that the party requesting assistance shall be
responsible for and shall reimburse the other party with respect to any out of
pocket costs and expenses incurred providing such assistance, including
reimbursement for employee time actually spent providing such assistance
(calculated based on that employee's actual time spent times that employee's
hourly rate of compensation as determined by dividing that employee's annual
salary by 2000 hours). The parties acknowledge and agree that the rights granted
under this Section 5.13.5 shall not apply to or be available for any purpose
involving a Claim or Action between the parties or their respective Affiliates.
The rights and obligations with respect to Intellectual Property Rights under
this Section 5.13.5 shall cease one (1) year from the date hereof.
5.13.6 The parties acknowledge and agree that the obligations under
this Section 5.13 shall be subject to any Laws or legal obligations which
prohibit the sharing of the information requested by a party.
Section 5.14 Loan Documents; Intercompany Accounts; Guaranties.
5.14.1 The Seller shall use its commercially reasonable efforts to
obtain at or before the Closing (a) the written release and waiver from all
appropriate Persons of (i) any and all Encumbrances (other than Permitted
Encumbrances) imposed on any portion of the Water Business, the Transferred
Assets or the assets of the Transferred Subsidiaries (including upon the Xxxx
Common Stock and the Water Subsidiaries Stock pursuant to the Loan Documents or
otherwise), (ii) any and all guaranties granted by the Transferred Subsidiaries
pursuant to the Loan Documents and (iii) any and all guaranties granted by any
of the Transferred Subsidiaries in respect of any other Indebtedness or other
obligations of the Seller or any of its Affiliates (other than the Transferred
Subsidiaries), and (b) the delivery to the Seller of the certificates
representing the shares of Xxxx Common Stock and Water Subsidiaries Stock.
5.14.2 Subject to the procedures and exceptions set forth in Section
5.14.2 of the Seller's Disclosure Schedule, at or prior to the Closing, all
intercompany receivables or payables and loans then existing between the Seller
and its Affiliates (other than the Transferred Subsidiaries), on the one hand,
and the Transferred Subsidiaries, on the other hand, shall be settled in the
Ordinary Course of Business or, in the Seller's discretion, by way of capital
contribution, dividend or otherwise.
5.14.3 The Purchasers shall use their commercially reasonable efforts
to cause themselves or one or more of their respective Subsidiaries or
Affiliates to be substituted in all respects for the Seller and its Subsidiaries
(other than the Transferred Subsidiaries), effective as of the Closing, in
respect of all obligations of the Seller or any of its Subsidiaries (other than
the Transferred Subsidiaries) under each of the guaranties, letters of credit
and letters of comfort, set forth in Section 5.14.3 of the Seller's Disclosure
Schedule, obtained by the Seller or such Subsidiaries (other than the
Transferred Subsidiaries) for the benefit of the Transferred Subsidiaries (the
"Guaranties"). If the Purchasers are unable to effect such a substitution with
respect to any Guaranty after using their commercially reasonable efforts to do
so, and the Seller has made a written request to the Purchasers to pay on its
behalf amounts due under a non-transferred Guaranty, the Purchaser shall pay
such amounts when requested. In the event the
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Purchaser fails to pay such amount, and in any event does not pay such amounts
by the later of (x) two days after written request by the Seller and (y) the
date such written notice indicates that such amount is due to an applicable
third party (the "Interest Accrual Date"), the Purchasers shall pay interest on
such amount at a 12% annual rate from the Interest Accrual Date to the date of
payment. As a result of the substitution contemplated by the first sentence of
this Section 5.14.3 and/or the payment obligation contemplated by the second
sentence of this Section 5.14.3, and subject to the provisions of Section
8.2.2(c), the Seller and its Affiliates (other than the Transferred
Subsidiaries) shall, from and after the Closing, cease to have any obligations
whatsoever arising from or in connection with the Guaranties, except for
obligations, if any, for which the Seller or its Affiliates will be fully
indemnified pursuant to the second sentence of this Section 5.14.3 or Section
8.2.2(c).
Section 5.15 Inventory Count.
5.15.1 The Seller shall take a count of the Inventories of the Seller
or any of its Affiliates relating to the Water Business (other than Inventories
of the Seller or any of its Affiliates relating to the Water Business located at
the sites of Customers (as defined in the Distribution Agreement)) as of the
Accounting Closing Date (the "Accounting Closing Inventory Count"). If the
Purchaser so elects, the Purchasers and the Purchasers' accountants may
participate in the Accounting Closing Inventory Count. Such Accounting Closing
Inventory Count shall be taken in accordance with the Seller's historical
inventory taking procedures, which procedures have previously been disclosed in
writing to the Purchasers. The Seller and the Purchasers hereby agree that the
Accounting Closing Inventory Count shall be used in determining the Closing Date
Net Assets, the Roll-Forward Closing Date Net Assets and the Final Purchase
Price pursuant to Section 2.5; provided, however, that disputes with respect to
the Inventory Count may only be settled either by the Seller and the Purchasers
or the Independent Accountant pursuant to Section 2.5 of this Agreement.
Section 5.16 [Reserved]
Section 5.17 Use of Hercules Name; Use of Xxxx Name.
5.17.1 Within 60 days after the Closing, (a) the Purchasers shall cause
each of the Transferred Subsidiaries to, to the extent applicable, change its
corporate names to a name that does not include the name "Hercules" or any
derivatives thereof and (b) the Purchasers shall have no right to use the
"Hercules" name or any derivatives thereof, except that for a period ending 90
days after the Closing, the Purchasers shall have the right to use any
catalogues, sales and promotional materials and printed forms that use such name
and are included in the Transferred Assets or the assets of any of the
Transferred Subsidiaries as of the Closing, or that have been ordered prior to
the Closing for use in the Water Business or any portion thereof; provided,
however, that (a) promptly after the Closing Date, the Purchasers shall make all
filings with the appropriate Governmental Authorities to effectuate the said
name changes, (b) the Purchasers shall use their commercially reasonable efforts
to minimize the usage of the "Hercules" name and any derivatives thereof, and to
discontinue it as soon as practicable after the Closing and (c) notwithstanding
anything to the contrary in this Section 5.17.1, to the extent any approvals of
Governmental Authorities are necessary to effectuate the said name changes,
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the time limits specified in this Section 5.17.1 shall be extended by the time
period necessary to obtain such approvals.
5.17.2 Within 60 days after the Closing, (a) the Seller shall cause
each of its Affiliates (other than the Transferred Subsidiaries), to the extent
applicable, to change its corporate name to a name that does not include, and to
thereafter cease to use any name that includes, the names "Xxxx,"
"BetzDearborn," "Dearborn," "BD," "Dear" or any derivatives thereof and (b)
except as provided in the Ancillary Agreements, the Seller shall cause each of
its Affiliates (other than the Transferred Subsidiaries) to thereafter cease to
use any Marks that include "Xxxx," "BetzDearborn" "Dearborn," "BD," "Dear" or
any derivatives thereof or Marks confusingly similar thereto, including "Xxxx
Paperchem Semi-Bulk Control"; provided, however, that promptly after the Closing
Date, the Seller shall cause each of its Affiliates (other than the Transferred
Subsidiaries) to make all filings with the appropriate Governmental Authorities
to effectuate the said name changes.
Section 5.18 Cooperation with Respect to Financial Reporting. After the
date of this Agreement, the Seller shall, and shall cause the Seller Entities
and the Transferred Subsidiaries to, reasonably cooperate with the Parent
Purchaser (at the Seller's expense) in connection with the Parent Purchaser's
preparation of historical financial statements of the Water Business as required
for the Purchaser's filings under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") following the Closing. After the Closing, the
Purchasers shall, and shall cause the Transferred Subsidiaries to, reasonably
cooperate with the Seller (at the Seller's expense) in connection with the
Seller's preparation of pro forma and historical financial statements of the
Water Business as may be required for the Seller's filings under the Exchange
Act following the Closing.
Section 5.19 Non-Solicitation of Employees. The Seller shall not, and
shall cause its Subsidiaries not to, at any time prior to the expiration of
three years from the date hereof, directly or indirectly, solicit the employment
of any Transferred Employee or any other employee of any portion of the Water
Business or the division of the Purchasers known as GE Specialty Materials
(including such division as conducted by the Transferred Subsidiaries following
the Closing) or any other employee of the Purchasers and their respective
Affiliates of whom the Seller learns in connection with negotiation of this
Agreement or the consummation of the transactions contemplated hereby
(collectively, the "Purchasers' Covered Employees") without the Parent
Purchaser's prior written consent. The Purchasers shall cause GE Corporate, the
Water Business and the division of the Purchasers known as GE Specialty
Materials (including such division as conducted by the Transferred Subsidiaries
following the Closing) not to, at any time prior to the expiration of three
years from the date hereof, directly or indirectly, solicit the employment of
employees of the Pulp and Paper Division, any employees of the Seller and its
Subsidiaries of whom the Purchasers learn in connection with negotiation of this
Agreement or the consummation of the transactions contemplated hereby, and any
employees of the Seller and its Subsidiaries of whom the Purchasers or any of
their Affiliates learn directly from the current Vice President and General
Manager of the BetzDearborn division of the Seller or his current direct reports
(together with the Purchasers' Covered Employees, the "Covered Employees")
without the Seller's prior written consent. The term "solicit the employment"
shall not be deemed to include generalized searches for employees through media
and/or web-based advertisements
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or through employment firms that are not focused on the Covered Employees.
Notwithstanding the foregoing, the term "Covered Employee" shall not include any
individual (i) whose employment with the Purchasers and their Affiliates or with
the Seller and its Subsidiaries, as applicable, has terminated for any reason,
(ii) who initiates discussions with the Sellers or any of its Subsidiaries or
with the Purchasers or any of their Affiliates, as applicable, at least one year
after the Closing Date or (iii) who is a non-exempt employee under the FLSA.
Section 5.20 Non-Competition.
5.20.1 The Seller agrees that, until the fifth anniversary of the
Closing Date, the Seller shall not, and shall cause each of its Subsidiaries not
to (i) directly or indirectly, operate, perform, control or engage in, manage or
own a greater than 5% ownership interest in a business or Person that develops,
manufactures, sells or distributes products or performs services in competition
with the Water Business or any portion thereof (as such business or portion is
conducted as of immediately prior to the Closing) (a "Competing Business");
provided that if the initial investment by the Seller in a Competing Business is
less than $10,000,000, the Seller and its Subsidiaries may own up to 10% of a
Competing Business; (ii) solicit, raid, or knowingly entice, encourage or induce
any Person that currently or at any time prior to or during the Non-Competition
Period is or was a client or customer (or is actively pursued as a potential
client or customer) of any portion of the Water Business to purchase any
products or services sold by the Water Business or any portion thereof (as such
business or portion is conducted as of the Closing Date) from anyone other than
the Purchaser and its Subsidiaries or to become a client or customer of any
Person (other than the Purchaser or its Subsidiaries) for products or services
the same as, or competitive with, those products and services as from time to
time may be provided by the Water Business or any portion thereof; (iii)
interfere with, disrupt or attempt to disrupt, each in a tortious manner, any
relationship, contractual or otherwise, between the Water Business or any
portion thereof, or the Purchaser or any of its Subsidiaries and any of their
respective clients, customers or suppliers (including soliciting or encouraging
any such client, customer or supplier to discontinue or reduce its business with
the Water Business or any portion thereof, the Purchaser or any of its
Subsidiaries); or (iv) cause or authorize any third party controlled by the
Seller to take any of the actions described in (i), (ii) or (iii) on its behalf;
provided, however, that (a) the activities of the Seller and its Affiliates
specified in Section 5.20.1 of the Seller's Disclosure Schedule as conducted on
the date hereof, (b) the ownership of all or any portion of the Retained
Business by any Person (other than the Seller or its Affiliates) (an "Acquiring
Person") (x) that is engaged in a Competing Business at the time of acquiring
such ownership (provided that the Acquiring Person and its Competing Business
(including their officers, employees, agents and other representatives) are not
given access to any proprietary and confidential information, which pertains to
the Water Business or any portion thereof, and no officer, employee, consultant,
agent or other representative of the Seller or its Subsidiaries that at any time
was employed in connection with, or engaged on behalf of, any portion of the
Water Business shall work for, be employed by, or provide consulting services to
the Acquiring Person in connection with its Competing Business or otherwise
disclose any proprietary and confidential information, which pertains to the
Water Business, or any portion thereof, to the Acquiring Person) or (y) that
subsequently acquires any other Person or business engaged in a Competing
Business (provided that the Acquiring Person (from and after the date of
entering into the agreement to acquire the Competing Business), and its newly
acquired Competing Business (including
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their officers, employees, agents and other representatives) are not given
access to any proprietary and confidential information, which pertains to the
Water Business or any portion thereof, and no officer, employee, consultant,
agent or other representative of the Seller or its Subsidiaries that at any time
was employed in connection with, or engaged on behalf of, any portion of the
Water Business shall work for, be employed by, or provide consulting services to
the Acquiring Person in connection with its Competing Business or otherwise
disclose any proprietary and confidential information, which pertains to the
Water Business or any portion thereof, to the Acquiring Person (from and after
the date of entering into the agreement to acquire the Competing Business)), or
(c) activities conducted pursuant to and according to the terms of the Ancillary
Agreements, shall not constitute a violation of this Section 5.20.1.
5.20.2 The parties agree that the prohibitions in this Section 5.20 are
in addition to, and not in lieu of, and shall not constitute a wavier of, any
rights or remedies which the Purchasers or the Seller, as the case may be, have
or may have pursuant to (i) the Ancillary Agreements, (ii) the Confidentiality
Agreement, or (iii) the Seller's or the Purchasers' rights in any jurisdiction
under any applicable Law, whether statutory or otherwise, whether in law or in
equity.
Section 5.21 Reorganization. (a) Prior to the Closing, or to the extent
applicable pursuant to Section 2.4.2, such other date, the Seller shall, and
shall cause its Affiliates to, at the Seller's sole cost and expense
(provided, however, that nothing herein shall require the Seller to take any
actions or incur any costs or expenses which it is not required to take or incur
under Section 5.5 and 5.6 in order to effect any step of the Reorganization)
effect the Reorganization in the manner set forth in Section 5.21A of the
Seller's Disclosure Schedule (including the alternatives described therein) or
as otherwise permitted pursuant to clauses (b) and (c) of this Section 5.21.
(b) In the event, prior to or on the Closing, the Seller
desires to change the manner in which a subsidiary, asset, liability, right,
obligation or interest (including equity interest) is to be transferred among
the Seller's Affiliates (e.g., the use of an asset transfer rather than a stock
sale) (such change, a "Structural Change") from the corresponding step set forth
in Section 5.21A of the Seller's Disclosure Schedule (other than pursuant to a
decision of the Seller in its sole discretion to use an alternative step
specified in Section 5.21A of the Seller's Disclosure Schedule), then the Seller
must either (1) obtain the consent of the Purchaser following written notice
from the Seller setting forth in reasonable detail the proposed Structural
Change(s), the reason(s) therefore and all information reasonably necessary for
the Purchaser to make the determinations described in clauses (a) and (b) below,
such consent not to be unreasonably withheld (it being understood and agreed,
without limitation, that the Purchaser may withhold its consent if a duly
authorized representative of the Purchaser notifies the Seller within 5 Business
Days after receipt of such notice that the proposed Structural Change (a) would
impede or delay in any material way the ability of the parties to close the
transactions contemplated by this Agreement or the Ancillary Agreements or (b)
would directly or indirectly prejudice or increase the costs (including Tax
costs) to the Purchaser, and provides the Seller with an accounting in
reasonable detail of its good faith reasonable estimate of the Damages (net of
benefits) the Purchaser would suffer, if any, if the proposed change were
consented to); or (2) in the event the Purchaser withholds its consent pursuant
to clause (b) above, effect the Structural
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Change and reimburse the Purchaser on an after Tax basis for the estimated
amount of such accounting (it being understood (1) that payment of such amount
shall not bar a recovery by the Seller (and such recovery shall be permitted) to
the extent the actual Damages (net of benefits) suffered by the Purchaser as a
result of such change was lower than the amount paid by the Seller hereunder; in
which case the Seller shall be permitted to recover such difference plus all
reasonable costs and expense of recovery (including attorney's and accountants
fees), and (2) that payment of such amount shall not bar a recovery by the
Purchaser (and such recovery shall be permitted) to the extent the actual
Damages (net of benefits) suffered by the Purchaser as a result of such change
was greater than the amount paid by the Seller hereunder). For the avoidance of
doubt, a "Structural Change" does not include, among other things, a change with
respect to the assignment of a Contract, Purchased Intellectual Property,
Retained Business Contracts or Retained Business Intellectual Property Rights,
which can be accomplished in the manner set forth in Section 5.5.1.
(c) The Seller and the Purchasers agree and acknowledge that no
consent shall be required to make changes other than Structural Changes. The
parties also agree that after the Closing with respect to the parts of the
Reorganization that could not be completed because of Transfer Approvals and are
subject to Section 2.4.2, no Structural Change(s) may be made to the
Reorganization without the consent described in Section 5.21(b), except if
otherwise required by Section 2.4.2(b).
(d) Each of the Seller and the Purchaser agrees that it will,
and will cause its respective Affiliates to, comply with all reasonable requests
from the other for information that is necessary to calculate and/or verify
Damages (as described above in (b)), whether such request is made before, on or
after the Closing.
(e) It is agreed and understood that Section 5.21B of the
Seller's Disclosure Schedule ("Part B") does not constitute a part of the
Reorganization. Part B may be amended prior to or on the Closing, in the same
manner and subject to the same limitations as set forth in Section 5.21(b) and
after the Closing in the manner described in Section 5.21(c). It is also agreed
and understood that any change in the manner in which the Reorganization or Part
B is carried out which is permitted pursuant to this Section 5.21 shall be
deemed to be a part of the Reorganization or Part B, as the case may be, as if
it was described on the relevant part of Section 5.21 of the Seller's Disclosure
Schedule.
Section 5.22 No Solicitation. From the date hereof until the Closing Date
or the earlier termination of this Agreement, other than in the Ordinary Course
of Business, the Seller shall not, nor shall it authorize or permit any of the
Purchased Subsidiaries to solicit the submission of any offers or proposals for
the Water Business or any portion thereof, the Purchased Subsidiaries and their
respective Subsidiaries, the Transferred Assets or the Transferred Liabilities
from any third party or otherwise directly or knowingly indirectly pursue any
offer or proposal so received; provided, however, that nothing in this Section
5.22 shall apply to the solicitation or pursuit of any offers or proposals of a
third party regarding the acquisition of the Seller or any of the Seller's other
assets.
Section 5.23 Leaseback Leases. The Seller and the Purchaser agree that at
or prior to the Closing, (i) the Seller shall cause the transfer of title to the
Leaseback Properties from Xxxx to
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the Seller or its Affiliates, and (ii) the Seller, or its Affiliates, and Xxxx
will enter into the Leaseback Leases, in the form attached hereto as Exhibit
VIII, demising the Leaseback Properties back to Xxxx in accordance with the
terms of such Leaseback Leases. The Seller and the Purchaser further agree that
if the Seller shall sell or cause the sale of any Leaseback Property to any
third party prior to the Closing, then such sale shall be subject to the terms
of the applicable Leaseback Lease.
Section 5.24 Escheat. Notwithstanding any other provision of this
Agreement, the Seller shall have no liability in connection with, and the
Purchasers shall be responsible for and shall hold the Seller and any successor
entities thereto or Affiliates thereof harmless against, any claims made on or
after the Closing Date for or with respect to abandoned, unclaimed or
escheatable property, whether or not such claims arise from events or activities
taken prior to, on or after the Closing Date, to the extent such claims relate
or are attributable to the Transferred Subsidiaries.
Section 5.25 [Reserved].
Section 5.26 Other Agreement. The Seller and the Purchasers agree that as
soon as possible after the date hereof, the Seller and the Purchasers shall
negotiate in good faith to and enter into an agreement for the purposes and with
the terms set forth in Section 5.26 of the Seller's Disclosure Schedule.
Section 5.27 Certain Water Business Properties. The Seller and the
Purchaser agree that, notwithstanding anything to the contrary herein, prior to
the Closing, or to the extent applicable pursuant to Section 2.4.2, the date of
the Deferred Transfer, the Seller will take such steps as are necessary to cause
the removal and transfer from the Transferred Subsidiaries of any Owned Real
Properties that are listed as Excluded Assets on Schedule 3.20, so that after
Closing (and the date of the Deferred Transfer, as applicable) those assets
shall be owned by the Seller (or its Affiliates).
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Mutual Conditions. The respective obligations of each party
hereto to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing of the following
conditions:
6.1.1 No Governmental Authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order of any nature that prohibits,
enjoins or restrains the consummation of the transactions contemplated by this
Agreement (each party agreeing that, prior to either party's election to
terminate this Agreement pursuant to Section 7.1.2 or any other applicable
provision in Section 7.1, to use its reasonable best efforts, including appeals
to higher courts, to have any judgment, injunction, order or decree lifted);
provided, however, that this will not include any Transfer Approval that has not
yet been obtained that meets the requirements of Section 2.4.2(a)
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(it being understood that the Purchaser shall have the option of waiving the
book value and materiality requirements of Section 2.4.2(a)(i) on behalf of all
parties hereto and this condition shall not apply to the extent of such waiver);
6.1.2 The consents and approvals of Governmental Authorities required
under the Antitrust Laws, including with respect to the HSR Act shall have been
obtained (or any applicable waiting period thereunder shall have expired or been
terminated); and
6.1.3 The Seller and the Purchasers shall have fulfilled all
notification requirements under applicable foreign Worker Consultation
regulations or Laws or under applicable foreign union contracts.
Section 6.2 Conditions to the Purchasers' Obligations. The obligations of
the Purchasers to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment prior to or at the Closing of
each of the following conditions:
6.2.1 The representations and warranties of the Seller set forth in
Article III of this Agreement or in any agreement or certificate delivered
pursuant to the provisions hereof or in connection with the transactions
contemplated hereby shall be true and correct as of the Closing Date (provided
that representations and warranties made as of a specified date, shall be true
and correct only as of such specified date), except where the failure to be true
and correct would not, individually or in the aggregate (and without regard to
any qualifications as to Material Adverse Effect contained in such
representations and warranties, except for the qualification as to Material
Adverse Effect contained in Section 3.5(b) of this Agreement), have a Material
Adverse Effect on the Water Business;
6.2.2 The Seller shall have performed in all material respects each
obligation and agreement to be performed by it, and shall have complied in all
material respects with each covenant required by this Agreement to be performed
or complied with by it at or prior to the Closing;
6.2.3 Prior to or at the Closing, the Seller shall have obtained (a)
from all appropriate Persons the written releases and waivers referred to in
Section 5.14.1(a)(i) or other evidences reasonably satisfactory to the
Purchasers that the Encumbrances (other than Permitted Encumbrances) referred to
in Section 5.14(a)(i) have been removed and (b) the certificates representing
the shares of Xxxx Common Stock and Water Subsidiaries Stock;
6.2.4 Prior to or at the Closing, the Seller shall have obtained from
all appropriate Persons releases from each of the guaranties given by the
Transferred Subsidiaries in respect of any Indebtedness (including pursuant to
the Loan Documents) or other obligations of the Seller or any of its Affiliates
(other than the Transferred Subsidiaries); and
6.2.5 Since the date hereof, there shall not have been any change,
effect, event, occurrence or state of facts which would reasonably be expected
to be materially adverse to the business, operations or financial condition of
the Water Business.
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6.2.6 Prior to or at the Closing, the Seller shall have delivered to
the Purchasers a certificate of a Vice President of the Seller, dated the
Closing Date, to the effect that the Person signing such certificate is familiar
with this Agreement and, to the best of such Person's knowledge, the conditions
specified in Sections 6.2.1, 6.2.2, 6.2.3, 6.2.4 and 6.2.5 have been satisfied.
Section 6.3 Conditions to the Seller's Obligations. The obligations of the
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing of each of the following
conditions:
6.3.1 The representations and warranties of the Purchasers set forth
in Article IV of this Agreement or in any agreement or certificate delivered
pursuant to the provisions hereof or in connection with the transactions
contemplated hereby shall be true and correct as of the Closing Date (provided
that representations and warranties made as of a specified date, shall be true
and correct only as of such specified date), except where the failure to be true
and correct would not, individually or in the aggregate (and without regard to
any qualifications as to Material Adverse Effect contained in such
representations and warranties), have a Material Adverse Effect on the
Purchasers;
6.3.2 Each of the Purchasers shall have performed in all material
respects each obligation and agreement to be performed by it, and shall have
complied in all material respects with each covenant required by this Agreement
to be performed or complied with by it at or prior to the Closing; and
6.3.3 Prior to or at the Closing, the Purchasers shall have delivered
to the Seller a certificate of a Vice President of the Parent Purchaser, dated
the Closing Date, to the effect that the Person signing such certificate is
familiar with this Agreement and, to the best of such Person's knowledge, the
conditions specified in Sections 6.3.1 and 6.3.2 have been satisfied.
6.3.4 The steps marked with an asterisk in Schedule 5.21A of the
Seller's Disclosure Schedule or, as selected by the Seller in its sole
discretion, the alternative steps corresponding to such steps set forth in such
schedule shall have been completed; provided, however, that this condition shall
expire on May 12, 2002.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated at any time
prior to the consummation of the Closing under the following circumstances:
7.1.1 by mutual written consent of the Seller and the Parent
Purchaser;
7.1.2 by either the Parent Purchaser, on behalf of the Purchasers, or
the Seller upon written notice to the other if the Closing shall not have been
consummated on or before the Outside Date; provided that the right to terminate
this Agreement under this Section 7.1.2 shall
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not be available to a party if such party's or such party's Affiliate's willful
act or willful failure to act has been the cause of or resulted in the failure
of the Closing to be consummated on or before the Outside Date; provided,
further, that in the event that the only condition(s) that have not been
satisfied or waived are the conditions set forth in Section 6.2.3 and/or 6.2.4,
the defined term "Outside Date" shall be deemed to mean November 12, 2002;
7.1.3 by the Parent Purchaser, on behalf of the Purchasers, upon
written notice to the Seller, if any of the conditions to the Closing set forth
in Section 6.2 shall have become permanently incapable of fulfillment and shall
not have been waived in writing by the Purchasers;
7.1.4 by the Seller upon written notice to the Parent Purchaser, if
any of the conditions to the Closing set forth in Section 6.3 shall have become
permanently incapable of fulfillment and shall not have been waived in writing
by the Seller; or
7.1.5 by either the Parent Purchaser, on behalf of the Purchasers, or
the Seller upon written notice to the other, if there shall be in effect a
final, non-appealable order of a court or government administrative agency of
competent jurisdiction permanently prohibiting the consummation of the
transactions contemplated hereby.
Section 7.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement, except for the last proviso
to the first sentence of Section 5.1.1, the last sentence of Section 5.1.1, the
provisions of Section 8.2.9, Article IX and this Section 7.2, shall become void
and have no effect, without any liability on the part of any party hereto or its
directors, officers or stockholders. Notwithstanding the foregoing, (a) nothing
in this Section 7.2 shall relieve any party hereto of liability for a willful
material breach of any of its obligations under this Agreement, and (b) if it
shall be finally judicially determined that termination of this Agreement was
caused by an intentional and deliberate breach of this Agreement, then, in
addition to other remedies at Law or equity for breach of this Agreement, the
party so found to have intentionally and deliberately breached this Agreement
shall indemnify and hold harmless the other parties hereto for their respective
out-of-pocket costs, including the reasonable fees and expenses of their
counsel, accountants, financial advisors and other experts and advisors, as well
as reasonable fees and expenses incident to the negotiation, preparation and
execution of this Agreement and related documentation.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
Section 8.1 Survival of Representations and Warranties.
8.1.1 The representations and warranties provided for in this
Agreement shall not survive the Closing; provided, however, that (a) the
representations and warranties contained in Sections 3.1, 3.3, 4.1 and 4.2 shall
survive the Closing until the second anniversary of the Closing Date; (b) the
representations and warranties contained in Sections 3.8.1 and 3.12.3 shall
survive the Closing until the first anniversary of the Closing Date; (c) the
representations and
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warranties contained in Section 3.9.3.2 shall survive the Closing until the
four-month anniversary of the Closing Date; (d) the representations and
warranties contained in Section 3.4 and 4.3 shall survive the Closing until the
three-month anniversary of the Closing Date; (e) the representations and
warranties contained in Section 3.10.2 shall survive the Closing until the 60th
day following the Closing Date; (f) the representations and warranties contained
in Sections 3.2, 3.9.1.2, 3.9.3.1 and 3.9.5, and 3.10.1 shall survive the
Closing indefinitely (except with respect to properties for which title
insurance is obtained by the Purchaser, as to which the representations and
warranties contained in Section 3.10.1 shall survive the Closing only until the
first anniversary of the Closing Date); (g) the representations and warranties
contained in Section 3.7 shall survive as provided in Section 5.9.10; and (h)
the representations and warranties contained in Section 3.18 shall survive the
Closing until the date the Final Closing Date Statement of Net Assets shall have
become final and binding on the parties pursuant to Section 2.5.
8.1.2 The survival period of each representation or warranty as
provided in Section 8.1.1 is referred to herein as the "Survival Period."
Section 8.2 Indemnification.
8.2.1 Subject to the limitations set forth in this Article VIII,
subsequent to the Closing (provided that a specific Claim alleging in reasonable
detail the then existing factual basis for such Claim and the Section of this
Agreement alleged to have been breached has been made during the applicable
Survival Period), the Seller shall indemnify, defend and hold harmless the
Purchasers and their respective Subsidiaries (and after the Closing, the
Transferred Subsidiaries), and Affiliates, and their respective officers,
directors, employees, agents and representatives, and each of their heirs,
executors, successors and assigns (collectively, the "Representatives"), against
and in respect of any and all Damages arising out of, resulting from or incurred
in connection with (a) any breach of any representations and warranties which
survives the Closing under Section 8.1, in each case as of the Closing Date
(provided that with respect to representations and warranties made as of a
specified date, any breach as of such specified date) without regard to any
qualification as to Material Adverse Effect contained in such representations
and warranties, (b) any breach by the Seller of any covenant or agreement of the
Seller contained in this Agreement, and (c) the Excluded Liabilities (except
that the Seller's indemnification under this clause (c) for Excluded Liabilities
arising from the Leaseback Leases shall be limited to liabilities of the
respective lessors pursuant to Paragraph 27A (Landlord's Environmental
Liability) of the form of the Leaseback Leases attached hereto as Exhibit VIII).
Notwithstanding the foregoing, (i) Section 8.2.1(a) shall not apply to the
representations and warranties contained in Section 3.7 of this Agreement, and
(ii) the Seller's indemnification obligations under this Section 8.2.1 with
respect to any breach of Section 3.8.1 shall be solely against and in respect of
any and all Criminal Damages paid by the Purchaser or any of its Affiliates
(including the Transferred Subsidiaries) arising out of, resulting from or
incurred in connection with any such breach of Section 3.8.1. The Seller's
obligations under this Section 8.2.1 shall not be relieved by Sections 8.2.2(c)
and (e).
8.2.2 Subject to the limitations set forth in this Article VIII,
subsequent to the Closing (provided that a specific Claim alleging in reasonable
detail the then existing factual basis for such Claim and the Section of this
Agreement alleged to have been breached has been
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made during the applicable Survival Period), the Purchasers shall, jointly and
severally, indemnify, defend and hold harmless the Seller and its
Representatives, against and in respect of any and all Damages arising out of,
resulting from or incurred in connection with (a) any breach of representations
and warranties which survives the Closing under Section 8.1 in each case as of
the Closing Date (provided that with respect to representations and warranties
made as of a specified date, any breach as of such specified date) without
regard to any qualification as to Material Adverse Effect contained in such
representations and warranties, (b) any breach by the Purchasers of any covenant
or agreement of the Purchasers contained in this Agreement, (c) any payments
made by the Seller or its Affiliates after the Closing under the Guaranties, (d)
any environmental or other testing not performed in compliance with the
provisions of Section 5.1 or any Actions against the Seller or its Affiliates
arising as a result of any environmental testing referred to in Section 5.1, and
(e) the Transferred
Liabilities.
8.2.3 Any Person providing indemnification pursuant to the provisions
of this Section 8.2 is referred to herein as an "Indemnifying Party," and any
Person entitled to be indemnified pursuant to the provisions of this Section 8.2
is referred to herein as an "Indemnified Party."
8.2.4 The Seller's indemnification obligations contained in Section
8.2.1(a) and under any Deed shall not apply to any claim for Damages until the
aggregate amount of all Claims under Section 8.2.1(a) and the Deeds totals
$20,000,000 (the "Basket Amount"), in which event the Seller's indemnification
obligation contained in Section 8.2.1(a) and the Deeds shall apply to the total
amount of Damages in excess of the Basket Amount, subject to a maximum liability
to the Purchasers, in the aggregate, of $100,000,000 (the "Cap Amount") for all
Claims under Section 8.2.1(a), and the Deeds, in the aggregate. Notwithstanding
the foregoing, Damages relating to a breach of Section 3.12.3 shall not be
subject to the Basket Amount, but shall be subject to the Cap Amount.
8.2.5 The Purchasers' indemnification obligation contained in Section
8.2.2(a) shall not apply to any claim for Damages until the aggregate amount of
all Claims under Section 8.2.2(a) totals the Basket Amount, in which event the
Purchasers' indemnification obligation contained in Section 8.2.2(a) shall apply
to the total amount of Damages in excess of the Basket Amount, subject to a
maximum liability to the Seller, in the aggregate, equal to the Cap Amount for
all Claims under Section 8.2.2(a) in the aggregate.
8.2.6 Notwithstanding the foregoing, (a) no party hereto shall be
obligated to provide indemnification with respect to any individual claim that
could be made under Section 8.2.1(a), 8.2.2(a) or 5.9.1(a) (but only to the
extent such claim relates to the Water Business) or 5.9.1(e), or under any Deed,
for Damages if the entire amount of Damages relating to such claim is, or is
reasonably expected to be, less than $50,000 ($20,000 for Tax claims under
Section 5.9.1(a) (but only to the extent such claim relates to the Water
Business) or 5.9.1(e)), and (b) no party hereto shall be obligated to provide
indemnification under Section 8.2.1(a) or 8.2.2(a), or under any Deed, unless it
is notified of the claim for Damages prior to the expiration of the Survival
Period applicable to such claim.
8.2.7 Subject to the provisions of Section 5.9 with respect to Tax
matters, the provisions of this Article VIII shall constitute the sole and
exclusive remedy of any Indemnified
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Party for Damages arising out of, resulting from or incurred in connection with
any inaccuracy in any representation or warranty or the breach of any
representation or warranty made by the Purchasers or the Seller in this
Agreement; provided, however, this exclusive remedy for Damages does not
preclude a party from bringing an action for specific performance or other
equitable remedy to require a party to perform its agreements, covenants or
obligations under this Agreement or any Ancillary Agreement or for fraud or
willful misconduct.
8.2.8 The Seller shall indemnify and hold harmless the Purchasers and
any other Indemnified Party of the Purchasers from and against any and all
Damages incurred or suffered by such Indemnified Party arising out of, resulting
from, or relating to the Seller's failure to comply with the terms and
conditions of any applicable bulk sales or bulk transfer or similar Laws of any
jurisdiction that may be applicable to the sale or transfer of any or all of the
Transferred Assets to the Purchasers (or its Designated Affiliates),
notwithstanding the waiver contained in the following sentence. In consideration
of the Seller's agreement to indemnify the Purchasers and other Indemnified
Parties of the Purchasers pursuant to this Section 8.2.8, the Purchasers hereby
waives compliance by the Seller and the Selling Entities with the requirements
and provisions of any bulk sales or bulk transfer or similar Laws of any
jurisdiction, including Article 6 of the New York Commercial Code, that may
otherwise be applicable with respect to the sale or transfer of any or all of
the Transferred Assets to the Purchasers.
8.2.9 The Seller shall pay, and shall indemnify the Purchasers in
respect of, any and all investment banking fees, brokers' or finders' fees, or
any other commission or similar fee, payable to any Person acting on behalf of
the Seller or any of its Affiliates or under the authority of any them, in
connection with any of the transactions contemplated herein (including as a
result of the occurrence of the Closing), and the Purchasers shall pay, and
shall jointly and severally indemnify the Seller in respect of, any and all
investment banking fees, brokers' or finders' fees, or any other commission or
similar fee, payable to any person acting on behalf of the Purchasers or any of
their Affiliates or under the authority of any of them, in connection with any
of the transactions contemplated herein, in each case regardless of whether any
claim for payment is asserted before or after the Closing of the transactions
contemplated hereby, or before or after any termination of this Agreement.
Section 8.3 Procedures for Third Party Claims.
8.3.1 In the case of any claim for indemnification arising from a
Claim of a third party (a "Third Party Claim"), an Indemnified Party shall give
prompt written notice to the Indemnifying Party of any Claim of which such
Indemnified Party has knowledge, and as to which it may request indemnification
hereunder, specifying (to the extent known) the amount of such Claim and any
relevant facts and circumstances relating thereto; provided, however, that any
failure to give such prompt notice or to provide any such facts and
circumstances will not waive any rights of the Indemnified Party, except to the
extent that the rights of the Indemnifying Party are actually prejudiced
thereby. The Indemnifying Party shall have the right (and, if it elects to
exercise such right, to do so by written notice within 30 days after receiving
notice from the Indemnified Party) to defend and to direct the defense against
any such Third Party Claim, in its name or in the name of the Indemnified Party,
as the case may be, at the expense of the Indemnifying Party, and with counsel
selected by the Indemnifying Party, unless (a) the
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Indemnifying Party shall not have taken any action to defend such Third Party
Claim within such 30-day period, or (b) the Indemnified Party shall have
reasonably concluded that there is a conflict of interest between the
Indemnified Party and the Indemnifying Party in the conduct of the defense of
such Third Party Claim. Notwithstanding anything in this Agreement to the
contrary (other than the last sentence of this Section 8.3.1), the Indemnified
Party and the Indemnifying Party shall cooperate with each other and keep the
other party fully informed in the defense of such Third Party Claim. The
Indemnified Party shall have the right to participate in the defense of any
Third Party Claim with counsel employed at its own expense; provided, however,
that, in the case of any Third Party Claim described in clause (b) above or as
to which the Indemnifying Party shall not in fact have employed counsel to
assume the defense of such Third Party Claim within such 30-day period, the
reasonable fees and disbursements of such Indemnified Party's counsel shall be
at the expense of the Indemnifying Party. The Indemnifying Party shall have no
indemnification obligations with respect to any Third Party Claim which shall be
settled by the Indemnified Party without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.
8.3.2 The Indemnifying Party, if it has assumed the defense of any
Third Party Claim as provided in this Section 8.3, shall not consent to a
settlement of, or the entry of any judgment arising from, any such Third Party
Claim without the Indemnified Party's prior written consent (which consent shall
not be unreasonably withheld) unless such settlement or judgment (a) relates
solely to monetary damages for which the Indemnifying Party shall be responsible
and (b) includes as an unconditional term thereof the release of the Indemnified
Party from all liability with respect to such Third Party Claim.
8.3.3 The foregoing provisions of this Section 8.3 shall not apply to
Third Party Claims involving Taxes, which Claims shall instead be governed by
the provisions of Section 5.9.
Section 8.4 Procedures for Inter-Party Claims. In the event that an
Indemnified Party determines that it has a Claim for Damages against an
Indemnifying Party hereunder (other than as a result of a Third Party Claim),
the Indemnified Party shall give prompt written notice thereof to the
Indemnifying Party, specifying the amount of such Claim and any relevant facts
and circumstances relating thereto. The Indemnified Party shall provide the
Indemnifying Party with reasonable access to its Records for the purpose of
allowing the Indemnifying Party a reasonable opportunity to verify any such
claim for Damages. The Indemnified Party and the Indemnifying Party shall
negotiate in good faith for a 30-day period regarding the resolution of any
disputed claims for Damages. If no resolution is reached with regard to such
disputed Claim between the Indemnifying Party and the Indemnified Party within
such 30-day period, the Indemnified Party shall be entitled to seek appropriate
remedies in accordance with the terms hereof. Promptly following the final
determination of the amount of any Damages claimed by the Indemnified Party, the
Indemnifying Party shall pay such Damages to the Indemnified Party by wire
transfer or check made payable to the order of the Indemnified Party. In the
event that the Indemnified Party is required to institute an Action in order to
recover Damages hereunder, the reasonable and verifiable cost of such Action
shall be added to the amount of Damages payable to the Indemnified Party if the
Indemnified Party recovers at least 50% of the Damages sought in such
proceedings. In the event that a party hereto claiming to be an Indemnified
Party institutes an
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Action in order to recover Damages hereunder and the applicable court refuses to
award any Damages to such party, such party shall reimburse the defending party
for the cost of such Action.
Section 8.5 Calculation of Damages. The Damages suffered by any party
hereto shall be calculated after giving effect to the receipt by the Indemnified
Party of any available insurance proceeds or recoveries from third parties.
Notwithstanding any provision herein to the contrary, to avoid double-counting
as to any matter, the term "Damages" shall not include any liability to the
extent that such liability (or a reserve therefor (to the extent of such
reserve)) is reflected as a liability in the Consolidated Statement of Net
Assets or the Final Closing Date Statement of Net Assets even if any such
liability would also constitute a breach of any of the Seller's representations
or warranties hereunder; provided, that in the case of liabilities (or reserves
therefor) reflected on the Final Closing Date Statement of Net Assets (but not
the Consolidated Statement of Net Assets), the term "Damages" shall not include
such liabilities or reserves only to the extent such liabilities (or reserves)
result in Decreased Consideration.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile (with confirming copy sent by one of the other delivery methods
specified herein), by overnight courier or sent by certified, registered or
express air mail, postage prepaid, and shall be deemed given when so delivered
personally, or when so received by facsimile or courier, or, if mailed, three
calendar days after the date of mailing, as follows:
If to the Seller: Hercules Incorporated
Hercules Plaza
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Chief Legal Officer
with copies to: Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
Xxxxx X. Xxxx, Esq.
and
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Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
If to the Purchasers: GE Specialty Materials
000 Xxxxxxx Xxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy to: General Electric Company
0000 Xxxxxx Xxxxxxxx, X0
Xxxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Senior Counsel - Transactions
and with a copy to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxxx, Esq.
Xxxxxxx Xxxxxx, Esq.
or to such other address and with such other copies as any party hereto shall
notify the other parties hereto (as provided above) from time to time.
Section 9.2 Expenses. Regardless of whether the transactions provided for
in this Agreement are consummated, except as otherwise expressly provided
herein, each of the parties hereto shall pay its own expenses incident to this
Agreement and the transactions contemplated herein (including legal fees,
accounting fees, investment banking fees and filing fees).
Section 9.3 Governing Law; Consent to Jurisdiction. Except as set forth in
Section 5.12.5 with respect to Insurance Policies disputes, this Agreement shall
be governed by, and construed in accordance with, the internal Laws of the State
of Delaware, without reference to the choice of law principles thereof. Each of
the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of Delaware and the United States District Court for any
district within such state for the purpose of any Action or judgment relating to
or arising out of this Agreement or any of the transactions contemplated hereby
and to the laying of venue in such court. Service of process in connection with
any such Action may be served on each party hereto by the same methods as are
specified for the giving of notices under this Agreement. Each party hereto
irrevocably and unconditionally waives and agrees not to plead or claim any
objection to the laying of venue of any such Action brought in such courts and
irrevocably and unconditionally waives any claim that any such Action brought in
any such court has been brought in an inconvenient forum.
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Section 9.4 Waiver of Jury Trial. EACH PARTY HERETO ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR ANY
ANCILLARY AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND,
THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR ANY ANCILLARY
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY ANCILLARY
AGREEMENT. EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH
ACTION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES
THIS WAIVER VOLUNTARILY, AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.4.
Section 9.5 Assignment; Successors and Assigns; No Third Party Rights.
This Agreement and the Ancillary Agreements may not be assigned by any party
hereto without the prior written consent of the other parties hereto, and any
attempted assignment shall be null and void; provided, however, that each of the
Purchasers may assign any or all of their rights and obligations to a Designated
Affiliate, provided that in each case the Purchasers continue to remain fully
and unconditionally subject to such obligations (it being acknowledged and
agreed that each of the Purchasers shall be liable for any Liabilities assumed
by or assigned to the Purchasers' Affiliates or Designated Affiliates). This
Agreement and the Ancillary Agreements shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Except as provided in Section 8.2, this Agreement shall be for the sole
benefit of the parties hereto, and their respective successors and permitted
assigns and is not intended, nor shall be construed, to give any Person, other
than the parties hereto and their respective successors and permitted assigns
any legal or equitable right, benefit, remedy or claim hereunder. Nothing in
this Agreement shall prevent any party and its successors and permitted assigns
from consolidating with or merging with or into, or transferring, in one
transaction or a series of related transactions, substantially all of its assets
to, any Person or Persons; provided, however, that the purchaser of
substantially all of the assets of the party or its successor or permitted
assign, shall agree with the other party to be bound by all of the transferring
party's obligations hereunder; provided, further, however, that no such
agreement shall be required in the event of a transfer by the Parent Purchaser
or its successor or permitted assign of substantially all of its assets or a
transfer by the Seller or its successor or permitted assign of substantially all
of its assets that does not include substantially all of the Seller's or its
successor's or permitted assign's business in the Pulp and Paper Industry.
Section 9.6 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original agreement, but all of which together
shall constitute one and the same instrument.
Section 9.7 Titles and Headings. The headings and table of contents in
this Agreement are for reference purposes only, and shall not in any way affect
the meaning or interpretation of this Agreement.
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Section 9.8 Entire Agreement. This Agreement (including the Schedules and
Exhibits attached hereto or delivered in connection herewith), the Ancillary
Agreements and the Confidentiality Agreement constitute the entire agreement
among the parties hereto with respect to the matters covered hereby and thereby,
and supersede all previous written, oral or implied understandings among them
with respect to such matters.
Section 9.9 Amendment and Modification. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 9.10 Publicity; Public Announcements. Unless otherwise required by
applicable Laws or the requirements of any national securities exchange (and, in
that event, only if time does not permit), at all times prior to the earlier of
the consummation of the Closing or termination of this Agreement pursuant to
Article VII, the Seller and the Purchasers shall consult with each other before
issuing, and give each other a reasonable opportunity to review and comment
upon, any press release with respect to the transactions contemplated hereby and
shall not issue any such press release without each other's consent, which
consent shall not be unreasonably withheld or delayed. The parties agree that
the initial press release to be issued with respect to this Agreement and the
transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties.
Section 9.11 Waiver. Any of the terms or conditions of this Agreement may
be waived at any time by the party or parties hereto entitled to the benefit
thereof, but only by a writing signed by the party or parties waiving such terms
or conditions.
Section 9.12 Severability. If any term, provisions, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions completed hereby
is not affected in any manner materially adverse to any party. Upon such
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
Section 9.13 No Strict Construction. The Purchasers and the Seller each
acknowledge that this Agreement has been prepared jointly by the parties hereto
and shall not be strictly construed against any party hereto.
Section 9.14 Knowledge. To the extent that any representation is made to
the "Seller's knowledge" (or similar words), such knowledge shall refer to the
actual knowledge of the individuals listed in Section 9.14 of the Seller's
Disclosure Schedule under the heading "Seller's knowledge," without any
investigation by such individual. To the extent that any representation is made
to the "Seller's Finance knowledge" (or similar words),
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such knowledge shall refer to the actual knowledge of the individuals listed in
Section 9.14 of the Seller's Disclosure Schedule under the heading "Seller's
Finance knowledge," without any investigation by such individual. To the extent
that any representation is made to the "Purchasers' knowledge" (or similar
words), such knowledge shall refer to the actual knowledge of the individuals
listed on Section 9.14 of the Purchasers' Disclosure Schedule, without any
investigation by such individual.
Section 9.15 Affiliate Status. To the extent that a party hereto is
required hereunder to take certain action with respect to entities designated
herein as such party's Affiliates, such obligation shall apply to such entities
only during such period of time that such entities are Affiliates of such party.
Section 9.16 No Implied Representation by the Seller. Notwithstanding
anything contained in Article III or any other provision of this Agreement or
the Ancillary Agreements, the Purchasers acknowledge and agree that the Seller
is making no representations or warranties whatsoever, express or implied,
beyond those expressly given in this Agreement, the Ancillary Agreements or any
certificate contemplated hereby or thereby to be delivered to the Purchasers in
connection herewith or therewith, including any implied warranty or
representation as to condition, merchantability or suitability as to any of the
properties or assets of the Water Business. As part of their investigation of
the Water Business, the Purchasers have been given financial information, cost
estimates, forecasts, projections and other oral or written information and
materials (including the Confidential Offering Memorandum, dated November 2000)
with respect to the Water Business (the "Additional Financial Information") by
the Seller or its agents and representatives. There are uncertainties inherent
in attempting to make projections, predictions and forecasts, and the Purchasers
are familiar with such uncertainties. The Purchasers have made their own
evaluation of the Additional Financial Information. None of the Seller and its
officers, directors, employees, Affiliates, representatives and agents is making
any representations or warranties with respect to the Additional Financial
Information (or the Special Purpose Financial Statements), except for the
specific representations and warranties set forth in this Article III.
Section 9.17 No Implied Representation by the Purchasers. Notwithstanding
anything contained in Article IV or any other provision of this Agreement or the
Ancillary Agreements, the Seller acknowledges that the Purchasers are making no
representations or warranties whatsoever, express or implied, beyond those
expressly made in this Agreement, the Ancillary Agreements or any certificate
contemplated hereby or thereby to be delivered to the Seller in connection
herewith or therewith.
Section 9.18 Designated Affiliates. The Parent Purchaser shall use its
commercially reasonable efforts to designate all of its Designated Affiliates as
soon as practicable following the date hereof and, in any event, shall use its
reasonable best efforts to make such designation not less than 30 days prior to
Closing. The Purchasers acknowledge and agree that any delay in any attempt to
make such a designation shall be considered in determining whether such
designation is made in compliance with clauses (2) and (3) of the definition of
"Designated Affiliate." The Purchasers acknowledge and agree that any
representation, warranty or covenant of the Seller which is breached or is not
true and correct, shall be deemed true and correct and not breached to the
extent such breach or inaccuracy resulted solely from the designation of a
Designated Affiliate.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HERCULES INCORPORATED
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman and CEO
FALCON ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title:
GENERAL ELECTRIC COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title:
