Exhibit 1
PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is dated August 14, 2003,
between Cemex, Inc., a Louisiana corporation ("Purchaser"), and Phibro Animal
Health Corporation, a New York corporation f/k/a Philipp Brothers Chemicals, Inc
("Seller").
WHEREAS, Seller is the sole stockholder of Mineral Resource Technologies,
Inc., a Delaware corporation (the "Company" or "MRT");
WHEREAS, MRT is engaged in the Fly Ash Management Business and the MRT
Cement Business;
WHEREAS, the Seller owns and desires to sell to Purchaser, and Purchaser
desires to purchase from the Seller, all of the issued and outstanding shares of
capital stock (the "Purchased Stock") of the Company.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, and intending to be legally
bound hereby, the parties agree as follows.
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms when
capitalized in this Agreement shall have the meanings set forth below:
"Actions or Proceedings" means any legal action, law suit, legal
proceeding or arbitration.
"Agreement" means this Stock Purchase Agreement, including the Disclosure
Schedule, as the same may be amended from time to time in accordance with the
terms hereof.
"Affiliates" shall mean, with respect to any Person, any and all other
Persons that control, are controlled by, or are under common control with, such
Person. For purposes of the foregoing, "control" of a Person shall mean direct
or indirect ownership of 50% or more of the securities or other interests of
such Person having by their terms ordinary voting power to elect or appoint a
majority of the board of directors or others performing similar functions with
respect to such Person.
"Assets" of the Company means all assets and properties of every kind,
nature, character and description, owned by the Company, including cash and cash
equivalents, investments, accounts and notes receivable, chattel paper,
documents, instruments, equipment and inventory owned by the Company.
"Business" means the Fly Ash Management Business and the MRT Cement
Business as conducted by MRT on the date of this Agreement.
"Business Day" shall mean any day other than Saturday, Sunday and any day
on which banking institutions in the United States are authorized by law or
other governmental action to close.
"Casualty Loss" shall mean any loss, damage or reduction in value
resulting from catastrophic occurrences, or acts of God.
"Claim Notice" means written notification pursuant to Section 10.3 of a
Third Party Claim as to which indemnity under Section 10.1 is sought by an
Indemnified Party.
"Closing" shall have the meaning set forth in Section 4.1.
"Closing Date" shall have the meaning set forth in Section 4.1.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Contract" shall mean an agreement, written or oral, between MRT and any
other Person which obligates either MRT or such other Person to do or not to do
a particular thing.
"Disclosure Schedule" means the schedules delivered to Purchaser by or on
behalf of Seller in respect of and identified as being the Disclosure Schedule
for this Agreement, containing all lists, descriptions, exceptions and other
information and material as are included therein pursuant to this Agreement.
"Election Notice" means a written notice provided by the Seller or
Purchaser, as the case may be, in respect of a Tax Claim to the effect that it
elects to contest, and to control the defense or prosecution of, such Tax Claim
as provided in this Agreement.
"Employee Stay Liabilities" shall mean those amounts identified in Section
1.1.B of the Disclosure Schedule, to the extent payable to certain employees of
MRT in connection with the Closing, pursuant to certain agreements identified on
said Section 1.1.B, as stay bonus or equity based compensation, and all
employment Taxes with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
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"ERISA Affiliate" shall mean any entity that would be deemed to be a
"single employer" with MRT under Section 414(b), (c), (m) or (o) of the Code or
Section 4001 of ERISA.
"Environmental Liabilities" means any cost, damages, expense, liability,
obligation, or other responsibility arising from or under (a) any Environmental
Law and consisting of or relating to (i) any environmental matters or conditions
(including on-site or off-site contamination and environmental regulation of
chemical substances or products); (ii) fines, penalties, judgments, awards,
settlements, legal or administrative proceedings, out-of-pocket damages and
necessary and required response, investigative, remedial, or inspection costs
and expenses arising under Environmental Law; (iii) financial responsibility
under Environmental Law for clean-up costs or corrective action, including any
necessary and required investigation, clean-up, removal, containment, or other
remediation or response actions required by Environmental Law and for any
natural resource damages; or (iv) any other compliance, corrective,
investigative, or remedial measures required under Environmental Law; or (b) any
common law causes of action, including, but not limited to, negligence, trespass
or nuisance, based on violation by MRT of Environmental Laws, releases by MRT of
Hazardous Materials or fly ash, or actions or omissions by MRT that expose
others to Hazardous Materials or fly ash. The terms "removal," "remedial,"
"response action", and "release" shall have the meanings provided for such terms
under, and shall include the types of activities covered by, the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq., as amended ("CERCLA").
"Environmental Laws" shall mean all federal, state and local Laws relating
to public health, or to pollution or protection of the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) including, without limitation, the Clean Air Act, as amended,
CERCLA, the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"),
the Toxic Substances Control Act, the Federal Water Pollution Control Act, as
amended, the Safe Drinking Water Act, as amended, the Hazardous Materials
Transportation Act, as amended, the Oil Pollution Act of 1990, any state Laws
implementing the foregoing federal Laws, and all other Laws relating to or
regulating (i) emissions, discharges, releases, or cleanup of pollutants,
contaminants, chemicals, polychlorinated biphenyls (PCB's), oil and gas
exploration and production wastes, brine, solid wastes, or toxic or Hazardous
Materials or wastes (collectively, the "Polluting Substances"), (ii) the
generation, processing, distribution, use, treatment, handling, storage,
disposal, or transportation of Polluting Substances, or (iii) environmental
conservation or protection. References in this Agreement to Environmental Laws
existing or in effect as of a particular date shall include written
administrative interpretations and policies then existing or in effect.
"Environmental Permit" means any federal, state, local, provincial, or
foreign permits, licenses, approvals, consent or authorizations required by any
Governmental or Regulatory Authority under or in connection with any
Environmental Law and includes
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any and all orders, consent orders or binding agreements issued or entered into
by a Governmental or Regulatory Authority under any applicable Environmental
Law.
"Facilities" means any real property, leaseholds, or other interests
currently or formerly owned, managed, leased or operated by MRT and any
buildings, plants and structures currently or formerly owned, managed, leased or
operated by MRT.
"Final Determination" means (i) a decision, judgment, decree or other
Order by any court of competent jurisdiction, which decision, judgment, decree
or other Order has become final after all allowable appeals by either party to
the action have been exhausted or the time for filing such appeals has expired,
(ii) a closing agreement entered into under Section 7121 of the Code or any
other settlement agreement entered into in connection with an administrative or
judicial proceeding, (iii) the expiration of the time for instituting suit with
respect to a claimed deficiency or (iv) the expiration of the time for
instituting a claim for refund, or, if such a claim was filed, the expiration of
the time for instituting suit with respect thereto.
"Fly Ash Management Business" shall mean, directly or indirectly,
purchasing, disposing of, managing, brokering, selling, promoting or dealing in
or with fly ash or other coal combustion products generated as a result of the
burning of coal at or by an electric utility (but shall exclude the MRT Cement
Business or any products or processes now or hereafter invented, developed,
marketed or manufactured as part of or derived from the MRT Cement Business).
"GAAP" shall have the meaning given in Section 3.2.a.
"Governmental or Regulatory Authority" shall mean any federal, state,
regional, municipal or local court, legislative, executive, Native American or
regulatory authority or agency, board, commission, department or subdivision
thereof.
"Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the environment.
"Hazardous Materials" means (i) any petroleum or petroleum products (other
than fly ash), radioactive materials, asbestos in any form that is, or that is
likely to become, friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs), or (ii) any chemicals, materials, substances
or wastes which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted
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hazardous wastes," "toxic substances," "toxic pollutants" or words of similar
import, under any applicable Environmental Law.
"Hired Employee" shall have the meaning set forth in Section 7.2.a.
"Indebtedness" of any Person means all obligations of such Person (i) for
borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases, and (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any other Person.
"Indemnified Party" means any Person entitled to indemnification under any
provision of Article 10.
"Indemnifying Party" means any Person obligated to provide indemnification
under any provision of Article 10.
"Inventories" shall mean all inventories and stockpiles of raw materials,
work in process and finished goods of the Company related to the Business.
"Knowledge" shall have the meaning set forth in Section 1.2.b.
"Law" shall mean any federal, state, county, or local laws, statutes,
regulations, rules, codes, ordinances, orders, decrees, judgments or injunctions
enacted, adopted, issued or promulgated by any Governmental or Regulatory
Authority, from time to time.
"Leased Real Property" shall have the meaning set forth in Section 5.14.a.
"Lease" or Leases" shall mean an agreement(s) between the Company and any
other Person which creates the relationship of landlord and tenant (with regard
to real property) or lessor and lessee (with regard to real and/or personal
property).
"License" shall have the meaning given in Section 5.18.
"Lien" shall mean any mortgage, deed of trust, pledge, lien, claim,
security interest, covenant, restriction, easement, preemptive right, or any
other encumbrance or charge of any kind.
"Loss" or "Losses" means any and all liability, damages (including for
diminution of value), fines, fees, penalties and expenses, including without
limitation, interest, reasonable expenses of investigation, court costs,
reasonable out-of-pocket fees and expenses of attorneys, accountants and other
experts or other reasonable out-of-pocket expenses of litigation or other legal
proceedings (such fees and expenses to
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* OMITTED PURSUANT TO THE COMPANY'S REQUEST FOR CONFIDENTIAL TREATMENT
include all reasonable out-of-pocket fees and expenses, such as reasonable
out-of-pocket fees and expenses of attorneys), incurred in connection with the
rightful enforcement of rights under this Agreement against any party hereto,
and whether or not arising out of third party claims against an Indemnified
Party.
"Material Adverse Effect" shall mean any material adverse effect on the
business or financial condition of MRT (after giving effect to the release
and/or discharge of all Company Debt and guaranties by MRT of institutional
indebtedness of Seller and to Seller's post-Closing obligations as to the
Retained/Assumed Liabilities).
"Material Contract" shall have the meaning set forth in Section 5.17.
[ * ]
[ * ]
[ * ]
[ * ]
"MRT Cement Business" means the development, marketing and/or manufacture
of cement, mortar, stucco and/or masonry products using fly ash.
"MRT Employees" shall mean those employees of MRT who, as of the date of
this Agreement, are employed by MRT in the operation of the Business.
"MTU Agreement" shall mean that certain Agreement between Seller and
Purchaser, relating to the possible future assignment to Seller of the MTU
License, in the form of Exhibit 1.1.C hereto.
"MTU License" shall mean that certain License Agreement between Michigan
Technological University (d/b/a the Institute of Materials Processing and
Mineral Resource Technologies, LLC, dated May 30, 1996, and the amendments and
addendums thereto.
"Option" with respect to any Person means any security, right,
subscription, warrant, option or other Contract that gives the right to purchase
or otherwise receive or be issued any shares of capital stock or other equity
interests of such Person or any security of any kind convertible into or
exchangeable or exercisable for any shares of capital stock or other equity
interests of such Person.
"Order" means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Authority (in each such case whether preliminary
or final).
"PBC Credit Agreement" shall mean the Amended and Restated Revolving
Credit, Capital Expenditure Line and Security Agreement, dated November 30,
2000,
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among Seller, PNC Bank, National Association, and the Lenders and Guarantors
signatory thereto, as amended.
"Permitted Lien" shall mean: (a) liens created under any Lease, except any
lien arising as a result of any failure to timely make any payment or failure to
perform any other obligation or other default under such Lease; (b) liens for
Taxes that are not yet due and payable or that are being contested in good faith
by appropriate proceedings; (c) mechanics, materialmen's, landlords', carriers',
warehousemen's, and other liens imposed by law incurred in the ordinary course
of business; (d) zoning restrictions, land use regulations, declarations,
reservations, provisions, covenants, conditions, waivers, restrictions on the
use of property and third party easements, rights of way, leases or similar
matters that are recorded in the county records where the effected property is
located and do not prohibit the use of the property as currently used; (e) the
absence of executed rights of way or easements, or a defect in any executed
right of way or easement, where such rights have been or can be otherwise
obtained through a proceeding under prescription or other operation of law; (f)
deposits or pledges to secure obligations under worker's compensation, social
security or similar laws, or under unemployment insurance; (g) deposits or
pledges to secure bids, tenders, contracts (other than contracts for the payment
of money), leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of like nature arising in the ordinary course of the
Company's business and made, created or arising prior to the Closing Date; (h)
leases or subleases granted by or to others (and identified in the Disclosure
Schedule); (i) precautionary Uniform Commercial Code financing statements
regarding operating leases which leases are either disclosed pursuant to Article
V hereof or no longer in effect; and (j) Liens disclosed in Section 5.15.c of
the Disclosure Schedule which Purchaser and Seller have agreed may remain in
place after the Closing (as indicated in said Disclosure Schedule by a "**").
"Person" shall mean an individual, partnership, joint venture, trust,
corporation, limited liability company or other legal entity or Governmental or
Regulatory Authority.
"Plan" shall mean each bonus, deferred compensation, incentive
compensation, supplemental retirement, stock purchase, stock option, restricted
stock, deferred stock, stock appreciation right, severance or termination pay,
health, life insurance, disability, flexible benefit, cafeteria plan,
educational assistance, supplemental unemployment benefits, profit-sharing,
pension, stock bonus or retirement plan, program, agreement or arrangement of
the Seller applicable to any MRT Employee.
"Post-Closing Period" means any taxable period or portion thereof
beginning after the Closing Date. If a taxable period begins on or before the
Closing Date and ends after the Closing Date, then the portion of the taxable
period that begins on the day following the Closing Date shall constitute a
Post-Closing Period.
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* OMITTED PURSUANT TO THE COMPANY'S REQUEST FOR CONFIDENTIAL TREATMENT
"Pre-Closing Period" means any taxable period or portion thereof that is
not a Post-Closing Period.
"Seller Retirement Plans" shall mean Seller's DB Plan and Seller's DC
Plan, as defined on Schedule 7.2.F.
"Subject Facilities" shall mean the power generating facilities, and
related ash storage and disposal locations thereat or serving the same, covered
by the ash management contracts identified in Section 5.17 of the Disclosure
Schedule.
"Taxes" shall mean any and all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross income, gross
receipts, excise, stamp, real or personal property, ad valorem, withholding,
estimated, social security, unemployment, occupation, use, sales, service,
service use, license, net worth, payroll, franchise, severance, transfer,
recording or other taxes, assessments or charges imposed by any Governmental or
Regulatory Authority, whether computed on a separate, consolidated, unitary,
combined or other basis, and in each case such term shall include any interest,
penalties, or additions to tax attributable thereto.
"Tax Return" shall mean any return, report or similar statement required
to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax and including any return of an
affiliated, combined or unitary group.
"Third Party Claim" shall have the meaning set forth in Section 10.3.a.
[ * ]
[ * ]
[ * ]
[ * ]
1.2 Construction and Interpretation.
a. Unless the context of this Agreement otherwise requires, (i)
words of any gender include the other gender; (ii) words using the singular or
plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement; (iv) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement; (v) the word "including" does
not imply any limitation to the item or matter mentioned; and (vi) the phrases
"ordinary course of business" and "ordinary course of business consistent with
past practice" refer to the business and practice of MRT. All accounting terms
used herein and not expressly defined herein shall have the meanings given to
them under GAAP.
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b. When used herein the phrases "to the knowledge of" or "to the
best knowledge of" mean, with respect to MRT or Seller, the knowledge of Xxxx
Xxxxxxxxxxxx and/or Xxxxx Xxxx and, in addition, with respect to the
representations and warranties of Seller set forth in (i) Sections 5.8 and 5.10
only, the knowledge of Xxxxx Xxxxxxxx, and (ii) Sections 5.13 and 5.21 only, the
knowledge of Xxxxxxxx Xxxxxxx. These named Persons will be deemed to have
"knowledge" of a fact or matter about which a particular representation of
warranty is made if (x) such Person is actually aware of such fact or matter or
(y) such Person, in the prudent conduct of his or her responsibilities as an
executive of MRT or Seller, as the case may be, should reasonably have been
expected to discover or otherwise become aware of such fact or matter, and for
purposes hereof it shall be assumed that such Person has conducted a reasonable
investigation of the accuracy of the representations and warranties set forth
herein.
ARTICLE 2
RETAINED LIABILITIES
2.1 From and after the Closing Date, and subject to the provisions of
Article 10 hereof, Seller shall retain or assume and pay, perform or otherwise
discharge the following (collectively, the "Retained/Assumed Liabilities"):
a. all Tax liabilities of MRT to the extent they arise in respect of
Tax periods ending prior to the Closing Date and are not accrued or adequately
reserved for as reflected in the Closing Date Balance Sheet;
b. all payment obligations, whether asserted prior to or after the
Closing, of MRT or Seller, as the case may be, to MRT Employees set forth under
those agreements identified in Section 1.1.b of the Disclosure Schedule as a
result of the transaction(s) contemplated in this Agreement, including Employee
Stay Liabilities, in each case other than for severance and/or termination pay
by reason of the termination of employment of any of such persons on or after
the Closing Date, whether by Purchaser or MRT;
c. except as otherwise specifically set forth in this Agreement, any
obligations and liabilities relating to any MRT Employee or the employees of any
ERISA Affiliate of Seller, arising under any Seller Retirement Plans, whether
asserted prior to or after the Closing except for contribution obligations of
MRT in respect to the Seller's DC Plan in the ordinary course of business
accrued as of the Closing Date;
d. any Liabilities covered by Section 7.2.e hereof, whether asserted
prior to or after the Closing;
e. all finders' fees, brokerage commissions, or similar compensation
payable to any Person retained by Seller or MRT prior to the Closing to assist
or
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represent either of them in connection with the transactions contemplated hereby
or any previous efforts to effect a sale of MRT or the Business, whether
asserted prior to or after the Closing; and
f. all legal and accounting fees incurred by MRT to any lawyers or
accountants retained by Seller or MRT prior to the Closing in connection with
this Agreement or the transactions contemplated hereby or any previous efforts
to effect a sale of MRT or the Business, whether asserted prior to or after the
Closing.
2.2 After the Closing, MRT or Purchaser shall promptly notify Seller in
writing when, to their knowledge, a Retained/Assumed Liability becomes due and
payable, and Seller shall, subject to Article 10 hereof, pay, perform or
otherwise discharge such Retained/Assumed Liability, to the extent fixed and
liquidated in amount and not contingent, within thirty (30) days after the later
of (i) receipt of such notice, or (ii) the actual due date thereof, unless the
same is being contested in good faith (in which case Article 10 shall apply
thereto).
ARTICLE 3
TOTAL CONSIDERATION
3.1 Total Consideration.
a. The total consideration ("Total Consideration") for the Purchased
Stock and the payment of indebtedness of the Company owing to Seller shall
consist of the sum of (x) US$15,800,000.00, subject to the adjustments set forth
in Sections 3.1.b and/or 3.1.c below, plus (y) the NOL Amount as defined in
Schedule 3.1.a hereto, and payable as follows:
(i) $100.00 of the Total Consideration shall be paid in
consideration of the Purchased Stock.
(ii) The balance of the Total Consideration shall be paid in
respect of an equal amount of indebtedness owed by the Company to Seller and/or
any other Affiliates of Seller and outstanding immediately prior to the Closing
(the "Repaid Company Debt").
(iii) At and effective as of the Closing, (a) Seller shall
contribute or cause to be contributed to the capital of the Company the entire
balance of outstanding indebtedness owed by the Company to Seller and its
Affiliates in excess of the Repaid Company Debt (the "Contributed Company
Debt"), and (b) Seller shall release the Company from any and all liability and
obligations with respect of any and all indebtedness owed by the Company to
Seller and its Affiliates (including without limitation the Repaid Company Debt
and the Contributed Company Debt, collectively the "Company Debt").
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* OMITTED PURSUANT TO THE COMPANY'S REQUEST FOR CONFIDENTIAL TREATMENT
(iv) The NOL Amount shall be determined, and paid by Purchaser
to Seller, as provided in Schedule 3.1.a hereto (the provisions of which are
deemed incorporated herein by reference).
b. The Total Consideration, and accordingly the Repaid Company Debt,
will decrease by the [ * ] Decrease (as herein defined) if [ * ] actually or
constructively shall terminate the [ * ] Agreement at any time prior to the [ *
] day after the Closing Date, but only if (i) such actual or constructive
termination is due in whole or in part to [ * ] [ * ] [ * ] ] and (ii) Purchaser
has complied with its obligations under the immediately following sentence [ *
]. Purchaser shall use its, and from and after the Closing, shall cause MRT to
use its, commercially reasonable efforts to [ * ] and Purchaser shall keep
Seller apprised of all material developments regarding the matters referred to
herein. Purchaser shall notify Seller of any [ * ] within five (5) business days
thereafter, and Purchaser shall be entitled to disbursement of the amount of the
[ * ] Decrease and interest or income earned thereon from the Section 3.1.b
Escrow (as defined below) on or after the 30th day after the Purchaser's notice,
unless [ * ]. Seller agrees that, except for routine communications by MRT
employees in the ordinary course of business prior to the Closing Date, neither
Seller nor any of its Affiliates (which term shall not include MRT from and
after the Closing Date) will communicate with [ * ] between the date of signing
of this Agreement and [ * ] days after the Closing without the participation or
consent of Purchaser, nor will Seller or any of its Affiliates [ * ] without
such participation or such consent of Purchaser. The "[ * ] Decrease" shall be
$[ * ] if [ * ]and shall be $[ * ] if [ * ].
c. The Total Consideration, and accordingly the Repaid Company Debt,
will decrease by $[ * ] (the "[ * ] Decrease"), if (i) [ * ] shall terminate the
[ * ] Agreement at any time prior to the [ * ] day after the Closing Date but
only [ * ] [ *
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* OMITTED PURSUANT TO THE COMPANY'S REQUEST FOR CONFIDENTIAL TREATMENT
] and (ii) Purchaser has complied with its obligations under the immediately
following sentence. Purchaser shall use its, and from and after the Closing,
shall cause MRT to use its, commercially reasonable efforts to [ * ] and
Purchaser shall keep Seller apprised of all material developments regarding the
matters referred to herein. Purchaser shall notify Seller of [ * ] within five
(5) business days thereafter, and Seller shall repay to Purchaser the amount of
the [ * ] Decrease on or after the 30th day after the date of Purchaser's notice
unless [ * ]. Seller agrees that, except for routine communications by MRT
employees in the ordinary course of business prior to the Closing Date, neither
Seller nor any of its Affiliates (which term shall not include MRT from and
after the Closing Date) will communicate with [ * ] between the date of signing
of this Agreement and [ * ] days after the Closing without the participation or
consent of Purchaser, nor will Seller or any of its Affiliates [ * ] without
such participation or such consent of Purchaser.
d. At the Closing, but only if the [ * ] Consent shall not have been
obtained, Purchaser and Seller shall execute and deliver an Escrow Agreement,
substantially in the form of Exhibit 3.1.d hereto (the "Escrow Agreement"),
pursuant to which the sum of [ * ] shall be deposited in escrow with the escrow
agent named in said Exhibit or such other escrow mutually acceptable to
Purchaser and Seller (the "Escrow Agent", and such escrow being herein called
the "Section 3.1.b Escrow"). Purchaser shall be entitled to the Section 3.1.b
Escrow if and only if, and then only to the extent, provided in Section 3.1.b.
If a [ * ], Purchaser shall cause 50% of the entire amount held in the Section
3.1.b Escrow (including all interest or other amounts earned thereon) to be
promptly disbursed to Seller, and Purchaser shall so instruct the Escrow Agent
to deliver such amount to Seller by wire transfer of immediately available
funds, to such account as Seller shall designate. Within five (5) days of the
earliest date as of which an event occurs which precludes Purchaser from being
entitled to receive any disbursement from the Section 3.1.b Escrow under the
terms of Section 3.1.b, Purchaser shall irrevocably instruct the Escrow Agent to
deliver to Seller by wire transfer of immediately available funds, to such
account as Seller shall designate, the entire amount held in the Section 3.1.b
Escrow (including all interest or other amounts earned thereon). If the [ * ]
Consent shall be obtained prior to the Closing, there shall be no Section 3.1.b
Escrow and no Escrow Agreement shall be required.
3.2 Closing Date Balance Sheet.
a. Not later than sixty (60) days after the Closing, Seller shall
prepare a balance sheet of the Company as of the close of business on the
Closing Date (the "Closing Date Balance Sheet"), in accordance with United
States generally
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accepted accounting principles ("GAAP") applied in a manner consistent with the
accounting principles and practices applied in the preparation of the Financial
Statements (as defined herein). Seller agrees to use reasonable efforts to cause
the Closing Date Balance Sheet to be prepared and delivered to Purchaser within
sixty (60) days after the Closing, unless such inability to deliver the Closing
Date Balance Sheet is as a result of Purchaser's failure to give Seller
reasonable access to the necessary books, records and/or personnel, in which
event the requirement to deliver the Closing Date Balance Sheet shall be tolled
until Seller is given reasonable access to the necessary documentation or
personnel. The date of delivery of the Closing Date Balance Sheet to Purchaser
is referred to herein as the "Delivery Date".
b. Without charge by Purchaser, Purchaser shall cause its and the
Company's employees to cooperate reasonably and on a timely basis and to assist
Seller with the preparation of the Closing Date Balance Sheet, and shall make
reasonably available to Seller and its authorized representatives the books,
records, and personnel of the Company which Seller reasonably requires in order
to prepare and deliver the Closing Date Balance Sheet. Purchaser and Seller
shall, throughout the entire period from the date of this Agreement to the
Delivery Date, meet and discuss any and all financial and business matters
relating to such process and the preparation of the Closing Date Balance Sheet,
and Seller shall make available its work papers for confidential inspection and
review by Purchaser and Purchaser's accountants; provided, however, that Seller
may omit or redact information that contains competitively sensitive information
concerning Seller's or any of Seller's Affiliate's unrelated operations,
contracts, customers, pricing, costs, or related matters.
ARTICLE 4
THE CLOSING
4.1 Closing. The sale and delivery of the Purchased Stock to Purchaser,
the payment of the Closing Payment (as herein defined) to Seller, and the
consummation of the other respective obligations of the parties contemplated by
this Agreement will take place at a closing (the "Closing"), which will be held
at the offices of Golenbock, Eiseman, Assor, Xxxx & Xxxxxx, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, on the 14th day after the date of this Agreement, or
another mutually acceptable date and location (the "Closing Date").
4.2 Deliveries by Seller. At the Closing, Seller will deliver or cause to
be delivered, unless waived by Purchaser, the following to Purchaser:
a. (i) copies of the certificate or articles of incorporation,
including all amendments thereto, of each of MRT and Seller certified by the
applicable Secretary of State or other appropriate governmental official, and
(ii) certificates from the applicable Secretary of State or other appropriate
governmental official to the effect that MRT is in good standing in such
jurisdiction, listing all charter documents of MRT on file and
13
attesting, in the case of MRT, to its payment of all franchise Taxes, and (iii)
certificates from the Secretary of State or other appropriate official in each
jurisdiction in which MRT is qualified or admitted to do business as a foreign
corporation to the effect that MRT is duly qualified or admitted in good
standing in such jurisdiction, all of such certificates to be dated within
thirty (30) days before the Closing Date;
b. executed certificates of the secretary or other appropriate
officer of Seller, dated the Closing Date, in form and substance reasonably
satisfactory to Purchaser, certifying (i) the resolutions of the board of
directors of Seller authorizing the execution and performance of this Agreement
and the transactions contemplated hereby and certifying that they have not been
rescinded or amended; (ii) as to the incumbency of the officers of Seller
executing this Agreement, and/or any related agreement, and including specimen
signatures; (iii) that the stockholders of MRT have approved this Agreement in
writing, and no other vote, approval or consent of any holder of capital stock
of MRT is required or necessary to consummate the transactions contemplated by
this Agreement;
c. Certificates representing the Purchased Stock, duly endorsed for
transfer or accompanied by executed stock powers;
d. a Release executed by Seller in the form of Exhibit 4.2.d hereto;
e. the MTU Agreement, executed by Seller;
f. Seller shall deliver such executed consents, novations,
assignments, waivers, actions, estoppel certificates, approvals, releases and/or
assignments as shall have been obtained by Seller in connection with this
Agreement;
g. Reasonably satisfactory evidence of the release of the Liens
listed in Section 5.15.c of the Disclosure Schedule which Purchaser and Seller
have agreed shall be released prior to or at the Closing and reasonably
satisfactory evidence that the Liens granted under the PBC Credit Agreement on
the assets of MRT have been, or effective upon the Closing will be, released and
that MRT has been, or effective upon the Closing will be, released as a
guarantor thereunder;
h. The corporate minute books and capital stock records of the
Company; and
i. If required pursuant to Section 3.1.d, the Escrow Agreement
executed by Seller.
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* OMITTED PURSUANT TO THE COMPANY'S REQUEST FOR CONFIDENTIAL TREATMENT
4.3 Deliveries by Purchaser. At the Closing, Purchaser will deliver or
cause to be delivered, unless waived by Seller, the following to Seller:
a. a certificate of good standing of Purchaser, issued as of a
recent date by the Secretary of State (or other applicable governmental office)
of the state of organization;
b. an executed certificate of the secretary or other appropriate
officer of Purchaser dated the Closing Date, in form and substance reasonably
satisfactory to Seller: (i) certifying that the Board of Directors of Purchaser
has authorized the execution and performance of this Agreement and the
transactions contemplated hereby;
c. a sum (the "Closing Payment") in respect of the Total
Consideration, by wire transfer of immediately available funds to an account
designated by Seller, equal to the amount by which $15,800,000 exceeds the
amount deposited in the Section 3.1.b Escrow (if and to the extent the same
shall then be required by Section 3.1.d);
d. a sum equal to $[ * ] (if and to the extent then required by
Section 3.1.d), by wire transfer of immediately available funds to such account
as shall be designated by the Escrow Agent, for deposit in escrow pursuant to
the Escrow Agreement.
e. the MTU Agreement, duly executed by Purchaser; and
f. If required pursuant to Section 3.1.d, the Escrow Agreement
executed by Purchaser.
4.4 New Holding Company. Seller shall be entitled to transfer the
Purchased Stock and/or all or any portion of the Company Debt prior to the
Closing to a newly formed, wholly owned corporation or limited liability company
subsidiary of Seller ("Newco"), in which case Newco shall be the record and
beneficial owner of the Purchased Stock and such transferred Company Debt prior
to the Closing and the actual seller of the Purchased Stock to Purchaser. No
such transfer shall limit or affect in any manner (i) the covenants, liabilities
and obligations of Seller under this Agreement, including without limitation the
obligation of Seller to cause the Purchased Stock to be sold to Purchaser, and
the obligations of Seller under Section 2.1 and Article 10 hereof, or (ii) the
representations and warranties made in this Agreement, except that, if such
transfer occurs, the representations and warranties in Sections 5.1, 5.2, 5.3,
5.5 and 5.6 shall be revised to include Newco and reflect the transfer, and such
transfer shall not be deemed to violate or conflict with Section 5.9 or Section
8.3. In the event of such transfer, the Escrow Agreement shall be revised as
appropriate to reflect the entitlement of Newco to the Escrow Funds (as defined
therein) .
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
5.1 Organization and Qualification. Each of Seller and MRT is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and has full corporate power and corporate
authority to conduct its business as and to the extent now conducted and to own,
use and lease its assets. Each of Seller and MRT is duly qualified, licensed or
admitted to do business and is in good standing in each jurisdiction in which
the ownership, use or leasing of its assets, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary, except for
such failures to be so qualified, licensed or admitted and in good standing
which, individually or in the aggregate, (i) are not having and would not be
reasonably expected to have a Material Adverse Effect, and (ii) would not be
reasonably expected to have a material adverse effect on the validity or
enforceability of this Agreement or on the ability of the Seller to perform its
obligations hereunder.
5.2 Capital Stock. The Purchased Stock consists of: 64.035 shares of Class
A common stock, par value $.001 per share; and 78.7854 shares of Class B common
stock, par value $.001 per share. The Purchased Stock constitutes all of the
issued and outstanding shares of capital stock of the Company. The shares of
Purchased Stock are validly issued, fully paid and nonassessable, issued in
compliance with all applicable Laws and no additional shares of capital stock
have been reserved for issuance. There are no outstanding Options with respect
to the stock of the Company or agreements, arrangements or understandings to
issue Options with respect to the stock of the Company, nor are there any
preemptive rights or agreements, arrangements or understandings to issue
preemptive rights with respect to the issuance or sale of the capital stock of
the Company. The Seller is the record and beneficial owner of all of the shares
of Purchased Stock, free and clear of all Liens. The delivery to Purchaser at
the Closing of the certificates representing the Purchased Stock duly endorsed
for transfer or accompanied by executed stock powers will transfer to Purchaser
good and valid title to all shares of the Purchased Stock, free and clear of all
Liens. At the Closing, neither Seller nor any third party will have any rights
whatsoever (other than any granted or provided by Purchaser) with respect to the
Purchased Stock or to any other securities, or incidents of ownership, of or in
the Company.
5.3 Authority Relative to this Agreement. Seller has full corporate
authority to enter into this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby have been duly and validly approved by its
board of directors and no other corporate proceedings of Seller's board of
directors or stockholders are necessary to authorize the execution, delivery and
performance of this Agreement by Seller and the
16
consummation by Seller of the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Seller and constitutes the
legal, valid and binding obligation of Seller.
5.4 Business. Section 5.4 of the Disclosure Schedule lists all lines of
business in which MRT operated in the preceding three years. The name of each
director and officer of the Company, and the position with the Company held by
each, are listed in Section 5.4 of the Disclosure Schedule. The Company holds no
equity, partnership, joint venture or other similar interest in any Person.
5.5 No Conflicts. The execution and delivery by Seller of this Agreement
does not, and the consummation of the transactions contemplated hereby will not:
a. conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate or articles of incorporation
or by-laws of the Seller or MRT;
b. subject to obtaining the consents, approvals and actions, making
the filings and giving the notices referred to in Section 5.6 below or disclosed
in Section 5.6 of the Disclosure Schedule, if any, conflict with or result in a
violation or breach of any term or provision of any Laws or Order applicable to
Seller or the Company, or any of their respective Assets, which is reasonably
expected to have a Material Adverse Effect; or
c. except where the same would not have a Material Adverse Effect or
in a Material Contract disclosed in Section 5.5 of the Disclosure Schedule, (i)
conflict with or result in a violation or breach of, (ii) constitute (with or
without notice or lapse of time or both) a default under, (iii) require Seller
or the Company to obtain any consent, approval or action of, make any filing
with or give any notice to any Person as a result or under the terms of, (iv)
result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (v) result in or give to any
Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (vi) result in the creation or
imposition of any Lien, other than a Permitted Lien, upon the Company or any of
its assets under any Contract or License to which Seller or the Company is a
party or by which any of their respective assets is bound.
5.6 Governmental Approvals and Filings. Except as disclosed in Section 5.5
or 5.6 of the Disclosure Schedule, no consent, approval or action of, filing
with or notice to any Governmental or Regulatory Authority on the part of Seller
or the Company is required in connection with the execution, delivery and
performance by Seller of this Agreement or its consummation of transactions
contemplated herein, except where the failure to make or obtain in the same
would not reasonably be expected to have a Material Adverse Effect.
17
5.7 Books and Records. The minute books and stock records of the Company
have been provided to Purchaser.
5.8 Financial Statements. The Seller has furnished to Purchaser true and
complete copies of (i) the unaudited balance sheet of MRT as at June 30, 2002
and as at March 31, 2003 (the "Most Recent Balance Sheet") and (ii) unaudited
income statements of MRT for the fiscal year ended June 30, 2002 and for the
nine month period ended March 31, 2003. Except as provided in Section 5.8 of the
Disclosure Schedule, such balance sheets and income statements (collectively
referred to herein as the "Financial Statements") fairly present, in all
material respects, the financial position of MRT as of the dates thereof, for
the periods covered thereby and the results of operations of MRT for the periods
set forth therein, all in conformity with GAAP, subject to the absence of
footnotes and, in the case of all interim period Financial Statements, to year
end adjustments. To Seller's knowledge, except as provided in Section 5.8 of the
Disclosure Schedule, MRT has no liabilities, secured or unsecured (whether
accrued, absolute, contingent or otherwise) required to be reflected in the
Financial Statements under GAAP (collectively, "Liabilities") not reflected on
or adequately reserved against in the Most Recent Balance Sheet, except for (i)
Liabilities incurred in the ordinary course of business since the date of the
Most Recent Balance Sheet, (ii) liabilities which would not be required under
GAAP to be set forth on or reserved against in the Financial Statements or a
consolidated balance sheet of MRT as of the date hereof, or (iii) Liabilities
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
5.9 Absence of Changes. Except as provided in Section 5.9 of the
Disclosure Schedule, since March 31, 2003, there has not been any change or any
event or development, which, individually or together with other such changes,
events, or developments would reasonably be expected to have a Material Adverse
Effect. In addition, except as expressly contemplated hereby and except as
disclosed in Section 5.9 of the Disclosure Schedule, there has not occurred
since March 31, 2003:
a. any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock (or other equity interests)
of the Company or any direct or indirect redemption, purchase or other
acquisition by the Company of any such capital stock (or other equity interests)
of the Company;
b. any authorization, issuance, sale or other disposition by the
Company of any shares of its capital stock (or other equity interests), or any
modification or amendment of any right of any holder of any outstanding shares
of capital stock (or other equity interests) of the Company;
c. any increase in excess of 5% in salary, rate of commissions or
rate of consulting fees of any employee or consultant of MRT earning more than
$75,000 per annum;
18
d. incurrences by the Company of Indebtedness other than Company
Debt, or (ii) any voluntary purchase, cancellation, prepayment or complete or
partial discharge in advance of a scheduled payment date with respect to, or
waiver of any right of the Company under, any Indebtedness (other than Company
Debt) of or owing to the Company;
e. any physical damage, destruction or other Casualty Loss (not
covered by insurance) affecting the Business or the Company's assets which would
reasonably be expected to have a Material Adverse Effect;
f. any purchase of the business of any Person or disposition of, or
incurrence of a Lien (other than Permitted Liens) on, any Company Assets, other
than acquisitions or dispositions of inventory or obsolete, unused or replaced
equipment, or of other items in the ordinary course of business consistent with
past practice;
g. any transaction by the Company with any of its officers,
directors, stockholders or Affiliates, other than bona fide, ordinary course
employment related matters or pursuant to a Contract or arrangement in effect on
March 31, 2003 and disclosed to Purchaser pursuant to Section 5.17 or other than
pursuant to any Contract listed pursuant to Section 5.17 of the Disclosure
Schedule;
h. any entering into of an agreement to do or engage in any of the
foregoing, including without limitation with respect to any merger, sale of
substantially all assets or other business combination not otherwise restricted
by the foregoing paragraphs;
i. any change in the accounting methods or procedures of MRT;
j. or any other transaction involving or development affecting the
Company outside the ordinary course of business which is reasonably expected to
have a Material Adverse Effect.
5.10 Taxes. Except as set forth on Section 5.10 of the Disclosure Schedule
or as set forth in this Section 5.10:
a. All material Tax Returns required to be filed by the Company or
Seller relating or with respect to the Company have been filed and all Taxes
indicated thereon as due have been paid. As of the time of filing, all such Tax
Returns in all material respects correctly reflected (and, with respect to any
such Tax Returns not filed as of the date hereof, but filed by Seller with
respect to the Company, in all material respects will correctly reflect) the
material facts regarding the income, business, assets, operations, activities
and status of the Company and other material information required to be shown
thereon.
19
b. To the knowledge of Seller, as of the date of this Agreement, no
Claim (including a notice of inquiry or commencement of an audit) is currently
pending by any authority in a jurisdiction where the Company or Seller does not
file Tax Returns that the Company is or may be subject to taxation by that
jurisdiction.
c. No extension of time with respect to any date on which a Tax
Return described in paragraph a. above was or is to be filed, is in force, and
no waiver or agreement by the Company or Seller is in force for the extension of
time for the assessment or payment of any Taxes of or with respect to the
Company. Neither Seller or the Company has granted a power of attorney with
respect to Taxes of or with respect to the Company to any person with respect to
any Taxable Period which is currently in effect.
d. The Company has complied in all material respects with the
provisions of the Code relating to the withholding of Taxes, including, without
limitation, the withholding and reporting requirements under Sections 1441
through 1446, 3401 through 3406, and 6041 through 6049 of the Code, as well as
similar provisions under any other laws, and has withheld and paid over to the
proper governmental authorities all amounts required to be withheld from
employees, independent contractors, creditors, stockholders, or other third
parties, except where noncompliance would not result, individually or in the
aggregate, in any material liability.
e. All Taxes of or with respect to the Company which are due and
payable prior to the date hereof, whether or not shown (or required to be shown)
on a Tax Return, in all material respects have been paid or will be paid as of
the Closing Date.
f. As of the date of this Agreement, none of the Tax Returns of or
with respect to the Company is being audited by the IRS or relevant state, local
or foreign taxing authorities. As of the date of this Agreement, there are no
administrative or court proceedings relating to Taxes of or with respect to the
Company in progress or pending nor has the Company or Seller received a revenue
agent's or similar report asserting a currently pending deficiency in any such
Taxes.
g. There are no security interests on any of the Assets of the
Company that arose in connection with any failure (or alleged failure) to pay
any Taxes and, except for liens for Taxes that are not yet due and payable,
there are no liens (other than Permitted Liens) for any Tax upon any asset of
the Company. The Company has not entered into a closing agreement pursuant to
Section 7121 of the Code.
h. The Company has not been a member of an (i) affiliated group
(within the meaning of Section 1504 of the Code), or (ii) affiliated, combined,
consolidated, unitary, or similar group for state, local or foreign Tax
purposes, other
20
than the group of which the Seller is the common parent. The Company is not a
party to any joint venture, partnership, or other arrangement that is treated as
a partnership for Tax purposes.
i. The Company is neither a party to nor bound by any obligations
under any tax sharing, tax indemnity, or similar agreement or arrangement (a
"Tax Sharing Agreement") for any Taxable Period other than the Tax Sharing
Agreement between Seller and the Company, which agreement is to be terminated as
of the Closing Date with respect to the Company and shall provide for no further
liability of the Company to Seller for any Taxable Period. The Company does not
have any liability for the Taxes of any person (other than the Company) under
Treas. Reg. ss. 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
j. The Company is not a party to any "safe harbor lease" that is
subject to the provisions of Section 168(f)(8) of the Code as in effect prior to
the Tax Reform Act of 1986 or to any "long-term contract" within the meaning of
Section 460 of the Code.
k. The Company is not a party to any contract, agreement, plan or
arrangement that, individually or in the aggregate, or when taken together with
any payment that may be made under this Agreement or any agreements contemplated
hereby, that gives rise to the payment of any "excess parachute payment" within
the meaning of Section 280G of the Code.
l. No consent under Section 341(f) of the Code has been filed with
respect to the Company.
m. The Company has not distributed the stock of any corporation in a
transaction satisfying the requirements of Section 355 of the Code since April
16, 1997. The stock of the Company has not been distributed in a transaction
satisfying the requirements of Section 355 of the Code since April 16, 1997.
n. The Company has not agreed nor is required to include in income
any adjustment under either Section 481(a) or Section 482 of the Code (or an
analogous provision of state, local, or foreign law) by reason of a change in
accounting method or otherwise.
o. No holder of an interest (other than an interest solely as a
creditor) in the Company is a foreign corporation, foreign partnership, foreign
trust or foreign estate (as those terms are defined in the Code and Income Tax
Regulations) nor a nonresident alien for U.S. income tax purposes.
21
p. The charges, accruals and reserves for Taxes with respect to the
Company for any Pre-Closing Period (including any Pre-Closing Period for which
no Tax Return has been filed), reflected on the Closing Date Balance Sheet
(excluding any provision for deferred income taxes) will be adequate in all
material respects to cover such Taxes.
q. All federal income Tax Returns filed with respect to taxable
periods of the Company through the taxable period ended June 30, 1999 have been
examined or closed or are Tax Returns with respect to which the applicable
period for assessment under applicable law, after giving effect to extensions or
waivers, has expired.
r. There are no requests for rulings or determinations in respect of
any Tax pending between the Company and any Governmental or Regulatory
Authority.
s. During the applicable period specified in Section
897(c)(1)(A)(ii) of the Code, the Company has not been a "United States real
property holding corporation" within the meaning of Section 897(c)(2) of the
Code and no withholding is required under Section 1445 of the Code as a result
of any transaction contemplated hereby.
t. To the knowledge of Seller, the consolidated group of which the
Seller is the common parent has not engaged in any tax shelter transaction
involving the Company which is the same or substantially similar to a
transaction which the Internal Revenue Service has determined to be a tax
avoidance transaction or which the Internal Revenue Service has identified
through a notice, regulation or other form of published guidance as a "listed
transaction" for purposes of Section 6111 of the Code.
Notwithstanding anything to the contrary contained in this Agreement, Seller
makes no representations or warranties whatsoever with respect to the existence
or availability of any net operating loss, net capital loss, unused investment,
foreign tax or other credits, or other tax attributes.
5.11 Legal Proceedings. Except as disclosed in Section 5.11 of the
Disclosure Schedule, as of the date of this Agreement:
a. there are no Actions or Proceedings pending or, to the knowledge
of Seller, threatened against MRT or any of its assets.
b. Seller has not received written notice of any Orders or lawsuits
currently outstanding against MRT; and
c. Seller has not within the past two years received written notice
of any defects, dangerous or substandard conditions in the products or materials
manufactured, sold, distributed, or to be manufactured, sold or distributed by
MRT in its operation of the Business that could cause bodily injury, sickness,
disease, death, or damage to property, or result in loss of use of property, or
any claim, suit, demand for arbitration or notice seeking damages for bodily
injury, sickness, disease, death, or damage to
22
property, or loss of use or property, in each case that has not been resolved or
settled in the ordinary course of business.
5.12 Compliance with Laws and Orders. Except as disclosed in Section 5.12
of the Disclosure Schedule, to Seller's knowledge, MRT is not in violation of,
and Seller has not received, at any time since January 1, 2002 and prior to the
date of this Agreement, any notice that MRT is, or has been at any time since
such date, in violation of or in default under, any Law or Order, except such as
would not reasonably be expected to have a Material Adverse Effect. In
furtherance and not limitation of the foregoing, neither Seller nor MRT has
violated any federal or state securities law in connection with the offer, sale
or purchase of any securities.
5.13 Benefit Plans; ERISA.
a. Section 5.13 of the Disclosure Schedule sets forth each "employee
benefit plan," whether written or unwritten, as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") (excluding
equity-based plans and workers' compensation, unemployment compensation and
similar government-mandated programs) currently maintained, contributed to or
entered into by the Company, or with respect to which the Company may have any
liability, contingent or otherwise, for the benefit of any current or former
employee or director of the Company under which the Company has any present or
future obligation or liability (collectively, the "Employee Plans"). Current,
accurate and complete copies of all Employee Plans, including the Retirement
Plan of Philipp Brothers Chemicals, Inc. and Subsidiaries and Affiliates (the
"Seller Pension Plan") (and, if applicable, related trust agreements or other
funding instruments), and all amendments thereto and related summary plan
descriptions and for the three (3) most recent years (i) Forms 5500 and attached
schedules and (ii) financial statements for such Employee Plans) have been made
available to the Purchaser.
b. Except as set forth in Section 5.13 of the Disclosure Schedule,
the Company does not sponsor and has not sponsored, within the last five (5)
years, any employee benefit plan which, individually or collectively,
constitute(s) (i) an "employee pension benefit plan," as defined in Section 3(2)
of ERISA, that is subject to Section 412 of the Code or Section 302 or Title IV
of ERISA, or (ii) a "multiemployer plan," as defined in Section 3(37) of ERISA.
Except as set forth in Section 5.13 of the Disclosure Schedule, each Employee
Plan that is intended to be qualified under Section 401(a) of the Code has
received a favorable determination, advisory and/or opinion letter, as
applicable, from the Internal Revenue Service and is so qualified.
c. Except as set forth in Section 5.13 of the Disclosure Schedule,
the Company has furnished or made available to the Purchaser copies or
descriptions of
23
each severance or other similar contract, arrangement or policy and each plan,
agreement, policy or arrangement, in effect on the date of this Agreement,
providing for insurance coverage (including any self-insured arrangements),
vacation benefits, disability benefits, early retirement benefits, death
benefits, hospitalization benefits, retirement benefits, deferred compensation,
profit-sharing, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of compensation or post-retirement benefits in each
case that (i) is currently in effect and is not an Employee Plan, (ii) is
entered into, maintained or contributed to, as the case may be, by the Company,
or with respect to which the Company may have any liability, contingent or
otherwise, and (iii) covers any employee or former employee of the Company. Such
contracts, plans and arrangements as are described in this paragraph c. are
herein referred to collectively as the "Benefit Arrangements."
d. Except as set forth in Section 5.13 of the Disclosure Schedule
and except for continued "COBRA" health coverage required pursuant to Code
Section 4980B, the Company is not a party to any Employee Plan or Benefit
Arrangement that requires the Company to provide, at any cost to the Company,
any health or life insurance coverage to any former employee of the Company.
e. Except as set forth in Section 5.13 of the Disclosure Schedule,
each Employee Plan and Benefit Arrangement is maintained in compliance in all
material respects with its terms and complies in all material respects with
applicable requirements of (i) the Age Discrimination in Employment Act of 1967,
as amended, and the regulations thereunder, (ii) any applicable provisions of
the Code, including Section 4980B thereof, and (iii) ERISA.
f. Except as set forth in Section 5.13 of the Disclosure Schedule,
there is, as of the date of this Agreement, no pending or, to Seller's
knowledge, threatened litigation or legal action relating to any Employee Plan
or Benefit Arrangement other than claims with respect to benefits in the
ordinary course of business. As of the date of the Agreement, no audit or other
administrative proceeding by the Department of Labor, the Pension Benefit
Guaranty Corporation, the Internal Revenue Service or other governmental
agencies are pending or, to Seller's knowledge, threatened against the Company
with respect to benefits to present or former employees of the Company under any
Employee Plan or Benefit Arrangement. All contributions due from and all
obligations of the Company under each Employee Plan or Benefit Arrangement have
been paid or accrued on the books of the Company in accordance with GAAP, to the
extent applicable.
g. Except as set forth in Section 5.13 of the Disclosure Schedule,
to the knowledge of the Seller, no "prohibited transaction" (as such term is
defined in ERISA Section 406 or Code Section 4975) by the Company has occurred
with respect to any Employee Plan and the Company has not engaged in a
transaction described in Section 4069 or 4212(c) of ERISA.
24
h. No employee pension benefit plan as defined in section 3(2) of
ERISA that is subject to regulation under Title IV of ERISA and maintained by
the Company or any ERISA Affiliate had an accumulated funding deficiency as
defined in section 302 of ERISA and section 412 of the Code, whether or not
waived, as of the last day of the most recent fiscal year of the plan ending on
or prior to the Closing Date. Neither the Company nor any entity that was at any
time during the six years before the Closing Date an ERISA Affiliate has ever
maintained, had any obligation to contribute to, or incurred any liability with
respect to, a plan that is both a multiemployer plan (as defined in section
3(37) of ERISA) and an employee pension benefit plan (as defined in section 3(2)
of ERISA. )
i. Except as set forth in Section 5.13 of the Disclosure Schedule,
all contributions, premiums or other payments due from the Company to (or under)
any Plan (other than the Seller Pension Plan or in the nature of
Retained/Assumed Liabilities) have been fully paid or adequately provided for in
all material respects on the books of the Company.
j. Except as set forth in Section 5.13 of the Disclosure Schedule,
the Company has not, since January 1, 2002, terminated, suspended, discontinued
contributions to or withdrawn from any Employee Plan subject to Title IV of
ERISA, including (without limitation) any multiemployer plan, as defined in
section 3(37) of ERISA.
k. Except as disclosed on Section 5.13 of the Disclosure Schedule,
the consummation of the transactions contemplated in this Agreement, either
alone or in conjunction with another event (such as termination of employment),
will not (i) entitle any current or former employee of the Company, to severance
pay, or any other payments under any Employee Plan or Benefit Arrangement, (ii)
accelerate the time of payment or vesting of benefits under any Employee Plan or
Benefit Arrangement, or (iii) increase the amount of compensation due any such
person.
5.14 Real Property.
a. Section 5.14 of the Disclosure Schedule contains a true and
correct list of all real property leased by MRT in connection with the Business
(the "Leased Real Property" or the "Real Property"), together with a true and
correct list of all such Leases, subleases or other similar agreements and any
amendments, modifications or extensions thereto (the "Real Property Leases").
MRT does not own any real property.
b. Each Real Property Lease is a legal, valid and binding agreement
of MRT, and, except as set forth in Section 5.14.b of the Disclosure Schedule,
to Seller's knowledge, as of the date of this Agreement, there is no notice of
any material uncured default (or any condition or event which, after notice or
lapse of time or both, would constitute a material default) thereunder. MRT has
not assigned, sublet, transferred,
25
hypothecated or otherwise disposed of its interest in any Real Property Lease.
To Seller's knowledge, no penalties set forth therein are accrued and unpaid
under any Leased Real Property.
c. Seller has delivered to Purchaser true and complete copies of all
Real Property Leases.
d. The Seller has no knowledge, as of the date of this Agreement, of
any claim, action or proceeding, actual or threatened, against MRT or the Leased
Real Property by any Person which would materially affect the future use or
occupancy by MRT of the Leased Real Property or any material part thereof.
5.15 Tangible Personal Property.
a. Seller has furnished to Purchaser recent depreciation/capital
expenditure schedules for the Company derived from its accounting records.
b. Section 5.15.b of the Disclosure Schedule contains a list, true
and correct in all material respects, of all of the equipment of every kind and
nature whatsoever, rolling or fixed, leased by MRT as of the date of this
Agreement, and utilized in the Business.
c. Except as indicated in Section 5.15.c of the Disclosure Schedule,
MRT is in possession of and has good and valid title to, or has valid leasehold
interests in or valid rights under contract to use, all tangible personal
property (other than ash inventory in transit or stored at Utility sites) used
by MRT in the Business (the "Owned and Leased Assets"), including all such Owned
and Leased Assets reflected on the Most Recent Balance Sheet and Owned and
Leased Assets acquired since March 31, 2003, other than inventory and obsolete
or replaced items disposed of since such date, and other property disposed of
since such date in the ordinary course of business. All such Owned and Leased
Assets, or in the case of leased assets, MRT's rights with respect thereto, are
free and clear of all Liens, other than Permitted Liens and Liens disclosed in
Section 5.15.c of the Disclosure Schedule.
5.16 Intellectual Property Rights.
a. Each of the patents, patent applications, trademark
registrations, service xxxx registrations, and copyright registrations listed on
Section 5.16 of the Disclosure Schedule (the "Intellectual Property Rights") is
owned by or licensed to MRT, and MRT has the right to use all such Intellectual
Property Rights in the Business.
b. Except as set forth in Section 5.16 of the Disclosure Schedule,
to Seller's knowledge, Seller has not received notice of any claim, that MRT's
conduct of the Business has infringed any patent, copyright, trademark, trade
name, know-how,
26
trade secret or other intellectual property right of any other person which is
reasonably expected to have a Material Adverse Effect. To Seller's knowledge,
there are no potential claims of infringement of any patent, copyright,
trademark, trade name, know-how, trade secret or other intellectual property
right of any other person by MRT's conduct of the Business that has not been
asserted but that, if asserted, would have a Material Adverse Effect.
5.17 Material Contracts and Default.
a. The Contracts identified in Section 5.17 of the Disclosure
Schedule (individually, a "Material Contract") are all of the Contracts as of
the date of this Agreement, except for (i) purchase and sales orders in the
ordinary course of business involving a commitment of $50,000 or less, (ii) any
contracts that have been fully performed by MRT or that involve a consideration
of less than $10,000, (iii) Contracts which are the basis for the accounts and
notes receivable and accounts payable in the ordinary course of business, and
(iv) any Contract for services or leases of computer or office equipment
involving annual payments less than $10,000 or which are otherwise of a normal
and customary nature, are entered into in the ordinary course of business and
are terminable by MRT without penalty upon not more than thirty (30) days
notice.
b. Seller has made available to Purchaser a true and correct copy
(or, if oral, a written summary) of each Material Contract. Seller represents,
with respect to each Material Contract, that, except as indicated in Section
5.17 of the Disclosure Schedule or where the same would not reasonably be
expected to have a Material Adverse Effect: (a) it is in full force and effect;
(b) to the knowledge of Seller, no other party thereto is in default or breach
under it and, to Seller's knowledge, there are no facts or circumstances
existing that would be such a breach or default thereunder with notice or
passage of time; (c) MRT has performed or is now performing the obligations of
MRT in respect of every Material Contract, except for any failure to perform or
default which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and (d) as of the date of this
Agreement, to Seller's knowledge, no party is making or threatening any claim
for damages or losses or other payments due under any Material Contract by
reason of a breach or default thereunder.
5.18 Licenses. Section 5.18 of the Disclosure Schedule contains, as of the
date of this Agreement, a true and complete list of all licenses, permits,
certificates of authority and the like of MRT from Governmental or Regulatory
Authorities used in and material to the Business (each a "License"). Prior to
the execution of this Agreement, the Seller has delivered to Purchaser true and
complete copies of all such Licenses. Except as disclosed in Section 5.18 of the
Disclosure Schedule:
a. MRT owns or validly holds all Licenses that are material to the
Business; and
27
b. to Seller's knowledge, each License listed in Section 5.18 of the
Disclosure Schedule is in full force and effect.
5.19 Insurance. Section 5.19 of the Disclosure Schedule contains a true
and complete list, as of the date of this Agreement (including the names of the
insurers, policy number, the expiration dates thereof, the period of time
covered thereby), of all liability, property and workers' compensation insurance
policies currently in effect that insure the business, operations or employees
of MRT and that (i) have been issued to MRT, or (ii) have been issued to Seller
or its Affiliates for the benefit of MRT. All premiums due under each policy
listed in Section 5.19 of the Disclosure Schedule have been paid and neither the
Seller or the Person to whom such policy has been issued has received as of the
date of this Agreement any notice of cancellation or termination in respect of
any such currently outstanding policy or is in default thereunder, that would
reasonably be expected to lead to the cancellation (without replacement) of such
currently outstanding policies. Section 5.19 of the Disclosure Schedule contains
a list of all claims in excess of $25,000.00 made under any insurance policies
(other than employee plan insurance) with respect to the Business from January
1, 1998 until the date of this Agreement. As of the date of this Agreement,
neither Seller nor MRT has not received notice that any insurer under any policy
referred to in this Section 5.19 is, with respect to claims relating to MRT,
denying liability with respect to a material claim thereunder or defending such
material under a reservation of rights clause.
5.20 Affiliate Transactions. Except as indicated in Section 5.20 of the
Disclosure Schedule, and other than under Material Contracts identified pursuant
to Section 5.17 or bona fide employment related liabilities or arrangements in
the ordinary course of business: there are no material Liabilities (other than
intercompany debt) between MRT and any current or former officer, director,
stockholder, Affiliate of MRT or any Affiliate of any such officer, director,
stockholder or Affiliate related, in any manner, to the Business, and MRT does
not provide or cause to be provided any material assets, services or facilities
to any such current or former officer, director, stockholder or Affiliate.
5.21 Employees; Labor Relations. Except as disclosed in Section 5.21 of
the Disclosure Schedule: MRT is not a party to or otherwise bound by any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization; to Seller's knowledge, there are no
activities or proceedings of any labor union to organize any employees of MRT,
and there are no strikes, material slowdowns, work stoppages or lockouts, or, to
Seller's knowledge, material threats thereof, by or with respect to any group of
employees of MRT; to Seller's knowledge, MRT is in compliance in all material
respects with all applicable laws regarding employment practices, terms and
conditions of employment, and wages and hours (including, without limitation,
ERISA, WARN or any similar state or local law). Section 5.21 of the Disclosure
Schedule sets forth MRT's workers' compensation claims history from January 1,
1999 until the date of this Agreement.
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5.22 Environmental Matters. Except as indicated on Section 5.22 of the
Disclosure Schedule and except for matters, events, or Losses arising out of or
attributable to the use, storage, disposal, generation or manufacture by others
of any materials or products utilizing or involving any materials or products,
conforming to MRT's specifications, that are supplied or delivered by or on
behalf of MRT to any customer of MRT:
a. Except where the failure to be in compliance or where such
violation would not reasonably be expected to have a Material Adverse Effect,
MRT is and has at all times been in compliance with, and has not been and is not
in violation of any Environmental Law related in any manner to the Business or
its operations.
b. Except as would not reasonably be expected to have a Material
Adverse Effect, no Hazardous Materials or fly ash have been (i) released by MRT
into the environment as a result of any violation of any Environmental Laws by
MRT, or (ii), to the knowledge of Seller, released into the environment as a
result of a third party's actions, in, on, or under any property, including the
land and the improvements, ground water, and surface water thereof, that MRT has
at the time owned, leased or occupied ("Covered Property"; provided, that, for
the avoidance of doubt, the only Utility property included within the meaning of
the term Covered Property shall be that portion of any Utility property in fact
occupied or used by MRT in the Business).
c. Except as would not reasonably be expected to have a Material
Adverse Effect, (i) MRT has not transported, sold, distributed, stored, treated,
processed, used, manufactured, generated, disposed of, released, or exposed its
employees, others, or the environment to, Hazardous Materials or fly ash or any
product containing a Hazardous Material except in compliance with applicable
Environmental Laws, (ii) MRT is not the owner or operator of any in-ground or
underground storage tank, (iii) to Seller's knowledge the facilities operated by
MRT do not contain asbestos, (iv) MRT has not assumed or otherwise become
responsible for the Environmental Liabilities of others under a contract or
agreement, except those identified in Section 5.22 of the Disclosure Schedule,
and (v) MRT is not party to any governmental compliance or consent agreements
under Environmental Laws.
d. Except where the failure to hold the same or to comply with the
same as would not reasonably be expected to have a Material Adverse Effect, MRT
or the applicable Utility currently holds all Environmental Permits required by
law for MRT's use, operation and occupancy of the Leased Real Property or the
portion of any Utility property in fact occupied or used by MRT in the Business,
as such activities and business are currently being conducted (and, in the case
of a Utility's Environmental Permit, MRT is authorized, under the applicable
Environmental Laws, to conduct its operations at the Utility's property under
the Utility's Environmental Permit).
29
e. Except as would not reasonably be expected to have a Material
Adverse Effect, MRT has not received written notice from any Person or, to the
knowledge of MRT, oral notice from any Governmental or Regulatory Authority, of
any currently pending or threatened claim, demand, action, judicial or
administrative proceeding, notice of noncompliance, notice of violation, consent
order, or consent agreement against MRT under any Environmental Law
(collectively, "Environmental Claims").
f. MRT has delivered or made available to Purchaser true and
complete copies of all material reports, studies, analyses, tests, and
monitoring possessed by or subject to the control of MRT or Seller pertaining to
Hazardous Materials or Hazardous Activities in, on, or under the Leased Real
Property or any Utility property in fact occupied or used by MRT in the
Business, or concerning compliance by MRT with Environmental Laws in connection
with the Business.
g. Except for inchoate statutory Liens, there are no Liens arising
under or pursuant to any Environmental Law filed against MRT.
h. To the knowledge of Seller, except for expenditures that would
not reasonably be expected to have a Material Adverse Effect, there are no
requirements under Environmental Laws, as existing as of the date of this
Agreement, that require MRT to make capital or other expenditures after the
Closing, other than for replacement of existing pollution control devices and
other similar equipment in the ordinary course of business, to remain in
compliance with such Environmental Laws.
i. MRT has not dumped or disposed of any material amounts of fly ash
at any offsite location (that is, other than at any of the Subject Facilities or
Leased Real Property), other than ash used in its research, development and/or
quality assurance efforts, or as part of routine daily clean-up efforts or
routine truck loading or rail car overfill clean-up activities, or as result of
occasional rail car or truck accidents (where clean-up is handled by the carrier
and/or a contractor designated by MRT), it being understood that, for purposes
of this Agreement, supplying of fly ash for cement raw feed, soil stabilization,
waste stabilization, road base, flowable fill, deicing, mine reclamation,
structural fill or any commercial or productive use or application (collectively
"Normal Commercial Applications" and individually each a "Normal Commercial
Application") shall not be considered dumping or disposal.
5.23 Substantial Customers and Suppliers. Section 5.23.A of the Disclosure
Schedule lists the ten (10) largest customers of the Business on the basis of
revenues for goods sold or services provided for the twelve month period ending
March 31, 2003. Section 5.23.B of the Disclosure Schedule lists the ten (10)
largest suppliers of the Business on the basis of cost of goods or services
purchased during the twelve month period ending March 31, 2003. Except as
disclosed in Section 5.23.C. of the Disclosure Schedule, to the knowledge of
Seller (but without having made any docket search), as
30
of the date of this Agreement no such customer or supplier has made or is the
subject of any voluntary or involuntary filing or petition for bankruptcy or
insolvency.
5.24 Other Negotiations; Brokers. Except as disclosed in Section 5.24 of
the Disclosure Schedule, neither Seller nor any of its Affiliates (nor any
investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of the Seller or any such Affiliate) has
entered into any agreement with any broker, investment bank or finder regarding
any transaction involving MRT which could result in MRT or the Purchaser, or any
officer, director, employee, agent or Affiliate of Purchaser, being subject to
any claim for liability to said broker, investment banker or finder as a result
of entering into this Agreement or consummating the transactions contemplated
hereby or thereby. Except as disclosed in Section 5.24 of the Disclosure
Schedule, no agent, broker, finder, investment banker, financial advisor will be
entitled to any fee, commission or other similar compensation from MRT in
connection with the transactions contemplated by this Agreement on the basis of
any act or statement made by Seller or any of its respective Affiliates, or any
investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of Seller, or any such Affiliate.
5.25 Investigation of Representations, Warranties, Covenants and
Agreements. Except as otherwise provided in Section 10.2.c hereof, even though
the Purchaser may investigate the Company and the Business and attempt to
confirm the accuracy of the representations and warranties of the Seller, the
Purchaser, nonetheless, shall have the right to rely upon the representations,
warranties, covenants and agreements of the Seller contained in this Agreement.
5.26 Board Approval. The Board of Directors of the Seller has approved
this Agreement.
5.27 Stockholder Approval. The stockholders of MRT have approved this
Agreement, and no other vote, approval or consent of any holder of capital stock
of MRT is required or necessary to consummate the transactions contemplated by
this Agreement.
5.28 Holding Company Act and Investment Company Act Status. The Company is
not a "holding company" or a "public utility company" as such terms are defined
in the Public Utility Company Act of 1935, as amended. The Company is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
5.29 Bank and Brokerage Accounts. Section 5.29 of the Disclosure Schedule,
as the same may be updated from time to time prior to Closing, sets forth (a) a
list of the names and locations of all banks, securities brokers and other
financial institutions at which the Company has an account or safe deposit box
or maintains a banking,
31
custodial, trading or other similar relationship; and (b) a true and complete
list and description of each such account, box and relationship, indicating in
each case the account number and the names of all persons having signatory power
and respect thereto.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
6.1 Organization and Qualification. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Louisiana. Purchaser is duly qualified, licensed or admitted to do business and
is in good standing in each jurisdiction in which the ownership, use or leasing
of its assets, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary, except for such failures to be
so qualified, licensed or admitted and in good standing which, individually or
in the aggregate, could not be reasonably expected to have a material adverse
effect on the validity or enforceability of this Agreement or on the ability of
Purchaser to perform its obligations hereunder.
6.2 Authority Relative to this Agreement. Purchaser has full corporate
power and authority to enter into this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by Purchaser and the consummation by
Purchaser of the transactions contemplated hereby have been duly and validly
approved by its board of directors and no other corporate proceedings on the
part of Purchaser or its stockholders are necessary to authorize the execution,
delivery and performance of this Agreement by Purchaser and the consummation by
Purchaser of the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Purchaser and constitutes a legal, valid
and binding obligation of Purchaser.
6.3 No Conflicts. The execution and delivery by Purchaser of this
Agreement does not, and the performance by Purchaser of its obligations under
this Agreement and the consummation of the transactions contemplated hereby, do
not and will not:
a. conflict or result in a violation or breach of any of the terms,
conditions or provisions of the certificate of incorporation or by-laws of
Purchaser; or
b. conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to Purchaser or its Assets and
Properties.
6.4 Governmental Approvals and Filings. No consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part of
Purchaser is required in connection with the execution, delivery and performance
of this
32
Agreement to which it is a party or the consummation of the transactions
contemplated herein.
6.5 Legal Proceedings. There are no Actions or Proceedings pending or, to
the knowledge of Purchaser, threatened against, relating to or affecting
Purchaser or any of its assets which (i) could reasonably be expected to result
in the issuance of an Order restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement, or (ii) could reasonably be expected, individually or in the
aggregate with other such Actions or Proceedings, to have a material adverse
effect on the business or condition of Purchaser.
6.6 Brokers. No agent, broker, finder, investment banker, financial
advisor or other similar Person will be entitled to any fee, commission or other
compensation in connection with any of the transactions contemplated by this
Agreement on the basis of any act or statement made by Purchaser.
6.7 Investigation of Representations, Warranties, Covenants and
Agreements. Except as otherwise provided in Section 10.2.c hereof, even though
the Seller may investigate the affairs of the Purchaser and attempt to confirm
the accuracy of the representations and warranties of the Purchaser contained in
this Agreement, the Seller shall, nonetheless, have the right to rely upon the
representations, warranties, covenants and agreements of the Purchaser contained
in this Agreement.
ARTICLE 7
POST-CLOSING COVENANTS AND AGREEMENTS
7.1 Further Action.
a. Following the Closing, each of the parties hereto shall use its
commercially reasonable efforts to take such further actions (including the
execution and delivery of such further instruments and documents) as shall
reasonably be required, after the Closing Date, but at the sole cost and expense
of the party requesting the same, to fulfill the purposes of this Agreement, and
in connection therewith, Seller shall provide to Purchaser as Purchaser
reasonably requests all documents, data and records in its possession reasonably
necessary to enable MRT and Purchaser to complete the transition and integration
of MRT and the Hired Employees into Purchaser's systems.
b. Without intending to limit the obligations of Purchaser under
Sections 3.1.b and 3.1.c with respect to the consents referred to therein, from
and after the date hereof, each party hereto shall use commercially reasonable
efforts, but at the sole cost and expense of Purchaser (except as expressly
noted below), to obtain the consents and any other approvals required to be
obtained from any Governmental or Regulatory Authority or other third party
necessary in respect of the transactions
33
contemplated by this Agreement. Seller will bear 50% of amounts paid to such
third parties in obtaining such required and necessary consents and approvals up
to an aggregate maximum of $100,000.
c. Following the Closing, to the extent that a party receives any
funds to which another party is entitled pursuant to this Agreement, the party
receiving such funds shall promptly deliver such funds to the appropriate party,
but in any event within five (5) Business Days after actual receipt of such
funds.
7.2 Employee Matters.
a. Seller has provided Purchaser with a list of all MRT Employees
employed, as of the date of this Agreement. Such MRT Employees and any employees
hired after the date hereof in the ordinary course of business or otherwise with
Purchaser's consent prior to the Closing are herein called the "Hired
Employees".
b. Following the Closing Date, Purchaser shall provide benefits for
Hired Employees that are no less favorable than those provided by Purchaser to
similarly situated newly hired employees of Purchaser. In specific, with respect
to the Cemex, Inc. Pension Plan and the Cemex, Inc. Savings Plan (the "Plans"),
no prior service credit shall be provided to any Hired Employee for any period
of service prior to the Closing Date; therefore, any Hired Employee who is
otherwise eligible to participate in the Plans will receive credit for
eligibility, vesting and benefit accrual purposes for periods of service
beginning on or after the Closing Date and shall not receive credit for
eligibility, vesting or benefit accrual for any period of service prior to the
Closing Date; provided, however, a Hired Employee shall be eligible to
participate in the Cemex, Inc. Savings Plan on the Savings Plan entry date
immediately following the Closing Date and each such Hired Employee shall enter
as a new employee.
c. Purchaser agrees that for purposes of any vacation policy
maintained by Purchaser or MRT in which the Hired Employees are eligible to
participate, credit will be given to the Hired Employees as of the Closing for
service previously credited with or by MRT or any of its Affiliates prior to the
Closing for MRT's vacation policy. Seller shall be obligated to provide any
continuation health care benefits required by Law as a result of the termination
by MRT of any employee prior to the Closing.
d. It is expressly understood and agreed that, except as set forth
in this Agreement, neither Purchaser nor any Affiliate thereof is, by virtue of
this Agreement or otherwise, assuming any Seller Retirement Plan, or any other
Employee Plan or Benefit Arrangement of Seller or any Affiliate or ERISA
Affiliate thereof (other than of MRT itself) or any liability or obligation of
any kind under any such Employee Plan or Benefit Arrangement.
34
e. Seller shall be responsible for any claims made by any Person
asserting that such Person: (i) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of any stock of, or any
other voting, equity, or ownership interest in the Company; or (ii) is the
holder or the beneficial owner of, or has the right to acquire or to obtain
beneficial ownership of any phantom stock interest, or any other phantom equity
or ownership interest in the Company; or (iii) is entitled to any payment, bonus
or other compensation directly as a result of the sale of MRT (other than for
severance or termination compensation if his employment terminates at or after
the Closing other than by discharge at the direction of Seller ("Seller Employee
Liabilities").
f. Purchaser and Seller will implement the provisions relating to
Company employee matters set forth in Schedule 7.2.F hereto.
g. This Section 7.2 shall operate solely for the benefit of the
parties to this Agreement and permitted assignees thereof and not for the
benefit of any employee or any other Person.
h. Seller shall take such actions as are necessary to cause MRT to
terminate its participation in all of Seller's Employment Plans and Employee
Benefit Arrangements effective as of the Closing.
7.3 Publicity. Following the Closing, Seller and Purchaser shall issue a
mutually approved press release with respect to this Agreement. Except for such
press release neither Seller nor Purchaser, nor any of their respective
Affiliates, shall issue or make any press release or other public announcement
or public disclosure pertaining to this Agreement or the transactions
contemplated hereby without the prior approval of all parties hereto as to both
form and content (which approval shall not be unreasonably withheld or delayed),
except as may be required by Law, by its securities indentures, or by any
applicable national securities exchange.
7.4 Restrictive Covenants.
a. For a period of five (5) years from the Closing Date, neither
Seller, alone or in conjunction with any other Person, or directly or indirectly
through their present or future Affiliates, will directly or indirectly own,
manage, operate, join, be employed by, have a financial interest in, control or
participate in the ownership, management, operation or control of, or use or
permit his name to be used in connection with, or be otherwise connected in any
manner with any business or enterprise engaged in the Business anywhere in the
United States of America, provided that the foregoing restriction shall not be
construed to prohibit Seller and/or any of its Affiliates from (i) exploiting
rights under the MTU License Agreement or developing or marketing any
product(s), process(es) contemplated or covered thereby, if Seller should
acquire the right to do so, as contemplated by the MTU Agreement, (ii) the
ownership, in the
35
aggregate, of not more than five percent (5%) of any class of securities of any
corporation which is engaged in any of the businesses or enterprises described
above, having a class of securities registered pursuant to the Securities
Exchange Act of 1934, as amended, which securities are publicly owned and
regularly traded on any national exchange or in the over-the-counter market, or
(iii) the acquisition or ownership of any securities that are acquired as
consideration for any assets or securities disposed of by Seller or any of its
Affiliates (provided that this clause (iii) shall not apply to acquisition or
ownership by Seller or its affiliates of the securities of a company whose
principal business is the Business). In the event, prior to the fifth
anniversary of the Closing Date, Seller or a subsidiary of Seller shall acquire
the assets or securities of a company in a transaction permitted under clause
(iii) of the immediately preceding sentence and such assets include, or in the
case of a stock purchase such company's assets include, a business which is in
the Business (a "Non-Core Fly Ash Business"), then Seller shall offer Purchaser
a reasonable opportunity to purchase such Non-Core Fly Ash Business on equitable
terms and conditions (at Seller's option either concurrently with or following
such permitted acquisition); provided that Seller shall be relieved of such
obligation if Purchaser and Seller are unable after good faith efforts to reach
agreement as to such terms and conditions.
b. For a period of five (5) years from the Closing Date, the Seller
shall not directly or indirectly, or through an Affiliate, (i) influence any
Hired Employee or consultant of MRT at any time, to terminate his or her
employment or consulting relationship with MRT, (ii) interfere in any other way
with the employment, or other relationship, of any Hired Employee or consultant
of MRT or (iii) cause or attempt to cause (or participate in any way in any
discussion or negotiation concerning) any client, customer or supplier, or any
potential client, customer or supplier, of the Business not to engage in
business with the Purchaser or any part of the Business.
c. Notwithstanding anything to the contrary contained in this
Agreement, the restrictions contained in paragraph a. or b. of this Section 7.4
shall not apply to any Person, who or which shall acquire any securities,
business or assets of Seller or any of its direct or indirect subsidiaries,
provided that such Person is not an Affiliate of Seller on the Closing Date or a
member of the family of Xxxx Xxxxxxxx or an entity controlled directly or
indirectly by one or more members of the family of Xxxx Xxxxxxxx.
d. Each party hereto agrees that the other's remedies at law for any
breach or threat of breach by it of any of the provisions of this Section 7.4 or
in Section 12.4 hereof will be inadequate, and that, in addition to any other
remedy to which any party hereto may be entitled at law or in equity, such party
shall be entitled to a temporary or permanent injunction or injunctions or
temporary restraining orders or orders to prevent breaches of the provisions of
this Section 7.4 or in Section 12.4 hereof and to enforce specifically the terms
and provisions of this Section 7.4 or in Section 12.4 hereof, in each case
without the need to post any security or bond. Nothing in this
36
paragraph shall be construed as prohibiting any party from pursuing, in
addition, any other remedies available to it pursuant to this Agreement.
e. A waiver by any party of any breach of any provision of this
Section 7.4 or in Section 12.4 hereof shall not operate or be construed as a
waiver of a breach of other provisions of this Agreement or of any subsequent
breach thereof.
f. The parties hereto consider the restrictions contained in this
Section 7.4 or in Section 12.4 hereof to be reasonable for the purpose of
preserving the goodwill, proprietary rights and going concern value of the
Company but if a final judicial determination is made by a court having
jurisdiction that the time or territory or any other restriction contained in
this Section 7.4 or in Section 12.4 hereof an unenforceable restriction on any
party's activities, the provisions of this Section 7.4 or in Section 12.4 hereof
shall, as the case may be, not be rendered void but shall be deemed amended to
apply as to such maximum time and territory and to such other extent as such
court may judicially determine or indicate to be reasonable. Alternatively, if
the court referred to above finds that any restriction contained in this Section
7.4 or in Section 12.4 hereof or any remedy provided herein is unenforceable,
and such restriction or remedy cannot be amended so as to make it enforceable,
such finding shall not affect the enforceability of any of the other
restrictions contained therein or the availability of any other remedy.
ARTICLE 8
SELLER'S AND PURCHASER'S PRE-CLOSING COVENANTS
Seller and Purchaser agree that prior to Closing:
8.1 Business Operations. From the date of this Agreement until the
Closing:
a. Seller shall cause the Company to use commercially reasonable
efforts to conduct its business only in the ordinary course of business and to
use commercially reasonable efforts to maintain and preserve its business
organization, to retain the services of its key executives and to retain key
customers and suppliers:
b. Seller shall use its reasonable commercial efforts to maintain in
full force and effect the insurance policies required to be listed in Schedule
5.19 or renewal or replacement policies with substantially the same coverage
subject to variations in amounts in the ordinary course of its business, from
reputable insurance carriers.
c. Seller and Purchaser shall use commercially reasonable efforts to
cooperate to obtain all consents required for the consummation of the
transactions contemplated hereby under or with respect to, any Material Contract
which is required to be scheduled pursuant to Section 5.17; provided, however,
neither Seller, Purchaser nor the Company shall be required to incur any
monetary cost in obtaining any such
37
consents. Notwithstanding the foregoing, this paragraph is not intended to limit
the obligations of Purchaser under Sections 3.1.b and 3.1.c with respect to the
consents referred to therein.
d. MRT will notify Michigan Technological University of the
execution of this Agreement prior to the Closing.
8.2 Access. From the date of this Agreement until the Closing Date, Seller
shall cause the Company to permit Purchaser and its authorized representatives
reasonable access to, and make available for inspection, upon reasonable prior
written notice and during reasonable business hours (or as otherwise agreed
between the parties), the facilities of the Company, and give Purchaser access
to records and documents of the Company as Purchaser and its representatives may
reasonably request, all for the sole purpose of permitting Purchaser to become
familiar with the business and assets and liabilities of the Company. Purchaser
shall also be entitled to, and shall promptly, cause Phase I environmental
assessments to be conducted by a recognized independent environmental consultant
with respect to those parcels of Leased Real Property and Subject Facilities
identified in Section 8.2 of the Disclosure Schedule (the "Phase I Assessments")
(subject to any consent required to be obtained from any owner or operator
thereof). To the extent the consent of the owner or operator of a Leased Real
Property or Subject Facility is required before Purchaser is authorized to
conduct the Phase I Assessment of such Leased Property or Subject Facility, MRT
and Seller shall use good faith efforts to obtain such consent promptly.
Purchaser agrees that it shall conduct the activities referred to in this
paragraph at its own cost and in a manner that does not unreasonably interfere
with any of the Company's business activities or personnel.
8.3 Changes. Except as set forth in Section 8.3 of the Disclosure Schedule
or elsewhere in this Agreement, without the prior consent of Purchaser, such
consent not to be unreasonably withheld or delayed, from the date hereof until
the Closing, Seller shall cause the Company not to:
a. amend the Company's Certificate of Incorporation or bylaws;
b. make any change in the Company's authorized capital stock, or
issue any shares of stock or other equity securities of any class or issue or
become a party to any subscriptions, warrants, rights, options, convertible
securities or other agreements or commitments of any character relating to the
issued or unissued capital stock or other equity securities of the Company, or
grant any stock appreciation or similar rights;
c. hire any new employee who shall have an annual salary in excess
of $50,000;
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d. incur or commit to incur any capital expenditures not required by
any applicable Material Contract in excess of $100,000 in the aggregate other
than repairs and maintenance in the ordinary course of business;
e. incur, assume or guarantee any indebtedness for borrowed money
and other than Company Debt, or grant any Liens (other than Permitted Liens);
f. enter into any Contract which if entered into prior to the date
hereof would have been required to be disclosed pursuant to Section 5.17;
g. increase the salary or commission rate or bonus payable to any
employee and except as required pursuant to Contracts disclosed pursuant to
Section 5.17;
h. sell, transfer or otherwise dispose of any material asset or
property, except for sales of inventory or as required by ash management
contracts and except for application of cash in payment of the Company's
liabilities;
i. amend, terminate or give notice of termination with respect to
any existing Material Contract, other than with respect to purchase and supply
orders and similar obligations in the ordinary course of business, or waive any
of its material rights other than in the ordinary course of business;
j. except for the continuation of Seller's cash management practices
regarding the Company and the repayment by the Company of cash advances made by
Seller or any of its subsidiaries to the Company, pay, declare, accrue or set
aside any dividends or any other distributions, or purchase, exchange or redeem
any of its securities of any class;
k. make any new election with respect to Taxes; or
l. take any action that would increase MRT's liabilities (other than
Retained/Assumed Liabilities) under any Employee Plan or Benefit Arrangement,
except in the ordinary course of business consistent with past practice.
8.4 Woodlands and Vehicle Lease. In connection with the Closing, and in
order to facilitate the obtaining of consents and assignments with respect to
the following:
i. Purchaser shall provide to the landlord under that certain Lease
Agreement, effective July 5, 2001 between Woodlands VTO 2000 Land, L.P.
and MRT (the "Woodlands Lease"), if required by such landlord, the
guaranty of Purchaser, or of an affiliate of Purchaser, reasonably
acceptable to such landlord, in such form as such landlord shall
reasonably request, in exchange for the consent of such landlord to the
change of control of MRT contemplated by this Agreement.
39
ii. Purchaser shall, if required by the lessor thereunder, enter
into, or cause an affiliate of Purchaser reasonably acceptable to such
lessor to enter into, a lease agreement for the vehicles identified in
Section 8.4 of the Disclosure Schedule (the "MRT Vehicles"), and currently
covered by the Vehicle Lease Agreement, dated as of February 8, 1999,
between Seller and Emkay Inc. Trust (the "Seller Vehicle Lease"), and
shall provide such insurance and other information as such lessor shall
reasonably require, in order to facilitate the assignment and assumption
of the lease obligations for the MRT Vehicles from Seller to Purchaser,
all effective as of the Closing.
From and after the Closing, Purchaser shall indemnify and hold harmless Seller
from all Losses arising out of the Woodlands Lease and/or, but only to the
extent relating to the MRT Vehicles, the Seller Vehicle Lease, and this
indemnity shall apply only to events occurring and/or periods beginning on or
after the Closing.
ARTICLE 9
CONDITIONS TO CLOSING
9.1 Conditions to Purchaser's Obligations. Except as may be waived in
writing by Purchaser, the obligations of Purchaser under this Agreement are
subject to the fulfillment at or prior to the Closing of each of the following
conditions:
a. Representations and Warranties. Each of the representations and
warranties of Seller contained herein shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the Closing as if originally made on the Closing Date (other than
any such representations or warranties given as of a specific date, which shall
be true and correct as of such date), except as affected by the transactions
contemplated or permitted under this Agreement.
b. Covenants. Seller shall have in all material respects performed
and complied with the covenants required by this Agreement to be performed by it
at or prior to the Closing.
c. Certificate. Seller shall have executed and delivered to
Purchaser its certificate, dated the Closing Date, that the conditions set forth
in paragraphs a. and b. immediately above have been satisfied.
d. No Injunction. No court or Governmental or Regulatory Authority
of competent jurisdiction shall have entered an order which enjoins the carrying
out of the transaction contemplated by this Agreement nor shall any bona fide
third party not an Affiliate of Purchaser have pending in a court of applicable
jurisdiction, on the basis of a bona fide, non-frivolous claim, a petition for
an order enjoining the carrying out of the transactions contemplated by this
Agreement.
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9.2 Conditions to Seller's Obligations. Except as may be waived in writing
by Seller, the obligations of the Seller under this Agreement are subject to
fulfillment at or prior to the Closing of each of the following conditions:
a. Representations and Warranties. Each of the representations and
warranties of Purchaser contained herein shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the Closing as if originally made as of the Closing Date, except
as affected by the transactions contemplated or permitted hereby.
b. Covenants. Purchaser shall have performed and complied in all
material respects with all covenants or conditions required by this Agreement to
be performed and complied with by it prior to the Closing (including, without
limitation and not subject to any materiality exception, all obligations which
Purchaser would be required to perform at the Closing if the transactions
contemplated hereby were consummated).
c. Certificate. Purchaser shall have executed and delivered to
Seller its certificate, dated the Closing Date, that the conditions set forth in
paragraphs a. and b. immediately above have been satisfied.
d. No Injunction. No court or governmental or regulatory authority
of competent jurisdiction shall have entered an order which enjoins the carrying
out of the transactions contemplated by this Agreement.
ARTICLE 10
INDEMNIFICATION, SURVIVAL AND LIMITATIONS, TAX MATTERS
10.1 Indemnification.
a. Subject to the terms and conditions of this Article 10, Seller
will indemnify Purchaser, its stockholders and the officers, directors,
employees, agents and Affiliates of each of them, including MRT (collectively
with Purchaser "Purchaser Indemnitees") in respect of, and hold each of them
harmless from and against, any and all Losses suffered, incurred or sustained by
any of them or to which any of them becomes subject, resulting from, arising out
of, or relating to
(A) any misrepresentation or breach of warranty or
non-fulfillment of or failure to perform any covenant or agreement on the part
of the Seller contained in this Agreement (including, without limitation, any
certificate delivered pursuant hereto, any of the agreements of Seller executed
and delivered pursuant to this Agreement), or
41
(B) the Retained/Assumed Liabilities or the Seller Employee
Liabilities, or
(C) (i) all liabilities of MRT, whether asserted prior to or
after the Closing, arising out of the disposal or dumping by MRT of any
Hazardous Materials at any off-site location (that is, other than one of the
Subject Facilities or the Leased Real Property) to the extent that the
transportation of any such Hazardous Material by or on behalf of MRT to the
off-site location, or such disposal or dumping, occurred before the Closing Date
(regardless of whether disclosed prior to Closing);
(ii) all liabilities of MRT, whether asserted prior to
or after the Closing, arising out of the disposal or dumping by MRT of fly ash
at any offsite location (that is, other than one of the Subject Facilities or
the Leased Real Property) to the extent that the transportation of such fly ash
by or on behalf of MRT to the off-site location, or such disposal or dumping,
occurred before the Closing Date (regardless of whether disclosed prior to
Closing), but specifically excluding all liabilities that arise out of a sale or
transfer of fly ash for use as a cement substitute in the blending or
manufacture of a cement or concrete product or for use in a Normal Commercial
Application; or
(iii) any Environmental Liabilities incurred by MRT
(other than an Environmental Liability covered by clause (i) or clause (ii)
immediately above) by reason of (x) any violation by MRT of Environmental Laws
occurring on or prior to the Closing Date, (y) any condition, event,
circumstance, activity, practice, incident, action or omission existing or
occurring prior to the Closing Date and related in any way to the Business
(collectively, "Environmental Conditions"), or (z) the use, storage, treatment,
transportation, discharge or disposal by MRT of Hazardous Materials or fly ash
prior to the Closing Date;
provided, however, that, in each instance under clause (A) and clause (C) of
this Section 10.1.a, Seller shall not have any obligation to indemnify any
Purchaser Indemnitee(s) for or in respect of Environmental Liabilities which
would not have been incurred or sustained by MRT under Environmental Laws as
existing on the Closing Date; and provided, further, that Seller's obligation to
indemnify Purchaser Indemnitees for Environmental Liabilities under clause (A)
and clause (C) of this Section 10.1.a shall apply to or cover an Environmental
Liability only to the extent such Environmental Liability is based on or results
from an Environmental Condition that occurs on or before the Closing Date.
b. Subject to the terms and conditions of this Article 10, Seller
will indemnify Purchaser and MRT in respect of, and hold each of them harmless
from and against, (i) 50% of the amount by which (x) any net out-of-pocket
Losses (that is, net of any benefit derived or to be derived by Purchaser, MRT
or any of their respective
42
Affiliates in connection with any settlement of any of the Covered Matters (as
such term is defined below)) suffered, incurred or sustained by any of them, or
to which any of them becomes subject, by reason of the First Covered Matter (as
such term is defined in that certain letter agreement of even date herewith from
Seller to Purchaser) exceeds (y) $170,000, and (ii) 50% of any net out-of-pocket
Losses (that is, net of any benefit derived or to be derived by Purchaser, MRT
or any of their respective Affiliates in connection with any settlement of any
of the Covered Matters) suffered, incurred or sustained by any of them, or to
which any of them becomes subject, by reason of the Second Covered Matter (as
such term is defined in said letter agreement); provided that: (A) in no event
shall the liabilities of Seller in respect of the First Covered Matter exceed
$90,000 in the aggregate, and in no event shall the liabilities of Seller in
respect of the Second Covered Matter exceed $150,000 in the aggregate; (B) in no
event shall any of Purchaser or MRT or any Affiliate of any of them, or any
agent, employee or representative of any of the foregoing, directly or
indirectly provide any advice, encouragement or cooperation to any person or
entity in connection with any of the Covered Matters (as such term is defined in
said letter agreement) without the express prior written consent and approval of
Seller; and (C) Purchaser shall cause MRT and those employees of MRT who remain
with MRT after the Closing and who have knowledge of any of the Covered Matters
to cooperate with and assist Seller in connection therewith.
c. Subject to the terms and conditions of this Article 10, Purchaser
will indemnify Seller, its stockholders and the officers, directors, employees,
agents and Affiliates of each of them (collectively with the Seller, "Seller
Indemnitees") in respect of, and hold each of them harmless from and against,
any and all Losses suffered, incurred or sustained by any of them or to which
any of them becomes subject, resulting from, arising out of, or relating to (A)
any misrepresentation or breach of warranty or non-fulfillment of or failure to
perform any covenant or agreement on the part of Purchaser contained in this
Agreement (including, without limitation, any certificate delivered pursuant
hereto, any of the agreements of Purchaser executed and delivered pursuant to
this Agreement), or (B) any Environmental Liabilities incurred by reason of (i)
violations by MRT of Environmental Laws occurring subsequent to the Closing
Date, (ii) any condition, event, circumstance, activity, practice, incident,
action or omission existing or occurring subsequent to the Closing Date and
related in any way to the Business, or (iii) the use, storage, treatment,
transportation, discharge, or disposal by MRT of Hazardous Materials or fly ash
subsequent to the Closing Date; provided, however, that Purchaser's obligation
to indemnify Seller Indemnitees for Environmental Liabilities shall not apply to
or cover any Environmental Liability to the extent such Environmental Liability
is based on or results from an event, activity, incident, action or omission
that occurred on or prior to the Closing Date.
10.2 Survival and Limitations. Notwithstanding anything to the contrary
contained in this Agreement (including without limitation the exhibits,
appendices and schedules hereto, and the Disclosure Schedule):
43
a. Each representation, warranty, indemnity, covenant and agreement
of each of the parties hereto shall survive the Closing; provided, however, that
no party shall be entitled to assert any claim against the other for
misrepresentation, breach of warranty, indemnity, covenant or agreement under,
pursuant to or in respect of this Agreement, unless the party asserting such
claim shall notify the other, as set forth in Section 10.3 below, of such claim,
in reasonable detail, during the Survival Period applicable thereto, in which
case the Indemnified Party's right to indemnification will survive, but only
with respect to the matters so described in such notice. The Survival Period
with respect to the following representations, covenants and agreements shall
extend until the expiration of the applicable statute of limitations with
respect thereto: Sections 2.1, 3.1 (including without limitation Schedule 3.1.a
hereto), 5.1, 5.2, 5.3, 5.10, 5.13, 5.26, 5.27, 5.28, 6.1, 6.2, 8.4, clause (B)
of Section 10.1.a, and covenants and agreements arising under the MTU Agreement.
The Survival Period with respect to the representations and warranties set forth
in Section 5.22 and the covenants and obligations set forth in clause (C)(iii)
of Section 10.1.a and clause (B) of Section 10.1.c shall be thirty-six (36)
months from the Closing Date. The Survival Period with respect to the covenants
and obligations set forth in clauses (C)(i) and (C)(ii) of Section 10.1.a shall
be sixty (60) months from the Closing Date. The Survival Period with respect to
the covenants set forth in Section 7.4 and 12.4 hereof shall be as indicated
therein. In all other instances for all other provisions for this Agreement, the
Survival Period shall be thirty (30) months from the Closing Date.
b. Except for the Retained/Assumed Liabilities and except for the
indemnity obligations under Section 10.1.b, or under clauses (i) or (ii) of
Section 10.1.a(C) (the "Indemnified Liabilities"), Seller shall have no
liability under this Article or otherwise under this Agreement or in connection
with any of the transactions contemplated by this Agreement, unless and until
the aggregate amount of Seller's liabilities under this Article, other than any
in respect of any of the Indemnified Liabilities, exceeds $100,000 (the
"Deductible"). In addition to the Retained/Assumed Liabilities, the maximum
aggregate liability that Seller shall have under or in connection with this
Agreement shall in no event exceed the aggregate sum of US$4,350,000 (the
"Cap"), except as provided in the immediately succeeding sentence in the case of
Fraud Losses (as defined therein) and/or in the case of Losses for which Seller
is obligated to provide indemnity under Section 10.1.b ("Covered Matter Losses")
and/or under clauses (i) or (ii) of Section 10.1.a.(C) ("Special Environmental
Losses"). In the event Purchaser suffers Losses in respect of this Agreement
which result from fraud by Seller (said Losses constituting "Fraud Losses"),
and/or in the event any Purchaser Indemnitee(s) suffer(s) any Covered Matter
Losses and/or Special Environmental Losses, Purchaser shall be entitled to
recover such Fraud Losses, such Covered Matter Losses and/or such Special
Environmental Losses from Seller; provided that (A) the maximum aggregate
liability for all Fraud Losses, all Covered Matter Losses and all Special
Environmental Losses shall, subject to clauses (B) and (C) immediately below, be
the amount by which US$15,800,000 (less all amounts (if any)
44
* OMITTED PURSUANT TO THE COMPANY'S REQUEST FOR CONFIDENTIAL TREATMENT
repaid by Seller, or disbursed by the Escrow Agent to Purchaser, in respect of
the [ * ] Decrease and/or the [ * ] Decrease) exceeds the lesser of (i) the Cap,
and (ii) the aggregate of all other Losses suffered or incurred by any or all of
the Purchaser Indemnitees (including Fraud Losses, Covered Matter Losses and
Special Environmental Losses) (the "Cap for Fraud and Other Special Losses"),
(B) the maximum aggregate liability for all Covered Matter Losses shall be as
set forth in Section 10.1.b (the respective "Covered Matters Caps"), and (C) the
maximum aggregate liability for all Special Environmental Losses shall be the
amount by which $9,350,000 exceeds the lesser of (i) the Cap, and (ii) the
aggregate of all other Losses suffered or incurred by any or all of the
Purchaser Indemnitees (including all Fraud Losses, Covered Matter Losses and
Special Environmental Losses) (the "Special Environmental Cap"). The Deductible
shall not be applied against or reduce any amounts payable in respect of any of
the Retained/Assumed Liabilities or Covered Matter Losses or Special
Environmental Losses, and no payments of the Retained/Assumed Liabilities by
Seller shall be included in calculating liabilities subject to the Cap, the Cap
for Fraud and Other Special Losses, any of the Covered Matters Caps, or the
Special Environmental Cap.
c. In the event that any misrepresentation or breach of warranty,
agreement or covenant is known to or discovered by Purchaser at or prior to the
Closing (including but not limited to matters disclosed in the Disclosure
Schedule or any of the Exhibits hereto), and Purchaser nevertheless elects to
close, the Purchaser Indemnitees shall be deemed to have waived such
misrepresentation or breach and shall have no claim or right whatsoever against
Seller by reason of such misrepresentation or breach. However, nothing in this
Section 10.2.c shall negate, modify or alter in any manner Seller's obligation
to indemnify the Purchaser Indemnitees pursuant to clause (B) and clause (C) of
Section 10.1.a of this Agreement.
d. In the event that any misrepresentation or breach of warranty,
agreement or covenant is known to or discovered by Seller at or prior to the
Closing (including but not limited to matters disclosed in any of the Exhibits
hereto), and Seller nevertheless elects to close, the Seller Indemnitees shall
be deemed to have waived such misrepresentation or breach and shall have no
claim or right whatsoever against Purchaser by reason of such misrepresentation
or breach.
e. If any of the Purchaser Indemnitees shall have received any
payment or the benefit of any payment required by this Article from Seller in
respect of any indemnified Losses and shall subsequently receive insurance
proceeds or other amounts in respect of any of such Losses, then Purchaser shall
promptly pay to Seller a sum equal to the amount of such insurance proceeds or
other amounts actually received, net of costs and expenses incurred in
collecting such amounts so received, but not exceeding the amount paid in
respect of such indemnified Losses.
45
f. Seller shall not be liable with respect to any Losses with
respect to which Purchaser or the Company is able, through the use of
commercially reasonable efforts, but fails, to mitigate, including but not
limited to its failure to use commercially reasonable efforts to recover under a
policy of insurance or to assert contractual rights.
g. The effect of any misrepresentation, breach of warranty, covenant
or agreement of, or any indemnifiable claim against, Seller under or in respect
of this Agreement, or any of the transactions contemplated by this Agreement,
and any damages resulting therefrom, shall be determined (1) on a net after-tax
basis (that is, with the amount thereof reduced to reflect the tax benefit
resulting therefrom) and (2) net of (i) any amounts recovered (or recoverable
through the use of commercially reasonable efforts) by or on behalf of Purchaser
or any Affiliate thereof, in respect thereof or in connection therewith under
any one or more policies of insurance maintained by any party hereto or any
third party, and (ii) any other amounts recovered by or on behalf of Purchaser
or any Affiliate(s) thereof from any third party in respect thereof or in
connection therewith. This clause (g) shall not be construed to require any
party to waive subrogation. In the event of any entitlement to payment or
recovery of any of the Purchase Indemnitees covered by this Article 10, Seller
shall be subrogated to all claims and causes of action which any of the
Purchaser Indemnitees may have against any one or more third parties in respect
of the matter, cause or event which is the subject of or gives rise to such
entitlement to payment or recovery, and Purchaser shall cooperate in all
reasonable respects with Seller (at Seller's expense) to enable Seller to assert
and enforce such claims and causes of action.
h. EXCEPT TO THE EXTENT PURCHASER WOULD BE ENTITLED UNDER APPLICABLE
LAW TO RECOVER INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES PURSUANT TO ITS
ENTITLEMENT TO RECOVER FOR FRAUD UNDER SECTION 10.2.b HEREOF, NO PARTY SHALL BE
LIABLE UNDER THIS AGREEMENT OR IN CONNECTION WITH ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT FOR INCIDENTAL, INDIRECT, SPECIAL, CONTINGENT,
SPECULATIVE, NON-QUANTIFIABLE, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR FOR LOST
OPPORTUNITY COSTS, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION 10.2.h SHALL
NEGATE, MODIFY OR ALTER THE OBLIGATION OF AN INDEMNIFYING PARTY TO INDEMNIFY THE
INDEMNIFIED PARTIES FOR INCIDENTAL, INDIRECT, SPECIAL, CONTINGENT, SPECULATIVE,
NONQUANTIFIABLE, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR FOR LOST OPPORTUNITY
COSTS, RECOVERED FROM THE INDEMNIFIED PARTY BY A THIRD PARTY WHICH IS NOT ITSELF
AN INDEMNIFIED PARTY OR AN AFFILIATE OF AN INDEMNIFIED PARTY, PURSUANT TO A
THIRD PARTY CLAIM AGAINST SUCH INDEMNIFIED PARTY FOR WHICH SUCH INDEMNIFIED
PARTY IS
46
OTHERWISE ENTITLED TO INDEMNIFICATION FROM THE INDEMNIFYING PARTY UNDER THIS
ARTICLE 10.
i. The sole and exclusive liability and obligation of Seller and the
sole right and remedy of Purchaser and all Purchaser Indemnitees for any and all
claims with respect to or in connection with this Agreement and/or any of the
transactions contemplated by this Agreement shall be limited to indemnification
under this Article 10 (or, in the case of Section 7.4 hereof, as provided
therein).
j. With respect to any Environmental Liability for which Seller is
required to indemnify and defend the Purchaser Indemnitees pursuant to the terms
of this Article 10 and that requires any removal, remediation, response, clean
up or other corrective action ("Remediation") to respond to, remove or otherwise
address such Environmental Liability, Seller, after obtaining the written
approval of the owner of the property on which the Remediation is to be
conducted, may elect to implement and complete such Remediation. If Seller
elects to conduct the Remediation:
(i) Purchaser shall have the right to participate in the
planning and design of any such Remediation and the right to participate in any
meetings with, hearings before or other sessions with any Governmental or
Regulatory Authority regarding the Remediation;
(ii) Seller shall design the Remediation to be in all material
respects consistent with, and not in any material respect to impede or increase
the cost of, the Purchaser's business operations on the property and any
construction or development plans Purchaser has for the property;
(iii) Seller, in good faith, shall coordinate the schedule of
the Remediation with Purchaser so that disruptions of the Business will be
minimized;
(iv) Seller shall obtain the prior written approval of
Purchaser, which approval will not be withheld unreasonably, for any consultant
or contractor retained by Seller to design or implement the Remediation;
(v) Seller shall conduct the Remediation in compliance with
all applicable Environmental Laws and as directed by the appropriate
Governmental or Regulatory Authority and in compliance with all applicable lease
or other contractual requirements; and
(vi) Seller shall not agree to or select any Remediation that
imposes any obligations on Purchaser, including, without limitation, the
obligation to obtain permits, without the prior written consent of Purchaser,
which consent shall not be unreasonably withheld.
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(vii) Seller shall attempt in good faith to provide Purchaser
with draft copies of any study, plan or report associated with the Remediation
at least fourteen (14) days before it is submitted to any Governmental or
Regulatory Authority (or shall provide Purchaser such draft copies as soon as
practical if at least fourteen (14) days is not practical) and shall provide
Purchaser copies of all reports, plans and correspondence submitted to a
Governmental or Regulatory Authority with respect to the Remediation. In
addition, Seller shall provide Purchaser seven (7) days' notice (or shall
provide Purchaser notice as soon as practical if seven (7) days' notice is not
practical) of any meeting with, hearing before or other session with any
Governmental or Regulatory Authority with respect to the Remediation. Seller and
Purchaser shall attempt to reach a mutual agreement with respect to any
comments, suggestions or requests of Purchaser in connection with the
finalization of such draft reports or plans and/or the conduct of such meetings,
hearings or otherwise.
(viii) Seller shall expeditiously remove from the property all
drill cuttings, soil, debris or liquids generated from or in connection with the
Remediation and shall restore the property and any existing structures or
equipment removed or damaged in the course of the Remediation to a condition
substantially the same as the condition that existed immediately prior to the
Remediation. Seller or its consultants and contractors shall provide Purchaser
at least five (5) business days' notice of the activities to be conducted on the
property, which notice may be in the form of a schedule of activities.
(ix) Purchaser shall at all times cooperate with Seller in all
reasonable respects to facilitate the Remediation contemplated by this paragraph
(j).
k. In the event any Purchaser Indemnitee shall assert a fraud claim
in respect of this Agreement (a "Fraud Claim") and (i) Seller is found (pursuant
to final judgment) to have no liability for such Fraud Claim (notwithstanding
that Seller may have liability under this Agreement based on some or all of the
same facts or circumstances underlying or involved in such Fraud Claim), or (ii)
the Purchaser Indemnitee withdraws or abandons such Fraud Claim, then
notwithstanding anything to the contrary contained in this Article 10, Purchaser
shall, unless such Fraud Claim is settled by such Purchaser Indemnitee and
Seller, indemnify and hold harmless Seller from and against any and all
reasonable out-of-pocket legal fees and other costs and expenses incurred in
connection with the defense of such Fraud Claim, including those incurred in the
simultaneous defense of any other claim(s) directly involving the facts or
circumstances underlying such Fraud Claim; provided that Seller's entitlement to
such legal fees, costs and expenses shall not apply to those which would not
have been incurred if such Fraud Claim were the only claim brought against
Seller.
l. Seller shall not have any liability with regard to any matter
covered by this Article 10, to the extent any liability or obligation in respect
of any such
48
matter(s) does not exceed the amount of the reserves or accruals relating
thereto reflected in the Closing Date Balance Sheet.
10.3 Method of Asserting Claims. All claims for indemnification by any
Indemnified Party under Section 10.1 will be asserted and resolved as follows:
a. In order for an Indemnified Party to be entitled to any
indemnification provided for under Section 10.1 in respect of, arising out of or
involving a claim or demand made by any Person not a party to this Agreement
against the Indemnified Party (a "Third Party Claim"), the Indemnified Party
shall deliver a Claim Notice to the Indemnifying Party promptly after receipt by
such Indemnified Party of written notice of the Third Party Claim; provided,
that failure to give such Claim Notice shall not affect the indemnification
provided hereunder except to the extent the Indemnifying Party shall have been
actually prejudiced as a result of such failure.
b. If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses, to assume and control the defense thereof with counsel
selected by the Indemnifying Party, which counsel must be reasonably
satisfactory to the Indemnified Party. Should the Indemnifying Party so elect to
assume the defense of a Third Party Claim, the Indemnifying Party shall not be
liable to the Indemnified Party for legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof, but shall continue to
pay for any other Loss suffered. If the Indemnifying Party assumes such defense,
the Indemnified Party shall have the right to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel employed by
the Indemnifying Party. If (i) the Indemnifying Party shall not assume the
defense of a Third Party claim with counsel reasonably satisfactory to the
Indemnified Party within a reasonable time after any Claim Notice, or (ii) legal
counsel for the Indemnified Party notifies the Indemnifying Party in writing
that there are or may be, and there is in fact a reasonable legal basis for
believing that are, material legal defenses available to the Indemnifying Party
or to other Indemnified Parties which are materially different from or
additional to those available to the Indemnified Party, which, if the
Indemnified Party and the Indemnifying Party were to be represented by the same
counsel, would constitute a conflict of interest for such counsel which
prejudices prosecution of the defenses available to such Indemnified Party, or
(iii) if the Indemnifying Party shall assume the defense of a Third Party Claim
and fails to diligently prosecute such defense, then in each such case the
Indemnified Party, by notice to the Indemnifying Party, may employ its own
counsel and control the defense of the Third Party Claim, but in such event it
shall be the obligation of the Indemnified Party to do so in a reasonably
prudent manner, and, if it shall do so, the Indemnifying Party shall be liable
for the reasonable fees, charges and disbursements of counsel employed by the
Indemnified Party, and the Indemnified Party shall be promptly reimbursed for
any such fees, charges and disbursements, as and when incurred.
49
Whether the Indemnifying Party or the Indemnified Party control the defense of
any Third Party Claim, the parties hereto shall cooperate in the defense
thereof. Such cooperation shall include the retention and provision to the
counsel of the controlling party of records and information which are reasonably
relevant to such Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation or any
material provided hereunder. The Indemnifying Party shall have the right to
settle, compromise or discharge a Third Party Claim (other than any such Third
Party Claim in which criminal conduct is alleged) without the Indemnified
Party's consent if such settlement, compromise or discharge (i) constitutes a
complete and unconditional discharge and release of the Indemnified Party, and
(ii) provides for no relief other than the payment of monetary damage and such
monetary damages are paid or otherwise satisfied in full by the Indemnifying
Party or the Indemnified Party has no liability therefor.
c. In the event any Indemnified Party should have a claim under
Section 10.1 against any Indemnifying Party that does not involve a Third Party
Claim, the Indemnified Party shall promptly deliver an Indemnity Notice to the
Indemnifying Party. The failure by any Indemnified Party to give the Indemnity
Notice shall not impair such party's rights hereunder except to the extent that
an Indemnifying Party demonstrates that it has been prejudiced thereby. If the
Indemnifying Party has disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and, if not resolved through
negotiations within thirty (30) days (or such shorter period as may end on the
last day of any applicable statute of limitations that falls within such 30 day
period), any party shall have the right to take any legal or equitable action
permitted by this Agreement that it deems necessary or appropriate.
10.4 Certain Understandings. Notwithstanding anything to the contrary
contained in this Agreement:
a. It is understood and agreed that whenever Seller is called upon
to list any contracts or agreements, there shall be deemed excluded from the
applicable representation or warranty any contract or agreement as to which the
primary obligations of the parties thereto have been performed or will be
performed on or before the Closing.
b. Certain matters and items disclosed in the Disclosure Schedule
may not be required to be disclosed therein, but may be disclosed therein for
informational purposes only, and no such disclosure shall constitute an
indication or admission of the materiality thereof or create a standard of
disclosure.
c. Notwithstanding any cross-referencing which may be undertaken in
the Disclosure Schedule or any Section thereof, any matter identified in any one
or
50
more of the Sections of the Disclosure Schedule shall be deemed disclosed for
purposes of any other Schedule of the Disclosure Schedule.
d. NO PARTY HERETO MAKES ANY, AND EACH PARTY HERETO HEREBY DISCLAIMS
ALL, REPRESENTATIONS AND/OR WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR
A PARTICULAR PURPOSE, EXCEPT AS SPECIFICALLY SET FORTH HEREIN.
10.5 Allocation of Tax Liability.
a. Seller will, to the extent permitted by applicable law, elect
with the appropriate Governmental and Regulatory Authority to close the taxable
period of the Company with respect to income Taxes as of and including the
Closing Date (a "Closing Date Election"). In any case where applicable law does
not permit a Closing Date Election to be made with respect to the Company, any
Tax pertaining to a period that begins on or before the Closing Date and ends
after the Closing Date shall be allocated in accordance with this Section
10.5.a. In the case of Taxes with respect to or payable by the Company with
respect to a Tax period that includes but does not end on the Closing Date, the
allocation of such Taxes between the Pre-Closing Period and the Post-Closing
Period shall be made (i) in the case of any Tax based on or related to income,
gross receipts, sales or use, on the basis of an interim closing of the books of
the Company as of the close of business on the Closing Date, and (ii) in the
case of any Tax other than a Tax based on or related to income, gross receipts,
sales, or use, on the basis of the amount of such Tax for the entire Tax period
multiplied by a fraction, the numerator of which is the number of days in the
Tax period ending on and including the Closing Date, and the denominator of
which is the number of days in the entire Tax period.
b. Notwithstanding the Cap set forth in Section 10.2.b hereof,
Seller shall be responsible for and pay and shall indemnify and hold harmless
Purchaser and the Company with respect to any and all Taxes imposed on the
Company, or for which the Company is or shall become liable, including, without
limitation, any such Taxes for which the Company is or shall become liable under
Treasury Regulation Section 1.502-6 or 1.1502-78(b)(2) (or any similar
provisions under any applicable foreign, state or local law), with respect to
(i) any Tax periods (or portions thereof) ending on or before the Closing Date,
and (ii) any Tax allocated to a Pre-Closing Period pursuant to Section 10.5.a;
provided, that in the case of any adjustment to any item of loss or expense for
any such years, which gives rise to corresponding and offsetting items of loss
or expense in subsequent years the benefit of which is or will be actually
realized by the Company (other than upon liquidation of the Company) including
by reason of any increase in a net operating loss, the Seller's obligations
shall be limited to (i) the amount of interest (computed at the appropriate
statutory rates) and penalties actually paid to
51
the appropriate taxing authorities by the Company as a result of such timing
differences in the case of audit adjustments, or (ii) interest at the rate of
eight percent (8%) per annum in the case of other adjustments. Notwithstanding
the foregoing, Purchaser agrees to pay and indemnify Seller for any Tax owed by
Seller (by reason of the Company having been part of an affiliated, combined,
consolidated, unitary or similar group, for federal, state, local or foreign tax
purposes, which includes Seller) resulting from any transaction engaged in by
the Company not in the ordinary course of business occurring on the Closing Date
after Purchaser's acquisition of the Company's stock.
c. Other than reports and returns referred to in paragraph (d)
below, from and after the Closing Date, Purchaser shall prepare, or cause to be
prepared, and shall timely file, or cause to be timely filed, all Tax Returns of
the Company required to be filed with respect to any Tax period that includes
(but does not end on) the Closing Date. Except as provided in paragraph (b)
above, Purchaser shall cause the Company to pay the appropriate taxing
authorities the Taxes shown to be due and payable on all such Tax Returns of the
Company filed after the Closing Date, concurrent with the filing of such Tax
Returns. Such Tax Returns of the Company shall be prepared on a basis consistent
with the Tax Returns filed by or with respect to the Company for previous
taxable periods, subject to the requirements of applicable law. Purchaser shall
permit Seller to review and comment on each such Tax Return at least 30 days
prior to the due date for filing and shall make such revisions to such Tax
Returns to the extent they relate to periods ending with and/or transactions
occurring on or prior to the Closing Date as Seller reasonably requests.
d. Seller shall include the income of the Company for all periods
through the Closing Date on its consolidated federal and, where permitted and
consistent with past practice, consolidated, combined or unitary state and local
income Tax Returns and pay any federal and state income Taxes owing on such
income. All such Tax Returns ("Consolidated Returns"), together with all other
Tax Returns with respect to Taxes of the Company for any Tax period ending on or
prior to the Closing Date, shall be prepared by Seller in a manner consistent
with prior practice, subject to the requirements of applicable law. Purchaser
shall cause the Company to furnish information to Seller as reasonably requested
by Seller to allow Seller to satisfy its obligations under this paragraph.
Seller shall permit Purchaser to review and comment on each such Tax Return
(other than Consolidated Returns and Tax Returns for which a Closing Date
Election has been made) within a reasonable time (which shall not be less than
30 days) prior to the due date for filing. Notwithstanding the foregoing, Seller
shall permit Purchaser to review and comment on any consolidated, combined or
unitary income Tax Return filed by Seller for a Tax period that begins on or
before and ends after the Closing Date within a reasonable time (which shall not
be less than 30 days) prior to the due date for filing, provided such Tax Return
includes any income of the Company for any Post-Closing Period and such review
shall be limited solely to the portion thereof which relates to the Company.
Purchaser shall file or cause to be filed, on a timely basis, all such Tax
Returns (other than Consolidated Returns and Tax
52
Returns for which a Closing Date Election has been made) for which Purchaser is
responsible under this Section 10.5 and shall provide written certification to
Seller of each such filing. Purchaser shall cause the Company to timely file
separate, combined or consolidated income Tax Returns, or shall include the
Company, in its combined or consolidated income Tax Returns for all Taxable
periods ending after the Closing Date and shall pay or cause to be paid all
Taxes required to be paid in respect of such Tax Returns.
e. Except as otherwise provided above, Purchaser shall prepare and
file, or cause to be prepared and filed, in each case in a timely manner, all
Tax Returns required to be filed by the Company after the Closing Date and all
Taxes indicated as due and payable on such Tax Returns shall be paid by
Purchaser.
10.6 Tax Contests.
a. If any Governmental or Regulatory Authority or other Person
asserts a Claim for Taxes for which Purchaser is entitled to indemnification
hereunder (a "Tax Claim"), then the party hereto first receiving notice of such
Tax Claim shall promptly provide written notice thereof to the other parties
hereto. Such notice shall specify in reasonable detail the basis for such Tax
Claim and shall include a copy of any relevant correspondence received from the
Governmental or Regulatory Authority or other Person.
b. Subject to the provisions of this Section 10.6, the Purchaser
shall diligently and in good faith defend or prosecute, at its sole cost,
expense and risk, such Tax Claim by all appropriate proceedings; provided, that
the Purchaser shall not, without the prior written consent of the Seller (which
consent shall not unreasonably be withheld), enter into any compromise or
settlement of such Tax Claim that would result in any material Tax indemnity
obligation of the Seller hereunder. So long as the Purchaser is diligently and
in good faith defending or prosecuting a Tax Claim, with respect to the Company,
the Purchaser shall provide or cause to be provided to the Seller any
information reasonably requested by the Seller relating to such Tax Claim, and
shall otherwise cooperate with the Seller and their representatives in good
faith in order to permit the Seller effectively to participate in the contest of
such Tax Claim. The Purchaser shall inform the Seller of all material
developments relating to such Tax Claim (including, without limitation,
providing to the Seller copies of all written materials relating to such Tax
Claim) and the Seller or its authorized representatives shall be entitled, at
its own expense, to attend and participate in, but not control, all conferences,
meetings and proceedings relating to such Tax Claim.
c. If, with respect to any Tax Claim, the Purchaser fails diligently
to defend or prosecute such Tax Claim, then the Seller shall at any time
thereafter have the right (but not the obligation) to defend or prosecute, at
the sole cost, expense and risk of the Seller, such Tax Claim. In such event,
the Seller shall have full control of such
53
defense or prosecution and such proceedings, including any settlement or
compromise thereof and the Seller shall pursue such proceedings diligently and
in good faith. The Seller shall inform the Purchaser of all material
developments relating to such Tax Claim (including, without limitation,
providing to the Purchaser copies of all written materials relating to such Tax
Claim). The Purchaser or its authorized representatives may attend and
participate in, but not control, all conferences, meetings and proceedings
relating to the defense, prosecution, settlement or compromise of any Tax Claim
controlled by the Seller pursuant to this Section 10.6.c, and shall bear its own
costs and expenses with respect thereto. So long as the Seller is defending or
prosecuting such Tax Claim, the Purchaser shall provide or cause to be provided
to the Seller any information reasonably requested by the Seller relating to
such Tax Claim, and shall otherwise cooperate with the Seller and its
representatives in good faith in order to contest effectively such Tax Claim.
d. Notwithstanding anything in this Article 10 to the contrary, the
Purchaser and the Company shall agree to any settlement, compromise or
resolution of a Tax Claim ("Resolution") proposed by the Seller, but only to the
extent that (i) the Seller shall be responsible for any Taxes payable by the
Company as a result of such Resolution to the extent not included in the reserve
for Taxes reflected in the Closing Date Balance Sheet, and (ii) such Resolution
would not result in any material Tax detriment to the Company not included in
any such reserve and not paid by the Seller for any Tax period for which the
Seller is not responsible hereunder.
e. In the case of any Tax Claim that is defended or prosecuted to a
Final Determination pursuant to this Section 10.6, the Seller shall pay to the
appropriate Tax Indemnitees, in immediately available funds the net Tax
detriment arising or resulting from such Tax Claim within five Business Days
after such Final Determination, to the extent not provided for in the reserve
for Taxes reflected in the Closing Date Balance Sheet. In the case of any Tax
Claim not covered by the preceding sentence, the Seller shall pay to the
Company, in immediately available funds, the net Tax detriment arising or
resulting from such Tax Claim (calculated after taking into account any actual
reduction in the current liability for Taxes of any Tax Indemnitee for Tax
arising out of or resulting from such payment or such Tax Claim), to the extent
not provided for in any such reserve.
f. Notwithstanding anything in this Agreement to the contrary,
Seller shall have the exclusive right and authority, at its sole expense, to
conduct, control, defend, prosecute and/or settle any proceedings involving a
Tax Claim, or any other examination, audit or inquiry, with respect to or
arising out of any consolidated, combined or unitary income Tax Returns filed by
Seller, including the right to represent the Company before the appropriate
Government or Regulatory Authority with respect to any issues raised therein
concerning a Taxable Period in which the Company was included in such
consolidated, combined or unitary Tax Return. Seller will allow the Company and
its counsel to participate at its own expense in any proceeding described
54
in this paragraph (f) to the extent it relates to the Company and involves a Tax
Claim and Seller will not resolve or settle any such proceeding in a manner
which would adversely affect the Company after the Closing Date without the
prior written consent of Purchaser, which consent shall not unreasonably be
withheld.
10.7 Cooperation Regarding Tax Matters. Each party hereto shall, and shall
cause its subsidiaries and Affiliates to, provide to the other parties hereto
such cooperation and information as any of them reasonably may request related
to the filing of any Tax Return, amended Tax Return or claim for refund,
determining a liability for Taxes or a right to refund of Taxes or in conducting
any audit or other proceeding in respect of Taxes. Such cooperation and
information shall include providing copies of all relevant portions of relevant
Tax Returns, together with relevant accompanying schedules, workpapers and
relevant documents relating to rulings or other determinations by Governmental
or Regulatory Authorities and relevant records concerning the ownership and Tax
basis of property, which any such party may possess. Each party shall make its
employees reasonably available on a mutually convenient basis at its cost to
provide explanation of any documents or information so provided. Subject to the
preceding sentence, each party required to file Tax Returns pursuant to this
Article 10 shall bear all costs of filing such Tax Returns. Notwithstanding the
foregoing, neither party shall be required to furnish to the other the federal
or state income Tax Returns of Seller's affiliated or combined group or
Purchaser's affiliated or combined group, as the case may be, for any period,
except to the extent specifically and exclusively relating to the Company.
10.8 Payment of Transfer Taxes and Fees. The Seller and Purchaser shall
each pay 50% of all sales, use, transfer, stamp, documentary or similar Taxes
imposed upon the transactions effected pursuant to this Agreement. The Seller
and Purchaser shall file all necessary documentation and Tax Returns with
respect to such Taxes and provide to the other of them copies of all such Tax
Returns.
10.9 Other Tax Covenants.
a. So long as any books, records and files retained by the Seller or
and its Affiliates relating to the business of the Company or the books, records
and files delivered to the control of the Purchaser pursuant to this Agreement
to the extent they relate to the operations of the Company prior to the Closing
Date, remain in existence and are available, each party (at its own expense)
shall have the right upon prior notice to inspect and to make copies of the same
at any time during business hours for any proper purpose. The Purchaser and the
Seller and their respective Affiliates shall use reasonable efforts not to
destroy or allow the destruction of any such books, records and files without
first providing 60 days written notice of intention to destroy to the other, and
allowing such other party to take possession of such records.
55
b. Except as otherwise provided herein, without the prior written
consent of Purchaser, neither the Seller nor any Affiliate of any the Seller
shall, to the extent it may affect or relate to the Company, make or change any
tax election, change any annual tax accounting period, adopt or change any
method of tax accounting, file any amended Tax Return, enter into any method of
tax accounting, enter into any closing agreement, settle any Tax Claim,
assessment or proposed assessment, surrender any right to claim a Tax refund,
consent to any extension or waiver of the limitation period applicable to any
Tax Claim or assessment or take or omit to take any other action, if any such
action or omission would have the effect of increasing any post-closing Taxes of
the Purchaser, of the Company or any Affiliate of Purchaser, unless required by
applicable law. Nothing contained in this paragraph (b) shall limit or affect
the right of Seller and its Affiliates to utilize any and all tax loss
carryovers of MRT which Seller and/or any of its Affiliates shall be entitled to
utilize for any period ending prior to, on or after the Closing Date.
c. Without the prior written consent of the Seller, neither the
Purchaser nor the Company shall, to the extent it may affect or relate to the
Company, make or change any Tax election, file any amended Tax Return, enter
into any closing agreement, settle any Tax Claim, assessment or proposed
assessment, surrender any right to claim a Tax refund, consent to any extension
or waiver of the limitation period applicable to any Tax Claim or assessment or
take or omit to take any other action, if any such action or omission would
affect a Pre-Closing Tax Period, unless required by applicable law.
10.10 Conflict. In the event of a conflict between the provisions of
Sections 10.5 through 10.10 and any other provision of this Agreement, such
provisions of this Article 10 shall control.
ARTICLE 11
TERMINATION
11.1 Termination. If the Closing shall not have occurred, this Agreement
may be terminated and the transactions contemplated hereby may be terminated and
abandoned:
a. in writing by mutual consent of the parties hereto; or
b. by Seller, if, as of the 14th day after the date of this
Agreement, the conditions set forth in Section 9.2 to the performance of the
obligations of Seller shall not have been fulfilled and shall not have been
waived by Seller, Seller gives Purchaser written notice of its intention to so
terminate within five (5) days thereafter, specifying in such notice, in detail,
the basis for such termination, and Purchaser does not correct or cure such
failure within twenty (20) days after its receipt of such notice; or
56
c. by Purchaser, if, as of the 14th day after the date of this
Agreement, the conditions set forth in Section 9.1 to the performance of the
obligations of Purchaser shall not have been fulfilled and shall not have been
waived by Purchaser, Purchaser gives Seller written notice of its intention to
so terminate within five (5) days thereafter, specifying in such notice, in
detail, the basis for such termination, and Seller does not correct or cure such
failure within twenty (20) days after its receipt of such notice; or
11.2 Effect of Termination. In the event of any termination or abandonment
of this Agreement pursuant to Section 11.1, no party hereto (or any of its
affiliates, shareholders, parents, officers, directors or employees) shall have
any liability or further obligation to any other party hereto, except that (i)
nothing herein will relieve any party from liability for willful and intentional
breach of this Agreement, (ii) Sections 7.3, 8.2, 12.3 and 12.4 shall remain in
full force and effect, and (iii) the obligations of the parties under the
Confidentiality Agreement shall remain in full force and effect.
ARTICLE 12
MISCELLANEOUS
12.1 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or mailed by prepaid first class certified mail, return receipt
requested, or sent by prepaid courier, to the parties at the following
addresses:
If to Purchaser (until 8/25/03), to:
Cemex, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
-and -
If to Purchaser (from and after 8/25/03), to:
Cemex, Inc.
000 Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
57
If to Seller, to:
Phibro Animal Health Corporation
Xxx Xxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Attn: General Counsel
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by mail in the manner described above to the address
as provided in this Section, be deemed given upon receipt, and (iii) if
delivered by courier to the address as provided for in this Section, be deemed
given on the earlier of the second Business Day following the date sent by such
courier or upon receipt. Any party from time to time may change its address or
other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
12.2 Entire Agreement. This Agreement supersedes all prior discussions and
agreements between the parties with respect to the subject matter hereof and
thereof and contains the sole and entire agreement between the parties hereto
with respect to the subject matter hereof and thereof.
12.3 Expenses. Except as otherwise expressly provided in this Agreement,
each party will pay its own legal, accounting, investment, banking and similar
fees, costs and expenses incurred by it in connection with negotiations,
executions and closing of this Agreement.
12.4 Confidentiality.
a. Without intending to limit the intent or effect of the
Confidentiality Agreement, except as herein provided, Purchaser and the Seller
will hold in strict confidence from any Person (other than its Affiliates or
representatives) all documents and information concerning the other party hereto
or any of its Affiliates furnished to it by or on behalf of the other party in
connection with this Agreement or the transactions contemplated hereby, except
to the extent the disclosing party can demonstrate that such documents or
information was (a) previously known by the party receiving such documents or
information, (b) in the public domain (either prior to or after the furnishing
of such documents or information hereunder) through no fault of such receiving
party or (c) later acquired by the receiving party from another source if the
receiving party is not aware that such source is under an obligation to another
party hereto to keep such documents and information confidential. Such covenant
of confidentiality will remain in effect unless a party is compelled to disclose
by judicial or administrative process (including in connection with obtaining
the necessary approvals of this Agreement and the transactions contemplated
hereby of Governmental or
58
Regulatory Authorities) or by other requirements of Law. The obligation set
forth in this Section 12.4.a shall survive the Closing indefinitely.
b. After the Closing, Seller shall (except as otherwise required by
applicable law or in connection with the preparation and filing of financial
statements and tax returns by or on behalf of Seller or any consolidated or
combined group of entities including Seller or any of its Affiliates) maintain
in confidence and not disclose or use any and all confidential or proprietary
information, technology, inventions, patents, processes and techniques of the
Business ("Purchaser's Proprietary Information"); provided that the Purchaser's
Proprietary Information shall not include information which first comes into the
public domain through no act or fault of Seller or which Seller shall establish
it shall have first acquired after the Closing from a Person (other than the
Purchaser or MRT) who is not subject to or bound by any confidentiality
obligation to the Purchaser or MRT. The obligation set forth in this Section
12.4.b shall survive the Closing indefinitely.
c. Notwithstanding anything herein or in the Confidentiality
Agreement to the contrary, any party to this Agreement (and any employee,
representative, or other agent of any party to this Agreement) may disclose to
any and all persons, without limitation of any kind, the tax treatment and tax
structure of the transactions contemplated by this Agreement (the
"Transactions") and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure; provided, however, that such disclosure may not be made to the extent
required to be kept confidential to comply with any applicable federal or state
securities laws.
12.5 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. All remedies, either under this
Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
12.6 Amendment. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of the parties
hereto.
12.7 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights, and this Agreement does not
confer any such rights, upon any other
59
Person, other than rights to indemnity under Article 10 hereof to the Person
entitled thereto.
12.8 No Assignment; Binding Effect. Without intending to affect Section
4.4, neither this Agreement nor any right, interest or obligation hereunder may
be assigned by either party without the prior written consent of the other
party(ies) and any attempt to do so will be void. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
12.9 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
12.10 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as part of this Agreement a legal,
valid and enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
12.11 Governing Law; Consent to Jurisdiction.
a. This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Delaware, without giving effect to any
choice of law or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
b. Any legal action or proceeding with respect to or in connection
with this Agreement or any of the transactions contemplated hereby, and any
action for enforcement of any judgment in respect thereof, shall be brought in
the courts of the State of Delaware or of the United States of America for the
District of Delaware, and, by execution and delivery of this Agreement, each
party hereby accepts for itself and in respect of its property, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts and
appellate courts from any thereof. Each party irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to such party at its address set forth herein. Each party
hereby irrevocably waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this
60
Agreement brought in the courts referred to above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such action
or proceeding brought in any such court has been brought in an inconvenient
forum.
12.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
61
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth on the first page hereof.
Cemex, Inc.
By: /s/ Xxxxx Xxxxxxxx Xxxxxxx
------------------------------------
Name:
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Its:
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Phibro Animal Health Corporation
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------------
Its: Chief Financial Officer
-----------------------------------
62
Schedule 3.1.a
a. If on any Tax Return filed after the Closing Date, Purchaser, the Company or
any member of an affiliated or combined group of companies which includes the
Company (collectively referred to in this Schedule as the "Purchaser Group" and
each such Tax Return being a "Post-Closing Tax Return") utilizes any net
operating loss carryover or carry forward of the Company which exists on the
Closing Date (the "Company NOLs") to reduce, offset or eliminate any liability
for federal, state or local Taxes of the Purchaser Group or of any member
thereof, or to generate any federal, state or local Tax refund, then, for each
such Post-Closing Tax Return, Purchaser shall pay to Seller, as additional Total
Consideration , an aggregate amount (the "NOL Amount") equal to 60% of all Tax
savings, refunds and other Tax benefits (collectively the "Tax Benefits")
realized by the Purchaser Group (or any current or future member thereof), and
such Tax Benefits shall be determined on the basis of the respective highest
marginal federal, state and local Tax rates then in effect. Each payment in
respect of the NOL Amount shall be due 45 days after the date on which any Tax
Benefits giving rise thereto are deemed realized. Tax Benefits will be deemed to
be realized for purposes hereof (i) on the date on which such Tax Benefits are
received as a refund of Taxes, or (ii), to the extent that any Tax Benefits are
not received as a refund of Taxes but rather are claimed as an item that
reduces, offsets or eliminates liability for Taxes, the due date (including
extensions) of the Post-Closing Tax Return that reflects such change in
liability for any Taxes (in each case under clause (i) or clause (ii), the "Due
Date"). Seller acknowledges and agrees that neither the Company nor the
Purchaser shall have any (i) obligation to utilize any of the Company NOLs so as
to generate or realize any Tax Benefit or (ii) liability to Seller for any
failure to generate any Tax Benefit by so utilizing the Company NOLs.
b. Not later than May 1 of each year commencing with 2004, Purchaser shall
deliver to Seller its written calculation of all amounts payable to Seller by
reason of this Schedule 3.1.a, and/or the basis for Purchaser's conclusion that
no NOL Amount is then payable to Seller, in each case certified as true and
accurate by the officer of Purchaser directly responsible for tax reporting,
together with sufficient information, in reasonable detail, to enable Seller to
review the basis for all calculations related thereto. Seller shall have an
opportunity to reasonably review Purchaser's calculation of the Tax Benefits
realized (including any calculations pursuant to which it is determined that
there are no Tax Benefits available to the Purchaser Group). Seller shall have
the right, at its cost and expense, to require that Purchaser's regular
independent accounting firm confirm the accuracy of any of the calculations and
certifications referred to in the first sentence of this paragraph (b). If
either Seller and Purchaser agree, or Purchaser's independent accounting firm
determines, that Purchaser has not paid Seller the entire NOL Amount payable
with respect to any Post-Closing Tax Return, Purchaser shall pay the balance of
the NOL Amount promptly but Purchaser shall not be obligated to pay or reimburse
Seller for or with respect to any costs or expenses (including any professional
fees and expenses) that Seller may have incurred in connection with its review
or dispute of Purchaser's calculation of the NOL Amount.
c. Purchaser's obligations under this Schedule 3.1.a shall continue as long as
and with respect to all periods for which any Company NOLs remain available for
utilization on any Post-Closing Tax Return.
2
Schedule 7.2.F
Employee Plans
A. The Retirement Plan of Seller
i) Certain of the Company's employees ("DB Participants") are
participants in The Retirement Plan of Seller ("Seller's DB Plan") which has
been and will remain sponsored by Seller for the benefit of eligible employees
of Seller and its Affiliates. The Company shall withdraw from Seller's DB Plan
effective as of the Closing Date, and Seller shall provide all DB Participants
notice of such withdrawal to the extent required by law. All benefits accrued by
DB Participants under Seller's DB Plan will remain the liability of Seller's DB
Plan after the Closing Date and no assets of the Seller's DB Plan will be
transferred in connection with this transaction. All accrued benefits of DB
Participants under Seller's DB Plan shall vest solely in accordance with the
terms and provisions of Seller's DB Plan.
ii) The amendments to Seller's DB Plan required by this Section A,
if any, shall be made subject to the approval of Seller's pension administration
committee.
B. 401(k) Retirement and Savings Plan of Seller.
i) Certain of the Company's employees ("DC Participants") are
participants in the 401(k) Retirement and Savings Plan of Seller ("Seller's DC
Plan") which has been and will remain sponsored by Seller for the benefit of
eligible employees of Seller and its Affiliates. The Company shall withdraw from
Seller's DC Plan effective as of the Closing Date, and Seller shall provide all
DC Participants with notice of such withdrawal to the extent required by law.
ii) To the extent permitted under the terms of Purchaser's qualified
defined contribution plan that includes a qualified cash or deferred arrangement
in which the Hired Employees are eligible to participate ("Purchaser's DC
Plan"), if a DC Participant who participates in Seller's DC Plan, becomes an
employee of Purchaser as of the Closing Date and is entitled to and receives an
"eligible rollover distribution" (as defined under Section 402(c)(4) of the Code
and the regulations promulgated thereunder) from the Seller's DC Plan at any
time on or after the Closing Date, Purchaser shall permit any DC Participant to
rollover (whether by direct or indirect rollover, as selected by such employee)
his or her eligible rollover distribution from Seller's DC Plan to the
Purchaser's DC Plan; provided, however, that Purchaser shall have no obligation
to cause the Purchaser's 401(k) Plan to accept such rollovers if Purchaser does
not receive from Seller proof which is satisfactory to Purchaser that the
Seller's DC Plan will be fully qualified under section 401(c) of the Code at the
time of such rollovers.
C. Welfare Benefit Plans
i) Seller shall be liable for any and all claims under any group
health plan (within the meaning of Section 5000(b)(1) of the Code) maintained by
Seller for employees of the Company to the extent such claims were incurred on
or prior to the Closing Date. Purchaser's group health plan within the meaning
of Section 5000(b)(1) of the Code in which Hired Employees are eligible to
participate ("Purchaser's Health Plan") shall (i) provide coverage with respect
to claims by such employees as of 12:01 a.m. on the Closing Date with
respect to which the covered health or medical services were incurred after
12:01 a.m. on the Closing Date, (ii) waive eligibility waiting periods with
respect to Hired Employees to the extent such eligibility waiting periods were
satisfied by any of the Hired Employees under Seller's group health plan as of
the Closing Date, (iii) recognize employment service with the Company and its
predecessors in interest to the extent that any recent hires of the Company have
earned service credit toward their group health plan eligibility waiting
periods, and (iv) credit any health or medical service expenses incurred by
Hired Employees during the current plan year and on or before the Closing Date
for purposes of applying the deductible and out of pocket limits under
Purchaser's Health Plan. Eligible Hired Employees will be immediately eligible
to participate in Purchaser's Health Plan.
ii) Current and former employees of the Company who either (i)
become entitled to such benefits prior to the Closing Date, or (ii) who are
receiving or entitled to receive short-term disability benefits prior to the
Closing Date and who subsequently become entitled to receive long-term
disability benefits immediately following the end of such short-term disability,
and whose covered disability continues on and after the Closing Date, shall be
entitled to benefit under the terms of Seller's long-term disability plan
applicable to them. Purchaser will provide long-term and short-term disability
insurance plans for eligible Hired Employees effective as of 12:01 a.m. on the
Closing Date, and shall be responsible for all disability benefits for eligible
Hired Employees whose disabilities occur after this Closing Date other than
those expressly retained under Seller's long-term disability plan pursuant to
the first sentence of this subparagraph (ii).
iii) All life insurance or other benefits payable to persons
employed by the Company or their beneficiaries under any group life, travel and
accident, and accidental death and dismemberment insurance programs of Seller
for deaths or dismemberments occurring prior to the Closing Date shall continue
to be covered by such Seller programs. Purchaser will be responsible for all
benefits (if any) which may be provided for deaths or dismemberments occurring
on or after the Closing Date under any and all programs maintained by or for the
employees of the Company.
iv) Vacation benefits after the Closing Date will be accrued in
accordance with the Purchaser's vacation accrual schedule.
D. General. i) Except as otherwise provided herein, Purchaser acknowledges
that Seller shall not be responsible for any employee benefits for Hired
Employees relating to periods from and after the Closing Date and that Purchaser
shall be responsible, to the extent it so elects or to the extent it may be
required by law, for providing such benefits on or after the Closing Date.
