EXHIBIT 10.1
EXECUTION DRAFT
================================================================================
ASSET PURCHASE AGREEMENT
BY AND AMONG
NOVEON, INC.
NOVEON HILTON DAVIS, INC.
NOVEON KALAMA, INC.
NOVEON TEXTILE CHEMICALS, INC.
LUBRIZOL FOAM CONTROL ADDITIVES, INC.
LUBRIZOL DO BRASIL ADITIVOS LTDA.
NOVEON IP HOLDINGS CORP.
THE LUBRIZOL CORPORATION
LUBRIZOL DEUTSCHLAND GMBH
AND
SPM GROUP HOLDINGS, LLC
Dated as of March 16, 2006
================================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 CERTAIN DEFINITIONS............................................ 2
1.1 Definitions..................................................... 2
1.2 Interpretation.................................................. 2
ARTICLE 2 PURCHASE AND SALE OF ASSETS.................................... 3
2.1 Purchase and Sale of Assets..................................... 3
2.2 Purchase and Sale of IP Assets.................................. 6
2.3 Retained Assets................................................. 8
2.4 Clear Title; Permitted Encumbrances............................. 9
ARTICLE 3 ASSUMPTION OF LIABILITIES...................................... 9
3.1 Assumed Liabilities............................................. 9
3.2 Retained Liabilities............................................ 10
3.3 Consents to Assignment.......................................... 12
3.4 Rights in Assumed Contract...................................... 12
ARTICLE 4 CONSIDERATION.................................................. 13
4.1 Purchase Price.................................................. 13
4.2 Payment of Purchase Price....................................... 13
4.3 Adjustment Procedure............................................ 14
4.4 Allocation of Purchase Price.................................... 17
4.5 Closing Costs; Transfer Taxes and Fees; Prorated Costs.......... 17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLERS...................... 18
5.1 Organization and Qualification.................................. 18
5.2 Corporate Authority............................................. 18
5.3 Enforceability.................................................. 19
5.4 Non-Contravention............................................... 19
5.5 Consents........................................................ 19
5.6 Financial Statements............................................ 19
5.7 Facilities...................................................... 20
5.8 Title to Assets; Sufficiency of Assets.......................... 21
5.9 Condition of Purchased Assets................................... 21
5.10 Accounts Receivable............................................. 22
5.11 Inventory....................................................... 22
5.12 Taxes........................................................... 22
5.13 Employee Benefits............................................... 23
5.14 Compliance with Laws............................................ 25
5.15 Legal Proceedings............................................... 25
5.16 Absence of Certain Changes and Events........................... 25
5.17 Contracts; No Defaults.......................................... 27
5.18 Labor Matters; Employees........................................ 29
i
TABLE OF CONTENTS (Continued)
PAGE
----
5.19 Permits......................................................... 30
5.20 Brokers or Finders.............................................. 30
5.21 Product Warranty................................................ 30
5.22 Intellectual Property Assets.................................... 30
5.23 Absence of Undisclosed Liabilities.............................. 32
5.24 Insurance....................................................... 32
5.25 Names and Locations............................................. 32
5.26 Customers and Suppliers......................................... 32
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER........................ 32
6.1 Organization.................................................... 33
6.2 Limited Liability Company Authority............................. 33
6.3 Enforceability.................................................. 33
6.4 Consents........................................................ 33
6.5 Non-Contravention............................................... 33
6.6 Certain Proceedings............................................. 33
6.7 Brokers or Finders.............................................. 34
6.8 Solvency and Related Matters.................................... 34
6.9 Financing....................................................... 34
ARTICLE 7 COVENANTS...................................................... 34
7.1 Conduct of Business of the Sellers and the IP Sellers........... 34
7.2 Access to the Businesses........................................ 35
7.3 Confidentiality Agreement....................................... 35
7.4 Further Assurances.............................................. 35
7.5 Governmental Notices and Consents; Permits...................... 36
7.6 Efforts......................................................... 37
7.7 Notification.................................................... 38
7.8 Title Commitment and Survey..................................... 38
7.9 Title Company................................................... 39
7.10 Exclusivity..................................................... 39
7.11 Confidentiality................................................. 40
7.12 Non-Compete; Non-Solicitation................................... 41
7.13 Removing Retained Assets........................................ 43
7.14 Retention and Access to Records; Access to Personnel............ 43
7.15 Sellers' Representative......................................... 43
7.16 Removal of Guarantees........................................... 44
7.17 License Agreement............................................... 44
7.18 Use of Lubrizol or Noveon Name.................................. 45
7.19 Buyer Use of Trademark; Seller Use of Trademark................. 46
7.20 Memorandum; Disclaimer of Projections........................... 46
7.21 No Additional Representations and Warranties.................... 47
7.22 Collections..................................................... 47
ii
TABLE OF CONTENTS (Continued)
PAGE
----
7.23 Purchase Option for Offsite Equipment........................... 47
7.24 Shared Agreements............................................... 48
7.25 Butadiene, Aniline and DPA Supply............................... 48
7.26 Assumed Contracts............................................... 49
7.27 Documents in the Online Data Room............................... 49
7.28 Customer and Supplier Calls..................................... 49
7.29 Shared Equipment................................................ 49
ARTICLE 8 EMPLOYEE MATTERS............................................... 50
8.1 Employment...................................................... 50
8.2 Employee Benefit Matters........................................ 52
8.3 Union Contracts................................................. 54
8.4 Third Party Obligations......................................... 54
ARTICLE 9 CONDITIONS OF CLOSING.......................................... 54
9.1 Conditions Precedent to Buyer's Obligation to Close............. 54
9.2 Conditions Precedent to Sellers' and IP Sellers' Obligation
to Close..................................................... 56
ARTICLE 10 TERMINATION................................................... 58
10.1 Events of Termination........................................... 58
10.2 Effect of Termination........................................... 59
ARTICLE 11 THE CLOSING; CLOSING DELIVERIES............................... 59
11.1 The Closing..................................................... 59
11.2 Closing Deliveries of Sellers................................... 59
11.3 Closing Deliveries of Buyer..................................... 62
ARTICLE 12 SURVIVAL; INDEMNIFICATION..................................... 63
12.1 Survival of Representations and Warranties...................... 63
12.2 Indemnification of Buyer........................................ 63
12.3 Indemnification of Sellers and IP Sellers....................... 64
12.4 Limitation of Indemnification................................... 65
12.5 Third-Party Claims.............................................. 66
12.6 Other Claims.................................................... 67
12.7 Exclusive Remedy of Parties..................................... 68
12.8 Amount of Claims; Insurance; Tax Benefits....................... 68
12.9 Adjustment to Purchase Price for Tax Purposes................... 69
ARTICLE 13 ENVIRONMENTAL MATTERS......................................... 69
13.1 Exclusivity of Article.......................................... 69
13.2 Sellers' Environmental Representation and Warranty.............. 70
iii
TABLE OF CONTENTS (Continued)
PAGE
----
13.3 Conditions to Environmental Indemnification and Cost Sharing.... 71
13.4 Indemnification by Sellers and Cost Sharing..................... 72
13.5 Limitations on Indemnification.................................. 75
13.6 Cincinnati Site................................................. 77
13.7 Third-Party Indemnitors; Actions................................ 78
13.8 Indemnification of Sellers by Buyer............................. 78
13.9 Environmental Matters Procedure................................. 79
13.10 Access to Business.............................................. 79
13.11 Environmental Matters Dispute Resolution........................ 79
13.12 Amount of Claims; Insurance; Tax Benefits....................... 80
13.13 Adjustment to Purchase Price for Tax Purposes................... 81
ARTICLE 14 DISPUTE RESOLUTION............................................ 81
14.1 Dispute Resolution.............................................. 81
14.2 Arbitration..................................................... 81
14.3 Equitable Relief................................................ 83
ARTICLE 15 GENERAL PROVISIONS............................................ 83
15.1 Expenses........................................................ 83
15.2 Notices......................................................... 83
15.3 Public Announcements............................................ 84
15.4 Governing Law; Jurisdiction..................................... 84
15.5 Waiver.......................................................... 85
15.6 Entire Agreement; Modification.................................. 85
15.7 Assignment, Successors; No Third Parties........................ 85
15.8 Exhibits and Schedules; Construction of Certain Provisions...... 86
15.9 Construction.................................................... 86
15.10 Severability.................................................... 86
15.11 Time Periods.................................................... 87
15.12 Execution of Agreement.......................................... 87
15.13 Checks Outstanding.............................................. 87
ARTICLE 16 DEFINITIONS................................................... 87
iv
LIST OF EXHIBITS AND SCHEDULES
SCHEDULES
---------
Schedule A IP Sellers
2.1(b)-1 Inventory
2.1(b)-2 Inventory located at Spartanburg, South Carolina, Avon Lake, Ohio,
Rio, Brazil, Hamburg, Germany, Brecksville, Ohio, and Gastonia,
North Carolina
2.1(b)-3 Inventory Included in the Calculation of Normal Working Capital
2.1(b)-4 Inventory Not Included in the Calculation of Normal Working Capital
But Conveyed to Buyer
2.1(d) Owned Real Property
2.1(e) Leased Real Property
2.2(a) Purchased Marks
2.2(b) Purchased Patents
2.2(c) Purchased Copyrights
2.2(f) Purchased Domain Names
2.2(g) Intellectual Property Licenses
2.3(j) List of Properties
2.3(n) Retained Contracts
3.1(f) Claims and Proceedings
3.2(r) Commercial Liability and Product Warranty
4.3(a) Accounting Principles, Policies and Practices
4.3(b) Closing Statement
5.4 Non-Contravention
5.5 Consents
5.6 Financial Statements
5.7 Facilities
5.7(b) Third Party Rights in Owned Real Property
5.7(c) Real Property Leases
5.7(d) Utilities
5.8(a) Title to Assets; Sufficiency of Assets
5.8(c) Non-Parties Owning Assets Used by the Businesses
5.10 Accounts Receivable
5.12 Taxes
5.13(a) Employee Benefit Plans
5.13(c) Buyer Liability for Sellers' Benefit Plans
5.13(d) Workers' Compensation Coverage
5.13(e) Employee Welfare Benefit Plans Liability
5.13(f) ERISA Compliance
5.13(i) Separation Benefits or Accelerated Vesting
5.14 Compliance with Laws
5.15 Legal Proceedings
5.16 Absence of Certain Changes and Events
5.16(h) Capital Expenditure Budget
5.17(a) Contracts
5.18 Labor Matters; Employees
v
SCHEDULES
---------
5.19 Permits
5.21 Product Warranty
5.22(a) Registered IP Used By the Businesses
5.22(c) Notices of Infringement or Misappropriation
5.22(f) Non-IP Assets
5.23 Absence of Undisclosed Liabilities
5.24 Insurance
5.25 Names and Locations
5.26 Customers and Suppliers
6.4 Consents
6.5 Non-Contravention
7.12(b) Employees Not Subject to Non-Solicit
7.16 Letters of Credit
7.17(b) Patents
7.26 Documents in Dataroom
8.1 Employment
8.1(c) Sellers' Bonus Plans
8.1(d) Sellers' Severance Practice
8.2(d) Retiree Medical Plans
9.1 Consents
13.2 Sellers' Environmental Representation and Warranty
13.2(g) Underground and Above Ground Storage Tanks
13.4(b)(i) Defined Remediation Projects
13.5(g) Long-Term Closure Areas
16(a) Active Employees
16(b) IP Sellers' Knowledge
16(c) Permitted Encumbrances
16(d) Seller's Knowledge
EXHIBITS
A Environmental Covenants
B Environmental Matters Agreement
vi
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
this 16th day of March, 2006, by and among Noveon, Inc., a Delaware corporation
("Noveon"), Noveon Hilton Davis, Inc., a Delaware corporation ("Hilton Davis"),
Noveon Kalama, Inc., a Washington corporation ("Kalama"), Noveon Textile
Chemicals, Inc., a Delaware corporation ("Noveon Textile"), Lubrizol Foam
Control Additives, Inc., a South Carolina corporation, ("Lubrizol Foam
Control"), Lubrizol do Brasil Aditivos Ltda., a Brazil company ("Lubrizol
Brazil") (Noveon, Hilton Davis, Kalama, Noveon Textile, Lubrizol Foam Control,
and Lubrizol Brazil, individually, "Seller" and collectively, "Sellers"), on the
one hand, and SPM Group Holdings, LLC, a Delaware limited liability company
("Buyer"), on the other hand; and Noveon IP Holdings Corp., an Illinois
corporation, The Lubrizol Corporation, an Ohio Corporation, and Lubrizol
Deutschland GMBH, a German limited liability company (collectively, the "IP
Sellers"), solely with regard to the sale and transfer of certain intellectual
property rights. Sellers, IP Sellers and Buyer are sometimes collectively
referred to herein as the "Parties" and individually as a "Party."
RECITALS:
WHEREAS, Sellers operate a portfolio of businesses that produce fine
chemicals, specialty polymers and additives, and performance materials for
consumer and industrial applications;
WHEREAS, Sellers' fine chemicals business consists of the Kalama Business
and the Noveon Textile Business;
WHEREAS, Kalama operates a fine chemicals business that produces benzoic
acid, benzaldehyde and their derivatives for a broad group of food and beverage,
pharmaceutical, consumer product and industrial applications (the "Kalama
Business");
WHEREAS, Noveon Textile operates a fine chemicals business that produces
glyoxal, glyoxal resins, sulfated oils, water repellants and waxes, (the "Noveon
Textile Business");
WHEREAS, Sellers' specialty polymer and additives business consists of the
Specialty Polymer Business and the Antioxidant and Accelerator Business;
WHEREAS, Noveon operates a specialty polymer and additives business that
produces thermoset resin tougheners used in adhesives, composites and coatings,
and also produces nitrile emulsions used in paper saturants, gaskets, coatings,
and missile fuel binder (the "Specialty Polymer Business");
WHEREAS, Noveon operates an antioxidant and accelerator business that
produces antioxidants and accelerators used in the rubber, lubricant and plastic
industries, and intermediates used in biocides and corrosion inhibitors, (the
"Antioxidant and Accelerator Business");
WHEREAS, Sellers' performance materials business consists of the Hilton
Davis Business and the Lubrizol Foam Control & Silicone Business;
WHEREAS, Hilton Davis operates a performance materials business that
produces dyes and dispersions used to add color to food, cosmetic,
pharmaceutical, coatings, inks and other consumer and industrial products (the
"Hilton Davis Business");
WHEREAS, Lubrizol Foam Control operates a performance materials business
that produces foam control additives, reactive silicones and silicone-based
products that are used to improve the processing or the performance of foods,
beverages, inks, metalworking fluids, adhesives, textiles, fermentation products
and coatings (the "Lubrizol Foam Control & Silicone Business");
WHEREAS, the Kalama Business, the Noveon Textile Business, the Specialty
Polymer Business, the Antioxidant and Accelerator Business, the Hilton Davis
Business and the Lubrizol Foam Control & Silicone Business are individually,
referred to herein as a "Business" and collectively referred to herein as the
"Businesses";
WHEREAS, IP Sellers own certain intellectual property rights used in the
operation of the Businesses; and
WHEREAS, Sellers desire to sell certain assets (other than the Retained
Assets including the Retained Product Lines) relating to the operation of the
Businesses and IP Sellers desire to sell certain intellectual property to Buyer,
and Buyer desires to purchase from Sellers and IP Sellers all such assets and
assume certain liabilities relating to the operation of the Businesses, for the
consideration and upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises and covenants set forth herein, and other valuable consideration the
receipt and sufficiency of which is hereby acknowledged by the Parties, the
Parties hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 Definitions. Certain capitalized terms used in this Agreement, and not
otherwise defined herein, shall have the meanings set forth in Article 16.
1.2 Interpretation. In this Agreement, unless a contrary intention appears:
(a) words used in the singular shall be construed to mean or include
the plural and vice versa;
(b) pronouns of any gender shall be deemed to include and designate
the masculine, feminine or neuter gender;
(c) The headings and captions used in this Agreement, in any Schedule
or Exhibit hereto, in the table of contents or in any index hereto are for
convenience of reference only and do not constitute a part of this
Agreement and shall not be deemed to limit, characterize or in any way
affect any provision of this Agreement or any Schedule or Exhibit hereto,
and all provisions of this Agreement and the Schedules and Exhibits
2
hereto shall be enforced and construed as if no caption or heading had been
used herein or therein;
(d) Any capitalized terms used in any Schedule or Exhibit attached
hereto and not otherwise defined therein shall have the meanings set forth
in this Agreement;
(e) Reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are not
prohibited by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually;
(f) "hereunder," "hereof," "hereto," and words of similar import shall
be deemed references to this Agreement as a whole and not to any particular
Article, Section or other provision hereof;
(g) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
(h) "or" is used in the inclusive sense of "and/or;"
(i) "may not" is prohibitive and not permissive;
(j) "neither," "nor," "any" and "either" shall not be exclusive;
(k) with respect to the determination of any period of time, "from"
means "from and including" and "to" means "to but excluding;" and
(l) all statements of or references to dollar amounts in this
Agreement are to the lawful currency of the United States of America.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale of Assets. On the terms and subject to the conditions
set forth in this Agreement, at the Closing, Buyer shall purchase and acquire
from Sellers, and Sellers shall sell, assign, convey, transfer and deliver to
Buyer, all assets, properties, rights, titles and interests of every kind and
nature owned, licensed or leased by Sellers which are used primarily in the
Businesses (including indirect and other forms of beneficial ownership) as of
the Closing Date (except for the Retained Assets and the Intellectual Property
(for which the terms of conveyance are set forth in Section 2.2 below)), whether
tangible or intangible, real or personal and wherever located and by whomever
possessed, free and clear of all Encumbrances (other than Permitted
Encumbrances), including the following:
(a) Accounts Receivable. All trade accounts receivable and supplier
rebates, whether current or non-current, other than accounts receivables
owed from Sellers' or IP Sellers', to the extent relating to the operation
of the Businesses that remain uncollected as of Closing (the "Accounts
Receivable"). For avoidance of doubt, the Parties agree that (i) certain
supplier rebates may not be transferable to Buyer and any supplier rebates
3
which are not transferable to Buyer will not be transferred to Buyer at the
Closing but Buyer will receive a credit for such supplier rebates in
connection with the determination of the Closing Statement and calculation
of the Closing Working Capital and the Final Adjustment Amount by virtue of
its treatment in Normal Working Capital; and (ii) certain accounts
receivable relating to the Lubrizol Foam Control & Silicone Business may
not be specifically severable, and that such accounts receivables will be
retained in full by the Sellers, and Buyer will receive a credit for such
accounts receivables in connection with the determination of the Closing
Statement and calculation of the Closing Working Capital and the Final
Adjustment Amount by virtue of its treatment in Normal Working Capital.
(b) Inventory. All inventories set forth on Schedule 2.1(b)-1 and all
inventories primarily relating to the operations of the Businesses that
exist as of the Closing, including raw materials, packaging materials, work
in process, engineering store inventory, consigned goods inventories,
finished goods, inventory held by a third party; and inventory in-transit,
but excluding (whether or not primarily related to the operations of the
Businesses) the Inventory set forth on Schedule 2.1(b)-2, wherever located,
including inventory located at Sellers' and IP Sellers' facilities in
Spartanburg, South Carolina, Avon Lake, Ohio, Rio, Brazil, Hamburg,
Germany, Brecksville, Ohio, and Gastonia, North Carolina (collectively the
"Inventory"). The Parties agree that all of the items set forth on Schedule
2.1(b)-3 are included in the calculation of Normal Working Capital but that
the items set forth on Schedule 2.1(b)-2 will not be conveyed to Buyer. The
Parties agree that Buyer will receive a credit for the items set forth on
Schedule 2.1(b)-2 in connection with the determination of the Closing
Statement and calculation of the Closing Working Capital and the Final
Adjustment Amount by virtue of its treatment in Normal Working Capital. The
Parties agree that all of the items set forth on Schedule 2.1(b)-4 are not
included in the calculation of Normal Working Capital but will be conveyed
to Buyer. The Parties agree that Sellers will receive a credit for the
items set forth on Schedule 2.1(b)-4 in connection with the determination
of the Closing Statement and calculation of the Closing Working Capital and
the Final Adjustment Amount by virtue of its treatment in Normal Working
Capital.
(c) Deposits; Prepaid Expenses. All deposits and prepaid expenses to
the extent relating to the operation of the Businesses that remain unused
as of the Closing including the Carolina Panthers seat license, the spare
catalyst, the catalyst in the reactor, and the silver in the catalyst at
GAX (the "Prepaid Expenses");
(d) Owned Real Property. The real property owned by any Seller and
described in Schedule 2.1(d), together with all buildings, structures,
fixtures and improvements located thereon (the "Owned Real Property");
(e) Leased Real Property. The real property leased by any Seller and
described in Schedule 2.1(e) as well as all the real property leased by any
Seller under the real property leases included in the Assumed Contracts
(the "Leased Real Property") and all of Sellers' rights existing under such
leases, including, without limitation, all rights to security deposits held
pursuant thereto;
4
(f) Owned Improvements. All buildings, structures, fixtures and
improvements owned or leased by Sellers and located on the Owned Real
Property and the Leased Real Property, including those under construction;
(g) Owned Personal Property. Except for the Offsite Equipment, all
items of tangible personal property, other than the Inventory, owned by any
Seller and used primarily in the operation of the Businesses, including all
motor vehicles, trailers, machinery, equipment(including lab equipment used
by the Businesses located in Sellers' and IP Sellers' facilities in
Spartanburg, South Carolina and Brecksville, Ohio) accessories, computer
hardware, telephone systems, office equipment and furniture, office
supplies, production supplies and other supplies, spare parts, other
miscellaneous supplies and other tangible property of any kind located in
any building, office or other space leased, owned or occupied by Sellers or
in any warehouse or other storage facility where any of Sellers' properties
and assets may be located, (including located in Sellers' facilities in
Spartanburg, South Carolina, Avon Lake, Ohio, Rio, Brazil, Hamburg,
Germany, Gastonia, North Carolina, and Brecksville, Ohio);
(h) Leased Personal Property. All items of tangible personal property
primarily related to the Businesses and leased by any Seller;
(i) Records. All original lists, data, records and other information
primarily relating to the operation of the Businesses, and the Purchased
Assets, including lists, records and other information pertaining to
accounts and referral sources; customer and supplier lists; customer files
and records; all drawings, reports, studies, plans, books, ledgers, files,
and business and accounting records of every kind (including all financial,
business, sales and marketing plans and information); pricing and cost
information; purchase and sale records; engineering records; property
records; payroll records of Transferred Employees; parts lists; manuals;
and all manuals and service and maintenance records; and copies of
personnel records of Transferred Employees, each as pertaining to the
Purchased Assets (the "Purchased Records"), and copies of all the foregoing
types of records otherwise relating to the operation of the Businesses and
the Purchased Assets;
(j) Assumed Contracts. All Contracts to which any Seller is a party
that relate primarily to the operation of a Business (the "Assumed
Contracts") and all security deposits relating thereto;
(k) Warranty Rights. All rights under or pursuant to all warranties,
representations and guarantees made by suppliers in connection with the
Purchased Assets or services furnished to any Seller primarily relating to
the operation of a Business or the Purchased Assets, in each case, to the
extent such warranties, representations and guarantees are assignable to
Buyer, and if such warranties, representations and guarantees are not
assignable to Buyer, then any proceeds actually recovered by any Seller
relating thereto;
(l) Claims and Refunds. All claims, refunds, credits, causes of
action, choses in action, rights of recovery and rights of set off of any
kind to the extent relating to the
5
Businesses but excluding claims, refunds, credits, causes of action, choses
in action, rights of recovery and rights of set off of any kind to the
extent relating to the Retained Assets or Retained Liabilities;
(m) Insurance Proceeds. All proceeds actually recovered under
insurance policies and, to the extent transferable, all rights of recovery
under such insurance policies, in each case to the extent relating to the
operation of the Businesses or the Purchased Assets;
(n) Mail. The right to receive and retain mail, payments of
receivables and other communications to the extent relating to the
Purchased Assets, the Purchased IP Assets or a Business;
(o) Advertising. Subject to the use restrictions set forth in this
Agreement, all advertising, marketing and promotional materials, all
archival materials and all other printed or written materials primarily
relating to the Purchased Assets or a Business;
(p) Sellers' Benefit Plans. All rights in connection with, and assets
of, any Seller' Benefit Plans transferred to Buyer pursuant to Article 8
(the "Assumed Benefit Plans");
(q) Rights to Xxxx and Receive Payment. The right to xxxx and receive
payment for products shipped or delivered or services performed but
unbilled or unpaid as of the Closing Date to the extent relating to the
Businesses or the Purchased Assets;
(r) Goodwill. All goodwill primarily relating to the Businesses or the
Purchased Assets; and
(s) Except as specifically set forth in Section 2.3(a) through 2.3(q),
all other properties, assets, rights, titles and interest of every kind and
nature (other than Intellectual Property, for which the terms of conveyance
are set forth in Section 2.2 below) owned, licensed or leased by Sellers as
of the Closing Date which are primarily related to the Businesses.
All of Sellers' respective rights, title and interest in and to the
foregoing assets, properties and rights, including the assets, properties and
rights transferred under the first sentence of Section 2.1 are collectively
referred to herein as the "Purchased Assets." Notwithstanding the foregoing, the
Purchased Assets shall not include any of the Retained Assets, the Purchased IP
Assets or the Licensed IP. For purposes of Article 2 and Article 3, "to the
extent relating to" means such amount or quantity (whether or not the item in
question primarily relates to the Businesses) that is capable of either being
partially attributed to or partially allocated to the Businesses.
2.2 Purchase and Sale of IP Assets. On the terms and subject to the
conditions set forth in this Agreement, IP Sellers and Sellers shall sell,
assign, convey, transfer and deliver to Buyer on the Closing Date, and Buyer
shall purchase and acquire free and clear of all Encumbrances (other than
Permitted Encumbrances) from IP Sellers and Sellers, all of IP Sellers' and
Sellers' respective right, title and interest existing as of the Closing Date in
and to all
6
Intellectual Property and lists, data, records and other information relating to
such Intellectual Property primarily relating to the Businesses (except for the
Retained Assets) wherever located and by whomever possessed, along with all of
IP Sellers' and Sellers' interests in goodwill relating thereto and income,
royalties, damages and payments accrued, due or payable as of the Closing Date
or thereafter (including damages and payments for past, present and future
infringements or misappropriations thereof, the right to xxx and recover for
past, present and future infringements or misappropriations thereof and any and
all corresponding rights that, now or hereafter, may be secured throughout the
world), including, without limitation, the following Intellectual Property and
lists, data, records and other information relating to such Intellectual
Property:
(a) all trademarks and service marks and applications, registrations
and renewals in connection therewith listed or described in Schedule
2.2(a), in each case, together with the goodwill of the Businesses
associated therewith;
(b) all patents and patent applications, together with all legal
equivalents and all continuations, divisionals, renewals and reissues or
reexaminations resulting therefrom, including the right to claim priority
listed or described in Schedule 2.2(b) (the "Purchased Patents");
(c) all copyrights and copyrightable works listed or described in
Schedule 2.2(c) and all registrations, applications, extensions and
renewals related to the foregoing;
(d) all trade secrets, know-how, confidential or proprietary
information, ideas, related processes and techniques, research and
development information, lab records, test results, quality assurance
reports, process improvements, plans, proposals, technical data and
manuals, recipes, formulations, process technology, plans, designs,
drawings, specifications, blue prints, inventions and discoveries primarily
relating to the operation of the Businesses and the Purchased Assets as
currently operated, wherever located including ADVA-related products and
products utilizing and incorporating ADVA products (the "Purchased Trade
Secrets");
(e) Intellectual Property in the Purchased Records;
(f) the internet domain names listed or described in Schedule 2.2(f)
and all registrations, applications and renewals related to the foregoing;
and
(g) all Intellectual Property licenses and all other agreements
affecting the Sellers' and IP Sellers' ability to use or disclose
Intellectual Property primarily relating to the operation of the Businesses
as currently operated, including those listed or described on Schedule
2.2(g).
All of IP Sellers' and Sellers' respective right, title and interest in and
to the foregoing Intellectual Property, including, without limitation, the
Intellectual Property transferred under the first sentence of Section 2.2 are
collectively referred to as the "Purchased IP Assets." Notwithstanding the
foregoing, the Purchased IP Assets shall not include any of the Retained Assets,
the Purchased Assets or the Licensed IP.
7
2.3 Retained Assets. Except for the Purchased Assets and the Purchased IP
Assets, Buyer shall not acquire any, and Sellers and IP Sellers shall retain all
right, title, benefit or interest in, to or under any other assets, properties
or rights of Sellers or IP Sellers (the "Retained Assets"), including the
following assets, properties and rights:
(a) all cash and cash equivalents of any Seller;
(b) all marketable securities;
(c) all Tax Returns and Tax records and any rights to Tax refunds or
credits and other governmental charges of whatever nature for periods prior
to the Closing, and all deferred Tax assets;
(d) all rights under any Contract that is not included in the Assumed
Contracts or any Permit that is not transferable;
(e) except as provided in Section 2.1(m), all insurance policies and
insurance contracts and all rights related thereto;
(f) all rights in connection with, and assets of, any of Sellers'
Benefit Plans, except as provided in Article 8;
(g) all minute books and stock records of Sellers and other similar
corporate books and records of Sellers;
(h) all shares of Sellers' capital stock held in treasury;
(i) all rights of Sellers arising under this Agreement or the
Transaction Documents;
(j) the real property located at Gastonia, North Carolina,
Spartanburg, South Carolina; Avon Lake, Ohio, Rio, Brazil, Hamburg,
Germany, and Brecksville, Ohio and set forth on Schedule 2.3(j);
(k) all Intellectual Property of Sellers and IP Sellers not
transferred pursuant to Section 2.2 and the Intellectual Property licensed
to Buyer as Licensed IP (the "Retained IP Assets");
(l) the stock of and all ownership interest in FCC Acquisition Corp.,
a Delaware corporation and wholly-owned subsidiary of Noveon Textile;
(m) all trade names, trademarks, service marks and domain names of
Noveon and The Lubrizol Corporation or its or their Affiliates and
subsidiaries not transferred pursuant to Section 2.2, including the names
"Noveon" and "Lubrizol" and all of its and their derivatives, the composite
trademarks "Lubrizol Foam Control Products" and "Lubrizol Performance
Products," and the Noveon(R), Hycar(R) and Vycar(R) registered trademarks,
provided that nothing in this Section 2.3(m) shall limit any rights of
Buyer
8
under Section 7.18(c) and Section 7.19, including any rights of or for
protection of, Buyer thereunder;
(n) all rights in the Contracts set forth on Schedule 2.3(n);
(o) subject to the obligations set forth in Section 7.11 and Section
7.14, all Retained Records;
(p) subject to the option granted to Buyer and its successors and
assigns in Section 7.23, the equipment primarily relating to the Businesses
and which will be used by Sellers, IP Sellers, and their Affiliates to
supply products to Buyer pursuant to the Buyer Manufacturing and Supply
Agreements (the "Offsite Equipment"); and,
(q) the accounts receivables due from Sellers or IP Sellers.
The Parties agree and acknowledge that there are identifiable product lines
(the "Retained Product Lines") that are (i) associated (present and
historically) with the Businesses but which relate primarily to the Sellers'
businesses (other than the Businesses) and (ii) the revenues from sales of such
product lines have not been included in the Financial Statements of the
Businesses provided to Buyer. The Parties agree to work together following the
signing to identify such product lines. The Parties agree and acknowledge that
the Retained Product Lines are Retained Assets. For avoidance of doubt, the
assets, properties or rights primarily relating to the Businesses and
specifically set forth above are Retained Assets.
2.4 Clear Title; Permitted Encumbrances. The Purchased Assets and the
Purchased IP Assets shall be transferred to Buyer free and clear of all
Encumbrances, other than the Permitted Encumbrances.
ARTICLE 3
ASSUMPTION OF LIABILITIES
3.1 Assumed Liabilities. At the Closing, Buyer shall assume and agree to
fully pay, perform and discharge, as and when they become due, the Liabilities
of Sellers and IP Sellers specifically set forth below and relating to the
Purchased Assets, the Purchased IP Assets or the operation of the Businesses
(the "Assumed Liabilities"):
(a) all Accrued Expenses (but only to the extent such items are
recorded and reasonably identified on a category-by-category basis on the
Closing Statement and are included in the calculation of the Closing
Working Capital);
(b) all Liabilities relating to the performance of the Assumed
Contracts and Permits first arising after the Closing and specifically
excluding any liability or obligation relating to or arising out of such
Assumed Contracts or Permit as a result of any breach of such Assumed
Contracts or Permit occurring on or prior to the Closing Date;
(c) all Liabilities relating to employee benefit plans, workers'
compensation or Transferred Employees but only to the extent specifically
provided in Article 8;
9
(d) except the matters set forth on Schedule 3.2(r), all Liabilities
for products recall or product warranty (whether such warranty is written,
at law or otherwise) to the extent relating to products manufactured, sold
or distributed by the Businesses whether prior to or after the Closing Date
but specifically excluding Product Liability. The foregoing shall apply to
such products, whether manufactured, sold or distributed before or after
the Closing Date and whether or not any claim therefor has been made or is
pending as of the Closing Date. The foregoing shall be assumed without
regard to the limits of any applicable reserves;
(e) except as set forth in Section 3.2(q), Section 3.2(s), and Section
3.2(t), all Environmental, Health and Safety Liabilities relating to or
arising from the Owned Real Property or the Leased Real Property;
(f) all Liabilities relating to the claims and Proceedings set forth
in Schedule 3.1(f); and,
(g) all other Liabilities to the extent expressly agreed to be assumed
by Buyer under the terms of this Agreement and the Transaction Documents.
Buyer shall take, or cause to be taken, all commercially reasonable actions
necessary to cause the assumption at the Closing by Buyer of the Assumed
Liabilities, including the execution and delivery at the Closing of the
Assignment and Assumption Agreements.
3.2 Retained Liabilities. Notwithstanding anything to the contrary
contained in this Agreement, Buyer shall not assume or in any way become liable
for any of Sellers' or IP Sellers' Liabilities (other than the Assumed
Liabilities), whether related to a Business or a Purchased Asset and whether
disclosed on the Schedules attached hereto, and regardless of when or by whom
asserted, including the following (the "Retained Liabilities"):
(a) All Accounts Payable;
(b) any Liabilities of Sellers or IP Sellers for Taxes;
(c) any deferred Tax Liabilities;
(d) any of Sellers' or IP Sellers' Liabilities or obligations under
this Agreement, the Schedules attached hereto and any other agreements
entered into by Sellers or IP Sellers in connection with the transactions
contemplated by this Agreement;
(e) except as for the filing fee in connection with the filing to be
made by the Parties pursuant to the HSR Act, any Liabilities for legal,
accounting, audit or investment banking fees, broker commissions or any
other expenses incurred by Sellers or IP Sellers in connection with the
negotiation, preparation, approval, authorization or consummation of this
Agreement and the transactions contemplated hereby;
(f) any Intercompany Payables;
10
(g) except as provided in Section 7.16, any Liabilities for, or
related to, Indebtedness;
(h) any Liabilities (including, without limitation, any Environmental
Health and Safety Liabilities) relating to the Retained Assets;
(i) subject to the indemnification of Sellers and IP Sellers by Buyer
set forth in Section 12.3(e), Product Liability;
(j) any Liabilities for infringement or misappropriation arising from
the development, modification or use of any Intellectual Property on or
before the Closing;
(k) any Liabilities to be paid or performed in respect of any Contract
not included among the Assumed Contracts;
(l) except to the extent specifically provided in Article 8, any
Liabilities relating to any employee or former employees of the Sellers and
IP Sellers and under any Sellers' Benefit Plans and any other employee
benefit plans, programs or arrangements to which Sellers or IP Sellers have
any Liability;
(m) any Liabilities to any of the employees, consultants or service
providers of Sellers or IP Sellers arising solely as a result of the
consummation of the transactions contemplated hereunder;
(n) any Liability relating to workers' compensation claims which were
filed or presented on or before the Closing Date or which are filed or
presented after the Closing Date but relate to claims or injuries first
arising on or before the Closing Date;
(o) any Liabilities (i) arising by reason of any violation or alleged
violation of any federal, state, local or foreign Law or any requirement of
any governmental authority, (ii) arising by reason of any breach or alleged
breach by any Seller of any Contract (including any Assumed Contract),
judgment, Order or decree,
(p) any Liabilities relating to any Proceeding or claim arising out of
or in connection with Sellers' or IP Sellers' conduct of the Businesses or
any other conduct of Sellers, or IP Sellers' or their respective officers,
directors, employees, consultants, agents or advisors on or prior to the
Closing Date except as set forth on Schedule 3.1(f) but including any
Liabilities relating to the Proceedings or claims set forth on Schedule
5.15 but not set forth on Schedule 3.1(f);
(q) any Liabilities including any Environmental, Health and Safety
Liabilities relating to any properties or facilities owned or operated by
any of the Businesses, the Sellers, IP Sellers or their respective
predecessors or Affiliates at any time prior to the Closing Date other than
relating to the Facilities (the "Former Facilities"), including any
Environmental, Health and Safety Liabilities arising from Toxic Tort Claims
relating to any Former Facility and from the offsite treatment, storage,
disposal or release of Hazardous Materials generated in connection with any
Former Facility;
11
(r) any Liabilities relating to known commercial liability matters and
known product warranty matters including Liabilities relating to or arising
out of the matters set forth on Schedule 3.2(r) and any Liabilities
relating to or arising from the disposal of butadiene in connection with
the Sellers' and IP Sellers' relationship with Equistar Chemicals, LP,
Lyondell Chemical Company or their Affiliates;
(s) any Environmental, Health and Safety Liabilities arising from or
relating to Toxic Tort Claims (including any associated with the
Businesses, the Facilities, or any Former Facilities), the facts, events or
circumstances underlying which occurred or were in existence on or prior to
the Closing Date (the "Pre-Closing Toxic Tort Liabilities");
(t) the Anhydrous Ammonia Release Liability; and
(u) any other Liabilities of Sellers or IP Sellers not expressly
assumed by Buyer pursuant to Section 3.1 above.
Sellers and IP Sellers hereby acknowledge that they are retaining the
Retained Liabilities, and Sellers and IP Sellers shall pay, discharge and
perform all such Retained Liabilities and obligations promptly when due.
3.3 Consents to Assignment. Notwithstanding anything in this Agreement to
the contrary, this Agreement shall not constitute an agreement to assign any
Assumed Contract or any claim or right or any benefit arising thereunder or
resulting therefrom, if an attempted assignment or transfer thereof, without the
Consent of a third party, would constitute a breach or default thereof or give
rise to a right of termination or cancellation thereunder and such Consent has
not been obtained prior to the Closing. Sellers shall use commercially
reasonable efforts for a reasonable period of time following the Closing Date to
obtain such Consent to assignment or transfer. If such Consent is obtained by
Sellers, Sellers shall promptly assign such Assumed Contract to Buyer and Buyer
shall assume all Liabilities relating thereto pursuant to a special-purpose
assignment and assumption agreement. If such Consent is not obtained, Sellers
and Buyer will cooperate with each other, in all commercially reasonable
respects, to design an arrangement pursuant to which Buyer will receive
substantially all of the material rights and benefits from such third party, and
assume all of the obligations relating to such Assumed Contract, including, if
requested by Buyer, acting as an agent on behalf of Buyer. Sellers shall not be
required to make any material change to their respective businesses, expend any
material funds or incur any other material burden, Liability or loss in order to
comply with its obligations set forth in this Section 3.3. Buyer is assuming the
full risk that Sellers and Buyer will be unable to establish a commercially
reasonable arrangement between Buyer and any third party whose Consent to assign
any Assumed Contract has not been obtained.
3.4 Rights in Assumed Contract. To the extent an Assumed Contract relates
to a Retained Liability, Buyer will cooperate with Sellers, in all commercially
reasonable respects, to design an arrangement pursuant to which Sellers will
receive substantially all of the material rights and benefits from such Assumed
Contract with respect to the Retained Liability. Buyer shall not be required to
make any material change to their respective Businesses, expend any material
funds or incur any other material burden, Liability or loss in order to comply
with its obligations set forth in this Section 3.4. Sellers are assuming the
full risk that Buyer and Sellers
12
will be unable to establish a commercially reasonable arrangement between
Sellers and any third party whose Consent to assign any Assumed Contract has not
been obtained.
ARTICLE 4
CONSIDERATION
4.1 Purchase Price. In addition to Buyer's assumption of the Assumed
Liabilities, the purchase price to be paid by Buyer to Sellers' Representative
(on behalf of Sellers and IP Sellers) shall be Two Hundred Forty-Three Million
US Dollars ($243,000,000.00) (the "Purchase Price"), plus $26,702,000.00 (the
"Accounts Payable Amount") plus or minus the Estimated Adjustment Amount, plus
or minus the Final Adjustment Amount.
4.2 Payment of Purchase Price.
(a) Payment at the Closing. At the Closing, Buyer shall pay the
Purchase Price, plus or minus the Estimated Adjustment Amount to Sellers'
Representative (on behalf of the Sellers and IP Sellers) in cash via wire
transfer of immediately available funds to an account designated two (2)
days prior to the Closing by Sellers' Representative in writing. If the
Estimated Adjustment Amount is negative, the Purchase Price shall be
increased at the Closing by the absolute value of Estimated Adjustment
Amount or if the Estimated Adjustment Amount is positive, the Purchase
Price shall be decreased at the Closing by an amount equal to the Estimated
Adjustment Amount.
(b) Payment at sixty (60) days following the Closing. On the date that
is sixty 60 days following the Closing (or the next business day if such
date is not a business day), Buyer shall pay the Accounts Payable Amount to
Sellers' Representative (on behalf of the Sellers and IP Sellers). For
avoidance of doubt, the payment required by this Section 4.2(b) shall be
the only payment made by Buyer with respect to the Businesses' Accounts
Payable, and there will be no further payment by Buyer with respect to the
Businesses' Accounts Payable in connection with the determination of the
Closing Statement and calculation of the Closing Working Capital.
(c) Payment of Final Adjustment Amount. Upon the later of: (i) ninety
(90) days after the Closing Date, or (ii) thirty (30) days after the date
of the final determination of the Final Adjustment Amount pursuant to
Section 4.3, (A) if the Final Adjustment Amount is negative, Buyer shall
pay Sellers' Representative (on behalf of the Sellers and IP Sellers) an
amount equal to the absolute value of the Final Adjustment Amount by wire
transfer of immediately available funds to an account specified in writing
by Sellers' Representative, or (B) if the Final Adjustment Amount is
positive, Sellers' Representative shall pay to Buyer the amount equal to
the Final Adjustment Amount by wire transfer of immediately available funds
to an account specified in writing by Buyer, and in either event together
with interest thereon accruing from the Closing Date to the date of payment
of the Final Adjustment Amount pursuant to this Section 4.2(c) at a rate
per annum equal to the prime rate as quoted in The Wall Street Journal on
the Closing Date, calculated on the basis of the actual number of days
elapsed over 365, from the Closing Date to the date of payment.
13
4.3 Adjustment Procedure.
(a) Definitions.
(i) "Working Capital" as of a given time or date means the amount
determined by subtracting the sum of: (i) (X) the Accounts Payable and
(Y) Accrued Expenses from (ii) the sum of (X) the Accounts Receivable
(net of the amount of any reserves relating thereto established in the
Ordinary Course of Business); (Y) the Prepaid Expenses and (Z) the
aggregate value of the Inventory (net of the amount of reserves
relating thereto established in the Ordinary Course of Business), as
of such time or date as calculated in accordance with the accounting
principles, policies and practices described on Schedule 4.3(a), and
except as otherwise noted therein, in accordance with GAAP,
consistently applied. For avoidance of doubt, Sellers and IP Sellers
will retain and satisfy all Accounts Payable relating to the
Businesses, and Accounts Payable shall be reflected as zero in the
Estimated Working Capital, the Closing Statement, and the Closing
Working Capital.
(ii) "Normal Working Capital" means the negotiated and agreed
amount of $83,384,000.
(iii) "Closing Working Capital" means Working Capital at the
Effective Time. For purposes of determining the "Closing Working
Capital," Working Capital shall only include amounts which constitute
Purchased Assets or Assumed Liabilities, and therefore, by way of
example, the Accounts Payable will be zero, because Sellers and IP
Sellers are retaining the Accounts Payable.
(iv) "Estimated Working Capital" means the good faith joint
estimate by Buyer, on the one hand, and Sellers Representative, on the
other hand, of the Working Capital of the Businesses as of the Closing
Date, completed on or prior to the Closing Date.
(v) "Estimated Adjustment Amount" (which may be a positive or
negative number) means the amount determined by subtracting the
Estimated Working Capital from the Normal Working Capital and adding
the Account Payable Amount.
(vi) "Final Adjustment Amount" (which may be a positive or a
negative number) means the amount determined by subtracting the
Closing Working Capital from the Estimated Working Capital.
(b) Closing Statement. As soon as practicable following the Closing
Date, but in no event later than one-hundred-twenty (120) days following
the Closing Date, Buyer shall prepare and deliver (or cause to be prepared
and delivered) to Sellers' Representative a written statement (the "Closing
Statement") setting forth in reasonable detail Buyer's calculation of the
Closing Working Capital together with supporting documentation and
information. Buyer shall prepare (or cause to be prepared) the Closing
Statement in accordance with the accounting principles, policies and
practices
14
described on Schedule 4.3(a), and except as otherwise noted therein, in
accordance with GAAP, consistently applied. Sellers and IP Sellers shall,
and shall cause their Affiliates and Representatives to, give Buyer
reasonable access to Sellers' and IP Sellers' books and records and shall
cooperate with Buyer in connection with the preparation of the Closing
Statement and the determination of the Closing Working Capital.
(c) Review Period. Sellers' Representative shall have forty-five (45)
days following receipt of the Closing Statement to review the Closing
Statement and all supporting documentation and information (the "Review
Period"). During the Review Period, Buyer shall provide Sellers'
Representative with access to the books, records and personnel of Buyer for
the purpose of verifying the accuracy of the Closing Statement, including
the Closing Working Capital calculation set forth therein, and all
supporting documentation and information.
(d) Acceptance of Adjustment Amount if not Objected to. The
calculation of the Closing Working Capital set forth in the Closing
Statement shall become final, binding and conclusive on the Parties and
shall be used in calculating the Final Adjustment Amount unless Sellers'
Representative provides Buyer with written notice of its objection to the
calculation of the Closing Statement or the Closing Working Capital set
forth in the Closing Statement prior to the expiration of the Review
Period.
(e) Dispute Resolution. If Sellers' Representative duly provides
written notice of their objection to the calculation of the Closing
Statement or the Closing Working Capital set forth in the Closing Statement
(which shall specify in reasonable detail the nature and dollar amount of
any disagreement so asserted), and Buyer and Sellers' Representative are
unable to resolve Sellers' Representative's objection within fifteen (15)
days (or longer if agreed to in writing by Buyer and Sellers'
Representative) of Sellers' Representative's duly providing written notice
of such objection to Buyer, then Buyer and Sellers' Representative shall
engage the Independent Valuation Firm, to resolve any items in dispute
between the Parties (and only such disputed items) relating to the
calculation of the Closing Statement or the Closing Working Capital in
accordance with the provisions of this Section 4.3. If the Independent
Valuation Firm is engaged to resolve any items in dispute between the
Parties relating to the calculation of the Closing Statement or the Closing
Working Capital, (i) each Party shall furnish (or cause to be furnished) to
the Independent Valuation Firm such documents and information reasonably
relating to the items in dispute and the calculation of the Closing Working
Capital as the Independent Valuation Firm may reasonably request and are
reasonably available to that Party, and each Party shall be afforded the
opportunity to present to the Independent Valuation Firm any other
documents and information reasonably relating to the items in dispute and
the calculation of the Closing Working Capital and to discuss the same with
the Independent Valuation Firm; (ii) resolution of the items in dispute by
the Independent Valuation Firm, as set forth in a notice to be delivered to
Buyer and Sellers' Representative within thirty (30) days of the
Independent Valuation Firm engagement hereunder, shall be final, binding
and conclusive on the Parties and shall be used in calculating the Closing
Working Capital and the Final Adjustment Amount; (iii) the Independent
Valuation Firm shall consider only the disputed matters that were included
in the notice of objection and the Independent Valuation Firm may not
assign a value to any item in dispute greater
15
than the greatest value assigned by Sellers' Representative, on the one
hand, or Buyer, on the other hand, or less than the smallest value for such
item assigned by Sellers' Representative, on the one hand, or Buyer, on the
other hand; and (iv) the fees and expenses of the Independent Valuation
Firm shall be allocated based upon the percentage which the portion of the
contested amount not awarded to each Party bears to the amount actually
contested by such Party in the written presentation to the Independent
Valuation Firm (For example, if Sellers' Representative submits a notice of
objection for $1,000, and if Buyer contests only $500 of the amount claimed
by Sellers' Representative, and if the Independent Valuation Firm
ultimately resolves the dispute by awarding Sellers' Representative $300 of
the $500 contested, then the costs and expenses of the Independent
Valuation Firm will be allocated 60% (i.e., 300/500) to Buyer and 40%
(i.e., 200/500) to Sellers and IP Sellers).
(f) Sole and Exclusive Remedy.
(i) Notwithstanding any other provision of this Agreement,
including any provision stating that remedies shall be cumulative and
not exclusive, this Section 4.3 provides the sole and exclusive method
for resolving any and all disputes of each and every nature whatsoever
that may arise between or among the Parties with respect to the
Closing Working Capital, the Closing Statement and the Final
Adjustment Amount. As between the Parties, Sellers, IP Sellers and
Buyer hereby irrevocably waive, relinquish and surrender on their own
behalf and on behalf of their respective Affiliates and
Representatives all rights to, and agree that they will not attempt,
and shall cause their Affiliates and Representatives not to attempt,
to resolve any such Dispute or disputes in any manner other than as
set forth in this Section 4.3, including through litigation.
(ii) It is understood that the amount of Normal Working Capital
is a negotiated and agreed amount which is not subject to further
adjustment. Notwithstanding the prior sentence, to the extent that it
is determined during the preparation of the Closing Statement and
determination of the Closing Working Capital that a specific current
asset was omitted from the determination of Normal Working Capital,
the amount of such current asset which should have been included in
the Normal Working Capital will be paid by Sellers and IP Sellers to
Buyer by wire transfer of immediately available funds to an account
specified in writing by Buyer (which amount shall be determined in
accordance with the accounting principles, policies and practices
described on Schedule 4.3(a), and except as otherwise noted therein,
in accordance with GAAP, consistently applied). The Parties agree that
the Normal Working Capital was calculated as set forth on Schedule
4.3(b). For avoidance of doubt, the Inventory set forth in Schedule
2.1(b)-4, has been intentionally excluded from Normal Working Capital;
the Parties agree that such Inventory will be included in the
Inventory included in the determination of the Closing Statement and
the calculation of Closing Working Capital and will not be considered
an omission within the meaning of this Section 4.3(f)(ii). The amount,
if any, of any payment under this Section 4.3(f)(ii) shall be included
in the preparation of the Closing Statement and
16
Closing Working Capital and subject to review, objection and dispute
resolution in accordance with the provisions of this Section 4.3.
4.4 Allocation of Purchase Price. The Purchase Price, the Accounts Payables
Amount, the Assumed Liabilities and other relevant items will be allocated among
the Purchased Assets and the Purchased IP Assets for all purposes as mutually
agreed to by the Parties within thirty (30) days after the final determination
of the Closing Working Capital as provided in Section 4.3 above. Each Party
agrees: (a) that any such allocation will be consistent with the requirements of
Section 1060 of the Code or applicable provision under foreign Laws; (b) to
complete and to file Form 8594 with its federal income tax return consistent
with such allocation for the tax year in which the Closing occurs or required
forms under foreign Laws; and (c) that no Party will take a position on any
income, transfer, gains, or other Tax Return, or before any Governmental Body
charged with the collection of any such Tax or in any Proceeding, that is in any
manner inconsistent with the terms of any such allocation, unless required to do
so by Law as interpreted or modified subsequent to the Closing Date. For all
purposes under this Agreement, any indemnification payments made pursuant to
Sections 12.2 or 13.4 will be treated as an adjustment to the Purchase Price.
4.5 Closing Costs; Transfer Taxes and Fees; Prorated Costs.
(a) Buyer, on the one hand, and Sellers and IP Sellers, on the other
hand, shall equally be responsible for: (i) all documentary and transfer
Taxes and any other Taxes imposed by reason of the transfer of the
Purchased Assets and the Purchased IP Assets hereunder (and any deficiency,
interest or penalty asserted with respect thereto); (ii) all recording,
filing, title and registration fees or other charges in connection with or
as a direct result of the transfer of the Purchased Assets or the Purchased
IP Assets; and (iii) all costs of obtaining and maintaining owner's title
insurance policies on the Owned Real Property, and the Leased Real Property
described in Schedule 2.1(e) ("Title Insurance Policies").
(b) Buyer, on the one hand, and Sellers and IP Sellers, on the other
hand, shall equally share: (i) all costs of obtaining commitments for
owner's title insurance policies with respect to the Owned Real Property
and the Leased Real Property described in Schedule 2.1(e); and (iii) the
fee charged by the Title Company in connection with the due diligence and
the Closing of the transactions contemplated by this Agreement. Sellers and
IP Sellers shall pay all costs of obtaining surveys with respect to the
Owned Real Property and the Leased Real Property described in Schedule
2.1(e)
(c) Buyer, on the one hand, and Sellers and IP Sellers, on the other
hand, shall prorate as of the Closing Date: (i) water, electricity and gas
charges, and all other operating expenses typically prorated between
sellers and buyers of commercial real estate, at the Facilities through the
Closing based on readings as of the Closing or prorated as of the Closing;
(ii) accrued but unpaid general real estate taxes on the Owned Real
Property prorated based upon the last available tax duplicate; provided,
however, such amounts shall be recomputed based upon the final rates and
valuation and any amounts found due from either Party shall be promptly
paid by the appropriate Party to
17
the other; (iii) all special assessments and the full amount of all
installments or any respreads of taxes and assessments on the Owned Real
Property and the Leased Real Property described in Schedule 2.1(e); (iv)
the amount of any recoupment of tax abatements or discounted tax valuations
(including agricultural and forestry use valuations) resulting from the
transfer, or current or future changes in use, of the Owned Real Property;
and (v) accrued but unpaid general real estate tax tenant obligations under
the Real Property Lease prorated based upon the last available tax
duplicate; provided, however, if the Real Property Leases provide for such
adjustments, such amounts shall be recomputed based upon the final rates
and valuation and any amounts found due from either Party shall be promptly
paid by the appropriate Party to the other. In no event shall Buyer be
responsible for any Sellers' or IP Sellers taxes, delinquent on the Closing
or for any interest or penalties accruing in connection therewith.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except with respect to environmental, health and safety Permits, which are
addressed under Section 5.19, none of the representations or warranties set
forth in this Article 5 cover or apply to Environmental, Health and Safety
Liabilities, Environmental Matters or environmental and health and safety
disclosures, all of which are exclusively covered in Article 13.
Sellers jointly and severally represent and warrant to Buyer those items
contained in Sections 5.1 through 5.26, inclusive, and IP Sellers severally
represent and warrant to Buyer those items contained in Sections 5.1 through
5.5, inclusive, 5.8(b), 5.17(a), 5.19, 5.20 and 5.22, as of the date hereof, all
of which warranties shall survive the Closing in accordance with Section 12.1.
5.1 Organization and Qualification. Each Seller and IP Seller is duly
incorporated or organized, validly existing and in good standing under the Laws
of its jurisdiction of incorporation or organization. Sellers have all requisite
corporate power and authority to own and operate the Purchased Assets and to
carry on the Businesses as currently conducted. IP Sellers have all requisite
corporate or organizational power and authority to use the Purchased IP Assets
and the Licensed IP. Each Seller and IP Seller is duly qualified to do business
and is in good standing as a foreign entity in all jurisdictions in which such
qualification is required to permit it to own its assets and to conduct its
Business as it is currently being conducted, except where such failure to
qualify would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
5.2 Corporate Authority. Each Seller and IP Seller has all necessary
corporate or organizational power and corporate or organizational authority to
execute and deliver this Agreement and each of the Transaction Documents to
which it is a party, and to perform its obligations hereunder and thereunder.
The execution, delivery and performance by each Seller and IP Seller of this
Agreement and each Transaction Document to which it is a party has been duly and
validly authorized and no additional corporate or organizational authorization
is required in connection with the execution, delivery and performance by
Sellers or IP Sellers of this Agreement and each of the Transaction Documents to
which it is a party.
18
5.3 Enforceability. This Agreement and each of the Transaction Documents
when executed and delivered by the Sellers and IP Sellers, assuming the due
authorization, execution and delivery of this Agreement by Buyer, will
constitute a valid and binding obligation of each Seller and IP Seller,
enforceable against each of them in accordance with its terms, except as may be
limited by the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws of general applicability relating to
or affecting creditors' rights and to general equity principles (whether
considered in a Proceeding in equity or at Law).
5.4 Non-Contravention. Except as disclosed on Schedule 5.4, the execution,
delivery and performance by each Seller and IP Seller of this Agreement and each
Transaction Document to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, does not (a) conflict with or
result in any breach of any of the provisions of, (b) constitute a default
under, (c) result in a violation of, (d) give any third party the right to
terminate or to accelerate any obligation under, (e) result in the creation of
any Encumbrance of any kind upon any of the Purchased Assets or the Purchased IP
Assets, or (f) require any authorization, Consent, approval, exemption or other
action by or notice to or filing with any court or other Governmental Body or
authority under (i) the certificate of incorporation, bylaws or similar
governing documents of the applicable Seller or IP Seller, (ii) any material
indenture, mortgage or loan agreements to which any Seller or IP Seller is
subject, (iii) any material license, permit certificate, accreditation or other
authorization of any Seller or IP Seller, (iv) subject to obtaining the
applicable Consents specifically identified on Schedule 5.5, any Assumed
Contract required to be set forth on Schedule 5.17(a) to which any Seller or IP
Seller is a party or by which the Purchased Assets or the Purchased IP Assets
are bound, or (v) assuming compliance with the matters set forth in Schedule
5.4, any material Law or Order or other restriction of any court or Governmental
Body to which any Seller or IP Seller is subject. Without limiting the
generality of the foregoing, except for those with Buyer pursuant hereto, there
are no agreements, options, commitments or rights with, of or to any Person to
purchase or otherwise acquire any of the material Purchased Assets, Purchased IP
Assets or any interests therein, except those entered into in the Ordinary
Course of Business for the sale of Inventory.
5.5 Consents. Other than in connection with the filing of a notification
and report form under and in compliance with Antitrust Laws or as disclosed in
Schedule 5.5, no Consent is required to be obtained by any Seller or IP Seller
from, and no notice or filing is required to be given by any Seller or IP Seller
to, or made by any Seller or IP Seller with any Governmental Body or any other
Person in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, except
where failure to obtain such Consent or to make such notice or filing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
5.6 Financial Statements.
(a) Attached hereto as Schedule 5.6 are: (i) the unaudited
consolidated historical income statements of the Businesses, as adjusted,
for the period ended December 31, 2005, and (ii) the unaudited consolidated
historical balance sheets of the Businesses, as adjusted, as of December
31, 2005 (collectively, (i) and (ii) the "Financial Statements"). Such
historical balance sheet, as adjusted, as of December 31, 2005 is referred
to herein as the "Most Recent Balance Sheet."
19
(b) The Financial Statements have been consolidated from the books and
records of the Sellers, which are kept by the Sellers in the Ordinary
Course of Business. The Financial Statements of the Sellers have been
prepared in accordance with the accounting principles, policies and
practices described in Schedule 4.3(a), and except as otherwise noted
therein, in accordance with GAAP, consistently applied, and are accurate
and complete in all material respects, are consistent with the books and
records of Sellers (which, in turn, are accurate and complete in all
material respects), and present fairly in all material respects the
financial condition of the Businesses as of the date thereof and the
operating results of the Businesses for the same period covered thereby.
(c) the statements of cash flows of the Businesses for the period from
January 1, 2005 through December 31, 2005, if prepared and provided to
Buyer, would not show a materially different financial condition of the
Businesses than shown by the Financial Statements, except for the impact of
movements in toluene inventory and payables.
5.7 Facilities.
(a) Schedule 5.7 contains a complete and accurate list of all real
property leased or owned by any Seller relating to the Businesses and
identifies each parcel of real property as being owned or leased, as the
case may be. All Facilities are in reasonable condition and repair
(ordinary wear and tear excepted) for comparable facilities in the industry
and in sufficient condition for the operation of the Businesses as
currently conducted and, to Sellers' Knowledge, except for the Permitted
Encumbrances and as set forth on Schedule 5.7(a), there are no facts,
conditions or deficiencies affecting any Facility which would, individually
or in the aggregate, interfere in any material respect with the use or
occupancy of any Facility in the operation of the Businesses.
(b) Each Seller has good and marketable fee simple title to the Owned
Real Property insurable as such at customary rates, free and clear of all
Encumbrances other than Permitted Encumbrances, and Encumbrances which will
be removed by Sellers or IP Sellers in connection with or prior to the
Closing and for which Buyer will not have any Damages relating to the
removal thereof. Each Seller, as applicable, enjoys peaceful and
undisturbed possession of the Owned Real Property owned by such Seller.
Except for Permitted Encumbrances and as set forth in Schedule 5.7(b),
there are no outstanding: (i) leases, subleases, licenses, concessions or
other agreements pursuant to which Sellers have granted any Person the
right to use or occupy any material portion of any Owned Real Property; or
(ii) options or rights of first refusal pursuant to which Sellers have
granted any Person the right to purchase, lease or use any Owned Real
Property or any material portion thereof.
(c) Except as set forth in Schedule 5.7(c), (i) the Real Property
Leases are in full force and effect and constitute valid and binding
obligations of the applicable Seller party thereto and, to Sellers'
Knowledge, the other parties thereto, and (ii) the applicable Seller is not
in default in any material respect under any of the Real Property Leases.
Sellers have furnished or made available in the online data room to Buyer
with true and correct copies of each Real Property Lease, together with all
material amendments
20
thereto. No Seller has received any written notice of cancellation or
termination or any written notice of default under any Real Property Lease.
Sellers' possession and quiet enjoyment of the Leased Real Property has not
been disturbed, and to Sellers' Knowledge, there are no disputes with
respect to any Real Property Lease. No security deposit or portion thereof
deposited with respect to the Real Property Leases has been applied in
respect of a breach or default of such Real Property Lease without being
redeposited in full. Sellers do not owe, and will not owe in the future,
any brokerage commissions or finder's fees with respect to any Real
Property Lease. The other party to any Real Property Lease is not an
Affiliate of any of the Sellers. Except as set forth on Schedule 5.7(c),
Sellers have not subleased, licensed or otherwise granted any Person the
right to use (including by way of a concession or similar agreement) or
occupy any Leased Real Property or any portion thereof and Sellers have not
collaterally assigned or granted any other security interest in any Real
Property Lease, except for Permitted Encumbrances. Except as set forth on
Schedule 5.7(c), there are no Encumbrances on the estate or interest
created by each respective Real Property Lease, except for the Permitted
Encumbrances.
(d) Except as set forth in Schedule 5.7(d), all of the Facilities are
supplied with utilities (including water, sewage disposal, electricity, gas
and telephone) and other services necessary for the operation of such
Facility as currently operated.
5.8 Title to Assets; Sufficiency of Assets.
(a) Except as set forth in Schedule 5.8(a), Sellers have good and
valid title to, or a valid leasehold interest in, all of the Purchased
Assets. The Purchased Assets are free and clear of any Encumbrances other
than the Permitted Encumbrances, and Encumbrances which will be removed by
Sellers or IP Sellers in connection with or prior to the Closing and for
which Buyer will not have any Damages relating to the removal thereof.
(b) The services and products provided pursuant to the Closing
Documents together with the Purchased Assets, the Purchased IP Assets and
the Licensed IP are all of the assets, property, rights, titles and
interests, whether tangible or intangible, real or personal, that are
necessary for the conduct of the Businesses in substantially the same
manner that they are currently being operated.
(c) Except as set forth on Schedule 5.8(c), no Seller or IP Seller has
any Subsidiary that is not a Party to this Agreement which owns any assets,
properties, rights, titles and interests (of any kind and nature including
by contract or otherwise) that are primarily used in the Businesses.
5.9 Condition of Purchased Assets. Each item of machinery and equipment and
other material tangible assets (whether owned or leased) included in the
Purchased Assets is in reasonable condition and repair (ordinary wear and tear
excepted) for comparable assets in the industry and in sufficient condition for
the operation of the Businesses as currently conducted.
21
5.10 Accounts Receivable. The Accounts Receivable (i) arose from bona fide
transactions in the Ordinary Course of Business, and (ii) represent valid and
binding obligations of the account debtors. (For the avoidance of doubt, this
representation is not intended as a warranty or guarantee of collectability of
any of the Accounts Receivable.) Except as set forth on Schedule 5.10, no Person
has any Encumbrances on such Accounts Receivables or any part thereof, and,
other than agreements which set forth (or are substantially similar to) the
Businesses' standard terms and conditions of sale, no binding agreement for
deduction, free goods, discount or other deferred price or quantity adjustment
has been made with respect to any such Accounts Receivable.
5.11 Inventory. Subject to the aggregate reserves for obsolete or unusable
Inventory and other customary inventory reserves reflected in the Most Recent
Balance Sheet, which were determined in accordance with the accounting
principles, policies and practices described in Schedule 4.3(a), and except as
otherwise noted therein in accordance with GAAP, consistently applied, all
Inventory reflected on the Most Recent Balance Sheet is of a quality and
quantity usable and, with respect to finished goods, saleable, in the Ordinary
Course of Business.
5.12 Taxes. Except as disclosed in Schedule 5.12:
(a) Sellers have filed or caused to be filed on a timely basis all Tax
Returns with respect to the Purchased Assets or the operation of the
Businesses that are or were required to be filed pursuant to applicable
Laws. All such Tax Returns and reports filed by such Seller are true,
correct and complete in all material respects. Sellers have paid, or made
provision for the payment of, all Taxes that have or may have become due
for all periods covered by such Tax Returns or otherwise, or pursuant to
any assessment received by Sellers, except such Taxes, if any, that are
being contested in good faith. Sellers are not currently the beneficiary of
any extension within which to file any Tax Return with respect to the
Purchased Assets or Purchased IP Assets.
(b) All Taxes that Sellers are or were required by Law to withhold,
deduct or collect with respect to the employees of the Businesses have been
duly withheld, deducted and collected and, to the extent required, have
been paid to the proper Governmental Body or other Person.
(c) Sellers have not made any payments, are not obligated to make any
payments, and are not a party to any agreement that under certain
circumstances could obligate them to make any payments, in each case with
respect to the Businesses that would not be deductible under Code Section
280G or subject to withholding under Code Section 4999.
(d) Sellers are not a party to any Tax allocation or sharing
agreement. Sellers do not have any liability for the Taxes of any Person
(other than a Seller) under Treasury Regulation Section 1.1502-6 (or
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
22
(e) There are no material disputes and no actual or proposed Tax
deficiencies, assessments or adjustments with respect to the Businesses or
any assets or operations of Sellers with respect to the Businesses.
5.13 Employee Benefits.
(a) Set forth in Schedule 5.13(a) is a complete and correct list of
all current "employee benefit plans" as defined by Section 3(3) of ERISA,
all specified fringe benefit plans as defined in Code Section 6039D, and
all other bonus, incentive compensation, deferred compensation, profit
sharing, stock option, stock appreciation right, stock bonus, stock
purchase, employee stock ownership, savings, severance, change-in-control,
supplemental unemployment, layoff, salary continuation, retirement,
pension, health, life insurance, disability, accident, group insurance,
vacation, holiday, sick leave, fringe benefit or welfare plan, and any
other employee compensation or benefit plan, agreement, policy, practice,
commitment or contract (whether qualified or nonqualified, currently
effective or terminated) and any trust, escrow or other agreement related
thereto that: (i) is maintained or contributed to by such Seller, or with
respect to which such Seller has or may have any Liability; and (ii)
provides benefits, or describes policies or procedures applicable to any
current or former director, officer, employee or service provider of such
Seller, or the dependents of any thereof, regardless of how (or whether)
Liabilities for the provision of benefits are accrued or assets are
acquired or dedicated with respect to the funding thereof (collectively,
the "Sellers' Benefit Plans"). Each Sellers' Benefit Plan from which Buyer
shall assume any Liability, as set forth in Article 8 or otherwise in this
Agreement, shall be referred to as an "Assumed Employee Plan." Schedule
5.13(a) identifies as such any employee benefit plan that is (w) a "Defined
Benefit Plan" (as defined in Section 3(35) of ERISA); (x) a plan intended
to meet the requirements of Section 401(a) of the Code; (y) a
"Multiemployer Plan" (as defined in Section 3(37) of ERISA); or (z) a plan
subject to Title IV of ERISA, other than a Multiemployer Plan. Also set
forth in Schedule 5.13(a) is a complete and correct list of any other
corporation or trade or business currently controlled by, controlling or
under common control with any Seller (within the meaning of Section 414 of
the Code or Sections 4001(a)(14) or 4001(b) of ERISA) ("ERISA Affiliate")
and each Defined Benefit Plan or Multiemployer Plan which each such ERISA
Affiliate currently maintains, contributes to or has any liability with
respect to. Sellers have delivered to Buyer complete and correct copies of
the plan documents, if the plan is written, and summary plan descriptions
for those Sellers' Benefit Plans that are subject to the reporting
requirements of ERISA, the most recent determination letter received from
the IRS for those Sellers' Benefit Plans that are "qualified" under Section
401(a) of the Code, the most recent annual report (Form 5500, with all
applicable attachments) for those Sellers' Benefit Plans that are subject
to the reporting requirements of ERISA, and all related trust agreements,
insurance contracts, and other funding arrangements that implement each
Sellers' Benefit Plan.
(b) No Purchased Assets or Purchased IP Assets are subject to any
Encumbrance under Code Section 401(a)(29), ERISA Section 302(f), Code
Section 412(n), or ERISA Section 4068 or arising out of any action filed
under ERISA. Neither Sellers, nor any ERISA Affiliate, has directly or
indirectly acted in any manner or
23
incurred any Liability with respect to any of the Sellers' Benefit Plans
which has or could give rise to any Encumbrance or claim against any of the
Purchased Assets, or which could result in any Liability to Buyer, whether
arising out of the establishment, operation, administration or termination
of such Sellers' Benefit Plans or the transactions contemplated by this
Agreement.
(c) Except as set forth in Schedule 5.13(c), Sellers have not taken
any action which may result in Buyer being a party to, or bound by, any of
Sellers' Benefit Plans, and, except as set forth in Article 8, Buyer will
have no Liability under any of Sellers' Benefit Plans following the
consummation of the transactions contemplated hereby.
(d) Sellers have maintained workers' compensation coverage as required
by applicable state Law through purchase of insurance and not by
self-insurance or otherwise except as disclosed to Buyer in Schedule
5.13(d).
(e) Except for the continuation coverage requirements of COBRA and
except as set forth in Schedule 5.13(e), no Seller has obligations or
potential Liability for benefits to employees, former employees or their
respective dependents following termination of employment or retirement
under any of the Sellers' Benefit Plans that are "employee welfare benefit
plans" as defined in Section 3(1) of ERISA ("Employee Welfare Benefit
Plans") and Sellers have retained the right under any such plan set forth
on Schedule 5.13(e) to modify or terminate such plan in the Sellers' sole
discretion without incurring any Liability.
(f) Except as set forth on Schedule 5.13(f), each Assumed Employee
Plan (and each related trust, insurance contract or fund) has been
maintained, funded and administered in all material respects in accordance
with its terms and the terms of any applicable collective bargaining
agreement and complies in form and in operation with all applicable
requirements of ERISA, the Code and other applicable laws in all material
respects. No Assumed Employee Plan is a Multiemployer Plan or a Defined
Benefit Plan.
(g) With respect to each Assumed Employee Plan, all contributions
(including all employer contributions and employee salary reduction
contributions) that are due have been made within the time periods
prescribed by ERISA and the Code, and all contributions for any period
ending on or before the Closing Date that are not yet due have been made or
properly accrued. All premiums or other payments for all periods ending on
or prior to the Closing Date have been paid or properly accrued with
respect to each Assumed Employee Plan that is an Employee Welfare Benefit
Plan (as defined in Section 3(1) of ERISA). No Assumed Benefit Plan has any
material unfunded liability that is not taken into account in determining
the Closing Statement and are included in the calculation of Working
Capital.
(h) With respect to each Assumed Benefit Plan, (i) there have been no
non-exempt "prohibited transactions" (as defined in Section 406 of ERISA or
Section 4975 of the Code), (ii) no "fiduciary" (as defined in Section 3(21)
of ERISA) has any liability for breach of fiduciary duty or any other
failure to act or comply in connection
24
with the administration or investment of the assets of such Assumed Benefit
Plan and (iii) no action, investigation, suit, proceeding, hearing or claim
with respect to the assets thereof (other than routine claims for benefits)
is pending or, to Sellers' Knowledge, threatened.
(i) Except as set forth on Schedule 5.13(i), none of the Assumed
Benefit Plans provides any separation, severance, termination or similar
benefit or accelerate any vesting schedule or alter any benefit structure
solely as a result of a change in control of ownership within the meaning
of any Assumed Benefit Plans or Section 280G of the Code.
5.14 COmpliance with Laws.
(a) Except as disclosed in Schedule 5.14, the Businesses are being
operated in compliance in all material respects with all Laws applicable to
the operation of the Businesses or the use of the Purchased Assets,
Purchased IP Assets or the Licensed IP, including all such Laws in
connection with the Owned Real Property and the Leased Real Property,
except where any failure to comply would not, individually or in the
aggregate, reasonably be expected to result in Losses to Buyer greater than
$100,000.
(b) This Section 5.14 does not apply to Taxes, Employee Benefits and
Labor Matters: Employees which are exclusively covered in the
representations and warranties set forth in Sections 5.12, 5.13 and 5.18,
respectively.
5.15 Legal Proceedings. Except as set forth in Schedule 5.15, there is no
(and, during the two (2) years preceding the date hereof, there has been no
(with respect to the past two years only) material) pending or, to Sellers' and
IP Sellers' Knowledge, threatened Proceeding against or affecting the Businesses
or any of the Purchased Assets, Purchased IP Assets or Licensed IP or that
challenges, or that will have the effect of preventing, delaying or making
illegal, any of the transactions contemplated by this Agreement and to Seller's
and IP Sellers' Knowledge, there is no reasonable basis for such Proceedings.
Sellers and IP Sellers are not subject to or bound by any outstanding Orders,
judgments or decrees of any court or governmental entity with respect to the
Businesses, the Purchased Assets, the Purchased IP Assets, the Licensed IP or
the Assumed Liabilities.
5.16 Absence of Certain Changes and Events. Except as set forth in Schedule
5.16, since September 30, 2005, with respect to the Businesses, the Purchased
Assets, the Purchased IP Assets, Licensed IP, and the Assumed Liabilities, there
has not been any Material Adverse Effect, Sellers and IP Sellers have conducted
the Businesses only in the Ordinary Course of Business and, with respect to the
Businesses, the Purchased Assets, the Purchased IP Assets, Licensed IP, and the
Assumed Liabilities, there has not been any:
(a) employment or severance Contract entered into with any director,
officer or employee of a Business, or a payment or increase of any bonus,
salary or other compensation of any director, officer or employee of a
Business for a Person whose annual compensation is in excess of $100,000;
(b) adoption of or amendment to any of Sellers' Benefit Plans;
25
(c) material damage to or destruction or loss of any Purchased Asset
with a replacement value in excess of $100,000, whether or not covered by
insurance;
(d) sale, lease, assignment, transfer, Encumbrance or other
disposition of any asset except for assets sold for less than $25,000 and
the sale of Inventory in the Ordinary Course of Business;
(e) except in the Ordinary Course of Business, waiver or release of
any material right or claim of any Seller or IP Seller relating to the
Businesses or the Purchased Assets, Purchased IP Assets or Licensed IP;
(f) any change in the accounting methods affecting the Purchased
Assets, Purchased IP Assets or the Businesses, other than those required by
GAAP which have been disclosed in writing to Buyer;
(g) mortgage, pledge or other Encumbrance of any material Purchased
Asset;
(h) single capital expenditure or written commitment therefore that is
in excess of $500,000 (other than expenditures made in accordance with the
capital expenditure budget set forth in Schedule 5.16(h));
(i) written Contract executed by any Seller or IP Seller to do any of
the foregoing other than as expressly provided for herein;
(j) except in the Ordinary Course of Business, payment of trade or
account payables or, delay or postponement of the payment of any trade or
accounts payable or commissions or any other Liability or litigation or
agreed or negotiated with any party to extend the payment date of any trade
or accounts payable or commission or any other Liability or accelerated the
collection of (or discounted) any accounts or notes receivable (whether
billed or unbilled) or any deferred revenue or taken any actions or omitted
to take any actions with the intent or the purpose of modifying the Working
Capital as of the Closing;
(k) except in the Ordinary Course of Business, delay in cutting any
checks;
(l) except in the Ordinary Course of Business, engagement in any
promotional sale, discount, price reduction or other activity that has or
will have the effect of accelerating to pre-Closing periods sales that
otherwise would be expected to occur in post-Closing periods;
(m) changed or modified its standard warranty and indemnity or other
terms and conditions of purchase, sale, manufacture, and distribution
provided to the Businesses' customers and suppliers in the Ordinary Course
of Business; or
(n) entrance into an amendment or termination of any Contract that,
but for such amendment or termination would be, an Assumed Contract that
would be required to be disclosed in Schedule 5.17(a) or, other than in the
Ordinary Course of Business, any
26
other Contract that is, or but for such amendment or termination, would be
required to be disclosed in Schedule 5.17(a).
5.17 Contracts; No Defaults.
(a) Schedule 5.17(a) contains a list of Contracts of Sellers and IP
Sellers used by the Businesses in the following categories, and identifies
with an asterisk each such Contract which is an Assumed Contract:
(i) all Contracts with Transferred Employees that have a
remaining unexpired term of at least one year and require payment of
more than $100,000 annually;
(ii) other than for the provision of goods or services in the
Ordinary Course of Business pursuant to one-time purchase orders, all
Contracts that require payment by Sellers or IP Sellers of, more than
$500,000 annually, which are not cancelable on thirty (30) calendar
days notice;
(iii) any Contract that contains a non-compete covenant or
similar provision that restricts Buyer in its conduct of the
Businesses following the Closing;
(iv) all Contracts that require payment of commission or similar
payments in excess of $150,000 annually;
(v) all evidences of Indebtedness which either (i) Sellers do not
intend to remain outstanding following the Closing or (ii) which Buyer
may be required to arrange for substitution of following the Closing;
(vi) all evidences of Indebtedness pursuant to which any Seller
has provided credit (excluding credit provided by a Seller in the
Ordinary Course of Business) to purchasers of its products;
(vii) any lease or sublease under which any Seller is a lessee of
or holds or operates any property, real or personal, owned by any
other Person where the lease or sublease provides for annual payments
in excess of $150,000;
(viii) any Contract under which any Seller is lessor of or
permits any third party to hold or operate the Purchased Assets;
(ix) all Contracts that are settlement, conciliation or similar
agreements pursuant to which any of the Businesses will be required,
as of or after the date hereof, to pay consideration in excess of
$150,000;
(x) all bonus, or deferred compensation plans or similar
Contracts with any Transferred Employee for payments in excess of
$25,000 or any severance Contract with any Transferred Employee;
27
(xi) all Contracts with any Transferred Employee providing for
the payment of any cash or other compensation or benefits upon the
sale of the Businesses;
(xii) all material licenses to which any Seller or IP Seller is a
party with respect to any Purchased IP Assets (other than commercially
available off-the-shelf software licenses solely for internal use of
Sellers or IP Sellers) and all other material Contracts affecting the
Sellers' or IP Sellers' ability to use or disclose the Purchased IP
Assets;
(xiii) all nondisclosure or confidentiality Contracts, other than
with respect to employees of Sellers;
(xiv) all contracts relating to the marketing, sale, advertising
or promotion of its products not terminable on sixty (60) days notice
or requiring annual payments in excess of $100,000;
(xv) except for Contracts which provide a warranty and indemnity
which are not materially inconsistent with the standard warranty and
indemnity and other terms and conditions of purchase, sale,
manufacture, and distribution provided to the Businesses' customers
and suppliers in the Ordinary Course of Business and which could not
result in losses to Buyer in excess of $240,000, all Contracts
providing a warranty or similar guarantee with respect to products
purchased, sold, manufactured, or distributed or Contracts providing
for indemnification or similar protection under which such Seller is
obligated to indemnify against product warranty or infringement or
similar claims;
(xvi) other than for the provision of goods or services in the
Ordinary Course of Business pursuant to one-time purchase orders, any
material Contracts with Material Customers; The Parties agree that the
disclosure provided by this Section 5.17(a)(xvii) will not be at the
signing but instead will be provided within twenty-one (21) days of
the date hereof.
(xvii) other than for the provision of goods or services in the
Ordinary Course of Business pursuant to one time purchase orders, all
Contracts between Sellers and suppliers of raw materials, utilities or
logistic services relating to the operations of the Business pursuant
to which Sellers reasonably expect payment thereunder to exceed
$500,000 in calendar year 2006, which are not cancelable on thirty
(30) calendar days notice;
(xviii) any powers of attorney executed by or on behalf of any
Seller; and
(xix) any other Contracts the absence of which would have a
Material Adverse Effect.
(b) Each Assumed Contract required to be disclosed in Schedule
5.17(a): (i) is a valid and binding and enforceable agreement of the
Sellers that is a party thereto and is in full force and effect (and will
continue as such immediately following the
28
consummation of the transactions contemplated hereby); (ii) no Seller is in
breach or default in any material respect under any Assumed Contract
required to be disclosed in Schedule 5.17(a), and to Sellers' Knowledge, no
event which, upon giving of notice or lapse of time or both, would
constitute a breach or default has occurred. No Seller has received any
written notice of cancellation or termination or any written notice of
default under any Assumed Contract required to be disclosed in Schedule
5.17(a). Sellers have furnished to Buyer true and correct copies of each of
the Assumed Contracts set forth in Schedule 5.17(a), together with all
amendments thereto. Except as specifically disclosed in Schedule 5.17(a),
(i) Sellers and, and to Sellers' Knowledge, the other party thereto have
performed in all material respects all obligations required to be performed
by such Person under the Assumed Contracts required to be disclosed in
Schedule 5.17(a) (ii) to Sellers' Knowledge, there is no breach by any
party to any Assumed Contract required to be listed on Schedule 5.17(a),
and (iii) Sellers have not assigned, delegated or otherwise transferred to
any Person of its rights, title or interest under any Assumed Contract
required to be disclosed in Schedule 5.17(a).
5.18 Labor Matters; Employees. Except as disclosed in Schedule 5.18:
(a) No Seller is a party to any labor or collective bargaining
agreement with respect to employees of the Businesses and, to Sellers'
Knowledge, there are no organizing or decertification activities (including
any demand for recognition or certification proceedings pending or
threatened to be brought or filed with the National Labor Relations Board
or other labor relations tribunal) involving any of the employees of the
Businesses;
(b) There are no strikes, lockouts or other work stoppages due to
labor disagreements pending against any Seller or, to Sellers' Knowledge,
threatened against or involving the employees of the Businesses, and no
such actions have occurred within the past two (2) years;
(c) There is no unfair labor practice charge or complaint pending
against any Seller before the National Labor Relations Board or any
comparable state, local or foreign agency with respect to its Business, and
there are no material written grievances currently being asserted against
any Seller with respect to its Business;
(d) Each Seller is in compliance in all material respects with all
Laws relating to the employment of labor;
(e) Schedule 5.18 contains a true and complete list of all employees
of Sellers dedicated solely to the Businesses and identifies the primary
location of each such employee's employment, and a separate list of other
employees of Sellers whose work is primarily related to the Businesses, and
identifies the primary location of each such employee's employment. The
Transferred Employees, together with those individuals who will be
providing services to Buyer pursuant to the Transition Services Agreement
are all of the individuals necessary to operate the Businesses in
substantially the same manner that they are currently being operated.
29
(f) Subject to Section 8.1(e), with respect to this transaction, any
notice required of any Seller under any Law or collective bargaining
agreement has been given, and all of Sellers' bargaining obligations with
respect to this transaction with any employee representative have been, or
prior to the Closing will be, satisfied. Within the past two years, none of
the Businesses has implemented any plant closing or layoff of employees
that could implicate the WARN Act (as defined herein), and no such action
will be implemented with respect to the Transferred Employees without
advance notification to Buyer.
5.19 Permits. Sellers and IP Sellers hold all material Permits currently
required to be held by them for the conduct of the Businesses as currently
conducted. Schedule 5.19 will be provided within fourteen (14) days of the date
hereof, setting forth a list of all Permits (including Permits required under
Environmental Law or Occupational Safety and Health Law) which are necessary to
allow Buyer to own and operate the Businesses and the Purchased Assets and
Purchased IP Assets as currently being operated from and after the Closing, and
indicating next to each such Permit whether such Permit will be transferred to
Buyer as part of the Purchased Assets. Sellers and IP Sellers are in compliance
in all material respects with all terms and conditions of any such Permits. To
Sellers' Knowledge and IP Sellers' Knowledge, except as set forth on Schedule
5.19, there has been no commencement of any process by or before any
Governmental Body to suspend, revoke, materially modify (other than
modifications made in connection with a normal renewal of an expiring Permit) or
cancel any such material Permits, or any claims by or before any Governmental
Body alleging or investigating any violations of Law.
5.20 Brokers or Finders. Except for KeyBanc Capital Markets, the fees of
which are the sole responsibility of Sellers or its Affiliates, Sellers and IP
Sellers have not incurred any Liability for brokerage or finders' fees or
agents' commissions or other similar payments in connection with the sale of the
Businesses, the Purchased Assets, the Purchased IP Assets or the transactions
contemplated by this Agreement.
5.21 Product Warranty. Except as set forth in Schedule 5.21, no Seller has
received any written claims, or to Seller's Knowledge, oral claims for Product
Liability or breach of warranty (whether or not covered by insurance) including
the Liability assumed by Buyer pursuant to Section 3.1(d), nor has any Seller
given written notice to any customer of any defect or deficiency with respect to
such Seller's products prior to the Closing. To Seller's Knowledge, each product
sold or delivered and each service rendered by Sellers has been in conformity in
all material respects with all applicable material contractual commitments and
all express and implied warranties, and Sellers have no material liability or
obligation for replacement or repair thereof or other damages in connection
therewith, subject only to the reserve for product and service warranty claims
set forth on Schedule 5.21. The reserve for product and service warranty claims
set forth on Schedule 5.21 (including the Liability assumed by Buyer pursuant to
Section 3.1(d)) was established in accordance with GAAP, consistently applied.
5.22 Intellectual Property Assets.
(a) Schedule 5.22(a) is a complete and accurate list of all registered
Intellectual Property owned by an IP Seller or a Seller and used in the
operation of the Businesses as currently conducted and, to IP Sellers'
Knowledge and Sellers' Knowledge,
30
there is no registered, or material (except Purchased Trade Secrets or
Licensed IP), Intellectual Property owned by an IP Seller or a Seller and
used in the operation of the Businesses that is not listed on Schedule
5.22(a). The Purchased IP Assets and the Licensed IP consist of all the
Intellectual Property used in the operation of the Businesses as currently
conducted. Except as set forth in Schedule 5.22(a), an IP Seller or a
Seller, as applicable, owns all right, title and interest in and to the
Purchased IP Assets and the Licensed IP, free and clear of all Encumbrances
(other than Permitted Encumbrances). Except as set forth in Schedule
5.22(a), the Purchased IP Assets (except Purchased Trade Secrets) have been
duly registered with, filed in or issued by, as the case may be, the United
States Patent and Trademark Office or such other Governmental Body,
domestic or foreign. Except as set forth on Schedule 5.22(a), no written
claim, or to IP Sellers' Knowledge and Sellers' Knowledge, oral claim by
any third party contesting the validity, enforceability, use or ownership
of any of the Purchased IP Assets or Licensed IP has been made, is
outstanding, or to IP Sellers' Knowledge and Sellers' Knowledge, is
threatened. Each of the IP Sellers' and Sellers' execution of, and
performance under, the License Agreement shall not conflict with any
Contract.
(b) To IP Sellers' Knowledge and Sellers' Knowledge, the Purchased IP
Assets and the Licensed IP have not been infringed or misappropriated by
any third party.
(c) The conduct of the Businesses has not infringed, misappropriated
or otherwise conflicted with any Intellectual Property of any third party,
and Sellers and IP Sellers have taken commercially reasonable steps to
avoid such infringement, misappropriation and conflict. Except as set forth
on Schedule 5.22(c), IP Sellers and Sellers have not received any written,
or to IP Sellers' Knowledge and Sellers' Knowledge, oral notices of any
infringement or misappropriation by any third party, including any demand
or request that any IP Seller or Seller license rights from a third party
in a situation where infringement or misappropriation is suggested or
implied.
(d) The loss or expiration of any single Purchased IP Asset would not
be expected to have a Material Adverse Effect, and no such loss or
expiration (other than expiration pursuant to its terms) is pending or
threatened.
(e) IP Sellers and Sellers have taken commercially reasonable
precautions to protect the secrecy, confidentiality and value of Purchased
IP Assets. The documentation relating to each Purchased Trade Secret is
accurate in all material respects and sufficient to identify and allow its
use in the operation of the Businesses as currently operated. To IP
Sellers' Knowledge and Sellers' Knowledge, the Purchased Trade Secrets are
not part of the public knowledge or literature, and to IP Sellers'
Knowledge and Sellers' Knowledge, have not been used, divulged or
appropriated either for the benefit of any Person (other than IP Sellers or
Sellers) or to the detriment of any IP Seller or Seller. To IP Sellers'
Knowledge and Sellers' Knowledge, no Purchased Trade Secret is subject to
any adverse claim or has been challenged or threatened in any way.
(f) Except for the assets, properties, rights, title and interests
used by Sellers or their Affiliates to provide the services required to be
provided under the Closing Documents to Buyer and except as set forth on
Schedule 5.22(f), no IP Seller has any
31
assets, properties, rights, titles or interests, of any kind or nature,
owned, licensed or leased that are primarily used in the Businesses and are
not Intellectual Property.
5.23 Absence of Undisclosed Liabilities. Except as set forth on Schedule
5.23, Sellers have no Liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due and regardless of when
or by whom asserted) in excess of $125,000 relating to the Businesses at or as
of the Closing Date or arising out of transactions entered into at or prior to
the Closing Date, or any action or inaction at or prior to the Closing Date,
except for (i) obligations under Contracts described on Schedule 5.17(a) or
under contracts and commitments entered into in the Ordinary Course of Business
which are not required to be described on Schedule 5.17(a) (but not liabilities
for breaches of any such Contracts occurring on or prior to the Closing Date),
(ii) Liabilities reflected on the liability side of the Most Recent Balance
Sheet, (iii) Liabilities which have arisen after the date of the Most Recent
Balance Sheet in the Ordinary Course of Business (none of which is a Liability
for breach of contract, infringement or except for those assumed pursuant to
Section 3.1(f), tort claim or lawsuit); and (vi) other Liabilities to the extent
expressly disclosed in this Agreement or the Schedules attached hereto.
5.24 Insurance. Sellers have in place policies of insurance in amounts and
scope of coverage as set forth in Schedule 5.24. Each such policy listed in
Schedule 5.24 is in full force and effect and all premiums are currently paid in
accordance with the terms of such policy or accrued. To Sellers' Knowledge, the
insurance coverage of Sellers is customary for businesses of similar size
engaged in similar lines of business.
5.25 Names and Locations. Except as set forth on Schedule 5.25, since June
3, 2004, Sellers and IP Sellers have not used any name or names under which it
has invoiced account debtors, maintained records concerning its assets or
otherwise conducted business with respect to the Businesses, other than the
exact name under which it has executed this Agreement.
5.26 Customers and Suppliers. Schedule 5.26 attached hereto accurately sets
forth, with respect to each of the Businesses, a list of each such Business' top
fifteen (15) customers ("Material Customers") and suppliers ("Material
Suppliers") by volume of sales and purchases, respectively, for the fiscal
period ended December 31, 2005 and the fiscal years ended December 31, 2003 and
2004. Except as set forth on Schedule 5.26, Sellers have not received any
written notice, or to Sellers' Knowledge, oral notice, from any Material
Supplier of the Businesses to the effect that such Material Supplier will stop,
or materially decrease the rate of, or change the pricing terms and procedures
or other material terms by which it supplies materials, products or services to
Sellers with respect to the Businesses, and Sellers have not received any
written notice, or to Sellers' Knowledge, oral notice, from any Material
Customer of the Businesses to the effect that such Material Customer will stop,
materially decrease the rate of, or change the pricing terms and procedures or
other material terms by which it buys products or services from the Businesses.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as of the date hereof:
32
6.1 Organization. Buyer is a limited liability company duly organized,
validly existing and in good standing under the Laws of the State of Delaware.
Buyer has all requisite limited liability company power and authority to own and
operate its assets and to carry on its business as it is currently conducted.
6.2 Limited Liability Company Authority. Buyer has all necessary limited
liability company power and limited liability company authority to execute and
deliver this Agreement and each of the Transaction Documents to which it is a
party, and to perform its obligations hereunder and thereunder. The execution,
delivery and performance by Buyer of this Agreement and each of the Transaction
Documents to which it is party have been duly and validly authorized by all
requisite limited liability company action on the part of Buyer and no
additional limited liability company authorization is required in connection
with the execution, delivery and performance by Buyer of this Agreement and each
of the Transaction Documents to which Buyer is party.
6.3 Enforceability. This Agreement, and each of the Transaction Documents
when executed and delivered by Buyer, assuming the due authorization, execution
and delivery of this Agreement by Sellers and IP Sellers, and the other parties
hereto, if any, will constitute a valid and binding obligation of Buyer,
enforceable against it in accordance with its terms, except as may be limited by
the effect of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar Laws of general applicability relating to or affecting
creditors' rights and to general equity principles (whether considered in a
Proceeding in equity or at Law).
6.4 Consents. Other than in connection with the filing of a notification
and report form under and in compliance with Antitrust Laws or as disclosed in
Schedule 6.4, no Consent is required to be obtained by Buyer from, and no notice
or filing is required to be given by Buyer to, or made by Buyer with any
Governmental Body or any other Person in connection with the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby, except where failure to obtain such Consent or to make such
notice or filing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
6.5 Non-Contravention. Except as disclosed in Schedule 6.5, the execution,
delivery and performance by Buyer of this Agreement and each of the Transaction
Documents to which it is a party, and the consummation of the transactions
contemplated hereby and thereby, does not (a) conflict with or result in any
breach of any of the provisions of, (b) constitute a default under, (c) result
in a violation of, (d) give any third party the right to terminate or to
accelerate any obligation under, (e) result in the creation of any Encumbrance
of any kind upon any assets, or (f) require any authorization, Consent,
approval, exemption or other action by or notice to or filing with any court or
other Governmental Body or authority under: (i) the certificate of formation,
limited liability company agreement or other organizational documents of Buyer;
or (ii) assuming compliance with the matters set forth in Schedule 6.4, any
material Law or Order or other restriction of any court or Governmental Body to
which Buyer is subject.
6.6 Certain Proceedings. There is no pending or, to Buyer's knowledge,
threatened Proceeding against or affecting Buyer that challenges, or will have
the effect of preventing, delaying or making illegal, any of the transactions
contemplated by this Agreement.
33
6.7 Brokers or Finders. Buyer has not incurred any Liability for brokerage
or finders' fees or agents' commissions or other similar payments in connection
with the purchase of the Businesses, the Purchased Assets, the Purchased IP
Assets or the transactions contemplated by this Agreement.
6.8 Solvency and Related Matters. Buyer will be solvent immediately after
the Closing after giving effect to: (i) the transactions contemplated by this
Agreement and the financing of those transactions; and (ii) any other
transactions contemplated by Buyer on or after such date which would be taken
into account in determining whether any of the transactions contemplated by this
Agreement were invalid or illegal under, in violation of, or can be set aside or
give rise to any award or damages, sanctions or other Liability against Sellers
or any of their Affiliates or Representatives under, applicable bankruptcy,
fraudulent conveyance, fraudulent transfer or other applicable Laws.
6.9 Financing. On the Closing Date, Buyer will have sufficient funds
available to enable it to pay the Purchase Price pursuant to the terms of this
Agreement and to pay and perform its obligations under this Agreement. Buyer
acknowledges and agrees that its obligations under this Agreement are not
subject to any condition regarding Buyer's ability to obtain financing for the
consummation of the transactions contemplated by this Agreement. Buyer has
delivered to Sellers true and complete copies of its financing commitments for
the transactions contemplated by this Agreement.
ARTICLE 7
COVENANTS
Sellers, IP Sellers and Buyer each covenant as follows:
7.1 Conduct of Business of the Sellers and the IP Sellers. Except in
connection with the transactions contemplated by this Agreement, and except as
permitted or required hereby or as Buyer may otherwise Consent to in writing,
from the date hereof through the Closing, Sellers and IP Sellers shall operate
the Businesses in the Ordinary Course of Business. Sellers and IP Sellers shall
use commercially reasonable efforts to: (i) keep available the services of the
employees of the Businesses; (ii) preserve intact the Businesses and their
relationships with customers, suppliers and others having business dealings with
the Businesses. From the date hereof until the Closing Date, Sellers and IP
Sellers shall not take any action or omit to take any action that would require
disclosure pursuant to Section 5.16 if each representation and warranty
contained herein were remade as of the time of such action or omission. Without
limiting the generality of the foregoing except as otherwise expressly
contemplated by this Agreement or with the prior written consent of Buyer, from
the date hereof until the Closing Date, each Seller and IP Seller shall: (i)
maintain appropriate levels of Inventory; (ii) maintain the Purchased Assets and
the Purchased IP Assets in reasonable condition and repair (ordinary wear and
tear excepted); (iii) except for modifications to existing policies in the
Ordinary Course of Business, continue all existing policies of insurance (or
comparable insurance) in full force and effect and at least at such levels as
are in effect on the date hereof, up to and including the Closing (and, except
in the Ordinary Course of Business, not cancel any such insurance; (iv) not
enter into any Contract that, had it been entered into prior to the date hereof,
would have had to be disclosed on Schedule 5.17(a); (v) except in the Ordinary
Course of Business, not grant any
34
increase in the compensation payable or to become payable to any employee of
Sellers who will be a Transferred Employee; (vi) apply or continue prosecution
of applications already submitted for any Permits for the continued operation of
the Businesses (as currently being operated); and (vii) not agree to take any
action prohibited by this Section 7.1.
7.2 Access to the Businesses. From the date hereof through the Closing,
Sellers and IP Sellers shall allow Buyer and its Representatives to have
reasonable access to all of their properties, offices, books, contracts,
commitments and records, and financial (including all working papers) and
operating data and access to all personnel, representatives, accountants and
advisors relating to the Purchased Assets, the Purchased IP Assets, the Licensed
IP and the Businesses, during normal working hours, provided Buyer gives Sellers
or IP Sellers, as applicable, at least 48 hours advance written notice and such
access does not unreasonably interfere with the operation of any Sellers' or IP
Sellers' Businesses; provided, further, that any such access shall not include
any environmental or property testing. Sellers and IP Sellers shall furnish to
Buyer unaudited monthly consolidated balance sheets of the Businesses and the
related consolidated income statements of the Businesses and such other
financial reports as Buyer shall reasonably request (which the Sellers will use
reasonable commercial efforts to furnish within fifteen (15) days after the end
of each month) for each month between the date hereof and the Closing Date.
Following the execution of this Agreement, Buyer and its Representatives may
contact Xxx Xxxxxxxx, Xxxxx Xxxxxx and other employees of Sellers who will be
future members of Buyer's management team with regards to the negotiation of the
Closing Documents, matters relating to the Closing, and general preparations for
the transfer of the Purchased Assets and Purchased IP Assets from Sellers to
Buyer and the operation of the Businesses by Buyer following the Closing;
provided, that Buyer agrees and acknowledges nothing herein shall limit Xxx
Xxxxxxxx, Xxxxx Xxxxxx and other employees of Sellers obligations to Sellers
prior to the Closing; provided, further, that such access shall not unreasonably
interfere with the operation of any of Sellers' or IP Sellers' businesses.
7.3 Confidentiality Agreement. The Parties acknowledge and agree that the
Confidentiality Agreement made by Sun Capital Partners Group IV, LP (an
Affiliate of Buyer) dated August 31, 2005 (the "Confidentiality Agreement") and
any other confidentiality agreements dated prior to the date hereof by and
between Sun Capital Partners Group IV, LP and its Affiliates and Sellers and any
of their Affiliates shall be automatically terminated on the Closing Date.
Should the Closing not occur, the Confidentiality Agreement shall not be
terminated and each of the Parties and their Affiliates' obligations thereunder
shall remain outstanding. At the Closing, Sellers and IP Sellers shall assign to
Buyer all of their rights under all confidentiality agreements with prospective
bidders entered into in connection with the process leading to the sale of the
Business. In addition, Sellers and IP Sellers shall use their commercially
reasonable efforts to obtain the return or destruction as promptly as possible
of all confidential information delivered to prospective buyers, and will not
release any prospective buyers from their obligations under any such
confidentiality agreements.
7.4 Further Assurances. Upon the terms and subject to the conditions
contained herein, the Parties agree, both before and after the Closing, (i) to
use commercially reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable to
effect, consummate, make effective, confirm or evidence the transactions
contemplated by this Agreement, (ii) to execute any documents, instruments or
35
conveyances of any kind which may be reasonably necessary or advisable to carry
out any of the transactions contemplated hereunder (including to assist Buyer in
preserving or perfecting its rights in the Purchased Assets and the Purchased IP
Assets its ability to conduct the Businesses), and (iii) to cooperate with each
other in connection with the foregoing. Following the Closing, at Buyer's
written request, Sellers shall take all commercially reasonable action necessary
to sell, assign, convey, transfer and deliver to Buyer any Purchased Asset or
Purchased IP Asset not delivered to Buyer at the Closing. For a period of twelve
(12) months following the Closing, Sellers agree that subsequent to the Closing,
they shall refer all customer inquiries with respect to the Businesses to Buyer.
Sellers and IP Sellers shall, and shall cause their Representatives to,
cooperate in connection with any financing arrangement Buyer seeks in connection
with or following the Closing as may be reasonably requested by Buyer or Buyer's
lenders. Such cooperation by Sellers and IP Sellers shall include (i) executing
such agreements as are reasonably required by Buyer's lenders in connection with
any pledge, security interest in and otherwise grant of lien by Buyer to its
lenders including with respect to Purchased Assets under Sellers' or IP Sellers'
control; (ii) consenting to the assignment of any agreements including the
Purchase Agreement and the Closing Documents between Buyer, on the one hand, and
any Seller or IP Seller, on the other hand; (iii) providing such information and
assistance (including available financial statements and other financial data
relating to the Business) as Buyer's lenders may reasonably request and granting
such access to Buyer's lenders and their Representatives as may be reasonably
necessary for their due diligence; and (iv) executing such other documents or
instruments as Buyer's lenders may reasonably request. For avoidance of doubt,
Buyer's lenders includes any of Buyer's prospective lenders.
7.5 Governmental Notices and Consents; Permits.
(a) Promptly after the date hereof, Buyer, Sellers and IP Sellers
shall file all notifications, applications and reports required by Buyer,
Sellers and IP Sellers, including any filing under the HSR Act or any
Antitrust Law, and any filings required by each Antitrust Authority, and
shall take such other action that is required to be taken, with any other
Governmental Body or authority in connection with the transaction
contemplated by this Agreement.
(b) Buyer, Sellers and IP Sellers shall: (i) cooperate with each other
in connection with all filings required by the HSR Act or by any Antitrust
Law to be made by either Party to consummate the transaction contemplated
by this Agreement; (ii) supply promptly any additional information that may
be required by any Antitrust Authority in connection with a review of the
transaction contemplated by this Agreement; and (iii) coordinate and
cooperate with each other in exchanging information and providing
reasonable assistance as may be required to complete such filings and
supply any additional information that may be requested pursuant to any
Antitrust Law.
(c) Without limiting the foregoing, Buyer, Sellers and IP Sellers will
use commercially reasonable efforts to obtain all Consents and Orders of
federal, state and foreign regulatory bodies and officials which may be or
become necessary for the execution and delivery of, and the performance of
obligations pursuant to, this Agreement and any related ancillary
agreements, and will cooperate together in promptly seeking to obtain all
such Consents and Orders.
36
(d) Without limiting the foregoing, Buyer, Sellers and IP Sellers
shall use commercially reasonable efforts to resolve any objections, if
any, as may be asserted by any Antitrust Authority with respect to the
transactions contemplated by this Agreement. In connection therewith, if
any administrative or judicial Proceeding is instituted (or threatened to
be instituted) challenging any transaction contemplated by this Agreement
as violative of any Antitrust Law, and, if by mutual agreement Buyer,
Sellers and IP Sellers decide that litigation is in their best interests,
Buyer, Sellers and IP Sellers shall cooperate and use commercially
reasonable efforts to contest and resist any such action or Proceeding, and
to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other Order, whether temporary, preliminary or permanent,
that is in effect and that prohibits, prevents, or restricts consummation
of the transaction contemplated by this Agreement. Notwithstanding anything
else contained in this Agreement, neither Buyer, Sellers nor IP Sellers
shall be required to take or agree to take any other action or agree to any
limitation that could reasonably be expected to have a material adverse
effect on the business, assets, condition, results of operations or
prospects of either Party.
(e) Buyer shall pay all filing fees required in connection with all
filings of the Parties under the HSR Act and with any Antitrust Authority
with respect to the transactions contemplated by this Agreement.
(f) Prior to the Closing, Buyer will use commercially reasonable
efforts to obtain all Permits necessary to allow Buyer to own and operate
its businesses immediately following the Closing, and will cooperate with
Sellers in promptly seeking all such Permits. Prior to the Closing, Sellers
will use commercially reasonable efforts to obtain all Permits necessary to
allow Sellers to own and operate their respective businesses immediately
following the Closing, and will cooperate with Buyer in promptly seeking
all such Permits. Without limiting the foregoing, Sellers shall use
commercially reasonable efforts to assist Buyer in obtaining such Permits
including by providing Buyer with reasonable access, and the assistance of,
its employees who are knowledgeable about the actions required to obtain
any such Permits.
(g) Prior to the Closing Date, Sellers and IP Sellers shall take good
faith action to determine any actions, other than the receipt of the xxxx
of sale to be provided by Sellers to Buyer at the Closing, that must be
taken by either Buyer or Sellers to effect the transfer of any Permits
included in the Purchased Assets to Buyer. As soon as practical following
the date hereof, but at least fifteen (15) business days prior to the
Closing, Sellers and IP Sellers shall inform Buyer of Sellers' and IP
Sellers' good faith determination of any actions, except the receipt of the
xxxx of sale to be provided by Sellers to Buyer at the Closing, that must
be taken by either Buyer or Sellers to effect such transfer.
7.6 Efforts. Each of the Parties agrees to use commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, and to assist and cooperate with the other Parties hereto in doing all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement, including: (a) the obtaining of all necessary Consents and Permits
from third parties; (b) negotiating final and execution versions of the Closing
Documents; and (c) the defending of
37
any lawsuits or any other legal Proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any temporary restraining Order entered by any
court or administrative authority vacated or reversed.
7.7 Notification.
(a) Between the date of this Agreement and the Closing Date, Sellers
will give prompt written notice to Buyer of the occurrence, or failure to
occur, of any event, which occurrence or failure to occur would be
reasonably likely to cause any representation or warranty by Sellers or IP
Sellers contained in this Agreement to be untrue or inaccurate or which
would result in a breach of any covenant contained in this Agreement by
Sellers or IP Sellers, and, , except for purposes of determining the Buyer
Indemnified Person's right to indemnification pursuant to Article 12 and
Article 13, such disclosures shall amend and supplement the disclosure
schedules to Article 5 and Article 13 for all purposes hereof including the
Closing condition in Section 9.1(a). For avoidance of doubt, all
disclosures made after the date hereof shall be disregarded, and shall not
be deemed to amend or supplement the disclosure schedules, for purposes of
determining the Buyer Indemnified Persons' right to indemnification set
forth in Article 12 and Article 13. For avoidance of doubt, the Parties
agree that the covenant set forth in the first sentence of this Section
7.7(a) shall terminate immediately following the Closing. For all purposes
of this Agreement, supplements to the Schedules specifically contemplated
by Section 5.17(a)(xvi) and the second sentence of Section 5.19 shall be
deemed for all purposes of this Agreement to be delivered on the date
hereof (and not on the date actually delivered) provided such supplement is
made within the time period set forth in Section 5.17(a)(xvi) and the
second sentence of Section 5.19.
(b) In the event such additional disclosures reveal facts or
circumstances that Buyer reasonably believes could result in indemnifiable
Damages under Article 12 and Article 13 equal to or exceeding $10,000,000
in the aggregate, Buyer shall have the right to terminate this Agreement
and such right to terminate shall be the sole and exclusive remedy of Buyer
with respect to such additional disclosures; provided that all procedural
requirements and claim limitations set forth in Article 12 and Article 13
(including the mini-basket and dollar thresholds set forth in Section 12.4
and Section 13.5) shall be disregarded. Buyer agrees to notify Sellers'
Representative of its determination that such additional disclosures reveal
facts or circumstances that could result in indemnifiable Damages under
Article 12 and Article 13 equal to or exceeding $10,000,000 promptly after
such determination.
7.8 Title Commitment and Survey.
(a) Prior to the date of this Agreement, Sellers delivered to Buyer a
survey map and legal description of each of the Owned Real Property and
Leased Real Property described in Schedule 2.1(e) (each a "Survey").
(b) Prior to the date of this Agreement, Sellers caused a title
company to examine title to the Owned Real Property and Leased Real
Property described in
38
Schedule 2.1(e) and to present to Buyer written commitments for owner's
policies of title insurance on the Owned Real Property and Leased Real
Property described in Schedule 2.1(e), on an American Land Title
Association form (each a "Title Commitment"), along with copies of all
Schedule B documents.
(c) Buyer shall have a period of ten (10) days following the date of
this Agreement to give Sellers' Representative notice ("Objection Notice")
of any encumbrances, easements, conditions, restrictions, covenants,
reservations, limitations, rights of way, encroachments or other matters
disclosed in the Title Commitment or Survey which are not defined as
Permitted Encumbrances (except subclause (e) of the definition of Permitted
Encumbrances set forth in Section 16), and which are reasonably
objectionable to Buyer ("Title Defect"). The applicable Seller has no
obligation to cure any Title Defect (other than a Title Defect or other
title matter which is a lien for the payment of money only that can be
removed by the payment of a definite sum or money, all of which will be
satisfied at the Closing). If Sellers elect not to cure or remove any other
Title Defect within thirty (30) days following receipt of the Objection
Notice, Buyer shall have the right, at its sole option, to: (i) waive the
Title Defect which such Seller has not removed or cured and accept title to
the property subject to the Title Defect; or (ii) terminate this Agreement
pursuant to Section 10.1(a). If Sellers elect to cure or remove a Title
Defect within thirty (30) days following receipt of the Objection Notice,
Sellers may reasonably (for a period not to exceed fifteen (15) days)
extend the Closing Date as necessary to cure or remove such Title Defect.
Encumbrances that are (i) not objected to by Buyer, (ii) waived by Buyer,
or (iii) cured or removed by Sellers shall be deemed Permitted
Encumbrances.
(d) Notwithstanding the foregoing, Buyer acknowledges that Sellers
have the right, in connection with the conduct of any environmental
remediation projects, to implement deed restrictions on the Owned Real
Property and the Leased Real Property described in Schedule 2.1(e) at any
time prior to the Closing, to the extent such deed restrictions are
required under Environmental Laws and will not unreasonably interfere with
Buyer's operations, and after the Closing, Buyer shall be subject to such
deed restrictions pursuant to Article 13.
7.9 Title Company. The Title Company (and not an agent of the Title
Company) shall serve as the closing agent for purposes of the transfer of the
Owned Real Property hereunder, pursuant to the terms of a closing escrow
customary for transactions of this type.
7.10 Exclusivity. Sellers and IP Sellers shall not, and shall cause their
Subsidiaries and their respective officers, directors, employees and Affiliates
not to, discuss, or otherwise enter into any agreement or other arrangements
with any third party regarding any possible sale or other disposition of the
Businesses or all or any part of the Purchased Assets or Purchased IP Assets
(other than the disposition of assets or Inventory in the Ordinary Course of
Business) (an "Acquisition Proposal") or provide any information to any third
party other than the provision of information as is specifically otherwise
permitted hereunder or the provision of information which is traditionally
provided in the regular course of such entity's business operations to third
parties where such entity and its officers, directors and Affiliates have no
reason to believe that such information may be utilized to evaluate any such
Acquisition Proposal. Sellers and IP
39
Sellers shall, and shall cause their Subsidiaries and their respective officers,
directors, employees and Affiliates to, (i) immediately cease and cause to be
terminated any and all contacts, discussions and negotiations with third parties
regarding an Acquisition Proposal and (ii) promptly notify Buyer if any
Acquisition Proposal, or any written offer or other inquiry from any third party
with respect thereto, is subsequently made.
7.11 Confidentiality. For a period of five (5) years after the Closing
Date, Sellers and IP Sellers will not, either directly or indirectly, divulge,
disclose, use, disseminate or communicate to any Person any of Buyer's
Confidential Information and Buyer will not, either directly or indirectly,
divulge, disclose, disseminate or communicate to any Person any of Sellers' or
IP Sellers' Confidential Information. For purposes hereof, "Confidential
Information" shall mean any information, in any form or medium, with respect to
Buyer, relating to the Businesses, the Purchased Assets and the Purchased IP
Assets, and with respect to Sellers and IP Sellers, relating to the Retained
Assets, that derives independent economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by proper means,
by other Persons who can obtain economic value from its disclosure or use.
Notwithstanding anything to the contrary in this Agreement: (i) Sellers and IP
Sellers may not, either directly or indirectly, divulge, disclose, use,
disseminate, or communicate to any Person any of the Purchased IP Assets or the
Purchased Records except as specifically permitted under the Buyer License
Agreement or as required in order to permit Sellers or IP Sellers to perform
their obligations to Buyer under this Agreement or any Transaction Document; and
(ii) to the extent permitted by the License Agreement, Buyer and its Affiliates
may divulge, disclose, use, disseminate, and communicate to any Person any of
the Licensed IP. Nothing in this Section 7.11 shall be deemed a license to,
waiver of, or limitation of Buyer's rights in Intellectual Property owned by
Buyer after the Closing.
Immediately after the Closing Date, except for so long as necessary to meet
their delivery obligations under this Agreement (but in no event longer than
thirty (30) days), IP Sellers and Sellers shall destroy any and all Purchased
Trade Secrets and all copies thereof in their possession; provided, Sellers and
IP Sellers may retain the Purchased Trade Secrets necessary for Sellers and IP
Sellers to perform their obligations under the Buyer Manufacturing and Supply
Agreements, in which case such Purchased Trade Secrets will be destroyed in
accordance with the terms of the Buyer Manufacturing and Supply Agreements, but
in no event later than thirty (30) days following the termination or expiration
of the Buyer Manufacturing and Supply Agreements. Within thirty (30) days from
the Closing Date, or as applicable, within sixty (60) days of the termination or
expiration of the applicable Buyer Manufacturing and Supply Agreement(s), IP
Sellers and Sellers shall deliver to Buyer written certification that such
destruction has occurred. IP Sellers and Sellers agree that notwithstanding
anything herein to the contrary, it shall deliver to Buyer any and all Purchased
Trade Secrets prior to destroying any Purchased Trade Secrets pursuant to its
obligations hereunder.
Notwithstanding the foregoing, Confidential Information shall not include
any information that: (i) is or becomes part of the public domain through no act
or failure to act on any Party's part; (ii) was independently developed by any
Party or their Affiliates after the Closing, but solely to the extent of such
independent development; or (iii) was received by any Party without restrictions
as to its use from a third party who is lawfully in possession and not
restricted as to the use thereof. Further, each Party is authorized to disclose
Confidential
40
Information of the other Party (but not Intellectual Property of the other Party
except, subject to the terms of the License Agreement and Buyer License
Agreement, pursuant to a joint venture, joint development, and similar
arrangement where the Person who will receive the Confidential Information
agrees (on customary and commercially reasonable terms which protect the rights
of the owner of such Intellectual Property) not to use the Confidential
Information other than in connection with such joint venture, joint development,
or similar arrangement) when such disclosure is (a) justified by a legitimate
business purpose, in which case the disclosing party shall impose commercially
reasonable restrictions on the recipient's use and protection of such
Confidential Information, including, without limitation, a written, executed
confidentiality agreement requiring protection no less than the protection
required under this Agreement; (b) required by any court Order or similar Order,
or (c) required under any applicable Law, including any rule, regulation, Order
or requirement of the Securities and Exchange Commission or any national
securities exchange, provided, however, before a Party discloses any
Confidential Information under clause (b) or (c), such Party shall promptly
notify the other Party in writing, which notification shall include the nature
of the legal requirement and the extent of the required disclosure, and shall
cooperate with the other Party to preserve the confidentiality of such
information consistent with applicable Law.
7.12 Non-Compete; Non-Solicitation.
(a) In consideration of the benefits to Sellers and IP Sellers
hereunder and in order to induce Buyer to enter into this Agreement,
Sellers and IP Sellers (on behalf of themselves and their Affiliates)
hereby covenant and agree that for a period of 5 years after the Closing
Date (the "Restricted Period"), Sellers, IP Sellers and their Affiliates
shall not, directly or indirectly, engage in, conduct, manage, operate,
control or participate in the ownership or management of, any business that
manufactures, distributes or sells any products of the same or
substantially similar composition, or are the functional equivalent, as
those products manufactured or sold by the Businesses on the Closing Date
or those products currently contemplated to be manufactured or sold (the
"Restricted Business"), except that nothing contained herein shall be
deemed to prohibit, limit or otherwise restrict Sellers, IP Sellers or
their Affiliates from any of the following:
(i) using emulsion process know-how, but not for the purpose of
(X) making or having made any nitrile emulsions which have
historically been purchased by Sellers, IP Sellers and their
Affiliates from the Businesses on an intercompany basis so long as
such nitrile emulsions are available from Buyer at commercially
reasonable terms, or (Y) selling or distributing nitrile emulsions,
except for the limited purposes of: (a) manufacturing, but not having
manufactured, the two products 1570X80 and 1570X95 in substantially
the same manner as such two products are manufactured by Seller
through use of the high-temperature process in existence as of the
Closing Date; and (b) the sale or distribution of products qualifying
under clause (a) in the same markets as sold or distributed by Seller
as of the Closing Date (provided such sale and distribution as of the
Closing Date is capable of contemporaneous documentation);
41
(ii) participating in product markets to the extent Sellers' or
IP Sellers' non-transferred businesses participate in such product
markets as of the Closing Date in the making, having made, using,
selling or distributing of (provided such participation as of the
Closing Date is capable of contemporaneous documentation): (x)
antioxidants and/or antidegradents: as a discrete component, or as
part of a package, in the fields of fuels and/or lubricants; or as a
component in Sellers' plastics or coatings non-transferred businesses;
provided, notwithstanding anything to the contrary in this Agreement,
in no event as a discrete component in any market other than fuels or
lubricants and in no event in connection with fuels or lubricants for
use in jet engines (the "Antioxidant Field"); (y) silicones in the
personal care market; and (z) wax emulsions (the entirety of Sections
7.12(a)(i) and (ii), the "Compete Field");
(iii) owning, purchasing or otherwise acquiring an aggregate of
up to five percent (5%) of the outstanding capital stock of any person
that is engaged in a Restricted Business, the securities of which are
listed on a national securities exchange or included in the national
list of over-the-counter securities; and
(iv) directly or indirectly participating in or acquiring any
interest in any business engaged in the Restricted Business where the
annual revenues of the Restricted Business are less than 20% of the
aggregate annual revenues of such business.
(b) Except for the employees listed in Schedule 7.12(b), each Seller
and each IP Seller agrees that it shall not directly, or indirectly through
another Person, for a period of two (2) years after the Closing Date, (i)
induce or attempt to induce any Person to leave the employ of any of the
Businesses, or in any way interfere with the relationship between any of
the Businesses and such Persons, (ii) hire any person who was an employee
of any of the Businesses at any time during the one-year period immediately
prior to the date on which such hiring would take place (it being
conclusively presumed by the Parties so as to avoid any disputes under this
Section 7.12 that any such hiring within such one-year period is in
violation of clause (ii) above); provided that Sellers and IP Sellers shall
not be prohibited from employing any such Person whose annual salary is
less than $60,000 and who responds to a general solicitation for employment
contained in a newspaper or other periodical, or (iii) except relating
solely and exclusively to the activities permitted in Section 7.12(a)(i),
call on, solicit or service any customer, supplier, licensor or licensee of
the Businesses (including any Person that was a customer or supplier of the
Businesses at any time during the 12-month period immediately prior to the
Closing), for the purpose of inducing or attempting to induce such Person
to cease doing business with the Businesses, or in any way interfering with
the relationship between any such customer, supplier, licensor or licensee
of the Businesses (including making any negative statements or
communications about the Businesses).
(c) Sellers and IP Sellers acknowledge that any breach of the
provisions of Sections 7.12(a) or 7.12(b) by Sellers or IP Sellers may
result in irreparable injury to Buyer (following the consummation of the
transactions contemplated hereby), and that Buyer's remedies at law may be
inadequate and insufficient. Accordingly, in the event of
42
any such breach by Sellers or IP Sellers of Sections 7.12(a) or 7.12(b),
Buyer may be entitled to preliminary or permanent injunctive relief, in
addition to all such other legal and equity remedies as may be available to
Buyer therefor. Nothing in this Section 7.12 shall be deemed a license to,
or waiver of, Buyer's rights in Intellectual Property owned by Buyer after
the Closing.
(d) This Section 7.12 shall terminate and be of no further force or
effect against Sellers or IP Sellers upon the Change of Control of either
Noveon or its ultimate parent, Lubrizol. For purposes of this subsection
(d), "Change of Control" means the disposition of all or substantially all
of the assets of, the merger or consolidation of, or the sale or exchange
of stock by, Noveon, Lubrizol or their respective shareholders that results
in a change of at least fifty percent (50%) of the voting stock of such
corporation, other than to one of its Affiliates.
7.13 Removing Retained Assets. Within ninety (90) days after the Closing
Date, Sellers (at their sole cost) shall remove or cause the removal of all
Retained Assets from the Facilities to be occupied by Buyer. Buyer shall (and
shall cause Buyer's Affiliates to) reasonably cooperate with Sellers in the
temporary storage and removal of, and refrain from using, any Retained Assets
that remain at the Facilities on and after the Closing Date.
7.14 Retention And Access To Records; Access To Personnel. For a period of
five (5) consecutive years after the Closing Date: (i) Sellers and IP Sellers
shall retain (and not destroy, alter or otherwise dispose of) the Retained
Records and Buyer shall retain (and not destroy, alter or otherwise dispose of)
the Purchased Records in their existing condition; (ii) each Party shall provide
the other Party and their Representatives with reasonable access to those
records under (i) during normal business hours; and (iii) each Party shall (and
shall cause their Affiliates to) provide the other and their Representatives
with reasonable access to each Party's (and their Affiliates) personnel during
normal business hours to the extent deemed necessary, in the requesting Party's
reasonable discretion, in connection with any matters relating to the Purchased
Assets, Purchased IP Assets, the Licensed IP or the Businesses, the Retained
Assets, the Retained Liabilities.
7.15 Sellers' Representative. Each Seller and IP Seller hereby irrevocably
appoints Noveon ("Sellers' Representative") as such Sellers' or IP Sellers' true
and lawful attorney-in-fact and agent and authorizes its acting for such Seller
or IP Seller and in such Seller's or IP Seller's name, place and stead, in any
and all capacities to do and perform every act and thing required or permitted
to be done by Sellers' Representative in connection with this Agreement, as
fully to all intents and purposes as such Seller or IP Seller might or could do
in person, including taking any and all action on behalf of such Seller or IP
Seller from time to time as contemplated hereunder. Each Seller and IP Seller
acknowledges and agrees that upon execution of this Agreement, (i) upon any
delivery by Sellers' Representative of any waiver, amendment, agreement,
certificate or other document executed by Sellers' Representative, such Seller
or IP Seller shall be bound by such documents or action as fully as if such
Seller or IP Seller had executed and delivered such documents, and (ii) Buyer
shall be entitled to rely on any action taken by Sellers' Representative, on
behalf of such Seller or IP Seller pursuant to this Section 7.15. Each Seller or
IP Seller will, by executing this Agreement agree that such agency, proxy and
power of attorney are coupled with an interest, and are therefore irrevocable
and shall survive the bankruptcy of
43
such Seller or IP Seller. Sellers' Representative will have no Liability to
Buyer, Sellers or IP Sellers with respect to actions taken or omitted to be
taken in its capacity as Sellers' Representative, except with respect to any
Liability resulting primarily from Sellers' Representative's gross negligence or
willful misconduct.
7.16 Removal of Guarantees. Sellers and IP Sellers hereby represent and
warrant to Buyer that Schedule 7.16 sets forth all letters of credit,
guarantees, surety bonds, or other credit support provided by or arranged by
Sellers, IP Sellers or their respective Affiliates which benefit the Businesses
and for which Buyer would be reasonably expected to replace letters of credit,
guarantees, surety bonds, or other credit support following the Closing. To
Sellers' Knowledge and to IP Sellers' Knowledge, other than as set forth on
Schedule 7.16, Buyer will not be required to provide or arrange for any letters
of credit, guarantees, surety bonds, or other credit support following the
Closing to allow Buyer to operate the Businesses as currently operated from and
after the Closing, to receive the benefits of any Assumed Contracts, or to
continue any existing customer, supplier, vendor or other business relation.
Following the Closing, each Seller and IP Seller agrees that it will keep in
place all letters of credit, guarantees, surety bonds, or other credit support
existing on the date hereof or on the Closing Date (whether or not set forth on
Schedule 7.16) applicable to it and not take any action to terminate or modify
such letters of credit, guarantees, surety bonds, or other credit support until
the expiration by its terms of such letters of credit, guarantees, surety bonds,
or other credit support. To the extent required by a Governmental Body in
connection with a remediation obligation relating to a pre-Closing environmental
condition, Sellers agree to issue a letter of credit or provide such other
letters of credit, guarantees, surety bonds, or other credit support or other
financial assurance mechanism, and continue thereafter to reissue or renew such
credit, guarantees, surety bonds, or other credit support or other financial
assurance mechanism indefinitely, and indemnify Buyer for any obligation or
Damages incurred in connection therewith. Except for that certain letter of
credit marked with an asterisk on Schedule 7.16 (for which Buyer shall have no
Liability), Buyer hereby agrees to indemnify the applicable Seller or IP Seller
for any Liability to the beneficiary of such letters of credit, guarantees,
surety bonds, or other credit support pursuant to the terms of such credit
support and which relates to a default by Buyer of the underlying obligations
pursuant to which such credit support was put in place and which first arises
following the Closing. With respect to letters of credit, guarantees, surety
bonds, or other credit support set forth on Schedule 7.16, Buyer further agrees
to pay to the applicable Seller or IP Seller an amount which shall be negotiated
in good faith between the parties following the date hereof equal to the fee
which Buyer would pay to its financial institution to provide similar credit
support.
7.17 License Agreement.
(a) At the Closing, Seller and IP Sellers will grant to Buyer or its
Affiliates a non-exclusive, perpetual, irrevocable, transferable (in whole
or in part, including in connection with the purchase of all or
substantially all of the assets to which this license relates),
sublicensable, fully pledgable, fully-paid, royalty-free, worldwide license
(with the right to sublicense) to use, make, have made, improve upon, sell
or distribute (each, in any manner) any Intellectual Property owned,
controlled or licensed (to the extent such license permits sublicensing) by
any Seller or any IP Seller (or their respective Affiliates) and not
otherwise transferred under Section 2.2 and used in the Businesses prior to
the
44
Closing Date (the "Licensed IP"); provided, Buyer and its Affiliates may
not use the Licensed IP to produce products, or the functional equivalents
of products, that primarily relate to Sellers' or IP Sellers'
non-transferred businesses as of the Closing (provided such products are
capable of contemporaneous documentation), unless the Businesses were also
selling such products or the functional equivalents of such products as of
the Closing (provided the Businesses' involvement in such products is
capable of contemporaneous documentation). The foregoing license shall be
sole and exclusive, including to the exclusion of Sellers and IP Sellers
and their respective Affiliates except with respect to the Antioxidants
Field and the Compete Field, within the fields of the Businesses for a
period of five (5) years from the Closing Date, and Buyer shall have the
right to enforce the Licensed IP in those fields, provided: (i) Buyer
notifies Seller and IP Seller promptly after instituting any lawsuit; and
(ii) any settlement of any such legal dispute does not detrimentally affect
Sellers' and IP Sellers' rights in the Licensed IP. Seller shall also
provide Buyer copies of all records and documentation related to the
Licensed IP and necessary for Buyer to avail itself of the benefits of such
Licensed IP. The license arrangement contemplated by this Section 7.17(a)
shall include the foregoing terms and shall be referred to herein as the
"License Agreement".
(b) At the Closing, Buyer will grant Lubrizol or its Affiliates a
non-exclusive, perpetual, irrevocable, transferable (in whole or in part,
including in connection with the purchase of all or substantially all of
the assets to which this license relates), royalty-free, worldwide license
(without the right to sublicense) solely in the Antioxidant Field and the
Compete Field to use, make, have made, improve upon, sell and distribute
the Buyer Licensed IP owned by Buyer (the "Buyer License Agreement"). The
term "Buyer Licensed IP" shall mean: (y) the patents identified on Schedule
7.17(b); and (z) the trade secrets and know-how actually used or being
developed by Seller in the Antioxidant Field prior to the Closing Date, to
the extent such actual use and development can be established by
contemporaneous documentation. Notwithstanding anything to the contrary in
this Agreement, the Buyer License Agreement shall: (i) be subject to
Section 7.12 of this Agreement; and (ii) impose no obligation on Buyer to
license Seller any Intellectual Property to which a third party may have
rights, whether by contract, license or otherwise; and (iii) except as
specifically scheduled in Schedule 7.17(b), impose no obligation on Buyer
to license Seller any Intellectual Property used exclusively in the
Businesses. Furthermore, Sellers, IP Sellers and their Affiliates hereby
waive, and covenant not to enforce, during the Restricted Period, any
rights Seller or its Affiliates may have against Buyer, its Affiliates,
R.T. Vanderbilt Company, Inc. and its Affiliates ("RT Vanderbilt"), BP
Exploration & Oil, Inc. and its Affiliates ("Air/BP") under the law,
including under contract or tort, that would limit or impair Buyer's
ability to sell, supply or trade with each of RT Vanderbilt or Air/BP under
contracts existing as of the Closing Date, as may be amended or restated,
or as entered into following the Closing Date, during the Restricted
Period, on terms substantially similar to those in the RT Vanderbilt or
Air/BP contracts existing as of the Closing Date.
7.18 Use of Lubrizol or Noveon Name.
(a) Buyer shall (and shall cause Buyer's Affiliates to), to the extent
commercially reasonable, remove or render illegible all references to
"Lubrizol" or
45
"Noveon" or any variation thereof, including "LZ," "NV," "Lubrizol
Performance Products," and "Lubrizol Foam Control Products", appearing on
the Inventories purchased and acquired hereunder unless such removal or
rendering illegible would cause such Inventories to become unusable. Aside
from any failure to use commercially reasonable efforts as required
pursuant to this Section 7.18(a), no failure to actually remove or render
illegible such references shall be deemed a breach of this Agreement.
(b) If removing or rendering illegible all references to "Lubrizol" or
"Noveon" or any variation thereof, including "LZ," "NV," "Lubrizol
Performance Products," "Lubrizol Foam Control Products" and the like,
appearing on the Inventory purchased and acquired hereunder would cause
such Inventory to become unusable, Buyer (or Buyer's Affiliates) shall be
entitled use such Inventory in the ordinary course of Buyer's (or Buyer's
Affiliates') business for a period of twelve (12) consecutive months
following the Closing Date without modifying such references; provided,
however, that, within six (6) months of the Closing Date, Buyer shall (or
shall cause Buyer's Affiliates to) affix in a prominent manner and location
on any finished goods in Inventories to be sold or distributed to third
parties markings that are sufficient to identify Buyer (or Buyer's
Affiliates) as the manufacturer or seller of such items.
(c) Buyer shall (and shall cause Buyer's Affiliates to) refrain from
using the name "Lubrizol" or "Noveon" or any variation thereof, including
"LZ," "NV," "Lubrizol Performance Products," and "Lubrizol Foam Control
Products," except that nothing (including, without limitation, any
provision of this Agreement or the Transaction Documents) shall limit or
prevent Buyer or its Affiliates from, and Sellers, IP Sellers, and their
Affiliates shall not seek to limit or prevent Buyer or its Affiliates from:
(i) using any of the foregoing terms in this subsection (c) in order to
indicate, as a historical fact, the actual former names of the Businesses
or the relations to Sellers or IP Sellers; or (ii) using any term in a
generic or descriptive manner, or using any terms such as "Specialty,"
"Performance," "Performance Products," "Foam Control Products,"
"Performance Materials," "Specialty Chemicals," or "Performance Chemicals."
7.19 Buyer Use of Trademark; Seller Use of Trademark. Buyer shall be
entitled to use the trademark Hycar and Vycar on its products that currently use
the trademark Hycar ("Hycar Products") or Vycar ("Vycar Products"),
respectively, and materials referencing such Hycar Products, but only in the
ordinary course of its business for a period of twelve (12) consecutive months
following the Closing Date, provided such use is in connection with goods and
services of a comparable quality to the goods and services on which Sellers use
the Hycar or Vycar trademark. For a period of twelve (12) consecutive months
following the Closing Date, Seller shall be entitled to use the trademark
Goodrite on its products and materials that currently use the trademark
Goodrite, but only in the ordinary course of Seller's business and provided such
use is in connection with goods and services of a comparable quality to the
goods and services on which Buyer uses the Goodrite trademark consistent with
past practice.
7.20 Memorandum; Disclaimer of Projections. Neither Sellers nor IP Sellers
make any representation or warranty to Buyer except as specifically made in this
Agreement and the Closing Documents and any signed certificates or other signed
instruments or signed agreements delivered after the date hereof in connection
with this Agreement on or prior to the Closing Date.
46
In particular, Sellers and IP Sellers make no representation or warranty to
Buyer with respect to: (a) the information set forth in the Confidential
Information Memorandum distributed by KeyBanc Capital Markets in connection with
the offering of the Businesses, the Purchased Assets and the Purchased IP
Assets, (b) the information set forth in the related management presentations,
or (c) any financial projection or forecast, written or oral, relating to the
Businesses, and Buyer waives all claims it has or may have in connection
therewith. With respect to any such projection or forecast delivered by or on
behalf of Sellers or the Businesses to Buyer, Buyer acknowledges that: (i) there
are uncertainties inherent in attempting to make any projection or forecast,
(ii) it is familiar with such uncertainties, (iii) it is taking full
responsibility for making its own evaluation of the adequacy and accuracy of all
such projections and forecasts so furnished to it, and (iv) it shall have no
claim against any Seller, IP Seller or the Businesses with respect thereto.
7.21 No Additional Representations and Warranties. Buyer acknowledges that
neither Sellers, IP Sellers nor any other Person has made any representation or
warranty, express or implied, as to the accuracy or completeness of any
information regarding the Businesses, the Purchased Assets or the Purchased IP
Assets, except as expressly set forth in this Agreement, or for fraud and Buyer
further agrees that neither Sellers, IP Sellers nor any other Person shall have,
or be subject to, any Liability to Buyer or any other Person resulting from the
distribution to Buyer or such Person, or Buyer's or such Person's use of, any
such information, including the Confidential Information Memorandum and any
information, documents, data or materials made available to Buyer in the online
data room furnished by Sellers, management presentations or other form in
expectation of the transactions contemplated by this Agreement. NOTWITHSTANDING
ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, EXCEPT FOR FRAUD, IT IS
THE EXPRESS INTENT OF THE PARTIES HERETO THAT NEITHER SELLERS NOR IP SELLERS
MAKE ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, AT LAW OR IN
EQUITY, IN RESPECT OF THE BUSINESSES, THE PURCHASED ASSETS OR THE PURCHASED IP
ASSETS OR ANY OTHER MATTER BEYOND THOSE EXPRESSLY GIVEN HEREIN OR IN ANY SIGNED
CERTIFICATES OR OTHER SIGNED INSTRUMENTS OR SIGNED AGREEMENTS DELIVERED IN
CONNECTION WITH THIS AGREEMENT AFTER THE DATE HEREOF AND ON OR PRIOR TO THE
CLOSING DATE. EXCEPT AS SET FORTH IN ARTICLE 5 AND SECTION 13.2, THE PURCHASED
ASSETS AND THE PURCHASED IP ASSETS ARE BEING SOLD "AS IS" AND "WHERE IS" WITH
ALL FAULTS.
7.22 Collections. After the Closing, Sellers and IP Sellers shall promptly
(but in no event later than one (1) day after receipt thereof) deliver to Buyer
any cash, checks or other property that any Seller or IP Sellers receives
following the Closing to the extent relating to the Purchased Assets, the
Purchased IP Assets or the post-Closing operations of the Businesses. After the
Closing, Buyer agrees to promptly (but in no event later than one (1) day after
receipt thereof) deliver to Sellers or IP Sellers any cash, checks or other
property that it receives to the extent relating to the Retained Assets.
7.23 Purchase Option for Offsite Equipment. With respect to each individual
piece of equipment included in the Offsite Equipment, Sellers and IP Sellers, on
behalf of themselves and their Affiliates and their successors and assigns,
grant to Buyer and its successors or assigns, an irrevocable option to purchase
for an purchase price of $1.00 such equipment following such
47
time as such equipment is no longer used to provide products or services to
Buyer or its successors or assigns pursuant to the Buyer Manufacturing and
Supply Agreements. Sellers and IP Sellers, on behalf of themselves and their
Affiliates and their successors and assigns, agree and acknowledge that the
Offsite Equipment may only be used to supply products and services to Buyer and
its successors or assigns pursuant to the Buyer Manufacturing and Supply
Agreements. Sellers and IP Sellers, on behalf of themselves and their Affiliates
and their successors and assigns, agree to keep the Offsite Equipment in
reasonable condition and repair (ordinary wear and tear excepted) for comparable
equipment in the industry. All such Offsite Equipment will be sold "AS IS",
"WHERE IS".
7.24 Shared Agreements. The Parties agree and acknowledge that there are
certain Contracts which relate to both the Businesses, on the one hand, and the
businesses (other than the Businesses) of Sellers, IP Sellers and their
respective Affiliates on the other hand (such contracts, the "Shared Contracts")
and that following the Closing certain Shared Contracts will be assigned by
Sellers to Buyer and certain Shared Contracts will not be assigned to Buyer. The
Parties agree (on behalf of themselves and their Affiliates) that at the written
request of the other Parties they will, and they will cause their Affiliates to,
cooperate with each other, in all commercially reasonable respects, to design an
arrangement pursuant to which Buyer and its Affiliates, in the case of Shared
Contracts that will not be assigned to Buyer, and Sellers and IP Sellers and
their respective Affiliates, in the case of Shared Contracts that will be
assigned to Buyer, may receive substantially all of the material rights and
benefits (and assume, discharge and indemnify for its proportionate share of the
obligations) of such Shared Contracts as may be received today. Each of the
Parties agrees and acknowledges that it may not be possible to design such an
arrangement, and if it is not possible to design such an arrangement, except for
the failure to use commercially reasonable efforts required hereby, no Person
shall be liable to any other Person pursuant to the terms of this Section 7.24.
7.25 BUTADIENE, ANILINE AND DPA SUPPLY. From and following the Closing
until December 31, 2009, the Parties agree to cooperate with each other, in all
commercially reasonable respects, to design shared purchasing and other
arrangements that ensures both the Buyer and its Affiliates, on the one hand,
and Sellers, IP Sellers and their Affiliates, on the other hand, with the supply
of butadiene, aniline and DPA from Chemtura Corporation, Equistar Chemicals, LP
or other suppliers of butadiene, aniline and DPA as is necessary to satisfy
their operating needs from time to time. The Parties agree to work with each
other pursuant to this Section 7.25 to maximize their combined purchasing power
and seek to obtain supplies upon the best possible available pricing, volume,
and other terms. The Parties further agree to work together pursuant to this
Section 7.25 even if one of the Parties no longer benefits from this Section
7.25 because it no longer requires butadiene, aniline and DPA in its operations
or for some other reason. If requested by the other Party, each Party agrees to
use its commercially reasonable efforts to purchase butadiene, aniline and DPA
directly (on behalf of the other Party) from suppliers and sell such materials
to the other Party; provided that the requesting Party shall pay all of the
purchasing Party's out-of-pocket costs and expenses related thereto. The Parties
agree that whenever they work together pursuant to an arrangement created
hereunder they shall pay the same price for the materials purchased hereunder.
The Parties agree and acknowledge that such arrangement could include designing
an arrangement pursuant to which Buyer and its Affiliates, in the case of
Sellers, IP Sellers, or their Affiliates supply contracts, and Sellers and IP
Sellers and their respective Affiliates, in the case of Buyer's and its
Affiliates' supply contracts,
48
may receive substantially all of the material rights and benefits (and assume,
discharge and indemnify for its proportionate share of the obligations) may be
received today and pursuant to arrangements. The Parties agree an arrangement
could include the other Party enjoying all of the benefits of the other Party's
relationship.
7.26 Assumed Contracts. Within fourteen (14) days after the date hereof,
Sellers and IP Sellers will use commercially reasonable efforts to provide Buyer
with a list of all Contracts located in the online data room that they believe
are Assumed Contracts, and to the extent Buyer does not already have a copy of
any Contract on such list, a copy of such Contract. For avoidance of doubt,
Article 2 shall govern whether or not such Contract is actually an Assumed
Contract, and no argument will ever be made that the failure to list a Contract
results in any obligation of Sellers or IP Sellers or any failure of Sellers or
IP Sellers to be obligated.
7.27 Documents in the Online Data Room. Within two (2) business days of the
date hereof, Sellers and IP Sellers shall deliver to Buyer a CD-Rom which
contains all the documents in the online data room on the date hereof.
7.28 Customer and Supplier Calls. Following the date hereof,
notwithstanding anything in this Agreement or any other agreement to the
contrary (including the Confidentiality Agreement) Buyer may contact any of the
Businesses' customers, suppliers, vendors, or other business relations in
connection with the transactions contemplated hereby and the operation of the
Businesses following the Closing. Upon reasonable request, Sellers and IP
Sellers will arrange meetings with such customers of, and suppliers and vendors
to, and other business relations.
7.29 Shared Equipment. The Parties agree and acknowledge that there is
certain equipment which relates to both the Businesses, on the one hand, and the
businesses (other than the Businesses) of Sellers, IP Sellers and their
respective Affiliates on the other hand (such contracts, the "Shared Equipment")
and that following the Closing certain equipment will be conveyed by Sellers to
Buyer and certain equipment will not be conveyed to Buyer. The Parties agree (on
behalf of themselves and their Affiliates) that at the written request of the
other Parties they will, and they will cause their Affiliates to, cooperate with
each other, in all commercially reasonable respects, to design an arrangement
(which shall not unreasonably interfere with the operation of the owner of the
equipment's business) pursuant to which Buyer and its Affiliates, in the case of
Shared Equipment that will not be conveyed to Buyer, and Sellers and IP Sellers
and their respective Affiliates, in the case of Shared Equipment that will be
conveyed to Buyer, may continue to use and benefit (but shall assume, discharge
and indemnify for its proportionate share of any costs and expense related
thereto) of such Shared Equipment as is enjoyed today. Each of the Parties
agrees and acknowledges that it may not be possible to design such an
arrangement, and if it is not possible to design such an arrangement, except for
the failure to use commercially reasonable efforts required hereby, no Person
shall be liable to any other Person pursuant to the terms of this Section 7.29.
49
ARTICLE 8
EMPLOYEE MATTERS
8.1 Employment. Prior to the Closing Date, and at a time chosen in
consultation with Sellers, Buyer shall offer employment to each Active Employee
and such other employees agreed to by the Parties and set forth on Schedule 8.1
to commence on the Closing Date, and will disclose such offers to Sellers at
least five (5) business days prior to the Closing Date. Each employee who
accepts such offer of employment by Buyer and reports to work with Buyer shall
be referred to herein as a "Transferred Employee."
(a) As of the Closing Date, Buyer shall provide each Transferred
Employee with base salary and base wages that are substantially similar to
such Transferred Employee's base salary and wages in effect immediately
prior to the Closing Date and other benefits (but excluding any equity
based compensation, retiree health and welfare benefits, defined pension
plan benefits, and nonqualified retirement benefits) that, in the
aggregate, are competitive in the industry for companies of similar size
and nature and in a similar location as of the Closing Date; provided,
however, any compensation and benefits provided to any Transferred Employee
subject to any collective bargaining agreement shall comply with all
applicable requirements of such collective bargaining agreement. Nothing
herein shall serve to change the at-will employment relationship of any
non-union employee not possessing an employment agreement with any of the
Businesses.
(b) The Transition Services Agreements shall provide, but not be
limited to, the following, (i) that the Transferred Employees shall
continue to participate in Sellers' Healthcare Plans until the earlier of
December 31, 2006 or the date upon which Buyer establishes a health or
welfare plan that replaces the Sellers' Benefit Plan applicable to the
Transferred Employees, (ii) that Buyer shall reimburse Sellers with respect
to all claims or expenses incurred by Seller in connection with the
provision of benefits or claims to Transferred Employees or their
dependents under the Sellers' Healthcare Plans after the Closing Date,
including, without limitation any COBRA coverage provided to Transferred
Employees or COBRA qualified beneficiaries of Transferred Employees after
the Closing Date and (iii) the direct out-of-pocket cash costs (including
base salary and wages but excluding bonus or other benefits and without
providing for any margin of profit or allocation of depreciation or
amortization expense) of Sellers with respect to providing such services,
and such Transition Services Agreement shall contain such other provisions
concerning process and participation of Transferred Employees in Sellers'
Healthcare Plans following the Closing Date as shall be agreed upon by the
Sellers and Buyer. All Transferred Employees shall cease to participate in
any of Sellers' Healthcare Plans on the Closing Date except to the extent
set forth in the Transition Service Agreement. Buyer shall give all
Transferred Employees credit for all service with the applicable Seller
(including service with previous employers that is credited by the
applicable Seller) under the Buyer Benefit Plans in which such Transferred
Employees becomes a participant for purposes of eligibility, vesting and
vacation and severance determination only, to the extent such service was
recognized for comparable purposes under the corresponding Sellers' Benefit
Plan.
50
(c) To the extent reflected in the Closing Working Capital, Buyer
shall assume and discharge all obligations of each Seller to its
Transferred Employees, whether or not yet payable in respect of periods
prior to the Closing Date for payroll, vacation and sick time; provided
that Buyer's liability for the obligations assumed in this Section 8.1(c)
with respect to the Businesses, other than the vacation obligation for the
Lubrizol Foam Control & Silicone Business, shall not exceed the amount
accrued on the Closing Statement and included in the calculation of the
Closing Working Capital with respect to the Businesses, other than the
vacation obligation for the Lubrizol Foam Control & Silicone Business, and,
with respect to the vacation obligation for the Lubrizol Foam Control &
Silicone Business, shall not exceed $175,000, and Noveon shall fully
indemnify Buyer to the extent such Liability with respect to the
Businesses, other than the vacation obligation for the Lubrizol Foam
Control & Silicone Business, exceeds the amount accrued on the Closing
Statement and included in the calculation of the Closing Working Capital
with respect to such Businesses and, in the case of the vacation obligation
for the Lubrizol Foam Control & Silicone Business, to the extent such
Liability for the vacation obligation exceeds $175,000. With respect to
each Transferred Employee who, as of the Closing Date, was a participant in
or eligible to receive a bonus under any of Sellers' bonus plans set forth
on Schedule 8.1(c) (collectively, the "Sellers' Bonus Plans"), Seller shall
be responsible for and shall pay any bonus payments under such bonus plans
in accordance with the terms and conditions of such bonus plans; provided
that any such bonus payments shall be determined without regard to any
length of service or last day requirement. Such Transferred Employees
eligible for a bonus under any Sellers' Bonus Plans shall receive their
prorated bonus payments as of the Closing Date or as soon as
administratively practicable following the Closing Date.
(d) Buyer shall reimburse Sellers and their Affiliates, parents and
Subsidiaries, with respect to any Liabilities paid by Sellers under the
Sellers' Severance Practice arising solely out of any failure by Buyer to
offer employment to each of such Seller's Active Employees to commence on
the Closing Date (or with respect to any disabled employee or employee on a
leave of absence, the date such employee is eligible to return to work with
Buyer following the Closing Date) in accordance with Section 8.1. A copy of
Sellers' Severance Practice is attached as Schedule 8.1(d).
(e) Buyer agrees and acknowledges that the transfer of the Purchased
Assets to Buyer contemplated by this Agreement constitutes the sale of one
or more businesses within the meaning of WARN. Notwithstanding anything
contained in this Agreement, Buyer agrees and acknowledges that for
purposes of WARN, it will be responsible for all applicable notices and
Liabilities under WARN resulting from any termination of employment which
occurs on or after the Closing Date, provided, however, that Sellers shall
provide to Buyer on or before the Closing Date a list of all employee
layoffs, by date and location, implemented by the Businesses in the 90-day
period immediately preceding the Closing. Sellers shall indemnify Buyer
against all liabilities and obligations arising under WARN prior to the
Closing.
(f) Buyer shall assume and pay as and when due all Liabilities or
amounts due to, or in respect of, any Transferred Employee relating to, or
arising in connection
51
with, any and all claims for workers' compensation benefits arising in
connection with any occupational injury or disease occurring after the
Closing Date.
(g) Buyer and Sellers agree that, provided that Sellers shall provide
Buyer with the applicable employee information by December 31, 2006, Buyer
shall be responsible for filing W-2 forms for the Transferred Employees for
the entire calendar year 2006 in accordance with the Alternate Procedure of
Section 5 of Revenue Procedure 2004-53.
8.2 Employee Benefit Matters.
(a) Sellers' Benefit Plans. Except as otherwise provided in the
Transition Services Agreement and this Section 8.2, on and after the
Closing Date, Sellers shall remain responsible and indemnify Buyer for the
maintenance, administration, funding and payment or distribution of any and
all benefits accruing or arising under or with respect to the Sellers'
Benefit Plans, including the Sellers' Pension Plans. Except as otherwise
provided in the Transition Services Agreement, on and after the Closing
Date Buyer shall be responsible and indemnify Seller for the
administration, funding and payment or distribution of any and all benefits
accruing or arising under or with respect to such employee benefit plans or
programs as the Buyer may establish or maintain on or after the Closing
Date for the benefit of the Transferred Employees.
(b) Vesting. As of the Closing Date, Seller shall take, or shall cause
to be taken, all steps necessary to fully vest all Transferred Employees in
their benefits or account balances under each Sellers' Benefit Plan that is
intended to be "qualified" under Section 401(a) of the Code.
(c) Defined Benefit Pension Plans. As of the Closing Date, Seller
shall amend each Sellers' Pension Plan to provide that each Transferred
Employee who is at least age 50 as of December 31, 2006 but less than age
55 as of the Closing Date and who has an accrued benefit under any such
Sellers' Pension Plan as of the Closing Date shall have their employment
with Buyer and its Affiliates (including any successors thereto) credited
for purposes of determining such Transferred Employee's eligibility for any
early retirement pension or subsidy under the Sellers' Pension Plan, but
only if such Transferred Employee applies for early retirement under such
Sellers' Pension Plan on or after retirement or termination of employment
from the employment of the Buyer and its Affiliates, (including any
successors thereto). For avoidance of doubt, no such credit for a
Transferred Employee's service with Buyer shall result in the continued
accrual of any normal retirement benefit under any Sellers' Pension Plan.
(d) Retiree Medical and Life Plans Under Collective Bargaining
Agreements. With respect to each Transferred Employee who works pursuant to
a collective bargaining agreement set forth in Section 8.3 herein and is
listed on Schedule 8.2(d), Buyer shall assume or retain all Seller's
obligations to provide any such Transferred Employee with post retirement
medical and life insurance benefits as set forth in the applicable
collective bargaining agreement under a Buyer established health and
welfare plans.
52
(e) Obligation of Seller for Retiree Medical and Life Insurance
Benefits. Following the Closing Date, Seller shall provide retiree medical
and life insurance benefits under any Sellers' Benefit Plan to each
Transferred Employee (other than such Transferred Employees set forth in
the preceding paragraph) and any other current or former employees of the
Business (including any beneficiaries thereto) who would have satisfied the
eligibility requirements (as such requirements existed as of the Closing
Date) for such benefits as if such Transferred Employee's service with
Buyer or any of its Affiliates during the period beginning on the Closing
Date and ending on December 31, 2006 is deemed service with Seller.
(f) Plan to Plan Transfer of 401(k) Benefits. Sellers and Buyer agree
to transfer the account balances of the Transferred Employees in Sellers'
401(k) Plans to Buyer's 401(k) Plan. The Parties agree that such transfer
shall occur as soon as practicable after the Closing Date and each Seller
shall cause the trustee of each Seller's 401(k) Plan to transfer in cash
(and notes evidencing participant loans) to the qualified trust established
under Buyer's 401(k) Plan the account balances whether or not vested of all
Transferred Employees in Sellers' 401(k) Plans. With respect to notes
evidencing plan loans, Sellers' 401(k) Plans shall assign such notes to
Buyer's 401(k) Plan. Until the transfer to the Buyer's 401(k) Plan occurs,
the applicable Seller and Buyer shall cooperate to take such steps as may
be necessary to permit Transferred Employees with outstanding loans from
the applicable Seller's 401(k) Plan to make timely payments to service such
loans and avoid default thereunder. Sellers shall make all contributions
required under any Sellers' 401(k) Plan for the Transferred Employees who
are participants in such plans for all periods of time up to and including
the Closing Date as and when such contributions are due under Sellers'
401(k) Plan and ERISA and shall waive any last day requirement or
1,000-hour requirements for purposes of any employer contributions with
respect to such Transferred Employees allocable during the plan year
containing the Closing Date.
(g) Buyer's Medical Plan. At the Closing Date or as soon as reasonably
practicable following the establishment of Buyer's Medical Plan, but in no
event later than December 31, 2006, Buyer shall allow all such Transferred
Employees and their eligible dependents to enroll, without any waiting
period, in Buyer's Medical Plan. For such individuals who elect to enroll
in Buyer's Medical Plan, Buyer and Buyer's Medical Plan shall be
responsible for all the medical, dental and prescription drug expenses
incurred by such individuals and their eligible dependents on and after the
date of enrollment. In accordance with the Transition Services Agreement,
Buyer shall be responsible for all the medical, dental and prescription
drug expenses actually incurred by Sellers with respect to Transferred
Employees and their dependents under the Sellers' Healthcare Plans after
the Closing Date and prior to enrollment in the Buyer's Medical Plan
including such other costs as set forth in Section 8.1(b)(iii) of this
Agreement. With respect to such individuals, Buyer shall use commercially
reasonable efforts to waive any restrictions and limitations for
pre-existing conditions except to the extent such individuals were subject
to such restrictions and limitations under Sellers' Healthcare Plans as of
the day prior to the date of enrollment in Buyer's Medical Plan. Sellers
and Buyer hereby agree that any Transferred Employee who (i) as of the
Closing Date is entitled to receive short-term disability benefits and who
subsequently becomes eligible
53
to receive long-term disability benefits or (ii) as of the Closing Date is
receiving or entitled to receive long-term disability benefits, shall
become eligible or continue to be eligible, as applicable to receive
long-term disability benefits under such Sellers' Benefit Plan unless and
until such employee is no longer disabled.
(h) Sellers' Healthcare Plans. Except to the extent otherwise provided
in the Transition Services Agreement, Sellers and Sellers' Healthcare Plans
shall only be responsible for medical, dental and prescription drug
expenses of the Transferred Employees and their dependants to the extent
such expenses are covered under the terms of Sellers' Healthcare Plans and
are incurred prior to the Closing Date. For purposes of this subsection
(h), an expense is incurred when the medical, dental, prescription drug or
other health benefit service is rendered or performed regardless of when
such claim for such expense is submitted for reimbursement. The Buyer's
Medical Plan shall take into account expenses incurred by a Transferred
Employee under Sellers' Healthcare Plans on or after the first day of the
plan year in which the Closing Date occurs, and up to the date that the
Transferred Employee enrolls in Buyer's Medical Plan, for purposes of
determining deductibles and out-of-pocket limits under Buyer's Medical Plan
for Transferred Employees in the plan years in which such enrollment
occurs.
8.3 Union Contracts. Effective as of and conditioned upon the occurrence of
the Closing, Buyer shall (a) recognize the current collective bargaining
representatives of the Noveon's employees at the Hilton Davis, Kalama, Akron and
Noveon Textile facilities, and (b) assume the Union Contracts and, except as
provided in this Agreement, the applicable Sellers' obligations thereunder as
well as the obligation to negotiate in good faith with respect to such Union
Contracts.
8.4 Third Party Obligations. Nothing contained in this Article 8 or this
Agreement, express or implied, shall confer any benefits, rights or remedies
upon any Person other than Sellers or Buyer.
ARTICLE 9
CONDITIONS OF CLOSING
9.1 Conditions Precedent to Buyer's Obligation to Close. Buyer's obligation
to consummate the transaction contemplated herein including to purchase the
Purchased Assets and the Purchased IP Assets, and to take the other actions
required to be taken by Buyer at the Closing, is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived in writing by Buyer, in whole or in part), which for the avoidance of
doubt shall include any environmental, health and safety matters relating to
each of the following:
(a) Accuracy of Representations. All of Sellers' and IP Sellers'
representations and warranties in this Agreement that are subject to
materiality qualifications shall have been accurate in all respects as of
the date of this Agreement and shall be accurate in all respects as of the
time of the Closing as if then made (except to the extent such
representations or warranties speak as of an earlier date in which case
such representation and warranty shall be true and correct in all respects
as of such earlier
54
date). All other representations and warranties in this Agreement shall
have been accurate in all material respects as of the date of this
Agreement, and shall be accurate in all material respects as of the time of
the Closing as if then made (except to the extent such representations or
warranties speak as of an earlier date, in which case such representations
and warranties shall be true and correct in all respects as of such earlier
date);
(b) No Material Adverse Effect. Subsequent to the date hereof and
prior to the Closing, there shall have been no occurrence of any event or
events that in the aggregate has had a Material Adverse Effect;
(c) Sellers' and IP Sellers Performance. All of the covenants and
obligations that Sellers or IP Sellers are required to perform, or to
comply with, pursuant to this Agreement at or prior to the Closing shall
have been duly performed and complied with in all material respects;
(d) Closing Deliveries. Sellers and IP Sellers shall have caused the
documents and instruments required by Section 11.2 to be delivered (or
tendered subject only to the Closing) to Buyer;
(e) Consents. All Consents set forth on Schedule 9.1 shall have been
obtained, in each case on terms reasonably satisfactory to Buyer;
(f) No Proceedings. Since the date of this Agreement, there shall not
have been commenced or threatened against Buyer, or against any Affiliate
of Buyer, any Proceeding involving any challenge to, or seeking damages or
other relief in connection with, any of the transactions contemplated
hereunder, or that would have a material adverse effect on the right of
Buyer or its Affiliates to own, operate or control all or any portion of
the Purchased Assets, the Purchased IP Assets, or the Businesses;
(g) No Conflict. Neither the consummation nor the performance of any
of the transactions contemplated hereunder will, directly or indirectly
(with or without notice), contravene or conflict with or result in a
violation of any applicable Law or Order;
(h) Permits. Except if Noveon and Lubrizol enter into an agreement
(reasonably acceptable to Buyer) with Buyer or its Subsidiaries which
agreement unconditionally guarantees the full payment and indemnification
against any Damages which may arise as a result of the failure of Buyer or
its Subsidiaries to have such Permits (including any environmental, health
or safety Permits) as are necessary to allow Buyer or its Subsidiaries to
own and operate the Businesses, the Purchased Assets and the Purchased IP
Assets as currently operated from and after the Closing and the only
potential Damages to Buyer as a result of the failure of Buyer to have such
Permits is monetary damages (as opposed to injunctive or other equitable
relief), Buyer shall have received such Permits (including any
environmental, health or safety Permits) as are necessary to allow Buyer to
own and operate the Businesses, the Purchased Assets, and the Purchased IP
Assets as currently operated from and after the Closing;
55
(i) Antitrust Laws. Buyer, Sellers and IP Sellers shall have received
or obtained all governmental and regulatory Consents and approvals that are
necessary for the consummation of the transactions contemplated hereby and
Buyer's operation of the Businesses following the Closing, in each case on
terms satisfactory to Buyer, and the filing and waiting period requirements
under the Antitrust Laws shall have been complied with and expired;
(j) FIRPTA Affidavit. Sellers shall have furnished Buyer with an
affidavit certifying as to each Sellers' United States taxpayer
identification number and that each Sellers is not a "foreign person"
pursuant to Section 1445(b)(2) of the Code; and
(k) Releases of Encumbrances. Sellers and IP Sellers shall have
obtained releases of all material Encumbrances relating to the Purchased
Assets and the Purchased IP Assets (other than the Permitted Encumbrances).
(l) Chemtura Corporation Agreement. Buyer shall have entered into a
written agreement with either Chemtura Corporation or Seller (or Chemtura
Corporation and Seller) that provides for the supply of Aniline and DPA to
Buyer through December 31, 2007 on substantially the same terms and
conditions as set forth in the Crompton Corporation Sales Contract dated on
or about December 2003 by and between Crompton Corporation and Noveon, Inc.
(m) Geon Purchase Option. Except if Noveon and Lubrizol enter into an
agreement (reasonably acceptable to Buyer) with Buyer or its Subsidiaires
which provides that Noveon and Lubrizol will indemnify Buyer or its
Subsidiaries from and against all Damages (of any kind and nature) as a
result of Geon Company's exercise of its right to purchase the warehouse
located in Xxxxx, Illinois, the Geon Company shall have (i) acknowledged in
writing that the option to purchase Seller's portion of the Warehouse at
the Xxxxx Township (the "Warehouse") facility granted to it pursuant to
Quitclaim Deed and Reciprocal Grant of Options effective as of March 1,
1993 and recorded on May 4, 1995, in Book 558, page 285, Document No.
62218, or otherwise (the "Purchase Option"), has terminated and is no
further force or effect; or (ii) waived the Purchase Option, if any; or
(iii) if the Purchase Option exists and Geon exercises the same and
acquires Sellers' portion of said Warehouse, entered into a lease with
Buyer for said portion of the Warehouse in form and substance reasonably
satisfactory to Buyer that provides it with the economic and other benefits
Buyer would have if it acquired Seller's portion of the Warehouse.
(n) Butadiene Supply. Buyer shall have entered into a written
agreement with either Equistar Chemicals, LP or Seller (or Equistar
Chemicals, LP and Seller) that provides for the supply of butadiene to
Buyer on substantially the same terms and conditions as those set forth in
the Sales Agreement 1,3 Butadiene effective November 10, 2005 among
Equistar Chemicals, LP, Noveon, Inc. and The Lubrizol Corporation.
9.2 Conditions Precedent to Sellers' and IP Sellers' Obligation to Close.
Sellers' and IP Sellers' obligation to consummate the transaction contemplated
herein including to sell
56
and transfer the Purchased Assets and the Purchased IP Assets, and to take the
other actions required to be taken by Sellers and IP Sellers at the Closing, is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived in writing by Sellers'
Representative, in whole or in part):
(a) Accuracy of Representations. All of Buyer's representations and
warranties in this Agreement that are subject to materiality qualifications
shall have been accurate in all respects as of the date of this Agreement
and shall be accurate in all respects as of the time of the Closing as if
then made (except to the extent such representations or warranties speak as
of an earlier date, in which case such representations and warranties shall
be true and correct in all respects as of such earlier date). All other
representations and warranties in this Agreement shall have been accurate
in all material respects as of the date of this Agreement, and shall be
accurate in all material respects as of the time of the Closing as if then
made (except to the extent such representations or warranties speak as of
an earlier date, in which case such representations and warranties shall be
true and correct in all respects as of such earlier date).
(b) Buyer's Performance. All of the covenants and obligations that
Buyer is required to perform, or to comply with, pursuant to this Agreement
at or prior to the Closing shall have been duly performed and complied with
in all material respects;
(c) Closing Deliveries. Buyer shall have caused the payments,
documents and instruments required by Section 11.3 to be delivered (or
tendered subject only to the Closing) to Sellers' Representative;
(d) No Proceedings. Since the date of this Agreement, there shall not
have been commenced or threatened against Sellers or their Affiliates any
Proceeding involving any challenge to, or seeking damages or other relief
in connection with, any of the transactions contemplated hereunder;
(e) No Conflict. Neither the consummation nor the performance of any
of the transactions contemplated hereunder will, directly or indirectly
(with or without notice), contravene or conflict with or result in a
violation of any applicable Law or Order;
(f) Antitrust Laws. The filing and waiting period requirements under
the Antitrust Laws shall have been complied with and expired; and
(g) Permits. Except if Buyer enters into an agreement (reasonably
acceptable to Sellers' Representative) with Sellers which agreement
unconditionally guarantees the full payment and indemnification against any
Damages which may arise as a result of the failure of Sellers to have such
Permits which are to be transferred to Buyer at the Closing and which are
necessary to allow Sellers to own and operate the Retained Assets as
currently operated from and after the Closing and the only potential
Damages to Sellers as a result of the failure of Sellers to have such
Permits which are to be transferred to Buyer at the Closing is monetary
damages (as opposed to injunctive or other equitable relief), Sellers shall
have obtained substitute Permits to replace those Permits to be
57
transferred to Buyer as necessary for Sellers to operate their businesses
(other than the Businesses) as from and after the Closing as currently
operated.
ARTICLE 10
TERMINATION
10.1 Events of Termination. This Agreement may be terminated prior to the
Closing pursuant to any of the following:
(a) Termination by Buyer. This Agreement may be terminated by Buyer's
written notice to Sellers' Representative: (i) if a material breach of any
provision of this Agreement has been committed by Sellers and IP Sellers
(through no fault of Buyer) and such breach has not been waived by Buyer or
cured by Sellers or IP Sellers within twenty (20) days of receipt of
written notice of such breach; (ii) if Buyer elects to terminate as set
forth in Sections 7.7(b) or 7.8(c); (iii) if any condition set forth in
Section 9.1 has not been satisfied as of the Closing or if satisfaction of
such a condition by the Closing is or becomes impossible (other than
through the failure of Buyer to comply with its obligations under this
Agreement), and Buyer has not waived such condition before the Closing;
(iv) if the Closing has not occurred on or before the date that is one
hundred (100) days following the date hereof (provided that unless Seller
is in material breach of the covenant set forth in Section 7.5(f), Buyer
may not terminate this Agreement until the date that is one-hundred-thirty
(130) days following the date hereof pursuant to this clause (iv) if the
conditions set forth in Section 9.1(h) or Section 9.2(g) have not been
satisfied), or such later date as the Parties may agree upon, unless the
Buyer is in material breach of this Agreement, or (v) if prior to the date
that is twenty-nine (29) days after the date hereof, if such day is a
business day or the next business day if such day is not a business day,
Buyer, on the one hand, and Sellers and IP Sellers, on the other hand, have
not executed (to be effective on the Closing) the Closing Documents; or
(b) Termination by Sellers and IP Sellers. This Agreement may be
terminated by Sellers' Representative's written notice to Buyer: (i) if a
material breach of any provision of this Agreement has been committed by
Buyer (through no fault of Sellers or IP Sellers) and such breach has not
been waived by Sellers' Representative or cured by Buyer within twenty (20)
days of receipt of written notice of such breach; (ii) if any condition set
forth in Section 9.2 has not been satisfied as of the Closing or if
satisfaction of such a condition by the Closing is or becomes impossible
(other than through the failure of Sellers and IP Sellers to comply with
their obligations under this Agreement), and Sellers' Representative has
not waived such condition before the Closing; (iii) if the Closing has not
occurred on or before the date that is one hundred (100) days following the
date hereof (provided that unless Buyer is in material breach of the
covenant set forth in Section 7.5(f), Sellers and IP Sellers may not
terminate this Agreement until the date that is one-hundred-thirty (130)
days following the date hereof pursuant to this clause (iii) if the
conditions set forth in Section 9.1(h) or Section 9.2(g) have not been
satisfied), or such later date as the Parties may agree upon, unless
Sellers or IP Sellers are in material breach of this Agreement; or (iv) if
prior to the date that is twenty-nine (29) days after the date hereof, if
such day is a business day or the next business day if such day is not a
58
business day, Buyer, on the one hand, and Sellers and IP Sellers, on the
other hand, have not executed (to be effective on the Closing) the Closing
Documents; or
(c) Mutual Termination. This Agreement may be terminated by mutual
written consent of the Parties.
For avoidance of doubt, none of Buyer, Sellers, or IP Sellers shall
have any obligation to execute the Closing Documents unless such Person is
satisfied with the form and substance of such document in its sole
discretion.
10.2 Effect of Termination. In the event that this Agreement shall be
terminated pursuant to Section 10.1, all further obligations of the Parties
hereto under this Agreement (other than the obligations of the Parties in
Sections 7.3 and 10.2 and Article 15 (other than Section 15.3)) shall terminate;
provided, however, nothing in Section 10.1 or this Section 10.2 shall be deemed
to release any Party from any Liability for any breach by such Party of the
terms and provisions of this Agreement or to impair the right of any Party to
compel specific performance by another Party of its obligations under this
Agreement.
ARTICLE 11
THE CLOSING; CLOSING DELIVERIES
11.1 The Closing. Unless otherwise agreed in writing by the Parties, the
closing and completion of the transfer and delivery of the Purchased Assets and
Purchased IP Assets (the "Closing") shall be held at the offices of Xxxxxx
XxXxxxxx, at 000 X. Xxxx Xxxxxx, Xxxxx, Xxxx 00000, or at such other place as is
mutually agreeable to the Parties, commencing at 10:00 a.m. on the later of: (i)
the twenty-eighth (28th) day following the date hereof; or (ii) the date that is
five (5) business days following the date upon which all closing conditions set
forth in Article 9 have been satisfied (the "Closing Date").
11.2 Closing Deliveries of Sellers. At the Closing, Sellers or IP Sellers,
as the case may be, shall deliver, or cause to be delivered, to Buyer (or, at
the request of Buyer, to the Title Company), the following:
(a) Physical Possession. Sellers shall deliver to Buyer physical
possession of all the Purchased Assets and Purchased IP Assets capable of
passing by delivery with the intent that title in such Purchased Assets and
Purchased IP Assets shall pass by and upon delivery.
(b) Title Insurance Policies. Title Insurance Policies (which may be
in the form of a xxxx-up of a pro forma of the Title Commitment) for each
Owned Real Property and each Leased Real Property described in Schedule
2.1(e) insuring Buyer's fee simple title to each Owned Real Property and a
legal, valid, binding and enforceable leasehold interest in each Leased
Real Property as of the Closing Date in an amount customary for
transactions of this type with gap coverage through the date of recording,
subject only to Permitted Encumbrances. Sellers shall deliver to the Title
Company such affidavits of title and other certificates as are customarily
requested by the Title Company. Such Title Insurance Policies may, at
Buyer's cost and expense, include all endorsements reasonably requested by
Buyer.
59
(c) Transfer Documents. The following transfer documents:
(i) Bills of Sale. Duly executed bills of sale, for all owned
tangible personal property that is included among the Purchased
Assets, each in the form and substance reasonably satisfactory to
Buyer and Sellers' Representative;
(ii) Certificates of Title. A duly executed and completed
certificate of title with respect to each motor vehicle or other
titled asset included among the Purchased Assets;
(iii) Assignments of Intellectual Property. Duly executed
assignments, which are necessary or appropriate to transfer and assign
any item of Purchased IP Asset to Buyer, each in the form and
substance reasonably satisfactory to Buyer and Sellers'
Representative;
(iv) Warranty Deed - Owned Real Property. Duly executed general
warranty deeds for each Owned Real Property conveyed under this
Agreement, executed in recordable form, each in the form and substance
reasonably satisfactory to Buyer and Sellers' Representative;
(v) Assignment and Assumptions and Consent - Real Property Lease.
Assignments of each Real Property Lease, duly executed by the
applicable Seller and the lessor of the Leased Real Property, each in
the form and substance reasonably satisfactory to Buyer and Sellers'
Representative;
(vi) Assignment and Assumption Agreements. Assignment and
Assumption Agreements (the "Assignment and Assumption Agreements"),
which are necessary or appropriate to transfer and assign any item of
the Purchased Assets to Buyer, duly executed by the applicable Seller,
each in the form and substance reasonably satisfactory to Buyer and
Sellers' Representative;
(vii) Estoppel Certificates. An estoppel certificate with respect
to each Leased Real Property described on Schedule 2.1(e), dated no
more than thirty (30) days prior to the Closing Date, in form and
substance satisfactory to Buyer;
(viii) Non-Disturbance Agreements. A non-disturbance agreement
with respect to each Real Property Lease described on Schedule 2.1(e)
in form and substance satisfactory to Buyer from each lender
encumbering any real property underlying the Leased Real Property for
such Real Property Lease; and,
(ix) Any other appropriately executed instruments of sale,
transfer, assignment, conveyance and delivery, warranty deeds,
warranty assignments and assumption of leases, bills of sale,
assignments and assumptions, intellectual property assignments or
other intellectual property conveyance documents, certificates of
title, vehicle titles, transfer tax declarations and all other
instruments of conveyance which are necessary or reasonably desirable
to effect transfer to Buyer of good and marketable title to the
Purchased Assets and the
60
Purchased IP Assets (free and clear of all Encumbrances, other than
Permitted Encumbrances).
(d) Records. All Records, provided that to the extent the Records must
be severed from Sellers' other files, records, documents and instruments,
Sellers will use commercially reasonable efforts to so sever those Records
and deliver them to Buyer as soon as practicable following the Closing;
(e) Officer's Certificate. A certificate dated as of the Closing Date
and duly executed by an officer of each Seller or IP Seller certifying
that: (i) such Seller has complied with all agreements and obligations
required by this Agreement to have been performed or complied with by it
prior to the Closing; and (ii) the representations and warranties made by
such Seller hereunder are accurate in all material respects at and as of
the Closing with the same effect as though such representations and
warranties were made at and as of the Closing;
(f) Secretary's Certificate. A certificate dated as of the Closing
Date and duly executed by the Secretary of each Seller or IP Seller
certifying that: (i) attached thereto is a true and accurate copy of the
articles or certificate of incorporation or similar organizational
documents of such Seller or IP Seller; (ii) attached thereto is a true and
accurate copy of the Code of Regulations, Bylaws or other similar governing
document of such Seller or IP Seller; (iii) attached thereto is a true and
accurate copy of the resolutions of the Board of Directors of such Seller
or IP Seller authorizing Seller or IP Seller to enter into and perform this
Agreement and each Transaction Document to be entered into by it at the
Closing and authorizing execution of this Agreement and each such
Transaction Document by each Person signing on behalf of such Seller or IP
Seller and further certifying that such resolution and such authority have
not been amended, modified, revoked or rescinded and are in full force and
effect at the Closing; and (iv) set forth therein are the names of the
individuals who are the duly elected officers of such Seller or IP Seller
who have been duly authorized by the Directors of such Seller or IP Seller
to execute and deliver this Agreement and the Transaction Documents to
which it is a party on behalf of Seller or IP Seller and certifying the
signatures of such officers;
(g) Transition Services Agreement. The transition services agreement
("Transition Services Agreement"), negotiated by the Parties after the date
hereof, duly executed by the applicable Sellers and IP Sellers;
(h) License Agreement. The License Agreement, duly executed by the
applicable Seller or IP Seller;
(i) Buyer License Agreement. The License Agreement, duly executed by
the applicable Seller or IP Seller;
(j) Manufacturing and Supply Agreements. The Buyer Manufacturing and
Supply Agreements and the Sellers Manufacturing and Supply Agreements, duly
executed by the applicable Seller or its Affiliate;
61
(k) Other Documents and Instruments. Such other documents or
instruments reasonably requested by Buyer; and
(l) Copies of Approvals. Copies of all third-party approvals and
Consents and governmental and regulatory consents and approvals obtained by
Seller.
11.3 Closing Deliveries of Buyer. At the Closing, Buyer shall deliver, or
cause to be delivered, to Sellers' Representative (or, at the request of
Sellers' Representative, to the Title Company):
(a) Wire Transfer. A wire transfer of the Purchase Price, plus or
minus the Estimated Adjustment Amount as set forth in Article 4 to Sellers'
Representative in immediately available funds, to the account designated by
Sellers' Representative;
(b) Assignments of Intellectual Property. The assignments of
Intellectual Property, duly executed by Buyer;
(c) Assignment and Assumption Agreements. The Assignment and
Assumption Agreements, duly executed by Buyer;
(d) Assignment and Assumption and Consent of Real Property Lease.
Assignments and assumptions of each Real Property Lease, duly executed by
Buyer
(e) Officer's Certificate. A certificate dated as of the Closing Date
and duly executed by an officer of Buyer certifying that: (i) Buyer has
complied with all agreements and obligations required by this Agreement to
have been performed or complied with by it prior to the Closing; and (ii)
the representations and warranties made by Buyer hereunder are accurate in
all material respects at and as of the Closing with the same effect as
though such representations and warranties were made at and as of the
Closing;
(f) Secretary's Certificate. A certificate dated as of the Closing
Date and duly executed by the Secretary of Buyer certifying that: (i)
attached thereto is a true and accurate copy of the articles of
organization (or the equivalent) and the operating agreement of Buyer; (ii)
attached thereto is a true and accurate copy of the resolutions of the
Board of Directors of Buyer authorizing Buyer to enter into and perform
this Agreement and each Transaction Document to be entered into by it at
the Closing and authorizing execution of this Agreement and each such
Transaction Document by each Person signing on behalf of the Buyer and
further certifying that such resolution and such authority have not been
amended, modified, revoked or rescinded and are in full force and effect at
the Closing; and (iii) set forth therein are the names of the individuals
who are the duly elected officers of Buyer who have been duly authorized by
the Directors of Buyer to execute and deliver this Agreement and the
Transaction Documents to which it is a party on behalf of Buyer and
certifying the signatures of such officers;
(g) Transition Services Agreement. The Transition Services Agreement,
duly executed by Buyer;
62
(h) License Agreement. The License Agreement, duly executed by Buyer;
(i) Buyer License Agreement. The Buyer License Agreement, duly
executed by Buyer.
(j) Manufacturing and Supply Agreements. The Buyer Manufacturing and
Supply Agreements and the Sellers Manufacturing and Supply Agreements, duly
executed by Buyer or its Subsidiaries; and
(k) Other Documents and Instruments. Such other documents or
instruments as reasonably requested by Sellers.
ARTICLE 12
SURVIVAL; INDEMNIFICATION
12.1 Survival of Representations and Warranties. Except for the
representations and warranties contained in Article 13, all representations and
warranties made by Sellers and IP Sellers in this Agreement shall survive the
Closing for a period of 18 months, except that the representations and
warranties set forth in Sections 5.1 (Organization and Qualification), 5.2
(Corporate Authority), 5.3 (Enforceability), 5.8(c) (Title to Assets;
Sufficiency of Assets), 5.20 (Brokers or Finders), 5.22(f) (Assets of IP
Sellers), and 7.16 (Removal of Guarantees) (together with Section 5.12 (Taxes),
the "Fundamental Representations")) shall survive the Closing indefinitely and
the representations and warranties set forth in Section 5.12 (Taxes) shall
survive the Closing until the expiration of the applicable statutes of
limitations (giving effect to any extensions or waivers thereof), plus sixty
(60) days. Any claim for indemnification with respect to any of such matters
that is not asserted by notice given as herein provided within such specified
period of survival may not be pursued. Any indemnity claim asserted within such
period of survival will be timely made for purposes hereof and shall survive the
time at which it would otherwise terminate pursuant to the terms hereof. Unless
a specified time period is set forth in this Agreement (in which event such
specified period will control), the covenants and obligations of Sellers, IP
Sellers, and Buyer herein will survive the Closing indefinitely. The
representations and warranties in this Agreement and the Schedules attached
hereto shall in no event be affected by any investigation, inquiry or
examination made for or on behalf of Buyer or Sellers or IP Sellers, or the
knowledge of any of Buyer's or Sellers' or IP Sellers officers, directors,
shareholders, employees or agents or the acceptance by Buyer or Sellers or IP
Sellers of any certificate or opinion hereunder.
12.2 Indemnification of Buyer. Subject to the provisions of this Article
12, Noveon, and if Noveon fails to do so then, Lubrizol, shall indemnify and
hold harmless Buyer and its Affiliates (each a "Buyer Indemnified Person") from
and against any and all damages or losses (collectively, "Damages") any Buyer
Indemnified Person suffers, sustains or becomes subject to as a result of or in
connection with:
(a) any breach of or inaccuracy in any representation or warranty made
by Sellers or IP Sellers in this Agreement, or except for the Closing
Documents, in any of the signed certificates or other signed instruments or
signed agreements furnished to Buyer by Sellers or IP Sellers pursuant to
this Agreement after the date hereof and on or
63
prior to the Closing Date, other than the representations and warranties
set forth in Section 13.2, for which the indemnification provided in a
connection with a breach of such representations and warranties will be
exclusively governed by Article 13;
(b) any breach of any covenant or obligation of Sellers or IP Sellers
in this Agreement, or, except for the Closing Documents, in any of the
signed certificates or other signed instruments or signed documents
furnished to Buyer by Sellers or IP Sellers pursuant to this Agreement
after the date hereof and on or prior to the Closing Date, other than
covenants and obligations set forth in Article 13, for which the
indemnification provided in a connection with a breach of such covenant or
obligation will be governed exclusively by Article 13;
(c) any of the Retained Liabilities;
(d) the Damages relating to removing any Encumbrance (other than
Permitted Encumbrances) on the Purchased Assets or the Purchased IP Assets
as of immediately prior to the Closing; or
(e) if the out-of-pocket costs and expenses of Buyer for filing and/or
transfer fees paid to a Governmental Body in connection with the transfer
from Sellers to Buyer of the Permits included in the Purchased Assets or
the attainment of Permits not included in the Purchased Assets because such
Permits were not transferable to Sellers, either of which are necessary to
allow Buyer to own and operate the Businesses and the Purchased Assets and
the Purchased IP Assets as currently operated from and after the Closing
exceeds $160,000 (excluding costs and expenses paid by Buyer to its
Representatives), then such out-of-pocket costs and expenses (excluding
costs and expenses paid by Buyer to its Representatives) of Buyer in excess
of $160,000.
12.3 Indemnification of Sellers and IP Sellers. Subject to the provisions
of this Article 12, Buyer shall indemnify and hold harmless Sellers, IP Sellers
and their Affiliates (each a "Sellers' Indemnified Person") from and against any
and all Damages any Sellers' Indemnified Person may suffer, sustain or become
subject to as a result of or in connection with:
(a) any breach of or inaccuracy in any representation or warranty made
by Buyer in this Agreement, or, except for the Closing Documents, in any of
the signed certificates or other signed instruments or signed agreements
furnished to Seller or IP Sellers by Buyer pursuant to this Agreement after
the date hereof and on or prior to the Closing Date;
(b) any breach of any covenant or obligation of Buyer in this
Agreement, or, except for the Closing Documents, in any of the signed
certificates or other signed instruments or signed documents furnished to
Sellers or IP Sellers by Buyer pursuant to this Agreement after the date
hereof and on or prior to the Closing Date;
(c) any of the Assumed Liabilities;
64
(d) any Liability first arising after the Closing out of the ownership
or operation of the Purchased Assets, the Purchased IP Assets or the
Businesses by the Buyer or the employment of any Transferred Employees by
the Buyer; and
(e) Product Liability claims made against Sellers following the
Closing Date; provided that Buyer's liability per claim under this Section
12.3(e) shall in no event exceed $100,000 per claim, with it being
understood that all Liabilities directly relating to claims arising out of
the same set of operative facts shall be considered a single claim for
purposes of this Agreement and shall be aggregated for purposes of
determining Buyer's maximum exposure to $100,000.
12.4 Limitation of Indemnification.
(a) Buyer Indemnified Persons shall not be entitled to indemnification
hereunder with respect to any Damages specified in Section 12.2(a) and
Section 12.2(d), unless the particular indemnifiable damage or loss exceeds
$50,000 (each an "Allowable Damage" and collectively, the "Allowable
Damages"), with it being understood that all Damages relating to claims
arising out of the same set of operative facts shall be considered an
individual claim for purposes of this Agreement and such items shall be
aggregated for purposes of this proviso.
(b) Noveon and Lubrizol shall not have any obligation to indemnify any
Buyer Indemnified Persons for Allowable Damages specified in Section
12.2(a) (other than with respect to representations and warranties
contained in the Fundamental Representations) unless and until such Buyer
Indemnified Persons have incurred Allowable Damages in an aggregate amount
in excess of $1,500,000, in which event such Buyer Indemnified Persons
shall be entitled to be indemnified for the entire amount of such aggregate
Allowable Damages. The Parties agree and acknowledge that for purposes of
satisfying the $1,500,000 threshold set forth in this Section 12.4(b) that
indemnification obligations for Environmental Costs incurred under Article
13 shall not apply toward the satisfaction of such threshold.
(c) Notwithstanding anything in this Agreement to the contrary,
Noveon's and Lubrizol's aggregate indemnity obligation for Allowable
Damages specified in Section 12.2(a) (when aggregated with its
indemnification obligations for Environmental Costs incurred under Section
13.4(a)) shall in no event exceed ten percent (10%) of the Purchase Price.
Other than with regard to the Fundamental Representations, no recovery for
indemnification of Allowable Damages under Section 12.2(a) shall be
received by any Buyer Indemnified Person to the extent the aggregate
Allowable Damages received under Section 12.2(a) (including any Allowable
Damages and Allowable Environmental Cost previously recovered under Section
12.2(a) and Section 13.4(a)) by all of the Buyer Indemnified Persons, taken
as a whole, exceed ten percent (10%) of the Purchase Price; and, other than
with regard to the Fundamental Representations, Sellers and IP Sellers
shall have no responsibility for Allowable Damages under Section 12.2(a) to
Buyer Indemnified Persons thereafter.
65
(d) Nothing in this Agreement (including this Section 12.2) shall
limit or restrict any of Buyer's rights to maintain or recover any amounts
in connection with any action or claim based upon fraud. No Buyer
Indemnified Person shall be entitled to indemnification hereunder with
respect to Damages to the extent (but only to the extent) the matter giving
rise to such Damages resulted in an adjustment (in favor of Buyer) to the
Purchase Price pursuant to Section 4.3 or to the extent (but only up to
such amount) the underlying matters are accrued for and identified with
specificity on the Closing Statement.
(e) Buyer acknowledges that the indemnifications provided by Sellers
and IP Sellers under Section 12.2 are being made by Noveon and Lubrizol on
behalf of all Sellers and IP Sellers, and Noveon and Lubrizol are the only
Parties available to the Buyer Indemnified Parties for claims of
indemnification against the Sellers and IP Sellers.
12.5 Third-Party Claims.
(a) The provisions of this Section 12.5 shall apply to any legal
Proceeding which is instituted or any claim asserted by any third party (a
"Third Party Claim") in respect of which a Sellers Indemnified Party, on
the one hand, or a Buyer Indemnified Party, on the other hand, may be
entitled to indemnification under this Article 12, the Party asserting such
right to indemnification under this Article 12 (an "Indemnitee") shall give
the Party from whom indemnification is sought (the "Indemnifying Party")
prompt written notice thereof. A delay in giving such notice shall relieve
the Indemnifying Party of Liability for the Third Party Claim to the extent
(and only to such extent) the Indemnifying Party suffers Damages for which
the Indemnifying Party is obligated to be greater than such Damages would
have been had the Indemnitee given the Indemnitor prompt notice hereunder.
The written notice shall set forth (to the extent known) in reasonable
detail the alleged factual basis for such Third Party Claim, the provision
or provisions of this Agreement on which such claim is based, and the
Indemnitee's good-faith estimate of the amount of the claim.
(b) If an Indemnitee gives notice to the Indemnifying Party pursuant
to Section 12.5(a) of the assertion of a Third Party Claim, the
Indemnifying Party shall be entitled to participate in the defense of such
Third Party Claim and, at its option, to assume the defense and control of
such Third Party Claim. Such assumption of control shall constitute the
Indemnifying Party's acknowledgment that the Indemnifying Party will be
responsible for any and all Liability or Damages associated with the
tendered claim. Notwithstanding anything contained herein to the contrary,
in no event, without the written consent of the Indemnitee, shall an
Indemnifying Party be able to assume the defense of any Third Party Claim,
if: (i) the Indemnifying Party is also a Person against whom the Third
Party Claim is made and the Indemnitee determines in good faith that joint
representation would be inappropriate; (ii) the Third Party Claim seeks an
injunction that materially interferes with the business or other operations
of the Indemnitee; (iii) the claim for indemnification relates to or arises
in connection with any criminal Proceeding, action, indictment, allegation
or investigation; (iv) the Indemnitee reasonably believes an adverse
determination with respect to the action, lawsuit, investigation,
Proceeding or
66
other claim giving rise to such claim for indemnification would be
detrimental to or injure the Indemnitee's reputation or future business
prospects; (v) upon petition by the Indemnitee, the appropriate court rules
that the Indemnifying Party failed or is failing to vigorously prosecute or
defend such claim; or (vi) the Indemnitee reasonably believes that the loss
relating to such claim for indemnification could exceed the maximum amount
that the Indemnitee could then be entitled to recover under Section 12.4.
After notice from the Indemnifying Party to the Indemnitee of its election
to assume the defense of such Third Party Claim, the Indemnitee shall have
the right, but not the obligation, to participate in such Proceedings with
counsel of its own choice, but the Indemnifying Party shall not, so long as
it diligently conducts such defense, be liable to the Indemnitee under this
Section 12.5 for any fees of Indemnitee's counsel or any other expenses
with respect to the defense of such Third Party Claim, incurred by the
Indemnitee after the assumption of the defense by the Indemnifying Party.
If the Indemnifying Party assumes the defense of a Third Party Claim the
Indemnifying Party shall not, without the Indemnitee's written consent,
settle or compromise such Third Party Claim, or consent to the entry of any
judgment, unless each of the following requirements is satisfied: (A) there
is no finding or admission of any violation of Law or any violation of the
rights of any Person; (B) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Party; and (C) the Indemnitee is
expressly and unconditionally released from all Liability from the Third
Party Claim and the events giving rise to the Third Party Claim. The
Indemnitee shall have no Liability with respect to any compromise or
settlement of such Third Party Claims affected without its written consent.
(c) With respect to any Third Party Claim subject to indemnification
under this Article 12: (i) both the Indemnitee and the Indemnifying Party,
as the case may be, shall keep the other Person reasonably informed of the
status of such Third Party Claim and any related Proceedings at all stages
thereof where such Person is not represented by its own counsel; and (ii)
the Parties agree (each at its own expense) to render to each other such
assistance as they may reasonably require of each other and to cooperate in
good faith with each other in order to ensure the proper and adequate
defense of any Third Party Claim.
(d) With respect to any Third Party Claim subject to indemnification
under this Article 12, the Parties agree to cooperate in such a manner as
to preserve in full (to the extent possible) the confidentiality of all
Confidential Information and the attorney-client and work-product
privileges. In connection therewith, each Party agrees that: (i) it will
use commercially reasonable efforts, in respect of any Third Party Claim in
which it has assumed or participated in the defense, to avoid production of
Confidential Information (consistent with applicable Law and rules of
procedure); and (ii) all communications between any Party hereto and
counsel responsible for or participating in the defense of any Third Party
Claim shall, to the extent possible, be made so as to preserve any
applicable attorney-client or work-product privilege.
12.6 Other Claims. Any claim by an Indemnitee on account of Damages which
do not result from a Third Party Claim (a "Direct Claim") shall be asserted by
giving the Indemnifying Party reasonably prompt written notice thereof, stating
the nature of such claim in reasonable
67
detail and indicating the estimated amount, if practicable, and the Indemnifying
Party shall have a period of thirty (30) days within which to respond to such
Direct Claim. If the Indemnifying Party does not respond within such thirty
(30)-day period, the Indemnifying Party shall be deemed to have accepted such
claim. If the Indemnifying Party rejects such claim, the Parties covenant and
agree to use commercially reasonable efforts to resolve their dispute with
respect to such claim within thirty (30) days of receipt of such written notice.
If despite such commercially reasonable efforts, the Parties are unable to
resolve their dispute, such dispute shall be promptly submitted to Arbitration
pursuant to Article 14.
12.7 Exclusive Remedy of Parties. The remedies provided in this Article 12
shall be the sole and exclusive remedy of the Parties for any breach by any or
all of Sellers or IP Sellers, on the one hand, or Buyer, on the other, of this
Agreement and the transactions contemplated hereby, other than indemnification
for Environmental Matters as set forth in Article 13 and remedies set forth in
the Closing Documents. Notwithstanding anything to the contrary contained in
this Agreement, other than claims based on fraud, except for Damages incurred by
Buyer Indemnified Persons or Sellers Indemnified Persons as a direct result of
the matters described in Section 12.2 or 12.3, respectively, Sellers, IP Sellers
and its and their Affiliates shall have no Liability to any Buyer Indemnified
Person, and Buyer and its Affiliates shall have no Liability to any Seller
Indemnified Person, including any Liability incurred in connection with this
Agreement, the Purchased Assets, the Purchased IP Assets or the operation of the
Businesses other than for Liabilities for Environmental Matters as set forth in
Article 13 and Liabilities pursuant to the Closing Documents.
12.8 Amount of Claims; Insurance; Tax Benefits.
(a) Insurance. To the extent that any indemnification claim made under
this Article 12 is covered by insurance held by a Buyer Indemnified Person
(an "Insured Loss"), the Buyer Indemnified Person shall only be entitled to
indemnification pursuant to Section 12.2 hereof with respect to the amount
of indemnification claim in excess of the net insurance proceeds actually
received (after deduction for any cost of collection, deductible,
retroactive premium adjustment, reimbursement obligation or other cost
directly related to such insurance claim) by the Buyer Indemnified Person
pursuant to such insurance. With respect to any Insured Loss, the Buyer
Indemnified Person shall use commercially reasonable efforts to obtain
recovery from the provider of such insurance; provided that a Buyer
Indemnified Person shall have no obligation to seek recovery under any
insurance policy to the extent that any claims against such insurance
policy for such Damages would result in an increase in the premium for such
insurance policy or in cancellation of such policy. Notwithstanding
anything herein to the contrary, a Buyer Indemnified Person may pursue
recovery hereunder prior to the resolution of any such insurance claim, and
Noveon, and if Noveon fails to do so then, Lubrizol, shall pay to the
applicable Buyer Indemnified Party such amounts as it would otherwise be
obligated to pay to such Buyer Indemnified Person without respect to this
Section 12.8(a) and prior to such time as such Buyer Indemnified Person has
determined whether such Damages is covered (or not covered) by insurance
held by such Buyer Indemnified Party. If, following the receipt of any
indemnity payments pursuant to Section 12.2, a Buyer Indemnified Person
obtains any insurance recovery from a third party insurance provider, then
the Buyer Indemnified Person shall promptly pay over to Noveon the net
amount of
68
the proceeds received by such Buyer Indemnified Person (after deduction for
any cost of collection, deductible, retroactive premium adjustment,
reimbursement obligation or other cost directly related to such insurance
claim) pursuant to such insurance up to, but not in excess of, the amount
of the indemnification claim paid by Noveon or Lubrizol. The Parties agree
that no insurance company shall have any right of subrogation under this
Section 12.8(a) and the Parties agree that this Section 12.8(a) is not for
the benefit of any third party insurance provider.
(b) Tax Benefit. To the extent that an Indemnitee recognizes Tax
Benefits as a result of any Buyer Indemnified Party's Damages or Sellers'
Indemnified Party's Damages, as applicable, the Indemnitee shall pay an
amount equal to the amount of such Tax Benefits (but not in excess of the
indemnification payment or payments actually received from the Indemnifying
Party with respect to such Buyer Indemnified Party's Damages or Sellers'
Indemnified Party's Damages) to the Indemnifying Party when such Tax
Benefits are actually recognized by the Indemnitee. The Indemnitee shall
pay the amount of such Tax Benefits to the Indemnifying Party within ten
(10) days of filing any Tax Return reflecting a Tax Benefit. For this
purpose, the Indemnitee shall be deemed to recognize a tax benefit ("Tax
Benefit") with respect to a taxable year if, and to the extent that, the
Indemnitee's cumulative liability for Taxes through the end of such taxable
year, calculated by excluding any Tax items attributable to the Buyer
Indemnified Party's Damages or Sellers' Indemnified Party's Damages, as
applicable, and the receipt of any indemnification payments from all
taxable years, exceeds the Indemnitee's actual cumulative liability for
Taxes through the end of such taxable year, calculated by taking into
account any Tax items attributable to the Buyer Indemnified Party's Damages
or Sellers' Indemnified Party's Damages, as applicable, and the receipt of
any indemnification payments for all taxable years (to the extent permitted
by relevant Tax Law and not already taken into account for a previous
taxable year pursuant to this Section 12.8(b) and treating such Tax items
as the last items claimed for any taxable year).
12.9 Adjustment to Purchase Price for Tax Purposes. It is the intent of the
Parties that any amounts paid under this Article 12 will represent an adjustment
of the Purchase Price, and the Parties will report such payments consistent with
such intent.
ARTICLE 13
ENVIRONMENTAL MATTERS
13.1 Exclusivity of Article. Except as otherwise provided in this Agreement
(including, with respect to the Retained Liabilities, Liabilities relating to
Anhydrous Ammonia Release Liability, Former Facilities, Pre-Closing Toxic Tort
Liabilities, and the provisions in Section 5.19 regarding environmental, health
and safety Permits), this Article 13 exclusively governs the Parties' and their
Affiliates' Liabilities relating to Environmental, Health and Safety
Liabilities, Environmental Matters, environmental and health and safety
disclosures and the allocation of Environmental Costs between the Parties and
their Affiliates as such costs relate to the Owned Real Property, the Leased
Real Property and the ownership and operation of the Businesses. Except as to
the Retained Liabilities including Liabilities relating to Former Facilities and
Pre-Closing Toxic Tort Liabilities or as set forth in this Article 13, Buyer and
69
Sellers and IP Sellers, for themselves and their Affiliates, Representatives,
successors and assigns, each release and discharge each other from any and all
rights, claims or causes of action that any of them may now have under any and
all Occupational Safety and Health Laws and Environmental Laws (including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Sections 9601, et seq., "CERCLA") relating to the Owned Real
Property, the Leased Real Property, the ownership of the Purchased Assets and
the operation of the Businesses. For avoidance of doubt, Sellers and IP Sellers
agree and acknowledge that nothing in this Article 13 or elsewhere in this
Agreement (other than the limitation set forth in Section 13.5) shall limit
Buyer's right to recover for breaches of the representations and warranties set
forth in Section 5.19.
13.2 Sellers' Environmental Representation and Warranty. Sellers jointly
and severally represent and warrant to Buyer that as of the date hereof, and
with respect to Sections 13.2(a) through 13.2(g) below, except as disclosed in
Schedule 13.2:
(a) To Sellers' Knowledge, since February 26, 2001 each Seller has
materially complied at all times with, and is currently in material
compliance with, all Environmental Laws and Occupational Safety and Health
Laws applicable to its Business, and there are no material Environmental,
Health and Safety Liabilities with respect to its Business.
(b) To Sellers' Knowledge, each Seller has all material Permits
required for the ongoing conduct of its Business as it is currently being
conducted. To Sellers' Knowledge, there has been no commencement of any
process by or before any Governmental Body to suspend, revoke, materially
modify (other than modifications made in connection with a normal renewal
of an expiring Permit) or cancel any such Permit, or any claims by or
before any Governmental Body alleging or investigating any violations of
Law, except where failure to have such Permit would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
Notwithstanding the foregoing, it is understood and agreed by Buyer that
Sellers make no representations as to the transferability or assignability
of any such Permit.
(c) There are no pending or, to Sellers' Knowledge, threatened claims,
Encumbrances, or other restrictions resulting from any Environmental,
Health and Safety Liabilities or arising under or pursuant to any
Environmental Law or Occupational Safety and Health Law with respect to or
affecting any Facility or any of the Owned Real Property or Leased Real
Property.
(d) To Sellers' Knowledge, neither the Owned Real Property nor the
Leased Real Property have been placed or are proposed to be placed by the
United States Environmental Protection Agency or equivalent state authority
on the National Priorities List or equivalent state list, as in effect as
of the Closing Date.
(e) To Sellers' Knowledge, no Release or presence of Hazardous
Materials has occurred or is occurring at the Facilities, the Owned Real
Property or the Leased Real Property that presently requires notice,
further investigation or response action under applicable Environmental
Laws.
70
(f) To Sellers' Knowledge, Sellers' ownership and operation of the
Facilities, the Owned Real Property and the Leased Real Property has not
involved the disposal, transportation or arrangement for disposal or
transportation, of Hazardous Materials at or to a site that, pursuant to
CERCLA or any equivalent state law, has been placed or is proposed to be
placed by the United States Environmental Protection Agency or equivalent
state authority on the National Priorities List or equivalent state list,
as in effect as of the Closing Date.
(g) To Sellers' Knowledge, Schedule 13.2(g) lists all underground and
above ground storage tanks regulated as such under Environmental Law (not
including process holding tanks, "drop" tanks and similar tanks) located at
the Owned Real Property and the Leased Real Property.
(h) Notwithstanding anything herein or in the Schedules or Exhibits
hereto to the contrary, Sellers have made available in the online data room
to Buyer all material information, including without limitation all
material environmental audit or assessment reports, bearing upon material
Environmental, Health and Safety Liabilities with respect to the
Businesses, the Facilities, the Owned Real Property or the Leased Real
Property, which are in Sellers' possession or control or which are
reasonably available to Sellers.
13.3 Conditions to Environmental Indemnification and Cost Sharing.
(a) During the term of Sellers' obligations under this Article 13,
Buyer shall comply with Sellers' executory obligations set forth in the
documents identified on Exhibit A which obligations (i) pertain to
operations at the Facilities, and (ii) are necessary for the preservation
of environmental indemnity rights of Sellers against third party
indemnitors ("Buyer's Environmental Covenants").
(b) Notwithstanding any other provision contained in this Agreement,
if Buyer breaches any of Buyer's Environmental Covenants, Buyer shall
indemnify and hold harmless the Sellers' Indemnified Persons from and
against all provable Damages they may suffer, sustain or become subject to
as a result of Buyer's breach of such covenants; provided that, for
avoidance of doubt, Sellers shall have no such right to indemnification in
the absence of actual prejudice of the rights or interests of Sellers
caused by such breach; and provided further, that in the event Buyer's
breach of any of Buyer's Environmental Covenants results in provable
Damages arising with respect to any location other than the transferred
Facilities: (i) Buyer shall be responsible for fifty percent (50%) of such
Damages, and (ii) Buyer's share of such Damages shall not exceed $5,000,000
in the aggregate. For avoidance of doubt, the Sellers' Indemnified Persons
shall have the right to injunctive relief set forth in Section 14.3, and
Sellers' Damages for a breach covered under this Section 13.3 shall include
any of Sellers' provable consequential damages arising from such breach by
Buyer.
(c) In the event of an inconsistency between the definitions of terms
set forth in the attached Exhibit A and the definitions of the same term
contained in this Agreement, the terms of the attached provisions shall
control as they relate to the attached covenants and only to the attached
covenants.
71
(d) Buyer shall ensure that its Representatives, successors and
assigns are aware of, and are obligated by contract to perform in
accordance with Buyer's obligations set forth in Section 13.3(a).
13.4 Indemnification by Sellers and Cost Sharing. Subject to the
conditions, limitations and provisions set forth in Article 13:
(a) Breach of Representation and Warranty. Subject to the applicable
provisions of Section 13.5, Sellers shall indemnify, defend and hold
harmless the Buyer Indemnified Persons from and against all Damages
(including Environmental Costs and capital costs) they suffer, sustain or
become subject to as a result of, in connection with, relating or
incidental to, or by virtue of a breach of or inaccuracy in any
representation or warranty of Sellers set forth in Section 13.2. For the
avoidance of doubt, a breach of Section 5.19 regarding environmental,
health and safety Permits shall be governed by this Article 13 and not
Article 12.
(b) Defined Remediation Projects.
(i) Existing Defined Remediation Projects. Schedule 13.4(b)(i)
describes the environmental remediation projects at the Charlotte,
North Carolina, Cincinnati, Ohio and Kalama, Washington Facilities
(collectively, the "Defined Remediation Projects"). Subject to the
terms of this Section 13.4(b), Sellers shall be responsible for, shall
have the right to control, shall diligently pursue Construction
Complete and all other required actions, and shall indemnify, defend
and hold harmless the Buyer Indemnified Persons from and against all
Damages (including Environmental Costs and capital costs) relating to
or arising from the Defined Remediation Projects until December 31,
2011, subject to the provisions of Section 13.4(b)(vii).
(ii) New Defined Remediation Projects for Known Matters. Subject
to the terms of this Section 13.4(b), Sellers shall be responsible
for, shall have the right to control, shall diligently pursue
Construction Complete and all other required actions, and shall
indemnify, defend and hold harmless the Buyer Indemnified Persons from
and against all Damages (including Environmental Costs and capital
costs) relating to or arising from any action, including any
investigative or remedial action ordered by a Governmental Body, for
any Known Environmental Matters arising with respect to any of the
Facilities (the "New Defined Remediation Projects") until December 31,
2011, subject to the provisions of Section 13.4(b)(vii). A "Known
Environmental Matter" shall mean any environmental condition that is
known and documented as being present at any Facility on or before the
Closing Date, which for the avoidance of doubt shall include, without
limitation, any environmental condition identified in the documents
made available to Buyer pursuant to Section 7.27.
(iii) Operation and Maintenance. Sellers shall be responsible
for, shall have the right to control, and shall indemnify, defend and
hold harmless the Buyer Indemnified Persons from and against all
Damages (including Environmental
72
Costs) relating to or arising from any monitoring of environmental
media, maintenance and repair of monitoring and remedial facilities
and equipment, and any other operation and maintenance activities
("Operation and Maintenance") required in connection with the Defined
Remediation Projects or New Defined Remediation Projects at any time
after the Closing Date until December 31, 2011, subject to the
provisions of Section 13.4(b)(vii).
(iv) Exclusivity of Subsection. Any Damages (including
Environmental Costs) that do not relate to or arise from the Defined
Remediation Projects, the New Defined Remediation Projects or related
Operation and Maintenance shall not be subject to this Section
13.4(b).
(v) Right of Control. (A) Sellers, or Sellers' designee, shall
have the right to control the Defined Remediation Projects and the New
Defined Remediation Projects (which right of Sellers includes the
rights of any of its third party indemnitors to control the Defined
Remediation Projects or the New Defined Remediation Projects), and
shall have the right to control the defense and resolution of any
claims asserted or threatened by any Governmental Body in connection
with or arising from a Defined Remediation Project or New Defined
Remediation Project subject to this Section 13.4(b), subject only to
the limitation in the immediately following sentence; (B) Sellers
shall provide Buyer with reasonable advance notice of, and an
opportunity to comment on, any planned activities and any documents
proposed to be submitted to any Governmental Body or other third
parties, and an opportunity for Buyer to participate in any meetings
or material negotiations with any third party (excluding counsel,
consultants or other experts retained by the controlling party, unless
such party consents to Buyer's participation), but Sellers shall have
the right to control the process and all the decisions necessary
thereto shall be made in Sellers' sole and absolute discretion subject
only to the limitation in the immediately following sentence; and (C)
Sellers' rights and duties under clauses (v)(A) and (B) above shall
not survive the termination of Sellers' indemnification obligations
under this Section 13.4(b). Notwithstanding clauses (v)(A) and (B)
above, no compromise or settlement may be reached by Sellers with
respect to a Defined Remediation Project or New Defined Remediation
Project without Buyer's prior written consent, nor shall any action
relating to any Defined Remediation Project or New Defined Remediation
Project, which action may interfere with Buyer's operations, be taken
without Buyer's prior written consent, in each case which shall not be
unreasonably withheld, conditioned or delayed; provided, Buyer shall
have such right to consent only to the extent such consent right does
not conflict with or cause a breach under Sellers' right to
indemnification from any third party, and further provided that Buyer
is not in violation of any material term under this Article 13
relating to the subject matter of the consent.
(vi) Termination Date of Sellers' Indemnity. Subject to Buyer's
rights under Section 13.4(d), Sellers' obligations under this Section
13.4(b) shall terminate on December 31, 2011, except with respect to
any claims asserted prior to December 31, 2011 which remain pending as
of such date, for which Seller's
73
responsibility, right to control and indemnification obligations shall
continue until the final resolution of such matter; provided, however,
that the Buyer Indemnified Person's indemnification rights against
Sellers with respect to such claims asserted prior to December 31,
2011 and pending as of such date shall be to the extent and for the
duration of Sellers' actual recovery under the Agreement for Sale and
Purchase of Assets between The X.X. Xxxxxxxx Company and PMD Group,
Inc. dated November 28, 2000 for such matters (the "Pass Through
Indemnity"). In furtherance of the foregoing, with regard to the Pass
Through Indemnity, Buyer shall present to Sellers information
reasonably necessary for Sellers to seek the applicable
indemnification from its third party indemnitors, and Sellers shall
diligently pursue and undertake all actions requested by the
applicable Buyer Indemnified Person to secure the indemnity therefor
from its third party indemnitors, provided that in the event
litigation is required to secure the indemnity, the applicable Buyer
Indemnified Person shall indemnify Sellers for any actual out of
pocket fees or expenses incurred by Sellers in connection with
litigation requested by Buyers.
(vii) Notwithstanding any other provision herein to the contrary,
for the avoidance of doubt, Seller's indemnification obligations
hereunder with respect to any Defined Remediation Project, New Defined
Remediation Project, or related Operation and Maintenance shall not be
subject to any deductible, cap, or other monetary limitation.
(c) Unknown Environmental Liabilities.
(i) Sellers Indemnity for Unknowns. Except for matters expressly
indemnified by Sellers in Sections 13.4(a) or 13.4(b), all of which
shall be governed exclusively by such express indemnity, and subject
to the Allowable Environmental Cost threshold of $50,000 set forth in
Section 13.5(a), Sellers shall indemnify, defend and hold harmless the
Buyer Indemnified Persons for fifty percent (50%) of all Damages
(including Environmental Costs and capital costs) for Environmental,
Health and Safety Liabilities relating to the Facilities and the
ownership and operation of the Businesses conducted thereon, in each
case to the extent arising from facts, events or conditions caused or
occurring on or prior to the Closing Date and only to such extent
(including off-site treatment, storage or disposal locations used by
or in connection with the ownership or operation of such Businesses
during such period) ("Unknown Environmental Liabilities"); provided,
for the avoidance of doubt, that Buyer's fifty percent (50%) share of
such liabilities shall be further limited as set forth in Section
13.4(c)(ii).
(ii) Limitations of Buyer's Assumption of Unknown Environmental
Liabilities. Buyer's share of Environmental Costs for Unknown
Environmental Liabilities shall not exceed $1,000,000 in any one
calendar year or $5 million in the aggregate; by way of example: in
the event of a $3 million Unknown Environmental Liability indemnified
pursuant to Section 13.4(c), Buyer and Sellers would each pay 50% of
the first $2 million, after which Sellers would be responsible for the
remaining $1 million. Any Damages (including
74
Environmental Costs and capital costs) not indemnified by Seller
because the $50,000 threshold amount is not exceeded shall nonetheless
be included for the purposes of calculating Buyer's $1,000,000 and
$5,000,000 liability limits hereunder.
(iii) Termination Date of Sellers' Indemnity. Sellers'
obligations under this Section 13.4(c) shall terminate on December 31,
2011, except as to valid indemnity claims asserted prior to December
31, 2011 which remain pending as of December 31, 2011 (which claims,
for the avoidance of doubt, relate to Unknown Environmental
Liabilities, the facts, events or conditions underlying which occurred
on or prior to the Closing Date, and only to such extent), in which
case Seller's obligations shall survive until final resolution of such
matter; provided, however, in the case such claims relate to
subsurface contamination at any Facility requiring remediation and
subsequent Operation and Maintenance, Sellers' obligations hereunder
with respect to such Operation and Maintenance shall terminate upon
the later date of either (x) Construction Complete or (y) December 31,
2011, after which date Buyer shall be responsible for such Operation
and Maintenance.
(d) Sellers' Breach of Prior Covenants. Notwithstanding any other
provision contained in this Agreement, if Sellers breach any of the
executory obligations in the documents identified in the attached Exhibit A
which obligations are necessary for the preservation of environmental
indemnity rights of Sellers against third party indemnitors ("Sellers'
Environmental Covenants"), Sellers shall indemnify and hold harmless the
Buyer Indemnified Persons from and against all provable Damages (including
Environmental Costs) they may suffer, sustain or become subject to as a
result of Sellers' breach; provided that, for avoidance of doubt, Buyer
Indemnified Persons shall have no such right to indemnification in the
absence of actual prejudice of the rights or interests of Buyer caused by
such breach. Buyer's damages for a breach under this Section shall include
any of Buyer's provable consequential damages arising from such breach by
Sellers.
(e) Acknowledgement of Indemnity by Noveon and Lubrizol. Buyer,
Noveon, and Lubrizol acknowledge that the indemnifications to be provided
by Sellers pursuant to this Article 13 shall be provided on behalf of all
Sellers by Noveon, and to the extent Noveon fails to provide such
indemnification, Lubrizol and Noveon and Lubrizol are the only Parties
available to Buyer for claims pursuant to this Article 13 of
indemnification against the Sellers.
13.5 Limitations on Indemnification.
(a) Buyer shall not be entitled to indemnification hereunder with
respect to any Damages (including Environmental Costs) indemnifiable under
Sections 13.4(a) or 13.4(c) (each a "Basic Environmental Indemnity" and,
collectively, the "Basic Environmental Indemnities"), unless the particular
indemnifiable Damages (including Environmental Costs) exceeds $50,000 (each
an "Allowable Environmental Cost" and, collectively, the "Allowable
Environmental Costs"), with it being understood that all
75
Damages (including Environmental Costs) relating to claims arising out of
the same set of operative facts shall be considered an individual claim for
purposes of this Agreement and such items shall be aggregated for purposes
of this proviso.
(b) Noveon and Lubrizol shall not have any obligation to indemnify any
Buyer Indemnified Persons for Allowable Environmental Costs specified in
Section 13.4(a) unless and until such Buyer Indemnified Persons have
incurred Allowable Environmental Costs in an aggregate amount in excess of
$2,500,000, in which event such Buyer Indemnified Persons shall be entitled
to be indemnified for the entire amount of such aggregate Allowable
Environmental Costs. The Parties agree and acknowledge that for purposes of
satisfying the $2,500,000 threshold set forth in this Section 13.5(b) that
indemnification obligations for Allowable Damages incurred under Section
12.2(a) shall not apply toward the satisfaction of such threshold.
(c) Notwithstanding anything in this Agreement to the contrary,
Sellers' aggregate indemnity obligation for Allowable Environmental Costs
indemnifiable under the Basic Environmental Indemnities, when aggregated
with its indemnification obligations for Damages incurred under Section
12.2(a), shall in no event exceed ten percent (10%) of the Purchase Price;
and no claim for indemnification of Environmental Costs under the Basic
Environmental Indemnities shall be made hereunder by Buyer to the extent
the aggregate Allowable Environmental Costs claimed (including any
Environmental Costs previously recovered and indemnifiable Damages incurred
under Section 12.2(a)) by the Buyer, taken as a whole, exceed ten percent
(10%) of the Purchase Price; provided however, for the avoidance of doubt:
(i) Seller's indemnification obligations under Section 13.4(b) with respect
to Defined Remediation Projects, New Defined Remediation Projects and
related Operation and Maintenance shall not be subject to any threshold,
deductible, cap or other monetary limitation, (ii) Seller's indemnification
obligations with respect to Pre-Closing Toxic Tort Liabilities and Former
Facilities (and any related offsite disposal Liabilities) shall not be
subject to any limitation as to time or amount.
(d) The indemnity obligation set forth in Section 13.4(a), and the
underlying representation and warranty set forth in Section 13.2, shall
survive the Closing hereunder for a period of 24 months after the date
hereof, and thereafter except for claims reported prior to such date,
Sellers shall have no responsibility or Liability with respect to any
claims arising under Section 13.4(a) or Section 13.2. Any claim for
indemnification with respect to any such matters which is not asserted by
notice given as herein provided within such specified period of survival
may not be pursued. Any indemnity claim so asserted within such period of
survival will be timely made for purposes hereof, and Seller's obligation
therewith, if any, shall continue until its final resolution.
(e) Any corrective actions or resolution resulting from a validated
indemnity claim made under the Basic Environmental Indemnities must be
diligently pursued by Buyer in good faith to prompt completion. Any
corrective actions or resolution resulting from a validated indemnity claim
made under Section 13.4(b) must be diligently pursued by Sellers in good
faith to prompt completion.
76
(f) Buyer shall not be entitled to indemnification hereunder with
respect to any particular Damages (including Environmental Costs) to the
extent (but only to the extent) the matter giving rise to such Damages
(including Environmental Costs) resulted in an adjustment (in favor of
Buyer) to the Purchase Price pursuant to Section 4.3 above.
(g) Sellers shall not be obligated to indemnify Buyer pursuant to
Article 13 to the extent Environmental Costs result from Buyer's
unreasonable disturbance of the areas identified on Schedule 13.5(g) that
are subject to long-term closure requirements under Environmental Laws.
(h) Except as set forth in Section 13.5(d), Sellers shall have no
obligation of indemnification pursuant to Article 13 after the termination
of the indemnification in accordance with the express terms of such
indemnification.
(i) Sellers shall have no obligation of indemnification for
Environmental Matters specified in the Basic Environmental Indemnities to
the extent Environmental, Health and Safety Liabilities arise as the result
of applicable regulatory standards that are not in effect at the Closing.
However, with respect to any such Environmental Matters which arise under
such standards in effect at the Closing, Sellers' obligations shall be
deemed extinguished only upon completing such remedial action as is
required under the regulatory standards in effect at the time such remedial
action is undertaken. For the avoidance of doubt, the preceding provisions
shall not apply to the Defined Remediation Projects or the New Defined
Remediation Projects, for which Sellers shall be responsible for completing
any and all required actions.
(j) Except as provided otherwise herein, Sellers shall have no
Liability whatsoever pursuant to the Basic Environmental Indemnities with
respect to any Environmental, Health and Safety Liabilities properly set
forth in Section 13.2 hereof, and the accompanying schedules hereto, to the
extent and only to the extent specifically and explicitly identified
therein.
(k) For the avoidance of doubt, Sellers shall have no obligation of
indemnification for Liabilities to the extent, and only to such extent,
arising from New Environmental Conditions or from Buyer's Exacerbation of
Pre-Existing Conditions.
13.6 Cincinnati Site. Sellers hereby assign, from and after the Closing
Date, all of its rights under the Environmental Matters Agreement among Freedom
Chemical Acquisition Corporation, Hilton Davis Chemical Co., and Sterling
Winthrop, Inc. dated September 9, 1993 in relation to the Cincinnati, Ohio
Facility, a copy of which and associated documents are attached hereto as
Exhibit B (referred to collectively hereafter as the "Environmental Matters
Agreement"). Buyer hereby agrees to, from and after the Closing Date, comply
with and assume, fully discharge and fully perform all of Hilton Davis'
executory obligations as set forth in the Environmental Matters Agreement
including such requirements as management of Hazardous Materials, release of
information, cooperation, and transfer of ownership; provided, for the avoidance
of doubt, that in accordance with Section 13.4(b), Sellers shall be responsible
for and shall indemnify and hold Buyer harmless against all Damages (including
Environmental Costs) relating to or arising from the Defined Remediation
Project, any New Defined
77
Remediation Project, and any related Operation and Maintenance with respect to
the Cincinnati Facility, notwithstanding any terms to the contrary in the
Environmental Matters Agreement or otherwise.
13.7 Third-Party Indemnitors; Actions.
(a) Sellers shall have the right to control the defense, negotiation
or resolution of any matter as to which indemnification is provided by
Sellers under Section 13.4(b) in accordance with the terms and Buyer
consent provisions set forth therein; provided that as to any remedy which
is being conducted in whole or in part at Sellers' expense pursuant to this
Article 13 or any third-party agreement, Sellers, or its or their
Affiliates, are permitted to control and define the remedy, which may be
conducted in the "Lowest-Cost Commercially Reasonable" manner, which, for
purposes of this Agreement, shall mean the cost effective methods for
investigation, remediation, removal, corrective action, containment or
monitoring permitted by applicable Environmental Laws determined from the
perspective of a reasonable business person acting (without regard to the
availability of indemnification hereunder) to achieve compliance with
applicable Environmental Law or to minimize Liability under Environmental
Laws or to third parties, it being understood that such Lowest-Cost
Commercially Reasonable manner shall, where appropriate, include the use of
risk-based remedies, institutional or engineering controls or deed
restrictions to the extent such controls or restrictions do not
unreasonably interfere with the ongoing operations upon the affected
Facility, it being further understood that, in the event of an actual
conflict between: (A) a requirement under applicable Environmental Law or
an Order, direction or mandate by a Governmental Body, and (B) what would
otherwise be a Lowest-Cost Commercially Reasonable manner, the requirement,
Order, direction or mandate shall be deemed the Lowest-Cost Commercially
Reasonable manner.
(b) Buyer shall have the right to control the defense, negotiation or
resolution of any matter as to which indemnification is provided under
Sections 13.4(a) and 13.4(c); provided that Buyer shall provide the Sellers
with reasonable advance notice of, and an opportunity to comment on, any
planned activities and any documents proposed to be submitted to any
Governmental Body or other third parties, and an opportunity for Sellers to
participate in any meetings or material negotiations with any Governmental
Body or third party (excluding counsel, consultants or other experts
retained by Buyer), and no compromise or settlement may be reached by Buyer
with regard to such matter (or any related third party claim) without
Sellers written consent (which consent shall not be unreasonably withheld
or delayed).
13.8 Indemnification of Sellers by Buyer. Buyer shall defend, indemnify and
hold harmless Sellers from and against all Damages (including any Environmental
Costs) suffered or incurred by Sellers to the extent, and only to such extent,
resulting from: (i) New Environmental Conditions; (ii) Buyer's Exacerbation of
Pre-Existing Conditions; or (iii) any and all Environmental, Health and Safety
Liabilities with respect to the Owned Real Property or the Leased Real Property,
in each case above, to the extent not otherwise expressly retained or
indemnified by Sellers in this Agreement. Buyer agrees that, except as otherwise
provided herein, this Section 13.8 shall survive the Closing indefinitely. For
the purposes of this
78
Agreement: (x) "New Environmental Conditions" shall mean any environmental
condition at any Facility occurring solely after the Closing Date and during the
Buyer's ownership or operation of such Facility; (y) "Buyer's Exacerbation of
Pre-Existing Conditions" shall mean any actions or omissions outside the
Ordinary Course of Business at any Facility by or on behalf of Buyer (such as
Buyer's voluntary invasive subsurface sampling, excavation or redevelopment of a
portion of a Facility) or by any other Person (such as Buyer's contractors and
agents, or vandals and other uninvited third parties), to the extent (and only
to the extent) such actions exacerbate or increase the remedial cost associated
with any environmental condition occurring or in existence at any Facility prior
to the Closing Date (including the Defined Remediation Projects); provided,
however, that Buyer's Exacerbation of Pre-Existing Conditions shall not include
any unsolicited governmental actions (such as governmental Orders or inspections
that result in a cleanup requirement), third party claims, or any actions
required by Law; and provided further, that nothing herein shall be deemed an
assumption by Buyer of any liabilities arising under CERCLA or any other
Environmental, Health and Safety Laws accruing to Buyer merely by virtue of
Buyer's status as the owner or operator of a Facility.
13.9 Environmental Matters Procedure.
Any claim for indemnification or reimbursement sought pursuant to this
Article 13 by an Indemnitee shall be asserted by giving the Indemnifying Party
reasonable prompt written notice thereof, stating the nature of such claim in
reasonable detail and indicating the estimated amount, if practicable, and the
Indemnifying Party shall have a period of thirty (30) days within which to
respond to such claim. if the Indemnifying Party does not respond within such
thirty (30) day period, the Indemnifying Party shall be deemed to have accepted
such claim. If the Indemnifying Party rejects such claim, the Parties covenant
and agree to use commercially reasonable efforts to resolve their dispute with
respect to such claim within thirty (30) days of receipt of such written notice.
If despite such commercially reasonable efforts, the Parties are unable to
resolve their dispute, such dispute shall be promptly submitted to arbitration
pursuant to Article 14. Buyer agrees at the reasonable request of Sellers'
Representative, and Noveon and Lubrizol each agree at the reasonable request of
Buyer, to modify the procedures set forth in this Section 13.9 to maximize the
ability of the Parties to recover for indemnification claims under the
agreements set forth on Exhibit A.
13.10 Access to Business. From the Closing Date until the termination of
all obligations of Sellers under this Article 13, Buyer shall allow Sellers or
its designees and its or their Representatives and Affiliates to have reasonable
access to personnel, the premises and to the properties, books and records of
Buyer as is reasonably necessary to protect Sellers' rights, perform Sellers'
obligations and investigate claims made under this Article 13, during normal
working hours, provided Sellers give Buyer at least 48 hours advance notice and
such access does not unreasonably interfere with the conduct of the business of
Buyer.
13.11 Environmental Matters Dispute Resolution. In the event of any
dispute, controversy or claim arising out of or related to this Article 13, or a
breach hereof, whether based in contract, tort, or statute, including as to
interpretation, scope, formation, performance or termination ("Environmental
Matters Dispute"), the Parties shall settle such Environmental Matters Dispute
in accordance with the procedure set forth in Article 14; provided, however,
that the Parties shall agree to temporarily halt the Environmental Matters
Dispute proceedings and
79
allow for executive management discussions and negotiations between Buyer and
Sellers prior to proceeding to arbitration.
13.12 Amount of Claims; Insurance; Tax Benefits.
(a) Insurance. To the extent that any Environmental Costs are covered
by insurance held by Buyer, Buyer shall only be entitled to indemnification
pursuant to Section 13.4 hereof only with respect to the amount of
Environmental Costs in excess of the net insurance proceeds actually
received (after deduction for any cost of collection, deductible,
retroactive premium adjustment, reimbursement obligation or other cost
directly related to such insurance claim) by Buyer pursuant to such
insurance. With respect to such insured loss, Buyer shall use commercially
reasonable efforts to obtain recovery from the provider of such insurance;
provided that Buyer shall have no obligation to seek recovery under any
insurance policy to the extent that any claims against such insurance
policy for such Environmental Costs would result in an increase in the
premium for such insurance policy or in cancellation of such policy.
Notwithstanding anything herein to the contrary, Buyer may pursue recovery
hereunder prior to the resolution of any such insurance claim, and Sellers
shall pay to Buyer such amounts as it would otherwise be obligated to pay
to Buyer without respect to this Section 13.12 and prior to such time as
Buyer has determined whether such Environmental Costs are covered (or not
covered) by insurance held by Buyer. If, following the receipt of any
indemnity payments pursuant to Section 13.12(b), Buyer obtains any
insurance recovery from a third party insurance provider, then Buyer shall
promptly pay over to Sellers the net amount of the proceeds received by
Buyer (after deduction for any cost of collection, deductible, retroactive
premium adjustment, reimbursement obligation or other cost directly related
to such insurance claim) pursuant to such insurance up to, but not in
excess of, the amount of the indemnification claim paid by Sellers.
(b) Tax Benefit. To the extent that Buyer recognizes Tax Benefits as a
result of any indemnification under this Article 13, Buyer shall pay an
amount equal to the amount of such Tax Benefits (but not in excess of the
indemnification payment or payments actually received from Sellers with
respect to such Environmental Costs) to Sellers when such Tax Benefits are
actually recognized by Buyer. Buyer shall pay the amount of such Tax
Benefits to Sellers within ten (10) days of filing any Tax Return
reflecting a Tax Benefit. For this purpose, Buyer shall be deemed to
recognize a Tax Benefit with respect to a taxable year if, and to the
extent that, Buyer's cumulative liability for Taxes through the end of such
taxable year, calculated by excluding any Tax items attributable to the
Environmental Costs and the receipt of any indemnification payments from
all taxable years, exceeds Buyer's actual cumulative liability for Taxes
through the end of such taxable year, calculated by taking into account any
Tax items attributable to the Environmental Costs and the receipt of any
indemnification payments for all taxable years (to the extent permitted by
relevant Tax law and not already taken into account for a previous taxable
year pursuant to this Section 13.12(b) and treating such Tax items as the
last items claimed for any taxable year).
80
13.13 Adjustment to Purchase Price for Tax Purposes. It is the intent of
the Parties that any amounts paid under this Article 13 will represent an
adjustment of the Purchase Price, and the Parties will report such payments
consistent with such intent.
ARTICLE 14
DISPUTE RESOLUTION
14.1 Dispute Resolution. Except as provided in Sections 4.3 and 14.3, in
the event of any dispute, controversy or claim arising out of or related to this
Agreement or a breach hereof, whether based in contract, tort, or statute,
including its interpretation, scope, formation, performance or termination
("Dispute"), the Parties shall settle such Dispute in accordance with the
following:
(a) Friendly Discussions. In the event of any dispute or disagreement
between Sellers and Buyer as to the interpretation of any provision of this
Agreement or the other agreements contemplated hereby (or the performance
of any obligations hereunder or thereunder), the matter, upon written
request of either Party, shall be referred to representatives of the
Parties for decision, each Party being represented by a senior executive
officer who has no direct operational responsibility for the matters
contemplated by this Agreement. The representatives shall promptly meet and
use commercially reasonable efforts to settle the Dispute by consulting and
negotiating with each other in good faith to reach a just and equitable
solution satisfactory to all Parties;
(b) Arbitration. If the Dispute is not resolved through friendly
discussions within sixty (60) calendar days of the date the Dispute is
referred to the Parties' representatives, the Dispute shall be finally
resolved by arbitration administered by the American Arbitration
Association (the "AAA") in accordance with the provisions of Section 14.2
and the AAA's then-current Commercial Arbitration Rules, including the
Emergency Interim Relief Procedures (and, in the case of any Dispute
involving a claim in excess of $500,000 (a "Large Dispute"), the
Supplementary Procedures for Large, Complex Disputes), and judgment on the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. In the case of conflict between the AAA's
then-current Commercial Arbitration Rules and Section 14.2, Section 14.2
shall control.
14.2 Arbitration. The following provisions shall apply to any arbitration
hereunder:
(a) Number and Appointment of Arbitrators. With respect to any Dispute
which is not a Large Dispute, the arbitration shall be conducted by one (1)
independent and impartial arbitrator appointed by Sellers and Buyer (or, if
they cannot agree, by the AAA). In the case of any Large Dispute, the
arbitration shall be conducted by three (3) arbitrators. Within ten (10)
days following the commencement of arbitration of a Large Dispute, Sellers'
Representative shall select one (1) arbitrator and Buyer shall select one
(1) arbitrator, and the two (2) arbitrators so selected shall select a
third arbitrator. If the two (2) arbitrators are unable to agree to the
third arbitrator within ten (10) days, a third arbitrator shall be
appointed by the AAA;
81
(b) Location of Arbitration; Governing Law. The arbitration shall take
place in a forum mutually agreed upon by the Parties, provided that the
arbitration may not take place in Lake County, Ohio, Cuyahoga County, Ohio,
Xxxx County, Illinois, and Palm Beach County, Florida. The Law of the state
of Delaware shall govern all questions concerning the construction,
validity, interpretation and enforceability of this Agreement and the
Schedules attached hereto, and the performance of the obligations imposed
by this Agreement, without giving effect to any choice of law or conflict
of law rules or provisions (whether of the state of Delaware or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the state of Delaware. The Parties acknowledge that
this Agreement evidences a transaction involving interstate commerce and
that the United States Arbitration Act shall govern the interpretation and
enforcement of, and any Proceedings under, the arbitration provisions
hereof;
(c) Language. The language of the arbitration shall be English;
(d) Discovery. The arbitrator shall permit and facilitate such
discovery as the Parties shall reasonably request. The Parties shall keep
confidential any Confidential Information or other non-public information
disclosed in discovery;
(e) Damages. The arbitrator shall be expressly empowered to award to
any party any Damages in connection with any dispute between them arising
out of or relating in any way to this Agreement or the other agreements
contemplated hereby or the transactions arising out of or relating in any
way to this Agreement or the other agreements contemplated hereby or the
transactions arising hereunder or thereunder, and each Party hereby
irrevocably waives any objection to such recovery by any other Party
hereto.
(f) Fees and Expenses. The fees, expenses and costs of the arbitration
shall be shared equally by the Parties and advanced by them from time to
time as required; provided that at the conclusion of the arbitration, the
arbitrator shall award costs and expenses (including the costs of the
arbitration previously advanced and the fees and expenses of attorneys,
accountants and other experts) and interest at the prime rate prime rate as
quoted in The Wall Street Journal on the date of determination of the
arbitrators final judgment to Sellers and Buyer pro rata in an inverse
proportion to the extent (by dollar value) to which the award agrees with
such Party's position, such amounts to be determined by the arbitrator(s)
at the time of the award;
(g) Final Judgment. The award rendered by the arbitrator shall be
final and not subject to judicial review, and judgment thereon may be
entered in any court of competent jurisdiction.
(h) International Enforcement. The arbitral award shall be enforceable
under the United Nations Convention on the Recognition and Enforcement of
Foreign Arbitral Awards; and
82
(i) Continuing Performance. Performance of this Agreement shall
continue unabated during the pending of any arbitration which may
arise out of a Dispute, except with regard to the matter in Dispute.
14.3 Equitable Relief. Notwithstanding anything contained in this Article
14 to the contrary and without prejudice to the procedures set forth in Article
14, each Party shall have the right to institute judicial Proceedings against
another Party or anyone acting by, through or under such Party, in any court of
competent jurisdiction for temporary injunctive or other provisional judicial
relief (including through reformation of contract, specific performance,
injunction or similar equitable relief) if such action is necessary to avoid
irreparable damage or to preserve the status quo until such time as the
arbitration panel is convened and available to hear such party's request for
temporary relief. Each of the Parties acknowledges and agrees that the other
Party would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or otherwise
are breached.
ARTICLE 15
GENERAL PROVISIONS
15.1 Expenses. Except as otherwise provided in this Agreement, each Party
shall bear its respective fees and expenses incurred in connection with the
preparation, negotiation, execution and performance of this Agreement, the
Transaction Documents and the transactions contemplated hereunder, including all
fees and expenses of its Representatives.
15.2 Notices. All notices, consents, waivers and other communications
required or permitted by this Agreement shall be in writing and shall be deemed
given to a Party when: (a) delivered to the appropriate address by hand or by
nationally recognized overnight courier service (costs prepaid); (b) sent by
facsimile or e-mail with confirmation of transmission by the transmitting
equipment; or (c) three (3) days following mailing by certified or registered
mail, postage prepaid and return receipt requested, in each case to the
following addresses, facsimile numbers or e-mail addresses and marked to the
attention of the Person (by name or title) designated below (or to such other
address, facsimile number, e-mail address or Person as a Party may designate by
notice to the other Parties):
If to Sellers:
The Lubrizol Corporation
00000 Xxxxxxxx Xxxx.
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, General Counsel
Ph: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxx@xxxxxxxx.xxx
83
With a mandatory copy to:
Xxxxxx XxXxxxxx
000 X. Xxxx Xxxxxx
Xxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx and Xxxxxxxx X. Xxxxx
Ph: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxx@xxxxxx.xxx
If to Buyer:
SPM Group Holdings, LLC
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xxxx X. Xxxxx and Xxxxx X. Xxxxx
Ph: (000) 000-0000
Fax: (000) 000-0000
With a mandatory copy to:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, P.C. and Xxxxxx X. Xxxx
Ph: (000) 000-0000
Fax: (000) 000-0000
15.3 Public Announcements. Prior to the Closing, all public announcements
and disclosure relating to this Agreement or the transactions contemplated
hereunder shall be made only as may be agreed upon by Sellers and Buyer, unless
required by Law. If public disclosure or notice is required by Law, the
disclosing Party will use commercially reasonable efforts to give the other
Party or Parties prior written notice of the disclosure to be made. Prior to the
Closing, Sellers and Buyer will consult with each other concerning the means by
which Sellers' employees, customers, suppliers and others having dealings with
Sellers will be informed of the transactions contemplated hereunder, and Buyer
will have the right to be present for any such communication.
15.4 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed and enforced in accordance with the Laws of the State of Delaware
applicable to agreements made and to be performed entirely within such state,
without regard to conflict of laws rules thereof. Subject to the provisions of
Article 14, the Parties agree that any action brought by any Party shall be
brought and resolved exclusively by state and federal courts other than those
located in Lake County, Ohio, Cuyahoga County, Ohio, Xxxx County, Illinois, and
Palm Beach County, Florida, and the courts to which an appeal therefrom may be
taken. Each of the Parties hereby consents to the jurisdiction of such courts
and waives all questions of jurisdiction and venue. The Parties agree that
either or both of them may file a copy of this
84
Section 15.4 with any court as written evidence of the knowing, voluntary and
bargained agreement between the Parties irrevocably to waive any objections to
jurisdiction venue or to convenience of forum. Legal process in any Proceeding
may be served on any party anywhere in the world.
15.5 Waiver. Neither any failure nor any delay by any Party in exercising
any right, power or privilege under this Agreement will operate as a waiver of
such right, power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege. No waiver of any of the provisions of this Agreement shall be valid
unless it is in writing and signed by the Party against whom it is sought to be
enforced. A waiver of any provision by any Party on one occasion shall not be
deemed to be a waiver of the same or any other breach on a future occasion.
15.6 Entire Agreement; Modification. This Agreement supersedes all prior
agreements, whether written or oral, between the Parties with respect to its
subject matter (including any letter of intent) and constitutes (along with the
Schedules and Exhibits hereto, and the Transaction Documents) a complete and
exclusive statement of the terms of the agreement between the Parties with
respect to its subject matter. This Agreement may not be amended, supplemented
or otherwise modified except by a written agreement executed by the Party to be
charged with the amendment.
15.7 Assignment, Successors; No Third Parties. No Party may assign any of
its rights or delegate any of its obligations under this Agreement without the
express written consent of the Buyer (or its permitted assigns) or Sellers'
Representative (or its permitted assigns), as applicable, which consent will not
be unreasonably delayed or withheld. Notwithstanding the foregoing, if Buyer's
(or its permitted assign's) proposed assignment includes the assignment of
Buyer's (or its permitted assign's) rights or obligations under Article 13,
Noveon's reasonable good faith belief that the proposed assignee is not
qualified to perform Buyer's (or its permitted assign's) obligations under
Article 13 or operate the assigned asset or assets according to standards of
reasonable environmental compliance, Sellers' Representative may withhold
consent to the proposed assignment. If Sellers' Representative withholds consent
to the proposed assignment, Buyer (or its permitted assign) may dispute such
withholding of consent in accordance with the dispute resolution process set
forth in Article 14, and the Arbitrator shall be instructed to make a
determination on the matter within 60 days of the filing of the Dispute. Subject
to the consent of Sellers' Representative as set forth above, this Agreement
will apply to, be binding in all respects upon and inure to the benefit of the
successors and permitted assigns of the Parties. Nothing expressed or referred
to in this Agreement shall be construed to give any Person other than the
Parties to this Agreement any legal or equitable right, remedy or claim under or
with respect to this Agreement or any provision of this Agreement, except such
rights as shall inure to a successor or permitted assignee pursuant to this
Section 15.7. Subject to the consent of Sellers' Representative (or its
successors) set forth above, it is expressly agreed that Buyer (or its permitted
assign) may assign its rights and obligations in whole or in part and that upon
any permitted assignment, Buyer (or its permitted assign) shall be released from
any and all Liabilities and obligations hereunder which are assumed by Buyer's
(or its permitted assign's) permitted assign. It is further agreed that any
assignment not consented to by Sellers' Representative (or its successor) of
Buyer's (or its permitted assign's) rights under Article 13
85
shall require that the proposed assignee of Buyer (or its permitted assign)
assumes the obligations set forth in Article 13 (including the obligation set
forth in Article 13 to comply with the covenants set forth in Exhibit A).
Notwithstanding the foregoing, Buyer (or its permitted assign) may assign in
whole or in part its rights and obligations pursuant to this Agreement and the
Closing Documents (including the right to purchase the Purchased Assets and the
Purchased IP Assets, the benefits and obligations under the Closing Documents,
and the obligation to assume the Assumed Liabilities) to one or more of its
Affiliates, and Buyer (or its permitted assign) may, in its sole discretion,
direct Sellers or IP Sellers to convey the Purchased Assets or the Purchased IP
Assets and license the Licensed IP, in whole or in part, to one or more of its
Affiliates; provided if Sellers' Representative does not consent to such
assignment to Buyer's Affiliates, Buyer shall remain obligated (and shall not be
released) from its obligations hereunder; provided, further, for this sentence
only, the reference to ten percent (10%) in the definition of "Affiliate" shall
be deemed to be fifty percent (50%). Buyer (or its permitted assign) may assign
this Agreement and the Closing Documents, including any rights to
indemnification, and its obligations pursuant thereto to any of its lender(s) as
collateral security; provided if Sellers' Representative does not consents to
any assignment of Buyer's (or its permitted assign's) lender(s), Buyer (or its
permitted assign's) shall remain obligated (and shall not be released) from its
obligations hereunder.
15.8 Exhibits and Schedules; Construction of Certain Provisions. The
Exhibits and Schedules referred to in this Agreement shall be construed with and
as an integral part of this Agreement to the same extent as if the same had been
set forth in their entirety herein. Each disclosure in the Schedules shall be
deemed to qualify all representations and warranties of Sellers and IP Sellers
made herein, notwithstanding the lack of a specific cross reference, but only to
the extent that its applicability to a particular representation, warranty,
agreement or condition is reasonably apparent from the face of the disclosure
thereof. It is understood and agreed that (1) the specification of any dollar
amount in the representations and warranties contained in this Agreement or the
inclusion of any specific item in the Exhibits or Schedules is not intended to
imply that such amounts or higher or lower amounts, or the items so included or
other items, are or are not material, and (2) except as expressly provided
herein, the listing or disclosure of an item on the Schedules shall not be
deemed to create an Assumed Liability or any other Liability for Buyer. All
Schedules attached hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein.
15.9 Construction. The Parties acknowledge that they and their respective
lawyers and counsel have negotiated and drafted this Agreement jointly and agree
that the rule of construction that ambiguities are to be resolved against the
drafting Party shall not be employed in the interpretation or construction of
this Agreement.
15.10 Severability. If for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative, illegal,
unenforceable or invalid by a court of competent jurisdiction as applied to any
particular case or in all cases, such circumstances shall not have the effect of
rendering such provision invalid in any other case or of rendering any of the
provisions of this Agreement inoperative, illegal, unenforceable or invalid.
Furthermore, in lieu of such inoperative, illegal, unenforceable or invalid
provision, there shall be added automatically as a part of this Agreement a
legal, valid and enforceable provision as
86
similar in terms to such inoperative, illegal, unenforceable or invalid
provision as may be possible.
15.11 Time Periods. Unless specified otherwise, any action required
hereunder to be taken within a certain number of days shall be taken within that
number of calendar days (and not business days); provided, however, that if the
last day for taking such action falls on a weekend or a holiday in the United
States, the period during which such action may be taken shall be automatically
extended to the next business day.
15.12 Execution of Agreement. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement. The exchange of copies of this Agreement and of
signature pages by facsimile or electronic mail transmission shall constitute
effective execution and delivery of this Agreement as to the Parties and may be
used in lieu of the original Agreement for all purposes.
15.13 Checks Outstanding. Sellers shall cause all "cut" but uncashed checks
written by Sellers on the Businesses' behalf prior to the Closing to clear its
bank accounts.
ARTICLE 16
DEFINITIONS
As used herein, the terms below shall have the following meaning.
"AAA" shall have the meaning set forth in Section 14.1(b).
"Accounts Payable" means all trade and accounts payable relating to the
operation of the Businesses prior to the Closing including amounts owing to
suppliers and vendors for services received and assets acquired.
"Accounts Payable Amount" shall have the meaning set forth in Section 4.1.
"Accounts Receivable" shall have the meaning set forth in Section 2.1(a).
"Accrued Expenses" means all accrued expenses accrued in the Ordinary
Course of Business relating to the operation of the Businesses prior to the
Closing.
"Active Employee" shall mean each employee of Sellers who is employed
solely in the operations of the Business (other then those employees set forth
on Schedule 16(a)) and who is actively at work as of the Closing Date, and also
shall include any such employee of Sellers who is absent from work as of the
Closing Date due to vacation, short-term disability, approved leaves of absence,
or other form of absence from employment and such other employees who are
employed (but not solely) in the operations of the Business and listed on
Schedule 8.1. For purposes of this Agreement the term Active Employee shall not
include any employee of any Seller on leave of absence or disability leave on
the Closing Date who does not return to work within three (3) months of the
Closing Date unless such leave of absence is subject to the Family Medical Leave
Act or the Uniformed Employment and Reemployment Rights Act.
87
"Acquisition Proposal" shall have the meaning set forth in Section 7.10.
"Affiliate" of a Person means:
- In the case of an individual, (i) each other member of such
individual's Family, (ii) any Person that is directly or indirectly
controlled by any one or more members of such individual's Family,
(iii) any Person in which members of such individual's Family hold
(individually or in the aggregate) a ten percent (10%) or greater
interest (by equity or voting power), and (iv) any Person with respect
to which one or more members of such individual's Family serves as a
director, officer, partner, executor or trustee (or in a similar
capacity). For purposes of this definition, the "Family" of an
individual includes the individual, the individual's spouse, any other
natural person who is related to the individual or the individual's
spouse within the second degree and any other natural person who
resides with such individual;
- In the case a Person other than an individual, (i) any Person that
directly or indirectly controls, is directly or indirectly controlled
by or is directly or indirectly under common control with such
specified Person, (ii) any Person that holds a ten percent (10%) or
greater interest (by equity or voting power) in such specified Person,
(iii) each Person that serves as a director, officer, partner,
manager, executor or trustee of such specified Person (or in a similar
capacity), (iv) any Person in which such specified Person holds a ten
percent (10%) or greater interest (by equity or voting power), and (v)
any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity). For purposes
of this definition, "control" (including "controlling," "controlled
by," and "under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agreement" means this Asset Purchase Agreement, including all the Exhibits
and Schedules hereto, as the same may be amended from time to time in accordance
with its terms.
"Air/BP" shall have the meaning set forth in Section 7.17(b).
"Allowable Damage" or "Allowable Damages" shall have the meaning set forth
in Section 12.4(a).
"Allowable Environmental Cost" or "Allowable Environmental Costs" shall
have the meaning set forth in Section 13.5(a).
"Anhydrous Ammonia Release Liability" shall mean any Liabilities (including
penalties and other Damages to any Governmental Body), and any costs relating to
any corrective actions that may be required in connection with the resolution of
such matter) relating to the leak of anhydrous ammonia in and around the storage
tank area at Sellers' facility located in Kalama, Washington.
"Antioxidant and Accelerator Business" shall have the meaning set forth in
the Recitals.
88
"Antioxidant Field" shall have the meaning set forth in Section
7.12(a)(ii).
"Antitrust Authority" shall mean any national, supernational or state
entity having antitrust or competition jurisdiction with respect to the
transactions contemplated by this Agreement.
"Antitrust Laws" shall mean the Xxxxxxx Act, as amended, the Xxxxxxx Act,
as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal, state, and non-U.S. statutes, regulations, or other binding legal
requirements, including European Council Regulation 4064/89, as amended, rules,
regulations, Orders and decrees and all other such applicable laws governing
antitrust and competition matters.
"Assignment and Assumption Agreements" shall have the meaning set forth in
Section 11.2(c)(vi).
"Assumed Benefit Plans" shall have the meaning set forth in Section 2.1(p)
"Assumed Contract" shall have the meaning set forth in Section 2.1(j).
"Assumed Employee Plan" shall have the meaning set forth in Section
5.13(a).
"Assumed Liabilities" shall have the meaning set forth in Section 3.1.
"Basic Environmental Indemnity" or "Basic Environmental Indemnities" shall
have the meaning set forth in Section 13.5(a).
"Business" or "Businesses" shall have the meaning set forth in the
Recitals.
"Buyer" means SPM Group Holdings, LLC, a Delaware limited liability
company.
"Buyer Benefit Plans" means the employee benefit plans, as defined in
Section 3(3) of ERISA, established or maintained by Buyer on and after the
Closing Date.
"Buyer Indemnified Person" shall have the meaning set forth in Section
12.2.
"Buyer License Agreement" shall have the meaning set forth in Section
7.17(b).
"Buyer Licensed IP" shall have the meaning set forth in Section 7.17(b).
"Buyer Manufacturing and Supply Agreements" shall mean those manufacturing
and supply agreements negotiated by the Parties after the date hereof for the
supply of product to Buyer and Sellers' Representative.
"Buyer's 401(k) Plan" shall mean the tax qualified 401(k) defined
contribution plan or plans established or designated by Buyer to receive assets
and Liabilities pursuant to Section 8.2(f).
"Buyer's Environmental Covenants" shall have the meaning set forth in
Section 13.3(a).
89
"Buyer's Exacerbation of Pre-Existing Conditions" shall have the meaning
set forth in Section 13.8.
"Buyer's Medical Plan" shall mean the medical plan or plans established or
designated by Buyer pursuant to Section 8.2(g).
"CERCLA" shall have the meaning set forth in Section 13.1.
"Change of Control" shall have the meaning set forth in Section 7.12(d).
"Closing" shall have the meaning set forth in Section 11.1.
"Closing Date" shall have the meaning set forth in Section 11.1.
"Closing Documents" shall mean the License Agreement, the Buyer License
Agreement, the Buyer Manufacturing and Supply Agreements, the Sellers
Manufacturing and Supply Agreements, the Transition Services Agreement, and,
Lubrizol Foam Control & Silicone Business Agreement, collectively.
"Closing Statement" shall have the meaning set forth in Section 4.3(b).
"Closing Working Capital" shall have the meaning set forth in Section
4.3(a)(iii).
"Code" means the U.S. Internal Revenue Code of 1986, as amended, and any
reference to any particular Code section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"Compete Field" shall have the meaning set forth in Section 7.12(a)(ii).
"Confidential Information" shall have the meaning set forth in Section
7.11.
"Confidentiality Agreement" shall have the meaning set forth in Section
7.3.
"Consent" means any approval, consent, ratification, waiver or other
authorization.
"Construction Complete" means the completion of all remediation (except for
long-term Operation and Maintenance after the completion of all necessary
testing and validation of remedial systems, facilities or equipment) required by
a consent decree, administrative Order or settlement agreement with any
Governmental Body and such completion has been acknowledged by the Governmental
Body having authority or jurisdiction over the remediation.
"Contract" means any agreement, commitment, understanding, instrument,
lease, pledge, mortgage, indenture, note, license, agreement, purchase or sale
Order, contract, promise or similar arrangement evidencing or creating any
obligation, whether written or oral.
"Damages" shall have the meaning set forth in Section 12.2.
"Defined Remediation Projects" shall have the meaning set forth in Section
13.4(b)(i).
90
"Direct Claim" shall have the meaning set forth in Section 12.6.
"Dispute" shall have the meaning set forth in Section 14.1.
"Effective Time" means 12:01 a.m. EST on the Closing Date.
"Employee Welfare Benefit Plans" shall have the meaning set forth in
Section 5.13(e).
"Encumbrance" means any lien (statutory or otherwise), hypothecation,
encumbrance, claim, security interest, license, mortgage, pledge, restriction,
security agreement, easement, encroachment, option, Tax (including foreign,
federal, state and local Tax), of any kind or nature (including (i) any
conditional sale or other title retention agreement, (ii) any assignment or
deposit arrangement in the nature of a security device, and (iii) any leasehold
interest, license or other right granted by Sellers in favor of a third party to
use any portion of the Purchased Assets or, the Purchased IP Assets), whether
secured or unsecured, xxxxxx or inchoate, filed or unfiled, scheduled or
unscheduled, noticed or unnoticed, recorded or unrecorded, contingent or
non-contingent, material or non-material, known or unknown. For avoidance of
doubt, neither the agreement with R.T. Vanderbilt Company, Inc. which allows it
to use the Purchased Patents nor written manufacturing, distribution, or agency
agreements entered into in the Ordinary Course of Business with third parties
which give such third party manufacturer, distributor or agent a non-exclusive,
non-perpetual license to use the Purchased IP Assets in connection with the
manufacture, distribution, sale, and promotion of the Businesses' products are
Encumbrances.
"Environment" means soil, land surface or subsurface strata, surface waters
(including navigable waters and ocean waters), groundwaters, drinking water
supply, stream sediments and any other environmental medium or natural resource.
"Environmental Claim" shall mean any Order, demand, notice or potential
liability, complaint or claim for indemnification by any Governmental Body or
third party, or any other claim for indemnification that is not the subject of a
third party claim in each case that may result in indemnifiable Environmental
Costs.
"Environmental Costs" shall mean any actual investigation, cleanup,
remediation, removal or other response costs (which without limitation shall
include costs to cause the Business to come into compliance with Environmental
Laws or Occupational Safety and Health Laws), expenses (including fees and
disbursements of consultants, counsel and other experts in connection with any
environmental investigation, testing, audits or studies, response actions, or
litigation), losses (including the posting of a letter of credit, bond, or other
credit support), liabilities or obligations (including liabilities or
obligations under any lease or other contract), payments, damages, civil or
criminal fines or penalties, judgments and amounts paid in settlement directly
arising out or relating to or resulting from any Environmental Matter regardless
of whether such costs, expenses, losses, liabilities, obligations, payments,
damages, fines, penalties, judgments or amounts arise as a result of the
negligence, strict liability or any other liability under any theory of law or
equity.
"Environmental, Health and Safety Liabilities" means any cost, damages,
expense, Liability or other responsibility arising from or under any
Environmental Law or Occupational Safety and Health Law.
91
"Environmental Law" means any Law that relates to the protection of the
Environment or human health and safety, to Releases of Hazardous Materials or
the notification, investigation or remediation thereof, or to any Environmental
Matters, in effect on or prior to the Closing Date.
"Environmental Matter" means any matter arising out of, relating to, or
resulting from pollution, contamination, protection of the Environment, human
health or safety, health or safety of employees, sanitation, and any matter
arising out of, relating to, or resulting from emissions, discharges, Releases
or Threat of Releases of Hazardous Materials into the Environment or otherwise
arising out of, relating to, or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, handling, Release or
Threat of Release of Hazardous Materials.
"Environmental Matters Agreement" shall have the meaning set forth in
Section 13.6.
"Environmental Matters Dispute" shall have the meaning set forth in Section
13.11.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning set forth in Section 5.13(a).
"Estimated Adjustment Amount" shall have the meaning set forth in Section
4.3(a)(v).
"Estimated Working Capital" shall have the meaning set forth in Section
4.3(a)(iv).
"Facility" means all or any of the Owned Real Property and the Leased Real
Property and the buildings located thereon.
"Final Adjustment Amount" shall have the meaning set forth in Section
4.3(a)(vi).
"Financial Statements" shall have the meaning set forth in Section 5.6(a).
"Former Facilities" shall have the meaning set forth in Section 3.2(q).
"Fundamental Representations" shall have the meaning set forth in Section
12.1.
"GAAP" means United States generally accepted accounting principles in
effect from time to time, applied in a manner consistent with the preparation of
the Financial Statements; provided that if more than one interpretation of an
accounting principle is permitted under GAAP and one of such interpretations has
consistently been used in the Financial Statements, then the interpretation of
such principle that has been used in the Financial Statements shall be used.
"Governmental Body" means any: (a) nation, state, county, city, town,
borough, village, district or other jurisdiction; (b) federal, state, local,
municipal, foreign or other government; (c) governmental or quasi-governmental
body of any nature (including any agency, branch, department, board, commission,
court, tribunal or other entity exercising governmental or quasi-governmental
powers); (d) multinational organization or body; (e) body exercising or entitled
or purporting to exercise, any administrative, executive, judicial, legislative,
police, regulatory or taxing authority or power; or (f) official of any of the
foregoing.
00
"XXX Xxx" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act.
"Hazardous Material" means any substance, material or waste which is
regulated by any Governmental Body, including any material, substance or waste
which is defined as a "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"contaminant," "toxic waste" or "toxic substance" under any provision of
Environmental Law, and including petroleum, petroleum products, asbestos,
presumed asbestos-containing material or asbestos-containing material, urea
formaldehyde and polychlorinated biphenyls.
"Hilton Davis" means Noveon Hilton Davis, Inc., a Delaware corporation.
"Hilton Davis Business" shall have the meaning set forth in the Recitals.
"Hycar Products" shall have the meaning set forth in Section 7.19.
"Indebtedness" shall mean (i) any indebtedness for borrowed money of any
Seller or IP Seller; (ii) any indebtedness evidenced by any note, bond,
debenture or other debt security of any Seller or IP Seller; (iii) any
liabilities or obligations for the deferred purchase price of property or
services with respect to which any Seller or IP Seller is liable, contingently
or otherwise, as obligor or otherwise; (iv) any commitment by which any Seller
or IP Seller assures a creditor against loss (including contingent reimbursement
obligations with respect to letters of credit); (v) any indebtedness guaranteed
in any manner by any Seller or IP Seller (including guarantees in the form of an
agreement to repurchase or reimburse); (vi) any liabilities or obligations under
capitalized leases with respect to which any Seller or IP Seller is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or with respect
to which obligations any Seller or IP Seller assures a creditor against loss;
(vii) any indebtedness or liabilities secured by a Encumbrance (other than
Permitted Encumbrances) on any Sellers' or IP Seller's assets; and (viii) any
amounts owed to Affiliates of any Seller or IP Seller, (including intercompany
trade and accounts payable).
"Independent Valuation Firm" shall mean FTI Consulting, Inc., Navigant
Consulting, or LEK Consulting as mutually agreed by Buyer and Sellers'
Representative, or if Buyer and Sellers' Representative are not able to mutually
agree on one of such firms, one of such firms selected by lot.
"Indemnifying Party" shall have the meaning set forth in Section 12.5(a).
"Indemnitee" shall have the meaning set forth in Section 12.5(a).
"Insured Loss" shall have the meaning set forth in Section 12.8.
"Intellectual Property" means all of the following in any jurisdiction
throughout the world: (i) patents, patent applications, patent disclosures and
inventions; (ii) trademarks, service marks, trade dress, trade names, corporate
names, logos and slogans (and all translations, adaptations, derivations and
combinations of the foregoing) and Internet domain names, together with all
goodwill associated with each of the foregoing; (iii) copyrights and
copyrightable works; (iv) mask works; (v) registrations and applications for any
of the foregoing; (vi) trade secrets and
93
confidential information (including but not limited to ideas, formulas,
compositions, inventions, discoveries, know-how, manufacturing and production
processes and techniques, research and development information, lab records,
test results, quality assurance reports, process improvements, manuals, recipes,
formulations, process technology, blue prints, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works, financial and
marketing plans and customer and supplier lists and information); (vii) computer
software (including but not limited to source code, object code, executable
code, data, databases and documentation); and (viii) all other intellectual
property.
"Intercompany Payables" means all accounts payable due Sellers or IP
Sellers that represent amounts payable by Sellers or IP Sellers to Sellers'
Affiliates and IP Sellers' Affiliates.
"Inventory" shall have the meaning set forth in Section 2.1(b).
"IP Sellers" shall have the meaning set forth in the preamble of this
Agreement.
"IP Sellers' Knowledge" means the actual knowledge, without independent
investigation, of any officer of IP Sellers listed on Schedule 16(b).
"Kalama" means Noveon Kalama, Inc., a Washington corporation.
"Kalama Business" shall have the meaning set forth in the Recitals.
"Known Environmental Matters" shall have the meaning set forth in Section
13.4(b)(ii).
"Large Dispute" shall have the meaning set forth in Section 14.1(b).
"Law" means any federal, state, local, municipal, foreign, international,
multinational or other constitution, law, ordinance, principle of common law,
code, regulation, statute or treaty in effect on the Closing Date.
"Leased Real Property" shall have the meaning set forth in Section 2.1(e).
"Liability" means any liability or obligation of any kind, character or
description, whether known or unknown, absolute or contingent, accrued or
unaccrued, disputed or undisputed, liquidated or unliquidated, secured or
unsecured, joint or several, due or to become due, vested or unvested,
executory, determined, determinable or otherwise, and whether or not the same is
required to be accrued.
"License Agreement" shall have the meaning set forth in Section 7.17(a).
"Licensed IP" shall have the meaning set forth in Section 7.17(a).
"Lowest-Cost Commercially Reasonable" shall have the meaning set forth in
Section 13.7(a).
"Lubrizol Brazil" means Lubrizol do Brasil Aditvos Ltda., a Brazil company.
94
"Lubrizol Foam Control" means Lubrizol Foam Control Additives, Inc., a
South Carolina corporation.
"Lubrizol Foam Control & Silicone Business" shall have the meaning set
forth in the Recitals.
"Lubrizol Foam Control & Silicone Business Agreement" shall mean a license,
transition services agreement, or other arrangement negotiated by the Parties,
in connection with the operation of the Lubrizol Foam Control & Silicone
Business outside the United States.
"Material Adverse Effect" means a material adverse effect on or change in
the Businesses, operations, assets, liabilities, cash flow, financial condition
or results of operations of the Businesses, taken as a whole. Notwithstanding
the foregoing, none of the following shall be deemed, either alone or in
combination, to constitute, and none of the following shall be taken into
account in determining whether there has been or shall be, a Material Adverse
Effect with respect to the Sellers: (i) any adverse change, effect, event,
occurrence, state of facts or development attributable to the announcement or
pendency of the transactions contemplated hereby; (ii) any disruption in
supplier or other business relationships attributable to the announcement or
pendency of the transactions contemplated hereby; (iii) any adverse change,
effect, event, occurrence, state of facts or development attributable to
conditions affecting substantially as a whole the United States economy that
does not affect the Businesses in a materially disproportionate manner from the
industry in which the businesses compete as a whole; or (iv) any adverse change,
effect, event, occurrence, state of facts or development arising or resulting
from or relating to any change in accounting method, practice or principle
required by generally accepted accounting principles.
"Material Customers" shall have the meaning set forth in Section 5.26.
"Material Suppliers" shall have the meaning set forth in Section 5.26.
"Most Recent Balance Sheet" shall have the meaning set forth in Section
5.6(a).
"New Defined Remediation Project" shall have the meaning set forth in
Section 13.4(b)(ii).
"New Environmental Conditions" shall have the meaning set forth in Section
13.8.
"Normal Working Capital" shall have the meaning set forth in Section
4.3(a)(ii).
"Noveon" means Noveon, Inc., a Delaware corporation.
"Noveon Textile" means Noveon Textile Chemicals, Inc., a Delaware
corporation.
"Noveon Textile Business" shall have the meaning set forth in the Recitals.
"Objection Notice" shall have the meaning set forth in Section 7.8(c).
95
"Occupational Safety and Health Law" means any Law designed to provide safe
and healthful working conditions and to reduce occupational safety and health
hazards in effect on the Closing Date, including the Occupational Safety and
Health Act of 1970, Public Law 91-596, 84 STAT. 1590.
"Offsite Equipment" shall have the meaning set forth in Section 2.3(p).
"Online Data Room" means the online data room used by Buyer and its
Representatives in connection with its due diligence investigation of the
Businesses located at the following website address:
xxxxx://xxxxx.xxxxxxxx.xxx/xXxxx/XxxxXxxxxxx.
"Operation and Maintenance" shall have the meaning set forth in Section
13.4(b)(iii).
"Order" means any order, injunction, judgment, decree, ruling, assessment
or arbitration award of any Governmental Body or arbitrator.
"Ordinary Course of Business" means the usual and ordinary course
consistent with past practice of the operation of each Business individually or
the Businesses collectively.
"Owned Real Property" shall have the meaning set forth in Section 2.1(d).
"Party" or "Parties" shall have the meaning set forth in the preamble of
this Agreement.
"Pass Through Indemnity" shall have the meaning set forth on Section
13.4(b)(vi).
"Permits" shall mean all permits, licenses, certificates of occupancy,
authorizations, and certifications from any Governmental Body.
"Permitted Encumbrances" means (a) carriers', warehousemen's, mechanics',
materialmen's, landlords', laborers', suppliers', vendors' and other statutory
liens incurred in the Ordinary Course of Business and securing obligations which
are not yet due or which are being contested in good faith; (b) Permitted Tax
Liens; (c) governmentally imposed use or zoning or planning restrictions, (d)
encumbrance, easements, licenses, rights of way, declarations, reservations,
provisions, covenants, conditions, survey exceptions or other title matters,
provided that, in case of both subclause (c) and this subclause (d), which do
not materially impair the use (in the manner currently used) or value of the
parcel of property to which they relate; (e) with respect to the Owned Real
Property and Leased Real Property described on Schedule 2.1(e), other exceptions
to title described in the commitments for title insurance or shown on the
surveys for such Owned Real Property or Leased Real Property described on
Schedule 2.1(e) which such title insurance or survey are listed in Schedule
16(c) unless and until objected to under Section 7.8(c) or cured by Sellers or
IP Sellers prior to the Closing; (f) Encumbrances that will be terminated prior
to or in connection with the Closing (and for which Buyer shall have no Damages
in connection with the removal thereof); (g) any deed restrictions imposed by a
Seller in accordance with Section 7.8(d); (h) Buyer's Environmental Covenants;
(i) Equipment Lease Agreement dated October 31, 2002, between InterMountain
Specialties, Inc. (now known as Lubrizol Foam Control Additives, Inc.), and
Xxxxx X. Xxxxx and Xxxxx X. Xxxxx; and (j) the Plant Services Agreement, between
the Geon Company and X.X. Xxxxxxxx Company, dated April 1, 1993, as it relates
to the Xxxxx Township property.
96
"Permitted Tax Liens" means (a) liens securing the payment of Taxes which
are either not delinquent or being contested in good faith by appropriate
Proceedings; and (b) liens for current Taxes not yet due and payable, and in
each case, for which appropriate aggregate reserves have been established (to
the extent required) in accordance the accounting principles, policies and
practices described on Schedule 4.3(a), and except as otherwise noted therein,
in accordance with GAAP, consistently applied.
"Person" means an individual, sole proprietorship, partnership,
corporation, trust, limited liability company, limited liability partnership,
organization, entity, authority, joint stock company, trust, unincorporated
association, joint venture or other entity or a Governmental Body (including any
instrumentality, division, agency or department thereof).
"Pre-Closing Toxic Tort Liabilities" shall have the meaning set forth in
Section 3.2(s).
"Prepaid Expenses" shall have the meaning set forth in Section 2.1(c).
"Proceeding" means any action, arbitration, grievance proceeding, audit,
hearing, investigation, litigation or suit (whether civil, criminal,
administrative, judicial or investigative, whether formal or informal, whether
public or private) commenced, brought, conducted or heard by or before, or
otherwise involving, or that could come before, any Governmental Body or
arbitrator.
"Product Liability" means any Liabilities for bodily injury or property
damage relating to products used, distributed, manufactured, or sold by the
Businesses prior to the Closing Date.
"Purchase Option" shall have the meaning set forth in Section 9.1(m).
"Purchased Assets" shall have the meaning set forth in Section 2.1.
"Purchased IP Assets" shall have the meaning set forth in Section 2.2.
"Purchased Patents" shall have the meaning set forth in Section 2.2(b).
"Purchase Price" shall have the meaning set forth in Section 4.1.
"Purchase Option" shall have the meaning set forth in Section 9.1(m).
"Purchased Trade Secrets" shall have the meaning set forth in Section
2.2(d).
"Real Property Leases" means the leases for the Leased Real Property.
"Release" means any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching
or migration on or into the Environment or into or out of any property.
"Representative" means, with respect to a particular Person, any director,
officer, manager, employee, agent, consultant, advisor, accountant, legal
counsel or other representative of that Person.
97
"Restricted Business" shall have the meaning set forth in Section 7.12(a).
"Restricted Period" shall have the meaning set forth in Section 7.12(a).
"Retained Assets" shall have the meaning set forth in Section 2.3.
"Retained IP Assets" shall have the meaning set forth in Section 2.3(k).
"Retained Liabilities" shall have the meaning set forth in Section 3.2.
"Retained Product Lines" shall have the meaning set forth in Section 2.3
"Retained Records" means originals or, in the case of the Purchased
Records, copies of all lists, data, records and other information relating to
the operation of the Businesses, the Purchased Assets, the Purchased IP Assets,
the Licensed IP, and/or the assets, properties, rights, titles and interests
provided under the Closing Documents to Buyer, including lists, records and
other information pertaining to accounts and referral sources; customer and
supplier lists; customer files and records; all drawings, reports, studies,
plans, books, ledgers, files, and business and accounting records of every kind
(including all financial, business, sales and marketing plans and information);
pricing and cost information; purchase and sale records; engineering records;
property records; payroll and personnel records of Transferred Employees; parts
lists; manuals; and all manuals and service and maintenance records.
"Review Period" shall have the meaning set forth in Section 4.3(c).
"RT Vanderbilt" shall have the meaning set forth in Section 7.17(b).
"Seller" means any of Noveon, Hilton Davis, Kalama, Noveon Textile,
Lubrizol Foam Control or Lubrizol Brazil individually.
"Sellers" means all of Noveon, Hilton Davis, Kalama, Noveon Textile,
Lubrizol Foam Control and Lubrizol Brazil, collectively.
"Sellers' Benefit Plans" shall have the meaning set forth in Section
5.13(a).
"Sellers' Bonus Plans" shall have the meaning set forth in Section 8.1(c)
"Sellers' 401(k) Plans" means each of the Sellers' Benefit Plans, which is
a defined contribution plan satisfying the requirements of Section 401(k) of the
Code and in which Transferred Employees participate, as applicable, and as set
forth in Schedule 5.13(a).
"Sellers' Environmental Covenants" shall have the meaning set forth in
Section 13.4(d)
"Sellers' Healthcare Plan" means the Sellers' Benefit Plans providing
medical, dental, prescription drug and health care flexible spending account
benefits to Transferred Employees.
"Sellers' Indemnified Person" shall have the meaning set forth in Section
12.3.
98
"Sellers' Knowledge" means the actual knowledge without independent
investigation of any officer of Sellers listed on Schedule 16(d), but only as to
the area and Business set forth opposite such officer's name thereon.
"Sellers' Manufacturing and Supply Agreements" shall mean those
manufacturing and supply agreements negotiated by the Parties after the date
hereof for the supply of product to Sellers and IP Sellers.
"Sellers' Pension Plans" means the Sellers' Benefit Plans which are defined
benefit pension plans maintained by the Sellers and in which the Transferred
Employees participate, as listed on Schedule 5.13(a).
"Sellers' Representative" shall have the meaning set forth in Section 7.15.
"Sellers' Severance Practice" means the Sellers' Severance Practice for all
regular employees, as described in Schedule 8.1(d).
"Shared Contracts" shall have the meaning set forth in Section 7.24.
"Shared Equipment" shall have the meaning set forth in Section 7.29.
"Specialty Polymer Business" shall have the meaning set forth in the
Recitals.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (irrespective of whether, at the time, stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, limited liability
company, association or other business entity, either (A) a majority of the
partnership or other similar ownership interest thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more Subsidiaries
of that Person or a combination thereof, or (B) such Person is a general
partner, managing member or managing director of such partnership, limited
liability company, association or other entity.
"Survey" shall have the meaning set forth in Section 7.8(a).
"Tax" means any income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental, windfall
profit, customs, vehicle, airplane, boat, vessel or other title or registration,
capital stock, franchise, employees' income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative, add-on
minimum, estimated and other tax, fee, assessment, levy, tariff, charge or duty
of any kind whatsoever whether computed on a separate or consolidated, unitary
or combined basis or in any other manner and any interest, penalty, addition or
additional amount thereon (whether disputed or not) imposed, assessed or
collected by or under the authority of any Governmental Body or payable under
any tax-sharing agreement or any other Contract.
99
"Tax Benefit" shall have the meaning set forth in Section 12.8(b).
"Tax Return" means any return (including any information return), report,
statement, schedule, notice, form, declaration, claim for refund or other
document or information (including any related or supporting schedules,
statements or information) filed with or submitted to, or required to be filed
with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with any
Law relating to any Tax.
"The Lubrizol Corporation" means The Lubrizol Corporation, an Ohio
corporation.
"Third Party Claim" shall have the meaning set forth in Section 12.5(a).
"Threat of Release" means a reasonable likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
"Title Commitment" shall have the meaning set forth in Section 7.8(b).
"Title Company" shall mean a nationally reputable title insurance company
chosen by Buyer and reasonably acceptable to Sellers.
"Title Defect" shall have the meaning set forth in Section 7.8(c).
"Title Insurance Policies" shall have the meaning set forth in Section
4.5(a).
"Toxic Tort Claims" shall mean any legal actions, lawsuits (including
individual and class action lawsuits), demands, or other claims for Damages
arising from actual or alleged bodily injury or property damage resulting from
exposure to Hazardous Materials.
"Transaction Documents" means this Agreement and all other agreements,
instruments, certificates and other documents to be entered into, executed and
delivered by any Party on or after the date hereof and on or prior to the
Closing Date in connection with the transactions contemplated to be consummated
pursuant to this Agreement.
"Transferred Employee" has the meaning given to that term in Section 8.1.
"Transition Services Agreement" shall have the meaning set forth in Section
11.2(g).
"Union Contracts" means the Working Agreement between Noveon Textile
Chemicals, Inc. Charlotte, NC Plant and International Union of Operating
Engineers Local 465, AFL-CIO dated June 16, 2005; Agreement between Noveon, Inc.
(Akron, OH Facility) and The United Steel Workers of America on behalf of Local
No. 5L dated August 2, 2003; Agreement between Noveon Hilton Davis, Inc. and
International Chemical Workers Union Council, UFCW, Local 342-C dated April 1,
2005 through March 31, 2010; and Agreement between Noveon Kalama, Inc. and
International Chemical Workers Union Council/UFCW Local 747-C dated May 10, 2005
to May 10, 2008.
100
"Unknown Environmental Liabilities" shall have the meaning set forth in
Section 13.4(c)(i).
"Vycar Products" shall have the meaning set forth in Section 7.19.
"Warehouse" shall have the meaning set forth in Section 9.1(m).
"WARN" means the Worker Adjustment Retraining and Notification Act, 29
U.S.C. Section 2101 et seq. and any similar foreign, state or local law,
regulation or ordinance.
"Working Capital" shall have the meaning set forth in Section 4.3(a)(i).
101
INTENDING TO BE LEGALLY BOUND, the Parties have executed this Asset
Purchase Agreement as of the day and year first above written.
SELLERS:
NOVEON, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, Vice President
NOVEON HILTON DAVIS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, Vice President
NOVEON KALAMA, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, Vice President
NOVEON TEXTILE CHEMICALS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, Vice President
LUBRIZOL FOAM CONTROL ADDITIVES, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxxx, President
LUBRIZOL DO BRAZIL ADITVOS LTDA
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx, Director-President
SPM GROUP HOLDINGS, LLC
By:
------------------------------------
,
--------------------------- -------
NOVEON IP HOLDINGS CORP.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, Vice President
and
THE LUBRIZOL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, Senior Vice
President
LUBRIZOL DEUTSCHLAND GMBH
By: /s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx, Director
