<PAGE>
Exhibit 10.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
among
FMC CORPORATION,
SOLUTIA INC.,
ASTARIS LLC,
ISRAEL CHEMICALS LIMITED
and
ICL
PERFORMANCE PRODUCTS HOLDING INC.
dated as of
September 1, 2005
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE OF ACQUIRED
ASSETS
1.1 Purchase
and Sale of the Acquired Assets; Assumed
Liabilities; Retained Liabilities.....................1
1.2
Consideration...........................................7
1.3 The
Closing.............................................8
1.4 Purchase
Price Adjustment..............................11
1.5 Further
Assurances.....................................15
1.6 Purchase
Price Allocation..............................16
1.7 Consent of
Third Parties...............................16
1.8 Removal of
Excluded Assets.............................17
1.9 Pro Ration
of Certain Items............................17
ARTICLE II REPRESENTATIONS AND WARRANTIES
OF THE SELLER
2.1 The
Seller, the Subsidiaries and Fosbrasil.............18
2.2
Authorization, Etc.....................................19
2.3 Financial
Statements...................................19
2.4 No
Approvals or Conflicts..............................21
2.5 Compliance
with Law; Governmental Authorizations.......22
2.6
Litigation.............................................22
2.7 Title;
Condition of Assets.............................23
2.8 Absence of
Certain Changes.............................24
2.9 Tax
Matters............................................26
2.10
Employee Benefits......................................26
2.11
Labor and Employment Matters...........................30
2.12
Intellectual Property..................................30
2.13
Contracts..............................................32
2.14
Environmental Matters..................................35
2.15
Insurance..............................................36
2.16
Real Property..........................................37
2.17
Product Liability......................................38
2.18
Inventory..............................................39
2.19
Accounts Receivable....................................39
2.20
Relationship with Customers and Suppliers..............39
2.21
Absence of Questionable Payments.......................39
2.22
Solvency...............................................40
2.23
All Assets.............................................40
2.24
No Brokers' or Other Fees..............................40
2.25
No Other Representations or Warranties.................40
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF THE OWNERS
3.1
Organization of the Owners.............................41
3.2
Authorization, Etc.....................................41
3.3 No
Approvals or Conflicts..............................42
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3.4
Litigation.............................................43
3.5 No
Brokers' or Other Fees..............................43
3.6 No Other
Representations or Warranties.................43
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF THE BUYER AND ICL
4.1
Organization...........................................43
4.2
Authorization, Etc.....................................44
4.3 No
Approvals or Conflicts..............................44
4.4 Financial
Capacity.....................................45
4.5
Litigation.............................................45
4.6 No
Brokers' or Other Fees..............................45
4.7 No Other
Representations or Warranties.................45
ARTICLE V CONDITIONS TO SELLER'S AND
OWNERS' OBLIGATIONS
5.1
Representations and Warranties.........................45
5.2
Performance............................................46
5.3 Officer's
Certificate..................................46
5.4 Consents
and Approvals.................................46
5.5 Bankruptcy
Approvals...................................46
5.6
Injunctions............................................46
5.7
Documents..............................................47
5.8 Opinion of
Buyer's and ICL's Counsel...................47
ARTICLE VI CONDITIONS TO THE BUYER'S AND
ICL'S OBLIGATIONS
6.1
Representations and Warranties.........................47
6.2
Performance............................................47
6.3 Officer's
Certificates.................................48
6.4 Consents
and Approvals.................................48
6.5 Bankruptcy
Approvals...................................48
6.6
Injunctions............................................48
6.7
Releases...............................................48
6.8
Permits................................................48
6.9 No
Material Adverse Effect.............................49
6.10
Documents..............................................49
6.11
Opinion of Seller's and Owners' Counsel................49
ARTICLE VII COVENANTS AND AGREEMENTS
7.1 Conduct of
Business by the Seller......................49
7.2 Access to
Books and Records; Cooperation...............51
7.3 Filings
and Consents...................................53
7.4 Tax
Matters; Cooperation...............................54
7.5 Employee
Matters.......................................55
7.6 Labor
Matters..........................................57
7.7 Covenant
to Satisfy Conditions.........................58
7.8 Contact
With Customers and Suppliers...................58
7.9
Noncompetition; No Hire................................58
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7.10
Bankruptcy Filings, Covenants and Agreements...........60
7.11
Carteret ISRA Approval.................................62
7.12
Notice and Cure........................................62
7.13
Negotiations...........................................63
7.14
Monthly and Interim Financial Statements...............64
7.15
Use of Names and Logos.................................64
7.16
Resignation of Directors and Officers of Subsidiaries..65
7.17
Collection of Receivables..............................65
7.18
OPEB...................................................65
7.19
Cooperation............................................65
7.20
Real Property Matters..................................66
7.21
Bulk Transfer Laws.....................................66
7.22
Astaris Brasil.........................................67
7.23
Intellectual Property Matters..........................67
7.24
Monsanto Supply Agreement Matters......................67
ARTICLE VIII TERMINATION
8.1
Termination............................................69
8.2 Procedure
and Effect of Termination....................70
ARTICLE IX INDEMNIFICATION
9.1
Indemnification........................................72
ARTICLE X MISCELLANEOUS
10.1
Fees and Expenses......................................84
10.2
Governing Law..........................................84
10.3
Amendment..............................................84
10.4
Assignment.............................................84
10.5
Waiver.................................................85
10.6
Notices................................................85
10.7
Complete Agreement; Successors and Assigns.............87
10.8
Counterparts...........................................87
10.9
Publicity..............................................87
10.10
Interpretive Provisions................................88
10.11
Disclosure Schedule...................................115
10.12
Headings; Table of Contents...........................116
10.13
Severability..........................................116
10.14 No
Third Party Beneficiaries..........................117
10.15
CONSENT TO JURISDICTION; APPOINTMENT OF AGENT FOR
SERVICE OF PROCESS..................................117
10.16
WAIVER OF JURY TRIALS.................................117
10.17
Specific Enforcement; Cumulative Remedies.............118
10.18
Guarantee.............................................118
10.19 No
Right of Setoff....................................119
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EXHIBITS
Exhibit A
Form of Escrow Agreement
Exhibit B
Form of Bill of Sale
Exhibit C
Form of Assignment of Contracts, Intellectual Property,
Permits and Warranties
Exhibit D
Form
of Transition Services Agreement
Exhibit E
Form of Deed for Owned Real Property
Exhibit F
Form of Assignments for Leased Real Property
Exhibit G
Form of Carteret Agreement
Exhibit H
Form of Assumption Agreement
Exhibit I
Initial Relief Order, dated July 21, 2005
Exhibit J
Form of Sauget Supply Agreement
Exhibit K
Form of Opinion of ICL's and Buyer's Counsel
Exhibit L
Form of Opinion of Seller's and Owners' Counsel
Exhibit M
Forms of Assignment and Assumption Agreements
iv
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), dated as of
---------
September 1, 2005, is entered into by and
among Israel Chemicals Limited, an
Israeli corporation ("ICL"), ICL
Performance Products Holding Inc., a Delaware
corporation and a wholly owned subsidiary
of ICL (the "Buyer"), FMC
-----
Corporation, a Delaware corporation
("FMC"), Solutia Inc., a Delaware
---
corporation ("Solutia" and, together with
FMC, the "Owners") and Astaris
-------
------
LLC, a Delaware limited liability company
("Astaris" or the "Seller").
-------
------
WHEREAS, each of the Owners owns fifty percent (50%) of the
Equity
Interests in Astaris;
WHEREAS, Astaris Brasil Ltda., a Brazil limited liability
company
("Astaris Brasil"), Astaris Canada Ltd., a
Canadian corporation ("Astaris
--------------
-------
Canada"), Astaris Europe S.r.l., an Italian
limited liability company
------
("Astaris Europe"), and Astaris
International, Inc., a Delaware corporation
--------------
("Astaris International"), are direct or
indirect subsidiaries of Astaris;
---------------------
WHEREAS, Astaris International owns all of the Equity Interests
of
Astaris Canada and five percent (5%) of the
Equity Interests of Astaris
Europe;
WHEREAS, Solutia filed for relief under Chapter 11 of title 11 of
the
United States Code (as amended, the
"Bankruptcy Code") on December 17, 2003;
---------------
WHEREAS, the Seller owns and operates the Business;
WHEREAS, the Seller wishes to sell (and the Owners wish the Seller
to
sell) to the Buyer the Acquired Assets and
to have the Buyer assume the
Assumed Liabilities, and the Buyer wishes
to buy from the Seller the
Acquired Assets and assume the Assumed
Liabilities, upon the terms and
subject to the conditions set forth in this
Agreement; and
WHEREAS, on July 21, 2005, the Bankruptcy Court entered the
Initial
Relief Order.
NOW, THEREFORE, in consideration of the foregoing premises and
the
mutual covenants contained herein, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ACQUIRED ASSETS
1.1 Purchase and Sale of the Acquired Assets; Assumed
Liabilities;
--------------------------------------------------------------
Retained Liabilities.
--------------------
(a) Subject to the terms and conditions of this Agreement, at
the Closing, the Seller shall sell, convey,
transfer, assign and deliver to
the Buyer or, subject to Section 10.4 of
this Agreement, ICL's designated
Affiliates or permitted assigns, and shall
cause Astaris International to
sell, convey, transfer, assign and deliver
to Buyer or, subject to Section
10.4 of this Agreement, ICL's designated
Affiliates or permitted assigns,
and the Buyer or ICL's
<PAGE>
designated Affiliates or permitted assigns
shall purchase and accept from
the Seller and Astaris International, the
Acquired Assets, free and clear of
all Encumbrances (other than Permitted
Encumbrances), including all claims,
liens, and interests of Solutia and FMC or
of any creditor or equity holder
of Solutia or FMC, respectively.
(b) Subject to the terms and conditions of this Agreement,
and except as otherwise specifically
provided (x) in this Section 1.1(b),
(y) in respect of the Retained Liabilities
(as set forth in Section 1.1(c))
or (z) in Section 1.9, at the Closing, the
Buyer shall assume and agree to
pay, discharge, perform and otherwise
satisfy, as the case may be, and the
Seller shall irrevocably convey, transfer
and assign to the Buyer, the
following Liabilities, commitments and
obligations of the Seller and the
Subsidiaries (other than Astaris
International) and no others (the "Assumed
-------
Liabilities"):
-----------
(i)
all account, trade and other payables of the
Seller and the
Subsidiaries (including bank overdrafts) as of the
Closing Date,
but only if and to the extent that the same are reflected
in Net Working
Capital in the Conclusive Net Working Capital and Capex
Statement;
(ii) all
Liabilities due to Affiliates of the Seller
and the
Subsidiaries as of the Closing Date, but only if and to the
extent that the
same are related to the purchase of goods or services
and are
reflected in Net Working Capital in the Conclusive Net Working
Capital and
Capex Statement;
(iii) all
Liabilities in respect of Taxes payable
for periods or
portions thereof ending on or prior to the Closing Date,
but only if and
to the extent that the same are reflected in Net
Working Capital
in the Conclusive Net Working Capital and Capex
Statement;
(iv) all
Liabilities in respect of commissions for
periods or
portions thereof ending on or prior to the Closing Date, but
only if and to
the extent that the same are reflected in Net Working
Capital in the
Conclusive Net Working Capital and Capex Statement;
(v)
all Taxes attributable to the ownership or
operation of the
Acquired Assets for periods or portions thereof
beginning after
the Closing Date;
(vi) the
Buyer's share of personal property and
real property
Taxes prorated under Section 1.9 and the Buyer's share of
any Transfer
Taxes pursuant to Section 7.4(b);
(vii) subject to
Sections 1.1(b)(xii) and 1.1(c)(xix)
hereof, all
Liabilities and obligations of the Seller and the
Subsidiaries in
respect of Contracts or Permits that are Acquired
Assets that
accrue or are to be performed after the Closing Date,
except that the
Buyer shall not assume or agree to pay, discharge or
perform any
Liabilities or obligations arising out of any breach or
default
(including for this purpose any event which, with notice or
lapse of time
would constitute such a breach or default) by a Seller
Person of any
provision of any such Contract or Permit, including
Liabilities
or
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obligations
arising out of a Seller Person's failure to perform any
Contract or
comply with any Permit in accordance with its terms or
applicable Law
on or prior to the Closing;
(viii) any Liability
or obligation arising under
the Assumed
Benefit Plans and Foreign Plans, to the extent (A) insured
under a
third-party contract of insurance that is transferred to the
Buyer pursuant
to this Agreement, (B) funded through a trust or
custodial
account that is fully transferred to Buyer pursuant to this
Agreement, (C)
reflected in Net Working Capital in the Conclusive Net
Working Capital
and Capex Statement, including any bonuses or similar
payments to the
extent reflected in Net Working Capital in the
Conclusive Net
Working Capital and Capex Statement that may be due upon
or after
consummation of the transactions contemplated by this
Agreement, (D)
accrued or to be performed under any Assumed Benefit
Plan or Foreign
Plan after the Closing Date, except that the Buyer
shall not assume
or agree to pay, discharge or perform any Liabilities
or obligations
that arise as a result of a Seller Person failing to
operate or
administer such Assumed Benefit Plan or Foreign Plan prior
to the Closing
in accordance with its terms or any applicable Law, or
(E) it is a
severance benefit that becomes payable to any Employee as a
result of the
transactions contemplated by this Agreement, but only to
the extent such
severance benefit becomes due as a direct result of the
Buyer's failure
to extend offers of employment to such Employees in
accordance with
Section 7.5;
(ix) all
accrued salary, wages, bonuses and
commissions as
of the Closing Date for Transferred Employees and
Non-U.S.
Employees, but only if and to the extent that the same are
reflected in Net
Working Capital in the Conclusive Net Working Capital
and Capex
Statement;
(x)
any severance benefits arising under the
Employment
Agreement, dated as of November 18, 2002, as amended by that
certain letter
agreement dated December 10, 2004, by and between
Astaris and Paul
L. Howes, that becomes payable on or after the Closing
Date, but only
if Paul L. Howes commences employment with the Buyer,
ICL or any of
ICL's Covered Affiliates within two (2) years of the
Closing
Date;
(xi) any
Liabilities or obligations arising after
the Closing Date
out of (A) any customer claims that are based upon any
express or
implied representation, warranty, agreement or guarantee
made or alleged
to have been made by the Seller or a Subsidiary in
connection with
products or materials manufactured or processed prior
to the Closing
that are sold by or on behalf of the Buyer after the
Closing or (B)
any other customer claim for product returns in respect
of any product
manufactured or processed prior to the Closing that is
sold by or on
behalf of the Buyer after the Closing, but if and only to
the extent, in
each case, such Liabilities or obligations (w) are
reflected in Net
Working Capital in the Conclusive Net Working Capital
and Capex
Statement, (x) are for any individual claim or group of
related claims
of an amount less than two hundred thousand dollars
($200,000), (y)
are for any individual claim or group of related claims
of an amount
equal to or greater than two hundred thousand dollars
($200,000), not
to exceed three million dollars ($3,000,000) in the
aggregate, or
(z) result from the Buyer's failure to manage the
customers and
accounts of the Business after the Closing with respect
to such claims,
or make any settlement in respect thereof, in its good
faith
3
<PAGE>
reasonable
judgment and consistent with the past practice in the
ordinary course
of the Business prior to the Closing Date; and
(xii) up to an
aggregate amount not to exceed twelve
million dollars
($12,000,000) (the "Monsanto Basket") of Additional
---------------
Monsanto Supply
Agreement Environmental Costs; provided that, in
--------
calculating
whether such Monsanto Basket has been exceeded, the amount
of any Monsanto
Supply Agreement Environmental Costs paid by the Seller
under the
Monsanto Supply Agreement prior to the Closing shall not be
considered.
Nothing set forth in this Section 1.1(b) is
intended or shall be construed
to derogate any of the representations or
warranties set forth in Articles
II or III.
(c) The Buyer, ICL and the Subsidiaries shall not assume any
Liabilities, commitments or obligations
(contingent or absolute and whether
or not determinable as of the Closing) of
any Seller Person (including the
Liabilities and obligations of the
Subsidiaries existing or arising prior to
the Closing), except for the Assumed
Liabilities as specifically and
expressly provided for above, whether such
Liabilities or obligations relate
to payment, performance or otherwise, and
all Liabilities, commitments or
obligations not expressly transferred to
the Buyer hereunder as Assumed
Liabilities (the "Retained Liabilities")
shall be retained or assumed by the
--------------------
Seller, Astaris International, FMC or
Solutia as provided in Section
10.10(d), who shall remain liable therefor.
Without limitation to the
foregoing, all of the following shall be
considered Retained Liabilities and
not Assumed Liabilities (except as
specified below) for the purposes of this
Agreement (whether or not disclosed,
referred to, accrued or reserved for on
the 2004 Balance Sheet, the Interim Balance
Sheet or any Disclosure Schedule
or Exhibit hereto):
(i)
other than any Assumed Liabilities under
Section
1.1(b)(xi), any Liabilities or obligations arising out of,
resulting from
or relating to (A) any claim, regardless of when made or
asserted and
whether founded upon negligence, strict liability in tort
or other similar
legal theory, seeking compensation or recovery for or
relating to
injury to person or damage to property to the extent
arising out of
the conduct of the Business prior to the Closing, (B)
the PPA
Litigation, (C) any product liability or similar claim for
injury to person
or property, regardless of when made or asserted,
which arises out
of or is based upon a theory of strict liability under
Section 402A of
the Restatement (2nd) of Torts or any analogous or
similar
provision of statutory or common law or any express or implied
representation,
warranty, agreement or guarantee made by a Seller
Person, or
alleged to have been made by any Seller Person, or which is
imposed or
asserted to be imposed by operation of Law, to the extent
arising out of
any service performed or the mining, treatment,
manufacture,
sale or lease, as the case may be, of any product or
materials by or
on behalf of any Seller Person prior to the Closing,
including any
such claim relating to any product delivered in
connection with
the performance of such service and any such claim
seeking recovery
for consequential damages, lost revenue or income;
provided that
such Liability or obligation for all claims under clauses
--------
(A) and (C)
shall be retained by the applicable Seller Person
notwithstanding
any duty to warn that may arise after the Closing with
respect to any product
sold or service provided prior to the Closing if
the defect or
other underlying cause of such claim or Liability existed
prior
4
<PAGE>
to the Closing,
or (D) any customer claim for product returns in
respect of any
product sold or distributed prior to the Closing;
(ii) other
than Taxes that are Assumed Liabilities
under Section
1.1(b)(iii), all Taxes of the Seller Persons for periods
or portions thereof ending on or
before the Closing Date, including any
Taxes of any
other Person for which any Seller Person may be liable (A)
as a member of a
consolidated, combined or unitary group of entities
pursuant to
Treas. Reg. Section 1.1502-6 or analogous provision of
state, local or
foreign Tax law, (B) as a successor to such other
Person by
merger, liquidation or other similar transaction, and (C) as
a result of any
tax sharing, indemnification or similar agreement
entered into by
any such Seller Person at any time prior to the
Closing;
(iii) other than
Taxes that are Assumed Liabilities
under Section
1.1(b)(vi), the Seller's share of personal property and
real property
Taxes prorated under Section 1.9 and the Seller's share
of any Transfer
Taxes pursuant to Section 7.4(b);
(iv) any
Liability (other than any Liability for
Taxes) under
applicable bulk transfer Laws, or similar statutes, Laws
or regulations,
including creditor related Laws, arising as a result of
the transactions
contemplated by this Agreement;
(v)
other than any Assumed Liabilities under
Sections
1.1(b)(viii), (ix) or (x), any Liability or obligation with
respect to
employment, termination of employment, compensation,
severance,
retention or employee benefits of any nature owed to any
employees,
former employees, agents or independent contractors of any
Seller Person,
whether or not employed by the Buyer after the Closing,
including any
Liability or Obligation that (A) arises out of or relates
to the
employment or service provider relationship between such Seller
Person and any
such individuals, including any claims, liabilities or
obligations that
arise under any Law governing equal employment
opportunity and
discrimination in employment, occupational safety and
health, the
payment of wages and other compensation, the provision of
workers'
compensation benefits and the maintenance of insurance for
such benefits,
and/or other terms and conditions of employment, (B)
arises out of or
relates to any Benefit Plan that is not an Assumed
Benefit Plan or
(C) arises out of or relates to events or conditions
occurring on or
before the Closing Date, including any bonuses or
similar payments
that may be payable to such individuals upon
consummation of
the transactions contemplated by this Agreement or
otherwise;
(vi) any
claims, Liabilities or obligations of
any Seller
Person arising out of or relating to the Excluded Assets,
including the
Excluded Contracts;
(vii) the OPEB
Obligations;
(viii) the Excluded
Master Lease Obligations;
(ix) the
Outstanding Guarantees;
(x)
any Liability or obligation for any bank or
other funded
debt of any Seller Person, including the loans, notes and
indebtedness,
obligations and
5
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liabilities of
such Persons in respect of the Credit Agreement or the
Solutia DIP
Financing Agreement.
(xi) the
Retained Environmental Liabilities;
(xii) any
Liability or obligation of any Seller
Person, arising
or incurred in connection with the negotiation,
preparation and
execution of this Agreement and the transactions
contemplated
hereby, including any fees and expenses (including any
fees, costs or
expenses of counsel, accountants, brokers, finders and
other
experts);
(xiii) any Liability
or obligation of any Seller
Person existing
under this Agreement or the other Transaction
Documents;
(xiv) any
Liability or obligation of any Seller
Person (except
for trade accounts payable and Liabilities due to
Affiliates
included within the Assumed Liabilities under Sections
1.1(b)(i) or
(ii)), to any other Seller Person, including any
intercompany
payables or receivable credits specified in the 2004
Balance Sheet
(the "Intercompany Payables");
---------------------
(xv) any
Liability or obligation created by any
by-law,
certificate of incorporation or limited liability company
agreement
provision or other agreement, to the extent arising prior to
the Closing in
the case of the Subsidiaries, and relating to the
indemnification
of any Person who was an employee, officer, director,
member or
manager of any of the Seller Persons prior to the Closing
Date;
(xvi) any
claims, Liabilities or obligations to
the extent
arising out of or relating to any agreement or instrument
(other than this
Agreement or any other Transaction Document) related
to the formation
of Astaris or the Subsidiaries or the disposition of
any of their
rights, assets or properties, including the Joint Venture
Agreement, the
Astaris LLC Agreement, the Solutia Asset Transfer
Agreement, the
FMC Asset Transfer Agreement, the Prayon Agreement and
the Agrium
Agreement (including any take or pay arrangements with
Agrium) or any
other contract relating to the formation of the Astaris
joint venture or
any transfer or other disposition of assets related to
the Business,
including any liquidation or restructuring of the Seller
after the
Closing;
(xvii) any claims,
Liabilities or obligations arising
out of or
attributable to the spinoff of Solutia from Old Monsanto in
1997;
(xviii) any Liability or obligation arising out of
or under or
relating to any Non-Assumed Undisclosed Material Contract,
other than any
Liability or obligation attributable to any breach of
any such
Non-Assumed Undisclosed Material Contract by the Buyer after
the time the
Buyer has actual knowledge of the existence of such
Non-Assumed
Undisclosed Material Contract;
(xix) other than
the Assumed Liabilities under
Section
1.1(b)(xii) hereof, all Additional Monsanto Supply Agreement
Environmental
Costs; and
6
<PAGE>
(xx) any
other Liability of any Seller Person
whatsoever,
except for the Assumed Liabilities as specifically and
expressly set
forth herein, including any Liability arising out of or
relating to the
ownership or operation of the Seller, the Subsidiaries,
the Acquired
Assets and the Business on or prior to the Closing Date
(including any
predecessor operations and any discontinued operations),
including any
claims, obligations or litigation arising out of or
relating to
events or conditions occurring on or before the Closing
Date (including
the litigation involving the PPA Technology, the
Solutia
bankruptcy proceedings or any other threatened or pending
litigation or
charges set forth on Section 2.6 or 2.11 of the
Disclosure
Schedule).
(d) The obligations of the Buyer in respect of the Assumed
Liabilities and the obligations of the
Seller, Astaris International, FMC or
Solutia in respect of the Retained
Liabilities set forth in this Section 1.1
are in addition to the other obligations of
the Buyer or the Seller Persons
or their respective Affiliates, as the case
may be, otherwise set forth in
this Agreement or the Transaction
Documents.
1.2 Consideration.
-------------
(a) At the Closing, subject to the terms and conditions set
forth in this Agreement, the Buyer will (i)
pay, in accordance with and to
the Persons specified in Section 1.2(b),
cash in the amount of two hundred
fifty-five million dollars ($255,000,000)
minus (A) the Estimated Capex
-----
Shortfall Amount, if any, plus (B) the
Estimated Net Working Capital Excess
----
Amount, if any, or minus (C) the Estimated
Net Working Capital Deficiency
-----
Amount, if any, each as determined pursuant
to Section 1.4(a)(ii), (the
"Initial Purchase Price" and, as the same
may be adjusted pursuant to the
----------------------
provisions of this Agreement, the "Purchase
Price") and (ii) assume the
--------------
Assumed Liabilities.
(b) At the Closing, the Initial Purchase Price shall be paid
by the Buyer as follows:
(i)
an amount equal to the Working Capital Escrow
Amount shall be
delivered by wire transfer of immediately available
funds to The
Bank of New York, or such other banking institution
mutually
acceptable to the parties, as escrow agent (the "Escrow
------
Agent"), to be
held in an interest bearing escrow account (the "Working
-----
-------
Capital and
Capex Escrow Account") and disbursed pursuant to the terms
--------------------------------
hereof and of
the Escrow Agreement in the form attached as Exhibit A
---------
hereto or other
form required by the Escrow Agent (the "Escrow
------
Agreement") as
provided in Section 1.4(d);
---------
(ii) an
amount equal to twelve million five hundred
thousand dollars
($12,500,000) (the "General Escrow Amount") shall be
---------------------
delivered by
wire transfer of immediately available funds to the Escrow
Agent to be held
in an interest bearing escrow account (the "General
-------
Escrow Account")
to secure Solutia's indemnification obligations
--------------
pursuant to
Article IX, and disbursed pursuant to the terms hereof and
of the Escrow
Agreement; and
(iii) the
remainder of the Initial Purchase Price
shall be
delivered to the Seller in immediately available funds by wire
transfer to an
account designated by
7
<PAGE>
the Seller by
notice to the Buyer not less than two (2) Business Days
prior to the
Closing Date.
1.3 The Closing.
-----------
(a) Closing. Unless this Agreement shall have been terminated
-------
and the transactions contemplated herein
shall have been abandoned pursuant
to Article VIII, the closing of the sale
and transfer to the Buyer of the
Acquired Assets and the assumption of the
Assumed Liabilities contemplated
by this Agreement (the "Closing") shall
take place at the offices of Dechert
-------
LLP, 30 Rockefeller Plaza, New York, New
York 10112, on the fifth (5th)
Business Day after the day upon which all
of the conditions set forth in
Articles V and VI hereof are satisfied or
waived in accordance with the
terms of this Agreement (other than those
conditions that are to be
satisfied at the Closing) (the "Closing
Date"), or at such other place and
------------
time as may be agreed upon in writing by
Astaris and the Buyer, and shall be
effective as of the Effective Time.
(b) Deliveries to the Buyer. At the Closing, the Seller or the
-----------------------
applicable Owner, as indicated, shall
deliver or cause to be delivered to or
for the benefit of the Buyer, in the case
of documents, duly executed by
each applicable party, the following:
(i)
a bill of sale and instrument of assignment
to the Acquired
Assets (other than Real Property, the transfer of which
will be effected
in accordance with subclause (v) below), duly executed
by the Seller,
substantially in the form of Exhibit B hereto;
---------
(ii) (A)
assignments of all transferable or
assignable
Contracts, Seller Intellectual Property, Permits (including
Environmental
Permits and pending applications therefor), and
warranties
relating to the Acquired Assets, each duly executed and,
where reasonably
requested by the Buyer, in recordable form
substantially in
the form of Exhibit C hereto, provided that, at and
---------
--------
following the
Closing, Seller shall also execute or cause to be
executed any
additional assignment forms furnished by Buyer and
reasonably
necessary for Buyer to record the assignment of Seller
Intellectual
Property registered, issued, or pending in other
jurisdictions
with the appropriate intellectual property offices or
Governmental
Authorities, (B) the Assignment and Assumption Agreements
with respect to
the rail car leases, duly executed by the Seller,
substantially in
the forms of Exhibit M hereto and (C) an assignment
---------
and assumption
agreement with respect to the supply of phosphoric acid
to Solutia under
the Master Supply Agreement dated as of April 1, 2000,
by and among
FMC, Solutia and Astaris that is in form and substance
reasonably
satisfactory to the Buyer, the Seller and Solutia, duly
executed by the
parties thereto;
(iii) the
Transition Services Agreement, duly
executed by the
Seller and each of the Owners, substantially in the
form attached
hereto as Exhibit D;
---------
8
<PAGE>
(iv) title
certificates to any motor vehicles
included in the
Acquired Assets, duly executed by the Seller (together
with any other
transfer forms necessary to transfer title to such
vehicles);
(v)
deed for transfer of the Owned Real Property
in the form
attached hereto as Exhibit E in recordable form, conveying
---------
insurable fee
simple title to the Owned Real Property, free and clear
of all
Encumbrances except Permitted Encumbrances;
(vi)
assignments for all Leased Real Property
Leases duly
executed and acknowledged by the Seller and in recordable
form, each
substantially in the form of Exhibit F hereto;
---------
(vii) such
affidavits of title or other
certifications
as shall be reasonably required by the Title Company to
insure the
Buyer's title to the Real Property as set forth in Section
7.20, and to
provide affirmative endorsements for no mechanics' liens;
(viii) copies of the
Initial Relief Order and the
Approval Order
as certified by the clerk or other appropriate
representative
of the Bankruptcy Court;
(ix)
Estoppel Certificates from landlords with
respect to the
Leased Real Property, to the extent the landlord is
required to
furnish an Estoppel Certificate under the Lease or such
certificate is
otherwise obtained;
(x)
subordination, non-disturbance and attornment
agreements and
recognition agreements from mortgagees and prime
landlords
holding Encumbrances on Owned Real Property or Leased Real
Property
included in the Acquired Assets;
(xi) an
acknowledgement from the Seller of receipt
of the Initial
Purchase Price;
(xii) the
Carteret Agreement, substantially in the
form attached as
Exhibit G, duly executed by the parties thereto;
---------
(xiii) copies of the
resolutions of the board of
directors of
each Owner and the Seller authorizing and approving this
Agreement and
the Transaction Documents to which such Owner or the
Seller is a
party and the transactions contemplated hereby and thereby,
certified by the
respective corporate secretary of such Owner or the
Seller to be
true and complete and in full force and effect and
unmodified as of
the Closing Date;
(xiv) evidence
of the release of the Encumbrances
on the Acquired
Assets listed in Section 1.3(b)(xiv) of the Disclosure
Schedule;
9
<PAGE>
(xv) the
Consents listed in Section 6.4 of the
Disclosure
Schedule;
(xvi) the
certificate required by Section 6.3 hereof;
(xvii) a certificate,
in form and substance required
under Section
1445 of the Code and the Treasury Regulations thereunder,
stating under
penalties of perjury that Astaris is not a foreign
person;
(xviii) the Escrow Agreement and Sauget Supply
Agreement;
(xix) such other
Transaction Documents to which
the Seller or
such Owner is a party;
(xx)
certificates (or local equivalent) representing
all of the Equity
Interests of Astaris Brasil, Astaris Canada and
Astaris Europe
and 44.25% of Fosbrasil (in each case to the extent such
Equity Interests
are certificated or there is a local equivalent in
use), duly
endorsed in blank or with duly executed stock powers
attached, in
proper form for transfer and with required transfer
stamps, if any,
affixed;
(xxi) all such
other instruments of conveyance as
shall be
necessary to vest in the Buyer good, valid, marketable (as to
the Real
Property) and insurable title to the Acquired Assets in
accordance with
Section 1.1 hereof; and
(xxii) such other
documents and certificates required
to be delivered
by the Seller or the Owners pursuant to the terms of
this
Agreement.
(c) Deliveries to the Seller and Owners. At the Closing, the
-----------------------------------
Buyer or ICL, as indicated, shall deliver
or cause to be delivered to or for
the benefit of the Seller, in the case of
documents, duly executed, the
following:
(i)
the Initial Purchase Price in cash by wire
transfer of
immediately available funds in accordance with, and to the
accounts
designated pursuant to, Section 1.2(b);
(ii) (A)
an assumption agreement, substantially
in the form of
Exhibit H hereto, (B) the Assignment and Assumption
---------
Agreements with
respect to the rail car leases, duly executed by the
Buyer,
substantially in the forms of Exhibit M hereto and (C) an
---------
assignment and
assumption agreement with respect to the supply of
phosphoric acid
to Solutia under the Master Supply Agreement dated as
of April 1,
2000, by and among FMC, Solutia and Astaris that is in form
and substance
reasonably satisfactory to the Buyer, the Seller and
Solutia, duly
executed by the parties thereto;
10
<PAGE>
(iii) copies of
the resolutions of the board of
directors (or
comparable governing body) of the Buyer and ICL, and any
of ICL's
designated Affiliates or permitted assigns, as applicable
pursuant to
Section 10.4, authorizing and approving this Agreement and
the Transaction
Documents and the transactions and agreements
contemplated
hereby and thereby, certified by the corporate secretary
(or local
equivalent) of the Buyer to be true and complete and in full
force and effect
and unmodified as of the Closing Date;
(iv) the
Escrow Agreement and Sauget Supply
Agreement;
(v)
the other Transaction Documents to which the
Buyer or ICL is
a party;
(vi) the
certificate required by Section 5.3 hereof;
(vii) all such
other instruments of conveyance as
shall be
necessary for the assumption of the Assumed Liabilities by the
Buyer in
accordance with Section 1.1(b) hereof; and
(viii) such other
documents and certificates required
to be delivered
by the Buyer pursuant to the terms of this Agreement.
(d) All instruments and documents executed and delivered to the
Buyer pursuant hereto shall be in form and
substance, and shall be executed
in a manner, reasonably satisfactory to the
Buyer. All instruments and
documents executed and delivered to the
Seller or the Owners pursuant hereto
shall be in form and substance, and shall
be executed in a manner,
reasonably satisfactory to the Seller or
the Owners.
1.4 Purchase Price Adjustment.
-------------------------
(a) (i) For the
purpose of determining the Initial Purchase
Price, at least ten (10) Business Days
prior to the Closing Date the Seller
shall cause to be prepared and delivered to
the Buyer a statement (the
"Estimated Closing Statement") setting
forth a good faith estimate of the
---------------------------
Capex Shortfall Amount (the "Estimated
Capex Shortfall Amount") and the Net
--------------------------------
Working Capital (the "Estimated Net Working
Capital"), and the components
-----------------------------
and calculation thereof, as of the
Effective Time, determined in accordance
with this Section 1.4 and the Applicable
Accounting Principles. The
Estimated Closing Statement shall be
subject to the review and agreement of
the Buyer, and the Buyer and the Seller
shall cooperate and negotiate in
good faith to resolve any dispute regarding
the Estimated Closing Statement
prior to the Closing; provided that if any
item of dispute regarding the
--------
Estimated Closing Statement is not resolved
by agreement in writing between
the Buyer and the Seller by the second
(2nd) Business Day prior to the
Closing, then the Seller's estimate of such
disputed item, together with the
resolved disputed items, shall be deemed
final solely for purposes of
determining the Estimated Capex Shortfall
Amount and the Estimated Net
Working Capital, absent manifest error. The
Seller shall cooperate with and
provide Buyer and its representatives and
accountants reasonable access to
books, records, accountants' work papers,
employees, accountants and
advisors of the Seller and
11
<PAGE>
the Subsidiaries and, to the extent in
their possession or accessible by
them, Fosbrasil, in connection with Buyer's
review of the Estimated Closing
Statement.
(ii) To
the extent that the Estimated Net Working
Capital is
greater than ($58,000,000) (such difference, the "Estimated
---------
Net Working
Capital Excess Amount"), the Initial Purchase Price shall
---------------------------------
be increased by
the amount of the Estimated Net Working Capital Excess
Amount as
provided in Section 1.2(a)(i)(A). To the extent that the
Estimated Net
Working Capital is less than ($58,000,000) (such
difference, the
"Estimated Net Working Capital Deficiency Amount"), the
-----------------------------------------------
Initial Purchase
Price shall be reduced by the amount of the Estimated
Net Working
Capital Deficiency Amount as provided in Section
1.2(a)(i)(B).
(iii) The
Initial Purchase Price shall be reduced
by the amount of
the Estimated Capex Shortfall Amount.
(b) Within ninety (90) calendar days after the Closing Date,
the Buyer shall cause to be prepared and
delivered to the Seller a statement
(the "Net Working Capital and Capex
Statement") setting forth in good faith
---------------------------------------
the Estimated Capex Shortfall Amount and
the Net Working Capital, and the
components and calculation thereof, as of
the Effective Time, determined in
accordance with this Section 1.4 and the
Applicable Accounting Principles.
The Inventory balance included in the
Acquired Assets as of the Closing Date
will be determined based on a physical
count of the Inventory included in
the Acquired Assets as of the Closing Date
by Buyer and the Seller and
Buyer's and Seller's accountants, in
accordance with the customary practices
for the taking of a physical inventory. The
physically counted Inventory
items will be valued at the lower of
standard cost or market (or as
otherwise provided in Section 2.18(a) of
the Disclosure Schedule) with the
cost being determined on a first-in,
first-out basis, in accordance with the
Applicable Accounting Principles. Net
Working Capital shall not include any
Retained Liabilities or the value of any
Excluded Assets, or reflect any
items prorated pursuant to Section 1.9. For
purposes hereof, the term
"Applicable Accounting Principles" means
GAAP applied in a manner consistent
--------------------------------
with the way the 2004 Balance Sheet was
prepared (including preparation on a
"going concern" basis without reflecting
the transactions contemplated under
this Agreement), with only the deviations
or changes in GAAP or the
consistency of their application as are
referred to in Section 1.4(b) of the
Disclosure Schedule.
(c) (i) After receipt of the Net Working Capital and Capex
Statement the Seller will have thirty (30)
calendar days to review the Net
Working Capital and Capex Statement. The
Buyer shall cooperate with and
provide Seller and its representatives and
accountants reasonable access to
the books, records, accountants' work
papers, employees, accountants and
advisors of the Buyer and, to the extent in
their possession or accessible
by them, Fosbrasil, in connection with the
Seller's review of the Net
Working Capital and Capex Statement during
the thirty (30) calendar day
period following delivery of the Net
Working Capital and Capex Statement to
the Seller. Unless the Seller delivers
written notice to the Buyer setting
forth the specific items disputed by the
Seller on or prior to the thirtieth
(30th) calendar day after the Seller's
receipt of the Net Working Capital
and Capex Statement, the Seller will be
deemed to have accepted and agreed
to the Net Working Capital and Capex
Statement and such statement (and the
calculations contained therein) will be
final, binding and conclusive. If
the Seller notifies the Buyer of Seller's
objections to specific items
contained in the Net Working Capital and
Capex
12
<PAGE>
Statement (or specific calculations
contained therein) within such thirty
(30) day period, the Seller and the Buyer
shall, within thirty (30) calendar
days following delivery of such notice by
the Seller to the Buyer (the
"Resolution Period"), attempt in good faith
to resolve their differences
-----------------
with respect to the disputed items (or
calculations) specified in the notice
(the "Disputed Items"), and all other
(i.e., the undisputed) items (and all
--------------
----
calculations relating thereto) will be
final, binding and conclusive. Any
resolution by the Seller and the Buyer
during the Resolution Period as to
any Disputed Items shall be set forth in
writing and will be final, binding
and conclusive on the parties hereto.
(ii) If
the Buyer and the Seller do not resolve
all Disputed
Items by the end of the Resolution Period, then all
Disputed Items
remaining in dispute will be submitted within thirty
(30) calendar
days after the expiration of the Resolution Period to
Grant Thornton
LLP or such other national independent accounting firm
mutually
acceptable to the Buyer and each Owner (the "Neutral
-------
Arbitrator").
The Neutral Arbitrator shall act as an arbitrator to
----------
determine only
those Disputed Items remaining in dispute, consistent
with this
Section 1.4, and shall request a statement from the Buyer and
the Seller
regarding such Disputed Items. In resolving such Disputed
Items, the
Neutral Arbitrator may not assign a value to any Disputed
Item greater
than the greatest value for such Disputed Item claimed by
any party or
less than the lowest value for such Disputed Item claimed
by any party.
All fees and expenses relating to the work, if any, to be
performed by the
Neutral Arbitrator will be allocated between the Buyer
and the Seller
in the same proportion that the aggregate amount of the
Disputed Items
so submitted to the Neutral Arbitrator that is
unsuccessfully
disputed by each such party (as finally determined by
the Neutral
Arbitrator) bears to the total amount of such Disputed
Items so
submitted. In addition, the Buyer and the Seller shall give
the Neutral
Arbitrator access to all documents, books, records,
accountants'
work papers, facilities and personnel of such party and
its subsidiaries
and, as the case may be, to the extent in such party's
or parties'
possession or accessible by such party or parties,
Fosbrasil, as
reasonably necessary to perform its function as
arbitrator. If
either the Buyer or the Seller fails to submit a
statement
regarding any Disputed Item submitted to the Neutral
Arbitrator
within the time determined by the Neutral Arbitrator or
otherwise fails
to give the Neutral Arbitrator access as reasonably
requested, then
the Neutral Arbitrator shall render a decision based
solely on the
evidence timely submitted and the access afforded to the
Neutral
Arbitrator by the Buyer and the Seller. The Neutral Arbitrator
will deliver to
the Buyer and the Seller a written determination (such
determination to
include a work sheet setting forth all material
calculations
used in arriving at such determination and to be based
solely on
information provided to the Neutral Arbitrator by the Seller
and the Buyer)
of the Disputed Items submitted to the Neutral
Arbitrator
within thirty (30) calendar days of receipt of such Disputed
Items, which
determination will be final, binding and conclusive and
judgment may be
entered on the award. The final, binding and conclusive
Net Working
Capital and Capex Statement based either upon agreement or
deemed agreement
by the Buyer and the Seller or the written
determination
delivered by the Neutral Arbitrator in accordance with
this Section
1.4, will be the "Conclusive Net Working Capital and Capex
----------------------------------------
Statement."
---------
13
<PAGE>
(d) On the fifth (5th) Business Day following the date on which
the Buyer and the Seller agree or are
deemed to have agreed to, or the
Neutral Arbitrator delivers, the Conclusive
Net Working Capital and Capex
Statement (the "Conclusive Net Working
Capital and Capex Settlement Date"),
--------------------------------------------------------
the following payments and instructions
shall be made or given:
(i)
If the final Capex Shortfall Amount is less
than the
Estimated Capex Shortfall Amount, the Buyer shall pay to
Seller an amount
in cash equal to such difference, and if the final
Capex Shortfall
amount is greater than the Estimated Capex Shortfall
Amount, Seller
shall pay to Buyer an amount in cash equal to such
difference, in
either case as an adjustment to the Purchase Price, and
the Buyer and
the Seller shall, and the Owners shall cause the Seller
to, deliver to
the Escrow Agent a joint written instruction directing
the Escrow Agent
to pay to the Buyer or the Seller, as the case may be,
funds in the
Working Capital and Capex Escrow Account sufficient to
satisfy such
payment obligation;
(ii) If
the amount of Net Working Capital on the
Conclusive Net
Working Capital and Capex Statement is less than the
amount of the
Estimated Net Working Capital (such difference, the
"Final Net
Working Capital Deficiency Amount") by one hundred thousand
-------------------------------------------
dollars
($100,000) or more, the Seller shall, and the Owners shall
cause the Seller to, pay to
the Buyer, as an adjustment to the Purchase
Price, an amount
in cash equal to the Final Net Working Capital
Deficiency
Amount as follows:
(A) if the Final Net Working Capital
Deficiency Amount is equal to or greater than the amount of the
funds remaining in the Working Capital and Capex Escrow Account
after deducting any payment made under clause (i) above (the
"Working Capital Escrow Balance"), then (1) the Buyer and the
Seller shall, and the Owners shall cause the Seller to, deliver
to the Escrow Agent a joint written instruction directing the
Escrow Agent to pay to the Buyer all of the funds remaining in
the Working Capital and Capex Escrow Account and (2) the Seller
shall, and the Owners shall cause the Seller to, pay to the
Buyer an amount in cash equal to the amount, if any, by which
the Final Net Working Capital Deficiency Amount exceeds the
Working Capital Escrow Balance (such excess to be calculated
without including in the calculation the amount of any interest
accrued on the funds in the Working Capital and Capex Escrow
Account); or
(B) if the Final Net Working Capital Deficiency
Amount is less than the Working Capital Escrow Balance, then
the Buyer and Seller shall, and the Owners shall cause the
Seller to, deliver to the Escrow Agent a joint written
instruction directing the Escrow Agent to (1) pay to the
Buyer the Final Net Working Capital Deficiency Amount
(together with any interest accrued thereon) and (2) pay to
the Seller any funds remaining in the Working Capital and
Capex Escrow Account after deducting the payment pursuant to
the immediately preceding clause (1).
14
<PAGE>
(iii) If the
amount of Net Working Capital on the
Conclusive Net
Working Capital and Capex Statement is greater than the
amount of
Estimated Net Working Capital (such difference, the "Final
-----
Net Working
Capital Excess Amount") by one hundred thousand dollars
---------------------------------
($100,000) or
more, the Buyer shall pay to the Seller, as an adjustment
to the Purchase
Price, an amount in cash equal to the Final Net Working
Capital Excess
Amount and the Buyer and Seller shall, and the Owners
shall cause the
Seller to, deliver to the Escrow Agent a joint written
instruction
directing the Escrow Agent to pay to the Seller the Working
Capital Escrow
Balance.
(iv) If
the amount of Net Working Capital on the
Conclusive Net
Working Capital and Capex Statement is not at least one
hundred thousand
dollars ($100,000) greater than or less than the
amount of
Estimated Net Working Capital, no adjustment shall be made to
the Purchase
Price and the Buyer and Seller shall, and the Owners shall
cause the Seller to,
deliver to the Escrow Agent a joint written
instruction
directing the Escrow Agent to pay to the Seller all of the
Working Capital
Escrow Balance.
(v)
Notwithstanding anything herein to the
contrary, if, prior to
the Conclusive Net Working Capital and Capex
Settlement Date,
the maximum net amount of the outstanding Disputed
Items in the
aggregate (the "Maximum Disputed Amount") is less than the
-----------------------
amount of the
funds in the Working Capital and Capex Escrow Account
(taking into
account interest that would be accrued on such amount),
then, within ten
(10) Business Days' following the request of Astaris
or the Buyer,
the payments and instructions described in Sections
1.4(d)(i)
through (iv) shall be made and given as if the Conclusive Net
Working Capital
and Capex Settlement Date had occurred and as if the
references to
"Conclusive Net Working Capital and Capex Statement" in
such Sections
referred to the Capex Shortfall Amount and Net Working
Capital as set
forth on the Net Working Capital and Capex Statement
excluding the
Disputed Items; provided that an amount equal to the
--------
Maximum Disputed
Amount (together with an amount of interest that would
be accrued on
such amount) shall be retained in the Working Capital and
Capex Escrow
Account until the fifth (5th) Business Day after final
resolution of
the Disputed Items, at which time the net amount of the
Disputed Items
due to the Buyer (together with interest accrued
thereon), if
any, shall be paid to the Buyer out of the Working Capital
and Capex Escrow
Account and the balance, if any, of the funds in the
Working Capital
and Capex Escrow Account shall be paid to the Seller.
(vi)
Notwithstanding anything to the contrary in
this Section
1.4, Seller shall not be liable for any of, and each Owner
shall be
severally liable for fifty percent (50%) of, any payments due
to the Buyer
pursuant to this Section 1.4(d).
1.5 Further Assurances.
------------------
After the Closing, each party hereto shall from time to time, at
the
request of another party and at such
requesting party's sole cost and
expense, execute and deliver such other
instruments of conveyance and
transfer and take such other actions as
such other party may reasonably
request in order to more effectively
consummate the transactions
contemplated hereby and to vest in the
Buyer good and valid title to the
Acquired Assets or provide for the
15
<PAGE>
assumption by the Buyer of the Assumed
Liabilities or by the Seller, Astaris
International, FMC or Solutia, as
applicable, of the Retained Liabilities.
1.6 Purchase Price Allocation.
-------------------------
(a) The Purchase Price shall be allocated among the Acquired
Assets in accordance with the principles
set forth in Section 1.6 of the
Disclosure Schedule, which principles shall
be consistent with the rules
under Section 1060 of the Code and the
Treasury Regulations promulgated
thereunder. The parties agree to act in
accordance with the computations and
allocations as determined pursuant to this
Section 1.6 in any relevant Tax
Returns or filings, including any forms or
reports required to be filed
pursuant to Section 1060 of the Code, the
Treasury Regulations promulgated
thereunder or any provisions of local,
state and foreign law, and to
cooperate in the preparation of any such
forms and to file such forms in the
manner required by applicable Law.
(b) The Buyer shall provide the Seller and the Owners with
a copy of the Buyer's proposed Purchase
Price allocation as promptly as
reasonably practicable, but in no event
later than sixty (60) calendar days
after the Closing Date, which allocation
shall be subject to the Seller's
and Owners' review and approval. In the
event that the Buyer, the Seller and
the Owners are unable to agree on the
allocation within forty-five (45)
calendar days of the date on which the
Buyer provides the Seller and the
Owners with a copy of the allocation, such
dispute will be referred to an
internationally recognized firm of
independent public accountants mutually
agreed upon by the parties, and the
determination of such firm shall be
final and binding upon the parties.
1.7 Consent of Third Parties.
------------------------
(a) On the Closing Date, the Seller shall assign to the Buyer,
and the Buyer shall assume, the Contracts
and the Permits (including the
Environmental Permits and pending
applications therefor) which are to be
transferred to the Buyer as provided in
this Agreement by means of an
assignment and assumption agreement
substantially in the form of Exhibit C.
---------
To the extent that the assignment of all or
any portion of any Contract or
Permit (including any pending application
therefor) shall require the
consent of the other party thereto or any
other third party, this Agreement
shall not constitute an agreement to assign
any such Contract or Permit (or
pending application therefor) if an
attempted assignment without any such
consent would constitute a breach or
violation thereof (provided that the
--------
Seller and each of the Owners agrees to,
and agrees to cause their
respective subsidiaries to, consent to the
assignment to the Buyer of any
such Contract or Permit (including any
pending application therefor) to the
extent that such consent is required for
such assignment). However, the
Seller and each of the Owners agrees that
on and after the Closing, it will,
at the request and under the reasonable
direction of the Buyer, in the name
of the Seller, such Owner or otherwise as
the Buyer shall specify, at the
sole cost and expense of the Seller, use
its commercially reasonable efforts
(including appointing the Buyer as
attorney-in-fact for the Seller or such
Owner to proceed at the Buyer's sole cost
and expense) to do or cause to be
done all such things as shall be necessary
and proper (a) to assure that the
rights of the Seller under such Contracts
and Permits (including any pending
application therefor) shall be preserved
for the benefit of the Buyer
(including any extension or renewal of any
such Contract or Permit) and (b)
to facilitate receipt of the consideration
to be received by the Seller in
and under every such Contract and Permit
(including any pending application
therefor), which
16
<PAGE>
consideration shall be held for the benefit
of, and shall be delivered to,
the Buyer. Nothing in this Section 1.7
shall in any way diminish any
obligation of any Seller or either Owner
under this Agreement to obtain all
consents and approvals and to take all such
other actions prior to or at
Closing as are necessary to enable the
Seller to convey or assign good and
valid title free and clear of Encumbrances
(other than Permitted
Encumbrances) to all the Acquired Assets to
the Buyer or shall otherwise
affect the obligations of Seller, Owners or
Buyer under Section 7.7 hereof,
respectively.
(b) To the extent that the Permits necessary for the Buyer's
operation of the Business as conducted as
of the Closing Date have not been
transferred to the Buyer or otherwise
obtained by the Buyer as of the
Closing, the Seller shall allow, to the
extent authorized by the terms of
such Permits and all Environmental Laws and
other applicable Laws, the Buyer
to conduct the Business pursuant to the
Seller's existing Permits. Regarding
each such Permit, the Seller shall allow
such use until the Buyer obtains an
equivalent Permit; provided, however, the
Buyer shall use commercially
-------- -------
reasonable efforts to expeditiously obtain
such equivalent Permit.
1.8 Removal of Excluded Assets.
--------------------------
Prior to the Closing Date, the Seller and the Owners shall, and
shall cause the Subsidiaries and their
subsidiaries to, remove all Excluded
Assets which are physically located on or
in the Acquired Assets from the
Acquired Assets.
1.9 Pro Ration of Certain Items.
---------------------------
To the extent not otherwise reflected in the Net Working
Capital
as finally determined under Section 1.4,
the parties agree that the
following expenses, to the extent relating
to any period commencing prior
to, and ending after, the Closing Date,
shall be allocated between the
Buyer, on the one hand, and the Seller, on
the other hand, with the Buyer to
be responsible for the portion of such
expense that relates to the period
after the Closing Date, and the Seller to
be responsible for the portion of
such expense that relates to the period on
or prior to the Closing Date:
(a) personal and real property Taxes (but not Transfer
Taxes arising from the sale and purchase of
the Acquired Assets, which are
dealt with in Section 7.4(b));
(b) electric, fuel, gas, telephone, sewer and utility
charges;
(c) rentals and other charges under leases to be assumed by
the Buyer pursuant to Section 1.1; and
(d) charges under maintenance and service contracts and
other Contracts, and fees under Permits to
be transferred to the Buyer as
part of the Acquired Assets.
Any amounts due from one party to the other party pursuant
this Section 1.9 shall be paid in cash as
promptly as practicable (but in no
event later than ten (10) calendar days
after written request) by wire
transfer of immediately available funds to
the account designated by the
requesting party.
17
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer and
ICL, as of the date of this Agreement, as
follows:
2.1 The Seller, the Subsidiaries and Fosbrasil.
------------------------------------------
(a) Section 2.1(a) of the Disclosure Schedule sets forth for
the Seller and each direct and indirect
subsidiary of the Seller, other than
Astaris Production LLC (the
"Subsidiaries"), and for Fosbrasil (i) its legal
------------
form (i.e., corporation, partnership,
limited liability company, etc.) and
----
the name and jurisdiction of incorporation,
formation or organization, as
applicable, (ii) the number of authorized,
issued and outstanding shares of
each class of its capital stock or other
authorized, issued and outstanding
Equity Interests, as applicable, the names
of the holders thereof, and the
number of shares or percentage interests,
as applicable, held by each such
holder and (iii) its entity classification
for United States federal income
Tax purposes.
(b) Except for the Subsidiaries, Astaris Production LLC and
Fosbrasil or as set forth in Section 2.1(a)
of the Disclosure Schedule,
neither the Seller nor any of the
Subsidiaries owns any shares of any class
of capital stock of any corporation or
ownership or other Equity Interest in
any other Person. No shares of any
corporation or any ownership or other
investment interest, either of record,
beneficially or equitably, in any
Person are included in the Acquired Assets,
other than the Equity Interests
owned directly or indirectly by the Seller
or Solutia in Astaris Brasil,
Astaris Canada, Astaris Europe, and
Fosbrasil.
(c) The Seller and each Subsidiary is duly formed or
organized, validly existing and, where
applicable, in good standing under
the Laws of its jurisdiction of
incorporation, formation or organization, as
applicable. The Seller and each Subsidiary
has the requisite corporate,
partnership or other applicable
corresponding power and authority and
possesses all governmental franchises,
licenses, permits, authorizations and
approvals necessary to own, lease and
operate the Acquired Assets and to
carry on its business as and where now
being conducted and, where
applicable, is duly qualified or licensed
to do business and is in good
standing in the jurisdictions in which the
ownership, lease or operation of
its property or the conduct of its business
requires such qualification or
license, except jurisdictions in which the
failure to be so qualified or
licensed does not have, and would not
reasonably be expected to have,
individually or in the aggregate, a
Material Adverse Effect.
(d) Except as set forth in Section 2.1(d) of the Disclosure
Schedule, all the outstanding shares of
capital stock or other Equity
Interests of the Subsidiaries and Fosbrasil
owned by the Seller, a
Subsidiary, or Solutia (i) are duly
authorized and validly issued and
outstanding, fully paid and nonassessable
(in those jurisdictions where such
concepts are applicable), (ii) were not
issued in violation of any
pre-emptive or similar rights or of any
terms of any agreement or other
understanding binding upon the Seller, the
Subsidiaries, or the Owners,
(iii) have been offered and sold in
compliance with any and all applicable
securities Laws and (iv) are owned
beneficially and of record by the Persons
set forth in Section 2.1(a) of the
Disclosure Schedule free and clear of any
Encumbrances. Except as set forth in
Section 2.1(d) of the
18
<PAGE>
Disclosure Schedule, there are no options,
subscriptions, warrants, calls,
commitments, agreements, contracts,
understandings, restrictions,
pre-emptive rights, arrangements or rights
of any character with respect to
the securities of the Subsidiaries or the
securities of Fosbrasil owned by
the Seller, a Subsidiary or Solutia, or to
which the Seller or any
Subsidiary or Owner is bound, that calls
for the issuance, sale, pledge or
other disposition of any securities of any
Subsidiary or Fosbrasil or the
conversion or exchange of any security
into, or equity security of, any
Subsidiary or Fosbrasil. Except as set
forth on Section 2.1(d) of the
Disclosure Schedule, there are no
agreements concerning the issuance,
voting, transfer, acquisition or
disposition of any securities of any
Subsidiary or Fosbrasil to which the Seller
or any Subsidiary or Owner is
bound. Complete and correct copies of the
charter documents (or equivalent
governing or organizational documents) and
all amendments thereto and the
minute books of the Seller and the
Subsidiaries (other than Astaris
International and except that the minute
books of Seller have been redacted
in good faith with respect to any
information to the extent directly related
to the Excluded Assets, the transactions
contemplated hereby, any disputes
between the Owners, the process of the sale
of the Business and the
strategic alternatives thereto and any
valuation of the Business) and, to
the extent in the Seller's possession or
accessible by the Seller, the
Subsidiaries or the Owners, Fosbrasil, have
been made available to the Buyer
on or prior to the date of this
Agreement.
2.2 Authorization, Etc.
------------------
(a) The Seller has full corporate or company power and
authority to execute and deliver this
Agreement and the Transaction
Documents to which it is a party and to
carry out and consummate the
transactions contemplated hereby and
thereby to be carried out and
consummated by it. Subject to the Approval
Order (solely with respect to
those matters regarding Solutia that are
addressed in the definition
thereof) having been entered and still
being in effect and not subject to
any stay pending appeal at the time of the
Closing, this Agreement and the
Transaction Documents to which the Seller
is a party have been duly and
validly authorized by the Seller and no
other limited liability company
action or proceeding by the Seller is
necessary to authorize the execution,
delivery or performance of this Agreement
and the Transaction Documents by
the Seller.
(b) This Agreement has been duly and validly executed by the
Seller and, assuming this Agreement
constitutes the legal, valid and binding
agreement of ICL and the Buyer, constitutes
a legal, valid and binding
agreement of the Seller, enforceable
against the Seller in accordance with
its terms. As of the Closing, each
Transaction Document will be duly and
validly executed by the Seller (to the
extent the Seller is a party thereto)
and, assuming such Transaction Document
constitutes the legal, valid and
binding agreement of the Buyer and ICL (if
a party thereto), will constitute
a legal, valid and binding agreement of the
Seller (to the extent the Seller
is a party thereto), enforceable against
the Seller in accordance with its
terms.
(c)
The Bankruptcy Court has entered the Initial Relief
Order, a true and correct copy of which is
attached hereto as Exhibit I.
---------
2.3 Financial Statements.
--------------------
(a) Section 2.3(a) of the Disclosure Schedule sets forth (i)
the audited consolidated balance sheet of
the Seller, the Subsidiaries and
Astaris Production LLC at
19
<PAGE>
December 31, 2003 and December 31, 2004
(the "2004 Balance Sheet"), and the
------------------
audited consolidated statements of income
and cash flows of Seller, the
Subsidiaries and Astaris Production LLC for
the years ended December 31,
2003 and 2004, in each case including notes
thereto (collectively, the
"Audited Financial Statements") and (ii)
the unaudited consolidated balance
----------------------------
sheet of the Seller, the Subsidiaries and
Astaris Production LLC at June 30,
2005, and the unaudited consolidated
statements of income and cash flows of
Seller, the Subsidiaries and Astaris
Production LLC for the six months ended
June 30, 2005, in each case including any
notes thereto (collectively, the
"Historical Interim Financial Statements").
The books of account and related
---------------------------------------
records of the Seller and the Subsidiaries
fairly reflect in reasonable
detail all assets, liabilities and
transactions relating to such Persons
(including the Acquired Assets and Assumed
Liabilities) and the Seller and
the Subsidiaries maintain a system of
internal accounting controls
sufficient to provide reasonable assurances
that transactions are recorded
as necessary to permit preparation of
financial statements in conformity
with GAAP. The Audited Financial Statements
and Historical Interim Financial
Statements are correct and complete, in all
material respects, and have been
prepared in accordance with the books and
records of the Seller, the
Subsidiaries and Astaris Production LLC in
conformity with GAAP, applied on
a consistent basis, as in effect during the
periods indicated, except, in
the case of the Historical Interim
Financial Statements, for customary year
end adjustments that are not expected to be
material individually or in the
aggregate. The foregoing statements of
income and cash flows, including any
notes thereto, present fairly, in all
material respects, the combined
results of operations and cash flows of the
Seller, the Subsidiaries and
Astaris Production LLC for the six months
ended June 30, 2005 and the years
ended December 31, 2003 and 2004. The
foregoing balance sheets, including
any notes thereto, present fairly, in all
material respects, the
consolidated financial position of Astaris,
the Subsidiaries and Astaris
Production LLC as of June 30, 2005 and
December 31, 2003 and 2004.
(b) Section 2.3(b) of the Disclosure Schedule contains the
following financial statements: (i) the
unaudited balance sheet for the
Acquired Assets and Assumed Liabilities as
of December 31, 2004 and the
related unaudited statement of income for
the year then ended and (ii) the
unaudited balance sheet (the "Interim
Balance Sheet") for the Acquired
---------------------
Assets and Assumed Liabilities as of June
30, 2005 (the "Interim Balance
---------------
Sheet Date") and the related statement of
income for the six months then
----------
ended. The year-end and interim financial
statements described in clauses
(i) and (ii) of the preceding sentence are
referred to herein as the
"Business Financial Statements." The
Business Financial Statements have been
-----------------------------
prepared based on the Audited Financial
Statements and the Historical
Interim Financial Statements (as
applicable), except as otherwise noted
therein, and give effect to assumptions
used in the preparation thereof,
which in the view of management of the
Seller are on a reasonable basis and
in good faith and fairly present in all
material respects the financial
position and results of operations for the
Acquired Assets and Assumed
Liabilities after giving effect to the
transaction and adjustments referred
to in the Business Financial Statements as
of and for the periods presented
therein; provided that the Business
Financial Statements include all
--------
properties, rights and assets relating to
the facility located in Sauget,
Illinois based on the contracts and cost
structure in force during the
period of the Business Financial Statements
and do not reflect the Sauget
Supply Agreement.
(c) Section 2.3(c) of the Disclosure Schedule sets forth the
audited balance sheet of Fosbrasil at
December 31, 2003 and December 31,
2004, and the audited statements of income,
changes in shareholders' equity
and changes in financial position of
Fosbrasil for the
20
<PAGE>
years ended December 31, 2003 and 2004, in
each case including notes thereto
(collectively, the "Fosbrasil Financial
Statements"). To the Knowledge of
------------------------------
the Seller, the Fosbrasil Financial
Statements (i) are correct and complete
and in accordance with the books and
records of Fosbrasil, (ii) fairly
present the results of operations,
financial position, assets and
liabilities of as of December 31, 2003 and
2004 and for the years then ended
and (iii) have been prepared in conformity
with Brazilian accounting
principles, applied on a consistent basis,
as in effect during the periods
indicated.
2.4 No Approvals or Conflicts.
-------------------------
Except as set forth in Section 2.4 of the Disclosure
Schedule, the execution, delivery and
performance by the Seller of this
Agreement and the consummation by the
Seller or any Subsidiary of the
transactions contemplated hereby to be
consummated by it will not (i)
violate, conflict with or result in a
breach by the Seller or any Subsidiary
of any provision of any certificate of
formation, limited liability company
agreement, charter, bylaws or equivalent
formation or governance document of
the Seller or any Subsidiary, (ii) violate,
conflict with or result in a
breach of, in any material respect, any
provision of, or constitute a
default by the Seller or any Subsidiary (or
create an event which, with
notice or lapse of time or both, would
constitute such a default) or give
rise to any right of termination,
cancellation, modification or acceleration
of or under, or result in the creation of
any Encumbrance upon any of the
Acquired Assets or give to others any
interests or rights therein under, any
material note, bond, mortgage, indenture,
deed of trust, license, franchise,
Permit, lease, contract, agreement or other
instrument or understanding to
which the Seller or any Subsidiary is a
party, or by which the Seller or any
Subsidiary may have rights or the Business
or any of the Acquired Assets may
be bound or subject, (iii) violate or
conflict with, or result in a breach
of, in any material respect, any order,
injunction, judgment, ruling,
constitution, treaty, statute, law,
ordinance, rule or regulation (each, and
collectively, "Law") of any United States
or foreign federal, state,
---
provincial or local government or other
political subdivision thereof, any
entity, authority or body exercising
executive, legislative, judicial,
regulatory or administrative functions of
any such government or political
subdivision, and any supranational
organization of sovereign states
exercising such functions for such
sovereign states (each, and collectively,
"Governmental Authority") applicable to the
Seller, any Subsidiary or any of
----------------------
their respective properties or the Business
or (iv) except for applicable
requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and any other Law
that is designed or intended to
-------
prohibit, restrict or regulate (a) foreign
investment or (b) antitrust,
monopolization, restraint of trade or
competition ("Competition/Investment
----------------------
Law"), and except for reports to be filed
under the Securities Exchange Act
---
of 1934, as amended (the "Exchange Act"),
require any material order,
------------
Consent, clearance, approval or
authorization of, or notice to, or
declaration, filing, application,
qualification or registration with, any
Governmental Authority or other Person,
including in connection with the
assignment of Contracts or Permits
(including any pending application
therefor). Except as set forth in Section
2.4 of the Disclosure Schedule, as
of the date hereof, the Seller and the
Owners have caused to be made all
appropriate notices and filings required
under any Government Order entered
or issued in connection with the formation
of Astaris, including the
Decision & Order (Docket No. C-3935)
issued May 15, 2000 (the "Consent
-------
Order"). The Seller has obtained the
Consents to the assignment to the
-----
Buyer, effective as of the Closing, of the
Monsanto Supply Agreement (i.e.,
the Consent of P4 Production L.L.C.) and
Monsanto
21
<PAGE>
Operating Agreement (i.e., the Consent of
Monsanto Company), and each such
Consent is in full force and effect.
2.5 Compliance with Law; Governmental Authorizations.
------------------------------------------------
Except with respect to the subject matter of Section 2.9 (Tax
Matters), Section 2.10 (Employee Benefits)
and Section 2.14 (Environmental
Matters), which constitute the sole and
exclusive representations and
warranties of the Seller with respect to
compliance with tax, employee
benefits and environmental law (except that
nothing contained herein is
intended or shall be construed to limit the
representations and warranties
set forth in Section 2.3), and except as
set forth in Section 2.5 of the
Disclosure Schedule, (a) the Seller and the
Subsidiaries have conducted the
Business and are now doing so in compliance
in all material respects with
all applicable Laws, (b) no notice,
citation, summons or order has been
received by the Seller or any Subsidiary,
no complaint has been filed, no
penalty has been assessed and no
investigation or review is pending or, to
the Knowledge of the Seller, threatened, by
any Governmental Authority or
other entity with respect to any alleged
(i) material violation of any
order, injunction, judgment, ruling, Law or
regulation of any court or
Governmental Authority by the Seller or any
Subsidiary or applicable to the
Business or Acquired Assets; or (ii)
failure in any material respect by the
Seller or any of its Affiliates to have any
permit required for the conduct,
ownership or operation of the Business, the
Acquired Assets or the
Subsidiaries, (c) there is no (i) to the
Knowledge of the Seller, material
claim or violation of any order,
injunction, judgment, ruling, Law,
regulation or Encumbrance applicable to the
Business, the Acquired Assets or
the Subsidiaries or (ii) Proceeding pending
or, to the Knowledge of the
Seller, threatened (whether for
condemnation or otherwise) against the
Seller or the Subsidiaries or the Owners
or, to the Knowledge of the Seller,
any other Person, which is reasonably
likely to materially and adversely
affect, as to any material portion of the
Real Property, the other Acquired
Assets or the assets of the Subsidiaries,
the zoning classification in
effect or the Seller's or any Subsidiary's
right to own, operate and occupy
the Real Property and use and possess the
other Acquired Assets or the
assets of the Subsidiaries in the manner in
which it currently owns,
operates and occupies the Real Property and
uses and possesses the other
Acquired Assets or the assets of the
Subsidiaries, and no zoning, building
or similar Law, regulation, ordinance or
order is, or on the Closing Date
will be, violated in any material respect
and (d) the Seller and the
Subsidiaries have all material Permits
necessary to conduct the Business as
currently conducted and to operate, own,
lease or otherwise hold the
Acquired Assets or the assets of the
Subsidiaries, as the case may be (the
"Seller Permits"). All of the Seller
Permits are (i) other than
--------------
Environmental Permits (which are set forth
in Section 2.14(b) of the
Disclosure Schedule), listed in Section
1.1(a)(viii) of the Disclosure
Schedule and (ii) in full force and effect,
and there are no Proceedings
pending or, to the Knowledge of the Seller,
threatened, that seek the
revocation, cancellation, suspension or any
adverse modification of any such
Seller Permits.
2.6 Litigation.
----------
Except as set forth in Section 2.6 of the Disclosure Schedule,
there are no material suits, actions,
proceedings or investigations
(collectively, "Proceedings") pending or,
to the Knowledge of the Seller,
-----------
threatened against, the Seller, the
Subsidiaries, the Business or any of the
Acquired Assets before any arbitrator,
court or Governmental Authority.
Except as set forth in Section 2.6 of the
Disclosure Schedule, there are no
outstanding material judgments, decrees
22
<PAGE>
or orders of any arbitrator, court or
Governmental Authority against the
Seller, the Subsidiaries or either of the
Owners, which relate to or arise
out of the conduct of the Business or the
ownership, condition or operation
of the Business or the Acquired Assets. The
Seller has heretofore provided
the Buyer with a list setting forth
generally a description of all material
settlements or orders regarding such
Proceedings, or other material
threatened actions or matters (including
product liability matters set forth
in Section 2.17 hereof) binding on the
Seller, any of the Subsidiaries or
the Acquired Assets.
2.7 Title; Condition of Assets.
--------------------------
(a) Except as set forth in Section 2.7(a) of the Disclosure
Schedule, the Seller and the Subsidiaries
have good, valid, marketable and
insurable fee simple absolute title and
interest to all of the Acquired
Assets constituting Owned Real Property and
a good and valid leasehold
interest in all Leased Real Property,
subject only to the Permitted
Encumbrances. None of the Acquired Assets
or the assets of the Subsidiaries
is subject to any Encumbrance, except (i)
in the case of the Real Property,
Encumbrances, none of which, individually
or in the aggregate, materially
impairs the use or operations of the
affected property or the conduct of the
Business thereon as it is currently being
used and conducted, (ii) in the
case of the Real Property, Encumbrances for
current real estate Taxes not
yet due and payable or which are being
contested in good faith by
appropriate proceedings, and mechanics',
workmen's, repairmen's,
warehousemen's, carriers' or other similar
liens, including all statutory
liens, arising or incurred in the ordinary
course of business, (iii) as to
the Leased Real Property only, the terms
and conditions of the Leases with
respect thereto, (iv) with respect to
leased or licensed personal property,
the terms and conditions of the lease or
license applicable thereto, (v)
zoning, building codes and other land use
Laws regulating the use or
occupancy of such Real Property or the
activities conducted thereon which
are imposed by any Governmental Authority
having jurisdiction over such Real
Property which are not violated by the
current use or occupancy of such Real
Property or the operation of the Business,
except where any such violation
would not reasonably be expected to
individually or in the aggregate
materially impair the use or operation of
the affected property or the
conduct of the Business thereon as it is
currently being conducted, (vi)
with respect to leased equipment included
in the Acquired Assets, the
Encumbrances set forth in Section
2.7(a)(vi) of the Disclosure Schedule and
(vii) Encumbrances which would not, taken
together with all other liens
described in clauses (i) through (vi)
above, reasonably be expected to
individually or in the aggregate,
materially impair the use or operations of
the Acquired Assets or the conduct of the
Business thereon as it is
currently being used and conducted
(collectively, the "Permitted
---------
Encumbrances"). The Seller has prior to the
date of this Agreement delivered
------------
to the Buyer, to the extent possessed by
the Seller or the Subsidiaries,
copies of all existing title policies and
surveys and all other material
documents, instruments and agreements
directly affecting title to, or
Seller's or any Subsidiary's property
rights to ownership, use and
possession of, the Real Property.
(b) Except as set forth in Section 2.7(b) of the Disclosure
Schedule, the buildings, machinery,
equipment, tools, furniture,
improvements and other tangible assets of
the Business included in the
Acquired Assets and the assets of the
Subsidiaries are, in all material
respects, in reasonably good operating
condition and repair, normal wear and
tear excepted, fit for the purposes for
which they are used in the Business
and sufficient to permit their use in
the
23
<PAGE>
continuing operations of the Business as
such operations are currently
conducted or have been conducted consistent
with past practices.
2.8 Absence of Certain Changes.
--------------------------
Except as set forth in Section 2.8 of the Disclosure Schedule
or
as otherwise contemplated hereby, since
December 31, 2004 (x) the Seller and
the Subsidiaries have conducted the
Business only in the ordinary course
consistent with past practice in all
material respects and (y) there has not
been any event or occurrence which has had,
or would reasonably be expected
to have, individually or in the aggregate,
a Material Adverse Effect.
Without limiting the generality of the
foregoing, except as set forth in
Section 2.8 of the Disclosure Schedule or
as otherwise specifically
contemplated hereby, since December 31,
2004 there has not been:
(a) any damage, destruction or loss of real or personal
property (whether or not covered by
insurance) affecting the Business in
excess of two hundred and fifty thousand
dollars ($250,000);
(b) any strikes, work stoppages or other material labor
disputes involving employees of the
Business;
(c) any
waiver or cancellation of any material term of any
Material Contract or of any material right
or claim of the Seller or any
Subsidiary under any Material Contract, or
the entering into of any new
Material Contract;
(d) any sale, transfer or other disposition of any assets,
properties or rights of the Business except
(i) any assets, properties or
rights which, when taken together with all
assets, properties or rights
disposed of, are immaterial to the Business
taken as a whole and (ii) sales,
transfers or other dispositions in the
ordinary course of business
consistent with past practice;
(e) other than any retention bonus or similar compensation,
any (i) increase in the salary or other
compensation of employees of the
Business other than in the ordinary course
of business consistent with past
practice, (ii) increase in any salary or
other compensation (other than
salary compensation in the ordinary course
of business consistent with past
practice) payable to any director, officer
or other member of senior
management of the Business, whether or not
in the ordinary course of
business consistent with past practice,
(iii) advance (excluding advances
for ordinary business expenses in the
ordinary course of business consistent
with past practice), loan or commitment
therefor made by the Seller or any
of the Subsidiaries to any officer or other
member of senior management of
the Seller or the Subsidiaries or (iv)
adoption, termination, material
amendment or other material modification of
any Benefit Plan, or any
material increase in any benefits or
benefit levels under any Benefit Plan;
(f) any change in the accounting methods or practices
followed by or applicable to the Seller or
the Subsidiaries (other than such
as have been required by applicable law or
GAAP);
24
<PAGE>
(g) the incurrence of any Encumbrances, other than Permitted
Encumbrances, upon any of the assets,
rights or properties of the Business;
(h) any material breach under, or any material amendment or
modification to, or termination (completely
or of a material portion) of,
any Material Contract;
(i) prior to the Closing, any amendment to the limited
liability company agreement, certificate of
incorporation, bylaws or other
governing or organizational documents of
the Seller or the Subsidiaries;
(j) any merger, acquisition, consolidation or other business
combination by the Seller or
Subsidiaries;
(k) any incurrence, assumption or guarantee of any obligation
or Liability (absolute, accrued, contingent
or otherwise) by or on behalf of
the Seller or Subsidiaries, except in the
ordinary course of business
consistent with past practice which has not
had, or would not reasonably be
expected to have, individually or in the
aggregate, a Material Adverse
Effect;
(l) any discharge or satisfaction of any Encumbrance against
or in favor of the Business, or payment or
satisfaction of any obligation or
liability of or relating to the Business
(whether absolute, accrued,
contingent or otherwise), other than (i)
liabilities shown or reflected on
the 2004 Balance Sheet, or (ii) liabilities
incurred since December 31, 2004
in the ordinary course of business
consistent with past practice which have
not had, or would not reasonably be
expected to have, individually or in the
aggregate, a Material Adverse Effect;
(m) any disposition of or failure to keep in effect any
rights in, to or for the use of any
material Permit (including any pending
application therefor) of the Business;
(n) any cancellation, modification or waiver of any material
debts or material claims held by the Seller
(including any such debts or
claims of an Affiliate of the Seller) or
any waiver of any other rights of
the Seller or any Subsidiary, in each case
in respect of a Material Contract
or other Acquired Asset or Assumed
Liability, or otherwise related to the
Business;
(o) any disposition of or failure to keep in effect any
rights in, to or for the use of any of the
material Seller Intellectual
Property;
(p) any dividend, distribution or payment (including the
declaration or setting aside therefor, or
agreement with respect thereto
other than any dividends for cash or an
Excluded Asset) in respect of the
Seller's Equity Interests or redemption,
repurchase or acquisition (or
agreement with respect thereto) of any of
the Seller's Equity Interests, or
the payment of any Intercompany
Payables;
(q) any capital expenditures or capital additions or
betterments exceeding in the aggregate one
hundred thousand dollars
($100,000), except such as may be involved
in the ordinary repair,
maintenance or replacement of the Seller's
assets not exceeding in the
aggregate one million dollars
($1,000,000);
25
<PAGE>
(r) any loss or impairment of or, to the Knowledge of Seller,
any threat of any loss or impairment of the
Seller's or any of the
Subsidiaries' relations with any of the
suppliers, clients or customers of
the Business which has had, or would
reasonably be expected to have,
individually or in the aggregate, a
Material Adverse Effect, or any material
change in Seller's or any of the
Subsidiaries' customary practices with
respect to the collection of accounts
receivable of the Business or payment
of accounts payable of the Business or the
provision of discounts, rebates
or allowances; or
(s) any agreement or
commitment by or on behalf of the Seller
or the Subsidiaries to do any of the
foregoing.
2.9 Tax Matters.
-----------
Except as set forth in Section 2.9 of the Disclosure Schedule,
or
as would not reasonably be expected to
have, individually or in the
aggregate, a Material Adverse Effect:
(a) all Tax Returns required to be filed prior to or on the
Closing Date by the Seller and the
Subsidiaries (separately or as part of an
affiliated, consolidated, combined or
unitary group) with respect to the
Business (A) have been or shall be timely
filed (subject to permitted
extensions applicable to such filing) and
(B) are correct and complete in
all respects; and all Taxes of the Seller
and the Subsidiaries shown as due
or payable on such Tax Returns have been or
shall be paid within the
prescribed period or any extension thereof,
other than Taxes that are being
contested in good faith for which adequate
reserves have been established;
(b)
no claim for unpaid Taxes has become a lien against the
Acquired Assets or is being asserted
against the Seller or any of the
Subsidiaries except for liens for Taxes not
yet due and for which adequate
reserves have been established; and
(c) there are no (w) examinations, audits, actions,
Proceedings, investigations or disputes
pending, (x) claims asserted in
writing for Taxes, (y) waivers or
extensions of statutes of limitation with
respect to Taxes currently in effect or (z)
closing agreements, or similar
agreements entered into or issued by any
Governmental Authority, in each
case, with respect to Taxes of the Seller
or a Subsidiary that would result
in Buyer being liable for such Taxes
following the Closing.
2.10 Employee Benefits.
-----------------
(a) Section 2.10(a) of the Disclosure Schedule sets forth a
complete and accurate list of (i) each
"employee benefit plan" (within the
meaning of Section 3(3) of the Employee
Retirement Income Security Act of
1974, as amended ("ERISA")), (including any
"multiemployer plan" as defined
-----
in Section 3(37) of ERISA) and (ii) each
other pension, retirement,
supplemental retirement, deferred
compensation, excess benefit, profit
sharing, bonus, incentive, stock purchase,
stock ownership, stock option,
stock appreciation right, severance, salary
continuation, termination,
change-of-control, health, life,
disability, group insurance, vacation,
holiday and other material fringe benefit
plan, program, contract, or
arrangement maintained, contributed to, or
required to be contributed to, by
the Seller or any Subsidiary for the
benefit of any Employee or Former
Employee, director, officer or independent
contractor of the Seller or any
Subsidiary in the United States or under
which the Seller or any Subsidiary
has any
26
<PAGE>
liability with respect to any Employee or
Former Employee, director, officer
or independent contractor of the Seller or
any Subsidiary in the United
States (collectively, the "Benefit
Plans").
-------------
(b) The Benefit Plans are in compliance in all material
respects with their terms and applicable
requirements of ERISA and other
applicable laws. Each Benefit Plan which is
intended to be qualified within
the meaning of Section 401 of the Code is
so qualified and all related
trusts are exempt from taxation under
Section 501(a) or the Code.
(c) No liability under Title IV of ERISA or Section 412 of
the Code (including any liability relating
to an "accumulated funding
deficiency") has been incurred by the
Seller or any Subsidiary or by any
other trade or business, whether or not
incorporated, that together with the
Seller or any Subsidiary would be deemed a
"single employer" for purposes of
Section 414 of the Code (an "ERISA
Affiliate"), that, if due and payable,
---------------
has not been satisfied in full as of the
Closing Date.
(d) Neither the Seller nor any of the Subsidiaries or ERISA
Affiliates has incurred, directly or
indirectly, any liability in respect of
any multiemployer plan (as defined in
Section 3(37) of ERISA or Section
414(f) of the Code (a "Multiemployer
Plan")) on account of any "withdrawal,"
------------------
"partial withdrawal," "reorganization" or
"insolvency" (all such terms
within the meaning of Title IV of ERISA),
which remains unsatisfied. None of
the Benefit Plans are Multiemployer
Plans.
(e) Except as disclosed in Section 2.10(e) of the Disclosure
Schedule, all contributions to, and
payments from, the Benefit Plans (other
than payments to be made from a trust,
insurance contract or other funding
medium) which may have been required to be
made in accordance with the terms
of any such Benefit Plan and, when
applicable, Section 302 of ERISA or
section 412 of the Code, have been timely
made.
(f) Except as set forth in Section 2.10(f) of the Disclosure
Schedule, no Employee or Former Employee is
a party to, or entitled to the
benefit of, any Benefit Plan which would
provide such employee any payment
or benefit (or accelerated payment or
vesting thereof) upon the execution of
this Agreement, equityholder approval of
this Agreement or the transaction
contemplated hereby, consummation of the
transactions contemplated hereby
or, following such consummation, upon the
occurrence of some other event,
whether or not subject to Section 280G of
the Code.
(g) There are no pending or, to the Knowledge of the Seller,
threatened claims or litigations with
respect to any Benefit Plans, other
than routine claims for benefits by
participants and beneficiaries, except
as set forth in Section 2.10(g) of the
Disclosure Schedule. None of the
Seller, the ERISA Affiliates, the
Subsidiaries or any Benefit Plan has
received any communication from any
Governmental Authority with
responsibility for Taxes, governmental or
quasi-governmental agency, the
Department of Labor or the Pension Benefit
Guaranty Corporation regarding
any Benefit Plan (other than routine
correspondence in the ordinary course
of business).
(h) None of the Seller, the ERISA Affiliates, nor to the
Knowledge of the Seller, any fiduciary,
trustee or administrator of any
Benefit Plan, has engaged in or, in
connection
27
<PAGE>
with the transactions contemplated by this
Agreement, will engage in any
transaction with respect to any Benefit
Plan which would reasonably be
expected to subject any such Benefit Plan,
the Seller, any ERISA Affiliate
or Buyer to a tax, penalty or liability for
a "prohibited transaction" under
Section 406 of ERISA or Section 4975 of the
Code. None of the assets of any
Benefit Plan is invested in any property
constituting "employer real
property" or an "employer security" within
the meaning of Section 407 of
ERISA.
(i) Each Employee, Former Employee and independent contractor
has been properly classified as such for
all purposes, including but not
limited to for purposes of tax withholding
and eligibility for or
participation in any Benefit Plan.
(j) Each Benefit Plan subject to Section 409A of the Code has
been operated in material compliance with
Section 409A of the Code and the
applicable guidance thereunder.
(k) With respect to each Benefit Plan, the Seller has made
available to the Buyer, as applicable, (i)
a complete and accurate copy of
each such plan (including the most recent
summary plan description prepared
with respect to such plan and each summary
of material modifications
thereto); (ii) the most recent copy of the
annual report form (Form 5500
Series) of each such plan for which such
form is required (including any
schedules thereto); (iii) the most recent
actuarial report for each such
plan; (iv) the most recent copy of its
favorable determination letter; (v)
all trust documents, investment management
contracts, custodial agreements
and insurance contracts relating thereto;
(vi) all records, notices and
filings concerning IRS or Department of
Labor audits or investigations,
"prohibited transactions" within the
meaning of Section 406 of ERISA or
Section 4975 of the Code and "reportable
events" within the meaning of
Section 4043 of ERISA.
(l) Section 2.10(1) of the Disclosure Schedule sets forth a
complete and accurate list of each benefit
plan, program, policy or
arrangement presently maintained by, or
contributed to by the Seller or the
Subsidiaries for the benefit of any
Employee or Former Employee, including
any such plan required to be maintained or
contributed to by the law of the
relevant jurisdiction, which would be
described in (a) above, but for the
fact that such plans are maintained outside
the jurisdiction of the United
States (but excluding plans maintained by a
governmental entity) (the
"Foreign Plans"), and a true and complete
copy of each written Foreign Plan
-------------
and of any description of each Foreign Plan
that is not written has been
made available to Buyer.
(m) The Seller and each of its Affiliates and each of the
Foreign Plans are in compliance in all
material respects with the provisions
of the laws of each jurisdiction in which
any of the Foreign Plans are
maintained, to the extent such laws are
applicable to the Foreign Plans.
(n) Except as disclosed in Section 2.10(n) of the Disclosure
Schedule, all contributions to, and
payments from, the Foreign Plans (other
than payments to be made from a trust,
insurance contract or other funding
medium) which may have been required to be
made in accordance with the terms
of any such Foreign Plan maintained by the
Seller or the Subsidiaries,
28
<PAGE>
and, when applicable, the law of the
jurisdiction in which such plan is
maintained, have been timely made.
(o) Each of the Foreign Plans has been administered at all
times, in all material respects, in
accordance with its terms. Except as set
forth in Section 2.10(o) of the Disclosure
Schedule, there are no pending
investigations by any governmental agency
involving the Foreign Plans, no
claims pending or to the Knowledge of the
Seller threatened in writing
(except for claims for benefits payable in
the normal operation of the
Foreign Plans), suits or proceedings
against any Foreign Plan or asserting
any rights or claims to benefits under any
Foreign Plan which would
reasonably be expected to give rise to any
material liability, nor, are
there any facts that would reasonably be
expected to give rise to any
material liability in the event of such
investigation, claim, suit or
proceeding.
(p) Except as otherwise reflected in Working Capital in the
Conclusive Net Working Capital and Capex
Statement, the assets of each of
the Foreign Plans (which is an employee
pension benefit plan as defined in
Section 3(2) of ERISA or otherwise provides
retirement, medical or life
insurance benefits following retirement)
are at least equal to the
accumulated benefit obligations of such
plans (calculated using the
generally accepted accounting principles of
the applicable jurisdiction).
(q) Section 2.10(q) of the Disclosure Schedule identifies all
Non-Union Employees who are actively
employed as of the date of this
Agreement by name, location, title or
function, current base salary or
hourly wage, date of hire and status
(part-time, full-time, salaried,
hourly, on leave of absence (including sick
leave, short-term disability,
maternity leave and military leave) or
vacation).
(r) Section 2.10(r) of the Disclosure Schedule identifies all
Non-Union Employees who are currently
employed as of the date of this
Agreement but not at work due to long-term
disability by name, location,
title or function, current base salary or
hourly wage, and date of hire.
(s) Section 2.10(s) of the Disclosure Schedule identifies all
Union Employees who are actively employed
as of the date of this Agreement
by name, location, title or function,
current hourly wage, date of hire,
seniority, status (part-time, full-time, on
leave of absence or vacation)
and applicable collective bargaining
agreement.
(t) Section 2.10(t) of the Disclosure Schedule (i) identifies
all Union Employees who are currently
employed as of the date of this
Agreement but not at work due to long-term
disability by name, location,
title or function, current base salary or
hourly wage, and date of hire, and
separately identifies (ii) all Union
Employees who are Former Employees
subject to recall or reemployment rights
under any collective bargaining
agreement or otherwise by name, location,
prior title or function, prior
base salary or hourly wage, and original
date of hire.
(u) Section 2.10(u) of the Disclosure Schedule identifies all
Non-U.S. Employees who are actively
employed as of the date of this
Agreement by name, location, title or
function, salary or hourly wage, date
of hire, seniority and status (part-time,
full-time, on leave of absence or
vacation).
29
<PAGE>
2.11 Labor and Employment Matters.
----------------------------
Except as set forth in Section 2.11 of the Disclosure Schedule,
with
respect to the Business: (a) there is no
collective bargaining agreement
applicable to Employees, and there has been
no such agreement in effect
during the three (3) years preceding the
Closing; (b) to the Knowledge of
the Seller, no union organizing or
decertification campaigns are underway or
threatened, and none has occurred during
the three (3) years preceding the
Closing; (c) there is no pending or, to the
Knowledge of the Seller,
threatened unfair labor practice charge or
complaint, union representation
petition or grievance, or labor grievance
or arbitration proceeding (except
that, in the case of labor grievance or
arbitration proceeding, disclosure
is required only if such proceeding has
had, or would reasonably be expected
to have, individually or in the aggregate,
a Material Adverse Effect); (d)
there is no pending or, to the Knowledge of
the Seller, threatened strike,
slowdown, work stoppage, lockout or other
such labor dispute, and there has
been no such event during the three (3)
years preceding the Closing; (e)
there is no pending or, to the Knowledge of
the Seller, threatened charge or
complaint of unlawful harassment or
discrimination, violation of the
National Labor Relations Act, violation of
any law governing workplace
safety (including the Occupational Safety
and Health Act), or violation of
any other law governing labor or employment
matters; (f) within the past
twelve months, no "plant closing" or "mass
layoff," as those terms are
defined in the Worker Adjustment and
Retraining Notification Act ("WARN
----
Act"), has been implemented, nor has any
other similar event requiring
---
notice to any Governmental Authority under
any Law similar to the WARN Act
been implemented; and (g) neither the
Seller nor any Subsidiary recognizes
or is required to recognize any labor
organization as the collective
bargaining representative of any employees
of the Business.
2.12 Intellectual Property.
---------------------
(a) Section 2.12(a) of the Disclosure Schedule contains a
complete and accurate list of all issued
patents and pending patent
applications, material unregistered
trademarks, service marks, trade names
and copyrightable software (excluding "off
the shelf" software), Internet
domain names, and all registrations and
applications for registration of
trademarks, service marks, trade names and
trade dress owned by the Seller
or any Subsidiary and used or held for use
in the conduct of the Business
(other than the PPA Technology), specifying
as to each such issuance,
registration or application, as applicable:
(i) the jurisdictions in which
the item is issued or registered or in
which any application for issuance or
registration has been filed; (ii) the
respective issuance, registration, or
application number of the item; (iii) the
respective issuance, registration
or filing date of the item; and (iv) the
owner or owners of record of each
item.
(b) Section 2.12(b) of the Disclosure Schedule contains a
complete and accurate list of all material
licenses, sublicenses, consents
and other similar types of agreements
(whether written or otherwise) (i)
pertaining to any Intellectual Property
used or held for use in the conduct
of the Business (including licenses for
computer software, other than
off-the-shelf software (including all seat
licenses for such software
collectively) with annual license fees of,
or a total replacement cost
reasonably estimated to be, less than
thirty thousand dollars ($30,000)), or
(ii) by which the Seller or any Subsidiary
licenses or otherwise authorizes
a third party to use any Intellectual
Property used or held for use in the
conduct of the Business. Neither the Seller
or any
30
<PAGE>
Subsidiary nor, to the Knowledge of the
Seller, any other party, is in
breach of or default under any such
license, sublicense, consent or other
similar type of agreement and each such
license, sublicense, consent or
other similar type of agreement is now, and
immediately following the
Closing shall be, valid and in full force
and effect. To the Knowledge of
the Seller, neither the Seller nor any of
the Subsidiaries is a party to any
contract or agreement related to the
ownership, co-ownership or
joint-ownership of any material patent or
patent application that would (i)
materially restrict the assignment,
license, transfer or conveyance of an
interest of the Seller in such patent or
patent application or (ii) result
in the Seller surrendering, abandoning or
forfeiting any material rights in
such patents or patent application upon the
transfer and/or conveyance of
the rights of the Seller in such patents
and/or patent applications to
Buyer.
(c) Except as set forth in Section 2.12(c) of the Disclosure
Schedule, (i) the Seller or the
Subsidiaries own, are licensed or otherwise
have the right to use, and immediately
after Closing the Buyer will own, be
licensed or have the right to use on terms
identical to the terms in effect
immediately prior to Closing, all
Intellectual Property necessary and
sufficient to operate the Business, in all
material respects, as currently
conducted (collectively, the "Seller
Intellectual Property") free and clear
----------------------------
of all Encumbrances, other than Permitted
Encumbrances; (ii) to the
Knowledge of the Seller, (A) the operation
of the Business does not, and
immediately after the Closing will not,
infringe, dilute, or otherwise
violate the Intellectual Property rights of
any Person and (B) no Person is
infringing, diluting or otherwise violating
any of the material Seller
Intellectual Property owned by the Seller
or the Subsidiaries; and (iii) no
suit, action or proceeding is currently
pending, outstanding or, to the
Knowledge of the Seller, threatened against
the Seller or any Subsidiary
that (A) challenges the validity or
ownership of, or any right of the Seller
or any Subsidiary to use or otherwise
exploit any Seller Intellectual
Property owned by the Seller or a
Subsidiary, (B) asserts or claims that the
operation of the Business infringes,
dilutes or otherwise violates any
Person's Intellectual Property rights, or
(C) asserts or claims that any
Person is infringing, diluting or otherwise
violating any of the Seller
Intellectual Property owned by the Seller
or any Subsidiary. To the
Knowledge of the Seller, except for as set
forth in Section 2.12(c) of the
Disclosure Schedule, the Buyer will not be
subject to any obligation or
restriction on or for the use of any Seller
Intellectual Property if the
Buyer conducts the Business after Closing
in substantially the same manner
as the Seller conducts the Business as of
the date hereof; provided that any
--------
Seller Intellectual Property not owned by
the Seller or a Subsidiary that is
used pursuant to a license, consent,
sublicense or other similar type of
agreement (whether written or otherwise)
will be subject to the obligations
or restrictions to which such Seller or
Subsidiary is bound or subject
immediately prior to the Closing that are
contained in or arises out of any
such agreement.
(d) Except as set forth in Section 2.12(d) of the Disclosure
Schedule, (i) all of the patents and
copyright, trademark, service mark and
Internet domain name registrations set
forth in Section 2.12(a) of the
Disclosure Schedule are in full force and
effect, are held of record in the
name of the Seller or a Subsidiary (other
than Astaris International) and
are not the subject of any cancellation or
reexamination proceeding or any
other proceeding challenging their extent
or validity, and (ii) the Seller
or a Subsidiary (other than Astaris
International) (or in the case of patent
applications listed on Section 2.12(a) of
the Disclosure Schedule, either
the Seller or an employee of the Seller (or
a Subsidiary (other than Astaris
International) or an employee of such
Subsidiary) that is contractually
obligated to assign all rights in and to
the patent application to the
Seller or a Subsidiary (other than Astaris
International), as applicable) is
the applicant of record of
31
<PAGE>
all patent applications, and applications
for all trademark, service mark
and copyright registrations set forth in
Section 2.12(a) of the Disclosure
Schedule, and no opposition, extension of
time to oppose, interference,
final rejection, or final refusal to
register has been received in
connection with any such application.
(e) None of the material trade secrets, know-how or other
confidential or proprietary information
included in the Seller Intellectual
Property has been disclosed to any Person
unless such disclosure was prudent
or deemed necessary by the Seller or the
Subsidiaries in the reasonable
business judgment of the Seller or the
Subsidiaries and was either made
pursuant to an appropriate confidentiality
agreement or to an employee of
the Seller or a Subsidiary with a duty of
confidentiality.
(f) Except as set forth in Section 2.12(f) of the Disclosure
Schedule, Astaris Production, LLC and Foret
are the sole and exclusive
owners of and control all right, title and
interest in and to the PPA
Technology and no Person, other than
Astaris Production LLC and Foret, has
any right, title or interest in or to the
PPA Technology (including the
right to exploit the PPA Technology
anywhere in the world). Except for the
Seller, Astaris Production, LLC and Foret,
no Person has any right to
practice or use the PPA Technology anywhere
in the world, whether as a
licensee, transferee, sublicensee, or
purchaser of any rights in or to the
PPA Technology. Set forth in Section
2.12(f) of the Disclosure Schedule is a
complete and accurate list of any contract,
agreement or arrangement ("PPA
---
Restriction") that restricts the use or
transfer of PPA Technology or any
-----------
equipment used or intended to be used for
the manufacture of purified
phosphoric acid to which any Owner, Seller,
Subsidiary or any of their
respective subsidiaries is a party or
otherwise bound or subject. Neither
ownership of nor any right in or to the PPA
Technology is necessary for the
operation of the Business as currently
conducted.
(g) The
information technology systems owned, licensed,
leased, operated on behalf of, or otherwise
used or held for use in the
Business, including all computer hardware,
software, firmware and
telecommunications systems, perform
reliably and in material conformance
with the appropriate specifications or
documentation for such systems.
Except for scheduled or routine
maintenance, such information technology
systems are fully available for use by the
Seller and, as applicable, by its
customers and clients, as necessary to meet
the Seller's obligations. The
Seller has taken commercially reasonable
steps to provide for the archival,
back-up, recovery and restoration of the
critical business data of the
Business. The computer software owned by
the Seller or the Subsidiaries and,
to the Knowledge of the Seller, all of the
licensed software used in the
Business, perform in material conformance
with the applicable documentation
for such software, and do not contain any
viruses, trapdoors, worms, or
other disabling or malicious code. Except
as set forth in Section 2.12(g) of
the Disclosure Schedule, the information
technology system including the
software, hardware, networks, and
interfaces included in the Acquired Assets
are sufficient in all material respects for
the operation of the Business as
currently conducted.
2.13 Contracts.
---------
(a) Section 2.13(a) of the Disclosure Schedule sets forth, by
subsection and category, as of the date of
this Agreement, a complete list
of each of the oral or written contracts,
instruments, Leases and other
leases, deeds and agreements by which the
Seller or any Subsidiary
32
<PAGE>
is bound and that relate to the Business or
by which any assets or
properties of the Business are bound
(including any Acquired Assets or
Assumed Liabilities) included within any of
the following types or
categories (collectively, the "Material
Contracts"):
------------------
(i)
indentures, mortgages, loan agreements,
letters of
credit and surety bonds, capital leases, security agreements
and other
agreements or commitments (including any assumptions or
guarantees
thereof) for the borrowing of money or the subjecting of any
assets to an
Encumbrance (other than Permitted Encumbrances);
(ii)
purchase or sales orders and other contracts
for the sale of
goods, raw materials, supplies, products or other
personal
property, or for the furnishing of services, excluding any
such orders or
contracts involving payments of less than one million
dollars
($1,000,000) from any Person in any calendar year;
(iii) contracts
involving the expenditure of more
than one million
dollars ($1,000,000) to any Person in any calendar
year for the
purchase of material, supplies, equipment, other personal
property or
services; excluding any thereof that are terminable by the
Seller without
penalty on not more than ninety (90) calendar days
notice or are
related to owned or leased real property;
(iv)
contracts not otherwise described in this
Section 2.13(a)
that individually (or as a group of related contracts)
involve
consideration of more than one million dollars ($1,000,000) in
any calendar
year, excluding any thereof that are terminable by the
Seller without
penalty on not more than ninety (90) calendar days
notice or are
related to owned or leased real property, and contracts
entered into
outside of the ordinary course of business;
(v)
guarantees of obligations of third parties,
excluding
guarantees involving the potential expenditure by the Seller
and the
Subsidiaries of less than two hundred fifty thousand dollars
($250,000) in
any instance;
(vi)
agreements which restrict the Seller, the
Subsidiaries or
the Business from competing with any other Person or
any Person from
conducting the Business in any geographic area;
(vii) contracts
or agreements with directors or
officers or
Affiliates (including the Owners) of the Seller or the
Subsidiaries;
(viii) agreements
under which the Seller or any
of the
Subsidiaries has licensed to or from any Person any material
Intellectual
Property owned by the Seller or any Subsidiary or used or
held for use in
the conduct of the Business (including licenses for
computer
software, other than off-the-shelf software (including all
seat licenses
for such software collectively) with annual license fees
of, or a total
replacement cost reasonably estimated to be, less than
thirty thousand
dollars ($30,000));
33
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(ix)
partnership, limited liability company,
joint venture
agreements or other similar agreements;
(x)
contracts relating to the acquisition or
disposition of
any business enterprise or the assets thereof;
(xi) any
agreement (or group of related agreements)
involving annual
payments to any Person in excess of two hundred fifty
thousand dollars
($250,000) for the lease of personal property;
(xii) any profit
sharing, deferred compensation,
severance,
termination, retention or other similar plan, agreement or
arrangement for
the benefit of any Employee or Former Employee (other
than the Benefit
Plans and Foreign Plans and other than any retention
plan, agreement
or arrangement that does not survive the Closing);
(xiii) any agreement
for the employment of any
individual on a
consulting or other similar basis providing anticipated
annual
compensation or severance benefits in excess of one hundred
thousand dollars
($100,000);
(xiv) any
distribution, dealer, representative or
sales agency
agreement with anticipated sales in excess of one million
dollars
($1,000,000);
(xv) any
labor agreement (including any side
agreements
thereto) with any union or recognized collective bargaining
agent;
(xvi) any
agreement otherwise material to the
Business, or
under which the consequences of a default or termination
has had, or
would reasonably be expected to have, individually or in
the aggregate, a
Material Adverse Effect or a material adverse effect
on the value to
the Buyer, or the possession, use, occupancy or
operation of any
material portion of the Business or the Acquired
Assets.
(b) Except for Excluded Contracts with the Owners or their
Affiliates that do not relate to the
Acquired Assets or Assumed Liabilities,
true and complete copies (with all
amendments and modifications) of each of
the written Material Contracts, and a
written summary setting forth the
terms and conditions of each oral Material
Contract, have been made
available to the Buyer.
(c) Except as set forth in Section 2.13(c) of the Disclosure
Schedule, with respect to each Contract
(other than an immaterial Contract)
that is an Acquired Asset or Assumed
Liability (whether or not disclosed or
otherwise required to be disclosed in
Section 2.13(a) of the Disclosure
Schedule), (i) the Contract is a valid and
binding agreement of the Seller
or the applicable Subsidiary, enforceable
against the Seller or the
applicable Subsidiary, and to the Knowledge
of the Seller each of the other
parties thereto, and in full force and
effect, (ii) the Contract will be a
legal, valid and binding agreement of the
Buyer enforceable against the
Buyer, and to the Knowledge of the Seller
each of the other parties thereto,
and in full force and effect on
34
<PAGE>
identical terms following the consummation
of the transactions contemplated
hereby, (iii) the Seller, and to the
Knowledge of the Seller, each of the
other parties thereto, have performed in
all material respects all
obligations required to be performed by
them thereunder and are not in
breach or default thereunder, (iv) no
condition exists or event has occurred
that (whether with or without notice or
lapse of time or both) would
constitute a breach or default of the
Seller or a Subsidiary, or to the
Knowledge of the Seller, any other party
thereto, or permit termination,
modification, or acceleration thereunder
and (v) the Seller or the
applicable Subsidiary has not, and to the
Knowledge of the Seller, no other
party thereto, has repudiated or threatened
to repudiate any provision
thereof.
(d) Except as set forth in Section 2.13(d) of the Disclosure
Schedule, to the Knowledge of the Seller,
no Monsanto Supply Agreement
Environmental Costs have arisen since
December 31, 2004.
2.14 Environmental Matters.
---------------------
Except (x) as set forth in Section 2.14 of the Disclosure
Schedule, (y) with respect to any Excluded
Assets or (z) as would not
reasonably be expected to result in a
Material Adverse Effect:
(a) The Seller, the Subsidiaries and, to the Knowledge of the
Seller, Fosbrasil hold and are in
compliance with all Environmental Permits,
all of such Environmental Permits are in
full force and effect and there are
no Proceedings pending, or to the Knowledge
of the Seller, threatened that
seek revocation, cancellation, suspension
or any adverse modification of
such Environmental Permits.
(b) All such material Environmental Permits (including any
pending application therefor) are listed in
Section 2.14 of the Disclosure
Schedule, and any that are not transferable
are so designated.
(c) The Seller, the Subsidiaries and, to the Knowledge of the
Seller, Fosbrasil have made timely
application for renewals of all such
Environmental Permits to the extent
required by Environmental Laws and, to
the Knowledge of Seller, to the extent
otherwise necessary for continued use
of the Acquired Assets and operation of the
Business as used or operated as
of the Closing Date.
(d) The Seller, the Subsidiaries and, to the Knowledge of the
Seller, Fosbrasil are not in violation of
Environmental Laws in connection
with the Business and the Acquired Assets
and, since the Formation Date,
have not been in violation of Environmental
Laws in connection with the
Acquired Assets or the Business.
(e) No unresolved written notice (including any notice of
investigations or reviews), citation,
request for information, claim,
demand, summons or order has been received
or, to the Knowledge of the
Seller, threatened by any Governmental
Authority or other entity: (i) with
respect to any alleged violation of any
Environmental Law in connection with
the Business or the Acquired Assets; or
(ii) with respect to any alleged
failure to have any Environmental Permit
required for the Business or the
Acquired Assets; or (iii) in connection
with the Business or the Acquired
Assets, with respect to any use,
possession, generation, treatment, storage,
35
<PAGE>
recycling, transportation or disposal
(collectively "Management") or
----------
exposure of or to any Hazardous Materials;
or (iv) with respect to any
allegation that the Seller, any Subsidiary
or any Owner is or may be
potentially responsible with respect to any
investigation or clean-up of any
threatened or actual Release of any
Hazardous Material in connection with
the Business or the Acquired Assets.
(f) Neither the Seller nor any Subsidiary nor any Owner has
arranged, directly or by delegation to a
third party, for the disposal of
any Hazardous Material in connection with
the Business or Acquired Assets at
any site which is listed or, to Knowledge
of the Seller, proposed for
listing on the National Priorities List
promulgated pursuant to CERCLA, on
CERCLIS or on any similar state list, the
circumstances of which listing
would reasonably be expected to result in
Proceedings or a claim against the
Seller or the Buyer under Environmental
Laws for clean-up costs, remedial
work or damages to natural resources.
(g) No Hazardous Material has been Released by the Seller or
any Subsidiary or any Owner or, to the
Knowledge of the Seller, by anyone
else at, on, about or under any Real
Property, which Release would require
an investigation, remediation or other
response actions pursuant to
Environmental Law. No such Real Property is
listed or, to the Knowledge of
the Seller, proposed for listing on the
National Priority List promulgated
pursuant to CERCLA, on CERCLIS or on any
similar state list of sites
requiring investigation or clean-up.
(h) There are no environmental Encumbrances on any Real
Property, and no government action is, to
the Knowledge of the Seller,
pending which would reasonably be expected
to subject any of such Real
Property to such Encumbrances. The Seller
is not required to place,
currently, nor to the Knowledge of the
Seller, in connection with Closing
any notice or restriction relating to the
presence of Hazardous Material in
the deed to any Real Property, and no Real
Property has such notice or
restriction in its deed.
(i) The Seller, the Subsidiaries, the Owners and, to the
Knowledge of the Seller, Fosbrasil have
made available to the Buyer all
non-privileged, written material
environmental inspections, investigations,
studies, audits, tests, reviews and other
analyses conducted in relation to
the Real Property, other Acquired Assets or
the Business, which are in the
possession, custody or control of the
Seller, Fosbrasil, the Owners or their
respective Affiliates.
(j) Notwithstanding any other provision of this Agreement to
the contrary, the representations and
warranties included in this Section
2.14 shall constitute the sole and
exclusive representations and warranties
of the Seller relating to environmental
matters, including any matters
arising under Environmental Laws or related
to Hazardous Materials.
2.15 Insurance.
---------
Section 2.15 of the Disclosure Schedule lists the policies
and contracts in effect for insurance
covering the Acquired Assets. Such
policies insure against risks of a
character and in such amounts as are
usually insured against by similarly
situated companies in the same or
similar businesses. All such insurance
policies are in full force and
effect, all premiums due thereon have been
paid and the Seller and its
Affiliates, as applicable, have complied in
all material respects with the
provisions of such policies and have not
received any written notice
36
<PAGE>
from any of their insurance brokers or
carriers that such broker or carrier
has cancelled or terminated coverage or
will not be willing or able to renew
their existing policies.
2.16 Real Property.
-------------
(a) Leased Properties. Section 2.16(a) of the Disclosure
-----------------
Schedule sets forth a complete list and the
location of all real property
leased or subleased, whether as landlord or
tenant, by the Seller or the
Subsidiaries, excluding the Excluded
Facilities (the "Leased Real
-----------
Property"), identifying the parties
thereto. The Seller has prior to the
--------
date hereof made available to the Buyer
correct and complete copies of the
leases and subleases (and all amendments,
supplements, side letters,
estoppels, subordination, nondisturbance
and attornment agreements, and
other written agreements related thereto)
that are in the Seller's
possession (collectively, the "Leases")
covering the properties listed in
------
Section 2.16(a) of the Disclosure Schedule
(as amended to the date of this
Agreement) and all material licenses,
certificates of occupancy, plans,
specifications and permits pertaining to
the Leased Real Property that are
in the possession of the Seller, any of the
Subsidiaries or the Owners.
Except (x) as otherwise specified in
Section 2.16(a) of the Disclosure
Schedule or (y) where the failure of any of
the following to be true and
correct does not have, or would not
reasonably be expected to have,
individually or in the aggregate, a
Material Adverse Effect:
(i)
(A) neither the Seller nor any of the
Subsidiaries,
nor to the Knowledge of the Seller, any of their
landlords or
tenants, as the case may be, is in default under any Lease
beyond any
applicable notice, grace or cure period, (B) neither the
Seller nor any
of the Subsidiaries has received or delivered a written
notice of
default or objection to any party to any Lease to pay and
perform its
obligations and (C) to the Knowledge of the Seller, no
event with
respect to any Lease which with either notice or the passage
of time or both
would reasonably be expected to become an event of
default
thereunder;
(ii) no
Lease has been assigned, sublet, mortgaged,
deeded in trust
or otherwise encumbered by the Seller or any of the
Subsidiaries;
and
(iii) (A) the
Leases constitute all written and oral
agreements of
any kind for the leasing, rental, use or occupancy of the
Leased Real
Property and are the result of bona fide arms length
negotiations
between the parties, (B) no third party has the right to
cancel or
terminate a Lease; and (C) there are no refunds, credits,
concessions,
bonuses, free months' rental, rebates, finish-out
allowances in
excess of the building's standard or other agreements or
matters
affecting the rental for any tenant under any Lease nor any
additional
payments, accommodations, consideration or unpaid tenant
improvement
costs due under any of the Leases.
(b) Owned Properties. Section 2.16(b) of the Disclosure
Schedule
----------------
lists all real property owned by the Seller
or the Subsidiaries, other than
Excluded Facilities (the "Owned Real
Property"), identifying the owner
-------------------
thereof.
37
<PAGE>
(c) Real Property.
-------------
(i)
With respect to the Real Property, the Seller
has previously
made available or delivered to the Buyer copies of the
following: (A)
all title insurance policies or commitments that were
delivered to the
Seller or any of their Subsidiaries by any title
insurance
company in connection with the Seller's or any of the
Subsidiaries'
investigation, acquisition financing, or refinancing of
the Real
Property, to the extent they are in the Seller's or any of the
Subsidiaries' or
the Owners' possession; (B) all instruments, documents
or agreements
referenced in the title policies that create or evidence
conditions or
exceptions to title affecting the Real Property, in the
Seller's or any
of the Subsidiaries' or the Owners' possession (the
"Exception
Documents"); and (C) any surveys, plats or plans delivered
-------------------
to the Seller or
any of the Subsidiaries in connection with the
Seller's or any
of the Subsidiaries' investigation, purchase, financing
or refinancing
of the Real Property, in the Seller's or any of the
Subsidiaries'
possession.
(ii) The
Real Property, the Seller and the
Subsidiaries are
not in violation of any Encumbrances, except for any
such violation
which would not reasonably be expected to individually
or in the
aggregate materially impair the use or operation of the
affected
property or the conduct of the Business thereon as it is
currently being
used and conducted.
(iii) The
Owners, the Seller and the Subsidiaries
have not
received any written notice from insurers of the Real Property
relating to any
material violations, defects, deficiencies, or need for
repairs.
(iv) To
the Knowledge of the Seller, no fact or
condition exists
which would result in the termination of the current
access from any
property comprising part of the Real Property to any
presently
existing highways and roads adjoining or situated on the Real
Property.
(v)
Except as set forth in Section 2.16(c) of
the Disclosure
Schedule, there are no encroachments or other facts or
conditions
affecting any of the Real Property which would materially
interfere with
the use, occupancy or operation thereof as currently
used, occupied
and operated.
2.17 Product Liability.
-----------------
Except as set forth in Section 2.17(a) of the Disclosure
Schedule, to the Knowledge of the Seller,
there are no (a) Liabilities,
fixed or contingent, with respect to any
product liability (as distinct from
warranty claims described in clause (b)
below) claim that relates to any
product manufactured and sold by the Seller
or any Subsidiary to others in
the conduct of the Business or (b)
Liabilities, fixed or contingent, of the
Seller or any Subsidiary, which have been
asserted, with respect to any
claim for the breach of any express or
implied product warranty with respect
to any product manufactured or sold by the
Seller or any Subsidiary to
others in the conduct of the Business other
than any claim based on standard
warranty obligations (to replace, repair or
refund) made by the Seller or a
Subsidiary in the
38
<PAGE>
ordinary course of the conduct of the
Business to purchasers of its
products. Section 2.17(b) of the Disclosure
Schedule sets forth the standard
warranty and return policies for the
Business.
2.18 Inventory.
---------
Except as set forth on Section 2.18(a) of the Disclosure
Schedule, the Inventory of the Business as
reflected on the Interim Balance
Sheet is, and the Inventory of the Business
acquired after the Interim
Balance Sheet Date and before the Closing
Date will be, carried at cost
determined on the basis of standard cost
and of good and merchantable
quality in all material respects. Since the
date of the Interim Balance
Sheet, such Inventory has been maintained
in the ordinary course of business
consistent with past practice. Except as
set forth on Section 2.18(b) of the
Disclosure Schedule, to the Knowledge of
the Seller, neither the Seller nor
any Subsidiary is under any Liability or
obligation with respect to the
return of any material Inventory in the
possession of wholesalers, retailers
or other customers. Such Inventory is
consistent in all material respects
(both as to amount and type) with the
requirements of the Business in the
ordinary course consistent with past
practice.
2.19 Accounts Receivable.
-------------------
Except as set forth in Section 2.19 of the Disclosure Schedule,
the accounts receivable of the Business
included in Working Capital in the
Conclusive Net Working Capital and Capex
Statement as of the Closing Date:
(a) will be valid and genuine; (b) will
have arisen solely out of bona fide
sales and deliveries of goods, performance
of services and other business
transactions in the ordinary course of
business consistent with past
practice; (c) will not be subject to any
material valid defenses, set-offs
or counterclaims; and (d) will be
reasonably expected to be collectible in
the ordinary course of business consistent
with past practice (net of any
reserve for doubtful accounts set forth in
Working Capital in the Conclusive
Net Working Capital and Capex
Statement).
2.20 Relationship with Customers and Suppliers.
-----------------------------------------
Section 2.20 of the Disclosure Schedule sets forth a true and
complete list of the twenty (20) largest
customers (by net sales) and
twenty (20) largest suppliers (by dollar
volume) of the Business for the
fiscal year ended December 31, 2004 and for
the six-month period ended June
30, 2005. To the Knowledge of the Seller,
no written or oral communication
has been received and no dispute exists,
which would lead a Person
reasonably to believe that any current
customer which accounted for more
than five percent (5%) of the net sales of
the Business for the immediately
preceding twelve (12) month period
(including, for this purpose, any
Affiliate) or any current supplier to the
Seller or any Subsidiary of items
material to the Business, which items
cannot be replaced at comparable cost
and the loss of which would reasonably be
expected to have, individually or
in the aggregate, a Material Adverse
Effect, will terminate or materially
and adversely modify its business
relationship with the Seller or such
Subsidiary.
2.21 Absence of Questionable Payments.
--------------------------------
Except as set forth in Section 2.21 of the Disclosure Schedule,
neither the Seller nor any Subsidiary nor,
to the Knowledge of the Seller,
any of the directors, officers, agents or
employees of the Seller or the
Subsidiaries or any other Persons acting on
their behalf has, in
39
<PAGE>
connection with the operation of the
Business, used any corporate or other
funds for contributions, payments, gifts or
entertainment, made any
expenditures relating to political activity
to government officials or
accepted or received any contributions,
payments or gifts, in each case in
violation of Section 104 of the Foreign
Corrupt Practices Act of 1977, as
amended, or any other applicable foreign,
federal or state Law.
2.22
Solvency.
--------
The Seller is now Solvent and immediately after giving effect
to
the consummation of the transactions
contemplated by this Agreement will be
Solvent. As used herein, the term "Solvent"
shall mean, at any time with
-------
respect to the Seller, that at such time
the Seller (a) is able to pay its
debts as they mature and has (and has a
reasonable basis to believe it will
continue to have) sufficient capital (and
not unreasonably small capital) to
carry on its business consistent with its
past practices, and (b) the assets
and properties of the Seller at a fair
valuation are greater than its debts
and other liabilities, including
subordinated and contingent liabilities
computed at the amount which, such Person
has a reasonable basis to believe,
represents an amount which can reasonably
be expected to become an actual or
matured liability.
2.23 All Assets.
----------
The Acquired Assets, together with the Transaction Documents,
constitute all of the assets, rights,
contracts and other properties
necessary for the Buyer to operate the
Business in all material respects in
the manner as it is now being conducted by
the Seller and the Subsidiaries.
Except for Excluded Assets and as
contemplated by the Sauget Supply
Agreement and the Transition Services
Agreement, there are no material
assets or properties used in the operation
of the Business and owned by any
Person other than the Seller that will not
be leased or licensed to the
Buyer under valid, current leases or
license arrangements, subject to any
consents listed in Section 2.4 of the
Disclosure Schedule.
2.24 No Brokers' or Other Fees.
-------------------------
Neither the Seller nor the Owners nor any of their respective
Affiliates have made any agreement or taken
any other action which might
cause any Person to become entitled to a
broker's or finder's fee or
commission as a result of the transactions
contemplated hereunder, which
could result in liability to the Buyer or
ICL or any of their respective
Affiliates.
2.25 No Other Representations or Warranties.
--------------------------------------
Except for the representations and warranties contained in
this Article II or expressly contained in
this Agreement or any other
Transaction Document, neither the Owners,
the Seller or any other Person
makes any other express or implied
representation or warranty, including
with respect to any financial information
of the Owners, the Seller, the
Subsidiaries, Fosbrasil or Astaris
Production LLC, other than to the extent
specifically set forth in this Agreement
and the Disclosure Schedule, to the
Buyer. Notwithstanding anything herein to
the contrary, but without
limitation of any representation or
warranty, stipulation, estoppel,
certification or agreement of the Seller or
the Owners expressly contained
in this Agreement, any other Transaction
Document, or the certificate under
Section 6.3 to be delivered to the Buyer
and ICL, THE SELLER AND OWNERS MAKE
NO OTHER (AND HEREBY DISCLAIM EACH
40
<PAGE>
OTHER) REPRESENTATION, WARRANTY OR GUARANTY
WITH RESPECT TO THE VALUE,
CONDITION OR USE OF THE ACQUIRED ASSETS
(INCLUDING WITHOUT LIMITATION
ENVIRONMENTAL CONDITION), WHETHER EXPRESS
OR IMPLIED, INCLUDING ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNERS
Each Owner, severally and not jointly, hereby represents and
warrants
to the Buyer and ICL, as of the date of
this Agreement, as follows:
3.1 Organization of
the Owners.
--------------------------
(a) With respect to FMC, FMC is a corporation duly
incorporated, validly existing and in good
standing under the Laws of the
State of Delaware. FMC has all requisite
corporate power and authority to
own, lease and operate its assets and to
carry on its business as now being
conducted and is qualified or licensed to
do business and is in good
standing in the jurisdictions in which the
ownership or leasing of its
property or the conduct of its business
requires such qualification or
license, except jurisdictions in which the
failure to be so qualified or
licensed does not have, or would not
reasonably be expected to have,
individually or in the aggregate, a
material adverse effect on the ability
of FMC to perform its obligations under,
and to consummate the transactions
contemplated by, this Agreement and the
Transaction Documents to which FMC
is a party.
(b) With respect to Solutia, Solutia is a corporation duly
incorporated, validly existing and in good
standing under the Laws of the
State of Delaware and, pursuant to Sections
1107 and 1008 of the Bankruptcy
Code and the orders of the Bankruptcy
Court, has all requisite corporate or
similar power and authority to own, lease
and operate its assets and to
carry on its business as now being
conducted and is qualified or licensed to
do business and is in good standing in the
jurisdictions in which the
ownership or leasing of its property or the
conduct of its business requires
such qualification or license, except
jurisdictions in which the failure to
be so qualified or licensed does not have,
or would not reasonably be
expected to have, individually or in the
aggregate, a material adverse
effect on the ability of Solutia to perform
its obligations under, and to
consummate the transactions contemplated
by, this Agreement and the
Transaction Documents to which Solutia is a
party.
3.2 Authorization,
Etc.
------------------
(a) In the case of FMC, (i) FMC has full corporate power and
authority to execute and deliver this
Agreement and the Transaction
Documents to which it is a party and to
carry out and consummate the
transactions contemplated hereby and
thereby to be carried out and
consummated by it and (ii) this Agreement
and the Transaction Documents to
which FMC is a party have been duly and
validly authorized by FMC and no
other corporate action or proceeding
41
<PAGE>
by FMC is necessary to authorize the
execution, delivery and performance of
this Agreement and the Transaction
Documents by FMC.
(b) In the case of Solutia, subject to the Approval Order
(with respect to the matters not covered by
the Initial Relief Order) having
been entered and still being in effect and
not subject to any stay pending
appeal at the time of the Closing, (i)
Solutia has full corporate power and
authority to execute and deliver this
Agreement and the Transaction
Documents to which it is a party and to
carry out and consummate the
transactions contemplated hereby and
thereby to be carried out and
consummated by it and (ii) this Agreement
and the Transaction Documents to
which Solutia is a party have been duly and
validly authorized by Solutia
and no other corporate action or proceeding
by Solutia is necessary to
authorize the execution, delivery and
performance of this Agreement and the
Transaction Documents by Solutia.
(c) This Agreement has been duly and validly executed by such
Owner and, assuming this Agreement
constitutes the legal, valid and binding
agreement of ICL, the Buyer, the Seller and
the other Owner, and, with
respect to Solutia, assuming the entry of
the Approval Order as a Final
Order, it constitutes a legal, valid and
binding agreement of such Owner,
enforceable against such Owner in
accordance with its terms. As of the
Closing, each Transaction Document will be
duly and validly executed by such
Owner (to the extent such Owner is a party
thereto) and, assuming such
Transaction Document constitutes the legal,
valid and binding agreement of
the ICL, Buyer the Seller and/or the other
Owner (to the extent they are a
party thereto), will constitute a legal,
valid and binding agreement of such
Owner (to the extent such Owner is a party
thereto), enforceable against
such Owner in accordance with its
terms.
3.3 No Approvals or
Conflicts.
-------------------------
Except as set forth in Section 3.3 of the Disclosure Schedule
and,
in the case of Solutia, subject to the
Approval Order (with respect to the
matters not covered by the Initial Relief
Order) having been entered and
still being in effect and not subject to
any stay pending appeal at the time
of the Closing, the execution, delivery and
performance by such Owner of
this Agreement and the consummation by such
Owner of the transactions
contemplated hereby to be consummated by it
will not (i) violate, conflict
with or result in a breach by such Owner of
any provision of any charter,
bylaws or equivalent formation or
governance document of such Owner, (ii)
violate, conflict with or result in a
breach of any provision of, or
constitute a default by such Owner (or
create an event which, with notice or
lapse of time or both, would constitute
such a default) or give rise to any
right of termination, cancellation,
modification or acceleration of or
under, or result in the creation of any
Encumbrance upon any of the Acquired
Assets or give to others any interests or
rights therein under, any material
note, bond, mortgage, indenture, deed of
trust, license, franchise, permit,
lease, contract, agreement or other
instrument or understanding to which
such Owner is a party, or by which the
Business or any of the Acquired
Assets may be bound or subject, (iii)
violate, conflict with or result in a
breach of, any Law of any Governmental
Authority applicable to such Owner or
any of its properties or the Business, or
(iv) except for applicable
requirements of the HSR Act or any other
Competition/Investment Law, and
except for reports to be filed under the
Exchange Act, require any material
order, Consent, clearance, approval or
authorization of, or notice to, or
declaration, filing, application,
qualification or registration with, any
Governmental Authority or other Person,
except in each case with respect to
subclauses (ii), (iii) and (iv), where such
violation, conflict, breach,
default,
42
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right, Encumbrance or requirement does not
have, or is not reasonably
expected to have, individually or in the
aggregate, a Material Adverse
Effect or a material adverse effect on the
ability of such Owner to
consummate the transactions contemplated by
this Agreement or the
Transaction Documents without material
delay.
3.4 Litigation.
----------
Except as set forth in Section 3.4 of the Disclosure Schedule,
subject to the Approval Order having been
entered and still being in effect
and not subject to any stay pending appeal
at the time of the Closing, there
are no Proceedings pending or, to the
actual knowledge of such Owner after
reasonable inquiry, threatened against such
Owner or any of their respective
subsidiaries (or any of their material
assets) before any arbitrator, court
or Governmental Authority and such Owner
and its subsidiaries have not
received any notice that they are subject
to any decree, order or judgment,
in each case, which has, or would
reasonably be expected to have,
individually or in the aggregate, a
material adverse effect on the ability
of such Owner to consummate the
transactions contemplated by this Agreement
or the Transaction Documents without
material delay.
3.5 No Brokers' or
Other Fees.
-------------------------
Neither the Owners nor any of their respective Affiliates have
made
any agreement or taken any other action
which might cause any Person to
become entitled to a broker's or finder's
fee or commission as a result of
the transactions contemplated hereunder,
which could result in liability to
the Buyer or ICL or any of their respective
Affiliates.
3.6 No Other
Representations or Warranties.
--------------------------------------
Except for the representations and warranties expressly
contained
in this Agreement or any other Transaction
Document, neither Owner makes any
other express or implied representation or
warranty to ICL or the Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND ICL
The Buyer and ICL hereby jointly and severally represent and
warrant
to the Seller and the Owners, as of the
date of this Agreement, as follows:
4.1 Organization.
------------
The Buyer is a corporation duly organized, validly existing and
in
good standing under the Laws of the
jurisdiction of its incorporation. ICL
is an Israeli corporation duly organized,
validly existing and in good
standing under the Laws of the jurisdiction
of its incorporation.
43
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4.2 Authorization,
Etc.
------------------
Each of the Buyer and ICL has full corporate power and
authority
to execute and deliver this Agreement and
the Transaction Documents to which
it is a party and to carry out and
consummate the transactions contemplated
hereby and thereby to be carried out and
consummated by it. This Agreement
and the Transaction Documents to which the
Buyer is a party have been duly
and validly authorized by the Buyer and no
other corporate action or
proceeding by the Buyer is necessary to
authorize the execution, delivery or
performance of this Agreement and the
Transaction Documents by the Buyer.
This Agreement and the Transaction
Documents to which ICL is a party have
been duly and validly authorized by ICL and
no other corporate action or
proceeding by ICL is necessary to authorize
the execution, delivery or
performance of this Agreement and the
Transaction Documents by ICL. This
Agreement has been duly and validly
executed by each of the Buyer and ICL
and, assuming this Agreement constitutes
the legal, valid and binding
agreement of each of the Owners and the
Seller, constitutes a legal, valid
and binding agreement of the Buyer and ICL,
enforceable against the Buyer
and ICL in accordance with its terms. As of
the Closing, each Transaction
Document will be duly and validly executed
by the Buyer and ICL (to the
extent the Buyer or ICL, as applicable, is
a party thereto) and, assuming
such Transaction Document constitutes the
legal, valid and binding agreement
of each of the Owners and the Seller, will
constitute a legal, valid and
binding agreement of the Buyer and ICL (to
the extent the Buyer or ICL, as
applicable, is a party thereto),
enforceable against the Buyer or ICL (as
applicable) in accordance with its
terms.
4.3 No Approvals or
Conflicts.
-------------------------
The execution, delivery and performance by the Buyer and ICL of
this Agreement and the consummation by the
Buyer and ICL of the transactions
contemplated hereby to be consummated by
each of them will not (i) violate,
conflict with or result in a breach by the
Buyer or ICL of any provision of
the certificate of incorporation, bylaws or
equivalent formation or
governance document of the Buyer or ICL,
(ii) violate, conflict with or
result in a breach of any provision of, or
constitute a default by the Buyer
or ICL (or create an event which, with
notice or lapse of time or both,
would constitute such a default) or give
rise to any right of termination,
cancellation, modification or acceleration
of or under, or result in the
creation of any Encumbrance upon any of the
Buyer's or ICL's properties or
give to others any interests or rights
therein under, any material note,
bond, mortgage, indenture, deed of trust,
license, franchise, Permit, lease,
contract, agreement or other instrument or
understanding to which the Buyer
or ICL or any of their respective
properties may be bound or subject, (iii)
violate, conflict with, or result in a
breach of any Law of any Governmental
Authority applicable to the Buyer, ICL or
any of their respective properties
or (iv) except for applicable requirements
of the HSR Act or any other
Competition/Investment Law, and except for
reports to be filed under the
Exchange Act or foreign securities Laws,
require any material order,
Consent, clearance, approval or
authorization of, or notice to, or
declaration, filing, application,
qualification or registration with, any
Governmental Authority, or other Person,
except in each case with respect to
subclauses (ii), (iii) and (iv), where such
violation, conflict, breach,
default, right, Encumbrance or requirement
does not have, or is not
reasonably expected to have, individually
or in the aggregate, a material
adverse effect on the ability of the Buyer
to consummate the transactions
contemplated by this Agreement or the
Transaction Documents without material
delay.
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4.4 Financial
Capacity.
------------------
The Buyer will on the scheduled Closing Date have cash on hand
sufficient to pay all amounts which may be
payable by it at the Closing
pursuant to this Agreement.
4.5 Litigation.
----------
There are no Proceedings pending or, to the actual knowledge of
the Buyer or ICL after reasonable inquiry,
threatened against the Buyer or
ICL or any of their respective subsidiaries
(or any of their material
assets) before any arbitrator, court or
Governmental Authority and neither
the Buyer nor ICL nor any of their
respective subsidiaries have received any
notice that any of them are subject to any
decree, order or judgment, in
each case, which has, or would reasonably
be expected to have, individually
or in the aggregate, a material adverse
effect on the ability of the Buyer
or ICL or their designated Affiliates or
permitted assigns to consummate the
transactions contemplated by this Agreement
or the Transaction Documents
without material delay.
4.6 No Brokers' or
Other Fees.
-------------------------
Neither the Buyer nor ICL nor any of their respective
Affiliates
have made any agreement or taken any other
action which might cause any
Person to become entitled to a broker's or
finder's fee or commission as a
result of the transactions contemplated
hereunder, which could result in
liability to the Seller or Owners or any of
their respective Affiliates.
4.7 No Other
Representations or Warranties.
--------------------------------------
Except for the representations and warranties expressly
contained
in this Agreement or any other Transaction
Document, neither the Buyer nor
ICL makes any other express or implied
representation or warranty to the
Seller or the Owners.
A
