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<PAGE>
Exhibit 10.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BETWEEN
SOLUTIA INC.,
AS THE SELLER
AND
THERMPHOS TRADING GMBH,
AS THE BUYER
DATED AS OF MARCH 11, 2007
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS..............................................................................2
Section 1.1 Certain Defined
Terms...............................................................2
Section 1.2 Table of
Definitions...............................................................12
ARTICLE II PURCHASE AND
SALE.......................................................................14
Section 2.1 Purchase and Sale of
Assets........................................................14
Section 2.2 Excluded
Assets....................................................................16
Section 2.3 Assumed
Liabilities................................................................18
Section 2.4 Excluded
Liabilities...............................................................19
Section 2.5 Assignment and Assumption; Cure
Costs..............................................20
Section 2.6 Consents to Certain
Assignments....................................................20
Section 2.7 Purchase
Price.....................................................................21
Section 2.8 Inventory Value
Adjustment.........................................................21
Section 2.9
Closing............................................................................24
Section 2.10 Closing
Deliveries.................................................................24
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
SELLER............................................25
Section 3.1 Organization and
Qualification.....................................................25
Section 3.2
Authority..........................................................................25
Section 3.3 No Conflict; Required Filings and
Consents.........................................26
Section 3.4 Title to Transferred
Assets........................................................27
Section 3.5 Financial
Information..............................................................27
Section 3.6 Absence of Certain Changes or
Events...............................................28
Section 3.7 Compliance with Law;
Permits.......................................................28
Section 3.8
Litigation.........................................................................28
Section 3.9 Employee
Plans.....................................................................29
Section 3.10 Labor and Employment
Matters.......................................................29
Section 3.11 Capital
Expenditures...............................................................30
Section 3.12 Buildings and Lease and Operating
Agreement........................................30
Section 3.13 Intellectual
Property..............................................................30
Section 3.14
Taxes..............................................................................30
Section 3.15 Environmental
Matters..............................................................31
Section 3.16 Material
Contracts.................................................................32
Section 3.17 Customers and
Suppliers............................................................32
Section 3.18
Inventory..........................................................................33
Section 3.19
Brokers............................................................................33
Section 3.20 Sufficiency of
Assets..............................................................33
Section 3.21
Insurance..........................................................................33
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
BUYER.............................................33
Section 4.1
Organization.......................................................................33
Section 4.2
Authority..........................................................................33
Section 4.3 No Conflict; Required Filings and
Consents.........................................34
Section 4.4
Financing..........................................................................34
Section 4.5
Brokers............................................................................35
Section 4.6 Government
Approvals...............................................................35
ARTICLE V
COVENANTS...............................................................................35
Section 5.1 Conduct of Business Prior to the
Closing...........................................35
Section 5.2 Covenants Regarding
Information....................................................36
Section 5.3 Disclosure
Schedules...............................................................38
Section 5.4 Notification of Certain
Matters....................................................38
Section 5.5 Interim Financial
Information......................................................38
Section 5.6 Employee
Benefits..................................................................38
Section 5.7
Confidentiality....................................................................45
Section 5.8 Consents and
Filings...............................................................45
Section 5.9 Bankruptcy Filings and
Agreements..................................................46
Section 5.10 Release of
Guarantees..............................................................48
Section 5.11 Corporate
Name.....................................................................48
Section 5.12 Refunds and
Remittances............................................................48
Section 5.13 No
Solicitation....................................................................49
Section 5.14
Non-Competition....................................................................49
Section 5.15 Bulk Transfer
Laws.................................................................51
Section 5.16 Public
Announcements...............................................................51
Section 5.17 Pro
Rations........................................................................51
Section 5.18 Assignment of Insurance
Proceeds...................................................52
Section 5.19 Further
Assurances.................................................................52
Section 5.20 No Joint
Venture...................................................................52
Section 5.21
Escrow.............................................................................52
Section 5.22 Product Warranty
Claims............................................................53
Section 5.23 Non-Exclusive
Contracts............................................................53
Section 5.24 Parent
Co-Signer...................................................................53
ARTICLE VI TAX
MATTERS.............................................................................54
Section 6.1
VAT................................................................................54
Section 6.2 Other Transfer
Taxes...............................................................55
Section 6.3 Allocation of
Consideration........................................................55
ARTICLE VII CONDITIONS TO
CLOSING...................................................................56
Section 7.1 General
Conditions.................................................................56
Section 7.2 Conditions to Obligations of the
Seller............................................57
Section 7.3 Conditions to Obligations of the
Buyer.............................................58
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ARTICLE VIII
INDEMNIFICATION.........................................................................59
Section 8.1 Survival of Representations, Warranties and
Covenants..............................59
Section 8.2 Indemnification by the
Seller......................................................59
Section 8.3 Indemnification by the
Buyer.......................................................59
Section 8.4
Procedures.........................................................................60
Section 8.5 Limits on
Indemnification..........................................................62
Section 8.6 Assignment of
Claims...............................................................64
Section 8.7
Exclusivity........................................................................64
Section 8.8 No
Duplication.....................................................................65
ARTICLE IX
TERMINATION.............................................................................65
Section 9.1
Termination........................................................................65
Section 9.2 Effect of
Termination..............................................................66
ARTICLE X GENERAL
PROVISIONS......................................................................67
Section 10.1 Fees and
Expenses..................................................................67
Section 10.2 Amendment and
Modification.........................................................67
Section 10.3
Waiver.............................................................................67
Section 10.4
Notices............................................................................67
Section 10.5
Interpretation.....................................................................68
Section 10.6 Entire
Agreement...................................................................69
Section 10.7 No Third-Party
Beneficiaries.......................................................69
Section 10.8 Governing
Law......................................................................69
Section 10.9 Submission to
Jurisdiction.........................................................69
Section 10.10 Exclusivity of Representations and Warranties;
Additional Information..............70
Section 10.11 Personal
Liability.................................................................70
Section 10.12 Assignment;
Successors.............................................................71
Section 10.13
Enforcement........................................................................71
Section 10.14
Currency...........................................................................71
Section 10.15
Severability.......................................................................72
Section 10.16
Counterparts.......................................................................72
Section 10.17 Facsimile
Signature................................................................72
Section 10.18 Time of
Essence....................................................................72
Section 10.19 No Presumption Against Drafting
Party..............................................72
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iii
<PAGE>
LIST OF SCHEDULES
-----------------
Schedule A Ancillary Products
Schedule 1.1(a) Accounting Principles
Schedule 2.1(a) Contracts
Schedule 2.1(e) Tangible Personal Property and Its Location
Schedule 2.1(k) Non-Exclusive Contracts
Schedule 2.2(e) Excluded Names and Marks
Schedule 2.2(j) Employees with Excluded Employment
Agreements
Schedule 2.2(k) Excluded Software and Computer Equipment
Schedule 2.2(s) Excluded Assets
Schedule 2.8(a)(i) Locations for Joint Inventory
Schedule 3.3(a) No Conflicts
Schedule 3.3(b) Filings and Consents
Schedule 3.4 Persons with Title
Schedule 3.5(a) Financial Information
Schedule 3.5(b)-1 Deviations from Accounting Standards
Schedule 3.5(b)-2 Excluded Assets and Liabilities in Financial
Information
Schedule 3.6(a) Non-Ordinary Conduct of Business/No Material
Adverse Effect
Schedule 3.6(b) No Other Significant Changes
Schedule 3.7 Violations of Laws
Schedule 3.7(b) Material Permits
Schedule 3.8-1 Litigation
Schedule 3.8-2 Avoidance Actions
Schedule 3.10 Labor and Employment Matters
Schedule 3.11 Capital Expenditure
iv
<PAGE>
Schedule 3.12(a) Buildings
Schedule 3.12(b) Title to Land
Schedule 3.12(c) Fact and Circumstances Related to Land
Schedule 3.13-1 Registered Intellectual Property
Schedule 3.13-2 Sufficiency of Intellectual Property
Schedule 3.13-3 Intellectual Property Claims
Schedule 3.14 Tax Matters
Schedule 3.15(a) Environmental Matters
Schedule 3.16(a) Material Contracts
Schedule 3.16(b) Validity of Material Contracts
Schedule 3.17 Top Customers and Suppliers
Schedule 3.18 Inventory Locations
Schedule 3.19 Brokers
Schedule 3.20-1 Sufficiency of Assets
Schedule 3.20-2 Encumbrances on Transferred Assets
Schedule 3.21 Insurance
Schedule 4.6 Government Approvals
Schedule 5.1 Interim Operation of Business
Schedule 7.1(c) Filing Jurisdictions
Schedule 7.3(e) Required Consents
LIST OF EXHIBITS
----------------
Exhibit A Form of Bidding Procedures Order
Exhibit B Form of Lease and Operating Agreement
Exhibit C Form of Sale Order
v
<PAGE>
Exhibit D-1A Form of Lease Agreement (LLN Lab)
Exhibit D-1B Form of Services Agreement (LLN Lab)
Exhibit D-2 Form of US Premises Lease and Services Agreement
Exhibit E German Tri-Partite Agreement
Exhibit F Form of Transition Services Agreement
Exhibit G Form of Interim Financial Information
Exhibit H Form of Escrow Agreement
Exhibit I Form of Acknowledgement
vi
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of March 11, 2007 (this
"Agreement"), between SOLUTIA INC., a Delaware corporation (the
"Seller"), and
--------- ------
THERMPHOS TRADING GMBH, a Swiss corporation (the "Buyer"; each
of the Buyer
-----
and the Seller, a "Party" and collectively, the "Parties").
----- -------
Certain capitalized terms shall have the meanings assigned to
them in
Article I.
RECITALS
A. The Seller, through its Dequest(R) division, together
with
certain of its Affiliates, is engaged in the worldwide business
of production
and sale of phosphonates and phosphonate-based specialty
additives and
purchase and resale of the products set forth in Schedule A (the
"Business");
---------- --------
provided, however, that "Business" shall not include the
business of the
-------- -------
Seller and its Affiliates of manufacturing, selling and/or
servicing a series
of products used in aviation and non-aviation hydraulic systems,
equipment and
testing labs, including products that contain phosphorus
derivatives and other
raw materials and are subject to re-formulations as required by
Solutia and
its Affiliates and industry requirements, including the business
conducted by
the Seller and its Affiliates that is currently known as the
"Skydrol
business" (the "Fluids Business").
---------------
B. The Seller filed a voluntary petition for relief under
Chapter 11 of Title 11 of the United States Code, 11 U.S.C.
ss.ss. 101-1532
(the "Bankruptcy Code") in the United States Bankruptcy Court
for the Southern
---------------
District of New York (the "Bankruptcy Court") on December 17,
2003.
----------------
C. The Seller wishes to sell (or cause to be sold) to the
Buyer
or its Affiliates, and the Buyer wishes to purchase (or cause
its Affiliates
to purchase) from the Seller and certain of its Affiliates,
certain assets
that are used exclusively in the Business, and in connection
therewith the
Buyer is willing to assume certain Liabilities (as defined
below) of the
Seller and its Affiliates relating to such assets, all upon the
terms and
subject to the conditions set forth herein, in the Ancillary
Agreements and,
to the extent applicable, in accordance with Sections 105, 363,
365 and 1146
of the Bankruptcy Code (the transactions contemplated by this
Agreement and
the Ancillary Agreements, collectively, the "Transactions").
------------
D. The Transactions are subject to the approval of the
Bankruptcy Court and will be consummated only pursuant to a Sale
Order
(defined below) to be entered in the chapter 11 case pending for
the Seller
and certain of its Debtor Affiliates (as defined below) in the
Bankruptcy
Court (the "Chapter 11 Case") and other applicable provisions of
the
---------------
Bankruptcy Code.
AGREEMENT
In consideration of the foregoing and the mutual covenants
and
agreements herein contained, and intending to be legally bound
hereby, the
Parties agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. For purposes of this
Agreement:
---------------------
"Accounting Principles" means the accounting principles,
---------------------
policies and practices set forth in Schedule 1.1(a) of the
Disclosure
---------------
Schedules.
"Action" means any claim, action, suit or complaint,
------
arbitration or proceeding by or before any Governmental
Authority.
"Affiliate" means, with respect to any Person, any other
---------
Person that directly, or indirectly through one or more
intermediaries,
controls, is controlled by, or is under common control with,
such first
Person.
"Ancillary Agreements" means, collectively, the Bills of
--------------------
Sale, the Assumption Agreements, the Employee Letter, the Lease
and Operating
Agreement, the Lease Agreements, the Transition Services
Agreement, the
Trademark Assignment Agreements, the Patent Assignment
Agreements, the
Premises Lease and Services Agreements and such other documents,
agreements,
deeds, instruments of sale, transfer and conveyance as are
required to be
delivered by a Party pursuant to the terms of this Agreement and
are actually
delivered by such Party.
"Assumption Agreement" means an instrument of assignment and
--------------------
assumption in form and substance reasonably satisfactory to the
Buyer and the
Seller pursuant to which the Seller or a Transferring Affiliate,
as the case
may be, shall assign to the Buyer and/or its Affiliates
Transferred Assets and
the Buyer and/or its Affiliates shall assume as of the Closing
Time the
Assumed Liabilities, including, in the case of the Assumed
Liabilities to be
assigned by Solutia Italy, the Italian Notarial Deed.
"Avoidance Actions" means all avoidance claims or other
-----------------
causes of action, whether arising under the Bankruptcy Code or
otherwise, and
the proceeds thereof, which are available to the Seller and the
Debtor
Affiliates under Section 510 or under Sections 542 through 553
of the
Bankruptcy Code, of whatever kind or nature, and whether
asserted or
unasserted.
"Bidding Procedures Order" means an order containing bidding
------------------------
procedures substantially similar to the bidding procedures set
forth in
Exhibit A hereto or such other form of order as is reasonably
acceptable to
---------
the Parties.
"Bill of Sale" means a bill of sale and transfer agreement
------------
in form and substance reasonably satisfactory to the Buyer and
the Seller
transferring to the Buyer and/or its Affiliates all of the
tangible personal
property owned or held by the Seller and/or its Affiliates as of
the Closing
Date that is included in the Transferred Assets, including in
the case of the
European Business Employee employed by Solutia Italy and the
Transferred
Assets to be transferred by Solutia Italy, the Italian Notarial
Deed.
2
<PAGE>
"Business Day" means any day that is not a Saturday, a
------------
Sunday or other day on which banks are required or authorized by
Law to be
closed in The City of New York, New York, US or in London,
United Kingdom.
"Business Employees" means all individuals employed by the
------------------
Seller or any of its Affiliates immediately prior to the Closing
Date
primarily in connection with the Business (including (a) those
on military
leave and family and medical leave, (b) those on approved leaves
of absence,
but only to the extent they have reemployment or continued
employment rights
guaranteed under applicable Law, under any applicable collective
bargaining
agreement or under any leave of absence policy of the Seller
and/or its
Affiliates and (c) those on short-term disability under any
short-term
disability program of the Seller or its Affiliates), whose
duties relate
primarily to the operations of the Business regardless of the
company payroll
on which such individuals are listed.
"Business Intellectual Property" means all Intellectual
------------------------------
Property owned by the Seller and its Affiliates that is used or
held for use
exclusively in the Business.
"Buyer Entity" means the Buyer or an Affiliate of the Buyer
------------
that will be a party to an Ancillary Agreement and "Buyer
Entities" shall mean
--------------
the Buyer and all such Affiliates collectively. For the
avoidance of doubt,
the Parent shall be a party to this Agreement and all Ancillary
Agreements.
"Buyer Environmental Liability" means any Environmental
-----------------------------
Liability (a) to the extent attributable or relating to,
resulting from or
caused by (i) any condition of soil, surface water or
groundwater
contamination first caused or occurring on or after the Closing
Time at,
beneath, or emanating from the Facility or the Transferred
Assets or (ii) any
violation of regulatory requirements under Environmental Laws
first caused or
occurring at the Facility or with respect to the operation of
the Business
after to the Closing Time, except in each case to the extent
that the facts or
conditions underlying such Environmental Liability are caused or
exacerbated
as a result of the willful misconduct of the Operator, its
officers,
directors, employees or agents, or (b) arising from any Buyer
Exacerbation.
"Buyer Exacerbation" means any act or omission by or on
------------------
behalf of the Buyer, its Affiliates, officers, directors,
employees or agents
(including any disclosure made to any Governmental Authority or
other third
party of any fact or condition relating to a Seller
Environmental Liability
without the prior written consent of the Seller, other than any
such
disclosure which is required by Environmental Laws).
"Buyer Material Adverse Effect" means any event, change,
-----------------------------
circumstance, effect or state of facts that is materially
adverse to the
ability of any Buyer Entity to perform its obligations under
this Agreement or
any Ancillary Agreement to which such Buyer Entity is or will be
a party or to
consummate the Transactions.
"Closing Time" means 11:59 a.m. on the Closing Date in The
------------
City of New York, New York, US.
"Code" means the Internal Revenue Code of 1986, as amended
----
through the date hereof.
3
<PAGE>
"COMAH Requirements" means the requirements, procedures,
------------------
policies and systems detailed in Solutia UK's "Site Procedure
COMAH Safety
Report" dated July 15, 2005 and all Appendices to it along with
any other
requirements, procedures, policies and systems needed in order
to comply with
the Operator's duties under the Control of Major Accident
Hazards Regulations
1999 (COMAH) as amended by the Control of Major Accident Hazards
(Amendment)
Regulations 2005.
"Competing Transaction" means the sale of the Business other
---------------------
than pursuant to the Transactions, for a purchase price with a
value equal to
or greater than an amount equal to the sum of the Base Purchase
Price, plus
Minimum Overbid Increment (as defined in the Bidding Procedures
Order, plus
Expense Reimbursement).
"Consent" means license, notice, authorization, approval,
-------
Order, permit, waiver or consent.
"Contracts" means contracts, agreements, lease agreements,
---------
settlement agreements (to the extent transferable, with Persons
other than
Governmental Authorities), purchase orders, binding commitments,
instruments
of transfer and license agreements.
"control", including the terms "controlled by" and "under
------- ------------- -----
common control with", means the possession, directly or
indirectly, of the
-------------------
power to direct or cause the direction of the management and
policies of a
Person, whether through the ownership of voting securities, as
trustee or
executor, as general partner or managing member, by contract or
otherwise.
"Cure Costs" means amounts that must be paid and obligations
----------
that otherwise must be satisfied, including pursuant to Sections
365(b)(1)(A)
and (B) of the Bankruptcy Code, in connection with the
assumption and/or
assignment of the US Contracts.
"Debtor Affiliate" means a Transaction Affiliate that is a
----------------
debtor in the Chapter 11 Case.
"Defective Inventory" means "Defective Inventory" as defined
-------------------
in the Accounting Principles.
"DIP Agreement" means that certain debtor in possession
-------------
Financing Agreement, dated as of January 16, 2004, between and
among the
Seller and its Debtor Affiliates, certain lenders and Citicorp
USA, Inc. as
collateral agent, administrative agent and documentation agent
and documents
executed in connection therewith (each as may be amended,
restated or
otherwise modified from time to time in connection
therewith).
"Directive" means EC Acquired Rights Directive 2001/23/EC of
---------
12 March 2001 and any Law implementing such Directive in any
relevant
jurisdiction (as applicable).
"Employee Affiliate" means an Affiliate of the Seller that
------------------
employs any Business Employee.
"Employee Letter" means that certain letter dated as of the
---------------
date hereof between the Seller and the Buyer with respect to
certain Business
Employee related matters.
4
<PAGE>
"Employee Plans" means all "employee benefit plans" within
--------------
the meaning of Section 3(3) of ERISA, all formal written plans
and all other
compensation and benefit plans, contracts, policies, programs
and arrangements
of the Seller and its Employee Affiliates (other than routine
administrative
procedures) in connection with the Business in effect as of the
date hereof,
including all pension, profit sharing, savings and thrift,
bonus, stock bonus,
stock option or other cash or equity-based incentive or deferred
compensation,
severance pay and medical and life insurance plans in which any
of the
Business Employees or their dependents participate.
"Encumbrance" means any charge, claim, mortgage, lien,
-----------
option, pledge, security interest, lease, levy, right of first
refusal, right
of first offer, restriction on voting or transfer or other
restriction of any
kind.
"Environmental Claim" means any civil, criminal, regulatory,
-------------------
administrative or judicial claim or other proceeding by any
Governmental
Authority or any Person arising out of or regarding any
Environmental
Liability.
"Environmental Laws" means any Laws of any Governmental
------------------
Authority as enacted and in effect at the relevant time,
including, in each
case to the extent having a force of Law, codes of practice,
circulars or
guidance notes or requirements of any Governmental Authority,
relating to
pollution or protection of the environment or concerning public
health or
safety or workplace safety or health.
"Environmental Liability" means any liability (contingent or
-----------------------
otherwise and including liability for response costs, personal
injury,
property damage or natural resource damage or damage to the
environment) or
investigatory or corrective obligation or Remedial Action which
arises under
or relates to any Environmental Laws, including, without
limitation, those
relating to (a) violations of, or noncompliance with,
Environmental Laws; or
(b) the handling, treatment, storage, disposal, arrangement for
disposal,
release or threatened release of hazardous materials, substances
or wastes.
"Environmental Permits" means all Permits required under any
---------------------
Environmental Law in connection with the Business, its
operations and the
Transferred Assets.
"ERISA" means the U.S. Employee Retirement Income Security
-----
Act of 1974, as amended.
"Escrow Agent" means The Bank of New York.
------------
"Escrow Agreement" means the Escrow Agreement substantially
----------------
in the form of Exhibit H.
---------
"Escrow Amount" means US$2,500,000.
-------------
"Euro Financing Documents" means the Euro 200 million
------------------------
Facility Agreement dated as of July 26, 2006 among SESA, Solutia
Services
International S.C.A./ Comm. V.A., as Borrower, the companies
listed in Part I
of Schedule 1 thereto, as Original Guarantors, Citigroup Global
Markets
Limited, as Arranger, the financial institutions listed on Part
II of Schedule
1 thereto, as Original Lenders, Citibank International PLC, as
Agent and
Citicorp Trustee
5
<PAGE>
Company Limited, as Security Agent, and all documents executed
in connection
therewith (as the same may be amended, restated or otherwise
modified from
time to time in accordance with the terms thereof).
"European Business Employees" means the Business Employees
---------------------------
(other than any Newport Employees) employed by SESA, Solutia
France, Solutia
Germany, Solutia Italia and Solutia UK.
"Facility" shall have the meaning assigned to such term in
--------
the Lease and Operating Agreement, provided that for purposes of
this
Agreement, the term "Facility" shall exclude the Excluded
Assets.
"Final Inventory Adjustment Amount" means an amount equal to
---------------------------------
(i) the Final Inventory Value minus (ii) the Pre-Closing
Inventory Value.
"Final Inventory Statement" means the statement that sets
-------------------------
forth the Inventory Value as of the Closing Time, prepared by
the Seller in
accordance with Section 2.8(b) and, in the event that the Buyer
delivers a
Notice of Disagreement in accordance with Section 2.8(b)(ii), as
adjusted by
agreement of the Buyer and the Seller, or by the Independent
Accounting Firm,
acting pursuant to Section 2.8(c).
"Final Inventory Value" means the Inventory Value shown on
---------------------
the Final Inventory Statement.
"Final Order" means an order or judgment of the Bankruptcy
-----------
Court, or other court of competent jurisdiction, as entered on
the docket in
the Chapter 11 Case or the docket of any other court of
competent
jurisdiction, which has not been reversed, stayed, modified or
amended, and as
to which the time to appeal or seek certiorari has expired, and
no appeal or
petition for certiorari has been timely taken, or as to which
any appeal that
has been taken or any petition for certiorari that has been
timely filed has
been resolved by the highest court to which the order or
judgment was appealed
or from which certiorari was sought; provided that any order
including a
--------
waiver of the provisions of Bankruptcy Rule 6004(g) shall
constitute a Final
Order.
"Governmental Authority" means any international, European
----------------------
Union, supra-national, national, federal, state or local
government,
governmental or administrative authority, court, arbitration
tribunal, agency,
bureau, works council or commission or other authority thereof,
or any
quasi-governmental regulatory, administrative or other
governmental or other
or quasi-governmental authority.
"Intellectual Property" means (i) trade names, trademarks
---------------------
and service marks, domain names, trade dress and similar rights
and pending
applications to register any of the foregoing, together with the
goodwill
associated therewith, (ii) patents and pending patent
applications, (iii)
copyrights (whether registered or unregistered) and pending
applications for
registration, including copyrights that protect computer
software, data and
documentation, product drawings, training materials, catalogs
and other
advertising or promotional materials, (iv) confidential and
proprietary
information, including trade secrets, specifications,
inventions, know-how,
financial, business and marketing plans, broker, customer and
supplier lists
and (v) mask works.
6
<PAGE>
"Interim Financial Information" means, with respect to any
-----------------------------
fiscal month of the Seller, the unaudited balance sheet and the
statements of
income and cash flow of the Business for such fiscal month, in
each case
substantially in the form of Exhibit G hereto and containing the
information
---------
of the type set forth on Exhibit G hereto.
---------
"Inventory Value" means the value of the Inventory
---------------
determined in accordance with the Accounting Principles.
"IRS" means the Internal Revenue Service of the United
---
States.
"Italian Notarial Deed" means a notarial deed with respect
---------------------
to the transfer of Transferred Assets held by Solutia Italy and
a certain
employee of Solutia Italy to an Affiliate of the Buyer and the
assumption of
Assumed Liabilities by such Affiliate, in form and substance
reasonably
satisfactory to the Buyer and the Seller.
"Knowledge" means, with respect to the Seller, the actual
---------
(but not constructive or imputed) knowledge, after reasonable
investigation,
of Charles M. Weidhas, General Manager, Specialty Products;
Bradley M.
Allbritten, Vice President, Human Resources; Steve A. Burges,
ESH and
engineering lead; Max W. McCombs, Vice President, ES & H;
Kristel Deroover,
Chief Legal Counsel-Europe; Steve Knight, Dequest Business unit
lead; and
Steve N. Westhead, Newport plant manager, as of the date of this
Agreement
(or, with respect to a certificate delivered pursuant to this
Agreement, as of
the date of delivery of such certificate).
"Land" means the parcels of land, including land over which
----
easements and rights are granted to the Buyer or one of its
Affiliates, at the
Chemical Works, Corporation Road, Newport, United Kingdom, that
are the
subject of the Lease Agreements (other than the Shared Access
Agreement, if
any).
"Law" means any statute, law (including common law),
---
ordinance, regulation, rule, code, directive or Order of any
Governmental
Authority.
"Lease Agreement" means any of lease agreements to be
---------------
entered into with respect to the Land between the Buyer or one
or more of its
Affiliates and Solutia UK, substantially in the form of Exhibit
D to the Lease
and Operating Agreement or the Shared Access Agreement.
"Lease and Operating Agreement" means the Lease and
-----------------------------
Operating Agreement between Solutia UK and the Buyer or one of
its Affiliates
substantially in the form of Exhibit B hereto.
---------
"Liability" means any liability or obligation, whether known
---------
or unknown, whether asserted or unasserted, whether absolute or
contingent,
whether accrued or unaccrued, whether liquidated or
unliquidated, whether
incurred or consequential and whether due or to become due.
"LIBOR Rate" means, as of a determination date, the rate per
----------
annum for such date for deposits in US Dollars for three (3)
months for
amounts payable pursuant to Section 2.8(d) equal to the average
of the
respective rates per annum for such date (rounded upward to the
next whole
multiple of 1/100th of 1%) as fixed at 11:00 a.m. London time on
the date of
7
<PAGE>
determination by the British Bankers Association displayed on
the Bloomberg
Marketing Screen, page 122, or such other page as may replace
such page on
such service for the purposes of displaying the London interbank
offer rate of
major banks for deposits in U.S. Dollars for three (3) months
comparable to
the amount payable pursuant to Section 2.8(d) (calculated on the
basis of the
actual number of days elapsed in a year of 365 or 366 days, as
the case may
be).
"LLN Lab Lease and Services Agreements" means the Lease
-------------------------------------
Agreement (LLN Lab) and the Services Agreement (LLN Lab) to be
entered into
between the Buyer or one of its Affiliates and SESA,
substantially in the form
of Exhibits D-1A and D-1B.
------------- ----
"Material Adverse Effect" or "Material Adverse Change" means
----------------------- -----------------------
any event, change, circumstance, effect or state of facts that
is materially
adverse to, or which individually or in the aggregate would
reasonably be
expected to result in any change, circumstance, effect or state
of facts that
is materially adverse to, (i) the business, financial condition,
results of
operations or operation of the Business, Transferred Assets and
Assumed
Liabilities, in all cases taken as a whole or (ii) the ability
of the Seller
and the Transaction Affiliates to perform their respective
obligations under
this Agreement or the Ancillary Agreements to which the Seller
or any of the
Transaction Affiliates will be a party or to consummate the
Transactions;
provided, however, that "Material Adverse Effect" and "Material
Adverse
-------- -------
Change" shall not include the effect of any circumstance,
change, development,
event or state of facts arising out of or attributable to any of
the
following, either alone or in combination: (1) the markets in
which the
Business or the Seller or any of its Affiliates operates
generally, (2)
general economic or political conditions (including those
affecting the
securities markets), (3) the announcement or disclosure of this
Agreement or
of the consummation of the Transactions, (4) acts of war
(whether or not
declared), sabotage or terrorism, military actions or the
escalation thereof
or other force majeure events occurring after the date hereof or
(5) any
changes in applicable Laws or accounting rules, or the
authoritative
interpretations thereof or in regulatory guidance related
thereto.
"Microsoft Enterprise Agreement" means Microsoft Enterprise
------------------------------
Agreement, Number OIE50326 between SOI and MLSI, GP, dated
December 5, 2000.
"Microsoft Licenses" means Desktop Professional licenses
------------------
licensed to the Seller and its Affiliates pursuant to the
Microsoft Enterprise
Agreement and subject to terms and conditions set forth
therein.
"Newport Employees" means employees employed by Solutia UK
-----------------
primarily at the Facility, but in all events excluding the
individual
identified on Schedule 3 to the Employee Letter.
"Newport Site" means the geographic location as identified
------------
in Schedule 1.3 to the Lease and Operating Agreement.
"Normalized Working Capital" means US$19,286,000.
--------------------------
"Operator" means Solutia UK as "Operator" under the Lease
--------
and Operating Agreement.
8
<PAGE>
"Order" means any judgment, writ, decree, injunction, order
-----
of any Governmental Authority or any compliance or settlement
agreement with
any Governmental Authority.
"Ordinary Course of Business" means the ordinary course of
---------------------------
business of the Seller Entities with respect to the Business
that is
materially consistent with past practices of the applicable
Seller Entities.
"Parent" means Thermphos International B.V.
------
"Patent Assignment Agreement" means a Patent Assignment
---------------------------
Agreement between the Seller or one of the Transferring
Affiliates and the
Buyer or one or more of its Affiliates in form and substance
reasonably
satisfactory to the Seller and the Buyer.
"Permit" means any permit, license, franchise, approval,
------
certificate, consent, waiver, concession, exemption, variance,
order,
registration, filing, notice or other authorization of any
Governmental
Authority necessary for the Seller and the Transaction
Affiliates to own,
lease and operate the Transferred Assets and to carry on the
Business as
currently conducted.
"Permitted Encumbrance" means (a) statutory liens for
---------------------
current Taxes not yet due or delinquent (or which may be paid
without interest
or penalties) or the validity or amount of which is being
contested in good
faith by appropriate proceedings, (b) mechanics', carriers',
workers',
repairers' and other similar liens arising or incurred in the
Ordinary Course
of Business relating to obligations of the Seller or any of its
Affiliates
that are not past due, or the validity or amount of which is
being contested
in good faith by appropriate proceedings, or pledges, deposits
or other liens
securing the performance of bids, trade contracts, leases or
statutory
obligations (including workers' compensation, unemployment
insurance or other
social security legislation), (c) zoning, entitlement,
conservation
restriction and other land use and environmental regulations by
Governmental
Authorities applicable to the Business, the Transferred Assets,
the Land or
the premises subject to any Premises Lease and Services
Agreement, (d)
easements, covenants, rights-of-way and other similar
restrictions of record,
(e) any conditions that may be shown by a current, accurate
survey of any
Building which has heretofore been provided by the Seller to the
Buyer, and
(f) all exceptions, restrictions, easements, imperfections of
title, charges,
rights-of-way and other Encumbrances that do not, and would not
reasonably be
expected to, materially interfere with the present use of the
Transferred
Assets in the Business taken as a whole.
"Person" means an individual, corporation, partnership,
------
limited liability company, limited liability partnership, joint
venture,
syndicate, person, trust, incorporated or unincorporated
association or
organization or other entity, including any Governmental
Authority, and
including any successor, by merger or otherwise, of any of the
foregoing.
"PPC Permit" means the permit and all schedules to it issued
----------
under Regulation 10 of the Pollution Prevention and Control
Regulations (2000)
by the Environmental Agency under permit number BR9715 to
Solutia UK for the
Newport Chemical Complex at Corporation Road, Newport Gwent
dated January 1,
2004.
9
<PAGE>
"Pre-Closing Inventory Statement" means the statement that
-------------------------------
sets forth the Seller's estimate of the Inventory Value as of
immediately
prior to the Closing Time, prepared by the Seller in accordance
with Section
2.8(a).
"Pre-Closing Inventory Value" means the Inventory Value
---------------------------
shown on the Pre-Closing Inventory Value Statement.
"Pre-Closing Offsite Disposal" means any offsite disposal of
----------------------------
hazardous materials, or of any substances or wastes generated at
or upon the
Facility occurring prior to the Closing Time.
"Pre-Closing Onsite Contamination" means (a) any condition
--------------------------------
of soil, surface water or groundwater contamination in existence
as of the
Closing Time at, beneath, or emanating from, the Facility, (b)
any additional
contamination arising from passive migration of any such
condition after the
Closing Time, or (c) any additional contamination arising from
any
continuation of any ongoing releases of hazardous materials,
substances or
wastes which materials, substances or wastes were present and
which release
commenced prior to the Closing Time. For the avoidance of doubt,
Pre-Closing
Onsite Contamination shall not include any conditions of
contamination to the
extent arising from any Buyer Exacerbation.
"Pre-Closing Regulatory Violation" means any violation of
--------------------------------
regulatory requirements under Environmental Laws occurring or in
existence at
the Facility prior to the Closing Time, including without
limitation any
post-Closing continuation of any such pre-Closing violation. For
the avoidance
of doubt, Pre-Closing Regulatory Violation shall not include any
such
violation to the extent arising from any Buyer Exacerbation.
"Premises Lease and Services Agreements" means (i) the LLN
--------------------------------------
Lab Lease and Services Agreements and (ii) the US Lease and
Services Agreement
to be entered into by the Buyer and the Seller, substantially in
the form of
Exhibit D-2 hereto.
-----------
"Remedial Action" means any investigation, feasibility
---------------
study, monitoring, testing, sampling, removal (including removal
of
underground storage tanks), restoration, clean-up, remediation,
corrective
action, closure, site restoration, remedial response or remedial
work.
"Representatives" means, with respect to any Person, the
---------------
officers, directors, employees, agents, accountants, advisors,
bankers and
other representatives of such Person.
"Return" means any return, declaration, report, statement,
------
information statement and other document required to be filed
with respect to
Taxes.
"Sale Order" means an order entered by the Bankruptcy Court
----------
substantially in the form attached as Exhibit C hereto or such
other form of
---------
order as is reasonably acceptable to the Parties.
"Seller Entity" means the Seller or any Transaction
-------------
Affiliate and "Seller Entities" means, collectively, the Seller
and the
---------------
Transaction Affiliates.
10
<PAGE>
"Seller Environmental Liability" means any Environmental
------------------------------
Liability to the extent attributable or relating to, resulting
from, or caused
by any (a) Pre-Closing Onsite Contamination, (b) Pre-Closing
Offsite Disposal
or (c) Pre-Closing Regulatory Violation, except in each case to
the extent the
facts or conditions underlying such Environmental Liability are
exacerbated by
any Buyer Exacerbation.
"SESA" means Solutia Europe S.A./N.V., a company organized
----
under the laws of the Kingdom of Belgium.
"Shared Access Agreement" means that certain Shared Access
-----------------------
Agreement between Solutia UK and the Buyer or one of its
Affiliates,
substantially in the form of Exhibit D to the Lease and
Operating Agreement.
"Solutia France" means Solutia Chemicals France SARL, a
--------------
company organized under the laws of the Republic of France.
"Solutia Germany" means Solutia Deutschland GmbH, a company
---------------
organized under the laws of the Republic of Germany.
"Solutia Italy" means Solutia Italia Srl, a company
organized
-------------
under the laws of the Republic of Italy.
"Solutia UK" means Solutia UK Limited, a company organized
----------
under the laws of England and Wales.
"Subsidiary" means a Person (other than an individual) of
----------
which another Person owns or controls directly or indirectly
more than 50% of
the stock, capital or other equity interests or more than 50% of
the voting
power providing the holders thereof, ordinarily and generally in
the absence
of contingencies, the right to vote for the election of
directors, managers or
Persons having similar rights and duties.
"Taxes" means any and all of the following imposed by any
-----
Governmental Authority: (i) taxes of any kind, including taxes
based on gross
receipts, franchise, estimated, alternative minimum, add-on
minimum, sales,
use, transfer, real property gains, registration, value added,
excise, natural
resources, severance, stamp, occupation, windfall profits,
environmental
(under Section 59A of the Code), customs, duties, real property,
personal
property or capital stock, (ii) social security, national
insurance,
unemployment, disability, payroll, license, employee or other
withholding and
related contributions due in relation to the payment of
compensation to
employees and (iii) any and all interest, penalties, additions
to tax and
additional amounts imposed with respect thereto.
"Trademark Assignment Agreement" means a Trademark
------------------------------
Assignment Agreement between the Seller or one of the
Transferring Affiliates
and the Buyer and/or one or more of its Affiliates in form and
substance
reasonably satisfactory to the Seller and the Buyer.
"Transaction Affiliate" means an Affiliate of the Seller
---------------------
that is a Transferring Affiliate and/or an Employee
Affiliate.
11
<PAGE>
"Transferring Affiliate" means an Affiliate of the Seller
----------------------
that will be transferring Transferred Assets pursuant to this
Agreement.
"Transition Services Agreement" means a transition services
-----------------------------
agreement substantially in the form attached hereto as Exhibit F
hereto.
----------------
"US" means the United States of America.
--
"US Business Employee" means any Business Employee employed
--------------------
in the US.
"US Contract" means a Contract to which the Seller or any
-----------
Debtor Affiliate is a party and that is (i) a Transferred Asset
and (ii) an
executory contract within the meaning of Section 365 of the
Bankruptcy Code.
"US GAAP" means United States generally accepted accounting
-------
principles as in effect on the date hereof.
"US Intellectual Property" means Business Intellectual
------------------------
Property of the Seller or any Debtor Affiliate.
"VAT" means any value added tax, including but not limited
---
to the goods and services taxes in Australia, Canada and
Singapore and
consumption taxes in Japan.
Section 1.2 Table of Definitions. The following terms have
the
--------------------
meanings set forth in the Sections referenced below:
Definition Location
---------- --------
Acknowledgement.........................Section 5.23(a)
Acquired Entity.........................Section 5.14(b)(i)
Agreement...............................Preamble
Allocation Statement....................Section 6.3(a)
Arrangements............................Section 5.23(a)
Assumed Liabilities.....................Section 2.3
Bankruptcy Code.........................Recitals
Bankruptcy Court........................Recitals
Base Purchase Price.....................Section 2.7
Basket Amount...........................Section 8.5(b)(ii)
Books and Records.......................Section 2.1(h)
Break-Up Fee............................Section 5.9(c)(i)
Buildings...............................Section 2.1(b)
Business................................Recitals
Business Contracts......................Section 2.1(a)
Business Permits........................Section 2.1(g)
Buyer...................................Preamble
Buyer Indemnified Parties...............Section 8.2
Cap.....................................Section 8.5(b)(i)
Chapter 11 Case.........................Recitals
12
<PAGE>
Definition Location
---------- --------
Closing.................................Section 2.9
Closing Date............................Section 2.9
Closing Time Receivables................Section 5.12(b)
COBRA Coverage..........................Section 5.6(b)(iii)
Competing Business......................Section 5.14(a)
Confidentiality Agreement...............Section 5.7(a)
De Minimis Business.....................Section 5.14(g)
Disclosing Party........................Section 2.8(c)
Disclosure Schedules....................Article III
Disputed Items..........................Section 2.8(c)
Dollar Equivalent.......................Section 10.14(b)
dollars, $, US$, US Dollars.............Section 10.14(a)
Escrow Fund.............................Section 5.21(a)
Escrow Termination Date.................Section 5.21(a)
Estimated Purchase Price................Section 2.8(a)(iii)
Excluded Assets.........................Section 2.2
Excluded Claims Rights..................Section 2.1(j)
Excluded Inventory......................Section 2.3(e)
Excluded Liabilities....................Section 2.4
Excluded Receivables....................Section 2.2(v)
Expense Reimbursement...................Section 5.9(c)(ii)
Financial Information...................Section 3.5(a)
Fluids Business.........................Recitals
Guarantee...............................Section 5.24
Guarantees..............................Section 5.10
HSR Act.................................Section 3.3(b)
Indemnified Party.......................Section 8.4(a)
Indemnifying Party......................Section 8.4(a)
Independent Accounting Firm.............Section 2.8(c)
Inventory...............................Section 2.1(f)
Losses..................................Section 8.2
Material Contracts......................Section 3.16(a)
Names...................................Section 5.11
New Plans...............................Section 5.6(b)(iv)
Non-Exclusive Contracts.................Section 2.1(k)
Non-Exclusive Interests.................Section 2.1(k)
Notice of Disagreement..................Section 2.8(b)(ii)
Old Plans...............................Section 5.6(d)
Party, Parties..........................Preamble
Past Service Credit.....................Section 5.6(b)(iv)
Pension Plans...........................Section 5.6(b)(i)
Potential Contributor...................Section 8.6
Proprietary Information.................Section 5.7(b)
Purchase Price..........................Section 2.7
Receivables Finalization Date...........Section 5.12(b)
13
<PAGE>
Definition Location
---------- --------
Replacement Agreement...................Section 5.23(a)
Restricted Entities.....................Section 5.14(a)
Seller..................................Preamble
Seller Indemnified Parties..............Section 8.3
Seller Plan.............................Section 5.6(b)(i)
Special Provisions Order................Section 6.1(b)
Specified Excluded Liabilities..........Section 2.4
Tangible Personal Property..............Section 2.1(e)
Termination Date........................Section 9.1(c)
Third Party Claim.......................Section 8.4(a)
Transactions............................Recitals
Transfer Taxes..........................Section 6.2
Transferred Assets......................Section 2.1
Transferred Employee....................Section 5.6(a)(i)
Transferred Microsoft Licenses..........Section 2.1(l)
TUPE....................................Section
5.6(a)(ii)(4)
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and Sale of Assets. Pursuant to Sections
363 and
---------------------------
365 of the Bankruptcy Code, the Sale Order and any other orders
of the
Bankruptcy Court pertaining to the Transactions (provided that
such Orders
--------
conform to the provisions of this Agreement and the Lease and
Operating
Agreement), upon the terms and subject to the conditions of this
Agreement, at
the Closing, the Seller shall, and shall cause its applicable
Affiliates to,
sell, assign, transfer, convey and deliver to the Buyer (or such
of its
Affiliates as the Buyer may direct), free and clear of all
Encumbrances (other
than Permitted Encumbrances), all of the Seller's and such
Affiliates' rights,
title and interest as of the Closing Time in and to the
Transferred Assets and
the Buyer shall (or shall procure that its relevant Affiliates
shall)
purchase, acquire, accept and pay for the Transferred Assets and
assume the
Assumed Liabilities. "Transferred Assets" shall mean the rights,
title and
------------------
interest of the Seller and its Affiliates in and to the assets,
buildings,
properties and rights (wherever located, including in transit to
the Seller
and its Affiliates), whether tangible or intangible, used or
held for use
(except for assets described in Section 2.1(k) and Section
2.1(l)) exclusively
in the Business (other than the Excluded Assets), as they exist
at the Closing
Time, as set forth below:
(a) all Contracts to which the Seller or any of its
Affiliates is a party or by which the Seller or any of its
Affiliates is bound
that relate exclusively to the Business (the "Business
Contracts"), including
------------------
all Contracts listed in Schedule 2.1(a) of the Disclosure
Schedules;
---------------
(b) the Seller's right, title and interest in and to (i) the
structures, facilities or improvements located at the Newport
Site and (ii)
all utility, pipe and service lines and related facilities
servicing or used
in connection with operation on land at the Facility within the
battery limit
of the Facility but, in each of clauses (i) and (ii) above, only
if used or
held for use
14
<PAGE>
exclusively in the operation of the Business at the Newport Site
and set forth
in Schedule 3.12(a) of the Disclosure Schedules (the
"Buildings"); provided
---------------- --------- --------
that the Buildings transferred shall not extend below the top
layer of soil of
the Land and shall comprise only the relevant above-ground
structure, facility
or improvement (as appropriate) and the Seller shall retain all
right, title
and interest in the Land and the property, structures,
facilities or
improvements below the top layer of soil of the Land;
(c) all Business Intellectual Property;
(d) subject to Section 5.18, the net proceeds of insurance
policies (other than proceeds of insurance provided by any
Affiliate of the
Seller, any captive insurer or any self-insurance program) to
which the Seller
or any of its Affiliates would otherwise be entitled with
respect to any
material tangible Transferred Asset that has been lost or
damaged during the
period commencing on the date hereof and ending on the Closing
Date, that, and
to the extent that, the Seller shall not have repaired or
replaced on or prior
to the Closing Date;
(e) all machinery, equipment, furniture, furnishings, parts,
spare parts, vehicles, trailers and rolling stock and other
tangible personal
property owned by the Seller and its Affiliates which is used or
held for use
exclusively in the operation of the Business at the Newport Site
and other
locations set forth in Schedule 2.1(e) of the Disclosure
Schedules (the
---------------
"Tangible Personal Property"), including any of the foregoing
listed in
--------------------------
Schedule 2.1(e) of the Disclosure Schedules;
---------------
(f) all raw materials, work-in-progress, finished goods,
supplies, packaging materials and other inventories owned by the
Seller and
its Affiliates and used or held for use exclusively in the
operation of the
Business (the "Inventory");
---------
(g) all Permits used or held for use by the Seller and its
Affiliates exclusively in the operation of the Business but only
if
transferable or assignable and/or not required to be retained by
the Seller or
any of its Affiliates to enable the Seller or any of its
Affiliates to comply
with their obligations under any Ancillary Agreement or
otherwise under any
applicable Law (the "Business Permits");
----------------
(h) subject to Section 6.1(h), all books of account,
general, financial, accounting and personnel records, files,
invoices,
customers' and suppliers' lists, other distribution lists,
billing records,
sales and promotional literature, manuals and customer and
supplier
correspondence owned by and in the possession of the Seller and
its Affiliates
relating exclusively to the Business (the "Books and
Records");
-----------------
(i) all credits, prepaid expenses, security deposits to the
extent relating exclusively to the Business, and all prepayments
or deposits
in respect of orders or product to be shipped after the
Closing;
(j) all rights to causes of action, lawsuits, judgments,
claims and demands of any nature in favor of the Seller and its
Affiliates
(but excluding, in the case of the Seller and the Debtor
Affiliates, any
Avoidance Actions) to the extent relating exclusively to the
Business or the
assets described in clauses (a) through (i) above, including all
rights under
all third-party guarantees, warranties, indemnities and similar
rights as to
third parties held by or in favor of the
15
<PAGE>
Seller and its Affiliates to the extent relating exclusively to
the Business,
except (x) to the extent any such rights are related to any
Excluded Assets or
relate to any Liability of the Seller or any of its Affiliates
that is not an
Assumed Liability and (y) for any rights of the Seller or any of
its
Affiliates to proceeds of any insurance policy other than those
described in
Section 2.1(d) (the rights described in clause (x) and (y), the
"Excluded
--------
Claims Rights");
-------------
(k) subject to Section 5.23, all rights, title and interest
of the Seller and its Affiliates in agreements set forth on
Schedule 2.1(k)
---------------
(the "Non-Exclusive Contracts") solely to the extent such
agreements are
-----------------------
related to the Business (such right, title and interest, the
"Non-Exclusive
-------------
Interests"); and
---------
(l) a number of Microsoft Licenses equal to the number of
Transferred Employees; provided that the Buyer or its Affiliate
to which such
licenses are transferred shall have accepted in writing, in form
reasonably
acceptable to the Seller and the Buyer, the applicable product
use rights, use
restrictions and limitations of liability set forth in the
Microsoft
Enterprise Agreement ("the "Transferred Microsoft
Licenses").
------------------------------
Section 2.2 Excluded Assets. Notwithstanding anything
contained
---------------
in Section 2.1 to the contrary, the Seller is not selling,
transferring or
causing to be sold or transferred, and the Buyer is not
purchasing or
receiving, any assets other than those specifically listed or
described in
Section 2.1, and without limiting the generality of the
foregoing, the term
"Transferred Assets" (including all assets listed in clauses (a)
through (j)
of Section 2.1) shall expressly exclude the following assets of
the Seller and
its Affiliates, all of which shall be retained by the Seller and
its
Affiliates, as the case may be (collectively, the "Excluded
Assets"):
---------------
(a) all of the cash and cash equivalents of the Seller and
its Affiliates;
(b) the Land;
(c) originals of the corporate books and records, records of
internal corporate proceedings, tax records, work papers and
books and records
of the Seller and its Affiliates that the Seller or any of its
Affiliates is
required by Law to retain; provided that copies of all such
Books and Records
--------
described in Section 2.1(h) shall be made available to the Buyer
as set forth
in Sections 5.2(c) and 6.1(h);
(d) subject to Sections 5.2(d) and 6.1(h), all records that
would otherwise constitute Books and Records, including
accounting records
(including records relating to Taxes) and internal reports
relating to the
business activities of the Seller or any of its Affiliates but
that are not
exclusively used in the Business;
(e) all rights in the names and marks, and any variation or
derivation thereof, set forth in Schedule 2.2(e);
---------------
(f) all of the bank accounts of the Seller and its
Affiliates;
(g) any interest in or right to any refund of Taxes relating
to the Business, the Transferred Assets or the Assumed
Liabilities for, or
applicable to, any taxable period (or portion thereof) ending on
or prior to
the Closing Date;
16
<PAGE>
(h) any insurance policies and rights, claims or causes of
action thereunder;
(i) except as specifically provided in Section 5.6, any
assets relating to any Employee Plan;
(j) (A) employment contracts of Business Employees (other
than the European Business Employees and of employees specified
on Schedule
--------
2.2(j)), and (B) employee benefit programs of the Seller and its
Affiliates
-------
(except to the extent required by the Directive), all as
specified in Section
5.6;
(k) all software, computer equipment, computer programs and
databases that (i) are not exclusively used or held for use
exclusively in the
operation of the Business or (ii) are exclusively used or held
for use in the
operation of the Business but are not transferable without cost
to the Seller
or any of its Affiliates (unless the Buyer pays for such
transfer cost) as
identified on Schedule 2.2(k) of the Disclosure Schedules, or
are not
---------------
transferable without consent of a third party as identified on
Schedule 2.2(k)
---------------
of the Disclosure Schedules and which consent has not been
granted;
(l) all Avoidance Actions and any amounts or other property
received or receivable in any such actions;
(m) Environmental clean-up technology of the Seller and its
Affiliates; however, the Buyer shall have the right to use any
such
environmental clean-up technology to effect any Remedial Action
with respect
to any Environmental Liability or Environmental Condition to the
extent that
both (i) the Seller and its Affiliates shall, upon notice and a
reasonably
opportunity to cure such failure, fail to effect any such
Remedial Action in
material violation of their obligations under this Agreement,
the Ancillary
Agreements and applicable Environmental Laws and Environmental
Permits and
(ii) such use by the Buyer would not violate any Law or any
Contract to which
Seller or any of its Affiliates is a party;
(n) all utility, pipe and service lines and related
facilities servicing or used in connection with operation on
land at the
Facility, unless and to the extent: (i) above ground, (ii)
within the battery
limit of the Facility and (iii) exclusively dedicated to the
operation of the
Business at the Newport Site;
(o) the Excluded Claims Rights;
(p) all deposits or refunds for or attributable to utility
or other services or arrangements relating to the conduct of the
Business for
the period prior to the Closing Time;
(q) all personal property located at the general offices of
the Seller or any of its Affiliates or any other office or
laboratory of the
Seller or any of its Affiliates not exclusively used or held for
use in the
Business;
(r) (i) information relating to the Seller's negotiations
for the sale or other ownership arrangement of all or a portion
of the
Business and any other transaction with the Buyer or any third
party that was
interested in the Business, including bids received from third
parties and
analyses relating to the Business and (ii) any confidential
information of any
third
17
<PAGE>
party that is contained within records exclusively used or held
for use in the
operation of the Business and all other confidential information
of third
parties and that is subject to an obligation of confidentiality
that is not
assumed by the Buyer pursuant to this Agreement or for which
consent for
assumption by the Buyer is necessary but has not been
obtained;
(s) the assets of the Seller and its Affiliates listed in
Schedule 2.2(s) of the Disclosure Schedules;
---------------
(t) all other assets, intellectual property (including
patents, trade secrets, know-how, trade names, trademarks and
copyrights),
technology, contracts and other business materials and
information of the
Seller or any of its Affiliates or related to their respective
businesses that
are not exclusively used or held for use in the operation of the
Business;
(u) all rights of the Seller under this Agreement and the
Ancillary Agreements;
(v) all accounts receivable, notes receivable and other
receivables due to the Seller and its Affiliates that arise out
of the
operation of the Business with respect to the period prior to
the Closing,
together with any unpaid interest or fees accrued thereon or
other amounts due
with respect thereto (the "Excluded Receivables"); and
--------------------
(w) all rights, claims and causes of action relating to any
assets described in this Section 2.2(a) through (v) or any
Excluded
Liabilities.
Section 2.3 Assumed Liabilities. In connection with the purchase
and
-------------------
sale of the Transferred Assets pursuant to this Agreement, at
the Closing, the
Buyer shall (or shall procure that its relevant Affiliates
shall) assume and
shall agree to pay, discharge, perform or otherwise satisfy the
following
Liabilities of the Seller and its Affiliates relating to the
Business (the
"Assumed Liabilities"):
-------------------
(a) except for Specified Excluded Liabilities, all
Liabilities accruing, arising out of or relating to the conduct
or operation
of the Business or the ownership or use of the Transferred
Assets from and
after the Closing Date;
(b) [reserved];
(c) any Taxes to be paid by the Buyer (or its Affiliates)
pursuant to Article VI and all other Taxes arising from or with
respect to the
Transferred Assets or the operation of the Business that are
incurred in or
attributable to any period, or any portion of any period,
occurring after the
Closing Date; it being understood that all Taxes arising from or
with respect
to the Transferred Assets or the operation of the Business for
all periods and
partial periods ending on or before the Closing shall be
Excluded Liabilities
(except as otherwise provided in this Agreement);
(d) subject to Section 2.5, all Liabilities of the Seller
and its Affiliates under the Business Contracts and the Business
Permits that
accrue or are to be performed on or after, or in respect of
periods following,
the Closing Date, other than any Liability resulting from a
breach by the
Seller or any of its Affiliates of such Business Contracts or
Business Permits
prior to the
18
<PAGE>
Closing, it being understood that Liabilities resulting from a
breach by the
Seller or any of its Affiliates of such Business Contracts prior
to the
Closing shall be Excluded Liabilities;
(e) all Liabilities with respect to Inventory that is a
Transferred Asset and identified at the Joint Walk Through as
Defective
Inventory (the "Excluded Inventory");
------------------
(f) all Liabilities assumed by the Buyer (or any of its
Affiliates) pursuant to Section 5.6; however, for the avoidance
of doubt, the
Buyer shall have no Liability with respect to the Solutia Inc.
Employees
Pension Plan or any other United States defined benefit plan or
retiree
medical plan;
(g) any Liability arising out of any violation of Law by the
Buyer or any of its Affiliates, on or after the Closing; and
(h) all Buyer Environmental Liabilities.
Section 2.4 Excluded Liabilities. Notwithstanding any other
provision
--------------------
of Section 2.3 to the contrary, the Buyer is not assuming and
the Seller
shall, or shall cause its Affiliates to, retain, pay, perform or
otherwise
satisfy, all Liabilities other than the Assumed Liabilities (the
"Excluded
--------
Liabilities"), including the following:
-----------
(a) all Taxes arising from or with respect to the
Transferred Assets or the operation of the Business that are
incurred in or
attributable to any period, or any portion of any period, ending
on or prior
to the Closing Date (except as otherwise provided in this
Agreement);
(b) all Seller Environmental Liabilities;
(c) any Liability retained by the Seller and its Affiliates
pursuant to Section 5.6 arising in respect of or relating to
Business
Employees or any Employee Plan; however, for the avoidance of
doubt, the Buyer
shall have no Liability with respect to the Solutia Inc.
Employees Pension
Plan or any other United States defined benefit plan or retiree
medical plan;
(d) subject to the Buyer's obligations pursuant to Section
5.10, any indebtedness for borrowed money or guarantees thereof
outstanding as
of the Closing Time;
(e) any Liability resulting from a breach by the Seller or
any of its Affiliates of any Business Contract or Business
Permit prior to the
Closing;
(f) any Liability or obligation to the extent relating to an
Excluded Asset;
(g) any Liability arising out of any violation of Law by the
Seller Entities prior to the Closing other than the Assumed
Liability
described in Section 2.3(g);
(h) any Actions arising out of actions or omissions of the
Seller Entities or the directors, officers, employees or agents
of the Seller
or its Affiliates occurring prior to the Closing;
19
<PAGE>
(i) any Liability retained by the Seller and its Affiliates
pursuant to Section 5.6;
(j) all Cure Costs; and
(k) subject to Section 5.22, all Liabilities arising from
products manufactured, marketed, distributed, sold or serviced
by the Business
prior to the Closing Date, including product liability and
negligence claims
and liabilities and claims for refunds, adjustments, allowances,
repairs,
exchanges, returns and warranty or similar claims (but excluding
in all cases
Excluded Inventory).
(the Excluded Liabilities described in clauses (a) through (k)
above, subject
to the immediately following sentence, the "Specified Excluded
Liabilities").
------------------------------
Neither the Seller nor any of its Affiliates shall have any
Liability under
this Agreement or any Ancillary Agreement to the extent any such
Liability
arises out of, is based on or related to any action or omission
of the Buyer
and its Affiliates or any of their respective directors,
officers, employees,
agents or any other Person after the Closing and such
Liabilities shall not be
Specified Excluded Liabilities or Excluded Liabilities.
Section 2.5 Assignment and Assumption; Cure Costs.
-------------------------------------
(a) At such time as is specified in the Sale Order, this
Agreement and any other orders of the Bankruptcy Court (provided
that such
--------
Orders conform to the provisions of this Agreement and the Lease
and Operating
Agreement), the Seller shall assign, or shall cause Debtor
Affiliates to
assign, to the Buyer the US Contracts pursuant to Section 365 of
the
Bankruptcy Code, and the Buyer shall assume from the Seller and
such Debtor
Affiliates the obligations of the Seller and the Debtor
Affiliates under the
US Contracts required to be performed subsequent to the
Closing.
(b) The Seller shall pay the Cure Costs as and when finally
determined by the Bankruptcy Court pursuant to the procedures
set forth in the
Sale Order or any other applicable order of the Bankruptcy
Court. To the
extent that any counterparty to a to-be-assumed and assigned US
Contract files
an objection to the Transactions or the Buyer's obligation to
pay the Cure
Costs, the Seller will provide the Buyer with copies of all
filings filed with
the Bankruptcy Court relating to such objection. The Seller, in
its sole
discretion, may elect to oppose such objection or enter into a
compromise with
such counterparty; provided that any opposition to the objection
or
--------
compromise, or lack thereof, shall not reduce the Purchase Price
or relieve
the Buyer from its obligation to consummate the Transactions at
Closing.
Section 2.6 Consents to Certain Assignments.
-------------------------------
(a) To the maximum extent permitted by the Bankruptcy Code,
the US Contracts and the rights of the Seller and Debtor
Affiliates to US
Intellectual Property shall be assumed and assigned to the Buyer
pursuant to
Section 365 of the Bankruptcy Code as of the Closing Date or
such other date
as specified in the Sale Order, any other order of the
Bankruptcy Court or
this Agreement (provided that such Orders conform to the
provisions of this
--------
Agreement and the Lease and Operating Agreement), as
applicable.
20
<PAGE>
(b) Subject to Section 2.6(a), notwithstanding anything in
this Agreement or any Ancillary Agreement to the contrary, this
Agreement and
the Ancillary Agreements shall not constitute an agreement to
transfer or
assign any Transferred Asset or any claim, right or benefit
arising thereunder
or resulting therefrom if an attempted assignment thereof,
without the Consent
of a third party, would constitute a breach or other
contravention under any
agreement, contract or Law to which the Seller or any Affiliate
of the Seller
is a party or by which it is bound, or in any way adversely
affect the rights
of the Seller or any of its Affiliates or, upon transfer, the
Buyer under such
Transferred Asset, claim, right or benefit. The Seller shall use
(and shall
cause other relevant Seller Entities to use) its commercially
reasonable
efforts to obtain any Consents required to assign to the Buyer
any Transferred
Asset that requires the Consent of a third party and the Buyer
shall cooperate
with the Seller in obtaining any such Consents; provided,
however, that this
-------- -------
Section 2.6(a) shall not be applicable to the transfer of any
Non-Exclusive
Interest, with respect to which Section 5.23 shall govern.
Notwithstanding the
foregoing, the Seller shall not be obligated to make any
payments to obtain
any Consent except for (i) the payment of its own expenses, (ii)
the
reimbursement of reasonable out-of-pocket expenses of other
parties to the
Business Contracts that require Consent for assignment to the
Buyer, and (iii)
the Cure Costs. Without limiting the foregoing, if any such
Consent is not
obtained prior to the Closing, if requested by the Buyer, the
Seller and the
Buyer shall cooperate (at the expense of the Buyer) in any
lawful and
commercially reasonable arrangement mutually agreed upon by the
Seller and the
Buyer under which the Buyer shall receive (without infringing
upon the legal
rights of any third party or violating any applicable Law) the
economic
claims, rights and benefits (net of the amount of any related
Tax costs
imposed on the Seller and its Affiliates) under the asset, claim
or right with
respect to which the required consent or waiver has not been
obtained;
provided that the Buyer shall assume any related economic burden
(including
--------
the amount of any related Tax costs imposed on the Seller and
its Affiliates)
with respect to the asset, claim or right subject to such
arrangement and
provided, further, that the Buyer shall indemnify the Seller
Indemnified
-------- -------
Parties with respect to any Losses incurred by any Seller
Indemnified Party in
connection with such arrangement, to which arrangements the
Seller and the
Buyer shall have agreed.
Section 2.7 Purchase Price. The aggregate purchase price
(the
--------------
"Purchase Price") for the Transferred Assets shall be
US$67,000,000 (the "Base
-------------- ----
Purchase Price"), MINUS the Normalized Working Capital, PLUS
Final Inventory
--------------
Value.
Section 2.8 Inventory Value Adjustment.
--------------------------
(a) Closing Date Inventory Value Calculation.
----------------------------------------
(i) Not earlier than ten (10) Business Days and no later
than three (3) Business Days prior to the Closing Date, the
parties shall use
commercially reasonable efforts to conduct a joint inventory of
Inventory
located at the locations set forth on Schedule 2.8(a)(i) of the
Disclosure
------------------
Schedules, which inventory shall include physical identification
of Inventory
and identification of Defective Inventory.
(ii) Not later than two (2) Business Days prior to the
Closing, the Seller shall prepare and deliver to the Buyer the
Pre-Closing
Inventory Value Statement. The Pre-Closing Inventory Value
Statement shall be
prepared in a manner consistent with the Accounting Principles.
The Seller
shall derive the Pre-Closing Inventory Value from the
Pre-Closing Inventory
Value Statement, and shall deliver such Pre-
21
<PAGE>
Closing Inventory Value calculation to the Buyer together with
the Pre-Closing
Inventory Value Statement.
(iii) The "Estimated Purchase Price" shall be an amount
------------------------
equal to the Base Purchase Price, MINUS the Normalized Working
Capital, PLUS
the Pre-Closing Inventory Value.
(b) Final Inventory Value Adjustment.
--------------------------------
(i) Within sixty (60) days following the Closing Date,
the Seller shall deliver to the Buyer the Final Inventory Value
Statement. The
Final Inventory Value Statement shall be prepared in a manner
consistent with
the Accounting Principles. The Seller shall derive the Final
Inventory Value
from the Final Inventory Value Statement, and shall deliver such
calculation
together with the Final Inventory Value Statement to the Buyer.
The Buyer
shall cause its employees and employees of the Business to
assist the Seller
and its Representatives in the preparation of the Final
Inventory Value
Statement and shall provide the Seller and its Representatives
reasonable
access, during normal business hours and upon reasonable prior
notice, to the
personnel, properties, books and records of the Buyer.
(ii) After receipt of the Final Inventory Value
Statement, the Buyer shall have thirty (30) days to review the
Final Inventory
Value Statement. The Seller shall cooperate with the Buyer and
its
Representatives to provide them with any information used in
preparing the
Final Inventory Value Statement reasonably requested by the
Buyer and its
Representatives and reasonably available to the Seller. The
Final Inventory
Value Statement shall become final and binding on the thirtieth
(30th) day
following the delivery thereof, unless prior to the end of such
period, the
Buyer delivers to the Seller a written notice of its
disagreement ("Notice of
---------
Disagreement") specifying the nature and amount of any disputed
item and
------------
accompanied by a certificate of the Buyer's auditors stating
that they concur
with each of the positions taken by the Buyer in the Notice of
Disagreement.
The Buyer shall be deemed to have agreed with all items and
amounts in the
Final Inventory Value Statement not specifically identified as a
disputed item
in the Notice of Disagreement, and such undisputed items shall
be deemed final
and binding and shall not be subject to review in accordance
with Section
2.8(c). Any Notice of Disagreement may reference only
disagreements based on
mathematical errors or based on amounts reflected on the Final
Inventory Value
Statement not being calculated in accordance with the Accounting
Principles.
(c) Resolution of Notice of Disagreement. During the twenty
------------------------------------
(20) Business Day period following delivery of a Notice of
Disagreement by the
Buyer to the Seller, the Parties in good faith shall seek to
resolve in
writing any differences that they may have with respect to the
disputed items
specified therein (the "Disputed Items"). During such twenty
(20) Business Day
--------------
period, the Buyer shall cooperate with the Seller and its
Representatives to
provide them with any information used in preparing the Notice
of Disagreement
reasonably requested by the Seller or its Representatives and
reasonably
available to the Buyer. Any Disputed Items resolved in writing
between the
Buyer and the Seller within such twenty (20) Business Day period
shall be
final and binding with respect to such items, and if the Seller
and the Buyer
agree in writing on the resolution of each Disputed Item and the
amount of the
Final Inventory Value, the amount so determined shall be final
and binding on
the Parties for all purposes hereunder. If the Seller
22
<PAGE>
and the Buyer have not resolved all such differences by the end
of such twenty
(20) Business Day period, the Seller and the Buyer shall jointly
submit, in
writing, to a mutually acceptable internationally recognized
independent
public accounting firm (the "Independent Accounting Firm"), all
Disputed Items
---------------------------
remaining in dispute. The Parties shall deliver to the
Independent Accounting
Firm a written brief from each Party detailing its views as to
the correct
nature and amount of each Disputed Item remaining in dispute and
the amount of
the Final Inventory Value. The Independent Accounting Firm shall
make a
written determination as to each such Disputed Item and the
amount of the
Final Inventory Value, which determination shall be final and
binding on the
Parties for all purposes hereunder. The determination of the
Independent
Accounting Firm shall be accompanied by a certificate of the
Independent
Accounting Firm that it reached such determination in accordance
with the
provisions of this Section 2.8. The Independent Accounting Firm
shall be Ernst
& Young LLP or, if such firm is unable or unwilling to act,
such other
internationally recognized independent public accounting firm as
shall be
agreed in writing by the Seller and the Buyer. The Seller and
the Buyer shall
use their respective commercially reasonable efforts to cause
the Independent
Accounting Firm to render a written decision resolving the
matters submitted
to it within twenty (20) Business Days following the submission
thereof. The
Independent Accounting Firm shall be authorized to resolve only
those Disputed
Items remaining in dispute between the Parties in accordance
with the
provisions of this Section 2.8 within the range of the
difference between the
Buyer's position with respect thereto and the Seller's position
with respect
thereto. Judgment may be entered upon the written determination
of the
Independent Accounting Firm in any court referred to in Section
10.9. The
costs of any dispute resolution pursuant to this Section 2.8(c),
including the
fees and expenses of the Independent Accounting Firm and of any
enforcement of
the determination thereof, shall be borne by the Parties in
inverse proportion
as they may prevail on the matters resolved by the Independent
Accounting
Firm, which proportionate allocation shall be calculated on an
aggregate basis
based on the relative values of the amounts in dispute and shall
be determined
by the Independent Accounting Firm at the time the determination
of such firm
is rendered on the merits of the matters submitted. The fees and
disbursements
of the Representatives of each Party incurred in connection with
the
preparation or review by such Representatives of the Final
Inventory Statement
and preparation or review of any Notice of Disagreement, as
applicable, shall
be borne by such Party. The Parties agree that all information,
documents and
other materials prepared or disclosed by a Party (the
"Disclosing Party") in
----------------
connection with the processes described in this Section 2.8 will
be exchanged
as part of an offer of compromise and shall not be used (or
requested to be
provided, whether through discovery or otherwise) by the other
Party in
--------
connection with any proceeding by such other Party or any of its
Affiliates
against the Disclosing Party or any of its Affiliates, including
any
proceedings pursuant to Article VIII.
(d) Final Settlement. Within three (3) Business Days after
----------------
the final determination of the Final Inventory Value pursuant to
the
provisions of this Section 2.8, the following amounts, if any,
shall be paid
by wire transfer of US Dollars in immediately available funds to
such account
or accounts as may be designated in writing by the Party
entitled to such
payment at least five (5) Business Days prior to such payment
date:
(i) if the Final Inventory Adjustment Amount is
positive, the Buyer shall pay to the Seller an amount equal to
the Final
Inventory Adjustment Amount; and
23
<PAGE>
(ii) if the Final Inventory Adjustment Amount is
negative, the Seller shall pay to the Buyer an amount equal to
the absolute
value of the Final Inventory Adjustment Amount.
(e) Interest. Amounts to be paid pursuant to Section 2.8(d)
--------
shall bear interest from the Closing Date to the date of such
payment at a
rate equal to LIBOR Rate on the date of payment, which interest
shall be
payable by wire transfer of US Dollars by the Party making the
payment
pursuant to Section 2.8(d) concurrently with such payment.
Section 2.9 Closing. Unless this Agreement shall have been
terminated
-------
and the Transactions contemplated herein shall have been
abandoned pursuant to
Article IX, the sale and purchase of the Transferred Assets and
the assumption
of the Assumed Liabilities contemplated by this Agreement shall
take place at
a closing (the "Closing") to be held at the offices of Gibson,
Dunn & Crutcher
-------
LLP, 200 Park Avenue, New York, New York, US at 10:00 a.m. New
York time on
the last Business Day of the calendar month in which all
conditions to the
obligations of the Parties set forth in Article VII (other than
such
conditions as may, by their terms, only be satisfied at the
Closing or on the
Closing Date) are first satisfied, or, to the extent permitted
by applicable
Law, waived, or at such other place or at such other time or on
such other
date as the Seller and the Buyer mutually may agree upon in
writing. The day
on which the Closing takes place is referred to as the "Closing
Date". The
------------
Closing shall be deemed effective as of the Closing Time.
Section 2.10 Closing Deliveries. At the Closing:
------------------
(a) the Buyer shall deliver to the Seller:
(i) an amount equal to the Estimated Purchase Price,
less the Escrow Amount, in immediately available funds in US
Dollars by wire
transfer to a bank account(s) designated in writing by the
Seller to the Buyer
at least five (5) Business Days prior to the Closing Date;
(ii) an acknowledgment from the Escrow Agent of receipt
of the Escrow Amount in the form of Exhibit A to the Escrow
Agreement;
(iii) a certificate, dated as of the Closing Date, of
the Secretary or another authorized person of the Buyer,
certifying the
resolutions authorizing the execution and delivery of this
Agreement and the
Ancillary Agreements by the Buyer and as to incumbency of the
Persons that
have executed this Agreement or will execute the Ancillary
Agreements on
behalf of the Buyer; and
(iv) all of the documents required to be delivered by
the Buyer pursuant to Section 7.2.
(b) the Buyer shall deliver to the Escrow Agent the Escrow
Amount to be held by the Escrow Agent pursuant to the terms of
the Escrow
Agreement; and
(c) the Seller shall deliver to the Buyer:
24
<PAGE>
(i) certificate(s), dated as of the Closing Date, of the
Secretary or Assistant Secretary of the Seller certifying as to
incumbency of
the Persons that have executed this Agreement or will execute
the Ancillary
Agreements on behalf of the Seller;
(ii) a certificate of "good standing" or similar
certification with respect to the Seller issued by the Secretary
of State or
similar official of the jurisdiction in which the Seller is
organized;
(iii) evidence of release of the Encumbrances on the
Transferred Assets pursuant to the DIP Agreement and the Euro
Financing
Documents, all solely to the extent that the Sale Order does not
authorize the
transfer of the Transferred Assets free and clear of such
Encumbrances; and
(iv) all of the documents required to be delivered by
the Seller pursuant to Section 7.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
Except as set forth in the Disclosure Schedules attached
hereto
(collectively, the "Disclosure Schedules"), the Seller hereby
represents and
--------------------
warrants to the Buyer as follows and acknowledges that the Buyer
is relying
upon such representations and warranties in connection with the
execution of
this Agreement and the Ancillary Agreements and the consummation
of the
Transactions:
Section 3.1 Organization and Qualification. Each Seller Entity
is a
------------------------------
company duly organized, validly existing and, to the extent
applicable, in
good standing under the laws of the jurisdiction of its
organization and (in
the case of the Seller and the Debtor Affiliates, pursuant to
Sections 1107(a)
and 1108 of the Bankruptcy Code and other applicable orders of
the Bankruptcy
Court and subject to the limitations imposed on the Seller and
the Debtor
Affiliates as a result of having filed a petition for relief
under the
Bankruptcy Code) has all requisite corporate or similar power
and authority to
own, use, lease and operate the Transferred Assets and operate
the Business as
now owned, used, leased and operated and to carry on the
Business as now being
conducted. Each Seller Entity is duly qualified or licensed as a
foreign
corporation to do business in each jurisdiction where the
ownership or
operation of the Transferred Assets or the conduct of the
Business makes such
qualification or licensing necessary, except in each case, for
any such
failures that would not, individually or in the aggregate,
reasonably be
expected to have a Material Adverse Effect.
Section 3.2 Authority.
---------
(a) Subject to the entry of the Sale Order as a Final Order
and such other authorization as may be required by the
Bankruptcy Court in the
case of the Seller and the Debtor Affiliates, (i) each Seller
Entity has full
corporate power and authority to execute and deliver this
Agreement (in the
case of the Seller) and each of the Ancillary Agreements to
which it will be a
party, to perform its obligations hereunder and thereunder and
to consummate
the Transactions and (ii) this Agreement (in the case of the
Seller) and each
of the Ancillary
25
<PAGE>
Agreements to which a Seller Entity will be a party and the
consummation by the Seller of the Transactions and by such
Seller Entity of
the Transactions contemplated thereby have been (and, in the
case of the
Seller Entities other than the Seller, will be on or prior to
the Closing)
duly and validly authorized by the relevant Seller Entity and no
other
corporate action or proceeding by the Seller or any Debtor
Affiliate is
necessary to authorize the execution, delivery and performance
of this
Agreement and the Ancillary Agreements by the Seller.
(b) Subject to the entry of the Sale Order as a Final Order
and such other authorization as may be required by the
Bankruptcy Court (in
the case of the Seller and the Debtor Affiliates) and assuming
this Agreement
and each Ancillary Agreement constitutes the legal, valid and
binding
agreement of the other parties hereto and thereto, (i) this
Agreement has been
duly executed and delivered by the Seller and upon their
execution each of the
Ancillary Agreements to which a Seller Entity will be a party
will have been
duly executed and delivered by such Seller Entity and (ii) this
Agreement
constitutes the legal, valid and binding obligations of the
Seller,
enforceable against the Seller in accordance with its terms and
upon their
execution and delivery by the applicable Seller Entity each of
the Ancillary
Agreements to which a Seller Entity will be a party will
constitute the legal,
valid and binding obligations of such Seller Entity, enforceable
against such
Seller Entity in accordance with their respective terms, except
in each case
as enforcement may be limited by applicable bankruptcy,
insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights
generally and by general principles of equity (regardless of
whether
considered in a proceeding in equity or at law).
Section 3.3 No Conflict; Required Filings and Consents.
------------------------------------------
(a) Except as set forth in Schedule 3.3(a) of the Disclosure
---------------
Schedules, and subject to the entry of the Sale Order as a Final
Order such
other authorization as may be required by the Bankruptcy Court
(in the case of
the Seller and Debtor Affiliates), the execution, delivery and
performance by
the Seller of this Agreement and by any Seller Entity of each of
the Ancillary
Agreements to which such Seller Entity will be a party, and the
consummation
of the Transactions, do not and will not:
(i) conflict with or violate the certificate of
incorporation or bylaws (or other equivalent organizational
document) of any
Seller Entity;
(ii) conflict with or violate any Law applicable to any
Seller Entity, the Business or any of the Transferred Assets or
by which any
Seller Entity, the Business or any of the Transferred Assets may
be bound or
affected;
(iii) conflict with, result in any breach of, constitute
a default (or an event that, with notice or lapse of time or
both, would
become a default) under, require any consent of any Person
pursuant to, or
give to others any rights of termination, acceleration or
cancellation of, any
Material Contract; or
(iv) result in the creation or imposition of any
Encumbrance (other than Permitted Encumbrance) on any
Transferred Asset;
except, in the case of clause (ii), (iii) or (iv), for any such
conflicts,
violations, breaches, defaults or other occurrences that would
not,
individually or in the aggregate, reasonably be expected to
26
<PAGE>
have a Material Adverse Effect or that arise as a result of any
facts or
circumstances relating to the Buyer or any of its
Affiliates.
(b) Except as set forth in Schedule 3.3(b) of the Disclosure
---------------
Schedules, no Seller Entity is required to file, seek or obtain
any Consent of
or with any Governmental Authority in connection with the
execution, delivery
and performance by the Seller of this Agreement and by the
Seller Entities of
each of the Ancillary Agreements to which the relevant Seller
Entities will be
a party or the consummation of the Transactions or in order to
prevent the
termination of any right, privilege, license or qualification of
the Business,
except for (i) any filings required to be made with the
Bankruptcy Court with
respect to the approval of the Bidding Procedures Order, the
Sale Order or
otherwise with respect to the Transactions, (ii) any filings
required to be
made under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as
amended (the "HSR Act") or any other filings under applicable
competition
-------
antitrust or similar law in all applicable jurisdictions, (iii)
where failure
to obtain such Consent, or to make such filing or notification,
would not,
individually or in the aggregate, reasonably be expected to have
a Material
Adverse Effect or (iv) as may be necessary as a result of any
facts or
circumstances relating to the Buyer or any of its
Affiliates.
Section 3.4 Title to Transferred Assets. Subject to the entry of
the
---------------------------
Sale Order as a Final Order (in the case of the Seller and the
Debtor
Affiliates), the Persons set forth in Schedule 3.4 of the
Disclosure Schedules
------------
have good and valid title to the Transferred Assets. This
representation and
warranty does not apply to Buildings and Business Intellectual
Property, which
matters are covered exclusively in Sections 3.12 and 3.13.
Section 3.5 Financial Information.
---------------------
(a) Schedule 3.5(a) of the Disclosure Schedules sets forth
---------------
certain unaudited financial data, specifically (i) the
statements of income
and cash flow of the Business for the years ended December 31,
2005 and
December 31, 2006 and (ii) a balance sheet of the Business dated
as of
December 31, 2005 and December 31, 2006 (together, the
"Financial
---------
Information").
-----------
(b) The Financial Information has been derived (and the
Interim Financial Information will be derived) from the
accounting books and
records of the Seller and its Affiliates, and is (and in the
case of the
Interim Financial Information will be) accurate and is (and in
the case of the
Interim Financial Information will be) fairly presented for the
respective
periods covered thereby or then ended, in each case in all
material respects,
except as otherwise provided (or in the case of the Interim
Financial
Information will be provided) in the Financial Information or
such Interim
Financial Information and subject, in the case of the Interim
Financial
Information, to normal and recurring year-end adjustments, that
will not
individually or in the aggregate be material. Except as set
forth in Schedule
--------
3.5(b)-1 of the Disclosure Schedules, the accounting standards
used in
--------
preparing the Financial Information are (and in the case of the
Interim
Financial Information will be) in accordance with the standards
applied by the
Seller in preparing its consolidated financial statements filed
with the U.S.
Securities and Exchange Commission and the Bankruptcy Court.
Except as set
forth in Schedule 3.5(b)-2, the Financial Information does not
(and the
-----------------
Interim Financial Information will not) include any assets or
Liabilities or
the results of operations or income other than those of the
Business, the
Transferred Assets and the Liabilities related thereto. A claim
under Section
8.2(a) with respect
27
<PAGE>
to any breach of this Section 3.5(b) shall be the exclusive
remedy of the
Buyer Indemnified Parties with respect to any claim based on or
arising out of
the level of accuracy or completeness of the Interim Financial
Information.
Section 3.6 Absence of Certain Changes or Events.
------------------------------------
(a) Except as set forth in Schedule 3.6(a) of the Disclosure
---------------
Schedules, (i) during the period commencing on December 31, 2006
and ending on
the date hereof, the Seller Entities have conducted the
Business, in all
material respects, in the Ordinary Course of Business and (ii)
since December
31, 2006, there has not occurred any Material Adverse Change or
Material
Adverse Effect. The Buyer acknowledges that there may be
disruption to the
operation of the Business as a result of the announcement by the
Seller of its
intention to sell the Business (and there may be further
disruption to the
Business as a result of the execution of this Agreement,
including as a result
of the identity of the Buyer, and the consummation of the
Transactions), and
the Buyer agrees that any such disruptions do not and shall not
constitute a
breach of this Section 3.6.
(b) Except as set forth in Schedule 3.6(b) of the Disclosure
---------------
Schedule, or as expressly contemplated by this Agreement or the
Ancillary
Agreements, during the period commencing on December 31, 2006
and ending on
the date hereof, neither the Seller nor any Transferring
Affiliates: (i) has
terminated, modified or cancelled any Material Contract (for the
avoidance of
doubt, this Section 3.6(b) shall not apply to any expiration of
any Material
Contract in accordance with its scheduled term), (ii) suffered
any damage,
destruction or loss, whether or not covered by insurance, of any
Transferred
Assets in excess of $200,000 per accident or event, (iii) made
any material
change in its accounting practices, procedures or methods with
respect to the
Business or (iv) committed to do any of the foregoing described
in clauses (i)
or (iii) above.
Section 3.7 Compliance with Law; Permits. Except as set forth
in
----------------------------
Schedule 3.7 of the Disclosure Schedules:
------------
(a) since December 31, 2004, the Business has been conducted
in compliance with all applicable Laws, except for any
non-compliance that
would not reasonably be expected to have a Material Adverse
Effect; and
(b) the Seller Entities are in possession of all material
Permits, which material Permits are listed in Schedule 3.7(b) of
the
---------------
Disclosure Schedules.
No representation or warranty is made under this Section 3.7
with respect to
ERISA, labor, or employment matters, Taxes or environmental
matters, which are
covered exclusively by Sections 3.9, 3.10, 3.14 and 3.15,
respectively.
Section 3.8 Litigation. Other than the Chapter 11 Case and
except as
----------
set forth on Schedule 3.8-1 of the Disclosure Schedules, and
proceedings
--------------
related thereto, as of the date hereof, there is no Action by or
against any
Seller Entities in connection with the Business or otherwise
relating to the
Transferred Assets or seeking to enjoin the Transactions pending
or, to the
Knowledge of the Seller, threatened that would, individually or
in the
aggregate, reasonably be expected to have a Material Adverse
Effect or would
affect the legality, validity or enforceability of this
Agreement or any
Ancillary Agreement or the consummation of the
28
<PAGE>
Transactions. No Seller Entity has received (i) any subpoena
against such
Seller Entity or (ii) any written notice of any investigation or
inquiry by
any Governmental Authority, in each case in connection with the
Business or
otherwise with respect to the Transferred Assets that would,
individually or
in the aggregate, reasonably be expected to have a Material
Adverse Effect.
All Avoidance Actions that the Seller and the Debtor Affiliates
have asserted
against any current customer or supplier of the Business set
forth on Schedule
--------
3.17 of the Disclosure Schedules are listed on Schedule 3.8-2 of
the
---- --------------
Disclosure Schedules.
Section 3.9 Employee Plans.
--------------
(a) With respect to the Employee Plans: (i) no event has
occurred and, to the Knowledge of the Seller, there exists no
condition or set
of circumstances in connection with which the Seller or any of
its Affiliates,
the Business or the Buyer could be subject to any material
liabili
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