Exhibit 10.1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
Dated as of August 19, 2006
Between
ASHLAND INC.
and
OLDCASTLE MATERIALS, INC.
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of August 19, 2006, between ASHLAND INC., a Kentucky corporation (“Seller”), and OLDCASTLE MATERIALS, INC., a Delaware corporation (“Purchaser”) (this “Agreement”).
Purchaser desires to purchase from Seller, and Seller desires to sell to Purchaser, all the issued and outstanding shares of no par value common stock (the “Shares”) of Ashland Paving And Construction, Inc. (“APAC”). APAC and its Subsidiaries are collectively referred to herein as the “Transferred Companies”.
Certain capitalized terms used in this Agreement are defined in Section 10.05(c). Section 10.05(c) also identifies other Sections of this Agreement in which capitalized terms used in this Agreement are defined.
Accordingly, the parties hereby agree as follows:
Purchase and Sale of the Shares; Closing
SECTION 1.01. Purchase and Sale of the Shares. On the terms and subject to the conditions of this Agreement, at the Closing, Seller shall sell, transfer and deliver to Purchaser, and Purchaser shall purchase from Seller, the Shares for an aggregate purchase price of $1,300,000,000 (the “Purchase Price”), payable as set forth below in Section 1.03 and subject to adjustment as provided in Section 1.04. The purchase and sale of the Shares is referred to in this Agreement as the “Acquisition”.
SECTION 1.02. Closing Date. The closing of the Acquisition (the “Closing”) shall take place at the offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York 10019, at 10:00 a.m. on the second (2nd) business day following the satisfaction (or, to the extent permitted, the waiver by the party entitled to the benefits thereof) of the conditions set forth in Article VII, provided that (i) if such second (2nd) business day is not a Monday then the Closing shall take place on the next following Monday and (ii) if such next following Monday is not August 28, 2006 or October 2, 2006, then the Closing shall take place on the tenth (10th) business day following satisfaction (or, to the extent permitted, the waiver by the party entitled to the benefits thereof) of all the conditions set forth in Article VII, provided further that if such tenth (10th) business day is not a Monday, the Closing shall take place on the next following Monday. Notwithstanding the foregoing, (a) the Closing shall not in any event take place prior to August 28, 2006 and (b) the Closing may take place at such other place, time and date as shall be agreed between Seller and Purchaser. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date”.
SECTION 1.03. Transactions to Be Effected at the Closing. At the Closing:
(a) Seller shall deliver to Purchaser (i) certificates representing the Shares, duly endorsed in blank or accompanied by stock powers duly endorsed in blank in proper form for transfer, with appropriate transfer tax stamps, if any, affixed, and (ii) such other documents as Purchaser or its counsel may reasonably request to demonstrate satisfaction of the conditions and compliance with the covenants set forth in this Agreement.
(b) Purchaser shall deliver to Seller (i) payment, by wire transfer to a bank account designated in writing by Seller (such designation to be made at least two (2) business days prior to the Closing Date), in immediately available funds in an amount equal to (A) the Purchase Price, plus or minus (B) an estimate, prepared by Seller and delivered to Purchaser on the date hereof, of any increase or decrease to the Purchase Price under Section 1.04 (the Purchase Price plus or minus such estimate of any increase or decrease under Section 1.04 hereinafter called the “Closing Date Amount”), plus (C) the aggregate amount of the Termination Payments paid or payable to Terminated Employees under Section 6.01(a), and (ii) such other documents as Seller or its counsel may reasonably request to demonstrate satisfaction of the conditions and compliance with the covenants set forth in this Agreement.
SECTION 1.04. Purchase Price Adjustment. (a) Within ninety (90) days after the Closing Date, Seller shall prepare and deliver to Purchaser a statement (the “Statement”), setting forth the Balance Sheet Amount as of the open of business on the Closing Date (the “Closing Balance Sheet Amount”) and substantially in the form as set forth on Schedule 1.04 of the Seller Disclosure Schedule.
(b) (i) The term “Balance Sheet Amount” means Specified Assets minus Specified Liabilities. The term “Specified Assets” means Accounts Receivable, net; Construction in Progress; Inventories; Other Current Assets; Investment in Equity Affiliates and Other Noncurrent Assets, in each case, of the Transferred Companies, all calculated in accordance with the Specified Requirements, and all as adjusted pursuant to Section 1.04(b)(ii). The term “Specified Liabilities” means Trade and Other Payables; Billings in Excess of Costs and Estimated Earnings; Other Long-term Liabilities, in each case, of the Transferred Companies, all calculated in accordance with the Specified Requirements, and all as adjusted pursuant to Section 1.04(b)(ii).
(ii) Notwithstanding the foregoing, the following items (each, an “Excluded Item”) shall not be taken into account in determining the Balance Sheet Amount: (A) cash and cash equivalents (other than petty cash included in Other Noncurrent Assets), (B) receivables and payables between any Transferred Company, on the one hand, and the Seller or any of its affiliates (other than a Transferred Company), on the other hand (other than Permitted Intercompany Receivables and Payables); (C) the book value of energy derivative instruments; (D) prepaid insurance premiums (other than prepaid surety bond premiums paid to Seller or Seller’s captive insurer for individual construction jobs); (E) employment, compensation and employee benefits-related liabilities retained by Seller and its affiliates with respect to the current portion of pension liability, the Tanner Supplemental Executive Retirement Plan and incentive compensation obligations payable by Seller pursuant to Section 6.04(c)(ii); and (F) liability for any remaining purchase price payment under the Wedowee quarry acquisition, all calculated in accordance with the Specified Requirements. For the avoidance of doubt, the Balance Sheet Amount shall not include any amounts related to income Taxes or deferred income Taxes or any amounts related to any long-term disability liabilities, pension liabilities or retiree welfare liabilities, in each case to the extent retained by Seller pursuant to Section 6.04(c)(i).
(iii) If, in connection with the preparation or review of the Statement, Seller or Purchaser, as applicable, shall identify a Processing Error on the accounting books and records of the Transferred Companies as of the open of business on the Closing Date, then both the Balance Sheet Amount as of the open of business on the Closing Date and, if and to the extent the same Processing Error was also reflected in the Target Amount, the Target Amount shall be adjusted to correct such Processing Error. The term “Processing Error” means a processing or mathematical error in the recording of any amount included in the Closing Balance Sheet Amount. For the avoidance of doubt, a Processing Error shall not include any differing views between Seller and Purchaser with respect to judgments, estimations, assumptions or the application of GAAP.
(iv) Except as and to the extent expressly provided in Section 1.04(b)(iii), (A) the Closing Balance Sheet Amount is to be calculated by applying United States generally accepted accounting principles (“GAAP”), or exclusions thereto or deviations therefrom, in the same way, using the same methods, principles, conventions, policies and procedures as the amounts comprising the Target Amount were calculated (the parties acknowledge that the Target Amount is the Balance Sheet Amount as of September 30, 2005, calculated based on the Specified Assets, Specified Liabilities and Excluded Items reflected in the Balance Sheet); (B) for purposes of calculating the Closing Balance Sheet Amount, no changes made in any reserve or other account existing as of the Balance Sheet Date shall be taken into account except for changes as a result of any fact, circumstance or event occurring after the Balance Sheet Date and, in such event, only in a manner consistent with past practices, provided that the parties agree that reserves for incurred but not reported claims (IBNR) shall be calculated using the same methods, principles, conventions, policies and procedures that were applied by Seller in its fiscal year-end closing on September 30, 2005, including actuarial review by Marsh & McLennan Companies Inc; (C) the parties agree that the adjustment contemplated by this Section 1.04 is intended to show the change in those items comprising the Balance Sheet Amount from the Balance Sheet Date to the Closing Date, and such change can only be measured if the calculation is done in the same way, using the same methods, principles, conventions, policies and procedures, for both dates; and (D) following the Closing, to the extent Purchaser takes any actions with respect to the accounting books and records of the Transferred Companies on which the Statement is to be based that are not consistent with the Transferred Companies’ past practices, such changes shall not be taken into account in calculating the Closing Balance Sheet Amount. In furtherance of the foregoing, except for any Processing Errors, any items on or omissions from the Balance Sheet that are based upon errors or that are not in accordance with GAAP shall be retained for purposes of calculating the Closing Balance Sheet Amount. The requirements of this Section 1.04(b)(iv) are referred to herein as the “Specified Requirements”.
(c) (i) The Statement shall become final and binding upon the parties on the sixtieth (60th) day following delivery thereof, unless Purchaser gives written notice of its disagreement with the Statement (a “Notice of Disagreement”) to Seller prior to such date. Any Notice of Disagreement shall (A) specify in reasonable detail the nature of any disagreement so asserted and (B) only include disagreements based on mathematical errors on the Statement or based on the Closing Balance Sheet Amount not being calculated in accordance with this Section 1.04 (including the Specified Requirements). Notwithstanding the foregoing, Purchaser shall not deliver to Seller a Notice of Disagreement, and no adjustment to the Purchase Price contemplated by this Section 1.04 shall be effected, unless such Notice of Disagreement shall specify an adjustment to the Closing Balance Sheet Amount in excess of $3,000,000 and otherwise satisfies the requirements of this Section 1.04.
(ii) If a Notice of Disagreement is received by Seller in a timely manner, then the Statement (as revised in accordance with this sentence) shall become final and binding upon Seller and Purchaser on the earlier of (A) the date Seller and Purchaser resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement and (B) the date any disputed matters specified in the Notice of Disagreement are finally resolved in writing by the Accounting Firm. During the thirty (30)-day period following the delivery of a Notice of Disagreement, Seller and Purchaser shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement. At the end of such thirty (30)-day period, Seller and Purchaser shall submit to an independent accounting firm (the “Accounting Firm”) for arbitration any and all matters that remain in dispute and were properly included in the Notice of Disagreement. The scope of the disputes to be resolved by the Accounting Firm shall be limited to whether there were mathematical errors on the Statement or whether the Closing Balance Sheet Amount was not calculated in accordance with the provisions of this Section 1.04 (including the Specified Requirements), and the Accounting Firm is not to make any other determination, including any determination as to whether GAAP was followed for the Balance Sheet or the Statement (in each case, except to the extent required to establish that the Specified Requirements were not applied uniformly and consistently for the Balance Sheet and the Statement) or whether the Target Amount is correct. Without limiting the generality of the foregoing, the Accounting Firm is not authorized or permitted to make any determination as to the accuracy of Section 3.04 or any other representation or warranty in this Agreement or as to compliance by Seller with any of its covenants in this Agreement (other than in this Section 1.04). Any determinations by the Accounting Firm, and any work or analyses performed by the Accounting Firm, in connection with its arbitration of any dispute under this Section 1.04 shall not be admissible in evidence in any suit, action or proceeding between the parties other than to the extent necessary to enforce payment obligations under Section 1.04(e). The Accounting Firm shall be PricewaterhouseCoopers LLP or, if such firm is unable or unwilling to act, such other nationally recognized independent public accounting firm as shall be agreed upon by the parties hereto in writing. The Accounting Firm shall be instructed to render its determination of all matters submitted to it within sixty (60) days following submission. Judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the party against which such determination is to be enforced. The cost of any arbitration (including the fees and expenses of the Accounting Firm and reasonable attorney fees and expenses of the parties) pursuant to this Section 1.04(c) shall be borne by Purchaser and Seller in inverse proportion as they may prevail on matters resolved by the Accounting Firm, which proportionate allocations shall also be determined by the Accounting Firm at the time the determination of the Accounting Firm is rendered on the merits of the matters submitted. The fees and disbursements of Seller’s independent auditors incurred in connection with their review of the Statement and review of any Notice of Disagreement shall be borne by Seller, and the fees and disbursements of Purchaser’s independent auditors incurred in connection with their review of the Statement shall be borne by Purchaser.
(d) Purchaser shall assist, and shall cause the Transferred Companies to assist, Seller in the preparation of the Statement. Purchaser acknowledges that Seller’s independent auditors may participate in the preparation of the Statement. During the period of time from and after the Closing Date through the date on which the Statement becomes final and binding on the parties (the “Finalization Period”), Purchaser shall afford, and shall cause the Transferred Companies to afford, to Seller and any of its independent auditors, counsel or financial advisers retained by Seller in connection with the preparation of the Statement and any adjustment to the Purchase Price contemplated by this Section 1.04 and to the Accounting Firm, reasonable access during normal business hours to all the properties, books, contracts, personnel and records of the Transferred Companies relevant to the preparation of the Statement and the adjustment contemplated by this Section 1.04, and, if Purchaser shall deliver a Notice of Disagreement to Seller, to the working papers of Purchaser and Purchaser’s auditors, if any, prepared in connection with the Notice of Disagreement. If, during the Finalization Period, Purchaser takes any action with respect to the data contained in the accounting books and records of the Transferred Companies as of the open of business on the Closing Date on which the Statement is to be based that is not consistent with the Transferred Companies’ past practices, Purchaser shall promptly advise Seller of such action and shall preserve the data as of the open of business on the Closing Date without any change resulting from such action. Following Purchaser’s receipt of the Statement through the date on which the Statement becomes final and binding on the parties, Seller shall afford, and shall cause its affiliates to afford, to Purchaser and any accountants, counsel or financial advisers retained by Purchaser in connection with any adjustment to the Purchase Price contemplated by this Section 1.04 and to the Accounting Firm reasonable access during normal business hours to all the properties, books, contracts, personnel and records of Seller relevant to the adjustment contemplated by this Section 1.04, including to the extent reasonably required to establish the methods, principles, conventions, policies and procedures, including GAAP and exceptions thereto and deviations therefrom, that were applied in the preparation of the Balance Sheet, the Target Amount and the Statement.
(e) The Purchase Price shall be increased by the amount by which the Closing Balance Sheet Amount exceeds $193,963,000 (the “Target Amount”), plus or minus, as applicable, the aggregate amount of adjustments, if any, to the Target Amount pursuant to Section 1.04(b)(iii) (the Target Amount, as so adjusted, the “Adjusted Target Amount”), and the Purchase Price shall be decreased by the amount by which the Closing Balance Sheet Amount is less than the Adjusted Target Amount (the Purchase Price as so increased or decreased shall hereinafter be referred to as the “Adjusted Purchase Price”). If the Closing Date Amount is less than the Adjusted Purchase Price, Purchaser shall, and if the Closing Date Amount is more than the Adjusted Purchase Price, Seller shall, within 10 business days after the Statement becomes final and binding on the parties, make payment by wire transfer in immediately available funds of the amount of such difference, together with interest thereon at a rate equal to the rate of interest announced publicly by Citibank, N.A., as its prime rate on the last business day preceding the Closing Date, calculated on the basis of the actual number of days elapsed, divided by 365, from the Closing Date to the date of payment.
Representations and Warranties
Relating to Seller and the Shares
Except as set forth in the Schedule of the Seller Disclosure Schedule attached hereto (the “Seller Disclosure Schedule”) referenced in the corresponding representation or warranty or as set forth in the last sentence of Section 10.05(b), Seller hereby represents and warrants to Purchaser as follows:
SECTION 2.01. Organization, Standing and Power. Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized. Seller has made available to Purchaser true and complete copies of its certificate of incorporation and by-laws, in each case as amended through the date of this Agreement.
SECTION 2.02. Authority; Execution and Delivery; Enforceability. Seller has full corporate power and authority to execute this Agreement, the Transition Services Agreement and the other agreements and instruments to be executed and delivered in connection with this Agreement (together with the Transition Services Agreement, collectively, the “Ancillary Agreements”) to which it is, or is specified to be, a party, to perform its obligations hereunder and thereunder and to consummate the Acquisition and the other transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and the Ancillary Agreements to which it is, or is specified to be, a party, the performance by Seller of its obligations hereunder and thereunder and the consummation by Seller of the Acquisition and the other transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action. Seller has duly executed and delivered this Agreement and, at or prior to the Closing, will have duly executed and delivered each Ancillary Agreement to which it is, or is specified to be, a party, and this Agreement constitutes, and each Ancillary Agreement to which it is, or is specified to be, a party will at and after the Closing constitute, its legal, valid and binding obligation, enforceable against it in accordance with its terms.
SECTION 2.03. No Conflicts; Consents. Except as set forth on Schedule 2.03 of the Seller Disclosure Schedule, the execution and delivery by Seller of this Agreement do not, the execution and delivery by Seller of each Ancillary Agreement to which it is, or is specified to be, a party will not, and the consummation of the Acquisition and the other transactions contemplated hereby and thereby and compliance by Seller with the terms hereof and thereof will not conflict with, result in any violation of or default (with or without notice or lapse of time, or both) under, give rise to a right of termination, cancellation or acceleration of any obligation or loss of a material benefit under, result in the creation of any Lien upon any of the properties or assets of Seller or require the consent of any person other than a Governmental Entity under any provision of (i) the certificate of incorporation or by-laws of Seller, each as amended to the date hereof, (ii) any contract, lease, license, indenture, agreement, commitment or other legally binding arrangement (a “Contract”) to which Seller is a party or by which any of its properties or assets is bound or (iii) any judgment, injunction, writ, order, binding arbitration determination or decree (“Judgment”) or statute, law, ordinance, rule or regulation (“Applicable Law”) applicable to Seller or its properties or assets, other than, in the case of clause (ii) above, any such items that, individually or in the aggregate, have not had and would not reasonably be expected to have a material adverse effect on the ability of Seller to perform its obligations under this Agreement and the Ancillary Agreements and otherwise consummate the transactions contemplated hereby and thereby. No consent, approval, license, permit, order or authorization (“Consent”) of, or registration, declaration or filing with, any Federal, state, local or foreign government or any court of competent jurisdiction, administrative agency, governmental arbitral body or commission or other governmental authority or instrumentality, domestic or foreign, (a “Governmental Entity”) is required to be obtained or made by or with respect to Seller in connection with the execution, delivery and performance of this Agreement or any Ancillary Agreement or the consummation of the Acquisition or the other transactions contemplated hereby and thereby, other than (A) compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), (B) compliance with and such filings and notifications as may be required under applicable state property transfer laws or other Environmental Laws, (C) those that may be required solely by reason of Purchaser’s (as opposed to any other third party’s) participation in the Acquisition and the other transactions contemplated hereby and by the Ancillary Agreements and (D) such Consents, registrations, declarations and filings the absence of which, or the failure to make or obtain which, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the ability of Seller to perform its obligations under this Agreement and the Ancillary Agreements and otherwise consummate the transactions contemplated hereby and thereby.
SECTION 2.04. The Shares. (a) Seller has good and valid title to the Shares, free and clear of all Liens. Assuming Purchaser has the requisite power and authority to be the lawful owner of the Shares, upon delivery to Purchaser at the Closing of certificates representing the Shares, duly endorsed by Seller for transfer to Purchaser, and upon Seller’s receipt of the Closing Date Amount, good and valid title to the Shares will pass to Purchaser, free and clear of any Liens, other than those arising from acts of Purchaser or its affiliates. Other than this Agreement, the Shares are not subject to any voting trust agreement or other Contract, including any Contract restricting or otherwise relating to the voting, dividend rights or disposition of the Shares.
(b) The authorized capital stock of APAC consists of 1,000 authorized shares of Common Stock, no par value, of which 10 shares, constituting the Shares, are issued and outstanding. Except for the Shares, there are no shares of capital stock or other equity securities of APAC issued, reserved for issuance or outstanding.
(c) The Shares are duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right (a “Share Right”) under any provision of the Delaware General Corporation Law, the certificate of incorporation or by-laws of APAC or any Contract to which APAC is a party or otherwise bound.
(d) There are not any bonds, debentures, notes or other indebtedness of APAC having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of the Shares may vote (“Voting Company Debt”). Except as set forth on Schedule 2.04 of the Seller Disclosure Schedule, as of the date of this Agreement, there are not any options, warrants, rights, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which APAC or Seller is a party or by which it is bound (i) obligating APAC or Seller to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, APAC or any Voting Company Debt, (ii) obligating APAC or Seller to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking or (iii) giving any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of Shares. As of the date of this Agreement, there are not any outstanding contractual obligations of APAC to repurchase, redeem or otherwise acquire any Shares.
Representations and Warranties
Relating to the Transferred Companies
Except as set forth in the Schedule of the Seller Disclosure Schedule referenced in the corresponding representation or warranty or as set forth in the last sentence of Section 10.05(b), Seller hereby represents and warrants to Purchaser as follows:
(a) Each of the Transferred Companies is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, which jurisdiction is set forth in Schedule 3.01 of the Seller Disclosure Schedule. Each of the Transferred Companies is duly qualified to do business and in good standing as a foreign corporation in each jurisdiction in which the conduct or nature of its business or the ownership, leasing or holding of its properties makes such qualification necessary, except such jurisdictions where the failure to be so qualified or in good standing, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect.
(b) Seller has delivered to Purchaser true and complete copies of the certificate of incorporation and by-laws, each as amended to the date hereof, of each of the Transferred Companies. The stock certificate and transfer books and the minute books of each of the Transferred Companies (which have been made available for inspection by Purchaser prior to the date hereof) are true and complete in all material respects as of the date hereof.
SECTION 3.02. Capital Stock of the Subsidiaries. (a) Schedule 3.02 of the Seller Disclosure Schedule sets forth for each Subsidiary the amount of its authorized capital stock, the amount of its outstanding capital stock and the record and beneficial owners of its outstanding capital stock. Except as set forth in Schedule 3.02 of the Seller Disclosure Schedule, there are no shares of capital stock or other equity securities of any Subsidiary issued, reserved for issuance or outstanding. All the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and are not subject to or issued in violation of any Share Right under any provision of any Applicable Law, certificate of incorporation or by-laws (or other equivalent organizational document) of the Subsidiaries or any Contract to which any Subsidiary is a party or otherwise bound, except for such violations that, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. There are not any bonds, debentures, notes or other indebtedness of the Subsidiaries having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of the outstanding shares of any Subsidiary may vote (“Subsidiary Voting Company Debt”). Except as set forth in Schedule 3.02 of the Seller Disclosure Schedule, as of the date of this Agreement, there are not any options, warrants, rights, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which any Transferred Company is a party or by which any of them is bound (i) obligating any Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, or pledge or otherwise encumber any share of capital stock or other ownership interest in, any Transferred Company or any Subsidiary Voting Company Debt, (ii) obligating any Subsidiary to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking or (iii) giving any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of any shares of capital stock of any Subsidiary. As of the date of this Agreement, there are not any outstanding contractual obligations of any Transferred Company to repurchase, redeem or otherwise acquire any shares of capital stock of any Subsidiary.
(b) Except for its interests in the Subsidiaries and except for the ownership interests set forth in Schedule 3.02 of the Seller Disclosure Schedule, none of the Transferred Companies, as of the date of this Agreement, owns, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest.
SECTION 3.03. No Conflicts; Consents. Except as set forth on Schedule 3.03 of the Seller Disclosure Schedule, the execution and delivery by Seller of this Agreement does not, the execution and delivery by Seller of each Ancillary Agreement to which it is, or is specified to be, a party will not, and the consummation of the Acquisition and the other transactions contemplated hereby and thereby and compliance by Seller with the terms hereof and thereof will not conflict with, result in any violation of or default (with or without notice or lapse of time, or both) under, give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, result in the creation of any Lien upon any of the properties or assets of the Transferred Companies or require the consent of any person other than a Governmental Entity under any provision of (i) the certificate of incorporation or by-laws of any of the Transferred Companies, (ii) any Contract to which any of the Transferred Companies, Seller or its subsidiaries is a party or by which any of the respective properties or assets of any of the Transferred Companies is bound or, in the case of Seller or any of its subsidiaries, that affect the operations of any of the Transferred Companies or (iii) any Judgment or Applicable Law applicable to any of the Transferred Companies or their respective properties or assets, other than, in the case of clauses (ii) and (iii) above, any such items that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. No Consent of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to any of the Transferred Companies in connection with the execution, delivery and performance of this Agreement or any Ancillary Agreement or the consummation of the Acquisition or the other transactions contemplated hereby and thereby, other than (A) compliance with and filings under the HSR Act, (B) compliance with and such filings and notifications as may be required under applicable state property transfer laws or other Environmental Laws, (C) those that may be required solely by reason of Purchaser’s (as opposed to any other third party’s) participation in the Acquisition and the other transactions contemplated hereby and by the Ancillary Agreements and (D) such Consents, registrations, declarations and filings the absence of which, or the failure to make or obtain which, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.04. Financial Statements. (a) Schedule 3.04(a) of the Seller Disclosure Schedule sets forth (i) the audited consolidated balance sheet of APAC and its Subsidiaries (including Limpus Quarries, Inc. “Limpus”) as of September 30, 2004 and September 30, 2005 (the “Balance Sheet Date”, and the balance sheet dated as of such date, the “Balance Sheet”) and the audited statements of consolidated income, statements of consolidated cash flows and statements of consolidated shareholders’ equity (deficit) of APAC and its Subsidiaries (including Limpus) for the periods as of and ended September 30, 2003, September 30, 2004 and September 30, 2005, in each case together with all notes and schedules thereto and the independent auditors’ report of Ernst & Young LLP thereon and (ii) the unaudited balance sheet, statements of consolidated income, statements of consolidated cash flows and statements of consolidated shareholders’ equity (deficit) of APAC and its Subsidiaries (including Limpus) on a consolidated basis for the nine-month period as of and ended June 30, 2006, together with all notes and schedules thereto (the financial statements referred to in clauses (i) and (ii), the “Financial Statements”). The Financial Statements have been prepared in conformity with GAAP consistently applied (except in each case as described in the notes thereto) and on that basis fairly present (subject, in the case of the unaudited statements, to normal, recurring year-end audit adjustments) the consolidated financial condition, results of operations and cash flows of APAC and its Subsidiaries (including Limpus) as of the respective dates thereof and for the respective periods indicated.
(b) No Transferred Company has any indebtedness or liability (whether accrued, fixed or contingent) of a nature required by GAAP to be reflected on a consolidated balance sheet or in the notes thereto, that has had or could reasonably be expected to have, individually or in the aggregate with other liabilities or indebtedness that are not Disclosed Liabilities, a Company Material Adverse Effect, except (i) as disclosed, reflected or reserved against in the Financial Statements, (ii) for liabilities incurred in the ordinary course of business of the Transferred Companies subsequent to June 30, 2006, (iii) indebtedness or liabilities that are set forth on Schedule 3.04(b) of the Seller Disclosure Schedule and (iv) for Taxes (the indebtedness and liabilities set forth in clauses (i) through (iv), the “Disclosed Liabilities”). This representation shall not be deemed breached as a result of a change in Applicable Law or GAAP after the Closing Date.
SECTION 3.05. Assets Other than Real Property Interests. (a) A Transferred Company has good and valid title or a valid leasehold interest or license to all the material assets reflected on the Balance Sheet or thereafter acquired, other than those set forth in Schedule 3.05 of the Seller Disclosure Schedule or otherwise disposed of since the Balance Sheet Date in the ordinary course of business, in each case free and clear of all mortgages, liens, security interests, charges, easements, leases, subleases, covenants, rights of way, options, claims, restrictions or encumbrances of any kind (collectively, “Liens”), except (i) such Liens as are set forth in Schedule 3.05 of the Seller Disclosure Schedule, (ii) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens arising or incurred in the ordinary course of business, Liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business and Liens for Taxes that are not due and payable or that may thereafter be paid without penalty, (iii) Liens that secure obligations that are reflected as liabilities on the Balance Sheet or Liens the existence of which is referred to in the notes to the Balance Sheet and (iv) other imperfections of title or encumbrances, if any, that, individually or in the aggregate, do not materially impair, and would not reasonably be expected materially to impair, the continued use and operation of the assets to which they relate in the conduct of the business of the Transferred Companies as presently conducted (the Liens described above, together with the Liens referred to in clauses (ii) through (vi) of Section 3.06, are referred to collectively as “Permitted Liens”).
(b) This Section 3.05 does not relate to real property or interests in real property, such items being the subject of Section 3.06, or to Intellectual Property, such items being the subject of Section 3.07.
SECTION 3.06. Real Property. (a) Schedule 3.06(a) of the Seller Disclosure Schedule sets forth, as of the date of this Agreement, a complete list of all real property and interests in real property owned in fee by any Transferred Company (individually, an “Owned Property”). Schedule 3.06(a) of the Seller Disclosure Schedule sets forth, as of the date of this Agreement, a complete list of all real property and interests in real property leased by any Transferred Company on terms that provide for a future liability in excess of $250,000 annually (individually, a “Leased Property”). A Transferred Company has good and insurable fee title to all Owned Property and good and valid title to the leasehold estates in all Leased Property (an Owned Property or Leased Property being sometimes referred to herein, individually, as an “APAC Property”), in each case free and clear of all Liens, except (i) Liens described in clause (ii), (iii) or (iv) of Section 3.05(a), (ii) such Liens as are set forth in Schedule 3.06(a) of the Seller Disclosure Schedule, (iii) leases, subleases and similar agreements set forth in Schedule 3.06(a) of the Seller Disclosure Schedule, (iv) easements, covenants, rights-of-way and other similar restrictions of record, (v) any conditions that may be shown by a current, accurate survey of any APAC Property, provided that such survey has been made available to Purchaser prior to the Closing, and (vi) (A) zoning, building and other similar restrictions, (B) Liens that have been placed by any developer, landlord or other third party on property over which a Transferred Company has easement rights or on any Leased Property and subordination or similar agreements relating thereto and (C) unrecorded easements, covenants, rights-of-way and other similar restrictions. None of the items set forth in clause (vi) above, individually or in the aggregate, materially impairs or would reasonably be expected materially to impair, the continued use and operation of APAC Property to which they relate in the conduct of the business of the Transferred Companies as presently conducted on such respective APAC Properties.
(b) Schedule 3.06(b) of the Seller Disclosure Schedule sets forth (i) each real property or interest in real property owned in fee by a Transferred Company that was sold, transferred or otherwise disposed of for consideration greater than $1,000,000 during the period from the Balance Sheet Date to the date of this Agreement and (ii) each real property or interest in real property that was leased by a Transferred Company on terms that provided for liability in excess of $250,000 annually as of the Balance Sheet Date and which expired and was not renewed or was otherwise terminated during the period from the Balance Sheet Date to the date of this Agreement, in each case, other than any such disposition or termination in the ordinary course of business.
SECTION 3.07. Intellectual Property. (a) Schedule 3.07 of the Seller Disclosure Schedule sets forth a true and complete list of all material Intellectual Property owned, used, filed by or licensed to any Transferred Company, other than unregistered designs and copyrights that, individually and in the aggregate, are not material to the conduct of the business of the Transferred Companies as presently conducted. The Intellectual Property set forth on Schedule 3.07 of the Seller Disclosure Schedule is referred to in this Agreement as the “APAC Intellectual Property”. Except as set forth in Schedule 3.07 of the Seller Disclosure Schedule, and except as, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect, (i) to the knowledge of Seller, all APAC Intellectual Property has been duly registered in, filed in or issued by the appropriate Governmental Entity where such registration, filing or issuance is necessary or appropriate for the conduct of the business of the Transferred Companies as presently conducted and (ii) during the two (2) years prior to the date of this Agreement, none of Seller or any Transferred Company has received any written communication from any person asserting any ownership interest in any APAC Intellectual Property. Except as specified in Schedule 3.07 of the Seller Disclosure Schedule, one or more of the Transferred Companies owns all right, title and interest in and to the APAC Intellectual Property listed in Schedule 3.07 of the Seller Disclosure Schedule, free and clear of any Lien other than Permitted Liens.
(b) None of Seller or any Transferred Company has granted any license of any kind relating to any Technology or APAC Intellectual Property or the marketing or distribution thereof, except nonexclusive licenses granted in the ordinary course of business. None of Seller or any Transferred Company is bound by or a party to any option, license or similar Contract relating to the Intellectual Property of any other person for the use of such Intellectual Property in the conduct of the business of the Transferred Companies that is material to the conduct of the business of the Transferred Companies as presently conducted, except as set forth in Schedule 3.07 of the Seller Disclosure Schedule and except for so called “shrink-wrap” license agreements relating to computer software licensed to any Transferred Company in the ordinary course of business. To the knowledge of Seller, the conduct of the business of the Transferred Companies as presently conducted does not violate, conflict with or infringe the Intellectual Property of any other person, except for such violations, conflicts or infringements that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. Except as set forth in Schedule 3.07 of the Seller Disclosure Schedule, to the knowledge of Seller, no claims are pending as of the date of this Agreement against any Transferred Company by any person with respect to the ownership, validity, enforceability, effectiveness or use in the business of the Transferred Companies of any Intellectual Property, except for such claims that would not reasonably be expected to have a Company Material Adverse Effect.
(c) In this Agreement:
“Intellectual Property” means any patent (including all reissues, divisions, continuations and extensions thereof), patent application, patent right, trademark, trademark registration, trademark application, service mark, trade name, business name, brand name, copyright, copyright registration, design, design registration, or any right to any of the foregoing.
“Technology” means all trade secrets, confidential information, inventions, know-how, formulae, processes, procedures, research records, records of inventions, test information, market surveys and marketing know-how of the Transferred Companies.
SECTION 3.08. Contracts. (a) Except as set forth in Schedule 3.08 of the Seller Disclosure Schedule, as of the date of this Agreement, no Transferred Company is a party to or bound by any:
(i) written employment or consulting agreement or contract (including with any Ashland/APAC Employee not employed by any Transferred Company, whether or not a Transferred Company is a party to such contract or is bound by it) that provides for annual cash compensation in excess of $100,000;
(ii) collective bargaining agreement or other contract with any labor organization, union or association;
(iii) covenant not to compete or engage in any line of business or similar agreement that materially limits the conduct of the business of the Transferred Companies as presently conducted;
(iv) Contract with respect to any disposition or acquisition of capital stock, business or assets of any person that contains any right of first refusal or any similar rights or involves consideration in excess of $500,000;
(v) lease, sublease or similar Contract with any person (other than a Transferred Company) under which a Transferred Company is a lessor or sublessor of, or makes available for use to any person (other than a Transferred Company), (A) any APAC Property or (B) any portion of any premises otherwise occupied by the Transferred Companies, in any such case which provides for a future liability or receivable, as the case may be, in excess of $250,000 annually;
(vi) lease, sublease or similar Contract with any person (other than a Transferred Company) under which (A) a Transferred Company is lessee of, or holds or uses, any machinery, equipment, vehicle or other tangible personal property owned by any person or (B) a Transferred Company is a lessor or sublessor of, or makes available for use by any person, any tangible personal property owned or leased by a Transferred Company, in any such case which provides for a future liability or receivable, as the case may be, in excess of $250,000 annually;
(vii) Contract under which a Transferred Company has borrowed any money from, or issued any note, bond, debenture or other evidence of indebtedness to, any person (other than a Transferred Company) or any other note, bond, debenture or other evidence of indebtedness of a Transferred Company (other than in favor of the relevant Transferred Company), in each case other than (A) indebtedness owed to Seller or any subsidiary of Seller (other than a Transferred Company) to be discharged on or prior to the Closing, (B) trade payables arising in the ordinary course of business, (C) surety bonds on which a Transferred Company is principal provided to a third party in the ordinary course of business and (D) and obligations to assure payment to subcontractors and material suppliers undertaken in the ordinary course of business, in any such case which, individually, is in excess of $1,000,000;
(viii) Contract (including any so-called take-or-pay or keepwell agreements, but excluding any GIA provided to a third party in the ordinary course of business with respect to which a Transferred Company is a principal and which GIA is listed on Schedule 5.13(b)-1 of the Seller Disclosure Schedule) under which (A) any person, other than a Transferred Company, has directly or indirectly guaranteed indebtedness, liabilities or obligations of a Transferred Company or (B) a Transferred Company has, directly or indirectly, guaranteed indebtedness, liabilities or obligations of any person, other than a Transferred Company (in each case other than endorsements for the purpose of collection in the ordinary course of business, surety bonds on which a Transferred Company is principal provided to a third party in the ordinary course of business, and obligations to assure payment to subcontractors and material suppliers undertaken in the ordinary course of business), in any such case which, individually, is in excess of $500,000;
(ix) Contract under which a Transferred Company has, directly or indirectly, made any advance, loan, extension of credit or capital contribution to, or other investment in, any person (other than a Transferred Company and other than extensions of trade credit in the ordinary course of business), in any such case which, individually, is in excess of $500,000;
(x) Contract for the provision of goods and services by any Transferred Company or from third parties to any Transferred Company (other than Contracts for the provision of goods and services by or to any subcontractor or supplier with respect to a construction project whereby a Transferred Company is the principal contractor for such project) in each case involving consideration in excess of $3,000,000 or containing a right of first refusal or similar right;
(xi) Contract for the purchase or sale of any asset of a Transferred Company or for the purchase of any asset from any third party by a Transferred Company (other than purchases and sales in the ordinary course of business) or the grant of any rights to purchase or sell any such asset or requiring the consent of any party to the transfer thereof, other than any such Contract entered into in the ordinary course of business and not in violation of this Agreement;
(xii) hedging instrument, currency exchange, interest rate exchange, commodity exchange or similar Contract;
(xiii) Contract for any joint venture, partnership or similar arrangement; or
(xiv) other Contract that creates an obligation on the part of any Transferred Company in excess of $3,000,000 that cannot be cancelled without penalty or further payment and without more than 90 days notice (other than Contracts of the type covered in clauses (i) to (xiii) of this Section 3.08 and other than Contracts excluded from clauses (i) to (xiii) of this Section 3.08 based on a dollar or other materiality threshold, an ordinary course of business exception, a cancellation or termination provision or other exclusion, including other than Contracts for the provision of goods and services by or to any subcontractor or supplier with respect to a construction project whereby a Transferred Company is the principal contractor for such project).
(b) Except as set forth in Schedule 3.08 of the Seller Disclosure Schedule, all Contracts listed or required to be listed in Schedule 3.08 of the Seller Disclosure Schedule (the “APAC Contracts”) are valid, binding and in full force and effect and are enforceable by the applicable Transferred Company in accordance with their terms, except for such failures to be valid, binding, in full force and effect or enforceable that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. Except as set forth in Schedule 3.08 of the Seller Disclosure Schedule, the applicable Transferred Company has performed all material obligations required to be performed by it to date under APAC Contracts, and it is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder and, to the knowledge of Seller, no other party to any APAC Contract is (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder, except for such noncompliance, breaches and defaults that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.
(c) For the purposes of this Section 3.08, a Transferred Company shall be deemed a party to each of the Contracts listed on Schedule 5.16(a)-1 of the Seller Disclosure Schedule.
SECTION 3.09. Permits. The Transferred Companies possess or have applied for all licenses, permits, certifications, consents, authorizations and approvals from any Governmental Entity (“Permits”) to own or hold under lease and operate their respective assets and to conduct the business of the Transferred Companies as currently conducted, other than such Permits the absence of which, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. Except a set forth in Schedule 3.09 of the Seller Disclosure Schedule, Seller does not have knowledge of any fact, error or omission relevant to any Permit that would permit the revocation or withdrawal, the threatened revocation or withdrawal or result in the failure to obtain the renewal or re-issuance thereof, other than where such revocation, withdrawal or failure to obtain renewal or re-issuance has not had and would not reasonably be expected to have a Company Material Adverse Effect. This Section 3.09 does not relate to Environmental Permits or matters relating to asbestos, which are the subject of Section 3.15.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Post-Closing Tax Period” shall mean any taxable period that begins after the Closing Date and the portion of any Straddle Period beginning after the Closing Date.
“Pre-Closing Tax Period” shall mean any taxable periods ending on or before the Closing Date and the portion of any Straddle Period ending on and including the Closing Date.
“Straddle Period” shall mean any taxable period that includes (but does not end on) the Closing Date.
“Tax” or “Taxes” shall mean all Federal, state, county, local, municipal, foreign and other taxes, assessments, duties or similar charges of any kind whatsoever, including all corporate franchise, income, sales, use, ad valorem, receipts, value added, profits, license, withholding, payroll, employment, excise, premium, property, customs, net worth, capital gains, transfer, stamp, documentary, social security, environmental, alternative minimum, occupation, recapture and other taxes, and including all interest, penalties and additions imposed with respect to such amounts, and all amounts payable pursuant to any agreement or arrangement with respect to Taxes.
“Taxing Authority” shall mean any domestic, foreign, Federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising tax regulatory authority.
“Tax Return” or “Tax Returns” shall mean all returns, declarations of estimated tax payments, reports, estimates, information returns and statements, including any related or supporting information with respect to any of the foregoing, filed or to be filed with any Taxing Authority in connection with the determination, assessment, collection or administration of any Taxes.
(b) Except as set forth in Schedule 3.10 of the Seller Disclosure Schedule, (i) each Transferred Company, and any affiliated group, within the meaning of Section 1504 of the Code, of which any Transferred Company is or has been a member, has filed or caused to be filed in a timely manner (within any applicable extension periods) all material Tax Returns required to be filed by the Code or by applicable state, local or foreign Tax laws, (ii) all material Taxes with respect to taxable periods covered by such Tax Returns, and all other material Taxes for which any Transferred Company is or might otherwise be liable, have been timely paid in full or will be timely paid in full or is being contested in a timely fashion in appropriate proceedings, and (iii) no material Liens for Taxes with respect to any of the assets or properties of any Transferred Company exist other than Liens for Taxes that are not yet due and payable or that may thereafter be paid without penalty.
(c) Except as set forth on Schedule 3.10 of the Seller Disclosure Schedule, no material Tax Return of any Transferred Company or any affiliated group of which any Transferred Company is now a member is under audit or examination by any Taxing Authority.
(d) Except as set forth in Schedule 3.10 of the Seller Disclosure Schedule, each material deficiency resulting from any completed audit or examination relating to Taxes by any Taxing Authority has been timely paid or is being contested in a timely fashion in appropriate proceedings.
(e) Except as set forth in Schedule 3.10 of the Seller Disclosure Schedule, no Transferred Company is party to or bound by any income Tax allocation, indemnity, sharing or similar agreement.
(f) Except as set forth in Schedule 3.10 of the Seller Disclosure Schedule, there are no outstanding agreements or waivers extending, or having the effect of extending, the statutory period of limitation for the assessment and collection of any Taxes applicable to any material Tax returns required to be filed with respect to any Transferred Company.
(g) Seller is not a “foreign person” within the meaning of Section 1445 of the Code.
(h) No Transferred Company is or has been a party to a “reportable transaction” to which disclosure is required pursuant to Treasury Regulation Section 1.6011-4 (excluding Section 1.6011-4(b)(6))or to a transaction that is substantially similar to a “listed transaction” as such term is defined in Treasury Regulation Section 1.6011-4(b)(2).
(i) No Transferred Company is a party to any agreement, contract, arrangement or plan that (i) has resulted or would reasonably be expected to result separately or in the aggregate, in connection with this Agreement or any change of control of a Transferred Company, in the payment of any “excess parachute payment” within the meaning of Section 280G of the Code, (ii) could obligate any Transferred Company to make any payments that will not be fully deductible under Section 162(m) of the Code or (iii) would reasonably be expected to give rise to an excise Tax under Section 409A of the Code.
(j) There are no material deferred intercompany transactions between any Transferred Company and any other member of its consolidated group and there is no excess loss account (within the meaning of Treasury Regulation Section 1.1502-19 with respect to the stock of a Transferred Company) which will, or may, result in the recognition of income in a Post-Closing Tax Period upon the consummation of the transactions contemplated by this Agreement.
SECTION 3.11. Proceedings. Except as set forth in Schedule 3.11 of the Seller Disclosure Schedule, as of the date of this Agreement, there is no pending or, to the knowledge of Seller, threatened Proceeding against Seller or any Transferred Company that has had or would reasonably be expected to result in a liability for damages in excess of $1,000,000 or involves a claim for material equitable relief. Except as set forth in Schedule 3.11 of the Seller Disclosure Schedule, as of the date of this Agreement, no Transferred Company is a party or subject to or in default under any Judgment, other than for such Judgments that, individually and in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. Except as set forth in Schedule 3.11 of the Seller Disclosure Schedule, as of the date of this Agreement, there is not any suit, action or proceeding (a “Proceeding”) or claim by any Transferred Company pending, or which any Transferred Company intends to initiate, against any other person, other than claims of $500,000 or less. As of the date of the Agreement, there is no pending or, to the knowledge of Seller, threatened Proceeding or investigation by any Governmental Entity, to restrain or prevent the consummation of the transactions contemplated by this Agreement. This Section 3.11 does not relate to environmental matters or matters relating to asbestos, which are the subject of Section 3.15.
SECTION 3.12. Benefit Plans. (a) Each “employee pension benefit plan” (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) (“Pension Plan”), each “employee welfare benefit plan” (as defined in Section 3(1) of ERISA), and each other plan, arrangement or policy (written or oral) relating to stock options, stock purchases, deferred compensation, severance, fringe benefits or other employee benefits, in each case maintained or contributed to, or required to be maintained or contributed to, by Seller, any Transferred Company or any other person or entity that, together with Seller, is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code (each, together with Seller, a “Commonly Controlled Entity”) for the benefit of any current or former employee of any Transferred Company (each, an “APAC Employee”) or any current Ashland/APAC Employee, other than any “multiemployer plan” (within the meaning of Section 3(37) of ERISA) or any plans, arrangements or policies mandated by Applicable Law, is herein referred to as a “Seller Benefit Plan”. Schedule 3.12(a) of the Seller Disclosure Schedule contains a list, as of the date of this Agreement, of each material Seller Benefit Plan. Seller has delivered or made available to Purchaser true, complete and correct copies of (A) each material Seller Benefit Plan, (B) the most recent annual report on Form 5500 (including all schedules and attachments thereto) filed with the Internal Revenue Service with respect to the APAC, Inc. Hourly Savings Plan (the “Assumed Benefit Plan”), (C) the most recent summary plan description (or similar document) for each material Seller Benefit Plan for which a summary plan description is required by Applicable Law, (D) each trust agreement relating to the Assumed Benefit Plan and (E) the most recent determination letter issued by the Internal Revenue Service for the Assumed Benefit Plan.
(b) The Seller Benefit Plans have been administered substantially in accordance with their terms and in substantial compliance with the applicable provisions of ERISA, the Code, all other Applicable Laws and the terms of all applicable collective bargaining agreements, except where the failure to be so administered would not reasonably be expected to have a Company Material Adverse Effect. There are no investigations by any Governmental Entity, termination proceedings or other claims (except routine claims for benefits payable under the Seller Benefit Plans) or Proceedings against or involving the Seller Benefit Plans or asserting any rights to or claims for benefits under the Seller Benefit Plans that, individually or in the aggregate, would reasonably be expected to have a Company Material Adverse Effect.
(c) The Assumed Benefit Plan is not subject to Title IV of ERISA or Section 412 of the Code. Except as set forth in Schedule 3.12(c) of the Seller Disclosure Schedule, on or following the consummation of the transactions contemplated by this Agreement, no Transferred Company would reasonably be expected to incur any liability under Title IV of ERISA as a result of being treated as a single employer with Seller for purposes of Section 414(b), (c), (m) or (o) of the Code.
(d) Except with respect to the individuals set forth on Schedule 3.12(d) of the Seller Disclosure Schedule (the “Primary Company Executives”), any amount that could be received (whether in cash or property or the vesting of property) as a result of any of the transactions contemplated by this Agreement by any employee, officer, director or independent contractor of the Transferred Companies who is a “disqualified individual” (as such term is defined in Treasury Regulation Section 1.280G-1) under any Seller Benefit Plan or otherwise would not be characterized as an “excess parachute payment” (as such term is defined in Section 280G(b)(1) of the Code.)
SECTION 3.13. Absence of Changes or Events. (a) Except as set forth in Schedule 3.13(a) of the Seller Disclosure Schedule, since the Balance Sheet Date, there has not been a material adverse effect (i) on the assets, business, financial condition or results of operations of the Transferred Companies, taken as a whole, (ii) on the ability of Seller to perform its obligations under this Agreement and the Ancillary Agreements or (iii) on the ability of Seller to consummate the Acquisition and the other transactions contemplated hereby; provided that, for all purposes of this Agreement, none of the following shall be deemed, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, such a material adverse effect (other than, in the case of clauses (A) and (B) below, any such change or disruption having a materially disproportionate effect on the business of the Transferred Companies, individually or in the aggregate, relative to other participants in the industry in which the Transferred Companies operate): (A) any change or disruption relating to United States or foreign economies in general, (B) any change or disruption in each of the Transferred Companies’ industries in general and not specifically relating to any of the Transferred Companies, (C) any change or disruption to any of the Transferred Companies’ businesses as a result of the execution of this Agreement and the consummation of the transactions contemplate hereby or the announcement of or other publicity regarding the possible sale of the Transferred Companies’ businesses, and (D) any change or disruption to any of the Transferred Companies’ businesses as a result of the ongoing litigation between the Sierra Club and the U.S. Army Corps of Engineers regarding the issuance of permits for the mining of construction aggregates in the Lake Belt area of Miami-Dade County, Florida.
(b) Except as set forth in Schedule 3.13(b) of the Seller Disclosure Schedule, since the Balance Sheet Date, the business of the Transferred Companies has been conducted in the ordinary course and in substantially the same manner as previously conducted. Except as set forth in Schedule 3.13 of the Seller Disclosure Schedule, no Transferred Company has:
(i) from June 30, 2006 to the date of this Agreement, increased or established any material reserve for liabilities (other than Specified Liabilities) on its books, other than in the course of ordinary business;
(ii) from June 30, 2006 to the date of this Agreement, made, authorized or committed to any capital expenditure for additions to plant and equipment accounts of any Transferred Company in excess of $1,000,000 each, except as may have been necessary for ordinary repair, maintenance and replacement; or
�� (iii) from the Balance Sheet Date to the date of this Agreement, declared, set aside or paid any dividend or other distribution to its stockholders, whether or not upon or in respect of its capital stock, or redeemed or purchased any shares of its capital stock, or agreed to take any such action, other than dividends and distributions of cash made by a Transferred Company to another Transferred Company or to Seller in the ordinary course of business.
SECTION 3.14. Compliance with Applicable Laws. Except as set forth in Schedule 3.14 of the Seller Disclosure Schedule, the Transferred Companies (i) to the knowledge of Seller, have been in compliance with Federal or state antitrust or anti-competition laws and regulations during the two year period prior to the date hereof, and (ii) are in compliance with all Applicable Laws, in each case except for instances of noncompliance that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. This Section 3.14 does not relate to matters with respect to Taxes, which are the subject of Section 3.10; employee benefits, which are the subject of Section 3.12; environmental matters or matters relating to asbestos, which are the subject of Section 3.15; or employee and labor matters, which are the subject of Section 3.16.
SECTION 3.15. Compliance with Applicable Environmental Laws. Except as set forth in Schedule 3.15 of the Seller Disclosure Schedule and except for matters that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) the Transferred Companies are in compliance with all applicable Environmental Laws, including any requirements under the National Emissions Standards for Hazardous Air Pollutants applicable to asbestos and asbestos-containing materials contained in any building, structure or equipment at any facility currently owned or operated by any of the Transferred Companies, (ii) the Transferred Companies hold, and are in compliance with, all Permits required under applicable Environmental Laws (“Environmental Permits”) for the Transferred Companies to conduct their respective businesses as currently conducted, (iii) no Transferred Company has any outstanding obligation under any binding agreement (other than any lease, sublease, license, indenture, credit agreement or contract for the provision of goods or services) or is subject to any Judgment, in each case, primarily or exclusively relating to an actual or alleged violation of any applicable Environmental Law or the investigation or cleanup of Hazardous Materials, (iv) there are no claims pending or, to the knowledge of the Seller, threatened against any Transferred Company relating to matters arising under or pursuant to applicable Environmental Laws or to human exposure to Hazardous Materials (except that this clause (iv) does not relate to any claims alleging exposure to asbestos or asbestos-containing materials which arise under, or are covered or barred by, workers’ compensation and workers’ compensation, disability or other insurance providing medical care and/or compensation to injured workers); (v) no Hazardous Materials (except that, for the purposes of this clause (v), “Hazardous Materials” shall not include asbestos or asbestos-containing materials) have been Released by any of the Transferred Companies or their respective predecessors in interest at, on, about or under (A) any property now or formerly owned, operated or leased by any of the Transferred Companies or their respective predecessors in interest, or (B) to the knowledge of Seller, any property to which any of the Transferred Companies or their respective predecessors in interest sent waste for disposal; (vi) there are no underground storage tanks at any property currently owned or operated by any of the Transferred Companies which any of the Transferred Companies is required to upgrade, retrofit or remove under applicable Environmental Laws; (vii) none of the Transferred Companies nor any of their respective predecessors in interest has ever manufactured, produced, sold, conveyed or otherwise put into the stream of commerce any product, merchandise, manufactured good, part, component or other item comprised of or containing asbestos; and (viii) Seller has delivered or made available to Purchaser all of the material environmental studies and reports (including, without limitation, Phase I and Phase II investigation reports) prepared during the last five (5) years and listed on Schedule 3.15 and, to the knowledge of Seller, there are no other material studies or reports relating to the condition of any property currently owned, leased or operated by any of the Transferred Companies which are not listed on such Schedule 3.15. Except as specifically provided in Sections 2.03 or 3.03, the representations and warranties in this Section 3.15 shall be the exclusive representations and warranties with respect to environmental matters and/or matters relating to asbestos.
The term “Environmental Laws” means all Applicable Laws relating to pollution or protection of the environment, preservation or reclamation of land or natural resources, or the generation, use, management, storage, treatment, recycling, distribution, transportation, disposal, remediation or Release of Hazardous Materials.
The term “Hazardous Materials” means (i) any radioactive materials or wastes, petroleum (including crude oil or any fraction thereof) or petroleum by-products, urea formaldehyde foam insulation, polychlorinated biphenyls, and asbestos or asbestos-containing materials and (ii) any other wastes, materials, chemicals or substances regulated pursuant to any Environmental Laws.
The term “Release” has the meaning ascribed to that term in 42 U.S.C. 9601(22).
SECTION 3.16. Employee and Labor Matters. Except as set forth in Schedule 3.16 of the Seller Disclosure Schedule, (i) there is no unfair labor practice, charge or complaint or other proceeding pending or, to the knowledge of Seller, threatened against any Transferred Company before the National Labor Relations Board or any similar sovereign state or local agency and (ii) there is no labor strike, slowdown, work stoppage or lockout pending, or, to the knowledge of Seller, threatened, against or affecting any Transferred Company, nor has there been any such activity within the 12 months prior to the date of this Agreement, except, in the case of clauses (i) and (ii), for any such action, conduct, practice or proceeding that has not had and would not reasonably be expected to have a Company Material Adverse Effect. Seller and the Transferred Companies are in compliance with all laws respecting employment of labor, except to the extent that any noncompliance would not reasonably be expected to have a Company Material Adverse Effect
SECTION 3.17. Transactions with Affiliates. (a) Except as set forth in Schedule 3.17(a) of the Seller Disclosure Schedule and except for any Permitted Intercompany Receivables and Payables, none of the Contracts between any Transferred Company, on the one hand, and Seller, any of its affiliates (other than any Transferred Company), any officer or director thereof or of any Transferred Company or any relative of any of the foregoing individuals (any such person, a “Related Party”), on the other hand, will continue in effect subsequent to the Closing and no Transferred Company shall have any liability with respect to any such Contracts.
(b) Except for (i) assets or rights used in connection with services provided to the Transferred Companies by Seller and its subsidiaries (other than any Transferred Company), including environmental, health and safety, purchasing and logistics, legal, planning and analysis, tax, real estate, risk and insurance, government relations, information technology, payroll, human resources and benefit plan administration, accounting, treasury, cash management, credit and accounts receivable, communications, security, office and building services, internal audit, air transportation, derivatives management and other corporate services; and (ii) the Contracts and other assets or rights set forth on Schedule 3.17(b), Seller and its subsidiaries (other than the Transferred Companies) do not own or hold any assets or rights that are necessary for the Transferred Companies to carry on their respective businesses as currently conducted.
SECTION 3.18. Finance Leases. No Transferred Company is a party to any finance lease other than (i) office or other real estate leases, (ii) mineral leases or (iii) any job-specific equipment or plant lease (A) with a remaining lease or rental commitment of less than one (1) year or (B) where the total period of usage commitment (past and remaining) is less than fifty percent (50%) of the overall useful life of such equipment based on the standard depreciable lives used by the Transferred Companies in accordance with their accounting policies in effect on the date of this Agreement.
Representations and Warranties of Purchaser
Purchaser hereby represents and warrants to Seller as follows:
SECTION 4.01. Organization, Standing and Power. Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has full corporate power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its properties and assets and to carry on its business as presently conducted, other than such franchises, licenses, permits, authorizations and approvals the lack of which, individually or in the aggregate, have not had and would not reasonably be expected to have a material adverse effect on the ability of Purchaser to perform its obligations under this Agreement and the Ancillary Agreements or on the ability of Purchaser to consummate the Acquisition and the other transactions contemplated hereby (a “Purchaser Material Adverse Effect”). Purchaser has made available to Seller true and complete copies of the certificate of incorporation and by-laws of Purchaser, in each case as amended through the date of this Agreement.
SECTION 4.02. Authority; Execution and Delivery; Enforceability. Purchaser has full power and authority to execute this Agreement and the Ancillary Agreements to which it is, or is specified to be, a party, to perform its obligations hereunder and thereunder and to consummate the Acquisition and the other transactions contemplated hereby and thereby. The execution and delivery by Purchaser of this Agreement and the Ancillary Agreements to which it is, or is specified to be, a party, the performance by Purchaser of its obligations hereunder and thereunder and the consummation by Purchaser of the Acquisition and the other transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action. Purchaser has duly executed and delivered this Agreement and, at or prior to the Closing, will have duly executed and delivered each Ancillary Agreement to which it is, or is specified to be, a party, and this Agreement constitutes, and each Ancillary Agreement to which it is, or is specified to be, a party will after the Closing constitute, its legal, valid and binding obligation, enforceable against it in accordance with its terms.
SECTION 4.03. No Conflicts; Consents. The execution and delivery by Purchaser of this Agreement do not, the execution and delivery by Purchaser of each Ancillary Agreement to which it is, or is specified to be, a party will not, and the consummation of the Acquisition and the other transactions contemplated hereby and thereby and compliance by Purchaser with the terms hereof and thereof will not conflict with, result in any violation of or default (with or without notice or lapse of time, or both) under, give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, result in the creation of any Lien upon any of the properties or assets of Purchaser or any of its subsidiaries or require the consent of any person other than a Governmental Entity under any provision of (i) the certificate of incorporation or by-laws of Purchaser or any of its subsidiaries, (ii) any Contract to which Purchaser or any of its subsidiaries is a party or by which any of their respective properties or assets is bound or (iii) any Judgment or Applicable Law applicable to Purchaser or any of its subsidiaries or their respective properties or assets, other than, in the case of clauses (ii) and (iii) above, any such items that, individually or in the aggregate, have not had and would not reasonably be expected to have a Purchaser Material Adverse Effect. No Consent of or registration, declaration or filing with any Governmental Entity is required to be obtained or made by or with respect to Purchaser or any of its subsidiaries in connection with the execution, delivery and performance of this Agreement or any Ancillary Agreement or the consummation of the Acquisition or the other transactions contemplated hereby and thereby, other than (A) compliance with and filings under the HSR Act, (B) compliance with and filings under Section 13(a) of the Securities Exchange Act of 1934, (C) compliance with and such filings and notifications as may be required under applicable state property transfer laws or other Environmental Laws, (D) those that may be required solely by reason of the participation of Seller and APAC (as opposed to any other third party) in the Acquisition and other transactions contemplated hereby and by the Ancillary Agreements and (E) such Consents, registrations, declarations and filings the absence of which, or the failure to make or obtain which, individually or in the aggregate, would not reasonably be expected to have Purchaser Material Adverse Effect.
SECTION 4.04. Litigation. As of the date of this Agreement, there are no (i) outstanding Judgments against or affecting Purchaser or any of its subsidiaries, (ii) Proceedings pending or, to the knowledge of Purchaser, threatened against or affecting Purchaser or any of its subsidiaries or (iii) investigations by any Governmental Entity that are, to the knowledge of Purchaser, pending or threatened against or affecting Purchaser or any of its subsidiaries that, in any case, individually or in the aggregate, have had or would reasonably be expected to have a Purchaser Material Adverse Effect.
SECTION 4.05. Securities Act. The Shares purchased by Purchaser pursuant to this Agreement are being acquired for investment only and not with a view to any public distribution thereof, and Purchaser shall not offer to sell or otherwise dispose of the Shares so acquired by it in violation of any of the registration requirements of the Securities Act of 1933, as amended.
SECTION 4.06. Availability of Funds. Purchaser has cash on hand or has existing borrowing facilities that are sufficient to enable it to consummate the Acquisition.
Covenants
SECTION 5.01. Covenants Relating to Conduct of Business. (a) Except for matters set forth in Schedule 5.01 or otherwise expressly permitted or required by the terms of this Agreement (including actions contemplated to be taken in connection with Sections 5.14 and 5.15), from the date of this Agreement to the Closing, Seller shall cause the businesses of the Transferred Companies to be conducted in the usual, regular and ordinary course in substantially the same manner as previously conducted (including, without limitation, with respect to the payment of claims described in Section 6.04(c)(i)(D)) and, to the extent consistent therewith, use commercially reasonable efforts to keep intact their respective businesses, keep available the services of their current employees and preserve their relationships with customers, suppliers, licensors, licensees, distributors and others with whom they deal such that their respective businesses shall be unimpaired at the Closing. Seller shall not, and shall not permit any Transferred Company to, take any action that would, or that would reasonably be expected to, result in any of the conditions to the purchase and sale of the Shares set forth in Article VII not being satisfied. In addition (and without limiting the generality of the foregoing), except as set forth in Schedule 5.01 of the Seller Disclosure Schedule or otherwise expressly permitted or required by the terms of this Agreement (including actions contemplated to be taken in connection with Sections 5.14 and 5.15), Seller shall not permit any Transferred Company to do any of the following without the prior written consent of Purchaser:
(i) amend its certificate of incorporation or by-laws;
(ii) declare, set aside or pay any dividend or make any other distribution to its stockholders, whether or not upon or in respect of any shares of its capital stock; provided, however, that (A) Purchaser acknowledges that Seller will withdraw any cash balances of the Transferred Companies, (B) dividends and distributions may continue to be made by the Subsidiaries to APAC or to other Subsidiaries and (C) dividends and distributions of cash may continue to be made by APAC to Seller in the ordinary course of business or as provided in clause (A) above;
(iii) reclassify, redeem or otherwise acquire any shares of its capital stock or issue any capital stock or any option, warrant or right relating thereto or any securities convertible into or exchangeable for any shares of capital stock, or otherwise change its capital structure;
(iv) (A) enter into, adopt, amend in any material respect or terminate any Seller Benefit Plan in respect of any APAC Employees, (B) increase in any manner the compensation or benefits of, or pay or otherwise grant any benefit not required by any Seller Benefit Plan or any existing agreement to, any APAC Employee or (C) enter into any contract to do any of the foregoing, in the case of clauses (A), (B) and (C), except (1) to the extent required by Applicable Law, (2) as may be required under any agreement in effect on the date hereof, (3) as effected in the ordinary course of business, (4) as would relate to a substantial number of other similarly situated employees of Seller or its affiliates or (5) for any actions described in each of clauses (A), (B) and (C) for which Seller or its affiliates (other than the Transferred Companies) shall be solely obligated;
(v) incur or assume any liabilities, obligations or indebtedness for borrowed money or guarantee any such liabilities, obligations or indebtedness, other than in the ordinary course of business and consistent with past practice; provided, however, that in no event shall any Transferred Company incur or assume any long-term indebtedness for borrowed money, except in connection with (A) intercompany transactions among the Transferred Companies and (B) intercompany transactions among any Transferred Company, on the one hand, and Seller and any of its subsidiaries (other than the Transferred Companies), on the other hand, in each case in the ordinary course of business and in the case of transactions described in clause (B) above that will either be discharged in full as set forth in Section 5.14 or constitute Permitted Intercompany Receivables and Payables;
(vi) permit, allow or suffer any of its assets to become subjected to any Lien of any nature whatsoever that would have been required to be set forth in Schedule 3.06 or 3.07 of the Seller Disclosure Schedule if existing on the date of this Agreement;
(vii) cancel any material indebtedness (individually or in the aggregate) or waive any claims or rights of substantial value other than in the ordinary course of business consistent with past practice;
(viii) pay, loan or advance any amount to, or sell, transfer or lease any of its assets to, or enter into any agreement or arrangement with, Seller or any of its affiliates, except for (A) transactions among the Transferred Companies, (B) dividends and distributions permitted under clause (ii) above and (C) intercompany transactions in the ordinary course of business;
(ix) extend credit in excess of $500,000 to any customer who was not a customer before the date of this Agreement or depart in any material respect from the normal and customary trade, discount and credit policies of the Company;
(x) make any material change in any method of accounting or accounting practice or policy other than those required by GAAP;
(xi) acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire any assets (other than inventory) that are material to the Transferred Companies, taken as a whole;
(xii) commit to make any capital expenditure that, individually, is in excess of $500,000;
(xiii) settle any Proceeding that would be required to be disclosed on Schedule 3.11 or Schedule 3.15 of the Seller Disclosure Schedule;
(xiv) sell, lease, license or otherwise dispose of any of its assets, except in the ordinary course of business and consistent with past practice;
(xv) enter into any lease of real property other than in the ordinary course of business and consistent with past practice; or
(xvi) authorize any of, or commit or agree to take, whether in writing or otherwise, any of, the foregoing actions.
(b) From the date of this Agreement to the Closing, Seller shall promptly advise Purchaser in writing of the occurrence of any matter or event that results in a breach of any representation, warranty or covenant that would reasonably be expected to result in a failure of a condition set forth in Article VII.
SECTION 5.02. Access to Information. From the date of this Agreement to the Closing, Seller shall, and shall cause the Transferred Companies to, afford to Purchaser and its accountants, counsel and other representatives reasonable access, upon reasonable notice during normal business hours to the personnel, properties, books, contracts, commitments, Tax Returns and records of the Transferred Companies, and shall furnish promptly to Purchaser copies of such documents and any other information concerning any Transferred Company as Purchaser may reasonably request; provided, however, that such access does not unreasonably disrupt the normal operations of the Transferred Companies. Except to the extent provided by the express written consent of Seller, such access excludes any right or permission to disturb surface or subsurface conditions at any APAC Property or to perform any environmental assessment, investigation, sampling or testing of the soil, subsurface strata, groundwater or surface water at, on or under any APAC Property (including, for example, the preparation of any Phase II environmental assessments).
SECTION 5.03. Confidentiality. (a) Purchaser acknowledges that the information being provided to it in connection with the Acquisition and the consummation of the other transactions contemplated hereby is subject to the terms of a confidentiality agreement between Purchaser and Seller dated March 22, 2006 (the “Confidentiality Agreement”), the terms of which are incorporated herein by reference. Effective upon, and only upon, the Closing, the Confidentiality Agreement shall terminate as to confidentiality with respect to information relating solely to the Transferred Companies; provided, however, that Purchaser acknowledges that any and all other terms and conditions of the Confidentiality Agreement (including relating to the confidentiality of information relating to Seller and its affiliates (other than the Transferred Companies) and any standstill provision) shall survive the Closing Date in accordance with the terms of the Confidentiality Agreement.
(b) Seller shall keep confidential, and cause its affiliates and instruct its and their officers, directors, employees and advisors to keep confidential, all information relating to the Transferred Companies, except as required by Applicable Law or administrative process and except for information that is available to the public on the Closing Date, or thereafter becomes available to the public other than as a result of a breach of this Section 5.03(b). The covenant set forth in this Section 5.03(b) shall terminate three (3) years after the Closing Date.
SECTION 5.04. Reasonable Best Efforts. (a) On the terms and subject to the conditions of this Agreement, each party shall use its reasonable best efforts to cause the Closing to occur, including taking all reasonable actions necessary to comply promptly with all legal requirements that may be imposed on it or any of its affiliates with respect to the Closing.
(b) Each of Seller and Purchaser has filed with the United States Federal Trade Commission (the “FTC”) and the United States Department of Justice (the “DOJ”) the notification and report form required for the transactions contemplated hereby and shall as promptly as practicable file any supplemental information requested in connection therewith pursuant to the HSR Act. Any such notification and report form shall be in substantial compliance with the requirements of the HSR Act. Each of Seller and Purchaser shall furnish to the other such necessary information and reasonable assistance as the other may request in connection with its preparation of any filing or submission that is necessary under the HSR Act. Seller and Purchaser shall keep each other apprised of the status of any communications with, and any inquiries or requests for additional information from, the FTC and the DOJ and shall comply promptly with any such inquiry or request and shall promptly provide any supplemental information requested in connection with the filings made hereunder pursuant to the HSR Act. Any such supplemental information shall be in substantial compliance with the requirements of the HSR Act.
SECTION 5.05. Expenses; Transfer Taxes. (a) Whether or not the Closing takes place, and except as specifically set forth in this Agreement or in any Ancillary Agreement to the contrary, or as otherwise agreed in writing by the parties, all costs and expenses incurred in connection with this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby shall be paid by the party incurring such expense, including all costs and expenses incurred in connection with any filings or obtaining Consents in connection with the transactions contemplated by this Agreement.
(b) All transfer, documentary, sales, use, stamp, registration and applicable real estate transfer and stock transfer Taxes incurred in connection with the Agreement shall be paid by Purchaser. Each party shall use reasonable efforts to avail itself of any available exemptions from any such Taxes or fees, and to cooperate with the other parties in providing any information and documentation that may be necessary to obtain such exemptions.
SECTION 5.06.Brokers or Finders. Each of Purchaser and Seller represent, as to itself and its affiliates, that no agent, broker, investment banker or other firm or person is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement, except, as to Seller, Credit Suisse Securities (USA) LLC, whose fees and expenses will be paid by Seller.
SECTION 5.07. Tax Matters. (a) Return Filings. Seller shall timely prepare and file all Tax Returns with the appropriate Taxing Authorities relating to the Transferred Companies for taxable periods ending on or prior to the Closing Date, subject to Section 9.01, and shall pay all Taxes due with respect to such Tax Returns. To the extent permitted by law, all such Tax Returns shall be prepared in a manner consistent with past practice of Seller and the Transferred Companies. Purchaser shall timely prepare and file, or cause to be prepared and filed, with the appropriate Tax Authorities all Tax Returns for Straddle Periods and for taxable periods beginning after the Closing Date required to be filed by the Transferred Companies and, subject to Section 9.01, shall cause the Transferred Companies to pay all Taxes due with respect to such Tax Returns. Seller will furnish to Purchaser all information and records reasonably requested by Purchaser for use in preparation of any Straddle Period Tax Returns. Purchaser shall present each Straddle Period Tax Return to Seller for review at least forty (40) days before the date on which such Straddle Period Tax Return is required to be filed. In the event that Seller reasonably objects to such Straddle Period Tax Return or to the allocation of the amount of Taxes for which Seller is responsible under Section 9.01, then Seller shall raise its reasonable objection in writing together with the basis for such objection no later than fifteen (15) days after the delivery of such Straddle Period Tax Return. To the extent that Seller has so objected, Seller and Purchaser shall attempt in good faith to resolve the dispute and, if they are unable to do so, the disputed items shall be resolved within a reasonable time, taking into account the deadline for filing such Straddle Period Tax Return, by a mutually acceptable certified public accounting firm. Upon resolution of such disputed items, Purchaser shall file the relevant Straddle Period Tax Return on that basis. The costs, fees, and expenses of such certified public accounting firms shall be borne equally by Seller and Purchaser. In the event that the parties are unable to resolve a dispute with respect to a Straddle Period Tax Return prior to the due date of such Straddle Period Tax Return, Purchaser shall in all events be permitted to file such Straddle Period Tax Return as required by law.
(b) Cooperation. Seller and Purchaser shall reasonably cooperate, and shall cause their respective affiliates, officers, employees, agents, auditors and representatives reasonably to cooperate, in preparing and filing all Tax Returns, including maintaining and making available to each other all records necessary in connection with Taxes and in resolving all disputes and audits with respect to all taxable periods relating to Taxes. Seller and its affiliates will need access, from time to time, after the Closing Date, to certain accounting and Tax records and information held by the Transferred Companies to the extent such records and information pertain to events occurring prior to the Closing Date; therefore, Purchaser shall, and shall cause each Transferred Company to, (i) properly retain and maintain such records until the applicable statute of limitations expires (giving effect to any extension thereof), and (ii) allow Seller and its agents and representatives (and agents or representatives of any of its affiliates), at times and dates mutually acceptable to the parties, to inspect, review and make copies of such records as Seller may deem necessary or appropriate from time to time, such activities to be conducted during normal business hours and at Seller’s expense.
(c) Refunds and Credits. Any refund or credit of Taxes described in Section 9.01(a)(i) or (ii) shall belong to and shall promptly be paid to Seller. Any refund or credit of Taxes of any Transferred Company for any taxable period beginning after the Closing Date shall belong to and shall promptly be paid to Purchaser. Any refund or credit of Taxes of any Transferred Company for any Straddle Period shall be equitably apportioned between Seller and Purchaser based on the principles described in 9.01(c). Purchaser shall, if Seller so requests and at Seller’s expense, cause any Transferred Company to file for and obtain any refunds or credits to which Seller is entitled under this Section 5.07(c). Purchaser shall permit Seller to control the prosecution of any such refund claim and, where deemed appropriate by Seller, shall authorize by appropriate powers of attorney such persons as Seller shall designate to represent any Transferred Company with respect to such refund claim, provided that such claim is solely related to a Pre-Closing Period. Purchaser shall control the prosecution of any refund claim relating to a Straddle Period. Each party shall, or shall cause its affiliates to, forward to any other party entitled under this Section 5.07(c) to any refund or credit of Taxes any such refund within ten (10) days after such refund is received or reimburse such other party for any such credit within ten (10) days after the credit is allowed or applied against other Tax liability.
(d) Tax Sharing Agreements. Seller shall cause to be terminated on or before the Closing Date the provisions of any Tax sharing agreement between (i) Seller or any of its affiliates (other than the Transferred Companies) and (ii) any Transferred Company. After the Closing Date, no party shall have any rights or obligations under any such Tax sharing agreement.
(e) Closing Date. On the Closing Date, Purchaser shall cause each Transferred Company to conduct its business in the ordinary course in substantially the same manner as presently conducted and shall not permit any Transferred Company to effect any extraordinary transactions (other than any such transactions expressly required by Applicable Law or by this Agreement) that could result in Tax liability or reduce any Tax attribute of any Transferred Company or any Subsidiary in excess of Tax liability associated with the conduct of its business in the ordinary course.
(f) Percentage of Completion Method. From the date of this Agreement to the Closing, Seller shall use the percentage of completion method (as described in Section 460(b) of the Code) in determining the taxable income of the Transferred Companies with respect to long-term contracts (as defined in Treasury Regulation § 1.460-1(b)(1), a “Long-Term Contract”) in a manner consistent with past practice. From and after the Closing, Purchaser and the Transferred Companies shall not revise or adjust any amount used to calculate the taxable income of the Transferred Companies with respect to any Long-Term Contract to the extent that such revision or adjustment results in any increase in the taxable income or Tax liability of any Transferred Company or of Seller and any of its affiliates for any Pre-Closing Tax Period, unless required to do so by any Applicable Law.
(g) Estimates of Reserves. From and after the Closing, Purchaser and the Transferred Companies shall not revise or adjust any estimate of reserves for the purpose of computing any deduction for depletion (as described in Section 611 (a) of the Code) to the extent that such revision or adjustment results in an increase in the taxable income or Tax liability of any Transferred Company or of Seller and any of its affiliates for any Pre-Closing Tax Period, unless required to do so by any Applicable Law.
SECTION 5.08. Post-Closing Cooperation. (a) Seller and Purchaser shall cooperate with each other, and shall cause their officers, employees, agents, auditors and representatives to cooperate with each other, for a period of 180 days after the Closing to ensure the orderly transition of the Transferred Companies from Seller to Purchaser and to minimize any disruption to the Transferred Companies and the other respective businesses of Seller and Purchaser that might result from the transactions contemplated hereby. After the Closing, upon reasonable written notice, Seller and Purchaser shall furnish or cause to be furnished to each other and their respective employees, counsel, auditors and representatives access, during normal business hours, to such information and assistance relating to the Transferred Companies (to the extent within the control of such party) as is reasonably necessary for financial reporting and accounting matters.
(b) Each party shall reimburse the other for reasonable out-of-pocket costs and expenses incurred in assisting the other pursuant to this Section 5.08. Neither party shall be required by this Section 5.08 to take any action that would unreasonably interfere with the conduct of its business or unreasonably disrupt its normal operations (or, in the case of Purchaser, those of the Transferred Companies) or violate any Applicable Law.
(c) From and after the Closing, except as prohibited by any Applicable Laws relating to the safeguarding of data privacy, Purchaser shall, or shall cause its affiliates to, promptly in response to any request by Seller, provide Seller with all data and records requested by Seller relating to the employment of the Transferred Employees by Purchaser and its affiliates following the Closing in order to assist Seller and its affiliates in administering any Seller Benefit Plans (other than the Assumed Benefit Plan) that cover any Transferred Employees following the Closing.
SECTION 5.09. Publicity. No public release or announcement concerning the transactions contemplated hereby shall be issued by any party without the prior consent of the other parties (which consent shall not be unreasonably withheld), except as such release or announcement may be required by law or the rules or regulations of any United States or foreign securities exchange, in which case the party required to make the release or announcement shall allow the other party reasonable time to comment on such release or announcement in advance of such issuance; provided, however, that each of Seller and Purchaser may make internal announcements to their respective employees after reasonable prior notice to and consultation with the other.
SECTION 5.10. Agreement Not To Compete; No Hire or Solicitation of Transferred Employees. (a) Seller understands that Purchaser shall be entitled to protect and preserve the going concern value of the business of the Transferred Companies to the extent permitted by law and that Purchaser would not have entered into this Agreement absent the provisions of this Section 5.10 and, therefore, for a period of three (3) years from the Closing (the “Restricted Period”), Seller shall not, and shall cause each of its affiliates (each of Seller and its affiliates, a “Restricted Entity”) not to, directly or indirectly, engage in activities or businesses or invest in, own, manage, operate, finance, control or participate in the ownership, management, operation, financing, or control of, any person that engages or conducts any businesses or activities (i) related to asphalt and concrete construction work or (ii) related to road and highway paving and repair, excavation and grading, or the production of asphaltic and ready-mix concrete, crushed stone or other aggregate, all as currently conducted by the Transferred Companies (“Competitive Activities”), provided that Competitive Activities shall not include the manufacturing, marketing, distribution or sale of chemical products (including composites, specialty polymers adhesives and other chemical products and road construction materials that include any such chemical products), other than, in all cases, aggregates, asphaltic and ready-mix concrete as currently produced and sold by any Transferred Company.
(b) Section 5.10(a) shall be deemed not breached as a result of the ownership by the Restricted Entities, in the aggregate, of:
(i) no more than 5% of any class of equity security of a person that is engaged, directly or indirectly, in Competitive Activities, the securities of which are publicly traded on an internationally recognized securities exchange; or
(ii) less than 10% in value of any instrument of indebtedness, of a person engaged, directly or indirectly, in Competitive Activities, provided that such instrument is not convertible into more than 5% of any class of equity security of a person engaged, directly or indirectly, in Competitive Activities, the securities of which are publicly traded on an internationally recognized securities exchange;
provided that in each case of clauses (i) and (ii), Restricted Entities, collectively, do not control the management or affairs of such person or do not have a right to designate a majority or such higher amount constituting a controlling number of the members of the board of directors (or similar governing body) of such person.
(c) For a period of twelve (12) months following the Closing, Seller shall not, and shall cause each of its affiliates not to, directly or indirectly hire any Transferred Employee, or solicit or induce such individuals to leave the employ of Purchaser or any of the Transferred Companies; provided, however, that the foregoing shall not apply to (i) any general solicitation of employment not targeted at Purchaser or the Transferred Companies or any such individual and any subsequent hiring of any such individual pursuant to such general solicitation, and (ii) any officer, director, or other individual if such officer, director or individual is discharged from employment with Purchaser, a Transferred Company or any of their respective affiliates at or after the Closing.
(d) If, at any time of enforcement of any of the provisions of this Section 5.10, a court of competent jurisdiction holds that the restrictions stated in this Section 5.10 are unreasonable under the circumstances then existing, the parties hereto agree that the maximum period, scope or geographic area of this Section 5.10 shall be limited to those that are reasonable under the circumstances.
SECTION 5.11.Resignations. On the Closing Date, Seller shall cause to be delivered to Purchaser duly signed resignations, effective immediately after the Closing, of all directors of each Transferred Company as Purchaser shall designate prior to the Closing.
SECTION 5.12. Further Assurances. From time to time, as and when requested by any party, each party shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions, as such other party may reasonably deem necessary or desirable to consummate the transactions contemplated by this Agreement, including, in the case of Seller, executing and delivering to Purchaser such assignments, deeds, bills of sale, consents and other instruments as Purchaser or its counsel may reasonably request as necessary or desirable for such purpose.
SECTION 5.13. Replacement of Credit Support. (a) Purchaser (i) shall use its commercially reasonable efforts to arrange, as soon as practicable after the Closing, at its sole cost and expense, for replacement arrangements for all guarantees, indemnities, letters of credit or similar assurances or credit support provided by Seller or any of its affiliates for the benefit of any Transferred Company, including replacement guarantees and letters of credit, in each case in existence as of the Closing Date and set forth on Schedule 5.13(a) of the Seller Disclosure Schedule and such other guarantees, indemnities, letters of credit or similar assurances or credit support provided by Seller or any of its affiliates for the benefit of any Transferred Company of which Seller informs Purchaser after the Closing or of which Purchaser is or becomes aware, in each case to the extent that Seller or any of its affiliates other than any Transferred Company continues to have any obligations thereunder (“Guarantees”), and (ii) shall use its commercially reasonable efforts to obtain, as soon as practicable after the Closing, releases indicating that Seller and its affiliates have no liability with respect to such Guarantees, in each case reasonably satisfactory to Seller.
(b) Purchaser shall use its commercially reasonable efforts, and shall cause the Transferred Companies to use their respective commercially reasonable efforts, to, as soon as practicable after the Closing, (i) replace (whether or not through novation, assumption, provision of a substitute instrument or otherwise) each general indemnity agreement, surety bond or similar instrument (each, a “GIA”) provided by Seller to any surety company on behalf of the Transferred Companies and set forth on Schedule 5.13(b)-1 of the Seller Disclosure Schedule, to the extent such GIA is in effect on or after the Closing Date, with a GIA from Purchaser or a Transferred Company to such surety companies and obtain the release of Seller from the GIA to which it is a party set forth on Schedule 5.13(b)-2 to the extent such GIA is in effect on or after the Closing Date, (ii) replace all Owner & Contractors Protective or Railroad Protective Insurance Policies issued on behalf of Seller for the benefit of the Transferred Companies and set forth on Schedule 5.13(b)-3 of the Seller Disclosure Schedule (“OCP Policies”) to the extent such OCP Policies are in effect on or after the Closing Date and (iii) replace all certificates of insurance provided by Seller on behalf of any Transferred Company (“Certificates”).
(c) To the extent that any Guarantee, GIA, OCP Policy or Certificate that Purchaser is required to replace pursuant to Section 5.13(a) or (b) is not replaced or Seller and its affiliates are not released from liability with respect thereto within 90 days after the Closing Date, Purchaser shall and hereby does indemnify Seller for any and all payments required to be made by Seller or any of its affiliates on or after the Closing Date under such Guarantee, GIA, OCP Policy or policy set forth on such Certificate; provided, however, that Purchaser shall continue to use its commercially reasonable efforts after such 90-day period to replace such arrangements and obtain such releases as set forth in Section 5.13(a) and (b), in each case to the extent commercially reasonable after such 90 day-period.
(d) Seller shall provide reasonable cooperation to Purchaser in connection with transactions contemplated pursuant to Sections 5.13(a) and (b); provided, however, that Seller shall not be obligated to expend money, commence, defend or participate in any litigation, incur any obligation in favor of, or offer or grant any accommodation (financial or otherwise) to, any third party, and all costs and expenses related to seeking and obtaining such replacement Guarantees, GIAs, OCP Policies, Certificates and releases shall be for Purchaser’s account.
SECTION 5.14. Intercompany Advances, Debt and Receivables; Existing Financing. (a) On or prior to the Closing Date, all advances, indebtedness and receivables between any Transferred Company, on the one hand, and Seller and any of its affiliates (other than another Transferred Company), on the other (except for Permitted Intercompany Receivables and Payables), shall be satisfied and discharged in full or settled without payment of cash.
(b) On or prior to the Closing Date, (i) all guarantees or similar assurances, credit support or obligations of any Transferred Company provided in respect of any indebtedness of Seller and any of its affiliates (other than any Transferred Company) shall be terminated and released and the Transferred Companies shall have no further liability with respect thereto, (ii) the participation of the Transferred Companies in any and all group financing arrangements and facilities, including any commodity hedging arrangements, of Seller and any affiliates (other than any Transferred Company) shall be terminated and (iii) all other agreements and arrangements (other than the Transition Services Agreement and the Permitted Intercompany Receivables and Payables) between any Transferred Company, on the one hand, and Seller and its affiliates (other than any Transferred Company), on the other hand, shall be terminated.
SECTION 5.15. Transition Services. After the Closing Date, and for the period of time specified in the Transition Services Agreement between Seller and Purchaser, substantially in the form as set forth in Exhibit A to this Agreement (the “Transition Services Agreement”), Seller shall provide the Transferred Companies with the services set forth in the Transition Services Agreement (the “Transition Services”). The Transition Services will be provided by Seller to the Transferred Companies at the fees and on the other terms and conditions set forth in the Transition Services Agreement.
SECTION 5.16. Certain Contracts. (a) Immediately prior to the Closing, Seller and its affiliates (other than the Transferred Companies) shall (i) transfer and assign to APAC the Contracts set forth on Schedule 5.16(a)-1 of the Seller Disclosure Schedule (the “Assigned Agreements”) and (ii) use commercially reasonable efforts cause APAC to enter into agreements (the “Replacement Agreements”) with providers party to the agreements set forth on Schedule 5.16(a)-2 of the Seller Disclosure Schedule (“Split Agreements”) on substantially similar terms and conditions as the Split Agreements.
(b) Purchaser acknowledges that certain consents and waivers with respect to the transactions contemplated by this Agreement may be required from parties to the Contracts listed on the Schedules hereto and that such consents and waivers have not been obtained. Prior to the Closing, Seller and Purchaser shall cooperate to obtain all consents and waivers that may be required in connection with such Contracts including in connection with the assignment of the Assigned Agreements to APAC or entering into Replacement Agreements; provided, however, that such efforts shall not include any requirement of Seller or any of its affiliates to expend money, commence, defend or participate in any litigation, incur any obligation in favor of, or offer or grant any accommodation (financial or otherwise) to, any third party, and all costs and expenses related to seeking and obtaining such consents and waivers or entering into such Replacement Agreements shall be for Purchaser’s account. Without limiting the provisions set forth in the second sentence of this Section 5.16(b), (i) Purchaser agrees that Seller shall not have any liability whatsoever to Purchaser arising out of or relating to the failure to obtain any such consents or waivers, or because of the failure to enter into a Replacement Agreement or because of the termination of any Contract, Assigned Agreement or Split Agreement as a result of such failure and (ii) Purchaser further agrees that no representation, warranty or covenant of Seller contained herein shall be breached or deemed breached, and no condition shall be deemed not satisfied, as a result of (A) the failure to obtain any such consent or waiver or enter into such Replacement Agreement, (B) any such termination or (C) any lawsuit, action, Proceeding or investigation commenced or threatened by or on behalf of any person arising out of or relating to the failure to obtain any such consent, enter into such Replacement Agreement or any such termination.
(c) Without limiting the provisions set forth in the second sentence of Section 5.16(b), if any such consent or waiver is not obtained, or a Replacement Agreement is not entered into, prior to the Closing, Seller, on the one hand, and Purchaser, on the other hand, each shall cooperate (at their own expense) in any lawful and commercially reasonable arrangement reasonably proposed by Purchaser under which Purchaser shall receive (without infringing upon the legal rights of such third party or outside party or violating any Applicable Law) the economic claims, rights and benefits (net of the amount of any related Tax costs imposed on Seller and its affiliates) under the asset, claim or right with respect to which the consent has not been obtained or Replacement Agreement has not been entered into in accordance with this Agreement, provided that Purchaser shall assume any related economic burden (including the amount of any related Tax costs imposed on Seller and its affiliates) with respect to the asset, claim or right with respect to which both of the following conditions apply: (i) the consent has not been obtained or Replacement Agreement has not been entered into (including any related liability) and (ii) such economic benefits have been received by Purchaser.
SECTION 5.17. Books and Records. (a) After the Closing, Purchaser shall use commercially reasonable efforts to preserve and keep all books and records relating to the Transferred Companies with respect to any period prior to the Closing (“Purchaser Pre-Closing Books and Records”) for such periods as may be required by Applicable Law. If, after the Closing, Purchaser decides to destroy or to cease to maintain any Purchaser Pre-Closing Books and Records, Purchaser shall provide Seller with prior notice and an opportunity to review such Purchaser Pre-Closing Books and Records and shall have them transferred to Seller’s possession upon Seller’s request, and, if at such time Seller shall then be subject to any third party or other claim, including an indemnity claim under Article IX, Purchaser shall preserve all related Purchaser Pre-Closing Books and Records and provide access thereto for such reasonable period of time as Seller may request and deliver copies of the same to Seller. Purchaser’s obligations under this Section 5.17(a) shall survive any sale or other transfer of any of the assets or stock of any Transferred Company (as a whole or in part) to any other person, and any other transaction that involves the transfer of such books or records to another person.
(b) After the Closing, Seller shall use commercially reasonable efforts to preserve and keep all books and records relating to the Transferred Companies with respect to any period prior to the Closing (“Seller Pre-Closing Books and Records”) for such periods as may be required by Applicable Law. If, after the Closing, Seller decides to destroy or to cease to maintain any Seller Pre-Closing Books and Records, Seller shall provide Purchaser with prior notice and an opportunity to review such Seller Pre-Closing Books and Records and shall have them transferred to Purchaser’s possession upon Purchaser’s request, and, if at such time Purchaser shall then be subject to any third party or other claim, including an indemnity claim under Article IX, Seller shall preserve all related Seller Pre-Closing Books and Records and provide access thereto for such reasonable period of time as Purchaser may request and deliver copies of the same to Purchaser.
SECTION 5.18. No Use of the Ashland Name. Prior to the Closing, Seller shall change the names of the Transferred Companies set forth on Schedule 5.18 of the Seller Disclosure Schedule to discontinue any references to the Ashland Name and replace such references with “APAC”. Purchaser shall promptly, and in any event within one hundred eighty days (180) days after the Closing, (a) revise product literature, signage, letterheads, labeling and any other material to delete, strike over, sticker over or otherwise cover all references to the Ashland Name and (b) refrain from making any type of reference to the operation of the Transferred Companies as linked to the Ashland Name. After such one hundred eighty (180) day period, Purchaser shall in no event use the Ashland Name in any manner or for any purpose whatsoever. “Ashland Name” means (i) “Ashland” and any variations thereof and (ii) any logos or trademarks of Seller or its affiliates not specifically included in Schedule 3.07 of the Seller Disclosure Schedule and of which Purchaser is or becomes aware. Notwithstanding the foregoing, Purchaser shall not be required to amend, modify or restate any Contract in order to remove the Ashland Name from such Contract.
SECTION 5.19. Insurance. (a) From and after the Closing, the Transferred Companies shall have all rights of a named insured with respect to any and all insurance policies applicable to the Transferred Companies and their respective assets and properties (the “Applicable Insurance Policies”) with respect to an occurrence, accident, incident or claim that occurred prior to the Closing Date; provided, however, that with respect to an occurrence, accident, incident or claim that occurred prior to the Closing Date involving the Transferred Companies, the Transferred Companies (i) shall not be entitled to make any claims or collect any proceeds under the following policies or self-insurance programs (such policies and programs collectively, the “Excluded Policies”): (A) any policies issued by Seller’s insurance subsidiaries (except to the extent such policies that were or are reinsured to third party reinsurers and payment is actually made by such third party reinsurers), (B) any self insurance programs of Seller or its affiliates (except for excess reinsurance coverage) or (C) any other insurance policies or programs (including “fronting” or matching deductible insurance policies) whereby and to the extent that payments made pursuant to such policies or programs are indemnified by Seller or its affiliates (including Seller’s insurance subsidiaries) and (ii) agree to indemnify Seller with respect to any third party claims against the insurer under the Excluded Policies for which and to the extent Seller or its affiliates have indemnified such insurer.
(b) Purchaser shall reimburse Seller for any claim payments and the related third party loss handling charges and other related administrative expenses payable to third parties; taxes, surcharges and assessments; and letter of credit fees allocable to the Transferred Companies with respect to claims against the insurer by the Transferred Companies after the Closing arising from an occurrence, accident, incident or claim that occurred prior to the Closing Date, in each case to the extent the payment with respect thereof is made by Seller on or after the Closing Date. Such reimbursement shall be made within fifteen (15) business days after receipt of an invoice from Seller setting forth reasonable details of the requested reimbursement.
(c) Seller agrees to cooperate with Purchaser and the Transferred Companies in making claims under the Applicable Insurance Policies with respect to an occurrence, accident, incident or claim that occurred prior to the Closing Date, and shall remit promptly any recoveries with respect thereto, to the extent received by Seller or any of its affiliates, to Purchaser.
(d) From and after the Closing, Seller shall provide to Purchaser and its agents, upon request by Purchaser, reasonable access to copies of the Applicable Insurance Policies and other documents and information with respect to any claims made or that may potentially be made by or on behalf of the Transferred Companies or by third parties pursuant to any Applicable Insurance Policies (including any claims referred to in Section 5.19(a) above). Purchaser, at its own expense, shall be entitled to make copies of such policies, documents and information, provided that Purchaser shall not provide such documents to any third party without the prior written consent of Seller.
(e) Notwithstanding the foregoing, nothing in this Section 5.19 shall obligate Seller or any of its affiliates to maintain any insurance policy or self insurance programs for an occurrence, accident or incident that occurred on or subsequent to the Closing Date.
Employee Matters
SECTION 6.01. Non-Transferred Employees. (a) Prior to the date of this Agreement, Purchaser and Seller have agreed in writing to a list of current APAC Employees and current Ashland/APAC Employees , in each case who Purchaser does not wish to be employed by the Transferred Companies as of the Closing (such listed APAC Employees and Ashland/APAC Employees, collectively, the “Non-Transferred Employees”). Prior to the Closing, each Non-Transferred Employee shall be either (i) terminated by the Transferred Companies or by Seller, as the case may be (each, a “Terminated Employee”) or (ii) in the case of an APAC Employee who is a Non-Transferred Employee and who is not terminated prior to the Closing, transferred to employment with Seller, or in the case of an Ashland/APAC Employee who is a Non-Transferred Employee and who is not terminated prior to the Closing, retained by Seller (each, a “Retained Employee”). Purchaser shall reimburse Seller for all cash retention payments or cash severance payments (including all payroll taxes related to such payments) made under, or in accordance with, the terms of the APAC Divestiture Stay Bonus Letters, the APAC Divestiture Severance Program and the APAC Divestiture Severance Program for Executive Level Employees (such programs, together, the “APAC Divestiture Programs”, and such cash payments, collectively, the “Termination Payments”) to (i) each Terminated Employee and (ii) to each Retained Employee whose employment is terminated on or prior to the six-month anniversary of the Closing.
(b) At least two (2) business days prior to the Closing Date, Seller shall provide Purchaser with a schedule listing each Non-Transferred Employee who is a Terminated Employee and the amount of the Termination Payments paid or payable to each such Terminated Employee, and Purchaser shall reimburse Seller for all such amounts at the Closing by wire transfer to a bank account designated in writing by Seller (such designation to be made at least two (2) business days prior to the Closing) in immediately available funds. From time to time thereafter, Seller shall provide Purchaser with a schedule listing each Retained Employee whose employment has been terminated since the Closing or, if applicable, the date of the preceding such schedule, and the amount of the Termination Payments paid or payable to each such Retained Employee, and Purchaser shall reimburse Seller for all such amounts not later than five (5) business days following the delivery of such schedule by wire transfer to the bank account designated by Seller in such schedule in immediately available funds.
SECTION 6.02. Transferred Employees. (a) Prior to the Closing, Seller shall transfer the employment of each Ashland/APAC Employee who is not a Non-Transferred Employee to APAC. From and after the Closing, Purchaser shall retain the employment of each APAC Employee (including any Ashland/APAC Employee transferred to APAC pursuant to the first sentence of this Section 6.02) employed by the Transferred Companies immediately prior to the Closing (each, a “Transferred Employee”) which continuing employment shall be at a wage rate or salary that is no less favorable than such employee receives immediately prior to the Closing and within fifty (50) miles of each such employee’s work location as in effect immediately prior to the Closing and with benefits as provided in Section 6.03. The terms and conditions of each Transferred Employee’s employment with the Purchaser shall be subject to (i) any existing agreements between any Transferred Company or Seller, on the one hand, and such Transferred Employee, on the other hand, including any APAC Divestiture Stay Bonus Letter to which such Transferred Employee is a party; (ii) any collective bargaining agreements that a Transferred Company is a party to or otherwise bound by covering such Transferred Employee immediately prior to the Closing; and (iii) any Applicable Law. For the avoidance of doubt, APAC Employees (including any Ashland/APAC Employees transferred to APAC pursuant to the first sentence of this Section 6.02) employed immediately prior to the Closing shall include those APAC Employees (including any Ashland/APAC Employee transferred to APAC pursuant to the first sentence of this Section 6.02) who are actually at work on the Closing Date or who are not actively at work on the Closing Date due to vacation, holiday, illness, jury duty, bereavement leave or other leave of absence, including short-term disability leave, military leave and family and medical leave under Applicable Law, and shall not include any Non-Transferred Employee or any APAC Employee or Ashland/APAC Employee who is not actively at work on the Closing Date and whose short term disability period has ended and as a result has become eligible to receive long-term disability benefits prior to the Closing Date. Nothing in this Section 6.02(a) shall restrict Purchaser, the Transferred Companies or their affiliates from terminating the employment of any Transferred Employee with Purchaser at any time after the Closing.
(b) From and after the Closing, Purchaser shall, or shall cause its affiliates to, comply with the terms of all collective bargaining agreements (including all obligations to contribute to pension plans) that cover one or more Transferred Employees (each, a “CBA”) as in effect on the Closing Date and to comply with Applicable Law. Notwithstanding anything to the contrary in this Section 6.02(b), Purchaser further agrees that the provisions of this Article VI shall be subject to any applicable provisions of a CBA in respect of Transferred Employees, to the extent such provisions are inconsistent with or otherwise in conflict with the provisions of any such CBA.
(c) The parties hereto intend that each Transferred Employee shall have continuous and uninterrupted employment immediately prior to and immediately after the Closing, and that, except as otherwise specifically provided for in APAC Divestiture Programs or the APAC Mirror Divestiture Programs, for purposes of any severance or termination benefit plan, program, policy, agreement or arrangement of Seller or any Transferred Company, any change in employer contemplated by this Agreement shall not constitute a severance of employment of any Transferred Employee.
SECTION 6.03. Benefits. (a) Purchaser shall provide each Transferred Employee with the employee benefits, employment policies and employment programs that are no less favorable than the Purchaser provides its employees who are similarly situated to such Transferred Employee.
(b) (i) Effective as of the Closing, the Transferred Employees shall cease all participation in all Seller Benefit Plans other than the Assumed Benefit Plan (other than as a former employee of Seller and its affiliates to the extent, if any, required by the terms of such Seller Benefit Plan).
(ii) From and after the Closing, Purchaser shall, or shall cause its affiliates to, assume and honor the Assumed Benefit Plan as in effect as of the Closing, regardless of whether the obligations, liabilities and commitments pursuant to the Assumed Benefit Plan arise prior to, on or after the Closing. Purchaser agrees to reasonably cooperate with Seller to transfer the assets and liabilities of the Assumed Benefit Plan to a trust maintained by the Purchaser or its affiliates that is exempt from tax under Section 501(a) of the Code and to effect such transfer in compliance with all Applicable Laws, including, without limitation the applicable provisions of the Sarbanes-Oxley Act of 2002.
(c) With respect to each “employee welfare benefit plan” within the meaning of Section 3(1) of ERISA, maintained by Purchaser or its affiliates for the benefit of the Transferred Employees (a “Purchaser Welfare Plan”), Purchaser shall, and shall cause its third party insurance providers and/or third party administrators and claims administrators to, (A) waive all limitations as to insurability, proof of good health, preexisting conditions, exclusions and waiting periods and actively-at-work requirements with respect to participation and coverage requirements applicable to the each Transferred Employees and his or her dependents under the Purchaser Welfare Plans and (B) provide each Transferred Employee and his or her eligible dependents with credit under Purchaser Welfare Plans for any co-payments, co-insurance and deductibles paid under corresponding Seller Benefit Plans prior to the Closing Date for purposes of satisfying any applicable deductible or out-of-pocket requirements under any Purchaser Welfare Plans in which the APAC Employees and their dependents participate.
(d) Purchaser shall, and shall cause its affiliates to, credit service accrued by each Transferred Employees with, or otherwise recognized for benefit plan purposes by, the Transferred Companies, Seller and its subsidiaries and affiliates as of the Closing Date (“Pre-Closing Date Service”) for all purposes (including for purposes of eligibility to participate, early retirement eligibility and early retirement subsidies, vesting and benefit accrual) under any employee benefit plans and arrangements and employment-related entitlements provided, maintained or contributed to by Purchaser and/or its affiliates, for such Transferred Employee’s Pre-Closing Date Service to the same extent recognized by the Transferred Companies, Seller and its affiliates immediately prior to the Closing, provided, however, that if Purchaser or any of its affiliates offers a defined benefit pension plan to any Transferred Employee, the accrued benefit thereunder for each such Transferred Employee shall be reduced by the benefit such Transferred Employee is entitled to under any defined benefit pension plan of Seller or its affiliates in which such Transferred Employee participated, calculated as of the day immediately prior to the Closing Date in the same manner and using the same actuarial assumptions used to determine the lump-sum mandatory cash-out amount under the terms of such plan.
(e) For purposes of determining the number of vacation days to which each Transferred Employee shall be entitled, Purchaser shall assume and honor all vacation days (regular, supplemental or banked) earned but not yet taken by such Transferred Employee as of the Closing Date. To the extent that a Transferred Employee is entitled under any Applicable Law or any policy of Seller or any of its affiliates to be paid for any vacation days (regular, supplemental or banked) earned but not yet taken by such Transferred Employee as of the Closing Date, Purchaser shall assume the liability for such vacation days.
(f) Purchaser shall continue to maintain in full force and effect for such period as is required to give effect to the terms thereof, the APAC Divestiture Mirror Severance Program and the APAC Divestiture Mirror Severance Program for Executive Level Employees (collectively, the “APAC Mirror Divestiture Programs”) on the same terms as in effect as of the date of this Agreement. Purchaser shall be solely responsible and liable for making all payments to be made and benefits to be provided under, or in accordance with, the terms of the APAC Mirror Divestiture Programs. Purchaser shall assume all Seller's obligations under the APAC Divestiture Stay Bonus Letters. Purchaser shall discharge all obligations under the APAC Mirror Divestiture Programs and the APAC Divestiture Stay Bonus Letters. Except as specifically set forth in Section 6.01 or this Section 6.03(c), Seller shall be solely responsible for any severance benefits incurred with respect to any Ashland/APAC Employee prior to the Closing for reasons unrelated to the transaction contemplated by this Agreement.
SECTION 6.04. Employee-Related Liabilities. (a) (i) Except as otherwise expressly provided in Section 6.04(c), Purchaser and its affiliates shall be liable for all employment and employee benefits-related matters, liabilities, obligations, commitments, claims and losses incurred or arising prior to, on or after the Closing Date, for each Transferred Employee.
(ii) Except as otherwise expressly provided in Sections 6.03(e) and 6.04(b), Seller shall be liable for all employment and employee benefits-related matters, liabilities, obligations, commitments, claims and losses incurred or arising prior to, on or after the Closing Date, for each Non-Transferred Employee.
(b) Purchaser and its affiliates shall be solely liable for all liabilities, obligations, commitments, claims and losses incurred or arising with respect to salary and wages (including payroll taxes) for the payroll period in which the Closing occurs in respect of each Transferred Employee who was an Ashland/APAC Employee.
(c) (i) Seller shall retain all liabilities (A) for benefits continuation in accordance with Section 4980B of the Code with respect to each APAC Employee and Ashland/APAC Employee (and any dependents and beneficiaries of such APAC Employees and Ashland/APAC Employees) whose “qualifying event” occurs prior to the Closing; (B) for long term disability liabilities with respect to each APAC Employee and Ashland/APAC Employee who is not actively at work on the Closing Date and whose short term disability period has ended and who has become eligible for long-term disability benefits prior to the Closing Date; (C) under all qualified and nonqualified retirement plans of Seller other than the Assumed Benefit Plan; (D) under the Seller Benefit Plans that are welfare benefit plans (within the meaning of Section 3(1) of ERISA) (I) with respect to claims that have been paid on or prior to the Closing with respect to any Transferred Employees who are APAC Employees (and their eligible dependents and beneficiaries) other than Ashland/APAC Employees, and (II) with respect to claims that are incurred and reported (i.e., “date-stamped”) prior to the Closing with respect to any Ashland/APAC Employees who are Transferred Employees (and their eligible dependents and beneficiaries); (E) for all payments due under the terms of the Seller’s flexible spending account plans, programs and arrangements with respect to claims that are incurred on or prior to December 31, 2006; and (F) for retiree medical, dental or group life insurance benefits with respect to retired former APAC Employees and retired former Ashland/APAC Employees (and, in each case, their eligible dependents and beneficiaries) and current APAC Employees and Ashland/APAC Employees (and, in each case, their eligible dependents and beneficiaries) who would be eligible to retire as of the Closing Date, provided, however, that for purposes of determining the amount of such benefits, age and service shall be credited only through the Closing Date.
(ii) With respect to any annual or long-term incentive plan or arrangement of Seller in which a Transferred Employee participates that relates to any period commencing prior to and ending after the Closing Date, at the times prescribed by such applicable plan or arrangement as in effect as of the Closing Date, Seller shall make payments to such Transferred Employee in accordance with the terms of such applicable plan or arrangement as in effect as of the Closing Date, on a pro-rata basis with such modifications as are required, in Seller’s sole discretion, to take into account the impact of the transactions contemplated by this Agreement on the performance measures (quantitative and qualitative) set forth in such applicable plan or arrangement.
SECTION 6.05. Compliance with Local Law. Purchaser and Seller agree to comply with all Applicable Laws, rules and collective agreements pertaining to the subject matter of this Article VI and applicable to Purchaser and Seller, respectively.
Conditions Precedent
SECTION 7.01. Conditions to Each Party’s Obligation. The obligation of Purchaser to purchase and pay for the Shares and the obligation of Seller to sell the Shares to Purchaser is subject to the satisfaction or waiver on or prior to the Closing of the following conditions:
(a) Governmental Approvals. All applicable waiting periods (and any extensions thereof) under the HSR Act to the consummation of the Acquisition, shall have expired or been terminated.
(b) No Injunctions or Restraints. No Applicable Law or injunction enacted, entered, promulgated, enforced or issued by any Governmental Entity or other legal restraint or prohibition preventing the consummation of the Acquisition shall be in effect.
SECTION 7.02.Conditions to Obligation of Purchaser. The obligation of Purchaser to purchase and pay for the Shares is subject to the satisfaction (or waiver by Purchaser) on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties of Seller in this Agreement that are qualified as to “materiality” (including by reference to a specified dollar amount) or “Company Material Adverse Effect” shall be true and correct, and those not so qualified shall be true and correct in all material respects, as of the Closing Date as though made on the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties qualified as to materiality (including by reference to a specified dollar amount) or “Company Material Adverse Effect” shall be true and correct, and those not so qualified shall be true and correct in all material respects, on and as of such earlier date); provided, however, that notwithstanding the foregoing, the representations and warranties set forth in Section 3.15(vii) shall be true and correct as of the Closing Date in all respects. Purchaser shall have received a certificate signed by an authorized officer of Seller to such effect.
(b) Performance of Obligations of Seller. Seller shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Seller by the time of the Closing, and Purchaser shall have received a certificate signed by an authorized officer of Seller to such effect.
(c) Absence of Proceedings. No Governmental Entity shall have brought or threatened to bring any Proceeding (i) challenging or seeking to restrain or prohibit the Acquisition or any other transaction contemplated by this Agreement or the Ancillary Agreements or seeking to obtain from Purchaser or any of its subsidiaries in connection with the Acquisition any damages that are material in relation to Purchaser, APAC and their respective subsidiaries, taken as a whole, (ii) seeking to prohibit or limit the ownership or operation by Purchaser or any of its subsidiaries of any portion of the business or assets of Purchaser, APAC or any of their respective subsidiaries that is material in relation to Purchaser, APAC and their respective subsidiaries, taken as a whole, or to compel Purchaser, APAC or any of their respective subsidiaries to dispose of or hold separate any material portion of the business or assets of Purchaser, APAC or any of their respective subsidiaries that is material in relation to Purchaser, APAC and their respective subsidiaries, taken as a whole, in each case as a result of the Acquisition or any of the other transactions contemplated by this Agreement, (iii) seeking to impose limitations on the ability of Purchaser to acquire or hold, or exercise full rights of ownership of, the Shares, including the right to vote the Shares on all matters properly presented to the stockholders of APAC or (iv) seeking to prohibit Purchaser or any of its subsidiaries from effectively controlling in any material respect the business or operations of any Transferred Company.
(d) Tax Certificate. Seller shall deliver to Purchaser a certification of non-foreign status executed by Seller and satisfying the requirements of § 1.1445-2(b)(2)(i) of the United States Treasury Regulations promulgated under the Code.
(e) Transition Services Agreement. Seller shall have executed and delivered to Purchaser the Transition Services Agreement.
(f) Assignment and Assumption Agreement. Purchaser shall have received an Assignment and Assumption Agreement substantially in the form of Exhibit E hereto executed and delivered by Seller and APAC.
SECTION 7.03. Conditions to Obligation of Seller. The obligation of Seller to sell is subject to the satisfaction (or waiver by Seller) on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties of Purchaser, CRH and Oldcastle made in this Agreement and the Guaranty Agreements that are qualified as to “materiality” (including by reference to a dollar amount) or “Purchaser Material Adverse Effect” shall be true and correct, and those not so qualified shall be true and correct in all material respects, as of the Closing Date as though made on the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties qualified as to “materiality” (including by reference to a specified dollar amount) or “Purchaser Material Adverse Effect” shall be true and correct, and those not so qualified shall be true and correct in all material respects, on and as of such earlier date). Seller shall have received a certificate signed by an authorized officer of each of Purchaser, CRH and Oldcastle to such effect.
(b) Performance of Obligations of Purchaser, CRH and Oldcastle. Each of Purchaser, CRH and Oldcastle shall have performed or complied in all material respects with all of its obligations and covenants required by this Agreement and the Guaranty Agreements to be performed or complied with by Purchaser, CRH, or Oldcastle, as applicable, by the time of the Closing, and Seller shall have received a certificate signed by an authorized officer of each of Purchaser, CRH and Oldcastle to such effect.
(c) Absence of Proceedings. No Governmental Entity shall have brought or threatened to bring any Proceeding challenging or seeking to restrain or prohibit the Acquisition or any other transaction contemplated by this Agreement or the Ancillary Agreements or seeking to obtain from Seller or any of its subsidiaries in connection with the Acquisition any damages that are material in relation to Seller and its subsidiaries taken as whole.
(d) Transition Services Agreement. Purchaser shall have executed and delivered to Seller the Transition Services Agreement.
(e) APAC Indemnity Letter. APAC shall have executed and delivered to Seller the APAC Indemnity Letter.
(f) Guaranty Agreements. Each of the Guaranty Agreements shall be in full force and effect and shall not have been modified, amended, terminated or withdrawn.
SECTION 7.04. Effect of Certain Waivers of Closing Conditions. If (a) prior to the Closing any party (the “Informing Party”) informs another party (the “Waiving Party”)in writing of any breach by the Informing Party of any representation or warranty contained in this Agreement and acknowledges in writing that the effect of such breach is a failure of any condition to the Waiving Party’s obligations set forth in this Article VII and (b) the Waiving Party proceeds with the Closing, the Waiving Party shall be deemed to have waived such breach and the Waiving Party and its successors, assigns and affiliates shall not be entitled to be indemnified pursuant to Article IX, to sue for damages or to assert any other right or remedy for any losses arising from any matters relating to such condition or breach, notwithstanding anything to the contrary contained herein or in any certificate delivered pursuant hereto.
Termination, Amendment and Waiver
SECTION 8.01. Termination. (a) Notwithstanding anything to the contrary in this Agreement, this Agreement may be terminated and the Acquisition and the other transactions contemplated by this Agreement abandoned at any time prior to the Closing:
(i) by mutual written consent of Seller and Purchaser;
(ii) by Seller if any of the conditions set forth in Sections 7.01 or 7.03 shall have become incapable of fulfillment, and shall not have been waived by Seller;
(iii) by Purchaser if any of the conditions set forth in Sections 7.01 or 7.02 shall have become incapable of fulfillment, and shall not have been waived by Purchaser; or
(iv) by Seller or Purchaser, if the Closing does not occur on or prior to October 2, 2006;
provided, however, that the party seeking termination pursuant to clause (ii), (iii) or (iv) is not then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement.
(b) In the event of termination by Seller or Purchaser pursuant to this Section 8.01, written notice thereof shall forthwith be given to the other and the transactions contemplated by this Agreement shall be terminated, without further action by any party. If the transactions contemplated by this Agreement are terminated as provided herein:
(i) Purchaser shall return all documents and other material received from Seller relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to Seller; and
(ii) all confidential information received by Purchaser with respect to the business of Seller or the Transferred Companies shall be treated in accordance with the Confidentiality Agreement, which shall remain in full force and effect in accordance with its terms, notwithstanding the termination of this Agreement.
SECTION 8.02. Effect of Termination. If this Agreement is terminated and the transactions contemplated hereby are abandoned as described in Section 8.01, this Agreement shall become null and void and of no further force and effect, except for the provisions of (i) Section 5.03 relating to the obligation of Purchaser to keep confidential certain information and data obtained by it, (ii) Section 5.05 relating to certain expenses, (iii) Section 5.06 relating to finder’s fees and broker’s fees, (iv) Section 5.09 relating to publicity, (v) Section 8.01 and this Section 8.02; and (vi) Sections 10.03 through 10.11. Nothing in this Section 8.02 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement.
SECTION 8.03. Amendments and Waivers. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. By an instrument in writing, Purchaser, on the one hand, or Seller, on the other hand, may waive compliance by the other with any term or provision of this Agreement that such other party was or is obligated to comply with or perform.
Indemnification
SECTION 9.01. Tax Indemnification. (a) From and after the Closing, Seller shall be liable for, and shall indemnify Purchaser, its affiliates (including the Transferred Companies) and each of their respective officers, directors, employees, stockholders, agents and representatives (the “Purchaser Indemnitees”) against and hold them harmless from (i) all liability for income Taxes of any Transferred Company for Pre-Closing Tax Periods; (ii) all liability for non-income Taxes of any Transferred Company for Pre-Closing Tax Periods in excess of the amount of such non-income Taxes included in the Closing Balance Sheet Amount; (iii) all liability for Taxes of any member (other than any Transferred Company) of an affiliated, consolidated, combined or unitary group of which any Transferred Company is or was a member on or prior to the Closing Date pursuant to Treasury Regulation § 1.1502-6 or any comparable provision of state, local, or foreign law or regulation; and (iv) all liability for reasonable legal fees and expenses attributable to any item in clause (i), (ii) or (iii) above. Notwithstanding the foregoing, Seller shall not indemnify and hold harmless any Purchaser Indemnitee from any liability for Taxes (i) attributable to any action taken after the Closing by Purchaser, any of its affiliates (including any Transferred Company), or any transferee of Purchaser or any of its affiliates (other than any such action expressly required by Applicable Law or by this Agreement) or any breach by Purchaser or any such person of its obligations under this Agreement (a “Purchaser Tax Act”), including any changes in accounting methods or elections (including revision or adjustment by Purchaser or any Transferred Company to any calculation concerning any Long-Term Contract, unless required by Applicable Law) or (ii) imposed on Purchaser or any of the Transferred Companies with respect to recapture in a Post-Closing Tax Period of percentage depletion pursuant to Section 1254 of the Code or otherwise.
(b) From and after the Closing, Purchaser shall indemnify Seller and its affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives (the “Seller Indemnitees”) and hold them harmless from (i) all liability for Taxes of the Transferred Companies for any Post-Closing Tax Period, (ii) all liability for Taxes attributable to a Purchaser Tax Act or to a failure to comply by Purchaser with its obligations under this Agreement, (iii) all liability for Taxes (A) arising as a result of any revision or adjustment by Purchaser or the Transferred Companies with respect to any calculation concerning any Long-Term Contract, unless required by Applicable Law or (B) imposed on Purchaser or any of the Transferred Companies with respect to the recapture of percentage depletion pursuant to Section 1254 of the Code or otherwise, and (iv) all liability for reasonable legal fees and expenses attributable to any item in clause (i), (ii) or (iii) above.
(c) The amount of any Taxes of any Transferred Company (other than Property Taxes) allocable to the portion of the Straddle Period ending on the Closing shall be determined based on an interim closing of the Company’s books as of the Closing (based on the actual operations of the Company during the portion of the Straddle Period ending on the Closing Date and the portion of such period beginning after the Closing Date), consistent with its past practice for reporting items, except that exemptions, allowances or deductions that are calculated on a time basis, such as deductions for depreciation, shall be apportioned on a time basis. The amount of real, personal and intangible property Taxes (“Property Taxes”) of a Transferred Company for a Straddle Period allocable to the portion of the Straddle Period ending on the Closing shall be equal to the amount of the Property Taxes imposed in respect of real, personal and intangible property owned by such Transferred Company prior to the Closing for the entire Straddle Period, multiplied by a fraction, the numerator of which is the number of days during the portion of the Straddle Period beginning on the first date in such Straddle Period on which such real, personal or intangible property was owned by the Company and ending on the Closing Date and the denominator of which is the number of days in the entire Straddle Period. All Property Taxes of a Transferred Company for the Straddle Period not allocated to the portion of the Straddle Period ending on the Closing Date pursuant to the preceding sentence shall be allocated to the portion of the Straddle Period beginning after the Closing Date.
(d) Any indemnity payment to be made under this Section 9.01 shall be paid within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) business days prior to the date on which the relevant Taxes are required to be paid by the indemnified party to the relevant Taxing Authority (including as estimated Tax payments). To the extent that indemnity is sought with respect to a particular Tax for a Pre-Closing Tax Period, any payment, including any estimated payment, with respect to such Tax made by or on behalf of any Transferred Company on or prior to the Closing Date shall each be credited to any indemnity obligation in respect of such Tax for the Pre-Closing Tax Period.
SECTION 9.02. Other Indemnification by Seller. (a) From and after the Closing, Seller shall be liable for, and shall indemnify each Purchaser Indemnitee against and hold it harmless from, any loss, liability, claim, obligation, damage or expense including reasonable legal fees and expenses (collectively, “Losses”), suffered or incurred by such Purchaser Indemnitee (other than any Loss relating to Taxes (except in the case of the covenants set forth in Section 5.07), for which indemnification provisions are exclusively set forth in Section 9.01) to the extent arising from any of the following:
(i) any breach as of the Closing Date of any representation or warranty of Seller contained in this Agreement (other than Section 3.10), in any Ancillary Agreement or in any certificate delivered pursuant hereto;
(ii) (A) any breach of any covenant of Seller contained in this Agreement (x) prior to the Closing (other than for breaches of covenants described in Section 9.02(a)(ii)(B)) or (y) after the Closing;
(B) any knowing and wilful material breach of Section 5.01 made with an intent to obtain the benefit of the limitations on indemnity set forth in Section 9.02(b);
(iii) any fees, expenses or other payments incurred or owed by Seller to any brokers, financial advisors or comparable other persons retained or employed by it in connection with the transactions contemplated by this Agreement;
(iv) any Third Party Claim to the extent, and only to the extent, such claim alleges (A) exposure to asbestos arising from the actual or alleged manufacture, production, sale, distribution, conveyance, or placement in the stream of commerce by any of the Transferred Companies or their respective predecessors in interest prior to the Closing Date of any product, merchandise, manufactured good, part, component, or any other item actually or allegedly comprised of or containing asbestos, or (B) exposure to asbestos prior to the Closing Date arising from the repair, maintenance, installation, or use by any current or former employee, contractor or subcontractor of any of the Transferred Companies or their respective predecessors in interest of any building material or fixture (excluding, for the avoidance of doubt, any pipes, machinery, equipment, vehicles, spare parts and other personal property) allegedly comprised of or containing asbestos and appurtenant to any facility or real property then owned or leased by the Transferred Companies or their respective predecessors in interest (except to the extent any such claims arise under, or are barred or covered by, workers’ compensation and workers’ compensation, disability or other insurance providing medical care and/or compensation to injured workers);
(v) the failure of Seller or any other person to pay, perform or otherwise promptly discharge any liabilities and obligations required to be satisfied by Seller pursuant to Sections 6.03(f) and 6.04; and
(vi) any liability or obligation under any Assigned Contract to the extent arising out of events or circumstances that occurred prior to the Closing and that relate to the business of Seller and its affiliates (other than the business of the Transferred Companies).
For the purposes of Section 9.02(a)(i), the representations and warranties set forth in any of Articles II and III shall be deemed made as of the Closing Date.
(b) Seller shall not be required to indemnify any Purchaser Indemnitee, and shall not have any liability:
(i) under clauses (i), (ii)(A)(x) and (iv) of Section 9.02(a), unless the aggregate of all Losses for which Seller would, but for this clause (i), be liable thereunder exceeds on a cumulative basis an amount equal to one and a half percent (1.5)% of the Purchase Price, and then only to the extent of any such excess; provided, however, that this clause (i) shall not apply to any claim for indemnification arising out of a breach of any of Sections 2.01, 2.02 and 2.04 (collectively, the “Specified Representations”);
(ii) under clauses (i), (ii)(A)(x) and (iv) of Section 9.02(a), for any individual claim or any series of claims for Losses arising from the same or similar facts, conduct, events, circumstances, occurrences or causes where the Loss relating thereto is less than $100,000 and such claims shall not be aggregated for purposes of clause (i) of this Section 9.02(b); provided, however, that this clause (ii) shall not apply to any claim for indemnification arising out of a breach of any Specified Representations; provided, further, that all claims pursuant to Section 9.02(a)(iv)(A) shall be deemed to have arisen from the same facts and events;
(iii) under clauses (i) and (ii)(A)(x) of Section 9.02(a), for any breach if Section 7.04 is applicable to such breach;
(iv) under clauses (i) and (ii)(A)(x) of Section 9.02(a), in the aggregate, in excess of twenty-five percent (25%) of the Purchase Price; provided, however, that this clause (iv) shall not apply to any claim for indemnification arising out of a breach of any Specified Representations;
(v) under clause (i) of Section 9.02(a) with respect to Specified Representations, in the aggregate, in excess of the Purchase Price;
(vi) under clause (iv) of Section 9.02(a) in the aggregate, in excess of fifty percent (50%) of the Purchase Price;
(vii) under clauses (i), (ii)(A)(x) and (iv) of Section 9.02(a) in the aggregate in excess of the Purchase Price, provided that the limitations on liability set forth in clauses (iv), (v) and (vi) of this Section 9.02(b) shall continue to apply.
(c) Notwithstanding anything herein to the contrary, any indemnification claims relating to asbestos or asbestos-containing materials shall be made exclusively under Section 9.02(a)(iv) or Section 9.02(a)(i) to the extent such Section relates to any breaches of representations and warranties set forth in Section 3.15 (except to the extent Purchaser would be entitled to be indemnified in respect thereof pursuant to Section 9.02(a)(iv)).
(d) Except as otherwise specifically provided in this Agreement or in any Ancillary Agreement, Purchaser acknowledges that its sole and exclusive remedy after the Closing with respect to any and all claims (other than claims of, or causes of action arising from, fraud or claims for equitable relief related to any covenant of Seller contained in this Agreement requiring performance after the Closing or in any covenant or agreement in the Assignment and Acceptance) relating to this Agreement, any other document or certificate delivered in connection herewith, the Ancillary Agreements, the Acquisition and the other transactions contemplated hereby and thereby, the Transferred Companies and their assets and liabilities shall be pursuant to Section 1.04 and the indemnification provisions set forth in this Article IX and, in the case of the Transition Services Agreement, pursuant to Section 4 of the Transition Services Agreement. In furtherance of the foregoing, Purchaser hereby waives, from and after the Closing, to the fullest extent permitted under Applicable Law, any and all rights, claims and causes of action (other than claims of, or causes of action arising from, fraud or claims for equitable relief related to any covenant of Seller contained in this Agreement requiring performance after the Closing or in any covenant or agreement in the Assignment and Acceptance) it may have against Seller arising under or based upon this Agreement, any other document or certificate delivered in connection herewith, the Ancillary Agreements, any Applicable Law (including, inter alia, any rights of contribution or recovery under The Comprehensive Environmental Response, Compensation, and Liability Act or other Environmental Law), common law or otherwise, in each case relating to the transactions contemplated by this Agreement and the Ancillary Agreements (except pursuant to Section 1.04 and the indemnification provisions set forth in this Article IX and, in the case of the Transition Services Agreement, pursuant to Section 4 of the Transition Services Agreement).
(a) Indemnification by Purchaser. From and after the Closing, Purchaser shall indemnify each Seller Indemnitee against and hold it harmless from any Loss suffered or incurred by such Seller Indemnitee (other than relating to Taxes (except in the case of covenants set forth in Section 5.07), for which indemnification provisions are exclusively set forth in Section 9.01) to the extent arising from any of the following:
(i) any breach as of the Closing Date of any representation or warranty of Purchaser, Oldcastle or CRH contained in this Agreement, in any Ancillary Agreement or in any certificate delivered pursuant hereto;
(ii) any breach of any covenant of Purchaser contained in this Agreement;
(iii) any Guarantee or obligation to assure performance given or made by Seller or any affiliate of Seller with respect to any obligation of any Transferred Company;
(iv) any discontinuance, suspension or modification on or after the Closing Date of the Assumed Benefit Plan;
(v) any claim that the purchase and sale of the Shares or the transactions contemplated thereby give rise to any severance obligations;
(vi) (A) any GIA posted by such Seller Indemnitee for the benefit of any Transferred Company, or (B) under any Owner & Contractors Protective or Railroad Protective Insurance Policies outstanding on the Closing Date and issued on behalf of any Seller Indemnitee for the benefit of any Transferred Company;
(vii) (i) the failure of Purchaser or any other person to pay, perform or otherwise promptly discharge any liabilities and obligations required to be satisfied by Purchaser pursuant to Article VI or (ii) any claim arising as a result of any actions or omissions by Purchaser or its affiliates and each of their officers, directors, managers, employees, agents and representatives with respect to the termination, including the selection process with respect to the termination, of any APAC Employee or Ashland/APAC Employee; and
(viii) the failure of APAC to perform under the APAC Indemnity Letter; provided, however, that Purchaser shall not be required to indemnify any Seller Indemnitee, and shall not have any liability under this Section 9.03(a)(viii) in the aggregate in excess of sixty-two and one-half percent (62.5%) of the Purchase Price.
For the purposes of Section 9.03(a)(i), the representations and warranties set forth in any of Article IV shall be deemed made as of the Closing Date.
(b) Indemnification by APAC. At or upon the Closing, Purchaser shall cause APAC to deliver to Seller an agreement substantially in the form of Exhibit B hereto (the “APAC Indemnity Letter”) pursuant to which APAC shall agree to indemnify each Seller Indemnitee against and hold it harmless from any Loss suffered or incurred by such Seller Indemnitee to the extent arising from all obligations and liabilities of whatever kind and nature, primary or secondary, direct or indirect, absolute or contingent, known or unknown, whether or not accrued, whether arising before on or after the Closing Date, of any Transferred Company, including any such obligations or liabilities contained in APAC Contracts to which any Transferred Company is a party or any agreement, lease, license, permit, plan or commitment that, because it fails to meet the relevant threshold amount or term, is not included within the definition of APAC Contracts (in each case other than to the extent indemnification by Seller is provided under this Article IX).
SECTION 9.04. Calculation of Losses. The amount of any Loss for which indemnification is provided under this Article IX shall be net of any amounts actually recovered by the indemnified party under insurance policies with respect to such Loss and shall be (i) increased to take account of any net Tax cost incurred by the indemnified party arising from the receipt of indemnity payments hereunder (grossed up for such increase) and (ii) reduced to take account of any net Tax benefit actually realized by the indemnified party arising from the incurrence or payment of any such Loss. In computing the amount of any such Tax cost or Tax benefit, the indemnified party shall be deemed to recognize all other items of income, gain, loss deduction or credit before recognizing any item arising from the receipt of any indemnity payment hereunder or the incurrence or payment of any indemnified Loss. Any payment under this Agreement shall be treated as an adjustment to the Purchase Price for Tax purposes, unless a final determination (which shall include the execution of a Form 870 AD or successor form) with respect to the indemnified party or any of its affiliates causes any such payment not to be treated as an adjustment to the Purchase Price for United States Federal income purposes. Amounts payable pursuant to this Article IX shall be payable without duplication of any other amount payable pursuant to any of this Agreement, the APAC Indemnity Letter and the Guaranty Agreements (including any amount included as a Specified Liability or reflected in the reported value of any Specified Asset in calculating the Closing Balance Sheet Amount).
SECTION 9.05. Termination of Indemnification. The obligations to indemnify and hold harmless any party (i) pursuant to Section 9.02(a)(i) or 9.03(a)(i) shall terminate when the applicable representation or warranty terminates pursuant to Section 9.07, (ii) pursuant to Section 9.02(a)(ii) or 9.03(a)(ii) shall terminate when the applicable covenant terminates pursuant to Section 9.07, (iii) pursuant to Section 9.02(a)(iv) or 9.03(a)(viii) shall terminate on the fifteenth (15th) anniversary of the Closing Date, (iv) pursuant to the other clauses of Sections 9.02 and 9.03 shall not terminate and (v) pursuant to Section 9.01 shall terminate upon the expiration of the statute of limitations applicable to the matters covered therein (giving effect to any extension thereof); provided, however, that such obligations to indemnify and hold harmless shall not terminate with respect to any item as to which the person to be indemnified shall have, before the expiration of the applicable period, previously made a claim by delivering a notice of such claim (stating in reasonable detail the basis of such claim), pursuant to Section 9.06, to the party to be providing the indemnification. Notwithstanding anything to the contrary in this Agreement, (i) the prior written consent of Purchaser shall not be required in connection with the assignment or transfer of Seller’s rights and obligations under this Agreement, including Seller’s rights to indemnification pursuant to this Article IX by Purchaser and APAC, pursuant to any merger or consolidation of Seller into, or a sale of all or substantially all of the assets of Seller to, another person; provided that, in the event of any sale of all or substantially all of the assets of Seller to another person, (A) such person shall assume all obligations of Seller under this Agreement, including all obligations of Seller to indemnify Purchaser pursuant to this Article IX, and (B) Seller shall remain subject to the restrictions set forth in Section 5.10 in accordance with the terms thereof, and (ii) the prior written consent of Seller shall not be required in connection with the assignment or transfer of Purchaser’s rights and obligations under this Agreement, including Purchaser’s rights to indemnification pursuant to this Article IX by Seller, pursuant to any merger or consolidation of Purchaser into, or a sale of all or substantially all of the assets of Purchaser to, another person; provided that, in the event of any sale of all or substantially all of the assets of Purchaser to another person, such person shall assume all obligations of Purchaser under this Agreement, including all obligations of Purchaser to indemnify Seller pursuant to this Article IX.
SECTION 9.06. Procedures. (a) Third Party Claims. In order for any indemnified party to be entitled to any indemnification provided for under Section 9.02 or 9.03 in respect of, arising out of or involving a claim made by any person against the indemnified party (a “Third Party Claim”), such indemnified party must notify the indemnifying party in writing (and in reasonable detail) of the Third Party Claim within fifteen (15) business days after receipt by such indemnified party of written notice of the Third Party Claim; provided, however, that, subject to Sections 9.05 and 9.07, failure to give such notification shall not affect the indemnification provided hereunder except to the extent the indemnifying party shall have been prejudiced as a result of such failure (except that the indemnifying party shall not be liable for any expenses incurred during the period in which the indemnified party failed to give such notice). Thereafter, the indemnified party shall deliver to the indemnifying party, within five (5) business days’ time after the indemnified party’s receipt thereof, copies of all notices and documents (including court papers) received by the indemnified party relating to the Third Party Claim.
(b) Assumption. (i) If a Third Party Claim (other than a Criminal Claim) is made against an indemnified party, the indemnifying party shall be entitled to participate in the defense thereof and, if it so chooses, to assume the defense thereof with counsel selected by the indemnifying party, provided that such counsel is not reasonably objected to by the indemnified party. If a Third Party Claim with respect to a criminal matter (a “Criminal Claim”) is made against an indemnified party, the indemnified party shall have the right to retain the defense of such Criminal Claim if it notifies the indemnifying party of such indemnified party’s intent to retain such defense in the notice delivered with respect to such Criminal Claim pursuant to the first sentence of Section 9.06(a). If the indemnified party retains such defense, the indemnifying party shall have the right to participate in the defense thereof and to employ counsel (not reasonably objected to by the indemnified party), at its own expense, separate from the counsel employed by the indemnified party, it being understood that, subject to Section 9.06(b)(ii), the indemnified party shall control such defense. If the indemnified party does not so notify the indemnifying party of its intent to retain the defense of such Criminal Claim, the indemnifying party shall be entitled to participate in the defense thereof and assume the defense thereof with counsel selected by the indemnifying party, provided that such counsel is not reasonably objected to by the indemnified party. Should the indemnifying party assume the defense of a Third Party Claim in accordance with the terms of this Section 9.06(b), the indemnifying party shall not be liable to the indemnified party for any legal expenses subsequently incurred by the indemnified party in connection with the defense thereof. If the indemnified party assumes the defense of any Criminal Claim, the indemnifying party shall not be liable to the indemnified party for any legal expenses incurred by the indemnified party in connection with the defense thereof. If the indemnifying party assumes such defense, the indemnified party shall have the right to participate in the defense thereof and to employ counsel (not reasonably objected to by the indemnifying party), at its own expense, separate from the counsel employed by the indemnifying party, it being understood that the indemnifying party shall control such defense. The indemnifying party shall be liable for the fees and expenses of counsel employed by the indemnified party for any period during which the indemnifying party has not assumed the defense thereof (other than during any period in which the indemnified party shall have failed to give notice of the Third Party Claim as provided above). If the indemnifying party chooses to defend or prosecute a Third Party Claim, all the indemnified parties shall cooperate in the defense or prosecution thereof. Such cooperation shall include the retention and (upon the indemnifying party’s request) the provision to the indemnifying party of records and information that are reasonably relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder; provided, however, that nothing in this Agreement shall obligate the indemnified party or its affiliates to contravene any Applicable Laws or binding agreements entered into prior to the date hereof. If the application of a prior agreement materially prejudices the indemnifying party in its defense or resolution of a Third Party Claim, the indemnifying party shall be released from its indemnity obligation to the extent of such prejudice.
(ii) Criminal Claims. If the indemnified party assumes the defense of a Criminal Claim, (A) the indemnified party shall promptly inform the indemnifying party of any offer of settlement, compromise or discharge received from or which it proposes to make to other parties to the matter (including any Governmental Entity) and (B) the indemnified party shall not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim or accept or make any offer with respect thereto without the indemnifying party’s prior written consent (which consent shall not be unreasonably withheld or delayed). If the indemnifying party assumes the defense of a Criminal Claim, the indemnifying party shall inform the indemnified party of any offer of settlement, compromise or discharges received from or which it proposes to make to the other parties to such matter (including any Governmental Entity) and the indemnified party shall agree to any settlement, compromise or discharge of a Criminal Claim that the indemnifying party may recommend that by its terms obligates the indemnifying party to pay the full amount of the liability in connection with such Criminal Claim, releases the indemnified party completely and unconditionally in connection with such Criminal Claim and does not impose any equitable relief or other obligation on the indemnified party.
(iii) Other Claims. Whether or not the indemnifying party assumes the defense of a Third Party Claim (other than a Criminal Claim), the indemnified party shall not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the indemnifying party’s prior written consent (which consent shall not be unreasonably withheld or delayed). If the indemnifying party assumes the defense of a Third Party Claim (other than a Criminal Claim), the indemnified party shall agree to any settlement, compromise or discharge of a Third Party Claim that the indemnifying party may recommend and that by its terms obligates the indemnifying party to pay the full amount of the liability in connection with such Third Party Claim, which releases the indemnified party completely and unconditionally in connection with such Third Party Claim and does not impose any equitable relief or other obligation on the indemnified party. If the indemnifying party assumes the defense of a Third Party Claim, the indemnifying shall promptly inform the indemnified party of any offer of settlement, compromise or discharge received from or which it proposes to make to other parties to the matter.
(iv) For the purposes of Section 9.06(b), whenever a determination is made on whether a withholding or a delay of a consent is reasonable, consideration shall be given not only to any amounts of Losses involved but also to any effect on the business of the indemnified party and its affiliates (including any loss profits and indirect and consequential damages).
(c) Other Claims. In the event any indemnified party should have a claim against any indemnifying party under Section 9.02 or 9.03 that does not involve a Third Party Claim being asserted against or sought to be collected from such indemnified party, the indemnified party shall deliver notice of such claim with reasonable promptness to the indemnifying party. Subject to Sections 9.05 and 9.07, the failure by any indemnified party so to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have to such indemnified party under Section 9.02 or 9.03, except to the extent that the indemnifying party demonstrates that it has been materially prejudiced by such failure.
(d) Procedures Relating to Indemnification of Tax Claims. (i) If a claim shall be made by any Taxing Authority, which, if successful, might result in an indemnity payment to any party pursuant to Section 9.01, the indemnified party shall promptly notify the indemnifying party in writing of such claim (a “Tax Claim”). If notice of a Tax Claim is not given to the indemnifying party within a sufficient period of time to allow the indemnifying party to effectively contest such Tax Claim, or in reasonable detail to apprise the indemnifying party of the nature of the Tax Claim, in each case taking into account the facts and circumstances with respect to such Tax Claim, the indemnifying party shall not be liable to the indemnified party to the extent that the indemnifying party’s position is prejudiced as a result thereof.
(ii) With respect to any Tax Claim (other than a Tax Claim relating solely to Taxes of APAC or any Transferred Company for a Straddle Period) for which a party may be required to indemnify another party pursuant to Section 9.01 of this Agreement, the indemnifying party may participate in and, upon notice to indemnified party, assume the defense of any such Tax Claim. If the indemnifying party assumes such defense, (i) the indemnifying party shall have the sole discretion as to the conduct of such defense, including selection of counsel and choice of forum, and the indemnifying party may, in its sole discretion, (A) pursue or forego any and all administrative appeals, proceedings, hearings and conferences with any Taxing Authority with respect thereto and (B) either pay the Tax claimed and sue for a refund where Applicable Law permits such refund suits or contest the Tax Claim in any permissible manner and (ii) the indemnified party shall have the right (but not the duty) to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the indemnifying party. Without limiting the foregoing, the indemnifying party shall not settle any Tax Claim without the prior written consent of the indemnified party (such consent not to be unreasonably delayed or withheld); provided, however, that if the indemnified party withholds such consent and, upon the final resolution of the matter, the amount for which the indemnifying party is liable under this Agreement exceeds the amount for which the indemnifying party would have been liable had the indemnified party not withheld such consent, then the indemnified party shall be liable for and shall indemnify the indemnifying party and hold them harmless from the amount of any such excess. Purchaser shall control all proceedings taken in connection with any Tax Claim relating solely to Taxes of a Transferred Company for a Straddle Period; provided that Purchaser shall not settle any Straddle Period Tax Claim without the prior written consent of Seller (such consent not to be unreasonably delayed or withheld).
(iii) Purchaser and its affiliates (including the Transferred Companies) shall cooperate with Seller in contesting any Tax Claim, which cooperation shall include the retention and (upon Seller’s request) the provision to Seller of records and information which are reasonably relevant to such Tax Claim, and making employees available on a mutually convenient basis to provide additional information or explanation of any material provided hereunder or to testify at proceedings relating to such Tax Claim.
(e) Mitigation. Purchaser, on the one hand, and Seller, on the other hand, shall cooperate with each other with respect to resolving any claim or liability with respect to which one party is obligated to indemnify the other party hereunder, including by using reasonable efforts to mitigate or resolve any such claim or liability. In the event that Purchaser, on the one hand, or Seller, on the other hand, shall fail to use reasonable efforts to mitigate or resolve any claim or liability, then, notwithstanding anything else to the contrary contained herein, the other party shall not be required to indemnify any person for any loss, liability, claim, obligation, damage or expense that could reasonably be expected to have been avoided if Purchaser or Seller, as the case may be, had made such efforts. Without limiting the foregoing, the indemnified party shall use commercially reasonable efforts to make a claim under insurance policies of such indemnified party applicable to any Loss to be indemnified hereby by the indemnifying party; provided, however, no provision of this Section 9.06(e) shall be deemed to require the indemnified party to expend money, commence, defend or participate in any litigation, incur any obligation in favor of, or grant any accommodation to any third party in connection therewith.
SECTION 9.07. Survival of Representations. The representations, warranties, covenants and agreements contained in this Agreement and in any document delivered in connection herewith (other than in the Ancillary Agreements) shall survive the Closing solely for purposes of this Article IX as follows: (i) the representations and warranties (other than in Section 3.10) shall terminate on the 18 month anniversary of the Closing Date; provided that the representations and warranties contained in Section 2.04, 3.14 (solely to the extent related to compliance with Federal or state antitrust or anti-competition laws and regulations) and the other Specified Representations shall terminate on the three (3) year anniversary of the Closing Date and the representations in Section 3.10 shall not survive the Closing; (ii) the covenants requiring performance prior to the Closing shall terminate on the eighteen (18) month anniversary of the Closing Date; and (iii) all other provisions of this Agreement shall survive indefinitely.
SECTION 9.08. Limitations on Liability. Notwithstanding any provision herein, none of Seller or Purchaser shall in any event be liable to each other or their affiliates, officers, directors, employees, agents or representatives on account of any indemnity obligation set forth in Sections 9.01, 9.02 or 9.03 for any indirect, consequential, special, incidental or punitive damages (including lost profits, loss of use, damage to goodwill or loss of business) except with respect to such damages payable by any indemnified party to any third party.
SECTION 9.09. No Additional Representations. Purchaser acknowledges that it and its representatives have been permitted full and complete access to the books and records, facilities, equipment, tax returns, contracts, insurance policies (or summaries thereof) and other properties and assets of the Transferred Companies that it and its representatives have desired or requested to see or review, and that it and its representatives have had a full opportunity to meet with the officers and employees of the Transferred Companies to discuss the business of the Transferred Companies. Purchaser acknowledges that (i) none of Seller, APAC or any other person has made any representation or warranty, expressed or implied, as to the Transferred Companies or the accuracy or completeness of any information regarding the Transferred Companies furnished or made available to Purchaser and its representatives, except as expressly set forth in this Agreement, the Ancillary Agreements or the Schedules, (ii) Purchaser has not relied on any representation or warranty from Seller, or any other person in determining to enter into this Agreement, except as expressly set forth in this Agreement, the Ancillary Agreements and the Schedules, and (iii) none of Seller or any other person shall have or be subject to any liability to Purchaser or any other person resulting from the distribution to Purchaser, or Purchaser’s use of, any such information, including the confidential memorandum dated March 14, 2006, and any information, documents or material made available to Purchaser in any “data rooms”, management presentations or in any other form in expectation of the transactions contemplated hereby. Purchaser acknowledges that, should the Closing occur, Purchaser shall acquire the assets of the Transferred Companies without any representation or warranty as to merchantability or fitness for any particular purpose, in an “as is” condition and on a “where is” basis, except as otherwise expressly set forth in this Agreement, the Ancillary Agreements and the Schedules.
SECTION 9.10. LIMITATIONS OF REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, NO REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT OF SELLER CONTAINED IN THIS AGREEMENT SHALL BE BREACHED OR DEEMED BREACHED AS A RESULT OF, AND SELLER SHALL NOT HAVE ANY LIABILITY FOR, ANY IMPACT ON THE BUSINESS OF THE TRANSFERRED COMPANIES AS A RESULT OF THE ONGOING LITIGATION BETWEEN THE SIERRA CLUB AND THE U.S. ARMY CORPS OF ENGINEERS REGARDING THE ISSUANCE OF PERMITS FOR THE MINING OF CONSTRUCTION AGGREGATES IN THE LAKE BELT AREA OF MIAMI-DADE COUNTY, FLORIDA.
General Provisions
SECTION 10.01. Assignment. This Agreement and the rights and obligations hereunder shall not be assignable or transferable by any party (including by operation of law in connection with a merger or consolidation of such party) without the prior written consent of the other parties hereto. Any attempted assignment in violation of this Section 10.01 shall be void.
SECTION 10.02. No Third Party Beneficiaries. Except as provided in Article IX, this Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the parties hereto and such assigns, any legal or equitable rights hereunder.
SECTION 10.03. Attorney Fees. A party in breach of this Agreement shall, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement. The payment of such expenses is in addition to any other relief to which such other party may be entitled.
SECTION 10.04. Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by facsimile or sent, postage prepaid, by registered, certified or express mail or overnight courier service and shall be deemed given when received, to the addresses as follows, or such other address as shall be furnished in writing by any party to the others:
(a) if to Purchaser,
Oldcastle, Inc.
375 Northridge Road, Suite 350
Atlanta, GA 30350
Telecopy: (770) 673-2400
Attention: Chief Financial Officer
with a copy to (that shall not constitute notice):
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Telecopy: (212) 351-4035
Attention: Steven R. Shoemate, Esq.; and
(b) if to Seller,
Ashland Inc.
50 E. River Center Boulevard
Covington, KY 41012
Telecopy: (859) 815-5053
Attention: General Counsel
with a copy to:
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Telecopy: (212) 474-3700
Attention: Susan Webster, Esq.
SECTION 10.05. Interpretation; Exhibits; Seller Disclosure Schedule; Certain Definitions. (a) For all purposes hereof:
(i) The headings contained in this Agreement, in any Exhibit, the Seller Disclosure Schedule or any other Schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
(ii) All references to articles, sections, paragraphs and schedules contained herein shall be construed to refer, respectively, to articles, sections, paragraphs and schedules hereof unless otherwise expressly indicated.
(iii) The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa.
(iv) The words “hereof”, “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(v) The term “knowledge” or “known” or “know” as used in this Agreement, shall mean, with respect to any person, those facts or circumstances actually known by such person as of the date of this Agreement.
(vi) This Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the extent to which any such party or its counsel participated in the drafting of any provision hereof or by virtue of the extent to which any such provision is inconsistent with any prior draft hereof.
(b) All Exhibits and the Seller Disclosure Schedule annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in the Seller Disclosure Schedule or any Exhibit but not otherwise defined therein, shall have the meaning as defined in this Agreement. When a reference is made in this Agreement to a Section, Exhibit or Schedule, such reference shall be to a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. Any matter set forth in any provision, subprovision, section or subsection of the Seller Disclosure Schedule shall be deemed set forth for all purposes of the Seller Disclosure Schedule to the extent relevant and reasonably apparent.
(c) The terms set forth below as used in this Agreement shall have the following meanings:
“affiliate” of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person.
“APAC Divestiture Stay Bonus Letters” means the individual retention agreements between certain APAC Employees and Ashland/APAC Employees entered into pursuant to the APAC Divestiture Stay Bonus Program, all as disclosed to the Seller in writing prior to the date of this Agreement.
“Ashland/APAC Employee” means an employee of Seller who perform services primarily in connection with the business of the Transferred Companies.
“business day” means any day, other than a Saturday or a Sunday, on which commercial banks are not required or authorized to close in New York, New York, United States of America.
“Company Material Adverse Effect” means a material adverse effect on the assets, business, financial condition or results or operations of the Transferred Companies, taken as a whole, in excess of $3,000,000; provided that, for all purposes of this Agreement, any change or disruption to any of the Transferred Companies’ businesses as a result of the ongoing litigation between the Sierra Club and the U.S. Army Corps of Engineers regarding the issuance of permits for the mining of construction aggregates in the Lake Belt area of Miami-Dade County, Florida shall not be deemed to constitute, and shall not be taken into account in determining whether there has been or will be, a Company Material Adverse Effect.
“CRH” means CRH plc, a corporation organized under the laws of the Republic of Ireland.
“Guaranty Agreements” means, collectively, (a) the Guaranty Agreement, dated the date hereof, from Oldcastle for the benefit of Seller, and (b) the Guaranty Agreement, dated the date hereof, from CRH plc for the benefit of Seller.
“including” means including, without limitation.
“Oldcastle” means Oldcastle Inc, a Delaware corporation.
“Permitted Intercompany Receivables and Payables” means trade accounts payable and receivable for commercial transactions on arms’ length basis in the ordinary course of business between any Transferred Company, in the one hand, and the Seller or any of its affiliates (other than the Transferred Companies), on the other hand.
“person” means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, Governmental Entity or other entity.
“subsidiary” of any person means (i) another person of which such first person owns (either directly or indirectly by another subsidiary of such first person) an amount of the voting securities, other voting ownership or voting partnership interests sufficient to elect at least a majority of the Board of Directors (or other governing body) (or such other number as is necessary to control the Board of Directors or such other body) of such other person or (ii) another person in which such first person possesses 50% or more of the equity interest.
“Subsidiary” means each subsidiary of APAC.
The terms set forth below as used in this Agreement shall have the meanings assigned to such terms in the Sections set forth below:
| Terms | Section |
| | |
| Accounting Firm | 1.04(c)(ii) |
| Acquisition | 1.01 |
| Adjusted Purchase Price | 1.04(e) |
| Adjusted Target Amount | 1.04(e) |
| affiliate | 10.05(c) |
| Agreement | Preamble |
| Ancillary Agreements | 2.02 |
| APAC | Preamble |
| APAC Contracts | 3.08(b) |
| APAC Divestiture Programs | 6.01(a) |
| APAC Divestiture Stay Letters | 10.05(c) |
| APAC Employee | 3.12(a) |
| APAC Indemnity Letter | 9.03(b) |
| APAC Intellectual Property | 3.07(a) |
| APAC Mirror Divestiture Programs | 6.03(c) |
| APAC Property | 3.06(a) |
| Applicable Insurance Policies | 5.19(a) |
| Applicable Law | 2.03 |
| Ashland/APAC Employee | 10.05(c) |
| Ashland Name | 5.18 |
| Assigned Agreement | 5.16 |
| Assumed Benefit Plan | 3.12(a) |
| Balance Sheet | 3.04(a) |
| Balance Sheet Amount | 1.04(b) |
| Balance Sheet Date | 3.04(a) |
| business day | 10.05(c) |
| CBA | 6.02(b) |
| Certificates | 5.13(b) |
| Closing | 1.02 |
| Closing Balance Sheet Amount | 1.04(a) |
| Closing Date | 1.02 |
| Closing Date Amount | 1.03(b) |
| Code | 3.10(a) |
| Commonly Controlled Entity | 3.12(a) |
| Company Material Adverse Effect | 10.05(c) |
| Competitive Activities | 5.10(a) |
| Confidentiality Agreement | 5.03(a) |
| Consent | 2.03 |
| Contract | 2.03 |
| CRH plc | 10.05(c) |
| Criminal Claims | 9.06(b) |
| Disclosed Liabilities | 3.04(b) |
| DOJ | 5.04(b) |
| Environmental Laws | 3.15 |
| Environmental Permits | 3.15 |
| ERISA | 3.12(a) |
| Excluded Item | 1.04(b)(ii) |
| Excluded Policies | 5.19(a) |
| Financial Statements | 3.04(a) |
| Finalization Period | 1.04(d) |
| FTC | 5.04(b) |
| GAAP | 1.04(b)(iv) |
| GIA | 5.13(b) |
| Governmental Entity | 2.03 |
| Guarantees | 5.13(a) |
| Guaranty Agreements | 10.05(c) |
| Hazardous Materials | 3.15 |
| HSR Act | 2.03 |
| including | 10.05(c) |
| Informing Party | 7.04 |
| Intellectual Property | 3.07(c) |
| Judgment | 2.03 |
| Leased Property | 3.06(a) |
| Liens | 3.05(a) |
| Long-Term Contract | 5.07(f) |
| Limpus | 3.04(a) |
| Losses | 9.02(a) |
| Non-Transferred Employees | 6.01(a) |
| Notice of Disagreement | 1.04(c) |
| OCP Policies | 5.13(b) |
| Oldcastle | 10.05(c) |
| Owned Property | 3.06(a) |
| Pension Plan | 3.12(a) |
| Permits | 3.09 |
| Permitted Intercompany Receivables and Payables | |
| Permitted Liens | 3.05(a) |
| person | 10.05(c) |
| Post-Closing Tax Period | 3.10(a) |
| Pre-Closing Date Service | 6.03(d) |
| Pre-Closing Tax Period | 3.10(a) |
| Primary Company Executives | 3.12(d) |
| Proceeding | 3.11 |
| Processing Error | 1.04(b)(iii) |
| Property Taxes | 9.01(c) |
| Purchase Price | 1.01 |
| Purchaser | Preamble |
| Purchaser Indemnitees | 9.01(a) |
| Purchaser Material Adverse Effect | 4.01 |
| Purchaser Pre-Closing Books and Records | 5.17(a) |
| Purchaser Tax Act | 9.01(a) |
| Purchaser Welfare Plan | 6.03(b) |
| Related Party | 3.17(a) |
| Release | 3.15 |
| Replacement Agreement | 5.16 |
| Restricted Entity | 5.10(a) |
| Restricted Period | 5.10(a) |
| Retained Employee | 6.01(a) |
| Seller | Preamble |
| Seller Benefit Plan | 3.12(a) |
| Seller Disclosure Schedule | Article II |
| Seller Indemnitees | 9.01(b) |
| Seller Pre-Closing Books and Records | 5.17(b) |
| Share Right | 2.04(c) |
| Shares | Preamble |
| Specified Assets | 1.04(b) |
| Specified Liabilities | 1.04(b) |
| Specified Representations | 9.02(b)(i) |
| Specified Requirements | 1.04(b)(iv) |
| Split Agreements | 5.16(a) |
| Statement | 1.04(a) |
| Straddle Period | 3.10(a) |
| subsidiary | 10.05(c) |
| Subsidiary | 10.05(c) |
| Subsidiary Voting Company Debt | 3.02(a) |
| Target Amount | 1.04(e) |
| Tax or Taxes | 3.10(a) |
| Tax Claim | 9.06(d)(i) |
| Tax Return or Tax Returns | 3.10(a) |
| Taxing Authority | 3.10(a) |
| Technology | 3.07(c) |
| Terminated Employee | 6.01(a) |
| Termination Payments | 6.01(a) |
| Third Party Claim | 9.06(a) |
| Transferred Companies | Preamble |
| Transferred Employee(s) | 6.02(a) |
| Transition Services | 5.15 |
| Transition Services Agreement | 5.15 |
| Voting Company Debt | 2.04(d) |
| Waiving Party | 7.04 |
| | |
SECTION 10.06. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other parties.
SECTION 10.07. Entire Agreement. This Agreement, the Ancillary Agreements and the Confidentiality Agreement, along with the Schedules and Exhibits hereto and thereto, contain the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings relating to such subject matter. None of the parties shall be liable or bound to any other party in any manner by any representations, warranties or covenants relating to such subject matter except as specifically set forth herein or in the Ancillary Agreements or the Confidentiality Agreement.
SECTION 10.08. Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the remaining portion thereof) or the application of such provision to any other persons or circumstances.
SECTION 10.09. Consent to Jurisdiction. Each party irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County, and (b) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, any Ancillary Agreement or any transaction contemplated hereby or thereby. Each party agrees to commence any such action, suit or proceeding either in the United States District Court for the Southern District of New York or if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the Supreme Court of the State of New York, New York County. Each party further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth above shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction in this Section 10.09. Each party irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement, any Ancillary Agreement or the transactions contemplated hereby in (i) the Supreme Court of the State of New York, New York County, or (ii) the United States District Court for the Southern District of New York, and hereby and thereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
SECTION 10.10. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.
SECTION 10.11. Waiver of Jury Trial. Each party hereby waives to the fullest extent permitted by Applicable Law, any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Agreement, any Ancillary Agreement or any transaction contemplated hereby or thereby. Each party (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement and the Ancillary Agreements, as applicable, by, among other things, the mutual waivers and certifications in this Section 10.11.
SECTION 10.12. Specific Performance. The Seller acknowledges that the Transferred Companies and their business are unique and that Purchaser will have no adequate remedy at law and may suffer irreparable damage if the Seller breaches any covenant contained herein requiring performance at or after the Closing. Accordingly, the Seller agrees that Purchaser shall have the right, in addition to any other rights which it may have, to specific performance and equitable injunctive relief if the Seller shall fail or threaten to fail to perform any of its obligations under any covenant contained in this Agreement that requires performance at or after the Closing.
IN WITNESS WHEREOF, Seller and Purchaser have duly executed this Agreement as of the date first written above.
ASHLAND INC., |
| by | /s/ James J. O’Brien |
| | Name: James J. O'Brien |
| | |
OLDCASTLE MATERIALS, INC., |
| |
| by | /s/ Thomas W. Hill |
| | |
| | Title: Chief Executive |
| List of Schedules | |
Schedule 1.04 - | Form of Statement |
Schedule 2.03- | No Conflicts; Consents (Seller) |
Schedule 2.04 - | The Shares |
Schedule 3.01 - | Organization and Standing |
Schedule 3.02 - | Capital Stock of the Subsidiaries |
Schedule 3.03 - | No Conflicts; Consents (APAC) |
Schedule 3.04(a) - | Financial Statements |
Schedule 3.04(b) - | Indebtedness or Liabilities |
Schedule 3.05 - | Assets Other than Real Property Interests |
Schedule 3.06(a) - | Real Property |
Schedule 3.06(b) - | Owned and Leased Property Sold, Transferred, or Otherwise Disposed Of |
Schedule 3.07 - | Intellectual Property |
Schedule 3.08 - | Contracts |
Schedule 3.09 - | Permits |
Schedule 3.10 - | Taxes |
Schedule 3.11 - | Proceedings |
Schedule 3.12(a) - | Benefit Plans |
Schedule 3.12(c) - | Assumed Benefit Plans - ERISA Liability |
Schedule 3.12(d) - | Primary Company Executives |
Schedule 3.13(a) - | Absence of Changes or Events (No Material Adverse Effect) |
Schedule 3.13(b) - | Absence of Changes or Events (Conduct in the Ordinary Course) |
Schedule 3.14 - | Compliance with Applicable Laws |
Schedule 3.15 - | Compliance with Applicable Environmental Laws |
Schedule 3.16 - | Employee and Labor Matters |
Schedule 3.17(a ) - | Transactions with Affiliates |
Schedule 3.17(b) - | Contracts Held by Seller |
Schedule 5.01 - | Covenants Relating to Conduct of Business |
Schedule 5.13(a) - | Guarantees |
Schedule 5.13(b) - | GIAs; Owner & Contractors Protective or Railroad Protective Insurance Policies |
Schedule 5.16 - | Certain Contracts |
Schedule 5.18 - | No Use of the Ashland Name |
TRANSITION SERVICES AGREEMENT
This Transition Services Agreement (this “Agreement”) is entered into as of August 28, 2006, by and among Ashland Inc., a Kentucky corporation (“Provider”), and Oldcastle Materials, Inc., a Delaware corporation (“Recipient”) (each a “Party” and together, the “Parties”).
WHEREAS, pursuant to that certain Stock Purchase Agreement dated as of August 19, 2006, between Provider and Recipient (the “Purchase Agreement”) (terms contained and not defined herein but defined in the Purchase Agreement shall have the meanings defined in the Purchase Agreement), Recipient has agreed to purchase the Shares of Ashland Paving And Construction, Inc. (“APAC”, and, together with its Subsidiaries, the “Transferred Companies”);
WHEREAS, Recipient is interested in purchasing the Services (as defined below) from Provider during the Services Periods (as defined below); and
NOW, THEREFORE, the Parties, intending to become legally bound, agree as follows:
| | 1.1. | Types of Services Provided; Services Periods. Provider hereby agrees to perform each of the services described in Schedules 1 and 2 (the “IT Services”) and Schedules 3, 4 and 5 (the “Payroll and Benefit Management Services”) hereto (each a “Service,” collectively, the “Services,” and each group of Services identified in the column headed “Service Sub-Category” on Schedules 1 and 3, a “Service Sub-Category”) for the Transferred Companies for a period commencing on the Closing Date and ending on and including the date set forth opposite each such Service Sub-Category on Schedules 1 and 3 hereto, as applicable, in the column headed “Expected Discontinuation Date” (with respect to any Service Sub-Category, (i) such date the “Expected Discontinuation Date”; (ii) such period, the “Initial Services Period”), and (iii) such period, subject to earlier termination or extension pursuant to Section 5.2, Section 5.3 or Section 6, as the case may be, the “Services Period”). Notwithstanding anything to the contrary herein, Provider shall not be required to perform or to cause to be performed any of the Services for the benefit of any third party or any person other than the Transferred Companies. |
1.2. Standard of Delivery.
| | 1.2.1. | In providing the Services, Provider shall use commercially reasonable efforts to provide such Services consistent with its past practice and at substantially the same level and quality as performed by Provider and its affiliates for the Transferred Companies during the twelve (12) months immediately preceding the Closing Date; provided, however, that neither Provider nor any of its affiliates shall be obligated to perform or to cause to be performed any Service in a volume or quantity which exceeds, in any material respect, the historical volume or quantity of such Service performed by Provider and its affiliates for the Transferred Companies at comparable times and periods during the twelve (12) months immediately preceding the Closing Date; provided, further, that neither Provider |
nor any of its affiliates shall be required to incur any capital expenses or other additional expenses in providing any Services to the Transferred Companies, other than expenses related to routine maintenance of systems necessary for the provision of comparable services to Provider for its own businesses. The Parties acknowledge the transitional nature of the Services and that Provider may make changes from time to time in the manner of performing the Services if (i) Provider is making similar changes in performing similar services for its own affiliates and (ii) Provider furnishes to Recipient substantially the same notice (in content and timing) as Provider shall furnish to its own affiliates with respect to such changes; provided, however, that such changes shall not materially reduce the level and quality of the Services provided to Recipient.
| | 1.2.2. | Compliance with Applicable Law. In all events, Provider shall perform the Services in compliance with Applicable Law. Notwithstanding anything to the contrary set forth in this Agreement, Provider shall not be obligated to take any action or fail to take any action that in the reasonable opinion of Provider, upon the advice of its counsel, would cause Provider to violate, or otherwise fail to comply with, any Applicable Law whether or not Recipient shall have directed, instructed, requested or otherwise purported to require Provider or any of its officers, directors, employees or agents to take any action or fail to take any such action. Recipient shall cooperate with Provider in such manner as Provider may reasonably request to assist with the compliance of Applicable Law. |
| | 1.2.3. | No Additional Representations or Warranties. Except as expressly provided in this Section 1.2, Provider makes no representation or warranty, expressed or implied, with respect to the Services. Without limiting the generality of the foregoing, Provider shall not express an opinion or provide Recipient with any representations or other form of assurance with respect to Provider’s internal control systems or its auditors’ compliance with laws, regulations or other matters, including in connection with any SAS No. 70 review by Recipient’s auditors or Recipient’s compliance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), and Provider shall not perform an evaluation of internal control over financial reporting upon which Recipient shall base its assertions in connection with Section 404. PROVIDER DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE SUITABILITY, ORIGINALITY, FITNESS FOR A PARTICULAR USE OR PURPOSE, OR RESULTS TO BE DERIVED FROM THE USE OF ANY SERVICES PROVIDED UNDER THIS AGREEMENT. WITHOUT LIMITING THE PROVISIONS OF SECTIONS 1.2.1 AND 1.2.2, PROVIDER DOES NOT GUARANTEE THAT ANY WORK PRODUCT WILL BE ERROR FREE. |
1.3. Administration.
| | 1.3.1. | Representatives. Each Party shall designate (i) a representative responsible for coordinating the performance of all of the Services and the transition process in general (each, a “Transition Representative”), and (ii) representatives to |
| | | implement and administer the Services provided with respect to each Service Sub-Category (each, a “Service Sub-Category Representative” and, together with the Transition Representatives, the “Representatives”). Each Party may change any of its Representatives by giving written notice to the other Party. Provider’s Transition Representative shall provide Recipient and its Representatives with contacts in the applicable Provider departments for purposes of implementing and performing the Services. Provider and any director, officer, employee, agent or Representative of Provider may rely in good faith on any document of any kind prima facie properly executed and submitted by Recipient respecting any matters arising hereunder. To the extent Provider fails to provide any Services when and as required pursuant to this Agreement as a result of a failure by a Recipient or any of its Representatives to provide timely information or instructions reasonably necessary for Provider to perform the Services and requested by Provider, Provider shall not be deemed to be in breach or default of this Agreement. |
| | 1.3.2. | Consultation / Meetings. During the Term and upon reasonable request of a Party, during normal business hours and in such a manner as shall not unduly interfere with or disrupt the operation and conduct of the other Party’s other businesses, such other Party shall permit the requesting Party to consult on a reasonable periodic basis with the Representatives and other applicable employees of the other Party with respect to the operation of the Transferred Companies and the transition process (the “Transition”). The Parties agree to cooperate as reasonably required to assist Provider in performing the Services during the Term and to assist each other with the transition process during the Term and upon expiration thereof; provided, however, that the Party requesting cooperation shall pay all reasonable out-of-pocket expenses incurred by the Party furnishing cooperation. The Parties shall hold monthly meetings to discuss the provision of the Services, including operational details, transitional matters, dispute resolution and any other issues related to this Agreement. Such meetings may take place telephonically or at mutually agreed locations and may include a reasonable number of representatives from each Party. |
1.4. Access / Transition / Records.
| | 1.4.1. | During the Term, Provider shall provide reasonable access to the files and all servicing records related to the Transferred Companies that are in Provider’s possession or under Provider’s control, including those which are reasonably necessary to enable Recipient to respond to employee, customer and supplier inquiries or otherwise manage the Transferred Companies and those that are necessary to enable Recipient to transition the Services and operations of the Transferred Companies. Recipient shall be entitled to make copies of and extract from such records at its own expense. |
| | 1.4.2. | During the Term, Provider shall provide Recipient with assistance necessary to permit an orderly transition of the books and records (including electronic files and data) of the Transferred Companies that are in Provider’s possession to Recipient |
| | | or to a successor service provider designated by Recipient (including permitting reasonable access to Provider’s system and premises). |
| | 1.4.3. | At the end of the Term, Provider shall deliver to Recipient all of the Transferred Companies’ files created during the Term that are in Provider’s possession or under Provider’s control, with an inventory listing of records delivered. |
| | 1.4.4. | Recipient is entitled to files, servicing records and other books and records related to the Transferred Companies in Provider’s possession or under Provider’s control, pursuant to Sections 1.4.1, 1.4.2 and 1.4.3, to the extent that such records (i) are necessary to enable Recipient to transition the Services and operations of the Transferred Companies, (ii) exist in a form that sets forth information related solely to the Transferred Companies (provided that, to the extent that this is not the case, Provider shall provide Recipient with copies of the data or excerpts thereof to the extent such data relates to the Transferred Companies; provided, further, with respect to any third party invoice for which it is not practicable to provide a copy or an excerpt, Provider shall provide a summary of the necessary information containing a level of detail consistent with current practice) and (iii) are not subject to any confidentiality agreements between Provider and a third party; provided, further, that (A) Recipient shall be entitled to obtain all employment-related files and records with respect to the Transferred Employees to the extent permitted by Applicable Law, except to the extent that such files and records are for the administration and maintenance of employee benefit liabilities retained by Provider under the Purchase Agreement, and (B) the restrictions set forth in clauses (i)-(iii) of this Section 1.4.4 shall not be applicable to any file, book and records that are owned by any Transferred Company. |
| | 1.4.5. | Recipient shall grant to Provider, during the applicable Services Period, subject to Recipient’s reasonable security requirements, reasonable access to Recipient’s premises for purposes necessary for the delivery of any Services hereunder or the performance of any obligations required by this Agreement. |
| | 1.4.6. | Upon notice of termination of any Service, Provider shall reasonably cooperate with Recipient to facilitate the assumption and performance of such Service by Recipient or another servicer. |
| | 1.4.7. | Recipient shall pay all reasonable out-of-pocket expenses incurred by Provider in connection with the transition activities set forth in Sections 1.4.1, 1.4.2, 1.4.3, 1.4.5 and 1.4.6 above. |
| | 1.4.8. | After the completion of the transition of the Transferred Companies from JD Edwards to Viewpoint, Recipient and Provider shall use commercially reasonable efforts to determine jointly which files of the Transferred Companies containing historical data from JD Edwards and other information systems used by APAC are to be archived. Provider shall provide Recipient, no later than ninety (90) days after the Closing Date, a list of information that is to be archived. Recipient shall provide Provider a copy of the mutually agreed-upon archived data in an SQL |
| | | database at no cost to Provider; provided, however, that if Provider’s data archival requirements are incremental to those of APAC, Provider shall reimburse Recipient for any out-of-pocket expenses (excluding expenses related to internal labor) that are reasonably attributable to such incremental archival requirements. |
| | 1.4.9. | Notwithstanding any provision to the contrary in this Agreement, Provider shall provide Recipient Entities with any additional security and network services not already included in the existing security cost allocations set forth on Schedule 1 hereto to enable the Transferred Companies to use the applications and services hosted by Provider on the network of Transferred Companies during the Term; provided that Recipient shall pay all reasonable out-of-pocket expenses of Provider in connection therewith. |
| | 1.4.10. | Miscellaneous Services. In addition to the Services described in Section 1.1, (i) for a period commencing on the Closing Date and ending thirty days after the Closing Date, Provider shall provide to the Transferred Companies invoice printing services, (ii) for a period commencing on Closing Date and ending on (and including) September 30, 2006, Provider shall continue to provide assistance to the political action committees formed in the states of Alabama, Arkansas, Florida, Georgia, Kansas, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia in which employees of the Transferred Companies are members to enable those political action committees to file all reports required by Applicable Law and (iii) for a period commencing on Closing Date and ending on (and including) September 20, 2006, Provider shall provide treasury and cash management-related services, including cash positioning, concentration, collections, disbursements and other services reasonably required to operate the treasury function of the Transferred Companies. Recipient shall reimburse Provider for all out-of-pocket, internal labor, supplies and training expenses incurred by Provider in connection with provision of such services, which expenses are not otherwise included in any other amount payable by Recipient pursuant to this Agreement (including Treasury Variable Costs). |
| | 1.4.11. | Dispute Resolution. Each Party shall nominate a member of that Party’s senior management as that Party’s executive representative under this Agreement for resolving disputes hereunder. Any dispute between the Parties relating to this Agreement which cannot be resolved with reasonable promptness shall be referred to each executive representative in an effort to obtain prompt resolution. Neither Party shall commence any action against the other Party until the expiration of sixty (60) days from the date of referral to such executive representatives; provided, however, that this provision shall not preclude a Party from instituting an action seeking injunctive relief. |
1.5. Disbursement of Funds.
| | 1.5.1. | In no event shall Provider be required, directly or indirectly, to advance funds to or on behalf of Recipient. To the extent any Service requires Provider to disburse funds on behalf of Recipient, upon reasonable notice by Provider, Recipient shall provide such funds to Provider, by electronic funds transfer to any account designated by Provider in writing, no later than the business day immediately preceding the day such disbursement is to be made. |
| | 1.5.2. | In furtherance of the foregoing, in advance of any distribution of funds pursuant to the Payroll and Benefit Management Services, including the administration of |
| | | any employee benefits claims (i) Provider shall provide Recipient with payroll and payroll tax reports, as applicable, and (ii) Recipient shall deposit in a bank account designated by Provider funds in an amount equal to the amount of such distribution. Recipient shall provide Provider with all information required to appropriately distribute such funds, including any necessary bank account numbers of employees, payment amounts and information required to remit funds to applicable tax authorities and benefits providers. |
| | 1.5.3. | The Parties acknowledge and agree that the obligations of Provider to disburse any funds on behalf of Recipient is contingent on the satisfaction by Recipient of its obligations relating to such funds under this Section 1.5. |
| | 1.6. | Benefit Plans. At the conclusion of the Services Period with regard to the employee benefit plans and the benefits administration thereof identified in Schedule 3, Recipient shall take all necessary actions to remove Provider as the identified plan administrator and shall promptly notify all participants and eligible employees of such removal and identify the new plan administrator. Additionally, Recipient shall indemnify and hold Provider, its employees, officers and directors harmless from any and all liabilities, including any attorney fees, asserted against Provider as a plan administrator for acts occurring after the conclusion of said Services Period. |
2. | CONTRACT PRICE AND PAYMENT SCHEDULE |
2.1. Contract Price.
| | 2.1.1. | Initial Services Period Price. Recipient shall pay, with respect to each Service provided hereunder, the following amounts: (i) with respect to any Service Sub-Category of any Payroll and Benefit Management Service Sub-Category, any one-time charges set forth in the column headed “Initial Set Up Charge” in Schedule 3 hereto (the aggregate of all such one-time charges, the “Initial Fee”), (ii) with respect to any Service Sub-Category the amount set forth opposite such Service Sub-Category in the column headed “Monthly Base Fee” in Schedule 1 or Schedule 3 hereto, as the case may be (such amount, the “Monthly Base Fee”), if any, (iii) with respect to any Service Sub-Category of IT Services, the total variable costs associated with the provision of such Service Sub-Category, if any, calculated based on the factors set forth opposite such Service in the column headed “Monthly Variable Costs” in Schedule 1 hereto (such total variable costs, together with Treasury Variable Costs, the “Monthly Variable Cost”), (iv) with respect to the Treasury Services Service Sub-Category, the total variable costs associated with the provision of such Services, if any, calculated based on the factors set forth opposite the Treasury Service Service Sub-Category in Schedule 3 (the “Treasury Variable Costs”) and (v) any out-of-pocket expenses incurred by Provider in connection with the provision of each Service actually provided hereunder, which out-of-pocket expenses are not otherwise included in any of clauses (i), (ii) and (iii) above (the “Additional Out-of-Pocket Expenses”). |
| | 2.1.2. | Fees after Termination. In the event that Provider relies on any third party provider in provision of any Services hereunder, Provider shall give prompt notice to such third party provider of any proposed termination of such Services and shall use its commercially reasonable efforts to cause such third party provider to terminate such Services on the scheduled termination date. In the event such third party service provider does not terminate such service on such date and Provider incurred any out-of-pocket expenses after the date of termination of the related Service, Recipient shall reimburse Provider for such reasonable out-of-pocket expenses to the extent they constitute Monthly Variable Costs. |
| | 2.1.3. | Extended Services Period Price. Recipient shall pay, with respect to each Payroll and Benefit Management Service for which an Extended Services Period is entered into pursuant to Section 6 of this Agreement, an amount equal to the amounts set forth in Section 2.1.1(ii), plus one hundred thirty percent (130%) of the Monthly Base Fee, if any, for such Service for the Extended Services Period. |
| | 2.1.4. | Monthly Base Fee for Payroll Tax Services. The Monthly Base Fee for Payroll Tax Services is (i) included in the Monthly Base Fee for Payroll Services, as set forth on Schedule 3 hereto, for the period from the date hereof through December 31, 2006, and is (ii) $5,000 per month for the period from January 1, 2007 to March 31, 2007. |
2.2. Calculation and Payment Schedule.
| | 2.2.1. | Payment of Initial Fee. Recipient shall pay the Initial Fees of $50,000, as set forth in Schedule 3 hereto, on the Closing Date. |
| | 2.2.2. | Payment of Monthly Base Fees. Each month during the Term, Recipient shall pay the Monthly Base Fee for each Service provided during such month on or prior to the last business day of such month. |
| | 2.2.3. | Payment of Monthly Variable Costs and Out-of-Pocket Expenses. On a monthly basis, Provider shall deliver to Recipient a separate invoice for each Service with respect to which Provider incurred a Monthly Variable Cost and/or Additional Out-of-Pocket Expenses, setting forth the amounts of such costs. Each invoice shall be accompanied by a reasonably detailed description of the Monthly Variable Cost and/or Additional Out-of-Pocket Expenses associated with the provision of such Service during such month and, with respect to invoices for IT Services, each invoice shall be in a form consistent with the past practices of Provider with respect to such Services, as previously provided to APAC. Recipient shall pay all amounts due pursuant to each invoice within ten (10) business days of the date of such invoice. |
| | 2.2.4. | Wire Transfer. All payments made pursuant to this Section 2.2 shall be made in United States’ dollars by wire transfer to an account at a financial institution designated in writing by Provider. |
| | 2.2.5. | Late Payment Fee. Any (i) portion of the Initial Fee not paid as of the Closing Date, (ii) Monthly Base Fees not paid by the last business day of the month and (iii) any Monthly Variable Costs or Additional Out-of-Pocket Expenses not paid within ten (10) business days after the receipt by Recipient of any invoice (any such day on which a payment amount is due, the “Due Date”) shall bear interest at a rate equal to the rate of interest announced publicly by Citibank, N.A., as its prime rate on such Due Date, calculated on the basis of the actual number of days elapsed, divided by 365, from the Due Date until the date payment is received in full by Provider. |
| | 2.2.6. | Taxes. Recipient shall pay any and all applicable taxes and assessments, including, without limitation, any U.S., foreign, state, local, sales, use, property, gross receipts, provincial, transaction, value-added, goods and services, excise or similar taxes or other taxes of whatever nature, including any penalties or interest thereon (“Taxes”), incurred in connection with Provider’s performance of the Services, if any, excluding income or franchise taxes that are based on or measured by the income of, or any branch profits or similar tax imposed on, Provider or any of its subsidiaries; provided, however, that, subject to the limitations set forth in Section 4.1, Recipient shall pay any excise tax or assessment imposed in connection with Provider’s violation of ERISA or the Code with respect to any benefit plan (“ERISA Taxes”). With respect to Tax matters, the procedures set forth in Sections 9.01 and 9.06 of the Purchase Agreement are incorporated herein by reference and shall apply to this Agreement in the same manner such provisions apply to the Purchase Agreement. |
| | 2.2.7. | Audit. Upon the reasonable request and with prior written notice, during normal business hours and in such a manner as shall not unduly interfere with or interrupt the operation and conduct of Provider’s other businesses, Provider shall provide representatives of Recipient (including its internal and external auditors) with reasonable access to (i) the books, records, files and papers, whether in hard copy or computer format, used or held for use in the provision of the Services, and (ii) applicable employees of Provider who provide or manage provision of the Services, to permit an audit of any Monthly Variable Costs and/or out-of-pocket expenses required to be paid or reimbursed to Recipient pursuant to this Agreement. Notwithstanding anything in the foregoing to the contrary, the provisions of this Section 2.2.7 shall be subject to and limited by the provisions of any agreement Provider has with any third party vendor that provides some or all of the Services or otherwise assists in such Services that are subject to the audit. |
Neither Party shall have liability for any interruption of Services, delay or failure to perform under this Agreement when such interruption, delay or failure results from causes beyond its reasonable control or from compliance with any law, decree, requirement or order of any Governmental Entity, or as the result of strikes, lock-outs or other labor difficulties; riot, insurrection or other hostilities; embargo, fuel or energy shortage, fire, flood, acts of God; acts of war or terrorism; or inability to obtain necessary labor, materials or utilities as a result thereof.
In such event, a Party’s obligations hereunder shall be postponed for such time as its performance is suspended or delayed on account thereof. Each Party shall promptly notify the other upon learning of the occurrence of such event of force majeure. Upon the cessation of the force majeure event, the delayed Party shall use all commercially reasonable efforts to resume its performance with all reasonable speed.
4. | LIABILITY; INDEMNIFICATION |
| | 4.1. | Liability. Notwithstanding anything to the contrary in this Agreement, except in the case of any ERISA Taxes to the extent that such ERISA Taxes are attributable to Provider’s gross negligence or willful misconduct, claims for equitable relief and fraud, the maximum liability of Provider and its affiliates to, and the sole remedy of, Recipient and any of its affiliates (including the Transferred Companies) for breach of this Agreement or for any losses under this Agreement or otherwise arising with respect to the matters addressed herein (including any ERISA Taxes to the extent that such ERISA Taxes are not attributable to Provider’s gross negligence or willful misconduct), regardless of the form of action that imposes liability, whether in contract, negligence, intentional conduct, tort or otherwise, shall be a termination of the provision of the Service to which such breach or loss relates in accordance with Section 5.3 hereof and payment of an amount not to exceed the lesser of (i) the Initial Fee and the Monthly Base Fees payable during the applicable Service Period for the particular Service, (ii) the cost to Recipient or any of its affiliates (including the Transferred Companies) of performing the Service itself during the remainder of the applicable Services Period or (iii) the cost to Recipient or any of its affiliates (including the Transferred Companies) of obtaining the Service from a third party during the remainder of the applicable Services Period. |
4.2. Indemnity and Third Party Claims.
| | 4.2.1. | Except with respect to any ERISA Taxes to the extent that such ERISA Taxes are attributable to Provider’s gross negligence or willful misconduct, Recipient shall indemnify, defend and hold harmless Provider, each affiliate of Provider and each of their respective officers, directors, employees, stockholders, agents and representatives, and each of the successors and assigns of any of the foregoing, from and against any and all losses, claims, damages, liabilities, Taxes, expenses (including reasonable legal fees and expenses) (“Losses”) or other obligations that are incurred by Provider and its affiliates in connection with or arising from a breach of this Agreement by, or gross negligence or willful misconduct on the part of, Recipient or its affiliates (including the Transferred Companies). |
| | 4.2.2. | Provider shall indemnify, defend and hold harmless Recipient and its respective officers, directors, employees, stockholders, agents and representatives and assigns from and against any and all Losses or other obligations that are incurred by Recipient or its affiliates (including the Transferred Companies) in connection with or arising from a breach of this Agreement by, or gross negligence or willful misconduct on the part of, Provider or its affiliates. |
| | 4.2.3. | With respect to any claim brought pursuant to this Section 4, the procedures set forth in Sections 9.04, 9.06 and 9.08 of the Purchase Agreement are incorporated herein by reference as if fully set forth herein; provided, however, that (i) references to Article IX in Section 9.04 shall be deemed to refer to Section 4 of this Agreement, (ii) the words “(including any amount included as a Specified Liability or reflected in the reported value of any Specified Asset in calculating the Closing Balance Sheet Amount)” in Section 9.04 shall be deemed deleted, (iii) references to “Section 9.02 or 9.03” in Section 9.06(a) shall be deemed to refer to Section 4 of this Agreement, (iv) the words “subject to Sections 9.05 and 9.07” in Section 9.06(a) shall be deemed deleted, (v) the words “under Section 9.02 or 9.03” in Section 9.06(c) shall be deemed to refer to Section 4 of this Agreement, (vi) the words “Subject to Section 9.05 and 9.07, the failure” in Section 9.06(c) shall be deemed amended and restated to read “The failure”, (vii) references to “Section 9.01” in Section 9.06(d)(i) shall be deemed to refer to Section 4 of this Agreement and (viii) references to “Sections 9.01, 9.02 or 9.03” in Section 9.08 shall be deemed to refer to Section 4 of the Agreement. |
5. | TERM; CANCELLATION FOR DEFAULT AND TERMINATION FOR CONVENIENCE |
| | 5.1. | Term. The term of this Agreement (the “Term”) shall commence on the date hereof and end on the last day of the longest Services Period. |
| | 5.2. | Termination for Convenience. Recipient may terminate this Agreement as to any Service under this Agreement by delivering to Provider a written notice of termination no later than sixty (60) days prior to the effective date of such termination, which notice shall specify the Service to be terminated and the effective date of such termination. |
| | 5.3. | Termination of Entire Agreement. Either Party shall have the right to terminate this Agreement effective upon delivery of notice to the other Party if the other Party materially defaults in the performance of any of its covenants or obligations contained in this Agreement and such default is not remedied to the non-defaulting Party’s reasonable satisfaction within sixty (60) days following written notice of such default. In the case of a breach of Recipient’s payment obligations under Section 2 of this Agreement, Provider shall have the right to terminate this Agreement ten (10) business days after written notice of such breach is delivered to Recipient. |
| | 5.4. | Procedures on Termination. Following any termination of this Agreement, in whole or in part, each Party shall cooperate with the other Party as reasonably necessary to avoid disruption of the ordinary course of the other Party’s business. Termination shall not affect any right to payment for Services provided prior to termination and rights to payments with respect to terminated services as set forth in Section 2.1.1. From and after the termination of any or all Services, Recipient shall have to further payment obligations with respect to such terminated services except as provided in this Section 5.4 and in Sections 2.1.1 and 2.1.2. |
| | 5.5. | Effect of Termination. The early termination of this Agreement shall not affect the rights of either Party against the other for any prior breach of any covenant or agreement contained herein, including, without limitation, the obligation of Recipient to pay Provider any and all amounts payable hereunder for Services theretofore provided. |
6. | EXTENSION OF SERVICES PERIOD |
Recipient may extend the period for which any Service is provided (any such period of extension with respect to a Service, the “Extended Services Period”) by giving written notice of such extension to Provider no later than sixty (60) days prior to the expiration of the Initial Services Period. Provider shall not be obligated to provide Services for any periods of time longer than the following: (i) with respect to any Payroll and Benefit Management Services, the Initial Services Period shall end on December 31, 2006, and such Services can be extended through March 31, 2007, provided that the Parties understand that (A) the last paychecks actually paid will be on the dates such paychecks are paid in the last month such Services are provided; (B) Provider cannot perform only Payroll or only Benefit Management Services during any period and (C) with respect to Form W-2 preparation, mailing and filing and Tax reporting, filing and remittance Services (collectively, the “Payroll Tax Services”) that will be provided by Provider to Recipient beyond December 31, 2006, in order to comply with tax reporting and filing requirements, the Initial Services Period shall end on March 31, 2007, and no extension beyond that date shall be requested by Recipient with respect to such Payroll Tax Services and (ii) with respect to any IT Services, the Initial Services Period shall end on July 31, 2007, and such Services can be extended through December 31, 2007.
7. | PROPRIETARY INFORMATION |
| | 7.1. | Definition. The term “Proprietary Information” means all confidential or proprietary information, including but not limited to code or intellectual property information, which relates to and is disclosed by one Party (the “Originating Party”) to the other (the “Receiving Party”) in connection with this Agreement, it being acknowledged that, except for Proprietary Information that is protected from disclosure by the attorney-client privilege or work product doctrine, such Proprietary Information does not include the Tax structure or Tax treatment of the transactions contemplated by this Agreement), except as required by Applicable Law. |
| | 7.2. | Disclosure and Use. The Receiving Party shall preserve Proprietary Information received from the Originating Party in confidence and shall refrain from disclosing Proprietary Information to any third party without written authorization from the Originating Party. Except for software in source code form, these obligations will terminate three (3) years after the earlier of (i) the date on which this Agreement is terminated under either Section 5.2 or 5.3 hereof and (ii) the last day of the Term. During the Term, the Receiving Party shall use Proprietary Information received from the Originating Party solely in connection with the performance of this Agreement or the Transition. The disclosure and use obligations set forth above shall be considered satisfied by the Receiving Party through the exercise of the degree of care, but in no event less than reasonable care, used to restrict disclosure and use of its own information of like kind and importance. |
7.3. Protection of Systems and Data.
| | 7.3.1. | Without Recipient’s written permission, Provider agrees to use its commercially reasonable efforts not to access or manipulate Recipient data or systems during the Term except as required to perform Provider’s obligations under this Agreement or as agreed in writing between the Parties. |
| | 7.3.2. | Without Provider’s written permission, Recipient agrees to use its commercially reasonable efforts not to access or manipulate Provider’s data or system during the Term except as reasonably necessary in connection with the transition of the operations and data of the Transferred Companies from systems of Provider and its affiliates and except as otherwise permitted in this Agreement, which access is hereby permitted subject to the terms of this Agreement. |
| | 7.4. | Injunctive Relief. Both Parties acknowledge that breach of this Section 7 may cause damage of an irreparable and continuing nature to the Originating Party for which monetary damages may not provide adequate relief. Therefore, in addition to any monetary damages, the Originating Party is also entitled to seek an injunction, including if applicable, a temporary restraining order, to prohibit continued breach of this Agreement. |
| | 7.5. | Exceptions. This Agreement shall not restrict disclosure or use of Proprietary Information that is: |
| | 7.5.1. | known to the Receiving Party without restriction when received or thereafter is developed independently by the Receiving Party without reference to Proprietary Information of the Originating Party; or |
| | 7.5.2. | obtained without restriction from a source other than the Originating Party through no breach of confidence by the Receiving Party; or |
| | 7.5.3. | in the public domain when received, or thereafter enters the public domain through no fault of the Receiving Party; or |
| | 7.5.4. | disclosed by the Originating Party to a third party without restriction; or |
| | 7.5.5. | required by Applicable Law or regulation, provided the Receiving Party notifies the Originating Party of the requirement promptly, and cooperates with the Originating Party (at the request and expense of the Originating Party) in contesting the requirement. |
| | 7.6. | No Other Rights Granted. Proprietary Information shall remain the property of the Originating Party. Except for the rights expressly granted under this Agreement, neither this Agreement nor disclosure of Proprietary Information hereunder shall be construed as granting any right or license under any trade secrets, copyrights, inventions, or patents now or hereafter owned or controlled by either Party. Nor does this Agreement grant any right or license, or impose any restriction on use of disclosure |
| | | with respect to information, other than Proprietary Information, disclosed or received by either Party in connection with this Agreement. |
| | 7.7. | Wind-up Activities. Upon completion or termination of the Services and unless instructed in writing to do otherwise by the Originating Party, the Receiving Party shall use commercially reasonable efforts to cease use of and return or destroy all of the Proprietary Information, if any, received from the Originating Party. The Originating Party may request, within sixty (60) days after termination of this Agreement, and the Receiving Party shall provide, written certification of the return or destruction. In the event that information not related to the sale or operation of the Transferred Companies is discovered by Recipient, Recipient shall contact Provider for instructions as to the disposition of that information and protect that information at the level of “Proprietary” in accordance with this Section 7. |
| | 8.1. | Further Assurances. Each Party shall, from time to time after the Closing Date, at the request of any other Party and without further consideration, execute and deliver such other documents and instruments and take such other actions, as such other Party may reasonably request to effect the transactions contemplated by this Agreement. |
| | 8.2. | Agency. Provider and Recipient each agree and confirm that (a) they do not intend to create any form of partnership or joint venture with the other Party with respect to any of the Services, (b) they will not hold themselves out to the public as a partner with the other Party hereto or any other person with respect to any of the Services, (c) they do not have, or intend to form, a joint profit motive with the other Party or any other person with respect to any of the Services, (d) they are not authorized to act as, or to hold themselves out as, the agent of or to otherwise bind the other Party with respect to any of the Services, (e) unless otherwise required by the Internal Revenue Service or like governmental authority with jurisdiction over income tax matters, they will not file any partnership or other joint income tax return reflecting the other Party as a partner or joint venturer with respect to items of income, loss, deduction, or credit attributable to the Services, and (f) they will report all items of income, loss, deduction and credit attributable to the Services on their own tax returns in a manner consistent with the terms of this Agreement. |
| | 8.3. | Incorporation by Reference. The following provisions of the Purchase Agreement are incorporated herein by reference and shall apply to this Agreement in the same manner such provisions apply to the Purchase Agreement: Sections 8.01 (Amendments and Waivers), 10.03 (Attorney Fees), 10.04 (Notices), 10.07 (Entire Agreement), 10.5(a) (Interpretation), 10.08 (Severability), 10.06 (Counterparts), 10.09 (Jurisdiction), 10.10 (Governing Law), 10.11 (Waiver of Jury Trial) and 10.12 (Specific Performance). |
| | 8.4. | Competing Provisions. The Parties acknowledge and agree that certain provisions of this Agreement may be inconsistent with the provisions of the Purchase Agreement. To the extent that any provision hereof is inconsistent with the provisions of the Purchase |
| | | Agreement, the provisions of the Purchase Agreement shall govern the subject of such inconsistencies in all respects. |
| | 8.5. | Survival: Sections 2 (with respect to Initial Fees and Monthly Base Fees accrued prior to termination of the applicable Services), 7 (with respect to Proprietary Information) and 8 (with respect to Miscellaneous provisions) hereof shall survive the termination of this Agreement. |
| | 8.6. | Assignment. This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns. This Agreement and the rights and obligations hereunder may not be assigned by either Party without the express written consent of the other, except that Provider may delegate its obligations for the provision of Services that historically have been performed by affiliates or third party service providers to such affiliates and third party providers consistent with past practice; provided that any such delegation shall not reduce or otherwise limit the liability of Provider under this Agreement. |
| | 8.7. | No Third Party Beneficiaries. This Agreement is for the sole benefit of the Parties hereto and their permitted assigns and nothing herein expressed or implied shall be construed to give to any person, other than the Parties hereto and such assigns, any legal or equitable rights hereunder. |
| | 8.8. | Announcements. All media releases, public announcements and public disclosures by Provider, Recipient or their respective affiliates relating to this Agreement or the subject matter of this Agreement, excluding announcements solely intended for internal distribution or to meet legal or regulatory requirements, shall be approved by Provider and Recipient prior to release; provided, however, that Provider hereby consents to all uses of its name by Recipient which refer in accurate terms to the Services that Provider shall provide hereunder. Provider shall not use the names of Recipient and its affiliates (including the Transferred Companies) without prior written consent, except as may reasonably be necessary for the performance of its duties under this Agreement. |
| | 8.9. | No Solicitation. Without Provider’s prior written consent, Recipient shall not directly or indirectly solicit for employment or hire any person is employed by Provider on the date hereof in an executive or management level position. This obligation shall terminate one (1) year after the earlier of (i) the date on which this Agreement is terminated under either Section 5.2 or 5.3 hereof and (ii) the last day of the Term. |
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
Ashland Inc. By: /s/ Lamar M. Chambers Name: Lamar M. Chambers Title: Vice President and Controller | | Oldcastle Materials, Inc. By: /s/ Michael O’Driscoll Name: Michael O’Driscoll Title: Assistant Secretary |
SCHEDULE 1
IT SERVICES PRICING
Service Sub-Category | Monthly Variable Cost | Expected Discontinuation Date | Monthly Base Fee |
Voice Network | Voice network monthly variable costs based largely on number and duration of calls and use of toll free numbers, with some costs based on historical allocations. Local phone services (home office and business lines) billed directly through Profitline. Mobile phone services (including Blackberry and Wireless Cards) based upon historical charges for various plans and number and duration of calls. | August 1, 2007 | $26,537 |
Data Network | Variable costs based on number of network lines, capacity and type of line. Description of Lines Number of Lines Cost per Line* 768 KB/sec 2 $850 1.5MB/sec 2 $1,200 512 KB 20 $790 384 KB 7 $625 256 KB 67 $575 Broadband VPN 1 $100 *includes circuit and associated router and switch maintenance | August 1, 2007 | $118,361 |
OS/390 | N/A | August 1, 2007 | $22,917 |
Intel | N/A | August 1, 2007 | $16,400 |
Distributed Computing | N/A | August 1, 2007 | $33,333 |
Total Service Delivery and Service Desk | Variable costs based on # of PCs (currently 2,588 total PCs: 2,207 PCs have variable costs of $40/PC/month and the remaining 381 PCs do not have associated variable costs because they are plant PCs). Billing by third party service provider to Provider occurs each quarter and is based on the # of PCs in use at the time of the once-a-quarter count, regardless of whether the use of any such PC continues subsequent to the count and the termination of such TSE. | August 1, 2007 | $75,831 |
AS400 | N/A | August 1, 2007 | $33,333 |
UNIX | N/A | August 1, 2007 | $17,000 |
Security | N/A | August 1, 2007 | $40,250 |
Telephone Local Service | Variable costs paid by Ashland via Profitline and direct billed to APAC at cost. | August 1, 2007 | $0 |
Mobile Phones | Variable costs paid by Ashland via Profitline and direct billed to APAC at cost. | August 1, 2007 | $0 |
FiberLink Remote Access | Variable costs paid by Ashland via Profitline and direct billed to APAC at cost. | August 1, 2007 | $0 |
Total | | | $368,723 |
SCHEDULE 2
IT SERVICES DETAILED SERVICE DESCRIPTION
Services Sub-Category | Activity Description | Key Service Products |
Voice Network | Engineering, implementation, optimization, administration, call routing, call accounting administration and support, procurement, problem reporting, incident and problem management, problem resolution, 24X7 operational monitoring, and support (includes IMAC activity) of the voice communication network, hardware, software and services. Also includes hardware maintenance, software maintenance and licensing, and support for adjunct voice related applications. | PBX, Voice Mail, VoIP, and Video Conferencing System Configuration services, maintenance and support · Capacity planning, business need assessment, network planning, system design and implementation · Change, incident, problem and asset management · Security administration (includes third party access) and Sarbanes-Oxley Compliance · 24X7 operational monitoring and support (problem monitoring, reporting and resolution) · System upgrades / optimization · Supplier management / selection PBX, Voice Mail, Video Conferencing System and Contact Center Install/ Move / Add / Change activity · Coordinate all IMAC activity with suppliers and interface with the business and site contacts · Manage equipment inventory · Manage remote administration of IMAC activity Manage, support and maintain Contact Center and Call Logging applications · Call logging installation, administration, support and quality monitoring · Report administration · Scripting of call and email / fax interaction for call routing and call treatments · Provide call flow designs · Agent, supervisor and application administration Manage voice services installation, support, upgrades and all other IMAC activity · Local phone service (home office and business lines), · Long distance, audio conferencing · Supplier, expense and contract management of mobile phone service (includes BlackBerry and Wireless Cards) · Small telephone and voice mail systems · Toll free numbers and routing · Circuit optimization Provide Tier 3 support to Global Operations for problem resolution Invoice and supplier management, and procurement of all voice services, hardware, software and maintenance purchases |
Services Sub-Category | Activity Description | Key Service Products |
Data Network | Engineering, implementation, optimization, problem reporting, incident and problem management, problem resolution, 24X7 operational monitoring, and support (includes IMAC activity) of the data communication network, hardware, software and services. Also includes hardware maintenance, software maintenance and licensing. | Wide Area Network (WAN), Local Area Network (LAN), Remote / Mobile access and Wireless Network configuration, engineering, maintenance and support · Capacity planning, business need assessment, network planning, system design and implementation · Disaster recovery planning and testing · Internet connectivity · Domain name services (DNS) and IP address management (DHCP) · Quality of Service (QOS) supported of the WAN · Network security and firewall administration (includes third party access) · Change, incident, problem and asset management · Network upgrades / optimization · 24X7 operational monitoring and support · Problem monitoring, reporting and resolution · Sarbanes-Oxley compliance Wide Area Network (WAN), Local Area Network (LAN), and Wireless Network Install/ Move / Add / Change activity · Coordinate all IMAC activity with suppliers · Interface with the business and site contacts · Manage equipment inventory · Manage remote administration of IMAC activity Provide Tier 3 support to Global Operations for problem resolution Invoice management, supplier selection and management, and procurement of all data related services, hardware, software and maintenance purchases |
OS/390 | Engineering & support, back-up & recovery, disaster recovery planning and testing, capacity management, performance tuning, 24X7 operational monitoring, problem reporting, incident and problem management, problem resolution, printing, storage and microfiche. | · HR Services · Payroll · APAC MCS (1535) · Integrated Accounting System (1510) · QMF · DB2 · File Aid for DB2 · Data Collection (1581) · Conversion Test (1588) · Project Pass |
Services Sub-Category | Activity Description | Key Service Products |
Intel | Usage and file/print activities, engineering and support, data back-up & recovery, disaster recovery planning and testing, capacity management, performance tuning, 24X7 operational monitoring and support, software maintenance licensing and support, the Citrix environment. | · Citrix · Meta Frame Farm · HCSS Heavy Bid Software · Primavera Expedition · MCS |
Distributed Computing | Engineering & support, back-up & recovery, disaster recovery planning and testing, capacity management, performance tuning, 24X7 operational monitoring, problem reporting, incident and problem management, problem resolution, printing, storage of applications that are distributed across multiple platforms (includes Lotus Notes). | · Large scale computer based printing · Application to application messaging · Business to business messaging · Lotus Notes · Web Methods |
Security | Provide efficient, effective, and simplistic authentication and authorization processes and establish procedures to protect against inappropriate data access. Develop and maintain policy and standards to ensure data integrity, coordinate with auditing the review evaluation and compliance requirements necessary to provide appropriate security processes and procedures. Provide appropriate systems and business management tools to ensure reliable service levels. Maximize service level performance while stabilizing overhead requirements and achieving minimized costs. Providing control objectives (integrity, accountability, availability, etc.) using security services (authentication, authorization, etc) comprised of controls and technology (Logon id's, encryption, password management, audit assessments, etc.) to security information at all levels of the organization. | · 2,182 APAC computer users of which 1,518 reside on an AS/400 that we help administratively manage · Manage 652 ID's on an APAC development machine · Notes setup and ongoing security access to Lotus Notes databases and group distribution change requests · Manage fire-call ID requests and approvals · Administer their AS/400 platform access · Troubleshoot AS/400 issues and request status issues · Administer formal process for allowing one person to view another persons Lotus Notes · Review daily/weekly reports for cell phone and blackberry access · AS/400 user reviews · NetIQ reviews seeking proactive problem identification · HRDS updates (terminations, retirements, leave of absence, military leave, etc.) · Coordinate 1,518 JDE updates on ID information · Manage audit reports and assist with non-Ashland ID management · Manage all shares and permissions, group account in terms of moves, adds, changes and deletes, as well and troubleshoot security issues to 72 APAC servers |
Services Sub-Category | Activity Description | Key Service Products |
Service Delivery /PC Services | Support of the PC environment. Application wrapping, application registration, tools development, asset and configuration management, Tier 3 support, service delivery management, quality assurance testing, break / fix and IMAC activities. Delivery, procurement and support of all PC related hardware and software products and services to the business. | Service Delivery · PC IMACD, hardware and software installation, and hardware break/fix · Printer repair · LAN/WAN IMACD; Tier-2 troubleshooting; and repair · Voice desktop and switch IMACD; Tier-2 troubleshooting; and repair · Video IMACD; Tier-2 troubleshooting; and repair Service Management · Coordination with business on application registration and deployment events · Incident escalation for business impacting PC issues PC Engineering · PC operating system engineering and image creation · Engineering and maintenance of standard set of PC applications · Maintain software distribution systems Quality Assurance · Testing and acceptance of PC software to ensure compatibility with Ashland standard PC software · Develop installation and support instructions registered PC applications Tier-3 · Printer support, such as: driver testing, acceptance, and installation; print server setup; print server configuration break/fix · Tier-3 client configuration, application and hardware support · PC hardware add-ons (i.e. PCI cards) and peripheral testing and implementation. · Client OS security software patching Asset and Configuration Management · Software license compliance tracking and optimization · PC and peripheral asset tracking |
AS/400 | Engineering & support, back-up & recovery, disaster recovery planning and testing, capacity management, performance tuning, 24X7 operational monitoring, problem reporting, incident and problem management, problem resolution, printing, storage. | · ERP System (JD Edwards) · Financial order entry, manufacturing and purchasing · Tape Management (LXI) · Turnover · Taa Tools · Blockade (password synchronization) · EMC Copy Point | · EMC Time Finder · Mplus · STK / RMLS · Communicator · ESSBAS · Websphere · IXOS |
Services Sub-Category | Activity Description | Key Service Products |
Service Desk | Incident resolution of PC related service calls, performs password resets and the immediate software install process, Tier 1 and Tier 2 application support | Service Desk (Tier-1) · 7x24x365 single point of contact for all IT related issues · Enters all reported IT related issues in Incident Management tool · Resolves incidents with scriptable and semi-scriptable resolutions · Provide installation of software · Communication with IM team for all Severity 1 and Severity 2 reported issues · Escalate tickets that are not scriptable, or require additional resources to resolve · Solicit customer satisfaction using an automated survey · Provide detailed reporting on daily, weekly, and monthly basis Application Support (Tier-2) · Escalation point for the Service Desk · Resolves incidents with non-scriptable resolutions · Test configuration changes in various applications · Perform documented procedural activities within application back-end systems · System administration in various applications · Enters/completes security requests in various applications · Solicit customer satisfaction using an automated survey · Document work instructions and process flows · Root cause analysis for problem identification and resolution |
J2EE / Unix | Engineering & support, back-up & recovery, disaster recovery planning and testing, capacity management, performance tuning, 24X7 operational monitoring, problem reporting, incident and problem management, problem resolution, printing, storage. | · Infrastructure for J2EE and other Unix applications · Business to Business and Application to Application environment · Weblogic · Webmethods · Inet Drivers · Oracle DBS · Microsoft SQL Server (DBMS) · Apache · AIX operating system · Tivoli · EMC Storage · Windows operating system · Cognos Report Net · OneSight |
SCHEDULE 3
PAYROLL AND BENEFIT MANAGEMENT SERVICES PRICING
Service Sub-Category | Description | Monthly Base Fee | Initial Set Up Charge | One-time Variable Cost | Expected Discontinuation Date | Comments |
Payroll | - Bi-weekly pay processing for salaried population - Weekly pay processing for hourly population - W4 Maintenance and entry - Garnishment interpretation, setup and Maintenance - Tax withholding administration - Government reporting - Disbursement control and remittance - Special check processing - Check printing, handling and distribution - FMLA process - Deduction Maintenance - Direct deposit management - Payroll journal entry processing - Unemployment Tax management support - Absence tracking (salaried only) - Other services (see Schedule 2 -- Detailed Payroll) - Provide all payroll data to Recipient or its delegate on 12/15/06 | $125,000 | $30,000 | | January 1, 2007 | - Payroll Transition services include 4.75 FTE months for system set-up on front-end and data/file transfer work on back-end - Does not include cost of JDE contractor, which will be direct billed |
Payroll Tax Services | - Tax reporting, filing and remittance - W2 preparation, mailing and filing | See Note in "Comments" | N/A | | March 31, 2007 | The Monthly Base Fee for Payroll Tax Services is included in the Monthly Base Fee for Payroll Services for the period through 12/31/06, and is $5,000 for the period from 1/1/07 to 3/31/07. |
Records Management | - All data entry for salaried - Partial data entry for hourly - Records Maintenance - System Maintenance | $56,000 | N/A | | January 1, 2007 | |
Service Sub-Category | Description | Monthly Base Fee | Initial Set Up Charge | One-time Variable Cost | Expected Discontinuation Date | Comments |
Call center | - Maintenance of the call center for benefits and HR policy related questions - Harassment hotline, dedicated line for Spanish speaking APAC employees - Enrollment related questions - Employment verification - Personnel data inquiries | $22,300 | N/A | | January 1, 2007 | For changes in benefits, calls will be escalated to Cambridge associates; if volume of calls will increase due to the transition, Ashland will notify Oldcastle and provide basis for headcount increase. Cambridge will conduct early November enrollment for January 2007 time period |
Treasury Services | - Check stock - Automated Clearing House ("ACH") credits/debits fees - Stop payment fees - Wire transfer fees - Positive pay exceptions fees - File transmission fees - Treasury personnel | "Treasury Variable Costs" shall be calculated according to the following: - Check stock and ACH fees based upon the number of employees paid during the period - Fees related to stopped payments, wire transfers, positive pay exceptions and file transmission will be charged to Oldcastle as they occur - Personnel at a rate of $25 / hour / employee | January 1, 2007 | |
Service Sub- Category | Description | Monthly Base Fee | Initial Set Up Charge | One-time Variable Cost | Expected Discontinuation Date | Comments |
Benefits Administration | The following services for all Buyer Plans listed on Schedule 5, directly or through service providers retained by Provider and listed on Schedule 5: - Handle all benefit determinations, claims and appeals - Interpret and implement the terms of the Buyer Plans - Authorize and direct all disbursements of benefits and other sums - Handle all payroll deductions and corresponding contributions - Track plan costs and make reports available to Buyer in the same manner Seller does for its own plans, except with respect to Buyer Plan # 19 on Schedule 5 - Support Recipient's employees and management with respect to vendor and other service issues in the same manner as such support is provided with respect to Seller's employees and management - Assist in communicating with Business Employees and Seller Business Employees - Handle all administrative support for passive/elective open enrollment at the time of Closing and during August open enrollment and process any enrollment changes - Handle all necessary regulatory compliance (including but not limited to COBRA, HIPAA and FMLA) - Manage external vendors - Provide support and information on plan design and administrative features that are to be in effect after the Service Period and aid in the transition of any applicable carriers at the end of the Service Period, except as relates to vendor negotiated fees - Provide all information to Recipient after the Service Period ends as reasonably requested by Recipient to assist Recipient with completion of any applicable forms to be filed with gov't agencies relating to the Buyer Plans due after the Service Period - Provide all LTD claims records to Recipient on 12/15/06 and 12/31/06, so Recipient can take over claims management on 1/1/07 | $69,000 | $20,000 | | January 1, 2007 | - During the Term, Provider shall be the administrator of the Buyer Plans (within the meaning of Section 3(16) of ERISA); - Recipient shall become the administrator of the Buyer Plans effective on the end of the Term if it chooses to continue any such plans; - If Recipient chooses to become the administrator of a Buyer Plan, Provider shall transfer all records relating to the administration of any Buyer Plan, as reasonably requested by Recipient, subject to any reasonable limitations and Recipient's reimbursement of reasonable costs incurred by Provider in connection therewith. With respect to the transfer of any such records, Provider will not provide or accept any direct electronic feeds to new third party providers, and will not provide or accept any direct electronic feeds to current third party providers after the expiration of the Term. |
Benefits Administration (Other) | - Print, assemble, mail benefits brochures for August enrollment | | | $1.50 / employee, total estimate $13,500 | | OMG will create benefits-related communications regarding August enrollment |
Service Sub- Category | Description | Monthly Base Fee | Initial Set Up Charge | One-time Variable Cost | Expected Discontinuation Date | Comments |
Medical Services Administration | Short Term Disability administration includes: - Intake of completed medical forms - Medical review and approval of each form - Email notification to APAC/purchasing company contact(s) of each case - Follow up of each case until closed. 800# will still be available to managers and patients who need to call - Medical record management of STD cases only - Tracking of all cases by region, division, etc as requested with confidential medical information blinded Other Medical Services administration includes: - Medical records maintenance - Administration of new hire, DOT and OSHA exams - Assistance with the development and launch of a new medical exam management system | $30,000 | N/A | | January 1, 2007 | - Medical does not have access to information with respect to eligibility for FMLA, short term disability, vacation, etc. This information shall be tracked by Recipient. - Decisions in cases that are questionable regarding Workers Compensation or short term disability shall be made by Recipient. |
Reporting | - HRIS system maintenance - HR data reporting - SOX compliance for HR data | $9,700 | N/A | | January 1, 2007 | |
Total | | $312,000 | $50,000 | | | |
SCHEDULE 4
DETAILED PAYROLL SERVICES
APAC Salaried Payroll Services | APAC Hourly Payroll Services |
| W4 maintenance & entry | W4 maintenance & entry |
| Garnishment interpretation, setup and maintenance | Garnishment interpretation, setup and maintenance |
| Process payroll | Process payroll |
| Tax reporting, filing, remittance | Tax reporting, filing, remittance |
| Tax withholding administration | Tax withholding administration |
| Government reporting | Government reporting |
| Disbursement control & remittance | Disbursement control & remittance |
| Special check processing | Special check processing |
| Check printing, handling, distribution | Check printing, handling, distribution |
| Payroll journal entry processing | Payroll journal entry processing |
| Banking and positive pay processing | Banking and positive pay processing |
| Direct deposit management | Direct deposit management |
| ACH processing and control | ACH processing and control |
| FMLA process | FMLA process |
| W2 preparation, mailing, filing | W2 preparation, mailing, filing |
| Ad-hoc reporting | Ad-hoc reporting |
| Unemployment tax management support | Unemployment tax management support |
| Special projects | Special projects |
| Timesheet entry | |
| Deduction maintenance | |
| Special earnings processing (executive compensation support) | |
| Absence tracking | |
| Policy interpretation & enforcement | |
| Payroll employee data record maintenance | |
| Account reconciliation | |
SCHEDULE 5
BUYER PLANS and SERVICE PROVIDERS
| 1) | Medical Plan for Salaried Employees - Anthem Blue Cross/Blue Shield shall be the third party administrator, and Medco shall provide prescription drug services |
| 2) | Hourly Medical Plan - Anthem Blue Cross/Blue Shield shall be the third party administrator, and Medco shall provide prescription drug services |
| 3) | Dental Plan for Salaried Employees - Basic option shall be administered by MetLife and enhanced option shall be administered by Delta Dental |
| 4) | Hourly Dental Plan - Basic option shall be administered by MetLife and enhanced option shall be administered by Delta Dental |
| 5) | Vision Cost Assistance Plan - Benefits shall be provided through an insurance policy underwritten by Combined Life Insurance Company of America and administered by EyeMed Vision Care |
| 6) | Group Life Insurance Plan - Prudential shall be the insurer |
| 7) | Group Variable Universal Life Insurance Plan - Metropolitan Life (formerly Paragon) shall be the insurer |
| 8) | Group Life Insurance Plan for Hourly Employees - Prudential shall be the insurer |
| 9) | The accidental death and dismemberment portion of the Group Life Insurance Plan and the Group Life Insurance Plan for Hourly Employees - Mutual of Omaha shall be the insurer |
| 10) | Voluntary Personal and Family Accidental Death and Dismemberment Plan - Mutual of Omaha shall be the insurer |
| 11) | Long Term Disability Plan - Prudential shall be the third party administrator |
| 12) | Occupational and Accidental Death and Disability Plan - Mutual of Omaha shall be the insurer |
| 13) | Travel Accident Insurance Plan - Life Insurance Co. of North America shall be the insurer |
| 14) | Employee Assistance Plan - Ashland will provide the current third party provider with data on eligible employees |
| 15) | Legal Plan - Hyatt Legal Plans shall be the provider |
| 16) | Adoption Assistance Program - Provider shall administer |
| 17) | Long Term Care Insurance Program - CNA shall be the insurer |
| 18) | Educational Reimbursement Program - Recipient shall approve and Provider shall administer |
| 19) | Sick Pay Policy and Short Term Disability Program - Provider shall provide Short Term Disability medical review and case and medical record management, as currently provided by Provider to the Transferred Companies |
| 20) | APAC Divestiture Severance Program pre-Closing - Provider shall execute severance and retention program for day-one eliminations |
| 21) | APAC Mirror Divestiture Severance Program post-Closing - Provider shall help administer by providing necessary information |
| 22) | The following other employee benefits: |
| | a) | Ashland Inc. Employees Credit Union |
| | b) | Ayco Group Financial Services |
| | c) | 529 Savings Plan offered by Fidelity |
| | d) | Group Auto & Homeowner's insurance - MetLife shall be the insurer. |
| 23) | In addition, (i) as provided under the Stock Purchase Agreement, Recipient shall assume sponsorship of the APAC, Inc. Hourly Savings Plan (which such plan shall be treated as a Buyer Plan for purposes hereof and with respect to which Fidelity Management Trust Company shall be the trustee and Fidelity Investments shall provide third party administration services and mutual fund investment options), and (ii) Provider shall continue to sponsor the Flexible Spending Accounts Plan (and WageWorks shall be the third party administrator), which Plan shall continue to cover Recipient's employees and their eligible dependents until the end of the Service Period. |
| 24) | Medical Department Services - Provider shall administer |
APAC INDEMNITY LETTER
August 28, 2006
Ashland Inc.
50 E. River Center Boulevard
Covington, KY 41012
Reference is made to Section 9.03(b) of that certain Stock Purchase Agreement dated as of August 19, 2006 (the “Purchase Agreement”) by and between Ashland Inc., a Kentucky corporation (“Seller”), and Oldcastle Materials, Inc., a Delaware corporation (“Purchaser”). Unless otherwise defined herein, capitalized terms used in this letter agreement without definition shall have the meanings given such terms in the Purchase Agreement.
From and after the Closing, Ashland Paving And Construction, Inc. (“APAC”) shall indemnify and hold harmless each of Seller and its affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives (the “Seller Indemnitees”) against and from any Loss suffered or incurred by such Seller Indemnitee to the extent arising from all obligations and liabilities of whatever kind and nature, primary or secondary, direct or indirect, absolute or contingent, known or unknown, whether or not accrued, whether arising before on or after the Closing Date, of any Transferred Company, including any such obligations or liabilities contained in APAC Contracts to which any Transferred Company is a party or any agreement, lease, license, permit, plan or commitment that, because it fails to meet the relevant threshold amount or term, is not included within the definition of APAC Contracts (in each case other than to the extent indemnification by Seller is provided under Article IX of the Purchase Agreement).
Sections 9.04, 9.06 and 9.08 of the Purchase Agreement are hereby incorporated herein by reference as if fully set forth herein; provided, however, that (i) references to “Article IX” in Section 9.04 of the Purchase Agreement shall be deemed to refer to this letter agreement, (ii) the last sentence of Section 9.04 shall be deemed amended and restated to read as follows: “Amounts payable pursuant to this letter agreement shall be payable without duplication of any other amount payable pursuant to the Purchase Agreement”, (iii) references to “Section 9.02 or 9.03” in Section 9.06(a) of the Purchase Agreement shall be deemed to refer to this letter agreement, (iv) the words “subject to Sections 9.05 and 9.07” in Section 9.06(a) of the Purchase Agreement shall be deemed deleted, (v) the words “under Section 9.02 or 9.03” in Section 9.06(c) of the Purchase Agreement shall be deemed to refer to this letter agreement, (vi) the words “Subject to Section 9.05 and 9.07, the failure” in Section 9.06(c) of the Purchase Agreement shall be deemed amended and restated to read “The failure”, (vii) references to “Section 9.01” in Section 9.06(d)(i) of the Purchase Agreement shall be deemed to refer to this letter agreement and (viii) references to “Sections 9.01, 9.02 or 9.03” in Section 9.08 shall be deemed to refer to this letter agreement.
This letter agreement and the rights and obligations hereunder shall not be assignable or transferable by any party (including by operation of law in connection with a merger or consolidation of such party) without the prior written consent of the other party thereto. Any attempted assignment in violation of the foregoing sentence shall be void. Notwithstanding anything to the contrary in this letter agreement, (i) the prior written consent of APAC shall not be required in connection with the assignment or transfer of Seller’s rights and obligations under this letter agreement pursuant to any merger or consolidation of Seller into, or a sale of all or substantially all of the assets of Seller to, another person; provided that, in the event of any sale of all or substantially all of the assets of Seller to another person, such person shall assume all obligations of Seller under this letter agreement, and (ii) the prior written consent of Seller shall not be required in connection with the assignment or transfer of APAC’s rights and obligations under this letter agreement pursuant to any merger or consolidation of APAC into, or a sale of all or substantially all of the assets of APAC to, another person; provided that, in the event of any sale of all or substantially all of the assets of APAC to another person, such person shall assume all obligations of APAC under this letter agreement.
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The parties have duly executed this letter agreement as of the date first written above.
| Very truly yours, |
| |
| ASHLAND PAVING AND CONSTRUCTION, INC. a Delaware corporation |
| | | |
| | | |
| By: | | /s/ R. Kirk Randolph |
| | | Name: R. Kirk Randolph |
| | | Title: President |
Agreed and Accepted:
ASHLAND INC.
a Kentucky corporation
| By: | | /s/ Lamar M. Chambers |
| | | Name: Lamar M. Chambers |
| | | Title: Vice President and Controller |
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”) is between Ashland Inc., a Kentucky corporation (“Ashland”) and Ashland Paving And Construction, Inc. and its Subsidiaries (collectively, “APAC”). Reference is made to that certain Stock Purchase Agreement (the “Purchase Agreement”), dated as of August 19, 2006, between Ashland and Oldcastle Materials, Inc., a Delaware corporation (“Oldcastle”), for the sale of APAC. Unless otherwise defined herein, capitalized terms used in this Agreement without definition shall have the meanings given to such terms in the Purchase Agreement.
Ashland desires to assign to APAC, and APAC desires to assume from Ashland, the contracts (the “Assigned Contracts”) set forth on Schedule 1 (attached hereto). Therefore, in consideration of the mutual covenants set forth herein, the parties agree as follows:
SECTION 1. Assignment. Ashland hereby assigns, conveys, transfers and delivers all of Ashland’s right, title and interest in, to and under the Assigned Contracts.
SECTION 2. Assumption. APAC hereby accepts such assignment, conveyance, transfer and delivery of all of Ashland’s right, title and interest in and to the Assigned Contracts and, subject to Oldcastle’s rights under Section 9.02(a)(vi) of the Purchase Agreement, assumes and agrees to pay, honor, perform and discharge all obligations and liabilities of Ashland under such Assigned Contracts.
SECTION 3. Certain Waivers. APAC hereby waives, relinquishes and releases Ashland and its affiliates and each of their respective officers, directors, managers, employees, stockholders, agents and representatives (the “Related Parties”) from any and all Losses that any party to any Assigned Contract might have asserted or alleged against Ashland or any Related Party at any time by reason of, or arising out of, any matters relating to such Assigned Contract except to the extent set forth in, and subject to Oldcastle’s rights under, Section 9.02(a)(vi) of the Purchase Agreement. Notwithstanding anything to the contrary in this Agreement, (i) the prior written consent of Oldcastle shall not be required in connection with the assignment or transfer of Ashland’s rights and obligations under this Agreement pursuant to any merger or consolidation of Ashland into, or a sale of all or substantially all of the assets of Ashland to, another person; provided that, in the event of any sale of all or substantially all of the assets of Ashland to another person, such person shall assume all obligations of Ashland under this Agreement, and (ii) the prior written consent of Ashland shall not be required in connection with the assignment or transfer of Oldcastle’s rights and obligations under this Agreement pursuant to any merger or consolidation of Oldcastle into, or a sale of all or substantially all of the assets of Oldcastle to, another person; provided that, in the event of any sale of all or substantially all of the assets of Oldcastle to another person, such person shall assume all obligations of Oldcastle under this Agreement.
SECTION 4. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.
SECTION 5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument.
SECTION 6. Severability. Whenever possible, each provision or portion of any provision of this Guarantee shall be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Guarantee (or any portion thereof) or the application of any such provision (or any portion thereof) to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the remaining portion thereof) or the application of such provision to any other persons or circumstances.
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Effective the 28th day of August 2006.
| Ashland Inc. | Ashland Paving And Construction, Inc. |
| | | | |
| By: | /s/ Lamar M. Chambers | By: | /s/ R. Kirk Randolph |
| | | | |
| Name: | Lamar M. Chambers | Name: | R. Kirk Randolph |
| | | | |
| Title: | Vice President and Controller | Title: | President |
SCHEDULE 1
ASSIGNED CONTRACTS
| 1) | Corporate Procurement Agreement between Ashland, Inc. and Bucyrus Blades, Inc., dated October 6, 2003, amended effective August 1, 2005 |
| 2) | Corporate Procurement Agreement between Ashland, Inc. and Donaldson Company, Inc., dated August 1, 2003, amended September 27, 2005 |
| 3) | Master Purchase Agreement between Ashland, Inc. and Goodyear Tire & Rubber Company, dated December 19, 2002 and amended by Addendum effective January 1, 2005 |
| 4) | Master Rental Agreement between Ashland, Inc. and Hertz, dated January 21, 2003, amended November 2004 |
| 5) | Corporate Procurement Agreement between Ashland, Inc. and Ingersoll-Rand Company, effective October 30, 2003 |
| 6) | Corporate Procurement Agreement between Ashland, Inc. and Interstate Battery, dated March 21, 2005 |
| 7) | Master Purchase Agreement between Ashland Inc. and Kawasaki Construction Machinery Corporation of America, effective March 1, 2003, and Amendment dated September 5, 2004 |
| 8) | Corporate Procurement Agreement between Ashland, Inc. and Komatsu America Corp., effective May 1, 2004 |
| 9) | Corporate Procurement Agreement between Ashland, Inc. and Menardi-Mikropul, LLC (Baghouses), effective July 1, 2005 |
| 10) | Corporate Procurement Agreement between Ashland, Inc. and Roadtec, Inc., effective January 8, 2004 |
| 11) | Corporate Procurement Agreement between Ashland, Inc. and Sakai America, Inc., effective October 30, 2003 |
| 12) | Supply Agreement between Ashland, Inc. and Truman Arnold Companies, effective March 1, 2006 |
For purposes of this Schedule 2.03, Purchaser acknowledges and agrees that Purchaser shall be deemed on notice of any required consent to the extent that it is set forth in any contract that is listed on Schedule 3.08, including the following:
None.
Ashland Paving And Construction, Inc. (DE) (Name to be changed to “APAC Holdings, Inc.” on August 22, 2006.)
APAC, Inc. (DE)
APAC-Arkansas, Inc. (DE)
APAC-Atlantic, Inc. (DE)
APAC-Kansas, Inc. (DE)
APAC-Mississippi, Inc. (DE)
APAC-Missouri, Inc. (DE)
APAC-Oklahoma, Inc. (DE)
APAC-Southeast, Inc. (GA)
APAC-Tennessee, Inc. (DE)
APAC-Texas, Inc. (DE)
Ashland Construction Communications Company (DE) (Name to be changed to “APAC Construction Communications Company” on August 22, 2006.)
Limpus Quarries, Inc. (MO)
For purposes of this Schedule 3.03, Purchaser acknowledges and agrees that Purchaser shall be deemed on notice of any required consent to the extent that it is set forth in any contract that is listed on Schedule 3.08, including the following:
See attached Financial Statements (audited as of September 30, 2005, and unaudited as of June 30, 2006.)
None.
None.
In addition to the properties listed below, see attached lists of Owned and Leased Properties (owned properties have File Numbers beginning with “0” and leased properties have File Numbers beginning with “2”).
In addition to the properties listed below, see attached list of Owned and Leased Properties (owned properties have File Numbers beginning with “0” and leased properties have File Numbers beginning with “2”).
None.
None.
None.
See the job contracts over $3,000,000 in the attached lists referred to in 10(ddd) above.
Currently there are no tax years under federal audit. Seller will shortly execute federal Forms 870-AD for tax years 1992 through 2003. The federal audit of tax years 2004 and 2005 is expected to commence in August, 2006.
Seller has waivers extending the statute of limitations for (1) Tax Years 1999, 2000 & 2001, extended to June 30, 2007, and (2) Tax Year 2002, extended to December 31, 2006.
Seller plans to make waivers extending the statute of limitations for (1) Tax Years 2002 & 2003, to be extended to December 31, 2007, and (2) Tax Year 2004, to be extended to July 31, 2008.
None.
None.
Provided that Robert K. Randolph is not terminated prior to the six month anniversary of the Closing Date, no amount received by Mr. Randolph in connection with the transactions provided for in the Stock Purchase Agreement shall be characterized as an “excess parachute payment” (as such term is defined in Section 280G(b)(1) of the Code). However, in the event that Mr. Randolph is terminated without cause prior to the six month anniversary of the Closing Date, or APAC fails to offer Mr. Randolph equivalent employment, then Mr. Randolph will be eligible to receive severance payments and an accelerated retention bonus that may be characterized as excess parachute payments.
None.
See items set forth on Schedule 5.01 “Covenants Relating to Conduct of Business”.
None.
None.
None.
Prior to the Closing Date, APAC intends to make the remaining deferred payment ($500,000) related to the purchase of Wedowee Quarry, Inc. by APAC-Southeast, Inc. in July 2005.
See Schedule 3.08(a)(viii).
See attached list.
Ashland Paving And Construction, Inc.
