PHARMACEUTICAL RESOURCES, INC.
One Ram Ridge Road
Spring Valley, New York 10977
Dated as of December 28, 2001
ISP Hungary Holdings Ltd.
ISP Investments Inc.
ISP Chemicals Inc.
ISP Technologies Inc.
c/o International Specialty Products Inc.
1361 Alps Road
Wayne, New Jersey 07470
Ladies and Gentlemen:
Attached to this letter is a form of Purchase Agreement, together with
the forms of Exhibits and Schedules referred to therein (collectively, the "Form
of Agreement"), among Pharmaceutical Resources, Inc. ("PRI"), as purchaser, and
ISP Hungary Holdings Ltd., ISP Investments Inc., ISP Chemicals Inc. and ISP
Technologies Inc. (collectively, "ISP"), as sellers, relating to the proposed
transactions contemplated therein. Capitalized terms used and not otherwise
defined herein are used herein as defined in the Form of Agreement.
1. In consideration of PRI's covenants hereunder and for other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged by ISP), ISP hereby agrees that from the date of this letter until
the No-Shop Termination Date (as hereinafter defined), neither ISP nor any of
its officers or directors shall (a) solicit any Entity to make an Acquisition
Proposal (as hereinafter defined), (b) deliver confidential information relating
to the Business to any Entity for the purpose of knowingly facilitating such
Entity's making of an Acquisition Proposal or (c) engage in any negotiations
concerning an Acquisition Proposal. For purposes of this letter, (i)
"Acquisition Proposal" shall mean any proposal or offer from an Entity other
than PRI relating to an acquisition or purchase of the Shares, the Business or
any material part of the Assets, other than sales of inventory in the ordinary
course; and (ii) "No-Shop Termination Date" shall mean the earliest of (A) the
date of closing of any sale of equity securities by PRI after the date hereof,
(B) the eighth Business Day immediately following the date on which the
Registration Statement shall have been declared effective by the SEC and (C)
February 15, 2002 (the earliest of such dates being the "Execution Date");
provided, however, that if both PRI and ISP shall have duly executed and
delivered the Form of Agreement prior to the Cutoff Time (as hereinafter
defined), the No-Shop Termination Date shall mean the earlier of the Closing
Date and the Termination Date. PRI shall notify ISP in writing of the occurrence
of the Execution Date (the "Notice") promptly (and in any event within one
Business Day) following the occurrence of the Execution Date. Notwithstanding
the foregoing, however, it is agreed that neither any actions in connection with
Dated as of December 28, 2001
Page 2
any proposed acquisition (by merger or otherwise) of International Specialty
Products Inc., nor any public disclosure made in accordance with Section 4
below, shall constitute a violation of this Section 1.
2. In consideration of ISP's covenants hereunder and for other good
and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged by PRI), PRI hereby irrevocably and unconditionally agrees that, if
(a) ISP shall have delivered to PRI, by not later than 4:00 p.m. New York City
time on the first Business Day following ISP's receipt of the Notice (the "Start
Date"), a copy of the Form of Agreement (with no changes thereto other than any
wholly ministerial changes necessary to complete the Form of Agreement) duly
executed by ISP, and (b) ISP shall not have received from PRI, prior to 4:00
p.m. New York City time on the first Business Day following the Start Date (the
"Cutoff Time"), a copy of the Form of Agreement (with no changes thereto other
than any wholly ministerial changes necessary to complete the Form of Agreement)
duly executed and delivered by PRI, then PRI shall pay to ISP, by not later than
the second Business Day following the Start Date, in cash by wire transfer of
immediately available funds to an account to be designated by ISP, a fee and
expense reimbursement in an aggregate amount equal to $3,000,000 (Three Million
Dollars) (the "Fee"). The Fee, which PRI hereby acknowledges is reasonable,
shall not constitute a penalty and shall not be subject to offset or deduction
of any kind by PRI. The Fee shall be ISP's exclusive remedy against PRI in
respect of any failure of PRI to duly execute and deliver the Form of Agreement
prior to the Cutoff Time. If for any reason PRI fails to pay the Fee to ISP in
accordance with the terms hereof, (i) the Fee shall bear interest at the rate of
7% per annum from the Cutoff Time until paid in full to ISP, and (ii) PRI shall
in addition pay to ISP all costs and expenses (including reasonable legal fees
and expenses) of ISP in connection with any action taken to collect payment.
3. Each of PRI and ISP shall make the appropriate filings (and pay
any required filing fees) under the HSR Act with respect to their respective
proposed participation in transactions contemplated by the Form of Agreement on
or as promptly as practicable following December 31, 2001. PRI shall not
voluntarily withdraw the Registration Statement or seek to delay SEC comments
thereto. The parties shall in good faith make any necessary revisions to the
Schedules on or prior to 12:00 a.m., New York City time on January 1, 2002.
4. The contents, terms and existence of this letter and the Form of
Agreement are confidential and shall not be disclosed by PRI or ISP (or their
respective representatives, advisors or agents) without the other party's prior
written consent (except to the extent required by applicable law or applicable
stock exchange rule, or as may be necessary in connection with an action to
collect payment of the Fee or to enforce compliance with Section 1 hereof, but
in each case, only following delivery of reasonable prior notice of such
disclosure to the other party). Notwithstanding the foregoing, the parties shall
use their best efforts not to make any public announcement in respect of this
letter or the Form of Agreement until on or after January 14, 2002.
Dated as of December 28, 2001
Page 3
5. Except as set forth in Section 2 above, PRI, on the one hand,
and ISP, on the other hand, shall each pay all of its own costs and expenses in
connection with this letter and the evaluation and negotiation of the
transactions contemplated by the Form of Agreement (including, without
limitation, commitment fees, bankers' and professionals' fees and HSR Act filing
fees), and any commitments or expenditures made by any party in connection
therewith are solely at the risk, and for the account, of such party.
6. From and after the date hereof and until the Cutoff Time, ISP
and PRI shall each provide the other party reasonable access, during normal
business hours and following reasonable prior notice (and subject to applicable
restrictions imposed by law or under contract), to the properties, books and
records of PRI or of ISP relating to the Business, as the case may be, in each
case, to the extent reasonably requested for the purpose of enabling reasonable
further due diligence with respect to the transactions contemplated by the Form
of Agreement. It is understood and agreed, however, that nothing learned or
discovered during the course of such due diligence investigation shall change
the Form of Agreement for purposes of Section 2 of this letter unless (and only
to the extent that) such changes are expressly agreed to by both ISP and PRI.
All information disclosed to PRI in connection with such due diligence
investigation shall be subject to the provisions of the Confidentiality
Agreement previously executed by PRI and an Affiliate of ISP.
7. PRI and ISP acknowledge and agree that this letter does not
obligate, and is not intended to represent a commitment, agreement or promise
of, any party to (a) execute the Form of Agreement or any other agreement or (b)
otherwise enter into, offer to enter into, or consummate, any transaction. A
binding commitment with respect to the transactions contemplated by the Form of
Agreement shall result only from the execution and delivery of the Form of
Agreement by the parties thereto. Notwithstanding the foregoing, the provisions
of Sections 1, 2, 3, 4 and 5 of this letter shall constitute legally binding and
enforceable agreements of PRI and ISP.
8. This letter shall be construed and interpreted in accordance
with the laws of the State of New York. This letter may not be assigned or
delegated by any party without the prior written consent of the other parties,
and any purported assignment or delegation without such consent shall be null
and void.
Dated as of December 28, 2001
Page 4
If this letter accurately reflects our agreement, please so indicate by
signing a duplicate of this letter in the space provided below and returning a
copy to us.
Very truly yours,
PHARMACEUTICAL RESOURCES, INC.
By: /s/ Stephen R. Connoni
------------------------------
Name: Stephen R. Connoni, Esq.
Title: Attorney-in-Fact
ISP HUNGARY HOLDINGS LTD.
ISP INVESTMENTS INC.
ISP CHEMICALS INC.
ISP TECHNOLOGIES INC.
By: /s/ Richard A. Weinberg
--------------------------------
Name: Richard A. Weinberg
Title: Executive Vice President
----------------------------------------------------------------------
PURCHASE AGREEMENT
among
PHARMACEUTICAL RESOURCES, INC.,
ISP HUNGARY HOLDINGS LIMITED,
ISP INVESTMENTS INC.,
ISP CHEMICALS INC.
and
ISP TECHNOLOGIES INC.
Dated as of December 28, 2001
----------------------------------------------------------------------
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") dated as of December 28,
2001 among ISP Hungary Holdings Limited, a company organized under the laws of
Hungary ("ISP Hungary"), ISP Investments Inc., a Delaware corporation ("ISP
Investments"), ISP Chemicals Inc., a Delaware corporation ("ISP Chemicals"), ISP
Technologies Inc., a Delaware corporation ("ISP Technologies"), and
Pharmaceutical Resources, Inc., a New Jersey corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, ISP Hungary owns all of the issued and outstanding capital
stock (the "Shares") of ISP FineTech Ltd. (formerly International Specialty
Products (Israel) Ltd.), a company organized under the laws of the State of
Israel ("ISP Israel") and engaged in the ISP Israel Business (as defined
herein);
WHEREAS, ISP Chemicals owns the Facility (as defined herein) and the
Equipment (as defined herein) located in Columbus, Ohio and used in the U.S.
Business (as defined herein);
WHEREAS, ISP Technologies owns the Inventory (as defined herein) of
the Business (as defined herein);
WHEREAS, the Sellers (as defined herein) own the Intangible Property
(as defined herein) used in the Business;
WHEREAS, the Sellers own the Other Assets (as defined herein) used in
the Business; and
WHEREAS, the Sellers wish to sell to Buyer, and Buyer desires to
purchase from the Sellers, the Shares, the Israel Notes (as defined herein), the
Facility, the Equipment, the Inventory, the Assigned Intellectual Property (as
defined herein) of the Business, the Other Assets and the Assumed Contracts
Rights (as defined herein), and ISP Investments wishes to license to Buyer and
Buyer desires to license from ISP Investments, the Licensed Intellectual
Property (as defined herein), and Buyer has agreed to assume certain liabilities
set forth herein, all upon the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
DEFINITIONS
1.01. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"Affected Employees" shall have the meaning ascribed to it in Section
5.09(a) hereof.
"Affiliate" shall mean, with respect to any Entity, any other Entity
that directly or indirectly controls, is controlled by or is under common
control with such Entity.
"Assets" shall mean, collectively, the Facility, the Equipment, the
Inventory, the Other Assets and the Intangible Property.
"Assigned Intellectual Property" shall have the meaning ascribed to it
in Section 2.01(a)(iv) hereof.
"Assignment and Assumption Agreements" shall mean the Assignment and
Assumption Agreements, dated as of the Closing Date, between the Sellers party
thereto and Buyer, in the form attached hereto as Exhibit A, pursuant to which
the Sellers party thereto shall assign to Buyer the Assumed Contracts Rights and
Buyer shall assume the Assumed Contracts Obligations and the other Assumed
Liabilities.
"Assumed Contracts" shall mean only the contracts, outstanding
purchase orders, agreements and leases listed on Schedule 3.09(b) hereto and any
additional purchase orders and other contracts that are entered into by the
Sellers in respect of the U.S. Business in the ordinary course after December
28, 2001.
"Assumed Contracts Obligations" shall mean the liabilities and
obligations of the Sellers from and after the Closing Date under the Assumed
Contracts which Buyer will assume pursuant to the Assignment and Assumption
Agreements; provided, that (subject to Section 2.04 hereof) the rights and
benefits of the Sellers from and after the Closing Date under such Assumed
Contracts shall be fully assigned to Buyer; provided, further, that any
liabilities or obligations arising from a breach by a Seller on or prior to the
Closing Date of any provision(s) of the Assumed Contracts that shall remain
uncured as of the Closing Date shall be Retained Liabilities; and provided,
further, that Buyer shall not assume any liabilities or obligations of the
Sellers or their Affiliates under the FineTech Agreement (other than the
obligation to pay or perform liabilities and obligations assumed by the buyer
thereunder) or under the Indemnification Agreement (other than the obligation to
pay or perform liabilities and obligations of the sellers thereunder assumed by
the buyer thereunder), the rights and benefits of which are to be assigned to
Buyer pursuant to this Agreement.
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"Assumed Contracts Rights" shall mean the rights and benefits of the
Sellers from and after the Closing Date under the Assumed Contracts which the
Sellers will assign to Buyer pursuant to the Assignment and Assumption
Agreements.
"Assumed Liabilities" shall mean only (a) the Assumed Contracts
Obligations and (b) any obligations for which Buyer shall be responsible
pursuant to Section 5.09 hereof.
"Bankruptcy and Equity Exception" shall have the meaning ascribed to
it in Section 3.01 hereof.
"Bill of Sale" shall mean the Bill of Sale, dated as of the Closing
Date, from ISP Chemicals, ISP Technologies and ISP Investments to Buyer, in the
form attached hereto as Exhibit B, pursuant to which ISP Chemicals, ISP
Technologies and ISP Investments shall transfer the Equipment, the Other Assets
and the Inventory to Buyer.
"Books and Records" means all books and records of any of the Sellers
of any and every kind, including, without limitation, CD, compact disk lists,
ledgers, files, reports, plans, drawings and operating records of every kind,
held or maintained by, or in the control of, any of the Sellers in each case, to
the extent exclusively related to the Business (including its customers and
suppliers), excluding only corporate books and other records specifically
described in the definition of Excluded Assets.
"Bridge Loan" shall mean a commitment by any one or more Lenders to
make senior secured increasing rate loans to Buyer and/or its Affiliates in the
event that an Equity Financing of sufficient size cannot be consummated by the
earlier of (i) the eighth Business Day immediately following the date on which
the Registration Statement shall have been declared effective by the SEC and
(ii) February 15, 2002.
"Business" shall mean, collectively, the U.S. Business and the ISP
Israel Business.
"Business Day" shall mean a day, other than a Saturday or Sunday, on
which commercial banks are not required or authorized to close in the City of
New York.
"Buyer" shall have the meaning ascribed to it in the first paragraph
of this Agreement.
"Buyer MAC" shall have the meaning ascribed to it in Section 6.04
hereof.
"Closing" shall mean the consummation of the transactions contemplated
in this Agreement, which shall occur at 10:00 a.m. (or such other time as Buyer
and the Sellers shall mutually agree) on the Closing Date at the offices of
Kirkpatrick & Lockhart LLP, 1251 Avenue of the Americas, New York, New York.
3
"Closing Date" shall mean the date that is two Business Days following
the satisfaction or proper waiver of all of the conditions set forth in Articles
VI and VII of this Agreement (other than conditions that by their nature are to
be satisfied at the Closing), which date shall not be earlier than January 18,
2002 (unless the parties otherwise agree in writing) or such other date as Buyer
and the Sellers shall mutually agree.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Credit Facility" shall have the meaning ascribed to it in Section
4.06 hereof.
"Current Good Manufacturing Practice Regulations" shall have the
meaning ascribed to it in Section 3.10 hereof.
"Customer Letter" shall have the meaning ascribed to it in Section
3.05(d) hereof.
"Entity" shall mean any person, firm, trust, partnership, corporation,
limited liability company, Governmental Entity or other business entity.
"Environmental Claims" means any liabilities, damages, obligations,
litigation, proceedings or claims relating to or arising from Environmental
Laws, including, without limitation, liabilities, obligations, litigation,
proceedings or claims arising from any alleged breach of Section 3.12 hereof.
"Environmental Laws" shall mean any United States Federal, state,
local or foreign environmental statute (including, but not limited to, the Clean
Water Act, the Toxic Substances Control Act, the Clean Air Act, the
Comprehensive Environmental Response, Compensation and Liability Act, and the
Resource Conservation and Recovery Act), common law, rules, regulations, orders
or directives, as and to the extent in effect on the date of this Agreement,
relating to (i) the protection of the environment or the public health and
welfare from actual or potential exposure (or the effects of exposure) to any
actual or potential release, discharge, disposal or emission (whether past or
present) of any Hazardous Substance or (ii) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Hazardous Substance.
"Equipment" shall mean all of the machinery, equipment, furnishings,
tools, dies, furniture and other similar items of personal property, spare parts
and other tangible assets of the Sellers (other than the Inventory) located at
the Facility and used principally in connection with the Business as of the
Closing Date, including, without limitation, those items listed on Schedule
1.01(b) hereto, together with all manufacturers' warranties pertaining to the
same, to the extent that such warranties may exist and be assignable.
"Equity Financing" means a public offering of equity securities of
Buyer that is registered under the Securities Act of 1933, as amended, pursuant
to the Registration Statement, or a private placement of equity securities of
4
Buyer (other than in connection with the issuance of any so-called "equity
kickers" to financial institutions in connection with bona fide debt
financing(s) of Buyer), that in each such case is consummated after the date of
this Agreement and prior to the Closing.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Excluded Assets" shall mean, collectively, (a) all accounts or notes
receivable of the Sellers (including, without limitation, all accounts
receivable of the U.S. Business in respect of periods prior to the Closing) and
all books and records relating thereto; (b) cash, cash equivalents and deposit
accounts of the Sellers; (c) any and all rights to causes of action, lawsuits,
judgments, refunds, claims and demands of any nature available to or being
pursued by any Seller with respect to Taxes relating to the Business accruing
through the Closing Date; (d) the names "International Specialty Products" and
"ISP" (and any derivatives thereof and trademarks, logos, URLs or domain names
associated therewith) or the right to use such names and logos (or any such
derivatives); (e) the corporate minute books, capital stock books and Tax
Returns of the Sellers; (f) any contracts, claims, rights, tangible or
intangible assets, or real, personal or other properties that are not
principally and directly used in the Business as presently conducted (except to
the extent of the license relating to the Licensed Intellectual Property
provided under the Intellectual Property Assignment and License Agreement); (g)
the Sellers' rights under this Agreement and the Other Agreements; (h) the
Sellers' and their respective Affiliates' rights under any agreement with any
prior owner of the Business or the Assets (other than to the extent included in
the Assumed Contracts Rights or any ISP Israel contracts with respect to the
acquisition of the assets of FineTech Ltd.); (i) rights under any insurance
policy of any Seller or any of its Affiliates (except to the extent provided in
clause (e) of the definition of "Other Assets"); (j) the inventory described as
an Excluded Asset in the definition of "Inventory"; (k) the other assets listed
on Schedule 1.01(x) hereto; (l) records and files (in whatever media) relating
principally and directly to the foregoing Excluded Assets or relating
principally and directly to the sale of the Business; (m) the intellectual
property relating principally and directly to the foregoing Excluded Assets; and
(n) rights, claims, recoveries or causes of action relating to the foregoing
Excluded Assets or the Retained Liabilities.
"Facility" shall mean the real property owned by ISP Chemicals located
in Columbus, Ohio, including all land, buildings, structures, improvements,
fixtures, easements, appurtenances and transferable privileges relating thereto,
in each case, as more particularly described on Schedule 3.14 hereto.
"Facility Transfer Agreement" shall mean the Deed and Transfer
Agreement, dated as of the Closing Date, from ISP Chemicals to Buyer, in the
form attached hereto as Exhibit C, pursuant to which ISP Chemicals shall
transfer the Facility to Buyer.
"FDA" shall mean the United States Food and Drug Administration.
5
"FineTech Agreement" shall have the meaning ascribed to it in Section
3.15 hereof.
"GAAP" means United States generally accepted accounting principles.
"Governmental Entity" shall mean any court, administrative agency or
commission or other foreign, United States Federal, state or local governmental
authority or instrumentality.
"Hazardous Substances" means all substances, wastes, contaminants,
pollutants and materials defined, identified or designated as hazardous,
dangerous or toxic, or any similar term, pursuant to or under any applicable
Environmental Law or the release of which is regulated pursuant to or under any
applicable Environmental Law, including, without limitation, asbestos and
asbestos-containing materials, oil, polychlorinated biphenyls ("PCBs") and
petroleum or petroleum related by-products.
"HSR Act" shall have the meaning ascribed to it in Section 6.03
hereof.
"Improvements" shall have the meaning ascribed to it in Section
3.14(c) hereof.
"Indemnification Agreement" shall have the meaning ascribed to it in
Section 3.15 hereof.
"Intangible Property" shall have the meaning ascribed to it in Section
2.01(a)(v) hereof.
"Intellectual Property Assignment and License Agreement" shall mean
the Intellectual Property Assignment and License Agreement, dated as of the
Closing Date, among ISP Hungary, ISP Investments and Buyer, in the form attached
hereto as Exhibit D, pursuant to which ISP Hungary and ISP Investments shall
irrevocably and unconditionally (except as otherwise set forth therein) assign
to Buyer all rights and interests in the Assigned Intellectual Property and
license to Buyer the Licensed Intellectual Property on the basis set forth in
Section 2.01(a)(iv) hereof.
"Intellectual Property Rights" shall mean any patents, patent rights
and patent applications, know-how, unpatented inventions, trade secrets and
other confidential or proprietary information, service marks, trademarks,
tradenames, trade designations, goodwill, Uniform Resource Locators (URLs), web
content, copyrights, pending or issued registrations for any such copyrights
(other than copyrights for marketing materials or other promotional products),
computer programs, and rights in processes, formulas and methods, but excluding
"off-the-shelf" software or similar items, technology, information, tapes,
disks, flow charts, diagrams, object codes, source codes, source listings,
documentation, manuals, inventory, or development; claims for infringements of
United States and foreign patents, trademarks, service marks, trade names or
copyrights and for the misappropriation of trade secrets; and all rights in all
intellectual property assignment agreements with any third party; in each case
in this definition, to the extent associated with the Business.
6
"Interim Balance Sheet" shall have the meaning ascribed to it in
Section 3.03(a) hereof.
"Inventory" shall mean (a) all finished products and goods inventory
of the U.S. Business on the Closing Date and held for sale to customers, and (b)
all raw materials and work in process inventory of the U.S. Business on the
Closing Date used in the manufacture of finished goods offered for sale, except
that certain inventory set forth on Schedule 1.01(y) hereto, which inventory
shall be an Excluded Asset.
"ISP Israel Business" shall mean the business of conducting contract
process research and development for pharmaceutical companies in the area of
advanced intermediates and active pharmaceutical ingredients, and of producing
and selling pharmaceutical intermediates and active pharmaceutical ingredients
that are (i) currently or, since June 6, 2001, have been manufactured or
developed or sold by ISP Israel, and/or (ii) set forth on Schedule 1.01(z)
hereto.
"Israel Benefit Plans" shall have the meaning ascribed to it in
Section 3.13(c) hereof.
"Israel Contracts" shall have the meaning ascribed to it in Section
3.09(b) hereof.
"Israel Employees" shall have the meaning ascribed to it in Section
5.09(a) hereof.
"Israel Facility" shall have the meaning ascribed to it in Section
3.12(d) hereof.
"Israel Investment Center" shall have the meaning ascribed to it in
Section 3.08 hereof.
"Israel Notes" shall have the meaning ascribed to it in Section
2.01(a)(i) hereof.
"Israel Pharmaceutical Product" shall have the meaning ascribed to it
in Section 3.10 hereof.
"Leases" shall have the meaning ascribed to it in Section 3.05(c)
hereof.
"Lender" shall mean any lending institution and/or its permitted
assigns that commit to provide the Bridge Loan and/or the Permanent Financing.
"Licensed Intellectual Property" shall have the meaning ascribed to it
in Section 2.01(a)(iv) hereof.
"Liens" shall mean all mortgages, liens, security interests, charges,
claims, title defects, pledges, encroachments or encumbrances of every kind.
7
"Material Adverse Effect" shall mean a material adverse effect on the
properties, assets, condition or operations of the Business, taken as a whole,
including as a result of any destruction or damage (by fire or other casualty)
of, or condemnation proceedings with respect to, the Real Property that has such
an effect; provided, however, that the following shall not be considered in
determining whether a Material Adverse Effect has occurred: (i) any effect
resulting directly from or arising directly in connection with this Agreement or
the transactions contemplated hereby or the disclosure or announcement thereof,
(ii) any fact, event, circumstance, condition, development or state of affairs,
of which the Sellers had knowledge or was reasonably discoverable by the Sellers
as of the date of this Agreement that generally affect the industry in which the
Business operates, and (iii) any fact, event, circumstance, condition or state
of affairs, of which the Sellers had knowledge or was reasonably discoverable by
the Sellers as of the date of this Agreement that results in changes in general
economic, financial market, regulatory or political conditions.
"Non-Competition Payment" shall have the meaning ascribed to it in
Section 2.02(a) hereof.
"Off-site Location" shall mean any location other than (i) the
Facility or (ii) a location directly migrated to from the Facility.
"Other Agreements" shall mean, collectively, the Bill of Sale, the
Assignment and Assumption Agreements, the Intellectual Property Assignment and
License Agreement, the Facility Transfer Agreement, the Supply Agreement, the
THF Agreement and the Transitional Services Agreement, and "Other Agreement"
shall mean any such agreement.
"Other Assets" shall mean all right, title and interest of the
Sellers, as of the Closing Date, in all assets, properties and rights, in each
case, to the extent exclusively relating to the Business, other than the
Excluded Assets, the Shares, the Equipment, the Inventory, the Facility and the
Intangible Property, including, without limitation, such of the Sellers' right,
title and interest in and to the following assets, properties and rights, in
each case, to the extent exclusively relating to the Business:
(a) subject to Section 2.03(b) hereof, all prepayments and prepaid
expenses, including, without limitation, utility, customer and leasehold
deposits;
(b) all lists, records and other information pertaining to accounts,
customers, suppliers, personnel and referral sources, products, intellectual
properties, technologies, all lists and records pertaining to suppliers and
customers, and all other Books and Records of every kind; provided, however,
that Buyer shall receive or have access to all copies of any books and records
relating to the Business;
(c) all transferable Permits owned by, granted to, or held or used by
any of the Sellers;
(d) all computers, source and object codes, data and software;
8
(e) all insurance proceeds (except to the extent relating to the
Excluded Assets) arising out of or related to damage, destruction or loss of any
property or asset of, or used exclusively in connection with, the Business based
on claims, if any, made by any of the Sellers prior to the Closing to the extent
of any damage or destruction that remains unrepaired, or to the extent any
property or asset remains unreplaced, at the Closing Date;
(f) all causes and choses of action, claims, including counter- and
cross-claims, credits, rights of recovery and setoff and other rights to the
extent relating exclusively to the Business and/or the Assets, other than those
relating to Taxes for periods prior to the Closing and those related to the
Excluded Assets or Retained Liabilities;
(g) any goodwill associated with the Business and the right to
represent to third parties that Buyer is the successor to the Business;
(h) all common-law rights, if any, of the Sellers to the name
"FineTech" and any names similar thereto and any variants thereof; and
(i) all assets and properties, whether or not referred to in clauses
(a) through (h) above, which were included or reflected in the Interim Balance
Sheet (other than assets disposed of in the ordinary course of business since
the date thereof), and assets thereafter acquired by any of the Sellers, which
if owned as of the date of the Interim Balance Sheet would have been reflected
therein.
"Permanent Financing" shall mean any financing(s) used to refinance,
refund or replace the Bridge Loan.
"Permits" shall mean all licenses, permits, registrations,
authorizations and approvals of any Governmental Entity.
"Permitted Closing Liens" shall mean all the Liens contained in the
definition of Permitted Liens, except for those set forth in clause (iv) in the
definition thereof.
"Permitted Liens" shall mean (i) liens for Taxes which are not yet due
or are being contested in good faith (and, in regard to the U.S. Business,
which, with respect to those which are being contested, are set forth on
Schedule 1.01(c) hereto); (ii) carriers', warehousemen's, landlords',
mechanics', materialmen's, repairmen's or other like liens arising in the
ordinary course of business, payment in respect of which is not yet due (none of
which interferes in any material respect with the ordinary conduct of Business);
(iii) deposits to secure the performance of utilities, leases, statutory or
workers' compensation or unemployment insurance obligations, warranties or other
contractual obligations, and surety and appeal bonds or other obligations of a
similar nature incurred in the ordinary course of business; (iv) liens listed on
Schedule 1.01(c) (none of which interferes in any material respect with the
ordinary conduct of the Business and none of which will remain undischarged as
of the Closing Date); (v) the title and other interests of a lessor under a
9
capital or operating lease; (vi) easements, rights of way, zoning restrictions
and other imperfections of title or similar matters not restricting or
interfering in any material respect with the ordinary conduct of the Business or
affecting the condition or transferability of the Assets; (vii) the title
exceptions listed on Schedule 1.01(d) hereof; (viii) all easements, encumbrances
and other matters shown on the Survey; and (ix) rights of Stewart Corporation as
tenant under that certain lease, dated as of July 1999, with ISP Fine Chemicals,
Inc.
"Pharmaceutical Product" shall have the meaning ascribed to it in
Section 3.10 hereof.
"Purchase Price" shall have the meaning specified in Section 2.02(a)
hereof.
"Real Property" shall have the meaning ascribed to it in Section
3.14(a) hereof.
"Real Property Leases" shall have the meaning ascribed to it in
Section 3.14(b) hereof.
"Registration Statement" shall mean Buyer's Registration Statement on
Form S-3 filed with the SEC on December 5, 2001, as such shall be amended.
"Retained Liabilities" shall mean all liabilities, obligations and
commitments of, and any third-party claims against, any one or more of the
Sellers, except only the Assumed Liabilities.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Sellers" shall mean, collectively, ISP Hungary, ISP Technologies, ISP
Chemicals and ISP Investments, and "Seller" shall mean any such Entity.
"Seller Benefit Plans" shall have the meaning ascribed to it in
Section 3.13(c) hereof.
"Shares" shall have the meaning ascribed to it in the WHEREAS clauses.
"Supply Agreement" shall mean the Supply Agreement, dated as of the
Closing Date, between Buyer and ISP Technologies, reflecting the terms set forth
on Exhibit E hereto and otherwise in form and covering such matters as is
customary for supply agreements of a similar nature, pursuant to which Buyer
will supply to ISP Technologies certain products described therein from and
after the Closing Date on the terms set forth therein.
"Survey" shall have the meaning ascribed to it in Section 5.12 hereof.
"Taxes" shall mean all taxes, charges, fees, levies, penalties or
other assessments imposed by any United States Federal, state, local or foreign
10
taxing authority, including, but not limited to, income, gross receipts,
license, stamp, occupation, premium, windfall profits, environmental, excise,
property, sales, value added, use, transfer, franchise, payroll, employment,
withholding, severance, social security or other tax of any kind whatsoever,
including any interest, penalties or additions attributable thereto, whether
disputed or not.
"Tax Return" shall mean any return, declaration, report or information
return required to be filed with any taxing authority with respect to Taxes.
"THF Agreement" shall mean a supply agreement, dated the Closing Date,
between Buyer and ISP Technologies, in customary form for supply agreements in
similar transactions, pursuant to which ISP Technologies will agree to supply
THF to Buyer for a two-year term at a price equal to ISP Technologies' standard
cost (based on its 2001 cost methodologies) therefor plus five (5%) percent plus
freight and related charges; provided, however, that the sum of such price and
charges shall not exceed the price and charges for THF for 2001.
"Third Party Claim" shall have the meaning ascribed to it in Section
9.03(a) hereof.
"Transitional Services Agreement" shall mean the Transitional Services
Agreement, dated as of the Closing Date, between Buyer and ISP Management
Company Inc., in the form attached hereto as Exhibit F, pursuant to which ISP
Management Company Inc. will provide Buyer (for a period of not longer than
eighteen (18) months following the Closing Date) certain customary and
reasonable transitional services as described therein and on the terms set forth
therein.
"U.S. Business" shall mean the business of (a) producing, marketing
and selling (i) all products currently or, since January 1994, manufactured at
or sold from the Facility (including those listed on Schedule 1.01(e)(i) hereto
and any related products, but excluding those listed on Schedule 1.01(e)(ii)
hereto and any related products) and any development or research activities in
respect of all such products (other than development or research activities in
respect of products listed on Schedule 1.01(e)(ii) hereto), since January 1994,
and (ii) pheremones for agricultural pest or insect control and/or (b) utilizing
Intellectual Property Rights or Licensed Intellectual Property as are currently
or were, since January 1, 1994, practiced at the Facility in connection with the
manufacture of active pharmaceutical ingredients or registered intermediates
related thereto which require FDA approval in the areas set forth on Schedule
1.01(f) hereto; provided, however, that in no event shall such Intellectual
Property Rights include the items set forth on Schedule 2.01(a)(iv)(B) hereto.
1.02. ADDITIONAL DEFINITIONS. Other capitalized terms used in this
Agreement but not defined in Section 1.01 hereof shall have the meanings
ascribed thereto throughout the remaining provisions of this Agreement.
11
ARTICLE II
PURCHASE AND SALE
2.01. PURCHASE AND SALE; CLOSING DELIVERIES. (a) Upon the terms and
subject to the conditions of this Agreement, at the Closing:
(i) ISP Hungary shall sell, assign, transfer and deliver to
Buyer, free and clear of all Liens (except for any restrictions under securities
laws of general applicability), and Buyer shall purchase, acquire and accept
from ISP Hungary, good and valid title to the Shares and the two notes issued by
ISP Israel listed on Schedule 3.05(g) hereto (the "Israel Notes");
(ii) ISP Chemicals shall sell, assign, transfer and deliver to
Buyer, free and clear of all Liens (except for the Permitted Closing Liens), and
Buyer shall purchase, acquire and accept from ISP Chemicals, good and valid
title to the Facility and the Equipment;
(iii) ISP Technologies shall sell, assign, transfer and deliver
to Buyer, free and clear of all Liens (except for the Permitted Closing Liens),
and Buyer shall purchase, acquire and accept from ISP Technologies, good and
valid title to the Inventory;
(iv) ISP Investments and, to the extent that it possesses any
such rights, ISP Hungary shall (A) sell, assign, transfer and deliver to Buyer,
and Buyer shall purchase, acquire and accept from ISP Investments and ISP
Hungary, all of ISP Investments' and ISP Hungary's right, title and interest in
and to all of the Intellectual Property Rights used exclusively in connection
with the Business, including, but not limited to, those listed on Schedule
3.06(a)(i) hereto (the "Assigned Intellectual Property"), free and clear of all
Liens (except for the Permitted Closing Liens), and (B) grant to Buyer an
irrevocable (except as set forth in the Intellectual Property Assignment and
License Agreement), perpetual, assignable, sublicensable and exclusive (as to
the operations of Buyer referred to in clause (x) below) and royalty-free
license to use the other Intellectual Property Rights used by the Sellers in the
operation of the Business (excluding the items set forth on Schedule
2.01(a)(iv)(B) hereto), including but not limited to, those listed on Schedule
3.06(a)(ii) hereto (the "Licensed Intellectual Property"), but only to the
extent necessary in connection with, and for no purpose other than, (x) Buyer's
operation from and after the Closing Date of the Business and (y) Buyer's
performance of its obligations under the Supply Agreement and the Assumed
Contracts;
(v) the Sellers shall sell, assign, transfer and deliver to
Buyer, and Buyer shall purchase, acquire and accept from the Sellers, all of the
Sellers' right, title and interest in and to the Assumed Contracts Rights
(collectively with the Assigned Intellectual Property and the Licensed
Intellectual Property, the "Intangible Property"); and
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(vi) the Sellers shall sell, assign, transfer and deliver to
Buyer, free and clear of all Liens (except for the Permitted Closing Liens), and
Buyer shall purchase, acquire and accept from the Sellers, good and valid title
and/or interest in and to all Other Assets.
Notwithstanding anything to the contrary set forth in this Agreement,
Buyer acknowledges and agrees that Buyer is not acquiring, and the Assets shall
not include, and the Sellers hereunder are not selling, assigning, transferring,
conveying or delivering to Buyer, any right, title or interest in or to the
Excluded Assets.
(b) Upon the terms and subject to the conditions of this Agreement,
at the Closing:
(i) the Sellers shall deliver to Buyer (A) reasonable evidence
of transfer of record ownership of the Shares to Buyer, including any stock
certificate(s) duly endorsed for transfer or accompanied by duly executed stock
powers for filing (if required) with the Israeli Companies Registrar, (B)
resignations of such directors of ISP Israel as Buyer may have requested not
less five (5) Business Days prior to the Closing Date, (C) a binding title
commitment from a title insurance company, as provided in Section 5.11 hereof,
(D) reasonably satisfactory evidence of the release and discharge (or agreement
of the lienholder to promptly release) of each of the Liens described in clause
(iv) of the definition of Permitted Liens, and (E) each of the Other Agreements
executed by the Sellers party thereto; and
(ii) Buyer shall deliver to the Sellers (A) the aggregate cash
Purchase Price and the Non-Competition Payment in accordance with Section 2.02
hereof by wire transfer of immediately available funds to such account or
accounts as the Sellers shall have specified to Buyer prior to the Closing Date
and (B) each of the Other Agreements executed by Buyer.
2.02. PURCHASE PRICE; ALLOCATION.
(a) The aggregate purchase price for the Shares and the Assets is
$107,820,000, subject to adjustment as provided below (the "Purchase Price"),
together with Buyer's assumption of the Assumed Liabilities. In addition, Buyer
shall pay $1,500,000 in consideration for the non-competition covenant set forth
in Section 5.04 hereof (the "Non-Competition Payment"). The Purchase Price shall
be allocated among the Shares and the Assets as set forth on Exhibit G hereto
and in accordance with paragraph (f) below. The Purchase Price (as it may be
adjusted pursuant to paragraph (c) below) together with the Non-Competition
Payment shall be paid by Buyer to the Sellers at the Closing by wire transfer of
immediately available funds to such account or accounts as shall have been
designated by the Sellers prior to the Closing Date. Each of the Sellers hereby
acknowledges and accepts the allocation of the cash Purchase Price and the
Non-Competition Payment among the Sellers as set forth on Exhibit G hereto
(subject to adjustment as set forth in paragraphs (c) and (e) below).
13
(b) The portion of the Purchase Price payable in consideration of the
Inventory (the "Inventory Purchase Price") is based, in part, on ISP
Technologies delivering to Buyer inventory of the U.S. Business with a value of
$4,312,000 (the "Target Amount"). The Inventory Purchase Price shall be adjusted
as follows to reflect the amount by which the Inventory Value (as hereinafter
defined) is greater or less than (as the case may be) the Target Amount. If the
Inventory Value is greater than the Target Amount, the Inventory Purchase Price
shall be increased by the amount of such excess, and if the Inventory Value is
less than the Target Amount, the Inventory Purchase Price shall be decreased by
the amount of such shortfall. The term "Inventory Value" shall mean the value of
the Inventory as of the Closing Date, determined in accordance with GAAP, using
the historical inventory valuation procedures of the Sellers, consistently
applied, and as such value may be reduced to reflect any breach of the
representations and warranties contained in Section 3.05(d) hereof. The Sellers
shall provide adequate prior written notice to Buyer as to when the Sellers
shall conduct a physical count of the Inventory in connection herewith, and
Buyer may participate in such Inventory count.
(c) Not less than two Business Days prior to the Closing Date, ISP
Technologies shall deliver to Buyer a statement setting forth its good faith
estimate of the Inventory Value (the "Inventory Value Statement"). At the
Closing, the parties shall make an adjustment to the Inventory Purchase Price
(and, correspondingly, the Purchase Price), as follows, to reflect the amount by
which the Inventory Value as set forth on the Inventory Value Statement is
greater or less than (as the case may be) the Target Amount. If the Inventory
Value as set forth on the Inventory Value Statement is greater than the Target
Amount, the Inventory Purchase Price payable by Buyer at Closing shall be
increased by the amount of such excess, and if the Inventory Value as set forth
on the Inventory Value Statement is less than the Target Amount, the Inventory
Purchase Price payable by Buyer at Closing shall be decreased by the amount of
such shortfall.
(d) Within 45 days after the Closing Date, Buyer shall notify ISP
Technologies in writing whether Buyer accepts the estimated Inventory Value set
forth in the Inventory Value Statement and, if so, no further adjustment to the
Inventory Purchase Price shall be required under this Section. If Buyer fails to
deliver written notice of its acceptance or objection to the estimated Inventory
Value set forth in the Inventory Value Statement within 45 days after the
Closing Date, Buyer shall for all purposes be deemed to have accepted such
Inventory Value and no further adjustment to the Inventory Purchase Price shall
be required under this Section. If, however, Buyer objects in good faith to the
determination of the Inventory Value set forth in the Inventory Value Statement,
Buyer shall deliver a written notice to ISP Technologies within such 45-day
period, which notice shall specify in good faith and in reasonable detail each
of Buyer's objections, and the parties shall each use reasonable best efforts
through authorized officers to resolve the objections in good faith. If no
resolution is reached within 15 days after the notice of objection is given,
then the issues that remain in dispute shall be promptly (and in any event
within 10 days) submitted to PriceWaterhouseCoopers (or, if such firm is unable
or unwilling to accept such engagement, another nationally-recognized
independent accounting firm with no pre-existing relationship with the Sellers
or Buyer as shall be mutually selected by ISP Technologies and Buyer) (the
"Arbitrator") for review and resolution. The fees and expenses of the Arbitrator
14
shall be paid one-half by ISP Technologies and one-half by Buyer. Each party
shall submit to the Arbitrator such information as the Arbitrator reasonably
deems necessary to reach a conclusion as to the correct determination of
Inventory Value. The Arbitrator shall be directed to reach a written
determination within ten Business Days and to deliver such determination to
Buyer and ISP Technologies, whereupon such determination shall be final, binding
and conclusive upon the parties (absent manifest error).
(e) If the Inventory Value as finally determined pursuant to paragraph
(d) above (the "Final Inventory Value") is equal to the estimate set forth in
the Inventory Value Statement, then no further adjustment to the Inventory
Purchase Price shall be required pursuant to this Section. If the Final
Inventory Value is less than the estimate set forth in the Inventory Value
Statement, then ISP Technologies shall promptly pay to Buyer the amount of such
shortfall plus interest thereon from the Closing Date until the date of payment
at the per annum rate of seven (7%) percent. If the Final Inventory Value is
greater than the estimate set forth in the Inventory Value Statement, then Buyer
shall promptly pay to ISP Technologies the amount of such excess plus interest
thereon from the Closing Date until the date of payment at the per annum rate of
seven (7%) percent . Each payment pursuant to this paragraph (e) shall be by
wire transfer of immediately available funds to such account as the party so
entitled to such payment shall designate in writing. The Inventory Purchase
Price adjustment provided for in this Section 2.02 shall be the exclusive remedy
of either party hereto in respect of the Inventory Value Statement or any
difference between the Inventory Value and the Target Amount.
(f) Buyer and the Sellers shall allocate the Purchase Price and the
Non-Competition Payment as set forth on Exhibit G hereto and in accordance with
Section 1060 of the Code and the applicable rules and regulations thereunder.
Buyer and the Sellers shall report the transactions contemplated herein for all
purposes (including, without limitation, the filing of Internal Revenue Form
8594) in accordance with such allocation. In any proceeding related to the
determination of any Taxes, neither Buyer nor any of the Sellers shall contend
or represent that such allocation is not a correct allocation.
2.03. ASSUMED AND RETAINED LIABILITIES; PRORATION. (a) As of, and at
all times subsequent to, the Closing, Buyer shall assume and be responsible for,
and shall pay, honor, perform and discharge as and when due, in accordance with
their respective terms, all of the Assumed Liabilities; provided, however, that
this Section 2.03(a) shall not limit any claims and defenses Buyer may have
against any party other than a Seller or an Affiliate of a Seller. It is
acknowledged and agreed that Buyer is not assuming from the Sellers, or in any
way responsible for, any of the Retained Liabilities.
(b) All items listed below relating to the Sellers' operation of the
U.S. Business will be prorated as of the Closing Date (all such prorations being
made on the basis of the actual number of days of the year and month that shall
have elapsed as of the Closing Date), with the Sellers liable to the extent such
items relate to any time period ending on or prior to the Closing Date, and
Buyer liable to the extent such items relate to all periods subsequent thereto:
(i) real estate taxes, (ii) water, electricity, sewer, gas, telephone
15
and other utility charges, (iii) fuel, if any, (iv) rents, (v) all fees under
service contracts for services rendered or to be rendered on or after the
Closing Date, and (vi) like items customarily prorated in transactions similar
to those contemplated by this Agreement. The Sellers shall be entitled to any
funds, bonds, letters of credit or deposits made by the Sellers with
municipalities, Governmental Entities and/or utility companies servicing or
having jurisdiction over the Real Property used in the U.S. Business, and if
same are not refundable to the Sellers without a replacement by Buyer, Buyer
shall either (x) deliver the required replacement funds and/or deposits to the
appropriate Governmental Entity prior to the Closing Date, or (y) pay to the
Sellers on the Closing Date the amount of such funds and/or deposits, in which
case the Sellers shall transfer all of the Sellers' right, title and interest to
such funds and deposits to Buyer. On or prior to the Closing Date, the parties
hereto will in good faith calculate an estimate of such proration adjustments
and a payment in the net amount thereof shall be paid by Buyer to the Sellers at
the Closing. To the extent that proration with respect to any of such items was
not definitively ascertainable or was erroneously calculated on the Closing
Date, such items shall be reprorated as promptly as practicable (but in any
event not later than 30 days after the Closing Date) and a cash settlement shall
be made between the parties promptly thereafter; provided, however, that if
final real estate tax bills of the tax year are not available on the Closing
Date, the real estate taxes apportionment shall be based upon preliminary tax
bills as if they were the final tax bills for the Real Property used in the U.S.
Business, with an adjustment to be made upon receipt of the final tax bills and
provided, further, that all cash payments made after the Closing Date shall be
accompanied by interest at the annual rate of seven (7%) percent . The parties
hereto shall promptly furnish to each other such documents and other records as
may be reasonably requested in order to confirm all proration calculations made
pursuant to this Section.
2.04. NONASSIGNABLE RIGHTS. (a) Notwithstanding anything to the
contrary contained in this Agreement or in any Other Agreement, this Agreement
and the Other Agreements shall not operate to assign, and there shall not be
included in the Assets, any of the Assumed Contracts, Assumed Contracts Rights,
Intangible Property or Permits, or any claim, right or benefit arising
thereunder or resulting therefrom, if an attempted assignment thereof, without
the consent of any Entity, would constitute a breach, default or other
contravention thereof or a violation of law, unless and until all required
consents, approvals and waivers are obtained (it being understood and agreed
that the failure to obtain such consents, approvals and waivers shall not reduce
the Purchase Price nor shall it relieve the Sellers of any of their obligations
under this Agreement, including Section 2.04(b) hereof, or eliminate any of the
conditions of Buyer's obligations hereunder). To the extent that this Section
operates to exclude any of such Assumed Contracts, Assumed Contracts Rights,
Intangible Property, Permits, claims, rights or benefits, the definitions of
"Business", "Assets", "Assumed Contracts", "Assumed Contracts Rights" and
"Intangible Property" in this Agreement shall be modified to exclude such
assets.
(b) The parties hereto shall use their respective commercially
reasonable best efforts promptly to obtain all necessary consents, waivers and
approvals of any third parties to the transfer of any of the Assumed Contracts
16
or Licensed Intellectual Property or in respect of any of the Assets or any
claim, right or benefit thereunder, and shall reasonably cooperate with each
other in connection therewith; provided, however, that neither party shall be
obligated to spend any sum of money (other than reasonable legal fees and
administrative expenses incurred in connection therewith) or make any material
financial or other accommodation or concession to obtain such consents, waivers
and approvals. If such consents, approvals or waivers are not obtained by the
Closing, or if an attempted assignment thereof would be ineffective or would
adversely affect the claims, benefits or rights of the Sellers or Buyer
thereunder or Buyer would not in fact receive all such claims benefits or
rights, the parties will, to the extent legally permissible, cooperate in a
mutually agreeable arrangement under which Buyer, at no additional cost to it
(except as provided below), will obtain the claims, benefits or rights
thereunder in accordance with the intent of this Agreement, including
subcontracting, sub-licensing or sub-leasing to Buyer, or under which the
Sellers would enforce for the benefit of Buyer any and all rights of the Sellers
against a third party thereto; provided, however, that, subject to the
foregoing, if any such arrangement requires the Sellers to incur a cost or spend
any sum of money to perform and/or enforce for the benefit of Buyer any and all
such rights of the Sellers in connection therewith, Buyer shall promptly
reimburse all such costs and sums to the Sellers. In the event of a failure by
Buyer to make such reimbursement, the Sellers shall cease to be obligated under
this Section. The Sellers shall promptly pay to Buyer all monies received by the
Sellers in respect of any Assumed Contract or any of the other Assets or any
claim, right or benefit arising thereunder after the Closing Date. In the case
of any such subcontracting, sub-licensing, subleasing or similar arrangement,
Buyer shall indemnify, defend and hold the Sellers and their respective
Affiliates harmless from and against any and all Damages arising out of or
relating to Buyer's failure to perform its obligations pursuant to the terms of
such arrangement from and after the Closing Date, and in the event of a failure
of such indemnity, the Sellers shall cease to be obligated under this Section.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby, jointly and severally, represent and warrant to
Buyer, as of the date hereof, as follows:
3.01. ORGANIZATION AND QUALIFICATION; DUE AUTHORIZATION. ISP Hungary
is a company duly organized and validly existing under the laws of Hungary. Each
of ISP Chemicals, ISP Technologies and ISP Investments is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. ISP Israel is a company duly organized and validly existing under the
laws of the State of Israel. Each of the Sellers and ISP Israel is duly
qualified and in good standing to do business in all jurisdictions in which the
location of the Assets respectively owned by them or their respective operation
of the Business makes such qualification necessary, except where the failure to
be so qualified has not had, and would not be reasonably expected to have, a
Material Adverse Effect. The Sellers are presently qualified to do business in
the jurisdictions set forth on Schedule 3.01 hereto. The Sellers have full
corporate power and authority to execute and
17
deliver this Agreement and the Other Agreements to which they are a party and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Other Agreements to which the Sellers are a
party and the performance and consummation of the transactions contemplated
hereby and thereby by the Sellers have been duly authorized by all necessary
corporate action on the part of the Sellers. This Agreement has been and, at the
Closing, the Other Agreements to which the Sellers are a party will be duly
executed and delivered by the Sellers party thereto and, subject to the due
authorization, execution and delivery of such agreements by the other parties
thereto, this Agreement constitutes and the Other Agreements, when so executed,
will constitute, valid and binding obligations of the Sellers party thereto,
enforceable against such Sellers in accordance with their terms, except as
enforcement may be affected by bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditor's rights generally and except for
general principles of equity (the "Bankruptcy and Equity Exception").
3.02. NO VIOLATION; CONSENTS AND APPROVALS. Neither the execution and
delivery by the Sellers of this Agreement or the Other Agreements to which they
are a party nor the consummation by the Sellers of the transactions contemplated
hereby or thereby nor compliance by the Sellers with any of the provisions
hereof or thereof (a) conflict with or result in a violation of the certificate
of incorporation or by-laws, or comparable organizational documents, of any
Seller, or the articles of association of ISP Israel, or (b) except as set forth
in Schedule 3.02 hereto, require (i) any authorization, consent, order or
approval of any Governmental Entity under any statute, law, judgment, order,
injunction or decree applicable to ISP Israel or any Seller in connection with
the Business or (ii) consent under, or violate, conflict with, or result in a
breach of any of the terms of, or constitute a default under, any note, bond,
mortgage, indenture, deed of trust, contract, license, agreement or lease to
which any of the Sellers or ISP Israel is a party or by which any of the Sellers
or ISP Israel may be bound or to which any of the Shares or the Assets may be
subject or affected in any material respect that, in each case, is material to
the Business.
3.03. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) Schedule 3.03(a) hereto contains authentic copies of (i) the
audited combined balance sheet of the Business as at September 30, 2001 (the
"Interim Balance Sheet") and audited combined statements of operations and cash
flows of the Business for the nine months ended September 30, 2001 (the "Audited
Interim Income Statement"), (ii) the unaudited pro-forma profit and loss
statement of the Business for the nine-month period ended September 30, 2001
giving effect to the acquisition of certain assets from, and the assumption of
certain liabilities of, FineTech Ltd. as if such acquisition and assumption had
been completed as of January 1, 2001 (the "Pro Forma Financial Statement"),
(iii) the audited balance sheet of the U.S. Business as at December 31, 2000 and
audited statements of operations and cash flows of the U.S. Business for the
fiscal years ended December 31, 2000 and December 31, 1999 (the "Audited Annual
Financial Statements"), and (iv) the unaudited pro-forma profit and loss
statement of the Business for the 11-month period ended November 25, 2001 giving
effect to the acquisition of certain assets from, and the assumption of certain
liabilities of, FineTech Ltd. as if such acquisition and assumption had been
18
completed as of January 1, 2001 (the "November Statement"). In addition,
Schedule 3.03(a) hereto contains authentic copies of the audited balance sheet
of FineTech Ltd. as at December 31, 2000 and audited statements of income and of
changes in financial position or of cash flows, whichever is applicable, of
FineTech Ltd. for each of the fiscal years in the three-year period ended
December 31, 2000 prepared in accordance with generally accepted accounting
principles in Israel with GAAP reconciliations.
(b) The Interim Balance Sheet, the Audited Interim Income Statement
and the Audited Annual Financial Statements were prepared in accordance with
GAAP (except as specifically set forth in the notes thereto and in the case of
the interim statements, except for the absence of footnotes and subject to
normal year-end adjustments), consistently applied in accordance with the
Sellers' past practices, and fairly present in all material respects the
financial condition and results of operations of the Business or the U.S.
Business, as the case may be, as of the respective dates and for the respective
periods covered thereby. The Pro Forma Financial Statement was prepared in good
faith by the Sellers based on the books and records of the Sellers and on
assumptions believed by the Sellers to be reasonable as of the date of such
statement. The November Statement was prepared consistently with the Sellers'
past practices and fairly presents in all material respects the results of
operations of the Business for the period covered thereby.
(c) Since June 6, 2001, ISP Israel has not incurred or assumed any
liabilities, commitments or obligations of any kind (whether accrued, absolute,
contingent or otherwise, and whether due or to become due or asserted or
unasserted), except (i) liabilities expressly reflected on or reserved for on
the Interim Balance Sheet, (ii) liabilities (none of which is a material
liability for breach of contract, breach of warranty, tort, infringement or
lawsuit) incurred in the ordinary course of business consistent with past
practice since the date of the Interim Balance Sheet or (iii) as set forth on
Schedule 3.03(c) hereto.
3.04. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
Schedule 3.04 hereto, and except for share transactions relating to the initial
capitalization of ISP Israel expressly disclosed to Buyer, since the date of the
Interim Balance Sheet, there has not been, in respect of the Business, (i) any
material adverse change in the financial condition, results of operations,
assets or business of any of the Sellers or of ISP Israel, (ii) any repayments
of any indebtedness or any borrowing of or agreement to borrow any money or any
liabilities incurred by any of the Sellers or of ISP Israel, other than payments
made and current liabilities incurred in the ordinary course of business, (iii)
any waiver of any material right of any of the Sellers or by ISP Israel, or the
cancellation or reduction of any material debt or claim held by any of the
Sellers or by ISP Israel, (iv) any declaration or payment of dividends on, or
other distributions with respect to, or any direct or indirect redemption or
repurchase of, any shares of the capital stock or other equity of ISP Israel
since June 6, 2001, (v) any issuance of any stocks, bonds or other securities of
ISP Israel or options, warrants or rights or agreements or commitments to
purchase or issue such securities, (vi) any mortgage, pledge, sale, assignment,
licensing or transfer of any material tangible or intangible assets of any of
19
the Sellers or of ISP Israel, except sales of assets effected in the ordinary
course of business consistent with past practice, (vii) any loan (other than in
the ordinary course for travel expenses and related items) by ISP Israel to any
officer, director, employee or shareholder of any of the Sellers or of ISP
Israel or any removal or relocation of any tangible assets from the Facility
(other than pursuant to sales or transfers to third parties in the ordinary
course of business), (viii) any damage, destruction or loss (whether or not
covered by insurance) adversely affecting any of the material assets, property
or business of any of the Sellers or of ISP Israel that is material to the
Business, (ix) any material increase, direct or indirect, in the compensation
(or rate thereof) paid or payable to any officer, director, employee or agent of
any of the Sellers or ISP Israel (it being agreed that any increase at a rate of
$25,000 or more per annum for an individual or at the rate of $100,000 or more
per annum for all such individuals shall be deemed material) in each case, other
than increases required by law or pursuant to annual increases consistent with
past custom, (x) any purchase or other acquisition of assets or property other
than in the ordinary course of business, (xi) any material change in the
accounting methods or practices followed by any of the Sellers or ISP Israel,
(xii) any operation of the business of any of the Sellers or ISP Israel outside
of the ordinary course of business and/or inconsistent with past practice or
(xiii) except as provided by this Agreement, any commitment or agreement
(contingent or otherwise) to do any of the foregoing.
3.05. THE SHARES; THE EQUIPMENT; THE INVENTORY; SUFFICIENCY OF
TANGIBLE ASSETS; ETC.
(a) ISP Hungary owns, beneficially and of record, all of the Shares
and the Israel Notes, free and clear of all Liens. The Shares represent all of
the issued and outstanding capital stock of ISP Israel (other than any
directors' and other qualifying shares as required by Israeli law, which ISP
Hungary shall cause to be unconditionally (and without any additional payments
by Buyer) assigned and delivered as reasonably directed by Buyer at the
Closing). Each Share is duly and validly authorized and issued. Except for the
rights created pursuant to this Agreement and, except for the note of ISP Israel
set forth on Schedule 3.05(a)(i) hereto, there are no outstanding subscriptions,
warrants, options, convertible securities or similar rights relating to, or
obligating ISP Israel to issue, any shares of capital stock of or other equity
interests in ISP Israel. ISP Hungary has delivered to Buyer a true and correct
copy of the articles of association of ISP Israel.
(i) As of the Closing, there will be no bonds, debentures, notes
or other indebtedness of ISP Israel having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matter on
which any shareholder of ISP Israel may vote, except for the Israel Notes.
(ii) Except as set forth on Schedule 3.05(a)(ii) hereto, ISP
Israel does not (a) own, directly or indirectly, legally or beneficially, any
shares of voting stock or other equity securities of any Entity, (b) have any
ownership interest, direct or indirect, legally or beneficially, in any Entity
or (c) have any obligation, direct or indirect, present or contingent, to
20
purchase or subscribe for any interest in, advance or loan monies to, or in any
way make investments in, any Entity, or to share any profits or capital
investments in other Entities.
(iii) Except for restrictions of the type set forth on Schedule
3.05(a)(iii) hereto, as of the Closing, Buyer shall own the Shares, without any
legal or contractual restrictions or limitations of any kind arising by or
through Sellers in respect of Buyer's ability to vote and/or transfer the
Shares, other than restrictions under laws of general application.
(b) ISP Chemicals has good and valid title to the Equipment (other
than any leased equipment, which is the subject of Section 3.05(c) hereof), free
and clear of all Liens except for Permitted Liens. Such Equipment is in all
material respects in a condition adequate for the purposes for which it is being
used in the ordinary course of the Business, normal wear and tear excepted.
(c) Schedule 3.05(c) hereto sets forth a true and complete list of
every lease agreement to which any of the Sellers is a party or entered into by
ISP Israel since June 6, 2001 relating to any item of Equipment or Other Assets
which entails rental payments of more than $20,000 per annum (the "Leases").
Such Seller or ISP Israel has good and valid title, free and clear of all Liens
except for Permitted Liens, to its leasehold interest in all equipment or other
assets subject to the Leases. The Sellers have delivered to Buyer a complete and
accurate copy of each such Lease. All equipment leased pursuant to the Leases is
in all material respects in the condition required of such property by the terms
of the Lease applicable thereto.
(d) ISP Technologies has good and valid title to the Inventory and ISP
Israel has good and valid title to all inventory that it purports to own, free
and clear of all Liens except for Permitted Liens. Neither ISP Technologies nor
ISP Israel holds, or has held on its behalf, any inventory in respect of the
Business on consignment. No such inventory is subject to recall. All items of
inventory reflected on the Interim Balance Sheet or acquired by ISP Technologies
or ISP Israel since the date of the Interim Balance Sheet consist of a quantity
and quality suitable and commercially usable and saleable in the ordinary course
of business for the purposes for which they are intended, in the ordinary course
of business, except for obsolete, slow-moving or defective items, all of which
have been written down to net realizable value or have been adequately reserved
against on the books and records of ISP Technologies or ISP Israel (and on the
Interim Balance Sheet, to the extent applicable) in accordance with GAAP (or, as
applicable, Israeli generally accepted accounting principles, as reconciled with
GAAP), consistently applied in accordance with the Sellers' past practices. The
Inventory has been reflected on such books and records and, as applicable, the
Interim Balance Sheet at the lower of cost or market value, the cost thereof
being determined on a first-in, first-out basis in accordance with GAAP,
consistently applied in accordance with the Sellers' past practices. Since the
date of the Interim Balance Sheet there has been no material increase in the
sale of inventory in respect of the Business by ISP Technologies or ISP Israel,
inconsistent with past practices and there has been no sales of inventory in
manner inconsistent with the intent of that certain customer letter, dated
December 19, 2001, provided to Buyer prior to the date hereof (the "Customer
Letter").
21
(e) The Sellers have good and valid title to the Other Assets, free
and clear of all Liens except for Permitted Liens.
(f) Except as set forth on Schedule 3.05(f) hereto and except for the
Excluded Assets (which for this purpose shall not include the assets described
in clause (f) of the definition thereof) and for utilities and employees, the
Assets and ownership of the Shares, together with the rights, goods and services
to be provided to Buyer after the Closing pursuant to the Other Agreements,
constitute, and on the Closing Date will constitute, all of the material assets
(including material intellectual property rights) and services used by the
Sellers to operate the Business as of the date hereof.
(g) All of the accounts and notes receivable of ISP Israel, including
those reflected on the Interim Balance Sheet, have arisen in the ordinary course
of business. The Sellers have not granted any security interest on such
receivables or any part thereof and, to the Sellers' best knowledge, no Seller
has received notice of any claim for recoupments, set-offs or counter-claims in
respect of any such receivables. No agreement for material deduction, discount
or other deferred price adjustment has been made with respect to any such
receivables. All accounts payable of ISP Israel, as reflected in the Interim
Balance Sheet or arising after the date thereof, are the result of bona fide
transactions in the ordinary course of business consistent with past practice.
ISP Israel is not due any receivable from, or liable for any account or note
payable to, any Affiliate or any officer, director or shareholder thereof,
except as set forth on Schedule 3.05(g) hereto.
3.06. INTELLECTUAL PROPERTY. (a) Collectively, Schedule 3.06(a)(i)
hereto and Schedule 3.06(a)(ii) hereto list or describe all material items of
Intellectual Property Rights used in the U.S. Business (the "Material
Intellectual Property Rights"). Schedule 3.06(a)(iii) hereto sets forth a list
of all material patents, patent applications, trademarks and/or trademark
applications owned by ISP Israel.
(b) Except as set forth on Schedule 3.06(b) hereto, ISP Investments
freely owns or is validly licensed to use, free from any Liens (except for
Permitted Liens), and without payment to any other party, the Material
Intellectual Property Rights. No claims have been asserted against any Seller by
any Entity, and none of the Sellers is aware of any basis for any claims
challenging the ownership, validity, enforceability or use of any of the
Material Intellectual Property Rights. To the best knowledge of the Sellers, no
Entity is infringing upon any of the Material Intellectual Property Rights. The
operation of the U.S. Business and/or the use of the Material Intellectual
Property Rights in the operation of the U.S. Business does not infringe upon or
violate the rights of any Entity and no Seller has received notice of any such
alleged infringement.
(c) Except as set forth on Schedule 3.06(b) hereto, ISP Israel owns,
free from any Liens (except for Permitted Liens), all Intellectual Property
Rights set forth on Schedule 3.06(a)(iii) hereto. To the best knowledge of the
Sellers, use of the Intellectual Property Rights of ISP Israel set forth on
Schedule 3.06(a)(iii) hereto since June 6, 2001, or of the Sellers in the
operation of the Business does not infringe upon the rights of any Entity. Since
June 6, 2001, to the knowledge of the Sellers, no claims have been asserted
against ISP Israel by any Entity, and none of the Sellers are aware of any basis
for any claims challenging the ownership, validity, enforceability or use of any
of ISP Israel's Intellectual Property Rights set forth on Schedule 3.06(a)(iii)
hereto. To the best knowledge of the Sellers, since June 6, 2001, no Entity is
infringing upon any of the patents or trademarks set forth on Schedule
3.06(a)(iii) hereto. Since June 6, 2001, to the best knowledge of the Sellers,
22
the operation of the ISP Israel Business and/or the use of the Intellectual
Property Rights set forth on Schedule 3.06(a)(iii) hereto in the operation of
the ISP Israel Business does not infringe upon or violate the rights of any
Entity and none of the Sellers has received written notice of any such alleged
infringement.
3.07. LITIGATION. Except as set forth in Schedule 3.07 hereto, there
is no material claim, action, lawsuit, investigation or other arbitration or
administrative proceeding pending or, to the best knowledge of the Sellers,
threatened against any of the Sellers or ISP Israel at law, in equity or
otherwise, in, before, or by any Governmental Entity or other Entity relating to
(i) the transactions contemplated by this Agreement, (ii) the U.S. Business or
(iii) the operations of ISP Israel. No representation is made in this Section
3.07 with respect to Environmental Laws or Permits or Environmental Claims,
which matters are covered by Section 3.12 hereof.
3.08. TAXES. All material Tax Returns relating to ISP Israel required
to be filed by ISP Israel since June 6, 2001, and all material Tax Returns
relating to the U.S. Business required to be filed by the Sellers, have been
filed with the appropriate taxing authorities in all jurisdictions in which such
Tax Returns are required to be filed. All such Tax Returns are accurate in all
material respects; all Taxes relating to the Business or ISP Israel due and
payable have been fully paid or adequate reserves therefor have been established
in accordance with GAAP, consistently applied in accordance with the Sellers'
past practices. Adequate provision has been made on the Interim Balance Sheet
for the payment of all accrued and unpaid Taxes of ISP Israel as of the date of
the Interim Balance Sheet. Since September 30, 2001, all Taxes incurred by ISP
Israel have been incurred in the ordinary course of business and, to the extent
payable, have been paid or adequate reserves therefor have been established in
accordance with GAAP. The Sellers have not received from any taxing authority
any notice of an asserted deficiency or audit with respect to such Taxes or Tax
Returns which has not been settled. There are no filed or, to the Sellers'
knowledge, other Tax Liens on any of the properties or other assets of ISP
Israel or the Assets, except for Permitted Liens. ISP Israel is not a member of
a consolidated group for income tax purposes and is not a party to or otherwise
bound by any tax sharing, tax allocation or tax indemnification or similar
agreement. ISP Israel has an "Approved Enterprise" partial tax-exempt status
pursuant to the Investment Center, Ministry of Industry and Trade of the State
of Israel (the "Israel Investment Center") and, to the best knowledge of the
Sellers, all actions necessary to preserve such partial tax-exempt status have
been taken.
3.09. CONTRACTS. (a) Except for the Assumed Contracts or as set forth
on Schedule 3.09(a) hereto, as of December 28, 2001, no Seller in connection
with its operation of the U.S. Business is, nor, since June 6, 2001, has ISP
Israel become, a party to or bound by any agreement, contract, lease (except for
the lease of office space at 19 Hamesila Street, Industrial Park, Nesher,
Israel, dated July 25, 2001) or license that (i) has an aggregate stated future
23
liability to any party thereto in excess of $100,000 and is not terminable by
notice of not more than 45 days for a cost of less than $20,000 or (ii) is
otherwise material to the operation of the Business (it being specifically
acknowledged that the Real Property Leases are material to the operation of the
Business).
(b) Schedule 3.09(b) hereto sets forth a list of all of the Assumed
Contracts (including the Leases and Real Property Leases that are Assumed
Contracts) as of December 28, 2001. Except as set forth in Schedule 3.09(b),
each of the Assumed Contracts (including the Leases and Real Property Leases)
that is material to the Business, and the contracts of ISP Israel entered into
after June 6, 2001 required to be listed on Schedule 3.09(a) hereto (the "Israel
Contracts"), is legal, valid, binding and in full force and effect, enforceable
by the Sellers party thereto or ISP Israel, as the case may be, in accordance
with its terms (subject to the Bankruptcy and Equity Exception). No non-Seller
Entity party to any Assumed Contract that is material to the Business or ISP
Israel Contract is, to the best knowledge of the Sellers, in default thereunder
and, to the knowledge of the Sellers, no event, occurrence, condition or act
exists that, with the giving of notice or the lapse of time or both, would give
rise to such material default or right of cancellation by a Seller or ISP Israel
thereunder. Except as set forth on Schedule 3.09(b) hereto, no Seller is in
default under, or in breach of, any Assumed Contract that is material to the
Business and, since June 6, 2001, ISP Israel is not in material default under,
or in breach of, any ISP Israel Contract and, to the best knowledge of the
Sellers, no event, occurrence, condition or act exists that, with the giving of
notice or the lapse of time or both, would give rise to a default by such Seller
or, since June 6, 2001, a material default by ISP Israel thereunder. Provided
that the Sellers obtain all necessary contractual consents as set forth on
Schedule 3.09(b) hereto, the consummation of the transactions contemplated
hereby will not cause, or result in, a default under, termination of, or
acceleration of any material rights (including change of control payments) under
any Assumed Contract that is material to the Business or any ISP Israel Contract
entered into after June 6, 2001. Except as set forth on Schedule 3.09(b) hereto,
the Sellers have delivered to Buyer true and correct copies of each of the
written Assumed Contracts and Israel Contracts in effect as of December 28,
2001.
3.10 COMPLIANCE WITH LAWS, PERMITS, ETC. Other than as set forth on
Schedule 3.10 hereto, the Sellers, all of the products manufactured, distributed
and/or marketed by the Sellers in respect of the U.S. Business (each, a
"Pharmaceutical Product") or, since June 6, 2001, by ISP Israel (each, an
"Israel Pharmaceutical Product") are and have been (in the case of Israel
Pharmaceutical Products, since June 6, 2001) in compliance in all material
respects with all applicable foreign, Federal, state and local statutes,
judgments, decrees, laws, ordinances, rules, regulations, injunctions and orders
of any Governmental Entity, including, without limitation, all applicable
requirements of the current good manufacturing practice regulations set forth in
21 C.F.R. Parts 210 and 211 (the "Current Good Manufacturing Practice
Regulations"), relating to all operations of ISP Israel since June 6, 2001 and
relating to all operations of the U.S. Business by the Sellers. Schedule 3.10
hereto lists all material Permits held by the Sellers that are required for the
operation of the U.S. Business as of the date of this Agreement. Each of such
Permits set forth on Schedule 3.10 hereto is (except as set forth on such
Schedule) freely transferable to Buyer and none of the transactions contemplated
24
hereby will cause, or result in, a termination, limitation or suspension of any
such Permit. Except as set forth on Schedule 3.10 hereto, no written
communication has been received by the Sellers or, since June 6, 2001, by ISP
Israel, and no investigation, review or regulatory action (including, but not
limited to, seizure, injunction, civil penalty or criminal action) is or, in
respect of any Pharmaceutical Product, at any time in the last five (5) years
has been, pending or, to the best knowledge of the Sellers, threatened by any
Governmental Entity with respect to (i) any alleged or actual violation by the
Sellers, by any Pharmaceutical Product or, since June 6, 2001, by ISP Israel or
by any Israel Pharmaceutical Product of any Permit, law, ordinance, regulation,
requirement or order of any Governmental Entity relating to the operations
conducted by ISP Israel since June 6, 2001 or by the Sellers in connection with
the U.S. Business or (ii) any alleged or actual failure to have all Permits
required in connection with the operations conducted by ISP Israel since June 6,
2001, or by the Sellers in connection with the U.S. Business, except in the case
of clauses (i) and (ii) for violations or failures which would not reasonably be
expected to be material to the Business. The failure to obtain (x) a certificate
of occupancy for the Modular Office listed as Item II.A.2 on Schedule 3.10
hereto and the PED Modular Offices listed as Item II.A.4 on Schedule 3.10 hereto
and/or (y) the permit as to the Life Safety Fire Alarm System listed as Item
II.A.6 on Schedule 3.10 hereto will not materially interfere with the operations
of the Business, taken as a whole, as currently conducted. No representation is
made in this Section 3.10 with respect to Environmental Laws or Permits, which
matters are covered by Section 3.12 hereof. In addition, the Sellers make no
representations or warranties with respect to any Pharmaceutical Products they
toll manufacture for other Entities (other than that the Sellers have been in
substantial compliance with the Current Good Manufacturing Practice Regulations
with respect to such Pharmaceutical Products to the extent applicable), nor with
respect to any use made of any Pharmaceutical Product by any Entity for whom
Sellers toll manufacture Pharmaceutical Products or by any Entity to whom such
products are sold, marketed or distributed by Sellers' customers.
3.11. BROKERS. In connection with the transactions contemplated by
this Agreement and by the Other Agreements, neither the Sellers, ISP Israel nor
any of their Affiliates are a party to any agreement, arrangement or
understanding with any Entity which will result in the obligation of Buyer or
any of its Affiliates to pay any finders fee, brokerage commission or similar
payment.
3.12. ENVIRONMENTAL MATTERS. (a) Except as described in Schedule
3.12(a) hereto, the current operations of the Sellers in connection with the
U.S. Business are, and the operations of ISP Israel since June 6, 2001 have
been, in compliance in all material respects with all applicable Environmental
Laws and all Permits issued thereunder; and the Sellers, within the last three
(3) years, have not received any notice relating to the Facility or the Business
alleging or investigating any material pending and unresolved violation of any
Environmental Law.
(b) Except as authorized by any valid Permit issued pursuant to an
Environmental Law, there are no Hazardous Substances disposed of or released by
the Sellers or, to the Sellers' best knowledge, by any other Entity prior to the
Closing on, to or beneath the Facility, or directly migrating from the Facility,
25
in quantities or concentrations that could reasonably be expected to give rise
to any material obligations, responsibilities or liabilities in respect of the
Business under any Environmental Law.
(c) Sellers have not disposed of or released Hazardous Substances in
connection with the Business at any Off-site Location nor, to the Sellers' best
knowledge, has any other Entity disposed of or released Hazardous Substances at
or beneath any Off-Site Location, or directly migrating from any Off-Site
Location or any other location, in quantities or concentrations that could
reasonably be expected to give rise to any material obligations,
responsibilities or liabilities in respect of the Business under any
Environmental Law.
(d) Except as authorized by any valid Permit issued pursuant to an
Environmental Law, since June 6, 2001 ISP Israel has not disposed of or released
any Hazardous Substances from any of the facilities it owns or operates (the
"Israel Facility") or in direct migration from such Israel Facility, or at any
other location, in quantities or concentrations that could reasonably be
expected to give rise to any material obligations, responsibilities or
liabilities in respect of the Business under any Environmental Law.
(e) Neither the Sellers within the last three (3) years nor ISP Israel
since June 6, 2001 has received any notice or order from any Governmental or
other Entity advising it that any of the Sellers in connection with the Business
or ISP Israel is responsible for or a potentially responsible party for
remediation or paying for the cost of investigation or remediation of any
Hazardous Substance at any Off-site Location, and neither the Sellers nor ISP
Israel has entered into any agreement pertaining thereto.
(f) Neither the Facility nor the Israel Facility contains any
underground storage tanks, underground injection wells, septic tanks in which
process water or wastewater have been disposed, or equipment using PCBs.
(g) The Sellers have delivered to Buyer true and correct copies of all
material environmental studies, analyses or reports in the possession of the
Sellers or ISP Israel relating to the Facility or the Israel Facility and the
Business. Schedule 3.12(g) hereto lists all material environmental Permits held
by Sellers that are required for the operation of the Business as of the date of
this Agreement.
3.13. EMPLOYEES AND EMPLOYEE BENEFIT PLANS AND ARRANGEMENTS. (a) Set
forth on Schedule 3.13(a) hereto is a true and complete list of all employees of
the Business as of the date hereof and their respective positions, date of hire
and compensation.
(b) Set forth on Schedule 3.13(b) hereto is a list of (i) each
employment agreement or contract with, individually or collectively, employees
of the Business (collectively, the "Employment Agreements"), and (ii) the name
of each employee of the Business that the Sellers or ISP Israel since June 6,
2001 has entered into an agreement or contract with as of the date hereof
providing for retention payments (collectively, the "Retention Agreements"). No
unions or other collective bargaining representatives have been certified or
26
recognized by the Business as representing any of its employees and none of the
employees of any of the Sellers in respect of the Business participates or
during the past six years has participated in and Sellers and their Affiliates
have not contributed to (or been required to contribute to) or incurred any
liability with respect to any "multiemployer" plan (within the meaning of
Section 3(37) of ERISA).
(c) Schedule 3.13(c) hereto lists each pension, profit-sharing, bonus,
life, health, incentive, welfare, severance, stock option, stock award or
phantom stock plan, retiree medical or other employee benefit plan, program or
arrangement maintained, sponsored or contributed to by the Sellers or any of
their Affiliates (or to which any of them have an obligation to maintain,
sponsor or contribute) which benefit any employee or consultant or former
employee or consultant of the Business (such plans and related trusts,
insurance, and annuity contracts, funding media, and related agreements and
arrangements hereinafter referred to, collectively, as the "Seller Benefit
Plans"). Schedule 3.13(c) hereto also shall indicate which Seller Benefit Plans
are sponsored or maintained by ISP Israel ("Israel Benefit Plans"). Any
reference herein to the term "Sellers and their Affiliates" shall be deemed to
refer also to any entity which is under common control or affiliated with
Sellers or any of their Affiliates within the meaning of Section 4001 of ERISA,
and the rules and regulations promulgated thereunder and/or Sections 414(b),
(c), (m) or (o) of the Code and the rules and regulations promulgated
thereunder. The Sellers have furnished to Buyer copies of all material documents
relating to the Seller Benefit Plans, including, without limitation, each plan
document, trust or funding agreement, employee summary, any annual reports
(including all schedules or accountant's opinions), actuarial reports and
financial statements with respect to such Seller Benefit Plans for all periods
in the last two years.
(d) All Seller Benefit Plans in which the employees of the Business
participate comply in all material respects with all applicable laws and
regulations and with the terms thereof. Each fiduciary as to each Seller Benefit
Plan has complied in all respects with all applicable laws in respect of each
such plan.
(e) All required employer contributions, premiums and Taxes under or
with respect to the Seller Benefit Plans due to be made or paid as of the date
hereof have been made, and the respective fund or funds established under the
Seller Benefit Plans have been funded in accordance with all applicable laws.
(f) Other than claims in the ordinary course for benefits with respect
to the Seller Benefit Plans, there are no material actions, suits, grievances or
material claims pending with respect to any Seller Benefit Plan or, to the best
knowledge of the Sellers, any circumstances which might reasonably be expected
to give rise to any such action, suit, or claims.
(g) The employees of the Business do not participate in any plan
subject to Title IV of ERISA and no liability under such Title has been incurred
by the Sellers or any of their Affiliates that has not been satisfied in full.
None of the Sellers nor any of their Affiliates has withdrawn from any "single
employer plan" as a "substantial employer" so as to become subject to the
provisions of Section 4063 of ERISA, or ceased operations at any facility so as
27
to become subject to the provisions of Section 4062(e) of ERISA.
(h) No prohibited or related party transaction has occurred since June
6, 2001 with respect to any of the Israel Benefit Plan which could subject any
Israel Benefit Plan or any related trust, the Sellers or their Affiliates, Buyer
or any director or employee of any of them to any tax, penalty or liability
imposed under Israeli law either directly or indirectly, and whether by way of
indemnity or otherwise.
(i) Except as set forth on Schedule 3.13(i) hereto, the execution and
delivery of this Agreement and performance of the transactions contemplated by
this Agreement will not (either alone or upon the occurrence of any additional
or subsequent event) constitute an event under any Seller Benefit Plan or
individual agreement that will or may result in any payment or obligation
(whether severance pay or otherwise) to any current or former employee,
consultant, agent or director of ISP Israel.
(j) With respect to all Israel Benefit Plans which are funded, or are
required by applicable law to be funded, the present value of all accrued
benefits (vested and non-vested) of each such Israel Benefit Plan, determined on
the basis of commercially reasonable actuarial assumptions, does not exceed the
fair market value of the assets of each such Israel Benefit Plan.
3.14. THE FACILITY; REAL PROPERTY.
(a) Schedule 3.14 hereto sets forth a true, correct and complete list
and summary description of all real property owned (beneficially or of record)
by ISP Chemicals in connection with the conduct of the U.S. Business (the "Owned
Real Property"), including the Facility, or leased by ISP Israel in connection
with the conduct of the Business (the "Leased Real Property" and collectively
with the Owned Real Property, the "Real Property"). Other than the Real
Property, the Sellers do not own, lease or use any other real property in
connection with the Business other than real property used in providing general
administrative services in respect thereof. ISP Chemicals has (and at Closing
will have) good, indefeasible, marketable and insurable fee simple title to,
and, subject to tenancies under leases that are Permitted Liens, is (and will be
at the Closing) in exclusive possession of, the lots and parcels of land listed
on Schedule 3.14 hereto as the Owned Real Property, together with the buildings,
structures and other improvements erected thereon, with all easements, rights
and other privileges appurtenant thereto, free and clear of all Liens (except
for Permitted Liens), ground rents, leases, tenancies (except pursuant to leases
that are Permitted Liens), licenses or other rights of occupancy or use for all
or any portion of the Owned Real Property, options, covenants, conditions,
restrictions, rights of way, easements (onto or by improvements on such Real
Property) and any other matters affecting title, other than any of the foregoing
that are Permitted Liens, including, without limitation, those specifically
reflected in the Survey (as defined in Section 5.12 hereof).
(b) Schedule 3.14 hereto contains a list of all real property leases
pursuant to which the Sellers and/or ISP Israel lease any Leased Real Property
28
(the "Real Property Leases"). To the Sellers' best knowledge, the Real Property
Leases, other than the oral agreement for two (2) laboratory rooms at Techion
University, are in full force and effect.
(c) All buildings or structures comprising the improvements with
respect to the Real Property (the "Improvements") are in adequate condition and
repair, reasonable wear and tear excepted, and are sufficient for the operation
of the Business on the applicable Real Property.
(d) None of the Sellers has received any written notice in the last
three (3) years from any Governmental Entity or board of fire underwriters (or
other body exercising similar functions) that the continued maintenance,
operation or use of any and all buildings (for the current or any contemplated
purpose), structures or other improvements comprising the Improvements violates
any zoning, building, or similar law, ordinance, code, order or regulation (in
each case) other than in respect of Environmental Claims, which are covered by
Section 3.12 hereof.
(e) To the Sellers' knowledge, no portion of the Owned Real Property
is subject to or is affected by any special assessment, whether or not presently
a Lien thereon, and no such assessment has been made or is pending.
(f) The Sellers have received no written notice of any material
default or breach which remains outstanding as of the date hereof under any of
the covenants, conditions, restrictions, rights of way or easements, if any,
affecting all or any portion of the Real Property.
(g) The Sellers have not received any written notice of a planned or
threatened taking, condemnation or expropriation proceeding for any public or
quasi-public purpose or use by a governmental or quasi-governmental authority or
by any right of eminent domain, of all or any part of the Real Property.
(h) All public utilities (including water, gas, electric, storm and
sanitary sewage and telephone utilities) required to operate the Business as
currently conducted at the Owned Real Property are available to such Real
Property. The Sellers have not received any written notice of any proposed,
planned or actual curtailment of service of any utility supplied to any portion
of the Real Property.
(i) The Sellers have not received any written notice in the last three
(3) years from any Governmental Entity which explicitly threatens to terminate
the current access from the Real Property to any presently existing highways and
roads adjoining or situated on the Real Property, which has not been withdrawn
or remains uncured.
(j) The Sellers have provided Buyer with true, correct and current
copies of: (i) the most recent title insurance policies, surveys, and as-built
plans and specifications, and all certificates of occupancy, other certificates,
permits, licenses and approvals, and other documents and instruments pertaining
to the Owned Real Property that are in the possession or control of the Sellers
29
and (ii) all of the Real Property Leases, including, without limitation, all
amendments, extensions and modifications thereto, and all subordination,
non-disturbance and attornment agreements, if any, relating to any of the Real
Property Leases.
(k) The Sellers have not received any written notice in the last three
(3) years that the Real Property and the use thereof by the Sellers in
connection with the conduct of the Business does not comply with all material
private covenants, easements and restrictions of record affecting such Real
Property, other than any such non-compliance which has been cured as of the date
hereof.
3.15. ISP ISRAEL ASSET PURCHASE AGREEMENT. Except as set forth on
Schedule 3.15 hereto, to the best knowledge of the Sellers, no representation or
warranty made by FineTech Ltd. or Dr. Arie Gutman in that certain Asset Purchase
Agreement, dated June 6, 2001, by and among FineTech Ltd., ISP Israel, ISP Opco
Holdings Inc. and Dr. Arie Gutman (the "FineTech Agreement") was untrue in any
material respect when made and/or at the date of the closing of such
transaction. Neither ISP Israel nor ISP Opco Holdings, Inc. has made any claim,
or knows of any reasonable basis for a claim, for a breach of any
representation, warranty or covenant by FineTech Ltd. or Dr. Arie Gutman
contained in such Asset Purchase Agreement; provided, that the foregoing
representations are made without prejudice to, or waiver of any rights of any
Seller or any Affiliate of the Sellers in respect of the FineTech Agreement or
that certain Indemnification Agreement, dated June 6, 2001, among FineTech Ltd.,
ISP Israel, ISP Opco Holdings and Dr. Arie Gutman (the "Indemnification
Agreement"); provided, further, that from and after the Closing, the Sellers
have hereby assigned all rights to any claim in respect of the FineTech
Agreement or the Indemnification Agreement to Buyer (other than as provided in
the Agreement, dated as of December 21, 2001, by and among ISP Opco Holdings
Inc., ISP Finetech Ltd., Finetech Ltd. and Arie Gutman).
3.16. PRODUCTS. Schedule 1.01(e) hereto sets forth all of the products
currently or, since January 1994, manufactured or sold by the Sellers at the
Facility in respect of the Business.
3.17. CERTAIN BUSINESS MATTERS. Except as set forth in Schedule
3.17(a) hereto, in respect of the Business, (i) none of the Sellers nor, since
June 6, 2001, ISP Israel has any sole-source supplier of material goods (other
than International Specialty Products Inc. or its Affiliates, the material goods
of which International Specialty Products Inc. provides are set forth on
Schedule 3.17(b) hereto) or services (other than utilities and employees of
International Specialty Products Inc. or its Affiliates) with respect to which
practical alternative sources are not available on comparable terms and
conditions, (ii) none of the Sellers nor, since June 6, 2001, has ISP Israel
received any written indication that any material supplier will terminate,
materially increase the rate of or materially change the terms with respect to
supplying materials, products or services to the Sellers or ISP Israel (whether
as a result of the consummation of the transactions contemplated hereby or
otherwise), (iii) there are not pending and, to the best knowledge of the
Sellers, there are not threatened, any labor negotiations involving or affecting
any of the Sellers or ISP Israel and, to the knowledge of Sellers, no organizing
activities involving union representation exist in respect of any of its
30
employees, (iv) except as set forth in the Assumed Contracts, none of the
Sellers nor, since June 6, 2001, ISP Israel gives nor is bound by any express
warranties relating to its products and there has been no assertion of any
breaches of warranty or product liability that has had or would reasonably be
expected to have a Material Adverse Effect, (v) to the best knowledge of the
Sellers, there are no material workmanship or service problems, or any material
claims made against any of the Sellers or ISP Israel with respect to any product
sold or services provided by the Sellers or, since June 6, 2001, by ISP Israel
and (vi) none of the Sellers is nor, since June 6, 2001, has ISP Israel become,
a party to or bound by any material agreement, including any of the material
Assumed Contracts or material Israel Contracts, or any material arrangements in
which any of its officers, directors or stockholders, or any Affiliate of any
such person, has, or had when made, a direct or indirect material interest.
3.18. REGULATORY COMPLIANCE.
(a) No Pharmaceutical Product has been, nor to the Sellers' best
knowledge is there any reasonable basis for any Pharmaceutical Product in any
material amount to be, recalled, withdrawn, suspended or discontinued by any of
the Sellers within the last five (5) years or, since June 6, 2001, by ISP Israel
as a result of any action by a Governmental Entity (whether voluntarily or
otherwise). No proceedings in or outside the United States seeking the recall,
withdrawal, suspension or seizure of any Pharmaceutical Product or, since June
6, 2001, any Israel Pharmaceutical Product are pending against any of the
Sellers or ISP Israel nor have any such proceedings with respect to any
Pharmaceutical Product been pending at any time during the last five years.
(b) For Pharmaceutical Products that the Sellers are currently
manufacturing, each of the Sellers' Drug Master Files ("DMFs"), as defined at 21
C.F.R. ss.314.420, in the possession of the FDA and each similar file in the
possession of any Governmental Entity is complete, accurate, and up to date in
all material respects, and the subject of each such DMF and similar file can be
effectively, efficiently, and legally manufactured or utilized in material
compliance with the pertinent DMF or similar file. Each Pharmaceutical Product
and, since June 6, 2001, each Israel Pharmaceutical Product manufactured and
tested for use in a product whose regulatory submission references a DMF or
similar file is being manufactured and tested in material compliance with the
current version of the applicable file.
(c) None of the Sellers, within the last two (2) years, or ISP Israel,
since June 6, 2001, has received any written notice that any Governmental Entity
has commenced or, to the best knowledge of the Sellers, threatened to initiate
(i) any action to withdraw its approval, registration or licensure of any
finished pharmaceutical because it contains a Pharmaceutical Product or Israel
Pharmaceutical Product or (ii) any action to seize or enjoin production of any
Pharmaceutical Product or Israel Pharmaceutical Product.
31
(d) To the Sellers' knowledge (after reasonable inquiry of senior
management of the Sellers) (i) no officer, employee or agent of any of the
Sellers or, since June 6, 2001, ISP Israel has made an untrue statement of a
material fact or a fraudulent statement to any Governmental Entity, failed to
disclose a material fact required to be disclosed to any Governmental Entity or
committed an act, made a statement or failed to make a statement that, at the
time such act, statement or omission was made, would reasonably be expected to
provide a basis for any Governmental Entity to invoke with respect to any of the
Sellers, the FDA's policy regarding "Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities," as set forth in 56 Fed. Reg. 46191 (September
10, 1991) or any similar policy of any Governmental Entity applicable to the
Business and (ii) no officer, employee or agent of any of the Sellers been
convicted of any crime or engaged in any conduct for which debarment is mandated
by 21 U.S.C. Section 335a(a) or any similar law or permitted by 21 U.S.C.
Section 335a(b) or any similar law of any Governmental Entity applicable to the
Business.
3.19. CUSTOMERS. Except as set forth on Schedule 3.19 hereto, none of
the Sellers or any of their Affiliates (including, since June 6, 2001, ISP
Israel) has received notice that any material customer of the Business intends
to terminate, suspend or materially change the terms of any of their respective
agreements or arrangements with any of the Sellers in respect of the Business or
ISP Israel as a result of the transactions contemplated hereby or otherwise.
Neither the Sellers nor ISP Israel, has any agreement or arrangement with any of
their customers with respect to guaranteed or fixed pricing, order cancellation,
price reductions, discounts or rights to return or reject any products sold by
any of the Sellers or ISP Israel, in each case, except as expressly provided in
any applicable Assumed Contracts or contracts with customers of ISP Israel.
3.20. EXTENT OF THE SELLERS REPRESENTATIONS AND WARRANTIES. The
foregoing representations and warranties of the Sellers in this Article III are
made only to the extent that they affect, or are in respect of, the Business,
the Assets or the Facility. Any reference to "material" in this Article III
shall refer to being material to the Business, taken as a whole.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Sellers, as of the date
hereof, as follows:
4.01. ORGANIZATION AND DUE AUTHORIZATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey. Buyer has full corporate power and authority to execute and deliver
this Agreement and the Other Agreements to which it is a party and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Other Agreements to which Buyer is a party and the
performance and consummation of the transactions contemplated hereby and thereby
by Buyer have been duly authorized by all necessary corporate action on the part
of Buyer. This Agreement and the Other Agreements to which Buyer is a party have
32
been duly executed and delivered by Buyer and, subject to the due authorization,
execution and delivery of such agreements by the other parties thereto, this
Agreement and the Other Agreements constitute the valid and binding obligations
of Buyer, enforceable against Buyer in accordance with their terms except as
enforcement may be affected by the Bankruptcy and Equity Exception.
4.02. NO VIOLATION; CONSENTS AND APPROVALS. Neither the execution and
delivery by Buyer of this Agreement or the Other Agreements to which it is a
party nor the consummation of the transactions contemplated hereby or thereby
nor compliance by Buyer with any of the provisions hereof or thereof (a)
conflict with or result in a violation of the certificate of incorporation or
bylaws of Buyer or (b) except as set forth in Schedule 4.02 hereto, require (i)
any authorization, consent, order or approval of any Governmental Entity under
any statute, law, judgment, order, injunction or decree applicable to Buyer or
(ii) consent under, or violate, conflict with, or result in a breach of any of
the terms of, or constitute a default under, any note, bond, mortgage,
indenture, deed of trust, material contract, license, material agreement or
lease to which Buyer is a party or by which Buyer may be bound or to which any
of Buyer's assets may be subject or affected in any material respect.
4.03. INVESTMENT INTENT. The Shares to be acquired by Buyer pursuant
to this Agreement are being acquired by Buyer for investment and not with a view
to the distribution thereof in contravention of any applicable securities law,
and Buyer will not transfer or otherwise dispose of any of the Shares, or any
interest therein, in such manner as to cause the Sellers or any of their
Affiliates to be in violation of any applicable securities law.
4.04. LITIGATION. There is no claim, action, lawsuit or proceeding
pending or, to the best knowledge of Buyer, threatened against Buyer at law, in
equity or otherwise, in, before, or by any Governmental Entity relating to the
transactions contemplated by this Agreement.
4.05. NO BROKERS. Except pursuant to Buyer's agreement with Bear
Stearns & Co., Inc., whose fees and expenses shall be paid solely by Buyer,
Buyer is not party to any agreement, arrangement or understanding with any
Entity which will result in the obligation of Buyer, the Sellers or any
Affiliate thereof to pay any finders fee, brokerage commission or similar
payment in connection with the transactions contemplated by this Agreement and
by the Other Agreements.
4.06. AVAILABILITY OF FUNDS. At the Closing, Buyer will have available
to it sufficient cash to enable it to pay the Purchase Price and the
Non-Competition Payment and otherwise consummate the transactions contemplated
by this Agreement; provided, however, that the fact that Buyer has available
such sufficient cash shall not, in and of itself, constitute the satisfaction or
waiver of the conditions to its obligation to close set forth in Sections 6.04,
6.05 and 6.07 hereof. Attached hereto as Schedule 4.06 is a true and complete
33
copy of all commitments and agreements relating to any credit facility or credit
agreement entered into by Buyer to, in part, finance the transactions
contemplated hereby, including, without limitation, any Bridge Loan (the "Credit
Facility").
ARTICLE V
COVENANTS OF THE PARTIES
5.01. CONDUCT OF THE BUSINESS; ETC. (a) From and after the date hereof
and until the earlier of the Closing and the date, if any, on which this
Agreement is terminated pursuant to Section 8.01 hereof (the "Termination
Date"), and except (1) with the prior written consent of Buyer and (2) as may be
expressly contemplated or permitted by this Agreement, the Sellers jointly agree
that they:
(i) shall, and shall cause ISP Israel, to, conduct the Business
in the ordinary and usual course consistent with past practice;
(ii) shall use reasonable efforts to preserve intact the
Business and the Business' relationships with those persons having material
business dealings with the Business (other than directly in connection with the
Excluded Assets);
(iii) shall not in connection with the Business (other than
directly in connection with the Excluded Assets), nor shall the Sellers permit
ISP Israel to, enter into any new material agreement other than in the ordinary
course of business, or modify or amend in any material respect or terminate, any
of its existing material contracts other than in the ordinary course of
business, or enter into any material contract or other material agreement with
respect to any portion of the Real Property that will survive the Closing or
otherwise materially affect the use, operation or enjoyment of the Real Property
after the Closing or take any of the actions referred to in Section 3.04 hereof
(other than clauses (i) and (viii) thereof);
(iv) shall not permit ISP Israel to (A) alter or adopt any
amendment to its articles of association or other organizational documents; (B)
adopt a plan of liquidation or dissolution; (C) enter into any merger,
consolidation or similar business combination with or into any Entity or any
agreement therefor; (D) purchase or redeem any shares of its capital stock; (E)
pay any dividends on or make any distribution with respect to, its outstanding
shares of capital stock; (F) issue or authorize the issuance of, or agree to
issue or sell, any shares of its capital stock of any class (whether through the
issuance or granting of options, warrants, commitments, convertible securities,
subscriptions, rights to purchase or otherwise); (G) incur or assume any
indebtedness for borrowed money or issue any securities; or (H) make or commit
to make (x) any investment in, or purchase the equity securities or, except in
the ordinary course of business, a material portion of the assets of, any
Entity, or (y) capital expenditures in excess of $250,000 in the aggregate per
calendar quarter;
(v) shall not, and shall not permit ISP Israel, to sell,
transfer or otherwise dispose of or subject to any Lien (other than for
Permitted Liens) the Shares or the Facility, or any of the Equipment, the
34
Inventory, the Other Assets or any of the properties or assets of ISP Israel
which are material to the Business, other than in the ordinary course of
business;
(vi) shall not, and shall not permit ISP Israel to, commence any
lawsuit or litigation relating to the Business, other than in the ordinary
course of business or directly in connection with the Excluded Assets;
(vii) shall use commercially reasonable best efforts to maintain
and repair, or cause to be maintained and repaired, all Real Property (including
all Improvements thereon) and Equipment, in each instance in adequate condition
and repair as reasonably necessary in connection with the operation of the
Business, reasonable wear and tear excepted, and shall promptly notify Buyer of
any material casualty or damage to any portion of the Real Property or any
material portion of the Equipment or the Inventory;
(viii) shall not effect any sales of inventory in any manner
inconsistent with the intent of the Customer Letter; and
(ix) shall not take any action which would cause any of the
conditions set forth in Article VI or Article VII of this Agreement not to be
satisfied.
(b) Buyer agrees that, from and after the date hereof and until the
earlier of the Closing and the Termination Date, and except as may be agreed in
writing by the Sellers, Buyer shall not, and shall not permit any of its
Affiliates to, take any action or agree, in writing or otherwise, to take any
action which would cause any of the conditions set forth in Article VI or
Article VII of this Agreement not to be satisfied.
5.02. ACCESS.
(a) PRE-CLOSING ACCESS. From and after the date hereof and until the
earlier of the Closing and the Termination Date, the Sellers shall, and shall
cause ISP Israel to, provide Buyer and its counsel, accountants and other
representatives reasonable access, to the extent legally permissible, during
normal business hours and following reasonable prior notice, to the Facility and
the customers and suppliers, properties, Books and Records of ISP Israel and of
the Sellers relating to the Business. All information disclosed to Buyer in
connection with the transactions contemplated hereby shall be subject to the
provisions of the Confidentiality Agreement previously executed by Buyer and an
Affiliate of the Sellers (the "Confidentiality Agreement").
(b) POST-CLOSING ACCESS. Following the Closing, Buyer shall maintain
the contracts, agreements, documents and Books and Records of the Business for a
period of six years following the Closing Date. Following the Closing and until
the sixth anniversary of the Closing Date, Buyer shall, subject to Section 5.13
hereof, provide the Sellers and their employees, counsel, accountants and other
representatives reasonable access, during normal business hours and following
reasonable prior notice, to the contracts, agreements, documents and books and
records of Buyer and its Affiliates relating to the Business as conducted by the
Sellers and ISP Israel immediately prior to the Closing for any reasonable
35
business purpose (including, without limitation, preparing tax returns,
administering benefit plans and defending or pursuing claims), and Buyer shall
cooperate and cause its Affiliates to cooperate and permit the Sellers and their
representatives to examine and copy, at the Sellers' expense, such contracts,
agreements, documents and books and records. In addition, Buyer agrees to
provide the reasonable assistance (including for purposes of prosecuting or
defending any claim) of those of its employees who may have knowledge of the
Business as conducted prior to the Closing.
5.03. REASONABLE BEST EFFORTS; FURTHER ASSURANCES. Subject to the
terms and conditions of this Agreement and applicable law, each of the parties
shall act in good faith and use reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate the transactions contemplated by this Agreement as
soon as practicable. Without limiting the foregoing, the parties shall, and
shall cause their respective Affiliates to, (i) use reasonable best efforts to
obtain all consents (including, without limitation, the consent of Arie Gutman
to the assignment of the FineTech Agreement and the Indemnification Agreement),
approvals, waivers, licenses, Permits, authorizations, registrations,
qualifications or other permissions or actions by, and give all necessary
notices to, and make all filings with and applications and submissions to, any
Governmental Entity or other Entity required for the consummation of the
transactions contemplated by this Agreement as promptly as reasonably
practicable (including, without limitation, providing an undertaking to the
Office of the Chief Scientist, Ministry of Industry and Trade of the State of
Israel); (ii) provide all such information concerning such party and its
officers, directors, employees, partners and Affiliates as may be necessary or
reasonably requested in connection with the foregoing; (iii) take any and all
reasonable steps necessary to avoid the entry of, or have vacated or terminated,
any injunction, decree, order, or judgment that would restrain, prevent, or
delay the consummation of the transactions contemplated by this Agreement,
including but not limited to defending through litigation on the merits any
claim asserted in any court by any person; and (iv) take any and all reasonable
steps necessary to avoid or eliminate every impediment under any antitrust,
competition, or trade regulation law that is asserted by any Governmental Entity
with respect to the consummation of the transactions contemplated by this
Agreement so as to enable the consummation of the transactions contemplated by
this Agreement to occur as expeditiously as possible. Prior to making any
application to or filing with a Governmental Entity in connection with this
Agreement, each party shall provide the other party with drafts thereof and
afford the other party a reasonable opportunity to comment on such drafts. Buyer
and the Sellers shall each keep each other reasonably apprised of the status of
material matters relating to the completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Buyer or the Sellers, as the case may be, or by any
of their respective Affiliates, from any third party and/or any Governmental
Entity with respect to the transactions contemplated by this Agreement.
5.04. NON-COMPETITION. (a) In consideration of Buyer's payment at the
Closing of the Non-Competition Payment and other valuable consideration, ISP
Investments, ISP Technologies, ISP Chemicals and their respective parent
entities and subsidiaries and other Affiliates shall not, directly or
indirectly, for a period commencing on the Closing Date and ending on the fifth
36
(5th) anniversary of the Closing Date, by ownership of securities or otherwise
(except as a holder of less than five (5%) percent of any class of equity
securities of any other entity, which class of securities shall have been
registered under Section 12 of the Securities Exchange Act of 1934), manage,
control, engage or actively participate in any business or activity that is
competitive with the Business; provided, however, that, notwithstanding the
foregoing, the Sellers and their respective parent entities and subsidiaries and
other Affiliates shall not be prohibited from:
(i) engaging in any of such activities as expressly contemplated
under any of the Other Agreements or any other written agreement with Buyer or
any of its Affiliates;
(ii) acquiring, owning and operating any business after the
Closing Date that includes operations the conduct of which would otherwise
violate this Section 5.04(a), if Buyer consents in writing thereto (such consent
not to be unreasonably withheld);
(iii) acquiring, owning and operating any business (a "Target")
after the Closing Date that includes operations the conduct of which would
otherwise violate this Section 5.04(a) (the "Subject Operations"), if (A)(1)
such Subject Operations accounted (as of the end of, and for, the last fiscal
year of the Target immediately preceding the date of its acquisition by a Seller
or its Affiliate) for less than twenty five (25%) percent of the aggregate gross
revenues of the Target and (2) (unless Buyer consents in writing to such Seller
or its Affiliate not complying with this clause (2), such consent not to be
unreasonably withheld) such Seller or Affiliate uses its commercially reasonable
best efforts to dispose of such Subject Operations as soon as practicable and in
any event within 24 months following the consummation of such acquisition (and,
if such Seller or Affiliate does not dispose of such Subject Operations within
such 24-month period, it shall cause such Subject Operations to be permanently
shut down and discontinued (or otherwise cease to violate this Section 5.04(a))
prior to the 30-month anniversary of the closing of such acquisition); provided,
however, that the Sellers shall use commercially reasonable best efforts to
ensure that any director, officer or key employee of the Sellers that, through
his or her participation in the Business learned confidential information of the
Business that is material to the Business, shall not participate in the Subject
Operations until the earlier of (x) the fifth (5th) anniversary of the Closing
Date and (y) such time as he or she is no longer employed or retained by the
Sellers; and
(iv) engaging in arbitrage investments and similar transactions
in connection with pending, publicly-announced business-combination
transactions.
Notwithstanding the foregoing, the provisions of this Section 5.04(a)
shall not be applicable to the acquiring, acquired or successor Entity, or the
surviving Entity of any merger or consolidation, in the event that any Seller or
any of its respective parent entities or subsidiaries or other Affiliates is
acquired (or all or substantially all of its assets is acquired), directly or
37
indirectly, after the Closing Date by any Entity whose activities or operations
include activities or operations described in the first paragraph of this
Section 5.04(a) (it being understood and agreed that, in the case of a merger or
other business combination, a Seller or its respective parent entities or
subsidiaries or other Affiliates shall be deemed "acquired" in the event that,
following such merger or other business combination, more than fifty (50%)
percent of the outstanding capital stock of the combined entity is owned by a
party or parties other than the shareholders of International Specialty Products
Inc. or any direct or indirect subsidiary of International Specialty Products
Inc., as applicable, immediately prior to such merger or other business
combination); provided, however, that the Sellers shall use commercially
reasonable best efforts to ensure that any director, officer or key employee of
the Sellers that, through his or her participation in the Business learned
confidential information of the Business that is material to the Business, shall
not participate in the operations of such entity that would otherwise violate
this Section 5.04(a) until the earlier of (x) the fifth (5th) anniversary of the
Closing Date and (y) such time as he or she is no longer employed or retained by
the Sellers or its successor Entity.
(b) The Sellers acknowledge that a violation or threatened violation
of any of the provisions of Section 5.04(a) hereof may result in Buyer
sustaining irreparable harm, which result may not be fully redressed by the
payment of damages to Buyer, and, therefore, in addition to any other remedies
which Buyer may have under this Agreement or otherwise, Buyer shall be entitled
to apply to any court of competent jurisdiction, at law or in equity, for an
injunction enjoining or restraining any such violation, including rescission of
any violative transaction. If for any reason any court of competent jurisdiction
shall find any of the provisions of Section 5.04(a) hereof unreasonable in
duration or in geographic scope or otherwise, the prohibitions contained herein
shall be restricted to such time and geographic areas as such court determines
to be reasonable and which reflects the intention of the parties hereto to the
fullest extent permissible. Such restriction shall apply only with respect to
the operation of such provisions in the particular jurisdiction in which such
adjudication is made.
5.05. PUBLIC ANNOUNCEMENTS. Except as reasonably determined to be
required by applicable law or the rules of any applicable stock exchange,
neither Buyer nor the Sellers shall, nor shall they permit any of their
respective Affiliates to, make any public announcement in respect of this
Agreement, the Other Agreements or the transactions contemplated hereby or
thereby without the prior written consent of the other parties hereto (which
consent shall not be unreasonably withheld or delayed).
5.06. CERTAIN TAX MATTERS. (a) The Sellers shall be responsible for
and shall pay, when due, all Taxes relating to the U.S. Business up until and
including the Closing Date, and Buyer shall be responsible for and shall pay all
Taxes relating to the U.S. Business from and after the Closing Date.
(b) The Sellers shall prepare and file, or cause to be prepared and
filed, all Tax Returns of ISP Israel for all Tax periods ending on or prior to
the Closing Date, and pay or cause to be paid, when due, all Taxes owing under
such Tax Returns (except to the extent such Taxes were reserved for on the
Interim Balance Sheet or accrued by ISP Israel in the ordinary course of
business since the date of the Interim Balance Sheet).
(c) Notwithstanding anything to the contrary contained in this
Agreement or provided by applicable law, all sales or real property, stock or
other transfer or similar taxes arising directly from the consummation of the
transactions contemplated hereby shall be paid by the Sellers. The Sellers shall
prepare and file all Tax Returns in connection with all such sales and transfer
taxes. Buyer shall provide the Sellers, upon their request, not less than two
(2) Business Days prior to the Closing Date, in properly completed form, all
exemption certificates with respect to such sales and transfer taxes that may be
executed by Buyer under applicable law, including a multi-jurisdictional sales
and use tax resale certificate with respect to Buyer's purchase of the
Inventory.
(d) From and after the Closing Date, the Sellers and Buyer shall
cooperate with each other and provide each other with such assistance (including
testimony) as reasonably may be requested by either of them in connection with
the preparation of any Tax Return or any audit or other examination by any
taxing authority, any judicial or administrative proceedings relating to any
liability for Taxes under this Agreement, or any claims for refunds. The party
requesting assistance hereunder shall reimburse the party providing assistance
for all reasonable third-party out-of-pocket expenses incurred in providing such
assistance.
5.07. OTHER AGREEMENTS. At the Closing, Buyer and each of the Sellers,
to the extent that it is a party thereto, shall enter into, execute and deliver
each of the Other Agreements.
5.08. DISCHARGE OF RETAINED LIABILITIES. From and after the Closing,
the Sellers shall pay, honor, perform or discharge the Retained Liabilities in
accordance with their respective terms; provided, however, that nothing in this
Section 5.08 shall limit any claims or defenses any Seller may have against any
party other than Buyer or its Affiliates.
5.09. EMPLOYEES. (a) As soon as practicable after the date hereof and
prior to the Closing, Buyer shall provide a written offer of employment (subject
to the Closing) to each employee of the U.S. Business identified on Schedule
5.09(a) hereto, except for those employees identified by Buyer thereon
("Excepted Employees"), even if any such employee is on long-term disability,
approved vacation, short-term sick days, approved leave of absence, short-term
disability leave or otherwise not actively working. Buyer acknowledges and
agrees that its identification of the Excepted Employees to whom it declines to
offer employment will be determined in its sole discretion and that the Sellers
had no part in such determination. Buyer agrees to offer each employee of the
U.S. Business (other than the Excepted Employees) the same or a substantially
similar position as he or she held with the Sellers immediately prior to the
Closing Date and salary or hourly wages, as applicable, in amounts no less
favorable than the salary or hourly wages, as applicable, paid to such employees
immediately prior to the Closing Date at the same geographic location of
employment. Buyer shall, as of the Closing, employ such employees of the U.S.
Business who accept Buyer's offer of employment (the "Affected Employees") at
their respective current geographic locations of employment. With respect to
Affected Employees not actively working as of the Closing Date, Buyer shall
39
employ them upon return to active employment. Nothing in this Agreement shall be
construed to limit Buyer's ability to, at any time after the Closing Date,
terminate, relocate, re-assign or otherwise change the terms and conditions of
employment of any Affected Employee and/or employee of ISP Israel ("Israel
Employees"). Buyer shall give the Affected Employees credit for all service with
the Sellers or any of their Affiliates (and service credited by a Seller or any
of its Affiliates), to the same extent as such service was credited for such
purpose by a Seller or any of its Affiliates, under (i) all employee benefit
plans (as such term is defined under Section 3(3) of ERISA), programs and
policies of Buyer in which they become participants for purposes of eligibility
and vesting (but not for purposes of benefit accrual other than as provided
below), (ii) all severance plans applicable to Affected Employees for purposes
of calculating the amount of each Affected Employee's severance benefits and
(iii) any other benefits that the Affected Employees shall be entitled to under
applicable laws, rules or regulations. To the extent permissible under the terms
thereof and applicable law, Buyer shall (A) waive all limitations as to
preexisting condition exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Affected Employees
under any welfare benefit plans of Buyer that such employees are eligible to
participate in on the Closing Date, other than limitations or waiting periods
that are already in effect with respect to such employees and that have not been
satisfied as of the Closing Date under any welfare benefit plan maintained for
the Affected Employees immediately prior to the Closing Date, and (B) provide
each Affected Employee with credit for any co-payments and deductibles paid
(with respect to the plan year in which the Closing occurs) prior to the Closing
Date in satisfying any applicable deductible or out-of-pocket requirements under
any welfare plans that such employees are eligible to participate on the Closing
Date.
(b) Buyer and its Affiliates shall not adopt or assume any liability
or obligation or liability (direct or indirect) with respect to any Seller
Benefit Plan other than an Israel Benefit Plan. Effective as of the Closing,
Buyer shall cause each Affected Employee to be eligible to participate in the
employee benefit plans, programs and arrangements maintained by Buyer and
identified on Schedule 5.09(b) hereto, in accordance with the terms and
conditions of such plans, programs, plans and arrangements, as applicable to
Buyer's employees generally and as may be amended from time to time. The parties
hereto acknowledge and agree that as of the Closing, the Affected Employees will
cease accruing benefits under and shall cease participation in all of the Seller
Benefit Plans (other than the Israel Benefit Plans).
(c) The Sellers shall retain and be solely responsible for all
liabilities and obligations arising out of or pertaining to the employment or
termination of employment of the Affected Employees and the employees of ISP
Israel, to the extent that such liabilities or obligations are based on or
relate to events, omissions or actions of the Sellers or ISP Israel occurring or
agreements (including severance, termination, retention or change of control
agreements or arrangements that result in any payment, compensation or benefit,
including, without limitation, cash or equity-related, owed to such individuals)
entered into or adopted by the Sellers or ISP Israel on or prior to the Closing
Date or as a result of or in connection with the transactions contemplated
hereby. All such liabilities and obligations shall be Retained Liabilities. The
Sellers shall further retain and be solely responsible for all liabilities and
40
obligations arising out of or pertaining to the employment or termination of
employment of all individuals employed by the Sellers in connection with the
Business who are not offered positions of employment with Buyer or who do not
accept Buyer's offer of employment, and all such liabilities and obligations
shall be Retained Liabilities. The Sellers shall also honor, pay and be solely
responsible for payment of all claims for any benefits accruing, or with respect
to occurrences commencing, on or before the Closing under any Seller Benefit
Plan (other than an Israel Benefit Plan), including, but not limited to, (A)
hospital benefits for any confinements that commenced on or before the Closing,
including any covered charges of health care professionals relating to such
confinements; (B) short-term and long-term disability benefits, if any, for
disabilities that commenced on or before the Closing for the period that each of
such affected individuals remain disabled; (C) life and survivor income
benefits, if any, for deaths that occur on or prior to the Closing; (D) all
benefits that are being, or that may be, paid to, or with respect to, any of
such employees who are on short or long-term disability, or medical, personal or
other leaves of absence as of the Closing or who go on short or long-term
disability, or medical, personal or other leaves of absence after the Closing as
a result of any injury, illness or other factor occurring on or prior to the
Closing pursuant to the terms of such plans as in effect immediately prior to
the Closing (including any subsequent benefit increases); (E) benefits under any
"spending account" or similar arrangement under any "cafeteria plan" (as defined
in Section 125 of the Code) with respect to salary reduction elections made
prior to the Closing; (F) workers' compensation liabilities; (G) accrued, unused
vacation time and sick leave benefits; and (H) benefits under all other Seller
Benefit Plans that accrue on or before the Closing.
(d) On and after the Closing, Buyer shall be responsible for and
assume any and all liability for all (i) notices, payments and benefits
(including, without limitation, severance payments and payments pursuant to the
Worker Adjustment and Retraining Notification Act of 1988, and any similar state
or local "plant closing" or "mass layoff" statute) due to any Affected Employees
terminated by Buyer or any of its Affiliates on or after the Closing, including,
without limitation, (A) pursuant to any applicable Employment Agreements, Buyer
benefit plans or corporate policies or programs pertaining to payroll, severance
pay, accrued vacation, fringe benefits and similar obligations or (B) as a
result of the termination by Buyer or any of its Affiliates of any Affected
Employee's employment after the Closing, and (ii) notices, payments, fines or
assessments due to any Governmental Entity, pursuant to any applicable foreign,
United States Federal, state or local law, common law, statute, rule or
regulation with respect to the employment, discharge or layoff of any such
Affected Employees by Buyer or its Affiliates on or after the Closing; in each
case under clauses (i) and (ii), other than where termination results from a
termination by a Seller or its Affiliates.
(e) On and after the Closing Date, Buyer (or any plan maintained by
Buyer or its Affiliates) shall, without cost to the Sellers or any of their
respective Affiliates, offer continued health and medical coverage as required
under Section 4980B of the Code, Part 6 of Title I of ERISA or any other
applicable Federal, state or local law or ordinance to all Affected Employees
(and their spouses, dependents and beneficiaries) with respect to whom a
41
"qualifying event" (as such term is defined under Sections 4980B(f)(3) of the
Code or 603 of ERISA) or other triggering event described under applicable
Federal, state or local laws or ordinances occurs with respect to any plan
maintained by Buyer after the Closing Date.
(f) Buyer shall bear, and shall indemnify, defend and hold harmless
the Sellers and their Affiliates and their respective directors, officers,
employees, representatives and agents from, against and in respect of any and
all losses, damages, expenses (including reasonable attorneys' fees), judgments
and other liabilities arising from or relating to the Affected Employees or
Israel Employees with respect to events arising after the Closing, including,
but not limited to (i) the termination by Buyer or its Affiliates of any
Affected Employee or any Israel Employee after the Closing Date, (ii) the
modification of the terms of employment of any Affected Employee or Israel
Employee, or any of the benefits received by any Affected Employee or Israel
Employee, after the Closing, (iii) any claim made by any Affected Employee or
Israel Employee for severance payments arising after the Closing or (iv) any
suit or claim (including, without limitation, by any administrative or
governmental agency) brought against any party indemnified under this Section
5.09(f) alleging the violation of any applicable employment or labor law by
Buyer or any of its Affiliates which occurred on or after the Closing; provided,
however, that nothing in this Section 5.09(f) shall be construed to cause any
person or entity other than the Sellers to be responsible for the obligations
set forth in Section 5.09(c) hereof.
(g) As soon as practicable after the Closing and effective as of the
Closing, the Affected Employees who were covered by the savings plan entitled
"Capital Accumulation Plan for Employees of GAFMC and ISP", a copy of which was
previously delivered to Buyer (the "Seller Savings Plan") prior to the Closing
Date shall be eligible to participate in Buyer's 401(k) Plan, in accordance with
its terms and conditions (the "Buyer Savings Plan"). Buyer shall cause the Buyer
Savings Plan to count for purposes of eligibility and vesting all service of the
Affected Employees that was counted for such purposes under the Seller Savings
Plan. The Sellers shall promptly provide Buyer with a copy of the most recently
issued determination letter from the U.S. Internal Revenue Service regarding the
Seller Savings Plan.
(h) Representatives of Buyer shall be entitled to hold an initial
meeting with the employees of the Business in each jurisdiction upon reasonable
notice to the Sellers to explain and answer questions about the conditions,
policies and benefits of employment under Buyer. Thereafter, until the Closing,
the Sellers shall reasonably cooperate with Buyer in communicating to the
employees of the Business any additional information concerning employment under
Buyer that such employees may seek, or that Buyer may desire to provide, and
during normal working hours shall allow such additional meetings by
representatives of Buyer with such employees as Buyer may reasonably request.
The Sellers shall be entitled to have one or more representatives attend all
such meetings.
(i) To the extent that the Closing does not coincide with the end of
any of the Sellers' payroll periods, the Sellers shall be responsible to pay all
payroll and related taxes and benefit payments and contributions for all
42
Affected Employees for such portion of such payroll period that shall occur
prior to the Closing, and Buyer shall be responsible to pay all payroll and
related taxes and any benefit payments and contributions for all Affected
Employees hired by Buyer for such portion of such payroll period that shall
occur following the Closing.
(j) The Sellers agree, if requested by Buyer, to cooperate on a
reasonable basis, to the extent permitted by applicable law, with Buyer's
application to designate Buyer (or its designee) as successor employer to the
Business for purposes of unemployment insurance, payroll tax or contribution
ratings and payroll credits pursuant to state and Federal law and/or worker's
compensation contribution premium ratings pursuant to applicable state law. The
Sellers shall, to the extent Buyer provided them with a reasonable opportunity
to comply, supply Buyer (or its designee) in a timely fashion with any payroll
or other account data as may be necessary or appropriate to make application for
the transfer of the Sellers' ratings, payroll credits and premium ratings as an
employer subject to unemployment compensation laws and/or workers' compensation
laws with any Governmental Entity. Buyer agrees, if requested by the Sellers, to
utilize the alternate procedure for furnishing Forms W-2 set forth in Rev. Proc.
96-30.
(k) As of the Closing, Buyer undertakes to cause ISP Israel to
continue the employment of the ISP Israel employees under the same terms as
before the Closing.
5.10. USE OF ISP NAME; ETC. Promptly, and in any event within 10 days,
following the Closing Date, Buyer shall deliver to the Sellers evidence
confirming that the corporate name of ISP Israel has been changed to a name that
does not include the term "International Specialty Products" or "ISP" or any
derivation thereof. Buyer shall not, and shall not permit any of its Affiliates
(including, from and after the Closing Date, ISP Israel) to, use the names
"International Specialty Products" or "ISP" or the International Specialty
Products or ISP trademarks or logo, or any derivation, similar variation or
simulation thereof, in any business, activity, promotional materials, or other
manner, or in connection with any product or service, without the Sellers'
specific prior written consent. Without limiting the foregoing, promptly, and in
any event within 10 days following the Closing Date, Buyer shall remove from
each Real Property all signage containing the names "International Specialty
Products" or "ISP", or any ISP trademarks or logos, or any derivation, variation
or simulation thereof. Notwithstanding the foregoing, Buyer may, for a period of
up to 120 days following the Closing Date, sell and/or distribute any products
containing the names or marks "International Specialty Products" or "ISP";
provided, that Buyer will use commercially reasonable best efforts during such
period to cover the name "ISP" or "International Specialty Products" and any
related marks or logos through use of additional labels, stickers or otherwise
to indicate that Buyer, and not "ISP" or "International Specialty Products", is
the seller and/or distributor of any of such products.
5.11. TITLE INSURANCE. The Sellers shall obtain good and valid,
irrevocable ALTA title insurance commitments (collectively, the "Title
Commitments"), in final form, from Chicago Title Insurance Company (the "Title
Company"), irrevocably committing the Title Company (subject only to the
satisfaction of any reasonable requirements contained in the Title Commitments)
43
to issuing ALTA form title insurance policies (collectively, the "Title
Policies") insuring, in the amounts that Buyer reasonably requests prior to
Closing good, valid, marketable, indefeasible fee simple title to each parcel of
the Owned Real Property, in Buyer, subject to no Liens or other rights of
occupancy or use for all or any portion thereof, options, security interests,
covenants, conditions, restrictions, rights of way, easements, encroachments or
other matters affecting title or other exceptions to title other than: (i) ALTA
standard printed exceptions (other than mechanic's and materialmen's liens and
rights of possession except if same constitute Permitted Closing Liens) and (ii)
the Permitted Closing Liens. The Title Commitments shall be effective as of a
date occurring not earlier than the date of this Agreement and the effective
date thereof shall be brought down to the Closing Date. The Title Policies shall
include such standard endorsements thereto as may reasonably be requested by
Buyer, including, without limitation, access and zoning endorsements, in form
and substance acceptable to Buyer. On or prior to the Closing Date, the Sellers
shall execute and deliver, or cause to be executed and delivered, to the Title
Company any reasonable title affidavits reasonably requested by the Title
Company in connection with the issuance of the Title Commitments or the Title
Policies. The Sellers shall pay all premiums and other charges for such Title
Policies and Title Commitments, including the cost of any endorsements thereto.
5.12. SURVEY. Buyer acknowledges that the Sellers have delivered to
Buyer a copy of that certain survey of the Owned Real Property prepared by DLZ
Ohio, Inc. and certified as of November 13, 2001 (the "Survey"). The Sellers
shall reasonably cooperate, at no expense to the Sellers, in causing the Survey
to be certified to Buyer, the Title Company and Buyer's lender(s) and shall
comply, at no expense to the Sellers, with any requirements imposed by the Title
Company as a condition to the removal of any survey exception from the general
(but not specific) exemptions to the Title Policies.
5.13. CONFIDENTIALITY. For a period of five (5) years from and after
the Closing Date, each of the Sellers shall treat and hold as confidential all
confidential information relating exclusively to the operations or affairs of
the Business. Without limiting the foregoing, each of the Sellers shall not, and
shall cause each of its Affiliates not to, disclose any such confidential
information to any Entity (except, as consistent with the Sellers past
practices, to such Entity's employees, auditors, counsel, other professional
advisors or its Affiliates) or make use of or exploit any such confidential
information for its own purposes or for the benefit of any other Entity. In the
event that any Seller or its Affiliate is required (by oral or written request
for information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand or similar process or by applicable law) to disclose
any such confidential information, then such Seller will promptly notify Buyer
of the requirement so that Buyer, at its expense, may seek an appropriate
protective order or waive compliance with this Section 5.13. If, in the absence
of a protective order or receipt of a waiver hereunder, the Sellers or any of
their respective Affiliates are, on the advice of counsel, compelled to disclose
such confidential information, the Sellers or such Affiliate may so disclose the
confidential information; provided, however, that the Sellers or the Affiliate,
as the case may be, will use all reasonable efforts to obtain reliable assurance
that confidential treatment will be afforded to such confidential information.
The provisions of this Section 5.13 will not be deemed to prohibit the
44
disclosure by the Sellers of confidential information relating to the operations
or affairs of the Business and any other operations or affairs relating to the
Business with Buyer's consent or to the extent reasonably and directly required
(i) to prepare or complete any required Tax Returns or financial statements,
(ii) in connection with reports, statements, testimony audits or other
proceedings before, by or on behalf of a Governmental Entity, (iii) in
connection with any insurance or benefits claims, (iv) to comply with any
applicable laws, (v) to prosecute or defend any suit, claim (including in
connection with this Agreement) or other litigation, or in response to any
summons or subpoena, or (vi) to provide services to Buyer in accordance with the
terms and conditions of this Agreement or any Other Agreement. The provisions of
this Section 5.13 shall not apply to information that (x) is or becomes publicly
available other than as a result of a disclosure by the Sellers, (y) is or
becomes available to the Sellers or any of their respective Affiliates on a
non-confidential basis from a source that, to knowledge of the Sellers, is not
prohibited from disclosing such information by a legal, contractual or fiduciary
obligation or (z) is or has been independently developed by the Sellers (other
than in connection with the Business).
5.14. NON-INTERFERENCE. From the Closing Date until the third (3rd)
anniversary of the Closing Date, (i) each of the Sellers shall not, without
Buyer's consent, hire or recruit any employee of Buyer (including any Affected
Employee) or solicit or induce, or attempt to solicit or induce, any employee of
Buyer to terminate his/her employment with, or otherwise cease his/her
relationship with Buyer (including any Affected Employee), and (ii) Buyer shall
not, without the prior consent of the applicable Seller, hire or recruit any
employee of a Seller or solicit or induce, or attempt to solicit or induce, any
employee of a Seller, except for any Affected Employee, to terminate his/her
employment with, or otherwise cease his/her relationship with, such Seller;
provided, that neither any Seller nor Buyer shall be prohibited from hiring any
employee of any Seller or Buyer, as applicable, who initiates contact with a
Seller or Buyer, as the case may be, in response to a general published
solicitation.
5.15. RIGHT OF ENFORCEMENT AND SETTLEMENT. (a) Subject to Article IX
hereof, from and after the Closing, Buyer shall have complete control over the
payment, settlement or other disposition of all Assumed Liabilities and the
right to commence, conduct and control all negotiations and legal proceedings
with respect thereto. The Sellers hereby agree to cooperate with Buyer in any
manner reasonably requested by Buyer involving the defense, settlement or other
disposition of any Assumed Liabilities.
(b) Subject to Article IX hereof, from and after the Closing, the
Sellers shall have complete control over the payment, settlement or other
disposition of all Retained Liabilities and the right to commence, conduct and
control all negotiations and legal proceedings with respect thereto. Buyer
hereby agrees to cooperate with the Sellers in any manner reasonably requested
by the Sellers involving the defense, settlement or other disposition of any
Retained Liabilities.
5.16. COOPERATION. The Sellers shall, and shall cause their
accountants to, reasonably cooperate with Buyer (at Buyer's expense) in
connection with any reasonable audit of the financial statements of the Business
45
that are reasonably requested by Buyer to be included in a Form 8-K to be filed
pursuant to the Securities and Exchange Act of 1934 in connection with the
transactions contemplated hereby and the Sellers shall, upon request from Buyer,
provide Buyer with unaudited financial statements of the Business for the
12-month period ending December 31, 2001 as soon as reasonably practicable, it
being understood that the Sellers make no representations or warranties
hereunder in respect of such audit or financial statements, except to the extent
set forth in Section 3.03 hereof. In addition, the Sellers shall reasonably make
their personnel and accountants available, at Buyer's cost, in connection with
the preparation of such audit and financial statements.
5.17. FIRPTA CERTIFICATE. At or prior to Closing, ISP Chemicals shall
deliver a FIRPTA certificate, executed by a duly authorized representative of
ISP Chemicals.
5.18 SUPPLEMENTAL DISCLOSURE. (a) The Sellers agree that, with respect
to the representations and warranties made by them in this Agreement, they will
have a continuing obligation up to the Closing to promptly supplement and/or
amend the Schedules to this Agreement, with respect to any matter hereafter
arising or discovered of which the Sellers become aware prior to the Closing
that, if existing or known as of the date of this Agreement, would have been
required to be set forth or described in the Schedules to this Agreement. No
such supplemented or amended Schedule shall be deemed to cure any breach of
representation or warranty for any purpose or limit or otherwise affect the
remedies available hereunder if the Closing does not occur as a result of such
breach. If, however, the Closing occurs, any such supplement or amendment of any
Schedule shall be effective to cure and correct for all purposes any breach of
any representation or warranty that would have existed by reason of the
party(ies) not having made such supplement or amendment.
(b) In addition, the Sellers shall promptly supplement and/or amend
the Schedules to this Agreement to reflect any event or condition that occurs
after the date hereof until the Closing of which the Sellers become aware prior
to Closing that, had it existed on the date hereof, would have caused any of the
representations and warranties of the Sellers contained herein to be incorrect
in any material respect (or would have caused representations and warranties
that are subject to materiality standards or qualifications to be incorrect in
any respect and without giving effect to any knowledge qualifier). The addition
of any such information to the Schedules to this Agreement shall not affect the
condition to Buyer's obligation set forth in Section 6.01 hereof; provided,
however, that the disclosure of such information shall not alter or diminish the
indemnification obligations of the Sellers set forth in Section 9.02(a)(i)
hereof and the Closing shall not cure or correct any such deemed breach of
representation or warranty referred to in the first sentence of this Section
5.18(b).
(c) Prior to the Closing, Buyer shall disclose promptly to the Sellers
any discovery by it of a breach of any representation or warranty made by the
Sellers herein.
46
5.19 ADDITIONAL COVENANTS OF BUYER. Buyer shall, subject to the last
proviso of Section 6.04 hereof, use its best efforts to (a) cause the
Registration Statement to be declared effective by the SEC (including, without
limitation, by filing such amendments and supplements thereto, and responding to
comments of, and providing such additional information as requested by, the SEC
in connection therewith), (b) consummate the Equity Financing and (c) cause all
conditions within its control to the consummation of the Credit Facility to be
satisfied (and remain satisfied through the Closing Date), in each case under
clauses (a), (b) and (c), as promptly as practicable following the date of this
Agreement. Without limiting the foregoing, Buyer shall use its best efforts to
avoid the entry of any suspension, stop order or similar proceeding in respect
of the Registration Statement (or, if one is entered, to have it rescinded as
promptly as practicable). Buyer shall (i) keep the Sellers apprised on a timely
basis of the status of the Registration Statement, the Equity Financing and the
Credit Facility, and promptly notify Sellers of any developments relating
thereto (including, without limitation, Buyer being aware of any event or
circumstance that could cause any of the conditions thereunder (or hereunder
relating thereto) not to be satisfied), and (ii) deliver to the Sellers true and
complete copies of any amendment to or modification of any of the documents
referred to in Section 4.06 hereof promptly upon Buyer's receipt thereof.
5.20 EXCLUDED INVENTORY. From and after the Closing, at the Sellers'
written request Buyer shall, at no charge to the Sellers and in a commercially
reasonable manner, store the inventory described on Schedule 1.01(y) hereto (the
"Excluded Inventory") at the Facility and maintain and protect the Excluded
Inventory in substantially the same manner as Buyer maintains and protects
similar items of tangible property located at the Facility. From time to time
following the Closing, Buyer shall ship (at the Sellers' expense) items of the
Excluded Inventory in such manner and to such locations as the Sellers may
reasonably direct in writing. Buyer shall use commercially reasonably efforts to
not permit any Lien arising by or through Buyer to attach or encumber the
Excluded Inventory. The Sellers shall bear any risk of loss in respect of the
Excluded Inventory.
5.21 CUSTOMER CONFIDENTIALITY. With respect to any Assumed Contract
that any of the Sellers have entered into with any of their respective customers
and that requires the consent of such customer to the assignment of such
Contract, Buyer shall ensure that any confidential information provided by such
customer to the Sellers or Buyer, as the case may be, shall continue to be held
confidentially such that no Buyer Entities or Buyer personnel involved in the
research, development, manufacture and/or sale of any generic drugs shall have
access to such confidential information.
ARTICLE VI
CONDITIONS TO OBLIGATION OF BUYER TO CLOSE
The obligation of Buyer under this Agreement to consummate the Closing
is subject to the satisfaction of each of the following conditions at or prior
47
to the Closing Date, any one or more of which may be waived in writing by Buyer
in its sole discretion to the extent permitted by applicable law:
6.01. REPRESENTATIONS AND WARRANTIES; NO MATERIAL ADVERSE EFFECT. The
representations and warranties of the Sellers contained in this Agreement shall
have been true and correct in all material respects as of the date of this
Agreement (except for such representations and warranties which (a) are made
expressly as of an earlier specified date or period, which shall have been true
and correct in all material respects as of such specified date or period and (b)
are subject to materiality standards or qualifications, which representations
and warranties shall have been true and correct in all respects as of the date
of this Agreement). Between December 28, 2001 and the Closing Date, no event
shall have occurred that has had a Material Adverse Effect. Buyer shall have
received a certificate dated as of the Closing Date executed by an executive
officer of each of the Sellers certifying as to the foregoing.
6.02. COMPLIANCE WITH COVENANTS. The Sellers shall have performed in
all material respects all covenants and agreements required to be performed by
them under this Agreement at or prior to the Closing Date, and Buyer shall have
received a certificate dated as of the Closing Date executed by an executive
officer of each of the Sellers certifying as to the foregoing.
6.03. CONSENT AND APPROVALS. All filings with, or approvals of, the
Israeli Chief Scientist and Israel Investment Center necessary to permit
consummation of the transactions contemplated hereby shall have been made or
obtained; any applicable waiting period mandated in respect of the transactions
contemplated hereby under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), shall have expired or been terminated without
adverse action by any Governmental Entity with respect thereto; and no
injunction prohibiting or materially restricting the consummation of the
transactions contemplated hereby shall have been issued by any Governmental
Entity and be in force.
6.04. NO BUYER MATERIAL ADVERSE CHANGE. Between December 28, 2001 and
the earlier of (a) such time as Buyer shall have consummated an Equity Financing
and (b) 5:00 p.m., New York City time, on the eighth (8th) Business Day
immediately following the date on which the Registration Statement shall have
been declared effective by the SEC (the earlier of the times described in
clauses (a) and (b) being the "Special Condition Fall-Away Time"), no Buyer MAC
(as defined below) shall have occurred. Notwithstanding the foregoing, it is
understood and agreed that the condition set forth in this Section 6.04 shall be
deemed satisfied as of (and, accordingly, such condition shall expire and be of
no force or effect from and after) the Special Condition Fall-Away Time, and as
of and from and after the Special Condition Fall-Away Time the only conditions
to Buyer's obligations shall be those expressly set forth in Sections 6.01,
6.02, 6.03, 6.06, 6.07 and 6.08 hereof. As used above, the term "Buyer MAC"
shall mean that at any time after the date of this Agreement and prior to the
Special Condition Fall-Away Time, it shall be reasonably determined that there
shall have occurred a material adverse change in the assets, business,
operations, condition (financial or otherwise) or prospects (without giving
48
effect to the Business or the consummation of the transactions contemplated
hereby) of Buyer and its subsidiaries taken as a whole that has had or would
reasonably be expected to have a material adverse effect on the ability of Buyer
to consummate the Equity Financing or the transactions contemplated by the
Credit Facility at such time; provided, however, that the following shall not be
considered in determining whether a Buyer MAC shall have occurred: (1) any fact,
event, development, circumstance, condition or state of affairs of which Buyer
had knowledge as of the date of this Agreement, (2) changes (or the effects of
changes), in and of themselves, in the trading or market prices of Buyer's
securities or (3) changes, in and of themselves, attributable to this Agreement,
the transactions contemplated thereby or the announcement or other disclosure
thereof; provided, further, that if the SEC were to issue comments or impose
requirements in respect of the Registration Statement which, if addressed or
implemented by Buyer, would require a significant restatement or amendment of
Buyer's financial statements and such restatement or amendment could reasonably
be expected to have a material adverse effect on the ability of Buyer to
consummate the Equity Financing, such an occurrence shall be deemed a Buyer MAC.
6.05 REGISTRATION STATEMENT. The Registration Statement shall have
been declared effective by the SEC and eight (8) Business Days shall have
elapsed since the date of such declaration of effectiveness without any order of
suspension thereof being issued by the SEC. Notwithstanding the foregoing, it is
understood and agreed that the condition set forth in this Section 6.05 shall be
deemed satisfied as of (and, accordingly, such condition shall expire and be of
no force or effect from and after) the Special Condition Fall-Away Time, and as
of and from and after the Special Condition Fall-Away Time the only conditions
to Buyer's obligations shall be those expressly set forth in Sections 6.01,
6.02, 6.03, 6.06, 6.07 and 6.08 hereof.
6.06 TRANSFER OF ENVIRONMENTAL PERMITS. All material Permits
(including, without limitation, any permits in respect of air contaminant
sources) required under Environmental Laws to operate the Business in
substantially the same manner as it was operated as of the date hereof shall
have been transferred to Buyer, or Buyer shall have received from each
appropriate Governmental Entity new Permits necessary under Environmental Laws
to, or reasonably satisfactory assurances from each such Governmental Entity
that it shall be able to, operate the Business in substantially the same manner
as it was operated as of the date hereof.
6.07 MARKET CONDITION. There shall not have occurred any disruption or
adverse change, as determined by any of the Lenders in its sole discretion, in
the financial or capital markets generally, or in the markets for bridge loans,
high-yield debt or equity securities in particular or affecting the syndication
or funding of bridge loans (or the refinancing thereof) that may have any
adverse impact on the ability to syndicate the Bridge Loans or to sell or place
the Permanent Financing.
6.08 CUSTOMER CONSENTS. The Sellers shall have obtained the consent of
the non-Seller party to the Assumed Contract listed as Item D.3 on Schedule
3.09(b) hereto to the assignment of such contract and delivered a written copy
of such consent to Buyer.
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ARTICLE VII
CONDITIONS TO OBLIGATION OF THE SELLERS TO CLOSE
The obligation of the Sellers under this Agreement to consummate the
Closing is subject to the satisfaction of each of the following conditions at or
prior to the Closing Date, any one or more of which may be waived in writing by
the Sellers in their sole discretion to the extent permitted by applicable law:
7.01. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement shall have been true and correct
in all material respects as of the date of this Agreement (except for such
representations and warranties which (a) are made expressly as of an earlier
specified date or period, which shall have been true and correct in all material
respects as of such specified date or period and (b) are subject to materiality
standards or qualifications, which representations and warranties shall have
been true and correct in all respects as of the date of this Agreement). The
Sellers shall have received a certificate dated as of the Closing Date executed
by an executive officer of Buyer certifying as to the foregoing.
7.02. COMPLIANCE WITH COVENANTS. Buyer shall have performed in all
material respects all covenants and agreements required to be performed by Buyer
under this Agreement at or prior to the Closing Date, and the Sellers shall have
received a certificate dated as of the Closing Date executed by an executive
officer of Buyer certifying as to the foregoing.
7.03. CONSENT AND APPROVALS. All filings with, or approvals of, the
Israeli Chief Scientist and Israel Investment Center necessary to permit
consummation of the transactions contemplated hereby shall have been made or
obtained; any applicable waiting period mandated in respect of the transactions
contemplated hereby under the HSR Act shall have expired or been terminated
without adverse action by any Governmental Entity with respect thereto; and no
injunction prohibiting or materially restricting the consummation of the
transactions contemplated hereby shall have been issued by any Governmental
Entity and be in force.
ARTICLE VIII
TERMINATION
8.01. TERMINATION. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing Date as follows:
50
(a) by mutual written agreement of the Sellers and Buyer;
(b) by Buyer upon a breach of any representation or warranty of the
Sellers or any covenant or agreement of the Sellers set forth in this Agreement
such that any of the conditions set forth in Article VI hereof would not be
satisfied; provided, however, that the right to terminate this Agreement
pursuant to this Section 8.01(b) shall only be available to Buyer after the
Sellers have received from Buyer written notice of such breach and a reasonable
opportunity (of not less than 10 Business Days) to cure (to the extent curable)
the same;
(c) by the Sellers upon a breach of any representation or warranty of
Buyer or any covenant or agreement of Buyer set forth in this Agreement such
that the conditions set forth in Article VII hereof would not be satisfied;
provided, however, that the right to terminate this Agreement pursuant to this
Section 8.01(c) shall only be available to the Sellers after Buyer has received
from a Seller written notice of such breach and a reasonable opportunity (of not
less than 10 Business Days) to cure (to the extent curable) the same;
(d) by the Sellers or by Buyer, at any time after April 30, 2002, if
the Closing has not occurred on or before April 30, 2002 for any reason;
provided, however, that the right to terminate this Agreement pursuant to this
Section 8.01(d) shall not be available to Buyer, in the case of a breach of this
Agreement by Buyer, or to the Sellers, in the case of a breach of this Agreement
by the Sellers, where such breach has been the cause of, or resulted in, the
failure of the Closing to occur by such date; or
(e) by the Sellers if the Registration Statement shall not have been
declared effective by the SEC on or prior to February 28, 2002.
8.02. EFFECT OF TERMINATION. In the event this Agreement is validly
terminated pursuant to the provisions of this Article VIII, except as set forth
below, this Agreement shall forthwith become wholly void and of no force and
effect and there shall be no liability or obligation on the part of the parties
hereto (or any of their respective officers, directors, employees, agents or
Affiliates), except that the provisions of this Section 8.02, the provisions of
Sections 5.05, 10.01, 10.08 and 10.11 hereof and the Confidentiality Agreement
shall continue to apply following any such termination, and nothing contained
herein shall relieve any party hereto from liability for any material breach or
inaccuracy of its representations and warranties or breach of its covenants or
agreements contained in this Agreement prior to such termination and the
Threshold Amount referred to in Section 9.04(a) hereof shall not apply in such
event.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
9.01. SURVIVAL OF REPRESENTATIONS AND COVENANTS. Each representation
and warranty made by any party to this Agreement (including pursuant to any
certificates delivered pursuant to Article VI or Article VII hereof) shall
51
survive the Closing for a period ending on the date 18 months immediately
following the Closing Date, except that the representations and warranties
contained in (i) Section 3.08 hereof shall survive until 30 days after
expiration of the applicable statute of limitations, (ii) clauses (a), (e), (f)
and (g) of Section 3.12 hereof shall survive the Closing until the fifth
anniversary of the Closing Date, (iii) the first, second and third sentences of
Section 3.05(a) hereof, the first sentence of Section 3.05(b) hereof, Section
3.05(e) hereof, the first sentence of Section 3.06(b) hereof and clauses (b),
(c) and (d) of Section 3.12 hereof shall survive the Closing indefinitely, and
(iv) Section 3.05(d) (other than the first and second sentences thereof) and
Section 3.03 (only insofar as it relates to inventory) shall survive until the
determination of the Final Inventory Value, as provided in Section 2.02(e)
hereof. As of the respective expiration dates applicable thereto set forth
above, each such representation and warranty shall expire and be of no further
force and effect, except that any representation or warranty which is the
subject of a claim or dispute that was properly asserted in writing in
accordance with this Article IX prior to the applicable expiration date provided
above shall survive with respect to such claim or dispute until the resolution
thereof. The covenants and agreements made by any party pursuant to this
Agreement shall survive the Closing for 18 months, unless a longer period is
specifically set forth in such covenant or agreement.
9.02. INDEMNIFICATION. (a) Sellers' Agreement to Indemnify. Subject to
the terms and conditions of this Article IX, the Sellers hereby agree to jointly
and severally indemnify, defend and hold harmless Buyer and its officers,
directors, employees, Affiliates, successors and permitted assigns (the "Buyer
Group"), from and against, and pay and/or reimburse them for, any and all
claims, whether or not the result of a Third Party Claim, and any and all
losses, claims, liabilities and damages (but excluding indirect damages, lost
profits or punitive damages), and reasonable and documented costs and expenses
(including reasonable attorneys' fees and reasonable costs of collection
hereunder) (collectively, "Damages"), incurred by any of the Buyer Group to the
extent arising from or attributable to (i) the breach of any representation or
warranty of the Sellers contained in this Agreement or the Other Agreements
(other than those that have expired as provided herein or therein); provided,
however, that in determining whether any such breach exists, such
representations and warranties shall be deemed also to have been made as of the
Closing Date and irrespective of any supplemented or amended disclosure made
pursuant to Section 5.18 hereof; provided, further, that if the Sellers shall
become aware prior to the Closing that any representation or warranty made by
the Sellers that is subject to a knowledge standard would not be true and
correct as of the date hereof were such knowledge standard removed, such
representation and warranty shall be deemed to have been breached for purposes
of this Section 9.02(a)(i); (ii) any breach of any covenant or agreement of the
Sellers contained in this Agreement or the Other Agreements; (iii) the Retained
Liabilities (including any liability imposed, by operation of law or otherwise,
on Buyer (as successor to or transferee of the U.S. Business) directly in
respect of pre-Closing actions or omissions of the Sellers or conditions
existing as of the Closing at the Facility, but in each case, only to the extent
such liabilities are not Assumed Liabilities); or (iv) any breach or
non-compliance with applicable bulk sales or similar laws in connection with the
transactions contemplated hereby. Claims by any of the Buyer Group under this
Section 9.02 are referred to individually as a "Buyer Claim" or collectively, as
53
"Buyer Claims." Notwithstanding the foregoing or anything to the contrary
contained in this Agreement or any Other Agreement:
(A) Buyer's sole remedy in respect of any actual or alleged
breach of the representations set forth in Section 3.05(d) (other than
the first and second sentences thereof) or Section 3.03 (only to the
extent relating to inventory) shall be limited to the procedures set
forth in Section 2.02 hereof relating to the adjustment of the
Inventory Purchase Price;
(B) in respect of any Buyer Claim under this Section 9.02(a)
relating to a breach or alleged breach of any representation or
warranty contained in Section 3.12 hereof (other than clauses (c) and
(d) thereof), in each case notice in respect of which Buyer Claim is
given in accordance with Section 9.03 hereof after the fifth
anniversary of the Closing Date, there shall be a factual presumption
that all Hazardous Substances that allegedly give rise to such Buyer
Claim were disposed of or released by Buyer; and
(C) for purposes of this Article IX and Section 5.08 hereof
only, Environmental Claims of any nature shall not be treated as
Retained Liabilities and, accordingly, Buyer's sole remedy in respect
of Environmental Claims shall be limited to claims for indemnification
under Section 9.02(a)(i) hereof in respect of Damages incurred by any
of the Buyer Group to the extent arising from or attributable to a
breach of the representations and warranties set forth in Section 3.12
hereof, and subject to all limitations applicable to indemnification
under Section 9.02(a)(i) hereof set forth in this Article IX; provided,
however, that the foregoing shall not limit Buyer's right, in respect
of Third Party Claims, to assert that any such Environmental Claims are
not liabilities assumed by Buyer hereunder.
(b) BUYER'S AGREEMENT TO INDEMNIFY. Subject to the terms and
conditions of this Article IX, Buyer hereby agrees to indemnify, defend and hold
harmless the Sellers and their respective officers, directors, employees,
Affiliates, successors and permitted assigns (the "Seller Group"), from and
against, and pay and/or reimburse them for, any and all Damages incurred by any
of the Seller Group to the extent arising from or attributable to (i) the breach
of any representation or warranty of Buyer contained in this Agreement or the
Other Agreements (other than those that have expired as provided herein or
therein); (ii) any breach of any covenant or agreement of Buyer contained in
this Agreement or the Other Agreements; (iii) any liability or obligation of the
Seller Group arising in connection with the Business, to the extent they are
directly based upon or directly related to actions or omissions of Buyer that
shall have occurred following the Closing; or (iv) the Assumed Liabilities.
Claims by any of the Seller Group under this Section 9.02 are referred to
individually as a "Seller Claim" or collectively, as "Seller Claims."
(c) TAX TREATMENT OF INDEMNIFICATION PAYMENTS. The Sellers and Buyer
agree to treat any indemnity payment made under this Article IX as an adjustment
to the Purchase Price for income tax purposes. Any such Purchase Price
53
adjustment shall, to the maximum extent possible, be allocated to the assets or
property acquired to which such adjustment relates.
9.03. PROCEDURES FOR INDEMNIFICATION. (a) In order for a member of the
Buyer Group or Seller Group, as the case may be, to be entitled to
indemnification provided for under this Agreement in respect of, arising out of
or involving a claim made by a third-party (a "Third Party Claim"), such
indemnified party must notify the indemnifying parties in writing, and in
reasonable detail, of the Third Party Claim within ten (10) days after receipt
by such indemnified party of written notice of the Third Party Claim; provided,
however, that the failure to provide timely and proper notice shall not limit
the indemnification provided hereunder except that the indemnification hereunder
shall be reduced by the financial effect, if any, of such failure (except that
an indemnifying party shall not be liable for any expenses incurred during the
period following such 10-day period in which the indemnified party failed to
give such notice). Thereafter, (i) the indemnified party shall promptly deliver
to the indemnifying parties (A) copies of all notices and documents (including
court papers) received by the indemnified party relating to the Third Party
Claim and (B) all available information and documentation necessary to support
and verify the claim asserted, and (ii) the indemnifying parties shall be given
reasonable access to the books and records in the possession or control of the
indemnified party or any of its Affiliates which any indemnifying party
reasonably determines to be related to, or reasonably necessary in the defense
of, such Third Party Claim.
(b) If a Third Party Claim is made against an indemnified party, the
indemnifying parties will be entitled, at their own cost and expense, to
participate in the defense thereof and, if they so choose, to assume the defense
thereof with counsel reasonably selected by the indemnifying parties. If an
indemnifying party assumes such defense, the indemnified party shall have the
right to participate in the defense thereof and to employ counsel, at its own
cost and expense, separate from the counsel employed by the indemnifying
parties, it being understood that the indemnifying parties shall control such
defense and will not be liable to the indemnified party for any legal expenses
incurred by the indemnified party subsequent to the assumption by an
indemnifying party of the defense; provided, however, that the indemnifying
parties shall be liable for the reasonable fees of separate counsel for the
indemnified party (which counsel shall be reasonably acceptable to the
indemnifying parties) if, in the reasonable opinion of outside counsel for the
indemnified party (which counsel and opinion shall be reasonably acceptable to
the indemnifying parties), representation of the indemnifying parties and the
indemnified party in such matter by one counsel would create a conflict of
interest such that representation of the indemnifying parties and the
indemnified party in such matter by separate counsel is required under
applicable ethical rules governing legal representation. In any event, an
indemnifying party shall not be liable under this Agreement for the fees and
expenses of more than one firm of counsel employed by (and representing all) the
indemnified parties. Whether or not an indemnifying party chooses to assume the
defense of any Third Party Claim, all the parties hereto shall, and shall cause
their respective Affiliates to, cooperate in the defense or prosecution thereof
and to in good faith retain and furnish such records, information and testimony,
and attend such conferences, discovery proceedings, hearings, trials and
appeals, as may be reasonably requested by a party hereto in connection
54
therewith. If an indemnifying party chooses to defend or prosecute any Third
Party Claim, the indemnifying party shall be authorized to consent to a
settlement of, or the entry of any judgment arising from, any such Third Party
Claim, and the indemnified party shall consent to a settlement of, or the entry
of any judgment arising from, such Third Party Claim; provided, however, that
the indemnifying party shall be authorized to so consent only if (A) it shall
pay or cause to be paid all amounts arising out of such settlement or judgment
concurrently with the effectiveness thereof; (B) it shall not encumber any of
the assets of any indemnified party or agree to any significant restriction or
condition that would apply to such indemnified party or to the conduct of that
indemnified party's business; (C) it shall obtain, as a condition of any
settlement or other resolution, a complete and irrevocable release of each
indemnified party; and (D) such settlement or judgment shall not require any (x)
admission of liability, fault or wrongdoing by any indemnified party or impose
any significant non-monetary obligation on any indemnified party (such as, by
way of example, and not in limitation, injunctive relief) or (y) admission or
statement that could reasonably be expected to materially impair, disparage or
otherwise adversely affect the business reputation of the indemnified party.
Except to the extent of the foregoing, no settlement or entry of judgment in
respect of any Third Party Claim shall be consented to by any indemnifying party
or indemnified party without the express prior written consent of the other
party (which consent shall not be unreasonably withheld or delayed). Whether or
not an indemnifying party shall have assumed the defense of a Third Party Claim,
the indemnified party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the indemnifying
parties' prior written consent (which consent shall not be unreasonably withheld
or delayed).
9.04. LIMITATIONS. (a) Except with respect to any breaches of Section
3.11 hereof, Section 4.05 hereof, the first, second and third sentences of
Section 3.05(a) hereof, the first sentence of each of Sections 3.05(b) and
3.06(b) hereof, Section 3.05(e) hereof, Section 3.12 hereof, the first sentence
of 3.18(a) hereof and/or the third sentence of Section 3.14(a) hereof
(collectively, the "Excepted Breaches"), (x) neither Buyer Group nor Seller
Group may, subject to Section 8.02 hereof, assert any Buyer Claims or Seller
Claims with respect to Damages under Section 9.02(a)(i) hereof or Section
9.02(b)(i) hereof, as the case may be, until the aggregate amount of such Buyer
Claims or Seller Claims, as the case may be, for which the Sellers or Buyer,
respectively, are required to indemnify hereunder exceeds $2,000,000 (the
"Threshold Amount"), and (y) once the aggregate amount of Buyer Claims under
Section 9.02(a)(i) hereof or Seller Claims under Section 9.02(b)(i) hereof, as
the case may be, for which a party is required to indemnify hereunder, exceeds
the Threshold Amount, then the indemnified party shall, subject to the following
provisos, be entitled to recover from the indemnifying parties the entire amount
of such Buyer Claims or Seller Claims, as the case may be, including the
Threshold Amount (provided that with respect to any Excepted Breaches, all
Damages, irrespective of the Threshold Amount, shall be recoverable); provided,
however, that (i) the aggregate liability of Buyer with respect to Damages under
Section 9.02(b)(i) hereof shall not exceed $25,000,000 and (ii) the aggregate
liability of the Sellers with respect to Damages under Section 9.02(a)(i) hereof
(other than in respect of breaches of representations and warranties provided in
Section 3.12 hereof) shall not exceed $25,000,000 and the aggregate liability of
55
the Sellers with respect to Damages under Section 9.02(a)(i), including breaches
of representations and warranties provided in Section 3.12 hereof, shall not
exceed $30,000,000.
Notwithstanding the foregoing, Buyer shall bear the costs of building a
structure designed to cover any hazardous material drums located at the
Facility, which costs shall be specifically excluded from the indemnification
provisions hereof; provided, however, that Buyer's agreement to bear such costs
shall in no other way limit or diminish Buyer's ability to seek indemnification
hereunder.
(b) Except (x) for the right to seek to specifically enforce the
covenants under this Agreement and the Other Agreements, (y) as specifically
provided in this Agreement or the Other Agreements and (z) for remedies that
cannot be waived as a matter of law, the sole and exclusive remedy of the Buyer
Group and the Seller Group for breaches of the representations, warranties,
covenants and agreements contained in this Agreement and in the Other Agreements
(other than the Supply Agreement), or any certificate delivered pursuant hereto
or thereto, shall be limited to the indemnification rights set forth in this
Article IX.
(c) The amount of any Damages sustained by an indemnified party shall
be reduced by (i) any amount actually received by such party with respect
thereto under any insurance coverage or from any other party alleged to be
responsible therefor and (ii) the amount of any other monetary benefit realized
by an indemnified party directly relating thereto. Any indemnified party under
this Agreement shall use reasonable best efforts to collect any amounts
available under such insurance coverage and from such other allegedly
responsible parties (including, without limitation, pursuant to the
Indemnification Agreement). If an indemnified party realizes or receives an
amount under insurance coverage or from such other party with respect to Damages
sustained at any time subsequent to any indemnification provided pursuant to
this Article IX, then such indemnified party shall promptly reimburse the
applicable indemnifying party for any payment made or expense incurred by such
indemnifying party in connection with providing such indemnification up to such
amount realized or received by the indemnified party. Each indemnified party
shall take reasonable steps to mitigate any Damages upon becoming aware of any
event, circumstance or condition that would reasonably be expected to give rise
to Damages indemnifiable hereunder.
(d) Indemnifiable Damages under Section 9.02(a)(i) hereof arising from
breaches of the representations and warranties in Section 3.12 hereof shall be
limited to the most cost-effective solution required to comply with applicable
Environmental Laws and the least stringent applicable remediation standards;
provided, however, that any such remediation standards applicable to the
Facility will allow the continued use of the Facility in substantially the same
manner as it was used immediately before the Closing Date. The Buyer Group shall
not be entitled to indemnification in respect of Damages to the extent based
upon diminution of the fair market value of the Facility. In respect of Damages
relating to operational or maintenance costs incurred by the Buyer Group to
operate any compliance equipment, the Buyer Group shall only be entitled to
indemnification in respect of the present value (discounted at the rate of seven
(7%) percent per annum) of such portion of such costs that relate directly and
56
exclusively to remedying the breaches of representations and warranties in
Section 3.12 hereof that gave rise to such Damages, and subject further to the
other limitations set forth in this Article IX. The Sellers may elect (in
writing) to control any investigation or remediation arising from breaches of
Section 3.12(b), (c) or (d) hereof; provided, however, that such investigation
or remediation pursuant to Section 3.12(b) or (d) hereof shall be conducted
promptly and shall not materially interfere with Buyer's operation of the
Business. Buyer agrees to (i) cooperate with the Sellers to perform any
investigation or remediation; (ii) to place any deed notices or restrictions
that may be necessary; provided, that such deed notices or restrictions do not
significantly interfere with the continued use of the Facility or other property
in the same manner as it was used on or before the date of this Agreement; and
(iii) to maintain any institutional or engineering controls; provided, that the
present value (discounted at the rate of seven (7%) percent per annum) of such
portion of the cost for maintaining such controls that relates directly and
exclusively to such remediation shall (subject to the limitations set forth in
this Article IX) be paid for by the Sellers.
9.05. INDEMNIFICATION FOR AIR PERMIT NON-COMPLIANCE. The Sellers
hereby agree to jointly and severally indemnify, defend and hold harmless the
Buyer Group from and against, and pay and/or reimburse the Buyer Group for, any
and all Damages incurred by any of the Buyer Group necessary for the Business,
as if operated at eighty one (81%) percent of its practical capacity for
manufacturing the products identified on Schedule 1.01(e)(i) hereto or
substantially similar products in a commercially reasonable and prudent product
mix and product scheduling, to comply with all applicable Environmental Laws, to
the extent that such Damages arise from or are attributable to conditions of
non-compliance referenced in Item 1 of Schedule 3.12(a) hereto (concerning
certain temperature requirements specified as Operational Restrictions in the
Additional Special Terms and Conditions section of the Permit To Install,
Application No. 01-7396, issued to the Facility by the Ohio Environmental
Protection Agency, effective October 1, 1998) (hereinafter, "Air Compliance").
The Sellers shall have the right to control the scope and nature of
the method to achieve Air Compliance, including, without limitation, pursuing
permit modifications to achieve Air Compliance; provided, however, that: (1) the
Sellers' efforts shall cause the Facility to achieve compliance at the
above-stated capacity as soon as practicable; and in any event not later than
one year after the date of this Agreement; and (2) any modifications or
amendments to the permit do not impose additional operating, maintenance or
monitoring requirements on the Facility that would significantly interfere with
Buyer's ability to operate the Facility in substantially the same manner as of
the date of this Agreement. If the Sellers do not achieve such Air Compliance
within one year of this Agreement, or if any time sooner the Sellers fail to
make reasonable efforts to achieve such Air Compliance, Buyer may undertake, at
the Sellers' expense, actions that are necessary to achieve Air Compliance at
the above-stated capacity in a manner that is reasonable and cost effective
under the circumstances existing at the time. Provided that the Sellers have
made reasonable progress toward achieving Air Compliance, this one-year period
may be extended for a reasonable period of time to allow for construction and/or
57
installation of equipment at the Facility. Any such extension must be approved
by Buyer and such approval must not be unreasonably withheld.
Notwithstanding anything to the contrary contained herein,
indemnifiable Damages under this Section 9.05 shall include, without limitation,
any losses resulting from or caused by any interruption of operations of the
Business due to the Sellers' action (or inaction) in seeking to achieve Air
Compliance. Buyer shall use commercially reasonable efforts to mitigate any
Damages under this Section 9.05. The indemnification available under this
Section 9.05 is separate and apart from the indemnification available under
Section 9.02(a) hereof and shall not be counted toward any of the limitations
specified in Section 9.04(a) hereof.
Buyer shall cooperate with the Sellers in connection herewith,
including, without limitation, executing and submitting any Permit amendment or
modification applications, or other documentation required to implement a method
to achieve Air Compliance, or providing employee training; provided, however,
that any such requirements do not significantly interfere with Buyer's ability
to operate the Facility in substantially the same manner as of the date of this
Agreement.
Buyer shall have the right to participate in the process of achieving
Air Compliance and the Sellers shall keep Buyer informed of developments,
strategy and plans, including but not limited to, prior notice of and
opportunity to participate in all meetings or discussions with Governmental
Entities, and prior draft copies of all correspondence with and information
supplied to Governmental Entities, and the opportunity to comment thereon prior
to submission to Governmental Entities. The Sellers shall reasonably address
Buyer's comments. The Sellers shall provide Buyer with reasonable prior notice
of written designs or descriptions of any: capital improvements, and equipment
installations, modifications or upgrades, and the opportunity to comment thereon
prior to such methods being implemented, and the Sellers shall reasonably
address Buyer's comments. Buyer shall bear the cost of its participation and
such costs shall not be considered Damages. In the event any method of achieving
compliance also results in an additional benefit to the operations of the
Business, indemnifiable Damages shall be calculated after subtracting the value
of any benefits to the Business as such shall be reasonably negotiated and
agreed to at such time by Buyer and the Sellers.
ARTICLE X
MISCELLANEOUS
10.01. FEES AND EXPENSES. Except as otherwise specifically provided in
this Agreement, each of the Sellers and Buyer shall respectively pay all fees
and expenses incurred by it, or on behalf of it, in connection with, or in
anticipation of, this Agreement and the consummation of the transactions
contemplated hereby.
10.02. FURTHER ASSURANCES; COOPERATION. From time to time after the
Closing, at the request of one of the parties hereto and at the expense of the
party so requesting, the Sellers and Buyer agree to execute and deliver to such
requesting party such documents and take such other action as such requesting
58
party may reasonably request in order to consummate more effectively the
transactions contemplated hereby. The Sellers and Buyer shall reasonably
cooperate with each other and provide each other with such assistance as
reasonably may be requested by either of them in connection with all reasonable
requests, including with respect to the prosecution and defense of claims and
perfecting title to, and possession of, the Assets and the Shares. The party
requesting assistance hereunder shall reimburse the party providing assistance
for all reasonable third-party out-of-pocket expenses incurred in providing such
assistance.
10.03. NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally,
sent by facsimile transmission or reputable overnight courier, or mailed
(certified or registered mail, return receipt requested):
If to any Seller, to such Seller:
c/o International Specialty Products Inc.
1361 Alps Road
Wayne, New Jersey 07470
Attention: General Counsel
Telephone: 973-628-3000
Facsimile: 973-628-3229
If to Buyer, to:
Pharmaceutical Resources, Inc.
One Ram Ridge Road
Spring Valley, New York 10977
Attention: Kenneth Sawyer, CEO
Telephone: 845-425-7100
Facsimile: 845-425-7922
With a copy (which copy shall not constitute notice) to:
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas, 45th Floor
New York, New York 10020
Attention: Stephen R. Connoni, Esq.
Telephone: 212-536-4040
Facsimile: 212-536-3901
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date on which so
hand-delivered or telecommunicated or delivered by overnight courier or on the
fifth Business Day following the date on which so mailed, except for a notice of
59
change of address, which shall be effective only upon receipt thereof.
10.04. ENTIRE AGREEMENT. (a) This Agreement, the Other Agreements, the
Schedules and the Exhibits hereto and thereto and the Confidentially Agreement
contain the entire understanding of the parties hereto with respect to their
subject matter. This Agreement supersedes all prior agreements and
understandings, oral and written, with respect to its subject matter except for
Section 1 of that certain letter agreement, dated as of December 28, 2001, by
and between the Sellers and Buyer. BUYER ACKNOWLEDGES THAT, EXCEPT AS
SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE SELLERS HAVE PROVIDED NO EXPRESS
OR IMPLIED REPRESENTATIONS OR WARRANTIES OF ANY KIND. Without limiting the
foregoing, Buyer acknowledges and agrees that, except to the extent provided in
Sections 3.03, 3.07, and 3.15 hereof, the Sellers are making no representations
or warranties with respect to the business, operations, properties, assets or
liabilities of ISP Israel or any assets acquired or liabilities assumed in
connection with the FineTech Agreement, for any period prior to June 6, 2001.
(b) Items or information may be disclosed in the Schedules hereto
which the Sellers are not required to disclose under this Agreement; disclosure
of such items or information shall not affect (directly or indirectly) the
interpretation of this Agreement or the scope of the disclosure obligation under
this Agreement. In addition, inclusion of such information herein shall not be
construed as an admission that such information is "material" for any purpose.
10.05. WAIVER OF BULK SALES REQUIREMENTS. Subject to Section
9.02(a)(iv) hereof, Buyer hereby waives compliance by the Sellers with any
bulk-sales notice requirements of applicable law.
10.06. SEVERABILITY. Should any provision of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any of the other provisions of this Agreement,
which other provisions shall remain in full force and effect and be enforced to
the fullest extent permitted by law.
10.07. BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors (except as provided in Section 5.04
hereof) and permitted assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated, directly or
indirectly, by any party hereto without the prior written consent of the other
parties; provided, however, that any party may assign and/or delegate this
Agreement and any or all of the rights, interests and obligations hereunder to
any of its Affiliates, and upon any such permitted assignment and/or delegation,
the references in this Agreement to the assigning and/or delegating party shall
also apply to any assignee and/or delegatee unless the context otherwise
requires, but no such assignment and/or delegation will relieve the assigning
and/or delegating party of its obligations hereunder in the event such assignee
and/or delegatee fails to satisfy such obligations in accordance with the terms
of this Agreement.
60
10.08. NO THIRD-PARTY BENEFICIARIES. This Agreement is not intended,
and shall not be deemed, to confer upon or give any Entity (including, without
limitation, any past or current employee of the Business) except the parties
hereto (and, with respect to Article IX hereof, the Buyer Group and the Seller
Group) and their respective successors and permitted assigns any remedy, claim,
liability, reimbursement, cause of action or other right under or by reason of
this Agreement.
10.09. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
10.10. INTERPRETATION. The article and Section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
10.11. GOVERNING LAW. This Agreement and any claim related directly or
indirectly to this Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
10.12. AMENDMENTS. This Agreement may not be amended, modified or
supplemented except pursuant to an instrument in writing signed by each of the
parties hereto. Any failure of the Sellers to comply with any term or provision
of this Agreement may be waived by Buyer at any time by an instrument in writing
signed on behalf of Buyer and any failure of Buyer to comply with any term or
provision of this Agreement may be waived by the Sellers at any time by an
instrument in writing signed on behalf of the Sellers. Any such waiver or
failure to insist upon strict compliance with such term or provision shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure to comply.
[signature page follows]
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
PHARMACEUTICAL RESOURCES, INC.
By:
--------------------------------------
Name:
Title:
ISP HUNGARY HOLDINGS LIMITED
By:
--------------------------------------
Name: Alvin Yanofsky
Title:
ISP INVESTMENTS INC.
By:
--------------------------------------
Name:
Title:
ISP CHEMICALS INC.
By:
--------------------------------------
Name:
Title:
ISP TECHNOLOGIES INC.
By:
--------------------------------------
Name:
Title:
INTERNATIONAL SPECIALTY
PRODUCTS INC.
(as to Sections 5.04, 5.05 and 5.13 only)
By:
--------------------------------------
Name:
Title:
62
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS.........................................................2
1.01. Definitions..................................................2
1.02. Additional Definitions......................................11
ARTICLE II PURCHASE AND SALE.................................................12
2.01. Purchase and Sale; Closing Deliveries.......................12
2.02. Purchase Price; Allocation..................................13
2.03. Assumed and Retained Liabilities; Proration.................15
2.04. Nonassignable Rights........................................16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS....................17
3.01. Organization and Qualification; Due Authorization...........17
3.02. No Violation; Consents and Approvals........................18
3.03. Financial Statements; Undisclosed Liabilities...............18
3.04. Absence of Certain Changes or Events........................19
3.05. The Shares; the Equipment; the Inventory; Sufficiency
of Tangible Assets; etc...............................20
3.06. Intellectual Property.......................................22
3.07. Litigation..................................................23
3.08. Taxes. ...................................................23
3.09. Contracts...................................................23
3.10 Compliance with Laws, Permits, Etc..........................24
3.11. Brokers.....................................................25
3.12. Environmental Matters.......................................25
3.13. Employees and Employee Benefit Plans and Arrangements.......26
3.14. The Facility; Real Property.................................28
3.15. ISP Israel Asset Purchase Agreement.........................30
3.16. Products....................................................30
3.17. Certain Business Matters....................................30
i
3.18. Regulatory Compliance.......................................31
3.19. Customers...................................................32
3.20. Extent of the Sellers Representations and Warranties........32
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...........................32
4.01. Organization and Due Authorization..........................32
4.02. No Violation; Consents and Approvals........................33
4.03. Investment Intent...........................................33
4.04. Litigation..................................................33
4.05. No Brokers..................................................33
4.06. Availability of Funds.......................................33
ARTICLE V COVENANTS OF THE PARTIES...........................................34
5.01. Conduct of the Business; Etc................................34
5.02. Access......................................................35
5.03. Reasonable Best Efforts; Further Assurances.................36
5.04. Non-Competition.............................................36
5.05. Public Announcements........................................38
5.06. Certain Tax Matters.........................................38
5.07. Other Agreements............................................39
5.08. Discharge of Retained Liabilities...........................39
5.09. Employees...................................................39
5.10. Use of ISP Name; Etc........................................43
5.11. Title Insurance.............................................43
5.12. Survey......................................................44
5.13. Confidentiality.............................................44
5.14. Non-Interference............................................45
5.15. Right of Enforcement and Settlement.........................45
5.16. Cooperation.................................................45
5.17. FIRPTA Certificate..........................................46
5.18 Supplemental Disclosure.....................................46
5.19 Additional Covenants of Buyer...............................46
ii
5.20 Excluded Inventory..........................................47
5.21 Customer Confidentiality....................................47
ARTICLE VI CONDITIONS TO OBLIGATION OF BUYER TO CLOSE........................47
6.01. Representations and Warranties; No Material Adverse Effect..48
6.02. Compliance with Covenants...................................48
6.03. Consent and Approvals.......................................48
6.04. No Buyer Material Adverse Change............................48
6.05 Registration Statement......................................49
6.06 Transfer of Environmental Permits...........................49
6.07 Market Condition............................................49
6.08 Customer Consents...........................................49
ARTICLE VII CONDITIONS TO OBLIGATION OF THE SELLERS TO CLOSE.................50
7.01. Representations and Warranties..............................50
7.02. Compliance with Covenants...................................50
7.03. Consent and Approvals.......................................50
ARTICLE VIII TERMINATION.....................................................50
8.01. Termination.................................................50
8.02. Effect of Termination.......................................51
ARTICLE IX SURVIVAL; INDEMNIFICATION.........................................51
9.01. Survival of Representations and Covenants...................51
9.02. Indemnification.............................................52
9.03. Procedures for Indemnification..............................54
9.04. Limitations.................................................55
9.05. Indemnification for Air Permit Non-compliance...............57
ARTICLE X MISCELLANEOUS......................................................58
10.01. Fees and Expenses...........................................58
10.02. Further Assurances; Cooperation.............................58
10.03. Notices.....................................................59
10.04. Entire Agreement............................................60
iii
10.05. Waiver of Bulk Sales Requirements...........................60
10.06. Severability................................................60
10.07. Binding Effect; Assignment..................................60
10.08. No Third-Party Beneficiaries................................60
10.09. Counterparts................................................61
10.10. Interpretation..............................................61
10.11. Governing Law...............................................61
10.12. Amendments..................................................61
iv
LIST OF EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Bill of Sale
Exhibit C Form of Facility Transfer Agreement
Exhibit D Form of Intellectual Property Assignment and License
Agreement
Exhibit E Terms of Supply Agreement
Exhibit F Form of Transitional Services Agreement
Exhibit G Allocation of Purchase Price
v
LIST OF SCHEDULES
Schedule 1.01(b) Certain Equipment
Schedule 1.01(c) Certain Permitted Liens
Schedule 1.01(d) Certain Title Exceptions
Schedule 1.01(e)(i) Certain Products
Schedule 1.01(e)(ii) Certain Excluded Products
Schedule 1.01(f) Certain Technologies
Schedule 1.01(x) Certain Excluded Assets
Schedule 1.01(y) Certain Excluded Inventory
Schedule 1.01(z) Certain ISP Israel Ingredients and Intermediates
Schedule 2.01(a)(iv)(B) Exceptions to Licensed Intellectual Property
Schedule 3.01 Jurisdictions of Qualification
Schedule 3.02 Sellers' Consents and Approvals
Schedule 3.03(a) Financial Statements
Schedule 3.03(c) Certain Liabilities
Schedule 3.04 Certain Changes and Events
Schedule 3.05(a)(i) Note
Schedule 3.05(a)(ii) Certain Exceptions Re: ISP Israel
Schedule 3.05(a)(iii) Certain Restrictions
Schedule 3.05(c) Certain Equipment Lease Agreements
Schedule 3.05(f) Certain Other Assets
Schedule 3.05(g) Certain ISP Israel Related-Party Notes and
Receivables
Schedule 3.06(a)(i) Assigned Intellectual Property
Schedule 3.06(a)(ii) Licensed Intellectual Property
Schedule 3.06(a)(iii) Material ISP Israel Patents and Trademarks
Schedule 3.06(b) Certain Exceptions to Material Intellectual
Property Rights and Material ISP Israel Patents
and Trademarks
Schedule 3.07 Litigation
Schedule 3.09(a) Certain Contracts
Schedule 3.09(b) Assumed Contracts; Certain Consents
Schedule 3.10 Compliance With Laws, Permits, Etc.
Schedule 3.12(a) Compliance With Environmental Laws
Schedule 3.12(g) Environmental Permits
Schedule 3.13(a) Employees
Schedule 3.13(b) Employment and Retention Agreements
vi
Schedule 3.13(c) Seller Benefit Plans
Schedule 3.13(i) Obligations under Seller Benefit Plans
Schedule 3.14 Real Property
Schedule 3.15 Certain Breaches
Schedule 3.17(a) Certain Business Matters
Schedule 3.17(b) ISP Goods
Schedule 3.19 Notices from Certain Customers
Schedule 4.02 Buyer's Consents and Approvals
Schedule 4.06 Credit Facility Documents
Schedule 5.09(a) Certain Employees
Schedule 5.09(b) Buyer Benefit Plans
vii