Exhibit 2.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is dated as of May 21, 2001
among BCP Ingredients, Inc., a Delaware corporation ("Buyer"), and DuCoa L.P. a
Delaware limited partnership ("DuCoa"), and DCV, Inc., a Delaware corporation
("DCV") and the general partner of DuCoa, and DCV GPH, Inc., a Delaware
corporation ("LP") and a limited partner of DuCoa (DuCoa, DCV and LP being
together referred to herein as "Sellers" and being individually referred to
herein as a "Seller").
BACKGROUND
Buyer desires to purchase and acquire from Sellers, and Sellers desire to
sell, assign and transfer to Buyer, certain assets, properties and business, as
a going concern, of Sellers, forming part of or used in connection with any of
the Business (as herein defined), with the exception of certain excluded assets
hereinafter specified, upon the terms and subject to the conditions hereinafter
set forth.
In consideration of the premises and the mutual covenants and agreements
hereinafter set forth, the parties hereto hereby agree as follows:
ARTICLE 1
1. Purchase and Sale of Business and Assets.
1.1 Acquired Assets. Subject to and upon the terms and conditions of this
Agreement, Sellers shall sell, transfer, convey, assign, grant and deliver
(collectively "Transfer") to Buyer, and Buyer shall acquire, and except as
otherwise indicated in this Section 1.1, at the Closing (as hereinafter
defined), subject to the Permitted Liens (as hereinafter defined), all right,
title and interest in and to all business, properties, assets, machinery,
equipment, furniture, fixtures, licenses, goodwill and rights of Sellers as a
going concern, of every kind, nature and description, tangible and intangible,
owned or leased, real or mixed, wherever located and whether or not carried or
reflected on the books or records of any Seller, including all properties,
assets, franchises, rights described in the form of Bill of Sale annexed as
Exhibit 1.1 hereto (the "Bill of Sale"), and all of the Acquired Assets, as
hereinafter referred to, but excluding the Excluded Assets (as hereinafter
defined), as the same shall exist on the Closing Date (as hereinafter defined),
forming part of or used in connection with any of the Business (as hereinafter
defined). All of the foregoing (other than the Excluded Assets) are herein
collectively referred to as the "Acquired Assets." The Acquired Assets also
include, without limitation, all, or where expressly indicated below in this
Section 1.1, all right and title and interest of any of Sellers in and to all,
of the following:
1.1.1 all real property and buildings and improvements thereon and all
interests therein or pertaining thereto (other than leasehold interests covered
by Section 1.1.3 below) owned by any Seller and used or occupied in connection
with any of the Business (as defined in Section 1.2 below) (such real property
being hereinafter referred to as the "Owned Real Property"), including the real
property more particularly described on Schedule 1.1.1 of the Disclosure
Schedule (as hereinafter defined);
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1.1.2 all tools, dies, molds, jigs, patterns, tooling, fittings, tanks,
machinery, equipment, cranes, furniture, furnishings, fixtures, vehicles,
rolling stock, and all computer hardware, used in connection with any of the
Business, all related claims, credits, and rights of recovery and set-off with
respect thereto, and all other items of tangible personal property of any Seller
used by any Seller in connection with any of the Business (collectively the
"Equipment"), including the items of Equipment more particularly described on
Schedule 1.1.2 of the Disclosure Schedule;
1.1.3 all leasehold interests used, held or occupied in connection with
any of the Business in all properties, real or mixed, wherever situated (but
excluding the leased Randolph, Wisconsin real property, the leased Highland,
Illinois real property and the leased Wilmington, Delaware real property (the
"Excluded Leased Property"), and any and all leasehold improvements located in
the buildings and improvements used by any Seller thereat (collectively, "Leased
Real Property," and, together with the Owned Real Property and the Excluded
Leased Property, the "Real Properties"), including under the leases more
particularly described on Schedule 1.1.3 of the Disclosure Schedule and all
leasehold improvements located thereon;
1.1.4 all U.S. and foreign trademark registrations and applications
therefor, and all right, title and interest of any of Sellers in and to all
names, titles, trademarks, trade names, service marks and logos owned, used or
proposed for use in connection with any of the Business, and any names similar
to or any derivation or variation of any and all thereof, and the goodwill
pertaining thereto and all right to fully exploit such names and other property
and rights (all of the above being hereinafter referred to as the "Marks"),
including, those names, marks and logos more particularly described on Schedule
1.1.4 of the Disclosure Schedule;
1.1.5 all patents and patent applications owned or used in connection
with any of the Business, and the goodwill pertaining thereto and the right to
fully exploit, and enforce infringement claims in respect of, such patents
(collectively, "Patents"), including those Patents more particularly described
on Schedule 1.1.5 of the Disclosure Schedule subject to those licenses
identified on said Schedule 1.1.5;
1.1.6 all of the right, title and interest (including by reason of
license or lease) of any Seller in or to any and all software, computer
programs, and software products and services owned, used, licensed, developed,
being developed or intended to be developed for or in connection with any of the
Business, whether for internal use (including engineering, design,
manufacturing, quality control, quality assurance, inventory control, pricing
and testing programs and software to create, publish, manufacture and distribute
any web site or home page) or for sale or license to others, and any and all
software, computer programs and software and software-related products and
services heretofore or currently or at the Closing manufactured, published,
licensed and/or marketed or proposed to be manufactured, published, licensed
and/or marketed, or under any stage of development, revision, upgrade,
modification or planning, for or in connection with any of the Business , in all
versions and releases, and all updates and enhancements of or to any of the
foregoing, including all run-time systems, libraries, examples, utilities, data
files, manuals, guides and written and related materials and all Intellectual
Property and Documentation (as such terms are herein defined), whether or not
patented or copyrighted, related to the implementation or use of any thereof
(collectively, "Programs");
1.1.7 all right, title and interest of any of Sellers in and to all
documentation, records and software, whether in machine or visually readable or
other tangible
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form, evidencing, representing or containing any Intellectual Property (as
hereinafter defined) related to any of the Business in the possession or under
the control of any of Sellers whether relating to any of the Programs or used in
or in connection with or necessary to any of the Business and/or the Acquired
Assets, including any and all manuals, functional and design specifications,
user and programmer instructions, engineering, design, manufacturing, machining,
quality control, quality assurance, inventory control, pricing and testing
instructions, flow charts and diagrams, coding constructions, testing notes,
error reports and logs, patches and patch instructions, itemizations of
development tools, and all other writings which would be necessary or helpful to
a skilled programmer to understand, maintain and enhance any Program
(collectively, "Documentation");
1.1.8 all right, title and interest of any of Sellers in and to all
know-how and other intellectual property of or developed or under development by
or for any of Sellers necessary for or used in or for any of the Business,
including all research and/or development and all results of all projects
related thereto whether partial, in progress or completed, trade secrets, vendor
information, lists and data bases, proprietary processes and other information,
methods and apparatus, information not known to the general public, each
literary work, whether or not copyrightable, copyrights and copyright
applications, ideas, concepts, product and other designs and drawings,
discoveries, formulae, patents, patent applications, technical information,
product and service developments, inventions, invention disclosures,
improvements, software, source codes and materials, object codes and materials,
algorithms, techniques, mask work rights, prototypes, engineering and design
models, information with respect to firmware and hardware, and any information
relating to any product or Program which has either been developed, acquired or
licensed for or used in or necessary for any of the Business, and also including
all of the foregoing relating in any manner to any of the projects referred to
in Schedule 1.1.8 of the Disclosure Schedule, and also including the
maintenance, modification or enhancement any and all of the foregoing, all
vendor and customer sales and purchase records and files of or related to any of
the Business, and all outsourcing, fulfillment, dealer, distribution,
engineering, design, manufacturing, quality control and assurance, pricing and
testing information, and all product and other information from all relevant
pages and portions of any and all websites of or maintained by or for any Seller
which covers or refers to any of the Business (collectively, together with the
Marks, the Patents, the Documentation and the Programs, "Intellectual
Property");
1.1.9 each contract, agreement, lease, license, franchise, purchase
order, sale, license or service order, permit, instrument, commitment,
arrangement and understanding (in each case, whether written or oral and
including all amendments thereto) to which any Seller is a party or by which any
Seller or the Business is bound or under which any Seller has any rights or is
entitled to any benefits relating to the Business, including, (i) all
maintenance, service, partnership and joint venture, license, royalty, supply,
purchase, distribution, dealer, distributor, advertising and promotional
services agreements, purchase orders, sale orders, government contracts, bids
and proposals, awards, options to purchase any asset or property rights, (ii)
all restrictive and negative covenants, non-competition, proprietary property,
non-disclosure and confidentiality agreements in favor of any Seller or the
Business or with any and all former or current employees and consultants having
access to Intellectual Property or rendering services to or for any of the
Business to the extent relating to any of the Business, and (iii) all leases of
machinery, equipment and other personal property accepted by Buyer and listed on
Schedule 1.1.9 of the Disclosure Schedule relating to or used in connection with
any of the
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Business (other than those identified as Excluded Assets or constituting
Excluded Liabilities (as defined below)) (collectively, "Contracts");
1.1.10 all right, title and interest of any of Sellers in and to all
promotional materials of every kind, nature and description used in, or
necessary for the operation of, any aspect of the Business, including all
physical copies and media of items constituting any part thereof, and all user
manuals, tapes, compact disks and diskettes, and all advertising, artwork,
templates and related creative materials for advertisements, catalog insertions,
page layouts, promotional and product literature and displays, marketing
materials, brochures and pamphlets related to any of the foregoing, in each case
to the extent any Seller has any right, title or interest therein or with
respect thereto (collectively, "Business Materials").;
1.1.11 the proceeds of any and all insurance, and the right to receive
the proceeds of any and all insurance, with respect to any and all claims which
have been or may be asserted in connection with the damage, destruction or loss
to any tangible property hereunder included, or which, but for such damage,
destruction or loss, would have been included, in the Acquired Assets, to the
extent not utilized prior to the Closing directly and exclusively to repair or
replace the lost, damaged or destroyed items (collectively the "Insurance
Proceeds");
1.1.12 all easements, rights-of-way, privileges, licenses or other
interests of any of Sellers in, on, or to, any land, highway, street, road, or
avenue, open or proposed, in, on or across, in front of, abutting or adjoining,
any of the Owned Real Property; and all right, title and interest of any Seller
or any affiliate, if any, in and to any awards made or to be made in lieu
thereof, and in and to any unpaid awards for damage thereto by reason of any
change of grade of any such highway, street, road or avenue;
1.1.13 all rights which any Seller may have against any of its
suppliers under express or implied warranties related to any of the Business or
any products or services sold or offered by or through the Business;
1.1.14 all right, title and interest of any of Sellers in and to all
operating data and records of any Seller which are necessary to or used in the
operation of any of the Business, wherever located, including all books of
account, files and records of or used in or for any of the Business, whether in
hard copy, electronic, magnetic or other format, including purchase and sales
records and information, customers' records, records pertaining to customer
requirements, equipment maintenance and warranty information, customer and
prospect lists, correspondence, catalogues, promotion materials, customer
contacts, customer invoices, customer returns and vendor product information,
and restrictive and negative covenants, non-competition, proprietary property
and confidentiality agreements, and all other files, records, literature and
other documents necessary to or used in or for any of the Business, excluding
only attorney-client or attorney work product documents or communications
(collectively, "Files and Records"); provided, that any file or record that
pertains solely to the Excluded Assets or Excluded Liabilities shall not be
included;
1.1.15 all prepaid items, advance payments, customer advances and
prepayments relating to any of the Business, including the items more
particularly described on Schedule 1.1.15 of the Disclosure Schedule, but
excluding the items more particularly described on Schedule 1.3.15 of the
Disclosure Schedule;
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1.1.16 all right, title and interest of any of Sellers in and to all
licenses, permits, security clearances, authorizations, franchises and
certifications, including ISO 9002 certifications, and other consents and
approvals issued by any agency, division, subdivision, audit group or procuring
office of any federal, state, local or foreign government, or any industry,
trade or standards authority, association or other organization, used or
necessary in the conduct of any of the Business ("Permits and Approvals");
1.1.17 all rights to payment, causes of action, claims and rights of
recovery of any Seller originating or resulting from or arising in connection
with any of the Business, and/or the Acquired Assets, excluding only those
listed on Schedule 1.3.7 of the Disclosure Schedule; and
1.1.18 all right, title and interest of any of Sellers in and to the
Business as a going concern, including all of the right, title and interest of
any of Sellers in and to the telephone, telex, telefacsimile and facsimile
numbers and directory listings, and all passwords and security protection
procedures and systems.
1.2 The Business. The businesses, operations and rights of Sellers or any
of them pertaining or relating to any or all of the "Verona Operations", the
"M-CAP Operations" and/or any of the "Products" (as each such term is defined in
Schedule 1.2 hereto), and/or the ownership and/or use of any and all assets,
properties and rights used in connection with any of the foregoing, are herein
called collectively the "Business."
1.3 Excluded Assets. Notwithstanding anything to the contrary contained in
this Agreement, the Acquired Assets shall not include any of the following (the
"Excluded Assets"), which Sellers shall continue to own and be responsible for
after the Closing:
1.3.1 all inventories of Sellers, including goods held by Seller for
sale, raw materials, work-in-process, finished goods and supplies, but not spare
or replacement parts or components for or related to any of the Equipment
(collectively "Inventory");
1.3.2 any cash or cash equivalents of Sellers on hand or on deposit;
1.3.3 all trade accounts receivable of Sellers for the sale of
Inventory or other accounts receivable in the ordinary course of business as of
the date immediately prior to the Closing Date (the "Receivables");
1.3.4 all refunds or credits in respect of income and franchise taxes
paid by Sellers (whether federal, state or local taxes) for periods prior to the
Closing Date;
1.3.5 those leases, contracts and agreements identified on Schedule
1.3.5 of the Disclosure Schedule (the "Excluded Contracts");
1.3.6 all limited partnership and corporate formation documents of
Sellers, including minute books and stock ledgers;
1.3.7 those claims and causes of action of Sellers identified in
Schedule 1.3.7 of the Disclosure Schedule, or constituting only an affirmative
defense accrued prior to the Closing Date to any of the Excluded Liabilities;
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1.3.8 (i) all assets historically located at Sellers' Wilmington, DE or
Highland, IL facilities, and never located at the Owned Real Property, in the
nature of furniture, office equipment, laboratory equipment, computer hardware
(including software used thereon) and office and laboratory supplies, other than
those used primarily for or in connection with the Business operations at
Verona, Missouri and/or Randolph, Wisconsin, and (ii) the central processing
system historically located at Sellers' Highland, IL facility (and the software
therefor);
1.3.9 Sellers' real property and improvements located at Miley, SC,
Sellers' abandoned Miley, SC plant and all tangible personal property
historically located at such abandoned plant (collectively with said real
property, improvements and plants, the "Excluded Miley Assets");
1.3.10 all Documents containing consolidated information of the
Business and other businesses of Sellers as long as Buyer otherwise receives as
part of the Acquired Assets all such information relevant to the Business in
other Documents;
1.3.11 the Intellectual Property for the production of those products
identified in Schedule 1.3.11(a) of the Disclosure Schedule previously sold,
transferred or assigned by any of Sellers in the transactions identified in said
Schedule 1.3.11(a) and not used in any part of the Business (other than pursuant
to the terms of the tolling agreements identified in said Schedule 1.3.11(b));
1.3.12 all right, title and interest in and to the trademarks and
tradenames, "DuCoa" and "DCV";
1.3.13 all right, title and interest in and to any websites, or
Intellectual Property, Documentation or Programs exclusively for such websites,
used, owned or licensed by any of the Sellers except for the website information
referred to in Section 1.1.8 hereof;
1.3.14 all right, title and interest in and to any Programs, or
Intellectual Property or Documentation exclusively for any Programs, except for
such Programs, or Intellectual Property or Documentation for any Programs, used
primarily at or for the Verona, MO site or the Business; and
1.3.15 prepaid items, advance payments, customer advances and
prepayment listed in Schedule 1.3.15 of the Disclosure Schedule.
1.4 Instruments of Transfer. The Transfer to Buyer of each of the Acquired
Assets as herein provided shall be effected by warranty deeds, bills of sale,
licenses, endorsements, assignments, certificates of title, and/or other good
and sufficient instruments of transfer and conveyance, satisfactory in form and
substance to Buyer and as shall be effective to vest in Buyer title to each such
Purchased Asset as required by this Agreement.
1.5 Title to Acquired Assets. Sellers shall Transfer to Buyer good and
marketable title to all of the Acquired Assets, free and clear of any and all
claims, liabilities and obligations and free and clear of any and all liens,
pledges, charges, mortgages, security interests, restrictions, leases, licenses,
easements, liabilities, claims, encumbrances, preferences, priorities or rights
of others of every kind and description (collectively, "Liens"), except for
those liens or limitations expressly identified on Schedule 1.5 of the
Disclosure Schedule ("Permitted Liens").
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1.6 Intellectual Property. Without intending to limit or affect any other
representation or covenant made herein or pursuant hereto, Buyer shall have all
rights as Sellers collectively have to use, assert and/or apply for patent,
trademark, copyright and other statutory or common law protection for any or all
Intellectual Property in any and all countries. Sellers agree to assist, and to
use at Buyer's expense all commercially reasonable efforts to cause each of its
current employees and contractors to assist, Buyer in every way to apply for,
prosecute and obtain, and from time to time enforce, any and all patent,
trademark, copyright and other statutory or common law protection for any of the
Intellectual Property in any and all countries. Sellers shall, or shall use
commercially reasonable efforts to cause the appropriate employee or contractor
to, execute any and all assignments, transfers, applications and other papers
covering any Intellectual Property which may be considered necessary or helpful
by Buyer in furtherance of the foregoing and/or to accomplish the assignment,
transfer and/or license of any Intellectual Property to persons designated by
Buyer. Seller constitutes and appoints Buyer its attorney-in-fact to execute and
deliver all applications for registration in its behalf of such copyrights and
to cause all assignments required, permitted or contemplated under the terms of
this Agreement to be recorded.
1.7 Assignment of Certain Contracts. Buyer and Sellers acknowledge that
certain of the Contracts, Permits and Approvals and Intellectual Property may
not, by their terms or under applicable law, be assignable without obtaining
third-party consents or approvals (collectively, "Unassignable Contracts"). Each
of Sellers acknowledges that the inability to assign any of the Unassignable
Contracts shall not relieve any Seller of the obligation to sell and deliver
such of the Acquired Assets as shall be tangible and/or capable of being
delivered or otherwise assignable as long as the compliance with such obligation
does not put any Seller in breach of any such Unassignable Contract. Anything in
this Agreement to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign any Unassignable Contract if an attempted
assignment thereof, without the consent of a third-party thereto, would
constitute a breach thereof. Any assignment to Buyer by any Seller of any
Unassignable Contract or any claim or right or any benefit arising thereunder or
resulting therefrom which shall require the consent of any third party, shall be
made subject to such consent being obtained. If such consent is not obtained, or
if an attempted assignment thereof would be ineffective or would adversely
affect the rights of Buyer thereunder, Sellers shall both before and after the
Closing cooperate with Buyer in any reasonable arrangement requested by Buyer to
provide for Buyer at Buyer's expense all rights and benefits under any or all of
such Unassignable Contracts, including enforcement for the benefit of Buyer of
any and all rights of any Seller against any third-party arising out of the
breach or cancellation by such third-party or otherwise, and Sellers shall both
before and after the Closing, and without further consideration therefor, pay,
assign and remit to Buyer promptly all monies, and, to the extent permitted, all
other rights or consideration received, or which may be received or obtained in
respect of performance of any of the Unassignable Contracts. When any such
consent shall be obtained or any such Unassignable Contract shall otherwise
become assignable, Sellers shall promptly assign same to Buyer and Buyer shall,
to the extent and only to the extent the same constitute Assumed Obligations (as
defined below) be deemed to have assumed Sellers' obligations under the
Unassignable Contracts, but in each case only if Buyer shall be entitled to the
full benefits associated therewith. Until such time, no Seller shall enter into
any amendment of any Unassignable Contract without the prior written consent of
Buyer.
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ARTICLE 2
2. Purchase Price; Assumption of Obligations; Adjustments; Prior Agreement.
2.1 Purchase Price. Subject to and upon the terms and conditions of this
Agreement, including the adjustments hereinafter referred to, Buyer shall pay to
Sellers, in full payment for the Acquired Assets and in reliance upon the
representations and warranties made herein by Sellers, the purchase price (the
"Purchase Price") set forth on and computed in accordance with Schedule 2.1
hereto, and payable in the manner and subject to adjustment as provided in said
Schedule 2.1.
2.2 Allocation. The Purchase Price shall be allocated among the Acquired
Assets as determined by Buyer in its reasonable judgment, and Buyer shall notify
Sellers thereof in writing within ninety (90) days following the Closing, and
such allocation shall be binding on Sellers. The parties hereto shall file all
tax returns consistently with such allocation.
2.3 Assumed Obligations. Except as may otherwise be provided hereunder,
Buyer shall, at the Closing, execute and deliver to Seller an Obligations
Undertaking in the form of Exhibit 2.3 hereto (the "Obligations Undertaking"),
pursuant to which Buyer shall assume and agree to pay and perform as the same
shall become due in accordance with their respective terms, the obligations of
Sellers set forth in the Obligations Undertaking, in each case, only to the
extent that such obligation is legally enforceable and also shall not have been
paid, performed or discharged prior to the Closing (hereinafter collectively
referred to as the "Assumed Obligations").
2.4 Excluded Liabilities. Except as expressly provided in the Obligations
Undertaking, and without intending to limit the provisions of Article 8 hereof,
Buyer shall not and does not assume any liability or obligation of any Seller,
fixed or contingent, disclosed or undisclosed, and does not and shall not assume
any liability for any claim, debt, default, duty, obligation or liability of any
Seller of any kind or nature, whether known or unknown, contingent or fixed, all
of which, to the extent that they exist on and after the Closing shall be
retained by Sellers. All of the foregoing are collectively referred to as the
"Excluded Liabilities" and also include (without intending to limit the
provisions of Article 8 hereof) all of the following:
2.4.1 any and all liabilities and obligations based on or arising from
the presence, use, disposal or treatment of any Hazardous Substance (as
hereinafter defined) on or about any of the Real Properties or any of the Prior
Properties (as hereinafter defined) or any of the disposal, storage or other
sites or premises used or occupied by or for any Seller or any past or present
affiliate or partner thereof, or any discharge or release of a Hazardous
Substance prior to the Closing Date, or failure to obtain any license or permit
required in connection with any Hazardous Substance, or arising out of any
non-compliance with any environmental, health or safety law, ordinance, rule or
regulation, in each case to the extent based on or arising from any act,
transactions, state of facts or other condition or conduct which existed before
the Closing Date, whether or not then known, including all fines, penalties,
remedial action and clean-up and other costs and expenses;
2.4.2 any obligation or liability of any Seller based upon acts or
omissions of any Seller occurring on or after the Closing Date;
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2.4.3 any Seller's obligations under any stock or equity option, stock
or equity purchase or profit-sharing plans or agreements;
2.4.4 any brokerage, investment banking or finder's fee payable by any
of Sellers in connection with the transactions contemplated hereby;
2.4.5 any liabilities of any Seller to any of its present or former
partner whether or not arising out of any action by any Seller or in connection
with any of the transactions contemplated hereby;
2.4.6 any and all obligations of any Seller for any indebtedness,
including capitalized leases not expressly assumed by Buyer hereunder and
amounts advanced by any Seller or any affiliate thereof or amounts otherwise
owed or payable by any Seller or any affiliate thereof, and any and all other
intercompany obligations (whether current or long-term);
2.4.7 except as expressly set forth in Section 6.6 hereof, any and all
debts, liabilities and obligations of any Seller incurred or accrued with
respect to any period, or circumstances, or state of facts or occurrences, on,
or prior to the Closing Date, relating to bonuses, salaries, wages, incentive
compensation, compensated absences, workmen's compensation, FICA, unemployment
taxes, employee benefits, medical and health, deferred compensation, wage
continuation, severance, termination, pension (including any unfunded accrued or
vested obligation), section 401(k) plans, cafeteria, child care, retirement,
profit-sharing or similar plans or arrangements and any and all vacation,
holiday or sick pay or leave incurred or accrued with respect to any current or
former employees of Seller whether or not such employees become employees of
Buyer;
2.4.8 any and all domestic and foreign federal, state and local income,
payroll, property, sales, use, franchise or value added tax liabilities, imposed
on any Seller or with respect to income or activities of any Seller, including
assessments and governmental charges or levies imposed in respect of such taxes,
and any and all other taxes of any Seller, any subsidiary or affiliate,
including any income or gains tax with respect to the Transfer of Acquired
Assets contemplated hereby;
2.4.9 any and all liabilities and obligations of any Seller arising
under or in connection with this Agreement (including indemnification
obligations and obligations to pay expenses arising out of this Agreement), or
from any failure to perform any of the agreements contained herein or incurred
in connection with the consummation of the transactions contemplated hereby, or
for which any Seller is responsible under this Agreement, including fees of
lawyers, accountants and other advisors;
2.4.10 any and all liabilities and obligations with respect to claims,
suits, legal, administrative, arbitral or other actions, proceedings and
judgments with respect to causes of action or disputes arising out of, and other
actual or alleged liabilities of any Seller asserted or imposed, or arising out
of, any events occurring, or circumstances or state of facts existing, on or
prior to the Closing Date, including personal injury, anti-trust, tort
negligence, deceptive, unfair or illegal trade practices, or any product
liability (including strict liability) or warranty claim with respect to
products, goods or items manufactured, sold or distributed or services rendered
by any Seller prior to the Closing Date;
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2.4.11 any and all debts, liabilities and obligations of any Seller
with respect to any of the Excluded Assets and/or the Excluded Contracts;
2.4.12 any and all liabilities or obligations arising out of any
breach, default or non-performance of any lien, license, agreement, or contract,
oral or written, or any violation of or failure of compliance with any law,
rule, regulation, ordinance, order or judgment, policy or requirement of any
governmental body, authority, agency, court, arbitrator(s) or tribunal occurring
or accrued, or attributable to any fact, occurrence or state of fact or
condition, on or before the Closing Date;
2.4.13 any and all accrued liabilities and obligations arising under
leases of real and personal property by any Seller to be assumed by Buyer,
including all arrearages in rent, for all periods prior to the Closing Date;
2.4.14 any and all claims or liabilities relating to any actions by any
present or former partner, shareholder, director, officer or employee of any
Seller or any affiliate thereof or of any predecessor of any Seller or any
affiliate thereof (including trustees of employee benefit plans) on or prior to
the Closing Date; and
2.4.15 any and all liabilities or obligations to or as a guarantor,
co-obligor or surety of any Seller or any affiliate thereof.
2.5 Apportionment of Certain Expenses.
2.5.1 Appropriate adjustments and apportionments shall be made between
Sellers and Buyer, as of the close of business on the calendar day immediately
preceding the Closing Date, for (i) real property (but not transfer or sales)
taxes, assessments and rentals, utilities, water, fuel and sewage expense in
respect of the Owned Real Properties and leased Equipment assigned to Buyer and
(ii) personal property (but not transfer or sales) taxes applicable to the
tangible Acquired Assets, such that Sellers shall be responsible for the pro
rated portion attributable to all periods ending prior to the Closing Date and
Buyer shall be responsible for the pro rated portion attributed to all periods
commencing on the Closing Date. To the extent Buyer assumes an accrued
obligation referred to in this Section 2.5.1 which is the responsibility of
Sellers, Sellers shall pay such amount to Buyer at the Closing. To the extent
Sellers have paid an obligation referred in this Section 2.5.1 which is the
responsibility of Buyer, such payment shall be added to the amount of the
Purchase Price payable at the Closing.
2.5.2 In addition, the Purchase Price (and the amount thereof payable
at the Closing) shall be reduced by the amount of all accrued vacation pay as of
the Closing Date for all personnel of the Business who shall be hired by Buyer.
2.5.3 If all the apportionments and reductions set forth above are not
accomplished at the Closing Date, then, as soon as practicable after said date,
representatives of Sellers and Buyer will examine all appropriate books and
records in order to make the determination of said apportionment. Payment in
respect thereof shall be made within 10 days after such determination; provided,
that if the payments with respect to real and personal property taxes are based
in whole or in part on the previous year's taxes, there shall be a later
adjustment to reflect the current year's taxes when the tax bills are finally
rendered.
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2.6 Prior Agreement. At the Closing, Sellers shall execute and deliver to
Buyer: a power of attorney with respect to Sellers' rights under that certain
Asset Purchase Agreement, identified in Schedule 2.6 of the Disclosure Schedule
(the "Prior Agreement"), and a security agreement, with respect to any and all
sums now or hereafter payable to any of Sellers under or by reason of the Prior
Agreement, all in the form appended to Schedule 2.6 of the Disclosure Schedule
(collectively the "PA/Security Agreement").
2.7 Certain Other Transfers.
2.7.1 Promptly after the execution hereof, Sellers shall take all steps
and execute and file all applications, assignments, notices and other documents
necessary or reasonably requested by Buyer to promptly transfer to Buyer or to
permit Buyer to promptly obtain in its own name all Licenses.
2.7.2 Sellers shall use their best efforts to cause all toll-free
customer service telephone numbers used primarily for the Business to be
transferred to Buyer effective within fifteen (15) days of the Closing Date.
ARTICLE 3
3. Closing; Deliveries; Conditions Precedent.
3.1 Closing.
3.1.1 The Closing under this Agreement (the "Closing") shall take place
at the offices of Golenbock, Eiseman, Assor & Bell, 437 Madison Avenue, New
York, New York at 10:00 a.m., local time, on May 31, 2001 or such other date,
place or time as the parties hereto shall mutually agree upon; provided that if
Buyer is actively engaged in efforts to obtain bank or institutional lender
financing for the acquisition contemplated hereby, then Buyer shall be entitled
to extend the date of the Closing until a date on or before June 15, 2001 (such
date for the Closing as Buyer may designate from time to time being herein
called the "Buyer Designated Date"), it being acknowledged by all parties that
Buyer has not assured and cannot assure that such financing will be obtained and
that none of Sellers will have any claim or cause of action whatsoever, nor will
Buyer be deemed to be in breach or default, if such financing is not obtained.
The time and date of the Closing is referred to in this Agreement as the
"Closing Date", but for purposes of any calculation or determination required to
be made by any of the parties following the Closing, the Closing shall be deemed
to have been effective as of 12:01a.m. on the Closing Date.
3.1.2 In the event that the Closing is not held on or before May 31,
2001, and such failure to hold the Closing is solely the result of a failure to
satisfy the condition set forth in Section 3.6.8 hereof without there also being
a failure of any other condition set forth in Section 3.6 hereof and which such
failure to satisfy the condition set forth in Section 3.6.8 is not due to any
act or omission of any of Sellers (the foregoing taken as a whole being a "Buyer
Financing Cause"), then, for each day after May 31, 2001 through the earlier of
(x) June 15, 2001, and (y) the Buyer Designated Date, the Purchase Price shall
be increased by $3,000 (the "Buyer Delay Increase"). Under no circumstances
shall any Buyer Delay Increase be payable by Buyer or added to the Purchase
Price if a delay in the Closing is due to any cause or event other than the
Buyer Financing Cause.
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3.1.3 All proceedings to be taken and all documents to be executed and
delivered by all parties at the Closing shall be deemed to have been taken and
executed simultaneously and no proceedings shall be deemed taken nor any
documents executed or delivered until all have been taken, executed and
delivered.
3.2 Deliveries of Selling Parties. At the Closing, Sellers shall deliver,
or cause to be delivered, to Buyer:
3.2.1 the Bill of Sale, executed by Sellers;
3.2.2 a Post-Closing Escrow Agreement, substantially in the form of
Exhibit 3.2.2 hereto, dated as of the Closing Date, among the Sellers and Buyer,
and the Escrow Agent thereunder (the "Escrow Agreement"), executed by Sellers
and pursuant to which $250,000 of the portion of the Purchase Price payable at
Closing (the "Escrow Amount") shall be deposited in escrow thereunder;
3.2.3 a Non-Competition Agreement, dated as of the Closing Date in the
form of Exhibit 3.2.3 hereto, among each of Sellers and Buyer (the "Non- Compete
Agreement"), as executed by each of Sellers;
3.2.4 a Non-Competition Agreement, dated as of the Closing Date, in the
form of Exhibit 3.2.4 hereto, between James Doncheck and Buyer, executed by said
individual;
3.2.5 such warranty deeds, endorsements, assignments, and other
instruments of Transfer, in form and substance reasonably required by Buyer, as
shall be effective to vest in Buyer, good and marketable title to the Acquired
Assets as provided herein;
3.2.6 instruments of assignment and transfer of all Marks, Patents and
Intellectual Property to be Transferred from any of Sellers to Buyer hereunder,
executed by the applicable Sellers, in form and substance satisfactory to Buyer;
3.2.7 with respect of each parcel of the Owned Real Property, evidence
as to whether such parcel is located within a flood hazard area for purposes of
the National Flood Insurance Act of 1968, as amended;
3.2.8 a survey (collectively, the "Survey") of each parcel of the Owned
Real Property, dated not more than 60 days prior to the Closing Date, certified
to Buyer and its lenders, and either (i) made in accordance with the "Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys" established and
adopted by the American land Title Association and American Congress on
Surveying and Mapping in 1992, and meeting the accuracy requirement of an
"Urban" survey as defined therein, or (ii) meeting the applicable state survey
requirements and sufficient to obtain "Extended Coverage Endorsements" for each
applicable title insurance policy insuring over the general exceptions contained
customarily in any such policy, in the case of both (i) and (ii) above, showing
all buildings and other improvements, if any, all encroachments, if any, all
set-back lines, if any, and all areas affected by any easement or other
instrument of record, if any (the recording data in respect of which shall be
marked on the Survey), containing metes and bounds description of such parcel,
and setting forth the flood zone designations, if any, in which such parcel is
located and otherwise reasonably satisfactory to Buyer; provided that Buyer
shall accept at the Closing such a Survey which does not show the precise metes
and bounds location of each building located entirely
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within the Owned Real Property or the precise metes and bounds location of each
utility easement, but which nevertheless shows and certifies the location of
each railroad easement and right of way easement and shows that no building or
improvement is located within or in conflict with any such railroad easement or
right of way or encroaches over the property line, and it is hereby agreed that
the estimated price, as established by the surveyor, of $7,000, for completing
and recertifying the Survey to conform with the requirements of this Section
3.2.8, without giving effect to the limitations in this proviso, has been
reflected in the Purchase Price;
3.2.9 the originals (or if not in existence copies) of all Contracts
included in the Acquired Assets;
3.2.10 certificates of good standing for Sellers issued as of a recent
date by the Secretaries of State of the States of Delaware and Missouri (with
respect to DuCoa and DCV) and Delaware (with respect to LP);
3.2.11 a certificate of each of Sellers, dated the Closing Date, in
form and substance reasonably satisfactory to Buyer, as to (i) the resolutions
of the board of directors shareholders and partners of each Seller, as the case
may be, authorizing the execution, delivery and performance of this Agreement
and each exhibit hereto and the consummation of the transactions contemplated
hereby and thereby; and (ii) the incumbency and signatures of the officers of
each Seller executing this Agreement and any Seller Documents (as defined
below);
3.2.12 the PA/Security Agreement, executed by Seller;
3.2.13 the certificate required by Section 3.6.6 hereof; and
3.2.14 all other documents, materials, items and property required by
the terms of this Agreement to be delivered to Buyer under or to effect the
provisions of this Agreement.
3.3 Deliveries of Buyer. At the Closing, Buyer will deliver, or cause to be
delivered:
3.3.1 to Sellers: wire transfer(s) in the amount of the Cash Payment
(as defined in Schedule 2.1), less the Escrow Amount;
3.3.2 to the Escrow Agent: wire transfer(s) in the amount of the Escrow
Amount;
3.3.3 to Sellers: the Escrow Agreement, executed by the Buyer;
3.3.4 to Sellers: the Obligations Undertaking, executed by Buyer;
3.3.5 to Sellers: a certificate of good standing of Buyer, issued as of
a recent date by the Secretary of State of the State of Delaware;
3.3.6 to Sellers: a certificate of the Secretary or an Assistant
Secretary of Buyer, dated the Closing Date, in form and substance reasonably
satisfactory to Sellers, as to (i) the resolutions of the Board of Directors of
Buyer authorizing the execution delivery and performance of this Agreement and
each exhibit hereto to which it is a party and the consummation of the
transactions contemplated herein and therein; and (ii) the incumbency and
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signatures of the officers of Buyer executing this Agreement and each exhibit
hereto to which it is a party;
3.3.7 to Sellers: the certificate required by Section 3.7.3 hereof;
3.3.8 to Sellers: the Non-Compete Agreement, executed by Buyer;
3.3.9 to DuCoa: a guarantee in the form of Exhibit 3.3.9 hereto,
executed by Buyer's parent corporation, guaranteeing Buyer's obligations under
paragraphs (b) and (m) of Schedule 2.1 hereto and under Section 3.9 hereof, in
the event of a default by Buyer thereunder;
3.3.10 to Sellers: the release of certain claims as required by Section
3.7.4 hereof;
3.3.11 to Sellers: the Notice and Acknowledgement as required by
Section 3.7.6 hereof; and
3.3.12 to Sellers: all other documents required by the terms of this
Agreement to be delivered to Seller at the Closing under or to effect the
provisions of this Agreement.
3.4 Further Assurances. At any time and from time to time after the
Closing, at Buyer's request, and without further consideration therefor, each of
Sellers shall execute and deliver any and all proper deeds, assignments, powers
of attorney, assurances in law, and such other instruments of sale, transfer,
conveyance, assignment and confirmation, and take such other actions, as Buyer
may reasonably deem necessary or desirable in order more effectively to Transfer
to Buyer, and to vest, perfect or confirm (of record or otherwise) Buyer's title
to, all of the Acquired Assets, to put Buyer in actual possession and operating
control thereof, and to assist Buyer in exercising all rights with respect
thereto.
3.5 Satisfaction of Liens and Certain Leases.
3.5.1 At the Closing, Sellers shall cause all Liens on or relating to
any of the Acquired Assets (other than Permitted Liens), to be released,
extinguished and discharged in full, and shall deliver to Buyer instruments
releasing, extinguishing and discharging all such Liens, and all rights and
claims of any holder(s) of any of such Liens with respect to any of the Acquired
Assets, all in such form and substance as Buyer shall reasonably require
(collectively the "Lien Release Instruments").
3.5.2 At or prior to the Closing, Sellers shall cause those capitalized
leases, if any, identified in Schedule 1.1.2 of the Disclosure Schedule to be
paid and satisfied in full so that Buyer shall acquire at the Closing good and
marketable title to the assets and properties covered thereby.
3.6 Conditions Precedent of Buyer. The obligations of Buyer under this
Agreement to proceed with the purchase and other transactions contemplated
hereby, are, subject to the fulfillment of all of the following conditions at or
prior to the Closing, and Sellers shall use commercially reasonable efforts to
cause each such condition to be fulfilled:
3.6.1 No Litigation. No action, suit, proceeding or investigation shall
have been instituted against Buyer or any of Sellers and be continuing before or
by any court,
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tribunal or governmental body or agency or have been threatened, and be
unresolved, to restrain or prevent, or to obtain substantial damages by reason
of, any of the transactions contemplated hereby;
3.6.2 Representations. The representations and warranties of Sellers
contained in this Agreement, and any Schedules hereto and any certificate or
documents delivered in accordance with this Agreement shall be true and correct
in all material respects at the time of the Closing with the same force and
effect as though such representations and warranties were made at that time
except for changes expressly permitted by this Agreement;
3.6.3 Performance of Covenants. Each covenant, agreement, obligation
and condition required by the terms of this Agreement to be complied with and
performed by any of Sellers at or prior to the Closing shall have been duly and
properly complied with and performed;
3.6.4 No Material Adverse Change. Since the date of this Agreement,
there shall not have occurred any material adverse change in the condition
(financial or otherwise), results of operations, business, properties, assets,
liabilities, backlog, prospects, goodwill or results of any Seller or the
Business or in the value of the Acquired Assets or the Business, or in the
utilizability thereof by Buyer, or in any material litigation affecting any of
Sellers, and the Business shall not have suffered a substantial fire, flood,
tornado or other casualty loss or damage;
3.6.5 Consents. All consents necessary to the assignment to Buyer of
the Contracts and Intellectual Property specified on Schedule 3.6.5 of the
Disclosure Schedule, and all approvals or actions necessary to the assignment to
Buyer of those Permits and Approvals as are specified on such Schedule 3.6.5,
shall have been obtained by Sellers, and there shall have been delivered to
Buyer executed counterparts thereof reasonably satisfactory in form and
substance to Buyer, of all such consents, approvals and actions; provided, that
if the consent of the other party thereto for assignment to the Buyer has not
been obtained and if Buyer waives the condition of this Section 3.6.5 with
respect to such matter, then such Contract, Permit, Personal Property, leasehold
interest or Intellectual Property shall not be assigned to Buyer and all
obligations and liabilities thereunder shall be and remain with Sellers, and, in
such event, Sellers shall cooperate with Buyer in any reasonable arrangement
designed to secure for Buyer the benefits thereunder, as contemplated by Section
1.7 hereof;
3.6.6 Certificate. There shall have been delivered to Buyer a
certificate of Sellers, dated the Closing Date, jointly and severally certifying
that the conditions set forth in subsections 3.6.2 through 3.6.4 have been
fulfilled;
3.6.7 Certain Agreements. Each other document, instrument and agreement
contemplated hereby shall have been executed and delivered by each party thereto
other than Buyer;
3.6.8 Financing. Buyer shall have obtained bank or institutional lender
financing in connection with the transactions contemplated hereby on terms
approved by it and such lenders; and
3.6.9 Title Insurance. Buyer shall have received written commitments by
a nationally recognized title insurance company reasonably selected by Buyer to
issue a title
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insurance policy, in the amount reasonably determined by Buyer, for the Owned
Real Property, at standard rates (such policy premium to be payable by Buyer)
and confirming Buyer's good and marketable title in fee simple to the Owned Real
Property, free and clear of all Liens and exceptions (except for Permitted Liens
and such insurer's standard printed exceptions).
3.7 Conditions Precedent of Sellers. The obligations of Sellers under this
Agreement to proceed with the sale contemplated hereby and to proceed with the
other transactions contemplated hereby, are, at the option of Seller, subject to
the fulfillment of all of the following conditions at or prior to the Closing,
and Buyer shall use commercially reasonable efforts to cause each such condition
to be fulfilled:
3.7.1 Representations. The representations and warranties of Buyer
contained in this Agreement or any certificates or documents delivered in
accordance with this Agreement shall be true and correct in all material
respects at the time of the Closing with the same force and effect as though
such representations and warranties were made at that time except for changes
expressly permitted by this Agreement;
3.7.2 Performance of Covenants. Each covenant, agreement, obligation
and condition required by the terms of this Agreement to be complied with and
performed by Buyer at or prior to the Closing shall have been duly and properly
complied with and performed;
3.7.3 Certificate. There shall have been delivered to Seller a
certificate executed by Buyer, dated the date of the Closing, certifying that
the conditions set forth in subsections 3.7.1 and 3.7.2 have been fulfilled;
3.7.4 Release. Sellers shall have received a release in the form of
Exhibit 3.7.4;
3.7.5 [Intentionally Omitted];
3.7.6 Notice and Acknowledgement. Sellers shall have received a copy of
the Notice and Acknowledgement required pursuant to 10 CSR 25-10.010 of the
Missouri Code of State Regulations as set forth in Exhibit 3.7.6; and
3.7.7 No Litigation. No action, suit, proceeding or investigation shall
have been instituted against Buyer or any of Sellers and be continuing before or
by any court, tribunal or governmental body or agency or have been threatened,
and be unresolved, to restrain or prevent, any of the transactions contemplated
hereby, except for any action, suit, proceeding or investigation based on or
arising out of any actual or alleged conduct, act, omission, liability or
obligation of any of Sellers.
3.8 Bulk Sales Compliance. Sellers have advised Buyer that none of the
provisions of any bulk sales law or any comparable statute relating to notice to
and rights of creditors of any of Sellers applies to the transactions
contemplated by this Agreement. To the extent any such bulk sales law or
comparable statute shall so apply, Sellers shall promptly pay or cause to be
paid (or provide, in a manner satisfactory to Buyer, for prompt payment of) all
claims against and debts of any of Sellers which are payable with respect to any
and all of the Excluded Liabilities and for which Buyer could be liable by
reason of any such law or statute if not paid by any Seller.
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3.9 Receivables. Buyer shall have the exclusive right and authority to
pursue collection of all accounts receivable of Sellers not included in the
Acquired Assets (the "Excluded Receivables") in accordance with Buyer's standard
accounts receivable management and collection practice (but without being
required to resort to litigation or use of collection agencies or efforts
involving cost or expense to Buyer). Promptly after the Closing Date, Seller
shall deliver to Buyer a list of the accounts receivable of Seller outstanding
as of the Closing Date setting forth in reasonable detail such information as
Buyer may reasonably require, and Buyer shall update such list on a weekly basis
and remit to Seller, on a weekly basis, all amounts in fact collected by Buyer
in respect of such Excluded Receivables. Buyer shall have the authority to
collect such Excluded Receivables and to endorse with the name of Seller checks
received on account thereof for purposes of collecting the same and thereupon
remitting amounts collected thereon to Seller in accordance with this Section
3.9. In the event Buyer shall receive moneys from an account debtor for which
pre-closing accounts receivable of Sellers from the Business and post-closing
accounts receivable of Buyer from the Business shall be outstanding, then such
receipts shall be applied first to the oldest of such accounts receivable,
unless the account debtor shall otherwise specify. If an Excluded Receivable
shall not be collected in the ordinary course within 90 days after the Closing
Date, then Sellers shall be entitled to pursue the collection of such Excluded
Receivable. In the event any of Sellers shall receive any money or check(s) from
any account debtor in connection with any account receivable of or other payment
obligation in favor of Buyer or any of its Affiliates, Sellers shall promptly
remit the same to Buyer, in the exact form received, on a weekly basis.
3.10 Certain Equipment. Sellers shall cooperate in all respects reasonably
requested by Buyer and at Buyer's expense to facilitate the removal and
transportation to Buyer within ninety (90) days following the Closing Date of
all equipment and other personal property included in the Acquired Assets and
located (or heretofore located) at Sellers' leased Randolph, WI facility (the
"Randolph Equipment"). Notwithstanding anything to the contrary contained in
this Agreement regarding the value, use or operating condition of same, Buyer
undertakes and acknowledges that the Randolph Equipment is transferred hereunder
in an "AS IS, WHERE IS" condition.
ARTICLE 4
4. Representations and Warranties of Sellers. Sellers hereby jointly and
severally represent and warrant to Buyer the matters set forth in Schedule 4
hereto, and the representations and warranties therein contained shall be and
hereby are incorporated herein by reference with the same force and effect as if
set forth in full herein. References in said Schedule or elsewhere in this
Agreement to the "Disclosure Schedule" shall be deemed to refer to the
Disclosure Schedule to this Agreement delivered among the parties hereto
concurrent with the execution and delivery hereof. References in said Schedule 4
to "this Agreement" shall be deemed to include said Schedule 4.
ARTICLE 5
5. Representations and Warranties of Buyer. Buyer represents and warrants to
Sellers that:
5.1 Organization and Standing. Buyer is a corporation duly incorporated,
validly existing under the laws of the State of Delaware and has all requisite
corporate power and corporate authority to enter into this Agreement and each
other agreement, document and
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instrument to be executed or delivered by Buyer in accordance with this
Agreement (the "Buyer Documents") and to carry out the transactions contemplated
hereby and thereby.
5.2 Authority of Buyer. The execution, delivery and performance of this
Agreement and the Buyer Documents by Buyer have been duly authorized and
approved by its Board of Directors and no other corporate proceedings on the
part of Buyer are necessary to authorize this Agreement, the Buyer Documents and
the transactions contemplated hereby and thereby. This Agreement is the legal,
valid and binding obligation of Buyer, and each of the Buyer Documents, upon
execution and delivery thereof by Buyer, will be a legal, valid and binding
obligation of Buyer.
5.3 No Violation. Except as set forth in Schedule 5.3 of the Disclosure
Schedule and except for matters pertaining to or arising from facts or
requirements involving any of the Sellers: the execution, delivery and
performance of this Agreement and the Buyer Documents and the consummation of
the transactions contemplated hereby and thereby, including the purchase of the
Acquired Assets by Buyer, will not (a) conflict with or violate any provision of
the amended and restated certificate of incorporation or By-Laws of Buyer or its
parent corporation, or (b) with or without the giving of notice or the passage
of time, or both, result in a breach of, or violate, or be in conflict with, or
constitute a default under, or permit the termination of, or cause or permit
acceleration under, any agreement, instrument, debt or obligation (other than
any of the Contracts) to which Buyer or its parent corporation is a party or to
or by which any of them is subject or bound, (c) require the consent of any
party to any agreement or commitment (other than any of the Contracts) to which
Buyer or its parent corporation is a party, or (d) violate any law, rule or
regulation or any order, judgment, decree or award of any court, governmental
authority or arbitrator to or by which the Buyer or its parent corporation is
subject or bound.
ARTICLE 6
6. Covenants of Sellers.
6.1 Conduct of Business. During the period from the date of this Agreement
to and including the Closing Date, Sellers shall conduct and cause to be
conducted the Business and all other businesses and activities of any Seller in
the ordinary, regular and usual course of business and consistent with past
practices, and shall not take any action which might result in any material
change in such operations or which might have a materially adverse effect on the
value of the Business, the Acquired Assets or any Seller other than changes made
with the prior written consent of Buyer. Without limiting the generality of the
foregoing, prior to the Closing, Sellers shall not, without the prior written
consent of Buyer:
6.1.1 dissolve, liquidate, merge or consolidate or sell, transfer,
lease or otherwise dispose of any assets or properties of or related to the
Business or obligate itself to do so, other than the sale of inventory or
consumption of supplies in the ordinary course of business on standard terms
(including delivery times and margins), conditions and operating procedures
customarily used by it, or discontinue any products, or effect or announce price
changes or special promotions;
6.1.2 enter into, amend, modify, change, alter, terminate, rescind, or
waive any rights or benefits under, any contract, agreement or commitment which
if in existence
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on the date hereof would have been required to have been disclosed pursuant to
Section 4.10 of Schedule 4 hereto;
6.1.3 fail to maintain the Acquired Assets or any of the other
properties of or used in connection with the Business in reasonably good
condition, repair and working order, reasonable and ordinary wear and tear
excepted;
6.1.4 fail to maintain any of the current insurance policies or any of
the coverage thereunder maintained for the protection of any of the Acquired
Assets or with respect to any of the Business or Seller;
6.1.5 fail to comply in any material respect with all laws, rules,
regulations and orders and all contractual obligations applicable to any Seller
or to the conduct of the Business;
6.1.6 except for normal salary review adjustments for non-union
employees not in excess of 5% per annum for any employee and increases in wages
and salaries made in accordance with applicable collective bargaining agreements
in effect on the date hereof, make or grant any general wage or salary increase;
pay or provide for any bonus, profit sharing, deferred compensation, pension,
retirement or other similar payment or arrangement except in the ordinary course
of the administration of the Collective Bargaining Agreement, or enter into or
amend any employment or consulting agreement, sales agency or other contract or
arrangement with respect to the performance of services for Seller which is not
terminable without liability by any Seller on 30 days' notice or less; or
6.1.7 perform, take any action or incur or permit to exist any of the
acts transactions, events or occurrences of the type described in any of clauses
(a), (b), (c), (d), (f), (g), (h), (j), (k), (l), (m) or (p) (but only to the
extent said clause (p) applies to matters covered by any of said clauses (a),
(b), (c), (d), (f), (g), (h), (j), (k), (l) or (m)) of Section 4.11 of Schedule
4 hereto which would have been inconsistent with the representations and
warranties set forth in any of such subsections of Section 4.11 of Schedule 4
hereto had the same occurred after the Balance Sheet Date and prior to the date
hereof.
6.2 Changes in Information. During the period from the date of this
Agreement to the Closing Date, Sellers shall give Buyer prompt written notice of
any material change in, or any of the information contained in, the
representations and warranties made by them in or pursuant to this Agreement or
of any event or circumstance which, if it had occurred on or prior to the date
hereof, would cause any of such representations or warranties not to be true or
correct in all material respects.
6.3 Access to Information.
6.3.1 During the period from the date of execution of this Agreement to
the Closing Date, Sellers shall cause Buyer and its counsel, accountants and
other representatives to be given, during normal business hours, full access to
and copies of all of the respective books, tax returns, contracts, commitments,
records, facilities and properties of Sellers or constituting any part of the
Acquired Assets, all work papers of all accountants of Sellers (to the extent
permitted by said accountants if they are outside accountants), and all
personnel of any of Sellers (excluding medical records which under applicable
law may not be disclosed to Buyer), and to be furnished with all documents and
information with respect to the respective affairs of
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Sellers and/or in connection with the Business as may from time to time
reasonably be requested. Sellers shall use their best efforts to have their
accountants provide Buyer with access to and copies of all work papers of said
accountants. Prior to Closing, Buyer will (and will cause its representatives
to) maintain the confidentiality of the confidential information it receives
from any Seller; provided, that such information may be disclosed (in
confidence, subject to the existing confidentiality agreement between DCV and
Buyer's parent corporation) to lawyers, accountants, lenders and investors, and
other persons or entities involved in the transaction, and that nothing herein
shall prevent disclosure of any information as may be required by applicable law
or that is at the date hereof or hereafter becomes generally available to and
known by the public other than by reason of Buyer's breach of its obligations
under this Section 6.3, or is or becomes available to Buyer on a
non-confidential basis from a source that is not then known by Buyer to be
prohibited from disclosing such information pursuant to a confidentiality
agreement with any of Sellers, or has been independently developed by Buyer or
any of Buyer's affiliates without violation of any obligation under this
Agreement. For a period of seven years after the Closing Date, each party and
its respective representatives shall have reasonable access to all of the books
and records of the Business in the possession of the other party or parties to
the extent that such access may reasonably be required by such party in
connection with the Excluded Liabilities, or in support of tax audits involving
the Business or litigation retained by Seller involving the Business. Such
access shall be afforded by the party or parties in possession of such books and
records upon receipt of reasonable advance notice and during normal business
hours. The party or parties exercising this right of access shall be solely
responsible for any costs or expenses incurred by it or them pursuant to this
Section. Notwithstanding the foregoing, Buyer's obligations hereunder shall be
subject to prior receipt of confidentiality agreements, executed by Sellers,
reasonably satisfactory to Buyer, and Buyer's obligation to retain particular
documents and records shall expire upon Buyer's sale of that portion of the
Business to which the documents and records in question relate.
6.3.2 Without limiting the foregoing, from time to time after the date
hereof and prior to the Closing Date, Sellers shall use their commercially
reasonable best efforts to provide to Buyer sample electronic files so as to
allow Buyer to prototype the transfer of all management information system
records of or pertaining to any of the Business electronically on the management
information system ("MIS") of Buyer, and all block, process and flow diagrams of
its MIS, telephone and other systems.
6.3.3 Until the Closing, the provisions of any written confidentiality
agreement between any of Sellers and Buyer shall remain in effect (to the extent
not inconsistent with the provisions hereof).
6.4 Confidentiality. Sellers shall hold confidential (and shall not
disclose, except in confidence to its lawyers, accountants and institutional
lenders) (a), at any time, whether before or after the Closing, any information
obtained by any of them or any of their representatives from or concerning Buyer
or any of its affiliates or otherwise arising out of any of its negotiations
with or investigations of Buyer or any of its affiliates, and such information
shall not be used except in furtherance of the transactions contemplated herein,
or (b), after the Closing, any information regarding any of the Acquired Assets
or the Business, except (i) information which is publicly available at the time
of disclosure (through no act of any of Sellers or any of their affiliates) or
(ii) which is disclosed to Sellers or an affiliate of Sellers by a third party
which did not disclose it in violation of a duty of confidentiality or (iii)
disclosures which (x) are required to be made by Sellers under applicable laws
or regulations or (y) with respect to
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information under clause (b), are directly required in dealing with any Excluded
Liabilities or to perform Sellers' duties hereunder. Buyer shall hold
confidential (and shall not disclose) except to its lawyers, accountants and
lenders any information regarding any of the assets or businesses of Sellers
other than any relating to any of the Acquired Assets or the Business, except
(i) information which is publicly available at the time of disclosure (through
no act of any of Buyer or any of its affiliates) or (ii) which is disclosed to
Buyer or an affiliate of Buyer by a third party which did not disclose it in
violation of a duty of confidentiality or (iii) disclosures which (x) are
required to be made by Buyer under applicable laws or regulations or (y) are
directly required in dealing with any Excluded Liabilities or to perform Buyer's
duties hereunder or are made in connection with the enforcement of rights or
obligations under this Agreement.
6.5 Preservation of Business. During the period from the date of this
Agreement to the Closing Date, Sellers shall use best efforts to preserve intact
the present goodwill of Sellers and the relationships of any Seller with
customers, dealers, suppliers, creditors, distributors, consultants,
governmental authorities and others having business relations with it and the
present business organization and personnel of Sellers. Sellers shall cause to
be paid before they become delinquent all taxes, assessments, and governmental
charges or levies imposed prior to the Closing Date upon the business or
properties of any Seller and all claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords, and other similar persons asserted prior to
the Closing Date which, if unpaid, might result in the creation of a Lien upon
any of the Acquired Assets or otherwise have an adverse effect on Buyer or the
Business.
6.6 Employees.
6.6.1 Sellers have supplied Buyer with a list setting forth the names,
location of employment, dates of hire and the current rate of compensation and
date and amount of last salary adjustment, of all employees employed in the
Business. Buyer has advised Sellers that it desires to employ following the
Closing Date, those employees identified in Schedule 6.6.1 of the Disclosure
Schedule who are then full time employees of the Business and who at the Closing
shall not be on any form of leave or absence, except as required by the
Collective Bargaining Agreement identified in Schedule 6.6.1 of the Disclosure
Schedule (the "Collective Bargaining Agreement"). Buyer has no intention to
employ any employees of the Randolph, Wisconsin operation. Sellers agree that
Buyer shall have the right to employ the employees so identified (each of whom
who accepts such employment being hereinafter referred to as a "Designated
Employee") and, after Sellers have terminated the employment of such employees
immediately prior to the Closing, Buyer shall offer employment commencing on the
Closing Date to such Designated Employees as of such date at such basic salary
rates or on such other terms as Buyer shall determine (subject where applicable
to such Collective Bargaining Agreement); provided, that Buyer shall not be
obligated to maintain any Designated Employees for any specific length of time
after the Closing Date and all Designated Employees shall be employees at will
(subject where applicable to such Collective Bargaining Agreement). Nothing in
this Section 6.6 shall be construed to confer any rights or remedies on any
employee of any Seller (Designated or not). Sellers shall use their best efforts
to encourage and induce the employees identified in said Schedule 6.6.1 to
become employees of Buyer and shall not take any action to prevent or discourage
any such employee from being employed by Buyer from and after the Closing Date
or derogate Buyer.
6.6.2 Sellers shall be solely responsible for any and all claims and
obligations, if any, for wages, commissions, salary, insurance, wage
continuation, severance pay, termination pay and other benefits (including
accrued and unearned vacation, holiday, sick pay
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and other benefits, if any) arising or accruing or claimed to arise or accrue
with respect to any employee of any Seller for any period on or prior to the
Closing Date, or out of termination of employment of any employee of any Seller
on or prior to the Closing Date, or the failure of Buyer to retain any employee
of any Seller after the Closing Date, or the effect of the transactions
contemplated by this Agreement on the employment status of any employee of any
Seller; provided that Buyer shall assume all liability and shall be responsible
for the payment of all accrued vacation pay for those Designated Employees in
fact employed by Buyer if any to the extent that Buyer received a dollar for
dollar reduction in the Purchase Price (and the cash portion of the Purchase
Price) for such accrued vacation pay pursuant to Section 2.5.2 hereof. Without
limiting the foregoing, Buyer shall have no responsibility for any compensation,
employee benefits or severance pay for or any notice to any employees of any
Seller who are not offered employment by Buyer, or who are offered employment by
Buyer and who fail to accept such offer or who fail to commence employment with
Buyer on or after the Closing Date, except with respect to retiree medical
benefits expressly required to be provided by Buyer after the Closing pursuant
to the Collective Bargaining Agreement for those retirees identified on Schedule
6.6.2 to the Disclosure Schedule (the "Designated Retirees"), but only with
respect only to occurrences after the Closing giving rise to such medical
benefits thereunder and for covered claims therefor first submitted to Buyer
after the Closing Date (and not theretofore submitted to any of Sellers or any
administrator therefor on or prior to the Closing Date). It is expressly
understood that any health care payment obligations for any employees of any of
Sellers for occurrences on or prior to the Closing and any health care payment
obligations for retirees covered by the Collective Bargaining Agreement for
claims submitted on or prior to the Closing Date shall be the sole and exclusive
liability and obligation of Sellers. Sellers shall pay all withholding tax and
similar obligations in each case with respect to all employees of Sellers for
all periods ending on or prior to the Closing Date.
6.6.3 Sellers shall remain liable and responsible for all obligations
to all past or present employees of any of Sellers (or any predecessors thereto)
who may be currently receiving or entitled to receive, or who from and after the
date hereof shall be entitled to receive, and shall provide or continue to
provide to such employees, health care related benefits consistent with the
health care continuation coverage requirements of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and of any analogous state law,
together with any of the rules or regulations thereunder, in connection with or
by reason of any termination of employment with any Seller (or any predecessor
thereto), regardless of whether any Seller is entitled under law to terminate
such coverage.
6.6.4 It is expressly acknowledged that any obligations of Buyer
arising under the Collective Bargaining Agreement shall be limited in all
respects to wages, current pension contributions and other benefits first
accruing after the Closing, except as expressly provided herein with respect to
retiree medical benefits.
6.6.5 Any payments for health care benefits under any of the Sellers'
plans, to the extent they relate to occurrences or events on or prior to the
Closing Date shall be the sole and exclusive liability and obligation of the
Sellers, except that, for the Designated Retirees, Buyer shall assume the
liability therefore under the Collective Bargaining Agreement with respect to
claims first submitted after the Closing Date and not submitted to any of
Sellers or any administrator therefor on or prior to the Closing Date.
6.6.6 Except as expressly provided above, all liabilities and
obligations of any of Sellers under or arising by reason of this Section 6.6
shall constitute Excluded Liabilities.
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6.7 Books and Records. During the period from the date of this Agreement to
and including the Closing Date, Sellers shall maintain all of their respective
books, accounts and records in the usual, regular and ordinary manner consistent
with GAAP, and on a basis consistent with prior periods, and will duly comply
with all legal and GAAP accounting requirements applicable thereto and to the
conduct of the business thereof. In maintaining its accounting records, Sellers
shall not make any change in the accounting methods or practices followed in
connection with the preparation of the unaudited financial statements heretofore
delivered to Buyer.
ARTICLE 7
7. Further Agreements.
7.1 Environmental Remediation Obligations.
7.1.1 Sellers, at their sole cost and expense, shall be fully
responsible for enforcing the terms of the Prior Agreement and performing the
terms of the settlement agreements identified in Schedule 7.1.1 of the
Disclosure Schedule (the "Remediation Activities"). Sellers represent and
warrant that, to Sellers' knowledge, all actions required by said settlement
agreements have been completed.
7.2 Sales and Other Taxes. Sellers shall pay all sales tax, transfer tax,
intangibles tax, filing fees, recording and registration fees and similar
government charges applicable to the transactions contemplated by this
Agreement, including, without limitation, all taxes and charges payable, if any,
upon the transfer of title to any Acquired Assets. Buyer and Sellers will
cooperate to prepare and file with the proper public officials, as and to the
extent available and necessary, all appropriate sales tax exemption certificates
or similar instruments as may be necessary to avoid the imposition of sales,
transfer and similar taxes on the transfer of Acquired Assets pursuant hereto.
7.3 Brokerage and Finder's Fee. Buyer represents and warrants to Sellers,
and Sellers represent and warrant to Buyer, that no person is entitled to any
brokerage commissions or finder's fees in connection with the transactions
contemplated by this Agreement as a result of any action taken by the
representing party or any of its affiliates, officers, directors or employees.
7.4 Referral. From and after the Closing, Sellers shall use their best
efforts to refer to Buyer all requests for and forward to Buyer all orders for
products of the type manufactured or sold by the Business at such telephone
number and address as Buyer from time to time informs Sellers. Sellers and Buyer
shall each attempt in good faith to direct or deliver to the other all incoming
mail, telephone or other communications or deliveries which are not received by
the appropriate party (that is, Buyer in the case of matters or materials
pertaining to the Business or the Acquired Assets or Sellers in the case of
matters or materials pertaining to the Excluded Assets or Excluded Liabilities).
7.5 No Shop. From the date hereof until the Closing Date, each of Sellers
agrees that, without Buyer's prior written consent, it shall not and shall not
permit any subsidiary or affiliate of any of Sellers to, directly or indirectly,
(A) offer or convey any of the Acquired Assets or the Business (except only the
sale of inventory in the ordinary course of business consistent with past
practices) or control thereof, (B) issue, sell or purchase any shares of any
class or series of any of the issued and outstanding capital stock or other
equity interests of either
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of them or any security interest convertible into or exchangeable for such stock
or other equity interest or any option or warrant with respect to such stock or
other equity interest, or (C) merge or consolidate with another entity, and no
Seller or anyone acting on its behalf will solicit, entertain or encourage
inquiries or proposals, or enter into, pursue, or carry on any discussions or
negotiations, with respect to any transaction of the type referred to above with
any person or entity other than Buyer. Sellers shall immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore in respect of any such transaction. Without
limiting the generality of, or providing an exception to the foregoing, if an
offer unsolicited by a Seller or its representatives is received prior to the
Closing, Sellers shall promptly advise Buyer of the identity of such offeror and
communicate to Buyer the terms of any oral inquiry or proposal which it or they
may receive and deliver to Buyer a copy of any such offer in writing. Without
limiting the rights of Buyer to pursue any remedies, the parties agree that
damages are not an adequate remedy for a breach of this Section 7.5 and that the
obligations under this Section 7.5 of Sellers may be specifically enforced.
7.6 8-K Report. Sellers shall in a prompt and timely manner both before and
after the Closing provide Buyer with all annual and interim financial
information relating to the Business as may be requested by Buyer in order for
Buyer to comply with its reporting and disclosure obligations under the Federal
securities laws covered by, and in accordance with the requirements of, SEC
Regulation S-X and Form 8-K (the "Reporting Requirements"), in connection with
Buyer's preparation of and so as to enable Buyer to timely file Buyer's Current
Report on Form 8-K, and any amendments thereto, regarding the Closing, and the
audit, by Buyer's regularly retained accounting firm ("Buyer's Accountant"), of
all financial statements relating to the Business as shall be required to be
included in said Current Report on Form 8-K and/or any such amendment (the "8-K
Financials"); provided that such financial information shall, prior to the
Closing, be held confidential by Buyer consistent with Section 6.3.1 hereof.
Sellers shall in a prompt and timely manner provide Buyer's Accountant with such
management representations as may be requested by Buyer's Accountant in
connection with its preparation of any financial statements for the Business
relating to such Current Report on Form 8-K. Without limiting the generality of
the foregoing, Sellers shall cause their respective chief financial officers and
other executive officers to promptly prepare, execute and deliver to Buyer's
Accountant all management representation letters and other certificates as shall
be requested by Buyer's Accountant, consistent with generally accepted auditing
standards, to support, and enable Buyer's Accountant to complete in a timely
manner (in accordance with the Reporting Requirements) its audit of, and to
promptly provide the certification and report of Buyer's Accountant of, the 8-K
Financials (in accordance with the Reporting Requirements). All fees and charges
of Buyer's Accountant in connection the above shall be borne by Buyer.
7.7 Excluded Miley Assets. Sellers shall assure that, for a period of five
(5) years from the Closing Date, none of the Excluded Miley Assets are sold or
transferred to any person or entity engaged or who or which to any Seller's
knowledge proposes to engage in any business in competition with any of the
Business as conducted by Buyer or its parent corporation after the Closing, and
shall cause any acquiror to enter into a written agreement, in reasonable and
customary form and content, whereby such acquiror agrees for the period of five
(5) years from the Closing Date neither it nor any of its affiliates, nor any
successor or assign thereof, shall use any of the Excluded Miley Assets in
competition with any of the Business as conducted by Buyer or its parent
corporation. Said agreement shall name Buyer and its successors and assigns as
express third party beneficiaries thereof and Sellers shall supply Buyer with a
true and
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complete executed copy thereof promptly after the execution of same.
Sellers shall use their best efforts to enforce said agreement.
7.8 Certain Transition Matters.
7.9 For a period of thirty (30) days from the Closing Date, Sellers shall
make available to Buyer, at no charge or fee, all reasonable access (subject to
reasonable security procedures) to and use of the computer and management
information systems, and all customer service and order taking and processing
personnel and facilities, of any of Sellers heretofore relating to or used for
any of the Business, so as to enable Buyer to continue to conduct all computer,
processing and management information system, and customer services and order
taking and processing aspects of the Business in a manner consistent with past
practice, and to facilitate Buyer's transition to its own computers and
management information systems and its own customer service and order taking and
processing functions, and Sellers shall cooperate in all reasonable respects
with Buyer in connection with the foregoing. Should Buyer so request, Sellers
will continue to provide such access and use for a period not to exceed sixty
(60) days after said initial 30-day period and Buyer shall pay Sellers for all
access, use and cooperation an amount equal to $3,000 per month plus the
out-of-pocket cost of the use of the dedicated telephone (data) line to Verona
applicable to the period of such usage (but not for any installation or removal
charge).
7.9.1 For a period of up to thirty (30) days or, in the case of any
particular category of end products, such lesser period ending on the date
Sellers shall have substantially exhausted their inventory of such category of
end products in satisfying outstanding customer orders of the Business for such
end products (in the case of each particular category of products a
"Post-Closing Product Sale Period"), Sellers shall fulfill in the timely manner
all outstanding orders for end products of the Business calling for delivery
prior to the end of the Post-Closing Product Sale Period out of Sellers'
inventory of such end products as of the Closing Date. Sellers and Buyer will
reasonably cooperate with each other in connection with such fulfillment efforts
and Sellers shall promptly compensate Buyer or Buyer's parent company for any
and all products and services provided by any of them in connection therewith,
in each case at the market price for same reflected in the particular order for
which the same are provided. In no event shall Sellers be entitled to fulfill
any customer order or sell any of such inventory after the end of the applicable
Post-Closing Sale Period, or, at any time, fill any order calling for delivery
after the end of the Post-Closing Sale Period, in each case without the express
prior written consent of Buyer. Under no circumstances shall any of Sellers
effect or make any sales or take or fill any order for any quantity in excess of
normal and customary levels (based on past history) or at any price less than
market price as most recently quoted or most recently in effect prior to the
date hereof, or in a manner or on terms not consistent with the ordinary and
normal course of business and recent past practice.
7.9.2 Limited License. Sellers hereby grant to Buyer, effective from
and after the Closing, the right and license to use and sublicense the names and
trade names DuCoa and DCV for the sole purpose of performing all obligations of
the licensor under that certain Technology and Trademark License between DuCoa
and Grupo Celanese S.A. de C.V., dated as of September 27, 2000 (the "Mexico
License"). Sellers shall cooperate in all respects to enable Buyer to fulfill
all obligations under or arising out of the Mexico License.
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ARTICLE 8
8. Indemnification.
8.1 From and after the Closing Date, Buyer hereby agrees to save, indemnify
and hold harmless Sellers and their officers, directors and shareholders (each,
together with Sellers, a "Seller Indemnitee") from and against, and shall on
demand reimburse the Seller Indemnitees for:
8.1.1 Buyer's failure to pay or perform the Assumed Obligations in
accordance with the Obligations Undertaking;
8.1.2 any and all loss, liability, damage or deficiency suffered or
incurred by any Seller Indemnitee by reason of any misrepresentation or breach
of warranty by Buyer or nonfulfillment of any covenant or agreement to be
performed or complied with by Buyer under this Agreement or any agreement,
certificate, document or instrument executed by Buyer and delivered to Sellers
pursuant to this Agreement; and
8.1.3 any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable attorneys'
fees, incident to any of the foregoing, or incurred in reasonably investigating
or attempting to avoid the same or to oppose the imposition thereof, or in
enforcing any of the obligations under this Section 8.1.
8.2 Sellers hereby jointly and severally assume and agree to save,
indemnify and hold harmless Buyer and Buyer's officers, directors and
shareholders (each, together with Buyer, a "Buyer Indemnitee") from, against and
in respect of, and shall on demand reimburse the Buyer Indemnitees for:
8.2.1 the Excluded Liabilities;
8.2.2 any and all loss, liability, damage or deficiency suffered or
incurred by any Buyer Indemnitee by reason of any misrepresentation, breach of
warranty or nonfulfillment of any covenant or agreement to be performed or
complied with by Seller under this Agreement or any agreement, certificate,
document or instrument executed by any of Sellers and delivered to Buyer
pursuant to this Agreement;
8.2.3 any and all loss, liability or damage suffered or incurred by any
Buyer Indemnitee in respect of or in connection with any and all debts,
liabilities and obligations of, and any and all violation of laws, rules,
regulations, codes or orders by, any Seller, direct or indirect, fixed,
contingent, legal, statutory, contractual or otherwise, which exist at or as of
the Closing Date or which arise after the Closing Date but which are based upon
or arise from any act, transaction, circumstance, sale or providing of products
or services, state of facts or other condition which occurred or existed, on or
before the Closing Date, whether or not then known, due or payable, except to
the extent specifically assumed by Buyer pursuant to the Obligations
Undertaking;
8.2.4 any and all loss, liability, damage, cost or expense suffered or
incurred by any Buyer Indemnitee based on or arising from (A) the presence of
any Hazardous Substance on any of the Real Properties or any Prior Property or
any Hazardous Discharge on or prior to the Closing Date, and/or any
Environmental Complaint (as such terms are defined in
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Schedule 4 hereto), and/or the failure to obtain any license or permit required
in connection with any Hazardous Substance or Hazardous Discharge or the
retention, disposal, treatment or use thereof, and/or arising out of any
noncompliance with any environmental, health or safety law, ordinance, rule,
regulation, order or policy (each, an "Environmental Requirement"), in each
case, based on or arising from any act, transaction, state of facts or other
condition which occurred or existed on or before the Closing Date, on, from,
involving or by any of the Real Properties or any Prior Property, or any
off-site waste or disposal location, or any of Sellers, whether or not then
known, (B) any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to any Hazardous Discharge, the
presence, use, disposal or treatment of a Hazardous Substance, or noncompliance
with any Environmental Requirement, on or prior to the Closing Date, and/or (C)
any Environmental Complaint and/or any demand of any government agency or
authority prior to, on or after the Closing Date which is based upon or in any
way related to any Hazardous Discharge, the presence, use, disposal or treatment
of a Hazardous Substance, and/or noncompliance with any Environmental
Requirement on or prior to the Closing Date, on, from, involving or by any of
the Real Properties or any Prior Property, or any off-site waste or disposal
location, or any of Sellers, and including, without limitation and in each such
case under this subsection 8.2.4, the costs and expenses of all remedial action
and clean-up, attorney and consultant fees, investigation, sampling and
laboratory fees, court costs and litigation expense and costs arising out of
emergency or temporary assistance or action undertaken by or as required by any
regulatory body in connection with any of the foregoing; and
8.2.5 any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation,
reasonable attorneys' fees, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing any of the obligations under this Section 8.2.
8.3 Survival, etc.
8.3.1 Each of the representations, warranties, indemnities, covenants
and agreements of any of Sellers shall constitute the joint and several
representations, warranties, indemnities, covenants and agreements of each of
Sellers. Each representation, warranty, indemnity, covenant and agreement of any
of the parties hereto shall survive the Closing; provided, that:
(a) no party shall be entitled to assert any claim against any other
for misrepresentations or breach of warranty (as opposed to any covenant or
agreement) under or pursuant to this Agreement unless the party asserting such
claim shall notify the other in writing of such claim within two years after the
Closing Date; provided, further, that the foregoing limitations on the survival
of representations and warranties set forth in this paragraph (a) shall not
apply to any of the representations and warranties in or pursuant to any of
Sections 4.3, 4.6(a), 4.8, 4.12, 4.13 and 4.14 of Schedule 4 hereto, and in the
case of any of said Sections 4.8, 4.12 and 4.13 said two year period set forth
above in this paragraph (a) shall be deemed extended until such time as all
claims and matters referred to therein or based thereon are barred by the then
applicable statute of limitations; and
(b) no party shall be entitled to assert any claim against any other
with respect to any environmental matter or any Environmental Requirement or
Hazardous Discharge, under any provision of this Agreement, unless the person or
entity making such claim (an "Environmental Claim") shall notify the other party
or parties hereto of such claim (A) within
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thirty (30) years after the Closing Date in the case of an Environmental Claim
involving Pre-Closing Dioxin Matters or Pre-Closing Non-Dioxin Matters, or (B)
within eight (8) years after the Closing Date in the case of an Environmental
Claim involving Hazardous Materials Used Both Before and After Closing; provided
further that the foregoing limitation on survival set forth in this paragraph
(b) shall not apply to any claim or indemnification obligation under any
provision of this Agreement arising out of a third party claim or Covered
Proceeding asserted or commenced against any Buyer Indemnitee. "Pre-Closing
Dioxin Matters, "Pre-Closing Non-Dioxin Matters" and "Hazardous Materials Used
Both Before and After Closing" shall have the respective meanings set forth in
Schedule 8.3 of the Disclosure Schedule.
8.3.2 In no event shall Sellers on the one hand, or Buyer on the other
hand, have any liabilities under or pursuant to this Agreement for any
misrepresentations or breaches of warranties hereunder, or any breach of any
covenant required to be performed before the Closing, or for any Excluded
Liability or any indemnification obligation under Section 8.2.1, 8.2.3, 8.2.4 or
(if and to the extent the provisions thereof are triggered by the foregoing
under this Section 8.3.2) 8.2.5, until, and then, only to the extent, such
liabilities shall exceed in the aggregate $200,000, except that the said
$200,000 aggregate deductible shall not apply to, limit or reduce Sellers'
liabilities or any Buyer Indemnitee's rights in the case of or with respect to
any and all pending litigation(s) involving any of Sellers and/or any and all
third party claims and Covered Proceedings.
8.3.3 Notwithstanding anything to the contrary herein, in no event
shall the total liability, cost and expense to Sellers or their affiliates or
their respective officers, directors or shareholders in respect of breaches of
representations or warranties hereunder on a cumulative basis exceed 50% of the
Purchase Price.
8.3.4 In the event of a breach of the representations in Section
4.14(a) hereof by reason of an environmental condition at DuCoa's Verona, MO
facility of which, on the date of the execution and delivery hereof, none of
Sellers had knowledge and Buyer shall elect not to effect the Closing, then
Sellers shall not have liability to Buyer for such breach.
8.4 Covered Proceedings.
8.4.1 If any action or proceeding is commenced by a third party against
a party entitled to indemnification under this Article 8 (an "Indemnitee") in
respect of which the Indemnitee proposes to hold any party or parties obligated
to provide such indemnification with respect thereto (the "Indemnitor(s)")
liable under the provisions of this Article 8 (a "Covered Proceeding"), the
Indemnitee shall give the Indemnitor(s) reasonably prompt written notice of such
Covered Proceeding and copies of all pleadings filed relating thereto within 20
days after the Indemnitee's receipt thereof.
8.4.2 If the Indemnitor(s) shall, at its (their) option, elect by
prompt written notice to each Indemnitee to contest or defend any such Covered
Proceeding, the Indemnitor(s) shall, subject to and except as otherwise provided
in the provisions of this Section 8.4, be entitled, at its or their sole cost
and expense, to contest or defend the same with counsel of its or their own
choosing, but reasonably satisfactory to the Indemnitee, and in such event the
Indemnitee shall not settle, compromise, pay or discharge the same without the
prior written consent of the Indemnitor(s) (which consent shall, however, not be
unreasonably withheld or delayed), so long as the Indemnitor(s) is (are)
actively contesting and defending the same in good faith.
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8.4.3 Notwithstanding the foregoing provisions of this Article 8, if
(i) the Covered Proceeding does not seek only monetary damages, but seeks any
injunction or other equitable relief or specific performance against any
Indemnitee, or may materially affect the continued use, condition, status or of
any of the Acquired Assets, or (ii) the Covered Proceeding involves any matter,
cause of action or claim covered by Section 8.2.4 hereof in which any
governmental or regulatory authority, agency or body of any other person or
entity seeks or may seek remediation or other action which may adversely affect
any business or operations of any Indemnitee, then the Indemnitee shall be
entitled to elect in good faith not to contest, and shall be entitled in good
faith to settle and discharge, any claim arising thereunder, and in the case of
clause (ii) the provisions of Section 8.4.5 shall apply.
8.4.4 Notwithstanding anything to the contrary contained in this
Section 8.4, and in the case of clause (ii) the provisions of Section 8.4.5
shall also be applicable:
(a) Even if the Indemnitee fails to give the Indemnitor(s) timely
notice of a Covered Proceeding or otherwise defaults in its obligations under
this Section 8.4, the sole remedy of the Indemnitor(s) for such default shall be
to offset against the indemnification liability otherwise payable by the
Indemnitor(s) to the Indemnitee the amount of damages actually suffered by the
Indemnitor(s) as a result of such default, including increased expenses,
liability or damages related to any limitation on the ability of Indemnitor(s)
to defend or remedy the liability or damage.
(b) The Indemnitor(s) shall not have any right to defend, or control
the settlement of, any Covered Proceeding: (i) if each Indemnitor does not
reasonably acknowledge in writing, within a reasonable period of time after the
Indemnitee gives notice of the Covered Proceeding, that the Indemnitor is
obligated to indemnify the Indemnitee in full with respect to the Covered
Proceeding as provided in Section 8.1 hereof or (ii) if the Indemnitor is then
in default in any of its material obligations under this Agreement or (if the
claim relates to violations or rights under the Prior Agreement) the PA/Security
Agreement, or (iii) if any of the Indemnitors is one of Sellers, then if Sellers
shall not have the financial ability and resources to conduct actively and
aggressively the defense of the Covered Proceeding and to pay and satisfy in
full the entire aggregate of the liabilities, costs and expenses which could
reasonably be expected to be incurred by any or all of Sellers or the Buyer
Indemnitees in connection with an adverse determination as a result thereof or
therein.
(c) In the event the Indemnitor(s) elect(s) (and is (are) entitled as
provided herein) to defend a Covered Proceeding, the Indemnitee shall be
entitled to participate in the defense thereof with its own separate counsel and
receive copies of all pleadings and other papers in connection therewith. In
such event, the fees and expenses of such Indemnitee's counsel shall, except as
otherwise provided in this Article 8, be borne by the Indemnitee, unless a
conflict of interest exists or the Indemnitee may have one or more defenses
available to it which are different from or in addition to those available to
the Indemnitor (an "Indemnitee Control Situation"). In the case of an Indemnitee
Control Situation, the Indemnitor shall not have the right to direct the defense
thereof.
(d) If the Indemnitor(s) do(es) not (or is (are) not entitled to) elect
to contest or defend a Covered Proceeding, or after so electing do(es) not
actively contest and defend the same in good faith, and in conformity with the
requirements of this Section 8.4, the Indemnitee shall be entitled to contest,
defend and/or settle such Covered Proceeding on such
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terms and with such counsel as the Indemnitee reasonably deems appropriate, and
at the sole cost and expense of the Indemnitor(s).
(e) If the Indemnitor(s) is (are) entitled to control the settlement of
a Covered Proceeding (subject to the requirements and limitations of this
Section 8.4), the Indemnitor(s) will be entitled to control such settlement only
if (i) the terms of such settlement require no more than the payment of money
(i.e., such settlement does not require the Indemnitee to admit any wrongdoing
or take or refrain from taking any action), (ii) the full amount of such
monetary settlement is or would be paid by the Indemnitor(s), and (iii) each
Indemnitee receives as part of such settlement a legally binding and enforceable
unconditional satisfaction and/or release, in form and substance reasonably
satisfactory to the Indemnitee, providing that the Covered Proceeding and any
claimed liability or obligation of the Indemnitee with respect thereto is being
fully satisfied by reason of such settlement and that the Indemnitee is being
released from any and all obligations or liabilities it may have with respect
thereto.
8.4.5 In the event any party hereto shall be in the process of
defending any Covered Proceeding, or any party hereto shall be liable for
indemnification obligations with respect to any environmental condition or
environmental incident at the Verona, MO site, the other parties hereto shall
(at the sole cost and expense of the party with the indemnification obligation
for the particular situation) reasonably cooperate with the party engaged in
such defense or so liable for such indemnification obligation to facilitate its
investigation of the matters at issue and provide reasonable access to the
Verona, MO site for such purpose at reasonable times during normal business
hours, and so long as such investigation or access shall not interfere with the
business or operations at the Verona, MO site. In addition, in the case of an
Environmental Claim involving the Verona, MO site for which Buyer is entitled to
indemnification under this Article 8: (a) Buyer will provide Sellers (in the
absence of emergency circumstances or applicable statutory or regulatory
requirements which make the same impractical) with a reasonable opportunity to
discuss possible means of effecting required remediation and to exchange with
Buyer cost estimates for remediation measures proposed by Buyer or Sellers, as
the case may be; and (b) Buyer will act in good faith in selecting remediation
measures which are reasonably cost efficient (in light of available alternatives
and its business needs) and consistent with commercially reasonable business
practice, so long as (i) such measures could not reasonably be expected to have
a material impact on production or other operations at the Verona, MO site, and
(ii) all liabilities, costs, expenses and damages resulting or likely to result
from or in connection with such measures are promptly paid by Sellers to Buyer
(and Sellers establish to Buyer's reasonable satisfaction (via bond or
satisfactory security device) their ability to make such payment), and (iii)
such measures does not significantly impair the ability of Buyer to continue to
conduct its business at the Verona, MO site or to maintain its competitive
position in the marketplace.
8.5 (a) If the Closing occurs and an Environmental Claim for Pre-Closing
Dioxin Matters or Pre-Closing Non-Dioxin Matters exists which entitles Buyer to
indemnification under this Agreement (a "Dioxin Claim"), and Sellers shall
concurrently be entitled to indemnification for such Dioxin Claim under the
Prior Agreement (the "Prior Seller Indemnity"), then if (i) Buyer commits an act
set forth in paragraph (b) below and the actual and direct effect of the
commission of such act is to cause the Prior Seller Indemnity for such
particular Dioxin Claim to be terminated and lost without right of recovery by
any of Sellers (a "Buyer Termination Cause") and (ii) such termination and loss
is not otherwise caused by or due to any other act, event or circumstance not
constituting a Buyer Termination Cause and Sellers shall have complied with
- 30 -
paragraph (c) below and shall have timely and diligently used all reasonably
available means to preserve the Prior Seller Indemnity, then the entitlement of
Buyer to indemnity under this Article 8 for such Dioxin Claim (but not any other
Environmental Claim) shall be reduced by the actual dollar amount of Prior
Seller Indemnity for such Dioxin Claim so terminated and lost which would
otherwise have been recovered but for such Buyer Termination Cause.
(b) A "Buyer Termination Cause" shall mean if after the Closing:
(i) Buyer shall disturb or damage the caps on the Sites or shall fail to
assume responsibility, at its sole expense, for the mowing and seeding of the
vegetative covers of the Sites or shall fail to notify DuCoa (or at Buyer's
option Prior Seller directly) of any disturbance of or damage first occurring
after the Closing to any such cap within twenty-four (24) hours after Buyer has
Knowledge thereof (the "Sites", for the purposes hereof, shall mean the Slough,
Lagoon, Burn, Spill and Irrigation areas as defined in the map attached as Annex
8.5A to the Disclosure Schedule, each of which may be referred to singly as a
"Site").
(ii) Buyer shall spray irrigate wastewater at the Plant.
(iii) Buyer shall fail to provide Prior Seller and its representatives with
access to (i) the Plant and the Verona, MO Owned Real Property acquired by Buyer
pursuant to this Agreement (the "Real Property") for so long as Prior Seller is
obligated to fulfill an environmental covenant under Article 10 of the Prior
Agreement, and (ii) the real property retained by Prior Seller as described on
Schedule 10.7 of the Prior Agreement via the easement described in the Ingress
and Egress Easement, a copy of which is attached hereto as Annex 8.5B to the
Disclosure Schedule; such access to be afforded during all reasonable times to
Prior Seller and to its representatives , upon reasonable notice to Buyer, in
order that Prior Seller and its representatives may undertake any and all
Remediation Activities that may be necessary to carry out the terms of the Prior
Agreement or any undertakings applicable thereto.
(iv) For a period of thirty (30) years after Closing, Buyer shall undertake
any construction or excavation or earthmoving activities that may affect the
Sites or otherwise substantially interfere with or materially increase the costs
of Prior Seller in carrying out its covenants under Section 10.4(a) of the Prior
Agreement.
(v) Buyer (and its successors and assigns) shall fail to notify DuCoa (or
at Buyer's option Prior Seller directly) within twenty-four (24) hours after
Buyer becomes aware that a third party having an easement right on the Real
Property: (i) intends to undertake any construction or excavation or earthmoving
activities that may affect the Sites, or (ii) has come onto the Real Property
with the intention of performing (or has already commenced performing) any such
activities.
(vi) Buyer shall refuse to meet with the Environmental Committee regarding
Remediation Activities of Prior Seller.
(c) Sellers shall, if and to the extent Buyer shall so require, promptly
and from time to time appoint representatives of Buyer (or its successors and
assigns) to the Environmental Committee as DuCoa's representatives thereto
(together with DuCoa's own internal designees). Sellers shall consult regularly
with Buyer regarding all Environmental Committee matters, and none of Sellers
shall take any action in the context of or relating to the Environmental
Committee without reasonable prior notice to and the express prior written
- 31 -
consent of Buyer. Sellers shall use its best efforts to facilitate continuing
communication between Prior Seller and Buyer and to enable Buyer to avoid a
Buyer Termination Cause and to preserve and enforce its right and remedies under
the Prior Agreement.
(d) For purposes of this Section 8.5 only: the terms "Knowledge", "Plant"
and "Remediation Activities" shall have the respective meanings ascribed thereto
in the Prior Agreement.
(e) Notwithstanding anything to the contrary contained herein, (i) Buyer
shall not have or assume any obligation of any of Sellers under the Prior
Agreement, nor shall Buyer have any liability or obligation to any of Sellers or
to Prior Seller for any matter covered by paragraph (b) above, the only
consequence of any such paragraph (b) matter being the possible reduction of an
indemnity right under Article 8 of this Agreement with respect to a particular
Dioxin Claim under the limited circumstances set forth above, (ii) the
obligations of Sellers under Article 8 of this Agreement shall not be limited or
affected in any manner by any termination or lack of availability of Prior
Seller's obligations under the Prior Agreement whatsoever, except under the
limited circumstances and to the limited extent expressly set forth in this
Section 8.5, and (iii) neither Prior Seller nor any other person or entity shall
be a third party beneficiary hereof, nor shall this Section 8.5 limit or affect
any rights or remedies which any Buyer Indemnitee may have against Prior Seller
or any other person or entity.
8.6 Escrow; Offsets.
8.6.1 Sellers' performance of their respective obligations under or
pursuant to this Agreement and/or any agreement or certificate or instrument
contemplated hereby, shall be secured by the Escrow Funds, as defined in, and
held in escrow pursuant to the terms of, the Escrow Agreement. In the event that
any Buyer Indemnitee shall have any claim for indemnification, then in addition
to any other rights and remedies available to any Buyer, Buyer shall be entitled
to recover such claim out of, and make claim for, the Escrow Funds and, subject
to the terms of the Escrow Agreement, the proceeds of the Escrow Funds shall be
available to satisfy any such claim. The right of any Buyer Indemnitee to assert
any claim it may have under or in connection with this Agreement against or to
recover the Escrow Funds shall be in addition to any and other rights and
remedies which any Buyer Indemnitee may have, all of which shall be cumulative.
In the event of any claim for indemnification, any Buyer Indemnitee may proceed
against any of Sellers and/or the Escrow Funds, and no failure or delay by any
Buyer Indemnitee in exercising any right to claim any portion of the Escrow
Funds shall operate as a waiver thereof, nor shall any single or partial
exercise of any right preclude the exercise of any other right.
8.6.2 Without limiting its other rights and remedies, Buyer, subject to
the provision of this Section 8.6.2, shall also have the right to set-off and
deduct the amount of any entitlement of any Buyer Indemnitee in respect of any
obligation under Section 8.2 or otherwise in respect of this Agreement against
amounts payable by Buyer under or pursuant to this Agreement, in each case at
the option of Buyer, in the order in which such payments come due. In order to
assert the set-off right herein provided for: either (i) there must be an
agreement by Sellers thereto or a determination of a court or arbitrator that
the claim on which such set-off is based is valid, or (ii) Buyer must propose
that an independent mediator mutually acceptable to Buyer and Sellers render a
non-binding determination as to the extent to which such claim on which such
set-off is based is reasonably likely to be a valid claim, and, in such event,
either Sellers shall fail to submit such matter to such a mediator or such
mediator shall make such non-
- 32 -
binding determination. In the event Sellers agree to such submission to such
mediator, then the parties shall proceed expeditiously to make such submission
and to request such mediator to render a determination promptly and any payment
obligation as to which such set-off claim applies shall be suspended until such
mediator renders his determination.
8.7 Remedies. After the Closing, the rights of Buyer under this Article 8
and under Section 9.1 hereof shall be the exclusive remedy of Buyer with respect
to claims based upon a breach or alleged breach of any of the representations,
warranties and covenants of Sellers contained herein. The rights of Sellers
under this Article 8 shall be the exclusive remedy of Sellers with respect to
claims based upon a breach or alleged breach of any of the representations,
warranties and covenants of Buyer contained herein. Except as expressly set
forth in or made pursuant to this Agreement, neither Sellers nor any of their
respective representatives or affiliates makes or has made any representations
or warranties, express or implied, in connection with the transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, except as set forth in or provided pursuant to this Agreement, the
Acquired Assets shall be transferred to Buyer pursuant to this Agreement,
without any warranty of merchantability or fitness for a particular purpose.
ARTICLE 9
9. Miscellaneous.
9.1 Specific Performance. Sellers agree that the Acquired Assets are unique
property that cannot be readily obtained on the open market and that Buyer will
be irreparably injured if this Agreement is not specifically enforced.
Therefore, Buyer shall have the right specifically to enforce the performance of
Sellers under this Agreement without the necessity of posting any bond or other
security, and Sellers hereby waive the defense in any such suit that Buyer has
an adequate remedy at law and agree not to interpose any opposition, legal or
otherwise, as to the propriety of specific performance as a remedy. The remedy
of specifically enforcing any or all of the provisions of this Agreement in
accordance with this Section shall not be exclusive of any other rights or
remedies which Buyer may otherwise have under this Agreement or otherwise
(subject nevertheless to Section 8.6 hereof), all of which rights and remedies
shall be cumulative.
9.2 Binding Agreement; Assignment. All the terms and provisions of this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and assigns, and no other
person shall have any right, benefit or obligation under this Agreement as a
third party beneficiary or otherwise. Prior to the Closing, neither this
Agreement nor any of the rights or obligations hereunder may be assigned by any
party without the prior written consent of the other parties.
9.3 Law To Govern. This Agreement and each of the agreements and
instruments executed and delivered pursuant thereto shall be governed by and
construed in accordance with the laws of the State of New York without regard to
any principles or requirements thereof that would otherwise require the
application of or reference to the laws of another jurisdiction.
9.4 Applicable Law; Venue. This Agreement and each of the agreements and
instruments executed and delivered pursuant thereto shall be construed and
enforced in
- 33 -
accordance with the internal laws of the State of New York, without regard to
principles of conflict of laws. Any litigation arising under or related to or in
connection with this Agreement or any of such other agreements and instruments
shall be tried by the United States District Court for the Southern District of
New York, provided that if such litigation shall not be permitted to be tried by
such court then such litigation shall be held in the state courts of New York.
Each party hereto irrevocably consents to and confers personal jurisdiction on
the United States District Court for the Southern District of New York, or, if
(but only if) the litigation in question shall not be permitted to be tried by
such court, on the state courts of New York, and expressly waives any objection
to the venue of such court, as the case may be, and agrees that service of
process may be made on such party by mailing a copy of the pleading or other
document by registered or certified mail, return receipt requested, to its
address for the giving of notice provided for in Section 9.6 hereof, with
service being deemed to be made five (5) business days after the giving of such
notice.
9.5 Waiver of Trial By Jury. Each party hereto waives, to the fullest
extent permitted by applicable law, any right it may have to a trial by jury in
respect of any litigation directly or indirectly arising out of, under or in
connection with this Agreement, any other agreement or instrument contemplated
by or relating to this Agreement, any of the transactions contemplated hereby or
thereby. Each party hereto acknowledges that it and the other parties hereto
have been induced to enter into this Agreement by, among other things, the
mutual waiver in this Section 9.5.
9.6 No Public Announcement. Prior to Closing, no party hereto shall,
without the prior written approval of Buyer and Sellers, make any press release
or other public announcement concerning the transactions contemplated by this
Agreement, except as and to the extent that any party hereto, or any of its
affiliates, shall reasonably determine it is so obligated by any law, rule or
regulation or the rules of any stock exchange, in which case the disclosing
party shall so advise the other parties and Buyer and Sellers shall use their
reasonable efforts to cause a mutually agreeable release or announcement to be
issued.
9.7 Notices. All notices shall be in writing and shall be deemed to have
been duly given if delivered personally or when deposited in the mail if mailed
via registered or certified mail, return receipt requested, postage prepaid, or
when delivered to a nationally recognized overnight courier service or when sent
by electronic facsimile transmission (with copy to follow by mail or courier as
aforesaid), to the other party hereto at the following addresses:
if to any Seller, to:
DCV, Inc.
3521 Silverside Road
Suite 2K - Quillen Bldg.
Wilmington, Delaware 19810
Attn: Mr. Earnest Porta
Tel: 302-695-5330
Fax: 302-695-5350
- 34 -
if to Buyer, to:
c/o Balchem Corporation
2007 Route 284
Slate Hill, New York 10973
Attn: Dino A. Rossi, President
Tel: 845-355-6300
Fax: 845-355-6528
with a copy to:
Golenbock, Eiseman, Assor & Bell
437 Madison Avenue
New York, New York 10022
Attention: Nathan E. Assor, Esq.
Tel: 212-907-7300
Fax: 212-754-0330
or to such other address as any such party may designate in writing in
accordance with this Section 9.7.
9.8 Fees and Expenses. Except as otherwise provided in this Agreement, each
of the parties hereto shall bear its own costs and expenses (including fees and
disbursements of its counsel, accountants and other financial, legal, accounting
or other advisors) incurred or otherwise payable by it in connection with the
preparation, negotiation, execution, delivery and performance of this Agreement
and each of the other documents and instruments executed in connection with or
contemplated by this Agreement.
9.9 Severability. In the event that any of the provisions contained in this
Agreement would be held to be invalid, prohibited or unenforceable in any
jurisdiction for any reason because of the scope, duration or area of its
applicability or for other reasons, unless narrowed by construction, such
provision shall, for purposes of such jurisdiction only, be construed as if such
invalid, prohibited or unenforceable provision had been more narrowly drawn so
as not to be invalid, prohibited or unenforceable (or if such language cannot be
drawn narrowly enough, the court making any such determination shall have the
power to modify, to the extent necessary to make such provision or provisions
enforceable in such jurisdiction, such scope, duration or area or all of them,
and such provision shall then be applicable in such modified form). If,
notwithstanding the foregoing, any such provision would be held to be invalid,
prohibited or unenforceable in any jurisdiction for any reason, such provision,
as to such jurisdiction only, shall be ineffective to the extent of such
invalidity, prohibition or unenforceability, without invalidating the remaining
provisions of this Agreement. No narrowed construction, court-modification or
invalidation of any provision shall affect the construction, validity or
enforceability of such provision in any other jurisdiction. Subject to the
foregoing, in case any one or more of the provisions contained herein should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected in any way thereby.
9.10 Entire Agreement. This Agreement and the schedules and exhibits hereto
which form a part hereof contain the entire understanding of the parties hereto
in respect of the
- 35 -
subject matter hereof. There are no promises, representations, warranties,
covenants, or undertakings, other than those expressly set forth herein or made
pursuant hereto. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
9.11 Amendments; Consents and Waivers. This Agreement and the other
agreements to be executed in connection herewith may not be modified, amended or
terminated except by a written agreement specifically referring to this
Agreement signed by Buyer and Sellers. Any failure by any party to this
Agreement to comply with any of its obligations hereunder may be waived by the
other party. No waiver shall be effective unless in writing and signed by the
party granting such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or similar nature.
9.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same Agreement.
9.13 No Third-Party Beneficiaries. Nothing herein, express or implied, is
intended or shall be construed to confer upon or give to any person or entity,
other than the parties hereto, any rights, remedies or other benefits under or
by reason of this Agreement or any other documents executed in connection with
this Agreement.
9.14 Section Headings. The Article, Section and paragraph headings
contained herein are for the purposes of convenience only and are not intended
to define or limit the contents of this Agreement.
9.15 Use of Terms. Whenever required by the context, any pronoun used in
this Agreement or in any Exhibit or Schedule hereto shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns, pronouns and verbs shall include the plural and vice versa. The use of
the words "include" or "including" in this Agreement or in any Exhibit or
Schedule hereto shall be by way of example rather than by limitation. Reference
to any agreement, document or instrument means such agreement, document or
instrument as amended or otherwise modified from time to time in accordance with
the terms thereof. Unless otherwise indicated, reference in this Agreement to a
"Section" or Article" means a Section or Article, as applicable, of this
Agreement. When used in this Agreement or in any Exhibit or Schedule hereto,
words such as "herein", "hereinafter", "hereof", "hereto", and "hereunder" shall
refer to this Agreement as a whole, unless the context clearly requires
otherwise. The use of the words "or," "either" and "any" shall not be exclusive.
The parties hereto have participated jointly in the negotiation and drafting of
this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
9.16 Termination. This Agreement may be terminated at any time prior to
Closing: (i) by mutual written consent of Buyer and Sellers; (ii) by Buyer or
Sellers if the Closing shall not have occurred on or before June 15, 2001,
provided that this provision shall not be available to Buyer if Sellers have the
right to terminate this Agreement under clause (iv) of this Section 9.16, and
this provision shall not be available to Sellers if Buyer has the right to
terminate this Agreement under clause (iii) of this Section 9.16, (iii) by Buyer
if there is a material breach of any representation, warranty, covenant or
agreement made or to be complied
- 36 -
with or performed by any of Sellers pursuant to the terms of this Agreement,
provided that Buyer may not terminate this Agreement prior to the Closing if
Sellers have not had a reasonable opportunity (not to exceed twenty (20) days
from the date of notice from Buyer to Sellers of such breach) to cure such
breach; or (iv) by Sellers if there is a material breach of any representation,
warranty, covenant or agreement made or to be compiled with or performed by
Buyer pursuant to the terms of this Agreement, provided that Sellers may not
terminate this Agreement prior to the Closing Date if Buyer has not had a
reasonable opportunity (not to exceed twenty (20) days from the date of notice
from Sellers to Buyer of such breach) to cure such breach.
9.17 Effect of Termination. In the event of termination of this Agreement
prior to the Closing: (i) each party will redeliver all documents, work papers
and other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after execution hereof, to the party
furnishing the same; (ii) the provisions of the confidentiality agreements
signed by each of the parties shall continue in effect; and (iii) no such
termination shall affect or negate any rights which any party hereto may have by
reason of any breach or default under this Agreement by any other party hereto.
- 37 -
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
BCP Ingredients, Inc.
By: /s/ Dino A. Rossi
--------------------------------
Name: Dino A. Rossi
---------------------------
Title: President
--------------------------
DuCoa L.P.
By: DCV, Inc., general partner
By: /s/ Earnest W. Porta
--------------------------------
Name: Earnest W. Porta
---------------------------
Title: President
--------------------------
DCV, Inc.
By: /s/ Earnest W. Porta
--------------------------------
Name: Earnest W. Porta
---------------------------
Title: President
--------------------------
DCV GPH, Inc.
By: /s/ Earnest W. Porta
--------------------------------
Name: Earnest W. Porta
---------------------------
Title: President
--------------------------
SCHEDULE 1.2
Schedule 1.2 - Operations and Products pertaining to the Business (Section 1.2
"The Business")
A. "Verona Operations" means the business, operations and rights of any of
Sellers for or relating to any of the following products, compounds, chemicals
or materials and any and all Derivative Products (as hereinafter defined):
Feedgrade choline chloride products, including:
50% Dry Choline Chloride
60% Dry Choline Chloride
70% Dry Choline Chloride
70% & 75% Aqueous Choline Chloride
all other choline and choline chloride products and materials for
animal and feed uses
Human nutritional choline products, including:
Choline chloride, FCC
Choline bitartrate, FCC
Regular
Coarse
Conditioned
20 Mesh Conditioned
40 Mesh Conditioned
Fine, Conditioned (milled by a third party)
Betaine HCl USP
Choline Dihydrogen Citrate
All other choline and betaine and related products for human use.
TMAC (Tetramethylammonium chloride)
Product tolled for EKC
Stabilized Choline Base in Methanol
Product tolled for Velsicol
Sodium Benzoate
Potassium Benzoate
Other:
All other business, operations and rights relating to any and all products,
materials and services related to any of the above under this Schedule 1.2.
1
Any and all other products, compounds, chemicals and materials concurrently
processed, produced, tolled and/or marketed, or currently proposed to be
processed, produced, tolled and/or marketed, as part of or in connection with
any operations or business of any of Sellers from or utilizing any of the
Verona, MO facilities or any services provided thereat or therefrom, including
without limitation Derivative Products (as hereinafter defined).
B. "M-Cap Operations" means the business, operations and rights of any Sellers
for or relating to any of the following products, compounds, chemicals and
materials and any and all Derivative Products:
Baking Soda G110
Baking Soda G130
Baking Soda 435
Baking Soda 516B
Cinnamon H100
F-440
F-441
F-444
F-445
Sodium Diacetate DP-208
Arginine 362
Ascorbic Acid B100
Ascorbic Acid 431
Betaine Hydrochloride 454
Choline Bitartrate 424
Choline Dihydrogen Citrate 430
Copper Gluconate 486
Ferrous Fumarate 451A
Ferrous Fumarate 482
Ferrous Sulfate 481A
Lysine 360
Magnesium Oxide 153
Magnesium Oxide 154
Natural Betaine 454WS
Niacinamide 477A
Riboflavin 357
Thiamine Hydrochloride 355
Thiamine Mononitrate 356
Zinc Oxide 471
Aspartame 311
Aspartame 452
Citric Acid A100
Citric Acid 437
Citric Acid 474
Citric Acid 535
Fumaric Acid 410A
Potassium Chloride C101
Potassium Chloride C102
Sodium Chloride 436A
Sodium Chloride 436B
All products, compounds, chemicals and materials related to any of the above.
2
C. "Products" as used in the Agreement includes (i): any and all of the
products, materials and services identified or referred to in this Schedule 1.2,
and (ii) any and all products, materials and services reflecting or utilizing
percentages or portions of any of the chemicals or compounds referred to in this
Schedule 1.2 which are different than the particular percentages or portions
referred to in this Schedule 1.2 or reflected in, and which products, materials
or services are used for similar purposes as, any of the other Products
("Derivative Products").
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SCHEDULE 2.1
Purchase Price
(a) The Purchase Price shall be the sum of $14,981,000 (the "Base
Price"), subject to adjustment as provided in Section 2.5 or 3.1.2 of the
Agreement, and also reduced dollar-for-dollar by the aggregate amount of the
Payables as of the Closing Date, plus the Contingent Amount (if any), and shall
be payable as provided in the Agreement or otherwise herein.
(b) The term the "Payables" shall mean the aggregate amount of (i) all
trade and other accounts payable, and (ii) those categories of accrued business
expenses described in Annex B hereto, in each case relating to the Business, as
of the Closing Date, which Buyer shall, at the Closing, elect to assume and pay
when due.
(c) The parties shall cooperate in good faith prior to the Closing to
estimate the amount of the accounts payable and accrued business expenses as of
the Closing Date relating to the Business, and at the Closing Buyer shall
designate, by category or amount, in its discretion, those items which shall
constitute Payables, in which event the parties' good faith estimate thereof
(the "Estimated Payables") shall be deducted from and reduce the Purchase Price
and the Base Price and such net sum (the "Cash Amount") shall be payable at the
Closing by Buyer as follows: $250,000 to the Escrow Agent; and the balance of
the Cash Amount to Sellers.
(d) The parties shall, promptly after the Closing (but in no event
later than sixty (60) days after the Closing), cooperate in good faith to
mutually compute the definitive amount of the Payables (the "Definitive
Payables"). If the Definitive Payables shall exceed the Estimated Payables,
Sellers shall promptly pay such excess to Buyer. If the Estimated Payables shall
exceed the Definitive Payables, Buyer shall promptly pay such excess to Sellers.
(e) Sellers and Buyer agree to use their best efforts to reach
agreement on any disputed portion of the computation of the Definitive Payables
under paragraph (d) above (the "Disputed Items"). Any Disputed Items remaining
unresolved on the 90th day after the Closing shall forthwith be submitted to a
neutral arbitrator selected under the auspices of the American Arbitration
Association or as Sellers and Buyer shall otherwise agree (the "Arbitrator").
Sellers and Buyer shall promptly present their positions with respect to the
Disputed Items to the Arbitrator, together with such other materials as the
Arbitrator may deem appropriate. Any determination by the Arbitrator with
respect to any Disputed Item shall be final and binding on each party. The cost
of the Arbitrator shall be borne 50% by Sellers and 50% by Buyer.
(f) The "Contingent Amount" shall be the product of $1,000,000,
multiplied by the appropriate and corresponding "Applicable Fraction" specified
below, for each of the twelve (12) month periods beginning July 1, 2001, July 1,
2002 and July 1, 2003, respectively (each an "Applicable Fiscal Period" and,
respectively the "2002 Fiscal Period," the "2003 Fiscal Period" and the "2004
Fiscal Period", as the case may be), based on the relationship of the Actual
Gross Margin, to the applicable Base Gross Margin, for the particular Applicable
Fiscal Period, and to the applicable Prior Base Gross Margin, all as hereinafter
defined and provided. 1
(g) The "Actual Gross Margin" for any respective Applicable Fiscal
Period shall mean Net Sales (as hereinafter defined) less all actual
manufacturing costs associated with the Verona, MO operations of Buyer for such
respective Applicable Fiscal Period, including all labor and material costs and
production costs (but excluding depreciation, income taxes, interest expense and
allocations of home office overhead, provided that home office or other overhead
items such as insurance which are properly allocable to the Verona, MO
operations of Buyer shall be included in computing Actual Gross Margin), as
determined in accordance with generally accepted accounting principles ("GAAP")
applied by Buyer on a basis consistent with GAAP reflected in the accounting
records of Sellers reviewed by Buyer's parent's accountants prior to May 1, 2001
during their review of the Sellers' financial statements.
(h) "Net Sales" shall equal gross sales by Buyer of the Covered
Products (as hereinafter defined) manufactured at the Verona, MO facility
included in the Acquired Assets, less all delivery and freight charges, returns,
allowances, credits, discounts, customs charges, duties and sales, use, VAT and
similar taxes; provided that all Covered Products sold or transferred to Buyer
or any of its affiliates or used by Buyer or any of its affiliates in the
manufacture or processing of encapsulated choline chloride (or any other
product) shall be deemed sold and transferred at a price no higher than the
applicable per unit manufacturing cost therefor for the Applicable Fiscal Period
in which so sold, transferred or used as determined in accordance with generally
accepted accounting principles ("GAAP") applied by Buyer on a basis consistent
with GAAP reflected in the accounting records of Sellers reviewed by Buyer's
parent's accountants prior to May 1, 2001 during their review of the Sellers'
financial statements.
(i) The Covered Products shall mean Choline Nutrient, Dry and Aqueous
Choline Chloride Feed, Betaine Hydrochloride, Tetramethyl Ammonium Chloride
(TMAC), Sellers' form of Encapsulated Choline Chloride and Benzoate tolling. It
is expressly understood that Buyer has no intention of marketing Sellers' form
of Encapsulated Choline Chloride.
(j) The Base Gross Margin for each Applicable Fiscal Period shall be as
follows:
Applicable Fiscal Period Base Gross Margin
------------------------ -----------------
2002 Fiscal Period $4,661,000
2003 Fiscal Period $6,062,000
2004 Fiscal Period $7,371,000
(k) The "Prior Base Gross Margin" applicable to a particular Applicable
Fiscal Period shall be the Base Gross Margin for the immediately preceding
Applicable Fiscal Period, and the Prior Base Gross Margin applicable to the 2002
Fiscal Period shall be $2,966,000.
(l) The Applicable Fraction for any particular Applicable Fiscal Period
shall be calculated as follows:
(i) If the Actual Gross Margin for such particular Applicable Fiscal Period
is greater than the Prior Base Gross Margin applicable to such Applicable Fiscal
Period, then the Applicable Fraction shall be a fraction (but in no event more
than 1.0):
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(a) The numerator of which is equal to the
amount by which such Actual Gross Margin
("Current AGM") shall exceed such Prior Base
Gross Margin ("Prior BGM"), and
(b) The denominator of which is equal to the
amount by which the Base Gross Margin for
such particular Applicable Fiscal Period
("Current BGM") shall exceed such Prior BGM.
(ii) Expressed as a fraction, such Applicable Fraction shall equal:
(Current AGM - Prior BGM)
-------------------------
(Current BGM - Prior BGM)
(iii) If the Current Gross Margin is less than or equal to the Prior Base
Gross Margin, then the Applicable Fraction shall equal zero and there shall be
no Contingent Payment.
(iv) As an example, if the Actual Gross Margin for the 2002 Fiscal Period
is $3,351,000 then the Applicable Fraction shall equal (3,351,000 -
2,966,000)/(4,661,000-2,966,000) or 385,000/1,695,000 or 0.2271. In such case,
the Contingent Amount payable for the 2001 Fiscal Period would equal
($1,000,000) times (.2271) or $227,100.
(m) If any Contingent Amount shall be payable for a particular
Applicable Fiscal Period, then Buyer shall pay the same to Sellers within 60
days after the end of such Applicable Fiscal Period. In no event shall the
Contingent Amount for a particular Applicable Fiscal Period exceed $1,000,000,
nor shall the aggregate Contingent Amount for all Applicable Fiscal Periods
exceed $3,000,000.
(n) Buyer acknowledges that the Base Gross Margin amounts are based on
estimated margins of the products currently manufactured at the Verona, MO site
and therefore, to the extent possible, the operations of the Verona, MO site
shall be accounted for on a basis separate from the remaining operations of
Buyer such that the results of operations at the Verona, MO site may be
accurately compared to such Base Gross Margin amounts.
(o) The use and amounts of all reserves or contingent liabilities,
including product claims or refunds or liability reserves, shall be consistent
with GAAP.
(p) In the event of an occurrence of a Force Majeure event during a
particular Fiscal Period resulting in (i) a Partial Shutdown (for a period
exceeding 30 consecutive days), or (ii) a total unscheduled shut-down (for a
period exceeding 7 consecutive days), of the Verona, MO site, including due to
earthquake, fire, or similar natural event, a plant shutdown, strike, lack of
raw materials, transportation or other situations outside the reasonable control
of the parties hereto, then the relevant Fiscal Period shall be extended by the
time period during which such shut-down continues, and Actual Gross Margin for
such Fiscal Period as extended shall not include Actual Gross Margin during the
period of such shut-down. A "Partial Shutdown" shall mean the unscheduled
shutdown of a major production line for the manufacture of liquid or dry choline
or choline salts.
(q) Upon payment of each Contingent Amount (or determination that no
Contingent Amount is owed) Buyer shall deliver to Sellers documents in
sufficient detail to show
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how the calculation of the Contingent Amount was determined. Sellers or their
representatives shall have a right, during normal business hours at such times
as reasonably approved by Buyer and subject to such restrictions as to
confidentiality as Buyer shall require, to audit all relevant records and
documents of Buyer necessary to verify the calculation of the Contingent Amount.
(r) Buyer acknowledges and agrees that the above Gross Margin
projections are solely for the purpose of establishing a Contingent Amount and
do not constitute a legally binding or enforceable commitment, projection,
representation or warranty for purposes of the Agreement, nor have Sellers made
any representations, warranties or assurances, express or implied, to Buyer as
to projected sales, margins or profits.
4
ANNEX B TO SCHEDULE 2.1
Accrued Business Expenses:
Property Taxes
Payroll withholdings (Taxes, 401(k), etc.)
Union pension contribution
Safety bonus
Vacation
Salary and wages
Lease/rental obligations
5
SCHEDULE 4
4.1 Organization, Standing and Qualification; No Subsidiaries.
(a) Each of Sellers is duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation, as set forth in
Schedule 4.1(a) of the Disclosure Schedule; and has all requisite power and
authority and is entitled to own, lease and operate its properties and to carry
on its business as and in the places such properties are now owned, leased or
operated and where such business is presently conducted. Set forth in Schedule
4.1(a) of the Disclosure Schedule is a listing of each jurisdiction in which the
respective Seller is qualified to do business as a foreign corporation. Each of
Sellers is duly qualified and authorized to do business, in good standing as a
foreign corporation in each jurisdiction in which it owns or leases property or
in which the nature of its business requires it to be so qualified except where
the failure to so qualify would not have a material adverse effect on the
Business, or on the condition (financial or otherwise), assets, liabilities or
operations of the Business. The copies of the Restated Certificate of Limited
Partnership and Limited Partnership Agreement of DuCoa and the Certificate of
Incorporation and By-Laws of each of DCV and LP delivered to Buyer are complete
and correct.
(b) Subsidiaries. Except as set forth in Schedule 4.1(b) of the
Disclosure Schedule, none of Sellers has any subsidiary or any interest, direct
or indirect, nor has any commitment to purchase any interest, direct or
indirect, in any other corporation or in any partnership, joint venture or other
business enterprise or entity. Except as set forth in Schedule 4.1(b), none of
Sellers is a subsidiary of another person or entity and no person or entity has
any interest, direct or indirect, nor has any commitment to purchase any
interest, direct or indirect, in any Seller. The Business has not been conducted
through any direct or indirect subsidiary or any direct or indirect shareholder
or affiliate of any of Sellers.
4.2 Related Transactions. Except as indicated in Schedule 4.2 of the
Disclosure Schedule, during the past three years none of Sellers nor the
Business has, directly or indirectly, purchased, leased nor otherwise acquired
any property or obtained any services from, or sold, leased or otherwise
disposed of any property or furnished any services to, or otherwise engaged in
transactions with any person or entity which, directly or indirectly, alone or
together with others, controls, is controlled by or is under common control with
any of Sellers or any partner or shareholder of any of Sellers or any person or
entity associated with any such person or entity, and no part of the property or
assets of any direct or indirect shareholder, subsidiary or affiliate of any of
Sellers is used by any Seller.
4.3 Authority. Each of Sellers has all requisite power and authority to
enter into this Agreement and each other agreement, document and instrument to
be executed or delivered by it in accordance with this Agreement (the "Seller
Documents") and to carry out the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and the Seller
Documents by Sellers have been authorized by all necessary corporate stockholder
partnership and partner action and no other proceedings on the part of any of
Sellers are necessary to authorize this Agreement, the Seller Documents and the
transactions contemplated hereby and thereby. This Agreement has been duly
authorized, executed and delivered by Sellers and is the legal, valid and
binding obligation of each Seller and each of the Seller Documents has been duly
authorized by Sellers and upon execution and delivery by such of Sellers as is
party thereto will be a legal, valid and binding obligation of same.
1
4.4 No Violation. Except as set forth on Schedule 4.4 of the Disclosure
Schedule, the execution, delivery and performance of this Agreement and the
Seller Documents and the consummation of the transactions contemplated hereby
and thereby, including without limitation the sale of the Acquired Assets to
Buyer, will not (a) conflict with or violate any provision of the amended and
restated certificate of limited partnership or limited partnership agreement of
DuCoa or the certificate of incorporation or by-laws of DCV or LP, (b) with or
without the giving of notice or the passage of time, or both, result in a breach
of, or violate, or be in conflict with, or constitute a default under, or permit
the termination of, or cause or permit acceleration under, any agreement,
instrument, debt or obligation to which any of Sellers is a party or to or by
which any of them or any of the Acquired Assets or the Business is subject or
bound, (c) require the consent of any party to any agreement or commitment to
which any of Sellers is a party, or to or by which any of them or any of the
Acquired Assets or the Business is subject or bound, (d) result in the creation
or imposition of any Lien upon any of the Acquired Assets, or (e) violate any
law, rule or regulation or any order, judgment, decree or award of any court,
governmental authority or arbitrator to or by which any of Sellers or any of the
Business or the Acquired Assets is subject or bound.
4.5 Financial Statements.
(a) Sellers have delivered to Buyer copies of the financial
statements identified on Schedule 4.5(a) of the Disclosure Schedule
(collectively the "Financial Statements"), including those for the calendar
years ended December 31, 1999 and December 31, 2000 and the three months ended
March 31, 2001, and the unaudited, pro forma listing of assets and liabilities
of the Business as at March 31, 2001 (the "Balance Sheet" and March 31, 2001 is
the "Balance Sheet Date"). Except as set forth in Schedule 4.5(b) of the
Disclosure Schedule, all of the Financial Statements have been prepared, on such
unaudited pro forma basis, from the books and records of Sellers in accordance
with generally accepted accounting principles consistently applied and
maintained throughout the periods indicated and fairly present in all material
respects the financial position of the Business as at their respective dates and
the results of operations and cash flows of the Business respectively for the
respective periods covered thereby, and do not contain any items of special or
nonrecurring income or any other income not earned in the ordinary course of
business except as expressly specified therein, and include all adjustments,
which consist only of normal recurring accruals, necessary for such fair
presentation.
(b) Except as and to the extent reflected or reserved against on
the face of the Balance Sheet (excluding the notes thereto), or set forth on
Schedule 4.5(c) of the Disclosure Schedule, none of Sellers has any debts,
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
of any nature whatsoever, other than current liabilities permitted under Section
4.11(a) below, and other than contract obligations disclosed pursuant to Section
4.9 below or not required to be disclosed pursuant to said Section 4.9, which in
each case conform to the representations and warranties with respect thereto in
this Agreement.
4.6 Title to and Condition of Acquired Assets.
(a) DuCoa has good and marketable title in fee simple to the Owned
Real Property, free and clear of all Liens, except (1) as reflected in Schedule
4.6(a) of the Disclosure Schedule, and (ii) liens for current real estate Taxes
not yet due or payable. None of the Owned Real Property is subject to or
affected by any reservation or exclusion of mineral, timber, air or other rights
or interests. Sellers have good and marketable title to all of the Acquired
Assets, and
2
all of the assets, properties and rights of the types described in Section 1.1
of this Agreement which any of them owns or purports to own, other than the
Owned Real Property, free and clear of any and all Liens, except as reflected in
Schedule 4.6(a) of the Disclosure Schedule.
(b) All Owned Real Property and all plants, facilities, structures,
machinery and equipment of or used by any Seller in connection with any of the
Owned Real Property conform in all material respects with all applicable
building and zoning ordinances and all other laws, regulations and requirements.
All such plants, structures, machinery and equipment of or used by any Seller in
connection with any of the Business are suitable for the purposes used and
adequate and sufficient for all operations and conduct of the Business as
currently being conducted, all of which are in all material respects in good
operating condition, order and repair, subject to normal wear and tear from
normal use and subject to normal maintenance requirements, and are free from
termites, wood destroying insects and organisms and structural damage therefrom.
There are no conditions or events, except for normal wear and tear, which would
prevent continued normal operation of said plants, structures, machinery and
equipment or would otherwise materially and adversely affect the operation
and/or use of the same as currently used by any Seller. There are no actions
pending or to the best of Sellers' knowledge threatened by any federal, state,
local or foreign regulatory agency with respect to the compliance of such
properties or assets with applicable laws, ordinances or regulations.
(c) Each Seller enjoys peaceful possession of all real and personal
properties held under lease or license. There are no material defaults existing
or event or condition which with notice or lapse of time or both, would
constitute an event of default, or arrearages under any of such leases and
licenses and all such leases and licenses are in good standing and in full force
and effect.
(d) Except as set forth in Schedule 4.6(d) of the Disclosure
Schedules, the Acquired Assets, together with the Excluded Leased Properties and
the inventory forming part of the Excluded Assets, include all of the assets,
contracts, leases and licenses and all of the other properties and rights of
every type and description, real, personal and mixed, tangible and intangible,
which are necessary to the conduct of the Business as presently conducted, and
for Buyer to conduct the Business in the same manner.
4.7 Intellectual Property.
(a) Except as indicated in Schedule 4.7(a) of the Disclosure
Schedule, Sellers own, or possess the perpetual and royalty-free licenses and
all other rights necessary to use, all Intellectual Property used in or
necessary to conduct any of the Business, all of which are in good standing and
uncontested and free and clear of any and all Liens and rights of others of any
kind. None of the Intellectual Property is owned or licensed or held by any
partner, shareholder, director, officer, consultant, independent contractor or
employee of any Seller, or by any person or entity which is an affiliate of any
Seller, all such Intellectual Property being owned or licensed as aforesaid
solely by DuCoa itself. To the knowledge of Sellers, no Seller is infringing
upon or otherwise acting adversely to any copyright, trademark, trademark right,
service mark, service name, trade name, patent, patent application, license or
trade secret or other proprietary right or intellectual property of any other
person or entity. No claim, suit, demand, proceeding or investigation is
pending, has been asserted or is threatened by or against any Seller with
respect to, based on or alleging infringement of any such rights or the
proprietary rights or intellectual property of any third party, or challenging
the validity or effectiveness of any license for such
3
rights, and none of Sellers knows of any basis for any such claim, suit, demand,
proceeding or investigation.
(b) Schedule 4.7(b) of the Disclosure Schedule, contains a true and
complete list of all Programs owned, developed, under development, published,
licensed, supported or maintained by any Seller (excluding commonly used and
available Programs used by Sellers each of which is subject to a commercially
standard "shrink-wrap" licenses which Buyer shall be entitled to utilize and
which can be readily obtained by Buyer without cost or expense).
(c) Sellers have delivered to Buyer copies of all registrations and
applications, which are currently pending for all Marks, Patents and copyrights,
all of which are identified in Schedule 4.7(c) of the Disclosure Schedule.
Sellers have, and on the Closing Date will continue to have, and Buyer will
have, the right to use all Intellectual Property in the manner presently used by
any of Sellers. None of Sellers has any knowledge of any infringement or
unlawful, unauthorized or conflicting use of any of the Intellectual Property.
4.8 Litigation.
(a) Except as set forth on Schedule 4.8(a) of the Disclosure
Schedule, there is no action, suit, proceeding, arbitration or investigation
pending against or affecting any of the Business or the transactions
contemplated by this Agreement, nor any basis therefor or threat thereof which,
in any case or in the aggregate, could if adversely determined have a material
adverse effect on the business, assets, liabilities, operations, prospects or
condition (financial or otherwise) of the Business or the Acquired Assets or the
value thereof, or the use thereof by Buyer. No Seller (with respect to any of
the Business), the Business or the Acquired Assets is subject to any court or
administrative order, writ, injunction or decree, nor in default with respect to
any order, writ, injunction or decree, of any court or federal, state, municipal
or other governmental department, commission, board, agency, instrumentality,
domestic or foreign.
(b) Schedule 4.8(b) of the Disclosure Schedule sets forth a
complete list and description of all product warranty and/or product liability
claims, other than minor returns or exchanges of goods in the ordinary course of
business consistent with industry practice, made in connection with the Business
during the past three years, in each case, together with the resolution thereof
(whether under insurance policies or otherwise).
4.9 Compliance; Permits.
(a) Each of Sellers, with respect to the Business, is in compliance
in all material respects with all laws, rules, regulations, orders, judgments or
decrees applicable to any Seller, any of its employees, any of the Acquired
Assets and/or any aspect of the Business, including any laws, rules,
regulations, ordinances, codes, orders, judgments or decrees as to zoning,
building requirements or standards, import, export, environmental, health and/or
safety matters. Each Seller has all licenses, consents, certificates,
franchises, permits, and authorizations issued by any department, board,
commission, bureau or instrumentality necessary to the conduct and operation of
the Business and the use of the Acquired Assets in the manner that it is
currently conducted by it ("Licenses"), and each of which is identified in
Schedule 4.9 of the Disclosure Schedule and none of operations of any Seller or
the Business is being conducted in any manner which violates in any material
respect any of the terms or conditions under which such License was granted.
Each License has been duly obtained, is valid and in full force and effect, and
is
4
not subject to any pending or, to the knowledge of any Seller, threatened
administrative or judicial proceeding to revoke, cancel or declare such License
invalid in any respect.
(b) None of Sellers, nor any officer employee or agent thereof, nor
any other person acting on behalf of any of them, has, directly or indirectly,
within the past two years given or agreed to give any gift or similar benefit to
any client, customer, governmental employee or other person who is or may be in
a position to help or hinder the Business (or assist any Seller in connection
with any actual or proposed transaction) which could reasonably be expected to
any Seller to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, if not given in the past might have had a material
adverse effect on the assets, operations or prospects of the Business, or if not
continued in the future might adversely affect the retention of any material
client, customer, account or business or the assets, operations or prospects of
the Business or which could reasonably be expected to subject any Seller to
material suit or penalty in any private or governmental litigation or
proceeding.
4.10 Schedules. Schedule 4.10(a) of the Disclosure Schedule contains a
true, complete and accurate list and description of the following:
(a) all real property and all buildings and improvements thereon in
which any Seller has an ownership, leasehold or other interest and which is used
in connection with any of the Business;
(b) all items of equipment, owned, leased or used by any Seller in
connection with any of the Business and setting forth with respect to all such
listed property an identification of all leases relating thereto;
(c) all Patents, Trademarks and copyrights and all applications
therefor (including any licensed to any Seller), held or used by any Seller in
connection with any of the Business, specifying such Seller's interest therein
and in the case of any licensed to any Seller, the expiration date of such
license, or if owned by any Seller, the date on, and manner in, which acquired;
and all Contracts (including licenses) relating to any of the Patents,
Trademarks or Copyrights;
(d) all fire, theft, casualty, liability, collision, personal
injury and other insurance policies insuring any Seller in connection with the
Business, or insuring any Acquired Assets or the Business, specifying with
respect to each such policy, the name of the insurer, the risk insured against,
the limits of coverage, the deductible amount (if any), and the date through
which coverage will continue by virtue of premiums already paid;
(e) all sales agency, supply, purchase, distribution, sales
representation, advertising, promotional, support, maintenance, outsourcing,
manufacture and fulfillment agreements or franchises, and all agreements
providing for the services of an independent contractor, to which any Seller is
a party or by which it or the Business is bound, currently used in any of the
Business;
(f) all guarantees, loan agreements, indentures, mortgages and
pledges, all conditional sale or title retention agreements, security
agreements, equipment obligations, leases or lease purchase agreements as to
items of personal property, in each case to which any Seller is a party or by
which it or the Business is bound or under which it has rights and which are
secured by or otherwise relate to any of the Acquired Assets or the Business;
5
(g) each employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, and all collective
bargaining agreements, employee policies, employment and consulting agreements,
and all employee bonus and benefit plans and all group insurance plans, whether
or not legally binding, relating to the Business or any current or former
employee, person or firm providing services to or for the Business, including
wage continuation, severance, reemployment assistance, termination, deferred
compensation, holiday, sympathy, sick leave or pay, vacation, personal day,
education, pension, retirement, welfare and group or individual life, health,
hospitalization, dental and accident insurance and other bonus practices, plans,
agreements, arrangements, and/or commitments to which any Seller is a party or
bound and, with respect to each of the employees identified in Schedule 6.6.1 of
the Disclosure Schedule, showing separately for each such person, the amounts
paid or payable as salary, bonus payments and all other direct or indirect
compensation for the year ended December 31, 2000 and the current year through
April 20, 2001;
(h) all contracts, agreements, commitments, purchase orders,
leases, licenses or other understandings or arrangements to which any Seller is
a party or by which it or the Business or any of its property is bound or
affected, relating to any of the Business, except for (i) short-term purchase or
short-term sale orders in the ordinary course of business on customary terms and
conditions, involving less than $10,000 in any single case, and (ii) contracts
entered into in the ordinary course of business which are terminable by any
Seller on less than 30 days' notice without any penalty or consideration and
involving payments or receipts during the entire life of such contract by any
Seller of less than $10,000 in the case of any single contract but not more than
$50,000 in the aggregate;
(i) all current forms of purchase orders, sales orders, invoices
and quotations used by or for the Business; and
(j) all agreements (whether or not fully performed) by which any of
Sellers or any holder(s) of any equity interest therein acquired or disposed of
any of such equity interests or any aspect of the Business or control thereof
(excluding the agreement covering the sale of the Mexican choline chloride
operation, other than all portions thereof accurately describing the business
and assets transferred pursuant thereto and any covenants and obligations
relating to any post-transfer conduct of any business or operations by any of
Sellers).
True and complete copies of all contracts, agreements, plans,
arrangements, commitments and documents (other than the Sellers' Credit
Agreement, dated August 20, 1977, and credit documents ancillary thereto,
between Sellers and Fleet Bank, as lead bank, which need only be listed and
identified in said Schedule 4.10) required to be listed or identified pursuant
to this Section 4.10 (to the extent either in writing or if not in writing, an
accurate summary thereof), together with any and all amendments thereto, have
been delivered to Buyer.
Except as expressly set forth on Schedule 4.10 (b) of the
Disclosure Schedule, all of the contracts and agreements required to be listed
or identified pursuant to this Section 4.10 (other than those which have been
fully performed) are in full force and effect, do not require the consent or
approval of any party to the assignment thereof and will be unaffected by any
Transfer of the Acquired Assets, and Buyer will be entitled to the full benefits
thereof, and none of such contracts and agreements is with a governmental agency
or authority. To the best of the knowledge of Sellers, there is not under any
contract or agreement required to be listed or identified pursuant to this
Section 4.10 any material existing default or event which, after notice or lapse
of time, or both, would constitute such a default or result in a right to
accelerate or loss
6
of rights. There have been no written modifications, or to Sellers' knowledge no
oral modifications to the terms or provisions of any of such contracts and
agreements. no amount payable or reserved under any such contract or agreement
has been assigned or anticipated and Except for security interests held by
Sellers' lenders, which shall be released in full at the Closing, no amount
payable under any such contract or agreement is in arrears or has been collected
in advance, and to the best of the knowledge of Sellers, there exists no offset
or defense to payment of any amount under any such contract or agreement.
4.11 Absence of Changes or Events. Since January 1, 2001, Sellers have
conducted the Business only in the ordinary course in a manner consistent with
past practices. Without limiting the foregoing, since such date, with respect to
the Business neither any Seller nor the Business has:
(a) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in the ordinary course of
business and consistent with its prior practice, none of which, in any case or
in the aggregate, could have a material adverse affect on the Business or on the
condition (financial or otherwise), assets, liabilities, business, operations or
prospects of the Business;
(b) discharged or satisfied any Lien affecting the Business or any
of the Acquired Assets, other than those then required to be discharged or
satisfied, or paid any obligation or liability, absolute, accrued, contingent or
otherwise, whether due or to become due, other than current liabilities
permitted by subsection (a) above;
(c) mortgaged, pledged or subjected to any Lien any of the Acquired
Assets except for Liens held by Sellers' bank lenders which shall be released in
full at the Closing;
(d) sold, transferred, leased to others or otherwise disposed of
any assets or properties or rights of or relating to any of the Business or any
of the Acquired Assets, except for the sale of inventory and consumption of
supplies, in the ordinary course of its business and consistent with its prior
practice; or canceled or compromised any debt or claim, or waived or released
any right of significant value;
(e) received any notice of termination of any material contract,
license, lease or other agreement relating to the Business;
(f) suffered any damage, destruction, loss (whether or not covered
by insurance) which, in any case or in the aggregate, could have a material
adverse effect on the Business or on the business, assets, operations or
prospects thereof, or disposed of or destroyed any records other than disposal
of duplicates, drafts and other immaterial documents in the ordinary course of
business in accordance with its written document retention policy;
(g) transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any United States or foreign
license, patent, copyright, trademark, trade name, invention or other
proprietary right, or modified any existing rights with respect thereto;
(h) instituted, settled or agreed to settle any litigation, action,
arbitration, investigation or proceeding before any court or governmental body
relating to it or its property or
7
received any threat thereof except for the good faith settlement of worker's
compensation claims in the ordinary course of business or immaterial labor
grievances involving individual employees relating to the Business;
(i) suffered any change, event or condition which, in any case or
in the aggregate, has had or may have a material adverse effect on the Business
or the condition (financial or otherwise), properties, business, assets,
liabilities, operations or prospects of the Business, except to the extent
reflected in the Financial Statements including, without limitation, any change
in its revenues, costs, backlog, or relations with its employees, landlords,
agents, customers, dealers, suppliers or government regulators;
(j) entered into any transaction, contract or commitment other than
in the ordinary course of business or incurred any severance pay obligations by
reason of this Agreement or the transactions contemplated hereby;
(k) made any change in excess of 4% in the rate of compensation,
commission, bonus or other direct or indirect remuneration payable to, or paid
or agreed or orally promised to pay, conditionally or otherwise, any bonus or
extra compensation to, or made any change in any pension, wage continuation,
severance, reemployment assistance, termination or vacation pay policy covering,
any officer, employee, salesman, or agent providing services to or for the
Business, except pursuant to the terms of the Collective Bargaining Agreement;
(l) made any capital expenditure or capital additions or
betterments in connection with the Business, in excess of $500,000 in the
aggregate, whether or not reflected on the Financial Statements as capitalized
expenditures;
(m) made any purchase commitment in connection with the Business,
in excess of normal, ordinary and usual requirements of the Business or at any
price materially in excess of the then current market price or upon terms and
conditions more onerous than those usual and customary in the industry or trade,
or made any change in its selling, pricing, advertising or personnel practices
inconsistent with its prior practice or prudent business practices prevailing in
the industry or trade;
(n) encountered any labor union organizing activity, had any actual
or threatened employee strikes, work stoppages, slow downs or lockouts, or had
any material change in its relations with its employees, agents, customers or
suppliers or any governmental regulatory authority or self-regulatory authority,
in each case in connection with or affecting any of the Business;
(o) received any notice from any customer or supplier that it
intends to cease doing business with it (or will refuse to do business with
Buyer), which, in any case or in the aggregate, has had or could have a material
adverse effect on the Business or on the condition (financial or otherwise),
business, assets, liabilities, operations or prospects of the Business, or on
the value of the Acquired Assets or the Business or the Transfer thereof to
Buyer; or
(p) entered into any agreement or made any commitment to take any
of the types of action described in subsections (a) through (o) above.
4.12 Taxes. (a) Sellers have paid or made adequate provision for the
payment of all taxes, fees, assessments and charges, including income, property,
sales, use, franchise, added
8
value, employees' income withholding and social security taxes, imposed by the
United States or by any foreign country, or by any state, municipality or
instrumentality of any of same or by any other taxing authority, and all
penalties and interest thereon (collectively "Taxes"), which has or may become
due for or during all periods ending, and in respect of all operations, on or
prior to the Closing Date. All Tax Returns (as hereinafter defined) required to
be filed in connection therewith have been accurately prepared and filed and all
deposits required by law to be made by any Seller or with respect thereto have
been duly made. No Seller is a party to any pending action, proceeding or audit
by any governmental authority for assessment or collection of any amount of
Taxes for which it may be directly or indirectly liable, and there is no claim
for assessment or collection of any amount of Taxes for which it may be directly
or indirectly liable. The term "Tax Return" shall mean any return, declaration,
report, claim for refund, or information return or statement relating to any
Tax, including any schedule or attachment thereto, and including any amendment
thereof.
(b) Each of Sellers has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
(c) No Seller (nor any director or officer or any employee
responsible for Tax matters) of any of Sellers expects any authority to assess
any additional Taxes for any period for which Tax Returns have been filed. There
is no dispute or claim concerning any Tax liability of any of Sellers related to
any of the Business or the Acquired Assets either (A) claimed or raised by any
authority in writing or (B) as to which any of Sellers or any of the directors
and officers (and employees responsible for Tax matters) of Sellers has
knowledge based upon personal contact with any agent of such authority.
(d) No claim has ever been made by an authority in a jurisdiction
where any of Sellers does not file Tax Returns that any of them is or may be
subject to taxation by that jurisdiction.
(e) None of Sellers (other than the corporate Sellers themselves)
(A) is or has been a member of an affiliated group (within the meaning of
Section 1504(a) of the Internal Revenue Code of 1986, as amended (the "Code"))
or any similar group defined under a similar provision of state, local, or
foreign law filing any consolidated or combined income Tax Return, or (B) has
any liability for the Taxes of any person or entity, whether under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), or as a transferee or successor, by contract, or otherwise.
4.13 Employee Benefits; Labor Matters. Except as set forth in Schedule
4.13 of the Disclosure Schedule:
(a) Each employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and any
other plan, policy, program, practice, agreement, understanding or arrangement
providing compensation or other benefits to any current or former employee or
independent contractor providing services to or for the Business (or to any
dependent or beneficiary thereof), which is maintained by any Seller or under
which any Seller has an obligation to contribute, including all pension,
retirement, profit-sharing, stock, stock option, deferred compensation, bonus,
incentive, medical, vision, dental and other health insurance, life insurance or
any other employees benefit plan, arrangement or understanding and any trusts,
insurance and administrative service contracts and agreements
9
maintained in connection therewith (collectively, "Benefit Plans"), conform in
all material respects to, and the administration thereof is in material
compliance with, all applicable laws and regulations, including, without
limitation ERISA and the Code, and neither the operation or administration of
any such Benefit Plan, nor the transactions contemplated by this Agreement will
result in any liability to any Seller, the Business or Buyer under or in respect
of any of such Benefit Plans, in Buyer incurring or suffering any liability, or
have any adverse effect on the financial condition, assets, liabilities or
results of operations of any Seller, the Business or Buyer. All contributions
required, by law or by contract, to be made to any Benefit Plans subject to
ERISA for any plan year or other period on the basis of which contributions are
required, ending before the date hereof, have been made as of the date hereof.
Sellers have complied in all material respects with all reporting and disclosure
requirements with respect to each Benefit Plan. No such Benefit Plan (including
any trust created thereunder), nor any trustee or administrator thereof, has
engaged in any transaction prohibited by ERISA or any foreign law, or by Section
4975 of the Code, which could subject any Seller, the Business or such Plan to
any penalty imposed under ERISA or to any tax imposed by Section 4975 of the
Code or, if any such transaction has occurred, it has been corrected within the
meaning of Section 4975 of the Code, and all applicable taxes and penalties with
respect thereto have been paid. No "reportable event" as that term is defined in
ERISA has occurred with respect to any of the Benefit Plans. No Seller
participates, maintains or contributes to (nor has any Seller participated,
maintained or contributed to), nor has any liability or obligation under or with
respect to, any multi-employer plan governed by or subject to ERISA, nor has it
participated, maintained, contributed or incurred any liability in respect of
any thereof. No Seller has any liability or obligation with respect to any
Benefit Plan or trust related thereto that may have been terminated prior to the
date hereof.
(b) Sellers have complied in all material respects with all
applicable laws, rules and regulations relating to the employment of labor,
including those relating to hiring, wages, hours, collective bargaining and the
payment and withholding of taxes, and has withheld all amounts required by law,
regulation or agreement to be withheld from the wages or salaries of its
employees and is not liable for any arrears of wages or any taxes or penalties
for failure to comply with any of the foregoing. No Seller has engaged in any
unfair labor practice, and there is no unfair labor practice, sexual harassment
or other employment-related complaint pending, or, to the knowledge of any
Seller, threatened against any Seller or any officer, director or employee
thereof. There do not exist any pending worker's compensation claims against any
Seller that is not adequately provided for by insurance, subject to deductibles,
or any pending or written claim that any workplace of Seller is unsafe.
(c) Sellers have previously delivered to Buyer a schedule listing
each present and former employee of the Business who is currently claiming or is
entitled to any health care related benefits mandated by the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), or any of the
rules or regulations thereunder.
(d) Other than as required by COBRA, none of Sellers has offered or
provided or is required to offer or provided any post-employment or retiree
medical or health benefits or coverage of any nature to any past or present
employee (other than to union employees at the Verona, MO plant to the extent
expressly required under the Collective Bargaining Agreement). The census data
provided to William M. Mercer, Incorporated as of May 1, 2001 in connection with
such firm's computation of Accumulated Post-retirement Benefit Obligation as of
May 1, 2001 is set forth in Schedule 4.13(d) of the Disclosure Schedule, is true
and complete and covers
10
all former employees (and their dependents) who are entitled to retiree health
benefits, all active employees who are eligible to receive retiree health
benefits and all other active employees who may in the future be entitled to
receive retiree health benefits, all as indicated therein.
(e) No Benefit Plan, including any providing long term disability
benefits, covers any employee(s) whose terms of employment are governed by a
collective bargaining agreement except as provided for in the Collective
Bargaining Agreement.
4.14 Environmental Matters.
(a) Except as set forth in Schedule 4.14(a) of the Disclosure
Schedule, no Hazardous Substance (as hereinafter defined) is present or at any
time has been stored, treated, released, disposed of or discharged on, about,
from or affecting any of the Real Properties or, during the period of any
ownership, lease or occupancy thereof by any of Sellers, any other property or
location heretofore owned, leased or occupied by any of them (the "Prior
Properties"), in any material amounts, except for products that have been used,
maintained and disposed of in compliance with all applicable laws, rules and
regulations and all applicable manufacturer instructions, and none of Sellers
has any liability which is based upon or related to any environmental condition,
and there is no reasonable basis for any such liability arising. The term
"Hazardous Substance" as used in this Agreement shall include, without
limitation, gasoline, oil and other petroleum products, explosives, radioactive
materials and related and similar materials, dioxins and any other substance or
material defined as a hazardous, toxic or polluting substance or material by any
federal, state or local law, ordinance, rule or regulation, including asbestos
and asbestos-containing materials.
(b) Except as set forth on Schedule 4.14(b) of the Disclosure
Schedule, none of Sellers or, to the best knowledge of Sellers, any prior or
current owner, tenant or occupant of any part of any of the Real Properties or
any of the Prior Properties, has received any notification or advice from or
given or been required to have given any report or notice to any governmental
agency or authority or any other person, firm or entity whatsoever involving the
use, disposal, management, handling, transport, treatment, generation, storage,
spill, escape, seepage, leakage, spillage, emission, release, discharge,
remediation or clean-up of any Hazardous Substance on or about any of the Real
Properties or caused by any of Sellers or any affiliate thereof (a "Hazardous
Discharge"), or any complaint, order, citation or notice with regard to a
Hazardous Substance or any other environmental, health or safety matter
affecting any of the Real Properties or any of the Prior Properties, or any
business or operations conducted thereat (an "Environmental Complaint"), under
the federal Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") or under any other federal, state or local law, ordinance, rule or
regulation.
4.15 Receivables. Schedule 4.15(a) of the Disclosure Schedule is a
true, accurate and complete item by item aging of the accounts receivable of the
respective Sellers as of the recent date indicated therein. Except as set forth
on Schedule 4.15(b) of the Disclosure Schedule, and except for a normal and
customary reserve for doubtful accounts consistent (as a percentage of
outstanding receivables) with past practice, all accounts receivable of any
Seller relating to the Business have arisen only from bona fide transactions
with unrelated third-parties in the ordinary course of business, and are
collectible in the ordinary course of business (without resort to litigation)
and in accordance with their respective terms.
11
4.16 Inventory. Except as set forth in Schedule 4.16 of the Disclosure
Schedule, and except for insignificant quantities thereof, all items of
inventory now owned or hereafter acquired (and not subsequently disposed of in
the ordinary course of business) are and will be merchantable, and for sale or
use in the ordinary course of business, as first quality products and materials,
at normal mark-ups, and none of such items is below standard quality. The
inventories of the respective Sellers do not include an excessive quantity of
any type of inventory or supplies in relation to the normal requirements of the
Business consistent with past practice. The practices and experience of the
Business with regard to returned items from customers and items returned by any
Seller to the original supplier thereof are and have been in conformity with,
and not in excess of, normal, industry-wide return practices in the ordinary
course of business.
4.17 Customers and Suppliers. Set forth in Schedule 4.17(a) of the
Disclosure Schedule is a list of the names and addresses of each of the twenty
(20) largest customers and the ten (10) largest suppliers (measured by dollar
volume of purchases) of the Business, and the dollar amounts and percentages of
the Business' revenues and expenses which each such customer or supplier
represented, during each of the years ended December 31, 2000 and 1999 and the
three (3) months ended March 31, 2001, respectively. Except as set forth in
Schedule 4.17(b) of the Disclosure Schedule, there exists no actual or
threatened termination, cancellation or limitation of, or any modification or
change in, the business relationship of any Seller with any supplier or customer
listed in said Schedule 4.17(a).
4.18 Records. The respective books and records of Sellers are complete
and correct in all material respects, and there has been no transaction which
properly should have been set forth therein and which has not been accurately so
set forth.
4.19 Disclosure. No representation or warranty by any Seller contained
in this Agreement, nor any Exhibit, Schedule or Certificate referenced herein,
furnished or to be furnished by or on behalf of any Seller in connection
herewith or any of the transactions contemplated hereby contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make the statements herein or therein contained, under
the circumstances under which made, not misleading or necessary in order to
provide a prospective purchaser of the Acquired Assets with adequate information
as to each of Sellers, the Business, the operations thereof, the Acquired Assets
and the Owned Real Property. The representations and warranties contained in
this Agreement or in any Exhibit, Schedule or certificate in connection with
this Agreement shall not be affected or deemed waived by reason of the fact that
Buyer and/or its representatives knew or should have known that any such
representation or warranty is or might be inaccurate in any respect.
4.20 Certain Limitations on Representations and Warranties. Each of the
parties is a sophisticated legal entity that was advised by experienced counsel
and, to the extent it deemed necessary, other advisors in connection with this
Agreement. Accordingly, each of the parties hereby acknowledges that there are
no representations or warranties by or on behalf of any party or any of its
respective affiliates or representatives other than those expressly set forth in
or made pursuant to this Agreement and BUYER ACKNOWLEDGES THAT, SHOULD THE
CLOSING OCCUR, BUYER WILL ACQUIRE THE ACQUIRED ASSETS WITHOUT ANY IMPLIED
WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
12
BILL OF SALE
KNOW ALL PEOPLE BY THESE PRESENTS THAT DuCoa L.P., a Delaware limited
partnership ("DuCoa"), DCV, INC., a Delaware corporation ("DCV") and the general
partner of DuCoa, and DCV GPH, INC., a Delaware corporation ("LP") and a limited
partner of DuCoa (DuCoa, DCV and LP being together referred to herein as
"Sellers" and being individually referred to herein as a "Seller"), for good and
valuable consideration paid to Sellers by or on behalf of ABC Corp., a Delaware
corporation ("Buyer"), receipt of which is hereby acknowledged, do hereby grant,
bargain, sell, transfer and deliver unto Buyer, its successors and assigns, all
of the Acquired Assets, as defined in Section 1.1 of the Asset Purchase
Agreement, dated as of May 21, 2001, by and between Buyer and Sellers (the
"Purchase Agreement"). Capitalized terms used but not defined herein have the
respective meanings specified in the Purchase Agreement.
TO HAVE AND TO HOLD the same unto Buyer, its successors and assigns,
forever.
In furtherance of the foregoing, Sellers shall any time, and from time
to time from and after the date hereof, upon the request of Buyer, promptly do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, assignments, transfers, conveyances,
instruments, powers of attorney and assurances as may be required or reasonably
requested for the better assigning, transferring, granting, conveying, assuring
and confirming to Buyer or for aiding and assisting in the collection of, or the
reduction to possession of, any or all of the Acquired Assets.
This sale, conveyance, assignment, transfer and delivery of the
Acquired Assets is made free and clear of all Liens, excluding the Permitted
Liens.
Each of Sellers hereby authorizes and grants its power of attorney to
Buyer, and appoints Buyer and each officer or agent of Buyer, with full power of
substitution, as its true and lawful attorney-in-fact to take any appropriate
action in connection with any of the Acquired Assets, in the name of each or any
of Sellers or in Buyer's own or any other name, it being understood that this
authorization and power of attorney are coupled with an interest and are
irrevocable.
This instrument shall inure to the benefit of and is binding upon the
respective successors and assigns of Buyer and Sellers.
1
IN WITNESS WHEREOF, Sellers have caused this instrument to be executed
as of June 1, 2001.
DuCoa L.P.
By: DCV, Inc., general partner
By: /s/ Harvey L. Weaver
----------------------
Name: Harvey L. Weaver
Title: V.P.
DCV, Inc.
By: /s/ Harvey L. Weaver
----------------------
Name: Harvey L. Weaver
Title: V.P.
DCV GPH, Inc.
By: /s/ Ricky L. Stejskal
-----------------------
Name: Ricky L. Stejskal
Title: V.P.
2
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
Personally appeared Harvey L. Weaver, Vice President of DuCoa L.P.,
signer and sealer of the foregoing instrument, and acknowledged the same to be
his free act and deed and the free act and deed of said limited partnership,
before me on this 31st day of May, 2001.
/s/ Beverly S. Oppenheim-Patterson
----------------------------------
Notary Public
My Commission Expires: October 2, 2001
---------------
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
Personally appeared Harvey L. Weaver, Vice President of DCV, Inc.,
signer and sealer of the foregoing instrument, and acknowledged the same to be
his free act and deed and the free act and deed of said corporation, before me
on this 31st day of May, 2001.
/s/ Beverly S. Oppenheim-Patterson
-----------------------------------
Notary Public
My Commission Expires: Ocober 2, 2001_
--------------
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
Personally appeared Ricky L. Stejskal, Vice President of DCV GPH, Inc.,
signer and sealer of the foregoing instrument, and acknowledged the same to be
his free act and deed and the free act and deed of said corporation, before me
on this 31st day of May, 2001.
/s/ Beverly S. Oppenheim-Patterson
----------------------------------
Notary Public
My Commission Expires: October 2, 2001
---------------
3
Obligations Undertaking
OBLIGATIONS UNDERTAKING dated, as of June 1, 2001, by BCP Ingredients,
Inc., a Delaware corporation ("Buyer"), in favor of DuCoa L.P., a Delaware
limited partnership ("DuCoa"), DCV, Inc., a Delaware corporation ("DCV"), and
DCV GPH, Inc. a Delaware corporation ("LP", LP, DCV and DuCoa being collectively
referred to as "Sellers", and individually as a "Seller").
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of May 21,
2001 (the "Agreement"), between Buyer and Sellers, Sellers have concurrently
herewith sold, assigned, transferred, conveyed and delivered the Acquired Assets
(as defined in the Agreement) to Buyer; and
WHEREAS, in partial consideration therefor, the Agreement requires
Buyer to execute and deliver to Sellers this Undertaking;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which by Buyer is hereby acknowledged,
Buyer hereby agrees as follows (capitalized terms used but not defined herein
having the meanings ascribed thereto in the Agreement):
1. Subject to the limitations contained herein, Buyer hereby assumes and
agrees to perform and discharge the following, but only the extent that the same
shall be legally enforceable and shall not have been paid, performed or
discharged prior to the Closing (collectively, the "Assumed Obligations");
(a) the unperformed and unfulfilled obligations of Sellers first
accruing after [the Closing Date] (with respect to periods commencing after the
Closing Date) under the contracts and agreements listed on Schedule A hereto and
expressly assigned to Buyer pursuant to the Agreement, and which, in all cases,
conform to the representations and warranties with respect thereto contained in
the Agreement, but in all instances, excluding any obligations arising out of
any breach or any non-performance of any contract, lease or agreement occurring
or existing on or prior to the Closing Date; and
(b) the Payables (as defined in Schedule 2.1 to the Agreement) as of
[the Closing Date], but in each case only to the extent of the definitive amount
thereof deducted dollar-for-dollar from and in computing the Purchase Price
under said Schedule 2.1;.
(c) retiree medical benefits under the Collective Bargaining Agreement
to the extent set forth in Section 6.6 of the Agreement; and
(d) accrued vacation for all Designated Employees to the extent there
has been a specific dollar for dollar reduction therefor in the Purchase Price
(and in the cash portion of the Purchase Price) pursuant to Section 2.5.2 of the
Agreement.
4
Notwithstanding anything to the contrary contained herein, the Assumed
Obligations shall not include the Excluded Liabilities, except only to the
extent expressly set forth in this Section 1.
2. Nothing contained herein shall require Buyer to pay, perform or
discharge any obligations assumed hereby so long as Buyer shall in good faith
contest the amount or validity thereof, except for payment of the Payables to
the extent indicated in Section 1(b) above, which Buyer shall promptly pay, up
to the definitive amount thereof deducted in computing the Purchase Price under
said Schedule 2.1.
3. Other than as specifically stated above (and subject to the terms of
the Agreement), Buyer assumes no debt, liability or obligation of either of
Sellers, whatsoever whether by this Undertaking or the Agreement, and whether
arising out of any debt, liability or obligation in respect of any act,
occurrence, agreement or state of facts in effect before, on or after the date
hereof, and it is expressly understood and agreed that all debts, liabilities
and obligations not expressly assumed hereunder by Buyer shall remain the sole
obligation of Sellers.
4. No person, firm or corporation other than Seller shall have any
rights under or by reason of this Undertaking or the provisions contained
herein.
BCP Ingredients, Inc.
By: /s/ Dino A. Rossi
--------------------------------
Name: Dino A. Rossi
Title: President
5
Non-Competition Agreement
AGREEMENT, dated as of June 1, 2001, made, jointly and severally, by DuCoa
L.P., a Delaware limited partnership, ("DuCoa"), DCV, Inc., a Delaware
corporation ("GP"), and DCV GPH, Inc., a Delaware corporation ("LP", and,
together with DuCoa and GP, collectively referred to as the "Obligors" and
individually an "Obligor"), in favor and for the benefit of BCP Ingredients,
Inc., a Delaware corporation ("Acquiror").
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of May 21, 2001
(the "Purchase Agreement") (capitalized terms used herein and not otherwise
defined are used herein with the meanings ascribed thereto in the Purchase
Agreement), Acquiror is acquiring from the Obligors, and the Obligors are
transferring, conveying and assigning to Acquiror, the Acquired Assets;
WHEREAS, the Obligors derive material benefit from the transactions
contemplated by the Purchase Agreement and accordingly are willing to enter into
this Non-Competition Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which by each of the Obligors is hereby acknowledged, and in
order to induce Acquiror to acquire the Acquired Assets pursuant to the terms of
the Purchase Agreement, the Obligors, jointly and severally, hereby undertake
and agree to and for the benefit of Acquiror as follows:
1. For a period of five (5) years from the date hereof (the "Limited
Period"), no Obligor shall or shall permit any person or entity directly or
indirectly (alone or together with others) controlling, controlled by,
affiliated with or related to, any of the Obligors (collectively the "Obligor
Affiliates") to, directly or indirectly (including through ownership,
management, operation or control of any other person or entity, or participation
in the ownership, management, operation or control of any other person or
entity, or by being connected with or having any interest in, as a stockholder,
agent, consultant, partner or otherwise, any other person or entity):
(i) own, manage, operate, control, invest in, participate in or be
involved with any business anywhere in the world which sells, licenses,
distributes, markets or provides any service in respect of any of the Products
or any of the associated services which have been, as of the date hereof, sold,
distributed, marketed or provided by or through the Business or which are
otherwise covered by the definition of the Business; provided that the foregoing
shall not prohibit the Obligors from owning in the aggregate less than 1% of any
class of securities listed on a national securities exchange or traded publicly
in the over-the-counter market or from engaging in the limited actions permitted
pursuant to Section 7.8.2 of the Purchase Agreement during the Post-Closing
Product Sale Agreement (as defined therein); or
(ii) without the express prior written consent of Acquiror,
directly or indirectly employ or retain or attempt to employ or retain or
knowingly arrange or solicit to have any other person or entity employ or
retain, as an employee or consultant, any person who then is or during the
proceeding two-year period has been an employee of or consultant to Acquiror, or
any of Acquiror's affiliates, or who heretofore (during the two-year period
ending on the date
1
hereof) has been employed or retained by any of Obligors, in connection with any
aspect of the Business.
2. None of the Obligors shall, nor shall permit any of the Obligor
Affiliates to, during the Limited Period and at all times thereafter, (i)
divulge or make available to any person or entity, except Obligors' counsels,
accountants, lenders or investors, who shall agree, for the benefit of Acquiror,
to be bound hereby, or as otherwise expressly consented to in writing by
Acquiror, or use, any confidential information or any documents, files or other
papers concerning any of the Business or the Acquired Assets or any financial
affairs of Acquiror, except such disclosure which is otherwise required by
applicable law, regulation or court order; provided, that Obligors give Acquiror
reasonable opportunity to contest any requirement to so disclose any such
confidential information prior to making any such disclosure, or (ii) publicly
disparage Acquiror, or any of Acquiror's Affiliates, or the Business, commit any
act, or in any way assist others to commit any act, which would injure Acquiror,
or any Acquiror's Affiliates, or the Business as theretofore conducted by
Acquiror, provided, however, that this sentence shall not restrict Sellers from
bringing in an appropriate legal proceeding any claim it may have against
Acquiror under the Agreement or otherwise.
3. In the event that any of the provisions contained herein would be held
to be invalid, prohibited or unenforceable in any jurisdiction for any reason
because of the scope, duration or area of its applicability or for any other
reason, unless narrowed by construction, such provision shall for purposes of
such jurisdiction only, be construed as if such invalid, prohibited or
unenforceable provision had been more narrowly drawn so as not to be invalid,
prohibited or unenforceable (or if such language cannot be drawn narrowly
enough, the court making any such determination shall have the power to modify,
to the extent necessary to make such provision or provisions enforceable in such
jurisdiction, such scope, duration or area or all of them, and such provision
shall then be applicable in such modified form). If, notwithstanding the
foregoing, any such provision would be held to be invalid, prohibited or
unenforceable in any jurisdiction for any reason, such provision, as to such
jurisdiction only, shall be ineffective to the extent of such invalidity,
prohibition or unenforceability, without invalidating the remaining provisions
hereof. No narrowed construction, court-modification or invalidation of any
provision shall affect the construction, validity or enforceability of such
provision in any other jurisdiction unless the failure to do so would result in
a violation of any court order.
4. Since Acquiror will be irreparably damaged if the provisions hereof are
not specifically enforced, Acquiror shall be entitled (without any bond or other
security whatsoever being required) to an injunction restraining any violation
or attempted violation of this Agreement, and/or any other appropriate decree of
specific performance. Such remedies shall not be exclusive and shall be in
addition to any other remedy which Acquiror may have.
5. This Agreement shall inure to the benefit of Acquiror and its successors
and assigns and shall be binding upon each of the Obligors and their respective
heirs, personal representatives, successors and assigns, and may not be modified
or terminated orally.
6. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which shall constitute one and the
same instrument.
2
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth in the introductory paragraph hereof.
DuCoa L.P.
By: DCV, Inc, general partner
By: /s/ Harvey L. Weaver
--------------------------------
Name: Harvey L. Weaver
Title: V-Pres.
DCV, Inc.
By: /s/ Harvey L. Weaver
---------------------------------------
Name: Harvey L. Weaver
Title: V-Pres.
DCV GPH, Inc.
By: /s/ Ricky L. Stejskal
---------------------------------------
Name: Ricky L. Stejskal
Title: V.P.
NON-COMPETITION AGREEMENT
AGREEMENT, dated as of [May 30 ], 2001, made by James Doncheck, a resident
of the State of Wisconsin, (the "Obligor"), in favor and for the benefit of the
BCP Ingredients, Inc., a Delaware corporation (the "Company").
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of May 21, 2001
(the "Agreement"), the Company is acquiring from the DCV, Inc., DCV GPH, Inc.
and DuCoa L.P. ("Sellers"), and Sellers are transferring, conveying and
assigning to the Company, the Acquired Assets (as defined in the Agreement);
WHEREAS, the Sellers have agreed to make the Obligor available to the
Company to assist in the transition of the business sold to the Company and have
offered Obligor employment with DCV, Inc.;
NOW, THEREFORE, for good and valuable consideration (including without
limitation such continued employment with DCV, Inc.), the receipt and
sufficiency of which by is hereby acknowledged, the Obligor undertakes and
agrees to and for the benefit of the Company as follows:
1. For a period of one (1) year from the date hereof (the "Limited
Period"), the Obligor shall not directly or indirectly (including through
ownership, management, operation or control of any other person or entity, or
participation in the ownership, management, operation or control of any other
person or entity, or by being connected with or having any interest in, as a
stockholder, agent, consultant, employee, partner or otherwise, any other person
or entity):
(i) be employed by or provide services to or for, or own,
manage, operate, control, invest in, participate in or be involved
with, (A) any business anywhere in the world which sells, licenses,
distributes, markets or provides any service in respect of any of the
products or services which have been, as of the date hereof, sold,
distributed, marketed or provided by or through the Business (as
defined in Schedule A attached hereto) or which is otherwise covered by
the definition of the Business or the definition of the Products (as
defined in Schedule A attached hereto); provided that the foregoing
shall not prohibit the Obligor from owning in the aggregate less than
1% of any class of securities listed on a national securities exchange
or traded publicly in the over-the-counter market; or
(ii) without the express prior written consent of the Company,
directly or indirectly employ or retain or attempt to employ or retain
or knowingly arrange or solicit to have any other person or entity
employ or retain, as an employee or consultant, any person who then is
or during the proceeding two-year period has been an
4
employee of or consultant to the Company, or any of the Company's
affiliates, in connection with any aspect of the Business.
2. Obligor shall not, during the Limited Period and at all times
thereafter, divulge or make available to any person or entity, except as
otherwise expressly consented to in writing by the Company, or use, any
confidential information or any documents, files or other papers concerning any
of the Business or any financial affairs of the Company, except such disclosure
which is otherwise required by applicable law, regulation or court order;
provided, that Obligor give the Company reasonable opportunity to contest any
requirement to so disclose any such confidential information prior to making any
such disclosure.
3. In the event that any of the provisions contained herein would
be held to be invalid, prohibited or unenforceable in any jurisdiction for any
reason because of the scope, duration or area of its applicability or for any
other reason, unless narrowed by construction, such provision shall for purposes
of such jurisdiction only, be construed as if such invalid, prohibited or
unenforceable provision had been more narrowly drawn so as not to be invalid,
prohibited or unenforceable (or if such language cannot be drawn narrowly
enough, the court making any such determination shall have the power to modify,
to the extent necessary to make such provision or provisions enforceable in such
jurisdiction, such scope, duration or area or all of them, and such provision
shall then be applicable in such modified form). If, notwithstanding the
foregoing, any such provision would be held to be invalid, prohibited or
unenforceable in any jurisdiction for any reason, such provision, as to such
jurisdiction only, shall be ineffective to the extent of such invalidity,
prohibition or unenforceability, without invalidating the remaining provisions
hereof. No narrowed construction, court-modification or invalidation of any
provision shall affect the construction, validity or enforceability of such
provision in any other jurisdiction unless the failure to do so would result in
a violation of any court order.
4. Since the Company will be irreparably damaged if the provisions
hereof are not specifically enforced, the Company shall be entitled (without any
bond or other security whatsoever being required) to an injunction restraining
any violation or attempted violation of this Agreement, and/or any other
appropriate decree of specific performance. Such remedies shall not be exclusive
and shall be in addition to any other remedy that the Company may have.
5. This Agreement shall inure to the benefit of the Company and its
successors and assigns and shall be binding upon the Obligor and his respective
heirs, personal representatives, successors and assigns, and may not be modified
or terminated orally.
6. The term "affiliate", when used with respect to the Company
means any person or entity directly or indirectly controlling, controlled by or
under common control with the Company.
5
7. This Agreement may be executed in two or more counterparts, each
of which shall constitute an original but all of which shall constitute one and
the same instrument.
6
IN WITNESS WHEREOF, the undersigned has executed this Agreement as
of the date set forth in the introductory paragraph hereof.
/s/ James Doncheck
----------------------------
JAMES DONCHECK
7
SCHEDULE A
The "Business" shall mean all business, operations and rights of
any of Sellers, or of Buyer or of Buyer's affiliates, pertaining or relating to
any or all of the Verona Operations (as hereinafter defined), the M-CAP
Operations (as hereinafter defined) and/or any of the Products (as hereinafter
defined).
A. "Verona Operations" means the business, operations and rights of any of
Sellers or of Buyer or any of Buyer's affiliates for or relating to any of the
following products, compounds, chemicals or materials and any and all Derivative
Products (as hereinafter defined):
Feedgrade choline chloride products, including:
50% Dry Choline Chloride
60% Dry Choline Chloride
70% Dry Choline Chloride
70%&75% Aqueous Choline Chloride
all other choline and choline chloride products and materials for
animal and feed uses
Human nutritional choline products, including:
Choline chloride, FCC
Choline bitartrate, FCC
Regular
Coarse
Conditioned
20 Mesh Conditioned
40 Mesh Conditioned
Fine, Conditioned (milled by a third party)
Betaine HCl USP
Choline Dihydrogen Citrate
All other choline and betaine and related products for human use.
TMAC (Tetramethylammonium chloride)
Product tolled for EKC
Stabilized Choline Base in Methanol
Product tolled for Velsicol
Sodium Benzoate
Potassium Benzoate
Other:
All other business, operations and rights relating to any and all products,
materials and services related to any of the above under this Schedule A.
1
Any and all other products, compounds, chemicals and materials concurrently
processed, produced, tolled and/or marketed, or currently proposed to be
processed, produced, tolled and/or marketed, as part of or in connection with
any operations or business of any of Sellers, or of Buyer or any of Buyer's
affiliates, from or utilizing any of the Verona, MO facilities or any services
provided thereat or therefrom, including without limitation Derivative Products
(as hereinafter defined).
B. "M-CAP Operations" means the business, operations and rights of any Sellers,
or of Buyer or any of Buyer's affiliates, for or relating to any of the
following products, compounds, chemicals and materials and any and all
Derivative Products:
Baking Soda G110
Baking Soda G130
Baking Soda 435
Baking Soda 516B
Cinnamon H100
F-440
F-441
F-444
F-445
Sodium Diacetate DP-208
Arginine 362
Ascorbic Acid B100
Ascorbic Acid 431
Betaine Hydrochloride 454
Choline Bitartrate 424
Choline Dihydrogen Citrate 430
Copper Gluconate 486
Ferrous Fumarate 451A
Ferrous Fumarate 482
Ferrous Sulfate 481A
Lysine 360
Magnesium Oxide 153
Magnesium Oxide 154
Natural Betaine 454WS
Niacinamide 477A
Riboflavin 357
Thiamine Hydrochloride 355
Thiamine Mononitrate 356
Zinc Oxide 471
2
Ascorbic Acid B100
Ascorbic Acid 431
Aspartame 311
Aspartame 452
Citric Acid A100
Citric Acid 437
Citric Acid 474
Citric Acid 535
Fumaric Acid 410A
Potassium Chloride C101
Potassium Chloride C102
Sodium Chloride 436A
Sodium Chloride 436B
All products, compounds, chemicals and materials related to any of the above.
C. "Products" includes (i): any and all of the products, materials and services
identified or referred to in this Schedule A, and (ii) any and all products,
materials and services reflecting or utilizing percentages or portions of any of
the chemicals, materials or compounds referred to in this Schedule A which are
different than the particular percentages or portions referred to in this
Schedule A or reflected in, and which products, materials or services are used
for similar purposes as, any of the other Products ("Derivative Products").
3
Guaranty
This Guaranty, dated as of June 1, 2001, is made by Balchem
Corporation, a Maryland corporation ("Parent") and the parent corporation of BCP
Ingredients, Inc., a Delaware corporation (the "Buyer"), in favor of Sellers (as
hereinafter defined).
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Parent hereby guarantees the payment of those
obligations of Buyer under paragraph (m) of Schedule 2.1 to, and Section 3.9 of,
the Asset Purchase Agreement, dated as of May 21, 2001, between Buyer and DuCoa
LP, DCV, Inc. and DCV GPH, Inc. ("Sellers") (the "Agreement"), and under
paragraph 1(b) of the Obligations Undertaking of Buyer executed and delivered as
of the date hereof pursuant to the Agreement (said obligations under said
paragraph (m) of said Schedule 2.1 and said Section 3.9 and under said paragraph
1(b) of said Obligations Undertaking being herein called the "Guaranteed
Obligations").
Sellers shall be entitled to enforce this Guaranty against Parent
in the event of a default by Buyer in the payment of said Guaranteed
Obligations, provided, however, that Parent's obligations under this Guaranty
are subject to any and all rights and defenses available to Buyer under or in
respect the Agreement (including without limitation under Section 8.6 of the
Agreement), but not to any defense of Buyer arising from the bankruptcy or
insolvency of Buyer.
Parent waives any and all defenses and discharges of Buyer
pertaining to Guaranteed Obligations, except (i) the defense of discharge by
payment in full, and (ii) all rights and defenses available to Buyer under or in
respect of the Agreement (including without limitation under Section 8.6 of the
Agreement). Parent waives presentment, demand for payment, notice of dishonor or
nonpayment, and protest of any instrument evidencing Guaranteed Obligations.
Sellers shall not be required first to resort to payment of the Guaranteed
Obligations to Buyer before enforcing this Guaranty. Parent also waives the
right to a jury trial on any dispute arising from this Guaranty and waives any
bond or surety or security upon such bond which might, but for this waiver be
required by Sellers.
IN WITNESS WHEREOF, Parent has duly executed this Guaranty as of
the date first written above.
Balchem Corporation
By: /s/ Dino A. Rossi
---------------------------
Its: President
--------------------------
4
LIMITED RELEASE AGREEMENT
THIS RELEASE AGREEMENT (the "Agreement") is made and entered into
as of June 1, 2001 by and between Balchem Corporation ("Balchem") and DuCoa L.P
("DuCoa").
WHEREAS, BCP Ingredients, Inc., a subsidiary of Balchem, and DuCoa
have entered into an agreement whereby such subsidiary has purchased certain
assets from DuCoa and its affiliates; and
WHEREAS, litigation, including class action litigation, is
currently pending in various state and federal courts in which plaintiffs have
alleged a variety of antitrust related claims against DuCoa and other choline
chloride producers and sellers; and
WHEREAS, Balchem, as a purchaser of choline chloride products from
DuCoa, has asserted claims against DuCoa stemming from Balchem's purchases of
choline chloride products prior to January 1, 1999; and
WHEREAS, DuCoa has denied any liability for claims that may be
raised by Balchem as a result of Balchem's purchase of choline chloride products
from DuCoa prior to January 1, 1999;
NOW, THEREFORE, in consideration of the mutual promises, covenants,
and agreements, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Balchem agrees as follows:
Balchem does hereby release, remise, quitclaim and forever
discharge DuCoa, DCV, Inc., DCV Holdings, Inc. and DCV GPH, Inc. and each of
their respective current directors and officers (collectively "Releasees") of
and from any and all claims, actions, causes of action, suits and demands, in
each case arising under any and all antitrust, unfair competition and similar
trade regulation laws and relating to Balchem's purchase of choline chloride
products from DuCoa prior to January 1, 1999 (collectively "Antitrust Claims"),
including but not limited to any such Antitrust Claims relating to pricing of
such choline chloride product so purchased; provided neither this Agreement nor
the foregoing shall (i) release, discharge, apply to or affect any claims,
actions, cause of action, suits or demands based on or involving product
liability, any express or implied warranties, and/or the quality of any
product(s), nor any and all Antitrust Claims, or any other claims or causes of
action, against any person or entity other than Releasees, nor (ii) constitute
or be deemed a waiver or release of any entitlement to or an agreement to
5
return any monies or payments, if any, heretofore received by Balchem in respect
of any pending or threatened claims or litigation, whether involving Antitrust
Claims or otherwise.
Balchem and DuCoa represent that the persons executing this
Agreement on behalf of each of them is authorized to do so. This Agreement shall
be governed by the substantive laws of the State of Delaware.
This Agreement may be signed in one or more counterparts, each of
which when so executed shall be an original, but all of which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by an authorized officer, agent, representative or attorney, as
of the date first set forth above.
Balchem Corporation DuCoa L.P., By DCV, Inc.,
its general partner
By: /s/ Frank J. Fitzpatrick By: /s/ Harvey L. Weaver
------------------------ ----------------------
Signature Signature
Frank J. Fitzpatrick, Controller Harvey L. Weaver
- -------------------------------- -------------------------
Name & Title Name & Title
June 1, 2001 June 1, 2001
- ------------ ------------
Date Date
6