Exhibit 2.1
STOCK PURCHASE AGREEMENT
by and among
THE GENSTAR STOCKHOLDERS LISTED ON SCHEDULE I HERETO
ONTARIO TEACHERS' PENSION PLAN BOARD
and
THE OTHER STOCKHOLDERS LISTED ON SCHEDULE I HERETO,
as Sellers,
THE SHERWIN-WILLIAMS CLAIMS TRUST,
GENSTAR CAPITAL CORPORATION,
as Sellers' Representative and Trustee of the Sherwin-Williams Claims Trust,
GENTEK HOLDINGS, INC.,
GENTEK BUILDING PRODUCTS, INC.,
GENTEK BUILDING PRODUCTS LIMITED
and
ASSOCIATED MATERIALS INCORPORATED,
as Purchaser
Dated as of July 31, 2003
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS....... .................................................2
Section 1.01. Certain Defined Terms.....................................2
Section 1.02. Other Interpretive Provisions............................15
Section 1.03. Schedules and Exhibits...................................16
ARTICLE II. PURCHASE AND SALE.................................................16
Section 2.01. Purchase and Sale of the Shares; Cancellation of
Options..................................................16
Section 2.02. Purchase Price...........................................16
Section 2.03. Escrow Arrangements......................................17
Section 2.04. Closing..................................................17
Section 2.05. Closing Deliveries of Sellers............................17
Section 2.06. Closing Deliveries of Gentek Holdings, Gentek U.S.
and Gentek Canada........................................18
Section 2.07. Closing Deliveries of Purchaser..........................18
Section 2.08. Pre-Closing Purchase Price Adjustment....................18
Section 2.09. Post-Closing Purchase Price Adjustments..................19
Section 2.10. No Impact on Indemnification.............................22
Section 2.11. Cash-True-Up Payment.....................................22
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLERS, GENTEK
HOLDINGS, GENTEK U.S., GENTEK CANADA, SELLERS'
REPRESENTATIVE AND THE SHERWIN-WILLIAMS CLAIMS
TRUST............................................................23
Section 3.01. Authority................................................23
Section 3.02. No Conflict..............................................24
Section 3.03. Governmental Consents and Approvals......................24
Section 3.04. Brokers..................................................24
Section 3.05. Ownership of the Shares and Options......................25
Section 3.06. Litigation...............................................25
ARTICLE IV. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF GENTEK
HOLDINGS, GENTEK U.S. AND GENTEK CANADA...........................25
Section 4.01. Organization and Qualification of Gentek Holdings,
Gentek U.S. and Gentek Canada............................25
Section 4.02. Capital Stock of Gentek Holdings, Gentek U.S.
and Gentek Canada........................................26
Section 4.03. Financial Information....................................27
Section 4.04. No Undisclosed Liabilities...............................28
Section 4.05. Receivables..............................................28
Section 4.06. Inventories..............................................28
Section 4.07. Conduct in the Ordinary Course; Absence of Material
Adverse Effect...........................................28
Section 4.08. Litigation...............................................29
Section 4.09. Compliance with Laws.....................................30
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TABLE OF CONTENTS
(Continued)
Page
Section 4.10. Environmental Matters....................................30
Section 4.11. Material Contracts.......................................30
Section 4.12. Intellectual Property....................................32
Section 4.13. Real Property............................................33
Section 4.14. Assets...................................................33
Section 4.15. Employee Benefit Matters.................................34
Section 4.16. Labor Matters............................................39
Section 4.17. Taxes....................................................40
Section 4.18. Accounts, Lockboxes, Safe Deposit Boxes; Powers
of Attorney..............................................41
Section 4.19. Warranty Claims..........................................42
Section 4.20. Steel Peel Claims........................................42
Section 4.21. Permits..................................................42
Section 4.22. Interests of Affiliates..................................42
Section 4.23. Books and Records........................................42
Section 4.24. Insurance................................................42
Section 4.25. Sherwin-Williams Counter-Claims..........................43
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER........................43
Section 5.01. Organization and Authority...............................43
Section 5.02. No Conflict..............................................43
Section 5.03. Governmental Consents and Approvals......................44
Section 5.04. Private Placement........................................44
Section 5.05. Investigation............................................45
Section 5.06. Financing................................................46
Section 5.07. Litigation...............................................46
Section 5.08. Brokers..................................................46
ARTICLE VI. ADDITIONAL AGREEEMENTS............................................46
Section 6.01. Conduct of Business Prior to the Closing.................46
Section 6.02. Access to Information....................................49
Section 6.03. Confidentiality..........................................49
Section 6.04. Regulatory Authorizations................................50
Section 6.05. Third Party Consents.....................................51
Section 6.06. Conveyance Taxes.........................................51
Section 6.07. Further Action...........................................51
Section 6.08. Sherwin-Williams Claims Matters..........................51
Section 6.09. Purchaser Financing Arrangements.........................55
Section 6.10. Sellers' Representative..................................55
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TABLE OF CONTENTS
(Continued)
Page
Section 6.11. Notification of Certain Matters..........................56
Section 6.12. Settlement of Payables...................................56
Section 6.13. Employees................................................57
Section 6.14. Statement of Outstanding Draft Amounts...................57
ARTICLE VII. TAX MATTERS......................................................58
Section 7.01. Allocation of Taxes......................................58
Section 7.02. Controversies............................................58
Section 7.03. Tax Returns/Payment of Taxes.............................59
Section 7.04. Prior Tax Agreements.....................................60
Section 7.05. Assistance and Cooperation...............................60
Section 7.06. Survival.................................................61
ARTICLE VIII. CONDITIONS TO CLOSING...........................................61
Section 8.01. Conditions to Obligations of Sellers, Sellers'
Representative and Purchaser.............................61
Section 8.02. Additional Condition to Obligations of Sellers and
Sellers' Representative..................................62
Section 8.03. Additional Conditions to Obligations of Purchaser........62
ARTICLE IX. TERMINATION AND WAIVER............................................64
Section 9.01. Termination..............................................64
Section 9.02. Effect of Termination....................................65
Section 9.03. Waiver...................................................66
ARTICLE X. INDEMNIFICATION....................................................67
Section 10.01. Survival of Representations, Warranties, Covenants
and Obligations..........................................67
Section 10.02. Exclusive Remedy.........................................67
Section 10.03. Indemnification by Purchaser.............................67
Section 10.04. Indemnification by Sellers and the Sherwin-Williams
Claims Trust.............................................68
Section 10.05. Indemnification Claim and Notice of Loss.................70
Section 10.06. Limitations on Indemnification...........................71
ARTICLE XI. MISCELLANEOUS.....................................................74
Section 11.01. Expenses.................................................74
Section 11.02. Notices..................................................74
Section 11.03. Public Announcements.....................................75
Section 11.04. Severability.............................................75
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TABLE OF CONTENTS
(Continued)
Page
Section 11.05. Entire Agreement.......................................75
Section 11.06. Assignment.............................................75
Section 11.07. No Third Party Beneficiaries...........................76
Section 11.08. Amendment..............................................76
Section 11.09. GOVERNING LAW..........................................76
Section 11.10. Jurisdiction...........................................76
Section 11.11. WAIVER OF JURY TRIAL...................................76
Section 11.12. Counterparts...........................................77
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into as of July 31, 2003 (as
amended, restated, supplemented or otherwise modified from time to time, this
"Agreement") by and among the stockholders listed as the GENSTAR STOCKHOLDERS on
Schedule I hereto (the "Genstar Stockholders"), the ONTARIO TEACHERS' PENSION
PLAN BOARD, a non-share capital corporation organized and existing under the
Teachers' Pension Act R.S.C. 1990, C.T.I. (Ontario) ("OTPPB"), and the other
stockholders listed on Schedule I hereto (together with the Genstar Stockholders
and OTPPB, collectively, "Sellers" and each, a "Seller"), as sellers, the
Sherwin-Williams Claims Trust, a trust organized and existing under that certain
Trust Agreement, dated as of July 31, 2003, by and among Genstar Capital
Corporation and the persons listed on Schedule I thereto (the "Sherwin-Williams
Claims Trust"), GENSTAR CAPITAL CORPORATION, a corporation organized and
existing under the laws of the Province of Alberta, Canada ("Genstar"), as
sellers' representative (Genstar acting in such capacity or such other Person as
may succeed Genstar in such capacity being referred to herein as "Sellers'
Representative") and trustee of the Sherwin-Williams Claims Trust (Genstar
acting in such capacity or such other Person as may succeed Genstar in such
capacity being referred to herein as the "Trustee"), GENTEK HOLDINGS, INC., a
corporation organized and existing under the laws of the State of Delaware
("Gentek Holdings"), GENTEK BUILDING PRODUCTS, INC., a corporation organized and
existing under the laws of the State of Delaware ("Gentek U.S."), GENTEK
BUILDING PRODUCTS LIMITED, a corporation organized and existing under the laws
of the Province of Ontario, Canada ("Gentek Canada"), and ASSOCIATED MATERIALS
INCORPORATED, a corporation organized and existing under the laws of the State
of Delaware ("Purchaser"), as purchaser.
W I T N E S S E T H:
WHEREAS, Sellers own all of the issued and outstanding shares (the
"Shares") of capital stock of Gentek Holdings and Gentek Holdings has issued
options (collectively, the "Options") to acquire shares (the "Option Shares") of
capital stock of Gentek Holdings.
WHEREAS, Gentek Holdings owns all of the issued and outstanding capital
stock of its direct subsidiary Gentek U.S., which in turn owns all of the issued
and outstanding capital stock of its direct subsidiary Gentek Canada.
WHEREAS, Sellers wish to sell to Purchaser, and Purchaser wishes to
purchase from Sellers, the Shares concurrently with cancellation of the Options,
all upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
agreements, covenants, representations and warranties hereinafter set forth and
other good and valuable consideration, the receipt and adequacy of which are
hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Certain Defined Terms. Unless the context otherwise requires,
the following terms, when used in this Agreement, shall have the respective
meanings specified below:
"Action" shall mean any claim, action, charge, complaint, suit,
arbitration, grievance, inquiry or proceeding (whether at law or in equity) or
investigation by or before any Governmental Authority or duly appointed
arbitration authority.
"Adjustment Estimation Date" shall have the meaning specified in Section
2.08.
"affiliate" shall mean, with respect to any specified Person, any other
Person that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control (as defined below) with,
such specified Person; provided, however, that for purposes of Section
4.11(viii) and Section 4.22, an "affiliate" of any Person shall also include (i)
any director of officer of Gentek Holdings or any of its Subsidiaries and each
of their respective affiliates, and (ii) the Sellers' Representative and any of
its directors, officers and each of their respective affiliates.
"Agreement" shall have the meaning specified in the preamble to this
Agreement.
"Arrangers" shall have the meaning specified in Section 5.06.
"Assets" shall have the meaning specified in Section 4.14.
"Assignment and Assumption Agreement" shall have the meaning specified in
Section 2.02.
"Auditor's Determination Statement" shall have the meaning specified in
Section 2.09.
"Best Efforts Letter" shall have the meaning specified in Section 5.06.
"Business" shall mean the businesses of Gentek Holdings and its
Subsidiaries as conducted on the date hereof.
"business day" shall mean any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by Law to be closed in San
Francisco, California or Cleveland, Ohio.
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"Canadian Employee Plans" shall have the meaning specified in Section 4.15.
"Cash" shall mean, for Gentek Holdings and its Subsidiaries on a
consolidated basis, all cash and cash equivalents, other than, solely for
purposes of Section 2.09, an amount in cash equal to the Cash True-Up Amount.
"Cash-True-Up Amount" shall mean a dollar amount equal to the amount of
deposits into the accounts of Gentek Holdings and any of its Subsidiaries as of
11:59 p.m. on the date of Closing that are not credited as Cash to reduce
Indebtedness.
"Class A Common Stock" shall have the meaning specified in Section 4.02.
"Class B Common Stock" shall have the meaning specified in Section 4.02.
"Class C Common Stock" shall have the meaning specified in Section 4.02.
"Class D Common Stock" shall have the meaning specified in Section 4.02.
"Closing" shall have the meaning specified in Section 2.04.
"Closing Adjustment Amount Statement" shall have the meaning specified in
Section 2.09.
"Closing Date" shall have the meaning specified in Section 2.04.
"Closing Indebtedness" means the amount of Indebtedness, together with
unpaid interest and fees accrued thereon, of Gentek Holdings and its
Subsidiaries on a consolidated basis immediately prior to the Closing, but
giving effect to any payment thereof by Gentek Holdings or any of its
Subsidiaries (and excluding, for greater certainty, any payment made by or on
behalf of Purchaser) in connection with consummation of the Closing, determined
in accordance with the accounting principles utilized in the preparation of the
Reference Balance Sheet.
"Closing Net Indebtedness" shall have the meaning specified in Section
2.09.
"Closing Working Capital" shall have the meaning specified in Section 2.09.
"Closing Working Capital Adjustment" shall mean Thirteen Million One
Hundred and Ninety Five Thousand Dollars ($13,195,000).
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended and as codified in Section 4980B of the Code and Section 601
et. seq. of ERISA.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collective Bargaining Agreements" shall have the meaning specified in
Section 4.16.
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"Competition Act" shall mean the Competition Act (Canada), R.S.C. 1985, c.
34, as amended through the date hereof, and the rules and regulations
promulgated thereunder.
"Confidential Information" shall have the meaning specified in Section
6.03.
"Confidentiality Agreement" shall mean the confidentiality letter
agreement, dated as of May 29, 2002, by and between Gentek U.S. and Purchaser.
"control" (including the terms "controlled by" and "under common control
with") shall mean, as used with respect to any Person, the possession, directly
or indirectly, or as trustee, personal representative or executor, by such
Person of the power to direct or cause the direction of the affairs or
management of another Person, whether through the ownership of voting
securities, as trustee, personal representative or executor, by contract or
otherwise, including, without limitation, the ownership, directly or indirectly,
of securities having the power to elect a majority of the board of directors or
similar body governing the affairs of such other Person.
"Current Incentive Plans" shall have the meaning specified in Section 6.13.
"Disclosure Schedule" shall mean the Disclosure Schedule attached hereto,
dated as of the date hereof, and forming a part of this Agreement, which
Disclosure Schedule shall (i) consist of items of disclosure categorized by
sections, and (ii) provide information, or otherwise qualify, the
representations and warranties set forth in the corresponding sections of this
Agreement and any other sections of this Agreement to the extent that it is
readily apparent on the face of such disclosure that such disclosure applies to
such other sections of this Agreement.
"dollars" and the sign "$" shall each mean lawful money of the United
States.
"Employee Plans" shall mean the U.S. Employee Plans and the Canadian
Employee Plans.
"Encumbrance" shall mean any security interest, pledge, mortgage, lien,
charge, encumbrance, adverse claim, preferential arrangement, option, right of
first refusal, easement, encroachment, indenture, deed of trust, right of way,
license, lease, security agreement or restriction of any kind, excluding
licenses of Intellectual Property.
"Environmental Claim" shall mean any action, suit, investigation (other
than a routine inspection), demand, demand letter, claim, lien, notice of
non-compliance or violation, notice of liability, proceeding, consent order or
consent agreement by any Governmental Authority or any Person made under or in
accordance with any Environmental Law or Environmental Permit.
"Environmental Law" shall mean any Law in effect as of the Closing Date,
including any legally enforceable judicial or administrative order, consent
decree or judgment, to the extent relating to protection of the environment,
natural resources or exposure of any Person to Hazardous Materials.
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"Environmental Permit" shall mean any Permit required under any applicable
Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended through the date hereof.
"ERISA Affiliate" shall have the meaning specified in Section 4.15.
"Escrow Agent" shall mean a national banking association reasonably
acceptable to Purchaser and Sellers' Representative, or any successor thereto
designated in accordance with the terms of the Escrow Agreement.
"Escrow Agreement" shall mean the Escrow Agreement, substantially in the
form attached hereto as Exhibit A.
"Estimated Adjustment Amount Statement" shall have the meaning specified in
Section 2.08.
"Estimated Closing Net Indebtedness" shall have the meaning specified in
Section 2.08.
"Final Closing Adjustment Amount Statement" shall have the meaning
specified in Section 2.09(b) or Section 2.09(c), as the case may be.
"Final Purchase Price Adjustment" shall have the meaning specified in
Section 2.09.
"Final Purchase Price Adjustment Date" shall have the meaning specified in
Section 2.09(b) or Section 2.09(c), as the case may be.
"Financial Statements" shall have the meaning specified in Section 4.03.
"Genstar" shall have the meaning specified in the preamble to this
Agreement.
"Genstar Stockholders" shall have the meaning specified in the preamble to
this Agreement.
"Gentek Canada" shall have the meaning specified in the recitals to this
Agreement.
"Gentek Holdings" shall have the meaning specified in the preamble to this
Agreement.
"Gentek U.S." shall have the meaning specified in the preamble to this
Agreement.
"Governmental Authority" shall mean any national, federal, state,
provincial, municipal, local, foreign or other government, governmental,
regulatory or
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administrative authority, agency or commission or any court, tribunal, or other
judicial body.
"Governmental Order" shall mean any legally binding order, writ, judgment,
injunction, decree, stipulation, or determination of any Governmental Authority.
"Hazardous Materials" shall mean any chemical, material or substance
defined or regulated as toxic or hazardous or as a pollutant or contaminant or
as a waste under any applicable Environmental Law and includes, without
limitation, petroleum and petroleum products, by-products or breakdown products,
radioactive materials, urea formaldehyde insulation, asbestos containing
materials and polychlorinated biphenyls.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" shall mean, with respect to Gentek Holdings and its
Subsidiaries on a consolidated basis, (i) indebtedness for borrowed money or
indebtedness issued or incurred in substitution or exchange for indebtedness for
borrowed money, (ii) amounts owing as deferred purchase price for property or
services, including all seller notes and "earn-out" payments, (iii) indebtedness
evidenced by any note, bond, debenture, mortgage or other debt instrument or
debt security, (iv) commitments or obligations to assure a creditor against loss
(including contingent reimbursement obligations with respect to letters of
credit), (v) indebtedness secured by a lien on any assets or properties of
Gentek Holdings or any of its Subsidiaries, (vi) obligations or commitments to
repay deposits or other amounts advanced by and owing to third parties
(including outstanding and unpaid checks), (vii) obligations under any interest
rate, currency or other hedging agreement, (viii) any unsatisfied obligation for
"withdrawal liability" to a "multiemployer plan" (as defined in the Employee
Retirement Income Security Act of 1974, as amended), (ix) amounts that will
automatically become due and payable or otherwise owing under any employment
agreements or non-competition agreements as a direct result of the execution of
this Agreement or the consummation of the transactions contemplated hereby, (x)
obligations under capitalized leases, (xi) guarantees or other contingent
liabilities (including so called take-or-pay or keep-well agreements) with
respect to any indebtedness, obligation or liability of a type described in
clauses (i) through (x) above of any other Person, (xii) prepayment premiums,
penalties or equivalents thereof with respect to any indebtedness, obligation or
liability of a type described in clauses (i) through (xi) above which would be
payable if such indebtedness, obligation or liability would be paid at Closing,
and (xiii) the Transaction Expenses; provided, however, that Indebtedness shall
not include (A) accounts payable to trade creditors and accrued expenses arising
in the ordinary course of business consistent with past practice, (B) the
endorsement of negotiable instruments for collection in the ordinary course of
business and (C) obligations for the undrawn face amounts of letters of credit
issued for the benefit of (1) Cragwood Joint Venture in the face amount of
$250,000 and (2) Liberty Mutual Insurance Company in the face amount of
$766,890.
"Indemnification Escrow" shall have the meaning specified in Section
2.03(b).
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"Indemnification Escrow Amount" shall mean Seven Million Dollars
($7,000,000), which amount is to be deposited with the Escrow Agent in
accordance with the terms of this Agreement and held and released pursuant to
the terms and subject to the conditions set forth in this Agreement and in the
Escrow Agreement.
"Indemnified Party" shall have the meaning specified in Section 10.05.
"Indemnified Purchaser Loss" shall have the meaning specified in Section
10.04.
"Indemnified Purchaser Party" shall have the meaning specified in Section
10.04.
"Indemnified Seller Loss" shall have the meaning specified in Section
10.03.
"Indemnified Seller Party" shall have the meaning specified in Section
10.03.
"Indemnifying Party" shall have the meaning specified in Section 10.05.
"Initial Trust Deposit" shall have the meaning specified in Section 6.08.
"Insurance Policies" shall have the meaning specified in Section 4.24.
"Intellectual Property" shall mean the Owned Intellectual Property and the
Licensed Intellectual Property.
"Interim Working Capital Statement" shall have the meaning specified in
Section 2.09(a).
"Interim Financial Statements" shall have the meaning specified in Section
4.03.
"Inventories" shall mean all inventory, merchandise, finished goods, work
in process, raw materials and parts, packaging, supplies and other personal
property maintained, held or stored by or for Gentek Holdings or any of its
Subsidiaries on the Closing Date.
"investment" with respect to any Person, shall mean (i) any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities, or ownership interest (including partnership
interests, limited liability company interests, and joint venture interests) of
any other Person and (ii) any capital contribution by such Person to any other
Person.
"Investment Canada Act" shall mean the Investment Canada Act, R.S. 1985, c.
28 (1st supp.), as amended through the date hereof, and the rules and
regulations promulgated thereunder.
"IP Rights" shall mean any or all of the following throughout the world:
(i) all patents and applications therefore and all reissues, divisions,
renewals, extensions,
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provisionals, continuations and continuations-in-part thereof ("Patents"); (ii)
all inventions (whether patentable or not), invention disclosures and
improvements, all trade secrets, confidential or proprietary information, know
how and technology, technical data, customer lists, designs, processes, source
codes and databases ("Trade Secrets"); (iii) all works of authorship, registered
and unregistered copyrights, mask works, moral and economic rights of authors
(however denominated) copyright and mask work registrations and applications
("Copyrights"); (iv) all trade names, logos, trademarks, service marks and other
indicia of origin; trademark and service mark registrations and applications or
similar reservations of marks ("Trademarks"); and (v) Internet domain names,
applications and reservations therefor, uniform resource locations and the
corresponding Internet sites.
"IRS" shall mean the Internal Revenue Service of the United States.
"ISRA" shall mean the New Jersey Industrial Site Recovery Act, N.J.S.A.
13:1K-6 et seq. (and including N.J.S.A. 58:10B-1 et seq.) and the regulations
promulgated thereunder.
"ISRA Approvals" all approvals, authorizations, agreements, consents or
orders that are required, in the reasonable, good faith judgment of Gentek
Holdings and its Subsidiaries, under the applicable provisions of ISRA to be
obtained by Gentek Holdings or any of its Subsidiaries in connection with,
and/or as a condition to, the consummation of the transactions contemplated by
this Agreement.
"knowledge" shall mean, with respect to any specified Person, (i) if such
Person is an individual, the actual knowledge of such Person, and (ii) if such
Person is not an individual, the actual knowledge of any executive officer or
director (or other individual serving in a similar capacity) of such Person.
"Law" shall mean any statute, law, ordinance, regulation, rule, code,
principle of common law, Governmental Order or other requirement of any
Governmental Authority.
"Leased Real Property" shall mean the real property presently leased by or
subject to an offer to lease, agreement to lease or sublease or other use or
occupancy agreement by Gentek Holdings or any of its Subsidiaries.
"Liabilities" shall mean any and all adverse claims, debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable.
"Licensed Intellectual Property" shall mean all material IP Rights licensed
or sublicensed to or by Gentek Holdings or any of its Subsidiaries from or to a
third party.
"Material Adverse Effect" shall mean any circumstance, change in, or effect
on the Business that, individually or in the aggregate with any other
circumstances, changes in, or effects on the Business, is or would reasonably be
expected to be, materially adverse to the Business, operations, assets or
liabilities, results of operations
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or financial condition of Gentek Holdings and its Subsidiaries, taken as a
whole; provided, however, that none of the following circumstances, changes in,
or effects shall be deemed, either alone or in combination, to constitute a
Material Adverse Effect: (i) any change in or effect resulting from or arising
out of the announcement of this Agreement or the pendency of the transactions
contemplated by this Agreement; (ii) any change in or effect resulting from or
arising out of the performance by Sellers, Gentek Holdings or Gentek U.S. of
their respective obligations under this Agreement; (iii) any change in or effect
resulting from or arising out of general economic conditions in the United
States or Canada that do not disproportionately affect Gentek Holdings or any of
its Subsidiaries; or (iv) any change in or effect resulting from or arising out
of the industries in which Gentek Holdings and its Subsidiaries conduct the
Business that do not disproportionately affect Gentek Holdings or any of its
Subsidiaries.
"Material Contracts" shall have the meaning specified in Section 4.11.
"Multiemployer Plan" shall have the meaning specified in Section 4.15.
"Option Shares" shall have the meaning specified in the recitals to this
Agreement.
"Options" shall have the meaning specified in the recitals to this
Agreement.
"OTPPB" shall have the meaning specified in the preamble to this Agreement.
"Outstanding Draft Amount" shall have the meaning specified in Section
6.14.
"Overlap Period" shall mean a taxable period beginning on or prior to and
ending after the Closing Date.
"Owned Intellectual Property" shall mean all material IP Rights owned by
Gentek Holdings or any of its Subsidiaries.
"Owned Real Property" shall mean the real property presently owned by
Gentek Holdings or any of its Subsidiaries, together with all buildings and
other structures, facilities or improvements currently or hereafter located
thereon, all material fixtures, systems, equipment and items of personal
property of Gentek Holdings or any of its Subsidiaries attached or appurtenant
thereto and all material easements, licenses, rights and appurtenances relating
to the foregoing.
"PBGC" shall have the meaning specified in Section 4.15.
"Pending Sherwin-Williams Litigation" shall mean that certain Action known
as Gentek Building Products, Inc. v. The Sherwin-Williams Company, Case No.
1:02CV0013 pending in the United States District Court for the Northern District
of Ohio (including any appeal, settlement or other proceeding relating thereto
or derivative thereof).
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"Percentage Share" shall mean, with respect to each Seller, such Seller's
allocated share of the Purchase Price, calculated using a fraction, the
numerator of which is the portion of the Purchase Price allocated to such Seller
pursuant to this Agreement based upon such Seller's ownership of Shares and
Options as set forth on Schedule I hereto, and the denominator of which is the
aggregate Purchase Price payable pursuant to this Agreement to all Sellers and
holders of Options.
"Permit" shall mean any permit (including occupancy permit), certificate,
license, consent or authorization of any Governmental Authority.
"Permitted Encumbrances" shall mean such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (i) Encumbrances for Taxes, assessments, charges, levies or
other claims not yet due and payable, or the validity of which are being
contested in good faith; (ii) materialmen's, mechanics', carriers', workmen's
and repairmen's liens and other similar liens arising in the ordinary course of
business and which do not, individually or in the aggregate, materially detract
from the value of, or impair the use of, any of the assets or properties of
Gentek Holdings or any of its Subsidiaries; (iii) Encumbrances, easements,
reserves, servitudes, encroachments, rights of way or other imperfections of
title to real property which do not, individually or in the aggregate,
materially detract from the value or marketability of, or impair the present use
of, such property; and (iv) the provisions of applicable Laws, including
by-laws, regulations, ordinances and similar instruments relating to development
and zoning, provided, in each case, that such Laws have been complied with in
all material respects and, in the case of owned Real Property, that all
necessary certificates and permits for the occupancy and use of each parcel of
such owned Real Property have been obtained and are in full force and effect.
"Person" shall mean any individual, partnership, firm, corporation, joint
venture, association, trust, unincorporated organization or other entity, as
well as any syndicate or group that would be deemed to be a person under ss.
13(d)(3) of the Securities Exchange Act of 1934, as amended through the date
hereof.
"Pre-Closing Period" shall have the meaning specified in Section 4.17.
"Preliminary Purchase Price" shall have the meaning specified in Section
2.02.
"Price Adjustment Audit" shall have the meaning specified in Section 2.09.
"Price Adjustment Auditor" shall have the meaning specified in Section
2.09.
"Proceeding" shall have the meaning specified in Section 11.10.
"Purchase Price" shall have the meaning specified in Section 2.02.
"Purchase Price Escrow" shall have the meaning specified in Section
2.03(a).
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"Purchase Price Escrow Amount" shall mean Five Million Dollars
($5,000,000), which amount is to be deposited with the Escrow Agent in
accordance with the terms of this Agreement and held and released pursuant to
the terms and subject to the conditions set forth in this Agreement and in the
Escrow Agreement.
"Purchaser" shall have the meaning specified in the preamble to this
Agreement.
"Real Property" shall mean the Leased Real Property and the Owned Real
Property.
"Real Property Documents" shall mean all leases, subleases, binding offers
to lease and other use or occupancy agreements and all material lease
guaranties, estoppel certificates and subordination and non-disturbance
agreements by Gentek Holdings or any of its Subsidiaries.
"Receivables" shall mean any and all accounts receivable, notes and other
amounts receivable owed to Gentek Holdings or any of its Subsidiaries by third
parties, arising from the conduct of the Business before the Closing Date,
together with all unpaid financing charges accrued thereon.
"Reference Balance Sheet" shall mean the audited consolidated balance sheet
of Gentek Holdings and its Subsidiaries dated as of December 31, 2002, a copy of
which is attached hereto as Exhibit C.
"Reference Balance Sheet Date" shall mean December 31, 2002.
"Registered IP Rights" shall mean all United States, international and
foreign (i) Patents and applications therefor (including provisional
applications), (ii) registered Trademarks and applications therefor, (iii)
registered Copyrights and applications therefor, and (iv) Internet domain names
and uniform resource locators.
"Regulations" shall mean the Treasury Regulations (including Temporary
Regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal tax statutes.
"Resolution Period" shall have the meaning specified in Section 2.09.
"Securities Act" shall have the meaning specified in Section 5.04.
"Sellers" shall have the meaning specified in the preamble to this
Agreement.
"Sellers' Representative" shall have the meaning specified in the preamble
to this Agreement.
"Shares" shall have the meaning specified in the recitals to this
Agreement.
"Sharing Formula" shall mean, with respect to the SVA Amount specified in
Section 6.08(h)(ii), an apportionment of such SVA Amount such that the Sherwin-
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Williams Claims Trust receives or retains the TR Share and Gentek Holdings and
its Subsidiaries receive or retain the remainder.
"Sherwin-Williams" shall mean The Sherwin-Williams Company, a corporation
organized and existing under the laws of the State of Ohio.
"Sherwin-Williams Claims" shall mean all claims, controversies, Actions,
demands, causes of action, debts, obligations, damages, liabilities, duties, or
contracts of every kind and description, whether known or unknown, and whether
at law or in equity, against Sherwin-Williams or any of its affiliates or any of
their respective predecessors or successors or any of their respective
businesses, which Gentek U.S. or any of its affiliates or any of their
respective predecessors or successors (other than Sellers and the holders of
Options) or any of their respective businesses now have or are owed, have had or
have been owed, or hereinafter may have or may be owed, arising out of or
related to any act, event, occurrence, or omission arising or existing at any
time from the beginning of the world which relate to a Steel Peel Occurrence or
a Subject Product, and all proceeds thereof and things of value received with
respect thereto; provided however, that if the transfer or assignment of such
Sherwin-Williams Claims would breach any underlying contractual right or render
void or voidable any benefit, then "Sherwin-Williams Claims" shall mean the
proceeds from the foregoing claims, controversies, Actions, demands, causes of
action, debts, obligations, damages, liabilities, duties or contracts.
"Sherwin-Williams Claims Trust" shall have the meaning specified in the
preamble to this Agreement.
"Sherwin-Williams Litigation Liabilities" shall mean any loss, liability,
obligation, damage, claim, cost, expense, interest, award, judgment or penalty
suffered, incurred or sustained by Gentek U.S. or any of its affiliates as a
result of (i) the conduct, management, settlement or prosecution by Sellers,
holders of Options, Sellers' Representative or the Sherwin-Williams Claims Trust
of the Pending Sherwin-Williams Litigation or any Sherwin-Williams Claims, (ii)
any claim, counterclaim or other Action initiated or asserted by
Sherwin-Williams or any of its affiliates arising out of, resulting from or
related to the Pending Sherwin-Williams Litigation or any Sherwin-Williams
Claims, (iii) any action taken by Gentek Holdings or any of its Subsidiaries or
any of their respective affiliates, officers, directors or agents at the
direction of Sellers or the Sellers' Representative pursuant to Section 6.08
hereof or as otherwise compelled by legal process in connection with the Pending
Sherwin-Williams Litigation, and (iv) the assignment, transfer, conveyance
and/or delivery by Gentek Holdings or any of its Subsidiaries of the rights and
benefits arising out of the Pending Sherwin-Williams Litigation and the
Sherwin-Williams Claims to the Sherwin-Williams Claims Trust pursuant to Section
6.08 hereof (including any Taxes payable in connection therewith).
"Single Employer Plan" shall have the meaning specified in Section 4.15.
"Steel Peel Adjustment" shall mean Five Million Dollars ($5,000,000);
provided, however, that if, prior to Closing, the Pending Sherwin-Williams
Litigation is
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settled (by judgment or otherwise), the Steel Peel Adjustment shall be reduced
proportionately by a percentage equal to the amount of future Steel Peel Claims
with respect to which Sherwin-Williams agrees to honor its warranty or otherwise
may pay, provided that pursuant to the terms of such settlement or judgment,
Sherwin-Williams agrees or is required to reimburse Gentek Holdings and its
Subsidiaries in cash for at least fifty percent (50%) of the costs incurred by
Gentek Holdings and its Subsidiaries after the Closing for the remediation of
Steel Peel Claims. By way of example, if Sherwin-Williams acknowledged one
hundred percent (100%) of the liability for future Steel Peel Claims, the Steel
Peel Adjustment would be reduced to zero and eliminated, and if Sherwin-Williams
accepted sixty percent (60%) of the liability for future Steel Peel Claims, the
Steel Peel Adjustment would be reduced to Two Million Dollars ($2,000,000).
"Steel Peel Claim" shall mean any warranty claim against Gentek U.S.
arising from any Steel Peel Occurrence made by, or derived from the rights of, a
Person to whom Subject Products were sold.
"Steel Peel Occurrence" shall mean a failure in the form of peeling of the
coated surface of any Subject Product.
"Subject Products" shall mean certain residential siding products,
consisting of painted steel paneling that were manufactured or produced by
Gentek U.S. or one or more of the predecessors of Gentek U.S. or its business
between January 1, 1992 and December 31, 1995 in product color lines designated
as (i) "885 White", "Special White", "Polar White" or "Poplar" or (ii) an
alternative name for marketing purposes corresponding to any such name and, in
each case, which used Sherwin-Williams paint.
"Subsidiary" shall mean, with respect to any Person, any other Person of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or more
Subsidiaries of such Person or a combination thereof.
"SVA Amount" shall have the meaning specified in Section 6.08.
"Tax" or "Taxes" shall mean any and all taxes (including estimated taxes),
assessments, fees, levies, duties, tariffs, imposts, and other charges of any
kind (together with any and all interest, penalties, loss, damage, liability,
expense, additions to tax and additional amounts or costs incurred or imposed
with respect thereto) imposed by any government or taxing authority, including,
without limitation (whether payable directly or by withholding and whether or
not requiring the filing of a Tax Return), (i) taxes or other charges on or with
respect to income, franchises, concessions, windfall or other profits, gross
receipts, property, sales, use, capital gains, capital stock or shares, payroll,
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employment, occupation, severance, social security, capital, workers'
compensation, unemployment compensation or insurance, or net worth; (ii) taxes
or other charges in the nature of excise, goods and services, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; (iii) license,
registration and documentation fees; (iv) customs duties, tariffs, and similar
charges and (v) any liability for amounts set forth elsewhere in this definition
of "Taxes" as a result either of being a member of a combined, consolidated,
unitary or affiliated group or of a contractual obligation to indemnify any
person or other entity.
"Tax Attributes" shall mean net operating losses, capital losses and tax
credits, and carryovers thereof, for purposes of federal income or state income
or franchise taxes.
"Tax Benefit" shall have the meaning specified in Section 10.06.
"Tax Matter" shall have the meaning specified in Section 7.02.
"Tax Returns" shall have the meaning specified in Section 4.17.
"Third Party Claims" shall have the meaning specified in Section 10.05.
"Threshold Amount" shall have the meaning specified in Section 10.06.
"TR Share" shall mean, with respect to the SVA Amount specified in Section
6.08(h)(ii), an amount equal to Five Million Dollars ($5,000,000), less the
present value of all sums expended after the Closing in remediating any Steel
Peel Claims which are not being reimbursed in cash to Gentek Holdings or its
Subsidiaries by Sherwin-Williams pursuant to the settlement contemplated in
Section 6.08(h)(ii) (discounted from the date that such sums were expended to
the Closing Date using a discount rate of six percent (6%) per annum),
multiplied by a factor equal to the percentage, which shall be at least fifty
percent (50%), of the costs incurred by Gentek Holdings or its Subsidiaries
after the Closing for the remediation of Steel Peel Claims with respect to which
Sherwin-Williams agrees to reimburse Gentek Holdings or its Subsidiaries in cash
pursuant to the settlement contemplated in Section 6.08(h)(ii) after the
Closing.
"Transaction Expenses" shall mean the aggregate amount payable, directly or
indirectly, by Gentek Holdings or any of its Subsidiaries, to the consultants,
financial advisors, attorneys, accountants or other agents and representatives
retained by Gentek Holdings, or any of its affiliates or stockholders, for
services rendered (including research, preparation, drafting documents,
negotiations, due diligence efforts, consultations, assessments, or valuations)
and any fees payable by Gentek Holdings or any of its Subsidiaries to Genstar or
any of its affiliates, in each case, in connection with this Agreement and the
transactions contemplated hereby, to the extent that such amounts have not been
either paid or accrued in accounts payable reflected in Working Capital as of
the Closing.
"Transferred Employees" shall have the meaning specified in Section 6.13.
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"Trust Amount" shall mean any and all proceeds of any award, settlement or
other recovery received in respect of any and all Sherwin-Williams Claims, less
any administrative charges of the Trustee.
"Trust Interest" shall mean a non-transferable right to receive, if and
when received by the Sherwin-Williams Claims Trust, an allocable portion of the
Trust Amount.
"Trustee" shall have the meaning specified in the preamble to this
Agreement.
"U.S. Employee Plans" shall have the meaning specified in Section 4.15.
"U.S. GAAP" shall mean United States generally accepted accounting
principles as in effect from time to time.
"Working Capital" shall mean, for Gentek Holdings and its Subsidiaries on a
consolidated basis, net accounts receivable, plus Inventories, plus prepaid
expenses, less the amount of accounts payable (excluding, for greater certainty,
unpaid checks issued by Gentek Holdings or any of its Subsidiaries) and other
accrued current Liabilities (excluding (i) accrued interest payable on
outstanding interest-bearing Indebtedness and (ii) Liabilities for Steel Peel
Claims). For references purposes only, Working Capital reflected on the
Reference Balance Sheet is Twenty Nine Million, Three Hundred Eighty Nine
Thousand Dollars ($29,389,000).
Section 1.02. Other Interpretive Provisions. With reference to this
Agreement, unless otherwise specified herein, the following interpretive
provisions shall apply:
(a) the meanings of defined terms are equally applicable to the
singular and plural forms of such defined terms;
(b) the words "herein," "hereto," "hereof" and "hereunder" and words
of similar import shall refer to this Agreement as a whole and not to any
particular provision hereof;
(c) Article, Section, Exhibit and Schedule references are references
to the articles, sections, exhibits and schedules of this Agreement;
(d) the term "including" is by way of example and not a limitation;
(e) the term "documents" includes any and all instruments, documents,
agreements, certificates, notices, reports, financialb statements and other
writings, however evidenced, whether in physical or electronic form;
(f) in the computation of periods of time from a specified date to a
later specified date, (i) the word "from" shall mean "from and including;" (ii)
the words "to" and "until" each mean "to but excluding;" and (iii) the word
"through" shall mean "to and including"; and
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(g) section headings herein are included for convenience of reference
only and shall not affect the interpretation of this Agreement.
Section 1.03. Schedules and Exhibits. The Schedules and Exhibits to this
Agreement are incorporated herein and form an integral part hereof. If an
Exhibit is a form of agreement, such agreement, when executed and delivered by
the parties thereto, shall constitute a document independent of this Agreement.
ARTICLE II.
PURCHASE AND SALE
Section 2.01. Purchase and Sale of the Shares; Cancellation of Options.
Upon the terms and subject to the conditions set forth in this Agreement, at the
Closing, (i) each Seller and Genstar, acting in its capacity as agent for
certain Sellers, shall sell, assign, transfer, convey and deliver to Purchaser
or cause to be sold, assigned, transferred, conveyed and delivered to Purchaser,
free and clear of any and all Encumbrances, and Purchaser shall purchase, the
Shares set forth opposite such Seller's name on Schedule I hereto, and (ii) all
of the Options shall automatically be deemed cancelled and shall have no further
force or effect. The surrender of Options in exchange for the consideration
described in Section 2.02 hereof shall be deemed a release of any and all rights
the holder had or may have had in respect of all of the holder's Options.
Section 2.02. Purchase Price. In consideration for the sale of the Shares
and cancellation of the Options pursuant to Section 2.01, upon the terms and
subject to the conditions set forth in this Agreement, (i) Purchaser shall pay
to Sellers and the holders of Options an amount equal to One Hundred and Ten
Million Dollars ($110,000,000), plus the Closing Working Capital Adjustment,
less the Steel Peel Adjustment (the "Preliminary Purchase Price"), as adjusted
pursuant to this Article II, such amount to be allocated among such Sellers and
holders of Options on a pro rata basis in accordance with their respective
economic ownership interests in the net proceeds of the transactions
contemplated hereby, and (ii) Gentek U.S. shall assign to the Sherwin-Williams
Claims Trust the rights and benefits of the Pending Sherwin-Williams Litigation
and the Sherwin-Williams Claims pursuant to the Assignment and Assumption
Agreement attached hereto as Exhibit B (the "Assignment and Assumption
Agreement"), and the Sherwin-Williams Claims Trust shall issue Trust Interests
to Sellers and the holders of Options, such Trust Interests to be allocated
among such Sellers and holders of Options on a pro rata basis in accordance with
their respective economic ownership interests in the net proceeds of the
transactions contemplated hereby (the Preliminary Purchase Price, as so
adjusted, being referred to herein as the "Purchase Price"). Delivery by
Purchaser of the Preliminary Purchase Price, as adjusted, to Sellers'
Representative in accordance with Section 2.03, and such assignment, shall
constitute a full discharge of Purchaser's obligations pursuant to this Section
2.02.
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Section 2.03. Escrow Arrangements.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, a portion of the Preliminary Purchase Price equal to
the Purchase Price Escrow Amount shall be deposited by Purchaser with the Escrow
Agent (the "Purchase Price Escrow") to be held and released by the Escrow Agent
pursuant to the terms and subject to the conditions set forth in the Escrow
Agreement as security for the Final Purchase Price Adjustment obligations of
Sellers set forth in Section 2.09.
(b) Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, a portion of the Preliminary Purchase Price equal to
the Indemnification Escrow Amount shall be deposited by Purchaser with the
Escrow Agent (the "Indemnification Escrow") to be held and released by the
Escrow Agent pursuant to the terms and subject to the conditions set forth in
the Escrow Agreement as security for the indemnification obligations of Sellers
and the Sherwin-Williams Claims Trust set forth in Article X.
Section 2.04. Closing. Upon the terms and subject to the conditions of this
Agreement, the sale and purchase of Shares contemplated by this Agreement shall
take place at a closing (the "Closing") to be held at the offices of White &
Case LLP, 1155 Avenue of the Americas, New York, New York, on August 29, 2003 or
on such other date (not later than October 31, 2003) as may be specified by the
parties hereto after the satisfaction or valid waiver of the conditions set
forth in Article VIII that are capable of being satisfied prior to the Closing
(the day on which the Closing takes place being referred to herein as the
"Closing Date").
Section 2.05. Closing Deliveries of Sellers. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing, the following shall
be delivered to Purchaser:
(i) a stock certificate evidencing the Shares held by each
Seller, duly endorsed in blank or accompanied by stock powers duly executed in
blank, with all required stock transfer tax stamps affixed thereto;
(ii) a consent and release, in form and substance reasonably
acceptable to Purchaser and Sellers' Representative, executed by each holder of
one or more Options in connection with the cancellation thereof;
(iii) a receipt for the Purchase Price executed by Sellers'
Representative;
(iv) a counterpart, executed by Sellers' Representative, of the
Escrow Agreement dated as of the Closing Date;
(v) a counterpart, executed by the Sherwin-Williams Claims Trust,
of the Assignment and Assumption Agreement dated as of the Closing Date; and
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(vi) each of the documents required to be delivered by Sellers
pursuant to Section 8.03 that has not been delivered prior to the Closing.
Section 2.06. Closing Deliveries of Gentek Holdings, Gentek U.S. and Gentek
Canada. Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, Gentek Holdings, Gentek U.S. and Gentek Canada shall
deliver, or cause to be delivered, to Purchaser the following:
(i) counterparts, executed by Gentek Holdings, Gentek U.S. and
Gentek Canada, of the Escrow Agreement dated as of the Closing Date;
(ii) a counterpart, executed by Gentek U.S., of the Assignment
and Assumption Agreement dated as of the Closing Date; and
(iii) each of the documents required to be delivered by Gentek
Holdings, Gentek U.S. or Gentek Canada pursuant to Section 8.03 that has not
been delivered prior to the Closing.
Section 2.07. Closing Deliveries of Purchaser.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, Purchaser shall deliver, or cause to be delivered, to
Sellers' Representative, on behalf of Sellers and the holders of the Options, as
applicable, the following:
(i) the Preliminary Purchase Price, as adjusted pursuant to
Section 2.08 (less the Purchase Price Escrow Amount and the Indemnification
Escrow Amount), by wire transfer in immediately available funds to the bank
account or accounts designated by Sellers' Representative in writing not less
than two (2) business days prior to the Closing;
(ii) a counterpart, executed by Purchaser, of the Escrow
Agreement dated as of the Closing Date; and
(iii) each of the documents required to be delivered by Purchaser
pursuant to Section 8.02 that has not been delivered prior to the Closing.
(b) Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, Purchaser shall cause all Indebtedness set forth in
Schedule II hereto to be paid in full.
Section 2.08. Pre-Closing Purchase Price Adjustment.
(a) On a date specified by Sellers' Representative, which must be a
date not less than three (3) nor more than five (5) business days prior to the
Closing Date (the "Adjustment Estimation Date"), Sellers' Representative, on
behalf of Sellers, shall cause Gentek Holdings to prepare and deliver to
Sellers' Representative and Purchaser a statement (the "Estimated Adjustment
Amount Statement") setting forth a
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good faith estimate of Closing Indebtedness, less Cash as of the close of
business on the Closing Date ("Estimated Closing Net Indebtedness") determined
in accordance with the accounting principles utilized in the preparation of the
Reference Balance Sheet.
(b) The Preliminary Purchase Price payable by Purchaser at the Closing
pursuant to Section 2.02 shall be decreased, on a dollar for dollar basis, by an
amount equal to Estimated Closing Net Indebtedness, if any.
Section 2.09. Post-Closing Purchase Price Adjustments.
(a) Initial Purchase Price Adjustment.
(i) Within ten (10) calendar days following the Closing Date,
Purchaser shall prepare and deliver to Sellers' Representative a statement
specifying the amount of Working Capital as of the close of business on the
Closing Date (the "Interim Working Capital Statement"), which statement shall be
prepared in good faith, in accordance with the accounting principles utilized in
the preparation of the Reference Balance Sheet and without giving effect to any
audit adjustments or procedures Purchaser might have or may then be implementing
to verify or test Working Capital, such as counting of Inventory.
(ii) Sellers' Representative, on behalf of Sellers, shall have
two (2) calendar days following its receipt of the Interim Working Capital
Statement during which either (A) to notify Purchaser of acceptance by Sellers'
Representative, on behalf of Sellers, of the Interim Working Capital Statement,
or (B) to notify Purchaser of any dispute by Sellers' Representative, on behalf
of Sellers, with respect to the Interim Working Capital Statement. If Sellers'
Representative shall fail either to so notify Purchaser of acceptance by
Sellers' Representative, on behalf of Sellers, of the Interim Working Capital
Statement or to so notify Purchaser of any such dispute by Sellers'
Representative, on behalf of Sellers, within such two-calendar day period, the
Interim Working Capital Statement shall be deemed to have been accepted by
Sellers' Representative, on behalf of Sellers. If Sellers' Representative shall
notify Purchaser within such two-calendar day period of any dispute by Sellers'
Representative, on behalf of Sellers, with respect to the Interim Working
Capital Statement, then no adjustment to the Purchase Price shall be made
pursuant to this Section 2.09(a).
(iii) In the event that the Interim Working Capital Statement
shall be accepted (or shall be deemed to have been accepted) by Sellers'
Representative, on behalf of Sellers, pursuant to Section 2.09(a)(ii), Purchaser
and Sellers' Representative, on behalf of Sellers, shall promptly deliver to the
Escrow Agent irrevocable instructions to immediately release Four Million
Dollars ($4,000,000) from the Purchase Price Escrow as follows: (A) if Working
Capital reflected on the Interim Working Capital Statement is less than Fifty
Million Dollars ($50,000,000), Purchaser and Sellers' Representative, on behalf
of Sellers, shall instruct the Escrow Agent to release and deliver to Purchaser
an amount equal to such difference, but in no event more than Four Million
Dollars ($4,000,000) and (B) to the extent that the amount
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distributed to Purchaser pursuant to the foregoing clause (A) of this Section
2.09(a)(iii) is less than Four Million Dollars ($4,000,000), Purchaser and
Sellers' Representative, on behalf of Sellers, shall instruct the Escrow Agent
to release and deliver to Sellers' Representative an amount equal to the amount
by which Four Million Dollars ($4,000,000) exceeds the amount released to
Purchaser pursuant to the foregoing clause (A) of this Section 2.09(a)(iii).
(b) Final Purchase Price Adjustment.
(i) As promptly as practicable following the Closing Date (but in
no event later than thirty (30) calendar days thereafter), Purchaser shall
prepare and deliver to Sellers' Representative a statement (the "Closing
Adjustment Amount Statement") setting forth (A) the amount of Working Capital as
of the close of business on the Closing Date ("Closing Working Capital"),
determined in accordance with the accounting principles utilized in the
preparation of the Reference Balance Sheet, and (B) the amount of Closing
Indebtedness, less Cash as of the close of business on the Closing Date
("Closing Net Indebtedness"), if any, determined in accordance with the
accounting principles utilized in the preparation of the Reference Balance
Sheet.
(ii) Sellers' Representative, on behalf of Sellers, shall have
thirty (30) calendar days following its receipt of the Closing Adjustment Amount
Statement during which either (A) to notify Purchaser of acceptance by Sellers'
Representative, on behalf of Sellers, of the Closing Adjustment Amount
Statement, or (B) to notify Purchaser of any dispute by Sellers' Representative,
on behalf of Sellers, as to the Closing Adjustment Amount Statement, which
notice shall set forth in reasonable detail the basis for such dispute. If
Sellers' Representative shall so notify Purchaser of acceptance by Sellers'
Representative, on behalf of Sellers, of the Closing Adjustment Amount Statement
within such thirty-calendar day period, the Closing Adjustment Amount Statement
shall constitute the "Final Closing Adjustment Amount Statement" and the date of
delivery of such notice shall constitute the "Final Purchase Price Adjustment
Date". If Sellers' Representative shall fail either so to notify Purchaser of
acceptance by Sellers' Representative, on behalf of Sellers, of the Closing
Adjustment Amount Statement or so to notify Purchaser of any such dispute by
Sellers' Representative, on behalf of Sellers, within such thirty-calendar day
period, the Closing Adjustment Amount Statement shall be deemed to have been
accepted by Sellers' Representative, on behalf of Sellers, and shall constitute
the "Final Closing Adjustment Amount Statement" and the last day of such
thirty-calendar day period shall constitute the "Final Purchase Price Adjustment
Date". In the event that Sellers' Representative shall so notify Purchaser of
any dispute as to the Closing Adjustment Amount Statement, Purchaser and
Sellers' Representative shall cooperate in good faith to resolve such dispute as
promptly as possible, and if Purchaser and Sellers' Representative are able to
resolve such dispute (as evidenced by a written notice acknowledged by each of
Purchaser and Sellers' Representative) within fifteen (15) calendar days of
Sellers' Representative's delivery of the notice of such dispute as provided
herein (the "Resolution Period"), then the date of such acknowledgement that
such dispute has been resolved shall constitute the "Final Purchase Price
Adjustment Date" and the Closing Adjustment Amount Statement, as modified in
accordance with
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such resolution of such dispute, shall constitute the "Final Closing Adjustment
Amount Statement."
(iii) In the event that Purchaser and Sellers' Representative
shall be unable to resolve any such dispute described in Section 2.09(b)(ii)
within the Resolution Period, then such dispute shall be submitted to a big four
independent accounting firm (the "Price Adjustment Auditor") selected by both
parties within ten (10) calendar days after the expiration of the Resolution
Period (such submission to the Price Adjustment Auditor being referred to herein
as the "Price Adjustment Audit"). If Purchaser and Sellers' Representative are
unable to agree on the Price Adjustment Auditor, then Purchaser and Sellers'
Representative shall each have the right to request the American Arbitration
Association to appoint the Price Adjustment Auditor, which Price Adjustment
Auditor shall not have had a material relationship with Purchaser, Sellers'
Representative, Gentek Holdings or any of its Subsidiaries, OTPPB or any of
their respective affiliates within the immediately preceding two (2) years. In
connection with the Price Adjustment Audit, Purchaser and Sellers'
Representative shall execute, if requested by the Price Adjustment Auditor, a
reasonable engagement letter. All fees and expenses incurred by the Price
Adjustment Auditor in connection with the Price Adjustment Audit shall be borne
equally by Purchaser and Sellers, in the aggregate. The Price Adjustment Auditor
shall act as an expert and not as an arbitrator to determine, based solely on
presentations by Purchaser and Sellers' Representative, and not by independent
review, only those issues in dispute between the parties regarding the Closing
Adjustment Amount Statement. The Price Adjustment Auditor's determination shall
be requested to be made within twenty (20) calendar days of its selection, shall
be set forth in a written statement (the "Auditor's Determination Statement")
delivered to Purchaser and Sellers' Representative and shall be final, binding
and conclusive on Purchaser, Sellers' Representative and Sellers and shall
constitute an arbitral award upon which a judgment may be entered by a court of
competent jurisdiction. The Closing Adjustment Amount Statement, as modified by
the Auditor's Determination Statement, shall constitute the "Final Closing
Adjustment Amount Statement" and the date of delivery of the Auditor's
Determination Statement shall constitute the "Final Purchase Price Adjustment
Date."
(iv) The Purchase Price shall be subject to a final adjustment
(the "Final Purchase Price Adjustment") following the Closing as follows:
(1) In the event that (A) Fifty Million Dollars
($50,000,000) exceeds Working Capital, as set forth in the Final Closing
Adjustment Amount Statement, then Sellers shall pay to Purchaser an amount equal
to such excess, if any, less any amounts previously paid to Purchaser pursuant
to Section 2.09(a)(iii), and (B) Working Capital, as set forth in the Final
Closing Adjustment Amount Statement, exceeds Forty Five Million Dollars
($45,000,000), then Purchaser shall pay to Sellers an amount equal to such
excess, less any amounts previously paid to Sellers pursuant to Section
2.09(a)(iii); provided, however, that in no event shall the aggregate amount
released and/or paid to Sellers pursuant to Section 2.09(a)(iii) and this
Section 2.09(a)(iv)(1) exceed Five Million Dollars ($5,000,000).
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(2) In the event that (A) Closing Net Indebtedness, as set
forth in the Final Closing Adjustment Amount Statement, exceeds Estimated
Closing Net Indebtedness, as set forth in the Estimated Adjustment Amount
Statement, Sellers shall pay to Purchaser the amount of such excess, or (B)
Estimated Closing Net Indebtedness, as set forth in the Estimated Adjustment
Amount Statement, exceeds Closing Net Indebtedness, as set forth in the Final
Closing Adjustment Amount Statement, Purchaser shall pay to Sellers an amount
equal to such excess.
(v) Any amounts payable by Purchaser or Sellers, as the case may
be, pursuant to Section 2.09(b)(iv) shall be set-off against any obligation to
make a payment by the other party or parties, if any, pursuant to Section
2.09(b)(iv). Within five (5) business days after the Final Purchase Price
Adjustment Date, Purchaser or Sellers, as applicable, shall pay to the other
party or parties, as the case may be, by wire transfer in immediately available
funds to an account designated in writing by the receiving party within four (4)
business days of the Final Purchase Price Adjustment Date, any net amount
payable to the receiving party pursuant to Section 2.09(b)(iv). Any net amounts
payable by Sellers pursuant to Section 2.09(b)(iv) shall be paid first out of
the funds then held in the Purchase Price Escrow and second out of the
Indemnification Escrow. Any net amounts payable by Purchaser pursuant to Section
2.09(b)(iv) shall be paid first out of the funds then held in the Purchase Price
Escrow. Within one (1) business day after the Final Purchase Price Adjustment
Date, Purchaser and Sellers' Representative, on behalf of Sellers, shall deliver
to the Escrow Agent irrevocable instructions to release funds from the Purchase
Price Escrow and, if required pursuant to this Section 2.09(b)(v), the
Indemnification Escrow to make the payments contemplated by this Section
2.09(b)(v). Notwithstanding anything to the contrary set forth in this
Agreement, Purchaser and Sellers' Representative agree that a breach of the
terms of this Section 2.09(b)(v) by one party may cause irreparable loss to the
other party and that damages may be impossible to ascertain, and therefore
hereby consent to the granting of equitable relief by way of temporary,
preliminary and permanent injunctive relief, by a court of competent
jurisdiction, to prohibit such breach and compel compliance with the terms of
this Section 2.09(b)(v).
Section 2.10. No Impact on Indemnification. Notwithstanding anything to the
contrary set forth in this Agreement, (i) the rights of Purchaser and Sellers to
indemnification pursuant to this Agreement (and any limitations on such rights)
shall not be deemed to limit, supersede or otherwise affect the rights of
Purchaser and Sellers to a full purchase price adjustment pursuant to this
Article II, and (ii) no claim for indemnification may be made with respect to
any Liabilities if and to the extent the amounts of such Liabilities are
reflected in the Final Closing Adjustment Amount Statement.
Section 2.11. Cash-True-Up Payment. On the third (3rd) business day (or
later if specified by the Sellers' Representative) following the Closing,
Purchaser shall pay to Sellers' Representative by wire transfer to an account
designated by it the Cash-True-Up Amount.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLERS,
GENTEK HOLDINGS, GENTEK U.S., GENTEK CANADA, SELLERS'
REPRESENTATIVE AND THE SHERWIN-WILLIAMS CLAIMS TRUST
As an inducement to Purchaser to enter into this Agreement, (i) each of the
Sellers severally, and not jointly, (ii) each of Gentek Holdings, Gentek U.S.
and Gentek Canada (except with respect to Section 3.05 and Section 3.06) jointly
and severally, (iii) Sellers' Representative (except with respect to Section
3.04, Section 3.05 and Section 3.06), and (iv) the Sherwin-Williams Claims Trust
(only with respect to Section 3.01(c) and Section 3.06), hereby represent and
warrant to Purchaser that, except as set forth in the Disclosure Schedule:
Section 3.01. Authority.
(a) If such Person is not an individual, such Person has all necessary
corporate or other power and authority, and if such Person is an individual,
such Person has full legal capacity, to execute and deliver this Agreement and
the other documents to be executed and delivered by such Person as contemplated
hereby and thereby, to carry out such Person's obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby,
including the sale, assignment, transfer, conveyance and delivery of the Shares.
If such Person is not an individual, the execution and delivery of this
Agreement and the other documents to be executed and delivered by such Person as
contemplated hereby, and the performance by such Person of all of its
obligations hereunder and thereunder, have been duly authorized and approved by
all requisite corporate or other action, as applicable, and no other corporate,
limited liability or other action, as the case may be, is necessary to authorize
the execution, delivery and performance of this Agreement and such other
documents by such Person and the consummation of the transactions contemplated
hereby and thereby. This Agreement has been, and as of the Closing each of the
other documents to be executed and delivered by such Person as contemplated
hereby will have been, duly executed and delivered by such Person, and (assuming
due authorization, execution and delivery by Purchaser and each other party
hereto or thereto) this Agreement constitutes, and such other documents to which
such Person is a party will constitute as of the Closing, a legal, valid and
binding obligation of such Person, enforceable against such Person in accordance
with its respective terms, except to the extent that their enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting the enforcement of creditors rights generally and to
general equitable principles.
(b) Each Genstar Stockholder has appointed Sellers' Representative as
its true and lawful attorney-in-fact with respect to the Shares. With respect to
each Genstar Stockholder, the power of attorney held by Sellers' Representative
remains in full force and effect, is valid and binding and has not been revoked,
repudiated or terminated.
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(c) The trust agreement and/or other organizational instrument(s)
establishing and governing the Sherwin-Williams Claims Trust contain no
restrictions prohibiting the Sherwin-William Claims Trust from entering into
this Agreement or the other documents to be executed and delivered by the
Sherwin-Williams Claims Trust as contemplated hereby or from consummating the
transactions contemplated hereby or thereby. The Sherwin-Williams Claims Trust
has all requisite power and authority to enter into this Agreement and the other
documents to be executed and delivered by the Sherwin-Williams Claims Trust as
contemplated hereby and to take any and all actions necessary to consummate the
transactions contemplated hereby and thereby.
Section 3.02. No Conflict. Assuming compliance with the notification
requirements of the HSR Act, the Competition Act and the Investment Canada Act
and the making and obtaining of all filings, notifications, consents, approvals,
authorizations and other actions referred to in Section 3.03, the execution,
delivery and performance of this Agreement and the other documents to be
executed and delivered by such Person as contemplated hereby, and the
consummation by such Person of the transactions contemplated hereby and thereby,
does not and will not (i) if such Person is not an individual, violate, conflict
with or result in the breach of any provision of the charter or bylaws (or
similar organizational documents) of such Person, (ii) conflict with or violate
any Law or Governmental Order applicable to such Person or the Shares held by
such Person or (iii) conflict in any material respect with, or result in any
breach of, constitute a default (or event which with the giving of notice or
lapse of time, or both, would become a default) under, require any consent
under, or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, or result in the creation of any
Encumbrance on any of the Shares or other assets or properties of such Person
pursuant to, any note, bond, mortgage, deed of trust, indenture, contract,
agreement, lease, sublease, offer to lease, agreement to lease, license, permit,
franchise or other instrument or arrangement to which such Person is a party or
by which any of such Shares or other assets or properties is bound or affected,
in any such case which would reasonably be expected to have a material adverse
effect on the ability of such Person to consummate the transactions contemplated
by this Agreement and the other documents to be executed and delivered as
contemplated hereby.
Section 3.03. Governmental Consents and Approvals. The execution, delivery
and performance of this Agreement and the other documents to be executed and
delivered by such Person as contemplated hereby does not and will not require
any consent, approval, authorization or other order of, action by, filing with,
or notification to, any Governmental Authority, except for (i) the ISRA
Approvals and (ii) the notification requirements of the HSR Act, the Competition
Act and the Investment Canada Act.
Section 3.04. Brokers. Except for TD Securities, Inc. and/or one or more
affiliates thereof, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon any agreement,
arrangement or understanding made by or
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on behalf of such Person. Gentek Holdings shall be solely responsible for
payment of the fees and expenses of TD Securities, Inc.
Section 3.05. Ownership of the Shares and Options. Such Seller is the
lawful owner, beneficially and of record, of all of the Shares of such class and
number as is set forth opposite such Seller's name on Schedule I hereto, free
and clear of all Encumbrances. Such Seller holds Options for the purchase of
such class and number of Option Shares as is set forth opposite such Seller's
name on Schedule I hereto, which Options are beneficially owned by such Seller,
free and clear of all Encumbrances. The delivery to Purchaser of the Shares held
by such Seller pursuant to this Agreement will transfer to Purchaser good and
valid title to all such Shares, free and clear of all Encumbrances.
Section 3.06. Litigation. No claim, action, proceeding or investigation is
pending against such Seller or the Sherwin-Williams Claims Trust, as the case
may be, or, to the knowledge of such Seller or the Sherwin-Williams Claims
Trust, as the case may be, threatened against such Seller or the
Sherwin-Williams Claims Trust, as the case may be, which seeks to delay or
prevent the consummation of, or which could reasonably be expected to materially
adversely affect the ability of such Seller or the Sherwin-Williams Claims
Trust, as the case may be, to consummate, the transactions contemplated by this
Agreement.
ARTICLE IV.
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF
GENTEK HOLDINGS, GENTEK U.S. AND GENTEK CANADA
As an inducement to Purchaser to enter into this Agreement, each of Gentek
Holdings, Gentek U.S. and Gentek Canada hereby jointly and severally represent
and warrant to Purchaser that, except as set forth in the Disclosure Schedule:
Section 4.01. Organization and Qualification of Gentek Holdings, Gentek
U.S. and Gentek Canada. Each of Gentek Holdings and Gentek U.S. is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Gentek Canada is a corporation duly incorporated and validly
existing under the laws of the Province of Ontario, Canada. Each of Gentek
Holdings, Gentek U.S. and Gentek Canada (i) has all necessary corporate power
and authority to own its property and to carry on its Business as conducted on
the date hereof and as of the Closing Date and (ii) is duly licensed or
qualified to conduct its Business and is in good standing in each jurisdiction
in which the properties owned or leased by it or the operation of its Business
makes such licensing or qualification necessary, except to the extent that the
failure to be so licensed or qualified does not have a Material Adverse Effect.
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Section 4.02. Capital Stock of Gentek Holdings, Gentek U.S. and Gentek
Canada.
(a) The authorized capital stock of Gentek Holdings consists of
2,000,000 shares of Class A common stock, par value $.01 per share (the "Class A
Common Stock"), 2,000,000 shares of Class B common stock, par value $.01 per
share (the "Class B Common Stock"), 1,000,000 shares of Class C common stock,
par value $.01 per share (the "Class C Common Stock"), and 1,000,000 shares of
Class D common stock, par value $.01 per share (the "Class D Common Stock").
There is no other capital stock of Gentek Holdings authorized for issuance.
There are 983,721 shares of Class A Common Stock and 400,000 shares of Class C
Common Stock issued and outstanding, all of which outstanding shares have been
duly authorized and validly issued, are fully paid and nonassessable and are not
subject to, nor were they issued in violation of, any preemptive rights. Except
as set forth in this Section 4.02(a), there are no shares of capital stock of,
or other equity or voting interest in, Gentek Holdings issued, outstanding or
reserved for issuance. Except as set forth in Section 3.05 and Schedule I
hereto, there are no outstanding or authorized options, warrants, convertible or
exchangeable securities, stock appreciation rights, subscriptions, phantom stock
rights, profit participation rights, or other rights, agreements, obligations,
arrangements or commitments of any character relating to the capital stock of,
or other equity or voting interest in, Gentek Holdings or obligating Gentek
Holdings to issue, deliver or sell, or cause to be issued, delivered or sold,
any shares of capital stock of, or any other interest in, Gentek Holdings other
than pursuant to this Agreement. Gentek Holdings does not have any authorized or
outstanding bonds, debentures, notes or other Indebtedness the holders of which
have the right to vote (or convertible into, exchangeable for, or evidencing the
right to subscribe for or acquire securities having the right to vote) with the
stockholders on any matter.
(b) The authorized capital stock of Gentek U.S. consists of 1,000
shares of common stock, par value $.01 per share. There are 100 shares of common
stock of Gentek U.S. issued and outstanding, all of which (i) have been duly
authorized and validly issued, are fully paid and nonassessable and are not
subject to, nor were they issued in violation of, any preemptive rights, and
(ii) are owned of record and beneficially solely by Gentek Holdings, free and
clear of all Encumbrances. There are no outstanding or authorized options,
warrants, convertible or exchangeable securities, stock appreciation rights,
subscriptions, phantom stock rights, profit participation rights, or other
rights, agreements, obligations, arrangements or commitments of any character
relating to the capital stock of Gentek U.S. or obligating such Person to issue,
deliver or sell, or cause to be issued, delivered or sold, any shares of capital
stock of, or other equity or voting interest in, Gentek U.S. Gentek U.S. does
not have any authorized or outstanding bonds, debentures, notes or other
Indebtedness the holders of which have the right to vote (or convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire securities
having the right to vote) with the stockholders on any matter.
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(c) The authorized capital of Gentek Canada consists of an unlimited
number of common shares. There are 100 common shares issued and outstanding, all
of which (i) have been duly authorized and validly issued, are fully paid and
nonassessable and are not subject to, nor were they issued in violation of, any
preemptive rights, and (ii) are owned of record and beneficially solely by
Gentek U.S., free and clear of all Encumbrances. There are no outstanding or
authorized options, warrants, convertible or exchangeable securities, stock
appreciation rights, subscriptions, phantom stock rights, profit participation
rights, or other rights, agreements, obligations, arrangements or commitments of
any character relating to the capital stock of Gentek Canada or obligating such
Person to issue, deliver or sell, or cause to be issued, delivered or sold, any
shares of capital stock of, or other equity or voting interest in, Gentek
Canada. Gentek Canada does not have any authorized or outstanding bonds,
debentures, notes or other Indebtedness the holders of which have the right to
vote (or convertible into, exchangeable for, or evidencing the right to
subscribe for or acquire securities having the right to vote) with the
stockholders on any matter.
(d) Gentek Holdings has no Subsidiaries other than Gentek U.S. and
Gentek Canada, and none of Gentek Holdings or any of its Subsidiaries has any
material investments in any Person that is organized and primarily carries on
its business in the United States or Canada, or any investments in any other
Person.
(e) The delivery to Purchaser of the Shares pursuant to this Agreement
will transfer to Purchaser good and valid title to all of the outstanding
capital stock of Gentek Holdings, free and clear of all Encumbrances.
Section 4.03. Financial Information. Section 4.03 of the Disclosure
Schedule contains copies of (i) the audited consolidated balance sheet of Gentek
Holdings and its Subsidiaries for the fiscal year ended as of December 31, 2002,
and the related consolidated statements of income, retained earnings,
shareholders' equity and cash flows of Gentek Holdings and its Subsidiaries,
together with all related notes and schedules thereto (collectively, the
"Financial Statements"), and (ii) the unaudited consolidated balance sheet of
Gentek Holdings and its Subsidiaries as of June 30, 2003, and the related
consolidated statements of income, retained earnings, shareholders' equity and
cash flows of Gentek Holdings and its Subsidiaries (collectively, the "Interim
Financial Statements"). The Financial Statements (i) were prepared in accordance
with the books of account and other financial records of Gentek Holdings and its
Subsidiaries, (ii) present fairly in all material respects the consolidated
financial condition and results of operations of Gentek Holdings and its
Subsidiaries as of the dates thereof or for the periods covered thereby, and
(iii) have been prepared in accordance with U.S. GAAP applied consistently in
accordance with the past practices of Gentek Holdings and its Subsidiaries. The
Interim Financial Statements (i) were prepared in accordance with the books of
account and other financial records of Gentek Holdings and its Subsidiaries,
(ii) present fairly in all material respects the consolidated financial
condition and results of operations of Gentek Holdings and its Subsidiaries as
of the dates thereof or for the periods covered thereby, and (iii) have been
prepared in accordance with U.S. GAAP (except for the absence of notes thereto
and subject to
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normal and recurring year-end audit adjustments) applied consistently in
accordance with the past practices of Gentek Holdings and its Subsidiaries.
Section 4.04. No Undisclosed Liabilities. Gentek Holdings and its
Subsidiaries have no material Liabilities other than Liabilities (i) in respect
of the Steel Peel Claims, (ii) comprising Sherwin-Williams Litigation
Liabilities, (iii) adequately reflected or reserved against on the Reference
Balance Sheet, the Financial Statements or the Interim Financial Statements,
(iv) arising out of one or more of the types of matters addressed in the
representations, warranties, covenants or agreements made in this Agreement and
(A) not required to be disclosed in the Disclosure Schedule by the terms of any
such representation or warranty or (B) permitted to exist or be incurred by the
terms of any such covenant or agreement, as the case may be, (v) covered by
insurance, indemnification, contribution or comparable arrangements, (vi) for
Indebtedness that as of the Closing will comprise Closing Indebtedness, (vii)
for payables and other accrued Liabilities that will be reflected in Working
Capital as of the Closing, (viii) for Taxes incurred or accrued in the ordinary
course of business since the Reference Balance Sheet Date, and (ix) incurred
since the Reference Balance Sheet Date in the ordinary course of business
consistent with the past practices of Gentek Holdings and its Subsidiaries and
that do not have a Material Adverse Effect.
Section 4.05. Receivables. Except to the extent, if any, reserved for on
the Reference Balance Sheet, all Receivables reflected on the Reference Balance
Sheet relating to the sale of Inventory or services arose from, and such
Receivables existing on the Closing Date will have arisen from, the sale of
Inventory or services to Persons not affiliated with Gentek Holdings or its
Subsidiaries and in the ordinary course of business consistent with the past
practices of Gentek Holdings and its Subsidiaries.
Section 4.06. Inventories. Subject to amounts reserved therefor on the
Reference Balance Sheet (i) the values at which all Inventories are carried on
the Reference Balance Sheet reflect the historical inventory valuation policy of
Gentek Holdings and its Subsidiaries of stating such Inventories at the lower of
cost (determined on the lower of average cost method) or market value, (ii) the
Inventories are in good and merchantable condition in all material respects, are
suitable and usable for the purposes for which they are intended and are salable
in the ordinary course of business consistent with the past practices of Gentek
Holdings and its Subsidiaries, (iii) the Inventories were acquired or produced
in the ordinary course of business and (iv) none of the Inventory is held on
consignment from others.
Section 4.07. Conduct in the Ordinary Course; Absence of Material Adverse
Effect. Since the Reference Balance Sheet Date, the Business has been conducted
in the ordinary course and consistent with the past practices of Gentek Holdings
and its Subsidiaries (other than with respect to the transactions contemplated
hereby) and no Material Adverse Effect has occurred or arisen. In addition,
since the Reference Balance Sheet Date, neither Gentek Holdings nor any of its
Subsidiaries has:
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(a) sold, transferred, leased, licensed or otherwise disposed of any
assets or properties having a value, in any individual case, in excess of
$100,000, except for (i) sales of Inventory in the ordinary course of business,
(ii) leases entered into or terminated in the ordinary course of business and
(iii) transactions among Gentek Holdings and its Subsidiaries;
(b) paid, discharged, settled or satisfied any Liabilities, other than
payments, discharges or satisfactions in the ordinary course of business and
consistent with the past practices of Gentek Holdings and its Subsidiaries;
(c) canceled or waived any claims or rights of substantial value;
(d) made any material change in any method of accounting or accounting
practices, other than changes required by U.S. GAAP;
(e) (i) made any tax election or settled and/or compromised any tax
liability; (ii) prepared any Tax Returns in a manner which is inconsistent with
the past practices of Gentek Holdings and its Subsidiaries, as the case may be,
with respect to the treatment of items on such Tax Returns; (iii) incurred any
liability for Taxes other than in the ordinary course of business; or (iv) filed
an amended Tax Return or a claim for refund of Taxes;
(f) increased the compensation payable (including, but not limited to,
wages, salaries, bonuses or any other remuneration) or to become payable to any
officer or employee being paid an annual base salary of $100,000 or more, or any
director of Gentek Holdings or any of its Subsidiaries, except for (i) such
increases that were required in accordance with the terms of any Employee Plan
set forth in the Disclosure Schedule, or (ii) salary increases made in the
ordinary course of business and consistent with the past practices of Gentek
Holdings and its Subsidiaries;
(g) made any bonus, profit sharing, pension, retirement or insurance
payment, distribution or arrangement to or with any officer, employee or agent
being paid an annual base salary of $100,000 or more, or any director of the
Gentek Holdings or any of its Subsidiaries, except for (i) payments that were
accrued on the Reference Balance Sheet or (ii) were required by the terms of any
Employee Plan set forth in the Disclosure Schedule;
(h) acquired any business or Person, by merger or consolidation,
purchase of substantial assets or equity interests, or by any other manner, in a
single transaction or a series of related transactions; or
(i) entered into any contract, agreement or letter of intent (whether
or not binding) with respect to, or otherwise committed or agreed, whether or
not in writing, to do any of the foregoing matters set forth in Section 4.07(a)
through Section 4.07(h), inclusive.
Section 4.08. Litigation. Other than the Pending Sherwin-Williams
Litigation, there are no Actions by or against Gentek Holdings or any of its
Subsidiaries, or
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affecting any of the Assets of the Business, pending before, or to the knowledge
of Gentek Holdings or any of its Subsidiaries, threatened to be brought by or
before, any Governmental Authority that have a Material Adverse Effect. No
claim, action, proceeding or investigation is pending or, to the knowledge of
Gentek Holdings or any of its Subsidiaries, threatened, which seeks to delay or
prevent the consummation of, or which could reasonably be expected to materially
adversely affect, the ability of Gentek Holdings or any of its Subsidiaries to
consummate the transactions contemplated by this Agreement. Neither Gentek
Holdings nor any of its Subsidiaries, nor any of their respective assets or
properties, is subject to any Governmental Order, nor, to the knowledge of such
Person, are there any Governmental Orders threatened to be imposed by any
Governmental Authority that have a Material Adverse Effect.
Section 4.09. Compliance with Laws. Gentek Holdings and each of its
Subsidiaries have conducted and continue to conduct the Business in accordance
with, and have otherwise complied and are in compliance with, all Laws and
Governmental Orders applicable to Gentek Holdings and such Subsidiaries, as the
case may be, or the Assets or the Business, except as does not have a Material
Adverse Effect, and neither Gentek Holdings nor any of its Subsidiaries are in
violation of any such Law or Governmental Order, except as does not have a
Material Adverse Effect.
Section 4.10. Environmental Matters. Except as set forth on Section 4.10 of
the Disclosure Schedule, Gentek Holdings and its Subsidiaries have obtained all
Environmental Permits and are in compliance in all material respects with the
requirements of such Environmental Permits and with all applicable Environmental
Laws. There are no material past, pending or, to the knowledge of such Person,
threatened Environmental Claims against Gentek Holdings or any of its
Subsidiaries or any of the Assets that are reasonably likely to result in a
material liability to Gentek Holdings or its Subsidiaries. There are no facts,
circumstances or conditions relating to the past or present business or
operations of Gentek Holdings or any of its Subsidiaries or any of the Assets
(including the disposal of any wastes, hazardous substances or other materials,
the existence of any contractual obligations, or any other matters in respect of
the past or present business or operations of Gentek Holdings and its
Subsidiaries or any of their predecessors) that would reasonably be expected to
give rise to any Liability that has a Material Adverse Effect. All material
environmental audits and reports relevant to the Owned Real Property and the
Leased Real Property in the possession of Gentek Holdings or any of its
Subsidiaries have been made available to Purchaser.
Section 4.11. Material Contracts.
(a) Section 4.11 of the Disclosure Schedule sets forth a complete and
accurate list of each contract and agreement (each contract and agreement listed
in Section 4.11 of the Disclosure Schedule being referred to herein as a
"Material Contract" and, collectively, the "Material Contracts") to which Gentek
Holdings or any of its Subsidiaries is a party or by which any of them is bound,
whether or not made in the ordinary course of business, that:
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(i) contain restrictions with respect to the payment of dividends
or any other distribution in respect of the capital stock or other equity
interests of such Person;
(ii) relate to capital expenditures or other purchases of
material, supplies, equipment or other assets or properties in excess of
$250,000 individually or $1,000,000 in the aggregate;
(iii) relate to a loan (other than accounts receivable from trade
debtors in the ordinary course of business) to, or investment in, any Person;
(iv) relate to Indebtedness;
(v) grant or evidence an Encumbrance on any properties or assets
of such Person, other than a Permitted Encumbrance;
(vi) relate to any management, consulting or financial advisory
services, or any other similar service, and any contracts with any investment or
commercial bank;
(vii) limits the ability of such Person to engage in any line of
business or to compete with any other Person, other than pursuant to customary
commercial arrangements with suppliers, distributors, vendors and other similar
partners entered into in the ordinary course of business and which do not have a
Material Adverse Effect;
(viii) is with any Seller or any other affiliate of such Person
(other than this Agreement and any agreement or instrument entered into pursuant
to this Agreement) or any current officer or director of Gentek Holdings or any
of its Subsidiaries or any of their respective affiliates;
(ix) provides for the future disposition or acquisition of assets
or properties (other than (A) in the ordinary course of business to any
customers of Gentek Holdings or any of its Subsidiaries, or (B) as contemplated
by clause (ii) above) with a value in excess of $100,000 in any individual case,
or any merger, consolidation or similar business combination transaction,
whether or not enforceable (including letters of intent);
(x) provides for the sale or other supply of products by Gentek
Holdings or any of its Subsidiaries to any of the twenty (20) largest customers
of Gentek Holdings and its Subsidiaries during the fiscal year ended December
31, 2002;
(xi) provides for any joint venture, partnership, strategic
alliance, shareholders' agreement, co-marketing, co-promotion, co-packaging,
joint development or similar arrangement;
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(xii) was entered into on or after June 30, 2003 and provides for
the resolution or settlement of any actual or threatened Action or other dispute
involving an amount in controversy that is equal to or greater than $50,000;
(xiii) includes a standstill or other similar arrangement; or
(xiv) involve the lease or sublease of personal property to which
such Person is a party (as lessee or lessor) with a base rental payment in
excess of $100,000 annually or $300,000 over the life of such lease or sublease,
as the case may be.
(b) Each Material Contract is in full force and effect and there
exists no material default or event of material default by Gentek Holdings or
any of its Subsidiaries or, to the knowledge of Gentek Holdings or any of its
Subsidiaries, any other party to any such Material Contract with respect to any
material term or provision thereof.
Section 4.12. Intellectual Property. Section 4.12 of the Disclosure
Schedule contains a complete and accurate list of each current item of
Registered IP Rights and each and every license or agreement, which grants
rights under Owned Intellectual Property, or Licensed Intellectual Property.
Sellers' Representative has, or has caused to be, made available to Purchaser
copies of all material licenses or material sublicenses relating to the Owned
Intellectual Property or Licensed Intellectual Property. Each item of Owned
Intellectual Property is owned free and clear of all Encumbrances, except
Permitted Encumbrances, and each item of Licensed Intellectual Property licensed
to Gentek Holdings or any of its Subsidiaries is licensed under a subsisting
license or sublicense which is to knowledge of Gentek Holdings and its
Subsidiaries valid and in full force and effect and enforceable in accordance
with its terms and the transactions contemplated by this Agreement will not
breach or violate the terms thereof. None of Gentek Holdings or any of its
Subsidiaries is in material breach or default of any license or sublicense
listed in Section 4.12 of the Disclosure Schedule. To the knowledge of Gentek
Holdings and its Subsidiaries, except as set forth on Section 4.12 of the
Disclosure Schedule, the Owned Intellectual Property and Licensed Intellectual
Property include all IP Rights used and material to Gentek Holdings or any of
its Subsidiaries to conduct their respective Businesses as and where conducted
on the Closing Date and as contemplated to be conducted in the near term. To the
knowledge of Gentek Holdings and its Subsidiaries, none of the business
operations of Gentek Holdings or any of its Subsidiaries (including, without
limitation, the manufacturing, marketing licensing, sale or distribution of
products and the general conduct and operation of their businesses) violate,
infringe or misappropriate any IP Rights of any Person. Each item of Owned
Intellectual Property listed on Section 4.12 of the Disclosure Schedule, shown
as registered, filed, issued or applied for, has been duly filed in, registered
in, issued by or applied for with, the official governmental registrars and/or
issuers (or officially recognized issuers) of patents, trademarks, copyrights or
Internet domain names (as applicable), in the various jurisdictions indicated on
such item, and except as set forth on Section 4.12 of the Disclosure Schedule,
each such registration, filing, issuance and/or application (i) has not been
abandoned or canceled,
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(ii) has been maintained effective by all requisite filings, renewals and
payments, and (iii) to the knowledge of Gentek and its Subsidiaries, remains in
full force and effect as of the Closing Date. Except as set forth in Section
4.12 of the Disclosure Schedule, none of Gentek Holdings or any of its
Subsidiaries has (1) received any notice of any claim, or a written threat of
any claim, from any third party within the past two years, and no third party
claims are pending, alleging an infringement, violation or misappropriation of
any intellectual property rights, and (2) nor have any of them made any claim
against any third party of a violation, or misappropriation or infringement of
Owned Intellectual Property which claim is pending. Gentek Holdings and each of
its Subsidiaries has internal policies and taken steps reasonably sufficient to
protect and preserve the confidentiality of those Trade Secrets it wishes to
maintain as confidential.
Section 4.13. Real Property.
(a) Section 4.13(a) of the Disclosure Schedule lists and notes the
address, including the name of the record or registered title owner of each
parcel of Real Property and the address and landlord and tenant for each Leased
Real Property. Gentek Holdings or its Subsidiaries are the legal and beneficial
owners of and have good and valid title in fee simple to the Owned Real Property
and Gentek Holdings or its Subsidiaries have valid leasehold interests that are
in full force and effect in the Leased Real Property. Each parcel of Owned Real
Property is owned free and clear of all Encumbrances (other than Permitted
Encumbrances) and each parcel of Leased Real Property is leased under a valid
and subsisting lease, sublease, offer to lease or agreement to lease. Purchaser
has been provided or afforded access to copies of each Real Property Document
and all written amendments thereto relating to the Real Property. Each Real
Property Document relating to the Leased Real Property is in full force and
effect, and none of Gentek Holdings or any of its Subsidiaries or any other
party thereto is in default in any material respect under any Real Property
Document.
(b) There is no pending or, to the knowledge of Gentek Holdings or any
of its Subsidiaries, threatened condemnation, eminent domain or similar
proceeding with respect to, any Real Property.
Section 4.14. Assets. Gentek Holdings and each of its Subsidiaries owns,
leases or has the exclusive legal right to use all of the material properties
and assets (other than IP Rights) used in their respective conduct of the
Business and, with respect to contract rights, are, as the case may be, party to
and enjoy the right to the benefits of all material contracts, agreements and
other arrangements used in or relating to their respective conduct of the
Business (all such properties, assets and rights being referred to herein as the
"Assets"). Gentek Holdings and its Subsidiaries have good and marketable title
to, or, in the case of leased or subleased Assets, valid and subsisting
leasehold interests in, all of the Assets, free and clear of all Encumbrances,
except Permitted Encumbrances.
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Section 4.15. Employee Benefit Matters.
(a) Section 4.15(a) of the Disclosure Schedule contains a complete and
accurate list of all "employee benefit plans" within the meaning of ss. 3(3) of
ERISA, all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other employee benefit
plans, programs and arrangements, and all employment agreements (except to the
extent an employment agreement provides for "at-will" employment and does not
provide for severance payments), in each case for the benefit of, or relating
to, current employees and/or former employees of Gentek Holdings or any of its
Subsidiaries and any such plans, programs and arrangements of any person (as
defined in ss. 3(9) of ERISA) which together with Gentek Holdings or any of its
Subsidiaries would be deemed to be a "single employer" within the meaning of ss.
414 of the Code (any such Person, an "ERISA Affiliate"), but excluding any
Canadian Employee Plan as defined in Section 4.15(n) (collectively, the "U.S.
Employee Plans"). All U.S. Employee Plans are in compliance in all respects with
the requirements prescribed by applicable Law currently in effect with respect
thereto, and Gentek Holdings and its Subsidiaries have performed all obligations
required to be performed by any of them under, and are not in any respect in
default under or in violation of, any of the U.S. Employee Plans, in each case,
except as would not reasonably be expected to result in material liability to
Gentek Holdings or any of its Subsidiaries. Each U.S. Employee Plan intended to
be qualified under ss. 401(a) of the Code and each trust intended to qualify
under ss. 501(a) of the Code has either applied for, prior to the expiration of
the requisite period under applicable Treasury Regulations or IRS
pronouncements, or obtained a favorable determination notification advisory
and/or opinion letter, as applicable, as to its qualified status from the IRS or
still has a remaining period of time under applicable Treasury Regulations or
IRS pronouncements in which to apply for such letter and to make any amendments
necessary to obtain a favorable determination. To the knowledge of Gentek
Holdings and its Subsidiaries, nothing has occurred since the date of the most
recent determination that could reasonably be expected to cause any such U.S.
Employee Plan or trust to fail to qualify under ss. 401(a) or 501(a) of the
Code. Purchaser has been provided or afforded access to copies of (i) all U.S.
Employee Plans and, where applicable, summary plan descriptions and summaries of
material modifications with respect to the U.S. Employee Plans, (ii) the annual
report on IRS Form 5500-Series, including any attachments thereto, for the 2000
and 2001 plan years, and (iii) all minutes with respect to the meetings of the
benefit committees of the U.S. Employee Plans since January 1, 2000.
(b) No complete or partial termination of any U.S. Employee Plan which
is subject to Title IV of ERISA has occurred or is expected to occur, and, to
the knowledge of Gentek Holdings and its Subsidiaries, no proceedings have been
instituted and no condition exists and no event has occurred that could
constitute grounds under Title IV of ERISA to terminate or appoint a trustee to
administer any U.S. Employee Plan. No U.S. Employee Plan subject to ss. 412 or
418B of the Code or ss. 302 of ERISA has incurred any accumulated funding
deficiency within the meaning of ss. 412 or 418B of the Code or ss. 302 of
ERISA, respectively, or has applied for or obtained a waiver from the Internal
Revenue Service of any minimum funding requirement or an
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extension of any amortization period under ss. 412 of the Code or ss. 303 or 304
of ERISA. Except for payments of premiums to the Pension Benefit Guaranty
Corporation (the "PBGC"), which have been paid in full, none of Gentek Holdings,
any of its Subsidiaries or any ERISA Affiliate has incurred any liability in the
past six years (including any indirect, contingent or secondary liability) to
the PBGC in connection with any U.S. Employee Plan covering any active, retired
or former employees or directors of Gentek Holdings or any of its Subsidiaries,
including, without limitation, any liability under ss. 4069 or 4212(c) of ERISA
or any penalty imposed under ss. 4071 of ERISA, or ceased operations at any
facility or withdrawn from any such U.S. Employee Plan in a manner which could
subject it to liability under ss. 4062, 4063 or 4064 of ERISA, or knows of any
facts or circumstances that might give rise to any material liability of Gentek
Holdings, any of its Subsidiaries or any ERISA Affiliate to the PBGC under Title
IV of ERISA that could reasonably be anticipated to result in any claims being
made against the Purchaser by the PBGC.
(c) None of Gentek Holdings, any of its Subsidiaries or any ERISA
Affiliate has incurred any withdrawal liability (including any contingent or
secondary withdrawal liability) within the meaning of ss. 4201 or 4204 of ERISA
to any U.S. Employee Plan which is a "multiemployer plan" (as such term is
defined in ss. 4001(a)(3) of ERISA) ("Multiemployer Plan"), and, to the
knowledge of Gentek Holdings and its Subsidiaries, no event has occurred and no
conditions or circumstance has existed, that presents a material risk of the
occurrence of any withdrawal from or the partition, termination, reorganization
or insolvency of any such Multiemployer Plan which could result in any material
liability of Gentek Holdings, any of its Subsidiaries or any ERISA Affiliate to
any such Multiemployer Plan. Except as set forth on Section 4.15(c) of the
Disclosure Schedule, none of Gentek Holdings, any of its Subsidiaries or any
ERISA Affiliate has, within the past six years, maintained, established,
sponsored, participated in, contributed to, or had any obligation to contribute
to any Multiemployer Plan.
(d) Neither Gentek Holdings nor any of its Subsidiaries maintains any
U.S. Employee Plan which is a "group health plan" (as such term is defined in
ss. 5000(b)(1) of the Code or ss. 607(1) of ERISA) that has not been
administered and operated in all respects in compliance with the applicable
requirements of Part 6 of Subtitle B of Title I of ERISA and ss. 4980B of the
Code and neither Gentek Holdings nor any of its Subsidiaries is subject to any
liability, including, without limitation, additional contributions, fines,
taxes, penalties or loss of tax deduction as a result of such administration and
operation, to the extent any such failures would reasonably be expected to
result, individually or in the aggregate, in any material liability to Gentek
Holdings and its Subsidiaries. No U.S. Employee Plan, which is such a group
health plan, is a "multiple employer welfare arrangement," within the meaning of
ss. 3(40) of ERISA.
(e) Neither Gentek Holdings nor any of its Subsidiaries maintains any
U.S. Employee Plan (whether qualified or non-qualified under ss. 401(a) of the
Code) providing for post-employment or retiree health, life insurance and/or
other welfare benefits and having unfunded liabilities, except as may be
required by COBRA
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or other applicable similar statute. Neither Gentek Holdings nor any of its
Subsidiaries has any unfunded liabilities pursuant to any U.S. Employee Plan
that is a pension plan (within the meaning of ss. 3(2) of ERISA) and is not
intended to be qualified under ss. 401(a) of the Code.
(f) Neither Gentek Holdings nor any of its Subsidiaries has incurred
any material liability for any tax or excise tax arising under Chapter 43 of the
Code and no event has occurred and, to the knowledge of Gentek Holdings and its
Subsidiaries, no condition or circumstance has existed that could give rise to
any such liability.
(g) No asset of Gentek Holdings or any of its Subsidiaries is subject
to any lien arising under ss. 302(f) of ERISA or ss. 412(n) of the Code, and no
event has occurred and no condition or circumstance has existed that is
reasonably likely to give rise to any such lien. Neither Gentek Holdings nor any
of its Subsidiaries has been required to provide any security under ss. 307 of
ERISA or ss. 401(a)(29) or 412(f) of the Code, and no event has occurred and no
condition or circumstance has existed that is reasonably likely to give rise to
any such requirement to provide any such security.
(h) There are no actions, suits, claims or disputes pending, or, to
the knowledge of Gentek Holdings and its Subsidiaries, threatened with respect
to any U.S. Employee Plan or the assets of any such plan (other than routine
claims for benefits and appeals of denied routine claims). No civil or criminal
action brought pursuant to the provisions of Title I, Subtitle B, Part 5 of
ERISA is pending or, to the knowledge of Gentek Holdings and its Subsidiaries,
threatened, anticipated or expected to be asserted against Gentek Holdings or
any of its Subsidiaries or, to the knowledge of Gentek Holdings and its
Subsidiaries, any fiduciary of any U.S. Employee Plan, in any case with respect
to any U.S. Employee Plan. No U.S. Employee Plan has been, within the past six
years, the direct subject of an audit, investigation or examination by any
governmental or quasi-governmental agency that would reasonably be expected to
result in material liability to Gentek Holdings and its Subsidiaries.
(i) Full payment has been made of all amounts which Gentek Holdings or
any of its Subsidiaries is required, under applicable law or under any U.S.
Employee Plan or any agreement relating to any U.S. Employee Plan to which
Gentek Holdings or any of its Subsidiaries is a party, to have paid as
contributions or premiums thereto as of the last day of the most recent fiscal
year of such U.S. Employee Plan ended prior to the date hereof. All such
contributions to any U.S. Employee Plan have been fully deducted for income tax
purposes and, to the knowledge of Gentek Holdings and its Subsidiaries, no such
deduction has been challenged or disallowed by any Governmental Authority,
except as would not reasonably be expected to result in material liability to
Gentek Holdings and its Subsidiaries. Benefits under all U.S. Employee Plans
are, in all material respects, as represented in the documents which have been
provided or made available to Purchaser and have not been increased subsequent
to the date as of which documents have been provided or made available to
Purchaser.
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(j) As of January 1, 2003, the value of the accumulated benefit
obligations (based upon actuarial assumptions which are in the aggregate
reasonable and which have been furnished to the Purchaser) under each U.S.
Employee Plan which is covered by Title IV of ERISA and which is a "single
employer plan" (as such term is defined in ss. 4001(a)(15) of ERISA) ("Single
Employer Plan") did not exceed the current fair value of the assets of each such
Single Employer Plan allocable to such accrued benefits, and since the Reference
Balance Sheet Date, there has been (i) no material adverse change in the
financial condition of any Single Employer Plan, (ii) no change in the actuarial
assumptions with respect to any Single Employer Plan and (iii) no increase in
benefits under any Single Employer Plan as a result of plan amendments, written
interpretations or announcements (whether written or not) which individually or
in the aggregate, would result in the current value of any Single Employer
Plan's accrued benefits exceeding the current value of all such Single Employer
Plan's assets. No U.S. Employee Plan holds as an asset any interest in any
annuity contract, guaranteed investment contract or any other investment or
insurance contract, policy or instrument issued by an insurance company that, to
the knowledge of Gentek Holdings and its Subsidiaries, is the subject of
bankruptcy, conservatorship, insolvency, liquidation, rehabilitation or similar
proceedings.
(k) No "reportable event" (as such term is defined in ss. 4043 of
ERISA) for which the thirty-day notice requirement has not been waived by the
PBGC has occurred within the past six years or is reasonably expected to occur
with respect to any U.S. Employee Plan. Neither Gentek Holdings nor any of its
Subsidiaries nor any of their respective directors, officers, employees or, to
the best knowledge and belief of Sellers, Gentek Holdings and its Subsidiaries,
other persons who participate in the operation of any U.S. Employee Plan or
related trust or funding vehicle, has engaged in any transaction with respect to
any U.S. Employee Plan or breached any applicable fiduciary responsibilities or
obligations under Title I of ERISA that would subject any of them to a tax,
penalty or liability for prohibited transactions or breach of any obligations
under ERISA or the Code that would, individually or in the aggregate, reasonably
be expected to result in material liability to Gentek Holdings and its
Subsidiaries.
(l) The execution of this Agreement and the consummation of the
transactions contemplated hereby do not constitute a triggering event under any
U.S. Employee Plan which (either alone or upon the occurrence of termination of
employment in connection therewith) will or may result in any payment (whether
of severance pay or otherwise), "parachute payment" (as such term is defined in
ss. 280G of the Code), acceleration, vesting or increase in benefits to any
employee or former employee or director of Gentek Holdings or any of its
Subsidiaries. No U.S. Employee Plan provides for the payment of severance,
termination, change in control or similar-type payments or benefits.
(m) The Options constitute all of the outstanding stock options to
purchase Shares heretofore granted under any stock option plan, whether or not
vested or exercisable.
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(n) Section 4.15(n) of the Disclosure Schedule contains a complete and
accurate list of all material bonus, stock option, stock purchase, incentive,
pay equity, deferred compensation, pension, supplemental retirement, severance
and other employee benefit plans, programs or arrangements, and all material
employment agreements (except to the extent an employment agreement provides for
"at-will" employment and does not provide for severance payments), in each case
for the benefit of, or relating to, current employees and former employees of
Gentek Canada (collectively, the "Canadian Employee Plans"). All Canadian
Employee Plans are in compliance in all material respects with the requirements
prescribed by applicable Law currently in effect with respect thereto, and
Gentek Canada (and any relevant pension committee) has performed all material
obligations required to be performed by it under, and is not in any material
respect in default under or in violation of, the Canadian Employee Plans. Each
Canadian Employee Plan intended to be registered under the Income Tax Act
(Canada) has been so registered thereunder and the applicable provincial
legislation, and, to the knowledge of Gentek Holdings and its Subsidiaries,
nothing has occurred that could reasonably be expected to adversely affect the
tax-exempt status of such Canadian Employee Plans or the funds held thereunder
or subject such funds to any tax or penalty that would reasonably be expected to
result in material liability to Gentek Holdings and its Subsidiaries. There have
been no withdrawals or transfers of assets from any Canadian Employee Plan,
including, without limitation, the taking of any contribution holidays, except
in accordance with the terms of such Canadian Employee Plans and applicable Law,
except as would not reasonably be expected to result in material liability to
Gentek Holdings or any of its Subsidiaries. Purchaser has been provided or
afforded access to copies of all Canadian Employee Plans and, where applicable,
summary plan descriptions as filed with Governmental Authorities.
(o) No termination or windup of any of the Canadian Employee Plans has
occurred or is expected to occur, and no proceedings have been instituted and,
to the knowledge of Gentek Holdings and its Subsidiaries, no condition exists
and no event has occurred that could constitute grounds under applicable Laws to
terminate or windup or appoint a trustee to administer any Canadian Employee
Plan.
(p) Gentek Canada does not maintain any Canadian Employee Plan
providing for post-employment or retiree health, life insurance and/or other
welfare benefits and having unfunded liabilities, except as may be required by
statute.
(q) There are no actions, suits, claims or disputes pending, or, to
the knowledge of Gentek Holdings and its Subsidiaries, threatened with respect
to any Canadian Employee Plan or the assets of any such plan (other than routine
claims for benefits and appeals of denied routine claims). No Canadian Employee
Plan has been, within the past six years, the direct subject of an audit,
investigation or examination by any governmental or quasi-governmental agency
that would reasonably be expected to result in material liability to Gentek
Holdings and its Subsidiaries.
(r) Full payment has been made of all amounts which Gentek Canada is
required, under applicable Laws or under any Canadian Employee Plan or
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any agreement relating to any Canadian Employee Plan to which Gentek Canada is a
party, to have paid as contributions or premiums thereto as of the last day of
the most recent fiscal year of such Canadian Employee Plan ended prior to the
date hereof.
(s) As of the date of this Agreement, the current value of the
accumulated benefit obligations (based upon actuarial assumptions which are in
the aggregate reasonable and which have been furnished to the Purchaser) under
each Canadian Employee Plan which is substantially similar to a Single Employer
Plan did not exceed the current fair value of the assets of each such Canadian
Employee Plan allocable to such accrued benefits, and since the Reference
Balance Sheet Date, there has been (i) no material adverse change in the
financial condition of any such Canadian Employee Plan, (ii) no change in the
actuarial assumptions with respect to any such Canadian Employee Plan, and (iii)
no increase in benefits under any such Canadian Employee Plan as a result of
plan amendments, interpretations or announcements (whether written or not),
which individually or in the aggregate, would result in the current value of any
Canadian Employee Plan's accrued benefits exceeding the current value of all
such Canadian Employee Plan's assets.
Section 4.16. Labor Matters. Section 4.16 of the Disclosure Schedule
contains a complete and accurate list of each collective bargaining or other
labor union contract to which Gentek Holdings or any of its Subsidiaries is a
party (the "Collective Bargaining Agreements") and no other union is currently
certified and no union or other organizational activity that would be subject to
the National Labor Relations Act (20 U.S.C. ss. 151 et seq.), the Ontario Labour
Relations Act, the Quebec Labour Code or other Law exists or, to the knowledge
of Gentek Holdings or any of it Subsidiaries, is threatened with respect to
Gentek Holdings' or any of its Subsidiaries' operations. Each Collective
Bargaining Agreement is in full force and effect, and none of Gentek Holdings or
its Subsidiaries is in material breach or default of any such Collective
Bargaining Agreement. There are (i) no material unfair labor practice complaints
or other material labor controversies pending or threatened against Gentek
Holdings or any of its Subsidiaries, (ii) to the knowledge of Gentek Holdings or
any of its Subsidiaries, no current activities or proceedings of any labor union
(or representatives thereof) to organize any unorganized employees of Gentek
Holdings or any of its Subsidiaries, (iii) as of the date hereof, no strikes,
slowdowns, work stoppages, lockouts, or, to the knowledge of Gentek Holdings or
any of its Subsidiaries, threats thereof, by or with respect to any employees of
Gentek Holdings or any of its Subsidiaries, (iv) no material grievance or
arbitration proceeding arising out of or under a collective bargaining agreement
or labor contract is pending or, to the knowledge of Gentek Holdings or any of
its Subsidiaries, is threatened with respect to the operations of Gentek
Holdings or any of its Subsidiaries, (v) none of Gentek Holdings or any of its
Subsidiaries has any Equal Employment Opportunity Commission charges or other
claims of employment discrimination pending or, to the knowledge of Gentek
Holdings or any of its Subsidiaries, currently threatened against them, (vi) no
wage and hour department investigation has been made of Gentek Holdings or any
of its Subsidiaries that would result in material liability to Gentek Holdings
and its Subsidiaries, (vii) there are no occupational health and safety claims
against Gentek Holdings or any of its Subsidiaries that are reasonably expected
to have a Material Adverse Effect, (viii) within the past
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year, neither Gentek Holdings nor any of its Subsidiaries have incurred any
liability or obligation under the Worker Adjustment and Retraining Notification
Act or any similar state or local law that remains unsatisfied, (ix) none of the
current employees or former employees of Gentek U.S. has suffered an "employment
loss" (as defined in the WARN Act) since ninety (90) calendar days prior to the
date hereof, and (x) Gentek Canada is in compliance in all material respects
with all applicable pay equity Laws.
Section 4.17. Taxes.
(a) Tax Returns. Gentek Holdings and its Subsidiaries have timely
filed or will timely file (taking into account any applicable extension of time
within which to file) with the appropriate taxing authorities all material tax
returns, statements, forms and reports (including elections, declarations,
disclosures, schedules, estimates and information Tax returns) for Taxes ("Tax
Returns") that are required to be filed by, or with respect to, Gentek Holdings
and its Subsidiaries on or prior to the Closing Date. The Tax Returns have
accurately reflected and will accurately reflect all material liability for
Taxes of Gentek Holdings and its Subsidiaries for the periods covered thereby.
(b) Payment of Taxes. All material Taxes and Tax liabilities due by or
with respect to the income, assets or operations of Gentek Holdings and its
Subsidiaries for all taxable years or other taxable periods that end on or
before the Closing Date and, with respect to any taxable year or other taxable
period beginning on or before and ending after the Closing Date, the portion of
such taxable year or period ending on and including the Closing Date
("Pre-Closing Period") have been timely paid or will be timely paid in full on
or prior to the Closing Date or to the extent not yet due and payable, have been
or will be accrued in Closing Working Capital or Closing Net Indebtedness on the
Final Closing Adjustment Amount Statement.
(c) Other Tax Matters.
(i) (A) None of Gentek Holdings or any of its Subsidiaries is or
has been the subject of an audit or other examination of Taxes by the tax
authorities of any nation, state or locality, has received written notification
that such an audit is contemplated or pending and, to the knowledge of Gentek
Holdings or any of its Subsidiaries, no such audit is contemplated or pending;
and (B) none of Gentek Holdings or any of its Subsidiaries has received any
notices, reassessments or requests for examination from any taxing authority.
(ii) None of Gentek Holdings or any of its Subsidiaries, as of
the Closing Date, (A) has entered into an agreement or waiver or been requested
to enter into an agreement or waiver extending any statute of limitations
relating to the assessment, payment or collection of Taxes of Gentek Holdings or
any of its Subsidiaries that has not expired, (B) is presently contesting the
Tax liability of Gentek Holdings or any of its Subsidiaries before any court,
tribunal or agency, (C) has granted a power-of-attorney relating to Tax matters
to any person or (D) has applied for and/or
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received a ruling or determination from a taxing authority regarding a past or
prospective transaction of Gentek Holdings or any of its Subsidiaries.
(iii) None of Gentek Holdings or any of its Subsidiaries has been
included in any "consolidated," "unitary" or "combined" Tax Return provided for
under the law of the United States, any foreign jurisdiction or any state or
locality with respect to Taxes for any taxable period for which the statute of
limitations has not expired (other than a group of which Gentek Holdings and one
or more of its Subsidiaries are the only members).
(iv) All Taxes which Gentek Holdings or any of its Subsidiaries
is (or was) required by law to withhold or collect in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder or
other third party have been duly withheld or collected, and have been timely
paid over to the proper authorities to the extent due and payable.
(v) No written claim that has not been resolved has ever been
made by any taxing authority in a jurisdiction where Gentek Holdings or any of
its Subsidiaries does not file Tax Returns that Gentek Holdings or any of its
Subsidiaries is or may be subject to taxation by that jurisdiction.
(vi) There are no tax sharing, allocation, indemnification or
similar agreements in effect as between Gentek Holdings or any of its
Subsidiaries or any predecessor or affiliate thereof and any other party
(including Sellers and any predecessors or affiliates thereof) under which
Purchaser or Gentek Holdings or any of its Subsidiaries could be liable for any
Taxes or other claims of any party.
(vii) None of Gentek Holdings or any of its Subsidiaries has
applied for, been granted, or agreed to any accounting method change for which
it will be required to take into account any adjustment under ss. 481 of the
Code or any similar provision of the Code or the corresponding tax laws of any
nation, state or locality.
(viii) There are no deferred intercompany transactions between
Gentek Holdings or any of its Subsidiaries and there is no excess loss account
(within the meaning of Treasury Regulations ss. 1.1502-19 with respect to the
stock of Gentek Holdings or any of its Subsidiaries which will or may result in
the recognition of income upon the consummation of the transaction contemplated
by this Agreement.
(ix) None of Gentek Holdings or any of its Subsidiaries has been
a "United States real property holding corporation" within the meaning of ss.
897(c)(2) of the Code at any time during the five-year period ending on the date
hereof.
Section 4.18. Accounts, Lockboxes, Safe Deposit Boxes; Powers of Attorney.
Section 4.18 of the Disclosure Schedule contains a complete and accurate list of
(i) the name of each bank, savings and loan association or other financial
institution in which Gentek Holdings or any of its Subsidiaries has an account,
lockbox or safe deposit box, and (ii) the number of any such account. Section
4.18 of the Disclosure Schedule
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contains a complete and accurate list of all Persons holding a power of attorney
from Gentek Holdings or any of its Subsidiaries.
Section 4.19. Warranty Claims. Other than the Steel Peel Claims, as of the
date hereof, there are no pending claims by third parties alleging that any
products sold by Gentek Holdings or any of its Subsidiaries do not meet the
applicable product warranty and that exceed $7,000 in any individual case or,
with respect to any series of related claims, $50,000 in the aggregate.
Section 4.20. Steel Peel Claims. Gentek Holdings and its Subsidiaries have
made available to Purchaser and its representatives all books, records,
financial statements, actuarial reports (and supporting data) and other
documents relating to the Steel Peel Claims and Subject Products.
Section 4.21. Permits. Gentek Holdings and each of its Subsidiaries have
obtained and possess all Permits and have made all registrations or filings with
or notices to any Governmental Authority necessary for the lawful conduct of
their businesses as presently conducted, or necessary for the lawful ownership
of their properties and assets or the operation of their businesses as presently
conducted, other than those the failure of which to obtain, possess or make do
not have a Material Adverse Effect. Gentek Holdings and each of its Subsidiaries
is in compliance with all such Permits, except for such non-compliance as does
not have a Material Adverse Effect.
Section 4.22. Interests of Affiliates. There are no contracts, agreements
or other obligations between Gentek Holdings or any of its Subsidiaries, on the
one hand, and any affiliates of Gentek Holdings or any of its Subsidiaries
(other than Gentek Holdings and its Subsidiaries), or any of the Sellers, on the
other hand. None of the directors or officers of Gentek Holdings or any of its
Subsidiaries, nor Sellers' Representative or any of its affiliates, has any
material financial interest in, or is a director or officer of, any supplier or
competitor of Gentek Holdings or any of its Subsidiaries.
Section 4.23. Books and Records. The respective minute books of Gentek
Holdings and each of its Subsidiaries, in the form made available to Purchaser
and its representatives, accurately reflect in all material respects the
meetings of the respective boards of directors and stockholders of each such
Person presented therein.
Section 4.24. Insurance. Section 4.24 contains a complete and accurate list
of each currently effective insurance policy covering Gentek Holdings or any of
its Subsidiaries, any of their respective properties, assets or employees and/or
the Business (collectively, the "Insurance Policies"). Section 4.24 of the
Disclosure Schedule contains a complete and accurate list of (i) all claims by
Gentek Holdings or any of its Subsidiaries under the Insurance Policies that are
pending as of the date hereof, and (ii) the claims history of Gentek Holdings
and each of its Subsidiaries during the period commencing on January 1, 2001
through the date hereof, whether under the Insurance
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Policies or any other insurance policies maintained by Gentek Holdings or any of
its Subsidiaries during such period.
Section 4.25. Sherwin-Williams Counter-Claims. None of Sellers'
Representative, Gentek Holdings, Gentek U.S. or Gentek Canada is aware of any
basis for any claim, counter-claim or other Action by Sherwin-Williams against
Gentek Holdings or any of its Subsidiaries, other than the counter-claim
currently pending in the Pending Sherwin-Williams Litigation.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Sellers to enter into this Agreement, Purchaser hereby
represents and warrants to each of the Sellers as follows:
Section 5.01. Organization and Authority. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all necessary corporate power and authority to execute and
deliver this Agreement and the other documents to be executed and delivered by
Purchaser as contemplated hereby, to carry out its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of the this Agreement and the other documents to be
executed and delivered by Purchaser as contemplated hereby, the performance by
Purchaser of all of its obligations hereunder and thereunder and the
consummation by Purchaser of the transactions contemplated thereby have been
duly authorized and approved by all requisite corporate action on the part of
Purchaser and no other corporate or other action is necessary to authorize the
execution, delivery and performance of this Agreement and such other documents
by Purchaser and the consummation of the transactions contemplated hereby and
thereby. This Agreement has been, and as of the Closing each of the other
documents to be executed and delivered by Purchaser as contemplated hereby will
have been, duly executed and delivered by Purchaser, and (assuming due
authorization, execution and delivery by each party hereto and thereto) this
Agreement constitutes, and such other documents to which Purchaser is a party
will constitute as of the Closing, the legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its respective
terms, except to the extent that their enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting the enforcement of creditors rights generally and to general equitable
principles.
Section 5.02. No Conflict. Assuming compliance with the notification
requirements of the HSR Act, the Competition Act and the Investment Canada Act
and the making and obtaining of all filings, notifications, consents, approvals,
authorizations and other actions referred to in Section 5.03, the execution,
delivery and performance of this Agreement and the other documents to be
executed and delivered by Purchaser as contemplated hereby, and the consummation
by Purchaser of the transactions
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contemplated hereby and thereby, does not and will not (i) violate, conflict
with or result in the breach of any provision of the charter or by-laws of
Purchaser, (ii) conflict with or violate any Law or Governmental Order
applicable to Purchaser or (iii) conflict in any material respect with, or
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, any material note,
bond, mortgage, deed of trust, indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument or arrangement to which Purchaser
is a party or by which any of such assets or properties is bound or affected, in
any such case, which would reasonably be expected to have a material adverse
effect on the ability of Purchaser to consummate the transactions contemplated
by this Agreement and the other documents to be executed and delivered as
contemplated hereby.
Section 5.03. Governmental Consents and Approvals. The execution, delivery
and performance of this Agreement and the other documents to be executed and
delivered by Purchaser as contemplated hereby do not and will not require any
consent, approval, authorization or other order of, action by, filing with, or
notification to, any Governmental Authority, except the notification
requirements of the HSR Act, the Competition Act and the Investment Canada Act.
Section 5.04. Private Placement.
(a) Purchaser understands that (i) the offering and sale of the Shares
under this Agreement is intended to be exempt from the registration requirements
of the Securities Act of 1933, as amended through the date hereof (the
"Securities Act"), and (ii) there is no existing public or other market for the
Shares and there can be no assurance that Purchaser will be able to sell or
dispose of the Shares.
(b) Purchaser is acquiring the Shares for its own account solely for
the purpose of investment and not with a view to, or for offer or sale in
connection with, any distribution thereof.
(c) Purchaser is an "accredited investor" as such term is defined in
Regulation D promulgated under the Securities Act.
(d) Purchaser is not a broker-dealer subject to Regulation T
promulgated by the Board of Governors of the Federal Reserve System.
(e) Purchaser has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Shares, and Purchaser is capable of bearing the economic risks
of such investment, including a complete loss of its investment in the Shares.
(f) Purchaser has been given the opportunity to ask questions of, and
receive answers from, Sellers' Representative and Gentek Holdings and its
Subsidiaries concerning the transactions contemplated by this Agreement, the
Shares and other related matters. Sellers' Representative and Gentek Holdings
have made available to
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Purchaser or its agents all documents and information requested by or on behalf
of Purchaser relating to an investment in the Shares. In evaluating the
suitability of an investment in the Shares, Purchaser has not relied upon any
representations or other information (whether oral or written) made by or on
behalf of Gentek Holdings, Gentek U.S., Sellers' Representative or any Seller
other than as contemplated by the two preceding sentences and Article III and
Article IV hereof.
(g) Purchaser understands that it may not sell or dispose of any of
the Shares other than pursuant to a registered offering, unless otherwise exempt
from the registration requirements of the Securities Act.
Section 5.05. Investigation.
(a) Purchaser (i) has made its own inquiry and investigation into,
and, based thereon, has formed an independent judgment concerning Gentek
Holdings, the Subsidiaries of Gentek Holdings and the Business, (ii) has been
furnished with or given adequate access to such information about Gentek
Holdings, the Subsidiaries of Gentek Holdings and the Business as Purchaser has
requested, (iii) will not assert any claim against any Seller, Gentek Holdings
or its Subsidiaries, or any of their respective directors, officers, employees,
agents, stockholders, affiliates, consultants, counsel, accountants, investment
bankers or representatives, or hold any Sellers, Gentek Holdings or its
Subsidiaries, or any such other Persons liable, with respect to any
inaccuracies, misstatements or omissions with respect to such information other
than pursuant to a claim for indemnification under Article X arising out of a
breach of the representations and warranties set forth in Article III and
Article IV or any claim arising out of fraud or willful misconduct, and (iv)
understands that none of Sellers, Gentek Holdings or its Subsidiaries is making
any representation or warranty with respect to the Business or the operations,
assets, liabilities or financial condition of Gentek Holdings or its
Subsidiaries, other than as specifically set forth in this Agreement.
(b) In connection with Purchaser's investigation of Gentek Holdings,
its Subsidiaries and the Business, Purchaser has received from Gentek Holdings,
its Subsidiaries and/or Sellers' Representative certain estimates, projections,
forecasts, plans and budgets for the Business. Purchaser (i) understands that
there are uncertainties inherent in attempting to make such projections,
forecasts, plans and budgets, (ii) is familiar with such uncertainties, (iii) is
taking full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections, forecasts, plans and budgets furnished
to it, (iv) will not assert any claim against any Seller or any of their
respective directors, officers, employees, agents, stockholders, affiliates,
consultants, counsel, accountants, investment bankers or representatives, or
hold any Seller or any such other Persons liable, with respect to such
estimates, projections, forecasts, plans and budgets other than pursuant to a
claim arising out of fraud or willful misconduct, and (v) understands that none
of the Sellers is making any representation or warranty with respect to any
estimates, projections, forecasts, plans or budgets referred to in this Section
5.05.
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(c) Notwithstanding anything to the contrary contained in this
Agreement, Sellers hereby acknowledge and agree that neither this Section 5.05
nor any inquiry or investigation of Purchaser into Gentek Holdings, its
Subsidiaries or the Business shall be construed to diminish or otherwise
adversely affect the rights of Purchaser to bring a claim for indemnification
under Article X of this Agreement.
Section 5.06. Financing. Purchaser has obtained a "best efforts" letter
(the "Best Efforts Letter") from UBS AG, Stamford Branch, UBS Securities LLC,
Credit Suisse First Boston, acting through its Cayman Islands Branch, and CIBC
World Markets Corp. (the "Arrangers") addressed to Purchaser that, on the terms
and subject to the conditions thereof, provides for a credit facility in the
aggregate amount of up to $143,500,000.00. A true and complete copy of the Best
Efforts Letter is attached hereto as Exhibit D. The aggregate proceeds of the
credit facility provided for in the Best Efforts Letter, together with equity
available to Purchaser, are sufficient for Purchaser to consummate the
transactions contemplated by this Agreement. As of the date of this Agreement,
the Best Efforts Letter has not been terminated and is in full force and effect.
Section 5.07. Litigation. Except as set forth in a writing given to
Sellers' Representative by Purchaser on the date of this Agreement, no claim,
action, proceeding or investigation is pending or, to the knowledge of
Purchaser, threatened, which seeks to delay or prevent the consummation of, or
which could reasonably be expected to materially adversely affect, Purchaser's
ability to consummate, the transactions contemplated by this Agreement.
Section 5.08. Brokers. Except for Harvest Partners, Inc., no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon any agreement, arrangement or understanding, written or oral, made by
or on behalf of Purchaser. Purchaser shall be solely responsible for payment of
the fees and expenses of Harvest Partners, Inc.
ARTICLE VI.
ADDITIONAL AGREEMENTS
Section 6.01. Conduct of Business Prior to the Closing.
(a) Except as set forth in Section 6.01 of the Disclosure Schedule or
as otherwise contemplated by this Agreement, between the date hereof and the
Closing, Gentek Holdings and its Subsidiaries shall conduct the Business in the
ordinary course and consistent with the past practices of Gentek Holdings and
its Subsidiaries, and shall use commercially reasonable efforts to preserve
intact their respective business organizations, keep available the services of
their respective officers and employees and maintain satisfactory relationships
with licensors, suppliers, distributors, clients and others having business
relationships with them. Notwithstanding the immediately
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preceding sentence, between the date hereof and the Closing Date, except as may
be (i) approved by Purchaser (which approval shall not be unreasonably withheld
or delayed), (ii) set forth in Section 6.01 of the Disclosure Schedule, or (iii)
otherwise expressly permitted, required or contemplated by this Agreement, none
of Gentek Holdings or any of its Subsidiaries shall:
(i) amend or restate its respective charter or by-laws (or
comparable organizational documents);
(ii) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (A) any capital stock of, or other equity or
voting interest in, such Person or (B) any securities convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire either (1)
any capital stock of, or other equity or voting interest in, such Person, or (2)
any securities convertible into, exchangeable for, or evidencing the right to
subscribe for or acquire, any capital stock of, or other equity or voting
interest in, such Person, other than the issuance of Option Shares upon the
exercise of any Options outstanding as of the date hereof; provided, however,
that prior to the issuance of any Option Shares pursuant to this Section
6.01(ii), Gentek Holdings shall have received from the applicable holder of
Options an executed counterpart to this Agreement.
(iii) declare, pay or set aside any dividend or make any
distribution with respect to, or split, combine, redeem, reclassify, purchase or
otherwise acquire directly, or indirectly, any capital stock of, or other equity
or voting interest in, such Person, or make any other change in the capital
structure of such Person;
(iv) sell, transfer, lease, license or otherwise dispose of any
assets or properties (including, without limitation, any Actions or claims),
except for (A) sales of Inventory in the ordinary course of business, (B) leases
entered into or terminated in the ordinary course of business, (C) transactions
among Gentek Holdings and its Subsidiaries, and (D) provided that there is no
settlement (by judgment or otherwise) of the Pending Sherwin-Williams Litigation
prior to the Closing, the assignment and transfer of the Pending
Sherwin-Williams Litigation and the Sherwin-Williams Claims pursuant to the
Assignment Assumption Agreement;
(v) make any capital expenditure or commitment therefor in excess
of $100,000 in any individual case, except (A) for Inventory acquired in the
ordinary course of business, or (B) as contemplated by, or disclosed in, the
written operating budget of Gentek Holdings and its Subsidiaries most recently
provided to Purchaser;
(vi) pay, discharge, settle or satisfy any Liabilities, other
than payments, discharges or satisfactions in the ordinary course of business
and consistent with the past practices of Gentek Holdings and its Subsidiaries;
(vii) make any material change in any method of accounting or
accounting practice, other than changes required by U.S. GAAP;
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(viii) (A) make any tax election or settle and/or compromise any
material tax liability; (B) prepare any Tax Returns in a manner which is
inconsistent with the past practices of Gentek Holdings and its Subsidiaries, as
the case may be, with respect to the treatment of items on such Tax Returns; (C)
incur any liability for Taxes other than in the ordinary course of business; or
(D) file an amended Tax Return or a claim for refund of Taxes;
(ix) increase the compensation payable (including, without
limitation, wages, salaries, bonuses or any other remuneration) or to become
payable to any officer or employee being paid an annual base salary of $100,000
or more, or any director of the Gentek Holdings or any of its Subsidiaries,
except for (A) such increases that are required in accordance with the terms of
any Employee Plan set forth in the Disclosure Schedule, or (B) salary increases
in the ordinary course of business and consistent with the past practices of
Gentek Holdings and its Subsidiaries;
(x) make any bonus, profit sharing, pension, retirement or
insurance payment, distribution or arrangement to or with any officer, employee
or agent being paid an annual base salary of $100,000 or more, or any director
of Gentek Holdings or any of its Subsidiaries, except for (A) payments that are
accrued on the Reference Balance Sheet or (B) are required by the terms of any
Employee Plan set forth in the Disclosure Schedule;
(xi) establish, adopt, enter into, amend or terminate any
Employee Benefits Plan or any collective bargaining, thrift, compensation or
other plan, agreement, trust, fund, policy or arrangement for the benefit of any
directors, officers or employees;
(xii) acquire any business or Person, by merger or consolidation,
purchase of substantial assets or equity interests, or by any other manner, in a
single transaction or a series of related transactions; or
(xiii) enter into any contract, agreement or letter of intent
(whether or not binding) with respect to, or otherwise committed or agreed,
whether or not in writing, to do any of the foregoing.
(b) Gentek Holdings and its Subsidiaries shall keep all insurance
policies currently maintained with respect to Gentek Holdings and its
Subsidiaries and their respective assets and properties, or suitable
replacements or renewals, in full force and effect through the close of business
on the Closing Date.
(c) Notwithstanding anything herein to the contrary, neither Sellers
nor Gentek Holdings or any of its Subsidiaries shall be in breach hereof, and
Gentek Holdings shall be permitted to take actions, agreed to with Purchaser,
with respect to the management of Working Capital from the date hereof through
the Closing, and no adjustment or challenge thereof shall be made pursuant to
Section 2.09 or otherwise. For example, if Purchaser and Gentek Holdings and its
Subsidiaries agree to reduce Inventory, or alter payable cycles in a manner
different from past practice or current
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plan, such agreed action will not for any purpose hereof be a breach hereof or
be subject to dispute under Section 2.09 or otherwise.
Section 6.02. Access to Information.
(a) Subject to the terms of the Confidentiality Agreement, from the
date hereof until the Closing, upon reasonable notice, Gentek Holdings and its
Subsidiaries shall cause their respective officers, directors, employees,
agents, representatives, accountants and counsel to, afford the officers,
employees and authorized agents, representatives, accountants, counsel and
financing sources of Purchaser reasonable access, during normal business hours,
to the offices, properties, plants, other facilities, and books and records of
or relating to the Business and to those officers, directors, employees, agents,
representatives, accountants and counsel of Gentek Holdings and its Subsidiaries
who have any knowledge relating to the Business; provided, however, that
Purchaser and its officers, employees and authorized agents, representatives,
accountants, counsel and financing sources shall not unreasonably interfere with
the business and operations of Gentek Holdings and its Subsidiaries.
(b) For a period of six (6) years following the Closing Date,
Purchaser shall, and shall cause Gentek Holdings and its Subsidiaries to,
provide to any of the Sellers or Sellers' Representative reasonable access to
the books and records of Gentek Holdings and its Subsidiaries, upon reasonable
advance written notice during regular business hours, for any proper purpose
relating to the ownership of Shares (including the purchase and sale of such
Shares pursuant to the terms hereof but excluding, after the Closing, any rights
of indemnification or the obligations of any party under this Agreement or any
other document to be executed pursuant hereto) by any such Sellers or Sellers'
Representative prior to the Closing, and shall permit any such Sellers or
Sellers' Representative to make copies or extracts therefrom as may be
reasonably necessary; provided, however, that neither Sellers nor Sellers'
Representative, as the case may be, shall unreasonably interfere with the
business and operations of Purchaser or Gentek Holdings or its Subsidiaries.
Section 6.03. Confidentiality.
(a) The terms of the Confidentiality Agreement are hereby incorporated
herein by reference and shall continue in full force and effect until the
Closing, at which time such Confidentiality Agreement and the obligations of the
parties under this Section 6.03(a) shall terminate; provided, however, that the
Confidentiality Agreement shall terminate only in respect of that portion of the
Proprietary Information (as defined in the Confidentiality Agreement)
exclusively relating to the transactions contemplated by this Agreement. If this
Agreement is, for any reason, terminated prior to the Closing, the
Confidentiality Agreement shall continue in full force and effect and shall
terminate in accordance with its terms.
(b) For a period of three (3) years following the Closing Date, each
Seller and Sellers' Representative shall, and shall use commercially reasonable
efforts to cause their respective directors, officers and other employees and
agents and other
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representatives to, keep any and all information (in any form or medium)
relating to Gentek Holdings or any of its Subsidiaries and/or the Business
("Confidential Information") confidential. Notwithstanding anything to the
contrary set forth in this Agreement, (i) for purposes of this Section 6.03, the
term "Confidential Information" shall be deemed not to include (A) any
information that at the time of disclosure or any time thereafter is generally
available in the public domain other than as a result of disclosure by any
Seller, Sellers' Representative or any of their respective directors, officers
or other employees or agents or other representatives, or (B) subject to the
terms of Section 6.03(c), any information that is required to be disclosed under
applicable Law or judicial process, and (ii) Sellers' Representative shall be
permitted to reasonably disclose Confidential Information in connection with
marketing and other similar activities in the ordinary course of business.
(c) If any Seller, Sellers' Representative or any of their respective
affiliates, agents or representatives are requested or required (by oral
question, interrogatory, request for information or documents, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information prior to the Closing, Sellers' Representative shall notify Purchaser
of such request or requirement and shall cooperate with Purchaser so that
Purchaser may seek an appropriate protective order or other appropriate remedy.
If such protective order or remedy is not obtained, any Seller or Sellers'
Representative, as the case may be, may disclose only that portion of the
Confidential Information to the Person compelling disclosure as is required by
applicable Law or judicial process.
(d) Notwithstanding anything to the contrary set forth in this Section
6.03, except as may be prohibited by applicable securities Laws, the parties to
this Agreement and any of their respective employees, representatives or other
agents may disclose to any and all Persons, without limitation of any kind, the
tax treatment and tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to such party relating to such tax treatment and tax
structure.
Section 6.04. Regulatory Authorizations.
(a) Each of the parties hereto shall use commercially reasonable
efforts to obtain, or cause to be obtained, prior to the Closing, all
authorizations, consents, orders and approvals of all Governmental Authorities
that are or become necessary for the consummation of the transactions
contemplated by this Agreement, and shall cooperate fully with each other in
promptly seeking to obtain all such authorizations, consents, orders and
approvals.
(b) Without limiting the generality of the foregoing provisions of
Section 6.04(a), (i) Gentek U.S. shall use commercially reasonable efforts to
obtain, prior to the Closing, the ISRA Approvals, and (ii) each party hereto
shall make an appropriate filing, if necessary, pursuant to the HSR Act, the
Competition Act and the Investment Canada Act with respect to the transactions
contemplated by this Agreement promptly after the date hereof and shall supply,
as promptly as practicable, to the
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appropriate Governmental Authorities any additional information and documentary
material that may be requested or required pursuant to the HSR Act, the
Competition Act and the Investment Canada Act.
(c) Notwithstanding the foregoing provisions of this Section 6.04 or
anything to the contrary set forth in this Agreement, Purchaser shall not be
required to hold separate, divest or cause a third party to purchase, Gentek
Holdings or any of its Subsidiaries or any assets thereof, including, without
limitation, any property or contract rights, any existing inventory, any
accounts receivable, any correspondence or files, any customer lists or customer
information, any advertising materials, any contracts or other relationships
with suppliers, customers or distributors, or any Owned Intellectual Property or
Licensed Intellectual Property.
Section 6.05. Third Party Consents. Gentek Holdings and its Subsidiaries
shall use commercially reasonable efforts to obtain, prior to the Closing, all
third party consents and estoppel certificates that are or become necessary for
the consummation of the transactions contemplated by this Agreement and such
other third party consents as Purchaser may reasonably request to consummate the
transactions contemplated hereby. Purchaser shall cooperate and use commercially
reasonable efforts to assist Gentek Holdings and its Subsidiaries in obtaining
such consents and estoppel certificates; provided, however, that Purchaser shall
not be required to expend any money or offer or grant any accommodation
(financial or otherwise) to any third party in connection with such cooperation
or efforts.
Section 6.06. Conveyance Taxes. Each party hereto shall be liable for, and
shall hold the other parties hereto harmless from and against, any transfer,
sales and use, value added, stock transfer and stamp Taxes, any transfer,
recording, registration and other fees, and any similar Taxes and fees which
become payable in connection with the sale and purchase of the Shares pursuant
to this Agreement for which such party is primarily liable under applicable Law.
Section 6.07. Further Action. Each of the parties hereto shall use
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, do, or cause to be done, all things necessary, proper or advisable under
applicable Law, and execute and deliver, or cause to be executed and delivered,
such documents and other papers, in each case as may be reasonably required to
carry out the provisions of this Agreement and consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, in
the case of Gentek Holdings and its Subsidiaries, Sellers and Sellers'
Representative, by assisting Purchaser with the procurement of the financing
contemplated by the Best Efforts Letter or any alternative source of financing
contemplated by Section 6.09.
Section 6.08. Sherwin-Williams Claims Matters.
(a) Upon the Closing, Gentek U.S. shall assign to the Sherwin-Williams
Claims Trust (i) the rights and benefits of the Pending Sherwin-Williams
Litigation and the Sherwin-Williams Claims pursuant to the Assignment and
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Assumption Agreement, and (ii) such amount of the Preliminary Purchase Price as
the Sellers' Representative may direct to cover the expenses necessary to
administer, prosecute, settle and otherwise pursue the Pending Sherwin-Williams
Litigation and the Sherwin-Williams Claims (the "Initial Trust Deposit").
(b) At all times during the period commencing with the Closing and
expiring on the third (3rd) anniversary of the Closing Date, Gentek Holdings and
its Subsidiaries (and any successor(s) thereto) shall use commercially
reasonable efforts, at the sole cost and expense of the Sherwin-Williams Claims
Trust, to assist and cooperate with the Sherwin-Williams Claims trust to
administer and prosecute the Pending Sherwin-Williams Litigation and otherwise
pursue the Sherwin-Williams Claims by (i) making available as reasonably
requested (A) employees or witnesses of Gentek Holdings and its Subsidiaries, as
the case may be, for questioning, any discovery purposes (including, without
limitation, propounding or responding to interrogatories), testifying or
otherwise appearing at depositions or other proceedings relating to the Pending
Sherwin-Williams Litigation or the Sherwin-Williams Claims, and (B) files, books
and records of Gentek Holdings and its Subsidiaries, as the case may be, for
review, any discovery purposes, use at depositions or other proceedings relating
to the Pending Sherwin-Williams Litigation or the Sherwin-Williams Claims, in
each case, without the necessity of a subpoena, and (ii) furnishing the
Sherwin-Williams Claims Trust with such access to employees, witnesses, files,
books and records of Gentek Holdings and its Subsidiaries, as the case may be,
as the Sherwin-Williams Claims Trust may reasonably request in order to
administer, prosecute and settle the Pending Sherwin-Williams Litigation and
otherwise pursue the Sherwin-Williams Claims, in each case, upon reasonable
advance written notice; provided, however, that Sellers, Sellers' Representative
and the Sherwin-Williams Claims Trust shall not unreasonably interfere with the
business and operations of Gentek Holdings and its Subsidiaries.
(c) At all times during the period commencing with the Closing and
expiring on the third (3rd) anniversary of the Closing Date, (i) Purchaser,
Gentek Holdings and Gentek U.S. shall be entitled to attend and participate in
all meetings, conferences and negotiations with Sherwin-Williams relating to the
Pending Sherwin-Williams Litigation or the Sherwin-Williams Claims and (ii) the
Sherwin-Williams Claims Trust shall, (A) make available to Purchaser copies of
any pleadings, correspondence, information, records or other documents as
Purchaser may reasonably request, (B) provide Purchaser with prior written
notice of all hearings, meetings, conferences, negotiations with
Sherwin-Williams and other proceedings and (C) provide Purchaser with notice of
all other material developments, in each case, relating to the Pending
Sherwin-Williams Litigation, or the conduct and status thereof, or the
Sherwin-Williams Claims. From and after the third (3rd) anniversary of the
Closing Date, Sellers and Sellers' Representative shall, if requested by
Purchaser, keep Purchaser reasonably informed of the status of the Pending
Sherwin-Williams Litigation and the Sherwin-Williams Claims.
(d) None of Gentek Holdings or any of its Subsidiaries or any of their
respective affiliates shall settle or otherwise compromise the Pending
Sherwin-Williams Litigation or release any Sherwin-Williams Claims without the
prior written
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consent of the Sherwin-Williams Claims Trust. Without Purchaser's prior consent
(which consent shall not be unreasonably withheld or delayed), neither the
Sherwin-Williams Claims Trust nor any other Person with control over the Pending
Sherwin-Williams Litigation and the Sherwin-Williams Claims following the
Closing shall (i) settle or otherwise compromise the Pending Sherwin-Williams
Litigation or the Sherwin-Williams Claims or (ii) liquidate, distribute or
otherwise transfer any property held in the Sherwin-Williams Claims Trust (other
than the reasonable fees of the Trustee) unless, prior thereto, the
Sherwin-Williams Claims Trust or such other Person, as the case may be, either
(x) receives an unconditional discharge or release by Sherwin-Williams of Gentek
Holdings and its Subsidiaries from Sherwin-Williams with respect to any
counter-claims made in the Pending Sherwin-Williams Litigation or arising out of
the pursuit of the Sherwin-Williams Claims (excluding any counter-claim or
portion thereof that is accrued in Closing Working Capital in the Final Closing
Adjustment Amount Statement), or (y) irrevocably relinquishes to Gentek Holdings
and its Subsidiaries all control over the conduct of any counter-claims made in
the Pending Sherwin-Williams Litigation or arising out of the pursuit of the
Sherwin-Williams Claims (excluding any counter-claim or portion thereof that is
accrued in Closing Working Capital in the Final Closing Adjustment Amount
Statement).
(e) Sellers and Sellers' Representative shall cause any successor to
the Trustee to execute a counter-part to this Agreement. Any successor Trustee
shall be a director or officer of Genstar or a U.S. commercial banking
institution holding trustee powers.
(f) Notwithstanding anything to the contrary set forth in this
Agreement or any other document executed by the parties hereto with respect to
the Pending Sherwin-Williams Litigation or the Sherwin-Williams Claims, each
Seller, each holder of Options, Sherwin-Williams Claims Trust and the Sellers'
Representative hereby waives, to the fullest extent permitted under applicable
Law, and agrees not to assert, any and all rights, claims and causes of action
(including any and all claims for Liabilities, losses, damages, claims, costs
and expenses, interest, awards, judgments and penalties incurred thereby) such
Person or any of its affiliates may have against Purchaser, Gentek Holdings or
any of their respective affiliates resulting from, arising out of or relating to
the assignment and transfer (including any failure or defect thereof or
illegality with respect thereto) of the rights and benefits arising out of
Pending Sherwin-Williams Litigation and the Sherwin-Williams Claims by Gentek
Holdings and its Subsidiaries to the Sherwin-Williams Claims Trust.
Notwithstanding the foregoing, Purchaser, Gentek Holdings and their respective
affiliates hereby waive and agree not to assert any failure or defect in or
illegality of, or otherwise challenge the enforceability of, the assignment and
transfer of the rights and benefits arising out of Pending Sherwin-Williams
Litigation and the Sherwin-Williams Claims by Gentek Holdings and its
Subsidiaries to the Sherwin-Williams Claims Trust. In the event that the
assignment or transfer of the rights and benefits arising out of Pending
Sherwin-Williams Litigation or the Sherwin-Williams Claims to the
Sherwin-Williams Claims Trust is held by a court of competent jurisdiction to be
invalid, illegal or incapable of being enforced by any Law or public policy or
otherwise to compromise the enforceability of the claims asserted in the Pending
Sherwin-Williams Litigation or the Sherwin-Williams Claims,
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Purchaser, Gentek Holdings, its Subsidiaries and their respective affiliates
shall, at the sole cost and expense of the Sherwin-Williams Claims Trust, take
(or cause to be taken), and do (or cause to be done), and execute (or cause to
be executed), all things and documents necessary, proper or advisable in order
to carry out and effectuate to the greatest extent possible, in a legally
enforceable manner, the economic intent of the assignment and transfer of the
rights and benefits arising out of Pending Sherwin-Williams Litigation and the
Sherwin-Williams Claims to the Sherwin-Williams Claims Trust, including, without
limitation, by collecting all proceeds realized from the Pending
Sherwin-Williams Litigation or the pursuit of the Sherwin-Williams Claims and
promptly contributing such proceeds, less costs, (or an amount equivalent
thereto) to the Sherwin-Williams Claims Trust in accordance with the terms of
this Section 6.08.
(g) Notwithstanding anything to the contrary set forth in this
Agreement, Purchaser agrees that breach of the terms of this Section 6.08 may
cause irreparable loss to the Sherwin-Williams Claims Trust and that damages may
be impossible to ascertain, and therefore hereby consents to the granting of
equitable relief by way of temporary, preliminary and permanent injunctive
relief, by a court of competent jurisdiction, to prohibit such breach and compel
compliance with the terms of this Section 6.08.
(h) The cash proceeds of any settlement of or judgment related to the
Pending Sherwin-Williams Litigation and the Sherwin-Williams Claims realized
after the Closing (the "SVA Amount") shall be apportioned among Gentek Holdings,
on the one hand, and the Sherwin-Williams Claims Trust, on the other hand, as
follows:
(i) any SVA Amount attributable to periods prior to the Closing
shall be and become the property of the Sherwin-Williams Claims Trust and shall
be promptly paid over to the Sherwin-Williams Claims Trust;
(ii) any SVA Amount attributable to periods after the Closing
shall be apportioned among the Sherwin-Williams Claims Trust and Gentek Holdings
in accordance with the Sharing Formula, and Gentek Holdings or any of its
Subsidiaries shall pay over to the Sherwin-Williams Claims Trust promptly after
the settlement or judgment referred to above, the TR Share in cash in
consideration for assignment by the Sherwin-Williams Claims Trust of the rights
and benefits under any settlement or judgment contemplated by clause (A) of this
Section 6.08(h)(ii) unless, pursuant to the terms of such settlement or
judgment, Gentek Holdings or any of its Subsidiaries receives such rights and
benefits. Notwithstanding the foregoing, Gentek Holdings and its Subsidiaries
shall not be required to pay the TR Share to the Sherwin-Williams Claims Trust
and the Sherwin-Williams Claims Trust shall not be required to assign the rights
and benefits under any settlement or judgment contemplated by this Section
6.08(h)(ii) (A) unless, pursuant to the terms of such settlement or judgment,
Sherwin-Williams agrees or is required to reimburse Gentek Holdings and its
Subsidiaries in cash for at least fifty percent (50%) of the costs incurred by
Gentek Holdings and its Subsidiaries after the Closing for the remediation of
Steel Peel Claims, it being understood, and Sellers and the Sherwin-Williams
Claims Trust hereby agree, that the Sherwin-Williams Claims Trust shall transfer
and assign to Gentek Holdings and its
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Subsidiaries the rights and benefits of any settlement or judgment contemplated
by this Section 6.08(h)(ii)(A), or (B) if the Pending Sherwin-Williams
Litigation or other Sherwin-Williams Claims are not settled or resolved pursuant
to a judgment on or prior to the third (3rd) anniversary of the Closing Date.
By way of example, and for reference purposes only, in the event that (A) one
year after the Closing, the Pending Sherwin-Williams Litigation and the
Sherwin-Williams Claims are settled and, pursuant to the terms of such
settlement, Sherwin-Williams agrees to pay an amount of cash ("X") in respect of
pre-Closing items and to reimburse Gentek Holdings and its Subsidiaries in cash
for 75% of all costs incurred by Gentek Holdings and its Subsidiaries after the
Closing for the remediation of the Steel Peel Claims, and (B) Gentek Holdings
and its Subsidiaries expended $1,000,000 on remediating Steel Peel Claims from
the Closing Date to the time of such settlement at a rate of $2,739.73 per day
for such year, the SVA Amount (consisting of X (Section 6.08(h)(i)) and the cash
proceeds from Sherwin-Williams' 75% warranty) would be apportioned as follows:
(1) X would be paid over to the Sherwin-Williams Claims
Trust; and
(2) the TR Share of $3,567,873 (i.e., $5,000,000 less
$242,836 (i.e. the present value of all sums expended after the Closing in
remediating any Steel Peel Claims which are not being reimbursed to Gentek
Holdings and its Subsidiaries by Sherwin-Williams, discounted at a rate of 6%
per annum) multiplied by 0.75) would be paid over to the Sherwin-Williams Claims
Trust.
Section 6.09. Purchaser Financing Arrangements. Purchaser shall use
commercially reasonable efforts to satisfy the requirements of the Best Efforts
Letter and to obtain the funding contemplated by and on the terms contained in
the Best Efforts Letter, or if the Best Efforts Letter is terminated or such
funds shall not otherwise be available, shall use commercially reasonable
efforts to obtain an alternative source of financing in order to consummate the
transactions contemplated hereby. Following the date hereof, any amendment,
termination or cancellation of the Best Efforts Letter or any information known
to Purchaser, which makes it unlikely to obtain the financing set forth in the
Best Efforts Letter, shall be promptly disclosed to Sellers' Representative.
Neither Purchaser nor any of its affiliates shall attempt, directly or
indirectly, to intentionally induce or encourage the exercise by the Arrangers
of any right not to fund any of the financing provided for in the Best Efforts
Letter.
Section 6.10. Sellers' Representative. Sellers hereby irrevocably designate
Sellers' Representative to execute any and all instruments or other documents on
behalf of Sellers, and to do any and all other acts or things on behalf of
Sellers, which Sellers' Representative may deem necessary or advisable, or which
may be required pursuant to this Agreement, the Escrow Agreement or otherwise in
connection with the consummation of the transactions contemplated hereby and
thereby and the performance of all obligations hereunder and thereunder at or
following the Closing. Without limiting the generality of the foregoing,
Sellers' Representative shall have the
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full and exclusive authority to (i) agree with Purchaser with respect to any
matter or thing required or deemed necessary by Sellers' Representative in
connection with the provisions of this Agreement or the Escrow Agreement calling
for the agreement of Sellers, give and receive notices on behalf of all Sellers,
and act on behalf of all Sellers in connection with any matter as to which
Sellers are or may be obligated under this Agreement or the Escrow Agreement,
all in the absolute discretion of Sellers' Representative, (ii) in general, do
all things and perform all acts, including, without limitation, executing and
delivering all agreements, certificates, receipts, consents, elections,
instructions, and other instruments or documents contemplated by, or deemed by
Sellers' Representative to be necessary or advisable in connection with, this
Agreement or the Escrow Agreement, and (iii) take all actions necessary or
desirable in connection with the defense and/or settlement of any
indemnification claims pursuant to Article X and performance of obligations
under Article II. Sellers shall cooperate with Sellers' Representative and any
accountants, attorneys or other agents whom it may retain to assist in carrying
out its duties hereunder. All decisions by Sellers' Representative shall be
binding upon all Sellers, and no Seller shall have the right to object, dissent,
protest or otherwise contest the same. Sellers' Representative may communicate
with any Seller or any other Person concerning his responsibilities hereunder,
but it is not required to do so. Sellers' Representative has a duty to serve in
good faith the interests of Sellers and to perform its designated role under
this Agreement, but Sellers' Representative shall have no financial liability
whatsoever to any Person relating to its service hereunder (including any action
taken or omitted to be taken), except that it shall be liable for harm which it
directly causes by an act of willful misconduct. Sellers shall indemnify and
hold harmless Sellers' Representative against any loss, expense (including
reasonable attorney's fees) or other liability arising out of its service as
Sellers' Representative under this Agreement, other than for harm directly
caused by an act of willful misconduct. Sellers' Representative may not resign
without the prior written consent of Purchaser. Purchaser shall be entitled to
rely on the authority of Sellers' Representative as the agent, representative
and attorney-in-fact of each Seller for all purposes under this Agreement and
the Escrow Agreement and Purchaser shall have no liability for any such
reliance.
Section 6.11. Notification of Certain Matters. Sellers' Representative
shall give prompt notice to Purchaser of the occurrence or existence of any
fact, circumstance or event which would be reasonably likely to result, as of
the Closing, in the failure of any condition precedent to Purchaser's
obligations under this Agreement.
Section 6.12. Settlement of Payables. The parties agree that all payables
(except for trade accounts receivable and payable in the ordinary course of
business) between Sellers, the holders of Options, Genstar or any of their
respective affiliates (other than Gentek Holdings and its Subsidiaries), on the
one hand, and Gentek Holdings or any of its Subsidiaries, on the other hand,
shall be settled at or prior to the Closing, provided that such amounts have not
been accrued in accounts payable reflected in Working Capital as of the Closing.
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Section 6.13. Employees.
(a) Purchaser shall maintain the Cash Incentive Bonus Award Plan and
other incentive compensation plans set forth in Section 6.13 of the Disclosure
Schedule (collectively, the "Current Incentive Plans") for those persons
employed by Gentek Holdings or any of its Subsidiaries immediately prior to the
Closing, including those employees on vacation, leave of absence, disability or
sick leave or layoff (whether or not such employees return to active employment
with Gentek Holdings or any of its Subsidiaries) (each, a "Transferred
Employee", and collectively, the "Transferred Employees") (if applicable) and
any other service providers of Gentek Holdings or any of its Subsidiaries
participating in the Current Incentive Plans immediately prior to Closing
(subject to the terms of the Current Incentive Plans) through December 31, 2003,
and shall make the payments (including any amounts accrued thereunder as of the
Closing) contemplated by the applicable Current Incentive Plans (if applicable)
in accordance with the payment schedule pursuant to which Purchaser makes
comparable payments under its own incentive plans. If a participant in any
Current Incentive Plan is terminated without "cause" or resigns for "good
reason" (in each case as such terms are defined in the applicable Current
Incentive Plan or, if not so defined, as reasonably determined by Purchaser in
good faith) after the Closing, he or she will be vested in a portion of the
benefit under the applicable Current Incentive Plan accrued as of the date of
termination, or, if not so accrued, to a portion of the annualized payment that
such participant would have received under the applicable Current Incentive
Plan, multiplied by the number of days such person was an employee during the
calendar year of 2003, divided by 365.
(b) To the extent that service is relevant for purposes of eligibility
or vesting under any employee benefit plan, program or arrangement established
or maintained by Purchaser, Gentek Holdings or any of its Subsidiaries for the
benefit of any Transferred Employees, Purchaser shall cause each such plan,
program or arrangement to credit such employees for service with Gentek Holdings
or any of its Subsidiaries on or prior to the Closing to the extent that such
service is recognized for similar purposes under the same or similar employee
benefit plans, programs or arrangements in which the applicable Transferred
Employee participates prior to the Closing.
Section 6.14. Statement of Outstanding Draft Amounts. On the date one (1)
business day immediately prior to the Closing Date, Sellers' Representative, on
behalf of Sellers, shall cause Gentek Holdings to prepare and deliver to
Sellers' Representative and Purchaser a statement (which shall be reasonably
satisfactory to Purchaser) setting forth the aggregate face amount of all bank
checks drawn on the accounts of Gentek Holdings and its Subsidiaries that will
be outstanding and unpaid as of the close of business on the Closing Date (the
"Outstanding Draft Amount"), it being understood that, prior to the Closing,
none of Gentek Holdings or any of its Subsidiaries shall issue any bank checks
or take any other action that would result in an increase in the Outstanding
Draft Amount.
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ARTICLE VII.
TAX MATTERS
Section 7.01. Allocation of Taxes. All Taxes and Tax liabilities with
respect to the income, property or operations of Gentek Holdings or any of its
Subsidiaries that relate to the Overlap Period shall be apportioned between the
Pre-Closing Period and the period after the Closing Date as follows: (i) in the
case of Taxes other than income, sales and use and withholding Taxes, on a per
diem basis, and (ii) in the case of income, sales and use and withholding Taxes,
as determined from the books and records of Gentek Holdings or any of its
Subsidiaries as though the taxable year of Gentek Holdings and such Subsidiaries
terminated at the close of business on the Closing Date. Purchaser and Sellers
agree to the extent permitted by applicable Law to elect with the relevant
taxing authority to treat for all purposes the Closing Date as the last day of a
taxable period of Gentek Holdings and its Subsidiaries.
Section 7.02. Controversies.
(a) Purchaser shall notify Sellers' Representative upon receipt by
Purchaser or any affiliate of Purchaser (including Gentek Holdings and its
Subsidiaries after the Closing Date) of written notice of any inquiries, claims,
assessments, audits or similar events with respect to Taxes relating to a
taxable period ending on or prior to the Closing Date for which Sellers may be
liable under this Agreement (any such inquiry, claim, assessment, audit or
similar event, a "Tax Matter"). Sellers' Representative, at its sole expense,
shall have the authority to represent the interests of Gentek Holdings or any of
its Subsidiaries with respect to any Tax Matter before the IRS, any other taxing
authority, any other governmental agency or authority or any court and shall
have the right to control the defense, compromise or other resolution of any Tax
Matter; provided, however, that Sellers' Representative shall not enter into any
settlement of or otherwise compromise any Tax Matter that adversely affects or
may adversely affect the Tax liability of Purchaser, Gentek Holdings or any of
its Subsidiaries or any affiliate of the foregoing for any period ending after
the Closing Date, including the portion of the Overlap Period that is after the
Closing Date, without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld, conditioned or delayed. Sellers'
Representative shall keep the Purchaser fully and timely informed with respect
to the commencement, status and nature of any Tax Matter and shall, in good
faith, allow Purchaser to make comments to the Sellers' Representative,
regarding the conduct of or positions taken in any such proceeding.
(b) Except as otherwise provided in Section 7.02(a) above, Purchaser
shall have the sole right to control any audit or examination by any taxing
authority and contest, resolve and defend against any assessment for additional
Taxes, notice of Tax deficiency or other adjustment of Taxes of, or relating to,
the income, assets or operations of Gentek Holdings and its Subsidiaries for all
taxable periods; provided, however, Purchaser shall not enter into any
settlement of or otherwise compromise any Tax matter that adversely affects or
may adversely affect Sellers with respect to their obligations for Taxes under
this Agreement without the prior written consent of Sellers'
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Representative, which consent shall not be unreasonably withheld, conditioned or
delayed; provided further, that upon receipt of written notice of any inquiry,
claim, assessment, audit or similar event with respect to a Tax matter arising
out of an Overlap Period, Purchaser shall provide written notice thereof to
Sellers' Representative.
Section 7.03. Tax Returns/Payment of Taxes.
(a) After the Closing Date, except as otherwise provided herein,
Purchaser shall file or cause to be filed (and shall have the exclusive right to
file or cause to be filed) all Tax Returns (including amended Tax Returns and
claims for refunds) of Gentek Holdings or any of its Subsidiaries. Any Tax
Return of Gentek Holdings or any of its Subsidiaries which is filed after the
Closing Date and which pertains to a Pre-Closing Period or an Overlap Period
shall be (i) prepared in accordance with past practices to the extent permitted
by applicable law and (ii) submitted (with copies of relevant work papers and
other documentation then available, to the extent such work papers and
documentation either solely pertain to a Pre-Closing Period or are not deemed
confidential by the Purchaser) to the Seller's Representative for approval not
less than thirty (30) calendar days prior to the due date for the filing of such
Tax Return, which approval shall not be unreasonably withheld, conditioned or
delayed. If Seller's Representative does not notify the Purchaser in writing of
any objection Seller's Representative may have to such Tax Returns at least
fifteen (15) calendar days prior to the due date for the filing of such Tax
Returns, Seller's Representative shall be deemed to have approved such Tax
Returns. For Tax Returns that relate solely to periods ending on or prior to the
Closing Date, unless otherwise required by applicable Law, Purchaser shall
follow Seller's Representatives comments with respect to the reporting of items
on such Tax Returns to the extent that either (x) pursuant to such comments,
such items are treated in a manner consistent with the past practices of Gentek
Holdings and its Subsidiaries, or (y) Purchaser determines in its sole
discretion that such comments could not adversely affect Purchaser or its
Affiliates (including Gentek Holdings and its Subsidiaries). Any objections to
such Tax Returns shall be resolved by treating items on such Tax Returns in a
manner consistent with the past practices of Gentek Holdings and its
Subsidiaries (as confirmed by an independent accountant, at the shared expense
of the parties, if necessary). With respect to Taxes due after the Closing Date
that relate to the income, property or operations of Gentek Holdings or any of
its Subsidiaries for a Pre-Closing Period, to the extent such Taxes were not set
forth as a current Liability (or in Closing Net Indebtedness) on the Final
Closing Date Working Capital, an amount shall be paid from the Indemnification
Escrow to the Purchasers five (5) business days prior to the due date of such
Taxes.
(b) Except as required by applicable Law, neither Purchaser or any
affiliate of Purchaser shall (or shall cause or permit Gentek Holdings or any of
its Subsidiaries to) amend, refile or otherwise modify any Tax Return relating
in whole or part to Gentek Holdings or any of its Subsidiaries with respect to
any taxable year or period ending on or before the Closing Date without the
prior written consent of the Seller's Representative, which consent may not be
unreasonably withheld, conditioned or delayed. Sellers' Representative may file,
or cause Gentek Holdings or any of its Subsidiaries to file, an amended Tax
Return or claim for refund with respect to a taxable
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year or period ending on or before the Closing Date with the prior written
consent of Purchaser, which consent shall not be unreasonably withheld,
conditioned or delayed. Any Tax refund received by Purchaser, Gentek Holdings or
any of its Subsidiaries, and any amounts of overpayments of Tax credited against
Tax which Purchaser, Gentek Holdings or any of its Subsidiaries otherwise would
be or would have been required to pay that relate to any taxable period, or
portion thereof, ending on or before the Closing Date shall be for the account
of Sellers, and Purchaser shall pay over to Seller's Representative any such
refund or the amount of any such credit within fifteen (15) calendar days after
it is actually received or so credited against Tax; provided, however, that (i)
any Taxes that are imposed on Purchaser or any of its Affiliates as a result of
a disallowance or reduction of any Tax refund or credit with respect to which
Purchaser has made a payment to Sellers pursuant to this Section 7.03(b) shall
be treated as a Tax for which Sellers are obligated to indemnify Purchaser
pursuant to Section 10.04(a)(ii) hereof as if it resulted from a breach of a
representation set forth in Section 4.17 without any exclusions or defenses, and
(ii) nothing in this Section 7.03(b) shall require Purchaser to disclose any
confidential information to Sellers (including, without limitation, its Tax
Returns).
Section 7.04. Prior Tax Agreements. Sellers shall terminate or cause to be
terminated any and all of the tax sharing, allocation, indemnification or
similar agreements, arrangements or undertakings in effect, written or
unwritten, on the Closing Date as between any Seller or any predecessor or
affiliate thereof, on the one hand, and Gentek Holdings or any of its
Subsidiaries, on the other hand, for all Taxes imposed by any government or
taxing authority, regardless of the period in which such Taxes are imposed, and
there shall be no continuing obligation to make any payments under any such
agreements, arrangements or undertakings.
Section 7.05. Assistance and Cooperation. Sellers' Representative and
Purchaser and its Affiliates shall at the requesting party's expense: make
available to the other and to any Taxing authority as reasonably requested all
information, records, and documents relating to Taxes concerning Gentek Holdings
and its Subsidiaries for Pre-Closing periods; make available to the other and to
any Taxing authority as reasonably requested (during normal business hours)
employees and independent auditors to provide explanations and additional
information relating to Taxes concerning the Gentek Holdings and its
Subsidiaries for Pre-Closing Periods; and retain any books and records that
could reasonably be expected to be necessary or useful in connection with
Sellers' Representative's or Purchaser's preparation, as the case may be, of any
Tax Return, or for any audit, examination, or proceeding relating to Taxes. Such
books and records shall be retained until the expiration of the applicable
statute of limitations (including extensions thereof to the extent the party has
been notified thereof); provided, however, that in the event of an audit,
examination, investigation or proceeding has been instituted prior to the
expiration of the applicable statute of limitations (or in the event of any
claim under this Agreement), the books and records shall be retained until there
is a final determination thereof (and the time for any appeal has expired);
provided further, however, that nothing in this Section 7.05 shall require a
party to retain any books or records beyond six (6) years after the Closing Date
if the Seller's Representative or Purchaser, as the case may be, has offered in
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writing to deliver such books and records to the other party (at the other
party's expense) and the other party either declined to accept such books and
records or failed to respond to such request within ninety (90) calendar days.
Section 7.06. Survival. Notwithstanding anything in this Agreement to the
contrary, the provisions of this Article VII shall survive for sixty (60)
calendar days after the full period of all statutes of limitations (giving
effect to any waiver, mitigation or extension thereof).
ARTICLE VIII.
CONDITIONS TO CLOSING
Section 8.01. Conditions to Obligations of Sellers, Sellers' Representative
and Purchaser. The obligations of each Seller, Sellers' Representative and
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) HSR Act, Act, Competition Act and Investment Canada Act. Any and
all waiting periods (and any extensions thereof) under the HSR Act, the
Competition Act and the Investment Canada Act applicable to the transactions
contemplated by this Agreement shall have expired or shall have been terminated.
(b) Regulatory Consents and Approvals. Purchaser and Gentek Holdings
and its Subsidiaries shall have received all authorizations, consents, orders
and approvals of all Governmental Authorities that are necessary to consummate
the transactions contemplated by this Agreement, including, without limitation,
the ISRA Approvals.
(c) No Governmental Order. No Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any Law or Governmental Order
which is in effect and has the effect of making the transactions contemplated by
this Agreement illegal or otherwise restraining or prohibiting the consummation
of the transactions contemplated by this Agreement.
(d) No Proceeding or Litigation. No Action shall have been commenced
by or before any Governmental Authority against any Seller or Purchaser seeking
to restrain or materially and adversely alter the transactions contemplated by
this Agreement which, in the reasonable, good faith determination of Sellers'
Representative or Purchaser is likely to prevent the parties from consummating
the transactions contemplated this Agreement; provided, however, that the
provisions of this Section 8.01(d) shall not apply to any party which has
directly or indirectly solicited or encouraged any such Action.
(e) Compliance with FIRPTA. Sellers' Representative and Purchaser
shall have received from Gentek Holdings a certificate, in form and substance
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reasonably satisfactory to Sellers' Representative and Purchaser, signed by a
duly authorized officer of Gentek Holdings and certifying pursuant to ss.
1.897-2(h) of the Treasury Regulations that the stock of Gentek Holdings is not
a United States real property interest within the meaning of ss. 897(c)(1) of
the Code.
Section 8.02. Additional Condition to Obligations of Sellers and Sellers'
Representative. The obligations of each Seller and Sellers' Representative to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment, at or prior to the Closing, of each of the following additional
conditions: (a) the representations and warranties of Purchaser contained in
this Agreement that are not qualified by materiality shall be true and correct
in all material respects as of the Closing Date with the same force and effect
as if made as of the Closing Date (other than such representations and
warranties as are made as of another date, which shall have been true and
correct in all material respects as of such other date); (b) the representations
and warranties of Purchaser contained in this Agreement that are qualified by
materiality shall be true and correct in all respects as of the Closing Date,
with the same force and effect as if made as of the Closing Date (other than
such representations and warranties as are made as of another date, which shall
have been true and correct in all respects as of such other date); (c) the
covenants and agreements contained in this Agreement to be complied with by
Purchaser on or before the Closing shall have been complied with in all material
respects; and (d) Sellers' Representative shall have received a certificate from
Purchaser with respect to the matters set forth in the preceding clauses (a),
(b) and (c) signed by a duly authorized officer thereof.
Section 8.03. Additional Conditions to Obligations of Purchaser. The
obligations of Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following additional conditions:
(a) Representations and Warranties of Sellers, Gentek Holdings, Gentek
U.S., Gentek Canada and Sellers' Representative. (i) The representations and
warranties of Sellers, Gentek Holdings, Gentek U.S., Gentek Canada, the
Sherwin-Williams Claims Trust and Sellers' Representative contained in this
Agreement shall be true and correct as of the Closing Date with the same force
and effect as if made as of the Closing Date (other than such representations
and warranties as are made as of another date, which shall have been true and
correct as of such other date), with only such exceptions as, individually or in
the aggregate, do not have a Material Adverse Effect (provided, however, that
(A) for purposes of determining the accuracy of such representations and
warranties, all "Material Adverse Effect" and materiality qualifications
contained therein shall be disregarded, and (B) the exception set forth in
clause (i) of this Section 8.03(a) shall not apply to the representations and
warranties set forth in Article III, Section 4.02 and the first sentence of
Section 4.07, each of which representation and warranty shall be true and
correct in all material respects as of the Closing Date, or if any such
representations and warranties are made as of another date, such other date);
(ii) the covenants and agreements contained in this Agreement to be complied
with by Sellers, Gentek Holdings, Gentek U.S., Gentek Canada, Sherwin-
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Williams Claims Trust or Sellers' Representative on or before the Closing shall
have been complied with in all material respects; (iii) Purchaser shall have
received a certificate from Sellers' Representative with respect to the matters
set forth in the preceding clauses (i) and (ii) (relating to Sellers'
Representative), signed by a duly authorized officer thereof; (iv) Purchaser
shall have received a certificate from the Sherwin-Williams Claims Trust with
respect to the matters set forth in the preceding clauses (i) and (ii) (relating
to the Sherwin-Williams Claims Trust), signed by the Trustee; (v) Purchaser
shall have received a certificate from Sellers' Representative, on behalf of
Sellers, with respect to the matters set forth in the preceding clauses (i) and
(ii) (relating to Sellers), signed by a duly authorized officer thereof; and
(vi) Purchaser shall have received a certificate from each of Gentek Holdings,
Gentek U.S. and Gentek Canada, respectively, with respect to the matters set
forth in the preceding clauses (i) and (ii) (relating to each of Gentek
Holdings, Gentek U.S. and Gentek Canada, respectively) signed by a duly
authorized officer thereof.
(b) Good Standing Certificates. Purchaser shall have received a
certificate from the Secretary of State or other appropriate official of the
respective jurisdictions of incorporation of Gentek Holdings, Gentek U.S. and
Gentek Canada to the effect that each such corporation is in good standing or
subsisting in such jurisdiction and listing all charter documents of Gentek
Holdings and such Subsidiaries on file therewith.
(c) Third Party Approvals. Gentek Holdings and its Subsidiaries shall
have received all authorizations, consents, orders and approvals of all Persons
(other than Governmental Authorities) that are set forth in Schedule III hereto.
(d) Purchaser Financing Arrangements. Purchaser shall have received
the proceeds of the financing contemplated in the Best Efforts Letter.
(e) Payment of Indebtedness. Purchaser shall have received customary
evidence, in form and substance reasonably satisfactory to Purchaser (including,
without limitation, customary pay-off letters from the holders of such
Indebtedness delivered to the Purchaser by the Sellers' Representative), that
(i) all Indebtedness of the Company set forth in Schedule II hereto that is
outstanding as of immediately prior to the Closing will be repaid at and as of
the Closing, and (ii) all arrangements providing for mortgage and lien releases,
canceled notes, trademark and patent assignments and other similar matters in
connection with the payment of such Indebtedness have been made.
(f) Genstar Management Agreement. Purchaser shall have received
evidence, in form and substance reasonably satisfactory to Purchaser, that the
Management Advisory and Consulting Services Agreement, dated as of December 15,
1994, as amended as of March 27, 2002, among Gentek Holdings, Inc., a Delaware
corporation, Gentek Buildings Products, Inc., a Delaware corporation, and
Genstar Investment Corporation, has been terminated and has no further force or
effect.
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ARTICLE IX.
TERMINATION AND WAIVER
Section 9.01. Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by the mutual written consent of Sellers' Representative, on
behalf of Sellers, and Purchaser;
(b) by Sellers' Representative, on behalf of Sellers, or Purchaser, if
the Closing shall not have occurred by October 31, 2003; provided, however, that
the right to terminate this Agreement under this Section 9.01(b) shall not be
available to any party hereto whose actions or failure to fulfill any obligation
under this Agreement shall have been the cause of, or shall have resulted in,
the failure of the Closing to occur on or prior to such date and such actions or
failure to act constitutes a breach of this Agreement;
(c) by Sellers' Representative, on behalf of Sellers, or Purchaser, if
there shall have been enacted, issued, promulgated or enforced any Law that
makes the consummation of the transactions contemplated by this Agreement
illegal, or any Governmental Order permanently restraining, enjoining or
otherwise prohibiting the parties hereto from consummating the transactions
contemplated by this Agreement, and such Governmental Order shall have become
final and non-appealable; provided, however, that the right to terminate this
Agreement under this Section 9.01(c) shall not be available to any party hereto
as a result of the imposition of a Governmental Order unless such party shall
have used commercially reasonable efforts to oppose such Governmental Order or
to have such Governmental Order vacated or made inapplicable to the transactions
contemplated by this Agreement;
(d) by Sellers' Representative, on behalf of Sellers, if following the
date hereof, (i) any representation or warranty of Purchaser contained in this
Agreement shall have become inaccurate in any material respect, or (ii)
Purchaser shall have failed in any material respect to comply with any covenant
or agreement contained in this Agreement to be complied with by it prior to the
Closing; provided, however, that notwithstanding the foregoing, in the event
that any such inaccuracy or breach is curable by Purchaser, then Sellers'
Representative shall not be permitted to terminate this Agreement pursuant to
this Section 9.01(d) until the earlier to occur of (i) the expiration of a
thirty (30) calendar day period after delivery of written notice from Sellers'
Representative to Purchaser of such inaccuracy or breach, as applicable, and
(ii) the ceasing by Purchaser to exercise commercially reasonable efforts to
cure such inaccuracy or breach, as applicable, provided that Purchaser continues
to exercise commercially reasonable efforts to cure such inaccuracy or breach,
as applicable (it being understood that Sellers' Representative may not
terminate this Agreement pursuant to this Section 9.01(d) if such inaccuracy or
breach is cured by Purchaser within such thirty-calendar day period);
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(e) by Purchaser if, following the date hereof, (i) any representation
or warranty of Sellers, the Sherwin-Williams Claims Trust, Sellers'
Representative, Gentek Holdings, Gentek U.S. or Gentek Canada contained in this
Agreement shall have become inaccurate in any material respect, or (ii) any of
the Sellers, the Sherwin-Williams Claims Trust, Sellers' Representative, Gentek
Holdings, Gentek U.S. or Gentek Canada shall have failed in any material respect
to comply with any covenant or agreement contained in this Agreement to be
complied with by any of them prior to the Closing; provided, however, that
notwithstanding the foregoing, in the event that any such inaccuracy or breach
is curable by the applicable Seller, the Sherwin-Williams Claims Trust, Sellers'
Representative, Gentek Holdings, Gentek U.S. or Gentek Canada, as applicable,
then Purchaser shall not be permitted to terminate this Agreement pursuant to
this Section 9.01(e) until the earlier to occur of (i) the expiration of a
thirty (30) calendar day period after delivery of written notice from Purchaser
to Sellers' Representative of such inaccuracy or breach, as applicable, and (ii)
the ceasing by the applicable Seller, the Sherwin-Williams Claims Trust,
Sellers' Representative, Gentek Holdings, Gentek U.S. or Gentek Canada, as
applicable, to exercise commercially reasonable efforts to cure such inaccuracy
or breach, as applicable, provided that the applicable Seller, the
Sherwin-Williams Claims Trust, Sellers' Representative, Gentek Holdings, Gentek
U.S. or Gentek Canada, as applicable, continues to exercise commercially
reasonable efforts to cure such inaccuracy or breach, as applicable (it being
understood that Purchaser may not terminate this Agreement pursuant to this
Section 9.01(e) if such inaccuracy or breach is cured by the applicable Seller,
Sellers' Representative, Gentek Holdings, Gentek U.S. or Gentek Canada, as
applicable, within such thirty-calendar day period); or
(f) by Sellers' Representative, on behalf of Sellers, if the Best
Efforts Letter is withdrawn and Purchaser has failed to procure alternative
financing arrangements sufficient to consummate the transactions contemplated
hereby within fifteen (15) calendar days thereafter (it being understood and
hereby agreed that Purchaser shall notify Sellers' Representative in writing
promptly upon receipt by Purchaser or any of its representatives of any
notification that the Best Efforts Letter is being withdrawn).
Section 9.02. Effect of Termination.
(a) If this Agreement is terminated pursuant to Section 9.01 by
Purchaser or Sellers' Representative, on behalf of Sellers, written notice
thereof shall be given to the other party specifying the provision of Section
9.01 pursuant to which such termination is made, and this Agreement shall be
terminated and there shall be no liability hereunder on the part of the parties
hereto, except that the provisions of Section 6.03, this Section 9.02, and
Article XI shall survive any termination of this Agreement. Nothing in this
Section 9.02 shall relieve any party of liability for any willful breach of this
Agreement.
(b) In the event that Sellers' Representative shall terminate
this Agreement pursuant to Section 9.01(b) and the condition precedent set forth
in Section 8.03(d) is the only condition precedent to the obligations of
Purchaser set forth in
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Article VIII that is not satisfied at such time, then within two (2) calendar
days after such termination, Purchaser shall pay to Gentek Holdings and Sellers'
Representative an amount in cash, payable in immediately available funds, equal
to Seven Hundred and Fifty Thousand Dollars ($750,000). Notwithstanding anything
to the contrary set forth in this Agreement, the fee provisions set forth in
this Section 9.02(b) shall be the sole and exclusive remedy of Sellers, Sellers'
Representative, Gentek Holdings, Gentek U.S. and Gentek Canada, and represents
liquidated damages, for any and all claims arising out of the termination of
this Agreement under the circumstances set forth in this Section 9.02(b), other
than pursuant to claims arising out of fraud, willful misconduct or any
intentional breach of the agreements and covenants set forth in this Agreement.
Section 9.03. Waiver.
(a) Sellers' Representative, on behalf of Sellers, may (i) extend the
time for the performance of any of the obligations or other acts of Purchaser or
any of the obligations or other acts of Gentek Holdings or any of its
Subsidiaries to be performed after the Closing, (ii) waive any inaccuracies in
the representations and warranties of Purchaser contained herein or in any
document delivered by Purchaser pursuant hereto, (iii) waive compliance with any
of the agreements of Purchaser contained herein or, after the Closing,
compliance with any of the agreements of Gentek Holdings or any of its
Subsidiaries contained herein, or (iv) waive any condition contained in Section
8.01 or Section 8.02 (other than the condition to closing in respect of the
receipt of the ISRA Approvals, which may not be waived by any party hereto). Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by Sellers' Representative.
(b) Purchaser may (i) extend the time for the performance of any of
the obligations or other acts of any Seller, the Sherwin-Williams Claims Trust,
Sellers' Representative, Gentek Holdings or any of its Subsidiaries, (ii) waive
any inaccuracies in the representations and warranties of Gentek Holdings or its
Subsidiaries, any Seller or Sellers' Representative contained herein or in any
document delivered by Gentek Holdings or its Subsidiaries, or any Seller, the
Sherwin Williams Claims Trust, or Sellers' Representative pursuant hereto, (iii)
waive compliance with any of the agreements of Gentek Holdings or any of its
Subsidiaries, or any Seller, the Sherwin-Williams Claims Trust, or Sellers'
Representative contained herein, or (iv) waive any condition contained in
Section 8.01 or Section 8.03 (other than the condition to closing in respect of
the receipt of the ISRA Approvals, which may not be waived by any party hereto).
Any such extension or waiver shall be valid only if set forth in an instrument
in writing signed by Purchaser.
(c) Any waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.
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ARTICLE X.
INDEMNIFICATION
Section 10.01. Survival of Representations, Warranties, Covenants and
Obligations. The representations and warranties contained in this Agreement
shall survive the Closing until the first (1st) anniversary thereof; provided,
however, that (i) the representations and warranties set forth in Section 3.01
(Authority), Section 3.05 (Ownership of Shares and Options) and Section 4.02
(Capital Stock of Gentek Holdings, Gentek U.S. and Gentek Canada) shall survive
indefinitely, (ii) the representations and warranties set forth in Section 4.10
(Environmental Matters) shall survive the Closing until the third (3rd)
anniversary thereof, and (iii) the representations and warranties set forth in
Section 4.17 (Taxes) shall survive the Closing until sixty (60) calendar days
after the expiration of the applicable statute of limitations. The agreements
and covenants contained in this Agreement shall survive the Closing in
accordance with their respective terms. If written notice of a claim has been
given prior to the expiration of the applicable representations, warranties,
covenants or obligations then such representations, warranties, covenants or
obligations, as the case may be, shall survive as to such claim until the claim
has been finally resolved.
Section 10.02. Exclusive Remedy. Except in cases of fraud or willful
misconduct, from and after the Closing, the sole and exclusive remedy of the
parties hereto and their respective affiliates (after giving effect to the
consummation of the transactions contemplated by this Agreement) with respect to
any and all claims resulting from, arising out of or relating to the subject
matter of this Agreement shall be the indemnification provisions set forth in
this Article X. In furtherance of the foregoing, each of the parties hereto
hereby waives, to the fullest extent permitted under applicable Law, any and all
other rights, claims and causes of action it or any of its affiliates may have
(excluding rights, claims or causes of action of any party under this Article X
or for fraud or willful misconduct), from and after the Closing, against each of
the other parties hereto and their respective affiliates and each of their
respective officers, directors, employees, agents and representatives resulting
from, arising out of or relating to the subject matter of this Agreement.
Section 10.03. Indemnification by Purchaser. Purchaser shall indemnify each
Seller and Sellers' Representative and their respective affiliates and each of
their respective officers, directors, employees, agents, successors and assigns
(each an "Indemnified Seller Party") with respect to, and hold each of them
harmless from and against, any and all liabilities, losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties (including,
without limitation, attorneys' and consultants' fees and expenses) actually
suffered, incurred or sustained by any of them or to which any of them becomes
subject (including, without limitation, any Action brought or otherwise
initiated by any of them) (each, an "Indemnified Seller Loss"), resulting from,
arising out of or relating to (i) the failure of any representation or warranty
made by Purchaser contained in this Agreement to be true and correct in all
respects as of the date hereof and as of the Closing Date (determined without
giving effect to any "material," "Material Adverse Effect" or similar
qualification), (ii) any
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breach of any covenant or agreement made by Purchaser contained in this
Agreement or the Escrow Agreement, (iii) any breach of any covenant or agreement
to be performed after the Closing by Gentek Holdings, Gentek U.S. or Gentek
Canada and contained in this Agreement or the Escrow Agreement, (iv) (A) any
collective bargaining agreement applicable to any Transferred Employee, (B) any
claim made by any Transferred Employee for any severance or termination benefits
pursuant to the provisions of any plan, program or arrangement or any applicable
federal or state law, (C) any suit or claim of violation under the Worker
Adjustment and Retraining Notification Act of 1988, as amended through the date
hereof, for any actions taken by Purchaser, Gentek Holdings, Gentek U.S. or
Gentek Canada on or after the Closing Date with respect to any facility, site of
employment, operating unit or Transferred Employee, (D) any action taken on or
after the Closing Date by Purchaser, Gentek Holdings, Gentek U.S. or Gentek
Canada with respect to any Employee Plan, (E) any claim for payments or benefits
by Transferred Employees, Transferred Former Employees or their respective
beneficiaries under any Employee Plan, (v) any and all Steel Peel Claims, or
(vi) the conduct of the Business or any other action or omission by Purchaser,
Gentek Holdings, Gentek U.S., Gentek Canada or any of their Subsidiaries or
affiliates on or after the Closing Date, provided, however, that Purchaser shall
not be required to indemnify Sellers pursuant to this Section 10.03 for any
liabilities resulting from, arising out of or relating to the matters set forth
in clauses (iv) or (vi) above if such liabilities result from, arise out of or
relate to a breach of any representation or warranty made by Gentek Holdings,
Gentek U.S. or Gentek Canada in this Agreement or otherwise are for or related
to Taxes for Pre-Closing Periods or for which Sellers are otherwise liable under
this Agreement (other than Taxes resulting from actions taken on the Closing
Date after the Closing that are outside the ordinary course of business).
Section 10.04. Indemnification by Sellers and the Sherwin-Williams Claims
Trust.
(a) Sellers shall severally, and not jointly, indemnify Purchaser, its
affiliates (including, after the Closing, Gentek Holdings and its Subsidiaries),
and their respective officers, directors, employees, agents, successors and
assigns (each an "Indemnified Purchaser Party"), and hold each of them harmless
from and against, any and all liabilities, losses, damages, claims, costs and
expenses, interest, awards, judgments and penalties (including, without
limitation, attorneys' and consultants' fees and expenses) actually suffered,
incurred or sustained by any of them or to which any of them becomes subject
(including, without limitation, any Action brought or otherwise initiated by any
of them) (an "Indemnified Purchaser Loss"), resulting from, arising out of or
relating to (i) the failure of any representation or warranty made by Sellers
contained in this Agreement to be true and correct in all respects as of the
date hereof and as of the Closing Date (determined without giving effect to any
"material," "Material Adverse Effect" or similar qualification, whether in such
representation and warranty or any defined term contained in such representation
and warranty and, with respect to Section 4.17 (Taxes) only, determined without
giving effect to any matters set forth in the Disclosure Schedule), (ii) the
failure of any representation or warranty made by Sellers' Representative, the
Sherwin-Williams Claims Trust, Gentek Holdings, Gentek U.S. or Gentek Canada
contained in this Agreement to be true and correct in all
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respects as of the date hereof and as of Closing Date (determined without giving
effect to any "material," "Material Adverse Effect" or similar qualification,
whether in such representation and warranty or any defined term contained in
such representation and warranty and, with respect to Section 4.17 (Taxes) only,
determined without giving effect to any matters set forth in the Disclosure
Schedule), (iii) any breach of any covenant or agreement by Sellers contained in
this Agreement, (iv) any breach of any covenant or agreement to be performed
before or through the Closing by Sellers' Representative, the Sherwin-Williams
Claims Trust, Gentek Holdings, Gentek U.S. or Gentek Canada contained in this
Agreement or the Escrow Agreement, and (v) the Sherwin-Williams Litigation
Liabilities and the Sherwin-Williams Claims, to the extent that such Liabilities
have not been accrued in Working Capital as of the Closing. Notwithstanding the
foregoing but without prejudicing any right or entitlement of Purchaser to
receipt of full indemnification under this Article X from monies held in the
Indemnification Escrow, no Seller shall have any indemnification obligation
under this Section 10.04 with respect to any Indemnified Purchaser Loss
resulting from, arising out of or relating to any breach of any representation
or warranty made by any other Seller contained in this Agreement or any breach
of any covenant or agreement by any other Seller in this Agreement. For any
Indemnified Purchaser Loss resulting from, arising out of or relating to any
breach of any representation or warranty made by Gentek Holdings, Gentek U.S. or
Gentek Canada contained in this Agreement or any breach of any covenant or
agreement by Sellers' Representative, Gentek Holdings, Gentek U.S. or Gentek
Canada in this Agreement, the maximum amount that may be recovered from any
Seller shall be the amount of such Indemnified Purchaser Loss multiplied by such
Seller's Percentage Share; provided, that the foregoing shall not prejudice any
right or entitlement of Purchaser to receipt of full indemnification under this
Article X from monies held in the Indemnification Escrow.
(b) The Sherwin-Williams Claims Trust shall indemnify each Indemnified
Purchaser Party, and hold each of them harmless from and against, any
Indemnified Purchaser Loss, resulting from, arising out of or relating to (i)
the failure of any representation or warranty made by the Sherwin-Williams
Claims Trust contained in this Agreement to be true and correct in all respects
as of the date hereof and as of the Closing Date (determined without giving
effect to any "material," "Material Adverse Effect" or similar qualification,
whether in such representation and warranty or any defined term contained in
such representation and warranty), (ii) any breach of any covenant or agreement
by the Sherwin-Williams Claims Trust contained in this Agreement and (iii) the
Sherwin-Williams Litigation Liabilities, to the extent that such Liabilities
have not been accrued in Working Capital as of the Closing, provided, however,
that no Purchaser Indemnified Party shall exercise its right to indemnification
pursuant to this Section 10.04(b) unless the funds comprising the
Indemnification Escrow are insufficient or are otherwise unavailable to satisfy
such Indemnified Purchaser Losses.
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Section 10.05. Indemnification Claim and Notice of Loss.
(a) An Indemnified Seller Party or Indemnified Purchaser Party (each
an "Indemnified Party") shall give Purchaser or Sellers' Representative and the
Sherwin-Williams Claims Trust, as the case may be (in such capacity, an
"Indemnifying Party"), notice of any matter, other than a Third Party Claim,
which such Indemnified Party has determined has given or could reasonably be
expected to give rise to a right of indemnification under this Agreement, within
thirty (30) calendar days of such determination, stating the amount of the
Indemnified Seller Loss or Indemnified Purchaser Loss, as applicable, if known,
and method of computation thereof, and containing a description in reasonable
detail of the basis for such claim and a reference to the provision(s) of this
Agreement in respect of which such right of indemnification is claimed or
arises; provided, however, that the failure to provide such notice shall not
release the Indemnifying Party from any of its obligations under this Article X
except to the extent the Indemnifying Party is materially prejudiced by such
failure and shall not relieve the Indemnifying Party from any other obligation
or Liability that it may have to any Indemnified Party otherwise than under this
Article X.
(b) The obligations and Liabilities of Purchaser or Sellers and the
Sherwin-Williams Claims Trust under this Article X with respect to Indemnified
Seller Losses or Indemnified Purchaser Losses, as the case may be, arising from
claims of any third party other than claims with respect to Taxes (which are
covered in Section 7.02) ("Third Party Claims") shall be governed by and
contingent upon the following additional terms and conditions:
(i) If an Indemnified Party shall receive notice of any Third
Party Claim, the Indemnified Party shall give the Indemnifying Party notice of
such Third Party Claim within twenty (20) calendar days of the receipt by the
Indemnified Party of notice of such Third Party Claim; provided, however, that
the failure to provide such notice shall not release the Indemnifying Party from
any of its obligations under this Article X except to the extent the
Indemnifying Party is materially prejudiced by such failure and shall not
relieve the Indemnifying Party from any other obligation or Liability that it
may have to any Indemnified Party otherwise than under this Article X.
(ii) If (x) the Indemnifying Party acknowledges in writing its
obligation to indemnify the Indemnified Party hereunder against any Indemnified
Seller Loss or Indemnified Purchaser Loss, as the case may be, that may result
from such Third Party Claim, and (y) in any case where the Indemnified Party is
an Indemnified Purchaser Party, the liabilities arising out of such Third Party
Claim would not reasonably be expected to exceed an amount equal to two times
the amount of the Indemnifying Party's indemnification obligations under this
Article X in respect of any Indemnified Purchaser Losses arising out of such
Third Party Claim, then the Indemnifying Party shall be entitled to assume and
control the defense of such Third Party Claim at its sole cost and expense and
through counsel of its own choice by giving notice to the Indemnified Party of
its intention to do so within fifteen (15) calendar days of the receipt of
notice of such Third Party Claim from the Indemnified Party; provided, however,
that (A) if there exists or is reasonably likely to exist a conflict of interest
that
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would make it inappropriate, in the reasonable, good faith judgment of the
Indemnified Party, for the same counsel to represent both the Indemnified Party
and Indemnifying Party, or (B) if there is a reasonable probability that such
Third Party Claim may have a material adverse effect on the Indemnified Party
other than as a result of money damages or other money payments, then the
Indemnified Party shall be entitled to participate in the defense of (but not
control) such Third Party Claim, at its sole cost and expense and through
counsel of its own choice; and provided further, that (x) if such Third Party
Claims involve a claim for an injunction against any material business or
operations of the Indemnified Party, (y) if such Third Party Claim involves a
criminal proceeding, action, indictment, allegation or investigation or (z) if
such Third Party Claim involves any of the top twenty (20) customers or top
twenty (20) suppliers of Gentek Holdings or any of its Subsidiaries, in each
case for the year 2002, then the Indemnified Party shall be entitled to retain
control of the defense of such Third Party Claim and the Indemnifying Party
shall be entitled to participate in the defense of such Third Party Claim, at
its sole cost and expense and through counsel of its own choice. Upon receipt by
an Indemnified Party of written notice of the Indemnifying Party's election to
assume the defense of such Third Party Claim, the Indemnifying Party shall not
be liable to such Indemnified Party for expenses incurred thereafter by the
Indemnified Party in connection with the defense of such Third Party Claim.
(iii) In the event that the Indemnifying Party shall exercise its
right to undertake any such defense against any such Third Party Claim, the
Indemnified Party shall cooperate with the Indemnifying Party in such defense
and make available to the Indemnifying Party, at the Indemnifying Party's sole
cost and expense, all witnesses, pertinent records, materials and information in
the Indemnified Party's possession or under the Indemnified Party's control
relating thereto as is reasonably requested by the Indemnifying Party.
Similarly, in the event the Indemnified Party is, directly or indirectly,
controlling or participating in the defense against any such Third Party Claim,
the Indemnifying Party shall cooperate with the Indemnified Party in such
defense and make available to the Indemnified Party, at the Indemnifying Party's
sole cost and expense, all such witnesses, records, materials and information in
the Indemnifying Party's possession or under the Indemnifying Party's control
relating thereto as is reasonably requested by the Indemnified Party.
(iv) No Third Party Claim may be settled by the Indemnifying
Party or the Indemnified Party, as the case may be, without the prior written
consent of the other party (which consent shall not be unreasonably withheld or
delayed).
Section 10.06. Limitations on Indemnification.
(a) The maximum amount of Indemnified Seller Losses or Indemnified
Purchaser Losses, as applicable, which may be recovered from Purchaser, Sellers
or the Sherwin-Williams Claims Trust, as applicable, pursuant to the
indemnification obligations set forth in Section 10.03(i), Section 10.04(a)(i),
Section 10.04(a)(ii) and Section 10.04(b)(i) shall be an amount equal to the
funds then held in the Indemnification Escrow; provided, however, that (i) the
limitations contained in this Section 10.06(a) shall not apply to any
Indemnified Purchaser Losses
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resulting from, arising out of or relating to the failure of the representations
and warranties contained in Section 3.01 (Authority), Section 3.04 (Brokers),
Section 3.05 (Ownership of Shares and Options), Section 4.02 (Capital Stock of
Gentek Holdings, Gentek U.S. and Gentek Canada) and Section 4.17 (Taxes) to be
true and correct in all respects as of the date hereof and as of the Closing
Date (determined without giving effect to any "material," "Material Adverse
Effect" or similar qualification, whether in such representation and warranty or
any defined term contained in such representation and warranty and, with respect
to Section 4.17 (Taxes) only, determined without giving effect to any matters
set forth in the Disclosure Schedule), or any Indemnified Seller Losses
resulting from, arising out of or relating to the failure of the representations
and warranties contained in Section 5.01 (Organization and Authority) to be true
and correct in all respects as of the date hereof and as of the Closing Date,
and (ii) the limitations contained in this Section 10.06(a) shall not apply to
any Indemnified Purchaser Losses to the extent that the funds then held in the
Indemnification Escrow have been reduced or depleted as a result of any claim
for indemnification resulting from, arising out of or relating to the failure of
the representations and warranties contained in Section 4.17 (Taxes) to be true
and correct in all respects as of the date hereof and as of the Closing Date
(determined without giving effect to any "material," "Material Adverse Effect"
or similar qualification, whether in such representation and warranty or any
defined term contained in such representation and warranty and, with respect to
Section 4.17 (Taxes) only, determined without giving effect to any matters set
forth in the Disclosure Schedule); provided, however, that notwithstanding the
foregoing proviso, (x) the maximum amount of Indemnified Purchaser Losses that
may be recovered from any Seller shall be such Seller's Percentage Share of the
Purchase Price, provided, that the foregoing shall not prejudice any right or
entitlement of Purchaser to receipt of full indemnifications under this Article
X from monies held in the Indemnification Escrow, (y) the maximum aggregate
amount of Indemnified Purchaser Losses that may be recovered from the
Sherwin-Williams Claims Trust shall be an amount equal to the assets held or
recovered by the Sherwin-Williams Claims Trust, and (z) that the maximum
aggregate amount of Indemnified Seller Losses that may be recovered from
Purchaser shall be the Purchase Price.
(b) The indemnification obligations of Purchaser, Sellers and the
Sherwin-Williams Claims Trust pursuant to Section 10.03(i), Section 10.04(a)(i),
Section 10.04(a)(ii) and Section 10.04(b)(i), respectively, shall not be
effective unless and until the aggregate dollar amount of all Indemnified Seller
Losses or Indemnified Purchaser Losses, as the case may be, which would
otherwise be recoverable from Purchaser, Sellers or the Sherwin-Williams Claims
Trust, as applicable, pursuant to the indemnification obligations set forth in
Section 10.03(i), Section 10.04(a)(i), Section 10.04(a)(ii) and Section
10.04(b)(i), respectively, exceeds Seven Hundred Thousand Dollars ($700,000)
(the "Threshold Amount"), and then only to the extent such aggregate amount
exceeds the Threshold Amount; provided, however, that (i) the limitations
contained in this Section 10.06(b) shall not apply to any Indemnified Purchaser
Losses resulting from, arising out of or relating to the failure of the
representations and warranties contained in Section 3.01 (Authority), Section
3.04 (Brokers), Section 3.05 (Ownership of Shares and Options), Section 4.02
(Capital Stock of Gentek Holdings, Gentek U.S. and Gentek Canada) and Section
4.17 (Taxes) to be
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true and correct in all respects as of the date hereof and as of the Closing
Date (determined without giving effect to any "material," "Material Adverse
Effect" or similar qualification, whether in such representation and warranty or
any defined term contained in such representation and warranty and, with respect
to Section 4.17 (Taxes) only, determined without giving effect to any matters
set forth in the Disclosure Schedule), or any Indemnified Seller Losses
resulting from, arising out of or relating to the failure of the representations
and warranties contained in Section 5.01 (Organization and Authority) to be true
and correct in all respects as of the date hereof and as of the Closing Date,
(ii) Sellers shall not be liable for Indemnified Purchaser Losses arising out of
or relating to the failure of the representations and warranties contained in
Section 4.17 (Taxes) to be true and correct in all respects as of the date
hereof and as of the Closing Date (determined without giving effect to any
"material," "Material Adverse Effect" or similar qualification, whether in such
representation and warranty or any defined term contained in such representation
and warranty and, with respect to Section 4.17 (Taxes) only, determined without
giving effect to any matters set forth in the Disclosure Schedule) unless and
until the aggregate dollar amount of all such Indemnified Purchaser Losses
exceed Two Hundred Thousand Dollars ($200,000), and then only to the extent that
such Indemnified Purchaser Losses exceed such amount, and (iii) Sellers shall
not be liable for Indemnified Purchaser Losses arising out of or relating to the
failure of the representations and warranties contained in Section 4.17 (Taxes)
to be true and correct in all respects as of the date hereof and as of the
Closing Date (determined without giving effect to any "material," "Material
Adverse Effect" or similar qualification, whether in such representation and
warranty or any defined term contained in such representation and warranty and,
with respect to Section 4.17 (Taxes) only, determined without giving effect to
any matters set forth in the Disclosure Schedule) in excess of the funds then
held in the Indemnification Escrow unless and until the aggregate dollar amount
of all such Indemnified Purchaser Losses in excess of the funds then held in the
Indemnification Escrow exceed Two Million Five Hundred Thousand ($2,500,000),
and then only to the extent that such Indemnified Purchaser Losses exceed such
amount.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, (i) prior to recovering any Indemnified Purchaser Losses from any
Seller or the Sherwin-Williams Claims Trust pursuant to the indemnification
obligations of Sellers or the Sherwin-Williams Claims Trust, as the case may be,
set forth in this Article X, an Indemnified Purchaser Party shall first recover
such Indemnified Purchaser Losses from the funds then held in the
Indemnification Escrow, if any, and (ii) to the extent that no funds or
insufficient funds are then held in the Indemnification Escrow, prior to
recovering any Indemnified Purchaser Losses from any Seller pursuant to the
indemnification obligations of Sellers set forth in Section 10.04(a)(v), an
Indemnified Purchaser Party shall first recover such Indemnified Purchaser
Losses pursuant to the indemnification obligations of the Sherwin-Williams
Claims Trust set forth in Section 10.04(b)(iii) from the funds then held by the
Sherwin-Williams Claims Trust.
(d) For the purposes of this Section 10.06, in computing the
individual or aggregate amounts of claims, the amount of each claim shall be
calculated
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net of any insurance proceeds (net of any increase in premiums directly
resulting from any such claims, as reasonably demonstrated by the Indemnified
Party) and any indemnity, contribution or other similar payment actually
received by the Indemnified Party, or any affiliate thereof, from any third
party with respect thereto (it being understood and hereby agreed that the
Indemnified Party shall use commercially reasonable efforts to collect any
available insurance proceeds and any indemnities, contributions or other similar
payments from third parties, but shall not be required to commence litigation
against any third parties).
(e) In the event that any Indemnified Purchaser Party is entitled to
indemnification of any Indemnified Purchaser Losses pursuant to a claim for
indemnification under Section 10.04, and such Indemnified Purchaser Party
reasonably determines, in good faith, that such Indemnified Purchaser Party has
actually received or realized in connection therewith any reduction of its Tax
Liabilities (calculated on the basis of the actual reduction in cash payments
for Taxes) in or prior to the taxable year in which the indemnification amount
is paid (a "Tax Benefit"), the indemnification amount that Purchaser is entitled
to recover pursuant to a claim for indemnification under Section 10.04 shall be
reduced, on a dollar for dollar basis, by the amount of such Tax Benefit;
provided, however, that with respect to any Tax Benefit offset contemplated by
this Section 10.06(e), (i) Purchaser shall not be obligated to file amended Tax
Returns for such purpose, and (ii) nothing in this Section 10.06(e) shall
require Purchaser to disclose any confidential information to Sellers
(including, without limitation, its Tax Returns).
ARTICLE XI.
MISCELLANEOUS
Section 11.01. Expenses. Except as otherwise specified in this Agreement,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred. All fees payable under the Competition Act in connection with the
transactions contemplated hereby shall be paid by Purchaser.
Section 11.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly delivered, given or made: (i) upon receipt if delivered in person or by
cable or telegram, (ii) five (5) business days following deposit in the mails if
sent by registered or certified mail (postage prepaid, return receipt
requested), (iii) when sent, if sent by facsimile transmission and receipt
thereof is confirmed by telephone and (iv) two (2) business days following
deposit with a nationally recognized overnight courier service, in each case, to
the respective parties hereto at their addresses set forth on the signature
pages to this Agreement (or at such other address for a party hereto as shall be
specified in a notice given in accordance with this Section 11.02).
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Section 11.03. Public Announcements. No party to this Agreement shall
make, or cause to be made, any press release or public announcement with respect
to this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media with respect thereto without the prior written
consent of the other parties, and the parties shall cooperate as to the timing
and contents of any such press release or public announcement; provided,
however, that such prior written consent (i) shall not be unreasonably withheld,
conditioned or delayed and (ii) shall not be required for releases,
announcements or communications to the extent obtaining such prior written
consent would prevent the timely and accurate dissemination of information as
required to comply with any applicable Law or obligation pursuant to any listing
agreement with any national securities exchange. For the avoidance of doubt and
not by way of limitation or restriction, notwithstanding anything in this
Agreement or the Confidentiality Agreement to the contrary, from and after the
Closing, Sellers' Representative shall be permitted to disclose the material
terms of the transactions contemplated by this Agreement in connection with
marketing and other similar activities in the ordinary course of business.
Section 11.04. Severability. If any term or other provision of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
Section 11.05. Entire Agreement. This Agreement, including the other
documents referred to herein which form a part hereof, constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, covenants, representations, warranties,
undertakings and understandings, written or oral, among the parties hereto with
respect to the subject matter hereof, including the Exclusivity Agreement dated
as of May 14, 2003 among Gentek Holdings, Genstar and Purchaser; provided,
however, that the Confidentiality Agreement shall continue to have force and
effect as provided in Section 6.03.
Section 11.06. Assignment. This Agreement may not be transferred,
assigned, pledged or hypothecated, by operation of law or otherwise, without the
express written consent of Sellers' Representative, on behalf of Sellers, and
Purchaser (which consent may be granted or withheld in the reasonable discretion
of each such party) except that Purchaser may without such consent assign its
rights under this Agreement to any of its affiliates or for the purpose of
securing any financing of the transactions contemplated hereby; provided,
however, that no such assignment by Purchaser shall relieve Purchaser of any of
its obligations hereunder.
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Section 11.07. No Third Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, whether express or implied, is intended to
or shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
Section 11.08. Amendment. This Agreement may not be amended, restated,
supplemented or otherwise modified except (i) by an instrument in writing signed
by Sellers' Representative, on behalf of Sellers, and Purchaser or (ii) by a
waiver in accordance with Section 9.03.
Section 11.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE.
Section 11.10. Jurisdiction. Any judicial proceeding brought against
any of the parties to this Agreement in connection with any dispute arising out
of this Agreement or the transactions contemplated hereby (each, a "Proceeding")
may be brought in the courts of the State of New York, or in the United States
District Court for the Southern District of New York, and, by execution and
delivery of this Agreement, each of the parties to this Agreement accepts the
exclusive jurisdiction of such courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. The foregoing
consent to jurisdiction shall not constitute general consents to service of
process in the State of New York for any purpose except as provided above and
shall not be deemed to confer rights on any Person other than the respective
parties to this Agreement. Each of the Sellers, Sellers' Representative and
Purchaser agree that service of any process, summons, notice or document by U.S.
registered mail to such party's address set forth below shall be effective
service of process for any action, suit or proceeding in the State of New York
with respect to any Proceeding.
Section 11.11. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO TRIAL
BY JURY IN RESPECT OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED ON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY
HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE. EACH OF THE PARTIES HERETO HEREBY AGREES
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT THE PARTIES HERETO MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
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Section 11.12. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each party hereto has executed, or caused its duly
authorized officer(s) to execute, this Agreement as of the date first written
above.
SELLERS
-------
GENSTAR STOCKHOLDERS:
THE MANUFACTURERS LIFE
INSURANCE COMPANY
439246 ONTARIO INC.
ROYAL TRUST CORPORATION OF
CANADA, TRUSTEE FOR DUPONT
CANADA INC. PENSION TRUST FUND
FIDUCIE DESJARDINS, COMPTE #43-
00418-7 FOR SOCIETE DE
TRANSPORT DE LA COMMUNAUTE
URBAINE DE MONTREAL
COMINCO PENSION FUND CO-
ORDINATING SOCIETY
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
ASSOCIATION DE BIENFAISANCE ET
DE RETRAITE DES POLICIERS DE LA
COMMUNAUTE URBAINE DE
MONTREAL
THE RETIREMENT PLAN FOR
EMPLOYEES OF CANADIAN
UTILITIES LIMITED AND
PARTICIPATING COMPANIES PLAN I
BANTOR COMPANY
CROWN LIFE INSURANCE COMPANY
DESJARDINS FINANCIAL SECURITY
LIFE ASSURANCE COMPANY
OEFC PRIVATE EQUITY HOLDCO
INC.
AXA SECONDARY FUND LP
PAUL CAPITAL PARTNERS VI
HOLDINGS
BPO PROPERTIES LTD.
SUN LIFE ASSURANCE COMPANY OF
CANADA
CITIBANK CANADA
CAPITAL GUIDANCE (PLACEMENTS)
LTD.
DAVOD H. BUTTERFIELD
RICHARD USHER-JONES
RAYQUEST HOLDINGS LTD.
MANFRED WIRTH
BMO NESBITT BURNS INC.
TOW PARTNERS, A CALIFORNIA
LIMITED PARTNERSHIP
G.R. DAWSON HOLDINGS LIMITED
INVENTURES CAPITAL
805491 ONTARIO INC.
ZURI-INVEST A.G.
ALDERPRISE INC.
DAVID L. ANDERSON
TERRY A. JACKSON
PATHONIC ULC
G. LEONARD BAKER, JR.
JIC
WIRRAL BOROUGH COUNCIL
MERCEYSIDE PENSION FUND
GE CAPITAL EQUITY INVESTMENT
LTD.
NORTH BAY LIMITED
ABN AMRO VENTURES BV
GENSTAR INVESTMENT
CORPORATION
RICHARDSON VENTURES INC.
By: Genstar Capital Corporation
By: /s/ William MacDonald
Name: William MacDonald
Title: Chairman and
President
1001 Corporate Drive
Burlington, ON L7L 5V5
Canada
Attn: Mr. William MacDonald
Telephone: (905) 319-5645
Telecopy: (905) 332-3765
with a copy to:
Genstar Capital L.P.
Four Embarcadero Center,
Suite 1900
San Francisco, CA 94111-4191
Attention: Richard D. Paterson
Telephone: (415) 834-2366
Telecopy: (415) 834-2383
and:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
One Market, Spear Tower
Suite 3300
San Francisco, California 94105
Attention: Michael J. Kennedy, Esq.
Telephone: (415) 947-2000
Telecopy: (415) 947-2099
ONTARIO TEACHERS' PENSION
PLAN BOARD
By: /s/ Glen Silvestri
Name: Glen Silvestri
Title: Assistant Portfolio Manager
5650 Yonge Street
Toronto, Ontario, M2M 4H5
Canada
Attention: Glen Silvestri
Telephone: (416) 730-6198
Telecopy: (416) 730-5082
DAVID L. BURKE
By: /s/ David L. Burke
Name: David L. Burke
KONG H. CHEN
By: /s/ Kong H. Chen
Name: Kong H. Chen
GEORGE E. ECKERD
By: /s/ George E. Eckerd
Name: George E. Eckerd
J. HERBERT GAUL, JR.
By: /s/ J. Herbert Gaul, Jr.
Name: J. Herbert Gaul, Jr.
JOSEPH P. IPPOLITO
By: /s/ Joseph P. Ippolito
Name: Joseph P. Ippolito
DARVIN L. KING
By: /s/ Darvin L. King
Name: Darvin L. King
STEPHEN L. KLEIN
By: /s/ Stephen L. Klein
Name: Stephen L. Klein
ALAIN LAROSE
By: /s/ Alain Larose
Name: Alain Larose
JEFFREY V. MILLER
By: /s/ Jeffrey V. Miller
Name: Jeffrey V. Miller
MICHAEL C. MILLER
By: /s/ Michael C. Miller
Name: Michael C. Miller
WAYNE G. PALMER
By: /s/ Wayne G. Palmer
Name: Wayne G. Palmer
JAN P. RANDLES
By: /s/ Jan P. Randles
Name: Jan P. Randles
ALAIN ROBITAILLE
By: /s/ Alain Robitaille
Name: Alain Robitaille
DONALD L. SPERRY
By: /s/ Donald L. Sperry
Name: Donald L. Sperry
DANIEL R. TAYLOR
By: /s/ Daniel R. Taylor
Name: Daniel R. Taylor
DENNIS M. THOMPSON
By: /s/ Dennis M. Thompson
Name: Dennis M. Thompson
JOHN UMIASTOWSKI
By: /s/ John Umiastowski
Name: John Umiastowski
THE SHERWIN-WILLIAMS CLAIMS TRUST
SHERWIN-WILLIAMS CLAIMS TRUST
By: Genstar Capital Corporation,
as Trustee
By: /s/ William MacDonald
Name: William MacDonald
Title: Chairman and
President
Genstar Capital Corporation,
Trustee
1001 Corporate Drive
Burlington, ON L7L 5V5
Canada
Attention: Mr. William MacDonald
Telephone: (905) 319-5645
Telecopy: (905) 332-3765
SELLERS' REPRESENTATIVE
GENSTAR CAPITAL CORPORATION
By: /s/ William MacDonald
Name: William MacDonald
Title: Chairman and President
1001 Corporate Drive
Burlington, ON L7L 5V5
Canada
Attn: Mr. William MacDonald
Telephone: (905) 319-5645
Telecopy: (905) 332-3765
with a copy to:
Genstar Capital L.P.
Four Embarcadero Center,
Suite 1900
San Francisco, CA 94111-4191
Attention: Richard D. Paterson
Telephone: (415) 834-2366
Telecopy: (415) 834-2383
and:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
One Market, Spear Tower
Suite 3300
San Francisco, California 94105
Attention: Michael J. Kennedy,
Esq.
Telephone: (415) 947-2000
Telecopy: (415) 947-2099
GENTEK HOLDINGS
GENTEK HOLDINGS, INC.
By: /s/ R. Kenneth Waldron
Name: R. Kenneth Waldron
Title: President and CEO
29325 Chagrin Blvd.
Cleveland, Ohio 44122-4613
Attention: President
Telephone: (216) 514-3595
Telecopy: (216) 514-3573
GENTEK U.S.
GENTEK BUILDING PRODUCTS, INC.
By: /s/ R. Kenneth Waldron
Name: R. Kenneth Waldron
Title: President and CEO
29325 Chagrin Blvd.
Cleveland, Ohio 44112-4614
Attention: President
Telephone: (216) 514-3595
Telecopy: (216) 514-3573
GENTEK CANADA
GENTEK BUILDING PRODUCTS LIMITED
By: /s/ R. Kenneth Waldron
Name: R. Kenneth Waldron
Title: President and CEO
1001 Corporate Drive,
Units 1 and 2
Burlington, Ontario L7L 5V5
Canada
Attention: President
Telephone: (905) 854-3200
Telecopy: (905) 854-3203
PURCHASER
ASSOCIATED MATERIALS INCORPORATED
By: /s/ Michael Caporale Jr.
Name: Michael Caporale Jr.
Title: President and CEO
3773 State Road
Cuyahoga Falls, Ohio 44223
Attention: D. Keith LaVanway
Telephone: (330) 922-2004
Telecopy: (330) 922-2312
with a copy to:
Harvest Partners, Inc.
280 Park Avenue, 33rd Floor
New York, New York 10017
Attention: Ira Kleinman
Telephone: (212) 599-6300
Telecopy: (212) 812-0100
and:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: Oliver C. Brahmst, Esq.
Telephone: (212) 819-8200
Telecopy: (212) 354-8113