Exhibit 10
CONVEYANCE AND TRANSFER AGREEMENT
DATED AS OF
JUNE 27, 2000
BY AND BETWEEN
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP
AND
BORDEN CHEMICAL, INC.
TABLE OF CONTENTS
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Section 1. Definitions................................................ 1
Section 2. Basic Transaction.......................................... 8
2.1 Purchase and Sale of Purchased Assets; Assumption of
Assumed Liabilities........................................ 8
2.2 Purchase Price............................................. 8
2.3 Inventory; Formaldehyde Inventory Purchase Price........... 9
2.4 Option..................................................... 9
Section 3. Closing(s) and Closing Date(s)............................. 9
3.1 Closing(s)................................................. 9
3.2 Closing Date(s); Possession................................ 9
3.3 Deliveries at the Closing.................................. 10
3.4 Deliveries at the Second Closing........................... 11
3.5 Allocation of Purchase Price............................... 12
Section 4. Representations and Warranties of Seller................... 13
4.1 Authorization.............................................. 13
4.2 Noncontravention; Consents................................. 13
4.3 Brokers' Fees.............................................. 14
4.4 Real Property.............................................. 14
4.5 Title to Personal Property................................. 15
4.6 Certain Financial Information.............................. 15
4.7 Contracts.................................................. 15
4.8 Intellectual Property...................................... 15
4.9 Litigation................................................. 15
4.10 Taxes...................................................... 16
4.11 Compliance with Laws....................................... 16
4.12 Purchased Assets........................................... 16
4.13 Employee Benefits.......................................... 16
4.14 Environmental Matters...................................... 17
4.15 Limited Warranties......................................... 17
Section 5. Representations and Warranties of Purchaser................ 18
5.1 Authorization.............................................. 18
5.2 Noncontravention........................................... 18
5.3 Brokers' Fees.............................................. 18
5.4 Litigation................................................. 18
5.5 No Other Representations or Warranties..................... 19
Section 6. Pre-Closing Covenants...................................... 19
6.1 General.................................................... 19
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6.2 Operation of the Formaldehyde Business..................... 19
6.3 Certain Interim Operating Agreements....................... 19
6.4 Access..................................................... 20
6.5 Notice of Developments..................................... 20
6.6 Employment Matters......................................... 21
6.7 Non-Solicitation; Break-Up Fee............................. 22
6.8 Title Binder and Survey.................................... 22
6.9 Condemnation............................................... 23
6.10 Inspection and Environmental Matters....................... 23
6.11 Urea Purchase Agreement.................................... 24
6.12 Methanol Sales............................................. 24
Section 7. Post-Closing Covenants..................................... 25
7.1 Further Assurances......................................... 25
7.2 Agreements Regarding Tax Matters........................... 25
7.3 Interim Period and Extended Period Operations.............. 26
7.4 Allocation of Profits and Losses During the Interim Period
and Extended Period........................................ 28
7.5 Title Insurance............................................ 31
7.6 Non-Competition; Non-Solicitation.......................... 31
7.7 Confidentiality............................................ 32
7.8 Employees.................................................. 32
7.9 Common Site Standards...................................... 35
Section 8. Closing Conditions......................................... 35
8.1 Conditions to Obligation of Purchaser...................... 35
8.2 Conditions to Obligation of Seller......................... 36
8.3 Conditions to Obligation of Purchaser - Second Closing..... 37
8.4 Conditions to Obligation of Seller - Second Closing........ 38
Section 9. Remedies for Breaches of this Agreement.................... 39
9.1 Assumed Liabilities; Excluded Liabilities.................. 39
9.2 Representations, Warranties and Covenants.................. 40
9.3 Matters Involving Third Parties............................ 40
9.4 Indemnification Limitations................................ 41
9.5 Exclusive Remedy........................................... 41
Section 10. Termination................................................ 41
10.1 Termination of Agreement................................... 41
10.2 Effect of Termination...................................... 42
Section 11. Miscellaneous.............................................. 42
11.1 Press Releases and Announcements........................... 42
11.2 Expenses; Transfer Taxes................................... 42
11.3 Remedies................................................... 42
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11.4 Consent to Amendments...................................... 43
11.5 Successors and Assigns..................................... 43
11.6 Severability............................................... 43
11.7 Counterparts............................................... 43
11.8 Descriptive Headings....................................... 43
11.9 Notices.................................................... 43
11.10 No Third-Party Beneficiaries............................... 44
11.11 Entire Agreement........................................... 44
11.12 Construction............................................... 44
11.13 Incorporation of Exhibits and Schedules.................... 44
11.14 Power of Attorney.......................................... 45
11.15 Governing Law.............................................. 45
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Exhibits
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Exhibit A - Contract List
Exhibit B - List of Excluded Assets
Exhibit C - List of Optioned Assets
Exhibit D - List of Purchased Assets
Exhibit E - Utilities and Services Agreement
Exhibit F - Barge Dock Agreement
Exhibit G - Environmental Indemnity Agreement
Exhibit H - Control Room Agreement
Exhibit I - Site Plan (with real estate to be transferred highlighted)
Exhibit J - Promissory Note
Exhibit K - Calculation of Profits and Losses
Exhibit L - [Reserved]
Exhibit M - Amendment to Intercompany Agreement
Exhibit N - Transition Services Agreement
Exhibit O - [Reserved]
Exhibit P - Ground Lease
Exhibit Q - Mutual Release and Termination Agreement
Exhibit R - Separate Ownership Agreement
Schedules
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Schedule 4.2 Noncontravention; Consents
Schedule 4.4 Title to Real Property
Schedule 4.5 Personal Property
Schedule 4.6 Financial Information
Schedule 4.8 Intellectual Property
Schedule 4.9 Litigation
Schedule 4.10 List of Leased Assets
Schedule 4.11 List of Permits and Methanol Permits
Schedule 4.13 List of "Seller's Plans"
Schedule 4.14 Environmental Matters
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CONVEYANCE AND TRANSFER AGREEMENT
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This CONVEYANCE AND TRANSFER AGREEMENT dated as of June 27, 2000 is
made by and between Borden Chemicals and Plastics Operating Limited Partnership,
a Delaware limited partnership ("Seller"), and Borden Chemical, Inc., a Delaware
corporation ("Purchaser").
R E C I T A L S
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WHEREAS, Seller owns and operates certain assets, rights and properties
and has certain liabilities and obligations associated therewith (including the
"Purchased Assets," the "Assumed Liabilities" and the "Optioned Assets," as each
is defined below) that are utilized in or relate to its "Methanol Business" and
"Formaldehyde Business" (as each is defined below);
WHEREAS, Seller desires to convey and transfer, and Purchaser desires
to purchase and assume, the entire interest of Seller in the Purchased Assets
and the Assumed Liabilities; and
WHEREAS, Seller desires to grant Purchaser an option to acquire the
Optioned Assets;
NOW THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the value, receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Definitions. For purposes of this Agreement, the
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following terms have the meanings set forth below:
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended; provided that
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for purposes hereof, Purchaser, on the one hand, and the Seller Entities, on the
other hand, shall not be deemed to be Affiliates.
"Agreement" means this Conveyance and Transfer Agreement, as the same
may be amended from time to time in accordance with the terms hereof.
"Amendment to Intercompany Agreement" means an amendment, in
substantially the form attached hereto as Exhibit M, to the Intercompany
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Agreement dated November 30, 1987, among Borden Chemicals and Plastics Limited
Partnership, a Delaware limited partnership (the "Partnership"); Seller; Borden,
Inc., a New Jersey corporation ("Borden"); and BCP Management, Inc., a Delaware
corporation and the general partner of Seller ("BCPM").
"Ammonia Purchase Agreement" means that certain Ammonia Purchase
Agreement dated as of November 30, 1987, by and between Purchaser and Seller, as
amended.
"Ancillary Agreements" means, collectively, the Amendment to
Intercompany Agreement, Bill of Sale, Assignment and Assumption Agreement,
Special Warranty Deed, Separate Ownership Agreement, Ground Lease, Mutual
Release and Termination Agreement, Utilities and Services Agreement, Barge Dock
Agreement, Environmental Indemnity Agreement,
Control Room Agreement, Promissory Note, Transition Services Agreement and any
easements and other agreements which may be required to complete the
transactions contemplated by this Agreement. If the Option granted Purchaser
under Section 2.4 is exercised, "Ancillary Agreements" also means the documents
delivered at the Second Closing pursuant to Section 3.4(a) and (b).
"Assignment and Assumption Agreement" means an assignment by Seller of
the Contracts, the Formaldehyde Intellectual Property and all other intangible
assets included in the Purchased Assets, and an assumption by Purchaser of the
Assumed Liabilities, in the form delivered at the Closing.
"Assumed Liabilities" means all liabilities and obligations under (a)
the BASF Sales Agreement other than the BASF Credit, and (b) the other
agreements, arrangements and understandings listed on Exhibit A (collectively
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with the BASF Sales Agreement, the "Contracts").
"BASF" means BASF Corporation, a Delaware corporation.
"BASF Consent" means the consent of BASF to the assignment by Seller to
Purchaser of all of Seller's rights, and the assumption by Purchaser of all of
Seller's liabilities and obligations, under the BASF Sales Agreement, other than
the BASF Credit.
"BASF Credit" means the obligation of Seller to pay an amount equal to
$250,000 per month to BASF in respect of the monthly credit payable under the
BASF Sales Agreement.
"BASF Sales Agreement" means that certain BASF Sales Agreement between
Seller and BASF dated as of May 31, 1989, as amended as of January 1, 2000.
"Barge Dock Agreement" means the agreement between Purchaser and Seller
regarding Seller's right to use the barge dock to be transferred to Purchaser
and the fee to be paid to Purchaser for such use in substantially the form
attached hereto as Exhibit F.
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"Bill of Sale" means one or more bills of sale by Seller conveying to
Purchaser all of Seller's right, title and interest in the tangible assets
included in the Purchased Assets, in recordable form to the extent necessary.
"Businesses" means the Formaldehyde Business and the Methanol Business.
"Closing" means the consummation of the transactions contemplated by
Section 2.1 of this Agreement. If the Option granted Purchaser under Section
2.4 is exercised, the consummation of the purchase and sale of the Optioned
Assets is referred to as the "Second Closing." The Closing and the Second
Closing are sometimes referred to collectively as the "Closings."
"Confidentiality Agreement" means that certain Confidentiality
Agreement dated as of April 10, 2000 by and between Purchaser and Seller.
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"Control Room Agreement" means the agreement between Purchaser and
Seller, in substantially the form attached hereto as Exhibit H.
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"Employees" means the employees of BCPM employed in the Formaldehyde
Business, tank farm operations and barge dock.
"Environmental Law" means any and all applicable Laws regulating,
relating to or imposing liability or standards of conduct concerning protection
of the environment or of human health.
"Environmental Indemnity Agreement" means the agreement between
Purchaser and Seller regarding the rights and obligations of such parties with
respect to environmental matters in substantially the form attached hereto as
Exhibit G.
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"Environmental Reports" means any report, study, assessment, audit, or
other similar document that addresses any issue of actual or potential
noncompliance with, actual or potential liability under or cost arising out of,
or actual or potential impact on the Businesses in connection with, any
Environmental Law or any proposed or anticipated change in or addition to
Environmental Law, that may affect the Purchased Assets or the Businesses.
"Excluded Assets" means (a) the Optioned Assets, (b) the Intellectual
Property licensed to Seller pursuant to the Use of Name and Trademark Agreement
between Seller and Borden and (c) those assets located in or upon the Real
Property that are listed or described in Exhibit B attached hereto and made a
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part hereof.
"Excluded Liabilities" means all liabilities or obligations of any
nature, other than those arising out of the performance of (a) the Contracts
following the Closing Date (other than obligations in respect of the BASF
Credit) or (b) if the Option is exercised, the Methanol Contracts following the
Second Closing Date. Without limiting the foregoing, the following liabilities,
obligations and commitments, express or implied, known or unknown, shall be
considered "Excluded Liabilities" and shall not be assumed by Purchaser:
(i) any liability, obligation or commitment of Seller relating to or
arising out of (A) the Formaldehyde Business or any Purchased Asset at or
prior to the Closing Date or (B) the Methanol Business or the Optioned
Assets at or prior to the Second Closing Date;
(ii) any liability, obligation or commitment relating to, pertaining
to, or arising out of (A) the Formaldehyde Business or the Purchased Assets
with respect to Taxes for periods or portions thereof ending on or prior to
the Closing Date or (B) the Methanol Business or the Optioned Assets with
respect to Taxes for periods or portions thereof ending on or prior to the
Second Closing Date, including but not limited to, any Taxes arising in
connection with the consummation of the transactions contemplated hereby
(other than those Taxes specifically allocated to Purchaser pursuant to the
terms hereof);
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(iii) any liability, obligation or commitment of Seller arising out
of any actual or alleged breach or nonperformance by Seller under (A) any
Contract prior to the Closing, (B) any Methanol Contract prior to the
Second Closing or (C) any other contract, agreement or commitment of
Seller, or any breach or alleged breach thereof, whether arising before or
after the Closing;
(iv) any liability, obligation or commitment of Seller (A) relating to
the Formaldehyde Business or Purchased Assets and arising out of any
action, suit or proceeding pending or threatened as of the Closing Date or
relating to events occurring prior to the Closing or (B) relating to the
Methanol Business or Optioned Assets and either arising out of any action,
suit or proceeding pending or threatened as of the Second Closing Date or
relating to events occurring prior to the Second Closing;
(v) except as expressly provided in Section 7.8, all liabilities,
obligations and commitments arising under any employee benefit plan; and
(vi) any liability, obligation or commitment that relates to or arises
out of products manufactured, shipped or sold by or on behalf of (A) the
Formaldehyde Business prior to the Closing or (B) the Methanol Business
prior to the Second Closing, including claims of negligence, personal
injury, product damage, product liability or any other claims (including
workers' compensation, employer's liability or otherwise), whether such
liability, obligation or commitment arises out of injuries or losses
occurring prior to, on or after the Closing Date.
"Formaldehyde Business" means the production of formaldehyde and UF
concentrate by the Seller Entities in Geismar, Louisiana.
"Formaldehyde Intellectual Property" means Intellectual Property that
is used in connection with the Formaldehyde Business. "Formaldehyde Intellectual
Property" includes, but is not limited to, all rights, licenses and know-how
pertaining to the Formaldehyde Business which were acquired by Seller from
Borden pursuant to the Patent and Know-How Agreement, dated November 30, 1987,
and any and all improvements thereon.
"Formaldehyde Processing Agreement" means that certain Formaldehyde
Processing Agreement dated as of November 30, 1987 by and between Purchaser and
Seller, as amended.
"Governmental Entity" means any domestic government, or agency, bureau,
board, commission, court, police jury, department, official, political
subdivision, tribunal or other instrumentality thereof, whether federal, state,
parish or local.
"Ground Lease" means the ground lease between Purchaser and Seller, in
substantially the form attached hereto as Exhibit P.
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"Intellectual Property" means U.S. and foreign intellectual property,
including, without limitation, patents, inventions, discoveries, processes,
techniques, formulae, research and
4.14-4
development, procedures, technology and related know-how and improvements,
copyrights and copyrightable works (including computer software, programs,
applications, code, databases, documentation, Internet site content, systems,
mask works and networks), trademarks, service marks, trade names, corporate
names, logos, domain names and other source indicators, and the goodwill of any
business symbolized thereby, trade secrets, confidential, proprietary or
technical data, plans, patterns, designs, manuals, materials or documents in any
media.
"Law" means any constitutional provision, statute, law (including
without limitation common law), code, rule, regulation, ordinance, Permit,
Methanol Permit, decree, injunction, judgment, order, ruling, determination,
finding, writ or other legally enforceable requirement of any Governmental
Entity.
"Lien" means any mortgage, pledge, security interest, charge, claim or
other encumbrance, other than (a) mechanics', materialmen's and similar liens,
(b) liens for Taxes not yet due and payable and (c) liens securing rental
payments not yet due under capital lease arrangements included in the Contracts.
"Limited Partnership Agreement" means the Amended and Restated Limited
Partnership Agreement of Seller dated as of November 30, 1987, by and among BCPM
as general partner, Borden as organizational limited partner and the Partnership
as limited partner, as amended from time to time in accordance with the terms
thereof.
"Materials of Environmental Concern" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, asbestos, pollutants, contaminants, radioactivity,
and any other substances of any kind, that is regulated pursuant to or could
give rise to liability under any applicable Environmental Law.
"Methanol Business" means the production of methanol by the Seller
Entities in Geismar, Louisiana.
"Methanol Employees" means the employees of BCPM employed in the
Methanol Business.
"Methanol Intellectual Property" means Intellectual Property that is
used in connection with the Methanol Business. "Methanol Intellectual Property"
includes, but is not limited to, all rights, licenses and know-how pertaining to
the Methanol Business which were acquired by Seller from Borden pursuant to the
Patent and Know-How Agreement, dated November 30, 1987, and any and all
improvements thereon.
"Methanol Purchase Agreement" means (a) that certain Methanol Purchase
Agreement dated as of November 30, 1987, by and between Purchaser and Seller, as
amended, and (b) that certain Option Agreement dated as of December 23, 1998,
extending the term thereof.
"Mutual Release and Termination Agreement" means the agreement between
Purchaser and Seller, in substantially the form attached hereto as Exhibit Q,
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releasing Purchaser
4.14-5
and Seller from their obligations under (a) the Formaldehyde Processing
Agreement, Ammonia Purchase Agreement and Urea Formaldehyde Concentrate
Processing Agreement as of the Closing Date and (b) the Methanol Purchase
Agreement effective as of December 31, 2000.
"Optioned Assets" means:
(a) the machinery, equipment, pipelines (including underlying rights
of way), control systems, tanks and other personal property listed or
described in Exhibit C attached hereto;
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(b) all rights under contracts described in Exhibit C (the "Methanol
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Contracts");
(c) the Methanol Intellectual Property, together with all
registrations, applications, renewals, reexaminations, continuations,
continuations-in-part, divisionals, reissues and similar rights relating
thereto and the right to bring an action at law or in equity for the
infringement thereof prior to the Second Closing Date, including the right
to receive all awards, damages and proceeds relating thereto;
(d) if and to the extent transferable, Seller's rights under all
licenses, permits or franchises issued by any Governmental Entity required
for the operation of the Methanol Business or the Optioned Assets
(including, without limitations, all VOC credits and banked VOC credits for
sources included in the Optioned Assets) (the "Methanol Permits");
(e) inventories, to the extent purchased and paid for under Section
3.4(d); and
(f) the financial records, operating procedures and engineering and
operating catalogues, and all other business records relating directly to
the assets included in (a) through (e) or used primarily in the Methanol
Business.
"Permits" means all licenses, permits or franchises issued by any
Governmental Entity required for the operation of the Formaldehyde Business and
the use of the Purchased Assets (including, without limitation, all VOC credits
and banked VOC credits for sources included in the Purchased Assets).
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a Governmental Entity.
"Promissory Note" means a note for nine million seven hundred thousand
dollars ($9,700,000) in substantially the form attached hereto as Exhibit J.
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"Purchased Assets" means:
(a) the Real Property;
4.14-6
(b) the machinery, equipment, pipelines, control systems, tanks and
other personal property listed or described in Exhibit D attached hereto
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and made a part hereof;
(c) all rights under the Contracts;
(d) the Formaldehyde Intellectual Property, together with all
registrations, applications, renewals, reexaminations, continuations,
continuations-in-part, divisionals, reissues and similar rights relating
thereto and the right to bring an action at law or in equity for the
infringement thereof prior to the Closing Date, including the right to
receive all awards, damages and proceeds relating thereto;
(e) if and to the extent transferable, Seller's rights under the
Permits;
(f) the barge dock and tank farm located on the Real Property; and
(g) inventories, to the extent purchased and paid for under Section
2.3; and
(h) the financial records, operating procedures and engineering and
operating catalogues and other books and records relating directly to the
assets included in (a) through (g) or used primarily in the Formaldehyde
Business;
provided, however, that the Purchased Assets shall not include the Excluded
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Assets.
"Real Property" means the real property and buildings and improvements
thereon (other than the Excluded Assets) and the easements, cross-easements and
servitudes (including, subject to Seller's reservation of a right of use, common
rights of way, roadways and spur tracks) located within the areas highlighted on
the site plan attached hereto as Exhibit I, and the additional easements, cross-
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easements and servitudes listed on Exhibit I, in each case with such additions
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or deletions as may result from the survey referred to in Section 6.7(c) hereof;
provided, however, that such additions or deletions do not materially affect the
use or diminish the value of either the property transferred to Purchaser or the
property retained by Seller. "Real Property" also includes underlying rights of
way for pipelines included in the Purchased Assets (subject to Seller's
reservation of a right of use).
"Seller Entities" means the collective reference to Seller, the
Partnership and BCPM.
"Separate Ownership Agreement" means an act of declaration of separate
ownership of land and improvements, between Seller and Purchaser, in
substantially the form attached hereto as Exhibit R.
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"Special Approval" means the approval of the transactions contemplated
by this Agreement by a majority of the independent committee of the board of
directors of BCPM.
4.14-7
"Special Warranty Deed" means an act of cash sale in recordable form,
with warranty as to those claiming by, through or against Seller but not
otherwise, delivered at Closing, in a form acceptable to Purchaser, whereby
Seller shall transfer to Purchaser the Real Property, subject to Seller's
reservation of a right of use in common rights of way, roadways and spur tracks.
"Tax" or "Taxes" means any federal, state, local or foreign net income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, lease, service, service use, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, windfall profits,
customs, duties or other tax, fee, assessment or charge, including any interest,
penalty or addition thereto.
"Tax Return" means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto.
"Transition Services Agreement" means the agreement between Purchaser
and Seller regarding each party's provision of certain essential services to the
other in substantially the form attached hereto as Exhibit N.
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"Urea Formaldehyde Concentrate Processing Agreement" means that
certain Urea Formaldehyde Concentrate Processing Agreement dated as of November
30, 1987, by and between Purchaser and Seller, as amended.
"Urea Purchase Agreement" means that certain Urea Purchase Agreement
dated as of November 30, 1987, by and between Purchaser and Seller, as amended.
"Utilities and Services Agreement" means the Utilities and Services
Agreement by and between Purchaser and Seller in substantially the form attached
hereto as Exhibit E.
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Section 2. Basic Transaction.
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2.1 Purchase and Sale of Purchased Assets; Assumption of Assumed
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Liabilities. At the Closing, (a) Purchaser will purchase from Seller, and
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Seller will sell, transfer, assign, convey and deliver to Purchaser, all right,
title and interest in and to all of the Purchased Assets, wherever such assets,
rights or properties are located, and (b) Purchaser will assume all of the
Assumed Liabilities.
2.2 Purchase Price. On the terms and subject to the conditions set
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forth in this Agreement, at the Closing Purchaser will assume the Assumed
Liabilities and will deliver to Seller the sum of forty-eight million five
hundred thousand dollars ($48,500,000) (the "Purchase Price"), payable as
follows:
(a) thirty-eight million eight hundred thousand dollars ($38,800,000)
in cash, by bank wire transfer of immediately available funds to an account
designated in writing by Seller; and
4.14-8
(b) the Promissory Note.
2.3 Inventory; Formaldehyde Inventory Purchase Price. As of 5:00 A.M.
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on the Closing Date, Seller and Purchaser, or their representatives, shall
physically audit, examine and count inventories located in Seller's formaldehyde
plant of the following: (a) production chemicals used in the formaldehyde
process, (b) in-process methanol that meets the specifications under the
Methanol Purchase Agreement in excess of amounts previously paid for under such
Methanol Purchase Agreement, if any, and (c) formaldehyde finished goods that
meet the specifications under the Formaldehyde Processing Agreement. Inventories
of production chemicals shall be valued at Seller's cost; inventories of
in-process methanol shall be valued at their price under the Methanol Purchase
Agreement; inventories of formaldehyde finished goods in excess of amounts
previously paid for under the Formaldehyde Processing Agreement, if any, shall
be valued at their price under the Formaldehyde Processing Agreement; and the
combined value shall be the "Formaldehyde Inventory Purchase Price." At the
Closing, Purchaser will purchase and Seller will sell, transfer, assign, convey
and deliver to Purchaser, all right, title and interest in and to such
inventories at the Formaldehyde Inventory Purchase Price. Within five (5) days
after the Closing, Purchaser shall pay the Formaldehyde Inventory Purchase Price
to Seller, in cash, by bank wire transfer of immediately available funds to an
account designated in writing by Seller.
2.4 Option. Seller hereby grants Purchaser an option (the "Option") to
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purchase all, but not less than all, of the Optioned Assets for a purchase price
of three million dollars ($3,000,000), which Option may be exercised by
Purchaser at any time on or prior to November 1, 2000, by giving written notice
of exercise to Seller at the address set forth in Section 11.9 below.
Section 3. Closing(s) and Closing Date(s).
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3.1 Closing(s). Subject to the provisions of Section 10, the
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Closing and the Second Closing, if any, will take place at the offices of Vorys,
Sater, Seymour and Pease LLP, 52 East Gay Street, Columbus, Ohio, at 10:00 a.m.
Columbus, Ohio time, or at such other place and time as Purchaser and Seller may
agree. The Closing will take place on the third business day after the
satisfaction or waiver of all of the closing conditions set forth in Sections
8.1 and 8.2, or on such other date as Purchaser and Seller may agree. The
Second Closing, if any, will take place on such date as Purchaser and Seller may
agree, but in no event later than December 31, 2000.
3.2 Closing Date(s); Possession. The date on which the Closing
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actually takes place is referred to in this Agreement as the "Closing Date."
Possession of the Purchased Assets shall be delivered by Seller to Purchaser
immediately following the Closing. The date on which the Second Closing
actually takes place is referred to in this Agreement as the "Second Closing
Date."
4.14-9
3.3 Deliveries at the Closing. At the Closing:
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(a) Purchaser will execute and deliver to Seller:
(i) the certificates referred to in Section 8.2(c); and
(ii) certified resolutions of the board of directors of Purchaser
authorizing the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements.
(b) Seller will execute and deliver to Purchaser:
(i) the certificates referred to in Section 8.1(c);
(ii) a Bill of Sale;
(iii) assignments of the Formaldehyde Intellectual Property, in
recordable form if necessary;
(iv) certified resolutions of the board of directors of Seller
authorizing the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements; and
(v) a Special Warranty Deed, together with an Owner's Affidavit
sufficient for the Title Company (as defined below) to provide extended
coverage over the standard printed exceptions in the title insurance
policy referred to in Section 7.5 below.
(c) Purchaser and Seller will each execute and deliver to the other:
(i) an Assignment and Assumption Agreement;
(ii) a Mutual Release and Termination Agreement;
(iii) the Utilities and Services Agreement;
(iv) the Barge Dock Agreement;
(v) the Environmental Indemnity Agreement;
(vi) the Control Room Agreement;
(vii) the Transition Services Agreement;
(viii) the Ground Lease;
4.14-10
(ix) the Separate Ownership Agreement;
(x) such easements, cross-easements and servitudes (including
common rights of way, roadways and spur tracks with respect to which
both Purchaser and Seller shall have a right to use), each in
recordable form, as may be necessary to enable the other party to have
access to the property owned by such party following the Closing and
to operate the businesses to be conducted by each of them following
the Closing, including without limitation those listed on Exhibit I;
and
(xi) such other instruments of sale, transfer, conveyance and
assignment as Purchaser or Seller and their respective counsel may
reasonably request.
(d) Purchaser will deliver to Seller the Purchase Price as specified
in Section 2.2.
(e) Borden, Seller, the Partnership and BCPM will each execute and
deliver the Amendment to Intercompany Agreement.
3.4 Deliveries at the Second Closing. At the Second Closing, if
--------------------------------
any:
(a) Seller will execute and deliver to Purchaser
(i) a bill of sale, in substantially the same form as the Bill of
Sale delivered at the Closing, conveying to Purchaser all of Seller's
right, title and interest in the tangible assets included in Optioned
Assets;
(ii) assignments of the Methanol Intellectual Property, in
recordable form if necessary; and
(iii) such closing certificates as are customary for this type
of transaction and are satisfactory to Purchaser's counsel.
(b) Purchaser and Seller will each execute and deliver to the other:
(i) an assignment by Seller and assumption agreement by
Purchaser, in substantially the same form as the Assignment and
Assumption Agreement delivered at the Closing, of the Methanol
Contracts;
(ii) a control room agreement, in substantially the same form as
the Control Room Agreement delivered at the Closing, regarding the
rights and obligations of the parties with respect to access to (A)
the control room for the Cogeneration 2 unit, acetylene off gas
processing equipment and site air compressor of Seller's methanol
operations and (B) the production accounting computers;
4.14-11
(iii) if requested by Purchaser, a utilities and services
agreement with respect to the operation of the Methanol Business
covering matters similar to those addressed in the Utilities and
Services Agreement;
(iv) if requested by Purchaser, a stand-by supply agreement for
acetylene off gas on terms mutually acceptable to Seller and
Purchaser; and
(v) such other instruments of sale, transfer, conveyance and
assignment as Purchaser may reasonably request, conveying to Purchaser
all of Seller's right, title and interest in the Optioned Assets.
(c) Purchaser will deliver to Seller:
(i) such closing certificates as are customary for this type of
transaction and are satisfactory to Seller's counsel; and
(ii) three million dollars ($3,000,000) in cash, by bank wire
transfer of immediately available funds to an account designated in
writing by Seller.
(d) As of 5:00 A.M. on the Second Closing Date, Seller and Purchaser,
or their representatives, shall physically audit, examine and count (i)
the inventories of (A) production chemicals and (B) methanol-in-process
located in Seller's methanol plant included in the Optioned Assets and (ii)
the inventories of methanol finished goods owned by Seller and located in
the tank farm included in the Purchased Assets (less, if the Second Closing
takes place before December 31, 2000, the portion of such inventories
required to fill Seller's contractual obligations to third parties on or
after the Second Closing Date). Inventories of the production chemicals
referred to in clause (i)(A) shall be valued at Seller's cost; inventories
of methanol-in-process referred to in clause (i)(B) shall be valued at the
price set forth in Section 7.3(a); inventories of methanol finished goods
referred to in clause (ii) shall be valued at their prices under the
Methanol Purchase Agreement; and the combined value shall be the "Methanol
Inventory Purchase Price". At the Closing, Purchaser will purchase and
Seller will sell, transfer, assign, convey and deliver to Purchaser, all
right, title and interest in and to such inventories at the Methanol
Inventory Purchase Price. Within five (5) days after the Second Closing,
Purchaser shall pay the Methanol Inventory Purchase Price to Seller, in
cash, by bank wire transfer of immediately available funds to an account
designated in writing by Seller.
3.5 Allocation of Purchase Price. As soon as practicable after the
-----------------------------
date hereof, Seller will provide to Purchaser copies of (a) IRS Form 8594 and
any required exhibits thereto prepared in accordance with Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code") and the Treasury
Regulations thereunder (the "Asset Acquisition Statement") with Seller's
proposed allocation of the Purchase Price and (b) any comparable tax forms
required to be filed under, and prepared in accordance with, applicable local,
state or foreign tax law. Within 20 days after the receipt of such Asset
Acquisition Statement, Purchaser will propose to
4.14-12
Seller any changes to such Asset Acquisition Statement or will be deemed to have
indicated its concurrence therewith. If, at any time thereafter, any matters on
the Asset Acquisition Statement require updating, Seller will provide to
Purchaser revised copies of the Asset Acquisition Statement (each, a "Revised
Statement"). Within 20 days after the receipt of any Revised Statement,
Purchaser will propose to Seller any changes to such Revised Statement or will
be deemed to have indicated its concurrence therewith. Purchaser and Seller will
endeavor in good faith to resolve any differences with respect to the Asset
Acquisition Statement or any Revised Statement. All Tax Returns and reports
filed by Purchaser and Seller will be prepared consistently with the Asset
Acquisition Statement or any Revised Statement.
Section 4. Representations and Warranties of Seller. Seller
--------- ----------------------------------------
represents and warrants to Purchaser as follows:
4.1 Authorization. Seller is a limited partnership duly organized,
-------------
validly existing and in good standing under the laws of the State of Delaware,
and is qualified to do business in the State of Louisiana. Seller has the
requisite power to own, lease and operate the Purchased Assets and the Optioned
Assets and to carry on the Businesses as the same are now being conducted.
Seller has taken all requisite partnership action to enable it to execute and
deliver this Agreement and each of the Ancillary Agreements to be delivered by
it and to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby, including, without limitation,
obtaining Special Approval. This Agreement constitutes, and each of the
Ancillary Agreements when executed and delivered by Seller will constitute, the
valid and legally binding obligation of Seller, enforceable in accordance with
its terms and conditions.
4.2 Noncontravention; Consents.
--------------------------
(a) Subject to the receipt of the consents referred to in Section
4.2(b), neither the execution and delivery of this Agreement or any of the
Ancillary Agreements by Seller, nor the consummation by Seller of the
transactions contemplated hereby and thereby, will (i) violate any Law to
which Seller is subject or any provision of the certificate of limited
partnership or Limited Partnership Agreement of Seller or (ii) constitute a
violation of, be in conflict with, constitute or create a default under or
result in the creation or imposition of any Lien upon any of the Purchased
Assets or the Optioned Assets, or result in a penalty or acceleration, or a
right to terminate, materially modify or demand additional fees under, any
agreement, contract, governmental permit, license, approval or commitment
to which Seller or any of the Purchased Assets or Optioned Assets is bound
or subject.
(b) Except as set forth on Schedule 4.2 and the approval required
------------
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), no consent, approval, order or authorization of, license
or permit from, notice to or registration, declaration or filing with, any
Governmental Entity or any third party is required on the part of the
Seller Entities in connection with the execution and delivery of this
Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby, except for such consents,
orders or authorizations as
4.14-13
would not materially impair the operation of the Businesses or the use
of any Purchased Asset or Optioned Asset following their respective dates
of acquisition.
4.3 Brokers' Fees. Seller has no liability or obligation, and has
-------------
not taken any action that will result in any such liability or obligation on the
part of Purchaser, to pay any agent or finder's fee or real estate brokerage
commission to any Person in connection with the transactions contemplated by
this Agreement.
4.4 Real Property.
-------------
(a) Except as set forth in Schedule 4.4, Seller has good and
------------
marketable title to the Real Property, free and clear of all Liens and
encumbrances other than encumbrances that (i) do not materially affect the
use or diminish the value of the Real Property or (ii) are of the type
included in the standard printed exceptions of the Title Binder referred to
in Section 6.8(a).
(b) Except as set forth in the Ancillary Agreements or Schedule 4.4:
------------
(i) there is no real property used in the Businesses other than
the Real Property;
(ii) all buildings and improvements thereon that are part of the
Purchased Assets are in good operating condition and repair, ordinary
wear and tear excepted, and are not in material violation of any
zoning or building ordinances;
(iii) to the best knowledge of Seller, there are no material
discrepancies, conflicts, shortages in boundary lines, encroachments
or overlaps upon or by any owned Real Property or the improvements
thereon;
(iv) Seller has adequate permanent rights of ingress and egress
to and from the Real Property; and
(v) all buildings on the Real Property have been completed and
there are no material structural defects in such buildings.
(c) There are no parties in possession of any portion of the Real
Property as a lessee, tenant at sufferance or trespasser, other than
Seller.
(d) There is no pending, or to the knowledge of Seller, threatened
special assessment affecting the Real Property, or any part thereof, nor to
the knowledge of Seller is any such assessment contemplated by any state,
local or other governmental authority.
(e) Seller has no knowledge that the location, construction,
occupancy, operation or use of the Real Property (including the buildings,
improvements, fixtures
4.14-14
and equipment located thereon) violates any restrictive covenant or deed
restriction (recorded or otherwise) affecting the Real Property.
4.5 Title to Personal Property. Except as set forth on Schedule
-------------------------- --------
4.5, Seller has good and valid title to, or, pursuant to a Contract, a valid and
- ----
binding leasehold interest in, all personal property included in the Purchased
Assets and the Optioned Assets, free and clear of all Liens. Except as set
forth on Schedule 4.5, all items of personal property included in the Purchased
------------
Assets are in good operating condition, reasonable wear and tear excepted, and
are fit for the purposes for which they are presently being used.
4.6 Certain Financial Information. The annual production cost
-----------------------------
sheets for the four years ended December 31, 1996 through 1999, and the interim
production cost sheets for the 5 months ended May 31, 2000, delivered to
Purchaser and attached hereto as Schedule 4.6 are true and accurate copies of
------------
Seller's production cost sheets for the Businesses for the periods indicated
thereon, and such cost sheets were prepared from Seller's internal records in
accordance with Seller's customary practices consistently applied and,
reasonably reflect Seller's direct costs and in the opinion of management,
reflect a reasonable allocation of costs for materials and services transferred
between production cost units.
4.7 Contracts. Seller has furnished to Purchaser true and correct
---------
copies of each Contract and each Methanol Contract (including each amendment or
supplement thereto). Each Contract and each Methanol Contract is valid and in
full force and effect according to its terms, and no Seller Entity and, to
Seller's knowledge, no other party thereto, is in material breach or default
under any such contract, and no facts or circumstances exist which, with giving
of notice or passage of time or both would give rise to such a material breach
by a Seller Entity or, to Seller's knowledge, any such other party.
4.8 Intellectual Property. Schedule 4.8 lists all Formaldehyde
--------------------- ------------
Intellectual Property and Methanol Intellectual Property. There are no U.S. or
foreign registrations or applications concerning patents, copyrights, trademarks
or domain names included in the Formaldehyde Intellectual Property or the
Methanol Intellectual Property. Except as set forth in Schedule 4.8, Seller
------------
owns, free and clear of all Liens, or has the valid right to use pursuant to a
Contract or Methanol Contract, as the case may be, all material Formaldehyde
Intellectual Property and Methanol Intellectual Property. There are no pending
or, to Seller's knowledge, threatened claims, actions, suits, proceedings,
judgments, orders, decrees, settlements or stipulations in front of or subject
to any Governmental Entity or any other forum that seek to challenge or limit
the enforceability, validity, use or ownership of any Formaldehyde Intellectual
Property or Methanol Intellectual Property and, to the knowledge of Seller, the
material Formaldehyde Intellectual Property and Methanol Intellectual Property
are valid and enforceable, do not infringe, misappropriate, dilute or otherwise
impair or derogate ("Infringe") the rights of others and are not being Infringed
by others.
4.9 Litigation. Except as set forth on Schedule 4.9, there are no
---------- ------------
actions, suits or proceedings pending, and, to Seller's knowledge, no such
actions, suits or proceedings are threatened and no investigations are pending
or threatened, which (a) relate to the Purchased Assets, the Optioned Assets or
the Businesses or the products thereof, (b) question or challenge
4.14-15
the validity or enforceability of this Agreement or any Ancillary Agreement or
(c) could prevent, hinder or delay consummation of the transactions contemplated
hereby or thereby.
4.10 Taxes. None of the Purchased Assets or Optioned Assets is
-----
tax-exempt use property within the meaning of Section 168(h) of the Code.
Except as set forth in Schedule 4.10, none of the Purchased Assets or Optioned
-------------
Assets is property that is or will be required to be treated as being owned by
another person pursuant to the provisions of Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended, and as in effect immediately prior to the
enactment of the Tax Reform Act of 1986.
4.11 Compliance With Laws.
--------------------
(a) All of the Permits and all Methanol Permits are listed on Schedule
--------
4.11. Except for the Permits and the Methanol Permits, no licenses,
----
permits, franchises, certificates, authorizations or approvals of any
Governmental Entity are required for the conduct of the Businesses as
currently conducted or as conducted over the past year. All Permits and
all Methanol Permits are in full force and effect and no action, claim or
proceeding is pending, or to Seller's knowledge, threatened to suspend,
revoke, invalidate, revise or limit any such permit.
(b) Seller is and has been in compliance in all material respects
with all laws, ordinances, regulations and orders applicable to the
Purchased Assets, the Optioned Assets and the Businesses.
4.12 Purchased Assets. The Purchased Assets to be transferred and
----------------
conveyed to Purchaser on the Closing Date pursuant to this Agreement and the
Ancillary Agreements include all of the assets required to operate the
Formaldehyde Business as presently conducted.
4.13 Employee Benefits.
-----------------
(a) Except as listed in Schedule 4.13, there are no "employee benefit
--------------
plans" (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and determined without
regard to Department of Labor Regulations (S)(S)2510.3-1 through 2510.3-3),
in which the Employees or the Methanol Employees participate and in which
employees of Purchaser do not participate.
(b) In addition to the employee benefit plans required under Section
4.13(a) to be listed in Schedule 4.13, Schedule 4.13 sets forth a list of
------------- -------------
all non-ERISA severance, change in control or employment plans, programs or
agreements, and all vacation, incentive, bonus, stock option, stock
purchase and restricted stock plans, programs or policies, sponsored or
maintained by Seller, in which the Employees or the Methanol Employees
participate but in which the employees of Purchaser do not participate
(collectively, the "Seller Plans").
(c) Each Seller Plan has been established and administered
substantially in accordance with its terms and is in compliance with the
applicable provisions of ERISA,
4.14-16
the Code and Seller has paid or accrued on its March 31, 2000 balance sheet
any and all contributions it is required to make or accrue under any of the
Seller Plans.
4.14 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 4.14 hereto:
--------------
(i) Except as set forth in the Environmental Reports, to Seller's
knowledge, Materials of Environmental Concern are not present at, in,
on, under or about any of the Purchased Assets or the Optioned Assets
in a manner that could reasonably be expected to affect in any
material respect the continued operation of the Businesses as
conducted currently and during the past year;
(ii) There is no consent decree, order or agreement with any
Governmental Entity under any Environmental Law or with respect to any
Materials of Environmental Concern that relates to the use or
ownership of the Purchased Assets, the Optioned Assets or the
operation of the Businesses; and
(iii) No judicial, administrative, or arbitration proceeding
(including any notice of violation or alleged violation) under any
Environmental Law or with respect to any Materials of Environmental
Concern, is pending or, to the knowledge of Seller, threatened, with
respect to the Purchased Assets, the Optioned Assets or the
Businesses, and no investigation or request for information is pending
in connection with any such proceeding.
(b) Seller has provided Purchaser access to all Environmental Reports
in Seller's possession or control.
4.15 Limited Warranties.
-------------------
(a) With respect to the Purchased Assets, all sales, transfers,
conveyances, assignments and deliveries to be made hereunder will be made
without representation or warranty whatsoever, whether express, implied or
statutory except as otherwise expressly provided in this Agreement and the
Ancillary Agreements.
(b) With respect to the Optioned Assets, except as otherwise expressly
provided in this Section 4:
(i) ALL SALES, TRANSFERS, CONVEYANCES, ASSIGNMENTS AND DELIVERIES
TO BE MADE HEREUNDER WILL BE MADE WITHOUT REPRESENTATION OR WARRANTY
WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY
REPRESENTATION OR WARRANTY AS TO VALUE, QUALITY, QUANTITY, CONDITION,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, WORKING ORDER,
COMPLIANCE WITH LAW OR FUTURE PROFITABILITY; and
4.14-17
(ii) ALL OPTIONED ASSETS TO BE SOLD, TRANSFERRED, CONVEYED,
ASSIGNED AND DELIVERED HEREUNDER ARE SOLD, TRANSFERRED, CONVEYED,
ASSIGNED AND DELIVERED "AS IS," AND ANY WARRANTIES OTHER THAN THOSE
EXPRESSLY PROVIDED FOR IN THIS SECTION 4, WHETHER EXPRESS, IMPLIED OR
STATUTORY, WRITTEN OR ORAL, ARE HEREBY EXPRESSLY DISCLAIMED.
Section 5. Representations and Warranties of Purchaser. Purchaser
--------- -------------------------------------------
represents and warrants to Seller as follows:
5.1 Authorization. Purchaser is a corporation duly organized and
-------------
validly existing under the laws of the State of Delaware, and is qualified to do
business in the State of Louisiana. Purchaser has taken all requisite corporate
action to enable it to execute and deliver this Agreement and each of the
Ancillary Agreements to be executed by it and to perform its obligations
hereunder and thereunder. This Agreement constitutes, and each of the Ancillary
Agreements when executed and delivered by Purchaser will constitute, the valid
and legally binding obligation of Purchaser, enforceable in accordance with its
terms and conditions.
5.2 Noncontravention.
----------------
(a) Subject to the receipt of the approval required under the HSR Act,
neither the execution and the delivery of this Agreement or any of the
Ancillary Agreements by Purchaser, nor the consummation by Purchaser of the
transactions contemplated hereby or thereby, will (i) violate any Law to
which Purchaser is subject or any provision of the certificate of
incorporation or bylaws of Purchaser or (ii) constitute a violation of, be
in conflict with or constitute or create a default under, or require the
consent of a third party pursuant to any agreement, contract, governmental
permit, license, approval or commitment to which Purchaser is a party or by
which Purchaser or any of its properties is bound or to which Purchaser or
any of such properties is subject.
(b) Except for the approval required under the HSR Act, no consent,
approval, order or authorization of, license or permit from, notice to or
registration, declaration or filing with, any Governmental Entity or any
third party is required on the part of the Purchaser in connection with the
execution and delivery of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and thereby.
5.3 Brokers' Fees. Purchaser has no liability or obligation, and
-------------
has not taken any action that will result in any such liability or obligation on
the part of Seller, to pay any agent or finder's fee or real estate brokerage
commission to any Person in connection with the transactions contemplated by
this Agreement.
5.4 Litigation. There are no actions, suits or proceedings
----------
pending, and, to Purchaser's knowledge, no such actions, suits or proceedings
are threatened and no
4.14-18
investigations are pending or threatened, which (a) question or challenge the
validity or enforceability of this Agreement or any Ancillary Agreement or (b)
could prevent, hinder or delay consummation of the transactions contemplated
hereby or thereby.
5.5 No Other Representations or Warranties. Except for the
--------------------------------------
representations and warranties contained in this Agreement and the Ancillary
Agreements, neither Purchaser nor any of its Affiliates makes any representation
or warranty, whether express or implied, on behalf of Purchaser.
Section 6. Pre-Closing Covenants. The parties agree as follows with
---------- ---------------------
respect to the period between the date of this Agreement and the Closing Date:
6.1 General. Each of the parties will use its reasonable best
-------
efforts to take all actions and to do all things necessary, proper or advisable
to consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set forth in Section 8). After the
date of this Agreement, Seller agrees to use its reasonable best efforts to
obtain any and all consents and approvals which may be necessary to vest or
confirm ownership in Purchaser to all of the Purchased Assets and, if the Option
is exercised, the Optioned Assets.
6.2 Operation of the Formaldehyde Business. Except as otherwise
--------------------------------------
contemplated by this Agreement, Seller covenants that, until the Closing Date,
it will use all reasonable efforts to continue, in the ordinary course and in a
manner consistent with the past practices of the Formaldehyde Business, to
maintain and preserve intact the Purchased Assets and the Formaldehyde Business
and to maintain the ordinary and customary relationships of the Formaldehyde
Business with its employees, suppliers, customers and others having business
relationships with it with a view toward preserving for Purchaser to and after
the Closing Date the Formaldehyde Business, the Purchased Assets and the
goodwill associated therewith. Until the Closing Date, Seller shall continue to
maintain its books and records with respect to the Purchased Assets and the
Formaldehyde Business in the ordinary course in accordance with past practices.
6.3 Certain Interim Operating Agreements. During the period from
------------------------------------
the date of this Agreement to the Closing Date (with respect to the Purchased
Assets) or the Second Closing Date (with respect to the Optioned Assets), as the
case may be, without the consent of the Purchaser, Seller:
(a) will not dispose of any of the Purchased Assets or the Optioned
Assets other than as set forth in this Agreement and except for sales of
inventory in the ordinary course of business, or pledge or subject any of
the Purchased Assets or Optioned Assets to any Lien other than liens set
forth in Schedule 4.4 or Schedule 4.5;
------------ ------------
(b) will not cancel any debts or waive any claims or rights pertaining
to the Businesses, except in the ordinary course of business consistent
with past practice;
4.14-19
(c) will not make any amendment or modification to or terminate any
Contract or any Methanol Contract;
(d) will not make any change in the accounting principles or practices
with respect to the Purchased Assets, Optioned Assets or the Businesses,
except as required by changes in generally accepted accounting principles
effected after the date hereof;
(e) will not enter into any license or other agreement with respect to
any Formaldehyde Intellectual Property or Methanol Intellectual Property;
(f) will not terminate any policies of insurance with respect to the
Purchased Assets, the Optioned Assets or the Businesses;
(g) will not settle any lawsuit or claim that will impose any non-
monetary obligation or restriction on the Purchased Assets, the Optioned
Assets or the Businesses; or
(h) will maintain its inventory of formaldehyde finished goods located
in its formaldehyde plant included in the Purchased Assets at levels
consistent with past practice; and
(i) will not agree or offer, whether in writing or otherwise, to take
any of the actions specified in clauses (a) through (g).
Except as required by agreements and arrangements in effect on the date
hereof, or otherwise in the ordinary course of business, and except for "stay"
bonuses, if any, that may be offered to Methanol Employees, as mutually agreed
by Purchaser and Seller (the cost of which shall be allocated in accordance with
Section 7.8(h)), neither BCPM nor Seller will increase the compensation or
benefits of any employee of the Businesses during the period from the date of
this Agreement through the date each such employee becomes a Transferred
Employee (as defined below), other than Employees Purchaser has notified Seller
it does not wish to employ following the Closing Date (or, with respect to
Methanol Employees, following the Second Closing Date or, if Purchaser elects to
have Seller operate the Optioned Assets, the end of the Extended Period).
6.4 Access. Upon reasonable prior notice and during normal business
------
hours, Seller will permit Purchaser, its agents, employees and designees to have
full and complete access to the books and records and personnel of Seller
related to the Purchased Assets and the Optioned Assets. All information
received, reviewed or made available to Purchaser shall be subject to the terms
of the Confidentiality Agreement.
6.5 Notice of Developments. Each party will give prompt written
----------------------
notice to the other of any material development affecting the ability of the
parties to consummate the transactions contemplated by this Agreement or any of
the Ancillary Agreements.
4.14-20
6.6 Employment Matters.
------------------
(a) Upon prior written or oral request of Purchaser, Seller or BCPM
will provide Purchaser, to the extent permitted by Law, with reasonable
access to the Employees and, if the Option is exercised, the Methanol
Employees, and to their employment and personnel files, so that Purchaser
may assess such employees and enter into discussions with and advise any of
such employees concerning the terms of any future employment of such
individuals by Purchaser. Neither Seller nor BCPM will discourage any
Employee or Methanol Employee from accepting any offer of employment made
by Purchaser to such employee.
(b) Pursuant to the Transition Services Agreement, for a period of time
following the Closing, Seller shall provide to Purchaser certain services
essential to the operation of the Formaldehyde Business, the barge dock and
the tank farm. So long as Seller is providing any of such services, the
Employees performing such services will remain employees of Seller or BCPM,
as the case may be. Purchaser may, from time to time by providing written
notice to Seller pursuant to the terms of the Transition Services
Agreement, assume responsibility for any of the services provided by Seller
under the Transition Services Agreement. Each time Purchaser elects to
assume responsibility for any of such services that are being performed by
persons who are Employees (as defined in this Agreement), Purchaser shall,
in its sole discretion, select those Employees who are performing such
services to whom it intends to offer employment and, together with the
notice required to be given under the Transition Services Agreement,
Purchaser shall provide Seller with a list of all such Employees to whom
Purchaser intends to offer employment.
(c) At least 10 business days prior to the Second Closing Date,
Purchaser shall, in its sole discretion, select those Methanol Employees
necessary to operate the Methanol Business; and, at least five (5) business
days prior to the Second Closing Date, Purchaser shall provide Seller with
a list of all Methanol Employees to whom Purchaser intends to offer
employment; provided, however, that if Purchaser requests Seller operate
the Optioned Assets during the Extended Period (as defined in Section
7.3(d)), Purchaser shall provide Seller with the list of Methanol Employees
to whom Purchaser intends to offer employment at least five (5) business
days prior to the date the Extended Period is terminated as provided in
Section 7.3(e).
(d) Each Employee and Methanol Employee who accepts Purchaser's offer
of employment shall be deemed to be a "Transferred Employee" and any of the
foregoing employees who are not offered employment or who do not accept
Purchaser's offer of employment shall be deemed to be "Non-Transferred
Employees." Each of the Employees who accepts Purchaser's offer of
employment shall be deemed to be a "Transferred Employee" as of the date
Purchaser assumes responsibility, in accordance with the Transition
Services Agreement, for the services performed by such Employee. Each of
the Methanol Employees who accept Purchaser's offer of employment shall be
deemed to be a "Transferred Employee" as of the Second Closing Date or, if
Purchaser
4.14-21
elects to have Seller operate the Optioned Assets during the Extended
Period, as of the day following the last day of the Extended Period.
6.7 Non-Solicitation; Break-Up Fee. From the date of this Agreement
------------------------------
until the Closing Date, Seller agrees, and will use its best efforts to cause
its officers, directors, employees, and agents, not to solicit or encourage,
directly or indirectly, in any manner any discussion with, or furnish or cause
to be furnished any information to, any person other than Purchaser in
connection with, or negotiate for or otherwise pursue a disposition of all or
any portion of the Purchased Assets or the Optioned Assets, or any business
combination involving the Purchased Assets or the Optioned Assets. Seller will
promptly inform Purchaser of any inquiry or proposal with respect to the
foregoing. Notwithstanding the foregoing, in the event that Seller determines
that its directors are required by their fiduciary duties to consider a proposal
from another party, Seller may terminate this Agreement by written notice to
Purchaser. In the event that Seller terminates this Agreement to consider
another proposal, Purchaser shall be entitled to receive from Seller
reimbursement for all out-of-pocket expenses (including, but not limited to,
reasonable attorneys' fees and expenses relating to the transaction contemplated
by this Agreement) which Purchaser has incurred, and if the consideration of
another proposal results in a transaction with a party other than Purchaser,
Purchaser shall be entitled to a break-up fee of two million five hundred
thousand dollars ($2,500,000), with credit given to Seller for any fees or
expenses already reimbursed by Seller.
6.8 Title Binder and Survey.
-----------------------
(a) Title Binder. Seller shall deliver or cause to be delivered to
------------
Purchaser, within 15 days after the date of this Agreement, a Commitment
for Title Insurance (the "Title Binder") issued by First American Title
Insurance Company (the "Title Company"), showing good and marketable title
to the Real Property in Seller, and committing to issue an owner's title
insurance policy (current ALTA Form) to Purchaser subject only to (a)
matters which do not materially affect the use or diminish the value of the
Real Property or (b) the standard printed exceptions on such policy.
(b) Survey. Seller shall obtain a current survey (the "Survey") of
------
the Real Property made and certified by a licensed surveyor acceptable to
the Title Company and upon which the Title Company may rely in amending or
eliminating the survey exceptions in its title insurance policy.
(c) Examination. In the event that (i) any exceptions appear in the
-----------
Title Binder (other than matters which do not materially affect the use or
diminish the value of the Real Property or the standard printed exceptions)
or (ii) the Survey reveals any state of facts constituting exceptions to or
deficiencies in title or that improvements built on the Real Property
encroach, in any material way, upon any easements, rights of way or utility
lines located on such Real Property, and in the further event that any such
exceptions, deficiencies or matters render title to the Real Property
unmarketable, Purchaser shall, within ten (10) days after the receipt of
the Title Binder and Survey, notify Seller in writing of its objection to
any such exception, deficiency or matter and Seller shall have until the
earlier of twenty (20) days after the receipt of written notice from
Purchaser or
4.14-22
the Closing Date within which Seller may, at its sole election: (y) remedy
or remove such exception, deficiency or matter and obtain for Purchaser a
Title Binder and/or survey without such exception, or (z) decline to take
any such action, in which event either party may terminate this Agreement
without further liability or obligation; provided further, however, that
Seller may not terminate this Agreement if Purchaser waives all of said
exceptions, deficiencies and matters not remedied or removed by Seller and
elects to purchase the Real Property subject to the same. Any exception,
deficiency or matter appearing in the Title Binder (other than matters in
the standard printed exceptions) or revealed in the Survey that are not
objected to by Purchaser in writing as provided above, or that are waived
by Purchaser as provided above, shall be considered "Permitted Exceptions."
In the event the Title Binder reveals any unsatisfied mechanics',
materialmen's or similar liens on the Real Property, such liens shall
constitute "Excluded Liabilities," and Seller shall bear the full cost of
discharging such liens and shall indemnify and hold harmless Purchaser from
any loss on account of such liens to the full extent provided in Section 9
hereof.
6.9 Condemnation. Seller shall notify Purchaser within 15 days if
------------
the Real Property, or any portion thereof, shall be taken or threatened to be
taken through the exercise of the power of eminent domain. Upon receiving such
notice, Purchaser shall have the right to terminate this Agreement and all
liability hereunder. If Purchaser should elect to terminate this Agreement as
set forth above, all of the proceeds of the taking shall become the property of
Seller. If Purchaser, after receipt of such notice, nevertheless agrees to
consummate the purchase and sale contemplated hereunder, the proceeds of such
taking shall belong to Purchaser.
6.10 Inspection and Environmental Matters.
------------------------------------
(a) Inspection. Purchaser, at its own expense shall have the right
----------
prior to the Closing to enter upon the Real Property for the purpose of
inspecting the same and conducting surveys, studies and tests including
environmental testing or assessments. If Purchaser has objections with
regard to the inspection, surveys, studies, or tests only (excluding any
environmental testing or assessments which shall be controlled by Section
6.10(b) below), it shall specify the items to which it objects no later than
10 business days after the date of its receipt of any reports which identify
an issue and within 10 business days after receiving written notice from
Purchaser, Seller shall respond to Purchaser's objections and, either
provide a proposed remedy and an estimated time frame for the completion of
such remedy or give notice that it declines to correct any conditions
objected to by Purchaser. Purchaser shall then have 10 business days after
the receipt of Seller's response to review Seller's response and give its
notice either: (i) approving such response and waiving all objections to
the Real Property, or (ii) disapproving such response and terminating this
Agreement. Failure to approve or disapprove shall constitute an approval by
Purchaser of the Seller's response only and a waiver of any objections to
same. Purchaser shall promptly repair or replace any damage or injury to
the Real Property or the fixtures or improvements thereon, caused by such
inspections, surveys, tests or studies, including environmental testing or
assessments. Purchaser shall indemnify, defend and hold Seller and its
agents, employees and Real Property free and harmless from any cost, expense
(including reasonable attorneys fees), claim, cause of
4.14-23
action, liability or charge incurred, occasioned by or related, directly or
indirectly, to the right of access herein granted or to the activities of
Purchaser, its agents, contractors or employees while upon the Real
Property and Purchaser agrees to do no act which could reasonably be
expected to encumber title to the Real Property.
(b) Environmental Assessment. A copy of all reports, data and
------------------------
conclusions generated as part of Purchaser's environmental assessment shall
be shared with Seller. It shall be a condition of Closing that both parties
be satisfied with the results of such assessment, but Seller and Purchaser
agree, notwithstanding such results, to allocate responsibility and
liability for any environmental matters associated with or connected with
the Real Property as set forth in the Environmental Indemnity Agreement.
6.11 Urea Purchase Agreement.
----------------------
(a) Except as set forth in subparagraph (b) hereof, effective as of
the date of this Agreement, (i) the Urea Purchase Agreement is hereby
terminated, (ii) Seller hereby releases Purchaser from all liabilities,
duties and obligations arising under or relating to the Urea Purchase
Agreement and (iii) Purchaser hereby releases Seller from all liabilities,
duties and obligations arising under or relating to the Urea Purchase
Agreement, and except, in each case, for liabilities under sections 3, 10,
11 and 12 thereof.
(b) The foregoing notwithstanding:
(i) Purchaser shall purchase and receive, and Seller shall sell
and deliver, all urea meeting the specifications set forth in the Urea
Purchase Agreement that is remaining in Seller's inventory as of the
date of this Agreement, which shall not be less than 10,000 tons nor
greater than 14,000 tons, such purchases to be made on the terms and at
the price set forth in the Urea Purchase Agreement; provided, however,
that if there is no Major Customer (as defined in the Urea Purchase
Agreement) the F.O.B. price will be based on the Green Markets Price
Scan low granular price for New Orleans for the week in which the Urea
is shipped; and
(ii) Purchaser shall pay Seller, in accordance with the Urea
Purchase Agreement, (A) any outstanding amounts due to Seller as of the
date of this Agreement under the Urea Purchase Agreement, and (B) any
amounts becoming due after the date hereof under clause (i) hereof.
6.12 Methanol Sales. Seller agrees that it will supply to Purchaser
--------------
not less than 20 million gallons of methanol (inclusive of methanol supplied to
the Formaldehyde Business) during July, 2000 on the terms set forth in the
Methanol Purchase Agreement.
4.14-24
Section 7. Post-Closing Covenants. The parties agree as follows
--------- ----------------------
with respect to the period following the Closing Date:
7.1 Further Assurances.
------------------
(a) In case at any time after either the Closing Date or the Second
Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement, each of the parties will take such further
action (including the execution and delivery of such further instruments
and documents of sale, transfer, conveyance, assignment and delivery, deeds
and instruments) as the other party reasonably may request, at the sole
cost and expense of the requesting party (unless the requesting party is
entitled to indemnification therefor under Section 9 below) in order more
effectively to vest in Purchaser ownership of the Purchased Assets to be
conveyed and assigned hereunder or intended so to be and to put Purchaser
in actual possession and operating control of such Purchased Assets.
(b) After the Closing and the Second Closing Date, if any, Purchaser
shall provide Seller access, during normal business hours for any
reasonable business purpose, to the financial records and other business
records included in (i) the Purchased Assets and (ii) if the Option is
exercised, the Optioned Assets.
(c) After the Closing and the Second Closing Date, if any, Seller
shall provide Purchaser access, during normal business hours for any
reasonable business purpose, to those financial records and other business
records, operating procedures and engineering and operating catalogs, if
any, retained by Seller that relate to (i) the Purchased Assets and the
Formaldehyde Business and (ii) if the Option is exercised, the Optioned
Assets and the Methanol Business.
7.2 Agreements Regarding Tax Matters. Seller and Purchaser will
--------------------------------
each provide the other party with such assistance as may reasonably be requested
in connection with the preparation of any Tax Return, audit or other examination
by any taxing authority or judicial or administrative proceeding relating to
liability for Taxes with respect to the Purchased Assets or the Optioned Assets,
will each retain and provide to the other party all records and other
information that may be relevant to any such Tax Return, audit or examination,
proceeding or determination and will each provide the other party with any final
determination of any such audit or examination, proceeding or determination that
affects any amount required to be shown on any Tax Return of the other party for
any period. Without limiting the generality of the foregoing, each of Purchaser
and Seller will retain, until the expiration of the applicable statutes of
limitation (including any extensions thereof) copies of all Tax Returns,
supporting work schedules and other records relating to Tax periods or portions
thereof ending on or prior to the Closing Date, which related to the Purchased
Assets, and the Second Closing Date, which related to the Optional Assets.
4.14-25
7.3 Interim Period and Extended Period Operations.
---------------------------------------------
(a) From the Closing Date until December 31, 2000, the date on which
the Methanol Purchase Agreement shall terminate pursuant to the Mutual
Release and Termination Agreement (the "Interim Period"), Seller will
continue to own the Optioned Assets and will continue to operate them in
the ordinary course consistent with past practice. During the Interim
Period, Seller shall continue to produce and supply to Purchaser, and
Purchaser shall continue to purchase, methanol in accordance with the terms
of the Methanol Purchase Agreement; provided however, that (i)
notwithstanding Section 2 of the Methanol Purchase Agreement, the maximum
amount of methanol that Seller shall be obligated to supply to Purchaser
pursuant to such section shall be 20 million gallons (inclusive of methanol
supplied to the Formaldehyde Business prior to the Closing Date) during
July, 2000 and 110 million gallons in the aggregate from July 1, 2000, to
the end of the Interim Period, and (ii) notwithstanding Section 6 of the
Methanol Purchase Agreement, if Seller permits the Major Customer (as
defined in the Methanol Purchase Agreement) to terminate or amend in a
manner adversely affecting Purchaser the contract on which Purchaser's
pricing is based as of the date of this Agreement under the Methanol
Purchase Agreement, then the price charged Purchaser by Seller under the
Methanol Purchase Agreement during the remainder of the Interim Period
shall continue to be based upon the pricing formula in such Major Customer
contract without regard to such termination or amendment.
(b) Notwithstanding any provisions hereof or any other agreement
between Seller and Purchaser, Purchaser shall be free to hold discussions
with prospective methanol suppliers and to provide such information
regarding Purchaser and its methanol requirements to such suppliers as
Purchaser deems necessary or advisable in order to secure such alternative
arrangements, and, subject to paragraph (d) below, Seller shall have no
obligation to assist Purchaser in procuring methanol for any period after
December 31, 2000.
(c) If Purchaser does not exercise the Option, Seller will retain all
ownership interest in the Optioned Assets and may, at its option:
(i) continue to operate the Optioned Assets after the end of the
Interim Period or any Extended Period (as defined below), subject to
the Ground Lease, with continuing rights of access to tankage and
terminalling for so long as it elects to operate such assets on the
terms set forth in the Utilities and Services Agreement (except for
the volume limitation on methanol storage set forth in Section 6
thereof which may, at Seller's option, be increased from 5 million to
7 million gallons) and the Barge Dock Agreement;
(ii) sell the Optioned Assets and, to the extent permitted under
the Ancillary Agreements, assign any portion of its rights under the
Ancillary Agreements relating to the operation of the Optioned Assets
(except for the volume limitation on the storage of methanol set forth
in Section 6 of the Utilities and Services Agreement which may, at
Seller's option, be increased from 5 to 7
4.14-26
million gallons); or
(iii) shut down permanently the Optioned Assets, in which case
it would have all salvage rights in the Optioned Assets, including all
necessary access to such assets for the purposes of salvage.
(d) Notwithstanding paragraph (c) above, Seller will, if requested by
Purchaser in writing not later than November 1, 2000, operate the Optioned
Assets after December 31, 2000, for a continuous and uninterrupted period
of six months (the "Extended Period"). If requested by Purchaser to
continue to operate the Optioned Assets during the Extended Period, then
during the Extended Period, Purchaser shall purchase, and Seller shall
produce and deliver methanol (i) in the quantities specified by Purchaser
(subject to the next paragraph), up to a maximum of 185 gallons per year on
an annualized basis, and at the price set forth in Section 7.4(d) hereof
and (ii) on the terms set forth in Sections 3 through 5 and 8 through 17
and 19 of the Methanol Purchase Agreement, which Sections shall be deemed
to be incorporated herein by reference. During the Interim Period and any
Extended Period, Seller will use its reasonable best efforts to optimize
raw material procurement and production efficiencies, including its
determinations as to the relative proportions of natural gas and acetylene
off gas to be used in production, in a manner designed to balance
economically methanol yield and production costs to Purchaser. During the
Interim Period and the Extended Period, Seller shall inform Purchaser of
the monthly price of natural gas when it is finalized, provided, however,
that, during any Extended Period, Purchaser may take over natural gas
procurement for the Methanol Business and pay the cost thereof directly by
giving Seller 30 days prior written notice of its intention to assume such
responsibility, provided that such action does not conflict with natural
gas purchase commitments previously entered into for such period, which
commitments shall not be for periods in excess of 30 days without the prior
written approval of Purchaser.
During the Extended Period, Seller will provide to Purchaser, at least
three weeks before the beginning of each calendar month, an estimate of
anticipated methanol production for such month; and Purchaser will provide
to Seller, at least two weeks, before the beginning of each calendar month,
an estimate of its anticipated methanol requirements for such month. Seller
will use its reasonable best efforts to meet Purchaser's estimated
requirements but, if it performs in accordance with such standard, will not
be liable to Purchaser for any failure to meet such estimate or any other
losses of methanol production volume.
(e) Purchaser may terminate the Extended Period by giving not less
than 30 days advanced written notice, provided that such termination does
not conflict with natural gas purchase commitments previously entered into
for such period, which commitments shall not be for periods in excess of 30
days without the prior written approval of Purchaser. Upon expiration of
the Extended Period or early termination at the request of Purchaser,
Seller will have no further obligation to produce methanol for Purchaser.
4.14-27
(f) During the Interim Period, or any shorter period designated in
writing by Seller, in its sole discretion, Purchaser will provide Seller
access to and use of the ammonia tank and the lines associated with the
tank, which are included in the Purchased Assets, at no cost to Seller;
provided that Seller shall be responsible for all maintenance and repair
costs associated with the use of the ammonia tank and associated lines
during the Interim Period or any shorter period designated by it. Prior to
the end of the Interim Period (or such shorter period specified by Seller
in accordance with the first sentence of this paragraph). Seller shall
remove all product from the ammonia tank and associated lines and shall
vent the tank and lines to the Seller's flare header. Any further
preparation of the facilities for use in any capacity shall be at the
expense and under the direction of Purchaser.
7.4 Allocation of Profits and Losses During the Interim Period and
--------------------------------------------------------------
Extended Period .
- ---------------
(a) On or before the 15th day after the end of each month of the
Interim Period (except the final month), Seller shall prepare and submit to
Purchaser an income statement of Seller's Methanol Business during that
month. On or before January 15, 2001, Seller shall prepare and submit to
Purchaser a final income statement of Seller's Methanol Business during the
entire Interim Period. The income statements shall be in the form attached
hereto as Exhibit K and shall be prepared in accordance with the
---------
methodology described in Exhibit K. If, based on the final income
---------
statement, the Methanol Business at the end of the Interim Period results
in (i) a net profit of $2,500,000 or less, Seller shall retain the full net
profit, (ii) a net loss of $2,500,000 or less, Seller shall bear the full
net loss, (iii) a net profit in excess of $2,500,000, Seller shall retain
the first $2,500,000 of net profit and shall distribute the excess net
profit to Purchaser or (iv) a net loss in excess of $2,500,000, Seller
shall bear the first $2,500,000 of net loss and the net loss in excess of
$2,500,000 shall be allocated to Purchaser, and Purchaser shall promptly
reimburse Seller for the amount of net loss allocated to Purchaser. By way
of example and not limitation, the net profit and net loss allocations
described above shall be made as follows:
- --------------------------------------------------------------------------------
Methanol Profit & For Seller's For Purchaser's
Loss Account Account
- --------------------------------------------------------------------------------
Case 1 $4M $2.5M $1.5M
- --------------------------------------------------------------------------------
Case 2 6 2.5 3.5
- --------------------------------------------------------------------------------
Case 3 1 1 0
- --------------------------------------------------------------------------------
Case 4 0 0 0
- --------------------------------------------------------------------------------
Case 5 (1) (1) 0
- --------------------------------------------------------------------------------
Case 6 (4) (2.5) (1.5)
- --------------------------------------------------------------------------------
Case 7 (6) (2.5) (3.5)
- --------------------------------------------------------------------------------
(b) For purposes of this subsection, and notwithstanding any actual
costs incurred by Seller, the costs associated with the operation of the
Methanol Business during the Interim Period shall be determined using the
following formula on a per gallon
4.14-28
basis:
(i) the weighted average cost of natural gas during the Interim
Period stated in dollars per million Btu ($/MMBtu) multiplied by an
energy factor of 0.12 MMBtu/gallon plus
(ii) the price of electricity charged by Entergy during the
Interim Period stated in dollars per kilowatt-hour ($/kwH) multiplied
by an electricity usage factor of 0.46 kwH/gallon plus
(iii) a fixed constant of $0.079/gallon to cover all non-fuel
variable costs and fixed costs related to the operation of the
methanol plant.
(c) Purchaser and Seller each have the option to reduce the methanol
production to a "one loop" basis, where the production rate would be in the
range of 150-185 million gallons per year, by giving 35 days prior written
notice to the other party, which notice may be given any time on or after
September 1, 2000. In case Purchaser exercises the option, Purchaser will
be entitled only to methanol physically produced by the Methanol Business
in excess of Seller's requirements to supply third parties at that time.
In case Seller exercises the option, Seller will be entitled only to
methanol physically produced by the Methanol Business in excess of
Purchaser's requirements for methanol. In addition, at any time, Purchaser
and Seller can mutually agree to reduce methanol production to a "one loop"
basis and to allocate production.
For purposes of this subsection, and notwithstanding any actual costs
incurred by Seller, if the "one loop" option is exercised, the costs
associated with the operation of the Methanol Business during the Interim
Period shall be determined using the following formula on a per gallon
basis:
(i) the weighted average cost of natural gas during the Interim
Period stated in dollars per million Btu ($/MMBtu) multiplied by an
energy factor of 0.1160 MMBtu/gallon plus
(ii) the price of electricity charged by Entergy during the
Interim Period stated in dollars per kilowatt-hour ($/kwH) multiplied
by an electricity usage factor of 0.356 kwH/gallon plus
a fixed charge of $1,439,250 per month to cover plant fixed costs and
overhead.
(d) In payment of the price for methanol during the Extended Period,
Purchaser will pay to Seller, for each month during the Extended Period, an
amount equal to the sum of the following formula on a per gallon basis:
(i) the weighted average cost of natural gas during the Extended
Period stated in dollars per million Btu ($/MMBtu) multiplied by the
natural gas usage factor plus
4.14-29
(ii) the price of electricity charged by Entergy during the
Extended Period stated in dollars per kilowatt-hour ($/kwH)
multiplied by the electricity usage factor plus
plus a fixed charge of $1,439,250 per month to cover costs other than
natural gas and electricity.
The above-mentioned factors are based on the annualized production
rate of the methanol plant as listed below:
Production Rate Natural Gas Usage Electricity Usage
(Million gallons/yr.) Factor Factor
gallons/yr.) (MMBtu/gallon) (kwH/gallon)
- -----------------------------------------------------------------------
100-125 0.1223 0.257
- -----------------------------------------------------------------------
125-150 0.1195 0.209
- -----------------------------------------------------------------------
150-185 0.1160 0.356
- -----------------------------------------------------------------------
At the conclusion of the Extended Period, Seller shall, using
production costs sheets in the form attached in Schedule 4.6 and a fixed
------------
overhead allocation charge of $1,439,250 per month, reconcile charges from
the formulae set forth in this subsection (d) to those actually incurred.
Should those actual charges be in excess of the total computed by the above
formulae, then Purchaser shall pay Seller for the difference. Should those
actual charges be less than the total computed by the above formulae, then
Seller shall pay Purchaser for the difference.
During the Extended Period, Seller shall send Purchaser an invoice for
charges pertaining to the formula price on a monthly basis. The invoices
shall be sent on the 15th of the month and shall be payable on receipt.
(e) During the Extended Period, Seller shall operate the Methanol
Business for Purchaser subject to the provisions governing standard of
liability and indemnification set forth in Section 6 of the Transition
Services Agreement.
(f) Purchaser acknowledges that the operation of the Methanol Business
on a single loop basis during the Extended Period involves running the
reactor catalyst for six (6) months longer than normal replacement time;
however, Seller represents that it has no knowledge of any methanol
production equipment defect that would cause the Methanol Business to be
incapable of operations on a single loop basis through the expiration of
the Extended Period.
4.14-30
7.5 Title Insurance. Promptly following the Closing, Seller shall
---------------
cause the Title Company to deliver to Purchaser an owner's title insurance
policy (current ALTA Form) (each, a "Title Policy") issued by the Title Company
in an amount equal to the portion of the Purchase Price allocated to the Real
Property and insuring that Purchaser owns marketable fee simple title to the
Real Property, subject to no exceptions other than the Permitted Exceptions
(with extended coverage over the standard printed exceptions) and to matters
which do not materially affect the use or diminish the value of the Real
Property.
7.6 Non-Competition; Non-Solicitation.
----------------------------------
(a) Non-Competition; Non-Solicitation. For the period commencing on
---------------------------------
the Closing Date and ending on the fifth anniversary of the Closing Date,
no Seller Entity shall, without the prior written consent of Purchaser,
engage in the production, sale or distribution of formaldehyde, directly or
indirectly, as an owner, consultant, manager, partner, shareholder, agent
or otherwise within the United States (the "Territory"), nor shall any
officer or employee of Seller, for such period and in the Territory,
solicit orders, directly or indirectly from any customer of Purchaser, for
the sale of formaldehyde, as an owner, consultant, manager, partner,
shareholder, agent or otherwise. This Section 7.6 shall not be construed :
(i) to prohibit a Seller Entity from engaging in a transaction
whereby, directly or indirectly, it acquires (whether by merger, stock
purchase, asset purchase or otherwise), any person or business, or any
interest in any person or business, engaged at the time of such
acquisition in the manufacture or sale of formaldehyde; provided that,
--------
at the time of such acquisition or at any time thereafter while this
Section 7.6 is in effect, (A) no more than 15% of the revenues of such
person or business results from the manufacture or sale of
formaldehyde in the United States and (B) and no manufacture or sale
of formaldehyde shall be conducted at the Geismar site; or
(ii) to prohibit a Seller Entity from engaging in a transaction
whereby, directly or indirectly, it is acquired (whether by merger,
stock purchase, asset purchase or otherwise) by any person or business
that is engaged, at the time of such acquisition, in the manufacture
or sale of formaldehyde, or to prevent the successor or surviving
corporation in any such transaction from continuing to engage in the
manufacture or sale of formaldehyde; provided that, while this Section
--------
7.6 is in effect, such successor or surviving corporation shall not
engage in the manufacture or sale of formaldehyde at the Geismar site.
4.14-31
(b) Acknowledgement. Seller acknowledges that the restrictions
---------------
contained in this Section 7.6 are reasonable and necessary to protect the
legitimate interests of Purchaser, do not cause Seller any undue hardship,
and that any violations of any provision of this Section 7.6 will result in
irreparable injury to Purchaser and that, therefore, Purchaser shall be
entitled to preliminary and permanent injunctive relief in any court of
competent jurisdiction and to an equitable accounting of all earnings,
profits and other benefits arising from such violation, which rights shall
be cumulative and in addition to any other rights or remedies to which
Purchaser may be entitled.
7.7 Confidentiality. (a) The Seller Entities shall not, and shall
---------------
cause their respective directors, employees, agents and representatives not to,
disclose any proprietary or confidential information about the Businesses,
except as required by law, in which case the Seller Entity shall promptly inform
Purchaser so that a protective order may be obtained, and (b) Seller shall, at
Purchaser's request and expense, enforce or cause to be enforced any
confidentiality agreements covering proprietary information relating to the
Purchased Assets, the Optioned Assets or the Businesses; provided that this
--------
provision shall not be applicable to the Optioned Assets or the Methanol
Business after December 31, 2000, if the Option is not exercised.
7.8 Employees.
---------
(a) Transition of Employees. Unless otherwise specified, (i) Seller
------------------------
shall be responsible for all liabilities and obligations with respect to
any Employee or Methanol Employee accrued on or prior to the date (each, an
"Effective Date of Transfer") any such Employee or Methanol Employee
becomes a Transferred Employee under Section 6.6 and (ii) Seller shall be
responsible for all liabilities and obligations accrued prior to, on or
after the Closing Date with respect to any Non-Transferred Employee. For
at least one year from and after each Transferred Employee's Effective Date
of Transfer, Purchaser shall provide such Transferred Employee with
compensation (including wages and annual incentive compensation) and
employee benefits that are substantially equivalent to the compensation and
employee benefits that were provided to such Transferred Employee
immediately prior to his or her Effective Date of Transfer. Seller shall
be responsible for the payment of all severance benefits and other costs
related to any termination of Non-Transferred Employees. Notwithstanding
the foregoing, any amounts earned under any nonqualified plan of deferred
compensation by any Transferred Employee before his or her Effective Date
of Transfer will be paid by, reported by and deductible by the Seller.
(b) Employment Agreements. Purchaser shall assume all liabilities and
---------------------
obligations with respect to any employment agreements included in the
Contracts or the Methanol Contracts and covering any Transferred Employee
as of such Transferred Employee's Effective Date of Transfer.
(c) Pre-Existing Conditions; Deductibles; Service Credit. Solely with
----------------------------------------------------
respect to the plan year(s) in which each Employee or Methanol Employee
becomes a Transferred Employee, Purchaser shall, as to each such
Transferred Employee, (i) waive
4.14-32
all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable
to the Transferred Employees under any welfare plan in which such employees
may be eligible to participate after becoming Transferred Employees, (ii)
provide each such Transferred Employee with credit for any co-payments and
deductibles paid prior to such Transferred Employee's Effective Date of
Transfer in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plan that such Transferred Employee is
eligible to participate in after such Transferred Employee's Effective Date
of Transfer, (iii) provide each Transferred Employee with credit for all
service (including for purposes of benefit accruals and benefit
entitlements) with Seller and its Affiliates under each employee benefit
plan, program, or arrangement of Purchaser or its Affiliates in which such
Transferred Employees become eligible to participate; provided, however,
that in no event shall the Transferred Employees be entitled to any credit
to the extent that it would result in a duplication of benefits with
respect to the same period of service, (iv) except as provided in the next
subpart of this subsection, give effect to all elections each Transferred
Employee made while employed by Seller and (v) as of the Effective Date of
Transfer, allow each Transferred Employee an opportunity to modify his or
her election made under any Code (S)125 plan (A) to reflect any change in
the cost of medical or health plan coverage but (B) only to the extent
permitted by Regulations issued by the Internal Revenue Service under Code
(S)125.
(d) Welfare Claims. Seller shall retain responsibility for and
--------------
continue to pay all medical, life insurance, disability and other welfare
Seller Plan expenses and benefits for each Transferred Employee with
respect to claims incurred by such employees or their covered dependents on
or prior to such Transferred Employee's Effective Date of Transfer.
Expenses and benefits with respect to claims incurred by Transferred
Employees or their covered dependents after the Effective Date of Transfer
shall be the responsibility of Purchaser. For purposes of this Section
7.8(d), a claim is deemed incurred when the services that are the subject
of the claim are performed; in the case of life insurance, when the death
occurs, in the case of long-term disability benefits, when the person first
becomes eligible for long-term disability benefits and, in the case of a
hospital stay, when the employee first enters the hospital.
(e) Vacation. Each Employee or Methanol Employee designated to become
--------
a Transferred Employee may elect either:
(i) to be paid for any accrued but unused vacation time to which
such Transferred Employee is entitled as of such Transferred Employee's
Effective Date of Transfer pursuant to the vacation policy applicable
to such Transferred Employee at that time (as described in Schedule
--------
4.13), in which event Seller will include payment in full for such
------
accrued but unused vacation time in such Transferred Employee's final
paycheck; or
(ii) to have all such accrued but unused vacation time to which
such Transferred Employee is entitled as of such Transferred Employee's
Effective Date of Transfer transferred to Purchaser, in which event (A)
Seller will, as soon
4.14-33
as practicable after each such Transferred Employee's Effective Date
of Transfer, pay to Purchaser the value of such accrued but unused
vacation time and (B) Purchaser will provide each such Transferred
Employee with full credit for such accrued but unused vacation time.
(f) Pension Benefit Plans. Purchaser and its Affiliates will credit
---------------------
under all "employee pension benefit plans" (as defined in Section 3(2) of
ERISA), programs or arrangements of any of them in which such Transferred
Employees are or become eligible to participate on or after the Effective
Date of Transfer all service (for all purposes including the accrual of
benefits, the calculation of breaks in service, eligibility for benefits
and any other plan purpose) performed by each Transferred Employee before
the Effective Date of Transfer as if that service had been performed while
employed by Purchaser or an Affiliate, and all compensation (for all
purposes, including the accrual of benefits and any other plan purpose)
earned by each Transferred Employee before the Effective Date of Transfer
as if that compensation had been earned while employed for Purchaser or an
Affiliate. Purchaser and its Affiliates will give effect to all plan
elections each Transferred Employee made while employed by Seller and in
effect on the Effective Date of Transfer and will assume responsibility for
administration of any loans taken by any Transferred Employee before the
Effective Date of Transfer. Purchaser will be responsible for restoring
any benefits conditionally forfeited by any of Seller's employees who
terminated employment with the Seller before the Effective Date of Transfer
but who are employed by Purchaser or an Affiliate after the Effective Date
of Transfer, but only to the extent that those conditionally forfeited
benefits are required to be restored under the terms of any employee
pension benefit plan, program or arrangement maintained by Purchaser or any
Affiliate. Purchaser will be responsible for all benefits accrued by
Transferred Employees after the Effective Date of Transfer, provided in no
event shall the Transferred Employees be entitled to any credit to the
extent that it would result in a duplication of benefits with respect to
the same period of service.
(g) WARN Notices. Seller agrees to provide any required notices under
------------
the Worker Adjustment and Retraining Notification Act of 1988, as amended
("WARN") and any other applicable law and to otherwise comply with any such
statute with respect to any "plant closing" or "mass layoff" (as defined in
WARN) or similar event affecting any Non-Transferred Employee and occurring
on or prior to such Transferred Employee's Effective Date of Transfer or
arising as a result of the transactions contemplated hereby. Seller shall
indemnify and hold harmless Purchaser with respect to any liability under
WARN or other applicable law arising from the actions (or inaction) of
Seller with respect to the Non-Transferred Employees on or prior to their
Effective Dates of Transfer or arising as a result of the transaction
contemplated hereby. Purchaser agrees to provide any required notices
under WARN and any other applicable law and to otherwise comply with any
such statute with respect to any plant closing, mass layoff or similar
event affecting any Transferred Employee and occurring within 90 days of
such Transferred Employee's Effective Date of Transfer. Purchaser shall
indemnify and hold harmless Seller with respect to any liability under WARN
or other applicable law arising from the actions (or inaction) of Purchaser
with respect to the Transferred Employees after their Effective Dates of
Transfer.
4.14-34
(h) Following the date of this Agreement, Seller and Purchaser shall
reasonably agree on the amount of any stay bonuses to be awarded to the
Methanol Employees. The cost of such stay bonuses shall be borne by
Seller; provided, however, that if Purchaser elects to have Seller operate
the Methanol Business during the Extended Period, Purchaser shall reimburse
Seller for a portion of such stay bonuses equal to (i) 50% of the total
amount of all stay bonuses payable to employees and awarded during the
period following the date hereof and prior to the end of the Extended
Period, multiplied by (ii) the number of days of operations during the
Extended Period divided by 180.
7.9 Common Site Standards. In order to ensure safe operation on the
---------------------
Geismar site with its common utilities and infrastructure systems, during the
term of the Transition Services Agreement, appropriate representatives of Seller
and Purchaser shall meet and:
(a) identify areas of operations in which consistent safety and
engineering procedures are advisable, which areas would include,
without limitation, materials standards, electrical standards, hot
work permitting, safety valve maintenance, lock-out and tag-out
procedures, vessel entry procedures and procedures for maintaining
pipelines on shared pipe-racks;
(b) develop and document safety and engineering procedures to be
used by Purchaser, Seller and their respective contractors in
connection with such identified areas of operations at the Geismar
site; and
(c) establish processes for monitoring compliance with such
procedures and for reviewing and updating such procedures.
Purchaser and Seller agree that, in the event either of them sells
assets to any person who will continue to operate such assets at the Geismar
site, the selling party shall use reasonable efforts to cause the transferee to
participate in the process developed in accordance with this Section 7.9.
Section 8. Closing Conditions.
--------- ------------------
8.1 Conditions to Obligation of Purchaser. The obligation of
-------------------------------------
Purchaser to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties of Seller set forth in Section 4
will be true and correct in all material respects on and as of the Closing
Date;
(b) Seller will have performed and complied with all of its covenants
hereunder in all material respects through the Closing Date;
(c) Purchaser shall have received such closing certificates of Seller
as are customary for this type of transaction and are satisfactory to its
counsel;
4.14-35
(d) the parties shall have received (i) all required approvals and
consents including all approvals under the HSR Act, and (ii) all of the
third party consents listed on Schedule 4.2(b), including the BASF Consent;
there shall not be any statute, law, rule or regulation which makes it
unlawful to consummate the transactions contemplated hereby and in the
Ancillary Agreements; and there shall not be any action, suit or proceeding
pending which challenges the consummation of the transactions contemplated
hereby or thereby;
(e) Seller will have delivered to Purchaser the documents listed in
subparagraphs (b) and (c) of Section 3.3 to be delivered by it;
(f) all actions to be taken by Seller in connection with consummation
of the transactions contemplated hereby, all certificates, instruments and
other documents required to effect the transactions contemplated hereby, and
the results of Purchaser's environmental assessment will be reasonably
satisfactory in form and substance to Purchaser;
(g) The parties thereto shall have executed and delivered the amendment
to the Intercompany Agreement; and
(h) The Liens of Fleet Bank referred to in the Schedules to this
Agreement shall have been released pursuant to a release in form and
substance satisfactory to Purchaser.
Purchaser may waive any condition specified in this Section 8.1, other than the
requirement of Section 8.1(d)(i) that the parties shall have received all
required approvals and consents from governmental authorities and agencies, if
it executes a writing so stating at or prior to the Closing.
8.2 Conditions to Obligation of Seller. The obligation of Seller to
----------------------------------
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) the representations and warranties of Purchaser set forth in
Section 5 will be true and correct in all material respects on and as of the
Closing Date;
(b) Purchaser will have performed and complied with all of its
covenants hereunder in all material respects through the Closing Date;
(c) Seller shall have received such closing certificates of Purchaser
as are customary for this type of transaction and are satisfactory to its
counsel;
(d) the parties shall have received all required approvals and consents
from governmental authorities and agencies and third parties, including all
approvals under the HSR Act; there shall not be any statute, law, rule or
regulation which makes it unlawful
4.14-36
to consummate the transactions contemplated hereby and in the Ancillary
Agreements; and there shall not be any action, suit or proceeding pending
which challenges the consummation of the transactions contemplated hereby
or thereby;
(e) Purchaser will have delivered to Seller:
(i) the documents listed in subparagraphs (a) and (c) of Section
3.3 to be delivered by it; and
(ii) the Purchase Price as specified in Section 2.2; and
(f) all actions to be taken by Purchaser in connection with
consummation of the transactions contemplated hereby, all certificates,
instruments and other documents required to effect the transactions
contemplated hereby, and the results of Purchaser's environmental assessment
will be reasonably satisfactory in form and substance to Seller; and
(g) Borden shall have executed and delivered the Amendment to the
Intercompany Agreement.
Seller may waive any condition specified in this Section 8.2, other than the
requirement of Section 8.2(d) that the parties shall have received all required
approvals and consents from governmental authorities and agencies, if it
executes a writing so stating at or prior to the Closing.
8.3 Conditions to Obligation of Purchaser - Second Closing. The
------------------------------------------------------
obligation of Purchaser to consummate the transactions to be performed by it in
connection with the Second Closing is subject to satisfaction of the following
conditions:
(a) the representations and warranties of Seller set forth in Section 4
that are applicable to the Methanol Business and the Optioned Assets will be
true and correct in all material respects on and as of the Second Closing
Date;
(b) Seller will have performed and complied with all of its covenants
hereunder in all material respects through the Second Closing Date;
(c) Purchaser shall have received such closing certificates of Seller
as are customary for this type of transaction and are satisfactory to its
counsel;
(d) the parties shall have received all required approvals and
consents from governmental authorities and agencies and third parties; there
shall not be any statute, law, rule or regulation which makes it unlawful to
consummate the purchase of the Optioned Assets; and there shall not be any
action, suit or proceeding pending which challenges the consummation of the
purchase of the Optioned Assets;
4.14-37
(e) Seller will have delivered to Purchaser the documents listed in
subparagraphs (a) and (b) of Section 3.4 to be delivered by it; and
(f) all actions to be taken by Seller in connection with consummation
of the sale of the Optioned Assets and all certificates, instruments and
other documents required to effect the sale of the Optioned Assets will be
reasonably satisfactory in form and substance to Purchaser.
Purchaser may waive any condition specified in this Section 8.3, other than the
requirement of Section 8.3(d) that the parties shall have received all required
approvals and consents from governmental authorities and agencies, if it
executes a writing so stating at or prior to the Second Closing.
8.4 Conditions to Obligation of Seller - Second Closing. The
---------------------------------------------------
obligation of Seller to consummate the transactions to be performed by it in
connection with the Second Closing is subject to satisfaction of the following
conditions:
(a) the representations and warranties of Purchaser set forth in
Section 5 will be true and correct in all material respects on and as of the
Second Closing Date;
(b) Purchaser will have performed and complied with all of its
covenants hereunder in all material respects through the Second Closing
Date;
(c) Seller shall have received such closing certificates of Purchaser
as are customary for this type of transaction and are satisfactory to its
counsel;
(d) the parties shall have received all required approvals and consents
from governmental authorities and agencies and third parties; there shall
not be any statute, law, rule or regulation which makes it unlawful to
consummate the sale of the Optioned Assets; and there shall not be any
action, suit or proceeding pending which challenges the consummation of the
sale of the Optioned Assets;
(e) Purchaser will have delivered to Seller:
(i) the documents listed in subparagraph (b) of Section 3.3 to be
delivered by it; and
(ii) three million dollars ($3,000,000) as specified in
subparagraph (b) of Section 3.3.
(f) all actions to be taken by Purchaser in connection with
consummation of the purchase of the Optioned Assets and all certificates,
instruments and other documents required to effect the purchase of the
Optioned Assets will be reasonably satisfactory in form and substance to
Seller.
4.14-38
Seller may waive any condition specified in this Section 8.4, other than the
requirement of Section 8.4(d) that the parties shall have received all required
approvals and consents from governmental authorities and agencies, if it
executes a writing so stating at or prior to the Closing.
Section 9. Remedies for Breaches of this Agreement.
--------- ---------------------------------------
9.1 Assumed Liabilities; Excluded Liabilities.
-----------------------------------------
(a) Purchaser does hereby agree to indemnify, defend and hold harmless
Seller and its successors and assigns, and their respective partners,
stockholders, directors, officers, employees and agents ("Seller Indemnified
Parties"), from and against any and all costs, damages, losses, claims,
liabilities and expenses, including court costs and attorneys fees, arising
from or connected with:
(i) the Assumed Liabilities,
(ii) Purchaser's failure to perform or discharge any of the
Assumed Liabilities,
(iii) the operation of the Formaldehyde Business or the
ownership or use of the Purchased Assets following the Closing Date and
(iv) the operation of the Methanol Business or the ownership or
use of the Optioned Assets following the Second Closing Date.
(b) Seller does hereby agree to indemnify, defend and hold harmless
Purchaser, and its successors and assigns, and their respective
stockholders, directors, officers, employees and agents ("Purchaser
Indemnified Parties"), from and against any and all costs, liabilities and
expenses, including court costs and attorneys fees, arising from or
connected with:
(i) the Excluded Liabilities,
(ii) any failure to perform the Excluded Liabilities,
(iii) the operation of the Formaldehyde Business or the
ownership or use of the Purchased Assets on or prior to the Closing
Date,
(iv) the operation of the Methanol Business or the ownership or
use of the Optioned Assets on or prior to the Second Closing Date,
(v) except as otherwise provided in the Ancillary Agreements,
Seller's access and use of the Purchased Assets and Optioned Assets
pursuant to the Ancillary Agreements;
4.14-39
provided, however, that the foregoing indemnification shall not apply to the
extent any matter is subject to indemnification pursuant to the terms of Section
1 or Section 2 of the Environmental Indemnity Agreement between Seller and
Purchaser or any other agreement pursuant to which Seller, Purchaser or any of
their Affiliates agrees to indemnify the other party.
9.2 Representations, Warranties and Covenants.
------------------------------------------
(a) Survival The representations, warranties and covenants in this
--------
Agreement shall survive the Closing and shall not be limited in duration or
scope except as herein provided.
(b) Indemnification Provisions for Benefit of Purchaser. In the event
---------------------------------------------------
Seller breaches any of its representations, warranties or covenants
contained in this Agreement, then Seller will indemnify Purchaser from and
against any the entirety of any and all costs, damages, losses, claims,
liabilities and expenses, including reasonable court costs and attorney's
fees and expenses (collectively, "Losses") suffered or incurred by any
Purchaser Indemnified Party, resulting from, arising out of, relating to, in
the nature of or caused by such breach. Notwithstanding the foregoing, in
the case of any breach of any representation or warranty, Seller shall not
be liable pursuant to this Section 9.2 unless a Purchaser Indemnified Party
has made a written claim for indemnification within two (2) years following
the Closing Date.
(c) Indemnification Provisions for Benefit of Seller. Without limiting
------------------------------------------------
Section 9.1, in the event Purchaser breaches any of its representations,
warranties or covenants contained in this Agreement, then Purchaser will
indemnify Seller from and against the entirety of any Losses suffered or
incurred by any Seller Indemnified Party, resulting from, arising out of,
relating to, in the nature of or caused by such breach. Notwithstanding the
foregoing, in the case of any breach of any representation or warranty,
Purchaser shall not be liable pursuant to this Section 9.2 unless a Seller
Indemnified Party has made a written claim for indemnification within two
(2) years following the Closing Date.
9.3 Matters Involving Third Parties. If any third party notifies
-------------------------------
any Purchaser Indemnified Party or Seller Indemnified Party (the "Indemnified
Party") with respect to any matter that may give rise to a claim for
indemnification against the other party hereto (the "Indemnifying Party") under
this Section 9, then the Indemnified Party will notify the Indemnifying Party
thereof promptly and in any event within 30 days after receiving any written
notice from a third party; provided that no delay on the part of the Indemnified
Party in notifying the Indemnifying Party will relieve the Indemnifying Party
from any obligation hereunder unless, and then solely to the extent that, the
Indemnifying Party is prejudiced thereby. Once the Indemnified Party has given
notice of the matter to the Indemnifying Party, the Indemnified Party may defend
against the matter in any manner it reasonably may deem appropriate. In the
event the Indemnifying Party notifies the Indemnified Party within 30 days after
the date the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense of such matter (a) the Indemnifying
Party will defend the Indemnified Party against the matter with counsel of its
choice reasonably satisfactory to the Indemnified Party, (b) the
4.14-40
Indemnified Party may retain separate counsel at its sole cost and expense
(except that the Indemnifying Party will be responsible for the fees and
expenses of such separate co-counsel to the extent the Indemnified Party
concludes in good faith that the counsel the Indemnifying Party has selected has
a conflict of interest or, in the event the Indemnified Party and the
Indemnifying Party are named parties in such matter, that joint representation
is inappropriate or inadvisable due to actual or potential differing interests),
(c) the Indemnified Party will not consent to the entry of a judgment or enter
into any settlement with respect to the matter without the written consent of
the Indemnifying Party (not to be withheld or delayed unreasonably) and (d) the
Indemnifying Party will not consent to the entry of a judgment with respect to
the matter or enter into any settlement that does not include a provision
whereby the plaintiff or claimant in the matter releases the Indemnified Party
from all liability with respect thereto, without the written consent of the
Indemnified Party (not to be withheld or delayed unreasonably). Wherever
possible, any information to be filed with any governmental entity in connection
with any indemnification hereunder shall be placed under confidential seal
before it is placed in public records.
9.4 Indemnification Limitations. Neither Seller nor Purchaser nor
---------------------------
their respective Affiliates will be liable hereunder for any punitive damages
relating to any claim for which any such party may be required to provide
indemnification under this Agreement (other than indemnification of such damages
paid or payable by any Indemnified Party to a third party in respect of any
claim for which indemnification hereunder is required).
9.5 EXCLUSIVE REMEDY. IN THE ABSENCE OF FRAUD OR THE INTENTIONAL
----------------
BREACH OF THIS AGREEMENT, FOLLOWING THE CLOSING DATE THE INDEMNIFICATION
PROVISIONS CONTAINED IN THIS SECTION 9 (AND THE OTHER AGREEMENTS REFERRED TO IN
THE PROVISO AT THE END OF SECTION 9.1) WILL CONSTITUTE THE SOLE AND EXCLUSIVE
RECOURSE AND REMEDY OF THE PARTIES FOR MONETARY DAMAGES WITH RESPECT TO ANY
BREACH OF ANY OF THE REPRESENTATIONS, WARRANTIES OR COVENANTS CONTAINED IN THIS
AGREEMENT. THE PROVISIONS OF THIS SECTION 9.5 WILL NOT RESTRICT THE RIGHT OF
ANY PARTY TO SEEK SPECIFIC PERFORMANCE OR OTHER EQUITABLE REMEDIES IN CONNECTION
WITH ANY BREACH OF ANY OF THE COVENANTS CONTAINED IN THIS AGREEMENT. NO PARTY
WILL BE REQUIRED TO POST ANY BOND OR OTHER INDEMNITY AS A CONDITION TO
EXERCISING ITS RIGHT TO SEEK SPECIFIC PERFORMANCE OR OTHER EQUITABLE REMEDIES
HEREUNDER.
Section 10. Termination.
---------- -----------
10.1 Termination of Agreement. Purchaser and Seller may terminate
------------------------
this Agreement (a) by mutual written consent at any time prior to the Closing,
or (b) if the Closing Date shall not have occurred within 45 days of the date
hereof; provided that if Closing Date shall not have occurred as a result of the
--------
willful act or omission of one of the parties, such party may not terminate this
Agreement pursuant to this clause (b). No party shall be deemed to have
willfully acted or omitted to act by reason of such party's refusal to enter
into litigation or assume any liability not expressly required to be assumed
pursuant hereto. No party shall be
4.14-41
deemed to have willfully acted or omitted to act by reason of such party's
taking any action permitted by this Agreement.
10.2 Effect of Termination. Except as limited by Section 6.7 above,
---------------------
if any party terminates this Agreement pursuant to Section 10.1, all obligations
of the parties hereunder will terminate without liability of any party to the
other party (except for any liability of any party then in breach); provided
that the termination of the Urea Purchase Agreement pursuant to Section 6.11 and
the expense allocation provisions contained in Section 11.2 of this Agreement
will survive termination and remain in full force and effect thereafter.
Section 11. Miscellaneous.
---------- -------------
11.1 Press Releases and Announcements. No party will issue any
--------------------------------
press release or announcement relating to the subject matter of this Agreement
prior to the Closing Date without the prior approval of the other party;
provided that any party may make any public disclosure it believes in good faith
is required by Law or by the rules and regulations of any stock exchange on
which the securities of such party or its Affiliates are listed (in which case
the disclosing party will advise the other party prior to making such disclosure
and shall make every reasonable effort to consult with the other party as to the
timing and content of any such announcement before such announcement is made).
11.2 Expenses; Transfer Taxes. Except as specifically set forth in
------------------------
this Agreement, each of the parties hereto will bear all legal, accounting,
investment banking and other expenses incurred by it or on its behalf in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated; provided, however, that Seller and Purchaser
shall agree to pay certain additional expenses of the transactions contemplated
by this Agreement pursuant to the terms of a Closing Statement, which shall
include, but not be limited to the following allocations: (a) Seller and
Purchaser shall each pay half of (i) the expenses in connection with the
preparation of the Title Policy and Title Binder, (ii) the premium for the Title
Insurance coverage, (iii) escrow fees, if any, of the Title Company, (iv) the
cost of the survey and (v) the amount of any documentary, stamp or transfer tax
imposed upon this transaction and any sales or use taxes, or recording and
filing fees applicable to the transfer of the Real Property and other Purchased
Assets to Purchaser or to any other transaction contemplated by this Agreement
and (b) real estate taxes shall be adjusted ratably as of the Closing Date (if
the amount of the current real estate taxes is not then ascertainable, the
adjustment thereof, except for that amount which may accrue by reason of new or
additional improvements, recently voted millage or changes in valuation, shall
be on the basis of the amount of the most recent ascertainable taxes), other
than special assessments or installments of special assessments (if payable by
the installment method) due on or prior to the Closing Date, which shall be paid
by Seller.
11.3 Remedies. Except as otherwise limited by this Agreement, (a)
--------
any party having any rights under any provision of this Agreement will have all
rights and remedies set forth in this Agreement and all rights and remedies that
such party may have been granted at any time under any other agreement or
contract and all of the rights that such party may have under any Law, and (b)
any such party will be entitled to enforce such rights specifically, without
4.14-42
posting a bond or other security, to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by Law.
11.4 Consent to Amendments. The provisions of this Agreement may
---------------------
not be amended or waived other than by a written agreement executed and
delivered by Seller and Purchaser. No other course of dealing between the
parties to this Agreement or any delay in exercising any rights hereunder will
operate as a waiver of any rights of such parties.
11.5 Successors and Assigns. No party hereto may assign or delegate
----------------------
any of such party's rights or obligations under or in connection with this
Agreement or any Ancillary Agreement without the written consent of the other
party hereto. Except as otherwise expressly provided herein, all rights and
obligations contained in this Agreement or in any Ancillary Agreement by or on
behalf of any of the parties hereto or thereto will be binding upon and
enforceable against the respective successors and permitted assigns of such
party and will be enforceable by and will inure to the benefit of the respective
successors and permitted assigns of such party.
11.6 Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable Law, but if any provision of this Agreement, or portion thereof, is
held to be prohibited by or invalid under applicable Law, such provision or
portion thereof will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement or such
provision.
11.7 Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
11.8 Descriptive Headings. The descriptive headings of this
--------------------
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
11.9 Notices. Any notice hereunder must be in writing and delivered
-------
personally or by United States Mail, Registered or Certified, Return Receipt
Requested; United States Express Mail; or Federal Express or equivalent courier
service, and shall be effective only if and when received by the party to be
notified. For purposes of notice, the addresses of the parties shall be as set
forth below or as may be designated by notice to the other from time to time:
If to Seller: Borden Chemicals and Plastics
Operating Limited Partnership
Highways 73 and 30
Geismar, Louisiana 70734
Attention: M. D. Owens, Vice President Manufacturing
Facsimile: (225) 673-0672
With a copies (which
will not constitute
notice) to: Borden Chemicals and Plastics
4.14-43
Operating Limited Partnership
Highways 73 and 90
Geismar, Louisiana 70734
Attention: J. O. Stevning, Chief Financial Officer
Facsimile: (225) 673-0672
and Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
P.O. Box 1006
Columbus, Ohio 43216
Attention: James H. Gross
Facsimile: (614) 719-4740
If to Purchaser: Borden Chemical, Inc.
180 East Broad Street
Columbus, Ohio 43215
Attention: Ed Huller
Facsimile: (614) 220-6655
With a copy (which
will not constitute
notice) to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10217
Attention: David Sorkin, Esq.
Facsimile: (212) 455-3387
11.10 No Third-Party Beneficiaries. This Agreement will not confer
----------------------------
any rights or remedies upon any Person other than Seller and Purchaser and their
respective successors and permitted assigns.
11.11 Entire Agreement. This Agreement (including the exhibits and
----------------
schedules referred to herein), the Ancillary Agreements and the Confidentiality
Agreement constitute the entire agreement among the parties and supersede any
prior understandings, agreements or representations by or among the parties,
written or oral, that may have related in any way to the subject matter hereof.
11.12 Construction. The language used in this Agreement will be
------------
deemed to be the language chosen by the parties to express their mutual intent
and no rule of strict construction will be applied against any party. The use
of the word "including" in this Agreement means "including without limitation"
and is intended by the parties to be by way of example rather than limitation.
11.13 Incorporation of Exhibits and Schedules. The Exhibits and
---------------------------------------
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
4.14-44
11.14 Power of Attorney. Seller does hereby constitute and appoint
-----------------
Purchaser, its successors and assigns, the true and lawful attorney with full
power of substitution for Seller and in Seller's name, place and stead or
otherwise but on its behalf, its successors and assigns and for the benefit of
Purchaser, its successors and assigns, to demand and receive from time to time
any and all property and assets, real, personal and mixed, tangible and
intangible, hereby conveyed and assigned to Purchaser or intended so to be and
to execute in its name, and the names of its respective successors and assigns,
deeds, assignments and other instruments of further assurance and to give
receipts and releases in respect of the same, and from time to time to institute
and prosecute in the name of Purchaser or Seller for the benefit of Purchaser,
any and all proceedings at law, in equity or otherwise which Purchaser, its
successors and assigns may deem proper in order to collect, assert or enforce
any claims, rights or title of any kind in and to the Purchased Assets hereby
conveyed and assigned or intended so to be, and to defend and compromise any and
all actions, suits or proceedings in respect of any of such Purchased Assets and
to do any and all such acts and things in furtherance of this Agreement and the
sale, transfer, conveyance, assignment and delivery of the Purchased Assets as
Purchaser, its successors or assigns, shall deem advisable. Seller hereby
declares that the appointment hereby made and the powers hereby granted are
coupled with an interest and are and shall be irrevocable and perpetual and
shall not be terminated by any act by it or its successors or assigns or by
operation of law.
11.15 GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
-------------
VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS AND SCHEDULES
HERETO WILL BE GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF OHIO, EXCEPT WITH RESPECT TO REAL ESTATE MATTERS, WHICH WILL BE
GOVERNED BY LOUISIANA LAW
* * * * *
4.14-45
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP
By: BCP Management, Inc.,
General Partner
By: ____________________________
William Harding Carter
Chairman of the Board
BORDEN CHEMICAL, INC.
By: _______________________________
Michael E. Ducey
President and Chief Executive Officer
CONSENTED TO BY:
BCP Management, Inc., for itself as to Sections
6.6, 7.6 and 7.8, and on behalf of Borden Chemicals
and Plastics Limited Partnership as to Section 7.6
By: ____________________________
William Harding Carter
Chairman of the Board
4.14-46